Colorado Is Losing the Critical Metals Race — with Hugo Schumann

[00:00:00] Hugo, so what's with this Congo story? Talk to me. Hi Dan, nice to see you. I was just telling your colleague that when I was 26 I was sent out to the Congo to go and build a mining project. And flew out my first experience getting off the plane. I took a photograph and a soldier came up to me with a massive AK-47 pointed it at me and said,

[00:00:23] do not take photographs in the Congo at the airport so I had to put that down and the next day we flew up in a chopper into the middle of the Congolese jungle and we discovered our iron ore project that we'd been looking at for several months and we hiked up in the morning and basically got to the top of the mountain with some local folks

[00:00:48] and brought some rocks back from the top of the mountain and we had those rocks assessed in a laboratory and it was basically like the highest quality of iron ore you can get. Really? Yeah, and the share price of the company went from 20, well market cap went from 20 million to 400 million in the space of a couple of months. Well let's rewind slightly, so what were the circumstances in which you hopped on that plane to go to the Congo? What led up to that?

[00:01:16] So out of my MBA I joined an Australian serial entrepreneur called Ian Middlemess at Apollo Group, which is an Australian kind of family office venture capital group and he hired me as his business development person and so he would send me out to different parts of the world to go and build mining projects for him.

[00:01:37] Effectively that meant we had a team of geologists and they would assess different projects and they were always looking for things that could be really big and it could be a uranium project in Tanzania or a coal project in Poland and this one was an iron ore project in the Congo and this was at a time just after what we call the super cycle in commodities where China was just had an insatiable appetite for iron ore and copper and steel

[00:02:07] and so our project was really well timed into that super cycle and I was sent out to the Congo to go and basically get drill rigs out and start to drill this deposit and take it through various stages of feasibility and ultimately into production. Wow, and that was at the age of 26. That was, yeah. Yeah, and we did similar things in Poland. We went out to Poland and built a coal project there and in Spain a uranium project

[00:02:33] and in France a tungsten project and so my work has taken me to really interesting parts of the world often working with Australians and that's been a lot of fun. Yeah, and from your accent you're from? South Africa. South Africa. Yeah, yeah. So we'll come back to that but now you're in Boulder so what were the circumstances that led to you being here in Boulder? Yeah, so while I was working with Ian Middleness at Apollo

[00:02:59] I was based in London and 15 years in the big city I needed a change, needed some fresh air and some sunshine and I got a call from the recruiters at Corn Fairy saying that there'd been this new copper discovery technology to basically convert waste into copper at big mines. So you go to Arizona and Chile and basically there's all this waste copper being thrown away in big piles

[00:03:28] and a bunch of really smart guys out of Silicon Valley came up with a way to extract this copper from waste and the company was called Jetty Resources Resources and they were based in Boulder and I came out as the CFO back in 2019. We didn't have an office so I was the first guy out here a little bit like the Congo story but you know in the US and the company was... Why Boulder? Yeah. What did they set up shop here or did you set up the shop here? It's a good question. So during the recruitment process

[00:03:58] the company was domiciled in the Cayman and this is around the time when President Trump had just come in and changed the tax laws and made it very difficult to be a Cayman company and so they decided to re-domicile into the US and they thought either Austin or Boulder and they settled on Boulder. Let's pause for a second. Yeah. So Trump made it difficult to be domiciled in Cayman and what was his logic?

[00:04:26] I think Trump's logic was that a lot of valuable companies were shielding themselves from taxes by being based offshore and wanted to bring them into the US where they would basically build companies and pay taxes in the US. I think that was the thrust of it. Yep. Well that seems like a reasonable thing to do if you're the President of the United States, no? I think so. And frankly it was a good thing. I mean we ended up with Jetty is still going.

[00:04:56] It's doing really well. They've got probably 40 people working in the company. Where are they at? Are they still in Boulder? They're still in Boulder. We're in Boulder. Yeah, they're just next to Spruce Confections on 8th and Pearl. Oh wow. Yeah, and a Tebow building. Oh yes. I met Mr. Tebow. I know that building. Yeah. Well that's right where I started Zayo in 2007 and we were on a Tebow building on, let's see, it'd be 8th and just one off street from Pearl.

[00:05:26] So it must have been right around the corner for that. Yeah, definitely. Wow. That's cool. Yeah, so it was, it was, yeah, and so basically I came out and the decision about Boulder was they. Boulder's the same building. What building? It could have been the same building. So if you are. Like a two-story with a little balcony. That's it. Oh my gosh, check that out. Wow. People just said the building's ready to be re-rented now. Yeah. Did they just move out? Yeah.

[00:05:52] So we came in, I think we probably were the next lessor after you guys. We came in and, you know, in classic Tebow fashion, we put the blinds over and got it all done in about two days and we came in and it all looked great. Yeah. No, I'm sure we left there in like 2009 or 2010. Okay, okay. There was a lot of activity between then and you got there. But that is so cool. Yeah. Wow. But just going back to the choice of Boulder, it was an interesting one.

[00:06:20] It's a mining technology business and so they looked at Austin and Boulder as options and they chose Boulder because number one, you got the Colorado School of Mines just outside in gold. And number two, you've got quite a good set of large mining companies that have come to Denver and private equity funds. You've got the resource capital funds here and a bunch of big gold mining companies. You've also got Denver Airport, which is a great hub, you know, center of the country.

[00:06:49] You can fly anywhere relatively easily on United. And it's a really easy place to attract talent to you. And I saw that while I was at Jetty, you would, you know, you'd phone someone and be like, we love your profile. Do you want to come and join us in Boulder? And I'd imagine this person going and talking to their partner. And, you know, it's a fairly easy discussion about moving here with the good weather and the good quality of life. So that brought me to Boulder. And I've been here for seven years. And we just met very recently. Yeah.

[00:07:18] So somehow our paths didn't cross very quickly. It took me a while. It finally did. Yeah. Likewise. So that was Jet Ski. Jetty. Jetty. Yeah. So Jetty, you were Jetty for how long? So I joined in 2019. We were a Series A company. And I stayed there for four and a half years. We took it through to Series D. We raised $100 million in the D round at a $2.5 billion pre-money valuation.

