The Critical Minerals Institute Warns That Government Funding Alone Is Not a Strategy

[music] Okay, on behalf of the Critical Minerals Institute, it's lovely to have our August uh CMI master class titled Playing the Trump Card. We have Jack Lifton in from Detroit and we have Melissa Sanderson in from Casper, Wyoming. How are you both today? I'm doing great. We had rain yesterday, so I feel refreshed and reinvigorated. >> I know it rains every day in tropical Detroit for the last two, literally every day. Okay. I haven't had to water flowers all summer. >> We despise you. We decided to do this master class because we do a podcast uh twice a month with both of you and we were discussing the Wall Street Journal article about uh the US is trampling allies in the global hunt for rare earth and we thought it would make a great conversation piece. So as Washington uses its financial power to outspend and outbid other nations, a crucial secondord problem is emerging. Could America's global hunt for rare earths, undermine its allies, and weaken the western coordination needed to compete with China? Do you guys want to flip a coin to see who's going first, or who would like to take that one on first? Should we do ladies first, Jack? >> No, I'm a gentleman. I'll let the lady go first. >> I I spoke recently to some officials from the European Union who very interestingly expressed exactly concern that the Oracle expressed to buy whatever it wants. And therefore we are trying to figure out how we're going to move forward with the US but also on our own because it appears increasingly to them as they articulated it that the message that they're receiving is it's every dog for itself and the biggest dog is going to build the biggest house. So I think it's a very real concern when a at least formerly very close ally and trusted friend in the form of the conglomerate of the European Union feels rightly or wrongly that it is being victimized by the US checkbook. I think it's something that perhaps hasn't received due consideration yet in Washington because at the same time that we are wielding the checkbook and the sword, we are also saying that we want our trusted allies and friends to join us. Look at the recent G7 meeting in working cooperatively together to build a western structure that would be able to begin to match what China has done in the global markets. So, I think we need to think about how we want to reconcile our currently conflicting messaging and actions. >> You know, I I I'm trying I I thought I have to have a theme for this discussion and I thought of it. This is what I call the great condiment crisis. What do I mean by that? We're playing catchup. Okay? And we are we are not going to be successful here. Here here's here's the problem. No one in America and including the government of course pays any attention whatsoever to history. And so we keep doing the same thing over and over again except that all the ground rules are changing. So this is 1939 and we're watching the great other great powers of the world great power okay uh arm themselves we think we think then we knew now we think and we have in 1939 the United States had a standing army of 139,000 men at that point France Germany the Soviet Union Japan had millions of men in a standing each standing army. Okay, we didn't give a damn because we had the oceans to protect us. We had the mines to protect us. We had the processing companies to protect us. If we wanted to, we were making million more cars in our country than all the rest put together. And our leaders then knew that if they had to switch that production to tanks and aircraft, we could do it. And we did it. Okay. The critical minerals in 1939 were iron, copper, aluminum. That's it. Coal. We had a lot of coal, too. Okay. And oil. We had we had a lot of them. Okay. Fast forward a century. I don't really understand what the competition is here because I don't believe that the China's competing with us. I believe that China is industrializing and taking care of itself. it. Here's the real problem. China does not have to export anything. They are consuming the 60% of the world's metals they produce in into in building their own country. Okay? They do export. Of course, there's always more productive capacity in their country than they need. So, they can run it up and export. But if they don't export, it's I don't think it's going to change their lifestyle too much. Um, I don't know what they need to buy with the dollars and and euros they earn by export, but I do know that they have been on a plan for the last 10 or 15 years to develop internally all of the key industries they need to be independent of the rest of the world. They've done a real good job. Okay. >> Okay. So, let's stay on your theme here of condiments. And so, Mel, which partner should we relish? Well, you know, Canada springs to mind inevitably, even though the current fad seems to be more of uh kicking the the cat, so to speak, in terms of Canada, but it's it's the obvious choice. If we're talking about trying to quickly build a secure uh integrated supply chain end to end in the critical mineral space, there's no better choice. We are connected by a land border. Canada has tremendous capabilities particularly at mining. It's a natural marriage, but at the same time, um, we've just unilaterally cancelled the US, Mexico, Canada trade agreement that counting its predecessor NAFTA, he had had really done a very fabulous job of integrating the three economies over the last 30 years, but it appears to be not not worthy of consideration. So, if we're not going to consider Canada, I