Trade and tariffs | Fast Forward podcast season 2, episode 1 transcript

You can read the full transcript of our interview between Fastmarkets’ own Andrea Hotter and Will Adams, including a panel discussion featuring Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, Ashley Zumwalt-Forbes, former US Deputy Director for Batteries and Critical Materials and Ben Steinberg, who is the Executive Vice President at government affairs firm, Venn Strategies.

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Full episode transcript

Andrea Hotter [AH]: We are back. Welcome to season two of Fast Forward, a podcast by Fastmarkets. I’m Andrea Hotter, special correspondent at Fastmarkets, and I’m super excited about this season. We have really great guests lined up to talk about some of the key issues impacting critical minerals, and I know you’re going to enjoy hearing their opinions. 

Before we do that though, I wanted to bring in an old friend and colleague who I’ve known since I started my professional career in journalism. I’m not going to tell you how many years ago that was. Because it’s quite a lot. He is the head of battery and base metals research at Fastmarkets and definitely my go-to if I ever need any assistance with forecasts, data or analytics. 

It’s the legendary Will Adams. Hi Will!  

Will Adams [WA]: Hi Andrea, that’s very kind of you, very nice introduction but overdone I think, overrated.  

AH: How are you? What have you been up to?  

WA: Yeah, good. Thank you. It’s been a busy start to the year really. Went off to Saudi, to the Future Minerals Forum there, that was in January. 

And then also followed with a trip to Japan to go and see customers and talk about the battery raw materials and other markets as well. So yeah, it’s been an interesting start to the year.  

AH: It’s been so quiet in the U. S., you know, nothing’s been happening, no news, no developments whatsoever. No, obviously, President Donald Trump was inaugurated in January, and we’ve seen this flood of executive orders impacting critical minerals, electric vehicles, supply chains, and I would hazard a guess that the word tariff has probably been one of the most searched words on the internet. 

Maybe that’s a good place to come in. Will, what are tariffs?  

WA: Tariffs are a means to really support your own domestic economy, I suppose. So, you put tariffs on imports. And at the moment, what’s a recent one is the U. S. is in 25 percent tax on aluminium and steel. So that means any aluminium or steel coming into the country, they’ll have a 25 percent tax on it. 

So it’s a huge increase in the price. In a way, the idea behind it is to protect and to help the domestic industry protect it from overseas competition. Or to help to build up a new industry as well, but obviously it costs, it means that the local consumers are then therefore paying 25 percent more than what they could be buying their raw material at. 

So it has a cost and it’s not all good.  

AH: Yeah. And I suppose I don’t think we should be completely surprised we’re seeing them used because Donald Trump did say during his election campaign that tariffs was his favourite word and that he planned to introduce them. Obviously, they have been introduced by previous administrations too. 

We talk here also about raising revenue for the economy. They’ve also been used in an interesting way as kind of a negotiating tool. There was the whole thing about using them to prevent the inflow of drugs and illegal immigration into the US. So that’s been quite an interesting twist as well, hasn’t it? 

WA: Yeah, no, very interesting. And you do wonder sometimes whether that is the primary aim of them. Because it is interesting when Trump introduced the 25 percent tariffs on Canada and Mexico and 10 percent on China. They were then delayed for 30 days on the back of Canada and Mexico saying, okay, we will send troops to the border to help protect that border. 

So in a way that was an immediate win for Trump at no cost because he didn’t actually do anything. Mexico and Canada did. And then he’s pulled back from, well, he said, you know, there’s a delay introducing the actual towers. So you do wonder whether that was the sort of the primary motive. Also, if you’re going to put a 25 percent tax on aluminium and you are a net importer of aluminium, I think the US, they get about 80 percent of their aluminium from imports. So what is the point of putting tariffs on that if it’s going to really damage your own consumers?  

AH: Obviously we know tariffs tend to lead to retaliation. You tax me, I tax you back, that kind of tit for tat thing. So we’re in that territory now as well, aren’t we? Like. Let’s have tariffs, let’s not have tariffs, let’s re announce them, let’s pause them, let’s do this.  

WA: It’s very difficult for the markets to operate in that area. It’s difficult for people to plan. And even if, going back to this aluminium, even if the hope of putting a 25 percent tariff on whilst to build up the aluminium in the US, these are huge projects. They take a lot of time to actually develop and to build and construct. 

And then who’s going to do that if in four years time under a different administration the tariffs go away again. So yeah, it’s very complicated.  

