I mean, I suppose the only frustration for, you know, people like me when you have these generalists coming into the space, I mean, it's great on the way in, but they don't like commodity investing is they they hate the space. And so, you know, the moment that something wobbles or goes a little bit wrong, like they sell and sell hard and get out because they. Never wanted to be there.
Exactly right, Exactly right. All right, money miners, we are a man and a half down with Trevor being a good son, supporting his mother up in Singapore for her birthday. But we have Sammy Berege to more than make up for it. Sammy, what a start to the year it's been. First two weeks. It's it was enough to drag you away from the ashes. You know, the 5th test like the
headlines. You know, the first couple of weeks a year, you just want didn't know what was going to happen next between Iran and gold going through the roof. And then now Trump wants Greenland. And then you throw some, you know, threatened criminal charges at the chairman and the Fed all mixed up together. It's yeah, been a pretty good start for hard assets like commodities. Yeah, Yeah, it has.
And to, to put it in a bit more context, I mean your, your returns last year were outstanding across the the two funds that you kind of managed. So it's not as if we're in the in, you know, that the very bottom and seen a kind of bounce out of nothing. A lot of fundies in the the natural resources space had had pretty decent 2020 fives, but it's a real continuation of the theme, right?
Yeah, it is. It's, you know, just set like the December quarter last year was quite strong for the entire sector. And yeah, it's a lot of those themes just keeping on going. Whereas I suppose the one observation in January is that because the sector has moved so hard and so fast, it's capturing, capturing the attention of of generalists and investment advisors and, and various other asset allocators who are underweight the space. And that underweight is hurting their relative returns.
And so, you know, the level of inquiry, you know, just in January for, you know, getting more money or putting money to work in the space has been quite acute. So, you know, that can lead to a bit of frothiness. So it's, you know, it can be a double edged sword, but still that's what's happening at the moment. How far along in that process do you think we are?
I think pretty early stage, there was some interesting sort of recommendations coming out in December about, you know, big banks advising their, you know, high net worth clients that they should add, you know, another percent or or so to their, to gold, for example, is part of their, their asset allocation. And, and across, you know, Europe and the US. Like what that means in terms of gold demand is, is quite
staggering. So, you know, if people are looking to, you know, primarily gold, but also secondary, the other commodities as alternative stores of value to, you know, Fiat currency, well, that process is in, it is in it's infancy. And again, it can lead to frothiness, but I think we're, you know, we're closer to the beginning than the end of of that process.
Yeah, you see a lot of top investors around the world talking about a 6020 twenty types of portfolios where the allocation to gold is, is unlike anything we've seen in in the last 100 years. But it still seems as if we're pretty far away from that actually happening. Yeah, I mean, again, you know, these people aren't idiots. They don't want to be buying the top. So, you know, if prices start running away too quickly, I suspect they'll hold back. But that that latent demand, I
think is still there. So, you know, you'll end up with higher lows and higher highs as dips continue to be bought, you know, until some point that the macro changes. But yeah, I don't think it's changing, you know, materially anytime soon. So when you when you think about this period in history and, and what commodities are doing what, what other period do do you reflect most on?
I know the the 70s is is 1 you've spoken about, but what what sort of matches and what doesn't match with with that error? Yeah, it's a, it's a, it's a good point. And you know, everybody wants to sort of find the analogy to give themselves a little bit more conviction in, in forecasting what's going to happen next. And I think the, the environment we are now is certainly has stronger similarities with the 70s than the last commodity boom, which was obviously China demand LED.
Whereas in the 70s, you know, there was a, an energy crisis, a shortage of oil that was, you know, geopolitically lead and then that, you know, was very inflationary. And then that flowed into, into a lot of other hard assets around the world. So, you know, today we've got China and, and the US competing over, you know, various metals. You know, certainly the, the US has built up huge inventories of
copper over the last 12 months. They're discussing, you know, building strategic reserves of, of rare earths. And I think there'll be more metals added to that. So they're the echoes that we get. It's more a a sort of a restriction of flow of commodities around that's driving prices as opposed to a a traditional sort of demand LED deficit. That said, I mean going into 2026, I mean demand does look a little bit better than it did in 2025.
So that's helpful. But that sort of de globalization trade and and you know, restocking event by countries around the world as they look to secure their own commodities, that's really something to watch to determine sort of the trajectory of metals prices on the way forward. Yeah, when when we think about how wild the the past year and the past couple weeks have been, the the 70s are really interesting example because oil jumps about four times in in one
year. I think in 1973, over the decade, gold I think was up 20X from being pegged. Silver goes from like 8 bucks to to to 50 bucks. So these are these are crazy movements in the in the meadows. Yeah. And it's, and then you think, well, you know what, what brought that bull market to an end because it went, you know, more or less for eight years. I mean, there were some spikes along the way.
And it ended when I think Paul Volcker, you know, took up chairmanship of the Fed and then he hiked interest rates to something like 20% to combat inflation. And that's snuffed out the market. And, and that was that, whereas today, with the amount of debt sloshing around the world, if any Fed chairman tried to do anything like that, like it would cause massive, massive issues. So, you know, pulling that interest rate lever is, is going to be much more difficult.
