Introduction

Powering Global Industry: Secure Your Low-Carbon Steel with BHP and Baowu’s Partnership

The steel industry, a backbone of global infrastructure, is under pressure to decarbonize as it accounts for roughly 8% of global energy-related CO₂ emissions. In 2025, BHP (ASX: BHP), one of the world’s largest mining companies, partnered with China Baowu Steel Group, the world’s leading steelmaker, through a memorandum of understanding (MoU) to invest up to US$35 million in joint low-carbon steelmaking technologies. This partnership builds on both companies’ climate agendas and aims to accelerate global progress toward net-zero steel.

BHP and China Baowu’s Low Carbon Steelmaking Partnership

Baowu’s partnership explores solutions in different sectors

Announced in 2025, this five-year partnership focuses on low-carbon pathways in integrated steelmaking. Funded by BHP’s US$400 million Climate Investment Program, the MoU commits to:

• • Develop Low-Carbon Technologies: Deploy carbon capture, utilization, and storage (CCUS) at Baowu’s steel plants.
  • Explore Hydrogen Solutions: Test hydrogen injection in blast furnaces as an alternative to coal.
  • Knowledge Sharing Center: Launch the BHP–Baowu Low Carbon Metallurgy Knowledge Sharing Center to distribute best practices industry-wide.
    This MoU builds on existing collaborations and solidifies a joint commitment to supporting China’s green development goals and the Paris Agreement.

This partnership positions both companies as pioneers in decarbonizing the steel industry, aligning with global climate goals.

A red-hot steel ring is lifted from a high-temperature furnace at a steel manufacturing facility.

• • Key Points:
    • Industry Focus: Decarbonizing integrated steelmaking, one of the hardest-to-abate sectors.
    • Investment: Up to US$35 million from BHP’s Climate Investment Program.
    • Scope: Focus on Scope 1–3 emissions reduction, CCUS deployment, and hydrogen metallurgy.
    • Impact: Aligns with China Baowu’s 2050 carbon neutrality target and BHP’s broader decarbonization strategy.

Background on BHP and China Baowu Steel

BHP

BHP is one of the world’s largest diversified resource companies, headquartered in Australia. It produces iron ore, copper, coal, and nickel—materials critical to industrial development and energy transition. Through its Climate Investment Program, BHP is driving low-carbon innovation across its operations and value chains.

Baowu

China Baowu Steel Group, the world’s largest steelmaker, produced 132 million metric tons of steel in 2022 and is targeting carbon neutrality by 2050, as outlined in its 2021 low-carbon metallurgy roadmap. As steel production accounts for about 17% of China’s carbon emissions, Baowu’s decarbonization efforts are critical. Baowu transforms them into steel, addressing emissions in a high-impact sector with ambitious sustainability goals.

Baowu vs BHP: Synergy in Action

BHP’s strength in mining raw materials and emissions reduction R&D aligns perfectly with Baowu’s scale, industrial reach, and commitment to innovation. Together, the two giants are driving systemic change in one of the world’s most emissions-intensive industries.

Key Points:

• • Steel’s Emissions Footprint: Steelmaking accounts for 8% of global CO₂ emissions.
  • BHP’s Strategy: Invest in CCUS, hydrogen trials, and value chain decarbonization.
  • Baowu’s Leadership: Global low-carbon innovation center + green production roadmap.

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The BHP and China Baowu Low Carbon Steelmaking Partnership

China Baowu is leading the way in producing high-quality, low-carbon steel

Steelmaking operations in China take center stage in global decarbonization strategies
As outlined in their 2025 MoU, BHP and China Baowu will jointly explore and implement a range of technologies to reduce carbon intensity in steelmaking. These include:

• • CCUS trials at Baowu plants to capture emissions from blast furnaces and reuse them in industrial processes.
  • Hydrogen injection as a partial replacement for coal, reducing the carbon load of traditional steel production.
  • Development of a China-based Low Carbon Metallurgy Knowledge Sharing Center, designed to disseminate best practices across the global steel sector. These initiatives build on BHP’s broader portfolio of clean energy and logistics investments, including its LNG-fueled shipping fleet and involvement in clean ammonia fuel trials under the West Australia–East Asia Green Corridor Consortium.

Why Low-Carbon Steel Matters

Modern infrastructure powered by cleaner steel—BHP and Baowu are creating the foundation for net-zero construction and mobility

The role of steel in the modern world cannot be overstated. It is essential to construction, automotive manufacturing, renewable energy infrastructure, and household goods. Yet, the traditional method of producing steel emits large quantities of carbon dioxide due to its reliance on coal. Low-carbon steel, produced using hydrogen and CCUS technologies, offers a critical solution. As regulatory and investor pressure grows, the demand for green steel is expected to skyrocket. Companies that act early to decarbonize their supply chains will enjoy reputational, compliance, and cost advantages in the coming decades.

