The Modern Mineral Monopoly: Unpacking the Geopolitical Realities of Scarce Elements with Tomasz Nadrowski

In this episode of the podcast, host Bryan Hattingh and co-host Jonathan Shaw are joined by Tomasz Nadrowski, an investment professional at Amvest Capital and author of Mineral War: China’s Quest for Weapons of Mineral Destruction. Nadrowski dives into the highly complex world of critical minerals and rare earth elements, highlighting how China has effectively monopolised the production chains essential for everything from daily consumer tech to advanced military equipment. The discussion covers the stark differences between private equity and public markets in resource financing, the severe shortages of engineering talent facing the Western mining sector, and why modern geopolitical strategies must urgent shift to counter supply chain weaponisation.

Find more at https://riskybusiness6.wordpress.com/ or https://www.cycan.co.za/

Transcript

SPEAKER_01 0:00

The wonderful sound of the quintessential Neil Young with his legendary song Heart of Gold. I'm your host, Brian Hunting, and we have a really special guest with us this evening. But first, let me introduce my co-host as always, Jonathan Shaw. Jonathan, good evening. Hello, Brian. I'm very good and you. I'm really well, thank you. And very excited to introduce our guest in the form of Thomas Dodrovsky, all the way from New York City. Thomas, welcome to the show.

SPEAKER_02 0:32

Thanks, Brian. Thanks, Jonathan. It's a real pleasure to be introduced with uh Neil Young's uh favorite record in my collection, Harvest. So thanks a lot for having me.

SPEAKER_01 0:42

It's an absolute pleasure and only a pleasure to do that. And I thought it would be very appropriate, you know, given given a lot of the subject matter we're going to talk around, uh, referring to golden minerals that we bring in with a song like that. Is that the theme today? I didn't think at first.

SPEAKER_02 1:00

Almost it should have been Heart of Neodymium or Heart of Lithium or something like that.

SPEAKER_00 1:05

Exactly. So just a note for the podcast, if you're listening on the podcast, we do have a new recommended playlist that we're going to put up with the podcast. So if you're listening to this and you check out the description, you'll see all the songs that usually feature in the radio show, but now you can go listen to them as an aside on the podcast. Well, that's great, Thomas.

SPEAKER_01 1:27

I like I like their little little edition. That's fantastic.

SPEAKER_00 1:30

Nice.

SPEAKER_01 1:31

Thomas, um you know, looking at at your your very, very compelling and and substantial portfolio, there's so many entry points that we could come into uh with this program. But I I'd love to go straight in and and hear about your book uh that you wrote, which is uh I I think very exciting. And and um I'd I'd ask if you'd share that with the listeners.

SPEAKER_02 1:56

Sure. The book is entitled Mineral War and subtitled China's Quest for Weapons of Mineral Destruction. And it goes through the history uh that brought us to this day, uh, which is uh a very unpleasant present time, uh, where China managed to monopolize uh several sectors of critical minerals and then decided to weaponize them. And I tend to dissociate the two um uh processes, uh monopolization and weaponization. Um, why did I write the book in the first place? Because I'm sure we're gonna come back to the theme in a moment. But uh I run a portfolio of uh critical minerals uh equities here at a fund in New York City. And for a long time we uh were not very successful uh raising new funds from allocators. Uh most allocators will tell us, well, we don't understand this space, we don't understand uh those minor metals, uh, it's too complicated. And anyway, China has a monopoly over production, so why would you invest in that? We'll say, well, precisely that's why you need to invest in scarcity value. Um but it's a complex uh topic, and I decided to basically publish the book, and then next time I hear from allocators, we don't understand the space, I throw the book at them and they have no excuse, right? And they have to invest. So that's the story. On a less uh uh frivolous uh side, I think there is still a disconnect between the way uh governments think about this uh strategically and the way uh Wall Street or in general capital markets view it. Um and the two speak two different languages. Uh I'm fortunate enough to speak more than one language, so I thought I'd translate the Wall Street language into, say, Washington, D.C. language, and vice versa. Yes. Uh language of geopolitics or geostrategy on one side, and language of uh you know margins, IRR, and NPVs on the others. Uh to what extent I've been successful with this, I don't know. It's too early to say, it's still a fresh book, and so I recommend it for as long as we are in 2026, it's still very uh very topical. But it's important that the two sides understand each other if we are to formulate policies that would lead to some kind of reindustrialization outside of um the Chinese value chain, which is not just a um challenge for this sector, but I deal with this one on a daily basis. So I thought I'd just contribute with the book.

SPEAKER_01 4:22

That's fantastic and well done in doing so. Yeah, it brings to mind, funny enough, uh I was really intrigued to see your your interest and involvement with uh equities in in private equity and equities in in that space. Um I I've found in South Africa I've done quite a lot of work with private equity uh companies and uh been interested to see, going back some years now, though, how they shied away from commodities. They really didn't want to, they didn't want to play in that space. And and I was trying to uh introduce a do do some deal origination for them of a really compelling company that was involved in the um recycling of carbonaceous waste products from mines, um, and uh uh producing initially predominantly large gold uh deposits from that, and then other minerals, cobalt and and uh silver and others that they that they uh worked in. And it was an incredibly successful business uh with fantastic uh profit margins and and EBITDA and all those good things. And yet these guys were just not interested. It was it was so frustrating because it was staring at them and they just kept coming back to say, no, no, no, um uh we we're not we're not we're not gonna play in that space. And and I I used to sort of sit there and think, but you guys are in the business of managing risk and yet you risk averse yourselves. You know, how do you get to marry those two things?

