Steel production generates almost 10 percent of global carbon emissions and has long been considered “hard to abate.” Enter Boston Metal, a startup that aims to make carbon-free steel using only (sing it with me!) clean electricity. In this episode, CEO Tadeu Carneiro explains “molten oxide electrolysis” and its potential to transform the industry.
Text transcript:
David Roberts
Steel helped build the modern world. It also helped create the climate crisis. Depending on exactly how you measure, iron and steel production is responsible for around 10 percent of global CO2 emissions — if it were a country, it would be the world’s fifth largest emitter. It is among the most energy- and emission-intensive industrial activities humans engage in, responsible for about a quarter of all global industrial emissions.
Steel has long been considered a “difficult to decarbonize” sector, but lately things have started to change. One way to almost fully decarbonize the process is to substitute green hydrogen for carbon as a reactant. That is being tested in a number of places across the world, but it remains an expensive and complicated process, and one dependent on clean hydrogen supply.
Now there's a startup called Boston Metal developing a truly novel way of making steel, one that involves no combustion and no emissions. Best of all — and longtime listeners know that this is my favorite thing to say in the entire world — it is based on clean electricity.
It’s called “molten oxide electrolysis.” I will leave the explanation to CEO Tadeu Carneiro, who has been kind enough join me today. Carneiro worked for 40 years in the metals industry before attempting unsuccessfully to retire in the 2010s. He was drawn back into the industry by the promise of truly scalable carbon-free steel. I can’t wait to talk to him all about it.
With no further ado, Tadeu Carneiro, welcome to Volts. Thank you so much for coming.
Tadeu Carneiro
Thank you so much, David. It's a pleasure to be here with you. Thank you for your nice introduction. And, yeah, that's precisely right. You cannot say no to something like this challenge. The beach can wait.
David Roberts
Great. So, I know I have listeners out there who might not be familiar with the process of making steel. So, I want to start with a few basics. Reading around, I've sort of gotten the idea that to make steel, you need iron. Iron is the precursor to steel. You need pure iron. And the problem is what you find in the earth's crust, iron ores, are basically iron oxides, which means iron with oxygen molecules attached. And the key to making pure iron, which is the precursor to steel, is knocking those oxygen molecules off of that iron to get the pure iron.
So, all the competing ways of making steel are basically competing ways of knocking that oxygen off of that iron. So, I thought to begin with, maybe we could just walk through what is the conventional way of doing that? And then, maybe we could briefly describe the hydrogen alternative, and that will set us up to understand what the electrolysis alternative is. So, maybe just tell us, like, how in ordinary steel making, do you get iron out of iron oxides?
Tadeu Carneiro
Oh, very good. That's done this way for millennia. So, you get your iron oxide from iron ore, mix it with coal, and then those things react. And the carbon from the coal gets the oxygen out by this chemical reaction, releases the iron, and in the process, also releases the CO2.
David Roberts
Right. Carbon attached to oxygen is CO2. That's why — that's where the CO2 comes from.
Tadeu Carneiro
That's right. So, that's how it's done. And it's done like this for millennia, since the Iron Age.
David Roberts
And that's at tremendous temperatures, right? How hot does that have to get for that to happen?
Tadeu Carneiro
Exactly, so that goes to, you know, in that reaction. So the 1,400, 1,500 degrees centigrade in order to get there. So you have two ways today, you know, to get your steel. One is remelting scrap. So that's 30% of the steel comes from that, so in the electric arc furnaces. The 70%, though, would come from blast furnaces. So you get your iron ore and you have to pelletize or sinter that. And then you get your coal, go to a coking coal to make coke. And these two things, the coke and the pelletized or sintered iron ore, you add on the top of a blast furnace, which is a very tall, more than 100 meters tall, furnace.
You blow air in that, and at the bottom, you get what you call pig iron. It's called pig iron in the liquid form because it has 4.5% to 5% carbon in it. So it's an iron with 4.5 to 5 carbon. That liquid pig iron from the blast furnace goes in what is called torpedo cars and gets transferred to the steel-making facility, which is a basic oxygen furnace, where you blow oxygen to kill the excess carbon and bring that carbon content down. So then you have your first liquid steel, which has — I mean, depending on the steel — will have 0.2 to 0.4% carbon.