AH: It is incredibly complicated. And all of this is coming to the market as Western supply chains are trying to reduce their reliance on China. So that’s where tariffs really come into play. 

I was reading this incredible statistic from the US Geological Society that the U. S. is a hundred percent net import reliant for 12 of its 50 individually listed critical minerals and more than 50 percent import reliant for another 28. And China was the leading producer of 30 critical minerals. So it’s kind of nuts when you think about it in that respect, there’s going to be a lot of work to be done to reduce that reliance and tariffs is kind of throwing a bit of a curve ball into it all. 

WA: Let’s look at the battery industry and trying to build up the lithium ion battery supply chain. You can understand why a company or a country wants to have a localized supply chain. If you are a EV manufacturer in the States or in Europe, and you’re putting billions of dollars or euros into building that manufacturing plant, you don’t want it suddenly to have to stop running that plant because some of your key raw materials are coming from a country and there’s a political fallout between your country and that country and the supply chain gets cut off. 

AH: Absolutely. Well, I wanted to delve into this a little bit more, so I got together a really excellent group of people to chat about the world as they see it. So I spoke with Ashley Zumwalt-Forbes. I think you probably met her at our Lithium and Battery Raw Materials Conference in Vegas. She’s great. She had just finished her term as deputy director in charge of batteries and critical minerals at the U.S. government. She was in the Office of Manufacturing and Energy Supply Chains. She is really incredibly impressive. She’s an engineer by training, but she’s also bought and financed and Brownfield projects, everything from nickel through to natural gas, so she was one of the guests.  

I also spoke with Gracelin Baskaran, who is the director of the Critical Minerals Security Program at the Center for Strategic and International Studies. She’s great too. She’s a mining economist and her main expertise is in critical minerals and trade. So she’s really well placed for this conversation. She actually started out in South Africa’s platinum belt. And she worked for the World Bank in South Africa. And she’s currently writing a book about international strategy for critical minerals in the US. So she was like the perfect guest.  

And then we also got on the show, Ben Steinberg, who is the Executive Vice President at government affairs firm, Venn Strategies out in Washington, DC. And he also co-chairs the company’s critical infrastructure group.  

He’s really interesting because he spent nine years at the US Department of Energy and a year at the White House under Obama and Trump. So that was a really interesting insight between the two different administrations. And he was also a liaison with the Department of Defense to build partnerships for batteries, grid security, energy, efficiency and so on. And he’s also the executive VP of the Battery Materials and Technology Coalitions, which kind of brings companies together through the supply chain. 

So it was a really great group of people to have a conversation with about China, reliance on the industry and how they see the world. So maybe we can take a little listen to some of it.  

WA: Yeah, sounds good. 

AH: First of all, I’d like to do a really quick poll and I just want a number from you, nothing else. So, on a scale of one to 10, I’d like to know where you think we are in terms of achieving secure supply chains, zero being nowhere and 10 being mission accomplished. So I’ll stick my neck out and go first and have a go too. 

So if we started at zero in 2017, then I would say we’re at a three at best. So Ben, what do you think? Give me a number.  

Ben Steinberg [BS]: Three.  

AH: Three? Okay. Gracelin?  

Gracelin Baskaran [GB]: Three was the first number that came to my head.  

AH: Okay. And Ashley?  

Ashley Zumwalt-Forbes [AZF]: I’ll go four. Just an optimistic spin on it, but absolutely early days.  

AH: Okay. All right. So, all right. We all agree. Let’s just say that there is quite a way to go still, but I think three was definitely a bit of a magic number. Ashley, I’m going to come to you then. As the optimist of the group, you’ve spent the past year at the heart of this challenge in the US working in government. So no doubt you’ve looked at the goal from all angles. 

I’d like you to give us a bit of a reality check, an insider’s view into the actual scale of the challenge and where you think the US and maybe the West is right now. 

AZF: So, challenges abound, I think is really the headline, and I think what’s really important to put into perspective is these are extremely complex supply chains. 

So, it’s not like we need to set up the processing part of the supply chain and wash our hands of it, boom, problem solved, like we are independent. Unfortunately, there are many steps in this chain. If you look at where China currently has a chokehold on the global economy, they control upwards of 70 percent of upstream resources. 

So, whether those are materials that are mined in China or mined elsewhere by Chinese companies, they have done an astounding job at being able to secure those materials, build those mines and operate those mines. If you go to more of the midstream and downstream sector, their dominance only gets larger depending on the specific material you’re looking at a number upwards of 90 percent of global supply is not uncommon. 

