Sims’ Scrap Supply Deal Hinges on Alter Steel’s Green Steel Project Execution Risks

• Non-binding MOU to supply 550,000 tonnes of scrap annually to Alter Steel
• Pinkenba site development to support logistics and domestic steel production
• Complementary supply agreement with New Zealand Steel for 200,000 tonnes annually
• Estimated $215 million investment in Pinkenba over next decade
• Shift from export to domestic scrap supply enhances operational efficiency

Strategic Partnership for Green Steel

Sims Limited has taken a significant stride in the evolving green steel sector by signing a non-binding Memorandum of Understanding (MOU) with Alter Steel Pty Ltd. The agreement outlines Sims’ proposed exclusive supply of up to 550,000 tonnes of ferrous scrap annually to Alter’s planned Electric Arc Furnace (EAF) facility, set to begin operations in 2028 near Sims’ Pinkenba site in Queensland.

This partnership is more than a supply deal; it represents a collaborative effort to decarbonise steelmaking in Australia and New Zealand. Alter Steel aims to lead the green steel movement, and Sims’ role as a supplier of high-quality recycled materials positions it at the heart of this transformation.

Pinkenba, A New Hub for Circular Steelmaking

Central to this initiative is Sims’ ambitious development of its Pinkenba site into a strategic logistics and recycling hub. With a projected investment of approximately $215 million over the next decade, including an initial $40 million allocation for the next two fiscal years, Pinkenba will facilitate more efficient scrap handling by shifting transport from road to port and rail infrastructure.

This development not only supports Alter’s feedstock needs but also enables Sims to consolidate its Rocklea and Northgate operations, unlocking land sale proceeds and enhancing cost performance. The site’s evolution underscores a broader market trend toward onshoring steel production, supported by government policies targeting sustainability and domestic manufacturing resilience.

Building on Regional Momentum

The MOU complements Sims’ existing supply agreement with New Zealand Steel, signed in August 2024, which commits to supplying at least 200,000 tonnes of scrap annually for the Glenbrook EAF in New Zealand. Together, these agreements mark a material shift in Sims’ scrap volume allocation, reducing exports and increasing domestic supply, thereby enhancing operational efficiency and market stability.

Executives from both companies expressed optimism about the collaboration. Sims’ CEO Stephen Mikkelsen highlighted the strategic importance of the MOU in providing volume certainty and supporting sustainable operations. Alter’s CEO Grant Johnston emphasized the partnership’s role in delivering Australia’s cleanest steel, reinforcing Queensland’s position in the green steel sector.

Looking Ahead

While the MOU is non-binding and subject to further negotiation, it sets a clear framework for a binding agreement that could reshape the scrap metal supply landscape in the region. The success of this partnership will depend on Alter Steel’s project execution and the broader market’s embrace of green steel technologies.

For Sims, the Pinkenba development and these supply agreements represent a strategic pivot towards sustainable growth and leadership in the circular economy, aligning with global decarbonisation trends and domestic industrial policy priorities.

Bottom Line?

Sims’ Pinkenba investment and scrap supply deals position it as a pivotal player in Australia’s green steel future.

Questions in the middle?

• When will the binding agreement with Alter Steel be finalised and what terms might change?
• How will the $215 million Pinkenba investment impact Sims’ financial performance in the near term?
• What government policies or incentives could influence the success of domestic green steel production?