“Securing NeoSmelt for Kwinana puts WA at the cutting edge of the global green energy/green steel push,” Cook said.

“I can’t over-emphasise the importance of this announcement. Downstream processing has been the Holy Grail for the mining industry in Western Australia for decades.

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“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. This means thousands of new jobs. This means extra prosperity.”

The pilot plant would produce 30,000 to 40,000 tonnes of molten iron a year. It will initially use natural gas to reduce iron ore to DRI, but once operational, the project aims to use lower-carbon emissions hydrogen to reduce iron ore.

The NeoSmelt parties said in a statement that Kwinana was chosen for its access to transport logistics and existing infrastructure, coupled with the state government’s willingness to contribute financially.

BlueScope chief executive Australia Tania Archibald said this was a significant milestone in a transformative project.

“The progress made during the pre-feasibility stage is a testament to the collaboration of all parties involved,” she said.

“BlueScope’s role as project manager leverages our deep iron and steelmaking experience at the Port Kembla Steelworks and our unique capability as the operator of the world’s only electric smelting furnace processing DRI in New Zealand.”

BHP Western Australia iron ore president Tim Day said a successful pilot plant of this scale would be a huge achievement in the bid to fast-track near-zero emission pathways for steelmakers using the Pilbara ores that powered Australia’s economy.

Beyond Zero Emissions chief executive Heidi Lee said Kwinana was one of the top existing green industrial sites in Australia and the perfect location for new technology to be piloted, but a genuine commitment to green steel-making needed to rapidly move to coal and gas-free production.

“To secure a long-term future for green steel in Kwinana we now need to see equivalent support for new renewables to power green industries, including ironmaking and associated supply chains,” she said.

“BZE research shows that a coordinated approach to new industries and renewable energy can save around half the costs of hydrogen pipelines, and almost 75 per cent savings of new transmission lines.”

WA is the world’s largest single exporter of iron ore into the global market.

The steel industry generates about 8 per cent of global carbon emissions.