Show host Gene Tunny speaks with Louis O’Connor, CEO of Strategic Metals Invest, about the increasing demand for strategic metals like gallium, hafnium, and indium—essential for modern technology. They discuss China’s dominance in rare earth processing, the geopolitical stakes, and how supply chain vulnerabilities could impact global markets. Louis also shares insights into investing in these scarce resources.
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You can listen to the episode via the embedded player below or via podcasting apps including Apple Podcast and Spotify.
Timestamps
- Introduction to Strategic Metals and Geopolitical Implications (0:00)
- Overview of Strategic Metals Invest (2:53)
- China’s Dominance in Rare Earths (4:00)
- Characteristics and Importance of Strategic Metals (14:55)
- Investment in Strategic Metals (16:11)
- Geopolitical Risks and Supply Concentration (23:33)
- Private Investment and Market Opportunities (32:45)
- Historical Context and Future Outlook (43:09)
- Market Volatility and Investment Strategies (46:49)
- Partnership Opportunities and Future Growth (49:46)
Takeaways
- Strategic metals are crucial – Essential for semiconductors, defence, and energy transition, these metals are essential for modern technology.
- China dominates rare earth processing – While reserves exist elsewhere, China leads in refining, creating supply chain risks.
- Investing in scarcity – Private investors can own and store strategic metals, profiting from increasing demand and limited supply.
- Geopolitical tensions impact prices – Trade restrictions and conflicts can drive scarcity-driven price spikes.
- The West is racing to catch up – The U.S., Australia, and Europe are working to develop independent supply chains, but progress is slow.
Links relevant to the conversation
Strategic Metals Invest website:
https://strategicmetalsinvest.com/
Lynas Rare Earths (Australia’s Leading Rare Earth Producer):
US DoD article “Securing Critical Minerals Vital to National Security, Official Says”:
https://www.defense.gov/News/News-Stories/Article/Article/4026144/securing-critical-minerals-vital-to-national-security-official-says/
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Transcript: Gallium, Hafnium & the Strategic Metals Shaping Our World w/ Louis O’Connor, Strategic Metals Invest – EP276
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Louis O’Connor 00:03
This year might be the year where we see a lot of sort of strategic sort of stockpiling beginning as well. The US Department of Defense needs these raw materials. The geopolitical situation also can have an effect, like I said, China in retaliation for the US block and some of the semiconductor technology to get into China is restricting. So the West, you could say, has the technology, but Chinese have the raw materials.
Gene Tunny 00:36
Welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode. Please check out the show notes for relevant information. Now on to the show. Hello and thanks for joining me. I’m really looking forward to sharing this conversation with Louis O’Connor, CEO of strategic metals, invest in this episode, we dive into the world of strategic metals, resources like gallium hafnium and rare earths that are essential for everything from smartphones and semiconductors to electric vehicles and space technologies. We discuss why China dominates global processing of these metals and what that means for international supply chains, geopolitics and the prices of our favorite gadgets, like smartphones. Louis explains how his firm helps both manufacturers and private investors navigate the complexities of buying, storing and selling strategic metals. If you’ve ever wondered about the hidden backbone of modern technology and where it all comes from, this is the episode for you. Before we get started, I want to give a quick shout out to our sponsor, Lumo coffee. This top quality organic coffee from the highlands of Peru is full of healthy antioxidants. As a listener of economics explored, you can get a 10% discount. Details are in the show notes. Now let’s jump into the conversation. I hope you enjoy it. You Louis O’Connor, CEO of strategic metals, invest. Welcome to the program. Thank you. Gene, happy to be here. Excellent. And you’re joining us from Ireland. That’s, that’s terrific. I think you might be the first guest I’ve had on from from Ireland. That’s, that’s great that that you can join us from, from Ireland. So can you tell us a bit about the company? It seems sounds like a real multinational operation. There’s quite a Yeah. Anyway, please, please tell us about the company. Please. Louis,
Louis O’Connor 02:53
sure, sure. So we had our core we’re based in Central Europe, so I’m, I am in Tipperary in Ireland. But our main office is in Frankfurt in Germany. We’ve got 3540 people there. We’ve been in business since 1999 and our main, our core business is we were a supplier of technology, metals, rare earths, to industry, to manufacturers. So we’ve probably more than 4000 clients in 7475 different countries. That’s our core business. We also have a evolved storage facility in the banking district in Frankfurt, and we also, we still, we have an inventory there, but we also allow some of our industry clients to store the metals there, and then we also invite private investors to participate in the supply chain. So strategic metals, I suppose I’ll just just explain gene it’s not an academic term. It’s more of a an umbrella term for the metals that are basically the backbone of manufacturing in the 21st century. So all modern technology, energy transition, aviation, military applications, but the ones we sort of we sell about 4045, maybe 50, to industry, and then as if we only offer about maybe 10 or 12 to private investors. And the characteristics of those ones are, you know, where does sort of supply, concentration, risk and stuff like that. But essentially, at our core, we’re supplying manufacturers all over the world with raw materials, right?
