Calix Limited (ASX:CXL) has taken a significant leap forward in developing Australia’s low-emissions steel value chain, executing a $44.9 million funding agreement with the Australian Renewable Energy Agency (ARENA) to build a ZESTY Green Iron Demonstration Plant.

The award marks a turning point for Australia’s role in global decarbonisation efforts, particularly in heavy industry, with the potential to preserve the nation’s iron ore export dominance while transforming how steel is made.

Targeting a 30,000 Tonne Per Annum Green Iron Facility

The Demonstration Plant will target annual production of 30,000 tonnes of hydrogen direct reduced iron (H2-DRI) or hot briquetted iron (HBI). Designed as a toll processing facility, it will handle iron ores from a range of producers, supporting the shift to a low-emissions steel industry while helping test and validate ore types across varying steelmaking methods.

Calix CEO and Managing Director Phil Hodgson described the grant as a defining milestone.

“Calix is delighted to announce this important milestone in the commercialisation of ZESTY, and we thank ARENA and the Australian Government for its support,” he said.

Demonstration Phase Paves Way for Commercial Deployment

The grant follows earlier ARENA-funded pilot trials and a Front-End Engineering Design (FEED) study that demonstrated ZESTY’s technical and economic feasibility at pilot scale. A final investment decision (FID) on the Demonstration Plant is targeted for FY26.

Construction is expected to begin in 2026, subject to matched funding and successful procurement of major capital items. Commissioning and operations are planned to start in 2028.

“Our shared vision is that a green iron industry here in Australia can add value to, and help futureproof, Australia’s iron ore industry,” Hodgson said.

Decarbonising Iron Without Pelletisation or Excessive Hydrogen

ZESTY, or Zero Emissions Steel TechnologY, combines electric heating with hydrogen reduction to convert iron ore into metallic iron. What sets it apart is its compatibility with lower-grade Australian ores – such as those from the Pilbara – that are typically unsuitable for low-emissions steel production.

By enabling the use of iron ore fines and avoiding energy-intensive pelletisation, ZESTY could deliver green iron more cost-effectively than conventional hydrogen DRI technologies.

“Iron ore is Australia’s largest source of export income, and it is under existential threat in a decarbonising global economy,” Hodgson said.

Deep Dive Into Scalability And Industry Integration

The project will also produce a FEED study for a commercial-scale ZESTY plant, forming the basis for broader deployment in Australia and overseas. The demonstration phase will test a wide range of ores and enable steelmakers to trial ZESTY’s output through various decarbonisation pathways – from partial blast furnace substitution to full electric arc furnace (EAF) integration.

Chris Ormston, Calix General Manager of Sustainable Processing, emphasised the platform’s versatility.

“ZESTY’s compatibility with multiple ore types and grades will make it an ideal, multi-user platform facility to test and develop green iron and steel pathways,” he said.

“Its potential to minimise hydrogen consumption, avoid pelletisation, and operate flexibly on low-cost electricity can enable it to do so in the most cost-effective way possible.”

ZESTY Aligns with Global Emissions Reduction Efforts

The iron and steel sector is responsible for around 7–8% of global CO₂ emissions. With most of Australia’s hematite/goethite ores currently processed abroad using carbon-intensive blast furnaces, ZESTY provides a direct path to cleaner domestic and export-ready production.

Hodgson concluded that the plant has the potential to be a global game changer.

“We look forward to working with ARENA to advance the project and help address this significant global challenge and opportunity.”

Calix will host a live webinar on Thursday, 31 July at 11:00am AEST, where it will provide a detailed overview of the ZESTY Demonstration Plant and its role in reshaping green iron production in Australia.