Stockpiling critical minerals: From scarcity to strategy | Fast Forward podcast season 2, episode 9 transcript

Full episode transcript

Andrea Hotter [AH]: Welcome to Fast Forward by Fastmarkets. I’m Andrea Hotter, and this is where we get behind the headlines in commodities and critical minerals with fresh ideas, smart insights and great conversations with people shaping what happens next. One of those is my friend and colleague Will Adams. Hello Will. 

William Adams [WA]: Hi, Andrea. How are you? 

AH: I’m good. I’m really good. How have you been? What have you been up to? 

WA: I’ve been good. Thanks. It was good seeing you at LME Week. 

AH: Yeah, really fun, really good. Some interesting stuff there and I, I hear you are in the market for some gold will. Tell me a little bit about that. 

WA: Ah, the story’s leaked it, has it? Yeah. So when my son was prepping for his A Levels and he needed some better grades, I said, well, if he gets a grades he needed, I’ll buy ’em an ounce of gold. So when his results came through, it was a bit of like, oh, those are really good results. Ooh, I’ve now gotta, ooh, my promise through. 

AH: The record high gold prices as well. That was not a very good timing for you. 

WA: Yeah, I know. Um, hopefully he’s delaying it. So we might get a bit of a pullback maybe. 

AH: Well, fingers crossed. Fingers crossed. So, yeah, there’s a lot happening in the world of commodities right now, and one of the more fascinating developments is the push by governments to build up strategic stockpiles of critical minerals. We’ve seen comments from Australia and the EU about this, but what really caught my attention was news out of the US. A company called Minerals, Metals Initiatives or M2I announced plans to create a strategic mineral reserve with the support of the US government, the project’s being led by Major General Alberto Rosende, who has a very distinguished military career. I was fortunate enough to sit down with him to hear more about what the project involves and why it matters. So shall we hear what he has to say? 

WA: Yes, let’s listen. 

AH: So Major General Alberto Rosende. Welcome to the Fast Forward Podcast. 

Alberto Rosende [AR]: Well, thank you Andrea. It’s a real pleasure to be here with you today and thank you for the invitation. 

AH: It’s really good to have you. And I know you said I can call you Al, so I, I just wanna ensure that there’s no disrespect when your, with your– 

AR: No, absolutely. Absolutely. Thank you. 

AH: And speaking of that, before we go any further, I really wanted to ask how does the Commanding General of the 63rd Readiness Division get involved with critical minerals? 

AR: Well, I think it’s kind of an interesting segue. I was an Army Reserve officer, and so I always say that I have two careers before 9/11 and post 9/11. Before 9/11, it was the traditional Army Reserve career. A weekend, a month, two weeks, a year, every two or three years, you go back to the school house to make sure that you’re progressing on your education, you continue to move up and develop your leadership skills. After 9/11, then I spent 20 years ’cause a total oval, almost 38. So after 9/11 at, at my last 20 years, I spent 10 on active duty between deployments to Afghanistan, Iraq, I, I did a resident, uh, senior service college. So I was gone for a year. Then I also did a couple years at the Pentagon and a couple years at the operational headquarters for the Army Reserve at Fort Bragg. And then I commanded the 63rd Readiness Division. 

So in my civilian career, I was in the financial services sector. I worked for both American Express and Visa in the credit operations, and then fraud management and fraud prevention aspect. Working out of both of those companies, Latin American and Caribbean region offices in Miami. But my last stint on the Army was about five years, and when I retired, then from the Army we moved to San Antonio and I was looking to see what I was gonna do. A gentleman that I had worked for multiple times in the Army, we deployed together to Iraq. He became the Chief of the Army Reserve, was the CEO of the company at the time. And I’ve been his operations officer on like four different stints and he was looking for an operations officer for the company M2I Global. M2I Global started at the end of 2022. I came in March of 2023 and I became the CEO in August of 2024. So that’s how I wind up getting here. 

AH: Yeah. So one set of reserves to another, I guess, almost. 

AR: Yes, exactly. Yes. 

AH: Alright, so now we’ve established that, let’s maybe set the scene a little bit. Obviously, there is a difference between strategic reserves and stockpiles, so maybe you could explain what that difference is and why even resource-rich nations should probably try to keep them. 

AR: Absolutely. Well, we have a stockpile in the United States called the National Defense Stockpile started in 1939 before World War II, so they felt that war was definitely looming and they needed to begin to build this stockpile so that they would have access to the critical minerals that they needed if they needed to mobilize and expand the industrial base. The stockpile over time grew to quite significant. It started with $10 million in ’39. It grew to a value of over $46 billion, and then after the peace dividend of the end of the eighties, early nineties, the stockpile was started to be sold off because there was no need at this time. 

