IQT Explains: Challenges & Opportunities in Critical Mineral Supply Chain Security

Transcript

[Music] welcome to iqt explains a series on the iqt podcast where we explore technology Trends and their impact on National Security I'm your host Sarah Su and today we're going to talk about critical minerals critical minerals are a collection of minerals including so-called Rare Earth elements that the government has deemed vital to National Security they're used in a range of modern Technologies from cell phones to airplanes and they will be increasingly Central to the nation's transition to Greener energy demand for critical minerals is projected to grow dramatically yet the United States and many other nations face major vulnerabilities because China controls so much of the global supply chain China has literally cornered the market on not just on the mining of critical minerals but also on the refining process and China has shown a willingness to weaponize its Monopoly just ask Japan about China's two-month cutoff of rare Earth elements China has more recently moved to require both the monitoring and in some cases the licensing of its critical mineral exports so diversifying critical mineral Supply chains has become a Washington preoccupation we Face several challenges however not just access to minerals but also the willingness to mine and refine them both are messy and dangerous highly polluting getting approval for new minds is therefore often difficult finding more environmentally sound approaches to collecting and refining critical minerals will be crucial as the West seeks to meet demand and secure its National supply chain we have three guests that run companies that are working to help us do just that so let me introduce these CEOs Nicole Richards has been the CEO of alonia since the company's founding in 2019 prior to that she was director of growth strategy and m&a for DuPont's Water Solutions Division and was previously a global director at solve that focused on sustain ability Solutions in materials and chemicals Nick Myers is the CEO of Phoenix tailings his background is in physics and in the manufacturing sector he moved into finance and became involved in the Boston startup ecosystem where he worked at the VC fund techstars prior to co-founding Phoenix tailings and then we have Oliver gunaa who's the CEO and co-founder of impossible medals he's a Serial deep Tech entrepreneur with over 30 years of experience across a variety of fields having LED mobile business development at arm as well as founding NG codec so let's start by learning how each of these companies will help the United States address critical mineral supply chain security Nicole can you tell us a little bit about what alonia will do hi Sarah absolutely so alone exists to develop and deploy transformational biological solutions for the world's toughest waste challenges and when we started with this Vision one of the most challenging aspects was deciding where to focus on our attention so we developed this rubric to look at areas that had high inmet needs where biology had an existing proof point and was a logical solution set based on its properties and where there was a customer with a willingness to pay for the solutions and I'll come back to this last one later um but for us Rare Earth was an early and obvious fit for the reason Sarah that you just stated in terms of the demand the National Security interest and rare Earths being an energy critical element and biology has specificity and that's one of the qualities about it that make it a great um fit in some of these applications and it can be tailored for Solutions like selectivity and lanides and and that's really the heart of some of the challenges and why so much processing is done overseason in China in particular is that these lanthanides 15 of them um are very chemically similar and has to do with lots of reasons uh um chemically and why that is but um we know from previous work that uh that there are proteins that exist that can separate lanthanides from things like iron iron or transition metals and that's a really critical property when you think of the waist streams that these lanthanides come in which largely are things like e-waist or mind tailings waste um and so we've picked up from this work that have been done previously to make the transition from it can separate it from Iron but can it separate itself from each other like dysprosium and turum and neodium and at alonia we believe that is a failure of imagination and that we don't need to rely on China we don't need to open new minds that will take 15 plus years to get to the processing stage and further destroy our environment 1% of rare earth is upcycled today which is the lowest of all metals and so if we just do more recycling of things like hard drive waste or M tailings is that we can come a long way to supply the needs that we have in the US um and so that's a big part of what our mission is and there's you know lots of challenges within there but um it's a project we're very excited about the um progress that we've made and so just to simplify it for our listeners when you talk about lantham modes you're really talking about Rare Earth elements that you're able to separate out from Mind tailings Correct and so in mind tailings it's it's particularly interesting and unique and so when you think what are tailings explain tailings sure so um when when we mine uh ore from the ground there is up to call it 177% is of what we mind is actually the desired metal and everything else in there is waste and that's tailing and so in that tailing there's lots of other things in there um that uh have no value or some value and so rare earth and many of these tailings exist in very small Quant quantities um as an example it could be anywhere from like 1 to 0.1% of the tailings is rare earth and so you've got this highly desired metal in very low concentrations and so challenge one is how do you separate that economically and then challenge two is how do you separate those very chemically similar lanides from each other and you got a new approach to doing that correct great thank you so much so so let's go to Nick now Nick Phoenix tailings as the the name of your company suggests that you're also dealing with tailings the mine waste but you have a different approach to it and you're also dealing with the processing side can you tell us a little bit about the company's role first off thank you very much for having me I