Mercedes-Benz AG and H2 Green Steel secure supply deal and an MoU to establish North American supply chain
Mercedes-Benz signed a supply agreement with Swedish start-up H2 Green Steel (H2GS) over approximately 50,000 tonnes almost CO₂-free steel per year for its European press shops and deepened its partnership through a Memorandum of Understanding (MoU) with the aim to establish a sustainable steel supply chain in North America.
After taking an equity stake in H2GS in 2021, the new supply agreement enables Mercedes-Benz to bring almost CO₂-free steel into series production. The partner plans to start its production during 2025.
As part of a broader effort to decarbonize the supply chain, Mercedes-Benz and H2GS agreed to aim to establish a supply chain for green steel produced in North America for local Mercedes-Benz manufacturing plants. Extending the strategic partnership with H2GS to North America marks another important milestone in increasingly pursuing the strategy of procuring close to Mercedes-Benz production sites.
“With the supply deal of around 50,000 tonnes almost CO₂-free steel from H2 Green Steel for our manufacturing plants in Europe, Mercedes-Benz and H2 Green Steel are accelerating the creation of a decarbonized, regional and resilient steel supply chain. At the same time, we are taking our partnership to the next level with the aim of establishing a sustainable steel supply chain in North America, another important step towards making the auto industry more resilient and sustainable.”
Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG. Chief Technology Officer, Development & Procurement
“Together with our strategic partner H2 Green Steel we’ve achieved the next milestone of our local for local strategy in procurement. Based on our initial investment into H2 Green Steel we now have a finalized relevant supply agreement for Europe and are looking at establishing a sustainable steel supply with H2 Green Steel in North America.”
Dr. Gunnar Güthenke, Head of Procurement and Supplier Quality, Mercedes-Benz Cars
Almost CO₂ free manufacturing technology
By using a new, innovative manufacturing process, the production of steel at the H2GS production site is almost CO₂-free. By contrast, steel produced using a classic blast furnace, emits an average of more than two tons of CO₂ per ton. In the new process, the supplier uses hydrogen and electricity from 100% renewable energy sources instead of coking coal in steel production. The hydrogen serves as a reduction gas, which releases and binds the oxygen from the iron ore. Unlike the use of coking coal, this does not produce CO₂, but water vapor. H2GS aims to achieve a footprint of 0.4t CO₂ per ton of steel at start of supply.
“H2 Green Steel exists because pioneering companies in the automotive industry, like Mercedes-Benz, signaled the transition in the steel industry was too slow for them to meet their climate targets. Working side-by-side with Mercedes Benz, we have a partner with whom we can raise the bar when it comes to supply chain emissions, circularity and social sustainability. They are a very strong player to liaise with for our European operations, but naturally also as we endeavor into the steel value chain in North America.”
Henrik Henriksson, CEO, H2 Green Steel
Decarbonizing the supply chain
Mercedes-Benz is working with all its suppliers towards a net-carbon neutral supply chain from 2039 at the latest. To achieve its ambitious climate goals the luxury carmaker is retooling its supply chain to focus on the prevention and reduction of CO₂ emissions rather than off-setting. Already today, the brand with the three-pointed star has introduced low-CO₂ steel, made from scrap, into four series models. This allows CO₂ emissions for the respective steel grades to be cut by more than 60%. Moreover, Mercedes-Benz recently announced to bring aluminium with almost 70% CO₂-reduction compared with the European average into series production as the lightweight material is becoming increasingly important for electric vehicles. At the same time, Mercedes-Benz aims to increase the share of secondary raw materials in its passenger car fleet to an average of 40%. Mercedes-Benz and H2GS agreed to collaborate on levers to increase the scrap content accordingly.
Actively pursuing a responsible and sustainable supply chain
In addition to consequently reducing CO₂ emissions, the company is committed to a responsible steel supply, relying on the application of recognized standards and robust certificates. Mercedes-Benz and H2GS share the same understanding of sustainability and intend to establish highest standards in terms of human rights due diligence along the steel supply chain. Mercedes-Benz is a member of the Responsible Steel Initiative and is actively involved in the development of a certifiable sustainability standard for the steel industry. The aim is to ensure environmentally compatible and socially acceptable steel production along the entire value chain.
About Mercedes-Benz
Mercedes-Benz has set itself the target of making its fleet of new vehicles net carbon-neutral over the vehicles’ entire life cycle by 2039. When it comes to sustainability, the company is focused on the consistent reduction of CO₂ emissions as well as the preservation of resources. In 2020, Mercedes-Benz Cars and Mercedes-Benz Vans sent out an ambition letter to suppliers of production materials. This was a declaration of intent on the supply of net carbon-neutral products and established prior approval as a prerequisite for awarding contracts. Suppliers representing almost 90% of Mercedes-Benz's annual purchasing volume have already signed the letter, among them many steel suppliers.
The vehicle manufacturer’s “Design for Environment” approach takes resource preservation from the very earliest stages of product development into account. Together with its partners, Mercedes-Benz is researching more sustainable material technologies and working intensively towards circularity.
About H2 Green Steel
H2 Green Steel (H2GS AB) was founded in 2020 with the ambition to accelerate the decarbonization of the steel industry, using green hydrogen. Steel, which is one of the world’s largest carbon dioxide emitters, is the company’s first business vertical. The founder and largest shareholder of H2 Green Steel is Vargas, which is also co-founder and one of the larger shareholders in Swedish battery maker Northvolt. H2 Green Steel is headquartered in Stockholm, Sweden, with its first green steel plant under development in Boden, northern Sweden. www.h2greensteel.com
Further information about Mercedes-Benz is available at www.mercedes-benz.com. Press information and digital services for journalists and multipliers can be found on our Mercedes me media online platform at media.mercedes-benz.com as well as on our Mercedes-Benz media site at group-media.mercedes-benz.com. Learn more about current topics and events related to Mercedes-Benz Cars & Vans on our @MB_Press Twitter channel at www.twitter.com/MB_Press.
Mercedes-Benz AG at a glance
Mercedes-Benz AG is part of the Mercedes-Benz Group AG with a total of around 170,000 employees worldwide and is responsible for the global business of Mercedes-Benz Cars and Mercedes-Benz Vans. Ola Källenius is Chairman of the Board of Management of Mercedes-Benz AG. The company focuses on the development, production and sales of passenger cars, vans and vehicle-related services. Furthermore, the company aspires to be the leader in the fields of electric mobility and vehicle software. The product portfolio comprises the Mercedes-Benz brand with the brands of MercedesAMG, MercedesMaybach, MercedesEQ, GClass as well as products of the smart brand. The Mercedes me brand offers access to the digital services from Mercedes-Benz. Mercedes-Benz AG is one of the world's largest manufacturers of luxury passenger cars. In 2022 it sold around two million passenger cars and 415,300 vans. In its two business segments, Mercedes-Benz AG is continually expanding its worldwide production network with around 35 production sites on four continents, while gearing itself to meet the requirements of electric mobility. At the same time, the company is constructing and extending its global battery production network on three continents. As sustainability is the guiding principle of the Mercedes-Benz strategy and for the company itself, this means creating lasting value for all stakeholders: for customers, employees, investors, business partners and society as a whole. The basis for this is the sustainable business strategy of the Mercedes-Benz Group. The company thus takes responsibility for the economic, ecological and social effects of its business activities and looks at the entire value chain.
