Deep-sea minerals - 10x or nothing

Stocks
,
1

I have been following deep-sea mining products and producers for a while now. The sector has many startup-like entities, all of which present very interesting 10+x investment cases. This thread is intended for a compiled general sector discussion. Let the forum’s hive-mind activate.

What is deep-sea mining?

Deep-sea (DS) mining is a category where metals are excavated or retrieved from the seabed. Technically and practically, there are two types: nodule collection and sediment excavation/suction. Several areas beneath the world’s oceans have been found to contain large quantities of concentrated ore or direct metal.

Nodules

Nodules are found especially in the Pacific Ocean. A nodule is a metallic sphere, usually the size of a tennis ball, formed over hundreds of millions of years. This sphere requires little processing apart from metal separation. It is metallic and quite pure. There are an incredible amount of these in certain areas. Nodules often contain cobalt, nickel, and magnesium, as well as other metals. The most significant single startup in this field is TMC (The Metals Company). Collecting nodules is a very sterile operation compared to terrestrial mining or underwater sediment suction. Here is an image of where nodules can be found. Especially the Clarion Clipperton Zone (CCZ) is a big draw in this business.
image

Nodules on the seabed look like this
image

Seabed Sediments

The formation method is very different from that of nodules. Active and clogged hot vents on the seabed spew gases and rock from beneath the Earth’s crust into the sea. Life on Earth likely began in these environments long ago. Where these vents have existed, there are often high concentrations of minerals. The idea is to excavate and suction the sediment layer on the seabed, after which the normal mineral processing refines the product into metal. Compared to terrestrial mining, the mineral richness is manifold, and operators in the field (startups again) suggest that even after excavation costs, it offers tens of percentage points better pricing compared to terrestrial mining.

Why?

Minerals are needed at an accelerating pace. New mines pose environmental problems, and getting them operational is a slow process. Earthworks are also very capex-intensive. DS mining proposes an environmentally friendly way to produce metals.

Why are all operators startups?

UN-mandated seabed legislation is still open. The ISA decision is being discussed. The ISA decision was supposed to come last summer. It didn’t. The next deadline for it is the coming spring. ISA’s biggest concern is environmental issues. Practically all DS startups are awaiting ISA’s decision so they have a legal basis to excavate the minerals.

Investment Targets

I have identified 2 DS investment cases.

TMC

TMC is the world’s largest DS startup. Around 500m USD market cap (01/2025). They are also the largest seabed researcher alongside academia. TMC’s operations are based on CCZ nodule collection. What makes TMC the “best” nodule company is their chain of agreements with Polynesian/Micronesian/Melanesian states. Some UN agreements contain a clause that offers world states a share of seabed resources. Small island nations receive more of these. TMC has positioned itself over the past 10 years with exclusive operating licenses from several island nations to act as a DS operator in the CCZ area. The host nation receives a share of the profits. It is noteworthy from the accompanying image that the Pacific Ocean is large and those areas are truly vast.
image

When ISA provides the legal basis to start mining, TMC will print money. TMC could also be seen partly as a Trump-play, as Trump’s American policy is very resource-centric, ‘America First’ oriented. Several Republican representatives are also lobbying domestically and at the UN for the acceleration of the ISA code.

Green Minerals AS

A Norwegian sediment startup. Much, much smaller than TMC. The technology is also different. They were supposed to get permission from the Norwegian government at the turn of the year a month ago. However, the left wing blocked this. Elections are now in Norway this spring, and according to the latest polls, the right-liberal party is winning the elections. Correspondingly, the current large Labour Party in government is facing a significant electoral defeat. GM said after the decision that this shifts the timeline by about a year. They will run out of cash before then, so an offering is expected. GM is a copper play. The areas found off the northwest coast of Norway have been identified as primarily containing copper. GM intends to operate with a light capex model, similar to oil companies operating in the North Sea in Norway. The intention is apparently also to use existing infrastructure in the area, such as decommissioned oil rigs.

TLDR

  • Political 10+x global investment case
  • Low technological risk
  • High political risk
  • A play for green technology and strategic resources
29 Likes
UЅΑ-ketju (entinen nimi UЅΑ:n presidentinvaalit 2024)
2

The Clarion-Clipperton Zone is an interesting case. However, is the technological challenge really as low as you present? The sea areas there are deep and the pressure at depth is immense.

