The Next Standard Oil Will Be Built in Mining
The mining industry is about to experience its Standard Oil moment.
Before Standard Oil, the oil industry was chaotic and fragmented. Individual companies handled different parts of the process: some drilled wells, others transported oil, and others refined it. This led to boom-bust cycles, inconsistent quality, and massive inefficiencies. While others saw oil as a speculative commodity, John D. Rockefeller (the founder of Standard Oil) saw it as an industrialized product that could be systematized, standardized, and scaled. Rockefeller built an empire that controlled every step of the oil business - from refining to transportation to retail - which let him make the whole process much more efficient than his competitors. He did this by owning his own pipelines, tank cars, and refineries instead of relying on others, and by hiring scientists to turn waste products like gasoline (which refineries used to dump in rivers) into valuable products1. Most crucially, he realized that controlling the refining and distribution of oil was more valuable than owning oil wells - a strategy that China is using today with mineral processing.
Rockefeller's genius wasn't in discovering oil or inventing new drilling techniques. He wasn't an oilman by training - he was an operator obsessed with efficiency and systems. This outsider's perspective proved crucial. Just as Rockefeller revolutionized oil by controlling the entire value chain, someone will do the same with critical minerals. And the opportunity is even bigger.
Consider the scale: demand for energy-related minerals has grown seven-fold in just two decades, from $53 billion to $378 billion. But that's just the beginning. The World Bank estimates we'll need $15 trillion worth of critical minerals (copper, cobalt, lithium, and nickel) by 2050 just to support the transition to electric vehicles.2 This isn't just a large market - it's a market being completely reshaped by electrification.
But here's the fascinating part: the industry is almost comically inefficient.
Only 0.5% 3of exploration campaigns succeed. It takes 16 years to go from discovery to production. Most mining companies won't even explore for new deposits, preferring to buy known ones. And once minerals are mined, they're shipped to China for processing, creating a dangerous strategic dependency.
Understanding Mineral Deposits
First, we need to understand what mineral deposits actually are. While minerals exist throughout Earth's crust, they're usually found in tiny concentrations - too dispersed to be worth extracting. What miners look for are deposits: rare geological formations where minerals are concentrated far above their normal levels.
These deposits form through fascinating processes over millions of years. Hot magma pushes upward through rock layers, carrying minerals with it. As this magma cools, it creates chambers or veins with high concentrations of valuable elements. Think of it like making rock candy - as the hot sugar water cools, crystals form and concentrate. The same principle applies underground, just over millions of years instead of days.
The Mining Process
Once a deposit is found, extracting the minerals involves three major steps:
Mining: Companies either dig open pits (imagine massive inverted cones up to a kilometer deep) or create underground tunnels. The choice depends on the deposit's depth and shape. This requires enormous machinery - trucks that cost $5 million each with $100,000 tires, and power shovels that can lift 100 tons at once.
Concentration: The mined ore goes through initial processing at the mine site. Think of this like separating wheat from chaff - they crush the ore and use various methods (magnetic separation, flotation, etc.) to concentrate the valuable minerals. This process typically aims to achieve 25-30% concentration.
Refinement: This is where China enters the picture - and where America's vulnerability lies.
The China Problem
Here's what makes China's dominance so concerning: they control the crucial middle step between mines and manufacturers. Almost all concentrated ore from American mines ships to China for processing. Why? Because China has built massive refinement infrastructure while America has let its domestic capabilities wither. China achieved its processing monopoly through a deliberate 30-year strategy combining massive state investment in infrastructure, technical expertise, and market manipulation. They built enormous processing complexes in cities like Baotou, supported by cheap land, subsidized utilities, and lenient environmental regulations.
Take rare earth elements as an example. In 2023, America was 95% import-reliant on these crucial materials4. But it gets worse: China was the leading producer of 24 out of 36 critical minerals (processing approximately 85% of rare earth elements, 60% of lithium, 65% of nickel, and 70% of cobalt globally) identified as having elevated supply risk. This isn't just about mining - it's about processing capability.
