Australian Mining Giants Join Forces to Develop Green Iron Plant
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Australia's largest iron ore and steel companies have chosen a site for a pilot project aimed at decarbonizing the country's steel industry, reports Nikkei Asia. BHP, Rio Tinto, and BlueScope will collaborate on the NeoSmelt initiative, using electric smelting technology to produce steel from Pilbara iron ore with renewable energy.
The project, announced Tuesday, will be located in the Kwinana Industrial Area south of Perth, Western Australia. It aims to demonstrate that Pilbara iron ore, currently Australia's most lucrative export, can be used to produce low-carbon molten iron using direct reduced iron (DRI) and electric smelting furnace technology.
"These are the Pilbara ores that power this nation's economy, so getting it right would be a major step forward in setting up WA and Australia to be an important part of a low greenhouse gas emission future," said Tim Day, asset president at BHP Western Australia Iron Ore, to Nikkei Asia.
The NeoSmelt project is driven by the need to adapt to global decarbonization efforts, which threaten demand for Australia's traditional coal-fired blast furnace steel production. The project will initially use gas before transitioning to hydrogen, producing an estimated 30,000 to 40,000 tonnes of molten iron annually.
The initiative has received AU$75 million in funding from the Western Australian government. The consortium plans to begin feasibility studies next year, with a final investment decision by 2026 and operational start-up two years later.
The project's success will depend on overcoming several challenges, including the need to develop and scale up technology, and the ability to convince customers to pay a premium for green steel products.
"If you go too quickly, you go broke. If you don't go quickly enough, you go broke," said Tony Wood, director of the energy and climate change program at the Grattan Institute, to Nikkei Asia. "It's a lot easier when you've got multiple big balance sheets who are prepared to get behind this, because some of the costs of this are pretty scary indeed."
BlueScope, which is managing the project, will leverage its experience operating the world's only electric smelting furnace processing DRI in New Zealand. The project aligns with Australia's net-zero ambitions and aims to ensure the long-term viability of its most valuable export.