tv Talking Business BBC News May 28, 2022 3:30pm-4:01pm BST
east, the real stumbling block. the east, the real stumbling block. olaf scholz and emmanuel macron had an 80 minute conversation jointly with president putin, let us say what the kremlin has to say when it gets its version and read out of that event. now it's time for a look at the weather with chris fawkes. cloud tended to build up through the day but showers like these were fairly typical but across southern and western wales and southwest england, it's a different story. large amounts of sunshine pretty much all day, it was a beautiful day in parts of devon. overnight tonight, we will keep variable cloud feeding in on these northerly winds, thick enough to bring a few showers to the north and east of scotland, one or two into northeast england, otherwise it's dry but with clear spells and cool air is going to be a chilly night, temperatures at six and seven across the northern half of the uk. a cold start. many will
see morning sunshine, cloud will bubble up to such an extent that we'll see showers breaking out across parts of scotland, england and wales, northern ireland should stay fine and dry, closer to an area of high pressure. temperatures down in recent days, it's going to feel cool in the breeze across north but warm enough in the may sunshine. hello, this is bbc news. the headlines: people travelling abroad are facing disruption at airports, stations and on the roads as the half—term getaway begins. dramatic pictures from torquay marina where a major fire has broken out in the harbour more conservative mps publicly declare they have no confidence in the prime minister after sue gray's report into lockdown parties in downing street.
liverpool and real madrid fans descend on paris — to support their teams in the final of european club football's most prestigious prize. now on bbc news, it's time for talking business. hello everybody, welcome to talking business weekly, with me, aaron hislehurst. let's take a look at what is on the show. a call to pick up your pickaxes, yeah, we are going to take a look at the metals mining boom, driven by record prices and the demands of the green energy transition. but are these old solutions to new problems? cutting out russian supplies has rocked the market, but digging up more of the planet may not be the best way to save our environment. i am going to be discussing all of that with these two, the boss of the world's biggest metals trading exchange and the head
of a mining investment firm, specialising in the minerals to power our future. plus, closing the sustainability gap in electronic waste. i talk to the boss of the firm who will use your latest phone upgrade to recycle mobiles from africa. wherever you'rejoining me from around the world, once again, a big hello and a very warm welcome to the show. you know, since the start of putin's brutal invasion of ukraine, we have all been learning the important part that russia's fast natural resources play in the global economy, as the effects of cutting them off the mark has sent prices soaring across the globe. this is having a devastating effect on the cost of living, with energy
and fuel prices skyrocketing. but another consequence that will undoubtedly be having less of an immediate impact on your daily lives, but nonetheless, important for all our futures, has been on the prices of minerals and metals. raw materials that are the building blocks of modern life and, in particular, green technologies, which is at the heart of our battle against global warming. so, what are we talking about here? well, these are a bunch of metals that were experiencing a huge surge in demand, even before the war in ukraine, as current supplies, well, they have fallen well short of what is needed. some you will have heard of, like nickel and lithium, and others, like palladium and cobalt, that may not be on your radar. at their prices have all been on somewhat of a roller—coaster of late, but the general direction of travel is up. these, along with a number of other lesser—known materials, are key to building green technologies, like wind turbines and solar panels, but in particular, batteries. batteries that are essential for energy storage and the biggest driver is coming from
the electric car industry. that is an industry that has doubled in size in the last year alone. much of this turbulence is a direct reaction to the war, as russia is a major global supplier of many of these raw materials, producing nearly half of the world's palladium, a metal used in catalytic converters and in cars and fuel cells. and, over 10% of the global nickel supply, that is a metal in high demand for its ability to increase battery efficiency. in fact, the price of nickel went so crazy at one point in march, spiking at almost 250%, causing the world's top metal exchange to suspend trading for the first time in 37 years. these political shifts and high prices are driving a boom in the supply industry, which in most part means mining, but it is also focusing minds on where the supplies come from, with china currently the dominant world player. triggering president biden�*s to call on a cold war era statute, the defence production act,
tojump—start new mines or expand on existing one is in the united states. but there are worries that this drive to supply the green revolution creates something of a paradox with the impact mining has on the environment. mining is one of the main drivers of ecosystem degradation around the world, which has both direct and indirect impacts. it also has huge social and health impacts, to mainstream important parts, deforestation and erosion of ecosystems caused by mining, especially open pit mining, is really what we are mostly concerned about. the second thing is the impact on people and indigenous communities�* rights. just so you know, in 2020, more environmental activists were killed in the mining sector than in any other sector. there are human rights violations, labour rights violations that are associated with this industry and the third point is water use. we are already in a water—scarce world and mining is very intensive
on water usage and damages the ecosystems in water. so, to help make sense of all of this turmoil in the market, i went straight to the top. i caught up with the big boss of the london metal exchange, that is the world's number one marketplace for base metals. matthew chamberlain, a real pleasure having you on the show, thank you for your time. matthew, can you help us out here? can you explain, because we know that the market has been experiencing unprecedented turmoil, certainly spurred on by the horrendous war in ukraine, just explain to us what has been going on. if i take copper as an example or benchmark or bellwether of this crazy ride, as you say, it started off pre—pandemic at about $7,000 a tonne, fell to about $5,000 a tonne in the pandemic because demand was locked down, but it has actually now gone back notjust to 7,000 but to $10,000 a tonne, an all—time record. why is that?
