The MoU partners will form a joint working group that will work on identifying a pathway to reducing carbon emissions across the entire steel value chain. According to a World Steel Association estimate, this accounts for between 7-9% of the world's carbon emissions.
The working group will form a plan around the partners' capabilities in R&D, technologies, processes, equipment, logistics, industry coordination and policy advisory capacities.
Rio Tinto chief executive Jean-Sébastien 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."
China Baowu chairman Chen Derong said the steel producer is looking to promote sustainable production through "intelligent manufacturing".
"We want to make a difference to the iron and steel ecosystem by developing greener factories and enterprises to deliver a cleaner, more sustainable steel industry," he added.