- MTM Critical Metals has attracted investors from the big end of town keen on its Flash Joule Heating technology
- Terra Capital analyst Dylan Kelly, a well known rare earths commentator, says the innovative method could solve a big critical minerals processing problem
- Deal to extract semi-conductor materials gallium and germanium puts junior on frontline of trade war
Renowned for his knowledge of the rare earth market and technology, Terra Capital analyst Dylan Kelly says the multi-million dollar fund is branching out by placing bets on processing tech it thinks could revolutionise the critical minerals industry.
“In my mind, technology like this, it’s a bit outside our wheelhouse in terms of what we do as fundamental investors. But you can see the potential that this could unlock,” he said.
Kelly is talking aboutMTM Critical Metals (ASX:MTM).
Once a standard minerals explorer, which listed amid a boom of mining IPOs a few years back, MTM has had a transformative six months.
Now led by Michael Walshe, the junior acquired the rights to a technology developed by researchers as Rice University in Houston called Flash Joule Heating.
It’s now looking to establish a one tonne per day demonstration plant in Texas by the fourth quarter of this year after a flurry of investor interest in the novel processing tech that could reframe the narrative around the costly and environmentally sensitive process of scrap recycling and critical minerals processing.
The company’s share price has lifted over 200% in six months, rerating off the back of a deal with US-listed Indium Corporation, a supplier of specialty metals to western customers largely dominated by Chinese producers.
They include gallium and germanium, two commodities used in semi-conductor chips which China has moved to restrict the sale of to US customers.
Terra is one of two major Australian funds that have put serious money behind MTM alongside Pengana Capital, the latter’s 40% ownership by Washington H. Soul Pattinson meaning one of Australia’s largest listed investment managers is also along for the ride.
“At the moment, the commercial potential seems to be what they can do with this gallium scrap process,” Kelly said.
“And I think that this group that they partnered with is a really interesting outfit, but they’ve got three niche waste streams that they’ve got incredibly high concentrations of those sorts of unique commodities in them.
“And by using this process, it’s going to save them a lot of time, energy, effort to effectively isolate and put into its own product.”
Kelly sees similarities toIperionX (ASX:IPX), which Terra has also invested in and owns a proprietary process to produce valuable titanium ingots from rutile and other feedstocks for the US defence market.
One of the best performing ASX 300 metals and mining stocks last year, IPX is now a $1.4bn company.
“It’s of a similar vein, it solves a bigger mining problem,” Kelly said of the $85m MTM.
The origin story
While it’s a novel concept, Flash Joule Heating has origins that stretch back to the industrial age in 1840, when James Prescott Joule laid the foundations for industrial heating elements with the revelation heat could be generated by electrical current.
Electricity has been used to heat metal and vaporise liquids since, notably in electric stoves, heaters and e-cigarettes.
But how is that linked to a process that could clean up the costly and environmentally messy task of producing lithium chemicals, rare earths, gallium and germanium for EVs, wind turbines and computer chips, the technologies at the centre of the next wave on industrial innovation.
In a 2021 article in the academic journal Nature, Rice University researchers revealed their gambit to recover precious metals rhodium, palladium, silver and gold from e-waste.
Led by chemistry professor James Tour, they showed at lab scale that superheating to over 3000 Kelvins for around a second could temporarily separate precious metals from ewaste, extracting it at recoveries of over 80% of rhodium, palladium and silver and over 60% for gold.
“Urban mining by flash Joule heating would be 80× to 500× less energy consumptive than using traditional smelting furnaces for metal-component recovery and more environmentally friendly,” they argued in their abstract.
Having spent a decade at Metso, the world’s largest technology supplier to the mineral processing and metal refining industries, MTM CEO Walshe first recommended when he was consulting to the company that the technology be tested on spodumene concentrate.
“A major industry secret is just how energy- and acid-intensive it is to extract lithium from spodumene,” he said.
“I sourced a high-quality spodumene concentrate from a leading Western Australian mine and tested it using FJH.
“The results were very impressive; FJH achieved in minutes what conventional kiln technology takes several hours to do.
“That was a lightbulb moment. I had known about the “spodumene problem” for nearly eight years, ever since working with several lithium producers in Western Australia, but this was the first time I had seen a viable alternative to the highly challenging calcination step.”
A similarly process is used in rare earths and pyrochlore (niobium) processing. Kelly described FJH as “a revolutionary type of concept that I’m surprised hasn’t actually been done before.”
“One of those elements that really gets me barred up is what they’re doing with rare earths,” Kelly also said.
“They’ve made two announcements on that phase. But rare earths is a nightmare to process. The first two stages is called cracking and leaching, and it typically uses like a what’s called a rotary kiln.”
That’s the processLynas (ASX:LYC)is using at a new plant in Kalgoorlie, which now has sulphuric acid headaches after its supplier BHP shut its nearby nickel smelter, the main source in WA.
“It’s a giant big 5m diameter steel pipe that turns very, very slowly and superheats the material inside about 1200 degrees and uses a load of acid – nitric, sulphuric acid,” Kelly added.
“There’s one big vat, the concentrate is dumped in there and that process liberates the lanthanide chemicals from the ore or from what’s effectively a potassium concentrate.
“If we’re talking about Flash Joule Heating, it doesn’t matter if it’s rare earths or other concepts – what happens if we don’t actually use all that energy, all of that capital to do that?”
Supply chain insecurity
The agreement with Indium Corporation has thrust MTM into the heart of two major trends – the competition for the US to secure its own supplies of metals now largely produced by China and new Republican President Donald Trump’s plans to revive domestic manufacturing.
Walshe describes the deal with Indium as “major external validation” of the FJH tech, with MTM this month announcing ‘very high recovery rates’ of both gallium (~90%) and germanium (~80%) from semiconductor metal refining waste.
Under the MoU, Indium will supply scrap material grading as high at 20% indium, 15% gallium and 18% germanium.
A total ban of the latter two metals, which China has restricted the export of on two occasions in 2023 and 2024,could cost the US economy as much as US$3.4bn a year in lost productivity according to the US Geological Survey.
“Given the strategic nature of these metals, and how they are currently being used as geopolitical weapons, MTM should be in a great position to benefit from any Department of Defence-led initiatives to onshore critical metal back to the USA, not to mention support for metal refining in America under the new Trump administration,” Walshe said.
“We are very excited about then next four years under a Trump government and think the tailwinds for what we are doing will be substantial.”
Terra chief investment officer Jeremy Bond cited the critical metals thematic as one of the key attractions of MTM and IperionX to the fund, which holds close to 9.4% of the company.
“There’s nothing rare about rare earths—what is rare is the ability to economically and sustainably produce these metals onshore outside of China in a capital-light way,” Bond said.
“US industry has been overly reliant on foreign-controlled supply chains for a variety of critical metals.
“Companies like IperionX and MTM offer a potential solution for the US to help create more secure supply. Security of supply of germanium and gallium are of particular concern given Chinas dominance of the market and its ban on exports.”
Bond views MTM not as an explorer, but as a project developer which, unlike explorers and miners does not have the elevated permitting risk.
“The waste streams they access have no exploration activity attached. These materials have already been mined, processed once or twice, utilised in industry, and now returned to be repurposed,” he said.
“No lengthy approvals process adding years to a development timeline.
Are they a miner? No. They are a processor with reduced risk to commodity cycles and the associated exposures.
“Right now, they are a project developer with a demo plant planned for year-end 2025.
“Are they undervalued? We certainly believe so. Due to the factors listed above, the Company will be able to rapidly de risk the process and we can see a pathway to revenue over the next 18 months, which is far quicker than a comparable rare earth mining project.”
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