The Democrats stimulus plan will be positive for gold, but it will be extremely positive for copper, said John Steen, associate professor at the University of British Columbia's mining school. On Friday Steen joined Kitco Roundtable to discuss stimulus, renewables and the electrification of everything, and the knock-on affect on metals, chiefly copper and nickel. Steen was joined by correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae. Republican and Democrat leaders are negotiating a COVID-19 stimulus package in excess of $2 trillion. President Biden is ahead in the polls, which could tilt the eventual stimulus to policy goals favored by Democrats.
The Democrats stimulus plan will be positive for gold, but it will be extremely positive for copper, said John Steen, associate professor at the University of British Columbia's mining school.
On Friday Steen joined Kitco Roundtable to discuss stimulus, renewables and the electrification of everything, and the knock-on affect on metals, chiefly copper and nickel. Steen was joined by correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae. Republican and Democrat leaders are negotiating a COVID-19 stimulus package in excess of $2 trillion. President Biden is ahead in the polls, which could tilt the eventual stimulus to policy goals favored by Democrats.
"A Biden win is extremely positive for copper. The estimated cost of preparing the electricity grid in the U.S. ... is about a trillion dollars. That's a huge stimulus, but it's a wicked amount of copper," said Steen.
Steen argues that the whole story of battery material demand seems to be driven by cars and Tesla, but that misses a larger picture.
"In the mining space, we have to look beyond the cars. Cars are getting a lot of attention [due] to the magnetism and charisma of Elon Musk, but there's a much, much bigger story here. It's the electrification of everything."
Steen notes that China plans to use its stimulus to decarbonize, and 4,000 tonnes of copper are needed to produce enough solar panels for 1GW of electricity.
Big miners like Rio Tinto and BHP Billiton are preparing for future copper demand. In the spring the number two gold miner, Barrick Gold, said it is on the hunt for copper deals. Earlier this week Newmont's Tom Palmer told Reuters that copper would account for up to one-fifth of the metal produced by the end of the decade given its current project pipeline.
Copper is currently trading at a two-year high.
Well, I'm going to kick a round table. I am your host, Michael MacRae with me. Editor Niels Christianson. Hi Niels. Hello, happy weekend. Happy Friday. Keiko correspondent, Paul Harris. Good afternoon. And our special guest is John Thomas Steen associate professor at the university of British Columbia, a mining school.
I'm delighted to have you, John, you are multidisciplinary and you have long experience at eye helping companies with innovation and strategy. And you also have been very forward-looking regarding Evie metals. Uh, can you tell us a little bit about your background and how you came to mining John? Yeah, well, it's a long story, but, um, yeah, growing up as a kid in Tasmania, which is one of the cradles of, um, geology and research, I, I think I got, uh, a geologist pick for my birthday as a 10 year.
It was a very strange child. Um, I, then I moved to Queensland a bit later on in my career and, uh, you can't be in Queensland without, uh, running into the mining industry somewhere. So, uh, it just sucked me in, and that was during the big growth phase in the China boom. And, uh, I came to a British Columbia, Vancouver in 2017.
And the thoughts are, gee, this is pretty good and it's full of Australians. Um, so it's got to be a good, pretty good place to be. So I moved here, but it's been a wonderful opportunity to be here in Canada. And, uh, yeah, it's a great mining scene and I'm having a great time here. Terrific. Uh, we want to get into, uh, some of your insights regarding, uh, Eby metals.
Uh, but first we always start with gold. Uh Neil's it looks like gold is still waiting for stimulus. No, it's I, I S I nap through the week, um, gold, this like does absolutely nothing goes to 1930 falls back below 1900. Um, and yeah, it is. It's waiting for stimulus and it's on again, off again. So, you know, one minute gold is up next minute.
Gold is down. It's just, but guys that I'm talking to, I mean, it's really, at this point, it's just ridiculous. Um, stimulus is not coming until after the election. Like they, they've blown through so many deadlines that the fact that we're still talking about it is, is just weird. Like, you know, let's get through the election now.
I will be repricing, uh, my interview with Peter hug at the end of, uh, this, um, at the end of this podcast, uh, interesting from Peter is that, uh, he says that stimulus happens no matter which way the chips fall, if it's purely Republican or if it's purely Democrat, uh, just because there's so many people that are screaming for stimulus right now, and again, bullish for gold.
