Australia needs to make significant investment decisions on green iron projects by around 2030 as competition increases abroad, experts told an industry forum recently held in Perth.

State and federal governments in Australia have been spending significantly to build up a low-emissions, or green, iron industry, with plans to eventually produce green steel to feed decarbonizing supply chains.

However, speakers at a recent Australia-based conference warned of the scale and time needed to build the required infrastructure, and how key hubs overseas looking to produce green iron are already evolving.

Australia is the world's largest producer and exporter of iron ore. Salable production is expected to reach a peak of 971 million mt by 2029, accounting for 37% of global production at the time, according to S&P Global Market Intelligence data. Output is then expected to start falling from 2030.

"We've got an immediate challenge improving the viability of Australian iron ore in the tech pathways that we choose; and then we've got a time challenge in setting up to compete in the new green iron corridors that become established. It's really hard," Tanya Hodgson, an investment manager at the Australian Renewable Energy Agency, told the Australian Green Iron & Steel Forum held in late March.

"We need to be able to confidently make [final investment decisions] around the 2030 horizon. These are capital-intensive integrated facilities. The tech maturity still needs to progress to a point where we're confident to take decisions at commercial scale," Hodgson added.

China's role in green iron

With momentum behind direct-reduced iron hubs in the Middle East and Brazil, "it's going to be Australia's challenge to compete with those on a timeline that doesn't leave us behind," Hodgson said.

Lifting the grade of Australia's predominantly low-grade iron ore for use in green steel supply chains via DRI is "an issue of Australian national interest" as "exports will come under threat ... if China gradually brings the steelmaking industry within its domestic carbon trading system and increases its carbon price," James Choi, managing director of J2 Advisory, told the forum.

China is Australia's top export market for iron ore, purchasing more than 800 million mt of iron ore from Australia in 2024, a record, according to S&P Global Commodities at Sea data.

Posco Holdings Inc.'s Port Hedland iron project in Western Australia could be a big part of the solution by moving green iron production closer to the source of energy and iron ore, Choi said.

"Posco's Port Hedland iron project and HyREX technology does provide that pathway for Pilbara's low-grade hematite," Choi said. HyREX uses hydrogen to convert fine iron ore into DRI, which is then charged into an electric smelting furnace to produce hot metal.

The first stage of the project includes a 3.5 million mt/year pellet plant and a 2.2 million mt/year hot-briquetted iron plant that will use a reductant comprising LNG and 1% hydrogen.

"That 1% of hydrogen will be ramped up over time as hydrogen becomes economically feasible," Choi said.

Technology perspective

Hydrogen is needed at scale for a "green iron and steel economy to be effective," yet Australia's industry has "a bit of work to do" to make it low-cost, Hodgson said.

Using green hydrogen instead of coke as a reducing agent lowers emissions from DRI. If DRI is fed to electric arc furnaces, which produce fewer emissions than traditional coal-fired blast furnaces, emissions from the entire steelmaking process could decrease to near zero.

Richard Carcenac, head of green metal technology at Fortescue Ltd., told the forum that production will start this year at its green metals project at the Christmas Creek iron ore project. The plant is expected to produce over 1,500 mt of high-purity iron per year using renewable energy and hydrogen reduction technology.

Carcenac said Fortescue is in talks with Chinese original equipment manufacturers to fund a green iron supply chain to eventually export 100 million mt per year of green metal, but the company has yet to set a timeline on when this will be achieved.

Australia needs to sort out technology pathways to green iron as 70% of global steel supply still relies on blast furnaces. Such furnaces are nearing a "midlife crisis" at around 2030, Hodgson said, noting that it would be "very, very expensive to replace those assets."

Aaron Walker, policy manager and head of economics at Western Australia's Chamber of Minerals and Energy (CME), told the forum that of the key green iron technologies his group evaluated in a December 2024 report, "none are fully proven from a technology perspective at the moment — and that is step one."

"We need the [research and development] to make sure they work from a chemical and technical process," Walker said. Then, producers need to work out how to both scale up and "bring down the costs so it is competitive with the range of existing competing projects," Walker said.

Western Australia could be producing at least 4.5 million mt of green iron by 2030 with potentially A$37.5 billion ($22.5 billion) in investment, "but fragmented electricity networks, complex state and federal approval processes, and the high-cost environment are slowing investment," CME's report said.