With Laurent's segle and from London and Gerard Reed from Berlin. This is redefining energy today. I'm redefining energy. We're going to talk about critical minerals and a particular those in relation to batteries.
Yeah, because there are hundreds of definition of critical minerals. If you look at the Europe and the US, they have a list, but of course it's not the same thing on the list. And right now you've got the rare earths and everybody's getting very excited about rare earths between Greenland and Ukraine. And so at some point we say, look, we are not specialists. We need to bring in a specialist to discuss critical minerals, how critical they are.
Yeah.
I think that the word critically is quite interesting around because it means different things to be people. So there's critical way you define it as rare, whether it's not a lot of something or good in the sense that there might be a lot of us, but there are only in a few countries, and those particular countries might be countries that are unstable or countries that you don't want to be the Panada. So it's a very interesting phrase that critical resources.
Our guest today is Richard Ted. Richard is the chief investment officer in a company called tech Met. Now tech met is very interesting in the sense that it's originally a joint venture between the Pentagon and Energy and Minerals Group. Now it has really grown attracted a lot of new investors, including Golf investors. The mission of tech met is to develop a non China based supply chain in critical minerals.
So they've invested in Littal, nickel, cobalt, rearers, and of course recycling, so there's a bit of processing as well. We're going to talk about all of those aspects. Before we do it, I just want to make a little caveat the global legion market into A twenty four was ten billion dollar, the rare earth market was fifteen billion dollar, the copper market was two hundred and fifty billion dollar, and your market three trillion dollar.
So critical but niche, Well, let's bring them on the show.
Richard, Welcome to the show.
Thanks, Laron, really excited to be invited on. I'm a big fan of what you guys do.
We are a big fan of what you're doing because critical materials people talk about critical matteral all the time. A lot of people get very heated around Joe politics, rare Earth and all those criticulats. Can you please explain a bit what's going on and what are those critical materials?
Yeah? I think the word critical minerals of critical materials has been thrown around so much now that it's almost lost meaning because everyone projects onto that phrase what they wanted to mean. In the public sphere, when it's used, it often leads to more confusion than clarity, you know. Simply put, a critical material is something that you're worried you're not going to be able to get in the future at its basic level. But I think we have to kind of unpack the term a little bit into
two kind of major categories. One is scarcity, and the scarcity of minerals is simply an economic issue. The last barrel of oil will have an infinite price, the last kilo of lithium will have an infinite price. The price mechanism over the long run will ration ultimately every resource
that humanity needs for economic activity. If, for example, the lithium price ran up to hundreds of thousands of dollars per kilo, we could set up a dle project on the ocean and just process lithium from the ocean because it would be economic to do so. So the price mechanism in the long run rations everything, and therefore no mineral is critical in the sense that we're going to
run out of it. However, certain critical minerals are crucial for certain new economic and technological applications, most obviously electric vehicles and lithium ion batteries. And the reason some critical minerals like lithium are being defined as such now is that they are needed in ever greater quantities because of booming demand because of an s curve adoption of a new technology, and they're having to grow off a very
very low base. The lithium market before the EV boom was just a couple one hundred thousand tons a year, and now we're talking by twenty thirty it needs to be a three million ton of year market. So there is a concern around the ability of the production side to keep up with the demand growth. There's a sense that as we scale evs, will we have enough units
of lithium to meet the consumer demand. That makes it critical in one sense, but actually the true criticality in the West about these materials is that there's plenty of lithium available to America and Europe in parts of the world where we can go and build minds quite easily. But you can't put dirt into a battery. You have
to put a specialty chemical into a battery. And what's really critical about things like lithium and nickel and cobol is that they've got to be processed and refined into usable specialty chemicals which can then be put into batteries. And it's that part of the supply chain which has been up completely and utterly concentrated within China and in the context of geopolitical tensions and new trade wars, and there has been a lot of newsflow in the last
few weeks around this. It's about the West's ability to have control over its own own industrial destiny, to be able to produce the specialty chemicals that these critical minerals get turned into insufficient quantities for their own manufacturing of their own ebs without having to go to China to
get the ingredients. Because China, as it has shown, is quite willing and able to use its control over these supply chains to turn off the taps and basically create leverage over Western companies and Western governments.
So Richard, really that's a brilliant beginning, and there's a lot there that you've said. I'd love to just sort of dig in a little bit into, first and foremost, not the processing side, but the mining side, because if I understand when I look at the Chinese and if I look at what they've done, they control the whole value chain. That's the reality of it. And as you describe them, these are critical materials. Now, let's go back to the mining side, and I'd love to hear what
worries you in terms of materials. Which materials you go, Oh, my god, we're gonna have a shit oritage of that twenty thirty.
