Europe’s First Merchant Hydrogen Iron Plant Gets €3B Order

GravitHy has secured a major contract with Danieli to build a hydrogen-based direct reduction plant at Fos-sur-Mer, France. Rated at 2 million tonnes per year of hot briquetted iron (HBI), a high-purity metallic feedstock for electric arc furnace (EAF) steelmakers, the facility is designed to achieve a 90% reduction in carbon emissions relative to conventional blast furnace ironmaking.

The order, announced in August 2026, positions GravitHy as Europe’s first independent merchant green iron producer at commercial scale. The project sits at the intersection of three structural shifts now reshaping the steel value chain: the decarbonisation of European steelmaking, the buildout of the green hydrogen economy, and a reordering of iron ore demand toward high-grade, direct-reduction-grade pellets.

What this project reveals matters well beyond one company and one plant. It signals where the green steel supply chain is heading, what inputs it will demand at scale, and which adjacent markets, from high-grade iron ore to electrolyser manufacturing, stand to be repriced if projects like this reach full operation.

A €3 billion bet on hydrogen iron at the heart of Mediterranean steelmaking

The numbers alone land the scale of the commitment:

• Production capacity: 2 Mt/year of HBI
• Total investment: exceeding €3 billion
• French government designation: project of major national interest
• August 2026: order placed with Danieli; notice to proceed with basic engineering issued

GravitHy’s business model is structurally different from most hydrogen-DRI projects in development across Europe. It is not a captive unit inside an integrated steelmaker. It is an independent merchant producer, designed to supply upstream metallics to multiple EAF operators rather than feed a single company’s own mills. A €3 billion independent green iron producer without a guaranteed captive customer signals that European industrial developers and their backers now believe a merchant market for certified low-carbon iron metallics is commercially viable, not theoretical.

Why Fos-sur-Mer

The location is deliberate. Fos-sur-Mer is a major industrial port situated to the west of Marseille on France’s Mediterranean coast, offering direct shipping access to steelmakers across Southern and Central Europe. The plant will sit adjacent to Marcegaglia’s new Mistral minimill, providing an immediate potential offtake partner at the fence line. The port infrastructure and shipping routes mean GravitHy can serve a broad regional customer base without being captive to any single one.

What the ENERGIRON Zero Reformer process actually does, and why it matters

The output parameters for GravitHy’s plant are consistent with a high-performing direct reduction facility: metallisation of up to 96% and carbon content of around 1%, with the flexibility to produce 100% HBI, 100% cold DRI (direct reduced iron), or a combination of both. Those numbers tell you the product is designed for high-efficiency EAF steelmaking, where metallisation and low residual content determine steel quality.

What distinguishes this plant is what sits behind those numbers. The ENERGIRON technology, which Tenova and Danieli jointly developed, operates via a vertical shaft furnace in which iron ore pellets move downward against an upward flow of hot reducing gas, progressively removing oxygen from the ore to produce metallic iron. In a conventional ENERGIRON configuration, that reducing gas is generated by reforming natural gas in an upstream reformer.

The ENERGIRON Zero Reformer configuration represents one of several competing technological pathways that have emerged as the leading candidates for green iron production at commercial scale, each with different trade-offs between capital intensity, hydrogen input requirements, and achievable emissions reductions.

The Zero Reformer configuration eliminates that reformer entirely. Hydrogen is supplied directly as the reductant. The plant’s process-gas heating system is electrically driven, replacing the combustion-based approach used in standard configurations. The result: the plant’s emissions profile is not hostage to natural gas availability or price, which matters for any investor or steelmaker evaluating long-run supply chain risk in a region where gas markets remain volatile.

GravitHy CEO José Noldin described the technology selection as a significant milestone toward delivering low-carbon iron at commercial scale. The distinction matters commercially: EAF operators willing to pay a premium for certified near-zero-emissions metallics need to know that the upstream supplier’s green credentials are not contingent on the price of natural gas next year.

90% fewer emissions, but at what cost and under what conditions?

According to Danieli, the Fos-sur-Mer plant is projected to cut CO₂ emissions by around 90% against the blast furnace route, keeping as much as 4 million tonnes of CO₂ per year out of the atmosphere when running at full capacity.

That headline figure deserves scrutiny, not because it is wrong, but because it is a ceiling rather than a guarantee. The 90% reduction is achievable when the plant runs on low-carbon hydrogen produced from low-carbon electricity. The actual emissions profile depends entirely on the carbon intensity of the inputs.

