The Hype around Hybrids is Rubbish (Andy Leyland Interview)

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Jonas Benedict Dawling We got
another interview and we just

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finished it.
We're wrapping it up.

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So we're we're talking about it
now.

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How do you feel at the how do
you feel at the conclusion of

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that?
Even though the money miners

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haven't heard of it yet?
You feeling good?

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Mate, the IT was, it was a good
time to talk about all this

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stuff, you know, lithium
batteries, everything from the

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whole supply chain given
everything that kind of happened

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last week, right?
So huge, huge kick up.

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There's no sort of new news for
people on on that front in in

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the lithium world.
But I think a lot of people are

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on edge starting to see, you
know, is this the the, the

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string that breaks the the
camels back and lithium is on a

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bit of a kick.
People, people are on edge about

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that just as much as they are on
edge about picking up the phone

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and getting in touch with Axis
mining technology because they

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are just the absolute best at
what they do, mate.

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They pick up, they actually
answer the phone.

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They're going to be the idea
they're going to release

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something that's going to make
life even easier for the, for

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the geos and the drillers out
there on the on the RC rigs,

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which are, you know, finding the
stuff that we talked about on

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the show.
JD it was Andy Leyland that we

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spoke with.
Like, like give me a bit of a,

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give me a bit of a bit of A and
everything you know about Andy.

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Mate, I'll, I'll give you the,
the, the spiel.

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So obviously everything going on
in, in battery metals right now,

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I thought it'd be good for us
to, to just check in with one of

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these people that follow the,
the industry pretty closely.

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So Andy Co founder of SC
insights, he spent a bunch of

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time at the, the likes of
Benchmark and and Woodmark just

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following the, the industry
pretty closely.

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And, you know, despite the, the
positivity that we got in the

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last couple weeks, it's, you
know, it's pretty clearly in the

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gutter.
We see all these, these sell

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side reports coming through,
right?

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And they're saying it's cooked.
You know, the, the EV kind of

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narrative is, is been smashed a
bit.

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So you can sort of see that in
all the, the lithium names and

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everything.
So I thought, you know, why not

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get someone who kind of lives
and breathes this stuff, get him

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on.
He's he's pretty keen.

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You know, he's, he's calling in
from from Holland at a fast

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markets conference.
So it's 7:00 in the morning.

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So, you know, thanks to him to
making the time so early.

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But I think with that intro kind
of said, we'll, we'll flip over

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and get into the conversation
from everything from lithium to

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EVs to to stationary storage and
a whole bunch more.

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All righty.
Andy Leyland, thank you for

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taking the time to, to join us
nice and early in Europe where

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you're you're calling in from.
And I think the, the logical

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place to start this one is to,
to get a feel for the sentiment

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in the, the battery industry
right now.

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You're at a conference.
So how are things looking over

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there mate?
Yeah, I'd say there's, there's

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actually a little bit of quiet
optimism, which is is

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interesting because you know,
you, you basically in this

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industry, you had three or four
years where every week, you

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know, there was a multi billion
dollar announcement of a new

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asset going after a new mine or
a new battery factory.

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And then for the past six to
eight months every week has been

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about a closure, about a
suspension, about a delay and

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subsidies, etcetera.
So it's been very negative

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sentiment across the industry
and the whole supply chain has

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been an oversupply.
But I think now there's that

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sort of view that, you know,
actually the situation we're in

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is completely unsustainable.
And that goes all the way

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through to the, the mining side
of the market.

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And people are starting to
realise that, you know, things

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will get better.
This is a sort of more temporary

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bump in the road and that there
is still a still a future to

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the, the lithium ion battery
supply chain.

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So let's say not not quite a
sort of, you know, huge turn in

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sentiment, but perhaps I'd say a
quiet optimism.

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You'd sort of the numbers I'd
heard you kind of put to EV

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growth specifically was 25%,
which is, you know really strong

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by by any kind of count.
How do you sort of see the

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market tracking to those numbers
That was 24, there were numbers

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you'd put out prior.
So how are we kind of going on

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that front?
Yeah.

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So what's happened is, you know,
China's sort of surprising on

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the upside and they're bringing
in a, you know, a bunch of new

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subsidies which are really
supporting the market.

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And Q4 is typically, you know,
after the the autumn festival

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holidays are having it at the
moment typically when you know,

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sales are very strong.
So potentially we've got a

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little turning point in China
there coming up on what's

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already been a strong year.
You know, they recently just had

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to their first month of selling
a million new energy vehicles,

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you know, in one month.
But that's sort of, you know,

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caveated with what's happening
outside of of China.

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And there you've had a pullback
in subsidies in a number of

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European countries.
You've seen sales, you know,

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stagnate or sell growth stagnate
in a number of countries.

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But again, that's that's partly
due to model releases.

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So the US data, for example, for
EB growth, if you exclude Tesla,

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you know, it's up like 3040%.
I mean, it's it's crazy when you

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include Tesla who haven't
launched new models and haven't

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increased their production, then
yeah, it doesn't look as

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impressive because they're, you
know, half of that market.

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But yeah, the the underlying
fundamentals of the EB side look

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very good.
The other thing to understand is

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that, you know, we still got
this political end date in the

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twenty 30s of, you know, phasing
out pure internal combustion.

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And as long as those don't
change, then everybody has to

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still work towards having, you
know, a battery in every

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vehicle.
And it really is the only game

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in town when it comes to
technology.

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You know, you've got sort of
15,000,000 sales of of battery

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electric vehicles versus 20,010
thousand hydrogen vehicles.

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You know, there's there's
there's no, no challenge.

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There are.
Those end dates really, are

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they, are they really sort of,
you know, do do they still hold

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any real legitimacy?
Because I, I, I almost maybe I'd

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come at it from like a, a
cynical lens or just like, you

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know, the way humans behaviours
kind of, you know, someone

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pushes back a date and then kind
of every, everyone does in, in,

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in the corporate world and you
kind of keep the can down the

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road and buy a bit more time.
But you, you sort of just look

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good at the time and appease
the, you know, the ESG Frank at

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the time.
But from, from the political

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perspective of that, like, is
that 2030 day?

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Is that still real?
Is that like?

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Is that still legitimate?
I think you know, other than a

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few exception cases, you're
looking at 2035 or, or after

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that, you know, the, the UK have
have flip flopped a little bit

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on, on whether they're going for
2030 or 2035.

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But you know, isn't really a big
enough market to make a huge

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difference.
The, the change comes in that,

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you know, you, once you've
committed all of the producers

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that they have to change their
supply chain to this and that

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they have to produce these
vehicles.

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Well, you know, it doesn't make
any sense for them to run 2

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supply chains.
So really, as long as they're

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convinced to do it and they're
going to be pretty annoyed if he

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starts.
If you keep changing the targets

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and moving the goal posts, the,
the, the sort of openness, I

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guess the targets comes from how
you deal with hybrids.

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Because you know, you can just
put a tiny battery and have a

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mild hybrid.
You still get your internal

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combustion engine and you know
that in theory you could still

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meet some of these targets.
How much that happens is kind of

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dependent upon how the rest of
the supply chain builds out.

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Because at the moment, I think
people are realising that we

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said everybody needs to drive
hybrids or EVs, but that's

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creating loads of jobs in China
and it's getting rid of jobs in

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Germany and the US, which is
politically unacceptable.

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And so now it's sort of
realising actually, you know,

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maybe we want to slow it down a
little bit because we need, we

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need time to build these supply
chains.

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And it's very difficult to build
the supply chains at the moment

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because China's put the whole
world into oversupply for

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cathode but anode, for battery
cells, for all the manufacturing

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parts of the the industry.
So what, what's the kind of mood

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on on the point of hybrids at,
at a conference like that and

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the people you speak with quite
regularly?

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I mean, we can sort of feel it
anecdotally with perhaps more

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the, the fund manager side of
things.

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They're starting to pay a whole
lot more attention over 2024 to

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hybrids to, you know, E i.e.
VS all these sorts.

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And they will point to the
numbers ticking up in in China.

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How big a sort of, you know,
space in your mind and your

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thinking is, is hybrids taking
in in the conversation?

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So I think a lot of the OEMs are
sort of betting on hybrids

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because they make more money on
them and their shareholders like

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that.
And you know, they're trying to

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sort of push this narrative that
it's the best of both worlds.

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It's rubbish, it's complete BS.
They're the worst of both

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worlds.
You've got 2 supply chains,

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you're carrying around 2
technologies.

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You've got effectively the, the
great thing about, you know,

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battery electric vehicle is
you've only got this relatively

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simple technology and the
maintenance costs are very low.

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Now the OEMs, you know, they
make a lot of money on

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maintenance.
If you've got a, a plug in

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hybrid, you know, that might be
great, but in three or four

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years, you're going to have all
the maintenance costs and

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perhaps even higher than you
have an internal combustion

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vehicle.
And you'll probably realise that

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you're using the battery 90% of
the time.

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Why are you paying to service an
engine that you hardly ever use?

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And, you know, we talked to a
lot of mechanics who are dealing

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with these plug in hybrids.
And again, they're like, this is

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ridiculous.
The maintenance costs are

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astronomical, you know, and
these people are only really

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using the battery or they're
only using the engine and

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they're just dragging around a
battery that they don't

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particularly need.
So I think it's, it's a very

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stopgap technology and it's,
it's a bit, the analogy we

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always use is, you know,
steamships with sales when they

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first bought in steamships,
nobody trusts the technology.

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So everybody put sails on these
big ships.

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It's ridiculous to have an
engine and a sail so that, you

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know, that only lasted for a
couple of decades and then

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everybody, you know, trusted the
new technology.

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So I think that the, the plug in
hybrid side is I don't think

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that's the answer in the, in the
long term, it's a very interim

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measure.
And at some point they'll start

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getting a background.
Hear that mate?

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That is a it feels like a pretty
contrarian view.

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Plug in the the whole hybrid
kind of narrative is is rubbish.

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That is, that's just.
So what does?

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It kind of make you think of
mate.

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But I, yeah, I always feel like
the the hybrid story is like,

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you know what everything we've
been hearing.

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So it's it's real contrarian.
So it's, it's rubbish.

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But you know, you know what else
is a bit contrarian?

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Like on the, on the, on that
thought, I think it's it's

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quite.
Mate, just.

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Me quite contrarian for these
like, you know, junior mining

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companies to to go into
production without actually

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having to fork out a, you know,
a dollar off their own back to

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actually start producing.
That is, that's a that's a

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contrarian way to go about
producing anything, don't you

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think?
Mate I'm thinking it's it's

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contrarian right now but it
won't be for for too much longer

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will it?
It absolutely won't be because

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I've, I've I've seen the the
locks of MMS, mate MMS have have

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done that.
They are they've worn, they've

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worn the risk to get some
operations into production with

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these very unique risk sharing,
kind of like joint ventures,

223
00:11:33,360 --> 00:11:36,120
really, really innovative stuff.
But they're they're getting

224
00:11:36,120 --> 00:11:38,040
phone calls left, right and
centre for all sorts of jobs.

225
00:11:38,040 --> 00:11:40,600
It's not just the the JVS.
They're they're mining dirt for

226
00:11:40,640 --> 00:11:42,960
red 5I saw the other day.
It seems to be called vault.

227
00:11:42,960 --> 00:11:45,680
Oh God, I'm never going to get
used to that, but I am used to

228
00:11:45,840 --> 00:11:47,480
MMS.
Mate, mate, they do, they do a

229
00:11:48,640 --> 00:11:50,800
they do a whole bunch.
But look at this mine site

230
00:11:50,800 --> 00:11:52,920
support, contract mining
services, drill and bar

231
00:11:52,920 --> 00:11:56,400
services, dry and wet hire,
engineering support, workshop

232
00:11:56,400 --> 00:11:59,040
support.
I mean, if you don't want them

233
00:11:59,040 --> 00:12:02,840
to come in and take all the risk
and do the mining for you, just

234
00:12:02,840 --> 00:12:05,880
a small share in the upside and
look at all those other things.

