The world’s No. 2 producer of iron ore, Rio Tinto (ASX, LON:RIO), has inked a preliminary deal with two Chinese partners to develop new ways to cut carbon emissions along the steelmaking supply chain amid increasing pressure from stakeholders to make mining a more environmentally-friendly activity.
Rio said it will work with China’s largest steel producer, Baowu Steel Group, and Tsinghua University to address the steel industry’s carbon footprint and curb its “scope 3” emissions – those made by its customers.
Rio will work with China’s largest steel producer — Baowu Steel Group—, and Tsinghua University on curbing the steel industry carbon footprint as well as its own “scope 3” emissions – those made by customers.
“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,” chief executive Jean-Sébastien Jacques told a steel conference on Wednesday in Qingdao, China.
In March, the Anglo-Australian miner
rejected proposals to set scope 3 emissions targets from its customers, saying
they were primarily caused by its customers over which it had “very limited control”.
Rio Tinto’s change of hearts follows a pledge in July by its rival, BHP, to spend $400 million over five years to reduce greenhouse gas emissions from its operations and mined commodities.
It also follows Australia’s Prime
Minister’s challenge to China to do more to cut its emissions.
Asked if the move was a business decision or was made based on other considerations, Jacques said it was all about business. “It’s nothing more than that. We want to achieve the best supply chain for the steel industry. It’s not about ideology,” he said.
Highly polluting steel
The production of steel is one of
the largest sources of carbon emissions, responsible for between 7% and 9% of the
world’s carbon emissions, Rio said.
The traditional method of making
iron and steel by smelting raw materials at extremely high temperatures has not
changed much in more than 150 years. Large blast furnaces rely on metallurgical
coal to reduce iron ore into liquid metal, which is refined into steel.
The company noted the
partnership will also look at emissions from distribution, an area where emissions
can be quickly reduced by changing from ships using bunker fuel – heavy,
carbon-intensive oil – to natural gas.
Rio has reported that its scope 3 emissions, most of
them from steel making, totalled 536 million tonnes of carbon dioxide
equivalent gases last year compared to 28.6 million tonnes across scope 1 and
2.