1 00:00:04,200 --> 00:00:07,360 Speaker 1: Those antimony, arsenic, aluminum, selenium and hydrogen and nyxogen and 2 00:00:07,440 --> 00:00:10,520 Speaker 1: hydrogen and urenium and nicoliodinium, naponium, germanium and. 3 00:00:10,480 --> 00:00:13,560 Speaker 2: Iron amoricia Hellostephonomics Here the podcast that brings you the 4 00:00:13,560 --> 00:00:16,639 Speaker 2: global economy, and we're visiting some of the forgot hument 5 00:00:16,680 --> 00:00:20,080 Speaker 2: corners of the periodic. Take in we these days and iodine, 6 00:00:20,079 --> 00:00:23,000 Speaker 2: andium and thulium and thallia as the world struggles to 7 00:00:23,000 --> 00:00:25,439 Speaker 2: get its hands on the critical minerals will need to 8 00:00:25,520 --> 00:00:29,520 Speaker 2: power electric car batteries and all those other green machines. 9 00:00:30,160 --> 00:00:33,239 Speaker 2: Good news for green tech companies maybe, But will it 10 00:00:33,320 --> 00:00:36,600 Speaker 2: also spell new riches for the countries that currently have 11 00:00:36,800 --> 00:00:41,480 Speaker 2: these much sought after materials. Historians would say, don't bet 12 00:00:41,520 --> 00:00:45,280 Speaker 2: on it. As a long and deeply depressing tradition of 13 00:00:45,360 --> 00:00:50,440 Speaker 2: commodity rich economies failing to benefit from their natural wealth. 14 00:00:51,120 --> 00:00:54,520 Speaker 2: With a handful of notable exceptions, such countries all too 15 00:00:54,560 --> 00:00:57,680 Speaker 2: often end up worse off than neighbours that weren't blessed 16 00:00:57,720 --> 00:01:01,040 Speaker 2: with all those natural assets in the first place. Could 17 00:01:01,080 --> 00:01:04,640 Speaker 2: this time finally be different? I'm going to debate that 18 00:01:04,720 --> 00:01:07,440 Speaker 2: in a few minutes with Bloomberg commodity reporter and author 19 00:01:07,560 --> 00:01:12,200 Speaker 2: Jack Farcie well backed senior economist Jim Cust But first, 20 00:01:12,480 --> 00:01:16,840 Speaker 2: Bloomberg's Indonesia economy reporter Claire Joo and metals and mining 21 00:01:16,880 --> 00:01:20,240 Speaker 2: reporter Annie Lee have an encouraging story to tell you 22 00:01:20,280 --> 00:01:23,520 Speaker 2: from Indonesia. The reporting was done by both of them, 23 00:01:23,600 --> 00:01:26,319 Speaker 2: but it's Claire's voice you'll hear doing the narration. 24 00:01:27,720 --> 00:01:30,840 Speaker 1: When you think of elements like nickel and aluminum, they're 25 00:01:30,880 --> 00:01:34,840 Speaker 1: probably just boxes on the periodic table. But these minerals 26 00:01:34,920 --> 00:01:39,120 Speaker 1: are essential components that go into making batteries for electric vehicles. 27 00:01:41,240 --> 00:01:45,040 Speaker 1: This is a four hundred billion dollar industry, and no 28 00:01:45,080 --> 00:01:50,680 Speaker 1: one knows it's better than Indonesia. Made up of over 29 00:01:50,800 --> 00:01:55,720 Speaker 1: seventeen thousand islands and lush rainforests, Indonesia sits a top 30 00:01:55,760 --> 00:02:00,760 Speaker 1: an abundant reserve of native metal copper, gold, and nickel, 31 00:02:01,320 --> 00:02:05,920 Speaker 1: the raw material used in evy batteries. For decades, Indonesia 32 00:02:05,960 --> 00:02:08,799 Speaker 1: has been content with digging up the minerals and sending 33 00:02:08,800 --> 00:02:12,600 Speaker 1: them to places like China, where skilled workers and factories 34 00:02:12,720 --> 00:02:17,080 Speaker 1: turn them into higher value products like batteries or electric cars. 35 00:02:18,040 --> 00:02:22,720 Speaker 1: But now the biggest economy in Southeast Asia has other ideas. 36 00:02:23,320 --> 00:02:26,880 Speaker 1: Why should Indonesia stop at exporting role or when it 37 00:02:26,880 --> 00:02:29,840 Speaker 1: can export the batteries that are made from them and 38 00:02:29,880 --> 00:02:36,600 Speaker 1: even the cars powered by those batteries. Indonesia's ban on 39 00:02:36,720 --> 00:02:40,519 Speaker 1: rule box site exports began over the weekend. The ban 40 00:02:40,800 --> 00:02:43,320 Speaker 1: is meant to encourage more investment into. 41 00:02:43,200 --> 00:02:47,120 Speaker 3: Higher value added activities on shore Indonesia. 42 00:02:47,160 --> 00:02:50,160 Speaker 1: The bottom line, if you want our minerals, you have 43 00:02:50,320 --> 00:02:55,519 Speaker 1: to process them here. For President Jokowidodo, Indonesia's natural wealth 44 00:02:55,600 --> 00:02:58,400 Speaker 1: is the key for it to become a high income country. 45 00:02:58,919 --> 00:03:01,519 Speaker 3: It is sassy in Dose three. 46 00:03:02,320 --> 00:03:06,960 Speaker 1: Industrial downstreaming is very important. We will leap forwards if 47 00:03:07,000 --> 00:03:08,280 Speaker 1: downstreaming is successful. 48 00:03:09,520 --> 00:03:16,040 Speaker 3: Thistochi The Golden Indonesia of twenty forty five, smart execution 49 00:03:16,400 --> 00:03:16,880 Speaker 3: is needed. 50 00:03:19,760 --> 00:03:22,640 Speaker 1: It's estimated to add more than seven hundred billion dollars 51 00:03:22,639 --> 00:03:27,160 Speaker 1: to the economy and create nearly ten million jobs. To 52 00:03:27,200 --> 00:03:31,240 Speaker 1: push this strategy forward, Indonesia uses a carrot and stick approach. 53 00:03:32,240 --> 00:03:35,120 Speaker 1: On one hand, it's clapped down on exports of some 54 00:03:35,280 --> 00:03:38,880 Speaker 1: raw mineral ores. On the other, it's offered tax for 55 00:03:39,000 --> 00:03:43,080 Speaker 1: certain incentives, viewering companies to build smelters and battery plants 56 00:03:43,120 --> 00:03:48,560 Speaker 1: within its borders, and it's already working, but is it 57 00:03:48,600 --> 00:03:50,840 Speaker 1: good to go to get a better idea of how 58 00:03:50,880 --> 00:03:54,240 Speaker 1: the carrot and stick approach materialized. I spoke with Mohammad 59 00:03:54,240 --> 00:03:57,600 Speaker 1: Faiz Naguza as an economist at Bank of America. 60 00:03:58,080 --> 00:04:01,920 Speaker 4: We saw about eleven billion dollars of being realized into 61 00:04:01,960 --> 00:04:02,520 Speaker 4: that sector. 62 00:04:03,000 --> 00:04:06,520 Speaker 1: By that sector, he means nickel downstreaming. 63 00:04:06,440 --> 00:04:09,000 Speaker 4: But that is just that sector. Beyond that, we're also 64 00:04:09,040 --> 00:04:14,040 Speaker 4: seeing more investments likely coming into other smelters copper smelters 65 00:04:14,040 --> 00:04:18,679 Speaker 4: for example, as well as battery grade nickel and even 66 00:04:18,760 --> 00:04:24,599 Speaker 4: producing IV batteries themselves. So the investment inflows Intodonesia is 67 00:04:24,640 --> 00:04:27,880 Speaker 4: getting beefed up because of this success in downstreaming. 