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The Critical Minerals boom - how to play it? · The Money Puzzle

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Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm
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Speaker 1: James Kirby. Welcome abore everybody. Now you've no doubt seen
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Speaker 1: Donald Trump sitting beside his new friend Anthony Albanesi in
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Speaker 1: recent times. Remarkable prominence given by Trump to this critical
0:26
Speaker 1: minerals deal with Australia at the APEC this week at
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Speaker 1: Albanesi again literally city beside Trump at the top table.
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Speaker 1: This deal is really getting a lot of attention around
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Speaker 1: the world. It's getting a lot of tension in global
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Speaker 1: markets about a sector in our mining industry which it
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Speaker 1: would seem is ripe basically for a boom, and as
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Speaker 1: Australian based investors were uniquely placed to make money basically
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Speaker 1: from this situation. The issue is, I think for our
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Speaker 1: listeners who would have been watching this is how do
1:01
Speaker 1: you play the critical minerals boom? Well, my guest is
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Speaker 1: Josh chaiat first time on the show, but I know
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Speaker 1: Josh quite well because he contributed to the wealth section
1:11
Speaker 1: of the Australian four years and continues to. He's a
1:15
Speaker 1: mining stock writer. He's based in Perth, which is the
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Speaker 1: best place to be if you're a mining stock writer.
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Speaker 1: I reckon, how are you, Josh.
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Speaker 2: I'm very good. It's early and it's cold and it's wet,
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Speaker 2: which is not what you think about when you think
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Speaker 2: about Perth and Wi not at all. I'm very good.
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Speaker 1: Now for our listeners, I think you know, they would
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Speaker 1: be familiar with this. They will perhaps be familiar with
1:39
Speaker 1: previous booms in inside the mining sector, if you like.
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Speaker 1: I mean, obviously there's times where the entire mining sector
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Speaker 1: has a run, and there's times where you have spot
1:48
Speaker 1: situations like the Great Gas boom for instance, a gas
1:52
Speaker 1: boom gas exploration surge of interest in stocks back around
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Speaker 1: the time just after the GFC actually when there was
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Speaker 1: very little less happening. Now on critical minerals, it's something similar,
2:03
Speaker 1: and I want to just bring people in from the
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Speaker 1: very top. They'll know the Gena Reinhart, which is present
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Speaker 1: in the country has just put more money basically into
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Speaker 1: that sector after the Trump deal was announced, which tells us,
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Speaker 1: if nothing else, that there is the opportunity here. This
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Speaker 1: is a long term game. But can you tell us, Josh,
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Speaker 1: first of all, this thing critical minerals, like how many
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Speaker 1: are there? What should we know? What are the main minerals?
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Speaker 2: So The confusing thing is that it really depends on
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Speaker 2: which country you're in what's considered a critical mineral. So
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Speaker 2: there's the United States, the EU, Australia, Japan Career. We
2:42
Speaker 2: all have our own interpretation of what a critical mineral is.
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Speaker 2: In Australia, historically it's been something that's essential to modern technologies,
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Speaker 2: but thinking about electric vehicles, energy, things that are considered
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Speaker 2: future facing, but also the declaration for critical minerals, it's
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Speaker 2: had to have a supply chain that's disrupted or overly
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Speaker 2: potentially disrupted, so overly concentrated in one place, and for
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Speaker 2: the most part that's China, right, So there's a lot
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Speaker 2: of these minerals that are you know, sixty seventy eighty
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Speaker 2: ninety percent, particularly on the refining side controlled by China.
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Speaker 2: In Australia, I think we've had about thirty one critical
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Speaker 2: minerals on the list, and then in America it's a
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Speaker 2: lot more, it's about fifty. But it's also like increasingly
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Speaker 2: it's become a politicized term, so it's we call things
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Speaker 2: critical minerals because we want a direct government funding towards them,
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Speaker 2: and that's got to do with you know, we put
3:43
Speaker 2: nickel in there because the nickel price nose dived a
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Speaker 2: few years ago and the government sort of desperately tried
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Speaker 2: to save nickel production in Australia, particularly in Western Australia.
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Speaker 2: It didn't work out. They were sort of too late
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Speaker 2: to the game.
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Speaker 1: I see. So that's interesting. There's no strict definition, seems
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Speaker 1: to me from the from what I've been covering that
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Speaker 1: like basically nickel, cobots, lithium, rare earth, alumina. Would they
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Speaker 1: be the headline ones after that? Did they get kind
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Speaker 1: of marginal or is there anything I'm missing there? You
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Speaker 1: said nickel obviously for Australia. Is there anything else that
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Speaker 1: maybe people would be familiar with.
