Startup Series: Impossible Metals
Today's guest is Oliver Gunasekara, co-founder and CEO at Impossible Metals.
If we're to electrify everything, we need an order of magnitude more batteries and wiring. All of this requires metals including nickel, cobalt, lithium, manganese, and copper. More metals mean… you guessed it, more mining. Today's land-based mining practices are fraught with externalities that vary by material, but often include deforestation and land degradation, incredible amounts of water use, pollution via mine tailings, giant diesel trucks, and in some cases even child labor.
And what's more, the supply chains for many of these resources often flow to China, which has made massive investments in securing access for China-based battery companies. And yet, in certain expanses of our deep ocean, there are seabeds full of golf ball-sized nodules of metal like nickel and cobalt that have naturally formed over millennia.
Impossible Metals is helping us realize an electrified future by developing underwater autonomous robots that mine metals for EV batteries in the deep sea. The company is developing an audacious moonshot-like technology to sustainably harvest trillions of dollars of undersea metals and disrupt the EV battery supply chain in the process. Buckle up, this discussion is rich and complex.
Get connected:
Cody Simms
Oliver Gunasekara / LinkedIn
Impossible Metals / LinkedIn
MCJ Podcast / Collective
*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on January 10, 2023.
In this episode, we cover:
The state of mining today
An overview of key battery metals, including nickel cobalt manganese (NCM), cobalt, manganese, and lithium
Shortfalls in fulfilling the supply chain
Oliver's journey in startups and how he transitioned to climate tech
An overview of deep sea minerals and their significance
The process for mining materials including regulations
Where we are today in terms of commercial mining of deep-sea minerals
Scientific exploration required to do the work
A description of Impossible Metals' autonomous underwater vehicles (AUVs)
How robotics help the AUV search for metals while minimizing the impact on sea life
Where the company is today and its goals for reducing the need for new mines
Costs associated with Impossible Metals' solution compared to dredging and new mines
Impacts on the supply chain for batteries
Role of the Inflation Reduction Act in funding manufacturing and production
Final steps for refining and manufacturing materials into batteries
How Oliver approaches company formulation with the mission of doing good
Where the company is today and why the work is important
-
Jason Jacobs:
Hello everyone, this is Jason Jacobs.
Cody Simms:
And I'm Cody Simms.
Jason Jacobs:
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms:
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs:
We appreciate you tuning in, sharing this episode. And if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms:
Today's guest is Oliver Gunasekara, co-founder and CEO at Impossible Metals. Impossible Metals is helping us realize an electrified future by developing underwater autonomous robots that mine metals for EV batteries in the deep sea. If we're to electrify everything, it means we need an order of magnitude more batteries and wiring. All of this requires metals including nickel, cobalt, lithium, manganese, and copper, and more metals means more mining. Today's land-based mining practices are fraught with externalities that vary by metal, but often include deforestation and land degradation, incredible amounts of water use, pollution via mine tailings, giant diesel trucks, and in some cases even child labor.
And what's more, the supply chains for many of these resources often flow to China, which has made massive investments in securing access to these materials for China-based battery companies. And yet, in certain expanses of our deep ocean, there are seabeds full of golf ball sized nuggets of metal like nickel and cobalt called nodules that have naturally formed over millennia. Impossible Metals is developing an audacious moonshot-like technology to sustainably harvest trillions of dollars of undersea metals and disrupt the EV battery supply chain in the process. Buckle up, this discussion is rich and complex. Oliver, welcome to the show.
Oliver Gunasekara:
Thanks. I'm really excited to be here.
Cody Simms:
Well, Oliver, you are working in the next frontier, the new frontier, whatever you want to call it. You are mining, or not mining I guess, you're collecting precious metals from essentially completely undiscovered territory, the bottom of the ocean. And I guess the first question I have to ask is, why. So what's the state of mining today on land that is causing us to need to go explore new terrain?
Oliver Gunasekara:
Yeah. I mean, it's really driven by the need to move away from fossil fuels, which is obviously a great awareness for the audience. But the reality is that as we move away from fossil fuels, we need a lot more electrification. That means batteries, that means copper and wiring, et cetera. So there are estimates out there, but it's something like 50X more metal mining to support the global 2050 net neutrality targets, so that's the big trend. Basically, we're replacing oil and gas and coal with battery metals. And the good news is that they're infinitely recyclable. But we do need to get them, and they live on our planet, and that involves mining and refining.
Cody Simms:
And so when we talk about battery metals, the ones I hear mentioned the most are nickel and cobalt. There's obviously lithium, and then I assume you've got things like copper and magnesium that are just sort of... Copper is just a mainstay of electrification. Magnesium also part of the battery chemistry mix. Maybe touch on each of the key metals, what the state of mining looks like today, as well as the state of supply. So start with nickel I guess since I think it's the most abundant.