68 00:04:28,560 --> 00:04:32,440 Speaker 1: Nowhere is that boom more apparent than in Morowali. It's 69 00:04:32,480 --> 00:04:36,760 Speaker 1: a nickel ridge district in Indonesia, Sulawesi island east of Borneo. 70 00:04:37,680 --> 00:04:41,400 Speaker 1: Once a quiet fishing town, it now houses the bustling 71 00:04:41,560 --> 00:04:46,719 Speaker 1: Morowali Industrial Park, which just celebrated its tenure anniversary this month. 72 00:04:48,560 --> 00:04:52,560 Speaker 1: Trucks are busy transporting or from mines to smelters, Buses 73 00:04:52,600 --> 00:04:56,280 Speaker 1: full of workers shuttling across the area. The park even 74 00:04:56,320 --> 00:05:01,200 Speaker 1: has its own private airport and port facilities. It employs 75 00:05:01,200 --> 00:05:07,279 Speaker 1: more than eighty thousand Indonesian and Chinese workers here. For 76 00:05:07,360 --> 00:05:10,120 Speaker 1: the first five months this year, this park has already 77 00:05:10,160 --> 00:05:15,080 Speaker 1: registered twenty two billion US dollars of investment. That's compared 78 00:05:15,120 --> 00:05:17,680 Speaker 1: with a record of twenty one billion dollars for the 79 00:05:17,720 --> 00:05:19,080 Speaker 1: whole twenty twenty two. 80 00:05:21,240 --> 00:05:24,920 Speaker 3: To be clear, such success is quite rare. Indonesia holds 81 00:05:24,960 --> 00:05:28,440 Speaker 3: the world's largest deposit of nickel, a mineral in short supply. 82 00:05:29,440 --> 00:05:35,679 Speaker 3: The same goes for Botswana when it comes to diamonds. 83 00:05:36,040 --> 00:05:40,080 Speaker 3: The global diamond manufacturer the Beers relies on Botswana's mines, 84 00:05:40,760 --> 00:05:44,640 Speaker 3: leveraging that the Botswana government struck a deal that set 85 00:05:44,680 --> 00:05:47,760 Speaker 3: aside a portion of rough diamonds to local cutting and 86 00:05:47,800 --> 00:05:55,440 Speaker 3: polishing companies. Historically, polishing usually happened in places like Antwerp, Belgium. 87 00:05:55,680 --> 00:05:59,120 Speaker 3: Other countries, though, face more basic challenges. 88 00:05:59,240 --> 00:06:03,120 Speaker 5: And here's important to maybe use the example of the 89 00:06:03,400 --> 00:06:04,800 Speaker 5: Democratic Republic of Congo. 90 00:06:05,120 --> 00:06:08,279 Speaker 1: Rahi dash Dawa, head of the International Council on Mining 91 00:06:08,279 --> 00:06:09,520 Speaker 1: and Minerals. 92 00:06:09,160 --> 00:06:14,920 Speaker 5: In DRC, A decision was taken to process copper concentrate 93 00:06:15,000 --> 00:06:18,200 Speaker 5: in the DRC itself, but that had to be delayed 94 00:06:18,600 --> 00:06:22,719 Speaker 5: because copper producers simply didn't have enough electricity in order 95 00:06:22,760 --> 00:06:25,599 Speaker 5: to be able to process the copper. So you can't 96 00:06:25,640 --> 00:06:28,520 Speaker 5: do copper smelting without electricity. And the DRC was not 97 00:06:28,600 --> 00:06:32,120 Speaker 5: producing enough of the electricity in order to keep that 98 00:06:32,240 --> 00:06:37,360 Speaker 5: plant going. And so you might think why don't companies 99 00:06:37,400 --> 00:06:39,640 Speaker 5: set up more processing plants. Well, actually, if you don't 100 00:06:39,640 --> 00:06:42,240 Speaker 5: have enough of the energy you need and increasingly low 101 00:06:42,400 --> 00:06:45,200 Speaker 5: carbon and low cost energy you need, it's very difficult 102 00:06:45,200 --> 00:06:45,719 Speaker 5: to process. 103 00:06:46,360 --> 00:06:50,680 Speaker 1: This success doesn't come free either. For one, there's the 104 00:06:50,760 --> 00:06:55,039 Speaker 1: environmental price given the tons of waste generated and the 105 00:06:55,160 --> 00:07:00,920 Speaker 1: coal to provide electricity for factories. Because Lane Calling, Annie 106 00:07:00,960 --> 00:07:04,599 Speaker 1: Lee listed a residential building outside of the Indonesian Park 107 00:07:04,880 --> 00:07:08,880 Speaker 1: where she met Ricky Ardiansha. Ricky rends rooms to Indonesian 108 00:07:08,920 --> 00:07:11,040 Speaker 1: workers and owns a construction. 109 00:07:12,680 --> 00:07:17,880 Speaker 4: The water, the rain rink is color is black? 110 00:07:18,160 --> 00:07:19,480 Speaker 3: Oh really yes? 111 00:07:21,480 --> 00:07:24,160 Speaker 1: Because the air the think. 112 00:07:24,360 --> 00:07:26,960 Speaker 4: Us and in air maybe and then the dust here. 113 00:07:27,920 --> 00:07:30,720 Speaker 1: Ricky told us when it rains, the rain drops turned 114 00:07:30,720 --> 00:07:34,280 Speaker 1: black from the dust in the air. Just outside this building, 115 00:07:34,640 --> 00:07:38,240 Speaker 1: there's a river that runs across the neighborhood. It looks 116 00:07:38,280 --> 00:07:44,840 Speaker 1: like a canal of tomato soup. Now, President Jacobi also 117 00:07:44,880 --> 00:07:48,360 Speaker 1: wants to apply the same strategy not only to other metals, 118 00:07:48,560 --> 00:07:53,720 Speaker 1: but into agriculture, farming, and fisheries, every sector that Indonesia 119 00:07:53,800 --> 00:07:58,440 Speaker 1: has clouds but not dominance. With the twenty twenty four 120 00:07:58,480 --> 00:08:03,000 Speaker 1: elections booming a trace questions will his successor repeat the 121 00:08:03,040 --> 00:08:06,520 Speaker 1: same trick. Here's economist Nagusa. Again. 122 00:08:07,240 --> 00:08:10,720 Speaker 4: Success is so evident that I think most investors assume 123 00:08:11,240 --> 00:08:14,240 Speaker 4: that it will be unlikely for any future governments to say, 124 00:08:14,560 --> 00:08:17,560 Speaker 4: you know, we need to revert this policy. The success 125 00:08:17,560 --> 00:08:20,200 Speaker 4: in terms of exports and the investments are very visible. 126 00:08:20,760 --> 00:08:24,320 Speaker 4: So the assumption is that there will be pretty much 127 00:08:25,000 --> 00:08:27,440 Speaker 4: a good degree of policy continuity on this downstreaming. So 128 00:08:27,600 --> 00:08:29,960 Speaker 4: if something were to change, I think that will come 129 00:08:30,000 --> 00:08:32,800 Speaker 4: as a negative and nasty surprise for investors. 