suppose I would have to say the next most obvious choice is Japan, but Japan lives in a bad neighborhood and it's going to be really, really hard to maintain a secure supply chain of any sort with anybody in that neighborhood if China ever decides that it actually wants to undertake acts of aggression to defend itself. >> Jack, do you agree with Mel on those partners? I think that Japan I agree with her on Japan is the would be the ideal partner for the United States because it has always had the deficit of natural resources. Yet it has built one of the world's greatest economies and nations by importing resources and internally developing total supply chains to take those resources into enduser products that actually support and build their economy. They are very smart people and they know what they've they faced this crisis their entire life. the national life. Okay. And they've solved it in a sense every day they're out looking for natural resources, but they have in their country the installed capacity to turn those resources into products to support their economy. Now, we could really learn from them. Uh I don't know that we think that way in Washington. Mel would know more about that than I do, but they to me they stand out as the ideal model for us to to pay strict attention to. >> Okay. Well, when we were discussing this yesterday, there were some concerns of course that Trump's administration uh wouldn't be open to partnerships. Do you want to comment any further on that, Jack? Well, I yeah, the the problem is they Washington, it's not just trumpets been for a long time. They assume the rest of the world exists to to supply us with what we need. Uh they take they don't take into account much the the aspirations of of other people's and and their ability to take care of themselves. The nations that have been supplying us today, I'm not talking about China, I'm talking about everybody else, are today thinking they want to use these resources as a tool to acquire the technologies and the education in order to add as much value into their country as possible. and they would like to emulate the the standard of living of the United States and they see that to do that they have to recreate the the total capacities for consumer goods for example in the United States and so what we're up against right now is that our traditional suppliers are thinking what's in it for us and I believe this is the biggest change and I I think tariffs do not help in this situation. I >> I want to get into tariffs, but we were discussing as well in preparation for today's master class about Project Vault. You wrote a story about it this week on how Project Vault could be competitive. Jack, do you want to provide Project Vault administration with the advice that we discussed? >> Uh yeah, it's very simple actually. The people who are promoting project vault as an inventory management setup run by the US national government have forgotten that they need to ask who are the customers, what are they buying and can we inventory those materials and devices or do we just inventory the raw materials and if we do that do we have the capability and capacity in the United states to transform those inventory raw materials into enduser products that we can actually use. Okay, none of this has been talked about. All they talk about is they're going to buy a whole lot of rare earths and a whole lot of BOS phosphates, whatever they're going to buy. And I don't think they really know what inventories are needed and what and I think what they missed entirely is it's going to be the end user that dictates what's in the inventory, not the USGS telling us that we're dependent on some other nation for this particular raw material and so we should we should get ahead and buy a lot of it. That doesn't mean anything. Okay? And I don't put much faith in project uh vault, so I don't think it's going to happen. >> Yeah. But didn't you have an excellent I thought it was an excellent recommendation that you said we should use project vault as an insurance agent agent uh as an insurance policy for our critical minerals. And then Mel, you told me you disagreed with [laughter] that. Would you like to jump in? Well, I mean, I agree with everything that Jack said in that regard, but I think that there's a couple of other concerns to articulate as well. The [clears throat] first of which is just as we were talking about the checkbook driving our partners out of business. The US government checkbook wants to uh purchase a bunch of stuff in a market where outside China supply is already scarce. The private sector is already scrambling to find sources that are trustworthy and reliable and available and suddenly the US government is going to come in and say no we're going to buy all of the disposium for what objective so that we can resell it at a profit to the same company that was trying to buy it in the private sector to begin with. So I think that that's another um obstacle that presents itself in the form of project fault. But everything else that Jack said is absolutely correct. I mean if if all we want is rocks. Well, there's plenty of minds that can sell plenty of rocks, but the rocks are not what's going to keep us all in business with the lights on and our cars running. So yeah, I'm I'm a skeptic as far as Project Walt goes, for sure. I want to circle back really quickly on this idea of partnerships as well because there's an additional point to what Jack was saying. [clears throat] The United States, particularly post World War II, never had to learn how to be a partner. We were the leader by a claim and in