foreign welcome to a scrap life a podcast solely focus on the hustlers grinders operators and business owners who live and breathe the scrap metal industry every day we are the original recyclers no suits required just guts and hard work here is your host brett eckhart all right guys i am uh back with another episode of a scrap life and uh the coolest thing about my job as i get to at least about this specific job is that i get to interview people from all over the scrap world and that and i i got an interesting guest today someone that i’ve been following now for i think a couple years um pay attention to what he has to say because i know he knows his space like nobody i’ve really ever heard um his name’s matt watson he’s with the precious metals commodities management llc and uh while some people may not really think of uh precious metals um when they think about recycling especially some of the up-and-coming metals that matt’s going to kind of break down for us i think it’s super imperative to understand the green revolution what’s going

on and i i got the expert here so i’m looking forward to having the conversation matt thanks for carving out the time man brett thanks for having me and again nice to meet you yeah we finally got to meet um kind of emailing uh texts back and forth and and uh i’m glad we at least got to meet via zoom someday i’ll meet you in person yep so matt i was just kind of cruising through your history actually i want to take a step back so i got introduced to you somebody sent me a video um on a speech you gave about silver it was like two or three years ago i’m thinking about three ish two and a half years ago and you went into um how important silver is going to be in the up and coming you know solar market and the industrial uh green from revolution that’s coming and at that time i want to say silver was was it like 19 20 bucks or something like that and i and i’m not a big stock i’m going to put it out there i’m not a big stock trader it’s

not uh it’s not it’s not something i do all my money is pretty much invested in scrap recycling whether trucks storage facilities just running our business and dumping as much money as i can get back into it to grow and somebody sent me this sent me this it was like an hour video and i was watching it and it you went and you kind of outlined i think like four silver mining companies and you you discussed in that video you know when you’re looking for a mining company because you’re interested in buying silver you know look for mining companies that that are primarily mining silver so like there’s a lot of companies out there that kind of get they they mine silver or they get silver because they’re in the process of mining other materials right and that was kind of my introduction and i went all in i i’m not going to lie i took whatever money i had in the stock market and i bought i bought and and this is kind of how i go i’m like all or none right i know i’m saying that’s the best way i’m just

saying it’s my way so you you bought it about a year ago at about 15 or so yeah and now it’s so now it’s sitting at 23. yeah so long story short you know that made me a believer you know listening to that talk i was like you know this guy knows a so i’m just going to pay attention to what he does so i’m excited to get you in front of uh guys and gals that listen to this podcast and just kind of if they don’t know you at least introduce you so not a problem you mind if i go on a bit of a rant here with silver and copper one of your favorites is copper too right i would absolutely love for you to just kind of do what you do okay so um when you look at the periodical table the two most conductive metals on the periodical table are number one silver followed very closely by copper very different in nature silver has 105 of the conductivity of silver if you use silvers or excuse me copper’s uh connectivity is a baseline silver is used on the solar panels

used in electronics extensively uh it’s even used as a catalyst in certain chemical industries that’s only oxides um it’s it’s also an investment product and used quite extensively in jewelry as you know so there’s a broad uses of silver but the one standout piece when you look at the supply and demand fundamentals on silver is the solar field solar pv so here we are last year in 2020 i think we did about 115 gigawatts of new installations of silver of a solar pv globally and it consumed a little under 100 million troy ounces of silver in that process so 10 of the global silver supply went to solar pv in 2020. the issue is in terms of the ramp on solar pv you ain’t seen nothing yet there are very serious discussions by governments about growing the the year-over-year new installations to as much as about 50x today’s present level of build out with solar uh there’s a there’s a irena the international renewable energy agency which is laid out a roadmap they want to see about 14 terawatts of solar pv installed and operational by 2050 you you see agencies like

arena that are are calling for this and when you plot out the trajectory that means we’re going to be using over 50 of the global supply and silver um with design thrifting that occurs year over year there’s there’s they they’re able to reduce it some five six percent year-over-year uh in reduction of weight per watt uh but even with the best design thrifting efforts you’re still going to be consuming half of the global silver supply into solar pv by 2050 and that’s just astonishing i mean what’s going to happen to all these other applications including jewelry investment and my premise is that silver is going to become very much dominated as a industrial metal uh that’s you know there’s not going to be a lot of excess slack for investment products for bullion for coins i i think uh in our lifetime you know by the mid-2040s it’s going to be dominated by uh industrial demand um there’s when you dig into the the picture of how much silver is in the ground you refer to the usgs the u.s geological service you look at they publish for each of

the models pictures of what they know what are known reserves global reserves and unknown reserve is we know where it’s at it’s at a depth and in a region that’s accessible and at today’s prices is economic to extract so there’s only about 16 years worth of additional supply in known reserves and then beyond that you get into a bucket that’s called inferred resources lower grade bodies that aren’t economical to recover today but let’s say the price doubles or triples then perhaps it becomes viable to extract those and go get those as well there you’re limited though i think you’re sitting on in total in the earth’s crust in terms of mineable anything you’re you’re sitting at maybe another incremental 40 years worth of supply so i think there’s somewhere in the neighborhood of under 60 years worth of total supply silver is really a finite amount of metal and one of the unfortunate things now let’s turn it to recycling is so much of the silver that’s in products today goes unrecovered um you get into issues where it’s it’s characterized as a low-grade silver and a lot of electronics and e-waste

for example and um you know it’s there but it’s there at you know a half a percent or one percent and you’ll spend more money on treatment charges doing the refining and extraction and smelting and getting it out than the metal that you recover at the end of the day and so as a result a lot of silver goes unprocessed unrecycled and we’re throwing way too much of it into our landfills and this ties right into this discussion of solar panels are we going to recover and recycle and scrap our solar panels properly or are we just going to throw them in landfills this is a discussion that’s you know is really not dominating the news but suddenly we’re at a point now these solar panels last about 25 years in life well now we’re at the point where a lot of these lead installations are 25 years old they’re going to start going to landfills here in mass and with it is a butt load of silver on top of those modules so on that deal i mean and and just interrupt you real quick so when you say the average uh pv

