Inside the stealth startup making zero-emission steel

suburban office park in Colorado. Electra is taking on a massive, often unrecognized problem, decarbonizing steel, an industry worth nearly one trillion dollars that accounts for seven percent of global greenhouse gas emissions. The vast majority of those emissions come from the first step in the process of making steel, converting iron ore to iron. What a pitch to him is like, I had four ideas. Actually, to be honest with you, the first idea I was explaining to him was around

iron steel of electrification at low temperature. And he said, let me stop you right there, I'm already sold. That's Sundeep Nichhaven, co founder of Electra, describing a conversation with his first investor, who was sold on the radical simplicity of Whatsonde was proposing zero carbon steel using iron produced at low temperature. Since that initial pitch Electra has gone

on to raise eighty five million dollars. What attracts people to Electra is the fact that not only can zero carbon steels solve a climate problem, but that it also has the potential to make a lot of money. That's one reason why Electra has been in stealth mode for the last two years. It did not want any of its ideas stolen. Now the company is finally talking because its idea has gone from a PowerPoint presentation to working at lab scale. What's the innovation. Coal plays a big

part of making steel today. It is used to melt iron ore in a furnace and also to extract unwanted oxygen atoms. Coal provides both the fuel for heat and the carbon for extracting oxygen in the process, forming huge amounts of carbon dioxide. Electros technology gets rid of both the furnace and the coal. Instead, it uses only renewable electricity and completes the reaction of making iron from iron ore at temperatures cooler than sixty degrees celsius, no molten metal,

no carbon emissions, and nothing hotter than your coffee. Crazy huh I talked to some leap about how he came up with this idea, built a team in the middle of the pandemic and what the steel town of the future will look for Sunny, Welcome to the show. Thanks such please, we're here now. You're trying to solve a problem that most people don't think about, but it is a massive problem for the climate, and that is how to make steel without having emissions. Let's start with stating

out the problem though. Why is it that steel is such a big problem for climate change? Sure, steel is the backbone of modern society. Steel is one of the hardest to abate sectors, and we produce about one point nine billion tons of steel each year. Why is there a CEO two problem at all? There is no COO two coming in this process. As far as most people would understand, the process, steel is actually ninety eight percent ron. The way the steel is made today is through a

pyrometallergy process that uses coal energy. We first melt the iron or at about sixteen hundred degrees celsius using coal as a source of energy, and that carbon is also used to then refine or reduce or transform iron ore into pure iron. And that's because iron ore is mostly iron and oxygen combined. Whereas what you want for steelmaking, it's pure iron or iron mixed with some small other elements.

That's correct. So from a problem streatment perspective, what this translates to is ninety percent of steels emission come from refining the iron ore into iron to mix steel. Now, it's intuitive that if you use coal to remove the oxygen from iron ore, and that coal then ends up into CO two emissions, we don't want to use coal.

There are being solutions that have been put forward where people use hydrogen stead because hydrogen can also do the same job and convert the hydrogen and oxygen mixture into water, which does not contribute to climate change. So if we have that solution, why try something else? First of all, I mean steel is a two billion ton market one dollars, So I think what leads multiple solutions to come to a resolution or transformation or how are we going to

do that? Having said that, a hydrogen As we know, one of the challenges with hydrogen is it's availability and cost. So to get to zero green premium steel, you need hydrogen add a dollar a quilo when itself. When you say zero green premium, you're basically saying at the same cost as steel that can be made using coal correct without any carbon subsidy. You need dollar akuilo hydrogen to

do that. But even more important, the issue of transforming our global steel production to an hydrogen based process comes down to the availability of ores that are needed to make hydrogen based steel green steel. And the reason that becomes a problem is that hydrogen risk process needs the highest grade of iron content available in the ores to make that happen, and the world is running out of

high grade ores that are available for steelmaking. At the same time, it's not that the world doesn't have iron ore. I mean, our planet is made of iron and there's plenty of iron ore. It's that it has certain grades of ore that cannot be economically processed, which is that there are a lot of impurities, a lot of impurities, and impurities are like phosphorous, impurities are hy silica, high alumina.

