Jack Lifton, editor-in-chief InvestorIntel.com, has been writing about rare earth elements, critical minerals, and the companies that produce them for more than two decades. In this episode, he talks about China’s dominance of the rare earths market and why its dominance will continue, why projections about huge increases in electric vehicle production in the U.S. are “nonsense,” and why humans are “mineral parasites.”

Episode Transcript

Robert Bryce 0:04
Hi, welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast, we talk about energy, power, innovation and politics. And all of this are all of those you’re gonna figure in today with my guest, Jack liftin. He is the editor in chief of investor intel.com, and an expert on rare earth elements. Jack, welcome to the power hungry podcast.

Jack Lifton 0:25
Thank you. This is quite interesting to me that this topic is now becoming mainstream. It used to be that no one knew anything about it.

Robert Bryce 0:36
Well, we’ll we’ll get into that. So Jack, I warned you, I’m gonna ask you to give me a brief introduction. But if you don’t mind, imagine you’ve arrived at a dinner party, you don’t know anyone there and you have about 45 seconds to introduce yourself, please introduce yourself

Jack Lifton 0:50
to quite a bit of imagining, but let’s say that I started. I was in graduate school. And I started working in chemical engineering in 1962. So the very first project that I had, was what we then called Ultra purification of neodymium, the rare earth element there, believe it or not, this is before the rare earth permanent magnet had been discovered. I was looking at it as an additive in a doping for electronic devices. And so I, I couldn’t find anybody who knew anything about it. So I had to learn how to how to handle the rare earth elements. And that that became a lifelong interest in this area. So after that, I went to work for a major global, electrical electronic manufacture. I did r&d for them. And then I made the switch to management. And I wound up ultimately, decades later, as the CEO of an engineered materials company servicing the automotive industry. I retired in 1999. And, and then right after that, someone said, Can you please write a column explaining what the rare earths are? That’s okay. And I didn’t think about them. And then, as soon as it was published, the editor of the Journal said to me, what are you going to write about next week, and I’ve been doing it ever since not journals, but popular writing? Sure, I’ve written hundreds and hundreds of articles, given maybe 100. Lectures done, you know, workshops, things like that. And I’m, things are happening now, that never happened before. So the rarer than the word space is booming right now. And I find it unfortunate that the US is so far behind. And I want to preface everything today with this. I’m not a kid. My colleagues and associates in this industry, who have had hands on experience, something Washington doesn’t understand it’s called getting your hands dirty. They don’t do that. People I know do that. And also have PhDs and an experience things that I’m sure so

Robert Bryce 3:20
so well, let’s see if we if we can if we can jump in. So you’ve been looking at rare earths in one way or another for 60 years then. Right. And and writing about and writing about it for the last more than the last 20 or so.

Jack Lifton 3:31
Yeah, the the rare earth metal dysprosium was first commercially produced two years before I graduated

Robert Bryce 3:41
from school. And so what year was that? 1960 1960 which was the which was the year I was born. So I guess my life is doing it I Dysprosium.

Jack Lifton 3:54
This is not copper iron are things that men have known about for 1000s of years. This is something really new. And there aren’t a lot of people who know about it.

Robert Bryce 4:05
Sure. Well, so let’s jump right in. Jack because I, one of the things I’ve been writing about rare earths In fact, in my fourth book, which I think is the first time we talked in power hungry now this came out in 2010. I had a chapter about the idea of the US trading one kind of import dependence for another right trading oil import dependence for rare earth element dependence. And now here 11 years later, what spurred me to contact you was this piece that was published in The Wall Street Journal earlier this month. And there was also one in in the Global Times, which is the state run media outlet in China, about the fact that the Chinese government is consolidating control over their rare earth elements companies and consolidating assets from three different companies into a new state champion called China rare earth group. How important is this?

Jack Lifton 4:57
Well for us, it’s It’s very important, because it means that see that the Chinese attitude is that whatever the government does, it has to ensure price stability, and social harmony. Those are the two Confucian goals of any Chinese government, Imperial Republic communist. No. Lately, the rare earths have been undergoing price. I don’t know what you want to call it, but they’re yo yoing all over the place.

Robert Bryce 5:31
If volatility volatility

Jack Lifton 5:33
is volatile. So, about a year ago, neodymium, for example, was selling for $50 A kilogram. A month ago was $150 a kilogram. And yes, speculators, traders, people like that may think it’s good to put rental. Okay, no, speculators and traders may think this is wonderful. And Junior miners think, wow, my, my preliminary economic analysis just went into into the black, you know, by huge numbers, this is great. But they’re not important. The only important people are industrial and users. And in the automotive industry, for example, they say, We can’t handle that kind of price increase. So the Chinese are having the exact same problem we are with prices. They’re too high.

Robert Bryce 6:28
So so so was So was this a creation of the rare earth group then? Or the no China rare earth group? Was it? Are they? Are they looking to strangle supply? Are they looking to increase price? what’s the end game?

Jack Lifton 6:41
They’re looking to maintain the stability of the Chinese were industry? Uh huh. I mean, you know, they can’t, they companies can’t handle swings of that size and price. And stay in business. And you need the Chinese are very aware of the of the details of an articulated supply chain. So they don’t want any companies to fail. And originally, you know, what, when China first condensed its rare earth production into six big companies, that wasn’t into six big companies that wasn’t under the control of six big state owned companies. Each company controlled the rare earth output in its region. So that was because they were they were concerned about illegal mining, and remediation of environmental problems. So many problems with companies that were really too small to be in business without huge, you know, subsidies in the form of loans are never repaid. So they went to their state owned companies and said, you guys manage this, everybody’s gonna have a quota. And if somebody is making 1000 tons of magnets, but they only have 500 tons of material, you’ll have to be discussed that with our Justice Department. So it really helped. But the problem is, it wasn’t enough. Now, China today is importing 40% of its rare earth over that process. It’s never before been importing records of any kind. But it’s now up to 40%. And the principal source of the important words that China import is my Inmar. And we know my Inmar has been a political mess for the last year since it had a revolution. And and so for a while, my Inmar cut off exports, for the reason that most third world countries are now cutting off exports of natural resource. They’re saying, We want you to add value in our country. We make more money, our people have high tech jobs, and we get a lot more Texas. Okay. Well, the Chinese have been resisting this. And they certainly when my Anmar just threw that at them after the generals took over. And they said, you know, we want you to process this stuff here. But China’s got the largest processing industry in the world. Right. And a lot of employers, they don’t want to do that. But they’re, I believe they’re going to compromise they’ll do something you know, another step employ some more people in Myanmar, and the trade is has resumed.

