The Brazil-based miner said the trio had reached a non-binding heads of agreement to establish a new venture, which would use existing and new low-CO2 iron-making technology, such as a Vale subsidiary's Tecnored Technology and Kobe's US subsidiary's Midrex Process.

Vale said Tecnored was focused on developing a low-carbon pig iron process using energy sources such as biomass, which emitted less CO2 than traditional coal and coke processes.

It described Midrex as the world-leading direct reduction iron-making (DRI) technology, saying as it used both natural gas and hydrogen as a reductant in the process, its CO2 emission level was much less compared with a blast furnace.

While steel production was essential for people's daily lives, it generated "considerable CO2 emissions", Vale said.

All three companies said they were committed to contributing to reducing the carbon footprint of steel production.

"Mitsui will continue working hard to provide sustainable and stable supply of essential resources and to create an eco-friendly society," the Japan-based company said.

The announcement comes as environmental, social and governance (ESG) transparency is of increasing importance to investors.