1 00:00:05,680 --> 00:00:08,480 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. 2 00:00:08,640 --> 00:00:11,959 Speaker 1: Lithium is in an unusual place right now. A couple 3 00:00:12,000 --> 00:00:14,520 Speaker 1: of years ago, it was the mineral of choice because 4 00:00:14,520 --> 00:00:16,840 Speaker 1: of the role it plays in the green energy transition, 5 00:00:17,040 --> 00:00:20,560 Speaker 1: including electric vehicles. Prices were soaring. Then a flood of 6 00:00:20,600 --> 00:00:23,320 Speaker 1: new supply and a slump in EV sales saw lithium 7 00:00:23,320 --> 00:00:27,000 Speaker 1: prices tumble. But as a long term prospect, lithium is 8 00:00:27,040 --> 00:00:29,960 Speaker 1: still going to play that vital role in the energy shift, 9 00:00:30,360 --> 00:00:33,120 Speaker 1: where Tinto has recognized that this week with its nine 10 00:00:33,120 --> 00:00:36,680 Speaker 1: point nine billion dollar bid for kadium lithium. So how 11 00:00:36,680 --> 00:00:40,040 Speaker 1: should Australian investors look at the global lithium market. Remember 12 00:00:40,080 --> 00:00:42,960 Speaker 1: this is general information only and you should seek professional 13 00:00:42,960 --> 00:00:46,680 Speaker 1: advice before making investment decisions. Vulcan Energy is a lithium 14 00:00:46,720 --> 00:00:50,199 Speaker 1: and renewable energy company due listed here on the AX 15 00:00:50,240 --> 00:00:53,680 Speaker 1: and in Germany. Francis Vadein is the founder and executive 16 00:00:53,760 --> 00:00:56,400 Speaker 1: chair of Vulcan Energy. Francis Welcome to Fear and Greed. 17 00:00:56,720 --> 00:00:57,600 Speaker 2: Thanks somy On Shan. 18 00:00:58,280 --> 00:01:01,160 Speaker 1: Francis explain lithium to me. I kind of get it, 19 00:01:01,160 --> 00:01:05,600 Speaker 1: but wow, what a volatile commodity. It's been just the 20 00:01:05,600 --> 00:01:09,520 Speaker 1: thumbnail skitch of why Prices they've done what they've done, 21 00:01:09,920 --> 00:01:11,640 Speaker 1: and they don't want to get onto the you know 22 00:01:11,720 --> 00:01:13,800 Speaker 1: what RIA is doing the industry generally before we get 23 00:01:13,800 --> 00:01:16,319 Speaker 1: onto vulcan. So why have Price has done what they've done. 24 00:01:17,080 --> 00:01:19,720 Speaker 2: Sure, well, lithium is a very small market that is 25 00:01:19,959 --> 00:01:24,080 Speaker 2: growing very very quickly. So it's growing roughly at the 26 00:01:24,120 --> 00:01:28,200 Speaker 2: same rate as the global rate of electric vehicle ed growth, 27 00:01:28,760 --> 00:01:30,560 Speaker 2: which if you look at it on the global sort 28 00:01:30,560 --> 00:01:34,800 Speaker 2: of average basis, is about twenty percent compounds annual growth rate, 29 00:01:34,920 --> 00:01:38,399 Speaker 2: and that growth rate is tipped really on average to 30 00:01:38,760 --> 00:01:40,680 Speaker 2: continue for quite a few years to come. So it's 31 00:01:40,720 --> 00:01:45,280 Speaker 2: a really large compounds growth rate. And essentially what it 32 00:01:45,319 --> 00:01:47,360 Speaker 2: means is every time there's because it's such a small 33 00:01:47,400 --> 00:01:50,520 Speaker 2: market that's growing very quickly, every time there's new supply 34 00:01:50,800 --> 00:01:54,400 Speaker 2: or demands entering the market, you get these wiles supply 35 00:01:54,440 --> 00:01:56,880 Speaker 2: demanding balances, and that has caused the price to go 36 00:01:56,960 --> 00:01:59,880 Speaker 2: from eight thousand ton up to eighty thousand and sort 37 00:01:59,880 --> 00:02:01,640 Speaker 2: of back down to nine or ten thousand a ton 38 00:02:01,680 --> 00:02:04,240 Speaker 2: within the space of you know, three or four years. 