Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNAF podcast. Which countries in the world are doing
Speaker 1: the best job of building a secure, reliable and sustainable
Speaker 1: lithium ion battery supply chain. As we know, lithium ion
Speaker 1: batteries are an important part of the energy transition. They
Speaker 1: provide everything from flexibility for wind and solar to the
Speaker 1: batteries that are found in electric vehicles and so much
Speaker 1: more so. Earlier this year, BNAF released the fourth edition
Speaker 1: of our Global Lithium ion Battery Supply Chain Ranking. We
Speaker 1: rank the top thirty countries using forty six metrics across
Speaker 1: five categories, and we take into account things like the
Speaker 1: sourcing of raw materials, battery manufacturing capacity, downstream demand, environmental,
Speaker 1: social and governance factors as well as innovation. So on
Speaker 1: today's show we speak with Eli Gomas Calous and Quisiampofo
Speaker 1: from b and EF's Medals and Mining team, and in
Speaker 1: addition to the ranking, they get into the last year's
Speaker 1: collapse of lithium prices as well as the impact that
Speaker 1: Indonesia has had on the global nickel market. To access
Speaker 1: this latest edition of the Global Lithium Ion Battery Supply
Speaker 1: Chain Ranking. B and EF subscribers can find it on
Speaker 1: b and EF dot com or at BNF on the
Speaker 1: Bloomberg terminal. Subscribe to the show to receive updates for
Speaker 1: future episodes, and consider giving us a review to help
Speaker 1: share us with others. But right now, let's jump into
Speaker 1: our conversation with Ellie and Quasy. Ellie, thank you for
Speaker 1: coming back on the show.
Speaker 2: Thank you for having me again.
Speaker 1: Dana and Cozy, good to have you here again too.
Speaker 3: Thank you for having me again, Dana.
Speaker 1: So we're here today to talk about the Global Lithium
Speaker 1: ion Battery Supply Chain Ranking, our own version of the
Speaker 1: OSCARS for metal. So the name is on the tin
Speaker 1: in that we're talking about the supply chains for all
Speaker 1: of the things that go into batteries with the metals specifically.
Speaker 1: But let's just have a moment for talking about who
Speaker 1: was in the running, who the nominees were for these oscars,
Speaker 1: if you will. How many countries were we reviewing when
Speaker 1: we set out to make this ranking.
Speaker 2: So unlike the Oscars, it wasn't just six, seven or
Speaker 2: eight nominees. Each year, we look at thirty countries and
Speaker 2: judge their potential to form a secure, unreliable and sustainable
Speaker 2: battery supply chain.
Speaker 1: Now, rather than make everybody wait for us to open
Speaker 1: the envelope, let's just get right into who the winner
Speaker 1: was and let me take a guess. Because on this show,
Speaker 1: the last couple of episodes, we've been talking about China
Speaker 1: dominating the electric vehicles market and the solar module market.
Speaker 1: So is it China?
Speaker 2: No? No?
Speaker 1: All right? So who? Yeah? Who came out on top?
Speaker 2: So it's undeniable that China leads the current supply chain.
Speaker 2: But the purpose of the ranking is to try and
Speaker 2: understand and see what countries canform supply chains for the future.
Speaker 2: And with that in mind, Canada actually came out on top.
Speaker 2: So the difference is with the ranking is that we
Speaker 2: don't only look at the but we look at the future.
Speaker 2: So we include two categories ESG Credentials and Industry Innovation
Speaker 2: and Infrastructure, And the inclusion of these help us look
Speaker 2: to the future because supply chains will need to be
Speaker 2: more sustainable as we go towards net zero, and also
Speaker 2: because demand is going to grow very quickly, so do
Speaker 2: these countries have the supporting sectors in place to be
Speaker 2: able to support the growth in supply chains.
Speaker 1: So let's take a moment on ESG, so environmental, social
Speaker 1: and governance factors. What do we mean by that in
Speaker 1: this context because that term gets reapplied to so many things,
Speaker 1: and we Bloomberg try and have quite a strict definition
Speaker 1: what does ESG mean for us in this specific context.
Speaker 2: So in the ranking, we include around ten ESG metrics
Speaker 2: are split between each of the three sub sectors, and
Speaker 2: we look at most of the ESG metrics on the
Speaker 2: country level, so we look at things like carbon pricing,
Speaker 2: environmental health of their ecosystems, as well as looking at
Speaker 2: the control of corruption and government effectiveness within the region.
Speaker 2: So with the rankings, a lot of what we do
Speaker 2: focuses on the country in that sense.
