BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) and Rio Tinto plc Sponsored ADR (RIO.US) team up with Posco to create Australia's first green iron smelter.

12:59 17/12/2024

Global mining giants BHP and Rio Tinto have joined forces with Boasteel Group Limited to plan the construction of Australia's largest electric arc furnace.

Global mining giants BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) and Rio Tinto plc Sponsored ADR (RIO.US) have joined hands with Fortescue Metals Group Ltd to plan the construction of Australia's largest electric arc furnace, aimed at promoting decarbonization in steel production. The project is located in Kwinana near Perth, with an expected annual output of 30,000 to 40,000 tons of molten iron. Initially, natural gas and hydrogen provided by Woodside Energy Group Ltd will be used to convert iron ore into direct reduced iron (DRI), with long-term plans to utilize hydrogen for power generation, potentially reducing emissions by up to 80%. This initiative aims to prove the feasibility of smelting iron ore in the Pilbara region of Australia through electric furnaces, as an alternative to traditional coal-powered blast furnaces which currently support over 70% of global steel production. According to a joint statement, the project was first announced in February this year. While the factory location has not been confirmed, research plans are set to commence next year, with operations expected to begin in 2028. Financial details have not been disclosed yet. This project not only challenges limitations in producing direct reduced iron from low-grade iron ore in the Pilbara region, but also signifies an important step for BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs, Rio Tinto plc Sponsored ADR, and Fortescue Metals Group Ltd. (which collectively supply nearly 60% of the world's Pilbara iron ore exports) in promoting the green transformation of the steel industry. The steel industry is a major source of global carbon dioxide emissions, accounting for around 10.5% of the global total in 2021, as reported by Bloomberg New Energy Finance. If successfully implemented, this project will provide a new pathway for steel production to reduce carbon emissions globally, especially in steel-producing countries like China.

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