WEBVTT - Rocky Markets Undermine Energy Transition Metal Demand 0:00:00.400 --> 0:00:03.520 This is Dana Perkins and you're listening to Switched on 0:00:03.760 --> 0:00:07.240 the podcast brought to you by BNF. On this podcast, 0:00:07.280 --> 0:00:10.320 we're talking about the energy transition and how our energy, 0:00:10.360 --> 0:00:15.680 transportation and agriculture systems are changing in many respects. Decarbonizing 0:00:15.800 --> 0:00:20.080 means different infrastructure and different equipment, and very often this 0:00:20.239 --> 0:00:24.319 requires a critical ingredient. Lithium ion batteries are used for 0:00:24.440 --> 0:00:29.240 cars and stationary storage, electrolyizers for hydrogen, and transmission lines 0:00:29.240 --> 0:00:32.559 for the grid that connects these newer, cleaner power sources. 0:00:32.840 --> 0:00:35.479 So what do they all have in common? Well, they 0:00:35.479 --> 0:00:39.280 all rely on metals. So today I speak with Quasiampofo, 0:00:39.560 --> 0:00:42.680 who leads b and EF's Metals and Mining team globally, 0:00:42.840 --> 0:00:46.400 and his team member Rosemary Cats. In our conversation, they 0:00:46.479 --> 0:00:49.800 draw from research found in the Transition Metal's Outlook twenty 0:00:49.800 --> 0:00:52.479 twenty four. We get into things like which metals have 0:00:52.560 --> 0:00:55.680 seen the most fluctuation in the past year, how cooling 0:00:55.760 --> 0:00:59.720 electric vehicle demand is impacting some battery metals, and which 0:00:59.760 --> 0:01:03.080 metal they see as the most critical to the energy transition. 0:01:03.520 --> 0:01:06.479 We also highlight the forgotten metal, but I can't tell 0:01:06.520 --> 0:01:08.440 you what it is because I've forgotten it. Of course, 0:01:08.680 --> 0:01:11.759 don't worry. Rose will remember to access b and EF's 0:01:11.800 --> 0:01:14.120 research on metals. Clients will be able to find it 0:01:14.200 --> 0:01:17.600 at BNEF dot com or at BNFO on the Bloomberg terminal. 0:01:17.880 --> 0:01:20.960 So let's jump into the conversation with Quasy and Rose 0:01:21.080 --> 0:01:33.560 on the metals that underpin the energy transition. Rose, thank 0:01:33.600 --> 0:01:34.679 you for joining us today. 0:01:34.959 --> 0:01:35.880 It's lovely to be here. 0:01:35.959 --> 0:01:37.640 Dana and Quazy, welcome back. 0:01:37.720 --> 0:01:39.520 Thank you, Dana. Always good to be buck. 0:01:39.880 --> 0:01:42.480 So we're going to focus on the transition metals outlook, 0:01:42.680 --> 0:01:46.760 and today let's start with just defining their ten main 0:01:46.880 --> 0:01:49.360 transition metals quickly. What are they so? 0:01:49.440 --> 0:01:52.480 Transition metals? Actually, I know the chemist listening to us 0:01:52.480 --> 0:01:56.360 will forgive us because transition metals is actually at classifications 0:01:56.360 --> 0:01:58.920 for metals on the periodic table. But then we at 0:01:58.960 --> 0:02:01.880 BNF we use it and the slightly transitioned way. As 0:02:02.080 --> 0:02:04.000 most of our listeners would probably be aware that the 0:02:04.080 --> 0:02:06.320 energy transition is our bread and butter. And then we 0:02:06.400 --> 0:02:08.840 looked at the energy transition as a whole, and we 0:02:08.880 --> 0:02:12.720 came to the conclusion that every technology that would ensure 0:02:12.800 --> 0:02:15.760 we reach the parent goals would need some raw materials 0:02:15.800 --> 0:02:18.359 in them. So you think about your electrolyzers, you think 0:02:18.360 --> 0:02:22.359 about your winter turbines, you think about your solar pvs, 0:02:22.400 --> 0:02:25.600 you think about your batteries. All these would require some 0:02:25.720 --> 0:02:28.919 amount of metals in them. So we classified all these 0:02:28.960 --> 0:02:32.480 metals as transition metals simply because they would play a 0:02:32.560 --> 0:02:34.000 key role to the energy transition. 