Gene Tunny 04:39
Okay, so you’re buying them from the mines, are you’re buying them from the miners, and then you, you then sell them to manufacturers that need it. Is that right?
Louis O’Connor 04:49
Correct? Yeah, we, we buy them directly from producers, suppliers. In a lot of cases, you know, there’s a supply concentration risk, like China, it’s. Funny we’re talking this week, because in the last probably two weeks, I have, I’ve never heard rare earths, which is our product, mentioned, as much in the media, or by, you know, heads of state. You know, President Trump in America is talking about rare earths in Ukraine. And of course, their interest in Finland is the same thing. Australia actually would be the second largest producer outside of China. China pretty much dominates, you know, a lot of these, not all, but a lot of you know technology, metals and rare earths, China is about a generation ahead of the rest of the world with the processing technology. So in a lot of cases, I’ll just explain, these metals sort of differ from base metals in the sense that they don’t occur naturally in the Earth’s crust, so they’re always a byproduct of another raw material. For example, gallium is a byproduct of aluminum, and halfnium is a byproduct of zirconium. So for every 50 tons of zirconium, you just get one ton of Hafnium. So it’s very, very limited in what’s available. But at the same time, hafnium is in the industry. Some people call them the spice metals, which is a good analogy to use, like if you think of the spice added to a bit of food. So although they’re used like, hafnium is like a super alloy in jet engines and rocket engines and nuclear reactors. There’s only a small amount, you know, applied or needed, but it’s critical. You couldn’t fly a jet engine won’t work without half Tim in there because of its ability to withstand extremely high temperatures. So on the one hand, they recommend a sort of a small economic they have a small economic visibility, visibility. But on the other hand, they’re critical. They’re absolutely critical. You You couldn’t swipe your phone without indium, you know, I could go on and on. But they’re, they’re, they’re basically the upstream raw materials that become trillions of dollars in in Downstream GDP, right. Okay,
Gene Tunny 07:01
now you mentioned strategic metals, and then there are rare earths. So a rare earths, rare earths are different from strategic metals. Are they?
Louis O’Connor 07:12
No, I would say the best probably description is strategic metals are an umbrella term for all all all metals, let’s say that are critical to all nations, economic prosperity and military applications. Now probably a good way to explain it would be on the in Europe and in the US, the Geological Society or association in the US, they have a list of what they deem 40 critical metals that are critical to their nations, and those would probably be the best description of what strategic metals are. They’re they’re critically needed, and in some, lot of cases, there’s a supply concentration risk, or there’s a heavy localized production, as you know, with gallium, 98% of the world’s gallium is coming from is being processed in China. That’s why, you know, President Bush and the EU and even yesterday, South Korea is maybe going to do a cooperation with Mongolia. Some countries have the resources and others have the demand, sort of because of China’s sort of domination. A lot of there’s a lot of cooperation gone on outside of China. That’s why Trump is after the wrong materials in Ukraine. That’s why Putin, actually a lot of that territory they’ve taken has these In fact, the EU President recently said that these rare earths are fast becoming, or are already more important than oil and gas. So they’re hugely important, yet they sort of have a sort of relatively small economic visibility, right?
Gene Tunny 08:54
Okay, so you, it’s, it’s President Trump, you, you’re talking about, I think you might have accidentally mentioned Bush earlier on, but you’ve been Oh, Donald Trump, yeah, President Trump, just okay, yeah, right. Oh, so you mentioned gallium, and that is, so it’s a soft, silvery white metal, similar to aluminum, and what’s it used in? Or it says it looks like it’s used in semiconductors, is that, right? Is it used in microchips? Indeed,
Louis O’Connor 09:23
it is, yeah, yeah, semiconductors. But it also has, it’s, it’s got, sort of, most of these raw materials are have multiple applications. So it’s used in semiconductors. It’s also considered, as well as an energy transition metal. So for, you know, electric cars, solar, wind, it’s using military applic or, sorry, medical applications and military applications, actually. And 98% of the world’s gallium is processed in China. And that’s, you know, a. Sort of an unusual situation to be in for Europe. Basically what happened gene was when rare earths were first discovered, or, sorry, when we first began to use them. So until the 60s and the 70s, they were really waste materials. And you could have considered them recycled materials, because, as I said, there are by galliums of byproduct of aluminum mining. So it was white. But when we went from black and white TVs to color TVs in the 60s, that’s when we began to have a use for these raw materials. Then in the 1980s in fact, the premiere of China at the time, Deng Xiaoping, who’s considered the modern the architect of modern China in 1987 you could Google this, you’ll see he made a very shrewd prediction. He was standing at a rare earth mine, and he said the Middle East has oil. China had. China has rare earths. And it looks like now that China sort of understood, maybe quickly, or before Europe and the US and the rest of the world how important these materials would be. Because, from that date, the 1980s to now, at that time, China was producing, responsible for maybe 12, 15% of the world’s rare earths. Now they completely dominate the market. So they sort of understood before everyone else, how important they would be in the you know, like China, they do. They made a very, very, you know, long term plan. Now, at the same time, during the 80s and the 90s, the US and Europe and other countries sort of allowed China to do that, because, number one, they could produce them for less money, and it’s a bit messy, it’s a bit complicated. And they said, well, we just let China make them, and we’ll buy them, you know, inexpensively from them for the cars. But, you know, it just sort of, you know, wasn’t, maybe, watched as carefully as it should be, because now all of a sudden, you know, somebody in Europe recently said, we’re in the middle of a Cold War 2.0 and it’s not a race for arms, it’s a semiconductor race. I mean, semiconductors are literally the most critical technology needed in the world today. You know, we needed steel and sort of armor in World War Two. In the Cold War, it was the atomic threat. And today, it’s precision and semiconductors that are in all these military application. So they’re hugely important and usually critical to military and to economic prosperity. Gotcha.
