Green manufacturing: Rod Sims and Superpower Institute reckon green iron could be worth up to $400bn
A think tank with ex-competition umpire Rod Sims at the helm has joined the chorus pushing WA to stake its claim in a fledgling green iron industry, but Government coffers will be still key to making it happen.
A new report released Monday by The Superpower Institute claims to provide the most detailed analysis yet into what is billed by some as the next frontier for Australia’s export industry — smelting iron ore into green iron.
‘A Green Iron Plan for Australia’ has also extrapolated from the country’s current iron ore exports that selling the steel-making precursor manufactured using renewable power instead of fossil fuels could create a $400 billion-a year industry.
The report makes the case that Geraldton and Kwinana are leading contenders to host iron-making factories due to their proximity to Pilbara iron ore mines and connection to the wholesale electricity market.
But there is a long way to go before such a prize could be realised.
Pinning down the best technologies and processes to produce so-called green iron is still a work in progress and has not been achieved at a commercial scale in Australia. There is also no internationally-agreed definition of green iron.
Kwinana is ahead of the pack in Australia after the WA Government put up $75 million to lure Bluescope Steel, BHP and Rio Tinto to start building a low-emissions iron smelting pilot plant there in December.
Fortescue is building a hydrogen-powered green iron plant at Christmas Creek in the Pilbara, and South Korean steel giant POSCO has a green steel plant collaboration with Hancock Prospecting before the WA Environmental Protection Authority.
The money and technology required to get the industry going is not lost on Mr Sims, an economist who ran the Australian Competition and Consumer Commission for over a decade.
The report suggests that three green iron projects in Australia should receive Federal Government support capped at $500m each that could be drawn from existing funds allocated under Prime Minister Anthony Albanese’s raft of green energy spending.
It also recommends a green iron production tax credit of $170 per tonne to simulate the effects of a carbon price so Australian product could compete with countries producing traditionally smelted iron.
Mr Sims said policy intervention was required to make green iron competitive against fossil fuel-derived iron in the absence of a world carbon price that factors in the environmental impact cost of commodity or product.
“This is an economic approach,” Mr Sims said. “This is saying, don’t just provide as much assistance as it takes. Don’t just throw money at this. I mean, we’re suggesting a fair bit of money, but this is about fixing the externalities.”
He said it was “economically silly” for Australia not to start getting involved in a new value-adding industry.
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