So a stockpile really hedges against supply chain disruption, especially for those critical resources that are required for real major fundamental pillars of what you would base either your economy on or your national defense on. The Strategic Mineral Reserve that we are building is going to be a more of an active platform that is built on three pillars. One of them is a buy-and-hold storage pillar, if you will. The second pillar being a tracking and tracing component that will allow you to determine the provenance of all critical materials that we will hold, or at least process through the Strategic Mineral Reserve. And then the third pillar is a critical mineral exchange platform that will connect buyers and sellers. 

AH: Wow. Okay. Right. So there’s a lot to unpack there. But you mentioned that Strategic Minerals Reserve, which is kind of the umbrella for all of these different pillars. That’s gonna be at Hawthorne Army Depot in Mineral County, Nevada. Why did you pick that? Was that security, logistics, something else? 

AR: Well, it kind of rolls up all into that. Our co-founder, Mr. Doug Cole, who’s the executive chairman of the company, he always used to look at Hawthorne and say, there’s gotta be something there that will really contribute to everything that we’re trying to do. One of my first visits after I joined the company in March, so within a couple of months, was to the Hawthorne Army Depot. At the time, the commander’s representative that’s there was someone that I had known from the Army Reserve as well. We had both served together, so we discussed what we were trying to do, and obviously, a lot of the federal installations have private-public partnerships. They have private companies that are tenants there, and the Hawthorne Army Depot provides an awful lot of what you mentioned earlier. 

Not only the logistics. As you can imagine, it’s the largest ammunition depot in the world, really. So it has millions of square feet of storage capability throughout greater than 147,000 acres. When you have an Army Depot, and it used to be an ammunition plant that’s that large, there’s an extensive rail network that exists on the installation that connects just about every corner of the installation. That’s built up. There’s plenty of land in order to build up additional facilities if we need to. They were very open to the concepts that we were describing early on, and we’ve received a letter of support from them. We’ve had multiple conversations and we’re very, very close on actually inking a contract to lease space and then be able to move forward to build a Strategic Mineral Reserve. 

AH: Yeah, fantastic. It’s really interesting that it’s in Mineral County. I love that as well. 

AR: It’s very appreciative. I know. That’s fantastic. Yes, ma’am. 

AH: So for the purposes of this podcast, we’re probably gonna focus more on the stockpiling aspect, but obviously your other parts will play a role in it. And you mentioned earlier that the Defense Logistics Agency, or DLA, has got a Strategic Materials department, which buys and manages materials for the National Defense Stockpile. What are you gonna be doing differently then? Because I’d love to know how you see M2I’s role fitting alongside government-led programs like the National Defense Stockpile or the Department of Energy reserve. 

AR: The National Defense Stockpile is really focused on what is really required in the event that one of the threats that we track actually engages us in a conflict and we lose material in fighting that conflict. And so the National Defense Stockpile is really narrowly focused on being able to provide the critical minerals that they would need to reconstitute the elements that were lost in that conflict that would only be coming from a contested environment. So it has a very, very narrow scope. So it’s kind of a needle and an eye through it that really focuses very, very narrowly on what those requirements would be. They’re used only in a national emergency where they dip into the stockpile to be able to provide that. 

It really isn’t available for the rest of our economy. So we see that’s really insufficient, especially since we rely on so many foreign sources of critical minerals for our economy at large. Our economy is much greater than what we spend on defense, and so our economy is really vicariously positioned on the critical mineral supply chain that we currently rely on. And so I think that we needed to do something about it, and that’s where the thought of a supply chain that would be assured for the purposes of both national defense and our economic security was a very relevant topic to be developed at this point. And then the Strategic Mineral Reserve to be able to hedge against those supply chains that really funnel the rest of the economy and not just in response to a reconstitution effort because of a conflict that may have existed. It’s a much broader, and it’s a very aggressive position to take that we’re gonna be able to do this, but we know that you start small, you start with the most critical, and then you continue to move forward. 

What we’ve been doing over the past couple of years is really developing a vast network of ecosystem collaborators, if you will, whether it’s through joint venture or collaboration agreements or other types of agreements to have in place to help us source critical minerals and to build a project portfolio that will help us bring back some of the most needed midstream processing to the United States so that we can relieve or actually dismiss a lot of that foreign dependency on critical mineral flow, especially from those actors that might not really want to support our economic growth and our national security. 

AH: So have you had to coordinate with the Defense Logistics Agency on sourcing? Are you engaging with other government agencies? How is that piece working? 

AR: So as you can imagine, as we’re building this ecosystem, a large percentage of our conversations have been with other federal departments and agencies within those departments. So we’ve spoken to the Department of Defense. Obviously, we’re working with Hawthorne Army Depot, which is part of the Joint Munitions Command, which is part of the Army Materiel Command. We’ve spoken to the Department of Energy, the Department of the Interior, through the Bureau of Land Management and some of the other agencies to begin to coordinate how we build this and move forward. And obviously, we’ll start small. We’ll definitely be linked to both the priorities and needs of the federal departments that I’ve mentioned before, and not only the Strategic Mineral Reserve, but the other priorities that we execute against within M2I Global. 

