Metals Co. CEO says ocean mining permit coming 'sooner than people expect'

View Full Transcript

Taylor Kuykendall:

Welcome to Energy Evolution, where we explore the latest trends and innovations shaping the energy landscape. I'm your host, Taylor Kuykendall, and today we're diving into a topic that's making waves in both the environmental and economic sectors talking about deep sea mining. Deep sea mining involves the extraction of minerals and resources from the ocean floor. Now, as the demand for metals like cobalt, nickel, and rare earth elements rises driven by the growth of renewable energy technology and electric vehicles, companies are starting to turn their sights to some more extreme locations to find some of these materials, including the ocean depths. Now, the mining process involves these remotely operated vehicles that are equipped with specialized tools to collect nodules from the bottom of the ground and bring them to the surface. This technology is fascinating, but it also raises significant environmental concerns. The ocean is a delicate ecosystem and disturbing the seabed can have far-reaching consequences, disrupting habitats, and threatening marine life.

So do be aware that there are some people that are pushing back on some of the development here. Now, what they're actually looking for when they go underwater is looking for these things called polymetallic nodules. They're small potato-shaped rocks that contain these valuable metals that they're looking for. They form on the ocean floor over millions of years and can be found in abundance in certain regions like the Clarion-Clipperton Zone in the Pacific Ocean. Now today, we're welcoming back Gerard Barron. He's CEO of The Metals Company. They're working to mine the ocean floor. Earlier this year, The Metals Company formally initiated a process with the National Oceanic and Atmospheric Administration under the U.S. Department of Commerce to apply for exploration licenses and commercial recovery permits under existing U.S. legislation. Let's just dive right into that conversation that we had with Gerard now. Hi, Gerard. Thank you so much for joining us back here on Energy Evolution. Just to start off with, can you give us a high-level overview of The Metals Company, what we're talking about when we're talking about deep sea mining and what it is exactly we're down there looking for?

Gerard Barron:

Yeah, so The Metals Company are focused on developing ocean metals, and so think of the planet as 70% ocean, yet we get no metals out of those very same oceans, and we're focused on a deposit about 1100 miles southwest of San Diego. It sits 4,000 meters below sea level in the form of polymetallic nodules. And if we go back to that global picture again, 70% of the known reserves of nickel and cobalt and manganese sit in this one deposit. And if I was with you, I'd hand you a nodule that's about the size of a potato. They literally lie unattached on the ocean floor and so what we've been focused on over the last 14 years is understanding the resource, how big it is, understanding what's the most efficient way of picking up these rocks causing the least impact, and then also studying what the environmental impacts will be of removing them from that ecosystem.

And so we're now getting to the final stages where we're about to seek a permit to enable us to move from the exploration phase into the commercial recovery phase and we're doing that through the United States government. And this resource represents an opportunity for us to ship those metals to the USA and help make America mineral-independent a little bit like it became energy-independent with the development of shale oil fields.

Taylor Kuykendall:

And I'm wondering too, one of the big developments we saw recently was an executive order from Trump supported this kind of activity. Can you tell me a little bit about what exactly that meant and how The Metal's Company's kind of mission fits into what the administration's thinking these days in terms of mineral supply chains?

Gerard Barron:

Well, we know that the current administration under President Trump have at the core re-industrialization and they need to bring back jobs, they need to secure supply lines. And that means you need to go and find where you're going to get these metals from because of course if it ain't grown, it's mined. And of course, what the West has done, including the USA, is over the last decades depended heavily on other parties. China and Russia are two that come to mind. And I guess when COVID arrived, it showed what happens when you interrupt a supply chain and it means that those industries that use those metals as their foundation can't continue, can't develop. And of course, in the last several decades we've seen America lose those industries to other developing countries, particularly in Asia. So what the Trump administration are very focused on is how do we secure the supply lines?

How do we bring back those jobs, bring back those industries into the United States? And so when the Trump administration was elected and the cabinet was chosen, we made the decision that we would seek permitting through the U.S. agency, NOAA, where the exploration and the commercial recovery rules already exist to enable us to lodge that application. And so we announced at the end of March that in fact would be our intention and, of course, we saw the executive order come out on April 24. And what that really did was say, now we want to fast track the development of these resources that we, America, have access to both in our territorial waters and also in the expanse of waters and that's what we're going through the permitting process now with the federal agency. But the executive order was an amazing boost for us and it certainly focused the minds of those permitting agencies.

Taylor Kuykendall:

So what sort of timeline do you think you're looking at now that all these developments have happened?

