America Has A Steel Start-Up. Yes, Really - EP 47 Laureen Meroueh

We are the first in the world to make steel in a single step. What does that mean? It means you're not only making your iron from ore in that step, but you're also tuning the carbon content of the steel because steel is typically iron plus carbon. And we do that by harnessing electric arcs for heating. And that's actually where our company name is from, and I can explain that in a moment. And we harness instead of solids like coal or coke. We harness gases as the reducing agent.

Okay.

By harnessing a gas, it means you can use natural gas, and natural gas in the U.S. is so much cheaper than metallurgical coal, it's a no-brainer. Now, that wasn't always true, so it's not like, you know, why wasn't this invented 100 years ago? It's really only in the last, like, 15 to 20 years that the natural gas boom took off, right?

From fracking.

Yes, exactly.

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You're the— are you the founder or are you a co-founder?

I'm the founder.

The founder of Hertha Metals. And, and just so people know where we're going to head, You're making steel. And I think you're the— you're the first female steel magnate company founder ever.

I am the first female inventor and founder in the steel industry.

Right. That is— that is— that is, I guess, like, I guess surprising and not— I don't know, sad and not. Yeah. I mean, it's the same.

I don't know how to feel about it.

It's—

it's— it's an honor, but surprising. And— and, you know, there have been amazing women before me in the steel industry. So I'm proud to be building off of what they've done and lead the way to show that, you know, anyone can invent a steelmaking technology and scale that up.

Well, we'll get into whether anyone can do it. Your background is quite impressive. But, you know, so, so most of the time on this podcast, a lot of it is people I know through the years and I just want to have on the show. And, you know, we have not met before. I have to confess, I know very little about the steel industry, but that seemed like a great excuse. I have to give—

you're in luck.

I have to give credit to your PR team because I usually, like I'm saying, I mostly go off my network or just people I want to talk to. But yes, this pitch came in and they sent me some videos of what you guys— I assumed they were renders when I first saw them because I saw this molten metal and I— but I saw startup and, you know, I've covered hard tech for a long time. It's my favorite thing to cover, but I always know it takes forever. It's very hard to do. I was skeptical that this company I hadn't heard of was, was at this stage. And then so anyway, it intrigued me. And then your backstory was fascinating. And so, so yeah, I mean, they did their job. Here we are. And, and I hope that the listeners and I, you know, can kind of understand a bit more about, about Steel, where the US fits in this technology. I'm going to stop rambling in a second, but I do want to give people just a little background on you. I think you did all the way from your undergrad through PhD at MIT.

Graduate school.

Graduate school. Okay. Okay. Where did you do your undergrad? I must— I messed that up.

Primarily University of Florida.

Okay. Okay.

Best engineering school in Florida.

Okay.

One of the top in the nation as well.

And you— but you ended up with a PhD in mechanical engineering and materials science from MIT. And then you have this, like, track record of not just research, but, but turning research into actionable ideas and obviously startups. I mean, this is your, this is your second startup.

Third.

Third. Okay. Okay. So walk me— I mean, have I gotten all this right so far? And tell us just like a little bit about, about your background. Are you from Florida?

Yeah, I was born in Florida. I'm first-generation American. My family's from Lebanon. The Lebanese are very entrepreneurial, to those that know the Lebanese, and so kind of fits right in. It's in my blood. I have always been really passionate about engineering and building things, especially in industry. So started my engineering career actually at 13, doing an accelerated program where you actually go straight into college rather going to typical high school courses. And so that was amazing because therefore I started at a very young age diving into research and development of new technologies for industry.

So you were doing— it was— you were taking college classes while you were doing high school or you were just straight into—

You go straight to college after the first year.

At 13?

So like your 9th grade is an accelerated high school program and then 10th, 11th, 12th is purely college courses.

I will say this without trying to be too— I didn't know Florida did things like this.

It's amazing. It's called Florida Atlantic University. High school program and, and I absolutely loved it. It allowed me to not get the nerd beat out of me in high school. You know, I was able to just do my thing and it was an interesting experience being like 15 or 16 tutoring the 19-year-old freshmen in calculus while there.

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I did two engineering degrees because I like torture.

Okay.

I did civil engineering and mechanical engineering, which are two completely different ones. So typically that might take you 8 years. Yeah, I did it very accelerated. And then having started young, I finished both degrees by 20.

Okay. Okay.

And then I went to MIT for my master's and my PhD.

Okay. Okay. All right. Well, yes. All right.

So again, I'm not sure anyone can do this, but if you're passionate enough and dedicated.

And so, and like, I mean, when I was reading about you throughout, I mean, it was always, it seemed like a passion for materials, chemistry, like quite the hard end of the sciences.

Yeah. I mean, if you look at the world around us, it's, it's all about the built environment. And even in this world in which we focus a lot on atoms and bits, at the end of the day, what's generating those bits? It's hardware, right? And so I just have a deep passion for the underlying infrastructure and what society is built upon.

Yeah. No, and going, going incredibly deep, you mentioned 3 startups. I read about one last— because we're going to spend most of our time on Hertha Metals, which I should explain to people. We're going to, we're going to get deep into it, but is a new type of steel company. Again, correct me if I get the general premise wrong, but a greener way of making steel, less steps, more efficient way of making steel, trying to bring steel manufacturing back to the United States. You guys were founded in 2022. 2022. And then the last stats I saw were about making about a ton of steel per day.

More than.

More than. Okay. And then, and then obviously trying to head to this a future where you're making even more. But the, the biggest item that kept coming up from in my research was that instead of using coal in this process, you're using natural gas. Is that kind of the, um, blockbuster headline on, on the approach?

So let's walk it back a bit. Firstly, we have been making steel primarily the same way since 1850, in which we're taking iron ore and metallurgical coal. And combining those to eventually get to our liquid steel. Hertha Metals has developed and scaled and is continuing to scale a process in which we are reintroducing the flexibility into steelmaking, which the industry has lacked for almost 100 years. And so that flexibility comes in the form of being able to use any grade of iron ore, including waste oxides, being able to use natural gas or hydrogen instead of coal, and being able to do everything in a single step, which gives again more flexibility, reduced cost. So what we lead with is the fact that we have a more cost-effective solution to steelmaking that is more flexible and it's cleaner, which— so you don't have to trade one for the other, right? It's not for cost for CO2 emissions, it's all in one, right?

And I mean, these are, these are I don't use claims here in a derogatory way. These are big claims. And, you know, I mean, obviously an industry that's been around for a very long time. And so any time somebody is coming out saying, we figured, we figured out a process that everybody else had missed.

Which is why we stayed in stealth for so long.

Okay.

Right. This is why you hadn't heard of us, because there have been a lot of companies that come out with these new technologies and make claims. And they're making these claims based off of test results of kilograms production or even just grams. The steel industry is making millions, billions of tons per year, right? Each mill makes millions of tons per year. Globally, we're making billions. And so proving things at scale is really important. And when I first founded the company, I spoke to the steel producers and incumbents and I asked them, At what scale must you see this process working for you to truly believe our claims on economic viability, flexibility, et cetera? And time and time again, they all said a continuous 1-ton-per-day rate, right? And so that's what we did. We put our heads down and proved that out, proved out our process working on natural gas, proved it out working on low-grade ores, medium grades, pellets, fines. And then once we had all of this data and support for our claims, did we come out of stealth just a few months ago.

And you guys are based in Houston?

Yeah, right outside of Houston in Conroe, Texas.

Okay. I grew up in Houston. I know Conroe.

Conroe for the win.

Mostly there because of energy and the industrial base and things like that in Houston/Conroe area.

Mostly there because there's a ton of talent in the oil and gas sector. Houston knows how to build big things.

Yeah.

If you're starting an industrial company, I really believe you're doing it wrong if it's not in Houston. And as I said, so much talent in the oil and gas sector.

Okay. Okay. Well, okay, so let's figure— let's try to— let's try to learn.

Jumped around.

No, no, no. I mean, it's great. You set us up. Those were— when I was reading, I'm like, I was fascinated because any time you have an industry that's been around this long, you know, to come and say we figured something out is, is, is hard to do and people will be skeptical. So the— and then I'm at a disadvantage because you just came out of stealth. There's not a ton of information about you guys, but from everything I was reading, it looked like at least this, the original seed of this company, the idea was it is a discovery that you made. I mean, is that true? Is that what happened? Did that happen at MIT or this was just after that? You— how did you come up with this idea of a new process?

Yeah, it's really the culmination of all of my previous research, which wasn't necessarily in the steel industry. So the first startup was during my master's and based off my master's degree research, which was a thermal silicon molten metal battery storing thermal energy, though. And this was to be applied for power plants to enable them to leverage arbitrage with renewable electricity prices. So store electricity when it's cheap and then regenerate that electricity through their steam turbines. So that gave me the exposure to molten metal systems and really the difficulty in, in material compatibility at high temperatures. Which is honestly why I also got into material science for the PhD. So that was startup number one. And eventually, though, decided to continue on the PhD instead of stopping and just focusing on that company. So then for my PhD, I pivoted into more material science metallurgy, and my research was on leveraging aluminum for generation of hydrogen, actually. So studying a lot about how to leverage scrap aluminum specifically. So that gave me the eye into the metals industry. And then I was recruited to join a green hydrogen startup as their CEO and standing CTO. And there we were, we were scaling industrial-scale water electrolyzers that are precious metal-free. And it's there where I asked myself, you know, this is in 2020 when everyone had a hydrogen production company, everyone had a green hydrogen startup. Where would all this hydrogen go? And that's how I stumbled upon steel, as today there is a novel technology in which steel is made from hydrogen. It's called hydrogen DRI process, but it's very expensive.

