Australian iron ore was not suited to green steel. An electric furnace in the Pilbara wants to change that

Fortescue produced first hot metal at its Christmas Creek pilot project with a Metso electric smelting furnace, a route designed precisely for the medium-grade ore that dominates the Pilbara and that the traditional direct reduction route does not handle well.

Fortescue produced its first molten metal — so-called hot metal — at the Green Metal Project, a pilot plant installed at the Christmas Creek complex in the Pilbara region of Western Australia. The company announced the milestone on August 19, 2026. On September 28, Finland's Metso, the furnace supplier, released details of its role: it was responsible for the core smelting design and for the electric DRI smelting furnace technology, whose installation began in September 2025. The same type of furnace is being tested in parallel at Metso's research center in Pori, Finland, alongside alternating and direct current electric furnaces. The route combines green hydrogen produced on site — the Christmas Creek plant, commissioned in 2024, has two 700 kW electrolysers and a capacity of about 530 kg of hydrogen a day — with electric smelting of the reduced iron. In the current phase, the pilot runs on blended ore, and commissioning will continue in stages before any decision on expansion. The original target, more than 1,500 tonnes of green metal a year from 2025, has slipped behind schedule.

To understand why a pilot furnace matters so much, you have to look at the chemistry of the ore. The lower-carbon steel route advancing fastest in the world is direct reduction: the ore, in pellets, is reduced by gas — natural gas or hydrogen — without melting, producing sponge iron, or DRI. That DRI then goes into an electric arc furnace. The problem is that the arc furnace has little capacity to separate impurities. All the gangue that was in the ore — mainly silica and alumina — follows the iron and becomes slag, consuming energy and dragging down productivity. That is why the DRI route with an arc furnace calls for high-grade ore, typically above 67% iron. And the Pilbara, one of the largest iron ore provinces on the planet, mostly produces medium-grade ore with more gangue, which works very well in the blast furnace but does not fit that requirement. This is where the electric smelting furnace comes in. Instead of charging DRI into an arc furnace, it melts the reduced iron and separates metal from slag in a way similar to a blast furnace — only using electricity instead of coke. The product is hot metal that can go on to a conventional steel shop, the same used today by integrated steelmakers. In other words, the technology tries to preserve the value of an ore that, in the transition to green steel, risked being passed over in favor of high-grade ores from other countries. Metso highlights exactly this point: the furnace was designed for ores with more gangue, previously considered unsuitable for direct reduction steelmaking. Fortescue is not alone in this bet — other major Pilbara producers are also studying electric smelting — which shows the industry sees this step as the missing piece connecting Australian ore to steel decarbonization. The pilot, however, is small and still being commissioned. The first-metal milestone proves the equipment works, not that the route is economic at scale.

Steelmaking accounts for something between 7% and 9% of global CO₂ emissions, and most seaborne iron ore comes from Australia. If the Pilbara's medium-grade ore lacks a viable route to low-carbon steel, Australia's major producers could lose ground to high-grade ores from other regions, such as Brazil and Canada, as steelmakers switch technology. Electric smelting is an attempt to avoid that loss and, at the same time, capture more value in the producing country: instead of exporting only ore, exporting iron that has already been reduced and smelted. For professionals in mineral processing, metallurgy and mine planning, the message is that the chemical quality of the ore — not just its iron grade — will weigh more and more in the product's value. Silica, alumina and phosphorus content, once tuned for the blast furnace, become strategic variables in the choice of the customer's steelmaking route. For those following Brazilian ore, the lesson runs the other way: the high-grade advantage exists today, but technologies like electric smelting could narrow it over the next decade.