Righto, money miners, another Friday special, another bloody ripper delivered by Axis Mining Technology, the trusted advisor in drill oil survey instrumentation, and the trust we have for them is probably similar to the trust we have with everyone else that comes on. Just like this fella, straight from the humidity of Singapore, Mr. Alex Turnbull. Welcome to Money and Mine Copper.
Thank you. Mate, you've got a light blue shirt on. I thought you're not allowed to wear them in Singapore because of the sweat.
I thought it was white shirts only over there. Well, mate, this is an advanced technological development. You can get them made in seersucker, so it just stays slightly off your skin so you don't get too hot. So I've got a lot of them in this climate.
There's an ice vest under it too. Very good. Yeah, probably. Yeah, exactly.
I've seen those. People go for runs in them. It's crazy. Trav, give the bloody, give the spiel of...
Mr. Turnbull, another great sub-stacker out there. Yeah, he writes a bit of a frequent writer on his sub-stack, which I can't pronounce, so you've got to forgive me. Syncretica? I'm probably saying that wrong. Syncretica, yeah.
There we go. But, you know, you're an investor in the materials, energy, kind of open source modelling kind of like areas. Mate, he previously worked on the special sits desk at Goldies on the Asian special sits desk and spends plenty of time.
I just like... The way you kind of word it to me is you think a lot about that interface of data centers, chips, energy, metals, and that overlaps a fair bit with our wheelhouse and what our listeners think and care about as well. So pretty keen to explore some of the things you've been thinking about, Alex, because these are the themes that really inform the commodity cycles that get us excited and demotivated at the same time.
Yeah. No, it's interesting. I mean, I've also. done a bunch of policy work with a think tank. Because one thing I guess I've seen, more at Goldman Special Sets, we bought Taliesin, they were the assets that became Taliesin, like green bushes out of bankruptcy, and we literally just underwrote the tantalum.
We didn't even think much about the lithium. Then you started to have the EV thing come along with the Nissan LEAF. One consistent pattern is tech moves at a very quick cadence. But the problem is getting mines up takes seven, 10 years. So there's always these kinds of moments where something happens on the tech side and it leaves miners hanging.
Or ultimately, something happens on the tech side and you have a bunch of semiconductor companies saying, I need 300 million tons of whatever. And there's literally a quarter of that available. So it's interesting to invest in because it creates these really big displacements and shocks.
but you've got to kind of be following both at the same time. But, you know, it's interesting. The way you kind of, yeah, described it to me over at, you know, Text Exchange was the tech evolves before the narratives, the investment narratives kind of evolve.
And I guess, you know, naturally then you want to focus on where is the tech evolving right now that will inform kind of tomorrow's narratives. And naturally I'm keen to know where are you spending a lot of your time thinking right now? because of the evolution yeah i think a lot of the a lot of what's happened in batteries in terms of people getting all the cobalt out i mean that's i think that's largely played out i think that people's consensus numbers on uh cobalt demand been a lot lower has kind of played out uh and then the split between nickel and lfp or some people say sodium now i think that's also fairly well priced um i'm not sure what's gonna get those two metals off the off the canvas but uh that's I think that's now been absorbed.
I think what is very controversial now is how much power a data center is going to use and is this going to be an additional over five years, 20% bump to US power demand because given the state of permitting and power grids and so forth, that's going to be very hard to implement, but that would be a big change to those markets. So spending a lot of time looking at chip and data center topology, how people are trying to reduce power, how successful they've been and how much is coming down the pipe in terms of... energy efficiency. So, yeah, it's been spending a fair bit of time on that, optical, compute, photonics, these sorts of things, yeah.
So if we, just to get a concept of where you think these data centres and, you know, the world of semiconductors at the moment, rewind, I don't know, four years ago or so when you had everyone pivoting to the future-facing metals, everyone pivoted like cobalt was going to be the thing, everyone getting into nickel sulfide. Then obviously the battery uptake changed a bit. And then it was all about this future EV demand. And obviously lithium went bloody bananas.
And we're here now and it's all just... Are we at that point? Is Datacenter the new EVs from four years ago? I think so.
So thematically what happened was it's like that's a really good comparison because what happened with the EV thing was you had policy-driven massive push on EV demand, particularly in China. And you also had a funny thing where... due to the COVID mess and a lot of normal IC companies not being able to get their chips made for analog, because basically all of Malaysia got COVID simultaneously for about four months back in 2021, you suddenly had Teslas were available, their operations weren't interrupted, and suddenly there was enormous demand for Tesla vehicles.
At the same time, you had all those mines shut down. So you're Alita, Zaltura, all these guys. So that just went vertical. And similarly, what's happened with data centers is due to AI, suddenly people have realized they want to invert matrices a lot very quickly all at once.
So you've had this kind of demand displacement in terms of compute. What we haven't seen, though, is how people are going to kind of tamp down that demand in terms of efficiencies. And that's definitely coming. So one sort of simple way to think about it is that Anytime you run something along a copper wire, you've got some resistive losses. So you take two sides of a, I don't know if you're a terrible pyromaniac as children, but I was, two sides of a nine volt battery, run a copper wire through it or try to make an electromagnet.
It gives off a lot of heat. If you move that to optical, to light, then there's no heat losses. So the question abstractly is how much computation can you do with as little electrical as possible?
And that's what people in... Physic Labs are exploring the boundaries of them, but there's a lot of products coming to market which will facilitate a good chunk of that. So if you want to hone in on the actual metals, between the construction of the data centres and the power supply, what are going to be the big ticket items at the moment from the first pass, you'd say? Yeah, I mean, definitely it's just, I mean, right now it's a lot of, so in terms of not so much metals themselves, but you see like a lot of the... To dissipate all this heat, it's a lot of HVAC, it's a lot of heat management.
Companies like Vertiv in the US and also just simple high voltage switches. So I think the Beige Book came out last night. We've now got running four straight years of electrical components being in shortage in the US between renewables build out, data centers and so forth. So people who make just basic switch gears and stuff like that are busy. Sloth businesses are doing well.
I think in Australia, you've got various contractors in electrical who are still absolutely booked out, hear comical stories of how hard it is to get good electricians, particularly in regional areas. I think that's pretty much ongoing. That's one stylized fact.
In terms of the metals demand, currently, it's quite very copper intensive. What I'm looking at is how copper intensive data center plans people have. planned out for 2027 versus something they built over the last 18 months and it's quite a big difference so that's something i'm trying to get some hard numbers around is it this might be a dumb question but with data centers and the heat and everything is does silver ever come into play as a better conductor of electricity like the best conductor or is it is that never going to be a thing not too expensive and in terms of the heat dissipation and everything Not, I don't think so.
