MTM Critical Metals investors likely to benefit from Trump tariffs

MTM Critical Metals just might be a beneficiary from any ‘Trump tariffs’. Investors in this company were facing an action-packed 2025 in front of them even in a more stable geopolitical environment. But the company could benefit, particularly from a ‘worst case’ scenario as far as Trump’s tariffs are concerned (i.e. where most or all of them stay in place).

Recap of MTM Critical Metals and its FJH technology

In December 2023, MTM Critical Metals took a license of an FJH technology from Rice University. At the time, the company was a rare-earths focused explorer and saw the potential it could make to the rare earths recycling process.

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. And it can recover a greater proportion of metals while using less energy, less time, emitting less emissions and achieving a higher yield.

At this point you might think it sounds good, but why can’t we just find new mineral deposits? Well, as goes without saying, it takes a lot of time and a lot of money. And more importantly, some jurisdictions, particularly the EU, are beginning to mandate the recycling of metals. And so methods of recycling like FJH that can speed up the process and do with a lower carbon footprint will be important.

MTM has re-rated significantly in the last 12 months, particularly off the back of testing results – because they just get better and better with every set of results. It has also signed multiple external partners including collaborations with Indium, Vedanta, Plastic Recycling and Dynamic Lifecycle Innovations.

The latter two are deals to source feedstock for MTM’s demonstration plant, whilst the Vedanta deal is a collaboration for Vedanta to supply bauxite residue (red mud) from its alumina operations and for MTM to apply FJH to extract materials. The Indium collaboration intends to create a US-based processing solution to recover metals from scrap sources.

For more details on this company, its technology and applications…check out the research reports written by our friends at Pitt Street Research, the most recent of which was published earlier this week.

Why MTM could benefit from a ‘Worst Case’ scenario with Trump’s tariffs

The trade war begun by the Trump administration has bought to the forefront of the minds of companies and investors the need for a domestic critical metals supply chain.

In reality, this push was well underway for certain metals even prior to the Trump administration, as the US and other Western countries established lists of critical minerals. Although the exact lists differ from country to country, many of them share metals where FJH has been shown to have an impact including graphite, zinc, lithium, certain REEs (Rare Earth Elements), Gallium and Germanium.

With China responsible for a significant proportion of the world’s supply chain for many of these metals, designating these materials as critical and subsequently offering initiatives such as grants to projects for these metals was an attempt to encourage the development of a Western supply chain for these metals. But in many of these, recycling could be the only option – most pertinently because of a lack of mineral projects or mines, but also because some can only be found as a by-product of other minerals. Germanium for instance is only found as a by-product of zinc ore and coal fly-ashes.

A major wake-up call for companies requiring Germanium came in July 2023 when China announced export controls on germanium, requiring a specific export license for every single shipment of germanium. This resulted in exports coming to a virtual standstill for a couple of months. Even when exports resumed, China was much faster to approve exports to more favourable jurisdictions with over 40% of exports being shipped to Russia and Hong Kong.

The Trump administration’s tariffs have only magnified this need for Western supply chains. Notwithstanding the 3-month ‘pause’ implemented for most tariffs, there is still a 10% baseline tariff on all imports and up to 125% for all Chinese-origin goods. The importing of critical minerals, at least from China, was an uncommercial prospect even prior to tariffs. But these tariffs increase the appeal of MTM’s FJH technology.

As a company that will source its feedstock almost entirely domestically (with potentially some from allied sources), MTM’s FJH should be able to bypass the tariffs altogether. Beyond being a tariff hedge for customers, MTM could also be a target for government procurement and incentives including Department of Defence (DoD) and Department of Energy (DoE) grants.

What MTM Critical Metals investors have to look forward to in 2025

MTM’s key focus for 2025 is its proposed demonstration plant. As of early April 2025, the company finalised the process design including the key process parameters (flow rates, material balances and operating conditions), final equipment selection and regulatory readiness. The company’s next step is to secure a pre-permitted site in Texas (or a neighbouring state) and obtain necessary approvals.

The company is aiming to begin operations by the end of 2025 and is currently on-track. By this time, it hopes to have finalised initial feedstock supply and offtake agreements to support future commercial operations. Success of the demonstration plant will raise awareness in the broader industry about MTM’s FJH and its potential.

MTM is pursuing a 3-pronged strategy to commercialisation involving optimisation of the technology, scaling up testing (towards pilot-scale trials) and pursuing collaborations with industry stakeholders. Testing programs to further validate FJH will continue, particularly across rare earths, lithium and e-waste. And finally, the company will continue to pursue partnerships – we expect the Indium collaboration to be the tip of the iceberg. We expect interest from metal suppliers, future off-take partners as well as from potential sources of non-dilutive funding.

MTM is looking to undertake a listing in the US via over-the-counter (OTC) markets, a move that will expose the company to a broader range of investors. Although the company’s management has not given a specific time frame, this is expected to occur in 2025.

There’s a lot of upside left

Even though MTM is capitalised at over $120m, more than double what it was just 3 months ago, there is still upside left if the company can successfully achieve its objectives. It has multiple peers trading at over A$1bn including Alpha HPA (ASX:A4N), Silex Systems (ASX:SLX) and IperionX (ASX:IPX). Although these companies are well ahead of MTM in being in commercial production or closer to it, we think the gap could narrow over the next couple of years.

MTM is a research client of Pitt Street Research. Pitt Street staff own shares in MTM. 

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