Green Iron opportunities in Australia

2. Developments in green iron production, trade and investment

This section discusses developments in global green iron production, investment and trade from the perspective of Australia. It provides an analysis on the basis of production, trade and investment data as well as on the basis of an assessment of company strategies along the steel value chain, as discussed in the previous section.

The second part of this section aims to map how Australian companies are positioning themselves in the emerging green iron sector. This analysis tracks their current and future investments and strategic orientations through the key drivers of green iron production identified earlier. Specifically, it examines how companies’ investments leverage the companies’ access to energy inputs and raw material supply — particularly high-quality iron ore— but also how companies’ investments in the green iron space respond to export market dynamics and are mediated by the evolving policy landscape.

DRI capacity and investments: an international perspective

DRI production currently accounts for a modest share of iron and steel making and is concentrated in Asia and the Middle East, Australia does not yet have a share

The geographical distribution of iron ore production and DRI production exhibits distinct patterns, with limited overlap of the two. Major iron ore producers such as Australia, Brazil, and China dominate global supply, with Australia alone producing 960 million metric tons in 2023. However, currently these countries are not the largest producers of DRI. Instead, India, Iran, Egypt, and the Russian Federation (hereafter Russia) lead in DRI production, despite having comparatively lower iron ore production levels.

This divergence suggests that factors beyond iron ore availability drive DRI production, particularly the cost of natural gas. Countries in the MENA region, such as Egypt, Saudi Arabia, and Oman, have significant DRI output, due to their access to low cost natural gas, the reducing agent used in DRI production to date. China, the world's largest steel producer, has limited DRI production, with its steel industry centred on traditional blast furnace technology fed by coking coal rather than EAF-based production.

Figure 2. Iron ore and DRI production take place in different geographies

Source: Iron ore production data are obtained from the US Geological Survey, annual publication, Iron ores. DRI data are obtained from the MIDREX 2023 Direct Reduction Statistics.

Most of current DRI capacity is not green but coal- or gas-based, particularly in Asia, with currently limited use of hydrogen.

Current DRI production is predominantly reliant on natural gas and, to a lesser extent, coal, making it far from a fully green technology. The majority of global DRI capacity uses gas-based reduction, particularly in regions with abundant and low-cost natural gas supplies, such as the Middle East, North Africa, and parts of North America. Coal-based DRI, though less common, is still significant in India, where coal availability supports its use in rotary kiln-based production. In contrast, hydrogen-based DRI remains an emerging technology, with only a few pilot projects and demonstration plants in Europe and Asia currently in operation. The primary barriers to large-scale H2-DRI deployment are high investment costs, infrastructure constraints, and the need for a reliable supply of green hydrogen at an affordable price, which itself depends on large-scale renewable energy capacity.

Figure 3. Hydrogen-based DRI is still a limited portion of total DRI capacity

 

 

Notes: Data in thousand of tonnes.

Source: Authors’ calculation based on Laplace data.

Green iron potential in Australia is significant, with production expected to grow

Despite the limited size of current global DRI capacity, Australia is well positioned to play a significant role in the global DRI market. Several reports provide a positive outlook to the Australian DRI potential. For example, (Finighan, 2024[7]) suggests that Australia’s iron ore exports could be converted into around 560 Mtpa of DRI, reaching AUD 386 billion annually with a 40% global market share in global iron and steel production in 2050. A report by Climate Energy Finance (Pollard and Buckley, 2024[6]) indicates that switching 40% of Australia’s iron ore exports into green iron exports could generate AUD 174 billion per year in export revenues from green iron, which coupled with additional iron ore export revenues of AUD 77 billion per year would translate to a doubling of export revenues from the iron export industry to AUD 250 billion per year. On the other hand, the associated costs of inaction and the associated reduced exports of iron ore as result of global steelmakers decarbonisation strategy would instead cost up to AUD 69 billion (approximately USD 45 billion) per year. Australia’s potential for wider greener exports is also emphasised by (Daiyan et al., 2024[8]): according to their estimates, Australia has the opportunity to establish a high-value green export sector worth an estimated AUD 333 billion per year, driven by the growing global demand for low-carbon products including green iron, green steel, renewable hydrogen, ammonia, green aluminium, and critical minerals.