SPEAKER_02 5:49

So uh this is interesting. Well, let me just step back and uh just refer to what you mentioned about private equity, because uh it's actually an interesting um factor, not limited to South Africa. We have served the same thing here in the US. There was never an interest, any interest in the raw material space. I think for three reasons. The first one is that most of those funds are closed end, and so you you know you start somewhere and you have an exit in X years. Yeah, there's no guarantee. There's no guarantee that in a cyclical market, like commodity market, you can actually hit the right spot seven years from now or whatever, whenever you know, ten years from now. So that's a big risk. That's the first one. The second thing is that in private equity, you um, when you select the deals, you usually start working with a relative value. So you have to have something that's comparable, say in real estate, it's very simple. Yes, yeah, you know, and some of the venture capital may be less so, but honestly, the geology, as we know, uh most of the time, even though we look at analogs and trying to compare things, uh, is unique, is idiosyncratic. Every deposit is different, it's very difficult to run very simple RV screens. And the third area is uh related to duration. Uh, why am I raising this? Because in oil and gas, it is actually possible to have private equity uh vehicles. Um, why? Because, say, in fracking here in the United States, you're in cash in 18 months, 18 months from now. And then there is a certain flexibility when you have the smaller, much smaller footprint and the sort of uh relatively short duration, which does matter in higher interest rate environment, because the operators can decide, depending on the preferences of their shareholders uh or LPs, uh, either to pay out a dividend or just start drilling again. Because what is this 18 months or two years or three years? You know, in mining, on average, we are out there for you know 15 years stuck in something with very little flexibility other than maybe sequencing and uh some modularity of your plant or whatever you can do on the brownfield side, but in reality, we are stuck. Uh, and so there, you know, that is not a palatable uh option, especially in higher interest environment for private equity. So I'm not holding my breath. We are mostly in public, public equity uh listed uh in all the you know usual suspect uh jurisdictions, although we do look at pre-IPO opportunities, but we have to see the exit. It has to be visible. We're not gonna get stuck in something for you know many, many, many years, uh, nor are we able uh to uh operate assets. So it has to be a visible exit if we take a position in a private company, but most of those are in the secondary market.

SPEAKER_01 8:33

So when you talk public equities, then is it is their view and behavior more as an investment fund than a private equity fast spin, high growth, high return multiplier?

SPEAKER_02 8:46

Well, hopefully high return, uh, but also high risk. Uh you know, the nature the nature of this business is that uh that's usually I have to explain this to Americans because you know I live in a country which is now 70% of the global equity market, right? And and and growing with the next you know multi-hundred billion uh IPO and another one and another one. Um the reality of mining business is that most companies uh list prematurely, uh, precisely because the only risk capital that's there is really open-ended, not closed-end. And therefore, it's you know, once you've gone through um family and and friends round, uh you just list, you know, in Australia with like you know, uh tens of thousands, hundreds of thousands of shares uh really on day one, in Canada maybe less. But this is this is what happens from the perspective of the dominant US equity market. This is premature and fairly illiquid. But that's the reality. That's the reality of this space. Unfortunately, between the collapse of the super cycle around 2011, over the next decade, uh till the pandemic and beyond, um, the uh professionalized equity fund management business uh shrank quite significantly. I mean, for South Africa, the probably the most important one is the one in London. I mean, really uh, you know, shrank by about 80% in terms of the funds managed by specialist uh mining equity funds in Canada is no different. So uh that's a problem because then you just don't have sources for financing. And it's extremely difficult for many of these junior operators, whether in South Africa, Australia, Canada, or elsewhere, to take their projects off the ground. And unfortunately, all those different initiatives that I see in the West, you know, just yesterday was a G7 announcement that they're gonna um cooperate to limit uh Chinese inputs or say inputs from one country, as it's stated, to 60%, 60% per mineral. Well, that's all good and fine, and there's a lot of effort to promote this industry from upstream to midstream and so on, but it doesn't take into account this pre-existing structure of the sector, and that's that's my worry, because uh you cannot really um re uh rejuvenate this sector without really taking into account how it's structured in the first place. Maybe because the G7 countries, with the exception of Canada, are not necessarily uh, you know, those parks mining jurisdictions like South Africa, Australia, and some others. So that's a that's a bit of a concern, is that they're trying to reinvent the wheel without really understanding what's behind it. So I hope my my book will help some people to understand it better.

SPEAKER_01 11:31

That sounds wonderful. And and just jumping across back to gold in particular, um, and you uh we'll talk about that with your experience in South Africa with Anglo-Gold Ashanti and your knowledge of the South African landscape, where a lot of our our mines here were very deep, uh, very deep and and and that in that way that much more expensive to mine. What is the the profile of that around the world in other parts of the other geographies in terms of gold mining as a pursuit and and where you're finding the yield and and and what the cost of of getting it is?

