Season 2 / Episode 3: Tadeu Carneiro, Boston Metal

This is the Green Steel Challenge. Hi, I'm Astrid Corp and welcome to the second series of the Green Steel Challenge. A podcast that focuses attention on the efforts being made towards decarbonising the steel industry worldwide. Whilst we spoke in the first series, mainly to CEOs in the international steel industry, we will extend in the second series to speak to leaders of the whole value chain of the steel industry and let's start up to have a chance to present what they have been working on as well. Joining me each time will be Dr. Mike Walsh, an independent consultant and project developer in the Steel and Special Metal sectors, and James Moss, strategy consultant and partner at first river consulting. This podcast is produced by the Willy Corp Foundation and Kalanish. Today I would like to welcome Tadeo Kanero, CEO at Boston Metal, based in Woeburn, Massachusetts in the US, and Minas Gerais in Brazil. It's a pleasure to be here with you in an honour. Boston Metal is a truly revolutionary startup, which is unlocking a future of sustainable metals and green steel production with a commercialisation of its molten oxide electrolysis known as MOE technology platform. Let's hear more from Mike and James. Thanks, Astrid, and welcome to today. It's a great pleasure to meet you. And if this podcast was made for anything, it was to talk to people like you who are innovating in steel manufacture, particularly to decarbonise the process. And ever since we first got wind of Boston Metal and your activities, we'll talk about them in a minute. We've been excited to know more about both the science and the entrepreneurship behind the venture. So perhaps you can start simply by explaining what the molten oxide electrolysis process is and what it looks like. We at Boston Metal are very excited with the prospect of developing and commercialising this new way to manufacture steel that could eliminate almost 10% of all the CO2 that comes from steel manufacturing in the world. The process is a one step process, very simple process where you add iron ore of any type or any grade into an electrolytic cell that has a soup of oxides or other oxides and you pass electricity and then the electrons will, through proper thermal balance, keep everything in the molten form and we will split the bones of the iron oxide. So you can get in one step your iron in the liquid form in the bottom of the cell and you will meet oxygen. So one step, any iron ore modular and then you, as you collect your iron in the molten form passing electricity continuously, you come to a point where you tap the cell and you collect the pure iron in the liquid form. So that's in a nutshell how the process works. So it's a batch process. So you need these loads of electricity and you never stop passing electricity into cell even when you are tapping the cell. So it takes iron ore, an important point that you made very clearly is that this is literally any iron ore and that's a point that we've discussed a lot in the Green Steel Challenge about the restriction of certain iron ore from certain geographies for certain processes. The whole beauty about this is it takes any iron ore, you continuously load that and then you say there's a soup of other oxides in there. Are they consumed or are they just part of the process? Now they are part of the process and they are not any special. What's special about that soup of oxides? It's composed of oxides that are more stable than the iron ore site and which are aluminum, silica, magnesium, caulcia. So therefore the impurities in the iron ore, that's why when you use a lower grade iron ore, everything you're doing is increasing the amount of that soup of oxides. So eventually you will have to also tap a little bit of that soup of oxides which is lag. It says lag, it's an inert's lag that will be able to be used as a construction material for example. It's a mixture of inert oxides that are more stable than the iron oxide. The beauty of this process is such that you know it so you understand that at any instant in that soup of oxides where you add your iron ore, the amount of iron oxide that you have there is less than 10%. Therefore you can imagine transforming tailing dams in mines. So even mining waste from tailing dams from iron oxide will have more than 10% of iron oxide. They don't have any any impurities there other than other more stable oxide. It's very common to hear that mining only gives you one crop. Well with this technology you may think of a second crop. Yeah, you know that's the beauty of it. How long does it take to tap that first iron batch is it worth? The way to see this is the following. I mean the process is dictated by the amount of electricity that you pass. So you have the unrolled surface parallel to the cathode surface. The cathode is the metal itself. So the more electricity you pass the higher the amount of iron you are producing. So if you have for for one million tons of steel per year you would need 300 cells passing 600 thousand years each. So two rows of 150 cells. So that answers your question. So you can have a million tons of steel per year using this range of 300 cells 600 thousand appears each cell. So each of those cells is producing how much a year? A medium divided by 300 right so