A conversation on how state and local governments can use technology to better serve their constituents W/ Zach Bookman.

View Transcript

Ryan Morfin:

Welcome to Non-Beta Alpha. I’m Ryan Morfin. On today’s episode, we have Zach Bookman from OpenGov.com talking about how state and local governments can use technology to better service their constituents. This is Non-Beta Alpha.

Ryan Morfin:

Zach, welcome to the show. Thanks for coming on today.

Zach Bookman:

Thanks for having me, Ryan. Really glad to be here.

Ryan Morfin:

OpenGov really helps federal, state, and local migrate their technology footprint from the 1970s Cobalt to the cloud. I can’t think of a more important component of growth for people to focus on, is how do we make our government more efficient given these times that we live in? So OpenGov, you guys have been doing this pre-COVID. Would love to ask you a little bit about how is it going? What are best practices in this whole space? And what do you citizens and investors need to know about this kind of digital transformation going on in government?

Zach Bookman:

We’ve been doing this eight years. And I’m sorry for the state of the world with COVID, but it’s actually been a bit of a boost, if you will, to our business. We sell ERP software. That’s budgeting and planning, financial management systems, and permitting licensing code enforcement systems. All that work that, if you’re redoing your house or your deck, or, heck, getting a marriage license or a puppy permit or something, we run all those back office systems. We’re also the leader in reporting and transparency software for our nation’s cities and counties and state agencies. By the way, we just work with state and local governments. Federal is a different beast, different market. Haven’t gone to tackle that yet.

Zach Bookman:

We’re seeing a… Like, the cloud is coming to government. This was the thesis back when Joe Lonsdale and I started the company along with two other great young technologists from Stanford. But it’s happening, and it’s happening now because it’s kind of inexcusable to be using these 30 year old green screen, white screen, legacy things that are just bleeding the government dry. What we saw back then is what we still see a little bit now. It’s a lot of actually good people. They’re hardworking. They’re plenty smart. And they’re banging their heads against the wall with old technology. They had probably a couple decades of starved IT budgets, or they’ve wasted them on the big SIS and the Oracle’s and the SAP’s. We’re seeing cloud adoption now in a way that we haven’t seen before.

Ryan Morfin:

I would assume all local and state governments are essential employees, so they’re back in the office. But how is it possible that they just never made the tech investment to get into the cloud when a lot of the economy has been moving in that direction?

Zach Bookman:

We’re a vertical enterprise software, as a service company. The nature of vertical SaaS, or really any vertical software, is that the vertical you’re targeting is so specialized that you trade off the total addressable market for the feature set that’s going to solve the workflows here. Government is not unique, but it’s darn near unique. No one would start a business and go pitch Bill Gurley and say, “Hey, do you want to invest in my business? I’m going to pave roads, educate kids, process sewage, and generate electric power.” That’d be ridiculous. But that’s what our cities and counties do. And they’re, I call them holding companies, that are collections of for-profit and non-profit business lines that we either don’t want or can’t have in the private sector. The reality is the amount of software needed to run a city or a county is massive.

Zach Bookman:

What has been happening since the seventies, probably even sixties, but seventies, eighties, and into the nineties, was extending what I call horizontal software. Your Oracle, your SAP. “Oh, let’s just hire a bunch of consultants, get over the sales hurdle, and then screw it in and kind of jam it into these government workflows.” The fact of the matter is it’s extremely expensive, doesn’t work. They’re very good at enterprise sales, so they convinced the governments, Hey”, we do this for banks and pharma and insurance, but it’ll work for you.” And it doesn’t. So there’s just loads and loads of workflows, processes, and business lines that are still on paper. And if they’re not on paper, they’re on that first gen tech.

Ryan Morfin:

At the procurement side, is it… You got to go through a CTO’s office, typically? Or, you going to the the mayor? Or, how is this kind of, I guess, advocated at a local level?

Zach Bookman:

The selling is very complicated. It’s another barrier to entry, if you will. It makes it really tough for a startup like OpenGov to succeed. Fortunately, we’re crossing those chasms and hurdles. For your financial system, typically we’ll go through the office of the CFO. But one of the things that makes it so tough is you’re not getting it done unless the CFO and the CEO agree. That’s basically the same in the corporate enterprise. But here’s the added hurdle. In virtually every city or county, the board gets an approval right. It’s kind of funny, because I don’t have to… I’m an acquirer or a software. I don’t have to get my board approval to go buy another Salesforce license or buy Intacct for our accounting system. And yet, if I was city manager of the city of OpenGov, I need to bring it to the board and get final approval.

Zach Bookman:

So that’s just five or seven more people, and they’re typically lay people, that you need to get some form of consensus on. That makes it really tough. But it’s a different buyer as well in permitting, licensing, and code enforcement. You might go through the Director of Public Works or the Director of Building and Planning. Then on the budgeting side, you might need to bring a budgeting director in. So these sales get very complicated, very quickly. You need board approval, you need, typically, approval from the analysts and the staff. And then of course you need the principals to be on board.

Zach Bookman:

So, very complicated and frankly, very expensive selling. I call it enterprise selling with 20% more pain. You got to go get a board approved, and then you got to get through procurement. There’s often rules and regulations which we’ve designed essentially as policies to, essentially, slow down sales. We don’t want rogue politicians or city administrators buying whatever they want. We want lots of regulations. And that’s not… They don’t want it either. It’s we, as a community.

Ryan Morfin:

So how do these CEO, CFO champions gravitate? What’s the path of least resistance? Do they say, “Hey…” They’re obviously not saying, “I want to raise your taxes to buy more software”, but is there an ROI argument that you guys utilize with them to say, “Listen, this is going to save us X amount of tax dollars and headcount” and such?

Zach Bookman:

Absolutely. There’s a few main ones that I’d bucket them, maybe as follows. Just off the top of my head. Number one is the classic cloud stuff. Your ROI, your total cost of ownership, get rid of the servers, get rid of the wasted IT stuff. And in government, for anybody who wants to go sell things to government, my advice is don’t tell them you can go fire people. It’s very, very hard to fire people. What you say is you can redirect your resources to more strategic or more important things, or “All your staff are overworked. This can take a bunch of things off their plate.” But the total cost of ownership analysis is one we do a lot IN ROI. Typical cloud stuff.

Zach Bookman:

Number two is… Heck, right now, we’re in COVID. You can’t have people coming to town hall with PDFs printed out, handing them to a clerk, and then counting out dollars and cents to pay utility bills, or to pay the fee or fine or price for a permit. We put all that online. So there’s a public benefit as well as just a business continuity benefit.

Zach Bookman:

And then, four, as I alluded to, how to get more strategic? How to get more resilient? How to get more secure? Ransomware is coming to government. If you’ve got some old on-premise thing sitting in a basement and that’s taken out… I mean, the city of Baltimore couldn’t allow its residents to pay their water bills for six months. This hits main street at some point. The reality is the cloud’s coming, it’s inexorable, and we talk in frank terms to city leaders, county executives. “Which side of history do you want to be on?” They basically have a choice to make between the safety and security of “No one gets fired for buying IBM”, and the “I got to have a forward lean. I got to engage my citizens. I got to provide services in a more innovative way and keep pace.” People are doing business on their cell phones. Like, it doesn’t make sense buying plane tickets online, and then you go print things out and pay bills in person at city hall.