[00:07:47] So it was a really good kind of high growth story, partnered with some amazing mining companies like Freeport, Mac Moran, BHP, who all wanted to trial this technology to figure out a way to turn all of this waste into something valuable. And I was the CFO. So that was my first kind of role as a CFO. Previously, I'd been more of a business development type person and had a really wonderful time. I think that's just a great role to be in a CFO role.

[00:08:16] I kind of really learned about cap raising and controls, budgeting, audit committees, all that kind of stuff that has helped me as a CEO. Okay. Let's return back to Colorado and the critical mining, critical minerals, I should say, industry. How big of a deal is that in Colorado and the related industries around it, kind of energy?

[00:08:42] So Colorado, I think, has an interesting role in that industry. So talk a bit about that. And then maybe take a step back either before or after and talk about critical minerals in general. Like what's there in the news a lot lately? There's been a lot of, you know, as technology has kind of advanced, the role of critical minerals is just going up and up and up. And China versus U.S. versus other parts of the world. So give us a whole rundown. Sure.

[00:09:10] I'll start on the critical metals sort of geopolitical lens. This is by far the most exciting time to be in the mining and metals sector of my career, certainly. I think in the gold rush days, it might have been a little bit more exciting. It might have been. There is a real gold rush happening right now. And it's in these very niche metals. And so basically what's happened, and there's a bit of a journey to go on.

[00:09:36] So between 2000 and 2008, China was just industrializing rapidly. And there were just insatiable demand for metal. And it's not just mining. There's the mine, and then there's the processing, and then there's the kind of smelting and refining. And it's those smelting and refining steps. And they were, back then, they were doing it because they were, China itself, were industrializing. So they needed them for internal consumption. They needed it for themselves.

[00:10:03] And so China built this huge refining complex. So they had the mines, but they also were buying mines in Congo and all over the world. But they had to build the end part of the value chain in China. So just as the U.S. and other countries were closing their refineries, China was building them. And the result now is that China has this incredibly dominant monopoly position in refining. And refining is kind of a dirty business. It's very energy intensive.

[00:10:31] It requires a lot of environmental, it makes a lot of damage to, you know, it's carbon emissions, it's acids, it's kind of emission heavy. And so the U.S. is kind of... Is it better on the environment to do it in China and worse to do it in the U.S.? It's better to do it in the U.S. because China has lower standards for environmental protection than the U.S. So if you care about the environment, you have to make a choice.

[00:10:57] Either the world shouldn't have critical minerals or if it's going to happen, to not have in the U.S. doesn't help our environment. It doesn't help. It doesn't help the environment. If everything is happening in China, it's still happening, right? It's still happening to the... And we share space. We don't compartmentalize it. Correct. And in things like rare earths, it's particularly polluting and damaging for the environment. It's kind of very heavy metals.

[00:11:25] So China has developed this sort of very, very strong... And will you talk later in the podcast about efforts to make it cleaner? Yes. In the process now? Yes. And that's Colorado's role, actually. Okay. So finishing up on China, what's happened now is the U.S. has no refining capacity or barely any. Neither does Europe. Neither does Canada. China's sitting on all of this. And so when anyone messes with China, so call it the tariffs, China just says, well, okay,

[00:11:53] I'm going to turn off the export of tungsten for the next six months. And no one even has heard of tungsten in political spheres. And suddenly they go, okay. And then all of the OEMs that use tungsten, which is the military and anyone making anything with a drill bit, says we can't get tungsten. The price of tungsten has gone up 3,000% this year. And suddenly it all lobbies back and the president goes, oh, holy shit, we've got a real problem. Did Trump know that when he was slapping the big tariffs on?

[00:12:20] To be fair, I think Trump is more aware of this than the previous administration and is doing a hell of a lot more than previous administrations to try and solve this problem. Yeah, for certain. And so it's tungsten. Now it's neodymium and samarium and all these things that you've never heard of. The problem is that these are very small markets. So the total amount of germanium, for example, is like a few truckloads a year comes into the US. But it's absolutely critical. Like you need it for optical lenses and night vision.

[00:12:47] You need it for doping into fiber optic cables. So if you don't have it, you can't build trillions of dollars worth of stuff. But it's a small market in and of itself. And so China's got this really clever way of turning the tap on, which basically allows everyone to sort of function. And then if anyone messes with China, it turns the tap off. And the other thing it does is as soon as the West starts to build capacity. So let's say we want to build a germanium plant. China just turns the tap on and kills the price.

[00:13:16] And so we're in this really awkward position of trying to build these refineries. But the markets are small and they can easily lose money quite quickly. So it's a very interesting time. The US in the last couple of years has put a huge amount of money into building magnet plants. So you now have like four or five major, major magnet facilities being built in the US. And what does that mean?

[00:13:40] Basically taking rare earths and refining them into very high value metal, high purity metal, and then actually making a magnet. And those magnets go into EV rotors, into the robots that Elon Musk will produce. They're small or relatively big. Some of them go into electronics for the computer industry. The problem is China owns 99% of that value chain. We're about to build all this magnet supply.

[00:14:08] And China could and probably will at some point just release more magnets into the market and kill all these facilities in the US. And so what we as a Western society need to decide is should we be propping up these industries with government, with taxpayer money to ensure our supply chain doesn't touch China? What's your answer to that question? My answer to that is technology.

[00:14:32] And that's the role that Colorado plays is can we discover and build breakthrough technologies that compete with China on a like-for-like basis on cost? And so you've got very, very smart people at Stanford and at the Colorado School of Mines all over the states innovating in this area, coming up with electrolysis and like new ways of like refining metal. These methods that China has are based on 1970s technology.

[00:15:01] It's hydromed, pyromed. It's kind of boring acid and power. You know, you're refining it by adding a lot of acid or adding a lot of power. We've got all these new technologies around electrolysis and like really smart ways to do nanoparticles and recovery through like innovative methods. And if we can come up with new technologies, and there are several of them, one of which is in Colorado, they can compete with China on a cost basis, basically. So we need to have innovation as our answer to this competitive issue.

[00:15:31] Yeah. And is this a 10-year, 20-year period of time to put a dent in how to solve this? Or is it going to be done in a shorter period of time? How long would the U.S. have to stay focused? Depends. And so, I mean, in the case of rare earths, we're looking at, you know, a lot of these facilities coming on stream as soon as 2028. Some of them are very innovative and will survive. Others, I think, may not survive if China starts to release these metals.

