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The only North American Green Steel project moves toward feasibility phase
ThREE Consulting LLC
Interview conducted by:
Lynn Fosse, Senior Editor
Published – July 12, 2021
CEOCFO: Mr. Kennedy, your site tagline is, “Understanding the larger issues.” What does that mean Three Consulting?
Mr. Kennedy: Three Consulting is the combination of a number of things that I have been working on over the last decade. It includes mining of basic commodities like iron, extraction of high-
CEOCFO: You have been researching it and now what?
Mr. Kennedy: This all came about from the acquisition of an iron ore mine in late 2001. I started working on redeveloping the iron ore mine and in the process of evaluating mineralogy we discovered that the deposit was very rich in rare earth elements and that caused me to go on a journey of discovery. As early as 2009 I engaged with the federal government and tried to alert them to the risk associated with our nations complete failure to be current or active in this space (rare earths). In addition to providing a lot of information to the federal government over the last decade, I have consulted financial companies, mining companies, and governments, on the geopolitical implications of rare earths.
This included an invitation to speak at the United Nations in 2014 on issues related to critical materials and the related element thorium, which is a nuclear fuel (https://www.youtube.com/watch?v=fLR39sT_bTs&t=14s ).
In short all of this stemmed from a mining project that we sold back in 2012 and through a lot of circumstances we now own the entire project again and we are doing high level engineering work related to redeveloping the mine as a green steel project and of course recover the rare earth resources that are associated with it. It was a 15 year walk down the path of discovery and it has culminated in potentially the first truly economic hydrocarbon-
CEOCFO: Is that because of the resource?
Mr. Kennedy: The mine we bought in 2001 happened to be the highest-
The biggest problem, however, was that the mine was an orphan iron producer in North America. In North America the market for virgin iron units has dropped by 70% as integrated steel production continues to be displaced by recycled steel from Electric Arc Furnaces. The remaining integrated steel producers primarily utilize their own iron ore mines, so there is no domestic ready / steady market for Pea Ridge.
The mine’s geographic location, in the center of the USA, makes the economics of exporting to China or other large markets risky.
The Pea Ridge deposit had a lot going against it but the plus side of the ledger was quite favorable. Despite being an underground mine, Pea Ridge has a history of being a relatively low-
Now that we control the project again and we have the benefit of over a decade of accumulated feasibility and engineering work, we are in a position to develop this project as a true green steel project and control the distribution of these specialty and chemical products.
CEOCFO: What has been the interest in the project?
Mr. Kennedy: The amount of investment dollars looking for green investments continues to grow. Governments and investors are demanding a bold shift in decarbonizing our economy. U.S. steel production represents about 6% of our national CO2 emissions. This Administration and the DoE have made this a priority.
The basic process of making steel with hydrogen is a decades-
Using hydrogen, you can produce ultra-
CEOCFO: What prompted you to explore Green Steel?
Mr. Kennedy: On two different occasions when I was discussing the rare earth issue with “green mandate’ investment fund managers, I happened to mention we owned a rare earth resource as part of a much larger high grade iron ore mining project. When I started telling them about the iron ore side of the project and they said “Wow.” They asked if there was any way to make that a green project because it sounded exciting. I had been dreaming about doing this for ten or twelve years and had not found anyone interested in funding this sort of green project. Both of these green mandate fund directors told me that if I could prove the economics, they would fund it.
CEOCFO: Where are you in that process?
Mr. Kennedy: I am working with my longtime partner in crime, John Kutsch, who is the executive director of Thorium Energy Alliance, and an all-
Upon confirmation of our economic projections via these feasibility studies, we have ready investors who would fund the development of the project. If the DoE acts quickly steel production could begin as early as 2025/26.
CEOCFO: Having worked with the government is your reputation helpful when looking at a grant or is it just the plan they see on the paper?