Zach Bookman:

So we tee it up and try to make the dichotomies pretty clear, and it’s working.

Ryan Morfin:

As government goes, this COVID, current environment that we’re in, has put a lot of stress on toll roads and revenue models, municipalities. Hospitals that are publicly run, some of them, don’t have electives. So there’s like a donut hole kind of evolving on the balance sheets of these entities. And the fed stepped in with the CARES Act, about $500 billion so far invested in support, if you will.

Ryan Morfin:

But what are you seeing out there in the trenches regarding the health of municipalities today in the states? It seems like we’re asking them to do all of this heavy lifting in the COVID era. And, I don’t know. I mean, at some point I think taxes are going to have to go up. I don’t know. What are your thoughts on what’s going on with the health of public finance?

Zach Bookman:

I think it’s pretty serious. I think it’s being masked a little bit by CARES Act funding, and I’ll explain that in a minute. Governments have a lag, typically, as well, which we’re not factoring in yet. So I think 2021 is when we’re going to be seeing and feeling more of the pain. Property taxes are a major component of state and county funding, and there’s a natural lag on when property taxes get paid and, thus, revenue gets accrued and recognized for governments. That hasn’t really hit yet. Right? Sales taxes have been hit. I talked to a government in Texas a few months ago, and she’s like, “You got to understand. If you came and visited us, 85% of our revenue is from sales tax, and every business in town is closed.” That’s just a disaster.

Zach Bookman:

I think a lot of this has been politicized around, red state, blue state, and so on. Independent of those merits, there’s a lot of little towns and counties that council member A and council member B get into a fight over petty, small town politics. Who wants a bike lane versus who wants more hours at the municipal pool. But that’s not politics at the federal level. It has nothing to do with it. And so, I think there’s some probably pretty serious pain coming.

Zach Bookman:

I said earlier, it’s been masked. The CARES Act is trickling down. We run the CARES Act programs for multiple states, as in them handing out grants distributions to either counties or even local businesses. State of Louisiana, for instance, is giving out something like 10, 20 thousand small business grants to… I think it’s their main street recovery program. All that’s running through OpenGov’s forms and workflows. A number of counties are getting funding, and then cities are able to apply to their state for possible funding. And obviously, you could buy sanitizers and masks and so on. But you can also buy accelerated telework capabilities. All their staff’s having to work from home. These are folks who’ve been working on desktops for like 10, 20 years.

Zach Bookman:

So we’re seeing them being able to buy technology to literally keep their government running. That’s been very important. It’s been a boost to OpenGov, but I think even a bigger boost to their operations. They’re having to get trained up on how to use Zoom and how to get going. There’s a lot happening. I forget who it was, but one… Maybe it was Aaron from Box.com, who’s a friend and investor. He said, “Governments are going to make more progress in the next year than they will have in the prior 10.” We’re seeing that.

Ryan Morfin:

Well, that’s great news for constituents. Moving to the cloud, what are some of the… Call it benefits or better constituent services that’ll emerge from moving to the cloud?

Zach Bookman:

I think it’s basic stuff. as residents and citizens, we interact with our local governments probably much more than we do with our federal government. You want a new deck on your house? Your contractor needs some permits. How quickly are they going to be processed? If you’re doing work or you want to cut down a tree, and there’s all sorts of regulations, being able to do that online, being able to do that on your phone, being able to pay for things like you would in other areas of your life, using Venmo, or this, or Stripe, we’re enabling a lot of that. I think that’s exciting.

Zach Bookman:

Now there’s also the back office guts of the government. If you use an OpenGov cloud-based ERP financial system, I don’t think main street folks are going to feel that, but their government’s going to be a lot stronger, a lot more resilient, a lot more resistant to cyber attacks. Their staff are going to get better trained, more sophisticated.

Zach Bookman:

Then on the budgeting and planning side, that’s the heart of a government, if you ask me. It’s why we have governments. We raise revenue. Coerce it, if you will. Then we figure out how to spend it on goods and services for the community. That’s actually called budgeting. You form a council, which is elected by the stockholders, i.e. residents, and they fight over where the money goes. Do you want more guns, or you want more butter, per the freshman year micro econ?

Zach Bookman:

With OpenGov budgeting, you can get a lot more granular, a lot more collaborative. You can get citizens involved in the budgeting process so they actually know where their money’s going and their tax dollars are going. When you raise the trust in a community like that, then you can actually get things done. It sounds a little pie in the sky, but we’re seeing it everyday. We work with a thousand governments and it’s growing fast.

Ryan Morfin:

What are some of the… You mentioned cyber a few times so far. How at risk are local governments? And do they even know they’re at risk, or do they think that it’s not going to happen to them? What would you say if you’re talking to the random mayor or governor?

Zach Bookman:

I think it’s pretty serious. I think we’re all taking it fairly seriously in our personal lives. The number of people you or I probably know who’ve been either hit by or threatened by some kind of identity attack or something like that brings it home personally. The stories are piling up out there, Ryan. Last year, 19 cities in Texas got hit at the same time. These are the little towns. These are not sophisticated. One or two of them were being operated out of a double-wide trailer, and they’re shut down. These little towns or cities are providing services like electric power or water, utilities. Then you’ve got major cities. Atlanta, Baltimore. Just last week, the market leader in this space, you could call them the incumbent, it’s a company called Tyler Technologies, which is listed on the S&P 500 now. They are literally, I believe as of today, still shut down, their website and phone system. I say this not to rub it in the face of a competitor, another player in the space. I say that it’s serious and it threatens us all.

Ryan Morfin:

Well, you’re more into the tech stack across the country at state and local than anybody else I know. Do you think there’s risk into the electoral process given the antiquated technology infrastructure that exists today?

Zach Bookman:

I’m, for better and worse, I’m the crazy guy who spent eight years obsessing on local government, state and local government software. So Ryan, for your sake, and maybe mine, I should hope I know more about local government software than any of your friends. I’m not an electoral software expert. So this is as lay in opinion as if you called up another buddy. We are not seriously into electronic voting in this country. I think for better and worse, there’s going to be a lot of mail-ins, a lot of paper ballots for years.

Zach Bookman:

I was living in San Francisco and I was voting in some neighbor’s garage. It’s classic. This was probably hasn’t changed since I was in elementary school. So no, I don’t think cyber attacks, in terms of the integrity of the actual vote counting and electoral process. I do think propaganda, and whether it’s China or Russia or Iran, getting involved in the American election, I think, is a very serious issue. But I don’t think the actual guts of physically voting or mailing that in are going to be affected because they’re not really online.

Ryan Morfin:

Yep. No, that’s a good point. A lot of the ballots are still paper and for that reason, I think we’re-

Zach Bookman:

Questions about the integrity of mail-in ballots, which I guess you’re darned if you do and darned if you don’t. But it’s a little harder to believe with mail-in ballots that we can’t deal with that integrity.