For example. There is eight billion tons of reserves of high fast containing ores in just one country like Australia, but that is worldwide. You will find these kinds of ores. Okay, so you're not using hydrogen to make your carbon free steel. What is your solution that has got investors giving you

eighty million dollars to solve it. What we have is what's starting with a clean sheet design a process to electrify iron making using widely available lower grade ores and radically shifting the operating temperature of the process from sixteen hundred degrees to sixty degrees celsius and thereby displacing the carbon intensive coal energy with renewable energy to make pure iron. And your process has no fire attached to it, all green.

It is low temperature. In fact, you could touch it, and I mean it is as benign from a temperature perspective you can get. Yeah, your coffee is brewed at higher temperature. Coffee is brewed at eye temperature. Absolutely. So you go from the process as it exists today, where you take iron or burn coal heated to sixteen hundred degree celsius create iron, and in the process even steel. It's a one place process. Iron or comes into a plant, it goes through a series of steps and outcomes steel.

You're splitting that process into two steps. You're making only iron first and then somebody else will make the steal. But because iron making is ninety percent of emissions, that's the step you want to attack with your solution. That's correct, That's where the problem is. Where it is how do we get to pure iron without having emissions? Okay, so you're not using hydrogen. You're not going to heat this to sixteen hundred degrees celsius, but keep it at sixty

two celsius. You're going to use electricity. Whereas that electricity coming from because most electricity generation even today has carbon dioxide emissions attached to it. Yeah. What we bring you forth is our ability to use intermittent renewable electricity, which is of course now increasably available at Kale. So this is solar and wind. Correct needs a solar and wind. If hydro is available, we'll use hydro as well. But what is the cheapest form of zero carbon electricity is

intermittent solar and wind today. Period. Let's talk about how you arrived at this solution in the first place, because you weren't making steel before this. Your previous companies had to do with hydrogen production and energy storage, So why go down the route of making steel? Yeah. So my background is in electrochemical conversion systems. So one of those batteries storage companies that I had was developing an iron

based battery storage. It was actually specifically nickel iron. So that's Edison's chemistry under de year sold highly robust chemistry, but iron is the means in which you're storing the energy. So I know a few things, not half, but a few things about iron, I would say, And my career of other doing energy storage or hydrogen, we're all tied towards decarbonization as a professional goal, and that being the

north star of my career. And Electra is really continuation of the journey in terms of picking one of the hardest to abate sectors and then if there is a solution to be had, then making a big impact with it. And so you come to this point where you're like, Okay, this is a big problem. I need to solve this. Yeah. So I started thinking about this at the peak of the pandemic in March twenty twenty. So you remember, how

can we flatten the curve? Remember flattening the curve? We feel like, if we can get America to all pitch in for the next fifteen days, we can flatten the curve, which is a term that you've been hearing a lot, not overwhelm our healthcare systems. And I was basically Okay, that's great. I'm not a biologist. I can really impact the thing. What can I do to flatten the global temperature that has been rising and is expected to go

to two degrees cells? And that's where I said, well, let's pick the problem like steel, which can have a huge impact. I remember in Match twenty twenty, I was just worried that we may not be able to find a vaccine. You know, I am a climate journalist. I was thinking about climate change, but I wasn't thinking about starting a company that would transolve a climate problem rather than a vaccine problem. While you know, pandemic was not the place I would wish to have again ever, but

I was through a transition of my previous companies. There was not a whole lot. You can go on a vacation or set on a beach and do a whole lot of things. So there was plenty of time to sort of think and sort of refine my thinking of what can be done here. And I don't have a background in steelmaking, but as an entrepreneur, I'm a very fast learner. And so you thought about it, You thought about the problem, and you made a PowerPoint presentation. That's correct.

