Canadian developer The Metals Company to start deep water tests in Q1 2022

Canadian battery metals developer The Metals Company has its first vessel for deep sea polymetallic nodule collection on the water and is planning to start harbor tests in February and deep-water tests in the North Atlantic later in the first quarter of 2022, the company told S&P Global Platts Jan 27.

The company is exploring the world's largest known deposit of battery metals in its deep-sea polymetallic nodule contract areas in the Clarion Clipperton Zone of the Pacific Ocean between Mexico and Hawaii.

These polymetallic nodules contain nickel, as well as cobalt, copper and manganese that can be collected and processed for a comparatively low costs, with almost no solid processing waste or tailings and 90% less CO2-equivalent emissions than onshore mining.

TMC Chief Financial Officer Craig Shesky told Platts that the company hopes to start production by the end of 2024, as the International Seabed Authority was still finalizing the mining code for deep sea polymetallic nodule collection and had a deadline of the third quarter of 2023.

If the code was not established by then, given the two-year notice exercised by the government of Nauru in July 2021, the ISA is obliged "to consider and provisionally approve" the relevant contractor's application based on the state of the mining code at the time of the application, whether finale or in draft form, he said.

"One way or another the industry is moving towards July 2023 for the decision on commercial production in the Clarion Clipperton Zone... once we make our application in Q3 2023, we aim to start production by end of 2024," Shesky said.

The company has an estimated total resource of 1.6 billion mt of polymetallic nodules over two mining contracts in the CCZ, although will initially focus on the first project, NORI-D, which covers around 22% of the total resource.

The initial NORI-D project will start with one collector robot and one converted drill ship, which is the vessel that has been converted by its partner and investor, Allseas, from an offshore oil and gas asset and will be tested in 2022.

NORI-D is eventually to be expected to ramp up to produce 119,000 mt/year of nickel, 2.8 million mt/year of manganese, 89,000 mt/year of copper and 9,000 mt/year of cobalt.

According to TMC, the NORI-D's project revenue will comprise 46% nickel, 28% manganese, 13% copper and 12% cobalt.

"We have the opportunity to ramp up to over 500,000 mt/year of nickel assuming full production potential across two of our contract areas," Shesky said. "Compare that to a nickel market that is expected to have an over 1 million mt deficit by the end of this decade, we could potentially be filling half of that."

Offtake agreement

TMC also hopes to be able to announce an offtake with a major consumer brand or automaker in 2022, as well as solve some funding issues to be in a position to start production by the end of 2024, Shesky told Platts. Glencore, a TMC shareholder, already has an offtake arrangement for half of the nickel and copper in TMC's NORI area.

In addition to collecting polymetallic nodules from the deep sea, the company also aims to eventually build an onshore plant to process the nodules.

TMC's initial assessment found that the cost to move to a full production system including building onshore refineries, onshore rotary kiln-electric furnaces and building collection ships from scratch would be around $7 billion.

However, Shesky pointed out that there were many ways to ramp up in a more capex-friendly fashion, such as using existing under-utilized RKEF capacity in Asia.

"We could go through tolling agreements and reduce capex initially, but there are only a few ways for the Western world to get the necessary nickel and cobalt needed for all the EV batteries and it makes sense to explore some government funding options to help build and localize capacity," Shesky said.

However, for now, TMC will look into establishing a further offtake agreement and continue to take the project forward while awaiting the establishment of ISA's mining code.

"At the end of the day, if there is one thing that's going to move us from the exploration phase into production, it's going to be regulatory certainty, so that's why we think the work being done by the ISA is so important," Shesky said.