Gene Tunny 12:27
And so what are the top I mean, what are the top five strategic metals? Can you just give us a sense of what the major ones that you’re trading in?
Louis O’Connor 12:36
Yeah, from a because I work mostly with private investment and private investors. So which ones would be the most relevant as a physical asset? Because despite the name, like rare earths, they’re not all that rare. There’s 17 of them, but there’s only four we would we would deem relevant. Now we sell all 17 to industry. They all have in Indus industrial applications. But there might be not that rare. There might be no problem at all with with supply. So out of you know, we also so categories, architect technology, metals, and say, platinum group metals. So we offer about 4550 to industry, but to private investors at any given time, we’re never recommending more than eight or 10. And I’ll give you the eight that we currently recommend is there’s gallium, germanium, indium, rhenium. They’re all technology metals we sell in ingot form or in bar form. And then there’s the rare earths, which are the powdered or the oxidized form that be dysprosium, neodymium, for seidymium and terbium, and all of those eight, six of those are 100, were pretty much 100% dependent on China. And that’s why they’re relevant as physical assets. So gallium germanium were completely dependent on China. In fact, China is banning, well, restricting, the export of gallium and germanium to the US. At the moment, you know, they’re in a trade dispute technology, I suppose, war more than anything. So you know, that’s why they’re relevant as physical assets. China. Can they have us what you might call a smart tap, they can push, put it on and off, and at the moment, there’s restrictions the other characteristics that determine why we deem them relevant as physical assets. One I mentioned is China. There’s a high, localized concentration risk. The other one is we look at what which ones are the most, I suppose the quantitative approach, which is which ones are actually the rarest, and hafnium, it’d be a good example. There’s only 70 to 90 tons of hafnium produced every year, which you could literally fit in the back of a big truck. But hafnium is critically needed in nuclear reactors, in jet engines and space. Technology, our space exploration is becoming a fully fledged space industry. So, so hafnium is critically in demand, yet there’s only 70 to nine tons a year. And then the other thing we look at is qualitative which is just, you know, which ones are most in demand? You know, I mentioned Indium. You can swipe your phone because of indium. So the most in demand at the moment are technology metals for, you know, all semiconductors and phones and computers. You know, one smartphone has probably 12, maybe 13 semiconductors in it. It has probably 12 or 13 of these metals. And yeah, you know, we touch them and see them and feel them every day and and don’t realize, oh, we can. We can own these metals, just like gold and silver, and profit from owning them. So, so those are the main characteristics, the the supply concentration, the qualitative and the quantitative approach,
Gene Tunny 15:56
right? Okay, this is fascinating. And are you helping your investors store the strategic metals? Yes,
Louis O’Connor 16:03
we do. And that’s very, very important question. Actually, Gene because, you know, if we weren’t active in the industry, like we’re in business since 1999 and we 85% of our business activities on a daily basis are, we’re buying and selling metals. So we have a logistics and distribution platform in Frankfurt, and on any given day, I mean, we’ve over 4000 clients in 74 different countries around the world. We’re also like a tier one supplier to companies like, let’s say, Siemens in Germany. What that means is they buy metals every single month from us, and have done for the last 15 years. In exchange for that, they audit us once a year. They come in to the office and to the distribution platform. Well, they hire somebody to do it. But the reason I mentioned that is, if we weren’t active, or not only active, if we weren’t in the middle of this industry, it wouldn’t make sense. I mean, if I was, I don’t know if this was just a sales and marketing operation, there’d be red flags everywhere for investors, because, you know, one like, obviously, because we’re selling to manufacturers, we know what the industry demands. We know what Siemens need, what BMW want, what Apple wants. So we know what purity levels to buy and that we can resell. And to when a investor wants to sell, we’ll mediate a sale immediately to one of our our industry buyers. So, so that’s very, very important, is that what we call the chain of custody. If these raw materials are not in the chain of custody. They’re really useless, no and buyer will. So we’re basically inviting investors to participate in the industry. We can offer them a safe entry and a safe exit from the supply chain. Gotcha,
Gene Tunny 17:53
okay, that’s That’s fascinating. How did you get involved in the industry? Louis, are you a geologist? Did you study geology or how did you get involved? No,
Louis O’Connor 18:03
actually, I’m quite recent. I’m on board like my my sales partners are, the supplier is a German company. I just worked exclusively with them. And, you know, I was, I was actually living in Central America until about five years ago, and I was planning to come home to Europe for my kids to go to school. And I was looking for some sort of, you know, I’d lived in Germany before, for 10 years, I’d lived in in the Americas. And I was coming home and was looking for something interesting to do. And, you know, I sort of, you know, I know Germany. Understand Germany well and and I heard about this company. I was up in the US at a precious metal sort of a conference and investment conference. And somebody told me all about them, and I went to visit them. And I initially was an investor, myself, interested as an investor, this is about 2015 and then I came, when I I immediately was interested in becoming sort of involved, but it took until about 2020 to, you know, to go through the process of becoming a part of of the business Gotcha.
