meed-logo

line1 line2 line3
SIGN IN / REGISTER

Gulf charts pathway to clean steel production

1 August 2024

 

Steel manufacturing accounts for 7%-9% of global carbon dioxide (CO2) emissions and is considered a hard-to-abate industry. With a forecast for strong growth in global steel production in the coming decades, changes need to be implemented to bring steelmaking in line with the UN Paris Climate Agreement goal of limiting global warming to 1.5 degrees Celsius.

The need for the international steel industry to slash CO2 and greenhouse gas emissions dominated the agenda at UN climate change summit Cop28 in Dubai last December, with about 35 companies and six industry associations, including the World Steel Association, endorsing the Industrial Transition Accelerator. The initiative aims to scale implementation and delivery of decarbonisation in the steel, aluminum, cement, transportation and energy sectors.

There are many levers for steel decarbonisation, including the electrification of heat generation, improving energy efficiency and increasing the utilisation of scrap steel. However, to reach net-zero, further steps are needed to address the emissions associated with coal’s role as a reducing agent in ironmaking. Breakthrough technologies that can accomplish this include hydrogen direct reduction to replace coal; carbon capture, utilisation and storage; and electrolysis-based, or green hydrogen-supported, production processes.

The Middle East and North Africa accounts for just 5% of global steel output. Despite this low market share, however, steelmakers in the region – particularly in the Gulf – have committed billions of dollars to investments in steel projects that could implement most proven clean technologies.

To reach net-zero, further steps are needed to address the emissions associated with coal’s role as a reducing agent in ironmaking

Saudi clean steel projects

Saudi Aramco, the kingdom’s sovereign wealth institution the Public Investment Fund (PIF) and Chinese steel manufacturing conglomerate Baoshan Iron & Steel Company (Baosteel) signed a joint venture agreement in May 2023 to establish an integrated steel plate manufacturing complex in Saudi Arabia’s Ras Al-Khair Industrial City.

The facility is expected to have a production capacity of up to 1.5 million tonnes a year (t/y). It will mainly cater to industrial sectors such as pipelines, shipbuilding, rig manufacturing, offshore platform fabrication and tank and pressure vessel manufacturing, as well as the construction, renewables and marine sectors.

The plant will be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace to reduce CO2 emissions from the steelmaking process by up to 60% compared to a traditional blast furnace. The DRI plant will be compatible with hydrogen without major equipment modifications, potentially reducing CO2 emissions by up to 90% in the future, Aramco says.

The partners have invited contractors to submit engineering, procurement, installation and construction proposals for the project, which are due by 30 July.

Separately, Indian industrial conglomerate Essar Group is advancing its planned $4bn Green Steel Arabia project, which will also be located in Ras Al-Khair. Essar’s integrated steel complex will have a production capacity of 4 million t/y, and a cold rolling capacity of 1 million t/y, along with galvanising and tin plate lines. The complex will also have two DRI plants, each with a production capacity of 2.5 million t/y.

In September 2023, Essar signed a memorandum of understanding (MoU) with Jeddah-based Desert Technologies to develop solar energy solutions to power its Green Steel Arabia project. Under the agreement, Essar and Desert Technologies will look to develop solutions for renewable energy generation – mainly solar photovoltaic power – and storage for the planned complex.

The parties will also explore opportunities for other similar projects in the region, Mumbai-headquartered Essar said at the time.

A third major clean steel project in the kingdom has been announced by Turkish steelmaker Tosyali Holding, which will invest up to $5bn in the venture. Tosyali said in January that it intends to produce steel with the help of green energy sources and will increase its solar energy output 10-fold to 2,500MW, up from the 240MW it currently uses.

Fuat Tosyali, Tosyali’s chairman, said the increase in solar output will be facilitated by a $1.5bn investment, as well as through plans to buy a stake in a hydrogen energy company.

UAE makes strides

Clean steel production efforts in the UAE have been led by Emirates Steel Arkan, the country’s largest steel manufacturer. The company has partnered with Japan's Itochu to develop a low-carbon iron processing plant in Abu Dhabi that will be capable of processing high-grade Brazilian iron ore into reduced iron, which will be sent to Japan.

The proposed plant will be built in collaboration with Japan’s JFE Steel and is expected to produce about 2.5 million metric tonnes a year of reduced iron starting in 2027. CSN Mineracao, a Brazilian company in which Itochu maintains a stake, will supply the iron ore.

