Metals Refining - From Mining to Brining: Ep 142

Transcript

Michael Liebreich

Hello, I'm Michael Liebreich and this is Cleaning Up. My guest this week is Alex Grant, co-founder and CEO of Magrathea Metals. Magrathea is developing a new process for the production of magnesium. And for disclosure, the major supporter of Cleaning Up, Capricorn Investment Group, led their seed round last year, and I am a modest investor. Please welcome Alex Grant to Cleaning Up.

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So Alex, thank you so much for joining us here on Cleaning Up.

Alex Grant

It's a pleasure. Thank you so much for having me, Michael.

So now I've done my little preamble and the viewers and listeners will already know that you have a company called Magrathea, and I'm a very small investor, and you're doing magnesium. But in your own words, tell us what you're doing.

We're developing a new generation of electrolytic technology for making magnesium metal, which is a very light structural metal, from seawater and brines. So it's a way to make carbon-neutral, primary light metal without any mining and the supply chain of the structural metal.

So give us a primer on magnesium. Why is magnesium cool?

So magnesium is pretty neat, being the lightest structural metal, so it's about a third lighter than aluminium and three to five times lighter than steel. It can be made from aqueous resources, which you can basically never do with aluminium and iron, which is quite unique. And it actually has been for almost a century or more than a century. It's very easy to die-cast, so in a world where you know, Tesla and other automakers have adopted very, very large die casting machines for making auto parts and consolidating auto parts into one big part, magnesium has a really kind of inherent advantage to be introduced more in manufacturing in transport for ultra light-weighting.

So what sort of components are we going to make from magnesium? What can we what are the uses?

So historically, mag has been used all around cars. So there's serial production pieces for roofs, doors, kind of centre consoles, dashboards, kind of almost every part you can imagine. So in principle, it is possible to use mag for eliminating dead weight in all of those applications. There's people working on using mag kind of in conjunction with aluminium to make ultra lightweight enclosures for battery packs and EVs. So yeah, it's actually really quite versatile.

I'm sure when I was at school, we got like magnesium filings, and they kind of burned. But you can do things like- that apparently is only because they were filings. Is that right?

Yeah. So when you grind up any metal, whether it be iron, or aluminium or mag, it will light on fire as a powder, with very high surface area to volume ratio. Magnesium also has a relatively high vapour pressure when it's molten. So if molten mag is exposed to air, it can have kind of thermal properties. But in you know, in common use cases like big chunky metal parts, or in an ingot like these guys that we made from seawater, this is virtually impossible to light on fire. And part of the reason why is because it has a very high thermal conductivity. So it whisks away heat very quickly and it won't melt. So basically, it-

Can make things like engine blocks from it, I mean so the really big heavy pieces in a vehicle?

So yeah, Volkswagen actually made the Beetle engine block out of mag for decades.

I thought so, I thought so. So these are your ingots. And I love it because it's like branded; as an investor I'm enormously proud of this. And yeah, it is, it's light. And- so you say it's 1/3 the weight of aluminium? We interrupt this show for a short service announcement. A few times during this conversation I refer to magnesium as being three times lighter than aluminium or aluminum, if you prefer. That is of course not correct, as I'm sure all of you will have noticed. Magnesium is 1/3 lighter than aluminium or aluminum, not three times lighter. Sorry about that! And of course, if you're enjoying these conversations, make sure you like, subscribe and leave a review. And of course, tell all your friends about Cleaning Up that really helps us to be discovered. And now back to the show. And now, your process, is that going to become as cheap as aluminium or more expensive? And where are you- where are you trying to get it to

So when you have a cost structure that's dependent on more or less seawater and electricity, and if you believe in a future of renewable energy abundance from solar and wind principally or you know, advanced geothermal systems perhaps, then you can believe in a future of cheaper electrolytic products in general, and mag really falls into this boat in a big way. We believe we can make magnesium metal with a cash cost that would make it competitive with aluminium. You know, if you look back decades through the literature on magnesium, you'll find over and over and over a reference to the magnesium to aluminium price ratio. So the price of aluminium or mag are rarely discussed, sort of, you know, on their own, but as a ratio. And that's sort of an expression of their fungibility. Multiple times over the last couple of decades, parts have gone from aluminium to mag and vice versa for different reasons.

When you talk about that price ratio, is that per kilo?

Per kilo yeah.

But then you need 1/3 of the kilos of magnesium or is it weaker than aluminum? When you replace a part and aluminum part- I keep- I'm gonna say a aluminium because I'm British. But so when you replace an aluminium part with a magnesium part, do you have to make it thicker or heavier - or not heavier but- how does that play out?

