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DRI Rising: The Slow Revolution in the Steel Industry

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DRI plant by Tenova in Gubkin, Russia. It operates using the Midrex process.

It was a shock for the industry: In early October, Handelsblatt reported that ThyssenKrupp's green steel project in Duisburg might be facing cancellation. One reason is the enormous costs of the direct reduction plant. Not only does the construction cost billions, but also the planned operation with green hydrogen (H2) from 2026 onwards. What makes this explosive: Besides ThyssenKrupp, almost every major industry player wants to produce steel using direct reduced iron (DRI) with H2. Is the future of DRI threatened overall? Not at all, because DRI is not just DRI. And the alternatives to H2 are performing increasingly well, as a look at the international development of DRI capacities shows. 

Traditional steel production is very CO2-intensive. According to the Federal Ministry for Economic Affairs and Climate Action (BMWK), in 2022, 6% of German emissions came from the steel industry, while in the entire industrial sector it was nearly 30%. A large portion of these CO2 emissions occurs during the reduction of iron ore using coke coal. This produces liquid pig iron, an important precursor in steel production. However, iron ore can also be directly reduced using coal, natural gas, or hydrogen. 

What is DRI? 

Because it produces less CO2, the resulting "sponge iron" (also known as "Direct Reduced Iron", DRI) is considered an important decarbonization lever for the steel industry. Its iron content is 92-95%. Unlike liquid pig iron from blast furnaces, DRI has a sponge-like porous consistency. Therefore, it contains impurities and must be compacted or melted before further processing. 

There isn't just one type of sponge iron: Depending on temperature, we distinguish between cold and hot DRI (Cold DRI/CDRI and Hot DRI/HDRI). CDRI is well-suited for transport over short distances due to its low temperature, while HDRI is fed directly into an adjacent steel plant immediately after production. A third variant is HBI (Hot Briquetted Iron). Since it's compressed into compact briquettes, it no longer has a porous structure and is particularly well-suited for transport over long distances. However, it is less reactive than CDRI or HDRI.

© Salzgitter/Dena

Figure 1: Conventional vs. "green" steel production (Source: Salzgitter/Dena)

© Midrex

Figure 2: DRI emissions by energy source (Source: Midrex)

Hydrogen-DRI can exist in all three forms. The problem: For it to be truly environmentally friendly, the hydrogen used must be "green", meaning produced with renewable electricity (see Figure 1). And green hydrogen is expensive. Today, a ton costs about three times as much as conventional hydrogen, which is already significantly more expensive than coke coal or natural gas. Every DRI project using hydrogen therefore faces a serious financing question -- besides ThyssenKrupp, this also concerns ArcelorMittal, Salzgitter, and the Saarland steel manufacturers of the SHS -- Saar-Holding-Stahl Group in Germany.

Production Methods 

However, DRI can also be produced without hydrogen. In fact, hydrogen use is more the exception, with current common methods relying on natural gas or coal. While these aren't "green," they emit significantly fewer emissions than the conventional blast furnace route (Figure 2).

© VDI

Figure 3: Energiron vs. Midrex (Source: VDI)

Two methods dominate the market today: the Midrex process, which according to the Association of German Engineers (VDI) accounted for about 59.7% of global DRI production in 2010, and the EnergIron process, a joint venture of Tenova and Danieli. In brief, the Midrex process operates at lower temperatures and pressures. It also uses an external methane reformer where CO2 from the reaction is reused. In contrast, with the EnergIron variant, CO2 is extracted from the exhaust gas for later marketing (Figure 3). 

Both plant types today achieve volumes of up to 2.7 Mt per year. This is below the volume of traditional blast furnaces, which produce between 3.6 and 4 Mt of pig iron annually. According to U.S. plant designer Midrex, which holds the patent for the namesake process, in 2023 about 68.5% of produced DRI was natural gas-based and 31.5% coal-based. The share of natural gas-based DRI has slightly decreased in recent years due to the rapid growth of coal-based production in India. But how much DRI is actually produced in total, and what development trends are emerging?