Emirates Steel and Abu Dhabi National Energy Company (Taqa) have also started the concept design for an electrolyser plant that they are jointly developing. Powered by renewable energy, the plant will have a hydrogen output capacity of 160MW, which will be used in the production of steel.

Abu Dhabi aims to establish a large-scale steel production hub with an overall capacity of 15 million t/y. This projected capacity will be in addition to Emirates Steel Arkan's existing production level of 3.5 million t/y, according to the firm's group chief projects officer, Hassan Shashaa.

Meanwhile, Dubai-headquartered Liberty Steel signed an MoU in December 2023 with Abu Dhabi’s AD Ports Group to invest in a green iron production facility in Khalifa Economic Zones Abu Dhabi.

Under the MoU, the two companies will explore the establishment of a green iron production facility and related port infrastructure and conveyor system at Khalifa Port in Abu Dhabi. The MoU is part of Liberty’s early-stage concept development to convert its magnetite ore into green iron in the UAE, using gas and transitioning to green hydrogen once it becomes available at scale in the next decade.

Green steel producers [in Oman] could benefit from cheap, locally available green hydrogen feedstock

Oman’s green steel plans

The largest green steel project in Oman is being developed by Vulcan Green Steel (VGS), the steel arm of Vulcan Green, which is owned by India’s Jindal Steel Group. VGS broke ground on the estimated $3bn project in December 2023.

The planned facility, covering 2 square kilometres in the Special Economic Zone at Duqm (Sezad), will have two production lines of 2.5 million t/y each, comprising DRI units, an electric arc furnace and a hot strip mill. 

Set for completion by 2026, the planned facility will primarily utilise green hydrogen to produce 5 million t/y of green steel. This will make it the world’s largest renewable energy-based green steel manufacturing complex once it is commissioned.

Sezad could also host another large-scale green steel project if Japanese steel manufacturer Kobe Steel and Tokyo-based Mitsui & Company are able to achieve the final investment decision on a preliminary agreement they signed in April last year to develop a low-carbon iron metallics project.

The two Japanese firms agreed to conduct a detailed business study in line with the goal of commencing low-carbon dioxide iron metallics production by 2027. The project is expected to produce 5 million t/y of DRI using a process called Midrex, where DRI is produced from iron ores through a natural gas or hydrogen-based shaft furnace.

Green steel producers in the sultanate could benefit from cheap, locally-available green hydrogen feedstock if the Amnah consortium – which won the first land block contract that Hydrogen Oman (Hydrom) auctioned last year – achieves the financial investment decision on its planned project by 2026.

The estimated $6bn-$7bn project will supply green hydrogen to domestic and overseas steel producers, Amnah project director Mark Geilenkirchen told MEED last year.

The planned integrated facility is expected to have a capacity of 220,000 t/y of green hydrogen and will require up to 4.5GW of renewable energy capacity. Unlike other projects in the region that aim almost exclusively to export their green hydrogen derivative products such as ammonia, Amnah is considering converting or using green hydrogen to support sustainable steel production.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12176557/main.jpg
Indrajit Sen

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Navigating financial markets amid geopolitical fragmentation

    28 December 2025

     

    As we move towards 2026, geopolitical fragmentation is no longer a background risk that occasionally disrupts markets.

    It has become a defining feature of the global financial landscape. Shifting alliances, persistent regional tensions, sanctions and the reconfiguration of supply chains are reshaping how capital flows, how liquidity behaves and how confidence is formed.

    For firms operating in the Middle East, this does not simply mean preparing for more volatility. It means operating in a system where the underlying rules are evolving.

    For much of the past three decades, businesses and investors worked within a broadly convergent global framework. Trade expanded, financial markets deepened and policy coordination – while imperfect – created a sense of predictability. That environment has changed.

    Today, economic decisions are increasingly influenced by strategic alignment, security considerations and political resilience. Markets still function, but they do so in a more fragmented and less forgiving way.

    Shifting landscape

    One of the most important consequences of this shift is that risk no longer travels along familiar paths. In the past, geopolitical events were often treated as temporary shocks layered onto an otherwise stable system.