Okay.

And so I— that gave me a peek into the steel industry as that's a potential customer. And then I just fell in love. And if anyone reads about steel, you're crazy to not fall in love. It's literally all around us. It is the most magical material where you can add an element, add, you know, change the microstructure, and now you can use it in a completely different way for a completely different application. Right. Steel is obviously in all of our infrastructure, in our bridges. Steel is also, of course, in our cars, but steel is also in our everyday life items. And so it's the backbone to both industry and society. Right. And since 1850, like I said, we've been making it the same way. So we continue to innovate on all of these sectors that build upon steel, such as today, AI, right? How do you get data centers? You need steel to build those. And we've completely ignored the foundation, which is the steelmaking process.

And so you, you saw the steel industry still using coal. And I mean, is that what set you off first? Is like, why, why does this look like it's still in the 1850s? Is that in—

and yeah, because if you think about energy, right, the transitions of energy— society also started based off of coal, and in some countries is still based off of coal. But then we learn here are these other resources with lower cost. Eventually got to natural gas. Why is steel still being made from metallurgical coal when there are these other resources that are more cost-effective? And metallurgical coal is not any coal. It's expensive because it's higher grade.

That's what I was going to ask you. So they use this special type of coal for espresso, which is— it's more expensive.

Yes.

And okay, so it just has to be higher quality.

Yep. It's, uh, significantly more expensive.

Okay.

It's not even minor.

But like, when you— okay, if, you know, if I was sitting down to do this, I, I just— again, not to harp on this point, but I would have just been like, I'm sure this happens for a reason. Somebody, you know, must have tried, um, to get away from this. And, and then, and then it would seem quite daunting to like think that there's some, some process lurking out there to be discovered. How did you even begin to approach it? You just sit down and think about it hard, or just turned on this big brain?

Yeah. No, I, I did a lot of research into what others were trying to develop, what research was out there.

I—

so that was on one end of the spectrum. On the other spectrum, I did a lot of discussions with actual steel incumbents. What are the challenges you're facing? What do you see ahead? What are the advantages to the resources that you have and what are the disadvantages? And really looked at a combination of how we're making scrap steel, which today scrap steel is made by just tossing— sorry, steel from scrap is made by just tossing scrap steel into an electric arc furnace. An electric arc furnace is an electrified approach to melting, to heat transfer. And so the steel industry doesn't have a problem with heating things, right? We understand how to harness electric arcs. The problem is how we reduce the ore, meaning how do we react with the oxygen in iron ore to pull out that iron without pulling out the impurities that come in with the ore?

Okay. Right.

You want to separate them. And so just thinking about that framework, uh, led to what is now our technology at Hertha Metals, in which we are the first in the world to make steel in a single step. What does that mean? It means you're not only making your iron from ore in that step, but you're also tuning the carbon content of the steel because steel is typically iron plus carbon. And we do that by harnessing electric arcs. For heating. And that's actually where our company name is from, and I can explain that in a moment. And we harness, instead of solids like coal or coke, we harness gases as the reducing agent.

Okay.

By harnessing a gas, it means you can use natural gas. And natural gas in the US is so much cheaper than metallurgical coal, it's a no-brainer. Now, that wasn't always true, so it's not like, you know, why wasn't this invented 100 years ago? It's really only in the last like 15 to 20 years that the natural gas boom took off, right?

From fracking and—

Yes, exactly.

Okay. So, okay, so this opens up this opportunity to rethink this.

Exactly, rethink it.

And when you talk about this one step, because I saw that being emphasized again and again, clearly I have no idea how many steps are traditionally involved.

At least 4.

Okay. So what hap— what are the typical 4 steps that take place?

Yeah. So, uh, let me nerd out on how we've made steel since 1830. Yes, please. So first you have your metallurgical coal, then that has to go into an energy-intensive and dangerous coking plant, and then your iron ore, which has to be a specific grade, 65% iron by weight, goes into what's called a sintering plant. Now iron ore out of the ground typically comes out as fine, so you can imagine sand, looks like sand, okay, uh, or lumps. To go into the blast furnace, you have to sinter that ore so that it's a very hard pellet and has that structural strength, but also the porosity for gas diffusion. And so now your coke and your sintered ore go into what's called the blast furnace. This blast furnace is the, the heart of the iron and steel making process from ore. And what's happening in the blast furnace is you are both combusting that coke for heat to melt the ore, right? So the temperature, the highest temperature in the blast furnace is around 1,500 degrees Celsius, 1,550. And you're also using that coke as the reducing agent. So the carbon, the CO from the coke is reacting with the oxygen. Okay. And now what you end up with is this molten iron that is saturated with carbon because you've blasted so much coal and carbon into it, hence the name blast furnace.

I mean, this is, this is what we see in pictures of a steel industry with— yes, the lava pouring. Yes, pouring through. Yeah.

So what's coming out is now called pig iron. It's a carbon-saturated molten iron. It also has other impurities that came in with the coal or the ore, such as the sulfur and phosphorus. And you're not done, too much carbon. So now you go into what's called the basic oxygen furnace. And the way we just blasted the ore with carbon to get rid of the oxygen, we're now blasting the pig iron with oxygen to get rid of the carbon.

Okay.

So like if you think about it, what's happening, a very inefficient process, right? Yeah.

So there's a lot going on. And if I'm, if I'm like Cleveland-Cliffs, am I doing all of that stuff? This is what you get. Yes. Okay.

Yes, it's all in one plant. So you have a coking plant, a sintering plant, a blast furnace, and a basic oxygen furnace. And out of the basic oxygen furnace, you have your crude steel, which still will have some impurities. Right. And so depending on the grade of steel you're making, you might have to do an additional post-processing step to refine.

Okay.

So that is how 70% of the world's steel is made.

Okay.

The remainder is primarily made through scrap recycling. And a very small portion is made with the direct reduced iron process, which leverages natural gas but needs very high-grade ore.

Okay. So then, and then, I mean, you guys talk about your one-step process and then you also talk about being able to use natural gas and hydrogen. So in these, how does just being able to use other sources of energy Is that related to the one step or are these, these— how did you trim all those steps to the one step? Yeah.

So my goal when inventing the technology wasn't even to make it into one step. My goal was truly reduce cost, increase flexibility, and reduce carbon intensity because the steel industry does contribute almost 10% of global emissions. Right. That's massive.

I saw that. Yeah. I mean, people say it's worse than aviation and automotive.

It's the, the highest emitter in industrial sector. Okay. So there's steel and then almost on par is cement, right? And then there's the transportation sector, which is its whole own sector. Okay. Own emission source. Uh, so steel is kind of like the black eye to society. We need it, we will never stop producing it, but we do it in such a dirty capital-intensive way.

So when you're first starting out, I mean, you're thinking of this from like a efficiency and environmental lens. Is that— is that—

yes.

Yeah.

Yes. Cost and cleanliness.

Okay.

So again, everyone has been making steel this way from ore, right? 70%. And it's been optimized over the last 100-plus years. And so when everyone's using the same exact technology, everyone's very similar in cost of production prices depending on the resources. And therefore everyone's just racing to the bottom of the cost curve, right?

Okay.

And so we've ended up with a steel industry in which margins are so tight because everyone again is making steel the same way. And so going into this, I wanted something that's cleaner, as you said, uh, more cost effective and reintroduces the competitive advantage that we can have in steelmaking, especially in the US.

So to do it differently than other countries would be doing. Yeah. Yeah. And then, okay. And then so how do— okay, so as you're going through all this, well, first of all, like, why do people not use natural gas today?

They use it in the direct reduced iron process.

Okay.

But natural gas is— the blast furnace has not been optimized for a gaseous reductant like natural gas.

So there's all this infrastructure that's been set up and nobody wants to deal with re-architecting that.

Exactly. It's very CapEx intensive and it's a complete redesign. Now, people are trying to inject hydrogen into blast furnaces. Not solely hydrogen. They're also introducing coke, but trying to supplant that. And that's, that's primarily reducing emissions. That's not a cost-saving approach.

Okay. And so, and so this, this like one-step process was like a happy accident.

Yes, it was.

Okay. And so what did you figure out? Or is this, is this a secret?

So what we—

It's called the— is this the HERS process? HERS?

Yes, FLEX-H2RS.

Okay.

So FLEX-H2RS stands for Flexible Fuel Hydrogen Electric Reduction Smelting.

Okay.

And flex fuel meaning that hydrogen can be sourced from anything. It can be natural gas or it can be pure hydrogen. But what is steel? As I said, iron plus some carbon. And so in our process, the natural gas is that carbon source.

Okay.

And the source for the reducing agent. And so what we, I guess had a breakthrough on was our ability to manipulate the way the natural gas interacts in our system such that we can tune how much carbon ends up in our iron melt, in our steel.

And so, and you're figuring out this where, like in a, are you, are you a typical garage start? I mean, how are you doing these experiments?