Ryan Morfin:

Yeah. No. I believe it’s going to be on the media cycle for while. Hopefully not till the end of January, but it might last that long.

Ryan Morfin:

Well, as it relates to… People who watch this show, it’s typically financial advisors around the country. They tend to be very involved. School board, former elected officials, donors. They look at OpenGov.com and they say, “Wow, my city needs to take a look at this.” What is the best way they can get involved to take their local community and try to bring it kicking and screaming into the 21st century?

Zach Bookman:

I love it. There’s a few ways. One, if you’re on a board of a city, town, county, township or state agency, you’ve heard what we’re doing. OpenGov.com. We’d be delighted to help. We have a whole range of solutions. And if for some reason we can’t help, we’ll still be a trusted advisor. We’re friends and partners with the entire ecosystem of cloud players in government. In fact, I know all the non-cloud players, too.

Zach Bookman:

Two, I’m not afraid. My email is ZBookman@OpenGov. That’s first letter, last name, at OpenGov.com. I talk with government executives, not all day, but all week. We love what we’re doing. We’re here to power more effective and accountable government. If you’re a city manager, or town administrator, or county executive, or governor or lieutenant governor, or on and on and on. Treasurers, controllers, so on, want to have a chat about what they’re dealing with, their problems, their pain points, I can gladly talk with them as well as our president David Reeves and many of our vice presidents. We’re really developing, I’d say, the most sophisticated expertise in the country around how to get local or state government into the cloud, leveraging the capabilities, streamlining workflows, and just becoming more efficient, effective, and accountable.

Ryan Morfin:

Maybe a Silicon Valley question, because I know you guys are based in the valley. What’s going on in the tech ecosystem, in your opinion? Elon Musk’s moving over to Texas. What is the view from Silicon Valley? You guys have been doing great things for the global economy, a kind of a Renaissance every time I go there. It’s amazing to see the energy levels. What is the optic today? I know Uber and Lyft have been getting kind of maybe unfairly picked on. Will it continuously be the epicenter of innovation, or do you think it’s going to start to fragment across the country?

Zach Bookman:

So, three vectors, as I see them. One is we’re a hundred percent remote distributed and virtual right now. We’ve got regional headquarters in Portland, Milwaukee, Chicago, Boston, and Dallas. We basically have a moratorium on hiring in the Bay area. It’s extremely expensive. You can’t keep up with the number of vintages of coconut water that are required in your corporate fridges, the whole thing. But actually, we’re finding great talent around the country and moving faster, filling roles and being closer to customers, and our employees are happier. They might want to go home and they grew up in Tennessee or they grew up in Boston. It’s like, “We got you. Go home. We support you.” So that’s happening.

Zach Bookman:

Two, a lot of CEOs, investors I know are fed up, and they’re leaving. A lot are going to Texas. Some we’re going to Wyoming. Some are going to Washington. Those are each no tax states. But a lot are going just elsewhere, and feeling like they’re being unfairly targeted or they’re just not welcome or just not wanted, and the business climate is unfriendly. I certainly see that. I feel that. Just little things, the traffic, the infrastructure in the Bay area, it’s really tough. COVID’s provided a little bit of silver lining in the sense that, how many more hours of your day do you have back that you’re not sitting in traffic just getting ground down? But I know a lot of billionaires and very successful entrepreneurs who are just moving on. I think that poses a real challenge for the state. It doesn’t take too many of them before you’re getting real revenue hits.

Zach Bookman:

Now three, I’m not totally bearish on the Bay area and the tech ecosystem. I am open and very seriously considering moving out because I’m kind of tired of watching my bikes get stolen and tripping over heroin needles in my neighborhood in San Francisco. That said, the ecosystem is strong. The innovation is strong. The investor community is strong and it’s really self-reinforcing. It’s a bit like a network in the sense that once that flywheel gets rolling, it’s very tough to stop. So I think a lot of people are still going. They still want to go, and this could have a dual benefit in the sense that the tech ecosystem stays strong in the Bay area. Prices maybe relax. Traffic relaxes a little bit. But also it’s a big boost to a lot of other tech ecosystems, whether that’s Austin or Boston, or a lot of other places, Seattle, that are rising strong. I tend to maybe have that naive entrepreneurial optimism, but those are my views along those three lines.

Ryan Morfin:

Yeah, no. It is interesting. We’re starting to see a lot of what I’ll call innovation come into the Midwest, cheaper places to live. Just because you’ve been part of the valley for so long, what is the view for people going public in terms of waiting longer? It’s an interesting… I mean, yeah, you guys have been reworking the system. It’s amazing. SPAC mania.

Zach Bookman:

Just whip up a SPAC and knock it out. It’s a wild, wild time. I don’t personally… I look to you and your investment team as to what’s really going on here. But as far as private companies and going public? Look, private companies… The goalposts have been moving, for sure. I think 20 years ago, a lot of companies were going public at 20 million in revenue, and then it was 50 to 70, and then it was hundred, and now it’s looking more like a buck 25, a buck 50 before it really feels like you’re kind of dialed in. And mind you, that’s SaaS revenue. Right? That’s recurring revenue for most of these companies, which itself is a moved goalpost. Because license maintenance, you’re getting three to five bucks for a dollar of SaaS revenue upfront.

Zach Bookman:

So I think you’re getting more mature companies. They’re definitely staying private longer. You’re seeing a massive, almost like the bottle being uncorked right now. And SPACs are playing a big part of that. Also, I think, direct listings. This is a big week with, I think, Palantir and Asana going public on direct listing. The SPACs are interesting. I’ve had my own interesting SPAC experience. Was approached couple of years ago. Very fortunately did not get wrapped up in it, and it turned out to be a totally failed SPAC. Most of these look like they’re succeeding. I’ll be interested to see how those go 6 or 12 months out. There’s a lot of dilution in there. They’re called promoters for a reason. It just feels a little like a lot of companies with SPACs are going public a little early. And when it’s funny money, it doesn’t matter that you’re giving up 15 or 20% of promote, but hard to see how people just don’t care about 10, 20% of a company. I’ve got a little healthy skepticism, I would say.

Zach Bookman:

Now a lot of these are… There’s a lot of good companies and it does feel like technology is gaining steam overall. So we’ve been in a 20, 25 year tech wave. I’m bullish on the next 20, 25 years. But as for what’s going on right now in these special few months, I’ll be eager to see how things look in 6 or 12.

Ryan Morfin:

It’s fascinating. I agree. I think SPACs are a little suspect. I love that comment, “They’re called promoters for a reason.” That’s awesome.

Ryan Morfin:

I would say the direct listing-

Zach Bookman:

Working at the club.

Ryan Morfin:

That’s right. Handing out cards to get into the VIP party.