[00:16:00] And how much of that has been subsidized by the government? A lot of it. It's been a big focus. Yeah, billions of dollars. So in the case of Vulcan Elements, I think they've got a funding package for a billion dollars. MP Materials, another couple of billion. With a guaranteed price floor on the metal. So not only are they giving them a billion dollars to build, but they're saying we'll buy those magnets from you at a fixed price or at a floor price. Which is, I mean, based on what you're saying, so which is appropriate, right?

[00:16:30] I mean, it's appropriate that, you know, U.S. or as you said, the Western world kind of address this. And you're not going to address it by just, you know, the free markets because we're up against a player who is, you know, I'm sure they've got good reason to do. They, you know, obviously benefits them, but they can manipulate the markets in a way that would make us very vulnerable in all kinds of different scenarios.

[00:16:59] And for national security reasons, you can't just accept that. So if the only alternative is the government play a really heavy role, you know, we've got to look beyond the politics of that and appreciate that, you know, that they're doing it. Is that the right way to think about it? That is 100% correct. I couldn't have phrased it better myself. This is not a free market capitalism decision in the plant, but it is actually a free market capitalism decision in the economy.

[00:17:25] Because if you don't have those few truckloads of germanium, then you can't make all these tanks and all these wireless cables, I mean, sorry, all these cable systems without that material. So there's a whole huge downstream economic effect of not having those small amount of metals. Yeah. So we have to do it. And I think the speed at which the current administration is doing it is very impressive.

[00:17:50] It's been their highest priority in terms of the massive investments they're making in kind of our overall critical infrastructure in the US. And that's been a head of quantum. It's been a head of new energy sources. It's been kind of, you know, kind of out of gate number one. And they feel, as I understand it, they're feeling good about what they've done so far. And that's allowed them to start turning their attention to other critical areas. Yeah.

[00:18:16] They include many companies in Colorado, including a few in our investment portfolios. So seeing them see that through, I mean, seeing the federal government see something all the way through that's of critical importance in a short period of time is pretty amazing. It's refreshing. Yeah. I will say in the case of critical metals, the mistake has been to focus too much on the mine and not enough on all the stuff in the middle and the processing and the refining. So people think of critical metals, they think of let's build a mine.

[00:18:43] And actually, you know, there's a lot of mines that you can get the material from. The part that is missing is the processing step and the refining step. And then what I'm interested in... What through processing versus refinement? So you get a mine. The mine sort of pulls up a bunch of rock, right? It crashes the rock and then it creates a concentrate, which is basically it runs it through some water and some flotation and it pulls out a material that...

[00:19:11] It's like a sludge that has like 30% of metal in it. So call it 30% copper. The rest is just sort of other stuff. That needs to go somewhere to get turned into a higher... Like a... There's a refined metal. So it'll go into a processing plant in pretty much all in China where they'll add heat to it and then they'll turn it into like a 99% pure copper. And then it can go to a separate stage, a refining stage,

[00:19:38] where it'll actually get turned into 99.99% copper wire or oxygen-free wire, which then goes into electronics. So those two phases there are already where the government should be focusing on because that is all sitting in China. You can get the copper from a mine in the DRC. You can get the copper from a mine in Chile, Canada. The U.S. Freeport has plenty of mines. It's the refining and the smelting and all that stuff that's missing.

[00:20:06] And what geographies in the U.S. are benefiting from the investment that's taking place now? Texas. Very much so. The Carolinas, South Carolina in particular, has welcomed a lot of this investment in. Yeah, those have been the big two.

[00:20:31] But I'd say the East Coast generally has been very accommodating to investors to bring big projects to them. And how are they winning those projects? You said they're accommodating. Yeah, it's tax breaks. Like in Oklahoma, one of the companies I'm on the board of is working with the state of Oklahoma. I mean, they will refund your salaries of employees for a period of five years. So we've just brought on a very good VP. Let's say it's costing us $250,000 a year.

[00:20:59] We get that back at the end of the year when we file. Tax breaks. Some of it is grant funding, straight up cash to get going. So it's just making it less expensive to do business and sort of to get things built. Yeah. Reno is another big one in Nevada. A lot of companies have been building things there. Redwood Materials being one of them. Yep. We're hearing this story over and over and over again.

[00:21:28] I'm sure you're following some of my pushback and us rallying together because, you know, it doesn't feel good sitting here in Colorado hearing that all this activity is happening elsewhere. And we're not – I mean, rightfully, we should be in the game. We've got that type of talent, as you said, deep here in Colorado, long history in that industry. You know, when it's time to kind of, you know, be in the center of the next phase of it, we're kind of on outside looking in, it sounds like. We very much are.

[00:21:58] There's a company called Nathan Ratledge. I'm an early advisor to Alta Resources, and they have a decision to make about where they put their next pilot plant. And it's, I think, a $50 million decision. And, you know, I'm pretty sure it won't be in Colorado. You know, maybe it will be, but I can see that he's looking at a lot of options outside of Colorado, that he's getting a lot of support for. And there just seems to be that missing step of, you know, come here. These are all the things we can do for you. Has he had any meaningful conversations at the governor level? I don't know.

[00:22:28] In Colorado? I don't know. If not, I'm sure I could facilitate a conversation with who's likely to be the next governor, who he'd want to talk to is, you know, the wiser. So that's still in play, and he's had trouble getting through to them. And I might be able to be helpful on that, even though I was pretty publicly trying to get Bennett as the next governor. I mean, Phil's a really, you know, I've known Phil for a long time. He's a really smart guy.

[00:22:55] You know, I know deep inside of him he understands the importance of winning these types of businesses. He just has to navigate some of the political dynamics and hurdles that he's going to have to balance with, you know, with doing what's right for Colorado. Yeah. So tell us about what you're doing now. So the other missing link of all of this is recycling. We have all of this metal already.

[00:23:23] Like, we're going through all this strain of mining and refining and sending everything to China when we actually have all of this metal in circulation, and it's getting thrown away. So our recycling rate for metal in the U.S. is between 20% and 30%. So everything that we have in circulation, we're throwing away 70% of it into landfill. 20% we're trying to do something with. And I just think that's crazy. And so I've been investing in the metals recycling space.