So that's the liquid steel. From that step onwards, you go to what's called ladle metallurgy, where you put it in a furnace, where you add other things to make the final composition of the steel. Steel has lots of different grades and different alloying elements that you need to add. So once you get the composition corrected, you send it to a caster, and then eventually to the rolling mills to get the finished products, right. So the bars and the plates and whatever you need as a finished product. So that's how steel is manufactured today. There is a very small percentage that uses natural gas with premium iron ores.
There are some iron ores. Only 3% of all the iron ore available in the world are very rich iron ores in iron oxide, meaning you don't have too many impurities in it. So, it's more than 66%, 67% in weight of iron. So, if you have those very premium iron ore and you have cheap natural gas, you can go in a direct reduction. It's called the DRI process, the direct reduction, and the natural gas as the carbon there, will reduce that rich iron ore into a sponge in the solid state. In that case, it is not molten like it is when you use the blast furnace.
And with that sponge, you then send it to an electric arc furnace and you remelt that, and you have your molten steel to go to a ladle metallurgy, the caster, and the rolling mill. So, it's a very small percentage done that way, despite the fact this process is already known for more than 50 years. And the reason is the basic limitations: One is you need very rich iron ores, and the other is you need to have abundant natural gas. And then the third problem is, it's a solid solution, so you have to remelt later on. In any case, that's where the idea of using hydrogen comes from.
They say, "Well, let's substitute hydrogen for the natural gas." They're both gases and they are both reducing agents. So then, instead of using natural gas, we use hydrogen and we get our sponge. Right. And then we can do that. And that's where that idea comes from.
David Roberts
Got it. So, the key here is that hydrogen is only going to substitute in this process for that direct reduction process, which only works with certain select premium iron ores.
Tadeu Carneiro
This is correct. Unless you get your iron ore and you put costs on it and process them in order to become premium, right? So, that's one way or another.
David Roberts
So when people talk about decarbonizing steel, using hydrogen, is that what they're talking about doing at scale, purifying the iron ore and then doing direct reduction?
Tadeu Carneiro
That's right. If you don't have the premium iron ores, that's what you have to do. Yes.
David Roberts
Right.
Tadeu Carneiro
And then, you have to get the green hydrogen as well. Otherwise, it defeats the purpose. Right. So that's the thing. And that's something that is more often than not taken as a given. And it's not. We know that there are lots of obstacles and challenges in getting abundant green hydrogen as well.
David Roberts
Right. So, the challenge is getting a pure enough ore, and the challenge is getting green hydrogen. And it sounds like to do both those things is going to be considerably more expensive than the traditional process.
Tadeu Carneiro
It is what's happening right now. Yeah. So, everyone is on a race to get cheap hydrogen, green hydrogen, manufactured. Yeah.
David Roberts
Yeah, yeah. Okay. So, in both these cases, you're doing very high-temperature combustion, and you're lifting the oxygen off of the iron. So, with that sort of foundation laid, as it were, let's talk about doing this with electrolysis rather than combustion. How does that work?
Tadeu Carneiro
So, now, in an electrolytic process, you have a furnace where you are going to pass electricity. So, you add your iron ore, which can be any iron ore, and I will explain why in a minute. So, you add your any iron ore to an electrolyte, which is a soup of oxides, and they pass electricity. The electrons will do two things: It will melt everything, it will heat everything and get everything molten, and then it will also break the bonds of the iron oxide, releasing the iron that you need in the liquid form. And because it's heavier, it goes to the bottom of that cell, that furnace, and also releasing oxygen.
So, your byproduct is oxygen. So, you pass — that's what the electricity. It's a one-step process. Iron ore in the cell. Electricity breaks the bonds of the iron oxide in the liquid form. So, molten iron goes in the bottom. Oxygen is released from the cell. Now, why we are able to use any iron ore is because that soup of oxides that you have there as electrolyte in your cell is composed of the oxides that are impurities in the iron ore. So, they are aluminum, silica, calcium, magnesia. So, those oxides are more stable than the iron oxide. So, when the electrons pass, when you put electricity through the cell, the electrons will split the bonds of the weaker oxide, which is, in that case, iron oxide.
The other ones stay there. And if you use a lower grade iron ore, you're not doing anything to the process other than adding more electrolyte in the cell. So, it doesn't hurt the process at all. So, you can use any iron ore available, and you can use the process.
