A green boost for Australian mining

26 June 2025

Australia’s ambitions to become a global powerhouse in green metals production have received a further boost from the Labor government’s election victory in May.

Now firmly installed for a second three-year term, Anthony Albanese’s administration has rolled out a suite of industrial policies aimed at green metals development, including A$2 billion (US$1.2 billion) in production credits to encourage the use of renewable electricity in aluminum smelting,^[1] a A$1 billion fund targeting low-emission iron manufacturing and related infrastructure,^[2] and a A$750 million fund supporting pilot projects in hydrogen-based steelmaking, carbon capture, and other advanced decarbonization technologies across metals sectors.^[3]

A local think tank estimates that green iron exports alone could generate A$295 billion annually — more than triple the current value of iron ore exports.^[4] Meanwhile, the broader green metals ecosystem — including aluminum, steel, and value-added manufacturing — could create more than 100,000 new jobs, more than doubling today’s employment levels in metals and refining.^[5]

Despite these tailwinds, progress on the ground remains uneven. Investor sentiment toward Australian miners has been subdued, weighed down by weak global demand and uncertainty around trade dynamics. Share prices in the sector (except for gold miners) remain depressed this year.^[6] Long-term shareholders of Australian miners can look to securities-linked financing to one of the avenues to manage working capital in order to ride out current market dislocations and invest in re-tooling their operations so that they are well prepared in the long run.

High stakes Down Under

Australia’s policies are designed not just to decarbonize existing industries, but to reposition the country as a leading supplier of low-carbon metals in a transforming global economy.

Much is riding on their success. Even before a shift in US trade policy sparked an increase in global trade tensions, the outlook for Australia’s commodity exports had begun to dim. Coal exports appear to have peaked, while iron ore — Australia’s largest export by value — has faced persistent pressure due to falling prices and a slowing Chinese economy.^[7][8] Although Australia leads the world in iron ore production, most of the steel processing takes place offshore, predominantly in China.^[9]

Meanwhile, Europe is pushing forward with carbon border adjustments and green procurement requirements, making it increasingly difficult for high-emissions exporters to remain competitive.

Australia’s government is hoping that a green transition for the metals sector could turn this narrative around. Steel alone is responsible for roughly 7-9% of global carbon emissions, and demand for low-carbon or green metals is projected to surge more than fourfold by the end of this decade as countries pursue net-zero targets and cleaner industrial supply chains.^[10][11]

Instead of merely exporting raw materials, Australia can capture more value by investing in domestic processing and green manufacturing, including exporting green steel commanding a higher value.

A crowded global race

Australia’s mining sector has yet to shift decisively from resource extraction to value-added processing. The country currently does not produce any direct-reduced iron (DRI), a lower-emissions alternative.^[12] While more projects using electric arc furnace (EAF) technology — more compatible with renewables — have been announced recently, commercial-scale implementation is still in its infancy.

Many other countries are already staking their claims. Brazil boasts higher-grade iron ore, which is better suited for green steel production. Companies in the Middle East, meanwhile, have rapidly expanded DRI capacity, accounting for 37.5% of global DRI production by late 2024 — increasingly powered by green hydrogen.^[13]

At the same time, global buyers remain hesitant to pay a “green premium” for cleaner materials.^[14] Without demand-side incentives or regulatory pressure, producers risk being stuck between higher input costs and limited pricing power.

Australia has the mineral resources, industrial base, and renewable energy potential to play a defining role in the future of green metals. After all, more than 43% of electricity used in Australia’s main power grid in the first quarter came from renewable sources. Blessed with plentiful land and sunshine, Australia has raced ahead in achieving its renewable energy goals.^[15]

A variety of financing solutions — from private credit to blended public equities — will be needed for mining firms to fund infrastructure upgrades and adopt cleaner technologies. Conventional lenders have so far taken a cautious approach to the risks involved, making access to alternative forms of capital essential.

Long-term investors and mining executives can speed this transition by acting decisively — partnering with government, deploying capital, and building capability — to ensure Australia doesn’t just dig up the raw materials for a greener world, but mines real value in the process.

[1] https://www.scmp.com/news/asia/australasia/article/3295414/australias-albanese-unveils-us12-billion-plan-make-aluminium-green

[2] https://www.reuters.com/markets/commodities/australia-launches-636-mln-green-iron-fund-offers-lifeline-steel-works-2025-02-20/

[3] https://www.pm.gov.au/media/backing-our-metals-manufacturers

[4] https://cdn.sanity.io/files/x4garcym/production/1201b937ae3348d77bcc9e46c3767db4b531e848.pdf

[5] https://www.actu.org.au/media-release/future-made-in-australia-investment-to-deliver-hundreds-of-thousands-of-new-jobs-by-2040/

[6] https://www.marketindex.com.au/news/citi-says-asx-mining-stocks-hit-eye-catching-valuations-but-global-risks

[7] https://ieefa.org/resources/australian-coal-exports-face-numerous-downside-risks-new-projections-show

[8] https://www.reuters.com/markets/australia-forecasts-hit-resource-energy-export-earnings-lower-us-dollar-2025-03-30/

[9] https://globalenergymonitor.org/report/pedal-to-the-metal-2025/

[10] https://www.mckinsey.com/industries/metals-and-mining/our-insights/materials-green-premia-trends-and-outlook-to-2030

[11] https://www.sei.org/publications/a-matter-of-transparency-leadit/

[12] https://climateenergyfinance.org/wp-content/uploads/2025/01/CEF_Sweden-Financial-Instituitons-Green-Steel-Supply-Chain-Forum_28Jan2025.pdf

[13] https://www.spglobal.com/commodity-insights/en/news-research/latest-news/metals/050825-australian-executives-warn-of-risk-to-green-iron-prospects-from-middle-east-ramp-up

[14] https://www.afr.com/companies/manufacturing/customers-won-t-pay-for-green-metals-mining-veteran-warns-labor-20250515-p5lzhp

[15] https://www.theguardian.com/australia-news/2025/may/07/more-than-40-of-electricity-used-in-australias-main-power-grid-at-start-of-year-was-renewable

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