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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.

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Speaker 3: I'm Jill Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, are we calling it a nuclear revival yet?

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Speaker 1: No?

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Speaker 2: I mean for real, like, is that a thing?

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Speaker 3: You know, what's going to happen? As soon as you

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Speaker 3: start calling it that, it's gonna like peter out, Ugh, fizzle.

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Speaker 2: Don't say that. Don't say that. Some people would say,

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Speaker 2: we saw the recent three Mile Island news, We've seen

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Speaker 2: some other things of that nature. Some people would say that,

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Speaker 2: at least in the US, there's something of a nuclear

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Speaker 2: revival going on.

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Speaker 3: Yes, you know what I find kind of funny is

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Speaker 3: if you look at one of the price impacts of

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Speaker 3: a nuclear revival, it's uranium. Yeah, but uranium started to

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Speaker 3: go up, I think right after the pandemic, and now

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Speaker 3: it's come down a little bit from its heights, its

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Speaker 3: recent heights. So it's kind of funny, like it's sort

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Speaker 3: of acting like a meme stalk.

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Speaker 2: Yeah, there's literally what I was saying. I was gonna

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Speaker 2: say that for a certain portion of the public, uranium

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Speaker 2: is like bitcoin. There's certain assets out there that have

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Speaker 2: these sort of cult like things where it's not just

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Speaker 2: that people are bullish, but they think that like in

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Speaker 2: the future, if they're smart and savvy enough to get

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Speaker 2: in now, they're going to make this huge fortune. And

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Speaker 2: I would put Crypto in there, and I would put

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Speaker 2: the people who play those like stub Equity of Fanny

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Speaker 2: and Freddy in that category. And then there's like the

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Speaker 2: uranium cult on social media, who thinks like, we're gonna

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Speaker 2: buy uranium and one day everyone will wake up and

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Speaker 2: realize that nuclear is the future of energy, that all

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Speaker 2: electricity will be powered by nuclear, and those of us

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Speaker 2: who are smart to get into uranium now will be

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Speaker 2: the new inheritors.

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Speaker 4: Of the Earth.

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Speaker 2: You know.

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Speaker 3: The funniest thing I saw when this became a thing

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Speaker 3: back in twenty twenty one. So there's a uranium market subreddit,

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Speaker 3: of course there is, yeah, And someone posted on there

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Speaker 3: that they're a broker for physical uranium. So if you're

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Speaker 3: interested in buying physical uranium, you can buy it in

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Speaker 3: like one hundred thousand pound increments. So I don't even

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Speaker 3: know like who the target is for this, Who is

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Speaker 3: the retail trader that is buying one hundred thousand pounds

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Speaker 3: of uranium and presumably storing it somewhere.

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Speaker 2: One day that person will have the mandate of heaven.

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Speaker 2: But the question is when will that be. Even if

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Speaker 2: there is a nuclear revival, even if all across the

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Speaker 2: rich world they like nuclear is the way to go,

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Speaker 2: what does that actually mean for the price of uranium.

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Speaker 2: I'm not really clear.

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Speaker 3: Yeah, me neither.

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Speaker 2: Well, I'm really excited to say because we do have

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Speaker 2: the perfect guest. We're going to be speaking to someone

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Speaker 2: who knows everything about every commodity in the world, as

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Speaker 2: far as I could tell, at least related to energy

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Speaker 2: commodities and maybe metal commodities. Two, he's someone on the

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Speaker 2: cell side, you know, Tracy, there are a few people

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Speaker 2: on the cell side, not many. Many people on the

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Speaker 2: cell side are worth reading. There are some people who's writing.

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Speaker 2: I consider it to be a crime that they're locked

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Speaker 2: up within cell side, because it's so good and so

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Speaker 2: interesting that it just shouldn't be the type of thing

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Speaker 2: that traders click on for five seconds. And we're going

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Speaker 2: to be speaking to one of them.

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Speaker 3: Yes, actually, this analyst. I think their research does get

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Speaker 3: published in a book. Oh yeah, every once in a while.

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Speaker 3: I have some of those some old ones and they

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Speaker 3: stand the test of time, which is something that you

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Speaker 3: can't say for all cell side research.

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Speaker 2: No, you absolutely can't. So we are going to be

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Speaker 2: speaking with the one and only Bob Brackett, literally the

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Speaker 2: perfect guest. I've had him on the podcast before. He

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Speaker 2: is the head of America's energy transition at Bernstein Research.

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Speaker 2: But what's your deal, Because, like I.

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Speaker 3: Said, you do a deal.

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Speaker 2: You know, like when I read your report on uranium,

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Speaker 2: you're going into the science of how it's mine. You're

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Speaker 2: going into the science. You have a copy and paste

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Speaker 2: of Einstein's letter to wrotell talk about how this uranium

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Speaker 2: thing could be big for bombs and electricity and so forth.

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Speaker 2: They don't really look like typical analyst reports.

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Speaker 4: Yeah, so I think the challenges I'm a geologist living

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Speaker 4: in Manhattan. There You've got a handful of jobs, and

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Speaker 4: I think I've had two of the best. I was

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Speaker 4: working with HAS Corporation for many years. I've been at

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Speaker 4: Bernstein now more than a dozen and so the answer is,

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Speaker 4: my whole lens of this planet is a cyclical commodity investor.

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Speaker 4: And how do I think about cycles? And it's always

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Speaker 4: depletion based, So anything that depletes naturally, other people run

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Speaker 4: away from I tend to run towards, and uranium is

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Speaker 4: right in that wheelhouse.

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Speaker 3: Okay, I have a really basic question what is uranium?

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Speaker 3: And also what is enriched uranium? Because when I hear that,

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Speaker 3: I always think are we adding B vitamins to it

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Speaker 3: or something? And then also what is yellow cake? And

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Speaker 3: why does it look so delicious?

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Speaker 4: Well, we'll start with yellow cake because that's where we

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Speaker 4: start geologically. And the funny thing about uranium as a

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Speaker 4: mind commodity is most it is drilled for, and most

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Speaker 4: of it looks more like an oil and gas operation.

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Speaker 4: So the majority of uranium yellow cake U three eight

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Speaker 4: comes out of the ground through insituo leaching. Drill a well,

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Speaker 4: pump fluids down to a sandstone reservoir, and pump up

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Speaker 4: and treat the yellow cake. So yellow cake is U

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Speaker 4: three eight. It's a uranium oxide. It looks nice and yellow.

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Speaker 4: It is not terribly dangerous because it is mostly a

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Speaker 4: very stable form of uranium. So uranium has isotopes if

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Speaker 4: we go back and remember our nuclear chemistry, and so

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Speaker 4: most of yellow cake is U two thirty eight. I

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Speaker 4: send that to an enrichment facility I spin it up,

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Speaker 4: I get rid of the oxygen and replace it with

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Speaker 4: fluorine for chemical reasons, and then enrich it to power

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Speaker 4: plant grade, and then I can keep enriching it to

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Speaker 4: weapons grade. But hopefully we don't go that far.

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Speaker 2: Hopefully the person buying one hundred thousand pounds on Reddit

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Speaker 2: isn't doing it. Earlier, you know, you mentioned depletion is

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Speaker 2: being this core lens for which you maybe view the

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Speaker 2: entire world. And I remember the one time we talked

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Speaker 2: to you before was very eye opening conversation because I

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Speaker 2: think the thing I took away from it is and

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Speaker 2: I think the way we from it disruption does not

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Speaker 2: exist within commodities the same way we think of in

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Speaker 2: tech and commodities. Almost they basically never disappear and they

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Speaker 2: never go absolute. Maybe with the exception of whale blubber,

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Speaker 2: which I don't think we use for lighting anymore, But

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Speaker 2: by and large, this seems to be like a core

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Speaker 2: gious of yours. I remember you wrote a great thing

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Speaker 2: on the coexistence of I think it was synthetic rubber

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Speaker 2: and regular rubber, but this idea like they just stay,

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Speaker 2: They'll be with us here forever.

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Speaker 4: Yeah, we were using whale based lubricants in the space age.

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Speaker 2: There you go, we stopped.

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Speaker 4: Okay, yes, but yeah, So the answer is if you're

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Speaker 4: in the depletions based business, imagine COVID, where everybody on

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Speaker 4: the planet started hoarding things because they worried that it

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Speaker 4: was going away and it couldn't be replenished, and we

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Speaker 4: did it again with the most recent couple hurricanes. If

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Speaker 4: you're in the natural resource business, you wake up every

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Speaker 4: day knowing your business is going out of business and

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Speaker 4: think how crazy behaviors were in a hoarding sort of world.

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Speaker 4: And that's the business model. And so in one, it

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Speaker 4: creates this strong desire to go replace resource and if

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Speaker 4: incentives are bad, that's kind of crazy. But two, it's

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Speaker 4: this constant treadmill. If the industry stops, the market rebalances.

