'This Is A Crisis': Fund Manager's Explosive Forecast For This Critical Sector | Tomasz Nadrowski
Summary
Critical Minerals: The guest strongly pitches critical minerals as a multi-year opportunity driven by Western efforts to reduce reliance on China across refining, smelting, and downstream uses.
Rare Earths: Extensive discussion of rare earths and permanent magnets, highlighting China’s export controls and the imperative for Western rebuilding of processing capacity.
Supply Onshoring: Emphasis on onshoring the “middle” of the value chain, citing the Korea Zinc Tennessee smelter deal as a template and advocating tariff floors and targeted incentives.
Defense Replenishment: Elevated munitions spending and restocking needs are set to boost demand for specialty metals (gallium, germanium, antimony, tungsten), with multi-year rebuild timelines.
Semiconductor Materials: Chips and optoelectronics (GaAs, GaN) are core demand drivers; complex supply chains and quality needs favor fresh oxides and robust Western processing capacity.
Battery Materials: Discussion of LFP and sodium-ion leadership in China, graphite anode bottlenecks, and potential substitutions (e.g., niobium), underscoring Western lag but growing incentives.
Market Outlook: Policy tools (tariffs, subsidies, tax code tweaks) and allied cooperation (US, Japan, Korea, Australia, Canada) are critical to catalyze investment amid high capital costs and permitting hurdles.
Companies Cited: Examples include Korea Zinc (Tennessee smelter), Alcoa (gallium pathway), Rio Tinto (Quebec potential), POSCO (graphite), and ASML (equipment), though no single stock was specifically recommended.
Transcript
There is no futures market. So what are you going to do with this? You need someone who would metalize it. You're not going to keep it in metal metal because it will corrode. But uh you're going to ship it to Vietnam to metalize it. So how do you invest in that? It's not sufficiently liquid. The ban has not been lifted. It has been suspended for 12 months. This is a crisis as it was before October. >> Do you think that the US is in a position to adequately fight sustained conventional war with a nearpeer adversary like Russia or China? Some people may question whether we are up here at >> critical materials drive our economy. Everything from phones to computers to petroleum and everything in between. So what is next for the future of materials trading exporting of critical minerals and what can investors expect to gain from this sector going forward? We're speaking about these themes with our next guest, Thomas Nrosski, portfolio manager at the Amethyst Terodan Critical Materials Fund and author of the book Mineral War: China's Quest for Weapons of Mineral Destruction. Welcome to the show, Thomas. Good to see you. >> Great to be here. Thanks for having me. >> I believe it was Deng Xiaoing that said um that China's ultimate weapon is critical minerals. And uh this was a rather precient quote because right now China accounts for the majority of the world's smelting of critical materials including copper. So before we talk about what investors should pay attention to in the current trends, just how dire is the situation that the west is facing to the extent that the Trump administration has labeled copper a critical material, critical mineral last year in August 2025 and he's called it a matter of national security that the US divests from China as a source of critical materials. Tell us about what you found through researching your book, Mineral War. >> Sure. So uh for starters I don't really deal that much with those larger markets. You're absolutely right. Copper is another source of concern. Um we tend to view critical minerals as some of those smaller markets or rare earth specialty metals some of the better materials. Um but it's true that um in the refining and smelting space China is so dominant not only in those smaller markets and you quoted Tangio Pink who probably his original quote is about rare earths only. Um but it's true for some of the larger markets. In fact, the slow death of smelters and refiners outside of China as uh some of the Chinese operators can uh operate without TCRC's or negative ones. Uh that's a big concern for that market. And indeed, it looks like China is doubling down. In Shandong, there's a whole new uh center built for new copper smelters as if the world needed more of those. Definitely not the case. not the case inside the Chinese market. And so once you have some of those, some of the critical minerals will come out from those flow sheets as well, such as toarium for example and some others. So it is a it is a concern. Um the US government is correct uh cautioning against uh this over dependence. However, this is something that has accumulated over three decades and it's not going to be unwound within just one electoral cycle in the United States. It takes a lot more. It takes a lot of incentives for the downstream business, downstream manufacturers to uh be incentivized away from that overdependence on relatively affordable uh inputs uh from the Chinese market. And since most of our procurement systems and our manufacturers function as cost centers, it's not that easy to do. There are levers, there are policy levers that could be um adopted uh for that. But we have to be realistic. downstream manufacturers are politically more powerful in this country than upstream miners. >> I want to come back to the China and geopolitical angle in just a bit but before that what do you think are the most critical critical minerals today in terms of what you expect demand to uh or how demand will grow in the coming years. >> So it's both demand and supply and uh substitution risk or lack thereof. So the three issues that really drive the criticality of those on the supply side is very clear because the more controlled a material is by China usually somewhere in the middle of the value chain but also upstream uh the more critical it is starting with gallium so I think 99% produced out of China at the moment um heavier herbs almost the same as feroniz graphite not much uh behind this tungsten which is probably the best performing uh metal of the last 12 months that's about 82 2% controlled by China and then we have bismouth and penadium and and antimony and uh indium and several others all similar way about 50% controlled by China so that's on the on the supply side on the demand side since we're talking about fairly small markets this is not iron or this is not box side um these are fairly small markets and so uh small technological changes can completely transform uh the uh the supply demand um uh relation here. I give you an example from one of the uh metals that has been overdependent on production from three mines for a very long period of time. Two of them in Brazil, one of them in in Canada. That's Naobbio. And the reason why it's not more broadly adopted uh beyond say steel alloys and some super alloys is precisely that there's a constrain on that development of the demand because the supply is so limited it's so so restricted to those several operations. uh the most important of which was almost acquired by Chinese parties uh during the great financial crisis and then the Japanese and Korean investors uh came in as well um keeping it keeping this product still available to the broader market. However, if there are more mines of nobbium around the world, uh it's possible that this uh material would be used uh as a substitution for others which are extremely constrained and in the case of nobbium that could be anode um anode am for for batteries replacing graphite potentially because these technologies exist. Toshiba worked on this many years ago. What just happens is there's just not enough production, but it's slowly changing. You know there are projects in Australia and Western Australia which are very promising that could transform the supply structure of that material. It will still be critical but the supply demand differential would look very different from now. >> Let's go back to China for a minute. Currently the um Chinese like you mentioned control a lot of the uh command system when it comes to refining and processing. Do you think the west is focusing on the wrong thing by simply just expanding uh mineral exploration? Uh should the west be investing in refining and onshoring some of that process? How long would that take? >> Okay, two things. So first I define the west not in cultural terms but institutional terms. >> Okay. >> So it's not just the oxident Europe and North America but also Japan, Taiwan and South Korea. So countries that are institutionally western. And so in these terms um especially those three Asian countries they do have manufacturing capacity and refining capacity um luckily enough why because I think we understand now exactly what you said but it's just not enough to back explorers or developers in Brazil or Africa or somewhere because at the end of the day they have to sell it somewhere. We invest this way at amvester and we invest by looking at the entire value chain and you know we're interested in the quality of the uh drill holes and the quality of the team but at the end of the day who are you going to sell it to if we have a bifurcated market so that's very important and by the end of last year I think our government here in US understood this and the best example of this is the deal with Korea zinc in Tennessee to build a massive smelter uh in a brownfields development used to own be owned by nerstar um but it's sort of on its last legs under the former um uh owner and Korea zinc will produce not just zinc and other base metals but also a whole range of other byproducts as you may know you can have indium or germanmanium out of zinc gallium out of boideum out of copper these are often sort of those uh byproducts that are absolutely critical but you need to have a full service smelter for that so I think there's understanding of this I think Australia is trying to save some of the smelters their private operator traders will would more happily close at the current Chinese prices. Um so there is a recognition that we need this physical market in the west. Uh we cannot just completely relinquish that middle of the value chain to China. >> Before we continue with the video, let's talk about one of the most critical minerals of our economy, copper. Now copper grades are declining globally. The majors are