Finding better ways
Decarbonising the
steel value chain
2024
Finding better ways | Decarbonising the steel value chain 1
As one of the world’s largest iron ore producers, we have a key role to play in enabling
decarbonisation of the steel value chain. Our global portfolio of low-, medium-,
and high-grade iron ores, combined with our deep technical expertise and industry
partnerships, uniquely position us to support decarbonisation of the steel value chain in
the short and long term.
Our emissions
In 2023, our Scope 3 emissions were 578 million tonnes (Mt) CO2e (equity basis), approximately 18 times higher
than our Scope 1 and 2 emissions. The majority (69% or 400 Mt CO2e) of these Scope 3 emissions stems from
customers processing our iron ore into iron and steel.
Rio Tinto Scope 3 emissions, 2023 (Mt CO2e)
Procurement
2%
Marine and logistics 4%
69%
578Mt Processing
3% CO2e of iron ore
Other products
22%
Processing of bauxite
and alumina
Our approach to Scope 3 decarbonisation
Review of our customers’ targets and their We have not set an overall Scope 3 emissions target
governments’ commitments to reduce their emissions due to the limited direct influence we have on the
shows a trajectory for our Scope 3 emissions decarbonisation activities of our customers, required
approaching net zero by around 2060. We are maturation of technology and uncertainty around
committed to partnering with our customers and timing of technology adoption, and growth in renewable
suppliers to find better ways to help them achieve their energy. Instead, we are committed to short- and
targets a decade earlier – reaching net zero by 2050. medium-term actions that help drive decarbonisation
across the value chains we participate in.
This means collaborating closely with customers,
technology providers, governments, universities
and other organisations to facilitate development of
technologies for producing low-carbon1 metals and
minerals and helping shape demand for them.
1. Low-carbon metals and minerals are defined as metals and minerals produced with low-CO2 emissions
Cover | 3D model of the BioIron™ Research & Development Facility in Western Australia
Finding better ways | Decarbonising the steel value chain 2
Steel: Why it matters and how it is made
Steel is the dominant metal used today and is essential for urbanisation, infrastructure
development and the transition to low-carbon energy. In 2023, close to 2 billion tonnes
of crude steel was produced globally, compared to approximately 100 million tonnes of
aluminium and 25 million tonnes of copper. This scale, combined with the production
processes used, resulted in the steel sector generating over 3 billion tonnes of CO2 – or
around 8% of global emissions.
Today's steelmaking pathways
The majority of steel value chain emissions are derived The EAF is fed by 2 sources:
from the Blast Furnace–Basic Oxygen Furnace (BF- – Scrap, which is the dominant source today. It can
BOF) process, which accounted for approximately 70% reduce steelmaking carbon emissions by up to
of global steel production, and 85% of Asian2 95% versus the BF-BOF when using renewable
steel production, in 2023. The use of coal for heat and energy.
as a reductant makes it a carbon-intensive process, – Direct Reduced Iron (DRI), which is produced from
producing 2.3 tonnes3 of CO2 per tonne of steel. the Shaft Furnace using natural gas, hydrogen, or
Most of our iron ore is placed with customers using a combination of both. This process can reduce
the BF-BOF pathway, as it is economically advantaged steelmaking carbon emissions by 50-90% versus
and the only process that is technically and the BF-BOF. However, it requires high-purity iron
commercially proven for low- to medium-grade iron ore, ore pellets, like those from our Iron Ore Company of
such as that found in the Pilbara. Canada (IOC) operations.
The Electric Arc Furnace (EAF) provides a low-carbon
alternative to the BF-BOF steelmaking process and
accounted for around 30% of global steel production
in 2023. While the process is less carbon-intensive, it
is less efficient at removing impurities compared to the
BF-BOF, so must be fed by high-iron and low-impurity
iron ore.
2. Asian BF-BOF steel production calculated using World Steel data. Data set includes China, Japan, South Korea, Taiwan and Other Asia.