AH: So this is not just a defense focus closed loop system, this is gonna be something that is obviously a lot broader than that from what you’re saying. 

AR: Absolutely. Absolutely. So what, what we’ve seen is that critical minerals impact everyday life for every single person on the planet. Whether it’s because of your iPhone, the vehicle that you drive, the type of battery that’s in your vehicle. The energy distribution systems that we have, both storage and distribution. Building out our data centers to allow for the expansion that we’re seeing within the tremendous computing power that we’re being able to amass. But that’s all gonna require power, it’s gonna require more advanced semiconductors, and all of that relies on very innovative materials, or at least innovative use of materials. 

AH: Yeah. So before we get to the mechanics of that reserve, let’s talk about the content. Because you’ve mentioned, I know, gallium, graphite and copper. Which minerals and materials are you considering to be most critical for US national security? Why is that? Are you following a specific list? Which materials should we expect to see prioritized? 

AR: Well, we all know that the critical mineral list is in draft form as an adjustment to the one that came out in 2022, which included a few more minerals and they dropped a couple of them. Obviously, copper’s coming back on. I think something interesting is coming back on is lead and most people think of lead as well. We don’t need that. That’s an old-fashioned mineral. We’re trying to get away from it, but lead-acid batteries are going to sustain our energy storage requirements for a long, long time. 

So when we peel it back and say, well, where do we start? What do we prioritize? What should we focus on? The Silverado Policy Accelerator is a think tank in DC and they published a report last September that identified the 12 most important critical minerals for the defense sector. They called them the strategic defense critical minerals, and some of those are the ones that you’ve mentioned, graphite, gallium, antimony. We’ve heard a lot about those. Interestingly enough, of those 12, 11 of those have been impacted through either export controls or export bans by China. So they were onto something if, within probably three or four months, China decided that they were going to ban them. So obviously those will be a key focus of ours, being able to source them, being able to process them without dependency on China and some of the other actors that don’t want to see us succeed. And so that’s where we’re going to start to really focus in and build on those particular minerals, especially the ones that we rely on foreign processing or foreign sourcing and processing of those critical minerals. So those are the ones that we’re going to look at first. 

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AH: How do you determine what you need to stockpile? I mean, how is the US planning to assess its vulnerabilities in these global supply chains? 

AR: Yeah. Again, you know, we’ll be working in concert with the government. How they prepare their economic plans and look at supply chain vulnerabilities is really something that’s still within the black box of the federal government, but we know that we will be responding to those requirements, so we will be working with them to be able to ensure that we can source those minerals, even though it might not be on their priority list. But we will also be assessing the market generally for the critical minerals flow for all industrial supply chains, and we’ll be adjusting accordingly. So we expect that this isn’t something that we’ll be able to do by ourselves. We’ll be working in collaboration with the federal government, with various departments. Obviously, the two most important ones when it comes to critical mineral supplies is Department of Energy, because they have to make sure that our grid is expanding to the point that it supplies the energy that’s required. And obviously that’s done mostly through private companies as well, and the other department being the Department of Defense because of the national security implications of the critical mineral supply flow. 

So we’ll be working with all of those, but then we’ll be working with many private companies as well. I mean, if you look at the aviation industries, they need titanium, vanadium, gallium, and germanium, and all the other particular minerals that are on the critical minerals list. So we’ll be working to make sure that we can work towards assuring that supply chain for their needs as well. 

AH: Fascinating stuff. So we’ve talked a little bit of how you choose which materials to look at. I’d like to better understand how the decision makers decide how much of a resource to stockpile. How are they going to determine we need X amount of tons or ounces or whatever it may be of that critical mineral? How is that gonna happen? 

AR: Well, I mentioned that we’re going to have a technological platform that will have three pillars that we’ll focus in, and one of those will be all of the modeling of consumption of those critical minerals, and where we see where there is a tightening of its availability, those will come up on the radar, so to speak, based on the AI models of consumption and availability and processing and so forth. I don’t want to say it’ll be a complex decision, but I’m sure it will be as to where to go. And then of course, it’ll always be constraints by the resources available, whether it’s the available storage capacity, the available processing capacity, or just even the available resources to procure them. The priorities will also include those that are requested by the federal government for us to support them on procuring additional sourcing and so forth. So there will always be inputs that will go into the overall decision, not just what the AI models will tell us that we need to do. 

AH: Yeah, and I wanna dig into that AI technology side of it in a little bit. But the other flip side is when it comes to releasing or even replenishing the stock, what criteria do you use? Is it that trigger on the AI model, that threshold that will make you say, now’s the time? 

