The Future of Energy with Veteran Analyst Arjun Murti

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Right eye buddy Viters, we've
got another bloody legend from

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stateside joining us today.
And this is in parallel to the

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legends of Axis Mine and
Technology JD.

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We cannot forget about them.
The bloody cornerstone of the

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show and the trusted advisor for
Drill Isle survey

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instrumentation.
And quite pertinent actually,

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because the follow we've got
here at the moment used to be,

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or you would say, the trusted
advisor for bloody Goldman

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Sachs, the head of research back
in the day, former partner at

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Goldman, left Goldman at 2014.
And now he's going on the bigger

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and better things to talk to us
specifically Mr Arjun Murti.

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How are you, Cobba?
Welcome to Money and Mine.

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I am doing well.
That is an awesome introduction

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and the fact that you were in
Perth, Australia, I was telling

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my last every analyst trip in my
final month at Goldman Sachs was

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to to Perth, Australia.
So I hope to get back someday.

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Was an awesome visit to go see
Gorgon the Gorgon LNG project.

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Oh, fantastic, mate, mate, we
are absolutely honoured to have

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you on and JD has been
religiously listening to pretty

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much every fucking podcast
you've done in history by the

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sounds.
So he's he does good.

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JD take it away, mate.
Oh this is a very excited for

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this yarn.
I've, I've got to say I love it

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when the, the person we
interview has their own sort of

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podcast because it just makes
the research that much easier.

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And some listeners out there,
they might know Arjun, he, he

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writes the Super spiked sub
stack, which has got a, a video

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format to it as well, podcast
and now works at Veriton.

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So I'm, I'm pretty pumped.
Like you said, Maddie, he, Arjun

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worked at Goldman Sachs.
You've covered energy for the

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best part of two or three
decades now.

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So plenty, plenty to chat about.
I want, I want to start with

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your, your guiding force, your
guiding principle, Arjun, you,

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you've spoken about prioritising
meeting the global energy needs

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for, for everyone on earth.
You speak about this in the

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context of, you know, us, you
know, all of us on this call

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being in the, in the lucky 1
billion versus the, the 7

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billion.
So can you kind of paint the

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picture of how you see energy
demand and how perhaps the the

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narrative is a bit distorted at
the moment out there?

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Absolutely.
And it really is a pleasure to

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be here.
You know, it's been about 10

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years since I was at Goldman and
like the 1st 22 years was mostly

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it's the South side a little bit
as a by side analyst.

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And I was like, I was enjoying
my time as a board and Advisory

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Board member at all these
various things.

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But there was something about
COVID and negative oil and the

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sudden energy transition mindset
that kind of took over the world

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that everyone suddenly has to be
Paris aligned, not just the

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world and not just countries,
but some of individual companies

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and actually primarily
individual companies in rich

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Western countries.
And it's led to a really a lot

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of, I think, bad perspectives
and understanding about energy.

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It was also a period of time
when energy prices were

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generally low.
So it didn't matter to anybody.

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There weren't wars, there wasn't
disruption.

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Shale oil was growing.
And I think we've gotten to a

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point where everyone is treating
counting CO2 as the overarching

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objective.
And my personal found it.

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I support the idea that
ultimately we're going to want

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to, you know, go to lower carbon
forms of energy.

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But the reason to do so isn't to
count CO2.

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It is to provide energy for
everyone on Earth.

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It's a hierarchy needs.
We all know that we can live 5

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seconds without energy.
There's the lucky 1 billion of

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us, as you highlight US, Europe,
Canada, Western Australia,

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Japan, New Zealand.
I probably forgot a country in

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there.
Maybe South Korea deserves to be

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in there.
We use a disproportionate amount

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of the world's energy.
In oil terms, it's about 13

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barrels per person per year.
The rest of the world, the other

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7 billion people, soon to be
nine, are using just three

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barrels per capita.
And some are using one or 1 1/2

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African countries and India as
an example.

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And we all know that you can't
go 5 seconds.

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None of us can without energy.
And I don't know why the world

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needs to keep learning this
lesson for everyone being energy

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rich first and foremost.
And I think with that, if you're

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a country that is not long
Crudle, if you're short Crudle,

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you don't have enough of it, you
are going to be non fossil fuel

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based energy and that is going
to be the driver of quote

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decarbonization.
It is not in my opinion going to

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come from counting Co Tor.
At least it's not going to come

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from that unless you solve for
how do you make everyone energy

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rich.
It can't be OK that someone has

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one light bulb and they go to
three light bulbs and you

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declare victory.
Everyone aspires to our

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lifestyles.
We can debate the time frames.

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They'll get there.
It may take decades, it may take

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a century.
Sadly, some people may never get

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there, but everyone's going to
strive to it.

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And I will say the 1.4 billion
people in in China, the 1.4 in

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India, and the 1.3 in the rest
of Southeast Asia, collectively,

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they for sure moving up that
economic and energy S curve.

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So at least that 4 billion
people, again, 4X the 1 billion

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of us that are currently rich,
that is a heck of a lot of

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energy used to come and a heck
of a lot of frankly, oil, gas,

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coal, and a bunch of new stuff
as well.

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So do you think like 'cause
it's, they're painted as like,

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you know, one thing, but it is 2
totally separate issues.

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If you removed the whole CO2
renewables side of thing and we

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just, we're focusing on base
load power as we have it, as we

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see it today, dear, would would
have there been enough energy

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for the world going forward or
do you think it still would have

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been an issue like discounting
renewables and everything?

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I mean, there is a heck of a lot
of oil, natural gas and coal

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still to be developed.
I think one of the tricky parts

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is a whole bunch of the
developing world does not have a

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lot of crude oil.
In the United States, we're

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blessed with it.
Canada has it.

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Obviously Russia and the Middle
East countries have it.

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In Africa, Africa is generally
law and crude oil, but Asia does

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not.
So I think in Asia there have

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been a huge motivation.
There is.

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You can see it in China's move
to EVs to try your best to not

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import massive amounts of crude
oil if you can help it.

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On the other hand, they all also
have a lot of coal.

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And so who, you know, what
evidence is there that China is

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not going to keep burning
increasing amounts of coal, even

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if they're trying to build out
renewables.

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India for sure is going to be
doing all the above, but for

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them it may not be importing as
much LNG.

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It's going to be burning a lot
of coal back.

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I don't think we're on track to
run out of these resources

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anytime soon.
So in that respects, you know,

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could you have 9 billion people
equivalently rich to America and

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Australia in 50 or 70 years?
I mean, that's probably a

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question, but you're not going
to have to test it because if

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you're China and you're barely
at 4 barrels of oil consumption

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per capita, we're at 22 in the
US, Canada's at 20, Europe's at

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10, the ritual's at 13, China's
at 4:00.

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If they go to 8, it's only going
from 13 to 26,000,000 barrels a

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day of oil imports.
They're not going to want to be

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dependent on either US shale or
Canada or for that matter OPEC

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or Russia, whatever.
Pick your poison.

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And so that is their move to
EVs.

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And so I think we're not going
to test those limits of crude

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oil.
We will already be buying to

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move on to other things.
So.

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So the conversation just super
quickly moves from the global

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energy demand to to geopolitics
and energy independence.

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And then, you know, it, it goes
in a whole bunch of different

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directions from there.
People often take it down a kind

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of political route.
But I want to hone in on the

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point you just touched on on
EVs, because China has won a lot

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of plaudits for what they've
done in, in EVs from people in

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the Western world.
But you know, you put you point

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out the mode of being being
super, super different.

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And I just want to hone in on
that because the E VS with, you

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know, the power is coming from,
from coal.

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The ultimate energy use is, is
still, you know, it's probably

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higher than an internal
combustion engine vehicles.

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So I just want to focus in on
China and their prioritisation

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of energy independence and just
hear what thoughts you've got

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around that.
I mean, I, I don't see how

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there's any question that it's
not driven by energy

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independence and geopolitics.
And so China is short crude oil,

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natural gas and for that matter,
food as well.

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And so they're hugely depending
on importing these resources.

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And during the time China has
ascended, which is really since

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joining the WTO in 2002, the US
has split places with it.

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We do have a lot of food and
grains and other resources, but

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we were importing 13 million
barrels a day as recently as

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2007, 2008.
By some miracle, we've had the

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shale revolution.
So when you think about China

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and the US being economic rivals
and maybe more than that these

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days, that's a huge change in
position where the US has gone

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from 13 million barrels of a day
of oil imports to essentially

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balanced, and with the help of
Canada, a slight.

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China's going from generally
balanced 25 years ago to now

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being the largest oil importer,
almost as much as the US was

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importing 15 years ago.
I think that motivation is

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overwhelmingly, it's going to be
all the above for all these

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countries.
So they are using more crude

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oil, they're using more natural
gas, they're using more coal,

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They've had massive renewables
growth and they're building out

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nuclear.
How is that not the obvious

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answer for essentially every
single country?

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And again, their population is 3
X 4X the size of the US and they

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still got, they've gone from
being poor to as a country being

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maybe middle income.
They are certainly not rich when

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you look at the totality of
their population.

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And I think it's going to be all
of the above.

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And to me, the driver is they're
not long crude oil, they're

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short it.
And that is the motivation for

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EPS.
Now we can separately decide

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what is their labour situation,
how much of the renewables and

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other mix comes from a very
challenging forced labour

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situation for some segment of
the population.

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There are other sort of
political and and humanitarian

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issues that go with it, but
they're burning a heck of a lot

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of coal.
These are coal fired EVs, make

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no mistake.
And when you build up as much

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renewables as they, you
obviously need a base load

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supply.
So what are your choices?

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It's nuclear, they're doing
that.

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It's natural gas.
They are importing some LNG from

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Australia, from the US, from
elsewhere.

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But the biggest thing that they
have domestically is coal.

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So why would they want to only
depend on LNG or only depend on

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these other things when the coal
price is going to be a fraction

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of of global LNG prices and it's
going to be Chinese labour and

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Chinese bureaucracy and Chinese
taxes and Chinese jobs.

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And I think that model to
varying degrees will hold true

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for India and some of the other
Southeast Asian countries as

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well.
What do you, what do you think

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about the just the decision that
like as you said, China's way is

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fucking logical.
It's like we need a bit of

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everything.
That's the that's the logical

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pathway going forward.
But I suppose we talked

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specifically about Australia and
you probably hear much how much

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an embarrassment our governments
are because they change every

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three months.
How much of the like stuff is

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like, is China just smarter on a
government level in terms of

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looking to the future, whereas
we're dictated by whether who's

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in bloody power at the time and
whatever friggin idea they've

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got going on?
Well, unlike Australia, we're

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stuck with our leaders for four
years, so I actually wouldn't

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mind this.
Model where people get a little.

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I wouldn't knock.
It we look forward to that day,

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if it, if it ever to come.
You know, I think there's been a

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little bit of, it's true of all
the rich countries.

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It's true especially in Europe.
I've been surprised honestly at

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how true it seems to be in
Australia.

225
00:11:26,640 --> 00:11:28,880
And to varying degrees, it's
true in the US where and and

226
00:11:28,880 --> 00:11:32,120
certainly true in Canada was the
idea that we need to quote

227
00:11:32,120 --> 00:11:36,400
urgently transition.
But somehow we're the ones that

228
00:11:36,400 --> 00:11:38,520
need to transition, even though
we're a fraction of the world's

229
00:11:38,520 --> 00:11:42,000
population, even though our
resources, and by ours I mean US

230
00:11:42,000 --> 00:11:46,280
shale, Canadian oil sands,
Australia, LNG, I think it's

231
00:11:46,280 --> 00:11:48,560
reasonable to hold our companies
to strict standards.

232
00:11:48,560 --> 00:11:50,880
That could be the amount of
methane that comes out of these

233
00:11:50,880 --> 00:11:52,720
projects.
The carbon intensity should be

234
00:11:52,720 --> 00:11:54,440
as competitive as any other
project.

235
00:11:54,680 --> 00:11:56,840
If it does not come from our
countries, US, Canada,

236
00:11:56,840 --> 00:11:59,720
Australia, and I'm going to add
Norway to that list as well, it

237
00:11:59,720 --> 00:12:03,960
is going to come from Russia,
Saudi Arabia, Iraq, Iran.

238
00:12:03,960 --> 00:12:06,840
And we can, I'm an American, I
can, we can have different

239
00:12:06,840 --> 00:12:10,600
opinions on these countries, but
they're certainly not always

240
00:12:10,600 --> 00:12:13,600
friendly to what I will say is
the collective West, and I'm

241
00:12:13,600 --> 00:12:16,120
going to apologise and include
Australia in that mix as well.

242
00:12:16,360 --> 00:12:19,560
And we've gone into this mindset
that somehow we individually

243
00:12:19,600 --> 00:12:21,320
need to decarbonize our
countries.

244
00:12:21,840 --> 00:12:25,400
I mean, so there's this anti oil
gas development that we see in

245
00:12:25,400 --> 00:12:28,040
the US, we see it in Canada.
And as best as I can tell, we

246
00:12:28,040 --> 00:12:30,880
see it in Australia as well,
even though I'd argue the

247
00:12:30,880 --> 00:12:33,800
resource base can and should and
will be held to a very high

248
00:12:34,000 --> 00:12:35,480
labour and environmental
standards.

249
00:12:35,480 --> 00:12:38,840
So if you're going to produce
oil for the developing world, it

250
00:12:38,920 --> 00:12:40,600
ought to come from countries
like ourselves.

251
00:12:40,600 --> 00:12:45,800
And I would divorce decarbonized
demand and that could be moved

252
00:12:45,800 --> 00:12:47,600
towards more fuel efficient
vehicles.

253
00:12:47,600 --> 00:12:51,640
In the US, we're very addicted
to SUVs, the biggest cars, and

254
00:12:51,640 --> 00:12:55,480
it's offset essentially 95% of
what could have been fuel

255
00:12:55,480 --> 00:12:58,840
economy gains over the last 20
years because we buy bigger and

256
00:12:58,840 --> 00:13:01,360
heavier cars every year.
So there are certainly things we

257
00:13:01,360 --> 00:13:04,600
could choose to do on the demand
side, but why any of our

258
00:13:04,600 --> 00:13:08,640
countries would want to penalise
our supply, I do not understand

259
00:13:08,640 --> 00:13:11,360
in the least.
And I think it's this mindset we

260
00:13:11,360 --> 00:13:15,640
have to transition urgently by
some arbitrarily short date

261
00:13:15,640 --> 00:13:18,920
2050.
It's somehow the only things

262
00:13:18,920 --> 00:13:23,160
that would be Australian, US,
Canadian oil and gas companies

263
00:13:23,160 --> 00:13:24,720
and probably coal companies as
well.

264
00:13:24,840 --> 00:13:26,280
And the logic of that I don't
get.

265
00:13:27,000 --> 00:13:30,640
So I just want to ask you on the
on the point of setting these

266
00:13:30,640 --> 00:13:34,960
arbitrary points 2050 like a lot
of the West did China who we

267
00:13:34,960 --> 00:13:37,400
kind of view as being a bit more
pragmatic in a few senses, they

268
00:13:37,400 --> 00:13:42,120
still set a a sort of phase out
time of 2060 from memory.

269
00:13:42,120 --> 00:13:44,880
What what do you think of that
timeline in their perspective?

270
00:13:46,120 --> 00:13:48,880
I find all these timelines to be
absolutely absurd.

