Stealthy Green Steel Startup Cracks Lazy Iron Ore Code
Decarbonizing the steel industry is one of the biggest challenges facing climate advocates, but solutions are beginning to emerge. In the latest development, the US startup Electra has busted out of stealth mode with a new recipe for green steel and an $84 million assist from a group of A-list clean tech investors, including Breakthrough Energy Ventures.
New Green Steel Process To Solve Lazy Iron Ore Problem
Electra is new to the CleanTechnica radar, so we have some catching up to do.
Over here in the US, about 70% of steel is produced with electric arc furnaces, which which is a good head start. In contrast to fossil-fueled blast furnaces, electricity opens up the door to producing green steel with wind, solar, and other forms of renewable energy.
That’s all well and good, but steelmaking requires higher grades of iron ore. As described by Electra, at least 62% iron content is needed for commercial grade iron ores, with natural gas or hydrogen furnaces requiring at least 67%.
That dependence on high grade iron ore is a double whammy for steelmakers. It can raise costs, and it can also limit the availability of domestic supplies.
Electra figured out a solution, which involves, well a solution. The idea is to dissolve less costly, low-grade iron ore in a solution, then extract the iron. The company states that its process can work on ores with an iron content as low as 35%.
The process of dissolving iron ores is “excruciatingly slow” under normal conditions, as described by Electra. In addition, extracting pure iron from a solution is difficult, because it is more unstable than other things floating around in there.
Electra’s process dispenses with those obstacles by re-configuring standard electrochemical and hydrometallurgical processes.
“Our team, starting with a clean sheet, developed an electrochemical process to refine iron ore to high purity iron by radically lowering the process temperature from 1,600 to 60 degrees Celsius,” Electra CEO Sandeep Nijhawan explained in a press release.
The low-temperature process can start and stop on demand, which means that it can use available wind or solar without necessarily involving a significant investment in energy storage.
The use of lower-grade ores could also help boost the US higher up on the list of top steel producers.
“We also have a historic opportunity to decentralize the global iron and steel supply chain and re-shore manufacturing and mining jobs,” Nijhawan said.
Problem Solved!
The green steel supply chain bottleneck is already happening. Citing a recent report from the Institute for Energy Economics and Financial Analysis, last June our friends over at SP Global noted that a “shortage of high-quality iron ore in the marketplace presents a significant hurdle for steelmakers who are trying to reduce their carbon emissions.”
“Green hydrogen-based technologies use less carbon to produce steel, but the process requires higher iron ore grades than traditional blast furnaces,” SP Global noted.
Last August, IEEFA issued a report on decarbonizing the steel industry, which focused attention on Direct Reduced Iron (DRI) ironmaking processes as a “key part of steelmaking’s lower-emissions future.”
“The ability of DRI to use green hydrogen as a reducing agent, rather than metallurgical coal, means that investment in DRI is expected to expand significantly going forward,” IEEFA noted, but the organization also warned that the process requires high quality ore with an iron content of at least 67%.
“DR-grade iron ore currently makes up only about 4% of global iron ore supply,” they added for good measure.
So much for the bad news. IEEFA also took note of several leading steel industry stakeholders that are developing new processes suitable for lower-grade ore.
$85 Million For Green Steel
A green steel pilot plant is already under construction at Electra’s headquarters in Boulder, Colorado. With $85 million new dollars in its pocket, the company plans to finish the pilot plant next year and get in gear for the next step, which is a commercial-scale demonstration plant. If all goes according to plan, the demonstration plant will start producing green steel sometime during the second half of this decade.
The $85 million investment was a group effort featuring:
Breakthrough Energy Ventures — Backed by Bill Gates, Breakthrough launched in 2016 on the heels of the 2015 Paris Agreement on climate change. It initially seemed focused on nuclear energy, but it has branched out in all sorts of different directions including sustainable hydrogen and concentrating solar power.
Amazon Climate Pledge Fund: This fund launched just a couple of years ago, in 2020, with an initial platform of $2 billion. It has backed high profile ventures like the hydrogen-electric aircraft company ZeroAvia as well as lesser known startups like Turntide, which has developed a new energy efficient electric motor.
Rounding out the list are BHP Ventures, Temasek, S2G Ventures, Capricorn Investment Group, Lowercarbon Capital, Valor Equity Partners, and Baruch Future Ventures among others.
If BHP rings a bell, that’s no accident. IEEFA cited BHP in its iron ore report, in which the company stated that “there is simply not enough high-quality iron ore suitable for efficient DRI/EAF production to meet the global steel demand.” Apparently BHP is not waiting for the grass to grow under its feet.
Woke Capitalism Is Coming For Your Freedoms
Electra is a good illustration of the rising tide of investor interest in clean tech, and in that regard so it’s no surprise that Republican office holders, candidates, and their allies have been raising the specter of “woke capitalism” as the latest thing to motivate their voters to the polls.
The gist of their complaint revolves around the ESG (environmental, social, governance) movement, in which companies adopt socially responsible business practices, at least on paper. The devil is in the details, but the basic idea is that companies can do better, and attract more investors, by taking ethical principles into the decision-making process.
Skeptics may scoff, but ESG advocates have been making a good case for the bottom line benefits of ESG investing, which means that human rights and the climate crisis are front and center — and that’s why the “woke capitalism” canard has become part and parcel of Republican discourse.
It’s not just empty rhetoric. Last year legislators in the Lone Star State passed SB13, a new law aimed at financial firms that “discriminate” against fossil energy. In theory, SB13 banned scores of financial firms from doing business with the state’s pension funds. In practice it only singled out the high profile ESG investor BlackRock for attention.
A group of Republican state attorneys general also piled on to BlackRock last summer. In a letter dated August 4, the group took BlackRock to the woodshed over statements in support of climate action made by CEO, chair and co-founder Larry Fink, even though the firm itself still has a hand in the fossil energy industry.
“Some states work with BlackRock for retirement plans, pension funds, and investments, but the company seems to be more interested in environmental, social, and governance (ESG) factors,” complained Arizona AG Mark Brnovich, who organized the letter and got 18 other state AGs to sign on, including Texas AG Ken Paxton.
Considering the torrent clean tech investment pouring into both Texas and Arizona, the letter seemed less inclined make the case for fiscal irresponsibility and more inclined to focus the attention of Republican voters on a powerful, high flying global financier. If you have any thoughts about that, drop us a note in the comment thread.
Chances are you’ll hear more about the evils of ESG investing as Election Day 2022 draws closer, but that probably won’t scare off investors when there’s money to be made.
Follow me on Twitter @TinaMCasey.
Photo: Green steel schematic courtesy of Electra.
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