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Speaker 2: It's interesting because that political angle, you know, sometimes it
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Speaker 2: goes as far as you know, the Trump administration talking
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Speaker 2: about coal being made a critical mineral, which goes very
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Speaker 2: much to their interests. But the ones that you're hearing
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Speaker 2: about now, you know, rare earth is the biggest of
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Speaker 2: the lot, and I'm sure we'll touch on why that
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Speaker 2: is in a second. And one that's really emerged the
4:39
Speaker 2: last couple of years, and a lot of these are
4:40
Speaker 2: because of export controls that China is put in place,
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Speaker 2: and there's a couple. Antimony is one that the price
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Speaker 2: has gone up, particularly last year the price went up
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Speaker 2: about five times over because of export controls from China,
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Speaker 2: which is the main refiner and producer of the metal,
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Speaker 2: and gallium and germanium which it will probably get on
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Speaker 2: too as well, because they're part of that critical mineral
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Speaker 2: steal between the US and Australia and very important in semiconductors,
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Speaker 2: which is also very important in the AI investment boom
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Speaker 2: that we've seen over in the US.
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Speaker 1: So you're talking about what goes into semiconductors. The semiconductors
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Speaker 1: go into AI. AI is what's driving the entire market,
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Speaker 1: so we can see that they are critical, as you say,
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Speaker 1: a couple of things. Just to clear folks, Okay, there's
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Speaker 1: no clear definition. I mean Australia has a list of
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Speaker 1: thirty one, but it's not the same as the list
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Speaker 1: that the US has. There are all sorts of reasons
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Speaker 1: why something could be defined as critical. Supply chain disruption
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Speaker 1: is crucial, Okay, We'll just take it that there is
5:38
Speaker 1: this group and we can define them as we like.
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Speaker 1: But it's a small group and there are companies that
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Speaker 1: run hot on it. And China is crucial here. What
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Speaker 1: happened Josh with China that suddenly made investors look hard
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Speaker 1: at this area.
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Speaker 2: So what we've seen over the last couple of years
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Speaker 2: is and this is in part been in a response
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Speaker 2: to measures that the US has taken to prevent computer
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Speaker 2: chip technology from getting it out to China because they're
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Speaker 2: really worried about China catching up or getting the ascendency
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Speaker 2: in that race. We saw the drama with Deep Seek
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Speaker 2: earlier this year when they claim that they could use
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Speaker 2: old chips and produce a better product than Open Ai,
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Speaker 2: that sort of thing, and the response from China because
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Speaker 2: they have such strong control of rares and rare so commodities.
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Speaker 2: And again when we talked about rarest, it's not one mineral,
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Speaker 2: it's actually seventeen and they're all different classifications. They're used
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Speaker 2: in different products, but China produces so many of them,
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Speaker 2: and particularly refined so much of them, and they're critical
6:43
Speaker 2: in middle military technologies. They're used in things like drones,
6:47
Speaker 2: things like radar sensors, anything that requires a permanent magnet,
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Speaker 2: basically even down to air conditioners and the machinery that
6:58
Speaker 2: makes your car window go up and down. Automatically.
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Speaker 1: Okay, So one of the things. So we've got a
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Speaker 1: couple of things going here. First of all, there's certain
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Speaker 1: sometimes there's a scarcity of these minders. Sometimes there isn't
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Speaker 1: They could be critical, but they're not certainly not scarce
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Speaker 1: in Australia. The question is their production they're getting into
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Speaker 1: the system. I want to just before we talk, maybe
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Speaker 1: in a few minutes, we'll talk about ways in for
7:22
Speaker 1: the general investor listening to the show. But a couple
7:24
Speaker 1: of things that I wanted to put to you I've
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Speaker 1: been aching to ask you. One is the extraordinary story
7:30
Speaker 1: of lithium. Right, so lithium was the first in this
7:34
Speaker 1: group that got a lot of attention. It went the
7:38
Speaker 1: price of it went up tenfold, and then it fell
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Speaker 1: ninety percent. What I wonder is whether it's a prototype,
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Speaker 1: if you like, for this wider boom. Will we have
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Speaker 1: a big run up and then will we have an
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Speaker 1: enormous crash? Because Trump, if you recall, even at that meeting, said,
8:00
Speaker 1: and he's obviously talking to China trying to basically play
8:03
Speaker 1: up what was going on, but he said, pretty soon
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Speaker 1: all this, all these will be worth two dollars. In
8:08
Speaker 1: other words, the ultimate outcome of the deal and the
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Speaker 1: injection of capital by both Australian and government and US
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Speaker 1: governments into this space is to actually bring down the price. Right,
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Speaker 1: So everyone's rushing in because they think the price is
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Speaker 1: going up. So is that lithium roller coaster, if you like?
