WEBVTT 1 00:00:04.759 --> 00:00:08.320 With Laurent's segle End from London and Gerard Reed from Berlin. 2 00:00:08.800 --> 00:00:13.160 This is redefining energy. Today. On redefining Energy, we're going 3 00:00:13.240 --> 00:00:17.480 to talk about market dynamics and the pricing of raw materials. 4 00:00:17.760 --> 00:00:19.239 But first of well, from my partner. 5 00:00:19.839 --> 00:00:23.160 A Bloco Energy is Europe's premier leaser of ten foot 6 00:00:23.280 --> 00:00:28.280 container mobile batteries built in Europe with coatl best LFP cells. 7 00:00:28.800 --> 00:00:34.119 A Bloco Energy serves fourteen European countries, including France, Germany 8 00:00:34.200 --> 00:00:37.399 and the UK. A Bloco's batteries can be leased for 9 00:00:37.439 --> 00:00:40.640 any duration between six weeks and six years, and they 10 00:00:40.679 --> 00:00:44.600 are monitored by the Dutch award winning platform school a 11 00:00:44.679 --> 00:00:48.719 Bloco Energy. Make your life easier, make your business more flexible. 12 00:00:48.960 --> 00:00:51.679 Back to the show and general it all came to 13 00:00:51.960 --> 00:00:55.799 everybody's attention six years ago when Simon Moos, the CEO 14 00:00:55.799 --> 00:00:59.159 of Benchmark Mineral Intelligent, shook the world, which is now 15 00:00:59.439 --> 00:01:02.600 legendary testimony in front of the US in it. So 16 00:01:02.640 --> 00:01:05.799 a few weeks ago, Simon, which has become a good friend, 17 00:01:06.319 --> 00:01:09.480 calls me and says, a lot of things are happening 18 00:01:09.519 --> 00:01:12.120 in the pricing of battery materials. I need to come 19 00:01:12.159 --> 00:01:15.840 on the podcast, to which I said, Simon, You're always welcome. 20 00:01:16.280 --> 00:01:19.560 And then what happened is we thought we would have 21 00:01:19.799 --> 00:01:23.680 Batman and we got Robin. So we have gaspar Roles 22 00:01:23.959 --> 00:01:27.799 with Simon first Lieutenant exactly. 23 00:01:27.480 --> 00:01:30.920 And we had a very very good conversation in and around, 24 00:01:31.239 --> 00:01:35.359 as you said, battery materials, which are obviously critically going 25 00:01:35.439 --> 00:01:38.959 for because batteries is you know, the key technology and 26 00:01:39.040 --> 00:01:41.959 the electrification and relubanization of the world. 27 00:01:42.519 --> 00:01:44.840 Yeah, we're going to talk a lot about pricing litium, 28 00:01:45.040 --> 00:01:48.200 and I think we'll have a tep of conversation in 29 00:01:48.239 --> 00:01:50.680 the conclusion because there are a lot of things happening 30 00:01:50.799 --> 00:01:55.200 in litium. So in the meantime, let's bring gaspar Roles 31 00:01:55.280 --> 00:01:56.159 on the show. 32 00:01:56.920 --> 00:01:58.680 Casper, great to have you on the show. 33 00:01:59.000 --> 00:02:00.959 Hi, Jered, thank you very much. In hiler On. 34 00:02:01.359 --> 00:02:04.719 So guess about six years ago, Simon Moorees, your CEO, 35 00:02:05.079 --> 00:02:09.240 made this extraordinary testimony in front of the US and 36 00:02:09.319 --> 00:02:12.960 night is in relation to China the US. Let's listen 37 00:02:13.039 --> 00:02:15.520 to a clip and then come back to the question. 38 00:02:16.039 --> 00:02:18.719 We are in the midst of a global battery arms race, 39 00:02:18.800 --> 00:02:22.360 which so far the US is a bystander. The advent 40 00:02:22.439 --> 00:02:25.199 of electric vehicles and energy storage is sparked a wave 41 00:02:25.280 --> 00:02:28.240 of battery megafactories that are being built around the world. 42 00:02:28.560 --> 00:02:31.439 The scale and speed of this growth is unprecedented and 43 00:02:31.479 --> 00:02:33.400 it will have a profound impact on the raw materials 44 00:02:33.400 --> 00:02:36.439 of fuel these battery plants. This adds extra impetus to 45 00:02:36.479 --> 00:02:39.639 this mega trend of battery megafactories and the impact on 46 00:02:39.719 --> 00:02:43.240 the demand for critical battery raw materials of lithium, cobalt, nickel, 47 00:02:43.280 --> 00:02:46.639 and graphite have been unprecedented. For example, in the next decade, 48 00:02:46.759 --> 00:02:49.560 the demand for lithium is set to go up nine times, 49 00:02:49.919 --> 00:02:53.159 cobalt set to go up six times, nickel set to 50 00:02:53.199 --> 00:02:55.879 go at five times, and graphite anades set to go 51 00:02:55.960 --> 00:02:58.719 up nine times. The question is how much of this 52 00:02:59.000 --> 00:03:02.800 mineral to ev back supply chain does the US control? So, 53 00:03:03.080 --> 00:03:06.000 for stage one, how much of that mind supply does 54 00:03:06.039 --> 00:03:10.759 the US control? For nickel it's zero, For cobom it's zero, 55 00:03:11.120 --> 00:03:14.599 For graphite it's zero, and for lithium it's one percent. 