Boston Metal: Revolutionizing the $1.6 Trillion Steel Industry with Green Steel Solutions | World Bank Investment

In an endeavor to combat climate change and reduce carbon emissions, the World Bank has placed its bet on Boston Metal, a ten-year-old startup aiming to transform the core processes of the $1.6 trillion steel industry.

Boston Metal, which originated from research conducted at the Massachusetts Institute of Technology in 2013, has successfully raised a total of $250 million thus far. The company, comprised of 120 individuals, is dedicated to developing an eco-friendly method of steel production. Steel manufacturing currently contributes between 7% and 9% of global carbon dioxide emissions, as reported by the World Steel Association.

While Boston Metal is still refining the technology for large-scale clean steel production, it recently secured a $20 million funding agreement with the International Finance Corporation (IFC), the private-sector investment arm of the World Bank. This marks the IFC's first investment in a pre-revenue startup, highlighting the World Bank's commitment to supporting low-income nations in their pursuit of carbon-free steel manufacturing.

William Sonneborn, Director of the IFC, expressed his enthusiasm for this initiative, stating, "There are hundreds of millions of people in Africa who do not have proper housing. Eventually, they will require steel. However, incremental steel production will not occur in the United States. The technology may have been developed at MIT, but incremental steel production will take place elsewhere."

According to the IFC, 59% of crude steel was manufactured in developing countries in 2021. Consequently, Boston Metal's green steel production process is particularly attractive for these nations, especially those with access to clean electricity such as Chile, Ethiopia, Malawi, Uruguay, and Zambia.

To understand the workings of Boston Metal, CNBC visited the company's headquarters located in Woburn, Massachusetts. The startup has received substantial funding from investors such as ArcelorMittal, Microsoft's Climate Fund, Bill Gates' Breakthrough Energy Ventures, and now the World Bank.

Traditional steel production involves coal-powered blast furnaces, which release significant amounts of carbon dioxide. In contrast, Boston Metal utilizes an electro-chemical process called molten oxide electrolysis. This technique involves passing electricity through a mixture of iron oxide and various other oxides. If the electricity used in the process is derived from clean sources, the resulting steel is also environmentally friendly.

The process bears resemblance to a battery, with a positively charged anode and a negatively charged cathode guiding the flow of electricity. Boston Metal's anode, a crucial development from MIT, consists primarily of chrome and iron, with small quantities of other materials. This alloy demonstrates remarkable durability, enduring exposure to oxygen at extremely high temperatures during the electrolysis process.

Furthermore, the byproduct of Boston Metal's process is oxygen, which has its own potential applications.

While Boston Metal continues to refine its commercial-scale technology, the underlying science is already well-established. CEO Tadeu Carneiro affirmed, "Success is no longer a binary outcome. It's now a matter of determining the anode's lifespan. Will it last for three or two years? That's where we currently stand. We are finalizing all parameters in order to construct the largest industrial cell."

The steel industry has taken note of Boston Metal's efforts. Carneiro stated, "When I initially presented the idea to my friends, the CEOs of various steelmaking companies in Asia, they were hesitant because it seemed premature. Now, they are all desperate to find a solution, but one has yet to materialize."

Boston Metal's process offers additional benefits, such as the ability to use low-grade iron ore. This attracted investment from the IFC