Press conference, Illawarra, NSW

ALISON BYRNES: I am absolutely delighted to be here today with Minister Bowen, with Mark Vassella and with Tania Archibald for this very exciting announcement. This announcement is about lowering emissions and securing our steel-making here in the Illawarra for generations to come. This also secures over 9,000 jobs in steelmaking and associated industries across the Illawarra.
 
BlueScope Steel will form an absolutely vital part of building the houses that we need across the region and across the nation as well. And it is with absolute delight that I welcome Minister Chris Bowen.
 
CHRIS BOWEN: Thanks very much, Alison. It's great to be back here at Port Kembla. You know, over the next several decades the world is going to need a lot of steel. Our renewable energy transformation will require 5 billion tonnes of steel between now and 2050 across the world. And we in the Albanese Government want as much of that steel as possible to be made in Australia. Steel for our own renewable transformation as well as all the other construction, of course, as Alison mentioned, but also providing steel to the rest of the world wherever possible. And that means we need a strong steel-making sector, a steel-making sector which is working hard on, of course, decarbonisation, which is part of our obligation as a country and also being demanded by consumers of steel around the world and investors, to say, “Show us your plans of decarbonisation.”
 
And when we reformed Australia’s climate policies on coming to office, one of the things we did is set up the Powering the Regions Fund. And we made that fund specifically in part about ensuring that those essential supplies for renewable energy are made as much as possible in Australia. Just taking one example – a wind turbine is made 90 per cent when it’s up and running of either steel or cement, and we want both of those things to be made in Australia.
 
So today, we’re announcing out of that Powering the Regions Fund two important investments. One of them here in partnership with BlueScope today - $136 million to support the refurbishment and realigning of blast furnace No. 6 here at Port Kembla. This ensures two things, it assists BlueScope in their long-term ambitions for decarbonisation, but it also ensures that Australia will continue to be an important steel-making country.
 
We’ve been making steel here for almost a hundred years. I see no reason why BlueScope can’t make steel here for another hundred years. And that means partnership – partnership between the government, partnership between BlueScope and across the board.
 
I’m also announcing today another allocation out of the fund of $63 million for BlueScope’s friends at Liberty Steel in Whyalla. That will be used for the establishment of an electric arc furnace in Whyalla, and that will see Liberty Steel increase their workforce by 25 per cent and is very important for Liberty Steel’s decarbonisation efforts.
 
Here in Port Kembla, we’ll see 250 extra workers employed on the realigning. But even more importantly than that – as important as those 250 jobs are – it’s the long-term security of the jobs at BlueScope for the Illawarra and for New South Wales and the country.
 
A serious country makes things, and a serious country makes steel. And as far as we’re concerned, as long as we have a say in it, in the Albanese Government, Australia will be an important country making steel and, as I said, steel that is vital for our renewable energy transformation.
 
So, I want to thank BlueScope for your partnership. We worked closely together in resetting and in collaboration and in consultation in resetting our industrial decarbonisation policies to ensure that we are competitive and that we are decarbonising at the same time. And that’s certainly the case.
 
I want to thank Alison Byrnes and Stephen Jones, two stronger advocates for the Illawarra you will not find, two stronger advocates for making things in Australia you will not find than Alison and Stephen, who have been very strong supporters of BlueScope’s future in the Illawarra and very strong supporters of a country which is making things and playing our role in decarbonising the world economy as well.
 
I’m going to hand over to Tania and then I’ll come back and take questions.
 
TANIA ARCHIBALD: Thank you very much, Minister Bowen and member for Cunningham Alison Byrnes. Welcome to Port Kembla. We sincerely appreciate your presence here today. Of course, it’s a terrific announcement that BlueScope has been successful in the application for the grant from the federal government as part of the Critical Inputs to Clean Energy Industries Fund. We’re very thankful for the grant which will help secure ongoing iron and steel making here in the Illawarra and the jobs and the investment that it delivers.
 