AR: Well, at the end of the day, we want our free market system to be able to dictate pricing and so forth, and you know that holding stock and then releasing stock can have some impacts on pricing. So we wanna make sure that never happens based on what we’re doing. Right. We will be working in concert to be able to meet those thresholds of when to release certain items. We’ll have partners, let’s say a large manufacturer will want to have a hedge on a particular critical mineral, and they’ll support us in ensuring that we have that critical mineral available to them and hedge against any shortages and so forth. So it’ll be a complex system of what the federal government requires and needs and what they want us to hold and what they want us to release back into the economy, so to speak. And then others will be buying and holding on their behalf so that we have those minerals available to them. So it’ll be a myriad of variables of what we’re holding when we’re releasing them. Is it privately owned that we’re just holding on their behalf, or is it part of the reserve at large that supports the federal government? So there’ll be some key elements in that decision process that obviously we still haven’t come across yet that will probably be baked into our ability to store and release material. 

AH: And you talked there about the free market a little bit ago. Are you planning therefore to buy your materials at the market price or are you gonna be looking at long-term contracts? 

AR: We expect that the critical minerals that we will engage in processing through projects that we have, this project portfolio of 19 projects, we will be seeking long-term off-take agreements to be able to source those critical minerals. Again, that will probably be our preferred methodology for the processing that we will have the supervisory control over. I believe that there will always be that kind of flow where you see an opportunity to obtain a critical mineral, and there will probably do that as well. So I don’t think there’ll be one main process that we’ll always use offtake long-term agreements. We hope that will be the case for the ones that we need to feed our processing platforms, but I’m sure that it will be an array of all of the opportunities that currently exist in the free market to be able to obtain those critical minerals and then be able to leverage those into the Strategic Mineral Reserve, into the processing and then, into industry in the US. 

AH: Okay. And then maybe you can talk me through who actually is gonna own these stockpiles. Is it government, is it hybrid? Is it you guys? And how financing for these stockpiles work? 

AR: We have seen multiple scenarios. One of those is a specific critical mineral that will be part of the Strategic Mineral Reserve on behalf of the federal government will, they will support the funding to acquire and hold those stores. We see a scenario where that definitely exists. We also see another scenario where a private manufacturer may need to hedge their availability of the critical mineral inflow into their industrial process, and so they will then support the buying and holding of critical minerals. So we see a complete hybrid. There’ll be stuff that maybe we buy and hold. There’ll be stuff, if you will, to use a really technical term that will be held on behalf of another industrial manufacturer, and then obviously held on behalf of the federal government, where they’ll use their funds to acquire and then store that material with us. 

AH: And presumably you’re using physical warehouses for all of this, right? 

AR: Absolutely. And that’s our point of going to Hawthorne Army Depot. They have a lot of storage available. They have a lot of land that if we need to expand, we’ll be able to do so. And then also the material needs to be in a certain configuration that either won’t degrade, so we can hold it for the period of time that we estimate. Our Strategic Mineral Reserve in the custodial part of that technological platform will also manage all of those elements that will allow us to understand we have to move it, we have to sell it off, we have to do something else with it. We’re obviously starting off with low-maintenance type of materials that would be inert as we build the capacity to manage the temperature and humidity and so forth. 

AH: Yeah, that degradation part is really important. So too is that kind of assessment of what is actually critical. We know that the list does change. It can have new technologies. We might see five, 10 years solid-state batteries, or rare earth recycling being the real big thing that replaces some of those needs. What if demand shifts, if new materials replace old ones? Or new battery chemistries or substitution takes effect and these new materials become available. How quickly can you adapt your assessments and then what? You get rid of the material or– 

AR: Right. Once we hold material, we know that there will always be a demand or a need for that material. So we are fairly confident that when materials start to be lower priority, we’ll still be able to sell those off and replace those with the newly demanded material or the same mineral, but in a different configuration. So that will then have to be adjusted. Same thing with our processing platforms. We have to stay on top of what the technological advances are that are creeping into actual industry so that we can deliver those key materials, and that will be part of the analysis piece of the Strategic Mineral Reserve to determine what new materials are being used. 

We have a couple of joint venture partners that are very important to us. One is a battery technology recycling company called Regenerate Global Technology. The other one is a mining and mineral sourcing company out of Australia, which is called Reform Group. They have access to not only a lot of the critical minerals on the list, especially those that we’re prioritizing. But they have also established a university consortium, which is a research and development consortium, which stays on top of the mining industry and looking at innovative ways of utilizing existing technologies and new processes or in the early commercialization or late-stage development of new technologies.  