39 00:02:04,480 --> 00:02:07,640 Speaker 2: So our perspective is really to go for long term 40 00:02:07,720 --> 00:02:10,360 Speaker 2: sort of agreements with stability on pricing because it's going 41 00:02:10,400 --> 00:02:12,119 Speaker 2: to be a wild ride for years to come. 42 00:02:12,639 --> 00:02:16,639 Speaker 1: Okay, the long term part is really important because unlike 43 00:02:16,960 --> 00:02:20,639 Speaker 1: other commodities nickel being an example, lithium, even though the 44 00:02:20,680 --> 00:02:24,880 Speaker 1: price has come off enormously, people no undoubts that it 45 00:02:24,919 --> 00:02:27,399 Speaker 1: is a long term play in terms of the transition 46 00:02:27,440 --> 00:02:29,040 Speaker 1: of the economy. That's right. 47 00:02:29,080 --> 00:02:33,079 Speaker 2: I mean, it's the irreplaceable components of electric vehicle batteries. 48 00:02:33,680 --> 00:02:36,560 Speaker 2: You can have some short range vehicles with sidi mind batteries, 49 00:02:36,560 --> 00:02:41,320 Speaker 2: but ultimately they are limited by physics. So ultimately lithium 50 00:02:41,480 --> 00:02:45,040 Speaker 2: is the irreplaceable component of batteries going into EVS. The 51 00:02:45,160 --> 00:02:49,440 Speaker 2: transition to EVS is structural. It's not going away. It'll 52 00:02:49,480 --> 00:02:52,040 Speaker 2: progress in fits and starts depending on the country, but 53 00:02:52,240 --> 00:02:55,880 Speaker 2: it is it's a mega trend, and so lithium has 54 00:02:55,919 --> 00:02:59,320 Speaker 2: to grow in the coming years by a very large amount. 55 00:02:59,639 --> 00:03:03,480 Speaker 2: And you know these are large, complex projects to build, 56 00:03:04,080 --> 00:03:07,880 Speaker 2: so the will continue to be these wild supply demanded 57 00:03:07,919 --> 00:03:10,600 Speaker 2: balances every time you build new supply and every time 58 00:03:10,600 --> 00:03:11,880 Speaker 2: there's need demands coming in. 59 00:03:12,520 --> 00:03:15,160 Speaker 1: Okay, so actually let's jump to volcan energy then, because 60 00:03:15,160 --> 00:03:18,160 Speaker 1: this is where you play and you are dual listed. 61 00:03:18,600 --> 00:03:24,400 Speaker 1: You are building the capacity in Germany to access lithium. 62 00:03:24,880 --> 00:03:27,240 Speaker 1: Just tell us about Vulcan and where you're up to 63 00:03:27,320 --> 00:03:30,919 Speaker 1: and how high you are away from actually processing lithium. 64 00:03:30,960 --> 00:03:35,480 Speaker 2: Sure, So, Volcan Energy is building a lithium brine project. 65 00:03:35,960 --> 00:03:38,160 Speaker 2: As you mentioned, it's in southwest Germany, so we're in 66 00:03:38,200 --> 00:03:41,560 Speaker 2: the heart of the European market. We are extracting lithium 67 00:03:41,680 --> 00:03:46,000 Speaker 2: from Brian's using a process called absorption type direct litheum extraction. 68 00:03:46,600 --> 00:03:48,440 Speaker 2: This is a process that makes up about ten percent 69 00:03:48,480 --> 00:03:53,040 Speaker 2: of global production today. It is a very low cost 70 00:03:53,240 --> 00:03:56,440 Speaker 2: process and it also has really good sustainability credentials as well, 71 00:03:56,480 --> 00:03:58,600 Speaker 2: so low carbon footprint and if you do things right, 72 00:03:59,040 --> 00:04:02,160 Speaker 2: low water footprint as well. What's unique about Vulcan is 73 00:04:02,160 --> 00:04:05,440 Speaker 2: that our Brian comes out of the ground naturally heated, 74 00:04:05,920 --> 00:04:08,040 Speaker 2: and that means that we can actually produce renewable energy 75 00:04:08,120 --> 00:04:10,560 Speaker 2: i geo thermal renewable energy from that Brian, and we're 76 00:04:10,560 --> 00:04:12,760 Speaker 2: doing so at the moment. Actually we'll be doing so 77 00:04:12,840 --> 00:04:15,160 Speaker 2: on the larger scale quite soon as well, once we 78 00:04:15,240 --> 