Robert Bryce 9:35
So my car is moving moving or back to China now. Yeah, but but let me let me zoom out I guess more particularly. What to me the other news hook on this story to me Jack, that was key was that earlier, we’ll just earlier this month, the Biden administration announces major push for for electric vehicles 500,000 public charging stations, they want half of EVs in the US to be electric by The half of the car sold by 2030 to be half him to be electric. Let me ask the question because this is what I wrote down here is the US by pushing EVs are we playing into handers at hand of China on the rare earths issue?

Yes. You we are we’re playing into the hands of the Chinese on this in AI

Jack Lifton 10:21
is the dominant player in the in the global wear of the industry. They, they produce perhaps 80 90% Of all the magnets made in the world, right. And of course, they produce a huge percentage of the raw material. And they have 95 to 98% of all the processing the separation metal and alloy making in their

Robert Bryce 10:46
facility. If I could interrupt just on the magnet part because this is the part that you know, I’ve done a fair amount of reading on this, but I’m not the expert that you are. But is it true then that I mean, they’re sometimes called Neo magnets, but these are the magnets. They’re permanent magnets inside the electric motors and electric vehicles. Now Nemean, neodymium and dysprosium and terbium are the key elements in those magnets. Is that right?

Jack Lifton 11:09
Almost it’s it’s neodymium crazy to demean it. It’s easier when you’re separating the words to keep those two they come together naturally in a cut. In nature, they’re usually found in a ratio of 7525, neodymium 75, President and 25 most magnets are made from that alloy because it there’s it doesn’t pay to separate the appraiser DMEM out it, it’s more expensive and it economically doesn’t work. So you have neodymium, we call it ndpr. In the industry, it’s it’s called oh god did mem. Okay. But in fact, it’s no DiMeo crazy different. Then if you want those magnets to survive high temperature and returned to having magnetic strength, no, you you add dysprosium and terbium, these are heavy rare earths are not normally found. They’re extremely rare. And up until now bought 100% of them have always been produced in China.

Robert Bryce 12:17
Well, let me ask about that, because I noticed in a piece that you wrote or were interviewed for in 2012, that at that time, there was no other country in the world that was was producing dysprosium so nothing’s changed in the last decade, China’s still 100% The all dysprosium in the world is coming from China,

Jack Lifton 12:33
what’s changed is that there are two or three junior mining companies which are quite advanced, which which want to produce DISPRO, which could produce dysprosium if their models work and if they go into business. There are one or two in Australia there’s one in Chile and there’s one in Brazil and there’s another source of amounts of dysprosium it’s the rare earth all four called monocyte which contains 1% of xenotime the ore from which the the mineral from which we get dysprosium

Robert Bryce 13:10
so then you said it’s 1% so 100 tonnes for every one tonne of Bible or what is what does that what does that ratio

Jack Lifton 13:19
what nothing like that if I say something as 1% xenotime It means 100 tonnes of xenotime has about eight tonnes of dysprosium but 100 tonnes of xenotime is in 10,000 tonnes of monocyte. Okay, so 10 processing 10,000 tons of models. I mean, there’s only one company in the world has ever done that. And they did not have the facility to extract the dysprosium, terbium, etc. So they sold that to the Chinese.

Robert Bryce 13:52
And what company what company was that? Line is the Australian company Australian minor, right, which is one of the I want to ask about them because I was just looking at their financials because there seemed to be one of the other only companies in the world of any Scott any size and they’re publicly traded. That’s really active in this in this marketplace. But, but let me let me come back to Linus if you don’t mind. So I was looking at this White House 2000 are December 13. Press Release. It called they call it an action plan that fast tracks EVs and talks about bolstering domestic production of lithium bolstering the battery supply chain doesn’t contain a single mention of rare earths and doesn’t mention China. I mean, I just thought that that was truly remarkable given that every new Eevee I mean, there are a few EVs that don’t require rare earths but every new Eevee requires what three four or five kilos of

Jack Lifton 14:43
any day is using a rare earth permanent magnet motor for attraction drive mode, right in the powertrain. It needs two and a half to five kilograms of neodymium iron boron permanent magnet. Now, can you use an AC more AC Motor rather than diesel, of course. And there are That’s what they always use. But the problem is the rare permanent magnet motor is more efficient and lighter, let’s say. I say 5%. But my colleagues in decidi, automotive engineers told me that it’s more like almost 10% improvement in efficiency and dramatic reduction in weight. Here’s the problem. weight equals range on a car. You want that you want the powertrain to weigh as little as possible. So you don’t waste energy dragging the powertrain along. Right. So, So traditionally, in the automotive sector, if you say, I’ve got a great idea, but it’ll add, it’ll add a kilogram to the car, they tell you, no, no interest, none. And then I have been in meetings where brands were talking about, I mean, so but it’s a new age, you know, the automotive industry right now. And they’re they’re looking at sort even mining sources of rare earths outside of China. And there’s no way to predict how this is going to work out. But I will say one thing the the OEM automotive industry in North America knows just as much about where its supply chain as the US federal government does. Which is nothing

Robert Bryce 16:28
Yes, it’s okay. It’s pretty brutal Jack You live in Detroit, right? You’re trying to make some friends in your hometown there that’s

Jack Lifton 16:40
why I’m tired of talking to these automotive guys because they do the same thing over and over again. What they do is they look for the largest company with the biggest market cap and and listing on the New York Stock Exchange. That’s who they want for a supplier General Motors did it last week. They decided on a supplier that’s never made a magnet not one not a milligram magnet never made me wear metal or alloy never separated any material. And that’s going to be their supplier for future so I decided I’m not going to order General Motors electric car because I’m too old. I can’t wait.