What silver is kind of interesting right now is that a lot of it's used in solar. There are technologies to get that, to get the silver out of solar if you go to heterojunctions and there's guys like SunDrive and a couple of companies in Germany. But what's interesting is that because the sector has been so bombed out, no one's going to do the capex to get rid of the silver. So the silver intensity is going to stay and be very high.
And you can... run numbers, which are not even close to crazy, where silver starts to become mid-30% of total global silver production just for salt. And so that's a metal which could get very silly over the next couple of years if people don't make that technology switch.
And no one's going to put that money in to make that technology switch when they're making negative 20% gross margins, as a lot of these guys are. So that's a metal which is set up in an interesting way where it could get quite bananas for a little while, frankly. I think the elephant in the room with regards to data centers is energy and where the old energy will come from. That's obviously been a big talking point, at least in the kind of circles that we speak in.
What have you sort of learned from diving into this at a sort of broader level to start with? Yeah, so, I mean, if you think about, I mean, data center basically, they want to keep the ships, let's call it, sort of more or less atmospheric, you know, ASM, like atmospheric temperature. So 20 to 40 degrees C. You don't want it to get too cold, too hot. The interesting thing for a lot of these data centers is that because they've only just become insanely power intensive quite quickly on the AI side in terms of unit per square meter footprint, there's a lot of stuff you can do.
And they're also, they're normally big flat. It's not like a vertical building. So there's all sorts of stuff going on right now. People are saying, well, maybe we just put. a bunch of solar panels on it and we just freeze a bunch of water during the day and we just use that as like an ice battery.
There's a lot of sort of efficiencies to squeeze out of these things that have largely not happened yet. I think in terms of like, is coal going to stay on the grid or is it going to continue to retire on as per projections three, four years ago, that what matters is the total power demand. What I'm saying is that I think people's estimates are way too high right now. They're going to come down due to these efficiencies at the SHIBs level. But I think in the short term, yeah, if you've got a cold plan, which is due to retire in 2028, it's probably going to get punted for an extra two years at this point.
And is that a trend you see across the Western world? Is there sort of disparities in that and how it might play out in China versus America versus Australia? I think so essentially in places where you have very easy permitting to build renewables or batteries or what have you, you still get pushed out faster. So Germany's done all sorts of stupid things with their energy policy, mostly around nuclear, egregiously so.
But on the other hand, they're very permissive permitting. So just getting stuff built is easy. It's a little bit like Queensland, but you've got that coordinator general thing. So just like actually getting poles and wires done is just simple.
So yeah, we're in places where you can build the substitute or the other sources of power. uh things get pushed out quickly but where you can't build because you've just got a crazy permitting mess um like i don't know um uh you know the northeast us or california things got a bit more slated is there any numbers you can wrap around the power required for these data centers like as a comparison to to something else like how energy intensive they actually are yeah i mean look that people are talking about a one gigawatt data center that's like a fuck that's all That's a big, yeah. So there's one being planned, but then they're also looking at reducing the switching and interconnect costs using some technology by about 80%.
So, you know, there's this race between actually demand for this stuff and the efficiencies are really starting to come through. Whereas no one was really engineering this stuff from a power point of view, with a big focus on power until... 12, 18 months ago when the densities got to the point where you had to start spending crazy amounts on getting liquid, like a liquid cooling can interconnect to a chip, which pushes through a liquid to take off the heat because you can't actually do it through airflow anymore at any degree of reasonable efficiency. So there's a lot of moving pieces right now. I feel like it's a little bit like battery cathodes were like two years ago, where nickel and cobalt went nuts and suddenly people in whatever the...
physics sorry the chemistry lab at catl and so forth we're told all right guys like you know if you want to get promoted in this organization you need to thrift a lot of the expensive stuff so get to work and that kind of happened right um so i think we'll see more of that sort of thing so that's like what five to ten billion dollars just to power a data center without building the data center effectively like if you've got to build a one gigawatt reactor to power it yeah yeah if you if you if you Yeah, if you want to build a nuclear reactor to pair with a one gig data center, it's pretty crazy stuff. A lot of the really big ones and really crazy projects are in the Middle East. But there's also a lot of them where you're saying in the US, there's one big Amazon center where they basically teamed up with an existing nuclear plant to take the whole offtake.
And that's that. Does it matter where the data centers are built? Where they emerge? Will they naturally emerge where there is a glut of...
of low cost energy or is or is there like more to it it depends i mean so so you know obviously if you um uh there's latency is an issue so if you if you're whatever requesting information from I don't know, a Spotify server on a VPN, it's laggy and that's annoying. If you request it from somewhere locally, so distance is important for certain applications, but if you're just doing a big training run, like you're ingesting some obscene amount of data to make GPT-5 or whatever, location doesn't really matter. So I think for inference, which is where you actually run a question to the model and get a reply.
You obviously don't want to be waiting five seconds for a reply. But if you're just doing a big training run, I mean, you don't care. That's not something you as a consumer observe.
So what about the modelling of it? Where does it sit at the moment about all this, the power required and the copper required for data centres? Is this like, one, how much exists at the moment and what is being modelled for the future projections of these data centres? Or is it very opaque at the moment? It's pretty opaque.
So if you go to your friendly neighborhood consultants at Woodmac and so forth, and they try to give you a sense, and you poke them pretty hard on the details, which is what I like to do, find there's not as much there. Which is why I've spent a lot of time talking to interconnect companies and other sort of businesses to really get my head around what those actual numbers are. I think right now, they're pretty accurate on what the intensity is now.
I think they can tell you where we are today. I think going forward, some of their projections, if you look at various ways companies have been thrifting on power, and normally thrifting on power means thrifting on copy. They're kind of the same thing for that fundamental physical reason.
Those things are going to pick up in quite a big way, but really not for the next 18 months, I would say, just in terms of the lead times of how people plan this stuff out. Once that starts to hit, it'll I think it'll be, it'll feel a little bit like what happened with battery metals once all the Indonesian nickel supply starts to come on, or once all the mysterious spodumene out of Africa started to turn up in people's supply demand balances, but no one could really track it at the port level that well. So I think it's going to be in the short, like it's like a lot of things, a lot of these in the short run momentum tends to work, but in the long run, you know, mean reversions are a real pain in the bum.
Well, all this bloody, all that heat, the heat coming out of these. these data centres and the bloody water cooling required. Mate, I'm bloody thirsty. If I can feel the heat.
Drink it out of my green water bottle. Jeez, that just just green lions popped in my head. Green water, bloody tell you what.
Isn't oh, mate, have a look at this. You've got me. Pipes. Wow. Water pipes.
Jesus. Mate, pipes, pipes, pipes. There is water pipes. flying out the door at Greenlands.
Talk about moving a shit tonne of water. Look at the size of these pipes. They could transport a lot of water.