In any case, I’ll be following this now myself.

4 Likes
3

TMC: a little more background:

https://www.globenewswire.com/news-release/2024/11/14/2981685/0/en/The-Metals-Company-Provides-Third-Quarter-2024-Corporate-Update.html

Even after the SPAC merger and other fundraising, there’s still enough cash to move operations forward - at least for now.
In old SPACs, and indeed in other growth companies, stock-based compensation effectively dilutes ownership. This seems to be the case here too; I need to dig into that further.

Other highlights from the Q3 report

After years of conversations with shareholders, it’s clear that the delivery of the Mining Code by the ISA is viewed as a key catalyst for TMC. Recent discussions with Member States and the incoming ISA Secretary-General give me confidence that there is no change in the ISA’s commitment to deliver on its mandate. But until we have sufficient regulatory progress—whether through delivery of the Mining Code or clarity on the ISA’s application review process—investors can rest assured we won’t be raising funds for CAPEX for the Hidden Gem production system upgrades.

In the meantime, we’re watching promising momentum in Washington, with several initiatives expected to gain traction post-election. One of Washington’s strongest nodule resource development supporters, Rep. Elise Stefanik, has been tapped as UN Ambassador, and Marco Rubio, another key supporter, is set to become Secretary of State, which oversees the ISA file. We anticipate the Pentagon’s long-awaited report on nodules to be released soon, and we’re encouraged by the increased U.S. interest in the ISA’s work.

And this awaited report was apparently positive
https://www.globenewswire.com/news-release/2024/12/30/3002615/0/en/TMC-Applauds-U-S.-Congressional-Mandate-for-2025-Defense-Department-Feasibility-Study-on-Nodule-Refining.html

An ISA decision is possibly coming at the June meeting. The next session is in March according to this, but the decision requires additional information, which at least Nauru would be providing only after the March meeting.

NORI has set the date of June 27, 2025 for its expected submission of its ISA exploitation application. According to the ISA Council’s decisions ISBA/28/C/24 and ISBA/28/C/25, if NORI submits an application for a plan of work for exploitation before the RRPs have been adopted, the ISA Council at its next meeting, as a matter of priority, will consider the process for considering such an application. The ISA Council is not scheduled to meet again until March 2025 and the Company believes it is unlikely that the ISA Council would consider an application for a plan of work for exploitation before this session. In light of this, Nauru has formally requested that the ISA clarify the submission and review process for such an application at the March 2025 meetings before NORI submits the Application and, therefore, has decided to submit the Application after the March 2025 meetings on June 27, 2025.

These are just superficial and quickly dug up points.
@luettelo: Any thoughts on the technology maturity mentioned by @Sir_Graham and the production potential of nodule mining?

Hmm.. an addition regarding SPAC capital. I once had SOAC in my portfolio and followed it a bit, selling my shares when the target company was found.
At least 90% of the SPAC’s capital was withdrawn :grin:
https://keskustelut.inderes.fi/t/spac-merger-companies-vaihtoehto-ipolle/6153/2759?u=kettunen
What remained in cash from that, or did additional funding come from another source :man_shrugging:

8 Likes
5

This is a very good question. Although the pressures are high, their relative size at different stages of the process must apparently be manageable. I am comparing the operating pressures and pressure differences in picking, filtering, and certainly lifting. TMC has already lifted tons of nodules as part of its research process: https://www.youtube.com/watch?v=xAtWBOtFIQY. It’s certainly not trivial, but I haven’t heard or read anywhere that the operation itself would be particularly challenging or a blocker.

This really encapsulates the biggest single risk of the whole endeavor: the goalposts for the UN’s ISA decision have a tendency to shift. This, of course, has then delayed the start of production, leading to the bottom of the cash chest being found and a need for additional funding. Previous quarterly reports have heavily emphasized that costs per quarter have decreased, etc., meaning the cash runway would be longer this way.

