The Metals Company has over $500 million pipeline to fund the company through to small-scale commercial production, said CEO Gerard Barron who spoke to Kitco on Thursday. The Metals Company was formerly named DeepGreen. A March financing valued the company at about $2.9 billion. Barron told Kitco he sees around $570 million total from the raise that will fund the company. The Metals Company plans to collects polymetallic nodules containing cobalt, nickel, manganese and copper from the ocean floor.
Last month, the metals company, formerly known as deep green went public and a 300 million financing. Is this enough gas in the tank to make deep sea mining a reality I'm with CEO, Zuora barren, and Gerard. Welcome to Kitco LACO. Great to be with you today. Let's start with a company. What is a metals company and how did it come together?
So the metals company, as you said, formerly known as deep green, uh, we've been around over a decade now and we're focused on one thing and that's collecting polymetallic nodules from our license areas in the cleric zone in the Pacific ocean. And. The premise is that we're going to need a whole heap more metals.
As we start moving through this green transition, and we can produce them with a, at a fraction of the environmental and societal impacts by collecting these nodules and turning them into metals compared to the land-based alternatives. A lot of questions, but you have it with you. What's special about nodules.
I mean, the sea is a big place. Uh, why are you specifically focused on these formations? Yeah, that's a good question. And, and it's a really special resource and they form in a different way because they literally precipitate the metals that are in solution in the ocean water or in the sediment upon which they sit.
And so there's this one in my hand would be three to 4 million years old and it's. It's a nickel is the main revenue driver. There's about 1.4% nickel in this nodule. And 1.1% copper and about 0.2% cobalt at about 30% manganese. And so. It's very aligned to what base metals we need as we move through this, uh, transition away from fossil fuels into electrification.
And it has other unique characteristics as well. For example, when we bring them to shore and we turn them into metals, we generate zero tailings. And zero waste. And, you know, just on that topic alone last year, the, the mining industry, uh, was the largest generator of waste. In fact, it was around 190 million tons of waste to generate it.
And to put that into context, municipal waste was around 2 billion tons. So we can collect these nodules in and process and then generate no waste and no taillights. So it's a pretty special resource. I know that you've had some studies on this, but could you just talk about what the potential resources where these nodules are and what they would be like for our processing?
Well, let's think about where they are. Uh, they were discovered way back in the 1870s and, and British explorers wanted to know what lay on the bottom of the ocean. So they H sailed HMS challenger around the seas for four years and they discovered, I mean, a number of locations, but there's one area of the ticagrelor interest.
And it's this area known as the CDC said, And the reason why it's of interest is because a little bit to the right are the Rockies and the Andes that of course were covered in nickel and copper and through Vulcan agentic explosion. That means that all these metals ended up in the Pacific ocean. And so as these nodules grew, they precipitated those metals and form these very valuable, um, time appropriate resources.
Now we've. We're a Canadian company and we have results statements on two of our license areas. And so we know that we have our 1.6 billion tons of these on those two blocks and as a fun resource, because you get to see it, you know, it's two dimensional. You don't have to imagine what's under the ocean floor.
Instead. We take pictures of it. Whereas on land, we'd be drilling thousands of holes to try and. Put together the shape of this all body. We literally get to see it running for thousands of kilometers across the ocean floor. What's the metallurgy like? Uh, what was it like, uh, extracting nickel from these nodules?
Yeah. So there are basically two approaches and, um, Back in the 1970s when they were collecting these nodules on the trials. And in fact, Kennecott Doughty, a, uh, onshore processing plan, a. Can of come up now, part of Rio Tinto, uh, they used a process, uh, the Cupra and which was mainly focused around the nickel and copper, but we've actually for the last decade, been running two onshore processing methodologies and the first was a pure hydrometra.
Where we would basically dissolve them in an acid solution, but we decided to pass that idea. We've gone with a more conventional, uh, pyro and hydro med combination. And so basically we, we knocked them. And that first pyros step seized us with a manganese Silicon material and an alloy or a map contain all of the nickel copper and cobalt.
