Climate Change and Energy Minister Chris Bowen has hit back at suggestions that contributing over $100 million towards BlueScope's reline of the No. 6 blast furnace would lock in carbon intensive steelmaking for the next two decades.
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Today, Mr Bowen announced the federal government would grant BlueScope $136.8 million after negotiations on the government's safeguard mechanism, the signature policy to reduce emissions from Australia's 200 heaviest emitters.
The steel industry and BlueScope, as a 'hard to abate' and trade exposed industry, was exempted from some of the requirements of the safeguard mechanism, which CEO Mark Vassella would have brought the company's $1.15 billion plans to reline the No. 6 blast furnace to a halt, if they had continued in their original form.
However, BlueScope had attracted local and international criticism for its blast furnace plans, at a time when low emissions steel produced from green hydrogen is technically and increasingly commercially feasible.
A green steel plant in Sweden will begin operating commercially in 2025, while BlueScope will convert its own steelmaking processes in New Zealand to run on renewable electricity, after the steelmaker and the New Zealand government came to an agreement to overhaul the plant near Auckland.
"Green steel is coming, it's not here yet, and we need to work in partnership as we get there," Mr Bowen said in Port Kembla today.
BlueScope's head of Australian Steel Products Tania Archibald said the blast furnace reline project was a "bridge" to enable BlueScope to reach its 2050 net zero targets, but that "key enablers", namely large quantities of gas or hydrogen, were not available.
"One of the most promising technologies to achieve a steep reduction in emissions in iron and steelmaking is direct reduced iron ore technology, DRI," she said.
"However, given the current state of technology, the multi-year lead time to reline the blast furnace and the absence of key enablers for DRI, such as abundant low cost natural gas or green hydrogen, BlueScope made the decision in 2023 that the most prudent way to proceed is to reline the No. 6 blast furnace."
Mr Bowen also announced $63.2 million for Liberty Steel to purchase and commission a low carbon electric arc furnace for the Whyalla steelworks, in South Australia. This was welcomed by steelworkers' representatives the Australian Workers Union, with national secretary Paul Farrow saying the projects would create hundreds of jobs, while protecting the thousands that already work in the steel and adjacent industries.
"We tend to hear a lot of doom and gloom about manufacturing in Australia, but the fact is the future looks extremely bright if we seize our opportunities," Mr Farrow said.
"This investment demonstrates the will of the government to help drive Australia's growth into a clean steel future."
Ms Archibald flagged that BlueScope would have more to say on its decarbonisation plans in the near future.
"We're doing a lot of work around lower emissions iron and steelmaking, particularly what's going on in Europe," she said. "We have a lot of technical partnerships already in place, a lot of work around DRI options and we'll have more to say about that in the very near future."