India is excluded for the purposes of calculation
3. World Steel Association, CO2 emissions and energy intensity, 2022
Finding better ways | Decarbonising the steel value chain 3
Our strategy
Unlocking the most sustainable
economic pathways for our iron ores In 2023, we spent
US$28 million on steel
Today, we are working with numerous strategic partners across
all components of the steel value chain to unlock the most decarbonisation
sustainable and economic pathways for our iron ores. We have initiatives and expect that
set near-term, action-oriented, and measurable targets in those
areas where we believe we have the most agency and can
to rise in 20244
support meaningful change.
Our strategy is framed under 3 pathways, focused on different
technologies and time horizons.
Existing pathways Emerging pathways Future pathways
Work with our customers to Utilise our high-grade iron Unlock new low-carbon
Focus area
lower the carbon intensity ores to accelerate the early technologies for our low- and
of the Blast Furnace proliferation of low-carbon medium-grade iron ores
DRI-EAF technologies
Support our customers’ Reduce our Scope 3 Commission the BioIron™
ambitions to reduce their emissions from our IOC Pilot Plant by 20266,7
carbon emissions from the high-grade ores by 50% by
Blast Furnace by 20-30% 2035 relative to 2022 levels6 Commission a DRI (Shaft
Targets
by 20355 Furnace) + ESF (Electric
Smelting Furnace) pilot plant
by 2026 in partnership with a
steelmaker5
Finalise study on a
beneficiation pilot plant in the
Pilbara by 2026
4. Delays in projects may result in some forecasted 2024 spend being pushed out to 2025
5. The support will be in the form of direct technical support and co-developing technology solutions
6. Subject to funding approval and technical feasibility
7. For more information about BioIron™, please see [Link]/news
Finding better ways | Decarbonising the steel value chain 4
Existing pathways Partnership spotlight: Shougang
We anticipate the BF-BOF will remain the
dominant steelmaking technology in Asia In 2022, we signed a Memorandum of
until around 2040. This is because the Understanding (MOU) with Shougang to
BF-BOF is the most economically viable promote research, design, and implementation
technology, and there is currently no low- of low-carbon solutions for the steel value
carbon technology that is technically and chain. Since then, we have progressed 2
commercial proven for low- and medium- projects with Shougang focused on low-carbon
grade ores. sintering technology and carbon capture and
utilisation (CCU).
We expect Asian steelmakers to focus on
optimising the Blast Furnace until economic We invested US$1.5M over 2023-24 to support
low-carbon steelmaking technologies are Shougang in commissioning a low-carbon
industrially proven for low- and medium- sintering demonstration facility in July 2024.
grade ores. Any transition away from the BF- The facility has demonstrated up to a 10% CO2
BOF will also have to overcome its economic reduction per tonne of sinter at the facility and
advantage and justify the significant capital improved energy efficiency. If adopted by 50%
required to replace existing assets. of mills in China, this technology has potential
to abate approximately 10 million tonnes per
Recognising the importance of early-stage steel annum (Mtpa) CO2, equivalent to 3 times
industry decarbonisation, we have committed to the Scope 1 and 2 emissions of our Iron Ore
working with customers including Baowu, Shougang, operations.
Nippon Steel and POSCO to optimise their existing
Blast Furnace technology, and to support our
customers’ ambitions to reduce their carbon
emissions by 20-30% by 2035.
We plan to achieve this by partnering with customers,
technology providers and universities on 4 key areas:
1 Optimising Blast Furnace burden to reduce
the use of sinter8
Shougang low-carbon sintering facility, China
2 Improving BF-BOF energy efficiency to
minimise coal consumption We have also committed US$3.5 million between
2023-25 to support Shougang’s CCU ambition.
3 Improving slag utilisation to recycle heat
and drive process efficiencies
Specifically, commissioning a 100m3 per hour
CCU pilot in October 2024 and designing a
3,000m3 per hour pilot plant. Construction of
4 Adopting carbon capture, utilisation and
storage (CCUS) to abate carbon emissions
the pilot plant is scheduled to commence in
early 2025. Once operational, it is estimated that
the 3,000m3 per hour pilot plant will capture
approximately 10,000 tonnes CO2 per year from
the Blast Furnace offgas9.
