UAE banks boost green steel funding with new low-carbon facility for AGSI

Emirates NBD has extended a green credit facility to Arabian Gulf Steel Industries (AGSI), aiming to help the UAE-based manufacturer push forward with low-carbon steel production. Both the bank and AGSI announced this move. The financing is structured under Emirates NBD’s Sustainable Finance Framework and aligns with the Green Loan Principles set by the Loan Market Association. These principles include specific uses of proceeds, ongoing environmental monitoring, and yearly impact reports.

AGSI, a private sector steel and recycling company based in Abu Dhabi, plans to use these funds to ramp up its low-emission output for the construction and real estate sectors. The company has been positioning itself as a leader when it comes to greener steelmaking in the MENA region. In fact, according to AGSI’s own statements, its Abu Dhabi plant was declared net-zero and carbon-neutral at the Make It In The Emirates event in May 2024. That achievement was part of the reason Emirates NBD decided to back its expansion.

Ahmed Al Qassim, who heads Wholesale Banking at Emirates NBD, described the deal as a real benchmark for industrial sustainability. He said, “Through structuring this green facility, we’re setting a strong example for sustainable industrial financing. AGSI’s verified standing among the lowest carbon footprint steel producers in the region shows its leadership in environmentally responsible manufacturing.” He also emphasized that the financing would involve strict allocation rules and transparent reporting. Interesting enough, these kinds of verified practices seem to be growing in the market.

Just recently, Mashreq provided a sustainable facility worth AED 126 million to AGSI in July 2025. They mentioned that their due diligence included an independent verification from DNV, which reported emissions of just 0.13 tonnes of CO₂ per tonne of crude steel. That’s quite favorable compared to many traditional steel producers and played a role in Mashreq’s lending decision.

On the operational side, AGSI has been expanding its manufacturing footprint. Industry sources reveal that the firm has completed trial runs at a new rolling mill, called HRM 3, which is now in its final commissioning stages. This new mill is expected to add around 600,000 tonnes annually of net‑zero rebar capacity. That’s a pretty significant move away from just producing merchant billets, toward a more integrated steel-making process that can meet local demand for lower-carbon reinforcement products.

This deal also underscores how UAE banks are increasingly directing green capital into heavy industries. Regulators and clients alike are pushing for decarbonization. Emirates NBD has already linked green lending to various building and infrastructure projects, a notable example being a green term loan for a Dubai sports complex aiming for Sa’fat Gold certification. They’ve also worked on a tailored financing framework with Siemens to support long-term infrastructure decarbonization, as per the bank’s media releases.

Of course, steel is notoriously tough to decarbonize. Industry estimates suggest that about 8% of global CO₂ emissions come from steelmaking, mainly from the energy used and the process itself. Many experts believe that reducing that footprint will require multiple efforts, like increasing the use of electric arc furnaces powered by scrap, electrifying processes, embracing hydrogen-reduced iron where practical, and improving material efficiency in construction.

From the UAE’s perspective, Emirates NBD sees the AGSI facility as aligned with the country’s Net Zero by 2050 strategy and broader industrial goals. However, debt providers face challenges in such heavy manufacturing projects, both reputational and technical. The Green Loan Principles, for example, require proceeds to be ring-fenced and the outcomes carefully measured. Emirates NBD pointed out that these governance features are part of their broader sustainability efforts.

AGSI and third-party reports paint a mostly positive picture, but some industry analysts are cautious. They note that claims of net-zero for individual facilities don’t automatically translate into significant global emissions reductions. Verification standards, scope of emissions included, and the longevity of reductions are all important factors. Some say that whether offsets are used, and how robust the measurements are, can make a big difference.

For the regional construction market, having verified low-carbon rebar available could be a real boost for green building projects. Developers and contractors seeking green certifications and aiming for lower embodied carbon are increasingly asking for such inputs. If AGSI manages to expand its capacity as planned, it could supply a large share of lower-carbon steel not just in the UAE but across the Gulf region.

Finally, this kind of financing showcases how competition among regional banks is intensifying around supporting the green transition. The earlier Mashreq deal and Emirates NBD’s credit line show multiple lenders evaluating similar risks and returns for sustainable heavy industry projects. This parallel activity could broaden access to capital for decarbonization efforts but also raises the bar for verification, monitoring, and reporting practices across the sector.

As the UAE continues to scale up its green manufacturing initiatives, transactions like this will be closely watched. The real test will be whether the reported emissions reductions, detailed in industry data, verification reports, and annual impact disclosures, actually translate into tangible, measurable progress toward more sustainable steel supply chains.