WEBVTT - Battery Metals - A Nickel for Your Thoughts 0:00:00.160 --> 0:00:03.800 Hey, Dina, the Wetterburn meteorite. Have you heard of it? 0:00:04.120 --> 0:00:08.080 I didn't even know meteorites had names. Well, I stumbled 0:00:08.080 --> 0:00:10.280 across an article about it the other day. So in 0:00:11.160 --> 0:00:14.240 outside the town of Wetterburn in Victoria, Australia, this guy 0:00:14.320 --> 0:00:16.480 finds an apple sized piece of metal by the side 0:00:16.520 --> 0:00:19.160 of the road. He takes it to the Museum of Victoria, 0:00:19.239 --> 0:00:21.800 where it's determined to be a meteorite, and pieces of 0:00:21.800 --> 0:00:23.840 this thing were sliced off and sent to scientists around 0:00:23.840 --> 0:00:26.920 the world for analysis. The meteorite is mostly iron and nickel, 0:00:27.040 --> 0:00:29.159 indicating that it was likely part of the core of 0:00:29.160 --> 0:00:31.800 a doomed planet that got smashed by some other planet 0:00:31.880 --> 0:00:34.720 or moon or asteroid, and after billions of years in 0:00:34.760 --> 0:00:37.319 the asteroid belt, it made its way to Australia. So 0:00:37.440 --> 0:00:40.879 why was it in the news? Well, good question. So 0:00:41.040 --> 0:00:43.720 some research at cal Tech recently found that it contains 0:00:43.920 --> 0:00:47.320 a mineral not previously found in nature FE five C two, 0:00:47.600 --> 0:00:50.680 a kind of iron carbide. So apparently there are five 0:00:50.760 --> 0:00:53.440 hundred to six hundred thousand minerals discovered or created in 0:00:53.479 --> 0:00:56.080 the lab, but less than six thousand or found in nature. 0:00:56.280 --> 0:00:59.080 This is a new one and only when a mineral 0:00:59.160 --> 0:01:00.640 is found in nature, did they get to name it? 0:01:00.960 --> 0:01:02.680 So they got to name this one, and it's called 0:01:02.840 --> 0:01:05.679 ed Scotite after this cosmo chemist. Yes, that's a thing 0:01:05.840 --> 0:01:09.000 at the University of Hawaii named ed Scott So ed Scottite. 0:01:09.440 --> 0:01:12.479 Very cool. Yeah right, that was my first thought too. 0:01:12.680 --> 0:01:14.640 But what could this thing be used for? What do 0:01:14.640 --> 0:01:18.560 you think? Batteries? Batteries? Sure, I don't know about that, 0:01:18.640 --> 0:01:21.399 but you know, it turns out that nothing really as 0:01:21.440 --> 0:01:23.559 far as I can tell. But it is a byproduct 0:01:23.560 --> 0:01:25.560 of iron smelting. So it is. It exists out there 0:01:25.560 --> 0:01:27.319 in the world, but it's just not in nature except 0:01:27.360 --> 0:01:30.200 in this little meteorite. Okay, So now that we're all 0:01:30.200 --> 0:01:33.600 thinking about metals, let's get into today's topic. Metals that 0:01:33.600 --> 0:01:35.720 can be used for stuff. I don't know about you, Danta, 0:01:35.760 --> 0:01:38.360 but I can't really see a way around metals demand. 0:01:38.400 --> 0:01:40.480 It seems like we always need them. That may be 0:01:40.560 --> 0:01:43.600 true in a high carbon or low carbon economy. There 0:01:43.760 --> 0:01:47.040 is a need for metals cobalt, lithium, nickel for batteries, 0:01:47.319 --> 0:01:50.480 rare earths for all kinds of electronics, steel for wind 0:01:50.480 --> 0:01:54.160 turbines and solar panels, and the list goes on. Today, 0:01:54.240 --> 0:01:57.000 we'll be talking with Sophie lou who leads b enufs 0:01:57.040 --> 0:02:00.600 medals analysis and will focus on the battery metals. We'll 0:02:00.600 --> 0:02:02.920 get into the supply and demand for metals used in 0:02:03.080 --> 0:02:06.640 battery production and some of the very real challenges in 0:02:06.720 --> 0:02:10.040 getting the stuff out of the ground. Our conversation is 0:02:10.040 --> 0:02:14.639 based on a report titled two h nineteen Battery Metals Outlook, 0:02:14.800 --> 0:02:18.680 Demand Realities. B NF users can get this report on 0:02:18.840 --> 0:02:22.200 BNF dot com, the BNF mobile app, or on the 0:02:22.200 --> 0:02:25.760 Bloomberg terminal at b NF go. Please note that BNF 0:02:25.800 --> 0:02:28.200 does not provide investment or strategy advice, and you can 0:02:28.240 --> 0:02:30.200 hear our full