struggling to keep their mills fed. Which brings me to today's sponsor, Algo Grande Copper Cor. Ticker Algr, and their Adelita project in Sonora, Mexico. Sonora is one of the most established copper producing regions in the world. Adelita sits inside it as a high-grade copper deposit, a type that's increasingly rare and increasingly strategic. Phase 1 drilling has already returned strong results, including 18.2 meters at 1.8% 8% copper equivalent. But this isn't a single whole story. The company has identified multiple high-grade systems along a 6 km corridor with geological work pointing to potential large-scale copper at depth. Phase 2 drill targets are already being defined. The technical team includes Peter Migall of Mag Silver and Raymond Janus of Atex Resources, both with proven track records in this type of geology. Ticker is ALGR. Scan the QR code here or go to the link in the description down below to learn more. I like to show this on the screen. This is from the White House adjusting imports of processed critical minerals and their derivative products into the United States dated January 2026. Uh this is a proclamation. So the secretary of commerce transmitted to me on report his investigation into the effects of imports of process critical metals and the derivative products PCMDP on the national security of the United States under section 232 of the trade expansion act of 1962. Now importantly this addresses the risks of the supply chain. What do you think uh the the US is going to do to fix the issues that we've talked about so far? ultimately which is that it's been heavily dependent on foreign supply chains especially for processing and magnets. >> Yeah. So this is not something can be changed overnight unfortunately. However, there are a couple of things that need to be done. First in order to incentivize investment uh within broader west and especially in the United States you really have to uh establish a different price structure because we overdependent on the so-called Chinese price uh for which the demand curve is much more elastic in China giving the over capacity over production than it is in the west. we have a much more inelastic demand curve and therefore the price should not reflect the Chinese market especially if it's quasi monopolized than some of these materials by China and therefore it this price floor for you know different for different materials would have to be protected have to be protected with tariffs section 301 tariffs so specific to specific HS codes uh but once you have that you have to incentivize the downstream business to uh move slowly gradually away from the Chinese product and so you can use the revenue generated by those tariffs to uh provide subsidies um and that is possible if you build the three things. So specific incentivized for the prices not for the operating margin but for the capital intensity that is necessary to put back uh facility and a specific node of the value chain of a given element and then protect it with tariffs and use this uh revenue in order for the downstream to wean themselves as I said gradually because it's not going to happen overnight from the dependence on Chinese products. So it's a it's a multi-step uh process. It's perfectly possible to do it. The second thing that needs to be done is of course to reduce the cost of capital for these investors both on the equity side and on the debt side and that could be done by tweaking the IR codes accordingly. Right now we just don't see this. For now we're seeing mostly you know very large operators being invited to cooperate with DFC or XM bank or sometimes just exper money being distributed. >> When the US faced an OPEC oil embargo in the 1970s the US responded in a few ways. one, they set up a strategic oil petroleum uh petroleum reserve. And number two, um the fracking boom that followed in the following decades presented an opportunity for the US to become the world's largest oil producer. Do you think that the US is facing an inle similar inflection point today with critical minerals? Is this the OPEC moment for critical minerals such that the US will one day reinvent its entire priorities and become a large supplier of critical minerals globally? So there are two two moments in history you mentioned. One is the OPEC 73 and the other one is the fracking which is late 90s early 2000s. Uh so it took a while. Now back to my point it's a gradual process. Uh you know fracking of course was such an amazing breakthrough uh that we had a capital market system that uh fit the requirements of this relatively small footprint very flexible uh operations between you know one day the investors want a dividend another day they want money be put back into the ground. We don't have that flexibility in mining because of just the nature of mineral exploration development and production. um fracking had fast depletion, heavy capex and short duration. So the capital market was ready for this. We have nothing quite like this in mining and as you know it's overdependent on equity markets, public equity markets and most of them overseas equity markets in Australia, Canada, UK to a lesser extent, much less so in the United States. However, if you bring up OPEC, which is really interesting because seems to be uh fracturing right now, um uh you know that led to a much more important uh move that is the uh introduction of the petro dollar uh system by William Simon who went in 1974 to Saudi Arabia and convinced the Saudis to uh swap their security for uh use of dollars not just in bilateral uh trade with the United States but uh trades with any other party that would require um oil, crude oil from the Middle East. That of course forced a lot of economies to seek the dollars to pay exactly for that. But this was a time where that sort of dislocation in the in the Middle East was much more important for the global economy which was you know $5 trillion at the time something like that. Right now we at $115 trillion so it's a smaller impact. Having said that, when I look at the levers that for example rare earth magnets have on our electrical grid and generally anything electric uh anything that produces some electricity flow uh probably affects about 47 48% of any of that um then the leverage is similar. So uh the urgency should be there. Whether we have financial tool that would address it, I'm not sure. some of the moves that we have made with the DRC exporting security or at least promising to export security to the eastern DRC in exchange for access to cobalt uh from that country um shows that maybe that idea from 1974 is not that far but these are smaller economies smaller players uh you know it's much more dispersed it's going to be multi-reion and so it's really difficult to uh compare it to the Persian Gulf uh developments back in 197374 >> well let's bring forward to today. If the Chinese decides to tighten their critical minerals uh exports controls even more from rare earth to uh beyond and really choke uh the United States and its allies on supply. What does the west per your definition have in terms of options today? >> So this already happened um last year. So, China, so let's step back. In 2020, China introduced export control law, which gave them sort of this um opening to uh introduced regulatory uh restrictions on flows not only of the materials per se, but also related technology, IP and equipment related to both the processing and sometimes even extraction of some of these materials. And over the subsequent 5 years from October 2020 to October 2025, we're in Xiinping being met with Trump and Busan and South Korea. We count 24 different restrictions. Most of those affecting the entire world. This is not a US China issue. There are certain that affect just the United States or just Japan more recently, but most are uh applicable for for the entire world. Uh two of these were really important. one in April of last year uh that uh slept constraints on seven uh rare earth elements and then in an escalation prior to the meeting with Trump there were five more in October. Uh the reaction that we heard from OEMs was that if we cannot obtain those permanent magnets to produce electric motors to produce our cars then let's just move our production of electric motors to China. And so this is a perfect illustration of this you know shwang shing the dual circulation that works for the Chinese communist party that is to make the entire world dependent on the Chinese economy increasingly make the Chinese economy independent of the outside world that worked very well. However like with any weapon and we can learn you know ourselves from slapping financial sanctions on different countries. If you just abuse it, then the other party eventually adjusts and and if there is a real absolute embargo on the entire world. Uh it will probably the last be the last time that China can use it. So it's probably more in their interest to threaten rather than actually apply a full embargo on the production of these. Not to mention, of course, a lot of their own producers would just die in the process by not being able to sell it. Whether they care or not is a different story. they definitely care about the stateowned ones that um they they control fully. Um so I would expect that a lot of foundational research or applied research some of the more advanced demo plant uh stage uh developments would advance a lot faster in this case. So you have incentive to actually really build up and you wouldn't have to subsidize the downstream producers anymore because they wouldn't be so chained to the Chinese supply chain, pun intended and therefore um it would be in some ways easier to transfer throughout the process of massive dislocation and the transition would uh take much uh less long. Now, of course, if something like this were to happen, then unfortunately, if you're geostrategically realistic, that would also possibly mean that there are some other plans of non non-commercial nature uh to ratchet up that conflict with the west. >> It it does one more question and we'll go back to the markets. It does raise a question as to why the US government has been relatively nonsupportive of the mining industry in terms of allocating capital in the past. The US government has supported ship building. They've supported farming, AI defense as you know. Um why is a little >> attention car making pharmaceuticals. Yeah. >> Exactly. You know all these big