Australia’s BHP stated that producing green iron in Australia is too costly, despite a recent agreement between Australia and China to jointly work on decarbonizing the steel supply chain. BHP Australia President Geraldine Slattery indicated that production costs in Australia would be twice as high as in the Middle East and China, even with policy support.

Australia supplies approximately 60% of China’s iron ore requirements. However, the ore is generally of low grade and cannot be directly processed into steel using renewable energy. As a result, an additional processing step is required.

When this processing is carried out using hydrogen produced from renewable energy or biomass as a substitute for coal, the resulting product is known as green iron. Green iron serves as a low-carbon base material for producing green steel. These processes are not expected to become commercially viable until the next decade.