Oliver Gunasekara:
Yeah. I mean, obviously different chemistries used in different manufacturing of batteries have different mixtures. So the dominant chemistry today is called NCM, nickel cobalt manganese, and it has different ratios, but typically nickel is the highest. And most of the world's nickel actually comes from Indonesia right now. And it's just below rainforest. So to get at that nickel, we have to deforest a large amount of area. Typically, that's done with diesel trucks. Then we dig up the ore. The ore grade is not that high. It might be below 1%, and so we then have to crush the ore, roast the ore, pressurize it, leach it with sulfuric acid to get the nickel out of the ore. And that's a process that's called HPAL, high pressure acid leaching. It's not very good for the environment, and that's typically how we get nickel. So nickel comes from many locations, but Indonesia is the biggest. Russia is a big source. Obviously, with the Ukraine war, that's now off, but it was up to 20% of the world's nickel was coming from Russia prior to Ukraine. So that's the deal with nickel.
Cody Simms:
So if I understand, then if any auto manufacturer that is building a battery or buying a battery that has a nickel cobalt, manganese chemistry is actually sourcing a decent chunk of what makes their vehicles go through deforestation in the Indonesian rainforest. Is that a correct conclusion to draw?
Oliver Gunasekara:
It is. I ,mean there are other sources of nickel, it's not ore, but the biggest source right now in 2023 is from Indonesia. There are places in Africa, New Caradonna, Australia. So it doesn't all come from a rainforest, but today, right now, Indonesia is the biggest source.
Cody Simms:
Got it. And then I think you're about to go into cobalt.
Oliver Gunasekara:
So cobalt is a more specialized metal. It's not used as much quantities, but it's really good at mitigating heat and giving long life to EV batteries, and so that's why it's used. And it's also used in other applications like nuclear power plants as well. But the biggest source of cobalt is the Democratic Republic of Congo in Africa. About 70% of the world's cobalt comes from that one location. And again, there are challenges with that because there have been artisanal minds that use children to actually mine this. And so if you look at all of the ES&G, there are issues all along the mining and refining supply chain that most people don't really think about. One other thing I would just mentioned, there is the plan, and I think in 50 years time we can get there, where we can recycle 100% of this material. And so we can take an old EV use pack and get the nickel and cobalt back out of it, but given the demand that's happening right now, it's going to be many decades before we don't need any new mines.
Cody Simms:
And I know there's been a big push, for example, with the Inflation Reduction Act for batteries that are manufactured in the US. I don't know though if that applies to where the metals themselves are sourced. Do you have a sense of kind of-
Oliver Gunasekara:
There's kind of two provisions. It's where is the metal sourced from, and then where is it processed, and then there are additional sources for where the battery is actually built and assembled. And so if you can do all of that domestically, you'll get the most credit. If you can do it in a free trade associated country, you get also high credits.
Cody Simms:
Got it. Helpful. We'll come back to that sort of domestic onshoring in a minute. Let's continue down the chemistry discussions or the metals discussions. So anything worth sharing about copper, manganese, lithium. And just for my own complete ignorance, is manganese and magnesium, are they the same thing, or is that a completely different metal or element?
Oliver Gunasekara:
They are different elements.
Cody Simms:
So manganese is the battery element.
Oliver Gunasekara:
Manganese, yes.
Cody Simms:
Okay, got it. Thank you.
Oliver Gunasekara:
Yes. Yes, it is. And so copper is available in quite a lot of different locations, but it's a really important metal for electrification and for moving beyond fossil fuels. Because all of the wiring, if you think of an EV charging network, there's a huge amount of copper in there. And so even things like wind farms still need copper to move the power, so copper becomes a very important vessel. Again, there are maps, there are many locations more in fact for copper, but the demand is also quite high. Manganese, it's a kind of a future metal. It's less critical, but still an important metal. And then lithium is really important. It's the actual metal that moves between the anode and the cathode in a charge and discharge cycle. A lot of lithium actually comes from Australia and South America, but there are issues around use of water.
So the typical way that lithium is extracted is that they have evaporation ponds where they take these areas in the desert and they basically mix in a bunch of water with the ore and then leave it out for a year or so to evaporate, and then what's left is high concentrate lithium, but that puts a lot of pressure on the water resource in those locations. So all through the metal supply chain, there are real challenges. And then finally, rare earths. Rare earths are used not so much in the battery, but in the motor in other areas, and these are also elements that we desperately need if we want to electrify everything.
Cody Simms:
And for each of these metals, obviously you've articulated a set of circumstances that are fraught with challenges around accessing them. Even those challenges alone, I believe we don't even have enough supply anyway even with those challenges for many of these metals to fulfill the supply chains that are anticipated over the next few decades. Do you have a sense of what the shortfalls look like in each of those categories, assuming not that the world should just do what it takes to access those metals, but in many cases it feels like that may happen in the near term in many of these categories.
