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NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

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The vast majority of iron ore from the Pilbara is exported overseas for processing. (ABC News: Supplied: Rio Tinto)

For decades, Western Australia has been keen to transcend its reputation as the world's quarry, and the government hopes a new project will help it do exactly that.

Called NeoSmelt, the initiative aims to transform low-grade Pilbara iron ore into molten iron, using an electric smelting furnace to be built at Kwinana in Perth's south.

The molten iron could then be made into steel.

The technology is the brainchild of steelmaker BlueScope and iron ore producers Rio Tinto and BHP, with oil and gas giant Woodside also announced as a project partner and energy supplier this week.

What's the nub of the issue?

Most of WA's iron ore is shipped overseas for processing, with China, Japan, South Korea and Taiwan the state's biggest customers.

Only a tiny percentage is processed at Australia's only commercial plants at Whyalla in South Australia and Port Kembla in New South Wales.

NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

Steelmaking accounts for about eight per cent of global emissions. (Ainslie Drewitt-Smith, ABC Illawarra News)

These use traditional blast furnaces powered by coal, which produces carbon dioxide —which helps explain why the steel industry accounts for about eight per cent of global emissions.

The WA government pledged $75 million to convince proponents to bring NeoSmelt to the state, much to the frustration of Australia's steel states.

NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

The Kwinana industrial area will host the NeoSmelt facility. (ABC News: Aran Hart)

"No longer will we just be a quarry for the steel making process, we will become a producer of green iron as part of the global supply chain for green steel," WA Premier Roger Cook said.

"What we'll be doing here is developing the technology needed to understand the processing plant arrangements.

"Then we are in a position to deploy those at commercial scale, which means Western Australia will be a green iron and a green steel producer in the future."

Hasn't this been tried before?

Proponents say NeoSmelt has the potential to be "world-leading" and "revolutionary" — the same language was used to describe a raft of similar initiatives in the past.

Rio Tinto and its partners spent $1 billion over three decades to develop the HISmelt technology to turn low-grade iron ore into pig iron for use in steel production.

It was dubbed the biggest research and development project in Australia at the time.

A commercial-scale plant operated out of Kwinana before it ran into trouble and closed at the height of the global financial crisis in 2008, finally shutting down in 2011.

BHP also had a go at producing green iron at its $2.6 billion hot briquetted iron facilities at Boodarie, near Port Hedland, but was forced to pull the pin in 2005, after an explosion at the plant killed an employee and injured two others.

NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

Peter Newman is hopeful the project does not fail.  (ABC News: Benjamin Gubana)

Curtin University Professor of Sustainability Peter Newman said both projects were designed to "revolutionise" steel production in Australia.

"All of them closed down, and we were considered to be just a good place to dig [iron ore] up and ship it out," he said.

"So [NeoSmelt] is coming in a long tradition of failed projects and hopefully this one doesn't … because if it fails, it's the kind of problem that will reverberate around the world.

"All power to them if they can make it work this time, but I think you'd have to be a little cynical about the past of these kind of plants, because we haven't done them too well."

So will it actually work this time?

NeoSmelt is still subject to funding and there's not yet an official price tag, but BlueScope chief executive Australia Tania Archibald said it was expected to be in the hundreds of millions of dollars.

"This type of technology is expensive," she said.

"There's large capital required eventually to get to full scale commercial production. So we do want to understand to what extent there is a green premium, as well."

NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

Professor Dongke Zhang says he's excited by the potential of the project.  (ABC News: Cason Ho)

Cost aside, UWA Centre for Energy director Professor Dongke Zhang said the project was technically highly feasible, and growing pressures to decarbonise industry bode well for the success of NeoSmelt.

"There will be a few challenges, but similar work has been done, or major technology components have been proven elsewhere," he said.

"What makes me feel very excited is putting all these different new, proven technology together to form a brand new, innovative process that is low emission.

How green is it?

There's also the question of how green the project will really be, given it will use natural gas to reduce the iron before a planned transition to renewable energy sources like green hydrogen.

But Professor Zhang said emissions would be slashed even without the use of green energy sources.

NeoSmelt aims to turn Pilbara iron ore into green steel with Rio Tinto and BHP — can it work?

NeoSmelt aims to turn iron ore into molten iron, which can then be made into steel. (Supplied: SSAB)

"Compare natural gas to coal … the carbon intensity will be literally reduced by almost two thirds," he said.

"If we replace natural gas with hydrogen produced from renewable energy sources … then we can achieve pretty close to zero carbon emissions."

Pre-feasibility works are expected to wrap up in March next year, with a final investment decision to be made in 2026.

If the project gets the green light, proponents hope to have the NeoSmelt pilot plant operational by 2028.

It is expected to produce between 30,000 and 40,000 tonnes of molten iron per year.

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