BHP and global engineering firm Hatch signed an agreement to design an electric smelting furnace (ESF) pilot plant in Australia. The facility will aim to demonstrate a pathway to lower CO₂ intensity in steel production using iron ore from BHP’s Pilbara mines. The small-scale demonstration plant would be used to collaborate with steel producers and technology providers with the aim of accelerating scale-up of ESF plant designs. The ESF allows for greater flexibility in input raw materials, addressing a key barrier to wider adoption of other lower-CO₂ emissions production routes, such as use of electric-arc furnaces (EAFs), which are designed for scrap steel and high-grade DRI only. The ESF also has the potential to be integrated into a steel plant’s existing downstream production units.

The pilot facility would be intended to test and optimize production of iron from the ESF, which is capable of producing steel from iron ore using renewable electricity and hydrogen replacing coking coal when combined with a direct reduced iron (DRI) step. According to BHP, estimates show that reductions of more than 80% in CO₂ emission intensity are potentially achievable processing Pilbara iron ores through a DRI-ESF pathway compared with the current industry average for the conventional blast-furnace steel route.

BHP and Hatch will assess several locations in Australia for the proposed facility based on supporting infrastructure, technology skills and the availability of local partnerships to build and operate the facility.