2025 is defined by a return to energy pragmatism – in line with Azimuth’s view as expressed in our Q1 2025 paper “Azimuth’s Philosophy on the Energy Transition”. Indeed, other thought leaders Jason Bordoff and Meghan O’Sullivan agree in their recent coverage on the weaponization of energy and critical in a Foreign Affairs fall essay. Forward-thinking investors must navigate not only business and technology risks, but also opportunities and pitfalls from government interventions spanning export bans, trade tariffs, stockpiling, and equity stakes intended to orchestrate specific flows of minerals among allies and foes. This paper highlights how Azimuth is positioned in the context of today’s renewed focus on domestic security and supply chains, illustrated in two parts: (1) Azimuth portfolio company Monolith’s positioning as a critical materials producer, and (2) Azimuth’s positioning in critical minerals that targets expansion of U.S.–Canada–Japan metals refining capacity, security, and industrial revival.

Monolith is the only commercial scale pyrolysis producer of a high value solid carbon product called carbon black (“CB”), a non-substitutable material that underpins tires, seals, gaskets, battery electrodes, and solid-rocket motor liners. For example, car tires only last 5,000 miles without CB, only one tenth of their typical 50,000-mile lifespan with CB. Monolith plays a critical role ensuring North America’s CB base is not lost. Twelve years ago, Monolith was founded with the idea that it was possible to manufacture CB more efficiently than the incumbent process, which takes place via combustion of hydrocarbon feedstock. Monolith’s electro-pyrolysis technology enables over 95% conversion to carbon black using domestic oil and natural gas feedstocks, versus 50% to 60% in legacy methods. A decade ago, to say that the CB and energy world was skeptical of Monolith’s innovation is an understatement. Today, Monolith’s process has revolutionized resource efficiency, lowered emissions, and reached cost parity.

The US CB base is fragile. No new CB plants have been constructed in the US in 50 years. Most US plants are 60 to 80 years old, most domestic capacity is foreign-owned, and production is becoming more and more concentrated in China, India, and Russia – presenting geopolitical risks for domestic as well as European mobility, military, and infrastructure buyers. Supply chain sovereignty, defense self-sufficiency, and mitigation of Chinese import dependence have emerged as clear, critical strategic drivers. Today, Monolith has demonstrated commercial scale production, with performance, safety, and scale at its Lincoln, Nebraska facility validated by Tier 1 customers including Goodyear, Michelin, and General Motors. The Monolith team has worked diligently to arrive at this point, maintaining strong customer trust, safety standards, and community support.

North American tire manufacturers cannot afford for Monolith to lose its capacity to produce CB. North American jobs and competitiveness are at stake. Expanding Monolith provides sovereign US supply for a material that directly affects safety of flight, vehicle mobility, and defense readiness. Monolith is positioned at the center of renewed North American focus on reshoring, national security, and domestic deployment. Monolith is actively in discussions for potential government funding with that purpose in mind.

Looking ahead, Azimuth is defining our key investment criteria for high-potential critical minerals opportunities. We plan to focus on minerals serving high-growth markets including defense, AI-driven infrastructure/electronics, and energy sectors. The investments will focus on the underinvested midstream/processing space, because the midstream—rather than upstream mining—is the key supply-chain gap in the West.

Minerals including vanadium, gallium, heavy rare earths, nickel and tungsten have emerged as having unique strategic midstream opportunities due to current overreliance on imports and the criticality of the markets they serve. North America is entering a time of renewed awareness of the importance of midstream mineral facilities, driven by the realization that critical mineral monopolies are unacceptable supply chain risks that must be addressed through strategic partnerships and secure sourcing.

We believe that the 2026-2030 window favors projects capable of underwriting midstream optionality – that is, projects that can accept multiple feedstock streams, serve premium offtakers with supply chain vulnerability, particularly in defense, industry, and energy applications, and blend private financing discipline with opportunistic policy instruments, i.e. with the US Department of Energy, US Department of War, Export-Import Bank of the US and the equivalent agencies of allied countries.

Expanding on Azimuth’s summer position paper on “Critical Minerals for Energy Development” (August 2025), our team has broadened our scope into targeted minerals that span defense, electronics, and energy supply chains, and conducted technology evaluations, active due diligence and site visits on nearly a dozen midstream companies. We observe that the next generation of developers are advancing modular refining systems that can handle multiple feedstocks–from recycled magnets and black mass to tailings and concentrates. These projects combine cost competitiveness, minimize commodity price exposure, optimize reagent use, maximize partnerships with North American-aligned organizations, and minimize permitting time through built-in environmental management.

The most promising technologies convert mixed inputs into 99.5-99.9995% high purity oxides and carbonates and leverages advanced separation techniques such as electrochemical separation, to minimize environmental impacts and reagent use. Legacy solvent extraction techniques that are dominant in China do not translate well for modular scale and North American environmental permitting. For players competing on recycled feedstock, we see the most successful teams execute targeted feedstock procurement strategies with a clear prioritization of highest value feedstock streams, such as end-of-life magnets, which produce up to twice the margin of secondary feedstocks, such as process scrap. However, as recycled feedstocks may be limited in volume, we are conducting deep-dive research into tailings feedstock and processing to assess viability to domestically source minerals of interest.

One of the greatest challenges that North American metal refiners must compete against is vertically integrated mine-to-smelter systems in Asia. We observe creativity in our sample of technology companies that structure project finance-like capital stacks blending senior debt, contingency capital, with equity for commercial plants with committed offtake. We also see the emergence of trading houses as critical intermediators that offer midstream operators both feedstock and offtake aggregation for specialized materials, underwriting the long-term agreements necessary to derisk bankability for emerging processors that would otherwise not qualify for debt capital. This model reduces overreliance on singular, lengthy OEM qualification cycles, shortens time to revenue, and allows midstream assets to service debt even under adverse pricing conditions, enabling competition with vertically integrated Chinese incumbents.

As novel processing technology bears scale-up risk, we are concentrating on higher TRL technologies, shifting the risk to execution: staffing, financing, acquiring new commercial-scale plants to meet agreement timelines, filing robust patents to protect not just lab R&D but also new process IP. We see operational teams work on automating processes that mix batch and continuous operations, manage project development across multiple plants, and manage sourcing and variation from multiple feedstock partners. We are watching US Government-sponsored deals closely to assess potential over-valuation and execution-related risks.

At Azimuth, we have scaled up Monolith for over a decade from a lab scale innovation to a commercial scale producer of carbon black, a critical material for mobility, defense, and infrastructure applications. For the next decade, we are strategically positioning Monolith to fulfill its potential as a substantial contributor to US supply chain security. In parallel, we believe that the next 12-18 months represents a tipping point for North American critical mineral refining projects with high midstream optionality across our priority minerals with premium offtake across defense, energy transition, and semiconductor markets. Azimuth recognizes the renewed focus on domestic supply chain security and maintains high conviction in selective opportunities in a rapidly evolving North American investment universe.

Our team is positioned to execute on this vision with our new Managing Director, Dr. Kathy Woody – who joined us in November 2025 as Critical Minerals strategy lead. Our working leadership team also includes Heath DePriest and Matt Horton, both Azimuth Operating Partners; Dr. Chris Miller, author of “Chip War” and partner at Greenmantle; and Harry Brekelmans, former Executive Committee member and Global Director of Projects and Technology at Shell. By design, we look forward to leveraging our multidisciplinary expertise across science and technology, refining operations, project development, and government leadership to bring fruit to our Critical Minerals strategy in 2026.