gold news

 [Music] investing News Network and here with me today is Chris Berry of House Mountain Partners Chris thank you so much for joining me today Priscilla it's great to be back with you so we're here at the 15th fast markets conference in Las Vegas I wanted to ask you about the first time you attended this conference what was your highlight back then and how has that changed today have certain conversations around lithium supply demand and prices remain the same you know I the first one of these I attended

um I think the very first one was in Chile I did not go to that one I think the first one might have been in Toronto and I just remember being in you know the basement of of the Sheraton in kind of it wasn't a conference room it was a ballroom but you know maybe there were 150 people there and I just remember being excited that there were other people that I felt like they were like me they were Believers in technology and Believers in this sort of commodity thesis and you know here we are today

year 15 to your point um and there are like 1100 people here and again so I'm still very encouraged because there are a lot more people I guess like me that that believe in the thesis and and I think have come to grips or have started to come to grips with a lot of the challenges around building out a not even just a domestic supply chain but a more regionalized supply chain structure which is going to take a lot of capital A lot of intellectual Firepower and a lot of time and that's one of the reasons why I

think 1100 people are here today it's because we have this awareness of the challenges um that we're facing and so but again that's not a bad thing I think it's actually a good thing that so many people are here and aware of it and you're starting to see what I would call larger pools of capital or money with a long fuse come into the space because that's what we really need to build up the supply chain the last time we spoke was at the end of last year and back then you were

mentioning how prices might stagnate are the current levels we're seeing more sustainable for this industry and for EVS to become more affordable with volatility remain when it comes to leaking price well I'll answer your last question first one of my core views I think for the remainder of this decade is that price volatility is here to stay I think and this goes beyond lithium I mean I think you could make the case we saw what happened over the last year with nickel on the lme Cobalt has sort

of done sort of a roller coaster and is actually now down pretty substantially from its peak so I think volatility price raw material price volatility is a core belief I guess for lack of a better phrase that I have going out through 2030 so that has implications obviously depending upon where you are on the supply chain is a minor or a cathode manufacturer or an oem sometimes it could be good and sometimes it could be bad and I'll let the listener think through who's going to win and who's going to

lose but nevertheless um yeah so I think volatility is one of the main issues and again I you know feel like a broken record but security of Supply is obviously that's again one of the reasons why 1100 people are here and it goes beyond lithium um but I'm sorry the the for the first question uh you had was yeah regarding uh the the current leaking prices uh do you think you know are there more sustainable for the industry and to make the EVS more affordable I guess well it's you know yet yes and no is it

sustainable I mean I think the market will ultimately dictate what is sustainable I mean obviously eighty thousand dollar lithium and even though it was the spot Market was in China I mean it was sort of a ridiculous number to be honest with you got everybody excited it got all the headlines but I'm not going to say it wasn't real it is a real price but it is really focused on a small part of the overall Market the contract price is really what you want to focus on um will we see 80 000 lithium again

honestly we probably will over the course of this decade and it could go could go higher than that I'm not predicting it a lot of that depends on the supply response that we see in the next few years so um you know again volatility is the name of the game I think going forward uh I do not think you know I do think we're very limited on the downside okay the days of six thousand dollar or ten thousand dollar lithium our ancient history um you know where we land I guess if we do land sort of a thinking about a

long-term average it's probably somewhere between you know 25 to 30 000 US dollars per ton that would be on a contract basis again a little bit later this decade and that again is dependent upon the success of the supply response so lower than where we are today but still very very profitable for both hard rock and brine players that can get into production right and you mentioned security of supplies so I want to touch on uh the inflation reduction act we're reaching almost the one year anniversary of this

legislation how have you seen it impact the lithium industry and what do you think is yet to achieve for the US when it comes to building its domestic supply chain well you know the the dust has yet to settle on the inflation reduction act in the sense that the department of the U.S department of the treasury and the in the IRS are trying to figure out okay how do we advise taxpayers in the United States corporate taxpayers how to account for these very generous uh benefits and so I guess I'll just make