SPEAKER_02 12:07

Yeah, so you know, as a as a mining person, I did grow up in South Africa in a way, um, and growing up means going very deep. Uh so it when I then moved to uh fund management industry uh and started visiting mines elsewhere, say in Australia, even underground mines, so it was a shock for me. You know, it's not a shaft, you just go in a truck down the ramp. Very, very different store. But this is really an interesting illustration of what has changed in terms of risk appreciation, because you know, my pedigree started at Anglo-Americans Gold and Uranium Division, which became Anglo-Gold, which became Anglo-Gold Ashanti. But think about that name, Anglo-American. Yes, what does it mean? You know, this was not an English or American company, but it reflected you know, a Johannesburg-based company, it reflected the origin of its investors. A hundred years ago, the investors were British and American, and therefore, American investors had a completely different risk appreciation, going really deep into you know, South African bisbatels on uh uh belt, or uh into copper in Chile, right? In exotic jurisdictions. Uh back then there was much less compunction against that. Um, that's not the case today. Uh there is uh there is this uh sort of almost instantaneous gratification obsession, uh, and that's not possible in mining, certainly not in deep level mining. Uh so you know I I do think that until 2003, roughly, so the black empowerment uh legislation, there was maybe a chance to connect the South African mining more strongly to the global um uh fund management industry. Uh I don't think it's gone in the right direction ever since. Um, but this is a global problem, not just a South African problem. The risk is considered too high. And just to give you an example, in America, in SP 500, less than 1% is in mining. And of that of that 1%, there's only one company that does critical minerals, and that's lithium. So it's really it's insignificant, it's completely invisible in the broader capital market.

SPEAKER_01 14:20

I was going to actually ask you that question of the sort of rare earth minerals like erbium and others that seem to be in increasing demand. You know, where where are they coming from and and and and how does that shape in terms of investment uh approach and strategy?

SPEAKER_02 14:37

Yeah, so this is a really uh big topic. So there's 17 of those elements, of which 16 exist in nature, and of those 16, 14 fall into one category called lanthanides. You mentioned erbium, and there's several others. Um they're predominantly used for magnet production. Why do we care about magnets? Because magnets go into many actuators, including electric motors. So an actuator that has a circular motion. 45% of electricity that we use, uh mostly in transportation, but not only, uh, uses some form of a motor. So, and without those permanent rare earth magnets, they cannot function. So now we have one country, this China, that controls 99% of production of those heavier earths, which are important for doping of the magnets that have to perform in high temperature on other hazardous conditions. And that's actually uh the the area which I wouldn't be so concerned about, the monopoly itself. Think about platinum in South Africa, right? Uh, South Africa has been a quasi-monopoly in platinum for decades, and it has never been a problem for the global market. The problem starts when a monopoly turns to a weapon, and that's exactly what China has done. And uh they prepared the ground for this in 2020 with export control law, targeting potentially rare herbs and other critical minerals where there's a significant uh level of monopolization by China. And then over the next five to six years, they have now fine-tuned this with a number of restrictions that allow them to constrain exports of what they monopolize. And so rare herbs fall into this category, and it's extremely dangerous for say OEMs around the world, car makers and other producers uh that need those magnets uh to produce uh you know whatever. So it's a it's a massive leverage because the actual value of those oxides, when I looked at it at the beginning of this year, was about 60 uh billion dollars. That's you know, not so big. Uh, however, the translation downstream to the economic value added of the products that cannot do without them is about $10 trillion.

unknown 16:49

Wow.

SPEAKER_02 16:50

$10 trillion. Wow. That's a massive there's a massive chunk of the global global GDP, you know, something like 7% of a global GDP. It could be, you know, uh see its you know, teeth knocked out if these if these uh ingredients are not available. And currently uh they're available selectively because China constrains some of those out of fear that they are for dual use applications, dual use meaning military and civilian.

SPEAKER_03 17:16

I was gonna, yeah.

SPEAKER_02 17:17

They're not wrong about it. Uh and that sort of raises uh an issue of uh you know more to a more strategic level. Um, you know, what can we do to actually bypass that chokehold? Um and there is no straightforward answer to it, but there's a lot of there's a lot of discussion, policy discussion. And indeed the business is seeing uh some inflows of capital right now uh to solve this issue and sort of become less dependent on that on the Chinese uh flows.

SPEAKER_01 17:46

Exactly the question I was going to ask you was in the military context. I mean, there must be uh huge exposure then and dependency in terms of that that that uh that sits in their hands.

