A "wild idea" about making oxygen on the moon is the source of green iron technology taken up by a big emitter to keep steelworks running.
BlueScope Steel's venture fund BlueScopeX on Wednesday signed a memorandum of understanding with Israel-based Helios Project to develop green iron technology for global steelmaking.
An affiliated member of the World Steel Association, Helios CEO Jonathan Geifman told AAP the method was "exceptionally fast" compared to other green iron processes.
"The economics have the potential to beat the economics of the blast furnace," he said.
"Rather than a billion-dollar plant, imagine smaller-sized machines the size of a semi-trailer that could produce 50,000 tonnes a year."
Nearly two billion tonnes of steel are made annually worldwide, contributing almost 10 per cent of global greenhouse gas emissions.
Helios is developing a more sustainable method of producing green iron from iron ores and tailings, with Australia and the United States proving to be "more welcoming" for investment, Mr Geifman said.
While sceptics say Australia's lower-grade iron ores are a non-starter for costly new processing methods, Mr Geifman said the Helios technology was "more indifferent" to the ore grade than other green iron methods.
"We've been testing different kinds of ore from all across Australia," he said, including Western Australia's high-phosphorus ore.
He urged the mining industry to also put more capital into "beneficiation" infrastructure that would remove the impurities and make green iron and steel more commercially viable.
Helios' proprietary technology uses sodium to replace coal in the steelmaking process, emitting only oxygen, which eliminates direct emissions.
He said the method was discovered when they had a "wild idea" about how to make oxygen on the moon, which has no carbon.
"The most accessible oxygen on the moon is in the minerals on the ground, which also produced metals as a by-product," he explained.
On Earth, producers would not need to make granulated pellets, or pig iron, as a feedstock for green iron because Helios could work with fine ores and crushed rock, he said.
Nor does the method need high-heat processes, he said, as it works at the temperature of a kitchen oven and can go 100 per cent electric.
The initial phase of the pact with BlueScope will involve a pilot project using Helios Green Iron, or HBI, produced by pilot plants, starting in 2026.
