- But the Australian iron ore industry faces a major challenge as its biggest customers – China’s steel mills – move to drastically reduce their carbon footprint.
- Most of Australia’s current iron ore exports are not classed as high grade.
- Typically, the lower the iron content of an ore is, the more energy is required to refine it.
Iron ore’s biggest customer cleans up its act
- Australia shipped 736 million tonnes – more than 80% of iron ore exports – to China in 2022.
- Last year, China’s steel mills made up the majority of global steel production.
- But they were also a major polluter, accounting for about 15% of China’s total greenhouse gas emissions.
Australian ore doesn’t make the grade
- Reducing the use of low-grade ore has become a priority for Chinese steel mills, significantly affecting iron ore’s demand profile.
- Much of the iron ore exported by competing nations like Brazil and Guinea is high-grade, containing more than 65% iron.
New technologies
A number of new and emerging steelmaking technologies offer the promise of significantly lower emissions. But common to all of them is a need for higher-grade iron ore than Australia produces. There are four new steelmaking technologies in use or under construction by a number of Chinese steel corporations, including the world’s biggest steelmaker – China Baowu Group. These include:
hydrogen-enriched carbon recycling and oxygen furnace (HyCROF)
hydrogen reduction and electric smelting process (HyRESP)
hydrogen metallurgy
green hydrogen zero carbon fluidized bed iron making technology.
Here’s how these technologies could help China reduce its carbon emissions:
Increased use of steel scraps
- Overall demand for iron ore could be reduced by the increasing availability and use of steel scraps or “recycled steel”, such as scrapped vehicles, white goods and machinery.
- Using one tonne of recycled steel for steelmaking saves 1.4 tonnes of iron ore and avoids about 1.5 tonnes of carbon dioxide emissions.
New tariffs on carbon
- This legislation acts as a carbon tariff on imports to the EU, initially aimed at carbon-intensive products such as steel.
- EU importers of steel products will be required to pay an import carbon tax, at a price set by the EU, based on the differences in carbon emissions between traditional steel mills and the EU’s emission benchmarks.
What lies ahead
- Reduced demand for Australia’s low-grade iron ore could put pressure on its producers’ revenue, or even force some smaller iron ore miners to shut down.
- Australia is abundant in magnetite, an ore type which differs in composition from hematite or “direct shipping ore” (DSO).
- This process is energy intensive, but could become economically viable if we continue to see rapid uptake of renewable energy.
- Decisions made by Australia’s major iron ore producers and political leaders will shape the outcome of this global shift.
Charlie Huang does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
