Ukraine has the potential to bring 20 to 25 million tons of raw materials for DRI production to the commercial market, meeting 14% of global market demand
Ukrainian perspectives in DRI production
The prospects of the European green steel market and the prospects of Ukraine are described in a study by the GMK Center
Ukraine is well suited to hosting DRI projects. Our country has one of the world's largest reserves of magnetite ore, which can be enriched to an iron content of 68-70%. Given the existing plans to build DRI plants in the EU, such raw materials will be in demand. Ukraine can thus help the European steel industry decarbonize.
Ukrainian companies have already announced several projects for the production of raw materials for DRI. For example, Metinvest can produce 7.5 million tons of pellets and 19 million tons of concentrate for DRI.
For FerrexpoThe production of DR pellets is a strategic area – the company is ready to focus 20-25% of its production on this product if the market requires such volumes.
Before the war, ArcelorMittal Kryvyi Rih announced a project to build a pelletizing plant with a capacity of 5 million tons of pellets. Due to the war, this project was frozen. We believe this will be a priority for the company after the war.
Black iron is a Canadian project with the goal of producing 4 to 8 million tons of high-quality concentrate. The project is frozen for the duration of the war and can be implemented after the war ends.
Ukraine has the potential to bring 20-25 million tons of raw materials for DRI production to the commercial market, meeting 14% of new market demand. Ukrainian iron ore companies will be able to increase production if market conditions are right.
Ukraine is a place of green steel production
In the future, Ukraine will join the EU, including the European trading system for greenhouse gas emissions. Therefore, the future of the Ukrainian steel industry lies in low-carbon steel production.
Before the war, Metinvest examined the possibility of building two DRI units and two electric arc furnaces Zaporizhzh Valley as a replacement for open hearth production. Electric arc furnaces and systems for casting slabs and square billets could be built Kametstal for producing thick plates and shapes.
ArcelorMittal Kryvyi Rih will likely take into account the experiences of its parent company. Therefore, it is possible to switch to electric arc furnaces and DRI systems.
Interpipe is planning to expand its electric arc furnace plant to start its own flat steel production. Investments in these projects will total over $1 billion. The company expects to raise funds under the Ukraine Facility.
Using modern technologies, Ukraine already produces up to 1 million tons of steel from scrap. Taking into account the potential decarbonization projects mentioned above, green steel production could reach 6 million tons in 2030. This will be Ukraine's contribution to climate change.
Taking the CBA into account, Ukraine will likely stop exporting pig iron, but will be able to become a supplier of low-carbon HBI, thereby contributing to the decarbonization of the European steel industry.
To launch all these projects and integrate into European value chains, Ukraine needs financing from European funds similar to those received by European steel companies (European countries have allocated 14.6 billion euros for the decarbonization of the steel sector).