The Australian Renewable Energy Agency (ARENA) committed US$19.8 million to support NeoSmelt, a major initiative to demonstrate that iron ore from Western Australia’s Pilbara region can be used to produce low-carbon steel. Launched in early 2024 by mining giants BHP and Rio Tinto, NeoSmelt has since expanded to include BlueScope, Woodside, and Japan’s Mitsui.

The project will construct a pilot electric smelting furnace (ESF) plant in Kwinana, south of Perth, to test the use of Pilbara iron ore in a decarbonized steelmaking process. This follows a US$75 million contribution from the Western Australian Government last year.

NeoSmelt will initiate a front-end engineering design (FEED) study, testing and refining the production of lower-carbon iron by utilizing direct reduced iron (DRI), which is subsequently processed in an electric smelting furnace (ESF). This approach could reduce CO₂ emissions by up to 80% compared to conventional blast furnaces. The FEED results will support a final investment decision expected in 2026.