US government-backed start-up on course to become mining unicorn

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A US government-backed mining start-up has raised $200mn in fresh equity, putting it on course to become one of the sector’s few unicorns with a valuation of more than $1bn.

The fundraising for TechMet, a Dublin-based private investment vehicle for nickel, lithium and other metals will help the west combat China’s dominance of critical minerals supplies for clean energy technologies.

The fundraising comes at a challenging time for early-stage mining companies as higher interest rates have squeezed available capital for developing expensive projects.

The investment activities of TechMet are also intended to address feared shortages of minerals later this decade and beyond as electric cars and wind farms are rolled out.

Demand for critical minerals is expected to grow by three and a half times by 2030, which would keep the world on track to reach net zero targets, according to the International Energy Agency.

However, mining projects can take many years, even decades, to develop, which could lead to shortages.

Brian Menell, chair of TechMet, said funds would be used to accelerate development of the 10 projects in its portfolio that would help reduce the west’s dependence on China for sourcing minerals including graphite, vanadium and rare earths.

“It’s a massive problem for the world as where is going to come the tens and tens of billions of dollars that is needed to be invested yesterday for us not to hit a structural deficit of lithium, nickel and cobalt,” he said.

He added that his company aims “to balance China’s overwhelming dominance across all of these critical minerals supply chains”.

The Biden administration’s $369bn Inflation Reduction Act and Bipartisan Infrastructure Law have offered up juicy incentives for companies to set up minerals processing facilities in the US but TechMet helps the country bolster critical raw material supplies from mines globally.

US-based S2G Ventures, a venture capital arm of the Walton family who founded Walmart, was one of the new shareholders to join TechMet’s latest fundraising round.

The company’s existing roster includes the US International Development Finance Corporation (DFC), the US government development bank, Swiss-based commodity trader Mercuria and London-based asset manager Lansdowne Partners, all of which contributed to the latest round.

Menell said the equity fundraising was oversubscribed and the company intends to embark on another round by the close of the year, with the aim of raising several hundreds of millions of dollars more.

In the past 12 months, the group has invested more than $180mn into critical minerals companies.

US DFC took a $25mn stake in TechMet three years after the Irish firm was founded in 2017 as concerns flared up in Washington about China’s stranglehold on critical minerals.

Last year the US government agency invested a further $30mn and plans to put in $80mn over the course of this year.

TechMet holds stakes in Brazilian Nickel, a nickel and cobalt project in north-eastern Brazil, Cornish Lithium, a lithium project developer focused on the UK’s south-west region, and EnergySource Minerals, a US lithium technology developer backed by oilfield services giant Schlumberger.

China controls 63 per cent of global lithium refining, 70 per cent of nickel processing and 65 per cent of graphite mining, according to Benchmark Mineral Intelligence, an information provider.