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Speaker 1: Is that likely to happen with this next wave of
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Speaker 1: the critical minerals film?
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Speaker 2: I think it's a little bit different. And in fact,
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Speaker 2: rares if you look at rares that they actually followed
8:43
Speaker 2: a very similar trajectory to lithium and for very similar reasons.
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Speaker 2: And this is kind of what the American government and
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Speaker 2: the people that are advising them are trying to counteract.
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Speaker 2: So lithium and rare as both became really scarce. I'd
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Speaker 2: probably not say really scarce. The demand shut up hugely
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Speaker 2: because of selectric vehicle boom led by China. So rarest
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Speaker 2: particularly NDPR neodymium praiser dimium, which is the main werss
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Speaker 2: price that you might see quoted. They were massively in
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Speaker 2: demand from electric vehicles, wind turbine so feb magnets, which
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Speaker 2: is the product made with neodymium praiseodmium. They're permanent magnets
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Speaker 2: that are used in ev motors and wind turbines, So
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Speaker 2: it was a massive new source of demand outside of
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Speaker 2: your kind of consumer products which use permanent magnets, which
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Speaker 2: emerged a few years ago. So rares prices actually hit
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Speaker 2: all time highs or nDPI prices hit all time highs
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Speaker 2: around the same time that lithium got to eighty thousand
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Speaker 2: dollars a ton spot for chemicals, it's now down to
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Speaker 2: around ten thousand. Neodymium Praiseodemium went to one seventy five
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Speaker 2: dollars a kilo US, which is even more than it
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Speaker 2: was in the japan led boom in twenty eleven. Twenty
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Speaker 2: twelve it came down to around fifty dollars US a kilo.
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Speaker 2: So basically the concern is were China overproducing to the
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Speaker 2: point that it was removing the incentive, intentionally removing the
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Speaker 2: incentive for operations in other countries to emerge, which would
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Speaker 2: then challenge their dominance of the supply chain. So what
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Speaker 2: you've seen with NDPR and this is when stocks, when
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Speaker 2: the railroad stocks really started to move, was the Pentagon
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Speaker 2: in June July did a deal with a company called
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Speaker 2: MP Materials, so they own mine in America called Mountain Pass,
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Speaker 2: which at the moment loses money. And Mountain Pass is
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Speaker 2: one of only two of large rareth operations outside of
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Speaker 2: Chinese influence, and the other is Linus which has the
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Speaker 2: Mountwelp mine near Laverton in Western Australia.
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Speaker 1: And Linus courses ESX listed.
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Speaker 2: Yeah, and Linus is ACEX listed, and funnily enough, there
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Speaker 2: were talks at one point between MP and Linus about
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Speaker 2: joining forces and Gina Royn Hutt has large steaks in
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Speaker 2: both companies, so she's potentially a big player in this
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Speaker 2: new mineral sperms.
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Speaker 1: So we will warn everyone basically there is speculation in
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Speaker 1: this area and the prices can really run up and
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Speaker 1: really run down, and they've rought up of late again
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Speaker 1: because of this of fear. Basically, the China in choking
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Speaker 1: off the supply in this area created scarcity. The US
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Speaker 1: and Australia have moved to fix that. But meanwhile, of
11:33
Speaker 1: course there is a lot of action on the share
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Speaker 1: market around that, and we'll see that. Like you know,
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Speaker 1: even after that deal, you mentioned just how volatile this
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Speaker 1: area is. Mountain, the Mountain Minerals, the US rare earth
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Speaker 1: stock that felt by twenty four percent the day after
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Speaker 1: Trump said that thing about the rarelroads will be worth
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Speaker 1: about two dollars from now. So did Linus, I mean
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Speaker 1: Linus felt fairly sharply too. So did all the other
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Speaker 1: So be warned first of all, folks that this is
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Speaker 1: a very volatile speculative area. However, the long game is
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Speaker 1: that these are the future facing metals and minerals. They
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Speaker 1: go into your iPhone, they go into semiconductors, they go
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Speaker 1: into AI, they go into electric cars, they go into
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Speaker 1: wind turbines. These are this is the industry of the future.