David Roberts
So, you're passing electricity through. And just so listeners can sort of envision what we're talking about here. This is like an electrolyte cell. How big is one of these? It's about the size of a school bus, right? I think I read that on your —
Tadeu Carneiro
Yeah, yeah. The industrial cell will be about the size of a school bus. And that's the thing. You know, the other important thing about this process is it's scalable and it's modular.
David Roberts
That's one of the really exciting things about this. But just to be clear on the process, the electricity that you're passing through, it's heating everything up. And it's also causing this chemical reaction that splits the oxygen from the iron.
Tadeu Carneiro
Right.
David Roberts
Am I right in assuming that that chemical reaction, where the oxygen splits off the iron, will only happen at extremely high temperatures? And that's why you're heating things up so much?
Tadeu Carneiro
Yeah. Well, the thing is, you pass enough electricity in order to get everything molten. You want to dissolve your iron ore in the electrolyte. Right? So, in the solid state, whatever you do in low temperatures or solid state will not be scalable. This is the important thing to understand. When you say, "Let's decarbonize the steel industry," you are talking about two billion tons of steel every year. So, there are several ideas that eventually can get to pure iron, but they don't scale up to solve the problem of the steel industry. So, you have to pay attention to what question you are answering.
Are you trying to decarbonize a little bit of steel here and there? Well, that's one thing. Are you starting to decarbonize the steel industry? Then you have to scale. And you are talking about two billion tons a year.
David Roberts
Right, right, because I was going to ask. Because right now, there are a couple of companies out there who are doing something like this, electrolysis, to produce iron. But they claim they're doing it at room temperature.
Tadeu Carneiro
Yeah.
David Roberts
Without all the heat. And that's what you say can't scale. Why couldn't that scale?
Tadeu Carneiro
I mean, they will be the ones to explain exactly what they are doing. But, I mean, one of them needs to dissolve the iron ore in acid. And there is a solubility limit. Meaning, you know, it's like you go to the kitchen and start adding salt to water or sugar in the water. It gets to a point where the thing goes to the bottom of your glass. So, you reached your solubility limit. So, if you have to dissolve your iron ore in acid, you have to observe how much you can dissolve, how many grams per liter of the acidic solution.
You're going to find out that you will need lots of water and acid in order to make any sort of measurable amount. Right. So, that's the thing. Is it possible? Maybe. Yeah, but do you decarbonize two billion tons per year? I have my doubts.
David Roberts
How hot does it get in your cell? What is the target temperature?
Tadeu Carneiro
It's 1,600 degrees C. And that's the thing. That's the other. It's really hot. The thing is — but when you manufacture steel, the important thing is that you need the steel to be liquid at one point. Even those who are claiming that they will manufacture at low temperature, they will have to remelt that at high temperature anyway. Because you need the steel to be liquid in order to correct the composition, go to the caster, and manufacture your finished products in the rolling mills. So that's the point. You may get to pure iron. But then you will have to remelt anyway.
You have to go to the high temperatures. In our process, you go in one step to the high temperature. So, you get your liquid iron coming out of the cell. Right. In the liquid form.
David Roberts
What happens to all the stuff that isn't iron or oxygen? Right. You're venting the oxygen out the top. And pure liquid iron is dribbling out the bottom. What happens to all the sort of impurities, like the stuff that becomes slag in the traditional process?
Tadeu Carneiro
You got it. It's slag. Like in the current process, for us, it will be a mixture of oxides composing that slag. And in our process, there is nothing harmful there. So it's slag. It's a mixture of oxides that can be used in construction. Like a blast furnace's slag is being used for today. So you accumulate that to a certain level, depending on the grade of the iron ore you are using. And as you tap the cell to get your liquid iron, once in a while, you are going to tap the cell to get some of that slag out of the cell as well.
So, it is construction material.
David Roberts
You can sell that? You can sell that slag?
Tadeu Carneiro
Yeah.
David Roberts
Okay. So, we got a cell the size of a school bus. You're feeding iron ore in. Oxygen is venting out. Pure iron is dripping out of the bottom. So, one more technical question: Inside any cell where you're passing electricity, you have a cathode and an anode. And I know that the anode is a big part of this. You've got a whole separate team doing R&D just on this anode. So, maybe just explain a little bit. Why is the anode so important? And what sort of qualities do you need in that anode?
