According to Zhitung Finance APP, the world's top mining giants BHP Group Ltd (BHP.US) and Rio Tinto (RIO.US) are collaborating with Fortescue Metals Group Ltd to construct Australia's largest electric iron smelting furnace, aimed at advancing the decarbonization process of steel production. The project is located near Perth in Kwinana and is expected to produce 0.03 million to 0.04 million tons of molten iron annually. Initially, it will use Henry Hub Natural Gas and hydrogen provided by Woodside Energy Group Ltd 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 validate the feasibility of smelting iron ore from the Pilbara region in Australia using electric furnaces to replace traditional coal-fired 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. Although the site for the plant has yet to be finalized, the research plan is expected to start next year and operations are anticipated to commence in 2028, with financial details remaining undisclosed.

It is understood that this project not only challenges the limitations of low-grade iron ore in the Pilbara region for producing Direct Reduced Iron, but also marks an important step for BHP Group Ltd, Rio Tinto, and Fortescue Metals Group Ltd. (these three companies together supply nearly 60% of the world’s marine iron ore from Pilbara) toward promoting a green transformation in the steel industry.

As a major source of global carbon dioxide emissions, the Steel Industry accounted for approximately 10.5% of global emissions in 2021, according to Bloomberg New Energy Finance. If this project is successfully deployed, it will provide a new path for reducing carbon emissions in steel production globally, especially in steel powerhouse countries like China.