And so, if you’re looking at an incumbent with such a majority in a low cost advantage, it really becomes a question of how do you compete from a place of weakness where we don’t have scale, we don’t have IP, we don’t have expertise, and it truly is like building that block by block on areas where we can compete. 

I don’t think we would win head-to-head on the exact same technology setting up the exact same supply chains. So, you really have to keep one foot in what is today and how do we strengthen the US’s position today. Again, Andrea, I liked your adage of in 2017 we were effectively at zero. And today we’re at that three, maybe four, depending on how optimistic you are. 

But we have a long way to go, and certainly we need to keep that second foot in what are the future technologies, where we can ensure we’re not starting from a 30-year disadvantage and starting from a place of weakness, but we’re able to get on the front foot.  

I completely agree with you, and Gracelin, you also said three. Do you agree with Ashley? Where do you see the most edge and area of concern? I’m really curious, where in the supply chain and which mineral do you see the biggest gap?  

GB: I agree with everything Ashley said. We are talking about a decades-long policy at home, but also through building minerals as a centrepiece of their foreign policy. 

If you look at the Belt and Road Initiative, if you looked at the countries they targeted for investment, they’re by and large resource rich jurisdictions where they were able to go in and secure feedstock. There’s sometimes a myth that, you know, China just has all the resources, but they don’t. They just have managed to build it into a bedrock of their foreign policy. 

So, the question is, how do we prioritize what we are going to do going forward? One of the acute vulnerabilities that we’ve realized in the last 60 days even, since China rolled out those most recent restrictions in the form of targeted bans, is that we spent a lot of the last four years talking about EV metals, which are incredibly important. 

But some of the ones we remain most vulnerable ones are the bespoke quantities of defence and semiconductor materials. We started thinking more about that antimony that we already are restricted. You get gallium and germanium from zinc and bauxite, but there’s not many facilities in the US and even limited in North America that I can actually process that out. 

So that makes it dually important that we start to leverage strategic partnerships with allies like Canada and Australia. People don’t realize mining is one to 2 percent of our GDP and Canada’s GDP. It’s 15 percent of Australia’s because they did build some of those advantages. So, we’re going to have to rethink what cooperation looks like because there are areas where we can get the quick wins. 

We have great R&D in the United States. We have great big technology brains, but we don’t necessarily have those other comparative advantages. So we’re going to see a strategic shift, I think in the coming four years on defense vulnerabilities and semi-conductor vulnerabilities. And those aren’t the easiest to extract and to hold on to. 

And commodities like gallium have a one-year shelf life to being stockpiled. So, we’re not going to stockpile our way out of this alone.  

AH: There are a lot of details to unpack in there and we’re going to get through those. Ben, I just want to come now to you just quickly to just get your assessment. You’ve worked at the DOE. You’ve been under both administrations. What’s your assessment of where the US is on this?  

BS: We’re competing against China, who is ahead and doesn’t play by the same rules. They have different objectives than us. And they manage their money differently. They manage their international relations differently. 

Their purpose is to dominate and control the marketplace. It’s not to make money. We have a bunch of corporations in the US and in our allied countries, even in China, trying to make money. And working with a government who backs their industry and pushes out policy to control marketplaces. Our industrial policy that we’ve set up in America needs to be supersized to be able to compete. 

And the second point is what is the role of government in all of this? I think you’ll have different approaches in every administration that comes in, but you need all the tools in the toolkit, if you’re the US or United States allies, to be able to compete. Gracelin named a few, but you need the state incentives or provincial incentives, you need federal incentives, you need potentially tariffs, you need efficient permitting, all of that is complicated because government has to weigh in and pick winners and losers and government has to be able to work with the constituency, the electorate on the social license to operate, which has been a struggle. 

There’s a lot of momentum though, so I’m, I’m optimistic.  

AH: Let’s get into tariffs because I think that’s a nice juicy topic for us. They are really important to this discussion. And the problem isn’t just the actual lack of US domestic production of many of these materials. It’s now that they’re also being weaponized via tariffs and trade wars and the threat of products being cut off seems to be growing bigger. 

We’re seeing more and more reciprocal tit for tat actions with taxes and quotas and restrictions on products that the US really needs. I mean, Gracelin, you talked earlier about germanium and antimony, gallium, graphite. We’ve seen restrictions on those. What’s next? Rare earths? I mean, that would really bite. 

So I guess the question is, how much of a stick do we need? And should the U. S. be throwing a few more carrots out there?  

