Shares of The Metals Company (TMC 1.90%) have whipsawed this summer.
First came a surge after Korea Zinc, a non-ferrous metal smelter based in South Korea, announced an $85.2 million investment in TMC — the company’s first major endorsement from an industry partner. Then came another pop after the National Oceanic and Atmospheric Administration (NOAA) reconfirmed that TMC’s exploration applications are in compliance under U.S. law.
Then, the letdown: The company reported a second-quarter net loss of $74.3 million in August, which reminded investors just how far this mining company is from turning a profit. Since then, share prices have fallen over 35% from their late-July highs.
That raises the question: Is now the right time to buy The Metals Company?
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A pre-revenue company with a $20 trillion opportunity
TMC sits on one of the largest undeveloped sources of critical minerals on the planet: nodules. These potato-sized rocks are found at the bottom of the Pacific Ocean and contain rare metals for the green energy transition.
China dominates the supply and processing of these and other critical metals, which underscores the urgency the U.S. faces if it wants industrial independence. Indeed, a study by the consulting firm Arthur Little values the total seabed mining opportunity at a staggering $20 trillion. If TMC could extract even a fraction of this, it could become the U.S.’s cornerstone supplier of critical metals.
However, a lot needs to happen before TMC mines nodules commercially. Most notably, it needs commercial rights to mine them. Although management recently confirmed that production will start in the fourth quarter of 2027, it needs permitting to clear before it can do so. Until then it has to rely on its cash — about $115.8 million — it’s not generating revenue.
As such, expect volatility in the near term. If you believe the scarcity of economically viable metals on land will push governments to embrace alternatives, TMC could be a speculative way to bet on that trend. Otherwise, a clean energy exchange-traded fund (ETF) might be a less bumpy investment for now.
Steven Porrello has positions in TMC The Metals Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
