ArcelorMittal says its $6.6-million investment in CHAR Technologies Limited is proof of its commitment to tackle climate change as it taps into the biocarbon produced by the Toronto-based company to reduce emissions from its Hamilton steel factory.
CHAR turns residual wood (such as used shipping pallets or sawmill offcuts) into biocarbon, renewable natural gas and green hydrogen using heat in a zero-oxygen environment. Its solution earned it an investment from ArcelorMittal’s XCarb Innovation Fund and a strategic partnership to supply biocarbon to ArcelorMittal.
Luxembourg-based ArcelorMittal is one of the largest steelmakers in the world. Hamilton-based ArcelorMittal Dofasco is an independent subsidiary.
The climate impacts of the steel industry is not lost on ArcelorMittal, with the company taking interest in innovations like electrification and replacing coal with biochar, according to Irina Gorbunova, ArcelorMittal’s vice-president of mergers and acquisitions, and the head of XCarb.
Gorbunova spoke at a July 19 virtual investor event with CHAR CEO Andrew White, as they outlined the plans between the two companies.
ArcelorMittal, she said, is fairly comfortable that CHAR’s technology “is a good solution for us and we think it is going to scale.”
Terms of the partnership
ArcelorMittal Dofasco converted a fossil fuel-powered blast furnace at its Hamilton site into an electric arc furnace, to trial the use of CHAR’s biocarbon. The plant received a $1.8-billion investment from the Canadian and Ontario governments to build the 2.5 million tonne capacity electric arc furnace that will operate on natural gas, but be ready to transition to hydrogen fuel.
It is part of the company’s broader goal to reduce the carbon intensity of the steel it produces by 25 per cent by 2030 and cut carbon emissions at the Hamilton facility by three million tonnes by 2030.
The steelmaker signed a memorandum of understanding to purchase biocarbon from CHAR’s Thorold, Ont. facility, contributing to its goal of reducing greenhouse gas emissions by 35,000 tonnes over four years and expanding testing for the electric arc furnace.
Gorbunova said ArcelorMittal felt CHAR stood out among the XCarb applications due to its flexible technology and a strong business plan, along with management that can drive the technology to commercialization.
There are no specific milestones yet for this investment and partnership, she noted, and ArcelorMittal will work to scale-up CHAR and provide capital if needed. The deal prioritizes strategy over investment returns, she said.
White said working capital from the partnership validates the work it has done with ArcelorMittal to demonstrate the technology and prove its business plan makes sense. Securing offtake is “paramount” to getting project-level financing, he added, by proving the facility can generate revenue.
The amount of biocarbon needed for the Dofasco plant, or ArcelorMittal’s international operations, was not disclosed by Gorbunova, who said they are “just learning to crawl.” The company wants to test and validate the biocarbon first, with a focus on Canada, before scaling up globally.
The future for CHAR
CHAR’s products will not be exclusive to ArcelorMittal Dofasco, according to White. He said CHAR is looking to use its demonstration-scale kiln to see if it can produce other kinds of biocarbons or apply its technology for other industrial processes like metals or cement. There are no restrictions in the investment which would prevent CHAR from seeking other market opportunities.
The renewable natural gas from CHAR’s process can be also used, which means it can partner with gas companies in Canada, the U.S. and Europe, White said. It is seeking a gas offtaker and is open to exploring opportunities with Canadian utilities.