MELBOURNE (Reuters) - Top global iron ore exporter Australia could lose as much as half its revenue from the sector if it fails to start producing green iron fast enough, as other countries start making steel using renewable energy, a think tank said on Friday.
WHY IT'S IMPORTANT
Iron ore is Australia's biggest export earner, but so far progress has been slow on developing green iron in the country.
BY THE NUMBERS
Australia risks losing around A$69 billion ($45 billion) a year in revenue from the sector as global steelmakers decarbonise, including in China, and restructure their supply chains, according to a report from Sydney-based Climate Energy Finance.
However, should Australia manage to position itself as a leader in green iron, it could potentially double current revenue to A$250 billion a year.
Australia accounts for 56% of seaborne iron ore trade, according to government figures.
KEY QUOTES
To avoid what could be "devastating economic consequences", Australia needs "a suite of strategic national-interest policy and investment incentives to kickstart a green iron export industry", the report said.
"In the global race to green iron exports, Australia has numerous competitive advantages – such as abundant and cheap renewables – that we must capitalise on," said Marilyne Crestias at Clean Energy Investor Group (CEIG).
WHAT'S NEXT
BHP Group (BHP.AX), Rio Tinto (RIO.AX) and Fortescue (FMG.AX) all have green iron projects underway, with Fortescue set to produce green iron from a pilot plant next year.
Climate Energy Finance recommended Australia should develop a clean commodities trading company with South Korea and Japan, and the government's Future Fund should provide A$20 billion to enable green metals processing.
It also suggested Australia's trade bodies should work on an Asian Carbon Border Adjustment Mechanism (ACBAM) to create a premium price signal for Australian green iron.