Speaker 3: Then also, I think one thing out our day naristat
Speaker 3: So the methodology overall was developed with the industry. So
Speaker 3: it's essentially what companies are saying in their boardrooms, what
Speaker 3: the supply chain industry is discussing. So when we select
Speaker 3: the criteria, particularly with respect to ESG, it was really
Speaker 3: dozed at the auto companies as well as the mining
Speaker 3: companies and governments are talking about that matters to them.
Speaker 3: In order to dominate the supply chain.
Speaker 1: Yeah, because we did a previous episode where we were
Speaker 1: talking about the use of blockchain and verifying minds and
Speaker 1: some of their social practices. It would kind of go
Speaker 1: into how they treat workers. So there's a wide basket
Speaker 1: of things, but a bit specifically related to metals and mining.
Speaker 1: Here you brought in ten important factors for this industry.
Speaker 1: So going back to the winner of this particular ranking,
Speaker 1: which isn't necessarily where the majority of the refining capacity is,
Speaker 1: but where it comes out on top when we're actually
Speaker 1: considering some of these different things like ESG. What does
Speaker 1: it take to come out on top? So you've gone
Speaker 1: through these various areas that went into the ranking, but
Speaker 1: essentially where does Canada really excel? Are they across the
Speaker 1: board or is there one specific area where really kind
Speaker 1: of set them over the edge.
Speaker 2: So Canada doesn't actually place in first position across any
Speaker 2: of the categories that we judge, but what they do
Speaker 2: do really well is that they have a consistent top
Speaker 2: ten performance across all of the five key categories, and
Speaker 2: ensuring that they can perform to a decent and sodid
Speaker 2: level across various different parts of supply chain has helped
Speaker 2: them get to first place. This is a fourth edition
Speaker 2: of the ranking, and what we've seen over the past
Speaker 2: two is in every single category they've continuously improved. So
Speaker 2: it's a combination of the consistency across the categories, but
Speaker 2: also the continuous improvement that has helped them get to
Speaker 2: where they are today.
Speaker 1: So they're an all rounder. Well, let's talk a little
Speaker 1: bit about the different geographic split then, if we will.
Speaker 1: Among those thirty countries, were they all centered in certain
Speaker 1: parts of the world or is this some really global
Speaker 1: supply chain.
Speaker 3: I think it's very global. One of the key things
Speaker 3: we should highlight is that we picked thirty countries out
Speaker 3: of over one hundred and ninety countries. So if you're
Speaker 3: in this ranking, you're probably already a winner. So I mean,
Speaker 3: going back to your scarce analogy, you've probably have won
Speaker 3: award an award in one of the five categories that
Speaker 3: we mentioned if you're in the top thirty arm In
Speaker 3: terms of the regional split, we wanted it to be
Speaker 3: very global. Obviously, you're going to find that in most
Speaker 3: of pretty much every region around the world. We did
Speaker 3: include some countries, so they are quite a number of
Speaker 3: countries in Europe, and for us, a minimum criteria to
Speaker 3: be part of that top thirty is really to have
Speaker 3: something going on within one of the criteria that we
Speaker 3: selected or that we assessed. So Europe would certainly feature
Speaker 3: quite strongly because they have a lot of battery manufacturing
Speaker 3: going on. We have North America where Canada, America, Mexico
Speaker 3: features quite strongly. You've got South America where Chile also
Speaker 3: features in addition to other countries. Then you go to Asia,
Speaker 3: you've got the Japan, the China, and then in the
Speaker 3: Pacific region in Australia as well. So certainly a global benchmark.
Speaker 3: But then to be included in that top thirty, I
Speaker 3: think the key criteria is that you need to feature
Speaker 3: quite strongly in the five areas that we assess, at
Speaker 3: least one of them.
Speaker 1: And so since this is the Metals in Mining team,
Speaker 1: can we talk about raw materials and really what's going
Speaker 1: on there and where it comes out on top because
Speaker 1: a lot of our conversations do tend to focus on
Speaker 1: Africa's in area that has a lot of raw materials
Speaker 1: that are necessary for the battery supply chain. How is
Speaker 1: that region faired when we come to the raw material
Speaker 1: space specifically, so.
Speaker 2: Actually, in this ranking, Africa is the only region where
Speaker 2: all the countries that we include in the ranking in
Speaker 2: this case it's Morocco, Democratic Republic of the Congo DRC
Speaker 2: and South Africa. Africa's the only region where all these
Speaker 2: countries have improved in the raw materials category. And we're
Speaker 2: seeing that as there's a renewed interest in energy transition
Speaker 2: and metals for the energy transition. Nations in Africa particularly
Speaker 2: are trying to harness the potential of their critical win reserves,
Speaker 2: as we've seen other supply chains try to decouple from
Speaker 2: China there turning to Africa to see if they can
Speaker 2: use some of their critical minerals there as well.