235
00:12:05,880 --> 00:12:08,760
They can solve any problems you
got with your open cut mines.

236
00:12:08,760 --> 00:12:12,520
Just give the guys at MMSA call.
Be contrarian, be like MMS, give

237
00:12:12,520 --> 00:12:14,840
them a call.
If, if, if cost is the thing the

238
00:12:14,840 --> 00:12:16,720
consumer worries about
maintenance cost or whatever,

239
00:12:16,720 --> 00:12:20,880
then actually the upfront cost
is also a pretty big factor in

240
00:12:20,880 --> 00:12:22,920
that equation.
Because these, you know, plug,

241
00:12:22,920 --> 00:12:26,240
plug in hybrid, sort of, you
know, all, all in cost is, is

242
00:12:26,240 --> 00:12:28,800
super attractive on a, on a
relative basis to the, to the

243
00:12:28,800 --> 00:12:31,560
Bevs.
And and if I'm if, you know, you

244
00:12:31,560 --> 00:12:33,640
can't blame the consumer for
just like wanting something

245
00:12:33,640 --> 00:12:36,760
that's affordable.
Yeah.

246
00:12:37,080 --> 00:12:40,680
And this is where it's
interesting because you know,

247
00:12:40,720 --> 00:12:44,240
the, the market outside of China
is basically a couple of years

248
00:12:44,240 --> 00:12:47,440
behind if you know, if you look
at the models, if you look at

249
00:12:47,440 --> 00:12:51,600
the prices, etcetera.
So what we're seeing now in the

250
00:12:51,600 --> 00:12:54,360
Chinese market, you know, which
is very much, you know where

251
00:12:54,360 --> 00:12:57,200
we're getting to Europe and
where we're getting to North

252
00:12:57,200 --> 00:13:01,160
America is some of these
vehicles are now out competing

253
00:13:01,160 --> 00:13:04,440
on every metric.
You know, they out compete on

254
00:13:04,440 --> 00:13:10,040
sticker price, they out compete
on total cost of ownership, they

255
00:13:10,040 --> 00:13:12,840
help compete on, you know,
comfort, speed, things like

256
00:13:12,840 --> 00:13:14,320
this.
And in a market where you have a

257
00:13:14,320 --> 00:13:17,440
huge amount of of charging
infrastructure and less range

258
00:13:17,440 --> 00:13:21,320
anxiety.
So, you know, I think that will

259
00:13:21,320 --> 00:13:23,360
start happening in other
markets.

260
00:13:23,360 --> 00:13:26,800
It's going to be really specific
though, because you know, you'll

261
00:13:26,800 --> 00:13:30,160
have, you know, cities with good
charging infrastructure where,

262
00:13:30,320 --> 00:13:32,960
you know, an electric vehicle
just makes more sense where

263
00:13:32,960 --> 00:13:35,920
you'd have to make a conscious
decision to go for internal

264
00:13:35,920 --> 00:13:38,440
combustion.
Now that's not going to happen

265
00:13:38,720 --> 00:13:43,520
in rural Australia or rural US.
You know overnight it'll, it'll

266
00:13:43,520 --> 00:13:46,520
take another 10 years for that
to make more sense because of

267
00:13:46,520 --> 00:13:48,400
the ranges, because of the
charging infrastructure

268
00:13:48,400 --> 00:13:50,760
etcetera.
But you will start getting these

269
00:13:50,760 --> 00:13:52,960
tipping points in different
markets.

270
00:13:53,880 --> 00:13:57,160
What are the, the kind of
implications on, on tariffs,

271
00:13:57,160 --> 00:13:59,960
because they make up a, a pretty
substantial part of the costs

272
00:13:59,960 --> 00:14:05,320
in, in the US, in the EU, in
Australia, I'm sure in time even

273
00:14:05,920 --> 00:14:07,240
even more.
And that's, you know, part of

274
00:14:07,240 --> 00:14:11,320
the real, the real factor that
makes these Chinese EVs, which

275
00:14:11,320 --> 00:14:14,800
would otherwise be a whole lot
more competitive, somewhat

276
00:14:15,080 --> 00:14:18,360
unattractive.
I mean, can you see them going

277
00:14:18,360 --> 00:14:21,520
away anytime soon?
Is that like a a block in the

278
00:14:21,520 --> 00:14:24,520
road that's going to try and
help the the legacy EU makers

279
00:14:24,520 --> 00:14:28,360
for for quite a while to come?
Yeah, and I mean, the, the

280
00:14:28,360 --> 00:14:32,120
automotive sector has always
been highly protectionist, so

281
00:14:32,120 --> 00:14:34,360
it's no surprise.
And it's not just the EU.

282
00:14:34,480 --> 00:14:40,440
In the US, you know, Canada,
Turkey, India, Thailand, they're

283
00:14:40,440 --> 00:14:43,600
all putting restrictions on, on
Chinese EVs.

284
00:14:45,360 --> 00:14:48,520
The interesting thing is, you
know, in Europe, if you put a

285
00:14:48,520 --> 00:14:52,320
2030% tariff on EVs, you know,
we didn't, we didn't have the

286
00:14:52,320 --> 00:14:54,920
100% tariffs here, but we were
around that level.

287
00:14:55,640 --> 00:14:58,360
The Chinese can swallow that
because they're already selling

288
00:14:58,360 --> 00:15:02,360
their vehicles at a 40% premium
to their domestic sales price.

289
00:15:03,480 --> 00:15:04,720
That's how much cheaper they
are.

290
00:15:05,480 --> 00:15:08,440
Now what will happen is you'll
just get more Chinese companies

291
00:15:08,440 --> 00:15:12,400
investing in Europe, investing
in India, investing in Turkey,

292
00:15:12,720 --> 00:15:15,840
and you'll get more domestic
production, which is what the

293
00:15:15,840 --> 00:15:18,240
government's really want.
You know, they want to keep

294
00:15:18,240 --> 00:15:20,840
their domestic industries and
those industries will just

295
00:15:20,840 --> 00:15:23,040
become slightly more, you know,
Chinese.

296
00:15:24,120 --> 00:15:27,040
But that's exactly what happened
with the Japanese and S Koreans,

297
00:15:27,400 --> 00:15:29,360
you know, over the past few
decades.

298
00:15:29,360 --> 00:15:35,120
So it's a well known playbook.
So, so on a slightly different

299
00:15:35,120 --> 00:15:38,600
tack, I mean, the, the, the
wording that we've been hearing

300
00:15:38,600 --> 00:15:41,680
a lot lately is that the writing
is in the wall for these EU car

301
00:15:41,680 --> 00:15:43,720
makers.
I guess the same kind of goes

302
00:15:43,720 --> 00:15:46,240
for the battery makers that come
out of Europe.

303
00:15:46,240 --> 00:15:49,440
And you know, you can sort of
say the same for the US.

304
00:15:49,440 --> 00:15:52,560
If you were sort of in a, in a
different position, say you're,

305
00:15:52,920 --> 00:15:55,840
you know, working with the EU,
what, what are you going to do

306
00:15:55,840 --> 00:15:59,760
to, to make the West more
competitive against the, the

307
00:15:59,760 --> 00:16:02,280
Chinese makers?
Or do you, do you see that as a

308
00:16:02,320 --> 00:16:04,400
sort of matter of course that
they're going to be the dominant

309
00:16:04,880 --> 00:16:08,240
car makers for the world in 1020
years time?

310
00:16:09,120 --> 00:16:12,680
Yes, I mean the, the Chinese
have overtaken in terms of

311
00:16:13,120 --> 00:16:17,200
technology, you know,
commercialization and

312
00:16:17,200 --> 00:16:19,640
commercialization of the need of
innovation.

313
00:16:19,640 --> 00:16:24,120
Basically there needs to be, and
I think the EU, you know,

314
00:16:24,120 --> 00:16:26,280
manufacturers in the EU itself
recognise this.

315
00:16:26,280 --> 00:16:29,440
We saw a big, you know, drunky
report about what the EU

316
00:16:29,440 --> 00:16:32,400
industry needs to do.
It needs to increase investment,

317
00:16:32,400 --> 00:16:36,200
it needs to increase
commercialization because at the

318
00:16:36,200 --> 00:16:38,440
moment, you know, China are
rolling out new industries while

319
00:16:38,440 --> 00:16:40,400
we're still, you know, looking
at the drawing board.

320
00:16:41,920 --> 00:16:44,320
So there needs to be an
acceleration and there needs to

321
00:16:44,320 --> 00:16:47,000
be a slight change in, you know,
how often you do vehicle

322
00:16:47,000 --> 00:16:49,600
refreshes, how you bring new
technologies to the market.

323
00:16:52,040 --> 00:16:54,920
When it comes to competing with
China, I mean, it's going to be

324
00:16:54,920 --> 00:16:57,680
very difficult because they've
got such an advantage now.

325
00:16:59,280 --> 00:17:01,760
And you look at the number of
researchers that companies like

326
00:17:02,640 --> 00:17:06,079
PYD and CATL have and you know,
it's in the thousands and it's,

327
00:17:06,560 --> 00:17:08,359
it's very difficult to compete
with that.

328
00:17:08,359 --> 00:17:12,480
You know, if you've got 70% of
the market and, you know, you're

329
00:17:12,480 --> 00:17:16,400
putting, you know, 10% in your
Rd budget, nobody else in the

330
00:17:16,400 --> 00:17:20,560
industry can compete with that.
So yeah, it's going to be very

331
00:17:20,560 --> 00:17:22,680
difficult to catch up.
And I think the the answer comes

332
00:17:22,680 --> 00:17:24,400
in, you know, a lot more
collaboration.

333
00:17:24,400 --> 00:17:27,200
And again, that that's nothing
new to the automotive industry.

334
00:17:27,200 --> 00:17:29,840
It's full of collaborations
between, you know, sorts of

335
00:17:29,840 --> 00:17:34,960
announcements with GM and
Hyundai and Ford and BMW.

336
00:17:34,960 --> 00:17:38,600
And, you know, there's lots and
lots of of, of collaborations

337
00:17:38,600 --> 00:17:40,800
like that.
Where, where do you sit on the

338
00:17:40,800 --> 00:17:42,760
kind of the role from government
in all in in all of this?

339
00:17:42,760 --> 00:17:46,880
Andy, I'm kind of curious too.
I mean, are you kind of yeah.

340
00:17:47,560 --> 00:17:52,360
I mean, you need government
support outside of, you know, if

341
00:17:53,800 --> 00:17:57,120
you're going to compete with
China because effectively, you

342
00:17:57,120 --> 00:18:00,280
know, China got government
support to build out these

343
00:18:00,280 --> 00:18:02,720
industries.
Now they're in oversupply.

344
00:18:03,240 --> 00:18:06,440
If you've got a factory that
exists in a market that's in

345
00:18:06,440 --> 00:18:10,240
oversupply, you produce a cost
to keep the factory open.

346
00:18:11,400 --> 00:18:13,240
OK, great.
That's just a simple economics.