disclaimer at the end of the show. 0:02:30.840 --> 0:02:34.000 I'm Dana Perkins and I'm Mark Taylor and you're listening 0:02:34.000 --> 0:02:39.120 to Switch on the b NF podcast. Hi, Sophie, thank 0:02:39.160 --> 0:02:41.320 you for joining us today. Good to be here. So 0:02:41.480 --> 0:02:43.919 this market outlook is about the battery metals. What are 0:02:43.919 --> 0:02:45.760 the main battery medals we should be worried about? Are 0:02:45.760 --> 0:02:48.960 concerned with? Sure um? In our outlook we focus primarily 0:02:49.000 --> 0:02:52.120 on lithium, cobalt and nickel um and when we do 0:02:52.160 --> 0:02:54.240 the supply and demand forecast where these big three. We 0:02:54.280 --> 0:02:57.120 do focus on the battery grade material that has produced 0:02:57.120 --> 0:02:59.720 for these three commodities. We also do look a little 0:02:59.720 --> 0:03:01.840 bit as some of the other medals that go into 0:03:01.919 --> 0:03:07.480 lithium ion batteries, so this would include manganese, graphite, copper, aluminum, um, 0:03:07.520 --> 0:03:10.480 but in general though the big three are lithium, cobalt, 0:03:10.480 --> 0:03:13.480 and nickel. This report is half yearly, But how far 0:03:13.520 --> 0:03:16.200 out do we look regarding the sub blind demand once 0:03:17.040 --> 0:03:21.400 UM our demand forecast goes out to and then our 0:03:21.440 --> 0:03:25.160 supply forecast goes out to at a D risk level, 0:03:25.680 --> 0:03:28.000 we do have a view out to twenty thirty, but 0:03:28.040 --> 0:03:30.160 we normally don't like to take a de wrist view 0:03:30.280 --> 0:03:34.120 on each of the assets UH after because of the 0:03:34.200 --> 0:03:37.560 lack of information. So it's mostly a short to medium 0:03:37.680 --> 0:03:41.520 term outlook. It's basically from now until in the nearer 0:03:41.640 --> 0:03:44.680 term what's going to be in short supply UH in 0:03:44.760 --> 0:03:47.640 the near term, So right now, it doesn't look like 0:03:47.680 --> 0:03:52.880 we have any major shortages pendent pending UM for any 0:03:53.000 --> 0:03:57.080 of the battery materials, So lithium, whether it be hydroxide 0:03:57.120 --> 0:04:00.360 or carbonate, are roughly in balance for twenty nine team 0:04:00.760 --> 0:04:05.120 UM and then UH cobalt is actually a little bit oversupplied, 0:04:05.400 --> 0:04:08.360 and then nickel, specifically nickel sulfate that goes into batteries 0:04:08.480 --> 0:04:11.880 is currently, according to our views, still supplied. But you 0:04:11.960 --> 0:04:15.080 go a little bit further out to about three and 0:04:15.120 --> 0:04:18.240 that's really when we start experiencing some potential shortages in 0:04:18.560 --> 0:04:22.760 um um, cobalt, and nickel, and then liftingum hydroxide UM 0:04:22.800 --> 0:04:25.960 maybe even a little bit earlier because of the potential 0:04:25.960 --> 0:04:29.479 bottleneck in conversion capacity. What's the reason for the shortage 0:04:29.520 --> 0:04:32.680 and cobalt supply UM The shortage and cobalt supply really 0:04:32.680 --> 0:04:34.760 has more to do with the fact that sort of 0:04:34.880 --> 0:04:39.760 insecurity and instability in the Congo has impacted the DRC. 0:04:39.880 --> 0:04:43.040 Excuse me, the Democratic Republic Congo has sort of impacted 0:04:43.240 --> 0:04:47.640 UM the larger miners um development plans for new capacity 0:04:47.640 --> 0:04:51.440 expansion inside of that market and has actually caused caused 0:04:51.440 --> 0:04:55.880 them to furlough some existing capacity in preparation for sort 0:04:55.880 --> 0:04:58.600 of reassessing because there they have to install the new 0:04:58.600 --> 0:05:00.960 processing equipment as well as they have to sort of 0:05:01.240 --> 0:05:04.919 reassess the impact of the new UH mining code that 0:05:04.960 --> 0:05:06.960 came into effect last year in the Congo and how 0:05:07.040 --> 0:05:10.320 that impacts the economics of the mining for cobalt in 0:05:10.360 --> 0:05:12.760 that market, particularly since cobalt prices have come down quite 0:05:12.800 --> 0:05:16.120 a bit. That's like, that's really the bottleneck going into 0:05:17.080 --> 0:05:19.880 four but in the nearer nearer term, so even just 0:05:19.920 --> 0:05:21.720 like in the next year or so, we could even 0:05:21.760 --> 0:05:26.320 potentially experience a UM, a sudden shortfall in the cobalt market. 