Tadeu Carneiro
Yeah. So, that's exactly like you described. I mean, an electrolytic cell has these two poles, right where you close the electricity, you pass the electricity. The anode does not participate in the reaction. So, it's inert. We call it inert because it does not participate in the reaction. But picture this: You have 1,600 degrees, 1,600 degrees centigrade, and you are bombarding that anode with oxygen because you are splitting. So, that thing will oxidize. It's a metallic thing that will form an oxide. So, the secret is to form an oxide layer that is a protective layer that will continue to pass electricity and will stop the oxidation process and let the anode survive for years.
Right. So that's the key portion of the electrolytic cell. And it's a chromium-based alloy, so it has other alloying elements in it to get to those properties, resisting the high temperature oxidation and protecting. That alloy was developed at MIT and patented, and we have the exclusive rights to use that patent. So that's where the fundamental piece of the electrolytic cell to make this competitive process came from. So, on the professors Sadoway and Allanore's laboratories at MIT.
David Roberts
You just got to get the composition right. You got to find just the right alloy, basically. And so, how long will one of these anodes, if you can sort of imagine, like you say, it's heating up and cooling down over and over again, and it's being bombarded with oxygen over and over again. It's a very strenuous process. How long will one of these anodes last in a cell? Like, if I have a school bus-sized cell in my backyard, how long will it last before I have to replace something?
Tadeu Carneiro
Right. We are designing it, and the process is continuous; it never stops. So, we are designing the anodes to last three years. So, it's not that it doesn't get consumed, it's that it will have a long life.
David Roberts
And can you just replace one of those and keep the rest of the cell intact?
Tadeu Carneiro
Yeah, that's the idea. So, the cell will have a longer life than the anode.
David Roberts
Okay, so now I want to try to get my head around the kind of scale we're talking about here. So, you have this school bus-sized cell. How many of these would I have to sort of stack up to match the output of a typical steel plant? What's the sort of relative output here?
Tadeu Carneiro
Now, very good. So, just so you have an order of magnitude here, an idea. Obviously, it depends on the final design of the cell and the amount of current that you're going to pass in each one. But think of a 1 million ton of steel per year. So, you probably need something like 300 cells, two rows of 150 cells each in a building that will probably be something like 150 to 200 meters wide, wide by 1 km long. So, that will give you a million tons of steel per year. Now, if you compare the capacity, it sounds like a very, very large area, but you are replacing a patch for the coal, a coking coal furnace, the sintering and the pelletizing of the iron ore, the blast furnace, the torpedo cars, the BOF, all this goes.
David Roberts
Well, and the coal mine too, if you want to go all the way back up the lines.
Tadeu Carneiro
Yeah, exactly.
David Roberts
So you're expecting to launch commercially in 2026, is what you've said?
Tadeu Carneiro
Yeah. It starts licensing in 2026 to build the first industrial facility. So that's what our intention is, yes.
David Roberts
So, you're going to license this to a company that will then build the plant. You're not planning to go into the sort of bulk steel-making business?
Tadeu Carneiro
Correct. Our intention, our business model, is to license the technology to steel makers or whoever wants, or even iron ore suppliers, and then supply the anodes. So, this is something that we will do. We are not going to be plant builders or steel makers, but we license and we supply the final anodes.
David Roberts
Interesting. So then say, um, you know, I'm a company, I've licensed this technology, I build a steel-making, uh, you know, a couple of these cells in 2026. What is the sort of per unit cost differential between that steel and traditionally made steel? Are you going to be substantially more expensive to begin with, or do you know yet exactly what that differential will be?
Tadeu Carneiro
Well, the current process to manufacture steel has been developed for 3000 years. So, you say, "Well, the first facility will beat the blast furnace," I don't think anyone would expect that. But, you know, once the process is mature, that's what we have as our journey. Once the process is mature and we reach the specific energy consumption that is reachable, that is our objective. With the electricity at $40 per megawatt hour or less, make our process competitive with the incumbent without a carbon tax. So, this process can be competitive without any carbon tax, depending on how abundant, cheap, and green the electricity will be.
Obviously, we are — I mean, the process is energetically efficient. It can be energetically efficient compared to the incumbent, but it's all electricity, so the main cost will be the electricity.