some cases by pleading and begging please lead us because we were the last man standing so to speak. So the idea the fundamental idea of partnerships and cooperation is fundamentally lacking in US foreign policy and has been for a long time. Even multilateral organizations like NATO that we formed were for our objectives and we were always the primary genesis of it. PreWorld War II isolationist America he had no desire to partner with anyone because we were fine and happy all on our own. So I would argue that America fundamentally has a problem with the concept of partnership and that's why we don't implement it very well. >> Can I jump in a minute just on the last topic? I just want to mention something because I've had direct uh interaction with project vault with our tungsten project in California. And number one, um you know, I can tell you that they're not very well organized. That's number one. Um and I've heard that multiple times from other people that are very close to the Trump administration and government, whatever. Um we had a call with uh one of the three commodity firms you know talking about offtakes and um you know their terms are are really crazy terms number one um for offtakes. I mean when I say crazy I mean they're just so rich. Um and the one that we spoke with u actually had a 7% equity interest in another tungsten company in the US and obviously we didn't really feel comfortable about entering an agreement when it's almost a competitor for us but um so far it's been a dead end with project vault for us. Uh I just wanted to just throw that out there. >> Okay. Thank you. Thank you very much. Kevin Ernst, CMI director as well. Okay. So, Jack, do you want to do you want to go ahead and start warming up the the audience here for for the big debate on the November 10th deadline and what what we should be expecting, how that's going to change our life and how that's going to impact the critical mineral strategy for the United States? >> Well, the thing is we have no idea because we don't know what China's going to do. the what happens on November 10th is their temporary halt on the prohibition of export uh in general expires. And so now they're they're going to let us know whether they're going to enforce the the rules and laws they've enacted about uh natural resources and and finished goods. And the thing that we don't know is if they're going to do anything at all. Uh as a uh a free market capitalist, I have to say that if I were President Xiinping of China, I would be thinking, why do I want to stop making all that convertible currency? Okay. I mean, what what difference does it make these the crazy people on the other end? And forgive me for everybody out there that's going, "What is the November 10th deadline?" It will impact approximately 6 and a half uh trillion dollars of downstream critical minerals. Those are the magic numbers they're throwing out, Jack. >> No, they're not. That's not This is the kind of nonsense that keeps people printing newspapers. Look, the those materials from China are critical to the production of trillions of dollars of enduser products. Okay? No one's talking about can we get along without some of that with the Chinese. Do you really think the Chinese are going to shoot themselves in the in the foot in in order to stop making shoes? I mean, come on. They're not going to simply institute a blanket. we you know prohibition on export they've what they're telling us is that two can play the same game. So what they're saying is all of us all of the nations of the world have always not exported weapons okay arbitrarily. Okay. Okay. We know for example that that uh the terrorists in the Middle East buy weapons from Czechoslov Czech Republic. Okay, great. That's the business of Czech Republic. But nations like great nations do not sell weapons to potential enemies. China says, you know what that means? If you're going to use rare earths to make military production, we will not sell you the rarest for that because you have told us we are the target. So we do the same thing. Okay. Now that's a tiny part of the rare earth use. Tiny. Okay. They're not saying they won't sell us material. They're what they've changed and people don't understand is this. They used to sell to anybody like I if I as a metal trader for example wanted to buy a rare earth I would contact one of at the time 29 Chinese export companies and I'd say I need a ton of this roium. They would then get back me with the price. I didn't know where they were getting it. Okay. I didn't care. I I just only cared if I could pay the price. Okay. China changed the rules now. No more intermediaries. If you want to buy rare earths, you need to be an enduser. Okay? And they have to decide if that use has a dual purpose, civilian and military. If it does, no contract. We you no longer deal with the intermediaries, neither theirs or ours. The the government in Beijing has to review every export order containing a metal they have prohibited [clears throat] the ex the free export of they then decide whether that order can be filled. No more intermediaries. This this is a big change. The other thing is they have now absolutely prohibited the export of technologies of any kind related to the production of rare earths at any level in the supply chain. They've also made a list of all the specialists in China in this particular area and they have said those people if they want a visa to to visit Ant Ming in Sacramento they need permission from Beijing directly. Okay. And it's and it's very unlikely it'll be given. Uh so that they have cut us off from raw materials for