271
00:13:48,880 --> 00:13:51,440
Again, they're all done with
this perspective that we're

272
00:13:51,440 --> 00:13:54,960
going to count CO2, we're going
to put some, you know, Excel

273
00:13:54,960 --> 00:13:58,040
curve down slope to it and
simply assume these things are

274
00:13:58,040 --> 00:14:01,240
going to be achieved when there
is little confidence that I

275
00:14:01,240 --> 00:14:04,480
would say one can have.
What are the technologies that

276
00:14:04,480 --> 00:14:07,160
are going to scale profitably
without government subsidies

277
00:14:07,440 --> 00:14:10,640
that are going to replace all of
current or the majority of

278
00:14:10,640 --> 00:14:14,560
current oil, gas and coal
demand, never mind solving for

279
00:14:14,560 --> 00:14:17,680
the other 7, two to 9 billion
people who are moving up that

280
00:14:17,680 --> 00:14:21,040
energy and economic gas curve.
And so I find this these dates

281
00:14:21,560 --> 00:14:23,400
be sort of bizarre and
arbitrary.

282
00:14:24,360 --> 00:14:28,640
And if I was to redo all this,
how do you solve for everyone

283
00:14:28,640 --> 00:14:31,120
being energy rich?
We can certainly debate time

284
00:14:31,120 --> 00:14:32,760
frames.
We can debate the health of

285
00:14:32,760 --> 00:14:34,920
governments like in Venezuela
and some of the African

286
00:14:34,920 --> 00:14:37,080
countries.
That sadly is going to result in

287
00:14:37,080 --> 00:14:40,160
the population staying poor for
longer than they should given

288
00:14:40,160 --> 00:14:43,600
their otherwise robust resource
wealth and and economic

289
00:14:43,600 --> 00:14:45,760
opportunity.
How to solve for everyone being

290
00:14:45,760 --> 00:14:48,080
energy rich?
When you do that, you'll start

291
00:14:48,080 --> 00:14:52,800
seeing some pretty big negative
deltas in terms of implied oil

292
00:14:52,800 --> 00:14:54,800
imports, implied natural gas
imports.

293
00:14:55,080 --> 00:14:57,960
That has been the mechanism and
the means by which those

294
00:14:57,960 --> 00:14:59,240
countries and we can see it in
China.

295
00:14:59,240 --> 00:15:01,640
Again, we're talking about this
with EVs where they will be

296
00:15:01,640 --> 00:15:04,480
motivated to try something
different with the idea that

297
00:15:04,600 --> 00:15:08,160
everybody is going to be
shifting to EVs by 2030 or 2035

298
00:15:08,160 --> 00:15:09,840
or 2040.
I mean, you all are in

299
00:15:09,840 --> 00:15:11,440
Australia.
Tell me if you can see that in

300
00:15:11,440 --> 00:15:13,960
the current copper price.
Is there any sign that we are

301
00:15:13,960 --> 00:15:16,040
going to have the type of ramp
in electric vehicles?

302
00:15:16,040 --> 00:15:18,080
No, I'm an electric vehicle
driver.

303
00:15:18,320 --> 00:15:20,200
I've given one for eight years
now.

304
00:15:20,200 --> 00:15:21,880
I love it.
I view it as a matter of

305
00:15:22,000 --> 00:15:24,040
personal choice, not personal
carbon emissions.

306
00:15:24,040 --> 00:15:26,120
I like the one pedal driving.
I like the instant, no

307
00:15:26,120 --> 00:15:28,680
acceleration.
But as you noted, I'm also a

308
00:15:28,680 --> 00:15:30,320
retired Goldman Sachs partner,
right?

309
00:15:30,320 --> 00:15:33,680
I'm very, very lucky, and I can
charge at home and I live in a

310
00:15:33,680 --> 00:15:35,200
nice house where these things
are possible.

311
00:15:35,200 --> 00:15:38,720
I drive 1 1/2 miles every day at
most, you know.

312
00:15:38,760 --> 00:15:41,320
So the idea that EVs are going
to be for everyone, including

313
00:15:41,320 --> 00:15:43,680
for the people in the developing
world who might not even have

314
00:15:43,680 --> 00:15:46,960
function in electricity grids,
is preposterous, right?

315
00:15:46,960 --> 00:15:51,240
And so it is about solving for
everyone being energy rich when

316
00:15:51,320 --> 00:15:55,280
as we're doing that, there will
be a natural motivation to not

317
00:15:55,280 --> 00:15:58,400
simply use fossil fuels.
And it's hard for someone in the

318
00:15:58,400 --> 00:16:00,360
environmental community to grasp
this.

319
00:16:00,720 --> 00:16:02,440
But we don't know the
technologies.

320
00:16:02,440 --> 00:16:04,440
I think they will come.
They're not on track to come

321
00:16:04,440 --> 00:16:07,440
within 10 or 20 years, but I'd
also say to think they're not

322
00:16:07,440 --> 00:16:09,560
going to come within 100 years
is equally foolish.

323
00:16:09,720 --> 00:16:13,480
And I don't know where within 30
and 75 years it'll come, but it

324
00:16:13,480 --> 00:16:15,920
will come.
We will discover new things and

325
00:16:15,920 --> 00:16:19,960
they will almost by definition
be non fossil fuel oriented

326
00:16:20,240 --> 00:16:23,400
because large parts of the world
can't import the kind of

327
00:16:23,400 --> 00:16:25,280
quantities that were, nor would
they want to.

328
00:16:25,520 --> 00:16:28,760
Not for geopol reasons, not for
affordability reasons, and not

329
00:16:28,760 --> 00:16:31,280
for availability reasons will
they want to import the

330
00:16:31,280 --> 00:16:33,520
quantities of crude oil that
would make them rich.

331
00:16:33,520 --> 00:16:36,200
So there's a huge motivation to
move off this stuff.

332
00:16:36,840 --> 00:16:39,960
But again, it's driven by does
your population of available

333
00:16:39,960 --> 00:16:43,400
resources, is it affordable and
is it geopolitically secure?

334
00:16:43,880 --> 00:16:47,640
Not what is it's CO2 content.
The world is upside down on this

335
00:16:47,640 --> 00:16:48,960
conversation.
Yeah, well, the the

336
00:16:48,960 --> 00:16:52,120
affordability is interesting
because how many people like

337
00:16:52,120 --> 00:16:55,480
spread across the population
that aren't in the at the right

338
00:16:55,480 --> 00:17:00,040
end of the bell curve for for
for money is like how many

339
00:17:00,040 --> 00:17:02,880
people buy a new car?
A lot of people buy second hand

340
00:17:02,880 --> 00:17:04,839
cars.
But when there's going to be

341
00:17:04,839 --> 00:17:09,240
that delayed period until like
second hand EVs are actually

342
00:17:09,480 --> 00:17:11,880
properly available because
everything's new at the moment

343
00:17:12,040 --> 00:17:15,800
unless you buy the what is it
the BYD seagull for 10 grand US.

344
00:17:16,119 --> 00:17:18,720
But other other than that,
everything's just too expensive

345
00:17:18,720 --> 00:17:22,599
for most of the population.
I mean, there's, there's,

346
00:17:22,720 --> 00:17:27,400
there's no question about that.
I think it's this idea that

347
00:17:27,400 --> 00:17:31,240
we're going to force a
transition based on technologies

348
00:17:31,240 --> 00:17:33,560
that bureaucrats and
environmentalists have decided

349
00:17:33,560 --> 00:17:36,680
this is the winner technology.
That is not how evolutions, that

350
00:17:36,680 --> 00:17:38,280
is not how you move out hockey
sticks.

351
00:17:38,280 --> 00:17:40,440
And I think how do you motivate
better behaviour?

352
00:17:40,440 --> 00:17:43,600
So in the US, it's been
bipartisan, both the Republicans

353
00:17:43,600 --> 00:17:46,000
and Democrats.
I've excused the fact that cars

354
00:17:46,000 --> 00:17:48,080
have become heavier and bigger
every year.

355
00:17:48,440 --> 00:17:51,320
And rather than be honest about
them and say, hey, if you do

356
00:17:51,320 --> 00:17:54,160
care about climate, if you do
care about the environment, you

357
00:17:54,160 --> 00:17:57,480
basically need to ban SU VS or
at least not allow this

358
00:17:57,480 --> 00:18:00,600
continued creeping away.
But instead of that, let's have

359
00:18:00,760 --> 00:18:04,280
higher tax credits for Hummer
EVs and EVSUVS.

360
00:18:04,280 --> 00:18:08,280
Like it's it's ridiculous
government policy and it's not

361
00:18:08,280 --> 00:18:11,040
being honest with the people.
It's saying those evil oil

362
00:18:11,040 --> 00:18:13,920
companies are forcing you to use
their project product which is

363
00:18:13,920 --> 00:18:15,960
preposterous.
No one could care less what

364
00:18:15,960 --> 00:18:18,240
energy they use.
They just care that your car

365
00:18:18,240 --> 00:18:20,440
moves forward and when you turn
on the switch the light comes

366
00:18:20,440 --> 00:18:21,880
on.
No one cares about their energy

367
00:18:21,880 --> 00:18:24,840
source for sure.
So if you want to motivate

368
00:18:24,840 --> 00:18:27,760
better behaviour, it requires an
honesty that you do not see in

369
00:18:27,760 --> 00:18:29,360
the discourse and dialogue
today.

370
00:18:30,000 --> 00:18:32,560
My guess is that I spent a lot
of time with the environmental

371
00:18:32,560 --> 00:18:34,640
community.
I actually think they understand

372
00:18:34,640 --> 00:18:36,600
all that.
I think it's just easier to yell

373
00:18:36,600 --> 00:18:40,240
at oil and gas companies and
create some notion of a shortage

374
00:18:40,480 --> 00:18:44,040
that then leads to price spikes
and leads to, you know, changes

375
00:18:44,040 --> 00:18:47,560
in demand and or sort of forced
policy.

376
00:18:47,720 --> 00:18:51,000
We're going to force everyone to
use EVs by some random date.

377
00:18:51,360 --> 00:18:53,040
All of those are going to get
pushed to the right.

378
00:18:53,200 --> 00:18:56,400
There is no chance we are going
to be 100% EVs in any part of

379
00:18:56,400 --> 00:18:59,480
the Western world anytime soon.
You could say Norway is an

380
00:18:59,480 --> 00:19:01,680
example.
That's now 85% of these.

381
00:19:02,080 --> 00:19:05,080
I think it's a country of five
and a half million people, a

382
00:19:05,080 --> 00:19:09,000
generally homogeneous society, a
very rich society, of course,

383
00:19:09,000 --> 00:19:12,560
rich on oil and gas, but that's
besides the point, I think.

384
00:19:13,000 --> 00:19:15,560
So they're able to get it done,
but they're a very rich country.

385
00:19:15,560 --> 00:19:18,440
And I'm not sure 5 million
people are the role model for

386
00:19:18,560 --> 00:19:22,640
for translating that to billion
people population in in parts of

387
00:19:22,640 --> 00:19:24,960
Asia and elsewhere.
Jay, there's a lot of lot of

388
00:19:25,160 --> 00:19:31,680
chat about bloody the power
going forward Arjun power going

389
00:19:31,680 --> 00:19:34,760
forward and like you know, we've
we've talked about in recent

390
00:19:34,760 --> 00:19:40,800
episodes just just the easy win
the world can have, especially

391
00:19:40,800 --> 00:19:46,320
in in underground mining with
smack VSDS JD like take away the

392
00:19:46,320 --> 00:19:49,840
bloody that is like half the
power for underground mining

393
00:19:49,840 --> 00:19:54,280
pretty much gone but.
Imagine you, you talk about, you

394
00:19:54,280 --> 00:19:57,000
know, not doing these out of
this world sort of goals and

395
00:19:57,000 --> 00:19:58,640
stuff.
But there's, there's low hanging

396
00:19:58,640 --> 00:20:01,480
fruit, there's things you can
do, there's realistic things,

397
00:20:01,800 --> 00:20:04,200
there's things, you know, where
management can just tackle the

398
00:20:04,200 --> 00:20:07,040
problems head on, be front and
centre with the market.

399
00:20:07,520 --> 00:20:08,760
And I mean, this one just makes
sense.

400
00:20:08,760 --> 00:20:10,480
Doesn't it matter You're pulling
down your OpEx?

401
00:20:10,920 --> 00:20:14,160
Oh mate, I think it's about 10%
saving in your OpEx for

402
00:20:14,160 --> 00:20:17,120
underground mining.
Half of your power required for

403
00:20:17,120 --> 00:20:19,800
secondary ventilation.
Wiped out.

404
00:20:19,920 --> 00:20:21,920
Wiped out.
It's a it's an easy win.

405
00:20:21,920 --> 00:20:27,800
A SMEC variable speed drive to
bolt onto any I'm talking any

406
00:20:28,000 --> 00:20:31,760
secondary vent fan.
Just bloody you don't have a fan

407
00:20:31,760 --> 00:20:35,560
starter box.
You have a SMEC VSD starter box

408
00:20:35,560 --> 00:20:37,040
mate.
You can even couple it with some

409
00:20:37,040 --> 00:20:40,040
vent on demand to bloody
regulate the fan speed for you.

410
00:20:40,360 --> 00:20:44,720
But mate, no point running a
underground secondary event fan

411
00:20:45,000 --> 00:20:51,000
at 100% when you only need to
run it at 10 or 20 just to keep

412
00:20:51,000 --> 00:20:53,640
the bag open while no one's in
there and the trucks don't rip

413
00:20:53,640 --> 00:20:56,320
it down.
It's an absolute no brainer and

414
00:20:56,360 --> 00:20:58,760
Jesus Christ I love this shit.
I love it.

415
00:20:58,760 --> 00:21:00,800
It's.
Why waste the power when you

416
00:21:00,800 --> 00:21:03,120
don't need it, Maddie?
Use it for when you need it.

417
00:21:03,440 --> 00:21:06,960
The world needs the power, but
you're effectively you're you're

418
00:21:06,960 --> 00:21:10,240
giving the power back to the
world for other places that need

419
00:21:10,240 --> 00:21:12,720
it because you don't need all
that power for your secondary

420
00:21:12,720 --> 00:21:15,080
event.
Give Marty or a call his phone,

421
00:21:15,080 --> 00:21:18,840
his phone number's in the show
nights go smack, go Australia.

422
00:21:19,600 --> 00:21:21,680
And you're talking about
Venezuela earlier.

423
00:21:21,680 --> 00:21:24,360
And it's probably a lot of
people probably don't know that

424
00:21:24,360 --> 00:21:27,120
Venezuela has, you know, the
biggest, the biggest all

425
00:21:27,120 --> 00:21:29,000
reserves in the world, bigger
than Saudi.

426
00:21:29,000 --> 00:21:30,640
And you said they're a poor
population.

427
00:21:30,640 --> 00:21:32,640
It's unbelievable to think that
way.

428
00:21:34,240 --> 00:21:36,960
Venezuela's, I think the saddest
story over the course of my

429
00:21:36,960 --> 00:21:40,520
career, when my career started,
this is pre Hugo Chavez,

430
00:21:40,800 --> 00:21:42,920
Venezuela's oil production, off
the top of my head, went from

431
00:21:42,920 --> 00:21:45,520
like one and a half million
barrels a day to as high as

432
00:21:45,520 --> 00:21:46,920
three and a half million barrels
a day.

433
00:21:46,960 --> 00:21:49,520
All the major oils, there was a
bunch of them in those days,

434
00:21:49,960 --> 00:21:52,720
signed up to develop the Orinoco
Belt as it's called.

