Green steel can help Defence – which can help green steel
Australia’s military programs, particularly AUKUS, and Australia’s green industrialisation agenda are usually treated separately. They shouldn’t be. AUKUS is creating decades of demand for specialised steel and advanced manufacturing. Green industrialisation, meanwhile, is trying to move Australia beyond exporting unprocessed iron ore to producing low-emissions iron and undertaking higher-value manufacturing.
As with other green products, discussed in an earlier article, green steel and Defence can be mutually helpful. The green steel industry needs demanding customers to set standards and demonstrate its capability, while Defence needs more qualified Australian suppliers. Demand from the armed forces alone cannot sustain a green steel industry, but it can help producers establish themselves in the larger civilian market.
Australia has committed A$8.5 billion to the submarine construction yard at Osborne, and Australian-made HY80 steel plate has secured its first order for US Virginia-class submarine construction. That order followed US Navy qualification of Bisalloy, which processes and heat-treats raw steel plate from fellow Australian company BlueScope. AUKUS Pillar One is creating a new market for Australian metallurgical capability. Green steel could eventually serve that market, provided it meets the same standards.
Carbon emissions are hard to abate in steelmaking. Conventional blast furnaces rely on coal for both heat and the chemistry of ironmaking, so decarbonisation is more difficult than simply changing the energy source. The Australian Renewable Energy Agency estimates that Australian steelmaking emits about 11 million tonnes of carbon dioxide equivalent annually. Cleaner production could reduce the emissions embodied in Defence’s equipment and infrastructure.
‘Green steel’ describes how the material is produced. One route uses renewable hydrogen to remove oxygen from solid iron ore through direct reduction, then melts the resulting iron in electric furnaces powered by low-emissions electricity. ‘Military steel’ describes how the finished material performs. Particularly for naval use, it must satisfy exacting requirements for strength, fracture toughness, fatigue resistance, weldability, corrosion resistance and traceability. Lower emissions do not remove the need for rigorous qualification.
Australia has a strong upstream position. Its ore, export infrastructure, renewable-energy potential and skilled workforce underpin the A$1 billion Green Iron Investment Fund. A government-cited estimate suggests green iron and steel could add up to A$96 billion annually to export revenue by 2040. That is a potential return, not a guaranteed one. The opportunity is to perform more energy-intensive conversion at home, applying Australian electricity, hydrogen, technology and labour before the product is exported.
Blast-furnace steel already meets Defence’s needs. The strategic risk is losing access to approved material when a supplier fails or demand surges. Qualifying another producer takes time. Green investment can add alternatives if it includes Australian steelmaking, heat treatment and testing. Long-term purchase commitments help make green iron projects investable. Defence orders could provide some of that predictability, while civilian sales supply the scale. Producers and workers gain manufacturing income; Defence gains options during disruption.
There is a technical obstacle. Much Pilbara iron ore contains impurities that complicate its use in conventional direct-reduction and electric-arc-furnace steelmaking. Project NeoSmelt, led by BlueScope, is investigating a route that combines direct reduction with electric smelting to remove those impurities. Its success would widen the range of Australian ores that could enter lower-emissions steel supply chains.
Defence can help strengthen the downstream end of that chain. Its demanding requirements can develop production, processing and testing skills that also serve civilian manufacturers. Australia already treats test and evaluation, certification and systems assurance as a Sovereign Defence Industrial Priority. Green iron investment can develop furnaces, process knowledge and iron supply; AUKUS can support specialised processing, qualification and access to allied customers. Connecting the two would create a pathway from Australian ore through lower-emissions ironmaking and steelmaking to finished, qualified military material.
Australia need not make every tonne of the military steel it needs. But it should retain the parts of steelmaking that create economic value and strategic resilience. A green iron industry would draw on Australian resources and renewable energy. Specialised processing would sustain skilled work and help Australia produce replacement material and repair equipment when external supply is disrupted.
International examples illustrate different parts of this approach. Germany’s Rheinmetall has signed a letter of intent with SSAB for lower-emissions steel, beginning with recycled steel made using fossil-free energy and envisaging hydrogen-based steel later. Canada’s Algoma and Roshel are developing domestic ballistic-steel capability alongside Algoma’s transition to electric steelmaking. India’s SAIL supplied the entire special-plate requirement for INS Taragiri. Germany and Canada demonstrate emerging links between cleaner production and defence demand; India demonstrates domestic supply, without establishing green-steel use.
Australia should therefore connect the Green Iron Investment Fund, industrial precincts, AUKUS supplier qualification and Defence purchasing. Lower-emissions steels can begin in infrastructure and suitable sustainment applications, progressing to more demanding uses such as shipbuilding only after testing and qualification against existing standards. Conventional steel should remain in use wherever green alternatives cannot yet meet those requirements. This staged approach would give producers a route into Defence supply chains while protecting military performance.
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