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

The MENA region as defined by the World Bank (2003), © Furfur, CC BY-SA 4.0, via Wikimedia Commons (source: wikimedia)

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.

Top 10 steel producers in June 2024 (source: worldsteel)

According to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), this provides a solid basis for a transition to more environmentally friendly production methods, with green hydrogen increasingly replacing natural gas. Given the large number of DRI plants, the MENA region's transition to an H2DRI EAF system could begin immediately. The MENA region could replace up to 30 % of its natural gas consumption in existing plants with hydrogen without having to make major modifications. In the long term, the region could switch completely to the production of carbon-free steel.

This transition is supported by the region's immense solar energy potential. With the ability to theoretically generate more than 5.8 kWh/m2 per day, the region is predestined for the economic production of green hydrogen. The region is forecast to significantly increase its renewable energy capacity by 2050, with the potential to add 83 GW of wind and 334 GW of solar capacity by 2050, increasing the share of wind and solar energy from 1% and 2% to 9% and 24% respectively.

The geographical advantages of the region, in particular the large, uninhabited areas with intensive solar radiation, facilitate the extensive implementation of photovoltaic systems, which are essential for the production of green hydrogen. This enables solar panels to be installed throughout the region without causing significant land-use conflicts.

The MENA region is excellently positioned to play a leading role in the global transition towards more sustainable steel production by proactively moving towards renewable energy and green hydrogen. By utilising its natural resources, technological capabilities and geographical advantages, the region could not only help achieve global carbon reduction targets, but also improve the region's economic sustainability and energy security.

Projected steel capacity increases 2024–26 by technology (source: OECD)

Green projects in North Africa

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.

The Chairman of Tosyalı Holding, Fuat Tosyalı, and Ahmed Gadalla, Chairman of Libya United Steel Company for Iron and Steel Industry (SULB), sign an agreement to build the world's largest DRI complex in Benghazi, Libya (source: Tosyali)

Mauritania is using its extensive iron ore resources to also jump on the green transformation bandwagon. The state-owned mining company SNIM is planning to double its iron ore production capacity to over 45 million tonnes per year over the next ten years. This expansion is to be complemented by the development of iron ore pellets that are suitable for modern steel production technologies. Mauritania is working closely with ArcelorMittal to expand its green steel production capacity, which will strengthen the country's industrial activities and its position in the global clean energy market.

Strategic realignment in the Middle East

Saudi Arabia, known for its dependence on oil exports, is in the midst of a strategic reorientation of its economy. With Vision 2030, an ambitious economic diversification plan, the Kingdom is striving to capitalise on its rich mineral deposits and make metals a new cornerstone of the economy. To support this endeavour, the country is hosting international forums and offering investment incentives to establish itself as a major player in the global metals and mining industry.

In parallel with the development of the metals industry, the Saudi steel market is also experiencing significant expansion, also driven by Vision 2030. Key players in this industry include Saudi Basic Industries Corporation (SABIC), the largest steel producer in the Middle East, and Rajhi Steel, with an annual production capacity of over 2.5 million tonnes. A construction boom, fuelled by major projects such as new cities, airports and hospitals, is driving demand for steel. Technological advances, including the introduction of artificial intelligence and robotics, are playing a crucial role in increasing efficiency and sustainability in the industry.

Riyadh, Kingdom Centre, ©muflih alhababi from Pixabay

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.

Groundbreaking ceremony at HyIron Oshivela Project (source: Namibia Investment Promotion and Development Board via LinkedIn)

Green steel production in East Africa: A paradigm shift through sustainable technologies

In East Africa, MENA's neighbouring region, a comprehensive transformation of steel production is also underway. The latest report by the Commonwealth Secretariat, "Towards a Green Steel Ecosystem in the East African Community", highlights the enormous opportunities for the East African Community (EAC) to develop a sustainable and environmentally friendly steel industry. This development could not only strengthen the regional economy, but also transform the steel sector into a multi-billion-dollar, low-carbon industry.

The EAC, which includes countries such as Burundi, the Democratic Republic of Congo, Kenya, Rwanda, South Sudan, Tanzania and Uganda, is experiencing a significant increase in demand for steel. This trend was evident between 2010 and 2019, with an annual growth of 11.4% in imports of iron and steel. In 2019 alone, Kenya and Tanzania together consumed over four million tonnes of steel, while demand in Uganda reached almost one million tonnes annually.

Identified solar photovoltaic and wind zones in EAC and region (source: “Towards a Green Steel Ecosystem in the East African Community“, Commonwealth Secretariat 2022)

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.

Logo wire MEA 2025 (source: Messe Düsseldorf)

Convincing premiere for wire and Tube Middle East Africa in Cairo

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