Gene Tunny 19:17
And what type of price growth have we seen in strategic metals? So your, you know, your investors are investing in them, then they’re obviously, you know that? Well, your tagline is, profit from scarcity and growth. So, yeah, yeah, that’s what you’re you’re aiming for. You’re aiming for all the factors these things are in, in short supply, and there’s, you know, there’s a steady demand, or a growing demand for them, and so we’re going to have price rising prices, I imagine. Can you tell us what’s been happening with the prices of these metals, please. Louis,
Louis O’Connor 19:52
yeah, that’s exactly it. Gene, we have what we call scarcity driven price increases. And then. Is also growth. I mean, I think when you look at all the applications and you know, our sort of now, first of all, when I tell you it is a speculation, prices go up or down, yeah, I if I was to say to you now, you’ll make this amount of money. You know, that would be morally wrong, and I’d be telling a lie, because we don’t know. But the truth of it is that the equation we work from is that when there’s, you know, increasing demand, supply can be limited, also subject to disruption, you’ve the potential for profit. Now, historically, we can shoot, we can prove, you know, they they do, they have gone up in value. But one thing we say to our clients is, look, we’re not financial advisors. Our poor our DNA is We buy and sell metals, and we’re inviting you to participate. But we do have an investment strategy, and we say, don’t buy unless you’re not aligned with this strategy. The strategy is simple, buy them and keep them for five years, and you’ll make money. And historically, that’s proven to be true. But what happens, for example, if you look on our website, you’ll see, on average, the metals are up about 34% a year. But I’m just going to give you two examples. If you look at terbium, you’ll see, in the last four years, it’s up 100% so it’s up about 25% a year. But that doesn’t tell the whole story. The whole story is, if you look at the price charts, you’ll see that when we went into lockdown, the terbium is used in semiconductors. When the whole world, you know, when we had COVID and the whole world went into working from home, there was a surge in demand for computers and laptops and stuff. So how a terbium went up 500% in three years, and that’s what we call a scarcity driven price increase. And the reason for that is terbium is a byproduct of another raw material. So just because demand increased for terbium doesn’t mean supply can it can’t. And that’s where we recommend, or, you know, investors can make a profit is if you know, depends what your goal is. But I honestly think if, if you’ve invested 10,000 or 25,000 euro, and it’s double in value, maybe that’s a good time to sell your initial capital, at least. So that’s what happened with turbine. Then when terbium, sort of the prices will correct themselves as well. Then, when we came out of COVID, you know, Boeing and Airbus put in all these orders for airplanes again, so hafnium went up 250% why? Because demand increase for hafnium and supply cannot be increased. So, you know, when does an increase in price? The manufacturers just absorbed the price because, you know, let’s say use Apple as an example, it will be far more catastrophic for the production of the iPhone to stop than for Apple to pay a 50% increase in Indian which is needed to swipe the phone. So anytime there’s increases like that, you know, I mean, companies and nation states do stockpile if they can and when they can. But invariably, from time to time, we have these, what we call scarcity driven price hikes, and then in terms of growth, you know, I don’t think anybody would argue, if you look at where we’re heading with electric cars, wind, solar, space exploration, or space industry, nuclear reactors, we’re going to have more nuclear energy technology. I don’t think anybody would argue that demand will not only continue, but will will probably grow absolutely
Gene Tunny 23:34
this supply concentration risk. I think that is so important. And you, I think you explain, you explain that, well, just how reliant we are on China. What do we know about alternative reserves around the world? I mean, presumably there’s a lot of exploration activity going on. What do we know about attempts to diversify, to find other sources of these strategic metals. Yeah,
Louis O’Connor 24:05
it’s, it is the hot topic at the moment. I mean, as I said, as President Trump highlighted in the last two weeks that these rare earths are, they’re very, very important to the US, and they us needs to wean its dependence off China and Europe as well. I mean, they’re that important that they might use them as leverage to end that war, you know. So there’s no question that you know Europe, the US, Australia, all of any you know nations are seeing. How can we wean our dependence off China? But it’s just, I suppose I’ll give you a good some context there the process. It’s not really mining, it’s metallurgy. And what that means is, because they’re a byproduct of another raw material, you have to first extract them, then you have to separate them, and you have to re metallize them. Yeah. So it’s a very complicated sort of specific, you know, precision driven process. China has about 28 universities that graduate degrees in metallurgy, in, you know, geology and, you know, the technology needed. So China has been graduating probably about 200 metallurgists a week, every week for the last 30 years. You know, there’s maybe 10 to 14 universities in North America that you know. The other thing is, not many of the kids in in US or Europe are interested in in geology or mining as well. So there’s very little. So even if, like, for example, there’s plenty of rare earths in Australia, they’re in North America, they’re probably, you know, they’re not that rare in a lot of cases. However, the engineering expertise does not exist in Europe or the US or Australia actually would be the second biggest, or after China would be producing the most, and probably the most technologically advanced Linus Corp in Australia. So you guys are sort of right behind China, Europe. Us. We’ve a long way to go.