[00:23:53] I created a company called Ever Metal, and we have been buying metal recycling companies that recycle metal for the aerospace and defense sector. It's basically like very high-performance metals, things that perform under a lot of stress, a lot of heat. These go into Boeings and into jet engines and into gas turbines, things like that. And a lot of that metal is recycled.

[00:24:20] And so we've been buying companies that are profitable, well-run companies in the U.S., and we're doing a roll-up strategy and sort of putting five of them together and building a really powerful player in what's called the super alloys metals recycling sector. So do you see yourself as more of an investor or an operator or some kind of blend between the two? I'm a bit of everything. So also I'm a VC. So I've founded a couple of companies, and I'm on several boards of venture capital companies.

[00:24:50] And then operator, I've just been running a large recycling company in the U.S. We did about a billion dollars of revenue last year in electronic waste and spent auto catalysts. So I got the operational chops from that. But what I really love is what I'm building at Ever Metal, which is a kind of hybrid between investing and operating. Yeah. Well, I guess that's somewhat analogous to what I did at Zayo in that we were buying companies, but we were pulling them together into one much bigger platform.

[00:25:18] So would you describe it as a roll-up strategy? It's a roll-up, 100%. Yeah. Very similar. So kind of lower middle market roll-up strategy, buying things at four to five times EBITDA, putting them together, and hopefully ultimately exiting at seven times. Yep. Yeah. And increasing EBITDA, taking costs out of business by combining them together at the same time. Yeah. Are they growth businesses, generally speaking? The main constraint to these businesses has often been access to capital.

[00:25:46] So in the recycling game, you're sitting on all this working capital. You're buying scrap. It's costing you millions of dollars, and then you're working on it and then selling it. And so what we do, we come in and we say, hey, why don't we double the amount of working capital you can have? A lot of the facilities that they're running are operating at 50% capacity. So you can easily double throughput. So our whole thesis is let's give you lots of capital, go buy more material. It's there. You just didn't have the capital. And then they put it through. And so we've almost doubled EBITDA in the last 12 months just from that.

[00:26:14] And we've had supportive markets as well. But yeah, it's a – How far along are you? When did you start doing this? Yeah. It sounds like you've acquired about five companies. Where are you at in the journey? Yeah. So it's still relatively early stage. It took me 12 months to raise the capital. So it was – I had some dark days. I thought I was never going to get it done. I probably – I think I had 160 meetings with investors.

[00:26:41] And I came from the mining industry, so everyone was like, oh, I don't really like this recycling stuff. It's, you know, full of the mob. And eventually came across just a great backer, and they just really understood what we were trying to do. And so they've given us almost a blank checkbook. And we're – Who's the backer? Can you say it? They're called GEF Capital. It's a circularity, decarb, private equity fund. They're focused on waste reduction.

[00:27:09] They've got a circularity theme around recycling now with us. Really, really, really good guys. And we've been really lucky to partner with them. I think their first fund was a five and a half times return, and we're investing out of fund two. So we bought our first company 12 months ago, and we are, I would say, weeks away from closing our second transaction, which would make us an international player.

[00:27:34] So we're currently U.S. focused, and the second acquisition would expand us all the way across the globe. And then we are live on two other deals. So by the end of this year, we'll hopefully be on kind of three to five companies. Oh, nice. Yeah. Yeah. How does it feel? It feels awesome. I've got just a great team. Where's your team? Is it scattered around? Scattered around. My partner in this is an early career guy.

[00:28:03] I met him when he was at Citi and doing investment banking, and I think he was working on our financial model until four in the morning. And he presented the model in the morning. I was like, I want to hire that guy. And that was seven years ago. And when I set up EverMetal, I gave him a call. He was just graduating from his MBA, and I said, you know, come and join me. And so he and I set it up, and then we've just added a third team member about two weeks ago.

[00:28:28] And it's small, but I just – we're going through like a difficult transaction at the moment, and it's just really great to work with these really smart, really nice people who've been helping me kind of navigate it. I'm going off a little bit of a tangent here. So I used to be a really good spreadsheet guy. When I enjoyed doing it, I'd build complex spreadsheets.

[00:28:49] And we're in the middle of a pretty significant acquisition ourself right now, and we need to build what's called a 10-year model, maybe a seven-year model, in order to really understand it. And there was no spreadsheet involved. It was sitting in front of Claude, describing what we wanted the model to do, iterating on the assumptions, getting very detailed on getting it to strip all the data that we needed to build up the model,

[00:29:21] getting its advice on what do you think the right growth rate is for this, what do you think the right rate for this to happen, interacting with the whole thing, to the point where it produced a great, great model, but never – there's never visibility to anything that looks like its spreadsheet.

[00:29:37] It's all built right on Claude that we created a website to carry not just the model, but all the diligence material and all the other more qualitative analysis. And I've got to tell you, if we – I would have kept – I don't know how many hours of people's time would have gone into building a model of that type. It would have taken weeks of elapsed time to do.

[00:30:06] Then to keep it updated would be really hard, and then if you have someone turn over, then what do you do? Now it's like you go back to the model and you say, okay, I need you to change these five things, or we got some more diligence data, look at that, and give you a recommendation if any of this affects the model. And it's like within minutes you get a whole new updated professional-looking model. It's like, wow. It's incredible. Yeah. Yeah. And arguably a lot more error-free.

[00:30:31] Those big models that our guys were building often had a bug in the system somewhere. Exactly. Yeah, we're using Claude a lot in our diligence programs. It's very much human in the loop. I mean, I – Describe for – when you say human loop, just describe. Yeah. For know what human loop means. So it's kind of using the AI as a tool, but then sense-checking everything. Oh, yeah.

[00:30:58] And, you know, so I, for example, would build a model using Claude, and then I'll send it to my colleague, and he'll sense-check it and go, well, you know, I think that growth assumption doesn't look good there. But I think where we're finding the best leverage on it is in the legal documentation, frankly.

[00:31:17] I mean, we're spending hundreds of thousands of dollars on legal fees, and I'll get an 80-page legal agreement, and I'll just run it through Claude, and it'll suggest a bunch of edits that would have taken me two and a half hours to read. And I'll just get to the really important points really quickly, and then I can just debate with Claude what I want.