Robert Bryce 17:19
Well, you also probably don’t want it to catch on fire. I’m guessing maybe

Jack Lifton 17:22

Robert Bryce 17:26
Chevy Volts, their sales are really on fire. But well, so let me talk about that. You mentioned GM because on December 10, you published a piece in investor Intel and by the way, I’m just returning returning, reminding you this my my guest is Jack liftin we’ve been acquainted now for more than a decade. He’s the editor in chief of investor intel.com You can find it investor intel.com. On December 10 on investor intel.com, you wrote a piece talking about and you wrote this I’ll quote it because it’s worth understanding what you’re where you’re coming from. Projections of near term Evie production proportions for the American and European markets are wildly unrealistic, just based on the necessary critical raw materials and components components capacity needed to achieve these goals. The build out of non China the Chinese non Chinese Evie industry is just beginning in the west and I think a long steep a very expensive learning curve is ahead of us.

Jack Lifton 18:19
Why? Because we have not been making these items for a very long time the last time birth permanent magnets were made that went into the automotive industry, for general use was about a generation ago by 2025 years ago. General Motors at one time had had a company called Magna quench and they made the magnets it but not in those days not for electric cars. It was for this small auxiliary motors on a car, the seat, the window, the power steering. These turned out that they could only be made as miniature motors with wherethe permanent magnets. Because an iron magnet has to be about 100 times the volume of a rare earth permanent magnet for the same strength. So you couldn’t when people said we got to have power windows and power seats, you may not remember the first ones were big fifth doors and clunky seats. The motor was so large it they said this isn’t going to work. The designers were screaming the car looks bad. Okay. In about 1980 They came up with the samarium cobalt worth permanent magnet and that that was used extensively for about a year until it got caught in a in a a samarium cobalt squeeze by a British group. They ran the price up to about five times what it had been and the purchasing department General Motors said go back to iron and but Sumitomo at the time said, Wait a minute. One of our one of our researchers has has really done a lot on neodymium iron boron, it looks great. Okay, well, they went into that mountain pass at that time. Molycorp got a new lease of life, because they know we had they had a demand for this stuff and never had it before. And the industry was born. That, let’s say, Now, actually, what’s interesting is that at that time, Mali corpse capacity was exceeded. There’s a point to start. And so they went looking for somebody who could do the work cheap. Hey, the Chinese, they’ll never figure out how to do it on their own. We can use these guys for coolie labor. Okay, great. So in in the early 80s, they, the company, Trent Molycorp, transferred the technology to China. And the rest is history.

Robert Bryce 20:58
Well, so let’s talk about then since since you mentioned mountain pass, and this is the mind in California, it’s the only operating rare earth element mined in the US. Is that correct? Is that correct?

Jack Lifton 21:08
Us? Yes. Right. Well, technically, that’s no longer true but because the camorra’s company in Florida is mining heavy mineral sands and the byproduct of bad for they might not preserve BCON and ilmenite the titanium mineral, the residue is monocyte that monocyte is now sold to Energy Fuels in Utah which we say cracks and leeches it and cleans it up and then cell makes it into a mixture of carbonate product without uranium or thorium, they recover that eliminate it and then they’re selling that to the Neil performance companies Estonian operations in Europe. So that’s actually they’re now ahead of MP MP sells bra or or company

Robert Bryce 22:04
so an MP is the MP MP it’s empty materials the which is the company that’s now traded on the New York exchange New York exchange that now operates the Mali Corp mine so that the mountain pass mine which has had what several different was Chevron and then it was Mali Corp and now it’s MP materials well

Jack Lifton 22:21
actually serves Molycorp then it was Occidental Petroleum then should have run then Mali Corp to know MP

Robert Bryce 22:30
okay so Mali Corp to thank you for that history. So Mali Corp to was the company that ramped up production at Mountain Pass, and then the prices of the commodities crashed and they went they went bust and now here’s another company taking another crack at the same ore body at the same location hoping that they’re going to make a go of it. And this was the firm that you referenced earlier that it now has a deal with GM in theory to make it to supply some of the the commodities but not necessarily the magnets because it’s the manufacturing of the magnet. You’re not just having you don’t just need the metal you have to be able to make the magnet

Jack Lifton 23:07
you’re interpreting so. Oh, okay. GM wants to buy the magnets from MD an MP is announced they’re building a metal a rare earth metal and, and and magnet production facility in Fort Worth, Texas. Okay. But there’s no timetable here. I don’t think they may at the same time, GM made a deal with a company in Germany called doklam. Smeltz. With for for supplying were permitted Magnus and backhoe Smeltz actually makes about 700 tons of these magnets a year. And here. Here’s a interesting statistic. If we assume that electric cars are two and a half kilogram magnet motor, right. And we know that BW makes 10 million cars a year, Daimler makes four or 5 million cars a year. And let’s say GM makes in the US for a year. So that’s 20 million cars. So let’s see multiply 22.5. So that’s 50 million kilograms. Okay. Yeah. Which is, and that seems to me it’s about 50,000 tons of magnets. Smelts has made 700 tons of magnets last year. There are big customers are the Germans. And I don’t know what it is they’re going to provide for GA. They said they’re going to build a plant in United States but there’s no feedstock in United States. So an MP the largest magnet imaginable. That’s here. A few times here would be a gigantic operation for these these magnets are not cookie cutter made. They’re they’re very carefully manufactured. The End Customer specifies it. It’s it’s not a commodity, people, you don’t just make the magnets, put them in a bag and sell you, the customer says these are the properties I want. And so

Robert Bryce 25:13
and so they have to be a certain size, shape weight

Jack Lifton 25:17
and, and magnetic strength. Don’t forget, yeah.

Robert Bryce 25:20
So let me let me let me back up. Because if you don’t mind, Jack, because we just had a little bit of a latency hit there. So you’re saying that if if we’re aim, the aim is 20 million EVs of production per year? Whichever carmakers you take right? But if we take the VW bought Daimler, GM 20,000, or 20 million EVs at two and a half kilos each, what did you say that’s 50 million kilograms. So then that’s 50,000 of the 50,000 tonnes, right. But you’re saying that the capacity of the biggest magnet manufacturer in the in the West is 700.

Jack Lifton 26:00
I don’t know of any other mega backwards belts frozen only the only magnet manufacturers in the West. And their capacity is currently 700. And as we always say, in America, there’s no problem that can’t be solved with money, right? I take a train load of money, and I and I run it into the Grand Canyon, I’ll be able to fill it with money, right? I mean, that’s for sure. But the problem is, if I take that same train, load and spend it with people who don’t have any background in what they’re doing, I’m unlikely to build an industry that’s competitive and large enough. For the US. Biden, President Biden has said, he wants 50% of EVs out of the number produced in the year 2030. In the United States, right?

