Australia's Leading Low-Carbon Steel Project Gets Funding

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Funding to support the development of Australia's largest planned direct reduced iron-electric smelting furnace (DRI-ESF) has been awarded to the NeoSmelt project proposed at Kwinana in southwestern Australia.

The Australian Renewable Energy Agency (ARENA) has allocated AUS$19.8 million (US$13 million) to help fund a front-end engineering design (FEED) study for the groundbreaking project, which aims to develop low-carbon steelmaking. The study will cost around AUS$49 million (US$32.2 million) and is being backed by a number of traditional rivals including iron-ore majors BHP Group (NYSE:BHP) (Melbourne, Australia), Rio Tinto (NYSE:RIO) (London, England), steelmaker Bluescope Steel (Melbourne), energy firm Woodside Energy Group (Perth) and Japanese steel major Mitsui & Co. Limited (Tokyo). It will be fed by iron-ore from the country's mining heartland in the Pilbara region, more than 1,300 kilometers away in the northwest. The project also benefited from a AUS$75 million (US$49.2 million) contribution from the Western Australian government last year.

Using the electric smelting furnace technology, NeoSmelt aims to prove that it is possible to produce lower-carbon-emission molten iron from Pilbara iron ore. ARENA Chief Executive Officer Darren Miller said collaboration and partnership across industry is crucial to decarbonizing mining and metal production in Australia. "Globally, the steelmaking industry makes up around 8% of global greenhouse gas emissions, so the decarbonization opportunity is huge. The NeoSmelt project brings together some of the world's largest players in the mining, metals and energy industries, in a collaborative effort to reduce emissions in the sector. This represents what the energy transition is all about--working together to achieve the most efficient and effective outcome for Australia's key export industry to transition into a lower-emissions economy. As the world's largest producer of iron ore, Australia has an important role to play in reducing emissions across the steel value chain."

The Kwinana Industrial Area, south of Perth, was announced as the preferred location to develop the pilot plant late last year. If approved, the NeoSmelt pilot plant will be able to produce 30,000 to 40,000 tonnes of molten iron a year, with operations kicking off in 2028. A final investment decision is expected in 2026. The ESF technology is capable of producing iron suitable for the basic oxygen furnace steelmaking process using lower quality iron ore. Other lower CO2 emission-intensity production routes, such as electric arc furnaces (EAF), require scrap steel and DRI produced from high grade iron ore, which the partners say is one of the key barriers to wider adoption of lower-carbon emissions technology. Initially, Woodside will supply natural gas to reduce iron ore to DRI, but once operational, the project aims to switch to lower-carbon-emissions hydrogen.

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