347
00:18:13,240 --> 00:18:16,280
China's got its comparative
advantage, but if you then want

348
00:18:16,280 --> 00:18:20,000
that industry in Europe or North
America, you say, well, hang on,

349
00:18:20,000 --> 00:18:21,920
it needs to make money because
otherwise there's no point

350
00:18:21,920 --> 00:18:24,840
investing in it.
Well, it can't make money just

351
00:18:24,840 --> 00:18:27,840
from market forces because it
can't compete with the existing

352
00:18:27,840 --> 00:18:30,600
oversupply industry.
So you need those barriers there

353
00:18:30,600 --> 00:18:33,200
to support it.
And that's what we've seen in

354
00:18:33,200 --> 00:18:35,600
the US with the inflation
reduction out, You've seen that

355
00:18:35,600 --> 00:18:39,960
copied in in Canada, you know,
and, and in Europe as well to A,

356
00:18:39,960 --> 00:18:43,880
to a lesser extent, there really
is that government.

357
00:18:43,880 --> 00:18:46,960
Wrong.
Yeah, I, I always feel a bit, if

358
00:18:47,880 --> 00:18:52,600
I'm remembering economics class
correctly, it was sort of like,

359
00:18:54,280 --> 00:18:56,960
it's pretty rare that you have,
you know, these, these

360
00:18:56,960 --> 00:19:01,080
protectionist policies actually
result in like a durable

361
00:19:01,080 --> 00:19:03,960
competitive advantage over time.
You often just end up, you know,

362
00:19:04,600 --> 00:19:06,880
infinitely subsidising an
otherwise uncompetitive

363
00:19:06,880 --> 00:19:09,040
industry.
But I wonder if that's kind of

364
00:19:09,040 --> 00:19:11,360
what the West has resolved to
do.

365
00:19:13,160 --> 00:19:15,680
Pretty much.
But you know, you, you have to

366
00:19:15,680 --> 00:19:22,040
remember there's a, it's a
failure of the market to address

367
00:19:22,720 --> 00:19:27,600
the pollution caused from the
transportation industry, which

368
00:19:27,600 --> 00:19:32,880
is being addressed by another,
you know, market manipulation by

369
00:19:32,880 --> 00:19:36,400
having this political target,
it's not necessarily consumer

370
00:19:36,400 --> 00:19:40,440
choice as a political mandate
to, to end internal combustion.

371
00:19:41,400 --> 00:19:44,480
So it is something, you know,
where governments are involved

372
00:19:44,680 --> 00:19:47,720
in and the market hasn't been
functioning properly in the

373
00:19:47,720 --> 00:19:51,400
first place.
Yeah, Yeah, Yeah.

374
00:19:51,400 --> 00:19:53,920
I guess that's a fairpoint in
some ways the inability of price

375
00:19:54,400 --> 00:19:59,440
externalities is, is is in some
part to explains the

376
00:19:59,440 --> 00:20:01,040
predicament.
But I took it.

377
00:20:01,040 --> 00:20:04,440
I took it nervous about the, the
like the sheer quantum of kind

378
00:20:04,440 --> 00:20:07,640
of of of money that's talked
about in all of these different

379
00:20:07,640 --> 00:20:11,080
acts.
And like, you know, what one

380
00:20:11,080 --> 00:20:13,280
party is like, you know,
worrying about what it, what it,

381
00:20:14,120 --> 00:20:17,240
you know, what it, what it means
for the long term in a lot of

382
00:20:17,240 --> 00:20:21,200
these countries where like we've
never been more worried about

383
00:20:21,200 --> 00:20:24,040
the, the size of government debt
and the ability to service that

384
00:20:24,040 --> 00:20:26,440
over time.
And kind of, you know, overlay

385
00:20:26,440 --> 00:20:30,480
that with with a workforce that
gets kind of like he's not, not

386
00:20:30,480 --> 00:20:33,880
able to keep in touch with the
phenomenal like productivity

387
00:20:33,880 --> 00:20:36,480
gains that that China has had in
its manufacturing sector as

388
00:20:36,480 --> 00:20:39,560
well.
But then, you know, you look at

389
00:20:39,560 --> 00:20:42,560
what happened in other
industries, you know, China

390
00:20:42,560 --> 00:20:46,800
through the 2000s, you know,
went from, you know, a very low

391
00:20:46,800 --> 00:20:50,160
percentage to the vast majority
of steel production, you know,

392
00:20:50,160 --> 00:20:54,360
likewise in solar panels and,
you know, floods these, the

393
00:20:54,360 --> 00:20:56,560
global markets, it pushed them
to oversupply.

394
00:20:56,560 --> 00:20:59,520
Nobody else builds anything.
And then, you know, then you

395
00:20:59,520 --> 00:21:02,040
look back ten years later.
Hang on, China's the only game

396
00:21:02,040 --> 00:21:05,120
in town.
Yeah, because, you know, they

397
00:21:05,200 --> 00:21:07,080
they have this huge race to
scale there.

398
00:21:07,360 --> 00:21:09,160
And it's not necessarily like,
you know, some sort of

399
00:21:09,160 --> 00:21:11,880
diabolical plan.
It's just, you know, that

400
00:21:11,880 --> 00:21:13,880
economy is growing so quick.
And people say, well, you know,

401
00:21:14,480 --> 00:21:18,280
if I build something and I'm
better than the next guy, then

402
00:21:18,280 --> 00:21:22,640
then I'll survive.
So Andy, I'm a a pretty

403
00:21:22,640 --> 00:21:25,760
prominent example in the past
couple weeks is North fault,

404
00:21:25,920 --> 00:21:28,040
heaps of articles about the kind
of troubles they're facing the

405
00:21:28,040 --> 00:21:31,440
Swedish government saying
they're not going to step in and

406
00:21:31,440 --> 00:21:32,920
help them.
Where do you think kind of

407
00:21:32,920 --> 00:21:35,800
things went wrong there?
Because it didn't seem to be by

408
00:21:35,800 --> 00:21:38,160
a shortage of capital or
investment on that front.

409
00:21:40,040 --> 00:21:43,120
It's just the difficulty in, you
know, a new manufacturer coming

410
00:21:43,120 --> 00:21:45,160
in and ramping up battery
production.

411
00:21:45,360 --> 00:21:47,600
You know, it's not an easy thing
to do.

412
00:21:48,520 --> 00:21:51,120
The North fault look a little
bit bad at the moment just

413
00:21:51,120 --> 00:21:54,720
because, you know, a lot of
other companies have got over

414
00:21:54,720 --> 00:21:56,840
these hurdles.
But you know, all the other

415
00:21:56,840 --> 00:21:59,600
battery manufacturers had
struggles ramping up in the

416
00:21:59,600 --> 00:22:01,480
past.
Now Tesla are doing it

417
00:22:01,480 --> 00:22:04,280
themselves.
They all are also struggling to

418
00:22:04,280 --> 00:22:08,120
ramp up that production.
And that's the real sort of

419
00:22:08,120 --> 00:22:09,720
challenge that they have because
remember, you know, this is

420
00:22:09,720 --> 00:22:14,080
still their first major plaque,
you know, CATR on, you know,

421
00:22:14,080 --> 00:22:21,000
BYDS, Goshen, SK, LG, Samsung,
you know, these guys are all,

422
00:22:21,000 --> 00:22:23,240
you know, done 5 that there's 5
or 6 times before they've

423
00:22:23,240 --> 00:22:24,600
learned a lot of lessons from
that.

424
00:22:25,200 --> 00:22:29,040
So yeah, Norfolk have to to get
the commercialization right.

425
00:22:30,240 --> 00:22:33,760
And, you know, that's it's a bit
more of an industry struggle

426
00:22:33,840 --> 00:22:35,760
than necessarily a company
struggle.

427
00:22:38,280 --> 00:22:42,000
So if we kind of zoom out a bit
and look at the, the entire

428
00:22:42,000 --> 00:22:45,520
supply chain, obviously there
was heaps going on with lithium

429
00:22:45,520 --> 00:22:48,440
in the past week or so.
This this news coming out of

430
00:22:48,640 --> 00:22:52,360
cattle which really lit a fire
under under the prices of all

431
00:22:52,360 --> 00:22:55,200
the stocks as well as the the
futures do.

432
00:22:55,280 --> 00:22:58,360
Do you kind of say a bit more?
Is that the the 1st of a a few

433
00:22:58,360 --> 00:23:01,040
bits to come these kind of
adjustments as cattle call it I.

434
00:23:04,560 --> 00:23:07,280
Mean it was it was an
interesting announcement, but

435
00:23:07,280 --> 00:23:10,640
not unexpected just because, you
know, we we know those mines

436
00:23:10,640 --> 00:23:17,880
were we're underwater at today's
pricing it it makes sense, you

437
00:23:17,880 --> 00:23:21,720
know, the production cuts that
we've been seeing, you know, in

438
00:23:21,720 --> 00:23:24,560
a market that's still seeing,
you know, double digit demand

439
00:23:24,560 --> 00:23:28,680
growth, yeah, just speeds up the
rebalancing.

440
00:23:29,160 --> 00:23:33,280
But yeah, we did a lot of work
on on sauce recently and you

441
00:23:33,280 --> 00:23:38,040
know that the pedalite side of
the market was just reviewed.

442
00:23:39,600 --> 00:23:41,440
It was never going to be
sustainable.

443
00:23:41,880 --> 00:23:44,640
And a lot of the forecasts out
there, you know, showing it

444
00:23:44,640 --> 00:23:48,000
growing 50% year on year
production, you're like, there's

445
00:23:48,000 --> 00:23:49,960
no way, there's no way that's
happening.

446
00:23:50,000 --> 00:23:52,440
Why would anybody do that?
You know, if you, if you're a

447
00:23:52,440 --> 00:23:55,960
Chinese refiner and you've got a
choice and they do have a choice

448
00:23:56,600 --> 00:23:59,160
as to, at the moment as to
whether they're buying, you

449
00:23:59,160 --> 00:24:03,400
know, Aussie spodrimin or some
crappy lipidolite, which is, you

450
00:24:03,400 --> 00:24:07,440
know, more expensive to process.
And you, why would you choose

451
00:24:07,440 --> 00:24:09,440
the crap stuff to put in your
refinery?

452
00:24:09,920 --> 00:24:13,960
It doesn't make any sense.
It's it's kind of interesting

453
00:24:13,960 --> 00:24:16,760
what you say there about these
guys running underwater.

454
00:24:16,760 --> 00:24:20,240
I think a lot of people have the
perception that the Chinese

455
00:24:20,240 --> 00:24:22,320
don't necessarily care.
And in cattle's case, it might

456
00:24:22,320 --> 00:24:26,040
be just just one part of the
whole kind of supply chain as

457
00:24:26,040 --> 00:24:28,600
they go through to making that
the battery itself.

458
00:24:28,960 --> 00:24:31,160
What, what have you kind of
picked up?

459
00:24:31,160 --> 00:24:33,200
Do you think that perception is
kind of wildly wrong?

460
00:24:33,400 --> 00:24:36,080
And these guys care, you know,
month on month, how much money

461
00:24:36,360 --> 00:24:38,680
they're making or where?
Where do you think they actually

462
00:24:38,680 --> 00:24:41,400
stand on profitability in the
shorter term?

463
00:24:42,840 --> 00:24:49,080
So look, I mean, with any supply
chain, particularly if you own

464
00:24:49,080 --> 00:24:52,520
it, you know, you've got to
consider the jobs side of things

465
00:24:52,520 --> 00:24:54,200
as well.
You know, shutting down an

466
00:24:54,200 --> 00:24:56,440
asset's an incredibly hard
decision to make.

467
00:24:57,000 --> 00:24:59,920
And it's not just a financial
one, it's a political one as

468
00:24:59,920 --> 00:25:03,040
well, because you know, you've
committed to create these jobs

469
00:25:03,040 --> 00:25:05,400
in an area and you know, you're
going to push these jobs on to

470
00:25:05,400 --> 00:25:08,360
the the government basically to
to look after.

