MIT spinout tries to green steel's $1.6 trillion industry with Microsoft and ArcelorMittal's support

Steel is a global industry with a value of $1.6 trillion, making it one of the world's most important industries. It is also one of the biggest contributors to global warming, since steel is responsible for between 7% and 9% of global carbon dioxide emissions, according to the World Steel Association.

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Boston Metal, a spinoff from Massachusetts Institute of Technology, has developed a new way to make clean steel. This is why massive global businesses, including ArcelorMittal and Microsoft, are investing in the company.

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Tadeu Carneiro, the CEO of Boston Metal, pointed out in a video call with reporters on Wednesday that there is no economy, no infrastructure without steel. As a result, when it comes to decarbonizing industry to fight climate change, it is one of the most important pieces of the puzzle. Carneiro said, "I don't think that this is obvious to everyone, but it is obvious to me."

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Professors Donald Sadoway and Antoine Allanore from the Massachusetts Institute of Technology recently published a paper in Nature that proved that it is possible to produce steel without emitting carbon dioxide emissions from the process of creating it. This technology was subsequently scaled up and commercialized by the same company in the same year, Boston Electrometallurgical Corp.

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Carneiro joined the company as CEO in 2017. During his 40 years in the steel industry, most of which were spent with Brazilian metals giant CBMM, he has acquired a wealth of experience. Breakthrough Energy Ventures led Boston Metal's first round of funding, $20 million, in a round led by Microsoft co-founder Bill Gates.

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It has been Gates' long-standing position that the manufacturing sector needs to think about decarbonizing in order to benefit the environment. According to Gates' book, "How to Avoid a Climate Disaster", the industry of transportation receives a whole lot of attention, but it produces only 16% of global emissions, while the manufacturing sector generates 31%, according to Gates' book.

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In his own words, Gates wrote on his own blog in 2019, “Whenever I hear an idea for what we can do to keep global warming in check - whether over a conference table or a cheeseburger of some sort - I always ask this question: ‘What’s your plan for steel? ’” Gates wrote on his own blog in 2019.

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Boston Metal announced on Friday that it had raised $120 million in its Series C round, led by international steel giant ArcelorMittal, and with additional funding from Microsoft's Climate Innovation Fund.

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As a result of the funding, Boston Metal will ramp up production of green steel at its pilot facility in Woburn, Massachusetts, as well as support the construction of Boston Metal do Brasil, the company's Brazilian subsidiary, which will manufacture various metals for the company. As early as 2024, it plans to begin the construction of a demonstration steel plant, and it plans to build a commercial-size plant in 2026 as well.

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ArcelorMittal's cost of carbon

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According to ArcelorMittal vice president and head of XCarb Innovation Fund, Irina Gorbounova, making steel without greenhouse gasses is not only a responsibility, but also a necessity.

“Our customers are asking for it, our investors expect us to transition and our employees — and our future workforce — want to work for a company that is part of the solution and not part of the world’s climate problem,” Gorbounova said.

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According to Gorbounova, "we are increasingly seeing a cost of carbon as well," according to CNBC. There is already a price on carbon emissions in Europe because the Emission Trading System, or ETS, is used to price carbon emissions, Gorbounova explained.

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It is reasonable to expect that other regions will follow the EU in terms of climate policy, as the EU has been at the forefront of this policy. It makes sense for us to decarbonize as well, according to Gorbounova, since there is a business case for it. 

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We will be able to produce steel with zero or near-zero carbon emissions in the near future. Whether we will be able to accomplish that journey as quickly as we would like is the only question. Steel companies will not be able to survive the test of time if they do not decarbonize."

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According to Gorbounova, steel is a key component of many technologies being constructed to decarbonize, including wind farms and electric vehicles.

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Despite the fact that Microsoft does not produce cars or steel, it has set aggressive climate goals, including becoming carbon negative by 2030 and removing all of the company's historic carbon emissions.

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Boston Metal's process: how does it work?

Steel is traditionally made by combining iron ore or iron oxide, which is mined from the ground, with coal in a very hot blast furnace. CO2 emissions are generated as a result of that process.

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As a key part of the global industry, scrap recycling accounts for 30% of steel production (70% in the U.S.) and has a much smaller carbon footprint, he added.

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Molten Oxide Electrolysis, a technology used by Boston Metal, passes electricity through iron oxide mixed with a "soup of other oxides" to produce iron and oxygen. As well as alumina, silica, calcium, and magnesium, Boston's process uses oxides that contain atoms of oxygen.

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According to Carneiro, "there is no carbon involved at all" in the process of creating the iron from this method.As a result, the heating of this soup to the required 1,600 degrees Celsius requires significant electricity - to make one million tons of steel every year, 500 megawatts of clean, baseload electricity would be required, or about half of what is needed to power a mid sized city. Depending on how quickly the process can be implemented, Carneiro said it will be determined by the availability of electricity.

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It is also imperative that the electricity used is clean, or the entire purpose will be defeated.

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“To manufacture green steel, we will need abundant, reliable, green and cheap electricity in the future,” said Carniero.

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In addition to hydrogen, other processes are being developed to produce clean steel, but they require iron oxide that is very pure, and only about 4% of the iron ore sold commercially is suitable.

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Eventually, Boston Metal will license its technology to steel companies rather than manufacture steel itself.

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There are a number of steelmaking companies contacting us with the aim of understanding our progress and when we will be able to enter the market," said Carneiro. “They are all making commitments to be carbon-neutral by the year 2050. As a result, they do not seem to be able to come up with a solution right now. It is understandable that they really need a solution for large scale, and our technology is the only one that is capable of scaling up to a capacity of billions of tons."