S1 E34 – We’re Looking at 2040 to 2045 For REE Independence

Dustin Olsen (00:40)
Hey everyone. Welcome back to the rare earth exchanges podcast. You've got me Dustin and my cohost Daniel, and we are so excited to guys have you guys back for yet another episode. And Daniel, before we dive in, I kind of want to just talk about the episode that we had last week with Emily. She's the director of the permitting council with the U S federal government. And what a conversation that was, listening to her talk now about

the things that they're doing to accelerate permitting in the country. But one fact that she says, she's like, it was taking 29 years for some of these projects to get just permitted, just permitted. They couldn't do anything else until those permits cleared 29 years. And my mind was blown. Like that's almost your entire career. Just trying to get a project off the ground. Like you could start and finish and still not have got anything done.

Daniel O'Connor (01:32)
Well, remember

Dustin, life's like a relay race, you know. Sometimes you just, you don't make it to the finish line, but you can pass the baton.

Dustin Olsen (01:38)
⁓ well, I guess thank goodness for that. Cause that, wow. But I was also, I was very encouraged when she said that her goal, her mission was to bring permitting timelines down to three years. So that's 10 % of the time of what it was taking. And that really filled me with a lot of hope and encouragement. So any takeaways that you had from the show last week?

Daniel O'Connor (01:44)
Yeah, that's…

I think she's an amazing person. She has been through, she has made it through multiple administrations. I think she started with Obama, Trump 1.0, Biden, Trump 2.0. And she's worked to really streamline that permitting councils made a huge change. I think Emily is the director of the permitting council. Dumechek, I think her last name is.

Dustin Olsen (02:25)
Dominic.

Daniel O'Connor (02:25)
Dominic, yeah,

she's sort of an unsung hero in the federal bureaucracy, really trying to make a difference. So I'm glad that, I thought you did a great job and I'm glad that we could showcase the work that she's doing.

Dustin Olsen (02:37)
Absolutely. and one thing that they are doing, if you guys haven't listened to the episode is they have a dashboard of projects that are out in the, in the, in their view that they are working on and trying to get permitted. It's the, they're fast 41 dashboard. So go look it up. You just might be enlightened. And if your projects on that dashboard, Emily guarantees it is in front of the rest of the government for permitting. So.

If you got a project that you want to get off the ground, go talk to Emily and her team for sure. And if you miss that episode, please go back and listen to it. If you don't want to miss a future episode, please like and subscribe to our channel wherever you are listening to this podcast. Daniel, this week, I wanted to kind of get into the weeds just a little bit on, we kind of brought up a couple of weeks ago, but this topic, this phrase where president Trump said,

we're gonna have more magnets than we'll know what to do with in a year. And I keep going back to that and I just think, mm, I just don't think that's true. And so we've put together some information on that to say what is the likelihood of having more magnets than we know what to do with in a year? because it's a pipe dream, that's what that is.

So help me out here. What is the reality that we're dealing with?

Daniel O'Connor (03:55)
Yeah, it's a very different reality than we really are told or informed in the media. And we recently at Rare Earth Exchanges, again, as you know, Dustin, one of our main viewers, readers are retail investors, folks, and institutional investors. And so it's very important that we get to them accurate information so that they can more

with more specificity understand the situation with the rare earth supply chains, the risks, right? It's very important. So we did an article called Roadmap to Western Rare Earth Independence with the meter running. And, you know, I brought some talking points today to talk about that and feel free to counter my position if you like. You can pretend that you're

a spokesperson for DC. I think importantly, importantly, here's the situation. 85 to 90 % of the rare earth oxides and magnets remain caught up in China. We're highly dependent. This is an overwhelming monopoly. True, there's a lot of stuff going on, which is great. We're encouraging it. And I think we've been part of it.

Dustin Olsen (04:45)
You

Daniel O'Connor (05:04)
But the West is, we're talking about independence, but we're not, okay? The roadmap stretches, our roadmap of that article you will see is about 2040. If we're going at the pace that we've been going at so far, even with the deals, the wheeling and dealing that's been happening in Washington, the uncomfortable truth here is that we're still highly dependent on China and by extension, the Chinese Communist Party.

