Why Aluminium Just Hit a Four Year High

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Travis Ricciardo, I am super
excited to share this episode

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that we've got in store today
with the one and only aluminium

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Alan Clark.
Alan is yeah, I just, I'm, I'm

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just a massive Alan Clark fan.
Alan.

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Alan heads up, you know, CM
Group, which which provides a

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wealth of industry research and
insights on on, on various

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commodities.
But aluminium Alan is aluminium

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Alan because aluminium is where
he just he just knows

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everything.
I know you're a big fan and the

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money miners are big fans as
well because we had our on about

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two years ago, maybe 18 months
ago and the episode got

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fantastic feedback.
The one of the big lessons is if

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you think aluminium is niche,
you need to broaden your

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horizons.
It is huge.

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It's a massive industry, one of
the biggest metals markets out

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there, and it has so many hands
throughout the economy,

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throughout the globe.
It's such a fascinating market.

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And as you can sort of glean
from this episode, we could chat

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with Alan for hours and hours
and hours about this.

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And there is a timelessness to
the conversation that we have.

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He's got so much knowledge from
his decades of experience in the

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industry, but it's also hyper
relevant for what's going on

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right now as we speak due to the
Iran crisis and the amount of

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aluminium that comes out of the
Middle East.

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We're seeing Bahrain and other
countries like that.

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So there's some huge lessons to
be learned.

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Aluminium, the price has just
hit a four year high.

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So it it really pulls at both of
those sort of strings of

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timeless content and a
conversation that will give you

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a bit of edge in the markets
today.

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And I'm excited to share it,
mate.

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Super excited to share this one.
Let us know what you think of

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it, JD.
What else should we be excited

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to share?
We should be excited to share

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the great name of Sandvik Ground
support, the greatest ground

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support in the industry, our
loyal partners.

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We are tremendously thankful for
the work they do in the industry

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and the support they provide for
us.

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If you operate a mine, if you
work within a mining

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organization, underground mining
or even open pit and you just

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want to Chuck in an order and
you should get in touch with the

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fantastic team at Sandvik Ground
Support.

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You can do it either by
contacting Derek, Kurt and the

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rest of the team there, or the
wicket app that they have is a

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great way to put your regular
orders in you.

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Know what ground support is
known fault?

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Well it's known for holding the
ground up.

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Obviously this is true.
They also hold up money of mine

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mate with the wonderful support
they provide us.

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If you need something to be
supported, I think probably

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ground.
Get in touch with Sandvik ground

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support.
Go Sandvik.

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Onto our chat with Alan.
Alan Clark Aluminium Alan, you

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are a fan favorite.
When I say fan favorite, I mean

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me as a fan.
I'm one.

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Fan.
Count me in there.

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There's two.
We, we, yeah, we just, we just

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love your perspectives on, on
the commodity world.

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Your, your intimate knowledge of
aluminium, your deep and

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profound insights about China
and the evolving kind of

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commodity landscape.
Last time you you joined us, you

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blessed us with really pertinent
insights on the entire aluminium

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history, its its rise through
time and how that had had

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evolved.
You've joined us again and the

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the landscape hasn't stopped
changing.

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Like not long after you came
things just things, things

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changed really, really quickly.
They did.

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They did pretty much the moment
I walked out.

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I think things started to change
now Guinea, I mean you know, we

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as as oxide aluminum analysts
now we've been yeah, we've been

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raging bulkside bulls for a
long, long time, right.

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And you know in 2024 and last
year in 2025, I mean we still

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under called Guinea you know by
by millions of tons.

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So I mean in 2025, you know,
China imported 200 million tons

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of bulkside and it's like 100
and 41150 that was from Guinea.

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And this year it'll probably go
up again by another 10% or so we

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think.
So it just continues to to grow

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And Guinea, I think Guinea is
now what 70 odd percent, 75% of

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of imports of boxing to China.
So it's crazy.

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So this is a roughly 400 million
ton overall market.

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Yeah, a bit bigger than that
now, but yeah, all that order,

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yeah.
Yeah, I think that I went back,

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by the way, and had a look at
the podcast last time and made a

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few notes of all the things,
like the questions I either

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avoided or just went down a
rabbit hole and forgot to come

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back to.
But one of them was that, you

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know, when we talked about
bauxite, as analysts, we always

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talk about dry, dry metric tons,
whereas if you talk about

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shipping it, it's almost always
wet tons.

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So when I say 140 a 150 million
tons or 200 million tons, I'm

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always talking dry.
But somebody will come along and

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go, oh, hang on a minute.
The number is actually close to

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230 million.
Oh, yeah.

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Whatever it is because it
includes the moisture.

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And so a lot of the figures that
are, you know, that are out

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there, you know, you have to
figure out whether they're wet

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or dry.
And I remember we did talk about

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liquefaction, right, about, you
know, what can happen in vessels

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because bauxite, the moisture
content can be pretty high in

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some bauxite.
So I'll clear that one up to

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start with the other one.
By the way, I know Trevor, you

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asked me the question, how many
tons of bauxite does it take to

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produce a ton of alumina and
then to aluminium And I just

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completely, I don't know what I
talked about, but I didn't give

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you the number.
The rule of thumb is 521, right?

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So 5 tons of bauxite, roughly 2
tons of alumina, one ton of

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primary aluminium varies a bit
depending on the grades of

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bauxite.
It can be you know I 6, but

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roughly.
I like rule of thumb.

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Yeah, helps just kind of.
They do help frame things.

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Yeah, that's right.
So.

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What caused the alumina price to
surge so sharply in early 2025?

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Well, if you go back and have a
look at the history of the

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Illumina price outside of China,
just for now that things happen,

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I mean, it's more or less
balanced.

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But when when you get a shock to
the system or you know, two or

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three things that happen
together, you can push the price

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pretty quickly.
So if you go back, maybe I think

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2018-2019 when there was a big
shutdown at Ali Norte, which is

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the biggest Illumina refinery
outside of China, the price just

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galloped, right?
Because they shut down half the

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capacity.
And at the same time, the market

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was a little bit short anyway.
So it doesn't take much for this

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to have a have a compounding
effect, right?

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So last year there was some
planets already starting to

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align shutdown here of Kwinana,
Rio called force majeure in

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Queensland on gas supply.
I think from memory there was a

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a disruption in, in Brazil.
So these things started to come

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together.
And then in, in China, if I

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remember correctly, China's
smelting sector is exposed to

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hydropower in some regions, you
know, particularly in, in

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Yunnan.
So depending on how brutal the

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season is, you might have
hydropower and you might not.

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And if you don't, then you
actually, you know, you shut

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down some smelting capacity.
But last year there was plenty

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of rain, plenty of water.
So it all kept going so that the

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demand in China was a little
higher than it had been for the,

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you know, for the the last few
years.

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So, so alumina demand in China
high, all these other things

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starting to happen.
So the price had just started to

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creep up.
And then of course, Guinea,

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right, we saw what happened
with, with GAC and there were

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some other disruptions in
Guinea.

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And I think it was for the first
time the industry kind of looked

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at and thought, you know, had,
you know, had a bit of an oh

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shit moment because it was well,
actually alumina is becoming

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tight.
And if we cannot get the bauxite

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and we're now, so, you know,
dependent on on Guinea, if we

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can't get the bauxite, then
we're going to need, we could

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run out of alumina and there's
nothing worse, right?

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You don't want to shut a smelter
down because you can't get

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alumina.
That's a disaster.

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So the price just started to
track higher and higher, quicker

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and quicker.
And the bulk site price went as

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well.
So, you know, at that time, I

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think bulk site price and
alumina price both set records,

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you know, during that spike and
then proceeded to come down, you

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know, just as just as quickly,
not quite as quickly, but it

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came down pretty quickly into
you know, Q1Q2 of last year to

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to where we are now where
bauxite prices are into the cost

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curve, right.
And the alumina, the alumina

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price is well into the cost
curve right now.

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Now numbers, you've probably got
40% of the alumina refining

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sector globally underwater.
The hell of a turn around right

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in a in a short amount of time.
But the aluminium price has

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performed really well over the
last three or four months.

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So how do you?
How do you piece that?

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Kind of weird, isn't it?
Very weird to me.

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The thing that.
That it does show is the the

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value of the integrated model,
right.

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So if you bauxite alumina
primary aluminium this time last

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year your bauxite alumina
business was doing

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fantastically, smelting not so
good.

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Now it's the complete reverse of
that.

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But the, you know, the primary
aluminium price, I mean,

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commodities are moving, right?
And you know, there's a lot of,

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there's a lot of speculation in
prices as well.

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You can see that copper prices
and you know, prices and other

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prices and there's that in
aluminium as well.

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And it's being pulled along.
Plus the demand just keeps, you

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know, the demand for aluminium
is just like I said to you last

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time, it's just slow burn.
It's just always going up.

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And you know, the world needs
kind of 1 smelter, at least one

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new smelter, prime aluminium
every year.

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And right now we've got the,
the, the, the cap in China.

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We'll come back to that, I'm
sure.

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The 45,000,000 ton cap,
definitely.

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But that's, you know, you can't
get out of China anymore.

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So now what?
So the demand stays, stays

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strong.
You've got a lot of speculation.

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It's starting to tighten up and
the aluminium price starts to

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have a run.
So at that point there Al on the

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integrated, just a quick
question.

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There has been the question
thrown up in recent times, you

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know, does Rio for instance, do
they really need to be fully

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integrated?
Do you have like strong thoughts

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on being integrated versus not?
No, well, I, I less so than I

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did.
You know, if you go back ten

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years or or more where, you
know, there was no such thing as

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a as a, as an alumina market.
There was no such thing as a

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bauxite market.
You go back six or seven years,

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it was all, you know, China
aside, right for now that, you

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know, bauxite and alumina was
vertically integrated.

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It was the mind mouth refinery
model.

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You, you the the alumina
refinery is built to treat the

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bauxite.
So there was no separation

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between the two.
So even to have that kind of

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conversation, you know, to think
about, well, it should it be

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integrated or not integrated?
I mean, people just laugh at

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you, you're crazy.
But now China has broken that

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model.
You know, it's not so much an

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integrated model now as it is
like a merchant model, you know,

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where the book site is procured,
you know, kind of third party,

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not all of it, but enough of it
to make it a, you know, a

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meaningful third party market.
So, you know, do I have a, do I

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have a preference?
Not so much now.

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00:11:28,800 --> 00:11:30,520
I mean, I kind of look at it.
We were talking about cost

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curves before, right?
So if you're sitting low enough

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on the bauxite, global bauxite
cost keep, you're sitting low

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enough on the alumina curve,
you're sitting low enough on

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the, on the primary aluminium
curve.

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What a great business if you're
in all three, but you know,

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they're, they're good standalone
businesses as well now, whereas

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00:11:47,000 --> 00:11:49,960
if that wasn't the case when you
go back, you know, 10-15 years

225
00:11:49,960 --> 00:11:52,200
or so.
This all makes me feel so, so

226
00:11:52,200 --> 00:11:54,160
young in the industry because
you don't have to, I mean.

227
00:11:54,240 --> 00:11:55,920
It makes me feel the opposite by
the way, but.

228
00:11:56,960 --> 00:12:00,080
Experienced was a you're talking
about 5 or 10 years and I think

229
00:12:00,080 --> 00:12:04,960
about other huge changes like
the free floating of the iron

230
00:12:04,960 --> 00:12:08,520
ore price that happened in 2010.
These are all very relative

231
00:12:08,600 --> 00:12:12,600
recent changes to the the
structures of these markets.

232
00:12:12,600 --> 00:12:16,120
So it's amazing, and a lot of it
is spared on by what China has.

233
00:12:16,120 --> 00:12:18,320
China front and center, it's
wild.

234
00:12:18,320 --> 00:12:19,800
Wouldn't have it without them.
Yeah.

235
00:12:19,800 --> 00:12:21,400
These markets wouldn't have
developed the way they've

236
00:12:21,400 --> 00:12:24,960
developed the index pricing.
The, you know, the commoditizing

237
00:12:24,960 --> 00:12:28,440
of the, you know, these things
from a, from a pricing

238
00:12:28,440 --> 00:12:29,680
perspective just wouldn't have
happened.

239
00:12:30,200 --> 00:12:33,640
So Guinea wouldn't have happened
either in the bauxite market.

240
00:12:33,880 --> 00:12:36,320
They went from, as we spoke
about last time, 1,000,000 tons

241
00:12:36,320 --> 00:12:40,960
per annum exporting to over 100.
Million well Guinea has always

242
00:12:40,960 --> 00:12:47,080
been a quite a significant
bauxite exporting country, you

243
00:12:47,080 --> 00:12:49,880
know say 15,000,000 tons or
there may be a bit more about

244
00:12:49,880 --> 00:12:53,480
that because there has been 1
mine there in particular CBG

245
00:12:53,480 --> 00:12:54,880
which has been going for
decades.

246
00:12:55,200 --> 00:12:58,880
But it was integrated in that
sense that the the bauxite was

247
00:12:58,880 --> 00:13:04,480
going to refineries and you know
Canada, Spain, Ireland that were

248
00:13:04,640 --> 00:13:07,520
based on that bauxite and it
was, it was integrated.

249
00:13:07,520 --> 00:13:11,240
So you know the Palco puns which
is you know Rio Alcoa and so

250
00:13:11,240 --> 00:13:14,160
forth, it was that bauxite to
that refinery.

251
00:13:14,360 --> 00:13:19,240
So no trade just you know good
quality bauxite into a purpose

252
00:13:19,240 --> 00:13:22,760
built refinery.
But for China, in 2015, China

253
00:13:23,200 --> 00:13:28,080
imported 1,000,000 tons bauxite
from Guinea.

254
00:13:29,040 --> 00:13:34,960
And you know, last year they did
whatever the number was, 170

255
00:13:36,360 --> 00:13:39,560
something crazy, Absolutely
incredible.

256
00:13:39,760 --> 00:13:43,920
Yeah, yeah.
Their dependence on imported

257
00:13:44,160 --> 00:13:47,880
bauxite, like at what point does
that become a strategic

258
00:13:47,880 --> 00:13:50,880
vulnerability for them?
Well, I think it's gone past

259
00:13:50,880 --> 00:13:56,480
that already.
It's but remember it's also kind

260
00:13:56,480 --> 00:14:00,440
of it goes both ways.
It's a vulnerability for the

261
00:14:00,440 --> 00:14:05,120
industry for sure to have that,
that concentration of, of supply

262
00:14:05,120 --> 00:14:08,120
in one country.
But you've got to remember that,

263
00:14:08,800 --> 00:14:12,360
you know, Guinea is just as
reliant on China as China is on

264
00:14:12,720 --> 00:14:14,560
Guinea.
Without China, Guinea doesn't

265
00:14:14,560 --> 00:14:18,360
have a bauxite export business
and industry.

