Namibia beats SA to green steel milestone before Coega can even get out the gate

Amit Saini, a director at Eastern Cape-based Coega Steels, has no doubt that South Africa can be Africa’s green-steel hub. Pictured are steel billets produced in the Gqeberha mini-mill’s induction furnace which, along with electric arc furnaces, has a lower carbon footprint than traditional coal-fired blast furnaces. (Photo: Supplied)

By Lindsey Schutters

6 Apr 2025

President Cyril Ramaphosa committed R319-billion of the Just Energy Transition funds to developing South Africa’s hydrogen economy, but Namibia has just leapfrogged its bigger neighbour.

The balance of power in the battle for supremacy in the African hydrogen economy decisively tipped last week when Namibia’s HyIron Oshivela plant successfully produced green hydrogen for the first time. This means Namibia is streaking ahead in the race for green steel production, a critical component of future industrial decarbonisation plans.

“The commercial production of direct reduced iron ore [DRI] is anticipated to be produced as of towards the end of April 2025,” Damian Howard, senior vice-president of energy at DMG Events (the organiser of the Global African Hydrogen Summit), told Daily Maverick.

“In the first project phase an annual output of 15,000 tonnes DRI is planned. With a planned start in late 2025, Oshivela will be one of the biggest primary production sites of green iron worldwide.”

The environmental impact is equally significant.

“Already at this stage, the project is expected to avoid 27,000 tonnes of CO₂ emissions per year, equivalent to 50% of the CO₂ emissions of Namibia’s power industry,” Howard said, adding that “considering that this is the first of its kind globally, it’s set to set a trend and demonstrate the potential and viability of green products production in Namibia”.

And the project didn’t use South African electrolysers either, with Howard saying that “the key factors were more based on the affordability of the electrolysers [and the] delivery time of the needed model” to justify the use of China-made products.

Divergent approaches

The two countries have been following separate paths towards the same destination.

Namibia’s Green Industrialisation Blueprint, launched in August 2024, presented a laser-focused vision centred on three coastal “development valleys” at Lüderitz, Walvis Bay, and Cape Fria.

Howard highlighted three key differentiating approaches that may have given Namibia the edge: political will, an investor-friendly climate and a social licence to operate.

"In line with the goals of the Paris Agreement, the government of the Republic of Namibia is pursuing the long-term goal of climate neutrality,” he said. “Namibia’s former president Hage Geingob outlined a framework for the development of a green hydrogen economy at the highest level of government and that would be overseen by the Presidency.”

On regulatory matters, Howard commended Namibia’s “pragmatic approach to regulation and policy”, saying that “the Namibian government is open to working with its partners to foster a conducive environment in which to invest”.

As an example, the country's flagship Hyphen Hydrogen project in Lüderitz is now well under way, developing 7.5GW of renewable energy to produce approximately 370,000 tons of renewable hydrogen and 2 million tons of renewable ammonia annually, primarily for European markets.

Production is expected online by early 2029, with future expansion capacity up to 10 times its initial size.

SA paralysed by caution

South Africa’s Hydrogen Society Roadmap, adopted in 2021, outlined an ambitious but ultimately more diffuse vision. While the initiative is substantial on paper – including plans for a Hydrogen Valley industrial cluster and the massive Boegoebaai project in the Northern Cape – implementation has lagged significantly behind Namibia’s.

Read more: South Africa’s ‘green hydrogen’ dream — hype or hope?

President Cyril Ramaphosa is betting more than a fifth of the R1.5-trillion Just Energy Transition Investment Plan with R319-billion on this emerging green hydrogen market – the same amount of money promised to support the country’s 278 municipalities during the transition.

Feasibility studies and pilot projects such as the Keren Energy facility in Vredendal have a total budget of R4.5-billion, a full R1.2-billion more than what is reserved for the localisation of renewable energy value chains.

In Ramaphosa’s defence, the Hydrogen Valley was estimated to add up to R171-billion to the South African GDP by 2050 and would create up to 30,000 direct and indirect jobs per year across the value chain.