471
00:25:09,120 --> 00:25:13,280
So, you know, there is that, you
know, nobody you know, loses

472
00:25:13,280 --> 00:25:16,680
money for a month and and shuts
down, you know, a huge sort of

473
00:25:16,680 --> 00:25:20,400
CapEx intensive industry.
Are they going to operate

474
00:25:20,400 --> 00:25:23,440
underwater forever?
People generally operate

475
00:25:23,440 --> 00:25:26,720
underwater for longer than they
should, but it's not a forever

476
00:25:27,040 --> 00:25:28,760
issue.
The other thing again, you know,

477
00:25:28,840 --> 00:25:31,560
you have to remember we're in
this market dynamic where the

478
00:25:31,560 --> 00:25:35,360
market is constantly growing and
you know, that means you

479
00:25:35,360 --> 00:25:37,160
constantly need to invest.
And what's happening at the

480
00:25:37,160 --> 00:25:39,560
moment is you're just not
getting that investment going

481
00:25:39,560 --> 00:25:41,920
into the industry.
And that happens in China as

482
00:25:41,920 --> 00:25:45,080
well.
So, you know, the the closure or

483
00:25:45,080 --> 00:25:47,600
the temporary suspension of
operations isn't really the big

484
00:25:47,600 --> 00:25:50,040
thing here.
It's that they're not investing

485
00:25:50,040 --> 00:25:53,920
in the next generation of lipid
like operations at the moment.

486
00:25:54,600 --> 00:25:59,200
You know, you're not going to
see China go from 10 to 15 to

487
00:25:59,200 --> 00:26:02,440
25% of the world's sort of, you
know, lithium extraction.

488
00:26:05,080 --> 00:26:08,680
So, So what about the, the
African sort of supply that was

489
00:26:08,680 --> 00:26:12,600
the, the, the big elephant in
the room that we didn't, we

490
00:26:12,600 --> 00:26:17,640
didn't really see coming until,
yes, late 23, early 2024.

491
00:26:17,640 --> 00:26:20,520
What, what's the kind of view on
how, you know, we, we'd heard

492
00:26:20,520 --> 00:26:22,680
it's potentially quite, quite
sticky.

493
00:26:22,960 --> 00:26:24,800
How do you kind of see it
sitting in the cost curve?

494
00:26:24,800 --> 00:26:27,480
It's hard to to get decent
amount of colour on it.

495
00:26:28,720 --> 00:26:32,560
So I mean, for a start, it's
just great for you to sort of

496
00:26:32,600 --> 00:26:35,160
the stages at the top of the
cost curve, right when when

497
00:26:35,160 --> 00:26:40,280
prices are incredibly high.
In 22, we saw a huge amount of

498
00:26:40,280 --> 00:26:44,560
supply, you know, from artisanal
sources, from tailings projects,

499
00:26:45,240 --> 00:26:48,240
really low grade materials
coming into the industry.

500
00:26:48,560 --> 00:26:51,120
And what what we sort of figured
out from that is, you know, over

501
00:26:51,120 --> 00:26:56,240
about 2025 thousand, you're
going to get supply, you know,

502
00:26:56,240 --> 00:26:59,760
within 6 to 12 months coming
into the industry.

503
00:26:59,920 --> 00:27:02,520
And as long as you've got
refining capacity that will

504
00:27:02,520 --> 00:27:05,840
balance the market and that sort
of probably puts a long term

505
00:27:05,840 --> 00:27:09,120
limit on pricing.
Then you sort of go down a step

506
00:27:09,120 --> 00:27:11,440
and you've got the sort of
mechanised lipid light

507
00:27:11,440 --> 00:27:16,120
operations in China which are
operating around $13,000 per

508
00:27:16,120 --> 00:27:20,800
tonne.
So and you know that that's

509
00:27:20,800 --> 00:27:24,680
probably the type of stuff that
needs to be incentivized in the

510
00:27:24,680 --> 00:27:28,560
long term and that gives you a
long term price closer to to

511
00:27:28,560 --> 00:27:31,200
sort of 20,000 for, for
carbonate.

512
00:27:32,200 --> 00:27:36,560
Now what we also had and as you
alluded to was a lot of this

513
00:27:36,560 --> 00:27:39,560
African supply coming on which
is mechanised and you know

514
00:27:39,560 --> 00:27:42,760
particularly a lot of the
Zimbabwe operations which have

515
00:27:42,760 --> 00:27:47,080
come on and expansions there,
which again you know surprised

516
00:27:47,080 --> 00:27:55,720
on the upside at the moment.
Those again, I'd say they're

517
00:27:55,720 --> 00:28:01,040
kind of a swing producer at the
moment, not on a cost basis, but

518
00:28:01,560 --> 00:28:04,160
in terms of, you know, how much
are they going to expand in the

519
00:28:04,160 --> 00:28:07,480
next year in the current price
environment because even those

520
00:28:07,480 --> 00:28:11,480
operations are not making a huge
amount of money in the current

521
00:28:11,480 --> 00:28:13,120
and price environment.
So again, you're going to see

522
00:28:13,120 --> 00:28:17,880
that investment continue.
It's it's a real difficult one

523
00:28:17,880 --> 00:28:19,960
to track.
You know, we've had people down

524
00:28:19,960 --> 00:28:27,280
there recently and I thought,
sure, we know the answer, even

525
00:28:27,280 --> 00:28:28,960
having visited some of the
operations.

526
00:28:28,960 --> 00:28:33,240
It's an interesting kind of
yeah, equation for a lot of

527
00:28:33,240 --> 00:28:36,040
these these miners that might
have like somewhat marginal

528
00:28:36,040 --> 00:28:40,200
economics at the moment, because
you're often faced with the

529
00:28:40,200 --> 00:28:43,840
opportunity to to invest more
capital and and actually lower

530
00:28:43,840 --> 00:28:46,280
your costs as a result of that,
which might give you a more

531
00:28:46,280 --> 00:28:49,280
durable competitive position.
And sort of depending how deep

532
00:28:49,280 --> 00:28:51,440
your your balance sheet and
capability of fund fund that is.

533
00:28:51,440 --> 00:28:54,760
But then the process, maybe you
actually kind of like, you know,

534
00:28:54,760 --> 00:28:59,200
lowering the whole cost curve,
But I'd be I, I do you think we

535
00:28:59,200 --> 00:29:02,640
make the mistake of just kind of
grouping these buckets of

536
00:29:02,640 --> 00:29:05,600
production like, you know, a bit
of light in China to kind of

537
00:29:05,600 --> 00:29:08,360
group it and we think it's all
the same cost, but there's

538
00:29:08,520 --> 00:29:12,280
there's a lot more nuance and
kind of heterogeneity to to the

539
00:29:12,280 --> 00:29:16,640
reality you.
Know, I mean, there is, but you

540
00:29:16,640 --> 00:29:20,800
know, it's just, it's quite
complicated talk through 100

541
00:29:20,800 --> 00:29:23,440
producing assets, you know, we'd
run out of time quite quickly.

542
00:29:25,400 --> 00:29:27,920
But that said, you know, one of
the predictions we made at the

543
00:29:27,920 --> 00:29:31,440
beginning of the year was that,
you know, the prices come down

544
00:29:31,440 --> 00:29:35,840
to a level where a lot of the
sort of less mechanised supply

545
00:29:35,840 --> 00:29:37,800
in China wouldn't come back
after the new year.

546
00:29:38,080 --> 00:29:41,160
A lot of the, the, the, the low
grade material coming from

547
00:29:41,160 --> 00:29:44,200
Africa would drop out the market
because it needed prices, you

548
00:29:44,200 --> 00:29:47,200
know, over $25,000 a tonne on
the chemical basis.

549
00:29:47,560 --> 00:29:48,800
And that's exactly what
happened.

550
00:29:49,400 --> 00:29:51,640
You know, those operations
dropped out the market because

551
00:29:51,640 --> 00:29:53,960
they didn't make any money
anymore.

552
00:29:55,520 --> 00:29:59,080
That's now happening with the
Lipidlite side of the operation.

553
00:29:59,080 --> 00:30:01,840
You know, the market in China,
you know, they're the cuts that

554
00:30:01,840 --> 00:30:04,320
we're seeing.
So, so it can be interesting to

555
00:30:04,320 --> 00:30:07,800
look at that.
I think once you get sort of

556
00:30:07,800 --> 00:30:11,640
further down the supply chain,
then you know, probably you do

557
00:30:11,640 --> 00:30:14,680
want to start looking at some of
these swing assets and swing

558
00:30:14,680 --> 00:30:17,680
investments on a, on a sort of
named basis.

559
00:30:17,880 --> 00:30:21,680
But yeah, I think, I think it's
more just for, for, for ease of

560
00:30:21,680 --> 00:30:25,400
reference that we, we, we talk
about these, these sort of big

561
00:30:25,400 --> 00:30:30,080
chunks of the, the supply chain.
How do you kind of think about

562
00:30:30,080 --> 00:30:34,040
the, the Brine projects lately?
I mean, let's, let's take sort

563
00:30:34,040 --> 00:30:36,960
of Chile and Argentina
politically, you know, there's

564
00:30:36,960 --> 00:30:40,240
been quite a bit going on in the
in the past couple years and

565
00:30:40,240 --> 00:30:43,520
there's a pretty decent range
where they kind of sit on the

566
00:30:43,520 --> 00:30:44,960
cost curve.
And you've also got the, the

567
00:30:44,960 --> 00:30:48,040
risk of their, their licences,
you know, sort of pulling up

568
00:30:48,040 --> 00:30:51,040
stumps in the not too distant
future.

569
00:30:51,320 --> 00:30:54,160
When you sort of speak to speak
to clients or speak to people in

570
00:30:54,160 --> 00:30:57,360
the industry, are you kind of
more bearish on these parts of

571
00:30:57,360 --> 00:30:59,000
the world, more bullish?
How do you think about it?

572
00:31:02,480 --> 00:31:05,640
I think as a, as a company was
still bullish on, on a lot of

573
00:31:05,640 --> 00:31:11,760
the Argentinian projects.
Chile's a lot more difficult.

574
00:31:11,800 --> 00:31:14,800
You know, you've got, you've got
questions there, as you know, is

575
00:31:14,800 --> 00:31:19,080
this an industry that's being
run to make money and return

576
00:31:19,080 --> 00:31:21,640
shareholder value?
Is it an industry run to raise

577
00:31:21,640 --> 00:31:24,880
tax for the government?
And you know, more and more it's

578
00:31:24,880 --> 00:31:29,080
the, the answers, the latter
with Argentina, it's a little

579
00:31:29,080 --> 00:31:32,880
bit more interesting.
And you know, I think we're

580
00:31:32,880 --> 00:31:36,560
still relatively bullish on on
most of the names there who

581
00:31:36,560 --> 00:31:39,800
over, you know, within the next
couple of years of production.

582
00:31:40,800 --> 00:31:45,440
I guess that sort of brings us
on to you know, dearly and how

583
00:31:45,440 --> 00:31:48,480
those technologies are
commercialised and implemented.

584
00:31:49,160 --> 00:31:51,920
The story hasn't changed there,
but you know, there's still

585
00:31:51,920 --> 00:31:57,400
technology risk, there's still a
reasonable amount of uncertainty

586
00:31:57,400 --> 00:32:04,080
as to how much these processes
will be able to produce on a

587
00:32:04,080 --> 00:32:07,480
consistent basis to meet
qualification for the for

588
00:32:07,480 --> 00:32:10,720
battery grade material.
And you know, if you have to

589
00:32:10,720 --> 00:32:17,280
reduce your your output from 20
to 15,000 tonnes to make sure

590
00:32:17,280 --> 00:32:20,640
you've got battery spec
material, well, you know, that

591
00:32:20,640 --> 00:32:22,880
increases your production costs
by a huge amount.