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Speaker 3: So what does the supply of uranium look like right now?

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Speaker 3: How much is out there and how accessible is it?

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Speaker 4: So yeah, roughly there's about two hundred million pounds of

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Speaker 4: uranium a year. And I do want to say that

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Speaker 4: we didn't really talk about what we were going to discuss,

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Speaker 4: and so I'm.

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Speaker 5: Oh, yeah, sorry, So I'm coming in a little cold,

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Speaker 5: but perfectly happy because uranium is something that's been in

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Speaker 5: my head and it's had this a lot of client

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Speaker 5: interest in the last year, and that sort of inflected.

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Speaker 4: Up just in the last months.

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Speaker 2: Okay, So we were reading your clients and you sense

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Speaker 2: the book. Okay, okay.

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Speaker 4: And so it is a small market. So it's two

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Speaker 4: hundred million pounds, and when you ever hear a million,

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Speaker 4: that sounds like a lot, but then you divide by

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Speaker 4: two thousand pounds per ton, and it's one hundred thousand kilotons.

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Speaker 4: And to put that into context, I'm going down next

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Speaker 4: month to Escondida, the world's largest copper mine. It moves

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Speaker 4: a million tons a year of just copper, and so

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Speaker 4: you could fit ten of the entire uranium industry within

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Speaker 4: a single copper mind. So it's a very small industry.

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Speaker 4: It's an industry that sells to one customer a lot

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Speaker 4: of commodity. Like copper goes into all parts of the economy,

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Speaker 4: uranium goes into nuclear power. But it's very small, it's

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Speaker 4: very regulated. And there's been this challenge between local ESG

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Speaker 4: and global ESG and the energy transition, which is to say,

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Speaker 4: I'm going to go into your remote community in South America,

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Speaker 4: and say, for the good of mankind, we need one

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Speaker 4: hundred thousand tons a year of copper so that we

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Speaker 4: can electrify the economy and reduce emissions. In the middle

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Speaker 4: of your backyard there's going to be a several thousand

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Speaker 4: foot open pit mine, and that local community says, not

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Speaker 4: a chance. I don't want that. That's hard enough to

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Speaker 4: do with copper right now, Think about uranium. Think about

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Speaker 4: trying to pitch a local community. This will be great

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Speaker 4: for jobs, it'll be great for investment, it'll be great

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Speaker 4: for tourism. We're gonna mine for uranium, and so as

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Speaker 4: a result, the ability to rapidly bring on uranium is

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Speaker 4: pretty challenging, which kind of suggests market tightness.

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Speaker 3: Joe, I love that we didn't actually tell Bob that

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Speaker 3: we're going to talk about uranium. But you've already given

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Speaker 3: us so much interesting and knowledgeable stuff, so thank you

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Speaker 3: for that.

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Speaker 2: I realized sometime this morning that we actually had never

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Speaker 2: told what we're going to be talking about. But I

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Speaker 2: also knew just from reading Bob that it wouldn't be

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Speaker 2: an issue at all, and that he would have to

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Speaker 2: be totally comfortable and keep him on his toes a

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Speaker 2: little bit Now I realize we're working in the audio

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Speaker 2: medium of podcasts, and so this is going to be

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Speaker 2: a little bit of a tricky question. But to the

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Speaker 2: extent that you can, can you summarize essentially like you

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Speaker 2: have a chart in your recent uranium note that I read,

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Speaker 2: give us the sort of medium term history of the

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Speaker 2: uranium price and why it went up and down over time.

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Speaker 4: The most important thing about uranium when we think about

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Speaker 4: commodity prices in general, I'm pretty good about picking the

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Speaker 4: middle of the cycle. It's the marginal cost of commodity,

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Speaker 4: and I can find the bottom of a cycle very well.

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Speaker 4: Miners refuse to give metals away for free. So when

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Speaker 4: the ebitdah of a marginal zinc mine or nickel mind

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Speaker 4: goes to zero, that mind goes to care and maintenance

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Speaker 4: and stops producing and price recovers from there. It's the

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Speaker 4: top of the cycle where pricing is the hardest to

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Speaker 4: figure out. But historically what happens for other commodity sector

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Speaker 4: is it's demand destruction and or substitution. So those are

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Speaker 4: the two things you look for. So when copper price

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Speaker 4: flies up, then aluminum becomes substitutable. And if aluminum price

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Speaker 4: doesn't move, well, I'll just use aluminum wiring in this

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Speaker 4: transmission with uranium one that power plant. The cost of

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Speaker 4: uranium into the power plant is a rounding error once

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Speaker 4: I've spent the billions and something.

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Speaker 2: This is really key because we talk all the time

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Speaker 2: about the cost of nuclear and construction. Uranium itself basically

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Speaker 2: never comes up.

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Speaker 4: It's under one hundred bucks a pound, okay. And if

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Speaker 4: you think about running a coal fired power plant, you

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Speaker 4: are moving millions of tons of material into that plant

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Speaker 4: every year. With uranium, it's thousands, right, So it's a

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Speaker 4: remarkably dense, obviously source of fuel. And so once that

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Speaker 4: plant is built, there is very little evidence that that

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Speaker 4: plant ever shuts in on uranium price. And then you

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Speaker 4: combine that with the structure of the industry. If it's

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Speaker 4: a utility and it can pass price onto the rate base,

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Speaker 4: well then it's not taking the full brunt to that

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Speaker 4: price straight to the head. So we don't see substitution

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Speaker 4: on fly ups for uranium. We don't really see demand destruction.

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Speaker 4: And it's also one of these markets that is very

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Speaker 4: difficult physically short or commercially short. And so those are

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Speaker 4: the three Boogeyman's at the top of the cycle.

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Speaker 3: They don't seem to be obvious who are the actual

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Speaker 3: players in the uranium market because I remember, again, like

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Speaker 3: going back to twenty twenty two, I think people were

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Speaker 3: talking about the price going up because there was a

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Speaker 3: new physical ETF that came out and was buying a

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Speaker 3: lot of it. And to your point, it's a relatively

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Speaker 3: small market, so presumably that kind of action could also

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Speaker 3: push prices.

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Speaker 4: Yeah, so two thoughts there. So there was this investment vehicles,

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Speaker 4: there was a spot uranium physical trust that is. But

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Speaker 4: I always go back to eight nine where the price

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Speaker 4: of oil shoots to one hundred and forty bucks a barrel,

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Speaker 4: and there were investigations from Congress and was it the speculators?

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Speaker 4: Was it Wall Street that caused the price to skyrocket? So,

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Speaker 4: and there was never a Purp walk, And I figure

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Speaker 4: even if there was half an excuse for a Purp walk,

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Speaker 4: they would have found somebody to walk out of a

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Speaker 4: building somewhere in our neighborhood all those years years ago.

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Speaker 4: And so in my head that I don't believe that

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Speaker 4: the speculators can move for any sustained period of time

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Speaker 4: in the commodity. Sometimes they can see the trend and

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Speaker 4: get into it before it takes off. I think they

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Speaker 4: just saw a fairly obvious trend. I should say. The

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Speaker 4: fourth thing that can kill uranium prices, and it is

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Speaker 4: the one out there that if you're kind of long

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Speaker 4: uranium uranium stocks you have to be aware of are

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Speaker 4: nuclear disasters or nuclear accidents. And so if we look historically, yeah,

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Speaker 4: the price corrections down on uranium always came on the

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Speaker 4: back of Fukushima, or they came on the back of

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Speaker 4: Three Mile Island.

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Speaker 2: So when were the big peaks in uranium prices? What

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Speaker 2: was going on in the world. I mean, even setting aside,

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Speaker 2: we know what caused them to go down, what was

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Speaker 2: going on in the world at the time, and which

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Speaker 2: years that there was a real uranium bull run.

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Speaker 4: They just kind of drift up, and so in real

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Speaker 4: terms they never get much above where we are now.

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Speaker 4: So our price decks about one hundred bucks a pound,

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Speaker 4: so you never see thousands or two hundreds of pound,

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Speaker 4: and you just have a market that absorbs uranium regularly

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Speaker 4: at a price that doesn't care and then recorrects on

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Speaker 4: disasters where shut ins and fear of future plants causes

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Speaker 4: the market to go and then you'll typically fall to

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Speaker 4: twenty thirty forty pounds, which is the cash cost where

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Speaker 4: somebody says, I'm just going to leave it in the ground.

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Speaker 3: How is it actually stored? If I'm that redditor who's

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Speaker 3: interested in buying one hundred pounds of physical or I'm sprought,

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Speaker 3: what am I actually doing with this uranium?

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Speaker 4: So once it's enriched, there are extremely strict guidelines on

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Speaker 4: the types of organizations and the type of regulators that

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Speaker 4: watch you store it. In theory, yellow cake is stored

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Speaker 4: at mind mouths and can be stored in the supply chain,

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Speaker 4: but enriched uranium is extremely heavily regulated. So companies like Camiico,

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Speaker 4: for example, might have regulatory authority, but not Joe uranium

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Speaker 4: wall Street on Reddit.