56 00:03:15.000 --> 00:03:17.199 For the chemical stage whether no how it comes in 57 00:03:17.319 --> 00:03:21.360 for using these minerals in batteries the chemical stage, how 58 00:03:21.439 --> 00:03:24.800 much capacity does the US control? Nickel is zero percent, 59 00:03:25.000 --> 00:03:29.199 cobalt it's zero percent, graphite it's zero percent, and lithium 60 00:03:29.319 --> 00:03:32.120 is seven percent. Battery capacity stage where they may be 61 00:03:32.120 --> 00:03:35.919 actual batteries that consuming plants. In twenty eighteen, the US 62 00:03:35.919 --> 00:03:38.639 had nine percent that was mainly from the Testla gigafactory 63 00:03:38.680 --> 00:03:41.840 in Nevada, and by twenty twenty eight we're only forecasting 64 00:03:41.879 --> 00:03:44.919 ten percent, So we're forecastinger are as a flatline as 65 00:03:44.960 --> 00:03:48.719 this industry grows. Incidentally, China is on track to have 66 00:03:48.840 --> 00:03:51.599 sixty five percent of battery capacity by twenty twenty eight. 67 00:03:52.039 --> 00:03:55.520 It already has fifty one percent of lithium chemical capacity, 68 00:03:55.919 --> 00:04:00.520 eighty percent of cobalt chemical capacity, one hundred percent of graphitepacity, 69 00:04:00.759 --> 00:04:04.199 and a third of nickel chemical capacity. Those that control 70 00:04:04.280 --> 00:04:07.120 these supply chains will hold the balance of industrial power 71 00:04:07.439 --> 00:04:09.919 for the twenty first century of auto and energy industries. 72 00:04:10.319 --> 00:04:13.159 And the question I have for this committee is what 73 00:04:13.280 --> 00:04:15.000 role does the US want to have in this global 74 00:04:15.080 --> 00:04:18.199 energy storage revolution because it starts with these supply chains. 75 00:04:18.759 --> 00:04:22.319 Thank you, mister Morris for reminding us so clearly and directly. 76 00:04:22.160 --> 00:04:25.800 Gasper, how do you assess the six years from this 77 00:04:25.920 --> 00:04:26.800 into up now? 78 00:04:27.480 --> 00:04:30.160 Over the last six years, lots have changed, but we're 79 00:04:30.160 --> 00:04:32.959 still in the exact same position. When we think about 80 00:04:33.000 --> 00:04:35.920 where these supply chains are today, the focus is still 81 00:04:36.000 --> 00:04:38.800 very much on the supply chain for the critical minerals, 82 00:04:38.800 --> 00:04:41.720 the raw materials that go into the battery supply chains. 83 00:04:42.000 --> 00:04:43.600 If you look through the data and look back at 84 00:04:43.639 --> 00:04:46.720 what's happened since the last six years, very much there's 85 00:04:46.759 --> 00:04:49.279 been a focus in the West at least on building 86 00:04:49.319 --> 00:04:52.199 out the downstream in particular of the supply chain. So 87 00:04:52.240 --> 00:04:56.279 we've seen good expansion in terms of luthymind battery production facilities, 88 00:04:56.759 --> 00:04:59.759 expansions in terms of the ability to build electric vehicles. 89 00:05:00.079 --> 00:05:02.439 But what we haven't really seen is much in terms 90 00:05:02.439 --> 00:05:05.759 of that midstream and upstream refining capacity and investments and 91 00:05:05.800 --> 00:05:09.279 expansions adequate Shure I say, in raw materials supply, particularly 92 00:05:09.319 --> 00:05:12.639 for lythium, nickel, cobalt, graphite, the materials that are going 93 00:05:12.680 --> 00:05:15.439 into the active materials, the anode and the cafe. So 94 00:05:15.720 --> 00:05:18.000 we look back at the world today, we think about 95 00:05:18.199 --> 00:05:21.319 politically what's going on. I'd say these markets are probably 96 00:05:21.319 --> 00:05:24.360 more politically charged than they've ever been, with the administration 97 00:05:24.439 --> 00:05:29.120 in the US, tariffs wars, et cetera, all focusing around commodities. 98 00:05:29.519 --> 00:05:31.480 In many cases, it's kind of back to the future. 