Critical Mineral Startup Landscape
Critical metallic mineral production
All four types of metals are needed for the clean energy transition.
The demand for critical metallic minerals, including alkali metals, transition metals, rare earth metals, and platinum metals, is increasing as we shift towards clean energy and decarbonize chemical processes.[i] This presents an attractive investment opportunity, with the market for critical minerals estimated to be $40 billion in 2020 and expected to grow 7 times by 2030.[ii] However, mining industry is responsible for 5Gtons of CO2 equivalent (CO2e) of greenhouse gas (GHG) emissions annually (most of which come from iron and alumni, but critical mineral ores are frequently found in the same mine as these metal ores).[iii] This level of carbon footprint dictates a need for 1) minerals recycling, 2) reduction in heat for chemical processes and more utilization of catalysts or electrochemistry, 3) avoidance of open pit mining and methane relief, 4) reduction in byproducts like SO4- and CO3- that increase ocean acidity and reduce ocean carbon capture.
Alkali and transition metals, such as lithium, cobalt, nickel, and sodium, play a critical role in battery and energy storage. Rare earth metals, such as neodymium and cerium, are vital to the production of permanent magnets and ethanol steam reforming (for hydrogen gas production) respectively. Platinum metals, such as palladium and osmium, play crucial roles in catalyzing essential transactions like hydrogenation processes and reducing energy consumption for these chemical processes.
Recent innovations are mostly focused on alkali & transition metals, leaving white spaces for other metals.
Figure 1 displays a few noteworthy startups that target different stages of critical mineral production, except for the input collection step (e.g. ore extraction or e-waste collection). These stages include: 1) separation of one mineral from another, 2) processing of intermediate forms into package-ready forms (e.g. from oxides to neutral charge metals), and 3) packaging, such as compressing neodymium into permanent magnets. One important but underserved area within critical mineral production is packaging services for rare earth elements (REEs). The production of permanent magnets using REEs results in about 3 Gtons of GHG emissions per year globally, which is 1,000 times higher than emissions from mining and processing REEs.[iv]
Figure 1: Map of Notable Startups in Critical Mineral Production
8 parameters for evaluating a startup optimizing the critical mineral production:
· Market definition: critical metallic minerals have applications in multiple industries, e.g. innovation in lithium production did not only affect the manufacturing and mining sectors but also transformed transportation and energy sectors.
· Financial impacts: Startups innovating in the critical mineral supply chain tend to focus on helping customers reduce costs instead of increasing revenue. While reducing carbon footprint is important, proving cost reductions (through raw input waste elimination, compliance pressure alleviation, process streamlining, and free energy utilization) is the key driver for adoption. As such, evaluating the types of costs a startup is helping its customers cut is a crucial aspect of assessing its potential impact.
· Competitive advantage: With tailwinds expected for cobalt, nickel, lithium, and REEs, the market is becoming increasingly crowded with startups offering similar products and services.
· Carbon footprint impact: Tailings solutions are important for improving environmental health but may not reduce carbon footprint unless coupled with additional mineral recovery. Therefore, it's important to evaluate if startup success is linked to reducing carbon footprint.
· Technical readiness: Startups in this space are typically founded by PhDs. Founders’ publications in peer-reviewed journals, patents, and technoeconomic analyses are important sources to evaluate pre-A startups. For post-A startups, trends in cost as scale increases are identifiable.
· Growth perspectives: A startup on figure 1 can expand its operation horizontally (including “processing” on top of “separation”, e.g.), or vertically (going from rare earth metals to transitional metals). The likelihood of expansion and the associated upsides are essential here.
· Risks: What additional capabilities could make this investment particularly attractive? Can the founders develop these capabilities to mitigate risk?
· (Bonus) White space: Founders who identify important underserved areas in critical minerals and associated chemical processes (e.g., Mangrove Lithium streamlining Li2SO4 – Li2OH conversion process while cleaning up sulfuric acid) are highly appreciated.
Deep dive into a hypothetical startup in this space and how this framework might be applied in evaluating them.
Information here is based on my own research of publicly available information and not based on conversation with any founder or anything proprietary provided by founder(s).
Company X
Providing metal-organic frameworks (nanoporous composite) to filter platinum metals from waste
Markets Impacted
· Direct: specialty chemicals (catalyst manufacturing)
· Indirect: food (vegetable oil), construction (equipment fuel)
· Immediate addressable market size: $4.9B[v]
Financial Impacts/ Value Proposition
· Palladium costs: Palladium is among the world's most expensive metals and is increasingly crucial for hydrogen fuel and hydrogen gas refinery. The rising consumption of hydrogen will require greater utilization of palladium, and efficient recycling of palladium is needed to reduce costs and ensure a stable supply.
