The Prime Minister, Anthony Albanese, has emphasised the pursuit of green steel and decarbonisation as vital in strengthening the bond between our two countries, during his six-day visit to China. Specifically, in a visit which was saw Mr Albanese make frequent references to respect, trust and reliability, he used a steel decarbonisation roundtable discussion in Shanghai to urge greater cooperation between Australia and China over green steel initiatives. At the roundtable, Mr Albanese was flanked by Geraldine Slattery, the President of BHP in Australia; Kellie Parker, Rio Tinto´s Chief Executive Australia; Dr Andrew Forrest, Executive Chairman of Fortescue; and Gerhard Veldsman, the CEO of Hancock Iron Ore. “This is the first time that Australia’s iron ore leaders have met with China’s steel industry leaders with an Australian Prime Minister here in China,” said Mr Albanese. China relies on Australia for roughly two-thirds of the iron ore consumed by its vast steel industry, a trade that will earn Canberra $105 billion this financial year, according to the latest government estimates. Herein lies the fundamental dichotomy that successive Australian governments have been unable to properly resolve.

While our cultural and security relationship with the United States has been paramount over the past five decades, our economy has become ever more dependent on China, which is now our number one trading partner by a large margin. So, if push came to shove, with which superpower would we align? Or do we not need to take sides? Anthony Albanese spent the week highlighting the mutual economic value that Australia and China represent to one another. In essence, to avoid Australia suddenly being forced to react to a combative situation in the near future, Mr Albanese sought to strategically position Australia as indispensable to China. (That is, as a partner, not a province).

Commenting on the fact he was accompanied by the iron ore chiefs, Mr Albanese said: “One of the things that comes out of a meeting like this is that it’s a reminder to Australians of the important role these four companies play in our national economy”. He might just as easily have said “our national security” because commerce breeds comradeship. Dr Forrest followed up by opining: “Across China, we have people – they want a peaceful, long-term relationship with Australia. Across Australia, we have people who want a peaceful, long-term relationship with China”.

Green steel refers to metal produced using renewable energy such as hydrogen to limit or eliminate the use of coal, thus cutting carbon emissions. Australian iron ore is too low-grade to be directly processed into green steel, so it needs an additional step. When that step is undertaken with renewable energy such as hydrogen or biomass instead of coal, it´s called green iron, which becomes a low-carbon base for green steel production. Our top iron ore miners – Rio Tinto, BHP and Fortescue – all have green iron projects underway, with Fortescue set to produce green iron from a pilot plant this year. However, “at scale” production is still some distance away. Meanwhile, higher grades of iron ore are currently available from countries such as Brazil and Guinea. Last year, a global think tank said Australia could lose as much as half its revenue from the iron ore sector if it fails to start producing green iron. The message therefore from the Australian companies to the Chinese steelmakers at the roundtable might well have been: “Okay, our iron ore isn´t of the best quality, but we do have plenty of it. So, (please) keep partnering with us and let´s see if we can make this green iron thing fly”.

In a more diplomatic voice, BHP´s Geraldine Slattery said: “This week’s gathering is a testament to the significant and enduring relationship of the economic and shared trust relationship between Australia and China”. Rio Tinto´s Kellie Parker said the meeting had “…deepened our relationship with mutual trust and collaboration and that’s what we’re going to take forward with steel decarbonisation”. Andrew Forrest made the point that the green iron industry will launch from the massively successful platform already created by Rio Tinto, BHP, Hancock and Fortescue. He said green steel will generate hundreds of thousands of new jobs and will protect the hundreds of thousands of jobs which are already employed by the iron ore industry.

“We want to see a sustainable steel sector in China and globally, and we want to build a future that keeps Australian jobs and our economy strong,” said Mr Albanese, who confirmed that his government is committed to supporting industry-led efforts towards green steel. He said that, by making an investment in the transition, the Australian government expected to enjoy a financial return in the form of increased revenues.

“Australia and China each have major stakes in how the decarbonisation efforts develop. As both countries cooperate to advance decarbonisation, we also need to work together to address global excess steel capacity. It is in both countries’ interests to ensure a sustainable and market-driven global steel sector,” Mr Albanese added. As has been well documented, weak demand for steel from China´s housing market over the past three years has fuelled an over-capacity and led to increased exports. This in turn has triggered a wave of tariffs and duties from trading partners such as Vietnam and South Korea. Kallanish reports that Chinese steel exports in the first half of 2025 grew 9.2% year-on-year to 58.1 million metric tonnes, the highest first-half-year export tonnage in history.

The shadow of the Trump-imposed tariffs hung heavily over Mr Albanese´s visit to China. By repeatedly referencing Australia as a reliable and trustworthy trading partner, the prime minister was clearly placing Australia in contrast to the current day USA. Also, by all accounts, his relationship with China´s President, Xi Jinping, developed nicely over the course of the visit. During a period in which Donald Trump is ostracising and infuriating economic friends and foe alike, Albo´s diplomatic charm offensive also carried with it a brutal reality: We need you and you need us. So let´s be sensible about this.