And again, for our heavy rare earths, which are used in various military products and tools, what have you, systems, it's even more overwhelming. It's about 98 % plus. Most of the source at this point today is China, Myanmar, Burma, and Laos, for example. And China processes 98 to 99%.

You know, this is, what does this really mean? So, the permanent magnets that electric vehicles use, green energy, other electronics, drones, defense systems, they're overwhelmingly Chinese, okay? That's just the reality. And without China, you know, what so-called clean energy, defense, all kinds of industry are gonna have bottlenecks, okay? So,

Where we stand today, as far as Western refining, we're in the single digits to low teens at best. Magnet production, we're rounding air. There's more in Japan. Japan is probably the most sophisticated market for magnet production out of China, but there's still a small percentage. And then Europe, a little bit more than us, probably. It's not good.

There's a lot of deals, there's a lot of good things happening, but we've got a long way to go. Now the Pentagon, what we're doing right now is sort of one Z, two Zs. We'll do a deal over here, we'll do a deal over there. There's no overarching strategy that we can determine so far. Maybe there's something we're missing. I'll acknowledge.

Dustin Olsen (07:01)
So,

so the strategy though, so far they made a deal with MP materials, the mountain pass mine in California. Wasn't that enough, right? They, they secure domestically their, their supply. And with that, with that large, large investment, won't they be ready to rock and roll? Are they not already rocking and rolling?

Daniel O'Connor (07:06)
Mm-hmm.

No, they have to build it out. so the magnet production is probably three years away. And they have to scale up the separation, the refining, the magnet production. Remember, most of NP materials product has been shipped to China, sharing resources for refining.

Okay. And that has to stop with the DOD deal. The Department of Defense has up to 15 % equity. you know, clearly DC under Trump is getting more serious about this topic, which is good. But I mean, MP by itself, you know, three years from now, if there's flawless execution, you know, maybe we'll make a dent in this situation. what, you know, we need other

mines. We need other refineries. We need other magnet producers that are all incentivized. And we're doing that. I mean, there's other deals that are happening, but it's not enough. you read the article that we put out there, there's a demand in tons and there's supply. And right now, if you forecast what MP is, what L-Linus is,

and all the other little projects that are sort of in the pipeline, it's not.

Daniel O'Connor (08:31)
see a lot of this stuff come to fruition and even then it's still not going to be at the scale that's necessarily. So if you read our math, the analysis that we did, you know, we're looking at, unless we have what we're calling for an operation warp speed type of scenario, and I'll get into that in a minute, we're looking at 2040. If we keep going at the pace we're going now, we won't see independence from China until 2040, probably.

And that's 50%. That's not totally independent. I want you to think about that. That's 15 years away. A lot's going to happen in that time. And don't forget what China is doing. They're not sitting still. They're investing heavily downstream, filing patent after patent after patent on how you can take these rare earths and advance materials, products, medical inputs.

military inputs. mean, it's so we not only do we have to catch up with the Chinese, but we have to own the future. And right now they own the future. When we talk about this business, this sector and research and development. So do you see what we did, Dustin, is we looked at the forecasted demand for this for oxides and for magnets, magnets both direct and embedded in other products.

And we looked at the supply and we looked at what the West outside of China can reasonably supply in a period of time. And it just doesn't look great. I hope we're wrong. I hope there's some disruption out there, maybe some recycling technology that can leapfrog the current situation. That would be great if that would happen and we would celebrate. But I think it's important that we have a sort of

that we temper our enthusiasm with the deals that have been done to understand that we've got a lot, lot to do. in 2035, we set up an inflection point. Conservatively, we'll be at about 30 % refining, 15 to 20 % magnets. We'll have progress, but it will be fragile. Because don't forget, China can come back and dump.

product on the market and put everybody out of business unless governments are coordinating their actions and lifting the prices. Remember, during the Cold War, the US, NATO all collaborated. Now what President Trump has done is taken a very different approach. It's much, it's sort of a national mercantilistic approach where every nation is sort of trying to cut their own deal one after another. It's sort of chaos.

