Ukraine could become a major supplier of DRI to the EU

Ukraine is home to 5 billion tons of magnetite ore, the main raw material for direct reduced iron (DRI) production, which is growing strongly in Europe. Thus, it can be argued that Ukraine is best positioned to become a major supplier of DRI raw materials to the EU.

This is stated in GMK Center’s study “Green Transformation of the EU Steel Industry in 2025-2035 and Prospects for Ukrainian Steel Industry”.

According to analysts, potential commercial supplies of DRI raw materials from Ukraine in the medium term amount to 20-25 million tons. At the same time, the potential growth in demand for DRI raw materials in the world in 2030, according to the announced projects, is 180 million tons.

Creating an internal DRI market in the EU

While existing European steel companies are announcing tentative DRI/HBI projects, new players are planning to build commercially oriented facilities.

Projects such as H2 Green Steel (Stegra), GravitHy, and BlastrGreenSteel could create a domestic market for hot briquetted iron in the EU.

Metinvest and Danieli plan to meet the needs of their electric arc furnace plant, which will produce flat products, by building a DRI plant. Potential investments in the project could amount to €2.5 billion, and DR pellets will be supplied from Ukraine.

“Supplying iron ore for DRI production and replacing pig iron supplies to the EU with green HBI will allow Ukraine to integrate into European green value chains. For this purpose, Ukrainian enterprises such as Ferrexpo, Metinvest, ArcelorMittal Kryvyi Rih will need access to European funds,” emphasizes Stanislav Zinchenko, CEO of GMK Center.

As GMK Center reported earlier, global direct reduced iron (DRI) production in 2023 increased by 6.5% compared to 2022 – to 135.7 million tons. This is a record high.

Earlier, Yuriy Ryzhenkov, CEO of Metinvest Group, explained why the global supply of direct reduced iron (DRI), hot briquetted iron (HBI) and pig iron will gradually increase.

In October, Italian steelmaker Acciaierie d’Italia (ADI) and DRI d’Italia, a subsidiary of state investment agency Invitalia, signed a memorandum of understanding to build a DRI plant at the Taranto site.