Cargill, a leader in the global iron ore supply chain, and Blastr Green Steel AS ("Blastr"), a leader in steel product development, today signed a strategic framework agreement reflecting a strong shared commitment to realizing the Blastr Green Steel project to radically decarbonize steel production. The agreement covers several parts of Blastr's integrated value chain, including iron ore supply, offtake, product sales, logistics and financial services, as well as a $10 million investment by Cargill in Blastr's planned Series A financing round.
Framework of the agreement
Over the past year, Cargill and Blastr have built a strong relationship, reflected by the signed agreement. The focus is Blastr's plan for an integrated green steel value chain that has the potential to reduce Scope 1-3 C02 emissions* per ton of steel by more than 90%. This will be enabled by a business model that provides low carbon footprint for industrial steel production and a platform for further growth. Initially, Blastr is developing a 6 million metric ton (Mt) DR-grade pellet plant and a 2.5 Mt direct-reduced iron (DRI-EAF) plant with its own green hydrogen production.
The agreement includes the supply of iron ore to the Blastr pellet plant, the offtake and sale of direct reduction (DR) pellets, iron briquettes (HBI) and ultra-low carbon steel products, scrap procurement, environmentally friendly shipping and logistics solutions, and working capital and risk management services.
"Today's agreement underlines our joint ambition to realize the Blastr Green Steel vision to significantly reduce CO2 emissions along the steel value chain. We are very pleased to further strengthen our collaboration with Cargill and enter into a long-term strategic cooperation in which Cargill also becomes a shareholder. Cargill's access to raw materials and end customers, combined with innovative trading, transportation and offtake solutions, takes us a big step forward in realizing green steel production on a large scale," said Hans Fredrik Wittusen, CEO of Blastr Green Steel.
Blastr and Cargill have signed a $3 million convertible loan agreement as part of the deal. This brings Cargill's equity participation in Blastr's Series A financing planned for the second half of 2023 to a total of $10 million. Cargill will continue to support Blastr in the development and commercialization of ultra-low carbon steel products for the European market. The parties will continue to leverage their respective capabilities to accelerate the development of Blastr Green Steel.
"Cargill is pleased to partner with Blastr in the development of this transformative project. This supply chain framework agreement is a significant step forward in providing solutions to our customers and a demonstration of Cargill's commitment to accelerate the development of new process routes that will enable the transition to a lower carbon, high ESG steel industry. Cargill will work with Blastr throughout the supply chain from raw materials to steel to enable the development of transparent, certified supply chains and create strategic flows to steel end customers in the growing green steel market segment. This brings us one step closer to our goal of creating a responsible and sustainable iron supply chain that contributes to the well-being of the world," said Lee Kirk, managing director of Cargill Metals.
Cargill and Blastr will finalize the definitive agreements in the coming months. This will then cover the areas of strategic collaboration as the companies continue to work closely together to realize the common goal of bringing low carbon steel to global customers.
