Meet SA-born Brian Menell: Betting big on electric batteries

JOHANNESBURG — South African-born mining veteran Brian Menell is shifting his focus to what looks set to become the next gold rush. Demand for minerals that make up batteries, for the likes of electric cars and other smart devices, is expected to soar over the next few years. Many minerals such as cobalt, lithium and tungsten are contained in modern batteries that have driven the globe's tech revolution. Miners have sat up and taken notice as the likes of Glencore has made big plays in the space. However, as Brian Menell in this interview explains, China has come to completely dominate the mining and supply of these key materials. But Brian — who is part of the Menell family that is well-known for having founded successful SA mining and industrial conglomerate the Anglovaal Group — sees new opportunities in tapping mining operations outside of China in order to provide an alternative source of these key minerals for the world's ever-growing battery market. Menell, from his office in London, tells us more in this interview. – Gareth van Zyl.___STEADY_PAYWALL___.It's a pleasure to welcome mining industry veteran Brian Menell on the line from London. Brian you've started a very interesting venture called TechMet, which is backed by high net worth people and which seeks to challenge China's dominance in the supply of minerals used in battery manufacturing. What motivated you to launch this new venture?.We set up TechMet about a year-and-half ago as a vehicle in which to build a portfolio of projects that mine, process and recycle what we believe are the key ingredients of the tech revolution. These are key metals that go into batteries, electric cars, and other disruptive technologies. We did this for two reasons. One, it's in recognition of the fact that the exponential growth and demand for batteries, electric vehicles and other technologies that rely on minor metal inputs is exponential and inescapable. Two, the supply of the key ingredients is, in many instances, not sufficiently scalable and, in many instances, is controlled or significantly influenced by China who have had an enormously successful 15-year programme of securing control over the input of tech revolution. This will result in a market environment where these commodities will outperform other commodities by many multiples over the next 5-10 years..Can you give us an idea of just how dominant China is in the space that you're going to be operating in, and does this also mean that you'll be rivalling the likes of Glencore, who, as you know, are playing quite heavily in the battery mineral space?.China's influence or control over the key strategic technology metals vary across the different metals – all of which obviously have different market equations and different usages. I think the estimates vary but, certainly, Chinese control of rare earth metals is overwhelming – probably more than 80% control of the primary resources and more than 90% of control over processing capacity and intermediate product. Cobalt is probably of the order of 65% of global supply. Lithium is probably now in excess of 60%. Tungsten is probably in excess of 70% as is graphite and the list goes on. So, China (to their credit) has foreseen the demand-supply tension in these key metals and has set about and successfully executed over the last 15 years on a strategy to secure a dominant position..You know, it would be very presumptuous of us to suggest that we're going to challenge China. China is very big, very rich, and very powerful and we are a private company funded with private money to create value in this very interesting and compelling space. Obviously, there are other people engaged in this arena. Glencore is a very strong producer of cobalt and will continue to grow and be a significant player in that particular metal, which we are likewise engaged in (particularly through our recycling side of our business). I don't think we are particularly dominant players. I think that would be ridiculously presumptuous of us but we aspire to be significant players across a number of these minor metals, which are small markets where you can be a significant player as a $1bn company as opposed to a multi-billion dollar company such as Glencore or the big Chinese state concerns..In which part of the world are you then looking to tap mines or potentially set up mines in order to get these materials? I read some of the lists of the countries that you're looking at and it really seems to be spread across the globe?.Yes, our interests include producing tin and tungsten mines in Rwanda, producing rare earth projects with a joint venture to develop processing capacity in Burundi, or at least production in Burundi and processing capacity elsewhere. We have an interest and a partnership with a nickel/cobalt project in Northern Brazil. We have an interest in partnership with a very innovative lithium-ion battery recycling technology company in Canada with a programme to commercialise their process for North America and Northern Europe. We also have a control/ownership of a vanadium speciality chemicals plant in the US in the state of Arkansas. Our present portfolio and priority projects – which we are now busy funding and developing as we grow – are reasonably widespread across Africa, and North and South America..We have looked at various projects elsewhere and we'll continue to do that. So, that portfolio is obviously not set in stone but within that portfolio, we already have the capacity to deploy significant additional capital over the next two years and be a significant player in certain niche markets..Talking about capital, you're also looking to raise $80m and then go on to invest $400m in three years. How has the capital raise gone thus far?.We closed our first-round financing approximately five months ago. And with that we obviously put in certain assets and funds as principals and we added to that equity financing from eight high net-worth individuals and family offices. The round two financing, which we are ready to proceed within the coming weeks, will draw on our existing shareholder base – many of them who would like to follow their interest and participate with further capital and a broader universe of big individuals and family offices in parallel with sovereign sources of funding. We are working with various government agencies in the US and in Japan to complement that private equity financing of TechMet as a private vehicle with both equity and project debt financing from US government and Japanese government sources..If all goes to plan, you've also been quoted as saying that TechMet will go public, offering shares worth about $1bn in about five years' time. That's obviously quite a long way away in the future, but do you have any ideas on where you could list yet?.No. Obviously, the choices are obvious. It's a long way off. It's a broad strategic-intention to work towards when it comes to that time-frame and that outcome from a crystallisation of value and creation of liquidity for our shareholder point-of-view. But what the numbers will be, what the market will be, what the scale will be, and what we'll do between now and then in order to grow bigger quicker through corporate activity and other means, remains to be seen. That's a very broad abstract intention and strategic case-based vision. Obviously, it's not something that we can – at this stage – put any detail to..Just as a last question: you obviously come from a strong mining background here in South Africa. You're part of the Menell family, which founded one of South Africa's most successful mining and industrial companies – Anglovaal Group. You also spent a long time at De Beers Group. What is your take on the state of the South African mining sector these days, and do you think it has the potential to get involved in this possible battery boom that we're about to see?.It certainly does. There are some very interesting resources in South Africa which will benefit from the market performance of this suite of metal. South Africa's mining industry, as you know, has had a challenging few years on a number of fronts with respect to legislative and regulatory-moving goalposts, functionality, labour issues, and power generation issues etc. I think some of these problems are now being addressed and it is a very desirable time – given the intentions of the new government – to re-engage in the South African mining industry with the view to looking for these opportunities to invest and develop into the arena of technology metals, which is what TechMet does. South Africa's challenges remain but the outlook is much more positive than it was and the opportunities are considerable..And could TechMet look at South Africa as a possible option in terms of your broader universe?.We're certainly interested in looking at projects in South Africa..Brian Menell, thank you so much for chatting to me today. It's been a pleasure talking to you and very interesting finding out more about TechMet..Great. Many thanks.

Meet SA-born Brian Menell: Betting big on electric batteries

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