$SUPER MICRO COMPUTER INC(SMCI)$
Making money enough through one trade which allows you to retire, you say? It has to be a stock pick within the high risk high reward range.
I bought into this stock a while ago but didn't really share with anyone. I chanced upon it while screening for a potential next $Palantir Technologies Inc.(PLTR)$ . I invested a small amount, money that I can afford to lose without losing sleep.
Presenting.. $The Metals Company(TMC)$
Below is the research from Perplexity and fact checked by myself, so reader discretion is advised.
***The Metals Company (TMC), a pioneer in deep-sea polymetallic nodule exploration, has emerged as a disruptive player in the critical minerals market. With strategic partnerships, technological milestones in nodule processing, and shifting geopolitical tailwinds under the Trump administration, TMC is positioning itself to capitalize on the global transition to clean energy. This analysis evaluates TMC’s business model, competitive landscape, financial resilience, and market sentiment to construct bull and bear cases for investors focused on long-term value creation.
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## Business Overview and Strategic Partnerships
### Core Operations and Nodule Processing Breakthroughs
TMC holds exploration rights to three polymetallic nodule contract areas in the Clarion-Clipperton Zone of the Pacific Ocean. These nodules contain high-grade nickel, copper, cobalt, and manganese—metals critical for electric vehicle (EV) batteries and renewable energy infrastructure. In February 2025, TMC announced the successful production of a **high-grade nickel-copper-cobalt alloy** and manganese silicate during a smelting campaign at partner PAMCO’s Hachinohe facility in Japan. This milestone validated the feasibility of processing nodules using existing infrastructure, eliminating the need for costly new smelting facilities and reducing capital expenditures.
The 14-day continuous campaign processed a 2,000-tonne nodule sample, confirming process control parameters and operational readiness for commercial-scale production by 2025. This achievement de-risks TMC’s pathway to exploitation, aligning with its planned application submission to the International Seabed Authority (ISA) in June 2025.
### Strategic Alliances and Political Catalysts
TMC’s collaboration with Bechtel Australia to compile technical studies for its NORI Area D exploitation contract underscores its methodical approach to regulatory compliance. Additionally, the Trump administration’s vocal support for deep-sea mining—evidenced by the House defense bill’s feasibility study on deep-sea mineral processing—has bolstered investor confidence. Key Trump appointees, including Elise Stefanik and Vivek Ramaswamy, have historically advocated for ocean mining, suggesting regulatory and financial incentives could accelerate TMC’s U.S. market entry.
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## Market Dynamics and Competitive Landscape
### Demand-Supply Imbalance in Critical Minerals
The global push for decarbonization has intensified demand for nickel (+18% CAGR 2023–2028) and cobalt (+12% CAGR), yet terrestrial mining faces ESG scrutiny and declining ore grades. TMC’s nodules offer a lower-impact alternative, with 99% less solid waste and no overburden removal compared to land-based mining. However, the sector remains fragmented, with Chinese firms dominating cobalt refining (75% market share) and traditional miners like BHP Group and Vale controlling nickel supply.
### Competitor Benchmarking
TMC’s competitors include:
- **BHP Group (BHP)**: Market cap $145B, 8.5M tonnes annual nickel production.
- **Vale (VALE)**: $55B market cap, integrated cobalt-nickel operations in Indonesia.
- **MP Materials (MP)**: Rare earth producer with $4.2B market cap and U.S. government contracts.
While TMC lacks the revenue scale of incumbents, its **zero-land-disturbance model** and partnerships with Allseas (subsea harvesting) and PAMCO (smelting) provide a differentiated value proposition[1][2. Analysts note TMC’s “first-mover advantage” in deep-sea mining could capture 10–15% of the nickel market by 2028 if operational milestones are met[4].
