In March, U.S. regulators gave The Metals Company (TMC +0.78%) the green light by confirming that its deep-sea mining consolidated application was complete, removing a major regulatory overhang. This is a huge step that brings TMC closer to obtaining a final permit to mine the deep ocean floor.
The seabed is rich in critical minerals used in batteries for electric vehicles, smartphones, and laptops, as well as metals used in electrical and renewable energy infrastructure. This application is seen as a key step toward helping the United States secure domestic sources of these crucial resources to help reduce dependence on Chinese sources. Here’s what TMC investors need to know, and what’s next for the company.
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NOAA approval gives TMC a boost for its deep-sea mining initiatives
In January, the National Oceanic and Atmospheric Administration (NOAA) finalized a rule allowing companies to apply for an exploration license and a commercial recovery permit simultaneously. This helps shorten the time to getting to mining these key minerals, and could help fast-track TMC’s efforts to mine and produce these critical minerals.
Last month, NOAA determined that TMC’s consolidated application was in substantial compliance with the Deep Seabed Hard Mineral Resources Act (DSHMRA). The application covers 65,000 square kilometers in the Clarion Clipperton Zone, a substantial increase from its original application that covered 25,000 square kilometers.
This matters because the deep ocean floor contains 619 million tonnes of polymetallic nodules. These are small rocks that sit on the seafloor and are rich in key minerals such as nickel, cobalt, copper, and manganese. By mining the ocean floor, the U.S. aims to reduce dependence on China, which currently accounts for about 70% of rare-earth extraction and 90% of rare-earth processing, according to research from The Motley Fool.
Here’s what is next for TMC
The approved consolidated application puts TMC on the fast track toward deep-sea mining, but there are still some steps to overcome first. The next phase involves a comprehensive Environmental Impact Statement (EIS). NOAA will use this to evaluate potential environmental risks and determine whether mining can be conducted without causing significant harm to the deep-sea ecosystem.
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The move helps remove some regulatory overhang and gives TMC a stake in the resource-rich seabed, but now the company must prove it can successfully mine and process these minerals profitably. Right now, TMC is still risky as it is pre-operations and pre-revenue. Last year, it posted a nearly $320 million loss as it spent heavily on its regulatory applications and other administrative costs.
Looking further ahead, TMC hopes to secure a final permit by 2027, with plans to initially process minerals through existing partners while it develops a massive, dedicated refining hub in Brownsville, Texas. The company has around $118 million in total cash and recently filed a shelf registration to potentially sell more stock to raise capital, which could dilute existing shareholders.
TMC is on pace to become the first company to mine the seabed on a commercial scale. That said, it remains a very high-risk stock at this stage and is best left to aggressive investors looking to capitalize on the growth of the domestic supply of critical minerals.
