The Swedish Energy Agency said Wednesday it was giving some $40 million in support to low-carbon steelmaker Stegra, amid fears surrounding the ambitious startup’s finances.
Stegra is building a new steel mill it says will produce steel using technology that gives off 95 percent less CO2 emissions than traditional methods.
Approximately 60 percent of the work has been completed.
In October, Stegra announced another round of financing to bring in an additional 10 billion kronor ($1 billion) to cover higher project costs.
“The project has great potential to accelerate the transition in the iron and steel industry,” said a Swedish Energy Agency statement.
It is awarding Stegra 390 million kronor through the “Industrial Leap” programme, which is part of the EU initiative NextGenerationEU.
The agency noted that Stegra had previously been granted 1.2 billion kronor from the programme.
The additional support “increases Stegra’s chances of securing the additional capital needed” to complete the project, the agency said.
In early November, French investment fund Hy24 — a major shareholder in Stegra — called for the government to step in to offset the increased costs.
Stegra’s finances have in recent months come under increased scrutiny, and observers have started making comparisons to another former leader of Sweden’s green industrial boom, battery maker Northvolt.
Northvolt was seen as a cornerstone in European efforts to catch up with Chinese battery producers before production delays and its mounting debts led it to declare bankruptcy in March.
Behind Stegra is investment firm Vargas Holding, which was also a co-founder of Northvolt.
Approximately 6.5 billion euros have already been invested in the project, raised from both loans and equity.
Speaking at a conference in Stockholm in early November, Stegra CEO Henrik Henriksson denied the company was in “crisis”.
“We are proceeding with our project at full speed,” Henriksson said, while adding that they had already secured about half of additional financing needs from prior investors.