Ryan Morfin:

The direct listing, if you look at what Google did, and then how much they, when IPO-ed, and then how much appreciation there’s been, then you look at Facebook and how much appreciation there’s been, it makes sense to wait longer before you go public. I think that’s the trend that we’ve been seeing. And so, it’s opening up this new industry. JP Morgan just announced, I think this week, that they’ve got a secondary market trading desk for early stage and late stage venture securities. So it’s like an emerging area of finance, which I think a lot of advisors aren’t paying attention to yet. They will. It’s because companies are going to stay private longer. So if you really want to participate in growth, you don’t want to be at the final cash register. You want to be there earlier stage.

Ryan Morfin:

How is the venture funding community doing? Are VCs starting to pull back, or are they doubling down and playing through the V-shape recovery here?

Zach Bookman:

Also, I’ll try to bucket a few thoughts here because I have a lot. I didn’t actually know that about JP Morgan. But Carta wants to do something. Zimbardo’s well-established in the space. There’s definitely secondary shares. I think it’s a nice trend and I can see… Look, if investors or wealth advisors, if you want to get solid returns or you want to get access, you’d probably need to come down the capital stack a little bit and take on a little more risk if you will.

Zach Bookman:

As for companies, to go public… What my sense of a public markets investor, and I know plenty, want, they want predictability. I want to know this thing’s working. I want to know that you’ve got all the controls and processes in place. I want to know what I’m going to get if I give you my money. What’s interesting about early stage tech companies is you’re sacrificing a lot of that predictability for growth and for attacking a new market or attacking an incumbent or being really innovative and applying new solutions. So I, in my own investing, I’m spending the vast majority of my time in the ecosystem, whether it’s angel investing or even later rounds in friends’ companies just putting money to work because it’s a good company, it’s got nice secular trans, great growth stats. I know they may have an off quarter, or they may miss their number, or they may not have it all dialed in. They’re not ready to go public. I think it’s a trade off well worth making. It’s definitely making a lot of these companies hotter, if you will.

Zach Bookman:

Now, third point. There’s a lot of cash sloshing around in the ecosystem. What I’m seeing among the top institutions, and I’m fortunate enough to have a few of them, or more than a few of them, involved in OpenGov is you better be darn good to earn a high valuation. But if you’re really good, then you can kind of name your price. So it’s a little bit like the best companies are getting these stratospheric valuations, and they’re really working, and they’re definitely going to produce, and the VCs know that. Then most of the others are grinding out rounds at more reasonable prices.

Zach Bookman:

So I’ve seen, if not a correction, a little bit more of, like, reality, healthy skepticism, definitely among the institutions. But I’ve also seen everybody and their mother and their best friend is raising a venture fund, or an angel fund, or getting in the game. So there’s a lot of money out there, but the best funds are still the best funds. It’s not necessarily that they have their pick of the best companies, but they’re finding the best companies and definitely going after them.

Ryan Morfin:

That’s fascinating. We sit outside the valley and just see the money flowing in, but we’re realizing that all the growth and all the appreciation is staying private longer. I tell advisors that you really need to start figuring out a way to get access to some of that growth because income is at record lows. Right? Low interest rates. So you’ve got to reallocate some of that into other buckets. Otherwise, you’re going to get left behind.

Zach Bookman:

It is tough to [crosstalk 00:32:30] a lot of these companies, though. That’s why these top VCs are top, and the top angel investors are the top angel investors. It’s not a closed ecosystem. It’s just kind of an insider, very active game. It takes an edge.

Ryan Morfin:

Absolutely.

Ryan Morfin:

All right. So this is the… Season two, we do this portion of the show. It’s real quick. Yes or no answer. It’s called “the human factor.” I’m going to ask you the same six questions I’ve asked everybody else on the show. Here we go. Here’s the fun part.

Ryan Morfin:

If there was a vaccine for COVID available tomorrow, would you take it? Yes or no.

Zach Bookman:

No.

Ryan Morfin:

No.

Ryan Morfin:

Who wins the election in November?

Zach Bookman:

Biden, by a hair.

Ryan Morfin:

What type of recovery are we in today? Is it V, W, U?

Zach Bookman:

W.

Ryan Morfin:

Anything that you achieve this summer that you’re proud of while you were quarantining and working from home?

Zach Bookman:

Personally or professionally?

Ryan Morfin:

Both.

Zach Bookman:

Professionally, OpenGov launched it’s fully cloud-based ERP. Fully integrated, and we’re off to a rip roaring start with that, stitching all the suites together. It’s really exciting, and the company’s humming. So I’m thrilled, and really proud of our 250 employees and the incredible, not just work ethic, but teamwork.

Zach Bookman:

Personally, I’ve been very fortunate to have some travels. I like to climb mountains and I’ve climbed up bunch of mountains in the past couple of months from the Wind Rivers in Wyoming and the Middle and South Teton to… I’m in Colorado at the moment and taking out a couple of fourteeners just to stay healthy and stay refreshed.

Ryan Morfin:

That’s awesome. That’s very cool. Tetons are beautiful, I hear. I’ve never been.

Zach Bookman:

Gorgeous.

Ryan Morfin:

Any silver linings you see in the economy going into 2021?

Zach Bookman:

I think this work from home stuff is driving people crazy and it’s posing pretty serious public health issues. I also see the rise of telework video conferencing as total game changer. I look back at my calendar at the stuff I used to travel for, and I’m now flabbergasted. I’m like, “I was going to fly to DC for that cocktail party. What was I thinking?” I think that’s just a net positive for a lot of families, a lot of people’s health, and frankly, their business lives. I get a lot more hours to focus on my business rather than missing flights and airports and staying in bad motels.

Ryan Morfin:

The bad motels. Terrible. I’m with you on that.

Ryan Morfin:

Anything that you’re watching, listening to, or reading right now that you’d recommend to the audience?

Zach Bookman:

I just read, and I’m sure a lot of your members have read it, but I read Titan. I’ve been reading a lot of biographies this summer. Just gone on a little kick. Chernow’s biography of Rockefeller, found it, not kind of erudite and extremely well-written, but fascinating. I’m reading Katherine Graham’s Personal History. I read, you know, lot of Wall Street guys. Schwarzman, and T. Boone Pickens, and kind of loving digging into people’s stories, seeing how they’ve battled adversity, and what rules and principles they applied to producing success, both professionally and personally. I’ve been having a lot of fun with that.

Ryan Morfin:

Fantastic. Well, we’ll be reading your bio, I’m sure. You guys are kicking butt. I really appreciate you coming on the show. OpenGov.com, for any of our advisors, again, this is Zach Bookman, CEO, helping governments, state and local, get into the 21st century. Thanks so much for joining the show.

Zach Bookman:

Really appreciate it, Ryan. Thanks everybody.

Ryan Morfin:

Bye-bye.

Ryan Morfin:

Thanks for watching Non-Beta Alpha. Before we go, please remember to like and subscribe on Apple podcasts and our YouTube channel. This is Non-Beta Alpha. Now, you know.