435
00:21:52,920 --> 00:21:55,480
And then that crude oil was
naturally processed in US

436
00:21:55,480 --> 00:21:57,760
refineries in Texas and
Louisiana.

437
00:21:57,760 --> 00:22:00,080
The Gulf Coast and the countries
are close by.

438
00:22:00,680 --> 00:22:02,360
We could process their heavy
crude oil.

439
00:22:02,400 --> 00:22:04,400
It really was a great
partnership between the two

440
00:22:04,400 --> 00:22:06,320
countries.
And I'll predict that I will, I

441
00:22:06,320 --> 00:22:09,920
guess, hope that someday
Venezuela will, you know, be

442
00:22:09,920 --> 00:22:12,360
able to have a better government
and a better situation because

443
00:22:12,360 --> 00:22:14,880
there is a lot of promise there.
And of course, it is a tragedy

444
00:22:14,880 --> 00:22:16,560
that's happened to the
Venezuelan people.

445
00:22:16,800 --> 00:22:19,200
It's led to an immigration
crisis here in the US.

446
00:22:19,920 --> 00:22:22,800
It's it's a terrible situation.
That does not have to be.

447
00:22:23,000 --> 00:22:26,400
That is a country that does have
a heck of a lot of resource that

448
00:22:26,400 --> 00:22:29,440
the world will want.
Yeah, I think the, the, the

449
00:22:29,440 --> 00:22:32,280
resource curse is just as
prominent in the the Hard Rock

450
00:22:32,280 --> 00:22:34,680
mining side of things that we
speak about on a on a daily

451
00:22:34,680 --> 00:22:37,640
basis as well.
I want to move the conversation,

452
00:22:37,640 --> 00:22:40,480
Arjun, to the the financing side
of things because there was

453
00:22:40,480 --> 00:22:44,120
heaps of pressure put on a lot
of banks, the commercial banks

454
00:22:44,120 --> 00:22:49,760
in US, in the EU, in Australia,
the finance, coal, natural gas,

455
00:22:49,840 --> 00:22:52,520
oil, all these types of
companies.

456
00:22:53,040 --> 00:22:55,320
And, you know, there was lots of
phrases thrown around like

457
00:22:55,320 --> 00:22:58,760
finance, emissions and all these
sorts of things in, you know,

458
00:22:58,760 --> 00:23:02,200
2020-2021.
But there seems to be a, a bit

459
00:23:02,200 --> 00:23:05,280
of a, a rollback, a bit of a
tweaking of the mandates, a bit

460
00:23:05,280 --> 00:23:08,440
of a changing of the phrasing.
Is that something you're picking

461
00:23:08,440 --> 00:23:10,960
up just as much in the States?
And where do you see that

462
00:23:10,960 --> 00:23:13,120
evolving over the the coming
period?

463
00:23:14,240 --> 00:23:17,600
I think it is getting better in
the sense that those financed

464
00:23:17,600 --> 00:23:20,640
admission targets, which I
thought was really pretty poor

465
00:23:20,640 --> 00:23:24,320
policy and pretty bad idea that
came from the overarching

466
00:23:24,320 --> 00:23:27,840
umbrella organisation at the
Glasgow Financial Alliance.

467
00:23:27,840 --> 00:23:30,080
Per net 0G fans would be the
acronym.

468
00:23:30,080 --> 00:23:32,920
It's run by Mark Carney or
founded by him.

469
00:23:32,920 --> 00:23:37,040
He's a prominent central banker
in Europe and I think BBC Canada

470
00:23:37,040 --> 00:23:40,040
as well.
And the idea is to get bank

471
00:23:40,040 --> 00:23:43,720
institutions to look at their
portfolio of loans and capital

472
00:23:43,720 --> 00:23:48,600
markets activity and over time
frames like 203020402050 show

473
00:23:48,600 --> 00:23:51,240
that those portfolio of loans
and capital markets activity

474
00:23:51,440 --> 00:23:53,400
have a decrease in carbon
intensity.

475
00:23:53,880 --> 00:23:58,080
The problem with that is it is
going to overly burden those

476
00:23:58,080 --> 00:24:00,960
banks to not do business with
companies in their own

477
00:24:00,960 --> 00:24:02,960
countries.
So for U.S. banks like Goldman

478
00:24:02,960 --> 00:24:05,360
Sachs that I used to work at, JP
Morgan, Morgan Stanley,

479
00:24:05,360 --> 00:24:09,960
etcetera, it's going to uniquely
disadvantage U.S. oil and gas

480
00:24:09,960 --> 00:24:11,560
companies.
Same thing in Canada, same thing

481
00:24:11,560 --> 00:24:13,760
in Europe.
And again, the idea that it

482
00:24:13,760 --> 00:24:18,040
would make sense for banks in
primarily the Western world to

483
00:24:18,040 --> 00:24:21,840
stop financing their own oil
companies, where is the logic to

484
00:24:21,840 --> 00:24:24,760
that?
I, I, I just say, again, I'm a

485
00:24:24,760 --> 00:24:28,440
lifelong equity analyst.
We definitely do not like every

486
00:24:28,560 --> 00:24:30,280
oil and gas company.
That means management team will

487
00:24:30,280 --> 00:24:33,200
drive you crazy, right?
And so you can, you can, you can

488
00:24:33,200 --> 00:24:35,560
uniquely not love every
management team, but it's very

489
00:24:35,560 --> 00:24:39,000
different than saying you should
undermine your own industry that

490
00:24:39,000 --> 00:24:41,240
provides this critical energy
that the world needs.

491
00:24:41,640 --> 00:24:44,560
Even even if your own country
for whatever reason figured out

492
00:24:44,560 --> 00:24:48,200
a way to ban SUVs and to show a
decreasing oil demand trend,

493
00:24:48,200 --> 00:24:50,680
which again, I think is
unlikely, but we can pretend

494
00:24:50,680 --> 00:24:53,200
that these things are true.
You would still to me want to

495
00:24:53,200 --> 00:24:56,000
support oil and gas companies in
your own country.

496
00:24:56,000 --> 00:24:59,360
This applies to US, Canada,
Europe and frankly Australians,

497
00:24:59,360 --> 00:25:02,280
when obviously a bit more
natural gas oriented and

498
00:25:02,280 --> 00:25:05,240
Australian.
So this Group G fans, I think

499
00:25:05,240 --> 00:25:07,680
some of the banks that signed up
for these targets and these

500
00:25:08,080 --> 00:25:13,080
umbrella organisations have
start to wake up to it's, it's

501
00:25:13,080 --> 00:25:15,800
not just bad business.
You know, for a lot of these

502
00:25:15,800 --> 00:25:17,760
banks, the oil and gas sector
has shrunk.

503
00:25:17,760 --> 00:25:20,640
It's not a major part of their
profits, but it's bad for

504
00:25:20,640 --> 00:25:23,800
society, it's bad for humanity,
it's bad for the developing

505
00:25:23,800 --> 00:25:25,960
world.
But if they do not get U.S. oil,

506
00:25:25,960 --> 00:25:29,480
Canadian oil, Australian natural
gas and Norwegian oil and gas

507
00:25:29,520 --> 00:25:32,920
are going to be dependent on
Russia, Saudi, Iraq, Iran.

508
00:25:32,920 --> 00:25:35,560
And one can have different views
on those countries.

509
00:25:35,720 --> 00:25:38,080
There's no chance anybody's
going to be solely depend on

510
00:25:38,080 --> 00:25:39,600
that.
They may not want to be solely

511
00:25:39,600 --> 00:25:42,080
dependent, depend on us.
When we think about our own

512
00:25:42,080 --> 00:25:44,400
citizens, especially as an
American, I think about this

513
00:25:44,800 --> 00:25:46,560
again.
Why would America suddenly want

514
00:25:46,560 --> 00:25:49,760
to just just become energy
independent or or at least less

515
00:25:49,760 --> 00:25:52,360
dependent?
Why would we want to go back to

516
00:25:52,360 --> 00:25:54,640
being dependent on other parts
of this world, this whole

517
00:25:54,640 --> 00:25:56,600
framework?
Did you have to have these

518
00:25:56,600 --> 00:25:59,560
arbitrary time frames which
you're going to stop financing

519
00:25:59,560 --> 00:26:02,560
oil and gas.
Tell me what is replacing it.

520
00:26:02,800 --> 00:26:06,240
That is economic without subsidy
and there isn't an answer,

521
00:26:06,240 --> 00:26:09,800
especially when you solve for
how do you make the other 7 to 9

522
00:26:09,800 --> 00:26:12,600
billion people energy rich again
over the you can see over the

523
00:26:12,600 --> 00:26:16,120
context of by 2100.
Pick a long time frame out there

524
00:26:16,440 --> 00:26:19,480
you're going to need and you're
going to want to have American

525
00:26:19,480 --> 00:26:23,520
oil gas financed by American and
European financial institutions.

526
00:26:23,520 --> 00:26:26,160
I think it's it deserves a lot
more pushback.

527
00:26:26,640 --> 00:26:30,200
You know, when I see in the US
context, Republicans complain

528
00:26:30,200 --> 00:26:33,360
about blocking, you know,
someone blocked the pipeline or

529
00:26:33,640 --> 00:26:36,520
Green New Deal and they they
have disparaging terms for it.

530
00:26:37,280 --> 00:26:41,320
The real ESG issue is this
Glasgow Financial Lines for net

531
00:26:41,320 --> 00:26:44,360
zero.
It is an organisation that deals

532
00:26:44,360 --> 00:26:47,480
with the most senior bankers and
they have a lot of sway of its

533
00:26:47,480 --> 00:26:50,000
industry.
So I agree it is lightened up a

534
00:26:50,000 --> 00:26:51,640
bit.
Some banks have left this.

535
00:26:51,920 --> 00:26:54,480
But I've made no mistake, it is
still a concern out there.

536
00:26:54,640 --> 00:26:58,000
And make no mistake that when
the current generation of CEOs

537
00:26:58,040 --> 00:27:01,320
of these major banks who grew up
in a different world with a

538
00:27:01,320 --> 00:27:04,280
better understanding of oil and
gas, are replaced by a younger

539
00:27:04,280 --> 00:27:07,960
generation that had been brought
up on climate crisis ideology.

540
00:27:07,960 --> 00:27:12,080
With all due respect, I think
there's a lot of concern.

541
00:27:12,360 --> 00:27:15,160
I have a lot of concern that
some of these financial

542
00:27:15,160 --> 00:27:16,800
emissions targets will make a
comeback.

543
00:27:17,200 --> 00:27:20,800
And you you run the risk of
seeing these banks, these major

544
00:27:20,800 --> 00:27:24,120
financial institutions move away
from the oil and gas sector.

545
00:27:24,120 --> 00:27:25,800
I think that'd be really
problematic.

546
00:27:26,960 --> 00:27:29,240
How about on the on the
investment side, because it's a

547
00:27:29,240 --> 00:27:32,640
very similar sort of narrative.
We, we have a huge Superfund

548
00:27:32,640 --> 00:27:36,720
industry here in Australia and
there were a lot of, you know,

549
00:27:36,720 --> 00:27:39,520
mandates that said you can't
invest in, in coal, thermal

550
00:27:39,520 --> 00:27:42,520
coal, you know, some in met coal
and these sorts of things.

551
00:27:42,800 --> 00:27:46,160
And again, we've seen tweaking
there as kind of, as you touched

552
00:27:46,160 --> 00:27:49,640
on before, the, the returns come
back to these sectors as the

553
00:27:49,640 --> 00:27:52,360
prices rise and they generate
great returns.

554
00:27:52,920 --> 00:27:54,960
People, you know, and tech rolls
off as well.

555
00:27:55,280 --> 00:27:58,760
People look at them and say,
hey, you know, we, we've got

556
00:27:58,760 --> 00:28:01,080
commitments to fill.
We need to pay out, pay out to

557
00:28:01,080 --> 00:28:04,440
our members and you know,
they've, they've followed the

558
00:28:04,440 --> 00:28:07,520
returns and, and we saw that
people tweaking the mandates of

559
00:28:07,560 --> 00:28:11,320
ESG funds to invest in METCO and
and thermal coal.

560
00:28:12,200 --> 00:28:15,120
Now that, that, that seems much
more straightforward than the,

561
00:28:15,320 --> 00:28:18,440
the commercial banking because
the returns are so evident and

562
00:28:18,440 --> 00:28:22,040
these guys are marked on a on a
fairly short time horizon.

563
00:28:22,040 --> 00:28:25,120
Do you do you see the same thing
happening in the States?

564
00:28:26,200 --> 00:28:28,880
It's very similar and I think
you summarised it well, so I'll

565
00:28:29,200 --> 00:28:30,600
try and be shorter in my
answering.

566
00:28:30,600 --> 00:28:32,720
He's pretty good, Jada.
He's pretty good.

567
00:28:32,760 --> 00:28:35,840
Arjun.
He he's, he's our macro expert.

568
00:28:36,240 --> 00:28:39,400
We've got.
Great answer, absolutely.

569
00:28:39,400 --> 00:28:44,320
Make me blush, Maddie.
I've always thought this sort of

570
00:28:44,720 --> 00:28:47,880
certain about ESG, if it applies
to traditional investors has

571
00:28:47,880 --> 00:28:49,600
kind of been overstated as a
risk.

572
00:28:49,760 --> 00:28:54,400
Definitely went through a craze
post COVID 2021-2022, but I've

573
00:28:54,400 --> 00:28:56,400
always thought when the
profitability comes back,

574
00:28:56,480 --> 00:28:59,960
investors will come back.
In the especially the western

575
00:28:59,960 --> 00:29:02,760
world oil and gas industry had a
really tough decade last decade.

576
00:29:03,000 --> 00:29:05,760
The returns on capital went
from, you know, decent at the

577
00:29:05,760 --> 00:29:08,880
end of the last super cycle to
simply awful for about 5 or six

578
00:29:08,880 --> 00:29:10,840
years.
It kind of had to earn the right

579
00:29:10,840 --> 00:29:14,400
to to gain investments back.
So I always thought that part of

580
00:29:14,400 --> 00:29:17,160
the ESG sort of concern was way
overstated.

581
00:29:17,160 --> 00:29:20,720
And investors will always chase
moving stock prices and

582
00:29:20,720 --> 00:29:23,760
improving profitability.
It's really again, the bank side

583
00:29:23,760 --> 00:29:26,320
that I worry about, G fans.
I worry about not so much

584
00:29:26,320 --> 00:29:29,080
investors anymore.
And that that I would say almost

585
00:29:29,080 --> 00:29:32,640
all those ESG, quote, ESG
concerns for can you invest in

586
00:29:32,640 --> 00:29:34,720
oil and gas?
I think those are almost all

587
00:29:34,720 --> 00:29:37,240
gone here in the USI just don't
hear people talk about it.

588
00:29:38,520 --> 00:29:41,280
And and to to chase up the the
companies a bit more like you

589
00:29:41,280 --> 00:29:44,840
say that there were pretty
dismal returns a long period

590
00:29:44,840 --> 00:29:48,560
through the 20 tens, just as
evident in Hard Rock mining.

591
00:29:48,560 --> 00:29:51,240
A lot of the companies, you
know, especially in that 2015,

592
00:29:51,240 --> 00:29:53,560
2016 period, it got really
tough.