Robert Bryce 26:49
50% 50% of all US sales and sales are about 17 million cars. So so let’s just say 8 million cars would have to be EVs.

Jack Lifton 26:57
Well, the Chinese will make 30 million cars in that year, and their goal is 40%. So my theory is that Joe took a look and said, No, I can up that. And he upped the ante to 50%. This was a nonsense, this prediction. It’s not based on any reality. And and nobody could meet it. Okay, not in America, China is ready now with the raw materials it needs to make its electric vehicles, its magnets, and all the other devices dependent on rare earth permanent magnets, they’re already supplied with a with enough capacity to meet their 2025 goal of 20% of cars, and their 2030 goal or 40% of cars. They believe that they have enough manufacturing capacity and raw materials. But but in order to do that, they’ve really put a crimp on the rest of the world. And I think the biggest mistake people make is they think, well, the Chinese are getting into into the rare earth magnet business. No, no, no, the Chinese were a permanent magnet business is meant to supply domestically, China, the gigantic market, 1.4 billion human beings. And they’re interesting, they restrict exports, technology can’t be exported, whereas could only be export, you know, as finished goods. And I always tell people that the Chinese are moving towards needing 100% of their output for their domestic consumer market. And the balance will go to the rest of the world.

Robert Bryce 28:31
So China is going to look after China first.

Jack Lifton 28:34
Of course, why is that a mystery to?

Robert Bryce 28:39
Just thought I’d ask that just directly, you know, this journalism thing, Jack? I can’t turn it off. You know, I’m just question. So so let me then ask it again, given what you’ve just said. So, one, you said Biden’s prediction is nonsense, but is but I asked before is the US just playing into China’s hand when it comes to the whole issue of EVs because of the supply chain issue? Is the ultimate going to be the ultimate constraint on the growth of EVs in the US? Is that a fair statement? Well, I

Jack Lifton 29:09
don’t think China was was really interested in what the US was doing when it began to do EVs. Now they’ve seen an opening. And, and, you know, they, I believe sincerely that China couldn’t care less what we do about any. And so what but once they saw the problem, they move to solve the problem. They’re not going to export anything that they need domestically. They’re not going to export anything to us that they think exporting to someone else wouldn’t give them a benefit. And this is what our government takes into account doesn’t take into a health. We do not have an industrial policy. China has an industrial policy, when they say they’re going to produce 20% EVs in 2025 and 40%. into 2013. That’s not a suggestion. That’s, that’s a mandate from people in Beijing to all these companies. And we look, you know, if you’ve been to China, I’ve been to China quite a bit. I’m not done at all. Okay. I’ve never seen so many rolls royces is in Beijing? I mean, if they’re all over, okay, fine. So you people say, Well, you know, these are communist in name only. That’s not correct. They’re really communist. They’re, they’re using a plan devised 25 years ago, let the capitalist system assist us to move socialism forward. That’s what they’re doing. I was at a conference, I sat next to a Chinese businessman, the the guy who makes the ginzu knives, he did that. And I said, so. What is your business model? He said, I do anything the government says is okay. He says, if you do something, the government says no, okay. No more money, and you might wind up in a corrective labor camp. I said, Okay. So he said, I got a Rolls Royce, I’m having a wonderful time. I do whatever they tell me to do. That’s how the system works there. In America. The President United States says we’ve got to have electric cars, look, whatever that is. Yeah, I’m sure he doesn’t know. And and then he he doesn’t give orders. Thou shalt mine refine, fabricate, he just says, well let private enterprise do it. You know, that’s how it works in America. But the government will interfere enough. So it never gets done.

Robert Bryce 31:33
Well, so well. So let me ask about let me follow up on your your point about the industrial industrial planning or industrial policy, because it seems to me that’s central to this whole issue, because in the press release, they you know, there’s this mention of bolstering the supply chain and working together, blah, blah, blah. And similar to what they said on on bolstering supply chains on rare earths. But even if the US let’s just assume that Biden could say we want to bolster development of rare earth mining, if we started now. And if we found a big rare earth element deposit in the US again, if mountain pass are equal to that, how long would it take to get a new mine up and running and actually producing the kinds of materials needed by EVs? How many years?

Jack Lifton 32:15
Number one, it’s mining friendly jurisdictions. The Fraser Institute in Canada lists 64 mining jurisdiction, they rate them in terms of friendliness, in other words, the speed with which you get a mining permit. Guess what is the bottom one? Number 64? Chuck, California, huggers, the mountain has mine, Cal, okay. So, second worst, or maybe first these days, Wisconsin, things like that, okay, it doesn’t matter because there’s only there’s iron in Wisconsin. No, where’s the problem is if you’re the deposit is put there by God or nature, whoever, whichever you believe in, and then you’ll find it if you if today if you’ll find a monster deposit of rare earths, let’s say outside of Los Angeles, it’ll just be a curiosity, no one would be dumb enough to try to get permitted to build a new mine. So you have an existing mine, the material it produces mildly radioactive. And what if you, you know, right now, they’re sending that to China, it’s not a problem. Okay,

Robert Bryce 33:26
now we’re talking about just to be clear, you’re talking about the ore that is produced by MP materials and mountain pass that but that ore is mildly radioactive, it’s not processed here it’s sent to China

Jack Lifton 33:36
right? Okay. And if you wanted to process it here is that as as Molycorp did once and as Molycorp two wanted to do you build a separation planet chemical separation and to separate the individual rare earths these plants use enormous amounts of water and the waste is happens to be salt you know, NaCl table salt and, and organic liquids. These require separate permitting, you know, to handle the first you have to have no water. I think they do it mountain best because they’ve grown their own groundwater. And they have to dispose of the of these chemicals. So these are permits that have to be gotten then you need air permits. You need a permit. Well, they don’t have to dig a mine. The mine is constructed in the mud.

Robert Bryce 34:28
So it’s a big it’s a big Opencast mine as you say, like an old copper miner or a coal mine. Yeah, it’s a very deep, deep pit.

