The China Iron and Steel Association invited the parties to sign the MoU at its China International Steel and Raw Materials Conference in Qingdao.
The MoU will enable the formation of a joint working group tasked with identifying a pathway to support the goal of reducing carbon emissions across the entire steel value chain, which accounts for between 7-9% of the world's carbon emissions.
The working group will establish a joint action plan on how to best utilise the parties' complementary strengths in research and development, technologies, processes, equipment, logistics, industry coordination and policy advisory capacities to combat climate change and improve environmental performance.
"This pioneering partnership across the steel value chain will bring together solutions to help address the steel industry's carbon footprint and improve its environmental performance," Rio Tinto CEO J-S Jacques said.
"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.
"We are already doing this in aluminium and now, through this partnership, we will be doing it in the steel industry."
The move comes after Rio faced pressure from investors earlier this year to try to reduce scope three emissions, being the emissions emitted by its customers.
BHP has pledged to set scope three emissions targets next year.