I'm going to just be kind of quite straightforward this one, and I'm going to pick the lowest hanging fruit and talk about lithium again, because I think lithium is the one which illustrates the interplay of supply demand, economics and
geopolitics the best. We need about three million tons per annum production of lithium by twenty thirty to meet the conservative demand projections of how much lithium we need to build the number of batteries that are being planned to be put into electric vehicles and energy storage systems, and let's not forget the new markets emerging in the field of drones and robots like the Optimus robot of Tesla.
Lithium price ran up, as we all know, to a very very high level in twenty twenty two and then has crashed back down to around ten thousand dollars a ton. That crash has largely been engineered by the Chinese, who brought on stream some very marginal sources of lithium through lipidolite mining domestically within China, which are very low grade mines, very high cost, very hard to make any money out
of them. And so we're now in a lithium market where, at ten thousand dollars a ton lithium carbon and equivalent price, very very few if any of the Western projects or the projects, let's say that are outside of Chinese hands, that are trying to be developed in Canada, in the US, in Latin America, in Africa, in Europe that is below the incentive price that private capital markets in the West where investors are going to get the IRRs they need to go and back those projects. So without an increase
in the lithium price, over the next eighteen months. We're going to have a tremendous shortage of lithium in twenty thirty because the mines that need to be built to satisfy that demand to break ground now, because the lead time to get them into production is quite long. So if I'm worried about any critical minerals shortages at this
point in time, it's lithium. And the challenge is that China is doing this deliberately to hamstring and kind of handcuff the options that the West will have in the future to determine its own industrial policies with this technology.
And so we in the West and particularly the United States, which is leading the charge in all of this, governments have to work hand in glove with the private sector to invest counter cyclicly and fight back against China and start to stand up some of these lithium minds now during this bear market, while prices are depressed, so that we are not caught shorthanded when the inevitable next upswing in the market occurs.
Can I just make a point, as you talk about opsing in the market, I mean, if lithium prices go back up, there'll be no upswing in the market, because what you're doing is you're making the batteries more expensive, which means that you're pushing evs out. So my view, i'd actually take a view of that, we're not going to see lithium prices going up.
The question is, how are you going to get three million tons a year of lithium onto the market at ten thousand dollars a ton. Where's it going to come from? How many minds can profitably produce lithium at that level.
And that's a very good question. So then what you're actually sort of saying is that actually the EV race is going to slow down.
Something's got to give. The problem with commodity markets in general is that the supply response is very inelastic in the short term to the movement in the price. In the long term, the mining industry generally is able to respond to higher price incentives. And there is a lot of good news in the West. The dle revolution, which is the kind of equivalent of the racking revolution in oil, is already here. It's real. Exon is building DL plants
in the Smackover formation. In America, tech met is building a DL plant on the salt and sea. DL is being stood up in Argentina as well, and these are much easier, simpler, lower cost projects to bring on stream relative to large Spogyman projects, which are traditional minds, which then have to be fed into very capital intensive hydroxide refineries.
Richard, just for the non technical people that are listening to this, could you explain what DA is and really just in Layman's terms, just explain the revolution that's going on in mining, because I really like your Alan.
Sure what's going from the oil and gas would go to shale. It's the exact same thing in mine exactly. DLE stands for direct lithium extraction. Prior to DLE, there
were two ways to get lithium into the market. One was to exploit Hoigh rock lithium sources, particularly a mineral called spodymy, which you dig out of the ground, you concentrate, and then you have to put it through a relatively energy and carbon intensive refining process to turn it into lithium hydroxide, which then typically goes into nickel based batteries.
The alternative source of lithium, and the lowest cost source of lithium for years, has been the brines from the lithium triangle down Latin America, Chili, Bolivia, Argentina, where the method of extraction is to pump lithium brines that are quite high in concentration in lithium and put them in huge ponds and evaporate them over time to kind of pre concentrate them and then process them into lithium carbonate.
And it's very environmentally problematic and there's a huge kind of lead time from pumping the water out of the grounds to actually having a deliverable ton of lithium at
the other end. So direct lithium extraction is where you take lithium bearing brines and you essentially run them through let's just call it a chemical plant for now, and within a few literally a few hours, you run it through a system where the Darly technology selectively strips the lithium from the brine to produce a lithium chloride, and from there it's a very simple step to produce lithium carbonate and then you can, of course, you can go on to produce a hydroxide as well if you wish
from there, and that's a huge revolution in lithium production because it allows a much shorter cycle from extracting the brine to delivering the chemical and it's a completely closed loop system because the lithium depleted brine is then reinjected back underground and can often recharge with lithium once it's
back underground. So the dly revolution not only going to be enabled the West to scale lithium quickly, it is also a very low carbon, low environmental footprint way of doing so is a really important revolutionary step in the lithium industry. There are a lot of skeptics out there who have said it's not going to happen.