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Speaker 2: What causes demand to change in the short term, So

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Speaker 2: I imagine if the US was like, we're going to really

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Speaker 2: go nuclear crazy and we're gonna and we'll get to

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Speaker 2: all that about your prospect for nuclear but I imagine

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Speaker 2: demand would go up. But in the course of a

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Speaker 2: year twenty twenty four, where we see what's out there

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Speaker 2: and we see the utilities and what they need, and

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Speaker 2: we know there's not suddenly going to be a new

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Speaker 2: nuclear plant tomorrow. What does the demand picture look like?

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Speaker 4: So two ways to create uranium demand one and we've

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Speaker 4: seen a bit of both. One is to build new

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Speaker 4: power plants and the second is to turn the old

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Speaker 4: ones back on. And so if you think about three

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Speaker 4: Mile Island being reactivated to support and Microsoft, imagine the

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Speaker 4: junior strategist that went to Microsoft's board and says, you

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Speaker 4: know what, aipower demand is huge. We need a cheap, ratable, dispatchable,

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Speaker 4: flat base load of power to supply it. We should

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Speaker 4: invest in nuclear power. And I imagine somebody higher above

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Speaker 4: that person said, are you an idiot? Have you ever

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Speaker 4: heard of three Mile Island? And this junior strategy said, yeah,

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Speaker 4: that's the one. We should turn that one back on.

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Speaker 4: And the fact that it vetted through and it's not

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Speaker 4: just Microsoft now every big tech company is associated with

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Speaker 4: nuclear investment, and they have all gone through this process

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Speaker 4: of what do they need based electricity of an unknowable

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Speaker 4: demand growth and where can they get it? And so

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Speaker 4: whether it's funding new SMRs, small modular reactors, or reactivating

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Speaker 4: the existing ones, it's been a remarkable inflection point.

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Speaker 2: And then when all these headlines come and suddenly everyone

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Speaker 2: wakes up that all these tech companies are going to

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Speaker 2: want some nuclear play. What's happening on the producer side,

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Speaker 2: because I imagine they can't just turn a switch right

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Speaker 2: away and have more what's happening on the supply side

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Speaker 2: when these headlines hit.

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Speaker 4: So on the producer side, the good news is again

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Speaker 4: it's a smallish market and it'll move relatively slowly. So

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Speaker 4: the real inflection would be around small modular reactors because

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Speaker 4: reactivating closed reactors. You know, we've got one up the Hudson,

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Speaker 4: you could reactivate theory.

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Speaker 2: I guess I'm on the mining side.

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Speaker 4: So on the mining side, I think the miners need

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Speaker 4: a price signal, which they have, They need regulatory approval,

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Speaker 4: and then they'll start to go out and reactivate some

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Speaker 4: of these mines. They'll start in the US and Canada.

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Speaker 4: Right the Canada already it's certainly the Athabasca region. There's

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Speaker 4: plentiful uranium resource there, and there's a range of places

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Speaker 4: in the US you can find uranium along the Gulf Texas.

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Speaker 4: You can go find it out in kind of four

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Speaker 4: corners out in the west. So the resources there you

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Speaker 4: don't need huge amounts of capital, and we're starting to

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Speaker 4: get a signal for a response, and then you go

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Speaker 4: further remote on the cost further remote, I should say,

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Speaker 4: not on the cost curve. Namibia's got a fantastic endowment. Russia,

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Speaker 4: Kazakhstan have endowments, and that's where this supply is ultimately

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Speaker 4: going to come from. From a security of supply, clearly

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Speaker 4: the US and the Canadian stuff is closer to home.

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Speaker 3: What's the time frame for this? Like, on average, how

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Speaker 3: quickly can supply ramp up?

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Speaker 4: Forever? In two years? So roughly we are measuring copper

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Speaker 4: mine life cycles in a decade now, right from a

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Speaker 4: maiden resource to first production. So even the easy stuff

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Speaker 4: is really measured in half a decade to a decade.

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Speaker 4: And so yeah, uranium, if it's quick, I'd be stunned.

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Speaker 4: If there's a big supply response in less than five years,

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Speaker 4: that seems hard to see. If five to ten you

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Speaker 4: start to get a response, and again, because the volumes

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Speaker 4: are small, we could start to balance the market them.

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Speaker 3: So the price of uranium is obviously tied to the

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Speaker 3: prospects of nuclear energy, but nuclear doesn't exist in a vacuum.

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Speaker 3: When it comes to the energy transition, and there are

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Speaker 3: other options out there, like solar or wind. How do

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Speaker 3: you kind of evaluate the cost for nuclear versus wind

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Speaker 3: and solar.

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Speaker 4: And there's two end members. In reality, it always sits

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Speaker 4: in between. So the primary end member that everyone talks

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Speaker 4: about in the energy space is the levelized cost of energy.

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Speaker 4: And Blizard, for example, has been studying this for decades

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Speaker 4: and putting out great work. And the idea of levelized

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Speaker 4: cost of energy is I need an electron, I need

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Speaker 4: to charge my phone. I don't need to charge it

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Speaker 4: all year. I just need to charge it now, and

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Speaker 4: that would be levelized cost of energy, and wind and

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Speaker 4: solar are remarkably good from that standpoint. Then there's the

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Speaker 4: other end member, which is, hey, I need to power

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Speaker 4: a remote Antarctic field station right something way off the grid,

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Speaker 4: and I need it base load twenty four to seven

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Speaker 4: for a year. And if I don't have baseload, if

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Speaker 4: I have intermittency, if the sun shines doesn't shine, then

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Speaker 4: I need batteries to support the rest of the time.

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Speaker 4: And so if my sun shines one percent and I

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Speaker 4: need the other ninety nine on batteries, I got to

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Speaker 4: buy a lot of batteries.

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Speaker 3: So ELCO wouldn't take that into account, right, so.

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Speaker 4: ELCO wouldn't be a levelized full cycle or full system

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Speaker 4: cost of energy. Adding adding letters to the acronym does,

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Speaker 4: and then nuclear starts to shine because it is just

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Speaker 4: it's built to be baseload.

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Speaker 2: We've done episodes. We've done a lot of episodes on

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Speaker 2: renewables and some on batteries and the intermittency issues that

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Speaker 2: arise with renewables. We've done episodes on nuclear. And you know,

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Speaker 2: there are people who think it's going to be an

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Speaker 2: all Like I was at a conference last week, and

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Speaker 2: a day at that conference, I was like, I'm convinced

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Speaker 2: the future is all solar. And then I'll talk to

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Speaker 2: someone else and like, the future is all nuclear. And

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Speaker 2: my gut would be that the future is not going

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Speaker 2: to be all of one energy source. But how would

401
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Speaker 2: you go about thinking what will determine what that ultimate

402
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Speaker 2: mix looks like? Imagine a fully electrified economy. What is

403
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Speaker 2: it policy decisions, is it technological breakthroughs? What ultimately been

404
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Speaker 2: your view will determine the share that will be nuclear

405
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Speaker 2: vers solar versus maybe some wind.

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Speaker 4: So I sort of dismiss these all or non hypotheses.

407
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Speaker 4: Because of the world we live in, you can barely

408
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Speaker 4: We don't have a single type of telephone, we don't

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Speaker 4: have a single type of carbonated beverage, we don't have

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Speaker 4: a single beer in the market, etc. So you kind

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Speaker 4: of go down and there's no obvious reason why modern

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Speaker 4: economy needs one form of electricity. So it's it's going

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Speaker 4: to be a big balance, and the way to solve

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Speaker 4: for intermittency, there's kind of three ways to do it,

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Speaker 4: you know, One is nuclear create energy that's baseload on

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Speaker 4: all the time. The other is batteries where I can

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Speaker 4: sort of offset the intermittency. And the third is sophisticated grids.

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Speaker 4: Right if my grid is big enough, Right, if I've

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Speaker 4: got a cross European grid and it's windy and Norway,

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Speaker 4: but I need my AC in Spain, the grid can

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Speaker 4: solve it. And so there's this sort of competition between

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Speaker 4: I mean, investing in the grid, which we're not doing

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Speaker 4: enough of globally, investing in cigs.

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Speaker 2: Just to be clear, when you think about what share

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Speaker 2: of the electrified economy will be powered on nuclear, what

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Speaker 2: things will go into that determination.

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Speaker 4: So we expect that if it grows it's going to

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Speaker 4: be less than ten percent, right, it's going to be

429
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Speaker 4: it's not going to be a dominant form of energy

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Speaker 4: simply because we would have to build so many reactors

431
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Speaker 4: so quickly and so generally. The way we get at

432
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Speaker 4: our long term view of what electricity demand from uranium

433
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Speaker 4: is is you can take an iea net zero pathway,

434
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Speaker 4: or you can take the sustainable pathway and it gets

435
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Speaker 4: you something like gdp ish growth from a base of

436
00:22:42,000 --> 00:22:43,960
Speaker 4: ten ish percent, and it's always going to be there.