It depends on the part and you know, what kind of load it's going to take and what direction and all these different things that design engineers know a lot about. But um, you know, I think maybe what kind of answers your question is like at what price ratio to things start to flip, right?

Absolutely.

And that ratio is usually between like 1.1 and 1.3. So, because you are buying fewer kilos, you know, people in principle are willing to pay slightly more per kilo.

And other than automotive presumably it's anything that's mobile: aeroplanes, anything that you need a light structural metal, or is that underselling it?

Yeah, no. So Dow used to market mag as the metal of motion. So anywhere where you have to lift something or move something, you know, lightweighting and especially magnesium has a big role to play. So there's magnesium in like every single helicopter, every single plane, I got a picture one of our one of our partners actually pours the the door hinges for Boeing, and I actually have a picture of me holding on with my pinky. So it didn't, you know, every commercial, you know, aeroplane part, every every commercial aeroplane, you can imagine. And every single car too.

Now when you and I first met you were Mr. Lithium. I sort of saw you as the expert and I was asking questions, andin fact everybody was asking questions about, you know, can we scale up lithium production, and you were Mr. Lithium, and-

Big lithium

You were big lithium, that was your kind of nickname or your handle. And then suddenly, you came to me and you said, "Michael, I'm not going to be a consultant. I'm going to go into business. I'm going to start this business." And I was like, "Ooh, lithium, here we come." And you said, "magnesium." And I was like, "Whoa, where did that come from?"

So yeah, I was consulting in lithium for about four years and started my own consulting company, helping people understand, you know, what types of process technologies we needed for producing lithium chemicals for batteries from all different types of unconventional natural resources. And, you know, industrial conglomerates on multiple continents hired me to help kind of advise on these topics. And multiple times, I was actually called out to the western US to Utah, different places to help take lithium out of magnesium chloride brines, so I was sort of accidentally learning about the resource base for magnesium when I was working in lithium. And there's a whole bunch of like, you know, salt chemistry reasons why, you know, they kind of end up together.

Because we magnesium is a problem in the brines we use for lithium, magnesium is a problem, right?

Yeah, it's an impurity that gets in the way sometime. So the number one reason why the Salar De Uyuni in Bolivia is so challenging to develop for lithium is because there's too much mag. So yeah, this is- in almost every lithium deposit, mag is an impurity you have to remove. So I was learning all that chemistry-

And your background is chem-eng. So this is not difficult for you to learn about, right?

Yeah. I have a undergrad from McGill in Montreal in chemical engineering and was doing a PhD in chemistry at Northwestern in Chicago, that I left with a masters. So yeah, deep technical background and you know spent six, seven years and in brine chemistry and process technology for natural resources. So yeah, that was the kind of experience that I that was able to-

Okay, so there's a light bulb sort of going flickering about magnesium, you know, learning about it and then- what happened first? Did you did you then meet your co-founder Jacob or did you decide to go for magnesium and then he turned up?

Yeah he really disrupted my beautiful beautiful life I had! So Jacob moved to San Francisco about four years ago to work for Tesla. Before that he did his PhD at Cambridge and chemical engineering and was from Australia. So we're both from wherever of Canada, Australia respectively, not even American. And his first job was at Alcoa in Perth, making alumina to make aluminium. And the result of our job was him thinking about light metal-

Aluminium

Not aluminium you can say whatever you want. I'm just, sorry, I'm interrupting you

No Jacob, and I have many, many jokes about this. So anyways, so no, he was thinking about like metal for a very long time and, and thought that, you know, aluminium had a big role to play in electrification because it was so light and about 30% of the cost of making aluminum is actually electricity and smelting. And being Australian, he's kind of a solar energy maximalist so thought that, you know, perhaps the price of aluminium would kind of come down as the price of electricity specifically came down. But then someone who was, I think, a former hatch engineer at Tesla working on the cathode pilot with Jacob mentioned, you know, what about mag right? It's kind of like aluminum's little brother, you know, every aluminum alloy has magnesium in it, every magnesium alloy has aluminum in it, you know, and they have very similar properties, almost the exact same melting point etc. And he had not thought about mag before, but, you know, it turned out that, you know, 70% of the cost of making magnesium metal was electricity instead of 30. So, it was it was much more congealed electricity than aluminium is, you know, gets called out all the time. But most of the cost of making aluminium is actually making the alumina to get smelted into aluminium, which is all you know, bauxite mining, and the Bayer process and very reagent energy intense. So anyways, we were just hanging out on a Saturday in San Francisco and he brought up magnesium as an opportunity for ultra lightweighting for decarbonisation, you know, we started thinking about how, because no CO2 is directly emitted in electrolysis of magnesium chloride for making magnesium metal, perhaps it could be decarbonized more easily and we still, now we have a lot of information to suggest that's true, so, um, you know, while aluminium is extraordinarily hard to decarbonize, if not impossible, so, basically, he just kind of pulled me down the rabbit hole. And you know, I knew nothing about magnesium alloy at the time. You know, if you would ask me, I would have thought that if you threw it in a lake, it would explode like sodium metal or lithium metal or potassium metal, or even calcium metal, but it's kind of a quirk of the periodic table that magnesium and aluminium are actually kind of right beside each other if you remove the transitional elements. So its properties are way more similar to aluminium than it is like anything else. And you know, if you put it in water, it certainly doesn't explode.