593
00:29:53,960 --> 00:29:57,440
And coming off the back of the
the 20 tens where there was

594
00:29:57,440 --> 00:30:03,320
just, you know, massively value
destructive M&AA lot of

595
00:30:03,320 --> 00:30:06,720
investors just found it much
easier to kind of kind of steer

596
00:30:06,720 --> 00:30:09,760
clear.
And that M&A cycle stayed away.

597
00:30:10,000 --> 00:30:12,080
And then it's come back in the,
in the past, you know, year or

598
00:30:12,080 --> 00:30:15,560
two, both in, in energy, there's
been some, you know, massive

599
00:30:15,560 --> 00:30:19,320
deals, $50 billion plus deals in
the energy space and slightly

600
00:30:19,320 --> 00:30:23,160
smaller in the the mining space,
but still a huge number of

601
00:30:23,160 --> 00:30:25,120
deals.
How do you think about the the

602
00:30:25,120 --> 00:30:28,920
M&A cycle evolving as it relates
to, you know, oil and gas in the

603
00:30:28,920 --> 00:30:32,320
States and energy more broadly?
Again, I think there's a lot of

604
00:30:32,320 --> 00:30:35,280
common themes between how you
just describe the evolution of

605
00:30:35,280 --> 00:30:37,720
the mining sector and what
you've seen in Australia with

606
00:30:37,960 --> 00:30:40,360
what has happened with, you
know, oil and gas companies here

607
00:30:40,360 --> 00:30:42,280
in the US will throw in Canada
as well.

608
00:30:42,920 --> 00:30:45,480
And I think to some degree they
had a really poor decade

609
00:30:45,480 --> 00:30:48,000
profitability wise.
They needed to improve return.

610
00:30:48,000 --> 00:30:50,600
So investors said, don't you
dare waste my money this cycle,

611
00:30:50,600 --> 00:30:53,000
capital discipline, so on and so
forth.

612
00:30:53,000 --> 00:30:56,480
I think unlike perhaps a mining
company and certainly unlike a

613
00:30:56,480 --> 00:30:59,680
downstream refinery and oil
refinery as we call them, or

614
00:30:59,680 --> 00:31:02,720
pipeline company in the US, if
you're upstream, you've got a

615
00:31:02,720 --> 00:31:05,240
depleting asset base.
And so the view that you can

616
00:31:05,240 --> 00:31:08,200
stay capital, quote, capital
discipline forever is, is not a

617
00:31:08,200 --> 00:31:10,640
thing unless you're going to
liquidate, which is not a way of

618
00:31:10,640 --> 00:31:12,760
saying, well, we need to go
waste a bunch of shareholder

619
00:31:12,760 --> 00:31:14,280
capital.
Again, no one is calling for

620
00:31:14,280 --> 00:31:16,240
that.
We'd rather a company liquidate

621
00:31:16,240 --> 00:31:18,440
than waste money.
But there is a need for risk

622
00:31:18,440 --> 00:31:20,800
taking to come back.
And to some degree investors

623
00:31:20,800 --> 00:31:24,520
have kind of overlarned a
industry stunk, let's not repeat

624
00:31:24,520 --> 00:31:25,720
that.
Totally agree.

625
00:31:26,200 --> 00:31:28,440
So if the metrics were a
production growth, and I think

626
00:31:28,440 --> 00:31:30,920
this is true of the miners, it
certainly is true of USEMPS.

627
00:31:31,200 --> 00:31:35,560
We're going to grow our
production 9% or 15% or 10% when

628
00:31:35,560 --> 00:31:39,200
oil demand itself only grows one
or two, two in a Goodyear,

629
00:31:39,200 --> 00:31:42,880
generally 1% and you're a more
mature industry, you're more

630
00:31:42,880 --> 00:31:45,600
mature company.
No one needs a focus on volume

631
00:31:45,600 --> 00:31:48,240
growth.
You do need to focus on what is

632
00:31:48,560 --> 00:31:51,760
I got five years of free cash
flow at a certain oil or copper

633
00:31:51,760 --> 00:31:55,080
price, whatever your metric is.
If I do something M&A wise or

634
00:31:55,080 --> 00:31:57,320
otherwise, what is my
competitive advantage?

635
00:31:57,600 --> 00:32:00,720
Is it additive to free cash flow
per share over the next 5 or 10

636
00:32:00,720 --> 00:32:04,040
years versus my base?
This, I think one is to redefine

637
00:32:04,040 --> 00:32:08,560
how we look at quote growth.
It's you can't kind of deplete

638
00:32:08,560 --> 00:32:10,760
your company away to prosperity
either.

639
00:32:10,960 --> 00:32:13,720
Otherwise you're simply a yield
vehicle, which is fine, but you

640
00:32:13,720 --> 00:32:15,000
should then not expect a re
rating.

641
00:32:15,000 --> 00:32:16,760
You're going to move up and down
with interest rates.

642
00:32:17,120 --> 00:32:20,640
And certainly I think oil and
gas, much like mining your, you

643
00:32:20,640 --> 00:32:22,320
know, your revenues are going to
be very volatile.

644
00:32:22,320 --> 00:32:24,840
So you're not going to be a
great yield vehicle to begin

645
00:32:24,840 --> 00:32:26,480
with.
The world is absolutely going to

646
00:32:26,480 --> 00:32:28,080
need more oil.
It's going to need more natural

647
00:32:28,080 --> 00:32:29,600
gas.
It is going to need more coal,

648
00:32:29,600 --> 00:32:32,160
whether anyone likes it or not.
And it's for sure going to need

649
00:32:32,160 --> 00:32:34,800
more copper and a whole bunch of
the metals and mining that you

650
00:32:34,800 --> 00:32:37,520
all would know much more about.
We're going to need all of that.

651
00:32:37,920 --> 00:32:40,920
How do we get all of that
without having to blow up the

652
00:32:40,920 --> 00:32:43,240
profitability that we had the
last 10 years?

653
00:32:43,560 --> 00:32:45,720
I think that's what we're that's
what we're trying to move

654
00:32:45,880 --> 00:32:49,440
through to as both sort of
management teams and boards on

655
00:32:49,440 --> 00:32:53,160
the one hand, but also investors
in well, investors still I think

656
00:32:53,160 --> 00:32:57,480
are stuck in the hey, the recent
past was too, too close up in

657
00:32:57,480 --> 00:32:59,600
memory.
Don't waste my capital.

658
00:32:59,800 --> 00:33:02,680
But that probably says there may
be more ancient opportunities at

659
00:33:02,680 --> 00:33:05,680
a time where people are still
kind of long term concerned

660
00:33:05,680 --> 00:33:07,720
about the outlook.
That's, I think certainly more

661
00:33:07,720 --> 00:33:09,600
true in oil and gas, maybe more
so than mining.

662
00:33:10,200 --> 00:33:14,520
Jay is your bloody sound.
Jay Zahajun, you sound you sound

663
00:33:14,520 --> 00:33:18,480
like you're being bloody.
Some historical management burns

664
00:33:18,480 --> 00:33:21,480
there.
I reckon we could instil some

665
00:33:21,480 --> 00:33:24,560
confidence back in yard and
introduce you to the Greenlands

666
00:33:24,560 --> 00:33:27,480
equipment team.
Now talk about a bloody

667
00:33:27,480 --> 00:33:31,040
management team that will not
let you down.

668
00:33:31,600 --> 00:33:34,960
Isn't that right, JD?
And I know you've dealt with

669
00:33:34,960 --> 00:33:37,720
some of the the biggest names in
the, in the oil and gas world,

670
00:33:37,720 --> 00:33:42,200
you know, we're talking about
Chevron, Mobil S But geez, these

671
00:33:42,200 --> 00:33:44,000
Greenland guys, they can do a
job, can't they, Maddie?

672
00:33:44,000 --> 00:33:45,640
Oh.
My the management team for

673
00:33:45,640 --> 00:33:49,160
bloody water.
But the check, the check some of

674
00:33:49,160 --> 00:33:53,200
the glorious work they've done.
The bloody carousel, damn

675
00:33:53,200 --> 00:33:57,400
Southern ball field, the the
Tower Hill pit dewatering the

676
00:33:57,440 --> 00:34:03,160
infamous Tower Hill, the friggin
Atlas pit ball field for bloody

677
00:34:03,160 --> 00:34:05,240
min rez mate.
Unbelievable.

678
00:34:05,240 --> 00:34:08,400
And don't mate, JD, you know
they got a workshop in Leonora,

679
00:34:09,120 --> 00:34:10,760
mate, they.
Did know that I have heard that.

680
00:34:11,040 --> 00:34:16,639
They are water ready in the gold
fields to service anyone for

681
00:34:16,800 --> 00:34:19,320
anything water.
I'm talking anything JD.

682
00:34:19,320 --> 00:34:22,840
So mate, these got they the
Greenlands team, they're on the

683
00:34:22,840 --> 00:34:27,440
line ready to go for anything
water related in the gold

684
00:34:27,440 --> 00:34:28,760
fields.
It's pretty amazing.

685
00:34:28,760 --> 00:34:32,400
You crack open the website and
you can just scroll, scroll and

686
00:34:32,400 --> 00:34:35,480
scroll and there's solution
after solution and you know,

687
00:34:35,480 --> 00:34:37,040
they've got our favourite word
in there, don't they?

688
00:34:37,280 --> 00:34:41,120
Oh mate, turnkey mate, I open
that website and I have to get a

689
00:34:41,120 --> 00:34:43,840
towel cause the water just
starts dripping on me.

690
00:34:43,840 --> 00:34:46,960
It is there is that much.
It is so watery mate.

691
00:34:47,120 --> 00:34:49,440
Give them a buzz.
Greenland's equipment, Arjun

692
00:34:50,080 --> 00:34:52,920
have some faith in management
mate, 'cause these guys are the

693
00:34:52,920 --> 00:34:56,280
ones.
You, you talk about a rewrite

694
00:34:56,280 --> 00:34:57,880
there.
And a lot of these energy

695
00:34:57,880 --> 00:35:00,720
companies, I think it's even
worse in the EU.

696
00:35:00,720 --> 00:35:03,800
The, the major oil and gas
companies, they trade a pretty,

697
00:35:03,800 --> 00:35:05,760
pretty startlingly low
multiples.

698
00:35:05,760 --> 00:35:08,400
I mean, especially if you, you
compare them to the, the good

699
00:35:08,400 --> 00:35:11,840
old technology sector.
And it's the same here for the,

700
00:35:12,120 --> 00:35:15,400
the majors, the BHBS, the Rio
Tintos of the world.

701
00:35:15,400 --> 00:35:19,720
Can, can you envision a world
where these guys actually trade

702
00:35:19,720 --> 00:35:22,960
on a higher multiple?
I mean, we're, we're talking

703
00:35:22,960 --> 00:35:27,120
single digit multiples for
assets that have decades and

704
00:35:27,120 --> 00:35:29,000
decades to them.
So it's it's a kind of

705
00:35:29,040 --> 00:35:31,880
interesting challenge to to
think through in a way, but.

706
00:35:32,880 --> 00:35:35,920
I think all these companies,
wherever they're located, need

707
00:35:35,920 --> 00:35:38,040
to give investors a reason to
own them.

708
00:35:38,040 --> 00:35:40,160
And what, what have they been
telling investors that I'm being

709
00:35:40,160 --> 00:35:43,480
very generic here, but I think
all these large companies in the

710
00:35:43,480 --> 00:35:45,720
jurisdictions you'd mentioned,
this is also two of large

711
00:35:45,720 --> 00:35:48,640
companies.
US it kind of had this mindset

712
00:35:48,640 --> 00:35:51,360
or mantra.
We are going to focus on

713
00:35:51,360 --> 00:35:53,680
shareholder profitability.
We're going to focus on growing

714
00:35:53,680 --> 00:35:55,480
our dividends and maybe stock
buybacks.

715
00:35:55,920 --> 00:35:58,800
If you're AUS company, we're not
going to waste shareholder

716
00:35:58,800 --> 00:36:00,200
capital.
We're not going to talk about

717
00:36:00,200 --> 00:36:02,720
production growth.
And we've all these CSG goals

718
00:36:02,720 --> 00:36:04,480
that are going to say we're not
evil.

719
00:36:04,520 --> 00:36:07,920
I know you think we're evil, but
we've got a whole corporate, a

720
00:36:07,920 --> 00:36:11,280
sustainability document that
just says how non evil we are.

721
00:36:11,520 --> 00:36:13,720
And we're going to have, you
know, the scope one and scope 2

722
00:36:13,720 --> 00:36:17,200
reductions and scope 3
reductions and whatever energy

723
00:36:17,200 --> 00:36:19,600
transition demand is, we're
going to meet that demand.

724
00:36:19,600 --> 00:36:23,520
Like none of that, none of that
speaks to a positive outlook for

725
00:36:23,520 --> 00:36:27,320
your company or the future.
And so I think the first thing I

726
00:36:27,320 --> 00:36:30,480
would this will not happen.
Let's get rid of all these

727
00:36:30,480 --> 00:36:31,720
corporate sustainability
reports.

728
00:36:31,720 --> 00:36:34,080
They're absolute rubbish.
At the beginning of my career,

729
00:36:34,560 --> 00:36:37,880
when I was an investor on the
buy side, I did care about and

730
00:36:37,880 --> 00:36:39,920
employ some of the individual
attributes.

731
00:36:39,920 --> 00:36:41,440
I cared about the governance of
a company.

732
00:36:41,760 --> 00:36:44,080
I cared whether their health,
safety and environment was good

733
00:36:44,080 --> 00:36:46,440
or was the refinery going to
blow up and I wasn't going to

734
00:36:46,440 --> 00:36:48,080
make profits if margins were
going to be good.

735
00:36:48,080 --> 00:36:49,440
What we cared about all these
things.

736
00:36:49,800 --> 00:36:53,000
We didn't need it to be written
down in a glossy brochure

737
00:36:53,160 --> 00:36:56,120
because it's created the mindset
of defensiveness, of

738
00:36:56,120 --> 00:36:59,680
appeasement, and you will never
appease your way to a higher.

739
00:36:59,680 --> 00:37:02,640
Multiple companies exist to
generate profits for their

740
00:37:02,640 --> 00:37:04,240
shareholders.
They should do it within the

741
00:37:04,240 --> 00:37:07,280
rules of society.
I think it helps to have many

742
00:37:07,280 --> 00:37:09,520
different viewpoints within a
management team on a board to

743
00:37:09,520 --> 00:37:11,880
evaluate things.
So it's not about groupthink or

744
00:37:11,880 --> 00:37:15,880
homogeneous existences per SE.
You have to run your operations

745
00:37:15,880 --> 00:37:18,320
well.
And if the US, as an example,

746
00:37:18,320 --> 00:37:21,280
puts in strict methane rules,
then clearly all companies

747
00:37:21,280 --> 00:37:23,040
should adhere to those rules.
But that's the order of

748
00:37:23,040 --> 00:37:25,400
operations.
We don't substitute public

749
00:37:25,400 --> 00:37:28,920
policy in the enactment of laws
in the US context by Congress,

750
00:37:29,040 --> 00:37:32,520
which enacts a law approved by a
president to say, well, the

751
00:37:32,520 --> 00:37:34,320
corporation's going to do it on
their own.

752
00:37:34,560 --> 00:37:37,920
It's it's preposterous, this
sort of trying to substitute ESG

753
00:37:38,760 --> 00:37:41,920
as a replacement for public
policy that either can't get

754
00:37:41,920 --> 00:37:44,200
voted in or isn't popular or
both.