spa state sponsored almostuh industries. Yeah. Mining has gained so little attention until now. Why? >> It's been really a forgotten corner of the US capital market. So it's it you know the largest mining companies are not in this country. they've been either UK listed or Australian listed, Canadian listed before before they were taken out by others. Um there's very little activity and therefore very little lobbying in favor of that of this industry. And then you have the permitting uh issue. Basically since 1960s, it's become extremely difficult to permit a mine. I think in the first 23 years of this century, there are only three new mines that were permanent in the United States. So it's not just a question of capital allocation. I think the capital patience for such long timelines, you know, going into, you know, a decade and a half or longer is just simply not there. And so there was no political pressure because there was no capital interest for something like this. We need a permitting reform. It was almost pushed through in late 2024. The party that swept uh all the liveries of the government in right before decided that in 25 they'll probably pull off a better reform. It didn't happen. We're still waiting for that. And so uh this and also courtroom legal challenges they're constantly plaguing this industry. Now this is not a benign industry. I agree there are certain places where you should not mine and build a massive open pit mine but it doesn't mean that you shouldn't mine at all. And therefore I think right now there is a recognition that yes there's a lot more focus. Definitely our government right now focuses on on just two uh industries um AI and critical minerals. um but it's difficult to take it off the ground from nowhere and there's a lot of regulatory changes that um contributed to killing this industry. Just in the case of rare herbs, it was the nuclear regulatory commission in in the early8s that basically made everything that 0.05% radioactive class 7 material uh boosting the costs for operating these um these mice and therefore basically uh pushing this industry out of the country and predictably into China at that time. So dealing with externalities uh massive overhaul reform but in the meantime we cannot wait and we have to piggy back on the existing successful mining industry in other countries and that is Australia, Canada, UK. I always repeat that's actually not so bad because these are defense production act titled three countries. So material coming from those countries counts as our domestic material for national security. >> So right now there's a few forces at play when it comes to demand. We talked about the supply side a lot. AI, data centers is one corner and on the other corner defense, munitions um and then of course battery technology is an ongoing uh demand force. Which of these forces do you think is strongest for an investor? >> I think everything that moves around the tiniest piece of widgets, there's the semiconductors, there's both civilian data centers and the and uh military. Uh we just wasted a lot of material in the Middle East. there's going to be a lot of stockpiling going into this uh to just accelerate replenishing of this inventory. So suddenly historically civilian market was you know 95% of all demand for most of these things if not more but it's changing in the current uh circumstances uh let's call it this way not just in the United States look at all the military budgets from India to Germany Japan Australia uh you name it United States currently on the table as well so that obviously matters but a lot of this passes through uh tiny pieces of u either logic chips in Taiwan or memory chips in Korea and uh it's overdependent on that uh supply chain very complex because these companies have as you know like supply roots going into thousands of subcontractors and ASML is no different in the Netherlands but they all depend on these materials compounds made from uh elements that are sourced from materials in the ground mostly in the ground sometimes recycled but there's often a question of quality for recycled materials So fresh oxides, fresh material from the ground is almost necessary for everything. And that includes um the centered magnets, you know, otherwise a pretty old technology that's been around for for over 40 years. Uh on the battery material side right now, uh you know, definitive leadership is with the Chinese producers on the LFP side and increasingly maybe uh sodium ion as a as a potential replacement for lithium ion depending on the prices of lithium carbonate equivalent. um this is going to be very difficult for other players in the west to wrench that um uh leadership away from China and the question is whether it needs to be done really this way um now whether the consumer will decide ultimately what happens. So I guess you know all of these all of these this you mentioned are are are the biggest drivers for what are ultimately not a very not very large markets um but they're growing uh because the complexification of technologies is advancing so fast I think I I write it in in my book when I started using the first you know CPU computer uh I think Intel used about 16 different models uh by now your you know you know tiny GPUs and your smartphone It's almost 10 times more. So it's just amazing how complexified our technologies have become in terms of the different inputs that go into >> Do you think that lithium will be the next oil >> different structure of supply? Uh different uh so depends probably on the development on the BSS side. Uh right now it's still early. I think in the transportation on the transportation side there will be compromises there will be compromises with hybrids plug-in hybrids and so on. uh not everything will be uh EVs because there's just too much um dominance by the by the Chinese producers and that comes with other strings attached not least the fact that these vehicles are software enabled and therefore they send data somewhere which uh gets accumulated and for many countries this is considered national security threat or at least a question mark and many places in the world are sufficiently unstable to worry about it so I guess uh it's going to come as it has in the last 10 years uh with uh busts and and booms and and back again. uh partly also because on the long on this high cost end of the curve on the cost curve production cost curve there's a lot of elasticity of supply giving the vertical integration of the dominant players uh there in the pidolite in Chanchi province and therefore it's uh it's a slightly different structure and therefore I don't expect cartilization as some of this leftist South American presidents dreamed of about 3 years ago >> do you expect the Pentagon to be more actively involved in um minerals companies in the US and abroad in the form of either investing or just outright buying them. So not sure about outright buying them but department of war is one of the parties that is heavily uh involved in uh generating different deals of different parties in addition to DFC DOE axim of course uh on it on its own right and department of commerce recently as well interestingly enough so it's one of one of many parties whether really buying equity stakes by government entities is a good idea I'm actually not a big supporter of this I think we have a capital market that's sufficiently deep, liquid, and efficient to pull it off if it's properly incentivized. And that requires some exchanges. What do you think are the um biggest opportunities for investors right now? I know you mentioned them uh mentioned a bunch of um different drivers uh but for most investors, a lot of these critical minerals are probably very in very opaque markets. What are some ways to be exposed to some of the biggest trends? Um, >> so the only way to really be exposed to most of them is for equity. Uh, because you're not going to start stockpiling some of the things, not only because it's tough to lay your hands on that, but also it's uh the cost of um building and maintaining this inventory could be just exorbitant. Um, you know, some of these things can oxidize very quickly or pulverize or whatever. you need to really uh keep them in in specific conditions uh and therefore uh you have to just leave it to um those experts you know I mean you have this problem with many base metals as well right you have to constantly replenish the u uh the stockpile this is more acute in some of those um those compounds in which you would keep it and if you do keep it in something that's stable like rare earth oxides what are you going to do with this you need someone who would metalize it you're not going to keep it in metal metal because it will corrode but you're going to ship it to Vietnam to metalize it. So how do you invest in that? It's not sufficiently liquid. There is no futures market. So you're down to equity. And equity means if you want to avoid China, then for most of the uh opportunity, you're going to be in still in pre-production with few exceptions pre-production equity. So you have to be comfortable with the duration of your portfolio given how high the interest rates are. That's not for everybody's liking. >> And on market impacts here, this is the price of silver on my screen. you're about to see uh how much of silver's rise in the early part of 2026 was due to China's limiting of silver exports that was in the news late last year in December 2025. I wonder if it's actually had a significant impact on the price. What do you think? >> I don't believe it. I don't believe it. There is about 34 refineries in China making silver, but there's 89 in the world. This is not This is not gallium. Okay. So uh I would leave it to Jeffrey Christian maybe to comment on silver one from my side and my my sort of memory of uh precious metals. What's interesting in this chart is uh where it settled after this spike. So it didn't go back down as you know on two occasions before uh well remembered uh by some and that means that there is some tension between the investment market and the physical uh demand and of course the physical market is mostly in China because as my mentor in the past Kelvin Williams the late Kelvin Williams of Anglo-American used to say in precious metals you have the driver and the floor under the price and the floor under the price is that industrial demand most of the time the driver is the investment. demand