Federal Resources Minister Ian Macfarlane announced a Commonwealth government commitment of $35 million to the foundation.

The central focus of the foundation, to be run by Rio, is to find sustainable solutions for major environmental challenges facing the Australian minerals and metals industries.

"The work of this foundation is likely to encourage entire mining industries to operate within improved environmental standards which will minimise long-term greenhouse impacts to the applause of local communities," Macfarlane said.

The foundation will initially focus on three important greenhouse energy efficiency projects including the burying of CO2, and increasing energy efficiencies in the aluminium, bauxite and iron ore industries.

"In this day and age of quadruple bottom lines, the potential benefit of this Australian R&D to the sustainability of the Australian minerals industry is huge. It's another indication of industry tackling the hard issues and preparing to lay the correct path for long term climate change," Macfarlane said.

An advisory board comprising representatives of Rio and from government, academia and business will govern the foundation.