Hitachi Energy Passes on Stegra Funding Amid Green Steel Hurdles

Hitachi Energy's Decision on Stegra AB Funding

Hitachi Energy Ltd. has decided not to inject additional capital into Swedish green steel startup Stegra AB, despite the company's ongoing efforts to raise more funding for its first plant. The Japanese electrical equipment supplier first invested in the project in 2022 as part of a strategic partnership. Hitachi Energy's decision comes amid Stegra's urgent need for €1 billion in new financing to complete construction in Boden.

The plant, expected to produce 2.5 million tons of green steel annually by 2027, has raised €6.5 billion to date through a combination of equity, debt, and public grants. Stegra's chairman, Shaun Kingsbury, has said the capital raise will likely be finalized in the first quarter of next year, but the absence of support from Hitachi Energy and other minor shareholders remains a concern.

Hitachi Energy continues to provide critical electrical infrastructure for the project, with a contract valued in the multi-billion-krona range. The firm's Swedish unit head, Tobias Hansson, emphasized that the project is progressing according to schedule and that the company is being paid on time for its deliveries.

Risks to the Outlook

Stegra's funding situation has been complicated by rising costs and delays in government support. While the startup has secured a significant portion of its required capital, the lack of further backing from Hitachi Energy adds uncertainty to its ability to meet its financial targets. Hansson acknowledged the challenges but said the original investment was never intended to yield financial returns, framing it instead as a strategic move.

Hitachi Energy's stance mirrors that of other minority shareholders who have not committed additional funds. This has led to questions about the likelihood of the capital raise being fully completed and whether the project will remain on track for its 2027 launch.

What This Means for Investors

Despite the funding hurdles, Hitachi Energy remains a key supplier to Stegra and is not abandoning the project. Hansson confirmed that the company is in the midst of delivering its electrical infrastructure and has no plans to withdraw from the partnership. The firm also stressed that it visits the project site monthly and remains confident in the project's direction.

For investors, the situation highlights the risks associated with green energy startups relying heavily on public funding and private equity. While Stegra has raised a substantial amount so far, the withdrawal of potential investors like Hitachi Energy signals the challenges of maintaining momentum in a capital-intensive industry.

Hitachi Energy's contract value and ongoing role in the project suggest it still sees long-term value in supporting green steel development, even without additional equity investment. For Stegra, the next months will be critical in demonstrating its ability to secure the remaining €1 billion and reassure stakeholders that the project remains viable.