WEBVTT - ‘Cursed’ Nations Want to Turn Green Minerals Boom Into a Blessing 0:00:04.200 --> 0:00:07.360 Those antimony, arsenic, aluminum, selenium and hydrogen and nyxogen and 0:00:07.440 --> 0:00:10.520 hydrogen and urenium and nicoliodinium, naponium, germanium and. 0:00:10.480 --> 0:00:13.560 Iron amoricia Hellostephonomics Here the podcast that brings you the 0:00:13.560 --> 0:00:16.639 global economy, and we're visiting some of the forgot hument 0:00:16.680 --> 0:00:20.080 corners of the periodic. Take in we these days and iodine, 0:00:20.079 --> 0:00:23.000 andium and thulium and thallia as the world struggles to 0:00:23.000 --> 0:00:25.439 get its hands on the critical minerals will need to 0:00:25.520 --> 0:00:29.520 power electric car batteries and all those other green machines. 0:00:30.160 --> 0:00:33.239 Good news for green tech companies maybe, But will it 0:00:33.320 --> 0:00:36.600 also spell new riches for the countries that currently have 0:00:36.800 --> 0:00:41.480 these much sought after materials. Historians would say, don't bet 0:00:41.520 --> 0:00:45.280 on it. As a long and deeply depressing tradition of 0:00:45.360 --> 0:00:50.440 commodity rich economies failing to benefit from their natural wealth. 0:00:51.120 --> 0:00:54.520 With a handful of notable exceptions, such countries all too 0:00:54.560 --> 0:00:57.680 often end up worse off than neighbours that weren't blessed 0:00:57.720 --> 0:01:01.040 with all those natural assets in the first place. Could 0:01:01.080 --> 0:01:04.640 this time finally be different? I'm going to debate that 0:01:04.720 --> 0:01:07.440 in a few minutes with Bloomberg commodity reporter and author 0:01:07.560 --> 0:01:12.200 Jack Farcie well backed senior economist Jim Cust But first, 0:01:12.480 --> 0:01:16.840 Bloomberg's Indonesia economy reporter Claire Joo and metals and mining 0:01:16.880 --> 0:01:20.240 reporter Annie Lee have an encouraging story to tell you 0:01:20.280 --> 0:01:23.520 from Indonesia. The reporting was done by both of them, 0:01:23.600 --> 0:01:26.319 but it's Claire's voice you'll hear doing the narration. 0:01:27.720 --> 0:01:30.840 When you think of elements like nickel and aluminum, they're 0:01:30.880 --> 0:01:34.840 probably just boxes on the periodic table. But these minerals 0:01:34.920 --> 0:01:39.120 are essential components that go into making batteries for electric vehicles. 0:01:41.240 --> 0:01:45.040 This is a four hundred billion dollar industry, and no 0:01:45.080 --> 0:01:50.680 one knows it's better than Indonesia. Made up of over 0:01:50.800 --> 0:01:55.720 seventeen thousand islands and lush rainforests, Indonesia sits a top 0:01:55.760 --> 0:02:00.760 an abundant reserve of native metal copper, gold, and nickel, 0:02:01.320 --> 0:02:05.920 the raw material used in evy batteries. For decades, Indonesia 0:02:05.960 --> 0:02:08.799 has been content with digging up the minerals and sending 0:02:08.800 --> 0:02:12.600 them to places like China, where skilled workers and factories 0:02:12.720 --> 0:02:17.080 turn them into higher value products like batteries or electric cars. 0:02:18.040 --> 0:02:22.720 But now the biggest economy in Southeast Asia has other ideas. 0:02:23.320 --> 0:02:26.880 Why should Indonesia stop at exporting role or when it 0:02:26.880 --> 0:02:29.840 can export the batteries that are made from them and 0:02:29.880 --> 0:02:36.600 even the cars powered by those batteries. Indonesia's ban on 0:02:36.720 --> 0:02:40.519 rule box site exports began over the weekend. The ban 0:02:40.800 --> 0:02:43.320 is meant to encourage more investment into. 0:02:43.200 --> 0:02:47.120 Higher value added activities on shore Indonesia. 0:02:47.160 --> 0:02:50.160 The bottom line, if you want our minerals, you have 0:02:50.320 --> 0:02:55.519 to process them here. For President Jokowidodo, Indonesia's natural wealth 0:02:55.600 --> 0:02:58.400 is the key for it to become a high income country. 0:02:58.919 --> 0:03:01.519 It is sassy in Dose three. 0:03:02.320 --> 0:03:06.960 Industrial downstreaming is very important. We will leap forwards if 0:03:07.000 --> 0:03:08.280 downstreaming is successful. 