Emirates Steel Arkan teams up with Japanese companies to produce low-carbon steel

Partners plan to build a ferrous raw material production facility in Abu Dhabi to meet growing demand for green steel

Ferrous raw material will initially be produced at the planned facility in Abu Dhabi through an enhanced decarbonised process using natural gas to reduce iron ore. Photo: Emirates Steel

Emirates Steel Arkan, the largest public steel and building materials manufacturer in the UAE, has linked up with Japanese trading house Itochu and JFE Steel in a plan for a ferrous raw material production facility in Abu Dhabi.

The move could bolster the Emirates’ efforts to further lower the emissions of its industrial activities.

ESA, formed after the merger of Emirates Steel and Arkan Building Materials last year, and the two Japanese companies will carry out feasibility studies for the creation of the plant in the UAE capital, the steel manufacturer said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.

The plan is intended to meet growing global demand for green steel.

“We are proud to be leading efforts among steel makers in the Middle East to decarbonise amid an intensification of the global drive to curb carbon dioxide emissions,” Saeed Al Remeithi, group chief executive of Emirates Steel Arkan, said.

“If hydrogen reduction becomes an established technology in the production of steel, Emirates Steel Arkan will rapidly harness it to further reduce its carbon emissions.”

The UAE aims to become carbon neutral by 2050 with new investments worth Dh600 billion ($163.4bn) planned in clean and renewable energy sources over the next three decades.

UAE companies are taking steps to reduce emissions in line with the national strategy.

Last year, Emirates Steel signed a preliminary agreement with Abu Dhabi National Energy Company, better known as Taqa, for the supply of green hydrogen to produce low-carbon steel.

Industrial conglomerate Emirates Global Aluminium is also focused on decarbonising its operations and developing its own technology to reduce emissions, Salman Abdulla, executive vice president of health, safety, sustainability, environment and quality at EGA, said at the Global Manufacturing and Industrialisation Summit in Dubai last year.

“Globally, some 80 per cent of the carbon dioxide emitted from steelmaking is the result of using coke in the blast furnace during the iron ore reduction process,” Mr Al Remeithi said.

“The group’s carbon footprint, however, is already significantly lower than that of its global peers thanks to its use of natural gas and advanced direct iron reduction technologies. The use of hydrogen might make our products even more environmentally friendly.”

As per the latest agreement, high grade iron ore will be imported into Abu Dhabi for the production of the ferrous raw material, currently expected to begin in the second half of 2025, and will be supplied to customers operating in Asia, including JFE Steel, ESA said.

Ferrous raw material will initially be produced through an enhanced decarbonised process using natural gas to reduce the iron ore, it said.

“The goal of the project is to create a low-carbon emission iron supply chain,” Jun Inomata, chief operating officer of metals and minerals resources division of Itochu, said.

“In this project, Itochu will be responsible for sourcing the high-grade iron ore, Emirates Steel Arkan will utilise the experience of operation of the direct reduction plant with carbon capture, utilisation and storage facility, and JFE Steel will use the ferrous raw material produced through this project as a steelmaking raw material and promote carbon dioxide emission reduction.”

The project will also make provisions for the adoption of renewable energy power sources as well as green hydrogen for the reduction process, according to the statement.

Established in 1998, Emirates Steel Arkan supplies domestic and international markets with products such as wire rods, rebar, heavy sections and sheet piles.

Last year, the Abu Dhabi company's exports represented 45 per cent of its total sales volumes while the balance was sold within the UAE, where the company maintains a 60 per cent market share.

The company has a total steel production capacity of 3.5 million tonnes a year.