Speaker 3:

All price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published, or reproduced in whole or in part. The information contained in this podcast does not constitute research or recommendation from Non-Beta Alpha, Inc., Wentworth Management Services, LLC, or any of their affiliates to the listener. Neither Non-Beta Alpha, Inc., Wentworth Management Services, LLC, nor any of their affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability, therefore, including in respect of direct, indirect, or consequential loss or damage is expressly disclaimed. The views expressed in this podcast are not necessarily those of Non-Beta Alpha, Inc. or Wentworth Management Services, LLC. Non-Beta Alpha, Inc. and Wentworth Management Services, LLC are not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast.

Speaker 3:

In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Non-Beta Alpha, Inc. or Wentworth Management Services, LLC to that listener nor to constitute such person a client of any affiliates of Non-Beta Alpha, Inc. or Wentworth Management Services, LLC. This does not constitute an offer to buy or sell any security. Investments in security may not be suitable for all investors. An investment of any security may involve risk and the potential loss of your initial investment. Investors should review all risk factors before investing. Investors should perform their own due diligence before considering any investment. Past performance is not indicative of future results. Investment products, insurance, and annuity products are not FDIC insured, not bank guaranteed, not insured by a federal government agency, and may lose value.

 

Share This Episode

Subscribe To Our Podcast!

COPYRIGHT 2020 ALL RIGHTS RESERVED. THIS DOES NOT CONSTITUTE AN OFFER TO BUY OR SELL ANY SECURITY; INVESTMENTS IN SECURITIES MAY NOT BE SUITABLE FOR ALL INVESTORS. AN INVESTMENT IN ANY SECURITY MAY INVOLVE RISK AND THE POTENTIAL LOSS OF YOUR INITIAL INVESTMENT. INVESTORS SHOULD REVIEW ALL “RISK FACTORS” BEFORE INVESTING. INVESTORS SHOULD PERFORM THEIR OWN DUE DILIGENCE BEFORE CONSIDERING ANY INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INVESTMENT PRODUCTS, INSURANCE AND ANNUITY PRODUCTS ARE NOT FDIC INSURED/NOT BANK GUARANTEED/NOT INSURED BY A FEDERAL GOVERNMENT AGENCY/MAY LOSE VALUE. SECURITIES OFFERED THROUGH CABOT LODGE SECURITIES, LLC [CLS] MEMBER FINRA / SIPC 200 VESEY STREET, 24TH FLOOR, NEW YORK, NY 10281, 888.992.2268.

Recommended For You

View Transcript

Ryan Morfin: Welcome to Non-Beta Alpha. I'm Ryan Morfin. On today's episode, we have Pini Althaus, CEO of USA Rare Earth, talking to us about the supply chain glut in rare earth minerals. This is Non-Beta Alpha.

Ryan MorfinPini, Welcome to the show. Thank you for coming on today.

Pini AlthausThank you for having me, Ryan. Good to be here.

Ryan Morfin: So you're an investor and a miner in rare earth minerals. Can you share with our listener base, what are rare earth minerals? Why are they important and why is there a geopolitical race going on globally?

Pini AlthausYeah, I mean, rare earths are an extremely ubiquitous part of all advanced manufacturing or technology manufacturing today's day and age. Several years ago, I had not heard too much about rare earths myself. I was not that familiar with it and being involved in this sector, in this company, for the past few years has given me an education of course. And I mean, I was sad to hear that 50% of all imports into the United States contain are earth elements and it runs the gamut from consumer electronic devices that we use every day. Our cell phones, our laptops, most communication devices, medical equipment. So there's a tie with COVID, which we can touch on at your discretion. Electric vehicles, defense equipment. So pretty much anything or everything high tech today has a rare earth element or critical minerals contained within them.

Ryan MorfinAnd what are some of the names of some of the more important rare earth? I know there's lithium for batteries, but what else is considered in this category, critical?

Pini Althaus: Yeah, so lithium is a separate category to battery material. The rare earths are 17 rare earths. The four, let's call it, key rare earths that we're focused on at our company, the four rare earths that go into the permanent magnets. And these are the magnets that are found, there are a number of them in your back of your cell phone or an iPad. But if you look at an F35 striker jet, you've got about a ton of rare earth magnets in those. And we've got two heavy rare earths and two light rare earths is part of the permanent magnets. You've got dysprosium, ytterbium are the heavies, and then you've got neodymium, praseodymium as the two light rare earths. So those would be key rare earths that are the focus.

Ryan MorfinAnd you use these in, I guess, in military applications as well, but historically, where has the United States sourced the rare earth for supply chain?

Pini AlthausYeah. And that's the shocking part. We've been securing those materials from China. So China controls the rare earth sector and has done so for the past 30 years or so. And it was a significant misstep on the part of the United States, allowing China to have this control. And actually this wasn't a question of China coming in and doing anything nefarious as far as stealing IP or anything. The US government made a conscious decision about 30 years ago to allow China to come to the United States and acquire the processing capabilities for rare earths. So just as part of some background, you've got the rare earth materials containing various mining projects, but once you extract them, you have to then process them and they go through certain phases before they get to the magnet phase. And China, the thought process was let China do the mining, let China do the processing.

Pini AlthausWe don't need to do that here. And we'll buy the materials from China cheaply and the premier of China at the time, Deng Xiaoping made the comment, he said, "The Middle East has oil. China has rare earths." And unfortunately we weren't smart enough to understand what he was saying. And the Chinese understood that the future of manufacturing is going to revolve around control of the rare earth and critical mineral supply chain. So if you think about it today, Ryan, we cannot build... Forget about consumer electronics and medical equipment. We cannot build the equipment that the US Pentagon or the US armed forces require, whether it's F35 fighter jet, Tomahawk cruise missile, communications equipment, without going to China and obtaining those materials. And it's obvious to all that this should be extremely alarming. We've seen China use this as a weapon, if you will, as far as how it interacts with other countries back in 2010, when there was a dispute between China and Japan on the East China Sea.

Pini AlthausSo China cut off rare earth exports from Japan for 40 days. Japan obviously being a significant user of rare earth elements for their high-tech manufacturing sector, that was stopped after 40 days. But in fact, it was President Obama that first made the United States aware of this, formed a division within the Department of Defense to handle this issue, but not much has happened. And we continue to be relying on China for these materials. And what has been made about trade war with China and whether the trade war is really the impetus for China withholding rare earth exports. And that is a huge misnomer. Whilst China had been talking or implying that they would cut off rare earth exports, the truth of the matter is that China, under it's made in China, 2025 mandate, its belt and road initiatives and others. And you seem to control the critical minerals and rare earth supply chain so that it can continue its dominance as a manufacturer or a global supplier of these materials and finished products.

Pini Althaus: It's the backbone of its economy. And in fact, China has become a net importer of rare earths from different countries like Miramar and others. So with that, they are decreasing the exports to countries like the United States, Japan and others.

Ryan Morfin: And was it ever a risk that the Chinese were going to turn off the exports of rare earth to the US during the trade war? How close were we to that? And was that ever some saber rattling that went down during trade negotiations?

