Rio Tinto (ASX, LON, NYSE: RIO) and POSCO (NYSE: PKX), South Korea’s largest steel producer, have inked a memorandum of understanding to jointly explore, develop and demonstrate technologies to speed-up transitioning to a low-carbon emission steel sector.
The partnership will explore a range of technologies for decarbonization across the value chain from iron ore mining to steelmaking. The deal includes integrating Rio Tinto’s iron ore processing technology and POSCO’s steelmaking technology.
“Tackling climate change is a critical item in achieving sustainable development for a better future,” POSCO’s head of steel business unit, Hag-Dong Kim, said in the statement.
“The agreement also complements Rio Tinto‘s partnerships with other customers as the industry focusses on developing technologies that support the transition to a low-carbon economy,” added chief commercial officer Alf Barrios.
The news comes on the heels of a landmark decision by the federal court of Australia, ordering the government to consider risks carbon dioxide emissions pose to young people when approving new coal mines or expansions to existing ones.
Rio announced in February it reversing an earlier stance on Scope 3 — those generated by customers through the use of its products — by owning its role in how third parties use the commodities it mines.
It has also set ambitious emissions targets to reduce its carbon intensity by a further 30% and absolute emissions by a further 15% by 2030, with the ultimate goal was to have “carbon neutral” by 2050.
The company is the world’s second biggest iron ore miner, and the commodity is responsible for around 90% of its profits. Given its huge exposure to the steel industry, one of the world’s heaviest polluters, the company has come under increasing pressure to help making steelmaking a more environmentally-friendly activity.
The process of producing steel involves adding coking coal to iron ore to make the alloy, and is responsible for up to 9% of global greenhouse emissions.
The company is investing $10 million in low-carbon steelmaking projects over the next two years, as part of its partnership with China Baowu Steel Group, the nation’s largest steel producer.
POSCO also aims to become carbon-neutral by 2050.