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Swedish industrial company Stegra is developing one of Europe's largest green steel projects (located in Bouden), but the project is facing financial pressure due to a partial shortfall in government funding. L290R steel, Although the EU has approved €265 million in project funding, only €100 million has been disbursed so far, forcing the company to seek alternative funding sources to ensure the project's smooth progress.
Stegra's government aid was reduced due to its use of natural gas.
In September 2024, the first tranche of €100 million was disbursed through the Swedish Energy Agency. L290R steel, However, the remaining funds were frozen by the Swedish Environmental Protection Agency because the project had not yet fully achieved fossil fuel-free production—Stegra plans to temporarily use natural gas until renewable energy is fully available.
To fill the funding gap, Stela has applied to the Swedish Energy Agency for nearly 2 billion Swedish kronor (approximately US$213.71 million) in additional assistance, and negotiations with shareholders for capital increases are also underway. Simultaneously, the company is exploring other public support programs, equity injections, and debt financing.
Financing Structure and EU Support
Stegra initially raised over €6 billion, of which approximately €4.2 billion was in loans and €2.1 billion in equity financing. In addition, the EU Innovation Fund provided €250 million in funding, and the European Commission approved €265 million in support from the Swedish government.
Construction Status and Progress
Despite funding challenges, construction of the plant in Bouden continues. The plant, built around electrolytic hydrogen production technology, is planned to have an electrolysis capacity of 740 MW. Unlike traditional blast furnaces that use coal and coke as reducing agents for iron ore production, this facility will use hydrogen to reduce iron ore, potentially reducing carbon emissions by 95%. L290R steel, Currently, Stegra has installed 10 electrolysis modules (totaling 200 MW). The plant is expected to begin continuous operation in 2026, initially using electric arc furnaces to process scrap steel, before gradually transitioning to hydrogen-based direct reduction (H-DRI) technology.
