Piva Bets on Boston Metal
A Crucial Next Chapter in the Energy Transition
There’s reason to be optimistic that crucial sectors of the economy are on track to reduce greenhouse gas emissions significantly. Wind and solar power are making impressive gains in the electricity sector (25% of global carbon emissions), while road transport (12% of emissions), once thought far harder to decarbonize than power, is rapidly shifting to electric vehicles. Incumbents like Volkswagen and GM are now pivoting away from internal combustion engines to compete head-on for the future of mobility with EV pioneers like Tesla and Rivian.
Investors who caught these trends early have been rewarded. NextEra, America’s largest renewable power producer, surpassed Exxon’s worth in 2020, and Tesla’s stock has appreciated more than 3,000% since its IPO in 2010.
Steelmaking: Ripe for Decarbonization Disruption
At Piva, we believe a significant sector ripe for a decarbonization-disruption is steelmaking, a nearly $1 trillion global industry* responsible for 8% of global CO2 emissions.** Steel is the backbone of wind farms generating carbon-free electricity and EVs that produce no road emissions. Unfortunately, more than 70% of global steel production is still based on a Basic Oxygen Furnace (BOF) process that uses coal, the most carbon-intensive fossil fuel, to produce crude steel from iron ore. The rest is primarily made from steel recycling through an Electric Arc Furnace (EAF), with a natural gas-driven process called Direct Reduced Iron (DRI) making up a small share of the market.
To decarbonize steelmaking, the process needs to use clean electricity rather than fossil fuels. Electricity can be used directly in steelmaking or first converted to hydrogen to fuel the process. Today, the only way to directly use electricity to produce steel is by recycling scrap in an EAF. While steel recycling can be ramped up, according to Bloomberg it can only produce about 40% of global steel demand by 2050, up from around 30% today. Green hydrogen can be substituted into a DRI process. DRI itself has gained only limited market share today because it requires cheap natural gas and higher-grade iron ores to be feasible. For these reasons, combined with hydrogen cost and infrastructure challenges, we see hydrogen-based DRI playing only a supporting role in the decarbonization of steelmaking. So we asked ourselves, “How can this giant industry find a viable path toward net-zero emissions?”
Enter Boston Metal: A More Efficient and Cost-Effective Way of Creating High Purity Steel
Boston Metal is an ambitious startup commercializing a radical approach to steelmaking based on technology initially developed by Professor Donald Sadoway at MIT. Through its proprietary Molten Oxide Electrolysis (MOE) process, Boston Metal has the ability to produce liquid iron from ore in a single step, using electricity as the only energy input and producing no greenhouse gas emissions. The magic that makes this possible is a proprietary inert anode that won’t react and create CO2 in situ. These inert anodes are paired with a novel electrolyte solution in a Boston Metal MOE cell to produce green steel from iron ore. The global steel industry is already demonstrating its preference for electrification, as evidenced by the growth in EAF. MOE will expand the electrification trend beyond secondary steel production (scrap recycling) into the primary production of steel from iron ore.
By addressing a “difficult to decarbonize” sector, Boston Metal’s process can enable the world to meet its climate targets. It’s also a fundamentally different way to make steel that is modular and flexible, as well as more efficient and cost-effective, while creating a highly pure product. As Boston Metal’s technology matures and challenges centralized, coal-fired blast-furnaces, the disruption will be similar to solar power’s impact on power markets, historically dominated by centralized coal-fired power plants. Boston Metal’s technology is already being commercialized in the ferroalloy market with its launching customer CBMM, the world’s leading supplier of niobium products and technology. CBMM will benefit from the ability to add incremental production capacity in a nimble way, while turning a complex, multi-step process for producing niobium from ore into a clean and simple, single-step process.
As the tailwinds for climate solutions grow, Boston Metal is well positioned with a proprietary technology that offers a pathway to net-zero emissions for a trillion-dollar industry that is desperate for solutions. But at the end of the day, Piva bets on teams, not technology. For a company like Boston Metal to achieve the impact the world requires, they need to spur adoption within a notoriously risk-averse and capital-intensive industry. With decades of experience in the metals industry and personal relationships with the heads of the world’s top steelmakers, CEO Tadeu Carneiro is the perfect CEO for the job. We aren’t fooled by his humility — Tadeu will lead his talented team to write the next chapter of metallurgical history and the energy transition.
Boston Metal has raised $60 million in total for its series B, positioning the company to scale its steel-making technology to full commercial scale, demonstrate operating capacity in an industrial environment, and further build out its already robust customer pipeline. Piva is joined by a syndicate of partners that represent the entire steel value chain, from the world’s largest iron ore mining companies (Vale and BHP) to one of the leading end-users of steel (BMW), as well as a group of visionary and committed deep tech investors (Breakthrough Energy Ventures, Prelude Ventures, and The Engine). We are thrilled to be part of this journey.
* According to Grand View Research
**According to the World Steel Association