It looks like aluminium.

It looks like a aluminium you can you know, you can lick it if one whatever want to, it won't harm you, right? Like the centre of the chlorophyll molecule in plants is a magnesium ion. So it's like super you know biocompatible and-

What about electrical performance? Because there's this big thing going on with, "hmm copper is really, really difficult in terms of the volumes that we're going to need to electrify everything or nearly everything." But then you've got aluminium, which is a substitute for copper, in some electrical use cases, many electrical use cases. Could we go all the way to magnesium or not?

Potentially, if the price was low enough. You know electrical conductivity to some extent is a function of kind of the density of atoms in a cross section, right? But because magnesium is so light, it basically means you know, you need a-

So you would need- if you were doing a cable out of magnesium, it would start to get pretty big?

It would potentially get bulky yeah I mean, we could we could probably do the calculation, you know, but no in principle, it's possible.

So it's- but for structural use, so it sounds like the substitutions, the really big substitutions that could be quite interesting is kind of aluminium goes into copper but magnesium goes into aluminium, so starts to displace aluminium in automotive and aviation- yeah.

I mean, the thing is, you know, magnesium is fundamentally like not a resource problem. That's something really interesting about it. You can make it from seawater, and it's been made from seawater commercially for decades, multiple times. So you know, as the world faces all these different crises with resources in the supply chain of electrified technology, like you know, mag has a big role to play, you know, we think for kind of reducing some pressure on their supply chains.

And are you going straight for seawater or you, I mean because we were sort of prepping for this and I came up with this little expression which I hope you're going to steal: "from mining to brining". So you're doing this through brines, but are they- are you looking primarily for sort of salts or really going straight to sea water?

So the really hard part of making magnesium metal isn't really like the upstream hydrometallurgy. So these ingots here are actually made from seawater. So this is the first electrolytic metal made from seawater in almost 20 years. So it's possible, you know, we're looking at a whole bunch of different resource opportunities, like different wastes from all different types of operations. You know, when you remove magnesium from molten aluminium to make aluminium foil it's very ductile, it's because the mag has been removed, because it stiffens aluminium, that makes the magnesium chloride waste. You know, making titanium, hafnium, zirconium, that makes-

Are there piles of these wastes that have been extracted, because it's kind of- because it's been a problem in titanium in aluminium. So does that mean that you know, as you sort of scour the countryside, you find piles of this stuff sort of shunted off into tailings dams?

Yeah coming from my lithium brine, you know, experience that I did learn where a lot of magnesium chloride is in different forms, so that gives us like kind of almost like an unfair advantage for like, you know, understanding the resouce base for magnesium metal that very few people have. But, you knokw, to answer your question very high-level without giving away any spicy trade secrets, like year, there's a lot of magnesium chloride out there. So we will make metal from seawater, we have made metal from seawater, but it's just one possibility for making metal.

Now talk me through the normal process for making magnesium. Okay, so it's this fantastic metal, it's three times as light as aluminium and- so you can use it in all sorts of ways. And it will reduce - it's both- you could make it zero-carbon, but it will also reduce the energy because if it's lighter, then a car would you know drive further and all those sorts of good things. So it's fantastic. So why are we not using loads and loads of it already? What's the big issue? And how- is it to do with how it's made now?