And we then put that through a pretty standard hydro flow sheet to either produce nickel, powders, or sulfates. We'll be, we'll be, we'll be completed the, uh, uh, our onshore pilot work for the pirate metallurgy. Uh, work in the next, uh, three or four weeks. We've made good progress there. Uh, I think you've touched on it, but, um, I wanted to step back and then just mention about funding because, uh, that was a really headline number that came out in March.
Uh, that was a big announcement regarding the special purpose acquisition. I want you to talk about the funding, but I think you've mentioned it also just about the metals. Uh, you know, there's another headline around this, this, this is that deep sea mining. What you're targeting, it's really kind of target around the electric vehicle material space.
Well, it's certainly very aligned with what the electric vehicle industry is going to need a lot of. And Michael, it's interesting that in this nodule, there are eight parts nickel to one pot cobalt. So, you know, as the auto industry for the time being at least has pretty well settled on a NMC eight one, one chemistry, then this results is just perfectly suited to that.
And so almost half of the revenues will come from the Nicole and, um, Followed by the manganese copper and cobalt. So you couldn't ask for a much better mixture of base metals given the environment that we're moving into. But you're right. It was, uh, an exciting moment for us to announce that transaction, uh, in total, we'll see around $570 million, uh, from the SPAC plus the pipe, we were originally planning to raise a $200 billion type, but, uh, we were, we were heavily oversubscribed.
And so we took a little bit more. And the good news about that is it, it. Provides us the funding to get to first production. And we're anticipating first production in 2024, which is, you know, not far away in certainly resourced development timeframes. And, uh, and the good news is this transaction sees us funded to the other side of that.
There is ocean diamond mining, um, are the processes, is that you're looking at a similar or how are they different? Well diamonds, firstly. Uh, located in watch shallow water. And so, uh, but you're right. There's a lot of diamonds that have been extracted, uh, from our oceans, from those shallow waters today.
And, uh, but the methodologies, uh, you should think of diamond mining, more as a dredging operation. And one of the thing, one of the challenges of diamond mining offshore is the waste. Because essentially you are literally hoovering up large areas of ocean floor, all these little areas and they about 2% of them might be diamonds.
So the other 98% of the material, you have to return somewhere. And so sometimes you'll see these operations, um, With all the, you know, quite murky waters, flumes surrounding. Whereas if I draw a comparison to what we're focused on and keep in mind, we're only focused on. Polymetallic nodules. When, when we have no interest in sulfides, we'll see full cross because they really do require mining.
Whereas these nodules just lay on the ocean floor. And so our collectors will, uh, using a jet propulsion system, collect the nodule, separate out the sediment, and then put the nodules into a air riser to be delivered to our production vessel. 4,000 meters above. And then of course, we offload them to a transporter and move them to shore for further processing.
So from a waste perspective, at 4,000 meters, we can be very efficient. Uh, and, and the good news around, uh, the, the dust or the plume at 4,000 meters and below, is that what we're finding is the particles tend to flocculate together, which means they. They bind together. They become heavier and they settle quite quickly.
And so, you know, we're confident we'll have some, you know, very good news, uh, confirming not only our studies around that, but studies from other, other contractors and institutions who've been focused on this very topic. Now we are going to get a, there's some marketing, there's some ESG issues that have come up in the headlines, but I just want to keep it on a, you're talking about production.
What's the number one technical challenge right now. You would really see to kind of making this a deep sea mining. Well, if we cast our mind back 50 years, Then there were many, uh, great industrial names. Lockheed Martin Mitsubishi, Sumitomo, DP and shell were starting to collect nodules. This industry was coming alive now, of course, uh, what stopped it was that the world had not agreed who owned the oceans.
But the good news is a lot of the technical challenges were sorted up 50 years ago. Now what's happened since then, of course, the offshore oil and gas industry cable lane pipeline has blossomed. And so the technological development in that 50 years has been enormous. Uh, in fact, Today, uh, there was a news release by a Belgium company.
Demi who've been trialing their C4 harvester in the city sees that area and they today announced a very successful trials. So I think the technical challenge is really, uh, about. Scale because engineers love solving problems. And if I talked to the offshore, uh, engineers, you know, they, they say, look, of course it's difficult, but you know, we've been solving much more complex challenges in this.