i think there is obviously the recovery, the post—pandemic growth story, people getting back to work, but there's also been the much brighter awareness of environmental factors that i think have resulted from the pandemic. and these metals are hugely important for the green transition. just to be clear, for the uninitiated, these metals are used in batteries and solar panels and wind turbines. absolutely right. to take some examples, copper, an electric car needs five times more copper for the interna combustion engine. wind turbines, you've got to coat them with zinc to deal with corrosion effects and these are big pieces of kit as we know. aluminium, needed for lightweighting to reduce fuel consumption, so all of these base metals that we trade on the london metal exchange are vital
for that green transition. prices were already going this direction, post—pandemic, after all the demand, but then came a war on european soil. what has that done? obviously looking at the war in ukraine and the tragic human consequence that everyone is aware of, but, of course, there are knock—on effects for supply chains and in particular around sanctions and tariffs. we have seen two things, we've seen individual countries taking action, so, for example, the uk has put a very high import tariff on russian copper and so we've said we cannot bring russian copper into uk lme warehouses for that reason, and then we've also seen corporate what i call self—sanctioning, perhaps people who make things out of metal saying, "even though it's legal, i would rather source my metal from other countries," and that does have upward pressure on prices because you have more people competing for a smaller pool of metal from otherjurisdictions.
are there other sources of supply readily available? it's a very good question because obviously to bring new metals production on stream is a huge undertaking and although these metals are needed for the green transition, their extraction has an environmental cost so understandably it's very difficult to sink a new mine because of the environmental impact so to answer your question, no, you can quickly supply on. let's talk nickel because you had that decision back in march to suspend trading on the exchange after prices went up 250% in a matter of a couple of days. explain to us why you had to do that. with nickel, we had a combination of all of the factors around fundamentals, the fact that supply was scarce etc, but we then had an additional problem which we only really understood after the fact, which was that a very large position had been built up on the so—called over—the—counter market, so these are trades that take place
away from the exchange, away from the lme, directly between participants. but when they get very big, they can have an effect on the market price and as you say, the price shot up over 200% over two days, and so we did have to take the very difficult decision to suspend trading. we didn't bring that trading back for eight days — between the 8th of march and the 16th of march, trading was suspended. that's obviously a hugely problematic development for us. we need to understand what we could have done better, how could we have known about that, how could we have performed better through that situation, but i think it also really emphasises the point ofjust how on edge
commodities markets are right now. some may say, it's one thing to close trading, but you also suspended millions of dollars in deals. some people may have made a lot of money from those deals. some people would have lost it. but isn't that just the nature of the game? that's what trading is about. yeah, and it's really important and i understand not everybody is going to agree with what we did. i personally believe that it was the right thing to do because if you have a disorderly market, the systematic or systemic impact of allowing those trades to stand would have been very, very significant so i am actually very confident that the decision, that narrow decision to suspend trading and to cancel the trades that took place during that period of disorder, was the right decision. i think there are broader questions about how we change our market structure so we never have to make that decision again because
it's not a decision that we would ever want to make. we did have to make the decision and we took the course of action that i believe was most appropriate but we need to make sure we are never in that position again. when are these prices going to level off? can you see anytime soon? certainly over the past two or three weeks we've seen prices begin to fall and stabilise a little. not back to their pre—pandemic levels, but that's really driven, i believe, by the fact that global growth may be cooling somewhat. the action that policy makers need to take around inflation may have the impact of curtailing demand to some extent, but if you look over the medium to long term, unless new supply comes on board, it's hard to see that prices are going to stay low forever. it's going to take a long time for new supplies to come on board. you can'tjust take a big pit again, you know, fast.