8. Including increased use of direct charge products such as lumps, pellets and DRI/HBI
9. The proportion of emissions abated by the CCU Pilot Plant will depend on how the captured emissions are utilised
Finding better ways | Decarbonising the steel value chain 5
Emerging pathways Partnership spotlight: GravitHy
As carbon prices rise in the future, we
anticipate DRI technology will become In November 2024, we entered agreements with
increasingly cost-competitive with Blast GravitHy – an industrial start up establishing
Furnace ironmaking, which will support 2 Mtpa production of ultra-low-carbon
proliferation of low-carbon steelmaking via DRI in Fos-sur-Mer, France. As part of this
the EAF. We expect Atlantic steelmakers collaboration, we will supply high-grade
to lead the transition, with policies like the direct reduction iron ore pellets from our IOC
Carbon Border Adjustment Mechanism operations, and manage the sales and marketing
(CBAM) in Europe incentivising end- of GravitHy’s ultra-low-carbon HBI.
customers to increase demand for low-
carbon steel. Our IOC iron ore pellets will account for a
significant portion of the iron ore supply
Steelmakers are beginning to decarbonise today by to GravitHy’s flagship plant. By becoming
transitioning to EAF operations. The Shaft Furnace will GravitHy’s sales agent, we aim to prove demand
play a critical role in decarbonisation, providing DRI and for their ultra-low-carbon HBI and support
Hot-Briquetted Iron (HBI) to mitigate limited volumes project financing.
of high-quality scrap. However, several challenges
currently exist when developing DRI/HBI capacity: GravitHy’s hydrogen-based DRI plant is
– Access to high-grade iron ore and pelletisation expected to start production in 2028. The
capacity facility will feature ultra-low-carbon hydrogen
– Access to economic natural gas or hydrogen production infrastructure, enabled by access to
– Ability to commit significant capital investment grid-connected nuclear power. By processing
our iron ore with GravitHy, emissions are
We are supporting and accelerating the early reduced by up to 90% compared to a typical
development and proliferation of low-carbon BF-BOF pathway.
steelmaking technologies by:
– Supplying high-grade iron ore from IOC, and
eventually Simandou, to low-carbon projects
– Bringing together consortiums interested in
decarbonising the steel value chain and investing in
early-stage low-carbon ironmaking and steelmaking
projects in energy-advantaged regions
– Supporting low-carbon projects by providing
marketing services for the DRI and HBI they Potential GravitHy plant layout
produce
“We are developing one of the most advanced
We have set a target to reduce our Scope 3 emissions ultra-low-carbon iron projects worldwide,
from our IOC high-grade ores by 50% by 2035 designated by the French government as an
relative to 2022 levels. ‘Industrial Project of Major National Interest’. By
combining our business ambitions, agility, and
We are undertaking studies in key regions with access technological capabilities with Rio Tinto’s global
to economic natural gas or renewable energy and in leadership in mining and steel decarbonisation,
locations that are proximate to our high-grade ores. we are ensuring a solid sourcing and go-
to-market strategy to help accelerate the
We are also exploring the development of Fluidised development of this project.”
Bed technology. The Fluidised Bed provides an
alternative low-carbon ironmaking technology with -José Noldin, GravitHy Chief Executive Officer
similar abatement potential to the Shaft Furnace.
While low-carbon Fluidised Beds using natural gas or
hydrogen are yet to be proven at commercial scale,
the technology is important because it does not
require iron ore to be pelletised like the Shaft Furnace.
Removing this processing step creates value for both
steelmakers and iron ore suppliers as it removes capital
and operating costs.
Finding better ways | Decarbonising the steel value chain 6
Future pathways
While low-carbon DRI-EAF steelmaking technologies are established for high-grade ores, like
IOC and Simandou, it is not technically or commercially proven for Pilbara ores. With low-
and medium-grade iron ores accounting for over 80% of global supply, decarbonisation of
the steel industry depends on the development, commercialisation and proliferation of low-
carbon technologies for these ores.
Our priority today is to develop economic low-carbon steelmaking technologies suited to low- and medium-
grade iron ores, such as those in the Pilbara. Industrialisation and proliferation of these technologies will depend
on access to economic low-carbon energy, as well as steelmakers’ willingness to invest significant capital to
replace existing infrastructure.
The 4 potential technologies we are focusing on are outlined in the figure below.