437
00:22:43,960 --> 00:22:45,840
Speaker 4: So it's always going to be part of the mix.

438
00:22:46,200 --> 00:22:49,960
Speaker 4: What you're seeing is a customer base that really really

439
00:22:50,000 --> 00:22:53,359
Speaker 4: wants it and has deep pockets. And so if you've

440
00:22:53,400 --> 00:22:58,480
Speaker 4: got big tech throwing research and development funds, then you

441
00:22:58,520 --> 00:23:00,240
Speaker 4: can start and say, well, well maybe it inflects high

442
00:23:00,280 --> 00:23:02,960
Speaker 4: and maybe small modular reactors come quicker.

443
00:23:02,600 --> 00:23:03,960
Speaker 2: And what's the higher is at fifteen?

444
00:23:04,480 --> 00:23:06,800
Speaker 4: Yeah, it'd be that sort of tune. Right, It's never

445
00:23:06,920 --> 00:23:09,399
Speaker 4: going to be there's no obvious reason it has to

446
00:23:09,400 --> 00:23:10,120
Speaker 4: be the majority.

447
00:23:10,800 --> 00:23:14,280
Speaker 3: So since we mentioned batteries and we're talking about uranium,

448
00:23:14,440 --> 00:23:17,280
Speaker 3: I wanted to bring up a sort of another MEMI

449
00:23:17,800 --> 00:23:20,959
Speaker 3: type thing, which is lithium. So if you look at

450
00:23:20,960 --> 00:23:23,840
Speaker 3: a chart of the lithium price. I mean, it looks

451
00:23:23,880 --> 00:23:26,840
Speaker 3: like a bubble, a bubble that burst. What's been going

452
00:23:26,880 --> 00:23:27,320
Speaker 3: on there?

453
00:23:27,960 --> 00:23:30,280
Speaker 4: So on this l side on Wall Street, they are

454
00:23:30,400 --> 00:23:34,560
Speaker 4: perma bulls, and there's perma bears, and then I'm something

455
00:23:34,600 --> 00:23:38,000
Speaker 4: of a perma cycle. And so my general response is

456
00:23:38,200 --> 00:23:41,640
Speaker 4: this two shall pass. And so lithium prices were high

457
00:23:41,640 --> 00:23:43,639
Speaker 4: two years ago, and I would have said, and we

458
00:23:43,680 --> 00:23:47,080
Speaker 4: did say this two shall pass. They're low today, measured

459
00:23:47,119 --> 00:23:50,320
Speaker 4: in ten bucks a kilogram, sorts of levels in this

460
00:23:50,400 --> 00:23:53,720
Speaker 4: two shell pass, and we would say not returning to

461
00:23:53,800 --> 00:23:58,040
Speaker 4: that eighty dollars a kilogram from the whipsaw effects of

462
00:23:58,119 --> 00:24:02,120
Speaker 4: the post COVID and but really think about building back

463
00:24:02,160 --> 00:24:05,800
Speaker 4: from ten to maybe fifteen dollars a kilogram in the

464
00:24:05,800 --> 00:24:09,960
Speaker 4: near term towards twenty. It's not a terribly hard commodity

465
00:24:10,000 --> 00:24:13,880
Speaker 4: to extract, it's not terribly scarce, and we've terribly over

466
00:24:13,920 --> 00:24:16,040
Speaker 4: capitalized it for the next couple of years.

467
00:24:16,359 --> 00:24:20,720
Speaker 2: I imagine that within lithium, and I'm just imagine, like

468
00:24:20,760 --> 00:24:22,600
Speaker 2: I said, I'm just imagining that there is a lot

469
00:24:22,640 --> 00:24:26,800
Speaker 2: booming demand from the electrification and the batteries and literally everything,

470
00:24:27,080 --> 00:24:29,719
Speaker 2: and that is a bullish force, and that batteries are

471
00:24:29,720 --> 00:24:31,960
Speaker 2: getting better and better and better and more efficient, and

472
00:24:31,960 --> 00:24:34,560
Speaker 2: that that is a bearish force for lithium. Tell me, Ave,

473
00:24:34,680 --> 00:24:36,440
Speaker 2: that's right. But more importantly, how do you think about

474
00:24:36,440 --> 00:24:37,760
Speaker 2: these two headwinds and tail.

475
00:24:38,000 --> 00:24:41,160
Speaker 4: Yeah, so for a period of time, I always want

476
00:24:41,200 --> 00:24:42,480
Speaker 4: to be a copper bowl and I want to be

477
00:24:42,520 --> 00:24:46,160
Speaker 4: an oil bowl. The two things that undermined the combined

478
00:24:46,200 --> 00:24:51,080
Speaker 4: thesis are hybrid electric vehicles. Because hybrids they're fuel efficient, right,

479
00:24:51,240 --> 00:24:55,520
Speaker 4: and they carry very small, at fifteen kilowater batteries, whereas

480
00:24:55,560 --> 00:24:57,960
Speaker 4: a big battery electric could have a fifty or one

481
00:24:58,000 --> 00:25:01,399
Speaker 4: hundred watt kill a wat battery. Lithium into those batteries

482
00:25:01,560 --> 00:25:05,800
Speaker 4: is linearly proportional to the kilowatt hours. And so what

483
00:25:05,920 --> 00:25:11,359
Speaker 4: we see now globally is for the last two ish years,

484
00:25:12,160 --> 00:25:15,320
Speaker 4: battery electric vehicle sales year on your growth is plummeted

485
00:25:15,400 --> 00:25:17,520
Speaker 4: and is kind of getting toward flat year on year.

486
00:25:18,119 --> 00:25:21,760
Speaker 4: Hybrid vehicle sales have been growing fifty percent year after

487
00:25:21,800 --> 00:25:25,320
Speaker 4: year after year. So we're seeing a world where hybrids

488
00:25:25,359 --> 00:25:30,280
Speaker 4: are winning the growth. They're still the minority of the vehicles,

489
00:25:30,640 --> 00:25:34,760
Speaker 4: and that's bad for lithium. It's bad for copper because

490
00:25:34,880 --> 00:25:37,600
Speaker 4: copper scales as well, and it's kind of bad for oil.

491
00:25:38,440 --> 00:25:41,720
Speaker 4: And we were told for years that hybrids are complicated,

492
00:25:41,760 --> 00:25:46,960
Speaker 4: they carry two independent modes of travel. We need batteries

493
00:25:47,080 --> 00:25:49,920
Speaker 4: electric because they're so simple, and we're kind of coming

494
00:25:49,960 --> 00:25:52,359
Speaker 4: to a world where people are moving back ish towards

495
00:25:52,440 --> 00:25:54,199
Speaker 4: the hybrids. So at a time where a lot of

496
00:25:54,240 --> 00:25:57,960
Speaker 4: capital went into lithium mining and lithium brining, we woke

497
00:25:58,080 --> 00:26:02,160
Speaker 4: up and saw ev adoption break fifty percent in China.

498
00:26:02,240 --> 00:26:04,960
Speaker 4: So the majority of vehicles sold in China now are

499
00:26:05,040 --> 00:26:09,280
Speaker 4: electric vehicles. But the challenge is the sizes and the

500
00:26:09,359 --> 00:26:12,040
Speaker 4: styles are not as lithium hungry as we would have thought.

501
00:26:28,080 --> 00:26:31,400
Speaker 3: Joe, should I just keep throwing out commodities and Bob

502
00:26:31,440 --> 00:26:34,840
Speaker 3: can talk to them. Okay, let's do gold. Speaking of

503
00:26:35,000 --> 00:26:39,280
Speaker 3: you know, there we go. But I mean, the price

504
00:26:39,320 --> 00:26:42,280
Speaker 3: action in gold has been just kind of crazy recently

505
00:26:42,320 --> 00:26:46,240
Speaker 3: and record highs, So I feel like I'm asking the

506
00:26:46,240 --> 00:26:48,520
Speaker 3: same question over and over. But what's going on there?

507
00:26:49,160 --> 00:26:51,000
Speaker 4: So that this is one of the ones Most of

508
00:26:51,040 --> 00:26:53,320
Speaker 4: the time, this too shall pass. If it's high, it

509
00:26:53,359 --> 00:26:55,160
Speaker 4: goes down, if it's low, it goes up. If it's

510
00:26:55,200 --> 00:26:57,440
Speaker 4: in the middle, it'll stay in the middle. I'm still

511
00:26:57,440 --> 00:26:59,199
Speaker 4: in the view we have burnste here, still in the

512
00:26:59,240 --> 00:27:03,280
Speaker 4: view that gold works from here and a couple ways

513
00:27:03,320 --> 00:27:05,080
Speaker 4: to think about it, which is always kind of the

514
00:27:05,080 --> 00:27:07,640
Speaker 4: supply and demand. We've gone back and looked at every

515
00:27:07,720 --> 00:27:10,639
Speaker 4: rate cut cycle, and we've looked at every individual rate cut.

