CERAWEEK INTERVIEW: New technology could cut steel production costs 20%, Hertha CEO says

Hertha Metals has developed a new technology that it says can replace traditional coal-based steelmaking. To that end, the sustainable steel startup is preparing to break ground on a new plantagainst a backdrop of rising support for domestic steelmaking capacity.

Hertha was founded in 2022 by CEO Laureen Meroueh, who invented the company's technology, which enables single-step steel and high-purity iron production. The process, yet to be commercially proven at scale, uses any grade of domestic iron ore to produce steel that's more than 20% cheaper with 50% fewer emissions than traditional steelmaking methods,according to the company.

Hertha will break ground on a 10,000 metric ton/year plant in July, located next to its operating Texas pilot plant. It will be operational by the end of next year, Meroueh said.

Meroueh spoke to Platts, part of S&P Global Energy, on March 26 at the CERAWeek by S&P Global energy conference in Houston. The following is an edited transcript of the conversation.

Platts: Can you describe this new technology and how it works?

Laureen Meroueh: Our technology is within one furnace, which is continuously charged and semi-continuously tapped. You're charging iron ore and what comes out is a refined liquid iron or steel.

We realized that at scale, you need really efficient heating and melting. Electric arc furnaces already exist at scale. We use them every single day to recycle our scrap steel. They're very efficient in heat transfer, and so we have no issue with heating in the steel industry. What we have a challenge with is being able to process any grade of iron ore in any form.

Today, to make steel, you first have to sinter or pelletize the iron ore and it has to be of a certain grade, which results in a large reservoir of iron ore in our grounds that is unusable.

We need to be able to leverage abundant resources that the world has, and therefore, we looked at how do we make a system work with any form in any grade. That's how we realized doing everything in the molten phase is the most efficient.

How do you compete economically with this technology?

We can produce steel that's more than 20% cheaper than the incumbent process. That is not true for other leading innovations. We are one of a handful of startups working on this problem and it is a very important problem to solve -- reintroducing competitiveness and the sustainability in primary steelmaking.

Hertha's whole game is we want to have a negative green premium, because we are in a commodity industry, and the only way you're going to really take market share in steel production is through price. That's the only way the billions in capital investment already in the ground are going to eventually switch over to this cleaner technology.

How do you see tariffs impacting the steel market and the work you're doing?

Steel is more than just a commodity. Steel is a matter of national security. The production of steel is a signal of economic strength. There's far more to it than just, "We'll import the cheapest steel available." We have to be able to make steel domestically and so these tariffs are a protectionist measure to allow the industry to continue to thrive domestically.

You have countries that are selling steel at a loss. China, for the last two years, has been selling up and down at negative margins. How can any steel mill compete with steel that's being sold at a loss? I can do as much as I want to lower the cost of production, but if you're going to just keep lowering it and sell it at a loss, there's nothing you can do.

Tariffs, to a degree, are necessary until countries stop overbuilding and then selling at less than the cost of production.

What kind of policy action could help support these innovative steelmaking efforts?

It is funding. Whether that's funding through the form of loans, credit or debt financing, non-dilutive funding, or very large funding deals in exchange for equity.

There needs to be support for the innovators trying to make steel production more competitive due to the capital intensity. This is not a venture capital-style business. Who else will step up to ensure that the country you operate in is more competitive? It needs to be administrative support.

How do you see the steel market evolving in the next five to ten years?

Definitely increased domestic production. No doubt that we're going to do whatever we can to increase domestic production. We already see announcements for new builds of iron-making facilities and restarting blast furnaces that were previously idled. Without a doubt, domestic production is going to increase.

On the innovation side, I'm not positive where it will go because we have some unfortunate examples out there for steel innovation. There have been a lot ofburns due to technologies not scaling -- going 10 times over the budget when they get to scale. That's why I'm really uneasy about the outlook of more innovation coming online until we have a success.

We're working so hard to be that success story as soon as possible, to encourage investors that this can happen, and there are innovations in steel that can get to scale and be more cost-competitive. That's what we'll do.