![BlueScope general manufacturing David Scott speaks to local industry about the steelmaker's plan for the future. Picture by Adam McLean BlueScope general manufacturing David Scott speaks to local industry about the steelmaker's plan for the future. Picture by Adam McLean](/images/transform/v1/crop/frm/123041529/240dd4c1-ebfd-4589-85bd-f7ccbafe70f5.jpg/r0_0_5607_3165_w1200_h678_fmax.jpg)
BlueScope is considering whether the long-term future of ironmaking is in South Australia or Western Australia, rather than Port Kembla, as the company continues to firm up plans for green steel production.
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At an Illawarra industry update on Thursday morning, BlueScope general manager manufacturing David Scott said the ingredients for green iron making were more readily found in the Pilbara or South Australia, with plentiful supplies of magnetite iron ore and natural gas and the capacity to produce vast quantities of renewable hydrogen.
This comes as global trends in the steel industry see large players begin to geographically separate iron making and steel making as production technologies change.
The technology that BlueScope considers the most viable for green steel making in Australia involves a process known as Direct Reduced Iron where natural gas is used to convert magnetite iron ore into iron pellets. The natural gas in this process can be replaced with green hydrogen for zero-carbon iron making.
Currently, BlueScope uses a coal-fired blast furnace to produce iron from hematite iron ore shipped from the Pilbara to Port Kembla.
![BlueScope may make green iron in South Australia or the Pilbara, rather than Port Kembla. Picture from file BlueScope may make green iron in South Australia or the Pilbara, rather than Port Kembla. Picture from file](/images/transform/v1/crop/frm/123041529/e46b648a-ade3-49fb-b954-3d6c7cdc91ca.jpg/r0_253_5184_3179_w1200_h678_fmax.jpg)
However, the huge amounts of natural gas - some 30 petajoules a year - and subsequently large amounts of hydrogen created by renewable electricity required would be more readily available in locations such as the Pilbara and South Australia, as well as being close to deposits of magnetite iron ore, Mr Scott said.
"I don't think there's enough gas on the east coast to support a DRI plant on the east coast of Australia," he said.
"We are looking at the east coast of Australia, we're looking at South Australia, we're looking at Western Australia, but it's definitely an Australian focus."
In the meantime, however, BlueScope is pushing ahead with its plans for a $1 billion reline of blast furnace number six, which would produce iron from 2026 for about the next two decades.
Known as Project Ironman, original board approval was expected in February, however was delayed after the government introduced its safeguard mechanism, which BlueScope CEO Mark Vassella said at the time would have a "material impact" on the project.
Subsequently, negotiations between BlueScope and the government over the mechanism, which sets a baseline of emissions for large industrial emitters and then requires these to be reduced by 4.9 per cent a year, carved out exemptions for "trade-exposed" industries such as steel and cement. This enabled the blast furnace reline project to go ahead, albeit with final approval pushed back to August this year.
"With the safeguard mechanism we needed to take time to reflect on what that meant for a 20 year investment, like the blast furnace, and we've been negotiating and talking with government at all levels about the impact of the safeguard mechanism and we think we've got a good pathway forward," Mr Scott said.
To be a "bridge" between current, coal-fired steelmaking and future green-steel, the blast furnace reline project includes a number of green technology improvements, including generating electricity and heat from waste gas and upgrading the handling process for slag - the waste from the ironmaking process - to cut sulphur dioxide emissions.
![The mothballed no. 6 blast furnace will be brought back online by 2026 after the $1 billion reline project. Picture by Adam McLean The mothballed no. 6 blast furnace will be brought back online by 2026 after the $1 billion reline project. Picture by Adam McLean](/images/transform/v1/crop/frm/123041529/42a25fb2-d903-408e-bfb1-ed0f0a799dd2.jpg/r0_257_5036_3100_w1200_h678_fmax.jpg)
Mr Scott also ran through multimillion-dollar upgrades to other BlueScope facilities, including the $70 million pipe and tube mill to service the solar energy market, the $150 million berth upgrades at Port Kembla for the unloading of raw materials, a $415 million upgrade to metal coating facilities in Western Sydney to serve the construction market and the $400 million advanced steel manufacturing precinct which involves upgrades to BlueScope's plate mill, as well as a fabrication facility for renewables.
However, the fabrication facility to enable the production of wind turbines locally, rather than being shipped in from overseas, has hit a literal road block, with bridges over highways between Port Kembla and the location of wind farms in inland NSW forcing BlueScope to consider locations tied to renewable energy zones outside of the Illawarra.
"Initially we tried to focus on locating a fabrication facility here in the Illawarra, targeting the renewable energy sector," Mr Scott said. "With the amount of wind tower fabrication that needs to be completed for the wind tower capacity in NSW, we say that those wind towers should be fabricated here in Australia, but it's really different to get those large sections that we would have to fabricate up and into the renewable energy zones."
In a sign of how Australia's inconsistent and fractured approach to the transition to net zero has hampered investment in next generation green industries such as green steel, the environment for BlueScope as it embarked on the journey towards getting to net zero across its operations, dubbed Project IronFlame, was compared with that of its European counterparts.
"If we were to go down this pathway in transition to low emissions and spend billions of dollars, you want some surety that someone isn't just going to then import a higher carbon-based steel from a blast furnace based in Asia," Mr Scott said. "That defeats the purpose of what we're trying to achieve so we need a supportive government."
Mr Scott cited the European Union's development of a carbon border adjustment mechanism, which would place tariffs on higher-carbon steel imported from overseas as one measure, as well as the billions in euros that European steel makers were receiving to convert to direct reduced iron.
Notwithstanding the challenges brought on by Russia's invasion of Ukraine and the impact this has had on gas prices, project director of the blast furnace reline Justin Reed said there was no doubt that Europe was leading the way when it came to the transition to green steel, with steelmakers in Korea and the Middle East chasing to catch up.
Assistant Treasurer and member for Whitlam Stephen Jones said a carbon border tariff was under consideration by the government.
"We are 100 per cent committed to working with BlueScope, with other steelmakers to ensure that we are still making steel not only in Australia but in the Illawarra, and our challenge right now is ensuring that the blast furnace is relined and then working with industry to ensure that beyond the reline there is a carbon reduction program," he said.
"[BlueScope] have done pretty well out of the Safeguard discussions, they know that border adjustments are on the table. We want to make sure that we are working in parallel with what other markets are doing to ensure that our industries aren't disadvantaged as compared to what is going on in other countries."
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