0:03:09.520 --> 0:03:16.040 Thistochi The Golden Indonesia of twenty forty five, smart execution 0:03:16.400 --> 0:03:16.880 is needed. 0:03:19.760 --> 0:03:22.640 It's estimated to add more than seven hundred billion dollars 0:03:22.639 --> 0:03:27.160 to the economy and create nearly ten million jobs. To 0:03:27.200 --> 0:03:31.240 push this strategy forward, Indonesia uses a carrot and stick approach. 0:03:32.240 --> 0:03:35.120 On one hand, it's clapped down on exports of some 0:03:35.280 --> 0:03:38.880 raw mineral ores. On the other, it's offered tax for 0:03:39.000 --> 0:03:43.080 certain incentives, viewering companies to build smelters and battery plants 0:03:43.120 --> 0:03:48.560 within its borders, and it's already working, but is it 0:03:48.600 --> 0:03:50.840 good to go to get a better idea of how 0:03:50.880 --> 0:03:54.240 the carrot and stick approach materialized. I spoke with Mohammad 0:03:54.240 --> 0:03:57.600 Faiz Naguza as an economist at Bank of America. 0:03:58.080 --> 0:04:01.920 We saw about eleven billion dollars of being realized into 0:04:01.960 --> 0:04:02.520 that sector. 0:04:03.000 --> 0:04:06.520 By that sector, he means nickel downstreaming. 0:04:06.440 --> 0:04:09.000 But that is just that sector. Beyond that, we're also 0:04:09.040 --> 0:04:14.040 seeing more investments likely coming into other smelters copper smelters 0:04:14.040 --> 0:04:18.679 for example, as well as battery grade nickel and even 0:04:18.760 --> 0:04:24.599 producing IV batteries themselves. So the investment inflows Intodonesia is 0:04:24.640 --> 0:04:27.880 getting beefed up because of this success in downstreaming. 0:04:28.560 --> 0:04:32.440 Nowhere is that boom more apparent than in Morowali. It's 0:04:32.480 --> 0:04:36.760 a nickel ridge district in Indonesia, Sulawesi island east of Borneo. 0:04:37.680 --> 0:04:41.400 Once a quiet fishing town, it now houses the bustling 0:04:41.560 --> 0:04:46.719 Morowali Industrial Park, which just celebrated its tenure anniversary this month. 0:04:48.560 --> 0:04:52.560 Trucks are busy transporting or from mines to smelters, Buses 0:04:52.600 --> 0:04:56.280 full of workers shuttling across the area. The park even 0:04:56.320 --> 0:05:01.200 has its own private airport and port facilities. It employs 0:05:01.200 --> 0:05:07.279 more than eighty thousand Indonesian and Chinese workers here. For 0:05:07.360 --> 0:05:10.120 the first five months this year, this park has already 0:05:10.160 --> 0:05:15.080 registered twenty two billion US dollars of investment. That's compared 0:05:15.120 --> 0:05:17.680 with a record of twenty one billion dollars for the 0:05:17.720 --> 0:05:19.080 whole twenty twenty two. 0:05:21.240 --> 0:05:24.920 To be clear, such success is quite rare. Indonesia holds 0:05:24.960 --> 0:05:28.440 the world's largest deposit of nickel, a mineral in short supply. 0:05:29.440 --> 0:05:35.679 The same goes for Botswana when it comes to diamonds. 0:05:36.040 --> 0:05:40.080 The global diamond manufacturer the Beers relies on Botswana's mines, 0:05:40.760 --> 0:05:44.640 leveraging that the Botswana government struck a deal that set 0:05:44.680 --> 0:05:47.760 aside a portion of rough diamonds to local cutting and 0:05:47.800 --> 0:05:55.440 polishing companies. Historically, polishing usually happened in places like Antwerp, Belgium. 0:05:55.680 --> 0:05:59.120 Other countries, though, face more basic challenges. 0:05:59.240 --> 0:06:03.120 And here's important to maybe use the example of the 0:06:03.400 --> 0:06:04.800 Democratic Republic of Congo. 0:06:05.120 --> 0:06:08.279 Rahi dash Dawa, head of the International Council on Mining 0:06:08.279 --> 0:06:09.520 and Minerals. 0:06:09.160 --> 0:06:14.920 In DRC, A decision was taken to process copper concentrate 0:06:15.000 --> 0:06:18.200 in the DRC itself, but that had to be delayed 0:06:18.600 --> 0:06:22.719 because copper producers simply didn't have enough electricity in order 0:06:22.760 --> 0:06:25.599 to be able to process the copper. So you can't 0:06:25.640 --> 0:06:28.520 do copper smelting without electricity. And the DRC was not 0:06:28.600 --> 0:06:32.120 producing enough of the electricity in order to keep that 0:06:32.240 --> 0:06:37.360 plant going. And so you might think why don't companies 0:06:37.400 --> 0:06:39.640 set up more processing plants. Well, actually, if you don't 0:06:39.640 --> 0:06:42.240 have enough of the energy you need and increasingly low 0:06:42.400 --> 0:06:45.200 carbon and low cost energy you need, it's very difficult 0:06:45.200 --> 0:06:45.719 to process. 