Importing green iron will reduce steel production costs in Europe – research

European steelmakers can reduce costs while protecting value chains by supplementing domestic production with imports of green iron, according to a new analysis by Agora Industry.

Favorable policies, coupled with strategic partnerships, also enable importers and exporters to reduce emissions and strengthen operational resilience.

Based on an in-depth assessment of the German steel sector, researchers conclude that integrating HBI imports into domestic production could reduce steel production costs in Europe by 12-15% by 2040. It is noted that green iron is the most energy-intensive stage of production.

“Trade in green iron could become a strategic pillar of European industrial policy,” said Julia Metz, director of Agora Industry.

According to her, the EU and national governments must ensure that the Clean Industry Agreement strengthens the sustainability, competitiveness, and climate-adapted global economy. Securing leading markets for green steel at home and building partnerships abroad is an important part of this strategy.

Researchers propose a three-phase strategy for the EU. The first phase is to replace blast furnaces with hydrogen-based direct reduced iron (DRI) plants, scaling up renewable energy and hydrogen infrastructure to increase the sector’s sustainability.

The second phase involves developing green iron value chains within the EU and building a strong single market for green steel.

The third stage is to establish strategic international partnerships to help diversify supply chains, mitigate the risks associated with increasing hydrogen emissions, and reduce costs.

The report is based on technical and economic modeling of the unit cost of producing 1 ton of steel. As noted, importing green iron from the Middle East or North Africa could reduce steel production costs in Germany by approximately 12%. Supplies from Australia, Brazil, or South Africa could provide even greater savings, reducing costs by 15% compared to domestic production.

It should be recalled that Rio Tinto has expressed doubts about the prospects for the development of the green iron industry in Australia. The company cites a lack of economic incentives for this sector, which would help decarbonize metallurgy. Earlier, BHP also noted that it is too expensive for the country to develop this sector and that the investments would not pay off.