592
00:32:23,760 --> 00:32:26,520
So you know, there are a few
issues still there in the

593
00:32:26,520 --> 00:32:29,640
market.
If the technologies work, then

594
00:32:29,680 --> 00:32:34,120
you know, they look like some
pretty good, you know, Q2

595
00:32:34,680 --> 00:32:36,240
players on the on the cost
curve.

596
00:32:37,080 --> 00:32:40,360
Where is that technology?
Yeah.

597
00:32:41,360 --> 00:32:44,640
It's a whole basket of different
technologies, but you know, we

598
00:32:44,640 --> 00:32:48,800
do have a lot more demonstration
plants, a lot more pilot plants

599
00:32:48,800 --> 00:32:51,800
out there.
And you know, we've, we've got

600
00:32:51,800 --> 00:32:53,800
things, you know, coming on and
scale as well.

601
00:32:53,800 --> 00:32:57,400
So what one thing I would say
there's there's no one winning

602
00:32:57,920 --> 00:33:01,560
DLE technology.
You know, different technologies

603
00:33:01,560 --> 00:33:05,640
work on different brands.
And you know, sometimes it's not

604
00:33:05,640 --> 00:33:08,520
even the, you know, the, the
parts per million of brine.

605
00:33:08,520 --> 00:33:11,240
That's the important thing.
It's the spend suspended solid.

606
00:33:11,240 --> 00:33:12,720
It's all the other stuff that's
in there.

607
00:33:13,240 --> 00:33:17,080
And again, that equation changes
by by Brian, it changes by

608
00:33:17,080 --> 00:33:19,560
technology, it changes by
temperature and and lots of

609
00:33:19,560 --> 00:33:22,480
different things.
Is that another one where you

610
00:33:22,480 --> 00:33:24,920
see China sort of steaming
ahead?

611
00:33:24,920 --> 00:33:26,280
They're the ones you got a bit
more hope for?

612
00:33:26,280 --> 00:33:30,520
Is it a bit more spread across,
you know, companies, countries?

613
00:33:32,080 --> 00:33:34,880
I'd say that one's pretty much
spread spread around, you know,

614
00:33:34,960 --> 00:33:38,280
the the technology seem to, you
know, come from from many, many

615
00:33:38,280 --> 00:33:43,160
different countries, you know,
whether that's the US, New

616
00:33:43,160 --> 00:33:47,120
Zealand, Israel, you know, the
China's players, players all

617
00:33:47,120 --> 00:33:50,560
over the shop in terms of dearly
technologies.

618
00:33:51,120 --> 00:33:56,280
So and also, you know, it opens
up a lot more, you know, for

619
00:33:56,280 --> 00:33:59,240
brines because you've got
geothermal brines in and

620
00:33:59,240 --> 00:34:01,880
Oldfield brines in many, many
countries.

621
00:34:02,520 --> 00:34:08,000
So, you know, I think the, those
sort of brine operations, the

622
00:34:08,000 --> 00:34:10,760
smaller sort of geothermal brine
and oilfield brine operations,

623
00:34:11,080 --> 00:34:14,400
they could play quite a big
significant role in the future.

624
00:34:15,719 --> 00:34:19,719
They're not going to change the
sort of market dynamics in the

625
00:34:19,719 --> 00:34:22,880
next 5 or so years.
You know, there's, but once

626
00:34:22,880 --> 00:34:25,480
you've sort of proven these
things, then potentially that

627
00:34:25,480 --> 00:34:28,920
opens up a whole new game for
the lithium supply.

628
00:34:28,920 --> 00:34:32,080
And we'll have to see then, you
know, how that competes with

629
00:34:32,080 --> 00:34:36,199
with Hard Rock sources.
Yeah, I mean, there's, there's

630
00:34:36,199 --> 00:34:39,360
one other sort of part of the
world I'm keen to get your take

631
00:34:39,360 --> 00:34:42,040
on that's, that's production
from, from Europe itself.

632
00:34:42,040 --> 00:34:45,800
So obviously you're based in
Europe and yada, is the, the

633
00:34:45,800 --> 00:34:48,760
kind of project Rios project
that comes to mind.

634
00:34:48,760 --> 00:34:52,960
But I'd I'd love you to kind of
tie in with that the, the kind

635
00:34:52,960 --> 00:34:56,840
of consensus opinion around the
the EU Critical Raw Materials

636
00:34:56,840 --> 00:34:59,600
Act.
I mean, we started the podcast,

637
00:34:59,600 --> 00:35:03,120
I think you know, almost 18
months ago or so and it feels

638
00:35:03,120 --> 00:35:06,760
like we've been hearing non stop
about it, but not an awful lot

639
00:35:06,760 --> 00:35:08,720
has actually happened on that
front.

640
00:35:08,720 --> 00:35:12,000
What's the kind of, you know,
sentiment towards action being

641
00:35:12,000 --> 00:35:16,080
taken from from that and the the
sentiment towards projects being

642
00:35:16,080 --> 00:35:19,760
mined within Europe?
Yeah.

643
00:35:19,840 --> 00:35:25,600
I mean, you know, Europe just
geologically doesn't have a huge

644
00:35:25,600 --> 00:35:28,840
number of good lithium assets.
You know, they tend to be quite

645
00:35:28,840 --> 00:35:31,440
small.
They're in a high cost location.

646
00:35:32,000 --> 00:35:34,280
There's a huge amount of
Nimbyism and, and legal

647
00:35:34,280 --> 00:35:37,320
challenges in Europe, you know,
for not just for extractive

648
00:35:37,320 --> 00:35:40,360
industries, but for any kind of,
you know, factory and, and part

649
00:35:40,360 --> 00:35:45,040
of the supply chain.
So the, the critical memorials

650
00:35:45,040 --> 00:35:48,640
Act, you know, is not
particularly impressive when it

651
00:35:48,640 --> 00:35:52,920
comes to its, its targets and
obligations for, for domestic

652
00:35:52,920 --> 00:35:55,280
raw material production.
I think it realises that, you

653
00:35:55,280 --> 00:35:58,200
know, Europe's going to be a
huge net import or its futures

654
00:35:58,200 --> 00:35:59,760
more in the processing of these
things.

655
00:36:01,280 --> 00:36:03,520
So I don't expect to see a huge
amount happening.

656
00:36:03,680 --> 00:36:06,280
You know, there are a few
projects to move forward.

657
00:36:07,000 --> 00:36:10,280
Yada is probably the the sort of
exception.

658
00:36:11,200 --> 00:36:14,520
But you know, in terms of the
scale of European projects.

659
00:36:14,520 --> 00:36:19,320
But you know, they're they're
caught up with a political

660
00:36:19,320 --> 00:36:21,880
protests in in Serbia at the
moment.

661
00:36:21,960 --> 00:36:24,920
You know, there are 10s of
thousands of people protesting

662
00:36:24,920 --> 00:36:28,520
that mine every week.
Yeah, that's probably going to

663
00:36:28,520 --> 00:36:34,960
lead to another delay.
And yeah, yeah, that just shows,

664
00:36:34,960 --> 00:36:39,560
you know, that the, the, the
objection to to extractive

665
00:36:39,560 --> 00:36:43,000
industries in Europe, it's quite
often it isn't even anything to

666
00:36:43,000 --> 00:36:45,880
do with the mind.
You know, it is they don't like

667
00:36:45,880 --> 00:36:48,440
the government.
They just, they don't like the

668
00:36:48,440 --> 00:36:51,040
industry.
It's very easy to delay things.

669
00:36:53,680 --> 00:36:56,120
How do you kind of how do you
marry those two up?

670
00:36:56,120 --> 00:36:59,120
Like the first parts of the the
conversation we've had so far is

671
00:36:59,760 --> 00:37:02,640
the acknowledgement that the
China is going to going to rise

672
00:37:02,640 --> 00:37:05,240
and dominate a, you know, what's
historically been a huge

673
00:37:05,240 --> 00:37:07,880
industry in Europe, the the auto
sector.

674
00:37:08,480 --> 00:37:10,680
And then on the on the flip side
of that, I mean, I understand

675
00:37:10,680 --> 00:37:13,240
it's a huge question to to put
on you.

676
00:37:13,240 --> 00:37:15,920
But the second part of that is
that they they don't want to

677
00:37:15,920 --> 00:37:19,320
mine.
OK, But even even the industry

678
00:37:19,320 --> 00:37:23,000
that the factories that the
processing and these things it

679
00:37:23,680 --> 00:37:27,080
it, it seems a a kind of tough
one to to marry up together,

680
00:37:27,080 --> 00:37:29,920
right?
Yeah.

681
00:37:31,720 --> 00:37:35,120
I mean, you know the there is
still a huge amount of

682
00:37:35,120 --> 00:37:38,600
investment going in to the
supply chain in Europe, you know

683
00:37:38,600 --> 00:37:43,400
whether it's in EV batteries,
cell plants, capo facilities,

684
00:37:43,400 --> 00:37:47,960
etcetera.
The the difficulty at the moment

685
00:37:47,960 --> 00:37:52,680
is when you're trying to finance
one of these parts of the supply

686
00:37:52,680 --> 00:37:54,640
chain.
So you're looking at a lithium

687
00:37:54,640 --> 00:37:57,280
refinery or cafe plant or an
anode plant or something like

688
00:37:57,280 --> 00:38:01,800
that to get your money.
You need to basically have

689
00:38:01,800 --> 00:38:05,160
somebody who's going to buy your
stuff and somewhere you can buy

690
00:38:05,160 --> 00:38:07,440
stuff from to produce what you
produce.

691
00:38:08,560 --> 00:38:12,600
And at the moment, because you
don't exist, it's very difficult

692
00:38:12,600 --> 00:38:15,640
for somebody to give you that
order because they're taking on

693
00:38:15,640 --> 00:38:19,160
a risk.
And then, you know, we just see

694
00:38:19,160 --> 00:38:21,760
this sort of chicken and egg
thing happening where people

695
00:38:21,760 --> 00:38:24,400
can't get the financing because
they can't get the raw material.

696
00:38:24,400 --> 00:38:26,200
They can't get the raw material
because they can't get the

697
00:38:26,200 --> 00:38:28,640
financing.
And then you add into that some

698
00:38:28,640 --> 00:38:31,840
of the uncertainty that's
happening, you know, around the

699
00:38:31,920 --> 00:38:36,160
EV roll out and how quickly the
OEMs are going to go to 100%

700
00:38:36,160 --> 00:38:38,960
electric or, you know, how many
plug in hybrids that they'll

701
00:38:38,960 --> 00:38:41,400
have in the industry.
And it's, it's really sort of

702
00:38:41,400 --> 00:38:45,560
stagnating a lot of things.
And, you know, the price

703
00:38:45,560 --> 00:38:49,200
environment doesn't help either.
So the same way that we've seen,

704
00:38:49,240 --> 00:38:53,480
you know, 10s and 10s of lithium
projects and mines delayed, you

705
00:38:53,480 --> 00:38:55,960
know, junior miners treading
water because just nothing's

706
00:38:55,960 --> 00:38:57,400
happening in today's price
environment.

707
00:38:57,760 --> 00:39:01,680
You also see that on the cathode
side, on the, the precursor

708
00:39:01,680 --> 00:39:03,800
material side, on the anode side
of the market.

709
00:39:05,000 --> 00:39:08,920
So, you know, you you do need
some stimulus to come in.

710
00:39:09,440 --> 00:39:13,960
You know, in the US that comes
in the form of government loans.