The whole thing is not directly dependent on the USA. TMC operates and relies on American technology, but the CCZ’s host states are Pacific island nations, and the video provided states that the nodules were processed in Japan. The nodule ores would certainly end up in the global market in the USA, but also in other countries where metals are widely used. The USA certainly has much more say in the UN body than a country the size of Nauru.

Regarding other states. China, in particular, is also interested in utilizing nodules. Other state actors are also very interested in nodules. It’s not exactly a race, but even here, contractually well-positioned actors like TMC will win.

4 Likes
6

There is a somewhat active discussion room on Reddit, where new discussion has emerged today as well: https://www.reddit.com/r/TMC_Stock/

Additionally, on YouTube, you can find surprisingly good and relevant videos generally about ISA, CCZ, and also directly about TMC, for example. Here’s a high-quality 11-minute video from Vox, which explains the history of ISA and CCZ. Probably the quickest way to get a basic understanding of the topic: https://www.youtube.com/watch?v=pf1GvrUqeIA.

1 Like
7

There’s nothing new here. In the 1980s, I worked at Rauma-Repola Marine Technology factory, where, among other things, MIR mini-submarines were manufactured, until the CIA banned the activity. There were also many different development projects there, e.g., for lifting nodules. Engineering students who were in the graduation phase were sent to an agricultural exhibition to learn about potato harvesting machines. Well, a device reached the development stage that worked similarly to a vacuum cleaner (albeit with water), which would have lifted nodules into baskets located near the surface and from there further onto a ship. Finland was quite developed in the field of marine technology at that time. It’s a shame that everything was stopped.

7 Likes
8

The mining of nodules from deep-sea floors has recently taken a peculiar turn. Researchers observed that nodules produce significant amounts of oxygen through electrolysis. Now it is being investigated how significant an impact this has on deep-sea ecosystems. Apparently, it is possible that deep-sea ecosystems are dependent on the oxygen produced by nodules.

And when I listened to the Northern Miner podcast in the autumn, this had raised doubts about the future of nodule mining.

6 Likes
9

Yeah, that got a lot of media attention in the summer. Whether there’s any basis to it is another matter. Several previous peer-reviewed papers on the subject describe a net opposite mechanism, as stated in the abstract of this paper as well.

In the CCZ area, the operations of TMC and other radars are being disrupted. There have been several encounters there. I was reading an analysis on this very topic in the summer. Among other things, the quality and stance of the paper in question were doubted there. The lead researchers of the paper are apparently quite active proponents of the cause. TMC and others, in turn, have published their own studies. They are also biased. In itself, ISA’s decision is not made easier by the fact that those publishing the research results are quite far from being impartial on the matter.

Then, of course, comes the question of what is the lesser evil; clear-cutting Indonesian rainforests for a nickel mine and moving millions of tons of earth. As well as consuming and polluting water. Or how cobalt from Congo is a product of child labor. To my knowledge, there has never been a pro-environment solution in the mineral business. One must probably just choose the lesser evil. Or live without minerals. It’s not hard to guess how consumers will vote with their feet on this matter. Or states (market areas) that have aggressive green targets.

2 Likes
10

I have been following that company for some time now, and I am convinced that seabed vacuuming has a smaller environmental impact than mining. Hopefully, the USA (and Europe) will act quickly enough, because China & co will do it anyway.

Utilizing minerals in the sea would balance the current imbalance, where China could, if it wished, hinder electrification in Western countries.

I also own a small stake in the company, even though I know it’s a lottery ticket. However, I don’t see anything insurmountable in the technology. Earlier in the thread, Rauma-Repola’s interests in this were mentioned. I myself remember thinking about concepts for utilizing nodules sometime in the 80s.

Hopefully, Barron & co will get the permits and get this source of valuable minerals operational!

5 Likes
11

I have exactly the same “strategy” in TMC. A purely speculative YOLO position, whose expected return is either 10+x or 0e. In terms of risk management, the formula is the same as at a poker table: the stake is sized so that losing it won’t kill me, even if it’s annoying.

2 Likes
12

Exactly the same for me.
I bought a small amount before ISA makes a decision.
If the permit is granted, the price will surely shoot up.
Even if the permit is granted, there are still many hurdles ahead before the business becomes profitable on a large scale.
If everything goes wrong, then so be it. I have such a small amount of money invested in this.
Let’s see what happens. The die is cast.