99 00:05:31.560 --> 00:05:33.000 Things haven't changed all that much. 100 00:05:33.680 --> 00:05:36.360 So casp can I ask the question, and why have 101 00:05:36.639 --> 00:05:39.920 we not seen the West go more into the material 102 00:05:40.079 --> 00:05:42.360 side of things, whether it's actually the mining side or 103 00:05:42.399 --> 00:05:46.360 the processing. So why, because as you said, it's highly strategic, you. 104 00:05:46.360 --> 00:05:48.279 Know there is a mandate for that to happen. The 105 00:05:48.360 --> 00:05:51.639 money flowing into the space has been relatively slow. And 106 00:05:51.680 --> 00:05:54.120 if we're thinking about that six year period in particular, 107 00:05:54.160 --> 00:05:57.199 we've seen in most of these raw materials are price cycle. 108 00:05:57.680 --> 00:05:59.720 We're in the low of that price cycle at the moment. 109 00:06:00.000 --> 00:06:01.879 Around the middle of that period kind of twenty one, 110 00:06:02.000 --> 00:06:04.040 twenty two to twenty three, depending on which markets you're 111 00:06:04.040 --> 00:06:07.839 looking at, we saw raw material prices increase really rapidly 112 00:06:07.879 --> 00:06:10.079 and very quickly, and then come back down again as well. 113 00:06:10.519 --> 00:06:12.720 If you think about companies that are looking to invest 114 00:06:12.759 --> 00:06:15.639 in the space, investments are certainly much easier when raw 115 00:06:15.680 --> 00:06:18.639 material prices are higher. But you also don't tend to 116 00:06:18.639 --> 00:06:21.079 see many investments when raw material prices are falling, and 117 00:06:21.120 --> 00:06:23.920 we've had periods of that twice really in that six 118 00:06:23.959 --> 00:06:27.680 year window. That always slows down the expansion. I would 119 00:06:27.680 --> 00:06:30.519 say also perhaps we haven't been aggressive enough in terms 120 00:06:30.560 --> 00:06:33.920 of investing in the upstreams. We've seen, particularly from China, 121 00:06:34.319 --> 00:06:37.480 global expansion in terms of ownership raw material so mines 122 00:06:37.639 --> 00:06:41.439 or operations, even processing capacity outside of China, and really 123 00:06:41.480 --> 00:06:44.319 that hasn't happened to the same extent from other countries. 124 00:06:45.000 --> 00:06:46.399 Can we just dig into that a little bit more? 125 00:06:46.439 --> 00:06:48.720 Because the one thing is if I look at the 126 00:06:48.759 --> 00:06:51.879 market dynamics, Let's say all the analysts had the views 127 00:06:51.920 --> 00:06:55.160 in terms of this was sort of exponential growth, and 128 00:06:55.279 --> 00:06:59.519 actually the growth has actually been faster than what we'd expected. 129 00:07:00.040 --> 00:07:01.720 It sort of leaves me a little bit puzzled. I 130 00:07:01.800 --> 00:07:04.600 understand from mind perspective, atleast you have prices that go 131 00:07:04.680 --> 00:07:06.920 wop them down, but you sort of look and say, 132 00:07:07.000 --> 00:07:10.600 the growth is there, so surely the mining companies and 133 00:07:11.319 --> 00:07:13.360 that's called the processing companies because at the end of 134 00:07:13.399 --> 00:07:16.360 the day, you have to process these materials. The opportunities there, 135 00:07:16.399 --> 00:07:19.600 the capitals should have normally just follow right the opportunity. 136 00:07:19.879 --> 00:07:21.800 I'm missing something, right, I don't know what it is. 137 00:07:22.480 --> 00:07:24.680 Yeah, I mean the growth has been quicker than expected. 138 00:07:25.160 --> 00:07:28.399 I did a presentation at our Gigafactories Europe event earlier 139 00:07:28.399 --> 00:07:31.079 this year. I look back at the ten years what 140 00:07:31.120 --> 00:07:34.079 the consensus was across kind of investment bank reports that 141 00:07:34.160 --> 00:07:36.279 was going out at the time, and that in this 142 00:07:36.360 --> 00:07:39.600 year twenty twenty five, that demand would reach five hundred 143 00:07:39.720 --> 00:07:42.199 gigabor hours, which of course with far and excess solfware 144 00:07:42.240 --> 00:07:44.920 around one point six terrible hours, so about three x. 145 00:07:45.519 --> 00:07:47.959 You know, in many cases what's happened already, we think 146 00:07:47.959 --> 00:07:50.439 about how hard it is to bring on minds, the permitting, 147 00:07:50.519 --> 00:07:53.160 the costs, the time it takes. It has been really 148 00:07:53.160 --> 00:07:55.120 warp speed already. It's been as quick as you could 149 00:07:55.160 --> 00:07:57.800 probably expect. You know, it does look like, as you say, 150 00:07:57.800 --> 00:07:59.800 it should be a very appealing market. I mean, even 151 00:08:00.279 --> 00:08:03.360 at the moment people are saying demand isn't performing as expected. 