BHP: It is too expensive to build an Australian green iron industry, as PM calls for China collaboration

BHP, a major miner in Australia, has stated that it would be too expensive for Australia to develop a "green-iron" industry. This comes after Australia and China decided to work together this week to decarbonise steel supply chains. These are responsible for almost a 10th of all global emissions.

BHP Australia's Geraldine Slattery said the costs of producing low-carbon steel products "just don't stack up" when she attended a business round table with Australian and Chinese leaders this week in China.

Slattery stated in a post on social media late Tuesday that "even with generous policy assistance, the cost (of production) (in Australia), would be twice as much as the Middle East or China - customers thousands of kilometers away."

Slattery, along with other CEOs from mining companies, accompanied Australian Premier Anthony Albanese to China on a trip this week. Albanese said that the two countries need to work more closely together on green steel.

Australia's ambitious plans were shattered by the lack of enthusiasm shown by the world's largest miner after the talks. It said that its strategy was to "not produce green steel or iron ore ourselves".

The iron ore that Australia provides to China is of a low quality and cannot be processed directly into steel using renewable energy.

The resultant product, green iron, is a low carbon base for green steel. These processes will not be widely available until the next decade.

High power and labour costs have hampered Australia's efforts to diversify its economy from raw materials that generate around A$370 billion (US$242 billion) in revenue each year.

In February, the government allocated A$1 Billion to support the manufacturing of green iron as well as its supply chain.

BHP, Rio Tinto, and Bluescope Steel have agreed to develop a pilot plant for producing low-carbon iron in an electric melting furnace (ESF) using direct reduced iron and renewable energy. The project could start as early as 2028.

Fortescue is also working on a green-iron project, which will produce green iron at a pilot facility this year. (1 Australian dollar = 1.5319 dollars) (Reporting and editing by Melanie Burton, Praveen Menon, and Sonali Paul).

(source: Reuters)