SPEAKER_02 17:58

So it's remarkable how quickly we have to learn about these things. You know, when I worked in South Africa in the midst of globalization and the world was beautiful, and we could, you know, go to uh China or Russia and look at potential mine investments, right? This is this is how the world used to be. I still uh fondly remember uh my uh friend, the head of geology, who had this uh office in Johannesburg completely plastered with like postcards from around the world, which he used to send to his assistant. Uh and you know, we worked together and we went to a lot of places, very, very exotic places on all continents. Um, well, that that world is over, and partly because we have to learn about conflict, including kinetic conflict. And we're learning really fast. Um you know, the best way to learn is just to observe what's going on in Ukraine with the technological change, almost on a monthly basis. There's some kind of overturn of technology that involves a lot of critical minerals, including different rare earths. Just for electromagnetic warfare, you need two, three, four of different of those rare earth elements. Uh now, you know, what is electromagnetic warfare? It's the way to basically protect your projectiles against being detected, yeah, and vice versa. And uh gadolinium is super important for tomahawk uh missiles that you know have been used now very uh profusely in the Persian Gulf War that's hopefully ended now. Um, yttrium, another um element, non-lanthanite uh rare earth, used in yttrium um iron garnet compound that's also part of electromagnetic uh sort of sensor screening. There are some others. Um, and so scandium, for example, for fuel cells, uh, very useful for those long-range drones. And so that uh technological advancement in on in the military sphere, um that that progresses a lot faster than in the civilian uh sector. Civilian sector is always much larger. For most of these civilian sectors, 90% or more. Maybe now with the growing military budgets around the world, it's changing a little bit, but civilian market is a lot larger. However, the technologies um, as Ukraine has uh proven, change much faster on the military side. That's not new. Think about the second world war. Second World War gave us uh jets, uh nuclear weapons, uh, penicillin, uh, and you know, several other uh inventions uh that uh you know, radar uh that were perfected during the war because it was just so necessary for national security. And we we're walking into somewhat similar um uh era right now, uh, where for me as an investor, substitution risk and indeed substitution opportunity is actually a source of a potential return. Um, but it's no longer investing in just mining, looking at the drill holes and trying to extrapolate from that and looking at what the reserve to uh resource to reserve conversion will be like. Um, it's more about looking at the entire value chain and including those final uh uh end consumer applications. You know, what changes, what kind of scarcity can read to lead to demand destruction, right? And what can come uh to replace that? How do we find a proxy for the replacement? And how quickly can we actually uh identify it and invest in something like this before uh this alpha goes away from us because everybody pounces on that? So it's uh it's it's it's a slightly different ball game working on an investment in uh an era of conflict uh than in the past era of say cooperation and competition, which is how I would probably uh characterize the globalization years of of yesteryear.

SPEAKER_01 21:48

Thomas, how would AI factor into this?

SPEAKER_02 21:52

It does a lot. Uh so uh you know, funny when we're using our claws and uh Chen GPTs and Geminis and And so on, tend to forget that there's a massive hardware infrastructure behind this uh in data centers, of course, and energy that goes into data centers and so on. Uh, there is no AI without access to Sinchu Science Park in Taiwan because uh because of just uh the this is the only place where you can actually uh find two nanometer uh uh logic chips um you know smaller than human DNA. And without this, uh nothing else is possible. So it is absolutely critical to protect that uh that asset uh for the digital transformation to continue. If something were to happen to Xinchu Science Park in Taiwan, and I'm not so gonna go into the details of Taiwan contingency here, but if something were to happen, we will be thrown back about 20 years in terms of technological progress. So it's not a very palatable uh prospect, hence the you know the vital role of that. Many, many, many of these critical minerals end up in that. Um, it's quite astounding when you start looking at how different wafers can be uh doped and etched and uh uh formed in a variety of processes, so semiconductor um uh reduction. Um there's you know 60, 70, 75 different elements that go into this. Many of those uh are those critical minerals that are quasi-monopolized by China. Um, for opt-electronics, for power electronics, for uh you know, plasma etching, uh for uh doping of different materials, just the growing of the of the different layers on a wafer that's so dependent on compounds uh built from those minor metals, specialty metals as we call them, you know, that you usually would never hear of gallium arsenite or indium antimonite and so on and so forth. And they are not mined per se. So you won't find a gallium mine, you won't find an indium mine, but you will find a zinc mine that has a byproduct of indium or germanium, or you will find alumina refinery that has a byproduct of gallium. And the problem that the industry has is that it offered zero payability to these byproducts historically, and now we're highly, highly dependent on that. So that's sort of something that has to change, and has this is one of a process of bringing this industry back from from China to the to the free world.

SPEAKER_01 24:28

What's so interesting? You're talking about that. I'm just thinking uh impact on on consumer. So with the the shortage of those those wafers um and the demand for those wafers, uh, that uh you're finding things like SSD uh hard drives for for uh you know keeping your photographs on or your music on or whatever, you know, are the the cost of that is just it's almost doubled or tripled in the last sort of nine months to a year.

SPEAKER_02 24:59

Yeah, that's mostly affecting memory chips. So we see it in companies in Korea, SK Heinex and Samsung, you know, Micro here in the United States, just turns out that we need a huge volume of those memory chips. So that was underinvested too. So in a way, part of the technology advances, and then everybody else has to look, it's like what's missing. So it's interesting as you know, in 2025, the main story were the designers of this hardware, so say Nvidia, and now suddenly in 26 realized, well, it's memory chips, in this case in Korea. So Korean market's extremely volatile, but with very strong upswing on a good day. And then it's it's as if we're moving slowly upstream, right? Then it's gonna be okay, which components go into those uh those memory chips, and then you know, which uh which elements go into those components or alloys and so on. And so that that's actually encouraging if you are investing in materials uh upstream because the wave will slowly move this way. And there's nothing in the valuation of these companies upstream that reflects that yet.