A lot of those technologies are also related to remediation of existing brownfield mine sites. We have plenty of stockpiles in the US and the mine tailings and mine waste dumps that exist currently. And so improving the technological ability to reprocess those tailings is really significant, and that’s one of the aspects that Reform Group is focused on through Nova Terra, this nonprofit consortium of universities, but also going into those environments where a lot of tailings exist, always requires water and land remediation. And so through sourcing those materials from Australia, we have a very significant capability to be able to source most of the critical minerals, particularly those on that top 12 list identified by the report that was published in September. Recycling is definitely part of the solution to sourcing critical minerals for sure. 

AH: Let’s dive a little bit into that technology side of it. You mentioned it earlier, the AI advanced modeling. How is this all gonna fit in? It’s really fascinating. This sounds like it’s definitely very real time as well. 

AR: Absolutely. You might know that we’re in the process of merging with another company that’s listed on the NYSE American. They’re an aviation company, but they have a large technological platform that provides an awful lot of aviation management, which can be a complex piece, not only managing the movement of aircraft, whether it’s empty or it’s not, but also managing all of the maintenance requirements and so forth. And so they have a great capacity within that technological platform and we’re gonna take advantage of that. 

We’ve also been, prior to the merger, developing the Strategic Mineral Reserve tech stack, if you will, with the three components. One of them is the storage requirements and the custodial requirements of the critical minerals, the tracking and the tracing aspect that will allow us to digitally fingerprint all of the minerals from its source all the way through its processing, through its custody and inventory management all the way into its release into an industry. So we’ll always be able to determine where that mineral’s coming from, which is really significant as we move forward because we know that there’s an awful lot of places that these critical minerals come from that are not maybe mined in the most responsible manner. We’ll just leave it at that. And then the third aspect is the buyers and seller connectivity through the mineral exchange. 

As part of the platform, we will have this AI engine that will take in information on the critical mineral situation, from sourcing to processing, to refining, to stockpiling, wherever it may be held and to its consumption rates. Particularly in the US and all of our allied partners. And so that will all work to help us understand how to best manage inventory, how to best manage the custody of what we want to take on, how to look at anticipating the costs of being able to do that, and whether we have to seek additional funding or other partners to be able to do so. So it’s a very, I think, broadly based platform that has very specific requirements, but we’ll be able to look across the globe and look towards hopefully that 10-year future and work our way back to be able to assemble what are going to be the building blocks of that future. And as new technology comes aboard, whether it’s in the research phase or in the early commercialization stage, that will definitely be considered within the platform to determine the right mix of future minerals that we need to acquire and hold to make sure that those technologies will continue to move forward. 

AH: Astonishing that you can create these models to anticipate not just shortages, but these strategic choke points a couple of decades ahead. It’s like an early warning system for resource stock almost. Now, let’s look a little bit at the global picture, the bigger picture here, is this intended to be a single Strategic Mineral Reserve or do you envisage a network of reserves elsewhere? And if you do, is this the model that you’ll replicate in other states or maybe even with other allied countries and partners? 

AR: I know Australia last year had called to develop a strategic mineral reserve within the country of Australia. Australia obviously is home to many of the critical minerals that we all require. I think probably they can source anything on that critical mineral list, and there are other countries that have been talking about this. I know that the Quad talked about how to collaborate together to develop a mineral reserve, so I’m sure that we won’t be the only Strategic Mineral Reserve that will exist. I’m sure that it’s not a unique idea to us. I’m sure that we will eventually collaborate in a loose network with some of the other mineral reserves that will come up. Again, it will be important to see the alignments of those mineral reserves, and so I know that working with Australia, one of our closest partners, we’ll be able to have that free flow of critical minerals and ensure the United States of what they require. As other countries or nations develop their reserves and would like to participate, I’m sure it’s a dialogue we’d love to have, but obviously, it will be in conjunction with the federal government’s requirements in the US and moving forward. So you know, it’s hard to envision that we’ll be the only mineral reserve on the planet. I believe that everyone will look to hedge against that supply chain as they have developed economies with industries themselves. But at this point in time, we’re focused on what the requirements are of the US and then our closest allies. 

AH: I was speaking with some of the Italian officials quite recently at an event in Europe, and they were talking about the EU’s working very closely on this kind of initiative itself as well. So it’s a very interesting development, which also leads to the question: to what extent are our allies coordinating versus competing for access to critical minerals? If we’re all going for the same thing and we’re all friends with the same people, then presumably there’s a lot of competition being placed on some of those key materials. 

AR: I would think so as well. The way that we have developed the Strategic Mineral Reserve and in the process that we’ve had so far, we’ve been working very, very closely with Australia. There are many other countries that have resources that maybe don’t have the industry developed to use the resources internally and want to export those materials. So we have to be very concerned with the processes they use to extract those minerals and then see if we can acquire those in a way that will allow us to always have that freedom of maneuver and not be kind of held to somebody saying, okay, we’re gonna stop exporting them now. Right. And so that’s the thing. We wanna be able to develop the sources of those minerals as they move forward. 

