RIO and BHP will build an electric melting furnace factory to reduce emissions

Rio Tinto RIO has joined forces BHP Group BHP and BlueScope will develop the largest electric smelting furnace (ESF) pilot plant for ironmaking in Western Australia. The BHP-RIO alliance will work to process iron sourced from the Pilbara using an electric furnace that replaces traditional blast furnaces.

This could lead the way in decarbonizing the steelmaking process, which is the need of the hour as steelmaking is responsible for about 8% of the world’s carbon emissions.

RIO, BHP and Bluescope, Australia’s largest steelmaker, formed the NeoSmelt partnership in February. This combined BHP and Rio Tinto’s knowledge of Pilbara iron ore with BlueScope’s unique operational experience in ESF technology. BlueScope operates the world’s only direct reduced iron (DRI) ESF in New Zealand.

Woodside Energy will also join as an equal participant and energy supplier, subject to the completion of commercial arrangements.

The NeoSmelt pilot plant will test and optimize the production of iron from the ESF. The ESF is capable of producing iron suitable for the basic oxygen steel process. Iron ore is first converted into DRI before being added to the ESF. The DRI-ESF equipment can replace the traditional blast furnace. This can help reduce CO2 emissions intensity by up to 80% compared to the conventional blast furnace steel route.

The pilot plant would produce molten iron at a rate of 30,000 to 40,000 tons per year. Initially, it will use natural gas to return iron ore to DRI. Once operational, the project plans to use hydrogen with lower CO2 emissions for the process. The Western Australian Government will contribute A$75 million to the project.

Subject to funding, the project expects to commence feasibility studies in the second quarter of 2025. The final investment decision for the pilot plant is expected in 2026, with work expected to start in 2028.

Steel production is responsible for approximately 8% of the world’s CO2 emissions. Most of these emissions arise during the industrial process of converting the raw material, iron ore, into steel. Miners, through individual research and partnerships, are working to develop technologies and solutions to reduce the intensity of greenhouse gas (GHG) emissions from the steelmaking process.

Steel production was responsible for 69% of Rio Tinto’s Scope 3 emissions in 2023. The company aims to reduce its Scope 1 and 2 carbon emissions by 15% by 2025 and 50% by 2030, compared to 2018 levels. The company expects to achieve net zero emissions from its operations by 2050.

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