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Ryan Morfin:

Welcome to Non-Beta Alpha. I’m Ryan Morfin. On today’s episode, we have Mitchell Sabshon, the CEO of Inland Real Estate Group of Companies, talking to us about Section 1031 during this political season. This is Non-Beta Alpha.

Ryan Morfin:

Mitchell, welcome to the show. Thank you for coming on.

Mitchell Sabshon:

Ryan, thank you so much for having me.

Ryan Morfin:

Well, we were just talking a moment ago, every four to eight years, 1031 becomes a talking point on campaigns, and a lot of our advisors utilize the 1031 Exchange for their clients. Maybe we can go right into the heart of the matter. What are your views of the realistic expectations of changing this? Would changing 1031 turn the real estate market into maybe a financial crisis?

Mitchell Sabshon:

Well, I think if the provision section 1031 of the Internal Revenue Code were repealed, it would have a significant negative impact, not just on the real estate industry, but on the economy as a whole. As your viewers understand, section 1031 provides that when a owner of real estate sells that real estate, if they comply with the specific requirements of section 1031 and take the proceeds all a part of that sale, and roll it into a new real estate investment, they can defer in whole or in part the tax and most likely, capital gains tax, on that transaction. And of course, there has been discussion, as we were talking about, every four to eight years, that is the deferral of that taxation somehow depriving the federal government of tax revenues that could otherwise be deployed. And with the coming election, certainly section 1031 is a hot topic.

Ryan Morfin:

And so, the two different camps, I think have different perspectives. I believe Trump campaign is a real estate entrepreneur, so I’m sure he loves 1031. But what is President Joe candidate, Joe Biden, said about the 1031?

Mitchell Sabshon:

Well, the planks of Joe Biden and the democratic parties platform have not been fully revealed, but there certainly has been preliminary discussion that there is looking to be ways to increase tax revenue to fund a broad variety of federal projects and programs. In particular, there has been some discussion, that the democratic party might choose to have repealed section 1031. And the revenue generated from that repeal would be deployed into programming for both younger children and senior citizens. More than that, we haven’t heard specifics. And then of course the supporters of section 1031, whether it be President Trump, the Republican party or business people generally believe that they are very pro-economic benefits of section 1031; far beyond the mere tax revenue. And as a result to repeal 1031, would have a material negative impact on the economy.

Ryan Morfin:

Yeah. I mean, if there’s a reset in valuation expectations based off of capital structure tax, it surely is going to impair the balance sheets of the banks, would you agree?

Mitchell Sabshon:

I’m sorry, the balance sheet of?

Ryan Morfin:

Of the commercial banks that have lent a lot of the money to the real estate industry.

Mitchell Sabshon:

Well, I think that’s one component. If section 1031 were repealed, clearly there would be reduced demand for new commercial real estate; new commercial real estate transactions. It would have a depressing value on real estate; commercial real estate generally, and therefore increase the degree of leverage as a percentage that banks have on real estate. So if you have a loan that is a 60% loan to current value, and the value drops, that loan could go to 70% of loan to value. I feel in that regard, though, there is sufficient push in most classes of real estate to absorb that impact. But I think the fundamental issue that needs to be appreciated here is that many people look at the tax deferral of section 1031, and the dollars of tax that have been deferred and say, couldn’t that be used for other purposes if the federal government could capture those dollars, but that is an overly simplistic view of section 1031, because there is very much an upstream, downstream effect of section 1031.

Mitchell Sabshon:

First of all, it helps the growth of businesses, in particular small and medium sized businesses, who may have outgrown their current operations into the efficient and more productive and employ more people, have to move into larger quarters. And the tax burden, if section 1031 repealed would be a disincentive to those kinds of moods. In addition, a tremendous amount of people are involved in the real estate industry from real estate agents and brokers and escrow agents and [praises 00:06:12] and lawyers. And as you point out, lenders and surveyors, and on and on and on, and those people all make incomes and in turn pay income taxes, federal and state; most states, income taxes, until you really have to look at the amount of tax dollars that are deferred from section 1031 versus the positive tax revenues that are generated from the continued growth of businesses as well as the employment creation of jobs.

