Australia risks losing its dominant position in the global iron ore market if it doesn’t move quickly to produce green iron, and would do well to draw lessons from the near obliteration of its nickel industry, Dino Otranto, CEO of Fortescue.
Australia is the world’s largest supplier of seaborne iron ore, accounting for about half of global supply. But Pilbara grades mined in the west of the country are generally considered too low to be made into steel without using coal.
This means that as steelmakers decarbonise by reducing their use of coal, they will look elsewhere for iron ore, which could hit Australia’s biggest export producer after the coal industry has suffered. nickel, Otranto said at the IMARC conference in Sydney.
Competition is intensifying thanks to growing investment in green steel projects in the Middle East, which do not use Australian iron ore, while the giant Simandou iron ore mine in Guinea is expected to come online next year, he said.
“This is a high-grade deposit that will go directly to steel mills in China,” he said of Simandou.
“My warning is: Look what’s happening,” he said.
“We don’t sit here with our heads in the sand thinking it won’t happen again,” he said.
Pointing to what had happened in the nickel industry, he said Australia had the opportunity to help develop Indonesia’s mineral wealth, but did not anticipate China’s ability to turn low-grade lateritic ore into a commodity of high purity.
“The Chinese… built the largest nickel industry the world has ever seen and… took out an entire market sector in four years,” he said, referring to the transformation of China’s nickel industry. Indonesia into the world’s dominant supplier, developed by Chinese stainless steel giants such as Tsingshan.
This year, the wave of cheaper supply has hit nickel producers around the world, such as New Caledonia and Australia.
Otranto said a similar scenario could play out in the Australian iron ore industry which, along with the Australian government, is underestimating the threat from iron ore.
Fortescue is starting a pilot plant to produce green iron from Pilbara iron ore.
The world’s fourth-largest iron ore miner will use green electricity from solar farms at its Christmas Creek operations in Western Australia to produce 1,500 tonnes per year of high-purity green iron using hydrogen.
“We can’t miss the ship again.”
Brazilian miner Vale, the world’s second-largest iron ore producer, said on Monday it has partnered with China’s Jinnan Steel Group to build an iron ore beneficiation plant in Oman to produce high-quality pellets.