They could cool data centres. They could build mines. They could transport iced water to go straight into the data centre to keep that bastard at 20 to 40. You want water, you don't want water, they'll fix it both for you, right?
Turn key, turn key. If you don't know if you want water or don't want it, they'll tell you if you need it or not. Simple as that.
So, mate, pipes, bloody. They're freaking huge. Think water, think greenlands.
Very easy. Think data centers, think greenlands. And to build on your analogy to EVs, Matty, like the flimsy part I imagine is just, you know, projecting what the intensity is actually going to be over time, like how powerful some of these models will be.
Isn't that what also happened in the lithium modelling here? They got wrong the actual amount of lithium that was going into the batteries. And it was kind of confused with the inventory levels, right? You didn't know what was sitting at the battery maker.
It was just a big ball of fuck. Yeah. I mean, so it's funny on the lithium thing. So a paper just came out where they, normally what they do is they pre-lithiate.
So they sort of charge the battery slightly, let it sort of marinate for a period of time in order to develop an interface layer on the anode, right? And so people just tried, why don't we just run a bunch more current through it, pull more lithium out of the solution and have a... thicker interface layer and what does that do to the properties of battery and actually means you can get almost double the cycle life so great but this is you know it's funny you read these chemistry papers and some guys like oh look i've doubled the cycle i'm like good for you pal and they're like yeah but we need like 25 percent more lithium per kilowatt hour now i'm like that is that is actually a big deal in resources so it's it's it's funny how there's um uh people on the yeah i think there's often a lot of upside in talking to nerds in chemistry labs, or at least the people who tell you at the battery companies where their next sort of essentially, cathode plans are, because it has huge effects on supply-to-man balances and this stuff.
And yet, I find the consultants, or at least the people who produce the estimates of long-term supply-to-man balances are not super responsive to what's going on there. Alex, you've written a fair bit talking about lithium and how the Aussie industry and Western industries more broadly can insulate them from the volatility that we've seen with prices running up to 8,000, now down to a bit over... 700 bucks i think to start it'd be good to get a bit of a flavor for how you sort of put this forward i know you've spoken about sort of strategic reserves i'm not sure if your thinking has evolved since you you wrote about this yeah no definitely i mean the so my thinking on this comes from doing far too many lithium bankruptcies uh so you know obviously talison got sold uh out of sons of gualia which was they messed up their gold hedging that's another story entirely you But then you had sort of another wave of failures where Galaxy almost sort of dropped dead.
You then had the wave of bankruptcies with sort of Alita, Altura, and so forth. And the problem is that from a policy point of view, so say you're a government, you want everyone to decarbonize, you need lithium. Cool.
But you need capital to commit to that. And there's this endpoint of, OK, 2 million tons, 3 million tons LC demand out at 2030, whatever your number is. But. To get there, you as an investor need to have the company survive and not die all the time.
That's pretty challenging historically. Also, for large companies, they tend to underinvest because they know these oversupply periods are brutal. Part of the problem with lithium is that you can't really store the end product.
Hydroxide, if you try to store that, but- more than 12 months. It's very aquaphilic. It basically absorbs water in the atmosphere and turns into sludge. Carbonate's a bit better, but not a lot better.
The way you would manage a market like this is being able to store spodumene in some way. The problem is that if you want to do some physical trade where you say buy a bunch of copper on the LME and then head to the futures curve sloping upwards, you can hedge that a couple of years out, you can get a good. bit of leverage from a bank on that.
You can't do any of that in the spot you mean because there's no futures, there's no warehouse and infrastructure, and there's no financing as a result of that. This is why we overshoot all the time in lithium because there's no real bank funding. It's the difference between a market where you've got strategic demand for storage and physical where I can go out and buy it and put it in a warehouse and so forth.
As a fund, I can't do that in Spodgermint. So trying to work out how to make Spodgermint a little bit more of a grown up LME style market is I think important because otherwise we'll get short again. It'll take ages for people to put supply on and we'll be up at some crazy level and then the governments will be upset because people don't want to buy EVs because they're expensive again.
And that sort of ping pong thing is not ideal. There's some bag holders that have really hoped that happens. Yeah, I mean, so the way I model it is that if you're, say we're at 700 bucks spot, if you think the long-term incentive price for spot is say 1500 bucks, well, probably higher if you're talking to someone like Patron Metals or Minerals or what have you, then it is vastly more appealing to just sit on a bunch of physical you can store cheaply. And the great thing about spot is it's not very reactive. store it on a Wompat for a long time and and flog it later I mean that's certainly happened out of bankruptcies before than it is to keep on tripping money into some junior mining team who are still going to conferences still have too much SG&A uh you know not it's basically like there's a lot of negative carry I would say in the sense of like the cost to play in a mining company which is below it's you know all the AISC is a lot higher than just sitting on rocks you So, you know, a lot of people in physical trading, they'll just accumulate physical rather than trying to mess around with junior miners and all the risks associated with them.
So essentially, but that's part of the reason why stuff like copper and zinc tend to normalize a bit faster and be a little bit more better valued markets. So are you saying this, you know, this does happen, but it tends to happen perhaps with commodity traders and people more in private markets that we're not as sort of privy to? Yeah, I mean, so commodity traders can take a view. I mean, I'll give you an example.
In 2015, it's fairly well known. Glencore accumulated a massive position in zinc and then proceeded to shut down some of their zinc capacity, which is. pretty clever, depending on how you look at things. You can't actually accumulate that physical leg in Lithium.
You basically just have to take the corporate risk. If you want to mess around with futures, it's all cash settled. It's all references Asian prices. There's a little bit of wobbly-wobbly stuff in terms of how accurate those prices are.
Then the stuff you can't store, you can't sit on it for more than about 12 months at best. That means if you're going to bet on the physical market normalising, it's got to happen in 12 months or else you've got to flog your inventory very quickly before it goes bad. Whereas if I just want to accumulate copper cathodes, I can sit on that for a more or less indefinite period of time.
And so essentially long-term value investing in physical is not possible on lithium, which is why it feels like a very cracked-out market wherever I'm short-term because they kind of have to be as it currently stands. So on a slightly different... tack. We've seen a lot of the companies down here try to go downstream, IGO, Minres briefly before they sold out. You've also sort of, you know, in tandem seen a lot of discussion with governments in encouraging it and whatnot.
What are the kind of views you've come to? I take it you spend a lot of time looking at Asia, you know, cattle and the like, who've done, you know, phenomenally well in their sort of iteration and learning turnover. Why have we struggled so much in Australia?