These experiments we're doing in our pilot plant. Okay. In our 1-ton-per-day pilot plant, which is a semi-continuous process, meaning You are continuously feeding ore, power, and gas, and you are semi-continuously tapping out product. This is a pyrometallurgical approach, very similar operation to the blast furnace or BOF when it comes to semi-continuous. And we run campaigns which can vary from, you know, 6 weeks or longer where it's just 24/7 operations. And that's where we're testing all of these different ways.

But was this— I just meant even before you got— before that, was this your PhD work or—

No, no, no. So out of that last company, which was hydrogen production, and that was green hydrogen production, I, I left it to just focus on the steel industry and just invented the process.

And then from the brain, you invented it from your brain. And then, and then it like in you and then the first 2023 you got to test it out.

We opened up our headquarters and we began testing out the process in our research and development lab, which is also at the same site of our pilot plant.

Okay. Okay. So you, you had the idea and got investors to like, yep.

Our first—

you have a try.

Our first investment was the fellows program, Breakthrough Energy Fellows program, and that provided us with the grant that it took to really get this idea off the ground. And then we had Khosla Ventures come in for our pre-seed and seed.

Okay. And then I saw— I mean, it's pretty remarkable. I mean, you got to the 1 ton per day in about a year. Yeah, which is like, it seems nuts. Yeah. How many, how many people work a year from, from opening up headquarters?

Yeah, I had started designing this pilot plant before hiring anyone, and so it was in the works for less than 2 years before we hit the capacity of 1 ton per day.

Okay. Yeah. Okay. So we, I mean, we went over some of the— now that we know a little bit more, I mean, tell me the the shortlist of the highlights again on, on how much cheaper would this be compared to the standard way we make steel?

Up to 30%.

30%.

Which is crazy in a commodity industry.

And then on the, on the kind of like carbon side, at least 50% reduced emissions.

Okay.

And then, okay, so, so, and then, and then on the— so we're cheaper, cleaner. And then I guess the next question is like, can you, you know, equal the rate of of current machines? Is it— does it ultimately end up faster too?

So is it scalable, I think, is, is the first one. And absolutely, and that is one of the, the advantages to our approach with our furnace design. Scalability is critical in steel, right? If you cannot scale, you're not going to compete. And so, A, scalable. Our, uh, smallest commercial mill for steel is going to be 500,000 tons per year.

Okay.

Right, 300,000 to 500,000 tons per year. We're aiming for 500,000 tons per year. And even at that small scale, which is a quarter of a typical steel mill capacity, we are cheaper, 25% cheaper on a commodity basis. And then we'll continue scaling to 2 million tons per year through a more modular approach. So instead of continuing to scale our furnace diameter, we have multiple furnaces. And at that point we are now producing at the 2 million ton per year rate of the typical steel mill.

Okay.

Now, is it faster? I mean, with less steps you have less complexity and you do have less refining with our process as it's, it's, it's higher grade metallurgically. And that does reduce the time it takes to get from ore to finished product.

It was great. That was probably a bad metric anyway. I mean, I was mostly just looking up, can we, yeah, keep up with whatever, you know, is there a downside to, to to this.

The only downside is in, uh, if we were to deploy in regions in which metallurgical coal is on par or maybe cheaper than natural gas.

Yeah.

So if you look at Australia, which is actually the, the major miner of metallurgical coal, and you look at their natural gas prices, we're at parity, right? But the advantage that we have is the metallurgical quality of the steel we make. Right, right. Because we have eliminated the use of coke, which, which does bring in sulfur, does bring phosphorus, and we also have very low nitrogen levels, we can make higher purity steels and therefore higher performance steels.

Okay, okay.

So think about electrical steel or, uh, automotive steels, any high performance.

Okay. Since day one, the Core Memory Podcast has been supported by the fine people at E1 Ventures. They are a young and ambitious VC firm in Silicon Valley investing in young and ambitious companies and people. Thank you so much to E1 Ventures for all your support. I was digging around, I asked ChatGPT to find the downsides on all this. I mean, the, the basic thing that I got back was that, um, people have tried new processes in the past. They always fall down in terms of scaling. You know, people do prototypes and small, small batches, but then things fall over when you try to, to build more. And then the other part was that, that people had not— it doesn't seem really been able to study your particular process yet. I mean, I guess you guys were in stealth mode. You've, you've come up with this new technique. It was hard to find criticisms in the sense of, of— I don't know that people had fully kind of like analyzed it yet. You know, is that I mean, ultimately, like with any startup, you just— the proof is in the pudding.

You're going to—

you're going to—

you have to just show it.

This one tonne, right? Right. But is there— is there like a— I guess is the industry— are they kind of embracing you guys or are there people who are like, no, this is not going to work?

They were very skeptical before we demonstrated this continuous 1 tonne per day. Production rate. Okay. And very skeptical before we showed, here's the data on our metallurgical compositions we're getting. Uh, that is to say though, that it's true the steel industry has gotten bruised a lot by new technologies, and that's because it's a commodity basis. Uh, the blast furnace has been optimized, and so it is difficult to compete if you do not have a massive step change in cost. Right, so it's very difficult to compete if you're just trying to be at cost parity at scale because, you know, China, for example, can just subsidize even further. But we have such a major step change, delta, negative delta in cost of production that that gives us a lot of flexibility for what if the efficiency of our system is, you know, 10% less than we're thinking on paper. That's okay. There's all this margin we can play with.

Okay. And is it like, is your end goal to compete with a Cleveland-Cliffs type company, or is it to sell this technology to the steel industry?

It's a great question. We are a tech-enabled steel producer, so we produce steel, uh, not technology. The technology is what enables us to have the advantage in the steel, but we partner with incumbents as well.

Okay.

So For example, a Cleveland-Cliffs, a US Steel, a Nucor, an SDI, an ArcelorMittal, all of these big names we partner, we can partner with.

Okay. And we— okay, so where are we? Like, the only thing I know about the steel industry is that we've had massive consolidation, that the US is still importing a ton of steel for reasons I can't fully explain. I invested in Cleveland-Cliffs like years ago when it had had a gone through a really bad period.

That's actually pretty cool that you invested in steel companies.

It was, you know, I was like, I, I try to, I try to invest in things I actually know about. But they had been, they had been sort of like brutally punished during some, some, I forget what had just happened. And then there's this, the guy who runs it is this, uh, what's his name? Lorenzo Gonzalez, I think. Um, I mean, he seemed like a real character who was like a, a firebrand in the steel industry and was making all these big deals and the stock had gotten so cheap. I was like, screw it, let's see what happens. And then, became like a mini meme stock during, during the pandemic. And, and did, did like extraordinarily well. And so that was kind of wild. He became this like this meme character that people were getting.

He is certainly a character.

Yeah, he seems like a cult of personality.

Polarizing. Yeah.

Yeah. That was my, that was my sense. But so I, you know, all I see are the headlines of it's been sort of, it seems like a depressing story for the US over the last few decades and in China. Doing well. And, and, and so, you know, where would this— is this— where would this fit into this like macro story of what's been happening? Is this a US-focused thing or this is a— this is even larger than that?

We're starting in the US, but certainly larger than that. So let's focus first on the US and that story. The US is the largest importer of steel in the world. About 25% of our steel is imported. And steel is a matter of national security. It's critical to our infrastructure, critical to our technology development. And so we're very vulnerable by relying so much on imported steel. And we got to this place by shutting down our blast furnaces, right, and not building new capacity. Not saying we should have, right? We absolutely should not be building more blast furnaces. But the last blast furnace in the US was built in 1979.

Okay.

So all the furnaces you see existing today, there's about 11 blast furnaces in the US, were built in 1979 or earlier. So very outdated. And instead what we've done is gotten really good at recycling scrap. 70% of domestically produced steel is from scrap, and that's based on electric arc furnace technology.

Okay.

In which you're leveraging electricity to do the melting.

And are we— that 25% that we're importing, is that just because it's higher quality? Like, what, what type of steel are we importing?

Primarily higher quality steel. Uh, and so the scrap steel furnaces, there's a limitation to the quality of steel they can make because their feedstock, their original feedstock, already has alloying elements included. And so because of the lack of blast furnaces in operation, We do import a lot of the steel that needs to be made from iron ore.

Okay.

So that fresh steel, we can call it. Okay. So Mexico and Canada are our primary partners who we import from, also Brazil. And what we're trying to do is enable the US to rebuild our strength in steel manufacturing. And to be able to do that by leveraging our domestic resources, which includes iron ore, right? And a lot of our iron ore is of the lower grade. And so there's a lot of what's called beneficiation. So upgrading of that ore necessary to go before it can go in the blast furnace, that's costly. There are implications on that. And so what we're doing is saying, here's a process in which we can use all of these grades, these lower quality, these, these fines versus pellets or lumps, in this process in which we're also leveraging the abundant natural gas that we have here.

So Emily, like in this moment of reindustrialization and obviously like the Trump administration's push to improve our supply chain, all of, you know, all of our ability to make things in the United States, I mean, you guys must be, you must be receiving quite a bit of attention, I would imagine.