David Roberts
Right, I want to get back to that in a second, but I wonder if you could just talk briefly about when you talk about scaling up. As you say, one of the cool things about this is that it's modular. So, like, you know, it's a lot easier to build one school bus-sized cell than it is to build, as you say, three different kinds of furnaces and coal mines, et cetera, et cetera. So you'll be iterating quickly. You'll be building a lot of these, or somebody will be building a lot of these quickly. I wonder what part — are there specific places where you see cost reductions happening? What specifically do you anticipate getting cheaper?
Tadeu Carneiro
A big portion of this is to understand that if you are going to revolutionize the steel industry, you have to revolutionize the whole supply chain. So, we started to partner with important people in the industry that will provide all the equipment to bring the electricity in the cell, the refractories we need in the cell. I mean, all these things will be very specific for the new process. So, we will find economies of scale as you go partnering with the supply chain that is necessary to build this. What will be the new way to manufacture steel? So, this is something that will happen. You must have that happening.
David Roberts
So, you'll be establishing entirely kind of new supply chains and —
Tadeu Carneiro
In cooperation with important suppliers that are out there.
David Roberts
And so theoretically, every part of that supply chain could be cutting costs over time as it scales up?
Tadeu Carneiro
Exactly. It's a new market. It's something that will demand reengineering the whole supply chain. Now, let me tell you something that is interesting, one aspect of this thing. So think about it: In order to have steel today, the way steel is manufactured today, you need four things. You need iron ore, coal, logistics, and you need the market. So if you think of Pittsburgh, Sheffield, and Dusseldorf, for example, they were big steel centers historically. What do they have in common? They all have coal mines. They have a river passing by — so logistics, and they are close to the market.
So, you would get the iron ore there and you will get your steel. So, that's how things historically happened, right? Now, if you are going to eliminate coal from the equation, you will go where electricity is.
David Roberts
Yes.
Tadeu Carneiro
Now, if you have electricity at the mine, instead of shipping iron ore, you ship a metallic, right? So, you bring the cell there, tap the cell into pigs that are pure iron, and ship that to whatever you want to. It's 40% less weight. The planet thanks you for that. And it's a higher value-added product. So, iron ore suppliers will like that, and it can be done with any iron ore. So, the key thing for the whole thing will be electricity.
David Roberts
But on the iron ore question, you say you can use a kind of lower quality ore than the traditional process. And I'm just curious, like, is that a substantial advantage? Is there a lot of low-quality iron ore out there available?
Tadeu Carneiro
Oh, yeah. At any moment in the cell, that soup of oxides has less than 10% of iron oxide. So, what does that mean? You can transform tailing ponds in iron ore mines, right? So, that's what it means. You can use any oxide, any iron ore.
David Roberts
So, it's a much bigger supply of iron ore available to you than is available to the traditional —
Tadeu Carneiro
Correct. At the same point that when you go to developing countries, they don't need five million tons at once; you can start smaller because it's modular. Right. So that's also important.
David Roberts
Well, let's talk about the electricity then. Because, as you say, the success of this enterprise, and this is a theme on this podcast, lots of different companies I talk to and lots of different industries, lots of different sectors end up coming back to this, which is the success of the enterprise depends on abundant, clean, cheap electricity. And so, you know, there's a lot of people now, there's a lot of sectors, there's a lot of sectors that want that electricity now. You know, the cars want it, buildings want it. Now, industrial processes are going to start running on it.
The green hydrogen wants it, the data centers want it. A lot of people want that abundant, clean, cheap electricity. And just how confident are you that there is going to be enough abundant, clean, cheap electricity for you to make this work?
Tadeu Carneiro
I am very confident, period. And here, I will offer you the following: If you don't believe that electricity will be abundant, reliable, green, and cheap in the future, forget about it. But then, you have to forget about everything else. So that's the thing. I really believe that. And you can see the amount of efforts and investments that's being done to generate green electricity today. It's in all sorts of different forms, not only wind and solar and all the batteries, in order to regulate the grid. If you're going all the way to fusion. So, fusion will happen one day, is it going overnight?
No, of course, there is a transition, but the amount of investment that is being done in order to get clean electricity, abundant and reliable, is enormous.
David Roberts
You know, one question that springs to mind whenever I hear about a business that's relying on clean electricity is: Can one of these cells run on intermittent supply of electricity, or do you need some intermediary to sort of smooth out the supply and make it a steady, constant supply?