Jack Lifton 34:37
I actually visited there 11 years ago and was given an opportunity to look at all the geology reports. And I think that mountain pass is probably the largest deposit of the mineral, bestest site in the world. It’s it’s the only primary rare earth mine I know. That was primary. A mine that, that produces one element in overwhelming amounts. That’s a primary. I don’t know of any others besides mountain pass, it’s a monster deposit. It could supply us with with magnet materials for forever. But it, we don’t have the infrastructure to make magnets. We don’t have the separation, we don’t have the metal making the alloy making. And we have

Robert Bryce 35:28
so many so so but if we started now, I mean, if we if, you know, the could say mountain pass, you’re going to be in charge of this, how many years? Would it take them to create that in that that, that supply chain from the or to the to the automobile?

Jack Lifton 35:43
I believe that they’re saying they can be producing magnets by the end of 2023? I think they’re saying that. Okay. So they’re saying two years, I’m going to guess from life experience that it’s more like 567 years? Because the volumes they’re looking at have never been produced before.

Robert Bryce 36:07
outside of China here. Yeah, I had never produced outside of China.

Jack Lifton 36:11
Right. So we’re and that’s one mind now, you know, you can never depend on one supplier in the supply chain, you have to have alternate supply chain. Okay. So we have several ventures moving along in the same direction, like Energy Fuels in with his operations in Utah. And then we have a company called USA where earth which as a deposit in Texas, and bought the equipment of the Hitachi magnet venture that was built in North Carolina a few years ago. And that there’s one outlier that I think is really got a lot of potential. And that’s company called where we’re element resources. It’s in its mines are in Wyoming. And the company is now 50 or 51%, owned by General Atomics, which just announced that it will match a government grant of $22 million with its own 22 million to build a separation plant in Wyoming to process or from the the deposit known as Bear Lodge. So this is called

Robert Bryce 37:30
it’s called rare earth element resources.

Jack Lifton 37:32
Yeah, they they are buying into that company. And they spent a great deal of money, General Atomics on developing a process to separate the rare earths. So they say they’re building the plant. And my guess is because their General Atomics and a big company a lot of experience in ultra high tech, my guess is that they will be successful. And in two or three years, they’ll have that separation plant there. The company has said nothing about metals or magnets or alloys, but those are the only ones I know of that I think could be brought into production in this decade.

Robert Bryce 38:12
So are any of these investable? Not that I’m looking for stock tips? Because I mean, I looked at the Rhiness. And all well, they’re all public. Sure. They’re all public and it’s but it’s Linus. It seems to be far ahead in terms of actual production, but I just glanced at their financials, they don’t seem to be making much money.

Jack Lifton 38:29
Now, well, Linus is producing quite a bit of material. But Linus separates, they produce light where it’s from a Manas, world class mountains I deposit in Australia, and they, they they do the chemical processing in Malaysia, for it was originally for economic reasons. Right? That that is the largest dedicated where it’s separation point in the world. It’s twice as big as anything I’ve ever heard of her saw in China. And it took here does a good example as an answer to your question. I surveyed the plan for the Malaysian government in 2012. It was finished ready to go. The first commercial production out of that plant was 2017. That plant cost it cost 800 million American dollars to construct, but half of that was because they process the or the raw ore was sent from Australia and they process the ore in Malaysia. The actual separation part of it was about four I remember $400 million. Point is it took them five years to get the kinks out. First of all, the Chinese never build anything that large because they’re afraid of if you lose that amount of material and process that huge amount. It’s a lot of money, right Chinese typically run 15 120 500 times a year separation systems.

Robert Bryce 40:00
that they and then they build and then they build several of them so that they don’t have one more than several

Jack Lifton 40:05
they have so much excess capacity, they you know, built one of their ghost cities rather. So the problem with Lynas is is I see it in here, Jeff, oh, have no friends in Southeast Asia either. I don’t think Linus is economically solid. And the only reason line is still there is the Japanese government has extended them loans and extended repayment. Because Linus is today, China’s only non Chinese source of rare earths.

Robert Bryce 40:41
So it’s another so this is what you what I’m hearing you say when you said that it just the word that popped in my head is mercantilism that if there’s if there’s going to be okay, well, let me put it this way. So is if the US is going to have to have a significant Eevee market, it is going in, therefore, it needs significant rare earth element inputs and magnets and all the rest of it, it’s going to have to be more mercantilist in how it approaches the entire affair. There’s just no way that we’re going that the US is going to be able to meet rare earth element demand unless the US government puts a whole lot of money and political power behind it. Is that a fair assessment?

Jack Lifton 41:20
Yeah, the you know, the real problem is how do you choose where to put the money, we had selectra. And that’s become an icon of a waste selector was a laboratory experiment funded by the taxpayers to the tune of $600 million? Who was never really a commercial venture. The problem in in Washington and you know, I’ve been saying this all my life, bureaucrats talk to each other. When when somebody in that room doesn’t know anything they call an academic bureaucrats and academics then discuss and they say, here’s the ideal solution. Okay. And they find out that if they had asked anybody in the industry the same question he said, he or she would have said, No, you do it that way. But they’re not interested because they get Grant University Grants bureaucrats or permanent civil service. They don’t have to worry about they don’t understand what’s going on already cut this part off. I was I was discussing this in the Department of Defense at a meeting and they said what are we supposed to do? I said, I have an idea what’s that? I said, listen to me and let me explain to you what the problems are and how you can solve them. No, we’re we’re talking to Professor so and so at the institute. That’s great. Okay, I know I’m not too popular now. These guys

Robert Bryce 42:51
say that again. If you don’t mind jacket, we just had a quick latency yet you said you said you’ll all explain it to you and then they didn’t they just

Jack Lifton 42:58
exactly what I said the Pentagon I’ll explain those to you. They didn’t want to hear

Robert Bryce 43:04
well So then what’s the way forward I mean in your piece in December on December 10, you just predicted failure the failure of the Evie market or that simply the prices of the the magnets are going to be so high that the Evie costs are never going to come down because of the supply chain. Let me put it simply to you what so what’s going to happen next then in terms of Evie development in the United States commercialization of EVs.

Jack Lifton 43:29
If, if our two American companies, General Motors and Ford are smart, they would go back to Henry Ford, the first playbook, they would bind the mind by the companies and integrate that production into their, you know, until 25 years ago, that’s how they work they had Ford made steel glass, General Motors made magnets, okay, then they they have the genius idea of divesting all of this and, and going back to their core competency, whatever that turned out to be. So,

Robert Bryce 44:02
losing money going bankrupt.