A report by Mandala (2024[9]) looks at the opportunity of switching to green iron for Western Australia, the Australian state with the largest reserves of iron ores. The study estimates that in presence of a supportive policy settings, Western Australia has the potential to produce at least 4.5 Mtpa of green iron in 2030. To achieve this, the required level of investment is estimated to be AUD 37.5 billion, a large share of which (AUD 23 billion) would be for renewable energy related investments e.g. generation, storage and transmission (Mandala, 2024[9]). A report by Springmount Advisory argues that Western Australia’s green iron potential could mean creating 24,000 ongoing jobs in Western Australia, with an additional 11,000 full-time construction jobs on average per year, and drive emissions from Australia down, with a reduction of 274 Mtpa CO2 of emissions in 2040 (Springmount Advisory, 2024[10]). Over the longer term, the Mandala’s report states that Western Australia could supply more than 14% of global green iron by 2050, generating AUD 74 billion of economic value, which correspond to about 310 Mtpa and 20% of global green iron demand.

Although estimates of green iron opportunities are quite optimistic, the announced projects so far represent only a limited share of the green iron potential projected in various reports

Summing up the estimates from multiple sources (Accenture, Climate Energy Finance, Daiyan et. Al, Finighan, Mandala and the Superpower Institute), in the long term the export gain produced by transitioning to green iron in Australia is expected to be valued between AUD 83 billion and AUD 304 billion. While these estimates highlight a significant opportunity for a large-scale green iron market in Australia, current ambitions and corporate efforts in this sector appear to fall short of these projections.

Figure 4. Estimates of Australia’s green iron export opportunity

Notes: Estimates obtained from the Mandala’s report refer to Western Australia only. Export gains refer to the estimated additional exports in values generated by transitioning to a green iron industry.

Source: Various reports (cited in the figure).

Australia's green iron ambitions are taking shape through several green hydrogen-based DRI proposals. The proposed Port Hedland Green Steel Project (POSCO) is in its pre-feasibility stage, planning a 2 Mtpa HBI facility, initially utilising natural gas, while Fortescue’s Christmas Creek green iron pilot plant is a smaller-scale initiative expected to produce around 1,500 tonnes of green iron per year. One ambitious proposal is the Mid-West DRI Plant being developed by Green Steel WA, which would consist of a AUD 1.5 billion hydrogen-based DRI facility able to operate on natural gas and gradually transition to green hydrogen, with an estimated capacity of 2.5 Mtpa (Green Steel WA, 2024[11]). Whyalla steelworks (currently under administration) had announced plans to replace blast furnace operations with a 1.8 Mtpa DRI plant and an EAF plant. Lastly, the proposed Gladstone Green Iron Project (Quinbrook) remains in early development, and the QLD state government has withdrawn financial support for the plant that would have provided hydrogen to the Quinbrook proposal (Quinbrook infrastructure partners, 2024[12]).

While these proposals highlight Australia's strong potential, they are not all hydrogen-based, and DRI proposals elsewhere are advancing at a faster pace

The pipeline of DRI proposals across Europe, India1, and MENA region has increased significantly. Germany and the Netherlands are leading Europe's hydrogen-based DRI transition, with ThyssenKrupp Steel building a 2.5 Mtpa DRI plant in Duisburg and Tata Steel Netherlands planning a full hydrogen-based transformation at Ijmuiden. India is scaling its DRI capacity using natural gas and coal, with JSW Steel and Tata Steel investing in new plants and long-term hydrogen integration. In MENA, Saudi Arabia, Oman, and Iran are expanding their investment pipeline, with Saudi Arabia developing hydrogen-ready DRI plants, Oman expanding gas-based DRI with hydrogen plans, and Iran already a global leader in gas-based DRI production.

Figure 5. Announced EAF and DRI projects by country

Source: Authors’ calculation based on Laplace data.

DRI is currently not often traded internationally but is supplied to steel firms in the vicinity of DRI producers

Currently, only 4.8% of global DRI production is traded internationally, corresponding to about EUR 2 billion per year. This limited trade is primarily because most DRI facilities are designed to supply nearby steel producers or integrated facilities. In many cases, these facilities are integrated into steelmaking plants, directly feeding BOF or EAF operations, as part of steel companies’ decarbonisation strategies. A plant-level analysis of DRI capacity in 2023 based on World Steel Dynamics data indicates that only 21.3% of global DRI capacity was not part of integrated steelmaking operations — a pattern that appears to persist in upcoming investments. Among announced DRI proposals, only 22% are planned as standalone facilities, separate from EAF or BOF plants.

