WEBVTT - The Tungsten Market Is Warning of an Upcoming War 0:00:02.720 --> 0:00:15.840 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.040 --> 0:00:21.439 Hello and welcome to another episode of The Odd Lots podcast. 0:00:21.520 --> 0:00:23.840 I'm Jill Wisenthal and I'm Tracy Alloway. 0:00:24.400 --> 0:00:26.720 Tracy, I'm in a mood of a little bit of 0:00:26.800 --> 0:00:28.120 heartbreak this morning. 0:00:28.240 --> 0:00:30.920 Oh mood of a little bit of heartbreak. That sounds 0:00:30.960 --> 0:00:32.479 like a country single, doesn't it. 0:00:32.560 --> 0:00:33.080 That's right. 0:00:33.560 --> 0:00:35.800 No, you're singing. I don't know what you're sad about. 0:00:35.800 --> 0:00:38.600 You're singing the Tungsten Cube. 0:00:38.040 --> 0:00:41.400 The Tungsten Blues. I'm actually a little shook. In twenty 0:00:41.520 --> 0:00:43.800 twenty two, remember the tungsten cube hype. 0:00:43.920 --> 0:00:46.479 Unfortunately I bought. 0:00:46.280 --> 0:00:49.240 One and it was the only and it feels so good, 0:00:49.280 --> 0:00:51.400 like a nice big block of tungsten your hand. It 0:00:51.440 --> 0:00:55.800 feels so good. It's so unexpectedly heavy, probably like a 0:00:55.800 --> 0:00:58.160 little like wild autism, like I like related like sort 0:00:58.160 --> 0:01:01.360 of like heavy things like weighted blankives, some heavy objects. 0:01:01.640 --> 0:01:03.240 And I was going to bring it to this episode 0:01:03.240 --> 0:01:05.959 because I know you love props. Sometimes I do like 0:01:05.959 --> 0:01:07.679 a good and I was like, I'll bring a prop. 0:01:07.720 --> 0:01:09.560 I couldn't find it on my desk, so we did 0:01:09.560 --> 0:01:13.679 a desk move recently and either somehow, I hope I 0:01:13.680 --> 0:01:15.959 shall find it. Either it got misplaced in the move, 0:01:16.520 --> 0:01:20.360 or because the value of tungsten has gone up so much, 0:01:21.200 --> 0:01:22.480 maybe someone stolen. 0:01:22.280 --> 0:01:24.960 I think I know which one it is, Joe, I 0:01:24.959 --> 0:01:25.480 think I know. 0:01:25.920 --> 0:01:27.480 Let me just have a messy desk too. 0:01:27.600 --> 0:01:30.640 For listeners who were lucky enough to have missed out 0:01:30.760 --> 0:01:33.720 on the tungsten cube craze, there was a moment where, 0:01:33.840 --> 0:01:36.840 for some reason it was mostly crypto bros Onto it 0:01:37.280 --> 0:01:41.080 all seemed to go nuts for buying tungsten cubes and 0:01:41.120 --> 0:01:45.640 then showing pictures of them on social media and then promptly, 0:01:45.800 --> 0:01:48.960 like Joe, forgot about them. And actually, this is a 0:01:49.000 --> 0:01:51.480 really good analogy for what we're about to talk about, 0:01:51.480 --> 0:01:52.080 because we're going to. 0:01:52.080 --> 0:01:52.960 Talk about tungsten. 0:01:53.040 --> 0:01:56.000 The metal and tungsten, it turns out, has gone through 0:01:56.040 --> 0:01:59.520 these cycles where for a few years it's an absolutely 0:01:59.600 --> 0:02:02.640 a cent show strategic asset that you need in order 0:02:02.680 --> 0:02:04.480 to declare war, and then as soon as the war 0:02:04.600 --> 0:02:06.920 is over, you kind of forget about it. You still 0:02:06.920 --> 0:02:10.840 need it for some industrial applications or for novelty dusk, yes, 0:02:11.440 --> 0:02:13.919 but then you find out that you need it again. 0:02:14.000 --> 0:02:16.400 And so there's this like long running kind of boom. 0:02:16.160 --> 0:02:18.160 Bus cycle I'm really sad. 0:02:18.600 --> 0:02:22.000 There's a demonstrative example of how everyone seems to forget 0:02:22.000 --> 0:02:23.400 about tungsten except China. 0:02:23.560 --> 0:02:26.400 I'mctually I'm actually really said about this. This is by 0:02:26.440 --> 0:02:28.960 the way, when I say one thing, please please. 0:02:28.760 --> 0:02:30.440 I know where you can find some tungsten. 0:02:30.600 --> 0:02:35.120 In the West, in Western Australia, in the bahamash. 0:02:34.320 --> 0:02:38.000 Really FTX famous, that's right, that's right. 