you know solar panel that they’re they’re lasting 25 years it feels like just like anything that’s electronic or technology driven the first iteration lasts longer than the second third fourth fifth iteration so if right now the average solar panel lasts 25 years i mean i would have to think or i’d have to anticipate that that you know the second wave third wave fourth wave is like a 15-year or you know and so i’m not sure is that not necessarily true with those people if anything actually the the the performance the electrical performance if you will of the solar panels has exceeded expectations actually there’s some that are going to survive 30 years which is great as opposed to wind as opposed to windmills these gigantic wind wheels and these wind turbines which are breaking down at 20 years or younger yeah and those two go to landfills those are enormous wind blades are going to stack up in our in our landfills and are going to be really problematic unless we can come up with recycle process for those but in the case of the solar panels you know really it’s going to

take a doubling of the price we’ve got to get the silver closer to about fifty dollars a troy ounce to make the economic such that it’s going to warrant retrieval from solar panels and i think we’re going to get there i don’t think it’s going to happen overnight or in the next two or three years but i think my projection for the silver price is if you look historically the past 30 years it’s grown on about an 8.3 percent year-over-year growth in price on average you know there’s noise up and down around that but on average it’s growing at about an eight point three percent compound annual growth rate i would expect that to continue and that’s right and that’s what i like about your research is you like us a lot of scrap guys we look at it for like a month or what’s going to happen this week because you know because we’re trading materials coming through but what i really took away from that speech you gave you know a couple years ago is i mean and i’m a lot i’m a buy-and-hold guy i’m not

smart enough to trade every day it’s just not my style but i i reason i i want everybody to listen to what you have to say is you’re not saying the price is going to double in silver tomorrow or no but you’re saying like look at the numbers and i’m and you’re projecting it out and you’re looking at you know available material what’s coming down the line so for the people out there that look that are my age younger that have you know they have money to invest or they’re looking for good opportunities for a buy and hold type of a scenario then they need to take a strong hard look at you know at these these metals so i’d go back not to interrupt you but i just i don’t know your approach to it but and by the way silver’s just one example i think you could throw copper into this discussion i think you could throw um a lot of the platinum group metals platinum ruthenium and iridium are going to perform very well um i i think you’re going to see zinc continue to perform well you know there’s a

whole list of metals as we electrify our worlds and as we try to transition all of our transportation to electric vehicles the utilization of these critical metals increases profoundly solar panels wind farms the loadings of critical metals are actually three times higher than the conventional grid and so we’re pushing ourselves to a state where the demand on fundamental metals is going to accelerate much more rapidly than it has in the past so silver’s just one yeah i so i have a very bullish outlook on on silver you’re right it’s not going to spike but it’s just going to be kind of a steady climb over the next couple of decades so certainly a good good case for investment you’re right there are mining groups that you could pay attention to that are a good way to invest another simple way to invest is an electronic uh traded fund uh you know there’s at least six or seven good silver etfs i could point you to that um you know are grouped around the metals prices or or miners or junior miners uh there’s different ways to invest very easily get in and out of

stocks without physically taking possession of silver um that you could you could buy a stake into the silver market and then the other the other metal that we started off talking about was copper um copper is used extensively for power transmission 75 of copper goes into wiring uh wiring that’s used in our homes our businesses buildings infrastructure in our vehicles you know in a gasoline engine it uses about a third of the copper that we put into these bevs like a tesla the loadings of copper in full range evs is three times higher than a conventional car windmills use a lot of copper to transport the power that they’ve collected to get it connected to the grid um windmills same thing especially offshore wind uses a very high rate of copper whenever you’re you’re burying a power cable underground or underwater to connect power to the grid inevitably you’re going to use a solid copper cable and so there’s a lot of demand that’s coming our way with this onslaught of renewables that’s coming our way and so yeah so copper is touching uh what we’re scoched under ten thousand dollars a ton today

um but it i think it’s going to be continue to be pressured it’s another one of these it’s not going to spike overnight but it’s just going to be continually under pressure the mining when you plot out the mining supply versus demand then mining is not going to be able to keep up we’re going to have to exploit deposits all over the place especially places like chile but we’re really going to need to step up the rate of mining on on copper some of the some of the stuff i’ve found interesting what you’ve said regarding the the mining and the you know the nimby not in my backyard i’ve listened to some of the you know some of your you know powerpoint presentations and and i found interesting and something i’d like to see here you touch on too is is you know as a recycling company and you know we we get we’re pretty heavily regulated in what we do and how we go about you know our business but mining companies are even i think even more um underneath the microscope especially if you’re trying to install or add on to an

existing mine or or start up a new mine and i think that’s an important point that you’ve really made and made me really think is is okay so there’s all there’s going to be this pressure this these pressures on these uh crucial industrial uh metals whether it’s copper or silver or you know some of these other ones we go into but the ability or the willingness for some people to um get behind somebody installing a new mind if you truly think that the green um revolution is is needs to be part of the the answer to lowering these carbon emissions then you you you probably need to figure out how to get behind either expanding existing mines or allowing new ones to exist i mean think of it simplistically if you want to get away from burning fossil fuels and you want to electrify everything as an alternative energy source where you can charge batteries in cars and so forth you’re going to have to grow the the amount of electronics profoundly you’re going to grow the grid uh by a factor of three between now and the end of 2050. um and yeah

there’ll be a lot of copper that goes into transformers and into uh you know a lot of the power transmission lines all the overhead lines a lot of aluminum so aluminum is another metal uh that’ll be taxed significantly um and you’re right there’s the pressure on miners you know it’s funny i think the environmentalists don’t realize what they’re asking for so they know they want all these clean energy sources and they want to electrify everything but once you say that what you’re really saying is i want to go double the rate of mining and they don’t they don’t connect the two uh yeah i’m a you know i’m environmentalist and i’d love to say oh so you’re into mining and their initials oh no i don’t like mining at all and and so they’re they’re in conflict with themselves and so how it bears itself out in the mining industry is the timeline if you showed up with you know 100 million dollars to develop a copper mine somewhere the environmental hurdles that you have to jump through to get all your permitting done to start production and begin extraction is growing and so

even an open pit a fairly shallow deposit that you usually takes five years from funding to operations now it’s suddenly seven or ten years with all these additional hurdles that people have to go through and it’s worked for costs too right yeah and it’s all environmental it’s you know you know social governance you know making sure you the way you’re going to manage your mind healings is appropriate that you’re not polluting the groundwaters air pollution there’s a lot of interest in mining how much co2 are you putting into the air in smelting and processing the ore that you’re extracting well it ends up you’re putting quite a bit of emissions into the air and so there’s a lot of pressure on miners to green up if you will they’re smelting and their power sources were mining now to your point about recycle one of the the key points recyclers like yourself needs to advocate is when you’re doing recycle yeah you’re gonna re-smelt that metal but it’s in a much higher percentage uh grade material it takes a lot lot less energy to process it in a recycle state than it does when

