What to know about Australia’s green iron potential

Australia could become a global export powerhouse for green iron, according to Dr Ingrid Burfurd of the Superpower Institute, which recently published A Green Iron Plan for Australia.

Speaking ahead of the Global Iron and Steel Conference, Dr. Burfurd said the world’s push to decarbonise energy intensive industries would pique appetite for green alternatives – particularly iron and steel, which contribute about 8 percent of global emissions.

Dr. Burfurd also claimed Australia is well-positioned to meet this demand, predicting a rosy future for domestic green iron suppliers.

“We know that the world is decarbonising, and that technologies to decarbonise iron and steel production are already available,” she said.

“The question remains as to which countries will step up to provide greener options – but we do know that Australia has a comparative advantage in this space.

“We have remarkable renewables, which are highly complementary and not very seasonal, when compared with other countries.”

Australia’s small population and large land mass are also an advantage when it comes to renewable prices.

“It’s not just about the supply of renewables; it’s about the demand for them. When you have high supply and high demand, it starts to push up that cost curve. And Australia has this great combination of abundant renewable energy, landmass, but also a very low domestic population.

“At the Superpower Institute it’s our evidenced-based belief that Australia can be a low-cost large-scale generator of renewable energy and, because of that, become one of the world’s export powerhouses in green energy intensive industries, including green iron.”

Opportunities for innovation

In traditional blast furnaces, large volumes of coking coal are used to reduce iron ore and remove gangue and slag. While gas-based direct-reduction methods are less carbon-intensive, the cleanest option is a move to green hydrogen, Dr. Burfurd said.

“Green hydrogen gives you that chemical reaction with your iron oxide, removing the oxygen from the iron without the CO2 byproducts. Instead, it produces steam, which is much cleaner.

While these sound like instant fixes, Dr. Burfurd said additional measures are needed to use lower and mid-grade ores in the green iron-making process. These are under development.

“To compensate for the heating and melting process you will lose from the traditional blast furnace, you’ll need to augment the green hydrogen reduction process with an electric smelting furnace – a technology that has been used overseas, but not with Australia’s lower and mid-grade ores. The technology is being tested and developed.”

Dr. Burfurd also pointed to other developments in green iron-making technology.

“Blast furnaces and basic oxygen furnaces operate continuously, but green iron technologies are likely to be lower-cost if they can increase and decrease production to better accommodate the natural variation in renewable energy supply. These technologies will really reward research and innovation.”

Supply chain shifts

While scaling may take time, The Superpower Institute predicts that we will see a progressive decoupling of the iron and steel making process and, in turn, a major restructure of the supply chain.

“Currently, blast furnaces feed molten iron into basic oxygen furnaces for steelmaking, so iron and steel-making processes are coupled together. But in a world where carbon emissions are very expensive, and the cost of transporting renewable energy is expensive, it will make economic sense to decouple the iron and steel making process.

“So, we anticipate that the carbon intensive part of this process – the iron making – will relocate to countries with low-cost renewable energy, and that green iron ore will then get shipped to other countries to make the steel.

“Australia will export green iron for that final much lower-carbon step – the steelmaking – to countries that want to do that alongside industrial processes like manufacturing. So, it really will reshape trade.”

Timing is key

As to how exactly things shape up, Dr. Burfurd said timing is important.

“At small scale, as industries get off the ground, it’s likely to be in locations where there’s access to existing infrastructure. In the longer term, as these industries scale up, they’ll most likely move off grid, just like the iron ore industry has done in areas like the Pilbara.

“At large scale you don’t need existing infrastructure, because you’ll need your own industrial scale infrastructure. These are incredibly energy intensive operations, but early on, there are advantages to being close to existing electricity networks.”

Geographical differences

As well as looking at different technologies, the Superpower Institute explored geographical differences in the iron and steel supply chain evolution. It found several Australian hotspots, where the levelised cost of iron (LCOI) was particularly favourable.

“We produced a bottom-up model to help us understand some of the drivers of cost in different locations. We found that LCOI was particularly good in the Eyre Peninsula in South Australia and various locations in Western Australia.”

Policy settings

Dr. Burfurd emphasised that green iron is a remarkable opportunity for Australia, but that the right policy settings were needed to capitalise on it.

In its report, the Superpower Institute recommend a production tax credit for green iron, as well as financial support for First of a Kind (FOAK) projects.

“We need this to support the innovation that firms undertake during the first commercial green iron projects,” Dr. Burfurd said.

Sharing more on this, Dr. Burfurd will present at the Global Iron and Steel Conference, due to take place in 25-26 March 2026 at the Pan Pacific Perth.

Learn more and register your tickets here.

About Ingrid

Dr Ingrid Burford is Carbon Pricing and Policy Lead at the Superpower Institute. She formerly worked as a Senior Associate at the Grattan Institute, a PostDoc at Melbourne University, a Lecturer at RMIT University, and a Senior Economist in the Victorian Public Service. She also served as a Senior Expert Advisor on the UNFCCC’s review of the Clean Development Mechanism. Ingrid has a PhD in Economics from the University of Melbourne.