And the fact that the likes of Rio Tinto, Exxon equinor slumberget Arcadian, which has seemed to be quiet seem to of course become part of Rio Tinto are all doing it is proving the naysayers wrong.
You name tech Met, tech Mets your company. I like to go back with you through the creation of tech Met, because you're one of the few companies who have the US government as shoulder or sponsor. Probably would explain, so go back to its creation and there's thesis around it, but probably we took already quite a note around the thesis and how you've delivered so far, because when I look at your activities. I see you have a mine ran dow or so, and you know your investment in lithium.
So can you put this together please?
So technetous sort of technology metals. And we define a technology metal as a metal where the demand for that metal is being driven by a technology adoption. Think about an S curve adoption of electric vehicles that is driving a kind of one time phacist in the demand for certain critical minerals. That's a definition that we tie to it, and particularly like our focus is on lithium, nickel, cobalt, vanadium, tin, and rare earth elements. We created the company in twenty seventeen.
We're not structured as a fund. We're structured as a permanent capital vehicle, which makes us quite unique relative to some of the other private equity players in the space.
And very early on we engaged with the US government and in December of twenty twenty, we closed our first significant investment from the United States government through an agency called the International Development Finance Corporation, which is a federal agency of the US government which used to be called OPIC, and under the first Trump administration, was given a new mandate from Congress with a lot more money, a much broader investment mandate, including the ability to do equity and
to have a much more America first policy orientation in the way it deployed its capital, and so its investment into tech Met was its first ever equity investment. And really the purpose of the US government and the Trump administration backing tech Met initially was because they had the foresight to see this big geopolitical issue coming down the pike and it's something that we needed to start to address and challenge. We're not solely backed by the US government.
We also have a huge amount of private capital behind us, including large scale family offices, institutional investors, and most recently the Katari Investment Authority. We've had two subsequent investments under the Biden administration, and so we're very much a bipartisan topic amongst Washington. Critical minerals and the fight against China
is something that the whole of America is behind. It's something that we continue to work with the US government on very very closely, and we're really excited about working with the new Trump administration to do more and quicker and more aggressively because the Chinese stranglehold over the critical minerals supply chain has increased, not decreased, and therefore we need to fight back even harder to make sure that America command its own destiny over its own industrial future.
Just one thing on the whole thing up, I can actually just be really take the exact tops of you, which is too late. Game's over. You can compete in any of the battery it met us, and the reason is is because China has the whole value chain, so you can try and catch up, but it's going to be a very very expensive ride. And the market power of the brand names, the technology it's ald with them.
Yeah, and I would respectfully take the other side of that argument. Never ever bet against America. America has some of the most incredible innovative technology businesses in the world. It's got the deepest capital markets, it's got a powerful unified government capable of strong action, and it's going to take time to catch up with the Chinese. I concede that the Chinese have had a twenty year head start.
But when America chooses to do something, it's like a sleeping giant, and when it wakes up, it can mobilize at an extraordinary scale. So there is a battery supply chain that is being stood up in America, and we will see it through to the end because we have no choice in the West if we want to have any control over the future technologies that are going to dominate the twenty first century, IE lithium ion batteries, which
are not going to be just about electric vehicles. They're going to be about drone technologies, which are super important for defense purposes. They're going to be about robots and automation, which is going to be essential for economic productivity. The US absolutely needs to have control over its own destiny in this area, and we need to reduce the leverage
in the international system that China has currently. And we are very very encouraged by what we're hearing from the new Trump administration that we're going to accelerate this fight against China, not decelerate.
When I read the news, and again I don't know if it's true or not, but China has imposed export controls on tungst team, tillurioma, bismuth, moule denum, and indioma.
And graphite, which is even more important.
Right the next day, reach out, your telephony is ringing, you know, how is it working?
We actually have a tungsten mind, so we're looking to ramp up production there and do our bit there. But these export controls, they're kind of the first firing salvos of a potential critical mineral trade war that could potentially increase in scale and breadth over time, and just sort of underscores how urgent it is that of how quickly we need to move in the West to counteract Chinese dominance.
And it's clear that China is willing to use these levers as ways to advantage itself in the international system and in the sort of great power competition against America. The good news is is that America and I should say North America to include Canada here as well, because there is vast geological mineral wealth right across the North American continent. None of those minerals that you listed are absent from North America. They're all there for the taking.