you take it out of the ground i mean to the to the range of like 10 to one or more in some cases and so your co2 footprint on recovering copper is so much cleaner than going and getting new stuff out of the ground and so yes we need to put a premium on the recycled materials and in fact i think there’s a discussion about will there be price premiums even for recycled material over virgin material out of the ground there should be is a greener material in that respect and so that’s one of the way governments are looking at how do we how do we encourage recycling does that circle back to where you’re talking about with the silver and the low grade um where you’re saying like recycling electronics like okay like maybe that that’s silver that’s being recycled at one percent two percent we’re going to need to recover all that silver uh even to the point that i advocate even government regulations to help force the recycle to put a crv you know like a bottle deposit if you will on on every module sold you know put put the

price of the recycle into the price of the the solar panel to begin with uh such that the money is there at the end when it’s time to be recycled that you recycle it no matter what the prices of the metals are i think you have to do more of that sort of forced recycle this is going to be a problem in the uh the ev battery spaces you know if you if you deal with automotive scrap yards what are we going to do with all these batteries that’s a real problem so forcing recycle on some of the cheaper varieties of these batteries is is another area solar panels solar panels are caustic there’s 10 of the solar panels have cadmium and there’s lots of leads in these products you don’t want that going to our landfills and yet that’s where it’s going to go today unless we alter our path and so i i see the need for governments to really expand the rate of what we’re capturing into recycle streams e-waste you’re a student of e-waste electronic waste i mean we’re lucky to be capturing about four or fourteen percent

on a global level too much of it is getting by um most the e-waste shops are really proficient at segregating the higher content the higher value stuff printed circuit boards and some of the higher content they know where the gold’s at they know where uh you know some of the platinum higher higher price metals are at and they’ll go get it but unfortunately some of the lower grade materials not that you couldn’t recycle it you can the technology exists but you don’t if you spend more money on recycle than what you get out of the end of the pipe therefore that’s so much of this goes to the landfills gets shipped off to africa or southeast asia and it’s just they’re cities that are just accumulating with piles and piles of electronic waste it’s just it’s something the world’s gonna have to deal with more efficiently in 2010 um 2009 we i i i decided we know we need to really start paying attention to the east craft market that’s something that’s it’s up and coming you know it’s there’s all this material there was actually some good homes for the material price

wise and uh so i really you know we started united electronics recycling and we got we got really behind it the problem that we faced which is exactly what you’re talking about but the big problem we face is in the state of idaho there was no um requirements for recycling east rap so we basically kind of were like you know competing against ourselves and the fact that the commodity values were starting to come down you know for the as as east became more prominent and became more of it out there there and then as uh the as china as olympics came that they really cracked down and so then the value of the material started coming down and then by the state of idaho and or the surrounding states washington california oregon they had like mandates forced recycling of e-scrap and they were basically kicking back these rece these companies i don’t know a certain dollar amount per pound for receiving the material and processing it but in idaho that that that wasn’t an option so the materials is going these landfills you know we you know you can’t really pay for it

to a certain extent there’s some material you can pay for but it’s generally speaking it’s it’s it’s like you said it’s more costly recycled than the value you’re getting out of it and so that material was going to landfill and we just kind of felt like we were fighting a uh losing battle so we really backed really hard out of it and that’s when we transitioned into the the converter space with platinum plane and running but but ultimately our story with escraft is exactly what you’re saying and i know it’s not the only state that doesn’t require it’s not forcing people to recycle these items in a proper fashion or at least getting some government subsidy to recycle them correctly and so we just kind of threw our hands up there and said hey we’ve got a certain set set of customers that know that we do the right thing with the material we’re going to keep them we’re going to service them take care of them but we are not going to extend our business any farther trying to force something that’s unenforceable you know right right right no and again i’m you

know i’m not big on you know regulations for the sake of regulations but we just simply can’t keep throwing things in the landfill there’s finite amounts of these metals that are all right or grades that are high enough that it’s worthy of doing the mining and even then the mining the rate of mining is going to have to grow at a pace that nobody wants to hear about on copper i love throwing out this statistic so in the past 1 000 years we’ve mined about 560 million tons of copper in the past thousand years so there’s basically a large part of the span of humanity’s use of copper great in the next 30 we’re going to need to double that you know in the next 30 years we need to double that and that’s like mind-boggling to think about right like it just that that that map you know i mean i pride myself on just basic math um that’s it and that that’s basic math and you think about the mine tailings that copper has generated more than any other metal on the periodical table roughly half of the world’s mine tailings

are from copper mining and you can stack up the mine tailings over the island of manhattan and cover it a little short of a kilometer deep over the entire island in mine tailings just from copper and we want to go double that in the next you know 30 years oh my goodness can you describe mine tailings i mean i’m not super familiar with the mining industry but the mine tailings you just just just for my my own knowledge i mean for anybody else listening that doesn’t really understand that piece of it you dig you extract uh you process the ore that’s got the stuff you’re looking for everything else gets dumped in a pile it’s mine tailings it’s everything else it’s everything else that you’re not trying to extract it’s just the pile of dirt and earth and the big concern is what chemistries and chemicals have been used in processing some of that that earth um unfortunately for example like a nickel there’s a lot of acids that are used in processing to get the nickel separated from the the rest of the the ore body and the rock and um so they

do what’s called a high pressure acid bleach process and they’ll get the the nickel to dissolve away and they can extract and separate the nickel out for further refinement and processing unfortunately the the mine tailings are uh contaminated with a great deal of acids now um and does it ever go away matt is that something that i mean i mean it’s hard to know but i mean is that something that that eventually you know it dilutes out over time or yeah what does it do to with your ground water and um yeah it’s a real problem uh in indonesia um there’s a body of ore um that the nickel comes from it’s a nickel pig iron in a lateralite ore they’re using a lot of these acids and it creates a really fluffy mine tailing where you get the residuals are like sub five microns it’s you know very easy to puff it up and this is in a region with just immense rainfall and you know volcanic activity and seismic activity earthquakes and so maintaining dams and and you know maintaining the huge amounts of these mine tailings is a problem in itself

