Intermediate product exports for Australia-China green steel

The Challenge

DRI production is set to grow from 8% to 24% pf iron production by 2050 (the MRIWA green steel report 2023). To make this production economic higher grade iron ores will be required. An increasing proportion of mined iron ore in Western Australia will not be of suitable grade for DRI.

Key Findings

The project delivered techno-economic and environmental models of individual process steps in conventional as well as decarbonized iron and steel making scenarios. The modelling allowed different steps of the process to occur in different countries, including with Australian exports of intermediate products such as 30, 50 or 70% metallised DRI.

Emissions from different process steps was determined in an LCA analysis. Transport costs and capacity constraints are included in a highly granular network representation. These components were combined in an optimization model to find cost-optimal solutions for different levels of decarbonization of Chinese steel demand.

The model results show that the Electric Smelter Furnace will be of key importance to the cost-competitiveness of Australian iron ore in future green steel value chains, regardless of whether the production of iron occurs in Australia or China. It suggests that in scenarios with high green steel demand in China, Australian iron ore consumption would climb together with ESF capacity, from near zero in scenario with no or very little ESF capacity, to 380 Mt of Australian iron ore consumption in a scenario with an ESF capacity of 400 Mt or above. It is therefore imperative that Australian industry and government work to stimulate the technological development of the ESF, which is currently still in the demonstration stage, and help support their industrial-scale rollout.

Benefits to WA

The assessment provides a basis for future decision makers and for policy makers to determine the best pathways for green iron and steel. The results highlight the role for further technology development, such as novel technologies for beneficiation or reduction via electrolysis of ores, in improving the competitiveness of Australian ores in a future Chinese market for green steel. They also highlight the importance of exploring the development of green iron markets beyond China, as the results presented here say nothing about the cost-competitiveness of Australian green iron production for supply into the Japanese, Korean, Indian, Taiwanese, European, or other markets. Further work will be carried out using this model to identify the cost-competitiveness of Australian green iron, or alternatively iron used in green steel making value chains, in those other global markets. That follow-up project will also identify critical points at which cost reductions or technology improvements could improve the competitiveness of Australian iron ore or green iron in such potential global markets, and interrogate how different policy mechanisms could help improve this competitiveness.

Financial Assistance DOI

DOI: 10.71342/017161370721