kind of a sweeping statement and it is that the IRA is an incredibly economically um beneficial piece of legislation to build battery infrastructure whether or not it's recycling or cathode or anode or cell Manufacturing uh here in the United States I did a study on One battery producer a Japanese battery producer for them to build a 30 gigawatt hour Factory here in the United States again making assumptions about gigawatt hours of production then of course their battery size you assume a 75 kilowatt

hour battery size they'll generate about a billion US dollars a year in tax credits and that's one Factory at 30 gigawatt hours of production and then you sort of say okay well what else is in the pipeline right and you're looking at hundreds of gigawatt hours if not at least a terawatt hour of capacity so hugely beneficial for the downstream portion of the supply chain here but again if there's a problem or a limitation of the IRA and again many listeners I think are aware of this is

that it does not really address the permitting issues here in the United States it doesn't smooth them over or it doesn't necessarily accelerate them so you know there is a mismatch here in the supply chain in the United States and it's that you can take three or four year years say and build a cathode facility or recycling facility right you can get the permits you can raise the capital but if you're relying on Friend or Foe for your raw materials you know that that doesn't really solve

the problem with respect to supply chain resilience and supply chain self-sufficiency so I'm glad that the inflation reduction Act and the bipartisan infrastructure law and the chips act are here and in in enforce you know about eight months ago about 40 billion US Dollars had been committed to what I would call Green infrastructure or green technology in the wake of the IRA which was passed about eight months ago and now that number has gone from 40 billion to over 200 billion and again somewhere that's semiconductors some of

it's wind you know it's not all battery infrastructure but a lot of it is and so I'm just happy to see the the policy kind of signal from the Biden Administration in particular but we have to focus on the Upstream to make sure this all really works in the long run actually yesterday some producers also mentioned how they're optimistic about this type of legislation not only in the U.S but also in Europe with the critical minerals Act do you think um that is also true for junior miners anywhere in the world

should everyone in the supply chain be as optimistic well I you know if you are a if you have a project in a country that has a free trade agreement with the United States I think there's reason for optimism although um every every situation is different Chile has a free trade agreement with the United States but of course Chile has gone through this um I guess spasm if you will of what I would call semi-nationalism or a threat of semi-nationalism and you know I'm not going to comment on what that's going to

look like but just the the appearance of some sort of nationalization of strategic assets scares Capital away so you know where does it go does it go to Argentina does it go to Australia so you know the short answer to your question is it's sort of a mixed bag I think the inflation reduction act in terms of who it benefits and how on the mining side but again I'd rather have it in place than not have it in place all right and you know it has been established so many times that we need more supply of raw materials and we

can't do that without mining what do you think the mining industry can do better to attract the Investments it needs deliver projects on time and on budget and again I'm not sort of throwing stones and glass houses here I know it's difficult um regardless of the jurisdiction regardless of the medal regardless of of all these different factors I just think that you know the mining business has to um has to deliver on time and on budget and I think one of the ways that you might be able to do that is through

leveraging technology I mean we've had these interviews in the past and I've talked about my belief in technology as a Force for good especially on the mining side and so you know I know Technologies like direct lithium extraction attract a lot of um passionate opinions on both sides I I happen to think that dle is necessary you know what It ultimately looks like and in other words if there's going to be tens of thousands of tons of you know dle produced lithium I don't necessarily

think so in other words just plain dle projects but you could would see and I think you will see daily utilize for existing brand projects in the future here and so that's that's a positive thing and um of course the other technology that I've been pretty bullish on for a number of years now is recycling um again this is an ecosystem that doesn't really exist here in North America I mean there's a little bit of there's collection there's a little bit of black mass production but that full

kind of closed loop supply chain where I'm taking in the batteries producing the black mass and then putting that black mask through a hydro metallurgical process to Leach out the valuable metals does not exist today the good news is I feel like we're sort of on the cusp of of seeing it happen but we're a couple of years away so yeah so I think technology is the key all right and let's just talk a little bit more about technology and specifically uh direct lithium extraction for investors that

