The parties have been negotiating the low-CO2 steel deliveries since October
2021.
On August 19, H2 Green Steel and BMW signed the final contract
on the delivery of CO2-reduced steel. The agreement addresses BMW’s upstream
scope 3 emissions and includes recycling, according to the release from H2 Green Steel.
Starting in 2025, H2 Green Steel will supply BMW’s European
plants with steel produced exclusively using hydrogen and green power from renewable
energies. This will allow BMW to use steel produced with 95% lower carbon
dioxide (CO2) emissions.
According to the market sources, BMW consumes about 500,000
tonnes of steel at its European plants annually.
Both companies have agreed to have 40% of pre-consumer steel
scrap returned to H2 Green Steel’s electric-arc furnaces (EAFs) for
recycling.
“We are on a mission to decarbonize the steel industry. Working
with progressive companies like BMW Group, pushes us to be better, both in our
own operations and our value chain. It also pushes us to be an even better
partner to our customers and raises the bar for industry peers on the
decarbonization journey,” Henrik Henriksson, chief executive officer of H2
Green Steel, said.
BMW also signed deals in February 2022 with German steelmaker
Salzgitter for supplies of low-carbon steel.
H2 Green Steel was founded in 2020. The integrated EAF-based
plant in Boden, Sweden, is under construction, with hot-rolled and cold-rolled
coil production expected to commence by 2025.
In the first phase, the company will
have an annual capacity of 2.1 million tonnes of direct-reduced
iron/hot-briquetted iron and 2.5 million tonnes of flat steel products. The
company expects to reach full capacity in 2026.