© Midrex

Figure 4: The Top 5 global DRI producers (Source: Midrex)

Current Development: Turning Point 2016 

U.S. steel expert Robert Mazurak has meticulously analyzed the development of DRI production. According to his findings, international production volume grew by about 3 million tonnes (Mt) annually since the 1970s. The year 2016 marked a turning point: Growth suddenly accelerated to almost 8 Mt per year. Since then, it's been rising steeply. While 72.8 Mt were produced in 2016, by 2022 this had reached 127.4 Mt. 

According to a recent Midrex study, global production reached a preliminary peak in 2023 with 135.7 Mt. In contrast, 1.3 billion tonnes of conventional pig iron were still produced in the same year. This shows: DRI remains the exception. 

Nevertheless, production is growing rapidly. In 2023, it was 6.5% higher than in 2022 and double the amount produced in 2012. According to the Brussels-based World Steel Association (worldsteel), this increase is mainly due to growth in India. 

Current Development: Details 

DRI production growth rates vary significantly by product type. According to Midrex data, CDRI volume has nearly tripled in the last two decades, from 39 Mt in 2003 to 102.1 Mt in 2022. One reason for this increase is the growing adoption and optimization of natural gas and coal-based reduction technologies. Even more impressive is the growth in HDRI, which has increased nearly eight-fold in the last two decades (from 1.8 Mt in 2003 to 13.9 Mt in 2022). 

Therefore, we can't speak of a DRI "boom," but rather of continuous growth over decades -- a "slow revolution." HDRI, in particular, is becoming increasingly relevant due to its high energy efficiency through on-site use. 

It should be noted that DRI profitability is linked to global steel demand. The price of iron ore and energy costs also influence the economics of sponge iron. According to the Midrex Report, these factors were favorable in 2023: stable iron ore supply, low price volatility, and robust demand. Under these conditions, steel plants producing DRI can achieve good margins. However, worldsteel urges caution: For 2023 and 2024, the steel association expects only moderate growth in global steel demand of around 1.9% each year. 

DRI producers must consider this when expanding their capacities, whether they use natural gas, coal, or hydrogen. But where are the DRI producers actually located?

© Midrex

Figure 5: Global DRI production 2023 by process (Source: Midrex)

DRI Production Worldwide 

India was by far the most important DRI nation in 2023 (Figure 4). According to the Indian Sponge Iron Manufacturers Association (SIMA), the country produced 49.3 Mt in 2023, representing a 13.1% increase compared to 2022. Iran ranks second with 33.4 Mt, showing a 1.5% increase according to Midrex. Russia maintains third place in 2023 with 7.8 Mt, followed by Saudi Arabia with 6.7 Mt and Egypt with 6.4 Mt. 

Midrex facilities still produce the majority of DRI. In 2023, the company reported a production of almost 75.7 Mt -- 56% of the global total. Interestingly, about half of the production from the North Carolina-based company's systems occurs in Russia and Iran. Even more significant is the growth rate: in 2023, Midrex technology produced 3% more DRI than the previous year. 

© Midrex

Figure 6: The main international trade routes for DRI 2023 (Source: Midrex)

Limited Global Trade 

Meanwhile, DRI is primarily used locally, which is also reflected in the rising HDRI demand. International trade is limited (Figure 6). Midrex reports that total DRI deliveries in 2023 fell to 21.4 Mt, 13% less than in 2022. Road and rail transport accounted for the majority at 14.8 Mt, while sea transport declined to 6.6 Mt. However, these figures might be significantly lower than actual delivery volumes, as some DRI-exporting nations are subject to Western sanctions and therefore don't report their figures. 

According to International Steel Statistics Bureau (ISSB) data analyzed by Midrex, Russia is the leading DRI exporter with approximately 3.0 Mt, followed by the USA with 1.5 Mt. The largest importers were India (1.6 Mt), the USA (1.3 Mt), and Italy (1.0 Mt). 

© Tenova

Figure 7: DRI plant opened in Monterrey in 2015, using the EnergIron process (Source: Tenova)

Future Prospects 

Despite the doom-saying in the German steel market, the medium to long-term outlook for DRI remains promising. Robert Mazurak predicts that DRI production will increase by another 60 Mt to 185-190 Mt by 2030. This forecast is supported by a worldsteel projection from 2023, which lists almost 80 Mt of announced and ongoing DRI capacity expansions. 

