Toronto-based Kinterra Capital co-founders and co-managing partners, Cheryl Brandon and Kamal Toor, explain why Canada is one of the fund’s core targets
Battery plants and precursor factories are starting to break ground in Ontario and Quebec, after an epic year of public and private investment in the development of Canada’s electric vehicle supply chain.
But will there be enough domestic supply of nickel, copper, lithium and other critical minerals to feed production in those factories when they begin coming online in 2025 and 2026?
That’s the million-dollar question — and hundred-million-dollar opportunity — motivating Cheryl Brandon and Kamal Toor, Toronto-based co-founders and co-managing partners of Kinterra Capital, following last month’s close of Kinterra’s new US$565-million Battery Metals Mining Fund.
The fund will invest exclusively in critical minerals mining and early-stage processing and conversion of that output. Despite sharply rising demand in the EV battery sector for these commodities, explain Brandon and Toor in an interview with Electric Autonomy, there has been a “structural underinvestment” in these upstream sectors.
“We’re trying to balance that scale and deploy more capital upstream so that all those downstream facilities actually have the inputs they require coming to them over the next five, 10, 15 years,” says Toor.
The opportunity goes beyond advancing and de-risking resource projects. Kinterra has a 15-year track record in the sector, Brandon notes, and is well-placed to help take those assets into the EV supply chain via offtake deals and other partnerships with OEMs, battery makers and precursor plants.
Canada a “core” focus for the fund
The Kinterra fund’s scope is international, targeting “stable jurisdictions primarily in North America, Western Europe and Australia that both source critical minerals and process them into chemicals for use in batteries and energy storage solutions,” according to a press release.
But within that framework, Canada is “a core part of the mix,” says Toor.
He lists three key factors: Canada’s free-trade access to U.S. markets and content eligibility under the Inflation Reduction Act; a vast critical minerals resource base; and a rapidly developing domestic battery and EV assembly supply chain.
“All of those investments, whether they’re cathode plants, whether they’re battery manufacturing plants, whether they’re PCAM plants, all of those manufacturing facilities are going to need to minerals and chemicals that come out of our projects,” he says.
Anyone paying close attention to this sector will note that the Kinterra fund closed just days before the federal government opened its first call for proposals for its $1.5-billion Critical Minerals Infrastructure Fund (CMIF).
The goal of that fund is to help advance critical mineral project development, including investments in clean transportation and related infrastructure.
Time for private capital
While the timing is coincidental, the pairing of these announcements underscores that these markets in Canada are at a critical inflection point. Federal and provincial leaders say to not expect many more new battery plant type investments in Canada. Instead, the focus is shifting to building out the supply chain ecosystem.
That also means it’s a time for private capital to step in, says Toor.
“Governments tempering their support slowly over the next little while, it’s probably to be expected,” he explains. “Governments can help de-risk ‘crowd in,’ but ultimately the capital that gets crowded in has to be private capital.”
For this reason, Brandon says, while the launch of the federal infrastructure fund won’t directly influence Kinterra’s core investment strategy, it is a welcome benefit that adds further upside to their investments.
Toor also reveals that the firm is preparing an application to the fund to support one of the first projects in which the fund has already invested.
“We have a nickel conversion facility that we’re developing in Quebec that takes nickel ore and converts it into nickel chemical that can be used in batteries. And we will be applying to the CMIF,” he says.
That project, which they did not identify by name, is one of three of the fund’s initial projects. The other two: a copper development project in the state of Michigan and a company operating two nickel development projects in Western Australia.
With more than half a billion dollars in the Kinterra fund, Brandon says they expect to announce more critical minerals investments in the year ahead.
“Given the market opportunity it’s a compelling time to be deploying capital to the sector,” she says. “We think we’ll be exceptionally active in 2024.”