September 2021
Several steel producers have already announced their plans for converting their BF operations to the less carbon intensive DRI/EAF technology. For the first half of 2021, many steel producers have been reporting record high revenues and operating EBITDA. The extraordinary financial results are driven by high steel prices, supply constraint issues and unprecedented government stimulus. With the growing rise of accounting for scope 1 and 2 carbon emissions, perhaps this windfall will accelerate growth in more DRI/EAF projects.

AME estimates investments in new projects for five sites utilising DRI/EAF technology is approximately US$8,971m. The investment projects range from 2024 to 2028 and are categorised by expected commissioning year. We note that for, one project, Metinvest Ukraine at this stage the commissioning date is unknown. 




ArcelorMittal Dofasco and the Canada government will invest approximately US$1.44bn over the next seven years in decarbonisation technologies at the steel facility in Hamilton. Its current BOF with 4.2Mt of crude steel capacity will be replaced with a 2Mt DRI facility and an EAF with crude steel capacity of 2.4Mt. The transition is contingent on support from the governments of Canada and Ontario, which will contribute approximately US$325m.

The new DRI and EAF are expected to be in production by 2028 and, once operational, will reduce carbon emissions at the facility by 60%. The project is likely to provide 2,500 jobs during the engineering and construction phase. ArcelorMittal believes its current employees (and new positions), training and development will require approximately 160,000 hours to transition the workforce to the new decarbonisation steelmaking facility.

Algoma Steel has been provided government support for green steel technology transformation. The government will invest a total of US$331m over a four-year period to transform the facility to an EAF steelmaker. The funding will be distributed from two sources – Canada’s Strategic innovation Fund (SIF), a government initiative to expedite Canada’s decarbonisation projects, will invest up to US$157m. Also, with agreement in principle the Canada Infrastructure Bank will invest a further US$174m.

The proposed EAF transformation has the potential to reduce Algoma Steel’s carbon emissions by approximately 70%. The project is expected to create 500 jobs during the construction phase and via subcontracting. The announcement is a significant step towards reducing carbon emissions for strong and sustainable steel operations in Sault Ste. Marie, Ontario.



ArcelorMittal Sestao will construct the world’s first commercialised zero carbon steel plant in Spain. The investment of approximately US$1.2bn is the result of a memorandum of understanding signed with the Government of Spain for construction of a green hydrogen direct reduced iron (DRI) plant in Gijon, including a new EAF.

The construction of the new green hydrogen DRI unit will have a capacity of 2.3Mt, with around 1Mt of DRI transported to Sestao for the purpose of providing feedstock. It is expected the plant will be producing zero carbon emissions by 2025. The plant will produce products mainly for the automotive and construction industries. Under the plan, the power for all steelmaker assets at the site will be supplied by renewable electricity. 

Metinvest may build a new steelmaking facility in Ukraine, with the potential construction sites being Zaporizhzhia and Mariupol. The investment required would be approximately US$3.5-4bn, for a crude steel capacity of about 4-4.5Mt. The new EAF steelmaking plan will include two DRI modules, two electric-arc furnaces and two continuous casting machines.

The company is preparing for decarbonisation in the future by using the most advanced technology to enable lower carbon steel end products for the consumer. The future technologies of steelmaking are EAF and hydrogen based. Once constructed, natural gas based DRI technology will be used to produce EAF steel. Moving forward, gas can be replaced with hydrogen, which can help reduce greenhouse gas emissions to zero.

AME estimates crude steel capacity in new projects for five sites utilising EAF technology is approximately 13.7Mt. We note that for, one project, Metinvest Ukraine, with crude steel capacity of 4.5Mt, at this stage the commissioning date is unknown. Many of the top steel producers in the US, such as Commercial Metals Company (CMC), Nucor, Steel Dynamics and others, have steel making assets which are companywide 100% EAF and have been for many years. However, this configuration of steelmaking assets was largest due to the US having relatively large supply of steel scrap available in their domestic economy and not from the motive of producing green steel.  




United Metallurgical Company (OMK) will build a pellet DRI direct feed for an EAF steelmaking facility. The new complex will include DRI with capacity of 2.5Mt and an EAF with crude steel capacity of 1.8Mt, with planned commissioning by 2024. Total investment is approximately US$2bn and construction will take place at OMK’s existing Vyksa Metallurgical Plant (VMZ) located in Nizhniy Novgorod region.