Mitchell Sabshon:

And the research has been quite clear that section 1031 in actuality, when all the factors are taken into account, is extremely revenue positive for the federal government and very much a generator of economic growth.

Ryan Morfin:

And it’s really a tax on main street, because only 5% of these exchanges are held at corporations, right? 95% of them are small and medium sized accredited investors.

Mitchell Sabshon:

That’s an excellent point. It is true that the small investors and small businesses are among the biggest users of section 1031. I’ve already talked about small business owners being able to grow their businesses. But you look at individuals, and one of the great things about our country is people can start with so very little and grow over time, and you see, especially real estate, which has been a path for so many families for, since the creation of our country. And they make a real estate investment and they work hard and they grow it. And then, at some point in time, they feel that that property is appreciated and they can sell that property. And because they’re not taxed, they can take the full dollars or using 1031 because the tax is deferred, they can take those dollars and invest in a more valuable real estate that will have all of the benefits that I just referred to.

Mitchell Sabshon:

But in addition, that individual, that family is slowly growing their own family wealth, their own quality of life. You can look at farmers. Also, farmers are a big user of 1031. It allows them to consolidate their real estate or to sell off real estate that is not particularly productive for their properties and redeploy that money in other areas for families that have operated farms for generations, and to are now leaving the farming industry, they can sell that land and protect their multigenerational wealth that they have created. Also, from a conservation perspective, we see a tremendous amount of real estate that is either sold to conservation organizations or sell easements that they won’t use a portion of their real estate for, let’s say, crop production.

Mitchell Sabshon:

And that benefits numerous conservation initiatives, and is motivated by the fact that taxes are deferred. And in fact, I think that’s an extremely important point to make. I keep making the distinction, taxes defer, because research shows that 88% of the real estate that is sold in a section 1031 tax deferred transaction, ultimately taxes are paid on that real estate when they are subsequently sold in a non-1031 transaction. So this is really not about tax avoidance in any way, it’s really about tax deferral. That small percentage that is not eventually tax, it’s because the owner passes away or it’s transferred in a divorce or a court ordered settlement or eminent domain. All things from public policy perspective that we encourage. But again, 88% of all 1031 transactions ultimately pay taxes on that real estate.

Ryan Morfin:

And what do you think would be the negative GDP impact, if they did repeal the 1031 Exchange?

Mitchell Sabshon:

Well, there was research done a few years back. I believe it’s being updated by Ernst and Young; the accounting firm. I think back then, I think the impact was actually a negative impact when all the factors I preferred to were taken into account, but it’s less than 10 basis points. It’s less than one 10th of 1%. I think the estimate of the impact that 1031 could be as much as much as between eight and $13 billion a year. So between 80 and $130 billion over 10 years, that seems like a big number, but in the scheme of things, I think Ernst and Young eyeballed about seven basis points. And so the impact is not material in either direction.

Ryan Morfin:

No, that’s very interesting that it’s so small, you would expect it to be a lot bigger, but maybe it’s just the talking point that they’re trying to manufacture. But that’s not a lot of money when you look at the federal government budget.

Mitchell Sabshon:

No, it’s not. And I think that rightfully so, the government should be looking at opportunities to create revenue, and that seems to be, to some audiences, an attracted poster child, because as you said earlier in our discussion, that it’s a little bit misleading. The perception is that big corporations or ultra high net worth investors are the real beneficiaries of section 1031. And from a marketing perspective, saying that a provision is a loophole for fat cat, rich people and rich corporations, but the reality is, one, it is used substantially by small businesses and small investors. And two, as I said, it’s really a GDP positive in place. But it’s an easy candidate for tax reform.

