Pondered Pragmatism & Pilbara Priorities Prevail

Mining heavyweight BHP has delivered a sobering message for Australia’s ambitious green iron dreams. Speaking at business roundtables in China alongside Australian Prime Minister Anthony Albanese, BHP Australia CEO Geraldine Slattery warned that even with strong government support, local production of green iron would remain too costly. “Even with generous political support, the cost of production will be twice as high as in the Middle East or China, and customers are thousands of kilometers away,” Slattery wrote on social media, underscoring the economic hurdles that cloud Australia’s vision.

Cautious Calculus & Carbon Conundrums Confront Country

Slattery’s remarks reflect BHP’s view that Australia’s competitive edge lies not in manufacturing green iron but in supplying low-carbon raw materials. Instead of chasing costly domestic green iron plants, BHP is focused on securing Australia’s role as a global leader in low-carbon mining. “Producing green steel ought to be competitive but the high production costs make it unfeasible,” said a mill source in Northern Europe, echoing BHP’s realism. Slattery stressed that BHP would rather strengthen its core position in mining than build an uncompetitive downstream industry.

Pilbara Partnerships & Pragmatic Pilots Propel Progress

Despite its reluctance to build local green iron plants, BHP is not standing still. In May, BHP’s ore from the Pilbara region was successfully tested in partnership with China’s Baowu for direct reduced iron production on an industrial scale. This pilot shows BHP’s strategic pivot toward supplying ores suitable for low-emission steel processes abroad. “We are strengthening our export positions thanks to a completely new level of quality,” said Vitaliy Sueta, Interpipe’s director of products & resources, reflecting broader industry sentiment that partnerships & quality matter.

Fiscal Fortitude & Fund Fuels Forward-thinking Futures

To counter cost concerns & attract private investment, Australia in February launched its $1 billion Green Iron investment fund. The fund aims to support environmentally friendly iron production, supply chains & innovative processing projects. Policymakers hope this will diversify exports and reduce reliance on raw ore. However, as Slattery warned, high domestic energy prices & labor costs challenge competitiveness, even with subsidies.

Carbon Curtailment & Chinese Cooperation Cultivate Continuity

Slattery noted the largest cuts in carbon emissions over the next two decades will come not from Australian processing but from upgrading China’s blast furnaces, which BHP expects to run for 20–30 more years. “We need to see how the Carbon Border Adjustment Mechanism is phased in starting 2026 — that might drive some demand for green steel as well,” a buyer source said. This aligns with BHP’s strategy to invest in research, development & pilot low-emission technologies to secure future demand for Pilbara ore.

Supply Synergies & Strategic Strength Shape Sentiment

Australia supplies around 60% of China’s iron ore needs, but local ores often require extra processing before use in renewable-powered steelmaking. High electricity costs & remote location further inflate costs. Instead of building expensive local plants, BHP focuses on research and partnerships to keep Australian ore essential to decarbonization. Earlier, Interpipe also announced plans to invest $120 million to modernize railway product facilities by 2032, including new heat treatment lines, showing broader industrial efforts toward sustainability.

Key Takeaways:

• BHP says Australian green iron would cost twice as much as Middle East or China.

• Company focuses on partnerships & research, like Pilbara ore trial with Baowu.

• $1 billion Green Iron Fund still aims to lure private investment despite challenges.