And so we need to radically liberate and deregulate mining regulations and loosen up some of the overbearing environmental hurdles that we have to jump over to stand up minds precisely so we can fight back against some of these export controls and take command of our own economic destiny.
Richard, It's not just about mining, it's also about technology. So can you explain how you're not just into mining but into all those new technologies.
Technology is the West's trump card, and it's particularly America's trump card, because America's the greatest technological innovation engine on planet Earth. Some of the ways we're going to fight back against China I've already touched on, For example, the
DLE revolution. The company that we've invested in Energy Source Minerals with its ILIAD platform, which is the most advanced DLE technology in the West, is now extremely important because the Chinese have announced controls on the export of DLE sorbents, and Iliad is a completely China free technology and in fact a superior DLY technology to what the Chinese have for directlythmic extraction. But there are other areas in which American innovation is going to help in this fight back
against Chinese control. We have a company called Zero Advanced Battery Corporation, which is looking to completely change the way that we make batteries. So if you think about the battery supply chain today, the stranglehold that China has is not necessarily on the upstream control of the mine itself. It's that middle part of the chain from how you get from a dirt to a specialty chemical that you
can actually put into a battery. Typically, you have to refine it into a ninety nine point nine to nine percent pure metal salt that then has to be put into a cathode precursor. The precursor has to be litheated into an active cathode material. That cathode is then put onto an aluminum foil using a binder. It's glued onto a foil. Well, we backed a company which can basically
do all of that in one step. We can take run of mind material and through a molten salt electroplating process, directly plate out active cathode material onto a current collector in one step. That's an example of fantastic American innovation that will essentially sidestep China's stranglehold on this part of
the supply chain. And there are other there are plenty of other businesses doing other great innovative work in the battery area, and I think it's American technology which, when it starts to scale up, will be the key to some of the fight back against China. Remember, the litty mind battery was invented in the West. It's a Western technology.
Firstly, it's not a Western technology. It comes out of Japan, Okay, And we've been asleep for twenty years. Everything you're saying
is anti Chinese pro American. It comes across and I'm saying, this is a European where we live in a very difficult geopolitical world where Europe being forced to move away from the United States, and we have a world where I know there's a great power discussion going on here, but I'm just saying all I've got is anti Chinese sentiment, and I don't know if that's helpful.
I would credit the Chinese. We're doing a fantastic job. Over the last twenty years. They prosecuted a fantastic leap frogging strategy of not chasing ice engines and simply going to degree leap frogging to dominate the next generation of electric vehicle technologies. And by the way, they've done an amazing job about it. So let me complement the Chinese. You know, then eighty percent dominant position of producing a percent of the lithumin batteries in the world. They're dominating
the supply chains. They have got to scale quicker and better than anyone. They've looked at the entire supply chain and subsidized the parts of it the need subsidizing to get to scale. Okay, but are you suggesting that we should therefore be supplicant to the Chinese and simply wholesale allow them to drive the future of the ev industry and allow Stilantis and Mercedes and BMW and Ford and GM to just kind of go to the wall, or to just become entirely reliant on Chinese technology, that's my
retort to you. Or should we also in the West try and use our own skill sets and talents and deep capital markets to try and innovate and also control our own economic future, or should we completely just give up the game.
Never give up. But what you have to know is where can I win and where can I not win? And sometimes, and I would say, in the case of let's say, a lot of the enerergy technologies that are out there, soler and batteries being two examples, they're just so far ahead and control the whole value chain, including the equipment manufacturing, that actually you're going to have to
partner with them. So that we can learn and learn from our mistakes and then see, Okay, when you have the knowledge and the know how here, then you can actually see how you compete them.
That is happening that there are battery plants being stood up in America in partnership with certain Chinese battery makers. There are partnerships in Europe that are being stood up with certain Chinese battery makers. The fins are standing up some cathode plants themselves partnering the Chinese parties as well. Remember it's not just about China, though Japan and Korea have very impressive battery companies themselves who can also do things at scale. We have the SK's, the lgs, the
Panasonics of this world. So we also have friendly Asian nations with excellent battery credentials and battery industrial know how
that we can leverage as well. However, in a world of increasing geopolitical tensions, I would suggest it would be derelict of us not to leverage the inherent advantages we have in the West, which is our own mineral endowments and our own fantastic technology and innovative powers, to try and also stand up our own independent supply chains, and that's all I'm saying, and.
I agree totally with you. That's what we should do.
Okay, guys, peace, peace, peace, and serenity.
Please.
I think we ended up agingble.
