OCDE - Green Iron opportunities in Australia A case study within the OECD’s Global Green Iron project

GREEN IRON

OPPORTUNITIES IN

AUSTRALIA

A CASE STUDY WITHIN THE OECD’S

GLOBAL GREEN IRON PROJECT

OECD SCIENCE, TECHNOLOGY

AND INDUSTRY POLICY PAPERS October 2025 No. 1862 

GREEN IRON OPPORTUNITIES IN AUSTRALIA © OECD 2025

This work was approved and declassified by the OECD Steel Committee on 21/08/2025 . This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

©OECD (2025)

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You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work. Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one.

Disclaimers 3

GREEN IRON OPPORTUNITIES IN AUSTRALIA © OECD 2025

Australia has an opportunity to play a role in the global green iron industry by leveraging its vast iron ore reserves and high renewable energy potential. This would involve shifting from a traditional "dig-and-ship" model and adding value to its iron ore through direct reduction, aligned with the global steel sector transition. Despite its natural advantages, Australia's green iron sector remains nascent, with limited project investment and barriers including infrastructure gaps and policy fragmentation. Major mining and steel companies show varied commitment levels, and new entrants face financing and logistical hurdles. International competitors are advancing rapidly through integrated strategies and lower-cost energy. Renewable energy access and co-located production models are key enablers, though technically complex. Australia's success depends on scaling up infrastructure, improving policy coordination, and forging international industrial alliances. With rising global demand for green inputs and evolving trade policies, Australia must act decisively to secure a competitive position in the emerging green iron value chain.

Abstract4 

GREEN IRON OPPORTUNITIES IN AUSTRALIA © OECD 2025

This paper has been prepared by Gianpiero Mattera (OECD at the time of drafting), Anna Lockwood and Stephan Raes from the OECD Directorate for Science Technology and Innovation (STI), Struc tural and Industry Policy (SIP) division. This work was conducted under the aegis of the OECD Steel Committee as part of the activities of the 2023-24 Programme of Work and Budget. This paper forms part of the broader Green Iron project led by the Secretar iat, which aims to deepen

Industry Policy (SIP) division. This work was conducted under the aegis of the OECD Steel Committee as part of the activities of the 2023-24 Programme of Work and Budget. This paper forms part of the broader Green Iron project led by the Secretar iat, which aims to deepen policymakers’ understanding of global green -iron developments and to strengthen dialogue between governments and industry on the opportunities and challenges of the emerging global green iron market. The authors would like to than k the Advisory Board Group - Chris Bataille, Marten Metsol, Baris Ciftci, Frank Jotzo, Kathy Reimann, Tristy Fairfield, Chan Yang, and Will Hall - their comments and suggestions helped improve substantially the paper. The authors are also indebted to the D epartment of Industry, Science and Resources (DISR) and the Department of Foreign Affairs and Trade (DFAT) of the Government of Australia for their continued support during the preparatory mission to Australia and during the drafting of this paper. Finally , the authors want to thank Jerry Sheenan and Michele Rimini for their invaluable comments and feedback. This work has benefitted from a voluntary contribution from the Pooled fund on International Energy (PIE).

Acknowledgements 5

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Table of contents Disclaimers 2 Abstract 3 Acknowledgements 4 Executive Summary 7 1 Introduction 9 Why is this important? 10 2 Developments in green iron production, trade and investment 11

DRI capacity and investments: an international perspective 11

Mapping company strategies towards green iron in Australia 16 Positioning Australia’s companies in the global competition context 21 3 Drivers of green iron production 24 Driver 1: Raw material availability 24 Driver 2: Access to renewable energy 26 Driver 3: Demand for green iron 29 Driver 4: The policy settings 33 4 Wrapping up and policy considerations 44 References 46

3 Drivers of green iron production 24 Driver 1: Raw material availability 24 Driver 2: Access to renewable energy 26 Driver 3: Demand for green iron 29 Driver 4: The policy settings 33 4 Wrapping up and policy considerations 44 References 46 Annex A. List of stakeholders consulted 54 Annex B. Approach to the case study 57 An evolving literature on green iron, in particular in Australia 57 Approach and methodology for the case study 59 Annex C. The Australian green iron ecosystem 61 End notes 646 

