Rio Tinto and BHP join forces with BlueScope to build Australia's largest electric iron furnace $RIO (-0,87 %)
$BHP (-0,6 %)

Australian companies BHP and Rio Tinto will jointly develop a pilot plant to produce low-carbon iron from Pilbara ore to accelerate decarbonization in the steel industry, the companies said in a joint statement on Tuesday.

The plant will use renewable energy and direct reduced iron (DRI) technology in an electric smelting furnace (ESF) to produce molten iron with a potential annual production of 30,000 to 40,000 tons.

The plant is being developed in partnership with BlueScope Steel BSL.AX in the Western Australian industrial hub of Kwinana.

If successful, the technology could enable steelmakers using Australian iron ore to meet global demand to operate with near-zero greenhouse gas emissions, the companies said.

Steel production, a key material for infrastructure and net-zero energy transition, currently accounts for around 8% of global carbon emissions.

The 'Green Iron' pilot project between Rio, BHP and BlueScope Steel was announced in February to reduce emissions from steelmakers around the world that rely on Australian iron ore.

The project has now finalized the location and details, including projected production, after reviewing several sites in Australia.

Woodside Energy $WDS (+1,31 %) will also participate as an equal shareholder and energy supplier in the collaboration, named 'NeoSmelt', pending final commercial agreements.

The project is expected to commence feasibility studies in the second quarter of 2025, followed by a final investment decision in 2026 and commencement of operations in 2028, the companies said.