Mining has become a sector inextricably linked to energy transition given the growing need for metals for everything from electric vehicle batteries and grid energy storage to hydrogen electrolysers.
Vale – Brazil’s largest mining company – is the world’s largest producer of iron ore in the world, consistently in the race to be the largest nickel producer in the world, and is in the top 10 for copper producers in the world. All three of these metals are essential for producing the technologies needed for the energy transition.
“For the world to reach the energy transition that it needs, we do need metals, and the metals need to pick up supply in order to be able to reach the demand that’s coming. So any technology that can help diminish the supply gap, we’re also looking into,” says Bruno Arcadier, head of Vale Ventures – the CVC unit formed two years ago with a $100m commitment from the mining giant – on the CVC Unplugged podcast.
“For Vale – for a lot of our peers, too – decarbonisation and the energy transition is really the driving force.”
The unit is pursuing startups across a wide array of technologies, including new “routes” for cleaner steel – those that may be alternatives to the commonly used blast furnace or less carbon-intensive direct reduction methods – as well as enablers for green steel such as hydrogen, which can replace natural gas in steelmaking to reduce carbon further.
“[Steel] is an industry that represents 8% of global emissions, and a big push – a big transformation – is coming. So for us, it’s important to foster this,” says Arcadier.
One of the two investments Vale Ventures has announced publicly since formally launching was in Boston Steel, a company developing a new, lower-carbon steelmaking process.
They’re also looking at novel ways for agglomeration — combining small materials into larger masses — and comminution — breaking down big objects into smaller ones — both of which are important to many mining activities and the latter of which is highly energy-intensive.
“Circular mining”, the use of mining byproducts – think the leftover dust and other materials, called tailings, after the desired ore is mined – is an area Vale is excited about as it can be used for applications such as cement feedstock for other industries or for further extraction of leftover metals. Considering the gargantuan volumes the industry works with, these can rack up quickly and have significant potential to be monetised.
The second of Vale Ventures’ publicly-announced investments was in Allonia, a startup using synthetic biology to process tailings, eliminate PFAS, and other applications.
More broadly, the unit is also looking at what it calls sustainable mining of the future, including ways to reduce its direct Scope 1 emissions, with the goal of becoming a net-zero miner by 2050, decarbonising its trucks, promoting safety with the use of autonomous vehicles and robotics, and promoting better decision making with AI.
The challenge of scale
For Vale Ventures, the issue when assessing the suitability of a startup is not just in the technology itself, but in the capacity to deal with the size of a mining operation.
“Our scales are huge,” says Arcadier. “We produce over 300 million tonnes of iron ore in Brazil. That’s a lot.”
One thing is having a good piece of technology, but being able to then apply it across hundreds of millions of tonnes in a reliable way is what separates the wheat from the chaff.
“That’s the big challenge in the mining industry. Having a startup developed from the early days, from the lab, and then having pilots, the demos, having an industrial scale that’s economic for the mining industry that’s dealing with a million tonnes. That’s a challenge. We can think about modular solutions – there’s a lot of different alternatives that you can think of,” he says.
Creating the CVC
Arcadier – a Vale veteran of 13 years who previously worked across strategic planning, new business development, joint ventures and more at the company – says that the creation of the CVC was preceded by various forays into open innovation, including a previous venture investment that yielded lessons learned, and some scars.
“It’s very much a reputation business – this is something that’s very important. It’s important for you to really know how the game is played and know that you are there for the success of the startup. You’re there for the success of the founder, and by the startup being successful, you are going to be successful because we are a strategic investor,” he says.
Having already done some venture client-type activity in the past — working with startups without investing in them — the team had to convince the company that investing would be a desirable addition to the innovation toolkit.
A major selling point was that being an investor gives you more access and can really increase your capabilities to network within the ecosystem, relative to just doing a pilot or a commercial agreement with a startup.
One important part of setting it up was getting the “why?” right, which for Vale was primarily new business opportunities and access to new technology. This was particularly important as, in 2022 plenty of CVCs were starting to go into panic mode in the midst of the venture market downturn.
“There’s a lot hype, there’s a lot of FOMO [fear of missing out], to get the headline,” says Arcadier. “That is ok – in our case it’s more for the strategic side.”
