Australia to propose tax incentives for critical minerals
The proposed law will set up a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals.
Andrew Forrest, billionaire founder of iron ore empire Fortescue Metals Group Ltd., is “runnin’ down a dream” of a green-powered Australian steel-making renaissance.
Citing inspiration from the rock song by the late Tom Petty, Forrest, in a televised speech on Saturday, will outline his vision to harness the country’s potential green energy and hydrogen resources and its vast iron ore reserves to make Australia a world leader in zero-emissions steel manufacturing.
It’s a big ask for a magnate whose company generates more than two million tons of greenhouse gases every year. “Green” steel production is unlikely to be competitive with the traditional coal-fired method much before 2030, according to BloombergNEF analysis.
At the same time, Australia’s steel-making heartlands have been decimated over recent decades by plant closures and cutbacks — a stark reminder of the huge challenge facing any would-be competitors to the might of China, which accounts for well over half of the world’s crude steel output.
“We aim to start building Australia’s first green steel pilot plant this year, with a commercial plant in the Pilbara, powered entirely by wind and solar, in the next few years,” Forrest said. “We’re also aiming to develop green iron ore trains –- that are powered by either renewable electricity or green ammonia.”
Hybrit, a joint venture in Sweden between steelmaker SSAB AB, iron ore supplier LKAB and energy supplier Vattenfall AB, last year began test operations aimed at removing fossil fuels from steel production. BHP Group sees major disruption of steel-making with hydrogen and clean energy as a much longer-term prospect. It could be 10-to-15 years before lower costs made the idea economic, Chief Executive Officer Mike Henry said in a September interview.
Forrest says he’s up for the challenge and, if he gets it right, believes that Fortescue could become a climate change innovator to rank alongside Tesla Inc. His company is trialling two methods of producing steel without coal — one with green hydrogen and the other with renewable energy.
“If Australia were to capture just 10% of the world’s steel market, we could generate well over 40,000 jobs – more than what’s required to replace every job in the coal industry,” he said. It’s an ambitious target as global output in 2019 was 1.9 billion tons, while Australia produced 5.5 million tons, according to the World Steel Association.
Forrest’s clean energy ambitions extend beyond steel. Fortescue, which began iron ore exports in 2008 and is now the world’s No.4 shipper, announced last year it would invest about A$1 billion ($780 million) in de-carbonization and hydrogen projects out to 2023.
Fortescue has a project pipeline that could lead to some 300 gigawatts of clean power generation — that’s more than four times Australia’s total energy capacity, Forrest said. Long-term, he sees potential to scale that up to 1,000 gigawatts.
“As someone who’s made a career out of doing what other people said was impossible, this doesn’t feel any different,” he said. Fortescue shares dropped 2.2% in Sydney on Friday.
(By James Thornhill)
Comments