E105: Benchmark Minerals’ Giga USA Preview

E105: Benchmark Minerals’ Giga USA Preview

[Music] welcome back to rockstock channel it is Thursday May 30th and we are gearing up for a series of conferences next month ahead of that we’re pleased to have today a panel of three guests all of whom will be presenting or moderating at the upcoming Benchmark mineral Flagship Giga USA event which will take place in Washington DC from June 11 to June 13th Brian villes who I recently met joined Benchmark last year from Europe focusing on political policy out of Brussels and we have my good friend and fellow critical minerals commentator Chris Barry of House Mountain Partners who I’m shocked this is the first time we’ve ever interviewed him uh you know but he recently joined the podcast commentariat with his power current podcast so we’d encourage all of you to uh you know tune in to his guests and and over there and we also have Todd menen head of government Affairs and public relations at Talon medals which has nickel projects in Minnesota and Michigan and has received substantial Government funding and a Tesla partnership that both Todd and Chris are based in DC uh for disclosure purposes R Equity has been an advisor to and holds Equity interests in Talon medals since around Tesla’s battery day September 2020 which was just a few months before you know Trump and Biden uh battled it out uh and as a reminder this video is for informational purposes only and nothing you hear should be construed as Financial or investment advice we would encourage any and all of you watching this video to attend the Giga USA uh event and any other Benchmark uh World Tour conferences Andor subscribe to their very ious Information Services and price data and remember uh to like and comment on this video And subscribe to rockstock channel and click the notification Bell to ensure you can catch all our videos once they’re released you can also email Rodney and me at rockstock Channel RK equity.com And subscribe to the liy mayb newsletter by registering your email at RK equity.com so as a quick intro uh Benchmark founder and CEO Simon Moors famously testified in front of the US Congress more than five years ago telling uh you know Congressional uh like Joe mansion and Lisa marowski that the USA was a bystander as it relates to the critical mineral supply chain for Ev and energy storage markets since that time the Biden Administration has enacted legislation and has sought to implement an enormous industrial policy that in many ways is meant to answer China’s made in China 2025 and belt and Road initiatives Biden has also sought strategic Partnerships with natural resourcer countries like Australia Canada and others in Africa and Latin America we are now about five months away from the US presidential election and actually just a few months away from Tesla’s uh Robo taxi unveil day where we uh think he may unveil some new cheaper vehicles uh you know but Trump is leading in many polls with a platform which includes vilifying bonics policies with rhetoric that is substantially anti-electric vehicle major US Auto oems like GM and Ford always trying to navigate shifting political winds affecting their industry have walked back many of their aggressive EV and Battery production goals and have pivoted more toward hybrid vehicles this year and various governments around the world are also pushing back regulatory timelines for the switch to the phase out of ice Vehicles China has focused on every aspect of the supply chain for 10 to 20 years capex and Opex in North America and Australia are much higher not just because China has low labor cost but because China has hundreds of thousands of people with the advanced technical knowhow to do these things and they have an exceptionally strong work ethic Simon Moore’s Benchmark and others like rcade Equity have talked about the battery arms race for years that the balance of industrial power hangs in the balance as the world shifts to Better Faster cheaper EVS we have argued that Upstream raw materials will be a key bottl net that supply of these materials won’t be able to keep up with eveve and energy storage demand Andor that China May restrict critical mineral Supply and will simply replace our oil Reliance on OPEC to a China reliance of these critical minerals but here we are in 2024 one year from made in China 2025 and due to China’s Ingenuity these material and cathode and battery and electric vehicles are largely in over Supply and they’re all super cheap supply has kept up and even lithium Benchmark is not forting deficits until 2029 China is exporting great e at $10,000 and $15,000 price point and many countries that don’t have big Auto industry jobs to lose are happy to be buying these vehicles over Western brand including Australia India Indonesia Etc can the US and the West compete with China for electric vehicles is the energy transition to EVS in the USA and Europe as inevitable as it appeared just a few years ago have we simply lost round one and can we catch up and what more needs to be done how well is biomics working so far as it relates to the entire EV supply chain from batteries to cathode to Upstream raw material Mining and processing Trump likes infrastructure he likes mining he likes manufacturing but he’s less focused on climate energy transition ESG sustainability but he’s having a bromance with Elon Musk how might how might all of this evolve if Trump wins these and other questions will be the focus at The Benchmark Giga USA event in DC in two weeks time and will comprise a significant part of rockstock Channel’s ongoing analysis and commentary in the runup to The Greatest Show on Earth the US presidential election in November and with that let me quickly introduce Our Guest starting with Brian bis of Benchmark minerals go ahead Brian Hi how it’s hard thought Chris great to be here I’m Brian I’m I’m working for Benchmark Minal intelligence and I’m part of benchmarks policy and geop political team great and you’re based in Brussels and and Chris just a quick overview sure based in Washington DC been focused on the lithium ion battery supply chain for about the last 14 years which I think was when I first met you Howard so we had we do go a long way back and uh work with a host of investors and companies trying to sort of demystify and and the risk opportunities along the supply chain and Todd great Hey Howard uh Todd me uh Chief external Affairs officer for Talon medals uh based in Washington DC but uh focused as well on our operations in North Dakota uh Minnesota and Michigan to develop a domestic supply chain for Nicole okay great so Todd I’ve heard you speak uh many times I think there’s no one kind of more uh better at their job in and trying to you know par through there’s a lot of jargon you know in the IRA and atvm loans and doe and 30d and 45x we’re going to try not to get kind of bogged down in all of the detail of this it’s really kind of the big picture that I laid out there we have an election year you know China single party State can have an industrial policy it doesn’t shift every 4 years um what their strategy is going to be uh and uh so so Chris why don’t we start start with you you’re moderating two panels um one I think with Frank Fannon but the the other one I think was