Oliver Gunasekara:
I mean, people like the World Bank and the International Energy, the IEA, they put out a lot of reports talking about the deficit, and I also saw Benchmark Mineral Intelligence, they are [inaudible 00:10:40] that writes a lot about the battery supply chain, and they said something like we need something like 50 new mines between now and 2050 to meet the demand. It's complex because it really comes down to what mix of what chemistry, what happens to EV demand. I think in the US, we're about 5% of new sales are EVs, but in Norway I think it's like 75%. So all of these factor into demand, but fundamentally, everyone is saying that around 2030 we're going to have a real shortfall of these devices. And that's pushing some to look at alternative chemistries that are not as ideal because they have less energy density, and that means less range, which, again, I think will affect adoption of EVs.
Cody Simms:
Is there a battery chemistry mix that if the world wasn't metal supply chain constrained is the sort of the obvious mix that would be used as the default chemistry mix?
Oliver Gunasekara:
Definitely, if you say that energy density is one of the most important characteristics because that basically means range. It's like for a given amount of weight, how much energy do you get, so how many miles? Then NMC wins that today, and that's why it is the dominant chemistry. The vast majority of EVs on the roads today have an NMC chemistry, but supply and cost and ESG and recycleability, these are all factors that influence people to make decisions. And definitely the iron chemistries, LFP is gaining share, which doesn't use any nickel and cobalt, but it has substantially less range.
Cody Simms:
That's lithium iron phosphate. Is that right?
Oliver Gunasekara:
Correct. Yeah, that's known as LFP.
Cody Simms:
And that's getting adoption because, A, the metals are less scarce and iron has a significant mining tailing footprint, I believe, but presumably less environmentally damaging than some of the NMC metals.
Oliver Gunasekara:
It's far more plentiful, so you find it in many, many [inaudible 00:12:42]. It's also cost. It's much lower cost, so it's really availability and cost that is driving these discussions. Interestingly though, it's not great for recycling. LFP cell, so LFP is the chemistry on the cathode, really doesn't have any recycle value today because the iron is so cheap, it's not worth anything, and the lithium is too complex. It's not cost effective today to get the lithium out. Whereas nickel and cobalt, almost 50% of the supply is coming from recycled material already because it's been used in consumer electronics for a long time. So an NMC cell is highly recyclable. And if you factor in the recycled value of the cell, it may actually be cheaper. It's just nobody does.
Cody Simms:
All right, that's super helpful background and context on the problem and the space. Now, I want to understand what got you into it. So as I look at your background, you don't have a lifetime of experience in mining, for example. You worked in mobile semiconductor space for many years. So maybe talk us through your path and how you ultimately decided to land on this general problem space, and then we're going to talk about the solution that you're now pursuing with Impossible Metals.
Oliver Gunasekara:
Yeah. So I grew up as a electrical engineer. I wasn't particularly good at it, but I was lucky that I found an early job at a company called ARM. It was a startup, it was about 60 people when I joined it end of 1994, and I quite quickly kind of migrated to a kind of a business development to a applications engineer role. And this was an amazing company. I had this amazing processor that had great technology, and we found this application in mobile phones that really loved what we had. And so I was able to basically run the mobile marketing team for about 10 years at ARM, allowing ARM to go public. And ultimately, ARM was actually acquired by SoftBank for $34 billion. And that was a great experience. When you're in a startup that becomes so successful so quickly, it provides so many opportunities for everyone that's there.
Even though I really joined right at the start of my career, I got to do many, many different things that were a lot of fun. But I also then after ARM became quite large. I kind of liked the idea of going back to a startup. And so I ultimately worked for a few startups in kind of go to market. And then in 2012, I actually founded a startup in the video compression space, and that went on to win business with Amazon Twitch, and then we had a decent exit to a semiconductor partner. And now, I think the technology is being used in AWS. So my starting story of Impossible Metals really comes about in 2019 after selling my company and thinking, "What am I going to do?" Initially, I was going to go traveling. I started that, and then the pandemic happened. And so like everybody, I'm sheltering at home, and I'm getting increasingly concerned about the climate crisis.
And we had this thing called Orange Day here in the Bay Area. Many of your listeners are probably familiar with it. We had really bad wildfires. The sky literally went orange. And that was the day when I said, "Look, if I do another company, start another company, it's got to be in the climate tech space." And so I continued researching and really came to the conclusion that electrification is essential to move away from fossil fuels, and batteries are essential for electrification, and then batteries have all the issues we just talked about. And somehow, I discovered that on the seabed where these little rocks that just had all the metals that we wanted, but the technology that others were pursuing was really dredging. It was really 50 year old, 1970s technology. And so I said, "Look, surely we could do better, we could use robotics," and that was really the idea for Impossible Metals.
Cody Simms:
Well, first of all, I can't tell you how many people have said that Orange Day in San Francisco was a turning point day for them. I feel like if we're going to look back over a decade or so time horizon and there are going to be multiple events that were hugely catalytic, it feels like one was the published of the 2017 IPCC report as one that a lot of people cite as why they jumped into Climate. Orange Day and San Francisco is another. Hopefully, the next wave of them aren't horribly catastrophic, but there will be other catalyzing events, and it's interesting that that is ultimately what triggers people to want to jump into this space. So you sort of talked about how you discovered there were these... all this valuable metal sitting on the ocean floor. Help us picture that. What does that look like? Are we talking literally rocks and pebbles sitting on the ocean floor? Are we talking large boulders that need to be scraped and clawed and drilled into? What does the physical ocean floor look like and how did these metals get there in the first place?