SPEAKER_01 26:02

Tell me something, taking a quite a big turn back to our conversation around uh uh South Africa, Santi Gold, and then your you you exited that in about 2007 to move into hedge fund, which was just pre-stock market crash, global crash. And uh we were just touching on it briefly before we started our conversation that you know you had some really interesting observations that uh and and discoveries in that short period of time.

SPEAKER_02 26:31

In in a in a in many ways. So talking about imperfect timing, right? So I I I joined a hedge fund in late uh 2007. So of course by early 2009, I was out in the street looking for something new to do. But that was an interesting, that was an interesting um lesson. This 2008 was a year that whatever your projections were for oil prices, whether it was you know $15 or $150, you were correct. It was it was both of these things. Um uh for me, uh really the lesson was that you know, I just came from uh look looking at projects, say in the DRC, right? But you look at projects in DRC, you spend a lot of time in the forest. You spend a lot of time within forest in Ituri Forest, for example, where unfortunately there's an Ebola outbreak right now. Um but but you know, with Mbuti people. Um so your your mind extends way beyond the squiggles on your Bloomberg screen, and then you're back on the you know hedge fund trade floor, and you have to flatten all this hands-on knowledge into just two dimensions. And I found this uh fascinating that that's that's exactly what we needed to do. Now, uh 2008 was an unprecedented uh moment of dislocation, at least here in the in the US market, and we didn't manage it particularly well. Um, but I remember that foreboding you know of this coming and uh realizing that the the the crash is coming, and then looking around me, uh the streets of North Carolina, people were completely unaware of what was always going on. And let's not forget, this was also a time where we had elections and Obama elections in in the United States, so there are other other um distractions. There was a lot of you know new uh hope, um, as it was stated at that time. But I'd say uh that sort of cold shower uh lesson prepared me to look um more long term because ultimately the biggest opportunities that appeared were in early 2009 after the crash for the remaining two years of the super cycle. Uh and the problem with this was, however, that if you were on the liquid side of this market, you could maybe time the exit two years later. But if you were a mining company, you destroyed shareholder value. Companies just overbuilt, overinvested. Uh, there was a massive inflation in the mining sector 29, 10, 11. And that led to that pullback later on of the of the Western, say London listed large mining companies, uh, from new projects. They decided to just focus on something that's very predictable, you know, predictable margins, say copper or iron ore in Australia or something like that. And that opened the door for Chinese players to come in, not least to Africa, and just snap up assets little by little, starting with things that are going into steel making, then to base metals, and eventually for critical metals, those that China doesn't have in its own geology that includes cobalt and manganese, so say the DRC or Gabon, uh places like that. And since they come in at zero cost of capital, they proved to be extremely competitive. And the Western mining uh sector, which used to dominate this industry until 2011, so the end of the super cycle, completely overslapped that. And we we we have seen since then um inability of the of the Western mining industry to compete fully against that very low cost of capital, Chinese competition.

SPEAKER_01 30:08

So going just going back to the crash, because there's one of the points I wanted to touch on. My my memory of of late 2007 and my observations was was the the big property bubble that was happening in in the US. And uh with my limited knowledge, I was even looking at this and saying, you know, this isn't good. You know, this is just people getting getting way ahead of themselves. And um coming into 2008, when you looked at people like Richard S. Fult Jr., who was uh head of Lehman Brothers, um who himself was a trader, not a banker, who was was completely cavalier and and uh impervious to any nudgings from his colleagues and his peers, and um who seemingly played, I I don't know to what extent, you know, you've got to look between the lines, how much he contributed to the start of the crash. Um, but the question I wanted to raise was really your observations at that time and even beyond that of of the leadership component, you know, what is it that leaders are getting wrong uh in this whole movie? You know, be it avarice or greed or megalomania, whatever it might be, and narcissistic narcissistic stuff, but and and traits of hubris, what what is it that leaders are missing and could possibly learn from over this period of how we as as as contributors to the the greater world could do it better?

