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How to invest in a ‘green steel’ disruption demanded by automakers, wind sector

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Replacing heavy-polluting traditional steel with “green steel” has taken a major leap forward this week, and while one breakthrough is from a private company, it has drawn the investment of global metals giant ArcelorMittal.

Other U.S.-based stock exchange-listed steel operators are pushing ahead as well, posing potential investment opportunities fueled by demand from automakers and the wind-turbine sector.

Private Boston Metal on Friday announced a $120 million investment from the world’s second-largest traditional steelmaker, ArcelorMittal
And Microsoft’s
climate-technology fund is pitching in, too. Boston Metal will expand production at a pilot plant in Woburn, Mass., near Boston, and help launch commercial production in Brazil. The company uses renewable electricity to convert iron ore into steel and the investment may just boost the scalability that has held green steel back.

Steel is traditionally a major polluter because the intense heat it requires in production has long left the burning of fossil fuels as the only avenue to reach those temperatures. Currently, some 75% of global steel production uses a traditional method that burns through train loads of coal to heat the furnaces and drive the reaction that releases pure iron from ore.

In fact, creating steel releases more atmosphere-warming carbon dioxide than any other industry, according to the International Energy Agency. Steel production alone accounts for about 8% of worldwide emissions. Steel is also is an in-demand product, key to construction, automotive manufacturing and building the machinery that powers the global economy.

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Decarbonizing steel at scale

The financial package by global steel giant ArcelorMittal is the biggest single investment made to date by the firm’s carbon innovation fund.

“Our technology is designed to decarbonize steel production at scale,” said Tadeu Carneiro, chairman and CEO at Boston Metal, the recipient of those funds.

“We believe we have the experienced team, strong financial backing and the innovative technology required to disrupt the industry. ArcelorMittal’s support further reinforces our capacity to lead the green steel revolution,” he said.

Instead of burning coal, their process runs electricity through iron ore in a metal box or “cell” the size of a school bus to separate the iron from the oxide. The next step is to collect the liquid iron.

Read: U.S. scores a nuclear fusion breakthrough — but experts caution commercial viability is a decade or more away

Boston Metal said it can eliminate all carbon dioxide from its steel production and hopes to ramp up production to millions of tons by 2026. As a bonus, it said, it is able to extract metals from slag normally considered waste.

‘We believe we have the experienced team, strong financial backing and the innovative technology required to disrupt the industry.’

— Boston Metal’s Tadeu Carneiro

The company’s technology was developed at the Massachusetts Institute of Technology. Professors Donald Sadoway and Antoine Allanore, experts in energy storage and metallurgy respectively, are the founders.

Already, major European steelmakers have announced alternatives to traditional coal-fired steelmaking. But by far the most steel is produced in Asia. Both China and Japan, whose coal burning remains a sticking point at global climate-change negotiatoins, have made moves in the direction of cleaner steel.

What about U.S. green-steel investing?

In the U.S., most steel is already relatively cleaner because it is made by melting down old steel, for example from junked cars. This can be done in electric kilns and emits a fraction of the climate-changing gases as virgin steel production.

Several industry alliances are working to speed things up. A non-profit called ResponsibleSteel, for example, brings together stakeholders along the supply chain — mining to finished steel products — to cooperate on greener steel.

And just this week, U.S. steelmaker Nucor
said it will start making heavy-grade steel at a new $1.7 billion mill in Brandenburg, Ky., using electric furnaces to make new steel from scrap. The company said it will help supply the growing demand for steel to build huge offshore wind turbines.

Offshore wind
is key to many plans to address climate change because it partially replaces fossil fuel-burning
electricity. It will require massive amounts of steel as turbines are large and built miles offshore. Nearly 90% of an offshore turbine’s weight is steel, and each one, including the foundation, requires roughly 180 tons of steel per megawatt, according to the industry group American Clean Power.

What’s more, some automakers, including Ford
and General Motors
are buying the cleaner steel to fulfill promises to shareholders and customers beyond just the switch to electric-charging vehicles

The average vehicle contains almost 2,000 pounds of steel, making it a large market for the steel industry. 

While Nucor is broadly considered the pioneer of the electric-arc furnace, or EAF, its competitors are jumping in. Steel Dynamics
founded by former Nucor employees, is another company that emerged using EAFs. U.S. Steel
has said it is transitioning to EAF production.

Some interests are rethinking how steel is heated, period.

Heliogen — a clean-energy company supported by Microsoft founder Bill Gates and Patrick Soon-Shiong, a billionaire former pharmaceutical developer — in recent years said it achieved a breakthrough in concentrated solar energy that could replace the fossil fuels used in heavy-emissions processes such as making cement, steel, glass and petrochemicals.

Heliogen’s solar technology can exceed temperatures greater than 1,000 degrees Celsius, and be sold commercially, the company said in 2019.

One analysis called the development the first solar high-heat “oven” for these key industrial purposes.

The Associated Press contributed.


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