Next milestone on the path to climate-neutral steel production: EUR 1.7 billion financing package for Power4Steel successfully secured

The financing was secured through a consortium of leading national and international banks and combines elements of corporate and investment financing. The investment component is supported by the export credit agencies OeKB (Austria) and SACE (Italy). Additional funding is provided through substantial equity contributions and direct financial support from the German Federal Government and the Saarland Regional Government under the EUR 2.6 billion programme for transforming the Saarland steel industry.

“This marks another key milestone on our path toward a low-carbon future. Building on the funding commitments made by the federal and state governments, the placement of orders for the core plant units and the securing of initial green hydrogen supplies, the successful completion of the overall financing package represents another decisive step towards the advancement of this unique project. We are firmly convinced that climate protection, innovation and competitiveness can – and must – advance in tandem. By implementing Power4Steel, we are demonstrating our long-term commitment to Germany as a centre of industrial excellence. Our sincere thanks go to all partners who have accompanied us on this path and supported us throughout the demanding financing process,” emphasised Stefan Rauber, CEO of SHS – Stahl-Holding-Saar and Chairman of the Management Boards of Saarstahl and Dillinger.

ING acted as Documentation Agent for the transition financing, UniCredit as ECA Coordinator and ECA Agent, and Deutsche Bank as Co-ECA Coordinator as well as Intercreditor, Security & Facility Agent. Lazard supported SHS as financial advisor, Hogan Lovells provided legal counsel to the company and Freshfields advised the banks. We also extend our thanks to Rothschild & Co for providing financial advice and support during an earlier project phase.

“We are grateful to our financing partners, who have demonstrated a clear commitment to supporting industrial decarbonisation in line with their own strategies. Through constructive collaboration, we were able to engage both established and new banking partners, all actively supporting the transformation initiative and backing our Power4Steel project,” explained Markus Lauer, CEO of SHS – Stahl-Holding-Saar and Chief Financial and Procurement Officer of Dillinger and Saarstahl. “The successful completion of this financing initiative is not only a decisive step for our project and its planned progression – it also demonstrates the extent to which industry, finance and government have aligned. This highlights the shared responsibility to advance the transformation toward climate-neutral steel production. This achievement sends a strong signal for the long-term viability of the Saarland steel industry and underscores the importance of cooperation and innovation within the energy transition,” continues Lauer.

Christian Lattwein, Head of Finance at SHS – Stahl-Holding-Saar, comments:
“This financing initiative demonstrates what can be achieved when all stakeholders – industry, banks and public partners – work together toward a common goal: making the decarbonisation of steel production a reality. We would sincerely like to thank our partners for their trust and their active contribution to this landmark step.”

As part of the Power4Steel project, a new direct reduction plant and two electric arc furnaces are under construction at the Dillingen and Völklingen production sites. These will gradually replace the existing blast furnaces and converters. Hydrogen-based steelmaking will enable a significant reduction in CO₂ emissions, with levels expected to drop by around 55 % by 2030. Fully climate-neutral production is envisaged by 2045. In the long term, SHS aims to become the largest producer of green steel within its peer group.

 

GLOSSARY

Corporate Financing

Corporate financing refers to the overall funding of a company, for example to cover ongoing operational costs, refinance existing loans or strengthen liquidity. It is not tied to a specific project but supports the company as a whole. Our transformation financing is a form of corporate financing, as it combines investment financing with additional components such as term loans.

Investment Financing

Investment financing refers to the funding of specific projects or assets, such as the construction of new production facilities or modernisation measures. In the case of Power4Steel, this specifically involves the construction of the new direct reduction plant and electric arc furnaces.

Export Credit Agency (ECA)

An Export Credit Agency (ECA) is a state-backed institution that supports and promotes the export of goods and services. It protects exporters and banks against default risks, thereby enabling more favourable financing conditions for international projects. In our case, the relevant agencies are OeKB (Austria) and SACE (Italy).

Documentation Agent

The Documentation Agent is the coordinating bank responsible for preparing, reviewing and managing all contractual documentation within a financing initiative. It ensures that all parties have consistent and legally compliant agreements.

Security & Facility Agent

The Security & Facility Agent manages securities and credit facilities (such as credit lines and guarantees) on behalf of all lenders. It acts as the central point of contact between the borrower and the banks regarding securities, disbursements and contract amendments.

ECA Coordinator

The ECA Coordinator is the bank responsible for overseeing communication and coordination with the Export Credit Agencies (ECAs). It ensures that all ECA requirements are met and that approval processes are managed efficiently.

ECA Agent

The ECA Agent is responsible for the operational execution and administration of ECA-backed loans. It ensures compliance with the terms of the export credit insurance and manages the ongoing coordination between the borrower, the lending banks and the Export Credit Agencies.