EXCLUSIVE: Impossible Metals CEO Says Presale Agreements 'Quite Attractive' For Funding Deep-Sea Projects Vs. IPO

The chief executive of Impossible Metals, a privately held company developing ocean floor mining technology, is leaning toward offtake agreements rather than a public listing to fund full commercial operations.

Offtake agreements are legally binding contracts where a buyer promises to take a certain amount of product at a specified price or price range in the future. These deals are important for early-stage mining companies because they allow them to more easily obtain money from lenders or investors to develop capital intensive projects.

"I think offtake agreements are quite attractive," Impossible Metals CEO Oliver Gunasekara told Benzinga. However, he stressed that nothing is set in stone and that the decision is a ways off.

Also Read: Future Of Deep-Sea Mining Might Rest On International Seabed Authority Leadership Election

The company is developing a robot that can collect mineral rich nodules from the ocean floor. These nodules contain manganese, nickel, cobalt and copper, all of which are either used in electric vehicle batteries, grid scale energy storage or other green technology like wind turbines and solar arrays.

Impossible Metals says its "autonomous underwater vehicles" are much more environmentally friendly than dredging technology that vacuums up the ocean floor along with the nodules and creates plumes of sediment. 

Rather, the company's vehicle hovers over the ocean floor and collects nodules individually with robitic arms. The company refers to the process as "harvesting" rather than mining. 

The machine also uses artificial intelligence to avoid nodules that contain certain types of life and mark off those areas.

"We effectively put a quarantine area around life we discover," Gunasekara said. 

Controversy and Challenges

There is plenty of vocal opposition to deep sea mining, especially this month as officials meet in Jamaica to hammer out an international seabed mining code to govern the thousands of kilometers of ocean floor at the bottom of international waters.

There is environmentalist resistance to deep sea mining in general, as conservationists worry about ecosystem destruction and migratory disruption. And Greenpeace, one of the most vociferous opponents, called out Impossible Metals by name ahead of a London meeting of deep-sea mining representatives earlier this year. The environmental activist group wants to see improved recycling and less dependence on automobiles rather than seafloor mining.

Seabed mining proponents argue that the practice does less environmental harm than land-based mining, while providing metals needed to decarbonize the global economy to stave off the worst effects of climate change. They also say that traditional mines, which take years to get into production, won't be able to meet all of the world's needs for critical minerals, even with recycling.

For Impossible Metals, there is also a technological hurdle.

Craig Shesky, chief financial officer of The Metals Company TMC—a competitor that uses dredging technology instead of individual nodule picking and appears to be closer to production than Impossible Metals—told Benzinga that Impossible Metals' technology still has to be proven.

"What they're doing is still on the back of the envelope," Shesky said.

Financing the Future

Impossible Metals recently tested a prototype robot at a depth of one mile off the coast of Florida. But that model is too small for commercial purposes, Gunasekara said.

The company is looking toward building and testing a full-sized collection robot, and that technology could be ready by 2027, Gunasekara said. 

After that testing, Impossible Metals would need to find a manufacturing partner to build a fleet for commercial production, he said. 

Getting funds for building and testing the first full-scale robot is the goal of a $23 million venture capital raise, half of which will go toward testing and components and the other half to staffing, Gunasekara said. He added that Impossible Metals is in the market now to raise this money.

After that, the company would need about $100 million in addition to government funding for a fleet of 20 of the collection vehicles, he said.

This is where the offtake agreement could come in.

Gunasekara said he would rather use one of those deals to cash up rather than going public because an exchange listing requires a lot of overhead, referring to continuing costs that don't directly relate to producing critical minerals.

Because of the amount of critical minerals on the seabed and the economic advantages of ocean floor mining, Gunasekara envisions a future where the world will tap out its current reserves of nickel, cobalt and manganese in land-based mines and won't need to develop new mines for those minerals.

"I don't think you're going to see new mines because they won't be able to compete," he said.

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