0:06:46.360 --> 0:06:50.680 This success doesn't come free either. For one, there's the 0:06:50.760 --> 0:06:55.039 environmental price given the tons of waste generated and the 0:06:55.160 --> 0:07:00.920 coal to provide electricity for factories. Because Lane Calling, Annie 0:07:00.960 --> 0:07:04.599 Lee listed a residential building outside of the Indonesian Park 0:07:04.880 --> 0:07:08.880 where she met Ricky Ardiansha. Ricky rends rooms to Indonesian 0:07:08.920 --> 0:07:11.040 workers and owns a construction. 0:07:12.680 --> 0:07:17.880 The water, the rain rink is color is black? 0:07:18.160 --> 0:07:19.480 Oh really yes? 0:07:21.480 --> 0:07:24.160 Because the air the think. 0:07:24.360 --> 0:07:26.960 Us and in air maybe and then the dust here. 0:07:27.920 --> 0:07:30.720 Ricky told us when it rains, the rain drops turned 0:07:30.720 --> 0:07:34.280 black from the dust in the air. Just outside this building, 0:07:34.640 --> 0:07:38.240 there's a river that runs across the neighborhood. It looks 0:07:38.280 --> 0:07:44.840 like a canal of tomato soup. Now, President Jacobi also 0:07:44.880 --> 0:07:48.360 wants to apply the same strategy not only to other metals, 0:07:48.560 --> 0:07:53.720 but into agriculture, farming, and fisheries, every sector that Indonesia 0:07:53.800 --> 0:07:58.440 has clouds but not dominance. With the twenty twenty four 0:07:58.480 --> 0:08:03.000 elections booming a trace questions will his successor repeat the 0:08:03.040 --> 0:08:06.520 same trick. Here's economist Nagusa. Again. 0:08:07.240 --> 0:08:10.720 Success is so evident that I think most investors assume 0:08:11.240 --> 0:08:14.240 that it will be unlikely for any future governments to say, 0:08:14.560 --> 0:08:17.560 you know, we need to revert this policy. The success 0:08:17.560 --> 0:08:20.200 in terms of exports and the investments are very visible. 0:08:20.760 --> 0:08:24.320 So the assumption is that there will be pretty much 0:08:25.000 --> 0:08:27.440 a good degree of policy continuity on this downstreaming. So 0:08:27.600 --> 0:08:29.960 if something were to change, I think that will come 0:08:30.000 --> 0:08:32.800 as a negative and nasty surprise for investors. 0:08:34.080 --> 0:08:38.480 Whatever the outcome, other countries will be closely watching. If 0:08:38.520 --> 0:08:41.559 they want a bigger role in the supply chain, they're minerals, 0:08:41.679 --> 0:08:47.760 maybe their fastest way to get there in Jakarta Clari 0:08:47.840 --> 0:08:49.040 out for Bloomberg News. 0:08:59.520 --> 0:09:02.440 So I would step back to consider now how this 0:09:02.520 --> 0:09:05.040 has gone in the past, and whether there's any prospect 0:09:05.080 --> 0:09:08.760 for countries elsewhere in the world, especially Africa, to benefit 0:09:08.760 --> 0:09:11.400 from the rush to acquire the minerals that will be 0:09:11.480 --> 0:09:14.400 needed to wean the planet off fossil fuels and to 0:09:14.440 --> 0:09:17.640 help us do that. I'm joined by Jim Cust, senior 0:09:17.679 --> 0:09:20.160 economist in the Africa Department at the World Bank, who's 0:09:20.160 --> 0:09:24.160 written extensively on this subject, and Bloomberg's Energy and Commodities 0:09:24.200 --> 0:09:27.840 reporter Jack Faci, who co authored with Javier Blass, The 0:09:27.880 --> 0:09:30.600 World for Sale, which is a cracking book on global 0:09:30.600 --> 0:09:34.560 commodity trading. Jim Cust, Jack, thank you very much for this. Jim, 0:09:34.640 --> 0:09:36.920 let me start with you. Let's go back in time 0:09:37.320 --> 0:09:41.880 first and think what's the traditional story of a commodity 0:09:41.960 --> 0:09:45.280 boom for developing country before we get onto how this 0:09:45.360 --> 0:09:48.679 time might be drifferent. What has traditionally been the problem 0:09:48.720 --> 0:09:52.920 for developing countries looking to get full advantage from these 0:09:53.000 --> 0:09:54.079 kind of booms. 