0:02:34.280 --> 0:02:36.560 Okay, so apologies to the chemists out there, but thank 0:02:36.639 --> 0:02:41.200 you for bearing with us on these energy transition critical metals. Now, 0:02:41.520 --> 0:02:43.920 this outlook that we do, we do it once a year. 0:02:44.160 --> 0:02:47.840 And what is it that you're hoping to achieve when 0:02:47.880 --> 0:02:50.480 you sit down once a year and look at these 0:02:50.639 --> 0:02:53.960 energy transition critical metals? What's the question you're asking yourself 0:02:53.960 --> 0:02:55.480 headed into it and what are you trying to solve? 0:02:55.720 --> 0:02:58.959 I think the fundamental question is that on the transition 0:02:59.120 --> 0:03:02.160 energy transition side, there's obviously a lot of optimism that 0:03:02.840 --> 0:03:06.320 in different scenarios, in the zero economic transition scenario, but 0:03:06.360 --> 0:03:09.280 then will there be enough raw materials to actually build 0:03:09.320 --> 0:03:11.480 these technologies? And I think is a question we ask 0:03:11.480 --> 0:03:14.400 ourselves every year. And if not, what should policymakers be 0:03:14.440 --> 0:03:17.880 thinking about? What should investors be doing, what should mining 0:03:17.960 --> 0:03:20.880 companies start doing? And more importantly, what should be these 0:03:20.919 --> 0:03:24.200 technology companies start doing if there's not enough, and. 0:03:24.160 --> 0:03:27.880 The price of these metals underpins how the companies are 0:03:27.919 --> 0:03:32.000 actually thinking about them, how much they're producing, exploring. So 0:03:32.200 --> 0:03:36.040 can you talk a little bit about the volatility in 0:03:36.080 --> 0:03:39.160 this space, which metals in particular really have been the 0:03:39.160 --> 0:03:41.640 most volatile, and well, then we'll come to whether or 0:03:41.680 --> 0:03:43.960 not twenty twenty four has been a recovery from what 0:03:44.040 --> 0:03:45.440 was a challenging twenty twenty three. 0:03:45.840 --> 0:03:48.200 Basically, when we talk about the prize of metals, there's 0:03:48.240 --> 0:03:51.800 always a temptation that is just a mining industry's problem. 0:03:51.960 --> 0:03:54.040 But then, Dana, I'm going to give you a formula 0:03:54.120 --> 0:03:57.720 that shows you that if we don't address the prize 0:03:57.720 --> 0:04:00.960 of metals, we could actually delay the energy transition. So 0:04:01.040 --> 0:04:03.800 let's say you are the precedent of a country and 0:04:03.840 --> 0:04:06.320 you set a target that by twenty thirty you expect 0:04:06.360 --> 0:04:09.440 five hundred people to drive electric vehicles. Now, the biggest 0:04:09.440 --> 0:04:12.760 cost component of electric vehicle is the battery. And if 0:04:12.760 --> 0:04:15.200 you slice open a battery, which I hope nobody listening 0:04:15.200 --> 0:04:17.640 to me will do, you will notice that the battery 0:04:17.760 --> 0:04:20.359 is simply made up of metals. So if you have 0:04:20.480 --> 0:04:24.200 metals constituting about seventy percent in some instances of the 0:04:24.200 --> 0:04:27.279 total cost of the battery. If prices of metals go high, 0:04:27.440 --> 0:04:30.120 prices of batteries go high, and if prices of battery 0:04:30.160 --> 0:04:32.799 go high, prices of electric vehicles go high as well. 0:04:32.880 --> 0:04:35.760 So essentially what you have is that five hundred people 0:04:35.960 --> 0:04:38.400 were hoping to buy electric vehicles, but then prices of 0:04:38.440 --> 0:04:41.719 these evs doubled and that five hundred becomes two hundred. 0:04:41.960 --> 0:04:45.800 So it's important that we address the price of commodities 0:04:45.800 --> 0:04:48.920 to ensure that governments are able to meet their target 0:04:49.160 --> 0:04:52.080 for clean energy adoption. If you look at the price 0:04:52.120 --> 0:04:54.760 market today, I think it's actually a very interesting dynamic. 0:04:54.920 --> 0:04:57.680 There are two teams that I do every morning arm Dana. First, 0:04:57.880 --> 0:05:00.880 I have my coffee, preferably a flat and the second 0:05:00.880 --> 0:05:03.240 thing is I check the prices of metals, cobalt and 0:05:03.279 --> 0:05:05.560 lithium being my favorite. Now, if you look at the 0:05:05.600 --> 0:05:08.360 prices of most of these metals, they're actually very low, 0:05:08.560 --> 0:05:11.960 and it comes down to one fundamental fact. Two things 0:05:12.000 --> 0:05:15.120 determine the price of a metal supply demand. If there's 0:05:15.160 --> 0:05:17.960 a lot of the metal in the market and less 0:05:18.000 --> 0:05:21.479 of it in demand, you have a surplus and nobody's buying, 0:05:21.520 --> 0:05:24.120 so prices drop, as we've seen with cobalt and lithium. 