Yeah, exactly. I think that's, and I think that's it, you know, we wait until where the chips fall after the election, and we see, uh, who who's going to do the stimulus and, and really, uh, guys that I've talked to is this stimulus is coming. It's just, you know, where does the money go? Democrats probably going to put more into, um, main streets.
And a Republican's maybe more to, uh, wall street and businesses and, you know, maybe, maybe not as much stimulus, but maybe more tax cuts, things like that. So, I mean, but ultimately, and this is going to tie into my number at the end of the show, but ultimately, um, the environment is just, is bullish for gold.
You can't, there's no way that you can, um, get away from higher gold prices. I think at this point, Let's switch to a junior news. Uh, you, uh, had, uh, there was two feasibility studies, uh, this week, uh, that peaked your attention, Paul. Yeah. So the first one gold one payment North goat, uh, announced the feasibility, um, for, sorry, paddle North gold announced the feasibility for their pavement project in Ontario, and that's the former Rubicon minerals.
So it's good to see them sort of, um, Coming forward with a positive feasibility study, the 50.3% IRR 74,000 ounce a year production. And then I'm more in my neck of the woods in South America. Uh, Jose Maria resources announced the feasibility for its host, Maria, a cup of gold. Silver project in San Juan Argentina.
That's a $3 billion project, um, sponsored or supported by the Lundeen family. Um, that will produce 136,000 tons a year of copper, 230,000. Now she's a gold and 1.2 million ounces of silver for an estimated. So 19 years. Now, uh, speaking of advancing these, uh, projects, obviously, uh, financing is important, uh, but, uh, you were on a financing panel this week and despite a gold hitting a production wall, uh, you said that the retail investor is still elusive.
Yes. Um, I, I was on a panel of the SME thrive event. And, um, one of the topics of discussion or one of the things that became evident during the discussion was that whilst this year has seen an uptick in fundraising equity fundraising for gold companies, um, still below sort of more historical levels. But, um, the feeling was that.
That's not new capital coming in. It's it's existing players, recycling equity, sending out things that made money on classic example of that is Eric Sprott and all the money he's made on Kirkland Lake and then recycling it back into other companies. And so the message really was this there isn't new capital coming into the sector yet.
Hm. Let's us switch to mining. Uh, I did notice, uh, that, uh, we are in the middle of quarterly season right now. Uh, the one that stuck out to my mind was nickel just because nickel seems to be the top of everybody's mind. Uh, the world's largest producer of nickel and that's nor nickel group in Russia announced consolidated nickel production increase of 8% quarter on quarter and 5.1% year on year.
Thanks to the ramp puppets. Cola MMC operations, valets nickel production dropped 20% in the last quarter, but the company said the drop was due to COVID-19 and maintenance work. The company expects a nickel output to improve due to production enhancements. Uh, the nickel prefecture does look bright, uh, demand for movie makers is expected to propel the metal.
Tesla has been holding talks with many of the major nickel producers, uh, the largest producer of batteries to Chinese auto manufacturers that C a T L sees demand for nickel spiking in 2021. John, what's the impact going to be, uh, from this production of EVs and, uh, the coming, uh, the coming, the coming crunch for metals.
Yeah, I think, um, now the story we've known it is it's been there for a while, but I think sometimes it takes us a long time to really take it seriously. So, you know, you have some trigger events like Elon Musk's battery day, where he starts dividing a whole hell of a lot of time to talking about Nicola and mining, manufacturing, and mining, and now converging as two very interdependent sectors.
Um, really, we're not ready for the, uh, the demand that's come, uh, from, from, uh, battery production. Uh, and it's going to hit us in a whole range. Nicole's an interesting one because Nicole is, uh, what provides the batteries with, um, energy density. Uh, we can just probably design out cobalt, um, but we can't design Nikolaus.
So I think everyone's getting on to this and understanding how important Nicole will be. The other thing that's really interesting is, um, if you like, uh, miners are coming into the car show rooms, um, the, you know, the, the, the, the car manufacturers want to be able to say to the customers who buy these nice shiny cars, um, let's say, look, our nickel comes from a best from the best sources.
You know, it's ethically produced. It has a low carbon footprint. So there's some really interesting things happen, you know? With D modifying the Nicole space in, you know, there's some Nichols are better than other Nichols or not just in terms of costs and grade, which is what we're used to talking about.
So this is changing really fast and it is extremely interesting. Yeah. One of, sort of a followup on what you mentioned about CATL. Um, I spoke with, uh, Walter Paris, who's president and CEO of Neo lithium. Uh, this week he received, uh, an $8 million investment from CTA CATL early this year, um, to help take for their transfer Browder's project in Argentina.