152 00:08:03.439 --> 00:08:06.439 But EV sales last year grew about thirty percent globally, 153 00:08:06.759 --> 00:08:09.199 potentially going to be a similar number this year, or 154 00:08:09.199 --> 00:08:12.160 we've seen some good performance in certain regions anyway, and 155 00:08:12.199 --> 00:08:14.040 so you would think the money would flow in. But 156 00:08:14.120 --> 00:08:16.879 I think there's still a been still some learning going 157 00:08:16.920 --> 00:08:19.639 on in that timeframe, people getting kind of understanding these 158 00:08:19.639 --> 00:08:22.560 markets and these supply chains, but be you know, still 159 00:08:23.000 --> 00:08:26.199 somewhat lack of transparency and these are not kind of 160 00:08:26.240 --> 00:08:28.920 mature markets where people can go out on the hedgehet 161 00:08:29.079 --> 00:08:32.200 price risk exposure, and that's kind of slowed things down 162 00:08:32.240 --> 00:08:34.399 as well. So that kind of the appetite for risk 163 00:08:34.639 --> 00:08:36.399 is there in some cases, but in many it's not, 164 00:08:36.440 --> 00:08:38.320 and people are still kind of getting the hedge around 165 00:08:38.320 --> 00:08:38.919 these markets. 166 00:08:39.519 --> 00:08:42.159 Looking back to bout six years, the market has gone 167 00:08:42.240 --> 00:08:45.919 from what three hundred thousand tons of letium to probably 168 00:08:45.960 --> 00:08:48.360 like one point five million now, so the market has 169 00:08:48.399 --> 00:08:52.399 times five on that aspect. Simon has been precient, and 170 00:08:52.440 --> 00:08:54.960 I guess nobody would have bought that this market with 171 00:08:55.120 --> 00:08:58.320 times five in six years. But on the other hand, 172 00:08:58.480 --> 00:09:01.639 a lot of those speeches about can and Cobbald, which 173 00:09:01.679 --> 00:09:05.080 meant that at the time everybody was pushing towards the 174 00:09:05.320 --> 00:09:09.799 NMC Nick and Manganes Cobbold chemistry, which in fact happened, 175 00:09:09.960 --> 00:09:15.519 then stop happening because the LFP appear. The quantity, yes, 176 00:09:16.279 --> 00:09:18.960 but the split of those minerals and maybe you're going 177 00:09:19.039 --> 00:09:22.440 to cobalt, which was like the must have metals four 178 00:09:22.519 --> 00:09:25.919 years ago. Now it's probably the lowest in twenty years. 179 00:09:26.360 --> 00:09:29.879 Nikkel wed that crazy moment into a twenty two in 180 00:09:29.919 --> 00:09:33.799 the Northern mechaeric change and then the Indonesian quantity came in. 181 00:09:34.519 --> 00:09:36.879 It's difficult to predict. 182 00:09:36.519 --> 00:09:40.440 The future exactly. It is extremely difficult to predict the future, 183 00:09:40.440 --> 00:09:42.720 and in many cases, part of that is the hardest 184 00:09:42.720 --> 00:09:46.639 thing to predict is consumer demand patterns, which are notoriously difficult. 185 00:09:46.879 --> 00:09:50.360 We do tend to see technology adoption curves have accelerated, 186 00:09:50.519 --> 00:09:52.559 you know, when we look back throughout history over all 187 00:09:52.559 --> 00:09:54.720 the new pieces of the technology that come in, it 188 00:09:54.759 --> 00:09:57.159 tends to happen more quickly each time. And as as 189 00:09:57.159 --> 00:09:59.960 you said, right, these markets have grown in excessive expectation. 190 00:10:01.159 --> 00:10:03.120 A lot has changed in that period as well. So 191 00:10:03.320 --> 00:10:06.639 it's not just consumer demand, it's also the policy and 192 00:10:06.679 --> 00:10:09.639 politics around this, So like what incentives are being put 193 00:10:09.720 --> 00:10:12.679 in place, what's going on. I think back to twenty nineteen, 194 00:10:13.039 --> 00:10:15.039 maybe it was twenty eighteen, but around that period the 195 00:10:15.120 --> 00:10:19.279 Chinese government were incentivizing higher energy density cathotes over LFP, 196 00:10:19.799 --> 00:10:22.440 and now we've seen almost not necessarily a reversal in 197 00:10:22.480 --> 00:10:25.720 terms of incentives, but a much larger push back towards LFP, 198 00:10:25.879 --> 00:10:29.960 which was around that timeframe it was almost forgotten cathode 199 00:10:29.960 --> 00:10:32.120 that was on its last legs and everyone was going 200 00:10:32.159 --> 00:10:35.879 to move towards NTM or Nickel Bays chemistries. We see 201 00:10:35.879 --> 00:10:39.200 consumer or the technology demands of the market change over times. 