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The Net Zero Renaissance for Mining Startups

September 5, 2023
x min read

With a global push towards net zero emissions and decarbonization, it may seem that mining startups would be slowly fading from interest.

And yet, the exact opposite is turning out to be true.

The big picture:

  • While net zero and the energy transition are a global focus, mining is actually a critically important element
  • The US Department of Energy recently named copper as a critical raw material due to how much it plays a role in building the infrastructure of the energy transition
  • Lithium is also a critically important metal, as it fundamentally fuels the transition to electric vehicles
  • There is a renewed interest and optimism around mining startups, especially from venture capitalists who traditionally have not been a huge participant in mining

Who is making moves:

  • TechMet, an investment vehicle for lithium and rare metals, recently raised $200 million in a funding round
  • KoBold Metals, a machine learning platform that identifies rare metals deposits more precisely, raised $195 million led by Breakthrough Energy Ventures
  • Koloma, a Denver based startup who mines natural hydrogen, recently came out of stealth with a $91 million round
  • Aether, a startup using robotics and machine learning to mine lithium more efficiently, recently raised a $49 million Series A round led by Natural Capital
  • The United States Department Of Energy recently put $10 million USD into funding a variety of lithium extraction projects focused on extracting lithium from geothermal brine. Stanford and other universities are partnering up with them on the projects
  • For publicly listed lithium companies, last year was record breaking, with more than $4.6 billion in fresh funding being deployed

Why it matters:

  • Net zero relies on numerous precious metals and critical minerals, so new capital and venture funding for mining focused startups is actually a foundational piece of the energy transition
  • Many areas of mining are being reimagined through artificial intelligence and clean technology, which bodes well for crossover investment from funds and capital allocators who have typically avoided mining altogether
  • For the United States in particular, decreasing its dependence on foreign countries for battery metals, rare earths and minerals is a high priority, which will require continued government funding into new startups and projects

Yes, but:

  • There is still a significant shortfall between supply and demand in lithium, copper and many other metals and minerals which is a large problem to solve
  • Currently, even with the recent substantial increase in venture funding for mining startups, there needs to be significantly more capital to get closer to net zero
  • Going from initial discovery to a mine in full production is an extremely lengthy process that spans decades, which is the largest limiting factor on achieving a balance between supply and demand for the energy transition
  • While artificial intelligence and other technological breakthroughs for mining are an exciting premise, many of them have yet to be validated or scaled up

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