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The NanoSteel Company: big thinking, small technology

Keywords: Tags  The NanoSteel Company Inc., advanced high-strength steel, David Paratore, Dan Branagan, EnerTech Capital, Scott Ungerer, General Motors, Jon Lauckner GM Ventures LLC

David Paratore knows what it means to be a major player in the transportation sector, having spent much of his early career working on jet engines at Pratt & Whitney Co. Now, as president and chief executive officer of The NanoSteel Company Inc., he is looking to commer cialize close to two decades of laboratory research and application development of paradigm-changing steel that forms its crystals in the nanometer range, particularly for the automotive sector.

While the exact details of the process are still confidential, the essence of the next-generation, cold-formable, advanced high-strength steel (AHSS) is a precise management of the chemical formation of the steel at the nanocrystalline level, brought about by the combination of proprietary material properties. Paratore emphasizes that the ingredients are still the common raw materials of commercial steel, not expensive or exotic additives. The key is using the same ingredients in ratios not previously considered.

“This is no longer just core research,” Paratore said. “Our technology guys have worked very hard in the lab, but they get it. They understand this has got to be a commercial proposition at the end, or why bother doing it at all? Our investors also have the right vision. Nanocrystalline sheet steel is the game-changer for the auto sector.”

The guiding light on NanoSteel’s research team is Dan Branagan, Ph.D., a founder of the Providence, R.I.-based company and its chief technology officer. He has been focused on materials nanotechnology since the early-1990s. The “eureka” moment, he said, came in 1996, when he was a metallurgist at the U.S. Department of Energy’s Idaho National Laboratory. Some of the early research also was funded by the Defense Advanced Research Projects Agency, known best for developing the precursor of the Internet.

Branagan started by exploring ways of controlling the structure of steel as it formed. “The key end-use market was to be automobile manufacturing,” he said. “I realized early on more breakthroughs were needed, so instead of starting with sheet steel we went back and started with physical vapor deposition (PVD). The path has been to work up from there to spray thin and thick coatings and then to sheet.” (PVD is most commonly used in the semiconductor industry, but has applications in many sectors. The most familiar may be aluminized balloons and snack-food bags.)

EnerTech Capital was an early supporter and investor in the development of NanoSteel as a company. “Our mission is to find and foster technology to improve efficiency in the transportation sector,” EnerTech founder and managing director Scott Ungerer said. “We have a long-term vision of creating new steel to take weight out of the car without compromising strength and safety.”

Ungerer said that nanocrystalline steel met two important criteria that many other next-generation materials--steel or otherwise--often do not meet: One was a smooth entry to the existing supply chain, the making of the material and the use by fabricators; the second was potential commercial applications in stages prior to full development of the final material. “Most exotic materials have a very long development timetable,” he said. “They do not usually have intermediate applications that can bring in a revenue stream to support the development, and they would require major changes to manufacturing, logistics, materials handling and fabrication.”

Jon Lauckner, General Motors chief technology officer, vice president of Global R&D and president of GM Ventures LLC, heartily agreed; the company announced last year that it was investing in NanoSteel. “There is an extensive steel manufacturing base and supply chain worldwide, as well as materials engineering expertise within our company and our suppliers. Working with that existing system is a quicker path to commercialization,” he said. “When we say ‘next generation,’ we mean just that--not decades down the road.”

NanoSteel had brought its development sufficiently along by June last year to publicly announce its new AHSS products, offering “exceptional combinations of strength and ductility for automotive structures,” with measured strength/elongation performance of 950 megapascals (MPa)/35 percent, 1,200 MPa/30 percent and 1,600 MPa/15 percent.

“These paradigm-changing performance levels are enabled by new discoveries related to the formation of nanoscale microstructures,” Branagan said. “Previously, sheet steel made of nanostructures was considered too brittle to form the shapes required for automotive parts. In contrast, NanoSteel’s materials are based on newly discovered mechanisms to form nanostructures during production (that) eliminate the cause of this brittleness. Our new AHSS uses conventional steel processes and avoids the use of exotic alloying elements and represents a whole new class of steel.”

One of the challenges with currently available AHSS is the need to form parts at elevated temperatures, which increases cost and production cycle times. NanoSteel’s focus has been on eliminating that extra process since the material’s inherent ductility allows the forming of component parts using room-temperature metal-stamping processes on existing manufacturing equipment, commonly referred to as cold forming.

Paratore said NanoSteel is working with two large steelmakers, which he declined to name, to produce sufficient quantities for GM to conduct its standard materials acceptance testing. Those coils could be delivered in the next few months, after which GM’s testing will initiate the product validation process.

In the meantime, NanoSteel continues to sell commercial coatings. In mid-February, the company named Harald Lemke vice president and general manager of powder metallurgy, leading the commercialization of the company’s alloys into the powder metallurgy industry using both the recent developments in AHSS and the company’s established coatings products. Lemke will focus on applications that require high hardness, wear and yield strength, and applications that also require the ductility traditionally served by specialty materials. Initial target industries for the company’s powder metallurgy business will be oil and gas, power generation and mining.

“There is significant opportunity to use our breakthroughs in nanostructured sheet steel into the cladding and near-net-shape parts businesses of powder metallurgy,” Paratore said.

“With NanoSteel’s broad portfolio of products,” Lemke said, “we have the opportunity to extend steel’s footprint outside of traditional metal performance boundaries into new markets and applications.”

Before joining NanoSteel, Lemke was global vice president of materials marketing for the coatings division of Sulzer-Metco. Previously, he was business development manager for Kennametal Inc.’s advanced materials division and chief operating officer and general manager of Powdermet, where he oversaw a metal and metal matrix powder start-up business.