Tadeu Carneiro
Correct. We need the latter. We need the base load. The cells will eventually survive some hours if you have a problem with electricity, but it's a continuous process. We need baseload electricity in order to run this process.
David Roberts
I know the business model here is to use carbon-free electricity, but just say you built one of these things and it was running on today's grid electricity. Would it still be cleaner than traditional steel, even if it was using somewhat dirty electricity?
Tadeu Carneiro
Yeah, we need to put the calculations in place and see how that electricity was generated, obviously. But it can be. You're right, it can be. So, depending how you generate, the important thing about the process is you decoupled the need on carbon. So in the incumbent process, the carbon is there in the chemical equation. Now it's no longer there. Now it's electricity. So, yeah, even with dirty electricity, you may be better off for sure.
David Roberts
Right. So, it seems to me that when you're talking about, as you say, a giant industry like iron and steel, the sort of science part is only a fraction of the challenge here. Like, getting a product that works is only a fraction of the challenge. It seems to me like the substantial challenge is how do you find a foothold in a market that is so big, is so set in its ways, as you say, it's been done the same way for thousands of years, very focused on short-term costs, you know, not a lot of margin.
How do you find a foothold? And then after that, how do you envision getting from that foothold to real scale?
Tadeu Carneiro
Yeah, well, look, the whole steel industry is making the pledge to be carbon neutral by 2050. I mean, we didn't have to make that pledge. They are the ones making the pledge. And if that's true, then the blast furnaces need to be phased out in the mid-thirties. So, there is a transition now where improvements will come and everything, but they have to find a solution. They are making the pledges. The steel industry — it's interesting, David, it is perceived as the most conservative industry in the world, and maybe it is, but if you look historically, every time that revolution in steel making was necessary, it was done very quickly.
So when the Bessemer furnace came, it was adopted very quickly. Then the open hearth furnace, then now the blast furnace. Whenever you come up with a process that is efficient and gives what they need, they adopt very quickly, and that's historically proven. So they are looking for a way not to emit two tons of CO2 for every ton of steel that is manufactured. So it needs to be done for the reasons you already explained in the beginning, it's 10% the planet needs for that to happen. And they know that they have to do something. So, I think it's —
I mean, so that's the fundamental part. The other thing is, they are all looking at what we are doing. So when one of them, the biggest international one, is a shareholder of Boston Metal, they are all following what we are doing and wanting. I mean, the pressure is on us to deliver as quick as we can.
David Roberts
Right. So, the take-home here is the industry is ready. Ready and motivated.
Tadeu Carneiro
They are. They made the pledges. Yeah.
David Roberts
Right.
Tadeu Carneiro
Yeah.
David Roberts
And I thought it was interesting — maybe you could talk a little bit about this project that you've opened in Brazil, which is a way of using this process to create valuable products that aren't steel, or to do something valuable that isn't steel. Maybe explain what that is.
Tadeu Carneiro
Yeah, so that's interesting. What happened is, we can use the molten oxide electrolysis process. It's a platform technology. So, the concept is what I described to you before. So, you have a soup of oxides. The least stable will get the bonds broken. So, what we are doing here is, we are looking at mining waste, where you have a mixture of oxides, and to understand if there is any of the metals that are valuable there that could not be recovered by any other process. And we are using that in our process to get that value from mining waste.
And we were able to identify, and we tested and we de-risked more than one opportunity. We are starting with the one that comes from tin smelting from cassiterite. And with that, we get these slags that are sitting there as liabilities in the balance sheet of different companies who have to hold them properly.
David Roberts
What happens to them now? Are they just, are those mining wastes, are they just stored?
Tadeu Carneiro
They are stored, and some of them have some harmful things, and they are environmental liabilities. So, we can process them in ourselves, and then we can take the value out of it and get those slags in a better form, because now everything is molten. So, whenever we take the value, whatever is left can be cast into blocks or bricks or whatever, it's easier to dispose of. Our process doesn't use any water. Right. So, it becomes easy to dispose of, and we can share the profit with whatever happens. So, something that is a negative cost becomes a profitable thing.
David Roberts
Interesting. So, you take the mining slag, you pull valuable metal out of it, and leave basically shaped blocks of —
Tadeu Carneiro
Whatever is left.
David Roberts
— that are easier to store, to dispose. And this is already up and running in Brazil?