The facility currently manufactures large diameter pipes for oil and gas industry and railway wheels for freight, passenger, and high-speed train sub-sectors. Once complete the new facility will achieve a 70% reduction in carbon emissions compared to traditional blast furnace technology. The implementation of the technology will represent a very short production chain, with iron ore feed to steelmaking facilities with continuous supply of DRI pellets to and EAF installed in one site.   


Blast Furnace Optimisation

Not all new investments are going to be in the DRI/EAF space. Companies which have BF operations will find ways to optimise the assets on their balance sheet. For example, Cleveland Cliffs has BF operations in Middletown, Burns Harbor, Indiana Harbor, Dearborn, and Cleveland, with eight of its BF’s utilising natural gas as both a power source and reducing agent. According to the company, its Middletown steelmaking operations can reduce its CO2 by 9% when using natural gas in a BF compared with coke only.

Machine learning technologies, or AI, appear to be more prevalent as steelmakers find a competitive advantage using big data analytics. One desirable purpose is to find production gains from using fewer raw materials or from energy savings. For instance, Metinvest has utilised machine learning for gains in blast furnace efficiency. Metinvest has been able to reduce the fuel consumption of its blast furnaces by controlling the silicon content in its iron.

The company commenced the pilot project with Azure Data Factory and Azure Machine Learning, and it is now looking at rolling out the technology across all its furnaces. With the aid of Azure Machine Learning, Metinvest was able to decrease its silicon variability from 0.16% to 0.1%. These efficiency gains will enable savings by reducing the coke usage.


Blast Furnace Investments

Magnitogorsk Iron and Steel Works (MMK) will decommission three blast furnaces’ and construct a new blast furnace #11 with planned commissioning by 2024. The investment is approximately US$828m, with crude steel capacity and pig iron capacity of 3.8Mt and 3.7Mt, respectively. The new investment will use the most up-to-date available technology in the market. The site will also include a recycling steam power plant with capacity of 100MW and investment of US$292m.

BlueScope’s Port Kembla facility is planning to reline the currently mothballed #6 blast furnace. As part of its pre-feasibility assessment, the suggested capital cost would be up to US$615m and would most likely be invested between fiscal years 2023 and 2025. The company considered the option of an EAF, however it ruled this out as Australia has insufficient availability of prime scrap and high electricity costs.

ArcelorMittal Kryvyi Rih will modernise its blast furnace #9 to increase hot metal capacity by 36%. The investment will be approximately US$270m and is expected to be complete towards the end of 2023. The purpose of the modernisation will be to optimise raw material consumption at the plant to enable not only sinter feed as a feedstock, but pellets as well. The plant currently has capacity to produce 9.2Mt of pig iron, and after the modernisation this will increase to approximately 12.5Mt. The new investment will also extend the operating lifetime of the furnace and make its production operations more cost efficient. 


Final Thoughts

The World Economic Forum (WEF) suggests now is a crucial time for green steel initiatives as approximately half of Europe’s steel assets are up for reinvestment within the next several years. If ‘green technologies’ are not brought into the market quickly enough the risk of having high-carbon investments for another twenty years is likely. However, the transition to low/zero carbon steelmaking will take some time and current blast furnace assets will be utilised and optimised providing they generate reasonable returns to shareholders/stakeholders.

It’s almost every week that steel companies are providing details or updates of their decarbonisation strategies. Recent industry activity includes co-operation with steel producers and raw material suppliers for the decarbonisation of the entire steel supply chain. Many steel producers have long-term target spread over several phases for the path to net zero steelmaking.

Thysenkrupp Steel has set clear pathways to become a leader of climate-neutral steelworks. The transformation plan at Duisburg has the potential to be used as a blueprint for the transition towards a competitive, climate-neutral industry that contributes to innovation and value creation. Thysenkrupp will invest approximately US$1.7bn for implementation of its strategy by 2030 and up to US$6.8bn for the complete switchover. The specific plans include replacing four blast furnaces by using green hydrogen by 2025 for DRI production. This includes innovative smelting units to turn the solid raw material into liquid pig iron.