FIRST MANHATTAN CO decreased its ownership in The Metals Company Inc. (TMC) by 23.36% as of July 2, 2025, according to a 13D/A filing on June 23, 2025. The firm reduced its holdings from 22,991,050 shares to 17,619,789 shares, resulting in its ownership stake declining from 6.50% to 4.90%.1
Several factors likely contributed to this significant reduction in ownership:
- Strategic Investment and Potential Dilution: On June 16, 2025, TMC announced a strategic investment of approximately $85.2 million from Korea Zinc Company, Ltd..2 This investment, which closed on June 26, 2025, involved Korea Zinc purchasing 19.6 million common shares and receiving warrants.2 While this capital infusion bolstered TMC's cash position to approximately $115.8 million by June 30, 2025,2 the issuance of new shares would have diluted existing shareholders. FIRST MANHATTAN CO's filing date on June 23, 2025, falls between the announcement and the closing of this deal, suggesting their reduction could be a response to the impending dilution or a re-evaluation of their position post-announcement.
- Profit Taking Amidst Share Price Increase: TMC's second-quarter 2025 financial results indicated a "significant increase in the share price during the second quarter of 2025".2 This appreciation in share value could have prompted FIRST MANHATTAN CO to realize profits and rebalance its portfolio.
- Ongoing Financial Performance and Cash Burn: Despite the capital raise, TMC reported continued operational losses. For the second quarter ended June 30, 2025, the company had an operating loss of $22 million, a net loss of $74.3 million, and used $10.6 million in cash from operations.2 The Q1 2025 results also showed a net loss of $20.6 million.3 While TMC is targeting commercial production in Q4 2027,2 the ongoing cash burn and losses might lead some investors to adjust their exposure to the long-term project.
- Regulatory Landscape Evolution: During Q2 2025, TMC made progress on the regulatory front, with its U.S. subsidiary submitting applications for a commercial recovery permit and exploration licenses under the Deep Seabed Hard Mineral Resources Act (DSHMRA) in April 2025.3 An Executive Order was also issued to expedite permitting for offshore critical minerals.4 However, the deep-sea mining industry still faces evolving regulations and environmental scrutiny, with the International Seabed Authority (ISA) yet to adopt exploitation regulations.5 Such uncertainties can influence institutional investment decisions.
In summary, the reduction in FIRST MANHATTAN CO's ownership of TMC likely stemmed from a combination of portfolio adjustments, potential dilution from a significant new strategic investment, and a re-assessment of the company's financial performance and the long-term risks associated with the deep-sea mining sector.