0:05:26.560 --> 0:05:31.359 If anything UM these stabilizing happens in that specific country, 0:05:31.520 --> 0:05:35.240 and UM that may cause or disrupt may cause disruptions 0:05:35.279 --> 0:05:39.279 to the outflow of cobalt from that market. Uh no, no, 0:05:39.360 --> 0:05:41.480 this is not trade. This is basically just the congo 0:05:41.800 --> 0:05:44.880 UM experiencing political instability. Because so they just got a 0:05:44.920 --> 0:05:47.320 new president that just came in January. There's a lot 0:05:47.360 --> 0:05:50.320 of UM. There's still he has not fully consolidated his power. 0:05:50.360 --> 0:05:51.760 There's still a lot of question as to whether or 0:05:51.760 --> 0:05:54.680 not his incumbent retains a decent amount of control over 0:05:54.720 --> 0:05:57.720 the market. In the last week or so, we've been 0:05:57.720 --> 0:06:00.640 hearing news about you know, the UM, the national government 0:06:00.720 --> 0:06:04.120 sending in troops to quote unquote protect UM, the mining 0:06:04.160 --> 0:06:08.479 assets UM and to essentially push away artisanal miners, so 0:06:08.560 --> 0:06:11.880 small scale miners from UM mining along the outskirts of 0:06:12.279 --> 0:06:15.320 the big minds for Glencore and for chinamally and for 0:06:15.400 --> 0:06:18.679 other companies. To clarifying questions, I think it just touched 0:06:18.680 --> 0:06:22.520 on the first one is is DRC the main source 0:06:22.520 --> 0:06:24.560 of co op in the world? And to who are 0:06:24.600 --> 0:06:26.359 the majors that you talked about in that market? You 0:06:26.360 --> 0:06:29.000 mentioned Glencore and and an others. Are there others? Yes? 0:06:29.320 --> 0:06:33.320 Um so, over seventy of the cobalt resource that is 0:06:33.360 --> 0:06:36.200 mined um is mine from from the congo. Um so 0:06:36.200 --> 0:06:38.800 seventy percent of the refined sorry, the seventy percent of 0:06:38.800 --> 0:06:41.160 the bind resource comes from the congo. And then within 0:06:41.200 --> 0:06:45.159 the congo, the biggest market shareholders really are Chinnamali, Glencore, 0:06:45.480 --> 0:06:48.200 Eurasian Resources Group UM y r G. I think they 0:06:48.640 --> 0:06:52.240 changed their name now, and UM there's a few other 0:06:52.440 --> 0:06:56.600 companies kind of throughout that also owned things like KEMAF 0:06:56.680 --> 0:06:59.320 and others. UM. The Chinese companies, if you agree with them, 0:06:59.320 --> 0:07:02.360 altogether own something close to a half if not more, 0:07:02.640 --> 0:07:05.440 of the cobalt resource inside of the congo, and then 0:07:05.600 --> 0:07:08.799 their dominance of the market share of cobalt increases significantly 0:07:08.880 --> 0:07:10.240 when you then go to the next up, which is 0:07:10.280 --> 0:07:13.880 the refinery. So cobal is exported from Congo and a 0:07:13.920 --> 0:07:16.160 lot of it is exported back into China, where many 0:07:16.200 --> 0:07:19.840 of the Chinese companies, particularly Hawaio China, Hawaio UM and 0:07:20.000 --> 0:07:22.840 then Um Dean Chron and a few other companies, they 0:07:22.960 --> 0:07:26.680 are some of the biggest refineries refiners of cobalt in 0:07:26.760 --> 0:07:30.600 the world. While we're talking about China, I'm thinking, you know, 0:07:30.680 --> 0:07:34.800 I've read here in your note that of the batteries 0:07:34.840 --> 0:07:37.520 in the world are actually manufactured in China. And then 0:07:37.560 --> 0:07:39.440 I think about the trade boards that are going on 0:07:39.600 --> 0:07:41.840 right now between the US and China. Is that going 0:07:41.880 --> 0:07:45.480 to pose a problem to the battery market in the US? UM, 0:07:45.560 --> 0:07:47.280 I don't think so. So we looked at a little 0:07:47.320 --> 0:07:51.520 bit at the the trade in critical minerals and materials 0:07:51.560 --> 0:07:53.720 that go into the battery supply chain between the U 0:07:53.800 --> 0:07:55.920 s and China, and actually the direct trade and raw 0:07:56.000 --> 0:07:58.840 materials is relatively low. There are a few things that 0:07:58.960 --> 0:08:01.680 might be potentially subject to higher tariffs, but um, at 0:08:01.720 --> 0:08:03.520 the end of the day, there's actually not as much 0:08:03.640 --> 0:08:06.920 trade in the material supply chain between the two countries. 