There were seven slides in it, and it was actually a five minute conversation with our lead investor, which is Bill Gates founded Breakthrough and Energy Ventures in particular Dave Danians in there. And what I pitched to him is like I had four ideas. Actually, to be honest with you, steel was one of them, and I said, I need thirty minutes to walk you through some of these ideas I have. First idea I was explaining to him was

around iron and steel of electrification at low temperature. And he said, let me stop you right there, and he said, you don't have to go any further than that. I'm already sold. If you could do this thing, that's what I want to do. I don't want to hear the next three ideas. And that was a journey we started on in March thirteen, twenty twenty, the day before California shut down, right, okay, And that was my first and only investor meeting, phase to phase I ever had for

the next two years. Okay. And so how big a check did he get? Our first check at the seed was two point two five million, not just from Breakthrough but number of investors, and my pitch to all of them was look, I don't know if this can be done. I've thought through the problem and ask the experts. I think there's a feasibility path. But all I need is less than ten people, maybe a year, year and a half to run this thing to ground, to prove to

myself first can this be done? Because if this cannot be done, I have idea number two, three, and four to work on and they're also big problems to solve. And we had the money in the bank by end of June. Essentially it took us three and a half months to close that round. And then what did you do next? Because you needed more people, you needed some science.

The success of any thing, at the end of the day comes to the team, right, So we need people who can essentially think through a problem, picked on a problem like this, find the fatalities and solve them in the right sequence. Because you don't have time or the money to boil the ocean, so you have to really think through what needs to happen, what has to be met to move forward. Okay, that there is a path forward here. Of course, we started in a garage. No,

it really was a garage. I mean that's a Silicon valley stereotype. It is not a stereotype. It is the real answer because it's one of our employees that later joined as employee. He was started as a consultant, and of course some of these folks started without getting paid because we didn't have money to pay them. And the idea was if he could raise the money, you know, you will have an opportunity to think about you want to join full timent on because it's a very high

risk project. Some of them had full time jobs and this is pandemic, you know. I remember people are losing jobs, a lot of instability in the economy, and people were hunkering down in terms of keeping their head about the water. Right. So it was one of the employees that we have today his garage and he's also has a machine shop there that he makes parts with on its free time. He makes drones actually at a hobby. So it was very convenient garage where we can build parts and we

can start making our test equipment and sells. Of course, we cannot do certain things in the garage from safety perspective, so we had to wait to get to a real laboratory where we can run experiments. So beyond the PowerPoint did you really have a plan for how you would solve the problem? Look, I did have a starting point, right, So it was in this case almost ignorance was a bliss. What you don't know, you don't know. But what you're promising to the investor is luck. We will run this

thing to ground. We will figure out every possible plan of attack. And I knew exactly when I started who the best person would be that could do it. That person was Quak Pham, who we met on our tour of the company. Do I need to introduce myself? Yeah, so you're name for me, I'm quick Fam. I'm a chief technology officer and co founder of electrac So welcome. Quak was at another company that I actually had a non solicit I actually could not go to Quak and

bring him and say, Quak com please join me. That would be violation of my contract. It was actually around early August that Quak called me, but not me calling him. Quak called him like, Okay, I'm done. I want to do something different, and I said, well, timing is perfect, and here's what I am thinking. What Sunnips thinking was maybe they could make iron the way other metals are made, like zinc, aluminum, and copper. They're all made using electricity.

But when you come to iron, this becomes really a mess because iron does not behave like the other metals. Remember, iron ore is made of iron and oxygen. To get the pure iron that you need to make the steel, you have to separate iron from oxygen. That can be accomplished with electricity, which is the promise Sunday made two investors. But you cannot pass electricity through solid iron ore. You need to dissolve iron ore in a liquid, first, an acid.