Ryan Morfin:

Do you think this political environment is different than years past, where this become an election discussion point? Do you think there’s a real risk about this getting passed in the new administration?

Mitchell Sabshon:

Well, so you’ve asked me a two part question and I’ll give you two answers. I do think the environment is different. Clearly I think there has, whatever your political affiliation, I think we have seen a real backlash to some of the pro-business policies of the current administration, in particular, that President Trump comes from a commercial real estate background. I think that the platform, I saw the Democratic Convention the first night last night, and I think the message really is about bringing Americans together at all economic levels. And so I think a challenge to any perceived big business or tax loophole, certainly will be in the crosshairs of initially. So I do see a change in that environment. But having said that, section 1031 is in reality, just one small provision as we point out, economically not that significant, of the overall revenue structure of our tax code.

Mitchell Sabshon:

And as a result, most elected politicians in the house and the senate are really unfamiliar with section 1031 and its impact. And I think that there will be a concerted effort to educate elected members of congress as to the positive aspects of section 1031 on the economy. And I think that right minded people will ultimately say, as appealing as repeal might be on first glance, I think when intelligent people do a deeper dive, they will see that that provision has been in the code for, I think it’s 99 years, maybe rounded to a hundred years, because from a public policy perspective, it’s very attractive to our country.

Ryan Morfin:

Well, maybe we take a step back, and how was the 1031 market evolving, leading into Q1 of 2020? And then with this great pause that we’ve gone through, how has it changed in Q3?

Mitchell Sabshon:

Well, I think real estate generally, has certainly been impacted in very clear ways over the course of 2020. I think the 1031 market in particular across all kinds of property types was robust. My own firm specializes in syndicated section 1031, so we are many investors; small investors are grouped together and participate in a 1031 Exchange together. It allows the small investor to participate in investment in high quality institutional type real estate. That business was in line nationally to have another record year. Clearly, the second quarter of 2020 when sheltered home strategies, closing of non-essential businesses was materially implemented. Investors stood, step back from the market, taking a wait and see look, and to see how transactions would be impacted.

Mitchell Sabshon:

There were many transactions, where investors were willing to walk away from hard money deposits, because the concern was that the actual value of a transaction, had they taken it to closing, might take a bigger hit; a larger loss than the money they would be walking away from. And so we saw that across real estate generally. However, a couple of things occurred. The Federal Government extended the deadlines, or some investors engaged in section 1031 Exchanges, allowing the 45 day identification requirement, and 180 day closing requirement to be extended to July 15th, and gave investors more time to look at the market. And I think what we’ve seen, our investors now, who were taking that wait and see position, are now transacting. And I would say, a total guesstimate, it’s a little visceral, but I would say that the market volume is down probably just about 20% over last year.

Mitchell Sabshon:

All things considered, I think that is actually doing pretty well in light of so much dislocation in real estate, in particular property types. So, we have seen really no change in the pricing of multifamily of apartment buildings. That is a very robust, very pricey market. We are certainly seeing five and even four capitalization rate transactions. Same thing can be said for self storage; transactions, manufactured housing transactions, distribution centers, so certain industrial types of real estate. As you would not be surprised, the two or three areas that have been most impacted negatively in terms of pricing are lodging, hotels, retail; bricks and mortar retail with so many stores closing, and now a fair amount actually declaring bankruptcy, or at least chapter 11. And a big question mark over student housing as well. So much online classes. So clearly there are sectors of the real estate industry that have been materially impacted and others that seem to be going along full steam ahead.

Ryan Morfin:

And what would you say, are there transactions where buyers and sellers are agreeing on a new evaluation framework today, or is the bid-ask still very wide and people aren’t agreeing to trade?