0:05:24.240 --> 0:05:26.280 On the flip side, if there is a lot of 0:05:26.279 --> 0:05:29.400 demand but less supply, we see actually the prices of 0:05:29.440 --> 0:05:32.960 these commodities rise, as we've seen recently with copper and aluminum. 0:05:33.120 --> 0:05:35.920 So essentially I think these are the two drivers. Lithium, 0:05:36.000 --> 0:05:39.640 cobalt and nickel. Battery metals in particular have been down 0:05:39.880 --> 0:05:41.960 the last couple of quarts as a result of the 0:05:42.000 --> 0:05:45.000 slowdown in China as we've seen, and then the overcapacity 0:05:45.240 --> 0:05:48.120 arm from around the world. But then for copper and aluminum, 0:05:48.160 --> 0:05:50.840 I think demand is going particularly from the grid, the 0:05:50.960 --> 0:05:52.040 supply is constrained. 0:05:52.240 --> 0:05:54.719 So when we're thinking about the use of transition metals 0:05:54.760 --> 0:05:58.920 in the energy transition, we're thinking about energy storage and 0:05:59.200 --> 0:06:02.440 electric vehicles. Predominantly. The vehicle space has seen a bit 0:06:02.440 --> 0:06:04.480 of a tapering off in terms of demand, and some 0:06:04.520 --> 0:06:07.880 of the forecasts coming from the auto manufacturers themselves is 0:06:07.920 --> 0:06:11.240 showing potentially cooling demand at least in the near term 0:06:11.440 --> 0:06:14.600 for electric vehicles. This of course would then have as 0:06:14.640 --> 0:06:17.279 you so aptly outlined, with supply and demand, this would 0:06:17.320 --> 0:06:19.839 have a lowering of prices for many of these metals. 0:06:19.960 --> 0:06:23.960 Does this then benefit the energy storage space and do 0:06:24.040 --> 0:06:27.240 they essentially scoop up the excess supply and take advantage 0:06:27.240 --> 0:06:29.400 of the lower prices or are we not really seeing 0:06:29.440 --> 0:06:32.480 that interplay between these two sides of the demand part 0:06:32.520 --> 0:06:33.080 of the equation. 0:06:33.480 --> 0:06:36.240 It's always a very interesting balance when you talk about 0:06:36.440 --> 0:06:39.440 that lower prices lead into low cost of battery. And 0:06:39.480 --> 0:06:42.200 I always say this that we as analysts, we focus 0:06:42.240 --> 0:06:44.360 on the excel, but every now and then we look 0:06:44.400 --> 0:06:46.960 around us to see whether the excel aligns with the 0:06:47.080 --> 0:06:49.479 row world scenario. And the example I always give is 0:06:49.520 --> 0:06:52.719 that over the last one year, you've noticed that pretty 0:06:52.800 --> 0:06:57.000 much every major electric vehicle company has reduced the price 0:06:57.040 --> 0:06:57.960 of its evs. 0:06:58.200 --> 0:06:59.960 Has this had a big impact on the price. 0:07:00.640 --> 0:07:04.600 It's about an eighty percent fall since twenty three, where 0:07:04.720 --> 0:07:08.120 lithium prices were at about sixty six and now they're 0:07:08.360 --> 0:07:11.120 sitting at thirteen point eight. So the prices of lithium 0:07:11.120 --> 0:07:13.840 plummeted quite quite a bit between twenty twenty three and 0:07:13.880 --> 0:07:14.600 twenty twenty four. 0:07:14.920 --> 0:07:17.960 And what that meant is that our electric vehicles became cheaper. 0:07:18.120 --> 0:07:20.600 But then here's the catch twenty two, So with lower 0:07:20.640 --> 0:07:24.320 prices of metals and lower prices of ev on what 0:07:24.400 --> 0:07:27.880 you realize is that miners need an incentive price to 0:07:27.880 --> 0:07:30.840 build new mice. Lower prices does not help the mining 0:07:30.960 --> 0:07:34.440 industry because everyone wants to be guaranteed their revenue when 0:07:34.480 --> 0:07:37.240 they are making a decision that would last thirty forty years. 