Green Steel Startup Aims to Outcompete Traditional Steel with New Production Method

Hertha Metals, a startup backed by Bill Gates and Vinod Khosla, has successfully tested a new approach for making "green steel" that minimizes emissions without raising costs. The startup can produce one ton of green steel per day in a pilot facility and plans to begin constructing a larger demonstration plant next year. Hertha expects to move to commercial production by 2031, at which point it says it will be able to produce green steel cheaper than traditional steel.

Hertha Metals, a startup backed by tech billionaires Bill Gates and Vinod Khosla, has made significant strides in developing a sustainable approach to steel production. The company has successfully tested a new method for producing "green steel" that minimizes emissions without increasing costs. This breakthrough, achieved through a pilot facility in Conroe, Texas, marks a crucial milestone in the journey towards cleaner steelmaking.

Hertha Metals' innovative process involves melting lumps of iron ore in a furnace using electricity and natural gas. The startup claims to reduce carbon emissions by more than 50% compared to traditional coal-based steelmaking. The company expects to construct a larger demonstration plant next year in Texas, with an annual capacity of more than 9,000 tons. By 2031, Hertha Metals aims to achieve commercial production, promising to produce green steel at a lower cost than traditional steel [1].

The steel industry is a significant contributor to global warming, with steel production responsible for more carbon dioxide emissions than shipping and aviation combined. The market for green steel is still in its early stages, with current green supplies accounting for only 6% of global production [1]. Despite the challenges, Hertha Metals' approach offers a promising solution, as it simplifies the steelmaking process by reducing the number of steps and resources required.

Hertha Metals' expansion comes at a time when the global green steel market is experiencing a decline in investment. In 2024, global investment in new green steel projects more than halved to $17 billion, marking the steepest annual decline in six years [1]. However, Hertha Metals' demonstration plant is expected to produce not only green steel but also high-purity green iron for manufacturers of rare earth magnets, which are essential for computers, electric cars, and medical imaging devices. This additional revenue stream could help the startup break even or even turn a profit.

The Europe mining steel industry market, valued at $124.2 billion in 2024, is projected to grow at a CAGR of 5.17%, reaching $217.6 billion by 2035. The market is driven by rising demand in infrastructure, automotive, and construction industries, as well as a shift towards greener practices [2]. The adoption of electric arc furnaces (EAF), direct reduced iron (DRI) technology, and renewable energy sources is key to this transition.

Hertha Metals' technology represents a significant step forward in the effort to decarbonize the steel industry. While the company's approach faces challenges, such as the high cost of green hydrogen and the need to scale up production, the potential for lower-cost green steel production is compelling. As the global steel industry continues to evolve, Hertha Metals' innovation could play a pivotal role in shaping a more sustainable future.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-22/a-green-steel-startup-says-it-can-outprice-conventional-steel
[2] https://finance.yahoo.com/news/europe-mining-steel-industry-report-090500992.html