Kinterra Capital, a Canadian private equity firm, has closed its $565 million debut fund dedicated to securing critical mineral assets for battery development. The inflow of private capital comes in the middle increasing government incentives in the supply and production of battery materials in North America.
Kinterra’s oversubscription round will target asset-level investments in North America, Western Europe and Australia over the next eight to 10 years, according to the company. This means investments in lithium mines, cobalt, nickel and graphite mining operations, battery manufacturing plants, energy storage solutions, raw material processing plants and other technology needed to extract, process and recycle critical battery minerals.
Kinterra says its fund has already invested “significant capital” in a number of assets with “a strong near-term pipeline.” In particular, the company has invested in Canon Resources, the owner and operator of two nickel development projects in Western Australia. another nickel processing plant in Quebec. and White Pine North, a large copper development project in the US
“Structural underinvestment in critical minerals over the past decade has resulted in severely depressed valuations for premium assets and created a huge need for capital investment as countries transition to more sustainable energy sources,” said Cheryl Brandon, co-founder and co-director. partner at Kinterra, in a statement.
“Kinterra addresses this need by bringing the right combination of active management, financial resources, deep domain knowledge and cross-functional technical expertise needed to identify and develop assets across the value chain,” Brandon continued.
Asset-level investing gives investors more direct control over specific projects or assets, but it also leaves them open to more risk. Kinterra says its internal team includes metallurgists, chemical engineers, geologists, permitting and sustainability experts and mining engineers to ensure the company makes smart investments.
The company plans to work with leading automakers, battery makers and other offtake partners in “highly structured transactions that provide long-term solutions to EV supply chain challenges,” according to Kamal Toor, co-founder and co-managing partner of Kinterra.
“Our investments will enable the complete ‘mine to battery’ solutions that OEMs require to meet their electrification goals,” Toor said in a statement. He noted that Kinterra hopes to help the West’s generational energy transition by: 1) securing a key critical mineral supply to meet growing demand; 2) ensure supply is from diversified sources in stable jurisdictions; and 3) done in a socially responsible manner.
“Our strategy is supported by strong secular headwinds, including strong and fundamental downstream demand, global net zero efforts and strategic government initiatives supporting the repatriation of material supply chains,” Toor continued.
Government incentives in the US, Canada and the European Union have spurred more private investment in an industry that is becoming increasingly regional.
of President Joe Biden Inflation Reduction Act, signed into law on August 16, 2022, requires the majority of the value of battery components to be produced or assembled in North America in 2024 to qualify for half of the legislation’s EV tax credit, or $3,750. To get the other half, battery makers would have to source most of the value of critical materials from the US or a country that has a free trade agreement. in addition to boosting domestic industrythe bill’s provisions are designed to reduce reliance on China for the supply and manufacture of lithium-ion batteries.
Canada also agreed to spend billions to support the transition to electric vehicles and energy. During the summer, the government provided up to $15 billion CAD to automaker Stellantis and battery maker LGES to build an EV battery plant in Ontario. Canada is also providing billions to boost the country’s mining of critical materials.
The EU Green Deal Industrial Plan It also sets targets for the region to extract 10% of the critical raw materials it consumes, with recycling adding another 15%. The bloc also aims to increase manufacturing to 40% of its needs by 2030.
In order to meet the targets set by governments around the world, mining and exploration projects will need to increase drastically. According McKinseyinvestment in mining, refining and smelting should increase by $3 trillion to $4 trillion by 2030 to “bridge the great raw materials decoupling.”
