Tuesday the reported news about Norwegian company Blastr Green Steel’s gigantic steel plant project in Inkoo quickly also sparked critical voices.

Among other things, S-bank’s investment manager Mika Leskinen estimates on Twitter that the probability of the project’s realization is perhaps ten percent.

Professor at the University of Oulu Jukka Kömi assesses to STT that the project’s published schedule in particular is completely unrealistic.

Both finance and technology are open. What is published is really only the intention and the place. So what should the Norwegians realistically think of the project?

Employment pension company CEO of Varma Risto Murto has been examining investments and investment targets with a critical eye from different roles for decades. So let’s ask him.

Murto has thought about the matter just in time: According to him, the Inkoo factory project is part of a new phenomenon where large industrial projects are also launched with a start-up spirit.

Therefore, the project must be viewed with the same eye as other start-ups.

“Traditionally, start-up culture has been seen in much smaller companies that do not require such large investments and process know-how. We are also used to the fact that a significant part of these companies fail, it is part of the nature of the operation,” he says.

Beginners only a small part of growth companies become success stories. The same probably also applies to industrial start-ups, although their logic is inevitably different.

While the development of a successful mobile game or software can already be done by, say, students and with relatively little funding, building a steel, battery or car factory requires billions of euros in capital, several years of time and process industry experience.

“The threshold for success is even a decade higher,” Murto puts it.

The most famous an example of a successful industrial start-up would be Tesla, which makes electric cars. The traditional car industry was surprised and shocked by Tesla’s ability to quickly set up a successful car company.

In the Nordic countries, an almost similar miracle has been achieved by the battery factory company Northvolt. The Swedish company was born almost from nothing only six years ago, i.e. in 2017. Many doubted the small company’s resources and ability to build a complex process industry.

But that was the only way the company managed to collect the billions required to build the factories and acquire the necessary know-how. The first factory in Skellefteå in northern Sweden is already in operation. The construction of at least four other factories is already planned in various stages.

Otherwise, the industrial start-up culture seems to be flourishing in Sweden. Some of the same investors as in Northvolt are also involved in the Swedish H2 Green Steel, which has already raised funding for the construction of a green steel factory.

Sweden also has, for example, growth companies interested in building nuclear power. The energy crisis and the green transition therefore attract young experts to unexpected fields.

Of the successful ones despite the examples, the Inkoo factory project still has many high thresholds before the foundation stone is laid.

“My assumption is that the carbon dioxide emissions of traditional steel must be priced through emission rights before emission-free steel can become profitable,” says Murto.

The competition for funding and other limited resources is also fierce. Not many carbon dioxide-free steel mills can fit in the Nordic countries. SSAB is already far ahead in its own, and H2 Green Steel is also far ahead of the Norwegians.

Before in order to obtain financing for the project, a credible profitability calculation must be presented, and there should also be customers ready to buy emission-free but more expensive steel.

Murto thinks that the reason behind the early announcement of the project is at least the need to find these potential customers.

Perhaps the most credibility of the entrepreneurs behind the project is eaten by the blatantly unrealistic schedule. CEO of Blastr Hans Fredrik Wittusen told HS that the investment decision will probably be made in 2025. Still, the possible factory is said to start already in 2026.

It is simply not possible to build a factory that quickly.

S-bank Leskinen first states that the estimate of ten percent probability was drawn out of a hat. However, there is a reasoned idea behind the assessment. There are still many challenges ahead of the steel mill project, not the least of which is financing.

Compared to, for example, Northvolt’s example, the availability of financing has tightened considerably.

“A couple of years ago, it would have been much easier, because now interest rates have risen and central banks’ actions are sucking liquidity from the market,” says Leskinen.

A widow however, believes that funding for good projects can still be found, because the challenges related to the energy system and the green transition are so great and solutions must be found.

“But first it should be proven that the project is good. I could see that in the early exit of the company, it might be in the interest to throw such an intention into the air and then wait to see what kind of response would come from Finland or another country,” he says.

Even if nothing came of the Norwegian project in the end, even the intention is, on the other hand, a sign that the rapid growth of renewable electricity production in Finland will attract this type of investment to the country.

“I would put the brakes on this project, because it is not clear at all. Of course, I hope it will come true. But we will certainly see more projects of this type in the future,” says Leskinen.