When we caught up last year, just before the US election, we discussed the impact of a potential Trump presidency for the mining industry. Where do you think the administration’s goals are aligned in terms of mining and critical minerals?
Yes, some of the buzzwords have changed since our interview last year, but at the core, achieving most of the goals of the current administration is going to require critical minerals, lots and lots of them. Whether that revolves around industrialization pre-se, defense and military sector investments, making our electric grid more robust, both in generation and transmission and stapled with plenty of required battery energy storage systems (BESS), the rapid expansion of digital infrastructure – data centers with huge amounts of GPUs, drives, UPS and backup systems – that AI, IOT, robotics, cloud computing all require, the common denominator is critical minerals.
Even with the more abrasive aspects of today’s geopolitics that cause some rifts and bifurcation of global supply chains, they just mean that the military and defense applications also require a lot of these critical minerals. Moreover, many materials and products are “dual-use”, for example antimony which is a fire retardant as well as an additive necessary in armor piercing ammunition, while drones can deliver a package or a pizza as well as bombs.
Some of the fantastic people that used to work for the previous administration, specifically with regards to implementation of the IRA, the BIL, the CHIPS act, are now in the private sector and could be good intermediates because they understand what’s going on and how the private and public sector interact. As they join the private sector, they can help streamline a lot of the action items. So again, even if the buzzwords and the branding are different, we have targets that are rather well aligned with the interests of our sector, namely requiring much more critical minerals and expansion and onshoring of their supply chains.
We’ve seen a lot of new initiatives, like the FAST-41, which is fast-tracking permitting for critical minerals projects. Have you seen any positive examples coming out of this yet?
Looking at the list of the recent announcements, even before the FAST-41, we do have Resolution Copper (a JV between BHP and Rio Tinto), which is quite substantial, and now we also have South32 Hermosa. The good thing about these two projects is that the execution risk is rather low because they are associated with major mining companies who know how to build and commission.
On the lithium front, which despite current market prices, that is well below the incentive price, is a material with a substantial and consistent demand side growth trajectory, we saw that Thacker Pass was basically approved even before the FAST-41, and now with FAST-41 we have the Silver Peak expansion and we have Jindalee, which is also a very large sedimentary deposit. Not on the list, but very advanced, is another sedimentary project in the west, the Ioneer lithium-boron project which recently tripled its resource. The Arkansas Smackover brines formation is in the next batch of FAST-41, currently on the transparency projects list.
So, there’s a lot of good potential to develop the local lithium upstream production, and that’s not even including some of the early stage hard rock spodumene projects such as IRIS Metals in the South Dakota Black Hills.
The increased focus on critical minerals should mean greater funding towards domestic projects for these metals. Is there greater funding coming through? Who is funding these projects?
We are at the threshold. At the moment, these projects are gathering their stakeholder stack (including strategic suppliers, offtakers, and potential EPC contractors), financing sources, and preparing to be ready to take the FID and move forward. But we know these integrated mining and midstream projects are big, they’re complex, and they’re capital-intense and require a concerted effort. So it’s going to be a multidimensional type of funding where there are traditional equity and commercial debt components, but there are also all the additional tiers of government grants, tax rebates and loans, and strategic partners who need this supply chain to be built, investing on project level and off-takers, both end-users and the international traders such as Traxys or Glencore for example, which provide substantial prepayments and working capital facilities and act as intermediates and providers of logistical and commercial services to the end-users and the producers.
What’s interesting now is that, with the need for rapid growth of digital infrastructure, electrification of everything, AI, IOT, automation, we will have so many new data centers emerging in the new High Performance Computing configurations which require a lot of power, back-ups, BESS, and we may see some opportunities for co-location and shared facilities, in which case some of the costs could also be supported by these co-located additional stakeholders and they might become co-investors. Conversion plants also generate steam and heat and gasses which are potential for cogeneration that the IS projects can use. On the mining and extraction front, whether from tailings or primary resources, there are also opportunities to provide various permanent carbon storage solutions as part of the project, and as this will generate high integrity carbon credits, there could be potential for funding and prepayments from those streams as well.
What I think is extremely interesting is that these projects also generate the opportunity for what I call a ”De-Facto PPP”, namely a private-public type of co-funding, even if they are not initiated as official Public Private tendered projects. This is because when these companies apply for the grants or support from the various government agencies and programmes, they are asked to prove that the private sector believes their story, that they have vetted the proposed process and technology, that they have potential feed suppliers (if not integrated) and potential off-takers who at least tested their samples, and that they have matching investors. The government institutions, whether it’s national or state level, rely, to a great extent, on the signals and conditioned decision of the private sector to take a piece of these projects.
Then, on the flip side, we’re seeing investors asking if the target company has been approved for a grant or a loan by the government agencies as a pillar question in their own due diligence process and decision tree. They ask if one of the ECAs are supporting – in the US mainly EXIM – they ask if companies are getting money through LPO, IRA, BIL, CHIPS, DPA, or one of the new programmes that we will have now under the various Executive Orders. In a very meaningful way, the private and the public sectors rely on each other, they hold hands and metaphorically jump together into the water even if they haven’t started the journey as an official predetermined or tendered out private public partnership, which I think is very good.