that's that's how many that's right. How big is this I'll tell you. You can think of each cell as a school bus. So think of a bunch of school bus work in parallel. And you pass the electricity and the same goes in every one of them. So it will actually look more like an aluminum plant than a steel plant. Correct. Correct. So it resembles a lot. It's electrolysis that is used to manufacture aluminum. But then it stops there because everything else is different. Temperature is a thousand degrees higher. The electrolyte for aluminum is totally different. It's very nasty. It uses a fluid right you need to have very pure aluminum to do that aluminum is very light. So the topping is not the regular top you suck that out of the cell. So I mean everything else is different compared to what we will have. The common thing is it's electrolysis. So you you know metals are produced using electrolysis for a hundred years because aluminum is is being produced this way. So it's in our case it's the electrolyte is is a mixture of oxides that are in air. It's a that therefore molten oxide electrolysis. Two questions. One is it sounds like if I understood you correctly that you could speed up or slow down this process depending on your electricity usage. Correct. Correct. Yeah. It is about electricity. This can change completely the geopolitics of steel because you know it's in the past. I mean what is this steel is in the past that would be coal logistics market and our nor so if you look at Pittsburgh, Dusseldorf, Sheffield. They all had three of those four things in common a river pass by the coal mines and they were close to the market. So you would bring the iron ore there and boom you are a big center of steel. right? So, it is historical, that's how it happened. Now, the minute you want to eliminate coal from the equation, you go where the electricity is. So, if you have electricity at the mine, you can ship a metallic product without being a steel maker. So, you bring the cells to the mine, ship a metallic, you are going to ship 40% less weight, the gold will thank you, and for that, and it's a higher value of that product, and you can ship to places where you don't have electricity, you know, the cheap electricity. So, they just remelt the pure metallic product and the coal want to manufacture the finished steel products. What's the economy of scale? Do you need 300 yellow school buses? Or could you just park a yellow school bus outside an iron or mine and produce your iron? Well, that's the beauty of it. You know, the blast furnace may be the most beautiful piece of equipment for a metallurgy. You know, you add the two cold things on the top and blow air, and then you get your pig iron on the pub, I mean, 100% efficiency. But then, in order to get that stuff, you need 3 million tons per year to be, that's the economic module here, you don't have that all this, you know, carbon emission. If you need more metal, you add more cells. It's modular. So, you don't need to invest for three or four million tons at that once. So, the answer is yes. If you need only around the 4,000 tons of steel per year, yeah, you park a one bus and you can get that, right? And that's the thing, you know, because the other front that we are exploring is to take value from mining waste because the technology is a platform technology. So, the same thing will happen in any soup of oxide. So, you pass electricity, you split the bonds of the least stable. So, the plant in Brazil that we are starting a industrial plant there will take metals of high value from what is an environmental issue today, to a mining waste from teenismality. So, we can take Nairobi and Tantulum from teen slags that otherwise are an environmental problem today. Yeah. And for that, you need less cells, right? So, we will have four or five cells to get 10,000 tons per year in our finished products. Having described the process, you started Boston Metal 2017 or around that time, or is it longer than that? I've been with the company since 2017. I was employing number six then early in 2017, but the company was formed some years before in 2013 and they went when they brought the coffee cup size on the bench at MIT to the first cell that was supposed to explore all sorts of different metals systems to see where they would go with the technology. So, when I came, we brought the focus into STU and high value metals. And then you've also got some very significant investment behind you from some very big hitters. How did that come about? Did you go as technology startup route or were you looking specifically within the steel ecology? Because of my background, the first thing that I tried when I joined was to approach my CEO friends in the steel companies. And at that time, seven years ago, it seemed to be too early for them. It's funny enough. Since a couple of years, everyone is really paying attention and pushing, so they really need us to be successful as soon as possible. Because of that, the first round of finance was actually brought about by the lead of breakthrough energy ventures, which is the fund that Bill Gates formed with his friends. And so we were very lucky that that fund was formed at the time that we needed to start the company. And then we had three other companies that joined the series. So, breakthrough energy