Pretoria, South Africa, 18 March 2026 - South Africa is advancing the decarbonization of its steel sector through a new initiative developed by the United Nations Industrial Development Organization (UNIDO) in partnership with the Industrial Development Corporation (IDC) and Guidehouse Germany. The project, Accelerating South Africa’s Steel Decarbonization, has entered the Detailed Preparation Phase (DPP) after being selected as one of seven initiatives from more than 500 global submissions to the Mitigation Action Facility, marking a significant step forward in mobilizing international support and advancing a coordinated national approach.
Developed under the guidance of the Department of Trade, Industry and Competition (the dtic), the Department of Forestry, Fisheries and the Environment (DFFE) and the Department of Electricity and Energy (DEE), the initiative aims to position South Africa’s steel industry for a competitive, low-emission future.
The initiative has already brought together key public and private stakeholders and is in the process of establishing a package of financial, technological and policy measures, laying the groundwork for implementation should the proposal be approved by the donor.
A sector under pressure to transform
South Africa is the second largest steel producer in Africa, with the sector underpinning automotive manufacturing, construction, mining and employment. At the same time, the industry faces high carbon intensity, ageing infrastructure and growing pressure to comply with international climate measures such as the European Union Carbon Border Adjustment Mechanism (CBAM).
With the EU as South Africa’s second-largest steel export market, meeting emerging low-carbon requirements is becoming critical for maintaining competitiveness.
Unlocking investment, technology and policy support
The project sets out a package of measures to unlock investment, strengthen the policy environment and enable the decarbonization of the steel industry.
A dedicated financing mechanism will blend grant funding with concessional and commercial finance to lower investment barriers. Catalytic funding from the Mitigation Action Facility aims to mobilize investment in low-emission technologies and support the transition toward near-zero emission steel production.
The initiative will also support breakthrough technologies, including a hydrogen-based direct reduced iron (H₂-DRI) pilot plant and the integration of renewable energy into steelmaking. Lessons from these demonstrations are expected to inform wider adoption and future investment decisions.
Technical assistance will support the development of a Steel Decarbonization Roadmap, green steel lead markets and carbon tax recycling options, alongside improvements to monitoring, reporting and verification (MRV) systems. Together, these measures will provide an integrated framework to guide the sector’s transition.
The proposed project also includes capacity development and just transition support, including gender-responsive training programmes for workers across the steel value chain.
Broad stakeholder support
The project is being developed in close coordination with government, industry and financial institutions.
Highlighting the strategic importance of the initiative, Gerhard Fourie, Chief Director of Green Industries at the dtic, noted: “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.”
Building on this, Sisanda Mtwazi, Director of Primary Minerals Processing and Construction at the dtic, emphasized the opportunity dimension of the transition: “What really encourages me about this project is that it does not only see decarbonization as a constraint, but also recognizes it as an opportunity to reposition and modernize our industrial base.”
From a financing perspective, Umeesha Naidoo, Industry Planner at the IDC, underlined the role of investment in enabling this shift: “The IDC has been actively working in the field of decarbonization and supporting the Just Energy Transition in South Africa, and sees the project as an important lever to support the steel industry's competitiveness and emissions reduction pathway.”
Echoing the importance of an enabling policy environment, Jasmina Curic from the Technical Support Unit of the Mitigation Action Facility stressed: “Strong government commitment - through clear policies, standards and risk mitigation frameworks - is essential for unlocking investment and accelerating the steel sector’s green transition.”
From an industry standpoint, Charles Dednam, Secretary General of SAISI, pointed to the key pillars required to maintain competitiveness: “The industry’s roadmap is built on four pillars - credible emissions data, a cleaner electricity supply, enabling finance, and green steel certification.”
Placing the initiative in a broader international context, Karin Reiss-Haimbala, Programme Manager in UNIDO’s Energy and Climate Action Division, added: “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.”
Moving toward approval for implementation
The project design was validated through consultations with stakeholders from government, industry and civil society, confirming alignment with sector priorities and readiness to move forward.
Feedback will be integrated into the final proposal ahead of submission to the Mitigation Action Facility in April 2026 for funding. If approved, the project will be implemented by UNIDO in partnership with the IDC and Guidehouse Germany.
The Mitigation Action Facility is a joint initiative of BMUKN, DESNZ, KEFM, MFA, the European Union and CIFF.
For further information, please contact:
UNIDO Headquarters
UNIDO South Africa
Mitigation Action Facility