Spanish steel producer Hydnum Steel has secured a EUR 150 million investment commitment from Spain’s state-owned development finance institution, COFIDES, marking a significant milestone in the development of the Iberian Peninsula’s first clean steel manufacturing facility. The investment forms part of the Co-investment Fund (FOCO), which is managed by COFIDES and aims to accelerate strategic industrial projects that promote sustainability and economic growth.
The planned steel plant will be located in Puertollano, in the province of Ciudad Real, and is expected to become one of Europe’s most advanced low-carbon steel production facilities. Hydnum Steel intends to manufacture approximately 2.7 million tonnes of flat steel annually by using electric arc furnace (EAF) technology powered by renewable electricity and green hydrogen. This production model is projected to reduce Scope 1 and Scope 2 carbon emissions by as much as 98% compared with conventional blast furnace steelmaking, positioning the facility as a benchmark for sustainable steel production.
The EUR 150 million commitment represents only one part of a much larger financing framework valued at more than EUR 1.5 billion. Hydnum Steel expects around EUR 600 million to come from equity investments, while nearly EUR 1 billion will be secured through debt financing. The project has also received financial backing under Spain’s PERTE II programme, which supports industrial decarbonization initiatives and promotes cleaner manufacturing technologies across the country.
Initially announced in 2023, the project has made substantial progress over the past year. Hydnum Steel has secured a 500 MW electricity grid connection at the Brazatortas node, ensuring sufficient renewable power to support future operations. The company has also obtained favorable hydrological clearance for the proposed site, confirming environmental suitability for construction. Furthermore, the public consultation process concluded without major objections, clearing another important regulatory hurdle.
Construction activities are expected to begin with earthworks before the end of 2026. The company has also strengthened the project's commercial outlook by securing purchase agreements covering the entire output from the plant’s first production phase for its initial five years of operation. This early demand provides revenue visibility and demonstrates strong market confidence in low-carbon steel products.
The project reflects the accelerating transition of Europe’s steel sector toward cleaner production technologies as governments and industries invest heavily in decarbonization. By combining renewable electricity, green hydrogen, and electric arc furnace technology, Hydnum Steel aims to reduce environmental impact while meeting the growing demand for sustainable flat steel from automotive, construction, renewable energy, and manufacturing industries. Once operational, the facility is expected to strengthen Spain’s position in Europe's emerging green steel market and contribute significantly to regional industrial development.
Impact on Product and ChemAnalyst Tracked Chemical Prices
Hydnum Steel’s clean steel project is expected to increase long-term demand for green hydrogen, renewable electricity, and electric arc furnace raw materials while supporting greater consumption of recycled steel scrap. Construction activities may also boost demand for industrial gases, specialty coatings, lubricants, and infrastructure materials. From a ChemAnalyst perspective, the project is unlikely to influence chemical commodity prices immediately. However, over the medium to long term, stronger investment in green hydrogen infrastructure could support firmer prices for hydrogen-related chemicals and industrial gases, while increased renewable energy deployment may improve supply efficiency and gradually stabilize production costs for downstream chemical manufacturers across Europe.
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