202 00:10:39.720 --> 00:10:44.039 Cobal prices were relatively low. We went through DRC export ban, 203 00:10:44.159 --> 00:10:46.159 which saw them rise over the course of this year. 204 00:10:46.720 --> 00:10:50.360 Nickel again, Nickel prices have been up and down various 205 00:10:50.360 --> 00:10:52.639 different reasons at the exchange level and at the raw 206 00:10:52.639 --> 00:10:54.480 material level. But we've seen a lot of supply come 207 00:10:54.480 --> 00:10:57.440 out of Indonesia which has seen that cost come down 208 00:10:57.480 --> 00:11:00.000 a fair amount in terms of both the production these 209 00:11:00.039 --> 00:11:03.720 materials and therefore the sale price. So it's a moving target. 210 00:11:03.960 --> 00:11:07.120 You'll have different chemistries in different regions for different applications. 211 00:11:07.159 --> 00:11:10.519 As you may expect. Our LFP four cars have increased 212 00:11:10.519 --> 00:11:12.480 over that period as well. That six year period what 213 00:11:12.519 --> 00:11:15.440 we're expecting to see in the markets so very challenging 214 00:11:15.519 --> 00:11:18.360 when you're thinking about building operations to know exactly when 215 00:11:18.399 --> 00:11:20.399 that demand's going to come online. And that's part of 216 00:11:20.440 --> 00:11:22.720 the reason why we have seen the price volatility that 217 00:11:22.759 --> 00:11:26.120 we have is there isn't perfect unison between supply growth 218 00:11:26.159 --> 00:11:28.759 and demand growth. It's lumpy and it happens at different rates, 219 00:11:28.799 --> 00:11:31.039 and that's why you have this long term period of 220 00:11:31.120 --> 00:11:32.559 volatility within the market. 221 00:11:33.600 --> 00:11:36.960 Now one of the success story is your company benchmarking 222 00:11:37.039 --> 00:11:40.000 their intelligence. First time I met Simon, you were like, 223 00:11:40.120 --> 00:11:42.480 I don't know thirty forty employees. 224 00:11:42.000 --> 00:11:45.039 And now roughly around two hundred. I don't have the 225 00:11:45.080 --> 00:11:45.639 exact number. 226 00:11:46.320 --> 00:11:49.960 Wow, So what did you do in terms of services, 227 00:11:50.080 --> 00:11:52.399 say six years ago, and where are you with. 228 00:11:52.720 --> 00:11:55.000 In terms of like the product groups at a high level, 229 00:11:55.200 --> 00:11:58.320 broadly similar, we just cover more products and have gone 230 00:11:58.360 --> 00:12:00.519 in some new markets as well outside of course, so 231 00:12:00.840 --> 00:12:03.240 back in that period, I would think in twenty nineteen, 232 00:12:03.320 --> 00:12:05.279 all of our data is very much focused purely on 233 00:12:05.320 --> 00:12:08.759 lithiumind supply chains. So we have price assessments. So these 234 00:12:08.759 --> 00:12:14.000 are the data that's collected from active market participants, producers, consumers, traders, etc. 235 00:12:14.639 --> 00:12:18.279 And then we follow a very rigorous process to assess 236 00:12:18.279 --> 00:12:22.519 the price and to publish to IOSCO Type two standards. 237 00:12:22.519 --> 00:12:25.399 So Type two is the more challenging of this internationally 238 00:12:25.440 --> 00:12:30.000 recognized standard to publish prices. Those prices are then used 239 00:12:30.039 --> 00:12:33.240 by industry to settle supply chain contracts. If you are 240 00:12:33.440 --> 00:12:36.000 buying a large amount of lithium or nicola, kobor whatever 241 00:12:36.039 --> 00:12:37.879 it may be on a long term contract. You don't 242 00:12:37.879 --> 00:12:40.240 want to be negotiating the price every month with your 243 00:12:40.240 --> 00:12:45.200 supplier or counterparty, and so use our pricing as agreed 244 00:12:45.240 --> 00:12:48.559 between the parties, as accurate and independent to settle your contracts. 245 00:12:49.200 --> 00:12:52.360 We also have forecasting services, so long term supply demand 246 00:12:52.399 --> 00:12:56.639 and costs for all of the raw materials, and sustainability 247 00:12:56.679 --> 00:12:58.759 reports as well. If we have a lot going on, 248 00:12:58.799 --> 00:13:00.480 we do. We cover the full supply chain, so we 249 00:13:00.519 --> 00:13:02.879 have the widest breadth of coverage in the market. So 250 00:13:02.960 --> 00:13:05.120 we cover from mind to grid as we call it, 251 00:13:05.200 --> 00:13:07.480 so from the raw materials all the way through the 252 00:13:07.480 --> 00:13:10.879 supply chain to electric vehicles, recycling, electric motors, et cetera. 