the more relevant one for for this uh conversation just to remind me of what that panel is and and what topics you’re going to cover there sure the panel is actually en titled financing the energy transition and uh it is I’m the moderator and so I will be asking questions and and soliciting comments from folks from the Department of energy uh the development Finance Corporation the World Bank uh uh and the atvm program management so basically the department of energy but really focusing on the atvm and I think the the goal of of the panel is to really talk about you know I think one of the original questions that I always used to get from investors and and policy makers and even a lot of the companies originally was where is all of the capital going to come from to finance this transition or to build a more domestic supply chain and I think that you know I’m sure we’ll get into it over the course of this discussion but um where the capital is going to come from is no longer an issue um I think it’s just a question of timing now again some of the other issues but the idea of the panel is to really outline some of the government incentives some of the funding opportunities uh highlight some of the roadblocks you know maybe that’s permitting but you know the roadblocks between pairing both public and private Capital to battery industry projects and then talking a little bit ideally through maybe some case studies around how government money and private money are working together to build a supply chain so that’s that’s the first panel will be moderating that one and the second one is a fireside chat more of a macro conversation with Frank Fannon who who many folks I’m sure watching or listening to this may be familiar with Frank worked um in the state department for a long long time and it’s really been a a true champion for critical minerals policy here in the US okay great the funding is a critical component again it’s uh biomics is both an answer you know to the EV you know climate you know supply chain but also critical minerals and with sha who he interviewed you know in the loan programs office uh you and I Chris have a long experience with lithium Americas uh they’re getting a 2.26 billion dollar loan uh shortly with the help of GM Equity but Todd Talon has tapped into I think two pockets of money uh from the US government you talk about those and and how they differ and and and I guess no one knows better the the landscape than than you who have uh successfully um you know tapped into this as the only nickel mine you know undeveloped nickel mine in in America yeah sure happy to you Howard uh you know I think I kind of joke every once in a while that this whole policy landscape is sort of the alphabet soup of uh the EV supply chain uh set of incentives and uh at Benchmark I’m going to be focusing on one part of that which is the production tax credit or the 45x but um really what I want to talk about is uh you know how the how we compete with China what are the different aspect there’s the funding aspects of course there’s tariff policy and trade policy that we can use um but then there’s a lot of things that the industry has to do itself in terms of um stepping up to compete with China and take on this very distinct government driven policy of gaining control over Global Supply and then being able to use over Supply to actually affect prices so in our case as you said you know we uh uh were fortunate enough to be selected uh by the dep Department of energy for about $114 Million worth of funding to build the processing facility in North Dakota that will process nickel from the United States and potentially from Canada as well and then we got $20 million from the Department of Defense to do uh additional exploration basically to double our exploration budget to be able to find more Nickel in America these are two very big programs and two very vital programs in this whole effort to kind of counteract Chinese government strategy in the EV supply chain the dod money that’s free money that’s that’s just for exploration there’s no matching requirement or or is there well you know I I don’t think it’s such a thing as as free money obviously they’re paying for us to do the work um there isn’t that we we have to you know put our own money into this as well they want us you know back somebody that knows how to do exploration but um it is Grand money it’s not allone I mean this is money that otherwise you’d have to raise ra to drill yourself exactly it’s a so it’s think of it as a non-diluted uh source of of of support I think of it as free money I mean but the the the North Dakota I’m in I don’t I don’t I don’t terms like time okay but the the the doe the dod is giving free money but it’s in small increments $20 million right the loan that’s going to lithium Americas is a commercial bank loan they’re very focused on it not being another cylindra there’s a lot of you know uh strings attached to it in terms of you know labor that they need to hire and contingencies that they need to build in so that’s very different type of money but the other money that you tapped into for North Dakota is that is that a loan programs office or is that a different that’s from the bip Parson infrastructure law um uh it’s about $6 billion in that particular program to support uh the battery supply chain and that money is a grant it’s not a loan um uh but we do have to perform the task that goes toward building up a secure supply chain we have to get permitted we have to uh do a number of different Milestones so you know I think it’s important that the taxpayer funded dollars be uh judiciously and strategically utilized um but absolutely this is um an important thing for companies like talent to be able to get this uh source of funding and uh actually contribute to the effort to build secure domestic supply chain for evb battery materials okay so uh the dod that’s it’s small money the doe you know I guess is is bigger money and uh do you see any risk that these Taps of money will um change at all if Trump is elected I think that the one area of energy policy where there’s a pretty consistent read across between how President Biden thinks about things and how president Trump thinks about things is in critical mineral policy and in terms of um addressing the uh threat of uh you know a Chinese strategic government focus on clean energy technology and noncritical mineral so I I wouldn’t expec in critical minerals for there to be uh big policy difference between a second Biden Administration and and a second Trump Administration so like Shaw probably won’t be in his job under a trump Administration but well the people stand of course yeah yeah that but that that’s that’s fine but the loan programs office was dormant for you know a long period of time it was revived you know there’s some talk that he’s just going to like you know get rid of like disband the loan programs office entirely or or or do you think he may just more select itively you know pick and CH them because it’s been four years that jger Shaw has been kind of like open for business takes a long time he’s processing a lot of loans you know but a trump Administration kind of look at at some of these things and like well maybe he doesn’t want the wind farm or he doesn’t want you know the