Gerard Barron:

That's in the hands of the agency. However, the executive order made it very clear, and I know it's a personal wish of the President that we see this resource in production during his 47th term. And of course, good news is we've spent the last 14 years getting ready for this moment and so we've been able to put in front of them a very well-baked application. We've spent nearly, well, more than $600 million carrying out the research both from the commercialization commercial recovery system and the environmental studies. So we've really given them a fully-baked application and we're hoping that we may hear news on that certainly much sooner than people expect and certainly in 2025.

Taylor Kuykendall:

When I first imagined all this, thinking about how far away some of these resources are from the places where they might be processed, thinking about how deep they are in the ocean and found know much about the technology. And my first kind of suspicion is this sounds expensive. Can you tell me about the economics of this? How it compares to mining on the land and where this all kind of fits into prices today? Some of these materials are not necessarily at their historic highs.

Gerard Barron:

Well, this resource offers many advantages and one of them is the high grade and it's often grade that is the real driver of the economics. And it's polymetallic so it's very high grades of nickel, and copper, and cobalt, and manganese plus a heap of rare earths. We're not focused on them in the early days due to the processing method we're using, but in future we will. But if we think about copper, because that's the metal that most people are familiar with, and while our resource has 1.1% copper, if we go and put the nickel, cobalt, and manganese into copper equivalent, it's well over 7% copper equivalent. Now last year the average grade of copper mined was about 0.6 of 1%, so we're talking about an order of magnitude higher grade so that has a big impact in the amount of revenue we generate per ton of material.

But what people often forget is what happens in mining is you have to invest an enormous amount in infrastructure. It might be because the resource sits buried underground, could be a kilometer, it could be four kilometers. I'd been to some of the deposits in South Africa where they spent seven years building shafts to get to the ore body. You've also got to build roads and railway lines, and perhaps deep water ports, and places for people to live, and water systems and everything else that goes with the development of a big resource. We don't have those same challenges. We have other challenges, of course, but we don't have those and that has a massive impact on the economics because it means that we can convert a production vessel and sail it on out there and be in production days later. And it means that the scale opportunities for us are tremendous as well.

It means we put more boats out there and it means that we can take advantage of existing already built and permitted processing facilities in various places around the world, such as we announced we're planning to do up in Japan. But the intention is to build this infrastructure in the United States. And of course, an abundant supply of energy is a really important ingredient. America has it, and the administration is very focused on having more of it with some of the initiatives that they've announced because abundant, affordable energy is absolutely one of the key drivers to prosperity and we're going to need a fair bit of it.

Taylor Kuykendall:

And there's been some environmental critics of deep sea mining. You just see the other day I saw the bloom of this Greenpeace has a release out saying that there's a threatened whale species in the area. I believe a lot of the criticism has kind of been around perhaps the unknowns of what happens when we begin industrial activities in these areas. Can you just tell me a little bit about The Metals Company's own work to try to mitigate some of these things and maybe your reaction to some of these studies?

Gerard Barron:

Look, it's the environmental angle that is probably one of the strongest aspects to support the development of ocean metals. And if we go back to first principles, it makes sense that we carry out extractive industries in parts of the planet, where there is the least life, not the most life. And if you look at the amount of living biomass in the abyssal zone, we're talking about less than 10 grams of living matter per square meter. And most of that is single cell organisms living in the sediment. That's 75 to 80% of it. So it begins with the fact that there's not a lot of life there to impact in the first instance. Still doesn't mean it's not important and that's why we've been studying about what the impact will be. Will we actually disturb or will we actually help productivity in that area? And there are some signs that will be the case with some species because it's an area of very low energy, low food.

And so we found abundances increasing in nearby areas where we had been down there collecting rocks in our commercial trials in 2022. So when I hear people like Greenpeace talking about potential impacts, they are truly grasping at straws now because we have been focused for more than 10 years on understanding those environmental impacts and we've engaged 20 of the world's leading institutions. They've carried out the research. We funded, of course, but it all fills all channels back into an integrated environmental impact study where we look at a whole range of impacts. We look at the pelagic impacts, and the midwater column, and the benthic impacts, the sediment plume and how fast are recovery rates. And sediment plume is one classic example. And when I say sediment, think of it as driving your car down a dirt track, you'll kick up some dust. The question is how much and how far will it travel?

And people like Greenpeace would argue that it's going to travel for thousands of kilometers. But our studies which we sit alongside people like MIT who've also published peer-reviewed studies, shows that down in the abyssal plane, the sediment... Because we take in the nodules in the front of the machine, we separate the sediment and we spit that out the back and it creates its own turbidity current, and it only rises two to three meters above the seafloor and up to 98% of it settles in the area of impact. So contrary to the speculation from desktop studies, when you go out and gather real in-field data, they provide you the answers. And the answers are that the sediment plume doesn't travel those very large distances. It stays very localized. And so my answer to people with environmental concerns is it's reasonable to have them. And, of course, our approach has been to address all of those and the results of those many hundreds of millions of dollars that we've invested, and on top of that, many other contractors have invested since the 1970s.