Uh, we've got this. And when I speak to the onshore engineers, it's pretty all the same that they, they see a pathway. All of our small scale pilot work has been. Very encouraging, uh, our on shore pilot work that we're coming to a completion now with has been equally encouraging. So I think it's really gay to be just, uh, more around successful, uh, implementation and then obviously reliability.
And that's one thing that has improved enormously in 50 years, we need lots of uptime. And so we're hoping that, you know, that's something. That will just continue to improve and there'll be hurdles. Of course there will be. And, uh, but, but you know, we're feeling confident that many of the technical challenges, uh, are well in hand.
Now people in the mining space, of course familiar with the deep sea miner Knotel spin role, which had a lot of challenges. And that of course, was in the last decade. It eventually did go bankrupt in 2019. What's different this time that you think deep sea mining can succeed. Sure. Well, I always say, um, Nautilus, we're like the pioneers who ended up with the arrows in the back.
You know, they went out there, blaze the trail. Um, but. Totally different to our efforts. For example, they were focused on seafloor, massive sulfides, and that represents an entirely different, uh, challenge because you really do have to go mining those. You've got to build a big machines to turn big rocks in the little rocks and then top them to the surface.
So firstly, um, and they're also the CFO, massive sulfides are located in shallow water and those areas tend to be more productive. So there's a lot more, uh, biomass, more biodiversity in those areas as well. The other thing is that while Nautilus, uh, found some of these systems, they didn't find a lot. So the size of what they were able to identify was that a fraction, I think they ended up with around 6 million tons of these C4, massive sulfides.
Now I've already got 1.6 billion tons identified under our 43 one Oh one. And. Of course, they operated in Papua New Guinea, and we've all know that some of these developing jurisdictions can be challenging, governments change. Uh, you know, the rules can sometimes be a little bit flexible. And in the end, I think Nautilus, uh, you know, just had a, uh, a series of events and setbacks.
And of course they were operating during the GFC, which meant that financing was challenging. And. But probably one of the most, um, important factors was that this new demand through the transition away from fossil fuels was only just beginning to take hold. Whereas now there is an enormous amount of focus on, um, the need to make this transition happen.
And what the true environmental cost might be of increased metal production. And so, you know, you need a lot of things going your way to get a new industry started. And I get the feeling that, you know, we've got a lot of those things, including the capital markets being open to allow us to do this transaction, of course.
And so hopefully our timing is right here, Michael. Uh, remarking on the scramble for ed materials, uh, clean tech CEO, Sam Riegel said OEM investment in nickel. Miners is inevitable, uh, due to the scramble for metals. Japan said it wants to be self-sufficient in battery materials, possibly looking at ocean floor mining.
You know, you've mentioned it, uh, with, uh, the opening of the financial markets. It just seems like there's a lot of partnerships that are available to you in the space. No, I think you're right. And you know, we've, we've had the benefit of speaking to those, uh, Evy companies for the last two and a half, three years.
And so they're challenged by the availability of raw materials to build their batteries. They're challenged by the price and they're challenged by sustainability. Now, this is a new set of problems for the auto industry, because they always had a very commanding position in the supply chain. And, you know, we've seen in recent months, car companies have to close their manufacturing facilities because they can't get hold of a simple semiconductor chip.
Now battery metals will be even more impactful, I think. And so there is no doubt that if you're a major auto maker, Then you'll have to vertically integrate because you can't just push the supply problem onto the supply chain because you might find your place in the queue is. No, not ideal. So, you know, we've seen obviously Tesla lead the way with, you know, doing their own battery cells.
We've now seen some other auto makers make some announcements that they plan to, to leave some bets in a variety of areas. So, you know, and that's exciting news for a company like us, that's trying to develop or planning to develop the world's largest, that tree materials. That's it. I mean, the opportunity to partner with some of those, uh, automakers who need to, to vertically integrate opens up an enormous amount of flexibility for us.
The other players I see in your space are GSR and Lockheed Martin's UKC bed resources. So do cooperate. We encourage. We encourage, we, we cooperate around issues, uh, to do with the regulator, uh, meaning that, you know, we do support, um, No positions that, that, uh, reasonable, uh, whether it's understand is in guidelines.
