BOSTON— As the U.S. steel industry approaches a multi-billion-dollar reinvestment cycle, new analysis commissioned by Ceres finds that direct reduced iron (DRI), a proven technology in ironmaking, is the most attractive place for future investment.
The report, Smarter, Leaner, Cleaner: Direct Reduced Iron and the Future of American Steel, finds that DRI is the lowest-cost, new-build ironmaking technology in the four major steel producing hubs studied: Minnesota’s Iron Range, the Gulf Coast, Pennsylvania, and Northern Indiana. Ceres convened more than 40 experts from the steel industry, financial institutions, and OEMs to inform this analysis.
The steel industry accounts for more than 7% of global emissions. DRI is an energy-efficient way to prepare iron ore for conversion into iron using natural gas or green hydrogen. For example, the U.S. currently imports $2 to 3 billion of pig iron per year. Ceres’ study finds that it would be cost-competitive to produce that pig iron in the U.S. using DRI technology. This pathway would further fuel the revitalization of regional economies through a cleaner, stronger steel industry.
Importantly, new greenfield DRI plants would achieve the 15% rate of return investors typically require to make projects investable, be 80% less polluting in local air contaminants, and cut overall pollution by 40% when compared with blast furnace technology.
“DRI is the future of the American steel industry, and today’s investment is a bridge to cleaner steelmaking tomorrow,” said Stephanie Hanford, director of heavy industry at Ceres. “This process, which serves as an alternative to coal-powered blast furnaces, not only reduces pollution but enables the industry to become more nimble, less susceptible to supply and price shocks, and brings good-paying jobs to regions that need them.”
Two DRI plants already serve American customers, and a third is under construction in Monterrey, Mexico. There have also been two recent announcements of new DRI plants to be built by U.S. Steel and Hyundai. Meanwhile, zero new blast furnaces have been built in the U.S. in decades.
The report also provides recommendations for investors and policymakers who are key to shaping the future of U.S. steel production.
For investors: There's a near-term, new-build opportunity in flex-fuel DRI projects across all four regions. Siting decisions will hinge on infrastructure, feedstock access, downstream demand—not regional cost gaps.
For policymakers: Additional DRI plants are coming—the question is where. States that engage steelmakers now, with permitting and incentives, can compete for that investment.
The global steel industry is in a period of realignment in order to manage supply chain disruptions, AI, energy price shocks, and an evolving policy landscape. With billions of dollars in reinvestment decisions on the horizon, the choice U.S. steelmakers make now will determine whether American steel remains competitive in the future.
More details are available in the full analysis of Smarter, Leaner, Cleaner: Direct Reduced Iron and the Future of American Steel commissioned by Ceres from Dr. Chris Bataille and Dr. Francis Li.
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About Ceres
Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and resilient economy. With data-driven research and expert analysis, we inspire investors and companies to act on the world's sustainability challenges and advocate for market and policy solutions. Together, our efforts transform industries, unlock new business opportunities, and foster innovation and job growth – proving that sustainability is the bottom line. For more information, visit ceres.org.