GB: Absolutely. The war ahead is going to be a combination of sticks and carrots, right? And the question is, who do we apply tariffs to and who do we not? We need to embrace Canada at this point in time. 

We are not going to meet the nuclear energy goals with uranium tariffs, batteries, and nickel. So, countries like Canada, Mexico, the average automotive part in the United States moves across borders between Canada, the US and Mexico eight times. If you think about retaliatory tariffs at 25 percent a pop on each move, that’s a massive number. 

Deciding who our allies are and ensuring that we are not applying punitive measures that undermine our own security and competitiveness, but then in turn using tariffs strategically to encourage off takers and buyers to buy from allies instead of Chinese companies in Indonesia is going to be incredibly important. 

AH: Ashley, how does that work when you’re sitting there in government and all of this is going on around you, how do the tariffs work and how do you think about them?  

AZF: I, too, worry about blanket tariffs, particularly on our closest allies like Canada and Australia. I worry about it from the consumer’s perspective. 

What we don’t want to do is to make goods even more expensive for the end consumer when consumers are being squeezed and life is hard enough. I certainly think there are great strategic applications for tariffs, and I have hope that the current administration will roll out tariffs in a way that makes the US stronger and more competitive, both from a consumer and an industrial standpoint.  

On the carrot side, see, carrot, really important to talk about here, particularly on the diplomacy piece. I think this is an area that we could really strengthen and bolster. A short analog that I always like to point to is there once was a junior mining company on the ASX called Leo Lithium, and they had a JV in Mali with a Chinese company. 

Ultimately, unrest broke out, the Chinese company acquired Leo Lithium’s portion of the project, and now it’s fully a Chinese asset. Well, what we can learn from that is that during this period, Australia did not have an ambassador to Mali, but China did. And so if you’re looking at the ability to build relationships, to go into countries, to have positive projects and be able to bring assets on for the Western world, I do think the carrot piece in being able to bring other countries along and form these allied relationships and having a win-win situation is absolutely critical.  

Second piece I will touch on, I clapped earlier, but I know nobody can see the video. Ben touched on, we have got to do better on permitting. Like, we do a piss poor job in this country trying to get assets online. I think I read it’s like an average 29-year process to get something up, and that’s an absurdity. 

So, I would absolutely love to see permitting advantages, so that we can stand a fighting chance here and in allied nations.  

AH: Ben, you were about to say something then.  

BS: We need tariffs. I totally understand. We don’t want prices to accelerate. Our industry cannot form here without having some competitive, not even advantage, but competition with price. 

Because right now you have the OEMs, not even just auto, but defense, others who are going for scale and speed, and they need their products now. And in the process, they’re pushing aside the qualification process, they’re dismissing the quotes on prices they’re getting from the up and comers. Nothing is more clear on that than the case of graphite. 

You’ve got a lot of companies. In the US, specifically, synthetic graphite or artificial graphite companies who have the ability to stand up large factories and support the industry but haven’t gotten a fair shake with their customers. And part of that is because China can dump product very cheaply and continue to dominate the market. 

In Indonesia and Morocco, you have a company like BTR setting up, which is a foreign entity of concern. And so what do you do? You have a tariff in place. We run the North American Graphite Alliance. We have a trade case in front of the International Trade Commission. The Commerce Department came out with similar tariff quote. 

It’s quoted from the Commerce Department at 915 percent up to that amount and that would make things equal to what the Chinese are doing in terms of dumping on graphite. Not to say the US industry or the battery industry wants that. That would be terrible, but somewhere in between 0 and 915 percent. There has to be an answer on what can help the industry stand up here. 

AH: It’s really interesting. I did an interview with Greg Beishcher quite recently. He’s the CEO of Alaska Energy Metals, and they’re developing a nickel project in Alaska, the state that got its very own executive order because of its importance to energy and. A lot of untapped natural resources and his view, and he wasn’t wishing this on the US., but his view was that it might actually take an emergency, like China cutting off the supply of something completely, for the US to spring into action and find an alternative quickly and maybe that is the 900 plus percent tariff. What do you think? Do we need a crisis? To make things happen.  

BS: I think we’re teetering on the edge of it. And it’s not a matter of if, it’s a matter of when and what minerals. And Gracelin talked about four or five other minerals. But look at the entire Rare Earth space. I mean, you mentioned that, Andrea. It’s happening. We’re in that space now. And we have to, again, use those tools to play a game that’s not necessarily. 

