"Whoever Controls Lithium, Copper, Cobalt And Nickel Will Control The 21st Century Economy" Featuring Ernest Scheyder

C.O.B. Tuesday

Today we had the very interesting opportunity to visit with Ernest Scheyder, Senior Correspondent at Thomson Reuters and author of the newly released book entitled "The War Below: Lithium, Copper, and the Global Battle to Power Our Lives." The book was officially published on January 30th and examines the multifaceted world of metals, mining, and processing with insights from investors, miners, landowners, environmentalists, and politicians. Ernie provided a balanced perspective in telling this complex story and has an extensive background covering both shale in its heyday and now critical minerals/mining for Reuters. As you will hear, our whole team thoroughly enjoyed the book and the discussion.
Our session with Ernie spanned the themes and insights in his book including the challenges and controversies surrounding the extraction of critical minerals, the complexity of mining operations, environmental concerns, community opposition, historical events and their implications for present-day mining projects, and the varying perspectives on greenfield versus brownfield mining. We touch on the lack of certainty in long-term projects across different administrations and various departments in the US, projects facing uncertainty with permitting issues, associated issues with outsourcing processing to countries like China, the tough choices the US will have to face regarding resource extraction to ensure national security, the potential for armed conflicts over critical minerals, and developing countries’ desire to develop their own supply chains. Ernie also shares his experiences with environmental groups and conservationists of all types, efforts by the mining industry to establish global standards (for additional reading on "IRMA" – the Initiative for Responsible Mining Assurance, click here), growing consumer interest in responsibly sourced materials, initial feedback Ernie has received on the book, and his overall goal to maintain a neutral viewpoint in the book. We thoroughly enjoyed the conversation!
To start the show, Mike Bradley flagged the recent surge in 10-year bond yields due to hotter-than expected recent job stats, which is making traders question the consensus expectation for interest cuts in March. From an equity markets perspective, broader equity indices continue hitting all-time highs with volatility trading near historic lows. On the commodity front, global crude oil prices declined ~$4/bbl. over the last week, but in general remain directionless due to varying global crosscurrents. On the U.S. natural gas front, natural gas traded briefly below $2.00/MMBtu and investors seem to be in little rush to be stepping into natural gas levered equities today but are sniffing around for a 2025 gas-levered trade. From an energy equity market perspective, he indicated that most oil majors have reported solid Q4 results, with one of the bigger themes coming from Euro majors being a modest pivot away from alternative energy spending and favoring increasing shareholder returns. He wrapped by highlighting the boom/bust for the lithium industry, with lithium prices down ~80% from its Nov. ’22 peak and with many lithium equities over the last year down >70%. Todd Scruggs emphasized the complexity involved in the energy transition by noting a recent announcement from Germany to commission 10 GW of new natural gas-fired power plants with the expectation of converting them to hydrogen fuel in the future (story linked here), Germany’s intention to introduce a capacity market feature to their power market, and the overall projected surge in demand for critical minerals like lithium, cobalt, copper, silver, and rare earths.
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