Scribbler Logo

    You have 4 summaries left

    Value Hive Podcast

    Ernest Scheyder: The War Below (Lithium, Copper, and Critical Minerals)

    Fri Feb 16 2024
    miningcritical mineralsenergy transitioncopperlithiumenvironmental concernsethical sourcing

    Description

    This episode explores various aspects of mining, critical minerals, and their impact on the global economy. It covers topics such as investment strategies, the human stories behind mining projects, environmental concerns, complex processes involved in copper mining, regional production and ethical sourcing of critical minerals, and the need for coordination and tough choices in mining practices. The episode concludes with praise for a book that sheds light on these important discussions.

    Insights

    Journalism offers various ways to tell stories

    Journalism now offers various ways to tell stories, including written word, graphics, video, photography, and podcasts.

    The book "The War Below" explores the choices we need to make for an energy transition

    The book "The War Below" explores the choices we need to make for an energy transition and the sources of building blocks for electronic devices.

    Mining is necessary for critical minerals used in electronic devices and energy transitions

    Mining is necessary for critical minerals used in electronic devices and energy transitions. Consumers need to consider where these minerals will come from if not produced locally.

    Copper is a crucial metal for electrification and global industrial systems

    Copper is a crucial metal for electrification and global industrial systems. The Marensi mine in Arizona provided insights into the scale and complexity of copper mining.

    Ensuring ethically sourced products may require consumers to pay a higher price

    Ensuring ethically sourced products may require consumers to pay a higher price but aligns with their values. Consumers are increasingly concerned about ethically sourced products, especially in the electric vehicle space.

    Controlling critical minerals will be crucial in the 21st century economy

    Controlling critical minerals in the 21st century economy will be crucial, similar to how oil defined control in the 20th century economy.

    The lack of coordination between different arms of the US government is hindering progress

    The lack of coordination and communication between different arms of the US government is hindering progress in addressing issues related to metals and critical minerals.

    Americans need to grapple with tough choices regarding mining projects

    Americans need to grapple with tough choices regarding mining projects within their own country and consider whether there are places too special to mine.

    The book discussed in the podcast is praised for shedding light on important discussions

    The book discussed in the podcast is praised for shedding light on important discussions related to mining and electrification. Its impact is expected to be significant and far-reaching.

    Chapters

    1. The Macarops Value High podcast
    2. The speaker's North Star as a writer
    3. Lithium power and the human story
    4. Debate over copper mining locations
    5. Exploring copper mining and environmental issues
    6. Complex processes and future prospects of copper mining
    7. Freeport-McMoRan's operations and challenges
    8. Rare earths and the international nature of mining industries
    9. Regional production and ethical sourcing of critical minerals
    10. Balancing zero emissions with ethical sourcing
    11. The need for coordination and tough choices in mining practices
    12. Praise for the book and concluding remarks
    Summary
    Transcript

    The Macarops Value High podcast

    00:01 - 07:07

    • Aims to consistently achieve high risk-adjusted returns and provide differentiated research, theory, and education resources
    • Offers a killer slack community filled with smart operators from around the world who share a love for investing
    • MIT Investment Management Company (Matico) invests with emerging managers who can earn exceptional long-term returns and has created emergingmanagers.org as a resource for stock pickers
    • Metemco occasionally hires new members for their investment team and provides essays and interviews by successful emerging managers on their website metemco.org/global-investor
    • The guest on the podcast is Ernest, a writer at Reuters who focuses on critical minerals and energy topics
    • Ernest's writing career started at the Associated Press in 2007 during the stock market crash, and he enjoys taking complex topics and making them understandable

    The speaker's North Star as a writer

    06:50 - 13:45

    • Is to understand and tell stories about emerging spaces and new people
    • Journalism now offers various ways to tell stories, including written word, graphics, video, photography, and podcasts
    • Good writing is informed by good reporting, which involves talking to different people and getting their perspectives
    • There is no one-size-fits-all day for journalists; it varies depending on the situation and context
    • When writing, it's easier when a lot of the reporting has been done beforehand
    • The book "The War Below" explores the choices we need to make for an energy transition and the sources of building blocks for electronic devices
    • The book aims to spark a conversation about where these building blocks come from and their impact on ESG standards and global economics
    • "The War Below" is a human story that affects everyone, not just investors or geologists
    • Lithium is essential for batteries used in cell phones, laptops, electric vehicles, and other devices. It impacts people on a practical level in their daily lives