Speaker 1: So while we're on the topic of battery metals, let's
Speaker 1: talk about prices, because that is certainly something our clients
Speaker 1: on the commodity side are watching closely. And there are
Speaker 1: two medals that have had on one side of fluctuation
Speaker 1: on the other side a dip. So let's talk about
Speaker 1: lithium and nickel, and I know we could spend an
Speaker 1: entire show talking about each independently, So maybe let's start
Speaker 1: with lithium. Why the fluctuations and why did the price
Speaker 1: collapse in twenty twenty three, I.
Speaker 3: Think disclaim every morning day. Now, the first thing I
Speaker 3: do is so look at the lithium prices. So certainly
Speaker 3: you've got me on the right sport. And I think
Speaker 3: the key thing to understand is there are two factors
Speaker 3: that drive supply in the market. Okay, Obviously there's a
Speaker 3: supply and the demand. And for every commodity, if you
Speaker 3: have more supply than demand, you obviously get price dipping. Okay.
Speaker 3: And what happened in the lithium market is a few
Speaker 3: years ago, Batri became the biggest consumer of lithium and
Speaker 3: we saw battery demand grow, which essentially led to an
Speaker 3: increased in demand for lithium as well. Supply was very
Speaker 3: late to the game, so you had a lot of
Speaker 3: demand with very little supply, and we saw prices go
Speaker 3: from ten thousand to about eighty thousand in a matter
Speaker 3: of eighteen months, which is very rare in the commodities market.
Speaker 3: Right to go times eighteen such a short period. Now,
Speaker 3: what happened is that once you have a commodity go
Speaker 3: that high level, two things happen. Everybody now becomes a
Speaker 3: lithium minor, even my good old friends in Australia who
Speaker 3: were exploring for gold decided to go for lithium, and
Speaker 3: now that price point as well. The second thing that
Speaker 3: happens is that it becomes very easy to develop new
Speaker 3: technologies to improve assistant processes. So your efficieness has become better,
Speaker 3: your recoveries become better. So no, I'll think about it.
Speaker 3: My good old friends in Australia, all of them exploring
Speaker 3: for gold overnight and technology becoming better to improve recoveries
Speaker 3: meant that supply really increased significantly within a short period.
Speaker 3: Now let's go back to the laws of economics. Remember
Speaker 3: when I said, when there's a lot more demand, we
Speaker 3: few supply, prices go up. When the revers happen, prices
Speaker 3: go down. So that's precisely what happened last year, where
Speaker 3: the technology improvement in China, where there was a certain
Speaker 3: type of lithium deposit called epidolite, historically had not been
Speaker 3: able to be mined, but then with higher prices they
Speaker 3: were able to crack the technology code. And then suddenly
Speaker 3: China becomes a key producer with all those new projects.
Speaker 3: Even my home country Ghana discovered lithium and they are
Speaker 3: on their way to develop it, So that meant that
Speaker 3: prices came down significantly as a result of a lot
Speaker 3: more supply coming in at a time where demand was
Speaker 3: beginning to slow down. That was the story for lithium.
Speaker 1: But then you note that companies that were mining other
Speaker 1: things like gold have actually pivoted their businesses. So is
Speaker 1: this actually had a knock on effect for other commodities
Speaker 1: and driven prices up as companies have actually switched their
Speaker 1: attention as opposed to adding additional capacity.
Speaker 3: I think very minimal in the sense that most of
Speaker 3: these companies that were exploring have not started producing yet, okay,
Speaker 3: so their supply had not actually entered the market for
Speaker 3: it to distort the market if they pivoted away from it.
Speaker 3: So I think the good for gold producers as well
Speaker 3: as other commodity producers is that those were early stage
Speaker 3: exploration projects that's simply pivoted, so their supply never really
Speaker 3: added onto it. But then what happened with other metals,
Speaker 3: Obviously the impact will be different, but at least within
Speaker 3: the context of gold explorers pivoting to lithium, that was
Speaker 3: very minimal effect on gold and other metals.
Speaker 1: So after you checked lithium prices and had your morning coffee.
Speaker 1: Is it on to nickel? And why has nickel been
Speaker 1: from a pricing standpoint a somewhat similar story. So is
Speaker 1: the reason behind it? Is it the same?
