Sweden’s H2 Green Steel has today signed two supply agreements with mining companies Vale and Rio Tinto to supply pelletised iron ore from Brazil and Canada respectively for its flagship facility in Boden, northern Sweden.

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On the surface, this would seem to go against the company’s pledge to produce hydrogen-derived “green” steel with 95% fewer emissions than traditional steelmaking.

The Swedish firm admits to Hydrogen Insight that shipping some of the Boden plant’s iron from overseas will emit around 40-50kg CO2 per tonne of steel.

But it argues that this is more than offset by the 1,800-1,900kg of CO2 emissions per tonne of steel avoided by its process, which uses renewable hydrogen to directly reduce iron before processing it into steel using electric arc furnaces.

And since H2 Green Steel says that it requires high-quality iron ore to be supplied as pellets, rather than lumps, this has limited which mining companies it can work with.

While Sweden is one of Europe’s largest iron-ore-producing nations, with 12 active mines, H2 Green Steel is still in discussions with local mining companies to supply ore according to its pellet specifications.

And while the rail network connecting Swedish mines passes by Boden, available logistics capacity has been raised as a roadblock to supplying the green steel plant.

“Swedish authorities have indicated there is capacity enough, but not all current actors operating on railway feel the same,” a spokesperson tells Hydrogen Insight.

H2 Green Steel also argues that the iron supply agreements with Vale and Rio Tinto could be built upon as it develops new projects outside of Sweden.

The company has already announced its intention to co-develop a plant capable of producing five million tonnes of green steel in Brazil in the late 2020s.

H2 Green Steel’s Boden plant is scheduled to start up in 2025.

Much of its two-and-a-half million tonnes a year of steel production by the end of that year is already pre-sold to companies such as Mercedes-Benz, Scania, Cargill and ZF.

The Swedish company has also agreed to supply hot-briquetted iron — brick-shaped lumps of pure iron extracted from the ore — to Rio Tinto as part of its supply agreement.

And since H2 Green Steel is set to make a final investment decision (FID) on the Boden facility this year, locking down iron supply agreements is likely to be a high priority ahead of financial close.