16

2024

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05

'China needs to decarbonise its steel — and we will provide the green hydrogen-based iron': Fortescue energy CEO

Author:

HydrogenInsight


 

Australian mining giant Fortescue has put Chinese steelmakers in its sights for exports of green iron, made via direct reduction of iron ore using renewable hydrogen, the firm’s energy CEO Mark Hutchinson told Hydrogen Insight in an interview.

 

 

“China needs to decarbonise the economy. They’re the biggest producers of steel on the planet by far, so if you’re looking from a global perspective, where your energy needs to go, it’s China,” he explained.

 

Hutchinson added that this shift towards low-carbon steel would be mainly driven by internal decarbonisation targets rather than external forces such as the EU’s Carbon Border Adjustment Mechanism for imports.

 

The Chinese government has set targets for 15% of crude steel to be produced via electric arc furnaces by 2025, rising to 20% by the end of the decade. Electric arc furnaces can use scrap steel or direct-reduced iron to produce new steel.

 

However, limited supplies of scrap steel and the high cost of setting up direct iron reduction facilities in the country have meant these facilities are so far underutilised — although they could represent a demand centre for exports of already-processed green iron.

 

“We sell 200 million tonnes of iron ore into China, so we’re working closely on helping them,” Hutchinson said.

 

Fortescue more widely plans to leverage its existing share of the iron market of around 20%. “If we move fast on green iron, and the others don’t, that’s an advantage for us — but we hope the others come along with us as well,” Hutchinson said.

 

The company’s board last year approved a US$50m investment into a green iron project at the Christmas Creek mine in the Pilbara region of Western Australia, which is expected to process 1,500 tonnes a year with first production before the end of 2025.

 

So how much will the green iron cost compared to what Fortescue normally ships to China? While Hutchinson did not provide specific figures, he hinted at a potential premium over traditional “grey” iron made with highly polluting coal.

 

 

“The way we think about a premium is, you got to make the economics work without a premium to start off with, but we do believe when you when you have the product, there’ll be a competition for it,” he said.

 

Fortescue also eyes a prime position in sales of green hydrogen-based ammonia, particularly to the shipping market.

 

“We will be one of the world’s biggest suppliers of ammonia,” Hutchinson said, noting that the company itself could offtake some of these volumes. “We have a fleet of about 100 massive vessels that we will now convert to green ammonia.”

 

The company already operates a small vessel, the Green Pioneer, which had been retrofitted to partly run on ammonia.

 

Source: HydrogenInsight

 

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