I think a lot of, I mean, building a refinery is to a certain extent, it's easier if you've done them before. And of course, China's built a lot of lithium refining capacity. There's also just some of it's just the same reason why it costs a lot to build a railway in Australia versus build one in China. It's just labor costs, efficiencies. Some people would point to CFMEU, no particular opinion on my side there, but it's just that it's a reason why building stuff in lot more developed jurisdictions is just generally more costly.
There's no mystery there. I think the issue is that for the producers, the advantage of having downstream is that you are selling an end product which can be sold directly to Japan or Korea or the US or what have you. Whereas if you're selling spot, to a certain extent, you are at the mercy of whatever the Chinese market is doing. And so you have to be very careful. Particularly in a bear market, the discounts in physical spot, it can be pretty terrible.
That's what's led to a lot of mine failures and closures. Also means if you're selling spot to China, you're facing someone in Shanghai, their understanding of tort law and enforceability of contracts is going to be very different to you historically speaking. We've seen a lot of situations like with Alita where the Chinese off-taker just said, actually, no, I don't want to take it at $800 anymore, spot $650. the company ran out of cash in two months or so. So there's a credit risk mitigant thing there too.
So I think there's, but, you know, this is another thing. It's essentially do auto companies and people who are buyers of chemicals want to have an enforceable, stable contract chain, or they want something which is going to be very cheap when it's good, very expensive when it's not, and very unreliable at any given point in time. And so there's a...
sort of a security versus price trade-off here, which people are kind of ignoring, but tends to bite them on the bum at the worst possible times. I did not know about that detail with Alita in there. Oh, yeah. Altura, they were getting, they also had, you know, people not taking cargos or deferring cargos nonstop.
This is, yeah, it was sort of interesting how a lot of these guys in 2019. They didn't raise equity when they could because they're off-tech. It's like, no, no, no, I'm good for it. I'm good for it.
I'm good for it. And then suddenly, actually, no, I'm not taking any material. I'll get wrecked.
Come and send me equity. That is. Maybe like the last one on kind of, you know, the lithium companies.
Like you've had a fair bit of work with the miners that have found their way into bankruptcy for whatever reason. Yeah, yeah. I'm guessing you take a relatively positive view on the credit case for a lot of these miners, but I'd be curious to know your view on the equity case.
Yeah, I mean, so the problem is the credit case is that it's hard. You really have, you've really kind of, the problem is there's no way to really hedge or manage physical risk now. So the credit case is you might as well be getting paid equity returns in the good times because you're certainly taking something close to equity risk in the bad times.
I think on the equity case now, the issue is, is that are we going to get some voluntary reduction in supply to stabilize the market somewhat. I think we should. The reason is that...
A lot of these miners don't have a ton of debt. I guess minerals is a notable exception now. So they do have the capacity to say, we're just going to throttle back supply until this balances and we're not going to produce any losses. So I think there's scope for these guys to kind of reduce output without getting in trouble with their creditors. Whereas a lot of these guys last time around had covenants with creditors where they said, you've got to produce or like, we're going to fall on this line next week, which just made the sell-off all the worse.
So I think that there's scope for supply discipline there. I think the equities, though, that they will only bottom when physical kind of bottoms. And the scary thing for a lot of the equities now is a lot of these guys are making pretty sizable cash losses. So, you know, you look at all these names and if things don't get better soon, you've got to assume there's a certain amount of dilution coming down the pike. Given you've spent this time looking, you know, all the way from the raw materials through to the, you know, the final technology, I'm interested to hear.
Alex, what you kind of make of, or what you kind of think the end game is for the European and the US automakers, given the rise of, you know, BYD and the whole suite of Chinese EV makers? Yeah, I mean, there's, yeah, the Germans have not covered themselves in glory. And I think the markets gradually figured that out over the course of the last six to eight months. I think the, there's a lot of moving parts here. I mean, firstly.
There's a couple of things which have kind of become quite clear from consumer point of view. In China, they've got charging stations all over the place. People are very comfortable buying EVs.
Nobody wants to be driving an oversized iPhone with wheels and not be able to charge it. People have a natural angst about that. So I think demand for EVs in a lot of markets is very heavily capped by how comfortable people are about charging.
So in the US, they've started to really pick up that rollout. So that's been very constructive. But in the interim, you're seeing a lot of demand for what they call EREVs or extended range electric vehicles. So you get about plus minus 100 Ks of range on the battery, and then you got plug in for the rest. That seems to be the sweet spot for a lot of markets in the US and a lot of Europe now too.
I think what happened with autos is they said, okay, we've got a core IC thing. we're going to have a specialized EV thing, but then the EV take-up wasn't quite as good as I expected because people aren't quite fully comfortable with making the jump. The guys who are doing very well right now, actually Toyota, because they've always had this sort of bias towards hybrids or degrees of hybridization or plug-in.
So yeah, so I think that's how everyone's kind of, like people haven't kind of actually, well, most of the auto companies haven't kind of got models, which are really clicked with people that well, either on price point or sizing. But that's starting to change. And in China, of course, everyone feels very comfortable buying EVs. They just buy them and BYD is happy and makes money. In China, I know you've spent a lot of time, Alex, thinking about their energy market and the makeup of it.
Yeah. I mean, there's a few kind of interesting facets of the Chinese energy market that aren't immediately obvious to people, including myself, until I kind of read some of your writing. We all kind of know about the hydropower.
um industry that you know that china's the beneficiary of but it's not necessarily like strictly intuitive that the the reliance on on or the utilization of hydro power actually drives demand for import of of coal and and gas can you can you tell me what yeah what you found there yeah i mean if you think about just think about the shape of sort of china it's got a big sort of tabletop in tibet and then you know essentially the the cradle of Chinese civilization, basically people who grew crops in the river systems that hang off that, namely the Yangtze and Yellow River. So there's an enormous amount of hydro, but as in any sort of power market with a lot of hydro, whether that's Norway or the Alps and Switzerland or Austria, it's variable. And the interesting thing with the hydro in China is that a lot of the hydro, which basically is water coming off Tibet and Sichuan, and then going downhill, there's very big high voltage interconnect to southern provinces of Guangdong and Guangxi, which are big importers of thermal copper. Essentially, when the hydro availability is excellent, and there's lots of power to export from these inland provinces close to the southern ones, then there's a bit of a who made my cheese moment for thermal exporters. I do track it because it is important to have more medium term signals.
in Asian demand for thermal coal. Northern China is kind of its own thing. They have plenty of coal in the north.
you know, unless they do something silly on the supply side, it's a little bit more of a stable system. So yeah, but this is a thing in Europe too. I mean, years where they've got weak hydro, suddenly the market feels super tight in gas. And there's a reason for that, right?
And the good news is, is that in most countries, you can get really good dam and rainfall data. In China, the hydro data is, they kind of often put it online and make it very difficult to scrape, then they pull it off. It's a little bit of a cat and mouse game in terms of analysis. But, yeah, it's worth the trouble, I generally find. So is it literally how much the variability in the hydro based on how much it rains in Tibet?