and so one of the things the chinese-owned mines are doing is they’re taking their mine tailings they’re running it out through a pipeline and dumping it into the ocean at a deep depth of over a thousand meters in most cases the problem i have with that is where they’re dumping it in in indonesia and papua new guinea and and um new caledonia that’s where all the world’s over half the world’s coral reefs reside in a region they call the coral triangle and so we’re dumping a bunch of millions of tons of mine tailings into the oceans in regions where we have all of our coral reefs oh boy that sounds like a great plan yeah but frankly that’s the cheapest way to manage it you know out of sight out of mine just kind of like crash is was like you know whatever i mean i’m sure it’s still going on in some some areas where they’re just dumping both loads of trash in the ocean because it’s out of sight out of mind so the it ends up the metal set that goes into a lot of these batteries uh specifically lithium

nickel and cobalt um those are three that cause a lot of the a lot of ecological damaging concerns um cobalt um you know comes from a region there’s one country in the central africa the democratic republic of the congo it’s just a human’s rights mess that 90 of the population lives in extreme poverty on less than 700 a year and you know that they’re sitting in all these metals and minerals that are really their best hope of getting out of that conundrum but unfortunately the government is so corrupt and even about a third of the land mass of that country isn’t even controlled by the government it’s been controlled by our militias for 20 plus years there’s over 6 million dead in the past 20 plus years from regional strife and you know civil war and infighting including 70 of the rwandan tootsies you know that’s called genocide and so you know you have child labor violations and just on and on and these people are just impoverished in all this wonderful mining for these battery metals that are going to save the planet with evs their lives haven’t improved one iota it’s still

a mess and it’s it’s just horrific what again a lot of chinese companies have gone in bought out the cobalt mines you know i’m sorry they just don’t have the environmental and social conscious that the most of the western world has they just don’t care the same way and they’re more driven by the the dog like the currency the the value of the material versus you know carbon you know yeah they want to make it cheap make it cheap and then make them make matters worse then they boat up a lot of the water they get the ore that they want of nickel or or cobalt and they’ll bulk ship it over to china and they’ll process and smelt and process all that and refine it on a coal based power grid in china which china’s power grid is largely coal based yes yeah by the way they’re gonna add you know some 300 more coal fire plants in china i saw that and i was just reading that the other day and you know everything just like that cop 26 whatever and it went through and everybody you know we’re going to reduce

the mystery and do this that and all of a sudden like a few days later they came out and said not only has their coal consumption not went down but it actually went up oh they’re going to add um you know an exponential amount of uh coal-fired power plants and it’s kind of like i’ve always said don’t don’t listen to what people say watch what they do and if you just do that in life i think you’re gonna be much farther ahead you know and now whether it’s investing or just watching people in society in general like drown out what they’re saying and just look at their actions their actions will tell you yeah a real story agreed and so you know i argue a lot of these bevs that they’re making in china with their coal-based grid and then recharging the vehicles with a coal based grid are actually dirtier than gasoline engines in vehicles over their lifetimes people don’t want to hear that the other big concern with bevs is what’s going to be the expected lifetime uh this is very much a recycled question um ice vehicles gasoline diesel

vehicles they last on average a little over 19 years of life before they hit the scrapyards with nearly two you know 240 000 miles on average in that range um bvs i think they’re planning in many of these to have a lifetime with the battery of about 10 years are we going to effectively double the cadence on recycle of electric vehicles you can replace your batteries by the way replacing a tesla battery in the entire length of the floorboard of the car um i saw a guy that had a damaged his battery he had to pay 16 dollars to replace the battery um i think that’s gonna trigger a lot of scrap decisions yeah right i mean if insurance companies right now to this day even on ice vehicles they’re they’re they’re totaling cars um just by the pure cost of what it’s taking to repair you know i mean from park standpoint whatever they’re perfectly good vehicles generally speaking but they’re totally in a lot of cars that you know yeah they never would have totaled a couple years ago i don’t i really don’t believe uh you know that that that are

being told today so and that’s a great that’s a great that’s something that i even never thought about and i’m in the freaking recycle business right like and i’ve never even taken that into consideration that that’s probably something that needs to be um at least discussed yeah absolutely and so you know really for the the automotive scrap genre we’ve got to uh you got to have some intelligence about these lithium-ion batteries that are going into vehicles um a lot of the early hybrids and plug-in hybrids have smaller batteries they may only be a couple hundred three hundred pounds weight total um but a lot of those are lithium iron phosphate um where when you look at the the metals that go in what has value well the lithium has the most value at you know it’s somewhere around over 13 000 a ton these days but the rest of the metals the iron and the phosphate are extremely cheap and again it’s one of those equations with lfp type of batteries you can the technology is there to you can do recycle and get everything out but it costs you more to

recycle than what you get out so they don’t get recycled and so those are kind of the unwanted battery varieties as these lfps the type that everybody wants as a recycler are more of these nickel and cobalt rich cobalt i think it’s crossed through fifty five thousand dollars a ton it’s the most expensive nickel uh twenty thousand dollars a ton ballpark and lithium as well uh there it does pay to recycle the ecosystem will take care of itself there’s value in the than their hills right but the problem is is the ratio how many of these batteries are the low low end variety and how many are the higher end nickel rich composition varieties and there’s it’s not easy to tell they’re not labeled you know so as you’re sitting there as a scrap collector what’s what how do you segregate it’s nearly impossible to segregate um you don’t know what you have and so some of the lead recycling efforts in the u.s as you know they’re willing to take all the batteries off your hands if you deliver it to their dock it’s it’s up on you the scrapyard to deliver

yeah which poses its own constraints and problems including cross-state line transport some of these materials are treated as hazardous materials in some states it’s really a hodgepodge of regulations on on transport and cost on transport but if you get to somebody’s doorstep that will take it he’ll take the whole lock stock and barrel of it the cheap stuff and the more expensive stuff but he’s not going to pay for it thanks for dropping it off bye yeah nothing for you in this ecosystem by the way that’s a ripoff there’s there’s enough money value in those they should be paying the scrap people but they don’t and then where do they where do those go and so they will process the whole lock stock and barrel they’ll get as much lithium nickel and cobalt as what they’re after out of that entire population of batteries and they’ll refine it and they’ll be able to use it in the next cycle and again just like in most metals the co2 footprint of recycling you have less co2 emissions the second time around in recycling you do taking it out of the ground for those same