0:02:38.120 --> 0:02:38.920 Yes, this is. 0:02:38.919 --> 0:02:42.760 Gonna install a giant tungsten cube at their headquarters in 0:02:42.800 --> 0:02:45.600 the Bahamas. And everyone seems to have forgotten this bit 0:02:45.639 --> 0:02:48.400 of the Michael Lewis book. At the very very end 0:02:48.800 --> 0:02:51.919 of Michael Lewis's book on Sam Bateman Freed, he says 0:02:52.000 --> 0:02:55.520 he found the giant tungsten cube in a storage unit 0:02:55.720 --> 0:02:58.240 in the jungle, and it's probably still there because no 0:02:58.240 --> 0:02:58.920 one would wind of move. 0:02:59.200 --> 0:03:02.160 Yeah, so would be so heavy. I have this. It's 0:03:02.200 --> 0:03:02.959 actually depressed me. 0:03:03.120 --> 0:03:03.280 You know. 0:03:03.360 --> 0:03:05.600 One of the reasons, like I didn't buy the cube 0:03:05.680 --> 0:03:09.040 is a quote investment unquote. But I think I've always said, 0:03:09.080 --> 0:03:10.639 you know, one of the things that people don't talk 0:03:10.639 --> 0:03:13.400 about with hard asset investing is that you actually pay 0:03:13.400 --> 0:03:17.000 a negative interest rate because a you have to either 0:03:17.040 --> 0:03:20.160 pay for storage constant storage like a safe or something 0:03:20.200 --> 0:03:24.200 like that, or if you haven't or eventually security guards. Right, 0:03:24.200 --> 0:03:25.959 if you really had a lot of gold or silver 0:03:26.080 --> 0:03:28.880 or whatever. But then if you don't have that, if 0:03:28.880 --> 0:03:31.280 you don't do that, then and every year there is 0:03:31.320 --> 0:03:34.079 like a non zero percent chance that you lose your 0:03:34.120 --> 0:03:36.560 asset you misplace it. Yeah, maybe you have like some 0:03:36.840 --> 0:03:39.320 keys to a crypto wallet that you lose or whatever. 0:03:39.680 --> 0:03:42.200 So that is a way of replicating except sort of 0:03:42.240 --> 0:03:46.560 stochastically a negative interest rate. I think I'm gonna find it. 0:03:46.720 --> 0:03:48.280 I didn't totally forget about it. I had it on 0:03:48.320 --> 0:03:50.240 my desk even as recently as a few months ago, 0:03:50.280 --> 0:03:52.520 and I have some very messy drawers, so I think 0:03:52.560 --> 0:03:54.960 I actually I'm not a I haven't actually given up hope. 0:03:55.080 --> 0:03:58.080 I'll create a bet on a prediction mark right about 0:03:58.080 --> 0:03:59.480 whether you'll find your tonguesten cube. 0:03:59.480 --> 0:04:03.840 But anyway, setting as a desk toys, it turns out 0:04:03.880 --> 0:04:07.440 tungsten is actually, as you said, important sometimes. You know, 0:04:07.520 --> 0:04:10.760 it's not like copper or oil where it's important all 0:04:10.760 --> 0:04:12.880 the times. It seems to be a commodity that's important 0:04:12.920 --> 0:04:16.080 sometimes and that creates as you said, interesting diameters. 0:04:16.279 --> 0:04:19.400 Yeah, and it seems to be growing more important because 0:04:19.440 --> 0:04:22.920 going back to the military applications of tungsten, we've had 0:04:22.960 --> 0:04:26.040 a lot of wars recently, and tungsten apparently is in 0:04:26.120 --> 0:04:29.240 a lot of cruise missiles and drone shrapnel and. 0:04:29.120 --> 0:04:29.680 Things like that. 0:04:29.720 --> 0:04:32.000 And at the same time, like a lot of other 0:04:32.520 --> 0:04:36.040 I guess, rare earth metals, it's also becoming more important 0:04:36.120 --> 0:04:39.400 to our vision of the future, to the AI build 0:04:39.480 --> 0:04:42.000 out things like that, So it's getting more attention. And 0:04:42.080 --> 0:04:44.680 of course, again like a lot of rare earths, there's 0:04:44.720 --> 0:04:47.800 a limited supply and it seems to be dominated by 0:04:47.839 --> 0:04:48.839 one particular country. 0:04:48.960 --> 0:04:51.040 Yeah, it's right, this is the thing. There's a lot 0:04:51.080 --> 0:04:54.200 of it, but it's expensive and low margin and typical 0:04:54.279 --> 0:04:56.839 times and so you're just like, yeah, it's like distributed. 