Chinese analyst’s green iron reality check for Australia

A Beijing-based green steel expert has warned Australia’s hopeful iron ore processors they need a reality check as they enter a costly and competitive industry.

At the Clean Energy Council’s WA summit on Tuesday, there was strong optimism from government and industry about the role green iron and steel production can play in decarbonising the Western Australian economy and creating new jobs.

However, speaking at the event, Bloomberg New Energy Finance green steel analyst Yuchen Tang said that such projects turned out to be more expensive and risky than expected.

Ms Tang said interest in new green steel projects peaked with 73 new projects announced in 2023 and has since decreased with 18 new projects announced in 2025.

“I love the optimism in Australian presentations but I’m here for a reality check,” he said.

“Most steelmakers looking to use these first-of-its-kind technologies realize the projects are much more expensive than they initially anticipated,” he said.

“The steel market has not been doing very well in recent years, so we have seen weakening demand from major markets such as Europe, China, etc., which means steel producers are very reluctant to invest in new capacity in projects when their cash flow is very tight and the market situation is not that good.

“Many of the projects we see under construction today still need firm commitments in terms of funding and procurement, as well as the right policies to truly support their progress.”

Ms. Tang said the cost of producing green steel using green technology is more than US$1,300 per ton; or up to 90 percent more expensive than using fossil fuels.

Western Australia is home to 10 low-carbon iron or steel projects; one of these (Fortescue’s 1,500 tonne per year pilot plant at Christmas Creek) is under construction.

Also proposed in the Pilbara are POSCO’s Port Hedland Iron, Element Zero’s electroreduction plant, Binding Solutions’ cold agglomerate pellet plant and Metal Logic’s modular smelter.

Progressive Green Solutions, alongside a consortium comprising Fenix ​​Resources, Athena Resources and Warradarge Energy, has proposed building a large pellet and hot briquetted iron facility in the Midwest.

Green Steel at Collie Steelworks in WA, south of Perth, appears to be the project closest to leaving the drawing board in the state.

BHP, Rio Tinto, Woodside, Mitsui and Bluescope Steel are working on an electric iron smelting project at Kwinana.

Rio Tinto also has the BioIron project on hold due to the miner working with Calix on its Zesty Green Iron technology.

Europe is still the dominant force in green steel, US industry growth has come to a halt under President Donald Trump, and Middle Eastern and Asian investments are increasing, Ms. Tang said.

“Despite [Europe] “It has the most stringent climate policy and various policy instruments to encourage the uptake of green and steel… We have noticed that many of these pioneering projects proposed in Europe have been postponed,” he said.

“These large industrial projects take several years to build and increase their production, and may encounter various obstacles such as infrastructure in this process.

“They need to be connected to the port transmission line, they need to have transportation storage facilities.

“Current project investment in Australia is still very low and we really need the right combination of firm acquisitions as well as policies, whether encouraged by government or mandates, or voluntary acquisitions by first movers in the market.”

He warned Australian industry hopefuls needed to ensure the demand they identified was real, not estimated.