DeepGreen Metals Inc, the developer of lower-impact battery metals from unattached seafloor polymetallic nodules, has entered into a definitive business combination agreement with Sustainable Opportunities Acquisition Corporation (NYSE: SOAC), a special purpose acquisition company with a dedicated ESG focus “and deep operational and capital market capabilities in the energy and resource sectors.” The transaction represents a pro forma equity value of $2.9 billion (assuming no redemptions) for the combined company, which will be renamed TMC the metals company Inc and operate as The Metals Company upon closing.
DeepGreen is developing a new, scalable source of EV battery metals in the form of polymetallic nodules found unattached on the seafloor in the Pacific Ocean. It says the estimated resource on the seafloor in the exploration contract areas held by the company’s subsidiaries is sufficient for 280 million EVs – a quarter of the global passenger car fleet. “The development of this resource offers an abundant, low-cost supply of critical raw materials for EV batteries and wiring including nickel, cobalt, copper and manganese, with a lower lifecycle ESG impact than conventional mining. Ensuring this critical supply of battery metals is essential to the transition from internal combustion engines to EVs.”
“Sourcing battery metals is the biggest hurdle facing the clean energy transition, and the pipeline of new mining projects on land is insufficient to meet rising demand,” said Scott Leonard, CEO of SOAC. “We looked at over 100 companies, many of them in the EV and renewable energy space. DeepGreen stands above the rest. It offers a real, scalable solution to the raw materials problem, at a low production cost and with a significant reduction in the ESG footprint of metals. Assuming full-scale production, we expect The Metals Company to be among the lowest cost nickel producers in the world.”
Gerard Barron, DeepGreen Chairman and CEO, said: “We are excited to partner with SOAC, an ESG-driven team that does not shy away from tough problems. The reality is that the clean energy transition is not possible without taking billions of tons of metal from the planet. Seafloor nodules offer a way to dramatically reduce the environmental bill of this extraction. We are getting into this industry with a deep commitment to ocean health and a clear stop date in mind. The plan is simple: produce better metals to supply the EV transition, while building up enough metal stock to stop extracting from the planet and enable society to live off recycled metals.”
The deal includes an upsized US$330 million fully committed common stock Private Investment in Public Equity (PIPE) at US$10.00 per share, anchored by an international consortium of strategic and institutional investors, including Allseas, adding to the list of existing strategic investors such as Maersk Supply Service and Glencore. The transaction, which has been unanimously approved by the Boards of Directors of both DeepGreen and SOAC, is expected to be completed in the second quarter of 2021 and is subject to the approval of SOAC’s and DeepGreen’s shareholders and other customary closing conditions, including a registration statement being declared effective by the SEC. The combined company will continue to be led by Gerard Barron, DeepGreen Chairman and CEO. Scott Leonard, CEO of SOAC, will join the board of The Metals Company.
DeepGreen through its subsidiaries has exploration rights to the world’s largest private resource of unattached polymetallic nodules and says it has made significant progress on project development, including: “attracting world-class strategic partners and investors; completing 10 resource definition and environmental campaigns to its exploration areas in the Pacific Ocean; the expected piloting of the offshore nodule collector system together with Allseas next year; and completing a zero-solid-waste pilot processing plant program with Hatch, FLSmidth and Glencore this year. DeepGreen is also participating in a multi-year environmental and social impact assessment, in partnership with some of the world’s top ocean scientists, to minimise risks for all stakeholders and comprehensively assess the impact of collecting nodules from the ocean floor. This business combination will provide the new entity, The Metals Company, with the capital required to get through a feasibility study and into potential revenue as early as 2024, when many analysts anticipate nickel and copper shortages from current sources.”