755
00:37:45,160 --> 00:37:47,720
And so when you get back to the
companies and what it takes to

756
00:37:47,720 --> 00:37:49,520
read, what is your positive
investment story?

757
00:37:49,880 --> 00:37:52,720
To take as an example, in the
United States, the merchant

758
00:37:52,720 --> 00:37:55,320
power producers, this is
classically a boom bust sector

759
00:37:55,720 --> 00:37:57,480
in the US.
We've had black power demand for

760
00:37:57,480 --> 00:38:00,560
the last 20 years and there's
signs that power is inflecting

761
00:38:00,560 --> 00:38:02,760
positively.
And that's even before we get to

762
00:38:02,760 --> 00:38:06,320
the artificial intelligence
hyperscale data centre kind of

763
00:38:06,320 --> 00:38:07,600
growth that people are
expecting.

764
00:38:07,600 --> 00:38:09,480
The grid is old, it's been under
invested.

765
00:38:09,760 --> 00:38:12,520
That is a bunch of intermittent
resources and power prices are

766
00:38:12,520 --> 00:38:14,800
basically spiking and people can
see it.

767
00:38:15,360 --> 00:38:18,160
And you can see we actually need
power plant growth in the US for

768
00:38:18,160 --> 00:38:20,560
the first time since at least 20
years ago.

769
00:38:20,920 --> 00:38:24,800
And you suddenly seen a massive
RE rate in companies like Talon,

770
00:38:24,800 --> 00:38:27,160
Constellation Energy Group of
Vistra.

771
00:38:27,160 --> 00:38:28,840
I'm sure I'm forgetting somebody
there.

772
00:38:30,000 --> 00:38:31,800
There's a positive reason to own
those stocks.

773
00:38:32,720 --> 00:38:35,600
We don't need these big
companies engaging in the

774
00:38:35,600 --> 00:38:37,800
politics of appeasement.
And I think it's especially that

775
00:38:37,800 --> 00:38:40,320
in Europe.
My sense is Australia suffers

776
00:38:40,320 --> 00:38:42,560
from that as well.
Are we now going to do all these

777
00:38:42,600 --> 00:38:46,800
uneconomic quote new energies
projects because we want to be

778
00:38:46,800 --> 00:38:48,520
ESG friendly and it's
ridiculous.

779
00:38:48,760 --> 00:38:52,240
Invest in areas of competitive
advantage that you perceive to

780
00:38:52,240 --> 00:38:54,000
be at the low end of the future
cost curve.

781
00:38:54,360 --> 00:38:57,480
Or if it's a higher cost asset
and I buy it for pennies on the

782
00:38:57,480 --> 00:38:59,520
dollar and how do I run it
better?

783
00:38:59,520 --> 00:39:02,840
Generate free cash flow and make
a positive investment case

784
00:39:03,000 --> 00:39:05,960
without apology.
If you screw up, you can say

785
00:39:05,960 --> 00:39:08,560
that you're sorry.
You should meet all the existing

786
00:39:08,560 --> 00:39:10,880
laws of society.
I think most of these companies

787
00:39:10,880 --> 00:39:13,600
lack positive investment cases
and you will not get to a RE

788
00:39:13,600 --> 00:39:16,480
rate as long as these companies
are in defensive appeasement

789
00:39:16,760 --> 00:39:18,520
corporate sustainability report
mode.

790
00:39:20,000 --> 00:39:22,240
You, you, you touched on AI
there.

791
00:39:22,240 --> 00:39:26,040
So we have to kind of dive into
the, the role that big tech is

792
00:39:26,040 --> 00:39:27,840
going to play.
You, you know, you talk about

793
00:39:27,840 --> 00:39:31,800
the merchant power companies
there and Amazon, Microsoft,

794
00:39:31,800 --> 00:39:34,560
they've been, you know, finally
actually speaking about these

795
00:39:34,560 --> 00:39:37,800
things quite seriously.
I think I heard from some of the

796
00:39:38,360 --> 00:39:40,080
podcasts you've done that
they're actually, you know,

797
00:39:40,080 --> 00:39:43,040
they're showing their faces at
some of these conferences.

798
00:39:43,040 --> 00:39:47,240
So that there needs to be a
serious kind of discussion about

799
00:39:47,240 --> 00:39:49,600
that.
And a lot of them are pointing

800
00:39:49,600 --> 00:39:52,280
to to nuclear, but that takes a
long time.

801
00:39:52,280 --> 00:39:55,480
So just firstly on on the
nuclear side of things, do you

802
00:39:55,480 --> 00:39:58,880
see that making up a serious
amount of the power generation

803
00:39:58,880 --> 00:40:01,880
that they're going to need and
you know broadly that the the

804
00:40:01,880 --> 00:40:05,520
states is going to need?
I mean, nuclear should be part

805
00:40:05,520 --> 00:40:07,480
of the conversation.
I don't think any of these

806
00:40:07,480 --> 00:40:10,040
things are 100% solutions.
One of the, again, the false

807
00:40:10,040 --> 00:40:13,040
narratives out there is somehow
energy transition means we're

808
00:40:13,200 --> 00:40:16,520
transitioning out of oil, gas,
and coal into somehow only

809
00:40:16,520 --> 00:40:18,560
renewables and I guess electric
vehicles.

810
00:40:18,920 --> 00:40:21,120
And these things don't even make
sense from an addition

811
00:40:21,120 --> 00:40:25,920
subtraction perspective.
That's that's what I think

812
00:40:25,920 --> 00:40:29,880
they're gonna do.
Let's electrify everything that

813
00:40:29,920 --> 00:40:32,040
only with an intermittent
resource that we can't control.

814
00:40:32,040 --> 00:40:34,320
That's a great idea, right?
That's a really, really great

815
00:40:34,320 --> 00:40:38,480
idea.
You know, the nuclear should

816
00:40:38,480 --> 00:40:40,040
actually be part of the mix
here.

817
00:40:40,040 --> 00:40:42,840
I think as an American, I need
to compliment China.

818
00:40:42,840 --> 00:40:45,800
I need to compliment United Arab
Emirates for somehow being able

819
00:40:45,800 --> 00:40:47,600
to build repeatable nuclear
plants.

820
00:40:47,960 --> 00:40:50,800
We have this model in the United
States where all utility,

821
00:40:51,080 --> 00:40:54,720
they're a bunch of them, there's
a power plant and then that's

822
00:40:54,720 --> 00:40:55,600
it.
And then they've done their,

823
00:40:55,600 --> 00:40:58,120
their nuclear plant.
And then a different management

824
00:40:58,120 --> 00:41:00,560
team hires a different group of
people to perhaps do some

825
00:41:00,560 --> 00:41:02,560
different power plant.
And these things take, you know,

826
00:41:02,560 --> 00:41:05,080
decades on it.
So there's a regulatory, there's

827
00:41:05,080 --> 00:41:08,680
an industry structure standpoint
that nuclear absolutely should

828
00:41:08,680 --> 00:41:10,680
be part of the the mix going
forward.

829
00:41:10,720 --> 00:41:13,040
By the way, solar and wind are
going to be part of the mix from

830
00:41:13,040 --> 00:41:15,800
a geopolitical risk standpoint.
Once you have it up and running,

831
00:41:15,800 --> 00:41:19,400
we're going to excuse the fact
that it comes from coal fired

832
00:41:19,400 --> 00:41:22,240
electricity generation in China.
We're going to skew the fact

833
00:41:22,600 --> 00:41:25,160
that it is slave labour that in
in many cases produces these

834
00:41:25,160 --> 00:41:27,840
panels and simply say once you,
I mean, skipped all that part.

835
00:41:28,000 --> 00:41:30,160
Once you have it up and running
your country, it's a domestic

836
00:41:30,160 --> 00:41:32,160
resource, right?
So I think India will use a lot

837
00:41:32,160 --> 00:41:33,720
of solar.
You're going to have to back it

838
00:41:33,720 --> 00:41:35,520
up with something that's going
to be coal, it's going to be

839
00:41:35,520 --> 00:41:36,680
natural gas, it's going to be
nuclear.

840
00:41:36,680 --> 00:41:38,000
You're going to need all those
things.

841
00:41:38,480 --> 00:41:42,240
As far as AI goes, this is one
of the sources of great optimism

842
00:41:42,240 --> 00:41:45,280
that I do think tech, the
technology sector, these are the

843
00:41:45,280 --> 00:41:47,880
mega cap companies.
They drive the US stock market.

844
00:41:47,880 --> 00:41:49,200
It seems like they drive the
world.

845
00:41:50,360 --> 00:41:53,240
They are going to be our
salvation to a healthier energy

846
00:41:53,240 --> 00:41:56,920
conversation because it is
indisputable that you cannot

847
00:41:56,920 --> 00:41:59,400
have your Internet down.
It's indisputable that if you do

848
00:41:59,400 --> 00:42:01,960
a ChatGPT search, you darn well
want to get a result, no matter

849
00:42:01,960 --> 00:42:03,400
how good or bad that result may
be.

850
00:42:03,560 --> 00:42:06,840
You want to get it instantly.
The lights have to turn on.

851
00:42:06,960 --> 00:42:10,160
And increasingly the US power
grid is at risk of a growing

852
00:42:10,160 --> 00:42:12,160
number of blackouts.
That is not solely the fault of

853
00:42:12,160 --> 00:42:14,440
solar and wind.
It's wrong to just blame it.

854
00:42:14,720 --> 00:42:17,480
But it is correct to say you
can't just add intermittent

855
00:42:17,480 --> 00:42:20,640
resource and at the same time
retire all your base load and

856
00:42:20,640 --> 00:42:22,680
not have a plan and say
batteries are going to make up

857
00:42:22,680 --> 00:42:25,680
for it today.
That's add only false at a time

858
00:42:25,680 --> 00:42:28,560
demand is now growing for the
first time in 20 years after it

859
00:42:28,560 --> 00:42:30,200
had been flat for for for 20
years.

860
00:42:30,200 --> 00:42:32,400
And so my comment there would
be.

861
00:42:32,720 --> 00:42:35,480
I think tech is part of moving
towards a better conversation

862
00:42:35,480 --> 00:42:38,600
around energy.
It will never be the CE OS of

863
00:42:38,600 --> 00:42:41,120
oil and gas companies that
convince people oil and gas is a

864
00:42:41,120 --> 00:42:43,560
needed industry.
It always sounds self serving.

865
00:42:43,800 --> 00:42:45,600
They are all petroleum
engineers.

866
00:42:46,200 --> 00:42:48,960
They're not charming and and
good looking like the three of

867
00:42:48,960 --> 00:42:50,640
us are.
They're actually pretty nerdy

868
00:42:50,640 --> 00:42:52,480
people, right?
And so they're not able to

869
00:42:52,480 --> 00:42:55,560
communicate effectively.
I, I, I have to say, I think

870
00:42:55,560 --> 00:42:57,760
it's a lost cause.
I wish they would stop the

871
00:42:57,760 --> 00:43:00,040
appeasement.
Maybe that's part of being a

872
00:43:00,040 --> 00:43:03,080
modern CEO today.
I think it take, I think it

873
00:43:03,080 --> 00:43:06,360
takes podcasts like this, but it
also is going to take a

874
00:43:06,360 --> 00:43:08,840
different entry to say we need
real energy.

875
00:43:08,840 --> 00:43:11,520
And make no mistake, I spent a
lot of time or growing amount of

876
00:43:11,520 --> 00:43:15,240
time with a bunch of those types
of tech companies and they're

877
00:43:15,240 --> 00:43:18,360
ramping up on energy.
They've gone from not knowing a

878
00:43:18,360 --> 00:43:20,240
lot.
It wasn't they had no reason to

879
00:43:20,240 --> 00:43:21,560
know it.
This is not being disrespectful.

880
00:43:21,560 --> 00:43:23,320
They had no reason to know
anything about energy to now

881
00:43:23,320 --> 00:43:28,480
realising, oh, our made up CO2
goal is completely preposterous.

882
00:43:28,480 --> 00:43:31,760
Instead of down 30 percent CO2
emissions, we've got up 30.

883
00:43:31,920 --> 00:43:34,320
And by the way, we're not going
to apologise for that.

884
00:43:34,360 --> 00:43:38,040
Kudos to Microsoft.
They said we're up 30 and you

885
00:43:38,040 --> 00:43:41,360
know what, tough luck that goes
with our growing business.

886
00:43:41,360 --> 00:43:43,360
We are going to keep our
sustainability goals.

887
00:43:43,680 --> 00:43:45,240
But they did not show
appeasement.

888
00:43:46,120 --> 00:43:48,880
Good for them, doesn't mean
they're perfect.

889
00:43:49,040 --> 00:43:51,280
They did a heck of a lot better
job than a lot of oil and gas

890
00:43:51,280 --> 00:43:54,520
management teams when they had a
a quote negative result of

891
00:43:54,520 --> 00:43:57,000
rising CO2 emissions.
They dealt with it head on and

892
00:43:57,000 --> 00:43:59,680
didn't apologise for it.
What, what's it like on the

893
00:43:59,680 --> 00:44:03,720
ground in, in the US and
probably Canada as well around

894
00:44:03,720 --> 00:44:07,280
nuclear, because we're seeing
like China is what, building 10

895
00:44:07,280 --> 00:44:09,720
reactors a year or something or
that's what they're planning to

896
00:44:09,720 --> 00:44:11,640
do.
Like they're just going off

897
00:44:11,640 --> 00:44:14,120
their bloody head.
Whereas America's obviously got

898
00:44:14,120 --> 00:44:18,640
a lot of legacy reactors, but
the doesn't appear there like

899
00:44:18,920 --> 00:44:21,440
the growth is there.
What what is the stigma of

900
00:44:21,440 --> 00:44:24,960
nuclear in America and what do
you think's potentially going

901
00:44:24,960 --> 00:44:26,480
to?
Is there going to be a catalyst

902
00:44:26,480 --> 00:44:29,760
where there will be massive
development of new reactors

903
00:44:29,760 --> 00:44:33,680
going forward?
I feel like the stigma is coming

904
00:44:33,680 --> 00:44:37,400
down and that people are warming
up to it, and I'm also cognizant

905
00:44:37,560 --> 00:44:40,480
of that is my personal view that
that is what should happen.

906
00:44:40,720 --> 00:44:43,520
We've had a major nuclear plant
start up in Georgia.

907
00:44:44,520 --> 00:44:46,520
There's not, you know, a second
plant.

908
00:44:46,520 --> 00:44:47,800
They've had a couple versions of
it.

909
00:44:47,800 --> 00:44:51,600
But beyond that utility, there
are not other utilities to my

910
00:44:51,600 --> 00:44:55,240
knowledge with a current clear
time Flint frame to add new

911
00:44:55,240 --> 00:44:57,840
plants.
So it it feels like the mood's

912
00:44:57,840 --> 00:45:00,080
improving.
It feels like policy makers are

913
00:45:00,080 --> 00:45:02,520
now recognising has to be part
of the conversation.

914
00:45:02,800 --> 00:45:05,680
It feels like it's got in the US
context, bipartisan support.

915
00:45:05,680 --> 00:45:08,760
We have passed some nuclear
regulatory reform bills with

916
00:45:08,760 --> 00:45:11,280
both Republicans and Democrats
somehow agreeing that this is

917
00:45:11,280 --> 00:45:13,800
something we should do.
There are some positive signs

918
00:45:13,800 --> 00:45:16,840
there because we still have an
industry structure that is not

919
00:45:16,840 --> 00:45:20,080
on track to replicate the China
or Abu Dhabi model of sort of

920
00:45:20,080 --> 00:45:23,920
crank them out quickly and learn
from the previous reactor on

921
00:45:23,920 --> 00:45:25,800
that nut still needs to be
cracked.