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FIGURES Figure 1. Emissions across the steelmaking value chain in BF-BOF route 10 Figure 2. Iron ore and DRI production take place in different geographies 12 Figure 3. Hydrogen-based DRI is still a limited portion of total DRI capacity 12 Figure 4. Estimates of Australia’s green iron export opportunity 14 Figure 5. Announced EAF and DRI projects by country 15 Figure 6. The Megahubs concept 23 Figure 7. Australia and Brazil dominate global iron ore production and exports 24 Figure 8. Capacity growth by generation technology, Australia 27 Figure 9. Renewable potential, gas pipelines and iron ore deposits 29 Figure 10. Steel demain is expected to grow moderately in the long term 30 Figure 11. Transport costs are quote homogenous across potential green iron producing economies 32

TABLES Table 1. Top export destinations for Australian iron ores (2023) 25 Table 2. Australia’s identified magnetite resources by Australian jurisdiction 26 Table 3. A mapping of the Australian green iron ecosystem 61

Table A A.1. Mission programme 54 7

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Australia aspires to be a global leader in green iron, leveraging its mineral wealth and renewable

Table A A.1. Mission programme 54 7

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Australia aspires to be a global leader in green iron, leveraging its mineral wealth and renewable energy potential. With vast reserves of iron ore and exceptional solar and wind resources, Australia sees a unique opportunity to become a central node in the emerging global green iron value chain. Supported by growing government ambitions and policy frameworks, the country aims to shift from its current “d igand-ship” model toward value-added green iron production, aligning economic growth with decarbonisation goals. Global steel decarbonisation trends are transforming the traditional iron and steel value chain, opening up new roles for resource -rich countr ies. Countries and companies are exploring the geographic relocation of ironmaking and steelmaking activities, with green iron production that will likely be concentrated in regions with cost-effective renewable energy and raw materials. This trend, if rea lised at scale, could redefine comparative advantage in the steel sector, especially as green iron gains prominence in corporate decarbonisation strategies. Despite its potential, Australia’s green iron industry is in early development, with a gap between long-term visions and current investments. Multiple studies highlight an immense potential of green iron exports, projecting up to AUD 304 billion in annual export value. Yet, the actual portfolio of announced projects—such as Fortescue’s Christmas Creek p ilot and Green Steel WA’s Geraldton DRI proposal — represents only a fraction of this potential, indicating that significant barriers to investment and deployment remain. Australia’s main iron ore producers exhibit divergent approaches to green iron, with only a few moving decisively beyond their traditional business models. Fortescue is leading the charge with bold commitments and partnerships, while Rio Tinto and BHP are exploring alternative technologies or limite d downstream processing. Hancock Prospectin g has adopted a more cautious stance. These strategic differences reflect the tension between the profitability of existing export models and the uncertain returns of green iron ventures.

commitments and partnerships, while Rio Tinto and BHP are exploring alternative technologies or limite d downstream processing. Hancock Prospectin g has adopted a more cautious stance. These strategic differences reflect the tension between the profitability of existing export models and the uncertain returns of green iron ventures. Steelmakers and emerging players are experimenting with diverse gree n iron business models, often shaped by resource access and policy support. GFG Alliance, now under administration, had developed an ambitious green iron strategy in Whyalla, while BlueScope has adopted a more incremental decarbonisation path. Meanwhile, n ewer entrants like Green Steel WA, Iron Road, and Progress Green Solutions are developing export -oriented green DRI projects, often through consortia and with foreign partners, though financing and infrastructure challenges remain. Australia faces growing international competition from faster-moving regions like MENA, Sweden, and Brazil. Countries like Saudi Arabia and Oman are rapidly scaling up DRI capacity using natural gas, benefitting from lower energy costs and integrated industrial policies. Global p layers like VALE are advancing “mega hub” models that integrate high -grade ore supply with low -cost green energy in partner countries. Compared to these developments, Australia’s progress appears slower and less coordinated. The availability and scalabilit y of renewable energy are emerging as critical locational factors for green iron production. Rapid growth in renewable capacity — particularly in Asia, MENA, and Australia — is enabling new models of industrial development based on co -located, off -grid ene rgy systems. In Australia, where key iron ore regions like the Pilbara are not connected to the national grid, green iron Executive Summary8 

GREEN IRON OPPORTUNITIES IN AUSTRALIA © OECD 2025

projects must rely on islanded systems that integrate renewable generation, hydrogen production, and ironmaking on-site. While this model offers strategic and logistical advantages, it also entails higher costs and technical risks. Targeted public investment in enabling infrastructure could help reduce these barriers. In the interim, gas-based ironmaking may act as a transitional pathway, but its competitiveness is likely to decline as green hydrogen infrastructure matures.

