Australia’s national identity is defined for us globally as a resource rich, export driven economy. As the 13th largest economy in the world, in an era marked by rising trade disruptions and increasing global protectionism, it is imperative that Australia proactively redefine its identity as a future focused and innovative green export superpower.
With global trade increasingly shifting to our Indo-Pacific region, trade ties with our Asian partners need to be stronger than ever. Our economic geography will matter, as will our ability to harness new export opportunities.
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One such opportunity lies in green iron ore and steel, building on Australia’s great expertise in mining iron ore. With the right kind of ambition, we can cement our place in the value chain of global decarbonisation, which continues to change economic structures around the world and leverage our leadership in renewable energy as we head towards a global transition to net zero.
Steel production is responsible for between 7 per cent and 9 per cent of global greenhouse gas emissions. Steel is not just a commodity, it is a strategic asset that countries leverage to enhance their economic power, ensure national security and navigate complex global politics. Climate and environmental stakes are higher than ever. The pressure is on for Asia, home to nine of the world’s largest steelmakers, to accelerate decarbonisation.
As a key global supplier of iron ore (38 per cent) and metallurgical coal (48.5 per cent) and with nearly unmatched global potential in renewable energy, Australia is uniquely positioned to drive this transition. By evolving our production methods and expanding into green iron manufacturing, we can drive down emissions and create a new high-value export market for our raw materials.
But while green iron holds enormous potential – offering significantly lower carbon intensity and greater resource efficiency – its future is at risk from an increasingly fragmented global trade environment.
Shifts in trade policy and supply chain volatility threaten the investment required to scale up renewable energy infrastructure.
At the heart of the challenge is a crucial question: how do we ensure that trade, particularly with Asia, remains a force for mutual economic, energy security, and climate and environmental benefit?
Australia’s proximity to Asia is its strategic advantage. As is its historical relationship with Europe and the US. We can design low carbon supply chains not only to deliver competitive economic outcomes but also to regenerate our distinctive natural landscapes. Australia can offer Asian steelmakers a strategic and trusted partnership that meets the expectations of global investors, increasingly guided by the principles of the Taskforce on Nature-related Financial Disclosures.
For instance, as investors demand that supply chains demonstrate tangible environmental benefits, Australia’s integrated approach to renewable energy deployment, low carbon production methods, and ecosystem regeneration become a significant asset.
Initiatives such as harmonised regional carbon pricing or coordinated approaches to emerging mechanisms like the Carbon Border Adjustment Mechanism (CBAM) could create incentives for cleaner production methods and ensure that supply chains are built on transparency and environmental integrity. Such measures not only lower production costs over time but also help steelmakers comply with investor expectations.
This is not just theoretical. Our new report Forging Futures: Changing the Nature of Iron and Steel Production lays out a roadmap for how Australia can transition from being a traditional exporter of raw materials to a leader in the green iron and steel revolution, capitalising on our renewable energy strengths and managing our natural assets, while adding value to our economy and those of our trading partners.
The report highlights that Australia’s renewable energy deployment is critical to driving down the cost of green hydrogen and green iron production. It is timely given recent developments in Whyalla and the Government’s newly announced Green Iron Investment Fund.
This could not come at a more important time for Australia’s economic future. Without a rapid acceleration in renewable investments and resilient supply chain practices, Australia risks being left behind in a race where both economic dividends and environmental imperatives are at stake.
We can either lament our given “dig and ship” national identity and be on the receiving end of these shifts, or we can lean into our national traits of ingenuity and grit to harness our potential as a renewable energy superpower to proactively shape the global green steel trade.
Trade seen as a zero sum game never ends well in the long run. When done well, trade has always been a dynamic driver of innovation and market solutions.
Ultimately, the stakes are clear. The world is grappling with climate change and economic disruption. Deepening our trade and foreign direct investment links with Asia and leading the shift to green iron ore and green steel represents good economic and environmental policy to secure our future prosperity.