711
00:39:14,680 --> 00:39:17,600
Yeah, that's still keeping a
number of investments happening

712
00:39:17,840 --> 00:39:20,520
and moving forward.
In Europe, it's a little bit

713
00:39:20,520 --> 00:39:23,320
more complicated because of
state aid rules, but I think

714
00:39:23,320 --> 00:39:28,200
they sort of that's been sort of
freed up and we'll see a little

715
00:39:28,200 --> 00:39:31,400
bit more movement coming in.
But also in Europe, you know,

716
00:39:31,440 --> 00:39:34,880
you get the opportunity to have
more Chinese investment.

717
00:39:37,560 --> 00:39:41,440
What about stationary storage?
I feel like this is, this is a

718
00:39:41,440 --> 00:39:44,040
sort of part like we've even on
this conversation, we've focused

719
00:39:44,040 --> 00:39:50,160
quite a bit on EVs specifically.
But for the, the intended

720
00:39:50,160 --> 00:39:53,760
targets for what a lot of these
policies are in place for, you

721
00:39:53,760 --> 00:39:56,720
know, you're, you're either
going to need battery stationary

722
00:39:56,720 --> 00:39:59,920
storage or the forms of, you
know, energy, whether that be

723
00:39:59,920 --> 00:40:02,040
nuclear or whatever, be part of
the mix.

724
00:40:03,000 --> 00:40:05,440
Do you feel that is a bit
underweighted in the, in the

725
00:40:05,440 --> 00:40:08,680
conversation and in the?
In the models you see for for

726
00:40:08,680 --> 00:40:14,360
raw material demand.
I mean, it's not in our models

727
00:40:14,360 --> 00:40:16,720
that are, you know, not
underweighted.

728
00:40:17,160 --> 00:40:22,320
We, we track it very closely and
it's an incredibly difficult one

729
00:40:22,320 --> 00:40:27,320
to predict because it gets
incredibly local as to whether

730
00:40:27,320 --> 00:40:30,840
it makes economic sense.
And it also a lot of it depends

731
00:40:30,840 --> 00:40:33,800
on the, the, the individual
vagaries of the power market,

732
00:40:33,800 --> 00:40:40,440
power market pricing.
The, the best way that I look at

733
00:40:40,440 --> 00:40:43,240
it is, you know, if you look at
the huge growth that we've seen

734
00:40:43,240 --> 00:40:47,120
in solar, which is now, you
know, cheap as chips, you see

735
00:40:47,120 --> 00:40:50,280
that continuing in Europe
because we've got to replace

736
00:40:50,680 --> 00:40:53,320
Russian gas and, you know,
replacing that with American gas

737
00:40:53,320 --> 00:40:55,840
is going to be quite expensive
in the long term.

738
00:40:56,280 --> 00:40:58,440
You see a huge amount of solar
rollout in the US.

739
00:40:58,440 --> 00:41:01,160
You see a huge amount of solar
rollout in China.

740
00:41:01,160 --> 00:41:04,960
I think they've met their 20-30
target already and that really

741
00:41:04,960 --> 00:41:06,840
is the future for a lot of
energy generation.

742
00:41:07,400 --> 00:41:10,040
And while, you know, as soon as,
as night turns today, you're

743
00:41:10,120 --> 00:41:12,640
going to need batteries to help
with that.

744
00:41:13,120 --> 00:41:18,480
So you know, a huge opportunity
for the, the battery sector

745
00:41:18,480 --> 00:41:19,440
there.
We've already, you know,

746
00:41:19,440 --> 00:41:22,520
forecast that percentage growth
rate of being a lot higher than

747
00:41:22,520 --> 00:41:25,840
EVs.
Now the, the barrier to that

748
00:41:26,040 --> 00:41:28,640
isn't availability or cost of
batteries.

749
00:41:29,080 --> 00:41:33,000
It's actually comes down to the
local view is, you know, can you

750
00:41:33,000 --> 00:41:36,680
connect to the grid, is the
policy there to save these

751
00:41:36,800 --> 00:41:39,360
batteries onto the system.
And there are a few other

752
00:41:39,360 --> 00:41:42,760
things, you know, like
Transformers, inverters.

753
00:41:43,760 --> 00:41:48,400
There are bigger headaches for
the the ESS buyers that we talk

754
00:41:48,600 --> 00:41:50,800
to rather than the batteries or
the raw material in the

755
00:41:50,800 --> 00:41:53,600
batteries, since it's actually
other parts of that supply chain

756
00:41:53,600 --> 00:41:56,560
which are delaying
implementation at the moment.

757
00:41:57,440 --> 00:42:01,720
I find all this like discussion
about, you know, the, the, the

758
00:42:02,280 --> 00:42:04,520
battery storage, you call it
Bess.

759
00:42:04,520 --> 00:42:05,680
It's a Bess.
Is that what you call it?

760
00:42:05,960 --> 00:42:09,480
But I, I find all this
discussion ESS, mate, ESS.

761
00:42:09,600 --> 00:42:10,160
Why?
Why?

762
00:42:10,240 --> 00:42:12,640
Yeah, I don't understand.
Anyway, it's so interesting,

763
00:42:12,640 --> 00:42:14,320
right?
Because it's like it's, it's, it

764
00:42:14,320 --> 00:42:18,040
goes hand in hand with you.
You lay a bunch of solar panels

765
00:42:18,040 --> 00:42:20,120
and all of a sudden now you've
got, it's like, you know,

766
00:42:20,360 --> 00:42:22,760
variable kind of issue you've
got to solve for.

767
00:42:22,760 --> 00:42:25,280
And the only way you solve that
is with, with the battery, with

768
00:42:25,280 --> 00:42:29,760
the battery solution as well.
And thankfully mate, I happen to

769
00:42:29,760 --> 00:42:34,040
know some some guys that can do
both of them for you on your

770
00:42:34,040 --> 00:42:36,200
bloody mine.
Silverstone.

771
00:42:36,520 --> 00:42:37,640
What?
Are you thinking mate

772
00:42:37,640 --> 00:42:40,080
Silverstone?
I am thinking Silverstone.

773
00:42:40,480 --> 00:42:43,480
They are pretty late.
They've done, they've done this

774
00:42:43,480 --> 00:42:45,480
so many times.
They're they're just power

775
00:42:45,480 --> 00:42:47,560
experts, mate.
If you're turning on a mine, you

776
00:42:47,560 --> 00:42:49,040
get them in.
If you're shutting down a mine,

777
00:42:49,160 --> 00:42:51,720
you get them in and they just
make make it a breath.

778
00:42:51,720 --> 00:42:54,560
They Chuck in the power
stations, you know, it's just

779
00:42:54,640 --> 00:42:57,200
that they are the trusted name
when you're when you're when

780
00:42:57,200 --> 00:42:59,120
you're ramping up or you're
ramping down or you're expanding

781
00:42:59,120 --> 00:43:01,720
or whatever your niche like
power solutions might be.

782
00:43:01,720 --> 00:43:04,880
I'm pretty sure I think they're
I think they could be added

783
00:43:05,000 --> 00:43:08,800
Mount Morgan's with, you know,
the the old Daisy assets coming

784
00:43:08,800 --> 00:43:10,040
back on soon.
So anyway do?

785
00:43:10,800 --> 00:43:13,880
You know what really what what
really stands out about the guys

786
00:43:13,880 --> 00:43:16,680
at Silverstein for me, the the
guys that run the company, they

787
00:43:16,680 --> 00:43:18,040
actually get out there
themselves.

788
00:43:18,800 --> 00:43:20,320
They get out there, they do the
job.

789
00:43:20,320 --> 00:43:22,960
So it's not like you're just
pulling in these these folks to

790
00:43:23,520 --> 00:43:25,800
fix up a one time solution
they'll look after.

791
00:43:25,960 --> 00:43:28,240
You as reliable as it gets.
Pretty brilliant.

792
00:43:28,240 --> 00:43:30,320
Makes me Silverstone.
Doesn't work with them makes me

793
00:43:30,320 --> 00:43:34,440
want to go to a mine with them.
And the, the economics like to,

794
00:43:34,440 --> 00:43:40,000
to to invest or find these
projects are a phenomenal for a

795
00:43:40,000 --> 00:43:43,280
for a period of time, right?
Well, you know, the, the, the,

796
00:43:43,440 --> 00:43:46,880
the arbitrage through the
cyclicality is, is great.

797
00:43:46,880 --> 00:43:50,480
But then if you if you have
sufficient penetration of best,

798
00:43:50,480 --> 00:43:52,880
then all of a sudden it's a.
It's a much different equation

799
00:43:52,880 --> 00:43:55,400
too, right?
Yeah.

800
00:43:55,400 --> 00:43:59,160
So, you know, the, the, the sort
of famous duct curve, you know,

801
00:43:59,160 --> 00:44:01,920
Californian power prices.
But once you've got enough

802
00:44:01,920 --> 00:44:04,560
batteries, then then that's
going to disappear and you'll

803
00:44:04,560 --> 00:44:07,600
have a relatively constant power
price and potentially you have a

804
00:44:07,600 --> 00:44:11,160
very cheap power price.
It gets a little bit more

805
00:44:11,160 --> 00:44:15,520
difficult when you come to
seasonality or even when you

806
00:44:15,520 --> 00:44:19,880
come to, you know, the UK, you
know, periods of low wind, you

807
00:44:19,880 --> 00:44:22,480
know, that can cause big, big
issues because you then have to

808
00:44:22,480 --> 00:44:27,400
import a lot of energy.
But yeah, the, the economics,

809
00:44:28,000 --> 00:44:32,200
you know, the cheaper the
batteries get, the, the better

810
00:44:32,200 --> 00:44:34,320
they get.
And the other thing is, you

811
00:44:34,320 --> 00:44:37,400
know, when you're looking at
energy storage systems, you can

812
00:44:37,400 --> 00:44:40,760
depreciate those assets over
years and years and years and

813
00:44:40,760 --> 00:44:45,440
decades if you need to.
And and the chemistries of the

814
00:44:45,480 --> 00:44:49,400
the stationary storage
batteries, is it is sodium ion

815
00:44:49,480 --> 00:44:52,680
getting getting bigger there?
Is it LFP at the moment all the

816
00:44:52,680 --> 00:44:54,480
way through?
What's kind of going on on that

817
00:44:54,480 --> 00:44:56,880
front?
We're seeing a little bit of

818
00:44:56,880 --> 00:45:00,240
penetration from sodium ion, but
you know, LFP is really the big

819
00:45:00,240 --> 00:45:03,320
game in town and, and what's
happening at the moment is, you

820
00:45:03,320 --> 00:45:08,360
know, lithium is so cheap and
the batteries in such

821
00:45:08,360 --> 00:45:11,720
oversupply, it's just
discouraging investment into

822
00:45:11,720 --> 00:45:14,320
sodium ion at the moment.
So that we're seeing a slower

823
00:45:14,320 --> 00:45:17,480
rollout on the sodium ion side.
And interesting enough, we're

824
00:45:17,480 --> 00:45:22,760
actually seeing a slow rollout
on LMFP, which was seen as this,

825
00:45:22,760 --> 00:45:25,720
you know, a higher energy
density LFP, it's still cheap.

826
00:45:25,800 --> 00:45:27,320
Great.
That's going to be, you know,

827
00:45:27,320 --> 00:45:30,200
amazing best of both worlds.
What the moment you know, it's

828
00:45:30,920 --> 00:45:33,280
not as much point investing in
it because you know, the, the

829
00:45:33,760 --> 00:45:38,040
LFP that you can get just a lot
cheaper because it and it

830
00:45:38,040 --> 00:45:41,760
already exists.
So actually this oversupply

831
00:45:41,760 --> 00:45:46,160
seeing a little bit of a slow
down in innovation being

832
00:45:46,160 --> 00:45:49,600
commercialised in the industry
because you know why?