solar or the EV battery plant you know but he wants he does want you know manufacturing and processing of critical minerals so like I just I I I’m just trying to read those T leaves if you have some connectivity to the people there um what well I think that’s what Chris is going to get into with Frank Fannon who is a former Trump Administration official but uh at the conference um and I think you’ll hear from other uh uh folks that are tied in with the um Trump campaign at at the conference but you know I think that um uh my view is that uh there is this biparting consensus about reshoring manufacturing about uh Shoring up the supply chain of critical min mineral that are needed in clean energy systems but also in defense production so um uh again I I I don’t expect to see a massive shift maybe some recalibration of priorities uh when it comes to critical mineral policy I think in terms of energy policy uh you know you could see a shift but um uh in critical minimal policy I I I see a pretty consistent rate across okay and Brian you’re based in Brussels and uh uh Brussels is famous for bureaucracy and and not speed in um you know implementing things but there has been some movement in the past year on critical minerals policy if you could just like at a high level um update us on what’s happening in Europe and and how that compares to what’s happening in the US because there was some paranoia like uh you know Europe complained for many years that the US is not doing enough you know that we need to kind of follow Europe right and then we passed Europe and they’re saying you’re moving too fast it’s unfair so um what’s uh yeah give us a read on what’s happening in Europe yes how no thanks for this question I mean I think Europe’s main concern when the IRA was adopted then implemented was that a lot of European Investments would go to the US given the very attractive tax incentives and other uh funding uh so and that was partly true I think I mean a lot of European investment have been going to North America which is good I think uh in general for Supply ex China Supply notification I think in the meantime uh a lot is a lot has happened uh in Europe so to uh Landmark legislations have been adopted so you’ve got the European critical raw materials act which is focused on mining process and recycling basically the same uh aims as the IRA and the bipartisan infrastructure La so uh supply deification and supply localization uh the big difference I would say between Europe’s approach and the US approach is Europe’s um legislation or policy doesn’t include stringent uh local content requirements as in the US Ira um looking at battery and critical mineral requirements to get the the tax credit that doesn’t the critical raw materials act doesn’t have uh doesn’t have this um it has some production t markets in view of 2030 but not legally binding but at the same time it does um incentify some Supply localization of course and um on the other hand you’ve got Europe’s Net Zero indust track that applies more to the downstream part of the supply chain same goals uh Supply localization uh and Supply deification uh and it’s uh I mean our industry I mean the battery part of that legislation is very important now in terms of funding uh I mean Europe’s approach again uh I would say quite different than from the US I mean us is very attractive as I said before very attractive funding mechanism straightforward I mean companies can can apply fairly easily for this uh whereas in Europe Europe is doesn’t have like a new created uh critical raw material fund or battery fund I mean there is been some funding announced on the European level but not to the same extent as in US Europe’s in instead use the patchwor funding um and that I think makes the the risking challenge because Europe’s Faith would it be risking challenge especially in mining it’s difficult to attract funding in mining project because of uh price volatility because of I would say Europe’s feding uh DNA or in mining I mean Europe used to have B DNA in mining now it’s fading obviously I mean you’ve got some mining regions still in Europe especially in Scandinavia but that’s changing so I guess that Europe’s funding mechanisms uh do meet some of the the risking Supply challenges um but not to the same extent as in the as in the US I think these are the big I would say differences between uh the US policy in terms of critical minerals and and and the European un policy the EU has like the European Investment Bank which financed like cathode and and and some battery plans I think North vault yumore LG cem uh you know we we talked and represent European Metals Holdings which has the cinec project which uh there’s the just transition fund that’s been labeled critical uh or strategic project as far the the crma critical raw materials act I think they’re planning to identify certain projects as strategic and and available like so what are the funding mechanisms the European Investment Bank there’s the just trans transtion fund there’s the ebrd any others yeah indeed you’ve got uh so the loans in Grants uh provided by the eib the ebrd EI is even providing uh in the future so there has been a lot of talk about this uh providing funding uh for strategic projects in Africa because obviously Surly ification in Africa is is very important also in European context and apart from that you’ve got a couple of battery related funding mechanism that been announced uh recently you’ve got a battery fund of3 billion EUR that have been announced that has been announced uh last year you’ve got a specific 500 million uh funds that has been announced at the uh World economic Forum DeVos and apart from that apart from that as I said before you’ve got a patchwork of national and European funding the the I mean one of the challenges you on top of the others but I’ve uh just outlined is uh the um layers and the different um levels of competence because European funding and at the same time you’ve got member states providing state aid like Germany I mean you’ve got the the famous North for plant in Germany that has received some national funding and this national funding this creates like a competition among EU member states which I guess harms to certain extent Europe the European Union’s Global competitiveness compared to China and compared to to the US okay you’re I’m just thinking you’re mentioning northfold northfold was you know formed by the ex Tesla it was meant to be like this Airbus you know for Batteries right you know like Europe does things like this they they say you know it’s a almost the European Champion okay uh in America we got Tesla right you know and then China has multiple North volts and multiple Teslas right you know and and have been focusing on this for 10 to 20 years so they’re so far ahead you know so from a Europe perspective from a US perspective just open up you know out though sorry you’re leaving out the Koreans and the Japanese too uh which are you know significant battery producers um and are backstopping a lot of the the the US and and European uh you know uh auto manufacturer you are very right to bring that up and America is very happy to have Koreans and Japanese uh plants in America and uh you know partner you know for that so can the US Japan Korea uh and you know and Europe