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Why Will Metallurgy Grow
in the Middle East,
and What Will Drive It?


Over the last ten years, from 2013 to 2023, the global geographical distribution of steel production has changed significantly. According to the statistics gathered by the World Steel Association, Europe, North America and Japan have reduced their production capacities by around 2-3%. At the same time, China, India and other Asian countries have seen a notable increase in steel production of as much as 4%. The Middle East has also increased its share, from 1.7% in 2013 to 2.9% in 2023.

Moreover, while global steel production tends to decrease, the Middle East and Northern Africa (MENA) industry is thriving and growing steadily year to year. The region can even become a global leader in green iron and steel.

In this article, we will explore the factors that foster the development of the MENA’s metallurgy industry and how the region takes advantage of them.

Strategic geographic location

The MENA region includes 21 countries: Algeria, Bahrain, Djibouti, Egypt, Israel, Jordan, Iran, Iraq, Qatar, Kuwait, Lebanon, Libya, Malta, Morocco, Oman, Palestine, Saudi Arabia, Syria, Tunisia, UAE and Yemen.

Indeed, the MENA is positioned at the crossroads of Europe, Asia and Africa. Thus, around 80% of global maritime cargo traffic passes through the region's ports. This boosts international trade in general and the supply of metallurgical products to other countries in particular. For example, the MENA is currently endeavouring to supply enough metal to growing markets like India and to regions focused on green steel, such as Europe.

Economic diversification incentives

Regional governments, especially in the Gulf Cooperation Council (GCC) countries, pursue ambitious goals for economic diversification to decrease hydrocarbon dependency. Although metallurgy may not be the primary focus of such diversification strategies, there is a noticeable trend toward investing in this industry, particularly in the UAE, Saudi Arabia, Bahrain, Oman and Qatar.

For example, Saudi Arabia's government strategy prioritizes establishing domestic production of all types of steel. Saudi Arabia plans to build three plants worth $9.3 billion (with 6 million tons of steel production capacity annually). The country seeks to acquire minority stakes in global mining assets, which will eventually help secure access to strategic minerals. Additionally, Saudi Arabia aims to utilize its mineral resources potential in the electric vehicle market, which requires batteries that are significantly dependent on minerals found in the country, including lithium and copper.

Demand for green steel

The transitional phase of the EU’s Carbon Border Adjustment Mechanism (CBAM) started on October 1, 2023. Abiding by this regulation, exporters to the EU will have to pay carbon taxes for cement, iron, steel, fertilizers, aluminum, hydrogen and electricity, which require carbon-intensive production (taxes will be imposed as early as the beginning of 2026).

As of today, the majority of steel producers, including the leader, China, are still very far from carbon neutrality. On the contrary, governments in the MENA region, particularly in the UAE and Saudi Arabia, are beginning to invest significantly in producing low-carbon aluminum and steel, aiming to achieve net-zero emissions by 2050.

Moreover, the MENA steel sector has a significant advantage as it is already based on DRI (Direct Reduced Iron) production using gas instead of coal. Gas-based DRI steel production has lower emissions than coal-consuming blast furnaces, which dominate steelmaking in most other regions. Consequently, substantial investments in upgrading existing facilities will not be necessary.

The MENA region has a stable source of DR-grade iron ore, a commodity with limited supply, making up only 3-4% of global trade. Vale, the world's largest producer of DR-grade ore, plans to create mega-hubs in the Middle East. Thus, supplies to the EU are expected to increase from 2026, and Japan is already transitioning to ore purchases from this region.

Solar energy for truly green steel

Switching to green hydrogen is the only way to make steel 100% environmentally friendly. Its cost is expected to decrease in the coming decade. The MENA’s extensive solar resources will allow the region to produce truly green steel and reduce its cost. This will be a double competitive advantage.

Focus on CCUS projects

Carbon capture utilization and storage (CCUS) is expected to play a notable role in decarbonizing the global steel sector in the coming years. The technology received massive support at the 2023 COP28 climate conference.

CCUS involves capturing CO2 emissions from major sources, such as power plants or industrial facilities that utilize fossil fuels or biomass. The captured CO2, if not used on-site, is compressed and transported via pipeline, ship, rail or truck. It can then be utilized in various applications or injected into deep geological formations like depleted oil and gas reservoirs or saline aquifers for long-term storage.

The UAE appeared to be the first country to establish a commercial-scale CCUS plant—Al Reyadah. This plant captures CO2 from a DRI-based steel plant owned by Emirates Steel Arkan. The facility is estimated to capture around 45% of CO2, making steel production greener and more sustainable.

Growing demand in the region

The MENA is a rapidly developing region. Its strategic infrastructure initiatives and ambitious construction projects, such as new urban developments, transportation networks and industrial zones, require vast amounts of steel and other metals. The push towards modernization and economic diversification also fuels the demand for metals used in manufacturing, technology and energy sectors. Finally, increasing investments in renewable energy projects, like solar power, contribute to the rise in metal consumption too, as these technologies rely heavily on metals like steel and aluminum.

As a result, domestic metal demand growth in the MENA is forecasted to exceed 4% and 2.6% year on year to 57 million tonnes and 59 million tonnes in 2024 and 2025, respectively.

Bottom line

With these implications, the MENA region is poised to become a significant player in the global metals market, with domestic production and consumption growing in tandem with its development goals. This expansion not only supports the local economies but also aligns with global trends towards sustainable and efficient use of resources.

Adopting digital transformation across the region's Metal industry can significantly enhance operational efficiencies, reduce costs, and minimize environmental impacts. Through the integration of smart technologies, such as the Internet of Things (IoT), big data analytics, artificial intelligence (AI), and blockchain, resource allocation and waste management can be optimized. This digital transformation can streamline the entire metals supply chain—from raw material extraction to production, distribution, and recycling—making processes more efficient and transparent. Ultimately, embracing digital transformation is not merely a choice but a necessity for the MENA region to fully harness its potential in the Metals industry. By doing so, it can establish itself as a forward-thinking leader, ready to meet both regional and global demand for sustainably and efficiently.

Interested to learn more? Talk to our experts.


Tatyana Bondarenko Tatyana Bondarenko is an Industry X Consultant at Axellect. She has more than 10 years’ experience in the oil & gas, metallurgy, mineral fertilizers, and automotive industries.