San Diego-based Pacific Steel Group (PSG) is planning a zero-carbon-emission steel mill near Mojave, Calif., in a first-of-a-kind project that will set an example for industrial decarbonization.

While there have been other electric steel mills, the Mojave Micro Mill project would be the world’s first fully electric, zero-carbon-emission steel production facility, according to Lin Planchard, a utilities engineer with the California Energy Commission. Electricity for the steel plant will come from on-site solar and the grid, and the plant will be equipped with a carbon-capture system.

The $630 million project will recycle steel to produce rebar for use in California’s construction industry. Currently, scrap metal from California is sent to facilities in Washington, Oregon, Utah, Arizona or even Asia for recycling and rebar production. The rebar then must be transported back to California.

“By building a new rebar mill, California can fill this gap in the market by localizing our scrap recycling and rebar production and thereby reducing emissions from transporting steel by approximately 118,000 tons per year,” Planchard said.

The CEC on Jan. 21 approved a $14 million grant to PSG for long-duration energy storage (LDES) to support about 50 MW of solar power at the steel plant. The storage will be connected to the solar photovoltaic system and a microgrid.

“It will optimize the use of on-site solar energy, support critical operations during outages and contribute to the overall energy management strategy of the facility,” according to the grant request form.

The 32 MWh LDES system will be non-lithium-ion; PSG is exploring multiple chemistries including zinc that are capable of discharging for at least eight hours, company spokeswoman Michelle D’Alonzo told NetZero Insider.

D’Alonzo said the Mojave Micro Mill will electrify processes that traditionally use natural gas. Steel will be recycled at the facility by melting it in an electric arc furnace.

Nearly 90% of the mill’s carbon emissions, which already are low, will be captured, according to a project fact sheet. Captured carbon dioxide will be purified, liquified and used in applications that require CO₂.

Kern County certified an environmental impact report and a statement of overriding consideration for the project in March 2024. PSG expects to break ground on the steel mill in March and start operations in early 2027.

When completed, the Mojave Micro Mill would be the only operational steel mill in the state, which hasn’t seen a new steel mill in more than 50 years.

“I love this project,” CEC Chair David Hochschild said during the Jan. 21 meeting. “This marries many of the things that we’re trying to do together: industrial decarbonization, new manufacturing, assembly and recycling facilities, and cutting-edge clean energy technologies and grid reliability.”

In addition to the CEC grant award, the Mojave Micro Mill got a boost Jan. 16 when Generate Capital announced a $200 million secured loan to PSG for the project. Generate Capital is a San Francisco-based sustainable infrastructure investment firm.

“PSG’s innovative approach demonstrates how we can significantly reduce emissions in the industrial sector while meeting the rising demand for greener building materials economically,” Generate Capital President Bill Sonneborn said in a statement.

As the most widely used metal in the world, steel is one of the largest single sources of carbon emissions, accounting for 7% of global and almost 30% of industrial emissions, Generate said in a release.

“Decarbonizing the steel market, therefore, is vital to achieving the transition to net-zero emissions,” the investment firm said.