Salzgitter Group secures two ECA-covered Green Loan financings for a total amount of €500 million

Salzgitter group announces the signing of two export credit agency (ECA) covered Green Loan financings to support the decarbonization of its steel manufacturing operations.

The total amount of €500 million ECA-backed Senior Unsecured financing package consists of a €300 million export credit facility covered by SACE, the Italian Export Credit Agency, with SIMEST CIRR support in connection to the DRI (direct reduction of iron ore) plant supplied by Tenova/Danieli from Italy and a €200 million export credit facility covered by Oesterreichische Kontrollbank (OeKB), the Austrian Export Credit Agency, in connection to the EAF (electric arc furnace) supplied by Primetals from Austria. These facilities are among the first ECA-covered Corporate Green Loans in the steel sector worldwide and the first in Germany.
 
The SACE-covered facility has been structured by BNP Paribas (BNPP) in its role as Coordinating Mandated Lead Arranger (MLA), Lender, Agent and ECA-Agent and Bookrunner. The OeKB-covered facility has been structured by Commerzbank as Coordinating Mandated Lead Arranger (MLA), Lender, Agent and ECA-Agent. BNPP jointly with Commerzbank, in their capacity as Coordinators aligned the interest of the two involved ECA’s and SIMEST across facilities. Deutsche Bank coordinated the Green Loan classification across the SACE and OeKB-covered facilities and acted as Sustainability Coordinator, MLA and Lender. BNPP acted as MLA and Lender also on the OeKB-covered facility and UniCredit as MLA and Lender on the SACE-covered facility. The finance parties, SACE and SIMEST were advised by Norton Rose Fulbright, while Salzgitter AG was advised by Linklaters.
 
The loans, structured under Loan Market Association’s Green Loan Principles, will fund a portion of the €2.3 billion Phase 1 of SALCOS^® (Salzgitter Low CO₂ Steelmaking), a program aimed to decarbonize the production of the second largest steel producer in Germany by converting the manufacturing process from blast furnaces to DRI plant and electric arc furnaces fed by direct reduced iron, powered respectively by green electricity and green hydrogen. A second party opinion from ISS-Corporate assessed and confirmed the alignment of the loans with the Loan Market Association’s Green Loan Principles and EU Taxonomy.
 
With this program Salzgitter AG is a frontrunner in the decarbonization of the steel industry in Europe. Once completed in 2033, SALCOS^® will enable a 95% abatement of Salzgitter AG’s CO₂ emissions in steel manufacturing, reducing Germany’s aggregate CO₂ emissions by around 1%.
 
In October 2022, the project received the European Commission approval as an Important Project of Common European Interest (IPCEI) and was selected by the Federal Republic of Germany and the Federal State of Lower Saxony in April 2023 to benefit from public subsidies amounting to almost €1 billion.