Steel industry decarbonisation in Australia and Asia will take time, says Rio Tinto

One of the nation’s largest producers of ore says the technology to create so-called ‘green steel’ is not yet available on a commercial scale in Australia or Asia.

Rio Tinto says that the transition to net zero emissions steel production will be a two-step process.

Mining giant Rio Tinto says Australia and Asia won’t be able to decarbonise their steel industries at the same rate as Europe and North America, with commercial-scale technology not yet available in the region.

Rio Tinto head of steel decarbonisation Simon Farry told a conference in Melbourne that the steel industry faced a two-phase transition – an initial, small change currently under way and a more substantial one in 15 years at the earliest.

Mr Farry said the decarbonisation of the steel industry would be driven by the type of iron ore available, as well as the ­technology.

Deeper collaboration with partners, competitors and other nations would be needed.

“There is technology available today at a commercial scale to produce green steel, but you need very high-grade iron ore to use in that process, and that only makes up about 5-10 per cent of the global supply of iron ore,” he told the Financial Review Asia Summit. “In the Atlantic region, we expect this technology, which is based on natural gas or hydrogen, to move quickly because they have high-grade iron ore, and there’s strong policy, particularly in Europe, but also subsidies through the IRA in North America.”

Mr Farry said in Asia the installed steelmaking infrastructure was relatively young and there wasn’t any carbon tax or consistent carbon policy to drive change, and the region also relied on “low- and medium-grade iron ores” from Western Australia.

“The focus in Asia is very much around optimisation of today’s technology, taking those pragmatic first steps to reduce the carbon that’s generated from coal-based steelmaking,” he said.

The mining industry has come under pressure to cut emissions as countries including Australia look to decarbonise. Rio Tinto has targeted a 30 per cent reduction in emissions by 2030 and net zero by 2050. Fortescue recently abandoned ambitious green ­hydrogen targets in a major ­business backdown, while BHP has said it may need offsetting to reach an ambitious net-zero target.

The second phase of the transition would involve developing technology for low and medium-grade iron ores, Mr Farry said.

“There are so many uncertainties around policy, capital requirements, renewable energy build-out and steelmaking technology, that success will be rooted in deep collaboration across the steel value chain with partners, with competitors and between nations,” Mr Farry said.

Rio Tinto noted that iron ore produced in Australia created three million tonnes of carbon every year and customers created another seven million tonnes, but when it was turned into steel it generated 400 million tonnes. Mr Farry said emissions in the sector were heavily weighted towards scope 3 emissions, with more than half coming out of China.

“We have an obligation as the largest supplier to the steel industry through our iron ore business, that we’ve got a role to play to help decarbonise the value chain.”

Meanwhile, Lynas Rare Earths chief executive Amanda Lacase told the summit that Australians didn’t recognise their unconscious bias with respect to other cultures, which was hindering success in Asia.

Lynas shares closed down 0.6 per cent at $6.88, while Rio fell 1.7 per cent to $108.12.

Originally published as Steel industry decarbonisation in Australia and Asia will take time, says Rio Tinto