Swedish green steel startup Stegra AB has received a major boost. The company was given 390 million kronor from Sweden’s Energy Agency. This is about forty million dollars. The money was confirmed on Wednesday.

The support comes with a rule. Stegra must gather enough extra funding by the spring of 2026 to finish its project. The grant also covers only a small part of what Stegra asked for. The company had applied for 1.6 billion kronor in support, so it received only about a quarter of that amount.

Stegra is still looking for a lot more money. It needs about one billion euros to build its first steel plant in Boden, a town in northern Sweden. Costs have gone up, and earlier government funding came later than expected. So far, the company has already raised about six and a half billion euros through investor money, loans, and public funding.

Part of Stegra is owned by Vargas Holding, a group that also supported the battery company Northvolt, which later went bankrupt.

The Energy Agency explained the importance of this project. Its Director General, Caroline Asserup, said Sweden’s industry is moving toward becoming free from fossil fuels. She said this shift will make Sweden stronger and help reduce pollution. She also said government help is needed so companies can make big technological changes.

This new grant was given under a program called Industriklivet. The European Commission has approved the funding. Stegra had already received 1.2 billion kronor from this program before.

Stegra’s plan is to build a steel mill that uses hydrogen instead of fossil fuels to make iron. This will help Sweden speed up its move toward cleaner steel production. It is an important step for Sweden to reach its goal of becoming fossil free by the year 2045.

In 2022, the iron and steel industry produced more than one third of Sweden’s industrial emissions. Most of these emissions came from the production process itself.