922
00:45:25,800 --> 00:45:27,760
We've not, we, we're not there
yet.

923
00:45:28,920 --> 00:45:33,720
California, which of course is
as as blue of a state, meaning

924
00:45:33,720 --> 00:45:36,120
Democrat as you can get.
They were going to shut down

925
00:45:36,120 --> 00:45:38,160
their one of their last
remaining nuclear plants at the

926
00:45:38,160 --> 00:45:39,520
last second.
They didn't because they

927
00:45:39,520 --> 00:45:41,440
recognised it would put a real
strain on the grid.

928
00:45:41,440 --> 00:45:44,040
And again, I think it goes back
to no one cares where their

929
00:45:44,040 --> 00:45:46,320
power comes from.
Ultimately, you just want to

930
00:45:46,320 --> 00:45:48,400
make sure it works.
So when people started getting

931
00:45:48,400 --> 00:45:50,600
the message that if you shut
down Diablo Canyon, that was the

932
00:45:50,600 --> 00:45:53,120
name of it, we might have
blackouts or brownouts.

933
00:45:53,120 --> 00:45:56,400
People say hey keep it on, maybe
10 minutes before that they

934
00:45:56,400 --> 00:45:58,240
would have been OK with shutting
it down.

935
00:45:58,480 --> 00:46:01,760
But if the choice was do with
that power or adhere to your

936
00:46:01,840 --> 00:46:05,880
personal perceived environmental
convictions, keeping the lights

937
00:46:05,880 --> 00:46:08,240
on will always win.
It's not even a question.

938
00:46:08,640 --> 00:46:12,280
Yeah, that that's why merit US
fascinates me so much in that

939
00:46:12,280 --> 00:46:15,880
realm because like Australia
fucking like we've obviously got

940
00:46:15,880 --> 00:46:19,080
no nuclear and so it's
impossible to nearly build one,

941
00:46:19,080 --> 00:46:25,080
but it's because US has so much
nuclear already, but then it's

942
00:46:25,120 --> 00:46:27,280
so stagnant in actually
expanding it.

943
00:46:27,400 --> 00:46:29,480
It's Yeah, I find it very
interesting, I.

944
00:46:30,640 --> 00:46:33,320
Mean these things only get done
in crisis time, right?

945
00:46:33,320 --> 00:46:35,880
And so like, we had a crisis in
the 70s, the air of oil

946
00:46:35,880 --> 00:46:38,400
embargoes, which I was old
enough to remember.

947
00:46:38,680 --> 00:46:41,600
We had odd and even licence
plates for when you could fill

948
00:46:41,600 --> 00:46:43,120
up gas.
I remember waiting in the gas

949
00:46:43,120 --> 00:46:45,400
lines with my mom and dad and I
was, you know, in elementary

950
00:46:45,400 --> 00:46:47,960
school at the time.
But it had a searing effect on

951
00:46:47,960 --> 00:46:51,360
the American psyche to the point
where it's still gasoline prices

952
00:46:51,760 --> 00:46:54,160
to drive presidential
popularity, which is kind of

953
00:46:54,160 --> 00:46:56,880
preposterous when you look at
how small of a percent of

954
00:46:56,880 --> 00:46:59,320
consumer expenditures gasoline
is today.

955
00:46:59,720 --> 00:47:02,440
Yet even President Bryden, who
vowed to do away with the fossil

956
00:47:02,440 --> 00:47:05,640
fuel industry on the campaign
trail in 2020, suddenly he's

957
00:47:05,640 --> 00:47:09,000
asking companies to drill more
and releasing the SPR Trying

958
00:47:09,000 --> 00:47:12,760
came $4.00 a gallon gasoline,
which is about 1/2 if not a

959
00:47:12,760 --> 00:47:15,200
third of the level of gasoline
prices in Europe, right?

960
00:47:15,200 --> 00:47:18,120
So we don't even have expensive
gas prices, but they go up a

961
00:47:18,120 --> 00:47:19,720
little bit and people freak out
about it.

962
00:47:19,720 --> 00:47:23,280
So it takes a crisis to change,
might say if we start having

963
00:47:23,280 --> 00:47:26,400
brownouts and blackouts in the
US, suddenly the move towards

964
00:47:26,400 --> 00:47:29,120
nuclear and figuring out how do
you do regulatory reform, start

965
00:47:29,120 --> 00:47:31,880
cranking them out.
I'll be optimistic that we will

966
00:47:31,880 --> 00:47:34,040
figure that out.
And again, this is one of the

967
00:47:34,040 --> 00:47:37,240
few areas that somehow has
reasonable bipartisan support.

968
00:47:37,560 --> 00:47:40,400
That doesn't mean regulatory
reform and all the other things

969
00:47:40,400 --> 00:47:43,120
needed have bipartisan support.
But you at least you're not as

970
00:47:43,120 --> 00:47:45,480
far apart on nuclear anymore as
you're on some of these other

971
00:47:45,480 --> 00:47:47,920
issues.
What what about the funding for

972
00:47:47,920 --> 00:47:50,560
it?
Is that like if if there's a

973
00:47:50,560 --> 00:47:54,200
nuclear shit load of plants to
be building in the US

974
00:47:54,200 --> 00:47:59,080
eventually, who pays for it?
Do the utilities pay for it or

975
00:47:59,080 --> 00:48:01,960
the government?
Because Australia's proposed

976
00:48:02,000 --> 00:48:04,840
idea was that the they were
going to be government owned

977
00:48:05,320 --> 00:48:08,440
nuclear plants.
How does it look in the US?

978
00:48:09,840 --> 00:48:12,880
I think we should always be
realistic that the people always

979
00:48:12,880 --> 00:48:13,640
pay for it.
Now.

980
00:48:13,640 --> 00:48:16,000
They may pay for it through
higher taxes down the road, they

981
00:48:16,000 --> 00:48:18,760
may pay for it through increased
government debt that does have

982
00:48:18,760 --> 00:48:21,600
to pay back at some point, or
they pay for it through higher

983
00:48:21,600 --> 00:48:24,000
utility bills.
People are definitely paying for

984
00:48:24,000 --> 00:48:27,200
it.
What structure do politicians

985
00:48:27,200 --> 00:48:29,960
and companies come up with how
the notional dollars are going

986
00:48:29,960 --> 00:48:32,200
to get allocated?
I mean, right now, again, in the

987
00:48:32,200 --> 00:48:36,280
US, it's mostly a utility model
where the utility would get

988
00:48:36,280 --> 00:48:38,320
approvals to move forward with
these things.

989
00:48:38,560 --> 00:48:43,080
They have a required an allowed
rate of return that allows them

990
00:48:43,080 --> 00:48:46,320
to recoup that investment from
ratepayers over some period of

991
00:48:46,320 --> 00:48:47,720
time.
That's sort of the model we've

992
00:48:47,720 --> 00:48:50,000
used.
The issue with that again is you

993
00:48:50,000 --> 00:48:53,560
don't get the economies of scale
and learning of having the same

994
00:48:53,560 --> 00:48:57,280
company or or small group of
companies figure out how to do a

995
00:48:57,280 --> 00:48:59,120
bunch of these.
It's like in US shale.

996
00:48:59,600 --> 00:49:04,240
US shale looked like it needed
$100 a barrel in the 2014, 2015

997
00:49:04,240 --> 00:49:06,200
period.
And while there are lots of

998
00:49:06,200 --> 00:49:09,480
companies, what you saw was a
learning curve as a lot of

999
00:49:09,480 --> 00:49:12,240
people went after this.
The industry consolidated down

1000
00:49:12,240 --> 00:49:15,720
to a few major players in each
of the shale basins, and costs

1001
00:49:15,720 --> 00:49:19,760
fell from needing $100 a barrel,
only needing 40 or $50 a barrel,

1002
00:49:19,760 --> 00:49:21,280
and maybe creeping up a little
bit again.

1003
00:49:21,280 --> 00:49:24,440
But that's sort of learning
curve where the same companies

1004
00:49:24,440 --> 00:49:26,880
can figure out where the best
place to drill wells.

1005
00:49:26,880 --> 00:49:28,280
How do you frack them
appropriately?

1006
00:49:28,480 --> 00:49:32,120
How do you bring them online?
That equivalent model is not how

1007
00:49:32,120 --> 00:49:34,400
our utility and power generation
industry is set up.

1008
00:49:34,400 --> 00:49:36,480
I don't think anywhere in the
world is set up like that.

1009
00:49:36,800 --> 00:49:38,920
You have the examples in China
and Abu Dhabi where the

1010
00:49:38,920 --> 00:49:42,560
government does control this.
I, I hate to say it as somebody

1011
00:49:42,560 --> 00:49:45,400
who's very much a free markets
person, this probably is an

1012
00:49:45,400 --> 00:49:49,160
example of area where apologies
for the lame buzzword, but

1013
00:49:49,160 --> 00:49:52,080
private public partnership makes
sense where some amount of

1014
00:49:52,320 --> 00:49:54,080
government and company risk
sharing.

1015
00:49:54,360 --> 00:49:56,840
But I, I don't think I'm not a
utilities expert.

1016
00:49:56,880 --> 00:49:58,640
You should, all of your
listeners should know that.

1017
00:49:58,880 --> 00:50:03,120
Like I can't see how you have
one utility build 1 plant and

1018
00:50:03,120 --> 00:50:05,960
then the next, you know, area
has the different utility bill

1019
00:50:05,960 --> 00:50:08,000
there.
But like that, that can't be the

1020
00:50:08,000 --> 00:50:10,240
most efficient way to do
something like nuclear, which is

1021
00:50:10,240 --> 00:50:12,520
so long term and so critical to
our country.

1022
00:50:12,760 --> 00:50:16,640
I think more thought from policy
makers, from better experts than

1023
00:50:16,640 --> 00:50:19,320
myself on this people you
probably need to go into how do

1024
00:50:19,320 --> 00:50:21,880
you best fund this, but it's
probably the US is going to be

1025
00:50:21,880 --> 00:50:24,440
some public private partnership
would be my guess at this point

1026
00:50:24,440 --> 00:50:26,320
in time.
I'll do that.

1027
00:50:26,960 --> 00:50:30,360
Arjun, we, we had one of our
sort of national champions here,

1028
00:50:30,840 --> 00:50:33,320
Fortescue.
They, you know, came, went from

1029
00:50:33,320 --> 00:50:36,000
nothing to being a huge iron ore
producer.

1030
00:50:36,000 --> 00:50:39,280
And about 3, three or four years
ago, they started pumping a

1031
00:50:39,280 --> 00:50:42,880
whole lot of money into to
hydrogen trying to, you know,

1032
00:50:43,040 --> 00:50:46,680
have the dream of pulling down
scope 1-2 and three emissions.

1033
00:50:46,680 --> 00:50:49,360
Ultimately.
I'd, I'd love to know if you, if

1034
00:50:49,360 --> 00:50:52,560
you could go back and give them
advice when they went on this

1035
00:50:52,760 --> 00:50:56,160
journey sort of three years ago,
what you would have said to them

1036
00:50:56,160 --> 00:51:00,280
at the time.
Well, I, I've said this to other

1037
00:51:00,280 --> 00:51:02,240
companies, so I don't know the
company you've mentioned, but

1038
00:51:02,240 --> 00:51:05,200
I've, I've seen that story
applied elsewhere, which is if

1039
00:51:05,200 --> 00:51:08,760
the reason you're doing it is to
reduce scope one or two or three

1040
00:51:08,760 --> 00:51:11,640
emissions, that is the worst
reason in the world to do a

1041
00:51:11,640 --> 00:51:14,560
project.
That's not a real reason you do

1042
00:51:14,560 --> 00:51:18,360
a project because it's economic.
I will say in the US we have

1043
00:51:18,360 --> 00:51:22,800
this example of these renewable
diesel plants where the soybean

1044
00:51:22,800 --> 00:51:26,840
price that once you have the
correct quantity is higher than

1045
00:51:26,840 --> 00:51:29,360
the diesel selling price.
It's got a inherent negative

1046
00:51:29,360 --> 00:51:32,160
gross margin.
But because California gives you

1047
00:51:32,240 --> 00:51:35,880
X dollars per tonne and the
government gives you X dollars

1048
00:51:35,880 --> 00:51:38,720
per, you know, per per gallon
and someone else is giving you a

1049
00:51:38,720 --> 00:51:41,440
different tax credit, the
business is actually profitable.

1050
00:51:41,600 --> 00:51:44,200
It is called harvesting
government subsidies.

1051
00:51:44,360 --> 00:51:46,840
Again, the American taxpayer
ultimately pays for it.

1052
00:51:47,120 --> 00:51:50,800
I find it ridiculous that you
can enrich, you know, I'm as

1053
00:51:51,120 --> 00:51:53,520
free markets as it gets, but
they think they can enrich

1054
00:51:53,720 --> 00:51:58,240
corporate and their shareholders
with government subsidies for

1055
00:51:58,240 --> 00:52:01,280
stuff that I think has marginal
economic environmental benefit.

1056
00:52:01,280 --> 00:52:05,680
I find in saying but but so you
can create these subsidy

1057
00:52:05,680 --> 00:52:08,480
harvesting schemes that perhaps
have some merit.

1058
00:52:08,480 --> 00:52:11,120
But if the idea that you're
going to do anything for scope

1059
00:52:11,120 --> 00:52:13,720
one, scope two or skip 3 from an
investment, if you want to say

1060
00:52:13,720 --> 00:52:16,840
that you have too much methane
flaring and that's how we reduce

1061
00:52:16,840 --> 00:52:18,720
scope one, well that that's
going to make sense.

1062
00:52:18,720 --> 00:52:21,440
And if there's a law against
flaring, absolutely you adhere

1063
00:52:21,440 --> 00:52:23,440
to it.
But the idea that you feel a

1064
00:52:23,440 --> 00:52:25,720
personal responsibility as a
company, I mean, it's

1065
00:52:25,720 --> 00:52:27,800
ridiculous.
You have 7 billion people that

1066
00:52:27,800 --> 00:52:29,160
are going to be have growing
emissions.

1067
00:52:29,440 --> 00:52:31,760
You've got China that builds,
you know, a new coal plant a

1068
00:52:31,760 --> 00:52:33,520
week or something like that.
Like what?

1069
00:52:33,520 --> 00:52:35,520
What's the relevance of an
individual company doing a

1070
00:52:35,520 --> 00:52:39,320
hydrogen project?
And when you get to hydrogen, it

1071
00:52:39,320 --> 00:52:42,200
takes a bunch of energy to make
a different form of energy.

1072
00:52:42,200 --> 00:52:43,920
It's like it's not a primary
source of energy.

1073
00:52:44,400 --> 00:52:46,240
Isn't where I actually agree
with the environmentalists.

1074
00:52:46,640 --> 00:52:48,640
If you're going to do hydrogen,
it darn well better come from

1075
00:52:48,640 --> 00:52:50,240
wind and solar.
Otherwise there's absolutely no

1076
00:52:50,240 --> 00:52:52,040
point to it.
You're going to use more energy

1077
00:52:52,240 --> 00:52:54,600
and make the hydrogen than
energy value get out of it.