Pini AlthausYeah, I think it was saber rattling. I think it would be paramount to an act of war. I can't say with any authority that that would not happen, but it would be probably, aside from war itself, it would be one of the most significant acts of war cutting the United States off from the ability to procure rare earths. But that being said, I mean, if you look at, as an analogy, the oil and gas sector and the reliance of the United States had for many, many years on OPEC countries to supply us with the oil. And we had embargoes and we had price manipulation by OPEC. This is far more significant given the ubiquity of where these rare earths go. And yes, we're always under the threat that China can cut off exports under the guise of a trade war or for any other nefarious reasons.

Pini AlthausBut I think even more importantly, to just as the natural run of the course of things with regards to their business and their desire to maintain themselves as the global leader in manufacturing and exporting of goods, China is in a position now where it actually requires these materials for their own domestic consumption and can legitimately cut off rare earth exports by stating that they need it for manufacturing and that would actually be somewhat correct. So we're in an extremely dangerous position here with this reliance on China. And it wouldn't just be China. If it was another country, it would be similar issues, not to the same extent, but reliance on one country for these materials is dangerous.

Ryan Morfin: And it's been mentioned in the past that in 2010, China flooded the market to really kill all the competitors in the rare earth mining industry. Where was the World Trade Organization during this period? And how did that play out and how does that set the chess board for China to run the tables?

Pini Althaus:

Yeah. So the WTO stepped in when China cut off rare earth exports from Japan, I think it lasted for about 40 days because the US and Japan protested the WTO, and they stepped in and China resumed exports. While I'm not an expert on these trade matters, one thing that I am aware of is that one of the reasons why China had to resume the export of rare earths was it did not legitimately need all the rare earths for domestic consumption. So therefore it was a nefarious act, if you will, to cut off rare earth exports. Now that has changed, which means China have to cut off rare earth exports today, they have a legitimate case to say that they require these materials. There's a shortage of these materials and they require them for their own domestic purposes. It is the backbone of their economy and there's very little we could do about this today, which is why it's becoming an even more urgent issue.

Ryan Morfin:

And the US government started stockpiling some of these after that incident. Can you talk a little bit about what DOD and DOE has done to start making sure that there's not a critical supply shortage going forward, and is it enough?

Pini Althaus:

Yeah, again, there is a national defense stock pile, and there are materials still that the United States needs to procure in order to shore up its stockpile. There are magnets, the finished magnet products as well, the United States government needs to stockpile. Again, there's a limited amount that the United States government has. It requires approval from Congress, whether it's in the NDAA or other approvals from Congress, to allocate monies for the national defense stock pile of these materials. That being said, there's no endless supply of these materials. And unfortunately, the apparatus, the way it's set up right now with the US government, it's going to continue to require having a secure supply chain of those materials for many, many years to come. So it's not a question of stockpiling for 10 or 20 years, and then this complacency and saying, we'll kick the can down the road. But keep in mind as well, Ryan, that US government accounts for low single digits of overall rare earth imports into the United States.

Pini Althaus:

We're talking about defense contractors, we're talking about the manufacturing sector. The direct impact this has on the economy, jobs, the automotive sector, and others is significant. So it's not just limited to the United States government. If you look at over the past couple of weeks, the sanctions that China have put on Raytheon, Boeing, Lockheed, et cetera. I mean, the question is where are they going to get those materials? And if we go beyond that, you need rare earths for the 5G network. Now that Huawei has been banned from installing the network, not only in the US but other countries, we have to have the ability to get a secure supply of these materials as well. Which currently, again, trying to control the hundred percent. So it runs across the board, both for government, defense and manufacturing in this country.

Ryan Morfin:

Well, and so help me paint a picture for our audience. Does China have all the mines for rare earth, or they're the only ones who started mining it? Or are their mines globally dispersed and nobody's been doing the actual infrastructure to do the mining?

Pini Althaus:

Yeah. So finding rare earth projects or rare earth elements is not the difficult part. It's finding them in significant quantities that makes a project economically viable. And part of that consideration are the environmental rigors that companies in the West have to adhere to. And China, even by their own admission, have had a complete disregard for mining these materials and even for processing these materials. And in fact, just the last week or so, the BBC did an expose on this, 60 Minutes has done an expose on this. But the Chinese have not denied this and have talked about cleaning up their act, but it has an effect on the bottom line for what the costs of mining and processing are if you have no environmental standards to adhere to. So China have exploited those rare earth projects they have, primarily in inner Mongolia, and have brought a number of projects online and quite quickly, and in a significant way, with a complete disregard for the environment.

Pini Althaus:

So it was seen as an environmental no-no in the West for many years. Now, what's happened over the past few years is you're starting to see rare earth projects in different parts of the world sprout up. You've got the Mountain World project in Australia owned by Linus, which is a producer of Nd and Pr, neodymium and praseodymium. So two of the light rare earths. They may have some heavy rare earths coming online at some point in time. And you've got Arafura, which is another company in Australia that we're working with to assist them with their processing so they don't have to send the materials to China for processing. But really these are a drop in the bucket for what the requirements are for the United States. And certainly what the requirements are for allied countries, the EU, et cetera. So there is a race, if you will, worldwide to start bringing projects online. The Chinese are very active in trying to secure assets outside of China.

Pini Althaus:

So in Africa. They have ownership of a project in Greenland. So there is somewhat of a race. The Australian government has stepped in and has started limiting the ability for China to own, or have ownership in, or off takes for the Australian rare earth projects. And that's part of the strategic Alliance between Australia and the US. Canada, similar thing as well. There are a number of projects that are looking to come alive, but these projects are, for the most part, will take many, many years to come online. We have to expedite the process. We have to assist with a [inaudible 00:14:41] supply chain and the domestic rare earth sector, because previously investors have been scared off by things like China flooding the market, which is not a possibility at this point in time, given that China can't actually afford to flood the market. They are already very heavily subsidizing their mine to magnet supply chain there.

Pini Althaus:

This is more now a case of being able to get production from non-Chinese sources so that the United States and allies have a viable, secure supply chain of these materials. And it's a concern worldwide. We speak to governments all over the world, and we're all facing the same issue. Some more than others, especially countries like Japan, that don't have their own rare earth projects there and are reliant on Australia where they've made some investments there. And in the United States, they've made an investment recently in Africa. So there is this race, if you will. And I think we've got a five-year window here to at least stand up a few projects worldwide. Otherwise we've lost this race and we will be dependent on China for many, many years to come. And Ryan, it's a bit of a hypocrisy. If you look at it where you've got materials going through clean, green energy applications, like electric vehicles, wind turbines, et cetera.

Pini Althaus:

That we're sourcing these materials from China, where they've, again by their own admission, has been complete environmental devastation to water bodies around these mines and processing facilities, to the communities. People have been getting sick around these projects yet we're putting these materials into our electric vehicles or wind turbines. It makes no sense at all. And people are starting to wake up to this. And that's why the sector is starting to see a lot of support come out of Congress and bi-partisan support. And in fact, it's one of the only bi-partisan issues right now in Washington. And it's good to see that some things decided to move in the right direction.