With the increasing production of DRI, an intensification of DRI/green iron trade is expected

On the basis of these plant-level projections, with almost 80% of planned DRI additions being part of integrated steelmaking operations, a strong rise in DRI trade is unlikely to occur immediately. However, there are reasons to expect that DRI trade will increase in the coming decade from both a demand and supply perspective. First, decarbonisation policies and net zero targets in various countries may incentivise steel firms to decarbonise further and seek cost-effective ways to do so. If more cost-effective options for green iron production become available at other locations than where integrated steel firms are currently located, they may be inclined to buy (and import) green iron. Secondly, various economies, including Australia, Brazil, Canada and MENA countries, are currently positioning themselves in green iron production and may become green iron suppliers (and exporters) towards these regions where demand rises. As more countries, particularly in Europe, India, and the MENA region, expand their DRI capacity, international trade in DRI and HBI is thus likely to increase. However, the increase in DRI/HBI trade will strongly depend on the extent to which ironmaking and steelmaking decouple, and whether certain regions take the lead in this transition and are willing to buy green iron from elsewhere. If steelmakers increasingly source DRI/HBI from external suppliers rather than producing it in-house, new trade routes are likely to emerge. Conversely, if most steel-producing countries invest in domestic DRI capacity, international trade in DRI may remain limited.

The outcome of these developments are of critical importance for the question of whether Australia will become a key player in the green iron trade. It seems fair to say that the estimates of Australia’s potential in green iron production and exports are ambitious. To provide some perspective, the estimated 560 Mtpa of DRI in Australia in one of the studies cited above is more than 25% higher than the current total volume of world steel trade and is four times higher than global DRI production in 2023 according to Worldsteel.

Mapping company strategies towards green iron in Australia

Australia’s green iron ecosystem encompasses a diverse set of actors, each playing a distinct role in shaping the country’s transition. Iron ore producers are central to this landscape: Australia is the world’s largest exporter of iron ores and their control over raw material supply positions them as possible key enablers of the green iron transition. Although Australia’s steel industry is relatively small compared to other major producers, its existing players remain crucial in driving this shift, given their role in developing low-carbon steelmaking technologies and integrating green iron into their supply chains.

Iron ore producers

Australian iron ore producers are exploring diverse strategies for green iron, with many assessing the potential to move downstream in the iron value chain by producing more value-added products such as DRI/HBI, and high-grade pellets. In many circumstances, the shift is driven by the opportunity offered by favourable policy setting and the conditions created by Australia’s growing investments in renewable energy, particularly solar and wind. However, despite these opportunities, Australian iron ore producers continue to operate under a highly profitable business model focussed on exporting iron ore, which remains in strong demand globally. This profitability has, in many cases, limited their urgency to invest in green iron solutions, as the economic incentives for moving downstream are not yet as compelling as and more risky than their current export-driven operations.

Fortescue

Fortescue’s green iron strategy is ambitious and unique. A giant in the Australian iron ore industry, the company’s shift away from a dig-and-ship model and towards hydrogen DRI technology has gained significant interest over the last five years and has been a key driver of green industry discussions in the country. With their Christmas Creek Trial Plant, Fortescue expects to produce more than 1,500 tonnes annually starting in 2025. Their target is to scale up to 200 Mtpa by 2040.

The company opened in 2023 high-grade magnetite mining operations as part of their Iron Bridge project with a first run grade of 67% Fe. The product is transported from the mine to Port Hedland through a slurry pipe, then further concentrated before being shipped overseas (the first shipment went to Vietnam).

However most of Fortescue’s iron ore resources are hematite, which has informed their green iron strategy, centered around an emerging two-step smelting process. Their Christmas Creek Green Iron Trial Commercial Plant, with USD 50 million in investment, began construction in August 2024 and aims to prove the viability of their method using green hydrogen, green electricity from solar generation, and existing infrastructure and technical capacity.