It's an approach. Maybe it'll work, but maybe it won't. So far, it's not working for the rare earths. We're the only ones really saying that, right? So we're not winning friends in Washington, DC right now by speaking our truth. Any thoughts on that?

Dustin Olsen (11:11)
So to kind of play the devil's advocate here, right? So what you're saying is MP materials is not enough to remotely come close to reducing reliance on China, much less the fact that to even reach their capacity to even supply what they need to worth three years away or more. If, if

Daniel O'Connor (11:31)
If MP…

Sorry, go ahead.

Dustin Olsen (11:33)
But, that's, and that's if everything goes right. So what, because we've talked about other deals going on. We've talked about other, mines. there's, you know, lot going on in Pennsylvania, things like that. What else do we need to see before we start to trend in this direction of warp speed? cause right now our current pace is not work speed. mean, that's four different presidential terms. That's.

⁓ that's a child's childhood, right? Like they're just, that's a lot of time, 15 years. ⁓ so.

Daniel O'Connor (12:02)
15 years, yeah, 15 years

and we'll be at 50%. We won't be 80%.

Dustin Olsen (12:08)
So, yeah, so my question is still, what needs to happen still from everything that we've heard that's going on, the different deals are made, things that we are promoting and encouraging, what has to come online for Warp Speed to start out?

Daniel O'Connor (12:21)
Well, I I think it's sort of the other way around. You need warp speed and industrial policy to trigger the unfolding series of events that will help you accelerate the progress. So we forecast at least $25 to $50 billion that needs to be allocated as part of some emergency funds.

We believe ⁓ President Trump should have declared emergency, but rather than this broad emergency that he declared for all these tariffs, he should have focused on this, on critical mineral, which includes rare earth elements as a subset, let's say, and an Operation Warp Speed to get our independence. Because again, these inputs, these are the vitamins of the new economy, right? That's the reality. We can't.

You know, we can't make, and when we look at our defense, you know, we're, we don't have alternatives at this point. Now, again, there's research to do alternatives. There's companies announcing, Hey, we have rare earth free magnets. The problem is a lot of the designs of these products, say missile systems or nuclear submarines or what have you are designed to use a certain type of magnet. So, you know, that's not to say you can't change it, but.

Based on our math today, there needs to be some form of emergency, much like what was with COVID.

a blank check, trillions was spent on COVID, trillions, Dustin, and tens of billions of dollars on the vaccine development. When you add up everything, all the socialized, externalized costs, wasn't probably in the tens of billions of dollars. And, you know, so that's that we have to have that kind of…

understanding, reckoning. And then we have to align with other countries. So rather than having these trade deals where like Canada, I'm gonna make you mad and I'll get you later in England, you're gonna line up in Japan. Yeah, you're gonna put money in me. know, all this, this is not gonna work for this. You're gonna have to have an understanding. And there's the quad, there's a few different.

Collaboratives that could be used for this. Okay. I'm not saying there is nothing, but there needs to be multinational collaboration, much like we did during the Cold War against the Soviet Union. And then there needs to be industrial policy. And we have some of that now, but it has to be much more comprehensive. Okay. So we need to declare pricing for the next 10 years, know, NDPR, what have you. This is what, you know, it's 110 across the board.

Let's buy it up. Let's get going. Okay. We need to have standardized contracts. We need to have workforce development. We need a critical mineral czar, someone at the top of the government that can orchestrate these agencies because there's still interagency competition and squabbles and politics. still there. Okay. And so, you know, we're going to do an article on

know, details of this industrial policy to try to provide some food for thought for the US government. But without this Operation Warp Speed for rare earth elements, and I'm going to say critical minerals, because we have a big problem with many other critical minerals that are dominated by China and some other countries. We're not going to see all this talk of, yeah, we're going to be done. We won't be dependent on the Chinese. That's all.

not the case and we're looking at 2040 to 2045. Okay, even with Operation Warp Speed by 2035, per our forecast, we might hit 50 % refining and 40 to 50 % magnets in the United States. That's 2035, so 10 years from now. If we embark on

a operation warp speed for critical minerals and rare earth elements. Thoughts, Dustin?

