South Africa is the second-largest steel producer in Africa, and the sector plays a foundational role in the national economy – supporting automotive manufacturing, construction, mining, and thousands of jobs. However, the industry faces significant challenges, including high carbon intensity, ageing infrastructure, and increasing pressure to comply with international climate policy instruments such as the EU’s Carbon Border Adjustment Mechanism (CBAM). With the EU serving as South Africa’s second‑largest steel export market, the sector’s ability to meet emerging low‑carbon requirements is becoming increasingly important.
To address these systemic challenges, the United Nations Industrial Development Organisation (UNIDO), jointly with the Industrial Development Corporation (IDC) and Guidehouse Germany, developed the South Africa – Steel project. Designed under guidance of the Department of Trade, Industry and Competition (dtic), the Department of Forestry, Fisheries and the Environment (DFFE) and the Department of Electricity and Energy (DEE), the project has been selected by the Mitigation Action Facility as one of seven out of more than 500 global submissions to enter the Detailed Preparation Phase.
“South Africa’s steel transition is essential for strengthening the sector’s competitiveness and building a resilient, low‑carbon industrial base. Through this project, UNIDO and its partners are working to stimulate local demand for low‑carbon steel and support the industry in meeting evolving international standards. It is a timely step that positions South Africa to innovate and lead in the global green steel economy .”
– Karin Reiss-Haimbala, Programme Manager in UNIDO’s Energy and Climate Action Division
Unlocking investment, technology, and policy support for green steel
The proposed project combines several measures to unlock investment, strengthen the policy environment, and accelerate the decarbonisation of South Africa’s steel industry. By blending grant funding with concessional and commercial finance, the project’s financing mechanism will help lower the cost of capital for steel decarbonisation projects. Mitigation Action Facility funding aims to mobilise investment in innovative low-emission technologies and support the country’s transition to near-zero emission steel production.
“What really encourages me about this project is that it does not only see decarbonisation as a constraint, but also recognises it as an opportunity to reposition and modernise our industrial base.”
– Sisanda Mtwazi, Director of Primary Minerals Processing and Construction at the Department of Trade, Industry and Competition
The project will also support the deployment of a hydrogen-based direct reduced iron (H₂-DRI) pilot plant and promote the integration of renewable energy into steel production. Lessons from these demonstrations will guide future sector-wide adoption.
To create an enabling environment, technical assistance will support the development of the Steel Decarbonisation Roadmap, promote green steel lead markets, explore carbon tax revenue recycling, and refine Measuring Reporting Verification systems. The project also includes capacity development and just transition measures, including gender-responsive training and reskilling programmes to prepare workers for emerging low-carbon technologies.
“Strong government commitment – through clear policies, standards and risk mitigation frameworks – is essential for unlocking investment and accelerating the steel sector’s green transition.”
– Jasmina Curic, Advisor at the Technical Support Unit to the Mitigation Action Facility
Together, these measures aim to enhance the competitiveness of South Africa’s steel sector and position the country as a regional leader in low-emission steel production. The initiative aligns with South Africa’s Nationally Determined Contributions (NDCs), the Just Energy Transition (JET), and national industrial policy goals, while delivering long-term environmental and social benefits for workers and communities.
National validation workshop moves project forward
Last week, over 40 representatives from government, industry, and civil society gathered at the dtic in Pretoria for the project’s national validation workshop. The meeting marked an important milestone for the project and gathered stakeholder input to finalise the project design and ensure alignment with South Africa’s priorities.
Senior representatives of the South African government, the IDC, the South African Iron and Steel Institute (SAISI), UNIDO, and the Mitigation Action Facility highlighted both the importance of the steel sector to South Africa’s economy and the opportunities of a green transformation.
“The steel industry has long been a foundational part of our industrial base, which is why the dtic requested this project to help the sector stay competitive as global markets shift toward low-emission steel.”
– Gerhard Fourie, Chief Director of Green Industries at the Department of Trade, Industry and Competition
Representing industry, Mr. Charles Dednam, Secretary General of SAISI, outlined the four pillars underpinning the industry’s roadmap:
- credible emissions data,
- cleaner electricity supply,
- enabling finance, and
- green steel certification.
Workshop outcomes and next steps
Participants discussed the project’s technical and financial components and emphasised the need to create demand for green steel, ensure stronger public–private coordination, and balance emission reductions with competitiveness and social inclusion. Feedback from the workshop will be integrated into the final project design before its submission to the Mitigation Action Facility.
Learn more about the project in the recently published factsheet, which key objectives and expected impacts.
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