253 00:13:11.600 --> 00:13:15.240 More recently this year, we launched coverage of the copper market. 254 00:13:15.480 --> 00:13:18.639 Last year Rare Earth's coverage as well. So Rare Earth 255 00:13:18.720 --> 00:13:21.480 that go into electric motors for a number of applications 256 00:13:21.519 --> 00:13:25.120 but primarily electric vehicles, a lot more services and a 257 00:13:25.159 --> 00:13:26.679 lot more people, and. 258 00:13:26.600 --> 00:13:28.480 That means also not a lot more knowledge. 259 00:13:28.720 --> 00:13:31.600 Yeah, well we hope, So, yeah, that's the goal. We 260 00:13:31.639 --> 00:13:33.960 have a very large analyst team, the largest analyst team 261 00:13:34.000 --> 00:13:36.320 looking at this space, and we are also the only 262 00:13:36.360 --> 00:13:38.799 company which has coverage all the way from kind of 263 00:13:38.799 --> 00:13:41.200 the mind level. So I say through mind to grid, 264 00:13:41.240 --> 00:13:43.480 through to the end of the supply chain and recycling 265 00:13:43.519 --> 00:13:46.480 and beyond, and we feel that that gives us unique 266 00:13:46.480 --> 00:13:48.960 insights to be able to link all of the data 267 00:13:49.000 --> 00:13:51.360 through the supply chain. You know, it makes sense that 268 00:13:51.440 --> 00:13:53.320 what's happening at the upstream would have an impact on 269 00:13:53.320 --> 00:13:54.679 the downstream and vice versus. 270 00:13:55.480 --> 00:13:59.240 Yeah, for our listeners, it's very important to understand how 271 00:13:59.279 --> 00:14:03.519 the pricing mechanism develops in markets. And that has been 272 00:14:03.559 --> 00:14:06.480 going on because at the beginning, the producer and the 273 00:14:06.480 --> 00:14:09.519 consumer they like to do their deals one together and 274 00:14:09.559 --> 00:14:12.320 you know, keep the price secret, negote once a year. 275 00:14:13.039 --> 00:14:15.960 But the dynamics of the market are so important. And 276 00:14:16.039 --> 00:14:19.399 here I want to quote the great Jeff Curry who 277 00:14:19.519 --> 00:14:25.200 say spot prices surpluses long term contracts or shortages, and 278 00:14:25.320 --> 00:14:29.519 so it means whether market is long or short, the 279 00:14:29.600 --> 00:14:33.559 strategic can't address it, and you need a pricing mechanism, 280 00:14:33.720 --> 00:14:37.200 and of course you need guys like Benchmark to independently 281 00:14:37.279 --> 00:14:41.039 set that price. We've seen that for iron Ore twenty 282 00:14:41.120 --> 00:14:44.320 years ago and it's exactly the same despite the fact 283 00:14:44.399 --> 00:14:46.240 that if you are six years ago to all those guys, 284 00:14:46.240 --> 00:14:48.240 no no, no, no, we don't want market. We know better, 285 00:14:48.720 --> 00:14:50.960 but in fact they don't know better exactly. 286 00:14:51.159 --> 00:14:53.759 You know, this is a very necessary step for the 287 00:14:54.320 --> 00:14:57.200 markets that are developing, particularly these markets which are expected 288 00:14:57.240 --> 00:14:59.639 to continue to grow such a long period of time 289 00:14:59.639 --> 00:15:02.440 and be so crucial to the energy ecosystem and in 290 00:15:02.480 --> 00:15:05.679 many cases the economies of many countries. But the market 291 00:15:05.759 --> 00:15:07.360 they need that you need to be able to settle 292 00:15:07.399 --> 00:15:10.000 these contracts. When you think about this world as well, 293 00:15:10.000 --> 00:15:12.840 which is people always talk about kind of commodities, but 294 00:15:12.879 --> 00:15:16.360 in reality these still remain speciality chemicals. So there's lots 295 00:15:16.399 --> 00:15:19.000 of different specifications out there, there's lots of different products. 