New funding gates start to open for mining tech

‘We can see from current activity new investors are being attracted into the sector’

About US$1 billion of finance and M&A deals in the global mining technology arena in the first half of 2023 is off the pace of last year, in line with broader tech-sector idling. However, leading advisory and investment firms are cheered by the types of investors becoming more active in the space and by the clearer picture emerging of near-term mining and metals spend on clean and other tech.

The latter came into sharper relief at the recent World Mining Congress in Australia, where BHP boss Mike Henry put a US$100 billion-a-year price tag on industry-wide decarbonisation needed to meet broadly publicised 2030 emission-reduction targets.

While a quick tally-up of real spending commitments has the industry falling well short on both investment levels and cutting reliance on fossil fuels, the weight of the dilemma and certainly of the pledges made to major investors and customers is expected to increase urgency around shifts seen to be able to deliver significant efficiency gains – much of it with available technologies.

“There is the realisation here that just to get a 30% carbon reduction by 2030 is incredibly hard and they are going to have to spend twice as much whilst achieving half what they originally thought,” says mine electrification and technology principal with engineering firm, Worley, Paul Lucey, who spoke at the World Mining Congress.

“Now at the moment mining is spending about a third of what it needs to spend and some of that money is being spent on unicorns and fairies.

“I would suggest a number of those projects will evaporate over the next couple of years and be replaced by more realistic projects.

“Further to this, if your plan was to wait until someone else solves the problem, you aren’t going to achieve your target.”

Notwithstanding the industry’s need to invest more in hard and soft technologies to move the dial on waste and emissions, while at least balancing it on output and costs, there is a renewed focus on discovery to meet forecast global energy transition demand for more metals, and on smaller-footprint but high-rate extraction.

All of which means we are seeing a meaningful shift in the attitude of so-called impact investors in North America, and also Europe, towards critical minerals and the methods employed to find and get them to markets.

This is being manifested in various ways, but the volume and weight of mining-tech financing deals is part of it. The names bobbing up on investor registers is probably more significant. Names such as Breakthrough Energy Ventures, BlackRock, BMWi Ventures, Microsoft’s Climate Innovation Fund, JP Morgan, Volvo, BHP and Anglo American.

Graeme Stanway, founder and CEO of Australian research group, State of Play, said on a webinar this week miners and mineral explorers continued to grapple with a generally negative social view of the industry that was increasingly impacting the investment decisions of large global funds and institutions. However, companies with credible decarbonisation roadmaps and critical mineral exploration or production plans were attracting the attention of socially (and environmental/governance) responsible investors.

A new State of Play survey of hundreds of mining-sector executives in more than 40 countries indicated green venture funds were seen as a potential new funding avenue for mineral explorers and developers, while the much-lauded State of Play initiative, the Electric Mine Consortium, is also on the radar of some heavyweight global funds.

“There’s nearly $1 trillion going into venture funding globally on the technology side and they have a lot in common with exploration,” Stanway says.

“We’ve been approached by several major financial organisations and had discussions with them as well. They want to see more accreditation so they can invest more aggressively in the industry, but they don’t see the accreditation being quite there.

“Accredited green exploration venture funds … could be very popular. It could be one way of really circumventing the [negative mining] perception issue.”

In Australia, the US and Canada, funds are targeting more of the impact investment dollar in new raisings, believing mining’s critical role in the global energy transition is getting more traction.

Marshall Allen, managing partner at Viburnum Funds, highlights the oft-cited copper case: 1.4 billion tonnes of new red metal needed to get to net zero by 2050, versus 700 million tonnes produced by humans to date.

“With the sheer volume of metal required for energy transition our view is that the funding is urgently needed in extraction productivity-enhancing technology – get it out faster or more economically – and better and scalable energy storage technology. Lithium isn’t the end game,” Allen says.

Again, the energy-transition investment dollar is already being seen to a limited extent in the punts being made on mining tech companies such as Jetti Resources, GeologicAI, KoBold Metals, Fleet Space Technologies, First Mode and others.

But the sense is that this is potentially the tip of the iceberg.

“We can see from current investment activity that new investors are being attracted into the sector,” says Ivan Gustavino, managing director of leading mining-tech advisory firm, Atrico.

“Our view is that this will continue for the next few years as the new mining tech players gain more traction in the mining companies and prove up their solutions.”

M&A slowdown

California-based “machine prospector” KoBold banked a further US$195 million from a series C raise in June, taking total equity funding in the past four years above $400 million.

KoBold was only behind Australia’s Imdex, which acquired Norway’s Devico for US$242 million earlier this year, on the list of 2023 first-half mining tech transactions.

Equity raises dominated the table (below) of more than 30 deals after the relatively high number of acquisitions announced in the past two years. Last year’s total deal value topped US$3.3 billion.

Other significant equity fundraising transactions involved UK automation software company Oxbotica ($140m), US green steel firm Boston Metals ($120m), Canadian lithium extraction tech company Summit Nanotech ($50m), Swiss robotics firm ANYbotics ($50m), and Australian exploration tech firm Fleet Space Technologies ($33m).

ANYbotics, working with Brazil mining major Vale to deploy its four-legged, AI-driven inspection robots, and across other industries, and Fleet Space, are just two examples of tech firms working in the mining space that are tapping deep tech investors.

Atrico’s Gustavino says despite recent M&A reducing the number of independent mining tech companies, particularly software firms, and macroeconomic headwinds stifling deals, “we can see the level of acquisition interest in high-quality companies with scale, growth and profitability remains strong”.

“There is still appetite for high-quality companies so we expect significant transactions to continue to happen in the second half of 2023,” he said.

*Get our June Mining Tech Report for a full rundown of latest mining-tech M&A and financing.

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