[00:31:36] Even Sandy-checking the models is, like, if you give it to your colleague, you could – and I'm sure you guys do this – you know, you go to Claude and say, okay, tell me, you know, the ten assumptions that, you know, make or break this model, and tell me what assumption is there, and, you know, tell me the logic behind the assumption.

[00:31:53] And you get a second set of human eyes on it, who are able to kind of diligence the model, you know, pressure test it, give their opinions of, you know, what they think, you know, might have been too aggressive, too conservative. But the process of using Claude as a tool, even with a second human in the loop, is extraordinarily effective and efficient. Yeah. And, yeah, for legal stuff, it's great. I didn't give my lawyer a hard time on this yet. I've got to wait until I catch him in the right mood, hopefully.

[00:32:23] I'm not listening to this, but we actually got instruction from our attorneys not to use AI to, you know, work on something we're working on because there might be, you know, a legal situation that it turns into down the road, and he doesn't want, you know, all of what's in AI to be discoverable. Yeah. Like, okay. I don't know how to do work anymore without Claude, by the way. I would just be staring at a screen trying to remember how to do something. Yeah, how to think, yeah. So I kind of ignored that.

[00:32:53] I think that ship is probably sailed, isn't it? Yeah. And this was, like, two weeks ago, you know? Yeah. Yeah. Like, okay, that's not going to work. Yeah. I think our productivity has probably doubled in terms of what we were able to – the output – what we were able to review, the output we were able to generate. It was incredible. Well, I would have guessed, you know, more than doubled. I know, you know, hard to measure that.

[00:33:16] Yeah, but I – I mean, I know me personally, I'm doing things that there's no way I could have even thought about doing kind of the range and depth of things that I'm doing personally right now. And I think most people – our team, some of them are, you know, early in career and getting used to doing stuff. But I think everyone on our team is way more advanced now than they were even three months ago. Yeah. It's the pace of, like, of, you know, of growth. Yeah.

[00:33:44] And I think it makes – what it hasn't done for us has made us think about having less people. It makes us think about having more people because the value of people is going up significantly. And as long as we can find ways of putting people to work on stuff that's valuable, you know, as long as they're – get very effective at using AI. It's like, let's get another person in.

[00:34:11] But it's really important that each person – they can't be of the same value personally now as they were three months ago or six months ago because then they're no longer valuable enough. Yeah. So the people who are able to leverage and keep pace and be creative with, be effective with AI, I mean, they're extraordinarily more valuable now than they were before.

[00:34:34] But they've got to want to be that person and they've got to have a knack for it and they've got to be good at it and they've got to be creative and they've got to own. Like you said, the human in the loop, they've got to own the outcome. Claude can own the outcome. Claude can, like, give you garbage. And it doesn't know any better unless you're looking at it and giving it really good instruction on what you need to do and then being the owner of the outcome because it's the outcome that matters.

[00:35:00] And it's just fascinating to see this playing out in such real time. Yeah. I mean, I've never had – I mean, I wish I was younger in my career. I'm actually younger in a lot of ways. But I've never in my career, not even in the early days of the internet, seen stuff happen anywhere close to the pace and which things are happening right now. And it's just so exciting. Yeah. It is. It's incredible.

[00:35:21] I mean, just in the case of Evermetal, in terms of the pipeline, you know, I go down these rabbit holes around different – so these alloys that we are going after, they have things like hafnium and rhenium and molybdenum and all these really weird metals in them that are very niche.

[00:35:36] And there are companies in the U.S. that I would never have been able to discover, but I can have these conversations with Claude and generate all these ideas up to the point of, like, actually getting the email address of the owner, reaching out to them, and having, like, a really sensible discussion around the acquisition with a really good understanding of how this business fits into our thesis. And, yeah, it's really awesome. Okay. So let's break down kind of the industry a bit more. Sure.

[00:36:01] You've thrown out a lot of – I don't know if metals is the right way to say it or if it's a more expansive word. But help us break down kind of first terminology. You know, is the right thing to call it critical minerals, critical metals? What's the right terminology to describe the industry and maybe a hierarchy of the terminology? Let's start there. Yeah, I'm glad you asked that because everyone kind of gets it wrong at the moment. So we're in the – it's the metals industry, firstly.

[00:36:31] Within that is the critical metals, which is a list that the government publishes every year. And it's basically things that are really important to the economy. So copper wasn't on there and was added about a year ago. And how many – how long would the list be? 50. 55, something like that. Changes every year. But, for example, copper, like, is absolutely – And what does it mean to be on the list versus –

[00:36:54] You qualify for certain programs that the government runs, tax breaks, tax incentives, things like that, that get kind of put into this bucket. And when you said earlier the current administration is more on top of this than the past administration, what – Copper is a great example. Like, you need copper. I mean, copper, if you think about the world, it's like electrifying. Cables, phones, everything is becoming – cars.

[00:37:22] Copper is the most conductive electron metal. So there's never going to be a substitute. And so copper is absolutely critical. And it wasn't on the critical metal list because it was fairly abundant. So you had lots of copper mines. But it has to be on that list because if it's not on there, you don't have copper, then you can't have data centers and EVs and everything. So the current administration moved copper onto that list. And is – are there different slots on the list?

[00:37:51] Is there, like, a number one and a number 50? Or is it, like, you're either on the list or not on the list? I think it is, actually. I think it is ranked by how critical and important it is because tungsten always finds its way to, like, number one or two. And neodymium, these are the – You find the list? Yeah. And then you've got this whole other basket called rare earths. And often people are like rare minerals and critical earths. That's right. I'm confused. So let's go through that again. Yeah. Critical metals first. Critical metals. Yeah, metals. First you have metals and then you have critical minerals. Yep.

[00:38:20] And then you have rare earths. And then you have rare earths. Rare earths is actually a defined set of things on the periodic table. There's, like, 19 of them. And things are ending in M's, usually, like dysprosium and terbium and neodymium. And these are tiny little markets often used in, like, electronics. And those are rare earths. And ironically, they're not that rare. Like, there's lots of mines of rare earths. And there's rare earths kind of in the ground fairly abundantly.

