Key Findings
Australia is expected to play roles both as a supplier of suitable feedstock and as a green iron producer. Yet Australian miners are missing the first wave of low-emissions iron production, supplied by Vale, Rio Tinto’s IOC in Canada and LKAB in Sweden.
Australia must pursue two parallel options: Leverage its vast magnetite deposits to join existing suppliers of higher-grade iron ore, and develop new pathways and technologies to upgrade Pilbara’s low-grade iron ore for use in low-emissions ironmaking.
New technologies that make Pilbara iron ore suitable for low-emissions ironmaking are essential for the wider decarbonisation of the global steel industry. But Australia can begin with existing technology if it aspires to become a green iron superpower.
Australia has long discussed developing a green iron industry, and Prime Minister Anthony Albanese stepped up efforts by attending high-profile meetings during his recent trip to China.
While this appears to be a promising opportunity for Australian iron ore miners, companies such as BHP have made it clear they will not pursue this path, saying the production of green iron in Australia is commercially unfeasible. The company maintained that the most effective approach to lowering emissions is by targeting reductions from coal-consuming blast furnaces in China. These notions come as no surprise from BHP, which lags its peers in its commitment to decarbonisation, as IEEFA has pointed out.
Rio Tinto seems to be concentrating more on other markets to produce suitable feedstocks for low-emissions iron, mostly based on hydrogen direct reduced iron (H2-DRI), rather than Australia. The company has underlined that producing green iron in Australia is expensive.
Fortescue remains optimistic and has set ambitious targets for the transition; however, it is pursuing only a very small-scale pilot plant at Christmas Creek. “We’re also looking to what’s next for green iron and how we can scale it to meet the demand from China and our customers,” noted Agustin Pichot, Fortescue’s CEO for growth and energy.
Australia has a world-leading opportunity, and while international competition is growing, there are still opportunities for progress and further pursuit.
If Australia aims to position itself as a global leader in the emerging green iron market, it must first assess whether it has the essential ingredients and whether it is on track to leverage its resources to meet long-term targets. There are several pathways to producing low-emissions iron. Some of Australia’s initiatives, mostly backed by big miners, wait for technological breakthroughs to make their lower-grade hematite and goethite ores suitable for low-emissions and green iron production. Others are pursuing conventional magnetite processing to produce iron ore concentrate and pellets suitable for DRI.
IEEFA’s new Australian Green Iron Tracker has been developed to monitor progress in these initiatives, alongside the development of magnetite mines, using the latest publicly available data.
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