you know collectively like is this a China versus all of those countries like dynamic or is there scope for America to kind of welcome byd and catl in the way we’ve welcomed you know Toyota and Hyundai and SK and and LG to build plants you know in America across the supply chain because that’s where all the knowhow is yeah but it power I mean it’s happening already I mean you’ve got uh gilee Automotive owns Volvo and Volvo is making cars in South Carolina um and so I mean that that phenomena of insourcing of autom mobile man facturing in North America is a you know a pretty well-worn path and you know I think that it already exists that those Chinese companies are are are in the US I think it’s a fairly it’s a much steeper uh political uh wind than it has been in the past um but I think it’s still possible I think the big issue is that uh cars manufactured in China uh you know I think that both the US and and Canada uh and Mexico are focused on making sure that that uh that doesn’t undermine the automobile Manufacturing in the in in the region there’s an element of this that like that there’s a lot of negative narrative here and and you’re like optimistic right and and counteracting a lot of the negativity and that’s helpful because um uh there’s a lot of fud noise out there and and to remind us things like you’re doing is is very relevant well I mean you know as a matter you know of um trade flows I mean I just don’t think you’re going to see a lot of Chinese vehicles coming to North America you may see a little bit of investment into uh the United States where uh Chinese manufacturers try to invest and sort of copy The Playbook of the Japanese autom makers and the Korean autometers who who have set up factories in North America um but in terms of uh inflows of vehicle I don’t see it what I think is really interesting though is the alliance of you know sort of Us Canada Australia Korea Japan and the EU to create secure Supply chains is really rolling out I mean if you look at Panasonic just investing in Noel Mond in Quebec um uh Dum Tomo investing in an Australian nickel Miner um you see these companies that are investing in from Korea or Japan that are investing in North American supply chain investing in Europe are actually also investing Downstream in the beginning part of the supply chain and I think that’s um showing that they’re stepping up to the policies that have been set down by like the IRA and and the European policies as well okay so you think like look before Biden came to power like under Trump there was movement on uh you know changing some laws you know permitting and regulatory there wasn’t necessarily the money but like you need a ho of government approach and and Biden really has has put this uh you know on steroids and there is momentum here and we just have to be careful it’s a political season so you know Trump and Biden they’ll say various things but we also Trump more than any other uh you know presidential candidate actually did try to keep all of his promises so um you do you can’t just dismiss what he says uh and he definitely seems more aligned with Elon Musk on every policy other than you know EVS so we we’ll see you know how how that how that plays itself out so so you’re you’re not overly pessimistic uh that all of the countries that you just uh mentioned you know can and will respond to uh you know to the threat from China that you know of in the electric vehicle you know industry in particular I focus mainly on EVS because that’s very prominent Big Industry in Germany and Europe and in the United States and it and it’s at threat and there is push back right there’s a number of Republicans who say like EVS are a solution without a problem like if I could buy a $225,000 Chota Corolla and get from point A to point B like and I don’t have to worry about range anxiety like why do I need an electric vehicle uh like why do I need to transition you know an energy transition which comes with all these other you know kind of complications so what do you think Chris you know and and and Brian and Todd you know is the energy transition you know to EVS you know we all watched uh what’s his name Tony siba you know who said like whatever six or seven years ago that within 13 years uh you know there’ll be this transformation and everybody you know anyone driving an ice car will look like you know riding a horse you know in the early 1900s so is it as in itable uh you know in the next kind of 5 to 10 years as it appeared you know two three years ago this switch or will it happen much more slowly I always sort of maintained it was going to happen much more slowly than um I think the hype sort of indicated you know I mean it’s a transition right this isn’t something where you flick a switch and all of a sudden Supply chains are built and we’re all zipping around in our EVS I think that um you know it’s going to take a lot longer and I think one of the biggest challenges right now is that you know you do have some macroeconomic factors at play here I mean the cost of capital to build and execute these projects all along supply chain is much higher right if you just look at interest rates and so I think you know one of the things that we all sort of struggle with or maybe think through a lot in our business is you know what is the proper role of government given all of these macro issues interest rates you know whatever it is right uh job creation things like that and so I just think look quite simply in the US the role of the US government regardless of who’s you know at 1600 Pennsylvania Avenue was to make it easier to build and to lower the cost of capital and that is one of the reasons to Todd’s Point why you’ve seen this new playbook emerge of private sector players whether or not it’s General Motors or Panasonic dumping I shouldn’t say dumping investing significant sums in Upstream parts of the supply chain because that really that and I would argue the refining is where two of the most critical aspects of the supply chain buildout are you know there are other interesting case studies we can look at I think somebody mentioned Panasonic earlier I mean we shouldn’t also forget about state level subsidies and things like that that are also in play I mean if you look at Panasonic and the gigafactory that they’re building in Kansas you know it’s somewhere between 30 and 40 gigawatt hours of capacity I believe I think maybe 32 comes to mind but you know the state of Kansas has awarded them over $800 million I believe in subsidies and yes there are strings attached there with job creation and so on and so forth and that makes total sense but know this isn’t just a situation where the US government is sitting there with the Bazooka ready to blast money at these projects right there are all sorts of criteria and and you know guard rails that I think need to be met and respected but the point is you know the the US government I think maybe initially by start with Trump and of course put on steroids with Biden has basically said look this is the new framework as we sort of reindustrialize and think through how you know Geo geopolitics kind of impact infrastructure investment and what we have seen is the private sector um start to come in and start to come in I think pretty significantly I saw a stat I think