André Pienaar Interviews Brian Menell

André Pienaar: “Welcome to the C5 Innovation channel. My name is Andre. C5 is a specialist venture capital fund focused on cybersecurity, artificial intelligence and cloud computing. Today, here in London, at our boardroom, we have Brian Menell, the Chief Executive of TechMet whose innovation lead is changing the world of mining and technology by focusing on how we can secure the critical minerals that are so crucial to the future of the digital world. Brian, welcome. Thank you for coming down to have a cup of tea with me today.”

Brian Menell: “André”

André Pienaar: “TechMet is a new venture. You’ve got a new and innovative business model for bringing the world of mining and the world of technology together. What led you to create this new venture, Brian? “

Brian Menell: “The three primary macrodrivers behind our TechMet stragegy, and TechMet is a private company in which we’re building projects that produce or process or recycle the key technology metals that are amongst the most important ingredients of the tech revolution. So, the three drivers are Firstly, the massive dislocation that we’re just at the beginning of, between exponential growth and demand for batteries, electric vehicles, renewable energy systems. And the supply scalability of the key ingredients of these systems. So this enormous supply demand dislocation will create unprecedented value creation opportunities for the suite of metals that we focus on as TechMet. The second driver behind our TechMet strategy is the extent to which these key ingredients of a big part of the tech revolution have, over the last 15 years, come to be controlled, or at least very significantly influenced by Chinese interests. And this creates a geopolitical climate in which we’re investing and building projects that is increasingly recognized in Washington, Tokyo, and other non-Chinese capitals as in a major security issue. The third driver behind our strategy is the degree to which you can add value to our products through a pipelined consumer goods, through very high level of social and environmental government standards and capacity to implement and execute.”

André Pienaar: “The three big drivers behind your strategy sound very similar to the three big drivers behind the C5 investment strategy. In the world of cybersecurity, which is focused on just the pace of digital transformation which continues to outpace our ability to secure it, geopolitics, and the growing importance of regulation. So, some striking similarities there. And it seems like TechMet is at the one end of the spectrum, and the venture capital industry is at the front end of it, but both of them are equally important to the future of the digital world. Brian, you’ve highlighted the importance of certain critical minerals to some of the key consumer products and goods that we value so much in the digital world and in which most of the innovation is taking place. Do you want to expand a little bit on what those minerals are, and where the supply comes from?”

Brian Menell: “Mm-hmm. One of the key, probably the single most important driver of demand that we are supplying into is lithium-ion batteries and electric vehicles. The growth of the adoption of electric vehicles is now inevitable and unstoppable. The three or four million electric vehicles in the world today, in ten years time in very, very the most conservative, pessimistic forecasts, will be 120, 150 million. In more, in my view, realistic forecasts, will be in excess of 200 million. That represents an enormous scale-up of requirement for key battery metals. So, lithium, cobalt, battery nickel, are going to have to be produced in many multiples of present global supply in order to feed that demand. And that growth of those key globally transformative technologies. This is probably the biggest dislocation in supply demand equation of any set of natural resources since the impact of the industrial revolution on demand for coal and iron ore.”

André Pienaar: “That’s fascinating. And I think we all have to be concerned about whether we will have sufficient supply to enable the innovation that we need to sustain the digital world that we are building for the future.”

Brian Menell: “Absolutely. I think the supply of the key technology metals that we’re engaged in the production and processing and recycling of, will be a key constraint with respect to the growth of these technologies that are enormously important to build a sustainable and green global industrial and technological environment. Added to this, as I mentioned, is the extent of Chinese control over these sources of supply. Not only primary resources, but processing capacity and intermediate products.”

André Pienaar: “Well, I’m fascinated by that, because in the world of cybersecurity the role that China is playing is of growing concern in the West. We are currently having a big debate about Huawei, the Chinese telecommunications company, and the role they’re going to play in 5G going forward. So, what you are saying is that on the supply end of minerals, we should also worry about the extent to which China is extending it’s control.”

Brian Menell: “Yeah, I mean, the Chinese have had an enormously successful and coherent 15 year program of securing control over these key imputs to the tech revolution. To the point where today, China controls over 90 percent of global rare earth supply.”