We are actively engaged across. There definitely needs to be more attention paid to what we build. So there's been talks of building a new blast furnace in the US, right? So, so it's the year 2025. The last one we built was in 1979. There's a good reason why we haven't been building more. And now there's this, this play of perhaps we will be building a new blast furnace. So we're doing everything we can now to get the word out there that that is not the only option and that's not the best option either. If we want to be cost competitive in our steel pricing compared to the global pricing.

I was going to ask you that because you said, you said we shouldn't be building a new blast furnace. I didn't know if that was because you think just you guys have this new path forward or if there's something just like inherently bad about just because a blast furnace is polluting or it's just old.

Yeah, all of that. So A, it's incredibly polluting. B, as I said, it's expensive to make, especially when you compare the price of steel production domestically using our metallurgical coal versus the price of steel production, for example, in China. And see, this is a— once you put in one of these blast furnaces, that thing's going to be operating for at least 50 years. So you're making a bet that this technology from 1850 is still going to be competitive in the next 15 years, which is a very risky bet to be making, especially in a world where we can imagine that there will be higher and higher value placed on steel with lower embodied carbon emissions.

Okay. And somewhere like China, are they innovating in the steel industry or they're doing things the way they've always been done?

They're actually deploying more and more of these DRI plants, direct reduced iron plants, which can use hydrogen or natural gas similar to us. Okay. The difference is that that process needs the high-grade ore, 67% iron by weight. Less than 6% of the world's ore, direct shipping ores, is of that grade today. And so it's a very limited, very costly supply. So they're building those. They operate, you know, under a different set of circumstances in which the government can subsidize those prices regardless of, you know, if they get high. But technology in China itself, they're not necessarily innovating in the way that we do in the US.

Okay.

For steel.

And this process that you've discovered, I mean, do you have to keep that under lock and key? So that a different country doesn't figure this out. And I mean, like, if I walked into your factory, would it be obvious to me what you guys are doing? I have no idea how.

Not necessarily. We do have some guardrails that we put up to block some of the IP. And so in terms of if you walk to the factory, will you exactly know how we're doing it? No. But we do have to be very protective. This is a very competitive market and we have something that's incredibly competitive on a cost basis. And so we do hold our cards a bit close to our chest when it comes to what's actually happening in that furnace. But we're very open in terms of what's going into the furnace and what's going out, which is really what matters.

Is it— is this a thing where like you kind of don't want to file a patent on what you're doing because you would have to show too much? Or—

we filed, so we did file, we filed a patent. We, we have 4, 4 patents in the process actually, but we haven't disclosed like the exact levers and, and, and parameters to operate the furnace for it to work.

Okay.

So there would be a lot of, there's a lot of know-how baked into what we're doing.

Okay. Okay. So you're sitting around thinking about all this and you just, you're just like, I think there's a technique that somebody has not pursued fully. And, and it may, I mean, you just start to see this in your head that that there's a different way to do it.

Yeah. And I don't want to dismiss all the research that has been done by others on steelmaking technologies. For— so for example, I was very inspired by reading research papers on hydrogen plasma smelting reduction. It's not what we do, not at all. That's a misconception. But learned a lot by understanding the challenges that they faced with that technology.

Okay. Okay. And so you've built it. The plant is in Houston as well. And so, and it looks like you—

We've been operating that since last August.

Yeah, it looked like you hit that 1 ton per day mark. And then when I was reading, it said the next step is to build a larger plant. So where are we with that?

Yeah, so we have started our feed. We're actually at the tail end of our feed study. Our front-end engineering design study on that plant. That's going to be a 9,000-ton-per-year plant. It's going to be a commercial mill for the rare earth magnet space in which we'll be making high-purity iron, but a demonstration plant for the steel industry where we'll be making steel qualification materials.

And will that be in Houston as well?

That's the plan.

Okay.

We're also exploring other states though. Looking at, you know, which states provide incentives and also have that workforce. But we would love to keep it in Texas and we have our site picked out.

So, and I saw this, did the— okay, your technology can be used like you just mentioned with these, these magnets, which are what they're like super high-end. I mean, it seemed like you had, you had two uses. You can go towards the magnets and then towards steel production. Yeah. And then, yeah, I was just kind of curious why you picked That route first. Yeah.

So at the end of the day, we're steel producers and that's our main focus. However, as you're scaling a technology, and especially in the commodity market at subscale, you're not going to be cost competitive, right? A 9,000-ton-per-year plant is not going to be able to compete on a cost basis with a 2-million-ton-per-year steel mill. So instead, we looked at what else could we be producing with this capacity? Right. We are reserving capacity for the steel qualification materials, but what else? And we realized there is another huge gap in the security of the US when it comes to manufacturing, and that's in the rare earth magnets. So if you've been reading, I mean, Bloomberg, it's all over Bloomberg.

I've seen all the rare earth stuff, but, but yeah, what— remind me again what these magnets are used for.

So rare earth magnets are essentially just and particularly permanent magnets, that's the majority of what rare earth magnets are. Permanent magnets are neodymium, high purity iron, and boron. And what they are are just super strong magnets. Like really, that's it. They're just incredibly strong magnets. And so because of how strong they are, you can use them in a lot of precision applications, especially defense systems, also in EVs and wind turbines, etc. So they're, they're used across applications. But the primary challenge is that without rare earth magnets, our defense systems will fail.

Okay. Right.

And the US has not made rare earth magnets and has instead offshored a lot of that and relied on China.

Okay. And your process helps in—

our process helps because there isn't a single domestic manufacturer of the iron for these magnets.

Magnets.

I see. Okay. And it's not any iron. It's high purity iron where you have to have at least 3 nines in purity. And 70% of the permanent magnet is that iron.

Okay.

So great. We solved the neodymium issue. We solved the boron issue. But unless we're making the remaining 70% of material, we're still at a risk. Right.

Where do we buy that from today?

China.

China. Okay.

Great. China. Yeah, it's great. It's great. And this is what happened with, with, you know, the tariff war. Yeah, right. China said, you're going to place these tariffs on me, fine, we're going to cut off your rare earth magnet supply. And that very quickly ended the tariff war.

Yeah. Okay. Okay. Okay. So, and then like on this journey that you're on, I mean, when do you think the, that we get to the 9,000 tons per day?

We are aiming to be in production of that by 2027.

2027. And then you said the next—

breaking ground next year.

And then the next step was 500,000 tons per year. Okay. And then is that what sort of— I have no idea what sort of timescale we're on.

If this is that, we will have generating revenue by 2030.

2030.

So in less than 5— I mean, 5 years, that's nothing, especially in founder time. You blink and 5 years went by.

Yeah. Like in hard tech, 5 years is not a long time. What is the— what is What takes the longest? I mean, in terms of scaling this up, just building the infrastructure and the specialized equipment that goes into this, it's primarily, you know, everything that goes into actually building a plant.

It's the upfront engineering studies, it's the construction time. Permitting is part of it, but not a huge lag. But all of that does take time and then commissioning and getting it online. What's particularly hard for startups in this industry is that to get funding, you need these commercial agreements, these offtake agreements. Typically, investors or financiers want to see a fixed price, but we're in a commodity industry, right? We're in steel, where that's not a typical commercial agreement. So that's another thing that can slow the whole process down. So we're getting ahead of that. We are Speaking to our 2030 customers today. And what's interesting is that we're also looking at partnering with an existing incumbent on that first mill.

Okay.

So what does that look like? That looks like Hertha Metals operating what's called the melt shop. So ore to liquid steel and our partners taking that liquid steel and converting it to the hot rolled coil or, you know, the stamped electrical steels.

How many potential partners are even left these days that would— that you can choose from?

It's actually crazy how few primary steel producers, first of all. So primary steel producers mean they're making it from iron ore, and there's just US Steel, which is now Nippon, yeah, and Cleveland-Cliffs.

That's what I thought, right? Yeah.

So we truly only have one, like, true domestic steel producer, which is now Cleveland-Cliffs.

Yeah.

But We are also exploring partnerships with secondary producers. Secondary producers are the mini mills that make steel from scrap. And for them, we offer this great opportunity to break into the higher price point product markets because we provide that high purity liquid steel to start with.

Okay.

Okay. So we actually have a number of potential partners. It's not just primary. Steel producers to that end.

Okay. I mean, part of the story is, is not— I mean, there's a lot of parts to this that are nuts. I mean, it seems like an incredibly difficult industry to try to like make headway in.

Potato, potato.

And you're doing it, you know, like a startup going into heavy industry is very, very, very difficult.

Um, I'm not going to lie, it's very challenging, but the most amazing journey to be on.

Yeah. What is your—

Because think about the impact when we're successful.

Well, and I, like, as I was reading about this, I mean, look, when you read about it, the, all those numbers you cited, you know, I mean, it's, it's, I don't say this in an antagonistic way. There's this like, this seems too good to be true. Like the numbers are so, so dramatic, you know? And then my, my journalist brain is just, is like full of skepticism. I'm like, it can't be this.

And people should be skeptics.

Yeah.

This is like without that skepticism, bets get made on the wrong technologies. And so I actually encourage skepticism and encourage people to take a deeper look, come talk to us and look at why we have these numbers. We have had our economic numbers somewhat validated by, by other steel producers. So, you know, we'll show it to them. We'll say, what are we getting wrong? What are we getting right? And so we're pretty confident.