And, uh, one of the things he said is that company CATL has created a $2 billion fund to fund upstream developments. So they recognize, and this is a big theme. Everybody knows that the. Batteries and EVs are going to demand these things, but, um, who's going to invest in bringing the, the minerals into, into production.
We heard a couple of weeks ago from Elon Musk at Tesla that they're investing in Piedmont, lithium, because they recognize that that, that, that gap, that divide CHL recognize it as well. Um, who else is Elon Musk going to be the Eric Sprott for battery minerals? Uh, nails. Yeah. I just wanted to ask, I mean, you know, we know the demand for, uh, for Evie and batteries is going to be massive, but I'm sort of wondering just how does this all fit in with like the bigger scope of, uh, a green revolution?
I mean, we are looking at a new election in the U S uh, potentially, uh, you know, if a new president comes in, if, if a new Congress comes in, we're looking at, uh, More green energy. How does this, how did, how did the, the, the tech metals sort of fit into this, into this changing environment? Yeah, that's, that's a really great question, Niels.
And I think, um, you know, in the mining space, we have to look beyond the cars. You know, the, the cars are getting a lot of attention and a lot of it's due to the, uh, the, the, the magnetism and charisma of mr. Musk. Uh, but there's a much, much bigger story here. Uh, you know, the, the electrification of everything that we're looking at, uh, I think the quote was from 35.
Trillion dollars to transform, uh, decarbonized China. We're looking at, uh, yeah, we said before the gold is positive, regardless of the election outcome, uh, Biden, uh, strong Biden wind is extremely positive for copper. Uh, the, the estimated cost of preparing the electric electricity grid in the U S uh, for all the CV stuff for de-carbonization is about a trillion dollars.
And that's a huge stimulus, but it's a wicked amount of copper. So I think we've got to look through the car story and, uh, you know, look at it, look at it more broadly. And that tells a very, very big demand picture for metals, um, which the big, the big miners are into BHP are all over this, uh, Rio. Uh, they've they've done their homework.
They're looking at a very long term structural change in demand. The, uh, the, the political strain in the U S is really starting to it's this whole idea of, um, energy security, critical metals is starting to become mainstream in, in us political circles at the start of the week. Penn smart intelligence held a webinar, um, looking at this and.
Republican Senator Lisa Murkowski from Alaska, who is the chair of the U S committee on energy and natural resources. She's also on the appropriations committee and she was the co-sponsor of the American mineral security act. She basically said that, uh, The lack of development of these men rules poses, a slow motion threat to the U S economy, its manufacturing sector and its overall competitiveness on a global stage.
Um, she said that China certainly understands the nature of that, uh, of that threat because it has been investing in Meadows and uh, she's seeing increasing by parties and support for such things in the U S however, she did say that, uh, Not all projects should go ahead. And, um, she was referring to, I think your, your pet project that you've been mentioning, uh, in recent weeks, Michael, uh, John, uh, I wanted, uh, you know, I wanted to have you on, because, uh, talking again about a policy that, uh, Paul just brought up, uh, there has been, uh, the ongoing, um, announcements, uh, regarding this green revolution and, uh, the next critical metal.
Uh, that is going to be, it seemed like all through 2020, we had an announcement of metal, X metal, Y that is going to be considered to be strategic. Uh, can you talk about, uh, these things, the impact of, uh, when a government actually says that a metal is strategic? Yeah, I mean, so the U S U S government. And I know this because I was in a, a, a, a, a workshop at the, at rice university and the Baker Institute with, I was starting to look at critical metals.
Um, and that was partly, now there's a lot of involvement there from. Uh, U S government. And, uh, there was a new department being created and a new secretary for like critical metals who presented there. Um, and yeah, it's, it's something that's come onto their radar. What recently it's really interesting how quickly this has happened.
Um, and you know, we don't need talking about October so a year. Yeah. Creating it. Yeah. Apartments to an announcement in January for a strategy for critical metals and the global Alliance between Canada, Australia, Peru. Uh, I think Ecuador's in there as well. There's a list of countries for now. If you're forming an Alliance around critical metal supply.
And it's interesting because, um, you know, it's like the good old days of the, uh, of the, the triple entente before the first world war, we have the countries lining up. Uh, they're not lining up around colonies, or they're not lining up around oil this time. They're lining up around, uh, around critical metals.