Amidst this growing focus on investing in critical minerals projects, are we seeing greater interest from generalist investors?
There are several aspects to that. First, I think we need to do a lot more work in educating, promoting, explaining, and really going beyond our small ecosystem to the general public. We need to repeat the narrative that everything that is required for a prosperous and healthy modern life relies on critical minerals coming from mines. Mining is a must, and it is not about what you are doing but about how you do it. Modern mining is an exciting high-tech sector, it is cleaner and safer for the employees and communities than most other activities, and as climate change and global warming are real science-based threats, mining really saves the day for humanity and its home planet.
As to approaching investors, I think we should simplify the message and focus on the utility and the purpose of the materials. For example, we’re making backup systems for data centers and hard drives that enable AI and GPUs to work efficiently, or we’re making the materials for F-35s which protect the freedom of the country. The specific materials that go into these utilities are already an “under the hood” detail that is perhaps less important than the big picture.
A cause for optimism is that we are seeing that some of the generalists and tech investors have finally taken an interest in mining and mining tech, and have invested in the AI exploration companies and some of the advanced processing companies and future cell manufacturers. Some of these companies, as they do their seed and series A and B, are starting to get money from VCs that previously invested in pure tech. It seems that mining tech is becoming an investable tech sector, which opens up quite a lot of opportunities. I also think some of the venture capitalists have realized that the risk profile of early-stage exploration is rather similar to the risk profile that they feel comfortable with, which is basically choosing a narrative, and choosing eight to 10 targets within that narrative, knowing that most of them won’t make it, a couple will do ok, but one of them could become the next Google.
More midstream projects are accelerating their development as the focus expands across the metals value chain. Are there interesting projects that you’ve seen coming up domestically?
There are many, but I love to take what’s happening in the State of Oklahoma as a pertinent example. This is a state which was previously focused on agriculture, oil and gas, and now there’s four very interesting midstream projects emerging there. You have USA Rare Earths building a REE magnet plant, Westwin Elements building a nickel refinery, Blue-Whale Materials who will recycle batteries and make a superior type of black-mass that’s easier to refine and then reuse in cells, and Stardust Lithium who are looking to build a lithium refinery. These are four midstream projects that, if they go well, will employ a lot of people, support many small businesses in their communities, will produce critical minerals here in the US opening up the upstream and enabling the downstream (as I heard once from an investor, if someone is building a winery in your district, you can grow grapes and your neighbor can open a restaurant), and will help Oklahoma reinvent itself as one of our critical minerals hubs.
Finally, what’s your outlook on the market today?
I’m excited about innovation in what was a very conservative sector. We are now all about new technologies, process improvements, and focused on how we can do things in a more efficient, safe, and clean way. And to some extent, the fact that we are playing catch-up with China also enables us to learn from some mistakes and to look at doing things in a better way.
I’m quite excited that exploration is making giant moves in terms of working with generative AI and deploying machine learning tools and finding ways to explore in ways less intrusive to communities and natural habitats, and to do it faster and much more efficiently, which I think is very important because we always complain about the timelines from discovery to production getting longer and longer and measured now in decades and not just in years. So, shortening the first iteration, the prospecting and exploration phase, zooming in quickly on the relevant part of the huge exploration blocks, generating a precise bank of targets and potentially avoiding some false negatives, as well wasting time and money on false positives, is very important. Companies like Kobold Metals and Verai Discoveries have been leading the way and now a new wave of companies such as ExploreTech and Terra-AI have followed.
On the brick and mortar of mining itself, we’re seeing companies like Eden GeoPower who are focused on reducing the energy intensity of comminution by 50% and using the same tech also enabling faster and more efficient in-situ and pad leaching, which is very important for uranium and copper. We have giant autonomous trucks that are moving around the mines and are controlled entirely remotely, equipment control room that look like a NASA mission control, and more. On the extraction and processing side we are also seeing so many improvements that allow reprocessing of tailings and waste dumps and make low grade resources economical. This industry is really moving to the forefront of technology, and I find that very exciting.
Another angle that’s developing more and more, is recycling and urban mining. This is not just for lithium or acid batteries or the traditional scrap stream of steel, copper or aluminum from construction or automotive anymore, but from a much broader bandwidth of previously neglected waste streams, both urban and industrial, as well as components in the traditional waste stream that ended up in landfill, such as airbags and seatbelts from cars for example, or simply fine or damp materials that previously were thought of as not worth the efforts but actually contain more industrial and precious metals than any primary mine. Some of the extraction methods used in tackling complicated polymetallic primary ores could be applied on secondary streams as well. These secondary sources of metals can shorten the timelines from a demand signal to a supply side response and provide a way that is quicker than conventional mining for getting these minerals back into the supply chains. They’re not a full substitute to primary resources of course and they never will be because the use cases and demand dynamics change and because there’s never a 100% recovery, but they are becoming an important closed loop solution supporting the primary supply chains.
