00:00The rare earths that matter so much to the U.S. still remain out of reach. Why?
00:09Why do they still remain out of reach?
00:12The main reason is it takes 20 years to develop a mine from the moment you find a deposit to
00:18the time that it's actually being produced commercially.
00:22And also the idea that if you're doing all these mines, you've been doing the exploration for a number of
00:29years and finding where all the deposits are.
00:33And then this is also a pretty mature industry, and it's mostly been mature and done by China for 20,
00:4130 years.
00:41So if you suddenly decide yesterday that you want to equal a behemoth of a commercial industry, probably impossible to
00:50do it in 18 months.
00:51And to be fair, I would say the administration does seem to understand that it's going to take more than
00:5718 months.
00:58But you're right. There are certain time limits that our own Pentagon have put on to ourselves, and I could
01:05go on and on.
01:05But it's a lot.
01:07It's a lot.
01:07All right. And we've not – even with the money that has come from the government or the contracts and
01:13the focus and the attention, we haven't really made any – or what progress, if anything, have we made so
01:17far?
01:19We've put money out the door.
01:20We've put promises out the door.
01:22Those are important because even the promise of government support does attract private investment.
01:29And we've seen it across the supply chain, right?
01:32We call it a mine-to-magnet supply chain.
01:35That's how the U.S. is phrasing it.
01:37The mine being obvious.
01:38You pull rare earths out of the ground.
01:40You then separate them.
01:41Those separated materials effectively are then combined in a chemical way to create a magnet, a high-powered magnet.
01:48And the high-powered magnet is what goes into movable objects, basically.
01:52So electric motors, wind turbines, and data centers.
01:57Yeah.
01:58So, you know, there's – but that's really complex, right?
02:03This is not just like a widget, if you will.
02:07You cover statecraft, and your beat went from metals and mining to statecraft, which was a very natural development because
02:16if we think about the way that statecraft is being practiced right now, we could look at the Strait of
02:21Hormuz and the way Iran is controlling that.
02:24That's a big part of that, and that has to do with natural resources.
02:27Yeah, I think the same thing.
02:29Like, is this China's Strait of Hormuz?
02:32That's exactly where I was going.
02:34Their control.
02:34Yeah.
02:35I mean, listen, we put together this lovely documentary that just went out today along with this story that you
02:41guys were mentioning.
02:42Congratulations.
02:42Congratulations, which was terrific.
02:44Our docs team is incredible.
02:46But, like, one of the things that we talk about in that story is, like, it's incorrect to look at
02:51this as if the United States is going to come in and just take over and compete with China on
02:57the same level and the same volume.
02:58The win is five years from now, ten years from now, the United States, Japan, South Korea, Spain, France, the
03:07U.K. are all on some level, and Australia and others, producing rare earths and or permanent magnets.
03:15Even if that's a 1%, 2%, 3%, 4% slice, that's successful.
03:21Because right now, the whole pie is China.
03:25And that's not just, like, my opinion, right?
03:27This is, you talk to the guys you talked to this week, right?
03:32Yeah.
03:32Realloy and Ramico Resources.
03:34You talk to the guys who are in this space.
03:36They have been saying that for years.
03:37They're like, Joe, the point is, like, if we can look ten years from now and say, like, oh, we
03:42got 1%, 2%, that's huge.
03:45So, understanding what success is does matter here.
03:49And I do think it's important to say that there are many people in the government, in the Trump administration,
03:53that do get that.
03:55That they're not sitting there behind the scenes saying, well, we need to be 90% of the market next
04:00year.
04:00Right.
04:02But it, oh, God, there's so many questions.
04:04I know you've talked with us.
04:06How did we get there?
04:06How did we just give it away?
04:09It's dirty.
04:11It's not a very profitable industry.
04:13Yeah.
04:13I think those are kind of the main two points, right?
04:16So, in the 1980s, the United States is still the dominant producer of permanent magnets.
04:20But, like, you know, I mean, listen, let me put it this way.
04:23Talking to various people for months and months and months, if you look at the real supply chain of going
04:28from the rare earth out of the ground to the magnet, the midstream, right, where you do metallization and oxidation,
04:35it's like it's just a part of the process, right?
04:38Like, those things stand alone aren't like these massive profit drivers.
04:43And even then, when you get to the permanent magnet, like, if you talk to OEMs, like, big, big guys,
04:48big names that everybody's heard of, and you ask them, like, well, why, like, would you buy from an American
04:52or from an Australian?
04:53And they're like, yeah, at the right price.
04:56But, like, you know, we're procurement officers.
04:58Only so much of our procurement goes toward permanent magnets.
05:02Because you know what else we have to procure?
05:04Like, real things, big things.
05:05So it's great that the Chinese make these at low cost, because that's, like, a small part of our budget.
05:11And it's like, if you start telling that to, like, any of these companies that are saying, we're coming in
05:15to do this, what they are also admitting to themselves is we're coming in to do a business that has
05:20small profit margins.
05:22Why would they do it then?
05:23Like, I mean, to be realistic then, is this, I understand it from a national security perspective.
05:29Yes.
05:29Like, why would American companies do it?
05:31Yeah.
05:32Or does it, is it going to have to be.
05:34Maybe it takes the guaranteed contracts.
05:35Or the rise in tension between these two countries.
05:39I get that.
05:39But then, does it have to be supported by the government in some ongoing way?
05:44Because it isn't such a great business.
05:46I think probably so, right?
05:47Like, this is, this is where you don't find too much disagreement among, let's just call it Republicans and Democrats,
05:55right?
05:55They're aligned in the idea that, like, yeah, you can't have a single source supply chain on something that is
06:01absolutely essential to modern technology.
06:03They do agree with that.
06:05Like, the example I use often, because I covered steel for a long time, right?
06:08It just so happens that 65% of the steel consumed in the United States on a per annum basis
06:14is made in the United States.
06:16Now, why is that?
06:17Well, a big part is steel is ubiquitous, right?
06:20Another part is steel is heavy.
06:22It costs a lot of money to move it everywhere.
06:23So, you want the plants as close to possible to all the construction sites, which are everywhere in the United
06:28States.
06:29To some degree, that is true of what we're talking about here, right?
06:32If we're talking of the data center boom that you guys are talking about every day, the valuations that you're
06:37seeing come up on the Bloomberg Terminal on a daily basis, the number of permanent magnets that are needed for
06:42those is massive.
06:44I mean, like one person put it to me, they're like, if you look at this one data center in
06:49Texas, this one data center in Texas is the equivalent of half of demand in the United States of America
06:54for permanent magnets.
06:56Well, why couldn't, you know, they say necessity is the mother of invention.
07:00You get 10 years out from this, very briefly, companies have said, well, we can't get these raros from China.
07:06We have to find a new way to do this stuff.
07:08Can that happen?
07:09Well, I think that's where we're at right now, right?
07:11It's like, if you, it is the idea that you're starting from scratch on an industry.
07:18That's the thing.
07:18In an industry that already has a dominant industrial size supplier, right?
07:24And that dominant industrial size supplier is saying to the world without actually saying it, every time you're about to
07:30get out of the starting gates to start a business, we're going to flood the market to crush you.
07:36Yeah.
07:37Thanks, but no thanks.
07:38You know, I'm just thinking coming back from Milken, everybody talked AI and data centers.
07:41No one talked really, at least in my conversations, about investing in rare earth mining companies.
07:46You've got to go to a different conference.
07:47Or doing those businesses.
07:48I guess so, but it's just interesting.
07:50Everybody understands the supply chain, the demand, the power.
07:54But this is a part of it.
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