266
00:14:18,360 --> 00:14:19,840
It wouldn't, it wouldn't exist,
right?

267
00:14:19,840 --> 00:14:23,160
So they, they rely on each other
in that sense.

268
00:14:23,160 --> 00:14:27,800
So and, and, and, and now we're
starting to see more investment

269
00:14:28,600 --> 00:14:31,600
in the in the alumina sector
into Guinea, which is another,

270
00:14:31,800 --> 00:14:35,880
you know, I think a further kind
of commitment by the Chinese to,

271
00:14:36,200 --> 00:14:39,120
you know, for, for long term
supply of, of bulks on.

272
00:14:39,320 --> 00:14:43,840
This is the value add in
country, you know, government

273
00:14:43,840 --> 00:14:46,880
ambition that that that.
Guinea well, we must more of an

274
00:14:46,880 --> 00:14:48,680
ambition.
I mean, you know, when you go

275
00:14:48,680 --> 00:14:52,880
back in time, look at some of
the, of the conventions that

276
00:14:52,880 --> 00:14:57,800
have been struck over the years,
you know, these the, the bauxite

277
00:14:58,480 --> 00:15:02,080
miners and exporters in Guinea,
most of them have a requirement

278
00:15:02,080 --> 00:15:04,000
to build a refinery.
That's clear.

279
00:15:04,040 --> 00:15:06,960
It's clear in their, in their,
in their agreements.

280
00:15:06,960 --> 00:15:09,640
These are agreements struck when
they got the mining license to

281
00:15:09,640 --> 00:15:11,240
begin with.
Or yeah, yeah, yeah.

282
00:15:11,360 --> 00:15:14,920
So it's no, this is not a
surprise that what we're seeing

283
00:15:14,920 --> 00:15:19,480
now is that the government is
being more assertive in, you

284
00:15:19,480 --> 00:15:24,480
know, in it's in its approach to
have these companies build

285
00:15:24,480 --> 00:15:27,360
refineries.
I mean, it's going to happen and

286
00:15:28,320 --> 00:15:31,200
it was always going to happen
according to the conventions.

287
00:15:31,320 --> 00:15:34,280
It's just that, you know, the
Guinean authorities prior to,

288
00:15:34,480 --> 00:15:38,160
you know, the current
administration had not had not

289
00:15:38,160 --> 00:15:40,800
been assertive in that sense.
They let them get away with not

290
00:15:40,800 --> 00:15:43,480
having to build refineries.
Those days are over.

291
00:15:44,600 --> 00:15:46,000
So they're coming.
They're coming.

292
00:15:47,160 --> 00:15:50,360
Are they coming in in enormous
scale or is it going to be a

293
00:15:50,400 --> 00:15:52,760
piece meal?
Well, we'll get to Indonesia in

294
00:15:52,760 --> 00:15:55,600
a minute because we won't talk
about scale, you know what's

295
00:15:55,600 --> 00:15:56,600
happening in Indonesia right
now.

296
00:15:56,600 --> 00:16:02,720
But I mean, I think we'll see 3
refineries in Guinea now in the

297
00:16:02,720 --> 00:16:05,680
next 5 years, but possibly more.
And how big would that be?

298
00:16:05,720 --> 00:16:08,360
I would think at least 1,000,000
tons each.

299
00:16:08,360 --> 00:16:12,480
So let's say that meant 3 or 4
million tons of alumina.

300
00:16:13,160 --> 00:16:18,040
That's 1010 + 1,000,000 tons of
bauxite consumed in country.

301
00:16:18,240 --> 00:16:20,160
That by the way probably
wouldn't go to China.

302
00:16:20,760 --> 00:16:22,240
So is that enough to move the
dial?

303
00:16:22,240 --> 00:16:26,720
Well, if we're talking imports
into China, 200,000,010 million

304
00:16:26,720 --> 00:16:30,440
stays in Guinea.
That's you know, is it enough to

305
00:16:30,680 --> 00:16:32,160
to move it?
Probably not.

306
00:16:32,920 --> 00:16:35,880
I've got a rule of thumb on the
the cost of building a refinery.

307
00:16:37,240 --> 00:16:43,280
Yeah, capital cost, yeah.
Yeah, if it's, I mean this is

308
00:16:44,400 --> 00:16:49,640
talking about this to the guys
this morning about about

309
00:16:49,760 --> 00:16:53,400
something that we're starting to
see in China with respect to

310
00:16:53,400 --> 00:16:56,520
their metallurgical construction
companies, because this is this

311
00:16:56,520 --> 00:16:57,720
is a really important
development.

312
00:16:57,720 --> 00:17:02,160
I think that those companies
were building alumina refineries

313
00:17:02,160 --> 00:17:06,920
and smelters and you know,
metallurgical equipment and

314
00:17:07,359 --> 00:17:09,800
facilities in China are now
starting to do that more and

315
00:17:09,800 --> 00:17:13,359
more outside of China.
I've seen it in nickel with

316
00:17:13,960 --> 00:17:16,240
what's happened in Indonesia,
now we're seeing it in in

317
00:17:16,240 --> 00:17:21,319
bauxite alumina.
So I say that to preface the

318
00:17:21,319 --> 00:17:24,359
numbers, right.
So if you're going to build a

319
00:17:24,359 --> 00:17:28,800
China that use the China model
to build a, an aluminum refinery

320
00:17:28,800 --> 00:17:32,400
say in Indonesia, then on our
numbers that's probably around

321
00:17:32,400 --> 00:17:36,560
1000 bucks US per annual tonne,
right.

322
00:17:36,560 --> 00:17:39,880
So for a million tonne refinery,
that's a billion of that order.

323
00:17:39,880 --> 00:17:43,200
Now if you're going to
brownfield that because which

324
00:17:43,200 --> 00:17:45,800
most of them do, it's probably
less than half that.

325
00:17:46,400 --> 00:17:47,720
OK.
Right.

326
00:17:47,720 --> 00:17:52,680
So on average, it's, you know
it, that's a low number and it's

327
00:17:52,680 --> 00:17:53,800
fast.
I mean, the other thing, you

328
00:17:53,800 --> 00:17:55,720
know, you guys know better than
I do when it comes to project

329
00:17:55,720 --> 00:18:00,800
economics that if you can get
that refinery built in 18 months

330
00:18:00,800 --> 00:18:04,080
or or less compared with 2 1/2
years and you're, you know,

331
00:18:04,120 --> 00:18:09,800
you've got a cash flow in month
#13 or 14, that has a massive

332
00:18:09,880 --> 00:18:12,480
impact on the on the value of
that project.

333
00:18:12,560 --> 00:18:16,800
And so it's not just the capital
cost, it's the speed with which

334
00:18:16,800 --> 00:18:18,840
it can happen because it is a
replication model.

335
00:18:18,840 --> 00:18:24,360
All right.
So low capital cost, quick build

336
00:18:24,960 --> 00:18:28,040
and then you know for the right,
you know for a good grade of

337
00:18:28,040 --> 00:18:30,200
bulkside, it's low operating
costs as well.

338
00:18:30,200 --> 00:18:32,440
So you're kind of winning on all
all three.

339
00:18:32,440 --> 00:18:35,200
Now we had a look at the cost
curve earlier where you know

340
00:18:35,200 --> 00:18:38,280
those new Indonesian refineries
would sit in it on our numbers

341
00:18:38,280 --> 00:18:39,440
Q1.
These.

342
00:18:39,720 --> 00:18:42,520
On on the China build, right?
These are these are these are

343
00:18:42,520 --> 00:18:45,640
family Q1, right like the this
cost curve it looked pretty flat

344
00:18:45,640 --> 00:18:50,240
to me and then Q1 displacing a
lot of other stuff in in Q1 is

345
00:18:50,280 --> 00:18:53,520
these Indonesian refineries that
are freshly freshly built.

346
00:18:53,720 --> 00:18:56,680
Yeah, yeah.
What like what about them is,

347
00:18:57,480 --> 00:18:59,280
you know, gives them a cost
advantage even versus the

348
00:18:59,280 --> 00:19:01,280
equivalent technology that's
deployed in China?

349
00:19:02,640 --> 00:19:05,760
Well, I mean, a lot of the
Chinese this is going to test

350
00:19:05,760 --> 00:19:07,720
how close you were looking at
that cost curve now, right,

351
00:19:07,720 --> 00:19:12,080
Because some of the refineries
in China low cut the Q1 and the

352
00:19:12,080 --> 00:19:15,240
Q1 because it's domestic
bulkside, OK, right, Yeah.

353
00:19:15,440 --> 00:19:17,440
Yeah.
It's the it's down the road,

354
00:19:17,440 --> 00:19:22,320
it's having to employ, yeah.
So relative to the vast majority

355
00:19:22,320 --> 00:19:25,440
of refineries in in China that
are importing bulkside.

356
00:19:25,760 --> 00:19:27,200
So they've got a massive
exposure there.

357
00:19:27,200 --> 00:19:29,800
So now compare that with
Indonesia where you're getting

358
00:19:29,800 --> 00:19:33,280
bulkside.
It's it's going to, it's going

359
00:19:33,280 --> 00:19:34,840
to be barge.
It doesn't have to travel

360
00:19:35,320 --> 00:19:38,040
halfway around the world like it
does, you know, from, from

361
00:19:38,040 --> 00:19:39,520
Guinea.
So you've got a cost advantage

362
00:19:39,520 --> 00:19:41,280
there.
And then depending on the grade

363
00:19:41,280 --> 00:19:45,120
of the bulk side, caustic soda
consumption, but also energy.

364
00:19:45,760 --> 00:19:49,240
And so, you know, if you're
winning on all of those 3 cost

365
00:19:49,240 --> 00:19:51,600
drivers, then that's that's how
you end up in Q1, right?

366
00:19:52,920 --> 00:19:56,240
When you say this this China
model, my head automatically

367
00:19:56,240 --> 00:20:00,640
thinks the western price is 2X
that and I think everything you

368
00:20:00,640 --> 00:20:02,240
just said kind.
Of for for capital cost.

369
00:20:02,920 --> 00:20:04,520
Capital costs, absolutely.
Yeah.

370
00:20:04,520 --> 00:20:06,560
Well, I'd say for alumina
refineries, it's less than a

371
00:20:06,560 --> 00:20:07,440
third.
Yeah.

372
00:20:08,040 --> 00:20:11,720
I mean, we, we heard, we were
hearing similar anecdotes when

373
00:20:12,160 --> 00:20:15,240
the Indonesian build out of at
these Chinese designed H power

374
00:20:15,240 --> 00:20:20,840
facilities came along just the
absurdly, yeah, kind of that

375
00:20:21,040 --> 00:20:24,120
they were not insanely capital
intensive like we we believed

376
00:20:24,200 --> 00:20:26,520
they would be.
And they happened extremely fast

377
00:20:26,520 --> 00:20:30,360
and they were, they were being
yeah, built out for less than

378
00:20:30,360 --> 00:20:32,280
1/3 of the cost of anyone in the
West could do.

379
00:20:32,400 --> 00:20:34,680
And it was technology that was
miles above anything in the in

380
00:20:34,680 --> 00:20:38,040
the West in H power.
Is the technology so far ahead

381
00:20:38,040 --> 00:20:40,920
on, on, on their refineries
versus our refineries?

382
00:20:40,920 --> 00:20:45,760
What I was going to, what I was
going to say, I think a better

383
00:20:46,120 --> 00:20:48,680
example here is actually
smelting, right, right.

384
00:20:48,680 --> 00:20:51,400
So rather than refining the
answer to that question is yes.

385
00:20:51,400 --> 00:20:55,040
But if you think of it from a,
from smelting, I mean, what are

386
00:20:55,040 --> 00:20:58,480
the, what are the drivers of, of
cost for aluminium smelting?

387
00:20:58,880 --> 00:21:04,640
It's energy consumption, right?
And, and, and like the, the, the

388
00:21:04,640 --> 00:21:08,560
life of the, of the cell, right,
because it could be five years

389
00:21:08,560 --> 00:21:11,040
or seven years or could pulling
a, pulling a cell out and then

390
00:21:11,040 --> 00:21:12,200
having to rebuild and put it
back in.

391
00:21:12,200 --> 00:21:15,240
That's high cost.
But the energy consumption is

392
00:21:15,240 --> 00:21:19,600
the key as well.
I, I would argue that the

393
00:21:19,600 --> 00:21:23,480
Chinese smelting technology is
now world world's best in terms

394
00:21:23,480 --> 00:21:26,480
of energy consumption.
It's maybe a bit early to tell

395
00:21:26,480 --> 00:21:29,720
about pot life because you need,
you know, 5-6, seven years of

396
00:21:29,720 --> 00:21:32,520
data to be able to say that, you
know, that what the pot life's

397
00:21:32,520 --> 00:21:35,760
like.
But they are world class, which

398
00:21:35,760 --> 00:21:39,400
is why I think it's, it's going
to be difficult for, you know,

399
00:21:39,400 --> 00:21:44,400
for smelting projects in the
West now to attract the funding,

400
00:21:45,680 --> 00:21:49,280
given that you can build an
equivalent primary aluminium

401
00:21:49,280 --> 00:21:53,360
smelter using Chinese technology
for half the capital cost and to

402
00:21:53,360 --> 00:21:57,760
build it quicker.
You know, it's I, I think we're

403
00:21:57,760 --> 00:22:00,640
kind of at that pivot point now
for the, for the aluminium

404
00:22:00,640 --> 00:22:03,280
ministry going forward that
we're going to see, we're going

405
00:22:03,280 --> 00:22:06,680
to see smelters built by Chinese
companies in, in jurisdictions

406
00:22:06,680 --> 00:22:09,360
that are kind of China friendly.
So that Indonesia or you know,

407
00:22:09,640 --> 00:22:11,840
Middle East or wherever it is.
But that I think is going to be

408
00:22:11,840 --> 00:22:15,600
the model of the future.
It's a bad spiral we're in and

409
00:22:15,720 --> 00:22:18,240
it's, it's not just the, the
aluminium industry it goes, it

410
00:22:18,240 --> 00:22:22,320
goes far beyond that.
On the on the flip side of that

411
00:22:22,520 --> 00:22:26,840
you referenced earlier, the
older Ghanaian mine would send

412
00:22:26,840 --> 00:22:32,200
product to Canada, Spain and and
a few other spots from memory

413
00:22:32,200 --> 00:22:35,200
looking at the cost curve,
they're now the they're now the

414
00:22:35,200 --> 00:22:37,880
the downstream parts that are
much higher on the cost curve.

