Never take no for an answer. The story of the CIA’s first Disabled Case Officer Richard Diaz.

View Transcript

Ryan Morfin:

Welcome to Non-Beta Alpha. I’m Ryan Morfin. On today’s episode we have Rick Diaz, a CIA case officer who teaches us of why it’s important to never take no for an answer. This is Non-Beta Alpha.

Ryan Morfin:

(singing)

Ryan Morfin:

Richard, welcome to the show. Thanks for joining us today.

Richard  Diaz:

Thank you very much.

Ryan Morfin:

Well, it’s an honor to have you on, sir. You served our country with distinction at the CIA, that you were a case officer, but your journey is really compelling. When I first heard it, I knew I had to have you on the show to tell your journey. Would you mind giving us a little bit of your background and a little bit about where you come from and then how you got into the field of work that you started in?

Richard  Diaz:

Yeah, definitely. Well, I’m the first CIA case officer in the history of the agency to get through the qualification course and the weapons qualification course to be an operations officer with a disability. I’ve got a brachial plexus injury to the right arm. I’ll talk to you a little bit more about that, but kind of give you a bit of a background on myself and get to it in understanding where I come from and my journey, like you said, it’s been a long road to get to where I am. Having to break through roadblocks every step of the way. Never taking no for an answer, which is the essence to my success. It took me to some of the most dangerous areas around the world to do the job that was extremely difficult for a person with two arms, much less one arm.

Richard  Diaz:

I’ve been fighting, taking risks my entire life. One thing I have learned is never taking no for an answer. Part of that attitude is also the essence of the most effective wealth managers or businessman. As a son of a poor Latino migrant worker, I knew all too well what it was like to struggle, living in poverty, and suffering the backlash against migrants of the 1970s. I saw my father struggle to put food on the table, keeping us from the fields. I saw him take us from a one-bedroom house, living with nine family members down in our home, or him going from a meter reader to a senior corporate salesman before he died. Never taking no for an answer, and neither did I.

Richard  Diaz:

This was a fight that was bred into me, which followed me during my career in the US Air Force, where I flew spy missions over Russia and other denied areas during the Cold War. I worked undercover targeting the Turkish Mafia, to surviving a run-in with the 17 November Terrorist group during Desert Storm, which prepared me for my life in the CIA and the struggle to become their first disabled case officer.

Richard  Diaz:

But that road was fraught with obstacles and sometimes with outright disdain for what I was trying to do. My efforts were initially met with off-handed remarks, which turned into direct hostility as I neared my goals. Being told I don’t belong and I should quit, then afterwards being bullied by some, but I persevered. Not taking no for an answer.

Richard  Diaz:

When people see me-

Ryan Morfin:

So-

Richard  Diaz:

… Yeah, go ahead.

Ryan Morfin:

… No, no. I was going to ask you, what part of the country were you from when you were raised with your family? Tell me a little bit about that experience because a lot of Americans don’t really hear that experience and I’d love to share that.

Richard  Diaz:

Sure. My family is from McAllen, Texas, down in the Rio Grande Valley. My family would move from state to state, depending on the picking seasons. Whether it was Ohio, Michigan for the apples, and even picking there in Central Texas. I think it was cotton. They were working on that as well. They lived in migrant camps, went to migrant schools. My father made a decision that that was enough for us, that he didn’t want us to have to live through that, so he moved us to Peoria, Illinois where we lived with nine other family members in our home until we could figure out how to get out of that.

Ryan Morfin:

Peoria’s a lot colder than McAllen, Texas. I’m sure shoveling snow is not one of your favorite things to do. It’s definitely not one of my favorite things to do.

Richard  Diaz:

No, I hated it. It was definitely cold. But even that life itself was definitely a learned thing. Just think about it. You had nine family members that lived in a one-bedroom house, one bathroom. We had people sleeping on tables, on floors, but that’s just the life that we had at the time. My father did everything he could to keep us from going in the fields and having to do that for the rest of our lives and he did it.

Ryan Morfin:

Where was he from originally? Was he from Southern Texas or was he from Mexico?

Richard  Diaz:

West Loco, Texas, down along the border. That’s where my mother was from as well.

Ryan Morfin:

Got it. You guys ended up in Peoria, Illinois and I guess you got involved in public school there. Tell me about it. How long did you guys stay in the Midwest?

