The world’s two biggest miners are teaming up in a bid to develop Australia’s first electric-smelting furnace, in what could prove an important step toward slashing emissions in the steel-making process.

BHP and Rio Tinto, alongside BlueScope Steel, will share data and research on the nascent technology that would usually be kept in-house. A pre-feasibility study is being launched to assess a location for a pilot facility, which could be commissioned as early as 2027, the companies said in a joint statement.

The collaboration was announced Friday at a press conference held at BlueScope’s Port Kembla steel mill south of Sydney.

It aims to solve two major issues for BHP and Rio — commercialising their lower-grade iron ore from Western Australia’s Pilbara region, which has contaminants such as silica; and capitalising on growing demand for “green” metals as countries look to meet emissions reduction targets.

“The carbon intensity of iron and steelmaking requires profound change to meet the needs of our planet and our climate objectives,” Rio Tinto iron ore chief executive officer Simon Trott said.

“We must find better ways to enable these materials to be made more sustainably through leveraging technology.”

The venture aims to replace the emissions-intensive coking coal usually crucial in the steelmaking process, using renewable power during the direct reduced iron process. If the deployment is successful, it could pave a way for use in steel mills globally, including those in China.

Rio, BHP and Fortescue Metals Group produce almost two-thirds of the world’s seaborne iron ore from WA. Typical iron ore from the region has a grade of between 56 per cent and 62 per cent, making it largely unsuitable for producing direct reduced iron — a material produced by deploying natural gas to remove oxygen from premium ores.

Friday’s announcement, which didn’t disclose financial details on the pact, is a boost to Australia’s bid to become a major player in greener steel-making.