f97.beERIK SCHMIDT’S WORKSHOP
← All terms

Glossary · Energy industry & energy transition

Direct Reduced Iron, DRI

Direct Reduced Iron DRI steel hydrogen Industry Decarbonization Iron Ore

Definition and delimitation

Direct Reduced Iron, DRI for short, is directly reduced iron. It is produced from iron ore without the ore being melted, as it is in the blast furnace. In direct reduction, oxygen is removed from the iron oxide in the solid state. What remains is metallic iron with many pores where the oxygen used to be. This is why DRI is also called sponge iron. The intermediate product is usually then melted into crude steel in an electric arc furnace. However, it can also be used in electric smelters or, in smaller quantities, in the blast furnace and the converter.

DRI is neither finished steel nor scrap nor pig iron. Scrap is steel that already exists and is melted down again. Pig iron is liquid iron from the blast furnace, saturated with carbon, with about 4 to 4.5 percent carbon. DRI, by contrast, is solid iron obtained from ore. It still has to be melted, separated from slag, alloyed and metallurgically adjusted. This distinction matters because the debate about climate-friendly steel often mixes up different production stages.

Chemistry and process

Iron ore consists predominantly of iron oxides. In the blast furnace, coke removes the oxygen from the ore, almost exclusively via carbon monoxide. This produces a great deal of carbon dioxide. In gas-based shaft furnaces, hydrogen and carbon monoxide perform this task. They react with the oxygen to form water vapor and carbon dioxide, respectively. So far, the gas has mostly been produced from natural gas. In a typical Midrex plant, it consists of about 55 percent hydrogen and 36 percent carbon monoxide. Reduction with hydrogen consumes heat, while reduction with carbon monoxide releases heat. A gas mixture therefore makes it easier to keep the furnace temperature stable.

Direct reduction takes place below the melting point of iron. Midrex states around 900 degrees Celsius for the reduction furnace and about 1,300 degrees for the blast furnace. Depending on the process, reduction temperatures in technical literature lie roughly between 800 and just over 1,000 degrees Celsius. This range is, however, a rough guide, not a fixed limit.

Important: not all DRI is gas-based. A large and growing share of world production comes from coal-fired rotary kilns, above all in India. There, coal is the reducing agent. According to Midrex, the emissions of such plants are significantly higher than those of gas-based shaft furnaces. From 2019 to 2024, Indian coal-based rotary kiln production grew by almost 20 million tonnes. Anyone who describes DRI across the board as low-emission overlooks this difference.

To put the scale in context: worldwide, around 140.8 million tonnes of DRI were produced in 2024, a record. India and Iran are the largest producers. In 2024, growth came mainly from Indian rotary kilns, while gas-based shaft furnace production declined slightly.

Product forms and key figures

A central key figure is the degree of metallization. It indicates what share of the total iron is actually present as metallic iron and no longer as oxide. For Midrex products, it is typically about 92 to 96 or 97 percent. The remainder is iron oxide that has not been fully reduced. The second key figure is the carbon content. Depending on the process, the gas and the mode of operation, it is about 1 to 4.5 percent. Many electric arc furnace operators prefer 1.5 to 3 percent, because burning the carbon with injected oxygen supplies heat and saves electricity.

DRI is traded or used in three forms:

  • Hot DRI (HDRI) is fed directly into the melting furnace at several hundred degrees. This saves energy for heating.

  • Cold DRI (CDRI) is cooled down. It is porous, reacts easily with air and moisture, and therefore has to be protected during storage and transport.

  • Hot Briquetted Iron (HBI) is produced when hot DRI at a temperature of at least about 650 degrees Celsius is pressed without a binder into pillow-shaped briquettes. The density is at least 5 grams per cubic centimeter. HBI is denser and less reactive. It is therefore best suited for storage, sea transport and trade.

The raw material side also matters: because DRI is not melted, it contains the non-metallic accompanying substances of the ore (gangue). Gas-based shaft furnaces therefore generally require high-quality pellets with a high iron content and little gangue. Not every ore that is suitable for the blast furnace is readily suitable for direct reduction followed by an electric arc furnace. If many sites worldwide switch over, demand for such ores rises. This can shift costs, trade flows and dependencies.

Climate impact: natural gas, hydrogen and the entire chain

Ore reduction is the most emission-intensive step of primary steelmaking. According to Midrex, the route via the blast furnace and the basic oxygen converter causes about two tonnes of CO2 per tonne of steel. Direct reduction operated with natural gas plus an electric arc furnace comes to about half of that. These values come from a plant manufacturer and depend heavily on assumptions. They nevertheless show that natural-gas-based DRI reduces emissions but does not make steel climate-neutral.