Is it as simple as that? Yeah, I mean, basically you get the monsoon, right, comes off the Indian Ocean, bang, it's the, you know, Himalayas. A lot of it lands on the Indian side. A lot of it flows off onto the Chinese side.
And then that sort of drives China's hydro system as it goes towards the East China Sea. That's pretty simple. So the sort of...
This monsoon, the funny thing is now in India, because you've got also some coal imports there, the behaviour of the monsoon on the Indian side now substantially impacts demand for import thermal coal there. So I didn't do hydrological engineering or meteorology, but it's sort of kind of important to try this stuff now. You're quite close enough now.
Close enough now. Yeah, yeah. It is what it is. If it moves the market hard and it's undercover, then I'll take... cracker you chucked in the number that it at times can translate to four percent of the global electricity output yeah yeah that blew my mind that is and this stuff can swing so if you think of like in a commodity market if you're like global supply demands like three four five percent tight i mean that is that's that's like 2022 crisis grade stuff and this stuff can be up and down 20 year to year so it's it's an enormous influence not just on their market but globally So, yeah, it's worth tracking.
They don't make your life easy. Like I said, there's not like a nice little data API where you can pull down all the damn levels and everything that's going on minute to minute like you can in Norway or Switzerland for that matter. Is that just tying back into, you said, global energy demand and then heading towards this future of EVs, if everyone if there is a massive uptake and everyone's charging EVs overnight, how much Is that negligible or massive in terms of global power demand once you replace combustion? Look, it depends on, there's lots of different numbers.
There's so many studies on this, right? You kind of start to get a sense of what the error bars are and the numbers. If you look at moving everyone to EVs and then you've got, you know, moving industrial processes to hydrogen or heat pumps or what have you.
Normally, the bump is somewhere in the order of 20% to 25% off the baseline. That's substantial, but that's something which plays out over the 2050 or whenever you have zero target. You can absorb that. The data center stuff is a bit spicy because people are saying, some investment banks anyway, are saying, we're going to be 20% up in six years. That's a big deal if that's real.
I'm becoming a little bit more skeptical on how real that is, but that's a real thing. So, yeah, but the interesting thing is also, like, you've got all these EVs on and people can sort of time their charging and then people put solar on their houses, then, you know, how much at the substation that you actually see demand go up and what does the shape of that look like? And needless to say, this electrical engineer spent a lot of time modelling this stuff out.
It's kind of interesting, but it's an emerging picture. Yeah, so for the data centres, like when this big uptake of them, if it does happen, is that going to replace? anything in the world like reduce the need of anything or is it just going to be a pure addition of the need for copper the need for extra power etc um well i mean there's obviously all these efficiencies you get from music so i mean i i use uh i use like claude's pretty good if you're writing code if you uh you know feeling a bit dusty one morning and you're not really feeling like writing some boilerplate stuff you can get AI to do a lot of that for you now.
That's kind of a big deal. Does that replace anything in the physical world? Well, TBD.
For example, one thing that's kind of crazy about this AI stuff is that because you can now essentially brute force modeling physical chemistry, so how ions move through a substrate or what have you, people are now, the search for better battery cathodes is now increasingly happening in silicon. And then they- going from say 3 million options down to 70 and then they test those 70 on a wet bench. So I think you're going to see it in terms of the speed up in technology in a lot of areas, but I think it's going to be big in pharmacology.
You've already seen that. And also in physical chemistry for, you know, battery cathodes, materials and that sort of stuff. So it's not like you can just sort of point to a couple of line items in an Excel model and show where it's going to turn up.
But it is sort of popping up all over the place. So I think one of the big pieces we haven't yet spoken about that ties in is stationary storage. What do you kind of make of...
the consensus growth numbers out there for stationary storage and you know how that plays into metals demands and all these sorts of things i think it's so i think it's sort of interesting there's there's often a very it's it's it's tricky to model the reason is is that right now given spreads you see intraday in say the net in australia and new south wales or victoria or you know prices are i don't i could open You've probably seen that OpenNEM website. You can see prices are basically negative for about four or five hours a day now. They get smashed up to like $300 for about 90 minutes or two hours around dinner time, and then it's back down to something sensible. For people who own batteries, they're absolutely meant to do it. I mean, you can do sort of back of the envelope stuff, even assuming they don't get any of this spending reserve or frequency and ancillary services revenue.
They're doing great. But the interesting thing is as a lot of storage goes in, those spreads will come down pretty hard. So there's kind of an equilibrium where you need enough spread to justify that stationary demand. I think it's very robust now.
But in three, four years, where are those spreads going to be? And then if you've got Snowy 2, at least in Australia, coming over the top with a hammer in 2028, then is that going to slow down? I think in the meantime, there's sort of going to be a speeding up and slowing down thing where spreads are very wide now. It doesn't make sense to build a solar farm. If you're going to have to sell it for negative power, that's pretty stupid.
But then. People pile in the batteries, solar farm gets a better level, people dump in more solar and there's going to be sort of a bit of an out-of-sequence sort of sign and causeway thing going on there. Reminds me of the avocado farms because I remember when avocados were like seven bucks and the people who had farms were minting it and then so everyone bloody planted avocado farms everywhere.
They take six years to come to fruit and then by then it was like. Avocados are two bucks because there's so many more avocados everywhere. Who would have thought the cure for hyper-ice is hyper-ice? There would have been more in the near-Aries.
I think that's exactly right. I mean, the difference is, though, is like in solar, it takes like 18 months, two years to throw up a farm so long as you get your permits. Batteries, it's like sometimes you can put these installations together six to 12 months. So there's going to be a little bit more of a tighter cycle, but I think that you're going to start to see that play out a bit. And it should mean prices are...
mostly a bit less cracked out going forward. Well, where things get spicy, and even in the electrical engineering, guys who do these big models, there's a guy called Tom Brown at University of Berlin who does some great stuff. The time that's always going to be dicey is like it's cold winter, not a lot of sun, not a lot of wind, and that's when things will get silly. So that's where you're going to need electrolyzers for 150 hours of a winter where things are not great. And the prices will always be nuts then, and then they'll be.
you know 25 30 bucks for most of the rest of the time is it just a function of like um of the like the you know the best implementation and requirement all that sort of stuff is it just a function of the penetration of solar and and wind in any in any market yeah i mean places like australia it's a super cheap i mean the thing is is that i mean people get very political about nuclear um and my opinion is that if you're someone which is has not much sun not all not great wind and it's cold, then you're crazy not to do nuclear. It is absolutely unhinged. People say, not Poland shouldn't do nuclear.
