The steelmaker has announced that is investing 65 million euros (US$72.8 million) in the effort, which will explore hydrogen as an alternative reductant in the direct reduction process. The company said it will collaborate with the University of Freiberg in Germany on the project, which will be based at its plant in Hamburg.

"Our Hamburg site offers optimum conditions for this innovative project: an electric arc furnace with DRI system and iron ore pellets stockyard as well as decades of know-how in this area. The use of hydrogen as a reducing agent shall now be tested in a new shaft furnace," said ArcelorMittal Germany chief executive Frank Schulz.

The project will initially play out on a demonstration scale, targeting 100,000 metric tons of hydrogen-based DRI production. Later plans call for construction of a pilot-scale plant, it said.

ArcelorMittal said it plans to derive hydrogen from the DRI plant’s top gas, separating it through the pressure swing adsorption process. But in the future, it hopes to generate hydrogen through renewable resources.