SPEAKER_02 31:33

There is a certain cycle between uh greed and fear uh throughout the markets, and the regulators uh tend not to be counter uh counter-cyclical in that. So when there's a lot of greed, regulators sort of uh loosen up on control, and when there's a lot of fear, they tighten up. You know, Lehman Brothers, yes, that's late 2008. I think the the first uh ring was Bear Stern's. I just happened to be at Bernstein's office the day before it collapsed in March 2008 here in New York City. And I I I listened to a uh presentation regarding commodities, and there was screaming coming out from a room next door. I didn't know, I didn't understand at that time what was going on until saw I saw the next day people walking out with boxes, you know, leaving the the building of bursters that basically died on on that day. Um the reality is that the lesson, if there is a lesson that regulators learned in 2008, is that they should have bailed out Lehman to prevent the systemic collapse at that point. And that's exactly what has happened since. Uh, think about you know the COVID uh intervention, right? Massive intervention, massive liquidity support for about 30 countries that are counterparties of the Fed, just to prevent a massive deflationary shock. Now, that of course contributed to the inflationary 2020s uh later on, but I think that's exactly the the the lesson. Let's say over a long time there was always this threat. Well, China holds this almost trillion dollars worth of US treasuries, now significantly less, but at some point it was a trillion or even more. Uh, you know, what's gonna happen if they sell it? Well, the Fed during COVID bought you know a larger amount within just two weeks, right? So, in a way, uh this this this they believe that this is the role. This is no different to what JP Morgan did in the early 19 uh hundreds to prevent another depressionary strike back then before the Fed actually was instituted properly, to avoid a previous um uh uh crisis, which was which was uh highly damaging. So, in fact, these are this is always we're always kind of battling the previous crisis uh or fighting the previous war. Uh, but I I I guess uh there is more fear of the sudden deflationary shock than of a sudden inflationary um uh dislocation, because we haven't seen a massive like jump in inflation that will be as damaging as a complete dislocation in the market, given how the um the exposure of like generic general consumer, at least in this country, is to the equity market. And so we had another example of that uh after the Liberation Day, uh so-called liberation day in April of uh 2025, uh when the Trump administration announced those tariffs, uh, you know, affecting the entire world country by country rather than product by product. And the bond market, of course, reacted very negatively to this, and they had to pull back uh from you know the most egregious uh elements of that of that plan. So there is a certain, I'd say, discipline in policymaking that's provided by by the sector, certainly the bond market. But if the bond market goes haywire, then the equity market will respond um accordingly. So, in a way, yes, a lot of damage, a lot of uh wealth destroyed in 2008. Um, but maybe the uh firepower and the toolkit of the regulators, and especially the Fed, is sufficiently limited uh to uh give them, you know, basically that particular weapon that is to reflate any um uh potential anxiety over another deflationary shock as quickly as possible. And this is what they did during COVID. Um it's very difficult to judge it over long term. People complain about inflation, but we do not have you know a next you know, next door a laboratory, uh a lab with with uh with a control group to find out how the economy would have performed without that intervention, right? We don't know that, and we will never know this because there's only one one planet to to work on for now.

SPEAKER_01 35:42

And and at that time we saw the the big banks, the global banks, you know, take a massive hit in terms of their net asset value and and uh their whole standing. Um and uh did in your observation did did most of them recover from that?

SPEAKER_02 35:59

No, I think there were some structural changes uh that took place, especially after Basil III, uh in the next you know two or three years that followed that. Uh and that pulled, for example, a lot of banks from uh trade financing. Uh and that moved moved that activity either into the hands of uh commodity traders, say in Switzerland or Singapore, or indeed for the Chinese entities. And so the this traditional work that's so important for you know the physical movement of commodities around the world, there was largely exited uh from banks that became more risk-averse following the regulatory reaction to the 2008 uh dislocation crisis. So so yeah, the banking system was never the same again.

SPEAKER_01 36:41

Yeah, I remember at the time before the crash, you know, the the merchant banks were riding high, and the the individuals in those organizations were being paid commissions that were just off the charts. I mean, there were it was insane to think that could be earning that sort of money, you know.

SPEAKER_02 36:59

Talking about imperfect timing again, you know, at that time, so 2004 or 5, I was uh working at a South African mining company, but I have friends in in US uh who are exactly in the group that you're mentioning, and sometimes, you know, two decades later, ask them so what was your best year in terms of your earnings? Well, 2004, that was really great. Not for me, not for me.

SPEAKER_01 37:22

No, no. Going going back to the the the sort of the mining space and we and looking at the junior mining companies, people going into mining today, um, what's changed and what do they have to what are their big dependencies that they need to manage and and how do they best enter into it?

SPEAKER_02 37:40

Which people going into mining today, Brian? I'd like to meet them. Uh, there's just not enough. There's not enough geologists, metalers, and engineers to take this to the next level. Um Vitz University is among the best in the world that's probably doing a little better. But between Colorado School of Mines and Canada and uh UK and Australia, it's catastrophic. We just don't have enough people to uh to to really take it off the ground and build up this uh, you know, not just mining, but also smelters and refineries and so on, everything midstream that we need. And you know, that's an industry that's also dying, including in Southern Africa, including you know, uh Glancor that's closing smelters in South Africa and and Mozzal in Mozambique and another zinc smelter in Namibia. They just can't compete against uh Chinese competition that can work at negative margins. And so that prospect is not attracting young people. And it's a real problem. It's a real problem, including in those, you know, par excellence mining um mining jurisdictions. I think if I were asked, okay, what's the number one challenge is lack of human capital going forward.

SPEAKER_01 38:48

And that's not the quick fix.

SPEAKER_02 38:50

No, no, absolutely not.

SPEAKER_01 38:52

Absolutely no quick fix on that. That's uh real tragedy. And part of that, you know, it's it's it's uh education failing upon itself, you know. Uh if what sort of uh marketing message is being made by the by the institutions around the possible opportunities for people in that space? Because clearly it must it should bring with it opportunity for people to excel and to and to prosper if they were to choose that route, provided that the very uh sectors themselves don't you know disappear into the ether.