    Today, they shape the system itself. Trade flows are influenced as much by political compatibility as by cost efficiency. Supply chains, once optimised for speed and scale, are reorganising into regional or allied clusters. Financial markets respond not only to data, but to narratives about stability, alignment and long-term credibility.

    This change places greater pressure on firms that rely on historical relationships to guide decisions. Models built on past correlations – between interest rates and equity markets, or between energy prices and regional growth – are less reliable when markets move between different regimes. The challenge is not simply higher volatility, but the fact that correlations themselves can shift quickly.

    Monetary policy adds a second layer of complexity. Major central banks are no longer moving in step. The US, Europe and parts of Asia face different inflation dynamics and political constraints, leading to diverging interest-rate paths.

    For the GCC, where currencies are largely pegged to the US dollar, this divergence has direct consequences. Local financial conditions are closely tied to decisions taken by the Federal Reserve, even when regional economic conditions follow a different cycle.

    This matters because funding costs, liquidity availability and hedging conditions are shaped by global rather than local forces. When US policy remains tight, dollar liquidity becomes more selective. When expectations shift abruptly, market depth can disappear quickly.

    For firms with international exposure, long-term investment plans, or reliance on external financing, these dynamics require careful management. They cannot be treated as secondary macro considerations.

    Energy markets further complicate the picture. The Middle East remains central to global energy supply, which means geopolitical events often interact with oil prices and financial conditions at the same time.

    When shifts in energy expectations coincide with changes in global interest-rate sentiment, liquidity conditions can tighten rapidly. This interaction is well known in academic research on fixed exchange-rate systems, but its practical implications are often underestimated in corporate planning.

    Expanding vulnerabilities

    These dynamics expose clear vulnerabilities. Concentrated supply chains are more susceptible to disruption. Financing structures dependent on continuous market access are more exposed to sudden repricing. Risk management approaches that assume stable relationships between assets are more likely to disappoint. Operational risks – particularly in technology and data – are increasingly shaped by geopolitical considerations rather than purely technical ones.

    At the same time, the region enters 2026 from a position of relative strength. GCC economies benefit from fiscal buffers, long-term investment programmes and a growing perception of stability compared to other parts of the world. In an environment where uncertainty is widespread, predictability itself becomes valuable. Capital increasingly seeks jurisdictions that combine economic ambition with institutional credibility.

    The question, therefore, is not whether opportunities exist, but whether firms are prepared to capture them responsibly. This requires a shift in how future risks are assessed and embedded into decision-making. Linear forecasts and static plans are insufficient when the environment itself can change state. Scenario thinking must evolve beyond optimistic and pessimistic cases to reflect different combinations of geopolitical alignment, monetary conditions, and supply-chain stability. These scenarios should inform capital allocation, not sit in strategy documents.

    Liquidity and risk management discipline also become central. In both trading and corporate finance, experience shows that many failures stem not from being wrong on direction, but from being overexposed when conditions change. Scaling risk to market conditions, maintaining funding flexibility and understanding how quickly liquidity can evaporate are essential practices. This is as true for corporate balance sheets as it is for trading books.

    Operational resilience must be viewed through the same lens. Supply-chain redundancy, cybersecurity preparedness and data governance are no longer purely operational concerns. They influence financial stability, investor confidence and regulatory trust. In a fragmented world, operational disruptions can quickly translate into financial and reputational damage.

    Facing the future

    As we approach 2026, leadership in the Middle East faces a clear test. The global environment is unlikely to become simpler or more predictable. Firms that continue to rely on assumptions shaped by a different era will find themselves reacting rather than positioning. Those that invest in disciplined risk management, flexible planning and operational resilience will be better placed to navigate uncertainty and to turn volatility into strategic advantage.

    In this environment, risk management is not an obstacle to growth. It is the framework that makes sustainable growth possible.

    Ultimately – and this is an often overlooked critical point – none of these adjustments, whether in scenario planning, liquidity discipline, or operational resilience, can be effective without the right human capital in place. 

    Geopolitical fragmentation and financial volatility are not risks that can be fully addressed through models or policies alone. They require informed judgement, institutional memory and the ability to interpret weak signals before they become material threats or missed opportunities. 

    Firms that succeed in this environment will be those that deliberately invest in corporate knowledge: building internal capabilities where possible and complementing them with external expertise where necessary. This means involving professionals with the right background, cross-market experience and a proven, proactive approach to risk awareness and governance. 