And, and obviously, you know, Trump's railing hard against against any suggestion that that could take place. So it's not clear what's going to bring sort of this sort of scenario to an end. I mean, you know, commodity prices go high enough, you end up with, you know, supply, sorry, price induced demand destruction. Like people just can't afford to use the, the commodities for, for all applications. So that brings demand down a
little bit. But again, you know, we're, I think we're at the more much closer to the beginning of this this, you know, rally than than the end. Yeah, yeah. Well, love him or loathe him, Elon Musk was tweeting, I think the other day that the silver rally is not good, given the, the kind of industries he works in as well, how much silver is used as, as one of the top conductors in, in the world and humanoids and anything else they
want to build battery related. So there's very real kind of consequences on, on that kind of front. If, if we look to, to Asia kind of getting a bit closer to home from, from the US now it's interesting to see some of the data and you flag some of the PMI data, which in, in simple terms, I think people can think of as a lead indicator potentially on, on metals demand, commodities demand. What are you sort of sniffing out from there?
I think it's, we're finally starting to see a bit of traction of the stimulus efforts over 2025 sort of flow into the, the real, you know, the real world. And, and, and that's reflected in those PMI numbers for, for Asia. So for March of 25, you know, you had the big sort of, you know, hissy fit over Trump's imposition of tariffs in April. You know, that did impact the US demand. It did impact Chinese demand for
commodities. The Chinese were very selective in how they chose to stimulate their economy to just can't try and keep things on an even queue, you know, more focused on consumer electronics E VS manufacturing basically. And bit by bit that stimulus appears to have been, you know, effective now and we're starting to see Pmis turn positive.
But the other factor, which is a, you know, different from the last commodities boom is that the delta in Chinese demand seems to be flowing through their exports. So it's basically rest of world demand as you know as expressed through Chinese exports, which is the area that's surprising to
the upside. So you know, this commodities rally at the moment feels much more broad based from a demand point of view than you know the very China centric rally that we had through the 2000s which is which is interesting. Yeah, yeah. I mean steel, steel is what comes to my mind like the the the amount that China's exporting in steel has a bunch of ramifications.
But firstly, it tells you what the demand overseas is like and, and secondly, what it's doing to any other domestic steelmaking Bluescope here in Australia, the bits that they do produce here and the the Europeans just begging for, for tariff and subsidy type protection for their their industry.
Where, where does that kind of go like yet I don't think you're too far off the mark in thinking that part of this is, is deliberate from, from the Chinese and how they think about it. Or is it all just property market collapsing? I think, I think it's a bit of a bit of both like the, you know, the Chinese construction and property markets been, you know, has been horrible for years now. It's not doesn't look like it's going to get any help either.
But at the same time, like you've had legit growth through, you know, Vietnam, Indonesia, you know, the ASEAN nations in general. And you know, they, they do have, you know, they're drawing more, more steel into those countries. And so, you know, I think it's, it's just, you know, the that sort of population base, which when you include India is actually much bigger than China.
You know, they've their growth has been quite rapid for a long time, but finally it's starting to compound off a, off a reasonable base and is and is moving the needle a little bit more. But just on the steel exports, there was a very interesting headline in I think it was, yeah, first week of January around China requiring any steel exports to get sort of, you know, federal government approval before, you know, before they're if they're allowed to export steel out of the country.
Now that's been, you know, sort of a rubber stamping effort to date. But as the world becomes more reliant on China for steel because their exports are a bigger part of of rest of world demand, if they were to slam the brakes on those steel exports, it would, you know, it would be ruinous for, you know, construction costs around the world because, you know, the China exports is having such a big influence on setting the price.
And we can see, you know, the amount of leverage they have in the rare earth market. You know, there is potential for something similar in steel and possibly an aluminium.
So you know this weaponization of commodities could spread and not say it will, but you know the the mechanisms are there for it to do so. So on on the back of that has has your thinking, I mean, I remember having you in this room and about six months ago we we were speaking about the all the checks that our government had been writing to traffic EUR the Glen cause of the world here in Australia for their downstream metals processing mainly in the base metal space.
And that has all come off the back of the the weaponization of of this. And it's always a bit murky because then you're giving money to traffic Euro Glencoe. It's not exactly a stand up Australian producer. But you've if if you are of the view that you need to have some sort of industry and they're the only ones left, what do you kind of do is so has your thinking on that changed at all?
No, no, I think if anything, it's probably a subset of that speech by the Canadian PM, Mark Carney, which is, you know, gone sort of viral over the last couple of days saying, you know, it's a, we're seeing a change in the, you know, the the world order and, you know, all these grandiose arm waving statements. But, you know, if globalization does start to reverse and you can no longer rely on the free flow of commodities and goods
around the world. And so we go back to an environment where, you know, countries have to be, you know, to a much greater extent, self-sufficient. That's massively inflationary for for metals prices because we can't compete with, you know, the refining costs, not the mining like we do mining reasonably well, but the refining costs we we just can't compete with because our power prices are too high and going higher. So yeah, I think that theme, if anything, is strengthening.
