BMW seals deal with H2 Green Steel on low-CO2 steel deliveries

German carmaker BMW Group signed an agreement with Swedish green steel maker H2 Green Steel to supply low-CO2 steel for vehicle production at its European plants, Fastmarkets has learned

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.

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