130 00:08:34,080 --> 00:08:38,480 Speaker 1: Whatever the outcome, other countries will be closely watching. If 131 00:08:38,520 --> 00:08:41,559 Speaker 1: they want a bigger role in the supply chain, they're minerals, 132 00:08:41,679 --> 00:08:47,760 Speaker 1: maybe their fastest way to get there in Jakarta Clari 133 00:08:47,840 --> 00:08:49,040 Speaker 1: out for Bloomberg News. 134 00:08:59,520 --> 00:09:02,440 Speaker 2: So I would step back to consider now how this 135 00:09:02,520 --> 00:09:05,040 Speaker 2: has gone in the past, and whether there's any prospect 136 00:09:05,080 --> 00:09:08,760 Speaker 2: for countries elsewhere in the world, especially Africa, to benefit 137 00:09:08,760 --> 00:09:11,400 Speaker 2: from the rush to acquire the minerals that will be 138 00:09:11,480 --> 00:09:14,400 Speaker 2: needed to wean the planet off fossil fuels and to 139 00:09:14,440 --> 00:09:17,640 Speaker 2: help us do that. I'm joined by Jim Cust, senior 140 00:09:17,679 --> 00:09:20,160 Speaker 2: economist in the Africa Department at the World Bank, who's 141 00:09:20,160 --> 00:09:24,160 Speaker 2: written extensively on this subject, and Bloomberg's Energy and Commodities 142 00:09:24,200 --> 00:09:27,840 Speaker 2: reporter Jack Faci, who co authored with Javier Blass, The 143 00:09:27,880 --> 00:09:30,600 Speaker 2: World for Sale, which is a cracking book on global 144 00:09:30,600 --> 00:09:34,560 Speaker 2: commodity trading. Jim Cust, Jack, thank you very much for this. Jim, 145 00:09:34,640 --> 00:09:36,920 Speaker 2: let me start with you. Let's go back in time 146 00:09:37,320 --> 00:09:41,880 Speaker 2: first and think what's the traditional story of a commodity 147 00:09:41,960 --> 00:09:45,280 Speaker 2: boom for developing country before we get onto how this 148 00:09:45,360 --> 00:09:48,679 Speaker 2: time might be drifferent. What has traditionally been the problem 149 00:09:48,720 --> 00:09:52,920 Speaker 2: for developing countries looking to get full advantage from these 150 00:09:53,000 --> 00:09:54,079 Speaker 2: kind of booms. 151 00:09:55,480 --> 00:09:58,760 Speaker 6: Sure, many countries have found it very challenging to move 152 00:09:58,800 --> 00:10:03,800 Speaker 6: from being a major resource dependent economy, so whether that's 153 00:10:03,840 --> 00:10:06,440 Speaker 6: mining or in other cases it's been oil and gas, 154 00:10:07,120 --> 00:10:13,079 Speaker 6: and turn that below ground wealth into above ground prosperity. 155 00:10:13,559 --> 00:10:15,680 Speaker 6: So we've all heard of the resource curse, and this 156 00:10:15,800 --> 00:10:19,200 Speaker 6: is sort of the classical case of countries that have 157 00:10:19,720 --> 00:10:26,000 Speaker 6: commodity booms, followed by busts, and if they haven't saved 158 00:10:26,000 --> 00:10:29,480 Speaker 6: and invested enough of their revenues, then the busts can 159 00:10:29,559 --> 00:10:32,320 Speaker 6: hit them even harder than the boom in the first place. 160 00:10:33,040 --> 00:10:35,600 Speaker 6: And so countries have got into these kind of cyclical 161 00:10:35,679 --> 00:10:39,040 Speaker 6: challenges that ultimately has added up to many of them 162 00:10:39,080 --> 00:10:42,760 Speaker 6: stagnating and growing a lot slower than their neighbors that 163 00:10:42,920 --> 00:10:46,240 Speaker 6: didn't have the resources. And that's what economists think of 164 00:10:46,320 --> 00:10:48,520 Speaker 6: as the resource curse, that you end up growing slower 165 00:10:49,000 --> 00:10:50,240 Speaker 6: than you might have done otherwise. 166 00:10:51,080 --> 00:10:53,480 Speaker 2: It's always striking how few there are, but there are 167 00:10:53,520 --> 00:10:56,360 Speaker 2: a few countries that have managed to get round this. 168 00:10:58,120 --> 00:11:01,599 Speaker 6: Yeah, absolutely, so the result curse is certainly not universal. 169 00:11:02,520 --> 00:11:07,720 Speaker 6: So we can think of countries like Chile and Indonesia, Australia, 170 00:11:07,800 --> 00:11:10,800 Speaker 6: of course, but in Africa, countries like Botswana have done 171 00:11:11,200 --> 00:11:14,920 Speaker 6: very well from their resources and have really succeeded in 172 00:11:15,280 --> 00:11:18,840 Speaker 6: taking something that is a sort of primary commodity dependence 173 00:11:19,320 --> 00:11:21,880 Speaker 6: and then turning those revenues into something you can invest 174 00:11:21,920 --> 00:11:24,080 Speaker 6: in the rest of the economy and have done well 175 00:11:24,120 --> 00:11:24,600 Speaker 6: out of it. 176 00:11:25,360 --> 00:11:27,880 Speaker 2: What of what would you advise countries who are trying 177 00:11:27,920 --> 00:11:30,920 Speaker 2: to repeat the Botswana example or is it just impossible 178 00:11:32,360 --> 00:11:33,280 Speaker 2: it's not impossible. 179 00:11:33,320 --> 00:11:34,880 Speaker 6: So the way that we think about it is it's 180 00:11:34,920 --> 00:11:38,360 Speaker 6: like a chain of decisions, and the chain of decisions 181 00:11:38,400 --> 00:11:40,960 Speaker 6: is only as strong as the weakest link. So there 182 00:11:41,000 --> 00:11:43,880 Speaker 6: are many places where the chain of decisions can go wrong. 183 00:11:44,400 --> 00:11:46,800 Speaker 6: But governments have to make a series of decisions. So 184 00:11:46,920 --> 00:11:50,760 Speaker 6: everything from negotiating a good deal in the first place 185 00:11:51,040 --> 00:11:53,760 Speaker 6: with the private sector companies that you're typically working with, 186 00:11:54,360 --> 00:11:57,120 Speaker 6: all the way through to making sure you get those 187 00:11:57,160 --> 00:12:00,320 Speaker 6: revenues and then you use those revenues effectively that you 188 00:12:00,360 --> 00:12:05,199 Speaker 6: avoid corruption and you avoid mismanagement and the boombus price 189 00:12:05,280 --> 00:12:08,199 Speaker 6: cycle and so on. So there's a series of decisions 190 00:12:08,200 --> 00:12:11,199 Speaker 6: and each step in that decision chain, there are examples 191 00:12:11,200 --> 00:12:15,120 Speaker 6: from countries like Botswana that you can emulate. And actually 192 00:12:15,160 --> 00:12:18,040 Speaker 6: Botswana has just been in the news very recently because 193 00:12:18,040 --> 00:12:22,600 Speaker 6: they've renegotiated their deal with the Beers and they have 194 00:12:23,240 --> 00:12:27,240 Speaker 6: a reputation for negotiating a very tough deal when they 195 00:12:27,240 --> 00:12:28,320 Speaker 6: work with the private sector. 196 00:12:28,720 --> 00:12:30,560 Speaker 2: And we actually heard a little bit about de Beers 197 00:12:30,559 --> 00:12:37,240 Speaker 2: in the earlier piece. So Jack, when you think about 198 00:12:37,840 --> 00:12:40,760 Speaker 2: the move to net zero, of course lots of people 199 00:12:40,920 --> 00:12:43,040 Speaker 2: wonder whether we really make them move to net zero 200 00:12:43,040 --> 00:12:47,440 Speaker 2: but there's certainly a massive rush for the materials that 201 00:12:47,480 --> 00:12:51,320 Speaker 2: we need to build all of those batteries for electric 202 00:12:51,440 --> 00:12:54,800 Speaker 2: cars and generally sort of power the transit transition away 203 00:12:55,040 --> 00:12:57,920 Speaker 2: from carbon. What does that mean in practical terms? What 204 00:12:58,000 --> 00:12:59,960 Speaker 2: kind of commodities are we talking about and where are 205 00:13:00,160 --> 00:13:00,840 Speaker 2: they currently? 