and so industrial demand of course has tightened and this we see it now because the market silver market didn't settle back to what it was before that spike that's positive overall for for the silver market going forward >> yes uh on you mentioned gallium gallium dermanium and antimony were banned by China in late 2024 for export China has lifted this ban uh late last year as part of deescalation in trade tensions suppose they didn't lift lift this ban, would the US military be um in danger of running out of munitions given that these minerals are reportedly used in the manufacturing of ammunition. >> Okay. So, let me just correct if I may one thing. Uh the ban the ban has not been lifted. It has been suspended for 12 months until November. >> Okay. So, so it's a suspension and therefore because we have this timeline uh the situation I mean this is a crisis as it was before October right uh so uh a couple of things kind of happened in terms of gallium a deal with Alcoa who's a refinery in Australia will start producing it rather than sending the material to China for uh separation of gallium there's another smaller deer in US with a talco wouldn't take long for us to settle our differences with Canada so that Riotinto and Quebec can also produce some So there are sources but we're coming from you know low-end 1% of non-Chinese production. Now this is not about ammunition per se. Uh gallium is used for two things. Gallium arssonite and opto electronics with very very um heavy electron mobility electron volatility and gallium nitrite which has a much higher band uh band gap uh which therefore has uh you know more applications for high thermal power electronics. this one. Yes, you'll find it. You'll find it in some precision munition. Um, but opto electronics, the products for opto electronics take longer uh for purified material to be vetted for the production. So, it's not an overnight thing that you just find someone who would produce it and and sell it. There are probably two producers in the west uh listed. Uh, we happily invested in one of them and uh the chart shows that the market's waking up to this. German is a little different. this infrared uh optics. It's also absolutely critical for um solar panels that go through uh the stratosphere atmosphere up there um because of course the number of low orbit satellites and those panels uh they require germanmanium uh but germanmanium can be more easily stockpiled in our uh DA has been doing this uh for a while. Antimony. I'm more optimistic in terms of rebuilding Antimmani uh production line uh also because it's often associated with gold and therefore bankers don't have the problem backing these projects as much as for the others. They can basically translate everything into gold equivalent as by the way the Australian regulators would force you to. you cannot present an antimony equivalent for some reason but gold equivalent and bankers will be able to run their RV screens and then decide you know whether they have appetite for this project or not. So it's probably we're still coming from a low base but I think within 5 years from now we're probably largely uh solve the antimony problem. >> Okay. Well going back to the munitions issue this is from CNN dated April 21st. US at risk of running out of missiles if another war breaks out. According to reports, over the last 7 weeks of the war, the US military has expended at least 45% of its stockpile of precision strike missiles, at least half of its inter inventory of THAD missiles, which are designed to intercept ballistic missiles, and nearly 50% of its stockpile of Patriot air defense interceptive missiles. This happened in just a span of a few weeks. Now, when articles like this present to you stats that are seemingly just, in my opinion, just frightening, uh, is it because of a lack of munitions, sorry, a lack of critical materials in inventory, or is it due to a lack of, I guess, production capability that that the reports say that the US is probably going to run out of munitions if this continues? >> Mhm. Okay. Uh, let me just correct the numbers there. So on the offensive weapons, Tommahawk we wasted about 27% of the inventory. For JSMs 23% for PRSMs 78%. And on defense ones the SM3 61% the SM6 32% THADS 81% believe it or not and three raiders are gone and Patriot 61%. So it's scary already. We don't need another war for a wakeup call. CIS I think calculated that we need between four, five, sometimes six years for some of these to rebuild those inventories. So, and I'm not sure to what extent these numbers actually reflect the fact that we might not have all that much godalinium for example for the electromagnetic warfare to protect the tomahawks that will be built right now. I remember Japan had about um an order for 400 tomahawks for next year. I'm not sure they're going to get it. So it it's already a problem. We don't have to wait for the next kinetic uh conflict for this to be a red alert. >> So that this red alert uh going back to the question is it is it a production issue or is it a minerals? >> It's going to be source sourcing and production production has to be boosted by you know a long stretch. Um luckily enough you know there are some other products uh that our allies built whether in Germany, Japan, Taiwan or elsewhere. Um, so it's not all lost, but uh uh that was a particularly wasteful campaign from this perspective. >> If it's going to take years to potentially potentially years to rebuild the stockpile, do you think the US military is going to shift its focus on building other types of perhaps even cheaper munitions and thus require different kinds of critical minerals? >> It's not just munitions. Did you see Awax >> which was splintered in two? Yeah, this is two years after Ukraine sent its spiderweb um drone attack on the Siberian base and deep into Russia when it basically obliterated big chunk of strategic bomber fleet of its you know number one adversary. Um, everybody seemed to have learned from that since they're certainly the Russians, certainly the Chinese. I don't I know that certainly Taiwanese as well. Somehow we haven't. This is more important than you know expanding all these patriots. It's just hardening your defense, putting hangers, strong hangers around this. Russians have been building it since that debacle against Ukraine two years ago. Why haven't we even the Middle East? >> Okay. So, you think there's an you think there's a bigger There's a bigger problem. There's a bigger problem of adjusting to the new uh reality. The situation on the ground, the asymmetry of these conflicts as shown by the Ukrainians on the Baltic Sea or in the front line and with with the drone technology that changes every 6 weeks and with this Delta AI system that feeds the the data back. Um, someone said a while ago that they didn't have cards. Well, maybe we don't have maybe we should be learning a little more from our allies and friends. So given what we've learned so far about munitions expenditures and um how the war has progressed from the Iran war, do you think that the US is in a position to adequately fight a sustained conventional war with a nearpeer adversary like Russia or China? >> If a war were to happen tomorrow, >> some people may question whether we are a peer adversary with China uh giving that they can build 232 vessels per year and we can build one. So uh you know this is uh it goes probably beyond the usual topic of your of your podcast but naturally with so much dependence for our future our digital future in the western Pacific western pacific remains our core interest and the stability in western pacific uh a lot depends on that uh in terms of our future lives and therefore what does it mean that we're conventionally inferior it means exactly the same thing as during the first cold war during the first cold war in the European theater, the USSR had a massive conventional superiority and that meant that the threshold for nuclear response was very low and we're going back to that world now. >> So what's going to happen in the next 5 years when and why ended here? >> Oh uh I hope we'll do very well in our fund uh investing in this space uh already restockping of all these critical minerals to just replace what's been wasted on the Iranian plains and mountains that's going to accelerate the demand. So it's a fantastic time to be in critical minerals >> and uh how do you think the US government and militaries will will respond to what we just talked about in the next 5 years and um would you adjust your portfolio to that trend? >> Yeah, so we always look for uh opportunities in you know across various uh materials. We have exposure to about 25 different let's call them commodities even though they're not widely uh traded but different elements and that counts for earth as one. So there's a lot to choose from uh depending on the technological changes and the tightness and that scarcity value that we um that we perceive in in the west. Uh right now the pecking order is fairly um simple. um in some of these markets one can actually question why they giving the monopolization and then weaponization of that monopoly by China why the west hasn't moved faster and I think speronized graphite is a case in point here I hear POSCO building the facility now but this was you know the constraints the restrictions on that was slept in October of 23 so almost 3 years ago so in some cases the the western response has been just slower than you would expect but if the kinetic conflicts multiply and proxy wars uh proliferate. Uh not only are we expanding a lot of material, but we also have to expand a little more gray matter and think about this differently. Um and that requires probably more rather than less cooperation with the allies. And you know to to the credit of the administration, they've gone down that road since at least the middle of the last year with a multiple great number of different bilateral deals with different countries have different strengths whether in mining or in processing and refining. >> Awesome. All right. Thanks very much. We appreciate it. Thomas, tell us where we can find out more information about your work >> and read about your fund. >> So, uh, we can be found at amvest teraden.com. Anvesvest m ter e r r r r r r r r r r r r r r r r r r r r r a d e n. Teroden means so terra of course earth and den in Japanese means earth or dn den in Chinese. So, um electricity from the earth on teroden.com you can find everything uh about us what we do. We uh publish on a weekly basis some commentary about different developments in the market, supply chain, geopolitical insights and so on. Uh you can also uh find the book mineral war uh on Amazon and most jurisdictions where Amazon exist or even in a local bookstore um even don't have it on the shelf they can order it from Ingram Sparks. That's how it works. >> Sorry, I was going to say we we'll put the links down below. So, make sure to follow Thomas and the fund and his book there. Thank you very much, Thomas. It was great to meet you. Welcome to the show and I hope to speak with you again soon. Take care for now. >> Thank you, David. >> Thank you for watching. Don't forget to like, subscribe,
