Europe’s Green Steel Shift: Impact on MENA and Turkey
Europe’s transition to green steel is reshaping the steel landscape in the Middle East, North Africa and Turkey, but is it beneficial or challenging? Perhaps both.
Featuring insights from the Green Steel Profile report for the Middle East, Africa and Turkey, published by McCloskey in December 2024.
As the European steel industry embarks on a complex journey towards a green transition, steelmakers in the Middle East and North Africa (MENA) region and Turkey are following the trend, but in their own way. Europe is their largest neighboring market, and it would be unwise to ignore its green agenda unless you want to lose customers. However, MENA producers not only want to maintain their strong position in the EU market but are also preparing for substantial sales growth in the region and the European Green Deal will help them in this.
The MENA region is already dominated by electric arc furnaces (EAFs), with Turkey dependent on scrap and MENA countries relying on direct reduced iron (DRI). Remaining CO2-intensive blast furnace-basic oxygen furnace (BF-BOF) steel mills are implementing carbon-reducing technologies and considering new DRI-EAF capacities to complement or replace existing integrated production.
But the main role in the ongoing transition will be played by large-scale greenfield projects, which account for nearly half of all green iron and steel initiatives in the region. Almost all of these projects will rely on the use of natural gas as a reducing agent to produce DRI/hot briquetted iron (HBI). While hydrogen is also mentioned as a future alternative, the dominant combination of natural gas-based DRI and electric furnace emits on average half the CO2 of traditional blast furnaces.
The region is rich not only in natural gas but also in sunshine, land, seaports and capital. These factors create a supportive environment for the development of DRI/HBI production for internal consumption and, most importantly, for export to Europe, where high-quality iron feedstock for new EAFs is expected to be in high demand.
Our recent Middle East, Africa and Turkey Green Steel Profile report confirms the trend of Europe-oriented production. Upcoming regional projects, including South Africa, are expected to add much more DRI/HBI than steel capacity (see graph). Over the next decade, new projects should add 48.2 mtpa of new DRI/HBI capacity, compared to 33.6 mtpa of steel, some of which will replace existing CO2-intensive steel facilities.
Three major projects alone—the DRI/HBI production complex in Benghazi by Tosyalı and Libya United Steel Company for Iron and Steel Industry, the new DRI/HBI plant in Misrata by Libyan Iron and Steel Company and Danieli, and the DRI plant in Oman by Kobe Steel and Mitsui—could add more than 15 mtpa of DRI/HBI production, much of which would go to Europe.
The influence of the European green agenda can trigger even more changes in the MENA/Turkey steel landscape, as it brings not only clear benefits but also challenges. The expected transition from BF-BOF to EAF/submerged arc furnaces (SAF) in Europe will drive demand for high-quality scrap, a requirement for electric furnaces, even if they operate on DRI/HBI. This will intensify competition for scrap between Turkish mills and their European counterparts, who are already pushing to restrict EU scrap exports. As a result, we may see a partial transition of Turkish mills from scrap to DRI/HBI and other metallics, opening new opportunities for investors and iron ore producers in the MENA/Turkey region.
Not all green iron or steel initiatives in the region are at advanced implementation stages. Some were announced as memoranda of understanding, others are in the final approval phase, and some are in the active construction phase. Most are expected to be commissioned by 2030 at the latest, but there are also pilot projects that have already been launched.
For a more detailed picture of the green transition on a project-by-project basis, please refer to McCloskey’s Green Steel Profile report for the Middle East, Africa and Turkey.