MENA Region Can Lead Global Green Iron Trade Using Solar Hydrogen Advantage

The Middle East and North Africa region is well-positioned to become a global leader in green iron and steel production by leveraging its existing direct reduced iron technology base alongside abundant solar resources for cheap green hydrogen. IEEFA analysis warns that the window for MENA to establish dominance is narrowing as competition grows from iron ore producers in Australia, Brazil and Canada.

MENA's steel sector holds a structural advantage: it already relies on direct reduced iron technology using gas, rather than the coal-based blast furnaces that dominate global steelmaking. The region has established access to direct reduction-grade iron ore — a commodity representing only 3% to 4% of global iron ore trade — and its solar resources can underpin cheap green hydrogen production in the near future. Vale, the world's largest producer of DR-grade iron ore, is planning green iron Mega Hubs in the Middle East to produce hot briquetted iron for local use and export.

As the global steel sector decarbonises, iron production is expected to increasingly separate from steel production, relocating to regions with cheap renewable energy. MENA is geographically well-placed to supply both Europe — where carbon border adjustment mechanism requirements will drive green steel demand — and India, the world's key steel growth market. IEEFA cautions that carbon capture utilisation and storage is not a viable alternative, citing a history of significant underperformance; the IEA's 2023 Net Zero Roadmap concluded that CCS has largely been characterised by underperformance.

IEEFA recommends that future DRI-based steel plants in MENA be built hydrogen-ready for early conversion from gas to green hydrogen. Steelmakers in South Korea and Japan are already planning HBI imports from the Middle East. A refocus from green hydrogen exports toward domestic industrial use could also help MENA nations reduce domestic emissions as international pressure on emissions ambition intensifies. Saudi Arabia, Oman and the UAE all have expansion plans for DRI-based plants that must eventually transition to green hydrogen to meet evolving definitions of green steel.

Key figure — 3%-4% — direct reduction-grade iron ore's share of total global iron ore trade