Why the partnership between MTM and Indium is a big deal

The newly minted partnership between MTM and Indium received a major endorsement from shareholders at the former company – as judged by the share price spike in the last week.

And it was a similar story at Indium too – Global Business Unit manager Markus Roas declared,’ FJH technology offers a novel and sustainable solution to recover these vital elements from waste materials, ensuring reliable access without relying on external sources’.

‘We are excited to support this collaboration in addressing the strategic needs of our country’.

But how did we get here?

Recap of MTM and its FJH technology

MTM Critical Metals (ASX:MTM) has a version of a technology called Flash Joule Heating (FJH), licensed from Rice University. FJH involves the creation of thermal energy through the collision of electrons in a conductor, at a ‘flash pace’. MTM’s FJH can create heat almost instantaneously and reach temperatures as high as 3,000 degrees celsius.

Since MTM licensed the technology, MTM has shown it can be reproduced at scale – at 50 times the original concept. It can impact several metals, including battery metals like lithium and various REEs (Rare Earth Elements). By impact, we mean more of the metal can be recovered.

Metals recycling today tends to be some form of incineration or using industrial sludges. They tend to be expensive, time-consuming, energy-intensive and non-selective (i.e. they do not just remove the metal of interest but take out all the metals as well).

MTM’s FJH Technology overcomes these problems, general to all metal recovery methods, as well as some specific problems to individual commodities. MTM has three target commodities: Lithium, REEs and Gallium. In respect of each of these, FJH could help shorten the process and bring down the time and cost of them. Turning to lithium, FJH can simplify the flowsheet by reducing the number of steps required to extract lithium from spodumene concentrate. With rare earths ores, FJH could potentially improve the processing by removing the need for the ‘acid bake/roasting’ step where rare earth phosphates are converted to rare earth sulphates.

The partnership between MTM and Indium: What does it involve and why is this a big deal?

Indium Corporation (Indium), is one of the Western world’s leading suppliers of refined gallium, germanium, indium and other specialty technology metals. The aim of the collaboration is to create a US-based processing solution using MTM’s FJH to recover the aforementioned metals from scrap sources. This initiative aligns with US efforts to establish a secure domestic supply of critical materials. Gallium, germanium, indium are all critical metals that are used in electronics, high-tech applications and advanced military technologies.

MTM can play a part in establishing a local supply chain and this partnership with Indium can make the potential a reality. It comes at an opportune time, with the incoming Trump administration emphasising a need for US industrial and economic independence. Although tariffs are the most anticipated measures, including potentially on gallium and germanium from China, they may also see enhanced incentives for domestic manufacturing and federal funding for critical mineral recovery and recycling technology.

So what’s next?

Once a pilot scale plant has been tested, the inevitable next step is taking FJH to commercial scale. The company will seek further strategic collaborations with industry, government and academia. If NeoMetals (ASX: NMT) is any precedent, we could see a (sub-)licensing deal prior to commercial production. When commercialised, FJH will aim to have a sustainable business model with recurring revenue based on the quantity of material processed.

MTM is also seeking non-dilutive funding sources, particularly government grants. Programs such as the Critical Minerals Development Program in Australia and the Critical Minerals & Materials program in the US seek to provide funding towards critical minerals projects so that the supply chain can be diversified before China and other nations can produce the ultimate applications critical metals are used in – particularly defence and decarbonisation applications.

MTM has told investors that it is actively applying for government grants based on supply of critical materials and that it has received a Letter-of-Support for Indium for a US Department of Energy (DOE) grant pertaining to ‘Advancing Technology Development for Securing a Domestic Supply of Critical Minerals and Materials’.

MTM Critical Metals has a big opportunity

Our friends at Pitt Street Research published a note on MTM earlier this week. It reckons MTM should be trading at a market capitalisation of over A$60m, which would be roughly double the company’s current share price. Such a valuation would be in line with its peers that are at a similar stage. Although the company has some way to go to reach a stage worthy of its $1bn+ peers, Pitt Street Research thinks A$60m would not be unreasonable once MTM’s FJH has passed pilot-scale testing and has secured a licensing deal.

So, keep your eye on MTM Critical Metals.

MTM Critical Metals is a research client of Pitt Street Research. Pitt Street Research directors own MTM shares.

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