0:09:55.480 --> 0:09:58.760 Sure, many countries have found it very challenging to move 0:09:58.800 --> 0:10:03.800 from being a major resource dependent economy, so whether that's 0:10:03.840 --> 0:10:06.440 mining or in other cases it's been oil and gas, 0:10:07.120 --> 0:10:13.079 and turn that below ground wealth into above ground prosperity. 0:10:13.559 --> 0:10:15.680 So we've all heard of the resource curse, and this 0:10:15.800 --> 0:10:19.200 is sort of the classical case of countries that have 0:10:19.720 --> 0:10:26.000 commodity booms, followed by busts, and if they haven't saved 0:10:26.000 --> 0:10:29.480 and invested enough of their revenues, then the busts can 0:10:29.559 --> 0:10:32.320 hit them even harder than the boom in the first place. 0:10:33.040 --> 0:10:35.600 And so countries have got into these kind of cyclical 0:10:35.679 --> 0:10:39.040 challenges that ultimately has added up to many of them 0:10:39.080 --> 0:10:42.760 stagnating and growing a lot slower than their neighbors that 0:10:42.920 --> 0:10:46.240 didn't have the resources. And that's what economists think of 0:10:46.320 --> 0:10:48.520 as the resource curse, that you end up growing slower 0:10:49.000 --> 0:10:50.240 than you might have done otherwise. 0:10:51.080 --> 0:10:53.480 It's always striking how few there are, but there are 0:10:53.520 --> 0:10:56.360 a few countries that have managed to get round this. 0:10:58.120 --> 0:11:01.599 Yeah, absolutely, so the result curse is certainly not universal. 0:11:02.520 --> 0:11:07.720 So we can think of countries like Chile and Indonesia, Australia, 0:11:07.800 --> 0:11:10.800 of course, but in Africa, countries like Botswana have done 0:11:11.200 --> 0:11:14.920 very well from their resources and have really succeeded in 0:11:15.280 --> 0:11:18.840 taking something that is a sort of primary commodity dependence 0:11:19.320 --> 0:11:21.880 and then turning those revenues into something you can invest 0:11:21.920 --> 0:11:24.080 in the rest of the economy and have done well 0:11:24.120 --> 0:11:24.600 out of it. 0:11:25.360 --> 0:11:27.880 What of what would you advise countries who are trying 0:11:27.920 --> 0:11:30.920 to repeat the Botswana example or is it just impossible 0:11:32.360 --> 0:11:33.280 it's not impossible. 0:11:33.320 --> 0:11:34.880 So the way that we think about it is it's 0:11:34.920 --> 0:11:38.360 like a chain of decisions, and the chain of decisions 0:11:38.400 --> 0:11:40.960 is only as strong as the weakest link. So there 0:11:41.000 --> 0:11:43.880 are many places where the chain of decisions can go wrong. 0:11:44.400 --> 0:11:46.800 But governments have to make a series of decisions. So 0:11:46.920 --> 0:11:50.760 everything from negotiating a good deal in the first place 0:11:51.040 --> 0:11:53.760 with the private sector companies that you're typically working with, 0:11:54.360 --> 0:11:57.120 all the way through to making sure you get those 0:11:57.160 --> 0:12:00.320 revenues and then you use those revenues effectively that you 0:12:00.360 --> 0:12:05.199 avoid corruption and you avoid mismanagement and the boombus price 0:12:05.280 --> 0:12:08.199 cycle and so on. So there's a series of decisions 0:12:08.200 --> 0:12:11.199 and each step in that decision chain, there are examples 0:12:11.200 --> 0:12:15.120 from countries like Botswana that you can emulate. And actually 0:12:15.160 --> 0:12:18.040 Botswana has just been in the news very recently because 0:12:18.040 --> 0:12:22.600 they've renegotiated their deal with the Beers and they have 0:12:23.240 --> 0:12:27.240 a reputation for negotiating a very tough deal when they 0:12:27.240 --> 0:12:28.320 work with the private sector. 