The low-carbon furnace will help the company phase out coal-based steelmaking while increasing capacity from one million tonnes to more than 1.5 million tonnes a year, according to owners Liberty Steel, part of the United Kingdom-based GFG Alliance.

UK-based executive chairman Sanjeev Gupta promised hundreds more jobs at the Whyalla plant that employs about 3,000 South Australians, as the global steel business works toward shifting from “being the most polluting of all industries to (being) among the cleanest and greenest”.

Last year, the Australian Conservation Foundation listed the Whyalla Steelworks at number 10 in its September report into the nation’s highest polluters, after analysing five years of safeguard mechanism data.

Reforms to the safeguard mechanism passed by the federal government this month targeting around 215 of the nation’s top polluters with a new hard cap are expected to make greenhouse gas emissions fall by 205 million tonnes to 2030.

Premier Peter Malinauskas, Energy and Mining Minister Tom Koutsantonis and federal Science and Energy Minister Ed Husic were in Whyalla for today’s announcement.

Equipment manufacturer Danieli is expected to finish building the new electric arc furnace in Whyalla in 2025, with the plant to initially be fed by domestic steel scrap and other iron-bearing materials to slash the steelworks’ carbon emissions.

It has capability for a direct feed from renewable power sources and is being funded by the business, which will also apply for a $50 million grant through the Whyalla Steel Taskforce funded by the State Government in 2016 to be used toward the investment, pending approvals.

The company is also installing a Direct Reduction Plant in Whyalla to process local magnetite ore to produce low carbon iron using a mix of natural gas and green hydrogen before transitioning to green hydrogen when it is available.

“Today marks the beginning of a new era placing Whyalla at the heart of a global revolution in the steel industry, moving it from being the most polluting of all industries to among the cleanest and greenest,” Gupta said.

“Through the steps we’re taking to install state of the art low carbon iron and steelmaking technologies here in Whyalla we will not only support Australia’s climate ambitions, but we will help to decarbonise steel supply chains globally.

“Whyalla has some of the best conditions to make low carbon iron and steel anywhere in the world and with our magnetite expansion plans, coupled with South Australia’s endless resource for renewable energy and green hydrogen, the potential for Whyalla has no bounds.”

The plant’s raw steel is mainly used in construction and rail transport industries.

Liberty Steel in 2021 announced a global decarbonisation strategy to be carbon neutral by 2030, and said today that low carbon and green low carbon iron made in Whyalla will feed its network of electric arc furnaces in Australia, Asia, Europe and the UK, helping to decarbonise steel supply chains across the world.

Malinauskas said the project showed the potential to create green products using hydrogen and was the reason why the government selected Whyalla to be home to the state’s Hydrogen Jobs Plan, including building a hydrogen power station.

“Whyalla and the broader Upper Spencer Gulf has enormous potential to lead the world in green hydrogen production, helping decarbonise industry across the planet,” he said.

“We look forward to working with key industrial players, including Liberty, to take full advantage of the opportunity to re-industrialise the Upper Spencer Gulf on the back of this.”

Conservation Council SA chief executive Craig Wilkins said the announcement marks an essential step in reducing emissions from heavy manufacturing in the state and using scrap metal as a fuel source will reduce the need for mining raw materials.

“Today’s announcement reinforces the seismic shift underway in heavy manufacturing, and is a testament to South Australia’s position as a global leader in energy transition,” Wilkins said.

“The key for long-term profitability and for market acceptance is to ensure sustainable production of green hydrogen and a quick transition away from fossil gas.

“And it’s an interesting indicator of where the green hydrogen debate is going in SA – shifting away from a primary focus on raw export of hydrogen, and more towards using green hydrogen to replace gas and coal in domestic manufacturing and heavy industries.”