Australia's PM Promotes Green Steel as Miners Meet Chinese Buyers

Written by Lewis Jackson and Melanie Burton

SHANGHAI () - Prime Minister Anthony Albanese stated in Shanghai on Monday that Australia and China should enhance their collaboration regarding green steel, despite urging the world's leading steel producer to tackle surplus production of the material.

China depends on Australia for approximately two-thirds of the iron ore used by its large steel sector, a transaction set to generate Canberra $105 billion (A$68.90 billion) this fiscal year, as per recent official projections.

Nevertheless, efforts to reform an industry accounting for approximately 10% of total emissions could jeopardize Australia's trading position because reducing carbon footprints demands higher quality iron ore, which is available in nations such as Guinea and Brazil.

Green steel is a type of metal created through the use of clean energy sources like hydrogen, aiming to reduce or completely remove reliance on coal, thereby lowering greenhouse gas emissions.

Before a gathering of Australian iron ore producers and Chinese steel manufacturers, Albanese presented green steel as an opportunity to expand the long-standing trading partnership between Australia and China.

"Reaching the objectives set by the Paris Agreement necessitates reducing carbon emissions from steel production processes, offering a chance for Australia and China to advance their extended economic goals," he stated.

Albanese also proposed collaborating with China to address excess production in its steel sector, which is driving unprecedented exports and prompting a surge in tariffs and taxes imposed by trading nations such as Vietnam and South Korea.

If Australia doesn't begin manufacturing green iron—a low-emission type of iron—then it might lose up to 50% of its income from this industry, according to a research institute report from last year. This is because other nations are beginning to produce steel with clean energy sources.

The report indicated that successfully establishing a sustainable steel industry might increase those earnings by two times.

Australia's iron ore is not sufficiently rich to be directly converted into green steel, requiring an extra processing stage. This stage, when carried out using clean energy sources like hydrogen or plant-based materials rather than coal, produces what is known as green iron, serving as a carbon-efficient foundation for making green steel.

Leading iron ore producers Rio Tinto, BHP Group, and Fortescue, who were present at the meeting, are each working on sustainable iron initiatives, with Fortescue planning to manufacture green iron using a prototype facility this year.

Andrew Forrest, founder of Fortescue, who was in China alongside Albanese, stated that the partnerships formed between Chinese steel producers and Australian mining companies enhanced ties between the two nations, adding that security concerns were merely a distraction.

Forrest answered a query regarding whether a discussion on security focusing on China's risks harms the economic ties between the two nations, within the framework where China presents itself as a more reliable ally compared to the United States.

Both Australia and New Zealand stated that they were not provided with sufficient notice regarding live-fire exercises conducted by China's naval forces in the Tasman Sea, which lies between the two countries earlier this year.

"Due to its complex nature, Australia maintains a multi-layered connection with China, and to truly enhance the power of this bilateral relationship, solid friendships and genuine commercial confidence between both sides are essential," Forrest stated.

(1 USD = 1.5239 Australian Dollars)

(Covered by Alasdair Pal from Sydney and Melanie Burton from Melbourne; Written by Lewis Jackson from Beijing; Edited by Kate Mayberry)