00:04:18,880 Speaker 2: build what we call our Phase one commercial plant, So 79 00:04:19,080 --> 00:04:24,760 Speaker 2: we're integrated renewable energy, lithium extraction and lithium refining to 80 00:04:24,800 --> 00:04:27,440 Speaker 2: reduce a battery grade lithium hydroxide, and we produce more 81 00:04:27,480 --> 00:04:30,440 Speaker 2: renewable energy than we consume in the process, so we're 82 00:04:30,480 --> 00:04:34,400 Speaker 2: net energy positive effectively, and that gives us a carbon 83 00:04:34,440 --> 00:04:36,480 Speaker 2: neutral footprint, which is unique. 84 00:04:36,680 --> 00:04:40,320 Speaker 1: So it's a geo thermal part, is why you're positive. 85 00:04:40,839 --> 00:04:44,320 Speaker 2: That's right, yep. So we're producing reneable energy, basically renewable 86 00:04:44,360 --> 00:04:46,800 Speaker 2: heat and power from the heated brian in the sub surface. 87 00:04:47,120 --> 00:04:50,760 Speaker 2: And we think that this method of lithium extraction absorption 88 00:04:50,800 --> 00:04:53,440 Speaker 2: type directly lithium extraction, it's going to play a very 89 00:04:53,480 --> 00:04:56,080 Speaker 2: major role in the next wave of lithium i'd call 90 00:04:56,120 --> 00:04:59,000 Speaker 2: it sort of the third wave. And that's I think 91 00:04:59,120 --> 00:05:01,520 Speaker 2: is being validated by by oil and gas companies coming 92 00:05:01,520 --> 00:05:04,520 Speaker 2: into the space equinor Exon investing in these types of 93 00:05:04,520 --> 00:05:07,320 Speaker 2: projects in various parts of the world. And yes, so 94 00:05:07,400 --> 00:05:11,039 Speaker 2: they also buy Rio, who's just brought their second absorption 95 00:05:11,240 --> 00:05:16,120 Speaker 2: type daily project by acquiring arcadium. So remember they already 96 00:05:16,120 --> 00:05:17,960 Speaker 2: had brink On next door. So one of the biggest 97 00:05:17,960 --> 00:05:21,080 Speaker 2: hardrop miners in the world is going into absorption type 98 00:05:21,120 --> 00:05:25,240 Speaker 2: directly from extraction as well. Just one final point, a 99 00:05:25,320 --> 00:05:27,799 Speaker 2: unique part about Vulcan is that we use waste heat 100 00:05:27,920 --> 00:05:31,200 Speaker 2: to drive our absorption process. The absorption is mainly driven 101 00:05:31,240 --> 00:05:33,520 Speaker 2: by heat, and that means that we really lower the 102 00:05:33,560 --> 00:05:36,240 Speaker 2: cost of production, so to low cost method of production 103 00:05:36,279 --> 00:05:39,120 Speaker 2: to begin with, and we make it extra low cost 104 00:05:39,240 --> 00:05:41,080 Speaker 2: because of leveraging that waste heat. 105 00:05:40,920 --> 00:05:43,760 Speaker 1: In the process. Stay with me, Francis, we'll be back 106 00:05:43,800 --> 00:05:54,080 Speaker 1: in a minute. I'm speaking to Francis Fadane, founder and 107 00:05:54,200 --> 00:05:58,360 Speaker 1: executive chair of Vulcan Energy. Okay, Aman, Vulcan, you have 108 00:05:58,400 --> 00:06:01,400 Speaker 1: from very high profile cheer including gena Ryan Hart in 109 00:06:01,480 --> 00:06:05,400 Speaker 1: more recent times. What I don't know enough about the 110 00:06:05,440 --> 00:06:10,159 Speaker 1: production process, but the competitive advantage is you're the geo 111 00:06:10,200 --> 00:06:14,960 Speaker 1: thermal heat. What about the actual product that you're ending 112 00:06:15,040 --> 00:06:18,080 Speaker 1: up with? Is there there must be grades of lithium 113 00:06:18,120 --> 00:06:21,039 Speaker 1: presumably and kind of where do you sit on that. 114 00:06:21,600 --> 00:06:25,679 Speaker 2: Yeah, So we'll be producing battery grade lithium chemicals, battery 115 00:06:25,720 --> 00:06:29,960 Speaker 2: grade lithium hydroxide, so we supply it direct to essentially 116 00:06:30,000 --> 