The Swedish Energy Agency is to provide SEK56 million (£5m) to a Carbon Dioxide-free steel project.
Steel refiners SSAB, mining company LKAB and Vattenfall have agreed to contribute the remaining SEK46 million (£4.1m), bringing total funding for the four-year research initiative up to SEK102 million (£9.1m).
They will also form a corporate joint venture in spring.
The companies aim to come up with a steel manufacturing process emitting water instead of Carbon Dioxide, by using Hydrogen instead of the current procedure based on blast furnaces burning coal and coke.
The initiative is divided into three phases: a pre-feasibility study to run through the end of 2017, followed by research and testing in a pilot plant until 2024.
The final step will involve carrying out testing in a full-scale demonstration plant through to 2035.
The Swedish Energy Agency have previously supported the plan with SEK7.7 million (£700,000) in funding for the feasibility study.
Jan Moström, CEO and Group Manager of LKAB, said: “It’s a real inspiration that the Swedish Energy Agency is helping to support Swedish companies in their efforts to introduce new innovative, environmentally-friendly manufacturing processes.”
A report last year claimed the steel sector has made no progress in reducing emissions in a decade, despite accounting for 7% of all global Carbon Dioxide emissions.
An expert panel has been established to advise upon and champion the UK’s low carbon metal industry.