Oliver Gunasekara:
Yeah. So when you talk about deep sea minerals, they are actually three types, and we are only targeting one. We're charging what's called the polymetallic nodule. So poly, four metals, so it's four metals in one. And it forms like golf balls. So literally, think of golf balls lying on the seabed. They're not attached, just lie on the seabed. And they are very rich in nickel, cobalt, copper, and manganese. And how they form, they basically what happens is that there are underwater volcanoes. These volcanoes release the trace metals that we talked about and put them into solution. And now, around a kernel, like a piece of clay or a piece of shell, the metals start to solidify, and it takes millions of years. Literally each centimeter in diameter takes approximately one million years to form. So they literally kind of grow and there are trillions of these lying in certain locations of the seabed.
It doesn't happen absolutely everywhere because what you need is, first of all, water that has been water for millions of years, so that means deep water. Typically three to four miles deep, four to 6,000 meters, incredibly deep. Secondly, you need oxygen, and you need the right conditions with those vents that are releasing the metals, but we have found them in all of the world's oceans in hundreds of locations, and the estimate is something like a $100 trillion worth of these battery metals just lying on the seabed.
Cody Simms:
And so this isn't like the deepest of deep ocean like trench level deep, but it's the bottom of the kind of sea floor for lack of a better term. Is that sort of the way to think about it?
Oliver Gunasekara:
Yeah. The technical firm is the abysmal plateaus. That's kind of where they are. So there are trenches that go even-
Cody Simms:
Sounds happy.
Oliver Gunasekara:
Yeah. There are trenches that go even deeper, it's not the deepest part. The Mariana trench is about 10,000 meters. So that's, I don't know what, almost nine, 10 miles. It's not quite that deep. But still, this is incredibly deep and this presents real challenges. The pressure there is hundreds of times what we have in our atmosphere. I like to tell people that this environment in some regards is harsher than space because we have to deal with immense pressure, and we have an environment where radio waves basically don't work very well, so we have low bandwidth acoustic communication, one to two kilobits a second best case.
Cody Simms:
And to be clear, as I understand it, there are companies today that are harvesting these nodules, but they're doing so by basically running a giant dredger across the sea floor. Is that correct?
Oliver Gunasekara:
They're not doing them in a production commercial operation yet. What they're doing is testing their equipment that they have built. So all mining, whether it is on land or at sea, is highly regulated. So you can't just go somewhere and say, "Look, I want to take up this material," you need permission. In the case of if it was in California, you'd need permission from the state of California and maybe even a city as well. In the case of the ocean, that permission breaks into two jurisdictions. Is it in the waters of a country? Typically, 200 nautical miles off the coast belong to that country, and so they give permission. So in the US, there is a part of the government, part of the Department of the Interior called the Bureau of Ocean Energy Management. They regulate seabed minerals.
And in fact, in the '70s, a whole bunch of laws were passed to give them permission to issue licenses and regulate. The Cook Islands country above New Zealand has a huge amount of water because they have a small amount of large number of islands with massive areas. They have huge area, and so they have also issued free permits.
Cody Simms:
In addition to the Cook Islands, where else are some of the heavier amounts of deposits?
Oliver Gunasekara:
So in international waters. So anything that is beyond 200 nautical miles by a United Nations treaty called the UN Convention on the Law of the Sea, it was signed in 1982, I believe, and ratified by 167 countries across the EU, it says once you go over 200 miles off the coast, you're in international waters, beyond national jurisdiction. That treaty established a United Nations body that was established by the treaty, although it's independent, called the International Seabed Authority, and it regulates deep sea minerals. And so that body has actually issued something like 19 exploration permits in this area between Hawaii and Mexico. It's called the Clarion-Clipperton Zone.
Cody Simms:
So fascinating. And so you have essentially the Cook Islands, which if this space evolves in the way you're planning with your company, almost have the potential to become what the Middle East has been over the last a hundred years from a natural resources perspective. They've got all this rich material just sitting there that no one really has thought about doing anything with yet, much like was the case with oil production a hundred years ago. And then you've got similar to offshore drilling I guess. You've got these large pools in international water that regulatory bodies are going to need to figure out who to assign the ability to access. That's sort of the state of affairs then.
Oliver Gunasekara:
Yeah. And so going back to your question, where are we today? So there are a bunch of exploration licenses being issued. So an exploration license is a given area on the seabed, it varies in size, but in the international area it's like 75,000 square miles. So it's quite a large area. And it says that for a period of time, let's say 10, 15 years, you can do science, you can study this place, you can understand how big the resource is, what's its value going to be, and you can also do environmental baseline studies. So you can study the marine life that lives there and try to understand what the impact of the mining is going to be, and this is a precursor to getting a production mining permit. This also happens on land. And so that's the stage we're at. Where totally, I think there are 19 of these permits in international waters. There are three in the Cook Islands that have been issued.
