Microsoft and ArcelorMittal back clean steel spinoff from MIT Boston Metal

The $1.6 trillion steel industry is the backbone of the modern world. It is also a significant contributor to global warming, accounting for between 7% and 9% of global carbon dioxide emissions, according to the World Steel Association.

That’s why huge global corporations, including international steel giant ArcelorMittal and a tech stalwart Microsoftinvest in Boston Metal, a company spun off from the Massachusetts Institute of Technology that has developed a new way to make clean steel.

“There is no economy, there is no infrastructure without steel,” Boston Metal CEO Tadeu Carneiro told CNBC on Wednesday in a video call. So when it comes to decarbonizing industry to address climate change, «that’s a big piece of the puzzle. I don’t think it’s obvious to everyone,» Carneiro said.

In 2013, MIT professors Donald Sadoway and Antoine Allanore published an article in the journal Nature with lab results proving that it is possible to produce steel without emitting carbon dioxide. In the same year, they started a company, Boston Electrometallurgical Corp., to develop and commercialize this technology.

In 2017, Carneiro joined the company as CEO. He is a 40-year veteran of a career in the steel industry, mostly with Brazilian metals giant CBMM. In 2018, Boston Metal raised its first round of funding, $20 million, in a round led by Breakthrough Energy Ventures, the climate investment firm founded by Microsoft co-founder Bill Gates.

Gates has been insisting for years on the need to think about decarbonizing the manufacturing sector. Transportation gets a lot of attention but is only responsible for 16% of global emissions, where manufacturing generates 31%, according to Gates’ book, «How to Avoid Climate Catastrophe».

«Whenever I hear an idea of ​​what we can do to control global warming – whether it’s around a conference table or a cheeseburger – I always ask this question: ‘What is your plan for global warming? ‘steel?'» Gates wrote on his own blog in 2019.

On Friday, Boston Metal announced it had raised $120 million in Series C, led by multinational steel giant ArcelorMittal, also with funding from Microsoft’s Climate Innovation Fund.

With this funding, Boston Metal will accelerate the production of green steel at its pilot plant in Woburn, Massachusetts, and support the construction of its Brazilian subsidiary, Boston Metal do Brasil, where the company will manufacture various metals. It plans to begin construction of a demonstration steel mill in 2024 and a commercial-size plant in 2026, Carneiro told CNBC.

For ArcelorMittal, making steel without greenhouse gas emissions is not only a responsibility, but also a business necessity according to Irina Gorbounova, Vice President and Head of XCarb Innovation Fund at ArcelorMittal.

“Our customers demand it, our investors expect us to make the transition, and our employees – and our future workforce – want to work for a company that is part of the solution, not part of the global climate problem,” Gorbounova told CNBC.

«Increasingly, we’re also seeing a cost of carbon,» Gorbounova told CNBC. In Europe, the Emissions Trading System, or ETS, already puts a price on carbon emissions, Gorbounova told CNBC.

“The EU has been at the forefront of climate policy, but it is reasonable to expect other regions to follow. So there is a business case for us to decarbonise as well,” he said. Gorbounova told CNBC. “Zero or near-zero carbon steel will become a reality. The only question is how fast we can make this journey. If steel companies don’t decarbonize, they won’t stand the test of time. «

Ironically, steel is a main ingredient in many technologies being built to decarbonize, such as wind to electric vehicles, Gorbounova said.

Microsoft doesn’t build cars or make steel, but it’s trying to meet its own aggressive climate goals, including being carbon negative by 2030 and eliminating all of the company’s historic carbon emissions since its inception in 1975.

Traditionally, the first step in steel production is to combine iron ore or iron oxide, which is mined from the ground, with coal in a very hot blast furnace. This process generates significant CO2 emissions.

Recycling scrap metal is also a key part of the global industry, accounting for 30% of steel production (70% in the United States), and has a «much smaller» carbon footprint, Carneiro said.

Boston Metal’s Molten Oxide Electrolysis technology passes electricity through iron oxide mixed with what Carneiro calls a «soup of other oxides» to make iron and oxygen. Oxides are chemical compounds that contain at least one oxygen atom, and the Boston process includes common oxides such as alumina, silica, calcium, and magnesium.

“There is no carbon involved” in the process of making iron from this method, Carneiro said.

That said, heating that soup to the required 1,600 degrees Celsius requires significant electrical energy – making a million tonnes of steel a year will require 500 megawatts of clean baseload electricity, or about half of the electricity needed. to supply a medium-sized city. “The availability of electricity will dictate how quickly the process is implemented,” Carneiro said.

Electricity must also be clean, otherwise it defeats the whole purpose.

“We believe that in the future we will have abundant, reliable, green and cheap electricity to use this process and make green steel,” Carniero said.

Other processes are being developed to make clean steel with hydrogen, but they require very pure iron oxide, and only about 4% of commercial iron ore is suitable, Carniero said.

Boston Metal will subsequently license its technology to steel companies, and will not itself be a steel fabricator.

“Every steel company is in contact with us to understand our progress and when we will go commercial,” Carneiro told CNBC. «They’re all committing to be carbon neutral by 2050. And they don’t really have a solution right now. So they really need a large-scale solution, and our technology is the only one that can reach those billions of tons of capacity.»