Middle East and North Africa Poised to Lead Global Green Steel Revolution, Says IEEFA Report

In a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA), the Middle East and North Africa (MENA) region has the potential to emerge as a global leader in green steel and the burgeoning green iron trade. Leveraging its abundant solar energy resources, the region could capitalize on producing green hydrogen for direct reduced iron (DRI)-based steelmaking. The strategic positioning allows MENA to cater to the growing steel markets in India and Europe.

Simon Nicholas, IEEFA’s lead steel analyst, emphasizes the need for swift and decisive action by MENA to seize this opportunity amidst rising competition from traditional iron ore mining nations like Australia, Brazil, and Canada. Instead of exploring inefficient and costly exports of green hydrogen, the report suggests prioritizing domestic use in DRI plants.

The global steel sector is transitioning towards DRI technology, powered by green hydrogen, making MENA’s existing DRI-based steel sector advantageous. As the world decarbonizes its steel industry, iron production is expected to dislocate from steel production, creating opportunities for regions with access to renewable energy resources.

While some may advocate for carbon capture and blue hydrogen, the report suggests that green hydrogen will soon outcompete on both cost and emissions fronts. The MENA region’s access to high-grade iron ore is set to increase, with major players like Vale planning green iron “Mega Hubs” in the Middle East.

With Europe leading in green steel demand and a carbon border adjustment mechanism in place, MENA’s low-carbon steel industry could gain a competitive edge. Additionally, MENA is well-positioned to supply India, a key global steel demand growth market. The region’s shift towards domestic use of green hydrogen aligns with emission reduction targets and prepares its steelmakers for the evolving global iron and steel sector.