Like as you make that jump from the 1 ton to the 9,000, the So like, how do you know it will scale? Are there still parts of this process that have to be proven out, or is it—

Yeah, there's still technical risk. There's no science risk, no science risks whatsoever. And we've actually done a great job at frontloading a lot of our technical de-risking. So 1 ton per day today, you know, it's around 360 ton per year capacity. We're now going to 9,000 tons per day. $9,300, really. And that's at a 30-ton per day production rate. Two things to note there. Don't let the 1 to 30 scare you. We're not scaling by 30x. In the steel industry, it's scaling based off of surface area, not volume.

Okay.

And so really what we're scaling is furnace diameter. And between where we are today and this next plant, we're only scaling that by 4x. We've already done 10x scale-up steps to get to the 1 ton per day. So We've already experienced what changes as you scale. And so the technical risk is really associated with, with how are we distributing the gas as we continue to increase that furnace diameter.

Okay.

And we have a lot of, you know, tricks in the bag that we use and we do a lot of modeling to try to de-risk that as much as possible and a lot of experimental testing at our current pilot plant. But nonetheless, you know, it's still a risk. It's a new technology.

And you, you mentioned Coastal Ventures and the original, the Breakthrough Energy. You were a Breakthrough Energy Innovator Fellow. And that comes from the Gates, from, is it Gates Foundation or just Bill Gates?

Breakthrough Energy. Just the Breakthrough Energy Foundation.

Right.

Who he founded.

Right. Sorry. Of course. And then like, and then how is Silicon Valley or the traditional VC community, like, have they been, this strikes me as a type of thing they might have trouble wrapping their head around to some degree. Yeah. I mean, are you, are you finding— this also strikes me as something that's going to be expensive, you know, to scale up. Have people been open-minded to this? Can they figure it out? Or are you— is this, is this the type of thing really where, um, it's almost more like, um, you know, parts of the, the government really getting behind this, like the Department of Energy or something like that?

Parts of the government need to get behind it because this is, again, infrastructure a matter of national security, and so they should. We did have a Department of Energy grant. We're now looking at working with DOD, the Department of Defense, on this. But for Silicon Valley, we're in a— certainly in one of those valleys of death right now, right? We are in a place in which we're building a— we're scaling again. It's a demonstration slash first-of-a-kind commercial plant for high-purity iron.. And there are a lot of VCs who are either too early stage or too late stage where they don't want to take that kind of a risk.

Right. Because the next, the next infusion is going to— is— would be quite large.

Yes. And a completely different investor profile. That's not going to be Silicon Valley who puts in the money into that next round. That's going to be infrastructure growth. And I mean, it's no surprise Silicon Valley is, is really putting all the eggs into AI right now. And so that's a struggle for all of us that are continuing to push the frontier in hard tech. I talk a lot about how climate tech is where a lot of funding came from— climate tech VC funding came from for infrastructure, because most infrastructure startups are doing something that's going to reduce emissions. Why would you not if you're going to build a new hard tech and climate tech 2.0 has, in my opinion, kind of died.

Yeah.

And it was marked by a lot of investments made into things that even at scale would require a green premium.

Yeah.

Right. And you know, the vision is just, well, by the end plant, we'll be at cost parity or cheaper. Hertha Metals is completely different. And honestly, a lot of Khosla Ventures, uh, investments are in our bucket of difference in which we have taken a very practical approach to scaling and to capital efficiency. And so what we're raising right now to build this 30-ton-per-day plant is still less than what other iron-making startups are raising to build a 1-ton-per-day plant.

Okay.

So yes, it's capital intensive, but we're doing it at a fraction of the cost that the competition is doing it at.

The— yeah, this— the, um, do you know the Cellogen guys? Yeah, I mean, they're in Houston as well. I mean, it's kind of interesting to me. There's some— there's like a budding, uh, you know, I mean, I've covered this industry for ages. There weren't tons of interesting startups being formed in, in—

yeah, there's Syzygy Plasmonics, who's, uh, one of the, the darlings of Houston. Uh, there's Solugen, there's Fervo, there's Quaise. I'm sure there are others I'm leaving out, but this is where you go if you want to build industrial technology companies.

Yeah, at least the ones I know about, like Solugen. I mean, it's like playing off Houston's track record in energy chemicals, sort of like you mentioned, having this people who can build plants, you know, who have built big things and then are applying their skills just a little to the side. And so it's pretty fascinating. I just got back back from a trip to Texas, but it's mostly Central Texas. And, um, it's funny because Los Angeles, often to people's surprise, still has this stranglehold. You know, the reason you see so many things in El Segundo a lot of the time is because you have these machinists who have been there for decades and, and this manufacturing expertise. But then Texas seems to have this, this, through this energy industry, um, this ability to build very large plants and objects. Yeah.

When I first moved there, I felt like I was in an engineer's dream city because you'll see, you know, these massive trucks pulling these massive wind turbine blades on the highway and then you're right next to them and we're just all together, right? And then you see the Ship Channel and then you can drive a bit and you're in the heart of downtown Houston eating the best food you've ever had in your life.

Houston.

And then you just drive a little north and you're now at the greatest steelmaking pilot plant in the world.

Do you live out near Conroe?

I live in the Woodlands.

In the Woodlands.

Okay. I, you know, I love Conroe. Conroe is amazing. My husband's plant is in Pearland, and so that's really south. So the Woodlands—

Your husband has a plant too? What does he do?

He's the CEO of Sisigi Cosmetics.

Oh, okay.

The company I gave you.

And I mean, you said there— I don't actually know what do they do?

They make light-powered chemical reactors. They've actually scaled the most efficient chemical reactor in the world.

Okay. So are they like a competitor to Cellogen? No, sort of different.

Or maybe, um, I mean, it's a completely different technology. They have different markets, some shared markets. But Syzygy Plasmonics has a platform technology where they can make sustainable aviation fuels, they can make hydrogen via ammonia cracking, syngas. And so lots of different plays there.

So you're like this industrial power couple of Houston.

Yeah, we just cry at dinner every night. Just kidding.

Did you, did you at all, what did your parents, what did your parents do?

My father was an engineer.

Okay.

My mother is a financial analyst and was like a math genius.

Okay. So this, some of this is in your blood. Did you at all?

But I'm the First PhD in engineering.

How long ago did your family move from Lebanon?

Um, it's been— so my father and his side still live in Lebanon, and my, uh, mother, they both moved together to Florida when I— my sister was born. So that's, you know, over 30 years ago. Okay. Sorry, sister, for giving away your age.

Have you— did you visit there?

Oh, of course. Yeah, I, I spent all my summers there.

It's like really high on my list of places I've always wanted to go because, I mean, people talk about it in such, like, fantastical terms.

I mean, yeah, it's a beautiful place. It's a beautiful country.

Yeah. And then is it, um, like, in 2025, like, good place to go, or—

Yeah, I mean, is it— if you're asking if it's safe, it's very safe in Beirut. Uh, the, the, you know, economy has been struggling. There was that major economic collapse However, there's a new government, parliament in place, and so hopefully that will help things. Nonetheless, I think it's a great place to go. Beirut is still gorgeous. You can drive north and be in beautiful mountains and then drive south, you know, an hour and a half and be at the beach.

Yeah, like everyone always tells me Beirut's like one, one of, if not like the—

it was the greatest city in the Middle East.

Yeah, right then. But then because of the economic downturn, that had gotten a little less, less exciting. But yeah, so I was just kind of curious what the state of affairs.

Yeah, yeah. Still a struggle with the economy.

Yeah, yeah. And when you were a kid, did you at all— would you have imagined you would have a steel company? Is this like remotely on the picture that you had for yourself?

Not steel. I didn't think of steel. And honestly, even getting into steel, it's probably good that I was a bit naive about how challenging it would be. Always good to have a bit of naivety whenever you start a company, but very quickly have understood, you know, what we're up against and how we're going to overcome these hurdles.

The only thing I— and I don't know if the Cleveland-Cliffs CEO is indicative of the industry overall, but, you know, he has a lot of like machismo swagger, like strikes me as a very sort of, you know, like swagger.

I would not say he has swagger.

Maybe, maybe. He seems to do these— I don't know if I meant that in the charisma sort of thing, but he's always making these big deals, trying to acquire people. And he is very bold, aggressive. Yes. It struck me as very like a very man's man sort of—

I know nothing except for— It's 100% a man's industry. You're not saying anything crazy.

Yeah. I mean, it's still— it strikes me as like—

Oh, it's incredibly male-dominated. Yeah, yeah, yeah, entirely.

So like, again, the bar— I mean, it seems like you have a, uh, it would only make things—

but I'm also an engineer, so I've been around, you know, I've been one of the only women in the room my entire career, right?

Yeah, yeah. So you're, you're—

I'm used to it.

You're used to this. And then, but okay, and I know you talked about like the, um, sort of potential to partner here and the way these things could go, but I mean, is, is, is Cleveland-Cliffs sitting there seeing you as like threat to their business? Are you guys—

are you— we'll have to get Lorenzo on here. That would be interesting if we could do that podcast. Lorenzo, Loreen, and Ashlee Vance, let's duke it out. At the end of the day, you know, we are more than open to partnering. We welcome partnerships, but without partnerships, we're going to keep going and we will take their market share.

Yeah. And the— in like the steel that you're producing today, where does it— where does it end up? Who does that go to?