military purposes and they've completely cut us off from technology and equipment. This is the biggest problem. The equipment >> we don't make that in the west. They >> So can I ask a question? Let me ask a question, Jack, because I just want to make sure I understand the implications of what you're saying. I mean, I think I do, but I just always like to check. So, basically what you're saying is if any of these US OEMs, whether it's Lockheed or Rathon, want to source materials for any of their defense products, China is basically going to say we're not we're not exporting to you. Is that's like in a nutshell what we're saying? >> Absolutely. >> Okay. Well, that's a problem. So, let's go back to what's going on with the spending spree that's happening right now with the US government. Okay. So, Mel, with this spending spree, who who are the decision makers and do you have some feedback on how this process is taking place? I know we spent a great deal of time trying to track who was giving what to who because it seemed like various branches of the US government were providing conflicting uh investment capital to competitors just like what Kevin was talking about. They didn't seem to even know who the competitors were. Um where do you want to go with this? >> Well, it's not a question that >> [clears throat] >> has an answer because [cough] the so-called process is completely non-transparent and therefore evades logical scrutiny. So as to how decisions are made that leads to an inevitable conclusion that they're made capriciously or they're made on the basis of relationships either personal or business that um will be beneficial at some point to the decision makers involved. So it does not appear readily that the decisions are based on potential. Whether that potential is the quality of the deposit of the rocks or whether that uh potential is the experience of the metal maker or whether it is the capability of the magnet maker. And you know Jack and and I have both talked about this before. When you don't have a strategy and you don't even have a plan, what you have is chaos. And that's what we're seeing playing out here. >> Jack, you wrote a piece called Trump's tariffs. Have a redistributed American manufacturing advantage, not rebuilt it. Do you want to start talking a little bit about the tariffs and how that's impacting the American strategy for critical minerals moving forward? and tariffs are creating favorite companies. Favorite companies uh share price goes up in the marketplace. A lot of people make a lot of money, but [clears throat] nobody's making anything useful. So that that's the real problem with tariffs. We we don't know we don't look at the effect of the tariff. Okay? For example, I was mystified to see tariffs put on key metals like ste steel and aluminum because because and then you may have noticed that the utilization of American industrial capacity for steel rocketed up one or two percentage points. the the the utilization of American aluminum production, productive capacity actually went from like 35 to 50%. Based on the fact that our non-competitive companies could charge higher prices because our our end users couldn't could no longer buy foreign goods at lower prices. This is this is all about capitalism, okay? And this is manipulated capitalism, okay? Which is we're supposed to believe is called is also free market capitalism. It is not. It in in a there there's never been a global market really. You know, it's always been since the war, the great war of 45, it's favored the United States. Okay? That's how it's been manipulated. Now the world's getting back into business. So, if I want to make a steel product in Detroit, let's call a car, uh, I need a reliable supplier of the quality of steel and the quantity I need at the price. Guess what? Chinese steel makers could do that every day. They could be the lowest price. Well, we need a steel industry in America, right? I mean, everybody agrees with that, okay? because this is not this is not an ideal world where everybody loves everybody. So we need a steel industry theoretically uh one to employ a lot of Americans and two to make sure we can compete in a war. Okay. So we support our steel industry with tariffs on foreign steel. But that makes cars more expensive than they have to be. Well, then we put a tariff on the we prohibit the import of foreign cars or put a tariff on it. And then the foreigners say, "Well, uh, okay. We'll build car factories in Indiana." Is that okay? And we say, "Yeah, unless you're Chinese." And they say, "Wow, there's a lot of rules here. What's it all about?" Well, what it's all about is keeping us in business. We have our people have to be employed and we have to have an economy. Okay. So these tariffs are meant to maintain America's lifestyle. I understand that. Okay. I if I were the president, I' I'd probably do the same thing. Okay. If I wanted to get reelected. Um, I don't understand if you're going to put a tariff on something, is it for 15 minutes, an hour, two weeks, couple of days? That's the problem. When you're in the manufacturing economy, you have to plan for the long term. How the hell do you plan when you don't know what the cost of your of your feeds are going to be? Okay, that's what the problem is. the tariffs have completely screwed up the our ability to plan production. That's the biggest problem. >> I I want to quote Jack before you respond to him, okay? Because what he adds that he hasn't said uh verbally is Jack says, "My conclusion is that the Trump tariff program has redistributed manufacturing advantage within the United States more