for the same metals um but there’s a whole lot of legislation that’s got to evolve and develop in this space about batteries as you know there are scrap yards that are building stockpiles of this stuff and it’s a hazardous material you just can’t leave it there there’s the potential for these piles to catch on fire and have forbidden if you and there have been scrapyard fires as you know you’re seeing a lot of shredder you know facility fires you know because these this is this is a big big problem with shredder yards you know they’re stacking up appliances and everything now has a lithium-ion battery and you know they’re running i mean you’re seeing some crazy large fires and it’s and it’s all battery driven you yeah yeah and so the environmentalists and the regulators are pushing us in this direction and yet there’s a whole lot of holes on on the scrap end of this how do we manage it appropriately handling you know how do we deal with this thing um i think europeans are far ahead of us in that regard what they’re doing in europe is they’re putting the

onus on the recycle of these car batteries on the automakers themselves so vw tesla and the likes they they have to pay the tab for recycle um which is good so that takes the pressure off these low cost variety of batteries who’s going to pay for it at least it’s paid for that’s the good news the bad news is is all these lfps these cheap batteries they’re treating it a lot like they do e-waste they’re just they’re segregating it they’re building up piles of the cheap stuff they’re putting in a bulk shippers and shipping it off to africa and southeast asia just like e-waste yeah out of sight out of mine yeah well the problem’s still there i can show you pictures coming out of china on the battery accumulation going on there it’s a wave of scrap i mean our rate of packing out landfills is going to triple people with what we’re doing and we can’t keep just doing this we’ve got to recycle everything much more proficiently than what we do today and so in general my message to recyclers like yourself is hey the prices of the metals

are going to do nothing but continue to climb so in that regard yeah there’s a business proposition for you but there’s going to be more materials like these batteries that are you know hazardous in a lot of ways and it’s going to take a lot more training and diligence and even regulations to to get this thing wrapped up completely as an ecosystem uh that these recycle systems can stand on their own and and just operate seamlessly um the u.s has a long way to go uh as does asia china japan why do you think and and out of curiosity because i i feel like there’s a lot of instances where um europe is ahead of us on the recycle front um and especially like some of the like even like our copper processing uh chopping lines you know those originated out of europe i mean the technology originated out of there and i mean why do you think i mean i have my ideas but in your opinion why why are they so much farther ahead of us on some of these fronts i just think the uh the human density they’re they’re

more tightly packed i think their uh aversion to landfills is just higher than ours i think we just have too much real estate we have we got utah we’ve got places where you can build huge landfills out of sight out of mind right and i just think them being in closer proximity to their land i think puts a little bit more of a premium on this um you need to have a full cycle view to this uh and and then even the metals demand of what you’re asking for again back to the environment they want to electrify everything but they don’t want to mind those those ideas are just completely in conflict with one another can i ask can i ask you a question i was i was kind of going to revert back to the you know the ocean side so i’ve been reading you know the last probably six months um there’s a company you know that was working on the getting the basically the green light to start mining the ocean floor right you probably know this this space i would assume fairly well just because you understand the mining side

can you can you speak on that and what what’s what does is that a game changer for some of these um you know more rare rare metals or is it just a you know a another green washing type scheme no it’s uh legit i mean um so one of the you know one of the concerns even with things like lithium it’s it’s abundant in all the salt flats so anything like the bonneville salt flats close to you um in southern california there’s this area called the salton sea outside of mexico city there’s some big salt flats um you know they a lot of the lithiums are there you can go extract but there’s metals like nickel um and manganese and uh even some of the rare earth elements that you hear about the rres that are in compositions that are fairly not to be fairly retrievable in nodules or rock type formations lying on the seabed floor it’s not like they want to necessarily go in and dig into the c4 bed they really want to scavenge some of the rock formations on the seabed that are rich in nickel and manganese and so

forth there’s regions between california and hawaii that are supposed to be rich in these sorts of nodules there’s some islands in the japanese island chain that are very rich and rare earth now there unfortunately would be more of a digging into the seabed floor uh to extract those rare herbs but these metals have become so profound in our everyday electronics and technologies and green energy technologies uh that we can’t you know you’re gonna need them at some point you can’t just keep mining these known reserves they’re gonna exhaust themselves and where else do we go uh chile you know the shoestring country on the south american coast it holds a lot of key deposits well unfortunately there’s peoples and cities on top of those regions you know what are we going to do and uh you know we’re really going to have to exploit chile in a huge way to get the copper um and a few others um so i’ve been reading some arizona new mexico there’s some big proper deposits but you’re starting to get it that i was reading an article here the other day about uh kind of going back

to that not in my backyard people are worried about their water source they’re worried about i mean they understand that originally they moved next to a copper mine so they’re in they’re okay with the existence but there’s a big mine there down new mexico is trying to expand and they’re like well if you expand now what happens to our water source what happens to more explosions you know as they blast the material out so they can um recover the copper and i that goes back to you know the original conversation of um yeah they want there’s a lot there’s a lot of wants but uh the requirements to get those wants is are there they’re out there yeah so you know what’s funny on these lithium from these what the the salt flats are what they call a brine composition you need huge amounts of fresh water to harvest the lithium you need about a half million gallons of fresh water for every one ton of lithium extracted in most these regions well hold it they’re assault flight for a reason there’s no you know what are we going to do and so the

you know 12 000 foot plus elevation in the andes uh with chile bolivia and argentina is over 56 of the global lithium reserves in salt flats at 12 000 plus foot altitude well the the lithium mining that’s going on there today is it’s minuscule compared to where it needs to go the scale and ramp this eb transition like they want to transition and yet there’s already water wars going on at that altitude and what are you going to do for fresh water to do more of this extraction there was even a serious discussion well can we do desalination and pump it up 12 000 foot elevation just to give them fresh water yeah do what they need to do um and you know people are at war with the indigenous people over water rights you’re absolutely right so lithium can can be very water intensive uh in the salt plants on these brines and you’re right i mean the acid controls you know groundwater pollution all this is is absolutely a concern and depending on the the population density of the region now arizona new mexico might that’s fairly you know low population density

right if we can’t get it going there then my goodness you don’t you’re never going to stand a chance in in more populous regions no and that’s the that’s the rub i see is i mean so i mean in a perfect world um how where do you see this i mean if you could design it your way would you i mean make the transition slower so that you could you know you know kind of walk before you run type deal or is it uh i mean how do you see it how would you play that play it out if given the opportunity i well this is a really open-ended question but um for what you’re so comfortable with you know no no so first of all renewables um i think there’s a you know a lot of marketing that’s gone into the clean energy space that sell us on these ideas uh that just aren’t true and uh renewables are not gonna save the planet uh as an unfortunate thing and don’t get me wrong i am as environmentally conscious as the next guy i want clean air and clean water and clean