Key Projects and Technologies

Both companies have been heavily investing in large projects and technologies that could make a difference in the future of metallurgy.

Innovation in real-time: Pilots and trials to green global steel supply
Some of the headline technologies involved in the BHP–Baowu partnership include:

• • Carbon Capture Utilization and Storage (CCUS): Captures CO2 emissions from steel production for reuse or secure storage.
  • Hydrogen Metallurgy: Replaces coking coal with hydrogen gas to reduce iron ore, emitting water instead of CO2.
  • Digital Optimization: AI and data tools to improve energy efficiency and production accuracy in steelmaking.
  • Electrification: Integrating electric arc furnaces and renewable energy into the steelmaking process. Each of these technologies is under active trial and development at Baowu’s production bases and through BHP-supported R&D projects in China and Australia.

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Benefits for Procurement Teams

If you are interested CAMAL’s services can not only save you a lot of time but also create a sustainable sourcing process.

Procurement teams can leverage BHP and Baowu’s collaboration for sustainable sourcing and compliance with low-carbon goals
With governments and major buyers now prioritizing ESG compliance and carbon footprint disclosures, procurement teams must future-proof their sourcing strategies. The BHP–Baowu partnership provides a stable and scalable channel for sourcing low-carbon steel. Procurement professionals can:

• • Access certified low-carbon steel for public infrastructure and private sector builds.
  • Meet Scope 3 emissions targets by working with upstream partners committed to decarbonization.
  • Reduce regulatory risks by aligning with market leaders in environmental compliance.
  • Strengthen brand positioning by using sustainable, traceable materials.

Challenge and Opportunities in Low-Carbon Steelmaking

Scaling low carbon steel is a process that is high risk, yet high reward.

Scaling low-carbon steel is tough—but the potential rewards are immense
The path to green steel is complex. Challenges include the high capital cost of retrofitting blast furnaces, uncertainty around green hydrogen availability, and evolving emissions regulation frameworks. However, the rewards are equally significant. First movers in the green steel market can lock in long-term customers, benefit from green finance, and shape industry standards. With a $1.4 trillion steel market in play, and rising demand from EVs, wind turbines, and green buildings, the opportunity to lead is now.

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Challenges:

• • Asset Lock-In: Existing blast furnaces have long life cycles, slowing transitions.
  • Upfront Costs: Hydrogen and CCUS infrastructure require large investments.
  • Technology Readiness: Many low-carbon processes remain in pilot phases.

Opportunities:

• • First-Mover Advantage: Stake claim in a $1.4 trillion green steel market.
  • Policy Support: Backed by national climate goals and international climate finance.
  • Supply Chain Security: BHP and Baowu’s existing logistics minimize transition risk.

Both challenges and opportunities can both be good for growth especially with CAMAL’s help

What is Low-Carbon Steel and Why Does It Matters?

Low carbon steel is one of the latest innovative technologies that can make a key difference in the global fight against climate change.

BHP, one of the world’s largest diversified mining firms, has partnered with China Baowu Steel Group—the world’s top steel producer—to accelerate the development of low-carbon steelmaking. Unlike traditional steel production, which heavily depends on coal and generates high emissions, low-carbon steel is produced using innovative technologies designed to significantly reduce greenhouse gas output. This 2025 memorandum of understanding (MoU) marks a milestone in aligning upstream raw material suppliers and downstream steelmakers in pursuit of a net-zero future. Key technologies explored under this partnership include:

Hydrogen Injection in Blast Furnaces – A cleaner alternative to pulverized coal injection, enabling lower-carbon reactions within existing furnace infrastructure.
Carbon Capture, Utilization, and Storage (CCUS) – Captures CO₂ emissions from Baowu’s production processes and repurposes or stores them safely to reduce environmental impact.
Digital Efficiency Tools – Advanced data analytics to optimize furnace operations and reduce energy waste.
Knowledge-Sharing Platforms – Creation of a Low Carbon Metallurgy Knowledge Sharing Center to spread best practices across the global steel industry.

This low-carbon approach doesn’t just focus on environmental impact—it also serves to future-proof both companies in the face of growing regulatory, investor, and market pressures to decarbonize. The initiative is funded under BHP’s US$400 million Climate Investment Program and directly supports Scope 1, 2, and 3 emissions reductions.

Why is this important?