'This Is A Crisis': Fund Manager's Explosive Forecast For This Critical Sector | Tomasz Nadrowski
Summary
Transcript
There is no futures market. So what are you going to do with this? You need someone who would metalize it. You're not going to keep it in metal metal because it will corrode. But uh you're going to ship it to Vietnam to metalize it. So how do you invest in that? It's not sufficiently liquid. The ban has not been lifted. It has been suspended for 12 months. This is a crisis as it was before October. >> Do you think that the US is in a position to adequately fight sustained conventional war with a nearpeer adversary like Russia or China? Some people may question whether we are up here at >> critical materials drive our economy. Everything from phones to computers to petroleum and everything in between. So what is next for the future of materials trading exporting of critical minerals and what can investors expect to gain from this sector going forward? We're speaking about these themes with our next guest, Thomas Nrosski, portfolio manager at the Amethyst Terodan Critical Materials Fund and author of the book Mineral War: China's Quest for Weapons of Mineral Destruction. Welcome to the show, Thomas. Good to see you. >> Great to be here. Thanks for having me. >> I believe it was Deng Xiaoing that said um that China's ultimate weapon is critical minerals. And uh this was a rather precient quote because right now China accounts for the majority of the world's smelting of critical materials including copper. So before we talk about what investors should pay attention to in the current trends, just how dire is the situation that the west is facing to the extent that the Trump administration has labeled copper a critical material, critical mineral last year in August 2025 and he's called it a matter of national security that the US divests from China as a source of critical materials. Tell us about what you found through researching your book, Mineral War. >> Sure. So uh for starters I don't really deal that much with those larger markets. You're absolutely right. Copper is another source of concern. Um we tend to view critical minerals as some of those smaller markets or rare earth specialty metals some of the better materials. Um but it's true that um in the refining and smelting space China is so dominant not only in those smaller markets and you quoted Tangio Pink who probably his original quote is about rare earths only. Um but it's true for some of the larger markets. In fact, the slow death of smelters and refiners outside of China as uh some of the Chinese operators can uh operate without TCRC's or negative ones. Uh that's a big concern for that market. And indeed, it looks like China is doubling down. In Shandong, there's a whole new uh center built for new copper smelters as if the world needed more of those. Definitely not the case. not the case inside the Chinese market. And so once you have some of those, some of the critical minerals will come out from those flow sheets as well, such as toarium for example and some others. So it is a it is a concern. Um the US government is correct uh cautioning against uh this over dependence. However, this is something that has accumulated over three decades and it's not going to be unwound within just one electoral cycle in the United States. It takes a lot more. It takes a lot of incentives for the downstream business, downstream manufacturers to uh be incentivized away from that overdependence on relatively affordable uh inputs uh from the Chinese market. And since most of our procurement systems and our manufacturers function as cost centers, it's not that easy to do. There are levers, there are policy levers that could be um adopted uh for that. But we have to be realistic. downstream manufacturers are politically more powerful in this country than upstream miners. >> I want to come back to the China and geopolitical angle in just a bit but before that what do you think are the most critical critical minerals today in terms of what you expect demand to uh or how demand will grow in the coming years. >> So it's both demand and supply and uh substitution risk or lack thereof. So the three issues that really drive the criticality of those on the supply side is very clear because the more controlled a material is by China usually somewhere in the middle of the value chain but also upstream uh the more critical it is starting with gallium so I think 99% produced out of China at the moment um heavier herbs almost the same as feroniz graphite not much uh behind this tungsten which is probably the best performing uh metal of the last 12 months that's about 82 2% controlled by China and then we have bismouth and penadium and and antimony and uh indium and several others all similar way about 50% controlled by China so that's on the on the supply side on the demand side since we're talking about fairly small markets this is not iron or this is not box side um these are fairly small markets and so uh small technological changes can completely transform uh the uh the supply demand um uh relation here. I give you an example from one of the uh metals that has been overdependent on production from three mines for a very long period of time. Two of them in Brazil, one of them in in Canada. That's Naobbio. And the reason why it's not more broadly adopted uh beyond say steel alloys and some super alloys is precisely that there's a constrain on that development of the demand because the supply is so limited it's so so restricted to those several operations. uh the most important of which was almost acquired by Chinese parties uh during the great financial crisis and then the Japanese and Korean investors uh came in as well um keeping it keeping this product still available to the broader market. However, if there are more mines of nobbium around the world, uh it's possible that this uh material would be used uh as a substitution for others which are extremely constrained and in the case of nobbium that could be anode um anode am for for batteries replacing graphite potentially because these technologies exist. Toshiba worked on this many years ago. What just happens is there's just not enough production, but it's slowly changing. You know there are projects in Australia and Western Australia which are very promising that could transform the supply structure of that material. It will still be critical but the supply demand differential would look very different from now. >> Let's go back to China for a minute. Currently the um Chinese like you mentioned control a lot of the uh command system when it comes to refining and processing. Do you think the west is focusing on the wrong thing by simply just expanding uh mineral exploration? Uh should the west be investing in refining and onshoring some of that process? How long would that take? >> Okay, two things. So first I define the west not in cultural terms but institutional terms. >> Okay. >> So it's not just the oxident Europe and North America but also Japan, Taiwan and South Korea. So countries that are institutionally western. And so in these terms um especially those three Asian countries they do have manufacturing capacity and refining capacity um luckily enough why because I think we understand now exactly what you said but it's just not enough to back explorers or developers in Brazil or Africa or somewhere because at the end of the day they have to sell it somewhere. We invest this way at amvester and we invest by looking at the entire value chain and you know we're interested in the quality of the uh drill holes and the quality of the team but at the end of the day who are you going to sell it to if we have a bifurcated market so that's very important and by the end of last year I think our government here in US understood this and the best example of this is the deal with Korea zinc in Tennessee to build a massive smelter uh in a brownfields development used to own be owned by nerstar um but it's sort of on its last legs under the former um uh owner and Korea zinc will produce not just zinc and other base metals but also a whole range of other byproducts as you may know you can have indium or germanmanium out of zinc gallium out of boideum out of copper these are often sort of those uh byproducts that are absolutely critical but you need to have a full service smelter for that so I think there's understanding of this I think Australia is trying to save some of the smelters their private operator traders will would more happily close at the current Chinese prices. Um so there is a recognition that we need this physical market in the west. Uh we cannot just completely relinquish that middle of the value chain to China. >> Before we continue with the video, let's talk about one of the most critical minerals of our economy, copper. Now copper grades are declining globally. The majors are struggling to keep their mills fed. Which brings me to today's sponsor, Algo Grande Copper Cor. Ticker Algr, and their Adelita project in Sonora, Mexico. Sonora is one of the most established copper producing regions in the world. Adelita sits inside it as a high-grade copper deposit, a type that's increasingly rare and increasingly strategic. Phase 1 drilling has already returned strong results, including 18.2 meters at 1.8% 8% copper equivalent. But this isn't a single whole story. The company has identified multiple high-grade systems along a 6 km corridor with geological work pointing to potential large-scale copper at depth. Phase 2 drill targets are already being defined. The technical team includes Peter Migall of Mag Silver and Raymond Janus of Atex Resources, both