From Y Combinator to mining, ft Earth AI’s Roman Teslyuk

Key Concepts

Yuan Internationalization: China’s strategic push to increase the use of the yuan in commodity pricing to reduce reliance on the US dollar.
Vertical Integration in Mining: A business model where exploration companies control the entire value chain, including AI-driven prospecting, drilling, and laboratory analysis.
Critical Minerals Supply Gap: The projected deficit of essential minerals (nickel, copper, cobalt, lithium, rare earths) required for the global energy transition.
Hydrothermal Systems: Geological environments where mineral deposits are concentrated; the primary target for AI-driven exploration.
National Security Premium: The concept that Western nations must pay higher prices for minerals sourced from friendly jurisdictions to ensure supply chain security.

1. Iron Ore Market and Geopolitical Shifts

BHP and CMRG Agreement: BHP reached a long-term contract agreement with China’s state-backed China Mineral Resources Group (CMRG) regarding "Jimblebar fines."
Pricing Paradigm Shift: The agreement incorporates a blended formula where 51% of the price is determined by yuan-denominated indexes (e.g., COREX, Mysteel) and 49% by US dollar benchmarks.
Strategic Significance: Analysts view this as a "paradigm shift" that grants China greater pricing influence and challenges the long-standing dominance of the US dollar-denominated Platts Iron Ore Index.
Fortescue’s Role: Fortescue Metals has also deepened ties with China, securing a $2 billion syndicated loan from the Bank of China at a favorable 3.8% interest rate, signaling a trend of Chinese leverage in the Australian mining sector.

2. Global Mining Developments and Security Risks

Sulfuric Acid Crunch: China’s potential ban on sulfuric acid exports (effective May 1st) has caused a supply squeeze, threatening copper cathode production in Chile, which relies on the chemical for processing.
DRC Security Force: The Democratic Republic of Congo is launching a $100 million, US and UAE-funded paramilitary unit to protect mining sites and curb smuggling, with a goal of 20,000 personnel by 2028.
Mali Conflict: Coordinated militant attacks on Mali’s Russian-backed regime threaten the stability of major gold assets, such as Barrick’s Loulo-Gounkoto complex.
Pakistan Attack: Gunmen killed nine employees at a National Resources Limited copper-gold project in Balochistan, highlighting the extreme security risks in global mining operations.

3. Technological Innovation: Earth AI

Methodology: Earth AI uses a proprietary "MTP" (Mineral Targeting Platform) system—a deep neural network that analyzes historical sampling and geophysical data to predict hydrothermal activity.
Vertical Integration: Unlike traditional exploration firms that rely on contractors, Earth AI operates its own drilling hardware, logistics, and laboratory. This reduces the "bottleneck" of waiting for third-party results, allowing for rapid iteration (days instead of months).
Efficiency: Founder Roman Teslyuk argues that traditional exploration cycles take 10–20 years, whereas their integrated model aims to compress this timeline significantly by maintaining continuous, year-round drilling operations.
Scaling: The company is currently focused on balancing rapid growth with quality control, with four new drill rigs on order to scale up resource definition.

4. Market Trends and Economic Context

Bond Yields: US and European 10-year bond yields rose, while China’s remained relatively stable, reflecting divergent economic pressures.
Metal Price Movements:
- Copper: Remained strong, hovering above $6.00/lb, with industry leaders like Robert Friedland suggesting potential for $15,000/ton due to US-China stockpiling.
- Precious Metals: Gold, silver, and platinum saw price declines over the week.
- Aluminum: Indonesia is aggressively expanding its aluminum smelting capacity with Chinese funding, raising concerns about future market oversupply similar to the nickel market crash.

5. Synthesis and Conclusion

The mining sector is currently defined by a "tug-of-war" between traditional Western-led market structures and China’s aggressive push for commodity pricing power via the yuan. Simultaneously, the industry is facing a "security-first" era, where mining companies are increasingly forced to operate in high-risk geopolitical zones, necessitating the creation of private security forces. Technological disruption, led by companies like Earth AI, is attempting to solve the critical minerals supply gap by replacing traditional, slow-moving exploration methods with AI-driven, vertically integrated models. The overarching takeaway is that the industry is moving toward a more fragmented, security-conscious, and tech-heavy future where the cost of supply chain independence—the "national security premium"—is becoming a standard economic factor.