Wheat Ridge / Denver, Colorado
Magnesium metal manufacturing
A 3.5-year, $4 million graduate research project at University of Colorado Boulder sparked the startup of Big Blue Technologies.
Palumbo and co-founder Boris Chubukov worked on the project, which ended in 2017, as they got the company off the ground. "We were tasked with finding out a new way to produce magnesium metal," says Palumbo.
The U.S. Department of Energy's ARPA-E helped fund the work at CU to diversify the notably narrow supply chain: Domestically produced magnesium metal is sole-sourced from U.S. Magnesium in Utah, and that's problematic when it comes to critical applications in defense and the industrial sector. The military uses it for radiator housing.
"That throws up a lot of red flags," says Palumbo. "In North America, most of the magnesium smelters shut down in the 1990s and early 2000s, mostly because China came on the scene and blew everyone out of the water on cost."
Magnesium is one of the most common minerals in the global economy. "Most of it is portable electronics," says Palumbo. "Pretty much every laptop, camera, and handheld electronic device has a little bit of magnesium in it, because "It's the lightest metal you can use for structural purposes."
The automotive industry is another major user of magnesium metal. Palumbo says it's used for lightweighting in both gasoline and electric vehicles.
"The process we use is an electrified thermal process," he says. "We have a direct route to magnesium production where we're taking two primary ore sources, heating them up, and making magnesium directly. Most processes use an indirect route, so they make an intermediate material in order to make the magnesium. It's a two-step process."
Big Blue's single-step process results in 15 to 20 percent savings due in large part to lower energy needs. "If we hook into renewable electricity sources, if we use particular ore sources, we can hit a lot of the sustainability goals that some of our end users want to see," says Palumbo. "If we're at a large enough scale, we think we can beat the Chinese on price -- especially because we know their labor and energy costs are only going up."
Some of the resulting magnesium metal now goes to Protocast in Commerce City. "They're taking some of our early magnesium product and turning it into parts," says Palumbo. "That way, we can work with some end users as well and develop some case studies to show the sustainability impact factor of what our product does as well as some of the potential cost savings are for using our product over some competitors'."
In 2015, Big Blue started out making batches of magnesium metal that were measured in the grams. That will soon increase to a kilogram an hour on the company's pilot production facility on the north side of Denver. To fully commercialize the process, production needs to hit 500 tons a year -- or about 50X the current output.
"That is the size where we could begin to attain supplier verification for all of the big aluminum alloyers and a lot of the automotive OEMs," says Palumbo. "We have to send one to 10 ons of samples just to get our product vetted."
"Everything we're doing now is essential focused on the technical aspects, de-risking the process and the technology, and making sure we can make a strong case that the technology will scale and will perform to the economic benchmarks that we're projecting at that minimum viable commercial scale," says Palumbo.
The goal is to hit that level within five years, marked by several capital-intensive steps along the way. "At a commercial level, we're looking at between $12 million and $15 million," he notes. "We are native to Colorado, so we'd love to stay in the area. There are some local industries that are helping us along as well."
Logistics could affect that -- namely the cost of electricity and the location of the ore sources. "In North America, you'd have to bring some down from Canada or else make it from seawater," says Palumbo. "What we plan to do is source that ore on the open market, so we've hooked into a reseller here in the Denver area, Garrison Minerals. They're quite adept at magnesium oxide and magnesium hydroxide ore, so we just get the best market price."
Challenges: The step-by-step process of scaling a new manufacturing process. "The biggest challenge is how discreet we have to undergo each phase of scale and operation," says Palumbo. "We wish we could be more like a software play or a B2C type of product manufacturer where you could scale gradually. In this case, it's all dependent on how big your equipment assets are. So we're at one kilogram an hour, then we have to spend a bunch of money to get to the next increment of scale."
Opportunities: Global demand for magnesium metal is about 1 million tons a year, making it upwards of a $4 billion market. The U.S. market alone is 150,000 tons.
"Where we're seeing all of the growth is for automotive lightweighting," says Palumbo. "That's almost exclusively where it is to increase fuel economy for fleets by making them more lightweight. Same for aircraft."
Needs: Capital. Big Blue recently closed on a $500,000 SBIR grant from ARPA-E, and Palumbo says the company is now pursuing about $2.5 million in seed funding.
Public awareness is another big need. "We need to educate people about what magnesium is used for," says Palumbo. "Most related it to fires or fireworks and just don't understand what magnesium is used for. Our go-to is: 'It's the same things you use aluminum for, the same exact applications.'"