Investing in SiTration to secure critical minerals for electrification

2150
7 min readJun 5, 2024

By Jacob Bro, Gemma Shepherd and Max Blanshard

At 2150, we started exploring critical minerals towards the end of 2022, diving deep into battery recycling, direct lithium extraction and copper mining. At the time these topics were far from mainstream, but there were a number of emerging startups that we spoke to and tracked. We have spent the intervening months developing our thesis and characterising the types of business that we believe can be most profitable and impactful. We came to a few key conclusions:

  • (1) The underlying drivers of critical mineral demand are rock solid and the restrictions on supply are highly significant
  • (2) The clean, green, shining cities of the future will remain a pipedream unless we can secure a large, affordable and sustainable supply of critical metals
  • (3) Cities themselves represent an enormous, and growing, deposit of critical metals, which at the end of their useful life need to be recycled (“Urban mining”)

In contrast to when we began our research, you do not need to look far in the news these days to come across the term “critical minerals”. Whether its BHP’s failed bid for Anglo American to consolidate copper mining, Tesla announcing it is aiming to go rare-earth free, or the Inflation Reduction Act’s (IRA’s) incentives for onshoring critical mineral supply, talk of critical minerals is all around us. But all this attention is not due to some sudden exciting innovation, nor interest in another billionaire’s brainchild, but instead is underpinned by some of the planet’s greatest human megatrends.

U.S. critical materials list. Source: United States Department of Energy, 2023.

Global population growth is the first clear driver — there are 8 billion of us today and we will add another 2 billion people by 2050. We are also consuming more than ever: we are using more energy, more electricity, and more materials. We continue to congregate in cities as the unstoppable megatrend of urbanisation ploughs forward, where we consume over 75% of global materials.

In parallel to this underlying growth is the energy transition, where rapid change is occurring at “both ends of the cable”. Countries, cities and consumers are rapidly electrifying: electric cars and buses for transport; heat pumps for homes; electrolysers for industry; even DAC to mitigate those residual emissions we’ve not yet worked out. Many of these technologies themselves require more critical minerals, but they all require more (green 🤞) electricity. And so to meet this demand, the producers are building towering wind turbines and sprawling solar farms, hydroelectric generators and vast arrays of batteries to keep our grid stable. Building this infrastructure is driving demand for more critical minerals. EVs require 6x more minerals than ICE vehicles, while offshore wind farms require 13x more minerals per MW than natural gas plants. Even “the cable” to move all of this extra electricity around needs attention: we need to add or replace 80 million km of powerlines (made of copper and aluminium) by 2040 to get on track for net zero. Overall, it is estimated that total mineral demand for clean energy technologies will quadruple by 2040.

Source: IEA, 2021

Finally, we must set those underlying demand drivers alongside some severe challenges on the supply side. Many of these critical minerals are located and refined in geopolitically sensitive regions: China processes the majority of top critical minerals including almost all REEs; cobalt is primarily mined in war-torn DRC; and 27% of our platinum group metals come from heavily sanctioned Russia.

Source: IEA, 2021

Additionally, the mining industry is facing degrading ore qualities. Copper ores have declined 70% in the last 40 years. Some miners are now looking again at their mountains of waste, which a couple decades ago were considered worthless, as sources of metals with higher grades than remaining reserves. Ores are also increasingly complex, with multi-metal ores requiring additional processing to extract their full value. In some locations environmental regulations are a bottleneck to mine expansion — the miners of lithium-rich brines in South America face permitting challenges due to the catastrophic impact water extraction is having on the water table for local inhabitants and wildlife. Finally, mining is slow — it takes an average of 17 years for a newly identified mining site to ship its first tonne of ore, due to the vast infrastructure required in remote locations and the even greater burden of regulation and permitting.

Example ore grade declines at the worlds largest copper mine, Escondida. Based on ERIG, BHP, Cochilco, ERI, 2022

When any commodity so integral to our economies and way of life becomes squeezed, it is natural that governments start to take action. The Inflation Reduction Act in the US incentivises onshoring or nearshoring of critical materials (including battery recycling) both directly through the Production Tax Credits for critical materials and indirectly through the Clean Vehicle Tax Credit that in part requires battery minerals to be “extracted, processed or recycled in the US or a free trade partner of the US”. In Europe, the EU Critical Raw Materials Act is a step towards ensuring more diversified and sustainable supply chains through setting ambitious domestic extraction, processing and recycling targets by 2030.

We met Brendan and Jeff’s team while we were in the early stages of our research into critical minerals, and throughout our research we kept circling back to them. Here were two razor sharp founders, spinning out highly differentiated and patented tech from MIT, iterating and improving at insane speed. They had also designed their product for manufacture and deployment at scale, and rigorously tested their go-to-market strategy, resulting in a significant partnership with one of the worlds largest mining companies.

At the heart of SiTration is a silicon-based membrane — it can withstand the harsh acidic environments of mining and battery recycling, and its semi-conductor properties enables it to operate as an electrode for electroplating, as well as a filter with enhanced rejection, all by tweaking the size of the pores in the membrane and the voltage passed across it. The manufacturing technique is lifted from the solar panel industry, and the modular operational setup means it can be deployed into applications ranging from mining waste water remediation to battery recycling.

The tunability of the membrane means it can be calibrated to extract many different metals and minerals, and has been demonstrated for extraction of copper, cobalt, nickel, PGMs, and other precious metals. Other targets such as REEs are also possible. The platform nature of this technology meant that many paths were open for Brendan and his team to explore. In his own words Brendan “efficiently meandered through the market landscape”, and soon identified copper and critical minerals as the initial focus for the business. Mining waste water valorisation and remediation presents a large and impactful initial opportunity, where the technology can be scaled with partners that are willing to pay for this service. Mining companies are under increasing pressure from regulators to reduce their environmental impact, and from shareholders to reduce liabilities associated with mining waste. They are also acutely aware that they are leaving billions of dollars of materials in their waste heaps.

Source: NGI, 2024

In the future, urban mining markets that are relatively nascent today are also expected to become more attractive, such as battery recycling. Existing challenges of low end-of-life battery volumes, and over-capacity of recycling facilities means that technologies focused on improving margins by reducing cost and increasing the recovery of valuable elements are well placed for adoption. SiTration’s opportunity to develop and iterate their tech within the mining space today means they will be primed and ready to enter these new markets when they make sense.

We could not be more excited to lead SiTration’s $11.8m Seed round, alongside a dream-team of value add investors BHP Ventures, Extantia and Orion Industrial Ventures and participation from previous investors Azolla Ventures and E14 Fund.

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2150 is a venture capital firm investing in technology companies that seek to sustainably reimagine and reshape the urban environment. 2150’s investment thesis focuses on major unsolved problems across what it calls the ‘Urban Stack’, which comprises every element of the built environment, from the way our cities are designed, constructed and powered, to the way people live, work and are cared for. Find out more at www.2150.vc. 2150 is a part of Urban Partners.

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2150

2150 is a venture capital firm investing in technology companies that seek to sustainably reimagine and reshape the urban environment.