Industrial

Green hydrogen for iron | H2 Green Steel in talks to build $6bn green steel plant in Quebec

Steel pioneer’s existing customers want near-emissions steel for North American operations, says CEO

Justin Trudeau meets with investor Marcus Wallenberg, whose investment vehicle owns an equity stake in H2 Green Steel.
Justin Trudeau meets with investor Marcus Wallenberg, whose investment vehicle owns an equity stake in H2 Green Steel.Photo: Canadian government
Swedish green steel developers H2 Green Steel (H2GS) is in discussions with Canadian authorities to build a massive $6bn H2-derived iron and steel plant in northern Quebec, according to its CEO — but progress depends on the company bagging a slice of the province’s hydropower-rich electricity supply.

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H2GS chief executive Henrik Henriksson told Bloomberg News that the company has identified a 500-acre site for the plant at the port of Sept-Îles, located on the Gulf of St Lawrence and close to an iron-ore depot owned by H2GS partner Rio Tinto.

The firm is currently considering two options — building a massive green iron and steel plant for $6bn, or a green iron plant only for around $3bn, from which H2GS would export green iron to international markets.

Most iron is extracted from its iron-oxide ore by burning coking coal, in a process that both heats the ore and creates a chemical reaction that removes the oxygen, converting it into CO2. This is why steelmaking accounts for around 7-8% of global emissions, the majority of which is derived from iron-making.
But green hydrogen could equally be used to produce so-called direct reduced iron (DRI), with the chemical reaction only producing steam (H2O), thus making it a far more environmentally friendly, albeit more expensive, method.

This green iron can later be used to produce green steel in an electric arc furnace powered by renewable energy.

Quebec and the neighbouring province of Newfoundland and Labrador host several iron-ore mines and iron transport infrastructure, meaning that a DRI export project may ultimately prove the most economic option if the scheme goes ahead.

But H2GS also says that it is under pressure to expand its green steel production capability beyond Europe.

“We bring with us a portfolio of customers who want to have supply in North America,” Henrikson told Bloomberg in Ottawa, where he was part of a Swedish business delegation led by H2GS equity investor Marcus Wallenberg that met Canadian officials including Prime Minister Justin Trudeau.

H2GS has several customers lined up for its Boden plant in Sweden, scheduled for final investment decision (FID) in the coming months and commercial operation by 2025, many of which already have international operations.

German auto giant Mercedes-Benz, which has signed a deal to source steel from the Boden plant for some of its European factories, earlier this year agreed a memorandum of understanding (MoU) with H2GS to investigate green steel procurement for its operations in North and South Amercia.
H2GS’s other customers include US conglomerate Cargill and German auto technology firm ZF, which operates across 32 different countries, including Michigan in the US and Ontario, Canada.

The green steel process requires huge amounts of renewable energy to produce green hydrogen (using electrolysers) and to power electric arc furnaces — which is likely why it is considering a scaled-back version of the project as well.

“It will depend on the dialogue we have with authorities in Canada regarding power allocation,” Henrikson said.

The company is looking for up to 700MW for the whole process, not much compared to Quebec’s 46GW of hydropower. However, the province’s power grid interconnects with those from major demand centres in Ontario, New Brunswick and the northeastern US.

So while Quebec’s power mix is 94% hydropower, alongside 5% wind, it can experience bottlenecks in winter, meaning it has to use fossil gas-power to fill the gap.

“Fairly early, we could see that Quebec has this perfect place with a combination of logistics ready and a certain quality of iron ore,” Kajsa Ryttberg-Wallgren, the head of H2GS’ hydrogen business told Bloomberg, adding a note of caution: “No green power, no project.”
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H2 Green SteelCanadaQuebecHydropowerUS
Published 10 October 2023, 08:07Updated 10 October 2023, 08:28