ironmaking on-site. While this model offers strategic and logistical advantages, it also entails higher costs and technical risks. Targeted public investment in enabling infrastructure could help reduce these barriers. In the interim, gas-based ironmaking may act as a transitional pathway, but its competitiveness is likely to decline as green hydrogen infrastructure matures. The viability of Australia’s green iron sector will depend on global demand dynamics and the pace of decarbonisation policies in key markets. While steel demand in tra ditional destinations like Japan and Korea is expected to remain stable, future demand for green DRI and HBI will depend on these countries’ policy incentives and willingness to import green inputs. Emerging markets in Southeast Asia and India could offer growth opportunities, while carbon border measures in the EU and US may indirectly boost demand for green Australian inputs. Logistics and trade infrastructure will play a critical role in scaling green iron exports. Unlike iron ore, green DRI and HBI requ ire specialised handling and transport due to safety and stability concerns. Although Australia’s port infrastructure is world -class for bulk ores, significant investments will be needed to handle and store green iron products. Transportation costs, though not prohibitive, may affect Australia’s competitiveness in more distant markets compared to closer MENA suppliers. Policy support for green iron in Australia is growing but still fragmented and uneven. While the federal government’s Future Made in Australia plan and AUD 1 billion Green Iron Investment Fund signal a major policy shift, concrete financial flows and infrastructure support are still ramping up. State governments, particularly in South and Western Australia, have launched initiatives to attract green iron investments, including support for specific projects and precinct planning. However, policy coordination between states and the federal level could be improved. Australia’s green iron success depends on stronger industrial alliances, targeted i nfrastructure investment, and decisive early action. To secure a place in the global green iron trade, Australia must accelerate project development timelines, align infrastructure planning with investment needs, and engage more assertively with key indust rial partners abroad. Delays risk losing ground to more agile competitors

investment, and decisive early action. To secure a place in the global green iron trade, Australia must accelerate project development timelines, align infrastructure planning with investment needs, and engage more assertively with key indust rial partners abroad. Delays risk losing ground to more agile competitors already forging international supply chains and capturing early-mover advantages. 9

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Australia has the ambition to become a global hub for green iron 1 production and trade. Its abundant resources of iron ore, in combination with favourable conditions for renewable energy production and a supportive policy environment are important assets underlying this ambition. The way to realise this green iron ambition is currently a hot topic among policymakers, think tanks, universities and civil society organisations as well as the private sector, with a plethora of consultations, papers, initiatives and conferences delivered or planned. Australia’s ambitions take place against the background of global developments in green iron markets . With a view to developing cost-effective steel decarbonisation pathways, various countries and companies along the steel value chain are exploring options to decouple the iron and steel m aking process geographically, with green iron production concentrated in regions that offer the most favourable circumstances. Low-carbon iron products would subsequently be exported to steel producing economies. Comparative advantage in a decarbonised global economy would play a significantly increased role in the steel value chain. While this rapidly evolving green iron market holds significant potential to transform the steel industry and advance global decarboni sation efforts, current developments in th is area remain underexplored and poorly understood, posing challenges to both industry stakeholders and policymakers. In particular, the potential misalignment between government strategies across diverse geographies aimed at supporting and attracting gree n iron production can lead to inefficiencies, contradictory policies, and heightened policy competition, with possible repercussions for both developed and developing economies. This case study on green iron developments in Australia is part of a wider OECD green iron project as part of the Programme of Work and Budget of the OECD Steel Committee, that aims to help better understand

heightened policy competition, with possible repercussions for both developed and developing economies. This case study on green iron developments in Australia is part of a wider OECD green iron project as part of the Programme of Work and Budget of the OECD Steel Committee, that aims to help better understand developments in green iron markets and provide a platform for international discussion and cooperation on the topic. The case study reviews Australian green iron developments against the background of how global green iron markets are taking shape and the positioning of firms and jurisdictions across the steel value chain. The paper analyses green iron developments from the perspective of four key drivers: renewable energy availability, raw material availability, demand c onsiderations and policy settings (see Annex B for a comprehensive explanation of the approach to the study). As such, the case study aims to provide both a benchmarking of Australian policy and company strategies , as well as an assessment of how developments in Australia link to the broader global green iron context and its drivers. The case study builds on wider OECD work on industrial decarbonisation in Australia, such as the 2023 OECD Economic Survey on Australia (OECD, 2023[1]), an OECD study on the Pilbara (OECD, 2023[2]) and wider OECD industrial decarbonisation analysis (OECD, 2023[3]). The case study was executed on the basis of extensive data analysis, interviews with over 100 Australian stakeholders, a structured questionnaire and a mission to Australia late November 2024 (see Annex A). The paper first discusses developments in green iron markets from the perspective of Australia and thereafter assesses these through the lens of the four drivers. 1 Introduction10 

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Why is this important?