AH: I guess the question then is what happens in the interim if the US. gets About 80 percent of its rare earth imports from China and the rest comes from Malaysia and Japan and Estonia. They’re not going to suddenly be able to increase their own production to meet that gap. So yes, we get the kick that we need maybe to get other secure supplies in place. But how do we fill the shortfall? 

Do we stop making semiconductors? We stop using magnets? We don’t. So what happens? 

AZF: That is, that is the question, Andrea. I know there was like the long pause there. I can certainly put my hand up and say, I don’t know what we would do if we were completely cut off from those materials. There’s always the discussion of stockpiling and the Department of Defense’s stockpiling capabilities for their own internal considerations. 

Great. Those capabilities are limited, and that doesn’t account for external industrial purposes. Certainly, large companies tend to stockpile for a few months just to ensure no supply disruptions. That won’t get you through a full blockade. In the case of something like rare earths and magnets, we simply don’t have the capability built out, even if we had access to rare earth materials to be able to supply ourselves with magnets. I certainly don’t know what the interim step would be. I do think there needs to be hopefully not a full emergency where we are completely blocked from supplies, but we need some sort of market shock such that commodity prices increase. What we’ve seen over the last 48 months is almost across the board. 

Almost completely across the board, commodity prices have just plummeted. And all that’s resulted in is Western supply being shuttered or deferred and just continued concentration into those foreign entities of concern. So we do need a shock in the market to increase those prices, bring that production and capability back online and meet incentive prices for new projects going forward. 

GB: To add to that, I think there’s a couple of things. I think we’d have to be ready for a highly inflationary environment, right? Ultimately prices are going to go up. I’m not as worried about a copper restriction because speaking candidly, I can get copper from South America just as much. So it would be a smaller impact, but when we look at something like rare earths, you’re going to have an inflationary spike, but almost counterintuitively, even though we know we need a lot of rare earths, NDPR prices aren’t great right now. 

It’s why companies aren’t racing in to go make it even it’s going to be an inflationary environment because our stockpiles only have so much. Our stockpiles at the end of the day are really a defense stockpile, which is why we’re talking about broadening out their use. But you can only do what geology gives you. 

And we don’t have the biggest rare earth deposits in the world. So in a way we’re going to have to live with the reality that our delay to action is driving inflation while we scoot our sorry little backsides over to hurry up and get feedstock from other places.  

BS: If I’m sitting in government, I want a strategy on every single critical mineral that’s on the list. 

It’s overwhelming, but. We’re in the era of industrial policy. And so we need to understand who our allies are. How do you get that mineral from an allied nation from the US where is it going to go get processed and literally link it, trace it all and create those international partnerships to extract that.  

You have resources where you may be a mining bauxite, but there’s a ton of germanium or gallium in that resource. That’s where it comes from. Pretty much every mining client I work with has some traces of rare earth in their deposit, but they don’t have the money and it’s just a by-product or a waste stream, not necessarily something that they’re selling into the market. 

So how do we target those? Like almost project by project, mineral by mineral, and really utilize that to drive how governments involved, how these nations work together.  

AZF: Gotta top line this. Love everything you just said, Ben. I will say, it calls into question, How does that work with existing contracts, right? 

Oftentimes when mines are brought online, they have life of mine off take agreements. That’s how they get financed. This is devil’s advocate. I really do agree with you, but are we, as the US government, in all of our knowledge, coming in and saying, you have to declare force majeure on your existing contracts and sell into the Western world. 

How does that work? What does that mean for risk going forward? What does that mean for financeability going forward? Where does that money come from? The question for me is that exact strategy works extremely well in a country like China where it’s more command and control around like thou shalt do this and you get on with it. 

It’s so hard when you’re driven by capitalist forces. And so I completely agree. We need a strategy for each critical material. My question is, how do we unwind the existing infrastructure and existing agreements that are already in place? And how do we avoid unnecessary redundancy across that chain? 

AH: Yeah, and not just the financing and the offtake agreements. A lot of these Chinese companies are in partnership with Western ones across the globe and across the commodity spectrum. So are you going to a big lithium company and saying, I’m sorry, I know you have that great refinery in Australia with a partner, but Get out of that partnership. 

No, I mean, I don’t know how you do that. Right. So I completely agree too. There is a real issue with this. We’re not starting with a blank slate in many instances. All right. The pricing problem as well. You kind of alluded to it. Everybody has in terms of when the underlying commodity price falls, investors back away from financing. 

And often a lot of these projects are either folded completely or they’re stalled for years until prices pick up again. China is different, more subsidies. It’s different forms, integrated supply chains as well, which I think is really important because if you’re losing money in one area, last year they were losing a lot of money in lithium pegmatite mining in China, and they just subsidized it with profits from another area like refining or batteries or cars. 