0:04:57.040 --> 0:05:00.400 There's some countries that are friendly to the US that 0:05:00.480 --> 0:05:04.120 are like more seen as geostrategic rivals. But in normal times, 0:05:04.320 --> 0:05:07.000 it's just not worth the squeeze to actually spend to 0:05:07.080 --> 0:05:10.360 spend the time and environmental costs of minding it. So 0:05:11.000 --> 0:05:14.200 we should talk about the current state of tungsten in 0:05:14.240 --> 0:05:17.840 a state of heightened geopolitical tension. Let's yeah, anyway, I'm 0:05:17.880 --> 0:05:20.320 very excited to say, we really do have the perfect guest, 0:05:20.360 --> 0:05:22.839 someone who we probably should have had on odd lots 0:05:22.960 --> 0:05:25.120 a long time ago. One of our colleagues coming to 0:05:25.200 --> 0:05:27.240 us from Sydney. We're gonna be speaking, of course, to 0:05:27.240 --> 0:05:31.159 Bloomberg Opinion calumnist David Fickling, who's just done a big 0:05:31.279 --> 0:05:35.200 reported piece about a tungsten mine in Australia, and what 0:05:35.240 --> 0:05:37.960 this tells us about all the things that we're talking about. David, 0:05:38.000 --> 0:05:40.159 Thank you so much for joining us. How are you doing, 0:05:40.560 --> 0:05:42.479 great to see you. Thank you so much for staying 0:05:42.520 --> 0:05:45.440 up late to chat with us. Why would we talk 0:05:45.480 --> 0:05:49.160 about war, geo political uncertainty, all this stuff? What is 0:05:49.200 --> 0:05:52.120 it about tungsten that suddenly becomes important? 0:05:52.960 --> 0:05:54.120 Yeah, I mean tungsten. 0:05:54.360 --> 0:05:56.120 You can look at it as a bit like a 0:05:56.720 --> 0:06:01.720 sort of century old missing prediction market for war basically, 0:06:01.880 --> 0:06:04.840 and I didn't realize this until I started looking at tungsten, 0:06:05.000 --> 0:06:07.400 but actually, if you go back right to the turn 0:06:07.400 --> 0:06:11.040 of the twentieth century, it has operated like a prediction 0:06:11.200 --> 0:06:15.119 market in the sense that people making real investments, once 0:06:15.160 --> 0:06:18.360 they get a sense that war is a real possibility, 0:06:18.400 --> 0:06:21.000 they put real money behind tungsten. And you can see 0:06:21.000 --> 0:06:22.839 the sort of process with that if you're operating a 0:06:22.880 --> 0:06:25.719 tungsten mine, then you're in touch with tungsten traders, and 0:06:25.720 --> 0:06:29.920 the tungsten traders are in touch with military materiel companies 0:06:30.279 --> 0:06:32.760 who get the first big orders when there's a real 0:06:32.800 --> 0:06:35.880 prospect of war. And this mine I visited has this 0:06:36.120 --> 0:06:39.640 extraordinary history where it first opened in nineteen seventeen during 0:06:39.640 --> 0:06:41.839 World War One. It closed at the end of the 0:06:41.839 --> 0:06:44.159 war because then the war ended, no one needed the 0:06:44.160 --> 0:06:47.440 tungsten anymore, and the European government sold it for all 0:06:47.480 --> 0:06:50.960 their tungsten stockpiles. Opens up again nineteen thirty eight before 0:06:51.120 --> 0:06:53.719 World War II starts. It goes through a bit of 0:06:54.000 --> 0:06:56.200 a struggle after World War Two, but then it's more 0:06:56.279 --> 0:06:59.200 or less rescued by the Korean War. It closes down 0:06:59.240 --> 0:07:02.240 almost altogether round about when Sputnick is launched and people 0:07:02.320 --> 0:07:04.960 start rethinking what wars are going to be like. But 0:07:05.040 --> 0:07:07.400 then it sort of keeps going through the Vietnam War 0:07:07.440 --> 0:07:10.000 and finally closes down the Cold War, and it's been closed. 0:07:10.080 --> 0:07:14.040 This mine it's on a beach in an island just 0:07:14.080 --> 0:07:16.560 off the coast of Tasmane. It's a pretty isolated wind 0:07:16.600 --> 0:07:19.800 sweat spot in the Roaring forties. In nineteen ninety it 0:07:19.880 --> 0:07:22.960 closed down, the mine flooded, and it was basically been 0:07:23.000 --> 0:07:26.080 ignored for most of the last three decades, and it's 0:07:26.120 --> 0:07:30.520 now finally starting up again at this very moment when 0:07:30.880 --> 0:07:31.920 war is looking more likely. 