Rio Tinto share price gains lag BHP despite green steel deal

Two businesspeople in suits run, one chasing the other.Two businesspeople in suits run, one chasing the other.

The Rio Tinto Limited (ASX: RIO) share price is climbing today after the company announced a low-carbon deal last night.

At the time of writing, shares in the world’s second-largest miner are up 2.75% to $119.76.

However, its share price gains are being eclipsed by peer BHP Group Ltd (ASX: BHP). BHP is trading 3.11% higher at $47.74.

In contrast, the broader S&P/ASX 200 Resources (ASX: XJR) sector is also rebounding in lunchtime trade, up 2.5% to 6,158.9 points.

Rio Tinto collaborates on green steelmaking process

Investors are bidding up the Rio Tinto share price after digesting the company’s news regarding “ways to accelerate green steelmaking”.

According to its release, Rio Tinto signed a memorandum of understanding (MoU) with major German steel producer Salzgitter.

Under the framework, both companies will work together to study Rio Tinto’s iron ore products for use in Salzgitter’s SALCOS green steel project.

In addition, the partners will explore the potential for greenhouse gas emission certification across the steel value chain.

Rio Tinto produces iron ore pellets and concentrate from its Canadian operations, and iron ore lump and fines in Western Australia.

The SALCOS project — Salzgitter Low CO2 Steelmaking — is targeting virtually carbon-free steel production. This is expected to start step by step in 2025 using hydrogen direct reduction.

Commenting on the partnership, Rio Tinto chief commercial officer Alf Barrios said:

We welcome the chance to work with Salzgitter on ways to accelerate green steelmaking, in keeping with our commitment to reduce emissions across the steel value chain.

Salzgitter has one of the world’s most advanced green steelmaking projects. Rio Tinto is excited at the opportunity of supplying our product and combining our technical expertise with that of Salzgitter to help advance the SALCOS project.

Rio Tinto is aiming for a 15% reduction in emissions by 2025, and a 50% reduction by 2030.

By 2050, the mining giant hopes to reach net-zero emissions across its operations.

Rio Tinto share price snapshot

A boom in commodity prices has led the Rio Tinto share price to accelerate 20% in 2022.

In particular, iron ore prices have shot up 21% since the beginning of the year.

Based on today’s price, Rio Tinto commands a market capitalisation of roughly $43.26 billion.

The post Rio Tinto share price gains lag BHP despite green steel deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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