MELBOURNE  - Australia risks losing its dominant position in the global iron-ore market if it does not move swiftly to produce green iron, and would do well to learn lessons from the near wipe-out of its nickel industry, Fortescue CEO Dino Otranto said on Tuesday.

Australia is the world's biggest supplier of seaborne iron-ore, accounting for around half of global supply. But the Pilbara grades dug up from the country's west are generally regarded as too low to be turned into steel without using coal.

That means that as steel makers decarbonise by reducing coal use, they are turning elsewhere for iron-ore, which could hit Australia's top export earner following the pain suffered in its nickel industry, Otranto told the IMARC conference in Sydney.

Competition is revving up on growing investment in green steel projects in the Middle East, that are not using Australian iron-ore, while Guinea's giant Simandou iron-ore mine is set to start up next year, he said.

"That's a high-grade deposit going straight into the steel mills in China," he said of Simandou.

"My warning is, look at what's just happening," he said.

"Let's not sit here with our head in the sand thinking it's not going to happen again," he said.

Pointing to what happened in the nickel industry, he said Australia had the opportunity to help develop Indonesia's mineral wealth but did not anticipate China's ability to turn low grade laterite ore into a high purity product.

"The Chinese ... built the biggest nickel industry the world has ever seen and ... took out an entire market sector in four years," he said, referring to the transformation of Indonesia's nickel industry into the world's dominant supplier, developed by Chinese stainless steel giants like Tsingshan.

That flood of cheaper supply has this year hammered nickel producers around the globe, like in New Caledonia and Australia.

Otranto said a similar scenario could play out in Australia's iron-ore industry which, along with the Australian government, was underplaying the threat to iron-ore.

Fortescue is ramping up a pilot plant to produce green iron from Pilbara iron-ore.

The world's fourth-largest iron ore miner will use green electricity from solar farms at its Christmas Creek operations in Western Australia to produce 1 500 tons per year of high purity green iron using hydrogen.

"We cannot miss the boat again."

On Monday, Brazilian miner Vale, the world's second biggest iron-ore producer, said it had partnered with China's Jinnan Steel Group to build an iron-ore beneficiation plant in Oman to make high quality pellet.