So do we just have to be smarter with with who we pick as partners? Yeah, definitely. And I think I, you know, I think you need to be realistic about the value of these industries because I think it was one of the economists saw Kevonik, I think his name is, you know, came out the other day said, oh, you know, manufacturing jobs aren't any more important than any other jobs. And on a superficial level, he is right. I mean, it's, it's just dollars and cents.
However, the, the benefits or the fringe benefits that you get from a big manufacturing industry, you know, do help lower prices or do facilitate other activities in the economy. And for example, take the power station in New South Wales and produces I think maybe FIF, no, a bit more than that, maybe 20% of NSW power like that was built sort of hand in glove with their with the Tomago aluminium refinery. So it produces power at a very low price.
And yes, it supports that refinery going into production and making money, but it also supports cheap power prices for the rest of the for the rest of NSW and, and for a very long time, like that sort of symbiosis helped Australia become a very low power and power country. And, and that helps our manufacturing. So, you know, if that manufacturing dies, then also the demand for those big base load power generation also dies.
But that means we end up with, you know, high power costs, you know, flowing through the rest of the economy, which is a, you know, a bad thing. Yeah, OK. If we if we change tack now, there's a bunch of medals, a lot of them are breaking through all time high semis. So I want to go through them because not all the, the the reasons are alike. Some of them are performing strongly for for quite varying reasons.
So Copper, I want to start with what, what are you making of this incredible rally we're seeing there and, and what's got us to this point? Well, yeah, I think as as touched on earlier like that, the big, big stockpiling by the US of copper has been a a major driver of the of the rally to date. Even copper inventories around the world have actually been increasing while the price has been increasing. So that's a bit counter
intuitive. I think the prices are where they are because there's a little bit of concern in the copper market that those inventories that are within the US won't be allowed to flow back out to the rest of the world. Should the sort of LMA price rise above the COMEX price, which would then incentivize the flow of copper out of the US. Now if that doesn't happen, yeah, it's throws back to what we're just just discussing and that, you know, countries is sort of each country for themselves.
But you know, I think that is a bit of a risk to the downside for. I mean, if assuming that, sorry, assuming the copper does flow out, that's a risk to the downside of those prices. But I think it's $6. You're also going to see it $6 a pound that is see an increase in scrap supply. So I, I reckon cop is looking pretty full up here. Where it pulls back to I I'm not
sure. I think it probably remains quite elevated because you know, whilst there has been a, a big inventory build last year and you know, maybe that's got a little bit of a head of itself, you know, looking in to 272829 like that structural deficit is, is well and truly there. So, you know, that's, you know, probably a little bit wary, but in the short term, but longer term, you know, things still
look pretty good. Yeah, yeah, 22 follow-ups, the first one and I have almost no experience in this. So I'm curious to to hear what you think. But I've heard with the the inventories that over the past 20 years there's been a real change in in where the inventories are held. So it's much harder these days to actually surmise what the global state of inventories is. Is this off base or does that sound broadly right?
I think. It is, it is difficult, but there is also, you know, with a big, big liquid market like copper, it is worth the while of the various sort of commodity consultants and banks and analysts etcetera, to, you know, try and put some numbers to that as best they can. So I, you know, I'd, I'd be surprised if that there's any, you know, if the, if the rounding errors in these numbers undermine the, you know, the premise that inventories actually have increased a bit around the world.
But yeah, I mean, that remains to be seen. Yeah. And the second follow up is TCRCS. They've been a huge gift to the copper miners that we know here. I mean, given given their money as opposed to the other way around, how long does that continue? I think for a while, I mean the shortage of copper concentrate doesn't look like it's going away unless you start to see refineries shut down and sort of you know reduce that supply demand mismatch, you know by
shutting refineries. And then that should allow the balance of them to get some more pricing power in terms of their TCRC negotiations. Certainly you know, I don't think any anyones building any more copper refineries anytime soon. So I mean it should you know slowly correct itself, but I don't think it's going to be a
near term event. It'll take time for the, the copper concentrate supply to bit by bit, you know move in excess of of smelting capacity and at some and at that point you start to see a normalization of TCRC's. Yeah, yeah. And at this point in the cycle, are there preferred ways for you to to play the copper? Do you, do you like some of the juniors at the moment? Are you safe in some of the producers or do you think like copper is such a richly valued place to be at the moment?
It's, it's a good question. I mean, you know, if, if a commodity price falls, you know, doesn't really matter what your exposure is. I mean, everything, you know, falls a, a reasonable amount, regardless of sort of, you know, where it's trading for, for fair value. But I think that the, you know, the, the top tier or the, you know, better quality development stories are probably where the value exists in the market today. So, you know, the developers never really price in spot at
all. So there is certainly there's discounts to to spot available there. And you know, because of the shortage of, you know, large. And when I say large, I mean sort of 50,000 tonne and above copper projects in desirable jurisdictions. I think if you know, any development story that falls into that basket is, is an M and a candidate. And so that's, you know, probably where we'd prefer to look. Do you do you spend much time looking at the overseas names? Yeah.