IRA-aside, should we be subsidizing more? Can we iron out and survive these pricing cycles better if we do? 

GB: Our biggest problem is actually competing with Chinese operations, like BHP, Close Nickel in Australia, Glencore in New Caledonia, and to realize for as long as China is subsidizing production, ours will be less competitive because I have market forces. 

The question we’d have to ask ourselves is if China won the last 30 to 40 years, using state support, how do we create a play field that is competitive? And there can be some tariffs, right? Which inherently raises the cost, but it is going to require state support because at the end of the day, mining is unique compared to a lot of industries and that it needs extremely patient capital. 

Think about how long it takes for a project to develop. Think about the risk profile. Mines are not location in the most exciting, most stable places oftentimes. So, to level the playing field, it’s going to require more support, but kind of aligned with what both Ben and Ashley said is ideally it follows what are our priority commodities, priority projects based on the fact that most mines are not a primary product, they have many secondary products. 

And deploying support along those lines is going to be really important because I can’t support every project in every place either. I also have to acknowledge that to make that project successful, I need energy and I need a whole ecosystem around it. One of the reasons a lot of processing has been developing in Canada is energy is affordable there. 

So these are factors that we need to take into account, but we are not going to compete with China without patient capital, which markets aren’t naturally inclined to do because fiduciary responsibilities are quarterly, generally, and again, levelling that playing field.  

AZF: Across the board, it’s going to require a tremendous astounding amount of capital coming off the sidelines to finance all the way across the supply chain. 

And guess what we love making money as long as you are subject to commodity price swings, particularly when prices are depressed, it’s extremely difficult, particularly when these are more bespoke metals, where they don’t have those long term hedging capabilities like you traditionally see baked into a senior debt facility, for example, where investors can take some risk off the table through financial instruments. A solution that I’ve always liked the concept of, and I’m reticent to have government subsidizing across the supply chain, but I like the concept of effectively the government being a buyer of last resort or providing a pricing backstop for off take agreements. I think it solves a variety of problems. 

One being the US actually being able to acquire materials directly and thereby solving this issue of are we going to make folks declare force majeure and sell to a company of our choosing? It also solves the problem of stability for investors such that we can get some of this capital off the sidelines. 

It is bespoke instrument for the US government. But when we’re looking at truly Herculean amounts of capital, I genuinely think we need to think more creatively than the resources industry has historically.  

BS: The term for me is certainty. If we’re going to do this in the US we need certainty for private capital and in partner nations. 

Folks need to know that if they put in the work and do all the things they’re supposed to do, 20 years later, it’s going to pay off, or 10 years later, however long it takes. So, one aspect of that, Ashley, you talked about incentives. The only incentive right now in the IRA that is with no sunset is the production tax credit for critical mineral processing.  

That’s really nice because it shows the marketplace that the US is invested in this and wants to continue. Everything we’ve heard is that credit is staying in place and won’t be repealed if some of the other parts of the IRA are repealed. It’s very popular So I think if you’re going to do incentives you do need that long term incentive along with that are content requirements that the US could set to say, we’re not buying from China, right? 

That kind of thing. Like you add in the 30D clean vehicle tax credit, you could apply that across other sectors and commodities. And then the other part of certainty is obviously the permitting. Someone could go in to put a categorical exclusion in place for, let’s say, mining exploration, which seems pretty simple, and get dragged along for years and not actually get it and get sued. 

So I think if you don’t have the rules set in place, people don’t know whether it’s okay to invest or not.  

AZF: I will say, we are up against these asset managers, like holdings SPY last year, the ETF that tracks S&P 500. You make 25 percent on your money. Boom! Just owning a stock, letting it sit in your brokerage account. 

So as much as I would love for this to be altruism, that money is coming to the table. It’s just not. That’s not how financial markets work. So we do have to figure out a way to structure in serious returns for investors in order to get this capital off the sidelines.  

AH: Coming back to that original question we asked, which was, if we do all of this, is the US and the West going to be able to reduce its reliance on China? Where’s the most important place to start? Gracelin, what do you think?  

GB: Given that China has built its advantage over 30 to 40 years plus, I don’t think it’s fair to expect that the US is going to catch up in five. If I think about the amount of domestic exploration, I was reading a book that I got sent in the mail yesterday. It was published in 1981, and it said over the last decade, President Carter allocated 3.4 million dollars over 14 government agencies to figure out how to build our strategic resources because we are dangerously low and all we have is a really dramatic report. 

