Rio Tinto, BHP, BlueScope select Perth to build low-emission iron plant

Australia’s two largest iron ore miners, Rio Tinto (ASX, LSE, NYSE: RIO) and BHP (LSE, NYSE, ASX: BHP), working with BlueScope Steel, have selected Perth to locate the country’s largest low-carbon iron-making furnace.

The NeoSmelt pilot plant is to be located in the Kwinana Industrial Area south of the west Australian city, the companies said on Thursday. This “green iron” project was first revealed in February, but without key details such as its location. It aims to assist steelmakers worldwide in reducing their carbon footprint while relying on Australian iron ore.

The plant is to be designed to produce 30,000 to 40,000 tonnes of molten iron annually. It is to initially operate using a mix of natural gas and hydrogen, the companies said. The facility will reduce iron ore to direct reduced iron (DRI) as part of efforts to lower emissions in steel production. 

The plant aims to test and optimize the production of iron using an electric smelting furnace (ESF). This type of furnace is being developed by steel producers and technology companies with a focus on reducing carbon dioxide emission intensity in the sector, the partners said.

2028 start

Woodside Energy (ASX: WDS) is expected to join as an equal equity partner in the collaborative effort. The company will also serve as the project’s energy supplier, pending finalization of commercial agreements.

The project is to advance to feasibility studies in the second quarter of 2025, with a final investment decision anticipated in 2026. Operations are projected to commence in 2028.

If successful, the technology could slash emissions by up to 80%, provided renewable energy and green hydrogen are used. This innovation has the potential to facilitate near-zero greenhouse gas emissions for steelmakers processing Australian iron ore, meeting growing global demand for sustainable steel production.

Steel production, a cornerstone material for infrastructure and the energy transition to net zero, currently accounts for about 8% of global carbon emissions. More than 70% of steel is produced using coal, underscoring the importance of the shift towards greener production methods.