ARENA commits AUD 44.9 million to Calix for ZESTY green iron demonstration plant

Mechanism

ZESTY (Zero Emissions Steel Technology) uses Calix's proprietary Flash Calciner, combined with hydrogen reduction and electric heating, to convert iron ore directly into HDRI/HBI without a coking-coal blast furnace. A distinguishing feature over rival direct-reduction routes is feedstock flexibility: ZESTY can process hematite as well as magnetite, which matters because the majority of Australia's iron ore exports are hematite-based (Pilbara ore), whereas many existing DRI technologies are magnetite-only. AUD 44.9M funds a demonstration-scale plant (up to 30,000 t/yr) plus early engineering for a future commercial-scale facility; neither the plant site nor total project cost (including any co-funding or state-government contribution) was disclosed in the announcement. Severity is set at 2/5: this is grant funding for a pre-commercial demonstration plant, not a production-scale subsidy commitment — the same tier as other single-recipient ARENA/DPA-style demonstration awards in the register, distinguished from India's PLI Specialty Steel scheme (2021-07-29-india-pli-specialty-steel, severity 3) which is a production-linked, economy-wide incentive rather than one plant.

Downstream implications

• Extends Australia's Future Made in Australia green-metals push into a

second decarbonisation pathway (direct hydrogen reduction) alongside green-hydrogen and green-aluminium demonstration funding already in the register, reinforcing the domestic-value-add rationale for processing Pilbara iron ore onshore rather than exporting raw ore.

• Calix (ASX: CXL) becomes a name to track in the green-steel/green-iron

demonstration cohort; a successful ZESTY demonstration would be a reference case for hematite-compatible DRI at a time when most green steel investment (e.g. HYBRIT, H2 Green Steel) is magnetite/pellet feed dependent.

• If commercial-scale ZESTY plants proceed, this could reduce the

competitiveness gap between Australia's raw ore exports and higher value-added HBI/HDRI exports, a long-standing policy goal given Australia is the world's largest iron ore exporter but has minimal domestic steelmaking capacity relative to that export volume.

Open questions

• Plant location and timeline to final investment decision for the

demonstration facility.

• Total project cost and whether Calix has secured additional private

or state co-funding beyond the ARENA grant.

• Whether a subsequent commercial-scale ZESTY funding round appears in

the register, and at what severity given disclosed capex at that point.