Global green steel leader rebrands and targets new territories – but Australia is not on the list

The world’s green iron and steel leader has rebranded as it makes it clear that it is already considering further investments around the world. Australia is not on its list.

With Western Australia now contemplating a new future for its iron ore exports, South Australia is currently aiming to entice green iron investment into the state. Iron and steel technology leaders like Stegra – the new name for H2 Green Steel – are just the type of forward-thinking companies it needs to be attracting.

Stegra is already building the world’s first commercial-scale green steel plant in northern Sweden, which will begin production in 2026. The steel produced can be classified as ‘green’ because the plant will use green hydrogen from day one.

In its update about the rebranding, Stegra highlighted that it has already started planning further green iron and steel projects outside Sweden – in Portugal, Brazil and Canada – noting that these are places where “the company’s customers need help with value-chain decarbonisation and which offer abundant access to renewable electricity and strong grid connections”.

Parts of Sweden, Canada and Brazil share key attributes that interest Stegra – they have both high-grade iron ore and decarbonised power grids to allow production of green hydrogen.

With its renewable energy grid penetration at 75% and heading to net 100% by 2027, plus plentiful high-grade iron ore, South Australia should be another territory among the group of potential green iron and steel pioneers. Yet despite South Australia beginning efforts to capitalise on its advantages and attract green iron and steel investment, it has yet to make Stegra’s list.

You can’t make green iron and steel with gas

Part of the explanation may come from South Australia’s August 2024 update summarising the feedback it has received so far on its Expressions of Interest (EoI) process.

Industry feedback highlighted the role that gas needs to play in direct reduced iron (DRI)-based ironmaking before green hydrogen becomes available. If the South Australian government takes this feedback on board, it will never attract leaders like Stegra that are clearly focused on immediate use of green hydrogen. You can’t make green iron and steel with gas.

There was also feedback from industry on the role of carbon capture and storage (CCS) despite the very poor track record of this technology in the steel sector.

Instead of going down gas and CCS rabbit holes, South Australia needs to take advantage of its world-leading renewable-based power grid.

The state already has more power than it can use in the middle of sunny and windy days. As a result, it is developing a 250 megawatt (MW) green hydrogen plant to use this excess renewable energy. Using renewable power that would otherwise have been wasted means there is potential for this green hydrogen to be competitively priced.

Some of the green hydrogen plant’s future production has already been earmarked for iron and steelmaking. The state government has reached a provisional agreement with Liberty Steel to provide green hydrogen to a new DRI plant that is planned to replace coal-based steelmaking at Whyalla.

However, the future of the Whyalla steel plant is now increasingly clouded by financial pressures, and the planned switch to cleaner iron and steelmaking technology has been delayed. South Australia may well be better off offering its green hydrogen production to the new potential iron and steel entrants it is currently trying to attract, while de-emphasising the role of gas.

Australia should be prioritising early, domestic green hydrogen adoption for iron and steel

The Australian government’s new National Hydrogen Strategy rightly narrows focus on potential uses for green hydrogen and identifies three industries where it can be most effectively used – ammonia, alumina and iron.

Unfortunately, the government remains focused on exports of green hydrogen, despite the difficulty and expense of shipping it. The government notes that the new strategy is a “strong signal of Australia’s intention to continue supplying energy to the global market”, and that “These exports could also provide opportunities for existing workers in declining fossil fuel industries to transition.”

Demand for Australian coal and gas shipments certainly faces decline, but the government seems to see green hydrogen as an opportunity to prolong the nation’s obsession with the export of raw materials and energy commodities, rather than products that are made from them.

Instead of exporting it, even more focus is needed on domestic use of green hydrogen in industries where it makes sense, like ironmaking.

One CSIRO-modelled chart in the new strategy doesn’t see any domestic demand for green hydrogen in the iron and steel sector until 2045. If Australia waits that long, it will be surpassed by other regions around the world that have the resources to be early movers in truly ‘green’ iron and steel.

Following Stegra’s green steel plant in Sweden, other iron ore producers like Canada and Brazil, and even some African nations like Mauritania look set to establish green iron operations via early adoption of green hydrogen.

To be among those first movers capturing early green steel demand, Australia must prioritise early domestic use of green hydrogen over exports.

Green iron cannot be made with fossil fuels, and South Australia – as well as the key iron ore exporter Western Australia – must not disqualify themselves from the group of global green iron export pioneers by becoming distracted by gas.