Mitchell Sabshon:

I think on the property types that I suggested have done well; multifamily, self storage, manufactured housing. Traditionally, in a sellers market, the sellers hold firm, and the buyers say, “No way [inaudible 00:19:25] transacted that level.” But then six months later, they seem to understand that if they want to buy real estate, they’re going to have to step up and pay those prices. And so I think we are seeing that kind of dynamic in the property types that have been least impacted by COVID-19. In the case of lodging and bricks and mortar retail, there is a great disparity in capitalization rates, maybe by as much as 150 basis points or more. And as a result, there are very few transactions going on in the bricks and mortar retail space and lodging.

Mitchell Sabshon:

And quite candidly, if buyers and sellers were closer in those markets, they would have a very difficult time getting financing right now from the banks; financing for apartment buildings, is that I believe absolute record lows. We’re seeing low 200 spreads on over treasuries, and I’ve even heard a little bit about sub 200 spreads on financing apartment buildings, but try to get along on a shopping center or certainly a mall or a hotel right now. You’ll be pretty hard pressed to find a lender.

Ryan Morfin:

You guys are a large investor also in office, how is your view on the remote work environment, and the office property type? What are your thoughts on that?

Mitchell Sabshon:

Well, first of all, let me say that Inland has not been a significant investor in office for a number of years. We do have some amount of assets in the portfolio, but have not made an acquisition. That’s actually an excellent question, because there were two schools of thought, and I don’t think we’ve seen enough time pass to truly appreciate the impact of this experience. Many will tell you that working remotely in many kinds of fields has been actually quite successful and quite doable. And so what we’ve seen here is an acceleration of a societal trend in the work environment. And then the question becomes, will that persevere, God-willing, when effects of COVID-19 are well in the rear view mirror? And those two schools of thoughts are the following.

Mitchell Sabshon:

First of all, there are those who say we’re going to need less space, because more people will work remotely, but at the same time, you also have those who will be working in office will likely now require far more square footage. There was a trend for years of smaller and smaller, square footage, for each employee in an office and for an open work environment, the collaborative benefits of working in an open work environment. And now I think that we’re going to see likely the trend move in the opposite direction, more square footage per employee, and more office space as opposed to open architecture. And so you have those two schools of thought; more people working remotely, less demand for workspace, office space, but on the other hand, the office space that is there, is going to be fully used. And I wish I could tell you, I knew which was going to transpire, but I don’t have that crystal ball on myself.

Ryan Morfin:

Yeah, that’s going to be very interesting, and it really is impacting. I mean, as these businesses, some of these retail businesses, their corporate back offices go out of business as well. It’s going to be a lot of increased vacancy. Have you seen any new leases being written or what’s the impact been to kind of the leasing of new properties, whether it’s office or industrial or? How are the cashflows being kind of impacted by this, in your view?

Mitchell Sabshon:

Well, I think that there are the haves and the have nots. So I think that, certainly, retail and my own firm has a very significant retail portfolio. We have seen leases signed, where tenants really don’t know what the future of their business will be. And when they underwrite their own operations [inaudible 00:24:01] to pay rent, really have a limit of what they can pay. And landlords are in a very difficult position because if they tell a tenant, no, we’re not going to cut a deal at that level, and the tenant actually does leave, you now have a vacant space, and there are far less tenants. And none of them may be in any greater position to pay the higher rents. So I think that in all, but the most high demand retail spaces, we are seeing rent growth flat, not shrinking, but flat. And real estate people tend to like to underwrite positive growth. In the retail sector, underwriting growth of two or 3% annually, would be a norm. And we’re not seeing any of that growth at all at the moment.

Ryan Morfin:

And are the banks holistically working with owners or landlords of retail to give them forbearance? Or I mean, we’ve had unprecedented demand destruction just from the stay at home economy. Everything’s moving digital, at least for the short term. Are the banks working with landlords to try to bridge this environment?

