GFG Alliance boss Sanjeev Gupta says Australia can lead the world in green steel and hydrogen

GFG Alliance executive chairman Sanjeev Gupta says a revolution in steelmaking is coming and Australia should grasp the opportunity with both hands.

GFG Alliance executive chairman Sanjeev Gupta at the Whyalla steelworks.

GFG Alliance executive chairman Sanjeev Gupta has launched a rallying cry for Australia to place itself “at the heart of a new industrial revolution’’, based around the use of renewable energy and hydrogen to produce steel, rather than simply shipping our vast reserves of iron ore offshore.

Mr Gupta also on Thursday announced an expansion of GFG’s magnetite iron ore concentrate production at its Whyalla operations, with the first phase of a two-stage expansion project almost finished.

Mr Gupta will tell an American Chamber of Commerce in Australia (AmCham) lunch in Adelaide on Thursday that GFG is aiming to increase magnetite production by more than 10 per cent to 2.5 million tonnes per year, up from about 2.2mtpa, which could lead to more exports to its European steelworks.

GFG currently produces both hematite and magnetite iron ore, with the 6.3mtpa of hematite produced each year exported, while the magnetite product is used in the Whyalla steelworks.

Mr Gupta said GFG subsidiary SIMEC Mining was about to complete the construction phase of a “two-phase debottlenecking process’’.

The expansion would also feed into GFG’s “Greensteel” ambition, which aims to produce carbon neutral steel by 2030 (CN30) with the aid of renewable energy and potentially hydrogen.

Mr Gupta said magnetite iron ore was suite for use in the Direct Reduced Iron (DRI) process, which was at the heart of the Greensteel program.

“Our purpose is to create a sustainable future for industry and society and that starts right here with magnetite - a critical enabler of our global Greensteel strategy,’’ Mr Gupta said.

“Thankfully it’s an iron ore we have in abundance right here in Whyalla.

“Combined with renewables, particularly solar from our Cultana Solar Farm, our port, a skilled workforce, and supportive community and government, we are in a unique and enviable position to create a world leading Greensteel hub and help fulfil our CN30 mission. That’s exciting!”

GFG Alliance executive chairman Sanjeev Gupta next to the Cultana solar plant test rig.

Mr Gupta also reiterated his call for Australia to ramp up its manufacturing capabilities, particularly in the steel sector,, saying the events of the past couple of years had thrown into sharp relief how “flimsy and fragile our supply chains really are ... and that we’ve become too dependent on others’’.

“Globalisation versus the need for self-sufficiency now requires a major rethink... At times like these...sovereign manufacturing capability moves from important to critical... Which is exactly the opposite to our thoughts and deeds for the last three decades,’’ he said.

“So, home grown is once again about to become the new mantra... at a time when so many countries have been desperate to farm out their manufacturing capabilities, to where it’s apparently cheaper, or easier... or both.

“And now, we’re worried all over again, that we’ve let too much experience and expertise simply evaporate.’’

Mr Gupta said there was a recognition now that countries needed to have their own manufacturing capabilities, and luckily, Australia had the right blend of raw materials and abundant renewable energy resources for this to be achievable in the steel sector.

“Australia exports enough iron ore to produce 500 million tonnes of steel, over a quarter of the world’s annual needs,’’ he said.

“Yet less than 1 per cent of this is processed into steel right here ... domestically. And with global steel consumption set to double in the next 30 years, could there be a better time for Australia to claim its place as a modern, efficient, low-carbon, global steel power?’’

Mr Gupta said the age of fossil fuels was “slowly coming to an end’’, and the role of steel and hydrogen in the economy was now “in the spotlight”.

“A glaring spotlight that shows both steel and hydrogen come with their own specific problems,’’ he said.

Almost all of Australia’s iron ore is exported overseas to be turned into steel.

“They say a problem shared is a problem halved ... and in this case, it’s doubly true. Put steel and hydrogen together and the problem simply goes away. Stop using coking coal in blast furnaces and replace it with hydrogen in Direct Reduced Iron (or DRI) furnaces.’’

Mr Gupta also repeated his opinion that hydrogen was best used where it was produced, as he did not think large scale exports were viable.

“Moving hydrogen around is both costly and challenging,’’ he said.

“Each stage of storage, shipping, and re-gassing, adds formidably to the cost - and that’s on top of the capital required to build the plants and infrastructure.

“Our solution, is rather than try and ship the hydrogen to where it’s needed, is to produce it right here, in abundance, and use it just where it’s made.

“By using hydrogen to make Greensteel in-situ, we solve the storage and transport problems at a stroke.

“Indeed, this could be at the heart of a new industrial revolution in Australia, offering this highly progressive nation the chance to be a world leader in a new, clean hydrogen economy.”

The South Australian Government is planning to build the world’s largest hydrogen electrolyser at Whyalla, while there are also plans on foot for a hydrogen hub adjacent to Whyalla involving several companies including Santos and Fortescue Future Industries.

GFG Alliance bought the Whyalla steelworks and iron ore operations out of administration in 2017, and the company has turned it around, saying it is now delivering strong profits.

GFG’s global operations ran into trouble early last year when its financier Greensill collapsed, forcing it to refinance more than $5bn in debt, including about $430m associated with its local arm, Liberty Primary Metals Australia.

A debt restructuring plan for the Australian operations was struck with Credit Suisse Asset management in October last year.

GFG said last month that it had more than doubled profits at its Australian steel manufacturing business Infrabuild and said production at its Whyalla steelworks up strongly.