INTERVIEW: Midrex plans for 16 new plants on rising direct-reduction tech demand

Direct-reduction technology provider Midrex expects global demand for direct-reduced iron and hot briquetted iron to reach 180 million metric tons by 2030, requiring an estimated $16 billion-$20 billion in new plant investments as the steel industry accelerates decarbonization efforts.

Sean Boyle, Midrex's vice president of commercial, told Platts in an interview that the projected 40 million mt increase in DRI/HBI demand from the 2024 production of 140 million mt would require about 16 new facilities by the decade's end. Each new DRI plant typically requires more than $1 billion in capital investment, depending on location and infrastructure requirements.

"The total capital investment for a new DRI facility is typically more than $1 billion, depending on the specific location and surrounding infrastructure," Boyle said. "If you assume that each new HBI/DRI plant is 2.5 million mt a year, then an extra 16 plants would be required, equaling $16 billion-$20 billion for just these facilities."

The investment requirements extend beyond DRI plants themselves, with additional capital needed for electric arc furnaces, natural gas and power infrastructure upgrades, and local infrastructure improvements to support the transition from traditional blast furnace steelmaking.

Market transformation

Across Midrex's current project pipeline and customer discussions, the Charlotte, North Carolina-based company said that DRI is no longer being positioned as a niche or transitional material but is being built into long-term operating plans, particularly where flat steel producers are converting blast furnaces or expanding EAF capacity.

In mature markets such as Europe and Japan, where prime scrap is expected to tighten, customers are looking to DRI to secure cleaner metallics and reduce exposure to volatile scrap markets. In the US, DRI and HBI are increasingly part of standard EAF operations as producers support higher-grade products.

Currently, DRI and scrap account for approximately 5%-7% and 30%-32% of the total global metallics mix, with hot metal accounting for the remainder. This is expected to grow to 13%-15% for DRI and 40%-42% for scrap by 2050.

Despite strong interest in DRI technology across Europe, Midrex said the region's energy cost disadvantage poses significant challenges to large-scale deployment.

"Europe's central challenge remains the cost and availability of energy," Boyle said. "Without competitive energy, Europe will struggle to scale DRI at the pace required for its climate ambitions."

For hydrogen-based DRI to become economically competitive with natural gas-based production, hydrogen costs would need to fall below $2/kilogram, depending on regional natural gas prices, applicable carbon pricing mechanisms, and the green premium achievable in the market.

The company suggested Europe could benefit from decoupling ironmaking from steelmaking by producing DRI in regions with abundant, low-cost energy and transporting it to European facilities for melting, preserving high-value steelmaking jobs while reducing decarbonization costs.

Midrex currently has major European projects under construction, including facilities for Stegra in Sweden, ThyssenKrupp in Germany, and Dillinger/SHS – Stahl-Holding-Saar also in Germany. Outside Europe, the company's largest project is a 2.5 million mt per year DRI module for Tosyali SULB in Libya.

China, the largest global steel producer, has traditionally relied on the blast furnace-BOF route, supported by abundant coking coal resources. According to Midrex, the country is accelerating exploration and deployment of low-carbon ironmaking technologies, with two trends emerging: rapid growth in hydrogen-based metallurgy plants and increasing investment in offshore DRI production to import HBI for low-carbon EAF steelmaking. Midrex said it is well-positioned to support the future growth of low-carbon iron and steelmaking in China, whether using natural gas, coke-oven gas, or hydrogen.

Platts, part of S&P Global Energy, assessed the spot price for pellet-based Indian domestic DRI with 80% Fe at Rupees 25,000/mt on an ex-works Raipur, Chhattisgarh, basis on Jan. 23, up Rupees 300/mt day over day and up Rupees 500/mt, or 2%, week over week.

Platts assessed Mediterranean hot-briquetted import prices at $366/mt CFR on Jan. 27, up $1/mt day over day.