appreciate it it's an honor to be here Phoenix tailings was founded about six years ago or so I met my co-founder Dr Tomas alone at a Bible study of all things and so they're talking about the biggest problems in the world right one you just hit on it's actually how we get the raw materials that we need to be successful and we believe key core technology and radically Innovative technology is essential to achieving this but it's not the only thing so our whole mission is just rethink how we actually approach harvesting raw materials and creating the final products needed to empower this massive transition that the whole world is looking to do instead of discarding massive amounts of waste in the processing and digging up of raw materials why don't we take the waste we've already produced and turn to the final metal at metal alloys right at the end of the day the world needs metal to make the final products they don't usually use oxide for say magnet production which is primarily the application for rare Earths so uh and the majority of the waste actually comes from the processing of the oxides to the final metal metal alloy the real Gap in the world supply chain is not on the digging up of the original ores the famous quote by Robert freedy one of the founders of modern day mining is in fact fact rare Earths are neither rare nor are the Earths um so at Phoenix we focus on the processing of it key as the key port we built our radically Innovative technology around taking individual oxides and reducing them to the final metal and metal alloys avoiding Chinese supply chain constraints which is at 97% of the final metal and metal alloy itself and able to harvest the material directly from concentrates and we Harvest those concentrates themselves from tailings bringing together radically Innovative Technologies some we build ourselves others we work with Incredible people all all in many different companies around to be able to implement on site but at the end of the day we're all about production and making sure we can produce the final metals and metal alloys that the world needs to actually sustain its growth and so today Phoenix fing is one of the only final metal producers of rare Metals in the Western Hemisphere and we produce commercially today in Burlington Massachusetts fantastic and can you talk a little bit about what it is that you're ex well let's let's do that when we come to technology so Oliver transitioning to you we've heard from two companies that are busy making sure that they can tap existing resources to to uh attract new critical materials from them um you've got a different value proposition for your company impossible medals can you describe it to us yes um I'm super happy to be here and you know what we're doing is deep sea mining but without destroying the Marine habitat so we've built these autonomous underwater Vehicles these robots that go to the deep sea bed and they use computer vision and Ai and selectively pick up these rocks and and actually holding one of them here and these these rocks uh they're called nodules they're actually the planet's biggest source of critical minerals for batteries for nickel and Cobalt there's something like 10x more of this metal on the Deep seab bed than there is on land and you know why why this matters is because the size of the resource is is a very big factor but also is the grade because the economics of mining is driven a lot by the grade of the resource if you have a highgrade resource for instance 3.2% for nickel equivalent that means that you have a lot of margin and one of the things that China's good at is winning the low cost getting the supply and then they're locked in but we can access the resource on the seabed with the least environmental impact but also the least cost and today China kind of dominates domestic mining something like nickel they have about 70% of the mines typically they're in places like Indonesia IIA and for Cobalt they're in Africa but they're operated and owned by Chinese companies and so that's a strategic risk in the Deep seabed they do have five permits but the majority are still uh available for for other countries so that's basically what we do so Oliver can you can you building on that what is it about the technology that is different um and and challenging that allows you to take this approach with uh seed nodules yeah um invented in the 1960s and tested in the 1970s was this uh dredging technology with Riser pumps and that's what everyone else including the Chinese are proposing to use so it's this massive machine that's lowered on the seabed floor and it literally vacuums up and sends it up a tube we felt that new technology could really change the balance both environmentally and economically and so what we have invented is these autonomous underwater Vehicles auvs underwater robots that can go up to four miles underwater and they hover above the seabed and they have an array of cameras and they look for the nodules and they look for life that is on a few of them like corals and sponges and if we see that we avoid harvesting if we um don't detect the life we just use the camera to direct the robot arm to pick up so it's really designed to minimize the environmental impact the vehicle itself carries the payload up and down the water column there is no te they're battery powered they're reusable we swap the battery and by having a fleet of these we can actually do very many uh millions of tons of of material every single year and how automated is this and what's the role of AI it's 100% automated uh these these robots are you know think of them like a car but they go underwater so they electric vehicle they have a battery pack and the AI is used to uh to detect the nodules on the seabed floor so we can move the arm uh to go and pick them up but it's also used to detect uh the megap forner the corals the sponges and other forms of life that do exist and so we avoid it and all of that runs on an Nvidia GPU that's embedded in the system uh one of the challenges of subc is that you have very poor communication we cannot use radio waves so we have to create our own 3D positioning system a bit like GPS uh we also have to use acoustic modems to communicate but because it's low Laten it's high latency unreliable we basically allow them to work fully autonomy and when they can sync up they do fantastic and so the the key takeaway is that unlike this dredging that creates sort of you know massive disruption and plumes of