    Lithium power and the human story

    13:21 - 20:25

    • Lithium power is essential for devices like cell phones, laptops, and electric vehicles
    • The podcast explores the human story behind a lithium deposit in Nevada that is also home to a rare flower
    • The head of the lithium company wants to develop the mine as his legacy for future generations, while a conservation group argues for protecting the flower
    • The book aims to humanize both sides of the argument and encourage understanding in a polarized political climate
    • Mining is necessary for critical minerals used in electronic devices and energy transitions
    • Consumers need to consider where these minerals will come from if not produced locally
    • There are alternative technologies like direct lithium extraction being explored but are not yet commercially viable
    • Concerns about environmental impact arise with proposed mining projects, such as acid seepage into waterways

    Debate over copper mining locations

    19:57 - 26:47

    • There is a debate about where to locate copper mines due to concerns about water contamination
    • Some argue that copper mines should be placed in areas with abundant water, while others believe they should be located in regions with less water
    • The issue of where to mine copper is complex and involves conflicting ideas and policies
    • The Democratic Republic of Congo (DRC) has a controversial mining industry, including artisanal mining practices that involve everyday people extracting minerals under dangerous conditions
    • It is difficult to trace the supply chain of minerals like cobalt, which are used in common electronic devices
    • The sourcing of critical minerals for electronic devices raises ethical questions and challenges related to ESG standards
    • Opposition to mining projects can hinder the solution even if it aligns with the goal of achieving sustainable practices
    • Writing the book was challenging due to the need to present different perspectives without imposing personal opinions
    • The book aims to highlight the complexities and tensions surrounding mining practices

    Exploring copper mining and environmental issues

    26:26 - 33:11

    • The author wanted to tell the best story possible in their book, exploring the complexities and tensions surrounding mining and environmental issues
    • The podcast allows for discussions beyond what was included in the book, giving the author the opportunity to share their opinions
    • The author's preconceived ideas about mining and environmental issues were challenged by the multiple perspectives and complexities they encountered while reporting on various projects
    • The Resolution Copper project in Arizona exemplifies how different groups have opposing views. While a mining company fights against an indigenous group, there is also a nearby town that supports the mine for economic reasons but advocates for its own interests
    • Politics play a significant role in these issues, as seen with President Trump approving the mine and President Biden winning Arizona due to indigenous votes
    • Copper is a crucial metal for electrification and global industrial systems. The Marensi mine in Arizona, which has been operational for over 100 years, provided insights into the scale and complexity of copper mining
    • Interviewing the CEO of Freeport Mac Moran, which runs the Marensi mine, shed light on strategic decisions within the copper industry and highlighted its intricate processes compared to oil and gas extraction

    Complex processes and future prospects of copper mining

    32:54 - 39:55

    • Copper mining involves multiple complex processes, including extraction and processing
    • Freeport-McMoRan is one of the largest copper mining companies in North America
    • The size and scale of copper mining operations can be mind-boggling, with massive leaching pads and tailings piles
    • Technological advancements have allowed for the extraction of copper at low concentrations that were previously inaccessible
    • Tailings are the waste rock left over after extracting copper from the ore. They are often stored in tailings dams, which can pose risks if poorly designed or maintained
    • There are efforts to use dry stack tailings as an alternative storage method, but it is more expensive and less commonly used
    • Executives in the mining industry think strategically about the future of their mines, metals, and capital allocation rather than focusing on short-term price fluctuations
    • Freeport-McMoRan believes there is a shortage of copper production globally to meet the demands of the energy transition, leading them to anticipate higher copper prices

    Freeport-McMoRan's operations and challenges

    39:38 - 46:40

    • Freeport operates in multiple locations around the world, including Latin America and Indonesia
    • In the United States, Freeport has existing mines with potential for expansion, which is easier to permit than new operations
    • Mining companies in the US don't pay royalties to the federal government for minerals extracted from federal land
    • Freeport faced a challenge in finding enough workers in the mining industry, leading to a decline in copper production
    • The mining industry faces difficulties attracting workers due to physically demanding work and being located in rural areas
    • Higher commodity prices may be necessary to incentivize workers and cover increasing input costs like equipment and fuel
    • Labor costs are a significant concern for mining companies, especially in Western Australia
    • Diesel is a major expense for mining operations, although there is potential for electrification and automation in the future
    • Freeport invests in community infrastructure and amenities to attract families of workers, owning various facilities in nearby towns
    • Living in a town owned by a mining company may seem dystopian but can be appealing to those working there