ventures led. And then we had the engine, the fund formed at MIT. And we had OGCI, the consortium of oil and gas companies. And also prelude ventures, which was another fund that was an LP breakthrough energy ventures, but decided to invest separately. So those four came in the series A. And then we had two other successful rounds of finance. The series C, the last one, consolidated a group of clainting investors. And you have the biggest of everything, the two largest mining companies, the BHP and Vali, the largest international steel maker, Barcelona, Mito, Saudi Arunco, Microsoft. And we are very proud of the fact that for the first time, the IFC World Bank invested in a company pre-revenue. So we were the first one. So we got a 20 giants in a sense and the beauty of it is no one controls the narrative. So it's well spread, the ownership, and they all very much helping to push us to success. So we can do what's the best for the company. Yeah. No pressure today. You're there to save the planet. And there's a bunch of smart money behind you there. That's right. I mean, do you see yourselves as disruptors or enablers? I mean, as you talk, it sounds like maybe a bit of both disrupting the iron or industry, but enabling the steel industry. Correct. Yeah. If you have to pick one, I would say disruptors, right? Because what happens is think about it. Steelism and the fact are the same way since the Iron Age is for millennia. It's more than 3000 years that we get iron ore and we mix, we go and somehow we get to the metallic iron. And so this is really disruptive. You know, we'll change completely the way things happen. As you went through those investment phases, one, two, and three, bringing in bigger and bigger hitters all the time. Well, start with big hitters with Bill Gates. Has it always been received as a an environmental zero type of a company or did it start off as a new way to make economic steel and metals? You have to show that there is a journey to be competitive, but it always started with the driving force to eliminate carbon emissions. And so break through any adventures, they invest in companies that can take at least half a gigatoms of CO2 per year. So it's steel is a very important component. It's almost 10% of all the CO2 emitted in the world. So that's the main driving force. But if you don't show a journey to competitive, it's more complicated obviously. The first industrial demonstration plant is not going to beat the costs of something that is being developed for 3000 years. But we will disrupt the whole supply chain and in order to get to a cup packs that is competitive. And we will have enough electricity, abundant green, cheap and reliable in the future to make the process competitive. So we, according to our calculations, once the process is mature with electricity that is $40 per megavat hour or less, we will make the process competitive without the carbon tax. And just how much electricity does a cell need? Yeah, a ton of iron. The way to look at this is the specific energy consumption. So once the process is mature, we believe we can achieve something between 4 and 5 megavat hours per ton. So that's the journey, that's the objective. So we need half of that theoretically to break the bones. And so if you add 100% losses in the process, you will still get a process that is energy that is efficient compared to the incumbent today. So the blast furnace B.O.F. route will consume between 5.5-6 megawatt hours per ton. It all comes from Bernie Goldo. In our case, we will come from electricity. Just to put that in context, 4 to 5 megawatt hours per ton is a lot of electricity. If you look at an electric often, it's melting a ton of steel. That's more like half a megawatt or 500.000. So it's a lot of energy. And I presume that the main constraint and your technological barrier is all about energy consumption. But I also understand the other main technological issue that you have is the nature of that anode. Because that takes a heck of a whacking in terms of the process. Are those the two main thrusts in terms of developing your technology to commercialization? Absolutely correct. Yes, those are. We just finalized the development of the first generation industrial modular in-air tonode. And with that, we are building now the first semi-industrial cell. We have 10 anodes in the cell. And we will start operations later this year and continue the operation in 2025. And then from that point on, we'll be able to design the first industrial demonstration plant. The scale of the anode is really what is behind this thing. And you described it very well in a very succinct way, the walk that it takes. You imagine a metallic surface being bombarded with oxygen at 1,600 degrees C. So what happens is the alloy, which is a chromium-based alloy, will develop a protective layer that stops the oxidation and continues to pass electricity. So that's how it works there. And then the other is electricity. You go where electricity is. Now, if you don't believe that electricity in the future will be abundant, reliable, green, and cheap. Forget about it. But then you have to forget about a whole bunch of other things, not just steel. So we believe that the future will be top of the society decided to get green electricity abundant. I'm an optimistic person, but even