World's biggest steel maker eyes new green plant in WA

·2-min read
Mick Tsikas/AAP PHOTOS

Western Australia is in the running to host a green steel plant bankrolled by the world's biggest steel maker, China Baowu Group.

During talks with Trade Minister Don Farrell in Beijing, company chairman Chen Dorong said the availability of clean energy and ore make Western Australia ideal as a site for the new facility.

The biggest buyer of Australian iron ore wants to decarbonise operations but is also eyeing West Africa, South America and Saudi Arabia as alternatives.

There had been "twists and turns" in the Australia-China relationship, Mr Chen said.

"But the fundamental direction is quite positive and both countries are moving quite fast," he said.

Mr Chen said the company wanted to use "new energy resources like photovoltaic and natural gas" in a possible clean steel joint venture with Rio Tinto and BHP.

One of China's biggest polluters, Baowu Group plans to reduce emissions by 30 per cent by 2035 and be carbon neutral by 2050.

Australia's first trade minister to travel to China made a visit 50 years ago - the year the steelmaker first purchased Australian iron ore.

"There are very positive signs in terms of our trading relationship" after "very difficult circumstances," Senator Farrell said.

"But there's more to be done."

Despite trade tension, Rio Tinto last year inked a $2 billion deal with its biggest customer China Baowu Steel Group to develop an iron ore project in the Pilbara, which has since secured government approvals.

China had also moved to centralise iron ore imports, which spooked Australia's big three exporters - Rio, BHP and Fortescue Metals.

An earlier joint venture with Rio developed the deposits in the Hamersley Ranges, shipping more than 200 million tonnes of iron ore to China over the decades.

Baowu has also been trialling blast furnace technology that uses hydrogen and heads a global alliance on low-carbon metallurgical innovation that aims to cut pollution from the heavy industry.

The steel industry accounts for around 15 to 20 per cent of China's greenhouse gas emissions.