Rio Tinto the mining Budget winner as green iron and aluminium players get a tariff-busting $3b free-kick

WA’s money-spinning iron ore miners will have to contend with South Australia’s ailing steel industry for the lion’s share of a new $1 billion Federal Government green iron fund.

Rio Tinto is set to emerge as the biggest beneficiary of the Federal Government earmarking more than $3b towards the production of “Australian-made green metals, like aluminium and iron”.

US President Donald Trump recently slapped import tariffs on aluminium and steel – the latter is made using iron.

A $2b green aluminium production credit will be made available from the 2028 financial year, supporting Australian aluminium smelters “to transition to renewable electricity and decarbonise”.

The Federal Government has also created a $1 billion ‘Green Iron Investment Fund’ to help establish an Australian green iron industry by providing “upfront capital support” to “eligible facilities”.

The three key WA iron ore producers — Rio Tinto, BHP and Fortescue — all have early-stage green iron developments in the works.

For iron to be classified as green it needs to be produced using renewable energy.

Rio and BHP are partnering with BlueScope Steel and Woodside Kwinana on a green iron plant — slated to be Australia’s first.

Down the road in Rockingham, Rio is also progressing a $215 million pilot plant populated by specialised microwaves fuelled by straw and other agricultural waste to make iron.

Meanwhile, Fortescue is going it alone in the Pilbara and building a $80m pilot plant using green hydrogen and solar panels to churn out green iron from its Christmas Creek ore.

But “up to” $500 million of the Green Iron Investment Fund has already been committed to go towards the collapsed Whyalla Steelworks in South Australia.

“This is to provide immediate on the ground support, stabilise the operations of the (Whyalla) Steelworks, and invest in the future of the Steelworks recognising it produces 75 per cent of the nation’s structural steel, critical to construction, infrastructure and defence initiatives,” the Budget papers stated.

The maximum sum of $500 million is set to form part of a $2.4b rescue package jointly put together by the Federal and South Australian governments days after Whyalla went bust.

The steel complex was declared insolvent last month after its owner — British industrialist Sanjeev Gupta’s OneSteel — repeatedly failed to pay its growing pile of debt.

While the aluminium tax credits are set to be available from the 2028 financial year, it appears the Green Iron Investment Fund can be accessed immediately.

The exact details of the aluminium tax credit rebate were not outlined, but to be eligible a smelter has to switch to renewable electricity before 2036.

In WA, Alcoa and South32 process bauxite into alumina — a pre-cursor material to aluminium. They will not be eligible to have access to the scheme.

Australia’s four end-product aluminium smelters are all based on the East Coast. Rio owns three of them — Boyne in Queensland, Tomago in New South Wales and Bell Bay in Tasmania. Alcoa has the Portland smelter in Victoria.

The investment commitments for miners and mineral processors in this Budget pales in comparison to the scale of last year’s production tax credit bonanza.

About $22.7b of production tax credits and other funding sweeteners were allocated for downstream processors of critical minerals, like lithium and rare earth elements, and green hydrogen.

The 10 per cent critical mineral tax rebate will kick in from 1 July 2027 and run until 30 June 2040.