than it has enlarged the American manufacturing base." And then he adds that the distinction between tariffs on finished goods and tariffs on industrial inputs is essential. So please do respond, but I want you to take those elements into consideration. >> Well, I was going to start with the fact that you just said something that's fundamentally incorrect, Jack. Tariffs are not helping President Trump. Pres President Trump is being hurt by tariffs because they are being applied indiscriminately in nature leading to pocketbook got to keep its prices low by bringing in Chinese-made goods and [clears throat and cough] they are now not able to keep those low prices. So people are not um benefiting from tariffs and Trump is not benefiting from tariffs either. That's one reason that his latest um popularity poll is as low as it is. Um but more importantly, the tariffs also degrade the capability on a broader level of improving our industrial base because the steel industry in this country does not have the productive capability to support simultaneous growth of the mining industry, the processing industry, the AI industry and ongoing retail developments. So a smart country is what I was saying would find a partner coming back to one of the earlier themes that actually produces steel in copious and reliable quantities and would smooth the path for the import of that steel if we actually had an industrial policy that looked at all the necessary factors that have to come into play to grow and grow rapidly a domestic indigenous production capability. Okay, you you realize there have been some very fundamental changes. Okay, at the excuse me for talking about history. The at the end of the 19th century there were there were four great steel producing nations. Germany, the United States, France and Great Britain. Would you please fast forward to that now? uh something like more than 50% of the world's steel is made in China. Britain basically has no steel industry. French has France has no steel. Germans Germany's steel industry is dying because of the cost of energy. We make 70,000 tons uh 70 million tons of steel here a year. Okay, which is by Chinese standards trivial. So, I'm not saying that. What I'm saying is you're exactly right. Even if we said no more imported steel, would we really run out of steel for what we need? Okay. I don't know. And could we increase that production? Yeah. And increase the cost and then all steel products would be more expensive. And this is this is getting us nowhere. That this tariff game is getting is getting us nowhere. I believe sincerely, this where I'm going to be different from all the rest of you, that the United States should be competitive on the world market. I believe we could be competitive on the world market. That's the real problem. That's that's not the goal of our government. >> Okay. I'm sure Mel would like to add something here. So, let's roll something another element in here, Jack. The Trump administration's announcement last week of approximately $3 billion in new investments, loans, and guarantees for critical mineral projects is the strongest signal yet that Washington has finally accepted a truth that those of us in the industry have been repeating for decades. Industrial civilization runs not on ideas, but materials. By the way, I'm quoting you, Jack. Mel, do you want to take this? you want to start talking about uh the critical mineral supply chain, how it will take time and how this capital is currently being prioritized. >> Well, um I'll start with the last part first because we we just spoke a little bit ago about the non-transparency of how capitals being allocated. So I think the same is true for quote the new 3 billion unquote as was true for the previous you know 3 5 10 100 billion. Um so whether it will be allocated logically and productively is a guess. Um because as far as is evident, we do not yet have in mind any sort of structured enduring defensible supply chain. And I I hope that the emphasis on the word defensible was noticed because you recall I said that Japan lives in a bad neighborhood. So does Vietnam and Malaysia and South Korea and all of these others. And we would like to buy magnets from Japan. We would like to buy them from South Korea. And we would like to buy rare earth from Malaysia and Vietnam. Um, you know, China has been very, in my view, very patient with all of the malarkey of the West to this point, but at some point, you know, they could get tired of it. And in a world where one major power is pursuing the PF of capriccious attack on other countries, I think that China could begin to see very little reason why it should not, as it has begun to do strategically with its elements, why it should not also begin to strategically defend its resources outside of the country or its so-called sphere of influence. So I think that we're looking increasingly at a period of turbulence and instability a lot of which derives potentially from Chinese actions and derives directly from current decisions but even goes beyond that. So the capability of the US as I say to structure and defend a supply chain is to a certain extent already failing because we are not making the sorts of strategic analyses necessary to determine where those rooted supply chains should begin. We always want them to end here but where should they begin? And without making that decision, I don't think we can rationally decide how to allocate our resources, whether it's three billion or 103 billion. >> Okay. Here's what I would like Jack and Mel. I'd like you both to take three minutes each and explain to our audience