00:06:34,560 Speaker 2: the cathode industry to make batteries for electric vehicles and 117 00:06:34,600 --> 00:06:38,400 Speaker 2: our main customers. So we've we've basically sold almost one 118 00:06:38,440 --> 00:06:41,200 Speaker 2: hundred percent of the first ten years of production from 119 00:06:41,240 --> 00:06:44,760 Speaker 2: our from our Phase one commercial facility to Tier one 120 00:06:45,120 --> 00:06:49,560 Speaker 2: automakers like Stilantis Reno, and that gives us a lot 121 00:06:49,600 --> 00:06:52,840 Speaker 2: of stability on pricing. So we took the view a 122 00:06:52,880 --> 00:06:56,000 Speaker 2: few years ago that these wild ostallations would continue, so 123 00:06:56,040 --> 00:06:58,159 Speaker 2: we want to fix a long term fair price for 124 00:06:58,360 --> 00:07:02,040 Speaker 2: both parties. We've got some pricing, some floor ceiling. So 125 00:07:02,120 --> 00:07:04,400 Speaker 2: I'd say we've got two competitive advantages. One is very 126 00:07:04,440 --> 00:07:08,240 Speaker 2: low cost of production inherent in the nature of our process. 127 00:07:08,800 --> 00:07:11,920 Speaker 2: The other is the stability on pricing that we have 128 00:07:12,040 --> 00:07:14,200 Speaker 2: with Offtich and we're also close to customers as well, 129 00:07:14,280 --> 00:07:16,760 Speaker 2: so we've got a lower cost of transportation. 130 00:07:17,400 --> 00:07:22,720 Speaker 1: Yeah, okay, the industry generally, so Rio's bid for arcadium lithium, 131 00:07:22,720 --> 00:07:25,520 Speaker 1: which it was made during the in the last couple 132 00:07:25,520 --> 00:07:28,880 Speaker 1: of days, do you expect to see more M and 133 00:07:28,920 --> 00:07:32,600 Speaker 1: A activity in lithium? And I mean, I'm interested in 134 00:07:32,640 --> 00:07:34,920 Speaker 1: your take on. I mean, I don't necessarily want to 135 00:07:34,920 --> 00:07:37,320 Speaker 1: get asking about the Rio bid, but just the fact 136 00:07:37,360 --> 00:07:39,840 Speaker 1: that lithium prices are so low at the moment, surely 137 00:07:39,960 --> 00:07:41,679 Speaker 1: that's going to be tempting for some of these really 138 00:07:41,680 --> 00:07:44,160 Speaker 1: big players with deep pockets. 139 00:07:44,440 --> 00:07:47,800 Speaker 2: I think. So, I think the industry is right for more, 140 00:07:48,080 --> 00:07:51,280 Speaker 2: you know, M and A and consolidation. As you mentioned, 141 00:07:51,280 --> 00:07:54,360 Speaker 2: you know some some companies are looking very cheap right now. 142 00:07:54,440 --> 00:07:57,920 Speaker 2: So I think one commentator said in an article is 143 00:07:58,040 --> 00:07:59,840 Speaker 2: that you know, strap in, it's going to be wild rides. 144 00:08:00,560 --> 00:08:02,440 Speaker 2: I agree with that sentiment. I think there's going to 145 00:08:02,480 --> 00:08:04,200 Speaker 2: be a lot of activity in the lithium space in 146 00:08:04,320 --> 00:08:06,960 Speaker 2: the months and you know, perhaps the year to come. 147 00:08:07,440 --> 00:08:10,640 Speaker 2: There's a few mega trends playing out. I think cost 148 00:08:10,680 --> 00:08:13,200 Speaker 2: of production is key for this next phase. I think 149 00:08:13,240 --> 00:08:15,520 Speaker 2: in the last phase it was speed to market. I 150 00:08:15,520 --> 00:08:18,560 Speaker 2: think this next phase of lithium is defined by building 151 00:08:18,560 --> 00:08:22,000 Speaker 2: out that long term, sustainable, low cost supply. But you're 152 00:08:22,040 --> 00:08:26,520 Speaker 2: also seeing geographical diversification playing a role, and I think 153 00:08:26,560 --> 00:08:29,640 Speaker 2: that rear takeover was part of that as well, you know, 154 00:08:30,240 --> 00:08:33,920 Speaker 2: going to different jurisdictions because and this is not just lithium, 155 00:08:33,960 --> 00:08:36,520 Speaker 2: but a number of different supply chains. We're seeing this 156 00:08:36,559 --> 00:08:40,200 Speaker 2: mega trend of ensuring or friendshurwing of supply chain. So 157 00:08:40,200 --> 00:08:43,160 Speaker 2: supply chains is deglobalizing, and we've taken that view as 158 00:08:43,160 --> 00:08:46,160 Speaker 2: well in Europe. You know, producing lithium from Europe for 159 00:08:46,240 --> 00:08:47,439 Speaker 2: Europe essentially. 