0:12:28.720 --> 0:12:30.560 And we actually heard a little bit about de Beers 0:12:30.559 --> 0:12:37.240 in the earlier piece. So Jack, when you think about 0:12:37.840 --> 0:12:40.760 the move to net zero, of course lots of people 0:12:40.920 --> 0:12:43.040 wonder whether we really make them move to net zero 0:12:43.040 --> 0:12:47.440 but there's certainly a massive rush for the materials that 0:12:47.480 --> 0:12:51.320 we need to build all of those batteries for electric 0:12:51.440 --> 0:12:54.800 cars and generally sort of power the transit transition away 0:12:55.040 --> 0:12:57.920 from carbon. What does that mean in practical terms? What 0:12:58.000 --> 0:12:59.960 kind of commodities are we talking about and where are 0:13:00.160 --> 0:13:00.840 they currently? 0:13:01.800 --> 0:13:04.520 I think the big one where markets are being totally 0:13:04.559 --> 0:13:08.319 transformed as a result of even the steps that we're 0:13:08.360 --> 0:13:11.600 taking at the moment towards net zero, even if together 0:13:11.640 --> 0:13:13.760 they're not enough necessarily to get us in at zero 0:13:13.760 --> 0:13:15.800 by twenty fifty. But the big ones where markets being 0:13:15.800 --> 0:13:19.840 totally transformed is the commodities that go into batteries for 0:13:19.880 --> 0:13:25.719 electric vehicles, and the key ones are things like lithium, nickel, cobalt, 0:13:26.160 --> 0:13:29.480 perhaps to a slightly lesser extent, manganese, graphite, and then 0:13:29.520 --> 0:13:32.800 things like copper and aluminium that are used in electrical 0:13:33.160 --> 0:13:36.960 wiring and therefore important both for the batteries but also 0:13:37.600 --> 0:13:40.200 the power cables, the charging stations, et cetera, et cetera, 0:13:40.240 --> 0:13:42.679 et cetera. Some of those markets are already quite large 0:13:42.679 --> 0:13:45.840 and well established, so things like manganese and nickel already 0:13:45.920 --> 0:13:48.800 have a large use in the steel sector. They're used 0:13:48.800 --> 0:13:52.560 as alloys in things like stainless steel and other steel alloys, 0:13:52.720 --> 0:13:54.959 and so there's already quite a large market, but something 0:13:55.000 --> 0:13:58.320 like lithium and cobalt were really quite small markets only 0:13:58.360 --> 0:14:02.880 a couple of years ago, and already they have increased, 0:14:03.040 --> 0:14:06.600 i think, probably doubled in size over the past five 0:14:06.679 --> 0:14:10.200 years or so, and the projections are that they would double, 0:14:10.240 --> 0:14:13.680 triple or even more in size over the coming decades. 0:14:14.400 --> 0:14:17.079 So those are markets where we're going from a relatively 0:14:17.280 --> 0:14:20.680 small market to suddenly a much larger market, and we're 0:14:20.680 --> 0:14:24.280 going to need to find lots more supply. In most cases, 0:14:24.280 --> 0:14:27.640 the supply or that the resources are there. So lithium, 0:14:27.680 --> 0:14:30.560 for example, there's a lot of lithium in South America, 0:14:31.000 --> 0:14:34.800 also in Australia. Nickel, as I think we just heard 0:14:34.960 --> 0:14:37.400 and we'll probably talk about quite a lot more. Indonesia 0:14:37.880 --> 0:14:41.040 has increased its supply of nickel enormously in the last 0:14:41.120 --> 0:14:43.640 few years, and it's projected to do so even more 0:14:43.640 --> 0:14:46.160 so in the coming years. So the resources are out there, 0:14:46.400 --> 0:14:49.120 but nonetheless it's a big challenge for the global mining 0:14:49.120 --> 0:14:53.880 industry to increase supply by a huge amount of some 0:14:53.920 --> 0:14:54.760 of these commodities. 0:14:55.280 --> 0:14:57.160 So I guess there's a nickel rush as opposed to 0:14:57.200 --> 0:14:59.600 a gold rush, as you say, but it's been transformative. Now, 0:14:59.600 --> 0:15:01.640 we heard about Indonesia, and a lot of people listening 0:15:01.680 --> 0:15:04.920 to that story would think, Okay, if you're a country 0:15:04.960 --> 0:15:09.520 that does is lucky enough to have these critical minerals, 0:15:10.240 --> 0:15:14.080 the government announcers it's going to ban the unprocessed form 0:15:14.120 --> 0:15:18.280 of those minerals, and lots of investment comes in and 0:15:18.320 --> 0:15:22.000 you get the downstream industry, which helps you perhaps avoid 0:15:22.120 --> 0:15:24.760 some of the issues that Jim was talking about earlier. 0:15:24.840 --> 0:15:27.080 Should we be encouraged by the Indonesia an example? 