Federal and South Australian leaders had a trying time last week explaining how their funding support over many years had failed to stop the demise of the blast furnace at Whyalla steel works.
On the other hand, Nationals leader Matt Canavan wasn’t holding back. Closing Australia’s only producer of structural steel, he said, meant that “we can’t make steel to make buildings, bridges or railway lines.”
“It’s not just a practical or productivity issue, it’s now a national security issue… It is an indictment on Australian energy and industry and our national security that we have lost the last blast furnace in this country to make structural steel,” he said.
He’s right – up to a point. Whyalla’s 60-year old blast furnace supplied less than a sixth of the steel Australia needs, but it was the only domestic source of rail and structural steel.
As the world’s largest iron ore exporter Australia ought to produce all the steel it needs instead of the current 65 per cent, but technical and market realities dictate otherwise. Even accounting for transport costs, China’s far larger mills, cheaper labour and huge domestic market give its steel a cost advantage over the local product.
But what’s really getting under Matt Caravan’s skin is government policy demanding that steelmaking embraces new low-carbon technologies, bringing to an end those long-standing icons of the industry, coal-fired blast furnaces.
Iron and steel production is the world’s highest industrial emitter of carbon dioxide, accounting for roughly 10 per cent of global emissions and surpassing entire sectors like aviation.
Both contenders to buy the Whyalla works – India’s Jindal Steel International and Brisbane-based M Resources – favour alternatives to coal-fired steelmaking. Both were fully across the loss of the blast furnace and have factored that into future plans focused on electric arc and electric smelting furnaces – technologies that are developing rapidly in both Asia and Europe.
So all parties with a continuing interest in the business want to run Whyalla as a green steel producer, using renewable solar energy instead of thermal coal. The pressure is now on the federal and South Australian governments to make sure that unlike its departing owner, Sanjeev Gupta’s GFG Alliance, the new proprietor is capable of keeping the operation going.
Most pressure is coming from political opponents of any and every move to eliminate the burning of coal in the production of steel and other metals. The treatment of this issue by Matt Canavan and One Nation’s Barnaby Joyce puts them among the disreputable minority globally (including many of their political colleagues) who trivialise efforts to cut carbon dioxide emissions.
But cutting steelmaking emissions is anything but plain sailing. It needs time, a lot of hard thinking and more than a little inspiration to transform this country’s entire energy and steelmaking regimes. And that calls for a level of patience that an adversarial political system rarely allows.
A steady, reliable supply of green hydrogen obtained from water by electrolysis remains central to Whyalla’s long-term future. That needs abundant clean energy. Until it’s available, “grey” hydrogen derived from a mixture of natural gas and super-hot steam will power steelmaking – and also the decarbonising of iron ore for export, making that product marketable in Europe.
Shutting their ears to political detractors, Australian mining and metallurgy companies have committed serious resources to developing electric smelting technology. They know it’s a long, hard slog, but they also know it can work. Like so many inventions (LED lighting, for instance, invented 99 years ago), it just needs time.
Laboratory-scale electric smelting using hydrogen is happening in Newcastle, NSW, and multiple similar projects are under way in WA. NeoSmelt, a joint venture at Kwinana, WA, is underpinned by capital from all the big names in Australian steel plus Mitsubishi Corporation – along with gas giant Woodside Energy, betting on returns from grey hydrogen.
A month ago, Andrew Forrest’s company Fortescue announced it had produced the first hot metal at its electric smelting plant at Christmas Creek in the Pilbara. And showing off its green energy commitment, last week Fortescue launched a racing team, Fortescue Zero, to compete in the all-electric Formula E World Championship.
Australian innovation extends to the electricity grid. In the race to replace retiring coal-fired power with solar, wind and battery storage, a potential blackout risk is being addressed by the Western Downs Battery storage project using virtual synchronous machines, a new invention involving a wholesale rethink of inverter technology.
This Australian world-first is happening on the Darling Downs in Matt Canavan’s home state of Queensland. But I’d hazard a small bet that he’s too hell-bent on resuscitating coal power to notice.