10-K: TMC The Metals Company Inc. Navigates Regulatory Path and Advances Deep-Sea Mining Project in 2024

TMC The Metals Company Inc. reports on its progress in deep-sea mining exploration, regulatory navigation, and technology development in its 2024 annual report.

Summary

• TMC The Metals Company Inc. is focused on exploring and developing polymetallic nodule resources in the Clarion Clipperton Zone (CCZ) for critical metals.
• The company holds exploration rights through its subsidiaries, NORI and TOML, sponsored by Nauru and Tonga, respectively.
• TMC is pursuing a U.S.-based regulatory pathway under the Deep Seabed Hard Mineral Resources Act (DSHMRA) and is preparing to submit an exploitation contract application to the International Seabed Authority (ISA) for the NORI Contract Area on June 27, 2025.
• In November 2024, DeepGreen terminated the Marawa Services Agreement, which is not expected to have a material impact on the company's financial results.
• The company is developing a commercial offshore nodule collection system with Allseas, targeting a production capacity of up to 3.0 million wet tonnes per annum.
• PAMCO successfully produced approximately 500 tonnes of calcine from nodules at their facility in Hachinohe, Japan in 2024.
• The company is conducting an Environmental and Social Impact Assessment (ESIA) and Cultural Heritage Impact Assessment (CHIA) for offshore nodule collection.
• NORI intends to submit its application for an exploitation contract to the ISA on June 27, 2025.
• The company reported a net loss of $81.9 million for the year ended December 31, 2024.
• As of March 20, 2025, the company had 347,910,742 common shares outstanding.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive developments in technology and partnerships, the company is still in the exploration phase, faces regulatory hurdles, and reported a significant net loss. The future success of the company is subject to many risks and uncertainties.

Positives

• Successful production of nickel and cobalt sulfates from polymetallic nodules.
• Progress in ESIA and CHIA with extensive data collection.
• PAMCO successfully produced approximately 500 tonnes of calcine from nodules at their facility in Hachinohe, Japan in 2024.
• Initiation of a process to explore a U.S.-based regulatory pathway for nodule production.
• Continued support from Allseas for the development of the Project Zero Offshore Nodule Collection System.

Negatives

• Reported a net loss of $81.9 million for the year ended December 31, 2024.
• The ISA has not yet finalized exploitation regulations, creating regulatory uncertainty.
• The company has a limited operating history and has not yet achieved commercial production.
• The company identified a material weakness in internal control over financial reporting.

Risks

• Regulatory uncertainties surrounding deep-sea mining could impact the company's ability to obtain exploitation contracts.
• Negative perceptions and lobbying from non-governmental organizations could affect the company's social license to operate.
• Offshore collection and onshore processing operations pose inherent risks and costs.
• The company's business is substantially dependent on its strategic relationship with Allseas.
• The company may be classified as a PFIC, which could result in adverse U.S. federal income tax consequences to U.S. holders.
• The company may not be able to adequately protect its intellectual property rights.

Future Outlook

The company is focused on submitting its application for an exploitation contract to the ISA and continuing to develop its offshore collection and onshore processing technologies. The company is also exploring a U.S.-based regulatory pathway for nodule production.

Management Comments

• Management believes that polymetallic nodules offer a source of four critical metals that can effectively diversify global supply chains.
• Management believes that the impacts of nodule collection on global biodiversity will be less significant than those estimated for land-based mining for a similar amount of produced metal.

Industry Context

The announcement highlights the increasing interest in deep-sea mining as a source of critical minerals for the energy transition and the growing focus on diversifying supply chains away from China. The company's efforts align with government initiatives to secure access to critical minerals and reduce reliance on foreign sources.

Comparison to Industry Standards

• The document states that the NORI and TOML contract areas are ranked as the world's first and second largest undeveloped nickel projects, respectively, by Mining.com in both 2022 and 2023.
• The Benchmark LCA shows that the NORI Area D project model performed better in each impact category analyzed than all the land-based processing routes chosen for comparison, except for the global warming potential (GWP) and water consumption of producing cobalt sulfate, in which one land-based route performed better.
• The document compares the potential impact of nodule collection operations in the CCZ to the impact of trawling operations, stating that nodule collection would impact less than 1% of the seafloor currently impacted by trawling every year.

Legal Proceedings

• The company is involved in a shareholder class action lawsuit in the Eastern District of New York.
• The company is involved in a lawsuit filed by investors in the 2021 private placement in the Commercial Division of New York Supreme Court, New York County.
• The company is involved in a shareholder class action lawsuit in the Central District of California.

Related Party Transactions

• The company has a consulting agreement with SSCS Pte. Ltd., where a director of DGE is employed.
• The company has transactions with Stonehaven Campaigns Limited and Robertsbridge Consultants Limited, where a director of the company is the Chairman.
• The company received funding from ERAS Capital LLC, the investment fund of one of the company's directors.
• The company has an Unsecured Credit Facility with Gerard Barron, the company's Chief Executive Officer and Chairman, and ERAS Capital LLC.
• The company has a Working Capital Loan Agreement with Allseas Investments, a company related to Allseas.

Stakeholder Impact

• Shareholders may be impacted by the volatility of the company's stock price and the potential for dilution.
• Employees are subject to the company's insider trading policy.
• Developing countries may benefit from royalties from commercial production of polymetallic nodules.
• The company's activities may impact marine wildlife and ecosystem function in the CCZ.

Next Steps

• NORI intends to submit its application for an exploitation contract to the ISA on June 27, 2025.
• The company will continue to develop its offshore collection and onshore processing technologies.
• The company will continue to conduct environmental and social impact assessments.
• PAMCO, with our support, expects to complete the feasibility study by mid-2025.

Key Dates

Keywords

Polymetallic nodules, Deep-sea mining, Critical metals, ISA, Exploration, Nickel, Cobalt, Copper, Manganese, Allseas, PAMCO, ESIA, CCZ