Yeah. I mean there's, there's not much left of a of a copper industry in, in Australia due to all, all the M&A and you know sand fires, you know sits there as as being pretty richly priced as a result. And, you know, a long way below that there is a sort of a growing group of, of, of smaller producers trying to get up and running. And, you know, they, they've had, you know, had various struggles over the years because they've, they've been higher cost.
But yeah, their, their margins would be looking much better now. So you know, there might be some some opportunities there, but you know, you just always need to balance that risk and reward with those guys. All right, next commodity uranium, Uranium has been on an upward trend again and everyone is bullish in in the space again. Interestingly, spot has been buying quite a bit again. So I think they're at over £70 million locked up in the in the vaults.
They're never to be seen again. So yeah, interesting dynamics with the the term and the spot pricing that we're seeing. A lot of the the miners once again are being priced very, very kind of richly. So what do you make of the whole space? I think uranium is or is enjoying some tailwinds as being a bit of a proxy to the the AI data center build out and the power requirements that that
will that needs. And so every time you know, the all the big tech stocks in the US have a bit of a sell off will you know, the uranium stocks usually go with it. So that's annoying and it doesn't have anything to do with the fundamental supply demand story. It's just something to be aware of as as noise you're going to have the uranium market has to contend with. But I think that, you know, it doesn't make any sense for the spot price to be below the term price.
You know, if the term market's where all the volume is, you know, why wouldn't you go and soak up pounds in the spot market until, you know, until such a point you get to the to the term price. So I think that's, you know, that's probably the first move that we're going to see. And certainly the, the split, sorry, the spot ETF buying will
help that happen. But beyond that, yeah, I mean, it's, you know, the, the deficits, you know, are looming and, you know, those reactors or these new reactors, you know, do need to start contracting, you know, a long time ahead when they're actually starting to to Commission. And, you know, there's still a few years away.
But I suppose a sort of shorter term, you know, these Japanese reactors continuing to restart and, and other existing reactors around the world all prolonging their life is probably where the, you know, the incremental sort of fundamental demand is coming from. But still today, like, I mean, we saw with Paladin's quarterly report just a couple of days ago, like even at $85 a pound and, and yeah, sure, the achieve Paladin's achieved price was a bit below that, they're still
not making any money. So, you know, for big waves of new supply to come on, you know, the price doesn't appear to be high enough just yet. Yeah, it's remarkable how many all in sustainings, all in costs. We can see at half the realized cross money doesn't drop to the bottom line. And on the on the macro, it was interesting to see Mertz, the the leader of Germany or the Chancellor acknowledge finally that it was a mistake to turn off the the reactors. So a bit more of that rhetoric
around the world. I think we'll, we'll be saying. Yeah, definitely. I mean, it's nice that he finally came out and said so, but yeah, it was an absolute disaster both for Germany and the environment as well. But anyway, Greenpeace can go pat themselves on the back because they were championing championing that initiative for years. One more question on the the uranium discussion more broadly is the US view.
So they've been quite strategic in how they've gone about certain projects, certain metals, rare earths last year for instance. Do you see them doing something similar in the uranium space, picking a national champion? I think it's, I think it's quite possible. Certainly, you know, in the when you go through the list of medals the US seems most concerned about, they've already underwritten the price for rare earths. I think uraniums quite high up there on the list and so. 20% of
their their electricity. It's huge. Yeah, and, and obviously the demand for, you know, more and more and more power generation. I mean, Trump just wants to saturate the country with as much generation as he can to as a means of, of stimulating, you know, GDP growth. So, yeah, it's it's very difficult to sort of forecast, you know, what that what shape that might take. But underwriting an increase in domestic uranium production in the USI think is, you know, is a sensible bet.
Like I, you know, I just wouldn't be surprised if they do it. And I think there's maybe a little bit of expectation in prices that that's going to take place. But yeah, you know, we wait and see, but I think that makes a lot of sense. Are there are there any names in the uranium space you you're holding at the moment you think are still quite cheap or you're more likely to trim in this kind of environment?
It's all, I mean I think most of the you know, the more liquid names with the exception of you know, things like Kamiko which traded a big premium to the rest of the market are pricing in more or less spot. But a lot of people as a lot of the sort of the the brokers and banks don't have forecasts going material materially above where we are at the moment. So that's where the opportunity is.
I mean, if you take a view that, you know, uranium is going to go to 150, well, you know, things look cheap, but you know, that requires you stepping away from consensus by by a fair degree. So I think there's there's still more to play out in terms of what the US is going to do and what that will mean for prices. And that's probably keeping, you know, keeping our holdings as is for the for the near term. But yeah, if any of that changes, well, you know, we'll change our mind.