absolutely. now, obviously there are technological solutions, particularly around recycling, for example, where we can build more of a circular economy. the nice thing about metals is they are infinitely recyclable and so we can do more in that respect, but will that fully address demand increases? probably not. so on this group of metals for the green revolution, what can you do or what are you doing to make sure that the mining of the metals that you trade in are not causing more harm than good? that's a really important point because if we look at the metals production cycle, there are a number of points where you can see, for example, human rights abuses and cobalt is a great example. cobalt is absolutely vital for the batteries in electric vehicles, but a lot of it comes from jurisdictions where there might not be the same oversight on human rights and nobody wants to have human rights abuses built into their car battery.
so what we've done at the lme is to introduce our so—called responsible sourcing requirements, so what we are saying, as of this year, is that if you want to list your metal on the lme, if that metal can be delivered against lme contracts, you have to pass not just our chemical tests to make sure that your metal is high quality metallurgically, but you have to pass our responsible sourcing tests to show that your supply chain is clean and free from those abuses. well, on that positive note, matthew chamberlain, the big boss of the london metal exchange, thanks very
well, let's get more on all of this, because i've also been speaking with the boss of a global mining investment firm, technet, who specializes in those metals needed for green energy and part financed by the us development bank. brian mann, a real pleasure having you on my show. thanks forjoining me, brian. can we can we start with this? just how big of a challenge is to get from where the world is in terms of supply right now and where we need to be to. well, to power the green revolution. and brian, how much of this has been exposed by the well, the current geopolitical situation with russia's invasion of ukraine? it certainly served to further focus attention on the vulnerability of supply chains for critical minerals and the dominant position of china across the global supply chain of all of these energy transition inputs.
is that forcing countries to to look at their own supply capabilities, i mean, moving away from relying on another country? there certainly is a big push in the us and in europe to explore and develop opportunities to develop localized supply chains. you know, there's no way europe or the united states is ever going to produce anything like the nickel or cobalt that they need for batteries, for electric vehicles, are opportunities to do lithium, but again, limited relative to the scale of opportunities to expand lithium production out of south america and australia. so localized supply chains are important, but they're a little piece of the answer, not the whole piece of the answer. and, brian, just how dominant is china in this sphere? china has executed an enormously successful 15, 20—year programme, in fact, of securing control over the global supply chain of critical minerals, going into energy transition technologies and and electric mobility. and they've done this globally.
they've done this by securing a dominant position in countries where primary resource is found and supplied and even more importantly, built up a dominant position in processing of these materials into metal chemicals that are used in battery manufacturer manufacturing and in other energy transition technologies. so they now today controlled between 60% and 90% of the entire global supply chain of these critical minerals. i'm wondering, can any of this kind of scale that you're talking about, brian, really be reached without serious environmental degradation? because it is, and correct me if i'm wrong here, you know, isn't a lot of this mining in open pits literally blowing up mountains? and if you if you live near one, it's going to have an impact
on your surroundings. mining and metal processing will always have an environmental impact, but it can be done in a very responsible manner. the assumption that mining and metals is an industry that is in some way fundamentally high impact from an environmental point of view, high carbon footprint and irresponsible from a social and political interface point of view is wrong. you know, they're elements of the industry's history that are unacceptable, but it can be done right. so it's part of what our industry needs to do to be a responsible participant in energy transition, is to transform itself to ensure that all of those standards are upheld at a very high level and it is doable. mining doesn't need to be dirty and offensive. it can be responsible and constructive and clean. and how much of a part does recycling have to play in all of this, brian? because some will say, you know, isn't new extraction just the wrong way to go about this? recycling is a very important part of the equation, and it's an ecosystem and a technologies set
of technologies that have to continue to evolve to be part of the solution to this short supply of critical minerals challenge. but even if that recycling ecosystem is fully developed to its maximum extent over the next ten years, recycling of lithium ion batteries, be they damaged, effective end of life to recover metals will probably only supply approximately 20% of the battery metal needs for new battery manufacturing. and, brian, let me end on this. is there a silver bullet around the corner that would change the game in all of this? something out there on the horizon that would make a huge difference to the industry? i think unfortunately not. you know, there's going to continue to be a lot of progress made in developing battery systems and they will develop in a direction that, will to some extent, mitigate the need for materials that are in short supply or too expensive to make those batteries economic.