What we need to do is we need to look at our domestic exploration, we need to look at our domestic land. And it’s funny, 44 years later I’m reading that going, Oh, that could be Britain today, actually. There’s an element of we need to get exploring both here and we need to get abroad, acknowledging that project development takes decades. 

Mines are generational. Mines are not a short-term project. So, it’s a long-term effort to catch up, but we need to get moving both here, but in allied countries as well, acknowledging that, like, the US still has less than 1 percent of the world’s cobalt, graphite, and manganese, etc. So it is going to take a global effort to build supply chains that are resilient to China, just like China’s leveraged the whole world. 

AH: Ashley?  

AZF: I think it very unlikely that in the near term the US or really the Western world can take any sort of dominant position in today’s technology. Can we carve out independence? Can we have security? I genuinely believe we can on a decade time frame. Our best angle is establishing security and independence with current technology now and keeping an eye to the future such that we can have a dominant position in the next iteration. 

AH: And Ben, what do you think?  

BS: I think we have an opportunity to build big partnerships with our allies. You have an administration coming in and a president who has a proclivity to announce big things. Look what’s happening in the AI and data center space. Why not critical minerals? Why can’t we make that huge investment announcement with South Korea or Japan or Finland or Norway to build processing facilities in this country? 

What is stopping us from those announcements that are so clearly needed, I think there’s a huge opportunity to do it. Obviously, there’s the dangling of carrots and sticks as you do that dance, but we just saw the spat with Columbia. I honestly think there’s an opportunity here, untapped, to think really big and go big. 

AH: Yeah, maybe Greenland’s a place we’ll see a lot of capacity, you never know. All right, and I think that is a great place to stop. I could talk with you all for hours, but we are unfortunately out of time. So, thank you so much for coming on Fast Forward. It’s been a lot of fun and really, really interesting to chat and hear your views. 

I would love to come back in a few years’ time and just see where we are on that scale. We’ll have to get you back on the show.  

AZF: Looking forward to it, Andrea.  

BS: Thank you. This was really fun.  

GB: Thank you so much. 

AH: So, well, wasn’t that really interesting? They’re great, aren’t they?  

WA: Yeah, interesting, yes. And such a lot of knowledge in there, that’s fantastic. So, yeah, I enjoyed that.  

AH: Yeah. Firsthand experience as well, which always helps. So now I’m going to throw that question I did to them to you. So based on that conversation, where do you think we now stand in terms of achieving secure supply chains on that scale of one to 10 that nowhere to mission accomplished? 

WA: Well I think it depends where you’re sitting. So if you’re in the US, I don’t disagree with the number three that they were generally talking about. Having said that, Ooh, maybe it could slip to two. In the current environment, when Donald Trump was talking in the run up to election, he was quite anti the IRA and he was talking quite negatively about some of the aspects of EV and the adoption of EVs. 

So yeah, I think depending on what happens and what policy comes out, it could slide back a bit, but yeah, I’d say generally in the US probably a three. I think Europe is lower than that. And some of the companies there have run into difficulties. So. Again, it’s not easy. It’s many different aspects of the market. 

It’s really complicated. It’s huge amounts of investment. So there are a lot of things that need to be sorted out.  

AH: Just going back to that tariff aspect, Ashley mentioned that there are strategic applications for tariffs. So far, we seem to be seeing them used more for strategy. But in terms of negotiating tactics, where could they be used strategically to secure that supply chain goal, do you think? 

WA: I think they can be used well, I think when you can say that another country is exporting to you and their domestic industry has been heavily subsidized and therefore they’re being able to dump material in your country and therefore to protect your industry, you put up tariffs. So I think that is a good strategic use of a tariff. 

I think, as you said, tariffs have been announced. Are they purely to protect the domestic industry, or is it just a means to have a wider talk on trade? So Trump at the moment, he’s saying we have a supply deficit and therefore we want to level that playing field. We want to level the trade more, so I’m going to be using tariffs. 

So yeah, I think you need to then really deep dive into it and see whether a tariff really is good, uh, for the economy or not.  

AH: It’s really hard though, isn’t it? You know, when you think about it, you’ve got, for instance, graphite, Ben mentioned graphite and a 900 and something percent tariff would be the kind of level you’d need to help protect the industry because of the dumping, which effectively is just like selling a huge amount into a country at low prices. 

