Dec 17 (Reuters) - Australia's BHP BHP.AX and Rio Tinto RIO.AX will jointly develop a pilot plant to produce low-carbon iron from Pilbara ores as they take steps to speed up decarbonisation in the steel industry, the companies said in a joint statement on Tuesday.

The facility will use renewable power and direct reduced iron $(DRI)$ technology in an electric smelting furnace (ESF) to produce molten iron, with a potential annual output of 30,000 to 40,000 tonnes.

The facility will be developed with BlueScope Steel BSL.AX in Western Australia's Kwinana industrial hub.

If successful, the technology could enable near-zero greenhouse gas emission-intensity operations for steelmakers using Australian iron ore to meet global demand, the firms said.

The production of steel, a key material for infrastructure and the net-zero energy transition, currently contributes around 8% of global carbon emissions.

The pilot "green iron" project between Rio, BHP and BlueScope Steel was announced in February to help cut emissions for steelmakers around the globe who rely on Australian iron ore.

The project has now finalised the location and details, including the forecasted output, after assessing several locations in Australia.

Woodside Energy WDS.AX is also set to join as an equal equity participant and energy supplier to the collaboration, dubbed 'NeoSmelt', pending final commercial arrangements.

The project plans to enter feasibility studies in the second quarter of 2025, followed by a final investment decision in 2026, and aims to begin operations in 2028, the companies said.

(Reporting by Roushni Nair in Bengaluru; Editing by Abinaya Vijayaraghavan)

((Roushni.Nair@thomsonreuters.com;))