Australia's green iron domination window closing: CEF

Climate Energy Finance (CEF) has called for a speedy execution by the government to position Australia as a leader in decarbonising steel value chains.

CEF's report Green Metal Statecraft: Policy, Investment and Technology Trends in the Green Iron Evolution said decarbonisation of the global iron and steel industry is undergoing a structural recalibration.

It urged policymakers to recognise that this remains a global race, with Australia's window of comparative advantage being real but increasingly time limited.

"Australia's window of comparative advantage in supplying green iron to the Asian steel corridor is real, with our iron ore endowment, renewable energy potential, low geopolitical risk, established trade relationships, and a large capital base of strategic, long-term capital that could be deployed into enabling infrastructure," CEF net zero transformation analyst Matt Pollard said.

"However, what this report makes clear is that this window is not permanent, and the shifting investment pipeline is a sobering story."

Pollard added while Australia is yet to see a final investment decision for a single commercial-scale lower-emission iron proposal, the Middle East and North Africa are advancing proposals at pace with streamlined approvals and development timelines, and active state capital support.

The report highlighted the need of a step change in political will, coordination and speed of execution to position Australia in decarbonising steel value chains, along with sustained investment in technology innovation.

It also called for policy and investment settings that capitalise on supply chain security risks in the Middle East to attract bilateral and multilateral support for first-of-a-kind deployments in direct reduced iron and green iron production onshore.

"The US war on Iran has yet again highlighted Australia as a key, stable strategic partner of choice with low sovereign risk able to ensure international supply chain integrity," CEF director Tim Buckley said.

Buckley said Australia must work with trading partners like China which provides world-leading technology at scale and low cost in electrified mining equipment, solar, wind and batteries.

"These are sorely needed to decarbonise Australia's world-leading mining sector, whose two largest firms - BHP and Rio Tinto - are currently both decarbonisation laggards, being shown up by Fortescue's vision. Follow the money," Buckley said.