A$636 Million Green Iron Fund Launched to Revive Australian Steelworks

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On Thursday, Australia allocated A$1 billion ($636 million) to a fund aimed at supporting the production of green iron and its supply chains. This includes an initial A$500 million to help rescue the Whyalla steelworks in South Australia, which was placed into administration on Wednesday due to unpaid bills. The South Australian premier expressed his commitment to developing lower-carbon steel production in the region.

The A$500 million is part of a larger A$1.9 billion funding package from both state and federal governments to stabilize the steel plant, which is owned by commodities financier Sanjeev Gupta’s GFG Alliance. GFG announced on Wednesday that it is seeking advice on its options going forward.

Australia is the world's leading iron ore producer, with exports generating more than A$100 billion in income for the 2023-24 period. The iron and steel industries support over 100,000 direct and indirect jobs, according to government data.

With elections set to be held by May, a key policy for the Labor government, under its "Future Made in Australia" initiative, is to leverage the clean energy transition to boost manufacturing growth and add value to critical minerals. 

"Investment in green iron and steel will secure future demand for Australia’s iron ore as the global market shifts toward lower-emissions production," the Department of the Prime Minister stated.

This transition, however, poses a challenge to Australia’s market share in the steel supply chain, as the country's iron ore has relatively low purity, requiring more processing to reduce carbon emissions.

Australia’s major iron ore companies are already exploring ways to cut carbon from the steel supply chain to meet their emission targets, but they face growing competition from other regions with emerging green industries.

Fortescue is on track to produce 1,500 tonnes of green iron using hydrogen at its Christmas Creek operations by the end of the year.

In December, BHP, Rio Tinto, and BlueScope Steel announced plans to jointly develop a pilot plant to produce low-carbon iron from Pilbara ores.

The Superpower Institute, an Australian think tank, estimates the country’s potential for green iron and steel production could be worth up to A$400 billion.

South Australia is seen as a key player in Australia’s green iron roadmap, thanks to its access to a deep-water port, abundant high-grade magnetite ore, a steel plant, and a grid powered by a high proportion of renewable energy. Companies involved in early-stage green iron technology include Calix, Element Zero, and Israel-based Helios Project.

Paraphrasing text from "Reuters" all rights reserved by the original author