415
00:22:38,200 --> 00:22:42,440
They are and that's because of
energy policy and older

416
00:22:42,440 --> 00:22:43,840
technology, correct?
Is that right?

417
00:22:43,920 --> 00:22:48,400
Energy policy and they're old
plants and they just their

418
00:22:48,400 --> 00:22:52,320
maintenance costs, their their
labor costs, they're all high

419
00:22:52,760 --> 00:22:57,160
and so they are exposed.
And then we and then we have

420
00:22:57,240 --> 00:22:59,680
Indonesia, they're coming in the
bottom like like Trav said as

421
00:22:59,680 --> 00:23:03,120
well.
And that as we spoke about last

422
00:23:03,120 --> 00:23:04,920
time, doesn't kind of come from
nowhere.

423
00:23:05,440 --> 00:23:08,480
I think Australia comes into the
conversation now and you know,

424
00:23:08,480 --> 00:23:12,120
we've seen since we last spoke a
shutdown here in, in Kwinana,

425
00:23:12,120 --> 00:23:16,000
the first of three, I think it
was paused and then officially

426
00:23:16,440 --> 00:23:19,200
written off last year.
So where do we kind of piece

427
00:23:19,200 --> 00:23:22,400
into this conversation and where
do we piece into the

428
00:23:22,400 --> 00:23:26,240
conversation going forward?
Geez, I wish I knew.

429
00:23:26,840 --> 00:23:31,400
I mean you know when you look at
it just purely on competitive

430
00:23:31,400 --> 00:23:37,240
advantage, right that here in
Australia we have we have good

431
00:23:37,440 --> 00:23:41,720
quality bauxite which is
treatable using the Bayer

432
00:23:41,720 --> 00:23:44,240
process.
And now if you were to build a

433
00:23:44,240 --> 00:23:48,200
new plant today, it would be Q1,
right.

434
00:23:48,280 --> 00:23:52,200
So, and if you looked at the,
you know, the three plants here

435
00:23:52,200 --> 00:23:57,920
in, in WA, they are you know, if
they were if they were operating

436
00:23:58,880 --> 00:24:03,080
on the basis of which they were
designed and that means treating

437
00:24:03,080 --> 00:24:05,920
bulks out of the grade upon
which they were designed.

438
00:24:05,920 --> 00:24:10,120
So that would be, you know, 30
plus alumina content, they would

439
00:24:10,800 --> 00:24:14,440
be Q1 all right, or straddling
Q1Q2.

440
00:24:14,440 --> 00:24:18,120
I'd say Q1 if they were, if, if
they were working, if they're at

441
00:24:18,120 --> 00:24:20,440
nameplate capacity and they were
treating the bulk site for which

442
00:24:20,440 --> 00:24:22,200
they were designed, they should
be Q1.

443
00:24:22,800 --> 00:24:25,440
The reality is that probably.
Well, the reality is, yeah,

444
00:24:25,440 --> 00:24:27,560
they're probably a little high
because they're, you know,

445
00:24:27,880 --> 00:24:31,520
they've got some issues here,
you know, with accessing bulks

446
00:24:31,520 --> 00:24:34,640
out of the up the grade which
they which they desperately need

447
00:24:34,640 --> 00:24:39,480
to get to, you know, to maintain
Q1 and to and to maintain their

448
00:24:40,240 --> 00:24:43,080
existence for the next decade
and beyond.

449
00:24:43,080 --> 00:24:47,320
They need access to that that
those sorts of grades of bulks

450
00:24:47,320 --> 00:24:49,000
on if I.
Think about that cost curve

451
00:24:49,000 --> 00:24:53,760
again, like if if these were.
We'll be able to flash it up at

452
00:24:53,760 --> 00:24:57,520
this point.
These were Q1 refineries and you

453
00:24:57,520 --> 00:25:02,080
explained, you know the minutiae
of, of why when we last spoke.

454
00:25:02,440 --> 00:25:05,600
But if, if they're being
displaced by a rapid build out

455
00:25:05,600 --> 00:25:09,480
of, of capacity in Indonesia,
there's, there's Guinea build

456
00:25:09,480 --> 00:25:14,240
out on the horizon and, and the
middle sort of looks pretty

457
00:25:14,240 --> 00:25:17,000
dominated by, by Chinese
capacity, which is pretty damn

458
00:25:17,000 --> 00:25:19,960
sticky even when it's uneconomic
in other industries when you've

459
00:25:19,960 --> 00:25:25,600
got like downstream things.
So is there a scenario where

460
00:25:25,600 --> 00:25:30,840
much of these previously Q1Q1
refineries can even become like

461
00:25:31,160 --> 00:25:35,080
like economic And is that is
that a realistic scenario?

462
00:25:36,160 --> 00:25:37,920
Over time, yeah, Yeah, Yeah, I
think so.

463
00:25:37,920 --> 00:25:40,280
I mean, you pointed out
something really important about

464
00:25:40,280 --> 00:25:42,640
that cost curve.
It's flat, right, that

465
00:25:42,640 --> 00:25:44,880
midsection of where you've got
the, you know, the Chinese

466
00:25:44,920 --> 00:25:47,040
refineries that have been built
probably over the last 10 years

467
00:25:47,040 --> 00:25:49,080
that are all that are processing
imported bulk site.

468
00:25:49,480 --> 00:25:51,120
You know, they've got very
similar cost structures.

469
00:25:51,120 --> 00:25:53,680
What's the, you know, what's the
difference that's you know, it's

470
00:25:53,680 --> 00:25:56,680
the same bulk site.
So therefore it's the same BIR

471
00:25:56,680 --> 00:26:00,560
bulk site to a limited ratio.
So tons per ton, same caustic

472
00:26:00,560 --> 00:26:03,880
soda consumption, pretty much
the same energy consumption.

473
00:26:04,080 --> 00:26:07,000
So they're, they're all similar
in that sense.

474
00:26:07,000 --> 00:26:10,880
So the exposure comes to the
refineries that are inland in

475
00:26:10,880 --> 00:26:13,760
China that Once Upon a time
we're, we're, we're processing

476
00:26:13,920 --> 00:26:18,160
domestic Bauksite that now can't
get that domestic bauksite

477
00:26:18,160 --> 00:26:20,400
because it's been depleted.
So they're importing.

478
00:26:21,200 --> 00:26:24,720
So you can imagine now you've
got an extra, you know, 150 RMB

479
00:26:24,720 --> 00:26:27,640
or whatever it is to get
imported bauxite inland.

480
00:26:27,640 --> 00:26:30,280
And so that's why you see that,
you know, that flat section of

481
00:26:30,280 --> 00:26:34,320
cost curve and then there's a
slightly high where those, those

482
00:26:34,320 --> 00:26:37,000
exposed inland refineries are.
And then you've got the rest of

483
00:26:37,000 --> 00:26:40,680
the world, the old, the old
capacity at the end.

484
00:26:40,680 --> 00:26:44,520
So you know, over time, I think
if the more capacity that comes

485
00:26:44,520 --> 00:26:46,240
on in Indonesia, that'll come on
Q1.

486
00:26:47,880 --> 00:26:51,920
Guinea, it's hard to tell.
I mean, Guinea, Guinea needs an

487
00:26:51,920 --> 00:26:54,640
energy solution to become to be
Q1 for the bulks, it's

488
00:26:54,640 --> 00:26:58,880
obviously, you know, high grade.
So with the right energy

489
00:26:58,880 --> 00:27:01,600
solution, they could come on Q1
as well in theory.

490
00:27:02,880 --> 00:27:06,720
Energy solutions don't just.
Don't, don't just materialize.

491
00:27:06,720 --> 00:27:08,880
No, no, I know that's right.
But whether that might?

492
00:27:08,880 --> 00:27:11,280
Be what's the most logical.
I think for the refineries,

493
00:27:11,280 --> 00:27:15,240
probably LNG, yeah, yeah.
But in over the longer term in

494
00:27:15,240 --> 00:27:17,280
Guinea, I mean, Guinea's got a
lot of potential for

495
00:27:17,920 --> 00:27:22,840
hydroelectric power.
And yeah, I mean, it's, it's

496
00:27:22,840 --> 00:27:26,680
the, it's the source, right, for
just about every large river in,

497
00:27:27,160 --> 00:27:29,480
you know, in that part of Africa
all starts in the Guinea and

498
00:27:29,480 --> 00:27:32,000
Highlands.
So they've got potential to do

499
00:27:32,000 --> 00:27:32,880
that.
And in fact, there's a, you

500
00:27:33,480 --> 00:27:37,800
know, there's a plan that that
Guinea will have smelters in the

501
00:27:38,040 --> 00:27:40,920
in the future, so based on
hydroelectric power.

502
00:27:41,360 --> 00:27:44,160
They're talking about smelters.
We have to go back to China.

503
00:27:44,200 --> 00:27:48,160
They have famously had the
45,000,000 tonne per annum

504
00:27:48,680 --> 00:27:52,080
production cap that's been in
place for around about a a

505
00:27:52,080 --> 00:27:54,880
decade and.
Somebody pointed out to me the

506
00:27:54,880 --> 00:28:01,280
other day, 45.43.
I said why is it 45.43?

507
00:28:01,280 --> 00:28:02,960
I don't know.
I don't know the answer,

508
00:28:03,800 --> 00:28:07,400
although we suspected it's based
on a, on a, on a consumption per

509
00:28:07,400 --> 00:28:11,200
capita kind of number.
OK, Yeah, but yeah, it's 45.

510
00:28:11,360 --> 00:28:14,000
And by the way, every company
that produces prime aluminium

511
00:28:14,000 --> 00:28:17,120
has its own number.
So some companies have already

512
00:28:17,120 --> 00:28:21,000
hit their cap, right.
And if you look at the number, I

513
00:28:21,000 --> 00:28:24,920
think, I mean I might be
slightly wrong here, but it

514
00:28:24,920 --> 00:28:28,520
might have been 45 point O
something million tons.

515
00:28:28,800 --> 00:28:31,040
So we're at the cap.
We're at the cap now.

516
00:28:31,480 --> 00:28:34,960
What happens next?
Smells get built in other

517
00:28:35,440 --> 00:28:37,880
jurisdictions by Chinese
metallurgical companies.

518
00:28:37,880 --> 00:28:41,160
That's my prediction that we
see, you know, in Indonesia.

519
00:28:41,160 --> 00:28:46,200
We'll see, I don't know, maybe 3
or 4 million tons of smell to

520
00:28:46,200 --> 00:28:48,400
capacity go in over the next
five years or so.

521
00:28:48,600 --> 00:28:52,800
But I think we'll also see more
capacity come into other other

522
00:28:52,800 --> 00:28:56,680
countries that have that are
that accept the China model and

523
00:28:56,680 --> 00:28:58,760
that might be the Middle East.
For example, you know, we might

524
00:28:58,760 --> 00:29:01,200
see some big smelters going to
the Middle East which are based

525
00:29:01,200 --> 00:29:04,320
on Chinese technology.
I think that but the cap is not

526
00:29:04,320 --> 00:29:06,400
budging.
Well, I don't think the cap

527
00:29:06,400 --> 00:29:09,040
budgets no.
And some people seem to think

528
00:29:09,040 --> 00:29:13,520
that it's it's a ridiculous
policy and China's would would

529
00:29:13,880 --> 00:29:16,520
do the right thing.
They should they should relax

530
00:29:16,520 --> 00:29:18,520
it.
But you've got to ask yourself

531
00:29:18,520 --> 00:29:20,680
why it's there and what, what
behaviour it's driving.

532
00:29:21,720 --> 00:29:27,480
It's there because because of,
to stop more smelters being

533
00:29:27,480 --> 00:29:33,240
built, energy consumption, which
is important, environmental

534
00:29:34,800 --> 00:29:38,920
constraints as well, but also
to, to encourage recycling

535
00:29:39,640 --> 00:29:42,760
because China's got a long way
to go to, to get up to the

536
00:29:42,760 --> 00:29:45,040
recycle rates of other, other
countries.

537
00:29:45,040 --> 00:29:47,600
So I kind of make you know all
the reasons the caps in place, I

538
00:29:47,600 --> 00:29:49,800
think kind of make sense.
And if you can then export the

539
00:29:50,600 --> 00:29:54,320
the construction and and
operation into other countries,

540
00:29:54,320 --> 00:29:56,240
why wouldn't you do that?
And I think that's just the,

541
00:29:56,840 --> 00:29:58,920
that's what we're going to.
See, and does it improve the

542
00:29:58,920 --> 00:30:01,840
profitability of the the
smelters as well maybe

543
00:30:03,080 --> 00:30:05,960
unprofitable projects not not
going on, more marginal projects

544
00:30:05,960 --> 00:30:08,920
not going ahead, only the best
going forward.

545
00:30:09,800 --> 00:30:11,440
Smelting.
You mean outside of China?

546
00:30:11,880 --> 00:30:15,000
Actually in inside of China,
like I'm kind of getting at this

547
00:30:15,000 --> 00:30:16,640
broader anti involution theme as
well.

548
00:30:16,640 --> 00:30:18,560
Does it stop excessive
competition?

549
00:30:20,520 --> 00:30:25,440
No, I, I don't think so.
I think, I mean, there's also a

550
00:30:25,440 --> 00:30:28,360
policy in China that, you know,
for older smelters that are

551
00:30:28,360 --> 00:30:33,960
running a lower, lower currents.
So if you, I think, I think the

552
00:30:33,960 --> 00:30:37,760
number is like if you're running
an older smelter that's 240 KA

553
00:30:37,760 --> 00:30:40,080
or below, then you are mandated
to shut down.

554
00:30:41,400 --> 00:30:44,760
So that could be replaced with
a, you know, with a new 600 KA

555
00:30:46,120 --> 00:30:49,560
smelter and and and the and the
capacity can be kind of horse

556
00:30:49,560 --> 00:30:52,200
traded, you know, problems to
province, but as long as you're

557
00:30:52,200 --> 00:30:56,560
under the cap, so new smelters
for old smelters, you know,

558
00:30:56,720 --> 00:30:59,560
better efficiency and you know,
and so forth.

559
00:30:59,560 --> 00:31:04,560
So I can see some more of that
happening, but no, I think that

560
00:31:05,280 --> 00:31:09,080
I think that the cap holds.
Is the landscape you're kind of

561
00:31:09,200 --> 00:31:11,880
just describing.
Imagine this time the next year

562
00:31:11,880 --> 00:31:14,320
we're sitting here, they're at
48 million tons.