516
00:27:10,960 --> 00:27:15,600
Speaker 4: In a world where rates are being cut, check and

517
00:27:15,640 --> 00:27:18,760
Speaker 4: where the FED succeeds in bringing long term interest rates down,

518
00:27:19,440 --> 00:27:22,479
Speaker 4: gold has always gone up. And so our view is

519
00:27:22,840 --> 00:27:25,760
Speaker 4: if you think the FED succeeds, then gold goes up.

520
00:27:26,200 --> 00:27:31,399
Speaker 4: Where we struggle is to what level. One The speed

521
00:27:31,400 --> 00:27:33,680
Speaker 4: at which gold has moved this year surprised even us,

522
00:27:34,040 --> 00:27:37,600
Speaker 4: and to the level is a bit tricky. On the

523
00:27:37,640 --> 00:27:43,040
Speaker 4: supply side mining companies, gold mining companies will brag about

524
00:27:43,320 --> 00:27:47,160
Speaker 4: or grades that are a gram per ton, one per ton,

525
00:27:47,359 --> 00:27:50,680
Speaker 4: that's one part per million, And so to make money

526
00:27:50,720 --> 00:27:53,200
Speaker 4: in gold mining, you have to take a ton of rock,

527
00:27:53,320 --> 00:27:55,680
Speaker 4: blast it out of the earth, grind it to flour,

528
00:27:56,280 --> 00:28:00,080
Speaker 4: find the one part out of that million, and that

529
00:28:00,240 --> 00:28:02,359
Speaker 4: is worth ninety bucks today. Right a gram of gold.

530
00:28:03,000 --> 00:28:07,160
Speaker 4: I've got to make a business of finding a needle

531
00:28:07,240 --> 00:28:09,560
Speaker 4: in a haystack, and I got to do it for

532
00:28:09,560 --> 00:28:11,840
Speaker 4: forty or fifty bucks a ton, and I've got to

533
00:28:11,880 --> 00:28:14,000
Speaker 4: safely disposed of that deposit and then move on and

534
00:28:14,040 --> 00:28:16,320
Speaker 4: find the next one. So it's a tough business.

535
00:28:16,520 --> 00:28:19,520
Speaker 2: Has the cost of blasting out that ton and finding

536
00:28:19,560 --> 00:28:21,960
Speaker 2: that graham come down with technology.

537
00:28:21,840 --> 00:28:25,360
Speaker 4: Long term, Absolutely, it is stunning the ability. I mean,

538
00:28:25,560 --> 00:28:27,879
Speaker 4: the fact that you can make money pulling one parts

539
00:28:27,920 --> 00:28:31,000
Speaker 4: per million out of anything is remarkable. So the scale

540
00:28:31,200 --> 00:28:34,920
Speaker 4: at which the mining industry is efficient boggles the mine.

541
00:28:35,359 --> 00:28:37,600
Speaker 4: Come to iron ore. Iron ore is almost all iron.

542
00:28:38,280 --> 00:28:40,760
Speaker 4: I can move a ton of iron ore from the

543
00:28:41,280 --> 00:28:46,840
Speaker 4: Amazon rainforest safely to China for forty bucks a ton.

544
00:28:47,560 --> 00:28:51,720
Speaker 4: I can't get someone to deliver most dinners in midtown

545
00:28:51,800 --> 00:28:55,080
Speaker 4: for forty dollars, And so the efficiencies of the mining

546
00:28:55,080 --> 00:28:59,800
Speaker 4: industry boggle the mines. Now, having said that, it appears

547
00:28:59,840 --> 00:29:02,560
Speaker 4: is if geology is fighting back, right, it is getting

548
00:29:02,560 --> 00:29:05,600
Speaker 4: harder and harder. The average copper mind gets deeper and

549
00:29:05,640 --> 00:29:09,000
Speaker 4: deeper every year. We're moving to higher elevations, we're moving

550
00:29:09,040 --> 00:29:11,920
Speaker 4: just more difficult regions. So geology is always in this

551
00:29:11,960 --> 00:29:15,520
Speaker 4: fight against technology and innovation. The fact that most every

552
00:29:15,520 --> 00:29:19,480
Speaker 4: commodity you buy from the earth mind metals are like

553
00:29:19,640 --> 00:29:22,120
Speaker 4: ten bucks a kilogram is a testament to how well

554
00:29:22,160 --> 00:29:25,200
Speaker 4: the industry's done. But it should grind. Costs of metals

555
00:29:25,200 --> 00:29:26,600
Speaker 4: should grow faster than inflation.

556
00:29:27,480 --> 00:29:29,960
Speaker 3: You know what else has been going up and this

557
00:29:30,080 --> 00:29:33,480
Speaker 3: is very exciting for me personally. Here's my disclaimer of

558
00:29:33,640 --> 00:29:38,840
Speaker 3: firstwes Well, no silver. For some reason. My dad every

559
00:29:38,920 --> 00:29:42,160
Speaker 3: year for my birthday sends me one silver dollar from

560
00:29:42,200 --> 00:29:45,360
Speaker 3: his collection, and because I'm getting old, I have quite

561
00:29:45,360 --> 00:29:48,000
Speaker 3: a few of them now. So silver has been going up.

562
00:29:48,120 --> 00:29:52,040
Speaker 3: It's not quite at a record, but you know, it's

563
00:29:52,120 --> 00:29:54,480
Speaker 3: sort of been following the path of gold. Is that

564
00:29:54,800 --> 00:29:57,840
Speaker 3: just an echo of the gold player? Is there something

565
00:29:57,880 --> 00:29:59,040
Speaker 3: more fundamental going on?

566
00:30:00,040 --> 00:30:02,880
Speaker 4: For most of this year, there's been this funny split

567
00:30:02,960 --> 00:30:06,680
Speaker 4: between the precious metals platinum, gold, and silver. Were the

568
00:30:06,800 --> 00:30:09,680
Speaker 4: more useful the metal the less it went off, and

569
00:30:09,720 --> 00:30:11,760
Speaker 4: gold is the least useful of the metals. Right, there's

570
00:30:11,840 --> 00:30:16,520
Speaker 4: very little real utility for industry, and silver is actually

571
00:30:16,600 --> 00:30:21,560
Speaker 4: quite useful, especially if we think about the future of

572
00:30:21,600 --> 00:30:25,440
Speaker 4: solar energy and so on the silver front, we like silver.

573
00:30:25,640 --> 00:30:28,400
Speaker 4: And finally silver's beating gold this year, so silver's kind

574
00:30:28,400 --> 00:30:29,240
Speaker 4: of broken out a bit.

575
00:30:29,400 --> 00:30:30,480
Speaker 3: Oh, I didn't realize that.

576
00:30:30,720 --> 00:30:34,640
Speaker 4: Yeah, just in the last few weeks. And what's interesting

577
00:30:34,840 --> 00:30:37,719
Speaker 4: is if you went through the list of the forty

578
00:30:38,200 --> 00:30:41,440
Speaker 4: largest mines that produce silver, one or two of them

579
00:30:41,440 --> 00:30:44,840
Speaker 4: are silver mines. The rest are lead zinc mines, or

580
00:30:44,880 --> 00:30:46,560
Speaker 4: gold mines or copper minds.

581
00:30:46,600 --> 00:30:48,600
Speaker 2: So I was gonna say, and I've brought this up

582
00:30:48,640 --> 00:30:51,480
Speaker 2: on the podcast before, but this reminded me a couple

583
00:30:51,520 --> 00:30:54,200
Speaker 2: of years ago. I was taking an uber into work,

584
00:30:54,600 --> 00:30:57,040
Speaker 2: you know, and I used to put it. The uber

585
00:30:57,120 --> 00:30:59,000
Speaker 2: drivers would see that I was going to Bloomberg, like

586
00:30:59,000 --> 00:31:01,000
Speaker 2: Bloomberg and like, what do you think about bitcoin? Or

587
00:31:01,040 --> 00:31:04,040
Speaker 2: Dogeklin And then there was this guy who said, oh,

588
00:31:04,080 --> 00:31:07,640
Speaker 2: you work for Bloomberg. I'm really bullish on silver because

589
00:31:07,680 --> 00:31:10,320
Speaker 2: there's less copper mining going on in the world, and

590
00:31:10,360 --> 00:31:12,720
Speaker 2: silver is a byproduct of copper, and there's a lot

591
00:31:12,760 --> 00:31:14,560
Speaker 2: of solar demand, and so there's going to be the

592
00:31:14,560 --> 00:31:17,160
Speaker 2: supplied demand mismatch. Was he onto something.

