Steel comes from iron ore, a naturally occurring rock pulled from the earth’s crust and then chemically transformed in massive furnaces. About 70% of the world’s steel starts this way, mined as raw ore and processed into new metal. The remaining 30% comes from recycled scrap, old cars, demolished buildings, and industrial offcuts melted down and reshaped into fresh steel.
Iron Ore: The Starting Material
Iron ore is the foundation of virtually all new steel. It’s not pure iron sitting in the ground waiting to be collected. Instead, iron atoms are locked inside mineral compounds mixed with oxygen and other elements. To make steel, you have to extract the iron from those minerals and then carefully control its carbon content.
The two most important types of iron ore are hematite and magnetite. Hematite is a reddish ore and the most abundant worldwide, found in large deposits across Australia, Brazil, India, and parts of Africa. Magnetite is a black, magnetic ore with major deposits in Russia and Sweden. Both contain enough iron to be worth mining, though the exact percentage varies. High-grade ores can be shipped directly to a steel mill. Lower-grade ores, like taconite found in Minnesota, Michigan, and Canada, contain only 25 to 30 percent iron and need to be ground up, concentrated, and pressed into marble-sized pellets before they’re useful.
Coal’s Chemical Role
Making steel requires more than just iron ore. You also need a form of coal called metallurgical (or “coking”) coal, and its job isn’t simply to provide heat. When coking coal is baked in an oxygen-free oven, it becomes coke, a hard, porous carbon material. Inside a blast furnace, that coke does something critical: it chemically strips oxygen atoms away from the iron ore. Without this step, you’d just have hot rock. The carbon in coke bonds with the oxygen in the ore, releasing it as carbon dioxide and leaving behind molten iron.
This is why steel production is so carbon-intensive. The coal isn’t just fuel; it’s a chemical ingredient in the reaction itself. Major coking coal exporters include Australia, the United States, and Canada, and their mines feed steel mills around the world.
Two Ways to Make Steel
There are two main production routes, and they start with very different raw materials.
The blast furnace method is the traditional approach. Iron ore and coke go into a towering furnace where temperatures exceed 1,000°C. The coke removes oxygen from the ore, producing liquid iron. That liquid iron then moves to a second vessel where its carbon content is reduced and refined into steel. This route dominates global production and accounts for the majority of the world’s output, especially in China and India.
The electric arc furnace (EAF) method works differently. Instead of starting with iron ore, it primarily melts down recycled scrap steel using powerful electric currents. It’s more flexible, can be scaled up or down more easily, and produces significantly less carbon dioxide per tonne of steel. The tradeoff is that it depends on a steady supply of scrap metal and affordable electricity. EAF steelmaking is particularly common in the United States and Europe, where decades of industrial activity have built up large reserves of recyclable steel.
Where the World’s Steel Is Produced
Global steel production reached roughly 1.885 billion tonnes in 2024. China alone produced just over 1 billion tonnes, more than half the world’s total. India came in second at about 149 million tonnes, followed by Japan (84 million), the United States (nearly 80 million), and Russia (71 million).
China’s dominance shapes the entire global supply chain. The country imports enormous quantities of iron ore by sea, primarily from Australia and Brazil. Ships carrying Australian ore to Chinese ports average around 250,000 deadweight tonnes each, and China has built 13 new port facilities specifically to handle even larger vessels. The shipping route from Brazil is longer and more expensive than the one from Australia, which gives Australian miners a significant cost advantage.
Recycled Scrap as a Source
About 30% of the iron and steel entering global production comes from recycled sources, a figure that has stayed remarkably flat for the past two decades despite growing awareness of sustainability. Scrap steel comes from end-of-life vehicles, demolished structures, manufacturing waste, and old appliances. It’s collected, sorted, shredded, and fed into electric arc furnaces.
Steel is one of the most recycled materials on the planet, and it can be melted down and reformed without losing its essential properties. Yet the sheer growth in steel demand, driven by construction and infrastructure in developing economies, means virgin iron ore still supplies the vast majority of production. Countries building new cities and railways need more steel than recycling alone can provide.
How Hydrogen Could Change the Process
The biggest shift on the horizon is replacing coal with hydrogen. In a process called direct reduction, hydrogen gas can do the same chemical job as coke, stripping oxygen from iron ore, but instead of releasing carbon dioxide, it produces water vapor. India has launched pilot programs under its National Green Hydrogen Mission to blend green hydrogen into steel production, starting with small amounts and scaling up over time. New steel plants in India are being required to build in compatibility for hydrogen from the start.
This approach pairs naturally with electric arc furnaces: produce iron using hydrogen-based reduction, then refine it in an EAF powered by renewable electricity. The technology works, but scaling it to replace a process that currently consumes over a billion tonnes of coal-derived coke per year remains one of the largest industrial challenges in the world.