What happens in Chinese processing facilities? They take that 25-30% concentrated ore and:
Separate individual elements through complex chemical processes
Refine these elements to 99%+ purity
Convert them into forms usable by manufacturers
Package and ship them back to global customers
This gives China enormous leverage. They can:
Control global prices by flooding markets (they've done this with cobalt)
Restrict supply during geopolitical tensions (which they’ve done with critical minerals)5
Set environmental standards for processing
Maintain first-mover advantage in new technologies
The Scale of the Problem
The numbers are staggering. For a single example: America has exactly ONE lithium mine, ONE cobalt mine, and ONE nickel mine operating today. Meanwhile, we'll need roughly 300 new mines globally by 20306 just to meet clean energy demands.
The gap between our needs and our capabilities is massive.
Request for Startups
I’m interested in meeting companies that want to build a full-stack business around tech-enabled mining.
Think of building a full-stack mining company that controls the entire value chain. Think of it as the Apple of mining - controlling the key technologies and infrastructure from end to end.
The foundation of this new company would be AI-powered exploration, similar to what KoBold and Earth AI are doing, but integrated into a larger system. Instead of just finding deposits, this company would control extraction, processing, and refinement. Modern technologies like direct lithium extraction would replace outdated methods like evaporation ponds, dramatically increasing efficiency.
Why will this work? The answer lies in first principles. The United States has abundant resources - we just discovered the world's largest lithium deposit on the Nevada-Oregon border7. The bottleneck isn't geology - it's technology and integration. The current fragmented approach simply can't compete with China's integrated supply chains.
The timing is perfect. Government support for domestic mineral production is at an all-time high. National security concerns about Chinese mineral dominance are mounting (drones, consumer electronics, etc). The ‘America first’ mentality is back in vogue. And perhaps most importantly, AI and machine learning have finally matured enough to transform exploration and processing.
The AI exploration system would create powerful data network effects - each discovery improving future discovery rates. Vertical integration would create economies of scale that fragmented players couldn't match. Regulatory relationships and processing infrastructure would form high barriers to entry.
They'll look more like Tesla than Rio Tinto. The company will combine AI, modern extraction technologies, and vertical integration to create an entirely new kind of mining company.
This is exactly the kind of opportunity I look for: a massive market being transformed by technology, an industry riddled with inefficiencies, and a clear path to disruption through vertical integration. The potential isn't just to build a large company - it's to build a company that reshapes an entire industry. The last time someone did this in natural resources, they built Standard Oil. This time, the opportunity is even bigger. The global transition to clean energy depends on critical minerals. Whoever solves this problem won't just build a valuable company - they'll help transform the global economy.
The question isn't whether this company will be built. The question is who will build it. The pieces are all there: the technology, the market demand, the government support, and the clear strategic need. All that's missing is the team that puts it all together.
Who's going to build the next Standard Oil?
Please email me at nkechi@mvp-vc.com or DM on Linkedin
https://www.pbs.org/wgbh/americanexperience/features/rockefellers-john/#:~:text=They%20began%20manufacturing%20high%20quality,and%20Flagler%20used%20as%20fuel.
https://www.worldbank.org/en/news/press-release/2020/05/11/mineral-production-to-soar-as-demand-for-clean-energy-increases
https://data.geus.dk/MICASheetsEditor/document/163b11a7-d944-494e-a21e-a8f81ce8b175#:~:text=Target%20testing%20or%20investigation%3B%20and,one%20percent%20(Table%201).
https://www.mining.com/web/charted-americas-import-reliance-of-critical-minerals/
https://www.technologyreview.com/2024/12/06/1108020/what-chinas-critical-mineral-ban-means-for-the-us/
https://www.csis.org/analysis/indispensable-industry-minings-role-energy-transition-and-americas
https://www.popularmechanics.com/science/green-tech/a45086253/worlds-largest-lithium-deposit-found-in-nevada/