Ryan Morfin:

And is there a special process? You talk about the expense, is it really difficult to mine these? You have to go through a special chemical process to extract and clean and purify. Is it a lot harder than, say, gold or silver or some of the other, we'll call, more traditional elements?

Pini Althaus:

Yeah. It's all about the processing to some extent. So if you look at MP Materials in California, which used to be Molycorp before they went through their bankruptcy. They are a miner of Cerium and Lanthanum, which are two of the light rare earths, the lower valued light rare earths. Given that they do not currently have processing technology, they are sending those materials to China for processing where China is tariffing those heavily. Linus is also, they're doing their processing work in Malaysia and elsewhere. So it's really about the processing at this stage. One of the things that we've done, after we put out our PDA last year with our upgraded resource, which now includes a significant amount of lithium. We make a decision that, based on the test work that we had done around our processing methodology, that we were not going to send our materials to China. That it's paramount for us to do this work in the United States and in a collaborative effort as well.

Pini Althaus:

We've been asked by some of our investors, "Well, why would you be looking to help other projects with their processing?" And the answer is simple. There's no one project or one company that's going to put China out of business or make a dent, or somehow be able to take care of the overall demand worldwide for rare earths and critical minerals. And it's very important for us to have processing capability in the West. So that was the impetus for us opening up our own rare earth and critical minerals processing facility earlier this year, which we did in Wheatridge, Colorado. And in fact, we've made some significant progress on the method that we're using for this. And we're starting to collaborate with Australian companies, Canadian companies. We're currently talking to a group over in Europe as well, because this has to be a collaborative effort.

Ryan Morfin:

How does Europe solve for these problems? Do they have this better under control than the US?

Pini Althaus:

No, they're in a far worse position than we are. The EU commission recently put out a report, I think, a couple of months ago that the requirement for rare earths is going to increase tenfold within a short period of time. Lithium 18 times. They don't really have rare earth projects. Again, there are the Greenland projects, which people have heard in the news recently. Those need to further development work so they don't have rare earth projects ready to come online there. There are a couple of lithium projects that are spread around Europe, but for the most part, Europe is in an even more precarious position. If you look at Germany with the auto manufacturers, you look at the big companies like ThyssenKrupp and others, all these countries and companies are looking for alternatives to China, because we've already seen in the news about China withholding or reducing exports of some of these rare earths that are required for these industries.

Ryan Morfin:

And you mentioned earlier the regulatory posture of the US makes it difficult to mine. Is it becoming a more bi-partisan issue that we need to maybe relax some regulation around the mining exercise, to incentivize private sector to come in and start producing this? Or is the Republican party versus the Democratic party on two separate pages of music?

Pini Althaus:

Yeah. Good question, Ryan. I mean traditionally the Republican party is obviously being more pro-mining and in favor of less regulation when it comes to these things. With regards to our project, we're on Texas state land. So we don't trigger federal environmental permitting at this point in time. And obviously Texas being Texas, a mining state and oil and gas state, things are a lot easier in Texas than they are on projects on federal land where the Bureau of Land Management controls the environmental process around that. But the thing is here, and I don't want to step into what other companies are doing, et cetera, but we do need to be reasonable about allowing projects to come online if they're adhering to environmental standards that are acceptable worldwide. And what we do know, is that China is destroying the environment and cities and water bodies around their mines and processing facilities.

Pini Althaus:

We have standards here in the United States, and I think what we need to do is make it easier for companies to mine, while at the same time protecting the environment. And there are ways to do that. And we're definitely seeing buy-in from Congress, from both sides, with regards to looking how we can stand up a secure supply chain. And, obviously under the Obama administration, they had very strict regulations when it comes to mining. And that's changed under the Trump administration. Hopefully what we start to see is some normal middle ground that'll allow other projects to come online.

Ryan Morfin:

And typically in these rare earth mines, is it amalgamation of different minerals that are all consolidated together and you have to separate them out? Or do you ever find pure play, Europium, I can't even pronounce some of these. Gadolinium, Cerium. I mean, are they all mixed together and you've got to filter and sift them through, or are they pure play mines?

Pini Althaus:

No, they're generally they have a mix. So they're polymetallic projects. They have a number of different materials. Some projects, you more to what we call the light rare earths like MP in California or Linus in Australia. Our project is actually on the opposite end of the spectrum. We have a very high concentration of heavy rare earths. That being said, we do have to go through a process of separating these materials. But the case of our project where we've got 30 materials. We're not going to produce 30 materials. We're not going to market 30 materials. So what we're doing is we're focusing on the key materials that are marketable, that we need for permanent magnets, lithium as well, and working on the separation and the optimization of those materials in particular. But we're all faced with the same processing challenges and that is something that can't be set.

Pini Althaus:

There's no easy way to do this. There are different technologies that have been used in different parts of the world. So predominantly there's a process called solvent extraction, but it's big, it's bulky, it's not benign. It's a bespoke solution for one particular project. So it doesn't work for feedstock from other projects. What we've done is we're using a processing technology that's actually been around since the 1940s. It was part of the Manhattan Project. It's called continuous ion exchange. In fact, the Chinese use it to increase the purities from 99.99 to four nines, five nines, and even six nines. So for some applications you require higher purity levels. It's a far easier processing method to scale up and to take feedstock from other projects. In fact, we've demonstrated for the Department of Energy that we can take coal waste from Pennsylvania and do high purity separation of rare earths using our processing methods. So it's not a step that can be skipped unless one needs to send it to China for processing, which is not going to help us with our objectives here.

Ryan Morfin:

How many other, we'll call it, going concerns on any other businesses that are doing this, that are trying to, I guess, start the development of these mines. Are you guys one of a few or are you one of many? And is it an international or just a US game? Who's leading the charge at going after this?

Pini Althaus:

Yeah, well, I'd say the Australians are leading it outside of China right now. You've got some really good projects in Australia. Again, more skewed toward the light rare earths. There's one more heavy rare earth project in Australia, which is not yet producing. The United States, you've got MP Materials, you've got Ucore in Alaska, you've got the Bear Lodge project in Wyoming, which is also another light rare earth project. So as far as a heavy rare earth project that looks like it will come online in the near term, that would be our project. In Canada there are a couple of projects there as well, and again, more skewed toward the light rare earths. But we really need to get as many of these projects online as possible. Because again, I don't see it as competition. We all have a problem doing supply agreements or offtake agreements for our materials.

Pini Althaus:

In fact, one of the things that we're going to have to consider is looking at potentially scaling up our production, based on the demand that we're already starting to see. And I think other companies would find that as well. So it's all about the economics of the project. You have projects that were economically viable back in 2012 or rare earth prices with 35% or so higher than they are today, and are not necessarily viable today. So that's the challenge as well, economically viable projects. And we've got to get as many of them online as possible. It takes many, many years. I mean, our project has had over $70 million put into it to get to where we are today, and we're close to getting to the production scenario. It all revolves around processing at this point in time.