Gene Tunny 26:13
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Gene Tunny 26:48
now, back to the show, right? Oh, well, that’s that’s good to know about Australia, okay, yeah, but yeah, just very concerning. I mean, is, are we just so reliant upon China now that, I mean this idea of decoupling, that we were talking about decoupling several years ago, or there was a lot of talk about that, and I’ve had guests on my program who are very concerned about China, and they’re, they’re advocating, yeah, they advocate that decoupling, or having a very strong strategic stance against China, pushing back against China. But it sounds like we’re just, we’re just so incredibly dependent economically now on on China that we need to find, we need to find some way of of dealing with with China, resolving our differences peacefully. I mean, I think that. I mean, we all want peace just because we’re just so incredibly dependent and anyway, that that’s more of a comment on my part. I’m just thinking through it all. But if you have any reflections on that, please, Louis, I’d be grateful. Yeah,
Louis O’Connor 28:00
I suppose I mean China. Its main focus is China, you know, you know, for example, let’s use the rare earth sector as an example. You know, they have China has big plans for energy transition, for for wind, for solar, for electric cars. That’s now becoming apparent. So, you know, it looks to me like now that they’ve sort of, let’s say, are the dominant market leader in technology, metals and rare earths. Now they’re going to move up the value chain. And for, you know, for to to serve China, first and foremost, but then also to export so, you know, they’ve always made, you know, helping planning, maybe, maybe further ahead. But I think we will see alternative, independent supply, because, as I said, these raw materials are not, you know, China does have about 50% of the world’s reserves. But, you know, there’s Africa and there’s South America, you know, Afghanistan, you you’ll hear a lot of countries all of a sudden going, oh, yeah, we’ve got, like, a trillion, a million tons or a trillion. But, you know, it’s just like anything else, it’s, it’s, it’s more complicated when you delve in a little bit. And for example, let’s suppose, like, even in North America, there’s about 500,000 abandoned coal mines that have what we call tailings, mine tailings, that there are rare earths there, but the technology isn’t there to to re metal, eyes them, and so I think we’ll see over The next 1015, 2025, 30 years independent more supply from from other areas, but it’s just going to take time and again. That’s why my focus is on private investment. Is there’s a window of opportunity over the next 1015, 20 years, even, where investors can own these raw materials and profit from the. Scarcity driven price, like we’re about to head into a cycle. We believe it’s already begun, but it’ll really kick in 2027 and then 29 and 30 and 32 where there won’t just be periods where there’s limited amount, there’ll be periods where there’s there’s none available, and the most important thing to have then will be inventory. And that’s our goal, is to continue to build the inventory. And we also think as well, this year might be the year where we see a lot of sort of strategic, sort of stockpiling beginning as well, the US Department of Defense needs these raw materials just depends on things. The geopolitical situation also can have an effect. Like I said, China in retaliation for the US block and some of the semiconductor technology to get into China is restricting. So the West, you could say, has the technology, but Chinese have the raw materials.
Gene Tunny 31:00
Yeah, gotcha. I mean, that stockpiling point is, is interesting. I mean, certainly. I mean, if you could corner the market, so to speak, then, yeah, you could, really, I mean, you could drive up the price quite significantly. So, yeah, if you get, if you end up being the holder of a, you know, a large quantity of this, of these strategic metals, at a time when there’s a otherwise limited supply, certainly, yeah, that could be very lucrative.