Speaker 3: Quite similar? So also you had nickel ten years ago,
Speaker 3: prices went quite high and then technology played a key role.
Speaker 3: So back to what I said earlier, at higher prices,
Speaker 3: new technologists come online. In this case latrites. There are
Speaker 3: two types of nickel depicits. Obviously, you have what we
Speaker 3: call the sulfite, which historically had been the dominance nickel source.
Speaker 3: So you go to countries like Russia, Australia, Canada, you
Speaker 3: find the sulfit. It's high grade quality, all requires less
Speaker 3: energy to process. And then there had been historically low
Speaker 3: grade deposit is that nobody really touched because they were
Speaker 3: quite expensive to mind. Then the Chinese competition Shan discover
Speaker 3: the technology where they could actually convert those lattert or
Speaker 3: into what we call nickel peg ion using steel. So overnight,
Speaker 3: if you look at the last ten years, Indonesia moved
Speaker 3: from being an insignificant producer of nickel to the largest
Speaker 3: within ten years. They're enough for one reason, improvement in
Speaker 3: technology that made their deposit viable and economic. But here's
Speaker 3: what has happened over the last two years. Indonesia kept
Speaker 3: ramping up their production, kept ramping up their supply, and
Speaker 3: once again they coincided with the period where demand is
Speaker 3: slowing down, so prices began to fall. But the good
Speaker 3: news in Indonesia is that they are producing at a
Speaker 3: very competitive cost, so they don't feel the burniar whereas
Speaker 3: everyone else or most companies around the world are beginning
Speaker 3: to feel the impact. Called prices are actually at a
Speaker 3: point where it's lower than the cost of production. So
Speaker 3: we've seen glen Core BHB and other major producers in
Speaker 3: Australia beginning to put their minds into care and maintenance.
Speaker 3: And when we say care and maintenance, we are not
Speaker 3: going to produce anymore, but we're just going to maintain
Speaker 3: those minds. Simply cost prices are lower than your preating costs.
Speaker 3: But that is not happening in Indonesia.
Speaker 1: Is it common for a government to get involved in
Speaker 1: the supply and demand balance to keep prices or to
Speaker 1: attempt to make prices more stable.
Speaker 3: So you can do that in the oil industry through
Speaker 3: a peck in mind. And if you try to influence. Obviously,
Speaker 3: the EU has the anti trust laws, so two companies
Speaker 3: cannot speak to each other. So I've got my colleague here. Early,
Speaker 3: if Ellie was an independent nickel producer and I was
Speaker 3: an indictdent neickero producer, the EU laws andi trust laws,
Speaker 3: which enforces competition among companies, prevents us to try to
Speaker 3: moderate supply in order to influence prices. So the simple
Speaker 3: answer is no. And because governments don't actually produce these metals,
Speaker 3: they also don't have direct control over how companies are
Speaker 3: preid because then it goes against the rules of competition.
Speaker 3: So that's why it's like, all of a sudden you
Speaker 3: see everyone pumpinging supply. That leads us to a cliff
Speaker 3: edge in mining where overnight we wake up and everybody
Speaker 3: asks what happened simply because all of us we're producer
Speaker 3: at the same time.
Speaker 1: Now, as we're talking about these metals, in light of
Speaker 1: the rankings that we did that focus more on sustainability,
Speaker 1: this brings us to one of my favorite terms, so
Speaker 1: hybrid word the green premium together is the greenium. Is
Speaker 1: there a green premium for essentially those countries at the
Speaker 1: top of this ranking, are they selling their products at
Speaker 1: a higher price because the buyers, well not all of them,
Speaker 1: but some are looking more seriously at sustainability metrics.
Speaker 3: It's always a hard one, right. So the mining industry
Speaker 3: is one of the most unique industries in the world. Okay,
Speaker 3: so mining industry has what we call price takus in
Speaker 3: most other industries. So let's take the phone industry. If
Speaker 3: some song or Apple produces a phone today, they actually
Speaker 3: decide how much they want to sell it. If Timcook
Speaker 3: came out with a new iPhone, he decides that I'm
Speaker 3: going to sell this a thousand, three hundred because my
Speaker 3: cost was whatever plus my margin. In mining, mining companies
Speaker 3: won't have that luxury. They take whatever price and market decide,
Speaker 3: so that premium would have to come from the market.
Speaker 3: And now you need to understand how prices are set.
Speaker 3: So most prices it's either through benchmark or through exchanges.