0:08:07.080 --> 0:08:11.200 Usually material that is mined in a third country moved 0:08:11.240 --> 0:08:13.360 to China to be refined is then sold to a 0:08:13.440 --> 0:08:15.920 third country that is then put into a battery component 0:08:15.960 --> 0:08:18.240 which is then potentially sold to the U. S so 0:08:18.680 --> 0:08:22.160 usually their trade partners in UM, Japan and possibly even 0:08:22.280 --> 0:08:26.440 Europe where that happens the direct trade of batteries between 0:08:26.560 --> 0:08:28.200 China and the US. I think one thing we can't 0:08:28.240 --> 0:08:31.360 forget is that UM okay, so overt of the battery 0:08:31.560 --> 0:08:34.040 supply chain is in China. That is true, right, and 0:08:34.120 --> 0:08:38.040 the battery manufacturing capacity is also over in China, But 0:08:38.880 --> 0:08:42.319 overt of battery demand will also happen in China, and 0:08:42.440 --> 0:08:44.719 so much of the batteries that are being made in 0:08:44.840 --> 0:08:47.640 China are likely to be deployed in and use applications 0:08:47.760 --> 0:08:50.120 in China. I'm not saying that they might not export 0:08:50.160 --> 0:08:52.040 some of it. Some of it might get exported, particularly 0:08:52.080 --> 0:08:55.760 to their Asia partners UM, but they're not necessarily reliant 0:08:55.800 --> 0:08:58.599 on the US to export their batteries. Changing tracks a 0:08:58.679 --> 0:09:01.839 little bit, looking at copper, one of the things you 0:09:01.920 --> 0:09:06.079 note is that recycling copper actually uses eight less energy 0:09:06.280 --> 0:09:10.360 than mining it. Like, what what companies are actually doing this? 0:09:10.520 --> 0:09:13.680 This is the big mining companies that are actually diversifying 0:09:13.840 --> 0:09:16.480 or these complete new players and a potential opportunity for 0:09:16.520 --> 0:09:19.160 a more fragmented market. They're not the big miners actually, 0:09:19.200 --> 0:09:22.559 so the big miners usually UM don't specialize in the 0:09:22.720 --> 0:09:26.839 recycling process. Oftentimes, the companies that are most involved in 0:09:27.000 --> 0:09:30.640 recycling of metals, including copper, but also including many other things. Uh, 0:09:30.720 --> 0:09:34.120 they're usually these specialized hydro metallurgical firms that are actually 0:09:34.160 --> 0:09:37.760 doing the refighting. So again Chinese, Japanese and creating companies 0:09:37.760 --> 0:09:40.319 and then also some companies in Europe are very specialized 0:09:40.360 --> 0:09:42.480 in this in this process and they work more like 0:09:42.640 --> 0:09:45.719 chemicals than they do UM in what we traditionally think 0:09:45.760 --> 0:09:48.520 of as as metals mining UM. And these are the 0:09:48.559 --> 0:09:51.520 companies that have the most opportunity to gain in a 0:09:51.840 --> 0:09:55.800 world where increasingly recycling and scrap becomes a bigger part 0:09:55.960 --> 0:09:59.439 of the overall supply chain. We understand that batteries are 0:09:59.559 --> 0:10:03.640 increased singly relying upon nickel in their composition and decreasing 0:10:03.679 --> 0:10:06.400 the amount of cobalt they're actually using. Is this driven 0:10:06.440 --> 0:10:09.160 by human rights and and wanting to make that pivot 0:10:09.280 --> 0:10:11.800 or is there some other reason that the battery compositions 0:10:11.840 --> 0:10:14.760 are changing so dramatically. It's two different reasons basically, but 0:10:14.760 --> 0:10:18.160 they're interrelated. So UM the desire or move towards higher 0:10:18.200 --> 0:10:21.160 nickel catholic chemistries is mostly UM the need to drive 0:10:21.240 --> 0:10:24.200 higher energy density in the battery packs, and higher nickel 0:10:24.280 --> 0:10:27.920 catholic chemistries generally have been are are moving in that direction. 