Blackwater Founder Wades into Battery Metals Space

The founder of American private military contractor Blackwater, Erik Prince has revealed he’s starting a fund to invest in securing battery metals for electric vehicles.

In an interview with the Financial Times, Prince said that the US$500-million fund would develop unexplored deposits to a stage where they could be sold to larger mining companies catering to the battery metal market.

“For all the talk of our virtual world, the innovation, you can’t build these vehicles without minerals that come from generally weird, hard-to-access places,” he said.

Prince said that the fund would target cobalt, copper and lithium focusing on deposits in Africa and Asia, with the aim of selling them to larger companies mostly in China.

One such ‘weird, hard-to-access place’ — without being explicitly named by Prince — is the Democratic Republic of Congo — producer of 58 percent of the world’s cobalt and a nation that proved itself a handful for miners during 2018 through tax code revisions, unrest and disease, not to mention the chaotic presidential election last weekend.

Prince explained that, “Chinese companies are not necessarily interested in the very upstream exploration,” leaving space for his US$500-million fund to do the heavy lifting.

Prince has form when it comes to difficult places — Blackwater was contracted by the US government to operate in Iraq between 2004 and 2006, and the company also operated in Afghanistan and Bosnia and Herzegovina providing security services.

While some pundits are drawing connections between Blackwater and the complexity of operating in Africa, suggesting Prince’s expertise in security would help lock down cobalt supplied in the DRC, Independent Speculator Lobo Tiggre told INN that “physical security is a solved problem over there.”

Tiggre said that proficiency in security “doesn’t help one bit if ebola scares investors out of Africa, or if the government cancels your mineral licenses.”

However, he added that a US$500-million fund was obviously a bullish sentiment — welcome news after a poor year for commodities.

“The general idea makes sense, and now is a good time to be acquiring assets (while prices are down).”

“But I don’t see why they would target the metals that are not in short supply, like lithium. Nor do I see why they would set out to go to higher risk areas when there are interesting places to explore all around the world.”

Tiggre added that despite those doubts, he was cautious to criticize as there was still more to be learned about the fund and how it would work to bring battery metals onto the market.

“It’s a bullish sign that the energy minerals are attracting this sort of attention. And as I said before, this really is a good time to be making acquisitions (buy low, sell high).”

Lobo Tiggre has spoken extensively about the risks of investing in different jurisdictions around the world — click here to read more of his thoughts.

Since selling Blackwater in 2010, Prince has been running Frontier Services Group (HKEX:0500) — a security, insurance and logistics company that caters to businesses operating in what it called “austere environments”, investing in natural resources.

Frontier Services, which has offices in China and the United Arab Emirates is associated with Chinese miner CITIC (HKEX:0267), with CITIC’s chairman Chang Zhenming also acting as chairman of Frontier Services.

CITIC has major interests in Africa, including the Democratic Republic of Congo — where it has recently increased its stakes in copper exploration and development through its C$723 million investment in Canadian miner Ivanhoe Mines (TSX:IVN) to snap up 19.5 percent of the company.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.