Can Green Iron Replace Australia’s Coal and Gas Exports?
Australia is exploring a potential alternative to its coal and gas exports by investing in green iron, a novel method of producing steel using renewable energy. This move could eventually replace the income generated from fossil fuel exports while significantly cutting down carbon emissions, potentially creating a $100 billion export revenue opportunity.
The Rise of Green Iron Technology
The innovation lies in using electric smelting furnaces (ESFs) to convert Pilbara iron ore into green iron, which could revolutionize the steel industry. Unlike traditional methods, which are heavily reliant on coal, this process uses electricity to melt scrap metal and direct reduced iron, dramatically reducing emissions. The shift to green iron would not only decarbonize steel production—one of the largest global contributors to carbon emissions—but also generate much-needed export income as Australia transitions away from fossil fuel dependency. The project requires significant investment in hydrogen production, electrolysis, and infrastructure, potentially costing upwards of $2 trillion. However, with enough scale, costs could decrease dramatically, making it an economically viable alternative in the long term.
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Progress in Green Iron Production
While Australia is at the early stages of green iron production, there has been progress. Industry giants like Rio Tinto and BHP are working on a 30-kiloton ESF in Western Australia, supported by a $75 million grant from the state government. This marks the first significant step towards realizing the full potential of green iron. Additionally, the Stegra green steel plant in Sweden, set to begin operations in 2026, provides a real-world example of this technology’s feasibility.
Challenges and Future Outlook
The challenge remains that the technology is largely unproven, and the required scale is immense. While hydrogen export and electric cable infrastructure are being explored as alternatives, green iron offers a promising solution to replace coal and gas exports, driving both economic growth and decarbonization efforts. Australia’s push to invest in this sector could help secure a sustainable future by becoming a global leader in green steel production.
