WORKWEEK

Earlier this week, we spent time discussing metals and mining. In it, we focused on dispelling the notion that the amount of materials required to produce technologies like solar panels or wind turbines puts their net environmental impact on par with fossil fuel-fired energy sources. For more on that, I enjoyed this Twitter thread.

We also started that piece of content by saying that metal and material inputs are a real constraint on the clean energy transition. To this end, we introduced a few companies whose value proposition lies in alleviating those constraints.

Right on queue, funding rounds this week point to more momentum in metals:

• EnergyX raised $450M for its end-to-end lithium production business
• Ascend Elements raised $300M in equity and debt for its lithium-ion battery recycling company
• Jetti Resources raised $100M for its copper extraction technology

Both EnergyX and Ascend Elements fit into the set of companies, including others like Redwood Materials, that focuses on building a domestic supply chain for battery materials.

EnergyX’s slogan, “brine to battery,” encapsulates their aim to create a fully vertically integrated business. Said differently, they want to not only process brine to extract lithium. They also want to be able to handle all subsequent steps needed to prepare lithium for use in a battery in house.

Jetti Resources focuses on upstream copper production. They’ve developed a novel technology to improve the ability to separate copper from low-grade ores (relatively little copper compared to surrounding ore). Their methods will ideally reduce the environmental impact inherent to traditional separation methods

Ascend Elements, like Redwood Materials, focuses on recycling lithium-ion batteries. Some estimates suggest that for metals like lithium, upwards of 5% of supply could come from recycling by 2030. While 5% sounds small, for a global commodity as crucial as lithium, any company that can capture even a sliver of that market share stands to reap significant economic benefits.

Still, recycling at scale requires considerable capital. Ascend will use fresh funding from this round of financing and recent DOE grants to build a factory in Kentucky, on which it broke ground recently.

Why am I reading this now?

What’s the throughline for all these eye-raising numbers and announcements?

For one, companies and countries alike recognize that the clean energy transition is well underway and gaining momentum, regardless of what naysayers will tell you. EV demand is surging. Renewable energies dominate global capacity additions. There’s a long way to go, but it’s happening.

This spells opportunity for producers of the material inputs needed for those technologies. And it also spells risk if their supply chains are heavily concentrated in places like China.

To that end, the Department of Energy has been doling out funding en masse for domestic metal and material producers and battery companies. That’s a positive signal for investors, who are piling in on top of the grant funding. As an aside, this also speaks to the power of the Inflation Reduction Act; lest we forget, part of public sector spending’s value is to catalyze private sector funding.

Nor is the U.S. the only place where companies and investors are focused on diversifying their material supply chains. Northvolt, a European battery production company, received one of the largest rounds of venture funding of any company this year ($1.1B).

The net-net

The companies we covered today represent every step of the supply chain for crucial metals, from getting them out of the ground to recovering them from batteries at the end of their useful life.

The entire chain should continue to be an area of intense focus for founders, investors, and policymakers alike. Metal supplies and supply chains globally will continue to oscillate through periods of relative to significant constraint. And critics of climate technologies will keep harping on the environmental impact of the extraction needed to produce them (which, to be sure, is non-negligible).

While there are already some big, flush fish in fields like battery recycling, the space at the intersection of metals and mining and the energy and climate transition doesn’t strike me as overly crowded. Government spending in places like the U.S. has just kicked off serious momentum for anyone who wants to cut their teeth (or drill bits) in this area. We’ll keep tabs on it all for you.