Independent think thank Climate Energy Finance (CEF) has raised alarms that Australia’s position as a global leader in iron and steel exports is under threat as the industry moves at a pace that is leaving local policy behind.
A new report from CEF noted that Australia’s opportunity to leverage its world-class iron ore endowment and renewable energy potential to produce green iron is narrowing rapidly.
While Australia holds the title of the world’s largest iron ore exporter, the study cautions that the conditions that made the Pilbara the global epicentre for iron ore will not automatically carry over into the low-emissions era without urgent intervention.
The Middle East and North Africa (MENA) region, specifically Saudi Arabia, Oman, and Libya, is emerging as a formidable competitor.
With lower capital and labour costs, streamlined approvals, and proximity to the European Union, MENA is aggressively positioning itself as a Direct Reduced Iron (DRI) producer.
Simultaneously, China is moving at orders of magnitude higher speed than Australia. As the world’s largest electric arc furnace operator, China is building commercial-scale DRI demonstrations and scaling green hydrogen manufacturing at costs significantly lower than Western equivalents.
The report’s authors argue that while the federal government’s Future Made in Australia policy is a start, it lacks the speed of execution required to secure long-term offtake relationships.
“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,” said Matt Pollard, CEF net zero transformation analyst.
“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 lower fossil energy costs, high renewable energy resources, streamlined approvals and development timelines, and active state capital support.”
Report co-author and former Citigroup MD Tim Buckley called for Green Energy Statecraft, urging the Australian government to partner with Asian giants like POSCO and China Baowu to get at least three first-of-a-kind (FOAK) commercial demonstration plants into construction.
The report was also critical of domestic mining giants. Buckley described BHP and Rio Tinto as decarbonisation laggards, contrasting their progress with the more aggressive vision shown by Fortescue.
He noted that Australia must value the technology of its trading partners, such as China’s low-cost solar and batteries, to decarbonise its own mining sector.
With the global steel industry contributing 7–9 per cent of global emissions, the report concludes that Australia must move beyond short-termism and corporate self-interest to secure its economic future in a decarbonising world.