André Pienaar: “90 percent of global rare earth-“

Brian Menell: “Yeah, which are key components for a range of important technologies, most notable of which is permanent magnets for electric motors. They control probably in excess of 65 percent of global cobalt primary supply and probably over 80 percent of processing and intermediary products. Probably likewise over 60 percent of lithium, 70 percent of tungsten, et cetera. So, this creates a global supply environment where, while the rest of the world was sleeping and not realizing that they were engaged in a war that they lost before they knew they were fighting it. We have a situation where China has an enormously powerful tool in their hands. Both to advantage their domestic industry battery manufacturing, electric vehicle manufacturing, relative to those industries in Japan, Europe and the US. And, equally as importantly and enormously powerful tool in an escalating environment of global trade disputes, which, in my view, are not simply a product of the present US administration but are going to be a feature of the world in which we live for the next five, 10, 15, 20 years.”

André Pienaar: “Well, we are definitely seeing a growing divergence between the West and China. China is a very important global power for the future, but it has a completely alternative model of governance to Western Democracy that we believe in and that also underpins the innovation in which we are investing venture capital. So, what you are saying is very alarming and TechMet’s investment strategy is clearly playing a crucial role in helping to remedy this situation.”

Brian Menell: “I think, you know, we’re a private company, and the degree to which we can counter Chinese dominance of these metals and intermediate product supply is obviously limited. China is an enormously rich and powerful force on the global stage. However, we can significantly counterbalance China’s control in certain niche areas such as rare earth metals, cobalt, et cetera. And we can do this in a way that also adds value to the degree to which we can educate government agencies in the US and Japan particularly as to how, not only to understand the landscape and the situation that the world finds itself in, but to find strategies to deploy political support and capital in order to, over time, counterbalance the Chinese dominance.”

André Pienaar: “Well, minerals and the mining industry clearly have a very important role to play in the creation of the digital world of the future and the making innovations sustainable in the West. So what TechMet is doing sounds to be very important and a very important contribution. Your business model is a very interesting one. You’ve built a new industrial minerals company with a dedicated and focused set of investors. How do you see this business model for the future in terms of it’s development and do you believe that building trusted communities of investors around certain missions is also a form of social impact investment? You’ve alluded to the ethical concerns and to the importance of ethical investment earlier on in our conversation, Brian.”

Brian Menell: “Yeah, I mean, that is one of the core legs of what we are as TechMet, is to invest in and develop projects in a sustainable, ethical and responsible manner. As you said, it’s enormously important to do that from a solid platform and a solid platform not only involves one’s company’s ethics and culture, but it involves an ecosystem of shareholders, executives, counterparties and partners in projects that are all like-minded and share a set of values and a global vision. And I think that’s what we’ve done, and that’s what we’re building on. We created TechMet about a year and a half ago, we funded it with seven family offices together with ourselves in our round one financing. We closed eight months ago. We’ve acquired our first five assets, which are all scalable world class projects in which we have the initial equity interests and the right to be dominant funders and dominant participants. As we grow those projects, many of them are already producing, some are in development. And they range from mining, processing, recycling across North America, South America and Africa. Our shareholders are a very like-minded group of private individuals. We’re busy raising a second round of financing now. Again with a focus on family offices who have a shared long-term vision. And the shared long-term vision is what I’ve described. I mean, you can’t have a sustainable, green, technological revolution without these key ingredients. And these key ingredients are not easily scalable to the extent that they require. They will be required for the growth of the demand of these systems. And they are in the hands of parties to a large extent outside of the non-Chinese consuming economies. So, this is a landscape and a context that is enormously compelling, exciting and important.”

André Pienaar: “Brian, it sounds like what you are doing is not only very exciting and is offering a very exciting opportunity for good investment returns, but it is also making social impact and helping to secure the future of the digital world. Electrical cars is definitely one of the most critically software platforms of the future. And is relevant to not only transport, but also to cybersecurity, to time and location, and to building sustainable cities and communities. So what you are doing is tremendous. Thank you so much for joining us today, Brian, and for sharing with us your vision and the transformative work that TechMet’s doing.”

Brian Menell: “Thank you very much, André”