I'm like, well, what are they going to do? What are their choices here? Whereas if you're somewhere like a lot of wind, a lot of sun, you can do a decent amount of pumped hydro, you're Argentina or Australia, you got plenty of choices. You don't need to do anything large and complicated.
You can just do dumb modular stuff. I think it's going to be very much. how people do this energy transition is going to be very much a, depending on your local endowment, physical endowment, and that'll define what's going to be the lowest cost option.
One of the non-consensus kind of calls last year, which sort of played out to be pretty correct was, I mean, you were pretty pessimistic on the outlook for Metco when the consensus was pretty optimistic. And I think you were sort of looking at the... the uh the the displacement of seaborne made coal as a result of um of lower cost mongolian coal feeding into china um yeah like how did you kind of come to that view and how's have you seen it play out since yeah i mean so i i did a um I did in 2016, 17, 16, there was like a bankruptcy of a Mongolian coal producer. So I've always done a lot of Asian distressed debt stuff. So I got involved in that.
So I got to know that company reasonably well. What was kind of interesting during COVID, China did a bunch of very silly things in the coal market, which I wrote about, I think it was, but basically they shut their border with Mongolia. Okay. So you can't get Mongolian coke and coal anymore because you're worried the Mongolians all have COVID and they're going to pollute China. Fine.
But then they also had a massive fight with Australia over whatever it was Scott Morrison ticked them off about. There was COVID inquiry, which I think was probably a good idea. So where were they going to get their met coal? So you've kind of, Mongolia's out, Australia's out. At the same time, they started to run a very big stimulus.
So met coal got very silly. And then, of course, with Russia, A lot of the met coal supply from the Donbass or exported through ports near Crimea and so forth, that just tightened the market further. So it just, so it went, it went absolutely bananas and justifiably so.
And sort of, so we're involved in owning Alpha Metallurgical in the US and a few others because it was just amazing. It was just a market which I didn't think could get this tight in any feasible state of the world. We just have like one global policy era after another.
And I think at that point, MET was going up to $600 or something silly. I think what was interesting was that after China kind of lost control of COVID, they then effectively let it rip and then reopened the Mongolian border. And they were also trying to get more Mongolian output even before they kind of towel-chopped on COVID. And then, of course, you had this supply shock of something like 50 million tons of MET hitting the market.
No, not hitting the global market. And you couldn't see it in the shipping data because it was all done. moved across by trucks and rail, but the market started to weaken. And yeah, Mongolia just keeps on producing more because their cash costs are like 75 bucks delivered to the Chinese border. So not a lot to slow them down there.
So you shared some comments in a Substack piece that you wrote at the time as well. And the gist of it is you were calling into question the, I guess, the pay, the bonus structure and everything of the Aussie producers, given that they weren't able to massively capitalise or at least expand production in a significantly tight market where prices were super elevated what was the you know reflecting back on a year later do you have views on how the you know rem is structured for these guys and the performance that the Aussie players had at the time I think I think it's it was kind of weird because that was about as good a market as you could ever hope for right I mean the Russians are basically taken out back not any Donbass supply from your front is gone like you should be able to ramp your output but It was interesting, they couldn't get their output up. And I met with Whitehaven with a couple of other guys in Singapore, and I wasn't sort of satisfied with the answer they had why they couldn't get it up. And some of it was definitely due to a tight labor market, and I think that was fair enough. But, yeah, underperformance was quite surprising.
And it's, you know, a lot of these management teams are like, look at this, we're making record EBITDA. I'm like, yeah, but you can't even lift volumes into like a $600. net market. What's up with that?
So that was a bit strange. I thought they were doing victory laps. They hadn't really earned unless they could take credit for shutting the Chinese border with Mongolia or kicking off the Ukraine war. They didn't really have a hand in it.
How much of that do you kind of view as mines having a natural sort of run rate? Obviously, like you said, there are a lot of issues within. within Australia, labour being one of them, energy price, all these sorts of things, weather events happened. But a lot of mines tend to kind of have a natural run rate, and I say this from someone who's never really worked on a mine, but from the outside it seems very hard, you know, to ramp up production even when prices are very high, as much as you'd kind of want to. Did you have any learnings on that kind of front?
Yeah, we looked at it. We went through a couple of the mines in Australia, and, like, of course there's, like, a constraint. So there's some of it's just yellow goods on site or labour. So how much you can, you know, your long wall only has certain capacity.
But often with these plants, it's like there's a constraint of the wash plant. And what we found was there wasn't like an obvious constraint of the wash plant for a lot of these installations. They just couldn't get up their earth movements a lot.
Now, that might have just been entirely driven by labor. That was definitely one bit of feedback we got. I reckon that rang pretty true. But I was surprised how little flex there was in the system, despite the fact when you look at what the headroom is. system level at a mine, it seemed to have some capacity to move.
So that was a bit of a surprise. So, yeah, it was... It's a mystery.
I hope someone gets a comprehensive answer at some point, but I was shocked at how non-elastic this sort of supply curve was in the space of a pretty crazy price spike. I think on your point, JD, I think the natural run rate of mines is also it's very capital sensitive. Like your Kathleen Valley, for instance, that could do 6 million tonne. If they put an underground crusher in and a conveyor and everything like that. So I think probably your narrow-vone golds and that, they've got a natural run road.
But I think these big like your big copper and lithium projects, depending on the capital, is where the talk is. Because you would have easily been able to raise money or debt if the met coal price is $600. But obviously it takes time to get everything humming and stuff.
Yeah, I think that's a good point. Like also like the... like more base metals like copper gold that's like a very capital intensive and also just more energy intensive i think amo had something where they looked at like electrifying mines and it's quite clear like a gold project just uses way more power but for bulks and like more earth movement driven stuff um it theoretically should be simpler so long as you you've got capacity in your wash plan or whatever but yeah that just it just didn't ramp which was interesting i just i never quite could get a clear answer on why literally no one could get their numbers up well that's that's the underground lot Natural mining rate I'm probably talking about. Open pit's probably a bit different in terms of MMS dictate the mining rate.
Yeah. The natural mining rate when you're in an MMS JV is like they'll tell you what they're mining and then they're like, we need more. They're like, okay, we'll get it. Yeah. It really depends who the contractor is.
And if you've got MMS around and the commodity price is flying and you want more coming out the ground. It'll be a better IRR and MPV and heck, mate, their numbers will be better than yours as well. Yeah, well, it's like the maximum possible mining rate plus 50% is what MMS. Maximum mining supply. Yes, exactly.
Yeah, and they take the risk off your hands, you know. Almost risk-free. So you're saying, J.D., no risk, maximum mining rate plus 50% if you want it because they'll just do it and it's pretty much free. It's a classic win-win-win, Matthew.