1. The steel industry, responsible for over 8% of global C O2 emissions, must undergo significant transformation to meet climate targets set by the Paris Agreement (IEA, 2023[4]). Although progress in incremental step change in emissions reduction and energy efficiency has been made, these efforts remain

1. The steel industry, responsible for over 8% of global C O2 emissions, must undergo significant transformation to meet climate targets set by the Paris Agreement (IEA, 2023[4]). Although progress in incremental step change in emissions reduction and energy efficiency has been made, these efforts remain insufficient for full decarbonisation. A major shift is required toward greener inputs, primarily in iron production, which makes up for a significant share in steel industry CO 2 emissions. Transitioning away from metallurgical coal -based reduction is also critical to mitigating coal mine methane emissions in the steel value chain, an often overlooked aspect of the embedded emissions in steel production. The investigation into hydrogen -based direct reduced iron (DRI) and hot briquetted iron (HBI) has expanded rapidly, with many companies expressing an interest in producing H2 -DRI/HBI, however final investment decisions and capital flows into project proposals remain slow. OECD analysis shows that nearly 60% of steel companies now include hydrogen -based DRI in their decarbonisation roadmaps, highlighting the growing focus on green ironmaking technologies (OECD, 2025[5]).

Figure 1. Emissions across the steelmaking value chain in BF-BOF route

Source: MRIWA, retrieved from (Pollard and Buckley, 2024[6]).

2. As low-emission factors of production become increasingly representative of the overall costs of iron in the steel value chain, the question arises of where such production can best be located. Instead of co-locating green iron and steel production, green iron production may be located where circumstances are most favourable after which it could be exported to steel plants elsewhere. This could entail a significant restructuring of the steel value chain and offer opportunities for countries such as Australi a. For other countries, it raises the question on advantages and disadvantages of relying on green iron imports. This makes a better understanding of developments in green iron production not only important from an economic but also a political perspective. 11

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countries, it raises the question on advantages and disadvantages of relying on green iron imports. This makes a better understanding of developments in green iron production not only important from an economic but also a political perspective. 11

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This section discusses developments in global green iron production , investment and trade from the perspective of Australia. It provides an analysis on the basis of production, trade and inves tment data as well as on the basis of an assessment of company strategies along the steel value chain, as discussed in the previous section. The second part of this section aims to map how Australian companies are positioning themselves in the emerging gre en iron sector. This analysis tracks their current and future investments and strategic orientations through the key drivers of green iron production identified earlier. Specifically, it examines how companies’ investments leverage the companies’ access to energy inputs and raw material supply — particularly high-quality iron ore— but also how companies ’ investments in the green iron space respond to export market dynamics and are mediated by the evolving policy landscape.

DRI capacity and investments: an international perspective DRI production currently accounts for a modest share of iron and steel making and is concentrated in Asia and the Middle East, Australia does not yet have a share The geographical distribution of iron ore productio n and DRI production exhibits distinct patterns , with limited overlap of the two . Major iron ore producers such as Australia, Brazil, and China dominate global supply, with Australia alone producing 960 million metric tons in 2023. However, currently these countries are not the largest producers of DRI. Instead, India, Iran, Egypt, and the Russian Federation (hereafter Russia) lead in DRI production, despite having comparatively lower iron ore production levels.

This divergence suggests that factors beyond iron ore availability drive DRI production, particularly the cost of natural gas . Countries in the MENA region, such as Egypt, Saudi Arabia, and Oman, have significant DRI output, due to their access to low cost natural gas, the reducing agent used in DRI

This divergence suggests that factors beyond iron ore availability drive DRI production, particularly the cost of natural gas . Countries in the MENA region, such as Egypt, Saudi Arabia, and Oman, have significant DRI output, due to their access to low cost natural gas, the reducing agent used in DRI production to date. China, the world's largest steel producer, has limited DRI production, with its steel industry centred on traditional blast furnace technology fed by coking coal rather than EAF -based production. 2 Developments in green iron production, trade and investment12 

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Figure 2. Iron ore and DRI production take place in different geographies

