Calix and Rio Tinto execute Joint Development Agreement Zesty Green Iron Demonstration Plant
Calix Limited has executed a Joint Development Agreement (JDA) with Rio Tinto, one of the world’s leading iron ore producers, for over $35 million in cash and in-kind support for the demonstration of Calix’s Zero Emissions Steel Technology (Zesty™) in Kwinana, Western Australia, and to help enable the future commercialisation of the Zesty technology.
The JDA is a significant step towards the commercial and financial commitments required to progress the Zesty Demonstration Project to a Final Investment Decision (FID) and supports Calix’s strategy to deploy Zesty as an industry-wide solution for low-emissions green iron and steel.
Highlights
- Calix and Rio Tinto have executed a non-exclusive JDA to support the demonstration and commercialisation of the Zesty technology.
- The Zesty Green Iron Demonstration Plant will be located in Kwinana, WA.
- Rio Tinto will contribute over $35m of value through $8m in cash and further in-kind contributions.
- Cash payments will be provided in two tranches prior to FID (subject to confirmatory due diligence and project milestones).
- In-kind contributions include support for development, commissioning and operations of the Demonstration Plant, subject to project milestones being achieved.
- Rio Tinto may take up shares in a Zesty subsidiary business, use the Zesty technology under a global and perpetual licence, and/or market and sub-license Zesty to its affiliates and customers.
- The Project is also supported by a grant of up to $44.9m from ARENA, subject to matched funding being secured.
Rio Tinto support for the Zesty Demonstration Plant
The Zesty Demonstration Plant will be located in Kwinana, WA. The Kwinana site is in close proximity to the NeoSmelt Project for downstream processing of direct reduced iron being developed jointly by Rio Tinto, BHP, BlueScope, Mitsui and Woodside. It provides access to established utilities, ports and other infrastructure, and is in relative proximity to other major sources of iron ore in Australia.
Under the terms of the JDA, Rio Tinto’s in-kind contributions will support the Project to reach a positive FID through the provision of the Project site, technical support, engineering services, and advocacy. Subject to a positive FID and construction of the plant, Rio Tinto will provide up to 10,000 tonnes of a range of Pilbara Iron Ores for use in plant commissioning and operations, and introductions to potential users of the Zesty green iron product for material testing and downstream processing to steel.
Commercialisation of Zesty
Rio Tinto’s support, including the cash and some of the in-kind contributions, is a significant step towards meeting the commercial and financial commitments needed to match and progress the ARENA grant award. Calix intends to source the remaining funding at the Zesty subsidiary or project level.
The JDA outlines principles for Rio Tinto to take up shares in a Zesty subsidiary business up to the value of its $8m cash contribution to the Project.
Rio Tinto may further support the commercialisation of the Zesty technology by marketing and licensing the technology to its global customer base. Rio Tinto and Calix have outlined the key terms, including royalties, for a potential non-exclusive global and perpetual licence agreement for Rio Tinto’s commercial use of the Zesty technology. Under these key terms, Rio Tinto may also sub-license the Zesty technology to its affiliates and customers.
Calix retains the right to provide the technology under licence to other partners and deploy the Zesty technology as an industry-wide solution.
Phil Hodgson, Calix CEO and Managing Director, said:
The Joint Development Agreement with Rio Tinto is a major milestone in the commercialisation of Zesty.
”It provides cash and hands-on support, including industry leading resources, expertise and market reach, to progress the Zesty Demonstration Project. This strong support from Rio Tinto provides further validation of the potential for the Zesty technology to be deployed to the world’s largest minerals and metals market, its potential to help decarbonise a critical industry responsible for ~8% of global CO2 emissions, and the opportunity to help future-proof Australia’s largest source of export income. We look forward to working with Rio Tinto, further industry partners and other key stakeholders, and ARENA on this important Australian project.”
Matthew Holcz, Rio Tinto Iron Ore CEO, said:
The world needs low-emissions steel if it is going to decarbonise, and we continue to look at a range of ways Pilbara iron ores can help to do this as new technologies emerge.
“We’re pleased to partner with Calix, an Australian technology company, to help progress the Zesty technology to be able to use Pilbara iron ores for lower-emissions steel making.”
Western Australian Premier Roger Cook added:
Locally made green iron is a key part of my vision to become a renewable energy powerhouse and make more things here.
“Coupled with my government’s recent announcement that government will take an “if not, why not” approach to green steel procurement on major government projects, the Zesty Green Iron Demonstration Plant will support our efforts to diversify WA’s economy so that it can remain the strongest in the nation.
“I welcome this agreement between Calix and Rio Tinto, which will play an important role in growing this exciting new industry in WA.”
ARENA’s Jody Herley, said:
Decarbonising iron and steelmaking is critical to meeting global climate goals.
The Zesty project shows how Australian innovation combined with partnerships across industry and government can accelerate the shift to cleaner, more sustainable metals production.
“Calix’s partnership with Rio Tinto demonstrates the level of ambition and joint leadership Australia needs to transform heavy industry for a low emissions future, and ARENA is proud to have supported Calix from early-stage studies through to this pivotal next phase of development.”
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Calix and Rio Tinto execute Joint Development Agreement Zesty Green Iron Demonstration Plant, source
