The Australian federal government has announced a $19.8 million grant to advance the production of low-emission iron using Pilbara iron ore at Kwinana, Western Australia, marking a significant step toward decarbonising the nation’s steel industry.
The funding will support a $48.8 million Front-End Engineering Design (FEED) study for the NeoSmelt project, which aims to replace traditional blast furnace steelmaking with an electric smelting furnace (ESF) — a technology capable of reducing emissions by up to two tonnes of carbon dioxide per tonne of steel produced.
If adopted nationwide, this innovation could cut millions of tonnes of carbon dioxide emissions annually, positioning Australia as a leader in green metals production.
The steel industry currently accounts for 7–9 per cent of global carbon dioxide emissions, with about 70 per cent of steel produced through energy-intensive, high-emission methods.
NeoSmelt is a joint venture between BlueScope, BHP, Rio Tinto, Woodside Energy, and Mitsui Iron Ore Development.
The planned Kwinana facility would be Australia’s largest ironmaking ESF pilot plant, expected to generate up to 100 full-time equivalent jobs during operations and potentially peaking at 300 jobs during construction.
A final investment decision is anticipated in 2026, with operations set to commence in 2028.
Minister for Climate Change and Energy Chris Bowen stated: “The Albanese Labor Government is backing business across the country to seize the opportunities of a Future Made in Australia, powered by low-emissions tech, including reliable renewables.
“We are getting on with the job and delivering solutions for hard-to-abate sectors to decarbonise right now and paving the way for our future.”
Assistant Minister for Climate Change and Energy Josh Wilson emphasised the project’s national and global significance: “This Albanese Government investment in a crucial Australian industry could help secure the future of Australia’s iron export industry and bolster global green steelmaking while accelerating the necessary shift away from fossil fuels.
“As the biggest iron ore producer in the world, every effort we make towards cutting emissions here at home has far-reaching benefits.
“Western Australians are experts at making and exporting high-quality metals–producing low-emission iron gives us yet another selling point in markets across the world.
“This project is a fantastic example of how the Albanese government is helping Australian industries to make the biggest economic shift since the Industrial Revolution while securing Australian jobs, Australian-made products and Australia’s net-zero future.”
Member for Brand, Madeleine King, highlighted Kwinana’s pivotal role, stating: “This is a great example of WA’s iron ore, gas, steel-making and clean energy sectors coming together to invest in technology critical for a low-carbon future.
“The fuels, metals, fertiliser, chemicals, and grain shipped from Kwinana have powered Western Australia and the region since the 1950s.
“Kwinana is now playing a central role in the world’s energy transition and a big part in global efforts to decarbonise.
“If we can decarbonise steel making, we will create far fewer emissions when building the cities of the world.”
The NeoSmelt funding is delivered through the Australian Renewable Energy Agency (ARENA) as part of the $400 million Industrial Transformation Stream within the Albanese Government’s $1.9 billion Powering the Regions Fund.
This initiative is designed to help regional industrial facilities reduce emissions through innovative renewable energy, energy efficiency, and electrification technologies.
Australia, as the world’s largest iron ore producer, is leveraging its resources and expertise to drive the global transition to green steel and support the nation’s net-zero ambitions.