Speaker 3: If you look at the current structure of the exchanges
Speaker 3: where the prices are discovered, there's very little room for
Speaker 3: them to actually have what we call it the word grimium.
Speaker 3: I'm going to seal that by the way there now,
Speaker 3: there's very little room for them to actually put on
Speaker 3: a premium because there's no structure to incentiviize. Prices are
Speaker 3: set at the macro level, not based on company. Now,
Speaker 3: the assumption is that companies can decide to go into
Speaker 3: bilateral agreements. Okay, so myself and Elie can decide that
Speaker 3: you produce the green to kill for me, I would
Speaker 3: pay it at an extra dollar because I want to
Speaker 3: reach my zero target faster than my competitors. But then
Speaker 3: the key thing is that you need to understand where
Speaker 3: the EV industry is. Every EV company is looking at
Speaker 3: improving its margins to break into profitability by reducing its costs.
Speaker 3: So at the moment, premium is not something any EVA
Speaker 3: company is willing to put on its costs given where
Speaker 3: we want to go with evs to increase the adoption,
Speaker 3: so green permium. Two things I want to end with
Speaker 3: on this question is that one, it will be difficult
Speaker 3: in the current structure of the exchanges where prices are
Speaker 3: discovered for there to be a premium in the market.
Speaker 3: But then secondly, what companies or to companies actually be
Speaker 3: willing to pay for green premiums. That will be hard
Speaker 3: because all of them are trying to reduce costs in
Speaker 3: order to improve the margins. Of the electric vehicle production
Speaker 3: to maximize their profit.
Speaker 1: So perhaps as learning rates improve and electric vehicles become
Speaker 1: more price competitive with internal combustion engine vehicles, which we
Speaker 1: are seeing happen, and we do have forecasts that actually
Speaker 1: think about when that's actually going to be, which is
Speaker 1: not too far away, then it becomes maybe potentially a
Speaker 1: bigger factor in the future, and this ranking maybe it'll
Speaker 1: go precisely.
Speaker 3: But then there's actually a plot twist, right. One thing
Speaker 3: I left out is policy. So look at the impact
Speaker 3: of Seabama as an example. So the Seabama I mean
Speaker 3: the carbon boder adjustment mechanism the European Union introduce, And
Speaker 3: what that means is that if you're a seal or
Speaker 3: aluminum important in the EU and you decide to import
Speaker 3: from a country whose emissions standards is not equivalent to
Speaker 3: what you have in the EU, you pay a premium
Speaker 3: on top of that, right or you pay a charge
Speaker 3: based on where the prices. So similarly, the EU is
Speaker 3: trying to introduce the battery passport. So what's going to
Speaker 3: happen is that the EU is hoping to track the
Speaker 3: emissions profile of auto companies in the EU. So if
Speaker 3: you don't want to pay that penalty, which is aligned
Speaker 3: with the carbon price. Then the good thing is that
Speaker 3: you go to the producers that produce the good stuff.
Speaker 3: And because everybody will be going to the producers that
Speaker 3: produce a lower emission nickel, that is where we think
Speaker 3: that obviously there might be a potential premium attach touced
Speaker 3: producers doing it in low emissions profile. So yes, character
Speaker 3: and stick. I think that one's a big stick, particularly
Speaker 3: from the EU is enforced. There's a probability that companies
Speaker 3: would have no option than to offer premiums in order
Speaker 3: to get access to the low emission stuff.
Speaker 1: So now we've entered our let's predict the future part
Speaker 1: of the podcast, which always seems to come at some
Speaker 1: point in the show when it comes to these different
Speaker 1: well nickel and lithium specifically, do we expect twenty twenty
Speaker 1: four to be a more stable year depends.
Speaker 3: On what world leaders have for coughing the more. But
Speaker 3: then what I tend to realize the near term price
Speaker 3: movement is mostly based on geopolitics, which is number one.
Speaker 3: A classic example is Russia is a major producer of nickel,
Speaker 3: so nichol is actually the only metal that has class
Speaker 3: class in the sense that there are two types of nickel,
Speaker 3: the Class one, which is a high priority stuff used
Speaker 3: in battery manufacturing, and then the Class two, which is
Speaker 3: used for seal steel production. So Russia is a key
Speaker 3: produce of Class one, and if America or any other
Speaker 3: country for that matter, decides to impose assanction on Russia's nickel,
Speaker 3: that certainly would move the market and unfortunately not make
Speaker 3: it a stable yet. So I think that's one. But
Speaker 3: then burying all these assumptions and geopolitical impact, we do
Speaker 3: think that we expect recovery in the market because we
Speaker 3: are seeing that companies are increasingly beginning to shut down supply.
