Steel group SSAB has secured €2.3 billion ( US$2.6 billion ) of green financing to build a fossil-free mini-mill in Luleå,Sweden.

The financing package is covered by the Swedish National Debt Office ( Riksgalden ), the Italian Export Credit Agency ( SACE ), and the Nordic Investment Bank. Crédit Agricole CIB acted as global coordinator, structuring bank, and green loan coordinator for the deal. Clifford Chance advised Crédit Agricole.

Last year SSAB decided to invest €4.5 billion in the new steel mill. The company has now signed three green loan facilities. All facilities have long-term maturities structured to support the full lifecycle of the project.

These include a syndicated loan amounting to 15 billion kronor ( US$1.55 billion ) covered by the Swedish National Debt Office ( Riksgalden ) under the credit guarantees for green investments programme; an €808 million syndicated loan backed by SACE; and a loan amounting to 1.15 billion kronor from the Nordic Investment Bank.

The loans are structured under the Green Loan Principles, in line with SSAB’s green and sustainability-linked finance framework.

“The great interest to participate in the financing underscores SSAB’s leading position in the steel industry, as well as our partners’ strong confidence in our transformation plan," says SSAB chief financial officer Leena Craelius. "We managed to secure favourable terms, and the package gives us the financial flexibility we need for robust implementation of the transformation, in line with our financial targets.

“The investment in Lulea will enable us to build an even stronger and more competitive SSAB by reducing costs, accelerating the product mix improvement, and virtually eliminating all CO2 emissions from the Luleå production.”

Sustainable production

The new mill will have a capacity of 2.5 million tonnes a year with two electric arc furnaces, advanced ladle metallurgy, and an integrated rolling mill.

The investment also includes a cold rolling complex, advanced galvanizing, as well as continuous annealing. Other advantages include lower costs, shorter lead times, and better ability to manage swings in demand.

The new steel mill will be able to use a flexible mix of fossil-free sponge iron, pig iron, and recycled scrap.

When the new mini-mill is completed, SSAB will close the current blast furnace-based production system in Lulea, which will largely remove the carbon emissions from existing operations. The reduction corresponds to 7% of Sweden’s current CO2 emissions.

“We are proud to support SSAB in their transformative journey towards more sustainable production practices,” says André Gazal, global head of export credit agency and multilateral financing solutions at Crédit Agricole CIB.  “Our commitment to strengthening their transformation strategy reflects not only our dedication to sustainability but also our expertise in providing tailored financing solutions.”