oceans um but i think there’s better ways to get there than the wind and solar path not that they don’t have their place they do but not at the scale that they’re trying to take us to i think that’s going to just consume way too much metals to get us where we need to go i think nuclear is a much better power source with a much smaller footprint higher energy density per real estate if you will uh and there’s it’s interesting there’s a lot of clean energy advocates that we’re on the cutting edge the past couple of decades that have transitioned and come to that same conclusion that renewables are not going to save the planet that we need to push nuclear much more aggressively unfortunately the same cadre of clean energy advocates in california where i’m from and germany are pulling the plug on nuclear early the nuclear is the most reliable energy source you know it operates 97 of the year consistently and you you can variably throttle it quickly um you know so if renewables kick in you could back off on the nuclear and let the renewables do their thing

unfortunately though with the renewables they’re variable in nature the wind’s not always on the sun’s not always up and our peaking evening demands from 5 p.m to 10 11 p.m at night are where you need to surge what are we going to do for this and so we’re driving ourselves down a variable renewable path without enough stability in the rest of the grid and that’s going to pose a lot of problems both on the cost front as well as a reliability of energy front without massive terawatt scale energy storage solutions and this is where i think the hydrogen economy discussion kicks in using hydrogen as a means to store energy to help you balance the load uh both seasonally and within time of day to meet your peak demands so if i were king for a day i’d be i’d be backing off on the renewables pushing more investment into nuclear facilities and that would be one play next would be the the vehicle transition i think this eevee transition is not going to go anywhere like people think i i think these mining constraints are already showing themselves even at the

four and a half five percent penetration on bevs globally that we’re at today they you hear a lot about zero emission mandates where they want governments want to force you’re going to either drive a you know a tesla a full range 300 mile plus bev uh or you have a fuel cell electric vehicle and it’s just not going to happen to the dates they set they have a lot that have transition dates in 2030 35 40 where there’s percentages of our vehicle fleets that are supposed to transition to zero emissions well we’re just the multiples needed in lithium and nickel and cobalt just aren’t going to happen quick enough in the mining space we’re going to be constrained we’re already seeing the prices on those metals already at within 10 percent of their all-time highs they’re all at their peaks and are going to keep climbing and we’re just getting started we haven’t even left the starting block yeah and we haven’t left the starting block so let’s let’s get her over ourselves there um i’m a big fan if you want to expand mining and have a clean energy impact i think

the metals that make the most sense to go double the rate of your mining on are these what are called pgms platinum group metals today in the auto in the catalyst the catalytic converter that you talked about harvesting there’s three of six of the platinum group metals are involved in that there’s platinum palladium and rhodium are the three metals all by the way very pricey right now right yeah there’s there’s great value in those catalytic converters that’s why thieves are stealing them like crazy right 100 right in the hydrogen economy where you generate green hydrogen using renewables and you can create a fuel basically with a very near zero co2 footprint so you can create a fuel with no emissions and then you can burn the fuel with no emissions um that you know that’s a great proposition to help you balance the grid and use as a new energy source there you’re gonna need platinum and two other pgms called ruthenium and iridium unfortunately ruthenium their iridium you know was at a near all-time high it touched seven thousand dollars to triumph it’s now down to about four thousand five hundred dollars

and troy ounce but um it’s very expensive uh it’ll it’ll go the way of rhodium it’ll spike to thirty thousand dollars in time i think there’s just not gonna be enough iridium on the planet um to meet the needs there but this is one where we know where the global reserves are we have over 200 years of known identified resources with pgms they’re in south africa that’s so we know where to go that’s the good news the bad news is they’re a half mile to a mile deep yeah some of the most complex mining on the planet and even with funding it takes you 15 years from funding to operations to get a new mine off the ground type of thing right so long timelines but here i think it’s worth spending in a little less than a trillion dollars and go double the rate of rpg and mining get more platinum in particular there i think we can start penetrating the vehicle market more completely not with battery operated electrical vehicles but with with hydrogen fueled vehicles where you fill up your gas tank there’s literally a compressed tank of hydrogen your refueling

process is very similar to filling up a gas or diesel you put in six seven kilograms of hydrogen into your vehicle and you’ll go off and have 450 miles of driving range just like you do in a gas car and fill up with basically the same frequency in the same duration as a gasoline car what the penetration rates could be much deeper much deeper than the limits we’re going to hit with all these battery metals they’re going to constrain us and you couple the the hydrogen powered car with uh the ice vehicle the basic gasoline diesel power car but you have a better quality converter off the back side i mean i think that’s the other kind of missing component people aren’t you know i mean some of these emission standards that are getting put into place you know i think those are going to do a lot for the carbon emissions i think absolute potential to do more than going electric you know if you start running through the whole cycle what it takes to make an electric vehicle and maintain it but that that that catalytic converter on the back side obviously

the reason they are so valuable with the platinum playing rhodium but they’re doing their job absolutely you know loaded correctly absolutely and so back to your initial question what would you do differently if you were king for a day yeah one is i would i would curtail and not do as big an ambitious renewable penetration i pushed nuclear much harder two i pushed this hydrogen economy harder and i would double the rate of pg and mining i’d put some of the green new deal investment money into the pgm mining in particular and develop that now you’re going to need to you know it’s going to take you 15 years to get there to the mining to do that investment now then i would focus a lot of these hydrogen vehicles on your favorite topic trucks heavy duty the heavy-duty long-haul trucking lends itself very much to these sorts of vehicles with hydrogen based you know they’re going to try to force batteries down the throats of a deadwood truck or a cummins truck come on who are you kidding it’s going to be a 15 000 pound battery it’s going to dig

into your 80 000 pound payload right and it’s going to need to be recharged for hours on you know every day how how is that going to work on long-haul trucking it’s just not going to work do you think supply chain issues will just exist today oh add that component in there and see where you get and so i would take our limited availability of platinum and pgms early and focus it on heavy duty not on light duty not on passenger vehicles get your light duty fleets and your medium duty fleets get those converted to hydrogen first by the way that’s a different nature of these hydrogen refueling stations you don’t put them in residential neighborhoods for light duty vehicles you put them you know roadside freeway side and you build fewer of these you know heavy-duty stations but i think a network of a 700 a thousand cross-country stations can cover your long-haul trucking for most of the nation and that would really enable a dramatic transformation by the way your heavy-duty trucking emits over 20 of the emissions so it’s a a bigger bang for the buck