what you would recommend for the US government with these huge budgets on how they should proceed. Okay. It's quite the challenge. And then we're going to open the uh floor for questions. Jack, you you want to go first? I'd like to put this in perspective. $3 billion is a lot of money to me. It is not to the US federal government. Everybody seems to forget that the American budget is in the trillions. That means billions of dollars per working day. May I I don't want to do the math, but it it's we're approaching a billion dollars an hour. You want us to got to think that $3 billion deployed it to 15 or 20 or 80 groups is going to change anything. Okay. You you yourself uh Tracy said, "Well, it's going to impact 6.9 trillion dollars of production." Well, isn't isn't also the sale of fly swatters going to affect that? I mean, there's a there's a point. Do does anybody understand the impact of any of this on any else? We keep talking about it's a crisis because we can't get ring baloney fruit sandwiches. Why is that a crisis? Okay. Like there's no other way to do it. >> So, how about you take your three minutes then because and since three billion isn't a large enough budget for you and why don't you just talk about your second law of productive investment. Okay. Installed capacity is not productive capacity. A plant becomes a productive asset when it can repeatedly produce qualified products at commercially sustainable yields and costs. >> So take on one critical mineral. >> Okay. >> And and and provide some feedback to the US government. >> You and I guess I have just stated the the key problem. What is this $3 billion for? Because if we're going to have productive capacity in the United States, we have to build it. We we do not have it for these critical materials. Okay. So, will it cost $3 billion to put us back into the processing uh you know ability for let's say rare earths? Yeah, I guess could be. Okay. But what does that mean? Because that doesn't mean we're going to have rare earths that meet the standards of our end users, okay, or in the forms they need. It just what we're trying to do here, what it we're we're at we're we're moving the tail of the dog, okay? We're we're trying to recreate the the capacity which means we have to first see do we have the capability to reproduce the capacity. This is where the money has to be spent and there's just one gigantic impediment. We don't have the people. We have lost the skills. We abandoned legacy engineering here. We said, "Let the Chinese build our magnets." And you guys that are now building magnets, you, as one of our former presidents said, learn how to code. Well, guess what? They tried. I guess we don't have the people. So, you can you can spend all the billions you want. You have to focus on the capability which means people, the capacity which means bricks and mortar and then the raw materials. Don't worry about the raw materials before you have something to do with them. I I have been saying to this industry for the last several years, the rare earth oxides have beautiful pastel colors. Why don't you go into the face brick business? Because there's no demand for them. We don't have the capability or capacity to process them into the enduser forms we need. That's where the money has to be focused. Never mind. We have enough mines. We have the largest uh primary rare earth mine in the world, Mountain Pass. We don't have any heavy merits in America that are be capable of being produced at this point. So, we can't make these special magnets. Let's face it, all this money, where is it going? What part of the supply chain is it supporting? That's what has to be understood. And it's not going to be understood by elected officials or bureaucrats. You have to go to the end users and say, "What do you need?" Then you go backwards and find out how those things are made. That's where you need the investment. >> Okay, Mel, I think uh Jack got his three minutes. Do you want to do you want to catch up with uh [laughter] Jack and add anything to that or would you like to go in a different direction for your conclusion? >> Yeah. Well, I think that, you know, the first thing that has to happen is some humility on the part of the folks in Washington. Um, so I may be starting from an absolutely impossible point, but let's assume that we can achieve some humility in Washington to recognize that there are many things that we don't know and because we don't know them, we can't cope with them. So I would, you know, the Department of Defense is currently running its own study group. I don't know if a lot of people know that they they've partnered with the private sector and with the end users and they've been doing their own sort of study group on strategically trying to think about what the supply chain should look like. I would throw the academic sector into that mix because there's a lot of skill around the theory of supply chain development that's available and is not being heard and I think that we need to to expand that coordinated talk shop. We need to get the political backing for it which it currently does not have. We need to make sure that the highest leadership listens to and is willing to implement the conclusions of that. I think that there are some concrete steps that could be taken. Jack's 100% right in pointing to the problem of human capital in this country. The current uh approach to granting or more frequently refusing visas is a travesty because it would be very possible for us to do what many other countries currently are doing, which is use our checkbook to buy the knowledge we need. There is