I read it somewhere yesterday um from the Council of economic advisors that clean energy investment in the United States has increased by 70% just in the last two years right and so that’s a significant jump and again that is the private sector taking it signal or taking the key if if you will from what the US government says they intend to do so again I would sort of echo Todd’s um optimism I think about where things go but again this isn’t this isn’t going to happen sort of next year and I think that’s also one of the challenges maybe we can talk a little bit about is just the the different sort of political Cycles right I mean it’s I feel like maybe in the United States there’s a Perpetual election cycle whereas in China it’s sort of like they do their fiveyear plans and like this is what we’re going to do we’re going to execute and they get it done and they’ve been doing that for 15 years right which is why you know we we’ve got a long way to go in terms of catching up but I’ll pause there I just think that you know there’s a lot at play here but it it certainly seems like for the first time the private sector is is stepping up thanks to what the US government has sort of indicated through these different pieces of legisl one private sector stepping up you know is like GM writing a $ 650 million check into Ley Americas that that strikes me and with the government providing lowcost funding that that that’s sort of like you know uh the Chinese government somehow is supporting you know Tangi you know or or ganang you know buying sqm right or you know through lowcost funding and then on the other side you know GM is like catl or byd actually investing in in the mine um panas I mean that that that’s the the biggest uh example of it I think we need a lot more of that though uh you know and also in Europe you said Todd that like industry needs to do a lot uh you know you have Rio Tinto in your capital structure but like the biggest nickel Miner what who are the biggest nickel miners in the in the world and what are they doing like why aren’t they stepping up you know to do more I I think they’re stepping up I mean in nickel you’re you’re you’re facing you know a government strategy to dominate the global supply of a particular mineral and therefore control prices and the control of the prices through over Supply means that it it there’s an intent there’s a you know and Deputy uh prime minister of Canada Christian Freeland said this two weeks ago that there ‘s a clear and strategic intent by the government to work with their companies to not only get self-sufficiency for Chinese supply chain but to go beyond that and actually be able to affect global prices by and then and therefore undermine the economics of projects in Australia Canada or the United States and so I think it’s great that the government has this awareness and now we can do something about it I think what I was talking about in terms of Industry stepping up I think industry also has to remain competitive I mean we’re fortunate enough at Talon to have very highgrade uh deposit here in the United States in a great jurisdiction but we also have to do other things like um plan our mind in such a way that we can reassure the public that we can protect the environment um we have to use innovation and tap into startup companies universities the US National Labs to find ways to extract more nickel from the ore or extract byproducts or create value added products from waste streams that would have gone into the waste Pile in the past so that’s what I mean by Innovation responsibility for the companies is that we we we have to work with government we have to you know take advantage of some of these um programs but we have a a we have agency as well we can um uh step up to be competitive uh as well and Howard one one just point just to jump in here back to your sort of you know you were talking about Tony siba and EES and things like that I think we also want to Define you know what a successful transition is and what it looks like I mean it’s a successful transition 100 100% EV penetration I mean perhaps I mean I think that’s a small part of the whole shift but I think of it more in terms of owning the IP right and so to Todd’s Point about extracting more nickel from the same amount of ore or I mean you know we’ve talked over the years about direct lithium extraction or new cathode formulation things like that I think that owning the IP and owning that um the ability to sort of Leverage that that that is successful more than anything else that’s where jobs come from that’s where new technologies and new discoveries come from as well so I think that when I think about you know how do you define success and when will we know we’ve gotten there again it’s not an overnight thing but I think that um I really think the technology the technological leaps that we’re likely to see in this transition if we can own those um that’s going to put us in a really good spot well I IP I want to link that IP comment to Todd what you were alluding to you’re basically saying because you didn’t mentioned Indonesia and and the China and the H palal you know technology but when you mentioned the Canada recognizes that it seems like you’re implying here that uh China is direct directly trying to undermine projects in other parts of the world through um you know their Indonesian technology is that what you’re saying and and I don’t know if we have laterite you know projects here or that type of IP but the concept of the Tang Shen of the world right who have figured out how to you know make battery grade products out of you know material that you didn’t think like and the IP in lithium for you know the Chinese know how to convert lepidolite like you know but the Chinese weren’t allowed to participate you know in ther pass right you know so and so America is not benefiting you know we got to create our own IP rather than leveraging you know the Chinese IP um anyway but I mean come on that’s old technology apal it’s the Chinese spent enough money to make it work um they just you know a shock and awe you know amount of money to uh pour into Indonesia and uh stand up that refining capability using technology that’s existed for a very long time they just spent enough money to work out the Kink um so um but again you know I I think governments are waking up to the fact that this is strategic and intentional um it’s not just for Chinese uh Supply and hopefully the policy response uh will be commencer it with that understanding and I think it is okay we probably need to do a deeper dive into nickel a separate topic we we touched on it here um so Brian you uh gave us a slide here uh we’re going to put up the slides on on benchmarks kind of you know forecast on on lithium but you gave us another slide on on the cathode could you just talk to that um slide yeah just also adding some positiv positivism here and optimism so um as you probably known I was very beneficial uh to the battery supply chain uh in the US and spad the F basically currently and it has specifically uh accelerated catod um capacity pipeline uh in the US uh at the same time we see some there some Supply deficits when you look at the supply um the Gia Factory sell uh demand we see some uh deficit because um I mean the gigafactories in