Posco and the Hancock iron ore group are investigating the viability of a green hydrogen-fueled Hot Briquetted Iron (HBI) facility in Australia to provide iron for Posco’s Korean steel facilities.

The two firms inked heads of agreement (HOA) to research the building of iron ore mines, hydrogen infrastructure, and a low-carbon HBI manufacturing facility that uses hydrogen as a reducing agent to minimize carbon dioxide emissions. Renewable energy sources would be used to generate hydrogen.

Hot Briquetted Iron is a premium kind of direct reduction iron that is compact and easy to transport, adding value to Australian ore before shipment to Asia.

Posco signed an MoU with Hancock in July of last year, completed a preliminary feasibility assessment on HBI production, and aims to decide on investment by the end of this year after performing a full evaluation through this HoA.

“This deal is the first business Posco is marketing for the manufacture of low carbon steel since Posco was founded as a steel company under the holding company structure,” said Posco’s head of buying and investment, Joo-tae Lee.

“With Hancock, which has resource development capabilities, we will explore the manufacture of low carbon steel material and lead a new steel age.”

Posco Group and Hancock invested in the Roy Hill mine in 2010 and have been successfully managing it since.

Senex Energy, an Australian firm that produces and develops natural gas, was recently bought by Posco International and Hancock Energy.

The two firms intend to form a strategic alliance to share new development ambitions in the domains of low-carbon materials, energy, and secondary battery materials, such as nickel and lithium.

BHP, then known as BHP-Billiton, spent $2.4 billion developing a hot briquetted iron facility at Port Hedland, but it was shut down in 2004 after a gas explosion killed one worker and severely burned two others.

The plant’s value was written off due to limited output, low pricing, and costly renovations, according to the firm.