593
00:31:17,440 --> 00:31:20,440
Speaker 4: It might have been me driving, Yeah, that's pretty well aligned.

594
00:31:20,480 --> 00:31:23,840
Speaker 4: He was reading the Bracket novel. Yes, And so the

595
00:31:23,880 --> 00:31:27,880
Speaker 4: answer is yes, if silver were to double overnight, there

596
00:31:27,960 --> 00:31:30,160
Speaker 4: is no mine that would say, well, now we should

597
00:31:30,160 --> 00:31:32,240
Speaker 4: go chase silver. So the largest silver mine in the

598
00:31:32,240 --> 00:31:35,080
Speaker 4: world was. I think it still could be kghm and Poland,

599
00:31:35,120 --> 00:31:37,040
Speaker 4: and it's a giant copper mind with a lot of

600
00:31:37,040 --> 00:31:39,440
Speaker 4: silver byproduct and a lot of the big gold mines

601
00:31:39,480 --> 00:31:42,880
Speaker 4: in Mexico. Silver is a byproduct, which means they love

602
00:31:42,960 --> 00:31:45,480
Speaker 4: to see that revenue stream go up from silver, but

603
00:31:45,640 --> 00:31:49,720
Speaker 4: it isn't the primary driver of capital decisions, investment decisions,

604
00:31:49,960 --> 00:31:53,480
Speaker 4: or supply response, and so it would take a big

605
00:31:53,520 --> 00:31:57,080
Speaker 4: price signal from silver to convince much of the world's

606
00:31:57,080 --> 00:32:00,160
Speaker 4: supply to do much more than they're doing already. But

607
00:32:00,240 --> 00:32:03,760
Speaker 4: we will mop it up with solar panels over time,

608
00:32:03,960 --> 00:32:05,800
Speaker 4: plus the other industrial uses.

609
00:32:06,200 --> 00:32:08,600
Speaker 3: Joe, when are we going to interview your uber driver?

610
00:32:09,680 --> 00:32:14,240
Speaker 2: Our producer Call is supposedly working on that, so yeah, yeah,

611
00:32:14,280 --> 00:32:15,960
Speaker 2: we're in touch with him. I think he's going to

612
00:32:16,000 --> 00:32:18,040
Speaker 2: come at some point. We're going to make that episode happen.

613
00:32:18,200 --> 00:32:22,120
Speaker 3: That'll be fun. So I hesitate to ask this question

614
00:32:22,800 --> 00:32:27,520
Speaker 3: because you know, politics are everywhere and inescapable at the moment,

615
00:32:27,680 --> 00:32:31,200
Speaker 3: But we do have a presidential election coming up, and

616
00:32:31,240 --> 00:32:33,479
Speaker 3: we have two candidates who seem to be, you know,

617
00:32:33,600 --> 00:32:36,480
Speaker 3: in different positions when it comes to the energy transition.

618
00:32:37,000 --> 00:32:38,360
Speaker 3: What are you watching out for there?

619
00:32:39,800 --> 00:32:43,680
Speaker 4: There's three events that have kept a lot of institutional

620
00:32:44,200 --> 00:32:47,800
Speaker 4: energy and oil investors on the sidelines over the last

621
00:32:47,840 --> 00:32:51,200
Speaker 4: several months. And the idea is, broadly speaking, if I

622
00:32:51,280 --> 00:32:54,400
Speaker 4: go to Las Vegas and go to any game of

623
00:32:54,480 --> 00:32:56,640
Speaker 4: the casino, on average, I'm going to lose, right, So

624
00:32:56,680 --> 00:33:00,680
Speaker 4: I shouldn't go. If I throw money at the stockmore blindly,

625
00:33:00,760 --> 00:33:03,600
Speaker 4: over time, it's going to compound high single digits, and

626
00:33:03,640 --> 00:33:06,040
Speaker 4: so I can kind of throw money in and so

627
00:33:07,160 --> 00:33:09,040
Speaker 4: therefore to make money, it's like, well, I think markets

628
00:33:09,040 --> 00:33:11,479
Speaker 4: go up, and let me find some ideas. And in

629
00:33:11,560 --> 00:33:15,200
Speaker 4: oil markets right now, you have to get three independent

630
00:33:15,440 --> 00:33:19,400
Speaker 4: variables or decisions or outcomes right in order to figure

631
00:33:19,400 --> 00:33:22,680
Speaker 4: it out. And if you're as good at figuring out geopolitics,

632
00:33:22,680 --> 00:33:24,400
Speaker 4: that you get one out of two and then one

633
00:33:24,440 --> 00:33:26,280
Speaker 4: out of two and there's a one in eight chance

634
00:33:26,320 --> 00:33:27,560
Speaker 4: you're going to get it all right. So those are

635
00:33:28,880 --> 00:33:33,600
Speaker 4: so one has been this constant, this de escalatory escalation

636
00:33:33,680 --> 00:33:37,160
Speaker 4: between Iran and Israel. Right what is the geopolitical premium

637
00:33:37,160 --> 00:33:39,400
Speaker 4: in the oil price? And we woke up Monday with

638
00:33:39,480 --> 00:33:43,680
Speaker 4: oil down five percent because the latest Israeli response was

639
00:33:43,720 --> 00:33:48,120
Speaker 4: extremely measured and disciplined and not the attacking of nuclear

640
00:33:48,240 --> 00:33:51,239
Speaker 4: or the attacking of oil infrastructure that the people had

641
00:33:51,280 --> 00:33:54,479
Speaker 4: worried about, and we've been seeing that all fall, this

642
00:33:54,640 --> 00:33:58,360
Speaker 4: sort of measured escalation, and so you had to get

643
00:33:58,360 --> 00:34:01,000
Speaker 4: that right. And then you have to get the election

644
00:34:01,160 --> 00:34:03,320
Speaker 4: right in terms of oil price, and then you have

645
00:34:03,400 --> 00:34:06,680
Speaker 4: to get the OPEC Thanksgiving meeting right in terms of

646
00:34:06,680 --> 00:34:09,200
Speaker 4: oil price. And then you wake up in January and

647
00:34:09,239 --> 00:34:11,840
Speaker 4: you have to decide what is China oil demand going

648
00:34:11,920 --> 00:34:15,800
Speaker 4: to do next year? This year has been stunningly poor

649
00:34:16,120 --> 00:34:19,120
Speaker 4: for Chinese oil demand growth, So you got to get

650
00:34:19,120 --> 00:34:22,960
Speaker 4: like fourth geopolitical things right. That's tough. Flipping coins on

651
00:34:23,040 --> 00:34:25,760
Speaker 4: him would be tough, and so most investors are simply waiting.

652
00:34:26,719 --> 00:34:28,960
Speaker 4: The way I'd frame it, at least in terms of

653
00:34:29,000 --> 00:34:32,440
Speaker 4: the election is, if it is a Trump presidency, you

654
00:34:32,440 --> 00:34:34,480
Speaker 4: can sort of believe he will do things like he

655
00:34:34,560 --> 00:34:36,759
Speaker 4: did last time, and then you have to separate it

656
00:34:36,800 --> 00:34:39,560
Speaker 4: into micro things he'll do around oil and the macro

657
00:34:39,600 --> 00:34:41,640
Speaker 4: things he'll do, like tariffs. Right, so somebody will have

658
00:34:41,640 --> 00:34:44,279
Speaker 4: a view on what his tariff policy is. But if

659
00:34:44,320 --> 00:34:47,320
Speaker 4: I just look at the oil sector, we know under

660
00:34:47,520 --> 00:34:51,480
Speaker 4: the Trump administration, sanctions on Iran were much more severe

661
00:34:51,480 --> 00:34:53,600
Speaker 4: than they are today, and so you could take a

662
00:34:53,680 --> 00:34:57,000
Speaker 4: million or two barrels off the market from Iran. And

663
00:34:57,080 --> 00:35:00,520
Speaker 4: he's no huge fan of Iran, so you could imagine

664
00:35:00,520 --> 00:35:03,640
Speaker 4: that decision wouldn't be that difficult for him. That would

665
00:35:03,640 --> 00:35:07,680
Speaker 4: strengthen oil price. Under Harris administration, you sort of assume,

666
00:35:08,239 --> 00:35:12,360
Speaker 4: for lack of clarity, more business as usual continuity with

667
00:35:12,520 --> 00:35:18,319
Speaker 4: Biden and so no radical reaction to Iranian sanctions. And

668
00:35:18,400 --> 00:35:21,000
Speaker 4: so I've been arguing for most of this year. I think,

669
00:35:21,040 --> 00:35:24,160
Speaker 4: starting in January, that Trump would be good for oil

670
00:35:24,239 --> 00:35:29,080
Speaker 4: price in that regard, and I've had a majority of

671
00:35:29,080 --> 00:35:32,000
Speaker 4: investors push back and worry about drill, baby drill. Where

672
00:35:32,000 --> 00:35:35,080
Speaker 4: he would be bad for oil price. Well, time will tell,

673
00:35:35,120 --> 00:35:39,040
Speaker 4: but ultimately it's much easier to put sanctions in place

674
00:35:39,120 --> 00:35:42,360
Speaker 4: on Venezuela or Iran than it is to convince an

675
00:35:42,360 --> 00:35:44,840
Speaker 4: oil and gas industry that's pretty mature, pretty grown up,

676
00:35:44,840 --> 00:35:47,520
Speaker 4: pretty disciplined to drill, baby drill.

