Could the sea bed be the next frontier for sustainable battery metals? This company thinks so.

Introduction

In the transition to a sustainable future, the demand for electric vehicles (EVs) and renewable energy solutions is skyrocketing. However, this green revolution hinges on the availability of crucial metals such as nickel, cobalt, copper, and manganese—materials integral to manufacturing high-performance batteries. Enter The Metals Company (TMC), a pioneering player in this space, offering an innovative approach to sourcing these essential materials sustainably.

TMC is making waves by focusing on extracting polymetallic nodules from the seafloor. These nodules are rich in the metals required for EV batteries and other renewable energy production methods like solar and wind. The method of extraction that TMC has been developing is promising and potentially less environmentally damaging than traditional land-based mining.

This is not financial advice. We are not financial experts and are not qualified to make an assessment of this company. We provide this information so that you can do further research and determine if this company would fit your investment portfolio.

Key Benefits of TMC’s Approach

Environmental and Social Benefits

1. Reduced Environmental Impact:

• TMC’s method generates 90% less CO2 equivalent emissions compared to traditional mining.
• The process aims to use nearly 100% of the nodule mass, resulting in near-zero solid waste and no tailings.
• No deforestation or disruption to Indigenous communities, thus resolving significant ethical issues associated with traditional mining.

2. Sustainability:

• TMC is committed to creating a closed-loop system by recycling battery metals, reducing the need for ongoing extraction.

Resource Efficiency

1. High Metal Content:

• Polymetallic nodules contain substantial amounts of nickel, cobalt, copper, and manganese in a single ore. This makes them a highly efficient source of these critical materials.

2. Abundant Supply:

• Exploration areas like the NORI area hold enough metals to potentially supply battery materials for 140 million EVs. The total estimated quantities in their contract areas could meet the requirements for 280 million EVs, which is equivalent to the entire U.S. passenger vehicle fleet.

Technological and Operational Advantages

1. Advanced Collection and Processing:

• TMC employs underwater drones and box core sampling to estimate mineral grades and abundances accurately.
• The collection process involves lifting nodules to the surface, separating sediment, and returning it to the seafloor with minimal environmental impact.

2. Adaptive Management System:

• Utilizes marine hardware and cloud-based AI to create a virtual replica of the deep-sea environment, allowing for real-time monitoring and management to minimize environmental impact.

TMC’s Key Products

1. Nickel Sulfate:

• Crucial for high energy density in EV batteries, enhancing storage capacity and range. Sourced from polymetallic nodules in the Clarion Clipperton Zone (CCZ), representing the largest and lowest-impact source of nickel.

2. Cobalt Sulfate:

• Increases energy density, battery life, stability, and safety. Extracted from deep-sea nodules, significantly reducing environmental and social impacts compared to land-based mining.

3. Copper:

• Essential for EV battery connectors, wiring harnesses, and electric motors. Polymetallic nodules offer a more sustainable alternative to declining land-based copper grades.

4. Manganese:

• Used in battery cathodes to achieve low internal resistance; also widely used in steel-making. Extracted from nodules, reducing the environmental impact compared to traditional mining methods.

Potential and Risks of Investing in TMC

High Potential

1. Innovation in Metal Extraction:

• TMC is developing an entirely new source of metals, focusing on sustainability and minimal environmental impact. Their future plan includes recycling metals, reducing the need for ongoing mining.

2. Resource Availability:

• According to the company, TMC has access to resources that could provide enough nickel, copper, cobalt, and manganese for 280 million EVs.

Significant Risks

1. Lack of Current Revenue:

• TMC currently operates at a loss, with no revenue and high operating expenses. In the most recent period, they reported operating expenses of $83.7 million and a net loss of $99 million.

2. Speculative Business Model:

• TMC’s approach to producing battery metals from polymetallic nodules is innovative but unproven. The company still needs to secure necessary permits and establish a favorable environmental framework for deep-sea mining.

3. Future Earnings Potential:

• Analysts forecast potential annual revenue of $5.25 billion by 2030 and earnings per share of $1.93. However, these long-term projections are highly speculative and my not account for the future fluctuations in the price of these metals.

5. High-Risk Profile:

• The Metals company has done substantial research and development, however so far have not started producing any commercial metals from their efforts. They are still seeking approval from the ISA. The soonest that mining could take place is the first quarter of 2026.

Conclusion

While The Metals Company presents a high-risk, speculative investment opportunity, its innovative approach to sourcing critical battery metals could play a pivotal role in the green energy transition. The amount of potential metals available to collect could present a large upside if successfully extracted. However, it is important to consider the significant risks associated with this investment and conduct thorough research before making any decisions. As with any investment, diversification is key and it is recommended to consult with a financial advisor before making any investments.