The Bill Gates-Backed Startup Trying To Fix Steel's Environmental Impact

Forbes

With more than $350 million in venture funding and a new factory in Brazil, Boston Metal looks to scale up production of its green method for making steel.  Read the full story on Forbes: https://www.forbes.com/sites/amyfeldman/2024/03/06/this-bill-gates-backed-startup-is-trying-to-fix-steels-horrible-environmental-impact/?sh=258d14ac4242  Forbes Daily Briefing shares the best of Forbes reporting on wealth, business, entrepreneurship, leadership and more. Tune in every day, seven days a week, to hear a new story. Subscribe here: https://art19.com/shows/forbes-daily-briefing  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Monday, March 11.

00:04 Today on Forbes, this Bill Gates-backed startup is trying to fix steel's horrible environmental

00:11 impact.

00:13 Donald Sadoway sees steel as a climate crisis of its own, and a conundrum.

00:19 He said, "If steel were a country, it would be the third largest polluter."

00:25 Steel's manufacturer is responsible for around 8% of global CO2 emissions, primarily because

00:31 making it usually involves burning vast amounts of coal.

00:35 But steel is also a material that's crucial to modern life.

00:39 It's in cars and buildings, kitchen appliances and medical equipment, and your kid's braces.

00:45 Nearly 2 billion tons of it are produced worldwide each year, worth $1.4 trillion, and they emit

00:51 nearly twice that amount in CO2.

00:55 We're addicted to steel in a way that's unlikely to change anytime soon.

00:59 Forecasts suggest the market could grow 3.8% annually and reach $1.9 trillion by 2027.

01:07 That makes decarbonizing it core to the global effort to prevent the coming climate catastrophe.

01:12 Sadoway, a retired MIT professor and co-founder of Boston Metal, thinks he's found a way to

01:19 do that by essentially shooting electricity into iron ore rather than splitting it with

01:24 a chemical reaction in a blast furnace.

01:27 No coal is needed.

01:29 Boston Metal's key innovation is an anode, essentially a metal rod that conducts electricity,

01:35 that can tolerate the high temperatures needed to liquefy iron.

01:40 Boston Metal CEO Tadeo Carnero told Forbes, "It solves a big problem, and it revolutionizes

01:47 an industry that has been based on the same equation for millennia."

01:53 Driven by rising European penalties on emissions and American incentives in the Inflation Reduction

01:58 Act, steel producers, startups, and investors alike are looking for ways to produce steels

02:04 that are less harmful to the environment but don't cost a pile more.

02:08 Boston Metal's electrolysis is one way of doing that.

02:12 Other companies have developed a green hydrogen-based process.

02:15 Of the variety of green steel efforts, John Gordon, deputy director of the Green Steel

02:20 Program at non-profit CalSTART, said, "We have the technology to revolutionize the steel

02:26 industry.

02:27 Now it is just an implementation problem."

02:31 It also requires a major shift in thinking for an ancient industry.

02:35 The notoriously dirty steel manufacturing process hasn't changed much in a thousand

02:40 years.

02:41 Since 1950, global steel production has risen from 189 million tons a year to nearly 2 billion.

02:48 CO2 emissions have soared in tandem to roughly 4 billion tons a year today, roughly four

02:55 times that of the aviation industry.

02:59 With a goal of lowering harmful greenhouse gases in a vast industry, Boston Metal has

03:03 raised more than $350 million from investors that include steel giant ArcelorMittal and

03:10 Bill Gates' Breakthrough Energy Ventures at a recent valuation of $860 million, according

03:16 to Venture Capital Database's Pitchbook.

03:19 Boston Metal already has a pilot plant at its headquarters in Woburn, Massachusetts,

03:23 just north of Boston.

03:25 In this past week, it opened a full-scale factory in Brazil that will produce pricey

03:29 low-carbon iron alloys with cheaper off-the-shelf anodes.

03:33 The idea is to quickly establish a solid source of revenue that will give the company a runway

03:37 to commercialize its green steel.

03:40 Arneiro expects the Brazilian operation to reach $400 million in revenue with $100 million

03:46 in operating profit by 2026, the same year it hopes to be commercial with its green steel.

03:52 Boston Metal's process, which uses an electricity-conducting, molten-metal-proof anode to liquefy iron ore,

04:00 separating the pure metal without harmful byproducts, allows factories to create carbon-free

04:04 steel as long as they use a clean energy source, such as hydroelectric power.

04:10 It also can create steel from lower-grade ores rather than relying on scarce high-grade

04:15 ones.

04:16 That's an important advantage in terms of both cost and availability compared to other

04:20 methods of making green steel, according to the company.

04:24 Just how much all this will cost relative to traditional steelmaking is the big unknown

04:29 here.

04:30 Steel is a commodity industry where every penny of cost counts, and building new steel

04:34 plants costs a fortune.

04:36 The costs should be on par with traditional steelmaking once plants are producing between

04:41 1 million and 2 million tons a year, as long as electricity prices are around $30 per megawatt

04:47 hour, this according to the company's calculations.

04:51 For full coverage, check out Amy Feldman's piece on Forbes.com.

04:57 This is Kieran Meadows from Forbes.

04:59 Thanks for tuning in.

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