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Green-steel startup Boston Metal has suffered a major setback following an industrial accident at its facility in Brazil.
The Massachusetts-based company announced it will lay off 71 people in the U.S. after the incident at its Brazilian plant last month thwarted a key funding deal, Boston Business Journal first reported. The turn of events was “sudden, dramatic, and unexpected,” company sources told the news outlet.
Boston Metal is among the handful of well-funded startups advancing newer and cleaner ways of making steel — a process that traditionally relies on polluting, coal-fueled furnaces. Since spinning out of MIT in 2013, the company has raised over $400 million from a range of investors, including global steel giant ArcelorMittal, the venture-capital arm of oil giant Saudi Aramco, and Microsoft’s Climate Innovation Fund.
On Jan. 30, Boston Metal experienced an “unforeseen critical equipment failure” in its manufacturing facility in Brazil, the company told Canary Media in a statement on Monday. Although the incident was “fully contained, with no injuries or environmental impact,” the equipment damage prevented Boston Metal from hitting an operational milestone that was tied to a pending financing transaction.
“As a result, we lost access to committed capital essential to supporting our operations in both Brazil and the U.S.,” the company said, forcing the need to reduce its American workforce. Before the accident, Boston Metal employed over 300 professionals in the United States and Brazil.
Globally, steel production accounts for between 7% and 9% of human-caused greenhouse gas emissions. The bulk of that pollution comes from heating coal to transform iron ore into iron, which is turned into higher-strength steel in a separate furnace. While companies like Stegra and SSAB, both in Sweden, are looking to replace coal with green hydrogen in the ironmaking stage, Boston Metal is attempting to reinvent this process entirely.
The startup is developing a novel approach called “molten oxide electrolysis,” which involves using electric current to heat iron ore to around 1,600 degrees Celsius to drive chemical reactions, without emitting any carbon dioxide. The resulting material then cools into blocks of steel.
Last March, Boston Metal said it had moved one step closer to commercializing its technology after successfully producing steel from its industrial-size system in the Boston suburb of Woburn. The accomplishment “de-risks our technology and validates scalability to achieve commercial production,” the company said in a press release.
Yet as Boston Metal works to refine its green-steel system, it has also been pursuing projects in Brazil that it hopes could become a reliable source of revenue in the nearer term.
Boston Metal’s same molten oxide electrolysis process can be used to extract high-value metals such as niobium, chromium, and manganese from mine-waste tailings. That could reduce the need for other companies to pull those materials directly from the earth.
Adam Rauwerdink, Boston Metal’s senior vice president of business development, told Canary Media last June that the company was initially focusing on extracting and selling niobium — a valuable alloying element used in steel production — to start bringing in money. At the time, niobium sold for about $82 per kilogram (about $74,000 per ton), while steel went for roughly $900 per ton.
Prior to last month’s accident, Boston Metal said it had already restructured its business to concentrate on advancing its operations in critical metals. “There is strong near-term demand for critical metals, while the cost and complexity of developing molten oxide electrolysis [for steel] have outpaced what our current revenue and available capital can support,” the company said in this week’s statement.
Boston Metal’s Brazilian subsidiary, Boston Metal do Brasil, built and began operating a pilot facility in the state of Minas Gerais in 2023. Last year, it completed construction on an industrial critical-metals plant, and the subsidiary was set to start “generating revenue with industrial-scale production” this year, according to a company fact sheet.
Though Boston Metal says it will press ahead with its high-value metals strategy, it’s unclear how the industrial accident in Brazil will affect that production timeline or impact Boston Metal’s broader expansion plans in the United States. The announcement of layoffs in Massachusetts comes shortly after the office of Democratic Gov. Maura Healey awarded Boston Metal over $950,000 in capital grants to upgrade its Woburn operations — public backing that was reportedly expected to lead to local job growth.
“In the coming months, our priority will be restoring operations in Brazil and scaling the critical metals business in Brazil, the U.S., and internationally,” the company said.
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