0:10:28.280 --> 0:10:31.319 But the problem is UM in the traditional designs of 0:10:31.360 --> 0:10:34.520 higher nickel catholic chemistries, you almost always need cobalt as 0:10:34.520 --> 0:10:36.599 a part of that. So, for instance, um Tesla's n 0:10:36.600 --> 0:10:40.240 CIA batteries require cobalt, and many of the battery makers 0:10:40.320 --> 0:10:43.319 and the automakers don't. They're not comfortable with having that 0:10:43.480 --> 0:10:46.280 much exposure to cobalt in their supply chains because cobalt 0:10:46.360 --> 0:10:49.000 is risky, not just from a reputational issue of human rights, 0:10:49.240 --> 0:10:52.480 but also just because UM. The political instability in the 0:10:52.520 --> 0:10:54.600 market that it comes from does mean that there can 0:10:54.640 --> 0:10:57.839 be occasional disruptions to the supply chain question on that. 0:10:57.920 --> 0:11:00.600 I used to be in the industry, my cro industry, 0:11:00.600 --> 0:11:03.640 I don't know what you'd call it, of geothermal, and 0:11:03.840 --> 0:11:05.679 I had a friend in the industry who actually owned 0:11:05.880 --> 0:11:09.280 a cobalt mine or cobalt outfit in Idaho, and it 0:11:09.400 --> 0:11:11.880 was called US Cobalt. Yeah, then it bought out by 0:11:12.080 --> 0:11:14.439 um first cobalt, Now I think have they? I think so, yeah, 0:11:14.480 --> 0:11:16.760 I had a whole like Iron Creek or something it's called. Okay, Well, 0:11:16.840 --> 0:11:19.160 my question on that is, I mean, is DRC the 0:11:19.280 --> 0:11:23.120 only option for cobalt mining or are their domestic you know, 0:11:23.240 --> 0:11:25.679 US supplies or supplies elsewhere that could be. It's a 0:11:25.720 --> 0:11:28.240 really good question actually, so um, like I said our 0:11:28.320 --> 0:11:31.400 earlier seventy of the mind, cobalt is mine in the DRC, right, 0:11:31.440 --> 0:11:33.719 but is mine outside the call the d r C. 0:11:33.840 --> 0:11:37.040 And right now the main sources of it are essentially 0:11:37.160 --> 0:11:41.640 Cuba um Morocco. Yeah, Morocco um so bo Azer is 0:11:41.640 --> 0:11:44.560 one of the oldest operating pure cobalt mines in the world. Um. 0:11:44.640 --> 0:11:47.240 And then cobalt is also produced as a byproduct um 0:11:47.360 --> 0:11:51.200 of nickel um uh production in some places in Southeast 0:11:51.200 --> 0:11:56.240 Asia as well as Russia. So there is on Indonesia, okay, right, 0:11:56.280 --> 0:11:58.839 So there are some cobalt production outside of the d 0:11:59.000 --> 0:12:01.560 r C. And there's a lot of interest amongst junior 0:12:01.640 --> 0:12:05.400 and mid sized miners to explore for pure cobalt plays 0:12:05.559 --> 0:12:07.760 um outside of the DRC, because they believe there might 0:12:07.800 --> 0:12:10.080 be a potential premium in terms of the supply chain, 0:12:10.160 --> 0:12:13.559 supply chain premium value for non DRC cobalt, and we 0:12:13.640 --> 0:12:15.199 see this plane out a little bit right. So you 0:12:15.280 --> 0:12:17.760 have companies like um core UM promising that they're definitely 0:12:17.800 --> 0:12:20.800 gonna have only non DRC cobalt and then therefore buying 0:12:20.840 --> 0:12:24.880 cobalt only from Glencore's production mirror Murine in Australia as 0:12:24.960 --> 0:12:29.000 well as possibly the RMAPU asset in Morocco UM and 0:12:29.080 --> 0:12:31.400 then UM. But the problem is of every single one 0:12:31.559 --> 0:12:35.240 of the major battery manufacturers or automakers like BMW all 0:12:35.360 --> 0:12:37.199 want to buy non DRC cobalt, there's not in a 0:12:37.240 --> 0:12:39.520 cobalt in the world to do that. UM. The problem 0:12:39.720 --> 0:12:42.760 is UM cobalt prices right now are not quite high 0:12:42.880 --> 0:12:47.400 enough to really sustain the independent discovery, exploration and development 0:12:47.480 --> 0:12:49.839 of a standalone cobalt asset. You'd have to have a 0:12:50.000 --> 0:12:52.120 really insanely high concentration to be able to do that. 0:12:52.120 --> 0:12:54.839 In terms of the or grade UM and is that 0:12:54.920 --> 0:12:57.839 what's unique about the cobalt and DRC UM. So the 0:12:57.880 --> 0:13:00.160 couple in DRC is actually