Booming green steel demand fuels Blastr's €6B hydrogen-powered plant in Finland

Norwegian startup Blastr Green Steel is vying to stake a major claim in Europe's emerging green steel landscape with plans to build a hydrogen-powered steel plant in Inkoo, Finland.

The project, which is expected to begin production in 2028, will cost up to €6 billion.

US commodities giant Cargill Inc. will deliver the iron ore and other feedstock needed to run the facility, which will be built and grid-connected at the site of Finnish utility Fortum Oyj's former Inkoo coal-fired power station that was dismantled in 2020.

The Nordics have become a hub for green steel production in Europe, with the HYBRIT and H2 Green Steel projects being developed in northern Sweden.

At Blastr's planned facility in Inkoo, the role typically played by coking coal in standard steelmaking is being handed to hydrogen. Blastr CEO Hans Fredrik Wittusen described the plant not as pioneering but as a "fast follower."

"We're basing every single step of the value chain on established, proven technologies," Wittusen told S&P Global Commodity Insights, adding that the delivery challenge lies in making good choices in supplier selection to ensure the final product matches the specifications customers need.

Blastr's hydrogen electrolyzer system will be connected to a Finnish grid that is already largely decarbonized due to nuclear power, hydro and a booming wind sector. It also aims to source electricity via power purchase agreements and is weighing a strategic partnership with Fortum for energy sourcing.

Unlike Norway and Sweden, Finland is not split into different power price bidding zones. The country no longer runs subsidy auctions for onshore wind and solar, and Wittusen said projects like Blastr's will help enable new investments in the country.

"Developers need at least to some extent to have stable offtake from industry," Wittusen said.

Industry tie-in

Industry already makes up a large share of energy demand in Finland, at 52%, according to the International Energy Agency (IEA), compared with the average among IEA members of 36%.

Nearly half of Finnish demand stems from the paper and pulp industry, whose workforce Blastr is hoping to tap into for the 1,200 workers required to operate Inkoo.

According to the IEA, the legislative and industrial environment in Finland provides fertile ground for industrial decarbonization ventures.

"Finland is a world-level player in energy technology innovation," the IEA said in a May report on the country. "There is a focus on finding solutions for hard-to-abate sectors and on developing new energy technologies and services with the potential for global deployment."

Aside from the wind project pipeline, Wittusen is also optimistic on Finland's permitting and grid connection trajectory.

"[Grid operator] Fingrid Oyj is doing an amazing job and has been for the past 15 years," the CEO said. "They are building the road wider than it's needed for the current traffic. ... That's a very different picture than we see in Norway, for example, where the grid is always 5-10 years behind schedule."

Demand to outpace supply

Blastr, which is owned by Nordic investment firm Vanir Green Industries 1 AS, is in discussions with several strategic and financial investors around Series A funding, the company said.

It hopes to make a final investment decision on its Inkoo plant in 2025, with commissioning from 2027. The company aims to produce 2.5 million tons of steel at the site annually.

Financing for the multibillion-euro endeavor will be a mixture of equity and debt, and Blastr will also apply for funding under EU support programs.

Platts, part of Commodity Insights, assessed the price of Northwest Europe hot-rolled steel at €745 per metric ton on May 30, up 10% since the start of 2023. Green steel fetches a price premium of 20%-40% over the standard product, according to Wittusen, who expects the gradual elimination of free allowances under the EU's Emissions Trading System for the steel sector to increase the urgency for a pivot.

"The willingness to pay a premium is quite clear and quite obvious," the CEO said, with key offtakers like car manufacturers or construction companies now closing in on emissions reductions timelines for 2030.

The European green steel market is set to skyrocket, with demand between 30 million tons and 40 million tons of low-CO₂ flat steel products expected by 2030, according to Blastr, increasing toward 100 million tons by 2050.

With that in mind, Blastr hopes to build two more plants based on the original template. To support the Inkoo project, Blastr is planning a Norwegian production plant for direct reduction pellets — a component in the steelmaking process — as part of the €6 billion capex plan. Excess material not used in Inkoo will be shipped to third-party customers or future new sites.

Finland would be a strong contender for a second site, but the US is appealing as well, Wittusen said.

"The Inflation Reduction Act will accelerate the production of low-CO2 steel in the US [and] we are looking at the US as a potential location for another steel plant," the CEO said.

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