Rio Tinto: No economic incentives for green steel in Australia

Rio Tinto, along with BHP, played down Australia's chances of developing a "green-iron" sector to help decarbonise its steel industry on Thursday because the country lacked the economic incentives for doing so.

Australia has worked to establish itself as a reliable supplier of green metals. It is the largest seaborne iron ore producer in the world. In February, the Australian government allocated A$1billion ($652.4m) to support green iron production and supply chains.

Due to the fact that Australia's iron is not of a high enough quality to be processed directly into steel using renewable energy, an additional step must be taken. This is done with hydrogen produced from renewable energy, instead of coal. The product is known as hydrogen direct reduced (DRI), or "green steel", which is a low carbon base for green steel.

Mark Davies, Rio Tinto's Chief Technical Officer said: "I don't think there's an economic incentive to switch to a DRI that uses hydrogen today."

He told a Melbourne business lunch that the technology was not proven and that there were difficulties in moving from natural gas-based processes to hydrogen.

"And it's expensive to do in Australia." He said that building stuff in Australia is expensive.

BHP, a major miner, said that it would be too expensive for Australia to develop a "green-iron" industry even though Australia and China had agreed to work together to decarbonise steel supply chains, which are responsible for almost a tenth of global emissions.

Davies told reporters at a later press conference that a global carbon price "of a few hundred dollars" was needed to create this incentive. (1 Australian dollar = 1.5328 dollars) (Reporting and editing by Melanie Burton)

(source: Reuters)