The Namibia breakthrough does alter the projections, though, and feeds the hydrogen-hater argument that using renewable electricity directly to produce green iron is more efficient than using green hydrogen.

“If you do the calculations, capex isn’t in electricity’s favour when it comes to powering industry,” said Stanford Chidziva, director for the University of the Western Cape green hydrogen programme. “Using electricity from renewable sources to make hydrogen leads to more revenue streams. Hydrogen is key in the chemical industry, agriculture [fertiliser], and in the space industry. In fact, there are three or four downstream uses for hydrogen versus the one or two for electricity.”

Coega enters the green steel chat

Despite the setback in the race against Namibia, South Africa still holds significant potential in the green steel sector, particularly through mini mills like Coega Steels in the Eastern Cape.

Amit Saini, director at Coega Steels, remains confident that South Africa can become the continent’s green-steel hub. “South Africa’s steel production output last year reflects the significant contribution being made by secondary-steel producers to the economy and efforts to curb carbon emissions,” he said.

While producers using traditional coal-fired blast furnaces produced 2.59 million tonnes of steel in 2024, mini mills, which make steel from scrap metal, yielded approximately 2.11 million tonnes in the same period, with considerably lower emissions.

“Mini mills emit roughly four to five times less carbon than primary steel producers,” Saini said. “This shift is driven by increasing regulatory pressures, consumer demand for eco-friendly products and international commitments to reduce carbon emissions under pacts such as the legally binding Paris Agreement on climate change.”

Unlike Namibia's approach using green hydrogen to produce DRI, Coega’s strategy is currently centred on recycling scrap metal, which Saini described as “the leading and foremost method of green steel production”.

Why this is important

Namibia has leapfrogged South Africa by starting green steel production using green hydrogen, thanks to political will, regulatory agility and focused planning. This is a missed chance to create jobs, attract investment and lead in an emerging green economy;

South Africa’s hydrogen strategy is well-funded but scattered, stuck in feasibility stages and missing key infrastructure like a DRI plant. This shows that leadership and execution matter more than just ambition or resources; and

While SA has mineral advantages, Namibia’s streamlined approach and institutional support are proving more effective for fast-tracking green hydrogen development. If projects don’t get off the ground, the economy loses out, and climate promises could fall flat. The public needs to hold leaders accountable for real delivery, not just ribbon-cutting plans.

DRI’s dirty secret

Amit Saini, a director at Eastern Cape-based Coega Steels, has no doubt that South Africa can be Africa’s green-steel hub. Pictured are steel billets produced in the Gqeberha mini mill’s induction furnace which, along with electric arc furnaces, has a lower carbon footprint than traditional coal-fired blast furnaces. (Photo: Supplied)

Saini acknowledged that South Africa currently lacks a merchant DRI plant – the very technology that has given Namibia its competitive edge – but suggested this could change with the right policies.

“By using iron ore to produce direct reduced iron, we can alleviate potential scrap metal shortages in the domestic market in the future,” Saini said. “It is a viable substitute for scrap and aligns well with the future of steel production in the country, particularly given the increasing adoption of electric arc furnaces over the next few years.”

He argued that South Africa has inherent advantages that could still be leveraged: “We have the biggest base of mineral resources compared to other African countries. These carry an estimated value of $2.5-trillion (R44-trillion).”

However, he did say that more than 90% of iron ore mined in South Africa is being exported owing to limited domestic beneficiation and constraints in the primary steel sector’s manufacturing capacity – a stark contrast to Namibia’s focused approach on value addition.

A new continental energy order

A crucial element in Namibia’s success has been its institutional framework. Howard explained that “the Namibian government established the facilitation and coordination arm, the Green Hydrogen Programme, as the lead institution to fasttrack all research, development and roll-out of the government’s vision for the Namibian and regional hydrogen ecosystem.”

For now, Namibia has established itself as Africa’s hydrogen superpower, with a clear early lead in green steel production and focused project execution providing an advantage in establishing a green hydrogen export industry.

South Africa’s competitive advantage in platinum group metals, essential for hydrogen technologies, hasn’t translated into actual production leadership. Now it must play catch-up to a neighbour with a fraction of our industrial base. DM

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