· 5 min read
While the world races to secure semiconductor supply chains and critical minerals, one material has quietly remained foundational and dangerously overlooked: steel.
Despite its ubiquity, steel is rarely treated as the strategic asset it truly is. It doesn't command the headlines like semiconductors or oil, yet it underpins everything from skyscrapers to submarines, wind turbines to warships.
If semiconductors are the neural pathways of modern power, steel is its skeleton - silent, structural, and absolutely indispensable.
It’s time we start treating it that way.
More than infrastructure
No country can project power, build infrastructure, or respond to crises without it. And while data may drive economies, it is still cold, hard steel that defends borders, and constructs the physical world.
But steel is more than material. It is a system: from mining iron ore and coking coal to refining, fabricating, and deploying. That system is increasingly fragile, exposed to geopolitical pressure, climate transition risks, and concentrated control.
The supply chain is the strategic leverage
China produces over half the world’s steel and dominates the export of both finished and intermediate products. This position grants Beijing enormous pricing power and geo-economic leverage, as demonstrated during trade wars and infrastructure diplomacy across Asia and Africa. A clear example is Pakistan’s China-Pakistan Economic Corridor (CPEC), where China exported both the infrastructure and the steel to build it. In periods of trade tension, Beijing has also leveraged its industrial overcapacity, supplying global markets at scale and displacing producers from India to Europe, turning material dominance into a quiet form of strategic leverage.
Meanwhile, high-grade speciality steels used in submarines, aerospace, and missile defence are produced by only a handful of nations such as the US, Russia, Germany, China and the UK. Many others, including major militaries, depend on foreign steel for critical defence components.
In a major conflict, natural disaster, or trade rupture, these dependencies could become liabilities. A nation that cannot secure or produce its own steel cannot build its own resilience.
Defence depends on metal, not just microchips
Modern defence strategy rightly emphasises digital dominance. But what happens when the physical components of military power are vulnerable? Tanks, warships, hypersonic missile casings, and hardened shelters, all require specific grades of steel. In a scenario of prolonged war or a global supply shock, import dependence becomes a strategic weakness.
The US, for example, has recognised this vulnerability through its Section 232 tariffs, which aimed to protect its dwindling steel base. But tariffs are tactical; what’s needed is a strategy that treats steelmaking capacity as essential infrastructure, on par with semiconductors and energy.
The green steel paradox
Climate policy further complicates the picture. Steel is one of the most carbon-intensive sectors. Countries like Sweden and Japan are leading decarbonisation efforts through hydrogen-based processes. But this transition is slow, costly, and uneven.
This is not yet the world we live in, but the industry should prepare for when it is. As political cycles evolve, climate regulations are likely to tighten once again. In these scenarios, nations may find themselves penalised for relying on conventional blast furnaces, through carbon border taxes or exclusion from green supply chains. This risks creating a two-tiered system: green steel for the wealthy and constrained industrial development for the rest.
In this context, climate policy becomes industrial policy. Nations that lead in green steel will not only cut emissions but will control future industrial and defence manufacturing. For those unable to transition due to technological or financial limits, there is a risk of exclusion from critical manufacturing and defence supply chains, leaving them dependent on foreign steel, exposed to price fluctuations, and vulnerable to external leverage. Over time, this could erode their industrial resilience and weaken their position in global power dynamics.
From commodity to geostrategic asset
We've seen this play out before. Oil crises redefined energy security. Chip shortages exposed digital fragility. Rare earth monopolies revealed the perils of material dependency.
Steel is no different; except more fundamental. It’s not just a product; it’s a platform. And without it, power is compromised.
Steel must be treated as a foundational material and a strategic enabler. Policymakers must adopt a three-pronged approach: resilience, innovation and control over strategic choices.
First, domestic steel capacity must be preserved for national security. In the UK, this may require nationalising British Steel to safeguard critical infrastructure. Similarly, the US is monitoring the Nippon Steel/US Steel deal and stands ready to intervene in foreign acquisitions that could undermine national security. Both nations share strategic priorities in ensuring steel production remains central to industrial resilience and defence capabilities.
Second, a sustained, well-funded long-term investment plan, coordinating government-private sector cooperation is essential to prioritise green steel technologies, securing both sustainable industrial growth and national security.
Finally, steel policy must be integrated into broader strategic frameworks, from defence planning to trade agreements. This includes carbon border taxes that align with national security goals and the diversification of steel imports to avoid dependency on geopolitical counterparts.
The stakes
Ideas shape nations, but only if steel holds them up. For all our advances in digital technology, the foundations of power remain physical. Ports, pipelines, tanks, and turbines don’t run on code alone.
Steel is what allows nations to stand. And if we fail to secure it, they may one day bend under pressure they can no longer resist.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