563
00:31:15,800 --> 00:31:16,800
We're just cut this.
Bit out of the.

564
00:31:16,920 --> 00:31:20,280
Conversation.
Editing sweep floor anyway to.

565
00:31:21,040 --> 00:31:26,040
Me to me what you describing and
I, I don't know this sector

566
00:31:26,040 --> 00:31:29,560
nearly as well as you do, but it
feels like you're describing one

567
00:31:29,560 --> 00:31:33,520
where the the incumbents with
old technology who don't have

568
00:31:33,520 --> 00:31:38,280
access to the Chinese capability
or or or strategic supply in the

569
00:31:38,280 --> 00:31:42,560
countries that that have new
books are coming online are

570
00:31:42,560 --> 00:31:45,880
really in a bit of a dire
predicament given yeah the the

571
00:31:45,880 --> 00:31:49,240
capacity that's building out for
cheaper and in favourable

572
00:31:49,240 --> 00:31:50,160
countries for the.
Smelting.

573
00:31:50,280 --> 00:31:52,280
You mean smelting?
Yeah or yeah.

574
00:31:52,760 --> 00:31:54,480
Smelting, refining, is that
wrong?

575
00:31:55,640 --> 00:31:57,560
Like, like I, I, I hear what
you're saying.

576
00:31:57,560 --> 00:31:59,480
And I think what does that mean
for Alcoa?

577
00:31:59,480 --> 00:32:01,800
What does that mean for, you
know, for Rio's aluminium

578
00:32:01,800 --> 00:32:04,680
business?
It it doesn't feel great.

579
00:32:05,600 --> 00:32:09,440
No, I, I look, I think the way
to think of it is that anywhere

580
00:32:09,440 --> 00:32:13,480
where you see a smelter now, it
means smelting, operating

581
00:32:13,480 --> 00:32:16,840
outside of China in, you know,
whether it's in Brazil or, or

582
00:32:16,840 --> 00:32:19,360
the Middle East or in Australia,
wherever it might be, wherever

583
00:32:19,360 --> 00:32:21,640
there's a smelter, there's a
power contract.

584
00:32:21,640 --> 00:32:24,680
All right, Electricity
contracts, about 1/3 of the cost

585
00:32:24,680 --> 00:32:27,400
is electricity.
Yeah, yeah.

586
00:32:27,680 --> 00:32:31,280
You know, as the, as the
original contract rolls off,

587
00:32:32,360 --> 00:32:35,040
it's got to be renegotiated.
And typically that's

588
00:32:35,040 --> 00:32:38,200
renegotiated at a higher price
and for a shorter amount of

589
00:32:38,200 --> 00:32:41,040
time.
So it's kind of you get a

590
00:32:41,040 --> 00:32:44,600
lifeline for, you know, for a
few years and then another

591
00:32:44,600 --> 00:32:47,080
lifeline and then another.
And that's what we're seeing in

592
00:32:47,080 --> 00:32:48,880
Australia.
You keep getting these life

593
00:32:48,880 --> 00:32:52,400
lines because the moment you
lose the the power contract,

594
00:32:53,760 --> 00:32:56,680
it's game over.
Like your negotiating leverage

595
00:32:56,680 --> 00:32:58,560
has just disappeared because
you've got the thing and you

596
00:32:58,560 --> 00:33:00,600
need the power.
That's that's right.

597
00:33:00,600 --> 00:33:03,360
But by the same token, a lot of
the electricity grids don't

598
00:33:03,360 --> 00:33:07,240
forget need the stability that
comes with a with a decent base

599
00:33:07,240 --> 00:33:09,440
load like a smelter.
I think people tend to

600
00:33:09,440 --> 00:33:11,880
underestimate the importance of
that in a, in a network as well.

601
00:33:11,880 --> 00:33:14,200
So, you know, that's, that plays
well.

602
00:33:14,200 --> 00:33:18,440
So there is some degree of
negotiating on both sides.

603
00:33:18,440 --> 00:33:22,240
But interestingly, you see that
S 32 is just announced, Moselle

604
00:33:22,320 --> 00:33:25,600
Moselle's being shut down.
I mean, the, you lose the power

605
00:33:25,600 --> 00:33:29,360
contract, you, what do you do?
You, you're exposed and that's

606
00:33:30,160 --> 00:33:32,240
happened.
So I think you just see more and

607
00:33:32,240 --> 00:33:36,040
more of that as these contracts
kind of roll off and the demand

608
00:33:36,040 --> 00:33:40,040
for the electricity comes from
other places, you know, data

609
00:33:40,040 --> 00:33:43,320
centers and, you know, whatever
else it might be, it becomes a

610
00:33:43,320 --> 00:33:45,200
competition.
I'm glad you bring that up

611
00:33:45,200 --> 00:33:49,120
because you see the stark
numbers about the quantity of

612
00:33:49,120 --> 00:33:53,160
aluminium required, you know,
for multiple, multiple reasons

613
00:33:53,160 --> 00:33:57,920
and the commissioning of the new
smelters to actually produce

614
00:33:57,920 --> 00:34:01,920
that, that quantity of aluminium
is incredibly energy intensive.

615
00:34:01,920 --> 00:34:05,000
And that energy now has to also
compete with with data centers

616
00:34:05,080 --> 00:34:07,320
who are hungry for the energy
off Take 2.

617
00:34:07,360 --> 00:34:09,600
That's right.
So, you know, how does that play

618
00:34:09,600 --> 00:34:11,719
out?
Well, who's prepared to pay what

619
00:34:11,719 --> 00:34:14,679
for, you know, for electricity
over what period of time?

620
00:34:14,679 --> 00:34:17,639
And that's, that's, that's where
we're headed.

621
00:34:18,960 --> 00:34:21,840
So.
The expression you gave us of a

622
00:34:21,840 --> 00:34:25,760
can just being condensed energy.
I'll never forget that when we

623
00:34:25,760 --> 00:34:28,360
when we spoke last time.
Like calculated electricity.

624
00:34:28,360 --> 00:34:30,120
Yeah, it's.
Yeah, it's.

625
00:34:30,719 --> 00:34:35,000
Well, yeah, that's yeah, I'm,
I'm not sure I got that, that

626
00:34:35,239 --> 00:34:38,040
explanation exactly right.
But I mean, that's, it's a good

627
00:34:38,040 --> 00:34:39,960
way of thinking about it, right?
When you pick up a can that

628
00:34:39,960 --> 00:34:42,800
that's, you know, once you, when
you dissolve alumina, we're

629
00:34:42,840 --> 00:34:45,080
going to get to alumina I think
in a minute because I've got

630
00:34:45,760 --> 00:34:48,480
something to show you there.
But, you know, when you dissolve

631
00:34:48,480 --> 00:34:52,560
the alumina into the, into the
bath into, into the electrolyte

632
00:34:52,560 --> 00:34:55,719
that's used in a, in a model
which is called cryolite.

633
00:34:56,760 --> 00:34:59,640
And when that, you know, the
alumina kind of breaks to

634
00:35:00,280 --> 00:35:04,160
aluminium and, and oxygen, the
oxygen is reduced by the carbon

635
00:35:04,160 --> 00:35:08,040
anode and creates carbon dioxide
and the, and the aluminium ion

636
00:35:08,800 --> 00:35:11,440
is then grabbing the free
electrons and producing the

637
00:35:11,440 --> 00:35:12,960
metal.
So in that sense, that's what it

638
00:35:12,960 --> 00:35:15,240
is.
You know, it's, it's that those

639
00:35:15,320 --> 00:35:17,520
additional electrons that are
creating that.

640
00:35:17,520 --> 00:35:22,160
But the, the thing that I'm
constantly reminded when I talk

641
00:35:22,160 --> 00:35:25,560
to people about smelting is that
that the operating window for

642
00:35:25,560 --> 00:35:28,880
that process to take place, it's
not is very, very small.

643
00:35:29,480 --> 00:35:32,240
But there is so much aluminium
produced now that the

644
00:35:32,240 --> 00:35:36,480
understanding of that, of that
process is now so deep that the

645
00:35:36,520 --> 00:35:39,320
energy consumption is getting
closer and closer to the

646
00:35:39,320 --> 00:35:41,680
technical limit.
And that's where the Chinese

647
00:35:41,680 --> 00:35:45,800
technology kind of kicks in
because it is the lowest energy

648
00:35:45,800 --> 00:35:48,000
consuming technology.
And that's.

649
00:35:48,000 --> 00:35:50,720
What's driving that per unit?
Per unit aluminium, yeah.

650
00:35:50,720 --> 00:35:53,320
So like they're down at sort of
like 12 1/2 kilograms per per

651
00:35:53,480 --> 00:35:54,880
per kilogram.
Wow.

652
00:35:55,720 --> 00:36:00,680
So yeah, it's it's all back to
electricity and electrons.

653
00:36:02,280 --> 00:36:06,480
I'm glad that stuck in your
mind. 100% Let's, let's talk a

654
00:36:06,480 --> 00:36:08,480
bit about what we can do here in
Australia.

655
00:36:08,480 --> 00:36:12,120
As you mentioned before, a bit
of alumina, high purity alumina

656
00:36:12,120 --> 00:36:18,080
is a a small part of the the
massive market that aluminium

657
00:36:18,080 --> 00:36:20,280
and the whole supply chain kind
of is, yeah.

658
00:36:20,280 --> 00:36:22,000
But we're doing something in
Australia.

659
00:36:22,000 --> 00:36:23,480
We're trying, yeah.
We are yeah.

660
00:36:23,520 --> 00:36:26,480
It's we're showing you this,
this sample that I bought in.

661
00:36:26,520 --> 00:36:31,160
I'm extremely grateful to the
guys from Alpha HPA for letting

662
00:36:31,160 --> 00:36:32,840
me borrow this rather than keep
it.

663
00:36:32,840 --> 00:36:36,960
I promise I'll give it back.
But that's a wafer of of of of

664
00:36:36,960 --> 00:36:40,280
pure alumina in a in a crystal,
which is used when you.

665
00:36:41,000 --> 00:36:45,040
Say pure, you mean 4 NS?
I mean 4 N plus, yeah, I mean

666
00:36:45,320 --> 00:36:47,480
higher.
I mean, I mean we're going to be

667
00:36:47,480 --> 00:36:50,480
careful when we we're going to
change horses here and talk

668
00:36:50,480 --> 00:36:52,600
about something which is not a
commodity and never will be.

669
00:36:52,720 --> 00:36:55,800
We're talking about a, you know,
a batch process where you know,

670
00:36:55,800 --> 00:36:59,600
where a higher very, very high
purity product is used for a

671
00:36:59,600 --> 00:37:02,720
particular application of which
there are several applications.

672
00:37:02,720 --> 00:37:05,680
And therefore there are
different, you know, I don't

673
00:37:05,920 --> 00:37:09,320
want to say grades of, of HPA,
but you know what I mean.

674
00:37:09,520 --> 00:37:12,280
It has an application.
Therefore certain impurities

675
00:37:12,920 --> 00:37:16,080
cannot be present down to past
pavilion, right?

676
00:37:16,080 --> 00:37:18,320
And that's whether it's halides
or uranium or, you know,

677
00:37:18,320 --> 00:37:20,480
depending on the, on the, on the
application.

678
00:37:21,160 --> 00:37:24,200
But that I mean, this, this
wafer which is used to print

679
00:37:24,200 --> 00:37:30,800
circuitry on, you know, gallium
nitride for, for, for LE DS and

680
00:37:30,840 --> 00:37:34,720
for semiconductors, you know,
that it's, it's all just kind of

681
00:37:34,720 --> 00:37:37,960
print on that as the substrate.
And yeah, I was lucky enough to

682
00:37:37,960 --> 00:37:40,040
go up and have a look through
the through the plant last week

683
00:37:40,040 --> 00:37:43,440
and it is seriously impressive.
But it's a great example of, I

684
00:37:43,440 --> 00:37:47,440
mean, I've got the, the bulks
out here as well that one of my

685
00:37:47,440 --> 00:37:50,840
kids found in a op shop for 2
bucks or something.

686
00:37:50,840 --> 00:37:53,200
But if I, you know, you compare
those two things, right?

687
00:37:53,200 --> 00:37:56,320
So his bulks are this, you know,
it's mined and you know, weeper,

688
00:37:56,320 --> 00:37:58,400
let's say, and you can get on a
boat to 20 bucks a ton.

689
00:37:59,120 --> 00:38:03,240
And that wafer, I mean, the,
the, the, the HPA that produced

690
00:38:03,240 --> 00:38:08,640
that like 25,000 bucks a ton.
So 20 bucks a ton to 25,000

691
00:38:08,640 --> 00:38:09,680
bucks a ton.
And that's all done in

692
00:38:09,680 --> 00:38:13,200
Australia.
So yeah, that's, that's, that's

693
00:38:13,200 --> 00:38:16,640
pretty impressive.
It's big value add, massive

694
00:38:16,640 --> 00:38:19,200
value add.
And yeah, like a sum.

695
00:38:19,920 --> 00:38:21,680
Very fortunate to have had a
look around them.

696
00:38:22,120 --> 00:38:24,120
It's a very small market, right?
Oh, tiny.

697
00:38:24,120 --> 00:38:26,760
Yeah, yeah, yeah.
It's, you know, 50,000 plus.

698
00:38:27,960 --> 00:38:31,680
Again, it comes down to back to
your definition of what, you

699
00:38:31,680 --> 00:38:34,000
know, what's HPA?
There's a there's a tendency for

700
00:38:34,000 --> 00:38:36,400
people to think of it like us
because we're commodity thinkers

701
00:38:36,440 --> 00:38:39,000
think that's right.
You get to this, this, this

702
00:38:39,320 --> 00:38:44,960
product called now HPA that once
you achieve a certain, a certain

703
00:38:44,960 --> 00:38:46,560
purity, then you you're in the
market.

704
00:38:46,560 --> 00:38:48,320
It just does not work like that
at all.

705
00:38:48,320 --> 00:38:51,400
It's for a particular
application and you have to be

706
00:38:51,400 --> 00:38:54,200
qualified, you have to be a
qualified supplier.

707
00:38:54,200 --> 00:38:56,840
And you know, as these guys
reminded me last week, the

708
00:38:56,840 --> 00:38:58,520
qualification process can take
years.

709
00:38:58,960 --> 00:39:02,880
Three years, but yeah.
That's an awful lot of time to

710
00:39:02,880 --> 00:39:06,480
spend to get your product in the
door.