Jack Lifton 44:05
Now, now, they really should vertically integrate. Okay, but you can’t. It’s like, you cannot simply say, today I am going to be a magnet maker. Okay, you have to understand what that’s going to take and to do that. You have to talk to magnet maker or hire a magnet maker. And then manufacturing engineering is not the same as laboratory desktops. Okay. Every every day you read about some somebody in university has got a solid state battery, it will last forever have infinite power in weighs nothing. Okay, great. But can they make two of them? Well, no, we don’t know. How

Robert Bryce 44:49
can they make 10 million right there? Just one question.

Jack Lifton 44:52
Yeah, this is always the problem. Manufacturing Engineering doesn’t do r&d for you. They you show them what you want to make, and they figure out how to make it. And then the Wharton fellow say, wait a minute, we can’t afford that. So don’t use it. That’s how it works. And when the miners and the planners like it with neodymium, 150 bucks a kilogram while we can afford to mine, rare, it’s in downtown Houston. Great, terrific. Okay. The problem is, today’s average car in the US costs $42,000. family of four, prior to the current inflation was making $64,000 a year family of four, how many of those $42,000 cars can they afford? And how often can they replace them? Right? In case you didn’t hear the chairman or president of still Lantis, you know, the former quest Rivia gave a speech last week, which I sent out to all of my colleagues. He said, I wonder if we can afford to build electric vehicles? Maybe they’re too expensive?

Robert Bryce 46:02
Well, I didn’t I didn’t see that. But it reminds me of what was the chairman of Audi A few years ago said What idiot will buy it. He was talking about electric vehicles.

Jack Lifton 46:10
Look what Toyota did last week at the beginning of the week. They were not going to you know, they were continuing to make internal combustion engine cars forever. By the end of the week. No, we’re going electric by 2030. Okay, so who knows? This is common in the automotive industry. If there’s a trend, they say, we’re going to do it, whatever it is. And keep in mind that all those predictions of 2030 are long after the current top management of the companies retire. So they’re going to say whatever they need to say to keep their beautiful bonuses pension, social that okay, there.

Robert Bryce 46:48
But what I’m hearing you saying jack to correct me if I’m wrong, is that there’s no there there that this is this, this, this, this, this belief that we’re going to switch to EVs this way I thought about it. We’re going to trade domestically made gasoline, diesel and jet fuel for praise, neodymium, neodymium, and terbium from China doesn’t seem like a good trade.

Jack Lifton 47:08
No. And, you know, the bottom line here is, it’s even worse because the United States produces a trivial amount of lithium, yet, we’re going to every electric car the size of a Tesla, model three needs eight kilograms of lithium measured as metal. Okay, so 17 million, Paris times eight. Okay. It is is 100. Let’s say 125 million. kilograms. Right. So that’s 125,000 tons of lithium, which is 25% more than the entire world produced last year. How long do you end? Let me tell you the absolute most ridiculous thing I hear. 2007 I wrote, I wrote an article pointing out that lithium that year produced I think 16,000 tons worldwide. I call it a rare metal, anything less than 20,000 Tons of room. Okay. 16 became 86 and 2020. So multiplied by five, let’s say, okay, so I read in The Wall Street Journal, New York Times Board report that well, if it multiplied by five in 13 years, certainly we can do another multiply multiplication by five. We don’t you know, do these people have they have the general education? Do they understand the Earth does not grow minerals, that whatever is there is just the scum leftover after the formation of the planet, and that human beings are mineral parasites, we eat the minerals and throw them away. And when we make cars and scrap and we make radios and televisions, forget radios, and and portable computers. And when we’re done with them, they go to landfill. Let

Robert Bryce 48:58
me Can I Can I interrupt you because I love this thing that humans are mineral parasites I’ve never enrolled,

Jack Lifton 49:03
we’re parasites on the minerals of our of the natural resources of our planet. We’re eating them up without any thought of replacing them. You know, you know what interested me the first thing I heard in China from 15 years ago, attorneys engineers said to me, why do Americans waste so much precious resources? And I said, well, because we’re pretty stupid and short sighted. He said, No, no, we don’t believe that. We think the Americans are the smartest in the world. I said, that’s our secret. We got to thinking okay, but they recycle everything in China, rare earth magnet companies recycled mine, you know, anything. Any residue is recycled. That’s that’s been going on in China forever.

Robert Bryce 49:49
Well, so then what’s next, Jack? I mean, you’ve been looking at this for a long time. And I have to say, You know what your analysis of the situation is fairly sobering. And I you know, I’ve thought myself, I thought well, how can this even possibly work at the scale of global unity? Or global it? So your answer is it can’t that that we’re there’s this this word so then we’re all in in this in mass delusion around this switch to electrify everything you

Jack Lifton 50:14
know you’re sentencing Africa and India to energy poverty when you do this. When you when you say we can’t You can’t use coal and oil and gas, you know, enter the world. Okay. How long do you think the United States and Western Europe can arrogantly just decide how the standard of living in Africa? I mean, I know I know that, what was he talking about? You, if we were to garner all these resources to make ourselves electric cars, enough electric cars, we would denude the Western world. And by the way, it’s too late the Chinese have been buying. And, and taking control of these resources overseas from China for 10 years, they’ve spent hundreds of billions of dollars on minds and, and fabricating companies. And we can’t catch up with them. They have really done a job. They basically own the world of the market, for example, they make 80% of the batteries used in electric vehicles, they control 60% of the world’s lithium. We’re we This isn’t. Okay, we’ve got a couple of big lithium companies that are based in United States, but they don’t have deposits in United States. And and you honestly think that, let’s say WR Grace, it’s kind of like an American Chemical Company, you know, billion dollar company? Can they compete against China Incorporated, or bank loans? repayment is not the issue for China’s security of supply is the issue. Our guys are after profit. If they can’t make a profit in the short term, they say The heck with it. The Chinese say, What will this do to advance our plan? And

Robert Bryce 52:05
you know if I can interrupt you there one second, because what you just said was exactly what I heard. I’ve only been to Saudi Arabia one time. And I don’t think I’m going back. But anyway, when I met with someone with a ministry of oil, we he was talking about that. He said almost the exact thing, same thing. He said, You know, the Americans come in here and all they want to talk about is price. The Chinese come in, they never talked about price, they just want about talk about security of supply. That was just remarkable. It I hadn’t thought of that in a long time until you just said that. But well so where does this go? I’ve asked you that once Jack and I’m gonna ask it again. So does this mean the internal combustion engine is here to stay what what’s gonna happen is and, and are these automakers just destined in a few years to write off 10s of billions of dollars of wasted capital trying to go to