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Even saying the word sounds kind of funny. How do you how do you sort of take into account everything we've kind of seen like this latest kick up from sort of 4400 where it kind of consolidated for, for a while has been pretty electrifying again on the back of geopolitics and the like. So how are you sort of chewing it all up and and digesting
this? Yeah, it's, it's really, it's really difficult as a, as a manager to try and you know, you know, manage your, your exposures to this appropriately because on the one hand we, I mean, we do have a big gold exposure and you know, that becomes bigger as you, your gold holdings, you know, rally. And I think undoubtedly we've had a confluence of quite positive events for gold over over the last or sorry the first couple of weeks of the year.
And so that's probably added a little bit of froth to, you know, over and above the, the underlying support for gold, which is a bit of skepticism that around the, the value of U.S. dollar and dollars and, and just government debt levels
globally. But every time anyone sold, you know, their gold exposures over the last 18 months, two years, it's been the wrong thing to do. So, you know, I I must admit, like the melt up in price we've had over the last couple of weeks does feel a bit like October last year, after which, you know, things got a bit overboard.
There were stories about, you know, people lining up in Martin Place to buy physical gold and you know, sure enough, the price rolled over by, you know, a couple 100 bucks an ounce straight after that. But here we are back at all time highs and the drivers, I think for a high gold price still
remain very much in place. So, yeah, I mean, we just again, you know, anything that's looking a little bit frothy or we, we see, you know, or foresee risks to production and downgrades, we'd, you know, probably be trimming those as as as you know, where we see that that opportunity. But, you know, I think the value in the gold market at the moment still sits with the the developers.
And that's because I think a lot of a lot of people in the market are sort of slow to, you know, run numbers to what, you know, what a development proposition might be worth. And you know, I've did this recently the, you know, you take your generic, you know, 100,000 oz producer. Oh, sorry, yeah, 100,100 thousand ounce per annum
project. So you need about 1,000,000 ounces in reserve or to to achieve that, you know, I assume $300 million for for CapEx and you know, even a pretty conservative cost of about 3000 bucks an ounce. Well, you're going to end up with AMPV for that project of 1.41 point $5 billion, you know, but that's not what these development projects are being valued at us.
It's nowhere, nowhere near it. So, you know, even if the gold price was to pull back, you know, a couple 100 bucks an ounce, I think these, you know, projects that look like they're able to be permitted, you know, no fatal flaws. They will, you know, endure in terms of their share price. And and you know what, we should continue to outperform on the upside even, you know, even in a bit of a pullback. And you're expecting some of the producers to to jump on these
opportunities? Yeah, definitely. I mean, there's one of the reasons that I suppose generalist investors hate commodities is because it's an industry of depleting assets and modeling that is is difficult is different to modeling an industrial company and it just. Doesn't look as good when you don't have the terminal value that goes on. Yeah. You know, you got to replace your resources and reserves, but for producing companies that's becoming cheaper and cheaper.
I mean, the margins of of some of these gold companies now start starting to look like software companies. I mean on the back of the envelope looking at Capricorn, which you know, one of the lower cost producers, like they're my EBITDA margins are like, you know, high 70s, you know, possibly touching 80% today with a spot price move. I mean, that's, that's like a software company.
But so the CapEx hurdle to replace those reserves because CapEx and costs aren't going up anywhere near as much as the gold price is, you know, it's becoming smaller and smaller. And so that lends itself to to M&A if they don't, you know, have the resources themselves. And interestingly with, with the Capricorn example, they've been very disciplined about not recutting the, the ore body and and changing the assumptions
going into that. Do you think we've seen sort of discipline across the board from the from the producers there? Yeah, I think to to the extent possible, I think you have. I still feel that throughout the mining industry in general, like the scars of the last commodity boom are still present and the memory is still there where, you know, people just let costs run, you know, unchecked because, you know, revenue, the revenue line
was growing so much. Whereas this time round by and large, I think cost discipline is much better and margins are you know, they are increasing. Whereas you know, in, in previous cycles you sort of saw, you know, the, you know, 90th percentile of costs almost tracked the commodity price or, or the gold price specifically, you know, almost in parallel. Whereas more recently gold price you know, has gone sort of exponential and costs are, are reasonably stable at the moment.
So you know those margins are increasing and you know to your point that that cost control is much better. Yeah, you said Scars of the Last Boom and I couldn't help but think of Rio Tinto. And I haven't actually spoken on the show about Rio and and Glencore because it's, it's just such a big deal and it's it's hard for a lot of people and it's not that meaningful for a lot of people at the smaller end of the market to have a strong view on this one way or another.
But are there sort of ramifications of this type of deal or are there little caveats to it that you think are kind of interesting for for investors or or speculators to kind of think about? Yeah, I think probably the the one factor that will jump to particularly institutional investors minds very quickly is what the index ramifications are for such a merger. Because if you know BH PS waiting in the, you know, all small or the ASX 200 I suppose
is is monstrous. And so it demands attention for people who are benchmarked against that index. If something similar was, you know, if Rio and Glencore were to get together, you're going to end up with a similar scenario because it would be a bigger company than than BHP. So yeah, that's certainly one, one part of it. But from an operational point of view, I suspect the cultures are
quite different between the two. I mean, you know, Rio's got, you know, has a has a finger in the pie and sort of in terms of African developments via SIM. And do you know how they go operating in the in the DRC with Glencor's copper mines? There is a bit of an open question. I mean Glencore seems to do OK, but it is it is tough. Very hard to see Rio operate in the DRC.