We are exploring opportunities to beneficiate10 our Shaft Furnace, Fluidised Bed, and BioIron all require
ores, which would remove impurities before ironmaking. Electric Smelting Furnace (ESF) technology to
We’re also advancing work to pelletise our ores, to transform low- and medium-grade ore into high-purity
improve their suitability to proven Shaft Furnace iron. The additional processing step melts the DRI using
technology. electricity and delivers similar efficient separation of
the iron and mineral impurities to the Blast Furnace.
Rio Tinto’s proprietary BioIron™ technology provides Iron produced by this process is most suitable for the
an alternative ironmaking process that does not require BOF steelmaking process, but can also be fed to an
natural gas or hydrogen. Instead, the technology uses EAF, providing flexibility for steelmakers.
raw biomass and microwave energy to convert Pilbara
iron ore into metallic iron11. We are progressing our collaboration with BlueScope
and BHP to build an ESF pilot facility in Australia, and
with Baowu to build an ESF pilot facility in China.
10. Beneficiation is the process of upgrading ores physical and chemical properties through crushing, grinding and separation techniques to concentrate
valuable minerals and remove impurities
11. Rio Tinto is aware of the complexities around the use of biomass supply and is working to ensure only sustainable sources of biomass are used in
conjunction with this technology. See page 9 for further discussion
Finding better ways | Decarbonising the steel value chain 7
Lastly, Electrolysis uses renewable electricity and
chemical processes to produce iron. Different
variants are being developed – some operating
at low temperature (<100°C) and others at high
temperature (>1600°C). The technology is expected to
be compatible with a wide range of ore types. While
it is still in its early stages, we continue to monitor
developments in this space.
As part of our commitment to working with partners
to unlock low-carbon steelmaking pathways for low-
and medium-grade iron ores, we have set 3 near-term
targets:
Commission the BioIron™ Pilot Plant
1 by 2026
Commission a DRI (Shaft Furnace) + ESF
2 pilot plant by 2026 in partnership with
a steelmaker
Finalise study on a beneficiation pilot plant
3 in the Pilbara by 2026
Finding better ways | Decarbonising the steel value chain 8
Technology spotlight: Spotlight: NeoSmelt – BlueScope, BHP
BioIron Pilot Plant and Rio Tinto ESF collaboration
BioIron™ is a proprietary Rio Tinto technology In February 2024, we entered a framework
that has been developed over a decade of agreement with BlueScope and BHP to jointly
extensive research. The process uses raw investigate the development of a DRI-ESF pilot
biomass and microwave energy, instead of coal, plant in Australia. The project, called NeoSmelt,
to convert Pilbara iron ores into metallic iron, aims to develop the ESF, which is a critical
and has potential to reduce carbon emissions technology for the economic production of
by up to 95% compared to the BF-BOF if low-carbon steel using low- to medium-grade
combined with renewable energy and fast- Pilbara iron ores.
growing biomass.
In December 2024, we announced that the
BioIron uses biomass from agricultural by- Kwinana Industrial Area south of Perth, Western
products (eg wheat straw and barley straw) Australia, has been selected as the location
or purpose-grown energy crops. The biomass for a pilot facility as part of a pre-feasibility
is blended with iron ore and heated through study. The pilot plant would produce 30,000
combustion of biomass and microwaves. The to 40,000 tonnes of molten iron per year. It will
microwaves are powered by renewable energy initially use natural gas to reduce iron ore to DRI,
and only require a third of the electricity but once operational, the project aims to use
compared to green hydrogen-based ironmaking. lower-carbon emissions hydrogen to reduce
It also only consumes a third to a quarter of iron ore. Reductions of up to 80%12 in carbon
raw biomass compared to other biomass char- emissions are potentially achievable, compared
based processes. to a typical BF-BOF.
In 2022, a small-scale pilot plant project NeoSmelt leverages BHP and Rio Tinto's deep
successfully proved BioIron as a low-carbon knowledge of Pilbara iron ores with BlueScope's
iron making process for Pilbara ores. We are unique operating experience in ESF technology.
now investing US$143 million to develop a 1 Woodside Energy will also join the consortium
tonne per hour pilot plant in Western Australia as an equal equity participant and energy
that will further assess the effectiveness of supplier, subject to finalising commercial
BioIron. Commissioning is planned for 2026, arrangements.
representing the first time BioIron will be tested
at a semi-industrial scale. The challenge of decarbonisation won’t be
solved alone. NeoSmelt is a great example of
We continue to explore options for sustainably collaboration across the value chain to tackle
sourced biomass – ideally from nearby decarbonisation of the steel industry.
agricultural operations or from energy crops.
