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BHP has launched a five-year partnership with steel producer China Baowu to focus on reducing the greenhouse gas emissions in the global steel industry.

The two companies have signed a memorandum of understanding with the intention to invest up to $US35 million ($48.1 million) into developing low carbon technologies and pathways to reduce the intensity of emissions in integrated steelmaking.

Together, BHP and China Baowu will share technical knowledge and deploy carbon, capture, utilisation and storage in the steel sector and investigate this at one of China Baowu’s production bases.

BHP’s investment will be funded under the $US400 million climate investment program the mining giant set up last year to prioritise projects, partnerships, research and development and joint ventures to reduce emissions, offsets and support technology to create change.

Chief executive officer Mike Henry said together the companies will collaborate on solutions to use low carbon fuel sources like hydrogen injection in blast furnaces, as well as exploring other low-emission options to support the transition of the steel sector into a low-carbon industry.

“This memorandum of understanding strengthens our longstanding relationship with China Baowu and reflects our joint determination and commitment to help reduce emissions in line with the Paris Agreement goals,” Henry said.

“BHP will invest in supporting the development of low emissions technologies, promote product stewardship and partner with others to enhance the global policy and market response to climate change.

“Our investments are focussed on actions that can create real change in emissions.”

Together, BHP and China Baowu will work to create a China Baowu-BHP low carbon metallurgy knowledge sharing centre to share green development knowledge with international industry stakeholders.

Last October, China Baowu announced it was establishing a low carbon metallurgy innovation centre and it has plans to develop a global low carbon metallurgy innovation alliance.

Chairman Chen Derong said the agreement with BHP will further enhance and broaden its existing strategic partnerships between the companies and establish a model of joint industrial efforts to promote transitions to a low-carbon world.

“Low carbon transition and green development represent a major disruption to the traditional steelmaking value chain,” Derong said.

“As a leading company in the sector, China Baowu will take an active role in implementing low carbon technologies, working together with upstream and downstream partners.

“The global steel industry needs an open platform to jointly explore low carbon technology and roadmaps as well as showcase to the world the effort to reshape the steelmaking value chain.”