Germany’s SHS or Stahl-Holding-Saar Group said on Thursday it had secured a €1.7 billion ($1.83 billion) financing package for its Power4Steel project, marking a major step toward producing green steel and decarbonizing its operations.
The funding, among Europe’s largest for industrial transformation, ensures full financing for the entire project. SHS subsidiaries Dillinger and Saarstahl will implement the plan, aimed at cutting carbon emissions from steelmaking through hydrogen-based technologies.
“This marks another key milestone on our path toward a low-carbon future,” said Stefan Rauber, CEO of SHS Group and chairman of the management boards of Saarstahl and Dillinger in a statement. “Climate protection, innovation and competitiveness can – and must – advance together.”
Funding Structure Combines Public and Private Support
The financing was arranged through a consortium of national and international banks, blending corporate and investment components.
Export credit agencies OeKB of Austria and SACE of Italy are backing the investment, while Germany’s federal and Saarland governments are contributing under a €2.6 billion program to transform the regional steel sector.
ING acted as documentation agent, UniCredit as ECA coordinator and agent, and Deutsche Bank as co-ECA coordinator as well as intercreditor, security and facility agent.
Lazard, Hogan Lovells and Freshfields advised SHS and the lenders, while Rothschild & Co provided earlier financial guidance.
Industry, Finance and Government Align on Climate Goals
Markus Lauer, CEO of SHS Group and chief financial officer of Dillinger and Saarstahl, said the financing reflects strong collaboration between industry and finance.
“The successful completion of this financing shows how industry, finance and government can align toward a shared goal,” Lauer said. “It sends a strong signal for the long-term viability of the Saarland steel industry and the future of green steel in Europe.”
Christian Lattwein, head of finance at SHS Group, said the agreement demonstrates the potential of joint action. “This step proves what can be achieved when all stakeholders work together toward decarbonizing steel production,” he said.
Hydrogen Technology to Cut Emissions by More Than Half
The Power4Steel project includes building a direct reduction plant and two electric arc furnaces at SHS’s Dillingen and Völklingen sites. These will gradually replace existing blast furnaces and converters.
By using hydrogen instead of coal, SHS expects to cut carbon emissions by about 55 percent by 2030. The company aims for climate-neutral steelmaking by 2045 and to become the largest green steel producer in its peer group.
“This financing milestone shows that our commitment to climate-neutral steelmaking is not only feasible but financially viable,” Rauber said.
Germany’s steel sector is among Europe’s most carbon-intensive industries. Projects such as Power4Steel are central to the country’s efforts to reach net-zero emissions by mid-century.
SHS Group’s investment underlines how heavy industry is leveraging public-private partnerships to deliver green steel solutions while maintaining global competitiveness.
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