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As the steel industry alone accounts for around 8% of global energy-related CO₂ emissions, its decarbonization is non-negotiable for meeting international climate goals. For China—the world’s largest steel producer and consumer—the need to green its steel value chain is both an economic and environmental imperative. The BHP–Baowu partnership:

• • Tackles hard-to-abate emissions at the core of industrial manufacturing.
  • Demonstrates how mining companies can support downstream sustainability through joint innovation.
  • Supports China Baowu’s 2050 carbon neutrality pledge and aligns with BHP’s broader ESG commitments.
  • Offers a blueprint for future supply chain cooperation in decarbonizing global heavy industries.

As pressure mounts on companies to align with the Paris Agreement and meet stakeholder expectations, low-carbon steel isn’t just good for the planet—it’s smart business.

Why This Matters for Australian Mining Procurement

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Australia’s mining sector stands at a crossroads. As BHP—the country’s largest mining company—joins forces with China Baowu, the world’s largest steelmaker, a new model for responsible material sourcing is emerging. This landmark partnership places Australian mining at the center of a global push toward industrial decarbonization. With BHP committing up to US$35 million and leveraging its Climate Investment Program to fund low-carbon steel technologies, the collaboration with Baowu signals more than a bilateral agreement—it sets a precedent for the future of Australian resource exports.

Australia currently supplies over 60% of China’s imported iron ore, much of which feeds into traditional, emissions-intensive steelmaking. As China accelerates its green transformation, partnerships like BHP–Baowu are vital to ensuring that Australian iron ore remains relevant, ESG-aligned, and technologically integrated.

Why This Partnership Matters for Procurement

For procurement leaders, this collaboration shifts the conversation away from simple cost-per-ton pricing toward more complex considerations like:

• • Carbon intensity of materials
    
  • Integration with low-emissions technologies
    
  • Supply chain resilience and transparency
    
  • Partnerships that deliver long-term innovation
    

By participating in Baowu’s green steel transformation, BHP ensures that its materials—and Australia’s iron ore more broadly—remain the default choice for sustainability-driven buyers across Asia, Europe, and beyond.

Why China matters more now

We are bold in our innovation to drive sustainable mining machinery for the future of mining

China is more than just the largest steel producer—it’s also a pace-setter in green metallurgy. Through Baowu’s leadership, China is advancing hydrogen injection in blast furnaces, piloting carbon capture at scale, and building innovation alliances that influence global supply chain norms.

The BHP–Baowu partnership plugs Australian mining directly into these developments, allowing miners to:

• • Align with China’s 2050 carbon neutrality roadmap.
  • Attract ESG-focused investment by supplying compliant, future-ready materials.
  • Capitalize on China’s surge in green infrastructure, EVs, and clean energy sectors—all of which require sustainable steel.

By positioning itself at the forefront of Baowu’s green transition, BHP is not only protecting Australia’s $138 billion iron ore export industry—it’s reimagining it for a net-zero global economy.

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FAQs

The partnership between BHP (ASX: BHP) and China Baowu Steel Group marks a significant milestone for decarbonizing the steel industry through collaborative innovation. With BHP investing up to US$35 million under its Climate Investment Program, this initiative offers strategic opportunities for procurement professionals to source low-carbon steel. Below are seven frequently asked questions about the BHP–Baowu partnership, highlighting its implications for procurement, emissions reduction, and the future of sustainable sourcing in 2025.

1. What is the BHP and China Baowu partnership about?

The BHP–China Baowu partnership centers on developing low-carbon technologies to reduce greenhouse gas emissions in integrated steelmaking. Signed in 2025, the five-year memorandum of understanding (MoU) includes joint trials of carbon capture and hydrogen injection at Baowu’s facilities, supported by BHP’s Climate Investment Program.

• • Objective: Drive emission intensity reduction across steel supply chains.
  • Key focus: Pilot CCUS and hydrogen-based blast furnace modifications at Baowu sites.
  • Technology: Carbon capture and hydrogen fuel injection into blast furnaces.
  • Source: BHP and China Baowu press releases, March–May 2025.
  • Procurement benefit: Opens access to lower-carbon steel produced through advanced technologies.

2. How does the BHP–Baowu partnership benefit procurement teams?

This partnership gives procurement teams access to climate-aligned steel products while reinforcing the long-term reliability of supply chains through shared investment in decarbonization. It enables forward-thinking procurement planning that meets growing ESG demands.

• • Sustainable sourcing: Access low-emission steel for infrastructure and manufacturing.
  • Reliability: Combines BHP’s raw material strength with Baowu’s industrial scale.
  • ESG compliance: Supports goals tied to Paris Agreement and investor benchmarks
  • Source: BHP Sustainability Brief, 2025; China Baowu Innovation Centre updates.
  • Market edge: Helps companies future-proof supply chains under climate regulation.