however, the present chemistry and configuration of lithium ion batteries that are driving the electric vehicle revolution will persist for at least the next ten to 15 years, and therefore we need many multiples of the present global supply. on that note, brian, i really appreciate your time. good luck with everything and i'd love to talk to you again soon. great. thanks very much. now, in the first half of the programme, we looked at how the cost of precious metals is rocketing because of a supply crisis due to the war in ukraine. and yet each year, we throw away electronics with tens of billions of dollars�* worth of these metals inside them. among the companies tackling this is closing the loop. it's a dutch company who works with telecom makers and networks to pay for old mobile phones to be collected in africa and then brought to europe for recycling. the dutch government are a customer, as is the global consultancy kpmg.
so i checked in with the big boss of closing the loop. jouster clover, a real pleasure having you on the show. thanks for your time. let's start with this, the basics. how does it work? we invented something new. so the concept of this composition very simply says you find devices that you want. don't change your procurement process. when you buy a new device, you can make that device waste—neutral. and that means that device that you buy is compensated by the waste that my company collects. so what we're good at is collecting electronic waste in emerging markets, and we do that on behalf of our customers. as a result, we reduce waste, and that waste compensates your new device. and then who do you sell to? so we have the service of waste compensation, and that's used mainly b2b, but increasingly also by the industry itself, the tech industry. so you'll see, for example, if you're a direct customer and end
user, that you buy devices which are really happy about all of those brands and devices that you love, vut those devices usually are not very much aligned with your company or organizational values. so those organizations use our service so that they can buy the devices that they need that they like, but now they can buy them in a way that's a little bit more aligned with their values. and, you know, some some might say, why don't you recycle them in africa where where you collect the phones from? because, again, some will say, hey, why do we need to fund this collection from africa in europe? why not fund it there and do it there? exactly. and i think the great thing about theory is that it's perfect, it's neat, it's clean. but then you need to implement stuff and then things get a little bit more difficult, right? so ten years ago when we started this company, our goalwas, let's
make local recycling possible. and then we found out that the whole ecosystem that would normally allow for local recycling is missing. no collection, no legislation, no consumer awareness. so we need to start very simply, let's collect waste. and secondly, let's create a business model that funds that waste collection. and then — and that's what we are heading towards now — we can go towards local recycling, but again, you need an ecosystem to support something like that. and just briefly, how many phones a year are we talking about? well, the opportunity to collect, you can imagine, is huge, right? two billion phones are sold each year across the globe and the collection is rather low, unfortunately, globally around 20—25%. so the opportunity to collect waste is there. but again, it's all about funding. it's all about the business model to increase and actually do that collection. so currently we've collected some 3.5, 4 million phones just about now, but we'll be scaling, especially also together with the industry, the tech industry, to a few million devices per year over the next year.