Speaker 3: And then, if we go back to the economics one
Speaker 3: O one that I mentioned, when supply finally is lower
Speaker 3: than demand, or let me say, when demand finally exceeds supply,
Speaker 3: what you see is that prices begin to recover. So
Speaker 3: as more companies furlow or put their operations into care men,
Speaker 3: if it tips to skill to the point where supply
Speaker 3: becomes less than demand, we think that prices will recover.
Speaker 3: But overall our view is that that recovery would not
Speaker 3: be significant compared to the drop we saw last year.
Speaker 1: So we've spent a lot of time talking about countries,
Speaker 1: and invariably this is a really important policy discussion. As
Speaker 1: you've pointed out, Quazy, Let's talk a second about the
Speaker 1: companies involved here. What are some of the bigger companies
Speaker 1: and is that actively shifting. Are there new entrants in
Speaker 1: this market or is it really the same companies that
Speaker 1: have always been in the space.
Speaker 2: As Quzy mentioned earlier, we're seeing companies expand into different
Speaker 2: metals and into new portfolios. But in the terms of lithium,
Speaker 2: for example, we've seen that there's top five producers standing
Speaker 2: firm in their position, for example Alba Marley, SQM, gan
Speaker 2: Feng in China. But as people are recognizing the potential
Speaker 2: and opportunity that comes with these energy transition metals, companies
Speaker 2: from sectors aren't necessarily in the metal space are getting involved.
Speaker 2: And a perfect example of that is in the in
Speaker 2: gas space, where we're seeing Exon Mobile planning to produce
Speaker 2: lithium by twenty twenty seven and people probably thinking like
Speaker 2: why is this happening? How does this actually work in practice?
Speaker 2: But interestingly, there's actually a lot of synergy between the
Speaker 2: production of oil from oil fields and the production of
Speaker 2: lithium from Brian, so a lot of the expertise and
Speaker 2: equipment that is already existingly used in oil and gas
Speaker 2: can also transfer over to lithium, which is great as
Speaker 2: we're seeing these companies trying to take advantage of what
Speaker 2: they have already in place.
Speaker 3: Even in the lithium space as well, we've seen battery
Speaker 3: manufacturers actually also go all the way upstream. So c
Speaker 3: ATL has concessions where they're actually mining lithium mum as
Speaker 3: we speak now, they've taken equity in our Congolese coboar
Speaker 3: to mine.
Speaker 1: Given.
Speaker 3: One example that would actually surprise you, danais GM General
Speaker 3: Motor Zeroto Company has actually gone into take equity in
Speaker 3: a mining company. And look, I'm not all but then
Speaker 3: I know that the last time an auto company took
Speaker 3: equity in a mining company was the days of Henry Ford.
Speaker 3: So simple terms, yes, companies that are actually making entrant
Speaker 3: and dominating the supply chain is actually evolving similar to
Speaker 3: what we are seeing in steel, and there a whole
Speaker 3: lot of reasons we can talk about. One other reason
Speaker 3: why we are seeing that shifting companies coming from different
Speaker 3: places into the mining industry is the fact that people
Speaker 3: have realized that there's a probability that there would not
Speaker 3: be enough for all of them. That's one second. People
Speaker 3: have realized that there's a probability that the good stuff
Speaker 3: from a sustainable or ESG perspective might not be enough
Speaker 3: for all of them. So, rather than adopt the historical
Speaker 3: supply chain strategy of just in time, and by just
Speaker 3: in time, auto companies historically don't want to commit to
Speaker 3: more than teddy days or sixty days of inventory is
Speaker 3: we're just going to wait to factor gator and deliver.
Speaker 3: They realize that, look, if we don't go out there
Speaker 3: and help these miners or even become minus like Tesla
Speaker 3: Annow's a few years ago, there might not be enough
Speaker 3: for us. So you're absolutely right. The companies in the
Speaker 3: mix that are dominating the industry are gradually shifting, and
Speaker 3: I'm quite interested in what that list would look like
Speaker 3: by twenty thirty.
Speaker 2: Who knows now, And I was going to say, we've
Speaker 2: seen this early move approach be so successful on a
Speaker 2: country level. That's the reason why China dominates a supply
Speaker 2: chain today. So what these companies are trying to do
Speaker 2: is replicate that on a more granular level. To ensure
Speaker 2: that they can be the leaders in the market that
Speaker 2: they want to be.
