Spain’s state co-investment fund backs Hydnum green steel plant with €150m

Hydnum Steel has secured a €150 million investment from COFIDES, the Spanish state-owned fund manager, towards its greenfield low-carbon steel plant at Puertollano in central Spain. The money comes from the co-investment fund FOCO, which COFIDES manages on behalf of the Spanish state.

The plant is designed for an annual capacity of 2.7 million tonnes of low-CO2 steel. Hydnum puts its Scope 1 and 2 emissions at 98% below the conventional blast furnace and basic oxygen furnace route. That figure rests on the plant drawing its heat from electricity rather than coal, and on the carbon intensity of the power it buys.

The €150 million sits inside a wider financial plan worth €1.5bn. Roughly €600m of that is equity and about €1bn is debt. State money entering at the equity layer gives private lenders a clearer view of the capital stack, which has been the sticking point for most European green steel projects announced since 2021.

Two of the harder consents are already in hand. Hydnum has approval from the Guadalquivir Hydrographic Confederation for hydrological works around the site, and it has secured 500 MW of access capacity to the Spanish national grid. Grid connection queues have delayed several comparable projects across Europe. Construction is scheduled to start at the end of 2026.

First phase targets hot-rolled coil

The opening phase covers a 1.5 million tonne a year electric arc furnace mini-mill, with hot charging from a continuous casting machine straight to a rolling line, according to McCloskey’s Global Green Steel Profile. The output is hot-rolled coil and hot-rolled pickled and oiled coil. The mill is specified to run on 100% fossil-free energy.

Hydnum said “the project has garnered significant interest from potential clients, having reached agreements covering 100% of the production capacity of the first phase for its initial five years of operation.” Locking in offtake before construction has become the standard route for European greenfield low-CO2 steel, because lenders will not price merchant risk on a product with no established market.

That market remains small. European green steel supply has so far come from trial plants with thin volumes, existing electric arc furnace flat producers, and steelmakers running mass-balance accounting. Buyers have cooled on the mass-balance approach and now favour steel with genuinely low embedded emissions.

Demand is growing from a low base, with new buyers making trial purchases. Recent deals for smaller lots of green hot-rolled coil have cleared at premiums of €150-180 a tonne. Whether that premium holds once Puertollano and its peers reach full output is the open question for anyone underwriting the sector.