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IFC announced an equity investment of $20 million in Boston Metal to support commercialization of the startup’s breakthrough technology aimed at eliminating carbon dioxide emissions from steel production.
IFC’s investment will also help fund the application of the company’s technology, molten oxide electrolysis (MOE), in extracting high value metal from mine waste. Boston Metal is building its first production facility in Brazil, which is expected to reach commercial production next year.
The global steel industry is a major source of greenhouse gases, accounting for about 7% of global greenhouse gas emissions in 2020. The industry produced 1.95 billion metric tons of crude steel in 2021, up 3.7% from 2020. About 59% of crude steel was manufactured in developing countries in 2021, up from 55% the year before.
Traditional steel production relies on coal-burning furnaces to separate pure iron from ore, generating a large amount of CO2 emissions in the process. By contrast, MOE splits iron ore into constituent parts through an electro-chemical process, eliminating coal from the steel-making process. It also enables manufacturers to produce steel using any grade of iron ore.
“We are excited to have IFC on board,” said Tadeu Carneiro, CEO of Boston Metal. “They share our vision of revolutionizing steel production by replacing coal with electrons. We look forward to drawing on IFC’s deep experience in emerging markets to catalyze the adoption of the new technology across the globe.”
See related article: ArcelorMittal Leads $120 Million Funding for Green Steel Tech Firm Boston Metal
The adoption of the green steel manufacturing model would be especially beneficial to emerging markets with access to renewable energy production, such as Chile, Ethiopia, Malawi, Uruguay, and Zambia. When powered by renewable energy, the MOE can achieve a steel production process free from CO2 emissions.
“Decarbonizing the steel industry is a complex and challenging task,” said Makhtar Diop, IFC’s Managing Director. “Boston Metal has the potential to drastically change the way steel is made and in so doing help countries achieve their emissions targets. The company’s plant in Brazil can help put a key segment of the country’s manufacturing sector on a path of sustainable growth with a competitive edge.”
The project is one of the first IFC investments in deep tech, a category of startups that aim to develop and commercialize complex scientific or engineering discoveries to solve some of the world’s most challenging problems in areas such as climate change, human health, and energy access. Since 2021, IFC has partnered with The Engine, the deep tech venture capital firm founded by MIT, to help bring deep tech solutions to emerging markets. In addition to The Engine, Boston Metal has attracted other deep tech and impact investors, including the world’s second-largest steelmaker ArcelorMittal and the Microsoft Climate Innovation Fund.
A long-standing investor in renewable energy, IFC has been pioneering new investments and advice in sectors ranging from green hydrogen and electric vehicles to battery storage and green technologies in hard-to-abate sectors.