1078
00:52:54,600 --> 00:52:59,480
So I am a reasonably large
hydrogen sceptic and so I would

1079
00:52:59,480 --> 00:53:01,360
have probably, I've told a bunch
of other companies, you have to

1080
00:53:01,360 --> 00:53:05,480
be really careful with hydrogen.
If it's subsidy harvesting, be

1081
00:53:05,480 --> 00:53:06,760
very clear that that's what you
do.

1082
00:53:06,760 --> 00:53:08,960
And I want to hear about scope
three and scope 2 emissions and

1083
00:53:08,960 --> 00:53:11,040
all these things.
You want to harvest subsidies

1084
00:53:11,040 --> 00:53:13,360
for the benefit of your
shareholders and the expensive

1085
00:53:13,400 --> 00:53:16,400
taxpayers of our country, then
there's certainly legally

1086
00:53:16,800 --> 00:53:20,080
acceptable to do so.
But you then also have to make

1087
00:53:20,080 --> 00:53:22,000
sure you have confidence that
something's going to be there

1088
00:53:22,000 --> 00:53:24,240
over the long run.
Find that you're not going to

1089
00:53:24,240 --> 00:53:27,440
get accused of profiteering off
of, again, taxpayers ultimately,

1090
00:53:27,880 --> 00:53:29,880
or that some different
government may not come in and

1091
00:53:29,880 --> 00:53:32,280
change the subsidy scheme of
which your plant is based, or at

1092
00:53:32,280 --> 00:53:34,840
least that you repeat.
But that that's the analysis.

1093
00:53:35,280 --> 00:53:37,840
It is not scope one, scope 2,
scope 3.

1094
00:53:38,080 --> 00:53:41,680
From that type of investment
standpoint, it is not good for,

1095
00:53:41,680 --> 00:53:45,480
it is not good for humanity to
force these hydrogen projects

1096
00:53:45,800 --> 00:53:49,960
that are not economic.
How do you decarbonize in the

1097
00:53:49,960 --> 00:53:53,960
least cost way possible?
You ban SUV to be a huge step in

1098
00:53:53,960 --> 00:53:55,840
the right direction.
Make sure India doesn't go down

1099
00:53:55,840 --> 00:53:57,440
that route.
That'd be, that'd be one very

1100
00:53:57,440 --> 00:53:59,280
clear thing you do.
You would want to use much more

1101
00:53:59,560 --> 00:54:03,200
efficient coal plants than coal
plants from 10/20/30 fifty years

1102
00:54:03,200 --> 00:54:05,040
ago.
So in fairness to China, today's

1103
00:54:05,040 --> 00:54:08,280
coal plants are much better than
they were 20-30 fifty years ago.

1104
00:54:08,280 --> 00:54:12,320
So there is some notion of
cleaner coal than what you know,

1105
00:54:12,320 --> 00:54:15,920
countries like America and
Australia used 50 years ago and

1106
00:54:15,920 --> 00:54:18,200
so forth.
But we have to look if we do

1107
00:54:18,200 --> 00:54:21,120
want to decarbonize, can't be
let's pick the most expensive

1108
00:54:21,120 --> 00:54:23,640
thing that doesn't work today.
It's time of subset like that.

1109
00:54:23,640 --> 00:54:26,080
And I as a company I'm going to
do it because I need some stupid

1110
00:54:26,080 --> 00:54:29,480
scope 3 promise.
That would that would have saved

1111
00:54:29,480 --> 00:54:32,560
them a fair bit of money.
I've, I've got to ask you as

1112
00:54:32,560 --> 00:54:36,360
well on the, on the specifics of
companies, giving you background

1113
00:54:36,360 --> 00:54:39,720
as an equity research analyst.
You've spoken about the, the

1114
00:54:39,720 --> 00:54:43,200
concept of fortress balance,
balance sheet and you know,

1115
00:54:43,200 --> 00:54:45,760
that's super, super applicable
to the, the companies we talk

1116
00:54:45,760 --> 00:54:49,240
about given the cyclical nature
of commodities.

1117
00:54:49,240 --> 00:54:51,880
And you know, you speak about
the, the basics, just having

1118
00:54:51,880 --> 00:54:54,600
lots of cash on hand, having
minimal debt.

1119
00:54:54,920 --> 00:54:58,920
Is, is that a mindset that you
look at across the board?

1120
00:54:58,920 --> 00:55:02,120
Is that the type of company you
know, you like to invest in?

1121
00:55:02,120 --> 00:55:03,920
What, what is the appropriate
amount of debt?

1122
00:55:03,920 --> 00:55:06,840
I know it's kind of different to
each company, but in general

1123
00:55:06,840 --> 00:55:09,640
terms, how do you look at the
debt balance of these cyclical

1124
00:55:09,640 --> 00:55:12,640
businesses?
I mean, I think the first thing

1125
00:55:12,640 --> 00:55:14,640
is you're going to send your
question which is very well

1126
00:55:14,640 --> 00:55:17,320
articulated, which is it's a
cyclical industry, right.

1127
00:55:17,320 --> 00:55:20,760
So you know, ideally you're find
your best to invest and buy

1128
00:55:20,760 --> 00:55:23,360
stuff at the lower points of the
cycle and you're trying your

1129
00:55:23,360 --> 00:55:26,760
best to avoid investing or even
buying back stock at the higher

1130
00:55:26,760 --> 00:55:30,040
points of the cycle, which does
mean building up cash when

1131
00:55:30,040 --> 00:55:33,080
things are good, which by the
way, most investors in finish to

1132
00:55:33,080 --> 00:55:36,040
the management teams, most
investors push back on cash

1133
00:55:36,040 --> 00:55:37,880
build up.
They'll say, give it back to me

1134
00:55:37,880 --> 00:55:39,240
if you don't want to use it
right now.

1135
00:55:39,240 --> 00:55:40,760
And I don't think that's always
the right answer.

1136
00:55:41,040 --> 00:55:45,240
There may be no more valuable
shareholder value enhancing

1137
00:55:45,240 --> 00:55:48,360
asset that a company can have in
cash at the peak.

1138
00:55:48,680 --> 00:55:50,480
If you're going to go to a
truck, you don't always know

1139
00:55:50,480 --> 00:55:53,160
when the truck is going to come,
but you do know these businesses

1140
00:55:53,160 --> 00:55:55,320
are cyclical.
So even just this most recent

1141
00:55:55,320 --> 00:55:58,120
COVID downturn, if you look at
again at U.S. oil and gas M&A,

1142
00:55:58,520 --> 00:56:01,960
I'd say all of those deals that
got done coming off at negative

1143
00:56:01,960 --> 00:56:04,120
oil prices, now barely positive
oil prices.

1144
00:56:04,120 --> 00:56:07,200
These are all home run deals for
basically every company that had

1145
00:56:07,200 --> 00:56:10,520
some combination of either
balance sheet cash or at least

1146
00:56:10,520 --> 00:56:12,760
the currency because their stock
didn't collapse because they had

1147
00:56:12,760 --> 00:56:15,800
a good balance sheet to be able
to then engage in M&A and

1148
00:56:15,800 --> 00:56:19,080
counter cyclical investing.
I think it becomes harder when

1149
00:56:19,080 --> 00:56:20,400
you're not at peak or at
through.

1150
00:56:21,240 --> 00:56:24,520
I've become more realistic that
sometimes deals happen when they

1151
00:56:24,520 --> 00:56:27,200
happen.
Certainly in the US often times

1152
00:56:27,200 --> 00:56:30,480
most deals are about companies
choosing to sell as about as

1153
00:56:30,480 --> 00:56:34,240
opposed to some companies saying
I want to buy you and that that

1154
00:56:34,880 --> 00:56:37,160
the nature of things.
It's probably a separate podcast

1155
00:56:37,160 --> 00:56:39,120
whether that should change or
not, but that is the nature of

1156
00:56:39,120 --> 00:56:41,560
things.
I think those sort of in between

1157
00:56:41,560 --> 00:56:46,200
deals are harder to gauge, but
the basic idea is not over

1158
00:56:46,200 --> 00:56:48,480
investing at the top and trying
to invest at the bottom.

1159
00:56:48,760 --> 00:56:52,680
These are all to some degree
users have been done, but you

1160
00:56:52,680 --> 00:56:55,400
can chart stock buybacks,
they're very pro cyclical.

1161
00:56:55,400 --> 00:56:57,560
It is very hard to buy back your
stock at the top.

1162
00:56:57,560 --> 00:57:00,840
Well, at least let's not waste
the cash at the at the peak of

1163
00:57:00,840 --> 00:57:03,840
the cycle and try your best to
invest counter cyclically as as

1164
00:57:03,840 --> 00:57:07,000
much as we can so.
It was 11 last topic.

1165
00:57:07,000 --> 00:57:12,480
I just wanted to to ask you
about Arjun and it it relates to

1166
00:57:12,480 --> 00:57:14,960
the, the kind of bias in energy
reporting.

1167
00:57:14,960 --> 00:57:17,720
Obviously you've, you've got a,
you know, a phenomenal amount of

1168
00:57:18,040 --> 00:57:21,760
experience in the, in the arena.
You understand that you've,

1169
00:57:21,840 --> 00:57:24,440
you've spend a lot of time out
at these sites, you've analysed

1170
00:57:24,440 --> 00:57:28,200
the data quite extensively, But
you know, a lot of people aren't

1171
00:57:28,200 --> 00:57:31,320
quite in that realm.
You know, they use mainstream

1172
00:57:31,320 --> 00:57:33,440
media, they use sub stack or
they use Twitter and all these

1173
00:57:33,440 --> 00:57:36,280
sorts of things.
And you know, in inherently

1174
00:57:36,280 --> 00:57:39,160
almost everything seems to be
biassed or portrayed in a, in a

1175
00:57:39,160 --> 00:57:41,920
kind of biassed way.
I'm, I'm kind of interested to

1176
00:57:41,920 --> 00:57:46,440
hear how you would advise people
to, you know, search for the,

1177
00:57:46,440 --> 00:57:49,600
the real truth in, in what
they're reading as it relates to

1178
00:57:50,200 --> 00:57:53,600
energy and the, the sort of, you
know, quote unquote, transition

1179
00:57:53,600 --> 00:57:56,440
we're on, whether that's
particular sources you look at

1180
00:57:56,440 --> 00:57:59,720
or just a way of thinking and
analysing things critically.

1181
00:58:01,280 --> 00:58:04,560
I think everyone should try and
become energy educated.

1182
00:58:04,960 --> 00:58:09,040
Most people do not, including
most fund managers and most

1183
00:58:09,040 --> 00:58:11,400
executives.
The tech companies now being

1184
00:58:11,400 --> 00:58:14,200
forced to become energy
educated, which is good but it

1185
00:58:14,200 --> 00:58:16,120
is a big challenge across
society.

1186
00:58:16,120 --> 00:58:17,600
You mentioned the media as an
example.

1187
00:58:17,600 --> 00:58:20,480
I think the worst thing that we
have right now, and this is

1188
00:58:20,480 --> 00:58:23,440
maybe AUS example, I'll speak
for my own country here is

1189
00:58:23,440 --> 00:58:26,720
climate journalists.
I, I think this is the worst

1190
00:58:26,720 --> 00:58:29,880
example of where the media has
gone where it's never about

1191
00:58:30,200 --> 00:58:32,600
climate.
It is about energy or use of

1192
00:58:32,600 --> 00:58:35,320
energy.
There are, you know, we might

1193
00:58:35,320 --> 00:58:38,040
want to decarbonize and and so
forth, but it's actually about

1194
00:58:38,040 --> 00:58:40,520
understanding why we use energy.
And we only have a climate

1195
00:58:40,520 --> 00:58:43,080
journalism that is then going to
write about every tornado and

1196
00:58:43,080 --> 00:58:45,520
every heat wave that we have
anywhere in the United States.

1197
00:58:45,520 --> 00:58:48,400
And it's different every year.
And that's qualifies as

1198
00:58:48,400 --> 00:58:50,960
journalism.
And all you get are fear

1199
00:58:50,960 --> 00:58:53,240
mongering stories about how bad
things you're going to get

1200
00:58:53,880 --> 00:58:56,400
that's that's neither helpful
nor educational.

1201
00:58:56,640 --> 00:58:58,360
You're going to lead to better
energy outcomes.

1202
00:58:58,360 --> 00:59:00,400
So how do you take the vitriol
out of this stuff?

1203
00:59:00,480 --> 00:59:01,920
First thing is to be educated on
energy.

1204
00:59:02,480 --> 00:59:05,520
I would actually be OK with
energy journalism and

1205
00:59:05,520 --> 00:59:07,760
environmental journalism.
I think there's a huge role for

1206
00:59:07,760 --> 00:59:10,440
environmentalists to play.
I will always say that they are

1207
00:59:10,440 --> 00:59:12,800
needed.
I'll use the US an example.

1208
00:59:12,800 --> 00:59:15,360
Thank goodness there was an
environmental movement that said

1209
00:59:15,360 --> 00:59:18,720
we shouldn't dump chemicals into
rivers anymore, that smog is a

1210
00:59:18,720 --> 00:59:21,080
bad thing.
So there is for sure a need for

1211
00:59:21,440 --> 00:59:23,160
an environmental voice to be out
there.

1212
00:59:23,400 --> 00:59:26,360
There's a need for energy
education, understanding why and

1213
00:59:26,360 --> 00:59:29,360
how we use energy.
We don't use it because fossil

1214
00:59:29,360 --> 00:59:33,520
fuel companies are, you know,
voicing it on to an unsuspecting

1215
00:59:33,520 --> 00:59:34,840
public.
It's, it's ridiculous.

1216
00:59:35,000 --> 00:59:36,320
No one cares about the energy
source.

1217
00:59:36,320 --> 00:59:38,400
They care that it's available.
They would like it to be

1218
00:59:38,400 --> 00:59:39,800
affordable.
They'd prefer it to be a

1219
00:59:39,800 --> 00:59:44,160
geopolitically secure great.
That's kind of the higher things

1220
00:59:44,160 --> 00:59:47,040
with availability more important
than affordability.

1221
00:59:48,160 --> 00:59:51,720
You know, I was happily retired
and a board member for a decade

1222
00:59:53,040 --> 00:59:56,360
and one of the reasons I started
writing public again, in

1223
00:59:56,360 --> 00:59:59,040
addition to enjoying it, in
addition to seeing a new cycle

1224
00:59:59,040 --> 01:00:02,000
that's fun to be engaged in sort
of my new role at Baratin and as

1225
01:00:02,000 --> 01:00:03,120
an investor and all these
things.

1226
01:00:03,360 --> 01:00:06,440
Once I did it, hey, my views may
be wrong, but at least I know

1227
01:00:06,440 --> 01:00:08,960
something about energy and I do
not agree with this energy

1228
01:00:08,960 --> 01:00:11,800
transition narrative.
So I felt an obligation to write

1229
01:00:11,800 --> 01:00:14,760
publicly.
I'm one small voice and all the

1230
01:00:14,760 --> 01:00:18,080
voices out there, but I feel
like this isn't topic I know

1231
01:00:18,080 --> 01:00:20,400
something about.
I spend a lot of time, it may

1232
01:00:20,400 --> 01:00:22,120
not seem like it.
I spend a lot of time with folks

1233
01:00:22,120 --> 01:00:25,520
in the environmental community.
I deal with the likes of EDF and

1234
01:00:25,520 --> 01:00:27,760
series here.
In the US, and they kind of

1235
01:00:27,760 --> 01:00:30,320
actually enjoy dealing with them
and I respect their viewpoints.