Louis O’Connor 31:33
Yeah. And it does happen, as I said, just, you know, every within every three to five year cycle, there are scarcity driven price hikes. You know, in 2012 the Japanese detained a Chinese trawl, a captain of a fishing trawler for fishing in disputed waters, and in retaliation, China blocked the export of rare earths to Japan. And, you know, right, yeah, prices went up, and things were have been relatively peaceful from about 2014 2015 until COVID. And you know that just that was just an not geopolitical, that was just, you know, this, you know, life or reality and that cause. But now what we’re seeing is this sort of Cold War, 2.0 Yeah, and also the rise in demand. I mean, nobody will argue like, you know, I think we’ll always have fossil fuels, but we’ll also have more nuclear power, and we also have more what we call green energy. I don’t know if that’s the right word, and we like to consider it green energy. But you know, electric cars, solar, wind they, you know, like the magnets in in your smartphone is, is, is similar to the magnet in in the electric car or wind turbine. So there’s raw materials are needed for this energy transition. Yeah,
Gene Tunny 32:59
absolutely. And how are your investors without naming them, obviously, I mean commercial, in confidence and all that. But are we talking? I mean, what are the types of investors? Can you just give us a description, like broad categories, please?
Louis O’Connor 33:13
Sure. Well, I mean, our minimum investment is only $10,000 or 10,000 euros. So when we initially started, it was very much organic and word of mouth, and most of our clients were in the sort of German speaking region of Europe, so Germany, Austria, Switzerland. And, to be honest, we didn’t, that’s why I was able to come on board in 2020 it was, it’s been very successful. And initially we, you know, we didn’t think that, you know, somebody, maybe in Australia or America, would buy metals and store them in Germany, because in order for it to make sense, you need to it is record. You should store them in our city. You do own them, but you store them in the custody of our facility, because that’s what keeps them extremely liquid. That’s what’s give you access to error, 4000 lines in 70 different countries. And it’s not like gold and silver, where, if you, I mean you to be honest, if somebody wants to move them, they welcome to, but they’re, I want, I don’t want to say they’d be worthless. But who’s going to buy them from somebody? Nobody. No manufacturer will buy a small amount anyway. The point I’m making is it started quite small, organically, and we, we haven’t, we don’t really do any marketing directly to private investors, because it, you know, our core business is most important. We don’t want to be seen, to be, you know, marketing to private investors. So, so we’ve just grown it very organically, and until very recently. You know, outside of the outside of Europe, you’d have to, you would have to be pretty on the ball to have found us. But I’d say most of our clients, a lot of them would would understand like there might be engineers or surgeons or people who are. Probably using these raw materials, and a little bit more about them and their capabilities than most people. And then I would say people who are sort of impressed have a curiosity for alternative investments. You know, what’s the next? Not the next big thing, but what’s the thing I don’t know about that’s going to be very important in three years from now, or in five years from now, some crypto people, people who’ve made money on crypto, are looking, you know, when they when they when, when they’ve made some money. They’re looking to diversify and cash out a little bit. So it’s still in its infancy in terms of private investment. Because, you know, somebody asked me recently, Gene What, give them a profile of what our private investor looks like, and I really couldn’t, because I’d say it’s the biggest obstacle to private investors profiting from owning these raw materials are just simply they don’t know they can. And that’s sort of changing. I mean, we’re the only supplier that invites in private investors. I’d imagine it won’t remain that way forever, but again, one has to be so careful, because the only reason we can do this is we’re in the industry. We’re we’ve turned over a billion dollars in in transactions already on the industry side. So we know we can liquidate for our clients, you know, if we, yeah, you know, and it’s not a financial instrument. I mean, we offer, we allow private investors to buy these raw materials. We offer storage in a sister facility, where it’s also a distribution platform. And then we also have a practice when somebody wants to sell that will buy them back from you, and we’ll resell them to a manufacturer. Yeah,
Gene Tunny 36:45
that’s fascinating, fascinating business. And it’s a it’s part of the market that maybe people don’t often think about. Or I think what you’re doing is, I mean, it’s, you know, it’s an important service you’re offering. Are there other companies, I mean, that are doing, that are doing similar things, or, like, where are you in the in the market? I mean, are you sort of on your own offering this, or are they you have competitors? Presumably, what’s this market situation like?
Louis O’Connor 37:18
Well, on the industry side, it’s a very competitive industry. I mean, there’s probably in Europe, 2025 companies, very similar to us, yeah, all over Europe, probably a similar amount in in North America, I’m not too sure, to be honest. And most, you know, thankfully, most of the suppliers like us. You know, stay in their lane. They focus on what they do best, which is they buy and sell metals. That’s what they’re good at. It’s what they know. Our business is. It’s 100% owner operated. It’s a family business, and there’s a little bit of an entrepreneurial flair. And I’ll tell you how what happened. Gene is about 2010 2012 the CEO Matthias route decided that it’d be a good idea to build an inventory, not to be just a middle man, not to just broker in deals. And so they looked for our premises to store metal so they could keep an inventory. And they found a place that actually was a bunker in World War Two. So it was a shelter two levels below ground in the banking district, and Frank converted it to a bank level ball. Now it has a third level above ground and offices and atrium. And at that time 2012 the idea was they begin when prices were low. They they buy inventory for themselves, and then some of their manufacturers, like, there’s one example, there’s a thermometer maker in Easton, north of Frankfurt, who have been a client since day one. They need a regular supply of gallium or germanium, whatever it is. They wanted also to buy, maybe when prices are low, when they could buy some more and have it in storage. So they began to offer the industry clients storage, and then they just said, Well, why don’t we offer it to private investors? It’s the same thing. So the idea was it wasn’t just a direct thing. It was just evolved over time. So since about 2012 they’ve been offering it, mostly in the German speaking region of Europe. But it’s, you know, again, it’s, it’s a success. I mean, people who are interested in gold and silver are interested in these metals as well.