are listening today what do you think are some of the key aspects to take into account about this technology and how realistic are the time frames for this technology to be commercially viable you know dle is used today commercially live event uses it I mean this is no secret livent uses it down in Argentina and Chinese groups use it in The Brines in western China because but in at least in the case of western China it's a very problematic brine um the keys are you know direct lithium extraction is not a single technology

it's not a single process your dle process is going to be geared and engineered based on the complexity of your brine source and it could be traditional Brian that maybe has a lot of impurities it could be a a boron waste stream that has lithium in it it could be you know old oil and gas Wells and so one of the challenges I think in terms of picking winners for lack of a better phrase on the dle side is you know how scalable is your technology because again I would argue the dle technology that you would use for oil

wells is going to be somewhat different from you know Boron or geothermal or something like that so really understanding the technology and making sure it's tailored is important and then again you know it's just basic like has this management team ever done this before and what is their capability with respect very complicated chemical processing so and you know there's some experience out there but we need a lot more of it and so that's the key all right and um you know with the

demand volumes expected we know OEM should be locking volume and ideally price as well but how is sustainability playing a role we heard producers say ESG is being built into contract these days will that become the norm how do you see that evolving well you know yes ESG is something that everyone's talking about right now I think that you know the oems in particular are particularly they're focused on that they and they should be but they're focused on just getting volume I mean look at lithium

Americas and General Motors I mean that's General Motors is putting 600 plus million dollars in a bazooka and Blasting it at this project to try and help it get you know fully funded and operational and that's great and that's a very interesting project and you know we should know within a couple of years how how ultimately successful it's going to be I actually think it's going to be successful but you know that's one example and then you've got another example of where a company like Ford

comes out a few weeks ago in their investor day and they say oh by the way we struck five distinct optic agreements some of which are with established producers like the albemarles and the sqms of the world and others are you know earlier stage players like energy source on the dle side so you know the the oems are embracing uh this risk and it's because they don't have a choice they realize look we probably should have made these Investments five or six years ago we didn't do it and so now

they're trying to play catch up and and help these mining companies kind of accelerate and bring the material to to Market all right my final question for you today any final thoughts you can share with our investor audience when it comes to investing in lithium in the current environment how can they cut through the noise in the season it's incredibly difficult um simply because if we're sitting here today and the lithium spot price is let's say 41 42 000 a ton and contract prices are generally higher

when you think about those numbers and then you look at the entire lithium cost curve literally every single project not not just in production but you know in production over the next say 10 years every single project is economic okay so you know what you have to do is you have to weigh the distinct risks the the non-economic risks for specific projects so jurisdictional risk you know do you want to be somewhere in Africa do you want to be in Chile do you want to be in Indonesia on the nickel side I mean it's

a personal preference right you want to handicap that though and then again you know which management teams have and I've always said this but like which management teams have the financial markets Acumen and and experience and have the technical chops to build lithium projects whether or not it's hard rock in Western Australia or conversion capacity or you know clay-based assets here in the US or traditional brine I mean I think one of the potential limitations to Bringing more much more lithium on stream and by

the way we're going to need about 140 000 additional tons every single year out to 2030. one of the real limitations here is finding all of that unique technical talent and so look I mean you know you don't wish anybody any ill will or any failure but if there are failures in bringing Supply on stream that again I think underpins my thesis around volatility and and prices that are arguably a little bit higher for longer but you know look we seen really positive news from Sigma recently I mean

they've entered commissioning and it looks very successful lithium Americas has just started doing the same thing as well and you've seen some other Hard Rock players that I think are are in the zone as well as we as we say so um yeah a lot of reasons for optimism but again the supply issue is always I think going to linger over this Market all right Chris thank you so much thank you [Music] thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your

thoughts so leave us a comment below we'll see you next time [Music]