Race to Australia's first green steel entering final stages - ABC News & Headlines – Australian Broadcasting Corporation

Australian companies are racing to build green steel mills powered by renewables. (Supplied: Nucor)

As companies race to build Australia's first green steel mills, questions remain whether costs, technology and logistics will stop the industry's loudest advocates fulfilling their promises.

The race to Australian green steel production is hotly contested, with at least five aspiring projects across Western Australia, New South Wales and Queensland targeting production by 2030.

Their race matters because conventional steelmaking is a heavy emitter, accounting for 8 per cent of the world's greenhouse gas emissions.

Traditional steelmaking is a heavy producer of greenhouse gases. (Supplied: Francisco Fernandes on Unsplash)

"You can't stabilise the climate without dealing with the greenhouse gas emissions from steel," he said.

"The basic situation is that it is very important to get this done, but it takes a long time and we don't have that much time."

Green steel is produced in various ways, each promising significantly lower emissions than traditional steelmaking.

The chosen method of several leading local projects is to melt scrap metal in an electric arc furnace powered by renewables, an approach proponents say could reduce the carbon footprint by up to 90 per cent.

That recycled steel is known as secondary steel.

Australia has traditionally focused on primary steel, using iron ore that is melted in a coal-fired blast furnace.

Further processing turns that iron into a steel billet, or bar.

Established electric arc furnaces already recycle scrap at Laverton in Victoria and Rooty Hill in New South Wales.

Generation Steel is among the hopefuls trying to build the next generation of secondary steel mills in the West Australian town of Collie, 200 kilometres south of Perth.

"It's almost a little bit incomparable between the Australian facilities and what we're doing," co-founder Rajan Aggarwal said.

The "continuous" facility is designed to turn scrap metal directly into new reinforcement steel, which will remove the need for a billet or a blast furnace.

"Rather than producing a billet using energy, then cooling it down, then transporting it somewhere else, then rolling it, you can actually do that all in a continuous process," Mr Aggarwal said.

"And that itself increases the energy efficiency by about 80 per cent."

Green steel projects are trying to rival and replace cheap imports of rebar for construction. (Supplied: Nucor)

Australia's traditional steelmakers are struggling with aging infrastructure, cheap imports and the formidable challenge of decarbonisation.

Since the permanent closure of the coal-fired blast furnace at Whyalla, South Australia, Australia has become increasingly reliant on imports for reinforcement steel, commonly known as rebar.

Australia's construction sector uses millions of tonnes of rebar a year to build bridges, homes and just about anything with concrete.

This domestic steel market is where Mr Aggarwal and others have set their sights, targeting price parity with imported and tariffed rebar from Asia.

The blast furnace at the Whyalla steelworks was shut down permanently earlier this year. (ABC News: Brant Cumming)

Mr Aggarwal said there was a misconception that green steel was a premium-priced product.

"That's a little bit unfortunate, but you have to break some of those barriers," he said.

He argues green steel has competitive advantages, namely the abundance of scrap metal created by heavy industry and low-cost power from renewables.

WA exports almost all its scrap metal overseas — almost 600,000 tonnes were exported out of Fremantle Port in 2025–26.

Some of it may inevitably return in imported steel products.

Steel production accounts for 8 per cent of the world's carbon emissions. (Supplied: Morteza Mohammadi on Unsplash)

The same is true in Queensland, where roughly 60 per cent of the state's scrap is exported overseas, according to Rohan Richardson, chief executive of Future Forgeworks.

Mr Richardson believes his company's proposed green steel mill near the city of Ipswich, outside Brisbane, could compete with cheap imported rebar.

"If our scrap metal right now leaves QLD, it goes all the way to Asia; it's processed there," he said.

Green steel has a drastically lower carbon footprint than traditionally made steel. (Supplied: Nucor)

"With logistics reduction and the modern processing facility, our production costs can compete with Asia."

But with three rival projects in QLD alone, Mr Richardson acknowledged there was only so much scrap metal to go around.

"It would create an imbalance in supply and demand, but I'll leave it at that," he said.

Greensteel Australia is the only company to lock in final investment for the first stage of its mill at the former BHP Newcastle Steelworks in NSW.

Its production methods differ somewhat, and it will initially use imported steel from South East Asia rather than domestic scrap.

But future plans for clean iron processing could require billions of dollars in further investment.

While the concept and its associated benefits have drawn significant publicity and funding, they are yet to be proven financially viable.

The South Australian steelmaking town of Whyalla was a case in point, where steel tycoon Sanjeev Gupta took over in 2017.

He promised to transform the aging facility into a global hub for green steel by 2030.

What followed was severe financial losses and job cuts, and the eventual closure of the Whyalla blast furnace.

WA mining magnate Andrew Forrest has also faced criticism over whether his vision for green iron would withstand commercial realities.

Fortescue's green iron pilot plant at Christmas Creek in the Pilbara region reached the technical milestone of first molten metal earlier this year.

Beyond the immediate race for secondary production of green steel is the broader global contest for green iron, or low-emissions primary steel production.

Green iron, or direct reduced iron, is made in a "direct reduction furnace", replacing the traditional coal-fired blast furnace.

These furnaces use hydrogen or natural gas (methane) instead of coking coal to remove oxygen from ore.

The method is better suited to higher-grade, magnetite iron ore, which is significantly harder to extract and process than the lower-grade hematite iron ore largely targeted by Australian miners.

Generation Steel recently struck a deal with Rio Tinto to process small amounts of green iron from a pilot plant in Kwinana at its mill in Collie.

Tim Buckley, director of the think tank Clean Energy Finance, calls green iron the "holy grail".

Tim Buckley says green iron is the "holy grail" for Australia's exports. (ABC News: Scott Preston)

"For decades, Australia has been relying on our world-leading mining industry, but it has been a dig-and-ship mentality," he said.

"That could potentially double or triple the value per tonne of the iron ore we're exporting."

Mr Buckley said global interest in green iron was growing, pointing to the European Union's recent introduction of a carbon tax applied to imports at the border.

Last year, the Chinese government also expanded its own national emissions trading scheme to its heavy-emitting steel sector.