Mitchell Sabshon:

Yes, I think so. Certainly, our own experience and anecdotally conversations with my peers, the banks understand that certainly, what we’re going through now is a temporary challenge. We’ll have to see what the longterm effects are. But banks don’t want to take back the real estate. Banks want to work with their landlords and that’s across all types of real estate right now. And so there is some willingness within reason to waive certain covenants on a temporary basis or modify loan arrangements on a go forward basis. It’s also that we have seen a number of landlords and tenants restructure deals, where the restructured deal might be something like, “Look, give us, the tenant, three, four, six months of partial rent relief.”

Mitchell Sabshon:

Not forgiveness, but relief. I’ll pay, by way of example, 50% of my rent for the next six months. And then I will start to pay not only my full rent, but pay back what I’ve deferred, maybe as additional monthly rent, but maybe spread over a 12 month or a 24 month period. And the bank see that the landlords and the tenants are working together for the common good of both, and the banks are pretty much getting on board and working quite closely for the same goal.

Ryan Morfin:

And there’s a lot of retailers, unfortunately, they’ve gone out of business this year. I mean, are we getting close to the end of the disruption here in retail as a sector? Or do you think there’s maybe more pain in the second wave coming ahead?

Mitchell Sabshon:

Well, there’s a couple of things going on, Ryan. First of all, to step back, retailers who have not changed their model of how they market, how they present their stores and their merchandise, eventually have to pay the consequences. That’s true of every business and retail is no different. So, there is a meaningful part of the bankruptcies that we have seen over, let’s say, the past four or five years, that were clearly justifiable in that these are businesses who have not kept pace with consumer demands, consumer preferences. And we will always see that. It’s possible that we have been through the lion share of that, at least at this current go round, but we’re also seeing something else.

Mitchell Sabshon:

We are seeing retailers that are using chapter 11 as a strategy to do what they otherwise might do outside of, or want to do outside of a bankruptcy. And that is once you file chapter 11, you can close stores and limit your lease obligations. You have great negotiating power with your landlords to restructure leases. They might be 10 year leases, and now you can go back and say, “If you don’t restructure with me, I’ll reject the lease.” And we’re seeing a lot of that going on. And I believe we will see more of that now and in the period following the pandemic, and closing of non-essential businesses as a strategy.

Mitchell Sabshon:

I think long-term, retail is changing, shopping online, I think so many people who have spent time at home have used online shopping, whether it’s Amazon or Walmart or other vendors. I think we’ll see a growth in that, and I think retailers are going to need to change how they do business for more online, smaller square footage, the much more what I would call time spent in the store. How do you get people to spend more time in the store? A woman may go into a store for a lipstick and spend instead 45 minutes in the store looking at other merchandise. Someone might go into a sporting goods store looking for one small purchase and spend more time. Retailers have to be more creative about creating what I call dwell time in the store to keep up with the online competition.

Ryan Morfin:

Well, that’s a fascinating comment you made about retailers, perhaps repositioning their business for the future and getting rid of past mistakes, because for our viewers, when you go through a bankruptcy, you only have to pay, I think, what is it, one year of a lease and you can accept or reject different leases through the restructuring.

Mitchell Sabshon:

Yeah, that is my understanding. And so you have a 10 year lease and your maximum liability and bankruptcy all deference to the bankruptcy and restructuring lawyers out there. I believe that the only obligation under the bankruptcy code is one year.

Ryan Morfin:

So it’s a way to get out of some mistakes that you made, and the locations of your properties of your stores. And so I could see a lot of these retailers cherry picking the future locations.

Mitchell Sabshon:

It’s even more strategically used than just that, because you talk about mistakes. Well, I have heard of scenarios, first hand, where a retailer has declared chapter 11. They do have some stores that are losing money and would like to get out from underneath the lease obligation. But they also have stores that are doing quite well and they, nonetheless will go to their landlord and say, “I know my rent is $8 a square foot for the next 10 years, but I’m proposing I pay only $4 a square foot instead.” And the landlord knows that the store is doing well, but the tenant says, “And if you don’t agree to the reduction in rent, I’m going to close the store. I’m going to put it on the closing list.” And the landlord has to play chicken with that tenant. Is the tenant [inaudible 00:31:49] bankruptcy really going to close that store or not. And so even stores that are not mistakes are on the block for reductions of rent. And that’s something that we will face more of certainly in the next 12 months.