    Rare earths and the international nature of mining industries

    46:27 - 53:29

    • The town discussed in the podcast appeared to be a regular town with all the amenities, but it was owned by one company
    • The book mentioned in the podcast focuses on five buckets of critical minerals: lithium, copper, nickel, cobalt, and rare earths
    • Rare earths are not actually rare but are difficult to find in large quantities. China currently controls 80-90% of the global rare earths industry
    • Rare earths have multiple uses in electronics and military equipment
    • The book explores the history of a rare earth mine in Southern California that went bankrupt and was later bought by a consortium involving a Chinese minority partner
    • The international nature of these industries is highlighted through overlapping ownership and partnerships
    • The vulnerability of different metals or groups of metals to severe supply shocks depends on location and use markets
    • The US has limited production capabilities for lithium, nickel, cobalt, and copper. Some minerals require processing in China due to lack of refining capacity in the US

    Regional production and ethical sourcing of critical minerals

    53:01 - 1:00:07

    • The podcast discusses the importance of regional production for critical minerals in light of recent efforts to boost domestic and regional production
    • The long and complex supply chain for lithium is highlighted as an example, involving multiple countries and shipping across the Pacific Ocean twice
    • The coronavirus pandemic revealed the need for domestic production of essential items like masks, emphasizing the importance of supply chains
    • Domesticating supply chains may lead to higher prices for commodities like lithium and copper due to the shift away from low-cost producers
    • Some companies are exploring premium pricing for metals produced at higher environmental, social, and governance (ESG) standards
    • The Initiative for Responsible Mining Assurance (IRMA) is mentioned as a mining certification organization that ensures ethical sourcing of metals
    • Companies like Ford, BMW, and Microsoft are seeking metals procured from IRMA-certified mines
    • Consumers, especially in the electric vehicle space, are increasingly concerned about ethically sourced products and may be willing to pay more
    • Low-cost producers flooding the market can push down prices and make it uneconomical for some mines to operate at higher ESG standards
    • Ensuring ethically sourced products may require consumers to pay a higher price but aligns with their values

    Balancing zero emissions with ethical sourcing

    59:47 - 1:06:44

    • The podcast discusses the philosophical exercise of balancing zero emissions with ethical sourcing
    • Consumers will have to grapple with choices regarding ethically sourced products and their willingness to pay for them
    • The book focuses on five buckets of metals used in everyday electronics but acknowledges that it is not an exhaustive list
    • Antimony, a flame retardant used in electric vehicle batteries, is explored due to its connection with gold extraction and the green energy transition
    • The book aims to philosophically explore the need for more metals from the periodic table and their importance in various industries
    • During World War II, prices of strategically critical minerals increased significantly, raising questions about current demand drivers like ESG and national defense buildup
    • The copper price is expected to rise later this decade as electric vehicles become mainstream and demand increases
    • Analysts speculate whether wars or armed conflicts could occur over copper due to its high demand and geopolitical implications
    • Controlling critical minerals in the 21st century economy will be crucial, similar to how oil defined control in the 20th century economy
    • There could be potential future books on the geopolitical aspects of copper and solutions for fixing problems related to metals and critical minerals

    The need for coordination and tough choices in mining practices

    1:06:25 - 1:13:37

    • The lack of coordination and communication between different arms of the US government is hindering progress in addressing issues related to metals and critical minerals
    • There is a need for a whole-of-government approach to achieve goals such as electrification of the global economy and transitioning the US federal fleet to electric vehicles
    • Examples like the resolution copper project and the endangered flower at the lithium mine site in Nevada highlight the disjointed approach taken by different government entities
    • The conflict between valuing biodiversity and securing resources like lithium and copper raises questions about priorities and tough choices that need to be made
    • A comprehensive discussion about priorities, trade-offs, and national security is necessary to ensure a secure supply of minerals for the country's future
    • Environmental concerns, such as those raised by offshore wind projects in California, further illustrate the challenges faced in balancing competing interests
    • Americans need to grapple with tough choices regarding mining projects within their own country and consider whether there are places too special to mine
    • The discussions prompted by this book are crucial for shaping our future, particularly in terms of mining and electrification

    Praise for the book and concluding remarks

    1:13:07 - 1:16:31

    • The book discussed in the podcast is praised for shedding light on important discussions related to mining and electrification
    • The impact of the book is expected to be significant and far-reaching
    • The guest provides information about where people can learn more about him, including his website and social media accounts
    • The host asks the guest who he would choose to have dinner with from the past or present, and the guest chooses Eleanor Roosevelt because of her bold thinking and insightful quote mentioned in the book
    • The host expresses gratitude for the guest's contribution to the podcast and hopes that many people will buy the book and engage in these important conversations
    1