0:07:32.040 --> 0:07:34.200 So this is a story. But just to be clear, 0:07:34.440 --> 0:07:37.640 what is it about the properties of tungsten such that 0:07:38.040 --> 0:07:41.120 it is important for material. 0:07:41.120 --> 0:07:42.760 I mean, it's the same thing with the tungsten cube 0:07:42.800 --> 0:07:45.440 on your desk. It's incredibly dense. I think one of 0:07:45.520 --> 0:07:47.640 the things that attracts the crypto roose to tungsten is 0:07:47.680 --> 0:07:49.800 it's not just incredibly dense, it's about the same density 0:07:49.840 --> 0:07:53.280 as bold, but it also has this ridiculously high melting 0:07:53.320 --> 0:07:56.480 point but more than three thousand degrees celsius, so sort 0:07:56.480 --> 0:07:59.640 of three times hotter than lava, Tungsten will still be solid. 0:08:00.120 --> 0:08:02.920 And that means that if you're trying to make projectiles 0:08:02.960 --> 0:08:04.640 with it. For instance, if you're trying to make an 0:08:04.760 --> 0:08:07.880 armor piercing projectile to get through the armor plating of 0:08:07.880 --> 0:08:10.760 a tank, it's going to hold its shape. Most materials 0:08:10.800 --> 0:08:13.000 are going to sort of turn into a mushroom and 0:08:13.400 --> 0:08:15.760 dissipate their force. This is going to go straight through 0:08:15.760 --> 0:08:17.760 to the inside of the tank, so that'll be very effective. 0:08:18.160 --> 0:08:20.520 Or also a thing that's more current at the moment, 0:08:21.040 --> 0:08:23.360 say you're having a sort of cluster munition, a sort 0:08:23.360 --> 0:08:26.040 of a warhead that explodes into a sort of distributed 0:08:26.120 --> 0:08:28.760 charge so that you can take out a command post 0:08:28.920 --> 0:08:31.880 or a drone. With tungsten, you can have a bunch 0:08:31.920 --> 0:08:34.200 of very tiny tungsten pellets and they will make a 0:08:34.240 --> 0:08:37.720 sort of metal rain that will smash anything in the vicinity. 0:08:37.920 --> 0:08:39.839 And because it's so dense, it's going to be much 0:08:39.880 --> 0:08:42.640 more effective than steel. So for all these reasons, it's 0:08:42.720 --> 0:08:45.120 just very useful for military purposes. 0:08:45.160 --> 0:08:45.880 And of course if. 0:08:45.840 --> 0:08:48.680 War is pending, people pay any price for those sorts 0:08:48.679 --> 0:08:49.760 of physical properties. 0:08:49.920 --> 0:08:52.240 Getting hit in the head by a tungsten cube would 0:08:52.320 --> 0:08:55.320 certainly be painful and damaging. Talk to us about the 0:08:55.400 --> 0:08:59.520 non military applications, because it's possible, you know, you wrote 0:08:59.559 --> 0:09:03.640 about this new mind that's restarting. Maybe what we should 0:09:03.640 --> 0:09:06.360 get into what the investors actually say the reasons behind 0:09:06.400 --> 0:09:10.079 them opening up this mine. Maybe it's because they're predicting 0:09:10.240 --> 0:09:14.400 more tungsten demand because of additional military conflict. Maybe they 0:09:14.520 --> 0:09:16.679 just think there's going to be more demand for, like, 0:09:16.840 --> 0:09:20.440 I don't know, carbide tooling or something like that. What 0:09:20.520 --> 0:09:23.120 else is tungsten used for? And then also what does 0:09:23.240 --> 0:09:25.319 we should also talk about how colorful some of these 0:09:25.360 --> 0:09:29.040 characters are. What is your merry band of tungsten investors 0:09:29.080 --> 0:09:30.679 say about their reasons for opening it. 0:09:31.040 --> 0:09:35.240 You've done your research, Tracy, I mean this carbide tooling, 0:09:35.480 --> 0:09:37.720 I could tell that was the I mean, the key 0:09:37.760 --> 0:09:40.720 reason you will use tungsten is again because it's very hard. 0:09:41.040 --> 0:09:44.040 It's basically drill bits. If you're in an. 0:09:43.760 --> 0:09:46.760 Auto shop, then you'll use the drill bit for working metal. 