Boston Metal Notches $262 Million Funding Round for Clean Steel

One of green steel’s biggest players gets a huge boost in its quest to decarbonize a heavily polluting industry.

(Bloomberg) — Boston Metal, a startup that has developed a method to make low- or no-carbon steel using electricity, said it closed a third round of funding at $262 million.

The Boston-based company said the latest round of funding will be primarily used to scale its decarbonization technology for commercial use and hiring more employees globally. The company has already proven its process works for ferro-alloys — essentially steel that has other metals in it to make higher value metal — but the next step will be to show it can turn iron ore into steel for the traditional steelmaking process at scale.

“It’s an endorsement of the technology and shows the importance of what we are doing,” Tadeu Carneiro, the chief executive officer of Boston Metal, said in an interview. “Getting steel running continuously will be the milestone until the end of next year.”

Steelmaking accounts for about 7% of global carbon emissions, owing to conventional steelmaking’s reliance on coking coal to heat the iron ore and turn it into molten metal. Steel purchasers and investors are growing increasingly adamant that the industry clean up its act, and major producers are searching for alternative techniques to produce low- or no-carbon steel. Global demand for steel could grow 20% by 2050, according to a forecast by the World Steel Association, making the need for steel free of carbon emissions even greater in the coming decades.

ArcelorMittal SA, the world’s second-largest steel producer, is the lead investor in the Series C round, Carneiro said, which also counts Bill Gates-funded Breakthrough Energy Ventures and the world’s largest mining company, BHP Group, among its backers. Boston Metal uses a process that melts iron ore at 1,600C (2,900F) passing massive amounts of electricity through it. Doing so creates molten iron pure enough to be made into steel. If the electricity is produced from carbon-free sources, it would produce emissions-free steel.

To be sure, the company faces a few hurdles. Proving their carbon-free technique can work at scale could be a long process. A carbon-free aluminum-making joint venture between Alcoa Corp., Rio Tinto Group and Apple Inc., for example, is a couple of years into proving its technology works at scale.

Green steel options remain thin for consumers across the globe, even as more of them push for the industry to get greener. A reduced carbon footprint has also been at the center of American steelmaker Cleveland-Cliffs Inc.’s bid to buy rival United States Steel Corp. 

Cliffs chief executive officer Lourenco Goncalves has staunchly insisted that his company would not expand into electric-arc furnaces, the greener, newer plants that melt scrap into steel rather than producing it from iron ore in traditional blast furnaces. One of the key differences between the two companies is that US Steel has spent the last few years shifting its investment focus toward the more modern types of plants.

There are also other competitors who are becoming increasingly competitive in the race to produce green steel. Other techniques to clean up steel’s carbon footprint include using green hydrogen — that is, hydrogen produced using electricity — and making steel with electricity minus the heat. Boston Metal is still one of the earliest movers, though.

(Updates with new information about Cleveland-Cliffs Inc.’s bid for United States Steel Corp. in paragraphs 7 and 8. Source corrects role of ArcelorMittal SA in paragraph 5. A previous version corrects temperature for Boston Metal’s process in paragraph 5.)

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