Tellus Materials Energy Technology Perspective
Low-Grade Ore, Green Steel: Hydrogen Breaks the Raw Material Barrier
The Namibia trial demonstrates that hydrogen-based direct reduction is no longer constrained by premium-grade ore, significantly expanding the raw material base for green steel production. For Tellus Materials, the maturation of this technology pathway signals a rapid expansion of hydrogen's role as an industrial process reducing agent — from ironmaking to other high-temperature applications. The ability to supply high-purity hydrogen reliably on-site will become indispensable infrastructure for industrial decarbonization.
Why Is Decarbonizing the Steel Industry So Difficult?
Steel is the backbone of modern industry — indispensable to construction, automotive manufacturing, and infrastructure at every scale. Yet the steel sector is also one of the world's most significant sources of carbon emissions, responsible for approximately 7% of global CO₂ output. The root of the problem lies in the traditional ironmaking process: blast furnace steelmaking requires vast quantities of coke, and the combustion of coke releases enormous amounts of carbon dioxide, making it one of the largest sources of process emissions on the planet.
In recent years, hydrogen-based direct reduced iron (H₂-DRI) has emerged as a leading alternative to the blast furnace. In this process, hydrogen replaces coke as the reducing agent, and the reaction produces water rather than CO₂ — a genuinely climate-neutral pathway for ironmaking in terms of its chemistry.
The challenge, however, has been a strict prerequisite: existing direct reduction technologies require premium-grade iron ore with an iron content of approximately 70%. Such ores are scarce and expensive globally, and they must also undergo energy-intensive pelletizing before they can be used in shaft furnaces. From the outset, these raw material constraints have posed a significant bottleneck to the widespread adoption of green steel production.
The Namibia Breakthrough: 56% Low-Grade Ore Successfully Reduced with Hydrogen
In 2026, a multinational research consortium completed a landmark industrial-scale trial at the Oshivela site in Namibia. Led by Germany's Federal Institute for Materials Research and Testing (BAM), the SuSteelAG consortium successfully converted 80 tonnes of Australian iron ore into direct reduced iron (DRI) under climate-neutral conditions.
The most critical breakthrough in this trial was the ore grade. Low-grade iron ore with an iron content of just 56% — long considered unsuitable for direct reduction processes — was successfully processed in a hydrogen rotary kiln at a throughput rate of five tonnes per hour, and without the energy-intensive pelletizing step that conventional processes require.
The ore was supplied by Australian mining and technology company Fortescue, while the rotary kiln equipment was designed and constructed by German industrial furnace manufacturer TS Elino GmbH. Supported by Namibia's abundant solar energy resources, the entire process achieved genuine climate-neutral production conditions.
Why Namibia? Renewable Energy Is the Answer
Namibia's selection as the site for this trial reflects a clear energy logic. Hydrogen-based direct reduction requires substantial quantities of green hydrogen, and green hydrogen production is highly dependent on renewable electricity — whether from solar or wind power for electrolysis. Located in southern Africa, Namibia benefits from exceptional solar irradiance and ranks among the world's most advantaged regions for solar energy resources.
This positions Namibia not merely as a test site, but as a potential production node of genuine strategic importance in future green steel supply chains. The hydrogen rotary kiln operated at the site by HyIron Green Technologies has now demonstrated stable operation at industrial scale.
BAM's Christian Adam stated that the trial reached a scale highly relevant for industrial production, and demonstrated that hydrogen-based direct reduction of lower-grade ores can be operated economically — an essential step toward accelerating green steel production in Germany and beyond, and proof that green steel need not be constrained by the limited availability of premium ores.
From Namibia to Germany: The Shape of a Transcontinental Green Steel Supply Chain
Following the completion of the trial, the next step is to ship the refined direct reduced iron from Namibia to Germany. Salzgitter Mannesmann Forschung GmbH will investigate how this material can best be integrated into existing industrial processes, with the ultimate goal of producing climate-friendly steel for automobiles and other key products.
At the same time, RWTH Aachen University's Advanced Mineral Processing Technologies Research and Teaching Unit (AMR) will investigate how Australian ores with lower iron content can be further optimized for direct reduction applications.
This tripartite framework — Australia supplying the ore, Namibia performing the hydrogen-based reduction, Germany completing the steelmaking and downstream application — traces the outline of a green steel supply chain spanning three continents. The SuSteelAG consortium's full program is supported by €4.5 million in funding under the seventh Energy Research Programme of the German Federal Ministry of Research, Technology and Space.
What This Breakthrough Means for Global Steel Decarbonization
For years, a structural obstacle has constrained the scaling of green steel technology: if only premium-grade ores can be used, then the number of production locations capable of participating in green steel manufacturing is severely limited, and raw material supply chain bottlenecks risk becoming the binding constraint on the entire energy transition in steel.
The Namibia trial dismantles this constraint. By demonstrating that low-grade ores can enter the hydrogen direct reduction process, the trial significantly expands the pool of usable iron ore resources globally, opening the way for a far broader range of deposits to serve as raw material inputs for green steel production.
Equally important is that this demonstration was completed at industrial scale — not in a laboratory, but under real production conditions. For the green steel industry as a whole, this kind of real-world validation carries substantial weight in building investor confidence and accelerating the financing and scaling of future commercial projects. The timeline for steel sector decarbonization may, as a result, move meaningfully closer.