No one has yet received permission to actually start doing commercial mining. And what they have to do is submit a report. That report has to quantify the size of the resource, but more importantly, it has to quantify the environmental impact. So what is the baseline, what life lives down there, and what will happen if the mining takes place? And then the regulatory authority decides if they want to grant permission.
Cody Simms:
We're going to take a short break right now so our partner Yin can share more about the MCJ membership option.
Yin Lu:
Hey folks, Yin here, a partner at MCJ Collective. Want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have since then grown to 2,000 members globally. Each week, we're inspired by people who join with differing backgrounds and perspectives. And while those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community, a number of founding teams have met, nonprofits have been established, a bunch of hiring has been done.,Many early stage investments have been made, as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more.
So whether you've been in climate for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms:
All right, back to the show.
And so for this scientific exploration work, how much of that is done to understand the impact of the technology on local ocean floors and seabed, et cetera, and how much of that is to actually just do the exploration work of understanding what's even down there in the first place?
Oliver Gunasekara:
The majority of it is to understand the environmental baseline. That's what takes the work because typically what you do is you do box core sampling. So you drop a piece of equipment over the side of a boat and it picks up like a meter square of the seabed, and then you analyze it. You have a lot of marine scientists, and they document what they find, what life is down there. And this includes the bacterial life. This is really quite sophisticated. In fact, an exploration contract typically includes something like a $50 million obligation to be spent over five years in doing this work, so it's quite comprehensive.
Cody Simms:
Super fascinating. And you're part of this wave of companies that are pursuing this opportunity or this necessity, though no one's doing it from a commercial perspective yet. And so you are taking one technology approach, other companies are taking other technology approaches, of which the primary other technology that's currently being explored is basically dredging the floor to pull up these materials. Is that correct?
Oliver Gunasekara:
Yeah. In fact, I believe it's the only approach until we came along that was being considered, and it was first tested by Lockheed Martin in the 1970s in this location between Hawaii and Mexico in international water. And one of the reasons it stopped was that there was no legal framework, and that's what led to the International Seabed Authority getting created. But when I learned of this technology, this was really the genesis for starting the company. It was like, "Why are we using 1970's technology, 50-year-old technology when we have real advancements in robotics, in AI, in computer vision?" And surely, we could both lower the cost and lower the environmental impact. And so that's really the mission of what we're trying to do. We know the world needs these resources, but we think we can do it in a much better way than dredging.
Cody Simms:
So let's hear you describe what Impossible Metals, AUVs, or autonomous underwater vehicles, what they look like and what they do.
Oliver Gunasekara:
Yeah. So just to be clear on the dredger, I mean, this is what we're not doing, but this is the state of play. It's a massive machine. People are proposing maybe 350 tons. It lands on the seabed, it has tracks, and then it has a big suction, and it basically squirts water into the seabed and sucks everything up a long tube to the support vessel that is maybe four miles above it. So that's basically the major issues with this around, one, it's really expensive, like nine years to pay back the cost. Secondly, it indiscriminately destroys all life in front. Now, you can leave areas that you don't touch, but anything in front of it will be destroyed. And thirdly, it generates these sediment plumes, which are basically a dust cloud because it's landed. And so we wanted to mitigate all three. The biodiversity is the biggest impact for us.
Because this life is so unique, what you find in one location, even if you go tens of miles away, can be completely different. And it is a low biomass environment. I mean, there is no light that reaches the deep seabed. So the sunlight, after you get a few hundreds of meters, it doesn't propagate all the way down, so it's pitch black. So there isn't massive amount of life down there, it's a bit like a desert, but the life that you do find is very unique. And who knows what properties this life has. There could be great pharmaceutical benefits from the bacteria that we find on the seabed, et cetera.
Cody Simms:
I presume there's also a decent amount of carbon sequestration also happening on the seabed through just the earth's natural carbon cycle that you presumably don't want to scrape up and interrupt also.
Oliver Gunasekara:
Absolutely. Absolutely. And so we've designed our vehicle to basically use parallelism. So it's a self-contained vehicle that has up to say a hundred robotic arms. And what it does is it uses a battery and a buoyancy engine that we've designed to actually descend the ocean depths. And it doesn't actually land. So once it gets close to the seabed, it maintains neutral buoyancy, it hovers, and now it has a whole array of cameras, and it's looking at the nodules, the rocks, and it's looking to see if any of them contain life that we can see with the camera. If they have a coral or sponge, maybe every one to 2% have visible life actually living on them.
Cody Simms:
Oliver, does the depth require full autonomy or can these be teleoperated?
Oliver Gunasekara:
No, we really need full autonomy because in the water, you only have low bandwidth acoustic modems, so the vehicles have to be fully autonomous. Also, by having a parallel fleet, we didn't want to have complexity of having to manage tethers and cables. So they are untethered, fully autonomous.
Cody Simms:
I did a quick Google as we were discussing just to give myself context because when I think of underwater exploration, of course, the first thing that comes to my mind is the Titanic thanks to James Cameron. And the Titanic itself was at 3,800 meters, and so you're almost at twice the depth of that, I think, which is significant because I remember that being a huge undertaking.