0:09:46.960 --> 0:09:48.360 If you're in a mine, it will be on the 0:09:48.440 --> 0:09:51.000 end of a drill bit there, or in an oil well, 0:09:51.320 --> 0:09:54.040 anywhere where you need to drill something very hard. Tungsten 0:09:54.040 --> 0:09:57.679 carbide is a mixture of tungsten and carbon, as the 0:09:57.760 --> 0:10:02.080 name suggests, and it's the best value way to get 0:10:02.120 --> 0:10:05.920 incredibly incredibly sort of powerful sort of drilling power. And 0:10:05.920 --> 0:10:08.000 that's actually essentially in all sorts of ways. But I 0:10:08.000 --> 0:10:10.840 think we don't often anticipate. I was in the course 0:10:10.880 --> 0:10:13.640 of working on this article, I was reading something about 0:10:14.000 --> 0:10:17.200 during World War two when Nazi Germany, when we can 0:10:17.240 --> 0:10:19.800 talk about this later was very concerned about its supplies 0:10:19.840 --> 0:10:22.920 of tungsten, and they were running short of supplies of tungsten, 0:10:23.440 --> 0:10:25.720 and one of the things they did is to conserve. 0:10:25.400 --> 0:10:26.440 It for the weapons industry. 0:10:26.480 --> 0:10:28.800 They stopped using it in tooling, and you hear these 0:10:28.880 --> 0:10:33.120 reports of Allied soldiers capturing German tanks late in World 0:10:33.160 --> 0:10:37.560 War Two and just going this equipment's terrible because they 0:10:37.559 --> 0:10:39.600 didn't have the tungsten car vibe for the tooling. 0:10:39.920 --> 0:10:41.640 So the machinery wasn't working very well. 0:10:41.640 --> 0:10:44.000 The gears were all out of whack, and nothing was 0:10:44.040 --> 0:10:47.480 working very well. And so most tungsten, now eighty percent 0:10:47.520 --> 0:10:49.920 of it is just tungsten carvide its tools, and you 0:10:49.960 --> 0:10:53.200 can buy it in your local toolshop. You'll find it everywhere, 0:10:53.240 --> 0:10:55.880 and it's a fairly fairly boring hum drum element. 0:10:56.400 --> 0:10:58.760 The other things, there are a few other uses for it. 0:10:58.920 --> 0:11:02.439 Like almost every critical mineral, it gets used in some 0:11:02.520 --> 0:11:05.880 weird processes in oil refineries. If you're as integritical mineral design, 0:11:05.880 --> 0:11:08.400 there's always like five percent there's always used as some 0:11:08.480 --> 0:11:12.160 weird catalysts in oil refinery. And that's the case here. 0:11:12.440 --> 0:11:14.880 Another one that's actually quite interesting again because of these 0:11:14.920 --> 0:11:18.000 sort of high temperature, high strength properties. If you're making 0:11:18.000 --> 0:11:21.640 turbine blades, it's very important for turbine blades a lot 0:11:21.640 --> 0:11:23.959 of you know in a jet turbine, but also in 0:11:24.280 --> 0:11:26.839 a gas turbine which gets used a lot of powering 0:11:26.920 --> 0:11:30.960 data centers and things in LNG compressors. About up to 0:11:31.000 --> 0:11:33.480 ten percent of that ally might be tungsten as well, 0:11:33.559 --> 0:11:35.640 So there's a certain amount of demand for that, and 0:11:35.679 --> 0:11:39.760 there is even supposedly a use in some AI chips 0:11:39.760 --> 0:11:42.480 for tungsten as well, but the quantities there will be 0:11:42.480 --> 0:11:45.520 absolutely tiny, because of course anything involved in chip making 0:11:45.720 --> 0:11:48.880 the raw materials is just infinitesimal because the chips themselves 0:11:48.880 --> 0:11:49.480 are so small. 0:11:49.880 --> 0:11:54.080 So the investors in this mind that's reopening the Dolphin mine, 0:11:54.480 --> 0:11:56.640 you know, I call them a colorful bunch earlier, and 0:11:56.679 --> 0:11:58.080 it really does. I think you make this point in 0:11:58.080 --> 0:11:59.880 your piece, but it really does sound like a cast 0:12:00.120 --> 0:12:02.520 characters from like a heist movie. It's like a red 0:12:02.600 --> 0:12:05.880 Bull air and like some distressed debt guys and then 0:12:05.960 --> 0:12:10.960 some retired miners doing last one, last job. But when 0:12:10.960 --> 0:12:14.439 they talk to you about their reasons for reopening this mine, what. 0:12:14.440 --> 0:12:14.960 Did they say? 0:12:15.760 --> 0:12:18.120 Well, the main one I was speaking to is actually 0:12:18.120 --> 0:12:21.960 the chief executive or the executive chairman of the mine himself. 