Renewable energy key to forging Australia’s ‘green iron corridor’
![Investors say green iron and energy are crucial to steelmaking beyond fossil fuels, a survey found. (Dean Lewins/AAP PHOTOS)](https://images.thewest.com.au/publication/C-15403152/9b42e75f7534b2a5195f2421e4173534389d5bd0-16x9-x0y0w1280h720.jpg?imwidth=810&impolicy=wan_v3)
Steelmaking needs to be electrified, investors warn, but that requires governments to commit to the end of coal-fired blast furnaces.
An investor survey released on Friday found a majority (59 per cent) viewed effective climate policies as crucial for “green steel”, which most said could not be produced by burning fossil fuels.
Most investors (81 per cent) defined green steel as needing to be made using green hydrogen and renewable energy, and rejected projects that relied on hydrogen derived from gas or offsets to reduce greenhouse gas emissions.
Australian, American, Asian and European investors believed metallurgical coal would become more risky in the next decade, according to the survey by shareholder research body the Australasian Centre for Corporate Responsibility.
Nearly half of respondents were directly lobbying their governments for incentives to attract renewable energy development as a crucial component for decarbonising steelmaking and reaching net zero.
The survey of 500 investors in the steelmaking, iron ore and metallurgical coal mining sectors also found support for importing green iron as a viable opportunity for steelmakers with limited access to renewable energy.
“Green iron corridors” from countries like Australia could use green hydrogen to turn iron ore into green iron pellets for steelmakers in countries such as Japan, the centre’s survey report suggests.
“Any company seeking to expand metallurgical coal assets or double down on coal-based iron-making should be paying serious attention to this strong investor sentiment,” the centre’s lead analyst Fiona Deutsch said.
But frameworks must be put in place by governments to remove barriers for the new industry, investors said.
The survey found interest in “genuine” emissions reduction technologies such as green hydrogen-based iron-making and electric arc furnaces.
Even most investors in China (72 per cent), the world’s biggest steelmaking region, did not believe metallurgical coal would have a long-term role in steelmaking.
However, investors in big-emitter India were the least confident (33 per cent) in market demand catching on for green production.
The investor report was compiled before billionaire and self-styled green energy champion Andrew “Twiggy” Forrest announced 700 white-collar jobs would go from its global operations.
Despite headlines proclaiming his “hydrogen fantasy” is over, Fortescue Group has said its green iron project in Western Australia will proceed. Nor is Fortescue withdrawing from the Port Bonython hub in South Australia.
Fortescue’s Gladstone green hydrogen project remains one of its four priority projects and is expected to be operational in 2025.
Energy Minister Chris Bowen said Australia had more than 50 companies “actively progressing” renewable hydrogen, making the clean hydrogen investment pipeline among the largest globally at more than $225 billion.
Export partners were keen to receive Australia’s green hydrogen in coming years and the federal government was committed to working alongside commercial interests to deliver on this potential, he said.
Production tax credits announced in the May budget would help Australia compete on green iron and steel production while providing a bulwark for the nation’s top export - iron ore, recent modelling by the Institute for Energy Economics and Financial Analysis found.
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