Richard  Diaz:

We were in Peoria for a few years, but then we ended up moving to Granville, Illinois. My father eventually got a job as a salesman and he eventually moved up and we ended up moving to South Milwaukee, as he worked his way up into the company. Then, that’s where I ended up going into the Air Force, from there.

Ryan Morfin:

How was it being Mexican-American going into the US Air Force at that period of time? Any issues, or did you feel like you were able to get in and do whatever billets you wanted?

Richard  Diaz:

Well, yeah. At that time, I didn’t have a degree, so we were pretty open to sending me wherever I wanted to be. That’s where I wanted to get in the FBI. I knew that’s what I wanted, so I volunteered to join the Air Force Security Police Law Enforcement. I thought that was a good step up to help me get into the FBI at that time.

Richard  Diaz:

But yeah, it was a struggle, just first getting in and trying to figure things out. But it was pretty good. It was great.

Ryan Morfin:

Is it kind of like the shows on NCIS or is it more like base patrol and all that, when you’re in the Air Force Security?

Richard  Diaz:

Well, this was kind of funny. When I first got in, the recruiter showed me this film of these guys, security forces, fighting terrorists, shooting guns, driving the Humvees and doing the whole thing. I said, “Great. That’s what I wanted.” The recruiter looked at me. He said, “Okay. Are you sure about that?” I said, “Yeah, that’s what I want to do.” Six months later I find myself guarding a B-52 at 2:00AM, 30 degrees below zero in Northern Maine. There was not a single terrorist in sight. I said, “Enough’s enough.”

Richard  Diaz:

But after that, I did finally was able to do a joint task force with the Office of Special Investigations overseas, where I worked undercover narcotics and targeting the Turkish Mafia for black marketing in Turkey. I eventually got to that, but it took some time.

Ryan Morfin:

Very cool. When you left the Air Force, you said you wanted your next step to go into the FBI, but what happened after you left the Air Force?

Richard  Diaz:

Well, when I was in the Air Force, this is when I got injured. My whole goal was to get into the FBI. That’s what I wanted to do. That’s why I went into law enforcement. I finally got to do an interview with the FBI. I did the first interview out of an office in Omaha and I remember doing that interview. It was the strangest interview I ever had in my life. It was a panel interview and it was all middle-age white men who gave me the interview. Nothing to say against that, but most of their issues were concerning my race, for some reason, and whether they think a minority should be moved up within the FBI, what their position should be, and the types of jobs. I kind of walked out of there, knowing I didn’t get the job, at first. Then, about a month later, the office was sued by a bunch of Hispanic officers for racism. There was a big issue with that. It was all over the papers. After that, they finally changed the way they did their job interviews.

Richard  Diaz:

Then, when I went to Texas, I did that same interview and I ended up getting into the FBI. That was about two weeks from the FBI Academy when I was out jogging alongside of the road in West Texas in the desert when a truck ran off the road and hit me at about 62 miles an hour, giving me a severe brachial plexus injury. I was almost killed. It was a hit and run. They just left on the side of the road. After that, I was going to have surgery. It was about two weeks after the surgery when my father was killed in a plane crash, so I couldn’t have the surgery. I had to delay it, which caused the permanent injury to my arm that I have right now.

Richard  Diaz:

So, I got kicked out by the Air Force and the FBI told me no. I said, “You know what? I’m not giving up.” That’s why I eventually made it to the CIA.

Ryan Morfin:

You had a traumatic injury and then a traumatic family tragedy. Then, during that period of time, how long did it take you to, I guess, rebuild your morale or your focus to go back into another government area?

Richard  Diaz:

It was a very difficult journey. It was very stressful trying to deal with the disability, trying to figure things out, how to do things with one arm. Everything from playing with my kids to driving a car and whatever else I had to do. I had to figure it out. On top of that, the stresses of trying to find work. I had found a temporary job, which I ended up not getting. I had for a little while, then I was unemployed for about nine months. It was a big struggle. It was about two years before I could really get myself back on my feet. That’s when I ended up going to the agency.

Ryan Morfin:

Well, and it’s that two year period of… I’m sure you’ll never forget it… anyone who’s ever experienced unemployment, there’s a lot of Americans out there today that are unemployed. Any advice? You say, “Never take no for an answer,” but when people are dealing through that, what would you say to them?