The Port Kembla steelworks is the sole domestic manufacturer of flat steel products and it provides sovereign capability for key sectors, including building and construction, energy, infrastructure and defence. And that includes the critical inputs that will be needed for Australia to become a renewable energy powerhouse, such as steel plate for wind towers and hot roll products for solar structures and electricity transmission and distribution infrastructure.
 
The decarbonisation of Australia’s electricity generation sector is a significant opportunity for the steel sector. A single gigawatt of a solar farm generation requires around 40,000 tonnes of steel. A gigawatt of wind generation requires 80 to 150,000 tonnes of steel, depending on the size and location. And given the government’s commitment to achieving 82 per cent renewable energy by 2030 and net zero by 2050, steel is now an indispensable cornerstone of building a low-emissions future.
 
So, we clearly recognise that we operate in an emissions-intensive, hard-to-abate sector. We are committed to decarbonisation, but we can’t lose our sovereign steel-making capability in the process. The grant announced today supports the project for the realign of the No. 6 blast furnace here at Port Kembla. The No. 6 project preserves Australia’s sovereign iron and steel-making capability and it provides the critical time necessary for the development of the essential enablers required to support lower emissions iron and steel-making here in Australia. Put simply, the realign project is an essential bridge to enable BlueScope’s transition to net zero by 2050.
 
BlueScope’s decision to realign the blast furnace in 2023 was made after very positive discussions with Minister Bowen and his colleagues around the government’s safeguard mechanism and the announcements made by the government regarding the treatment of trade-exposed, hard-to-abate facilities.
 
Now, one of the most promising technologies to achieve a step reduction in emissions and iron and steel making is direct reduced iron, or DRI, technology. In the DRI process, natural gas and ultimately green hydrogen would replace coal in the steel-making process. Natural gas-based DRI could reduce emissions in iron and steel making by around 60 per cent, while green hydrogen-based DRI could cut emissions by approximately 85 per cent. However, given the current state of technology, the multi-year lead time to realign the blast furnace and the absence of key enablers for DRI, such as abundant low-cost natural gas or green hydrogen, BlueScope has made the decision in 2023 that the most prudent way to proceed is to realign No. 6 blast furnace whilst we continue our DRI work.
 
The $1.15 billion realign investment secures the immediate future for iron and steel making here in the Illawarra whilst we work with industry partners to further develop and commercialise DRI technology in Australia with a primary focus on utilising Australia’s abundant resources of iron ore. This work is important to achieving what should be a national goal of developing low-emissions iron-making industry for domestic and export consumption.
 
In closing, we have a clear vision for BlueScope in Australia as a vibrant, modern and sustainable manufacturer with a clear role to play enabling Australia’s energy transition. The blast furnace realign is part of a broader $2 billion investment pipeline by BlueScope in our Australian steel assets, and we greatly appreciate the government’s support for domestic manufacturing.
 
Today’s announcement of the federal government grant to support the realign is a critical step on the journey to a low emissions future, and we very much thank the government for their support.
 
CHRIS BOWEN: Thank you, Tania. Over to you guys.
 
JOURNALIST: So does this investment lock in carbon intensive steel making for the next 20 years?
 
CHRIS BOWEN: It locks in steel making in Australia for the next hundred years. I mean, that’s what it does. And as Tania said, both Liberty and BlueScope are on different journeys, but they have the same destination – and that is decarbonisation. And we’re supporting both of them in those efforts. And what we don’t want to see and what we won’t let see is other countries making steel without the sort of carbon constraints that we have in Australia and Australian competitiveness being impacted. So hence, we worked very carefully to design the safeguard mechanism to reduce emissions on site but also to protect those trade-exposed, emissions-intensive industries like steel-making.
 
And the establishment of the sub-fund out of the Powering the Regions Fund and the Critical Inputs to Renewable Manufacturing Fund was an important part of doing that. And as Tania said, BlueScope is committed, Liberty is committed. This is a hard-to-abate sector, steel making. I mean, green steel is coming, but it’s not here yet. And we need to work in partnership as we get there.
 
