Deals - Asia

Rio signs deal with China partners to cut carbon in steelmaking

MELBOURNE (Reuters) - The world's top iron ore miner Rio Tinto Ltd RIO.AXRIO.L has signed a preliminary deal with two Chinese partners to develop new ways to cut carbon emissions along the steelmaking supply chain, it said in a statement on Wednesday.

The collaboration between Rio Tinto and China’s largest steel producer, China Baowu Steel Group, and Tsinghua University aims to address the steel industry’s carbon footprint and improve its environmental performance, Rio’s chief executive told a steel conference on Wednesday in Qingdao, China, according to the statement.

“The materials we produce have an important role to play in the transition to a low carbon future and we are committed to partnering with our customers and others to find the most sustainable ways to produce, process and market them,” CEO Jean-Sebastien Jacques told the conference.

The working group formed under the deal, signed on Wednesday, will establish a research and development plan that will cover technologies, processes, equipment, logistics and industry coordination, according to the statement from Rio.

Global miners are coming under increasing pressure to account not only for their own emissions, but also for those of their customers. This is especially so for producers of carbon-intensive raw materials like metallurgical coal, which is used in the steelmaking process.

BHP Chief Executive Officer Andrew Mackenzie said in July that the world’s biggest miner would invest $400 million over five years to reduce emissions, as it became the first miner to pledge to tackle pollution caused when customers use its products.

China Baowu Chairman Chen Derong said in the statement: “China Baowu looks forward to exploring low-carbon metallurgical innovation with Rio Tinto and Tsinghua University, and building a low-carbon industrial value chain.”

The steel production chain accounts for between 7% and 9% of the world’s carbon emissions, according to World Steel Association estimates based on 2017 data.

Reporting by Melanie Burton; Editing by Tom Hogue