Fortescue and Baowu Resources signed a memorandum of understanding for “further accelerating the development of green iron technology and ensure that [the companies] will be able to meet growing demand for green iron in and outside China” in January 2025 (Lv and Jackson, 2025[13]). Media outlets indicated that Fortescue‘s Chairman Andrew Forrest welcomed the Australian federal government's allocation of AUD 6.7 billion in tax incentives for renewable hydrogen, viewing it as a catalyst to fast-track the development of a green iron industry in Australia (Vorrath, 2024[14]).

Rio Tinto

Rio Tinto’s interest in green iron production is limited compared to Fortescue, but the company is interested in proving the feasibility of two ironmaking routes: a biomass-fueled process called BioIron, and electric smelting furnace (ESF). They plan to commission in 2026 a USD 143 million pilot plant in Perth that will use raw biomass like wheat straw and canola stalks to make iron, in a process already demonstrated at a small-scale plant in Germany (Rio Tinto, 2024[15]). Rio Tinto evaluates the CO2 emissions reduction potential of this method at 95% when compared with a blast furnace.

The company runs a technology programme in partnership with Baowu to test ESF technology in China, which they hope will be able to remove impurities from iron made with low- to medium-grade iron ores. In Kwinana (Western Australia), Rio Tinto is participating in the NeoSmelt proposal, planning to build a pilot DRI-ESF plant as part of their pre-feasibility study in partnership with Bluescope and BHP, with a potential output of 30,000-40,000 tonnes molten iron per year. The pilot plant was announced to run on renewables but the inclusion of Woodside Energy as a partner and energy supplier has led some observers to foresee a bigger role for natural gas in the proposal. The state government committed to invest AUD 75 million to support the pilot facility in December 2024.

In parallel, Rio Tinto is exploring how beneficiation and pelletisation of their low-grade ores could make them suitable for future low-carbon steelmaking.

BHP

BHP’s interest in green iron production is limited to investigating the suitability of their hematite iron ores for future green iron production outside of Australia. As mentioned above, BHP entered into a MoU with Rio Tinto and BlueScope for the NeoSmelt Project, to jointly investigate the development of an ironmaking electric smelting furnace (ESF) pilot plant, to be sited in Western Australia. The company sees high infrastructure and labour costs in the Pilbara as too large of a barrier for a DRI industry in the region.

BHP mines medium-grade hematite iron ore and very little magnetite. Their customers are mostly overseas steel companies using blast furnaces and working with partners on reducing the emissions intensity of the BF route.

Hancock Prospecting

Hancock Prospecting, while a major iron ore producer in Australia, operates at a lower scale than Fortescue, Rio Tinto or BHP. Their Roy Hill operation, of which they own 75%, produces 64 Mtpa shipped from Port Hedland. Their interest in green iron production seems limited, adopting a “wait and see” approach to the market. When POSCO, who owns a 12.5% stake in Hancock Prospecting, began exploring their Port Hedland HBI project, Hancock Prospecting purchased land for magnetite mining in the area. However, Hancock Prospecting decided to not pursue these operations, which represented a capital-intensive business model compared to their usual hematite iron ore mining.

Further, the company seems reluctant to move downstream into producing any DRI themselves as the wide profit margins of their dig-and-ship model are more attractive to them then a value-added product. They see the lack of common use infrastructure in the Pilbara as a barrier, as well as the financial risk and technological limitations.

Grange Resources

Located in Tasmania, Grange Resources owns and operates an integrated iron ore mining and pellet plant using magnetite from their mines in both Tasmania and Western Australia, producing 2.5 million tonnes of iron ore pellets in 2024 (Grange Resources, 2025[16]).

Steel companies

Australia's steel industry was, until the recent decision to put the Whyalla steelworks under administration, dominated by two major players: GFG Alliance and BlueScope Steel, each pursuing distinct strategies towards green iron. GFG Alliance, which operated the Whyalla Steelworks through Liberty Primary Metals Australia until administration proceedings occurred in February 2025, was more vertically integrated with upstream mining operations, giving it a strong incentive to invest in hydrogen-based DRI production as part of its transition to green steel. In contrast, BlueScope Steel, which operates the Port Kembla Steelworks, is focusing on natural gas-based solutions for its decarbonisation efforts. Its strategy reflects the limited availability of hydrogen infrastructure in Australia and the need for an intermediate step before a full transition to green hydrogen.