It is a win-win-win. WWW Mining Services. Go MMS. Go MMS.
You know people that are doing a JV with MMS? Anyone? They're happy. Minimum eight hours sleep a night. They have no worries at all.
They just zonked. You want good sleep? You want to look after your health? Get an MMS JV.
Pick up the phone. So looking forward in the Metco market, Every single producer that I looked at there at the annual report over August was super bullish India in the next decade, the next two decades, and out to 2050. Given the decade you've been looking at the met coal market, what do you kind of make of this emergence? Are they kind of looking for someone to piece in the model to show the growth to investors, or do you think this is legitimate? I think it's look, I mean, there's going to be more steel demand, right? I don't think it's ever going to be anything like China.
in terms of per capita or what have you, but the number's got to go up. I'm not some insane person. However, the interesting thing when I look at India's options, India has a lot of thermal coal.
So I don't think they're, to the extent they can sort out their internal constraints, whether it be rail or funky political stuff in the eastern states, they can produce as much coal as they probably need. What's going to be interesting on the met coal side is these are all going to be quite new steel plants. China's essentially made its choices in terms of its mix of blast furnace versus EAF and their demand probably drops over time, but they're going to have the same mix of plants, I think.
For India, the interesting thing is that you can now do direct reduction plants. There's an Italian company called Daniele, which makes steel plant equipment. You can now take natural gas, crack it into carbon monoxide and hydrogen and then use the hydrogen as a direct reduction mechanism. And the pitch from Daniele is, well, you can use natural gas today, you don't need met coal to reduce this iron, and then in the future, you can use green hydrogen. So if you're a steel company and you want to keep your ESG ratings in a good place, you can say, well, I'm going to build a plant, which gives me the option to switch to something green at some point in the future.
So the composition, I think what people need to look to is what is the composition of new steel plants being built in India? Because if they move towards more electric arc furnace, where they can take, say, Twiggy's directly reduced iron pellets from the Pilbara and then just tip it in. or they go for something where they can take net gas, crack it, and then do the reduction themselves on site, that's pretty bearish met coal, right? Then that growth story is not going to play out.
So that's another thing we're spending a bit of time on looking at what the future plant mix is going to be in India because that will define how met coal intensive that steel demand growth is. What do you make of FMG, as you mentioned there, their ambitions? They've been pretty steadfast in wanting to be real. Real Zero, I think, is the terminology they use now by 2030. Have you spent time looking at that? Yeah, I mean, the various pathways, there's actually a big ANU project which I played a minor role in looking at all these pathways to reduce carbon and steel, and that paper should be out in about four months, I think.
It's been an absolute bearer of a modelling exercise. I think, yeah, it's been quite a journey. uh modeling all these various pathways to how you how you can decarbonize stuff so do you do do you just run just run met coal and do carbon capture that's an option do you do this stuff where you take very finely ground iron fine stick it in a sodium hydroxide bath at 100 c run electrolytic cell through it and then scrape off the eye that's another option there's a hydrogen thing everyone knows about that so there's a lot of ways up the mountain and just working out what the mix is going to be um i think uh Fortescue's got a number of bets. They've got an electrolytic cell thing they're working on.
They've obviously got this hydrogen thing which is now going to be start, they said, next year at Christmas Creek. So we're going to see, but they're plenty serious and they're putting the money down. I think part of the problem has been is that they have talked a very big game up to this point and it's very hard for customers to understand what's real and what's not, but I think people are going to start taking delivery of material and at that point it's going to be pretty real next year i mean this is the same when fortiski started uh they were a high yield borrower um when i started in finance and no one was ever sure whether triggie was real and lots of people were very skeptical but twiggy's shown himself to be a bit of a talker but he's also a deliverer so i think that's you got to kind of uh give him credit in that point i suppose the the last kind of area i want to explore is one that i haven't seen you write about yet but he's incredibly topical And that's the current state of the iron ore market.
And being kind of having a decent China lens, Alex, I imagine you've been thinking about this a bit too. Yeah. I mean, it's a lot like sort of the question is a lot like when China had a big real estate sort of slowdown 2014-15 and we briefly touched what was the low print, like $34 on spot or something like that.
That was pretty terrifying. I think the scary thing now. So basically, China is about a 50-50 split between imports of iron and domestic production.
And the domestic stuff is, by all accounts, kind of rubbish. It's got high phosphorus. It's in a lot of places. Its blended average cost is maybe $70, $80 a ton. But as we have seen with lithium, China will keep stuff running at a loss for their national security or self-sufficiency reasons.
So the real horror show node for next year is... No one really taps the brakes in the Pilbara. China keeps running their production at a big loss, and then you've got Simandu coming over the top, depending on when you think that's going to happen or how much that will happen. That could get very scary indeed. And the issue is that what's China's flaw in terms of how much demand is going to recede?
And it's pretty clear that's going to recede a fair bit. But then also... At what point are they going to gradually start to turn off their domestic production, which is not competitive? And I don't know.
But there are a lot of people who thought lapidolite would have been turned off by now. It's still running. Yes, apparently.
Not everyone knows. Well, you can get satellite phones. Yeah, so what is, yeah, give us a bit of insight on that. So it's funny. Like I sort of speak and.
read and write Mandarin. So I sort of try to check in on, well, you know, like in these mining towns in Jiangxi, what people are like each and where they've got all these big lapidolite mines. And they're kind of horrible because the grade's terrible.
They produce all this, you know, mine waste. And previously a lot of that mine waste was just basically gypsum. So I went into fiberboard for construction and that was fine.
And now of course the real estate markets toast. So there's clearly big waste piles around the place. and some of the locals are expressing firm opinions locally. But they're still running these plants, and by all accounts, I mean, they say their costs are in the high, you know. on carbon at equivalent like 80, $19,000.
I think that's an underestimate, but obviously people have different opinions, but by all accounts, they are losing like negative 30% gross margins. That's the ball case on these guys right now. Is that the fully integrated cost?
No, this is cash. I mean, the integrated, I don't know, 25. These guys are just losing money hand over fist. That's one of the numbers I really watch in lithium is that- If they start to turn off that supply, then the market will normalize pretty quickly. But to the extent that China wants to dump and wants to produce stuff at a massive loss for other reasons, you know, security or whatever the internal narrative is, it's very hard for that market to behave itself normally. I thought I saw some headlines that in Zijin's latest reporting, you could kind of infer that they, you know, throttled some lapidolite production.
There's some, but there's still a lot running. and the amount that they threw on last year was crazy yeah uh i was i was at fast markets in may last year um and a guy from one of the domestic producers in china this is when spotting me when carbonate was still like 35 grand or something and they basically said we're going to crush this you know we could we are cost like high teens i was like okay so we're going to high teens it's good shorting down to there but then they haven't turned anything off so it's just it's just kept on getting getting smart so um We'll see. I think we're kind of waiting to see what they do because that would be the in a normal market where companies try to make money, that would be how things would normalize.