sediment Etc you've got a really surgical tailored approach to identifying precisely what's what's necessary and what's going to be least environmentally disruptive as you search for these critical minerals yeah that's exactly right we we took all of the criticism that people had of this 1960s technology and really invented the system it minimizes the noise pollution the light pollution the sediment uh the big sediment um swarms that that and plumes that are generated it uh it preserves biodiversity um you know we've really gone to Great lims to minimize the environmental impact but it's also less expensive because we don't need a dedicated ship and it doesn't have any single point of failures so it's really using a 21st century approach versus a 1960s approach that everyone else is doing fantastic and so so Nick as we think about the the technologies that are critical to Phoenix tail feelings you know what was the process by which you discovered those or you decided that that these were great Technologies to bring to you know mining and and refining you know I wouldn't really phrase it that way if I wouldn't I'd uh phrase it a little bit differently we saw a problem in the world and we said let's bring together the best people on the planet to solve this problem right we have 33 patents and Trade Secrets around our process through various different ways where innovating daily we come up with new technologies daily to solve this problem but at the end of the day really it it doesn't matter like our our our key technology we started off with is radically different than what we have now and I'm sure the technology in the future will develop from there right it's really about solving the supply chain not developing cool technology that makes a is exciting for people it's about really solving this issue of supply chain all the way through right Dr thas V is our CTO and he's really leads this initiative with the entirety of the Phoenix tailings team from our mixed t molten salt electrolysis cell that allows us to to selectively reduce individual Rare Earth oxides at 40% less energy consumption uh with zero emissions and zero waste from the process oh by the way and it's the hits on Chinese economics all the way through so you're not paying a high end premium for the end product to things like our separation system leveraging uh SX circuits with the new novel chemistries that doesn't generate emissions but it also means things like you know traditional floculation tchs right that are used in Normal mining operations day in and day out just modifying it slightly so it doesn't produce waste all of those things coming together actually are what make an End production possible uh and it's amazing fa what people do but you've got some you've got some novel new approaches that have really distinguished your company's value proposition of course of course you have to but it's really about the production you have to hit economics not just make cool technology that's the key thing so for us we have novel metalization cell and novel processing which is really what's differentiated us allow us to go to market that much faster but at the end of the day fantastic keep an eye on economics and that's that's such a different um approach to a similar problem for Nicole's company so so alonia how did you guys come to the technology that really allows you to be an economically viable biologically driven technology solution yeah thanks Sarah so I mean we looked at um we look at it from a is it can we convince ourselves that it's theoretically possible and so we do a lot of work before we delve too far into the details on what would it take to make a costeffective solution and and so then we we look at that in the context of our development plan and disagre those risks and work on them and so part of there's there's two two key components to it one is can you get the biology right can you get the biology right in that you're identifying the the proteins that are needed to bind what is needed to be bound to separate those um elements that you wish to separate so is that theoretically possible and and that's what we've made um great strides in in looking at and then and then once you have that what do you do with it and what kind of system do you put that in from a deployment perspective and so um that's another one where um great strides have been made and we've been able to identify at the lab scale right now um that there is a process that we can incorporate our proteins into that allow for the um separation of the rare earth from these waste materials and the reusability of it because that's really key in making this economically viable um one pass for biology would you know would would put an end to this project because it would cost more than the metals are even worth but the ability to be able to reuse that process a number of times is is what really unlocks the potential of this being a viable solution and that's a discovery that you know we recently just made Nicole for for alonia what what is the what is the hurdle that you face now as you seek to prove out your technology and scale it yeah I think there's I I think there's two hurdles there's a a technical hurdle and then I think there's a longer term commercial hurdle and I'd like to touch on both if I can just briefly please and so the the technical hurdle is is really twofold it's one it's that um low concentration and um and the second part to that is the varying waist stream and and when we look to upcycle waste in a number of cases the variability of that waist stream is uh challenging and so you you know you're dealing with varying levels of metal and pH and different um Geo and biological components that make that up so finding biology that is robust enough to work in that environment at those low concentrations is um what we have to engineer into those proteins next um so that's the the biggest next hurdle um from the technology mment from the commercial development you know when when we look at the viability of um a startup producing technology for this particular application one of the questions we have is really the commitment of the mining partners and the US government um to commit to wanting a domestic environmentally friendly source and this one is tricky because unlike a lot of things that we're working on um there's already solution exists it's a terrible environmentally disastrous and unsafe solution to separate Rare Earth but it exists it exists in China and