Rio Tinto deepens pact with world's biggest steelmaker

Under the memorandum of understanding signed with China Baowu in Shanghai, the two companies pledged to play a leading role in transforming one of the world's most emissions-intensive products.

Rio Tinto chief commercial officer Alf Barrios said the agreement aims to address one of the biggest challenges faced by the industry.

That is, developing low-carbon processes for low-to-medium grade iron ores, which account for the vast majority of global iron ore supply.

Lower grade ores produce more emissions when extracted, as they need to be blasted out of more rock, and traditionally require extreme heat to be made into steel.

The two companies will examine how to make feedstock that would be suitable for lower-carbon processes that consumers demand.

In contrast to coal-fired blast furnaces, equipment is being developed to use gas and hydrogen.

China Baowu said upgrading the steel industry, all the way along the production chain, would support the world to address the challenge of climate change.

Extending their 50-year relationship, the two companies will share expertise and resources in Australia and China.

The Memorandum of Understanding follows trade talks in Beijing last month as the steel giant weighed up sites for an offshore green steel plant.

"We look forward to progressing this study into the potential of low-carbon iron making in Western Australia as we work to ensure a positive future for Pilbara ores in a green steel world," Rio Tinto's iron ore boss Simon Trott said.

The steel industry accounts for around 15 to 20 per cent of China's emissions.

GREEN STEEL PRODUCTION CHAIN:

* Jointly study opportunities for producing low-carbon iron and pellets in Western Australia

* Develop pelletisation technology for Australian-sourced ores to be used as a feedstock for low-carbon processes

* Research, build and demonstrate a pilot-scale electric melter at a steel mill in China

* Develop Baowu's existing "HyCROF" technology which it says can largely mitigate blast furnace emissions.

Australian Associated Press