Colorado-based Electra has raised $129 million to fund the next round to develop the technology to produce iron for steel. The technology is set at temperatures below boiling water and without planet-warming emissions.
The startup emerged from stealth mode in 2022 and has since secured $214 million in funding from prominent investors, including Breakthrough Energy Ventures (founded by Bill Gates), Singapore’s Temasek Holdings, and Capricorn Investment Group.
The new funding round arrives amid President Donald Trump’s sweeping changes to the clean-tech landscape. While his administration has moved to roll back incentives for low-carbon technologies, his steel import tariffs aim to boost domestic manufacturing. However, given the uncertainty surrounding these trade policies, startups such as Electra have yet to experience a surge in investor enthusiasm.
In January public filings, Electra set an upper limit on the raise at $257 million, but the final sum for this round announced today is $186 million, of which $129 million is new money and the rest is equity converted from a previous round.
Electra is set to build a demonstration plant in Colorado with the capacity to produce 500 tons of iron starting in early 2026. The company will supply the test batches to steel producers like Nucor Corp., who can process the iron into steel through electric-arc furnaces. When powered by renewable energy, this method enables completely carbon-free steel production.
CEO Sandeep Nijhawan anticipates converting early deals into offtake contracts if Electra’s iron meets the standards customers are looking for. The company is currently evaluating potential sites, including locations outside the United States.
“We see the demand,” said Nijhawan. “But we have to temper that with the risk that comes to the table with the first-of-a-kind plant.” Nijhawan has not revealed the prices for Electra’s iron from the plant. However, he noted that steelmakers have agreed on target price ranges needed to fast-track commercial agreements.
Electra originally aimed to construct a 50,000-ton plant by 2027 and scale up to a million-ton facility by 2029.
However, Nijhawan admits that the timeline was based on the desire to move as quickly as possible and is no longer realistic. The company is now finalizing a detailed plan, which involves securing land permits and access to renewable energy, and anticipates having the 50,000-ton plant fully operational by 2029, with the million-ton plant expected to launch in the early 2030s.
As Electra did not secure any funding from the US government, the policy changes will not impact the startup directly, according to Nijhawan. Trump’s existing tariffs on China and other nations could drive up the cost of acquiring equipment and clean energy, while the unpredictability surrounding tariff rates and their duration may cause delays in purchasing decisions.
Trump’s 25% tariffs on steel are meant to encourage domestic production—in theory. However, these tariffs alone wouldn’t justify Electra building its commercial-scale plant in the U.S. The company is also weighing other factors, like government incentives and access to affordable clean energy, areas where the U.S. lags behind countries such as Australia.
“No doubt tariffs and the volatility in the market is not conducive for business, but we are taking a very long-term view and not being reactive,” said Nijhawan. “We have got to build this plant to withstand any political changes because this plant is going to last more than 20 years.”
Converting iron ore to iron is responsible for 90% of the 7% global carbon emissions. Electra’s technology performs the same chemical process as the conventional method that burns coal to extract oxygen from iron ore, emitting greenhouse gases. However, it relies on electricity and does so without producing carbon dioxide if the power comes from clean sources.
Other startups are also attempting to decarbonize ore processing. Boston Metal, which has raised $370 million since it started a decade ago, also relies on electricity, but uses temperatures of up to 1,400C (2,550F). That means the process must run continuously or risk solidifying molten metal, unlike Electra’s, which operates at low temperatures and can be turned off whenever needed.
Electra says that it can use low-grade ore, of which billions of tons are easily accessible. Every green-steel startup depends on affordable, low-carbon electricity. But despite the expansion of solar and wind energy, demand far outstrips supply, with renewable projects facing lengthy waitlists. Now, Steel start-ups with thin margins must compete against capital-rich tech giants, like data center operators, who can pay higher rates to secure power first, squeezing out smaller players with tighter margins.”
The startup faces two critical challenges: demonstrating its technology can operate commercially and delivering iron at market-competitive prices. First, however, Electra needs to raise at least several hundred million dollars for its commercial facility – a fundraising effort that’s already underway.
“We are always raising money,” said Nijhawan. “That’s the truthful answer.”
Source: Energy Connects