206 00:13:01,800 --> 00:13:04,520 Speaker 7: I think the big one where markets are being totally 207 00:13:04,559 --> 00:13:08,319 Speaker 7: transformed as a result of even the steps that we're 208 00:13:08,360 --> 00:13:11,600 Speaker 7: taking at the moment towards net zero, even if together 209 00:13:11,640 --> 00:13:13,760 Speaker 7: they're not enough necessarily to get us in at zero 210 00:13:13,760 --> 00:13:15,800 Speaker 7: by twenty fifty. But the big ones where markets being 211 00:13:15,800 --> 00:13:19,840 Speaker 7: totally transformed is the commodities that go into batteries for 212 00:13:19,880 --> 00:13:25,719 Speaker 7: electric vehicles, and the key ones are things like lithium, nickel, cobalt, 213 00:13:26,160 --> 00:13:29,480 Speaker 7: perhaps to a slightly lesser extent, manganese, graphite, and then 214 00:13:29,520 --> 00:13:32,800 Speaker 7: things like copper and aluminium that are used in electrical 215 00:13:33,160 --> 00:13:36,960 Speaker 7: wiring and therefore important both for the batteries but also 216 00:13:37,600 --> 00:13:40,200 Speaker 7: the power cables, the charging stations, et cetera, et cetera, 217 00:13:40,240 --> 00:13:42,679 Speaker 7: et cetera. Some of those markets are already quite large 218 00:13:42,679 --> 00:13:45,840 Speaker 7: and well established, so things like manganese and nickel already 219 00:13:45,920 --> 00:13:48,800 Speaker 7: have a large use in the steel sector. They're used 220 00:13:48,800 --> 00:13:52,560 Speaker 7: as alloys in things like stainless steel and other steel alloys, 221 00:13:52,720 --> 00:13:54,959 Speaker 7: and so there's already quite a large market, but something 222 00:13:55,000 --> 00:13:58,320 Speaker 7: like lithium and cobalt were really quite small markets only 223 00:13:58,360 --> 00:14:02,880 Speaker 7: a couple of years ago, and already they have increased, 224 00:14:03,040 --> 00:14:06,600 Speaker 7: i think, probably doubled in size over the past five 225 00:14:06,679 --> 00:14:10,200 Speaker 7: years or so, and the projections are that they would double, 226 00:14:10,240 --> 00:14:13,680 Speaker 7: triple or even more in size over the coming decades. 227 00:14:14,400 --> 00:14:17,079 Speaker 7: So those are markets where we're going from a relatively 228 00:14:17,280 --> 00:14:20,680 Speaker 7: small market to suddenly a much larger market, and we're 229 00:14:20,680 --> 00:14:24,280 Speaker 7: going to need to find lots more supply. In most cases, 230 00:14:24,280 --> 00:14:27,640 Speaker 7: the supply or that the resources are there. So lithium, 231 00:14:27,680 --> 00:14:30,560 Speaker 7: for example, there's a lot of lithium in South America, 232 00:14:31,000 --> 00:14:34,800 Speaker 7: also in Australia. Nickel, as I think we just heard 233 00:14:34,960 --> 00:14:37,400 Speaker 7: and we'll probably talk about quite a lot more. Indonesia 234 00:14:37,880 --> 00:14:41,040 Speaker 7: has increased its supply of nickel enormously in the last 235 00:14:41,120 --> 00:14:43,640 Speaker 7: few years, and it's projected to do so even more 236 00:14:43,640 --> 00:14:46,160 Speaker 7: so in the coming years. So the resources are out there, 237 00:14:46,400 --> 00:14:49,120 Speaker 7: but nonetheless it's a big challenge for the global mining 238 00:14:49,120 --> 00:14:53,880 Speaker 7: industry to increase supply by a huge amount of some 239 00:14:53,920 --> 00:14:54,760 Speaker 7: of these commodities. 240 00:14:55,280 --> 00:14:57,160 Speaker 2: So I guess there's a nickel rush as opposed to 241 00:14:57,200 --> 00:14:59,600 Speaker 2: a gold rush, as you say, but it's been transformative. Now, 242 00:14:59,600 --> 00:15:01,640 Speaker 2: we heard about Indonesia, and a lot of people listening 243 00:15:01,680 --> 00:15:04,920 Speaker 2: to that story would think, Okay, if you're a country 244 00:15:04,960 --> 00:15:09,520 Speaker 2: that does is lucky enough to have these critical minerals, 245 00:15:10,240 --> 00:15:14,080 Speaker 2: the government announcers it's going to ban the unprocessed form 246 00:15:14,120 --> 00:15:18,280 Speaker 2: of those minerals, and lots of investment comes in and 247 00:15:18,320 --> 00:15:22,000 Speaker 2: you get the downstream industry, which helps you perhaps avoid 248 00:15:22,120 --> 00:15:24,760 Speaker 2: some of the issues that Jim was talking about earlier. 249 00:15:24,840 --> 00:15:27,080 Speaker 2: Should we be encouraged by the Indonesia an example? 250 00:15:28,400 --> 00:15:31,440 Speaker 7: I think the Indonesian example is a very impressive example 251 00:15:31,600 --> 00:15:36,000 Speaker 7: of a government pursuing a policy here to encourage investment 252 00:15:36,000 --> 00:15:39,440 Speaker 7: into its nickel industry and also to develop some more 253 00:15:39,480 --> 00:15:42,960 Speaker 7: of the processing of the downstream and being successful. I 254 00:15:43,000 --> 00:15:49,480 Speaker 7: also think it's a very rare, I'm hesitant to say unique, 255 00:15:49,480 --> 00:15:51,840 Speaker 7: but it's a very rare example of a number of 256 00:15:51,880 --> 00:15:54,720 Speaker 7: factors that Indonesia had in its favor. The number one 257 00:15:55,000 --> 00:15:59,880 Speaker 7: being is today a vast share of the world's nickel supply, 258 00:16:00,880 --> 00:16:04,080 Speaker 7: a significant share of the world's nickel reserves. But even 259 00:16:04,080 --> 00:16:08,320 Speaker 7: when they started this policy direction nearly a decade ago. 260 00:16:08,680 --> 00:16:11,480 Speaker 7: So Indonesia first actually banned exports of nickel or in 261 00:16:11,520 --> 00:16:13,880 Speaker 7: twenty fourteen, and they were much smaller player in the 262 00:16:13,920 --> 00:16:16,080 Speaker 7: global nickel market at that point, but they were still 263 00:16:16,480 --> 00:16:19,760 Speaker 7: the key supplier of nickel or to China and to 264 00:16:19,760 --> 00:16:22,640 Speaker 7: the Chinese industry that was turning it into nickel pigeye 265 00:16:22,680 --> 00:16:25,000 Speaker 7: in which then was an input into the Chinese stainless 266 00:16:25,000 --> 00:16:27,720 Speaker 7: steel industry. And so when they did that, the Chinese 267 00:16:27,720 --> 00:16:30,240 Speaker 7: stain and the steel industry had little alternative but to 268 00:16:30,280 --> 00:16:34,480 Speaker 7: come to Indonesia and build nickel pigeye and plants there 269 00:16:34,520 --> 00:16:36,160 Speaker 7: because there wasn't an alternative it. So, I think if 270 00:16:36,160 --> 00:16:40,000 Speaker 7: we're talking about how countries can capture the most rents 271 00:16:40,000 --> 00:16:43,160 Speaker 7: from these industries, Indonesia is a rare example because they 272 00:16:43,160 --> 00:16:47,280 Speaker 7: have such a dominant position in a particular market. Botswana 273 00:16:47,360 --> 00:16:49,280 Speaker 7: is a good example in diamonds. They also have a 274 00:16:49,360 --> 00:16:52,320 Speaker 7: very large share of the global diamond market, and so 275 00:16:52,360 --> 00:16:54,800 Speaker 7: that puts them in a very obviously puts them in 276 00:16:54,840 --> 00:16:57,440 Speaker 7: a much stronger position, give them much more leverage if 277 00:16:57,440 --> 00:17:02,200 Speaker 7: they're negotiating with companies country to try and extract more 278 00:17:02,240 --> 00:17:04,440 Speaker 7: rent from their natural resources industry. 279 00:17:04,640 --> 00:17:07,240 Speaker 2: And jet you also had said that perhaps there were 280 00:17:07,280 --> 00:17:09,680 Speaker 2: quite a lot of attractions to going to Indonesia anyway, 281 00:17:09,880 --> 00:17:12,119 Speaker 2: and even without the policy, you might have seen this 282 00:17:12,200 --> 00:17:13,280 Speaker 2: kind of inward investment. 283 00:17:13,800 --> 00:17:16,560 Speaker 7: Yeah. Absolutely, so they were really kind of pushing water downhill. 284 00:17:16,920 --> 00:17:19,240 Speaker 7: The origin of this was the nickel pig iron industry, 285 00:17:19,240 --> 00:17:20,680 Speaker 7: which is a kind of low grade nickel that was 286 00:17:20,760 --> 00:17:24,919 Speaker 7: used in stainless steel built and rose up originally in 287 00:17:25,080 --> 00:17:28,280 Speaker 7: China after about two thousand and six when nickel prices 288 00:17:28,320 --> 00:17:30,040 Speaker 7: shot up a lot, and that made this process of 289 00:17:30,080 --> 00:17:33,800 Speaker 7: making nickel pig iron economic. And at the time when 290 00:17:33,920 --> 00:17:38,520 Speaker 7: Indonesia started this process of restricting exports, it was way 291 00:17:38,680 --> 00:17:41,960 Speaker 7: cheaper to make nickel pig iron in Indonesia than it 292 00:17:42,000 --> 00:17:44,120 Speaker 7: was in China, both because of the shipping cost because 293 00:17:44,119 --> 00:17:46,200 Speaker 7: you weren't having to ship lots and lots and lots 294 00:17:46,240 --> 00:17:49,320 Speaker 7: of very low grade ore, but also because Indonesia was 295 00:17:49,400 --> 00:17:52,680 Speaker 7: very rich in coal, Coal powered energy was very cheap. 296 00:17:52,720 --> 00:17:55,760 Speaker 7: It's an energy intensive process, so the kind of costs 297 00:17:55,760 --> 00:17:58,240 Speaker 7: we're talking about, it was costing about six to eight 298 00:17:58,240 --> 00:18:00,880 Speaker 7: thousand dollars a ton to make nickel and in Indonesia 299 00:18:00,960 --> 00:18:02,600 Speaker 7: versus ten to twelve thousand dollars in China, So there 300 00:18:02,640 --> 00:18:06,240 Speaker 7: was a really clear economic incentive behind it, and in fact, 301 00:18:06,320 --> 00:18:10,320 Speaker 7: some of the Chinese companies that have invested now and 302 00:18:10,320 --> 00:18:13,120 Speaker 7: build lots of I think say privately at least that 303 00:18:13,160 --> 00:18:15,240 Speaker 7: they might have done it anyway even if the government 304 00:18:15,280 --> 00:18:18,280 Speaker 7: hadn't banned exports. The other point I would make is, 305 00:18:19,280 --> 00:18:22,440 Speaker 7: and it's a really interesting case study for lots of 306 00:18:22,520 --> 00:18:27,440 Speaker 7: reasons that there's been this really close partnership and alliance 307 00:18:27,520 --> 00:18:31,840 Speaker 7: between the Indonesian government and China, and in particular a 308 00:18:31,840 --> 00:18:35,520 Speaker 7: couple of a few Chinese companies, prime among them Singshan, 309 00:18:35,840 --> 00:18:38,760 Speaker 7: which is the world's biggest nickel and Staler's steel producer, 310 00:18:38,840 --> 00:18:41,600 Speaker 7: and maybe familiar to listeners because it was at the 311 00:18:41,600 --> 00:18:44,399 Speaker 7: center of a huge short squeeze on in the nickel 312 00:18:44,400 --> 00:18:45,200 Speaker 7: market last year. 313 00:18:45,320 --> 00:18:47,640 Speaker 2: Those who avidly look at the short squeens. 314 00:18:47,359 --> 00:18:50,600 Speaker 7: Those who avidly follow the metals markets. But even if not, 315 00:18:50,800 --> 00:18:53,520 Speaker 7: it's a fascinating company. It's one of the great innovators 316 00:18:53,760 --> 00:18:57,080 Speaker 7: of the global metals industry, and they really bet the 317 00:18:57,119 --> 00:19:00,560 Speaker 7: house on Indonesia a number of years ago, forged this 318 00:19:00,640 --> 00:19:03,439 Speaker 7: very close partnership with the Indonesian government, and in exchange, 319 00:19:03,480 --> 00:19:07,160 Speaker 7: the Indonesian government has really opened the doors to them, 320 00:19:07,320 --> 00:19:09,800 Speaker 7: allowed them to make the investments and build the projects 321 00:19:09,840 --> 00:19:12,280 Speaker 7: that they were building the way that they wanted to, so, 322 00:19:12,480 --> 00:19:17,440 Speaker 7: you know, using Chinese workers, giving them tax breaks, all 323 00:19:17,440 --> 00:19:20,520 Speaker 7: of these kind of things to really encourage them and 324 00:19:20,560 --> 00:19:22,399 Speaker 7: to make it as cheap as possible for them to 325 00:19:22,480 --> 00:19:25,080 Speaker 7: come and make those investments in a way that lots 326 00:19:25,080 --> 00:19:28,119 Speaker 7: of other countries with nickel resources hadn't done. And so 327 00:19:28,320 --> 00:19:31,160 Speaker 7: as a result, you've seen this kind of huge investment 328 00:19:31,320 --> 00:19:34,760 Speaker 7: from China, principally into Indonesia, and as a result, this 329 00:19:34,840 --> 00:19:36,880 Speaker 7: massive boom in the Indonesian nickel industry. 330 00:19:37,680 --> 00:19:39,720 Speaker 2: Well for those listening who woke up this morning not 331 00:19:39,760 --> 00:19:42,320 Speaker 2: realizing they were going to be much better informed about 332 00:19:42,440 --> 00:19:45,439 Speaker 2: nickel pig iron by the end of the day. But 333 00:19:46,000 --> 00:19:50,399 Speaker 2: really going back thinking now about Africa, Jim, we have 334 00:19:50,480 --> 00:19:55,840 Speaker 2: this quite encouraging example in Indonesia. We do have a 335 00:19:55,920 --> 00:20:00,600 Speaker 2: palpable boom in materials that, as we've already mentioned, are 336 00:20:00,600 --> 00:20:05,800 Speaker 2: pretty are present in large amounts in certain African countries. 