711
00:39:06,480 --> 00:39:10,080
But once you do, then that's an
enormous barrier as well to

712
00:39:10,120 --> 00:39:13,640
others and for you to keep, you
know, for you to keep into it.

713
00:39:13,640 --> 00:39:17,240
So yeah, it's fascinating stuff.
I never thought I would be so

714
00:39:17,240 --> 00:39:19,920
far down at value chain.
Talking about box side room.

715
00:39:20,600 --> 00:39:23,960
Yeah, we are holding a wafer of,
you know, of sapphire.

716
00:39:24,560 --> 00:39:26,040
Amazing.
We've, we've learnt this with

717
00:39:26,200 --> 00:39:28,720
Lithium Land as well and it's a
bit of a chicken and egg problem

718
00:39:28,720 --> 00:39:31,720
when you need to get the the
project funded and financed and

719
00:39:31,720 --> 00:39:34,720
these sorts of things, but you
need to be able to produce it

720
00:39:34,720 --> 00:39:37,960
regularly and then consistently,
just super consistent.

721
00:39:37,960 --> 00:39:40,240
Qualification to justify, yeah.
Yeah.

722
00:39:40,520 --> 00:39:45,640
And the process you were talking
about this earlier as well that

723
00:39:46,240 --> 00:39:50,200
you know, the, the process to
produce HPA is typically you

724
00:39:50,200 --> 00:39:53,640
start with high purity primary
aluminium and you go backwards

725
00:39:53,640 --> 00:39:57,520
to, to the oxide.
So you, you know, you've removed

726
00:39:57,520 --> 00:40:01,040
a lot of the impurities start
with, but the the process that's

727
00:40:01,040 --> 00:40:05,080
used in alpha goes the other
way, starting with with alumina.

728
00:40:05,880 --> 00:40:08,560
And then purifying that you
know, through their process too.

729
00:40:08,640 --> 00:40:11,240
So they have you know somewhat
of a cost advantage there as.

730
00:40:11,840 --> 00:40:14,320
Well, getting in the weeds on on
this chemistry actually makes me

731
00:40:14,320 --> 00:40:17,000
think of that.
The chat around substitution, if

732
00:40:17,000 --> 00:40:21,120
we go back to the big level,
copper, aluminium, and I think

733
00:40:21,120 --> 00:40:24,880
we touched on it last time, but
we did when we were messaging

734
00:40:24,880 --> 00:40:28,880
before speaking today, you, you
made the comment which stuck out

735
00:40:28,880 --> 00:40:31,800
that you're left less of a
skeptic than you once were.

736
00:40:31,960 --> 00:40:34,120
Why is that?
What's happening?

737
00:40:36,240 --> 00:40:37,160
The facts.
It's hard.

738
00:40:38,000 --> 00:40:40,240
To know when the facts get in
the way of a good story.

739
00:40:41,880 --> 00:40:45,360
I guess I'm, I'm less of a
skeptic for certain

740
00:40:45,360 --> 00:40:47,680
applications.
I mean, we're starting to see

741
00:40:47,680 --> 00:40:53,080
substitution in, in China in, in
a VS we're starting to see

742
00:40:53,080 --> 00:40:57,120
substitution of aluminium is
being substituted by steel.

743
00:40:57,760 --> 00:41:01,520
So for panels and so forth,
they're going back to because

744
00:41:01,520 --> 00:41:03,520
aluminium is getting expensive,
yeah.

745
00:41:03,520 --> 00:41:05,520
I mean, steel has already been
proven in the application and

746
00:41:05,560 --> 00:41:09,400
plus, you know, steel grades are
are always improving strength

747
00:41:09,400 --> 00:41:11,160
and so forth.
And so they can make them

748
00:41:11,240 --> 00:41:16,080
thinner and thinner and more,
you know, lighter.

749
00:41:16,080 --> 00:41:21,080
And if they can compete on cost
with aluminium starting to where

750
00:41:21,080 --> 00:41:23,440
it is today.
Yeah, we're starting to see

751
00:41:23,440 --> 00:41:28,040
substitution back-to-back to
steel, steel panels.

752
00:41:28,040 --> 00:41:31,040
So, you know, you can see that
type of substitution.

753
00:41:31,040 --> 00:41:33,520
You can see some substitution.
We'll talk about mag I think in

754
00:41:33,520 --> 00:41:36,200
a minute as well.
But some substitution back to

755
00:41:36,200 --> 00:41:39,400
mag because the aluminium prices
started to, you know, to, to get

756
00:41:39,840 --> 00:41:43,400
a little high.
So we are starting to see some

757
00:41:43,400 --> 00:41:47,320
substitution in that sense.
But I mean, I, I, I was, the

758
00:41:47,320 --> 00:41:50,160
comments I made last time was
I'm still skeptical about

759
00:41:50,160 --> 00:41:55,160
substituting large volumes of
Ali for copper, for example, in

760
00:41:55,160 --> 00:41:58,240
certain applications where it's
just not that simple.

761
00:41:58,880 --> 00:42:02,280
There are so many other things
to take into consideration, not

762
00:42:02,280 --> 00:42:05,840
just the price, because, you
know, a lot of a lot of

763
00:42:05,840 --> 00:42:08,040
situations it's a redesign.
Yeah.

764
00:42:08,280 --> 00:42:09,680
And then it's a re
qualification.

765
00:42:10,560 --> 00:42:13,120
And then, by the way, if you're
not using copper, then the

766
00:42:13,120 --> 00:42:15,400
copper demands going down and
you are using other means.

767
00:42:15,400 --> 00:42:19,200
So it's going up, you know, so
it's not, it's just not that.

768
00:42:19,640 --> 00:42:22,240
It's just not that simple in
those types of applications.

769
00:42:22,240 --> 00:42:24,880
But yeah, in some, yeah.
Yeah, we're seeing it.

770
00:42:25,280 --> 00:42:27,960
So which, which use cases is it
most prevalent?

771
00:42:27,960 --> 00:42:30,720
It's just, it's just for the
like, you know, the EV, like,

772
00:42:30,720 --> 00:42:33,760
you know, substitutions to steel
that you're seeing.

773
00:42:33,760 --> 00:42:39,240
Yeah, that's where we're seeing
it over the past six months or a

774
00:42:39,240 --> 00:42:42,240
year or so I mean given also in
China what's happening you know

775
00:42:42,280 --> 00:42:49,800
construction down yeah you know
vehicle production up yeah so

776
00:42:49,920 --> 00:42:53,240
the the the steel sector pivots
yeah right.

777
00:42:53,240 --> 00:42:56,320
And if there's an opportunity
for them to displace because the

778
00:42:56,920 --> 00:42:58,960
because the alley price is high
as well, then they'll work hard

779
00:42:58,960 --> 00:43:00,880
to make that happen.
And that's what we're, that's

780
00:43:00,880 --> 00:43:03,520
why I think we're seeing it.
There's a lot of steel in China

781
00:43:03,520 --> 00:43:05,680
at the moment.
There is, yeah.

782
00:43:05,680 --> 00:43:07,560
There is a lot.
So, so when we talk about the

783
00:43:08,320 --> 00:43:11,080
the pricing differentials as
well, I think we've got to talk

784
00:43:11,080 --> 00:43:14,160
about the the tariffs and, and
the US right now because

785
00:43:14,840 --> 00:43:17,560
aluminium has come up a lot
because there's a lot happening

786
00:43:17,560 --> 00:43:20,720
in in Canada and a lot comes
over the border and a lot goes

787
00:43:20,720 --> 00:43:22,760
back over the border and comes
back and goes back and forth.

788
00:43:23,440 --> 00:43:27,240
But both of those commodities
moved very strongly.

789
00:43:27,240 --> 00:43:32,520
Copper moved very strongly away
from its China or London listed

790
00:43:32,760 --> 00:43:37,200
price as well, because the the
tariff kind of changes that we.

791
00:43:38,640 --> 00:43:41,200
If you look up the, the, you
know, historically the, the,

792
00:43:41,280 --> 00:43:45,120
the, the movement of primary
aluminium into the, into the US

793
00:43:45,120 --> 00:43:48,800
come from Canada.
So, you know, we hit them with

794
00:43:48,800 --> 00:43:52,200
the tariff.
Then what happens, you know,

795
00:43:52,240 --> 00:43:57,240
things get volatile and, and the
industry's got to try and figure

796
00:43:57,240 --> 00:44:01,040
out the, the path of least
resistance for the metal to

797
00:44:01,040 --> 00:44:03,640
start moving elsewhere.
You know, it's kind of try and

798
00:44:03,760 --> 00:44:08,720
find how it kind of settles
under a new, a new system of

799
00:44:08,720 --> 00:44:10,520
tariffs.
And then if they change again,

800
00:44:10,560 --> 00:44:13,880
and then it kind of got to
change again.

801
00:44:13,880 --> 00:44:16,960
And, and what it does is just
introduces an enormous amount of

802
00:44:16,960 --> 00:44:20,320
volatility.
That's what you see in the in

803
00:44:20,320 --> 00:44:24,640
the price in all that's what you
see also in the premiums.

804
00:44:25,400 --> 00:44:29,000
So the LMA price which can be
impacted by so many different

805
00:44:29,000 --> 00:44:31,600
things now, but you see it in
the premiums because that's a

806
00:44:31,600 --> 00:44:35,080
reflection of the regional
markets that the premiums will

807
00:44:35,080 --> 00:44:38,760
move to give you an indication
more of the physical market than

808
00:44:39,440 --> 00:44:43,720
than you know the theoretical
market of the LMA or Shanghai

809
00:44:43,760 --> 00:44:45,040
or.
Yeah.

810
00:44:45,960 --> 00:44:49,320
So we, I mean to tie the steel
component back into it, we, we

811
00:44:49,320 --> 00:44:54,120
saw a transaction with US Steel
and just real protectionism in,

812
00:44:54,440 --> 00:44:57,480
in the, in the US in, in a sense
and I was a Japanese partner

813
00:44:57,560 --> 00:45:00,400
coming in.
But do you anticipate any, any

814
00:45:00,400 --> 00:45:04,200
of that sort of stuff happening
for the now diminished and and

815
00:45:04,200 --> 00:45:07,440
limited sort of Western supply
that we see in in some pockets

816
00:45:07,440 --> 00:45:12,120
of the Western world?
You mean an aluminium?

817
00:45:12,760 --> 00:45:15,240
Yeah, I mean, I mean an
aluminium, I mean in Australia

818
00:45:15,240 --> 00:45:17,840
as well.
Tomago, too, had government

819
00:45:17,840 --> 00:45:19,280
support going forward.
Right.

820
00:45:19,280 --> 00:45:20,840
Well, yeah.
But I mean, that comes back to

821
00:45:20,840 --> 00:45:23,640
the point of the, of the, of the
power contracts, right?

822
00:45:23,640 --> 00:45:27,480
If you've got to, you've just
got to give a lifeline.

823
00:45:27,480 --> 00:45:31,040
It has to be, it has to be
economic for the, the, the, the

824
00:45:31,040 --> 00:45:35,120
smelter to, to continue, you
know, at a power price that

825
00:45:35,120 --> 00:45:39,520
everybody's kind of happy with.
I see that in the aluminium

826
00:45:39,520 --> 00:45:43,000
industry, I see that much more
of a, of an influence of how the

827
00:45:43,000 --> 00:45:49,960
industry is going to transpire.
It's much more of a linkage to

828
00:45:50,280 --> 00:45:53,000
power than it is for the steel
sector, for example.

829
00:45:54,200 --> 00:45:58,040
Sure, but there's also a lot of
jobs at stake at in some of

830
00:45:58,040 --> 00:46:01,240
these aluminium plants.
So it inherently is, is pretty

831
00:46:01,240 --> 00:46:04,280
political when it comes to, you
know, filling the gap between

832
00:46:04,280 --> 00:46:06,960
expensive power all of a sudden
and profit.

833
00:46:06,960 --> 00:46:07,400
Margin.
Yeah.

834
00:46:07,400 --> 00:46:11,560
Well, it's not only that it's,
it's also the, the, the, the

835
00:46:11,560 --> 00:46:15,400
perception of the of the power
price itself, right.

836
00:46:15,400 --> 00:46:21,200
Is it a subsidy?
I mean, you tell me, is, is it a

837
00:46:21,200 --> 00:46:24,560
subsidy or is it not that, that,
that, you know, governments give

838
00:46:24,560 --> 00:46:27,800
to smelters to keep them going?
Because you could argue that

839
00:46:27,800 --> 00:46:31,200
that power could be sold into
the grid at a much higher price

840
00:46:31,200 --> 00:46:34,320
than what the, the smelter is
paying for it.

841
00:46:34,640 --> 00:46:38,040
And I'd argue that's not,
that's, that's a very simplistic

842
00:46:38,040 --> 00:46:42,320
view of how you know how
electricity systems work,

843
00:46:44,200 --> 00:46:46,200
especially when you're
considering the, the, the, the

844
00:46:46,200 --> 00:46:49,080
importance of a base load and
the, and the, the cost to

845
00:46:49,080 --> 00:46:52,000
generate it.
This is complicated.

846
00:46:52,000 --> 00:46:55,320
So I don't every time I see, you
know, something like we've seen

847
00:46:55,320 --> 00:46:57,680
at Tom Gang, we sort of Portland
not long ago and same thing

848
00:46:57,680 --> 00:47:00,360
happened in New Zealand a few
years ago that it's a

849
00:47:00,360 --> 00:47:04,800
negotiation where where there
are a lot of stakeholders here.

850
00:47:04,880 --> 00:47:09,640
It's not just the general
public, you know, having to pay

851
00:47:09,640 --> 00:47:12,120
more for their electricity to
keep their air conditioners

852
00:47:12,120 --> 00:47:15,360
going because there's a massive
subsidy going to A to a smelter.

853
00:47:15,360 --> 00:47:17,600
It's just not that simple,
right.

854
00:47:17,600 --> 00:47:20,680
So, you know, you look at the
come back to the Australian

855
00:47:20,680 --> 00:47:24,480
smelters.
I think that's, you know, what

856
00:47:25,280 --> 00:47:28,960
does the future look like?
It's I think we just keep

857
00:47:29,920 --> 00:47:34,080
pushing those power blocks, you
know, into the future until,

858
00:47:35,040 --> 00:47:37,200
until you can't push them any
further.

859
00:47:37,280 --> 00:47:39,640
And that's the end of the that's
the end of the industry.