Yeah, I'm not sure. I'm not sure how, you know, they're very sort of straight laced approach is going to going to work in in that country on a number of fronts. But and then there's another question of what happens to the coal assets that Glencore's got, you know, do they get spun out as a sort of a, you know, Spinco to try and clean up Glencore to make it a little bit more palatable to the Rio investor
base? I mean, all these are, you know, quite sort of open-ended questions, but there'd be some huge fees on the line for the for the bankers on this merger. So I'm sure they'll find a way to solve those problems as best they can. Yeah, yeah, life changing fees I think in this one. A couple of the other medals I'm, I'm keen to, to touch on PGMS. They've really been working and one for us here in Australia because it's just not that much exposure on, on the ASX.
And that's part of the, the charm, if you like, of, of PGMS because it's South Africa, it's it's Russia, it's these parts of the world. Have have you played this in, in any way and do you have a strong view on it? No, we haven't. I was. I was getting. Closer and closer to just buying the physical last year and I didn't pull the trigger, which is, you know, one of many mistakes that we made a good year for, for many mistakes. I reckon. Oh yeah, yeah. But I mean, you know.
You can always be better and you know, should always, you know, go through and you know, work out what you know why you didn't or or whatever to try and not avoid making that mistake again. But I think for for the for the, the platinum group elements once again, like similar to what our discussion about copper is that it it the move in price seems to be investor LED rather than
demand LED. It had probably, I think probably had some quite tangible foundations in that, you know, people came to the view that internal combustion engines are going to be around for a lot longer than, you know, what we might have thought three or four years ago. And so that means the, you know, PGE demand for the catalytic converters is, is going to be a bit more enduring. And then, you know, OK, so we need, you know, we're going to need this stuff for a bit longer.
And for a long time, you know, platinum was trading, you know, well below the cost curve for some of those South African mines. And then the investors have sort of piled on top of that thematic and push prices quite a long way. You know, where does it end? I'm not quite sure. You know, picking sentiment or second guessing sentiment can be quite difficult sometimes. But, you know, that's my understanding of what's transpired to date. Yeah, Yeah.
And and how? About tin, this is 1 We do have a small little view into here in Australia down in in Tassie with with some rich history as well. But the tin market has been electric to the to start this year. And there's yeah, there's a whole bunch of different reasons why there's lots happening in the in the small pockets that
produce tin around the world. And there seems to be a lot of attention on it. I think you've got a bit of exposure from from what I kind of know down in, in, in Tassie. But how are you thinking about it? I mean this is one has. A bit of a more sort of solid foundation to it to my think. I mean, there's, you know, the demand through electronics and data center building out is, you
know, it's quite tangible. It's difficult for investors to move the tin price around because it's, it's a, you know, it's not a particularly liquid market. It's hard for big financial flows to come and to come and go like, you know, like copper, for example. And then on supply side, like through, you know, Cambodia, Southeast Asia and India and sorry, Burma, I think is the other other countries, you know, had their supply disrupted.
I mean, you know, that looks like it's going to be long, you know, long lasting. And I think there was another, there was a one of the larger tin mines just in on the border between DRC and Uganda. Yeah, that's the one. So Alpha Men's mine. In in the DRC, Yeah, yeah, that's the one. And I mean. That I think that knocked out something like 5% of global
supply or something like that. So I was, you know, when you've got a tight market and all of a sudden somebody pinches, you know, knocks out 5%, will buyers tend to start to get very nervous and and they will start building, you know, building inventory to protect themselves against further price rises. But, you know, that just leads to the price moving anyway. So it's, yeah, it's a, you know, positive feedback loop that the metal's in at the moment. Yeah.
A nice little project down. In Tasmania seems seems a bit easier to manage than yeah, some of the more eclectic parts of the world. That's right. Yeah. So aluminium is one of the other ones. And this is a a whole supply chain. There's lots to it. There's the the books that play as alumina aluminium, but it's it's been kind of hot as well to to start the year. It's had people talking about it.
And we've got a bit of insight into it in Australia with the various parts of the supply chain that we see in Australia. I know MMI was a company a couple of years ago that we'd we'd spoken about, but are you saying pockets of value in in the in the chain? Yeah, definitely. And I think that it's. You know, the rally and copper price is probably shown thrown aluminium into sharper focus because there is a, you know, a substitution trade there sort of
at the margins. But also the ratio of copper to aluminium, which usually sits around I think 3.7 to 4 times as has blown out as as copper as rallied. So you know that starts to look show aluminium as being cheap. But again, on a sort of a longer term view, the, the interesting story with aluminium is, is that, you know, for a long time or for the last decade, your new aluminium capacity has come from China, you know, with, with very cheap power.