I see that other countries are doing the same, like you said, the EU has had a long-standing discussion on the critical mineral aspect. If you look at some of the actions that the US has taken in the 2024 National Defense Authorization Act, they actually extended the definition of domestic processing or domestic sourcing to other allied countries because we know that we were in a pinch for some of these critical minerals and some of these other processes. So Australia was included in that and so was the UK, two of our closest partners. So I think that overall, there will always be a bit of competition amongst friends for material. At the end of the day, we always want to be at the head of the line when there is a line. So I think that we’ll always be competing with other countries, but I think that our ability to be able to manage the relationships with other countries will really be the solution going forward as resources become more constricted and being able to collaborate will be really important. And that’s one of the things that I mentioned earlier. We’ve been working on an ecosystem of broad collaboration with companies and organizations that exist in different industries, all related to the critical minerals. But is it transportation? Is it logistics? Or is it sourcing, extraction, processing, or recycling of those critical minerals. 

Now, we mentioned recycling before. Recycling is something that we all need to integrate into our processes for all critical minerals. ‘Cause at the end of the day, minerals really aren’t consumed, right? They’re just reused when appropriately treated. And so we have to increase our level of recycling and make getting to that circular economy for many of the minerals that we use. Especially those that we use most of. I don’t believe that as we continue to grow and demand that recycling will cover our growing demand, but it will definitely reduce the demand to continue to extract as much. 

AH: Absolutely. And when you talked there about the potential geopolitical friction, what about distortions to the market? Because, as you’ve noted, some of these critical minerals are really constrained. It’s hard to get access to them now, let alone when there’s a huge number of people competing and stockpiling them. So do you think stockpiling itself could exacerbate that situation? 

AR: I think that’s why we have to look at it very closely and work in concert with many entities, both on the private side as well as the public side. We don’t want to distort markets because that’s one of the things that we’re working to eliminate, the distortion, the manipulation of the market, whether it’s pricing, whether it’s sourcing, whether it’s even just the availability of the minerals. So we need to get away from that. We need to let the free market really create that demand and supply based on innovation and industrial capacity, and we need to be able to allow that to work without any control and without any manipulation. 

So we have to be very sensitive and work with the federal government to ensure that we’re doing the right things at the right times, in the right ways to avoid any sense of manipulation or market control, we definitely don’t want to do that. What we want to do is alleviate the critical mineral supply chain impacts that we currently see and eliminate the dependency on those that want to do us harm by cutting off our supply. So that’s our big focus and we want to stay away from any manipulation and understand that the federal government will have a very large say in those markets. I mean, even the National Defense Stockpile and when they buy and they sell, they go through an economic analysis and go across the whole government to determine if their sale or their buy will impact the pricing to the private industry. And that’s something that we have to keep at the forefront of what we’re doing to make sure that never creeps into what it is that we’re trying to execute here. 

AH: Just to wrap up now, because I’ve been taking up too much of your time. If we were sitting here in a decade’s time and you had to say what we achieved at Strategic Reserve was a success, what is that going to look like? What does success look like for you? 

AR: I think that success looks like that we are in control of our own future when it comes to processing and refining a resilient, transparent supply chain of critical minerals. That we have a critical mineral exchange that is free of manipulation by some of those actors that don’t want us to succeed. That also has been transparent and is transparent to all of the participants of the exchange, including all the way upstream and downstream of the critical minerals flow, particularly with industry. So the Strategic Mineral Reserve will be a success. We’ll have probably multiple locations of the Strategic Mineral Reserve hedging against the disruptions of that supply chain, but that might even be minimal, right? If we have the control of extraction and sourcing, we have the control of processing and refining, then what we need to hedge against will probably be more diminished than the need is today. So I think that success will mean that industry will be flourishing with all of the materials that it requires to be able to continue to innovate and use advanced materials to make everybody’s life easier. 

AH: Well, Major General, this is just so fascinating. You certainly got a huge job on your hands here, so I really appreciate your time and I wish you all the luck, but this is gonna be something I’m definitely keeping an eye on – how it develops and what it’s gonna mean for critical mineral supply chains too. 

AR: Well, thank you very much, Andrea. It was a real pleasure and I love the conversation and I’m always available to continue to talk it. Thank you. 

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AH: So really interesting developments. Before we discuss Al’s comments, I wanted to welcome Alex Cook, a Senior Price Reporter at Fastmarkets to the group. Hi Alex. 

Alex Cook [AC]: Hi there, Andrea. How are you? 

AH: Very good. Very good indeed. It’s great to have you join us. So let’s just chat about what we’ve just heard. Fascinating stuff. What stood out to you most from his points on stockpiling? 

AC: I think one of his closing statements he made about success comes in when we are in control of our own processing and refining future, and I think that’s interesting just to see that’s the goal that they’re aiming for, the US, to really kind of reduce reliance on imports and really push forward a lot of their domestic processing. 