Jack Lifton 52:47
their they’re destined to go bankrupt? The automotive industry is capital intensive, perhaps the most capital intensive industry, you might say semiconductors and more. But some industries is small compared to automotive, the world automotive industry is one to $2 trillion a year in sales, to make a new to design and build a new car from the ground up. Maybe $3 billion to build a an assembly plant three to $5 billion in many years. These guys need huge amounts of capital. Okay, so occasionally when they’re making money, it’s internally financed. But usually it’s bank financed or government handouts, right. Okay. Now, if a company and I’m not accusing General Motors, I’m just making General Motors decides we’re not going to design any more internal combustion engines. And we’re going to we’re going to limit our ability to manufacture and we’re going to go over to electric motors, okay? So, but see, BMW is doing the opposite. They’re saying we have no plans to discontinue internal combustion engines. So five years from now, when you want to buy a sports car with an internal combustion engine, BMW is going to say t we just finished developing this this is our 2025 monster V six wheel bla bla bla. And so I’m always gonna say we can give you a 57 Chevy and and so we’ve

Robert Bryce 54:15
been we’ve got this va 350 that we’ve been driving for towing for decades, where would you like that one? Because we get a lot of them.

Jack Lifton 54:21
Okay. And so that’s the problem. The other problem is that if, let’s say you total up to make 5 million electric cars, but you only get robbed rows make 1 million. Do you think that’s a profitable operation? See, they’re not thinking that General Motors announced they’re going to build for battery plants for I think two or three other people, etc. When you add up all the capacity of those plants, it’s a drop in the bucket. Okay, but the point the point is, where are they going to get the lithium, the cobalt, the Where’s where are they going to go? They think it As do all American financiers, that if you just raise the price, you’ll increase supply. Okay, well, that isn’t true natural resources,

Robert Bryce 55:10
because China’s looking at it solely from a national from a well from a national security state isn’t true

Jack Lifton 55:15
because there is a finite amount of natural resources. China for 10 years has been buying them control of them. We’re new to the game. You know, no American company is building railroads in schools in in the Democratic Republic of Congo, the Chinese are, and they get all the cobalt, okay, and probably the copper. And so we need an industrial planning policy. We need. We need financing of supply chains. But to do that, we need to understand the supply. What I’m saying to you is that in World War Two, Franklin Roosevelt called in the heads of the automotive companies and Henry J. Kaiser, and he said, Listen, guys, I need a lot of boats, a lot of tanks, a lot of machine guns and cannons, stuff like that. And they said, when and how much, you know, I don’t know what he said, but you know, what they said to him? And how do we get paid? And he said, You’ll be paid cost and 10%, something like that. Okay. So, Henry J. Kaiser went on. And by the end of the war, I think every three days, he’s delivering the Liberty ship. General Motors built, Ford built more airplanes in Germany did more work to case you don’t know what in Michigan. Okay. General Motors, I, as a boy, I visited a factory where they had on display the drive train of the submarine, which they built in their Saginaw work. Okay. That was not because a bunch of bureaucrats and academics got together. That was because the industrial leaders of this nation got together and they said, We can do this. And how did they do it? The raw materials were directed to them, you couldn’t get a tire during the war. Unless you were right. Yeah, sure. Okay,

Robert Bryce 57:12
so so well, if I if I interrupted me, what I hear you saying is you’re only that the only way? I’m paraphrasing what I’m hearing you say what I think I’m hearing you say that the only way the US is going to make some significant inroads in terms of EVs, and that is producing them by the millions, is if the US government mandates it and makes it happen, because the individual companies can’t Is that am I hearing you correctly?

Jack Lifton 57:34
Yes, China mandated it and happened, because they have central control. And what’s their control? Their control is obviously the money, when when you go to the People’s Bank of China to borrow 10 million bucks to build a magnet line. They they only ask if you’re competent. They’re not asking about your your ability to repay the loan, or we’d be profitable the first day of the first quarter. The question is, can you do it? And then they in Beijing, they say, do we need this? And, and the money flows? Okay. And and they’re, you know, in the Soviet Union, managers who didn’t meet their quota were were replaced. Okay. So in the Soviet Union, they made as many tractors as possible, even though there was no market. That that would, that was their failure, the Chinese noticed this, and they they’re not doing that. They make things for which there is a demand. And, in fact, they create the demand, for example, when they when they say, you will make 20% EVs in 2025. You know, it’s not a suggestion. And,

Robert Bryce 58:41
and part of that is their own national security by as I’ve understood it to reduce their need the amount of oil that they need by putting more because they can fuel the the EVS with coal or with electricity that, you know, that they can generate from coal they don’t have which they have domestically, they don’t have to import the oil. So they’re their security. Is it true that their security view on this is more nuanced than a lot of people understand is that

Jack Lifton 59:06
I really think that considering how polluted Chinese large cities are, or were, that they immediately realized that cars were really contributing to pollution in the cities. Now, they move steel mills away from the cities, they moved other industries that create a lot of, you know, part of the particular and I think they decided if we go electric, we eliminate one big cause of of air pollution. And so that’s for social harmony. See, and then people tell me, No, they’re trying to save the Earth global this and that cooling warming. I can’t keep track of this crap. But But what they’re doing is trying to clean up their cities. I mean, Chungking China has more people in California. Okay, it’s a city. So it’s really polluted when when you have a million ice ice is running around it. You know, people tend to not keep them exactly in tune. So sure they blow out turbine and they, they steal the catalytic converter, all that stuff is going on. So they said, you know, the solution of problem is not to educate people but to replace that industry and they’re doing it, but they’re the only country in the world that can do it. They have the autocratic kind of government they have now got the raw materials, they’ve got a gigantic carbon spree much bigger than than the American Okay, and they’re the world’s biggest maker of the batteries and of the components of the battery and of the rare earths for the drive trains and they play this was an act in America it’s accidental this all happened in China it was a plan and the plan worked

Robert Bryce 1:00:46
well So then what’s next Jack? We’ve only got we’ve been talking for more than an hour now for about an hour. What’s next what how does this unfold Is this what the the automotive sector that we have now in the auto auto sector we’re going to have for decades to come What’s this what’s what’s going to happen next

Jack Lifton 1:01:02
year always listen if if you I’ll tell you what I promise you if you buy an electric car and there’s a power shortage only certain electric ambulance for you it doesn’t make it I’m sorry

Robert Bryce 1:01:16
I’m not planning to buy an electric vehicle for the record I’m not I’ve had the vehicles that I have are the ones that know about this

Jack Lifton 1:01:21
about this one. The the accessory on a battle main battle tank will be a 5000 Miles extension cord.

