News: BHP UPDATE 1-Rio Tinto, BHP tie up in Australian steel decarbonisation pilot

(Adds quotes from press conference, more details)

Rival miners Rio Tinto RIO.L (RIO) and BHP Group (BHP) said on Friday they would jointly investigate the development of a pilot project to decarbonise steelmaking that could be commissioned as early as 2027.

Australia's two largest iron ore producers and its biggest steelmaker, BlueScope Steel (BSL) , said in a joint statement the collaboration would look to develop and "potentially invest" in the country's first ironmaking electric smelting furnace (ESF) pilot plant.

If successful, it could help open a potential pathway to near-zero greenhouse gas emission-intensity operations for steelmakers that rely on Australian iron ore to meet global steel demand, the statement said.

The production of steel, a key material for infrastructure and the net-zero energy transition, currently contributes around 8% of global carbon emissions.

"The carbon intensity of iron and steelmaking requires profound change to meet the needs of our planet and our climate objectives," said Rio Tinto Iron Ore Chief Executive Simon Trott.

The announcement was made at BlueScope's Port Kembla steelmaking operations 75 kilometres (46.6 miles) south of Sydney.

Under a new framework agreement, Rio, BHP and BlueScope will consolidate the work each party has completed to date, it said.

The companies said they would assess several locations in Australia, the world's top exporter of iron ore, for the proposed pilot facility.

The pre-feasibility study work programme is expected to conclude at year-end. If approved, the pilot facility could be commissioned as early as 2027, they said.

If successful, this would be the first partnership between the two global miners on a downstream project.

"If we can crack it, it’s going to be a significant uptick for the mining industry, the Pilbara, Western Australia, Australia in general and the globe”,” Tim Day, BHP's incoming Western Australia iron ore asset president, said at a news conference announcing the collaboration.

One potential ambition for the project would be to make commercial quantities of “green iron” that could then be shipped to steelmakers in Asia, said Tania Archibald, CEO of BlueScope.

However, the pilot would need to run for several years, so commercial production was unlikely before the 2030s, she added.

Costs for the project will be shared equally, although the companies declined to provide any costs

The pilot facility would be intended to test and optimise production of iron from the ESF, a type of furnace being developed by leading steel producers and technology companies targeting low carbon emission-intensity steel.

ESF is capable of producing iron suitable for the basic oxygen steelmaking (BOS) process. Iron ore is first converted to direct reduced iron (DRI) before being charged into the ESF. Together, the DRI-ESF equipment can replace the blast furnace, eliminating the need for metallurgical coal.

Estimates show that reductions of more than 80% in CO2 emission intensity are potentially achievable processing Pilbara iron ores through a DRI-ESF pathway, the companies said in the joint statement.

Rio and BlueScope had announced in October 2021 they would work together to explore low-carbon steelmaking pathways.

BHP is also working with global engineering firm Hatch to design an Electric Smelting Furnace (ESF) pilot plant.