So it’s incredibly attractive. But the problem is if you start tariffing or preventing that material coming into the US graphite. That’s where the vast majority of the world’s graphite comes from China. So until there are alternatives, what do you do?  

WA: Yeah. And I think that’s a good point. On the one hand, you need to build up the industry and maybe tariffs aren’t the answer and that maybe it’s actually the government needs to support the industry by things like they’ve been doing with the IRA, giving them incentives or tax credits to actually build up the industry. 

Which enables the product to still remain relatively cheap with the government subsidy until that industry has got up to speed. It is in commercial production. It has the economies of scale and then it’s more likely to be able to stand on its own two feet without those subsidies.  

AH: Yeah, I guess the situation is now that the current administration doesn’t believe in the IRA and has rescinded a rollback in certain areas, but particularly on the EV side. 

So that whole incentive program, the tax credits for EVs, they no longer are going to exist. So that will be interesting to see what happens to car sales over the next few months as well.  

WA: Yeah, it will be. And then you’ve got to take the bigger picture. If you want to sort of reduce your CO2 levels, you have to go down that electrification era and therefore you do need to build up that industry. 

Maybe it’s all over the last 10 years or five years or whatever, everybody’s been trying to do it too quickly. And that’s one of the problems and maybe we need to do it at a pace where that will work.  

AH: Yeah. The other one I find really interesting, and this perhaps is an example of how this tit for tat is working slightly differently depending on which country you’re in, is rare earths. 

Obviously you need them in electric vehicles as well, but also in wind turbines and consumer electronics and so on and so forth. And obviously defense industry, which is I think why they’re getting so much attention. Over 95 percent of the world’s rare earths are produced in China, but if China’s doing things differently, it’s crimping supplies. 

So, it’s not saying we’re going to send it and you’re paying more. It’s restricting exports. So, if it were to cut off exports of rare earths, for example, that would actually really hurt the US and anywhere else that it was applied to, right? For the tech sector, that could be quite disastrous.  

WA: Yeah, absolutely. That is a danger. Rare earths, although China dominates them, they are produced in other places, or they could be, they are in the ground in other places. Often, they’re in such small quantities, it’s not worth to develop them. So I think while we are dependent on China for a lot of these rare earths, we also need to be building up our own access to those in other places. 

But let’s look at it from another way as well. You know, China could say, okay, I’m going to stop all that. Yeah. Yeah. I’m going to stop all the export of rare earths. But they also depend on importing an awful lot of other raw materials and metals and things like that. So. You can play it the other way, you know, they’re talking about tit for tat relations. 

You don’t want to get into that sort of a trade war, I think. Yes, it could be painful. It could be absolutely catastrophic in the short term. Say lithium. So, China has its own domestic supplies of lithium, but not enough. It still imports an awful lot from Australia, imports from South America, and it’s importing from Central Africa as well. 

So there would be pushbacks if they tried to, I think.  

AH: No, for sure. Well, that seems like quite a good place to end. So, Will, that was a really great chat. What have you got coming up next? Are you going to the Asia Battery Raw Materials and Recycling Conference in Seoul, South Korea in April?  

WA: No, I’m going to be missing out on that one this time. Having said that, a lot of the individual analysts will be going plus a number of our analysts from China as well.  

AH: I know they’re doing some really exciting things at the moment with the products suite.  

WA: Yes, we have got a good suite of products looking at all sort of aspects of the battery raw materials and the base metals as well. 

And I think one of the reasons why I tend to travel is when I travel, I can meet the customers. So it’s really useful to get first hand insight into what customers are thinking about, what they’re worried about. And then I can put that all in my melting pot and then try to come up with some of our own insight into those things as well. So yeah, it’s an interesting time and there’s an awful lot to be discussing and thinking about in these markets as always.  

AH: Well, it’s going to be a great series and I’m really excited. You’re going to join me like this for the rest of the episodes as well. We’ve got a really fun one coming up next month. 

I’m not going to tell you who it is, but let’s just say they are quite a celebrity, and the focus is going to be on electric vehicles. So it’s an exciting guest.  

WA: Excellent. Yeah, I look forward to that.  

AH: To find out more about those products Will was just talking about, you can go to fastmarkets.com/podcast. 

Will, thank you. This has been so much fun.  

WA: Yeah, absolutely. No, I’ve thoroughly enjoyed it. Thank you very much.  

Fast Forward is a Bearded Fellows production for Fastmarkets. Your host was Andrea Hotter, featuring William Adams, Gracelin Baskaran, Ashley Zumwalt-Forbes and Ben Steinberg.