But China is not just about making money. In fact, it's something that's very not about making money. They'd have done well if you kept that short position open. That would have been pretty fruitful.
What do you kind of Yeah, it's been okay. But then the problem is everything gets kicked out of the index and you can't get the stock borrow and, you know, it's like There could be worse problems. What do you think of Chinese government stimulus more broadly? There's been a lot made of it. Obviously, you mentioned that the property market in a real point of pain.
Do you think there's more stimulus to come through or do you think that's kind of run its course and the property sector and the portion of economic output that makes up of China is going to normalise over time? I think what they're trying to do now is they basically stop property because it was very crazy for a long time. Hugh Henry sort of called this out before he went literally very troppo. It was clearly a lot of nuts even a decade ago.
He's pretty good. He's great. I think Hugh's excellent.
I love that guy. But he went there and he was like, look, this is bananas. And it was, right?
And. Eventually they decided to stop that. So what they're doing now is they're trying to export their way out of this malaise through EVs, through solar, through batteries. But now it seems like they're, you know, all that output is struggling to get absorbed now.
So, yeah, so I'm not sure what's really next for them. The usual answer is, in most countries, is you actually try to not have all these. state-owned enterprises hoard all this cash and you just distribute dividends to effectively people who own them, which is the government, and then the government can encourage more stimulus for locals. But that's not happening.
I think they're running out of road. I'm not sure what their next categories are. They're going to try to take some crazy global share in as quickly as they can.
Obviously, there's real pushback now on trade. The Europeans are getting very pointed. the Americans have slammed the door shut.
So ultimately how many EVs and solar panels can you dump into places like Pakistan and Nepal? It's a good number, but it's not even a US state in terms of demand terms. I was reading somewhere that Chinese policy setters have a better appreciation than the ones in the West in relation to kind of moral hazard and fragility in the financial system, et cetera, and maybe there's some of their... some of the stimulatory or lack thereof kind of stuff to come from now, we'll have that in mind.
Is that a valid perspective, do you think? I think there are some people who sort of have this, they try to turn this into sort of more of a moral exercise. The ultimate point is China is able to not go into a massive recession right now because they are able to export a lot. and absorb demand elsewhere. So, ultimately, someone's got to buy all this stuff.
And the issue is that people in Europe or the US in particular... take the view that they don't want the auto sector to be annihilated by Chinese exports, then what's China going to do then? This whole thing works so long as they can export unimpeded. As in the case of lithium export, basically run losses, the banking system just underwrites the losses of the Lapidolite guys so they can export.
That's essentially like, do you want to give people a stimulus so they can, I don't know, work in services or do anything else? Or do you want to underwrite losses at a corporation so they keep people employed, where the whole endpoint is kind of like maintaining jobs, but it's just this very elaborate way in which you have to kind of crush businesses elsewhere? I don't know how long-term sustainable that is, the places where they are dumping.
And I think that's going to be a challenge. So we'll say, I mean, the US obviously has become increasingly skeptical on free trade with them. I think a lot of that's quite well-reasoned. Europe's- kind of getting there in places. So I'm not sure how much longer they'll be able to keep this up.
It's really a political question in Europe and the US more than anything else. Fascinating. Beautiful, mate. I've got nothing else, but I've really appreciated this conversation.
Sensational. I was zoned in the whole time. That was frigging awesome, mate. Yeah, I'm a fan of the global view.
Yeah, appreciate you making the time to come on the show, Alex. It's actually our first yarn in the weeds about data centres, really, like actually going into detail because it's that buzzword at the moment. Other than antinomy. Antimony, yeah, the rise of antimony.
But that's the first in detail one we've had, so I look forward to plenty more of that. I mean, a lot of these weird like off-the-run metal, like galleon, for example, like that was like three bucks a kilo because China just decided, hey. We produce a bunch of bauxite. You know, we might as well, alumina, we might as well just produce a byproduct.
And the funny thing is now we've got a, China's basically banned exports. The price is now $455 a kilo. And at the same time, I saw actually an article in the West, there were people getting all stroppy about the wagger up and all the like refineries of all that red mud waste in WA.
And I'm like, wait up, we've got a gallium shortage outside China. Okay. and we've got a red mud disposal problem in WA.
Interesting. Why don't we just process all the red mud, do exactly what they do in China, and solve this problem? And it's like there's no discussion of that anywhere.
It's pretty funny. So there's a lot of these kinds of missing markets where I think there's room for the government to say, all right, guys, you need to reprocess that waste, but here's the thing, I'm going to give you $300 kilo for the galleon, and that would work. I'm going to find a Red Mud producer and we'll talk after the show, mate.
There's a lot of it in WA. All the aluminum guys. Sounded like a former guest of our party, Todd Milan.
You might even know him, but I think he used to head up. He's a nickel guy, right? Yeah.
But he used to be like Rio Tinto Aluminium Division some senior role there and he advocated for these gallium circuits on some of the downstream stuff. But never quite like the small. capex and like you know it was it was just kind of irrelevant um and never never never kind of justified any this this is the funny thing with all these like critical like particularly the stuff in semiconductors like everyone kind of assumes it's going to be there if you're a Rio Tinto you're like okay so I'm going to put in 150 bucks that I could have maybe make 20 bucks a year like this is sort of pizza money at Rio Tinto but the problem is when we don't have it we will absolutely know that it'll be not fun yeah so I think that in those situations there's definitely a role for government for sure Ah, bloody beautiful.
Mate, I apologise in advance. Everything you said about data centres and that, you're going to hear those words resonating out of my mouth in the future as my own idea. So just letting you know. Hopefully not copyrighted. So I appreciate the insight, mate.
That was sensational. Cheers, Alex. Thanks, Alex.
Good to chat. Have a good one. Bye. You too, mate.
How good was that? That was awesome. That was really fascinating. I love asking any question and having someone answer it.
So good. They just know heaps of shit. That global view is very much up my alley.
I was a big fan of that chat and, you know, a lot of different talking points. And like you said, Matty, data centers, these sorts of things, things we haven't touched on, which I'm sure we will do a whole lot more of in the future. Mate, if he had, like, in terms of the, like, investment experience and said he can read and... and write Mandarin, like, that'd be, like, the most appealing Tinder profile you could put up, like, far out. Like, what a bloke.
Like, is there anything he can't do? Unbelievable. Speaking of... Speaking of unbelievable, Matty. Axis.
Axis. Mining technology. Lost for words how unbelievable are mineral mining services. You want to look after your health and get a good sleep? Do a JV with them.
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