3. What is low-carbon steel, and why is it important for procurement?

Low-carbon steel, unlike conventional variants, is produced using emissions-reducing methods such as carbon capture and hydrogen metallurgy. For procurement teams, it provides a critical solution to comply with evolving environmental standards and customer expectations.

• • Definition: Steel made via processes like CCUS and hydrogen injection, lowering CO₂ output.
  • Importance: Steel accounts for 8% of global emissions, demanding greener alternatives.
  • Procurement value: Supports sustainable projects and green building certifications.
  • Source: World Economic Forum and BHP Climate Program reports.
  • Application: Used in sectors like EVs, energy infrastructure, and green real estate.

4. How can procurement teams source low-carbon steel from the BHP–Baowu partnership?

High-quality steel products ready for global export from China

High-quality steel products ready for global export from China
Procurement teams can tap into the BHP–Baowu pipeline by engaging through Baowu’s steel mills and BHP’s logistics channels. Certified sourcing agents like CAMAL can assist in contract setup, regulatory compliance, and quality assurance.

• • Steps: Inquire with Baowu or BHP-aligned partners for green steel offtake agreements.
  • Production: Trials underway at Baowu sites with scaling potential over five years.
  • Sourcing agents: Ensure vetted suppliers and traceable emissions data.
  • Source: China Baowu Knowledge Sharing Center, BHP Stakeholder Report.
  • Certifications: Meet ISO 14064, China’s green manufacturing codes, or equivalent.

5. What are the risks of sourcing low-carbon steel from BHP and Baowu in 2025?

Baowu Steel’s production complex, a central player in China’s low-carbon steelmaking transition

While low-carbon steel delivers clear ESG benefits, risks such as cost volatility and tech maturity remain. However, BHP and Baowu’s partnership mitigates these through joint investment and pilot project scale.

• • Cost risk: CCUS and hydrogen methods are still capital-intensive, raising costs.
  • Supply chain risk: Pilot-phase logistics and new tech may slow early procurement.
  • Mitigation: Use long-term supplier relationships to offset startup risk.
  • Source: IEA 2024 SteelTech report and BHP Innovation Portfolio Summary.
  • Procurement strategy: Secure phased procurement contracts with flexible clauses.

6. How does the BHP–Baowu partnership impact iron ore and steel prices in 2025?

Steel coils organized for shipment at a large Chinese steel manufacturing facility.

Steel coils organized for shipment at a large Chinese steel manufacturing facility.
The partnership supports a long-term shift in steel pricing by increasing demand for certified low-carbon products. While green steel may carry a short-term premium, rising policy incentives could offset price hikes.

• • Price impact: Low-carbon steel may cost more per ton initially.
  • Market trends: ESG demand, not just raw material supply, now shapes pricing.
  • Forecast: Green steel premiums likely decline by 2030 as tech scales.
  • Source: Financial Times and BHP earnings briefings, 2025.
  • Procurement tip: Lock in pricing agreements now before demand spikes.

7. Why should procurement teams choose BHP and China Baowu for low-carbon steel supply?

BHP and Baowu represent a globally trusted supply partnership backed by innovation and deep experience. Their joint decarbonization roadmap provides access to leading-edge materials without compromising on quality or scale.

• • Leadership: BHP is a top iron ore exporter; Baowu is the global steel production leader.
  • Sustainability: BHP’s Climate Investment Program aligns with Baowu’s 2050 goals.
  • Reliability: Longstanding trade channels ensure dependable delivery.
  • Source: BHP–Baowu MOU (2025), World Economic Forum profiles.
  • Procurement advantage: Partner with two global giants leading steel’s green transition.

Conclusion: A Better Future for Low-Carbon Steelmaking

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The BHP and China Baowu Steel Group partnership is a bold step toward decarbonizing the steel industry through green iron production. By leveraging BHP’s resources with China Baowu’s steel making expertise, the collaboration addresses global climate challenges while meeting demand for sustainable building materials.

How CAMAL Can Help

CAMAL Group simplifies sourcing low-carbon steel for procurement teams:

• • Certified Suppliers: Connect with vetted BHP and Baowu partners.
  • Cost-Effective Solutions: Secure long-term contracts for stable pricing.
  • ESG Compliance: Ensure materials meet standards like the International Cyanide Management Code.
  • End-to-End Support: From supplier vetting to logistics and compliance checks.
  • Partner with CAMAL: to gain expert knowledge with certified equipment, use third-party inspections, and leverage sourcing agents to navigate regulatory and logistical complexities.

Why Choose CAMAL? Your Trusted Partner for Tailored, Cost-Effective Solutions

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