0:07:37.240 --> 0:07:39.360 They're having some minds in Chili that have resisted over 0:07:39.400 --> 0:07:44.119 one hundred years. So people want higher prices to incentivize 0:07:44.160 --> 0:07:47.560 them to make their capital decision. So today the ev 0:07:47.760 --> 0:07:50.720 industry is benefiting from lower prices, but then the mining 0:07:50.840 --> 0:07:53.440 industry is actually complaining because they are not getting the 0:07:53.480 --> 0:07:56.360 incentive price to develop these new mince. And what is 0:07:56.400 --> 0:07:59.240 going to happen is that down the line, in this decade, 0:07:59.360 --> 0:08:02.200 after years of enjoying these low costs, you realize that 0:08:02.200 --> 0:08:04.280 there are no more new minds to me demind and 0:08:04.400 --> 0:08:08.000 we go back to that cycle where deficist prices start 0:08:08.000 --> 0:08:09.800 to go high. And that is why we always say 0:08:09.800 --> 0:08:11.960 that the mining industry is a cyclical industry. 0:08:12.160 --> 0:08:15.240 So within this group of ten metals that you've defined 0:08:15.360 --> 0:08:18.560 that are really critical, which ones are most exposed and 0:08:18.600 --> 0:08:21.480 which ones essentially were the highlight of this report and 0:08:21.600 --> 0:08:23.800 with other people maybe when they were drinking their morning 0:08:23.840 --> 0:08:26.840 coffee were flicking to is a section that was critical 0:08:26.880 --> 0:08:27.200 to read. 0:08:27.360 --> 0:08:29.880 I think, just like a responsible parent, I like to 0:08:29.920 --> 0:08:32.480 say that I love all my children equally, so I 0:08:32.520 --> 0:08:35.199 love all ten metals equally. But then if you look 0:08:35.200 --> 0:08:37.480 at there's actually an interesting metric we looked at in 0:08:37.520 --> 0:08:40.240 the report where we wanted to determine the exposure of 0:08:40.280 --> 0:08:42.560 each of these metals to the energy transition. So we 0:08:42.640 --> 0:08:45.319 looked at the percentage of demand coming from the energy 0:08:45.320 --> 0:08:49.920 transition relative to the percentage of demand coming from other sources. 0:08:49.920 --> 0:08:53.000 And lithium is actually the most exposed. Then you have cobalt, 0:08:53.120 --> 0:08:55.800 So these two are actually the most exposed. So when 0:08:55.800 --> 0:08:58.440 you talk about exposure, it goes both ways. Right, If 0:08:58.480 --> 0:09:02.080 the energy transition is growing, that ultimately also impacts our growth. 0:09:02.120 --> 0:09:03.920 But then if there is a decline in the growth 0:09:03.960 --> 0:09:06.600 of the energy transition, that also affect them negatively. So 0:09:06.600 --> 0:09:08.440 I think those are the only two in terms of 0:09:08.480 --> 0:09:11.560 which one was very interesting to me. Platinum was quite 0:09:11.600 --> 0:09:14.320 interesting because it's a metal that we have not looked 0:09:14.320 --> 0:09:16.040 at at B and EF in a very long time. 0:09:16.120 --> 0:09:20.120 We've done ad hoc studies and very few people would 0:09:20.200 --> 0:09:23.880 actually consider this metal or this group of metals has 0:09:23.920 --> 0:09:27.240 been related to the energy transition. So platinum metals, mostly 0:09:27.240 --> 0:09:30.920 found in South Africa are very interesting. So historically the 0:09:31.000 --> 0:09:34.520 are used has been in catalytic converters, and catalytic converters 0:09:34.600 --> 0:09:38.160 essentially is in every car that goes around. What it 0:09:38.200 --> 0:09:42.240 does is you have combustion between fuel and oxygen propelling 0:09:42.320 --> 0:09:45.280 cars and there is always a waste product that comes out. 0:09:45.320 --> 0:09:48.560 So these converts enshure that the toxic air or the 0:09:48.600 --> 0:09:52.040 toxic gases that are produced don't get emitted, and PGMs 0:09:52.080 --> 0:09:54.800 make these happen. Then we are saying that lectric vehicles 0:09:54.840 --> 0:09:58.000 we replace internal combusting egines, so that means that PGMs 0:09:58.040 --> 0:10:01.400 will see a significant decline river What we came to 0:10:01.480 --> 0:10:04.440 realize is that to be able to build electoralizers you 0:10:04.480 --> 0:10:08.680 need PGM. So we actually tried to estimate what would 0:10:08.720 --> 0:10:11.280 be this new demand or PGM that will come from 0:10:11.320 --> 0:10:13.440 the energy transition, and I bet you the results were 0:10:13.520 --> 0:10:16.960 quite interesting. I'll courage everyone reading to get a copy 0:10:17.000 --> 0:10:19.360 of it. Go straight to that page and you would 0:10:19.400 --> 0:10:21.880 identify some interesting things and you would understand why I 0:10:21.920 --> 0:10:23.760 think that was my favorite metal in this report. 