833
00:45:49,600 --> 00:45:51,840
Why build something new when you
can't sell what you've already

834
00:45:51,840 --> 00:45:55,560
got and.
And what about NMC, is that just

835
00:45:55,640 --> 00:45:58,720
continue to go on the the kind
of trend of the the last few

836
00:45:58,720 --> 00:46:04,720
years?
I mean, I think you know, the

837
00:46:04,720 --> 00:46:11,760
LFP story you need to look at in
a sort of China lens because it

838
00:46:11,760 --> 00:46:14,960
LFP makes a lot more sense for
China where it's much more cost

839
00:46:14,960 --> 00:46:18,920
sensitive.
And the big barrier was cost to

840
00:46:18,920 --> 00:46:21,640
buy EVs and sticker price to buy
EVs.

841
00:46:21,960 --> 00:46:25,080
And also where you get lost less
long distance journeys because

842
00:46:25,080 --> 00:46:27,720
you know you've got such a great
high speed ground network.

843
00:46:28,600 --> 00:46:32,520
But when you look at Europe and
North America, you know, the

844
00:46:32,520 --> 00:46:34,840
main reason people don't
necessarily want to make the

845
00:46:34,840 --> 00:46:38,000
switch to EVs is because of
range anxiety and charging

846
00:46:38,360 --> 00:46:41,560
anxiety.
And you answer that question by

847
00:46:41,560 --> 00:46:43,960
having a longer range and you
answer that question by having

848
00:46:43,960 --> 00:46:48,640
an NMC battery.
So the, the dynamics in you

849
00:46:48,640 --> 00:46:50,960
know, Europe and North America
are slightly different and

850
00:46:50,960 --> 00:46:54,600
they're slightly more weighted
to NMC, they're slightly more

851
00:46:54,600 --> 00:46:57,920
weighted to lithium hydroxide,
therefore over carbonate.

852
00:46:58,960 --> 00:47:01,360
I'm not saying that LFP won't
take market share.

853
00:47:01,880 --> 00:47:04,680
You know, as we move towards
having entry level models of

854
00:47:04,680 --> 00:47:07,920
electric vehicles, it makes
sense for them to have LFP

855
00:47:07,920 --> 00:47:11,840
because there's a couple of
$1000 potential saving in the

856
00:47:11,840 --> 00:47:14,960
battery pack.
And you know, that's how you get

857
00:47:14,960 --> 00:47:17,280
entry model vehicles.
But when you're looking at

858
00:47:17,280 --> 00:47:22,280
luxury vehicles, when people
want, you know, 354 hundred, 450

859
00:47:22,280 --> 00:47:26,000
miles range, that's still on NMC
territory.

860
00:47:28,840 --> 00:47:32,320
And we, we kind of heard on the,
on the Indonesia front

861
00:47:32,320 --> 00:47:35,040
specifically, obviously they
were trying to encourage

862
00:47:35,040 --> 00:47:37,760
everything or you know, rather
force everything to be done

863
00:47:38,160 --> 00:47:42,280
downstream in country there.
And that kind of LED from what I

864
00:47:42,280 --> 00:47:45,520
could see to them importing
nickel at times.

865
00:47:45,560 --> 00:47:49,280
What what's your kind of view on
how they go trying to get

866
00:47:49,280 --> 00:47:51,240
everything downstream?
Obviously we've we've spoken

867
00:47:51,240 --> 00:47:54,680
about how hard that can be.
Do do you anticipate they, they

868
00:47:54,680 --> 00:47:57,320
run into hurdles there?
Are they kind of ramifications

869
00:47:57,320 --> 00:47:59,400
that you're you're looking out
for on that front?

870
00:48:00,680 --> 00:48:02,240
Yeah.
I mean, I've, I've never been a

871
00:48:02,240 --> 00:48:07,720
fan of this sort of value add
economics, you know, where,

872
00:48:07,720 --> 00:48:09,840
where countries have some raw
materials, they think, oh right,

873
00:48:09,840 --> 00:48:12,400
we need to process it.
We need to, you know, we've got

874
00:48:12,400 --> 00:48:14,160
lithium, we need to build
batteries, we need to build

875
00:48:14,160 --> 00:48:16,640
cars.
And you're like, no, you don't.

876
00:48:16,720 --> 00:48:20,400
You know, not everybody needs
Japanese, Japan and Germany's,

877
00:48:20,640 --> 00:48:22,200
you know, economic business
model.

878
00:48:22,680 --> 00:48:24,960
You know, you look at Australia,
you look at Canada, you look at

879
00:48:24,960 --> 00:48:27,520
resource based economies, you
could be incredibly successful

880
00:48:27,840 --> 00:48:30,080
economies without having to
produce cars.

881
00:48:32,520 --> 00:48:35,640
That said, you know, for
Indonesia, they are allowing the

882
00:48:35,640 --> 00:48:40,440
exports at the moment.
They're encouraging investment

883
00:48:40,600 --> 00:48:47,280
which makes sense for them.
So yeah, I mean, you know, I

884
00:48:47,280 --> 00:48:49,840
think Indonesia is a big enough
market that it makes sense to

885
00:48:49,840 --> 00:48:51,760
have some battery production
there.

886
00:48:53,560 --> 00:48:57,440
My concerns over Indonesia are
more on the environmental side

887
00:48:58,360 --> 00:49:01,920
and particularly you know when
you group all of the the nickel

888
00:49:01,920 --> 00:49:06,200
Tri asset assets together, you
know, you look at some of the

889
00:49:06,200 --> 00:49:09,800
environmental considerations
there, it's it looks, looks

890
00:49:09,800 --> 00:49:11,760
pretty, pretty worrying and
pretty challenging.

891
00:49:12,200 --> 00:49:15,440
And while most nickel, you know,
nickel production growth will

892
00:49:15,440 --> 00:49:19,560
still come from Indonesia, I
suspect that will slow over the

893
00:49:19,560 --> 00:49:26,440
coming decade.
So what about the like the, the

894
00:49:26,440 --> 00:49:29,960
idea of green premiums, This
was, this was kind of huge in in

895
00:49:29,960 --> 00:49:33,320
Perth where we're kind of based
and heard sort of similar echoes

896
00:49:33,320 --> 00:49:37,200
in in London and throughout
Europe.

897
00:49:37,200 --> 00:49:40,320
Given, you know, they can, they
can kind of see what's happening

898
00:49:41,280 --> 00:49:44,480
at a kind of buying level.
It didn't seem to really deter

899
00:49:44,480 --> 00:49:47,680
too many people because the, the
vehicles that come out or the,

900
00:49:47,680 --> 00:49:50,120
the materials that go into the
vehicles that they buy are just

901
00:49:50,480 --> 00:49:54,160
that much cheaper.
But from where you kind of sit

902
00:49:54,160 --> 00:49:59,800
in in London there is there is
there a route to green premiums

903
00:49:59,800 --> 00:50:03,320
being sort of baked into London
Metal Exchange contracts?

904
00:50:03,760 --> 00:50:06,040
Shaking your head already.
I agree.

905
00:50:07,320 --> 00:50:11,880
If you need a premium, you know
you can read into it what you

906
00:50:11,880 --> 00:50:13,960
will, right?
If you, if you can't, if you

907
00:50:13,960 --> 00:50:18,600
need a premium, you can't
compete The premiums, you know,

908
00:50:18,720 --> 00:50:20,960
that said they, they, they would
exist, but they need to be

909
00:50:20,960 --> 00:50:24,200
supported by legislation.
So in the US we've got the

910
00:50:24,560 --> 00:50:28,080
inflation reduction acts and you
get some subsidies if you, you

911
00:50:28,080 --> 00:50:30,600
know, have non Chinese material
in your supply chain.

912
00:50:30,600 --> 00:50:33,040
And then you get a premium for
that because baked into

913
00:50:33,040 --> 00:50:36,880
legislation in Europe, you know,
the cross border adjustment

914
00:50:36,880 --> 00:50:39,240
mechanism, which, you know,
looks at the, the carbon

915
00:50:39,240 --> 00:50:41,760
intensity of supply chains.
And yeah, that might give you a

916
00:50:41,760 --> 00:50:43,640
bit of a green premium, but it's
legislation.

917
00:50:44,400 --> 00:50:48,560
Nobody's going to pay a premium
just because of the ESG

918
00:50:48,800 --> 00:50:52,280
credentials without some kind of
legislation to support it.

919
00:50:53,200 --> 00:50:54,960
It's just not the way purchasing
works.

920
00:50:54,960 --> 00:50:57,680
You know, it's not your target.
Your target is to have the

921
00:50:57,680 --> 00:51:00,520
lowest cost.
And you know, I always say this,

922
00:51:00,520 --> 00:51:05,480
you know, nobody, nobody in the
world wants DRC cobalt in their

923
00:51:05,480 --> 00:51:09,160
supply chain.
Nobody pays a premium for non

924
00:51:09,160 --> 00:51:13,160
DRC cobalt, right?
You know, it's just the these

925
00:51:13,160 --> 00:51:16,640
green premium concepts.
I say they, they, they don't

926
00:51:16,640 --> 00:51:20,280
exist from an altruistic basis.
The market doesn't develop them.

927
00:51:20,640 --> 00:51:22,800
They need to be supported by
legislation.

928
00:51:25,240 --> 00:51:27,400
I mean, to, to tie that on then,
do you, do you see a world in

929
00:51:27,400 --> 00:51:31,120
where legislation becomes a, a
part of it?

930
00:51:31,120 --> 00:51:33,480
Obviously it's, you could argue
it's kind of captured with the

931
00:51:33,480 --> 00:51:36,240
Chinese vehicles having huge
tariffs on them.

932
00:51:36,520 --> 00:51:40,600
But I mean, I think you still
see the likes of Volkswagen, BMW

933
00:51:41,120 --> 00:51:43,800
buying their nickel from
Indonesia too, right?

934
00:51:46,280 --> 00:51:48,000
Yeah.
And I think, you know, when you

935
00:51:48,000 --> 00:51:51,400
get sort of implementation of
things like the battery passport

936
00:51:51,400 --> 00:51:54,520
and when you get sort of a lot
more transparency, which is

937
00:51:54,520 --> 00:51:58,600
what's absolutely key in this
supply chain, then, you know,

938
00:51:58,800 --> 00:52:03,320
you'll start getting pressure to
have lower, you know,

939
00:52:03,440 --> 00:52:06,360
environmental footprints.
That's exactly the right thing.

940
00:52:06,360 --> 00:52:09,520
Because, you know, that's what
the, the market failed to do

941
00:52:09,680 --> 00:52:13,160
with internal combustion and
what it needs to do with the

942
00:52:13,320 --> 00:52:17,000
solution to, to internal
combustion and, and climate

943
00:52:17,000 --> 00:52:21,120
change.
So yeah, these, these are all

944
00:52:21,640 --> 00:52:23,600
good things.
And, you know, the, the, the key

945
00:52:23,600 --> 00:52:27,240
is transparency.
And you know, then then you will

946
00:52:27,240 --> 00:52:31,080
change behaviours.
Just say telling a purchasing

947
00:52:31,080 --> 00:52:34,360
manager that you know they they
they need to pay a premium is it

948
00:52:34,360 --> 00:52:36,840
just doesn't work.
And you'd love to know what,

949
00:52:36,920 --> 00:52:42,200
what, what are the biggest, you
know, misconceptions, Yeah,

950
00:52:42,800 --> 00:52:45,280
about, about the industry from
your, from where you sit.