on the co2 reduction impact um what’s that what’s that percentage for uh for just your passenger vehicles 20 is uh heavy-duty trucking what’s the so i think the the the light duty is in the neighborhood of 60 then you get into this range of these medium duties six tons uh and up uh that are contributing as well okay so i would say so i would save all these batteries i i’m absolutely against building big ole honkin teslas and i know that sounds crazy i’m more in favor of putting more cars with small batteries in them these lithium-ion batteries a la a toyota prius the toyota prius has about a 4 4.4 kilowatt battery in it it has very limited electrical range but it bumps your fuel mileage up to 55 miles per gallon pretty easily just by putting a little battery in there that charges in in around you don’t have to have a plug-in charging station it charges itself on deceleration and breaking in yada yada right put in putting forced cars into more of these hybrid configurations yeah spread out the available mineral resources in smaller batteries on

a larger percentage of the fleet that has more of a more profound miles per gallon impact in reducing emissions and then maybe have a consistency across the battery line so you’re not getting this mixed bag of items right come right some sort of consistency exactly some sort of standard exactly the um yeah it’s it’s just how do you how do you spread out the available resources you got to have more of a materials mindset here when you look at this and um and i think even the recycle systems could be better tailored to that environment as well that it’d be easier to manage but i think that’s that’s a much more viable you know hybrids have been cost effective um for over a decade now right a toyota prius getting 55 miles a gallon pays for itself right then you’re only paying and you’re paying cheaper we all see that coming right i mean but and you’re only paying 1500 to 2 000 more a car for that capability and you’re saving that in gas very easily over the life of the car everybody sees that but to try to force big batteries that

are 10 or 18 times the size of that toyota prius battery to give you a full range 400 mile plus you know long-range electric vehicle those are big batteries suddenly you’re talking 1200 pound 1300 pounds per car in battery mental metals yeah that’s a lot that’s a lot of weight so um well think about the amount of force hybrid it’s going to to to put those big charging stations at the at these uh truck stops right i mean you talk about copper power you’re gonna you’re gonna have to run to create that grid take the electric vehicle out of it just just the grid to get the just to get it there is crazy well that’s another little shady part of the eevee transition people don’t talk about so today’s global power grid it’s 27 000 terawatt hours of electronic electricity generation globally 27 000. you need to grow that by a little under 13 000 terawatt hours just to charge what will be 2 billion evs on the road by 2050. we need to grow today’s grid by 50 just to do the charging with all the evs we’re going to create

that’s how much more power grid you’re going to need right now what’s the co2 impact of doing that yeah that’s where i call bs on you know 40 percent 30 40 you know by 2030 or whatever that number is i like i’m i mean to be honest you see where i’m betting my money right i mean yeah getting rhodium copper i’m like all right i guess i mean silver so you did so you talked about you did well on silver listening to me on my outlook over the past year one of the medals i’ve made a good amount of money on is palladium uh palladium and rhodium are two key components in those catalytic converters correct and with all these emission standards that have gotten obscenely tight um and there was a big transition that came out of the vw dieselgate i don’t know if you remember that story but vw got caught a lot of their passenger vehicles which just happened to be diesel passenger vehicles in europe they discovered were uh not operating as advertised that in operation they were a lot higher emission than what they were taught it to be

and one of the results of that in addition to some people getting fired and thrown in jail was they changed the naked nature of emissions testing now you and i we get our vehicles tested every year we go into a place get our smog test they stick a probe up your tailpipe you run it you know you rev the engine for a couple three minutes they take the data and away you go right now they force new car builders to do a three to five hour test overheal over dale full loads different driving conditions and collect data dynamically over that whole time frame and they could see the true emissions much clearer this way it’s called real world testing the end user doesn’t have to do this but the oems when they qualify models have to do these things for each configuration each model they sell and these real world test conditions on their own have increased the loadings of these pgms in catalytic converters some 15 as a result of these real world test conditions and so to your point we know how to how to control emissions in ice vehicles and a

lot of these regulations have tightened up substantially the loadings have gone up that’s part of the reason why these prices on rhodium and palladium have gone sky high and so i wasn’t able to invest in palladium on the front end of this i bought i bought i bought in at 600 and i sold a lot of it at about 2 400 trillions so i did well on palladium rhodium was another one that you could see the shortage coming rhodium is a a strange little metal it’s difficult to invest in without taking physical possession of it but i saw it at a thousand dollars and i knew it was coming and it went as high as thirty thousand dollars to try outs uh you know it’s now back down to uh well last i looked it was somewhere around fifteen i haven’t looked at it today i think it’s like thirteen five or thirteen five fourteen i mean it came off the last this last week but i’m just i’m so i’m bullish on rhodium and palladium even to this day exactly i think there’s more legs to be had here on those two metals

and so for your auto scrap collectors just real quickly what’s going on why had those why did those metal spike and then back off a bit from their peak about over the past year it has everything to do with the south african supply disruption one of the biggest miners anglo-american had trouble with a after smelting as a concentrating step where they get the purities to about 90 range they have trouble uh been a failure in their concentration plant and uh they didn’t stop mining they kept building up dog piles of material to be refined but they got behind on processing that ore while they rebuilt their concentrator plants that rebuild is now complete and so there’s been a surge of deliveries on mined material that was accumulating over the past year and so that surge is brought us down from this peak so the disruption drop help accelerate this peak in the drive up and now that they’re playing catch up it’s come back down that catch-up will complete in late q1 or q2 of 2022 then i think you’re back on the upward swing for palladium and rhodium to your point

i think they will continue their climb starting summer at 2022 and continue to climb for them some three four years after that easily and combine that with um auto deliveries right new autos you combine what you just stated with uh reduced demand and maybe not reduce demand reduce supply because they i feel like the demand is there but obviously the ability to get them through because of the chip shortage and whatnot right that’s what me listening to what you have to say and look at you know the the availability of vehicles and that at some point those two are going to cross paths again you get you know a big supply you know a big demand push and then and then i think we’re off the races again in my in my opinion i think you’re exactly right i think there’s a the amount of investment surged into semiconductor tooling and factories is just unprecedented uh the people that make the equipment for sending conductor they keep setting record sales quarter over quarter i mean they just can’t build the equipment quick enough to pack out the nameplate capacities of semiconductor plants quick enough

