(Detroit / USA) – “The demand for green steel is increasing worldwide, especially among European automobile manufacturers,” recognizes the Institute for Energy Economics and Financial Analysis (IEEFA). A new study finds that the Middle East and North Africa (MENA) region can be a "pioneer in the global decarbonization of the steel industry" with investments in green hydrogen and renewable energy, according to the think tank deals with issues relating to the global energy sector. The method of choice: direct reduction (DRI) of iron ore with green hydrogen.
Direct reduction of iron ore
In traditional steel production, the oxygen is removed from the iron ore using carbon and coke in a blast furnace (reduction process). The pig iron that is tapped from the blast furnace is liquid and is poured out as ingots at the end of the process.
In contrast, the lower-emission direct reduction of iron occurs using gas - ideally with green hydrogen - at a lower temperature, and sponge iron is produced in pellet form. Several sponge iron pellets are pressed together to form a briquette and are melted in an electric arc furnace.
MENA already uses DRI procedures
In 2021, companies in the MENA region produced only three percent of the world's crude steel, the analysis found, but almost 46 percent of the world's DRI products. In addition, some of the largest iron ore pelletizing plants in the world are located there, so supply is not an obstacle unlike other regions.
The MENA region from Morocco to Iran. © UNICEF
“The MENA region can lead the world in immediately switching to renewable energy in the steel sector,” says report author Soroush Basirat. MENA has an “established supply of iron ore in DRI quality”. According to Basirat, the DRI process, which currently uses synthesis gas from natural gas or gasified coal, could be emission-free if green hydrogen and electric arc furnaces powered by green electricity were used instead.
“The knowledge of MENA countries about this special type of steel production is an invaluable advantage.” Compared to other regions, this means that there are no additional costs for replacing the basic technology. All new investments could be focused on expanding the production of green hydrogen and other renewable energies, the institute said.
Steel companies worldwide are working on the DRI process
The steel industry causes eight to eleven percent of global CO2 emissions. According to the Worldsteel Association, 2021 billion tons of steel were produced worldwide in 1,95, led by China with almost 1,04 billion tons. India (118 million tons), Japan (96 million tons) and the USA (85 million tons) follow far behind. Production in Germany was 40 million tons last year.
The global steel industry has been working - some for years - to convert their production to direct reduced iron in order to reduce emissions, many of them also working to integrate the hydrogen-based DRI process into their processes. Examples:
- The Luxembourg-based steel group ArcelorMittal SA wants to reduce its CO2 emissions in Europe by 2030 percent by 30 and produce climate-neutrally by 2050. In Germany, the group operates a factory in Hamburg with a DRI system and electric arc furnace, where the conversion to the use of hydrogen is being prepared. In Bremen and Eisenhüttenstadt, the blast furnaces were converted so that they can initially be used with natural gas and later with climate-neutral hydrogen.
- The oil multinational BP and the steel company Thyssenkrupp Steel Europa AG want to promote the transition of steel production to renewable energy and low-carbon hydrogen. The companies are examining the possibilities of supplying blue and green hydrogen as well as electricity from wind and solar energy in the form of power purchase agreements. Thyssenkrupp Steel currently produces eleven million tons of crude steel per year. By 2025, 400.000 tons of this are to be produced with reduced CO2 emissions.
- The Salzgitter AG reports a production volume of a good 2021 million tons in its 6,7 annual report. The group from Lower Saxony is working on its project called SALCOS (Salzgitter Low CO2 Steelmaking) to also produce raw steel in the future using green hydrogen and direct reduction. The most recent date mentioned as the start of production was “end of 2025”. Part of the green electricity will be supplied by newly built wind turbines on the company premises, among other things.
- The Australian steel manufacturer Blue Scope Steel Ltd. and Shell Energy Operations Pty Ltd are jointly planning renewable hydrogen projects at the Blue Scope Port Kembla steelworks in the Illawarra region of New South Wales. The first pilot project includes the development, construction and operation of a 10 megawatt electrolyser to test the use of green hydrogen in the blast furnace for low-emission steel production.
- The Spanish energy supplier Iberdrola SA and the Swedish steel manufacturer H2 Green Steel AB (H2GS) agreed in December 2021 to build a green hydrogen plant with an installed capacity of 1.000 megawatts. According to estimates, the investments amount to 2,3 billion euros. The fuel will power a direct iron ore reduction plant to produce crude steel with a capacity of around two million tonnes per year.
- The steel manufacturer SSAB, the iron ore mining group LKAB and the Swedish state-owned company Vattenfall SE founded the joint venture Hybrit Development in 2016. The companies want to create a completely fossil-free value chain from the mine to the finished steel and introduce the new technology in which hydrogen is used instead of coal and coke using the direct reduction process. Fossil-free steel is expected to come onto the market on an industrial scale in 2026. The production facility is being built in Gällivare in northern Sweden. The choice of location is based in particular on the proximity to the iron ore mines, existing logistics and access to fossil-free electricity.
While steel makers around the world are still setting up the infrastructure for DRI products in a time-consuming manner, in the MENA region, 30 percent of the previously used fossil gas in the existing fleet of DRI plants could be immediately replaced with green hydrogen without any major modifications, according to the company IEEFA study. After that, the region could soon “produce 100 percent carbon-free steel.” The countries of North Africa and the Middle East already had “excellent solar resources” for producing green hydrogen.
With almost five kilowatt hours per kilowatt of installed capacity per day, the solar power potential of the MENA region is well ahead of other regions of the world. © World Bank / IEEFA
According to the study, the cost of producing hydrogen through electrolysis in Middle Eastern countries is currently lower than that of blue hydrogen. The production of one kilogram of green hydrogen cost $2,59 in Qatar, $3,20 in Saudi Arabia, $3,55 in Oman and $5,14 in the United Arab Emirates. In contrast, the price of blue hydrogen produced by combining methane steam reforming and carbon capture and storage (CCS) is about $2022 per kilogram in the Middle East, the analysis says (all figures as of July XNUMX).
Photo above
ArcelorMittal factory in Bremen / © ArcelorMittal Germany Holding GmbH
The study "“Green Steel Opportunity in the Middle East and North Africa” is available free of charge as a PDF (26 pages)