Richard  Diaz:

The key to it is family and never giving up. It was really difficult. Keep your goals in mind. Set up your goals and keep fighting to get those goals and not to give up. It’s tough. It really is. I see these guys, some of the disabled vets, and some other folks on the streets with the signs out there, asking for money and stuff. A lot of times, I’ll sit down and I’ll talk to them. I’ll say, “Hey, I was in the same situation. I was able to do it. I’m disabled. I can do this.” Try to encourage them. I do that. I used to volunteer at a homeless shelter as well, where I did the same thing and talking to them. Okay. You can overcome this, but it’s not easy, but I’ve been there and I know what it’s like.

Ryan Morfin:

Unemployment’s coming way down, but I do think there’s a group of people, a group of Americans today, that are in long-term unemployment because of the sectors that they were working in. Our hearts go out to them, but hopefully they can re-skill up and change their life course because I got a feeling we’ll be in this rough patch for a little bit longer than people want to hear.

Ryan Morfin:

Well, you got the job and then you applied, I guess, for the government to go back into the government. At the end of that two year period, was it right into the CIA? Where’d you go from there?

Richard  Diaz:

I ended up with the DoD IG, Department of Defense Inspector General’s Office. Then, I got a road into the Agency, but it took me five times to get into the Agency. It was tough. I didn’t give up. The fifth time I finally got it. I was able to convince them to get me in. They let me in the door. I’m not sure if they regret it or not, after what I’ve done, but I got my foot in the door but it took five times of not giving up.

Ryan Morfin:

Once you get up and you get in, you have to go through a bunch of coursework. We don’t have to get into that, but what shocks me about your story is that you had to also get weapons qualified with only one arm. Maybe you could talk a little bit about how that works.

Richard  Diaz:

I volunteered for an overseas assignment to a war zone. Part of the process was to get weapons qualified. Again, with that, it took me four or five times to try to get that certification, even them to allow me to do it with a disability. Shooting with a Glock brought a whole handful of issues in itself. I had to figure out how to do everything that somebody does with two arms, with one arm, from shooting the gun, loading the magazines, loading the gun, fixing jams, and firing the rounds.

Richard  Diaz:

One of the things I did is I figured things out. One of the things I always say is, “Necessity is the mother of invention.” I had to figure out how I was going to do this. What I did is I purchased two right-side Glock magazines and I put them on the left-side, behind a KYDEX holster and I reversed the magazines, so all I had to do was pickup, push in, and the gun was loaded.

Richard  Diaz:

Then, I used my KYDEX holster to fix the jams, to cock the gun back, shoot, and I was able to fire off three to four rounds in about four seconds, while fixing a jam in the middle of that, which was really unheard of for one arm at that time. But it was definitely a challenge, but I was able to do it. That was my initial qualification. I would get through another qualification later on in my career that questioned this first one, but I did it.

Ryan Morfin:

Now, shooting a Glock with two hands is hard enough, but doing it with one, that’s amazing. Well, as you got in, you volunteered for the war zone and they drop you off. Where’d you deploy to, or if you can’t say, and how was it down range?

Richard  Diaz:

I deployed out to Southwest Asia area, but it was definitely a challenge. I remember when I first arrived there, I was at a clearing barrel, trying to clear my gun, and using my one-handed technique, I heard people in the background say, “Oh, yeah. He’s disabled. What’s he doing here?” I remember turning around and looking at them and I said to them, “You know what? I qualified just like you did and I’m here to stay. I’m not going anywhere.” And I walked away.

Richard  Diaz:

Then, the following morning, my logs officer handed me my keys to my truck. He was kind of smiling and laughing. I was trying to figure out why. I walked out. He followed me with two other guys. They stood up on top of a hill when I went to get into my truck. I got in my truck and I looked down. It was a stick shift. Then, I kind of laughed a bit and I said to myself, “Okay.” Because when I was first disabled, I drove a stick shift truck, and I had my four year-old son, I trained him how to shift up and shift down while I was driving the truck until I could figure out how to do drive with my knee and shift the truck. I could actually make left and right turns now with my knee without even a problem. It scares people, but I can definitely do it. So, I got in the truck and I drove off. I looked up at them and they kind of just sat there with their mouths open. I waved and I took off and drove out of the parking lot.

Richard  Diaz:

I remember, the following day, some supervisor came up and said that there was some concern about my ability to handle myself in a war zone with a disability. That night or the following night, we were out and we normally have Security Forces go out in front of us to pave the way and one night, at about 2:00AM, we pulled out. Security Forces went out, said it was secure. We went out, and I was in the back of a truck and I had three other guys in the truck with my translator driving. The insurgent pulls out with an AK-47 pointing at us. I remember, the first thing I did was I called into the Security Forces, said, “Hey, we need help. I got a guy with a gun.” They said the words I’ll probably never forget, “You’re on your own. We’re too far away. Deal with it.”

