As part of a memorandum of understanding signed in Shanghai by Rio Tinto chief commercial officer Alf Barrios and China Baowu vice-president Hou Angui, China Baowu and Rio Tinto will jointly advance specific decarbonisation projects both in Australia and in China.

Those projects include development of a pilot-scale electric smelter at one of Baowu's steel mills in China. The planned smelter will enable low-carbon steel making by utilising direct reduced iron, which is produced from a mix of low and medium-grade ores.

Another project includes optimising pelletisation technology for Australian ores to develop a feedstock for low-carbon shaft furnace-based direct reduction.

In China, another project involves development of Baowu's Hycrof technology, which can mitigate carbon dioxide emissions from the blast furnace process.

Trials of the technology at the Bayi steel mill in 2022 lowered emissions 21%.

Under the terms of the MoU Rio Tinto and Baowu will also seek out opportunities to produce low-carbon iron in Western Australia.

Barrios said the MoU aimed to address one of the biggest challenges faced by the industry - developing a low-carbon pathway for low-to-medium grade iron ores, which accounted for the vast majority of global iron ore supply.

"China's commitment to curbing emissions and promoting high-quality green development is strongly aligned with our own position where climate change and the low-carbon transition are at the heart of our strategy," he said.

Rio Tinto iron ore chief executive officer Simon Trott said Rio Tinto's relationship with Baowu stretched back more than 40 years.

"We look forward to progressing this study into the potential of low-carbon iron making in WA as we work to ensure a positive future for Pilbara ores in a green steel world," he said.

Hou said China Baowu was committed to working with Rio Tinto to jointly study and provide low-carbon and green comprehensive solutions for the steel value chain.