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Speaker 1: So it is a fascinating area. The question is how
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Speaker 1: on earth do you get started? Okay, so Gina Reinhardt
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Speaker 1: went in it's arafura. Is that right? Maybe we'll talk
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Speaker 1: about that in a moment. Andrew Forrest is in there
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Speaker 1: in big time. But these people really know mining. How
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Speaker 1: does the ordinary investor get involved? We'll be back in
12:39
Speaker 1: a moment. Hello and welcome back to The Australian's Money
12:49
Speaker 1: Puzzle podcast. I'm James Kirby and I'm talking to Josh Chaiat,
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Speaker 1: who is the stockhead mining correspondent based in Perth and
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Speaker 1: someone who's really across the whole critical minerals area, as
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Speaker 1: you would have gathered quite clearly from the first segment
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Speaker 1: of the show. Now, what we're all waiting for, Josh,
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Speaker 1: is how do we How does the every day investor
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Speaker 1: get in here and get started? Can I just take
13:14
Speaker 1: you through a few ideas. First of all, what about
13:16
Speaker 1: the big names like the BHP and Real they're conglomerates, right,
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Speaker 1: and I presume they have some of this, but I
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Speaker 1: presume they're not Rare Earth's plays really because they really
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Speaker 1: are in our companies. Is that a fair coal or
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Speaker 1: am I off target? Yeah?
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Speaker 2: I mean the sense with BHP and REO is they're
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Speaker 2: not really interested in this end of the market. It's
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Speaker 2: too speculative in the market's too small for them at
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Speaker 2: the moment. Rio Tinto went into lithium, but it looks
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Speaker 2: like under their new lead, as Simon Trot, they're really
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Speaker 2: stripping back to only the best lithium operations. Is that
13:50
Speaker 2: they bought the iron ore and then the copper, and
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Speaker 2: really you get into b HP and Rio Tinto, you're
13:55
Speaker 2: going in for two themes, which is iron ore and copper,
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Speaker 2: and copper is sort of the big growth angle that
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Speaker 2: BHP and rio tinto are really pushing at the moment,
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Speaker 2: which is similar themes to lithium and similar themes to
14:08
Speaker 2: lithium and rarest but very much a commodity that while
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Speaker 2: there is a bit of concentration in South America of production,
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Speaker 2: it's really not got the risk. It's produced too many
14:18
Speaker 2: places to be disrupted in the same way.
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Speaker 1: Okay, okay, that's very interesting, and it's also very interesting
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Speaker 1: I think folks that how Josh explained that it's not
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Speaker 1: that they're it's not that they're rare, it's that they're critical.
14:32
Speaker 1: And by that I mean it's got as much to
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Speaker 1: do with politics and supply chains as it has to
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Speaker 1: do with the amount of them in the earth, because
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Speaker 1: as any money person will tell you, some of these
14:40
Speaker 1: are not particularly rare at all. I mean, lithium, for instance,
14:43
Speaker 1: is widely available across Australia. The question is it's the
14:47
Speaker 1: dynamics of the market. Okay, I want to talk about
14:50
Speaker 1: a couple of Let's just talk about a couple of stocks.
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Speaker 1: If you can Arafura rare earth catches my eye. Are
14:56
Speaker 1: a fura rare earth. The reason that catches my eye
14:59
Speaker 1: is because Gina Reinhardt has gone into a four hundred
15:03
Speaker 1: and seventy five million fundraising in this company, which is
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Speaker 1: a specific rare earth's producer, But she did it a
15:13
Speaker 1: week after the deal that was announced, So that tells
15:17
Speaker 1: me that she certainly doesn't think it's overpriced, though it
15:20
Speaker 1: may well be. Tell us about that company, Josh, can
15:23
Speaker 1: you tell us anything about it?
15:26
Speaker 2: Saraha is interesting because they've been around for such a
15:29
Speaker 2: long time. They've had this project for a couple of
15:31
Speaker 2: decades called the Olans rare Earth Project. So they're not
15:34
Speaker 2: a producer yet. There is still a development stage company,
15:37
Speaker 2: but they have enormous amounts of government backing. And something
15:41
Speaker 2: that was really crucial. I didn't mention it before that
15:43
Speaker 2: that Pentagon deal between the US Department of Defense or
15:47
Speaker 2: Department of War if you want to use A Trump's
15:49
Speaker 2: new terminology for it. The deal included a price floor
15:54
Speaker 2: for nDPI that was purchased by the military for just
15:59
Speaker 2: just remind us again what is it and DPR neodmium praiseodmium.
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Speaker 1: Oxide and why is it so important?
