(Bloomberg) — The world’s top miners BHP Group and Rio Tinto Group will join BlueScope Steel Ltd. to build Australia’s largest electric iron-making furnace, a move they say may speed the decarbonization of steel production.

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The pilot project at Kwinana near Perth will produce 30,000 to 40,000 tons of molten iron a year and will initially use natural gas and hydrogen supplied by new consortium partner Woodside Energy Group Ltd. to reduce iron ore to direct reduced iron (DRI), according to a joint statement from the companies.

Once operational, the project aims to use hydrogen to generate the power. The technology could reduce emissions by up to 80% if renewables and green hydrogen are used, the companies said in the statement.

The project may help show iron ore sourced from the Pilbara region of Australia can be smeltered using an electric furnace replacing traditional blast furnaces which are powered by coal, the companies said. More than 70% of steel is currently produced using coal.

The venture was first announced in February without a location for the plant. Studies into the project will begin next year with a view to commission the facility in 2028. No financial details were disclosed.

BHP, Rio and Fortescue Metals Group Ltd. supply almost 60% of the world’s seaborne iron ore from the Pilbara. Still, the lower grades from the region pose a challenge in producing DRI — a material made by removing oxygen from ore.

The steel industry was responsible for around 10.5% of global carbon dioxide emissions in 2021, according to BloombergNEF. If the deployment is successful, it could pave the way for use in steel mills globally, including those in China.

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