Richard  Diaz:

At that point, you have split seconds to make a decision that’s going to determine the lives of everybody in that truck. My first option was number one, we try to run the guy over. If we try to run him over, we were in a thin-skinned vehicle, a regular armor vehicle. We’d probably all get killed because he gets that gun off, it’d go right through it. So, second option, I was a pretty good shot, but it was pitch black dark and I would have to fire the gun at about 20 yards, hitting the guy so he couldn’t fire a shot. I wasn’t going to put people’s lives at risk.

Richard  Diaz:

So, my third option was to trust my translator to talk our way out of it… we were all dressed in local garb and stuff… which I did, and we all ended up getting through the situation safely, which is the same thing. I learned from that from a previous experience in the military where my cover got blown when I was overseas in Turkey and I was surrounded by several angry Turks in the back of a shop. They were all armed and I wasn’t armed. I had to talk my way out of it. I barely got out with my life, but I made the decision to talk my way out versus fight my way out, which is the same thing that happened with this situation.

Richard  Diaz:

When I got back, nobody ever questioned my ability in a war zone ever again. It was a shut case.

Ryan Morfin:

That’s fantastic. How does one talk their way out of a drug den in the back of an office with no weapons? What’d you say, “Hey, guys. I’m just kidding. I’m just here looking for real estate.”

Richard  Diaz:

Well, they knew who I was because a corrupt Turkish official turned my name over to the head of the mafia. So, they set me up and unbeknownst to the Office of Special Investigations was running the case with them that they barely sent me into a trap. When that happened, the key to that is the one guy that I basically had recruited from them was my gardener actually and I developed such a close relationship with him, which really helped me in my CI career, that he trusted me, that he would do anything for me. I really looked towards him when I was surrounded and he finally said, “Okay, let him go,” because he couldn’t believe that I had been traded. He couldn’t believe that. He was able to vouch for me to get me out of that room. I got out barely. Like I said, barely by the skin of my teeth. We ended up getting ex field out of the country after that. Within a couple days we were gone.

Ryan Morfin:

Wow.

Richard  Diaz:

But the key, again, is setting up that relationship.

Ryan Morfin:

Yep. No, and he was your gardener, you said?

Richard  Diaz:

Well, yeah, because he had the contacts with the mafia off base.

Ryan Morfin:

Got it.

Richard  Diaz:

And he set me up with the meetings and everything.

Ryan Morfin:

Got it. Wow. Got to be nice to everybody. You never know who’s going to help you out later. You never know.

Ryan Morfin:

How many year did you serve in the Agency?

Richard  Diaz:

20 years.

Ryan Morfin:

Wow.

Richard  Diaz:

I did nine in the military.

Ryan Morfin:

Well, thank you for your service. That’s a long career. That’s a long career in any industry, but this one especially. It’s very arduous. Going forward, you got out. What are you doing now? What do you think about today’s environment that we’re in, as a country?

Richard  Diaz:

Well, right now I started my own company, a company of one, [Alcore 00:21:16] International. I provide guidance to different companies on security issues. I have some contracts. I’ve been overseas doing some stuff, in safety and security. I’ve also developed some of the programs that I’ve learned from my Agency career and it’s all open source information on basically developing my own recruitment cycle. Taking the existing recruitment cycle for the Agency, [inaudible 00:21:46], and build my own and build it around a business recruitment cycle. I’m trying to work on that. I’ve done some stuff for UBS and they’re going to have me come back and do some client events as well. That’s what’s keeping me busy.

Richard  Diaz:

I’m also volunteering at the International Spy Museum. I did a web chat with them a couple weeks ago and we’re looking at some fundraising things and so forth and there’s a possibility they may put some of my stuff up on display there as well at the museum.

Ryan Morfin:

Well, that’s fantastic. The work you’re doing for UBS, maybe touch on it a little bit. You’re talking to financial advisors about developing their approach to new clients.

Richard  Diaz:

Right, just the approach on how to basically go after the big clients they want to go after, how to be able to go after them, target them, develop that relationship, do an assessment of them. Then, be able to go in and hit it home at the end by getting the recruitment. We call it recruitment, but sealing the deal with them at the end. But there’s a whole process that you have to go through and a lot of it’s, like we said before, is built on trust and built on the relationship you have with them.

