Rio Tinto (ASX:RIO) signed a five-year offtake agreement with Australian bioenergy company SuperChar for the supply of locally produced bio pellets for use at its alumina refineries in Gladstone, with deliveries targeted to commence in 2028, according to a Wednesday statement.

The company said it plans to undertake a range of operational demonstrations and assessments of bio pellet blends ranging from 5% to 50% as a supplement to coal used in boilers at its Gladstone alumina refineries, with scope to increase supply over time if the project is successful.

SuperChar plans to establish a bio pellet production facility in the Gladstone region using locally grown bana grass as feedstock, with initial capacity to produce 35,000 tonnes of bio pellets per year, and at full contract volumes could reduce reported Scope 1 emissions by up to 90,000 tonnes of carbon dioxide equivalent annually, the statement added.

SuperChar is targeting the progressive roll-out of bana grass planting starting later in the year, with bio pellet production to begin in 2028.

Rio Tinto's shares rose 2% in recent Wednesday trade.