860
00:47:40,800 --> 00:47:47,320
Before we talk about Mag, I just
want to, I want to pry into any

861
00:47:47,320 --> 00:47:52,760
insights you might have about
about the the the large, you

862
00:47:52,760 --> 00:47:57,520
know, western producers of, of
aluminium, Yeah, Alcoa, Rio S

863
00:47:57,520 --> 00:48:02,120
32, even even Glencore.
What what are the dynamics that

864
00:48:02,120 --> 00:48:04,840
we should think about when we we
think about these majors, their

865
00:48:04,840 --> 00:48:07,920
their their different
vulnerabilities in the changing

866
00:48:07,920 --> 00:48:10,400
dynamics?
Are there potential kind of key

867
00:48:10,400 --> 00:48:14,040
risks that some of them might be
under more than others and and

868
00:48:15,400 --> 00:48:18,360
any of them have to do, you
know, deal or divest to to

869
00:48:18,360 --> 00:48:20,960
survive in that landscape?
I think the best way to look at

870
00:48:20,960 --> 00:48:23,000
it is actually on an asset by
asset basis.

871
00:48:23,280 --> 00:48:25,160
That's the, that's the key for
these.

872
00:48:25,280 --> 00:48:27,640
I mean, every one of those
companies that you mentioned has

873
00:48:27,640 --> 00:48:29,640
got some fantastic assets and
some dogs.

874
00:48:30,800 --> 00:48:33,200
And you know, when you look at
them all kind of individually

875
00:48:33,680 --> 00:48:36,520
and, and, and see where those
exposures might be that what are

876
00:48:36,520 --> 00:48:39,360
they going to do about them?
Because you know, ultimately

877
00:48:39,360 --> 00:48:41,600
what you're looking for, you
know, as an investment into the

878
00:48:41,600 --> 00:48:45,200
sector is to get, you know, come
back to the cost curve, low cost

879
00:48:45,200 --> 00:48:47,960
books or low cost aluminum or
low cost prime aluminum on the

880
00:48:47,960 --> 00:48:50,120
on the cost curve.
What a wonderful business that

881
00:48:50,120 --> 00:48:53,360
is to be in.
But for each one of those

882
00:48:53,360 --> 00:48:55,440
companies you mentioned, there's
an exposure somewhere.

883
00:48:56,280 --> 00:48:59,640
And I think if you look at where
those exposures are and let's

884
00:48:59,880 --> 00:49:00,840
what are they going to do about
it?

885
00:49:00,840 --> 00:49:03,560
You know, this is the long term
they're going to continue to be

886
00:49:03,560 --> 00:49:05,640
in it because they want to
remain vertically integrated.

887
00:49:05,640 --> 00:49:09,600
Or is there another, another
option or two?

888
00:49:09,720 --> 00:49:12,960
So I think that's the, that's
the the key here to look at them

889
00:49:12,960 --> 00:49:15,680
and and watch what they may
divest or what they might

890
00:49:16,440 --> 00:49:22,240
acquire to kind of get that, get
it back to a a really attractive

891
00:49:22,240 --> 00:49:27,080
low cost long term business,
which is, you know, companies

892
00:49:27,080 --> 00:49:30,760
like Alcoa and Rio and BHPM and
that's that's their DNA, right?

893
00:49:31,320 --> 00:49:37,800
Alcoa has it commands a a really
phenomenal multiple, but it's

894
00:49:37,800 --> 00:49:42,360
it's you know, pureplay
aluminium business S 32 like

895
00:49:42,400 --> 00:49:45,160
does not have a a phenomenal
multiple just in its its market

896
00:49:45,320 --> 00:49:49,400
market trading valuation.
And and you know, Glencore is

897
00:49:49,800 --> 00:49:52,560
bank or Rio that they don't have
the same multiple as as Alcoa

898
00:49:52,600 --> 00:49:55,480
either.
Like just from a simplistic, you

899
00:49:55,480 --> 00:49:58,800
know, banker pitch, you pitch
spin out your spin out your

900
00:49:58,800 --> 00:50:03,360
aluminium business and listed in
in the US and get get Alcoa as

901
00:50:03,360 --> 00:50:06,240
multiple value creation.
You think that they're.

902
00:50:06,240 --> 00:50:09,000
All well and good in these
million prices, 3100 bucks the

903
00:50:09,000 --> 00:50:11,840
mid the Midwest premium is where
it is right now because they are

904
00:50:11,840 --> 00:50:15,200
making you know, good margins on
on their metal.

905
00:50:15,520 --> 00:50:18,920
But you know the the rest of
them don't necessarily have the

906
00:50:18,920 --> 00:50:23,800
same, the same asset profile.
So you know, you want to spin

907
00:50:23,800 --> 00:50:26,280
them out and expose them.
If you, you know, if you take

908
00:50:26,280 --> 00:50:28,960
Rio as an example, I mean those
two alumina refineries in

909
00:50:28,960 --> 00:50:33,200
Queensland are Q3 or Q4, you
know, but they've got some great

910
00:50:33,200 --> 00:50:36,080
smelting assets and they've got
some fantastic books like mines

911
00:50:36,080 --> 00:50:37,920
as well.
So wouldn't it be great to have

912
00:50:37,920 --> 00:50:40,600
the exposure or you know, right
across that value chain to be

913
00:50:40,600 --> 00:50:44,960
low cost all the way.
That's what the and, and that

914
00:50:44,960 --> 00:50:47,600
business to be spun out.
Imagine that if you know, you,

915
00:50:47,800 --> 00:50:50,040
you know, for each one of those
three points, the value chain

916
00:50:50,040 --> 00:50:52,360
you're in Q1.
That's what we're craving,

917
00:50:52,360 --> 00:50:54,320
right?
That's from an investment

918
00:50:54,320 --> 00:50:55,720
perspective, that's the perfect
business.

919
00:50:56,840 --> 00:50:58,280
See if some bankers can get
creative.

920
00:50:58,480 --> 00:51:03,280
Sounds like a Chinese business.
Let's talk about magnesium.

921
00:51:03,760 --> 00:51:06,800
I have sure very limited
knowledge.

922
00:51:06,800 --> 00:51:10,160
So yeah, start anywhere you like
and we'll jump in.

923
00:51:10,160 --> 00:51:12,680
The best place to start with
magnesium is aluminium.

924
00:51:13,200 --> 00:51:16,120
OK.
Because aluminium needs

925
00:51:16,120 --> 00:51:20,640
magnesium so the can trap.
I think I mentioned this to you

926
00:51:20,640 --> 00:51:22,600
last time.
There's three different alloys

927
00:51:22,600 --> 00:51:24,280
to make that can.
All three of them have got

928
00:51:24,480 --> 00:51:28,000
magnesium in the alloy.
Magnesium strengthens aluminium.

929
00:51:28,240 --> 00:51:31,160
You can't do without it.
There's no substitute and if you

930
00:51:31,160 --> 00:51:34,960
go back so I embarrassed myself
again here, I'd go back 20 years

931
00:51:35,000 --> 00:51:39,840
right Alcoa passionate companies
that are long gone since you

932
00:51:39,840 --> 00:51:43,200
guys have been around, but Alcan
let's not go there.

933
00:51:45,120 --> 00:51:47,640
They all had their own
magnesium, primary magnesium

934
00:51:47,640 --> 00:51:50,080
production facilities because
they needed it and they were

935
00:51:50,200 --> 00:51:53,400
exposed in the absence of it
because there's no substitute

936
00:51:53,400 --> 00:51:56,080
for for for magnesium into
aluminium, right is.

937
00:51:56,520 --> 00:51:58,760
That because they would make the
end product, so they needed

938
00:51:58,760 --> 00:51:59,640
that.
Yeah, exactly.

939
00:51:59,680 --> 00:52:02,440
That would take the, the
magnesium and they alloy it

940
00:52:02,440 --> 00:52:04,400
straight into their, you know,
use it in their smelters and

941
00:52:04,400 --> 00:52:06,720
they produce the alloys that
they need to produce cans and

942
00:52:07,720 --> 00:52:11,400
window frames and, you know,
and, and, and die castings and

943
00:52:11,640 --> 00:52:13,320
everything.
It's all there's, there's mag in

944
00:52:13,480 --> 00:52:16,400
pretty much all of it except
for, except for foil, right,

945
00:52:16,400 --> 00:52:18,880
Which is the stuff that, you
know, you wrap on the meal that

946
00:52:18,880 --> 00:52:22,320
I had on the plane last night.
You know, that's, that's almost

947
00:52:22,320 --> 00:52:23,800
pure aluminium.
But other than that, there's,

948
00:52:23,840 --> 00:52:27,640
there's a mag in it.
So the aluminium industry is

949
00:52:27,640 --> 00:52:30,480
dependent on the magnesium
industry, right?

950
00:52:30,800 --> 00:52:32,360
Without it, it's in real
trouble.

951
00:52:34,320 --> 00:52:39,440
So where's the magnesium made?
It's 9090 percent, 8590% of all

952
00:52:39,520 --> 00:52:40,920
primary magnesium is made in
China.

953
00:52:42,640 --> 00:52:47,000
So there's which is why you now
see magnesium top three sort of

954
00:52:47,000 --> 00:52:49,000
critical minerals lists.
Magnesium is sitting there

955
00:52:49,000 --> 00:52:51,680
because it's such an exposure,
which is kind of odd, right?

956
00:52:51,680 --> 00:52:57,000
But one, one other point, right,
the magnesium industry, to put

957
00:52:57,000 --> 00:53:00,000
into perspective, the whole of
the world's magnesium industry,

958
00:53:00,000 --> 00:53:02,680
primary magnesium industry is
the size of one big aluminium

959
00:53:02,680 --> 00:53:05,000
smelter, right?
So about 1,000,000 tons.

960
00:53:05,000 --> 00:53:07,280
That's how much magnesium.
So it's tiny relative to

961
00:53:07,280 --> 00:53:09,240
aluminium, 80 odd million tons,
right?

962
00:53:09,840 --> 00:53:12,680
So it's a very small industry,
but it is absolutely essential

963
00:53:12,680 --> 00:53:16,080
for, for aluminium.
Point number one point #2 when

964
00:53:16,080 --> 00:53:19,400
you think about the, the, the
demand profile for, for

965
00:53:19,760 --> 00:53:23,040
magnesium, rule of thumb, right?
3rd, 1/3 a third.

966
00:53:23,040 --> 00:53:26,240
So 1/3 of it goes into primary
aluminium, 1/3 of it goes into

967
00:53:26,240 --> 00:53:30,320
die casting, and 1/3 of it goes
into other stuff desulfurizing

968
00:53:30,320 --> 00:53:33,800
and, you know, a lot of
fireworks that are mag.

969
00:53:34,480 --> 00:53:40,440
So, yeah, it's, it's a, it's,
it's a weird kind of situation

970
00:53:40,480 --> 00:53:43,280
that the magnesium industry has
been in for quite some time now,

971
00:53:43,280 --> 00:53:46,080
given that dependency on China
has just been growing and

972
00:53:46,080 --> 00:53:48,320
growing for the past 20 years or
so.

973
00:53:48,400 --> 00:53:52,400
What does a kilo of mag go for?
At the moment, the FoB price in

974
00:53:52,400 --> 00:53:54,480
China is about 2300.
Wow.

975
00:53:55,000 --> 00:53:56,560
Yeah, 1K.
Sorry.

976
00:53:56,800 --> 00:53:58,360
One ton, 2300 a ton.
Yeah.

977
00:53:58,360 --> 00:54:01,200
So the, you know, a lot of the
diecast that kind of keep their

978
00:54:01,200 --> 00:54:03,640
eye on the I mean in China to
keep their eye on the ratio

979
00:54:03,640 --> 00:54:06,520
between the aluminium and the
and the magnesium price and the

980
00:54:06,520 --> 00:54:10,240
ratio of the densities, right.
To give them a feel for where

981
00:54:11,280 --> 00:54:13,640
what should I be using?
If I can swap from one to the

982
00:54:13,640 --> 00:54:15,400
other?
What what should I be using?

983
00:54:15,880 --> 00:54:20,520
Yeah, a ton of mag, roughly 2223
hundred a ton at the moment.

984
00:54:21,400 --> 00:54:23,760
If we're having this
conversation two years ago, two

985
00:54:23,760 --> 00:54:27,680
or three years ago, it hit
10,000 bucks a ton, 10,000 bucks

986
00:54:27,680 --> 00:54:31,560
a ton China, China driven.
That was a China, it was a it

987
00:54:31,720 --> 00:54:36,320
was a spark that was caused by
the the means by which you

988
00:54:36,320 --> 00:54:39,080
produce magnesium.
That that piece that I showed

989
00:54:39,080 --> 00:54:40,520
you, by the way, you can have a
look at that.

990
00:54:40,520 --> 00:54:45,280
This is a like a little crystal
that's grown and it's a that's

991
00:54:45,280 --> 00:54:48,320
pure magnesium.
That's as it's produced in

992
00:54:48,320 --> 00:54:52,520
China, but the process is called
the pigeon process, it's

993
00:54:52,520 --> 00:54:56,400
pyrometallurgical process.
And a lot of the plants in China

994
00:54:56,400 --> 00:55:00,440
take, they get their energy from
semi cooking oven.

995
00:55:00,440 --> 00:55:03,000
So they'll build the facility
next door.

996
00:55:03,000 --> 00:55:04,680
So they're effectively getting
the energy free.

997
00:55:05,320 --> 00:55:08,440
Now if there's a disruption to
the semi cooking producers, it

998
00:55:08,440 --> 00:55:10,400
has an immediate impact on that,
right?

999
00:55:10,400 --> 00:55:14,320
So a lot of the semi cooking
producers were forced to shut in

1000
00:55:14,320 --> 00:55:18,040
China under some changes to the
environmental requirements and

1001
00:55:18,480 --> 00:55:20,960
when they started to shut down,
they shut down about 60% of it.

1002
00:55:21,280 --> 00:55:23,040
The mag prices went crazy
overnight.

1003
00:55:23,240 --> 00:55:26,360
So you mentioned that 90
percent, 90% plus comes from

1004
00:55:26,360 --> 00:55:29,800
China, that's the the down the
downstream.

1005
00:55:29,880 --> 00:55:31,280
Where are the mines that they're
actually?

1006
00:55:31,280 --> 00:55:33,520
Getting the mines, well, that's
the thing about you got to

1007
00:55:33,520 --> 00:55:36,000
remember about magnesium.
It's not so much about the raw

1008
00:55:36,000 --> 00:55:38,720
material as it is for other
because it's the.

1009
00:55:38,760 --> 00:55:39,920
Pyro Metallurgical.
Process.

1010
00:55:39,920 --> 00:55:45,080
No, because it's everywhere.
So, so you can produce magnesium

1011
00:55:45,080 --> 00:55:49,360
from magnesite from I like from
dolomite, right?