Oliver Gunasekara:
Yes, yes. Now, we don't intend to have people in our vehicles, so that adds additional complexity. But still, and I think in the CCZ, the average depth is about 4,500 meters, so not too far off actually. But fundamentally, our vehicles are looking for signs of life. And if we see life on the actual nodule, the rock, we don't pick it up because we have a whole array of robotic arms. And so the vehicle is moving and hovering above the seabed, looking to see where the rocks are, using the computer vision and AI to pick up the rocks. If we see life, we leave it behind, and we'll leave behind an additional number because the life that lives down there needs additional rocks. And then once the payload is full, the vehicle will ascend.
Cody Simms:
Life is going to be things like sea fans, barnacles, mollusks, et cetera. Is that often what we're talking about at the bottom of this depth?
Oliver Gunasekara:
It's pretty specialized. So there are corals, there are sponges, there are megafauna, which are some of these bigger lifeforms. There are some octopuses that have been found, but it is a bit like a desert. It's a low energy environment, but there is definitely life down there, and so we're just really trying to minimize the impact.
Cody Simms:
And then does the machine also need to know that, "Hey, I see a thing that looks like a golf ball." Is it just assuming every piece of mineral underwater at this depth is the type of metal that you're looking for, or do you bring them up to the surface and then sort of have a successful percentage of them that you are harvesting?
Oliver Gunasekara:
Yeah. We know from the surveying data and the box course sampling that they are almost completely uniform. So a given location on the ocean floor, the percentage of nickel, cobalt, copper, manganese will be somewhat constant, so we don't have to choose. And the sizes do vary a little bit, but not massively. Typically, three to four centimeters in diameter. They can get a little bigger, they can get a little smaller, but that's generally. So all we have to do with the camera and vision system and lights is navigate the arm and the end effector to actually pick up the rock and avoid ones that contain life.
Cody Simms:
And how big are these machines?
Oliver Gunasekara:
So what we've built right now is quite small. It's about one meter by two meters in size, seven feet or so, but that's a proof of concept. That's to really prove the tech that we're building. The full size vehicle could be up to a hundred times.
Cody Simms:
You're at the scuba dive in the swimming pool sort of size of development, I'm guessing?
Oliver Gunasekara:
That's exactly right. Yeah. We just showed our first Eureka One that can go 25 meters deep or 75 feet. And in fact for your listeners, maybe we can put a couple of YouTube links in the show notes because there's an animation that shows the full scale, and then there's a video of what we've actually built right now. But the full size vehicle will be quite large. It will have something like one shipping container of payload. Because ultimately, this is a numbers game. We want to deliver. Our mission is to basically say, once we get to reduction, maybe we don't need any new mines for nickel, cobalt, copper, and manganese. Unfortunately, no lithium, so we're still going to leave lithium. But that I think from an environmental standpoint could be really great to say, "No new mines have to come online because we can supply them from the ocean until we have the ability to be fully recycled."
Cody Simms:
And I'm going to assume just given the amount of technical work that you need to do, R&D, equipment to build, permitting, all of this, the immediate financial cost is going to be high for a while relative to land-based mining or even this ocean-based dredging. It's just the externalities are significantly lower. And so to some extent, there has to be an assumption on your part that either those externalities are going to start to get factored into cost, or they're going to be regulated to the point where you can't pursue those existing methods of extraction. Is there a calculus there that you're following as you build this company?
Oliver Gunasekara:
We actually believe, and we're optimizing our system to come in substantially lower costs than the dredging, like a three-year payback time. And given some of the, I would say, tailwinds that are there for us, we actually think we can come in lower costs than new mines. So we have a high grade resource, we have four metals in one, we don't have to build a lot of infrastructure, like we reuse ships and docks, and we don't have to reclaim. So if you take a brand new mine in say Canada, they have a lot of permitting risk, their ore grade is going to be low, meaning they have to dig up a lot more material to get at what they need, and they're also going to have to build a lot of infrastructure.
It's going to be a remote location, so they're going to have to build a highway, they have to build a village, they have to pay to fill in the mine after its end of life, so we actually think we can come in substantially lower than new mines. Now, a mine that's been operating for 20 years that's high grade, we're not going to come in lower costs than that. But for new resources, absolutely.
Cody Simms:
So that makes sense. And then on the dredging side, how do you factor your cost being lower there?
Oliver Gunasekara:
Yeah. I mean, it turns out that when you have such a large machine that you have to launch and recover, you need a specialized ship because the machine is so big, and that becomes a very material part of your economic model. Now, we have designed our system to basically work with an existing shipping container vessel, a regular shipping container vessel, and so that drastically saves cost. Also, it's far more automated. So we don't have operators, so that saves people, and people that ship on the ocean become very, very expensive.
Cody Simms:
And I assume there's also the dredging methodology presumably will have some form... Much like land-based mining, you said they are responsible for filling the mine back in when they're done. With ocean-based dredging, is there some form of environmental recovery that they would be responsible for? I don't know how you would do it at that depth, but...