so people like amant and lam researchers are just going crazy and you’re right so and they call it a chip shortage i think that’s a misnomer just to reset your audience okay i just think i just think there’s a big ass demand on ships automotive is growing at a year-over-year growth rate of about 14 and a half percent on ships a lot of that is the evs people don’t realize the evs have twice the electronics as a conventional vehicle and so you have twice the chips twice three times the copper you know three times the copper two times the electronics two times the silver um and it’s uh just amazing how many chips that you need in a vehicle these days they’re you know they’re not gasoline vehicles they’re computers on wheels i’ve never heard it stated like that but that’s one sound that’s about the truth you you say you’re not in the e-waste business like you were before if you’re doing auto recovery you’re in e-waste yeah i can i contend e-waste and automotive scrap i’m sorry they’re gonna become more difficult to segregate in the future

right they’re kind of phenomenal yeah the shredder technology of these big facilities i mean you’re watching have to upgrade these these downstream technologies and they keep having to add more lines and keep adding more you know safety features because lithium-ion batteries are getting through and i mean it’s just the amount of investment in the back end the downstream of these shredders is is mind-boggling to a guy like me even 15 years ago that wasn’t even you know it wasn’t even close yeah exactly so uh the chips so anyway that that you know you’re with covet and everybody working from home all the computer sales you know ipads everything exploded it was not really anticipated by all the animals like me people didn’t see it coming and so there’s a surge in demand for all your networking gear and computer stuff at home to work from home the evs had a bigger slope on demand for chips some people realized and just overall it’s not that the semiconductor industry lost ground on its shipments no they actually surged in a big way they just didn’t surge enough so yeah they’re short to total

demand but the rate of their growth is just enormous i mean they’re going to go from an industry being that was doing um 440 billion one year to doing over 500 billion the next doing over 600 billion the next that’s pretty fast growth on an industry so maybe that shortage isn’t there and so and this goes to another point that i love to make because i think we’re on the inflection point of the growth in electronics in everyday products i mean you can’t buy a refrigerator a washer or a dryer that isn’t connected to the internet anymore right and with displays and everything on it and so there’s more chips going into everything about our lives anyway the chip world is catching up and they will catch up there’s even some signs on automotive we’re seeing some lead relief ford was running at full capacity um for the first time um you know in in over a year uh so there are some signs that we’re going to get the the chips caught up during this chip quote shortage the gasoline the ice engine variety paid the penalty the bulk of the penalty uh

they they did paid preference to the evs using 2x loadings of chips in a lot of these and so um it’s you know the evs won the priority game gasoline vehicles suffered and so to your point is the chip industry catches up and i think in 2022 you’ll see a lot more cars on the lot in the u.s if you go buy a new dealer a lot you’re just stunned how little inventory is on the lot now just use view i mean the only thing you see some of these new these new dealerships have on their lot is just some used vehicles you know i mean that’s what they have available that actually that takes more than just you know that’s not pre-sold yep exactly and so i think you’ll see some of the new car populations you know it’s going to take them a full year once even the trips are there to fully catch up uh but there is pent-up demand um and you’re going to see i think you’re right i think you’re going to see an additional surge in palladium and rhodium at the back end of

next year and it will continue into 20 23 and beyond uh for a few more years beyond and then the question becomes how much can you really penetrate with evs you know this four or five percent penetration as they try to double that to you know eight to ten and then again to 15 each one of those multiples you’ve got to replicate your mining and that’s just like and that’s just not happening it’s just not happening goes back to like it goes back to basic math you know all the trigonometry trigonometry geometry you want to but i think in life if you can understand just basic math you can do pretty good and and so brett you’re going to see copper you’re going to see aluminum continue to climb you’re going to see all these fundamental base metals take off you know again i’m very pro silver as you know and then the pgms you know for the hydrogen economy i think you’re going to see a ship where platinum this small metal called ruthenium and another small metal called iridium are going to take front stage and uh be a problem and that

we don’t have enough of those um so that’s that’s a very high level my outlook for the world and how this thing’s shaping up so well i i will say matt man i mean i’ve been following you and that’s why i wanted to get you on here is i’m a big believer in man when you hear somebody that knows their whether they know it about you know you know precious metals they know it about scrap they know it about trucking whatever it is man i just i’m big on trying to introduce people that listen to this podcast like to the smart people that i know exist out there in their specific field so help me let just real quick before we go how if somebody wanted to uh come find you or somebody wanted to see the stuff you’re putting out there i mean i know but do you want to let everybody know how to find you uh the easiest my you my website is precious metals commodity management dot com precious metals commodity management dot com and uh all my contact information’s there you can sign up for a weekly newsletter that

i do for free uh where i touch on a number of these medals and these transitions that we’re talking about um brett i’m going to work with you offline we’re going to you know i’m trying to come up with the subscription report for scrap people in the scrap business like yourself to help give you some guidance on the hedging and trading that you’re doing on these different metals and what to anticipate over the next one to three quarters depending on which metal you’re talking about uh so i’m trying to have that formulated ready to go in january for for distribution to a number of scrap clients uh and collectors that want to guide their hedging process i have a few clients that i work with um you know i’ve helped them immensely um you know play the rhodium market wisely yeah you know there was an interval there where you know they were panicked about hedging i told don’t hedge it’s only going to double and sure enough it did the best advice they ever took was listening to me they’re like okay i’ll sign me up for some newsletters yeah so so i

got one client says you just you get 10 years of subscription for me just from that one play alone so uh well like i told you i said i’ve got some ideas in my head on how what we can do and how we can do it um i’m excited to introduce people that don’t know you and you know in our audience i want them to you know come find you you’re also fairly active on linkedin so you can find you can find matt um watson on linkedin as well um go check him out go dig through his uh website there’s a there’s a ton of just diamonds in there that i found over the last year different different keynotes and kitko interviews i have the video links that you could play and you can listen to me drone on if that’s what you’re into yeah guys like metal heads like myself like it’s it’s right up my alley so i just want to say thanks again matt we’re going to talk about you know how we can do some some more things moving forward but i just appreciate you carving out the time and

uh and giving us breakdown on you know on what you know thanks brent my my pleasure thank you sir take care everybody take care yeah