Mining giant Rio Tinto has struck a deal with its biggest Chinese iron ore customer, China Baowu Steel Group, to develop ways to reduce carbon emissions pumped into the atmosphere as part of the steelmaking process.

The partnership, signed on Wednesday, is an attempt by Rio Tinto to curb its “scope 3” emissions – those made by its customers – and follows a pledge in July by its rival, BHP, to spend $400m as part of a plan to tackle the climate crisis.

It comes despite a campaign by the Morrison government to get big business to shut up about social issues such as the environment and restrict its campaigns to economic territory including corporate tax cuts.

Coal-burning steel mills are a significant source of carbon dioxide emissions, creating about 1.8 tonnes of carbon emissions per tonne of steel and accounting for between 7% and 9% of the global total.

It is possible to slash emissions by substituting hydrogen that has been manufactured using renewable energy for metallurgical coal, but the technology is not yet in commercial use.

However, it is understood the partnership between Rio Tinto and China Baowu, which also includes Tsinghua University, will also look at emissions from shipping.

Shipping represents low-hanging fruit for companies looking to improve their environmental credentials because emissions can be quickly reduced by changing from ships using bunker fuel – heavy, carbon-intensive oil – to natural gas.

The China Baowu agreement is Rio Tinto’s second project attacking scope 3 emissions. Last year, the company entered an agreement with the Canadian government, Alcoa and Apple to develop a carbon-free method of making aluminium.

Steelmakers around the world are under increasing pressure to curb their emissions.

In Europe, carbon pricing has crimped steel mill profits, putting jobs at risk and forcing companies to look for alternatives to coal to save on emissions costs.

Both Rio Tinto and BHP have said they want to dramatically reduce their emissions but the strong language has so far not been enough to satisfy activists.

Rio Tinto says it supports the international Paris agreement, which is designed to keep the increase in global temperature below 2C, and is aiming for the “substantial decarbonisation” of its entire business by 2050.

The Rio Tinto chief executive, Jean-Sébastien Jacques, said the China Baowu deal would “bring together solutions to help address the steel industry’s carbon footprint and improve its environmental performance.

“The materials we produce have an important role to play in the transition to a low carbon future and we are committed to partnering with our customers and others to find the most sustainable ways to produce, process and market them,” he said.