knowledge that is necessary outside of China. We could buy it. We could bring it here. we could put it to productive use >> to build the skills and the projects that we need to have built in record time instead of slamming a door shut and saying that we don't want anybody from outside and we don't need anybody from outside comes back to the concept startlingly of showing a little humility. So if we would be willing to do these things, we could make better use of even the relatively small pots of money like $3 billion. But let's not overlook that there's much larger pots of money already out there that are being um I would say personally frittered away. So you know we have the Orion fund in coordination with DoD. We have you know the the the Morgan Stanley fund out there. We have pots of money that are a lot bigger than $3 billion, but that in my personal opinion, as I've said earlier, are not being correctly and uh strategically allocated. So we start by getting a plan that is backed politically and correctly funded itself and we undertake some measures that are well within our ability to do quickly and well like visa reform. And then we put all of that together and we can make progress in something less than 50 years. Maybe in 20 instead of 50 we could be where we need to be. Oh, and one final thought. We're killing innovation in this country. We need to re-energize innovation because we're not going to beat China, quote unquote, by doing what China already does so well. We're going to beat China by doing it differently, better, smarter. Okay. Well, a lot of points were hit on in this last hour. Thank you all to all the Critical Minerals Institute members that are here today. Would anyone like to ask a question or two? We've got some time. >> Yes. Uh it's Kevin. I'd like to ask a question. And by the way, I'm sorry that I interrupted with my questions. This is my first master class, so I didn't really know the format, so I apologize. Um anyway um you know when we were talking about the ideal uh partners in terms of countries um I I know that uh Mel you mentioned Canada and I think Jack mentioned uh Japan but I guess I'm wondering where do you put Australia and where do you put uh South Korea on that list? Well, you might remember that I also said that Japan lives in a bad neighborhood, >> right? >> So does Australia. So does South Korea. The problem that that we have in terms of trying to pick the partners is the new global reality is gone has gone back to the old zones of influence or spheres of influence. So, it's one reason that we see Washington get really touchy and increasingly touchy about Chinese quote interference unquote in Latin America. So, why would we be surprised to see the Chinese get agitated about so-called American interference unquote in their sphere of influence which includes all of those yummy countries that you just mentioned who I don't disagree. I mean, I mentioned Japan myself. We need those countries. But I'm coming back to the concept of a defensible supply chain. The whole thing with the straight of four moves underscores that your supply chain has to be defensible. If you're going to source it nearly exclusively in China's sphere of influence, you inherently do not have defensible supply chain. >> Go ahead, Darius. Yes. Uh, thank you Tracy. Good evening from Johannesburg down here in South Africa. And I just wanted to ask when you're just the the recent um $50 million DFC funded project now here and uh it's a Falabora rare earths project and looking at the supply chain issues that Mel has mentioned and totally agree with some of the comments that uh from my experience in this part of the world where I've been for the last 15 years looking at new partnerships uh to what extent do you think that these sorts of relationship ships with South Africa uh would be harbinger of future partnerships because if you look at uh there was a very difficult relationship if you know with and then South Africa appointed a new ambassador to Washington to redefine the relationship with the US and South Africa as you know South Africa is a powerhouse so I'd be interested in seeing and hearing from the panelists on their views of on this part of the Thank you. >> Actually, Darius, I think we'd all be intrigued by their responses on South Africa. Who wants to go first? >> Jack looks like he's still thinking, so I'll go ahead and run my mouth first. [laughter] Uh Darius, um I don't know you you would have no reason to know this, but I actually lived in in the Democratic Republic of the Congo for eight years. So I know uh somewhat uh some of the parameters of doing business on the continent. um where as you just indicated, South Africa has long been one of the shining lights, but even South Africa has encountered some substantial difficulties related specifically to the mining sector and the energy sectors that have really decreased both its productivity and its attractiveness as an investment source. And in a broader continentwide sense, those problems epitomize the the rise of Africa because we've got a a whole host of issues that interlock and are very complicated to address and involve energy but also involve you know uh former wars and [clears throat] separate relationships and therefore impacts on logistics and transportation. We've seen the problem of the coming together of a of a true African trade zone. Um, countries that haven't made the political effort yet to begin to harmonize their standards in order to ratify the treaty. So I think that that's why in many ways outsiders use the phrase Africa as if it was one country. But it's because they just