The relationship with China is very complex because on one hand, yes, they have technological advantage. On the others, they are financing the Russians. They are very remarkable but difficult people to deal with, and I can understand that it's easier to negotiate with them from a position of strengths than a position of weakness. And the fact that building our own supply chains makes what of a negotiation we're going to
have with them easier. Exactly what we all want to live in a Kumbaya world, but unfortunately that's not what it is.
We have to live alongside China. China's a reality. It has become a very substantial global power, and it really is about the kind of the terms of trade in and right now we have very little leverage and very little negotiating power in this narrow area of batteries, and what we need to do is do our best to increase our own industrial capacity in this area so we can have a fairer discussion with China in this area and not let them completely dictate the terms of the game.
And that's all I'm really saying. It's really about great power competition and ensuring that we are not going to be dictated to by China in the future.
On these wise words, Richard, I thank you very much for coming. Job is totally.
Flambosty attacking them like America is doing right now. You're not going to win. You have to be much more subtle in the way you're doing it. That sounds pretty.
Simple, okay, joh, thank you, reach out, thank you, thank you, thank you both. And the debate continues. We are excellent, Joa. Before you're going to say what you're going to say, I just want to tell our listeners I had to cut about five minutes of heated conversation between you and the guests, so I'm sorry listeners you get a sensored version of our conversation. But if there are something to say, y'all is now well.
I just want to say, if you've got to beat China, you have to come up with a real long term strategy for beating China. And my own view on how you beat China is what I call more than before. So it is you need to be bigger than them in whatever area you go into, and you have to go there before they do it. Okay, If you try to compete with them when they're big and they're in the market already, you've no chance. And I really say no chance. Now, that does not mean you give up
competing with them. It means you have to rethink how do you compete with them? So if I'm trying to think about how do I compete with China and say, litty MYWN batteries, well, you know, trying to do a North fold on it and vertically integrate and get your hands on more materials and actually go and get processing over here, and trying to do it ourselves. You have two hopes of succeeding, Bob hope and no hope. Okay. So then the question is how do you well? One,
you partner with the other Asians. So you go and say to the Japanese and to the South Koreans, Okay, guys, how are we going to together compete against China? And you work with them. Okay. That's the strategy in terms
of catching up with them. The other strategy, which probably nobody wants to hear is that you do a little bit what we did with them thirty years ago, which was instead of us going and investing and bringing internal combustion engine engineering expertise over to China chemical expertise going into change joint ventures with them, what you need to do is do the same on the way backward and say, okay, China, you come and manufacturer evs over here, you come and
go and bring your factories over here, and that way. Okay, they're bringing jobs in here, and you're learning from them, and that gives you a chance to actually be in the game, because a present in that area, we're not in the game. So what I heard was a strategy that I don't think will win. That's what I heard.
Wrong.
Okay, that's your usual rumbling, but it's not very specific, so I'm going to be specific. I cannot understand his thesis and why the Pentagon liked it and the very bellicos rhetoric. The thing is, the price of rare earths is very low right now. Whatever the headlines say, there's no shortage of rare earth. You cannot go and see politicians and say, oh, you know, we have a problem with gallium. We have a problem with germanium, we have
a problem with molybdenum wor problem with antimony. But rare earth sounds nice, even if nobody knows what's in it. Now, if you need those minerals, you just ask a Swiss trader or Japanese traders and they'll bit it from China and you will have it the next day in a warehouse in Singapore elsewhere. So first thing I'll say is tech met should erect the statue to Simon moorees when he did his legendary show in the US Senate and
freak out everybody else. But when I look at the result, I'm sorry to say I think they're delusional for three reasons. The first one is from a technical point of view, whatever they say about the Leger market is going to get short, and you know, sorry, everything I see on the legion market contradicts is a very well supplied market. And also it's very bullish on directly legium extraction. Well, good luck with that because that's a tough one. So
that's technical strategic. They've gone big on nickel and cobalt, I mean cobbold. There's so much cobalt right now that the DRC had to stop the export, kind of lower the inventories. And you know what, NIKEL and Cobbalt, we don't need them in batteries anymore, so why invest in there? And the third point you made it Okay, the US want to partner with allies, well, at the same time they are bullying them or ignoring them. So I mean, you can't have your cake and eat it for those
three reason. I'm not convinced that is a good.
Conclusion, my fad a good conclusion. You're definitely more diplomatic than I am.
It was a great foot fight.
It was a date.
Okay, my friend, talk to you next week.
Look forward to it. Thank you for listening to Redefining Energy. Don't forget to rate the show and subscribe on Apple, Podcast, Spotify, or the platform of your choice.