So cumulatively, over the first 100 years of the industry from maybe 1910 or 1900, the majority of magnesium metal ever made was made electrolytically from seawater, by people like Norsk Hydro and Dow. So that is actually like the normal technology for making magnesium metal. And this is like industrial history that like everyone has kind of forgotten. We've started retelling that story of how compelling that is for the era we live in now. About 30 years ago, the Chinese started, you know, essentially taking over the industrial base of the West in many different ways, not just mag, but aluminium, even steel, lithium, everything right. And they tapped into a different cost structure than sea water and electricity. It was a process called the pigeon process, which basically takes in inputs of more or less coal and labour. So in the 90s and early 2000s, China had a lot of very low cost, coal and labour. Both of those things are becoming and have become more expensive in China in the last couple of years. So it's become a less competitive process on a cost basis. But in the 90s, they were able to essentially dump, like they did to many other industries, into Western markets-

And their raw material is magnesium carbonate. So it's not the same raw materials, not these brines or salts or anything-

Exactly, completely different. So you'll take likea dolomite, magnesium carbonate, calcium carbonate or pure magnesite, and react it at over 1000 degrees Celsius with ferrosilicon, which is itself the whole, you know, coal-derived product.

So you're heating it up- why with ferrosilicon? You're trying to get the oxygen out of the- no, you're trying to get- yes

You're reducing the magnesium from two plus to zero to metal. And you're making a vapour phase magnesium metal, which then gets condensed in a vacuum. And then a guy goes in with a shovel and like chips it out. So it's a crazy process, and like, it would never be economic if you didn't have essentially free heat from coal-processing.

What is the life expectancy of the guy with the shovel who chips it out?

I can't imagine very high. You know, we have pictures from some of these plants, I mean, it's like something out of, you know, industrial revolution, you know, Britain,

You know, we shouldn't be flippant about the human cost of, you know, China has dominated sector after sector, and one of the ways they've done it is through environmental dumping. So they have- it wasn't just that it's an environmentally- a carbon-intensive process at 1100, 1300C, and that labour was cheap. They were actually, you know, they were actually- there was a human cost - people were dying because of the way that they're doing this right?

Yeah, and the advantages that made that possible in the 90s and 2000s are going away. So in China, they're actually trying to commission an electrolytic magnesium metal plant to sort of, you know, be able to shut down some of that really nasty labour-intense production. So already in China, that's the direction they're going.

But does that mean- I mean, is the story here, you know, China was environmentally and humanly dumping, and that's stopping, and now magnesium is going to become more expensive? Is that the story here?

Um, I don't think that it necessarily has to become more expensive. You know, if you can own a cost structure that's mostly dependent on seawater and electricity, and if you believe in a future of renewable energy abundance and low cost power, then it's relatively easy to believe in a future of low cost magnesium metal. So you know, what we've done over the last year to 18 months is go back and survey every attempt ever at electrolytic magnesium metal from brines and seawater, and, you know, try to avoid the mistakes that other people have made to radically reduce the cost of that metal and develop a new generation technology that solves legacy cost issues. So, yeah, going forward, you know, we think we can be really competitive with Chinese pigeon process. But you know, meanwhile, you know, the Western market and the Chinese market are kind of quite different, too. So, the price of mag in the US right now is, you know, structurally two to three times higher, because of an anti-dumping duty, which protects the one primary metal producer in the entire Western world. And ex-China producers typically can charge like 2x, because, you know, the defence complex in the US doesn't want to depend on Chinese metal.

Because you will remember when we first spoke about me investing in Magrathea, and you sort of said, "well, you know, yeah, it's more expensive, but it'll be fine, because people won't buy the cheap Chinese stuff, they'll buy this more expensive [stuff]," and I said, "I don't know how that works" because it's kind of sounds good in theory and right now, you know, people want to de-risk and they don't want to buy Chinese, but you know, are people really going to continue to pay twice as much for a metal, you know, as they have to? Or- is that still part of your kind of business plan? I need to know this as an investor. Is it still part of your business plan to kind of only sell to people who will overpay for the results?

Yeah, no, that's the thing, after we really dug in, you know, and worked on it for a year, we realised, wait, you know, if we can really own this cost structure enabled by ownership of technology, you know, we don't need a premium, we don't need a green premium, we don't need a red, white and blue premium, we will likely be cost competitive with Chinese pigeon process. So that is really very much not part of the calculus at all anymore. And we think that's what you really need if you're going to be competitive with aluminium in the long term.

I agree, which is why you know, when you first said, "Oh, it's okay. It'll be more expensive, but it'll be fine"- and so what you're saying is no, you've actually sharpened the pencil, come back. And presumably, it's things like you've got a continuous process, very cheap electricity, you found some good resources, those sorts of things.