Tadeu Carneiro
Yes, the first phase is up and running. The first industrial cell will start later this year, early next year, and we are ramping up very, very fast to be a full operation by 2026. So, what is different from the steel development that we are conducting here in Woburn, Massachusetts, is that in that case, we use off-the-shelf anodes. So that means the same type of anodes that are used in electric arc furnaces we use there. So, the only thing missing to become commercial with steel is already solved. And it's not a distraction, because everything else that you need to scale up the size of the cells, the refractory, bringing the electricity in, everything, I mean, the tapping, the feeding, all the systems, all the balance of the plant will be solved.
And it will help to build the first industrial demonstration plant for steel as well.
David Roberts
Can I ask why you don't need a special anode in those? Like, is it just a less corrosive process or?
Tadeu Carneiro
No, no, no, it's the contrary. I need a higher temperature in that case, because the metals that I am dealing with there, they demand higher temperature. So, I need anodes that are the same as the ones in the electric arc furnace. Now, the thing is, even using those anodes, the carbon footprint of what we will extract from the mining waste is one-tenth of the carbon footprint of the incumbent today in the market, the ferroniobium, ferrotantalum, and ferrotin. And the beauty is, Boston Metal is an enterprise that has a high star of green steel, which will come, but we can deploy the fundamental technology to generate cash earlier and help make the whole enterprise sustainable.
David Roberts
So, this recovery of metals from mining waste is sort of a way to produce revenue and fund yourself as you scale up to steel.
Tadeu Carneiro
Exactly.
David Roberts
And it strikes me that the world is full of mining waste.
Tadeu Carneiro
Absolutely. This is a global —
David Roberts
The world is full of rocks with good metals in them. Like, it's, you know, the sort of mind boggles. You could do this —
Tadeu Carneiro
Tell me about it, Dave.
David Roberts
Anywhere on anything?
Tadeu Carneiro
Yes, we are receiving phone calls every day. "Can you come and look at this and that? And that as well?" So, we built a specific department to analyze all these opportunities in order to prioritize how we grow. That business that we started in Brazil, that is a global business for sure. As you said, this is something that nobody knows how much waste, mining waste is out there that can be used, not only the measurable tailing ponds that are, that's more or less known, but slags and wastes that are sitting there all over the place. You're absolutely right.
David Roberts
And it seems like it would also help the profitability of a mine. Right? If the mine is able to make money off its slag, it's going to help the miners. Right?
Tadeu Carneiro
Absolutely. In mining, the key thing is recovery, and this process helps increase recoveries. So, what happened is, and that's another punch line here for you, David, the following: The thing is, before reaching the new age of electrons, we are moving towards the age of the electrons.
David Roberts
Amen.
Tadeu Carneiro
We are going to reach the age of efficiency. We are consuming two planets, and we only have one planet, so we need to be more efficient. That comes immediately, if not sooner. Our process can help with that.
David Roberts
And, is there any metal that you can't recover? Like, is there a range of metals that you can use this process on? Or could you theoretically sort of dial it in to extract anything, any metal?
Tadeu Carneiro
You could, but again, there are some oxides that are very stable. So, the more stable the oxides, the more difficult it will be to find a way to use the fundamental process. Right. But, yeah, theoretically, you could. It's a mix of oxides. The least stable will get the bonds split with electricity.
David Roberts
Yeah, yeah. So, you mentioned earlier, and this is something I find super intriguing, which is as heavy industry shifts over to electricity-based processes, as opposed to sort of coal-based or fossil fuel-based, it's going to change the geography of the market, the geography of lots of markets. So, I'm curious, sort of like, what does that mean? What does that look like? What is the, you know, project 20 years down the line when electrolysis is the primary way of making steel? Where does that happen? Out in the desert, in the Sahara? Like, how do you envision it? What do you envision the geography looking like?
Tadeu Carneiro
I mean, again, it's like what we mentioned before. You go where electricity is available, and then you also need logistics. But you take Quebec, for example, right? So, you have abundant, cheap, green electricity there, and you have mines close by. So that goes to the top of the list. Australia is investing a lot in green electricity. A process that is modular, with some hydroelectricity in Africa and lots of mines there, could transform that into a very important supplier of metals. Saudi Arabia is investing a lot in electricity. You go where electricity will be available.
David Roberts
Is there a particular place where steel making is concentrated now that might suffer from this? Or, like, a particular area of the world or particular region that might lose out based on this process? I assume so.