Because you know, aluminium is basically just congealed electricity. Whereas China's now has put a 45,000,000 tonne per annum cap on their capacity and they certainly appear to be sticking to that. So begs the question, I mean, as demand grows, where is your spare? You know, where, where is your additional aluminium going to come from? And most people point to Indonesia and you know, the potential for them to do, you know, something similar as they've done with nickel with aluminium.
But Morgan Stanley shot up to Indonesia in in January and, and their takeaways were that the the power generation is just not there to really accelerate their aluminium production growth anytime in the next two to three years. Like it's, it's going to take a take a while. So, you know, incremental supply from Indonesia, but nothing much. But at the same time you've seen, you know, S 32 shut down their smelter in Mozambique
because of high power prices. An open question, what happens to the rest of or what's left of Australian aluminium production due to high power prices again and problems at Brazil? Yeah, as well. Yeah. So it's it's really struggling and. You know, again, because the world's been reliant on China for so long for it's, it's, it's refining industry there.
We could end up in a world where, you know, aluminium prices need to move to such a point that you can produce it profitably at 100 and 3000 and $40 per MW hour. Whereas I think the, the Tomago refinery in New South Wales, they're power contracts that are about to roll off. They're closer to $50 per MW hour. And yes, I mean if, if that if they're the sort of projects that need to be sustained. Well, the aluminium price is going to have to move quite a long way to sort of balance
supply and demand. And just the last point on that and it, it applies to copper and it definitely applies to aluminium is as opposed to other other much niche markets like lithium, which is more or less about 100, sorry 1.5 million tonne market, you can bring on decent chunks of supply. So if you know Wodgina was to turn like the rest of their trains on, I think you add you know maybe 5 to 7% of of global supply there pretty quickly because it's a small market.
Whereas with copper, which is a 26,000,000 tonne per annum market, or aluminium, which I think is around about a 60 million tonne per annum market, it's much harder for the supply side to catch up. And so you end up with a sort of an iron ore scenario from the last commodity boom where, you know, you've got to build, you know, significant infrastructure before that supply hits the market.
In aluminium's case, you're going to have to build more power plants for that supplier to before that supply comes on. So that just means that the rally, you know, should last for for a while longer than you know, for them for some of these niche commodities. Yeah, you measure these things in years. Instead of instead of months, I want to say going to an Illumina plant is right up on the on the list. It's just the, the amount of energy that goes into it. The, the, the process is, is
fascinating. And to your point on Indonesia, I mean, you, you made the the sort of link with with nickel and what we saw there with Morawali and the other industrial parks, they, they solved the energy problem that that nickel process is not short of energy demands either. And they just square off a a big plot of land and fit it all in there. So you'd have to imagine that's something that just takes time to work out if they're serious about this or they can solve it. Yeah, definitely.
Yeah, I mean, they've built, built in, they can knock up coal power plants reasonably quickly there, Although I suspect the like there has been some environmental carnage, you know, in Indonesia recently. I think that of of a few people that died due to floods late last year, you know, which were tied to, you know, mining industry and and the palm oil industry as well. Not, you know, looking after their or rehabilitating their land as as as as as well as they
should have. So, you know, it's not a complete free for all, but it still takes time. And, you know, it's still, you still need to secure the additional coal supply for those power plants. You know, that's becoming a little bit more difficult now. So yeah, again, it is certainly much more likely also will happen. Like I think definitely it's a matter of when rather than if, but it's still, you know, a few years away at least it seems. Yeah, yeah.
All right. Sammy, a couple, a couple kind of general ones to to finish off, I'm pretty curious to hear you, you manage two different funds, one sort of targets the smaller end of the market and the other the slightly larger end of the market. But how do you how do you think about these differently in this in this type of market when, when everything's kind of working and what you're, what you're targeting, what you're avoiding and these sorts of things? I think as much as possible, we.
Try and we just try and do what we tell our investors we're going to do. So you know, the larger fund that that that myself and you and run is called the strategic natural resources trust like that is being sold from inception as being a a lower beta way to enjoy commodities exposure. And so, you know, we, we don't take as as big as swings. We we're in probably later stage, you know, companies that have, you know, a fairway down
the D risking path. And so, you know, the returns for that one should be more reliable or be it, you know, we had a, we had a decent year last year, whereas the micro resources trust, which I run, I mean, that's more, you know, feel the wind in your hair type thing. I will take, you know, bigger swings. We'll go into earlier stage investments and and you know, that worked last year. So we, you know, just ticked
over 100% return for that one. And you know, hopefully we do something similar again this year, but the returns will be more volatile for that sort of product. But we're we're candid about that. And you know, some investors, you know, are happy to take that, you know that risk and and hopefully the return that comes with it. Yeah, huge, huge year last year
and I can't. Believe we haven't had you in on the on the show with the amount of times we've had you on I'm I'm curious to. Hear the the. Benchmark there right now because this is a for a lot of fund managers. You've kind of touched on this, but like gold for instance, if we look at the ASX 300, I think it's like 2020% of the it's getting up there the the market now so and and that's just gold like resources beyond that is at
at another number of percent. I don't know what the exact number is, but if you're, if you're one of those fundies that doesn't like to plant resources, you're, you're between a rock and a hard place, aren't you? 100% and. Like last year I felt sorry for calendar 25, the small resources index was up 70%. You know, that's it's crazy. Yeah, it was an on an absolute tear.