296 00:15:19.039 --> 00:15:22.000 They're not commoditized like you would see in other supply chains, 297 00:15:22.399 --> 00:15:24.120 and so it's really important to have that kind of 298 00:15:24.159 --> 00:15:26.960 expert analysis that goes on to ensure that the prices 299 00:15:27.000 --> 00:15:30.120 that you're publishing are representative of the products being traded 300 00:15:30.159 --> 00:15:33.279 at the correct specification. As these markets continue to grow, 301 00:15:33.320 --> 00:15:36.000 we may see that some of those product specs align 302 00:15:36.080 --> 00:15:38.039 more closely and they do get more commoditized, But at 303 00:15:38.080 --> 00:15:40.200 the moment that's really not the case, and we're dealing 304 00:15:40.200 --> 00:15:42.480 with a large amount of data and information that we 305 00:15:42.559 --> 00:15:45.399 have to assess independently and then publish for people to 306 00:15:45.399 --> 00:15:46.759 be able to use in their contracts. 307 00:15:47.320 --> 00:15:50.080 The other day, I was actually on the Shanghai Exchange 308 00:15:50.399 --> 00:15:53.240 and I actually just wanted to guess the lithium price, 309 00:15:53.919 --> 00:15:56.679 and then I realized like there was like fifty different 310 00:15:56.720 --> 00:15:59.879 types of lithium pricing there. So the market seems to 311 00:15:59.879 --> 00:16:04.639 have become incredibly complex or how do you see it? Yeah, 312 00:16:04.639 --> 00:16:06.759 there's a number of things going on. There's a number 313 00:16:06.799 --> 00:16:11.080 of different specifications. Broadly speaking, you have like feedstock, so 314 00:16:11.399 --> 00:16:15.080 spodymine litium carbonate, so you have technical and battery grade. 315 00:16:15.399 --> 00:16:17.799 You have lithium hydroxide as well. But then you also 316 00:16:18.039 --> 00:16:20.759 need to think about where the price is for different regions, 317 00:16:20.759 --> 00:16:23.679 so you may have variations in price China versus the 318 00:16:23.679 --> 00:16:26.200 rest of Asia or Europe or North America or whatever 319 00:16:26.240 --> 00:16:28.679 region you're looking at. And we continue to launch more 320 00:16:28.679 --> 00:16:30.320 and more price indexes. 321 00:16:29.799 --> 00:16:33.639 For this market. Liquidity is still building the side of Asia, 322 00:16:33.759 --> 00:16:36.320 certainly outside of China which is the main hub. But 323 00:16:36.480 --> 00:16:38.519 you know, those indexes are are going to be relevant 324 00:16:38.519 --> 00:16:42.639 and necessary as we see more and more spot activity 325 00:16:42.639 --> 00:16:45.080 across the globe and people want to have a price 326 00:16:45.120 --> 00:16:47.320 that represents what's going on in their region. Rather than 327 00:16:47.480 --> 00:16:49.080 linking back to an Asian price. 328 00:16:49.639 --> 00:16:53.200 It's probably time now to introduce the great agreement you 329 00:16:53.279 --> 00:16:58.639 sign with ICE, the Intercontinuelytic change. Maybe for our listeners, 330 00:16:58.919 --> 00:17:01.919 what is ICE and what's the nature of your agreement? 331 00:17:02.600 --> 00:17:06.680 Device is the largest commodity energy commodity exchange in the world. 332 00:17:06.680 --> 00:17:10.799 Its operations have focused on oil and gas. Have a 333 00:17:10.839 --> 00:17:12.480 huge amount of products on there, but you know it's 334 00:17:12.599 --> 00:17:14.759 by volume. Oil and gas is their bread and butter. 335 00:17:15.559 --> 00:17:17.559 So people in that world will know them really, really well. 336 00:17:18.240 --> 00:17:21.240 What we're doing with them lithium and cobalt contracts and 337 00:17:21.279 --> 00:17:23.519 that's actually kind of a new asset class for them, 338 00:17:23.559 --> 00:17:26.359 so kind of considered metals in the exchange world, although 339 00:17:26.359 --> 00:17:29.079 we know, you know, these aren't truly metals. These are chemicals. 340 00:17:29.119 --> 00:17:32.000 As I said earlier, our deal with them is to 341 00:17:32.039 --> 00:17:35.200 launch these contracts and allow users so that can be 342 00:17:35.680 --> 00:17:39.279 people who have exposure to the physical world, so also makers, 343 00:17:39.359 --> 00:17:43.680 mining companies, etc. To hedge their price risk. Futures exchange 344 00:17:43.839 --> 00:17:46.359 is at aol to use financial derivatives to be able 345 00:17:46.400 --> 00:17:50.039 to protect yourself from price volatility or price risk at 346 00:17:50.039 --> 00:17:53.200 some point in the future. Our contracts are cash settled, 347 00:17:53.240 --> 00:17:55.160 so it means no physical delivery. But what it does 348 00:17:55.200 --> 00:17:58.400 is it enables people to manage price risk in the future. 349 00:17:58.440 --> 00:18:01.519 That can be the physical world also in the financial world. 