Oliver Gunasekara:
Yeah. No one has figured out how to do that. So right now, all they're proposing is to have areas of the seabed that are not touched.
Cody Simms:
Interesting. So it's just a pure externality that people are putting their hands up around at this point.
Oliver Gunasekara:
Yeah.
Cody Simms:
So I'm interested to hear, Oliver, you share a bit about what all this means. If in a world where this is working, we are becoming free of nation, state level, pseudo monopoly over specific metals and actually moving to a world where the bulk of this material is in international waters, how does that change the supply chain for batteries?
Oliver Gunasekara:
Yeah. I think it's kind of the third problem. We started with the environmental, the ESG, we talked about supply and cost, and I think the third is the fact that China fundamentally has been very smart and controls something like 80% of the supply of these critical battery metals. Most of them are not directly in China's territory, but they've invested billions of dollars in Africa and Indonesia and built the infrastructure and bought the offtake. And so from a geopolitical standpoint, this is very concerning. It's not too dissimilar to oil and gas specifically being sold by Russia to Europe. And so you see the Inflation Reduction Act trying to stimulate domestic supply. And I think the seabed is really the only resource of scale that can really impact because the problem is that China controls 80% of it. And yes, there is some material in domestically and in Canada and Australia and friendly nations, but it's relatively small, and it's relatively risky from a permitting point of view that it's going to take a decade or more before it's available.
And so I think the seabed resource has an opportunity to come from the Pacific Ocean directly into North America where it could be processed in a co-located cathode manufacturing facility, which would then make the cathode that would go directly into the cell production, and that would then all qualify for the Inflation Reduction Act stimulus. And so that's really where we see this fitting in.
Cody Simms:
And there is onshore battery production happening today in the US, though it's also significantly smaller than what's happening in China as far as I understand it. How does that side of the industry scale up as well? That'll require similar amounts of technical feats to what Impossible Metals needs to build? Probably not because these are relatively known processes, it's just that they haven't had enough access to materials to justify the large scale infrastructure build out. Am I understanding the sort of macroeconomics of that clearly?
Oliver Gunasekara:
Yeah. I mean, I think over the last two, three years, there's been a massive investment in battery manufacturing. And so almost every few weeks, you hear of a new joint venture, Ford or Tesla or GM, et cetera, to build batteries in North America so that they don't get hit with any tariffs and actually would qualify. So I think the actual cell manufacturing is kind of taken care of if you just look at the rollout of all these new factories that are coming online in the next few years. What' isn't clear is, where are the metals going to come from and where are metal processing, the refining going to happen, and that's really the piece that we're focused on.
Cody Simms:
And so you end up harvesting these, I want to keep calling them nuggets, but I think you call them nodules, these nodules from the bottom of the sea, bring them up on a ship, bring them to the port of Los Angeles or Oakland or somewhere, and then what happens?
Oliver Gunasekara:
Yeah. I mean, we would want to transport them to a refining plant that would probably be co-located with the cathode manufacturing. So the cathode is material that gets made that then goes into the battery. And so the ideal place to do that is somewhere where land is not too expensive, where permitting are easier, so a lot of the southern states are actually getting infrastructure in place to do this. And so you could see maybe the Port of Houston would be a good place. You might have to go through the canal, but arriving the Port of Houston and then on a train to a processing plant, and that would be co-located with the cathode manufacturing, which could also then be co-located with the actual cell manufacturer as well.
Cody Simms:
Fascinating. One thing that strikes me is, is there any difference from a processing perspective of the metals that are coming from these nodules relative to metals that would be coming from a traditional mine? Anything that needs to be done differently to handle them given the form factor and presumably other forms of biomaterial that may be around? Them much like you need to do certain things to process ore, you're kind of needing to process these nodules in some way. What does that look like?
Oliver Gunasekara:
Yeah. So I mean, whatever ore you're processing, you kind of tweak the metallurgical process for that ore. And so the two traditional ways are pyro where you roast with lots of energy, not very good because of the emissions, or you leach with sulfuric acid. And again, not great because that acid gets left behind. So both could be used for the nodules, but it's not like you have an existing factory already set up because you'd have to tweak that because the actual characteristics of the nodules are unique. But we are trying to invent a third way of doing mineral processing that could also have benefits for land-based ore as well.
Cody Simms:
Anything you can share about? It's okay if not.
Oliver Gunasekara:
Yeah. I mean, it's early days, so we're still at the lab, but we are using a discovery that a retired professor from the University of Southern California made. And he discovered that there are these bacteria that when they're put in an environment where there's no oxygen left in the air, they will actually find a way to get oxidized metals. So if you have iron oxide or manganese oxide, like what we do in the nodules, then these bugs are really smart. They actually can transfer an electron into the ore and break the ore body down. And so we patented that and are attempting to build processing technology for nodules [inaudible 00:44:50] based on this because it has the potential to be very low energy and not have any acid that's left over, like any tailings.