produced as a byproduc of 0:13:00.240 --> 0:13:03.280 copper um, and so the DRC actually makes more money 0:13:03.280 --> 0:13:05.439 from copper than it does from cobalt, but cobalt it 0:13:05.559 --> 0:13:08.560 was really hot for a little while because or somewhere 0:13:08.640 --> 0:13:11.840 like that, because the cobalt doesn't occur in high volumes 0:13:11.880 --> 0:13:15.320 the way that in Peru. I actually, for those listening, 0:13:15.320 --> 0:13:17.480 I'm just asking because Prue has a lot of copper. Yes, 0:13:17.600 --> 0:13:19.960 Peru has a lot of copper, but cobalt doesn't always 0:13:20.000 --> 0:13:22.520 just occur with copper. Um and it doesn't always it's 0:13:22.559 --> 0:13:25.400 not so they're not inclusive or like that. It's not 0:13:25.520 --> 0:13:28.439 a requirement to necessarily occur with copper. Sometimes occurs with nickel. 0:13:28.720 --> 0:13:30.319 It's like all rock in the earth. It kind of 0:13:30.400 --> 0:13:33.880 occurs in varying degrees. But um, the DRC does happen 0:13:33.920 --> 0:13:35.760 to be one of the best deposits in the world 0:13:35.840 --> 0:13:38.400 for both copper and cobalt in terms of the quality 0:13:38.440 --> 0:13:40.640 of the intensity of the grade um. Yeah, so it's 0:13:40.640 --> 0:13:43.800 it's very rare to develop a pure standalone cobalt asset. Um. 0:13:44.000 --> 0:13:47.000 Most cobalt assets that are producing now are bioproducts of 0:13:47.040 --> 0:13:49.920 either copper or nickel. Bo as you're in Morocco is 0:13:50.000 --> 0:13:54.560 the own is. The only large scale, commercially producing pure 0:13:54.640 --> 0:13:59.080 cobalt play in the world is it bright blue? It's yeah, cobalt, 0:13:59.600 --> 0:14:01.600 I mean, is the mind bright blue? Oh No, I don't, 0:14:01.640 --> 0:14:03.280 I don't, I don't know, I don't know. I have 0:14:03.320 --> 0:14:05.040 to go back and look at it, look at it physically. 0:14:06.120 --> 0:14:09.800 That given that Lee's lithium ion batteries are being used 0:14:09.920 --> 0:14:14.319 in cars and power storage and then additionally for consumer 0:14:14.320 --> 0:14:17.440 electronics that we all consume, looks like there's a lot 0:14:17.480 --> 0:14:19.760 of stuff that is actually going to rely on these batteries. 0:14:19.880 --> 0:14:23.400 Do you foresee the material prices, the metal prices going 0:14:23.560 --> 0:14:26.240 way up as this demand looks like it just almost 0:14:26.240 --> 0:14:29.080 has a limitless appetite. I think a lot of companies 0:14:29.160 --> 0:14:31.840 that are investing into new assets are betting that the 0:14:31.960 --> 0:14:34.320 prices of these commodities will come back up. We've seen 0:14:34.360 --> 0:14:36.800 short term spikes, right, So, lithium went through a pretty 0:14:36.880 --> 0:14:39.840 high period UM just a year ago. Cobalt also just 0:14:39.960 --> 0:14:41.600 a year ago, it was quite high that came back 0:14:41.640 --> 0:14:45.720 down about really like a ten months ago. UM Nicole 0:14:45.880 --> 0:14:48.000 is experiencing a bit of a search now. Also on 0:14:48.080 --> 0:14:50.840 the EV thesis, we're basically seeing this kind of like 0:14:50.920 --> 0:14:53.800 cascade effect where basically every time somebody who likes EV 0:14:53.920 --> 0:14:56.320 batteries discovers a new metal, they all pour their money 0:14:56.360 --> 0:14:57.920 into it, and then it surges, and then it comes 0:14:57.960 --> 0:15:00.360 back down when they realize once everybody has enough information 0:15:00.360 --> 0:15:03.320 about supply and demand. So um, I feel like in 0:15:03.360 --> 0:15:05.360 the metals industry, and this is the thing that everybody 0:15:05.400 --> 0:15:06.800 sort of talks about. There's no such thing as a 0:15:06.840 --> 0:15:09.560 true shortage. Like we didn't stop using bronze because we 0:15:09.640 --> 0:15:10.920 ran out of bronze, right like, and this is the 0:15:10.920 --> 0:15:12.560 same thing. We didn't stop using oil because you ran 0:15:12.560 --> 0:15:14.560 out of oil. Um. There's no such thing as like 0:15:14.600 --> 0:15:16.520 a true scarcity in the sense that there isn't enough 0:15:16.520 --> 0:15:18.680 of the resource. It's always just about is the price 0:15:18.760 --> 0:15:21.080 high enough to support the development of the next incremental 0:15:21.320 --> 0:15:23.240 um tonnage that needs to come into the market to 0:15:23.280 --> 0:15:26.960 support the future demand um. The market generally has proven 0:15:27.000 --> 0:15:29.480 to be pretty efficient in terms of pricing signals to 0:15:29.760 --> 0:15:33.960 the miners um to sort of to the resource level 0:15:34.080 --> 0:15:36.120 to basically tell everybody you need to bring this much 0:15:36.160 --> 0:15:38.920 more material up to the market to supply future demand. 