Source : THE AGE NEWS
Australia’s vast Pilbara iron ore industry has the potential to reinvent itself into a lucrative “green iron” export powerhouse, research suggests, amid warnings that China’s hunt for higher-quality ore to make cleaner steel may hasten the mining province’s demise.
Andrew Forrest, the billionaire chairman of Western Australia’s third-largest iron ore shipper, Fortescue Metals Group, declared last week that Chinese steel mills’ shift away from traditional blast furnaces to less-polluting technologies threatened to turn the iron ore mining hub into a “wasteland”.
The steel sector generates more than 8 per cent of the world’s greenhouse gas emissions.Credit: Bloomberg
“They’re looking straight into a future that may or may not include WA,” Forrest told a mining summit in Perth.
Iron ore – the raw material needed to manufacture steel – is Australia’s biggest export commodity, raking in more than $100 billion in export revenue a year, and China is the world’s biggest importer.
But as Australia’s iron ore giants face difficulties maintaining the quality of their supplies, there are fears demand could shrink as Chinese steel mills turn to less-emitting processes that use electricity instead of coal and require higher grades of iron ore with fewer impurities.
Rod Sims, the long-serving former chair of the Australian Competition and Consumer Commission, said China’s effort to clean up its polluting steel industry posed a threat but also a potentially enormous opportunity for Australia, which he said was “superbly well positioned” to pivot to green iron manufacturing.
Australia could generate up to $386 billion a year by 2060 if green iron replaces iron ore as its largest export.
“Green iron is the next great chapter in Australia’s export story,” Sims said. “As the world decarbonises, our fossil fuel exports will inevitably decline – but by using our unparalleled renewable energy resources to make green iron, we can replace those exports with high value, zero carbon products that the world will need.”
One way to produce green iron involves the use of green hydrogen – hydrogen produced using renewable energy to split water into hydrogen and oxygen – as a substitute for coal in the steel-making process to ensure the end product is emissions-free.
The technology is not yet widely used across the steel industry as it remains far more expensive than basic coal-intensive furnaces.
But Sims, who now chairs the Superpower Institute, a think tank founded by energy expert and economist Ross Garnaut, said Australia had the iron ore and world-class wind and solar resources to make it work.
Former ACCC chair Rod Sims is now the chair of energy think tank the Superpower Institute.Credit: Dion Georgopoulos
Instead of being left behind as a “wasteland”, the Pilbara could “absolutely blossom”, Sims added. “The potential is enormous,” he said.
In a new report, the Superpower Institute calculates that Australia could generate up to $386 billion a year by 2060 if green iron replaces iron ore as its largest export.
It identifies South Australia’s Eyre Peninsula, Gladstone in Queensland, Kwinana, Geraldton, and the Pilbara in WA as ideal locations because they could be easily coupled with the vast solar and wind generation required, and had existing infrastructure that could be expanded.
However, the federal government must act urgently to “level the playing field”, Sims said. The report recommends providing tax credits to simulate the effects of a carbon price, grants covering up to 30 per cent of investment costs for early green iron projects and a boost to essential shared infrastructure such as electricity transmission, hydrogen pipelines, ports and water supplies.
The global steel-making industry is a significant contributor to global warming, accounting for at least 8 per cent of the world’s emissions.
Fortescue is investing heavily in a push to diversify into green hydrogen, and has plans to build a commercial-scale green iron plant in the Pilbara. The nation’s two biggest miners, BHP and Rio Tinto, meanwhile, have partnered with BlueScope Steel to build an electric iron-making furnace as part of a demonstration project at Kwinana near Perth.
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