Gene Tunny 39:30
Oh, that’s great. I mean, that’s fascinating. You’ve got an old World War Two, a German World War Two bunker. I mean, there must be some stories there. I mean, I imagine the Americans must have captured it when they rolled through in the in after, you know, D Day, yeah, so, yeah. Well,
Louis O’Connor 39:49
I mean, Frankfurt. If you look at Frankfurt, Frankfurt has always been known as the crossroads of Europe. And if you look it’s smack bang in the middle of all of Europe. So it’s always been a. A busy sort of a thoroughfare. And Frankfurt was of any city in Germany. It was leveled in World War Two. There was, if you look at photos of Frankfurt after in 1946 47 leveled, and it’s just a question as well, like somebody was saying, you know, it’s funny that, you know, even with the Japanese, if you look at America today, it’s, we’ve sort of a short memory, and history moves on very quickly. Because if you look at, you know, how many, you know, we’ve clients from the US who store the metals involved that maybe you know their their granddad was, you know, flying over not too long ago and dropping bombs on it. Or, you know, if you look at Japan and America as well, that it’s all, you know, it’s economics nowadays, the most important thing is that is the business. And, you know, everybody’s doing business together. So, yeah,
Gene Tunny 40:51
yeah, absolutely, yeah. Pass that in. What conditions do you need for that bunker, for the to store the metals are the other special atmospheric conditions that you need? Yes,
Louis O’Connor 41:04
for some of them. For precious metals, no. And for technology matters now you can store them almost indefinitely, just about anywhere they’re in that metal form. But for we have a facility has a reach certification, which is an acronym, and we’ve a lot of bureaucracy, obviously in Europe. So we were regulated. Buying and selling metals is not a regulated industry. Anybody can do it. But the storage like we sell in metal form, oxide, nitrate, even liquid form sometimes. So, so yeah, some of the rare earths that we offer to private investors do need special conditions. But you know, as I always say to my clients, is once you when they complete the purchase, they have a safe keeping receipt to show what’s stored for them, what’s, you know, an account statement, and that shows the facility is reach certified. And once you have that certification, your raw materials are extremely liquid. What that means is, any manufacturer won’t hesitate to buy them, because they were bought from a recognized supplier, and they’re stored in a recognized facility. Gotcha.
Gene Tunny 42:14
Gotcha. Okay, so finally, Louis, there’s a lot of I mean, market volatility at the moment. I mean, we’re recording this on 13th of March, 2025, and I mean just extraordinary. I mean very extraordinary time with what’s happening with tariffs and and all sorts of, all sorts of threats. And the market has, you know, reacted, and it’s, it’s down. The market’s down. Stock markets, is that affecting you at all? Are you? Do you have concerns about, about the future, about your business at all, but with what’s going on, although all the volatility that’s coming out of the United States, well,
Louis O’Connor 42:53
I mean, just purely, I’m not going to say I’m happy with what’s happening in the world. It’s, it’s, we seem to be in dark time. But from from an investment perspective for these metals. I mean, like gold, for example, metals in general have, have not faltered in three, you know, 3000 years as a store of wealth, as a physical asset and and these raw materials survive all economic cycles. I mean, there’s four economic cycles, and metals have proven always to be a good store of wealth during them. But it’s funny gene, I would say now that, you know, we’ve shared a lot of information, and you’ll probably, you know, you know, the way, once you hear about something, you’ll start to notice more. But watch what’s happening over the next few weeks and a few months. I mean, I think possibly even as early as this week, China is going to retaliate to these tariffs, and one way, because I mentioned to you earlier on, China is restricting the export of gallium or germanium in the for the last 18 months. Now. What that means is, prior to this restriction, producers of gallium could sell gallium to whoever they want it. They could export anywhere after the restriction. If you’re producing gallium, you have to apply to the Chinese government for a license to export. And what that means is the Chinese government wants to see who the consignee is. They want to see where it’s gone, and then they can say, yes, we’ll give you the license. So they’ve in the last 18 months, the Chinese have put in a system, and it’s like a tap that they can turn on and turn off of who will receive. I have a feeling, possibly as early as this week, but certainly watching the next four to six weeks, China might say they might put in an outright ban on gallium, germanium and the four rare earths I mentioned the sprosium, neodymium, for serodyne and Terbium. And if they do, you know the likelihood is we’ll see prices we go into a scarcity driven price increases. Yeah,
Gene Tunny 44:56
absolutely, absolutely, yeah. It’s fascinating learning about. About this, because this is, it’s going to become a, well, I presume it is a focus of policy now at the mean, the White House, they’re thinking about it. Our administration here in Australia is presumably concerned about the supply of these, of these strategic bills. I mean, mate, well, I mean, we’re not manifest. We’re probably not, I guess we, you, you said you’re selling some of these metals, strategic metals, to Australia, aren’t you to some of our manufacturers? Is that? Ryan,
