Not all criticism is personal. Earlier, we looked at the criticism around leadership at wind turbine installer Cadeler. Now we head into a different sort of leadership criticism.
After we published yet more scepticism on subsea miner the Metals Company last week, Iceberg Research reached out to us to share their analysis on the company. You can read their two excellent research reports here and here.
Iceberg Research says that it specialises in identifying, “substantial earnings misrepresentation and accounting irregularities in financial statements issued by public companies.”
Like us, its analysts are concerned that the Metals Company is overhyping the commercial prospects of mining deepsea polymetallic nodules in the Pacific Ocean, that the company lacks the resources to execute its ambitious project given its limited cash, and is managed by individuals with questionable histories of previous subsea mining fiascos.
The Metals Company’s founder, David Heydon, was the CEO of Nautilus Minerals from 2002 to 2008, and the licences the Metals Company holds were originally obtained by Nautilus.
Like we did in 2020, Iceberg pointed to the similarities between the Metals Company and its disastrous predecessor Nautilus, which went spectacularly bust in 2019 after trying and failing to commercialise mineral extraction from hydrothermal vents in water depths of over 1,200 metres off Papua New Guinea, a failure we covered at the time.
Nautilus failed only after the Metals Company's current CEO, Gerard Barron, and the other founders cashed out at the top of the market. Retail investors and the government of Papua New Guinea were badly burnt, however.
"TMC exhibits striking similarities to its predecessor, Nautilus Minerals, where the Metals Company’s CEO Gerard Barron was an investor," wrote Iceberg. "Nautilus originally claimed operating expenses (OPEX) of US$70 per tonne but was delisted from the Toronto Stock Exchange and filed for creditor protection after OPEX rose to US$192 per tonne.
"The Prime Minister of Papua New Guinea said, 'we burnt almost 300 million Kina (US$72 million) in that Nautilus project on a concept that someone told us can work, but is… a total failure.'"
Nautilus raised and spent around US$686 million from investors, delivered massive returns to Mr Barron when he sold his shares, and then ran out of cash without actually mining any of the valuable gold and other minerals it was seeking to extract from the vents.
Then, the Reeves’ family’s shipowning company Marine Asset Corporation (MAC) and China's Fujian Mawei Shipbuilding were on the hook. They had built a massive subsea mining vessel which they planned to lease to Nautilus. Unfortunately, Nautilus was unable to charter it, as MAC defaulted on the contract with the shipyard.
It is only in 2025 that the vessel has finally found a new role. Earlier this month, Boskalis announced that it had purchased the hull and renamed it Windpiper.
The Dutch contractor has taken the 227-metre long ship to Batam in Indonesia to convert it into a rock dumping vessel, after seven years suspended in the yard in China. This was the original Mac Goliath and the un-ironically named Nautilus New Era.
Now the Metals Company has partnered with the governments of Nauru and Tonga on the polymetallic nodules project and has the Heerema family's Dutch/Swiss marine contractor Allseas providing the chartered-in mineral dredging vessel Hidden Gem.
The structural similarities between Nautilus and the Metals Company are clear, as is the fact that the latter faces the same challenges as Nautilus, being economic challenges of mineral recovery in deepwater using brand new technology, and the environmental challenges of ripping up a pristine and barely studied marine environment.
The main criticisms of the Metals Company made by Iceberg appear fair to us. Iceberg estimated that it will not be profitable for the Metals Company to extract the minerals from 4,500 metres down on the seabed – an obvious concern, given the huge numbers of nodules needed to be collected and the massive logistical and operational challenges of the remote and deepwater location.
"After revising a series of unrealistic assumptions, we very conservatively estimate the net present value (NPV) to be negative US$721 million, 111 per cent lower than TMC’s projected NPV of US$6.8 billion," wrote Iceberg.
From a mining industry perspective, the most critical issue is the company's consistent failure to provide a pre-feasibility study, which would provide estimates of the mineral reserves that are in place and that are commercially viable to extract from its Pacific Ocean polymetallic mineral licences.
Iceberg stated that the Metals Company said the report was ready in November 2024, but that it has still not been issued. Several of the company’s consultants working on its resource estimates are from very small organisations and one is even a former employee of Nautilus while another was also previously a consultant to Nautilus.
The Iceberg analysts also highlighted the extremely high pay of the Metals Company's leadership, much of it in the form of stock.
Iceberg pointed out that both the smelting company tasked with melting and purifying the minerals from the nodules, PAMCO, and Allseas as subsea contractor, plan to charge much, much more to the Metals Company than it originally forecast, driving up its operating costs.
At the same time, prices of nickel and cobalt are much lower than they were in 2021.