Whyalla Steelworks

GFG alliance is the owner of OneSteel Manufacturing, a mining and steel company that was operating the Whyalla steelworks in South Australia prior to the plant being placed into administration by the South Australian government in February 2025. Out of 5.4 Mtpa of steel produced in Australia, approximately 1.2 Mt was made at the Whyalla steelworks, and it is estimated that the company produced roughly three quarters of the structural steel consumed domestically. The company’s green iron strategy was ambitious: GFG Alliance’s target was to produce over 1 Mtpa of DRI-HBI in 2030, although not all necessarily within the country. They also aimed to sell magnetite concentrate and finished steel made in the new EAF they recently purchased. However, it is not yet clear how or if these plans will be pursued by the future operator which is not yet determined at the time of writing.

GFG alliance operates hematite mines as well as magnetite mines which are connected to the steel plant by slurry pipes. The magnetite mine they operate in the Middleback ranges provided 100 Mtpa for the Whyalla blast furnaces. The deposit contains significant JORC-compliant magnetite resources, and more sites were planned to open.

They planned to feed the DRI operation at the Whyalla steelworks with a scalable hydrogen plant on site with 120MW-capacity modules, which will run on electricity generated from the wind and solar farms in the Eyre Peninsula. In the medium term, they planned to make their DRI using natural gas, and increasingly blend it with green hydrogen. This hydrogen project was to be developed with significant financial assistance from the state government, however the state’s Hydrogen Jobs Plan has recently been deferred which may impact this project (Government of South Australia, 2025[17]).

GFG Alliance planned to keep their existing workforce which would be retrained to work in the new DRI plant. They foresaw customers for HBI in Europe and in Korea but aimed to first supply HBI and finished steel to the domestic market. It remains to be seen whether this will also be the end goal of the chosen buyer of the plant.

BlueScope

BlueScope's decarbonisation ambition towards green iron is relatively more cautious. The company has invested in relining its blast furnace in Port Kembla, New South Wales, signaling a continued reliance on more traditional steelmaking, and is skeptical of hydrogen steelmaking because of infrastructure and supply constraints, and instead sees natural gas as a viable alternative. However (as mentioned above) they are in partnership with BHP and Rio Tinto on the development of an Electric Smelting Furnace (ESF) pilot plant through the Neosmelt Project in Western Australia (Bluescope, 2024[18]).

The company's decarbonisation efforts extend beyond Australia, working with companies like POSCO, ThyssenKrupp, Tata Steel, and Nippon Steel. BlueScope has conducted feasibility studies on DRI pathways in the past but remains cautious about the use of lower-quality iron ore in DRI processes. Overall, the company is positioning itself strategically within the evolving steel industry but remains unconvinced that hydrogen will play a major role in the near term.

POSCO

The Korean steel company POSCO, 7^th largest in the world by volume2, is a key potential player in the green iron space both as a potential producer and offtaker. POSCO has announced plans to expand its operations in Australia, Southeast Asia and India. POSCO aims to develop its hydrogen-based low-carbon ironmaking process, HYREX, to reach demonstration stage in 2026 and industrial scale in 2030. Its technology uses sinter feed with low-grade iron ore, skipping pelletisation processes.

POSCO's strategy is centred on establishing international partnerships, particularly with Australia, Malaysia and Oman, with the goal of accessing regions with cost-competitive low-carbon energy sources to produce green hydrogen and supply it to Korea, potentially embedded in a low-carbon product. In terms of hydrogen production, two key regions in POSCO’s strategy are Australia and Oman.

In late 2022, POSCO announced that it would invest AUD 28 billion in green hydrogen and AUD 12 billion in green steel with its local Australian partners by 2040, which would make the company Australia’s second largest foreign direct investor. For example, POSCO announced a 2 Mtpa DRI/HBI plant in the Boodarie Strategic Industrial Area of Western Australia, near Port Hedland (the Port Hedland Iron project), and conducted a feasibility study for the project in 2022. As of October 2023, ENGIE and POSCO agreed to undertake a pre-feasibility study for a green hydrogen initiative which is expected to supply the HBI plant. It has been recently announced that the Western Australian government is contributing AUD 15 million towards this project.