[00:38:49] They're rare in the processing and the kind of refining part of the value chain. What does that mean? The rare? So there's lots of mines. Like, in Brazil, there's loads of them. I'm actually on the board of Rare Earth Americas. We're building, well, developing projects in Brazil and the U.S. There's a lot of mines that produce rare earths. And there's in the ground. But they're called rare, not because they're rare, but because they're.

[00:39:14] The rare part is the fact that the refining side of the equation is all concentrated in China. And it's very hard to do it anywhere else in the world. So, yeah. And do you have to, when you're solving for the, building the refinery capability, do you have to solve for it for each individual? You know, rare earth or metal? It's a great question. Or is it, you know, usually if you're going to build one, it covers 10 of them? Or how does that work?

[00:39:44] Yeah. It's a great question. They're broadly split into heavies and light rare earths. And the light rare earths, so in California, you've got the Mountain Pass MP Materials. Mine is mostly light rare earths. The heavy rare earths are the really valuable ones. And those are the ones in Brazil that we're developing at Rare Earth America. There's lots of heavies. It's like those are the sexy rare earths at the moment. But it's the metallurgy, which is basically you mine all this stuff.

[00:40:11] It comes out in a mess of 10 or 15 of these. And then you have to decide how to build your processing plant to, like, optimize the cost benefit of recovering certain of those. And it's a pretty detailed. You take months and months of feasibility work to figure out how easy it is to extract the different ones and what the cost is of doing it. Great.

[00:40:32] And if Jared Polis was sitting there and Phil Wise was sitting there and our two senators were sitting there, and they said they asked you to tell us what Colorado should do. What should Colorado's strategy be in this combination of rare earths and metals and critical metals? Yeah. You know, Colorado wants, you know, should Colorado want to be a leader? If so, how would Colorado be a leader? What is the position to be a leader of? Yeah.

[00:41:02] What should we be going after? What behavior changes would Colorado need to make? What would the Colorado strategy be for this? So I would focus very much on this processing and refining step. And I would encourage the building of pilot plants. So exactly like my friend Nathan Ratlidge, he's got this technology. It works great. They've got a little facility here in Boulder in a lab. They now need to put in a commercial plant. It's going to cost, call it $50 million.

[00:41:33] I don't know the actual number. Tell us more about Nathan's business. Yeah. So expand on that a little bit if you can, and then we'll go back to the strategy. So Nathan's business addresses exactly this problem I've been talking about in rare earths. So Nathan will take mined concentrates, so these concentrates coming out of these mines in Brazil, and also end-of-life magnets on hard drives in electronics. They crush it up, and then they put it into, I think it goes into a solution,

[00:42:02] and then he uses these proteins that he's created, synthetic proteins, that go in and they basically selectively pull the metal into the protein. And so it'll be able to, I want to go and get neodymium, and it'll grab the neodymium particles, and then it'll float them up to the top, and then they can basically take that off at an incredibly high purity of neodymium. So it's a very unique way to get from 85% to 99.99%.

[00:42:29] And it's exactly what the U.S. needs is a technology like this. And he's got some fantastic backing from some of the top VCs, and now he's faced with the decision of, like, where do I build the first facility? Mm-hmm. And that is what the Colorado government should be supporting. You know, you can put it over here. Here's a free trade zone. We'll give you, you know, $10 million of your CapEx.

[00:42:58] We'll let you have a couple years of tax breaks. We'll refund some of your employee costs. Just make it easy. Yep. And then if someone was in the back row there, maybe it's one of our wise Colorado, you know, Colorado state senators, House members, whatever they call themselves, and they raise their hand and say, you know, we're broke as a state. You know, we're spending too much money,

[00:43:26] and you wealthy people, tech people, you have plenty of what you need. There's much better ways for us to put our money to work than supporting your tech business. Go to Oklahoma. Go to Texas. We don't want you here. Like, what would be the response? Like, why should Colorado care about him building the plant here in Colorado as opposed to somewhere else? Yeah. How does the state benefit?

[00:43:53] How do the people of Colorado benefit if Colorado has to give $10 million there instead of $10 million somewhere else and do other things? You know, what's the response to someone who says, you know, we don't need to subsidize it. I thought you guys were business and believed in free markets. We're not going to subsidize business. Yeah. Like, why aren't they right? Well, the first point to make is he'll go somewhere else where he can get that.

[00:44:18] So that will mean 50 employees, long-term employees with skilled jobs. I mean, these are science jobs. These are highly skilled jobs that will pay people well. And you can take students out of CU. You can take them out of Colorado School of Mines where they've got degrees in metallurgy. Take them straight out and put them there. There's infrastructure. There's investment. And these are like strategic businesses.

[00:44:46] I mean, they'll be producing a very, very high-grade magnet material that will go into, like, electronics businesses in Colorado that it'll be, like, very useful stuff. And we're not making widgets. This is, like, very useful stuff for the electronics. Presumably some of those 50 people that would get hired will work there for a while. They'll come up with their own idea. And then they'll want to launch their own business, not unlike what you did after coming here. Now you're doing the next business.

[00:45:14] So it's not even just that business and what they do there. It's what spawns off around it. Correct. It's kind of a job creation platform of valuable jobs and economic activity. Yep. So Redwood, there's a company, Redwood Materials, basically. J.B. Straubel, who came out of Tesla, he was one of the co-founders of Tesla, realized that there'd be all these end-of-life batteries in Teslas that would need to be recycled.

[00:45:41] So he left Tesla and set up Redwood Materials, which is basically a recycling company of Tesla batteries, EV batteries for lithium and copper and nickel. Set it up in Reno. Thousands of people now live in Reno working with him on this. They've spent... And Reno needs the jobs, too. I mean, Reno's not exactly otherwise a thriving, booming economy. Yeah. Yeah. I'm sure Reno is benefiting significantly from that job creation.

[00:46:08] And you've got some very, very talented engineers have moved there. And now there's the second generation that you spoke about. And several folks I know have left Redwood and are now setting up the next billion-dollar startup in Reno because they're like, well, I can grab that guy who's a really good chemist. And it kind of spawns these next generation of technology. Yep. Yeah. So you think Colorado should come up with a nice strategy around rare earths and metals and critical metals? I do.

