BlueScope, BHP and Rio Tinto decarbonise steel

Australia’s two largest iron ore miners and its biggest steelmaker have selected the Kwinana Industrial Area in WA as the location to develop Australia’s largest ironmaking electric smelting furnace (ESF) pilot plant.

The groundbreaking project combines the expertise of BlueScope (ASX: BSL), BHP (ASX: BHP) and Rio Tinto (ASX: RIO) to test technology to enable the use of Pilbara iron ore to produce iron without the need for traditional blast furnaces, as the companies come together to try to accelerate the decarbonisation of steelmaking.

The industry leaders formed the NeoSmelt collaboration in February 2024, combining BHP and Rio Tinto’s deep knowledge of Pilbara iron ore, with BlueScope’s unique operating experience in ESF technology.

Woodside Energy (ASX: WDS) will also join the consortium as an equal equity participant and energy supplier, subject to finalising commercial arrangements.

Woodside Energy executive vice president and chief operating officer Australia Liz Westcott says the company is excited to join the NeoSmelt project.

“Natural gas and hydrogen may enable emissions reductions in steelmaking and we are proud to bring to the NeoSmelt project our expertise, experience and know-how as a global supplier of energy,” she said.

“Woodside supports the NeoSmelt project’s goals of exploring lower-emissions steelmaking pathways for Pilbara iron ore and unlocking new skills and capabilities through the energy transition.”

The pilot plant aims to prove Pilbara iron ore can be used to produce lower-carbon emissions molten iron using direct reduced iron (DRI)-ESF technology.

The pilot plant would produce 30,000-40,000tpa of molten iron. It will initially use natural gas to reduce iron ore to DRI, but once operational, the project aims to use lower-carbon emissions hydrogen to reduce iron ore.

If successful, NeoSmelt has the potential to open a pathway to near-zero emissions steelmaking using Pilbara iron ore and ensure the longevity of Australia’s iron ore industry.

WA Premier Roger Cooks says the State is becoming a global renewable energy powerhouse.

“Securing NeoSmelt for Kwinana positions WA at the cutting edge of the global push to slash emissions from steel production and means our Pilbara iron ore will be processed right here in WA,” he said.
“Putting the global steel industry on the pathway to near-zero emissions means more jobs in processing in WA and a strong future for WA’s iron ore industry.”

BlueScope chief executive Australia Tania Archibald says this is a significant milestone in what is truly a unique and transformative project to help decarbonise the steel industry.

“The progress made during the pre-feasibility stage is a testament to the collaboration of all parties involved,” she said.

“BlueScope’s role as project manager leverages our deep iron and steelmaking experience at the Port Kembla Steelworks and our unique capability as the operator of the world’s only electric smelting furnace processing DRI in New Zealand.”

BHP WA Iron Ore (WAIO) asset president Tim Day says the company is thrilled to be well on its way to bringing this cutting-edge technology to life in WA.

“A successful pilot plant of this scale would be a huge achievement as we work with our partners, here and around the world, to help fast-track near-zero emission pathways for steelmakers using Pilbara ores,” he said.

“These are the Pilbara ores that power this nation’s economy, so getting it right would be a major step forward in setting up WA and Australia to be an important part of a low greenhouse gas emission future.”

Rio Tinto Iron Ore chief executive Simon Trott comments on the development.

“We must find better ways to produce the most commonly used metal in the world, while meeting the needs of our planet and our climate objectives,” he said.

“We are excited to announce the location for Australia’s largest ironmaking ESF pilot plant is in WA.

“It’s just one of the ways we’re working with our peers to develop the technology needed to reduce the carbon intensity of iron and steelmaking.

“The NeoSmelt pilot plant builds on the suite of projects Rio Tinto has underway with our customers and suppliers to find better ways to accelerate their efforts to meet their decarbonisation targets.”

Federal Resource Minister Madeleine King comments on the project.

“Kwinana was built in the 1950s to power WA and under the [WA] and [Federal] Governments it will remain the engine room of this State for generations to come,” she said.

“This is a significant project for Kwinana that will create many highly skilled and well-paid jobs to build our national capability.

“Under the [Federal] Government’s Future Made in Australia agenda, the State and Federal Government are working together to make best use of our natural advantages, to process more of what we mine here, to secure our sovereign capability and to power the world’s energy transition.”

The NeoSmelt parties assessed several pilot plant locations in Australia before selecting the Kwinana Industrial Area, utilising its access to transport logistics and existing infrastructure, coupled with support from a $75m contribution from the WA Government.

Subject to funding, the project anticipates a decision to enter feasibility studies in Q2 CY25 and is targeting final investment decision for the pilot plant in 2026, with operations expected to begin in 2028.