Well, also being able to use intermittent energy in a kind of engineered way, right. So with aluminium smelting, for example, it's basically impossible to, you know, use a variable energy input because of the chemistry of molten cryolite and alumina dissolution. Like, if you change the composition or temperature, everything freezes, or you start having big problems in your smelting process. But in our process, because the temperature is way lower, and because of just the inherent chemistry of the electrolyte-

There are people who disagree with that - sorry to cut in but you know - I think I put you in touch with EnPot, and then there's, there's a few people actually looking at using aluminium smelting as a way of providing demand response and load following. But you're not, you're not convinced, or you think you can do it easier?

No, I really, I really like them and I really hope they're successful. But that's like a plus or minus 10% thing. Like we're pursuing like a plus or minus like 50% thing, which could allow you to, like, you know, shut down for 15% of the day. With aluminium smelters, you only have like five to ten degrees of superheat above the liquidus. So, you know, if the temperature drops in your cell by 10 degrees Celsius, everything freezes. In our process, we have like 100 degrees of superheat. So you can imagine a world where if you have, you know, $20 per megawatt hour power for 70% of the day, then you could - you know, I'm not proposing this is exactly what we would do, there's a bunch of different ways we could do it but like - you could shut down for 20% of the day, like cut out the part of the day where the price of electricity is high and then go back to making metal when it's cheap again. So you can never do that with aluminium even with EnPot's technology. But again, I really like EnPot so-

But what are you doing that's particularly clever, right? Because you started by saying that historically, all magnesium was made this way right and there's- in Norway there was a plant, there was one in Canada - Becancour, and they all get shut down, they all got out-competed by the Chinese. Can't those people just kind of reactivate and have the same economies of scale or a bit of flexibility that you'll do- what's the clever here?

We've developed a completely different way of processing the magnesium chloride salt, before it gets melted and electrolyzed. So that's actually the hard part of electrolytic magnesium metal, it's kind of bizarre, not very many people know about this chemistry. But if you try to make anhydrous magnesium chloride with just like heat and vacuum, you won't make anhydrous mag chloride, you'll actually make magnesium oxide, which is inert, because of the hydrolysis reactions,

So you're trying to dry this thing and if you heat it too much, then it oxidises and you're kind of-

If you heat it in the wrong way, it, you know, gets converted to mag oxide.

See I'm doing due diligence that I didn't do when I invested, so there is something clever and some patents and all the rest of it-

Our sponsors at Capricorn Investment Group did the diligence. But no, we've developed a much simpler, more robust, low capex intensity way of doing that final drying step. That's really the hard part. And Norsk Hydro at Becancour and Porsgrunn in Norway, used to be able to make really nice, low water content, low oxide content mag chloride, really anhydrous, great for electrolysis into metal, but the process used was extraordinarily expensive and extraordinarily capex intense. So hydrochloric acid drying process. So, you know, you can only imagine hydrochloric acid gas, not aqueous hydrochloric acid gas is like one of the most corrosive things you can imagine. So, you know, if you hire an engineering company to build that for you, they're just gonna, like, make everything out of titanium, right, because, you know, they want to be able to put a warranty on it or, you know, guarantee that's going to work and not suffer the embarrassment of it corroding right, so the capex just goes to the moon. And, you know, I have almost like an ideological view that if you're going to compete with with China, you need to unlock totally different cost structures on both OpEx and CapEx to reduce, you know, things like CapEx intensity, or else, it's just not going to work. Because raising money to finance these projects is not, you know, just a walk in the park. So that's been like a, you know, big kind of guiding, you know, thought process for us is like, how do we kill CapEx intensity, especially, to be able to take advantage of that low cost energy?

So this sort of process of mining to brining, of going from, you know, lots of crushing rocks, and then heating them up to very high temperatures and so on, yours is not the only product and this is not the only process where this is being sort of, you know, attempted or tried. So is this part of a kind of mega-trend? Can one say mining to brining is like a really big deal that will help us to get to net-zero?

Yeah, um, that's an interesting question. You know, I'm kind of a brine maximalist, right. Like, I think there's a lot of interesting things we can make from brines like metal, you know, I've worked on a whole bunch of different lithium brine projects over the years before I was working on this,

Because in lithium this is called direct-lithium-extraction, DLE-type processes. Is that right?