0:12:22.200 --> 0:12:24.480 He was actually he was brought in by one of 0:12:24.520 --> 0:12:26.640 these investors. As I said that, if you look at 0:12:26.640 --> 0:12:30.520 the shareholder reds of this company, it's like nothing I've 0:12:30.559 --> 0:12:33.240 ever seen of a shelled regis certainly of a company 0:12:33.360 --> 0:12:36.280 of sort of global importance. Like you say that, I 0:12:36.320 --> 0:12:38.720 think the reason Red Bull are involved is that there's 0:12:38.720 --> 0:12:42.920 a sort of long central European Germanic interest in tungsten, 0:12:43.080 --> 0:12:45.439 and Red Bull are based in Austria, a couple of them. 0:12:45.520 --> 0:12:46.880 Are they urged. 0:12:46.679 --> 0:12:50.800 To acquire tungsten? I'm well aware, yes, absolutely. 0:12:51.440 --> 0:12:55.600 The Peabody Energy that the American coal mining company bought 0:12:55.640 --> 0:12:58.720 a coal mine off a couple of Australian investors about 0:12:58.760 --> 0:13:01.160 twenty years ago and they used the payout from that 0:13:01.360 --> 0:13:02.880 to invest in this mind they were some of the 0:13:02.880 --> 0:13:06.000 first people who were involved. There's a Caterpillar dealer who 0:13:06.040 --> 0:13:08.200 actually worked at the mine in the nineteen sixties. 0:13:08.559 --> 0:13:09.560 He's one of the shareholders. 0:13:09.600 --> 0:13:12.280 That the state government of Tasmania is one of the 0:13:12.320 --> 0:13:14.719 shareholders because they were bailing it out. And even that 0:13:14.840 --> 0:13:18.480 some of the companies that were leasing cranes and mining equipment. 0:13:18.520 --> 0:13:22.480 They basically took equity in lieu of unpaid bills. There's 0:13:22.520 --> 0:13:25.800 really hardly anything in the way of bank finance in 0:13:25.840 --> 0:13:28.680 this company at all. It's equity is about seven million 0:13:29.000 --> 0:13:33.520 Australian dollars and the total CASHTUN invested since it started 0:13:33.559 --> 0:13:36.880 up has really tried to get back into operations twenty 0:13:36.960 --> 0:13:39.560 years ago. There's been a lot of reports and environmental 0:13:39.600 --> 0:13:42.560 studies and things over that period. Total is about seventy 0:13:42.600 --> 0:13:45.360 seven million dollars. You know what Amazon spends in about 0:13:45.400 --> 0:13:48.960 four hours, so it's really very little money. I would 0:13:49.040 --> 0:13:52.680 say their ambition, they weren't betting for twenty years on war, 0:13:53.280 --> 0:13:57.160 but their ambition was that China produces eighty percent of 0:13:57.160 --> 0:14:02.439 the world's tungsten, and by twenty you were seeing China 0:14:02.880 --> 0:14:06.800 threatening Japan for instance, over its rare earth supplies, and 0:14:06.960 --> 0:14:11.120 you could see this was a potential risk even back 0:14:11.160 --> 0:14:14.640 then and people around the world. There was one tiny 0:14:14.720 --> 0:14:18.480 tungsten mine that the US is last tungsten mine was 0:14:18.480 --> 0:14:21.120 actually just east of Los Angeles. It was a sort 0:14:21.160 --> 0:14:23.560 of retired Vietnam veterman who would go up to the 0:14:23.560 --> 0:14:28.720 mountains and dig out a few tons of tungsten every summer, 0:14:29.000 --> 0:14:32.080 and that went on until he went on mining until 0:14:32.080 --> 0:14:35.680 about twenty thirteen. I think he was talking back then. 0:14:35.720 --> 0:14:37.600 In the process of writing this article, I dug out 0:14:37.600 --> 0:14:40.240 at a letter that he'd sent to Congress complaining about 0:14:40.640 --> 0:14:44.440 reducing tariffs on Chinese tungsten because he was concerned back 0:14:44.440 --> 0:14:46.960 in twenty twelve that China controlled too much of this 0:14:47.040 --> 0:14:48.320 and was a strategic competitor. 