It gets actually used as a scrap.

Okay.

Scrap supplement right now because we are always changing the chemistry of the steel coming out as we're testing different things. And then the next plant, right, we're going to be reserving a portion of it for the high purity iron for rare earth magnets. We're going to be the only domestic producer of this material and then we'll also be producing electrical steels and automotive steels for qualification.

Because I always see Cleveland-Cliffs, they seem to always be chasing the automotive deals and trying to lock prices in with the automotive customers for as long as they can. And is that, is that like the holy grail of the steel industry or?

I wouldn't say it's a holy grail. It is a high price point product. I think electrical steel is a really, really attractive market as well. Automotive steels are, are, as I said, high price point, do require some purity. But the OEM, you know, working with the automotives is a long process. Like there's a long time for qualification. You need to be very flexible to their needs and we welcome that. But it's— it takes some strategy to get in there and you have to start early, which is why we're going to be making some of those trial materials.

And then it always reminded me of like the memory industry. It seems so boom and busty. It's like all of a sudden there's a surplus.

Now we don't have enough memory. Interesting.

Like, like memory for, for computer chips. Oh, you know, sort of below one step, kind of below the semiconductor. Just the pure memory for, for caches, for RAM, for, for storage, things like that. I mean, it's, it's constantly, you know, always a boom and bust because it's like you run out, then they make way too much and then there's a glut and, and everything crashes.

Yeah. That's a great parallel.

You just go through these cycles.

It's very cyclical.

Yeah.

Very cyclical. What, what, so firstly, two things. One, the electrical steel market, we are always teetering on the edge of just supply meeting demand.

Okay.

There's not a surplus. And so that's a very safe industry to get into in terms of, you know, not being worried about overcapacity. But even with that, the, the industry as a whole globally is an overcapacity market. That said, if you cut cost, you will nonetheless be able to take market share even in overcapacity. So this is what Nucor did. Nucor brought into the steel industry this model of mini mills in which you're recycling scrap, and they brought them online during an overcapacity market as well. But look at them now. They're the largest steel producer in the US.

Okay. What is— I don't even— who is Nucor? Are they— they're like a— newish player in all this or not new?

They are the, the again, the largest steel producer in the US, but they run mini mills.

Okay.

No, it's okay. They run mini mills. So they are just making steel from scrap and also plant it with, you know, iron units. But a Cleveland-Cliffs is starting from iron ore. So that's the differentiator.

I see.

It also results in slightly different product mixes between a Cleveland-Cliffs versus a Nucor.

Okay.

And then similar to Nucor is Steel Dynamics, another steel producer in the US that also leverages scrap. And then, you know, similar to Cleveland-Cliffs is Nippon US Steel.

US Steel and Cleveland-Cliffs. Those are— this is all I know. I don't know. I mean, is it the— so I feel bad for not going deeper.

I'll tell them you say sorry. It's okay.

It's one of these industries. I feel like you got to be in it, you know, it doesn't get—

And once you're in, it's difficult to get out.

Yeah, it's—

Yep. You're just sucked in.

So I did see these videos on your website. I mean, it looks so awesome. Like if we came with cameras, could we follow this process or is it too secretive to—

No, no, we'll just, you know, hide some of the things, but you'll see the ore going in and you'll see the molten metal coming out.

Yeah.

It's really a sight to see. I encourage anyone listening to this podcast, if you're not a steel producer, to break in, find a way. Don't break in, guys. But see a steel production in operation. Yeah. It's so amazing to watch. Our furnace in itself is amazing to watch, you know, tons coming out at a time. But when you see an actual industrial-scale steel furnace and you see the tons coming out, it's just such a sight to see and to realize how incredible humans are for having created this thing. And we do it every day. And, and like, a lot of society isn't even aware of how it's made.

Yeah.

Yeah, it's critical to everything around us.

Yeah, well, I mean, it is like alchemy and magic and science.

And then EAF, an electric arc furnace that makes scrap steel, that's a sight. So they've got this massive bucket of scrap scrap of all different shapes. They remove the roof of the electric arc furnace, they open the bottom of the bucket, the scrap just falls into the furnace, and then they put the roof on, strike an arc, and immediately it's like looking at Dante's Inferno. There's all these crazy colors and smoke, and it looks like, you know, the whole building's about to catch on fire. Uh, first time I saw it, I'm like, is this— is this normal? And everyone was calm in the control room. It's really incredible.

Is there like a window into it at all or—

Oh, no, not into the furnace. No, no, no. But, you know, from the control room you see there's— so there's an opening, right? There's a gap between the furnace roof and the hearth, the bottom.

Okay.

And so you see it all coming out.

Okay. Remind me how big your— how big your facility is.

We have 20,000 square feet building, 100,000 square feet total.

Okay. And then do you guys do— do you have the offices right by the— near Or are you?

Yeah, yeah. No, no, no, no. You're right there.

You're in it.

You need to— if you are working at Hertha Metals, you need to see what we're doing every day.

Yeah.

You need to be on the plant floor.

Okay.

You need to feel the magic of that furnace.

I mean, I want to say, I honestly, I— when I first saw the videos, I, I don't know if your PR person told you, but I was like, is this a render? I really— I was like, this seems I was just shocked that there was kind of like a new company doing a new take on steel and that somehow they were already actually making it. I fully expected— I was poking on the website and I was like, oh, I'm sure this is like 8 years away, you know what I mean? From, from— and assumed it was fiction.

Yeah, we've— we haven't slept much since starting the company. Yeah, there are, there are technologies that have been under development for more than 8 years that are still not at our scale. There are technologies that have been under development for, you know, tens of years that are still not at commercial scale. We don't want to be that story. Everything about a successful business is also based on timing to market, and we see just this perfect opening. So we are truly speedrunning to get there.

Okay. Okay. Well, thank you so much for educating us on, on your company and then, and then Yeah, I think it's a deeply important topic for all kinds of reasons. So thank you for helping bring us up to speed. And then as far as like the coming few months go for you guys, I mean, is there, is there, you know, are you guys on a particular fundraising quest? It sounds like you're looking for this next site.

You know, we have the site.

Okay.

Yep. So if we're staying in Texas, we have our site located. It's actually right next door to our headquarters. So great. So that all of our talent can just migrate right there. Fundraising now, you know, socializing that fundraise. And yeah, we're also working with the government. We're, we're looking forward to a partnership there. Not in the way of, you know, an MP Material type of deals, not, not in the way of the deals that are making headlines today.

No, but like the— I mean, the Defense Department would be interested in this.

Yeah.

I mean, for like national Security Office.

Exactly.

Yeah, that makes total sense. Okay. And then, but you're saying, I don't want to put you on the spot, but, but you're saying like if some other state was, was making a compelling case, yeah, the opportunity could be there.

Yeah. Listen, I mean, we're a startup. We need funding and state incentives are important to any startup and can go a long way. And there are states that are really hungry to bring back steelmaking, such as, you know, Pennsylvania, for example, Michigan, states along the Rust Belt that we're exploring.

Yeah. Okay.

That makes sense. And really the vision is that, you know, this next plant, if it's in Texas, great. You know, we also have multiple commercial mills that are in the pipeline to be built. And one of my visions is to put a Hertha steel mill in Pittsburgh revitalize the capital of steel, right? Pittsburgh was the Steel City in a way where neighbors want that mill there. The reason why Pittsburgh lost its strength in steelmaking is because of all of the pollution from the blast furnace. And, you know, it resulted in the river dropping to a pH of 1, and communities were up in arms. They don't want that, and they shouldn't, right? Why, why make steel but at the sacrifice of the community that lives around it? Who are the ones, you know, typically working at your company. And so because our process is so much cleaner in terms of just even the, the air, the environment in our mill, I'm really looking forward to the time in which we revitalize steel in Pittsburgh.

How depressed or not should we be about the U.S. steel industry and especially vis-à-vis competition with China? I mean, it seems— it just seems like a sad, sad tale from what I see. Clean.

We should be excited. We have an opportunity here. So firstly, the U.S. doesn't import steel from China, right? We fixed that problem a while ago. That said, China still has major influence in global steel pricing, right? And so what they do produce and how that— what price they sell at still affects us in the U.S., but we're primarily importing from, you know, Canada, Mexico, Brazil. And, uh, we it opens an opportunity. The fact that we've already removed ourselves from depending on Chinese steel, it just opens up a really strong opportunity for us to reshore that production.

Yeah, okay. And, uh, okay, that makes sense. Um, and then, and just the idea that— I like the idea. It's always nice when you can actually not just, you know, sort of mimic what's being done, but a bit more efficiently, but actually take a leap forward? I mean, so like, if you guys pulled off what you're trying to do, the US would have this like flagship new steel—

oh man, the US would be one of the lowest cost steel producers in the world, which means that we could become a net exporter instead of a net importer. And that is exciting. It's not just good for the U.S., but it's also good for the rest of the world to have another option of a country to import steel from that's not going to break the bank. Right.

And then like on the level of, you know, because I cover the reindustrialization stuff as much as anyone, I think, and then sometimes I'm really optimistic and I'm into it. And then sometimes, or even on defense, right, it's like I hear the Defense Department say we need to modernize, we need to do things more cost-effectively. And I see all the startups trying to meet some of that need. And then And I, you know, and I, I'm into all that, but then part of it's like, okay, how real is this? Like, honestly, how seriously does the United States government, you know, that they feel this need, that they know there's things to fix.