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Speaker 2: So it's the key light rare earth product that goes
16:08
Speaker 2: into permanent magnets and that's used in things like evmotors,
16:12
Speaker 2: wind turns at consumer products, military applications. So they were
16:17
Speaker 2: going to pay one hundred and ten US dollars a kilo,
16:20
Speaker 2: which is around double what the price was in China
16:24
Speaker 2: at the time that deal was made. And the theory
16:27
Speaker 2: that big investors have is that these minerals are so
16:29
Speaker 2: strategic that for at least a few of the companies,
16:34
Speaker 2: governments are effectively going to underwrite their cash flows so
16:37
Speaker 2: that they're not losing money and closing operations.
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Speaker 1: Bye. So there's a price floor for them. So they
16:43
Speaker 1: give you that security as a as an investor. Okay,
16:47
Speaker 1: that's how did you pronounce it?
16:48
Speaker 2: Again, I'm not sure the exact pronunciation of their aru
16:53
Speaker 2: on the ASX so.
16:55
Speaker 1: Another one that as we make our way sort of
16:57
Speaker 1: through this before, we don't want to get down to
16:59
Speaker 1: two speculative. But there are groups like South thirty two,
17:05
Speaker 1: which is something of a sort of mini conglomerate. It
17:07
Speaker 1: was a spinoff of Corres once upon a time from PHP.
17:10
Speaker 1: There's a Luca well known rare earths and critical minerals minor,
17:16
Speaker 1: and there's Linus so Linus a LUCA and South thirty
17:20
Speaker 1: two just as an entree if you like into this area,
17:24
Speaker 1: how do they shape up?
17:27
Speaker 2: So South thirty two you're looking at really copper and
17:32
Speaker 2: zinc as a sort of future growth legs, which again
17:36
Speaker 2: future facing commodies, but not quite the same as what Rafa,
17:40
Speaker 2: Aluca and Linas are doing. Iloka have had some struggles
17:44
Speaker 2: of late with their mineral sands business. They've closed a
17:46
Speaker 2: couple of operations down or idled a couple of operations WA.
17:50
Speaker 2: But they've got a big government loan to build this refinery.
17:53
Speaker 2: It's going to be the first rarest refinery that'll produce
17:56
Speaker 2: rare earth oxides in Australia at any Abba, which is
17:59
Speaker 2: near Ryalton in WA. And they're really hoping that the
18:04
Speaker 2: rares is kind of going to diversify their business. But
18:08
Speaker 2: potentially they are beneficiary if the Australian government does things
18:12
Speaker 2: like puts in a price floor for materials for their
18:15
Speaker 2: strategic reserve of these metals, which is something the alb
18:18
Speaker 2: and Easy government has announced, and i Luka in particular
18:22
Speaker 2: probably likely to be a focus for that because the
18:26
Speaker 2: government's putting in a big loan already, they're putting close
18:29
Speaker 2: to two billion dollars of money into a loan for that,
18:31
Speaker 2: so they're incentivized to make sure that thing actually gets
18:34
Speaker 2: off the ground.
18:35
Speaker 1: They're being directly sponsored basically by the government.
18:38
Speaker 2: Yes, yeah, and Arafa is in that position as well,
18:41
Speaker 2: although they're at a much earlier stage than I Luca,
18:44
Speaker 2: so more water to go under the bridge there.
18:46
Speaker 1: Yeah. Yeah, so Luca is closer. Luca for it is
18:50
Speaker 1: it explorer as such, pre production and more speculative.
18:55
Speaker 2: And I looka has the cash flows from mineral sands
18:58
Speaker 2: as well.
18:58
Speaker 1: Has some production. Okay, so the other one then there's
19:00
Speaker 1: Linus tell Us about Linus seems like a great story.
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Speaker 2: So yeah, Linus is the biggest rarest producer outside of China.
19:09
Speaker 2: So really the kind of obvious way to if you're
19:12
Speaker 2: just making a market play, then most investor will tell
19:16
Speaker 2: you they're sort of the obvious stock to be involved in.
19:19
Speaker 2: The concern that a couple of analysts have is that
19:22
Speaker 2: people are so exuberant about rare earths now since the
19:24
Speaker 2: critical minerals discussion started happening earlier this year, that they're
19:29
Speaker 2: pricing in a commodity price in the stock price that's
19:33
Speaker 2: way above what it currently is what they're currently receiving,
19:37
Speaker 2: but a lot of strategic optionality, a lot of growth
19:40
Speaker 2: potential within their operations, if not necessarily in the market
19:46
Speaker 2: cap at the moment, you know, people might be waiting
19:48
Speaker 2: for a pullback a bit in Linus, and we've seen
19:50
Speaker 2: a little bit of that because they I don't think
19:52
Speaker 2: they got direct support in that US Australian Critical Minerals deal.
