BHP, a large mining company in Australia, said that establishing a green iron industry is prohibitively expensive, Reuters reported in a recent report.
BHP made its announcement after Australia and China agreed to work together on the decarbonisation of steel supply chains, which account for almost 10% of all global emissions.
Geraldine Slattery (BHP Australia) participated this week at a roundtable in China, with leaders from the Australian and Chinese industries. She said that low-carbon steel production is not feasible.
Slattery stated in a late Tuesday social media posting;
The cost of producing goods in Australia would still be twice as high as it is in the Middle East or China, and the customers are thousands of kilometers away.
Slattery was one of the mining CEOs who accompanied Australian Premier Anthony Albanese to China on his recent visit. Albanese urged increased cooperation between Australia and China on the development of “green steel” during this trip.
This initiative is a reflection of the growing focus internationally on the development and implementation of sustainable industrial practices, and also the possibility for partnership to be formed to promote innovation and reduce the environmental impact in the steel and mining sectors.
Absence of Interest
BHP is the largest mining company in the world. It has stated that they are not interested in producing green iron ore and steel.
The Australian steel industry’s ambitions were tempered by this stance, which highlighted the challenge in gaining the full support of major players around the world to transition towards greener methods of production.
This also highlights the diversity and complexity of the environmental issues within the industry.
Australia is a major supplier of iron ore to China, which is crucial for the steel industry.
The low grade of the ore poses a major challenge. Its inherent characteristics mean that it can’t be processed directly into steel with renewable energy.
It is necessary to perform an extra processing step in order to improve the ore. This incurs additional costs and resources consumption.
In this process, hydrogen derived from biomass or renewable sources of energy replaces coal.
Commercial adoption is expected to be widespread within the next 10 years.
China’s dependency on Australian supplies, combined with its need to refine further, reveals a complex interaction between sustainable manufacturing and resource acquisition.
Minerals Processing Industry
Australia wants to build a strong minerals processing industry and move beyond the current dependence on raw materials exports that generate A$370 billion (US$242 billion) per year.
The strategic change aims to diversify the economy of this country and to add value to their abundant mineral resources.
This ambition, however, is severely challenged by high electricity prices in the country and the substantial costs of labour, both of which are detrimental to the profitability and competitiveness for such an industry.
Australia must overcome these obstacles to develop and improve its international trade.
In February, the government allocated A$1billion to boost green iron manufacturing and supply chains.
BHP, Rio Tinto and Bluescope Steel signed an agreement in December to work together on a project for a pilot steel plant.
The plant will produce low carbon iron using direct reduced iron and renewable energy in an electric melting furnace (ESF). This initiative could start operating as early as 2028.
Fortescue plans to start a pilot plant this year that will produce green iron, which is a major step forward in the green iron project.
The post BHP’s reality check on Australia’s green-steel ambitions may change as new information becomes available.