the US and the pipeline capacity there is growing much faster than the catod pipan capacity so as a result I mean the US will be to a great extent feel reliant on Imports of Catos especially from South Korea which I me South Korea was was mentioned before I mean South Korea was arguably one of the main beneficiaries of the IRA with a lot of C Supply deals between US Open makers and South Korean uh Cod supplies we’ve seen a lot of uh South Korean investment going into the US uh but again these highlights I mean the IRA was super beneficial and and has accelerated uh battery pipeline capacity in the US but the a supply uh gaps uh especially in the Midstream part I mean AP from uh catod I mean I know that even a biggest Supply uh bottleneck in this regard for the US okay it’s very important that we have local cathod here I mean the Arcadium Paul Graves said it’s it’s great to kind of you know just manufacture you know lithium hydroxide you know process baming or Etc but you know it’s still going to Asia you know unless you have cathode you know developed here so there is a lot of cathode development underway I think through uh Tesla you Elon Mo’s partner JB strable um Tesla I don’t know kind of disbanded their cathod team I don’t have any insights into what’s going on there um you Todd uh two questions uh I don’t know if you’re you may have some sensitivity as a Tesla partner to answer them but I you know four years ago we started this podcast in August Elon said you know it was begging you know the industry to M more nickel and uh he in battery day he talked about battery he wanted to be expert you know in in the best manufacturer in the world right of batteries EVS Etc that was the main focus in his last quarterly call uh he basically said you know the valuation of if you’re investing in Tesla you have to believe it it’s a bet on autonomy you know he and and and the 4680 and the battery he said is that that’s not just like a hedge you know because there are enough batteries coming from the rest of the world so I guess what’s your what’s your read on you know te and Tesla like fired a lot of people including cathode Etc do you have any sense of like what’s happening a Tesla and then the second question is relateded to your 45x panel again I don’t want to get bogged down into the jargon but um that’s not money direct money but if you’re actually it it’s more meaningful than you know a strings attached loan if you’re up and running because it you know those tax credits hit the bottom line every year I think forever so anyway if you can comment on those two things yeah I mean uh hey uh uh you know we have we’re a Tesla partner and privileged to be working with them on a number of different aspects of our ability to supply nickel uh I’m also a proud owner of two Teslas and uh enjoy driving it um but I’m not going to speculate on on on Tesla it’s not my role I don’t work there so um but on 45x um I do think it’s real money so um I think as much as you don’t want to get into the details I do think for investors it’s worth digging into the details to understand how profound some of these programs are in terms of helping uh standup uh projects in the United States so when it comes to critical minerals the production tax credit is the only part of the production tax credit that actually never Sunset so it lasts until Congress actually closes it off it covers 50 elements in the elemental table at certain levels of Purity but the prize that you get and this is real money uh how is 10% of production uh cost so people energy and we believe ultimately the government will include uh the cost of raw material so when you think about a lithium hydroxide plant like Tesla’s building in Corpus Christie uh Texas um that’s the perfect example of something that would be benefiting from the production tax credit for uh critical minerals um think about it on a yearly basis the US government is going to give you a tax credit um for 10% of your production cost so it’s actually quite a generous um um um benefit the details still have to be rolled out so we’re waiting on the final details but I actually think this is one of the things that people need to pay attention to if they’re looking at investing in um us mining or refining project or companies that have those kind of projects because um it’s one that uh uh is is actually quite uh significant I don’t know Chris do you do you have a a V 45x for CTO yeah I I think it is it is astounding you know even if you do do some back of the envelope math about how economically beneficial it is to set up um cathode or or battery or cell manufacturing capacity in the US I mean if you just come back to that Panasonic plant that I mentioned before in Kansas um you know you think the other portion of 45x is of course a $45 per kilowatt hour tax credit um or I guess that’s a production tax credit if I’m not mistaken but my point is again you you just you just run some very rough back of the envelope math you think about gigawatt hours of production uh you assume a battery size 60 70 kilowatt hours and then you start you know pulling out the calculator and it’s worth billions of dollars every single year for Panasonic to to pump as many batteries as they can out of that plant and that’s just one gigafactory so you know um if there if there was a way for us to sort of accelerate building this capacity and getting it up and running um I think 45x in particular really stands out as as one of the subsections of the IRA in my mind um that that sets it apart from from the rest of the world and and Brian I’d love to hear your thoughts but I really think that 45x is in some ways a threat to building capacity in Europe uh just again from a pure economic standpoint so it it’s I’ve always sort of been interested to see how you know de point governments funds and things like that in the EU respond uh because I think that 45x in particular is just a very very powerful tool for capacity here in the US what do you think Brian than you know I’ve heard I mean I’ve heard the same um thoughts and from European perspective same concerns being the only downside of 45 expert correct me if I’m wrong I’m not the expert in all the firming mechanisms in the US it’s not supporting domestic miners but only Midstream and more the downstream part of the supply chain that could potentially be the only downside but yeah as you said I mean I’ve heard similar uh reactions and thoughts in in Europe about this and Todd on that point uh you’re saying the guidance on mining is not uh yet been made for 45x however the doe did just announce that not just processing but mining can be part of I don’t know if it’s part of the atvm process but you know I know that like lithium Americas I mean the mining is only a small portion of that but like the funding was definitively not for the mining portion and the same was true for for pedmont but now just explain the policy and and do you think that that that policy will then you know just trans at into 45x just adopting the similar mentality yeah the way to think about Howard is that um the department of energy can now give uh lowcost uh favorable Term Loan not just to processing facilities but also to mining operation and this is a a a a long-term view held by Senator Lisa marowski of Alaska and Senator mansion