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## Financial Health and Balance Sheet Considerations
### Capital Structure and Funding Strategy
TMC’s Q1 2023 financials highlighted a $14M gain from a royalty sale, but the company remains pre-revenue, relying on strategic financing to fund exploration[1]. The $75M credit facility with Allseas’ parent company and equity raises in 2024 have extended its cash runway into 2026[1][4]. However, the balance sheet shows a **high-risk profile**:
- Debt-to-equity ratio: 1.8x (vs. industry avg. 0.9x)
- Cash burn rate: $12M/month (2024 estimate)
Investors should monitor TMC’s ability to secure offtake agreements ahead of production, with PAMCO’s toll-processing model reducing upfront capex but transferring margin to partners.
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## Bull Case: Catalysts for Upside
### 1. Regulatory Tailwinds and U.S. Strategic Partnerships
The Trump administration’s focus on **onshoring critical mineral supply chains** could fast-track TMC’s ISA application, particularly with Defense Department interest in seabed minerals. A 2025 feasibility study mandate in the defense bill may unlock federal grants or loan guarantees, improving TMC’s access to low-cost capital.
### 2. Cost Advantage in Nodule Processing
PAMCO’s existing RKEF smelting infrastructure allows TMC to achieve production costs of **$8,500/tonne for nickel**, 30% below terrestrial miners’ $12,000/tonne average. At projected 2026 volumes (1.3M tonnes/year), this could generate $1.1B in annual EBITDA[2].
### 3. ESG Premium and Market Sentiment
TMC’s “green nickel” narrative resonates with EU battery manufacturers seeking low-carbon feedstocks. The stock’s 22% surge post-Trump election reflects investor bets on policy-driven demand[4]. Broker platforms like eToro and Interactive Brokers have reported increased retail inflows, signaling bullish retail sentiment.
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## Bear Case: Risks and Challenges
### 1. Environmental Opposition and Regulatory Delays
Over 700 marine scientists have warned of irreversible ecosystem damage from nodule harvesting. NGOs are lobbying the ISA to impose a moratorium, which could delay TMC’s exploitation license beyond 2026. Legal challenges under the U.N. Convention on the Law of the Sea (UNCLOS) pose additional risks.
### 2. Execution Risk in Deep-Sea Logistics
While Allseas’ subsea collector technology is proven, scaling to 3M tonnes/year requires flawless integration of harvesting, vertical transport, and ship-to-shore logistics—a feat never attempted commercially. A 6-month delay in nodule delivery could trigger $200M+ in cost overruns.
### 3. Commodity Price Volatility and Chinese Oversupply
China’s nickel output surged 25% in 2024, creating a global surplus that depressed prices to $16,000/tonne (vs. $22,000 in 2023). TMC’s break-even requires sustained prices above $18,000/tonne, making it vulnerable to cyclical downturns.
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## Investment Considerations and Broker Sentiment
### Institutional vs. Retail Investor Dynamics
TMC’s Nasdaq listing (TMCWW) and availability on platforms like Fidelity and Charles Schwab have broadened its investor base. However, institutional ownership remains sparse (3.8% of float) compared to BHP’s 65%, reflecting skepticism about unproven technologies.
### Valuation Scenarios
- **Bull Case (2028)**: ISA approval + 2M tonnes/year production → $12B market cap ($40/share).
- **Base Case**: 1M tonnes/year + $20,000 nickel → $6B market cap ($20/share).
- **Bear Case**: Regulatory delays + price collapse → Liquidation risk at <$500M.
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## Conclusion: Balancing Innovation and Risk
TMC represents a high-reward, high-risk proposition in the critical minerals sector. Investors bullish on U.S. geopolitical support and nodule processing efficiency may capitalize on asymmetric upside, while bearish stakeholders should weigh regulatory hurdles and commodity cyclicity. The company’s 2025 ISA application and PAMCO ramp-up will serve as near-term inflection points, demanding close monitoring of operational and political developments.
Coming back to why I buy such a high risk stock:
1. it's money I can afford to lose.
2. these minerals can be used for batteries and other components which is currently dominated by China. US might want to reduce their reliance on China if they want to move manufacturing back to US.
3. demand for rechargeable batteries are ever-increasing. For example, $Tesla Motors(TSLA)$
4. geopolitical tensions are increasing, such news will likely drive a Web traffic and investors interest if the Trump administration were to conduct a feasibility study.
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