For the outlook to 2050, Mazurak cites various forecasts showing a wide range: from 272 Mt (World Steel Dynamics) to 411 Mt (International Energy Agency's Sustainable Development Scenario) to 549 Mt (Wood Mackenzie's Accelerated Energy Transition 1.5°C Scenario). The differences show: Long-term predictions are currently difficult to make in the industry. 

© H2 Green Steel

Figure 8: Rendering of the H2 Green Steel plant at Boden (Source: H2 Green Steel)

Meanwhile, several projects indicate a trend toward capacity expansion. For example, ThyssenKrupp's Midrex plant in Duisburg is designed for 2.5 Mt/year. Further projects have been announced in Germany, Mexico, and Oman, all aiming for a capacity of over 2 Mt/year. 

These developments show: The trend is moving toward more environmentally friendly steel production. The increasing use of green hydrogen promises to fully decarbonize the process in the future. Now what's the actual situation regarding the increased use of hydrogen? 

H2 Hope for Green Steel 

Hydrogen-DRI can be competitive wherever green hydrogen is readily available at a reasonable cost. This is particularly true in Southern and Northern Europe. While the South has reliable sunshine, the North has abundant wind and hydropower. With plenty of available space and rich iron ore deposits in these regions, it's no surprise that the showcase green steel projects are all located in Scandinavia. Sweden is taking a pioneering role - here are two examples: 

  1. The startup H2 Green Steel has been planning since 2022 to build a DRI plant using the Midrex process in Boden, northern Sweden (Figure 8). The goal is to produce 5 Mt annually by 2030 with 95% lower CO2 emissions. This will be made possible by a giga-electrolyzer that H2 Green Steel plans to build directly next to the steel plant.
  2. The HYBRIT consortium (LKAB, Vattenfall, SSAB), on the other hand, is using the EnergIron® DRI technology from the two major Italian plant manufacturers Tenova and Danieli. In Vitåfors, it is building a demonstration plant that should produce 200 tonnes of DRI per hour starting in 2026. SSAB aims to replace all its blast furnaces with fossil-free alternatives by 2045.

To fully decarbonize steel production, these manufacturers are using steel scrap and electric arc furnaces (EAF) powered by renewable electricity alongside H2-DRI. 

Outlook and Conclusion 

DRI capacities are developing positively, as evidenced by both rising production and announcements of new plants. Since 2016 at the latest, it's clear: DRI is coming. However, reports like those from Duisburg show that one must bet on the right horse. DRI from hydrogen is one -- possibly the only -- alternative for fully decarbonizing steel production. However, H2 production should ideally take place directly at the steel plant, as is the case with the showcase projects in Sweden. 

Mazurak also points out that unexpected "Black Swan" events -- oil or financial crises, pandemics, geopolitical conflicts -- can threaten these time and financially intensive DRI projects. The VDI report highlights the substantial costs associated with converting existing plants to DRI technology. As a rule of thumb: Each million tonne of capacity requires up to 1 billion euros in conversion costs. This is a financial challenge that's often difficult to overcome without government support. 

Another concern Mazurak raises is the long-term availability of DRI facilities and their raw materials, particularly high-quality iron ore. That fluctuations in the natural gas and especially hydrogen markets additionally influence costs hardly needs mentioning. 

Despite these challenges, current developments in global DRI capacities suggest a promising future for the technology. Along with recycling, digitalization, and electrification, it is a cornerstone of the steel sector's decarbonization efforts. Projects like those from Scandinavia also provide reason to hope that green hydrogen can play a role in DRI. 

As always, success depends on how well technological innovations can be aligned with economic feasibility and political support. Either way, the coming decades will be crucial for the transformation of the steel industry -- in the Ruhr region and elsewhere. 

Learn more about DRI at the next wire & Tube, taking place from April 13-17, 2026 in Düsseldorf. Current industry and product information is available on the web portals at www.wire-tradefair.com and www.tube-tradefair.com.

Further Information and sources 

  • Robert Mazurak: Outlook for DRI Production and Use 
  • DRI Statistics by Midrex, 2023 World Direct Reduction Statistics  
  • MIDREX Direct Reduction Plants 2023 Operations Summary