Co-creating the future of low carbon steel

Last updated: 21 February 2024

Steel is one of the most vital materials for everyday life. It’s used in everything from skyscrapers to scalpels, and is a necessary material for renewable energy infrastructure.

But converting iron ore into steel uses a lot of fossil fuel energy – the process contributes around 8% of all global CO₂ emissions. We aim to achieve net zero emissions from our operations (Scope 1 and 2) by 2050, while also supporting many of our customers and suppliers to meet their emissions targets (our Scope 3).

That’s an ambitious target, and we can’t achieve it alone. So we’re working strategically with other organisations, who can share expertise from many different industries and disciplines, along with the capital and scale to jointly develop new technologies, projects and products.

We’ve been working with China Baowu Steel Group Corporation (China Baowu), the world’s largest steelmaker, for more than half a century. We delivered our first shipment of iron ore to China in 1973 – to the Shanghai No. 1 steel mill that is now part of China Baowu.

Today, China Baowu is our largest customer, a joint venture participant on multiple projects, and a steadfast climate change partner. Like any great partnership, our relationship has evolved with time, from a transactional business relationship to a unique, enduring, and self-reinforcing strategic partnership.

Creating joint ventures to develop new mines

In 2002, we worked with China Baowu to create the Bao-HI Ranges joint venture to produce the Eastern Range iron ore deposit in the Pilbara region of Australia. The mine commenced in 2004 and celebrated a significant milestone in 2020 with more than 200 million tonnes of iron ore shipped to mills in China. The agreement also included a feasibility study into the neighbouring Western Range project, which in 2022 led to the announcement of a new $2 billion joint venture to co-develop this asset as well. Construction at Western Range is currently on schedule, and production from the mine is expected to commence in 2025.

Our involvement with China Baowu further extends to their role as a major rail and port infrastructure co-development partner in our Simandou project, the world’s largest untapped high-grade iron ore deposit. With first production expected in 2025, the new mine will deliver a significant new source of high-grade iron ore that will strengthen our portfolio for the decarbonisation of the steel industry.

Coming full circle by supplying our operations

Beyond being a customer and development partner, Baowu supplies us with their steel end products that complete a circular value chain. They use our high-quality iron ore to produce specialised essential equipment for our rail transportation system used to service the same Pilbara mines the ore came from. After many years of joint efforts, Baowu subsidiary Masteel is now our main supplier of high performance, high reliability rail wagon wheels.

Pushing the industry forward through technology exchange

We’re constantly exchanging technical know-how with China Baowu to improve efficiency across the value chain. Back in 2006, China Baowu suggested we consider offering a standard blended product, instead of 5 different types of iron ores, to support customers with reducing inventory levels and blending process complexity. This led to the invention of our flagship Pilbara Blend products.

These technical developments have extended beyond our companies, benefiting other customers as well. Leveraging both parties’ technical and operational strengths, in 2018 we co-created an industry-first lump rescreening project. We aimed to address the long-time steelmaking challenge of significantly increasing the usage of lump in blast furnaces, while reducing overall cost and carbon emissions. Over the past 5 years, more than 20 major Chinese steel mill customers have adopted a similar approach, which has supported an increase in demand for our lump products.

In 2021, we worked with the Bank of China to pioneer the first Chinese Yuan (RMB) settlement using China Baowu’s blockchain transaction platform – reducing document exchange from 4 days to a few hours, improving document security and authenticity, and removing the need to use traditional paper document and courier services. This digital trade finance solution is now a common practice with our Chinese customers.

Hacking the climate change challenge

Aligned with our shared climate change goals, in 2019 we partnered with China Baowu and Tsinghua University to identify and develop new technical routines to reduce carbon emissions and improve environmental performance across the steel value chain. We advanced this partnership in 2020 with a $10 million investment in low-carbon steelmaking projects and research. Publicly sharing the outcomes, we jointly hold annual industry symposiums to promote the exploration of carbon emission reduction pathways.

This year we’ve further expanded our climate partnership to explore a range of new projects that will address one of the biggest challenges faced by the industry – developing a low-carbon pathway for low-to-medium grade iron ores. Together, we’ll share resources and expertise to progress specific decarbonisation projects that will pioneer the steel industry’s low-carbon transformation.