This is the third part of our blog series exposing TMC’s financial risks. 

See the other parts here:  Part 1 | Part 2 | Part 3 | Part 4

A Familiar Story

The Metals Company (TMC) is treading a path eerily similar to that of Nautilus Minerals, a deep-sea mining venture that ended in bankruptcy. Both companies have showcased ambitious plans, yet face significant financial and operational challenges.

TMC’s Financial Risks and Insider Lending

TMC’s financial risks are rife. At the end of 2024, the company reported under $4 million in cash reserves, while incurring over $88 million in expenses over that year. To stay afloat TMC has relied on loans from insider shareholders, rather than issuing new shares, which could dilute existing ownership.

This strategy mirrors Nautilus Minerals’ approach, where insider lending played a significant role before its collapse.​

In the case of Nautilus, these insider lenders ultimately took control of the company’s key assets after bankruptcy, leaving retail investors with nothing. It seems to be a repeating pattern with TMC insiders positioned to benefit while public investors bear the brunt of potential failure.

Operational Challenges and Market Skepticism

Deep-sea mining remains an unproven technology with high start-up costs. TMC’s plans hinge on the successful extraction of polymetallic nodules, a process fraught with technical and environmental uncertainties.

Moreover, the market demand for these minerals is uncertain, with many investors and insurers expressing hesitation.

This skepticism is reminiscent of the doubts that surrounded Nautilus Minerals before its downfall.​

Regulatory Hurdles and Strategic Shifts

Facing delays in international regulations, TMC has shifted its strategy by seeking permits through the U.S. National Oceanic and Atmospheric Administration (NOAA), potentially bypassing the International Seabed Authority (ISA).

This move has raised legal and diplomatic concerns, as it challenges established international norms governing deep-sea mining.​

Nautilus Minerals’ venture ended in financial ruin, leaving behind environmental concerns and significant debts.

The parallels with TMC are striking: both companies faced technological challenges, relied on insider funding, and operated amidst regulatory uncertainties.

TMC’s financial risks and current trajectory suggests repetion of these mistakes, potentially leading to similar outcomes for investors and stakeholders.

See the other parts here:  Part 1 | Part 2 | Part 3 | Part 4