with proven track records in this type of geology. Ticker is ALGR. Scan the QR code here or go to the link in the description down below to learn more. I like to show this on the screen. This is from the White House adjusting imports of processed critical minerals and their derivative products into the United States dated January 2026. Uh this is a proclamation. So the secretary of commerce transmitted to me on report his investigation into the effects of imports of process critical metals and the derivative products PCMDP on the national security of the United States under section 232 of the trade expansion act of 1962. Now importantly this addresses the risks of the supply chain. What do you think uh the the US is going to do to fix the issues that we've talked about so far? ultimately which is that it's been heavily dependent on foreign supply chains especially for processing and magnets. >> Yeah. So this is not something can be changed overnight unfortunately. However, there are a couple of things that need to be done. First in order to incentivize investment uh within broader west and especially in the United States you really have to uh establish a different price structure because we overdependent on the so-called Chinese price uh for which the demand curve is much more elastic in China giving the over capacity over production than it is in the west. we have a much more inelastic demand curve and therefore the price should not reflect the Chinese market especially if it's quasi monopolized than some of these materials by China and therefore it this price floor for you know different for different materials would have to be protected have to be protected with tariffs section 301 tariffs so specific to specific HS codes uh but once you have that you have to incentivize the downstream business to uh move slowly gradually away from the Chinese product and so you can use the revenue generated by those tariffs to uh provide subsidies um and that is possible if you build the three things. So specific incentivized for the prices not for the operating margin but for the capital intensity that is necessary to put back uh facility and a specific node of the value chain of a given element and then protect it with tariffs and use this uh revenue in order for the downstream to wean themselves as I said gradually because it's not going to happen overnight from the dependence on Chinese products. So it's a it's a multi-step uh process. It's perfectly possible to do it. The second thing that needs to be done is of course to reduce the cost of capital for these investors both on the equity side and on the debt side and that could be done by tweaking the IR codes accordingly. Right now we just don't see this. For now we're seeing mostly you know very large operators being invited to cooperate with DFC or XM bank or sometimes just exper money being distributed. >> When the US faced an OPEC oil embargo in the 1970s the US responded in a few ways. one, they set up a strategic oil petroleum uh petroleum reserve. And number two, um the fracking boom that followed in the following decades presented an opportunity for the US to become the world's largest oil producer. Do you think that the US is facing an inle similar inflection point today with critical minerals? Is this the OPEC moment for critical minerals such that the US will one day reinvent its entire priorities and become a large supplier of critical minerals globally? So there are two two moments in history you mentioned. One is the OPEC 73 and the other one is the fracking which is late 90s early 2000s. Uh so it took a while. Now back to my point it's a gradual process. Uh you know fracking of course was such an amazing breakthrough uh that we had a capital market system that uh fit the requirements of this relatively small footprint very flexible uh operations between you know one day the investors want a dividend another day they want money be put back into the ground. We don't have that flexibility in mining because of just the nature of mineral exploration development and production. um fracking had fast depletion, heavy capex and short duration. So the capital market was ready for this. We have nothing quite like this in mining and as you know it's overdependent on equity markets, public equity markets and most of them overseas equity markets in Australia, Canada, UK to a lesser extent, much less so in the United States. However, if you bring up OPEC, which is really interesting because seems to be uh fracturing right now, um uh you know that led to a much more important uh move that is the uh introduction of the petro dollar uh system by William Simon who went in 1974 to Saudi Arabia and convinced the Saudis to uh swap their security for uh use of dollars not just in bilateral uh trade with the United States but uh trades with any other party that would require um oil, crude oil from the Middle East. That of course forced a lot of economies to seek the dollars to pay exactly for that. But this was a time where that sort of dislocation in the in the Middle East was much more important for the global economy which was you know $5 trillion at the time something like that. Right now we at $115 trillion so it's a smaller impact. Having said that, when I look at the levers that for example rare earth magnets have on our electrical grid and generally anything electric uh anything that produces some electricity flow uh probably affects about 47 48% of any of that um then the leverage is similar. So uh the urgency should be there. Whether we have financial tool that would address it, I'm not sure. some of the moves that we have made with the DRC exporting security or at least promising to export security to the eastern DRC in exchange for access to cobalt uh from that country um shows that maybe that idea from 1974 is not that far but these are smaller economies smaller players uh you know it's much more dispersed it's going to be multi-reion and so it's really difficult to uh compare it to the Persian Gulf uh developments back in 197374 >> well let's bring forward to today. If the Chinese decides to tighten their critical minerals uh exports controls even more from rare earth to uh beyond and really choke uh the United States and its allies on supply. What does the west per your definition have in terms of options today? >> So this already happened um last year. So, China, so let's step back. In 2020, China introduced export control law, which gave them sort of this um opening to uh introduced regulatory uh restrictions on flows not only of the materials per se, but also related technology, IP and equipment related to both the processing and sometimes even extraction of some of these materials. And over the subsequent 5 years from October 2020 to October 2025, we're in Xiinping being met with Trump and Busan and South Korea. We count 24 different restrictions. Most of those affecting the entire world. This is not a US China issue. There are certain that affect just the United States or just Japan more recently, but most are uh applicable for for the entire world. Uh two of these were really important. one in April of last year uh that uh slept constraints on seven uh rare earth elements and then in an escalation prior to the meeting with Trump there were five more in October. Uh the reaction that we heard from OEMs was that if we cannot obtain those permanent magnets to produce electric motors to produce our cars then let's just move our production of electric motors to China. And so this is a perfect illustration of this you know shwang shing the dual circulation that works for the Chinese communist party that is to make the entire world dependent on the Chinese economy increasingly make the Chinese economy independent of the outside world that worked very well. However like with any weapon and we can learn you know ourselves from slapping financial sanctions on different countries. If you just abuse it, then the other party eventually adjusts and and if there is a real absolute embargo on the entire world. Uh it will probably the last be the last time that China can use it. So it's probably more in their interest to threaten rather than actually apply a full embargo on the production of these. Not to mention, of course, a lot of their own producers would just die in the process by not being able to sell it. Whether they care or not is a different story. they definitely care about the stateowned ones that um they they control fully. Um so I would expect that a lot of foundational research or applied research some of the more advanced demo plant uh stage uh developments would advance a lot faster in this case. So you have incentive to actually really build up and you wouldn't have to subsidize the downstream producers anymore because they wouldn't be so chained to the Chinese supply chain, pun intended and therefore um it would be in some ways easier to transfer throughout the process of massive dislocation and the transition would uh take much uh less long. Now, of course, if something like this were to happen, then unfortunately, if you're geostrategically realistic, that would also possibly mean that there are some other plans of non non-commercial nature uh to ratchet up that conflict with the west. >> It it does one more question and we'll go back to the markets. It does raise a question as to why the US government has been relatively nonsupportive of the mining industry in terms of allocating capital in the past. The US government has supported ship building. They've supported farming, AI defense as you know. Um why is a little >> attention car making pharmaceuticals. Yeah. >> Exactly. You know all these big spa state sponsored almostuh industries. Yeah. Mining has gained so little attention until now. Why? >> It's been really a forgotten corner of the US capital market. So it's it you know the largest mining companies are not in this country. they've been either UK listed or Australian listed, Canadian listed before before they were taken out by others. Um there's very little activity and therefore very little lobbying in favor of that of this industry. And then you have the permitting uh issue. Basically since 1960s, it's become extremely difficult to permit a mine. I think in the first 23 years of this century, there are only three new mines that were permanent in the United States. So it's not just a question of capital allocation. I think the capital patience for