SPEAKER_02 39:24

So this is a fascinating conversation. And my book, one um uh chapter is entitled, If greed doesn't force us, then the fear will. And I think this is slowly what's happening to a younger generation. So this year, you know, most offices, including mine, is tinker around with how to best use AI to advance certain processes, modeling, and so on. You know, we need an intern or two interns to do this, but at the end of the day, if we are successful, then it's gonna be an AI robot and not a human being. Young people see the you know uh writing on the wall, unfortunately. But that also means that uh going into something that's just a pure manipulation of symbols on a computer screen, uh which is what you learn in a college, university, uh, is probably not gonna guarantee a career. And so increasingly in the United States as well, and it's a system that always existed in Switzerland to some extent in Germany, uh, you're pushing on people towards something else. Focus on making widgets, focus on actually creating something that's in 3D, not just on a software screen, uh, so that you learn how to actually catch up with the changing uh technology and that you can participate in this process rather than being displaced by this process. And so that means that eventually people will move back to industry. It's not gonna be, you know, 19th century factory floor or 19th century uh underground shaft, but it's going to be more people who have no choice in order to actually have any job other than actually create the world, the 3D world, and that includes mining and metallurgy.

SPEAKER_01 41:05

That's quite profound, you know, and I think that it's it's not something that's that's that uh present on front of mind with many young people in the world today and their parents, you know, that they're oblivious to the extent of of the of the changing space of time and what's what's uh happening in the world of work.

SPEAKER_02 41:27

It's it's it's very new, it's just happening for the first uh time, but they will have to adjust. There's no doubt about it. And you know, we need them. We need them, and the the economy will need these people. Some people will go or there is a need. And unfortunately, that might mean that maybe you know, not the gender studies at the university and not you know critical theory studies. Um, you know, that's you know, maybe interesting areas, but they're not gonna guarantee and not gonna be a guarantee for a job in the future.

SPEAKER_01 41:54

But isn't that a responsibility with the institutions themselves, academia, to rethink itself and cannibalize itself in terms of what it's offering to the world, rather than something just of um academic, esoteric uh indulgence to practical uh world impacting and value transferring studies?

SPEAKER_02 42:14

Well, maybe we need both. Maybe we need um really technical um uh apprentiçage so that people actually learn how to make things, physical things. And if they're interested in the esoteric side of life and studying philosophy or you know, practicing religion, that's fine too. That's also another aspect of life. But you know, the we have to make sure that the new generation can also uh satisfy the economic needs of the system and their own. And that's the that would require some rethinking of the educational system.

SPEAKER_01 42:48

Yeah, you've touched on such an important point there on the practical hard skills, you know, which we've seen, particularly in South Africa, a complete erosion of, you know, the the technical schools and technical colleges closed down. And so we're sitting here with a a real need for um apprentices and apprenticeships to be reintroduced, you know, and for those skills to be out there. And uh they they skills that are transferable, you know, you can take them anywhere in the world. You know, a plumber's a plumber, you know, they're gonna uh uh they're gonna be needed, they're gonna need to fit a pipe, and uh there's value in that, you know, and and uh similarly with electricians, you know.

SPEAKER_02 43:26

Yeah, I think there's still value in in making things or fixing things and improving things. And if technology you know advances, and we have to say transform plumbing from something to something else, as some of the older towns in in Europe have to do. That requires a lot of uh manpower and skilled manpower, and uh manpower that's being upskilled on a regular basis because you know clean energy and uh connectivity and uh wiring and all of these things have to change if the building is from the 19th century. You still have to make it livable and so. There is a lot of there's a lot of potential for that, for both creating new things and maintenance of old things. And uh there there's no there's no way to run against that. That's just just the nature of our depreciated capital park. So uh I you know I think there there is no other way. And by the way, you know, we often just agonize about how many engineers are chunked out by say China or India or countries uh like that. They have a similar problem. They're trying to actually provide uh jobs for uh graduates. Currently, you know, in China, 20% of graduates are without jobs, and that's before even AI really kicks in. I'm talking about college graduates. So it is a it is a global problem. It's just the the fact that uh many of those like symbol manipulating jobs are gonna go away. You know, is there really a space for paralegals now if Claude can do everything for you for you know $20? Um, no, there isn't. And there are gonna be more of those. Uh robotization is gonna change this as well. But this plumbing thing, uh, you know, for many, at least for men, uh, creating something and making something and improving your home and DIY and so on has been always part of, if not a job, then at least a hobby for many. Uh that's still probably better in terms of skill set and upgrading skills with to keep up with technology than just serving coffee to each other, which is what the service industry-based economy has become. Um, not a very high level of self-esteem. And I think the problems that the US has seen after the China shock of the 2000s under George Bush II presidency uh led exactly to that. If you travel around, you know, the Dakotas or the Midwest or somewhere, you know, some of the places look like um as if Eisenhower was still a president. But people do just that. They serve coffee to each other, and it's not great for self-esteem. So for the next generation to avoid that, we have to actually create the opportunity to actually help them to learn how to make things and how to improve things. And things are in 3D, not things just on a screen and certainly not on TikTok.

SPEAKER_01 46:04

It's absolutely amazing, Thomas, and so much to reflect on and consider uh in a in a world that's become so much more complex than we ever would have imagined. You know, the 20th century was complicated, the 21st century is certainly one that's complex. Um just a question, going back, just touching on the mining thing again. If one looks at Africa, Africa still is this incredible geography loaded with uh mineral resources uh that are uh profound. What's going to happen with all that unmined uh that's still out there and with some of the challenges we've touched on?