350 00:18:01.519 --> 00:18:04.279 So you may be, for example, a bank who just 351 00:18:04.279 --> 00:18:06.720 wants to trade these contracts or a financial institution that 352 00:18:06.759 --> 00:18:08.720 wants to trade these contracts. But you may also be 353 00:18:08.799 --> 00:18:12.279 someone who has issued debt lent money to a company 354 00:18:12.279 --> 00:18:14.680 looking to develop a lithium mind or whatever it may be, 355 00:18:15.039 --> 00:18:17.079 and you may want to reduce some of the risk 356 00:18:17.160 --> 00:18:19.960 to that part of your structure around the loan using 357 00:18:19.960 --> 00:18:20.920 these contracts. 358 00:18:21.400 --> 00:18:24.119 When I hear that, CAS, what that tells me is 359 00:18:24.119 --> 00:18:25.200 the market is maturing. 360 00:18:25.920 --> 00:18:28.640 Yeah, exactly. So this is very much kind of the 361 00:18:28.680 --> 00:18:33.160 next step for these markets. By bringing in the partnership 362 00:18:33.160 --> 00:18:36.480 between Ice and Benchmark, what we're hoping to achieve is 363 00:18:36.759 --> 00:18:41.599 a more liquid futures contract that people can trade with confidence, 364 00:18:42.200 --> 00:18:44.559 and then with confidence be able to manage your price 365 00:18:44.640 --> 00:18:47.200 risk in the physical world to lithium or cobalt or 366 00:18:47.240 --> 00:18:50.240 any other contracts that may come in the future. If 367 00:18:50.240 --> 00:18:52.200 we think back to the very start of this conversation, 368 00:18:52.359 --> 00:18:54.440 and I said that part of the problem that people 369 00:18:54.480 --> 00:18:57.200 face is that kind of volatility we've seen around pricing 370 00:18:57.440 --> 00:19:00.000 and the risk that people are exposed to. This is 371 00:19:00.160 --> 00:19:01.680 very much a tool that they can use to help 372 00:19:01.720 --> 00:19:04.319 reduce that and give confidence not just investments, but in 373 00:19:04.440 --> 00:19:07.519 terms of like business operations as well. So primarily a 374 00:19:07.519 --> 00:19:09.720 lot of the price risk in these supply chains sits 375 00:19:09.839 --> 00:19:12.599 with the automakers, and it's very difficult for them. They 376 00:19:12.599 --> 00:19:14.759 have a business model where they kind of need to 377 00:19:14.759 --> 00:19:16.440 set the price for a long period of time and 378 00:19:16.480 --> 00:19:19.200 they can't frequently change that because lithium prices are up 379 00:19:19.319 --> 00:19:21.200 or you know, cobal prices are up, or whatever it 380 00:19:21.240 --> 00:19:24.079 may be. So they can offset some of that risk 381 00:19:24.200 --> 00:19:26.880 using these contracts. It's never going to be perfect, there's 382 00:19:26.920 --> 00:19:28.359 always going to be some risk, but if you can 383 00:19:28.440 --> 00:19:31.720 manage the vast majority of that risk using derivatives, it's 384 00:19:31.799 --> 00:19:34.079 a much more stable environment for your business. 385 00:19:34.480 --> 00:19:36.799 Cosper, can we dig in a little bit into that 386 00:19:36.920 --> 00:19:40.559 automobile industry, because for me, when again for just the outside, 387 00:19:40.559 --> 00:19:42.519 I look and I go when you see the price 388 00:19:42.559 --> 00:19:45.400 falls in the last two years, I'm just thinking, if 389 00:19:45.440 --> 00:19:49.359 I'm a battery buyer and I've bought wrong. As an 390 00:19:49.359 --> 00:19:52.039 automobile manufacturer, I'm in big trouble because my gross margin 391 00:19:52.160 --> 00:19:56.240 is just killed just because I've bought wrong. Can you 392 00:19:56.279 --> 00:19:59.720 talk a little bit about what do these automobile manufacturers 393 00:19:59.759 --> 00:20:04.839 do in this period where does technology change and there's 394 00:20:04.920 --> 00:20:08.119 also price falls. What do they do and how do 395 00:20:08.240 --> 00:20:11.519 you advise them to be successful going through this, because 396 00:20:11.519 --> 00:20:13.079 again I can imagine if you get it wrong. 397 00:20:13.480 --> 00:20:15.640 Yeah, exactly, mean there's huge amounts of money on the line, 398 00:20:15.960 --> 00:20:18.559 extremely challenging and not going to pretend that it's easy 399 00:20:18.680 --> 00:20:21.400 for these auto makers looking to build out their portfolio 400 00:20:21.720 --> 00:20:25.599 electric vehicles and increase sales. Now, primarily when we think 401 00:20:25.599 --> 00:20:28.319