Nucor’s Investment Green Steel Start-Up Could Light Fire Under The Sector

hot steel being made in a factory

(Credit: Canva Pro)

by | Sep 12, 2023

hot steel being made in a factory

(Credit: Canva Pro)

Nucor has long been on the cutting edge of trying to green the steel sector — a difficult task, given that the industry’s emissions are hard to abate. But its statement last December that it was investing in a start-up to make clean steel is a big step to putting its money where its mouth is.

Nucor is one of a few companies backing Boulder, Colorado-based Electra. The company electrochemically refines iron ore into pure iron at 60 degrees Celsius, allowing it to use renewable energy instead of coal. And iron makes up 98% of steel.

“We make green iron without CO2,” said Quoc Pham, Electra’s founder and chief technology officer, in an interview with his writer. “Let’s say Nucor wants to increase output significantly. They need more scrap, and we dilute the impurities. They need more iron.”

Microsoft’s founder Bill Gates, is also backing Electra. So are BHP, Amazon, S2G Ventures, and Temasek. Altogether, investors have put $85 million into the start-up.

Here’s the rationale: Steel is a $1 trillion industry, producing 2 billion tons annually and contributing about 7% of the globe’s greenhouse gas emissions. Demand will jump to 2.5 billion tons yearly by 2050 — tied to economic growth in China and India. The sector aims to reduce emissions by half by 2030 and to hit net zero by 2050.

Blast furnaces are prevalent on the world markets. They run at 1600 degrees Celsius, which is suitable for coal but not for intermittent renewable energy. Electra’s technology burns at 60 degrees Celsius, making it conducive to green energy. The company also uses low-grade iron ore discarded at existing mines. Electra is making use of that resource, which can avoid further excavation. It will sell that output to operators of electric arc furnaces to process scrap into steel.

Blast furnaces release between 1.8 and 2.3 tons of CO2 per ton of produced steel, whereas an electric arc furnace emits .5 to 1.1 tons of CO2.

Renewable Energy Could Replace Coal

The goal is to commercialize the technology by decade’s end, producing 100,000 tons of green iron annually.

“We can use any ore. But our interest is in low-grade iron ore found at the mine,” said Pham. “The lower-grade ore is not sold commercially. But we put it into a liquid form to purify it. We extract the iron from the liquid by passing an electricity current through. We, therefore, make a solid — an iron metal.”

Electra has mastered the process: “There are no show-stoppers at the pilot scale,” he said. The goal is to scale up, “where the engineering behind that is not trivial.”

With its low-cost renewable energy and the world’s largest fleet of electric furnaces, the United States can produce green steel. That will create U.S. jobs. Moreover, major semiconductor, automotive, wind, and solar equipment factories are  U.S.-based. By contrast, China is the world’s largest steel maker, using blast furnaces that run on coal.

But green steel, for the foreseeable future, is bound to cost more. Many companies, such as General Motors, have set net-zero goals, meaning they will pay the added costs — if they can justify it to shareholders and customers. Price parity is the ultimate goal.

Nucor is investing in more than just Electra. It’s also a buyer of its end product — at least when it becomes available.

It says its carbon intensity is less than one-third of today’s world steelmaking average. The Charlotte, N.C.-based company is committed to cutting its CO2 levels by 35% by 2030 from a 2015 baseline. Beyond that, it plans on being a net-zero manufacturer. Nucor’s mission is to cut the carbon intensity at its plants, necessitating more renewable energy.

For example, it is building a $2.7 billion steel plant in West Virginia to be completed by 2024. To that end, American Electric Power and Wheeling Power are building green plants to serve Nucor.

It also uses recycled scrap as a raw material — as do nearly all U.S. steelmakers; about 75% is scrap. The circular nature of remelting recycled scrap in electric arc furnaces, combined with steel’s ability to be infinitely recycled, means that Nucor’s steelmaking facilities generate roughly one-third of the CO2 of extractive steelmaking plants.

“Fortunately, advances in processing technology called electric arc furnaces are enabling the steel industry to reach the high temperatures needed using renewable energy rather than fossil fuels, thereby reducing carbon emissions,” writes Sara Gutterman, chief executive of Green Builder, in a blog.

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