don't want to have to deal with all of those complexities. Um I remember the [clears throat] great hope for the African Union that it would be the European Union analog and it has not become that. So I think that it's going to continue to be a country bycountry um investment strategy whether we're talking government to government like the DFC or whether we're talking about straight private sector investment. So the continent itself is not in my opinion in a position to benefit from the current race to rare earths but some countries may. You want to comment on that, Jack, or do we want to go to the next question? >> South Africa, what do you think? >> I think that the current American administration is extremely unfriendly to South Africa and that you cannot you it will not be involved in at least the next two years. >> Okay, Al, you have a question. Go ahead. I think you just need to unmute yourself. I don't just look. >> Thanks a lot. always uh fascinated by the discussions but you know a recurring theme has been demand the end users what do they want how do we you know and work backwards from there is there any consistent um visible effort on behalf of demand and I'm I'm talking about wind turbines electric car manufacturers that need permanent magnets robotics and those kind of demand drivers uh to try and influence where the investment is going in rare I I don't understand the the context of the question because uh you're you know the if you look at the uh uh journalist approach to this of course all they talk about is is the gigantic demand that'll be unfilled. My opinion is quite the opposite. I think the American economy is mature. I I don't I think uh EVs are not going to be a big uh item here. Uh our government is strictly against it currently against wind turbant and I don't see any great demand growth in the United States uh that couldn't be filled by the current regime of of international trade. The pro the real problem here is real simple. Well, we we import essentially all of the rare earth permanent magnets and the raw materials to make them that we use. The principal source of those imports is China. It China controls that. If if we can't get where permanent magnets in China, let's say a total uh then you can forget all about electric cars. You can forget all about wind turbines and all of those products. If they restrict the export, as it looks like they're planning to do, uh then we'll our our industries have not our government, our industries will have to pick and choose. Uh I don't think wind turbines are going to are much of a business here in America right now. Okay? >> China dominates that. electric cars. The truth is we make between 1 and two million a we sell between 1 and two million a year in the US. So we need we need those magnets right now. We have them. Okay, you can buy electric car made in the United States with a Chinese magnet. You may not think it's a Chinese magnet, but it is. Okay, that's what they're going to impact. And to sum this up, it all comes back to what what the industrialists always say. Is something necessary or nice? You decide. Can you live without this stuff? I don't know. It's up to you. >> Yeah. I guess my assumption is that the the magnitude of the buildout if if all the um facilities from mine right to magnets is built in the US with the amount of investment is there there won't be enough demand in the US. So if the US if the US can't learn to sell or can't get access to markets outside of the US why would anybody build those that capacity in the US? Don't don't tell anybody about this because it'll it'll it'll you know impact their their idea how rich they're going to be in the future. We are we have committed to so much capacity that you know will never get built because there's no demand. So these companies will fail. But right now all we want to do is talk about capacity capacity. Capacity. My question is for what? >> Mel, do you want to add anything to that or do you want to take on Marcy's question because we have time for one question left for today. >> Oh, let's hear Marcy's question. >> I just was curious what your guys's thoughts are. Um, in the last few months, I've had um, two fairly well-known semiconductor companies out of Japan who have confidentially asked about when and if we can get our pilot plant up and running and produce gallium and ribidium and what sort of end product we're going to be having and at um, what capacity because they are both in fear that China may cut them off. So, they're fishing for alternate sources. >> I think they're right to be worried. I would add that, you know, Japan's actions over the last six years at this point um clearly indicate that Japan fears a possible attack from China, a military attack, not just an economic one. So, you know, I think that they're right to be worried and I also think it's why they're looking for good places to settle their their companies outside of Japan. >> You know, something Mel Mel made an very interesting point. It never dawned on me and and one of the viewers um I think an ideal combination would be Australia and South Korea. South Korea has what Australia lacks and Australia has what South Korea lacks. The two of them could be powerhouse together. >> There we go. >> I agree. >> Well, that's the benefit of these wonderful master classes. Our next one, by the way, will be the impact of artificial intelligence on uh the critical mineral sector and as the evolution of the marriage between technology and critical minerals rises. Anyways, again, thank you everybody. If you have any questions, just reach out to me. Thank you.