19:56
Speaker 2: But they're the obvious company that They've got a large mind,
20:00
Speaker 2: one of the best deposits in the world in Wa,
20:03
Speaker 2: and they've got refining operations which most companies don't have.
20:07
Speaker 2: So they've got a refiner in Malaysia, they're looking at
20:09
Speaker 2: setting up some stuff in America. They've got a midstream
20:13
Speaker 2: plant in Wa. They were really born of Japan's desire
20:18
Speaker 2: to get away from solely Chinese supplies. Of the Japanese
20:22
Speaker 2: government was a big backer of them, and still a
20:24
Speaker 2: big backer.
20:25
Speaker 1: It goes way back, that's sort of.
20:28
Speaker 2: It goes back to twenty eleven, twenty twelve.
20:30
Speaker 1: Yeah, okay, very good. It's interesting that you as you see,
20:36
Speaker 1: the issue is not the companies are fine, it's the
20:39
Speaker 1: stuff price. It's like it's like AI itself, you know.
20:42
Speaker 1: Next TOC seems to be a pretty good company. The
20:45
Speaker 1: issue is the price and there and of course they're
20:47
Speaker 1: capital demands as well, so they need close consideration. Folks.
20:53
Speaker 1: You're not probably in the business of funds, specialist funds
20:58
Speaker 1: or ETFs, but I expect a lot of our listeners
21:02
Speaker 1: would say too hard, I want in my way in
21:07
Speaker 1: might be an ETF or a specialist fund. Folks, I'm
21:11
Speaker 1: not going to name ETFs. There are quite obvious what
21:13
Speaker 1: they are. All you have to do is google them.
21:15
Speaker 1: There they are. There are ETFs that specialize in critical minerals.
21:20
Speaker 1: There are ETFs that specialize in the future of electric cars,
21:23
Speaker 1: for instance, which is a proxy for the same thing,
21:26
Speaker 1: so you can go in that way. Are there any funds, Josh,
21:32
Speaker 1: that are specialists in this area that are listed that
21:35
Speaker 1: the retail investor could access.
21:39
Speaker 2: I'm not so certain about funds specifically. I know there's
21:42
Speaker 2: a couple of sort of large institutional investors who've gone
21:46
Speaker 2: pretty big into this area, and I'm not sure if
21:48
Speaker 2: it will result instead of a retail product at some point.
21:51
Speaker 2: The one that's been really aggressive is a Tribeca, So
21:54
Speaker 2: they've actually taken a bunch of steaks, maybe two million,
21:57
Speaker 2: three million dollars stakes to back a lot of very
22:00
Speaker 2: small companies. We're talking very early stage, very speculative countries,
22:03
Speaker 2: particularly sorry companies, particularly ones that are focused in that
22:07
Speaker 2: American market, trying to get the tailwinds of the goodwill
22:11
Speaker 2: from the Trump administration and the executive orders they've put
22:14
Speaker 2: in place to increase critical minerals mining. So you're asking
22:18
Speaker 2: a few big name investors who are trying to seems
22:22
Speaker 2: like they're trying to sort of agglomerate stakes in very
22:27
Speaker 2: small companies. Now, whether that becomes a retail offering at
22:30
Speaker 2: some point, I'm not sure, but it isn't to watch.
22:33
Speaker 1: They're laying out there a bits across the area. And
22:36
Speaker 1: one thing I should have said, folks at the store,
22:37
Speaker 1: when we see certain companies are ASX listed, they may
22:40
Speaker 1: be ASX listed, but the mines or some of their
22:43
Speaker 1: minds could be in the US of course, which adds
22:45
Speaker 1: to their attractions. Okay, I think this is fascinating. I
22:50
Speaker 1: think it is an area where our listeners, should they
22:55
Speaker 1: be interested in the more speculative end of the market
22:59
Speaker 1: or taking a and seeing it through, you could be
23:02
Speaker 1: well rewarded by a deeper dive into this. And it's
23:05
Speaker 1: been really good to have a deep dive with Josh
23:07
Speaker 1: this morning. All right, we've tied it for some questions
23:11
Speaker 1: in this area. I'll be back in a moment. Hello,
23:22
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. I'm James Kirkby.
23:25
Speaker 1: Welcome aboard again, folks, and I'm talking to Josh Chiat
23:29
Speaker 1: on critical Minerals, a story that ranges from the White
23:33
Speaker 1: House to Canberra to the tiniest specky miners you've ever
23:38
Speaker 1: heard of in your life. A great story, great theme.