0:15:28.400 --> 0:15:31.440 I think the Indonesian example is a very impressive example 0:15:31.600 --> 0:15:36.000 of a government pursuing a policy here to encourage investment 0:15:36.000 --> 0:15:39.440 into its nickel industry and also to develop some more 0:15:39.480 --> 0:15:42.960 of the processing of the downstream and being successful. I 0:15:43.000 --> 0:15:49.480 also think it's a very rare, I'm hesitant to say unique, 0:15:49.480 --> 0:15:51.840 but it's a very rare example of a number of 0:15:51.880 --> 0:15:54.720 factors that Indonesia had in its favor. The number one 0:15:55.000 --> 0:15:59.880 being is today a vast share of the world's nickel supply, 0:16:00.880 --> 0:16:04.080 a significant share of the world's nickel reserves. But even 0:16:04.080 --> 0:16:08.320 when they started this policy direction nearly a decade ago. 0:16:08.680 --> 0:16:11.480 So Indonesia first actually banned exports of nickel or in 0:16:11.520 --> 0:16:13.880 twenty fourteen, and they were much smaller player in the 0:16:13.920 --> 0:16:16.080 global nickel market at that point, but they were still 0:16:16.480 --> 0:16:19.760 the key supplier of nickel or to China and to 0:16:19.760 --> 0:16:22.640 the Chinese industry that was turning it into nickel pigeye 0:16:22.680 --> 0:16:25.000 in which then was an input into the Chinese stainless 0:16:25.000 --> 0:16:27.720 steel industry. And so when they did that, the Chinese 0:16:27.720 --> 0:16:30.240 stain and the steel industry had little alternative but to 0:16:30.280 --> 0:16:34.480 come to Indonesia and build nickel pigeye and plants there 0:16:34.520 --> 0:16:36.160 because there wasn't an alternative it. So, I think if 0:16:36.160 --> 0:16:40.000 we're talking about how countries can capture the most rents 0:16:40.000 --> 0:16:43.160 from these industries, Indonesia is a rare example because they 0:16:43.160 --> 0:16:47.280 have such a dominant position in a particular market. Botswana 0:16:47.360 --> 0:16:49.280 is a good example in diamonds. They also have a 0:16:49.360 --> 0:16:52.320 very large share of the global diamond market, and so 0:16:52.360 --> 0:16:54.800 that puts them in a very obviously puts them in 0:16:54.840 --> 0:16:57.440 a much stronger position, give them much more leverage if 0:16:57.440 --> 0:17:02.200 they're negotiating with companies country to try and extract more 0:17:02.240 --> 0:17:04.440 rent from their natural resources industry. 0:17:04.640 --> 0:17:07.240 And jet you also had said that perhaps there were 0:17:07.280 --> 0:17:09.680 quite a lot of attractions to going to Indonesia anyway, 0:17:09.880 --> 0:17:12.119 and even without the policy, you might have seen this 0:17:12.200 --> 0:17:13.280 kind of inward investment. 0:17:13.800 --> 0:17:16.560 Yeah. Absolutely, so they were really kind of pushing water downhill. 0:17:16.920 --> 0:17:19.240 The origin of this was the nickel pig iron industry, 0:17:19.240 --> 0:17:20.680 which is a kind of low grade nickel that was 0:17:20.760 --> 0:17:24.919 used in stainless steel built and rose up originally in 0:17:25.080 --> 0:17:28.280 China after about two thousand and six when nickel prices 0:17:28.320 --> 0:17:30.040 shot up a lot, and that made this process of 0:17:30.080 --> 0:17:33.800 making nickel pig iron economic. And at the time when 0:17:33.920 --> 0:17:38.520 Indonesia started this process of restricting exports, it was way 0:17:38.680 --> 0:17:41.960 cheaper to make nickel pig iron in Indonesia than it 0:17:42.000 --> 0:17:44.120 was in China, both because of the shipping cost because 0:17:44.119 --> 0:17:46.200 you weren't having to ship lots and lots and lots 0:17:46.240 --> 0:17:49.320 of very low grade ore, but also because Indonesia was 0:17:49.400 --> 0:17:52.680 very rich in coal, Coal powered energy was very cheap. 