without being too much optimistic, I think I could say that electricity in the future will be too cheap to meet it. So that's where it has to go. Yeah, that is an optimistic view. I mean, when you look at the globe, where do you gravitate towards as being geographies where you think you will be best received? Well, you have parts of the world that you can deploy right away. You have electricity that is very cheap and green. You take Quebec, for example, in Canada. So that's one case. It's a kind of a Scandinavia, it's another case. The Middle East, North Africa, will be or are being developed as places where electricity will be deployed cheaply. And then you have Australia, Brazil as options as well. So you can deploy it right away. Then what will come will be the result of all the investment that is being done in different ways to generate alternative ways to get electricity. So geothermal, modular, nuclear, all sorts of different things. And then it starts to balance the grids and everything. All this eventually will solve the equation for electricity in the future. You produce from your process, you get a high quality iron. When you talk to your CEO, steel CEO friends, how do they see you fitting into existing processes as a source of green iron or as a complete alternative to the steel making process? You can serve both ways. So our cells will bring molten iron. So you eliminate the patch of our coal, the cooking coal, the fire days, the blast furnace, the torpedo cars, the POF furnace, all these goals. And even processing the iron ore, the spelletizing, sintering things, you don't need any of this. Because you add the iron ore dry, you don't use any water in the cell and it gets dissolved in the electrolyte. So it's just a question of adjusting the way you add the thing in the cell. So you eliminate all that. So if you bring the cells smaller actually area for the same capacity, you get your molten iron. And then from that point on, it's all the same. You have to go to a lateral metallurgy to correct the composition before you send that to caster and the rolling mills. So you can bring to, if you have electricity at the place where the integrated mills are, you bring the cells there instead of relining blast furnaces. That's one thing. If you are investing in electric arc furnaces to remote metal, then you can bring the cells to a mine. And then ship metallic iron digs to be remelted. So it's not, you lose the efficiency, the thermal efficiency of having liquid metal coming out of the cells. But you can go where the electricity is now and cheap. You can see that in both ways. It's the point where I can make this observation. You know, if we are not the ones who are making the pledges to be carbon neutral in the steel industry, the steel industry is. So they are making the pledges being carbon neutral by 2050. If that's true, then the blast furnaces need to be phased out by the mid-30s. So right now we are leaving a transition where you see all sorts of improvements and gain 10% here, 20% there. You push and shovel and do this and do that. But eventually, you'll need to have a process that that solves the whole equation. It's my understanding that Boston Metal will remain a technology company and you will sell all the license or technology to companies. Do you envisage existing steel companies using your technology or do you see a whole new industry moving forward using your technology? We see all the current steel makers are following you what we are doing. I think they will be ready to adopt the technology. And yes, we see ourselves as a licensing the technology to whoever wants to use not only steel makers, but also our own our suppliers as we discussed before. We will license the technology and we will supply the key component of the cells, which is the inertanode. So we intend to manufacture that ourselves and supply that. And everything else is the standard regular engineering. Exactly. Refractory is a steel shell, electricity being brought and break the fires and all these things. So whoever wants to license the technology, we use their means to build the plant and use it. So that's how we see ourselves in the future. This is the other thing. You look historically. It's funny because the steel industry is perceived as the most conservative industry on earth. Maybe they are, but every time that a process was developed, that was efficient and the best process. It was adopted very quickly when the bad hammer came about, then the open hearth came about, then the blast furnace came. So it doesn't matter where you are in the world and what political system you have, everybody produces steel uses a blast furnace today. If you don't have a scrap to remel. Once the most efficient and best process is offered, to the industry, the industry tends to adopt very fast. Yeah, which raises the issue. Are you guys the only ones exploring the electrolysis route? The high temperature of both and oxide electrolysis, yes. We are the only ones. So a little electric iron exists forever. It's something that don't skate. At maximum, you become a boutique steel. You can get Olympic size films of acids to dissolve stuff and then you get a very small amount of iron. This is done forever. So yeah, so we don't know of any any other process that can scale the way our process can. And