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Arcanum Alloys: Currently Commercializing Two Metal Products that are Using Surface-Optimized Diffusion Alloy Technology (SODA); Interview with Dr. Daniel Bullard, CEO

on 7/1/2020
We learned from Dr. Daniel Bullard, CEO of Arcanum Alloys that they are looking to change the way that steel is manufactured. Arcanum Alloys has developed a breakthrough technology to drive revolutionary performance and margins in numerous metal alloy markets. They are currently commercializing two products that are using Surface-Optimized Diffusion Alloy technology (SODA). One is a stainless steel alternative, where a low-carbon steel's surface is converted into a stainless-steel alloy that's metallurgically bonded to the substrate. That lowers the costs, improves the formability, and gives incredible corrosion performance. The second product is an electrical steel alternative, with improved performance.

Dr. Daniel Bullard, CEO & Founder of Arcanum Alloys

Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Dr. Daniel Bullard, who is CEO of Arcanum Alloys. Dan, could you give our readers/investors an overview of your Company?

Dr. Daniel Bullard: We're a startup, out of Silicon Valley, and we are changing the way steel is manufactured. We have developed proprietary technology that uses CVD (Chemical Vapor Deposition) based processes to modify the surfaces of steel coils. Our SODA technology allows us to decouple the surface properties from the bulk properties of steel and thereby radically change the properties provided to our customers. We have commercialized two products to date. The first is an alternative stainless steel, which is marketed under the tradename Optiform®. This product starts with a commercially available low carbon steel coil; during the SODA process Cr and/or Ni are diffused into the surface of the steel, creating a true stainless steel alloy. This alloy is metallurgically bonded to the surface of the steel substrate. By doing this, we can create alloys with lower costs, improved formability, and incredible corrosion performance. Our second product, OpticoreTM, is a high performance electrical steel that delivers state of the art combinations of induction and core loss. Both products are produced, using the exact same SODA technology.

Dr. Allen Alper: All right. Sounds great. Do you do the coating in your plant, or do you go to the customer. How does that work?

Dr. Daniel Bullard: That's a great question. We are currently using a toll processing model, so we buy coils of steel and use the slack capacity in the industry to produce our products. We'll go to a conventional coil coater to apply our proprietary slurry, and then we'll send it to an annealing facility to do the heat treatment, and then back to a cleaning line to remove the slurry remnant. It can be processed through any other means after that. So we don't own our manufacturing equipment. We rent that through the toll processing.

Dr. Allen Alper: Okay. That sounds like a wise way of doing it. How do you protect your Company from loss of technology?

Dr. Daniel Bullard: We have a very robust patent portfolio, covering all of our technology. It's very rare that any one processor is doing the same or multiple steps. So we try to keep the technology compartmentalized inside the toll processing model as well.

Dr. Allen Alper: What are the advantages of the technology you have, compared to others?

Dr. Daniel Bullard: That's another great question. The way I view the world, as a start-up I have two customers. The first is the consumer that uses my products (i.e. Optiform or Opticore) to produce their products. I offer these customers a unique combination of properties they can't get through conventional steels. For example, because we are doing everything through solid state chemistry, we are not limited to the alloy compositions that can be produced through the conventional melt phase technology. Therefore, I can produce a stainless steel coil that has 30% Cr, with the ductility of IF steels. Alternatively, by changing the alloy composition, we can produce an electrical steel with excellent core loss and far superior induction, which will increase the power density and efficiency of electric motors.

Our second customer is the steel industry. In the sense that I would love to license my technology to the mills, we have spent the vast majority of our development time, creating a technology that can be easily integrated into the existing manufacturing infrastructure. The SODA process is “CAPEX lite” – that is we don't need any special equipment to be able to produce our products and materials.

Dr. Allen Alper: Could you tell our readers/investors a little bit more about the process you use to create your alloys on the surfaces of steels and other metals?

Dr. Daniel Bullard: All we do is change the order of operations in the steel mill. Instead of going from a cold mill to the annealing shop, to a coating line, our processes go from the cold mill to a coating line, to annealing shop. This change in process order allows us to create an alloy layer on the steel. To make these alloys we use a conventional paint line. We take full hard substrate from the cold mill to a paint line where we apply a slurry, essentially a paint, to the surface of the coil. The steel is re-wrapped into a tight coil and sent to a batch annealing facility, where it is subjected to elevated temperatures; the coil is subjected to a prescribed heat treatment, under a prescribed atmosphere, to allow diffusion to occur. After annealing, the slurry remnant is removed at a cleaning line. Once cleaned the coil can be processed just like any other steel coil (i.e. temper rolling, slitting, cut-to-length, etc).