Yeah. So you know, my kind of like, most popular consulting product that I had before I was working on mag was a DLE technology review report. And I supplied that research product to like, you know, lots of people who we can't name who are making huge investment decisions off the back of it. So I went really, really deep on brine process technology for lithium. And in the process, I realised like, "wait, we're actually making a lot of things from brine already." You know, bromine is made from brine in places like Arkansas, calcium fluoride is made from brine, sodium chloride - salt, of course, is made from seawater - seasalt, right. And yeah, I just found it utterly like, I mean, tantalising and beautiful that we can make structural metal from brine too, I mean, that's just kind of, you know, a lot of people- a lot of people think we're doing science fiction stuff.

But does it go beyond just brines because the brine is kind of connected with the extraction, but just in general, going from thermal chemistry to electrochemistry. Because I see a lot of these kind of, I see that theme popping up and things like, Haber-Bosch process, couldn't we do that differently? Or fixing CO2, so instead of doing sort of direct air capture using amines, you would use an electrolytic process. Is that- is any of that going to work? Or is this kind of like just extracting money from venture and private equity players?

Well, I think in all like frontier technology spaces, you know, I mean, it's a portfolio right, like 80 to 90% of projects will fail. Of course, that's always true. I think that the theme of electrification of industry is really powerful and legitimate. There's already lots of electrochemical processes that have been running at full scale for decades, right, like Chlor-alkali for making caustic and HCl

Smelting aluminium

Aluminium, and others. So it's not a new idea at all. I am not like necessarily, you know, an electrochemistry maximalist the way that like Jacob might be-

Your co-founder?

Our co-founder yeah, our CTO, but you know- because I think that there's probably ways to make clean things that don't necessarily depend on direct electrification. But in this case, it's kind of like almost obvious that electrolytic processes is superior so

What about- obviously, so you said 70, 80% of projects fail, hopefully, obviously, not Magrathea and this process, but

I don't think it will, yeah I mean-

Obviously not, having raised a chunk of money and devoted your career and your co-founder's career to it. What about though, there's a really interesting one, which is steel. So you've got a lot of momentum. There's a lot of wind in the sails of hydrogen reduction for steel, but there are the people who want to do it electrolytically, so there's Boston Metal, there's Fortescue Future Industries, there's actually a lot of people looking at electrolytic steel. If you had to bet with your, you know, electrochemistry and chem-eng hat on, what would you say? Hydrogen wins or electrochemistry wins?

Oh, man. I mean, I mean, hydrogen is electrochemistry in the green hydrogen, you know, vision.

Yes. But it's electro- but it's producing the green hydrogen and then

Indirect, yeah.

using it for chemical reduction. I mean, direct, electrical,

Yeah directly electrify iron reduction. Yeah, I mean, I think potentially, both could be successful. I don't really see why- I don't really see a reason why both wouldn't be successful if energy is really that cheap. You know, CapEx could kill directly electrified steelmaking, if you need like, billion dollar anodes. But I don't- yeah, I'm not really severely biassed against either-

The challenge there is the anode, it's a very high temperature isn't it, it's like 14, 1500 degrees, it likes to melt, everything likes to melt at that point no?

So yeah, so Boston metal for example, in I think the Nature paper that was kind of like the foundation of Boston metal was I think in 2012 or 2014, it was on essentially inert anodes like non-carbon anodes for reduction of iron oxide to iron. And, you know, non-carbon anodes in aluminium smelting is almost like this, this this kind of unicorn technology that people have pursued for decades. You know, there's history going back 50, 60 years even on non-carbon anodes. But aluminium smelting, you know, we're talking like kind of 950 to 1000 C. With iron, you have to get above the melting point of iron and whatever electrolyte you're using, so, so yeah, you're a couple 100 degrees Celsius even higher than that.

What temperature are you gonna be at?

We're at, like, less than 700 C. So it's like preposterously lower temperature than even aluminium smelting. And the chemistry is much more favourable. So like, molten fluorides, that you have an electrolyte for aluminium smelting are really nasty like cryolite, you know, the stuff that is the main component of the electrolyte, it's often called the universal solvent. And if it leaks, then, you know, people have said, like, it'll just like corrode its way to the centre of the Earth, you know. Of course, it freezes, but like, but it's terribly corrosive. So those, you know, those challenges I can imagine can only be almost worst with iron.

It feels like you're sitting here and sort of saying, well, you know, whatever it is, 18 months, two years into this Magrathea journey, you still haven't seen any showstoppers. And you're still, you know, you seem very bullish at least, that's the impression you give, what keeps you up at night? What's- what're the things that you really think, okay, if it's going to fail, it's going to fail because of x - what is x?