do you have waste? their solid waste product. I've seen the slag functions just like slag from a blast furnace or a B.O.F. Correct. Yes, that's exactly what it is. So if you use a very rich iron ore, you're not, you know, your electrolyte is going to be more or less the same always. If you use a low grade iron ore, you will have to tap some slag once in a while and that's very rare and can be used as the same way this slags today are used. Yeah, of course construction material. It's just an important point that we haven't mentioned yet is that your main waste product, a byproduct instead of CO2 coming from a blast furnace, your equivalent to that is oxygen opposite. Yes, and that has value as well. And that's not the one we can get, right? Yeah, no doubt about it. Yeah. So we will have a solution to capture that for sure. As a matter of fact, this technology at MIT started to be studied because of the oxygen, not because of the metal. And historically, it was NASA was funding Professor Sadoe's and Professor Allan or laboratory to get extended stay on the moon for the astronaut. So you'll get the regolith, put it in the cell, get a big solar panel there, path electricity, get oxygen. And so the the the Arnold at that point was made out of the region. So eregion is rare, very expensive, but everything on the moon is expensive anyway. So so when the funding ceased there for that development, they thought, well, what if we look at the cathode, but then they needed to get a non-old that that would be competitive. And that's where they developed the chromium alloy as as a linearity on the old and then we we started to to manufacture metals on earth using the technology. But yes, oxygen will come out of the cell as as I'm other broad by broad. So going forward, you've talked about commercialization by 2026, what does that look like and what are the major milestones between now and then? You're starting and running successfully the multi-anode cell here in Uber. We'll allow us to design and and and build the first industrial demonstration plant, which we didn't decide where it will be placed at that this point. And then from that point on being commercial meaning meaning start selling licenses to to build a big plant. And that's now we could start aggressively I would say in 2026, build the first plant if you take a couple years it will be 2028 where where a first mid-on-tone per year or two mid-on-tone could operate. That's the by-stones are the ones that I described. So the same industrial cell running continuously and then the first industrial demonstration. And then so we got to the first generation of of inereton nodes. We will we will continue to develop the design to to be more competitive in the industrial and in the industrial facility. That's the journey that that we have to travel in order to get there. When you say it's going to run continuously, do they run for days and weeks and months on end or is it so 12 hours and stop for an hour or? No, it's four months. Yeah, it's yeah. So the same I industrial cell here in Uber, we are planning to have runs that will last three four months. You'll stop once in a while and you keep going. Right. So we already had with our single one-ode cell, you know developing the cell and everything around. We first used carbon nodes and with those carbon nodes we were able to run. We had three runs that last two months each. More recently with the inereton node, this first generation of inereton node that is industrial and modular. We we had three runs that that were month runs. So so then once once we get the same our industrial, we we are projecting runs that last three months and then it's stopping because we need to test other variables and other parameters in order to make the process more complex. Yeah, but it could continue. How many people does it take to run one of these plans? So I know say a one million ton plan. How many people do you think might be working with such a plan? This is another aspect. We are investing a lot in controls. So this will be another good could become another very important product for the company. So controlling the cells and and and automation will make the the plants you know you know you need people but but it's much less than than what you need in the combat. So it will be really automated. So I would say equivalent to what it takes in the in the aluminum plants. Okay, very very automated. Yeah. As you look forward what are the biggest obstacles for you? Is it people? I mean it doesn't look like it's money. People want to throw money at you. Well, it's I mean it's it's not that easy but but I know what you mean. I mean it's yeah so you'll you'll have you'll have lots of people who want this to succeed and then you look at our syndicate of investors and it will be what tests to that. Talent is the bottle neck for everything right. So it's the more talent you have the bar you can do and uh you know in that there is something that is the necessary time in order to deploy its systems and to make them large and everything. So that's that to me I mean it's talent and and and time right that we have to there is no way to get a shortcut to that. So on the basis of what you've just said unless it's a big assumption but let's assume the power is made available. We've got nuclear and all kinds