So this, this is turning into a very, um, you know, sort of. I'll use the word interesting in a potential threat sense because, uh, we, we really see a lot of defense security now are tied up with this. I think the effect of this is it brings metals, you know, not, we're not just talking about economic development and markets.
Now we're talking about geopolitics and geopolitics and security. So. Um, the melding of, of geopolitics, uh, the conflict, the cold war between the U S and China. I think the metals are going to get bound up in that and the really interesting ways. So we're going to see the barriers between, uh, what what's corporate and what's, uh, what's defense slash political, uh, really melt away.
That's this, and this is changing so fast. Um, you know, yeah. What is a critical metal? Well, I think anything that's strategic, uh, in the sense that it represents a point of conflict between, uh, China and the West, um, for Australia now, iron ore and Cola, uh, critical materials because they're points of geopolitical conflict.
So if you like, um, you know, everything is a critical resource now because it affects our ability to exert power, um, across borders. Uh, I wanted to have you on because of your past hat, uh, working at eye, uh, they had their study that came out, uh, talking about, uh, social license, uh, just being one of the key concerns for minors.
Um, I was just really interested when Tesla was, uh, sourcing a nickel, uh, just, uh, in terms of, uh, underlying his interest right now. And just making sure that. This is sustainable. This is clean a nickel that, uh, is being sourced for them. What's the number one push for that? I mean, it's, he is just somebody that is actually sourcing that right now.
It actually goes back to the minor. Why is he getting pushed so hard on this? Yeah, I, and, and I'm, you know, I've, I've always had this relationship with E Y I was like a subject matter expert, I guess. So, um, I've never, never been on the payroll formally, but we worked together over a long period of time just to clarify that, but look, you know, W it's, it's been really interesting to follow a wise risk survey that they do every year in the mining space, because for the last three years, licensed to operate has been the number one risk.
And, you know, it's been stilly creeping up the, up, up the charts there. So, you know, uh, mining now the ability to get a mine operating in permitted and keep it operating in terms of secure supply. Depends on its license to operate, you know, that does it actually fit well with the community is ethically produced.
You know, what's, what's its, what's its carbon and environmental footprint. So I think there's a few things going on here with, with, with Ella and, and the, the battery industry. Generally. I think one thing they want to do is to be able to say, As they produce these premium products. And it's a bit like when you, when you, when you go shopping down in the supermarket, you know, that people will pay a premium for things that, where they, where they know the ingredients come from.
And if, if your coffee has a fair trademark, we'll pay a premium for that. And it's exactly the same with the batter industry. If we know as consumers that the metals come from, places where, you know, we're happy to see them. Yeah. Being produced, um, preferably they have a zero carbon footprint. We'll pay a premium for that.
And I think it's all part of the product strategy of premium products that that mask is going for. So two things guarantee of supply, uh, and also the premium product. This metal, we took out metals as commodities. Um, yeah. Okay. We're de commodifying middles. Now, particularly when we're blending them into these, uh, high value products like cows.
And all of this is within a much broader umbrella if you like of the finance that, uh, um, which goes way back to the, the start of this century, when a UN secretary general Kofi now wrote to the CEOs of the world's major financial institutions, uh, urging them to integrate ESG factors into their investments.
Um, Investment decisions. So the push has been from leading world NGOs and governmental organizations to the finance sector because they're having to report on this and take this into account. They're pushing that down the pipeline to the companies, they potentially investing, including mining companies.
John just quickly on that. There was a ripping article in the financial times from, um, one of the executives of Stanton chartered, um, signed that the banks are going to be one of the real pushes to decarbonize and. That reduced the footprint of the mining sector. And it just ties back to you, you know, your point about where do we get the capital from.
We can only recycle as much capital we're going to have to get new capital, but the banks are going to get really fussy about what they fund they're really paying attention to footprints. So that's that, that article that came out yesterday really, really good. Very very quotable. Uh, I wanted to circle back because you made a really good point, John, about copper.
And then obviously we've seen that the number one and number two, uh, gold miners, uh, talking about their copper or what, uh, what they're interested in. So you have Barrack for instance, saying that it has been on the hunt for copper deals. And then I did see something come from Reuters where new month's Tom popper was talking about.
Tom Palmer, not popper was talking that about one fifth of its metals produced by the end of the decade is going to be from copper. Now we're going, going from a very hot metals right now, but let's just mention a Pearl diamonds, which has really been in the doghouse for this year. But Navy. We're starting to see a turnaround Asian markets seem to be opening up, uh, due to better COVID-19 controls.