Three variables determine whether the business case holds between now and the targeted 2030 start-up:

• Power prices: GravitHy has entered a letter of intent with EDF for long-term electricity supply, a signal that power contracting is advancing. But the delivered cost of that electricity will set the floor for hydrogen production costs, and therefore for the price of every tonne of HBI that leaves the plant.
• Hydrogen cost trajectory: Green hydrogen produced via large-scale electrolysis carries a substantial cost penalty over conventionally produced hydrogen. GravitHy’s concept requires up to approximately 720 MW of electrolysis capacity to produce around 120,000 tonnes per year of low-carbon hydrogen on site. While that cost differential persists, green HBI will be more expensive to produce than conventional iron.
• EU carbon pricing: The EU Emissions Trading System (ETS) carbon price is the mechanism that makes conventional blast furnace steel progressively more expensive and green steel progressively more competitive. Where that price sits in 2030 and beyond will determine the size of the green premium that downstream steelmakers are willing, or compelled, to absorb.

EU ETS carbon pricing functions as the primary market mechanism that erodes the cost advantage of blast furnace steel over time, but the trajectory of allowance prices between now and 2030 involves significant uncertainty driven by policy reform cycles, industrial lobbying outcomes, and the pace of free allocation phase-down under the Carbon Border Adjustment Mechanism.

For investors or steelmakers evaluating offtake from this facility, the 90% figure is not a fixed property of the plant. It is a function of what the European energy and carbon markets look like when the facility reaches commercial operation.

“This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Financial projections and forward-looking statements are subject to market conditions and various risk factors.”

Where GravitHy sits in Europe’s green steel race, and what still has to go right

GravitHy is not building in isolation. Across Europe, a cohort of hydrogen-DRI projects is advancing: HYBRIT in Sweden (the SSAB, LKAB, and Vattenfall joint venture), thyssenkrupp’s hydrogen-DRI transformation at Duisburg, and ArcelorMittal’s planned DRI units across multiple EU countries. What separates GravitHy from every one of them is the merchant model. The others are captive units feeding their parent steelmakers’ own operations. GravitHy is building a standalone plant to sell green metallics on the open market.

European green steel economics are shaped by a layered set of cost pressures, from electricity and hydrogen input costs to carbon border adjustment exposure and financing terms for capital-intensive transition assets, and those layers interact differently for integrated steelmakers transforming existing blast furnace assets versus greenfield merchant producers like GravitHy.

What still has to go right

The August 2026 order authorises basic engineering. It does not authorise construction. The remaining milestones run in sequence, and each one must clear before the next can proceed:

1. FEED (front-end engineering design): Hatch is engaged and work is underway
2. Permitting: applications submitted July 2026; approvals pending
3. Final Investment Decision (FID): the FID is not expected to be taken before 2027
4. Construction: 2028-2030
5. Start-up: commercial operations are scheduled to commence by late 2030, with full production targeted across 2030-2031

The gap between the August 2026 order and the 2027 FID is where this project’s fate will be decided. Four conditions will determine whether FID proceeds and the project ultimately succeeds:

• Policy support: EU industrial strategy frameworks and national incentives for green steel production
• Carbon pricing trajectory: EU ETS price levels high enough to make conventional steel’s carbon cost a competitive disadvantage
• Green steel certification: Standardised certification schemes that allow downstream buyers to verify and market low-emissions steel
• Customer offtake commitments: Binding purchase agreements from EAF steelmakers willing to pay the green premium

The order announcement is a meaningful signal. It is not a guarantee of delivery. That is precisely the calibration investors and supply chain planners need when assessing this project’s risk profile.

What the Fos-sur-Mer project signals for iron ore, scrap, and the hydrogen economy

If delivered at full scale, GravitHy’s plant does not just change the economics for one company. It sends demand signals into three adjacent markets that investors across the resource and energy sectors should be tracking.

The DR-grade iron ore requirement is particularly significant. As hydrogen-DRI capacity grows across Europe, demand for pellets above 67% iron content tightens a supply pool that is already concentrated among a small number of global producers. For iron ore miners positioned with suitable high-grade product, the buildout of green steel capacity represents a structural demand shift, not a cyclical one.

The hydrogen economy read-through

The 720 MW electrolysis requirement at Fos-sur-Mer is not a rounding error. It represents one of the largest single-site hydrogen demand commitments in Europe, with direct implications for electrolyser manufacturers, renewable power developers, and energy infrastructure investors. Combined with the Mediterranean port location and access to Southern and Central European markets, GravitHy’s project is a demand signal for upstream inputs that currently have very few green-steel-oriented customers at commercial scale.

For investors in iron ore, scrap markets, or the hydrogen economy, this is not just a steel-sector story. It is a signal about where capital and demand are heading across an interconnected supply chain that stretches from mine to electrolyser to furnace.

For investors tracking the upstream implications of the green steel buildout, our deep-dive into iron ore supply concentration examines how the shift toward DR-grade pellet demand is beginning to reprice the premium between high-grade and standard-grade ore across the major seaborne trading routes.