Mr. Kennedy: Working with the government this long, the government and I have much lower opinions of each other. A lot of decisions about who is going to get a grant are made long before opportunities are announced. For example, in the Pentagon’s recent funding decision related to national security and rare earths, a group of folks inside and outside the Pentagon had decided to channel much of the money into a previously twice bankrupt project -
The government has a bad reputation for preloading funding opportunities, but in this case, we are dealing with a Department of Energy grant that has been around for a number of years. In this particular case the Department of Energy is trying to achieve a number of things that are very important to them. One of the top priorities of the Department of Energy in this particular grant, which is FOA-
There are two reasons why the nuclear fleet is economically unstable, one is mindless, selfish, stupid CEOs borrowing money against fully paid-
Renewables are essentially bankrupting the nuclear sector by stripping out all the high-
What we did was design an economic model around green steel that also met one of the DOEs primary goals of economically stabilizing the nuclear fleet. Our project does this through providing guaranteed offtake for nuclear energy during off-
CEOCFO: Is the technology and the equipment to do all of this available today or do you need to develop other equipment and technology?
Mr. Kennedy: Everything that we are employing in this project is a proven commercial technology. Nothing is left to chance, nothing is wishful thinking, nothing is dependent on a technology that has not found its way out of a laboratory yet. Everything is proven at a commercial scale.
The trick is to secure reliable, uninterruptable energy at 70% of current industrial rate, typically $.04 per kwh. This is the parity-
Nobody else has identified the primary source for low-
As an aside, most everyone think renewables are great. What they don’t understand is that renewables are destabilizing all base-
This excess energy can have very low, or even negative pricing associated with it. The next problem is that you can’t power an energy intensive industrial process based on the intermittent surges of low-
You need to store it. This is the brick wall for most people – conditioned to think in terms of chemical battery storage. They just cannot get their heads around how to store energy at the thousands or tens of thousands of megawatts level. The solution is old – very old.
We solve the problem by acquiring the underutilized nuclear capacity of regional nuclear reactors during off-
In this scenario, everyone wins. The nuclear facilities operate at optimal efficiency levels and any excess renewable energy gets put to good use.
That is a huge leap that no one has taken. It is a virtuous and sustainable solution that stabilizes our nuclear fleet, utilizes curtailed renewable energy and allows for the economic production of hydrogen as a reduction gas (see: https://www.aist.org/AIST/aist/AIST/SteelNews/greenmillpresentation.pdf).
The integrated solution will allow us to operate at parody with traditional hydrocarbon and eliminates nearly all input pricing volatility. Coal, natural gas prices are replaced by water and iron ore volatility is eliminated through the integration of our mining operation. This will prove to be very attractive to the steel industry once they see its potential. In the steel industry margins can be horrible for long periods. When market prices move against the steel industry, they really lose a lot of money fast.
That is why the DoE grant and the green mandate investment funds are so important. Our project can demonstrate how and why other steel makers should make the transition. Our solution basically eliminates nearly all of the input price fluctuation risk associated with steel production.
CEOCFO: Is there a plan B for you if you do not get the grant?
Mr. Kennedy: If the DOE does not provide funding for the feasibility work, we will be forced to proceed with the project under traditional hydrocarbon technology. For investors, that is the lowest risk path forward.
Either way we have a very high margin project with essentially no ‘beta’ risk and we did it the old-
If the DoE does not provide funding the project will become just one more CO2 emitting hydrocarbon project and the U.S. will surrender any claims of leadership in the green new economy.
CEOCFO: Hopefully they will.
Mr. Kennedy: Right now, in the real world there is only two true green steel projects on this planet. Both of them are in Sweden, both of them will get a tremendous amount of state funding and both of them are based on iron ore deposits that are chemically identical to our resource. These are two excellent mine to metal projects. One of them is fully integrated and the other one not fully integrated but they do start from the mine and get all the way to a finished steel product.
This is the only other project in the world and it is the only potential project in the US. If we do not get funding in this immediate round from the DOE, it is impossible for the US to be competitive in this space. If we are not launched as a green steel project in the near-
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“It was a 15 year walk down the path of discovery and it has culminated in potentially the first truly economic hydrocarbon-