Yeah.

But then it's like, are you really doing everything it takes to do this on something as fundamental to our infrastructure as steel? Like, is the US government paying lip service to this? Are they paying attention to what you guys are doing? Are you, you know, like, do you feel like like they're actually cognizant of all this?

Well, I think that you can, uh, infer that from the mandates that the U.S. government made to allow the Nippon Steel acquisition of U.S. Steel, right? The U.S. government said, we're going to have the golden shares, you're going to put in this many billions of investment into the U.S., into our steel production, and including, you know, the push to build a new steel mill steel mill. As I said, they're considering building a new steel mill.

Okay.

And it's probably not just a consideration, it's probably they're mandated to build a new steel mill, right? Nippon. And so what I think is different in this administration is the commitment to deploy rapidly, whether it's steelmaking, whether it's rare earth magnet manufacturing, whatever it is, even nuclear. The commitment to accelerate what it takes to get from, okay, here's our goal as a country, to we have actually achieved the goal. The Biden administration was marked by a lot of amazing efforts to, to introduce new technologies and infrastructure. There were a lot of, a lot of movement around hydrogen hubs, right? Hydrogen hubs were a big thing. But the pace in which those programs were progressing was too slow.

Yeah.

Such that by the time a new administration came in, we didn't get anywhere aside from, oh, we're almost at FID, we're almost at final investment decision. That's too late.

Right. And then, I mean, I've been covering some of the nuclear startups. This seems to be like a trying to make permitting easier, trying to make it easier to set up the new factories, to get rid of some of the red tape. I mean, that's like the similar thing that you guys would need?

Uh, we don't need any accelerated permitting, etc. Honestly, it's a capital-intensive industry. What we need is capital.

Okay.

And we need capital.

Yeah. And, and I mean, obviously this has to be on the order of like hundreds of millions to billions to go be making steel, to be making millions of tons of steel per year. Yeah. Well, so that's what I kind of mean. It's like, so obviously the US knows this is in its best interest, but this is sort of what I mean. It's like, are they gonna talk or is it— is it— yeah, we'll see. Are we gonna make it happen? You know? Yeah.

Let's see.

Yeah.

I wanna know too. Is it gonna be talk or are we gonna make it happen? One of the, you know, things is that we are already operating, you know, the largest pilot plant and we still have that middle step before we get to that full scale.

Right.

And so really what we need to do is just get through this middle step, this 9,000-tonne per year plant as quickly as possible. So that we can push the administration forward on our half a million tonne per year.

And you said like all the science is solved, but I mean, so, but what are, like, what are the things you worry about most as you're trying to scale up?

All the science is solved. We were able to get here so quickly because fundamentally from the start I tried to leverage as much existing, you know, furnace technology and process knowledge as possible that the steel industry already has. And so really the main innovation and breakthrough is around how we use our gases in the molten phase. So we are pioneers in gas— gas-liquid phase reactions, whereas the steel industry is very much used to, uh, solid-gas or solid-liquid reactions.

Okay. And it's like kind of how you control that?

Yes, that's our trade secret, proprietary information. How do we control the gas distribution such that the reaction enables controllability of your carbon content and optimizing your throughput of the furnace.

I see. So it's kind of like a rate at which you're pushing the gas through the process.

That's one piece of it. Okay. Yeah, there's proprietary technology in how we're actually introducing the gas as well.

Okay.

And so as we scale, like the engineering challenge is around making sure we're also scaling that gas distribution. Okay. And so that's why I say this is not a plasma-based system, which, which sometimes gets confused for what we're doing. Plasma-based systems are very limited in surface area for the reaction. You're limited, limited to the arc, to where the plasma is, because that's where your ionized gas is. We're not focused on the arc. The arc is for heat. Instead, we're leveraging gases in the molecular state And so it's all about how to continue distributing that gas across the surface area of the reaction zone in the furnace.

Okay. And like, I mean, I don't mean this— I'm putting you in a tough spot with this question because it's sort of like for you to speak about how awesome you are. But like, how much, you know, when you're talking about this, it seems like many, many science problems that you've had to solve. Have you had sort of you know, you came to this industry with like fresh, fresh eyes and everything, which I think is fantastic. But has there been kind of like a chief technology officer or someone who's been along your side? It seems like a lot of things to have to figure out.

I have the most amazing team of incredibly smart and determined people, one of those being our chief research officer, Dr. Dan Bullard.

Okay.

Bullard. And he is a steel industry veteran. So he has been in steel his whole life. He actually founded a steel startup himself, innovating on the downstream side and sold that to a strategic. And so he's been an amazing partner to have as he brings in that metallurgical experience with steel. And I bring in that, you know, high-level technology overview.

That's kind of what I was wondering. Yeah, because there must have been people who have been scarred by things.

Multiple partners in crime. Yes.

No, no bits and pieces to it.

And, and when— before even, even hiring anyone, including Dan, I was heavily working with consultants from the steel industry and from other metals industries so that I'm making sure I'm learning from their mistakes.

Well, that— and I, you know, I was— I'm just used to the typical Silicon Valley garage. That's why I was asking that question. I know this is probably a little bit different, but like I was trying to picture in my head your leap from, I'm architecting this on paper, I have these ideas, I'm whiteboarding.

Yeah, let me walk you through it.

I'm like, catting this out to now I'm raising money to make a plant to really try this. I mean, it's a big, big, you know, typically you might have even in something maybe like I'm used to rockets, you know, it's like, okay, before we build the whole rocket, I'm going to prove out the engine and then, and then I'm going to go to these other— you have some smaller steps along the way.

And we did too. It was just all in parallel. And so invented the technology, pulled in consultants to do different studies for me, unbiased studies, making sure this is viable. And then while designing the pilot plant, we started testing the actual science behind it. It. So we didn't order anything yet, right? We're just in the design phase. So we started testing the science behind it at a very small scale, making, you know, grams of product, grams of iron and steel. Okay, science works. Here are these other challenges, but let's not pause pilot plant work. Let's design the pilot plant to be configurable and modular in a way where if we learn something new in the R&D lab lab, we can still implement it in the pilot plant. And that's what we did. So we're at grams level, we're now ordering pieces of equipment that we know will not change in design, right? Like our rectifier and transformer. And then we're moving to the next scale of furnace. We have 3 different furnaces in our R&D lab, all of different scale, about 10x difference between. So now we're working on the next scale up and learning how does gas distribution change, How does material compatibility change with increasing diameter? Because now you have different flow characteristics of your, of your metal and slag and learning more there. And then thankfully, we did a really good job designing it in the first place such that everything that we learned could still be translated to that pilot plant.

Okay.

So it wasn't 0 to 1 ton per day. It was in parallel learning on the gram scale and then the kilogram scale and then the ton per day scale.

Parallel.

But in parallel. And honestly, it is all thanks to, uh, you know, Ashlee Vance at Breakthrough Energy Fuels for just believing in me, really, and what I was proposing. Uh, because it is a pretty big bet to make. Like, here's this funding to disrupt the steel industry based off of this idea.

Yeah, I mean, we went through your background kind of quick, and again, this is putting you in the awkward position of having to talk about yourself and your achievements and everything. But I mean, I mean, it's, it's a little bit nuts. I mean, when you were growing up, you, you obviously, you must have had the sense that you were, you were obviously like quite smart and, or not? No, I mean, you, you had to be on, you're on this, like the, the school you went to, was it full of like what we would think of as like gifted kids or it was like science-minded kids or Right?

Yeah, it's like gifted. Yeah, gifted kids. But I, I wasn't really gifted, or I mean, I wasn't very, um, motivated by academics up until middle school, like even past middle school. I remember when I was in elementary school, I would come home and take a nap when I needed to do homework, and my sister would help me with the homework. So clearly not just like an immediate get genius, super driven. I don't know what happened, you know, going from 12 to 13 or 11 to 12, because I started that program at 12, uh, that just made me really dive into learning.

I mean, because when I was going through your background, I'm having trouble asking this question in an eloquent way. I just noticed with your other startups, with your work at school, it seemed like you were able to that the steel company is not totally unique, that you were able to find discoveries or paths of exploration that other people had missed and to do it in— I usually don't find someone who's done this in completely different fields, you know. And so I got curious how your mind works.

Well, I think I really thank MIT for that because the programming at MIT makes you really understand the fundamentals. Like, you have to really have your mind wrapped around the most basic levels of physics and engineering, and that enables you to go into all of these different sectors. It also doesn't hurt that I've been doing engineering for a decade and a half now on the R&D side, right? And so you do learn a lot of different technologies throughout that. I've worked on thermochemical energy storage in my undergrad on, uh, actually plasma discharge for water desalination and passive cooling devices. What else? A portable bicycle generator for a, for a festival. So lots of different things.

Yeah.

And the Herta Metals technology is not just out of the blue. It truly has been our ability to invent what's been invented is truly because of all these previous technologies that we've, that I have investigated.