So just to like, kind of riff on what you just said, there, like, the purpose of that angel round that you passed on a year and a half ago, was to figure out like, is this a good idea? And should we work on it, right? And we had some very nice California-types, you know, YOLO, some money in at a very low valuation, right. But the purpose of the seed round was was for us to, you know, come back and basically be like, "Oh, my goodness, like, we think we've discovered something really significant here." And in also, you know, inventing a new process for the dehydration of a chloride. So our conviction in what we're doing and the future of mag and lightweighting has basically only grown and solidified. I'm in a very lucky position right now in like late 2023, to be, you know, kind of almost extraordinarily well capitalised, we brought on some of the best investors in the world in our seed round, it was perhaps almost too big of a seed round. It was more money than we were even going after. So I feel very, very lucky, very blessed to have that. We've been able to recruit an incredible team. I mean, we have like, you know, in software, they call them 10x engineers, you know, we're doing chemical engineering so it's different, but like, I legitimately think we have people doing the job of like, five. So that's going extraordinary. You know, if you would ask me six months ago, I would have said recruiting was like the biggest thing I was afraid of, but we've kind of solved that problem, you know, right now we're just, we're just kind of heads down focused on executing and delivering the things that we said we would do out of the seed round fundraise, which is delivering a two-ton-per-year pilot. So the entire team right now in California is completely focused on that.

Two ton per year. So what percentage of everything you've made does this represent?

We've made about two kilos in late 2022-

This I'm guessing is about 2, 300 grams?

It's about 50 grams, it's about 75.

Okay, so there you go. My internal scales are way off. But it's- so you've gone up 5500- you've got two orders of magnitude about from one of these, right? But you need to do two tons a year, you said, so that's a big step, right?

Yeah, it's a big step. But it's still kind of like human scale. Like you can have like a guy like move equipment. So we're not at a point yet where like materials handling and things like that is unruly-

You can still have, like PhDs doing things like grinding and filling things and moving them around?

Kinda, yeah, yeah, we're still we're just at the cusp of being able to not do that anymore. Because the thing is, when you're developing chemical process technology, right, like, the thing that the PhD always like, kind of runs into and thinks it's like a fake problem but it's actually like, sometimes the problem, is things like materials handling, you know, like, how do you just physically move stuff around, right? So we're not at a scale yet where it causes problems. And interestingly, also, like, we only have kind of one scale up after this to commercial scale. So when we deliver that pilot in the next couple of months, we only have one more scale up step to the demo plant, where we're going to build a couple of commercial scale cells. And that's only like a, I think, 40x scale up or something.

40x. So what is the biggest Chinese plant producing today annually?

Like 10 to maybe 30,000 tons per year

10 to 30- so you've got to go from from sort of this type of scale to two tonnes to 40 tons and then-

Like 100, 200 tonnes. 200 tons per year scale in the demo.

In the demo. So are you going for- yeah. So then it goes 2, then 200, you want to do. Okay, so that's quite- these are quite big jumps. All right.

Divide it by two though, because it's two cells.

Okay. All right. But orders of magnitude- you're going up sort of two orders of magnitude each step, right?

Well, in this scale-up step that we're, you know, basically completing right now and commissioning the pilot, it's like a- yeah, it's like something like 100x. But the next one's about 5, so- and the rule of thumb is you never want to do like 1,000x, like 100x is okay, you know 10x - with 10x, you're not being ambitious enough, to some extent.

When do you need to raise more money- just we should also acknowledge that your big backer is also the major sponsor of this, of this podcast, this video, YouTube channel-

I feel like we should like wave to Ion and Dipender.

We should wave to Ion and Dipender, you know, we should look at the camera and say, "Hello and thanks and so on." But realistically- I mean, they are, you know, they've been fantastic supporters of what I do, fantastic supporters of you, and in fact, I probably would have had you on the show kind of anyway, because I think what you're doing is really, really interesting. But when do you need to go out and get another round? I mean, in these kinds of 100x, 100x, you've got like two or three of those still to do, when do you need to go out, and what quantum are you going to need to go out for?

So yeah, we have one more scale up to do in that demo plant, and then we're ready to develop commercial smelters. But there's things going on that I can't- I'm not allowed to announce yet, but in the next couple of weeks, perhaps even by the time that this goes online, it'll be public. We've formed a partnership with a significant government entity that's going to fund most of our scale-up over the next couple of years. So that's kind of deleted our Series A to some extent.

Would that be a government agency that sort of procures this type of stuff, either directly or indirectly?

I'm not allowed to say yet. So let's- but yeah, basically, what it means is we don't- we're probably not really going to need to fundraise for like, absolute minimum a year from now, like, you know, but probably not even, but 2, 3, 4 years, potentially, we might not really need to fundraise.