of places because we can make this stuff all over the world. So if somebody wants to go nuclear then they can exploit this technology to their benefit. So on that basis everything you said by 2050 why isn't every ounce of steel on the planet gonna not be made by what if your technology. Oh sorry. Oh it is. Exactly. I mean I'm glad you said that. Okay it is. I mean I just want you face the 1.8 billion tons will take by 2050. Okay. Once you face out the blast furnaces you know you need the technology I mean even if you find a billion tons of scrap to be remelted every year you still need one and a half billion coming from iron ore in 2050 according to the projections. And so our power process is the one the one process that can scale up I mean it historically that's what happened. Maybe everybody uses blast furnaces right. So it's 70% of all the steel the 1.8 times 0.7 right 1.4 billion tons it comes from blast furnaces. You go back where the blast furnaces didn't exist and say wow and you know in some decades everyone is gonna be using this technology. Now it always starts with the question is it important to eliminate CO2 or not right. So if it is you have to find a way that scales and then the next thing is so we have an off electricity. I mean this is and we will the way society is decided that everything will be electrified. This thing of one of factory metals using electricity is old I mean it goes back to fire day 1800 so now we need to use it so that's that's what it is I think I think you were right by 2050 it's going to be MOE for steel it has to be yeah. And you're using electricity presumably in the overall process you're using electricity more efficiently than one of the alternatives which is to make green hydrogen using lots of green electricity which is then used to reduce the iron. The hydrogen route is possible of course it is you know but but the hydrogen once we are commercial and we are deploying our technologies in larger scale hydrogen is the man in the middle so why do you need to go to hydrogen with all the things that that you know the simple thing he was look direct reduction exists for more than 50 years that's replace hydrogen with the the the natural gas and you got it direct reduction never took off I mean during these 50 years as the most important production method because it's limited. You need high grade iron ore. And then, I mean, these days, they're saying, "Oh, you can relax a bit and you can use, you know, you don't need 66% iron, you can use 64." But again, you go from 3% of all the iron ore to 20% of all the iron ore. So if a steel maker decides to decarbonize production of six, seven million tons per year using hydrogen and have very rich iron ore, very cheap electricity and it's green and it wants to get a premium because it's going to cost more and you solve all the problems to get your green hydrogen. Yeah, you can do six million. If the question is, how do we decarbonize the steel industry, which is two billion tons per year, but that's not hydrogen, that's not the solution. It's clear. It's clear. Right. We are super excited with what we are developing here at Boston Metro. One thing that I, you know, made me feel the most successful person on earth is it was the fact that we were able to attract all the talent that we did. It's a heck of a group working here. It's unbelievable that the talent that we were able to congregate here. And as I mentioned before, it was employing number six back in early 2017. Now we are approaching 300. It was really refreshing to see how we can attract talent. And to me, that's what we need in order to get this equation solved going forward. So we are very excited and we will start this industrial molten oxide electrolysis facility in Brazil, become revenue in 2025 now by April. And so we graduate as an enterprise. And this is something important to say. It's very difficult to find an enterprise like ours where you have a North Star that is going to solve a problem for a multi-trillion dollar business, which is the steel with another front that is very profitable and can bring gratitude to make the enterprise sustainable. So that's who we are. That's how we feel. And then we are very excited with the journey ahead. We're excited to hear it too. And there's a lot resting on the success of molten oxide electrolysis. And we look forward to revisiting with Boston Metal sometime in the future as you go through this journey. Thank you so much. And of course, you have an open invitation to come and kick the tires here. Anytime you want, there's nothing like coming to see for yourself. It will be a pleasure and an honor to have you visiting us. Absolutely. We'd love to. Yeah. Thank you so much. It's my pleasure. Thank you. Thank you, Tadeo. And thank you guys for this very interesting discussion. And next time, we will be talking to Ellen Dancemore, CEO of Severefield PLC. For the very latest steel news, pricing and market data, stay ahead with Kalanishk commodities. Your trusted source for steel industry information. With an unrivaled team of experienced journalists all around the world, get accurate updates and market reports to help you make informed business decisions fast. The latest data, market information and steel news is at Kalanishk.com. In this far spaced world, knowledge matters.