And, but generally, you know, it's, it's, we've all got our own strategy and, you know, we've got a very clearly defined one at the metals company. And so, um, yeah, I'd call us in a pre-competitive stage, but we're encouraging one another. I probably wouldn't go as far as, uh, cooperated. Now Gerard, the other headline was, uh, the, uh, signups that, that were done with the world wildlife fund.
And then that was Googled BMW and handful of other companies, uh, stating that they were asking for more study of deep sea mining. Uh, you push back, uh, strongly, uh, comparing the impact of mining on land versus deep sea mining. Uh, we understand, uh, the stories, but kind of on a PR basis. What's the strategy to gain wider acceptance of deep sea mining.
How do you get ahead of the story? Well by awareness. You know, we, we think that, uh, we came out pretty strong against that position because we thought we had to, you know, if, if the names of companies that we were in dialogue with had been on that list, that would have been. A heart sinking moment, but they weren't, they were companies that we'd never, ever spoken to.
And so, you know, to take a public stance back that, you know, I forgot it was important that we come back and say, hang on, there are some other issues that we all need to be thinking about here, and this is what we're doing about those issues. And so, uh, you know, I, I think that's the challenge at a wider level as well, because, you know, if I was to, to.
Like protect the oceans is a very easy idea to get behind. I want to protect the oceans. I consider myself an environmentalist. And if you looked at the terrestrial mining industry, and so now we're going to do that in the oceans. You'd go. That doesn't sound a very good idea at all, but it's because it's the nothing alike, you know, we're talking about collecting these nodules off the ocean law.
We're talking about, uh, you know, one of the least, uh, Densely populated lowest biomass areas on the planet. Like there is 1500 times less biomass where we pick these up from then when we're, we're collecting Nicole from in Indonesia. And when you start to understand. How that impacts climate, because of course those rainforests are carbon sinks as well.
So it's an education task. And I think, you know, we're in it for the long game. Uh, we invest a lot of money, uh, in the environmental science part of it. You know, a bird has been on the water to the last six weeks. Uh, this will be our first campaign of 2021, but there are three more. It arrives back to San Diego.
It heads straight out again, two weeks later, I mean, we're investing, we'll invest $75 million on our environmental impact. Uh, study. Uh, and so I think it's just about being transparent. It's about being open, letting people see the results. I mean, we, we engage, uh, scientists from universities and UN organizations all around the world.
Part of the dealers, they're free to publish their findings. And so, yeah, I think, you know, it's, it's, it's a long game, but I think when people start to understand. The tangible differences between this results and the alternative they get to get behind us because it's a, it's a we're hands down without what's the milestones for the metals company over the next 12 months.
So. By the end of this year, we'll have a harvester in the water and by middle of next year, we'll have our, uh, we aim to have our end to end production system being piloted. On our license area. So that's a really exciting moment for us. Um, we also have a lot of commercial conversations underway, you know, we're, we're, we're taking some of these customers with us along the journey of understanding the environment or.
Uh, challenges that we're addressing. And so, uh, obviously the onshore pilot processing workers is coming to an end for the pyrometallurgical. Uh, we'll we'll shortly go out to tender for some of the pilot. Uh, processing hydro network. Um, we, we hope to have, uh, an area identified for our first onshore processing plant, um, where we can ship our nodules to in 2024 to turn them into battery metals.
Um, you know, obviously the geopolitics that are very active in the world today, uh, quite helpful for us because you know, the world is finally working up to the fact that. China has invested well ahead of the curve and dominates the material supply of battery metals. So, you know, that means governments are saying, well, you know, how can we encourage you to locate in Algeria station as opposed to someone else's?
So, yeah, there's a, there's a lot of, uh, exciting action happening at the metals company over the next year. And, and of course, now that we're moving to a public stage, You know, we have a, a voice that can be heard, you know? And so that's one of the main reasons why we went down this path. One was to get access to capital so we could, uh, accelerate, you know, the projects and the other was to, to cancel out a voice so we can share this very, very important story.
Gerard, thank you for speaking with Kitco. Oh, Michael. My pleasure. I've been speaking with CEO, Gerard Baron. He is with the metals company. My name is Mike McCray. You are watching Kitco mining.