Along with BlueScope and Woodside Energy, Western Australia iron ore is on its way to being a world leader when it comes to low-carbon.

In the first partnership between Rio Tinto and BHP on a downstream project, the two top iron ore miners and BlueScope, Australia's biggest steelmaker, are teaming up to construct the country's largest groundbreaking low-carbon electric smelting furnace (ESF) at a facility in the Kwinana Industrial Area, south of Perth.

The ESF will process direct reduced iron (DRI), a grade of iron ore made by removing chemically bound oxygen from iron oxide pellets and lump ores without melting. The reducing agents are carbon monoxide and hydrogen.

"Today marks a significant milestone in what is truly a unique and transformative project to help decarbonise the steel industry. The progress made during the pre-feasibility stage is a testament to the collaboration of all parties involved," said Tania Archibald, chief executive of BlueScope's Australian Steel Products. "BlueScope's role as project manager leverages our deep iron and steelmaking experience at the Port Kembla Steelworks and our unique capability as the operator of the world's only electric smelting furnace processing DRI in New Zealand."

Utilizing the area's access to transport logistics and existing infrastructure, coupled with support from a A$75 million (US$46.6 million) cash infusion from the Western Australian government, the trio's NeoSmelt project aims to test and optimize the production of iron from ore mined in the Pilbara region to accelerate the decarbonization of the steelmaking sector and reduce CO2 emissions through electrification.

"The carbon intensity of iron and steelmaking requires profound change to meet the needs of our planet and our climate objectives," Rio Tinto Iron Ore chief executive Simon Trott said. "We must find better ways to produce the most commonly used metal in the world, while meeting the needs of our planet and our climate objectives. We are excited to announce the location for Australia's largest ironmaking ESF pilot plant is in Western Australia. It's just one of the ways we're working with our peers to develop the technology needed to reduce the carbon intensity of iron and steelmaking. The NeoSmelt pilot plant builds on the suite of projects Rio Tinto has underway with our customers and suppliers to find better ways to accelerate their efforts to meet their decarbonisation targets."

The pilot plant will initially use natural gas and hydrogen to produce 30,000 to 40,000 metric tons of molten iron annually by processing iron ore into "green" direct reduced iron. If successful in utilizing renewable energy and green hydrogen, the technology could cut emissions by up to 80% compared to regular iron production.

The green iron collaboration, which was formed back in February, combines the global mining companies' knowledge of Pilbara iron ore with BlueScope's operating experience in ESF technology. If successful, this arrangement promises steelmakers the capability to reduce their carbon footprint with Australian iron, meeting growing global demand for sustainable steel production.

Steel production is foundational to infrastructure and the energy transition, accounting for approximately 8% of global carbon emissions. More than 70% of the world's steel production still uses coal, stressing the importance of the shift towards greener production methods.

Woodside Energy expects to join as an equal equity partner and the project's energy supplier, pending the finalization of commercial agreements.

"Woodside is excited that it will join the NeoSmelt project as an equal equity participant and energy supplier alongside BlueScope, BHP and Rio Tinto, subject to finalising commercial arrangements," said Liz Westcott, executive vice president and COO Australia at Woodside. "Natural gas and hydrogen may enable emissions reductions in steelmaking, and we are proud to bring to the NeoSmelt project our expertise, experience and know-how as a global supplier of energy. Woodside supports the NeoSmelt project's goals of exploring lower-emissions steelmaking pathways for Pilbara iron ore and unlocking new skills and capabilities through the energy transition."

"We're thrilled to be well on our way to bringing this cutting-edge technology to life right here in Western Australia," said Tim Day, BHP's Western Australia iron ore asset president. "A successful pilot plant of this scale would be a huge achievement as we work with our partners, here and around the world, to help fast-track near-zero emission pathways for steelmakers using Pilbara ores. These are the Pilbara ores that power this nation's economy, so getting it right would be a major step forward in setting up WA and Australia to be an important part of a low greenhouse gas emission future."

Subject to funding, the project will advance to feasibility studies in the second quarter of 2025, with a final investment decision for the pilot plant anticipated by 2026, followed by the beginning of operations in 2028.