AH: And Will, what about you? What was your kind of key takeaway? 

WA: I agree with what Alex said, but I think also just the whole scale of it hit me, I think, and in many different ways. So if you look at the National Defense Stockpile, they’re now really only looking to sort of have the raw materials needed for the defense industry. But what they’re talking about is for the whole of the industry, and we know how much we rely on China. So many of our supply chains go through China. And I think the other thing is if they’re going to just dismiss the dependency on foreign entities, then it’s a huge ask. Then if you look at another aspect of it, I mean, I think he said 147,000 acres, that was the are of warehousing they got, and just put that into context – that’s like  75,000 soccer fields, football pitchers. It’s huge. It’s a huge area. So yeah, in every single way it’s gonna be large scale. And I think also on top of all that, where’s all that finance gonna come from? It sounds like they’re gonna start small, build up big, but that in time should be, you know, really supportive for the markets, for demand, for all these critical metals and minerals. So, yeah. Very interesting. 

AH: Absolutely. Now, Alex, I know you’ve written extensively around the Defense Logistics Agency, which Al talked about and most recently its purchases of cobalt. He explained some of the differences between the DLA and the planned Strategic Mineral Reserve that he’s helping to set up, which I think really helped clarify the scope of the DLA versus what the government’s now trying to create. So I’m wondering if you can just explain a little bit how the DLA goes about managing its stockpiles. 

AC: Yeah, so the DLA is the procurement and logistics arm of the Department of Defense or Department of War now. It’s mainly stockpiling for national defense reasons rather than to support its own supply chain for electric vehicles or something like that. They’ve recently secured a 2 billion budget to go out and replenish stockpiles. So what they do is they put out a publicly visible contract opportunity, which any one of us could look at or dive into the details of, of pretty much, you know, the US wanting to buy X amount of tons of a critical material like cobalt, for example, or antimony as they’ve recently launched, or just a piece of machinery or parts or even a service like cleaning of a warehouse. They then look to also manage the stockpile and sell off parts of it as and when required due to parts of it being obsolete or needing just to be sold really. But it’s more of a defense-orientated stockpile rather than for anything else. 

AH: Yeah, there are obviously gonna be overlaps in some of the management aspects, but the scope of it’s very different than the new mineral reserve that we’re gonna see. Will, do you think there’s a danger that governments or companies hoard too much – I’m using the word hoard, but that’s not really the right one. There may be – and also could this lead to choking of supply? 

WA: I think given, as I said earlier, sort of how much we rely on China, I think there isn’t a danger of hoarding too much anytime soon because I think it’ll take a long time to build up these reserves and especially if you think of the scope of it all and everything. But I think it was interesting. They weren’t just looking at stockpiling were they – they were also looking at having some processing capacity. They’ve also talked about getting in ownership of some of the more upstream side of things. I thought it was really interesting that they’re looking at the old mine tailings as well. So there’s probably a huge potential there to have that as part of the stockpile as well. And I think then the other point was also looking at recycling, and I think that’s really important. 

AH: Absolutely. I think that the whole stockpiling, recycling and domestic mining forms kind of like a triad with the stockpiles covering the immediate risk, the domestic mining almost ensuring that there’s a steady supply and then recycling, reducing that long term dependence. Alex, do you think stockpiles and recycling programs support each other, or do you think they could conflict in a certain way as well? Some metals might be better to be focused on stockpiling versus recycling. What do you think on that front? 

AC: I think they could almost go hand in hand to some extent. I think just because you’re stockpiling a material doesn’t mean it has to come from a hundred percent primary mined material. It can come from recycled material as well. And the DLA actually have a recycling program as well for its stockpile, where I think it serves about 10% of the US needs. Whereby, you know, they’ll go through old stock, recycle it again, and just keep it within the stockpile really. We’re at the point now where new kind of sources of primary material can take a very long time to get off the ground, and so recycling capacity should be incorporated in any kind of stockpiling strategy, I think. 

AH: Yeah, and it’s almost as if the stockpiling acts as a bridge whilst those circular systems mature a little bit. And in terms of the allies, I thought it was really interesting what he was saying about allies and partnerships. There was a lot of emphasis on Australia, conversations with the UK. Do you see shared stockpiles at some point, maybe? Or do you think it’s more about sourcing the raw materials for the stockpiles? 

AC: Yeah, that’s a good one. I think if you look at the current situation we have in Europe, there has been some sharing of stockpiles, whether it’s ammunition or machinery. I think that can be part of the plan, but I imagine everybody wants to build up their own stockpiles initially so they can look after their own interests first. But again, it goes back to this thing of scale. I think if you look at all the European governments, they’ve all suggested they’re going to boost their defense spending, and along with that, they’ll also be looking at stockpiles as well. So it’s big, and I think maybe for the metals demand side of things, if we need to increase our spending on defense plus also stockpiling, then I think we should probably need to take into account in our models, our supply demand models, that demand is gonna be that much stronger. 