0:14:48.680 --> 0:14:50.320 Back then, people weren't worried. 0:14:50.080 --> 0:14:53.600 About it very much, and now it's everything everyone worries about. 0:15:09.320 --> 0:15:11.160 So I definitely want to talk more about the sort 0:15:11.160 --> 0:15:14.480 of economics and significance of this, mind, but can you 0:15:14.480 --> 0:15:17.320 just talk a little bit more. You mentioned China producing 0:15:17.360 --> 0:15:20.240 eighty percent of the world's tungsten. Can you just give 0:15:20.280 --> 0:15:22.800 us a little bit more color on what the peace 0:15:22.920 --> 0:15:26.800 time tungsten market looks like in terms of how big 0:15:26.840 --> 0:15:29.720 we're talking about, the sort of the I guess I 0:15:29.720 --> 0:15:33.520 would say, why there hasn't been so much investment, Like, 0:15:34.160 --> 0:15:39.320 what are the economics such that generally during peacetime it 0:15:39.360 --> 0:15:43.280 does not make sense to do a new project given 0:15:43.440 --> 0:15:46.640 either the size of the market and maybe assuming presumably 0:15:46.920 --> 0:15:50.160 the cost, competitiveness and the efficiency of the Chinese miners. 0:15:50.640 --> 0:15:52.880 I mean, I think the biggest thing, and I think 0:15:52.920 --> 0:15:56.040 this gets underestimated a bit because China does try to 0:15:56.240 --> 0:15:57.720 lock down a lot of a supply chain and a 0:15:57.760 --> 0:16:00.240 lot of critical resources. But in the case of tungst, 0:16:00.320 --> 0:16:01.720 and I think is actually similar in the case of 0:16:01.800 --> 0:16:04.240 rare earth. It has just happened to get the best 0:16:04.280 --> 0:16:07.320 geological resource of this by far. And that's a thing 0:16:07.360 --> 0:16:10.440 that happens in mining. South Africa and Botswana have the 0:16:10.440 --> 0:16:13.960 best geological resources of diamonds, and Russia and South Africa 0:16:14.000 --> 0:16:17.800 have the best resources for platinum group metals, and Australian 0:16:17.800 --> 0:16:18.800 and Brazil have the best iron. 0:16:18.880 --> 0:16:19.720 Or that just happens. 0:16:19.760 --> 0:16:23.480 These resources are unevenly distributed around the world, and it's 0:16:23.520 --> 0:16:25.560 hard if you don't have resources as good as that 0:16:25.600 --> 0:16:28.960 to get a look in China, going back to the 0:16:28.960 --> 0:16:32.880 turn of the twentieth century, dominated global tungsten supply, and 0:16:32.920 --> 0:16:35.560 the only time that that's really changed was during a 0:16:35.560 --> 0:16:37.760 period in the Cold War when Tungstan was basically closed 0:16:37.760 --> 0:16:39.320 off from the rest of the world. As soon as 0:16:39.840 --> 0:16:42.400 Chinese tungsten was able to get into the world market. 0:16:42.600 --> 0:16:45.600 Their minds are the highest grade minds and there is 0:16:45.720 --> 0:16:49.640 justly more of it. There now some investors outside China 0:16:49.680 --> 0:16:53.360 and tungsten. Alongside the geofelisical argument, they would probably say, look, 0:16:53.400 --> 0:16:56.000 these mines have been mined for a century. One of 0:16:56.000 --> 0:16:59.680 the reasons China at this moment has export controls on tungsten. 0:17:00.240 --> 0:17:03.520 I think it's probably mostly geopolitics. But the defense of 0:17:03.520 --> 0:17:06.920 that that the Chinese government might have is that these 0:17:06.960 --> 0:17:09.280 mines are very old and we need to reorganize the 0:17:09.280 --> 0:17:11.440 industry because it's an underperforming industry. 0:17:11.520 --> 0:17:14.680 So there is a fairly scarce resource of this. 0:17:14.760 --> 0:17:17.480 It's about eighty five thousand metric tons a year is 0:17:17.520 --> 0:17:21.480 all the tungsten that's used. It's not a super exciting 0:17:21.640 --> 0:17:25.080 market because it's very expensive, and because it's mainly used 0:17:25.119 --> 0:17:28.399 in places like tool shops and mines. Most of that 0:17:28.480 --> 0:17:31.879 stuff gets recycled. If you're in an auto tooling shop, 0:17:32.359 --> 0:17:34.879 once your drill bit gets worn out, it might get reground, 0:17:34.960 --> 0:17:36.919 or you might just send it and it'll be recycled. 