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Revolutionizing Steel: Electra's Leap Towards Carbon-Neutral Production


Leo Gonzalez

March 27, 2024 - 10:25 am


Electra Achieves Major Breakthrough in Carbon-Neutral Iron Production

Sandeep Nijhawan Photographer: Chet Strange/Bloomberg

In a groundbreaking advancement within the steel industry, the Bill Gates-backed startup Electra has announced a significant technological triumph. The Colorado-based company has successfully produced emissions-free iron without having to melt ore using commercial-sized prototypes, marking a substantial stride towards an eco-friendly future for one of the world's most essential construction materials. This innovative approach offers an environmentally sustainable path to steel production, a sector which is traditionally known for its heavy carbon emissions, amounting to 7% of global carbon-dioxide emissions annually. The trailblazing technology not only promises a seismic shift in steel manufacturing but also underscores the relentless pursuit for green alternatives in an era grappling with climate change.

Creating Demand for Green Steel

When Electra emerged from stealth mode in 2022, it introduced a pioneering methodology that stretched the limits of electrochemistry as we knew it. Now, it finds itself at the epicenter of a scaling-up endeavor, driven to demonstrate its capability of producing cost-effective green steel. "We have so much demand for this material," shared Sandeep Nijhawan, Electra's CEO, signaling a marked interest from various industries seeking sustainable materials.

Automobile manufacturers, electrical appliance brands, and equipment companies are at the forefront, showing a keen readiness to pay a premium for steel produced without emitting greenhouse gases. This surge of interest is rooted deeply in their commitment to tackling climate change. Claire Curry, the technology, industry, and innovation research manager at BloombergNEF, observed, "Without customer demand, it's tough to secure investment,” emphasizing the importance of brand names willing to shoulder up to a 50% price increase for low-carbon steel offerings.

The emergent customer-centric market has been instrumental in drawing substantial investments into green startups. A notable entrant is H2 Green Steel from Sweden, which amassed a staggering $1.6 billion in equity funding in the previous year, representing one of the most significant financial infusions into such startups for 2023. Electra, with its vision to supply green iron to steelmakers for further processing into green steel, and H2 Green Steel, focusing on establishing a large-scale facility set to commence operations by 2026, are redefining sustainable approaches within the industry.

The Journey from Iron Ore to Green Steel

The conventional process of steel production is bifurcated into two stages. Initially, iron ore, which is iron interlaced with oxygen, is treated with a reducing agent, typically coal, to extract the iron by removing oxygen. The carbon emissions attributed to steelmaking are predominantly sourced from this initial phase. Subsequently, the extracted iron is alloyed with minute quantities of other metals and carbon to fashion different steel variants, such as carbon steel or stainless steel.

Fundamentally, there are three recognized methods to fabricate emissions-free steel. The first method is to capture the emissions from traditional steelmaking and sequester them underground, which has been demonstrated at a facility in the United Arab Emirates. Another approach revolves around substituting coal with a carbon-neutral fuel, like hydrogen powered by renewable energy sources, which is the mechanism employed by H2 Green Steel. Lastly, Electra's revolutionary method utilizes carbon-free electricity to transform iron ore into iron and subsequently into steel via existing electric-arc furnaces.

However, the proliferation of carbon capture has not been widespread, with no additional large steel plants adopting the approach. While H2 Green Steel anticipates the completion of its 2.5-million-ton plant by 2026, its financial practicality is currently contingent upon high-grade iron ore, thereby constraining its broader application. Additionally, there hasn't yet been a startup that solely depends on electricity for steel production reaching a commercial phase.

This spurs a sense of urgency within Nijhawan and his team at Electra. "We went from a PowerPoint vision to a pilot in three and a half years," said Nijhawan, reflecting on the rapid progression. His aim is the establishment of a 50,000-ton plant by 2027, which will experience an upscaling to a million-ton capacity by 2029.

Electra's Innovative Process and Competitive Edge

Electra's proprietary process heats iron ore to a temperature of 400 degrees Celsius using hydrogen and then dissolves the ore in acid, a procedure that concurrently eliminates any associated sand. The mixture of iron ore and acid is subjected to electric currents at a relatively mild temperature of 60 degrees Celsius, resulting in the separation of oxygen from iron oxide and yielding silvery-gray slates of carbon-neutral iron. According to Quoc Pham, Electra's CTO, the entire process has an operational window spanning three to five days.