0:15:39.120 --> 0:15:41.000 In the lithium market. There's some debate about whether or 0:15:41.040 --> 0:15:44.160 not this is actually true, being because a lot of 0:15:44.240 --> 0:15:46.600 producers in the market are saying that the lithium price 0:15:46.680 --> 0:15:48.600 is too low to support a lot of the new 0:15:48.960 --> 0:15:51.280 UM material that needs to come into the market to 0:15:51.320 --> 0:15:56.240 support the future demand UM. And our view is it 0:15:56.320 --> 0:15:58.560 can it can vary like around ten thousand per ton, 0:15:58.600 --> 0:16:01.080 I think is actually still a pretty god support price UM. 0:16:01.320 --> 0:16:03.600 But it does. It does kind of UM raise the 0:16:03.680 --> 0:16:05.560 question of there's a lot of assets that are in 0:16:05.600 --> 0:16:08.359 the supply curve right now who have not finished fundraising 0:16:08.560 --> 0:16:11.800 and UM their total costs when you include both the 0:16:12.040 --> 0:16:15.600 mining as well as the conversion capacity costs could potentially 0:16:15.640 --> 0:16:18.280 be is a little higher than what the current UM 0:16:19.000 --> 0:16:22.160 prices UM, and so there's there's a question of like, well, 0:16:22.320 --> 0:16:23.960 maybe the prices need to come back up in order 0:16:24.000 --> 0:16:26.800 to support it. But regardless, Actually, we have a battery 0:16:26.840 --> 0:16:30.400 metals UM commodity price sensitivity tool that we've built and 0:16:30.680 --> 0:16:32.880 UM uh you know, our users can explore that tool 0:16:32.920 --> 0:16:34.280 to sort of see what the impact would be. But 0:16:34.560 --> 0:16:35.920 we looked at it and it was like, you know, 0:16:36.120 --> 0:16:39.160 prices for lithium cobalt nickel can be pretty much double 0:16:39.400 --> 0:16:41.600 UM and even even in some cases triple and the 0:16:41.760 --> 0:16:44.440 overall impact on the overall cost of the battery pack 0:16:44.520 --> 0:16:46.920 itself is you know, something to like three to five 0:16:46.960 --> 0:16:49.840 percent maybe in terms of the fluctuation. Well, um, so 0:16:50.000 --> 0:16:52.800 the so overall, the battery packs are also becoming more 0:16:52.840 --> 0:16:55.760 efficient about how they use materials. So the energy density 0:16:55.840 --> 0:16:58.000 is improving, but the size of the battery pack is 0:16:58.080 --> 0:17:01.280 not increasing necessarily, So you're you're being able to find 0:17:01.400 --> 0:17:04.359 new chemistries where you're exponentially increasing the energy density and 0:17:04.400 --> 0:17:07.720 performance of the battery not necessarily having to also exponentially 0:17:07.800 --> 0:17:10.080 increase the use of the usage of your battery, So 0:17:10.160 --> 0:17:14.320 you're per per ton of material results of you know, 0:17:14.440 --> 0:17:18.479 battery performance is also improving. Yeah, you're getting more out 0:17:18.520 --> 0:17:20.280 of it. So what you're telling me is that there 0:17:20.480 --> 0:17:23.320 is enough supply to go around, and there's enough of 0:17:23.400 --> 0:17:25.040 this in the earth, but it's an issue of getting 0:17:25.080 --> 0:17:27.840 it out. We've established with the issue of the congo 0:17:28.240 --> 0:17:30.680 that you've got a lot of it in one location 0:17:31.040 --> 0:17:34.040 that can prove to be a problem depending upon who's 0:17:34.040 --> 0:17:36.480 sitting on top of it. Some of the other metals, 0:17:36.840 --> 0:17:40.320 are they in difficult locations? Are some of them under 0:17:40.400 --> 0:17:43.479 rainforests or under major cities