0:17:37.000 --> 0:17:41.359 So there's not a sort of huge ongoing demand surge 0:17:41.400 --> 0:17:44.080 for tungsten. It really sort of grows at the pace 0:17:44.160 --> 0:17:46.440 of tooling capacity worldwide. 0:17:46.640 --> 0:17:47.480 Can you talk to us. 0:17:47.440 --> 0:17:50.320 About the market structure of tungsten as well, because I 0:17:50.359 --> 0:17:52.399 know Joe said he didn't buy the tungsten cube as 0:17:52.440 --> 0:17:55.359 an investment, but if you had, I mean, you would 0:17:55.440 --> 0:17:58.359 have a hard time actually looking up the price of 0:17:58.440 --> 0:18:01.119 tungsten right now because it doesn't seem to have a 0:18:01.160 --> 0:18:04.280 forward curve in the way of a traditional commodity like 0:18:04.359 --> 0:18:06.480 oil or something like that. So if you're an investor 0:18:06.600 --> 0:18:09.520 trying to make a bet on a tungsten mine, it 0:18:09.600 --> 0:18:13.120 seems really hard to predict what your current returns are 0:18:13.119 --> 0:18:15.240 going to be, much less your future returns. 0:18:15.920 --> 0:18:18.159 I think that's absolutely right, and I think it's one 0:18:18.160 --> 0:18:21.240 of the biggest problems with critical minerals generally, because there's 0:18:21.280 --> 0:18:24.200 not a futures market. Because there's no way of hedging 0:18:24.240 --> 0:18:28.960 your cost with any mine, you are making capital investments 0:18:29.040 --> 0:18:31.520 right now for something that might only pay off in 0:18:31.680 --> 0:18:34.879 years five to ten. Now, if I'm doing that with copper, 0:18:35.240 --> 0:18:38.080 I can go to the London Metal Exchange or Comics 0:18:38.520 --> 0:18:41.080 and I can have as many contricts as I want 0:18:41.280 --> 0:18:44.239 setting the price of copper five years hence, and then 0:18:44.280 --> 0:18:45.880 I can take that to the bank and say, look, 0:18:45.920 --> 0:18:48.520 here's my operating costs, here's the value of cover, here's 0:18:48.560 --> 0:18:51.680 how much I'm going to produce. This is a bankable project, 0:18:51.880 --> 0:18:55.479 very simple, totally different with tungsten, they're just there. Simply 0:18:55.640 --> 0:18:58.320 is no futures market in this because it's such a 0:18:58.359 --> 0:19:02.080 tiny market most of time. One investor I spoke to, 0:19:02.280 --> 0:19:05.480 I think he's been on the podcast before, actually Alex Turnbull, 0:19:05.840 --> 0:19:07.920 you know. He said, sometimes it could be three he said, 0:19:08.160 --> 0:19:11.720 like tungsten, it could be three hundred dollars adrimetric ton unit, 0:19:11.760 --> 0:19:13.840 which is the unit the is, It could be three thousand, 0:19:14.560 --> 0:19:18.160 three hundred, three thousand each is a reasonable price for it. 0:19:18.200 --> 0:19:21.680 Because depending on the state of supply and demand of 0:19:21.720 --> 0:19:24.320 the market, the fact that China may suddenly close off 0:19:24.359 --> 0:19:26.919 supply and China has eighty percent of supply and then 0:19:26.960 --> 0:19:29.280 you have most of the world fighting over the remaining 0:19:29.280 --> 0:19:31.959 twenty percent, any of these prices is viable. And that 0:19:32.000 --> 0:19:34.240 means that if you're stuck in the middle, and most 0:19:34.560 --> 0:19:38.479 tunkster minds outside China are above that a ton level, 0:19:39.000 --> 0:19:42.280 then you find it very hard to finance your mind. No, 0:19:42.280 --> 0:19:45.040 no banker will really lend money to you on that 0:19:45.080 --> 0:19:47.199 basis because they don't know what your revenues are going 0:19:47.280 --> 0:19:49.840 to be next year, let alone five years from there. 0:19:50.320 --> 0:19:52.760