0:10:23.960 --> 0:10:25.680 So We've done a show in the past on lithium, 0:10:25.720 --> 0:10:27.640 We've done a show in the past on coalbalt and 0:10:27.679 --> 0:10:31.520 the swapping potentially of aluminum as the prices go high. 0:10:31.559 --> 0:10:33.800 But within platinum group metals, which I don't think we 0:10:33.880 --> 0:10:37.440 have actually talked about on this show, are they countercyclical 0:10:37.600 --> 0:10:40.520 to the other metals and are there reasons why this 0:10:40.600 --> 0:10:43.360 behaves differently than the other cluster of those. 0:10:43.160 --> 0:10:48.160 Ten Yeah, Mahamasa Michaeligu Grousia from South Africa, which happens 0:10:48.200 --> 0:10:50.400 to be I think the largest produce. I don't know 0:10:50.400 --> 0:10:52.439 if you've been to any of these platinum one. 0:10:52.480 --> 0:10:55.280 I've been to a platinum and believe me, it's hot. 0:10:55.800 --> 0:10:58.840 It's dangerous to be down there. You see people mining 0:10:58.960 --> 0:11:01.320 without this shows on because it's so hot, and having 0:11:01.360 --> 0:11:03.599 ice packs in their boots. And you see from a 0:11:03.640 --> 0:11:07.600 structural geology side, just one th one meter scene for 0:11:07.640 --> 0:11:10.280 the value that it has in the market itself, so 0:11:10.440 --> 0:11:12.960 you sometimes ask yourself is it worth it? But from 0:11:12.960 --> 0:11:15.760 an energy transition point of view, right now we're finding 0:11:15.800 --> 0:11:19.120 the value in it since people want to move to 0:11:19.200 --> 0:11:23.120 electric vehicles, so we definitely are seeing the value of 0:11:23.160 --> 0:11:26.719 it within the electoralizer space, as Pasi alluded to. 0:11:26.840 --> 0:11:29.920 And also in terms of it being quite countercately called 0:11:30.040 --> 0:11:32.840 the fact that arms not many people realize that it's 0:11:32.880 --> 0:11:35.960 actually the only pressures metal, to the best of my knowledge, 0:11:36.000 --> 0:11:39.080 that also has a very significant industrial use. So they now, 0:11:39.080 --> 0:11:40.520 I don't know if you've ever been to a Tiffany. 0:11:41.120 --> 0:11:43.480 I have not been to a Tiffany. I've seen a Tiffany. 0:11:43.480 --> 0:11:46.000 I've worked pastor Tiffany, and I've seen breakfast at Tiffany. 0:11:46.520 --> 0:11:50.400 Okay, let me give you a task next time you 0:11:50.480 --> 0:11:52.840 actually you see a Tiffany, walk in there and take 0:11:52.840 --> 0:11:54.560 a look at some of the platinum you already have. 0:11:54.800 --> 0:11:57.560 So it's actually a pressures metal that happens to have 0:11:57.640 --> 0:12:00.800 industrial use. And you know that the horses that police 0:12:00.800 --> 0:12:03.440 cut are very different industrial use of your See you 0:12:03.480 --> 0:12:06.679 look at Macro grow China, Europe. Then for Juary, I mean, 0:12:06.720 --> 0:12:08.600 I don't know what the key drivers are and I 0:12:08.600 --> 0:12:11.120 would not even attempt to. And now it's actually got 0:12:11.120 --> 0:12:14.199 a TED dimension to it, which is the energy transition demand. 0:12:14.240 --> 0:12:17.600 So it's actually the fully metal in my estimation that 0:12:17.679 --> 0:12:21.120 actually has a very broad induced application, and that's what 0:12:21.200 --> 0:12:23.559 makes it quite unique and to a largest and counter 0:12:23.640 --> 0:12:26.280 cyclical to the other metals that we traditionally focus on. 0:12:26.600 --> 0:12:29.880 Well, let's talk a little bit about the environmental and 0:12:30.040 --> 0:12:32.760 also human element of this, and one of the things 0:12:32.840 --> 0:12:35.240 we've discussed in the past actually quasy is that you know, 0:12:35.320 --> 0:12:38.320 you've actually been to cobalt mines and seeing how there's 0:12:38.320 --> 0:12:42.440 been a