and things that are going 0:17:43.520 --> 0:17:45.520 to make it difficult. Potentially, are we going to reach 0:17:45.600 --> 0:17:47.760 a peak metals for some of the metals that go 0:17:47.800 --> 0:17:50.760 into the battery metal space. UM No, I don't think 0:17:50.800 --> 0:17:53.480 so right now. There's there are definitely environmental damages that 0:17:53.560 --> 0:17:55.480 might occur though, so this is actually a huge issue 0:17:55.560 --> 0:17:58.840 for a lithium UM. So Lithium is primarily produced from 0:17:58.840 --> 0:18:01.640 two types of deposits right now. Um either spodymin which 0:18:01.680 --> 0:18:03.280 is hard rock lithium um and a lot of that 0:18:03.400 --> 0:18:05.920 is coming from Australia, or Brian, which is like salt 0:18:06.000 --> 0:18:09.680 water essentially um lithium the brine um is it we 0:18:09.840 --> 0:18:12.560 used to be traditionally the majority of lithium produced UM 0:18:12.560 --> 0:18:15.560 actually now shifting more towards boymin Um. Brian is primarily 0:18:15.640 --> 0:18:19.359 located in the solars of Latin America on like the 0:18:19.440 --> 0:18:22.440 high altitude between It's basically the lithium triangle between Argentina 0:18:22.880 --> 0:18:27.080 Um Bolivia and Chili and UM. Those deserts, those like 0:18:27.200 --> 0:18:31.280 high altitude desserts, have an extreme scarcity of water. Now 0:18:31.600 --> 0:18:36.040 UM solars, these salty brines, these lithium brine deposits. The 0:18:36.160 --> 0:18:39.960 producers they they obtain what they call pumping rights um 0:18:40.040 --> 0:18:43.879 to pump the salt water from this brine deposit um 0:18:44.080 --> 0:18:47.119 into surface level ponds which are then go through various 0:18:47.160 --> 0:18:49.960 levels evaporation or to turn be turned into a high 0:18:50.040 --> 0:18:52.680 enough lithium concentrate can then that can be shipped off 0:18:52.720 --> 0:18:55.280 to their plant to be converted into a lithium chemical 0:18:55.359 --> 0:18:58.080 used for batteries. So that's the process. UM. There's been 0:18:58.080 --> 0:19:00.600 a lot of controversy over how much water being pumped 0:19:00.680 --> 0:19:02.800 from these brines because even though the water in these 0:19:02.800 --> 0:19:05.200 brines are not drinkable, so these are not humans drinking 0:19:05.240 --> 0:19:09.040 water from these things, UM, they do still um have 0:19:09.280 --> 0:19:13.560 potential relationship to the overall water table of the region. Now, 0:19:13.760 --> 0:19:16.000 it's kind of there's a lot of I'm not going 0:19:16.080 --> 0:19:18.400 to say specifically which way we lean. We're actually writing 0:19:18.400 --> 0:19:20.080 an in depth research on this in second half of 0:19:20.119 --> 0:19:22.119 the year to look at how the lithium industry can 0:19:22.160 --> 0:19:26.040 reduce its water usage UM, but UM for for right now, though, 0:19:26.119 --> 0:19:29.800 there's controversy around this issue and UM Basically, although the 0:19:29.920 --> 0:19:32.240 lithium producers in the regions say that they're in compliance 0:19:32.320 --> 0:19:34.080 with the pumping rights that they were granted to them 0:19:34.320 --> 0:19:36.960 by the regulators of the region, activists in the regions 0:19:36.960 --> 0:19:39.480 say that the regulators don't actually understand how this entire 0:19:39.520 --> 0:19:42.679 ecosystem is interconnected, and believe that they have allocated pumping 0:19:42.760 --> 0:19:45.959 rights that are probably too high and will eventually destroy UM, 0:19:46.160 --> 0:19:49.879 these very delicate ecosystems. UM. There's some evidence to prove 0:19:49.960 --> 0:19:52.080 that it may already be the case. Right, So the 0:19:52.440 --> 0:19:56.800 UM salars are natural homes for flamingos and other endangered species, 0:19:56.920 --> 0:20:00.800 and UM the population has diminished and and are suffering. 0:20:01.040 --> 0:20:02.720 But there's debate as to whether or not the reason 0:20:02.840 --> 0:20:06.320 that's causing the factors causing that are because of lithium 0:20:06.359 --> 0:20:09.639 production specifically, or because UM water usage in the region 0:20:09.720 --> 0:20:12.320