677
00:35:47,600 --> 00:35:50,279
Speaker 2: I think I just have one last question. But since

678
00:35:50,320 --> 00:35:53,080
Speaker 2: I like hearing you talk geology and science, I like

679
00:35:53,160 --> 00:35:55,200
Speaker 2: the price stuff, but most you know, there are other

680
00:35:55,239 --> 00:35:57,000
Speaker 2: people in the world who could talk price stuff. Can

681
00:35:57,040 --> 00:35:59,360
Speaker 2: you talk about lithium brining and what that means and

682
00:35:59,400 --> 00:36:00,000
Speaker 2: how that'll work.

683
00:36:00,600 --> 00:36:05,200
Speaker 4: So broadly speaking, two places define lithium mines and brines,

684
00:36:05,600 --> 00:36:09,480
Speaker 4: and up until now the brines have been Let me

685
00:36:09,600 --> 00:36:12,279
Speaker 4: go to the most remote places on the planet. I'm

686
00:36:12,320 --> 00:36:14,840
Speaker 4: going to go to high altitudes and to these ancient

687
00:36:14,880 --> 00:36:17,680
Speaker 4: lake beds, these salars, these salty, dried up lake beds,

688
00:36:18,040 --> 00:36:22,520
Speaker 4: and the Atacama has this lithium triangle that spreads between Bolivia,

689
00:36:22,640 --> 00:36:26,160
Speaker 4: Argentina and Chile, the world's hugest endowsment. You go up

690
00:36:26,160 --> 00:36:28,880
Speaker 4: into the highlands of Tibet and you can find similar

691
00:36:29,160 --> 00:36:32,520
Speaker 4: so in Tibet, for example, Chinese companies are drilling wells

692
00:36:32,600 --> 00:36:34,560
Speaker 4: right again, which is kind of funny where we've come

693
00:36:34,600 --> 00:36:37,359
Speaker 4: full circle from my oil and gas roots. You drill

694
00:36:37,440 --> 00:36:39,959
Speaker 4: for uranium, you drill for oil, you drill for gas,

695
00:36:39,960 --> 00:36:43,120
Speaker 4: you drill for lithium brines. You pump this very salty

696
00:36:43,120 --> 00:36:47,080
Speaker 4: brine to the surface, and historically you let it evaporate.

697
00:36:47,239 --> 00:36:49,600
Speaker 4: You did the same thing the French have done on

698
00:36:49,640 --> 00:36:52,000
Speaker 4: their coasts for years, and you create seldom are the

699
00:36:52,160 --> 00:36:55,040
Speaker 4: beautiful sea salts. But you don't want the sodium chloride,

700
00:36:55,040 --> 00:36:57,360
Speaker 4: you don't want the table salt. You want the lithium,

701
00:36:57,680 --> 00:36:59,880
Speaker 4: and so we've been doing that for a very long time.

702
00:37:00,160 --> 00:37:03,960
Speaker 4: It's economic even doing it in these remote areas, and

703
00:37:04,000 --> 00:37:07,440
Speaker 4: then slowly and now quickly over time there is a

704
00:37:07,520 --> 00:37:10,640
Speaker 4: technology disruption. And so one of the reasons I have

705
00:37:10,760 --> 00:37:14,080
Speaker 4: to cover all of these various commodities is the shale

706
00:37:14,120 --> 00:37:18,200
Speaker 4: industry destroyed the oil patch. And the reason that shale

707
00:37:18,280 --> 00:37:22,120
Speaker 4: was such a disruptive technology was threefold. First, it's small

708
00:37:22,120 --> 00:37:24,759
Speaker 4: little units of capex ten million dollars a well, not

709
00:37:24,800 --> 00:37:29,160
Speaker 4: a billion dollar platform. Second, you get a quick response.

710
00:37:29,280 --> 00:37:31,879
Speaker 4: I get oil two quarters later, not five years later.

711
00:37:32,280 --> 00:37:35,080
Speaker 4: And third, we drilled one hundred thousand shale wells and

712
00:37:35,080 --> 00:37:37,239
Speaker 4: we got smarter and smarter and smarter. So Wright's law

713
00:37:37,280 --> 00:37:40,360
Speaker 4: that natural learning curve mattered. So why am I talking

714
00:37:40,400 --> 00:37:45,520
Speaker 4: about this in dlee? Well lithium is now being commercialized

715
00:37:45,560 --> 00:37:48,239
Speaker 4: with a new technology it's been around well dl E

716
00:37:48,400 --> 00:37:53,280
Speaker 4: direct lithium extraction, where instead of laying that briny liquid

717
00:37:53,320 --> 00:37:56,279
Speaker 4: out in the sun and letting mother nature evaporate it,

718
00:37:56,440 --> 00:37:58,440
Speaker 4: I'll do it in a tank. And so if you're

719
00:37:58,520 --> 00:38:01,560
Speaker 4: about a year ago, is when X Mobile announced their

720
00:38:01,640 --> 00:38:04,680
Speaker 4: plans to go to old oil field areas They're going

721
00:38:04,760 --> 00:38:08,160
Speaker 4: up into Arkansas and they are drilling wells to pump

722
00:38:08,200 --> 00:38:11,520
Speaker 4: out brinds from the Smackover formation, and they're going to

723
00:38:11,560 --> 00:38:14,600
Speaker 4: put it in a facility that doesn't look any different

724
00:38:14,640 --> 00:38:17,560
Speaker 4: than an Amazon fulfillment center, and they're going to extract

725
00:38:17,560 --> 00:38:20,279
Speaker 4: that lithium and by twenty thirty they want to have

726
00:38:20,320 --> 00:38:23,480
Speaker 4: a million cars worth of lithium. An equanor next door

727
00:38:23,480 --> 00:38:27,240
Speaker 4: in Arkansas wants to do the same thing. That technology works.

728
00:38:27,719 --> 00:38:31,800
Speaker 4: We saw Rio Tinto in my coverage spend paying almost

729
00:38:31,840 --> 00:38:36,360
Speaker 4: one hundred percent premium on a company that is leading

730
00:38:36,880 --> 00:38:39,399
Speaker 4: the industry in terms of direct lithium extraction. So there's

731
00:38:39,440 --> 00:38:42,520
Speaker 4: a disruptive technology that comes into the bottom of the

732
00:38:42,520 --> 00:38:46,760
Speaker 4: cost of on lithium. So that's the future of lithium

733
00:38:46,840 --> 00:38:50,080
Speaker 4: is will the industry get more lithium from old oil

734
00:38:50,080 --> 00:38:53,080
Speaker 4: fields or will they get it from the slars of

735
00:38:53,200 --> 00:38:54,400
Speaker 4: the high altitude andies.

736
00:38:54,880 --> 00:38:57,680
Speaker 3: Joe and I learned the hard way that commodities can

737
00:38:57,800 --> 00:39:01,000
Speaker 3: in fact evaporate when they're in container because I had

738
00:39:01,320 --> 00:39:04,919
Speaker 3: a small glass jar of crude oil and I left

739
00:39:04,920 --> 00:39:07,640
Speaker 3: it in the office when I moved to Abu Dhabi

740
00:39:07,680 --> 00:39:10,200
Speaker 3: because I figured I couldn't take a jar of oil

741
00:39:10,400 --> 00:39:14,520
Speaker 3: on a plane and it's slowly evaporated in the office,

742
00:39:14,760 --> 00:39:16,480
Speaker 3: for which I apologized, Joe.

743
00:39:16,400 --> 00:39:17,840
Speaker 2: That's okay. I don't as far as I know, I

744
00:39:17,880 --> 00:39:20,240
Speaker 2: didn't get sick. Wait, I have one tiny, tiny question,

745
00:39:20,400 --> 00:39:22,320
Speaker 2: and I just want to end it. Back on uranium.

746
00:39:22,360 --> 00:39:25,600
Speaker 2: What is the role of nuclear weapons decommissioning in the

747
00:39:25,719 --> 00:39:26,440
Speaker 2: uranium supply?

