A bold plan to reset the exploration bar

‘The opportunity to become the software arm of the mining industry could prove an important wedge for KoBold’

KoBold Metals is not unlike other mineral explorers in building a large portfolio of ground to increase its chances of finding something significant. But that’s about where the similarities end.

Backed by billionaires at birth, KoBold president Josh Goldman says the company wants to be the “most successful explorer of the generation”. That would be the electric vehicle generation.

“Our view is the supply gap [for copper, nickel, lithium and cobalt] to get to 100% electric vehicles by mid-century is US$15 trillion worth of those metals,” Goldman said on a podcast hosted by London’s Imperial College Business School.

He said decades of decreasing discovery effectiveness could be pinned, in large part, on “using the same methods for harder problems”.

“We have ways of working in the industry that we have to get past.

“Innovation in the exploration business just has not kept up with the increase in difficulty.

“We need new thinking and we need big investments behind that new thinking.”

“Machine prospector” KoBold has raised more than $212 million since March 2019. Initially backed by Breakthrough Energy Ventures, whose investors and leaders include Bill Gates, Jeff Bezos, Andrew Forrest and Ray Dalio, privately-owned KoBold secured $192 million early last year in a series B round involving BHP Ventures and Apollo Projects.

Private technology company research firm, Contrary Research, reported a plus-$770 million valuation for KoBold.

“Software is eating mining,” Contrary suggested.

“By becoming early software partners with the largest mining companies around the world, the opportunity to become the software arm of the mining industry could prove an important wedge for KoBold Metals.

“This could also give the company an opportunity to go after other layers in the software stack to help with the end-to-end mining of critical minerals.”

Quantum computing PhD Goldman leads – with co-founder and CEO Kurt House – what is now a team of more than 100 data scientists and geoscientists at KoBold. The US-based company has positions in more than 30 projects on three continents, including joint ventures with BHP and Rio Tinto, and its major $150 million investment in Zambia’s Mingomba copper project. The latter has it working with partners EMR Capital and Zambia state-backed ZCCM-IH.

“KoBold Metals’ most fruitful allies could also be [its] greatest competitors,” says Contrary.

“Large mining companies like BHP Group, Rio Tinto, and Glencore have staffs in the thousands, some of whom are data scientists and engineers on mineral exploration teams.

“Mineral exploration companies are also developing software analysing electromagnetic and radiometric data to accelerate processes.

“What differentiates KoBold is its speed of operation.

“Partners have cited its quick, iterative processes as an advantage, supplemented by the team’s previous experiences in start-ups.

“KoBold’s core product premise is to add a software overlay over the physical world, modernise mining, and make it cheaper, better, and faster.”

Goldman says speed is of the essence.

KoBold Metals president and co-founder Josh Goldman

“The timescale for a lot of scientific impact is very long but in energy and energy technology there are problems that are really important to society right now where science has a really important role to play,” he says.

“We need to stop burning fossil fuels for personal transportation [and] we have the technology to do that … EVs are now widely available. To get to a global fleet of EVs we just have to have the materials to build those vehicles.

“Lithium is going to be the winning [battery] technology for a very long time.

“Cathodes … we need cobalt and nickel. And then copper for electrical anything.

“Even if we could have 100% recycling we don’t have the materials we need in stock today. There is no source of lithium we can recycle.

“But there will be those sources in 30 years when we have a global fleet of EVs.

“We’ll be able to recycle the batteries that we have from cars ending their service life and then we can make new batteries out of them. And then we’ll need very small increments of new lithium.

“But in order to have a circular economy we need to have enough materials in circulation in the first place.

“And for these four materials in particular we need a significant increase in the stock of those materials in circulation in the economy in order to build the global fleet of electric vehicles.

“Physically they are in the ground right now … and we have to go find the places where they are highly concentrated by natural processes so that with industrial processes we can get the rest of the way to metals and turn them into batteries.

“And that is the core scientific challenge.

“How can we find them fast enough so that we can accelerate the transition to a low-carbon economy?

“It’s not helpful if we get to 100% EVs in 2150. We have to get there in the middle of this century.

“The problem is urgent and we have to get on with it.”

Contrary says if there is anything to learn from the last clean-tech investment surge, it’s that “momentum does not equate to adoption”.

“Due to mismatched timelines, large-scale electrification was slowed by a lack of readily usable technology and investment retraction. Costs have since come done per kilowatt hour.

“The challenges the industry now faces are mostly around material sourcing.”

Goldman says KoBold was created with the goal of dramatically increasing exploration success rates.

It aimed to do that through “using and inventing” the best technology.

“We use a whole range of quantitative methods including machine learning to make predictions and make improved exploration decisions.

“Our geologists are out running exploration programs. Our data scientists are making predictions that guide exploration decisions that we are making.

“Our software engineers are building a technology platform that all these models run on and that make all the data available to our scientists.

“There are more data scientists than anybody else at KoBold … but the data scientists’ job is to make discoveries not to do analysis. The data scientists are explorationists … so we have to be asking relevant questions.

“The vast majority of the value [in mining] gets created in exploration.

“That’s where you go from having ram pasture to having an incredibly valuable ore deposit, still in the ground, and then harvesting that value through mining.

“The unit economics of discovery are extraordinary.

“The problem in the industry is that the success rate is just too low.

“That also means the exploration business doesn’t attract enough capital to be able to fuel the discovery engine.

“Exploration writ large is not a good enough investment.

“The goal here is to dramatically change the standard of practice in exploration.”

Contrary says KoBold is trying to make the discovery process cheaper and more efficient by using ore-deposit science and machine learning algorithms.

“KoBold is building a full-stack digital prospecting engine using computer vision, machine learning, and data analysis.

“Rather than selling the software as a product, KoBold Metals seeks to generate revenue by holding ownership stakes in the mineral resources discovered.

“Each mineral that KoBold is prospecting for has a market cap that, combined, hints at the total addressable market size for the company. In 2021, lithium was valued at $7.1 billion, cobalt at $8.7 billion, nickel at $31.5 billion, and copper at $283.4 billion.

“These minerals make up a basket of battery materials, expected to grow at a CAGR of 18.9% from 2021 to 2030.”


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