POSCO also has a strong relationship with a number of Australian iron ore companies. Fortescue has been a long-standing supplier of iron ore to POSCO, while POSCO and Hancock Prospecting are partnered on several projects, most notably as part of the Roy Hill mining operation. Hancock Prospecting owns majority shares in the operation while POSCO has a 25% stake. The operation produces 60 Mtpa of iron ore, 16 of which are supplied to POSCO. Roy Hill and POSCO announced they would explore different ways to produce hydrogen in Australia, initially using natural gas with CCUS, and ultimately solar and wind power.

While POSCO has the potential to be a key partner for a green iron industry in Australia, it is not yet certain whether their investment commitments will materialise as announced, or whether they may move towards other regions more ready for DRI production in terms of infrastructure and energy generation.

Emerging players

The steel industry has a long history with deep roots in complex energy-intensive process, heavy infrastructure, influenced by the vibrant international trading market system. As a result, the current decarbonisation movement represents a pivotal and unprecedented shift for the steel industry. Due to these complexities and the significant capital required for replacement, newer players, like Stegra, GravitHy, etc., are less impacted by legacy operations and infrastructure but with different challenges, are moving faster and taking different pathways to adopt and scale green technologies compared to incumbents. Within the Australian steel eco-system, a variety of new emerging players and consortia are being set-up in the green iron space.

Green steel WA

Green Steel WA is an emerging player in the DRI landscape in Australia who has two main projects, in addition to having applied for the EoI process in South Australia as part of a consortium. First, a planned EAF steel plant in Collie to make rebar for local and international consumption, which would be the first steel mill in the state and the first EAF plant in the country, expected to be operational in 2027. The project has already received AUD 2.7 million of government grant support through the Collie Futures Fund.

Secondly, Green Steel WA has proposed an export-oriented 2.5 Mtpa green hydrogen DRI plant near Geraldton, in the Mid-West of the state, with a cost of roughly AUD 3 billion (Thomson, 2025[19]). The project is expected to take a final investment decision in late 2025 with operations beginning in 2028. They foresee offtake to be in Thailand, where the offtaking company also has investors in the project.

The company is consortium-minded, collaborating with multiple other small-scale players in order to reach viability. Tempest Minerals signed a MoU with Green Steel WA in early 2025 to explore opportunities for making high-grade magnetite concentrate from their Remorse magnetite deposit for use in the Mid-West DRI plant. Recent drilling at Remorse found magnetite with grades up to 39% Fe, and the company plans to conduct further drilling and testing in the March quarter to validate the deposit (Thomson, 2025[19]). It is proposed that the DRI plant will begin operations on natural gas and transition to green hydrogen as it is made available by their partner, BP.

Green Iron SA

Green Iron SA is a consortium of four companies - Magnetite Mines, Aurizon Holdings, Flinders Port Holdings, and GHD – launched with the goal of producing green iron in South Australia, and taking part in the South Australian government’s Expression of Interest programme. The iron ore will be sourced by Magnetite Mines from the Braemar region, and the consortium plans to both produce the green iron and export it from Port Pirie. New infrastructure for water, energy and transport is needed for the project, however, the consortium hopes the South Australian government will provide the necessary financing.

Iron Road

Iron Road, in consortium with Amp Energy, is aiming to develop a green iron hub in Cape Hardy, South Australia. Amp Energy was originally aiming for an export-oriented green ammonia plant, but now it is shifting its focus towards green iron, both for export and domestic consumption. A final investment decision is expected by 2027 and first green hydrogen production is planned for 2030.

Stage 1 of the project requires approximately 2.5 GW of renewables for the 1 GW hydrogen electrolyser, with a cost of AUD 10 billion. Stage 2, at a cost of AUD 30 billion, involves scaling up to 5 GW of electrolyser capacity, and hydrogen user facilities including ammonia, green iron, peak generation, or green fuels.

Amp has secured a portion of the Cape Hardy Precinct through an agreement with Iron Road and has signed an infrastructure agreement with the aim to share the use of any common infrastructure. Amp has also signed an agreement with the Northern Water Project to facilitate access to produced water and sharing of information.

Progress Green Solutions (PGS)

Progress Green Solutions (PGS), a small WA-based start-up with investment from POSCO and in partnership with Germany and Japan, has high ambitions for green iron production in the Mid-West of the state. The company envisages that due to good wind energy potential, the operation can produce at 65% capacity without any hydrogen storage, with a 1.4GW electrolyser supplied by Thyssenkrupp Nucera.

