IEEFA Report Positions MENA as Potential World Leader in Green Steel Production

IEEFA has released a report arguing that the Middle East and North Africa region could become a global leader in green steel and the emerging green iron trade if it channels its solar energy resources into green hydrogen for direct reduced iron steelmaking rather than hydrogen exports. The report warns that the opportunity requires urgent action as competition from Australia, Brazil and Canada intensifies.

The IEEFA report, co-authored by lead steel analyst Simon Nicholas and steel analyst Soroush Basirat, finds that MENA's existing DRI-based steel sector — already using gas rather than coal — gives the region a significant structural advantage as the global steel industry transitions to green hydrogen. Vale, the world's largest producer of direct reduction-grade iron ore, is planning Mega Hubs in the Middle East to co-locate DRI plants and supply hot briquetted iron for export. South Korean and Japanese steelmakers are also planning HBI imports from the Middle East as part of their decarbonisation strategies.

The report explicitly discounts carbon capture and utilisation storage as a credible pathway for MENA steel decarbonisation, noting CCUS's poor track record. The world's only industrial-scale steel CCUS project, at Emirates Steel Arkan's Al Reyadah facility in the UAE, captured only 30% of CO2 in 2022 and uses captured carbon for enhanced oil recovery. IEEFA expects stricter definitions of green steel, near-zero emissions steel and low-carbon steel to emerge, which will render both gas-based DRI and CCUS-backed production ineligible for the label in major export markets.

The report identifies India as a key growth market for MENA green iron exports, noting that India's steel sector decarbonisation, while later than Europe's, could accelerate faster than anticipated given historical rates of technology adoption. Europe's carbon border adjustment mechanism will drive green steel demand, benefiting MENA as a geographically proximate supplier. Saudi Arabia's automotive manufacturing ambitions also position it as both a domestic consumer and potential export hub. MENA steel expansion plans in Saudi Arabia, Oman and the UAE should prioritise hydrogen-ready plant design.

Key figure — 30% — CO2 capture rate at the Al Reyadah steel CCS project in the UAE in 2022