Boston Metal CEO, Tadeo Carneiro

Image courtesy Boston Metal

In an inconspicuous office park on the outskirts of Boston, a decade-old startup is trying to reinvent a process at the heart of the $1.6 trillion steel industry to reduce carbon emissions and combat climate change.

Boston Metal It emerged from research developed at MIT in 2013 and has since raised a total of $250 million. The 120-person company works on an environmentally friendly method of making steel, which is both The backbone of modern infrastructure construction and a significant contributor to climate change, generating between 7% and 9% of global carbon dioxide emissions, according to World Steel Association.

Boston Metal has yet to start generating revenue and is still replicating the final technology it will use to make clean steel on a large scale.

But it recently signed a $20 million financing deal with the private sector investment arm of the World BankInternational Finance Corporation.

It is the first time that the IFC has invested in a startup before revenue is realized, which speaks to the value the World Bank sees in helping low-income countries make steel without carbon emissions, Director of the International Finance Corporation William Sonneborn he told CNBC.

“I’m only here in Africa,” Sonborn said on a video call from Senegal at the end of May. “There are hundreds of millions of people who don’t have a home. At some point, they’re going to need steel. And so the additional production of steel in the world won’t be in the United States—the technology may have been invented at MIT, but the additional production of steel won’t be in the United States.” “

the majority of crude steel, 59%, manufactured in developing countries in 2021, according to the International Finance Corporation. Boston Metal’s operation will be particularly attractive in developing countries that also have access to clean electricity, such as Chile, Ethiopia, Malawi, Uruguay and Zambia, the IFC says.

CNBC visited Boston Mittal’s headquarters in Woburn, Massachusetts, at the end of May to learn more about the startup, which has raised hundreds of millions of dollars from investors like ArcelorMittal (the second largest steel producer in the world), MicrosoftClimate, innovative energy projects of Bill Gates, as well as the World Bank.

Boston Metal offices in Woburn, Massachusetts.

Kat Clifford, CNBC

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Diagram of the process Boston Metal uses to make green steel.

Graphic courtesy Boston Metal

This technology passes electricity through iron oxide mixed with a large number of other oxides, which are chemical compounds that contain at least one oxygen atom. If the electricity entering the process is clean, the steel that comes out the other side of the electrolysis cell is also clean.

The process is similar to a battery, with a positively charged anode and a negatively charged cathode directing the flow of electricity through the process.

For Boston Metal’s electrolysis to work, it must convert alternating current from the grid to direct current.

This is where electricity is converted from AC to DC at the Boston Metal site. (Part of the image has been changed to protect Boston Metal’s intellectual property.)

Kat Clifford, CNBC

The anode in the Boston Metal process was a major development from MIT. It is mainly made of chromium and iron with some other small amounts of other materials mixed in, and is not consumed or corroded during the electrolysis process.

“What sets it apart is that it can live in high temperatures — 1,600 degrees Celsius, 3,000 Fahrenheit. And while you’re doing electrolysis, you’re using electrons to separate iron and oxygen. So that anode hits oxygen all day at a very high temperature, and it has to survive in that environment.” Rawerdinck explained during a tour of the lab. “There are very few elements that will do that. This ingot is the one that will do that.”

The by-product of the process is oxygen.

Boston Metal’s electrolysis process releases oxygen as a by-product. On the screen circled, oxygen bubbles can be seen shooting up. (The text on the whiteboard has been blacked out to protect Boston Metal’s intellectual property.)

Kat Clifford, CNBC

While Boston Metal is still iterating on the technology on a commercial scale, the science behind the process is foolproof.

“It’s no longer a binary that you will fail or you will succeed,” Boston Metal’s CEO said Tadeo Carneiro for CNBC in Woburn. “It’s a question of how old will the anode be? Will it last three years or two? That’s where we are now, we’re finalizing all the parameters in order to build the biggest, most beautiful industrial cell. That’s where we are.”

The steel industry is watching.

“The first thing I did when I joined the company was to visit my friends, all the CEOs of different steel companies, mainly in Asia, to pitch the idea to them. That was six years ago,” Carneiro said. “It’s funny, for most of them, it seemed so early. Now, they’re all desperate—because they have to find a solution. And they don’t have a solution.”

Other benefits of the process

Boston Metal’s process can use lower-grade iron ore, which is one reason IFC invested in the company.

Boston Metal can make steel using low-grade iron ore, like this Australian ore from mining company BHP, which is one of the startup’s investors.

Kat Clifford, CNBC

“There are many emerging markets that have a lot of iron ore, and it’s of low quality, and so they can’t produce steel using blast furnace technology. They can use Boston Metal technology,” Sonborn told CNBC.

This means that these developing markets can make their own steel, Sonborn said, creating self-sufficiency for the economies of these countries.

Also, the electrolytic cells can get bigger to a certain point, but then the company will have to put many more cells next to each other to make the green steel.

This is a medium sized electroanalyzer, between a laboratory scale bench and a large scale cell. This can go on for weeks at a time and collect anode performance data. (The text on the whiteboard has been covered up to protect Boston Metal’s intellectual property.)

Kat Clifford, CNBC

“If you go to a large-scale plant with this technology, you might see a few hundred electrolytic cells.” Rowardink told CNBC.

This cell pattern is attractive to the World Bank.

“Boston Metals’ modular technology allows a small country like Burkina Faso to build its own steel mill, have its own steel production — instead of importing it from India and shoving hard currency out of the country when it can do it in-house,” Sonneborn told CNBC.

Here, a large-scale anode powers the electrolysis process at Boston Metal’s Woburn site.

Kat Clifford, CNBC

Another faster way to make profits

Boston Metal is in the midst of raising what it hopes will be a $300 million funding raise. So far he’s closed half of that tour and “a lot of the rest has happened,” Rawerdink told CNBC.

Boston Metal’s main goal is green steel, but the company will also use basic electrolysis technology to produce the metals tin, niobium, and tantalum from what would otherwise be waste from the mining process. About a third of the $300 million will go towards marketing this software in its Brazilian branch, and the largest device the company has made to date will be used there.

Reporter Kat Clifford stands next to Boston Metal’s multi-anode electrolyzer cell. (Part of the device is covered to protect Boston Metal’s intellectual property.)

Kat Clifford, CNBC

Niobium is mainly used to make steel, tin is used as a metal and in electronics, and tantalum is used, among other purposes, in the electronics industry for capacitors and other components.

“It’s easier, and that’s why we can deploy earlier,” Carneiro told CNBC in Woburn. “Characteristics of different anodes.”

The mineral generation business in Brazil will be the first to generate revenue for the company.

The other two-thirds of the $300 million increase will go toward the completion of the steelmaking process and components. Boston Metal plans to be on a commercial scale making green steel in 2026.

When Boston Metal is ready to commercialize its green steel process, these cell types will last for years at a time. Boston Metal will make money by licensing the technology and by making and selling the anodes needed for the green annealing process.

Carneiro told CNBC that Boston Metal hopes to begin licensing the technology in 2026.

The IFC wants Boston Metal to succeed so that it can help developing countries build their steel industry, but also that it can generate returns for other projects. IFC does not pay dividends on its investments to investors – all gains go directly to the treasury.

“When we exit, all these gains will come back to solving gender inequality in India or South Asia or climate challenges in different aspects. So every profit we make, again, is not distributed as a return to our shareholders, it is reinvested back into our goals.” developmental.”

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