337 00:20:05,840 --> 00:20:10,040 Speaker 2: What's the prospect for African countries announcing that they're not 338 00:20:10,080 --> 00:20:13,960 Speaker 2: going to export unprocessed versions of these materials. I was 339 00:20:14,160 --> 00:20:16,000 Speaker 2: one of the reasons we were doing. This story was 340 00:20:16,000 --> 00:20:19,600 Speaker 2: that one of a recent Bloomberg conference in Morocco, the 341 00:20:19,640 --> 00:20:23,120 Speaker 2: New Economy Gateway, we heard a Ghanaian minister say that 342 00:20:23,200 --> 00:20:27,639 Speaker 2: they weren't going to export unprocessed lithium as they developed 343 00:20:27,720 --> 00:20:30,280 Speaker 2: that industry. How feasible is that. 344 00:20:32,240 --> 00:20:33,800 Speaker 6: Well, I think the first thing to say is that 345 00:20:33,840 --> 00:20:38,320 Speaker 6: the overall opportunity is pretty exciting for African countries. So 346 00:20:39,040 --> 00:20:42,720 Speaker 6: we do see a boom ahead in a whole range 347 00:20:42,720 --> 00:20:45,360 Speaker 6: of different metals and minerals. Jack mentioned some of them already, 348 00:20:45,760 --> 00:20:48,840 Speaker 6: the earliest around the battery minerals, but there are many others, 349 00:20:49,240 --> 00:20:52,800 Speaker 6: including rare earths, that are found all over Africa in abundance, 350 00:20:53,359 --> 00:20:58,320 Speaker 6: so there's a big opportunity here. Africa has been the 351 00:20:58,359 --> 00:21:01,240 Speaker 6: most under explored region in the world, so it's not 352 00:21:01,280 --> 00:21:03,280 Speaker 6: only that we know there's a lot there already, but 353 00:21:03,320 --> 00:21:07,639 Speaker 6: there's probably even more to be found as well. On 354 00:21:07,720 --> 00:21:11,639 Speaker 6: top of that, I think there's a recent growing recognition 355 00:21:11,840 --> 00:21:17,240 Speaker 6: that supply chains for some of these metals are fragile 356 00:21:17,359 --> 00:21:20,199 Speaker 6: but also quite concentrated. So of course a lot of 357 00:21:20,200 --> 00:21:23,680 Speaker 6: the processing gets done in China, but also in places 358 00:21:23,720 --> 00:21:27,640 Speaker 6: that are far from say, US markets, and so as 359 00:21:27,720 --> 00:21:32,560 Speaker 6: the US tries to increase its capacity in electric vehicles, 360 00:21:32,560 --> 00:21:35,040 Speaker 6: in batteries and things like that. There's a kind of 361 00:21:35,480 --> 00:21:38,879 Speaker 6: a new sort of interest in figuring out how can 362 00:21:39,480 --> 00:21:43,440 Speaker 6: Africa build out some of these supply chain themselves, which 363 00:21:43,480 --> 00:21:45,760 Speaker 6: could help bring resilience not just in the interests of 364 00:21:45,760 --> 00:21:48,119 Speaker 6: African countries, but in the interests of others in the 365 00:21:48,119 --> 00:21:51,159 Speaker 6: global market. So there's this kind of alignment of interest 366 00:21:51,200 --> 00:21:54,120 Speaker 6: that is quite new and quite unique that we hope 367 00:21:54,119 --> 00:21:58,080 Speaker 6: will work in the favor of African countries. As Jack 368 00:21:58,160 --> 00:22:01,240 Speaker 6: rightly points out that there are challenges to this. It's 369 00:22:01,280 --> 00:22:04,199 Speaker 6: not as simple as oh, you just announced an export 370 00:22:04,240 --> 00:22:07,760 Speaker 6: ban and everything will sort of follow suit. It's worth 371 00:22:07,840 --> 00:22:11,000 Speaker 6: noting that even in Indonesia they had to give away 372 00:22:11,040 --> 00:22:15,119 Speaker 6: some pretty pretty serious tax concessions to some of the 373 00:22:15,160 --> 00:22:18,040 Speaker 6: mining companies to make this kind of work for them, 374 00:22:18,320 --> 00:22:21,760 Speaker 6: and when they'd first tried this in around twenty fourteen, 375 00:22:22,440 --> 00:22:25,600 Speaker 6: it wasn't a universal success. They did run into challenges. 376 00:22:25,600 --> 00:22:29,240 Speaker 6: There wasn't enough smelting capacity, and actually they lost a 377 00:22:29,240 --> 00:22:32,040 Speaker 6: lot of their market share in baulk side production to 378 00:22:32,119 --> 00:22:34,440 Speaker 6: the baux side demand. Some of it got driven to Africa, 379 00:22:34,480 --> 00:22:38,560 Speaker 6: to Guinea, and the share of Indonesia's bulk side supply 380 00:22:39,080 --> 00:22:42,840 Speaker 6: fell and I don't think it's recovered since, so there's 381 00:22:42,880 --> 00:22:46,640 Speaker 6: sort of cautionary tails here as well. But the ambition 382 00:22:46,960 --> 00:22:50,439 Speaker 6: of governments like Ghana is to be applauded and to 383 00:22:50,480 --> 00:22:53,680 Speaker 6: see if they can sort of seize the moment. Right 384 00:22:53,720 --> 00:22:56,240 Speaker 6: you've got the increased bargaining power that some of these 385 00:22:56,240 --> 00:23:00,760 Speaker 6: countries have. DRC, of course, is a great example of this, 386 00:23:00,840 --> 00:23:05,000 Speaker 6: with a huge share of the world's cobalt supply in DRC, 387 00:23:06,119 --> 00:23:09,679 Speaker 6: combine with the rising demand for these metals, combined with 388 00:23:10,000 --> 00:23:14,160 Speaker 6: the fact that there's interest from other actors. But it's 389 00:23:14,160 --> 00:23:16,760 Speaker 6: a window of opportunity and it's one that can close easily. 390 00:23:16,920 --> 00:23:23,320 Speaker 6: So you may see headlines around this idea that is 391 00:23:23,359 --> 00:23:26,840 Speaker 6: lithium the new oil, and I think we need to 392 00:23:26,880 --> 00:23:29,000 Speaker 6: have a touch of realism to go with this, that 393 00:23:29,760 --> 00:23:31,760 Speaker 6: lithium is not going to be the next oil for 394 00:23:31,840 --> 00:23:34,879 Speaker 6: various reasons. The size of the market is a fraction 395 00:23:34,960 --> 00:23:38,919 Speaker 6: of what oil is. It's the dominant battery technology of today, 396 00:23:38,960 --> 00:23:41,000 Speaker 6: but it doesn't mean it remains to be the dominant 397 00:23:41,000 --> 00:23:44,760 Speaker 6: battery technology of twenty fifty. For example, And actually, if 398 00:23:44,880 --> 00:23:48,280 Speaker 6: prices were high and sustained between now and twenty fifty, 399 00:23:48,600 --> 00:23:51,119 Speaker 6: the incentive for people to come up with alternative battery 400 00:23:51,119 --> 00:23:55,480 Speaker 6: technologies would be even greater. So African countries need to 401 00:23:55,480 --> 00:24:00,240 Speaker 6: see themselves in this global game where there's innovation puting 402 00:24:00,280 --> 00:24:03,480 Speaker 6: at a very fast pace. And so while they might 403 00:24:03,520 --> 00:24:08,320 Speaker 6: have some bargaining power, it's not a blank check. It's 404 00:24:08,320 --> 00:24:10,560 Speaker 6: not a blank check to say we're going to ban 405 00:24:10,680 --> 00:24:14,760 Speaker 6: exports and everything else will follow. You might actually inadvertently 406 00:24:14,880 --> 00:24:18,680 Speaker 6: drive investment elsewhere and it could backfire, as we've seen 407 00:24:18,720 --> 00:24:19,840 Speaker 6: in some countries. 