Tadeu Carneiro
Yeah, it will. I think the geography of steel will change, but it could change in different ways. I mean, you could get metal moving instead of iron ore. And you get the places reinvesting in electric arc furnaces to remelt pure iron units rather than starting with iron ore. It's difficult to forecast because it's not only the pure iron units, you need the market and you need the logistics as well. Well, in order to close the equation. So, I believe it will change, I really do. The geopolitics of metals, it will continue to be important to be close to the market. So here in the US, we already have electricity to deploy our process tomorrow if we want. I mean, this is, I don't think it is a problem.
David Roberts
Looking out to the future, I mean, depending on how bullish you are about clean electricity, if you listen to some of the more optimistic forecasts about solar costs, it's really going to get really, really cheap, if you believe those forecasts. And I wonder, is there in the future a world where steel made with this process gets cheaper than current steel such that it starts to compete in new markets, gets more competitive with, say, aluminum? Something like that. Do you envision steel getting substantially cheaper?
Tadeu Carneiro
Yeah, I think it can be cheaper. Aluminum is already more expensive and it will depend on the properties of each one of the materials also to get to the final application. But yeah, short answer is yes, I can see steel becoming cheaper. You know, I think, again, I may not see this myself, although I look like I am 85, I am already 120 years old. But I believe that electricity will be, in the future, too cheap to measure. So it has to.
David Roberts
Well, I love to hear that.
Tadeu Carneiro
Whoever survives on the planet, we'll see.
David Roberts
Okay. As I said, one of the, to me, the coolest features of this is that it's modular. So, you could theoretically, anytime you have some iron ore, you could just buy one school bus-sized cell and make pure iron. You don't have to build a factory, basically. And I'm just curious: That also seems to me like it's going to transform the market in some unpredictable ways. And I'm just curious, what would small scale iron production look like? Where could you imagine these cells kind of being tucked in smaller applications, where today it's unrealistic because there's too much capex involved, too much building involved.
What would a sort of small scale iron production do? You envision that popping up in lots of different places?
Tadeu Carneiro
I think so, I do. What happened is the blast furnace is the most beautiful equipment for a metallurgist, because you add two cold things on the top and you get 100% efficiency by blowing air in that thing. And it's been developed for hundreds of years, but you need to manufacture three to four million tons per year to get that efficiency. Now, the thing is, you go to developing countries, you may not need three to four, and then it's a $5 to $8 billion of capex to get that going. So, I think, especially in developing countries where that's a catch 22, you need the steel in order to develop infrastructure, but you don't have the money to invest everything so you can start smaller and then grow. I think for developing countries, the modularity is key, and it's very, very, very important.
David Roberts
Interesting. All right, well, this has been fascinating. And so, as you say, 2026 is when you're targeting having an industrial-sized cell making iron that you're selling on the market. That's 2026 is when you go commercial.
Tadeu Carneiro
That's the year when we go commercial. That's the target. It's a very aggressive target, but that's how we are working very aggressively to get that going.
David Roberts
And is that because you're still developing the technology, or do you feel like the technology itself is sort of dialed in at this point and it's more about scaling up in logistics and business stuff?
Tadeu Carneiro
It is a scaling up for the most part of it. We will finalize the development of the modular industrial inert anode towards the end of this year. Next year, we should run here in Woburn a stable, multi-anode cell that is semi-industrial, and then from that point on, is going industrial with the first demonstration. So, we are working on finalizing the last touches in the technology and scaling up to a semi-industrial by next year.
David Roberts
Interesting. Well, thank you so much. This is so exciting. I sort of joke with my listeners. I've become such a believer in clean electricity, and every time I hear about a hard-to-decarbonize sector, I'm just like, "Well, give it a while. Clean electricity will get there, too." And so it's very exciting to me to hear that clean electricity has made it to steel and one more sector sort of conquered by clean electricity. Or maybe that's premature: to be conquered.
Tadeu Carneiro
To be conquered. That's right. Very good, David. That's very exciting. We have a talented group with fire in the eye to get this thing done, and that's the most amazing thing in the experience. It's all these talented people working in the program and making it happen. So it's very nice.
David Roberts
Awesome. Well, thanks for coming on.
Tadeu Carneiro
Very good. Thank you.
David Roberts
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