Opinion pieces

OUR REGION IS NO GREENHORN AT MAKING STEEL

May 16, 2020

Just as the Hunter was the birthplace of Australian steel making, we can and should be the birthplace of Australian green steel making.

This is detailed in the Grattan Institute's Start with Steel report that sets out how Australia and the Hunter in particular can rebuild a steel industry based on combining clean hydrogen with iron ore to produce iron and steel ("Hard target", Newcastle Herald 11/5).

Newcastle was once Australia's steel city employing 11,500 workers at the BHP steelworks. With good policy to take advantage of our skilled workforce and other endowments, Newcastle can again be the Steel City; this time with 10,000 steel workers producing $25 billion of clean steel each year. The same clean hydrogen can help establish a clean ammonia industry in the Hunter, delivering another 6000 jobs.

These would be 16,000 well-paid, clean manufacturing jobs that would cement the Hunter's place as the energy and manufacturing capital of Australia. This would provide desperately needed economic diversification for our region. It also goes beyond the debate around when coal mining will begin to decline, which too often degenerates into narrow ideological positions.

The world is shifting to electricity generation and manufacturing that does not release greenhouse gases. There is much debate about how fast this transition is occurring, but the truth is that it varies across the world. The beauty of establishing Newcastle as the heart of Australian green steel and ammonia production is that it will give our region an insurance policy against the risk of falling demand for Australian coal. Some parts of the world will shift to 'clean steel quickly and we can sell green steel to them; others will move slower and we can continue to sell coal. This is the perfect diversification strategy.

Developing a Hunter clean steel industry can also be part of a wider strategy to rebuild Australian manufacturing and boost our national independence. This is essential, as the sudden crunch in global supply chains for medical equipment during the current COVID-19 crisis demonstrated. Instead of just exporting our coal and iron ore, we can transform and add value to those resources here. This is vital because the manufacturing process will deliver big job and economic diversification benefits on top of the mining jobs that are so important for our region.

Australia produces two out of every five tonnes of iron ore around the world and one in every five tonnes of coking coal, yet we only produce a tiny fraction of the world's steel - just three in every 1000 tonnes. This is because it is cheaper to transport these resources to northern Asia, as shipping only adds 10 per cent to the cost. Shipping hydrogen is much more expensive than shipping coal and it is cheaper to combine Australian iron ore with Australian hydrogen here rather than ship the hydrogen, or for those nations to produce the hydrogen given their poor renewable energy resources.

Combining our world-beating renewable energy resources that will make the hydrogen and the greatest iron ore reserves in the world with our very skilled workers, excellent electricity grid connections and Australia's premier export port here in Newcastle means we can compete against low-wage nations in steel making. This is part of a broader clean energy export superpower strategy Labor has championed.

As the world decarbonises its electricity supply, the nations that can transform into manufacturing powerhouses are those with the cheapest energy, which will be the nations with the best renewable energy resources. Australia has the highest average solar radiation per square metre of any continent in the world. We also have some of the best wind resources, which often complement solar resources in when they provide the most potential power. Our geographical diversity north-south and east-west means that renewable energy generation can be established in separate regions to capture different periods of wind and sunshine.

We are also well poised to be the capital of mining and processing of key inputs for the renewables revolution.

Australia is the second largest producer of rare earth elements. We have the greatest reserves of iron and titanium, the second greatest of copper and lithium, and the third of silver. These are crucial for clean energy and battery manufacture. Labor has demonstrated our support for the revitalisation of manufacturing centred on green steel. At the last election, we committed $1.1 billion to develop an Australian Hydrogen Industry and allocated $10 billion to the Clean Energy Finance Corporation that could fund the steel flagship project the Grattan Institute proposes. We also proposed Renewable Energy Zones - areas with the right resources, topography and developer interest to drive cost-effective renewable projects.

With open minds and clear vision we can ensure thousands of well-paying jobs for our region into the future.

This opinion piece was first published in NEWCASTLE HERALD on SATURDAY, 16 MAY 2020.

GET UPDATES