and they’ve been pressing for this change and the administration looked at it hard and actually came to the same conclusion that the law allows them to uh provide lending to mine operations not just refineries so that’s a big change I think it’s a game changer um to be honest um and another one of these things where you know people you know get caught up in the alphabet soup or don’t want to get into the details but the details is where you can understand how people are going to make money so I I really urge investors to maybe get into some of these details because they’re they’re quite impactful I don’t know Chris what do you think about the the new mining ability yeah I look I mean I always thought the IRA was terrific but the the lack of of a focus or or any kind of incentive to build Upstream mining capacity was left out I think the idea was oh we’ll just rely on our pre-trade partners you know for for the raw material well guess what I mean Australia Canada all of these companies or even companies or countries excuse me EXC me that we would consider allies are all crafting their own critical minerals policy and guess what they want everything on Shore as well so you can see the tension is in the Upstream portion of the supply chain right um and that’s why I think again incentivizing mining done responsibly utilizing Western techniques and Technologies and protocols is is only going to make make it easier to build that supply chain here so that that was one thing that I thought was left out of the IRS but to your point I mean things things continue to sort of grow and morph and and get interpreted right I mean we’ve even now are still coming to grips with what a foreign entity of concern is and how involved a Chinese entity can be in different parts of the supply chain so but it’s it’s again it’s headed in the right direction you know I may ask a question to will these be translated in the final guidance regarding 45x what you’ve just said regarding the doe interesting uh no so the the the doe uh Loan program uh availability for mining is now definitively decided so mining projects like ours are going in and talking to the The Loan program office and and and beginning the process of um figuring out how to how to do this lending um and it you know for investors I think it’s really imp impactful because it means that we’ll have access to uh Capital to actually build mins uh that get permitted yes definitely thanks just just a a comment or observation we had John Miller from TD Cowen on the podcast when the IRA was originally passed and and subsequently and he reminded us like the IRA was a big legislation but this guidance right the IRS interpretations the the definitions of what is an feoc you know that’s taken a lot longer to be implemented but it’s rolling out very fast right now in part I think because all of the Democrat administrators who are there are saying well we need to kind of like get this thing defined because if we lose um you know and it’s left loose then um it wouldn’t be set in stone so there’s a lot of decisions that are coming out right now and new additions like uh mining that’s a big thing that that that mining is now available for Lending like we everyone knows who watches us you know that we’re big supporters of you know pedmont lithium and petm lithium like and and albamar um Alamar got a grant of $90 million for the Kings Mountain mine from the Department of Defense but there was always this distinction you know about processing hydroxide you actually the mining was the problem concentrating lith spine in you know that would apply but the actual mining wasn’t previously available now it is available and that’s a that’s a benefit but the bigger thing is if on the 45x it doesn’t apply to mining either in America or if you import it so Todd like your North Dakota processing plant you mention uh you want to process ore from other countries potentially that 45x tax credit today would not give you a tax credit against the imported you know concentrate but if they change that law to this or they change it to allow for mining it would apply you know for Canada you know or any other imported concentrate you know as a cost that would significantly enhance the economics of processing that in America I think more than anything that that’s a level you know a play field leveler with China is this you know reduction in cost and it doesn’t come necessarily with all of the requirements for you know union labor right which have increased you know the cost on you know the fer pass project for example right that you could be in any we don’t see it that way Howard I mean we we actually uh have a an agreement with the Steel Workers Union uh as a partnership um they’re strong advocates for our project in the permitting process and other things we have project labor agreements in place in both Minnesota and in in North Dakota um we view it as strategic as our relationship with the labor unions in terms of our future Workforce um showing the community that we’re going to play good uh wages and and and and benefit um and we want to work with people that know how to do Mining and know how to um uh builds things so we view our relationship with unions as strategic and not as a uh an increase cost um you know we’re actually going through some of our plans with Building Trades unions that again know how to build things in Minnesota and North inota and uh they’re helping us find ways to cut cost so um I I don’t I don’t think I don’t buy the premise that um some of these requirements or these expectations automatically lead to higher cost okay thank you for that I always uh say that 3M the most famous company you know in Minnesota actually stands for Minnesota Mining and Manufacturing right you know so Minnesota has a long history uh you know of building this country uh from the iron mines and uh in the future hopefully not too distant future uh you know nickel mines you know supplying the most important you know electric vehicle maker you know in the world uh in in in Tesla okay we’re almost at an hour here there any final comments that any of you uh would like to make um this was a great you know Preamble or pre-brief uh to The Benchmark conference I’m looking forward to attending and uh hearing and making contacts you know a lot of this discourse there’s a lot of crosscurrents of information but final word you know Brian yeah no um basically looking forward to the to the conference uh to continue our discussion and like you said we should stay uh optimistic regarding the energy transition despite uh yeah the tit fortat and and Global competition between the European Union China and us all right Chris any final thoughts yeah I I would just look for more Partnerships uh from the private sector across across borders as well I mean I you know we’re never probably unfortunately going to see a free trade agreement with the UK or with the EU certainly not uh before November arguably in the next few years but you know if you could put something together like for example what the United States has with Japan right now with respect to critical medals materials it’s not a full free trade agreement but it’s more of a standstill on on I think how we interact if you could see some things like that fall into place some of these other