The Metals Company is developing the world’s largest estimated resource of metals required for the green energy transition through deep sea mining. Can you dive a little bit into the methodology for this mining technique?
I’m glad you phrased it that way, because deep sea mining is a rather comprehensive category and I think people who are especially familiar with land mining compare it to underwater, which leads to a lot of issues.
There are different types of deep-sea mining. We focus on the collection and processing of polymetallic nodules, which are little potato sized rocks taken from 4200m below the surface of the Pacific Ocean, sitting in what is known as the Clarion Clipperton zone of the Pacific, in the abyssal plain.
So, we are working in areas with low levels of biodiversity, other types of deep-sea mining may differ. Like land mining, there is a wide spectrum of potential impacts, but there is also a wide spectrum of potential economic returns for shareholders depending on the type of project you’re going after.With the deep ocean, we focus on polymetallic nodules collected off the sea floor, which are then lifted to the surface via a riser system with the drill ship provided by our partner Allseas Group. It’s a marriage of mining and offshore oil and gas technology.
Can you talk us through some of the in-field data that’s being collected by The Metals Company? How does this data dispel speculation around the environmental impact of nodule mining?
The quantity of collected data is quite staggering. Looking at the industry, there has been over US$2B spent on roughly 300 research campaigns since the 1960s.
A lot of people think we don’t know a lot about the deep ocean, but when it comes to this specific patch of the Pacific, the British HMS Challenger discovered these nodules back in the 1870s.
If you flash forward to the 1960s and 70s, you had companies like BP, Shell, US Steel, Rio Tinto, Inco, all in this area of the Pacific Ocean collecting these nodules.
Over the last few years, there has been speculation, mainly driven by NGOs like Greenpeace and World Wildlife Fund, about the impacts of collecting these nodules off the sea floor, but the data being collected is dispelling much of the previously held speculation.
We let the science do the talking, and so far, that science is pointing in the right direction – of this being much lower impact not only than land-based mining for certain metals, but also much lower impact relative to the previously held assumptions.
One of the main impacts that’s being talked about is the sea floor plume. Our collector vehicle drives at the bottom of the sea floor, where there is very little life per square meter. Think of it like the Sahara Desert.
When you collect the nodules, it produces a dust cloud, and there has been speculation on what happens if that dust cloud gets picked up into ocean currents. Because while tuna, whales, dolphins, etc. are not going below 1000m typically (and we’re talking about a resource at 4000m), what would happen, if those organisms above were impacted? What we found, and what MIT has found, is that 92-98% of the plume or the dust that gets kicked up rises 1-2m above the sea floor but then falls back down. And, in fact, most of that sediment settles within 24 hours after the collection process.
So, that means we have a much more limited environmental footprint, and the previous speculation was wildly incorrect.
Can you talk us through some of these global legislations that are arising to support deep sea mining?
So, the US, China, and India are focused on it, and India has extended exploration contracts within the Indian Ocean. A lot of the focus is on the zone in which TMC controls three contract areas out of 17 granted exploration contracts. Hence, think of TMC as having very good ground in a very good neighbourhood.
We’ve also worked to define the resource and in fact, we have Canadian 43-101 standard and SEC S-K 1300 standard resource statements. Additionally, we have spent over 12 years gathering environmental data and have spent roughly US$0.5B already on developing this project.
So TMC really is the furthest along, but now there’s global interest in this space driven by the recognition that the Western world shouldn’t have to trade energy independence for metal dependence.
To avoid that situation where we’re dependent on a few global jurisdictions, whether it’s Indonesia for nickel or the DRC for cobalt, we view nodules as the antidote to that within the US specifically.
Additionally, there’s a lot of political support in the US now to ratify the UN Convention of the Law of the Sea and join the ISA, to go after mine sites in the deep sea that are worth roughly US$1T each according to a recent letter to the Senate.
Furthermore, there was a ‘Responsible Use of Sea Floor Resources Act’ that was proposed in the US House of representatives on how the US can provide political, diplomatic, and financial support for those who are collecting, processing, and refining nodules.
Lastly, the National Defense Authorization Act within the US, signed by President Biden at the end of December last year, directs the Pentagon and the Department of Defense to deliver a report on how the US is going to take tangible steps to catch up in this industry.
Can you talk a little bit more about TMC’s NORI-D project? Where are you in terms of project advancement? What’s your timeline looking like?
We expect to be in production on NORI-D around the end of Q1 2026. So, in mining terms, right around the corner. We have already defined the size of the resource. We’ve taken most of it from inferred to indicated, and then some of it from indicated the measured. What we found was a very consistent and high-grade resource.
We had an initial assessment done in conjunction with AMC Consultants in 2021 and NORI-D had a net present value at the time of roughly US$7B. We are now trying to develop a capital light approach rather than building new ships, new processing, or refining facilities ourselves, by using existing assets to get into production at very low CapEx for our shareholders.
We can do that because this is not a resource where you need new infrastructure. This is something that simply relies on the number of ships you can get out there to collect the nodules.
We’re now seeing increased interest from oil and gas companies to devote their drill ships to get a piece of this growing metal market.
So, that’s an opportunity for us and that’s why, for NORI-D, we’ve taken a very capital-light approach. We already have the vessel system that’s going to be collecting these nodules. The last remaining hurdle for us is getting the permit to allow commercial production.
We’re now in the stage where we’re gathering data, formulating our environmental impact statement, and formulating our pre-feasibility study. Both the EIS and the PFS we anticipate being finished around the middle of this year and then sometime following the July 2024 session of the International Seabed Authority, we’d be in the position to launch our application to go to commercial production.
Can you talk a bit about TMC’s vision in the recycling space, looking at producing a closed loop system with various partnerships?
Well, we’ve already looked at what a future processing facility could look like if capital were no object – a facility that’s going to be able to not only do the primary processing of polymetallic nodules, but also allow for the recycling of black mass from spent electric vehicle batteries.
To do this, we need a massive injection of new metals into the system to allow for a circular economy. You can’t recycle what you don’t yet have, so our first step is to inject those new metals that have a lower environmental impact than the equivalent number of metals from other sources.
In the much longer term, we anticipate that the recycling industry will reach a state where we’re able to pull back the throttle a little bit on new extractive industries.
For the near term, can you share more about the outlook for TMC and for the deep-sea mining industry overall?
The outlook is very bright, we’re seeing a growing chorus of support from some of the most populous nations in the world. China is devoting a lot of assets and effort to deep sea mining. They have to catch up to companies like TMC, not only in the technology race, but the fact that they’ve yet to do a lot of the environmental baseline studies required for them to move into commercial production.
Norway announced earlier this year an intention to allow exploration and then, pending environmental studies, the exploitation of sea floor resources within their territorial waters. Japan is also very supportive. The US is taking steps.
Importantly for TMC, we’ve had a bit of a tailwind recently, a new board member, Steve Jurvetson, was announced. Steve was a board member of Tesla for many years. He’s also a current board member of SpaceX. He’s a renowned Silicon Valley investor with a lot of support from that community and he’s also now becoming an advocate for deep sea nodules as the lowest impact way to get the battery metals needed, not just for electric vehicles, but for increased industrialization for developing middle classes around the world, and for a growing population.
So, we think nodules are absolutely going to be part of the solution, and as more and more people hear about this industry and think how they can be a part of it, the natural answer would be The Metals Company, ticker TMC, trading on the Nasdaq.