Among Electra’s competitors is Boston Metal, a U.S.-based company that also utilizes electricity to produce green iron, with funding that has reached $262 million. Despite being founded in 2012, Boston Metal has yet to establish a commercial-scale plant. Since Electra’s debut in 2022, another promising entity, Element Zero based in Australia, claims the capability to transmute iron ore into iron exclusively using electricity at temperatures below 400 degrees Celsius. Despite working on a smaller scale presently, Element Zero does not anticipate a commercial-scale plant until 2030.

The edge that Electra and Element Zero maintain lies in their low-temperature process which permits starting and stopping the iron conversion process with ease, crucial for leveraging solar and wind energy efficiently. In contrast, Boston Metal's process is susceptible to the solidification of molten metal upon cooling, which could potentially damage their reactor.

All three startups share a common goal of providing carbon-free iron to steelmakers. These steelmakers utilize a mix of scrap steel and virgin iron in electric-arc furnaces to produce steel. If the entire process is backed by renewable energy, the iron to steel cycle could usher in an era of absolute emissions-free production.

Associate Professor Venkat Viswanathan, from the University of Michigan’s mechanical engineering department, optimistically predicts an influx of startups in this sector. He believes that "The electrification of industrial processes is accelerating," which bodes well for the future of steel production.

Within a year, Electra's workforce grew from 20 individuals, crafting iron plates that were office paper-sized and weighed a few kilograms, to about 100 employees producing carbon-neutral iron plates weighing over 100 kilograms. This rapid expansion was accompanied by Electra taking over the space of a neighboring bakery. Pham humorously remarks on missing the bakery's aroma, yet he envisions a million-ton iron plant comprised of countless similar plates that his team has successfully tested in the pilot plant.

Both Nijhawan and Pham emphasize the versatility of electric-driven iron production in utilizing any kind of iron ore. With billions of tons of such ore lying unused in dumps across the globe, acquisition costs remain remarkably low. Additionally, Electra has divised methods to extract valuable materials like alumina, used in aluminum production, from low-grade ores, thus opening an avenue for further financial gain.

Today, Electra's energy consumption is on par with traditional iron-making methods. Over the past 18 months, Pham's team poured efforts into reducing this consumption. Given that electricity is costlier than coal, minimal energy usage is pivotal for cost competitiveness. "Ideally, electrochemical iron-making should require far less energy than conventional methods," asserts Viswanathan.

Yet, the road to green steel is paved with complexities. Even after surmounting technological hurdles, a plethora of logistical challenges remains, as noted by Julia Attwood from BNEF, specializing in industrial decarbonization. Power-hungry startups, whether banking on hydrogen or electricity, must secure colossal quantities of green energy, a daunting task given the lagging global solar and wind power infrastructure development. Furthermore, while hydrogen adaptations to existing steel plants are feasible, electricity-reliant ventures necessitate constructing new facilities from scratch, inflating the economic challenge.

Electra is currently scouring for the ideal location to erect its inaugural commercial-scale plant. While Nijhawan remains tight-lipped about the potential sites, it is revealed that the startup has formed alliances with some of the largest iron ore producers, steelmakers, and equipment manufacturers globally. Electra has accumulated $85 million in funding from investors, which includes prominent names such as Bill Gates-backed Breakthrough Energy Ventures, Capricorn Investments, Singapore's Temasek, and Amazon’s Climate Pledge Fund. Notable is the involvement of Michael Bloomberg, founder and principal shareholder of Bloomberg News parent, Bloomberg LP, as an investor in Breakthrough Energy Ventures.

The impeding funding round projected at $150 million will be directed towards the procurement of land and the engineering design for this commercial facility. Nijhawan anticipates that constructing a million-ton plant might necessitate around $1.6 billion, indicating that a significant fundraising journey lies ahead.

H2 Green Steel secured billions due to pre-established orders totaling approximately 1.2 million tons of emissions-free steel, albeit at a higher price point than its traditional counterpart. Nonetheless, Nijhawan is undeterred by competition. He plans to replicate H2 Green Steel's strategy by courting orders from the automotive and electrical-appliance sectors.

With a resolute tone, Nijhawan concludes, "The opportunity and the size of the problem is so big that there will be multiple paths to solve it. I'm not being pressed by a competitive threat. Rather, I'm being pulled by demand."

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