Swedish green steel firm Stegra seeks another $1.1 billion in financing

STOCKHOLM, Oct 13 (Reuters) - Swedish green steel startup Stegra plans to raise up to around 975 million euros ($1.1 billion) in additional funding for the building of its plant in northern Sweden and the shoring up of finances, it said on Monday.

Stegra, formerly H2 Green Steel, said last year it had secured 6.5 billion euros in funding for the plant, which is under construction in Boden and will use hydrogen made on-site from renewable electricity in its production process.

CEO Henrik Henriksson said the new financing round aimed to fund higher project costs and offset some state grants that Stegra had been counting on but failed to secure. The funds will also boost the group's financial buffers, he added.

"We already have initial equity commitments from both founders and lead investors," he said in an emailed statement.

Sweden has led Europe's efforts to shift from fossil fuel-based industries to non-polluting energy, driven by cheap, carbon-free electricity. But its green transition has faced headwinds, such as the bankruptcy of battery maker Northvolt.

Hard-to-electrify industries that were seen as ideal candidates for green hydrogen, such as steelmaking and long-distance transportation, have found that the transition to the low-carbon fuel may be prohibitively expensive.

A Stegra spokesperson confirmed the amount of new funding, saying it would be composed of a mix of equity, debt and strategic partnerships and adding that it would be in addition to the previously announced 6.5 billion euros.

"We expect that this will carry us through the completion of the factory and the scaling up of volumes," she said.

Stegra said in a statement it is in advanced talks regarding outsourcing opportunities.