Ryan Morfin:

Yeah, no, that’s a very interesting game theory application in the retail space. What about Amazon? What are your thoughts about Amazon? I mean, have they damaged and disrupted the industry so much that it will be hard for it to recover? Or do you think the retail entrepreneur is going to come up with a competitive model here?

Mitchell Sabshon:

I do think, as I said earlier, I think retailers need to figure out a way to truly address consumer preferences. Why would a consumer want to get in the car and go to a store? What is it about that experience? As opposed to going online, finding the merchandise and clicking on it, maybe even sometimes one click and have it on your doorstep, certainly 48 hours later, sometimes 24 hours later. Retailers need to figure out how to attract people to the store, because it’s a positive experience. I do believe that that is doable, but they have to be creative in finding out, determining how to do that for each different type of retailer. I think Amazon poses a huge threat to the industry so long as it’s the fair hair child of the stock market, because Amazon, while certain of its businesses, it’s cloud based business may make money, as long as investors are prepared to continue to provide capital to the company, what is it, stock at $3,200 a share at this point?

Mitchell Sabshon:

It was at 700 before the pandemic or something like that. They can afford to lose money on their retail businesses, whereas any other business that had a true positive cost of capital would pay dearly and could not absorb that for an infinite period of time. And so the only way that Amazon actually its impact on retailing can truly be materially reduced is if the stock market does not support it to the same extent. And that could very well be a result of any kind of congressional action about dealing with Amazon monopoly, or anti-competitive type actions it that may be accused. And maybe if that were to happen, that would be a motivation for the stock market not to basically provide free capital to the company.

Ryan Morfin:

Yeah, I’m looking at a graph here from Goldman Sachs. From 2013 to 2017, the stock market went up about 27%, but the tech stocks went up about 230%. And then if you look at the V-shaped [inaudible 00:34:53] of S&P 500, the fangs are up about 35%, and the remaining 495 names are down 5%. So, it’s fascinating to me that these guys can keep posting losses and not paying taxes and still just grab all this market share and top line revenue and it’d be okay. So I think antitrust; tech antitrust conversation, irrespective of who wins in November, is going to accelerate next year. So I think it’s going to be a very interesting trend to watch.

Mitchell Sabshon:

Yeah, I actually believe that, I am concerned about that because as a counter argument, consumers are very simple. We’re all very simple. We vote with our feet. We vote with our pocketbook. And if any manufacturer or any provider of services provides a product or services that we think makes sense, we’re going to be attracted to that. And so those companies, Apple and Facebook and Amazon and Google, they have created products and maybe it’s easy for them to create products now because of the cost of capital and because of their market shares, we can talk about all of that, but the bottom line is consumers have made them who they are because those companies have successfully provided consumers what they are looking for.

Ryan Morfin:

Well, and if they do have the antitrust successful conversations in D.C, then we should probably expect inflation to start to spike up because, like you said, consumers have been the beneficiary of this price war, if you will, between Amazon and the brick-and-mortar folks.

Mitchell Sabshon:

Well, that depends on whether consumers take chips off the table, or they keep riding it, riding it, riding it. There’s an old adage, you can’t put your chips on the same number for 20 years in a row and expect to win every time, and eventually it’s going to come up a different number or it’s going to come up black when you’re on red. And so if financial advisors, your audience are disciplined themselves, at some point they will tell their clients, “Take your winnings. Be happy and be safe.”

Ryan Morfin:

Well, what are some silver linings? What is your view on the economy? Is the recession just starting? Do you think the V-shaped [inaudible 00:37:15] continues to grow from here? What are some silver linings in the economy today?