    In a fragmented world, competitive advantage increasingly depends not only on capital or strategy, but on the quality of people entrusted with understanding risk, challenging assumptions and guiding decision-making under uncertainty.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15306336/main.gif
  • Oman’s growth forecast points upwards

    24 December 2025

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15306449/main.gif
    MEED Editorial
  • December 2025: Data drives regional projects

    23 December 2025

    Click here to download the PDF

    Includes: Top inward FDI locations by project volume | Brent spot price | Construction output

    MEED’s January 2026 report on Oman includes:

    > COMMENT: Oman steadies growth with strategic restraint
    > ECONOMY: Oman pursues diversification amid regional concerns
    > BANKING: Oman banks feel impact of stronger economy
    > OIL & GAS: LNG goals galvanise Oman’s oil and gas sector
    > POWER & WATER: Oman prepares for a wave of IPP awards
    > CONSTRUCTION: Momentum builds in construction sector

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15306140/main.gif
    MEED Editorial
  • Local firm bids lowest for Kuwait substation deal

    22 December 2025

    The local Al-Ahleia Switchgear Company has submitted the lowest price of KD33.9m ($110.3m) for a contract to build a 400/132/11 kV substation at the South Surra township for Kuwait’s Public Authority for Housing Welfare (PAHW).

    The bid was marginally lower than the two other offers of KD35.1m and KD35.5m submitted respectively by Saudi Arabia’s National Contracting Company (NCC) and India’s Larsen & Toubro.

    PAHW is expected to take about three months to evaluate the prices before selecting the successful contractor.

    The project is one of several transmission and distribution projects either out to bid or recently awarded by Kuwait’s main affordable housing client.

    This year alone, it has awarded two contracts worth more than $100m for cable works at its 1Z, 2Z, 3Z and 4Z 400kV substations at Al-Istiqlal City, and two deals totalling just under $280m for the construction of seven 132/11kV substations in the same township.

    Most recently, it has tendered two contracts to build seven 132/11kV main substations at its affordable housing project, west of Kuwait City. The bid deadline for the two deals covering the MS-01 through to MS-08 substations is 8 January.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15305745/main.gif
    Edward James
  • Saudi-Dutch JV awards ‘supercentre’ metals reclamation project

    22 December 2025

    The local Advanced Circular Materials Company (ACMC), a joint venture of the Netherlands-based Shell & AMG Recycling BV (SARBV) and local firm United Company for Industry (UCI), has awarded the engineering, procurement and construction (EPC) contract for the first phase of its $500m-plus metals reclamation complex in Jubail.

    The contract, estimated to be worth in excess of $200m, was won by China TianChen Engineering Corporation (TCC), a subsidiary of China National Chemical Engineering Company (CNCEC), following the issue of the tender in July 2024.

    Under the terms of the deal, TCC will process gasification ash generated at Saudi Aramco’s Jizan refining complex on the Red Sea coast to produce battery-grade vanadium oxide and vanadium electrolyte for vanadium redox flow batteries. AMG will provide the licensed technology required for the production process.

    The works are the first of four planned phases at the catalyst and gasification ash recycling ‘Supercentre’, which is located at the PlasChem Park in Jubail Industrial City 2 alongside the Sadara integrated refining and petrochemical complex.

    Phase 2 will expand the facility to process spent catalysts from heavy oil upgrading facilities to produce ferrovanadium for the steel industry and/or additional battery-grade vanadium oxide.

    Phase 3 involves installing a manufacturing facility for residue-upgrading catalysts.

    In the fourth phase, a vanadium electrolyte production plant will be developed.

    The developers expect a total reduction of 3.6 million metric tonnes of carbon dioxide emissions a year when the four phases of the project are commissioned.

    SARBV first announced its intention to build a metal reclamation and catalyst manufacturing facility in Saudi Arabia in November 2019. The kingdom’s Ministry of Investment, then known as the Saudi Arabian General Investment Authority (Sagia), supported the project.

    In July 2022, SARBV and UCI signed the agreement to formalise their joint venture and build the proposed facility.

    The project has received support from Saudi Aramco’s Namaat industrial investment programme. Aramco, at the time, also signed an agreement with the joint venture to offtake vanadium-bearing gasification ash from its Jizan refining complex.

    Photo credit: SARBV

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15305326/main.gif
    Edward James