Dustin Olsen (16:10)
Everything you just said really makes it sound like it comes down to the U.S. actually doing more than they've done with doing more than just a deal with a domestic company, MP Materials. And as you're saying, standardizing processes, contracts, pricing, things like that to get the ball rolling.

Daniel O'Connor (16:29)
Yes, ⁓ yes.

Dustin Olsen (16:29)
Right. So

once the ball is rolling, then is it safe to say that the private sector can then come in and benefit from all of that?

Daniel O'Connor (16:38)
Well, yeah, I mean, it's like during… We have industrial policy in this country. It's just manifest in different ways. So, you know, during World War II, we had industrial policy. During the Cold War, we had immense industrial policy through aerospace and defense. Reagan, you know, spent enormously on defense, aerospace…

in the competition against the Soviet Union, which it worked. It was very effective in helping to have that nation cease to exist, frankly. It became Russia, their empire, the Soviet Union dissolved, the different states that it held together. so enormous amounts of money. mean, places like Orange County in California,

where I've lived before prospered because there was so much of that aerospace activity. This can make economies prosper. We're having a challenge now with the economy as well. While we, this is a digression, but relevant. While President Trump has announced a lot of deals where different companies are saying, yeah, we're going to put millions, billions in what have you. It's about right now. And right now there's only 22,000 jobs that were announced in August. It's abysmal, right?

We need an industrial boom. So you can kill a few birds with one stone with this approach. We need an industrial policy. You know, I've never felt so strong about something just because of what we've learned with this channel, with the Rare Earth Exchanges platform. And with all the spin out there and all the media, 90, 95 % of the media is off.

It can be misleading to outright disinformation, there's intentionally incorrect information. China, don't forget, Dustin, if we don't have industrial policy and if we don't create an environment where private businesses in partnership with the government can have certainty for over at least a decade.

China will come in at some point and dump cheap product on the market.

We'll have a different president, a different administration, maybe, you know, and it'll go back to what it was. mean, and in the meantime, you know, these rare earth elements are being, are the basis of new innovation that we're tracking. We report on new patents and new materials, new, it's contributing to hydrogen energy. It's an existential threat.

Okay.

Dustin Olsen (19:05)
At what point, what do things need to get to for…

government like it COVID you referenced COVID the vaccine, the amount of money, the amount of effort that went into that. At what point will we see that here with rare earths? If it's so dependent, if things were to happen, say China dumps BYD on our shores and that puts Tesla out of business, Ford out of business, anyone who's selling electric cars out of business just as one

example, one industry, right? Is that enough to trigger a massive amount of money and effort to change what's going on, to save jobs, to save the economy? Right? Is that enough? Because people had to die for COVID to accelerate the way that it did in terms of getting the vaccine out there.

Are we going have to say the same thing here?

Daniel O'Connor (19:56)
That's a really good question.

That's a really good question. And I thought about this, Dustin, and I'm not sure what it's going to take because I think what, again, I President Trump, I give him a lot of credit for what he has done so far. He's done far more than any other president. Far more. So I don't want to be hard on President Trump. You know, and I think, I think his advisors tell him things I don't even, I don't even think he knows.

Okay, and he's not reading rare earth exchanges. know some of the Congresses, we know some people in Washington are going to rare earth exchanges, but…

What is going to trigger that moment where that wake up moment? It sort of started. I think it's going to be a crisis. If it happens, it may be that this fizzles and we just remain dependent on China and they just keep growing at our expense. OK, that's very possible. Very possible. In fact, that's probable. The probable outcome is that there won't be that moment.

And that we will continue to lose leverage in the world of international trade because of this really ridiculous inequality. mean, how can our leaders let this happen? And by the way, I've heard that there are folks high up in the military and in aerospace or defense contractors that are really concerned that, you know, because Trump's asking the same question, how did this happen? Right?