Phase 1 of the project aims to produce 7.5 Mtpa of low-carbon DRI pellets for export by end of 2028, with a total CAPEX of AUD 3.2 billion. Currently, 480ha of private land has been purchased, and development approvals are ongoing as well as feasibility studies. The plant will be supplied in an integrated way from iron ore mines in Karara that PGS aims to purchase.

In August 2025, Thyssenkrupp signed a memorandum of understanding (MoU) with PGS to buy 100% of the green iron pellets and HBI from the Mid-West project, marking Australia’s first green iron offtake agreement (Fuel Cells Works, 2025[20]).

Other projects

• Mid West Green Pellet Plant (Pilbara Green Steel) : A project to produce high-grade pellets to be exported from Geraldton port is being proposed with consultation with iron ore suppliers and logistic providers. It could potentially support regional magnetite production without the need to go to green iron. No public announcement has however been made. The potential project could be based on Metso H2 pelletising process (100% hydrogen) and the market will likely be Japan and Korea for reduction of blast furnace emissions. The requirement of hydrogen is estimated to be 60,000kg per year.

• Zero Emissions Steel Technology (ZESTY) pre-FEED / FEED Study (Calix): AUD 1.96 million pre-Front End Engineering and Design (FEED) and FEED study will scope the design for a proposed demonstration scale H2-DRI plant. The company will receive an AUD 44.9 million grant from the Australian Renewable Energy Agency (ARENA) to build the plant which aims to produce 30,000 tonnes per annum of H2-DRI or HBI (Calix, 2025[21]). The process builds on Calix’s existing Calix Flash Calciner technology that is used for a variety of industrial processes (Calix, 2022[22]).

• Element Zero: A Western Australian based technology company that looks at an electro-chemical approach to producing iron, with demonstration facility planned for the Perth Area. The company is subject to action on an intellectual property dispute with Fortescue (Federal court of Australia, 2025[23]).

Positioning Australia’s companies in the global competition context

Australia is approaching the green iron transition at a time of intensifying global competition, with some MENA countries, Sweden and Brazil positioning themselves as possible frontrunners

Despite Australia’s ambition in transitioning to green iron production, the scale and speed of its companies’ investments in green iron remain relatively modest, raising concerns about its ability to compete in a rapidly evolving market.

One of Australia's biggest challenges is the competition from MENA producers, who benefit from well-established natural gas infrastructure and strong renewable energy potential. Countries like Saudi Arabia, Oman, and the UAE are leveraging their low-cost natural gas and abundant solar and wind resources to ramp up gas-based DRI production. Their ability to integrate existing gas-based reduction technologies with future green hydrogen supply gives them a first-mover advantage, making them attractive suppliers to steelmakers in Europe and Asia.

According to a report prepared by IEEFA (Basirat, 2024[24]), the Turkish steelmaker Tosyali, in partnership with Libya’s SULB, is establishing the world’s largest DRI facility with an 8.1 Mtpa capacity, starting with a 2.7 Mtpa phase using Midrex Flex technology, which enables ironmakers to gradually shift from natural gas to hydrogen as a reducing agent without needing a complete plant rebuild. Additionally, Tosyali plans to build a 4 Mtpa flat steel plant in Saudi Arabia’s Ras Al-Khair industrial zone, integrating two Midrex Flex DRI plants. Meanwhile, Libya’s LISCO has partnered with Danieli to produce 2 Mtpa of DRI/HBI for domestic use and exports to Italy, and Danieli has proposed a USD 4 billion integrated steel mill in Egypt, featuring a DRI facility and hydrogen plant to supply low-emissions steel to the EU.

North Africa is also emerging as a key player in green iron, with CWP Global planning to use hydrogen from its 30 GW AMAN project in Mauritania to produce green HBI for export to Europe. Mauritania’s AMAN Green Energy has signed an MoU with SNIM, the country’s largest iron ore producer, to begin green iron production by 2030. The European Commission has highlighted Mauritania's potential as a major supplier of green hydrogen and iron, given its vast renewable energy resources. Additionally, China’s Baosteel is expanding its investment in Saudi Arabia’s BAP Al-Khair Steel Company, a joint venture with PIF and Aramco, to maintain its 50% stake. This venture aims to produce low-emission thick plates using DRI-EAF technology, further cementing the region’s role in the global green steel transition.