1012
00:55:49,360 --> 00:55:50,960
There's dolomites pretty much
everywhere.

1013
00:55:51,640 --> 00:55:53,160
Sounds like aluminium.
Yeah.

1014
00:55:53,160 --> 00:55:56,080
Well, but in a sense, I mean
there's bauxite pretty much

1015
00:55:56,080 --> 00:55:59,360
everywhere, right?
You wouldn't think so with the

1016
00:55:59,360 --> 00:56:02,160
way the industry behaves
sometimes, but there's dolomite

1017
00:56:02,160 --> 00:56:04,720
pretty much everywhere.
So magnesium is not so much

1018
00:56:04,720 --> 00:56:08,160
about the about the raw material
as it is about the technology

1019
00:56:09,040 --> 00:56:11,920
cost to produce it, right.
That's the key for magnesium.

1020
00:56:11,920 --> 00:56:16,920
It's the technology, right?
So, you know, you can produce it

1021
00:56:17,160 --> 00:56:19,800
that way, which is the the
pyrometallurgical route, or you

1022
00:56:19,800 --> 00:56:22,560
can produce it electrolytically
the same way you produce

1023
00:56:22,560 --> 00:56:25,840
aluminium.
So, you know, there's some

1024
00:56:25,840 --> 00:56:28,720
plants in the world that still
run electrolysis, but most of it

1025
00:56:28,720 --> 00:56:31,560
in China is produced using the
the pyrometallurgical pigeon

1026
00:56:31,560 --> 00:56:33,520
process.
That is, that is very cool.

1027
00:56:33,520 --> 00:56:36,280
And yeah.
What's going to say is, is, is

1028
00:56:36,280 --> 00:56:40,920
that that, you know, price spike
dynamic that that was a, a China

1029
00:56:40,920 --> 00:56:43,040
called spike?
Is that a lever that that

1030
00:56:43,040 --> 00:56:45,920
Beijing, you know, pulls from
time to time?

1031
00:56:46,360 --> 00:56:52,080
What's the rationale for it?
I mean, the skeptic might think

1032
00:56:52,080 --> 00:56:54,040
that, right?
That, or you might look at that

1033
00:56:54,040 --> 00:56:55,640
and think, well, why wouldn't
they?

1034
00:56:57,960 --> 00:57:02,280
What we've observed in China is
that, you know, with these

1035
00:57:02,280 --> 00:57:04,320
industries, because we look at
a, we look at a lot of them,

1036
00:57:04,320 --> 00:57:09,440
right, that China has got a lot
tighter on its environmental

1037
00:57:11,120 --> 00:57:15,120
compliance requirements.
And the semi cooking ovens,

1038
00:57:15,120 --> 00:57:17,520
would you know, the guys, the,
the operators were doing the

1039
00:57:17,520 --> 00:57:19,720
wrong thing.
I mean, their, their ovens were

1040
00:57:19,720 --> 00:57:24,120
not compliant.
And so they were warned and some

1041
00:57:24,120 --> 00:57:25,760
of them rebuilt and some of them
didn't.

1042
00:57:25,840 --> 00:57:28,000
And so the authorities came down
pretty hard on them to clean

1043
00:57:28,000 --> 00:57:31,640
their act up and magnesium was
collateral damage.

1044
00:57:32,480 --> 00:57:36,680
So I, I, I never saw this as
somebody pulling a lever to go,

1045
00:57:36,720 --> 00:57:38,960
we're just going to push the,
the, the mag price up.

1046
00:57:39,120 --> 00:57:41,480
I mean, if, if that was the
case, you could do that anytime,

1047
00:57:41,480 --> 00:57:42,920
right?
You could do that anytime, but

1048
00:57:42,920 --> 00:57:45,520
it doesn't happen.
It happened because of this

1049
00:57:45,520 --> 00:57:49,400
particular event.
And once they cleaned up their

1050
00:57:49,400 --> 00:57:53,080
act and they were, they became
compliant, the price went down

1051
00:57:53,280 --> 00:57:55,080
pretty quickly.
And by the way, at the same

1052
00:57:55,080 --> 00:57:57,840
time, you know, people were
ringing us outside of China

1053
00:57:57,880 --> 00:58:01,880
saying, you know, the price of
mag is like 8000 bucks a ton.

1054
00:58:01,880 --> 00:58:03,360
Can you help us source some in
China?

1055
00:58:04,280 --> 00:58:06,240
At the same time, we're getting
phone calls from Chinese

1056
00:58:06,240 --> 00:58:08,720
producers going.
We got plenty of mag here.

1057
00:58:08,720 --> 00:58:10,160
We just can't find anybody to
sell.

1058
00:58:10,160 --> 00:58:14,720
You know, it was this, it was
just such a crazy time that they

1059
00:58:14,720 --> 00:58:17,200
couldn't, they just couldn't,
you know, get their act together

1060
00:58:17,200 --> 00:58:19,480
and and kind of solve the
problem.

1061
00:58:19,560 --> 00:58:22,080
But because it, you know, it
didn't last that long because

1062
00:58:22,160 --> 00:58:25,160
like I say, once the once the
the semi cooking industry got

1063
00:58:25,160 --> 00:58:27,160
its act together, then the price
came down pretty quickly.

1064
00:58:27,680 --> 00:58:31,120
But the impact that it did have,
I'm going to come back to, to

1065
00:58:31,120 --> 00:58:34,040
substitution now, because if
you're a die caster, right, and

1066
00:58:34,040 --> 00:58:37,560
you're making a, you know, you
know, a gearbox housing or

1067
00:58:37,560 --> 00:58:41,240
something and you were making it
out of mag or you'd switched to

1068
00:58:41,240 --> 00:58:44,840
mag because it had been cheaper
than aluminium for the past five

1069
00:58:44,840 --> 00:58:46,840
years.
All of a sudden you have a price

1070
00:58:46,840 --> 00:58:49,280
excursion to 10,000 bucks a
tonne on mag.

1071
00:58:50,240 --> 00:58:52,560
You're swapping back to
aluminium pretty quickly.

1072
00:58:53,200 --> 00:58:56,400
And now that the aluminium, the
mag price has been lower than

1073
00:58:56,400 --> 00:58:59,200
aluminium for the last, you
know, 18 months or two years,

1074
00:58:59,560 --> 00:59:04,640
the die casters are not going
back to mag because I've refused

1075
00:59:04,640 --> 00:59:09,800
to wear that risk again that it
might hit, it might hit 10,000

1076
00:59:09,800 --> 00:59:11,640
bucks a ton.
The interesting thing about that

1077
00:59:11,640 --> 00:59:13,680
though, is the aluminium
industry has no choice.

1078
00:59:14,160 --> 00:59:16,640
If it goes to 10,000 bucks a
ton, you've got to pay it all

1079
00:59:17,320 --> 00:59:18,320
right.
You've got to pay it.

1080
00:59:18,600 --> 00:59:20,920
No substitute.
That is interesting.

1081
00:59:21,360 --> 00:59:25,240
Got to look up some magnesium
exposure in my My Portfolio,

1082
00:59:25,680 --> 00:59:28,040
just just just in case.
Yeah, well, it's interesting to,

1083
00:59:28,480 --> 00:59:30,280
there's not a lot.
I mean, there's the project in

1084
00:59:30,280 --> 00:59:32,600
Victoria, the the LA tribe guys,
they've been going for quite a

1085
00:59:32,600 --> 00:59:33,720
while.
And the interesting thing about

1086
00:59:33,720 --> 00:59:37,280
that project is that they use
fly ash as the, as the, as the

1087
00:59:37,280 --> 00:59:39,240
feedstock, which is effectively
free, right.

1088
00:59:40,080 --> 00:59:42,800
So, but it's technology, it's
always going to come back to

1089
00:59:42,800 --> 00:59:45,120
technology and to commercialize
what it is that they've been

1090
00:59:45,120 --> 00:59:47,720
developing for the past decade
or so.

1091
00:59:47,720 --> 00:59:50,760
This, this reminds me of one
more kind of question related to

1092
00:59:50,760 --> 00:59:54,720
your, your specialty.
Well, not because you even cover

1093
00:59:54,720 --> 01:00:00,560
this, this metal, I don't think,
but the the concentration in

1094
01:00:00,560 --> 01:00:04,720
China theme etcetera, etcetera.
Big, big noise, big commitments

1095
01:00:04,960 --> 01:00:07,720
for a lot of these aluminium
refineries to add a liquor

1096
01:00:07,720 --> 01:00:10,920
circuit to extract gallium in,
in recent history.

1097
01:00:10,920 --> 01:00:14,160
This I don't think this is like,
you know, a new endeavour.

1098
01:00:14,160 --> 01:00:16,120
This sort of thing has been
looked at historically over

1099
01:00:16,120 --> 01:00:18,400
time.
Is it real this time?

1100
01:00:18,600 --> 01:00:21,480
Is it going to going to happen
in a meaningful and material

1101
01:00:21,480 --> 01:00:22,440
way?
Does it have to?

1102
01:00:23,160 --> 01:00:25,920
What's what's changed?
Yeah, look, I mean, what's

1103
01:00:25,920 --> 01:00:27,680
changed is that the the demands
changed.

1104
01:00:27,800 --> 01:00:32,120
Yeah.
So, you know, you, you, you need

1105
01:00:32,120 --> 01:00:36,800
a lot more.
But it is known the technology

1106
01:00:36,800 --> 01:00:41,840
to to extract gallium from say
Western Australian box or

1107
01:00:41,840 --> 01:00:43,680
Illumina.
You can, you can build the

1108
01:00:43,680 --> 01:00:48,280
plant, you bolt it on and you
can produce it in fairly

1109
01:00:48,320 --> 01:00:51,160
sizeable volumes.
So, you know, I see it as

1110
01:00:51,560 --> 01:00:55,960
somebody going to do that more
than, you know, one company does

1111
01:00:55,960 --> 01:00:57,240
it.
But it'll it's a.

1112
01:00:57,440 --> 01:00:59,720
It's a reasonably
straightforward solve, I think.

1113
01:01:02,040 --> 01:01:07,280
And to round out our, yeah,
venturing into exotic metals,

1114
01:01:07,320 --> 01:01:10,560
this one's not that exotic.
It is a bit molybdenum.

1115
01:01:11,600 --> 01:01:13,080
It's that medal.
It's always kind of hard to say

1116
01:01:13,080 --> 01:01:15,000
you stutter once or to ask for.
Yeah, Molly.

1117
01:01:15,000 --> 01:01:16,160
Molly.
Anyway, we just call it Molly.

1118
01:01:16,920 --> 01:01:21,280
Much easier.
Molly, Molly for as long as I've

1119
01:01:21,280 --> 01:01:23,680
thought about Molly, I've never
thought too hardly about it, but

1120
01:01:23,680 --> 01:01:26,160
I just always sort of thought
this is a Co product with a lot

1121
01:01:26,160 --> 01:01:27,880
of a lot of copper, copper.
Operations.

1122
01:01:28,600 --> 01:01:30,920
And so I never really paid much
attention to it, Should I?

1123
01:01:32,040 --> 01:01:33,760
I think you should increasingly
so.

1124
01:01:34,240 --> 01:01:38,360
And I say that because again,
you come back to the cost curve,

1125
01:01:38,360 --> 01:01:40,680
right?
So if you looked at the the and

1126
01:01:41,080 --> 01:01:44,360
it's a byproduct.
So how you take that into

1127
01:01:44,360 --> 01:01:46,600
consideration in the cost curve?
Well, you know, we've all got

1128
01:01:46,600 --> 01:01:49,560
our own different ways of doing
AC1 curve, right?

1129
01:01:49,560 --> 01:01:54,440
But the things that make Molly
interesting is that if you go

1130
01:01:54,440 --> 01:01:57,600
back and have a look at the
profile of Molly production from

1131
01:01:57,600 --> 01:02:00,440
some of the big copper producers
that have got Molly circuits,

1132
01:02:01,800 --> 01:02:03,960
forecasting their Molly grade is
very difficult.

1133
01:02:04,200 --> 01:02:06,360
It's up and down, it's all over
the place, right?

1134
01:02:07,160 --> 01:02:09,200
Having said that, it's still
going to be a byproduct.

1135
01:02:09,200 --> 01:02:13,640
So the cost is still going to be
quite low, although the supply

1136
01:02:13,800 --> 01:02:18,200
is going to is going to shift
as, as the, as the grades shift

1137
01:02:18,200 --> 01:02:19,920
in the, you know, with the big
copper producers.

1138
01:02:20,360 --> 01:02:21,960
But who sits at the top of the
cost curve?

1139
01:02:22,160 --> 01:02:25,560
China, China's got producers a
lot of Molly, but they produce

1140
01:02:25,560 --> 01:02:30,120
it out of their own primary
Molly mines really, really so

1141
01:02:30,840 --> 01:02:33,760
and what we've noticed over the
years is that those Molly grades

1142
01:02:34,360 --> 01:02:38,080
are starting to to to drop,
which means their costs just

1143
01:02:38,080 --> 01:02:39,600
have just been tracking higher
and higher.

1144
01:02:39,600 --> 01:02:41,760
So now if you're sitting at the
if that's setting the price, if

1145
01:02:41,760 --> 01:02:44,240
you're at the top of the curve
with primary Molly mines in

1146
01:02:44,240 --> 01:02:47,240
China that are just getting more
and more expensive, then the

1147
01:02:47,240 --> 01:02:50,440
price is going to go with it.
Which is why we've kind of I

1148
01:02:50,440 --> 01:02:52,480
guess for the past few years
we've kind of looked at it and

1149
01:02:52,600 --> 01:02:56,280
thought well, you know, the,
the, the imports into China, we

1150
01:02:56,280 --> 01:02:59,440
would expect to to continue to
increase having said that's

1151
01:02:59,440 --> 01:03:00,600
going into the steel sector,
right.

1152
01:03:00,600 --> 01:03:03,560
And the steel sector's been
quite flat, but the grades of,

1153
01:03:03,800 --> 01:03:06,040
of, of steel have been
increasing, which means Molly

1154
01:03:06,040 --> 01:03:09,200
content, vanadium content is
going up.

1155
01:03:09,200 --> 01:03:11,400
So there's still a, there's
still, it's still tracking

1156
01:03:11,400 --> 01:03:14,080
higher, but now they've got to
input more and more because

1157
01:03:14,080 --> 01:03:17,160
their own primary Molly mines
are starting to struggle.

1158
01:03:17,640 --> 01:03:20,960
So it's interesting from that
imagine that dynamic plus the

1159
01:03:21,240 --> 01:03:23,720
the ups and downs that go with
the with the production of Molly

1160
01:03:23,720 --> 01:03:26,000
out of copper makes it a really
interesting.

