The green potential of the MENA region: A new chapter for the global steel industry

The MENA region (Middle East and North Africa) is on the cusp of a significant transformation of the steel industry. Due to its extensive natural resources, the region could not only meet its own demand for conventional steel through strategic positioning, but also become a leading global supplier of green steel. 

The region, which includes countries such as Iran, Saudi Arabia, Egypt, the United Arab Emirates and Algeria, is already a major player in the global steel market. The predominant technology is gas-based direct reduction iron electric arc furnace (DRI-EAF) technology. Countries such as Iran, Oman and Bahrain are known for their ability to produce DR quality pellets, which are critical to the DRI-EAF process. The steel and mining sectors' investment in the upstream value chain, which provides high-quality iron ore pellets for steel production, as well as extensive experience in steel production technologies, is fundamental to the transition to greener production. 

The MENA region can already point to remarkable progress in the introduction of green projects. These developments are not only a testament to the region's commitment to environmental protection but also to its ambitions to play a leading role in the global economy. Particularly in the area of steel production, countries such as Egypt, Mauritania and Libya are adopting innovative approaches to drive the production of green steel while diversifying their economic base. 

Egypt, which is investing heavily in green hydrogen and renewable technologies, is a prime example of the drive for sustainable change. With a committed investment of USD 40 billion, of which USD 12 billion is earmarked for pilot projects in the Suez Canal Economic Zone, Egypt is leading the way. The country is utilising its abundant sunlight to power around 60% of its energy mix from renewable sources by 2030. The steel industry, led by heavyweights such as Ezz El Dekheila Steel Company and Beshay Steel Co, plays a central role in this. These companies are not only important players on the local market, but also make a significant contribution to Egypt's economic development by exporting finished products. 

In Libya, Tosyalı, a leading global producer of green steel, has partnered with the Libya United Steel Company (SULB) to build the world's largest direct reduction iron (DRI) complex in Benghazi. This project, which includes advanced steel production technologies and the utilisation of hydrogen as a clean energy source, exemplifies Tosyalı's strategic expansion across three continents. The planned plant, which will specialise in the production of Hot Bricket Iron (HBI), will not only strengthen the local economy, but will also have a lasting impact on the industrial sector in the Mediterranean region. 

According to Khalid Al-Mudaifer, Deputy Minister of Industry and Mineral Resources, Saudi Arabia plans to invest around USD 12 billion in steel projects to increase production capacity and meet rising domestic demand as part of its economic diversification efforts. He emphasised that the ongoing construction projects, worth over 5 trillion riyals (US$1.33 trillion), will lead to a sharp increase in steel demand, which is expected to grow at least 2.5 times in the coming years. To further expand its steel industry, Saudi Arabia has partnered with China's Baoshan Iron & Steel, Saudi Aramco and the Public Investment Fund (PIF) to establish a joint steel venture. This new plant is expected to be operational by the end of 2026. In addition, in September last year, the Kingdom announced plans for three new steel production projects worth USD 9.32 billion, with a total capacity of 6.2 million tonnes, involving local and international investors. A further step towards consolidating the Saudi steel industry is the planned takeover of Saudi Iron and Steel Co (Hadeed) by the Public Investment Fund (PIF) from Saudi Basic Industries Corp (SABIC) for USD 3.33 billion. 

In addition to conventional steel production, Saudi Arabia has also taken significant steps to invest in the production of green steel and green hydrogen. The Essar Group, an Indian conglomerate, recently confirmed an investment of USD 4.5 billion to build a green steel plant in Ras Al Khaire. This plant is intended to meet local steel demand and support Saudi Arabia's plans to become an electric vehicle manufacturing centre. The construction of this plant, the first of its kind by Essar outside India, is expected to be completed by 2027 and will incorporate state-of-the-art gas-based direct reduced iron (DRI) and electric arc furnace (EAF) technologies. 

Increasing market development, combined with improvements in transport infrastructure and significant capacity in the private sector, positions the region ideally for the development of a green steel industry. A key factor supporting this transition is the abundant supply of renewable energy sources such as hydropower, geothermal and other renewables, which allow for more environmentally friendly production of steel. The increased use of renewable energy in steel production is an essential aspect of the transition to a more sustainable economy.  

However, the transition to a green steel ecosystem requires significant investment and political commitment. Coordinated efforts between governments, industry players and international partners are crucial to mobilising the necessary financial resources. With a global steel market worth over a trillion US dollars and expected to grow further, the transition to more sustainable production methods is not only an environmental but also an economic necessity.  

Since the early 2010s, the Commonwealth Secretariat has been supporting value addition in the minerals sector and the development of a regional steel industry. However, the path to a green steel ecosystem in East Africa also faces challenges, particularly in securing financing for large-scale infrastructure projects and new technologies. If these hurdles are overcome, the EAC could transform its steel industry into a sustainable and economically profitable sector that aligns with global decarbonisation goals and regional development priorities.  

Conclusion 

With extensive investments in green technologies and the strategic utilisation of natural resources, the MENA region is positioning itself as a dynamic and future-oriented player in the global market. The strategic focus on the expansion of renewable energy and the introduction of green hydrogen will not only help achieve global carbon reduction targets, but also improve the region's economic sustainability and energy security. In summary, the unique combination of solar energy potential, existing steel production infrastructure and advanced knowledge of DRI-EAF technology positions the MENA region as a key player in the global endeavour to produce low-carbon steel.