AH: Yeah, it was interesting. I looked at that report that he mentioned. It identifies 12 minerals that pose the greatest risk to US national security. Alex, just curious how you view that list and maybe how that might compare to something that the DLA is doing. 

AC: Yeah, I think much of what the DLA are doing now in terms of wanting to procure many different critical materials. By the end of August, they were planning to, or had already posted, I think around 30 contract opportunities for procurement. So there was cobalt recently and antimony as well that went live at the end of September. A lot of that comes from the US Government Accountability Office, it did two reports. One in 2022 that found that the Department of Defense had not updated their stockpile planning model to reflect these new metals that the country needs. You know, not just for defense, but also for energy transition for different national security needs. And then again, in 2024, the GAO again warned that critical materials necessary for advanced batteries and microelectronics, which weren’t around back in the Cold War times, were actually largely absent from current holdings in the National Defense Stockpile. So I think that’s where a lot of these efforts come from – from the DOD, from the DLA – to build up that national stockpile when the US is wholly import dependent on many of them. 

WA: And what Alex said is very true. It’s gonna be a big job. There’re gonna be challenges to build up these stockpiles. But I think the other thing is it’s not just the material. Even if we’ve got the materials in friendly countries, it’s quite hard. It needs a lot of know-how to actually extract some of these rare earths and materials as well. So that’s another sort of potentially delaying factor as well. 

AH: Yeah, so again, going back to what the allies or partners might be doing, it’s also interesting to hear what they’re doing perhaps independently. We don’t really know yet, but any thoughts on that? We mentioned during the conversation Australia and the EU, so any thoughts on that, Alex? 

AC: So the EU back in July called for a stockpiling strategy and want to implement it by 2026 to set up a critical raw material center to jointly buy critical materials. I wonder – it might be difficult with so many member states having different opinions or objectives for energy transition or defense – blending if that’s possible. But they’ve also said that they’re gonna give consideration to cooperate with like-minded countries as well. So it’s not just the EU, it’s working with other countries as well. They said as well the EU, that they realize that they have underused potential with the private sector as well, who have that expertise of the big trading houses in essentially manage their own strategic stockpiles, which they buy and sell and move around depending on market dynamics. And so they want to bring that in and speak to the experts on it really. 

WA: Yeah, I thought it was interesting that M2I seemed to have operations or links with Australian mines. If they’ve got offtake agreements, then that’s a way to slowly build up these stockpiles, I suppose. And maybe they’re gonna look at doing more of that with more friendly countries. 

AH: So before we wrap up, I’d just like to ask you guys what you think is the single biggest takeaway for the industry from the conversation that we heard and the plans that M2I have. 

WA: I think scale and how that could support demand. I think it’s a big takeaway for me. 

AC: I think it’s almost becoming a, like Will said earlier, a secondary demand source for future supply demand models. I think any sizable purchase like what the US is planning to do with cobalt, it has a huge impact on day-to-day market pricing. Markets move massively just based on the rumors of strategic stockpile purchase because you know that purchase is probably gonna be quite a large volume as well over a sustained period of time. That has big impacts on price, and so I think moving forward, it’s another element two markets, which probably five to 10 years ago, most people wouldn’t have factored in really to the extent of which they do now. 

WA: There is just an interesting angle to really look at these things. Just the potential scale of it, I think is going to probably be the thing that really impacts things. 

AC: It could also help those downstream projects get off the ground a lot quicker because they will need to supply offtake agreements and they’ll need to prove to finance agreements as well to creditors that they have offtake agreements in place. But if you’re having an offtake agreement with, say, the US government, or with M2I, or with the EU or with Australia, it might speed up that whole process in getting things built. 

WA: That’s a good point because that’s exactly what China did over the last 15 years in the battery raw materials area. They said, okay, you need to build these things, but we’ll actually end up buying your material as well. So we will buy the EVs, the government vehicles will be EVs and things like that. So it really helped these companies set up and scale up and get to their economies of scale and that’s what’s been so missing in so many attempts in the West, I think. So a really good point, Alex. 

AH: Okay, well let’s wrap up there. Alex, thank you so much for being our special guest this week. It’s been great to have you. 

AC: Thank you for the opportunity. 

AH: And Will, thank you as always for your insights. 

WA: No, thank you. It’s been really interesting. 

AH: So that’s it for this episode of Fast Forward. If you found it interesting, share it with a colleague or friend or follow the show on your favorite podcast app. Thank you for listening and see you next time. 

Fast Forward is a Bearded Fellows production for Fastmarkets. Your host was Andrea Hotter with William Adams.