verification process on mining operations using drones, and 0:12:42.480 --> 0:12:45.960 how blockchain has become a really important way and verifying 0:12:46.040 --> 0:12:48.960 that certain metals are actually coming from the minds that 0:12:48.960 --> 0:12:51.840 they're purporting that they are from. With platinum group metals, 0:12:52.040 --> 0:12:53.959 you know, what are some of the ways to actually 0:12:54.080 --> 0:12:56.599 ensure that those who are interested in well the e 0:12:56.840 --> 0:13:00.320 of ESG and the environmental aspect, but also interested in 0:13:00.640 --> 0:13:03.440 the impact on the individuals who are actually doing the 0:13:03.480 --> 0:13:06.880 mining and then environment in the broadest sense, given that 0:13:07.120 --> 0:13:11.560 mining operations are not in and of themselves unharmful. 0:13:11.360 --> 0:13:14.160 Coming from I guess the platinum group metals point of 0:13:14.240 --> 0:13:17.200 view being from South Africa where the largest reserves are found. 0:13:17.320 --> 0:13:19.559 Speaking about the social aspect of it, A couple of 0:13:19.640 --> 0:13:22.560 years ago, one of the biggest mining disasters happened in 0:13:22.600 --> 0:13:25.959 South Africa called Maricana, where a lot of families lost 0:13:26.040 --> 0:13:28.560 a lot of their family members, and the way that 0:13:28.720 --> 0:13:31.640 was handled was a little bit contentious, But I think 0:13:31.679 --> 0:13:34.439 the biggest lesson we took out of there is to 0:13:34.679 --> 0:13:37.280 break down how to better take care of our people 0:13:37.320 --> 0:13:40.480 within these tough environments within that they work, and how 0:13:40.520 --> 0:13:43.720 to ensure, you know, the longevity in terms of having 0:13:43.800 --> 0:13:46.440 work long term. But from an environmental point of view, 0:13:46.480 --> 0:13:49.319 I think the biggest thing that we've seen within that 0:13:49.400 --> 0:13:53.000 sector is a lack of land reclamation. So a lot 0:13:53.080 --> 0:13:56.720 of abandoned sites have been left after these mines have 0:13:56.840 --> 0:13:59.839 depleted their reserves and resources, and I think it's very 0:14:00.040 --> 0:14:03.640 humbent upon the Anglos of this world to focus on 0:14:03.840 --> 0:14:06.400 if there is a depletion of a resource, to actively 0:14:06.440 --> 0:14:10.240 be planning reclaiming that land or repurposing it into something 0:14:10.400 --> 0:14:13.840 that the society at large that are within these communities 0:14:13.960 --> 0:14:16.200 can still continue finding value in. 0:14:16.600 --> 0:14:20.320 So, when we're talking about the ecosystem surrounding an actual 0:14:20.360 --> 0:14:23.320 mining project, are we seeing signs that mining companies are 0:14:23.360 --> 0:14:25.920 taking this part of the project, the very tail end 0:14:25.960 --> 0:14:28.960 of the project, and are they taking it seriously and 0:14:29.040 --> 0:14:29.920 are things improving? 0:14:30.200 --> 0:14:33.040 So definitely, yes, they are taking it seriously. As a 0:14:33.080 --> 0:14:35.800 government requirement to get your license to mine, you need 0:14:35.840 --> 0:14:40.200 an environmental impact assessment that basically outlines what you're going 0:14:40.280 --> 0:14:42.560 to do with the land after you're done mining the 0:14:42.640 --> 0:14:45.600 metal from it. And we do see some really great cases, 0:14:45.720 --> 0:14:47.920 and we see some terrible cases. But I'd like to 0:14:47.960 --> 0:14:51.040 just highlight in areas like Groute Island South thirty two 0:14:51.120 --> 0:14:54.640 where they've actually reclaimed as they've mined because it is 0:14:54.680 --> 0:14:57.880 indigenous land, so as an agreement with the indigenous people, 0:14:58.120 --> 0:15:00.520 as you mine one quarry, you actually we have to 0:15:00.800 --> 0:15:03.680 reclaim the land, reforest the land as you go by. 0:15:03.800 --> 0:15:07.520 But we have also seen instances in Indonesia which we 0:15:07.680 --> 0:15:11.480 cover in some of our biodiversity work here at benif 0:15:11.560 --> 0:15:15.800 retailings that actually from the mining of nickel have contaminated 0:15:15.920 --> 0:15:20.240 water sources within the region. So there's definitely room for improvement, 0:15:20.360 --> 0:15:23.320 much more improvement, and that's why you see frameworks like 0:15:23.360 --> 0:15:26.760 the Global Biodiversity Framework coming in place to make sure 0:15:26.880 --> 0:15:29.960 that countries from a government level and a company level 0:15:30.000 --> 0:15:34.160 start focusing on the impact on biodiversity as we mine 0:15:34.200 --> 0:15:35.920 these energy transition minerals. 