Is there a mining technology landscape?

One of the most frequent questions I get asked when working with mining technology companies is “how do I access capital?” These tech firms have all the hallmarks of other tech companies. They employ highly skilled people, they use disruptive technology like artificial intelligence, and they engage in world-class applied R&D. Traditionally, industrial technology companies have not used third party investment as an instrument to raise capital as much as other sectors like digital technologies and life sciences. Lacking a universally compelling story, consumer facing products, and having typically longer returns on investments, industrial tech companies have long struggled to attract venture capital interest. This, however, is starting to change.

While not typically seen as a bastion of new ways of doing things, the mining sector is undeniably an industry that consumes innovative technologies. There is much written on this topic regularly by industry insiders profiling the latest solution that will save money or make mines safer or more profitable. Many of these mining technology companies were formed on the basis of solving a specific challenge for the mines, and many of them are bootstrapped and grow through typical means like personal investment, patient capital (friends and family), or traditional bank loans.

In my experience, mining technology companies usually do not raise capital the way other technology sectors do. Quite often, I have heard from angel investors and venture capital fund managers that the mining technology sales cycle is too long and therefore too risky to invest in. What has become increasingly clear is that there is a nascent mining technology investment landscape that is starting to take shape and much of this important work is happening right here in Canada.

From a cursory look at the investments that have been made in mining technologies, the types of deals can be divided into a few categories; industry specific corporate venture capital (VC), traditional venture capital funds with a focus on industrial technologies, and academic linked start-up programs.

Corporate VC is the direct investment of corporate funds into an external startup company. Typically, this is characterized by large companies recognizing a unique technology offering that can offer benefit within the large firm’s value chain or business process. Often, the corporate will invest through joint venture agreements, direct funding to R&D, and/or taking an equity position in the start-up. The investing corporation may also provide the startup with management and marketing expertise, strategic direction, and/or a line of credit. Some interesting examples of corporate VCs that have invested in some mining tech start-ups that I have come across in recent years include ABB Technology Ventures and Caterpillar Ventures.

ABB Technology Ventures (ATV) is the venture capital arm of the well-known electrical and automation firm, the ABB Group. ATV looks for breakthrough technology companies aligned with ABB’s business goals and more altruistic vision for society. Some notable investments include the B.C.-based digital ore sorting solution company, MineSense, and the Sweden-based battery developer and manufacturer, NorthVolt, which is becoming a household name for those interested in the EV supply chain.

Caterpillar Ventures (CV) was founded in 2015, and it invests in early-stage startups focusing on the energy sector and the digital economy. While many of the firms’ investments have been in industrial technology companies with wide cross-sectoral appeal, several of them have mining as a key segment of focus. For example, CV has invested in Guardhat, an industrial IoT firm that facilitates lone worker scenarios through wearable tracking devices and other solutions. CV have also invested in Waterloo-based tech company, Clearpath Robotics. Clearpath has had several forays in the mining sector from intelligent inspection robots to autonomous mapping robots and fully autonomous mine vehicles. In all, CV has invested in 17 firms to date and is actively recruiting new investment opportunities in energy, digital solutions, robotics, and advanced materials.

Furthermore, mining companies themselves have started to see the value in the technology ecosystem and have launched corporate VCs to accelerate new ventures towards commercialization. NEXA Resources, for example, launched its Mining Lab program in 2016, and Vale launched its corporate VC arm, Vale Ventures, in 2022 to invest in disruptive technological innovation projects for the mining and metallurgy industry.

When it comes to VC firms that have a focus on mining technology, it appears there are only a handful of firms zeroed in on mining from which to draw. The term commonly used in the investment community for these funds is “industrial innovation venture capital.” Far and away, the most prolific VC I have encountered in the space is the Vancouver-headquartered Chrysalix Venture Capital. While some of its 20+ portfolio companies focus on multiple sectors, the threads that link them all are mining, metals, and energy. The portfolio companies are truly a great example of technological innovations in the industry as they range from utilizing AI in mineral exploration to advanced IoT sensors and even autonomous inspection robots.

In the angel investment space, there is momentum growing behind a few opportunities led by the Northern Ontario Angels (NOA), Archangel’s Axion fund, and the Sudbury-based Catalyst fund. These funds have a focus on investing in northern Ontario-based companies and have mobilized capital for several mining-based technology ventures such as the IoT firm, Symboticware, and the autonomous mining equipment venture, Fortai.

In addition to direct investment in start-ups, there are university-linked accelerators that have healthy numbers of portfolio companies focused on the mining sector. University of Toronto’s Creative Destruction Lab, for example, have had nearly a dozen companies targeting mining and mineral processing from AI geological solutions and tailings treatment technologies to advanced robotics and novel lithium extraction technologies. Involvement in academic linked accelerators provides early-stage companies access to mentors and introduction to the angel and venture investment community.

The mining sector has been a consumer and developer of innovation for over a century. The rise of the modern tech firm has occurred relatively recently over the last three decades. Mining and tech are now, more than ever, getting to know each other. With the recent re-focusing of attention on critical minerals, more technology ventures are starting to see the sector as an opportunity. Mines are now closer to the consumer with the advent of the electric vehicle supply chain, and they are more prevalent in the public consciousness. This, coupled with the sector’s recognition of the need to decarbonize, make it ripe for new technology adoption. While still in the early stages, the investment community is starting to consider mining-focused firms as viable ventures to invest in. Canada has an opportunity to lead in this space and become a destination for industrial tech start-ups. CMJ

Steve Gravel is the manager of the Centre for Smart Mining at Cambrian College.

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