Australia PM promotes green steel when iron ore miner meets Chinese steelmakers

Australia and China need to work together more closely on green steel, said Anthony Albanese, the Prime Minister of Australia, in Shanghai, on Monday. He also called for China, the world's biggest steelmaker, to reduce its excess production capacity.

China depends on Australia for two-thirds or its iron ore consumption by its massive steel industry. This trade will bring Canberra A$105 Billion ($68.90 Billion) in this financial year according to the most recent government estimates.

Decarbonisation, which requires higher-grade iron ore from countries such as Guinea and Brazil, puts this trade at risk for Australia.

Green steel is metal that's produced with renewable energy, such as hydrogen, to reduce or eliminate coal and carbon emissions.

Albanese, speaking before a meeting of Australian iron ore miner and Chinese steelmakers explained that green steel was a way for Australia and China to continue their decades-long relationship.

He said that "achieving the goal of Paris Agreement would require decarbonisation steel value chains. This presents an opportunity for Australia, and China, to advance our long-term interests."

Albanese offered to work with China in order to reduce the overcapacity of its steel industry. This is fueling record exports, which in turn triggers a wave tariffs and duties by trade partners such as Vietnam and South Korea.

A think tank warned that Australia could lose up to half of its revenues from the steel industry if it does not start producing green iron. This is a product with lower emissions, and other countries are now making steel using renewable energies.

The report suggests that if you build a successful green iron industry, your revenues could be doubled.

The iron ore from Australia is not of a high enough quality to be processed directly into green steel. It requires an additional processing stage. This step can be done with green energy, such as biomass or hydrogen instead of coal.

Rio Tinto and BHP Group, as well as Fortescue, were among the top iron ore mining companies that attended.

All have

Fortescue to produce green iron

Green iron produced by a pilot plant

This year is the first time that we will be able to see this.

Andrew Forrest, Fortescue's founder, was in China to meet with Albanese. He said that the relationship between Chinese steelmakers, and Australian mines, strengthened the bonds between the two countries, and that security concerns were "a distraction."

Forrest was answering a question regarding whether or not a security debate that emphasizes China's risks is detrimental to the economic relationship between the two countries, given the fact that China frames itself as a partner who is more stable than the United States.

Both Australia and New Zealand said that they were not adequately warned of China's Navy's live-fire drills in the Tasman Sea, between Australia and New Zealand, earlier this year.

Forrest stated that "Australia's relationship with China is multi-layered, as it should be, and in order to build a strong bilateral relationship, you need these strong friendships, this very real business confidence between the two countries." $1 = 1.5239 Australian Dollars (Reporting and writing by Alasdair pal in Sydney, Melanie Burton in Melbourne, Lewis Jackson in Beijing, Kate Mayberry).

(source: Reuters)