Direct emissions fall significantly further only when hydrogen predominantly serves as the reducing agent. This hydrogen must be produced with low emissions, for example as green hydrogen. The electricity for the electric arc furnace and the auxiliary plants must also be low-emission. Midrex puts the hydrogen requirement in the shaft furnace at about 550 normal cubic meters per tonne of DRI. In addition, up to 250 normal cubic meters of hydrogen or other energy are needed to preheat the gas. Even then, some natural gas is often added, about 50 normal cubic meters per tonne, to maintain the temperature and to set a carbon content of around 1.4 percent. Hydrogen-based direct reduction is therefore, in practice, not automatically carbon-free.

For this reason, the term "hydrogen-ready DRI plant" – comparable to H2-ready – describes only a technical possibility, not an actual emissions balance. A plant can be designed for hydrogen and still run for years on natural gas or a gas mixture. What counts for the climate impact is which gas is actually used in operation and how the hydrogen was produced. The emissions of upstream chains and how much fossil carbon remains in the process also count. In addition come ore mining, pelletizing, transport, electrodes, alloying agents and further processing. DRI is therefore not synonymous with green steel. This term is not uniformly defined and can refer to product emissions, certificates or funding criteria.

Link to the power system

DRI is linked to the power system above all through hydrogen production and the electric arc furnace. A rough back-of-the-envelope calculation: 550 normal cubic meters of hydrogen weigh about 49 kilograms. Assuming a demand of 50 to 55 kilowatt-hours of electricity per kilogram of hydrogen from electrolysis, this yields around 2.5 to 2.7 megawatt-hours per tonne of DRI for the reducing gas alone. In addition come the energy demand for gas preheating, the electricity for the melting furnace and the auxiliary plants. A large plant thus becomes a major industrial consumer.

For grid planning and procurement, it is not only the annual amount of energy that counts. Equally important are the connected capacity, the operating hours and the load profile. A plant that runs almost continuously at high output places different demands on the grid connection, substations and electricity procurement than a consumer with the same annual volume but highly fluctuating operation.

Flexibility is possible only to a limited extent. Electrolyzers can in principle be operated more flexibly than many industrial processes. The shaft furnace, by contrast, is a continuous high-temperature process with tight requirements for gas quality, temperature and material flow. The electric arc furnace, too, cannot be controlled at will according to electricity prices, owing to delivery obligations, shift operation and metallurgical quality. Room for maneuver arises rather through hydrogen storage, through buffers of intermediate products such as HBI, through an adapted mode of electrolysis operation and through electricity procurement contracts.

Role of scrap

Scrap recycling in the electric arc furnace saves a great deal of energy and emissions. It is, however, limited by the available quantity and the quality of the scrap. Undesirable accompanying elements such as copper can hardly be removed and must be diluted. In this respect, DRI is largely free of such elements. However, it contains gangue and residual oxides and is therefore not "pure" iron. DRI can supplement scrap and enable high-quality steel grades. Because global steel stocks are growing and buildings and infrastructure are used for a long time, recycling alone will not be sufficient for the foreseeable future.

Regulation and funding (as of November 2026, EU and Germany)

In the EU, iron and steel production plants fall under the emissions trading system. CO2 costs therefore change the investment calculation between the blast furnace and direct reduction. In addition, the Carbon Border Adjustment Mechanism (CBAM) covers DRI as a covered good under customs tariff heading 7203. The definitive phase, in which CO2 costs arise for imports, has been running since 2026. The details, such as default values and benchmarks, are complex and should be checked in each individual case against the current legal acts.

In Germany, climate protection contracts (Klimaschutzverträge), based on the principle of carbon contracts for difference, are intended to compensate for the additional costs of climate-friendly processes over many years. The contracts are awarded in auctions. Under the original design, projects in emission-intensive sectors such as steel could participate. A prerequisite was that a comparable conventional reference plant would emit more than 10 kilotonnes of CO2 equivalent per year. In addition, over the course of the funding period, the projects were to save considerably more greenhouse gases than this reference plant – the 2023 presentation speaks of at least 90 percent. The conditions of later bidding rounds may differ from this.

In addition, permits, grid connections, hydrogen pipelines, import terminals and the expansion of renewable electricity generation each touch on different responsibilities. A DRI plant can therefore be fully planned industrially while hydrogen infrastructure, grid reinforcement or the legal recognition of climate-friendly products still lag behind.

Conclusion

DRI does not denote the finished climate-neutral steel. It refers to the process step in which iron ore is reduced to solid metallic iron without a blast furnace. How climate-friendly this is depends on the reducing agent: coal, natural gas or low-emission hydrogen. The electricity mix, the ore quality and the entire supply chain are equally important. Anyone who classifies DRI correctly sees which emissions can actually be avoided and which prerequisites must be met outside the steelworks.

Sources

Related glossary entries

Edited by eCMS on 11.11.2026 19:11

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.