[00:46:37] And I think it's better than mining. I mean, it's... You know, when you think about metals, people immediately jump to the dirty mine. And I don't want to mine in my backyard. It's the... We have a saying called NIMBY in mining, not in my backyard. A processing plant is different. You don't even know it's there. You know, most of these, like Nathan's thing, will be a covered warehouse. It'll look like any normal building. And yeah, we should build them in Colorado for sure. Yep. Good. Yeah. No, it's...

[00:47:06] You know, because we've been kind of digging and, you know, presenting the cases and saying, what are Colorado's strengths? You know, you start with kind of a, you know, your typical McKinsey-style analysis, you know, strengths, weaknesses. And Colorado, when you add up all the strengths of Colorado, you just don't run out. I mean, you start with the most obvious, well, you know, space and aerospace and now quantum and, you know, and, you know, the outdoor industry and my old industry, digital infrastructure, AI infrastructure.

[00:47:35] Then you keep going on and on and on and on and on. And you... There's probably eight to ten meaningful industries. You know, cyber is one of them. And then you get to the, you know, I got to get my terminology down. Metals. How would you put those two together? They're like... Metals. So metals would cover the whole gamut. Yeah, it would. Yeah. So the metals industry is yet one more example and perhaps arguably the one most overlooked of all of them when it comes to understanding kind of what Colorado has to work with.

[00:48:03] So we have more going for us as a state than arguably, you know, any other state. If you assume California is going to be driving, you know, innovation out of California. So pick them off of it. You know, we should... We have so much to work with and, you know, we should have the most thriving innovation economy out there yet. We don't. Yeah. We're kind of going backwards, which is just incredible. Yeah.

[00:48:29] And the Colorado School of Mines is one of, if not the top school for mining and engineering in the country. And, you know, students are going there, getting their mining degrees, getting their metallurgy degrees, engineering degrees and leaving. Got to go work in other parts of the states. And they don't want to stay in Colorado. No, they'd love to. They would love to stay in Colorado. They'd love to stay in Colorado. Yeah. They've just learned how to ski and... And now they got to go live in Oklahoma. No, that's Oklahoma. In Reno, yeah. In Reno.

[00:48:59] Oh, yeah. I was in Reno not too long ago. I'm like, okay, I don't think there's any good reason to come back to Reno in the future at all. So what attract... What do you like most around Boulder and Colorado? What part of the lifestyle have you taken to the most out here? It's... I mean, I've got to say the sunshine. Having lived in London for 15 years and I brought over my umbrella stand with about seven or eight umbrellas in it.

[00:49:29] And it sat in the entryway of my house in Boulder for about a year and a half. And eventually I was like, what is this doing here? I haven't used it once. So the weather is just phenomenal. And I think we take for granted that 300 days of sunshine a year is just awesome. I've got two dogs, a two-year-old and a newborn. And my wife and I just love hiking. So just getting out into the trails and just being connected to nature is really good for my head. But I think Boulder's got a unique...

[00:50:00] People... Interesting people move here. You know, chosen quality of life. And I'm part of YPO, which has been a really great networking tool for me. And I've met some phenomenal people here as a result of that. So I think it's just, I think, quality of life, ability to do business, build companies here has been really fantastic.

[00:50:19] Yeah, I've made it a point for me to discover as many interesting people around Boulder and Colorado as I can. You know, I've been doing it for quite some time. It's kind of a deliberate effort. The team is involved with the effort. You know, and I keep thinking, while I must know pretty much everyone other than people who, you know, have just moved here that are doing really interesting things, they've had really interesting backstories.

[00:50:46] And it seems like every week we find one or two more. You know, and some of them, like you, it's not like they just arrived, you know, last month. They've been here five years, been here four years. I'm like, wow. Yeah. But the richness of gathering of people and that includes, you know, people who've been here a long time. I mean, it's, you know, I think we have an opportunity for, you know, Boulder to lead by example of how a community can come together more. Yeah.

[00:51:12] We, like a lot of parts of the U.S., have people who identify with being way over here on the political spectrum, or maybe not way over there, but something from the vantage point of the far left looks like they're a long ways out. And, you know, people aren't that different from one another. If they talk and communicate and listen and, you know, understand where people are coming from, we're going to find that we have a lot more in common and can enjoy each other a lot more.

[00:51:38] And so that's part of my kick right now is how to bring kind of the community together, regardless of where they're coming from within the community, and try to get past this point where it feels so divisive. Yeah. And as a foreigner, I really appreciate that, Dan, because I've seen how divided it is. It's almost like you can't at a dinner table discuss politics because immediately you're going to have this kind of very quick division.

[00:52:05] And people just have stopped the debate around politics. In the U.K., you can easily talk about, you know, you don't like this minister and what's going on with the Labour government. And you can have these debates, but it's all kind of sensible here. It seems like you just don't even go there. And I think encouraging debate and bringing people together is a bit of a lost art, and I think it's really important that you're doing it. Yeah. I mean, even the comment you made earlier around how it came out in 2019 and Trump, I've never heard anyone say that before.

[00:52:34] I mean, it wasn't paying close enough attention, but, you know, it's hard to look at that and say, well, there goes Trump being Trump again, doing all this horrible stuff. It's like, that doesn't sound so horrible from the vantage point of, you have made from the vantage point of Cayman Islands does, but that's, you know, but a lot of people are using those tax statements in Cayman Islands are wealthy people who want to keep their wealth. And so he's like, well, I don't, you know, that's not a, that's not a simple way to keep your wealth, I guess.

[00:53:02] You know, you're going to have a business in the U.S., you can't just domicile it and Cayman Islands and get all kinds of crazy tax breaks. So, you know, I don't know enough about that issue to, you know, obviously to be a master at it, but it's an example of, you know, if you're talking to each other, even if you're in the, I don't like Trump crowd, you can appreciate that some of what's going on there is really important to the U.S. And we should be aware of that and we should be supportive of it.

[00:53:29] We shouldn't be ignorant of it or against it just because it's associated with the Trump administration. Agreed. And are we seeing that in the, in this metals space of just how much and how rapidly the government is moving to secure U.S. sovereignty with regards to the supply chains? And, and that is absolutely important. And that one's critical in the sense that you got to be willing to play the long game there in order for us to get the benefits.