0:15:36.040 --> 0:15:38.680 So it's fair to say that companies are increasingly starting 0:15:38.680 --> 0:15:42.920 to think about the energy transition and decarbonization with biodiversity 0:15:42.960 --> 0:15:45.800 in mind, and both of those are being taken into consideration. 0:15:46.160 --> 0:15:47.960 Yes, yes, I would say so. 0:15:47.960 --> 0:15:50.800 So you brought up Indonesia and you specifically referenced also 0:15:50.880 --> 0:15:54.320 the platinum group metals in South Africa. What are the 0:15:54.360 --> 0:15:57.960 countries to watch? What are the main centers of mining 0:15:58.200 --> 0:16:01.480 that really are highlighted among this group of ten. 0:16:02.000 --> 0:16:05.280 Historically there has been focused if we talked about the 0:16:05.320 --> 0:16:07.800 countries to watch, the focus has actually been on the 0:16:07.800 --> 0:16:10.840 countries that produce these But then what the energy transition 0:16:10.960 --> 0:16:13.400 is actually teaching us is that a lot of people 0:16:13.720 --> 0:16:16.600 care beyond where these pits are located. And I think 0:16:16.880 --> 0:16:19.080 a few weeks ago we were the Climate Week in 0:16:19.120 --> 0:16:21.920 New York and myself in you and then it would 0:16:21.920 --> 0:16:24.880 amaze you the number of sessions that were held in 0:16:24.920 --> 0:16:27.520 New York on mining and there are no minds in 0:16:27.600 --> 0:16:30.480 New York. So I think countries to watch. The United States, 0:16:30.560 --> 0:16:34.240 they've implemented the Inflation Reduction Act, which essentially helps the 0:16:34.360 --> 0:16:36.840 US to meet some of his demand from raw materials. 0:16:37.320 --> 0:16:40.160 We have the Bloomberg events held during Climate Week as 0:16:40.200 --> 0:16:43.960 well on renewable energy, tripling renewable energy. I think, for me, 0:16:44.080 --> 0:16:46.800 one of the highlight was the President of the EU 0:16:47.040 --> 0:16:49.320 given her speech and at the tail entry talks about 0:16:49.360 --> 0:16:53.080 critical raw materials, So obviously EU is origin to be 0:16:53.160 --> 0:16:55.280 on the watch list as well. And then you've got 0:16:55.280 --> 0:16:57.880 the countries that actually produce these. We've already talked about 0:16:57.880 --> 0:17:00.960 South Africa, We've talked about Indonesia. We can also talk 0:17:00.960 --> 0:17:03.680 about Zimbabwe, we can talk about Chile, we can talk 0:17:03.680 --> 0:17:06.280 about Argentina, we can talk about of course Canada, who 0:17:06.280 --> 0:17:09.160 wouldn't and then the list goes on and on and on. 0:17:09.200 --> 0:17:11.720 But then essentially I think the key thing to highlights 0:17:11.720 --> 0:17:13.840 with this question is that it's no more just the 0:17:13.920 --> 0:17:17.560 producers that care about these the consumers also equally care 0:17:17.640 --> 0:17:19.520 and for us are being f and in the report 0:17:19.640 --> 0:17:21.119 we tried to actually highlight. 0:17:21.680 --> 0:17:25.000 So you've already established that there's not enough supply of 0:17:25.160 --> 0:17:27.520 some of these metals. Are there any countries that are 0:17:27.560 --> 0:17:30.920 essentially keeping it all to themselves and recognize the really 0:17:30.960 --> 0:17:32.280 high value in hagging it. 0:17:32.520 --> 0:17:32.720 Yeah. 0:17:32.720 --> 0:17:35.399 Thing, It's actually actually a very interesting conversation, Dana, that 0:17:35.440 --> 0:17:38.000 came up last week at Climate Week. So the Atlantic 0:17:38.080 --> 0:17:42.680 Council actually launched the public reports on Indonesia and how 0:17:42.800 --> 0:17:45.320 they managed to sort of I would say, put in 0:17:45.440 --> 0:17:48.520 