Who's Making Money pt3 – Mineral Processing Startups in the Mining Value Chain

💡What’s New: Mineral processing tech is critical in a global supply crunch.

🤔 Opinion: Pause on the electric mobility market?

🛠️ Tools & Data: Opensource solutions to accelerate your R&D.

Want to feature your service or product in DRIFFT? Grab an ad spot here.

💡What’s new

Last week I discussed Extraction within the mining and mineral value chain. This week I tackle Processing, which might be the most critical component for investors and regulators given the ongoing export limits placed on critical minerals from China.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

Processing

Turns minerals into refined ore. Includes chemical and mechanical aids both at the mine site and dedicated smelting facilities.

Value: 000s of $Ms

Example Startups and Business Models

• Phoenix Tailings - Creating a waste-less, rare earth mineral processing system and associated tech that takes present day mine “tailings” (the waste leftovers of traditional mines) and extracts valuable metals. Their primary business model appears to be selling a modular extraction system to larger mining companies to be set up at existing mines. Phoenix is based in the US and is currently working on scaling its technology.

• Levitated Metals - Levitated is perfecting a proprietary recycling process for shredded recycled metals (mainly aluminum) that allows them to extract high-grade metal with zero wastewater and significantly lower energy consumption. They make money by buying up scrap metals and using their process to extract the metal, which is sold to consumers (e.g., metal smelters, etc).

• Next Ore - This Australian startup builds and sells novel ore sensing and sorting systems that use magnetic resonance to identify metals as they move along a conveyor at high speed. To distill ore from minerals, mines have to sort the aggregate material. By sorting metals more carefully, their customers can produce a higher grade of ore for which they are paid a premium.

Why they matter:

For one, they’re critical for securing future technology markets. Today’s critical mineral shortages are not just due to a lack of material. Even if we can find all the minerals we need to transition to electric energy, it does not follow that we can process them into usable material. There is a processing supply shortage.

The problem is that setting up processing operations takes about as long as setting up a mine (about 3 years minimum). Processing also entails many of the same environmental and regulatory challenges as the Extraction process, which is why it takes a long time plus a lot of capital.

If the world is going to transition to electric energy, it’s going to need more processing capability.

For investors, my opinion is that processing might prove one of the safe bets during this market cycle. Processing will always be needed, regardless of what metal is in demand. And more importantly, these companies seem to align energy and environment with profit incentive.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

Related News Highlights

• A new AI mineral exploration company, Atomionics, from Singapore gets first customer.

• A recent presentation to Congress on mining by CEO of TerraSpace.

• A great overview of rare-earth minerals with a focus on China’s prominence.

• Rare earth mining is growing in China.

• Recent Senate testimony on the future of mining law in US.

🤔 Opinion

A few days ago I was at an automotive store to buy a car battery. The sales person mentioned he worked at a local Chevrolet dealer, so I asked him to confirm how sales were going. He confessed they had a 12 month backlog of electric vehicles that weren’t selling. This confirms what I’ve been seeing in social media and the markets.

• Auto dealers are saying, “pause EVs” because they’re not selling.

• Lithium & cobalt futures (see below) have given back all their recent gains.

• The Society of Automotive Engineers recently published a study that claimed EV manufactures significantly overstate their driving ranges.

When I combine these data points with broader manufacturing orders and personal consumption reports, I have an increasingly bearish outlook on EVs.

So what’s next? I think electric vehicles will still come, but the future will take longer to produce. It always does. And consumers will likely have multiple solutions for clean energy mobility, including hydrogen. The kid in me is hopeful we get a Back To The Future mini reactor system some time soon to go with our quadcopter cars.

If you’re investing in startups or the open market, more attention should be paid to rare earths. Our entire way of life and technological progress depends on them. As mentioned above, processing facilities and technology could be the more important play. Every metal needs to be processed and refined. And new methods, chemistry, and technologies are all patentable.

🛠️ Tools and Data

Thanks for reading! Want me to look into a particular topic? Email your suggestions and and I will dig.

David