A general view of Europe's first greenfield steel mill in 50 years, under construction by Stegra, outside Boden, in northern Sweden, December 5, 2024.
"The project has good potential to accelerate the transition in the iron and steel industry," the Swedish Energy Agency stated.
The agency explained that the funding will improve Stegra's ability to obtain the additional capital required for the project. Support is conditional: Stegra must prove by spring 2026 at the latest that it has raised sufficient funds to finish construction.
Stegra plans to build a plant that produces steel using hydrogen generated on-site from renewable electricity, replacing traditional coal-based methods. In October, the company said it was seeking up to $1.1 billion in new financing. Last year it had already secured loans and equity totaling 6.5 billion euros ($7.5 billion).
Stegra's CEO Henrik Henriksson stated this month that approximately half of the required funding is now in place and that he expects the remainder to be provided by banks within the next six months. He noted that government support sends a positive message to financial institutions and investors.
The latest grant forms part of broader assistance originally agreed between Sweden and the European Union. Stegra previously received 1.2 billion crowns from this package, while an additional 1.6 billion crowns had been withheld. The company reapplied and has now been awarded a portion of the outstanding amount.
"Although there is a gap to what the government requested and received EU approval for, we can now take the next step together with the financiers," Stegra said in written comments to Reuters on Wednesday. "This levels the playing field somewhat in relation to other projects in Sweden and the rest of Europe."
The funding reinforces efforts to advance low-emission steel production using Sweden's abundant renewable electricity resources. The new facility, once completed, is expected to play a significant role in reducing carbon emissions from the steel sector.