Speaker 1: So we've got a diverse set of companies and a
Speaker 1: diverse set of countries in this ranking. How do we
Speaker 1: compare apples to apples, Because this seems like it's a
Speaker 1: pretty diverse set of things that we're going to have
Speaker 1: to look at. I mean, how do you do this
Speaker 1: from a methodology standpoint?
Speaker 3: So i'dan, I don't know if you want us to
Speaker 3: release the BNF secrete sauce of comparing level, but look,
Speaker 3: I think it's that's a hard part of what we
Speaker 3: do with these rankings because obviously you've got other micro
Speaker 3: level of companies. Even within companies, different minds or different
Speaker 3: projects have different metrics, right, So I think it's important
Speaker 3: for us to first of all set that benchmark, so
Speaker 3: we go into details. If you take an example, their missions.
Speaker 3: So fortunately BEINGF has this really good climate scope is
Speaker 3: an example. All Climoscope is one of our big research
Speaker 3: pieces we put out every year where we sort of
Speaker 3: rank countries and the progress they are making in the
Speaker 3: renewable energy space, whether policy or capacity build. So for us,
Speaker 3: these are in house methodologies that we've built that have
Speaker 3: to standardize what countries are doing within the renewable energy space,
Speaker 3: which sort of makes our life easy because we don't
Speaker 3: have to reinvent the wheelders. So that's an example the
Speaker 3: fact that we have in house benchmarks we've developed that
Speaker 3: helps us to compare these countries in other areas as well.
Speaker 3: It's also important that for us having that benchmark that
Speaker 3: all other countries input aligns with.
Speaker 1: Is it a pretty tight race between those thirty countries
Speaker 1: that we were evaluating or is there a big gap
Speaker 1: between Canada and everybody else.
Speaker 2: There's a big gap. And what we've seen as the
Speaker 2: rankings have gone on is countries are starting to form
Speaker 2: into clusters. So we've seen at the top the countries
Speaker 2: that have the clear policy commitments, have the ambitions in place,
Speaker 2: and are actually getting to the implementation stage. We've seen
Speaker 2: at the bottom of the countries such as Bolivia, DRC
Speaker 2: and Argentina that have raw materials to a certain extent,
Speaker 2: but aren't necessarily capitalizing it across the whole supply chain,
Speaker 2: so they're just sitting within their strength and not developing
Speaker 2: as much as they could. And then we have the
Speaker 2: middle round, which involves a lot of the Southeast Asian
Speaker 2: countries actually, such as Indonesia and India, that are trying
Speaker 2: to make the next step to success. So we've seen
Speaker 2: Indonesia build their nickel market, but now it's how can
Speaker 2: they use that nickel market to try and attract manufacturing investment,
Speaker 2: And that's at the stage r at the moment, trying
Speaker 2: to get to the next step in building the supply chain.
Speaker 3: Adding what too Early said, this is a unique ranking
Speaker 3: where it'll only get lonely at the top four one year.
Speaker 3: Because us early mentioned the competition really horisen. Never in
Speaker 3: my wild as imagination when we started as four years
Speaker 3: ago did I think that Canada would become first down
Speaker 3: the line, right, So the competition is quite high. If
Speaker 3: you look at the earlier IT creations of the ARM
Speaker 3: rankings that we did back I remember vividly when we
Speaker 3: did the first one, the difference between China and the
Speaker 3: second country was very significant. And then last year you had,
Speaker 3: for example, the Inflation Redaction Act and you can see
Speaker 3: that instantly it puts America in the game as well.
Speaker 3: And then the EU came with this Green Deal and
Speaker 3: it also helped propel countries like Germany, Okay, and then
Speaker 3: you look at a country like Elie mentioned Indonesia, where
Speaker 3: a few years ago in nickel class one refinery, China
Speaker 3: was number one. This year, according to being a forecast,
Speaker 3: Indonesia is likely to overtake China in the refinery of
Speaker 3: nickel soffet used in batteries. So it's important to realize that.
Speaker 3: I think the key thing is that, yes, you can
Speaker 3: win today, but then it's very very difficult. With the
Speaker 3: pace of growth we've seen in countries like Germany, in
Speaker 3: countries like the United States, and then in countries like Canada,
Speaker 3: it becomes unpredictable who's going to be first in subsequent
Speaker 3: editions of the ranking.
Speaker 1: So, Elie, you'd mentioned those in the middle of the
Speaker 1: ranking are potentially striving to raise higher. Maybe they're not
Speaker 1: looking at this ranking specifically is their aim, but they're
Speaker 1: certainly looking at their sustainability credentials. And what I want
Speaker 1: to know is what's going to take to actually rise
Speaker 1: in that ranking, and which countries are thinking about it
Speaker 1: and how are they going about it or maybe even
Speaker 1: a playbook. I mean, basically, how are countries approaching improving
Speaker 1: in this ranking.