Robert Bryce 1:01:29
Okay, okay, now you’re pulling my leg Jack what’s gonna happen give me the give me the disgrace straight poop, what is gonna

Jack Lifton 1:01:35
always Sabri Bolgar might have said we’ll always have internal combustion engines. Okay, now, if if the people in Washington are foolish enough to make the price of gasoline sky high, will will simply go into into a sharp recession over that, because America moves on 300 million ice vehicles. Okay. And they’re actually doing that, in my opinion, they’re making us gasoline too high. So the end result will be that Americans drive either internal combustion engine cars or Chinese made EVs. Now sooner or later, China will exceed the capacity of Chinese production will exceed the market. And they will then be able to export, but they’ll export cars that have Chinese lithium, Chinese, cobalt, Chinese, wherever we will. Nothing to that, except the dealerships.

Robert Bryce 1:02:36
All right. Well, so let me let me let me so you’re saying that eventually then, because that we won’t be able to produce EVs profitably, the US automakers won’t be able to produce EVs profitably here will eventually be will be eventually be importing Chinese electric vehicles.

Jack Lifton 1:02:51
I have to say that I never was a fan of Elon Musk because as a as a native Detroiter, of course, he was against the grain, but you know, what? He’s turning out to be right. And my guess

Robert Bryce 1:03:03
is that so how is he turning out to be right, I’m sorry.

Jack Lifton 1:03:07
He transformed. He created in the market, the electric, the battery powered electric vehicle back in 2005. And it looked ridiculous. At that point. It was a game. And now I think he may have created an industry. But it’s a limited an industry is going to be limited in this part of the world, to luxury vehicles. They’re expensive. And like my, my brother’s electrical contractor, he said, it’s only going to be $5,000 to put the charging station in your garage. So that’s great. So if I don’t buy the car, I just say 5000 more. Okay. And, you know, we have power outages. We don’t know if we have enough power. And I have to tell you that I do know, a retired Vice Chairman of General Motors, who only three years ago said to me, it ain’t never going to happen until we have hundreds of 1000s of charging stations and the grid to support it. I don’t see anything happening there. You know, this idea, the canoe approach to government, thou shalt build 500,000 charging stations. And how are they going to do that? I mean, it’s gonna be crazy to have to wire them up.

Robert Bryce 1:04:24
Yes. Oh, it’s gonna be it’s gonna be crazy expensive. So Jack, just two more questions. And these are questions that I asked him. Pretty much everybody is on the podcast. So what are you reading these days? You have books on your bookshelf or your reader, what do what’s what do you what do you like to read?

Jack Lifton 1:04:37
And be honest with you, I read economic analysis, especially historical analysis. And I read all the national newspapers of the United States in Great Britain every morning, and I subscribe to the China Daily and and things like that I really read voraciously. Because there’s so little actual journalism in the United States. If I didn’t read the British papers in the, in the Chinese and Japanese, I wouldn’t know anything that’s going on in the world, because their point of view overseas is quite different than ours. I’m not saying to their that, that they’re not their governments are wonderful. Their Prime Ministers aren’t Looney Tunes. I’m not saying that at all. But you have to really get information as much information as possible to get any information. Because there’s so much bull out there. Wow. And when I see things like we were talking about today, we’re going to build 50% EVs by the year 2030. And this is repeated by institutional finance, banks, universities, politicians, and I think, How can these people be so uninformed? I don’t, I really don’t know. But when you don’t teach history for the kids today begins the day they were born. And I always tell people, I’ve lived a long life. I’ve done everything wrong, possibly you could do wrong. But that’s why I’m good at giving advice, because I know what you’re doing isn’t going to work. And I’ll tell you why. They but I found out they don’t want to hear

Robert Bryce 1:06:28
well, that’s rather sobering. Last question, then Jack and my guest is Jack liftin. He’s the editor in chief of investor intel.com. What gives you hope?

Jack Lifton 1:06:41
I don’t think there’s going to be any devastating war. And I think that the United States is going to slide into a genteel second place in the world economically. And that if you’ve gotten the money, you’re okay, if you know how to make money, you’re okay. But I don’t see a good future for for people who have not got any any saleable skills. The I don’t I think the United States after World War 219 47 was the strongest nation in history, the richest nation in history, etc. That was the peak of the United States, my opinion. And we’ve, we’ve lived through the rest of it, the decline has been very slow. But if we don’t adopt things like industrial policy, and America First I’m not talking about Donald Trump, talking about common sense. If we don’t adopt we do for ourselves first, like the Chinese, the British, the French, everybody else on her, then we’re just going to slowly decline now. Like, we have a lot of nuclear weapons, a lot of Nate ships, missiles, aircraft and men. Okay, so we’re not nobody’s going to attack or take us over. But what happens if nobody’s listening to us? And I think what I’m seeing in the world in my lifetime, is America’s Respect, respect for Americans by foreigners is gone. The Chinese are beginning to hold us in contempt. And that’s a bad sign.

Robert Bryce 1:08:20
Well, I’m not sure that’s what gives. The question was what gives you hope? I’m not sure you answered it very that way. But it will. That’s okay. We’ll end it right there. Jack, it’s been great. It’s been great to catch up with you again. And your analysis is sobering but in a very well informed it seems. So. Thanks again for being on the power hungry podcast.

Jack Lifton 1:08:42
Okay, no, no prob we want to be depressed call me.

Robert Bryce 1:08:47
So tell you out there. This again, has been an interview with Jack liftin. He’s the editor in chief at Investor intel.com. You can find him right there, investor intel.com. Thanks for tuning into this episode of the power hungry podcast. Until next time, see you. Thanks very much.


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