Further problems are besetting the Whyalla steelworks which has been unable to produce steel since mid-March when its 60-year-old blast furnace was damaged during a re-start following maintenance. Now, Liberty Steel Australia, the owner of the Whyalla operations, has announced that a new electric arc furnace, the centre piece of a $500 million green steel upgrade of the steelworks, won´t come online until 2027, two years later than promised. Liberty Steel Australia is part of the GFG Alliance group of companies, which are privately owned by the British industrialist, Sanjeev Gupta. In April 2023, GFG placed the order for the EAF with Italian firm Danieli, to replace its existing coal-fired furnace. The new furnace is believed to have a price tag of $485 million which GFG could lower through a $50 million contribution from the South Australian government and a further $63.2 million coming from the federal government. Speaking after addressing the World Hydrogen Conference in Rotterdam on May 15, Mr Gupta confirmed the EAF delay. The dual problem of the furnaces has raised concerns about the economic viability of the steelworks under the present ownership. The best projection

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for when the existing blast furnace might come back online is “several weeks”. Meanwhile, as many shift workers sit idle and have been forced to take wage cuts of up to 30%, it´s reported that some of Whyalla´s large customers have turned to imports to fill production shortfalls: placing orders with steelmakers in Vietnam, South Korea and Taiwan. At the time of publishing, Liberty Steel had given no explanation for the delay in the EAF schedule, nor whether the projection of it being functional by 2027 was rock solid. The South Australian Minister for Energy and Mining, Tom Koutsantonis, says the government holds “grave concerns” about the current situation. Well it might. The state government has committed to building a $593 million hydrogen plant as part of its State Prosperity Project. Under an agreement between the SA government and GFG Alliance, that hydrogen will go to Mr Gupta´s Whyalla steelworks, to be fed into his much-hyped green steel future and the new EAF – when and if it arrives.

The greening of manufacturing in Australia was a central theme in the budget announced this week by Federal Treasurer, Jim Chalmers. “This budget invests in our renewable energy superpower ambitions – including $13.7 billion in production tax incentives for green hydrogen and processed critical minerals,” Mr Chalmers said in his speech last Tuesday. Another key component will be the federal government’s $22.7 billion Future Made in Australia program, which Mr Chalmers said is intended to make Australia “an indispensable part of the global economy”. Professor Rod Sims from the ANU’s Crawford School of Public Policy agrees with the ambition but believes Australia should only put taxpayers´ money into green initiatives where we have a clear comparative advantage over other countries. Mr Sims, who also chairs the Superpower Institute, told the Melbourne Economic Forum in April that Australia has precisely that type of advantage in our role as the world’s top supplier of iron ore. We also have plentiful and cheap renewable energy to make hydrogen. Green steel production aims to use renewable energy to make hydrogen, which would then replace coal in the steel manufacturing process. “All overseas studies that I am aware of suggest Australia is likely the cheapest place in the world to make green iron,” Mr Sims said. Government intervention would be essential in this endeavour, he added, because of two large problems facing anyone seeking to make green energy products. The first obstacle is that steel made with fossil fuels is cheap because it does not account for the environmental costs of carbon emissions. However, Mr Sims warned that the time has now come where the cost of carbon must enter the system. The new European Carbon Border Adjustment Mechanism is one such example, Mr Sims argued. It has placed a cost on the carbon imported to the EU and, in doing so, has presented Australia with a chance to export competitive “green” iron into the trading bloc. Mr Sims also proposed that the energy-intensive, hydrogen production facilities should not be linked to the National Electricity Market, and should be located close to the iron ore mines in Western Australia. This brings up the second problem: financing. While green iron-making technology is proven, it has not been done at scale and will require federal government support.

Finally, the Australian Steel Institute (ASI) has called for ban on unprocessed scrap steel exports. In a submission to a federal government Senate Inquiry into waste reduction and recycling policies, the ASI said Australia needs to fully optimise waste and the circular economy by prohibiting the export of unprocessed steel scrap, which usually includes car parts and whitegoods contaminated with plastics and other products already banned from export. The ASI submission claims steel scrap is a sovereign and increasingly scarce and valuable resource. Without a ban, Australian steel mills will fall short of being able to fully service the growing Australian construction and manufacturing sectors, the ASI says. This would mean Australia would be forced to continue to import higher volumes of steel scrap.