In this case. Figuring out how to dissolve iron ore in acid was Quak's first job the moment we get the lab space. The very first experiment that I rank in the lab was to verify can we even dissolve I know and not too much. To my surprise, we could not, And so I remember going to Sunday's office and I told him, Hey, I have a bad news for you. Need to sit down. We cannot dissolve iron or so, which means that forget about what we plan to do, because that's the very first step. It doesn't

happen in a story. So I joke with him that could have been my shortest thought up life ever, but upting the fact that it doesn't dissolve, accepting that I may have a short job opportunity. Here, let's see if I can tone a situation around. And he did turn the situation around. In a few months, Electra had the whole process from iron ore to iron made with only

electricity working on a lab bench. Now Electro does not want to share the secret sauce of how they made it happen, but I spoke to experts who reviewed parts of the technology and confirmed it is feasible. And the proof is in the pudding. When electricity is used for this process, the iron oxide is broken into oxygen, which is released as a gas, and iron which is plated onto an electrode. I got to see those plates. Yeah

please with the silvery gray metal on them. Yeah, I don't think I have a helpier and in this form of first small ones the size of business cards, and then large ones the size of office paper. I even held them in my hands and surprise, surprise, it's heavy. They were heavy. Before it can be commercial, those plates will have to be much larger, something like three feet by three feet. After the break, I talked to us and Leap about how all this goes from the lap

bench to a factory in a town near you. And each of those steps that you had to solve those were known science. It's just that the combination of those known science steps done in the specific way that you have done, is what is the core innovation of electra. That's correct. We are not inventing new science. We are not inventing new catalysts, we are not inventing new on optanium material. Every aspect of science, all the material systems that we are needed to make this innovation happen is

readily available. Parts of it are used in different processes, and our real innovation is bringing this all together to solve the problem. Iron and steel especially is a very cheap commodity. Yes, it has a climate problem, and it's a cheap commodity because we have to use it at such a scale. So you had to use every step to be such a cheap, easy to do step that you could replicate the cost of steel as you can buy it from the market today. That is absolutely correct.

And in addition to that, what I will also add less not forget our heads only money for a year, so time pressure do or die in a startup is real. You don't have ten years to develop the science to create a new catalyst, to create a new material. It had to be solved or we move on from a fatality perspective. That was very important. You have to be in that pressure cooker to be on with you rather than having in finite time available and resources available to

see what can be done in a different way. So twenty twenty one you found a way to try and make these different steps work. What have you been doing for the last eighteen months. Yeah, So in early twenty two Q one or twenty twenty one, we had on a bench top the entire process now going all the way from or into pure Iland already on place, using that process and showing that it can be economically done

at a price point that the world needs. We then went and raised additional capital and we raise twenty eight million by June of twenty twenty one, and we brought in other investors co investors into our syndicate. So now we have total raise eighty two million dollars. Since talking to sleep in August, the number has gone up to eighty five million dollars. And one of your investors is a mining company called BHP. Why is BHP interested in this?

To be honest, bringing strategic investors very early in the startup is not what a typical venture capital community will advise you to do. That and I overrule that largely knowing or having a gut reaction that ores are going to be a big part of the story. So the goal of that strategic partnership was to explore what can be done from the ore side, and how expansive is our process in dealing with impurities, and what kind of

ores can be used to make green steel. So, if I'm hearing you right, your solutions are you use as much energy or less energy than the conventional process. That energy is electricity that can be intermittent and renewable, so it has no carbon attached to it. And you can use lower grade iron ore, which is cheaper to get. So if you combine that and you scale it up, you'll have presented a carbon free, cheaper way to make iron.

But then you have to make steel, right, that's correct, and then the next step is just really mixing it in the right order. And the next step is to take the iron and again smelt it or melt it and then adding other constituents to it to give steel its strength. But melting something is a very small amount of energy that is needed to make steel. It's very

counterintuitive to most people. I would think, when you look at a hot piece of metal that's been melted, you go, oh my god, that would have taken a lot of energy. But when you look at iron ore and then you look at iron metal, you don't think energy. That's correct because what we are not seeing is that the energy is predominantly used to split oxygen that is bonded to iron, and that's where the bulk of the energy goes to get the oxygen out. Now, if you use carbon, it

makes COO two. If you use electrons, you do not produce any COO two, and you can get to pure iron, which is again the goal of all of these processes is before you can get to steal, when will you have your first factory making this carbon free iron and hopefully steal after that. We are working on building a pilot, and we should have this pilot working in twenty twenty three.

