Battery metals: why ROI is crucial even for zero-competition environments

If bread were growing on trees, investors in a food industry would hardly need to calculate ROI thoroughly. Not because the sector would be too lucrative to calculate the ratio of income and expenditure but because any feasibility improvement would be senselessly redundant in such a case.

Batteries don’t grow on trees as well, but synthesizing energy metals from minerals may seem so explicitly straightforward for potential investors that some enhancements to the process look worthless. However, if it were that simple, no innovative approaches to a production of battery metals would appear. But they do.

The so-called “battery metals” are on the hype nowadays. The topic is becoming so viral that economists, environmental activists, and even celebrities from politics and show-business started to express their concerns over the post-industrial green economy where batteries would seem playing the same role as hydrocarbon played in the outgoing industrial era.

Batteries and accumulators are made of various minerals among which a number of metals has a primary importance. Copper, cobalt, nickel, zinc, manganese, and lithium constitute the most valuable set of energy metals. The demand for those metals exceeded supply early before we entered the so-desired post-carbon economy.

The “cobalt crunch” was one of the burning topics on twitter last year. A lack of this metal in batteries can cause overheating — blasting smartphones and burning laptops were too creepy to be ignored by the mass attention in media. Despite multimillion investments in open-pit mines in Congo (where, by the way, about 50% of the global onshore deposit of cobalt locate) the general situation on the market leaves much to be desired. The thing is that such battery-dependable sectors as EVs, wind farms, and solar power plants are evolving so rapidly that a traditional mining industry cannot keep pace with the growing demand for energy minerals.

The undersupply of battery metals is so serious today that some of the end buyers of batteries start considering an alternative approach to the problem. Elon Musk has recently announced his plans to enter a mining sector with his own new division to address the energy-metal shortage that Tesla Motors has been facing. The long-awaited step, nevertheless, seems unexpectedly trivial for such extraordinary entrepreneur as Mr. Musk. But more on that later.

Every business person knows that when demand exceeds supply a chance to hit the jackpot appears. Therefore, not just another wave of investment covered the conventional onshore mining of energy minerals, but a new vision of where the minerals could be found emerged.

The deep-seabed mining of polymetallic nodules full of cobalt, nickel, copper and manganese is what such a new vision promises to the world market. Billions of tons of the untouched mineral resources available on the ocean floor can saturate the global battery industry for decades if not centuries. However, for common people this new sector looks as promising as questionable since a number of constraints are staying before it.

Even though military and scientific submarines discover and sail around the seas for many decades, industrial deepwater miners remain at the verge of sci-fi up to now. Experimental prototypes are mentioned from time to time in media, but the working depth of 3–6 km imposes many technical limits on launching a serial fleet of seabed miners.

Another issue relates to some uncertainty in the international regulation of any activity on the ocean floor since the richest mineral deepwater deposits such as Clarion Clipperton Zone (the. Pacific between Hawaii and Mexico) locate in international waters. However, the issue is almost settled once the International Seabed Authority addressed it from a fundamental U.N. level through finalizing the international seabed mining code this summer.

And the hottest controversial aspect of a marine mining industry belongs to an exaggerated alarmism of some environmental activists who recognize threats to the ocean ecosystems long before any practical deep-sea mining starts. Most likely they are guided by a “better safe than sorry” principle keeping in mind what harm people caused to the terrestrial biosphere with open-pit mining. For better or for worse, but this looks like counting chickens before they are hatched.

Whatever concerns might bother common people with regard to deep-sea mining, investors keep in sight the opportunities a new promising sector offers. They might accept the energy metals as the “new blood” of a future green economy but what they probably do not see clearly is how those potato-sized pieces of ore — polymetallic nodules turn into battery metals. Investors are always investors when they figure out return on investment (ROI) with regard to whether it comes to an existing industry or to what is just going to appear.

Although picking up nodules from the ocean floor is a true technological challenge, it is just half the battle. When hundreds of thousands of tons of marine ore appear onshore what should happen next from a commercial perspective? Of course, nodules can be left as a raw material for a further processing somewhere else — any semi-finished product can find its buyers. But will it be reasonable for a seabed mining company to stop halfway allowing some other market players to reap the benefits of being a “savior of a green economy” i.e. a supplier of pure battery metals?

One of the major commercial fundamentals states that a finished product is always more valuable than any raw material. When a seabed mining company can supply pure metals to battery manufacturers, something like a sectoral monopoly starts looming on the horizon. This is where investors can catch a hint and ask providers of seabed mining technologies whether their production cycle implies a deep processing of nodules and, if so, how feasible the process is in terms of ROI.

In anticipation of such a natural interest of investors, engineers of Krypton Ocean Group spent plenty of time in their hydro metallurgical laboratory figuring out the best possible method of nodules’ processing. Below you can find quite a specific piece of content where nuances of hydrometallurgical method of ore processing is described. Why potential investors in a seabed mining industry should read this chemistry-intensive explanations, you may ask. Because a common ground for those who generate value and the ones who invest in their process must take place. This is about ROI after all, and feasibility always matters.

So, when polymetallic nodules are delivered to a processing factory, the first thing to do is crushing them to a fine fraction. Then, leaching of metals with acidic solutions takes a few minutes at only 30–40 degrees temperature. The chemical recovery occurs thanks to using of sulphur dioxide which can be produced right at a site through burning sulphur. After leaching, the resultant suspension is to be filtered for a further deposition of Fe.

When ferric dioxide is deposited, it should be filtered and either utilized for a production of pigment dyestuffs or sold as an iron-containing raw material of a high purity.

Then, the leachate comes to further separation of Cu, Co, Ni, and Zn while Mn remains in a solution. It is possible to deposit Mn through adding ammonia to the solution. But in such a case, an output of ammonia sulphate as a by-product can increase several times over. And this is far from our main objective — we are not going to set up a production of fertilizers, right?

That’s why a different and more effective technology should be applied to the process. Crystallization of MnSO4 along with a subsequent baking seems more reasonable since ⅔ of the applied sulphur returns back to a production cycle. Besides, there is no need to either bring H2SO4 from outside or synthesize it through catalytic oxidation of SO4. Although Krypton won’t face problems with sulphur due to a close proximity of its deposit to the construction site of Krypton’s processing factory in Esmeraldas city (Ecuador) where both a seaport infrastructure and power-supply facilities are available, this issue might appear crucial for the other processors of nodules in terms of ROI. “A penny saved is a penny gained” as whether Warren Buffett or Scrooge McDuck used to saying.

Hence, specialists of Krypton Group have achieved a complete separation of components of polymetallic nodules while the efficiency of process met the best possible feasibility. As a result, the technology allows to reduce sulphur consumption from 283 kg to 106 kg per one ton of nodules. At the same time, an output of the by-product ammonium sulphate dropped down from 1052 kg to 302 kg per one ton of nodules in comparison with the other available processing technologies.

The resulting output of pure energy metals from polymetallic nodules is available in a table below:

For those who are familiar with the subject well the figures speak louder than words. If you combine them with an outstanding technology of seabed mineral mining with autonomous deepwater vehicles from Krypton Ocean Group, the ROI of getting metals from nodules seems much greater than anything a conventional onshore mining industry can offer.

Returning to the intention of Elon Musk to start mining of energy minerals for his battery division, quite an obvious ambiguities appear: wouldn’t it be more reasonable for him to enter a zero-competition environment of seabed mining having almost an indefinite growth potential than to elbow within a long-distributed field of the terrestrial mineral extraction where mighty transnational corporations rule the business?

Hence, as cliche as this sounds, calculating ROI will always stay worthwhile whatever activity it concerns.