Mitchell Sabshon:

Well, I do think, maybe I’ll step back and take a further view without the specifics of the economy, but I still look around the world and I look at the way capitalism is executed here in the United States, and I still believe that our economy and our culture rewards innovation, creativity. People can argue that culturally, we are not a level playing field and that’s a discussion for another day, but there is clearly opportunity in this country that doesn’t exist anywhere else. And so I am a buyer of the U.S. economy growth. And even when we have dips, I have faith, I have almost certainty that this economy comes back over time, no matter what.

Ryan Morfin:

Do you think that the trade war between the U.S. and China is going to move supply chains back to the U.S.?

Mitchell Sabshon:

No, I don’t. I think that, again, common sense will drive both the U.S. and China for their own mutual benefit. Yes, I think that corporate espionage and copying the various products needs to be implemented in an international way. But generally, China wants its economy to continue to grow. We want our economy to continue to grow. I think trade wars and turf wars both are not in anybody’s best interest.

Ryan Morfin:

And you’re going into like a human element about leadership through this environment. How have you and your leadership team gone through this change and working environment? From a business development standpoint to a communication standpoint, what are things you guys are doing differently to keep in communications with your clients?

Mitchell Sabshon:

We have actually been extremely proactive. So from internally our own management, our offices are formally closed. We have approximately, I think 750 people in our home office, and then another few hundred people around the country onsite of properties. The headquarters is technically closed, but we have implemented work remotely strategies. We have our weekly meetings and board meetings all by video camera. Zoom has been very much become a part of our culture at this point. And so we have found almost seamlessly the ability to work remotely, even with that large number of employees, with respect to our partners on the investment side. So our broker dealers are registered investment advisors, our financial advisors. We continue almost daily, a series of communication about property performance.

Mitchell Sabshon:

We have implemented something we call Inland Academy to provide educational materials to get our partners even more familiar with new products, new strategies to discuss tax issues and investment concepts. And we are also in constant contact with our investors, sending out weekly reports on every single property in our portfolio. Our portfolio is well over $10 billion, and we communicate very robustly. We also schedule multiple webcasts during the week to inform our investors real time, the actual Inland executives are responsible for each investment, discussing the status of the investment. I think that we have been creative and very successful quite candidly, Ryan, in a way that if you would ask me in January or February, I never could have imagined, and yet I am so pleased with what we’ve done and I hope our partners and our investors feel the same way.

Ryan Morfin:

Absolutely. And one final question for you. Are you reading anything this Summer? Or are there any podcasts or newsletters that you’ve been going to, to try to help shape your view on this recovery?

Mitchell Sabshon:

Well, I have found far more time to read over the past several months since March than in a long time. My commute to our office, when the office is open is anywhere from 45 minutes to an hour. I don’t have that commute problem. So now I have an hour and a half to two hours every day of additional time. I’m not reading so much related to COVID-19. I do watch all of the news channels; 24 hour news channels. But I’ve read a couple of interesting books. I’ve read, Fascism by Madeleine Albright, Scalia Speaks, written by Judge Scalia himself. I’ve read Katharine Graham’s personal history, and it escapes me now, but I have a name. But I’m watching, I’m listening to a podcast on WeWork. It’s rise and it’s fall, and makes for fascinating listening as well.

Ryan Morfin:

Well, Mitchell, thank you so much for joining us. Thanks for your leadership in the industry. And we’ll keep an eye out on the rhetoric coming out of DC in election season for section 1031. Thanks for your insights.

Mitchell Sabshon:

Ryan, it’s been my pleasure. Thank you for having me and please be safe and well.

Ryan Morfin:

You too. Thank you very much. Thank you for watching Non-Beta Alpha. And before we go, please remember to subscribe, like and join us on Apple Podcasts, YouTube or Spotify. This is Non-Beta Alpha, and now you know.

 

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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.

 

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