Richard  Diaz:

If you can develop a relationship with that client, then you can recruit him in the end. He’ll do anything for you by the time he’s gone. The key to that recruitment at the end is using his own words, his own situation, against him. Talking about how he has issues, financially or whatever, you can talk to him about, “Hey, here’s how I can help you financially. Here’s what I can do for you. Again, the whole basis of it is just being able to how to go after those targets, how to assess them and use the best approach and develop that relationship.

Ryan Morfin:

No, it’s interesting. Some advisors are just depending on technology to bring them leads, but I think there’s no replication, there’s no replacement, I guess, for human contact, human sales skills, gathering assets that way. If anybody thinks they’ve figured it out and they always hit 1000%, then they probably don’t need any coaching or help. But I do think it’s important for advisors to bring new ideas to how they approach the business.

Richard  Diaz:

Yeah. I had a couple financial advisors, not from UBS, other ones I’ve talked to. They tell me, “Well, the clients come to me. I don’t need to go after my client.” I just looked at them and said, “Good luck. You can’t do it that way. You got to learn the hard skills.” We used to call it in my profession, bricks and sticks, the old way. Develop the relationship. Be able to go in there, physically have physical contact with that client, because that’s how you build trust.

Ryan Morfin:

This part of the conversation we call in season two the human factor. I’m going to ask you six questions that are usually yes or no questions, but here we go. If there was a vaccine available today, would you take it for COVID?

Richard  Diaz:

Yes.

Ryan Morfin:

Who do you think’s going to win the election in November?

Richard  Diaz:

That one I’m not sure about at this point.

Ryan Morfin:

Yeah, too close to call. Such an exogenous shock to the system.

Ryan Morfin:

What type of economic recovery are we in? Do you think it’s going to be a V-shape recovery or is this a different type of shape?

Richard  Diaz:

I think V-shape is what it’s going to be.

Ryan Morfin:

Is there anything that you achieved this summer that you’re proud of? Any projects that you worked on during quarantine?

Richard  Diaz:

Just a big one is the Spy Museum and was honored to be asked by them to speak at the museum. It’s a big deal. It’s not something they allow a lot of people to do, but that’s something I was very interested in was for Disability Awareness Month. It worked out pretty well.

Ryan Morfin:

Well, that’s awesome. Are there any silver linings that you see in the economy in 2021 for the US?

Richard  Diaz:

Once the vaccine gets in place, and it depends on who comes into the office.

Ryan Morfin:

Yeah. No, I think that’s right. I think that will take the lid off the top. There’ll be a lot of growth coming after that. Last question, is there anything that you’re watching or listening to or reading that you’d like to share with our viewers?

Richard  Diaz:

Yeah, one of the books that actually I just started reading, it’s called A Woman of No Importance. It’s about Virginia Hall. She was the first disabled SOE, their Special Operations Officer for the Brits, working behind enemy lines, and how she operated. She had one leg, but we had a lot of similarities when I was reading this. It’s just amazing how life imitates life.

Richard  Diaz:

For example, when she was injured, she was 27 years-old. I was 27 years-old. She worked in Turkey. I worked in Turkey. She was almost killed in Turkey. I was almost killed in Turkey. She worked on setting up networks behind enemy lines, which is exactly what I was doing in my work. She was tied to the state department. I was tied with the state department. We recruited some of the same types of people. We both had difficulty moving up because of our disability. We were both questioned about our ability in a war zone because of our disability. It’s a really good book. I’m about half way through it right now and it’s shocking the crap out of me, to be honest with you. The similarities and what she went through, it’s pretty incredibly. Our fathers died about the same age, tragically, both of our fathers did. The similarities are just amazing. I have a lot of respect for her. It’s a good book.

Ryan Morfin:

Well, fantastic. Well, we’ll make sure we hyperlink that to this episode for people to check it out. Rick, I appreciate you being on the show and sharing your story and telling our viewers that never take no for an answer. I think people today need to hear that more than ever, just given high structural unemployment, but also some people I think need to reevaluate where they’re going, what trajectory they’re on, and what goals they’re looking to achieve.

Ryan Morfin:

I appreciate you being so open with your story. Thank you for your service.

Richard  Diaz:

Thank you. Take care.

Ryan Morfin:

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 and now you know.

Ryan Morfin:

(singing)

 

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