4 Likes
13

Screenshot_2025-02-01-11-28-48-18_b72a20be883aec8a014bd2b7c7038e87

TMC was supposed to publish the previously delayed strategy and feasibility study. The latest deadline given was January. January ended. However, the CEO presented something like this. So Trump has significantly changed the equation, and they prefer to find out more about the matter before rushing. If I have understood correctly, this feasibility study also includes production cost and revenue forecasts once operations begin.

1 Like
14

New article discussing TMC’s investment risk and opportunities. Nothing new or groundbreaking for those already familiar with the matter: Deep-Sea Nodule Collection: Why Some Investors Are Missing the Boat (Guest Post by Craig Shesky) - The Oregon Group - Critical Minerals and Energy Intelligence

16

All base metals in the electrochemical series occur naturally as salts of some acid, such as sulfate, sulfite, or combined with oxygen, i.e., as oxides. It is chemically impossible for these to produce oxygen on the seabed. When metals are possibly refined from these nodules, they must be reduced. This process requires a significant amount of energy. The idea that these would produce oxygen is completely absurd.

2 Likes
17

Indeed, even the researchers were surprised that the nodules produced oxygen, and at first they almost didn’t believe the results. However, those researchers claim that the nodules would be electrochemically active. I am certainly no electrochemistry expert, so I don’t have any personal opinion on the matter. Apparently, most of the nodules are silicate- or oxide-based in their mineralogy.

1 Like
18

Exactly so. Silicates are also salts of silicic acid, although they may also contain oxygen. It would be truly difficult to believe (impossible) that these molecules would release their oxygen atoms without catalysts and abundant external energy.

2 Likes
19

Screenshot_2025-02-08-19-08-45-47_b72a20be883aec8a014bd2b7c7038e87

What could one speculate about this… Nodule Jesus has apparently visited the White House

20

A lot has happened for both TMC and GEM over the last couple of weeks.

TMC

TMC’s stock has been riding a strong tailwind. In addition, TMC published the results of its demo beneficiation process using existing mature technologies. The results were very positive. This means that after nodule extraction, the technological risk in the production line is almost zero. According to LinkedIn and other buzz, TMC’s CEO, the long-haired nodule Jesus, has been at the White House a lot, and according to him, the US administration is very positive about utilizing CCZ.

GEM

GEM published its earnings report a couple of days ago. The stock dropped ~30% at the same time. And similarly, it bounced back slightly in the following days. GEM provided figures on how much cash is in the account, what the cash burn is, and the runway. There was also a mention of WWF’s lost court case, which provides a legal footing for the operation. Norway’s upcoming autumn elections are their next significant milestone.

4 Likes
22

The Metals Company Announces Fourth Quarter and Full Year 2024 Corporate Update Conference Call for Thursday, March 27, 2025

3 Likes
23

TMC’s quarterly report came out. The report itself didn’t offer any significant news. There’s still money in the bank. One loan guarantor withdrew. Another loan guarantor is guaranteeing more. There’s still runway left.

Operationally, the most significant thing was the collection, transport, and processing of a trial batch of nodules in Japan. 1200 tons of nodules turned into 500 tons of calcine, from which nickel-copper-cobalt and magnesium-silicate casts were then obtained in the smelter. This means that usable metal products can be obtained from nodules with existing technology and refining infrastructure.

However, the reason I didn’t immediately start writing on the forum on the 27th, the day of the quarterly report, is the political environment. This morning, however, CEO-nodule-Jesus Barron published a rather sulfurous letter addressed to ISA CEO Statement on ISA and USA - The Metals Company. It’s no secret that ISA has not been quick to act with permitting. Barron referred to a 2-year processing time with Nauru, which ISA merely brushed aside and didn’t process at all. Barron and the TMC team have been in close contact with Washington in recent months. TMC’s frustration with ISA is very much in line with the Trump cabinet’s communication, which criticizes other UN operations. Is a situation now materializing where TMC bypasses ISA entirely with the help of the US and Nauru to utilize the CCZ? In the big picture, it would be interesting to see how China or India would act in this situation.

4 Likes