The Australian Government is investing almost $20 million to bolster the green metals sector with a grant to develop the production of low-emissions iron using Pilbara iron ore in Kwinana, Western Australia.
The $19.8 million funding will support a $48.8 million front-end engineering design (FEED) study for the NeoSmelt project, which is seeking to replace the traditional blast furnace steelmaking route by developing an electric smelting furnace to make low-emissions iron.
NeoSmelt is a joint venture between BlueScope (ASX:BSL), BHP (ASX:BHP), Rio Tinto (ASX:RIO), Woodside Energy (ASX:WDS) and Mitsui Iron Ore Development. The Kwinana facility is poised to become Australia’s largest ironmaking electric smelting furnace pilot plant.
The electric smelting furnace, known as ESF, is a technology advance that could reduce emissions by as much as 2 tonnes of carbon dioxide per tonne of steel produced.
The innovation is expected to cut emissions by millions of tonnes of carbon dioxide each year if rolled out Australia-wide.
A final investment decision is expected in 2026, with operations at Kwinana planned to begin in 2028.
Funding for NeoSmelt is being delivered through the Australian Renewable Energy Agency (ARENA) from the $400 million Industrial Transformation Stream of the Albanese Government’s $1.9 billion Powering the Regions Fund.
The Industrial Transformation Stream is designed to support industrial facilities in regional Australia to reduce emissions through innovative renewable energy, energy efficiency and electrification technologies.
Minister for Climate Change and Energy Chris Bowen says the project is expected to generate up to 100 full-time equivalent roles during operations, potentially peaking to 300 during construction phase.
Assistant Minister for Climate Change and Energy Josh Wilson adds that investment in such a crucial Australian industry could help secure the future of Australia’s iron export industry and bolster global green steelmaking while accelerating the necessary shift away from fossil fuels.
“As the biggest iron ore producer in the world, every effort we make towards cutting emissions here at home has far-reaching benefits,” Wilson says.
“Western Australians are experts at making and exporting high-quality metals–producing low-emission iron gives us yet another selling point in markets across the world.”
The steel industry accounts for 7% of global energy demand and generates between 7% and 9% of carbon dioxide emissions. Currently, around 70% of steel is produced using energy intensive and high emission methods.
The Department of Industry, Science and Resources (DISR) says global demand for green iron could reach more than 850 million tonnes by 2050 in a net zero scenario.
The federal government’s investment follows research from the Institute for Energy Economics and Financial Analysis (IEEFA) showing that Australia is not well placed for a green steel transition based on the available resources and set-up in its mining and steel sector, as reported by Mining.com.au.
The Chamber of Minerals and Energy Western Australia (CME) has been examining Western Australia’s potential in particular to play a role in decarbonising the emissions-intensive steelmaking process, following the release of its ‘Realising WA’s green iron potential’ report.
Based on an analysis by Mandala Partners, the report uncovers the opportunities and actions required to capitalise on the state’s green iron production.
The CME finds the large-scale production of green iron in Western Australia could reduce global emissions by 1.2% by 2050 – effectively offsetting nearly every tonne of CO2 currently produced in Australia – while generating $74 billion in economic value and supporting 19,600 direct jobs.
The Department of Industry, Science and Resources says global demand for green iron could reach more than 850 million tonnes by 2050 in a net zero scenario. Green iron proposals are currently under consideration around the country to capture the growing global demand for green iron, which makes Australia well placed compared to many other nations.
Write to Adam Orlando at Mining.com.au
Images: Bluescope & Stock