[00:53:57] So it's got to, it's got to last across administrations. It can't be one where one administration works really hard for, you know, for three and a half years and make some progress. And the next administration comes in and they're with the other party and the other party says, well, that's, you know, we're not going to support that because that's associated with the prior administration. And the other side of the aisle is like, we got to mature as a, as a leadership structure and, you know,

[00:54:23] and not just react based on which party came up with the idea or is pursuing the initiative. Especially when you're thinking about China on the other side, it's got 30 years of strategic vision and these five-year plans and one leader who's arguably not going anywhere for a while. Yeah. Not unless Mother Nature takes them away. Yeah. Good. So what, what else? Anything we didn't cover that you think would be interesting to share? What's your future look like? You're still early in your overall journey.

[00:54:53] What does your future look like? So I'm, I just love working with, with smart people who have low egos. That's my favorite thing. And I think building companies is what I love doing. And so we are at Evermetal. We're, we're executing this strategy of this roll-up strategy. You've got your hands in lots of other things besides ever metal too. Yeah. Maybe tell us a little bit. How do you kind of balance all that? So I'm on the board of Iron Drive.

[00:55:23] Iron Drive is a breakthrough technology called deep eutectic solvents. It's like a new class of solvent that recovers metal. And so this is one of those technologies that purifies rare earth. That's listed in Australia. So that's kind of my evenings. Occasionally I'll do a call to Australia. I'm on the board of Rare Earth Americas, which is a business in Brazil listed on the New York Stock Exchange. I was one of the early investors in that. And that's a great team and very well-run company.

[00:55:53] Some on the audit committee as well. Yeah. Look at that. Yeah. I think I'll do it maybe this last time. But then ever metal is really where my passion is at the moment. And we may set up a second platform and buy companies in different parts of the metals value chain. And then I still help the team at Elemental where I was the CEO in the US.

[00:56:21] And so I keep very busy, but I love what I do. So it feels like a lot of fun. Yep. I know your time is tight, but anything I could do or we could do to get you plugged into the ecosystem here? And frankly, tap into some of your expertise to help our political brains kind of understand what we as Colorado can do to support your industry.

[00:56:50] It's kind of a side mission of mine to get Colorado. Well, not a side mission. I guess it's a main mission to get Colorado to be everything it can be for the betterment of all of Colorado. And breaking that down and start thinking about each industry. Each industry and what because it's not one size fits all. Like what kind of stuff we would need to do to support your industry is unique to your industry. There's some commonality, but you got to understand the industry.

[00:57:17] You got to make it a priority and you got to be willing to lean in and support it. So with the platform that I've been creating to have more of a voice on the political side, it's really to use that to bring more awareness about what Colorado can and should and do to further develop. But I think, you know, is our opportunity to be the most innovative kind of geography and do it in a way that benefits all of Colorado.

[00:57:45] So not just do it for the sake of having, you know, more tech industry do more tech things. But how do we connect that dot to the big dot of how do we do in a way that is a clear benefit to the broad Colorado so that we can all rally together around it and be ourselves as part of the same team, regardless of what your exact political mindset is. You know, we're all team Colorado and, you know, your industry is one of those industries that's underappreciated, doesn't have the level of awareness.

[00:58:14] And we should build up on that. Yeah. Well, the Colorado School of Mines has a dedicated critical metals team now, and they're looking to encourage companies to start up and sort of use PhDs and give them training. I'd love if you know anyone at the Colorado School of Mines or could get me connected with them, I'd love to have a chat with them because several of the projects I'm working on would involve building plants. And we'd love to look at Colorado and why not do something in partnership with the School of Mines

[00:58:44] with their critical metals division. Well, that's easy. We could get right to the head of School of Mines, you know, have conversations with them, and they want to get closer. So, yeah, we'll take that if you can write that down. Thanks. And then you were here, I think you were here for the Endeavor. I was, yeah. Yeah. Would love to find one of the companies from that segment that is ready for Endeavor.

[00:59:11] So Endeavor is, I think you probably picked up on, Endeavor Global is in 50 countries across the world, and it's all around scale-up tech companies. So it's a nonprofit that has the thesis, which is a pretty simple thesis, that if you have these outstanding entrepreneurs building up tech businesses that scale significantly, it's really good for the community around there. So they want to have them in Brazil, and they want to have them in the Middle East,

[00:59:40] and they want to have them in Southeast Asia and in the periphery of Europe and build upon it from there. But it would be great to get a Colorado company that's in the metal space that fits the profile and shine. And we've got two quantum companies from Colorado now, the first two quantum companies that made it through the Endeavor process. We have a couple space companies in there and a couple more that are well done in the process.

[01:00:08] We have a couple biotech companies in there, which is awesome. So we have a really good superset of frontier tech companies. In fact, Endeavor Global is viewing Colorado as kind of the center of a lot of what is frontier tech and the broader Endeavor network and would love to have a metals company. See, I'm using the terminology right now. Yeah, nailed it. A metals company, part of that.

[01:00:35] So I don't know which of the companies that fits that profile that's in the right scale of phase. It's kind of like Series A, Series B is the sweet spot with the right kind of venture backers. And more important than anything is the founding team and how special they are. Some are first-time founders, but they're the kind that you look at and say, okay, that's a really strong founding team.

[01:01:03] And some are serial entrepreneurs that have already established their track record. But a lot of it comes down to who is that entrepreneur and founding team? Where are they at in the scaling process? Are they doing something of significance, something of typically international, maybe not global, but more than just whatever country they're starting in? So if you've got any of them like, well, here's the two that should be at the top of the list. Please share them. I will.

[01:01:30] Yeah, I think Alta is a good candidate for that, Nathan. Yeah. Good. There's another one I have in mind, but I'll send you an email with them. All right. Good deal. Yeah. All right. Thank you, Dan. Well, this has been a lot of fun. I really enjoyed it. Likewise. I learned a ton. Thank you. About you and about the industry and I look forward to getting to know you better. Thank you. Thanks for your time. I appreciate it. Thanks for having me. Take care. All right. Thank you for listening to this episode of The Bear Roars.

[01:01:54] Check out Stretch, the new song from Dan Caruso with music by Jason Mendelsohn, available now on all streaming services. If you enjoyed the episode, please like and subscribe on your listening platform. This podcast was produced by Loud Bear Productions and edited by Hannah Schmetzer with support from Kendall Weinberg, Alex Kim and Gibson Siegert. Thank you.