00:00So BNF has been looking at the metals market and just published your latest outlook on how shifts within the energy sector are going to be shaping the metals market.
00:09And that's a well-established link, of course. What did you discover?
00:12I think the three main things that were discovered, just like you mentioned, copper trading at an all-time high.
00:19And for us, what we saw is that there's obviously a deficit as a result of the growth in demand we've seen in the market from transition, from data centers.
00:27But then also at the same time, unfortunately, supply is constrained.
00:31The second thing that we also noticed is the fact that if you take commodities like rare earth, for policymakers, it's increasingly becoming the most important one for them.
00:41Over the last five years, we've tracked incentives that policymakers have been putting in place to address the supply gap.
00:46And then we see that rare earth obviously becomes the most important.
00:50We have companies like Anglo-American Glencore starting to invest in mining again, as opposed to returning money to shareholders.
00:58And then the final thing is that our countries are working hard in terms of investment and fiscal policies to diversify from China.
01:05Yes, absolutely. So a lot in the report. Let's focus in on the copper story then.
01:09You talked about that copper deficit. We've got sort of structural issues around concern about tariffs in the United States, but the underlying demand story also interesting.
01:16So, Kwasi, talk me through what's driving that copper deficit.
01:19I think if you look at the electric vehicle compared to the traditional internal combustion engine, you're looking at for copper consumption.
01:26You're looking at multiple times the amount of copper that historically we're using in the normal cars.
01:32And if you take even the amount of grid connection we need to connect all the solar panels that we built over the next 20 years, we need quite a lot of that.
01:41And if you see demand now, currently we're sitting close to about 30 million, that could rise to about 50 million.
01:47And that's a 20 million gap. To be able to get the mines, we need about close to 30 to 40 mines being open in the next 25 years.
01:56And we don't see that happening. In the near term, like you mentioned, the inventory is really hurting the market and driving prices up.
02:02OK, yes. So, my next question is going to be whether companies are responding to this deficit and trying to trying to fix it, trying to provide more to the market.
02:10I mean, that sounds like a tough thing to be able to close that deficit gap.
02:13So, what are the chances that they will be successful, these businesses?
02:16I would say they're doing quite a lot. I mean, we've seen the recent deal Anglo-American with tech.
02:20We saw BHP try to also acquire Anglo-American.
02:22We've seen quite a lot of M&A activities. And for us at BNEF, we tracked all the M&As that have happened the last five years.
02:29And you can see that COPPA obviously stands out quite high, followed by lithium and the rest.
02:34But I think for now, companies are trying. But then on average, it takes about 10 years to build a new mine.
02:40So, still a lot to be seen.
02:42Yeah, OK. So, there's a substantial lead time between the market giving these signals of deficit and the extra product coming out of the ground.
02:51So, what about rare earths? You mentioned that as part of the conversation earlier, Kwasi.
02:56I mean, why have rare earth minerals become as important as they are?
03:01A lot of this has to do with technology, electric vehicles, energy transition, all the rest.
03:05So, there are two sides to that story. There's obviously the demand side.
03:08It's very critical to industries such as defence and the energy transition you mentioned.
03:14But then also, it's also one of the few metals where China has complete, total control, both at the upstream and the downstream.
03:22So, if I was a policymaker in Brussels or D.C., and one of my most strategic minerals is totally under control at the upstream and the downstream by one country, I'll be worried.
03:31And as a result of that, that's why we've seen a lot of policy focus going to address that gap.
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