Allied countries I think that would be terrific um and yeah I think look infrastructure as an asset class or green infrastructure as an asset class is kind of the new thing and so as an investor uh or a policy maker or one of these companies you’re going to have to have a view on how to handle geopolitics how to how to Fant alliances and and and just think again about a lot of the macro backdrop fiscal monetary policy and how they all sort of work together to come together I think with the Salient sort of investment view but I I still see a lot of room for for optimism despite a lot of the noise with Metals prices all over the place and people rethinking EV penetration rates I still think it’s very very positive yeah I’d just add to the same comment um Howard I thought your intro was a little dark um and uh you know I I I needed my uh black coffee this morning to uh give me uh energized but I’m I think the timing for The Benchmark conference is is really impeccable as always and uh I think that actually uh there’s a lot of very good news rolling out from policy makers there is this clear recognition in the EU us uh UK Australia Canada Japan Korea that what we’re seeing is a Chinese strategy and that Chinese companies are being aligned with that strategy through things like one belt one belt one road Etc and so I think I think there’s um a lot that will happen in the next six months obviously elections one of those things but um we’re we’re we’re at a really interesting time for both the clean energy supply chain and defense supply chain which actually kind of run together um and I think um we’ll see a lot and hear a lot in the next com weeks and going to be excited to actually attend the Benchmark confer and I’m super excited to attend that as well as the fast markets and and and get the energy of uh in-person contact because uh you know just sitting here and digesting you know on on Zoom calls and and and X everything you can get in a bit of a negative um you know bubble so I do get energy from those conferences I actually do I know I said you wanted including thoughts there but there couple thing I was just reminded of we had a question here is can us funding be made available for projects in Australia and Canada you know in the similar way that like the development Finance Corp will finance things in Africa and other countries and Brian you mentioned the EU is talking about um you know European funding potentially for African projects but you would never think like and I asked this of um sha could you see loan programs funds go to fund like a Quebec project and he said no way would US taxpayer dollars do that um what do you think Todd is that could that be a way to bridge like America’s somewhat anti- mining mentality say okay we’re happy for Australia and Canada to do it we’ll give you some money to do it you know we’ll process it but what do you think I mean the program you’re talking about is the defense production act funding out of the Department of Defense that’s the same group that gave us $19 million to kind of supersize our exploration for nickel in America what is a game changer is they have now made an investment just two weeks ago in Canada in uh two mining projects in Canada and Congress last year changed the law to allow them to also do Investments um in the UK and in in Australia so there’s over I think a billion dollar in the DPA title 3 funding envelope um and now that funding can go to project in the mining sector in the US Canada the UK or Australia that’s the the the sort of the Providence that you can uh see that investment in but I think it’s you know for those projects that get funding um a it’s great because uh it’s not a loan it’s a grant uh and B it really credential ises the purpose of your project the US government the US defense department is saying we need more of act whatever that project is focused on in terms of the elemental table that’s basically validating that the US government is of the view that we have a security of supply problem that needs to be solved and that’s what that money’s for so I think it’s actually a a really strategic tool it’s so great to see DOD uh do the first investment in Canada I’m sure there’ll be more to come okay great so that’s a defense uh production act uh DOD money you know in the singled digit billion not in the hundreds of billions um you know that the loan programs office is doing so the doe has not yet been given any power to you know so this is Australia this is part of the mineral security partnership or the the five eyes domestic Source um not really part of it though it’s it’s not really part of it it’s not part of it okay no it’s it it’s it’s a separate initiative run by the Department of Defense okay so there’s still whole of govern approach there may be new initiatives who know under Trump he may just decide you know this is real important and we’ll invest so there bottom line is America is aware in ways that they’ve not been aware over the last kind of number of years and they’ve been taking measures and if Trump is elected he’ll be inheriting a lot of bodies of people you know and and agencies have been focusing on critical minerals policy and he is very focused on that so he’s not going to just rip it up it just there’ll be a reassessment and a realignment and and you know additional policies so anyway we’ll wait and see great thank you very much uh all of you for a great discussion and looking forward to the conference and we’ll have more comments on this after that have a great weekend guys thanks much see you one [Music]

INDEX:
00:00:00 – Introduction
00:10:55 – Talon Metals: US gov funding for nickel projects
00:15:26 – Election’s effect on US critical mineral funding
00:17:54 – Europe vs. US: critical mineral policy progress
00:22:25 – Funding options for Europe’s mineral projects
00:24:00 – US, Japan, Korea, Europe vs. China: battery competition
00:30:05 – EV adoption: sooner or later than expected?
00:35:15 – Major nickel miners: production boost plans
00:38:36 – China’s use of Indonesian tech in nickel projects
00:40:30 – Benchmark’s lithium and cathode forecast
00:42:58 – Tesla’s focus: from nickel to autonomy
00:48:49 – Will 45X embrace mining?
00:51:48 – DOE’s mining loan program and 45X
00:54:03 – Mining unions: cost or advantage?
00:57:08 – Closing Remarks
01:00:30 – US funding for Canadian, Australian projects?
01:02:57 – Howard’s Closing Remarks

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Links 🌍

RK Equity Website: https://rkequity.com/
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Podcast:
Apple Podcast: https://podcasts.apple.com/us/podcast/lithium-ion-rocks/id1457969172
Spotify: https://open.spotify.com/show/0KiMIZOPaDg8ENfPJMSINq?si=a4ca356c45394648
X (Twitter):
Howard: https://twitter.com/LithiumIonBull
Rodney: https://twitter.com/RodneyHooper13
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DISCLAIMER

NOT INVESTMENT ADVICE. DO YOUR OWN RESEARCH

Rodney and Howard are not financial advisors nor broker-dealers, this video is for information purposes only and should not be considered investment or financial advice. Please do your own independent research and read the disclaimer at the end of the video or on RK Equity’s website https://www.rkequity.com

Intro and outro audio credit: Jamie Klein