0:17:52.720 --> 0:17:55.760 It's an energy intensive process, so the kind of costs 0:17:55.760 --> 0:17:58.240 we're talking about, it was costing about six to eight 0:17:58.240 --> 0:18:00.880 thousand dollars a ton to make nickel and in Indonesia 0:18:00.960 --> 0:18:02.600 versus ten to twelve thousand dollars in China, So there 0:18:02.640 --> 0:18:06.240 was a really clear economic incentive behind it, and in fact, 0:18:06.320 --> 0:18:10.320 some of the Chinese companies that have invested now and 0:18:10.320 --> 0:18:13.120 build lots of I think say privately at least that 0:18:13.160 --> 0:18:15.240 they might have done it anyway even if the government 0:18:15.280 --> 0:18:18.280 hadn't banned exports. The other point I would make is, 0:18:19.280 --> 0:18:22.440 and it's a really interesting case study for lots of 0:18:22.520 --> 0:18:27.440 reasons that there's been this really close partnership and alliance 0:18:27.520 --> 0:18:31.840 between the Indonesian government and China, and in particular a 0:18:31.840 --> 0:18:35.520 couple of a few Chinese companies, prime among them Singshan, 0:18:35.840 --> 0:18:38.760 which is the world's biggest nickel and Staler's steel producer, 0:18:38.840 --> 0:18:41.600 and maybe familiar to listeners because it was at the 0:18:41.600 --> 0:18:44.399 center of a huge short squeeze on in the nickel 0:18:44.400 --> 0:18:45.200 market last year. 0:18:45.320 --> 0:18:47.640 Those who avidly look at the short squeens. 0:18:47.359 --> 0:18:50.600 Those who avidly follow the metals markets. But even if not, 0:18:50.800 --> 0:18:53.520 it's a fascinating company. It's one of the great innovators 0:18:53.760 --> 0:18:57.080 of the global metals industry, and they really bet the 0:18:57.119 --> 0:19:00.560 house on Indonesia a number of years ago, forged this 0:19:00.640 --> 0:19:03.439 very close partnership with the Indonesian government, and in exchange, 0:19:03.480 --> 0:19:07.160 the Indonesian government has really opened the doors to them, 0:19:07.320 --> 0:19:09.800 allowed them to make the investments and build the projects 0:19:09.840 --> 0:19:12.280 that they were building the way that they wanted to, so, 0:19:12.480 --> 0:19:17.440 you know, using Chinese workers, giving them tax breaks, all 0:19:17.440 --> 0:19:20.520 of these kind of things to really encourage them and 0:19:20.560 --> 0:19:22.399 to make it as cheap as possible for them to 0:19:22.480 --> 0:19:25.080 come and make those investments in a way that lots 0:19:25.080 --> 0:19:28.119 of other countries with nickel resources hadn't done. And so 0:19:28.320 --> 0:19:31.160 as a result, you've seen this kind of huge investment 0:19:31.320 --> 0:19:34.760 from China, principally into Indonesia, and as a result, this 0:19:34.840 --> 0:19:36.880 massive boom in the Indonesian nickel industry. 0:19:37.680 --> 0:19:39.720 Well for those listening who woke up this morning not 0:19:39.760 --> 0:19:42.320 realizing they were going to be much better informed about 0:19:42.440 --> 0:19:45.439 nickel pig iron by the end of the day. But 0:19:46.000 --> 0:19:50.399 really going back thinking now about Africa, Jim, we have 0:19:50.480 --> 0:19:55.840 this quite encouraging example in Indonesia. We do have a 0:19:55.920 --> 0:20:00.600 palpable boom in materials that, as we've already mentioned, are 0:20:00.600 --> 0:20:05.800 pretty are present in large amounts in certain African countries. 0:20:05.840 --> 0:20:10.040 What's the prospect for African countries announcing that they're not 0:20:10.080 --> 0:20:13.960 going to export unprocessed versions of these materials. I was 0:20:14.160 --> 0:20:16.000 one of the reasons we were doing. This story was 0:20:16.000 --> 0:20:19.600 that one of a recent Bloomberg conference in Morocco, the 0:20:19.640 --> 0:20:23.120 New Economy Gateway, we heard a Ghanaian minister say that 0:20:23.200 --> 0:20:27.639 they weren't going to export unprocessed lithium as they developed 0:20:27.720 --> 0:20:30.280 that industry. How feasible is that. 0:20:32.240 --> 0:20:33.800 Well, I think the first thing to say is that 0:20:33.840 --> 0:20:38.320 the overall opportunity is pretty exciting for African countries. So 0:20:39.040 --> 0:20:42.720 we do see a boom ahead in a whole range 0:20:42.720 --> 0:20:45.360 of different metals and minerals. Jack mentioned some of them already, 0:20:45.760 --> 0:20:48.840 the earliest around the battery minerals, but there are many others, 0:20:49.240 --> 0:20:52.800 including rare earths, that are found all over Africa in abundance, 0:20:53.359 --> 0:20:58.320 so there's a big opportunity here. Africa has