It's not Trump's fault. Remember the first time he became president, he started to shake things up and then COVID happened and forget about it. We got a much bigger problem. So I think it's going to be China, Sino-American conflict. I think if you're going to have that moment where the

Dustin Olsen (21:27)
Mm-hmm.

Daniel O'Connor (21:37)
Republicans, Democrats are aligned to say, we've got to open up the checkbooks and spend whatever it takes. And we have to do whatever it takes. I don't think we're there yet. I think we've started to get a taste of that and we've seen executive orders and some deals, some unprecedented deals where, again, the Department of Defense.

secured an equity investment in ⁓ MP Materials. And MP Materials is a great company. I think they've done a great job. We've referred to them as the treasure trove of American Rare Earths. mean, they're a great company. The CEO and COO, they're real operators and they've done great. It's just they're not enough, right? They're not enough. You need more. so what's going to trigger it?

is probably some kind of crisis.

maybe a trade war intensifies, they shut down the exports, our military stuck, and maybe our military triggers that inevitability,

Again, right now, I I want you to think about the new planes, war fighting planes. There was rumblings that because of that, the way China constrained the exports of rare earth magnets, for example, they've made it more tricky to get these products out. We've spoken with people, they now…

Dustin Olsen (22:38)
Right.

Daniel O'Connor (22:56)
force you to share a lot more information about your supply chain. They want to know everything. Our military establishment is quite concerned, and they should be. So I think it's going to take some kind of conflict that's a little more intense than what we've already experienced.

Dustin Olsen (23:13)
Which is sad, but I would also agree with you. I would say that something that is newsworthy, and I hate saying that, but for it to become more mainstream is when action's probably gonna happen, right? Because if it's, if everyone's talking about it, then they have to deal with it. I have maybe bit of a hot take. We've given President Trump a lot of credit with all the shakeup that he's done. He's changed a lot of things that have.

been long overdue, but I will be shocked if we see much more of that over the next three-ish years because I think he's trying to get it to stick with what he's done. He's had to deal with a lot of civil unrest in some major cities throughout the country. And there's just…

a lot of just upset people. And so I think he will be doing well to keep what he's done, much less do more like what we're talking about today. And if that's the case.

We're just stuck until hopefully another president comes in and is willing to mix things up some more. But that's my hot take. I feel like he's gonna try and write it out. Get his changes he's already initiated to stick and that'll be his win.

Daniel O'Connor (24:28)
I think you're probably right. mean, I can't really disagree with that hot take. He's got a lot on his plate. He's tried to do a lot. This critical mineral rare earth, while important, it's one of many things that they are trying to do.

Obviously for us, and we're biased, we have a certain vantage with through rare earth exchanges. We think it's extremely important.

But that may not be the consensus in Washington. We know that Washington has seen a lot of companies now, a lot of companies from Australia, Europe, Africa, they're all talking to Washington. So there's a lot of interest. And so I think that, again, is positive. Again, it's the policy, it's how you go about doing it, it's execution.

The Cold War, we had deep, deep alliances, right? Intelligence agencies, all kinds of stuff going on to collaborate to try to keep the Russian, the Soviet bear at bay and, you know, not too powerful. And, you know, that was what was required, you know, at the time. There's these two. ⁓

ideological divides. I don't see the same imminence here. think China is very different. They're very smart people and they're much better business people generally than Russians. ⁓ they're, I mean, not to disparage Russians, I think there's great business Russian business people, but Chinese culture goes back thousands of years. mean, their networks

highly educated, organized, competitive. And, you we see this in other industries, bio-pharma, you know, I've had a lot of experience in the bio-pharma industry. They're doing very well. But let's just take a step back. This is our forecast here for the world to hear. If we, even as much as good as we've done, and Trump has done, and he has done a lot of good, we give him credit.

However, it's not enough. By 2040, we'll be somewhat independent with about 50%, maybe refining by then. That's 15 years away.

And don't forget, without industrial policy, China's going to come in and they're going to play games. They're going to dump cheap product three, four years from now. They're going to destroy. If these companies aren't supported with industrial policy-driven offtake pricing, contract support, these companies are going to go out of business.