23:41
Speaker 1: Can you make money from it? Where people will make
23:43
Speaker 1: money from it? A lot of it will be timing,
23:45
Speaker 1: I expect, because if they have these speculative cycles, if
23:48
Speaker 1: you're on the wrong side of them, obviously, that's the
23:50
Speaker 1: hard part with this. A couple of questions. There's one
23:53
Speaker 1: from Frank, very simple question that says, if uranium star,
23:57
Speaker 1: if uranium stocks are being short at how come the
24:00
Speaker 1: places going up uranium? Josh, completely different story as such,
24:05
Speaker 1: just the commodity that goes into nuclear power out of
24:08
Speaker 1: fashion for a long time, Lots of false starts about
24:11
Speaker 1: whether it's going to have a good run up, a
24:13
Speaker 1: fat bit of shortening at the moment, but then all
24:15
Speaker 1: of a sudden this week, Trump there it is again
24:17
Speaker 1: announcing a big nuclear power plant construction program in the US.
24:24
Speaker 1: What's going on with uranium in just for Lehman's terms,
24:26
Speaker 1: where are we on with that?
24:27
Speaker 2: So, just on the I guess it's pretty I would
24:30
Speaker 2: say confusing questions, A complicated question because shortening of the
24:34
Speaker 2: stocks is not necessarily investors going we're not happy about
24:39
Speaker 2: the uranium prize that we don't.
24:40
Speaker 1: Okay, you say that, Can you explain why you say that?
24:45
Speaker 2: So I think there's a bit of a bit of
24:49
Speaker 2: concern maybe around specific operations, like it's very hard to
24:53
Speaker 2: get a mining operation running at the you know, at
24:57
Speaker 2: the promised rate.
24:59
Speaker 1: You it's problems with certain companies rather than their commodity uranium.
25:05
Speaker 2: Yeah, well, we've had some pretty high profile production issues
25:09
Speaker 2: or super resource issues or resource revisions at Paladin and Boss,
25:15
Speaker 2: which are the two biggest uranium produced standalone uranium producers
25:20
Speaker 2: in the Australian market. Of BHP's technically the biggest producer,
25:24
Speaker 2: but that's a byproduct. They don't really worry about it
25:28
Speaker 2: too much. So yeah, that can be about that specifically,
25:32
Speaker 2: in terms of the uranium price, we've kind of seen prices,
25:37
Speaker 2: they're a long way up from their lows. They got
25:39
Speaker 2: really low after Fukushima because Japan shut off its entire
25:43
Speaker 2: reactive fleet and there was a lot of concern about
25:46
Speaker 2: nuclear energy. People are obviously a lot more comfortable with
25:49
Speaker 2: the long term future for nuclear now. Sur prices are
25:51
Speaker 2: way above what they were then, but they're not quite
25:54
Speaker 2: at the level yet to incentivize new uranium operations to
25:59
Speaker 2: be build. And the question is how long does that
26:03
Speaker 2: last for and when does that shortage really emerge, because
26:07
Speaker 2: there probably will be a time when utility is that is,
26:10
Speaker 2: power plants that need uranium, nuclear power plants, there will
26:13
Speaker 2: be a time when they need to come into the
26:14
Speaker 2: market and purchase in larger volumes because they generally purchase
26:18
Speaker 2: like years and years in advance, so.
26:20
Speaker 1: They have to be spot so much time. Yeah, yeah, okay,
26:24
Speaker 1: we're really good.
26:24
Speaker 2: The spot market is very small.
26:26
Speaker 1: That's right, So I understand. So there you are, folks,
26:30
Speaker 1: two minutes on uranium. There. One of the great ironies,
26:33
Speaker 1: of course of it older is in Australia is a
26:34
Speaker 1: major uranium producer that has been nuclear power, happy to
26:39
Speaker 1: send it off around the world, but not herero.
26:41
Speaker 2: Down uranium mining in certain states as well.
26:44
Speaker 1: In certain states as well. That's right. You can do
26:46
Speaker 1: it somewhere you can't do with other places. Debate for
26:49
Speaker 1: another day. Okay, now final question. We'll see what we
26:52
Speaker 1: can do about this. It's not so much about ve
26:54
Speaker 1: Stark as the situation that our listener Vatsal binds them.
27:00
Speaker 1: I was in Vatzell, says the atsa L. I have
27:03
Speaker 1: a question on salt Lake potash. This question has been
27:06
Speaker 1: here for a while. I have to admit, it's just
27:08
Speaker 1: I haven't had someone on the show who could even
27:09
Speaker 1: have a go with answering it. A company delisted from
27:12
Speaker 1: the AX several years ago and went into administration. I
27:16
Speaker 1: want to write the shares off and the tax returners.