so while we know that the solutions we're working on or we believe are scalable it will take time um and and that can be a barrier to entry is do we have the patients to um to get these startup Technologies to the point where they're viable and and we know China announced this week they're at a 5% growth rate they're putting a sign out on their store front window saying we're open for business they have a potential to cut costs flood demand and put competitors around the business that's disastrous for a startup um and so we are carefully looking at um the Investments made by the government B by our mining Partners um to this endeavor um and how sustainable and committed they are because that's really what we believe it will take to put the supply chain in place that's needed to enable Solutions and access to tailings is that a challenge for you um we do not believe that that is a big hurdle because we have been um in conversations with several mining companies and they have all expressed interest in this area and so you know of course there's when you're working with major mining companies you know there's lots of conversations around IP and all of that but um access to the tailings is something that and and separation of rear Earth from their tailings not only has a monetary benefit for them but it's also environmentally favorable because the more metal you remove from these miningspeed for them and so we don't think that that's going to be a barrier Oliver can you talk a little bit about the hurdles that you see ahead for impossible metal from either a technological or perhaps more uh apposite uh a a a commercial or a geopolitical lens yeah I I mean I think we have a lot of technical work ahead although we're getting you know we hope to be picking up moduls in the deep ocean in in the next few months but I would you know I would say that's more internal lot of hard engineering but the biggest uh issue I think is really perception of deep sea mining it it it has a really negative perception I mean all mining has a negative perception deep sea mining has a really bad perception um you know a lot of people I think are beginning to realize that if we're going to get to Net Zero we actually have to have massive amounts of Mining and all of the companies on on this uh on on this podcast are really going to be critical because that's that's what this transition needs we're moving away from fossil fuels to primarily electrification electrification needs metals and rare Earths uh Etc but the perception of deep sea mining is driven by the 1960s technology the dredging technology which now some public companies are proposing to go mining in the next couple of years and so there's a big environmental Outreach to try and stop that and you know what we feel is that it doesn't make sense to ban a location especially a location that's 71% of the surface area of our planet what we should do is Ban the technologies that are inappropriate and enable the new technologies to innovate that can significantly reduce the environmental impact but getting that message out isn't easy because we're not a public company we're still a startup uh and you know and so that perception is probably the hardest thing that we have to try try to get people across that deep sea mining doesn't mean just dredging it can be done in our view a very responsible way and in fact a way that's maybe far more responsible than on land and it can be done potentially in our own Waters so the US itself has these resources within its territorial Waters and you know the uh Department of the Interior has authority to kind of Grant permits and and so I think given that so much of this metal is needed and so much of it is overseas we should at least start the process to investigate accessing it in our own Waters and getting that message out I think is our biggest challenge given our technology is different than the dredging but people don't know thanks so Nick over to you to talk about what you see as the biggest challenges for for Phoenix whether they're the continued Innovation on the technological IAL side or whether there are commercial or other kinds of hurdles that you face yeah absolutely so the the major challenges that we see really is speed at the end of the day people can make a lot of money producing rare earth metals or any other critical Metals right turum alone sells for over a million dollars a ton it's a very very very good metal to make right the challenge is with private Capital markets on their own the time may not really align with exactly what the US's initiatives mean right at the end of the day does everything right we will be successful we will be very radically uh powerful and make a lot of money for ourselves our shareholders and everyone around right but it may take longer than what the US is willing to stomach and that's where I think the the government can step in in a lot of ways to help alleviate that cost of capital that you see because of the Chinese influence like the Chinese price fluctuations that occur because the Chinese control the whole Market which causes a huge risk and a um adverse reactions from private investors right the US government come in guarantee loans support initiatives push things forward in a sustainable and effective way to help counteract that challenges that you see and that's where we see the best possible uh support given in in the long-term future but also one of the biggest challenges right I think uh with alonia impossible medals I and ourselves at Phoenix right we will see that challenge of growing as fast as we possibly can and we really need to do so at a much faster rate than I think the the world can really even handle at this point so that's primarily it so as we think about sort of the last question that I'm hoping each of you can help share with your answer with the viewers is is what would you have the government do more of and you've given us a preview I'm wondering Nick can you can are there any examples of where you think government has already done something important and useful in terms of helping accelerate innovation to solve supply chain security issues with critical minerals and what would you like them to do specifically more of yeah absolutely uh I think sbirs are really great and more initiatives like that really help push things forward can you explain to our viewers what an SB is of course sbir is a is a program that which you know they're a government grant that gives to small