Louis O’Connor 45:30
correct? Yeah, we, we’ve, you know, yeah, globally. We sell them globally. But yeah, like, or, sorry, Australia is probably the most advanced in terms of the processing of any country outside of China. In fact, I think Linus Corp is signed up with the US Department of Defense to build a processing facility in either Florida or Texas. Like, unbelievably, Gene Yeah, there’s one plot. There’s one mine in in North America, in California, MP raw materials, producing rare earths, but they have to sell most of their ores, most of their product, to China for processing, because they have no processing capability in the US, and that’s why, you know, it’s funny you hear politicians talk, oh yeah, you know, just because there might be raw materials in Ukraine and in Greenland doesn’t mean you’ll have them in three to five years in smartphones you’re looking at. The average time in America is 29 years from discovery to production of a mine. Not, not you know, it’s, it’s just the industry has dwindled so, so, but Australia has been on it longer than you know anybody else, and they’re sort of way ahead of Europe and the US,
Gene Tunny 46:56
right? So, I mean, this is, I know that critical minerals are part of the discussion between our government, or our and the US administration at the moment, because I don’t know if you saw the news. I mean, well, I guess you know, Trump’s put on the 25% tariff on steel and aluminum, and we thought that as a long standing ally of the US and, I mean, we thought we would get exempt from it, and we haven’t been exempt from it. We’re being accused of dumping. And I think our strategy now is to say, Well, look, we’ve got these critical minerals. We call them critical minerals over here, that that are important for for the US. And so I think I can see now how that can be part of the discussion, given, you know, the conversation we’ve had just, you know, how how critical they are, how much in shortage, how China can actually control the supply of some of these, of these strategic metals. So I can see how this all comes into the negotiations.
Louis O’Connor 48:01
Yeah, and Australia would definitely have some leverage there because of their how far advanced they are in terms of the metallurgical side of it, as well as the production so, yeah, yeah, that’s the thing. I mean, I don’t think most politicians wouldn’t understand Resource Economics. Or, I think President Trump is mixing up rare earth minerals with critical minerals, right?
Gene Tunny 48:28
Oh, yeah,
Louis O’Connor 48:29
not even getting sort of and it seems to be complicated. I mean, you know, we, as I said earlier, strategic metals is not an academic term. And then, like, for example, energy transition metals, defense metals, green metals are sort of, gallium is all of those three as well. But the thing to look at is, is, you know, what’s the most critical technology we have today, semiconductors, and that’s sort of, you know, if you start from there and work your way up, you’ll, you’ll figure it out, you know,
Gene Tunny 48:58
yeah, I think, I think that was really good, Louis, I think there’s really good briefing on no strategic metals, and their importance and and the supply potential, supply problems, what that means to prices. I think that’s, that’s all, all very good stuff before we wrap up any further points you think would be worth, worth us knowing, with people in the audience knowing? No,
Louis O’Connor 49:25
I might. I might just add gene. As I said, until recently, all of our sales partners were in Europe. And you know, if anybody’s listening, who’s who’s involved in precious metals or wants to maybe not. No, I’m not pitching for a customer or an investment, but that’s always welcome. But yeah, we might be interested in talk with somebody about an affiliate and a partnership, an affiliate partnership, if somebody knows a little bit about battles and is entrepreneurial and like, you know, I’m what. We’re open. Into partnerships globally. We have no problem on the industry side, but we, you know, as I said, without doing any marketing, we’ve clients all over the world, private investors, and somehow they’re finding us. But you know, it’s our business is doubling every year on the industry side, so we may as well bring in more partners to work with private investors. So there could be an opportunity there for somebody, if they want to contact me, they can go to the website strategic metals invest and leave an email, or actually, I’ll just give you my email. It’s Louis l, o, u, i s at strategic metals invest.com if anybody wants to get in touch, as I said, I’m not necessarily, I’m definitely not looking. Look. If somebody wants to explore, I’m happy to assist, but, but, yeah, you never know. Business wise, somebody might be interested,
Gene Tunny 50:52
right? Yeah, absolutely not all, all good stuff. Okay? Louis O’Connor from strategic metals, invest. Thanks so much for your time. I really found that fascinating, and I learned a lot about about the market and what that you’re in and some of the risks that we’re facing in the future. So I found that really valuable. So again, thanks so much. Thank you, Gene. Thank you, right. Oh, thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at economics explore.com or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you, then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week. You
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Credits
Thanks to the show’s sponsor, Gene’s consultancy business, www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts and other podcasting platforms.