place policies that restricted the export of nickel a few 0:17:48.600 --> 0:17:51.320 years back, and ultimately what happened is that that ended 0:17:51.400 --> 0:17:55.199 up making Indonesia the largest producer. And whether in that 0:17:55.359 --> 0:17:59.120 report whether that could be a template countries in Africa 0:17:59.240 --> 0:18:02.760 could actually in order to dominate the industry, and I think, 0:18:03.240 --> 0:18:05.600 just like everything else, it always depends. There are a 0:18:05.600 --> 0:18:09.280 lot of factors that come into play. Because internally, obviously 0:18:09.359 --> 0:18:12.359 that policy of banning raw materials, I think in the 0:18:12.440 --> 0:18:15.560 long term, if every country restrict the expert of these 0:18:15.640 --> 0:18:18.480 raw materials, that does not help the energy transition, right, 0:18:18.560 --> 0:18:22.120 So it's important to highlight that governments need to balance 0:18:22.240 --> 0:18:25.800 their local target with a long term ambition of reaching 0:18:25.840 --> 0:18:28.760 the zero and free flow of these raw materials would 0:18:28.760 --> 0:18:31.520 actually help make the world better. The second thing is 0:18:31.560 --> 0:18:34.880 also about how do you then incentiviize local economy because 0:18:34.920 --> 0:18:37.879 for most of these countries, the energy transition is not 0:18:37.960 --> 0:18:41.119 just a transition, is also an opportunity to industrialize. And 0:18:41.200 --> 0:18:44.080 what we saw in Indonesia is that raw materials can 0:18:44.280 --> 0:18:48.359 actually become a catalyst for industrialization with the right policies. 0:18:48.480 --> 0:18:52.119 So the policy in Indonesia's case was the fact they 0:18:52.240 --> 0:18:54.960 restricting export of these metals, which work for nickel for 0:18:55.000 --> 0:18:57.479 a host of reasons, the same policy did not actually 0:18:57.480 --> 0:19:00.560 work for copper. So it's not always universal that restricting 0:19:00.640 --> 0:19:04.240 export and consuming it locally always works. But what I 0:19:04.359 --> 0:19:07.280 think in March is for other economies looking to replicate 0:19:07.280 --> 0:19:10.080 the Indonesia model, is that it's always important to have 0:19:10.280 --> 0:19:13.359 good business friendly policies as well. It's good to have 0:19:13.440 --> 0:19:16.000 infrastructure because in the end, if you look at the 0:19:16.000 --> 0:19:19.080 Indonesian story again, a lot of investment went into producing 0:19:19.080 --> 0:19:22.600 these industrial packs, railways, power that actually help. It is 0:19:22.680 --> 0:19:26.720 good to really have that certainty of capital being deployed 0:19:26.760 --> 0:19:29.399 and recovered in the country because imagine going into a 0:19:29.440 --> 0:19:32.400 country where you put in place a planned two years 0:19:32.480 --> 0:19:35.600 later government changes policy that you can do XYZ, and 0:19:35.640 --> 0:19:38.439 I think that limits investments. So I think overall, I 0:19:38.440 --> 0:19:40.800 would just end by saying that other countries looking to 0:19:40.880 --> 0:19:44.399 replicate this model one should balance their local economy needs 0:19:44.400 --> 0:19:47.280 with a long term energy transition needs. Two, it's important 0:19:47.320 --> 0:19:50.480 to have the right business friendly policies. Three, it's also 0:19:50.560 --> 0:19:54.240 important to have infrastructure in place. And then finally they 0:19:54.280 --> 0:19:57.720 assurance that once company invests in the country they would 0:19:57.760 --> 0:20:00.879 be able to recover their capital and turns on it. 0:20:01.119 --> 0:20:03.520 So you brought up New York Climate Week, and actually 0:20:03.600 --> 0:20:08.040 the next place where policy makers, specifically the United Nations 0:20:08.119 --> 0:20:12.480 come together to discuss decarbonization is at COP twenty nine, 0:20:12.560 --> 0:20:14.280 and one of the things they've brought up is that 0:20:14.600 --> 0:20:16.800 it's more than likely we're going to be talking a 0:20:16.840 --> 0:20:21.680 lot about energy storage and a increase potentially sixfold increase 0:20:21.760 --> 0:20:24.199