Speaking at the second session of the SteelOrbis Spring 2026 Conference & 94th IREPAS Meeting in Amsterdam on April 26-28, Dr. John Atherton, secretary general of the International Iron Metallics Association (IIMA), outlined the evolving role of iron metallics in the transition towards carbon-neutral steelmaking, highlighting both the opportunities and the growing challenges facing the sector.
Hydrogen-based DRI gains importance in decarbonization pathway
Dr. Atherton stated that the steel industry is increasingly focusing on reducing its carbon footprint, with direct reduced iron (DRI) gaining prominence as a key enabler of low-carbon steel production. He noted that hydrogen-based DRI, in particular, is widely seen as the optimal pathway to achieving deep decarbonization targets of up to 80-90 percent, although natural gas-based production is expected to remain dominant until hydrogen becomes cost competitive.
He emphasized that the transition to greener production routes is being driven by both sustainability targets and the need to minimize the environmental impact of raw materials. However, he warned that the shift towards DRI and electric arc furnace (EAF)-based production could create new challenges, particularly regarding scrap availability and quality. He stated that, while scrap will continue to play a crucial role in the circular economy, impurities and limited supply mean that DRI will remain an essential input even in scrap-rich regions.
Dr. Atherton also pointed out that progress on steel decarbonization has so far fallen short of earlier expectations, with several announced projects facing delays or cancellations. He noted that, although global DRI capacity is projected to increase significantly, less than half of the announced capacity is currently under construction, reflecting the uncertainties surrounding investment decisions and policy support.
Costs, raw material constraints and policy gaps slow transition
Addressing cost-related challenges, the IIMA secretary general stated that the transition to hydrogen-based production routes requires substantial capital expenditure, with estimates suggesting that investments could reach up to $1.5 trillion in Europe alone. He added that switching from natural gas to green hydrogen could increase production costs significantly, making policy support mechanisms such as carbon pricing critical to bridging the gap.
He highlighted that hydrogen availability and cost remain key barriers to the widespread adoption of H2-DRI. While naturally occurring hydrogen resources could play an important role in the future, their development is still at an early stage. He noted that regions such as the Middle East and Australia are well positioned due to their energy resources and supportive policy frameworks, while Brazil stands out with its potential to supply high-grade iron ore required for DRI production.
He also pointed to the emergence of “mega hubs” for green iron production, particularly in regions close to raw material sources, which could add value through processing and increase seaborne trade in DRI and hot briquetted iron (HBI). However, geopolitical developments, especially in the Middle East, continue to pose risks to supply chain stability and trade flows.
Looking ahead, Atherton warned that the timeline for large-scale adoption of hydrogen-based steelmaking may be longer than previously expected, with significant capacity growth potentially shifting to the late 2030s or early 2040s. He concluded that, while the pathway to carbon-neutral steelmaking is clear, achieving it will require coordinated efforts in investment, policy support and technological innovation.