Co-managers of global investment giant BlackRock’s US$1.5 billion World Mining Trust say the fund’s first mining technology investment can deliver “material valuation upside” if industry adoption of Jetti Resources’ copper processing catalyst continues to accelerate.
Writing in BlackRock World Mining Trust’s (BWMT) 2021 annual report, Evy Hambro and Olivia Markham said copper production companies were primary drivers of the London-listed firm’s 22.8% net asset growth in its latest year. The trust had £1.14 billion of investments at the end of 2021 and has a current market value of about £1.42 billion.
The fund also invests in other metal miners and has a handful of royalty and unquoted interests.
Hambro and Markham wrote that post year-end BWMT made an (unspecified) investment in Jetti.
“Jetti Resources, alongside the University of British Columbia, has developed a new catalyst that improves copper recovery from primary copper sulphides – specifically from chalcopyrite, which is often uneconomic under conventional leach conditions,” they said.
“Jetti is currently testing at 23 projects at various stages, including five active pilots where they will look to integrate their catalyst into existing heap leach SX-EW mines to improve recoveries at a low capital cost.
“If industry adoption of Jetti’s technology continues to accelerate and is proven to work at scale, we see material valuation upside, with Jetti sharing in the economics of additional copper volumes recovered through the application of their catalyst.”
Colorado, USA, based Jetti has raised more than US$100 million in private equity finance to drive development and application of its copper catalyst. Backing the company so far have been groups such as BHP, Freeport-McMoRan, Mitsubishi Corporation, UBC, DNS Capital and Orion Resource Partners.
US-based BlackRock, the world’s largest asset manager with circa-US$10 trillion under management in January this year, is steering its investments away from mining and metals companies that don’t set appropriate environment, social and governance goals, including around decarbonisation.
BWMT’s Hambro and Markham wrote: “Over the last year we have seen mining companies articulate how they will reduce their own emissions, with companies generally looking to reduce emissions by 30% by 2030, with many targeting net zero by 2050.
“Over the next decade, the reduction of emissions will be largely achieved by switching to a renewable power source for mining fleets, transportation and parts of the processing circuit. Beyond this it becomes more challenging to achieve net zero emissions and will require advancement in technology in areas such as green hydrogen for the hard to abate emissions.”
At the same time Hambro and Markham talk about the almost unfathomable investment required to decarbonise global transport systems and energy grids over the coming decades, and the subsequent demand for key commodities. “In our view, the market is underestimating the impact that the energy transition will have on commodity markets, particularly on the supply side. Copper, battery-related materials [lithium, cobalt, nickel] and rare earths are key beneficiaries. Each of these commodities will see significant demand growth as renewable energy investment is increased, the grid is upgraded, electric vehicle penetration grows and the requirement for battery storage increases.”
The connection, or disconnect, between social, economic and environment pressure to decarbonise, the supply response needed from commodity producers, and the massive challenges the mining industry faces in moving away from current large-scale, energy and water intensive production practices to more efficient methods, is not made in the BWMT report.
While Jetti may have a technology that enables more copper to be economically produced from material that is currently not feasible to mine, others will surely be needed to enable widespread change in mining and recovery approaches.
BWMT says its investment policy is aimed at providing diversified exposure to mining and metal assets worldwide. “While the policy is to invest principally in quoted securities” royalties on metal production and even physical metals are okay and “up to 20% may be invested in unquoted investments”.
Jetti was understandably “excited to welcome BlackRock World Mining Trust as new investors”.
Other mining technology companies with significant roles to play in the industry’s decarbonisation and broader ESG shift might also be encouraged by the signal the BlackRock investment sends.