160 00:08:48,320 --> 00:08:52,960 Speaker 1: Is there a risk that someone like China funds enormous 161 00:08:53,120 --> 00:08:55,920 Speaker 1: minds in other parts of Asia in kind of flights 162 00:08:55,960 --> 00:08:59,760 Speaker 1: to market, is at a risk for lithium producers like yourself. 163 00:09:00,280 --> 00:09:02,559 Speaker 2: Well, it's already happened. I mean, they've been investing in 164 00:09:02,600 --> 00:09:07,040 Speaker 2: the lithium space for many years and they control most 165 00:09:07,040 --> 00:09:09,800 Speaker 2: of it, to be honest, So I'd say that's already 166 00:09:09,800 --> 00:09:12,000 Speaker 2: happened to a degree in recent you know, increased production 167 00:09:12,080 --> 00:09:16,560 Speaker 2: from Africa has also caused some of the recent price weakness. 168 00:09:17,320 --> 00:09:19,880 Speaker 2: But I think there's a strong push from automakers to 169 00:09:20,520 --> 00:09:23,680 Speaker 2: as I said, localized supply and to secure their own 170 00:09:23,760 --> 00:09:27,120 Speaker 2: supply chains from if you like Western Western producers, so 171 00:09:27,760 --> 00:09:30,440 Speaker 2: I think you're you're somewhat insulated from that to a 172 00:09:30,480 --> 00:09:34,120 Speaker 2: degree if you're producing in Australia, in Europe, in North 173 00:09:34,200 --> 00:09:38,560 Speaker 2: or South America, because ultimately, Western automakers want to build 174 00:09:38,559 --> 00:09:40,880 Speaker 2: their own supply chains of critical raw materials, and that's 175 00:09:40,880 --> 00:09:43,840 Speaker 2: backed up by legislation in places like the EU as well. 176 00:09:44,160 --> 00:09:47,960 Speaker 1: Yeah, Okay, are there many lithium producers like yourself in 177 00:09:47,960 --> 00:09:50,079 Speaker 1: the ear? I'm just sharing my ignorant he I've never 178 00:09:50,080 --> 00:09:52,360 Speaker 1: thought of it as a European commodity, but is it. 179 00:09:52,760 --> 00:09:56,600 Speaker 2: No no, there's no you know, fully integrated producers. There's 180 00:09:56,600 --> 00:09:59,960 Speaker 2: some chemical converters who import raw materials from overseas, but 181 00:10:00,120 --> 00:10:02,520 Speaker 2: were I think going to be the first ones who 182 00:10:02,600 --> 00:10:06,600 Speaker 2: produce the raw material salts, the lithium salts locally and 183 00:10:06,640 --> 00:10:09,280 Speaker 2: then convert that to a battery Greed's product as well. 184 00:10:09,920 --> 00:10:12,160 Speaker 1: Very exciting. Francis, thank you very much for talking to 185 00:10:12,200 --> 00:10:12,760 Speaker 1: Fear and Greed. 186 00:10:12,960 --> 00:10:14,160 Speaker 2: Thanks so much for me and Shan. 187 00:10:14,360 --> 00:10:18,160 Speaker 1: That was Francis Verdean founder and executive chair of Vulcan Energy. 188 00:10:18,200 --> 00:10:20,679 Speaker 1: This is the Fear and Greed Business Interview. Remember this 189 00:10:20,720 --> 00:10:23,560 Speaker 1: is general information only and you should seek professional advice 190 00:10:23,640 --> 00:10:27,000 Speaker 1: before making investment decisions. Join us every morning for the 191 00:10:27,040 --> 00:10:29,400 Speaker 1: full episode our Fear and Greed Business Views for people 192 00:10:29,400 --> 00:10:32,400 Speaker 1: who make their own decisions. I'm Sean alma Enjoy your day.