Even with all the business potential of spray and powder coatings, high-strength nanostructured sheet steel for automotive use is still the company’s ultimate goal. “Coatings are a derivative we can sell today, but sheet is our intent,” Paratore said. “To be sure, we are not planning to be a steel company or a car company; we want to make the technology available to everyone worldwide to use under a royalty-bearing license.” That will probably be on a tonnage basis rather than by site license, but the final form is yet to be determined.

“We are working with two steel companies to prepare for large-scale production trials,” Paratore said. “We are also working on driving production costs down and possibly working up the supply chain to thin slab, but the initial focus is on thin strip sheet. In all, we design for production to come from existing lines without a lot of retrofitting or modification.”

The final cost of the material remains to be determined, but it is expected to be more expensive than carbon steel but less expensive than stainless. Currently, NanoSteel’s sheet steel product is made via the strip casting process. After coils of commercial material are delivered, Paratore expects a six- to 12-month validation process.

“We are not just looking to replace conventional steels or aluminum or other materials. We are looking to enable automobile makers to use the best material for each component, whatever that may be,” Paratore said. High-volume components “is our sweet spot. We bring light weight and strength into focus for the large-volume platforms.”

For Branagan, the thrill is making steel exciting again. “Steel is very old technology,” he said. “It has been around 5,000 years. It’s not sexy. I wanted to leapfrog the existing incremental improvements. Given the trends in research funding--away from the multi-decade work of a single investigator and toward multidisciplinary projects--we had to form the company to get to the end game.”

He also realized that such a company had to build a commercially viable business to sustain the research and development of the final material. “The other advantage of going outside academic- or state-funded research is being free from the obligation to publish papers and make presentations,” he said, adding that it is not just about secrecy but the sense that those demands are a distraction and a drag on time.

Branagan reiterated Paratore’s emphasis on reducing production costs for the steel mills that will someday license NanoSteel’s technology. “We really want to optimize productivity all along the supply chain, for the mills to make it and for the fabricators to use it. We believe we are on cost targets that the market needs.”

That said, some challenges remain. “You can’t schedule breakthroughs,” Branagan said. “You have to have the confidence and the belief that the breakthroughs will come, but I also know that schedules are critical for commercial companies.”

Ultimately, Branagan sees production “not in the thousands of tons, but in the millions of tons of production and distribution worldwide by existing steel companies. I really want to stress that we are not a steel company. We want to be a partner with steel mills.”

“We have been at this business of very selectively supporting research and development since our founding in 1996,” Ungerer said, “and we have looked at around half a dozen companies in the materials category. Most of them were binary--either it worked in the end or it did not. NanoSteel had applications along the way.”

Ungerer said EnerTech Capital also was looking for seamlessness. “The steel industry and the auto industry don’t need a whole new process or more lines or new equipment. We do want to be revolutionary, but we don’t want to be too disruptive. You have to make life easy for the people who are going to make and use the new stuff.”

Since its initial investment, EnerTech has maintained the same level of ownership through successive rounds of financing. “In the initial round, we bought up our stake,” Ungerer said, “and perhaps we have been a little shy, strictly speaking, in the more recent rounds, but overall we have maintained our level.”

As supportive as EnerTech has been and continues to be, Ungerer said his company “is not a buy-and-hold operation. At some point, we will be looking for a liquidity event. Could NanoSteel go public or be acquired? If the market for this material unfolds the way we envision, it could easily become a public company on its own. I don’t know the minds of the steel industry executives, but if I were them I would want this technology in my portfolio.”

While Branagan’s original work goes back 18 years and NanoSteel has been around for about 10 years, GM Ventures is a little more than two years old. “We invest in start-ups that will develop the next generation of auto-related technology to complement our own in-house developed technology,” Lauckner said. That is focused in five areas: propulsion and emissions, “infotainment”, advanced materials, automotive sensors, processors and memory and business and value chain models. Lauckner is eager for his outfit to get hold of NanoSteel’s commercial-volume coils. “We have to run our full battery of tests, just as we would for any other new material. We have to evaluate welding, corrosion resistance, formability,” he said. “We have had opportunities to review NanoSteel test samples, and the results have been very encouraging. But we won’t have final determination until we can get some coils, most importantly to confirm that the steel has consistent characteristics across a wide area of the material.”

The ideal, Lauckner said, “is for the new material to be “technically transparent” to our forming, stamping and then fabrication, if it can really be just plug-and-play. But we are realistic about the chances it can really be that simple. We use lots of types of steel and we are used to making adjustments. So, we expect that adjustments will need to be made to process the NanoSteel material and we are optimistic those will not be a problem.”

Ultimately, if all goes well in the full battery of testing, NanoSteel will get quality acceptance, after which preliminary arrangements will be made for high-volume manufacturing. Full acceptance will only come once sufficient commercial volumes are available for design and use. And finally, as with any new material, it will be selected by product development organizations for each car brand.

“A lot of that is up to NanoSteel and up to the steel suppliers with whom they become partners, but at some point the steel suppliers are going to want to hear from us about how much we want and where and when,” Lauckner said.

It is not expected that any one steelmaker, even a big one, would be able to meet the volume and geographic needs of incorporating nanocrystalline sheet steel into widespread automobile manufacturing, so several licensees are likely, even early in the commercialization process.

“We use a lot of steel, so we are very comfortable with it,” Lauckner said. “But we try to be agnostic and just optimize fabrication for each material. I know there are all-steel cars and all-aluminum cars, but for the future, to optimize vehicle mass and cost, we want to use the best material for the specific application. By the way, that means we also need to have a robust library of joining technologies.”

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