1161
01:03:27,240 --> 01:03:29,680
Industry, I'd love to see a
business that yeah kind of

1162
01:03:29,680 --> 01:03:32,000
wrapped together the the Molly
rights at a bunch of different

1163
01:03:32,000 --> 01:03:35,880
assets and and those assets
structurally sat lower on the

1164
01:03:35,880 --> 01:03:38,040
cost curve than China and.
Yeah.

1165
01:03:38,040 --> 01:03:39,280
Well, that's, I mean, that's
interesting.

1166
01:03:39,280 --> 01:03:40,680
They had a Molly streaming
product.

1167
01:03:41,360 --> 01:03:43,360
There's some, there's some
interesting Molly projects here

1168
01:03:43,360 --> 01:03:45,000
in in Australia, Right.
Primary Molly.

1169
01:03:45,000 --> 01:03:46,760
Yeah.
With, with quite high grade

1170
01:03:46,760 --> 01:03:47,760
Molly.
They're worth having a look at.

1171
01:03:47,800 --> 01:03:50,280
So yeah, yeah.
Undeveloped today.

1172
01:03:50,840 --> 01:03:52,040
Undeveloped.
Yeah, yeah, Yeah.

1173
01:03:52,680 --> 01:03:56,880
So take some take some some time
and money, but I mean, it's a

1174
01:03:56,880 --> 01:03:58,160
it's.
Super low grade, right?

1175
01:03:58,160 --> 01:04:00,560
Like the actual yeah, yeah,
yeah, yeah.

1176
01:04:00,720 --> 01:04:02,280
It's a lot of.
Rock less than one.

1177
01:04:02,560 --> 01:04:04,880
Yeah, yeah, yeah.
So.

1178
01:04:04,880 --> 01:04:07,320
And vanadium is is another one
that we.

1179
01:04:07,320 --> 01:04:11,160
Yeah, Vanadium is very briefly.
Yeah, Vanadium's interesting

1180
01:04:11,160 --> 01:04:15,840
because again, I mean, you know,
it's, you know, I'm going to

1181
01:04:15,920 --> 01:04:18,960
drag you back to China every
every opportunity I get, but.

1182
01:04:18,960 --> 01:04:21,000
Welcome to commodities.
That's right.

1183
01:04:22,840 --> 01:04:26,720
You know, vanadium is still
linked as a, as a primary,

1184
01:04:28,240 --> 01:04:33,600
primary demand.
And again, grades of of rebar in

1185
01:04:33,600 --> 01:04:38,560
China are always improving,
which means the vanadium content

1186
01:04:39,000 --> 01:04:42,200
is going up.
The sector is flat, the

1187
01:04:42,200 --> 01:04:46,080
construction sector is flat, but
still vanadium tracks a bit

1188
01:04:46,080 --> 01:04:48,800
higher because it's, you know,
because the grades dictate that

1189
01:04:48,800 --> 01:04:53,360
you requires more vanadium.
On top of that, you've got these

1190
01:04:53,680 --> 01:04:57,200
wonderful vanadium fossil
batteries that are now starting

1191
01:04:57,200 --> 01:05:01,640
to get real traction in China
and they require, you know, they

1192
01:05:01,640 --> 01:05:04,400
require substantial volumes of
V2I5.

1193
01:05:05,680 --> 01:05:09,040
So that's starting to drive a
demand as well.

1194
01:05:09,160 --> 01:05:12,360
So, you know, then become, well,
where's the supply?

1195
01:05:12,920 --> 01:05:18,320
And a lot of China's vanadium
supply comes from its own iron

1196
01:05:18,320 --> 01:05:21,200
ore mines.
They're quite high, high issue

1197
01:05:21,200 --> 01:05:23,320
in vanadium.
But you know, when you're

1198
01:05:23,320 --> 01:05:25,920
producing the, the, the steel,
it reports to the slag.

1199
01:05:26,120 --> 01:05:28,960
So then you can, you can extract
the, the, the vanadium from the

1200
01:05:28,960 --> 01:05:33,080
slag.
And that's their primary source

1201
01:05:33,360 --> 01:05:36,880
of, of vanadium.
How does that, you know, I had

1202
01:05:36,880 --> 01:05:39,240
this conversation with some
people earlier today about,

1203
01:05:39,240 --> 01:05:43,280
well, what does that mean?
If you know, if more iron ore is

1204
01:05:43,280 --> 01:05:47,240
coming into into China, not that
the iron ore market is what it

1205
01:05:47,400 --> 01:05:49,680
wants, what it's still big
volumes, though, right?

1206
01:05:49,760 --> 01:05:54,200
And so let's say, for example,
the, the, the final from Siman

1207
01:05:54,200 --> 01:05:59,400
do comes in and that might
displace higher cost domestic

1208
01:05:59,840 --> 01:06:03,040
product, which means that that
might impact vanadium, right?

1209
01:06:03,040 --> 01:06:06,560
If they just shut down the, the,
the the domestic mines, then all

1210
01:06:06,560 --> 01:06:08,120
of a sudden they go short
vanadium.

1211
01:06:08,880 --> 01:06:11,960
So the question really is, does
that happen when you've got, you

1212
01:06:11,960 --> 01:06:16,240
know, when you've got more iron
ore coming in from outside of

1213
01:06:16,240 --> 01:06:17,760
China?
Would they actually do that?

1214
01:06:18,680 --> 01:06:22,840
That's a hard one.
That's our suspicion is no.

1215
01:06:22,840 --> 01:06:25,880
Our suspicion is they keep they
keep producing their own iron

1216
01:06:25,880 --> 01:06:28,320
ore because of the venadium,
because of some other reasons

1217
01:06:28,320 --> 01:06:30,560
that they might want to.
Been very stupid production.

1218
01:06:30,640 --> 01:06:31,200
Yeah.
Sticky.

1219
01:06:31,200 --> 01:06:32,320
That's a good word for it.
Yeah.

1220
01:06:32,320 --> 01:06:34,520
Yeah.
So maybe it continues to be

1221
01:06:34,520 --> 01:06:38,440
sticky and therefore the demands
not as you know, not not quite

1222
01:06:38,440 --> 01:06:43,160
like it is with with Molly.
So yeah, it's an interesting

1223
01:06:43,160 --> 01:06:49,560
one.
Before we completely wrap up and

1224
01:06:49,560 --> 01:06:53,000
you lift your your S Australian
Coopers aluminium can which

1225
01:06:53,000 --> 01:06:54,760
which we got just specifically
for you.

1226
01:06:54,880 --> 01:06:56,360
Thank you very much.
And by the way, what we're

1227
01:06:56,360 --> 01:06:58,480
talking about Coopers, I mean,
the big news in Adelaide is the

1228
01:06:58,480 --> 01:07:00,400
Coopers will be making its own
whiskey soon.

1229
01:07:01,720 --> 01:07:02,680
There you go.
Look out for that.

1230
01:07:02,680 --> 01:07:04,200
They better put up in an
aluminium can.

1231
01:07:04,720 --> 01:07:07,560
Imagine that, you know, imagine
trying to sell whiskey in that.

1232
01:07:08,200 --> 01:07:11,080
She's good luck with that guys.
Anyway, sorry.

1233
01:07:11,600 --> 01:07:14,800
Is there is there anything else
you, you want to, you know,

1234
01:07:15,120 --> 01:07:17,560
espouse us and our audience with
that we we haven't talked about

1235
01:07:17,560 --> 01:07:19,560
today?
One more, one more point, just a

1236
01:07:19,640 --> 01:07:23,000
shameless plug, right?
One thing that we have done over

1237
01:07:23,000 --> 01:07:25,360
the past year is, is develop our
own app.

1238
01:07:25,360 --> 01:07:26,480
Did I show you the app?
No.

1239
01:07:26,480 --> 01:07:28,320
So we've got a, we've got a bulk
site app.

1240
01:07:28,480 --> 01:07:31,760
So you can download it and you
can actually put in a spec for a

1241
01:07:31,760 --> 01:07:33,280
bulk site no matter where it is
in the world.

1242
01:07:33,760 --> 01:07:35,080
So, so we're publishing an
index.

1243
01:07:35,080 --> 01:07:37,320
And so the index price for a
standard Guinea bulk site today

1244
01:07:37,320 --> 01:07:40,600
might be like 62 bucks, right?
Thinking God, what does that

1245
01:07:40,600 --> 01:07:42,120
mean?
What's the wiper stuff?

1246
01:07:42,120 --> 01:07:43,040
Where?
What's it worth out of

1247
01:07:43,040 --> 01:07:46,480
Madagascar or Pakistan or Laos
or wherever it might be?

1248
01:07:46,480 --> 01:07:48,680
You can just put the spec and it
will give you a calculate.

1249
01:07:48,680 --> 01:07:49,440
Oh.
That's cool.

1250
01:07:49,760 --> 01:07:52,320
Because you know, one of the
biggest barriers to, to moving

1251
01:07:52,320 --> 01:07:55,240
to index pricing for, for, you
know, for bulks, what has been

1252
01:07:55,240 --> 01:07:57,040
value in use?
It's complicated, right?

1253
01:07:57,160 --> 01:07:59,480
How you, what does it mean to
the refinery?

1254
01:07:59,480 --> 01:08:01,920
If you've got a little more
silica or you've got, you know,

1255
01:08:01,960 --> 01:08:04,800
you've got bomite, can you
actually treat the bomite?

1256
01:08:04,800 --> 01:08:06,320
You know, it's, it's
complicated.

1257
01:08:06,320 --> 01:08:09,320
So we put together this this app
and seems to be doing pretty

1258
01:08:09,320 --> 01:08:11,080
well so.
That's awesome.

1259
01:08:11,080 --> 01:08:12,320
That's really.
Cool, we've had a win.

1260
01:08:12,720 --> 01:08:14,080
That's fantastic.
Just a quick one on that.

1261
01:08:14,640 --> 01:08:20,120
Would the price that a refiner's
willing to pay not be slightly

1262
01:08:20,120 --> 01:08:23,279
differentiated depending on what
they're tailored for?

1263
01:08:23,399 --> 01:08:25,279
Yeah, sure.
Absolutely they would be.

1264
01:08:25,279 --> 01:08:27,479
That's right.
That's I'm glad you said that,

1265
01:08:27,479 --> 01:08:29,080
because that means you were
listening last time I was,

1266
01:08:29,520 --> 01:08:31,279
right.
That's right.

1267
01:08:31,279 --> 01:08:34,240
Some refineries just simply
can't take, you know, if you're

1268
01:08:34,240 --> 01:08:37,080
a low, what's called a low
temperature refinery and you've,

1269
01:08:37,080 --> 01:08:40,160
you know, you've got a, a
monohydrate content of a

1270
01:08:40,160 --> 01:08:43,200
bauxite, which is, you know,
bone mite or, or diaspora.

1271
01:08:44,080 --> 01:08:47,200
You can't you, you can't get
the, the, the digestion

1272
01:08:47,200 --> 01:08:50,439
temperature high enough to
actually push it into a

1273
01:08:50,439 --> 01:08:52,040
solution.
It's just not going to happen or

1274
01:08:52,040 --> 01:08:53,840
it's going to take so long.
It's just crazy.

1275
01:08:53,880 --> 01:08:56,960
So you can't treat it.
So that would be like trying to

1276
01:08:56,960 --> 01:08:59,600
put a, you know, Queensland box
into AWA refinery.

1277
01:08:59,960 --> 01:09:03,200
You just can't do it.
So there is always that.

1278
01:09:03,200 --> 01:09:07,279
So the app will say to you how
you're going to treat this high

1279
01:09:07,279 --> 01:09:10,080
temperature or low temperature
right straight away.

1280
01:09:10,160 --> 01:09:14,040
And if you try to put a low
temperature box into a high

1281
01:09:14,040 --> 01:09:16,520
temperature, no, a high
temperature box into a low

1282
01:09:16,520 --> 01:09:18,920
temperature refinery, you just
get a can't.

1283
01:09:19,240 --> 01:09:20,359
Not applicable.
That's right.

1284
01:09:20,520 --> 01:09:23,279
You know, you get a what the
hell are you doing kind of

1285
01:09:23,279 --> 01:09:24,960
message.
So yeah, but you're quite right.

1286
01:09:24,960 --> 01:09:27,279
You can't.
You've got to be careful about

1287
01:09:29,000 --> 01:09:35,120
what what refineries, how
refineries are built, and what

1288
01:09:35,120 --> 01:09:36,399
bulk sites they can and can't
treat.

1289
01:09:37,319 --> 01:09:39,399
Now we learn, we learn so much
every time we speak.

1290
01:09:39,399 --> 01:09:40,600
I already know this is going to
be an episode.

1291
01:09:40,600 --> 01:09:43,279
I'm going to go back and and
listen to a bunch so that all

1292
01:09:43,279 --> 01:09:44,640
the information actually sinks
in.

1293
01:09:44,640 --> 01:09:47,120
So yeah, we're we're very
grateful that you made the time

1294
01:09:47,120 --> 01:09:48,160
for us.
It's a pleasure.

1295
01:09:48,160 --> 01:09:49,520
Thanks very much for the
invitation.

1296
01:09:49,520 --> 01:09:51,880
And who knows, next time we
might be sipping at Cooper's

1297
01:09:51,880 --> 01:09:55,640
whiskey, fingers gross.
Not out of an aluminium can

1298
01:09:55,640 --> 01:10:00,520
though, thank.
You so much go SA, go aluminium.

1299
01:10:00,680 --> 01:10:02,360
Thank you.
I can speak to Alan forever,

1300
01:10:03,120 --> 01:10:05,480
forever.
So ever so many more stories to

1301
01:10:05,480 --> 01:10:06,760
glean.
We'll have him on again in the

1302
01:10:06,760 --> 01:10:09,160
future to dive into a few more
of those.

1303
01:10:09,160 --> 01:10:12,000
A massive thank you to Sandvik
grant support, Exceed capital

1304
01:10:12,000 --> 01:10:14,800
interlinks, and focus the
platform by market tech.

1305
01:10:15,400 --> 01:10:16,560
Hey, Derrick.
Go Australia.

1306
01:10:17,640 --> 01:10:20,480
Now remember, I'm an idiot.
JD is an idiot.

1307
01:10:20,800 --> 01:10:22,920
If you thought any of this was
anything other than

1308
01:10:22,920 --> 01:10:25,600
entertainment, you're an idiot
and you need to read out a

1309
01:10:25,600 --> 01:10:26,040
disclaimer.