The Albanese government will invest $1 billion into green iron in a bid to jump start the sector, reduce emissions and revitalise the struggling Whyalla steelworks, the Prime Minister announced on Thursday.
Half of the green iron package has been earmarked for the transformation of the South Australian steel plant, which the state government tipped into administration on Wednesday over unpaid royalties and water bills.
Anthony Albanese and Industry minister Ed Husic flew to the South Australian regional city on Thursday to also announce a dedicated $2.4 billion support package for Whyalla, most of which will go to infrastructure for a new steelworks owner.
The Prime Minister and state Premier Peter Malinauskas said their preference is to find a new steel maker to take over the site but would not rule out nationalising the steelworks.
The rescue mission came as the government announced a new competitive $1 billion Green Iron Investment Fund.
The other half of the fund will be available to other applicants around the country for existing facilities and greenfield projects that can value add in Australia.
The green iron play follows a $2 billion package for green aluminium, and was designed by the seven-member advisory group the government appointed last August.
Australia is the world’s largest producer of iron ore, representing the nation’s single largest source of export revenue. It does far less steelmaking and even less green steel.
But the emerging sector is being targeted by the government because Australia’s renewable energy supply could change the equation in a hugely energy intensive process. Turning iron ore into steel accounts for around 7 per cent of global green house gas emissions.
The Minerals Research Institute of Western Australia estimates that building just one green iron plant could generate $85 billion in Australia’s GDP and create more than 1500 jobs, while Accenture research claimed a potential $122 billion a year in export revenue to Australia’s economy could come from green metals by 2040.
“We know that there’s a great deal of interest in the transition that will occur, that will set us up for the very long term future,” Mr Albanese said in Whyalla on Thursday.
Decarbonised domestic iron and steel production and more domestic manufacturing could also be a significant contributor to reduced global emissions, Australian Conservation Foundation’s climate policy adviser Annika Reynolds said in response to the new fund.
“Iron and steel production are important to many communities and are one of Australia’s largest exports, but the steel supply chain is a significant contributor to global greenhouse gas emissions and escalating climate change,” they said.
“In 2023, Australia exported 892 million tonnes of iron ore to be smelted in coal-fired blast furnaces in other countries, producing more than a billion tonnes of climate pollution.”
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