Green steel pilot set to take off from Raipur with Matrix Gas using hydrogen for coal

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As India stays the course to go net-zero by 2070, it has taken the first steps to make green steel.

The steel ministry is set to kick off its first pilot project aimed at decarbonising the sector with Matrix Gas and Renewables leading the initiative from Raipur. The IPO-bound company will use green hydrogen as a substitute for coal in sponge iron manufacturing, potentially paving the way for more sustainable steelmaking across the country.

As the lowest bidder for the pilot project, Matrix Gas and Renewables will receive the letter of award (LOA) from the ministry in the coming week, Chirag Kotecha, who is the managing director of the Chhattisgarh-based company, told Moneycontrol in an exclusive interview.

Matrix is working with a consortium, which includes technology partners and the IIT Bhubaneswar, to develop an indigenous technology which will explore the use of green hydrogen to convert iron ore into sponge iron by removing oxygen. Coal or natural gas is used traditionally for this, but green hydrogen is a cleaner alternative because it produces only water as a byproduct, instead of carbon emissions.

"We will set up a 50-tonne-per-day plant focused on green hydrogen fuel production, which will serve as a prototype. We have secured capacity agreements with steel manufacturers in Raipur, and this is a build-operate project, fully funded through our own resources," Kotecha said. The company has set a Rs 400-crore budget for this project.

India aims to produce 5 million tonnes of green hydrogen by 2030. To access its potential use in the sector, a budgetary outlay of Rs 455 crore till FY 2029-30 has been earmarked. Earlier in the year, the steel ministry had appointed MECON as the scheme implementing agency (SIA) for the initiative. In June, MECON Limited invited proposals from prospective bidders for use of hydrogen in the DRI pilot plant, in the existing blast furnace and vertical shaft.

So far, 14 task forces have been set up by the ministry on different eco-friendly steel production, touching upon aspects such as raw materials, technology, and policy frameworks.

Electrolyser manufacturing

Matrix, along with its consortium partner Gensol Engineering, recently emerged as the winning consortium for a 237 mega watts (MW) hydrogen electrolyser manufacturing capacity PLI scheme, which was part of India's National Green Hydrogen Mission.

"We have secured a Rs 444-crore incentive for the capital expenditure involved in setting up the electrolyser manufacturing plant, based on a production-linked incentive. This facility will be established in Maharashtra, where the land has been finalised, and the technology is in place. We aim to achieve financial closure for this plant in November," Kotecha said.

The plant, expected to be commissioned by July 2026, will supply electrolyers for the company's hydrogen valley project in Pune and bio hydrogen project at NTPC Netra campus in Noida. It will start off with 350 MW operational capacity and will be expanded to 1 giga watt (GW) by 2028 and 2 GW by 2030.

"For the initial 350 MW, we anticipate a capex of Rs 700 crore, with a total of Rs 1,600 crore projected for the 2 GW capacity," Kotecha said. His company, which is expected to go public by the middle of FY26, is looking to raise Rs 1,000-1,200 crore of equity for its green hydrogen projects, electrolyser manufacturing plant, CGD and gas aggregation.