The surface alloy is formed by our SODA process. It is very robust. It's not a coating that can be mechanically scrapped off like zinc or aluminum based coatings. Nor is the alloy layer brittle. For example, in a tensile test, the alloy layer and the substrate fail at the same rate. We've designed the product to be as durable as needed for end use.

Dr. Allen Alper: It sounds very good. Could you tell our readers/investors a little bit about what kind of applications and the advantages of your process compared to normal products?

Dr. Daniel Bullard: The first product we're selling is a stainless steel alternative. We convert the surface of low carbon steel to stainless steel. That allows us to give the same aesthetics, with the same corrosion resistance that you would get from a 430 or a 300 series stainless. But because we are not alloying through thickness, we provide much better formability than conventional stainless steels. As a result, Optiform can be subjected to deeper draws in fewer steps. Optiform is also perfect for appliances, automotive exhausts, sinks, architecture, fire suppression, and any other applicable product, (architectural panels, elevator doors, escalator skirting, column covers, commercial kitchen applications).

For electrical steels, we can create alloys of up to 6% silicon and/or 12% aluminum in Opticore. These alloys provide unique combinations of core loss and permeability to improve the performance of motors.

Dr. Allen Alper: Okay. Well, that sounds great. Could you tell our readers/investors about your background and your Team's?

Dr. Daniel Bullard: Academically, I'm also a PhD Materials Scientist, from the University of Arizona, with a background in metallurgy and chemistry from the University of Wisconsin and an MBA from Northwestern University. Professionally, I'm a steel industry veteran. I started my career at U.S. Steel and worked throughout the industry in research, manufacturing and process technology.

At Arcanum we are a very eclectic team. We recruited from outside the steel industry to make sure we have a very diffuse team that is willing to think “outside the box”. I'm the only metallurgist on staff. We want team members to come in without any preconceived notions about what can and cannot be done in order to develop this process and solve the big problem.

Dr. Allen Alper: This is a young Company that started in 2011. Could you tell us a little bit about your history?

Dr. Daniel Bullard: We were funded in 2011, through a venture capital firm in Silicon Valley, Khosla Ventures. Their principal investor had been looking to do an investment in steel for several years, and they recruited to come in and start the Arcanum Alloys. Since then, we've been working with a wide variety of both domestic and international steel companies to try and bring our product to market. We currently have a production partnership with Stelco in Canada to produce our substrates and help us manufacture. In July of last year, we brought in Severstal from the Russian Federation as a co-investor. And we're looking to expand our operations into Russia, and then also be able to service the European Union markets as well.

Dr. Allen Alper: Is your Company a private company?

Dr. Daniel Bullard: It's not publicly traded at this point.

Dr. Allen Alper: Could you tell our readers/investors your primary goals for 2020 and going into 2021?

Dr. Daniel Bullard: Our primary goal for 2020 is to demonstrate product/market fit. We got our first production PO for Optiform in December of last year. We're moving that product forward. We're currently working with several additional potential customers as we speak. The other big commercial goal is to completely launch our Opticore, our electrical steel product. We are currently in pilot scale production of that material and getting that out into customer's hands for prototyping. Hopefully by the end of the year, we'll be fully commercial and ready to launch that product on a commercial basis, or a production basis.

Dr. Allen Alper: That sounds very good. What kind of customers are you trying to develop?

Dr. Daniel Bullard: For the Optiform, our stainless steel product, anybody that uses sheet stainless steel will have potential use for our products. So elevator doors, commercial kitchens, automotive exhaust systems, appliances, home appliances, things like that, anywhere sheet stainless steel is used. For electrical steels, it's motor manufacturers. So people doing things for refrigerators or appliances, the automotive propulsion systems for electric vehicles, things like that would be our target markets at this point.

Dr. Allen Alper: That sounds excellent! Is there anything else you'd like to add, Dan?

Dr. Daniel Bullard: We're very excited by the technology that we've developed. I think we're well on the way to accomplish our ultimate goal of disrupting the way steel is produced and changing an industry that I believe is ripe for change.

Dr. Allen Alper: That sounds very good. Besides new applications and growing the Company, are you also looking for more private investors?

Dr. Daniel Bullard: We're always looking for people that can help us move this forward. So if there are strategics out there, steel mills that are interested in our technology, I would love to hear from them. If there are potential investors, I'm always interested in understanding what their motivations are, why they want to invest and how they can help us move it forward. So I would say categorically yes, but on a somewhat selected basis. We're looking for people that can both provide cash and help us in other ways.

Dr. Allen Alper: Sounds good. We’ll publish your press releases as they come out so our readers/investors can follow your progress.

Daniel Bullard, PhD
CEO & Founder

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