such long timelines, you know, going into, you know, a decade and a half or longer is just simply not there. And so there was no political pressure because there was no capital interest for something like this. We need a permitting reform. It was almost pushed through in late 2024. The party that swept uh all the liveries of the government in right before decided that in 25 they'll probably pull off a better reform. It didn't happen. We're still waiting for that. And so uh this and also courtroom legal challenges they're constantly plaguing this industry. Now this is not a benign industry. I agree there are certain places where you should not mine and build a massive open pit mine but it doesn't mean that you shouldn't mine at all. And therefore I think right now there is a recognition that yes there's a lot more focus. Definitely our government right now focuses on on just two uh industries um AI and critical minerals. um but it's difficult to take it off the ground from nowhere and there's a lot of regulatory changes that um contributed to killing this industry. Just in the case of rare herbs, it was the nuclear regulatory commission in in the early8s that basically made everything that 0.05% radioactive class 7 material uh boosting the costs for operating these um these mice and therefore basically uh pushing this industry out of the country and predictably into China at that time. So dealing with externalities uh massive overhaul reform but in the meantime we cannot wait and we have to piggy back on the existing successful mining industry in other countries and that is Australia, Canada, UK. I always repeat that's actually not so bad because these are defense production act titled three countries. So material coming from those countries counts as our domestic material for national security. >> So right now there's a few forces at play when it comes to demand. We talked about the supply side a lot. AI, data centers is one corner and on the other corner defense, munitions um and then of course battery technology is an ongoing uh demand force. Which of these forces do you think is strongest for an investor? >> I think everything that moves around the tiniest piece of widgets, there's the semiconductors, there's both civilian data centers and the and uh military. Uh we just wasted a lot of material in the Middle East. there's going to be a lot of stockpiling going into this uh to just accelerate replenishing of this inventory. So suddenly historically civilian market was you know 95% of all demand for most of these things if not more but it's changing in the current uh circumstances uh let's call it this way not just in the United States look at all the military budgets from India to Germany Japan Australia uh you name it United States currently on the table as well so that obviously matters but a lot of this passes through uh tiny pieces of u either logic chips in Taiwan or memory chips in Korea and uh it's overdependent on that uh supply chain very complex because these companies have as you know like supply roots going into thousands of subcontractors and ASML is no different in the Netherlands but they all depend on these materials compounds made from uh elements that are sourced from materials in the ground mostly in the ground sometimes recycled but there's often a question of quality for recycled materials So fresh oxides, fresh material from the ground is almost necessary for everything. And that includes um the centered magnets, you know, otherwise a pretty old technology that's been around for for over 40 years. Uh on the battery material side right now, uh you know, definitive leadership is with the Chinese producers on the LFP side and increasingly maybe uh sodium ion as a as a potential replacement for lithium ion depending on the prices of lithium carbonate equivalent. um this is going to be very difficult for other players in the west to wrench that um uh leadership away from China and the question is whether it needs to be done really this way um now whether the consumer will decide ultimately what happens. So I guess you know all of these all of these this you mentioned are are are the biggest drivers for what are ultimately not a very not very large markets um but they're growing uh because the complexification of technologies is advancing so fast I think I I write it in in my book when I started using the first you know CPU computer uh I think Intel used about 16 different models uh by now your you know you know tiny GPUs and your smartphone It's almost 10 times more. So it's just amazing how complexified our technologies have become in terms of the different inputs that go into >> Do you think that lithium will be the next oil >> different structure of supply? Uh different uh so depends probably on the development on the BSS side. Uh right now it's still early. I think in the transportation on the transportation side there will be compromises there will be compromises with hybrids plug-in hybrids and so on. uh not everything will be uh EVs because there's just too much um dominance by the by the Chinese producers and that comes with other strings attached not least the fact that these vehicles are software enabled and therefore they send data somewhere which uh gets accumulated and for many countries this is considered national security threat or at least a question mark and many places in the world are sufficiently unstable to worry about it so I guess uh it's going to come as it has in the last 10 years uh with uh busts and and booms and and back again. uh partly also because on the long on this high cost end of the curve on the cost curve production cost curve there's a lot of elasticity of supply giving the vertical integration of the dominant players uh there in the pidolite in Chanchi province and therefore it's uh it's a slightly different structure and therefore I don't expect cartilization as some of this leftist South American presidents dreamed of about 3 years ago >> do you expect the Pentagon to be more actively involved in um minerals companies in the US and abroad in the form of either investing or just outright buying them. So not sure about outright buying them but department of war is one of the parties that is heavily uh involved in uh generating different deals of different parties in addition to DFC DOE axim of course uh on it on its own right and department of commerce recently as well interestingly enough so it's one of one of many parties whether really buying equity stakes by government entities is a good idea I'm actually not a big supporter of this I think we have a capital market that's sufficiently deep, liquid, and efficient to pull it off if it's properly incentivized. And that requires some exchanges. What do you think are the um biggest opportunities for investors right now? I know you mentioned them uh mentioned a bunch of um different drivers uh but for most investors, a lot of these critical minerals are probably very in very opaque markets. What are some ways to be exposed to some of the biggest trends? Um, >> so the only way to really be exposed to most of them is for equity. Uh, because you're not going to start stockpiling some of the things, not only because it's tough to lay your hands on that, but also it's uh the cost of um building and maintaining this inventory could be just exorbitant. Um, you know, some of these things can oxidize very quickly or pulverize or whatever. you need to really uh keep them in in specific conditions uh and therefore uh you have to just leave it to um those experts you know I mean you have this problem with many base metals as well right you have to constantly replenish the u uh the stockpile this is more acute in some of those um those compounds in which you would keep it and if you do keep it in something that's stable like rare earth oxides what are you going to do with this you need someone who would metalize it you're not going to keep it in metal metal because it will corrode but you're going to ship it to Vietnam to metalize it. So how do you invest in that? It's not sufficiently liquid. There is no futures market. So you're down to equity. And equity means if you want to avoid China, then for most of the uh opportunity, you're going to be in still in pre-production with few exceptions pre-production equity. So you have to be comfortable with the duration of your portfolio given how high the interest rates are. That's not for everybody's liking. >> And on market impacts here, this is the price of silver on my screen. you're about to see uh how much of silver's rise in the early part of 2026 was due to China's limiting of silver exports that was in the news late last year in December 2025. I wonder if it's actually had a significant impact on the price. What do you think? >> I don't believe it. I don't believe it. There is about 34 refineries in China making silver, but there's 89 in the world. This is not This is not gallium. Okay. So uh I would leave it to Jeffrey Christian maybe to comment on silver one from my side and my my sort of memory of uh precious metals. What's interesting in this chart is uh where it settled after this spike. So it didn't go back down as you know on two occasions before uh well remembered uh by some and that means that there is some tension between the investment market and the physical uh demand and of course the physical market is mostly in China because as my mentor in the past Kelvin Williams the late Kelvin Williams of Anglo-American used to say in precious metals you have the driver and the floor under the price and the floor under the price is that industrial demand most of the time the driver is the investment. demand and so industrial demand of course has tightened and this we see it now because the market silver market didn't settle back to what it was before that spike that's positive overall for for the silver market going forward >> yes uh on you mentioned gallium gallium dermanium and antimony were banned by China in late 2024 for export China has lifted this ban uh late last year as part of deescalation in trade tensions suppose they didn't lift lift this ban, would the US military be um in danger of running out of munitions given that these minerals are reportedly used in the manufacturing of ammunition. >> Okay. So, let me just correct if I may one thing. Uh the ban the ban has not been lifted. It has been suspended for 12 months until November. >> Okay. So, so it's a