And beer said that it saw 57% jump in sales in September site when selected buyers, viewers were able to purchase goods already produced by de beers. A recall that the Chinese, uh, the currency is strengthening right now in that market. And also there seems to be better controls. Over COVID. So you see a strong Chinese consumer, you see people that are able to get out.
You also see Christmas and holiday shopping that is hearing there. So maybe we're finally seeing a turnaround for diamonds. Diamonds also has been cutting its production. Uh, you would see that, uh, de beers announced, uh, that, uh, dropped at diamond production 4% year on year when it was talking about it's quarterly also in may, uh, the Russian mining giant Alrosa.
Cut production by 2.5%. Now our figure of the week, that's a number that was meaningful to our guests. We always start with our guests. John, what was your number of the week? Oh, a number of the week is 4,000 and it's a big number and it's the number of, uh, of tons of copper that goes into producing a one, a gigawatt of solar energy capacity.
Um, what's one gigawatt. Well, it's not the largest solar farm that's going around the Australians planning a 10 gigawatt, but it just really emphasizes how much copper is going to go into the de-carbonization of the world economy. Thank you. Uh Neil's what's your number? Uh, mine's uh, above 7 trillion. Any, any guesses?
Well, I think that was one of the latest stimulus numbers. If I, if I saw correctly in a, in a, in a report. No, that is now the size of the fed balance sheet. I heard, I heard two numbers, a 7.3 and 7.2 trillion. You know, we can, we can forgive a couple billion here and there. Um, so above 7 trillion, and this is why gold, just, you know, you have to be bullish on gold that this balance sheet is only going to keep going higher.
In the, in the near term. And you know, that means higher, higher, higher, precious metals prices. It's $7 trillion. It's it's such an interesting one. Um, I saw a really interesting, a great chart on just how frequently the debt ceiling gets raised by the U S now, um, you know, it, for the first half of the century, it happened once, uh, in it.
And then nowadays it happens every, every two or three years. And they'll get to the point like my son does with his mountain bike habit habit where they, um, the debt ceiling has to be raised every six months. Yeah, Paul, what's your number? My number is 320 million. Well, I've got several this week, my first one, that 320 million more precisely 320 million kilometers.
And that's the distance. The Osiris-Rex probe traveled to collect a rock sample from the piano. Um, another one I've got that, uh, just. Really struck me as interesting. It doesn't really have anything to do with mining, but is how many brands do you think Coca-Cola has and how many of them is it killing off?
I, well, I, I remember seeing the headline, that tab is going to be disappearing so well, apparently Coca-Cola has got 400 brands and all those it's going to be killing off 200. Dan do a cool 209, then we'll
give it to her or a background. I was hoping to find a one last tab in the, uh, in the supermarket. Uh, apparently they're phasing that out because it's always had a metal taste to it. Uh, which some people love. But most people find a distasteful and that kind of goes back when they're actually trying to figure out how to make, uh, make, uh, make a, uh, make a Cola's without a, um, uh, without sugar in them and, uh, their early recipes, uh, project the product's been around for what least over 40 years, isn't it on to decide to, can it.
My number of the week, and I'm going to be sticking with a John's theme and a, that is 73%, 73%. And that's according to BMO a poll of LME week participants voting on their favorite metal who overwhelmingly chose copper the metal with the best exposure over the coming year, by a long stretch with 75, 73% picking it as a favored long.
That's it for us, Paul, when's your conference. It's on November the 10th to the 13th of November. Yeah. And what's that conference again? The Columbia gold symposium. Keiko is a media partner for CSC mining over Canada, a cross country trip from Atlantic Canada to BC to Canadian North together. Unique perspectives on Canadian mining, explore regional national issues and celebrate the achievements in ground breaking industry.
Google mining over Canada to learn more and sign up for alerts. We're going to reprise our interview with Peter hug had a precious metals division here at KACO, where he talks about elections, stimulus and how that's going to play out with gold. John, it's been a pleasure. Can you tell us how we can follow more and learn more about what you're doing?
Yeah. Follow my, uh, the research Institute brim, uh, that's B R I M m.ubc.ca. Uh that's that's. That's going like a rocket at the moment. We're doing great things with a lot of companies. Uh, I'm also on LinkedIn. I'm also on, on Twitter or so, uh, that's John at UBC, uh, capital B and uh, yeah, lots of stuff going on.
It's been a real pleasure to be here today. A lot of fun. Thank you guys. Thank you. Now, our conversation with Peter hug.