408 00:24:20,080 --> 00:24:20,280 Speaker 5: Well. 409 00:24:20,280 --> 00:24:23,040 Speaker 2: And also, I mean we're speaking in the week where 410 00:24:23,080 --> 00:24:28,240 Speaker 2: the British government has had to extend enormous inducements to 411 00:24:28,280 --> 00:24:33,400 Speaker 2: persuade a Tata Industries to put their big battery factory 412 00:24:33,440 --> 00:24:36,560 Speaker 2: in the UK, hundreds of millions of pounds supposedly, we 413 00:24:36,560 --> 00:24:38,680 Speaker 2: don't know the exect number. I mean, this is a 414 00:24:38,760 --> 00:24:42,040 Speaker 2: very competitive market and there's lots of subsidies flying around. 415 00:24:42,280 --> 00:24:44,439 Speaker 2: There is a risk that you're just adding costs and 416 00:24:44,480 --> 00:24:46,840 Speaker 2: adding reasons for companies not to go there. 417 00:24:48,960 --> 00:24:51,719 Speaker 6: Yes, that's right. So I mean the first thing is 418 00:24:51,840 --> 00:24:55,200 Speaker 6: to note that not every country that has an abundance 419 00:24:55,240 --> 00:25:00,600 Speaker 6: of minerals has the processing supply chain, so huge amount 420 00:25:00,640 --> 00:25:02,720 Speaker 6: of iron ore comes out of Western Australia. They're the 421 00:25:02,720 --> 00:25:06,040 Speaker 6: biggest iron ore producer in the world. They're not even 422 00:25:06,080 --> 00:25:08,639 Speaker 6: in the top twenty five of steel producers in the world. 423 00:25:10,119 --> 00:25:12,440 Speaker 6: All of that iron ore for Western Australia goes to China, 424 00:25:12,640 --> 00:25:17,080 Speaker 6: goes to the steel mills in China. Similarly, Chile is 425 00:25:17,320 --> 00:25:20,560 Speaker 6: famous for being a successful copper producer, but more than 426 00:25:20,600 --> 00:25:25,320 Speaker 6: half of Chile's copper is exported raw and that proportion 427 00:25:25,400 --> 00:25:28,800 Speaker 6: is actually rising rather than falling. And so it's not 428 00:25:28,920 --> 00:25:34,200 Speaker 6: the case that to be a successful mineral producing, affluent 429 00:25:34,240 --> 00:25:38,040 Speaker 6: economy that you have to go down the supply chain 430 00:25:38,080 --> 00:25:40,639 Speaker 6: of the minerals that you have in abundance. Actually, a 431 00:25:40,680 --> 00:25:42,960 Speaker 6: lot of the processing makes sense to take place closer 432 00:25:42,960 --> 00:25:46,360 Speaker 6: to the markets, closer to the manufacturing centers and so on. 433 00:25:46,680 --> 00:25:51,280 Speaker 6: So this is not the This is not the recipe 434 00:25:51,720 --> 00:25:54,959 Speaker 6: for success that is necessary. Right, This is not the 435 00:25:55,000 --> 00:25:58,560 Speaker 6: path that countries like Australia and Chile have followed. It 436 00:25:58,600 --> 00:26:02,200 Speaker 6: doesn't mean it can't be successful, as the Indonesian case 437 00:26:02,280 --> 00:26:06,960 Speaker 6: is starting to demonstrate, but nor is it necessary for success. 438 00:26:07,440 --> 00:26:09,199 Speaker 2: Both of you have spent a long time looking at 439 00:26:09,240 --> 00:26:13,000 Speaker 2: this and Jack, you've reported on many commodity booms and 440 00:26:13,040 --> 00:26:15,200 Speaker 2: busts over the years. Does this feel different? I mean, 441 00:26:15,240 --> 00:26:20,240 Speaker 2: either in terms of the incentives facing the big industries 442 00:26:20,240 --> 00:26:24,399 Speaker 2: involved and the governments that are pushing for those climate targets, 443 00:26:24,600 --> 00:26:29,040 Speaker 2: or in the sort of underlying conditions in Africa and 444 00:26:29,080 --> 00:26:31,840 Speaker 2: other commodity commodity producing countries. 445 00:26:32,920 --> 00:26:34,760 Speaker 7: I don't know. I think you know this time is 446 00:26:34,760 --> 00:26:38,159 Speaker 7: different is obviously the most dangerous phrase to utter in 447 00:26:38,480 --> 00:26:41,000 Speaker 7: in finance and markets. No, I don't think so. I 448 00:26:41,000 --> 00:26:44,600 Speaker 7: think you know. It's obviously a fascinating moment and a 449 00:26:44,680 --> 00:26:48,359 Speaker 7: very exciting one if you are in the batteries or 450 00:26:48,359 --> 00:26:52,440 Speaker 7: the battery metals industry. But fundamentally, these are commodity markets 451 00:26:52,480 --> 00:26:56,480 Speaker 7: and they will and indeed are going through booms and busts. So, 452 00:26:56,760 --> 00:27:01,200 Speaker 7: you know, Jim was talking about the differentistries going into 453 00:27:01,200 --> 00:27:04,639 Speaker 7: different types of batteries, and already we've seen in the 454 00:27:04,680 --> 00:27:08,240 Speaker 7: last few years as electric vehicles have grown and grown, 455 00:27:08,320 --> 00:27:12,880 Speaker 7: and this has become a front page story that shifts 456 00:27:12,920 --> 00:27:16,560 Speaker 7: in the battery chemical battery makeup, in part in response 457 00:27:16,600 --> 00:27:20,640 Speaker 7: to things like concerns about the concentration of supply of 458 00:27:20,840 --> 00:27:27,920 Speaker 7: cobalts ay from congo are making meaningful impacts. So, for example, 459 00:27:28,600 --> 00:27:31,040 Speaker 7: the cobalt market at the moment is in a bit 460 00:27:31,040 --> 00:27:33,280 Speaker 7: of a slump. That the price of cobalt is at 461 00:27:33,400 --> 00:27:35,399 Speaker 7: the lowest in quite a number of years, in spite 462 00:27:35,400 --> 00:27:37,359 Speaker 7: of the fact that the market is growing very rapidly 463 00:27:37,400 --> 00:27:40,119 Speaker 7: and demand is growing very rapidly. That's absolutely true, but 464 00:27:40,160 --> 00:27:44,200 Speaker 7: nonetheless the price is at a multi year low. One 465 00:27:44,200 --> 00:27:47,760 Speaker 7: of the reasons is a big increasing supply. Another reason 466 00:27:47,880 --> 00:27:52,359 Speaker 7: is actually the chemistry