so it looks quite promising, i must say. so you collect these phones, millions from africa, and i'm assuming you fly them back to europe to be recycled. you know where i'm going with this. some will say that's that's not the most environmentally friendly way, is it? yeah. no, i think the key thing that we've seen is that perfection is just not there. especially as a starting point. you cannot do perfection. so what we're currently doing, we're shipping electronic waste out of africa, which is a lot better than leaving it in the continent. you can imagine, where people often dump or burn electronic waste. but the key thing that we're working towards is local recycling. it benefits everyone, local communities, us, because shipping waste is extremely difficult, but also the concept of waste conversation would be much stronger if we would do the recycling locally. well, talking of business, is recycling the answer, because some will say, shouldn't phone makers make longer lasting
phones and shouldn't consumers use them longer? actually, the two words we hear quite often in this world is "should" and "just", which i think reflects a little bit how people unfortunately think about sustainability. just come up with a great concept and then we're done. reality says it's very, very difficult to change anything in the market, in the production process, in consumers�* minds. so yes, everything should just be a little bit different. but let�*s start with something that you can actually do today that also makes commercial sense, and then let�*s see where we can go from there. otherwise, you get utopian concepts that are not implemented. what�*s next for you ? oh, waste composition is a concept that we�*ve developed, but it�*s in the market now for many years. so what we�*re seeing happening now, and i�*m quite proud of that, is that the industry is embracing this because their customers appreciate it and they, the tech brands, can actually benefit from it. so we�*re teaming up with some of the biggest names in the industry
to apply waste compensation for sometimes all of the devices that they sell. so this is going to scale waste competition. it�*s a great concept, but most of all, it�*s a starting point towards circularity. the big boss of closing the loop, how i appreciate your time. good luck with everything and i�*d love to check in with you soon. cheers. well, that�*s all for this week�*s show. i hope you enjoyed it. don�*t forget to follow me on twitter. tweet me, i�*ll tweet you back. thanks for watching. i�*ll see you soon. bye— bye. hello again. we�*ve seen quite a bit of cloud through the course of the afternoon and spreading across the sky. that was the case across parts of eastern england and eastern
scotland, just a few holes in the cloud to allow some bright or sunny spells. the satellite picture shows the extent of today�*s cloud but many of us have cap spells of sunshine. the best has been across southern and western wales and southwest england where we�*ve had almost clear blue sunny skies pretty much all day. glorious in parts of devon. into the evening, as temperatures drop, there should be more breaks in the cloud so more in the way of sunshinejust as we the cloud so more in the way of sunshine just as we enter the day and then overnight we will continue to fade and northerly winds, cloud will vary from time to time, they will vary from time to time, they will be a scattering of showers for northern and eastern scotland and one or two into northeast england as well. quite a chilly night for the time of year with temperatures at six and seven celsius across scotland, northern england and northern ireland. for sunday, we continue with this feat of north, northwesterly winds coming around this area of high pressure that is centred near iceland. it will be dragging in some chilly air. if anything it�*s going to be colder.
sunday morning starts on a chilly note, many of you will see some morning spells of sunshine but cloud will bubble up through the day but this time we are more likely to see the cloud thick enough to bring some scattered showers across scotland, england and wales, northern ireland should stay fine and dry. closer to that area of high pressure. temperatures around 16 celsius so cooler than recent days but in any may sunshine it shouldn�*t feel too bad if you are out of the breeze. into next week, this area of low pressure is moving in from scandinavia. as pressure falls, the cloud goes up. this time we will see showers becoming really widespread, especially across the northern half of the uk on monday. some of the showers will be heavy with some hail and thunder mixed in and further south there will be one or two big showers going up through the course of the afternoon. temperatures given all this cloud around and the cool fade of air, just 11 or 12 celsius across scotland, northern england and northern ireland so temperatures continue to drop year, 15, i6 and northern ireland so temperatures continue to drop year, 15, 16 in the south, not particularly special for
this time of year but we keep the risk of showers through tuesday and wednesday, notjust across scotland and northern ireland, it could be anywhere, some with hail and thunder but temperatures recover later in the week. this is bbc news the headlines at four. this is bbc news the headlines at four... people travelling abroad are facing disruption at airports, stations and on the roads — as the half—term getaway begins. dramatic pictures from torquay marina — were a majorfire has broken out in the harbour. more conservative mps publicly declare they have no confidence in the prime minister — after sue gray�*s report into lockdown parties in downing street. former us president, donald trump, dismisses calls for gun reform — days after 19 children and two teachers were killed by a teenage gunman in texas. liverpool and real madrid fans descend on paris — to support their teams in the final of european club football�*s most prestigious prize.