Announcement of NeoSmelt pilot plant location, December 2024
Raw materials for BioIronTM process: biomass, iron ores and fluxes
12. Assumes utilisation of renewable energy to power the DRI-ESF facility and zero emissions hydrogen in the DRI plant. The remaining CO2 emissions are from
carbon required in the process of making liquid iron suitable for the basic oxygen steelmaking process
Finding better ways | Decarbonising the steel value chain 9
Accelerating steel industry decarbonisation:
The role of government
While business has a vital role in managing Policies should underpin and support research and
the risks and uncertainties of climate development of new and novel processing technologies
change, governments can support these which decarbonise the steel value chain, from iron
efforts by providing enabling frameworks, ore to steelmaking, ensuring a prosperous future for
including policies and programs, that Australian resources, both here in Australia and as
increase momentum towards shared net- inputs and exports to the global steel industry.
zero goals. Decarbonisation of the steel
sector will not happen in isolation; nations Implement effective carbon prices
will need to work together. A range of Higher carbon prices are required to support the
different policies are needed to support decarbonisation of hard-to-abate sectors, including
research and development, first of a kind steelmaking. A market-based price on carbon is the
projects and larger scale deployment most effective way to incentivise the private sector
and commercialisation of low-carbon to make low-carbon investments and drive down
steelmaking. emissions. Higher carbon prices and other forms of
support are necessary to address emissions from hard-
Investment in research and development to-abate sectors.
A range of measures are necessary to support early
movers to innovate and deploy low-carbon technology Effective climate policy should incentivise the private
in hard-to-abate sectors. Incentives, investments from, sector to invest in low-carbon technology without
and collaborations with government and research undermining the competitiveness of trade-exposed
institutions are key to supporting industrial transitions industries and shifting production, jobs and supply
and maintaining business competitiveness. chains to countries with lower emissions standards
Transformative, leading-edge research and (carbon leakage). Where there is significant regional
development is complex, and trials of low emissions variation in carbon prices, carbon border adjustment
technology are expensive. Government policies, mechanisms (CBAM), or alternative policies, may be
including tax credits and incentives, to meet this required to limit leakage, provided they are pragmatic,
challenge are key. Government systems and regulations, effective and equitable to minimise carbon leakage.
including application approval periods, need to be However, carbon prices on their own are unlikely to be
streamlined and efficient, nimble enough to support the sufficient to drive large-scale widespread deployment
quantum of investment in research and development of low-carbon steelmaking.
commensurate with the challenge and pace at which
solutions are required.
Policy to support research and development
Carbon pricing, on its own, might not be sufficient to
Policies to support expanding industries transform the metals sector. Other policy tools are
or developing new industries, including necessary to tackle emissions and simultaneously
low-carbon steel, that harness competitive achieve objectives related to industrial policy. These
energy advantages can include:
The policy framework in respect of developing new
low-carbon metals products and industries, including – Grant funding, tax incentives and investment
low-carbon ironmaking and steelmaking, outside of incentives to support research and development,
established markets needs to reflect the early-stage innovation and first-of-a-kind projects
nature of these domestic industries and the significant – Product standards and procurement obligations
capital intensity gaps between domestic production (such as minimum and rising requirements for
and established offshore processing. low or zero carbon metal) that drive deployment
of pre-commercial technology. Governments,
Policies for these new low-carbon metals industries government-funded businesses, and industry
should focus in the short term on creating the can continue to support the decarbonisation of
conditions required to encourage the research and steel by using their significant procurement and
development activity that not only builds skills and spending power to encourage suppliers to fast-
knowledge but may contribute to reducing this track investment into the development of low-
cost gap. carbon steel.
Finding better ways | Decarbonising the steel value chain 10
Finding better ways | Decarbonising the steel value chain 11