1236
01:00:30,320 --> 01:00:32,520
I may not agree with how they
think these things should be

1237
01:00:32,520 --> 01:00:33,920
solved.
In all cases.

1238
01:00:33,920 --> 01:00:35,760
I don't think they're entirely
wrong either.

1239
01:00:36,080 --> 01:00:39,040
But again, it goes back to are
we trying to solve climate or

1240
01:00:39,040 --> 01:00:41,520
are we trying to solve making
everyone energy rich?

1241
01:00:41,760 --> 01:00:43,120
That's what everyone's going to
choose.

1242
01:00:43,480 --> 01:00:44,760
And it's not up to you in
Australia.

1243
01:00:44,760 --> 01:00:47,760
It's not to me in America.
India is going to go down the

1244
01:00:47,760 --> 01:00:49,680
path they're going to want to go
down.

1245
01:00:49,800 --> 01:00:52,520
Same thing with China, same
thing with the rest of Southeast

1246
01:00:52,520 --> 01:00:55,360
Asia.
Unfortunately, that is not true

1247
01:00:55,360 --> 01:00:58,200
of many African countries.
They are still victims of

1248
01:00:58,200 --> 01:00:59,840
American and European
interference.

1249
01:01:00,160 --> 01:01:03,800
There's a really sad and tragic
legacy of that for the last 400

1250
01:01:03,800 --> 01:01:07,560
years and in many respects it
continues to this day where you

1251
01:01:07,560 --> 01:01:11,720
have activists protesting
Barclays Bank cannot approve a

1252
01:01:11,720 --> 01:01:15,480
singular oil pipeline from
Uganda to Tanzania or I might

1253
01:01:15,480 --> 01:01:17,360
have my direction wrong, which
is ridiculous.

1254
01:01:17,720 --> 01:01:19,680
Africa uses 4 million barrels
today.

1255
01:01:19,680 --> 01:01:21,840
They produce seven.
They export more oil to the rest

1256
01:01:21,840 --> 01:01:25,040
of the world and 1.4 billion
people use 4 million barrels a

1257
01:01:25,040 --> 01:01:27,360
day.
In the US, 350 million people

1258
01:01:27,360 --> 01:01:31,040
use 20 million barrels today.
But somehow you can't have a

1259
01:01:31,040 --> 01:01:33,800
singular oil pipeline from
Uganda to Tanzania, right?

1260
01:01:33,800 --> 01:01:36,720
So the countries, India, China,
it's going to be self

1261
01:01:36,720 --> 01:01:39,240
determination.
Every country should have self

1262
01:01:39,240 --> 01:01:40,880
determination.
It is not up to us.

1263
01:01:41,120 --> 01:01:44,120
And more of this needs to be
part of the energy docs.

1264
01:01:44,120 --> 01:01:47,880
I applaud you guys for doing a
podcast on these types of

1265
01:01:47,880 --> 01:01:50,240
topics.
I try and do it here in the US.

1266
01:01:50,520 --> 01:01:52,760
It is one of the founding
motivations for Veriton.

1267
01:01:52,760 --> 01:01:55,280
We are a for profit business.
We advise companies we want to

1268
01:01:55,280 --> 01:01:58,360
make money on that.
But there is absolutely an

1269
01:01:58,400 --> 01:02:02,280
energy education element to it.
And I always say, I am an equity

1270
01:02:02,280 --> 01:02:04,640
research analyst.
That is my mindset.

1271
01:02:04,920 --> 01:02:07,600
I'm just trying to make the
right call as an energy equity

1272
01:02:07,600 --> 01:02:10,720
analyst, not about whether your
analysis is right or wrong.

1273
01:02:11,640 --> 01:02:14,080
You have to make the right call,
get the stocks right.

1274
01:02:14,080 --> 01:02:17,480
And I try and bring that to to
this discussion as well.

1275
01:02:18,040 --> 01:02:21,640
Arjun, where are your men On the
ground in Australia now, mate.

1276
01:02:21,720 --> 01:02:25,000
You bloody need anything.
We're at your disposal mate,

1277
01:02:25,120 --> 01:02:27,720
don't you worry about that.
We're pretty much best friends

1278
01:02:27,720 --> 01:02:29,440
now after this.
Experience.

1279
01:02:29,760 --> 01:02:33,000
I'm a huge Australia fan.
I know it's cliche, but I grew

1280
01:02:33,000 --> 01:02:37,080
up in ACD, DC fan, first concert
ever went to, concert like son

1281
01:02:37,080 --> 01:02:42,560
ever went to and you know a lot.
And ESPN when it first got

1282
01:02:42,560 --> 01:02:45,440
started only had Australian
rules football on.

1283
01:02:45,440 --> 01:02:49,120
So before they got any other
sports, that's what we used to

1284
01:02:49,120 --> 01:02:51,880
watch as a kid, Australian rules
football, a huge fan of the

1285
01:02:51,880 --> 01:02:53,440
country so.
Right, you should have.

1286
01:02:53,600 --> 01:02:57,160
Did you catch the the rugby
league games they had in Las

1287
01:02:57,160 --> 01:03:00,480
Vegas to start our season?
Actually not.

1288
01:03:00,520 --> 01:03:04,080
So, mate, it was, it was because
it's, you know, rugby league,

1289
01:03:04,080 --> 01:03:06,920
they they don't have pads or
helmets or anything.

1290
01:03:06,920 --> 01:03:08,800
And it's like, and it's just
constant.

1291
01:03:08,800 --> 01:03:11,040
There's no, just not one play
and then pause.

1292
01:03:11,280 --> 01:03:14,200
And I think a lot of the NFL
supporters that watched it,

1293
01:03:14,200 --> 01:03:17,480
they're like, fuck me, these
blokes are lunatics.

1294
01:03:17,480 --> 01:03:21,080
Like they just couldn't get over
the intensity and the brutality

1295
01:03:21,080 --> 01:03:22,680
of it without helmets and
everything.

1296
01:03:22,880 --> 01:03:25,200
And they're, and how much it
just kept going and going.

1297
01:03:25,200 --> 01:03:27,280
I think it surprised the
culture.

1298
01:03:27,280 --> 01:03:32,200
So it was yeah, I'll definitely
go next year for the Vegas 100.

1299
01:03:32,200 --> 01:03:35,920
Percent rugby insane looks
absolutely insane so.

1300
01:03:37,560 --> 01:03:39,840
What else you got JD Or is that
about it marked?

1301
01:03:40,120 --> 01:03:41,800
That that's about it.
Actually, one more.

1302
01:03:41,800 --> 01:03:43,920
This is probably a bit of a
nerdy one on on my part.

1303
01:03:43,960 --> 01:03:47,960
I know you'd you'd recommended a
few books in your time, Arjun,

1304
01:03:47,960 --> 01:03:51,720
some backlab smeal ones and and
Daniel Juergen ones.

1305
01:03:51,720 --> 01:03:55,480
But is there another sort of
stand out one on the on the

1306
01:03:55,480 --> 01:03:58,360
world of energy?
Perhaps a, you know, a one

1307
01:03:58,360 --> 01:04:00,680
that's a bit more recent that
you'd recommend.

1308
01:04:01,720 --> 01:04:04,560
I mean, I, I do love the Vaclav
Shmuel books and he's got one,

1309
01:04:04,560 --> 01:04:07,600
you know, the way the world
really works and numbers don't

1310
01:04:07,600 --> 01:04:09,400
lie.
He's a professor at the

1311
01:04:09,400 --> 01:04:11,800
University of Manitoba.
He's probably retired by now,

1312
01:04:12,280 --> 01:04:14,000
but you know, he, he's just a
scientist.

1313
01:04:14,000 --> 01:04:16,560
He, he, he's not right or left.
I think it'd be very hard to

1314
01:04:16,560 --> 01:04:19,400
guess what he is, but he's the
guy that actually follows

1315
01:04:19,400 --> 01:04:22,280
science and analysis and data.
Despite everyone else saying

1316
01:04:22,280 --> 01:04:24,720
they follow the science or the
numbers and so forth.

1317
01:04:24,720 --> 01:04:27,400
This guy actually does it.
And it's a very pragmatic,

1318
01:04:28,120 --> 01:04:30,840
excellent view on, I think,
energy and climate and all these

1319
01:04:30,840 --> 01:04:33,000
types of things and what's real
and what's not real.

1320
01:04:33,240 --> 01:04:36,040
I would highly recommend him.
I think, you know, Dan Yergin's

1321
01:04:36,040 --> 01:04:38,720
a personal hero of mine.
I met him when I was 23, and he

1322
01:04:38,720 --> 01:04:40,640
was probably in his late 40s at
the time.

1323
01:04:40,640 --> 01:04:43,360
And, you know, it's a career
achievement to now serve on some

1324
01:04:43,360 --> 01:04:46,120
advisory boards with him.
But whether it's the prize or

1325
01:04:46,120 --> 01:04:48,480
the new map, these are two of
the best people.

1326
01:04:48,480 --> 01:04:51,080
What I really appreciate about
both of them is they've both

1327
01:04:51,080 --> 01:04:54,440
achieved significant career
success, but you don't see them

1328
01:04:54,440 --> 01:04:57,280
either cutting corners are in
their analysis, engaging in

1329
01:04:57,560 --> 01:05:00,600
engaging in appeasement or
saying other thing than other

1330
01:05:00,600 --> 01:05:03,440
than what they truly believe.
And especially Doctor Yergin, it

1331
01:05:03,440 --> 01:05:07,280
is shocking to see him interview
world leaders, senior

1332
01:05:07,280 --> 01:05:09,400
executives.
He doesn't pull punches.

1333
01:05:09,600 --> 01:05:13,080
He's very polite and respectful
in a statesman, but he asks real

1334
01:05:13,080 --> 01:05:16,280
questions and he doesn't give
made up answers that he thinks,

1335
01:05:16,280 --> 01:05:18,560
you know, the generic public
person wants to hear.

1336
01:05:18,800 --> 01:05:22,080
He actually said we don't have
enough copper to have 100% EVs.

1337
01:05:22,280 --> 01:05:23,560
Why would you have that as a
mandate?

1338
01:05:23,560 --> 01:05:26,120
It's preposterous.
He says it in a much more

1339
01:05:26,120 --> 01:05:28,200
friendly, statesmanlike manner
than what I just did.

1340
01:05:28,200 --> 01:05:30,360
But that is unquestionably the
conclusion.

1341
01:05:30,360 --> 01:05:32,360
So I would say those two people
are probably mine.

1342
01:05:32,360 --> 01:05:35,360
They're heroes of mine and who I
would recommend to get yourself

1343
01:05:35,360 --> 01:05:37,960
more educated on energy and
geopolitics and all these kind

1344
01:05:37,960 --> 01:05:40,000
of things.
Backlash meal and you're good.

1345
01:05:40,920 --> 01:05:42,160
We don't, we don't need them,
mate.

1346
01:05:42,160 --> 01:05:45,560
We've got you now.
So that's a piece of piss, mate.

1347
01:05:45,640 --> 01:05:47,880
That was.
Thanks so much for your time.

1348
01:05:47,880 --> 01:05:50,840
I know we are, we it's early for
us, late for you.

1349
01:05:50,840 --> 01:05:52,600
So I'm glad we could make it
work.

1350
01:05:52,600 --> 01:05:56,480
And but mate, that was just a
fascinating chat, obviously

1351
01:05:56,480 --> 01:06:00,320
coming from decades of
experience in in the big smoke,

1352
01:06:00,320 --> 01:06:02,400
mate.
So we, yeah, we're absolute

1353
01:06:02,400 --> 01:06:04,960
pleasure to have you on, Arjun.
Thanks for coming, Arjun.

1354
01:06:06,160 --> 01:06:08,240
I love being on.
You guys are great hosts, great

1355
01:06:08,240 --> 01:06:10,200
questions and I appreciate the
opportunity.

1356
01:06:10,200 --> 01:06:12,560
Thank you.
You can thank JD for all them

1357
01:06:12,560 --> 01:06:13,920
mate.
I'm just off the cuff.

1358
01:06:13,960 --> 01:06:17,960
So bloody good.
Good hustle there JD.

1359
01:06:17,960 --> 01:06:19,840
Great recruitment as always
mate.

1360
01:06:19,840 --> 01:06:23,040
What a bloody honour to have
that friggin ex head of research

1361
01:06:23,040 --> 01:06:27,920
and a bloody follow that had
skin in Goldman Sachs that is.

1362
01:06:27,920 --> 01:06:30,120
What an honour.
It's pretty cool.

1363
01:06:30,120 --> 01:06:34,240
It's awesome how people like
this just start up sub stacks or

1364
01:06:34,240 --> 01:06:37,480
whatever, go on Twitter and
share their wisdom.

1365
01:06:37,480 --> 01:06:40,680
It's awesome that we can chip
off a bit and learn from them,

1366
01:06:40,680 --> 01:06:42,040
right?
I'll just, yeah.

1367
01:06:42,040 --> 01:06:43,360
I just can't believe they talk
to me.

1368
01:06:43,440 --> 01:06:45,280
It's great.
They're all very humbling

1369
01:06:45,280 --> 01:06:48,040
people.
I'm equally shocked mate, don't

1370
01:06:48,040 --> 01:06:50,440
worry about it.
I've I've come a long way since

1371
01:06:50,440 --> 01:06:51,720
boring.
I was in a decline.

1372
01:06:51,720 --> 01:06:54,480
I can tell you.
I could tell you that that was

1373
01:06:54,480 --> 01:06:58,160
that was awesome, mate.
Good work, JD, mate, as always,

1374
01:06:58,160 --> 01:07:02,120
thanks to all the bloody legends
that made us talking to Arjun

1375
01:07:02,200 --> 01:07:04,600
possible.
Axis Mining technology.

1376
01:07:05,000 --> 01:07:07,360
Yeah, freaking good at that.
Talk about it.

1377
01:07:07,360 --> 01:07:09,320
And he was talking about
management teams, mate.

1378
01:07:09,360 --> 01:07:13,400
Every management team here you
can bloody trust mineral mining.

1379
01:07:14,080 --> 01:07:19,960
Oh mineral mining services dear
Silverstone bloody verify smack

1380
01:07:19,960 --> 01:07:25,040
power and technology CRE
insurance, Greenland's equipment

1381
01:07:25,280 --> 01:07:28,360
K drill and mate.
You want to manage your bloody

1382
01:07:28,600 --> 01:07:31,400
trading and your graphs get a
spark chart in front of you.

1383
01:07:31,720 --> 01:07:34,560
Easy as a spark.
Go Australia and go.

1384
01:07:34,560 --> 01:07:37,840
You JD, go to Rudy and go to the
money miners.

1385
01:07:37,840 --> 01:07:39,400
Hudaru, go.
Everyone.

1386
01:07:41,160 --> 01:07:43,720
Information contained in this
episode of Money of Mine is of

1387
01:07:43,720 --> 01:07:45,760
general nature only and does not
take into account the

1388
01:07:45,760 --> 01:07:49,360
objectives, financial situation
or needs of any particular

1389
01:07:49,360 --> 01:07:51,440
person.
Before making any investment

1390
01:07:51,440 --> 01:07:54,480
decision, you should consult
with your financial advisor and

1391
01:07:54,480 --> 01:07:57,600
consider how appropriate the
advice is to your objectives,

1392
01:07:57,840 --> 01:07:59,800
financial situation and needs.