been the 0:20:58.359 --> 0:21:01.240 most under explored region in the world, so it's not 0:21:01.280 --> 0:21:03.280 only that we know there's a lot there already, but 0:21:03.320 --> 0:21:07.639 there's probably even more to be found as well. On 0:21:07.720 --> 0:21:11.639 top of that, I think there's a recent growing recognition 0:21:11.840 --> 0:21:17.240 that supply chains for some of these metals are fragile 0:21:17.359 --> 0:21:20.199 but also quite concentrated. So of course a lot of 0:21:20.200 --> 0:21:23.680 the processing gets done in China, but also in places 0:21:23.720 --> 0:21:27.640 that are far from say, US markets, and so as 0:21:27.720 --> 0:21:32.560 the US tries to increase its capacity in electric vehicles, 0:21:32.560 --> 0:21:35.040 in batteries and things like that. There's a kind of 0:21:35.480 --> 0:21:38.879 a new sort of interest in figuring out how can 0:21:39.480 --> 0:21:43.440 Africa build out some of these supply chain themselves, which 0:21:43.480 --> 0:21:45.760 could help bring resilience not just in the interests of 0:21:45.760 --> 0:21:48.119 African countries, but in the interests of others in the 0:21:48.119 --> 0:21:51.159 global market. So there's this kind of alignment of interest 0:21:51.200 --> 0:21:54.120 that is quite new and quite unique that we hope 0:21:54.119 --> 0:21:58.080 will work in the favor of African countries. As Jack 0:21:58.160 --> 0:22:01.240 rightly points out that there are challenges to this. It's 0:22:01.280 --> 0:22:04.199 not as simple as oh, you just announced an export 0:22:04.240 --> 0:22:07.760 ban and everything will sort of follow suit. It's worth 0:22:07.840 --> 0:22:11.000 noting that even in Indonesia they had to give away 0:22:11.040 --> 0:22:15.119 some pretty pretty serious tax concessions to some of the 0:22:15.160 --> 0:22:18.040 mining companies to make this kind of work for them, 0:22:18.320 --> 0:22:21.760 and when they'd first tried this in around twenty fourteen, 0:22:22.440 --> 0:22:25.600 it wasn't a universal success. They did run into challenges. 0:22:25.600 --> 0:22:29.240 There wasn't enough smelting capacity, and actually they lost a 0:22:29.240 --> 0:22:32.040 lot of their market share in baulk side production to 0:22:32.119 --> 0:22:34.440 the baux side demand. Some of it got driven to Africa, 0:22:34.480 --> 0:22:38.560 to Guinea, and the share of Indonesia's bulk side supply 0:22:39.080 --> 0:22:42.840 fell and I don't think it's recovered since, so there's 0:22:42.880 --> 0:22:46.640 sort of cautionary tails here as well. But the ambition 0:22:46.960 --> 0:22:50.439 of governments like Ghana is to be applauded and to 0:22:50.480 --> 0:22:53.680 see if they can sort of seize the moment. Right 0:22:53.720 --> 0:22:56.240 you've got the increased bargaining power that some of these 0:22:56.240 --> 0:23:00.760 countries have. DRC, of course, is a great example of this, 0:23:00.840 --> 0:23:05.000 with a huge share of the world's cobalt supply in DRC, 0:23:06.119 --> 0:23:09.679 combine with the rising demand for these metals, combined with 0:23:10.000 --> 0:23:14.160 the fact that there's interest from other actors. But it's 0:23:14.160 --> 0:23:16.760 a window of opportunity and it's one that can close easily. 0:23:16.920 --> 0:23:23.320 So you may see headlines around this idea that is 0:23:23.359 --> 0:23:26.840 lithium the new oil, and I think we need to 0:23:26.880 --> 0:23:29.000 have a touch of realism to go with this, that 0:23:29.760 --> 0:23:31.760 lithium is not going to be the next oil for 0:23:31.840 --> 0:23:34.879 various reasons. The size of the market is a fraction 0:23:34.960 --> 0:23:38.919 of what oil is. It's the dominant battery technology of today, 0:23:38.960 --> 0:23:41.000 but it doesn't mean it remains to be the dominant 0:23:41.000 --> 0:23:44.760 battery technology of twenty fifty. For example, And actually, if 0:23:44.880 --> 0:23:48.280 prices were high and sustained between now and twenty fifty, 0:23:48.600 --> 0:23:51.119 the incentive for people to come up with alternative battery 0:23:51.119 --> 0:23:55.480 technologies would be even greater. So African countries need to 0:23:55.480 --> 0:24:00.240