Speaker 2: So what we've seen successful for lots of regions is
Speaker 2: they've capitalized on their strength to help build out other
Speaker 2: parts of the supply chain, and we're seeing that approach
Speaker 2: being used again and again by regions that are striving
Speaker 2: to improve. So if you take Africa, that's a really
Speaker 2: good example because as you mentioned earlier, they're the only
Speaker 2: region that is improved across the raw materials sector, but
Speaker 2: actually in the overall ranking they still sit pretty low.
Speaker 2: And we as BNF had opportunity to visit South Africa
Speaker 2: for the BNF Forum in Cape Town and we had
Speaker 2: a discussion about how we could harness the critical murial's
Speaker 2: potential in Africa to ensure this foundation for growth can
Speaker 2: be made. And what we found is that in Africa,
Speaker 2: for example, they are established in the mining sector. South
Speaker 2: Africa's the top producer of minds manganese DRC takes the
Speaker 2: larger share of the mind's cobalt supply in the world,
Speaker 2: but it stops at mind supply. And what Africa trying
Speaker 2: to do and need to do is actually harness the
Speaker 2: critical minerals potential to be able to move further downstream
Speaker 2: in the raw materials value chain, so actually take part
Speaker 2: in the value adding activity which can bring more development
Speaker 2: and economic benefit to the region so they can build
Speaker 2: further down the supply chain. There are of course challenges
Speaker 2: to that, and what the report hired is that there's
Speaker 2: been progressed, but actually there's a real long way to
Speaker 2: go for Africa still and focusing on specific areas is
Speaker 2: important to ensure that Africa can become a supply chain
Speaker 2: for the future.
Speaker 3: I think Dana can I can talk about some of
Speaker 3: these specific points that we highlighted the and the report
Speaker 3: in how Africa can improve its critical mineral's potential, And
Speaker 3: one was obviously sustainability and as you know, are being
Speaker 3: there for something that is important to us. But it's
Speaker 3: not just we have benf Also the wider industry is
Speaker 3: beginning to look into how can mines be more sustainable though,
Speaker 3: so one way where if you look at South Africa's
Speaker 3: South Africa has one of the highest CEO or two
Speaker 3: emissions on its grid, so that doesn't help really well
Speaker 3: if Africa wants to be the raw material producer of
Speaker 3: the future. Another area is also good governance. So there
Speaker 3: were instances where if you look at the country like
Speaker 3: the Democratic Republic of Congo a few years ago, I'm
Speaker 3: net International that a report and talked about how there
Speaker 3: were incidents of corruption and also human rights abuses in
Speaker 3: the minding value chain, particularly at the atis now illegal
Speaker 3: atismal small skill level. So that's also one thing where
Speaker 3: the reporter highlighted that good governance will certainly go a
Speaker 3: long way into making Africa the important region to produce
Speaker 3: a raw materials we need for the transition. Financing was
Speaker 3: also part of it, right because most companies for most
Speaker 3: countries are not able to transform the amnial resources into
Speaker 3: value art products which would improve the ascores on the
Speaker 3: ranking simply because they are not getting access to financing,
Speaker 3: and we ded touch on the important factors that is
Speaker 3: needed to ensure that these projects get the much needed financing.
Speaker 3: Another important thing is the one thing that most people
Speaker 3: don't know is I started my care We are in
Speaker 3: a university, so skill set mutchs a lot to me.
Speaker 3: And it's important that one of the challenges we put
Speaker 3: to the people around the round table was the fact
Speaker 3: that how many universities are actually offering a cross in
Speaker 3: battery management or battery engineering or call it whatever, right,
Speaker 3: So it's important that countries regions can be passionate about
Speaker 3: the transition, but without preparing the workforce of the future today,
Speaker 3: it becomes practically impossible to play any key role in there,
Speaker 3: and a host of other factors as well. And I
Speaker 3: believe once African countries, particularly in this ranking, are able
Speaker 3: to address these, are pretty sure that the rankings under
Speaker 3: line might look different from what it is today.
Speaker 1: Well, Quezy Ellie, thank you so much for coming on
Speaker 1: the show today, sharing the rankings and just some of
Speaker 1: the really interesting things that are happening in metals and
Speaker 1: mining at the moment.
Speaker 3: Thank you for having us.
Speaker 2: Thanks Daniel.
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