Cody Simms:
So this could become not just a verticalized business for you where you're sourcing the nodules and processing them, but also potentially its own business unit that could process ore from traditional mined metals.
Oliver Gunasekara:
Yeah, exactly, in a very green way, which is why it's so potentially attractive. And we were able to get funding for this from one of the big top five mining companies. We don't yet have permission to announce them. I'm hoping we'll get that in the next few months or so. But we've been able to, on the nodules, we've been able to get to about 80% recovery in a couple of days now, which is pretty good, and we think there's a lot more to do.
Cody Simms:
Oliver, talk to me a bit about, you obviously have come at this problem out of a concern for the future of the planet, you also believe you can build an incredibly lucrative business here, but it seems in looking at your website, you're also taking a lot of proactive steps to ensure that the company itself is formed in a way that has a lot of attention to culture, has a lot of attention to responsibility, to sustainability, to whatnot. I mean, as I understand it, you're a public benefits corp, you're a B Corp, you're a pledge 1% member, you're doing annual reporting on both environmental and social impact. Tell me a bit about how you've approached company formulation from that perspective.
Oliver Gunasekara:
Yeah. So we really believe in the mission of doing good. And as you said, I love public benefits. I learned about them. And to me, it's an obvious, especially for people working in the climate tech space. So our public benefit is to mitigate the climate crisis by providing responsibly sourced battery metals, so it's core to our mission anyway, but it helps let people know that's what we're doing. We're now also in the process of trying to see if we can get B certified, and that's a lot of work. And this is something that Renee, my co-founder, she's our chief sustainability officer, she believes in this really strongly. She comes from the mining industry and wants us to do it differently, wants us to really be a 21st century mining company that takes ESG really seriously. And so that's really the culture that we're trying to build, and I think it really helps when you come to recruit talent that we think we can really do good.
We can really help solve some of the big problems that are out there whilst also making a lot of money and building some incredible technology. I think those three together are unique. And when you get them, it becomes really exciting for everybody on board.
Cody Simms:
Fantastic. What can you share about how you've capitalized the business to date?
Oliver Gunasekara:
Yeah. So we were fortunate enough to go through Y Combinator about a year ago, we're in the winter '22 batch, and that cultivated with us raising in total about $12 million as a seed round, and that really allows us to build the next version of our robot, we'll call it Eureka Two, that can go to the full ocean depths. And so our plan is that by the end of this year, we will have demonstrated that, and then we'll be able to raise a fairly large series A to build the full sized vehicle.
Cody Simms:
Well, Oliver, so fascinating to talk with you. I've learned a ton. What should I have asked that I didn't dive into? I feel like we've been uncovering little nuggets of whole new pockets of things you're working on along the way, but I'm curious where else the conversation should have gone.
Oliver Gunasekara:
No, this has been great. And the one thing I would say is that we do have some headwind, and that is the perception of seabed mining, I think primarily driven by the dredging technology and people saying, "Well, why are we doing this? It's an untouched part of the planet. Why are we causing destruction there?" And so I would like, if you allow me, to give very short summary as why we feel it's the right thing to do.
Cody Simms:
Sure, please do.
Oliver Gunasekara:
So I think the first thing to say is that all extraction industries have impact, so we're not claiming there's going to be zero impact, but if we want to move away from fossil fuels, we have to electrify, we're going to need these metals, and we're going to need the wiring in copper and et cetera. So we've got to get it from somewhere. Recycling long-term maybe by 2050, we won't need any new mines. But if we need 30 or 50 new mines on land, think of the environmental impacts and the social impacts that that's going to happen. And also, the permitting risk that could delay. If we can't get low cost batteries, EV prices will go up substantially, and that's going to really slow adoption. So the seabed, in our view, is the best source if we can do it in a responsible way that will really allow us to manage this transition.
And so we've gone to great lengths to build a vehicle that doesn't generate these sediment plumes, doesn't destroy biodiversity. And I think if we do that, the impact between having 30 or 50 new mines on land versus just leaving with what we've got for nickel and cobalt and copper and just using the seabed resource is huge. And so that's really my plea. And really look into the detail of if you don't do seabed mining, you are implicitly saying yes to more rainforests destroyed, more child labor, more water scarcity, more people being displaced, all of the bad things that we don't want to think about as we drive our EV, but that will be the reality.
Cody Simms:
Oliver, thanks so much for joining us today. It's been a pleasure, and I wish you all the best as you continue to build out your company.
Oliver Gunasekara:
And thank you again for the opportunity. Love the platform, and really excited to have an opportunity to participate. Thank you again.
Jason Jacobs:
Thanks again for joining us on My Climate Journey podcast.
Cody Simms:
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem-solving capacity. To do this, we focus on three main pillars, content like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change, and our member community to bring people together as Yin described earlier.
Jason Jacobs:
If you'd like to learn more about MCJ Collective, visit us at www.mcjcollective.com. And if you have guest suggestions, feel free to let us know on Twitter @MCJPod.
Cody Simms:
Thanks and see you next episode.