So if you are sensitive to the small ords index, which you know a large number of funds are and you don't have any resources, well, it's going to really hurt. And so you're, you're forced to cover that underweight. Now, if you've got some resource investing experience, then yeah, great.
But if you don't or you're sort of groping around in in the dark there, but you've got to solve that problem somehow because otherwise you're going to end up, you know, underneath your benchmark and you and you're not going to get paid. So it just made it all. The outcome for that is that more money should be flowing into the space as as time goes on. Yeah.
And in a world in which the. The ASX 10, ASX 20 are so richly valued like the banks, the con banks of the world at 25 times earnings, it becomes a real tough one for for the Super funds, all these Aussie fund managers to kind of play Yeah, it does and I mean I. Suppose the only frustration for, you know, people like me and the rest of the commodity sort of fund managers that that apply our trade is that when you have these generalists coming into the space, I mean, it's
great on the way in, but they don't like commodity investing as they they hate the space, if to be frank. And so, you know, the moment that something wobbles or goes a little bit wrong, like they sell and sell hard and, and get out because they, you know, they never wanted to be there. Exactly. Right, exactly. Right, but and that's fair enough, that's fair enough, but it does make for a an inefficient market where you
know, a small wrinkle. Can, you know, present us a buying opportunity, I suppose if, you know, the problem is not as great as as what a given share price reaction might imply, but you know, that's what makes a market. So, you know, we take the other side of that reasonably regularly. Yeah, yeah, totally. Last one. Because I know you're a busy man and you've got to shoot Sammy, but humanoid robots, I know you like to, to see what the latest is.
And you, you write about them fairly regularly. And the advancements, particularly in some of the Chinese ones, has been pretty astounding. Now you can you can see a lot from a a YouTube promo video and maybe there's a bit more than meets the eye with with some of these, but some of the stuff you do see is pretty, pretty outstanding. So how do you think about this or when when are you thinking about buying your first one?
I I reckon. By 20-30 I suspect I'll probably have one in the house and I won't be alone. I certainly won't be a first adopter, but I might be a fast follower. How much do you think you'd be paying? At that point in time. Well, that unitary or the humanoid robot from Unitary, which is sort of the price I've been tracking of the, you know, of all of them for a while now. That's down to $13,500 per unit. Is that, is that US? Yeah. That's US. US, yeah.
But for context, in September 2024 when I first looked at that, that same unit was 90,000 US. So, you know, it's fallen in price by what circa 80% in a, you know, say a year and a half at while the functionality of these things has been getting better and better and better. It's like a like the solar chart that. Just got cheaper and cheaper and cheaper. Except this sounds a lot more complex than the PV. Yeah. And I think the challenge for
the functionality. Of them is that, you know, unlike the large language models that all the ChatGPT and all that stuff used for learning and training, the Internet's just full of text and speech, etcetera. So to learn to learn the language is there's a massive data set there. A same data set doesn't exist for how humans move around the home, how you sort of open a, a washing machine and, and fill it full of clothes, how you fold a shirt and all this sort of stuff.
So these training models need to be built from scratch and that is that's probably the, the rate determining step for the adoption of these robots is and, and how competent they become around the house. But it will be, it will be solved. And whoever solves it first is going to be able to roll it into their robots and then put them into, you know, invite various environments, industrial as well
as residential. And that will accelerate the learning even more so as, as that feedback mechanism starts to starts to sort of roll. And then, you know, the, the, the functionality of these things should go, you know,
exponential. And if you really want to get hyperbolic about it, you can, you know, go down Elon's sort of rabbit hole where he reckons that, you know, there won't be any surgeons in whatever it is 5 or 10 years time because the robots will learn to do that job so quickly and, and, and better than humans can. So, you know, he's obviously talking his own book, but it's it's not, you know, it's not completely beyond the realms of of possibility that something
like that could happen. And in 20-30, will you? Be will will the average person in Perth be jumping into an an Uber or DD or whatever that is drivers? I think the. Technology will definitely be there. I think in in Perth and and Australia in general is regulation which holds these things back. I mean, clearly you can already jump into driverless cabs in, you know, many cities in the US. You can't do it here yet, but it's coming for sure. All right. As always, fantastic.
To chat Sammy, thanks for making the time for us and I'm sure the the listeners have taken a whole bunch from your your views as always. Absolute pleasure Jodie. Anytime, always. Enjoy a a chat with you guys and a massive thank you to. Our awesome partners. We hadn't had the privilege of thanking these guys in a little while, but Sandy Ground support, who we had in the show, Exceed Capital Intralinks and check out the Focus platform by Market Deck. Hudaru Money minus Hudaru.
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