And the investors that we're trying to help are not going to be in a good place. you know, that's an interesting position we're in because, you know, we want investors. This is why we're putting together the whole supply chain through the rankings. And we're working on our bigger project, which is sort of a portfolio of of rare earth supply chain stocks. Right.

So, because it's going to take a lot of private capital.

Dustin Olsen (27:21)
Absolutely well. And probably just to sum up here, I think it's important for those

Retail investors, people who are deeply looking into this industry on what does it look like, where can you put your money? I think these are the conversations you've got to look out for and pay attention to. Whether it's from a political standpoint or a business standpoint, there is impact from top to bottom that could make or break any…

Daniel O'Connor (27:39)
Yeah, yes.

Dustin Olsen (27:50)
of the initiatives we've talked about today. So that I think that's our encouragement is be vigilant so that you can have the right conversations and hopefully drive this forward. mean, we're here talking about this ever earth exchanges, but what if everyone else was talking about the same thing, right? That's got to trickle up. Then then I think we might start seeing things move a little faster, but until that happens.

Daniel O'Connor (28:06)
Yeah.

Dustin Olsen (28:12)
We're just the minority voice, so.

Daniel O'Connor (28:14)
We're

very much a minority voice and we could be wrong. mean, we're deep into this. We're looking at the math and the forecasts. And again, like I said, there could be some disruptive technology. There could be a change with, there could be proprietary things going on we don't know about, you know, in the military. Who knows? There could be whole other things happening that

are somehow shielded from the public. so, we don't have, we're not disclosing anything other than public information here, right? So there could be things happening and maybe Trump knows something we don't. That's possible.

Dustin Olsen (28:49)
Absolutely.

Very likely,

very likely. Well, for those who have been listening to this conversation, if you'd like to read the article that was published on our website, the title is Roadmap to Western Rare Earth Independence with the meter running. We'll put a link to that in the show notes so you can go easily find it and come back next week where Daniel and I are going to interview the managing director, Thomas at Ionic Rare Earths.

And we're going to get his perspective and his take on the things that his company is doing and where the rules are headed there. I think it'll be a really interesting conversation. So subscribe to the channel. So you get a notification when that episode comes out. You can also listen to the show on all popular podcasting platforms, such as Apple podcasts, Google cast and the like. So Daniel, any final words before we sign off here?

Daniel O'Connor (29:44)
I would just like to say we're making really good progress with Rare Earth Exchanges, this startup that you and I launched, Dustin. I'm very proud of what we've done. The website traffic has really exploded thanks to your great work. And we're building data tools, we're actually getting, you know, it's mostly.

public data, all over the place, right? So we're having to dig this data up all over the place, scour, and then we have to bring it together, aggregate, synthesize, analyze. And you'll see in our data tools, we have upstream, rare earth, lights, heavies, rankings. We have a process ranking that's not up there yet. And then we have the magnets and…

We're working on supply chain maps for key companies and we're going to put it all together in a sort of subscription package that helps our cause and helps investors. And then from there, we've got plans for other products. And the idea is we're going to bring a level of clarity to this industry that just has not existed. And I can tell you and the audience that some folks that I consult with that are

deep experts, know, they remain anonymous because they're just very busy and they have their focus, but they really appreciate what we're doing. They say what we're doing is extremely valuable and we're going to disrupt any folks that are looking for pricing information, contract information, supply demand information, you're going to be able to…

obtain that information from Rare Earth Exchanges far more economically than maybe some consulting firm where you have to pay tens of thousands of dollars for a report. So our goal is to help drive value, innovate, and bring transparency. And that's a prerequisite for a marketplace. So what we are doing, Dustin, we've invested to create the conditions for transparency that will eventually help

pave the pathway to actual markets here in the United States for these elements.

Dustin Olsen (31:45)
Absolutely. It's a lot of work. That's still very much a mountain of an uphill still to go but We hope we hope it makes a difference. So Daniel, thanks for joining me on the show this week and Come back next week for that interview with Thomas and we'll see you guys later