Source: Iron ore production data are obtained from the US Geological Survey, annual publication, Iron ores. DRI data are obtained fro m the

MIDREX 2023 Direct Reduction Statistics. Most of current DRI capacity is not green but coalor gas-based, particularly in Asia, with currently limited use of hydrogen. Current DRI production is predominantly reliant on natural gas and, to a lesser extent, coal, making it far from a fully green technology. The majority of global DRI capacity uses gas -based reduction, particularly in regions with abundant and low-cost natural gas sup plies, such as the Middle East, North Africa, and parts of North America. Coal -based DRI, though less common, is still significant in India, where coal availability supports its use in rotary kiln -based production. In contrast, hydrogen -based DRI remains a n emerging technology, with only a few pilot projects and demonstration plants in Europe and Asia currently in operation. The primary barriers to large -scale H 2-DRI deployment are high investment costs, infrastructure constraints, and the need for a reliable supply of green hydrogen at an affordable price, which itself depends on large-scale renewable energy capacity. Figure 3. Hydrogen-based DRI is still a limited portion of total DRI capacity 13

infrastructure constraints, and the need for a reliable supply of green hydrogen at an affordable price, which itself depends on large-scale renewable energy capacity. Figure 3. Hydrogen-based DRI is still a limited portion of total DRI capacity 13

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Notes: Data in thousand of tonnes.

Source: Authors’ calculation based on Laplace data.

Green iron potential in Australia is significant, with production expected to grow Despite the limited size of current global DRI capacity, Australia is well positioned to play a significant role in the global DRI market. Several reports provide a positive outlook to the Australian DRI potential. For example, (Finighan, 2024[7]) suggests that Australia’s iron ore exports could be converted into around 560 Mtpa of DRI, reaching AUD 386 billion annually with a 40% global market share in global iron and steel production in 2050 . A report by Climate Energy Finance (Pollard and Buckley, 2024 [6]) indicates that switching 40% of Australia’s iron ore exports into green iron exports could generate AUD 174 billion per year in export revenues from green iron , which coupled with additional iron ore export revenu es of AUD 77 billion per year would translate to a doubling of export revenues from the iron export industry to AUD 250 billion per year. On the other hand, the associated costs of inaction and the associated reduced exports of iron ore as result of global steelmakers decarbonisation strategy would instead cost up to AUD 69 billion (approximately USD 45 billion) per year. Australia’s potential for wider greener exports is also emphasised by (Daiyan et al., 2024[8]): according to their estimates, Australia has the opportunity to establish a highvalue green export sector worth an estimated AUD 333 billion per year , driven by the growing global demand for low-carbon products including green iron, green steel, renewable hydrogen, ammonia, green aluminium, and critical minerals.

value green export sector worth an estimated AUD 333 billion per year , driven by the growing global demand for low-carbon products including green iron, green steel, renewable hydrogen, ammonia, green aluminium, and critical minerals. A report by Mandala (2024[9]) looks at the opportunity of switching to green iron for Western Australia, the Australian state with the largest reserves of iron ores. The study estimates that in presence of a supportive policy settings, Western Australia has the potential to produce at least 4.5 Mtpa of green iron in 2030. To achieve this, the required level of investment is estimated to be AUD 37.5 billion, a large share of which (AUD 23 billion) would be for renewable energy related in vestments e.g. generation, storage and transmission (Mandala, 2024[9]). A report by Springmount Advisory argues that Western Australia’s green iron potential could mean creating 24,000 ongoing jobs in Western Australia, with an additional 11,000 fulltime construction jobs on average per year, and drive emissions from Australia down, with a reduction of 274 Mtpa CO2 of emissions in 2040 (Springmount Advisory, 2024[10]). Over the longer term, the Mandala’s report states that Western Australia could supply more than 14% of global green iron by 2050, generating AUD 74 billion of economic value , which correspond to about 310 Mtpa and 20% of global green i ron demand. Although estimates of green iron opportunities are quite optimistic, the announced projects so far represent only a limited share of the green iron potential projected in various reports Summing up the estimates from multiple sources (Accenture, Climate Energy Finance, Daiyan et. Al, Finighan, Mandala and the Superpower Institute), in the long term the export gain produced by transitioning to green iron in Australia is expected to be valued between AUD 83 billion and AUD 304 billion. While these estimates highlight a significant opportunity for a large -scale green iron market in Australia, current ambitions and corporate efforts in this sector appear to fall short of these projections .14 

to green iron in Australia is expected to be valued between AUD 83 billion and AUD 304 b