Okay. I mean, and then I say we for my imaginary friend. Well, and going back across some of the things you've done, I mean, when you look at the most dramatic ways we could actually do something about carbon. Yeah. I mean, I mean, I'm like running across still a bunch of carbon capture companies, all kinds of different things. I can never tell what like actually would make a difference, what wouldn't. I mean, clearly, like the steel industry is massive, transportation's massive, but I don't know. Are there things that you feel like other startups should be exploring that are missed or—

I just think that we really have to focus on developing solutions that can cut cost and not just emissions, right?

Okay.

We've tried this already of trying to just lead with emissions, right? It, it didn't work because at the end of the day, we live in a capitalistic society. Yeah. And you need to build on that. And so whatever any startup is working on, uh, whether it's for industry, uh, any space, at the end of the day, we have to focus on coming out under the incumbents when it comes to price.

It's just always so difficult because, you know, and it is very difficult. Yeah. Because there's the difference on price between the first factory you build and the thousandth.

Oh yeah.

And then, and then just knowing if that math is actually going to check out or if people are going to stick with you on the journey from there, you know what I mean? It's such a—

it's a, it's a complex, complex complex ecosystem, first of all, to navigate of investors, all the stakeholders. You've got your investors, your customers, policy, government. It's a lot with different priorities across it. But if you spend enough time in it, you can kind of see all the pieces of the puzzle and how they could come together. And at the end of the day, you also just have to have belief in your company and your team, because at the end of the day, your team is what's going to make or break it. Let's say we learn something new that just completely surprises us. It's the team that's going to figure out how to pivot and get us back on track.

Yeah. Do you— do you— are you in the whole reindustrialized thing? Yeah, it's kind of bro-y.

I'm surrounded by bros. Yeah, what isn't bro-y?

Okay, fair. I mean, it's like, you know, the tech industry as a whole is kind of— is quite male-dominated. But then once you get to like aerospace and defense and everything, it's like next level. Yeah. And I mean, the energy industry, not even just steel, but the energy industry, same similar thing. Yeah. Yeah. I mean, sometimes I find it, it's like Like, I see the El Segundo guys, many of whom I really like, and I'm into what they're doing, but I don't know, then it just, it feels to me like sort of goes too far a bit in the rah-rah. We're popping zins and lifting weights and, and you'll like, I don't know, I just try to put myself in other people's shoes. It seems like you're, you're perhaps not like calling to the broadest possible talent pool.

Well, my talent pool isn't like the tech bros, right? My talent pool is the industrialists and the technologists and the metallurgists and the operators. Like half of my, not half, but we have a good portion of our company that's just our operators, right? From oil and gas, from steel. And so we attract people from the steel industry over who want to actually work on something that could change the industry. And we are one of, I would say, the only start-up companies that actually has a technology that could disrupt in a very pragmatic manner the steel industry. We have those that are from the commodities industry, not steel. Yeah, that are attracted also to steel because it's the backbone. And I think I do a pretty good job at painting the vision and the impact we can make if we're successful. I don't have too many. I don't have any Silicon Valley guys coming over to my company.

Yeah. Okay. Yeah. And, and, and so, and obviously, like, kind of not a problem.

Yeah, not a problem.

Yeah.

Yeah. Join us if you'd like. Join us if you're passionate about the mission. Join us if you want to be in literally one of the coolest industries out there. Steel has lost its sexiness and we're bringing it back because it truly is an incredible material that we rely on.

Have you heard of this Prototown place? It's like a hardware, um, startup city between Austin and San Antonio.

Oh, interesting.

I'm sure they would like you to build your, your, uh, next plant there.

Why not Houston? Why don't these guys come to Houston?

Well, yeah, I mean, they're trying to make— they're trying to make this like American Shenzhen, kind of between Austin and San Antonio, is is the goal.

Interesting.

Yeah.

I'll have to look them up.

Yeah. I'll connect you guys. I'm sure they will pitch you.

Yeah. Putting here.

I mean, I guess the theory, the working theory is that I've driven it. I just went there. So, you know, you really can get, you're outside of Austin. It's close to Lockhart, Texas. And so the drive really is like 45 minutes to get to Austin, maybe a quicker to get to San Antonio. So you're close to civilization. You know, they're trying to build the city out in a, in like a ranch, but, and then you really are super close to all of Elon's battery factories and satellite factories and all these things. You can feel that there's an industrial thing brewing there.

Texas as a whole, right? More and more steel mills are popping up in Texas. We've got that with Hertha Metals, if we were to put this 9,000-ton plant there, in which we'll make high-purity iron along with steel, we would basically be able to complete the supply chain of rare earth magnet manufacturing in Texas, within Texas, because we have Novion, who is another rare earth magnet manufacturer. We have MP Materials, who has, you know, the mines and refining processes. And So Texas is kind of becoming that hub.

Okay. Okay. Well, that the— I mean, it is fascinating. I grew up in Texas and then I've lived in California so long and the two states sort of hate each other.

They're just so different.

Yeah. But I feel, I feel like I belong to both, both worlds. And so it's always confusing in my head.

You have to let me know when you're in Houston next.

I will. I mean, I know the Solugen guys, so I went out and saw their first like bioreactor and foundry, I think they call it. I find that really fascinating. And I have, I've got like deep soft spot for Houston, which is apparently a much better city than when I grew up there because we did not have a bustling food scene or anything.

I've heard that it was very different, you know, maybe 20 years ago, 10 years ago.

Houston grew so fast that it never had like a kind of heart to it, you know, and like downtown, you know, after 5 PM was just nothing. And it was just so fascinating. Yeah.

I don't know that world of Houston. I've never seen that.

It was all, it just grew so fast that everywhere was just its little suburban enclave of like a strip mall and—

Right next to the oil refinery.

Yeah.

Which is discharging in the Galveston Bay.

Great zoning laws. But yeah, I never had— I never felt like it was a wonderful place to grow up. It was very easy. You know, things were relatively pleasant. It just, it never had like a soul to it, you know? And I mean, the the food was fine in the sense of like Tex-Mex and barbecue and things like that. But the idea of like some more eclectic food scene was not—

I mean, it's one of the most diverse cities in the US, which naturally gives rise to an amazing diversity of food and cuisine.

Like, people do not know that still, I think to this day, but like the Indian and Vietnamese population, just enormous. I mean, maybe like the biggest Indian population in the US.

I think you might be right.

Yeah. And so anyway, all right.

Yeah, we have a Chinatown. We've got it all.

Yeah, and, uh, it's still a very massive place.

It's very massive. But what I really love about Houston is how grounded everyone is. Yeah, you know, so I lived in Boston for MIT for almost 6 years. I, you know, have been in Florida. I have spent plenty of time here in California. And what I love about Houston in that area is that everyone's— there are a lot of really smart people there, but they don't act like they know everything. They're very grounded, which in Boston, it's an academic bubble. Everyone knows they're a genius and everyone talks as if they're geniuses.

Boston's crazy because not only do you run into a PhD, it's like their spare PhD. They have 2 or 3, and it's like, that's enough, man. You don't have to be an MD and a PhD. Yeah.

As an MBA. Yeah.

Yeah. And then obviously Silicon Valley comes with all the utopian—

Oh, I dropped out of college. I didn't even go. I don't care about that.

And I'm saving the world. And Texas, I think you're 100% right. People are very grounded. Yeah. Okay. Last thing. I forgot, we forgot, I forgot to ask you about the name and—

Okay.

Yeah. Yeah.

Thank you. So Hertha Metals, I named us after Hertha Ayrton, which is a late scientist in the 1800s She was the physicist that pioneered the understanding of electric arcs. And so not only was she, you know, incredibly intelligent, but she also was a pioneer in a number of other ways, one being that she was a woman suffragette. So she was fighting for women's right to vote at that time. And at that time, those that were protesting were also getting arrested, and she could kind of hide the other women that were being chased down by police at her home, which is, I think, an honorable thing to do for that effort. She was best friends with Madame Marie Curie, and importantly, she was the first woman that the Royal Society of Chemistry allowed to read her own research papers to, right? So back in the day, in 1800s, you're not publishing papers, you are creating your original work of research, and then you go in front of this room of men that are wearing fancy clothing, and you read your research article to them. And at that time, women weren't allowed to. And so they said, if you want this piece of work to be presented, you're going to give it to this guy and he'll read it for you. And she said, excusez-moi. And so she pushed back, pushed back, pushed back. Eventually eventually— it wasn't like right after she asked— eventually they let her. And then she went on to win the Hughes Medal of Honor for chemistry.

My God. So they— this happened. They would— the guys would read.

Yeah. Yeah. And she didn't give up. So she literally has broken barriers in steelmaking by the understanding of electric arcs, broken barriers in terms of women in science, and broken barriers in terms of women being able to Oh, okay. What a badass.

I'm very glad I asked. That was— that I did not know we were gonna go there.

We have a painting of her in our office, and she just stares down at us saying, "Make me proud." Um, okay, that's amazing.

Well, thank you so much for your time. Thank you for, um, all this knowledge, and thanks for coming into the studio.

Thank you, Ashlee. I really appreciate it.

The Core Memory Podcast is hosted by me, Ashlee Vance. It is produced by David Nicholson and me. Our theme song is by James Mercer and John Sortland, and the show is edited by the John Sortland. Thanks as always to Brex, NE1 Ventures for making this possible. Please visit visit our Substack, YouTube, and podcast channels to get more of what Core Memory makes. Thanks, y'all.