· Environmental impact: Palladium is a toxic metal that may incur compliance penalties if released into the environment. X’s technology enables the recycling of palladium from sources, reducing environmental impact and avoiding compliance penalties.
Competitive Advantages
· The MOF-composite beads offer one of the highest Pd capacities to date, with 498mg of Pd per gram of composite bead. Furthermore, Pd remains retained on the bead even under continuous flow.[vi]
· X’s nanoporous membranes, which are polymer-based, are cheaper and easier to scale than SiTration's silicon-based membranes. X’s membranes can capture molecules at lower weight ends, while Sitration's membranes can only capture molecules of 350+ Da. As a catalyst like PdCl2 weighs at 177 Da, X’s membranes have a significant advantage.[vii]
Carbon Footprint Impact
The use of X’s technology to lower the cost of manufacturing hydrogenated vegetable oil can lead to a higher adoption of biofuel. This could lead to 0.4Gt reduction in CO2 emitted per year[viii]. Additionally, a catalyst like Palladium can substantially reduce the dependence on heat of HVO production processes and can prevent up to 0.1 Gt of CO2 emissions.[ix]
Technical Readiness
Looking for experienced founders – someone who has published at least double digit number of articles on MOF-composite and covered a wide range of metals not just Pd. Bonus points for holder of patents on the use of MOF-composite in metal separation.
Growth Perspectives
Aside from its focus on ultra-fast water filtration, X can explore opportunities in disaster-relief efforts by collaborating with municipalities.
Risks and Mitigations
One issue with polymer-based membranes is that they cannot handle temperatures above 40°C and acidic environments.[x] While MOF composites may behave slightly better, they are still polymer-based at the end of the day. However, there is no urgent need for optimization in the context of palladium recovery.
White Space?
While renewable energy availability to split water to hydrogen is a major focus within hydrogen and ammonia, there is less attention given to the role of catalysts in hydrogen refinery and hydrogenation. This presents an opportunity for X to explore the potential for their catalyst technology in these areas.
[i] Not including actinide group here due to strict regulations and likely very few, if any, startups are able to enter this space.
[ii] https://insights.issgovernance.com/posts/the-race-for-critical-minerals/#:~:text=Rising%20prices%20and%20competition%20help,and%20%24400%20billion%20by%202050.
[iii] https://www.mckinsey.com/capabilities/sustainability/our-insights/climate-risk-and-decarbonization-what-every-mining-ceo-needs-to-know; https://www.visualcapitalist.com/all-the-metals-we-mined-in-one-visualization/.
[iv] https://www.sciencedirect.com/science/article/pii/S0048969722021155
[v] Market size for palladium is $16B. Recycling rate of palladium is 70%. Assuming SunChem can target the other uncaptured 30% at best. https://www.resourcepanel.org/file/380/download?token=YKREbKl7, https://www.globenewswire.com/en/news-release/2023/03/16/2628383/0/en/Palladium-Market-Size-Share-to-Surpass-USD-24-Billion-by-2030-Vantage-Market-Research.html#:~:text=WASHINGTON%2C%20March%2016%2C%202023%20(,the%20forecast%20period%202023%2D2030.
[vi] https://pubs.acs.org/doi/abs/10.1021/jacs.0c02371
[vii] Based on data from PhD Thesis Dissertation of Brendan Smith, CEO and Founder of SiTration. https://dspace.mit.edu/handle/1721.1/117935
[viii] Up to 10% of emissions come from the construction industry, 7% of which has to do with red diesel usage. HVO substitution could lead to a 90% reduction in GHG emissions (or ~0.4Gt of CO2 per year). https://www.maximrecruitment.com/news/post/hydrogenated-vegetable-oil-hvo-to-help-carbon-emissions-in-construction/; https://iea.blob.core.windows.net/assets/c3086240-732b-4f6a-89d7-db01be018f5e/GlobalEnergyReviewCO2Emissionsin2021.pdf.
[ix] Assuming manufacturing each ton of HVO emits 3 tons of carbon and the world demands ~60 billion liters of HVO annually. https://www.iea.org/data-and-statistics/charts/biodiesel-and-hvo-production-overview-for-key-global-markets-2019-2025
[x] Based on data from PhD Thesis Dissertation of Brendan Smith, CEO and Founder of SiTration. https://dspace.mit.edu/handle/1721.1/117935