The recent revisions of my steel demand projections up to 2100 have changed the viability of new steel production technologies. The worldwide demand for primary steel is flat and I assume that they fall worldwide, especially because China's cement and construction zoom of components decreases.
This means fewer new bridges, less new skyscrapers and a long -term shift in the steel cement relationship, which has underpinned primary steel production for decades.
Producing with less tons of steel, the edge shrinks for errors in industrial investments. Capital reports and inefficient processes become more visible.
Fig. 1: Projection of steel demand, which is fulfilled by scrap and some DRI technology by the author
As I recently found on these pages, Australia is sitting in a uniquely affordable position in this new steel landscape. It has huge iron oral reserves, some of the cheapest renewable electricity potential on the planet, adequate access to natural gas and a sustainable carbon sequestration geology.
These factors do not refer to a uniform solution. Instead, they suggest that three different steel manufacturing routes in Australia correspond to different regions and applications.
None of them is a direct reduction in iron (Dri) on a hydrogen basis.
In the past five years, hydrogen has been strongly promoted as the future of the green steel. The idea was uncomplicated: Create hydrogen from renewable electricity using electrolysis, frequency hydrogen into a wave oven, reduce iron ore in solid metal and melt the result into an electric arc oven. It was proven to be clean, flexible and technically. It is technically proven.
However, the economic assumptions that supported this vision have not been. The costs for the electrolysers remain high. The efficiency of hydrogen production remains low. Compression, storage and distribution remain complex and expensive.
The electricity is cheap in Australia compared to global average values, but not cheap enough to make green hydrogen close to 2 US dollars per kilogram, let alone USD 1.50 or lower, which are required for cost parity with other options.
The reality – even if remote industrial plants combine wind, solar and storage into solid electricity – is 3 to 4 US dollars per kilogram in Australia and 5 to 8 US dollars in most industrial countries.
Hydrogen Dri only works in a table if you accept the energy prices from a future that has not arrived and may never be completely concluded. This gap between expectation and reality is important.
Australia has a credible opportunity for carbon steel, but it is not about hydrogen. It is based on three different processes, each of which is suitable for another industrial geography and resource mix.
In places with plenty of renewable electricity, in particular large parts of the interior of Queensland, North South Australia and the Pilbara, in which wind and solar are co-localization in the scale, the electrolysis of the molten oxide is most sensible.
Moe is a direct electrification route. It completely bypassed hydrogen and divides iron ore electrochemically into liquid iron and oxygen. The only inputs are electricity and iron ore. There are no carbon emissions at the location. The process was detected by Boston Metal on a pilot scale and the company builds on commercial demonstrations.
With four megawatt hours per ton of steel, Moe is energy -intensive, but Australia's renewable energies can support this. With electricity at $ 0.03 per kilowatt hour, the $ 120 per tonne is electricity costs. Add another $ 50 for Capex amortization and operating costs, and MOE can deliver liquid iron with around $ 170 per ton in places with plenty of inexpensive renewable energies.
This is lower than lightning iron production, lower than biomethane -dri and much lower than hydrogen -dri. Moe also eliminates the need for hydrogen infrastructure, gas pipelines or high -pressure tanks. It is modular, electrically powered and good for new construction industrial projects in addition to solar and wind resources.
Fig. 2: Chatgpt-generated map of Australia, which emphasizes region-specific steel production of zero-carbon steel production: MOE in renewable zones, flash in gas basins and biomethane dri in agri industrial regions.
In regions in which natural gas is cheap and the geology of carbon sequences is accessible, lightning iron production becomes economically interesting. This process quickly heats fine iron ore particles with oxygen and a burning fuel, traditionally natural gas.
The reactor is compact and does not require sintering or pelletization. It works continuously and can generate liquid iron or direct reduced iron depending on the configuration. If you are combined with the carbon cover and storage, it can provide steel with emissions that are comparable to MOE.
Australia's geology supports this. The Cooper Basin and the Gorgon CO₂ project against Western Australia are proof that CCS is feasible here. With natural gas, it costs 6 US dollars per gigajoule and, assuming five gigajoules per ton of steel, fuel. Add 50 US dollars for investments and operations, 30 to 50 US dollars for CO₂ capture and compression and another 10 to 20 US dollars for the remaining carbon prices, and they are still less than $ 200 per ton.
Flash reactors also benefit from faster start-stop ability as blast furnaces, ie it may offer advantages for grid flexibility. The only disadvantage is the dependence on fossil gas, but in places where CCS is cheap and allowed, this is not a deal breaker. Flash iron production offers Australia the option of removing foot ovens without waiting for Moe scaled or based on expensive hydrogen.
The third viable path is electrified dri-based dri, paired with CCS. This is not a universal solution, but it fits well in certain regions. If there is plenty of waste biomass and the methane was a problem, the production of biomethane from anaerobic digestion or thermal gasification becomes attractive. If this biomethane is burned in a wave oven to reduce iron ore and the resulting CO₂ records and sequestrates, the process reaches negative emissions. That is valuable.
With a carbon price of $ 100 per ton and negative emissions, the economy becomes convincing. Biomethane costs around 20 US dollars per gigajoule. A DRI process may need 7 giga joules per ton. That is 140 US dollars of fuel. Add 50 US dollars for heating and melting, 100 US dollars in the detection costs and subtract 100 US dollars for negative CO₂ credit. The resulting costs are around 190 US dollars per ton.
In places such as Northern New South Wales or parts of Victoria, where agriculture creates a large volumes of organic waste and in which offshore -co₂ pipelines are possible, this process can produce steel for competition costs and at the same time sequest carbon. It will not scale worldwide, but it fits for Australia's domestic needs and selection of export products.
Hydrogen dri does not fit. Even with generous assumptions, the costs per ton of over 300 US dollars remain, often closer to 500 US dollars. This is before being prepared for compression, retrofits with high -temperature wave oven or hydrogen storage. No amount of pilot success changes. The economy is not forecast to improve quickly enough over the next two decades.
Steel is a goods. The edges are tight. The producers are not overpaid through a green credibility if other paths exist. Moe, flash with CCS and biomethane Dri offer credible, scalable paths with better cost structures and lower infrastructure risk. You also agree with Australia's industrial geography. Moe fits where renewable energies dominate. Flash fits where gas and CCS align. Biomethane -Dri fits where the organic waste and carbon attempts overlap.
The intelligent approach is not to select a single winner, but to use the right technology in the right place. Australia has resources, the country and the geological advantages to support all three. What it takes now is a shift in industrial policy and investment focus. The withdrawal from the hydrogen-first thinking way opens up for cheaper and regionally oriented solutions.
Moe should be followed quickly where plenty of renewable energies are available. The lightning iron production should be used in gas-rich corridors with a CCS readiness. Biomethane Dri should be stimulated near agricultural pools and industrial carbon sinks. Each process deals with another market layer and together build a credible, affordable and geographically coherent carbon steel sector.
This is not about ideological preference for one technology towards another. It is about aligning the physical, economic and geological resources of Australia with steel manufacturing paths that correspond to these realities.
Since global steel demand remains earlier forecasts, there is less space for inefficient experiments. Every new plant must be economically justified. Hydrogen dri is not. Moe, lightning and biomethane.
Australia's chance is to achieve the right method in the right place, and thus a low -carbon steel Future operation, which is based on actual resources and real costs.