This will be an industrial scale pilot. And what I mean by that I need to clarify is that it will have iron plates that are being produced a low temperature process, which are meter square type of area, and the goal of that pilot is to stress test the design of the commercial plant we're actually doing at this point. So we need a place where we can stress test all the design in terms of what works, what doesn't work, and how do we scale that up to a full

commercial scale. So what you're describing is very different from how people think of steel because the steel industry as it exists has created entire towns that are steel towns where the only job maker is a steel factory, and it takes up a huge amount of land, and that land is required for making coal. To pick up coke, which is carbon, you require iron ore that has to be cleaned up and put into this big furnace at

sixteen hundred degrees celsius. Then once you get iron out of it, then you have to do something else to make steel. All of that is a huge amount of investment. Are you saying that you can now make iron in a very small plant now? I would say in terms of it's more distributed, that it is modular in the sense that you don't need to create an integrated plant that has all of these feedstocks coming in in a plant and then steel goes out. So what this allows you to do is do this in a distributed way,

just the way he of steelmaking is done. Yeah, can you explain what EAF is. Yeah, So EF is electric arc furnace. It is the electricity powered arc furnace that is used to melt scrap or r pure ron and make into steel. Thirty percent of steel is made using EF steelmaking. It's a wild process as well. We'll see sparks flying everywhere. It's giant and it's very noisy. And once the process is done, you see this like molten metal being poured down from that unit. It's just yeah,

it's a wild, wild thing. It happens everywhere. It's it's just that not many people get to see it. Yeah, I mean that's the way steel is made. I mean an alternative. You also may have seen molten iron getting poured out of blast furnaces, and that's the image we have grown up looking at ron. It's hot, almost the image of fire. And of course all of that is coming from carbon intensity and CO two that goes along

with it. So in terms of job creation, this is actually still a lot of job creation because this is manufacturing jobs. That plant aren't making plant I'm talking about it's going to have fifty years life, so it is going to create a town around it where you will have renewal electricity coming to their green jobs. From that side, you are an or being supplied, so that is not going away, and we are using green energy and ores to produce pure rn for next fifty years at that plant.

And the Inflation Reduction Act or the biggest climate bill that the US has passed, will that help you in any way? Oh? Absolutely, I would say that is the most excising things I have seen in the climate tech space in fifteen years of history I've had. There is seven billion of investment that I have been set aside

to help decarbonize hard to abate industry like ours. So steel is included, cement is included, and I'm planning to go to DC to start having conversations with policymakers that there is another way to get to green steel that doesn't involve all the known things we have had, which is hydrogen, which is part of big tax credit that is already in the Inflation Reduction Act, or carbon capture

or sequestration. That's also part of what's in the Inflation Reduction Act and the solutions like ours that from first principle do not produce the CEO two emissions that you're trying to abate through all of the tax credit that Inflation Reduction Act is offering. So conversation I want to have with the policymakers is on that front is how can we be part of that equation to also accelerate and promote technologies like ours to get to scale faster.

That was a great conversation. Thanks for the tour and good luck with scaling up. Thank you. It's a pleasure to host you at side and have this conversation. The fact that the US Climate Bill as it exists today does not even account for the idea that you can make steal without emissions from the get go shows how fast technology is moving and coming out of stealth is just the very beginning. Scaling up is hard, and I look forward to seeing how electromatures and how the steel

industry responds. If Electra can pull this off, it will be a huge deal. Thanks for listening to Zero. If you like the show, please rate, review, and subscribe. Tell a friend or tele former colleague who's under a non solicit If you've got a suggestion for a guest or topic, or something you just want us to look into, get in touch at zero pod at lumber dot net. Zero's senior producer is Christine Driscoll and producer is Oscar boyd

Our theme song is composed by Wonderney. Many people help make this show a success, and each week I'll tell you about one of them. This week special thanks to Aaron Rutkoff, who is the executive editor of Green. Although his cultural references land one out of three times, his editorial suggestions are always on the point. I'm Akshadrati back next week.