27:18
Speaker 1: The shares are worthless in my opinion. And then, don't
27:22
Speaker 1: you know, he said or she has had all sorts
27:25
Speaker 1: of problems trying to contact APMG, trying to figure out
27:29
Speaker 1: from the AX in link etc. It's stuck in this limbo.
27:34
Speaker 1: This does happen. I don't want to talk so much
27:35
Speaker 1: about it, but small mining stocks, more often than not
27:41
Speaker 1: being the dominant small cap type of stock in Australia,
27:44
Speaker 1: when everything goes wrong and the company's in bits basically,
27:47
Speaker 1: and it's gone, but it's not gone from the A SX.
27:49
Speaker 1: So you're stuck with this stock that has a value
27:52
Speaker 1: of no point four cents or something, though it's effectively zero.
27:55
Speaker 1: Do you know what people can do in those situations?
27:58
Speaker 1: Have you any idea?
28:01
Speaker 3: Cry? It's a tough one. I mean, I've had friends
28:06
Speaker 3: who have been in companies have gotten delisted and try
28:09
Speaker 3: to set up they try to set up like off
28:14
Speaker 3: bourse like share sale platforms, and generally, you know, you
28:18
Speaker 3: wind up with no or very little liquidity.
28:22
Speaker 2: So yeah, it is effectively worthless. I think the issue
28:25
Speaker 2: with this specific company they were trying something very new,
28:28
Speaker 2: and I don't think retail investors. They got money, a
28:33
Speaker 2: lot of money from retail investor. I don't think retail
28:35
Speaker 2: investors really understood that the degree of risk involved in
28:40
Speaker 2: this particular company. So it is always if you're going
28:43
Speaker 2: into something in a company that's trying a very new
28:46
Speaker 2: technique out, it's worth just being mindful of that. I
28:51
Speaker 2: was looking at the ass when you sent this question,
28:52
Speaker 2: so I was looking at the asset guidance, and there
28:56
Speaker 2: can be a declaration mate that shareholders are unlikely to
28:59
Speaker 2: get anything out of a administration process, which then can
29:03
Speaker 2: be the trigger for that for saying that your shares,
29:06
Speaker 2: we're getting.
29:07
Speaker 1: Your tax right off. But who makes the declaration.
29:09
Speaker 2: From what I read, and this is probably one for
29:12
Speaker 2: an accountant more specifically, which is not me. That's not
29:15
Speaker 2: what I do, but it is supposed to be I
29:18
Speaker 2: think either the administrator or the liquid ata. Just looking
29:21
Speaker 2: at the asset guidance. This confusing one because there was
29:24
Speaker 2: a deed of company arrangement, which means basically a company
29:28
Speaker 2: came in and took the asset out of the company
29:31
Speaker 2: as part of the administration process. But potentially you've still
29:36
Speaker 2: got a shell that survived, which has you know, the
29:38
Speaker 2: worthless shares.
29:39
Speaker 1: And it's interesting because when you buy mining, you think, oh, well,
29:41
Speaker 1: you know alike software, so you say, oh, at a
29:44
Speaker 1: very least as a mine, at very least as you
29:46
Speaker 1: know there's a rigs there, et cetera. But you know,
29:48
Speaker 1: in fact, if you buy tiny miners, it's highly speculative
29:52
Speaker 1: and you can lose everything, and that includes tiny miners
29:56
Speaker 1: in the rare earth and critical mineral space, which I
29:59
Speaker 1: think might be a good to keep all that in
30:01
Speaker 1: mind and wrap up with Josh. Hey Josh, first time
30:04
Speaker 1: on the show. Terrific to have you really good, love
30:06
Speaker 1: to have you on again. Thanks for coming on.
30:08
Speaker 2: Jeers, thank you very much. I really appreciate it.
30:10
Speaker 1: I was Josh chaiat there. Who is the mining a
30:12
Speaker 1: mining correspondent birth Perth based mining correspondent with the stock
30:18
Speaker 1: publication Stockhead. Okay, talk to you soon. Send in the
30:22
Speaker 1: emails the money puzzle at the Australian dot com dot au.
30:26
Speaker 1: I do have a batch of further questions on super
30:30
Speaker 1: and clarification which we will get to and we will
30:34
Speaker 1: get to it with Jackie who will be on the
30:37
Speaker 1: show next Thursday. Jackie Clark, Okay, talk to you soon.
31:00
Speaker 1: S