748
00:39:26,760 --> 00:39:30,239
Speaker 4: That's an excellent question, and so as a geologist, I

749
00:39:30,239 --> 00:39:32,359
Speaker 4: can go by mine by mine and add up all

750
00:39:32,360 --> 00:39:36,839
Speaker 4: of the uranium supply. There are three other places that

751
00:39:36,920 --> 00:39:39,879
Speaker 4: you can get uranium from. I can go to old

752
00:39:40,000 --> 00:39:42,799
Speaker 4: uranium tailings and enrich those. That's never going to be

753
00:39:42,800 --> 00:39:44,920
Speaker 4: the bottom of the cost curve. They wouldn't be sitting there.

754
00:39:45,200 --> 00:39:49,360
Speaker 4: The other is government stockpiles can release uranium. And the

755
00:39:49,400 --> 00:39:53,880
Speaker 4: third is I can accelerate the conversion literally almost literally

756
00:39:53,920 --> 00:39:58,840
Speaker 4: swords to plowshares and start moving decommissioning warheads and using

757
00:39:58,880 --> 00:40:01,880
Speaker 4: that as a supply. What I would say is the

758
00:40:01,920 --> 00:40:04,600
Speaker 4: government is not in the business of making money, So

759
00:40:04,640 --> 00:40:08,399
Speaker 4: I don't really worry that there's some government bureaucrat that says, oh,

760
00:40:08,560 --> 00:40:11,080
Speaker 4: uraniums at one hundred and town bucks, let's put some

761
00:40:11,160 --> 00:40:14,120
Speaker 4: of our volumes into the market. It will almost be

762
00:40:14,280 --> 00:40:17,760
Speaker 4: like gold. Right, as gold price goes up, governments actually

763
00:40:17,760 --> 00:40:21,200
Speaker 4: buy more. It's almost the reverse of what you'd expect.

764
00:40:21,880 --> 00:40:25,280
Speaker 4: And so if uranium price goes up, it's highly unlikely

765
00:40:25,320 --> 00:40:27,720
Speaker 4: that governments are like, let's make a quick buck. Instead,

766
00:40:27,719 --> 00:40:30,200
Speaker 4: they will see that as a strategic stockpile.

767
00:40:31,000 --> 00:40:33,520
Speaker 2: Bob Brackett, I can't think of any other guest where

768
00:40:33,560 --> 00:40:37,400
Speaker 2: we would go from the highlands and Tibet to a

769
00:40:37,480 --> 00:40:41,399
Speaker 2: random place in Arkansas. It's nuclear weapons decommissioning and it's

770
00:40:41,440 --> 00:40:43,800
Speaker 2: effect on the uranium price, but there's no doubt we

771
00:40:43,840 --> 00:40:45,080
Speaker 2: could do it to you. Thank you so much for

772
00:40:45,120 --> 00:40:46,040
Speaker 2: coming back on online.

773
00:40:46,080 --> 00:40:48,080
Speaker 4: Absolutely my pleasure. Thanks Joe, thanks gas seeing.

774
00:41:00,960 --> 00:41:02,520
Speaker 2: I love talking to Bob. They're so fun.

775
00:41:02,680 --> 00:41:04,839
Speaker 3: Yeah, he's one of those rare guests where you can

776
00:41:04,920 --> 00:41:08,719
Speaker 3: just sort of throw out anything and literally answer expertly.

777
00:41:08,840 --> 00:41:12,399
Speaker 2: Ohmercaief is kind of like that, And he's another one where, yeah,

778
00:41:12,480 --> 00:41:14,960
Speaker 2: you just have there was just no doubt that if

779
00:41:15,000 --> 00:41:17,560
Speaker 2: you throw something out, he's going to have some extremely

780
00:41:17,640 --> 00:41:19,279
Speaker 2: granular knowledge of what he's talking about.

781
00:41:19,360 --> 00:41:19,560
Speaker 4: Yeah.

782
00:41:19,560 --> 00:41:22,840
Speaker 3: Brad Setzer as well is one that sticks in my mind. No,

783
00:41:23,040 --> 00:41:25,920
Speaker 3: that was fascinating I do wonder. First of all, I

784
00:41:25,920 --> 00:41:29,160
Speaker 3: feel like there's this weird, like overarching theme when it

785
00:41:29,200 --> 00:41:33,120
Speaker 3: comes to these commodities where people get really like emotionally

786
00:41:33,280 --> 00:41:36,600
Speaker 3: attached to a lot of them. You know, I don't

787
00:41:36,600 --> 00:41:39,959
Speaker 3: think anyone treats like US treasuries in the same way

788
00:41:40,040 --> 00:41:44,000
Speaker 3: they treat like the same uranium or gold or something

789
00:41:44,080 --> 00:41:47,440
Speaker 3: like that. So that's kind of interesting why that happens.

790
00:41:47,680 --> 00:41:51,400
Speaker 3: And then secondly, I was thinking about the prospects for

791
00:41:51,480 --> 00:41:55,320
Speaker 3: nuclear energy, and it does. I take Bob's point about

792
00:41:55,400 --> 00:41:58,040
Speaker 3: how you're actually measuring the cost and that things like

793
00:41:58,120 --> 00:42:01,480
Speaker 3: Elco aren't going to take into a out the stability

794
00:42:01,680 --> 00:42:04,760
Speaker 3: of nuclear power, but I do wonder as the cost

795
00:42:04,840 --> 00:42:09,080
Speaker 3: curve comes down for stuff like solar, if you know,

796
00:42:09,239 --> 00:42:12,320
Speaker 3: maybe some of the appetite for nuclear kind of ebbs.

797
00:42:12,920 --> 00:42:14,680
Speaker 2: Yeah, we'll have to see. I mean, to my mind,

798
00:42:14,680 --> 00:42:17,560
Speaker 2: there's still just so much incredible uncertainty about what the

799
00:42:17,680 --> 00:42:21,800
Speaker 2: energy mix looks like in five years, ten years, twenty

800
00:42:21,880 --> 00:42:25,080
Speaker 2: years and beyond. You know, Bob said something that was

801
00:42:25,120 --> 00:42:28,600
Speaker 2: like this major light bulb moment for me in that conversation.

802
00:42:29,360 --> 00:42:33,399
Speaker 2: I've always thought commodity people are a little bit screw loose.

803
00:42:33,680 --> 00:42:35,760
Speaker 2: Many of them, not Bob, but you know, like especially

804
00:42:35,800 --> 00:42:38,359
Speaker 2: that people get really culty about commodities and stuff like that.

805
00:42:38,800 --> 00:42:41,920
Speaker 2: And then he said, all commodity people are aware that

806
00:42:41,960 --> 00:42:44,560
Speaker 2: their business is disappearing. And it's like, you know what,

807
00:42:44,719 --> 00:42:46,480
Speaker 2: if I were in a business like that where every

808
00:42:46,560 --> 00:42:47,640
Speaker 2: day I woke up.

809
00:42:47,480 --> 00:42:48,920
Speaker 3: And knew it, you'd be a little weird too.

810
00:42:49,080 --> 00:42:51,680
Speaker 2: Yeah, It's like, Okay, I get it. I forgive you. You're

811
00:42:51,520 --> 00:42:53,719
Speaker 2: in a business where every day like there's less and

812
00:42:53,760 --> 00:42:55,640
Speaker 2: less of it in the world and people are trying

813
00:42:55,680 --> 00:42:59,120
Speaker 2: to substitute away from it. I get it, all right.

814
00:42:59,160 --> 00:42:59,960
Speaker 3: Shall we leave it there?

815
00:43:00,080 --> 00:43:00,839
Speaker 2: Let's leave it there.

816
00:43:01,000 --> 00:43:03,960
Speaker 3: This has been another episode of the Odd Loots podcast.

817
00:43:04,080 --> 00:43:07,440
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

818
00:43:07,080 --> 00:43:09,880
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.

819
00:43:10,120 --> 00:43:13,760
Speaker 2: Follow our producers Carmen Rodriguez at Kerman Arman, Dashel Bennett

820
00:43:13,760 --> 00:43:16,799
Speaker 2: at Dashbot and Kilbrooks at Kilbrooks. Thank you to our

821
00:43:16,840 --> 00:43:19,719
Speaker 2: producer Moses Ondem. From our odd Lots content, go to

822
00:43:19,719 --> 00:43:22,880
Speaker 2: bloomberg dot com slash odd Lots, where transcripts, a blog

823
00:43:22,920 --> 00:43:25,440
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824
00:43:25,520 --> 00:43:28,000
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825
00:43:28,080 --> 00:43:31,000
Speaker 2: our discord discord dot gg slash, od.

826
00:43:30,840 --> 00:43:33,880
Speaker 3: Loots and if you enjoy odd Lots. If you like

827
00:43:33,920 --> 00:43:36,719
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828
00:43:36,840 --> 00:43:40,040
Speaker 3: Bob Brackett, then please leave us a positive review on

829
00:43:40,120 --> 00:43:43,359
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830
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831
00:43:48,120 --> 00:43:51,359
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832
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834
00:43:57,760 --> 00:44:04,200
Speaker 3: Thanks for listening in