951
00:52:47,920 --> 00:52:53,160
I think, you know, a lot of the
comparisons that people make on

952
00:52:53,160 --> 00:52:57,720
the environmental footprint of a
battery electric vehicle versus

953
00:52:57,720 --> 00:53:00,520
internal combustion vehicle,
they're just, you know, you,

954
00:53:00,600 --> 00:53:04,600
they, they take the production
of the vehicle and then, you

955
00:53:04,600 --> 00:53:07,640
know, ignore the rest of the
life of the vehicle.

956
00:53:08,720 --> 00:53:12,440
So there's a lot of real really
false comparisons and a lot of

957
00:53:13,680 --> 00:53:17,480
sort of, you know, real sort of
vitriol and complete rubbish

958
00:53:17,480 --> 00:53:20,160
that's published across the
supply chain.

959
00:53:20,640 --> 00:53:23,640
You've then also got this really
weird mix.

960
00:53:26,040 --> 00:53:30,840
You've got you one of these sort
of big solutions to climate

961
00:53:30,840 --> 00:53:34,240
change and the energy transition
is, you know, electrification of

962
00:53:34,240 --> 00:53:35,960
everything.
And yeah, that's where the

963
00:53:35,960 --> 00:53:39,960
battery side comes into it.
But that means, you know, mining

964
00:53:39,960 --> 00:53:44,120
different raw materials.
And there's this almost, you

965
00:53:44,120 --> 00:53:49,000
know, there's this psychological
hate toward extractive

966
00:53:49,000 --> 00:53:52,080
industries because there's so
much against oil and gas.

967
00:53:52,440 --> 00:53:55,040
The people just want the best.
They don't believe in mining.

968
00:53:55,040 --> 00:53:58,840
You know, mining, it's always
sort of lost its social licence

969
00:53:58,920 --> 00:54:02,640
in in many countries.
So, you know, people want the

970
00:54:02,640 --> 00:54:04,800
energy transition, but they
don't want to face up to the

971
00:54:04,800 --> 00:54:08,680
reality that that we need some
some, you know, changes in in

972
00:54:08,680 --> 00:54:11,840
what we extract from the planet.
One thank you was that and

973
00:54:11,840 --> 00:54:18,040
that's high prices.
Yeah, it helps, but you know,

974
00:54:18,120 --> 00:54:19,680
you've got a big change like
this.

975
00:54:20,080 --> 00:54:22,200
You need to incentivize new
producers.

976
00:54:22,200 --> 00:54:24,160
You know, that's why the
market's really interesting

977
00:54:24,680 --> 00:54:28,720
because, you know, and, and why
the current prices for for

978
00:54:28,720 --> 00:54:31,840
manganese, for nickel, for
cobalt, for graphite, for

979
00:54:31,840 --> 00:54:34,720
lithium, they're all
unsustainable in the long term

980
00:54:34,720 --> 00:54:37,680
because they just don't
incentivize new production that

981
00:54:37,680 --> 00:54:41,640
we need.
How about if you, you look

982
00:54:41,640 --> 00:54:46,160
forward, Andy, what, what are
the kind of contrarian views,

983
00:54:46,160 --> 00:54:49,320
you know, whether that be about
lithium a VS stationary storage?

984
00:54:49,320 --> 00:54:52,240
Is there is there opinions you
have from like being in the

985
00:54:52,240 --> 00:54:55,920
weeds every day that you think
you know stand out quite

986
00:54:55,920 --> 00:54:59,680
differently to to your peers in
the in the market there?

987
00:55:03,360 --> 00:55:06,400
Not hugely, you know, I, I,
we're at a conference here at

988
00:55:06,400 --> 00:55:09,520
the moment in apps down as
listening to some of the, some

989
00:55:09,520 --> 00:55:12,920
of the other analysts and it's a
little bit dull, to be honest.

990
00:55:12,920 --> 00:55:15,640
We're all sort of singing from
the same hymn sheet at the

991
00:55:15,640 --> 00:55:18,880
moment that, you know, we, we
are in a, an unsustainable

992
00:55:18,880 --> 00:55:20,240
position.
We've got different views as to

993
00:55:20,240 --> 00:55:23,320
how quickly turning points will
happen, maybe different views on

994
00:55:23,320 --> 00:55:25,920
what's happening in, in industry
positions.

995
00:55:27,360 --> 00:55:32,320
The the one thing I would say is
that the next turning point in

996
00:55:32,320 --> 00:55:36,480
the battery industry and you
know, the lithium, you know,

997
00:55:36,520 --> 00:55:39,360
price and mitigation, it's a
China story.

998
00:55:39,440 --> 00:55:43,480
It's a complete China story.
Yeah, that's 20%, sorry, 70% of

999
00:55:43,480 --> 00:55:47,440
the market.
Everything else is a price

1000
00:55:47,440 --> 00:55:50,640
taker.
So, you know, we talk a lot

1001
00:55:50,640 --> 00:55:54,560
about Europe and North America,
but if you're interested in

1002
00:55:54,560 --> 00:55:58,640
what's happening to prices and
share prices and investment

1003
00:55:58,640 --> 00:56:02,280
decisions, still a China story.
So that's the one you need to

1004
00:56:02,280 --> 00:56:08,360
track.
What is what is the China story

1005
00:56:08,360 --> 00:56:11,680
right now that that?
They're they're on holiday.

1006
00:56:12,840 --> 00:56:19,640
So no, I'd say we're, we're,
we're, we're reasonably

1007
00:56:19,640 --> 00:56:22,040
optimistic.
And you know, I'm not going to

1008
00:56:22,040 --> 00:56:24,920
go through the whole Chinese
economy and property prices and

1009
00:56:24,920 --> 00:56:26,880
things like that.
But when it comes to vehicles,

1010
00:56:26,880 --> 00:56:29,400
when it comes to batteries, when
it comes to that supply chain,

1011
00:56:29,880 --> 00:56:36,200
you know, we've stock levels
have balanced, you know,

1012
00:56:36,200 --> 00:56:39,800
inventory levels aren't as high
as they were at the beginning of

1013
00:56:39,800 --> 00:56:43,560
the year. the OR if they are
higher, it's because the

1014
00:56:43,560 --> 00:56:47,040
market's 20 or 30% bigger.
So you know, you need a lot more

1015
00:56:47,040 --> 00:56:50,120
pipeline stock.
I think there's, you know, the

1016
00:56:50,120 --> 00:56:53,200
good possibility that we'll go
into a bit of a restocking cycle

1017
00:56:53,560 --> 00:56:55,840
across the supply chain over the
next couple of months.

1018
00:56:55,840 --> 00:56:59,160
Traditionally it's when when
buying is pretty high anyway in

1019
00:56:59,160 --> 00:57:04,440
the fourth quarter that could
see a little bump in, in prices

1020
00:57:04,440 --> 00:57:08,720
across the supply chain.
You're not going to see a huge

1021
00:57:08,720 --> 00:57:12,960
rally in in lithium in the next,
you know, couple of months, but

1022
00:57:12,960 --> 00:57:16,960
you probably will see a rally.
You know, there's still

1023
00:57:17,240 --> 00:57:19,080
inventory that needs to be
cleared.

1024
00:57:19,560 --> 00:57:22,640
And but yeah, you could then
have a, you know, a more

1025
00:57:22,640 --> 00:57:25,320
sustained rally, you know,
relatively early.

1026
00:57:25,320 --> 00:57:30,200
You know, most analysts are
changing their view from 2029 to

1027
00:57:30,200 --> 00:57:36,760
2027 and some now say 2026.
So you know turning .25 so

1028
00:57:36,760 --> 00:57:38,920
things that things are looking
better, things are looking

1029
00:57:38,920 --> 00:57:42,760
better and obviously the the
production costs, you know speed

1030
00:57:42,760 --> 00:57:48,400
up that that market rebalancing.
Is your base case for a couple

1031
00:57:48,400 --> 00:57:52,840
more Aussie spot producers to to
come out the market in the near

1032
00:57:52,840 --> 00:57:57,320
term?
I mean, a lot of them are are

1033
00:57:57,320 --> 00:57:59,720
losing money, right?
Most of them are losing money.

1034
00:58:00,480 --> 00:58:03,760
So they're difficult decisions
to make.

1035
00:58:05,440 --> 00:58:10,280
I think now you've seen the
announcement from CACL, you

1036
00:58:10,280 --> 00:58:13,600
know, a couple of them might
give it a few more weeks or

1037
00:58:13,600 --> 00:58:19,560
months before before making
those decisions or but you know,

1038
00:58:21,200 --> 00:58:23,000
it's, it's, it's, it's
difficult.

1039
00:58:23,080 --> 00:58:25,800
If it is, it is a doubt.
I don't envy the decisions that

1040
00:58:25,800 --> 00:58:30,160
they've got to make, but you
know, probably curtailing

1041
00:58:30,560 --> 00:58:33,680
production makes sense for a
view of them and then at least

1042
00:58:33,680 --> 00:58:35,600
sort of slowed down on on
expansions.

1043
00:58:38,320 --> 00:58:39,880
Pretty, pretty ominous sort of
stuff.

1044
00:58:39,880 --> 00:58:41,920
We hope we can kind of pull
through.

1045
00:58:41,920 --> 00:58:45,160
But yeah, thanks Sir.
Thanks for making the time and

1046
00:58:45,360 --> 00:58:46,320
coming on the show.
Andy.

1047
00:58:46,320 --> 00:58:49,320
It's good to good to get you
insights and good to hear from

1048
00:58:49,760 --> 00:58:52,840
from someone that's sort of
who's on the ground speaking,

1049
00:58:52,840 --> 00:58:54,320
speaking with the people in the
industry.

1050
00:58:54,560 --> 00:58:56,880
Thank you very much.
I just say, you know, on, on the

1051
00:58:56,880 --> 00:58:59,080
Aussie minor side, you know,
they'll, they'll be back

1052
00:58:59,560 --> 00:59:02,800
because, you know, the world
still needs that material.

1053
00:59:03,120 --> 00:59:08,520
It's just a question of timing.
Some good, you know, positive

1054
00:59:08,520 --> 00:59:11,200
note for for people and
investors out there to to kind

1055
00:59:11,240 --> 00:59:13,400
of end the show on.
Cheers, Andy.

1056
00:59:13,960 --> 00:59:14,960
Cool.
Thanks, guys.

1057
00:59:15,240 --> 00:59:16,960
Bye.
How about that, JD?

1058
00:59:17,280 --> 00:59:18,800
That's a that's a wrap for
Friday.

1059
00:59:18,800 --> 00:59:20,520
Learned a lot and we've got some
partners.

1060
00:59:21,000 --> 00:59:23,040
There we go.
Thank all the money miners out

1061
00:59:23,040 --> 00:59:25,240
there for tuning in.
Hope you all have a good weekend

1062
00:59:25,240 --> 00:59:28,840
and a big thank you to access
Mining Technology, Mineral

1063
00:59:28,840 --> 00:59:33,920
Mining Services, Verify, Adia,
DSI Underground, Silverstone who

1064
00:59:33,920 --> 00:59:36,560
we had in the show, CRE
Insurance, Greenland's

1065
00:59:36,560 --> 00:59:40,720
Equipment, K Drill and Spark
Hodoru.

1066
00:59:40,720 --> 00:59:43,960
Money Miners, Hodoru.
Information contained in this

1067
00:59:43,960 --> 00:59:46,680
episode of Money of Mine is of
general nature only and does not

1068
00:59:46,680 --> 00:59:49,320
take into account the
objectives, financial situation

1069
00:59:49,360 --> 00:59:51,360
or needs of any particular
person.

1070
00:59:51,680 --> 00:59:54,720
Before making any investment
decision, you should consult

1071
00:59:54,720 --> 00:59:57,800
with your financial advisor and
consider how appropriate the

1072
00:59:57,800 --> 01:00:01,480
advice is to your objectives,
financial situation and needs.