POSCO has cleared a key permitting hurdle for its low-carbon iron processing plant in Port Hedland, Western Australia, after securing environmental approval from Australia's federal government. With both state and federal environmental reviews now complete, the 4 trillion won ($3 billion) low-carbon steel project is set to accelerate. POSCO said it plans to move quickly on follow-up steps with its overseas partners, including a final investment decision (FID).
Australia's federal government recently granted conditional environmental approval for the first phase of the Port Hedland Iron Project under the Environment Protection and Biodiversity Conservation Act (EPBC Act), according to Bloomberg and other outlets on the 19th. In Western Australia, the state environment minister gave final approval in April following a recommendation from the Environmental Protection Authority (EPA). POSCO has now passed the stringent environmental reviews of both the state and federal governments, building momentum toward construction.
POSCO drew up plans in 2022 to process iron ore locally in Australia to produce low-carbon steelmaking feedstock. In May that year, the company applied to the Western Australian government to lease a site in the Boodarie Strategic Industrial Area, about 10 kilometers from downtown Port Hedland, and received allocation approval in late December. Total project costs are estimated by the Western Australian government at about 4.4 billion Australian dollars (about 4 trillion won). Using 3 million to 3.5 million tons of Australian iron ore as feedstock, the plant aims to produce about 2 million tons of high-grade hot briquetted iron (HBI) annually for overseas steel mills, along with about 700,000 tons of pellets for export.
HBI is direct reduced iron (DRI) — iron ore from which oxygen has been removed — compressed into briquette-shaped pieces. It is an essential input for producing high-grade steel in electric arc furnaces, and securing a stable supply is becoming increasingly important as the industry shifts toward carbon neutrality. With global trade barriers rising, including Europe's Carbon Border Adjustment Mechanism (CBAM), securing low-carbon feedstock has emerged as the steel industry's biggest challenge.
POSCO's Western Australia project aims to turn local iron ore into high-grade reduced iron for use at steel mills abroad. How much of the output will go to mills in which countries has yet to be determined. Demand for HBI is ample, as POSCO plans to build an electric arc furnace steel mill in Louisiana in a joint venture with Hyundai Motor Group, with mass production of 2.7 million tons of high-value steel products a year starting in 2029.
The project is significant in that POSCO is building a large-scale HBI production base in Australia, the world's biggest iron ore producer, pre-emptively shoring up its low-carbon feedstock supply chain. In June, POSCO completed an electric arc furnace with annual capacity of 2.5 million tons at its Gwangyang steelworks, and from the earliest stage of its electric furnace investment it has treated securing overseas HBI, along with high-grade steel scrap, as a core supply chain strategy. The project also gives POSCO an opening to expand its partnerships with Japan's Marubeni and Taiwan's China Steel Corp. (CSC) — co-investors since the early 2010s in the Roy Hill iron ore mine in Western Australia — from simple raw material sourcing into high-value local processing.
The project is also aligned with the Australian government's policy of encouraging local processing. Australia is the world's largest iron ore exporter but lacks processing facilities, and it has been actively supporting local processing projects to create added value and cut carbon emissions.
Having passed the critical environmental permitting watershed, the project now enters a concrete execution phase. Indigenous consultations, utility permits, and FIDs and ownership structures for the participating companies are to be worked through in sequence. Once those steps are complete, construction is to begin with a target of first production in 2031.
"This approval covers environmental permitting, and follow-up steps remain before final approval for plant construction," a POSCO official said. "We plan to pursue the indigenous consultations, reviews of support measures and partner discussions needed for a final investment decision."