SPEAKER_02 46:44

Well, that really depends on uh what the policymakers will do with this in those countries. And you know, each country has a slightly different attitude. I often hear, like at Indaba uh this year, that uh the industry is to go downstream. We really need to build smelters. I mean, really, I mean, where's the energy endowment allowing you to do this? Smelters in the West, that includes Europe, uh, Asia, Australia, Canada, and so on, are struggling. This business is usually uh low margin and it has to be high volume. It's very difficult to do this. Maybe, maybe at the very early stages of Belt and Road Initiative, where China was actually infusing a lot of funds into Africa, that was the moment to make it conditional upon you know building downstream uh operations. Right now, it's probably nigh on impossible unless those countries want to become even more dependent on Chinese investment. As you know, this is not coming for free, but the 3.5% interest rate. And that's a problem. That's a problem because that means that currently the capital flows are reversed, have been reversed since 24. So this, you know, go to $20 billion worth of capital account repayment that goes back to China, in addition to a trade account uh uh deficit vis-a-vis China of over $100 billion. And that's because the US, the US and to some extent Europe have shut the door uh for some of the Chinese products. So rather than China rebalancing its economy from production to consumption, they redirected the edge towards Southeast Asia and Africa with very damaging consequences for uh reindustrialization, or in Africa's case, industrialization. But I wouldn't completely agonize about that, you know, that's gonna be so difficult to build downstream uh processing. Maybe in some cases it will be, but overall, it's it's difficult. We have one example from history of successful downstream building and uh economic development on the back of this. That's of course the beers in Botswana. Um very, very unique case. But let's not forget that we know countries in the developed world that created a lot of wealth just off mining and extraction, certainly Canada, certainly Norway, certainly Australia. So it's possible to do this. Uh you don't have to uh invest in in smelting, refining, purification, separation, and so on on site to extract value from this. It's some kind of a myth that a lot of policymakers in Africa are following into.

SPEAKER_01 49:10

So just talking again about your book, uh, The Mineral War, China's Quest for Weapons of Mineral Destruction. I just love the title. I think it's superb. And uh where is it available? It's available on Amazon and and and uh through various channels. Uh anybody can get it?

SPEAKER_02 49:27

Yeah, anybody can get it from Amazon. Uh that's worldwide. Uh, if you're in the US, then of course all other bookstores can hold it too uh through a wholesaler, but Amazon is the the best place around the world to obtain it. Um it's both available on Kindle and in hard copy.

SPEAKER_01 49:43

That's fantastic. Is it on audiobook as well?

SPEAKER_02 49:47

Not yet. Not yet. You're not you're not the first person this week asking for it, so I'll work on that. Yeah.

SPEAKER_01 49:53

Okay, that sounds great. Well, I mean, I can't believe it, but we've actually come to the end of the show, and it's been so fascinating. It's been such a pleasure having you uh join us and be with us and sharing your your very substantial insights and wisdom and uh knowledge and experience with with the listeners. And it's just uh reminded me once again of of uh what a wonderful world we live in. It's crazy, it's upside down, but it's still filled with opportunity and and and things to learn. And and I think one of the most important, perhaps, commodities that that people need to hold on to is curiosity and and and and the and the willingness and ability to learn and learn new things. What would you think on that?

SPEAKER_02 50:36

We just see a small snapshot of this, right? That you know, we are thrown into this at some point, then we spend you know 80 years at best uh in this space and then we go away. So what else can we offer other than curiosity about what's out there? And we'll never be able to fathom the whole thing. So that's the that's the fascinating thing about this little snapshot of universe and time that we've granted with.

SPEAKER_01 51:01

And I think uh a never an ever-present gratitude for the fact that we are alive and that we've got another day to either make a difference or not make a difference, but if we can, to just uh leave a great footprint on the world, you know, no matter how small. Um and it speaks to how we engage with people and with one another and how we just embrace this thing called life.

SPEAKER_02 51:25

That's that's the healthiest attitude, yes, absolutely.

SPEAKER_01 51:29

That was Thomas Nodrowsky, our guest on our show this week. Uh he's an investment professional, he's an author, he has more than 25 years' experience in the mining and natural resources sectors. Currently serves as a portfolio manager at Ambest Capital, which focuses on critical minerals and commodity strategies. And then his recent book that's just gone out there and is available on Amazon, is Mineral War, China's Quest for Weapons of Mineral Destruction. He also hosts a podcast called Tyranny Today. Thomas, I wish you every success in what you're doing. Thank you.

SPEAKER_00 52:13

And some days are diamonds.

SPEAKER_01 52:16

Okay, thank you. Thomas, take care, be safe. And listeners, remember if you're not with the ones you love, love the ones you're with, take time to tell and show the ones you love how much you do, and take care of yourselves and each other. Thomas, all the very best. Thanks for joining us.

SPEAKER_00 52:34

Thank you, Brian. Thank you, Thomas. Thank you, Thomas. Have a great day. Thanks.