JOURNALIST: There are green steel-making options going on overseas. Are you looking into that?
 
CHRIS BOWEN: Yeah, I mean, Tania may care to add about BlueScope’s particular approach, but I’m aware that BlueScope is decarbonising and moving towards green steel over a long period of time, as is appropriate because it’s a big process to undertake. So is Liberty. And what you won’t find, though, around the world is no country has finalised its green steel making in a massive commercial effort. That is the key – making it commercial, making it competitive as we go forward.
 
Tania, do you want to add anything from BlueScope’s perspective?
 
TANIA ARCHIBALD: Yeah, we’re doing a lot of work around lower emissions iron and steel making, particularly watching what’s going on in Europe. There’s a lot to be learned from some of the work that’s going on in Europe. We have a lot of technical partnerships already in place and we’re doing a lot of work ourselves around DRI options. And we’ll have more to say about that in the near term.
 
JOURNALIST: Minister, the AER says wholesale power prices fell substantially across most of the country last year. Are you confident that will flow through to household power bills, and when?
 
CHRIS BOWEN: Well, firstly, can I say it’s encouraging. This is now the second report we’ve seen in a fortnight showing that wholesale prices are down very substantially – one from AEMO and one from the Australian Energy Regulator. This shows the government’s plan is working. The coal and gas caps worked and our plans to increase renewable energy is working. The cheapest form of energy is renewable energy, and that is having an impact on wholesale prices.
 
Now, wholesale prices is one of the key inputs into retail prices. Consumers don’t pay wholesale prices, but it’s one of the key inputs. And we’ll see the draft energy regulator’s determination in a couple of weeks. But obviously, I would expect that what we’re seeing in the very encouraging news in wholesale prices as one of the key inputs to retail prices is one of the things we’ll see reflected in energy prices going forward, as we’ve said.
 
Now, there’s other factors as well. There’s the forward prices that energy prices have previously locked in, there’s the cost of distribution et cetera. All of these go into the energy regulator’s determination. But can I say, most importantly, we’ve always said the cheapest form of energy is renewable energy. And the fact that you’re seeing wholesale prices 60 per cent lower or more than when the Coalition left office shows that our plan is the right plan. The alternative plan is to introduce the most expensive form of energy available in the world – and that is nuclear.
 
JOURNALIST: Minister, do you stand by your 275 power bill promise from the last election and can it be achieved by next year?
 
CHRIS BOWEN: We’re not about to walk away from our efforts to make energy prices lower.
 
JOURNALIST: Under the safeguard mechanism specifically for BlueScope, what requirements will there be for BlueScope to reduce their emissions, or are they totally exempted from that requirement?
 
CHRIS BOWEN: No, of course, they’re not exempted. Of course, they’re not exempted. But, hey, it’s covered by the safeguard mechanism, as is every big emitter in Australia, the 215 of them. Their requirement is to reduce emissions by 4.9 per cent a year. We have put in place, a mechanism in place, for the companies that are on different parts of the journey. I mean, cement making, for example, is hard to abate, steel making is hard to abate. It covers the two airlines. They all have different options available to them, but we require that 4.9 per cent emissions reduction each and every year, and it’s a very important obligation on BlueScope and on every other company covered.
 
JOURNALIST: Minister, you said at COP28 in Dubai last month that our future is clean energy and the age of fossil fuels will end. How does that square with the message your colleague Madeleine King has taken to Japan this week that Australia will remain a reliable source of export gas into the future?
 
CHRIS BOWEN: Well, because we are on – again, every country is decarbonising, and we are partnering with countries on that decarbonisation, including Japan, including Korea. And it is important for a country that seeks, as Australia seeks to be, to be a renewable energy superpower, to be a reliable supplier of all types of energy as we undertake that transformation as we generate more renewable energy, as we work with countries like Japan and Korea and, indeed, Germany and all through Europe on their decarbonisation journey.
 