suspension and therefore because we have this timeline uh the situation I mean this is a crisis as it was before October right uh so uh a couple of things kind of happened in terms of gallium a deal with Alcoa who's a refinery in Australia will start producing it rather than sending the material to China for uh separation of gallium there's another smaller deer in US with a talco wouldn't take long for us to settle our differences with Canada so that Riotinto and Quebec can also produce some So there are sources but we're coming from you know low-end 1% of non-Chinese production. Now this is not about ammunition per se. Uh gallium is used for two things. Gallium arssonite and opto electronics with very very um heavy electron mobility electron volatility and gallium nitrite which has a much higher band uh band gap uh which therefore has uh you know more applications for high thermal power electronics. this one. Yes, you'll find it. You'll find it in some precision munition. Um, but opto electronics, the products for opto electronics take longer uh for purified material to be vetted for the production. So, it's not an overnight thing that you just find someone who would produce it and and sell it. There are probably two producers in the west uh listed. Uh, we happily invested in one of them and uh the chart shows that the market's waking up to this. German is a little different. this infrared uh optics. It's also absolutely critical for um solar panels that go through uh the stratosphere atmosphere up there um because of course the number of low orbit satellites and those panels uh they require germanmanium uh but germanmanium can be more easily stockpiled in our uh DA has been doing this uh for a while. Antimony. I'm more optimistic in terms of rebuilding Antimmani uh production line uh also because it's often associated with gold and therefore bankers don't have the problem backing these projects as much as for the others. They can basically translate everything into gold equivalent as by the way the Australian regulators would force you to. you cannot present an antimony equivalent for some reason but gold equivalent and bankers will be able to run their RV screens and then decide you know whether they have appetite for this project or not. So it's probably we're still coming from a low base but I think within 5 years from now we're probably largely uh solve the antimony problem. >> Okay. Well going back to the munitions issue this is from CNN dated April 21st. US at risk of running out of missiles if another war breaks out. According to reports, over the last 7 weeks of the war, the US military has expended at least 45% of its stockpile of precision strike missiles, at least half of its inter inventory of THAD missiles, which are designed to intercept ballistic missiles, and nearly 50% of its stockpile of Patriot air defense interceptive missiles. This happened in just a span of a few weeks. Now, when articles like this present to you stats that are seemingly just, in my opinion, just frightening, uh, is it because of a lack of munitions, sorry, a lack of critical materials in inventory, or is it due to a lack of, I guess, production capability that that the reports say that the US is probably going to run out of munitions if this continues? >> Mhm. Okay. Uh, let me just correct the numbers there. So on the offensive weapons, Tommahawk we wasted about 27% of the inventory. For JSMs 23% for PRSMs 78%. And on defense ones the SM3 61% the SM6 32% THADS 81% believe it or not and three raiders are gone and Patriot 61%. So it's scary already. We don't need another war for a wakeup call. CIS I think calculated that we need between four, five, sometimes six years for some of these to rebuild those inventories. So, and I'm not sure to what extent these numbers actually reflect the fact that we might not have all that much godalinium for example for the electromagnetic warfare to protect the tomahawks that will be built right now. I remember Japan had about um an order for 400 tomahawks for next year. I'm not sure they're going to get it. So it it's already a problem. We don't have to wait for the next kinetic uh conflict for this to be a red alert. >> So that this red alert uh going back to the question is it is it a production issue or is it a minerals? >> It's going to be source sourcing and production production has to be boosted by you know a long stretch. Um luckily enough you know there are some other products uh that our allies built whether in Germany, Japan, Taiwan or elsewhere. Um, so it's not all lost, but uh uh that was a particularly wasteful campaign from this perspective. >> If it's going to take years to potentially potentially years to rebuild the stockpile, do you think the US military is going to shift its focus on building other types of perhaps even cheaper munitions and thus require different kinds of critical minerals? >> It's not just munitions. Did you see Awax >> which was splintered in two? Yeah, this is two years after Ukraine sent its spiderweb um drone attack on the Siberian base and deep into Russia when it basically obliterated big chunk of strategic bomber fleet of its you know number one adversary. Um, everybody seemed to have learned from that since they're certainly the Russians, certainly the Chinese. I don't I know that certainly Taiwanese as well. Somehow we haven't. This is more important than you know expanding all these patriots. It's just hardening your defense, putting hangers, strong hangers around this. Russians have been building it since that debacle against Ukraine two years ago. Why haven't we even the Middle East? >> Okay. So, you think there's an you think there's a bigger There's a bigger problem. There's a bigger problem of adjusting to the new uh reality. The situation on the ground, the asymmetry of these conflicts as shown by the Ukrainians on the Baltic Sea or in the front line and with with the drone technology that changes every 6 weeks and with this Delta AI system that feeds the the data back. Um, someone said a while ago that they didn't have cards. Well, maybe we don't have maybe we should be learning a little more from our allies and friends. So given what we've learned so far about munitions expenditures and um how the war has progressed from the Iran war, do you think that the US is in a position to adequately fight a sustained conventional war with a nearpeer adversary like Russia or China? >> If a war were to happen tomorrow, >> some people may question whether we are a peer adversary with China uh giving that they can build 232 vessels per year and we can build one. So uh you know this is uh it goes probably beyond the usual topic of your of your podcast but naturally with so much dependence for our future our digital future in the western Pacific western pacific remains our core interest and the stability in western pacific uh a lot depends on that uh in terms of our future lives and therefore what does it mean that we're conventionally inferior it means exactly the same thing as during the first cold war during the first cold war in the European theater, the USSR had a massive conventional superiority and that meant that the threshold for nuclear response was very low and we're going back to that world now. >> So what's going to happen in the next 5 years when and why ended here? >> Oh uh I hope we'll do very well in our fund uh investing in this space uh already restockping of all these critical minerals to just replace what's been wasted on the Iranian plains and mountains that's going to accelerate the demand. So it's a fantastic time to be in critical minerals >> and uh how do you think the US government and militaries will will respond to what we just talked about in the next 5 years and um would you adjust your portfolio to that trend? >> Yeah, so we always look for uh opportunities in you know across various uh materials. We have exposure to about 25 different let's call them commodities even though they're not widely uh traded but different elements and that counts for earth as one. So there's a lot to choose from uh depending on the technological changes and the tightness and that scarcity value that we um that we perceive in in the west. Uh right now the pecking order is fairly um simple. um in some of these markets one can actually question why they giving the monopolization and then weaponization of that monopoly by China why the west hasn't moved faster and I think speronized graphite is a case in point here I hear POSCO building the facility now but this was you know the constraints the restrictions on that was slept in October of 23 so almost 3 years ago so in some cases the the western response has been just slower than you would expect but if the kinetic conflicts multiply and proxy wars uh proliferate. Uh not only are we expanding a lot of material, but we also have to expand a little more gray matter and think about this differently. Um and that requires probably more rather than less cooperation with the allies. And you know to to the credit of the administration, they've gone down that road since at least the middle of the last year with a multiple great number of different bilateral deals with different countries have different strengths whether in mining or in processing and refining. >> Awesome. All right. Thanks very much. We appreciate it. Thomas, tell us where we can find out more information about your work >> and read about your fund. >> So, uh, we can be found at amvest teraden.com. Anvesvest m ter e r r r r r r r r r r r r r r r r r r r r r a d e n. Teroden means so terra of course earth and den in Japanese means earth or dn den in Chinese. So, um electricity from the earth on teroden.com you can find everything uh about us what we do. We uh publish on a weekly basis some commentary about different developments in the market, supply chain, geopolitical insights and so on. Uh you can also uh find the book mineral war uh on Amazon and most jurisdictions where Amazon exist or even in a local bookstore um even don't have it on the shelf they can order it from Ingram Sparks. That's how it works. >> Sorry, I was going to say we we'll put the links down below. So, make sure to follow Thomas and the fund and his book there. Thank you very much, Thomas. It was great to meet you. Welcome to the show and I hope to speak with you again soon. Take care for now. >> Thank you, David. >> Thank you for watching. Don't forget to like, subscribe,