At the same time, emerging business models, such as VALE’s green iron “mega hubs" or the new business model proposed by Stegra are reshaping global supply chains

The “mega hubs”, strategically located in regions with low-cost renewable energy, enable the production of HBI and DRI for export to closer high-demand regions (e.g. Europe). By developing these large-scale industrial ecosystems, VALE and other international players are creating a new dynamic in iron production, where iron ore suppliers evolve into value-added green iron producers. Despite the relatively favorable circumstances, this model is not easily replicable by Australian large iron ore producers because of multiple factors, in particular the limited engagement of companies from closer high-demand countries (e.g. Korea and Japan) and lack of strong commitments from these key industrial partners.

Stegra, a steel start-up in Sweden, is developing the world’s first industrial scale decarbonised 100% green hydrogen-based DRI-EAF steel project in Boden, Sweden. Stegra is in the unique position of advancing faster than incumbents by focusing solely on green hydrogen-based DRI-EAF technology route without planning to use a bridge fuel or alternative technology options, e.g. natural gas-based DRI, CCUS. Its DRI plant is to operate in 2026 with the aim of producing 5 Mtpa of green steel. Stegra has secured substantial financial support from global financial institutions, public financing agencies, and steel end consumers, who have already signed binding long-term supply agreements for Stegra’s green steel. The company is also looking to expand its iron and steel production in different countries with abundant access to renewable energy sources and strong grid connection, such as Portugal, Canada and Brazil, but not in Australia (Parkes, 2024[25]).

GravitHy is another new entrant in the European green iron space. With commercial operations projected to begin in France in 2029, the company focuses on DRI - particularly cold DRI pellets - and HBI production to serve nearby European markets. Unlike emerging players in Australia, GravitHy relies on both renewable and nuclear energy, connected to the grid system. A key element of GravitHy’s business model is the inclusion of major input suppliers, such as Engie (a French energy operator focused on renewables) and Rio Tinto, in its shareholding structure.

Box 1. Vale’s strategy and the emergence of “Mega Hubs”

Australian iron ore producers are displaying a heterogeneous approach to green iron, with some players that seem more inclined to invest in new technologies that could enable green iron production, and others more hesitant in this respect and willing to continue their longstanding and profitable business model. Global iron ore producers like the Brazilian VALE, one of the world’s largest producers of iron ore, are adopting a more globally integrated approach by exploiting synergies with companies overseas down the iron ore supply chain and focusing on DRI/HBI and green iron solutions.

VALE’s strategy is underpinned by its abundant supply of high-grade iron ores, primarily produced in its operations in Brazil, such as Carajás. These ores, with Fe content above 65%, are particularly suitable for DRI and HBI production, which require higher-grade feedstock to optimise efficiency and minimise carbon emissions. VALE has also invested in technological advancements, such as its green briquette product, which enables the reduction of CO2 emissions by up to 10% compared to traditional pellets.

VALE’s strategy is focused on establishing international partnerships with the aim to accessing regions with cost-competitive energy inputs and favourable industrial strategies. Two key regions in VALE’s strategy are Sweden and the MENA:

• Sweden: VALE collaborates with Stegra to supply high-grade iron ore in the form of pellets for further production of green steel products (Stegra, 2023[26]).

• MENA Region: VALE is forming partnerships with industrial players in MENA by establishing the so-called “Mega Hubs”, particularly in countries like Saudi Arabia, Oman, and the UAE (International Mining, 2022[27]).

These partnerships are not only driven by energy considerations (both regions offer abundant and cost-effective natural gas and renewable energy, critical for producing hydrogen and the key input in green DRI/HBI production) but also reflect the growing demand for green iron products in Europe and Asia, where decarbonisation policies are driving investment in cleaner steelmaking processes.

Figure 6. The Megahubs concept

VALE’s initiatives are often supported by government frameworks that promote industrial decarbonisation and energy transitions: national visions, such as Saudi Arabia’s Vision 2030 and UAE’s Net Zero by 2050 initiative, support investments in hydrogen and green industrial projects, which complement VALE’s long-term objectives.

Notes

← 1.  In India, DRI projects appear to be mostly coal-based.

← 2.  According to the worldsteel 2023 ranking (Worldsteel, 2023[96]).