Latest / Best of Business / Dr Allan Trench: mineral economist on Donald Trump signing minerals deals with Australia and Japan

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Dr Allan Trench: mineral economist on Donald Trump signing minerals deals with Australia and Japan · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk zed be
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  Speaker 2: Now. Rare Earth minerals a bit of a talking point
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  Speaker 2: at the moment across the globe because Donald Trump is
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  Speaker 2: rushing deals with Japan and Australia and so on, and
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  Speaker 2: these are the elements that make up our modern tech,
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  Speaker 2: from evs to smartphones to military drones. And as a
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  Speaker 2: result of this, Australian mining stocks are soaring some over
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  Speaker 2: four hundred percent, leaving economists asking is this a boom
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  Speaker 2: or a bubble now? Doctor Allen Trench is a mineral
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  Speaker 2: economist and a professor at the University of Western Australia
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  Speaker 2: and with us Alan Halo.
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  Speaker 3: Hello.
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  Speaker 2: Do we know any of the details of these deals?
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  Speaker 3: Not too much, it's just a framework at this stage.
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  Speaker 3: I think the hard dollars are I think a billion
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  Speaker 3: US from Australia and from the US in the next
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  Speaker 3: six months. That's the sort of locked in component. And
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  Speaker 3: beyond that there's promises of I've heard numbers up to
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  Speaker 3: eight billion US, but we'll see. Time will tell on that.
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  Speaker 2: But the point of these deals, presumably is to get
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  Speaker 2: the minerals out of the ground fast. Yeah, it is.
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  Speaker 3: Yes, there's a lot of these projects have been around
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  Speaker 3: for decades. I was just looking at the share price
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  Speaker 3: history over twenty years of one of the rare Earth developers,
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  Speaker 3: and the last time rare Earth peaked back in twenty
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  Speaker 3: eleven they were hoping to get into production then and
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  Speaker 3: fifteen years later, here we go again.
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  Speaker 2: And so do you think I mean the point also
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  Speaker 2: is to get the stuff out of the ground quickly
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  Speaker 2: in order to cut China out, I would imagine. So
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  Speaker 2: does the sale of the rare earth minerals then have
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  Speaker 2: to be exclusive to exclusive to the US?
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  Speaker 3: To be honest, I don't know in the framework I
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  Speaker 3: would anticipate so from what we hear from Donald Trump,
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  Speaker 3: of course. But my comment would be that there's plenty
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  Speaker 3: of rare earth. I'm sure you've heard the phrase before
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  Speaker 3: at rare earths are not actually that rare. So there
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  Speaker 3: are lots and lots of deposits around the world, plenty
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  Speaker 3: of them in Australia. A personal perspective is there's plenty
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  Speaker 3: to go around.
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  Speaker 2: Okay. Is there a chance that digging all the stuff
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  Speaker 2: out of the ground in a rush could actually drop
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  Speaker 2: the value of you know, could basically burst the bubble.
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  Speaker 3: Well, it's interesting, actually rare earth prices are actually pretty
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  Speaker 3: low at the moment, and that the West is it were,
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  Speaker 3: would make the argument that China are purposely keeping the
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  Speaker 3: prices low to stop these new projects from getting into production.
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  Speaker 3: So quite what we're hearing is that the sort of
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  Speaker 3: the Trump and other allies are willing to set things
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  Speaker 3: like floor prices above the current prevailing prices out of
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  Speaker 3: China to get these projects into production.
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  Speaker 2: Yeah, how much what have you guys got on the
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  Speaker 2: ground in Australia?
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  Speaker 3: Lots and lots of projects I think, and of course
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  Speaker 3: with the interest in rare earth, they're almost being discovered
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  Speaker 3: by the month quite frankly, so the sort of leaders.
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  Speaker 3: We've got one producer, Linus Corporation, that's been producing for
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  Speaker 3: around a decade or so now. A couple of larger projects,
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  Speaker 3: Arrafhora have just raised I think the number was seven
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  Speaker 3: hundred million dollars in equity on the back of the
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  Speaker 3: extra interest the Luca Resources about a three billion dollar company,
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  Speaker 3: and Linus themselves have again raised around about that seven hundred.
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  Speaker 3: My apologies at Arafura was five hundred new raising. LIONUS
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  Speaker 3: just raised about seven hundred. So the interest in the
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  Speaker 3: market is unlocking new equity into these projects.
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  Speaker 2: What do you reckon's the big strategic reason why Donald
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  Speaker 2: Trump so interested in it?
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  Speaker 3: I would say it pretty much as you said in
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  Speaker 3: your introduction, really from a defense perspective. You need this
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  Speaker 3: for planes, you need it for ships, you need it
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  Speaker 3: for submarines, and all the guidance systems and all of
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  Speaker 3: the things that all of those three types of defense
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  Speaker 3: capabilities actually shoot out of themselves. So it's very much
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  Speaker 3: a defense player.
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  Speaker 2: I would say, is it is it for defense or
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  Speaker 2: is it preparing for war? Do you think.
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  Speaker 3: That one's above my pay grade? I'm afraid. So I've
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  Speaker 3: given that. He's renamed the Department of Defensive Department of War,
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  Speaker 3: and you know, let's hope it's just posturing.
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  Speaker 2: Well, let's hope. So Allan is fascinating to talk to you.
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  Speaker 2: Thank you very much for that, Doctor Allen Trench, mineral
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  Speaker 2: economist and a professor at the University of Western Australia.
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  Speaker 2: I suppose the difference between defense and war sometimes is
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  Speaker 2: just semantics, isn't it.
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