businesses doing research on new projects some of them larger scale some of them smaller scale it just depends and it's really helpful for early stage businesses to approach new technologies that they wouldn't otherwise pursue because it's more of an idea and asking a private investor to finance a highly risky new technology say on uh bacterial leeching of new material new metals or a rare earth metal production process that we had originally started or one of the new recent SBI that we received was on a carbon negative process to recover nickel copper Cobalt from nickel tailings right we would not pursue that without the government's support because it helps drisk this so I can tell my investors hey look the government's reducing the cost of capital here you can invest in this at a much steeper discount and it proves out to have the potential return in the future which a much lower risk it's very helpful beyond that there's new things like the ndia bill National Defense authorization act um there's a new bills that being put forward to allow for the military to purchase metal directly so it's not just hold into the Strategic stockpile groups and there's a number of tax incentives there really the main thing we have to do is control the price fluctuations the Chinese have if the Chinese set the prices and produce all the materials it's going to be very hard for any other player whether it's ourselves or any other Innovative technology to produce any product because we really are beholden to our competitors which is very very challenging to operating yeah and we've seen the willingness of China to undercut pricing in order to maintain its Monopoly that is that is a pretty standard piece of the Playbook so those are great great comments um Nicole what would you like to see government do more of so from the from the government perspective I think you know what the government has been doing really well is supporting Innovation through government grants and through a commitment to um further Investments I think we really need to look at this and take a long-term strategic view this is not something that we can invest in for two years and then walk away from these Technologies take time to develop and they take time to deploy and I also think that having incentives for the um for the consumers that are buying these strategic metals that are outside of the government is important to encourage them to look for alternative sources versus importing and that's where the do you tax the Imports and regulate that or do you incentivize the behaviors of the people that are using the metals and and maybe it's some combination of both so continue with the Investments that the government is making today take a long-term view with those commitments and then encouraging the users to look for domestic Supply sources versus Imports which is part of what the IRA has done with Battery Technology and EVS right so so right direction but do more and have a longer term view okay great and and to close us out Oliver would you share your perspective on on where government should be should be what they should be thinking what policymakers should be thinking about and what government should do yeah I mean first of all I would say I'm a big fan of the IRA the inflation reduction act uh I think what it's done to onshore and try and break our dependency on on China for batteries and and critical minerals is great I'd love to see more of that but I think it's a really encouraging uh I would rein en Force any non-dilutive funding whether it's from The Loan program office or others are very very helpful for early stage companies especially when we have to build firstof its kind infrastructure it's difficult to get funding from traditional sources government can really help uh two specific things that I personally would like to see for our business I'd like to see mapping of us waters for critical minerals um I know there is some work but I think it's 2030 I think we would like to see that sooner let's at least understand what exists in our own Waters uh especially as that can remove the need to to go to China or China controlled Africa or Indonesia uh and then a nice would be it would be nice to ratify the UN the UN convention on the law of the sea uh that's a 1982 law that has been ratified by 167 countries uh if you add up the population it's 93% of governments on the planet have ratified that we are really really the only major country that has not um and that means that we don't have any formal say in how the rules are made around mining in international waters we can't uh actually help create those rules uh American companies cannot receive permits uh and it's a big disadvantage and and so I would love to see Congress formally ratify that uh that that rule um so those those are the things I would like to see thanks and just to remind mind viewers you know you've been um talking about the possibility of deep sea mining in US Territorial Waters when you'd call for ratification of the law of the sea convention you know the the that affects a a very different part of the world's deep seabed but it is an a place of great power competition and as you noted China has the majority of the permits uh waiting uh action once the the go-ahead is given and we might note that you know Norway has recently announced its interest in um commencing seabed mining so we the the exigencies of National Security and the desire on part of many governments to find uh more secure access to critical minerals will likely keep driving uh policies at both the national and the international level but what's so exciting is to hear from you3 as being really Pioneers in this this new approach of of meeting a a longstanding need with more environmentally responsible Solutions because it was in many ways the environmental hazards associated with critical minerals Mining and and processing that led to the offshoring and ultimately to the Chinese current Monopoly you're doing your part at the national level to to essentially make critical minerals uh Mining and then uh processing uh in some cases safe for America if you will and uh and thank you for your leadership in that vein and thank you for for joining us and thanks to everyone who tuned in to to listen to us today this episode of iqt explains and feel free to subscribe to the overall podcast or learn more on iq's website at ww w. iq.org thanks again for everyone for for being with us and particularly to our our [Music] innovators