Australia risks being left behind in the global shift to green steel production despite being the world’s largest exporter of iron ore, the Australian Hydrogen Council has warned in its response to a government consultation.

One of the main green steel production routes under development globally is the use of hydrogen-fuelled direct-reduced iron (DRI) technology to process iron ore. However,

Australian iron ore is predominantly hematite-goethite, which is “not ideal” for use in DRI, the AHC said.

“The bulk of the iron ore currently mined for export in Australia is incompatible for use in the production of DRI as the ore contains too many impurities,” it said in a position paper designed to inform the Australian government’s review of the National Hydrogen Strategy, which was developed in 2019.

The processing of hematite-goethite for use in DRI technologies is poorly understood and will require R&D to enable commercially viable methods, the AHC said.  “While Australia is not a first mover on DRI with hydrogen, we are the largest exporter of iron ore, and so there is a market opportunity,” it said.

Onshoring

The use of hydrogen in steelmaking and the production of other metals from Australia’s vast mineral reserves has the potential to be a more efficient use of domestically produced hydrogen than exporting it as an energy carrier, the AHC said.

“We observe that the expert consensus in Australia is starting to land on the concept that it may be better for a philosophy of ‘use it where you make it’—that is, for Australian hydrogen to process ores rather than exporting hydrogen and its derivatives an energy vector,” it said.

“Given hydrogen is our critical industrial solution, this is too important to be left to chance, or to the whims, complexities, and uncertainties of a nascent market” Simon, Australian Hydrogen Council

“The efficiency of onshoring hydrogen that might otherwise be exported to achieve the same outcome is also greater,” it adds.

However, the AHC is careful not to talk down the country’s significant potential as a hydrogen exporter to key consumers in Asia-Pacific and other regions.

“We would caution against [onshoring] being prioritised to the degree that Australia does not also pursue developing the export markets for our trading partners who need energy,” it said. “Japan, Korea Germany and others may import green iron from Australia in the future, but they also need energy and are seeking to engage on, and invest in, hydrogen and hydrogen derivatives to meet energy demand and diversify supply.”

The government said Australia has up to $300b of potential hydrogen investments in the pipeline. Australia has more than 100 hydrogen projects at various stages of planning and development, placing it among the largest developers along with the US, the UK and Germany, according to Gulf Energy Information’s Global Energy Infrastructure database.

Strategy reset

Australia was one of the first countries to publish a hydrogen strategy as the government recognised its potential to tap its vast renewable power resources to become one of the world’s largest producers. But the country’s Labor government, which came to power in elections in May last year, is overhauling the strategy to ensure it positions Australia “on a path to be a global hydrogen leader by 2030” both an export basis and for the decarbonisation of its domestic industry.  

“Much has changed since the original strategy from 2019. The effects of the pandemic and the war in Ukraine have forced a reassessment of how nations consider the strategic overlaps between decarbonisation, national security and self-sufficiency. In Australia, we have also had a change of government, with a new approach to climate change and net zero,” the AHC said.

The AHC’s paper contains more than 50 recommendations for a refresh of the national strategy. These include setting priorities and targets based on robust analysis; committing to planning and financial support for shared physical infrastructure; and de-risking projects through public finance support.

“Given hydrogen is our critical industrial solution, this is too important to be left to chance, or to the whims, complexities and uncertainties of a nascent market,” said the AHC’s CEO, Fiona Simon.

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Author: Stuart Penson