of batteries has been changing, so 467 00:27:53,320 --> 00:27:57,639 Speaker 7: car makers, particularly in China, are using lower cobalt batteries 468 00:27:57,720 --> 00:28:01,920 Speaker 7: and batteries have no cobalt at all in them. Lithiumyin 469 00:28:01,920 --> 00:28:05,399 Speaker 7: phosphate batteries are rising very quickly in popularity. So if 470 00:28:05,440 --> 00:28:08,439 Speaker 7: you look at some of the forecasts for demand for 471 00:28:08,520 --> 00:28:12,080 Speaker 7: cobalt in twenty thirty, say from last year to this year, 472 00:28:12,320 --> 00:28:15,440 Speaker 7: those forecasts have been cut pretty substantially. So for example, 473 00:28:15,720 --> 00:28:18,160 Speaker 7: I was looking at earlier today at a company called 474 00:28:18,520 --> 00:28:22,520 Speaker 7: Dartan Commodities, which is one of the key forecasters on cobalt, 475 00:28:22,520 --> 00:28:26,000 Speaker 7: and they've cut their demand from electric vehicles for cobalt 476 00:28:26,000 --> 00:28:28,879 Speaker 7: in twenty thirty by about twenty percent. As a result, 477 00:28:28,920 --> 00:28:32,000 Speaker 7: of that shift. So these markets can absolutely still go 478 00:28:32,080 --> 00:28:34,760 Speaker 7: through booms and bus and that does make it a 479 00:28:34,800 --> 00:28:38,800 Speaker 7: competitive environment unless you're in a position like Indonesia in 480 00:28:38,920 --> 00:28:42,480 Speaker 7: nickel or Botswana in diamonds. If you're not in that 481 00:28:43,160 --> 00:28:46,000 Speaker 7: rare position of being a very dominant supplier of a market, 482 00:28:46,040 --> 00:28:50,160 Speaker 7: it's much harder to have that negotiating leverage. It's not 483 00:28:50,200 --> 00:28:52,480 Speaker 7: to say it's totally impossible, and I think one of 484 00:28:52,520 --> 00:28:56,360 Speaker 7: the there's a couple of interesting things of the current 485 00:28:56,400 --> 00:29:00,000 Speaker 7: moment that I would just point out. One is, you know, 486 00:29:00,200 --> 00:29:03,320 Speaker 7: a lot of processing goes where energy is cheap, it 487 00:29:03,360 --> 00:29:05,320 Speaker 7: tends to be quite energy intensive, and so you have 488 00:29:05,560 --> 00:29:10,000 Speaker 7: big metal processing industries in places like Scandinavia with hydroelectric power, 489 00:29:10,160 --> 00:29:14,160 Speaker 7: Iceland with geothermal power, the Middle East with cheap natural gas. 490 00:29:14,440 --> 00:29:19,800 Speaker 7: Increasingly now as solar and wind become very cheap sources 491 00:29:19,800 --> 00:29:22,920 Speaker 7: of power possibly and potentially you have hydrogen as well 492 00:29:22,920 --> 00:29:25,840 Speaker 7: coming as a way of storing that renewable power at 493 00:29:25,840 --> 00:29:29,040 Speaker 7: some point in the future. That can really democratize access 494 00:29:29,040 --> 00:29:34,280 Speaker 7: to cheap power and make that availability of cheap electricity 495 00:29:34,640 --> 00:29:37,400 Speaker 7: no longer such a stumbling block for countries that want 496 00:29:37,400 --> 00:29:40,040 Speaker 7: to build processing industries and The other, of course, is 497 00:29:40,080 --> 00:29:45,120 Speaker 7: what's happening in global geopolitics, where suddenly the US and 498 00:29:45,520 --> 00:29:49,320 Speaker 7: EU in particular are saying are looking at the dominance 499 00:29:49,360 --> 00:29:52,160 Speaker 7: of China in the processing of all of these metals 500 00:29:52,240 --> 00:29:55,800 Speaker 7: and saying strategically that's not great for US, and willing 501 00:29:55,840 --> 00:29:59,040 Speaker 7: to spend large amounts of tax payer money to try 502 00:29:59,080 --> 00:30:02,440 Speaker 7: and change that situation, As the example of the UK 503 00:30:02,600 --> 00:30:05,600 Speaker 7: is showing, probably they want to change that situation by 504 00:30:05,600 --> 00:30:10,640 Speaker 7: building capacity in their own countries rather than in Africa, say, 505 00:30:10,920 --> 00:30:15,520 Speaker 7: but potentially there's a possibility there for some kind of 506 00:30:15,840 --> 00:30:19,720 Speaker 7: joint venture where you see countries in Africa or South 507 00:30:19,760 --> 00:30:22,560 Speaker 7: America or Asia, or whether it might be being able to 508 00:30:22,600 --> 00:30:26,000 Speaker 7: get some kind of government funding from the US or 509 00:30:26,040 --> 00:30:28,320 Speaker 7: Europe or or other countries that want to try and 510 00:30:28,360 --> 00:30:30,960 Speaker 7: diversify their battery supply chains. 511 00:30:31,120 --> 00:30:34,360 Speaker 2: One of the most evocative examples of some of these 512 00:30:34,400 --> 00:30:38,520 Speaker 2: issues from back in history was the Calico Acts, when 513 00:30:38,720 --> 00:30:43,560 Speaker 2: Britain actively banned Indian cotton from the British market in 514 00:30:43,600 --> 00:30:48,720 Speaker 2: the seventeen twenties to protect and help kickstart the British 515 00:30:48,800 --> 00:30:51,560 Speaker 2: cotton industry and I think set back the textile industry 516 00:30:51,640 --> 00:30:53,640 Speaker 2: in India for hundreds of years, so I guess we 517 00:30:53,640 --> 00:30:56,920 Speaker 2: would hope that what is different now is that our 518 00:30:57,040 --> 00:31:00,680 Speaker 2: industrial countries are not actively trying to thwart or openly 519 00:31:00,720 --> 00:31:05,120 Speaker 2: trying to thwart the development of developing countries. Jack Farci, 520 00:31:05,560 --> 00:31:06,840 Speaker 2: Jim Cust, thank you very. 521 00:31:06,800 --> 00:31:08,360 Speaker 6: Much, thank you, thank you. 522 00:31:11,360 --> 00:31:14,440 Speaker 2: Well, that's it for this episode of Stephanomics. Next week 523 00:31:14,560 --> 00:31:17,840 Speaker 2: we'll have more, in fact the last in the current series. 524 00:31:18,200 --> 00:31:20,080 Speaker 2: In the meantime, you can get a lot more economic 525 00:31:20,120 --> 00:31:23,240 Speaker 2: insight and news from the Bloomberg Terminal website or app. 526 00:31:23,760 --> 00:31:27,120 Speaker 2: This episode was produced by Magnus Hendrickson, Yang Yang and 527 00:31:27,200 --> 00:31:32,240 Speaker 2: Summer Sudden. Special thanks to Claire Joo, Annie Lee, Chandra Asmara, 528 00:31:32,840 --> 00:31:37,640 Speaker 2: Norman Hassano, Jack Farci and James Cust, and of course 529 00:31:37,720 --> 00:31:40,160 Speaker 2: the brilliant Tom Lehra for the elements you heard at 530 00:31:40,200 --> 00:31:43,800 Speaker 2: the start. Molly Smith is the executive producer of Stephanomics 531 00:31:43,920 --> 00:31:46,720 Speaker 2: and the head of Bloomberg Podcast is Sage Bowman.