A factory for making green iron in central Queensland will push ahead, helped along by federal government tax incentives for renewable hydrogen.
Iron ore will be mined about 70 kilometres west of Gladstone and then transported to the new facility, where it will be converted to green iron using renewable hydrogen made in a neighbouring plant.
Production tax credits worth $13.7 billion for hydrogen and critical minerals were the centrepiece of Labor's Future Made in Australia plan detailed in last week's federal budget.
The $2-per-kilogram production tax credits are intended to help spur investment in renewable hydrogen and green metals and other industries that use hydrogen as an input.
Treasurer Jim Chalmers said central Queensland would play a key role in the Future Made in Australia industry plan.
"It's about building on our strong and proud foundation as a resources powerhouse to also be a renewables powerhouse," he said on Monday in Gladstone.
The $3.5 billion green iron project spearheaded by international infrastructure investment manager Quinbrook will draw on hydrogen produced by the nearby Central Queensland Hydrogen Project.
Quinbrook Infrastructure Partners co-founder and managing partner David Scaysbrook said Gladstone had all the ingredients for a "world class green iron project", including proximity to an existing port and other key infrastructure.
The project would also have access to Queensland's abundant renewable power sources, he said.
"This is exactly the type of project the Made in Australia and critical minerals policies of the federal and Queensland state government are designed to support and the recent federal budget announcements have given us and our partners the confidence to get on with it," Mr Scaysbrook said.
The opposition does not support the tax incentives for hydrogen and critical minerals, with leader Peter Dutton claiming the projects "should stand up on their own without the need for taxpayer's money".
