Energy-system optimization for hydrogen-based green steel production from medium-grade iron ore

The steel industry accounts for 8 percent of global greenhouse gas emissions and is central to industrial decarbonization. Most green-steel assessments focus on hydrogen direct reduction with electric arc furnaces, which require high-grade ores. However, major iron ore producers, including Australia, the world's largest exporter, supply predominantly medium-grade ores that cannot be processed efficiently in this route. This study addresses this gap by assessing whether medium-grade ores can support competitive green-steel production. We develop an integrated optimization framework that links hydrogen supply, storage, and continuous steelmaking under variable renewable resources, applied to the hydrogen direct reduced iron-electric smelting furnace-basic oxygen furnace route tailored to medium-grade ores. The results show that an optimised mix of wind and solar power, supported by moderate grid supply, can lower production costs. The current cost gap of roughly 400 USD t−1 relative to conventional blast furnace steel can be closed through a combination of technology learning, carbon prices similar to the European Union Emissions Trading System, and targeted support that declines over time. Hourly temporal matching and limits on hydrogen-emission intensity have a strong influence on electrolyser utilisation, renewable overbuild, and the levelised cost of steel. A moderate emission threshold near 3 kg CO2 kg−1H2, combined with hourly matching, captures most attainable abatement while avoiding the marked cost escalation associated with stricter limits. These findings clarify how ore quality, renewable-resource profiles, and hydrogen-system constraints interact to determine the feasibility of green steel production, and they offer guidance for regions planning large-scale hydrogen-based industrial systems.