The idea that we can just withdraw one form of energy as we are seeking to become a major supplier of another doesn’t survive contact with reality. So, what I’ve said and what Madeleine has said are exactly and entirely consistent.
 
Yesterday I was in Townsville announcing a major hydrogen export hub. Now, that hydrogen can be exported to Japan and Korea and Germany and other countries, but it will take some years to build up. In the meantime, we need to be a reliable supplier of those other forms of energy, otherwise, we won’t become a renewable energy superpower.
 
JOURNALIST: You mentioned hydrogen. There’s obviously a huge demand for hydrogen here, not only with the steel works but with Tallawarra and other hydrogen industries here in the Illawarra. Why wasn’t the Illawarra included in the grants announced for the Hydrogen Headstart Fund?
 
CHRIS BOWEN: Well, Hydrogen Head Start is not a location-based fund; it’s a proponent-based fund. And we have a short list I announced recently of six, and that was a very competitive process based on merit. But it wasn’t a location-based application process, it was a company-based application process.
 
JOURNALIST: Minister, you mentioned wind turbines. Can we – when can expect an announcement on the Illawarra wind turbines?
 
CHRIS BOWEN: Well, every day is another day closer. I’m not here making that announcement today, but I am advanced in my consideration. I’ve been reading through all the submissions. I’ve been considering Alison’s submission, who’s made a very powerful submission on behalf of her community. And I’ll have more to say in the not-too-distant future.
 
JOURNALIST: There’s a lot of misinformation around that topic. Is the government planning to do anything about that?
 
CHRIS BOWEN: There is misinformation out there. There is, for political purposes by some people. There’s also genuine concerns which need to be addressed and worked through. But, I mean, I think you’ll find that Alison and I and our colleagues are dealing with that misinformation all the time. I mean, misinformation from those who seek to make political points.
 
I mean, Peter Dutton has never cared about a whale before the last few weeks. He been in parliament for, you know, more than 20 years and now all of a sudden he cares about the environment. The fact of the matter is, there’s no evidence in the world that any offshore wind has had a negative effect on whale migration. But I understand people’s genuine concerns, and that’s why I take – that’s why I take my time. I don’t rush these determinations of wind zones. I read through the submissions, I take it carefully, I take it seriously and I listen to community concerns on both sides – on both sides of the argument. And that means we strike a good balance in the decision that I will announce.
 
JOURNALIST: Minister, speaking of both sides of the argument, the first pro-offshore wind rally is being held in Newcastle on Sunday. Are you pleased to see that given the number of rallies that gets –
 
CHRIS BOWEN: Yes, and I understand there’ll be some activity in the Illawarra pro-renewables as well. Yes. I mean, I think the vast majority of Australians understand that the future is renewable. You know, you get some who still deny the science of climate change. You get some who argue that there’s alternatives like nuclear, which is the most expensive form of energy. But sensible Australians who in huge numbers – a greater proportion of anybody else in the world have put solar panels on their roofs – understand that renewables are the cheapest. And so of course it’s great to see communities coming together on the Illawarra – in the Illawarra, the Hunter and elsewhere over the weekend and in coming weeks to support renewable energy.
 
JOURNALIST: Just about the carbon border adjustment mechanism, is there a risk that steel produced here in Australia will be undercut by greener steel produced in Europe or Korea or elsewhere?
 
CHRIS BOWEN: That’s the very idea of a carbon border adjustment mechanism. That’s why we’re doing it. That’s why we’ve got – that’s why I commissioned Professor Frank Jotzo to advise me and work with my department on work on the detailed design of a carbon border adjustment mechanism or other forms to ensure against carbon leakage into the future.
 
There is no – there is no option of not having policies to decarbonise. That is not an option for a serious modern country like Australia in 2024. That’s not an option. Nor is it an option to impact on the competitiveness of our industries, hence the carefully calibrated policies we’ve been rolling out over the last 18 months, including the one we’re rolling out today.
 
That’s a good run. Thanks, guys.