Sweden’s H2 Green Steel company said Wednesday it would supply German car maker Mercedes-Benz with 50,000 tonnes of steel made without using fossil fuels as of 2025.
The two companies also signed an agreement for the potential supply of green steel produced in North America.
H2 Green Steel, whose first plant is under construction in northern Sweden, plans to use hydrogen made from renewable energy to produce steel instead of highly-polluting coal used in traditional steelmaking.
A preliminary accord with Mercedes-Benz “has now been further developed into a binding agreement covering volumes of about 50,000 tonnes per year, which will be produced in H2 Green Steel’s green hydrogen-powered iron and steel plant in Boden in northern Sweden,” the two companies said in a joint statement.
With around 900 kilos (1,985 pounds) of steel needed per car according to industry data, the contract would enable Mercedes-Benz to produce around 55,000 cars with a lower CO2 footprint.
Mercedes-Benz sold around two million vehicles last year.
No financial details of the deal were disclosed.
“A memorandum of understanding has also been signed for the potential supply of green steel produced in North America,” the two companies said.
“We have talked to different stakeholders in both Canada and the US for some time,” H2 Green Steel chief executive Henrik Henriksson said, providing no other details.
H2 Green Steel says its method reduces emissions by 95 per cent, compared to traditional steel manufacturing.