TMC and Allseas Just Signed an Agreement to Develop a Commercial Nodule Recovery System. Does This Move Make the Stock a Buy in 2026 and Beyond?

Critical minerals have become a strategic priority and a national security concern. According to research by The Motley Fool, China controls about 70% of rare-earth extraction and 90% of processing, giving the country a stronghold over the rare-earth supply chain. The need to build a domestic supply chain became urgent when China imposed restrictions on rare-earth elements and magnets, which are crucial for defense, electric vehicles, wind turbines, and other technologies.

TMC The Metals Company (NASDAQ: TMC) is looking to mine the deep-sea floor, which is rich in these rare-earth materials. The company has gotten some good news this month that brings its deep-sea mining business closer to reality, making it an intriguing mining stock for investors playing the rare-earth and critical minerals supply chain build-out.

TMC is one step closer to mining the seafloor

This month the National Oceanic and Atmospheric Administration (NOAA) ruled that TMC's consolidated application was fully compliant. This stamp of approval removes a major regulatory hurdle for TMC and provides it with priority rights over designated areas in the Clarion Clipperton Zone in the Pacific Ocean until the final permitting process plays out.

Building on this, the company signed an agreement with offshore engineering giant Allseas to build, integrate, and operate the world's first commercial-scale deep-sea nodule collection system. This robotic collector will crawl across the seafloor to pick up polymetallic nodules, which are rich in manganese, nickel, cobalt, and copper. The nodules will then be pumped via a pipe to a surface vessel, which will transfer them to onshore processing hubs.

Image source: Getty Images.

Under the agreement, Allseas will pay a significant portion of the pre-production development, engineering, and procurement costs out of pocket. It will then recover these costs through production revenue once commercial mining begins. This helps align the companies' incentives and limits TMC's need to pay high upfront costs to develop this system, thereby protecting its capital reserves, which is crucial during these early developmental stages.

What's next for TMC?

TMC's application with NOAA is in the certification stage, and NOAA will begin drafting a comprehensive Environmental Impact Statement. There will then be a public comment window, followed by NOAA issuing a final decision on the commercial permit, which TMC believes could happen by early 2027. TMC and Allseas plan to commission the system in the fourth quarter of 2027, with full commercial production beginning in 2028 -- assuming things unfold smoothly.

While TMC's funding model with Allseas is positive, the execution risk remains high. Commercial deep-sea extraction systems have never been operated at scale before, and the setup poses unique risks, including extreme pressure, toxic sediment plumes, and potential environmental impacts. If you do decide to buy TMC today, maintain a small position and a long-term outlook, as the company still has a lot of work ahead to turn deep-sea mining into a profitable venture.

Courtney Carlsen has positions in TMC The Metals Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.