SA’s Whyalla steelworks hits green steel milestone with first batch of premium magnetite

Global steel company GFG Alliance on Tuesday announced its mining arm, SIMEC Mining, had produced its first high quality magnetite pellets which the company says will underpin green steel production in Whyalla on South Australia’s Eyre Peninsula.

Steel has traditionally been made by putting iron ore in a blast furnace with coking coal. Unsurprisingly, this process is highly pollutive and accounts for as much as 10% of the globe’s carbon emissions.

Enter green steel – which sees renewable hydrogen used as an alternate reducing agent to create Direct Reduced Iron in an electric arc furnace powered by renewables. 

The processed magnetite concentrate, which is ultimately a high-quality iron ore product, comes into this process because it enables the use of hydrogen as a reductant and is needed to feed the Direct Reduced Iron or DRI process.

“The successful production of the Direct Reduction grade [magnetite] pellets is another significant step forward in GFG Alliance’s green steel transformation at Whyalla,” the company said in its announcement of the news.

Whyalla draws lucky cards for its green steel future

Whyalla is set to be GFG Alliance’s “first primary steel plant to be transformed to green steel,” the company’s Executive Chairman, Sanjeev Gupta, has said. 

Gupta is something of a tycoon having bought steelworks, mines, and smelters across the world Australia to the Czech Republic. 

As the Australian Financial Review (AFR) reported in March, the billionaire “may get a taxpayer-funded hydrogen power station next door to his Whyalla steelworks should the Labor Party win South Australia’s election.”

The Labor government did indeed win that election, and the new Malinauskas is pushing ahead with its $593 million hydrogen hub plan which will see it install a 250 MW electrolyser and a 200 MW hydrogen-fuelled power station in Whyalla. 

The South Australian government said in July that it had received 60 different proposals to realise its vision and it is now in the process of reviewing these. 

According to the AFR, land belonging to the GFG steelworks is one of several options being considered by the Labor Party to install its hydrogen hub.

Should everything go to plan, the government’s hydrogen hub would be exceedingly valuable to the steelworks, providing a nearby source of hydrogen for its previously announced Direct Reduced Iron (DRI) plant, which will initially be fed by natural gas from Santos.

On its website, however, GFG says the green hydrogen it plans to use in the process would be “produced from GFG’s own renewable energy projects including Cultana – one of Australia’s largest solar farms being built in Whyalla.”

It isn’t clear whether the company is planning to install its own electrolysers though or, rather, whether the electricity generated from its Cultana Solar Farm would go towards powering its electric arc furnace which would also need renewable electricity for the steel it produced to be classed as green.

Either way, the production of Direct Reduction grade magnetite pellets is important because it informs one of two future expansion prongs at Whyalla. 

GFG’s massive magnetite expansion

Whyalla obviously isn’t the only steelworks in the world looking at converting its operations to green steel and, according to GFG, those other facilities will also need to use magnetite concentrate to do so. 

“High grade magnetite iron ore allows alternate iron and steelmaking technologies to be considered with lower energy demands and lower-carbon steel technologies to be considered,” Gavin Hobart, General Manager of Magnetite Expansion and Growth at GFG’s SIMEC Mining explains.

“Our existing iron-ore operation in Whyalla is home to some of the highest purity and most desirable deposits of magnetite in the world,” he adds. 

So the lucky Whyalla is hoping to export its magnetite to other steelmakers, as well as using it themselves.

In fact, earlier this year the company announced it would be significantly expanding its magnetite mining operations in up to three stages. The first stage, already underway, includes a 2.5 million tonne per annum (tpa) expansion which is expected to be followed by another 5 million tpa expansion.

The company’s ultimate goal seems to be to get to above 10 million tonnes of production per year of the specialised iron ore product.

As boss Gupta explains: “Our ambition is to not just develop the iron ore and export the iron ore, but to develop hydrogen at the same time by developing large-scale renewables and bringing them together to make hydrogen DRI [Direct Reduction Iron].”

Gupta wants to “at least” export Direct Reduction Iron made with hydrogen, “if not actually green steel made out of hydrogen DRI.”

GFG’s probed by the Serious Fraud Office

While this all sounds promising, it’s worth noting that GFG Alliance is currently being investigated by the UK’s Serious Fraud Office. It is suspected of fraud, fraudulent trading and money laundering including in its financing arrangements with Greensill Capital.

Greensill had been GFG’s major lender until it collapsed in 2021, going into administration.

“The enquiries only relate to some of our businesses in the UK and do not relate to our Australian operations which continue to perform strongly,” a spokesperson for GFG Alliance has said. “We continue to focus on operating safely and delivering our business plans.”