Australia will lose thousands of jobs to rival resource-rich economies if the federal government fails to kickstart the nascent green iron industry, experts warn.
An independent report released on Tuesday by Mandala Partners found the industry could potentially generate more than $100 billion annually for the economy and support 27,500 direct jobs.
Australian Workers' Union national secretary Paul Farrow said Australian steel production was "under massive pressure" and there was an opportunity to usher workers into alternative, well-paid, long-term jobs.
"If the government doesn't step in, it'll shut down and we'll lose not just thousands of jobs, but the historic opportunity to transition to green iron," Mr Farrow said. "There are clever countries lining up right now to rob Australia of its green metals advantage and it would be a national tragedy if they are successful."
Rival iron ore giant Brazil is developing a new green iron province to supply world markets, while Africa is another future source for the United States, Europe and China's automakers and steel furnaces.
Becoming a green iron titan would also have a greater impact on reducing global emissions than a commitment to net zero by 2050, according to the analysis commissioned by philanthropic organisation Boundless Earth.
Ironmaking is the most emissions-intensive part of the steel value chain, contributing up to 90 per cent of the emissions.
With the steel industry pumping out up six to nine per cent of global emissions, an Australian production chain for green iron was estimated at reducing global emissions by 1.7 per cent - or more than the official national carbon footprint.
"If Australia reaches its green iron potential, it would be a huge contribution to global climate action," Boundless Earth chief executive Eytan Lenko said.
"This report clearly shows the importance and strategic opportunity of transforming our iron ore industry to a green iron industry, and its critical role in Australia becoming a renewable superpower."
Australia could be a cost-competitive producer of green iron if there was taxpayer support during the "scale-up" phase as high capital requirements and technological risks were deterring private investment.
Some $28.8 billion in investment would be needed by 2030 to build production plants, hydrogen facilities, and renewable energy systems, the report found.
Mandala Partners' Amit Singh said Australia had an opportunity to position itself as a leader in a new industry where the nation had unique natural advantages, but it wouldn't happen without a big push by governments.
"Relying on private investment alone is not going to get us there, especially given the renewable energy infrastructure requirements," he said.
Production would require 16 terrawatt hours of renewable energy by 2030 and 775 TWh by 2050, or 2.4 times the nation's 2030 renewable energy target.