Pini Althaus:

We'd be very happy to see another couple of projects come online, because this is extremely important for national security and for the economy as well. I mean, if you think about it, Ryan, if you've got a billion dollars of rare earth materials, that translates into a trillion dollars or I should say trillions of dollars of finished product. So you've got a magnet in your phone there that's worth a couple of dollars and the cell phone's a thousand dollars. And electric vehicles and defense applications even more.

Ryan Morfin:

Yeah, everyone has one of these iPhones now, and there's tremendous amounts of rare earth on the circuit boards here. And I think people take it for granted that that supply chain is not secure right now. So one question for you, there's talk of this maybe medium term to longterm, but there's talk about mining in space. Do you think that's a feasible option in the longterm, medium term? What are your thoughts on that?

Pini Althaus:

No, that's just ridiculous. I mean, we're trying to find ways to make mining on earth economically viable. I think the cost of going up to space would be more than what our capex will be bringing our entire project into production. I mean, we've got about a 350 to $400 million capex to bring 130 year mine life into production. I'm not an aerospace expert, but I think sending a rocket, building a rocket ship and sending it up, I think maybe on the fuel alone, you could bring a couple of projects into production. So unless we have a fortunate situation or an asteroid lands on earth, and fortunate if it lands somewhere where we don't care, I don't see how that happens. And if it's big enough, it's a problem as well. It's nonsense. And even, options aside of the deep sea mining for rare earths, I mean, you've got all sorts of environmental issues around that as well. I think we need to look at projects that we can bring online, that can be done so in an economic way, that can be done so in an environmentally responsible way.

Pini Althaus:

I mean, one of the things that we've done at our project is we've got in excess of 60% of the materials that have come out around top, will have a clean green energy applicability to them. So we're using the benign processing method. We're going to be using renewable energy on site. In fact, we will likely be putting a solar farm on site as well. We've talked to a couple of companies that have approached us about that, and we'll be a net producer of power for the surrounding area. So there are ways to do it which don't affect the environment. Obviously if there's a project that's situated on a sensitive area, that's a unique situation for that specific project. We've seen it with the Pebble project, which is not a rare earth project. The Pebble project in Alaska where their environmental concerns is we've been recognized by both Republicans and Democrats, but we have to be reasonable about the projects that don't have environmental concerns.

Ryan Morfin:

So Pini, in season two, we ask all of our guests a series of six questions. They're usually, yes, no questions, but trying to take a survey of our conversations. And if you want to add a little context to the yes or no, feel free, but here goes the first question. If there was a COVID vaccine available today, would you take it?

Pini Althaus:

Yes.

Ryan Morfin:

Who do you think is going to win the election?

Pini Althaus:

Which election?

Ryan Morfin:

The US election.

Pini Althaus:

Well, I think it looks like Joe Biden's going to win it, but I think what happens, if we go past January six from my understanding is that the house will vote on it and it's one vote per state. But I don't know if I see it getting there at this point in time. I really don't have a crystal ball.

Ryan Morfin:

Third question. What type of economic recovery are we in? What type of shape is it taking? A V-shape, W, U, L?

Pini Althaus:

Yeah, I think 2021 is going to be challenging. I think we've been, and rightly so. I mean, we've had no choice as of almost every other country. We've been printing money for the past year because of COVID. And I think we've got to brace ourselves that, at some point in time, the chickens come home to roost. It was a necessary step. People needed it on an individual level. Businesses needed it as well, but I think we've got to do whatever we can to stimulate the economy, give people confidence to go out and work again, employ people. So I think we've got to watch ourselves, especially in 2021. And I have some concerns, but long-term, I think the approach in the United States is a healthy one.

Ryan Morfin:

During lockdown this summer and quarantine, was there anything in particular that you accomplished that you're particularly proud of?

Pini Althaus:

Yeah. A great amount of family time, which, if you would've asked me a few years ago if I could sit at home and be at home for six months, I would have told you absolutely not. I wouldn't be able to do it for six days, but it has... I'm sure it's done this with a lot of families as well. It's brought families together. We had a baby actually last year on Thanksgiving. So I was doing a lot of travel at the time and thought I wouldn't get to see my daughter in her first year or couple of years too often. And being home with her every day is actually been just the most amazing experience. So thankful at least for some silver lining in COVID.

Ryan Morfin:

Are there any silver linings that you see in the economy going into 2021?

Pini Althaus:

Yeah, I think we've gone through an absolute beating and it looks like we've got the ability to come out of it. And I think that's a testament to how strong the economy was built up in the years preceding COVID. So overall I remain an optimist. I mean, we are a country built on opportunity and going out and making it happen. And we're not a socialist country sitting and waiting for people to send us paychecks or wealth distribution or anything like that. I think the American dream still lives on. I think if you go out and you're willing to work and put your head to it and heart in it, I think we do have the ability to climb out of it. So if we look at what the economy is doing over the past few weeks, it looks like it's starting to rebound. And to me, that's assuring because it could go completely one way as well.

Ryan Morfin:

And the last question is, is there anything that you're watching, or listening to, or reading today that has been impactful on your thinking that you'd like to share with our audience?

Pini Althaus:

Yeah, that's a good question. I think it's been more personal stories. The news, I sort of take that in context or with more than a grain of salt. In some cases stay off the news channels for a number of days at a time, it became quite repetitive. But I think on the personal side, talking to friends, my family's all back home in Australia, they've just come out of 110 day lockdown, which we can't relate to that. It's been very trying on them and seeing the fortitude that they've had to come out of that and stay intact. I think the mental health issues that will come out of COVID are going to have a far longer effect than the economic issues. I think we're going to have to focus on mental health issues in this country for a long time to come.

Pini Althaus:

The impact on kids has been significant with regards to lockdown or remote schooling, et cetera. But to see people come through it. I think it's a testament to people in general and to the country and other countries as well, to see got that fortitude and survival instinct to try to get through whatever adversity we can. So hearing the personal stories, the challenges that people have gone through, I think it's made me a lot more aware of things that I have to be thankful for and where we can help out other people as well. I think we have to be united going forward because there are things...

Pini Althaus:

I think one of the things that COVID has shown us is we can get into this complacency and life goes on and we go one day to the next. And all of a sudden we get hit by something that affects everybody equally. I mean, COVID, whilst there were groups of people, whether it was the elderly or people with underlying health conditions, that got hit the worst. I mean, we all got hit in some form or another. So really, this should be something that unites us, not divides us.

Ryan Morfin:

Well, Pini, I appreciate you coming on today to talk to us a little bit about the supply chain crimp on rare earth and we'll definitely keep an eye on it and would love to have you back in the future.

Pini Althaus:

Thank you, Ryan. Thanks for having me.

Ryan Morfin:

Absolutely. Thank you. Bye-bye. Thanks for watching Non-Beta Alpha. And before we go, please remember to like, and subscribe on Apple podcasts and our YouTube channel. This is Non-Beta Alpha, and now you know.

 

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

read more

Want to join our show?

Would you like to be a guest on the Non-Beta Alpha Podcast? Please click below and let us know that you are interested in being a guest on the podcast and we will get back to you shortly.

Skip to content