And for your American listeners, NOAA put together a programmatic environmental impact study, which was the work of four EISs done by contractors plus their own work, which they submitted to Congress in 1995. And it basically showed that subject to more studies on the plume, which we have now done, there was no risk of causing serious harm in collecting nodules from the abyssal plane. Our work has further studied that and come up with the same findings. And we also have to remember that nothing has zero impact. But when you look at the two ecosystems and you think about the abyssal plains and hills, which account for 50% of our entire planet, so it's the most common environment. There's no alternative use for it. You can't grow things there, people can't live there. It seems to be a perfect place to be carrying out this activity because today where we're getting our nickel from is from tropical rainforests.

And the problem with that is you've got to move all of the people who live in them out. You've got to tear down the rainforest and all of the biodiversity and biomass that is in it, and then you've got to dig up the soil where the metal bearing ore is contained, and that's the beginning of the impacts. Then you have spillage into the oceans and rivers, and honestly, it's such a clear use case to be picking up rocks and turning them into these important base metals compared to the land-based alternatives.

Taylor Kuykendall:

Excellent. And the last time we were talking, you were looking at permitting, I believe before the International Seabed Authority. Can you maybe give our listeners just a little bit of background about that organization and why we're now hearing about applying through the U.S. instead? Maybe give us a little bit of background and how that came to shift around.

Gerard Barron:

Yeah, sure. So in 2001, we applied for our first exploration license under the International Seabed Authority. And in 2012, our second one, so first was with Nauru, the other was the Kingdom of Tonga. And if we look at this industry, it almost got started back in the seventies. And then the United Nations got involved and a number of countries decided that the best way to approach this would be to agree a treaty for a number of countries and there are now 169 member countries who have signed that treaty. There are more than 20 who have not and, of course, the most notable one who have not is the United States of America. And the U.S., from the very beginning, said, "We don't agree with this approach. We're not going to sign the treaty. We're not going to abide by those rules because no sovereign has ownership over the oceans."

Every nation has freedom of movement, freedom of passage rights. They have access to the minerals on the sea floor. They have access to be able to lay cables on the sea floor. And what America did is stood aside, said, "We still want to maintain those rights." Whereas, the other countries who did sign UNCLOS, as I say, there's 169 of them now, said, "Well, when it comes to minerals, when it comes to metals on the sea floor, we're going to be bound by these rules." Now, in 1994, the International Seabed Authority was established and it had a very clear mandate. It had to put in place exploration and exploitation regulations to allow the commercialization of these resources and while protecting the marine environment. And so in 2001, they put in place the exploration rules, but here we are 2025 and there are still no rules that cover commercial production.

And the main reason for that is that the system got overtaken by NGOs and so the process was slowed down, some bad actors became more vocal, and they just used the process of the delay. Now, at the same time, the United States in 1980 adopted a set of rules. We know them as DSHMRA and they're administered by NOAA, the federal agency, which allowed for exploration and also for commercial recovery. And so we made a decision in the second half of last year that's subject to a number of things and one of them was getting a strong government in place that we would change our permitting strategy and apply through our U.S. subsidiary TMC USA, and that's what we're moving forward with. And obviously, the United States are very clear on their rights over these metals. They've held two exploration areas in the CCZ, in the very same area that were granted to Lockheed Martin, and they've been in place for a long time.

But it was really the President's focus on reindustrialization, their absolute focus on how to secure supply chain certainty that gave us the confidence that this resource could play a very important role in helping fulfill America's future ambitions. And while the support has come from President Trump, we do see it as a bipartisan issue. We had good support from the previous administration as well. Certainly not the strong leadership we're seeing from this one, but we think the critical mineral challenge is one that will not go away. It will only become more important. And I think that for the last couple of years we've been all talking about bits, we've been talking about AI and these new industries, and of course what people are now starting to realize is that the atoms are super important because we need to build all the infrastructure to supply the energy to enable this to happen and to supply the industry to attract jobs back into the United States.

And so it's an exciting time and we're delighted with the support we're getting from this administration, and we're delighted the prospect that we can get this resource into production on a short timeline.

Taylor Kuykendall:

And now related to that, I'm always curious of whether the market is out there following these trends closely enough to know what's going on. And I think it took a while for people to realize the importance of critical minerals, right. But you've recently announced it a 37 million investment from Hess Capital, I believe it was an $85 million investment from Korea Zinc into The Metals Company. Can you tell me a little bit about first of what the significance of those investments, but also maybe how have you seen the kind of market evolve and its reception of critical minerals and understanding its importance to maybe say energy transition?

