Itochu and Emirates Steel Plan to Establish Iron Processing Facility in UAE

Itochu Corporation, a Japanese trading house, is planning to establish a global supply chain for reduced iron, a low-carbon steel feedstock and this supply chain will link Brazil, the UAE, and Japan to help reduce the steel industry’s carbon emissions.

According to media reports, Itochu will partner with Emirates Steel Arkan and others to conduct a feasibility study, with the plant, which will be set up in Abu Dhabi, is expected to start operations in 2027 or later. The high-grade iron ore from Brazil will be processed into reduced iron in the UAE and then shipped to Japan, the reports said.

Moreover, Itochu plans to produce about 2.5 million metric tons of reduced iron annually in Abu Dhabi beginning in 2027, in collaboration with JFE Steel and Emirates Steel, leveraging the UAE’s affordable natural gas supply.

The iron ore will be supplied by CSN Mineracao, a Brazilian company partly-owned by Itochu, JFE Steel, and Kobe Steel. CSN Mineracao will open a new plant in Minas Gerais, Brazil, to produce pellet feed for export to the UAE starting in 2027.

CSN Mineracao will build a new plant in the southeastern Brazilian state of Minas Gerais to crush iron ore into “pellet feed” and begin production in 2027. Itochu will export the pellet feed to the UAE.

This initiative aims to support Japan’s steel industry in its decarbonisation efforts, as it currently accounts for 10% of the country’s emissions. Using reduced iron in electric furnaces instead of the traditional blast furnace method significantly reduces CO2 emissions.

Blending reduced iron with scrap steel allows electric furnaces to produce high-grade steel suitable for automobiles and other products. JFE Steel plans to operate a large-scale electric furnace in Okayama by April 2027, using reduced iron from Abu Dhabi.

Japan’s Ministry of Environment said that the domestic steel industry emitted about 134 million tons of CO2 in 2022, representing 38% of industrial emissions and 10% of total emissions. While direct hydrogen reduction technology is advancing, it is not yet ready for widespread use, the reports said.

Demand for reduced iron, which can rapidly reduce emissions, is growing. The global market is projected to reach $115.4 billion by 2032, more than doubling the 2024 forecast.

Mitsui & Co and Kobe Steel are also considering building a reduced iron plant in Oman, with production slated to begin in 2027. A memorandum of understanding (MoU) was signed by the two Japanese firms with Oman’s Public Authority for Special Economic Zones and Free Zones (OPAZ) to manufacture and sell direct reduced iron (DRI) near the port of Duqm in Oman.

Sustainability Focus

The new plant is expected to play a crucial role in establishing a global low-carbon iron supply chain, aligning with growing global efforts to reduce carbon emissions in the steel industry.