You said something also about a car manufacturer, I'm not sure if you're allowed to reveal anything, can you kind of, can you tease us at least?

I can definitely tease you, Michael. So, you know, we are doing an R&D project with one of the world's largest automakers already, after about, you know, six months post seed round. Yeah, I can't say very much about it or who it is or anything like that. But yeah, we've- you know, needless to say, we've had some pretty phenomenal traction so far with, you know, people who are interested in mag for die-casting, for lightweighting, people who use magnesium to make other metals like hafnium and zirconium, titanium and all these other things, silicon even, and people who need mag for alloying and aluminium. So, you know people really want non-China, low-carbon, magnesium metal.

Final question, because you know, this is all about kind of leadership in the age of climate change. This all sounds wonderful, and we'd kind of do it even if climate was not an issue, I think. What is the potential impact on the climate challenge of this? And is it fundamentally a kind of, you know, is it a response to climate change? Or is it just- it's something that's a good thing, and it's a, you know, it's a great metal, and in a way, there's a kind of corollary question, which is, is it actually going to help with climate change? Or is it going to just kind of enable us to do even faster cars and bigger aeroplanes and just, you know, does the Jevons effect just totally destroy your contribution to climate action?

So aluminium is 2% of the world's CO2 emissions, right, about a billion tonnes a year of CO2. Magnesium as a substitute for aluminium, you know, gives you a total addressable decarbonisation of like that order of magnitude, so 10s, hundreds of millions of tonnes of CO2. That was why we like started the company, right, because we just think magnesium is just fundamentally easier to decarbonize than aluminium and, you know, if decarbonisation really does matter, you will see that price ratio evolve in a favourable way towards mag, it's almost categorical. It's almost like not if but when, to some extent, because aluminium, primary aluminium is just so hard to decarbonize. And, you know, many of our investors, you know, joined the company because they agree with that thesis and I've now validated that position with some significant automakers, even other automakers who - besides the one we're doing an R&D project with, I also can't really talk about it, but like, you know, that kind of perspective, I feel, is pretty validated at this point. But there's other reasons why we're building this company, right. So being able to eliminate mining from the supply chain of structural metal is like really motivating to me, you know, I've been, you know, trying to shut down the mines and ramp up the brines for more than half a decade now already. So I'm very passionate about that. But you know, the upstream supply chain of aluminium is horrible, right? We're mining primary Amazon rainforest for bauxite to make alumina. It's really awful. It's one of the worst I can imagine for any material. So that's really motivating. But then, you know, in addition, which is like the big thing that kind of changed since you didn't invest in our angel round, and then you did invest in our seed round, right, was, it became very clear that we're kind of in this new decade of great power conflict. And, you know, Pax Americana is over and, you know, supply chains are kind of de-globalising, and magnesium is like the poster child of an industry that was completely destroyed by China. So, you know, we have a lot of, you know, future customers approaching us being like, "Oh my God, we're like, completely dependent on China for all of this material, and, you know, 90% of our EBITDA is underpinned by supply of this metal, so like, you know, we need non-China sources desperately." So that's like one of the biggest things that's changed in the last year.

Look, I'm loving it. I've enjoyed the conversation. As an investor, I absolutely love it, because as far as I can see, you've got lighter vehicles, which will use less fuel, you've got elimination of the CO2 bout of aluminium production as you substitute, you've got an improved and much more, much healthier supply chain, less mining, more brining, which is inherently better, and you're solving the world's geopolitical problems. So what can I say you know, thank you for joining me, thanks for letting me be an investor, and you know, go Magrathea, go Alex, thank you for being here today!

Thank you, Michael. I appreciate it.

So that was Alex Grant, CEO of Magrathea Metals. We'll include in the shownotes a link to the press release on Magrathea's seed round earlier this year, as well as to a white paper written by Alex in Light Metal Age on the bright future for magnesium. If you've enjoyed today's conversation, please remember to like, share, and subscribe to Cleaning Up or leave us a review on your chosen podcast platform. And do please, please spread the word on social media or by telling your friends and colleagues. And, if you want more from Cleaning Up, sign up for our free newsletter at cleaningup.live where you'll find our archive of over 160 hours of conversations with extraordinary climate leaders.

Cleaning Up is brought to you by our lead supporter, Capricorn Investment Group, the Liebreich Foundation and the Gilardini Foundation.

Metals Refining - From Mining to Brining: Ep 142 - Alex Grant

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