Gerard Barron:

Well, you're right to suggest that people have been a little bit slow on the uptake on the importance of critical minerals, but they are getting it now. We wanted to focus the business more and more on the USA and so we were delighted to see Michael Hess, and in fact, we announced Alex Spiro to join our board only a week ago. And of course, the Hess family are very well known industrialists in the USA. So to have them commit a very sizable piece of capital behind this idea from their family office was a really important initiative because they help manage some of the stakeholders who are going to be very, very important and they've got an amazing track record of building globally successful companies and I'm sure some of that will rub off onto our efforts and it already has. This is not a passive investment.

This is an investment, which I imagine they'll probably invest more in the future if the opportunity arises. But what we're seeing at the moment is lots of effort to help us achieve what our corporate goals are. And of course, Careers Inc.is similar. We've known that company... Well, we've known the company for decades, but we've had good dialogue going for the last year and their chairman is very committed to exploring how they can access more USA opportunity. And from our perspective, they are, outside of China, the only company that we think can help fast-track what we want to put on the ground in the United States. And they bring expertise, clearly they bring capital, but it's that expertise which will enable us to move a whole lot faster and with much less risk than we would otherwise be able to. And we have an enormous amount of inbound inquiry coming our way these days since we announced at the end of March that our permitting pathway would be USA-focused.

People see that there's some certainty now about us being able to secure a permit to be able to go and develop this enormous resource. And one thing I haven't mentioned, Taylor, is we know we've got a defined 1.6 billion tons on the areas that we've applied for through the U.S. government, and we estimate with some other ground that we've added to the application, there's another half a billion tons. We're talking well over 2 billion tons of nodules sitting on the seafloor that are polymetallic, but if we put them into copper grade are more than 7% copper equivalent. There is no other resource on the planet that fits into that category and so having strong partners who can help us develop this asset in the same way that we have Allseas as one of our most important partners who are experts in the offshore industry, and it was their flawless execution that enabled us to run those commercial trials so well in 2022 because for the past 40 years, they've been solving very complex production issues in the deep ocean.

They lay pipe 24 hours a day, 365 days a year when they're on production and so they bring all of that learnings and all of that know-how to help us avoid making mistakes the early stage companies would otherwise make. And we see Careers Inc. and the Hess family coming to help us do that to an even greater degree.

Taylor Kuykendall:

So a lot of reasons to be excited over The Metals Company. Just to wrap it up, my last question for you is what are maybe some of the challenges that you see in the horizon 2025? What are your maybe biggest hurdles that you're looking to face in the next couple months?

Gerard Barron:

Well, we're going to be depending on getting this permit on the commercial recovery, of course, but we absolutely want to get focused on building that infrastructure in the USA. We're very encouraged by the administration's support that they've been offering us on how to get processing quickly permitted. Of course, I don't have to worry about capital so much now because not only do we have access to lots of capital on the balance sheet, we'll close the quarter with more cash than we've ever had in the bank. I think the pro forma number we gave was about $120 million. So that's a good feeling. But, of course, capital management is one of those things that we've proven to be pretty good at, but we've now got more expertise around the table and the Hess family help with that. Of course, Alex Spiro brings an enormous amount of expertise in that area as well so we're very happy to have his services available to us as to Careers Inc.

But managing that capital so that our equity holders get the best return on their invested capital is always of the highest priority for me. Our shareholders have been amazing to support us. We're enjoying building a strong retail support base as we are welcoming institutions. If you look at the forms that have been filed now, you see some of the world's biggest institutions turning up on our share registry, and I think providing... We continue to show them that we look after their capital, then we'll continue to see that group of institutional owners grow and grow. So it's going to be an exciting little run in into first production, and we've been at this for 14 years and we're just grateful for the fact that President Trump and his administration is clearing a pathway to help us make this happen quickly.

Taylor Kuykendall:

Excellent, Gerard. Thank you so much for joining us in the day and look forward to having you back for another update soon.

Gerard Barron:

Thanks Taylor.

Taylor Kuykendall:

All right, listeners, thank you so much for listening to the latest episode of Energy Evolution. I want to give a special shout out to our incredible podcast team members. I am once again, Taylor Kuykendall, but some of the other people that work for this podcast include my co-host, Eklavya Gupta, Camilla Naschert, Christopher Coats, Dan Testa, Karen Willenbrecht, and our wonderful agency partner, The 199. To stay up to date with our upcoming episodes, be sure to subscribe to Energy Evolution on your favorite platform. If you have any ideas for future themes or guests, we'd love to hear from you. All you have to do is shoot us an email at energyevolution@spglobal.com.

And look, if you liked what you heard today, do consider sharing the podcast with others or leaving a review on your preferred podcast platform. We can't wait to bring you more fascinating discussions in the future. Until next time, take care and stay tuned for more from Energy Evolution.