Iceberg also found that the Metals Company’s estimate that it would recover 95 per cent of the nickel in the nodules is much higher compared to conventional smelting recoveries, where 83 per cent is the average. Their criticism is that the company’s numbers just don’t stack up.
The most shocking paragraph is just before the conclusion. It is worth quoting in full because even my jaded cynicism about this overhyped venture did not expect it:
“From 2021 to March 2025, the Metals Company raised US$221 million in equity, increasing the share count by 77 per cent to 362 million in May 2025. Using funds raised through shareholder dilution, key executives paid themselves US$44.6 million in total compensation from 2021 to 2024.
"In 2024, CEO Gerard Barron alone was paid US$3.2 million, which is 836 per cent higher than the median compensation for CEOs of mining companies with less than US$100 million in assets, according to consultancy firm Bedford. The company had US$63 million in assets in 2024. Chief Strategy Officer Erika Ilves received US$1.7 million in compensation in 2024, which is 387 per cent higher than the median pay for CEOs of comparable firms.”
Overpaid senior executives are an occupational hazard for investors, especially when the CEO claims to be a visionary and the chief strategist has come from McKinsey. But 800 per cent pay seems extreme. It is on the board to prevent such excess pay, and clearly they have failed.
But it gets better, or worse, depending on your point of view, with what follows:
“Barron and related parties got creative in 2024. In March 2024, the company entered into an unsecured credit facility with Gerard Barron and ERAS Capital, the family fund of a director, Andrei Karkar. The facility originally had a US$20 million limit, carried an interest rate of SOFR plus four per cent, and included a four per cent 'underutilisation' fee on undrawn amounts.
"The Metals Company drew just US$4.3 million from the facility in 2024. The company reported US$0.2 million in interest expense and US$1.1 million in 'underutilization' fees on this facility. The company is effectively paying a whopping annualised 39 per cent in interest and fees.
"One would expect this costly and underused facility to be cancelled. But the borrowing limit was raised to US$44 million in March 2025 and the underutilisation fee was increased to 6.5 per cent.”
So, Mr Barron and Mr Karkar are paid when they lend money to the Metals Company, which is fair, but they are also paid handsomely if they do not lend money to company.
Assuming that the company borrowed absolutely nothing under this standby loan agreement in 2025, it would still pay the pair who sit on its board over US$2.8 million for the privilege of not borrowing the money.
This fact alone should be a major red flag in a room full of bright red flashing warning signs.
Titanic was sunk by an iceberg. I have a feeling that the Metals Company will meet a similar fate, just as its predecessor Nautilus Minerals did.
Mr Barron has met a serious, immovable, and implacable foe in Iceberg, whose research is fact-based and analytical. When the company's investors and its complacent board of directors will wake up to the size of the conflicts of interest is not clear. That’s not a criticism; it’s a fact.
And if anyone wants to pay me US$3 million not to lend them money, the editor’s email is on the website. Heads I win, tails you lose. What could be wrong with that?
Finally, we close with an epitaph for American shipbuilding. The Trump administration has said that it would like to reinvigorate American shipbuilding capability as part if its ambitious plan to reestablish American “maritime dominance”. Cheerleaders like John Konrad took them at their word.
We were sceptical, and rightly so. The first major decision the administration has taken regarding shipbuilding is not to increase capacity or announce new orders.
Instead, the Department of Homeland Security has cancelled the contract for the US Coast Guard's 11th Legend-class national security cutter, at American military shipbuilder Huntington Ingalls Industries (HII), as we reported last week.
The vessel was originally scheduled for delivery in 2024, but it remains incomplete more than a year past its deadline.
Surprise! Students of the Bollinger icebreaker fiasco, the Scottish ferry building saga, and numerous Canadian and American naval shipbuilding projects will not be surprised. The US Government said it will take back the unused parts and use them as spares for sister ships, and thus save US$260 million.
“This project was over time and over budget,” said Homeland Security Secretary Kristi Noem in a DHS statement, while expressing the need, "to be smart with the American taxpayer’s money."
Presumably, HII doesn’t recognise the picture she is painting? Is it a criticism to say that any plan for revived American shipbuilding – if the existing players cannot even finish the ships they started – is simply likely to result in more costs for the treasury and higher costs?
I hope to see some robust defences of how and why American shipbuilding can be turned around on social media.
In the meantime, I leave the last words to Cadeler CEO Mikkel Gleerup, whom we covered in part one of this piece last Monday:
“It makes a big impression to receive personal criticism. And it hurts that the focus is taken away from the work our many talented colleagues do every day.”
Don’t criticise; you will distract people from doing their jobs. Sorry to have distracted you, Mr Barron. Carry on as you were! Or maybe not.
Please don’t.