What America will look like a day after the Election W/ Dan Proft Host of “the Answer” AM 560 Chicago

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Ryan Morfin:

Welcome to Non-Beta Alpha, I’m Ryan Morfin. On today’s episode, we have Dan Proft, the host of 560, The Answer talking to us about the 2020 election and what America looks like the day after election day. This is Non-Beta Alpha. Dan, welcome to the show. Thanks for coming on, I appreciate it.

Dan Proft:

Good to be with you, Ryan. Thanks.

Ryan Morfin:

So Dan, you have a widely syndicated show where you cover all sorts of things. One of the things I wanted to ask your opinion about today, because you stay on top of these matters is, what’s going on in the 2020 election? How is this going to play out in your opinion?

Dan Proft:

I think it’s very dicey and you see this state by state, not only in terms of the mail-in push and the litigation surrounding how those elections will operate. You just saw the Supreme Court, I should say, decide not to take up a Pennsylvania case that allows for counting the ballots up to three days after the election with no postmark requirement. And so you have the prospect that people could actually vote after the election, which is a remarkable development, but it’s a reminder of our federalist system that elections are primarily state and local matters and Pennsylvania, which has, I think, a sizeable chance to be determinative in the outcome, you have this nuance that people need to be aware of because election night may go into election week and election month, we’ll see.

Dan Proft:

My handle on it is I think Trump is doing slightly better than he was doing in 2016 at this time, it is a turnout game, it is a base plus election, meaning whoever does the best job of coming as close as possible to turning out 100% of their base is likely to win. The other data point I would point people to which runs counter to the media’s coverage of the horse race polls for the last several weeks, really, the last several months, is that 56% of Americans, according to Gallup, believe that they’re better off today than they were four years ago, which is a much higher number than Obama when he won reelection in 2012, a much higher number than George W. Bush when he won reelection in 2004.

Dan Proft:

And I think those numbers bode fairly well for Trump, as well as the fact that at least as we sit here today, the early voting numbers in Wisconsin, in Michigan, in Pennsylvania, those swing states, really don’t show a sizable advantage for Democrats. So this notion of a red mirage, Trump wins on election night, and then by the time all the ballots are counted and challenged and counted, that Biden will turn out to be the winner, that’s so on the left of propagated as a possibility, if not a likelihood, we’re not seeing that as of yet, but again, two weeks is a long time in an election, particularly one as close as this.

Ryan Morfin:

I think the big question everyone has is what’s the ghost vote or the shadow vote where someone calls and says, “Are you voting for Trump?” And they don’t want to be truthful though, they want to be coy about it, how big do you think that is and has it grown since 2016? I think it was 5% then.

Dan Proft:

Yeah, I think it’s grown. And some of the survey work on that specific topic is the reluctant Trump voter, is that Trump voters are twice as likely to refuse to identify themselves as Trump voters, as Biden voters are. So you don’t build that into how you’re assessing some of these horse race polls that essentially, show a statistical dead heat. I would look at the Trafalgar Group.

Dan Proft:

There was a good interview by the founder of the group, Robert Cahaly by Rich Lowry at National Review this week and he went through their methodology, how the Trafalgar Group was so accurate, actually the most accurate polling firm in 2016 and what they do to try to get down to the granular level to address some of these issues like the fact that Conservatives are five times less likely to want to answer surveys than Liberals are, in addition to the reluctant Trump voter, the social desirability biases is what the pollsters call it in terms of people, especially on live calls, wanting to not say something that will get them judged by somebody they don’t know.

Dan Proft:

And so how they go about trying to control for that to get as accurate a polling as possible then Cahaly is in the same position I am in part because of Cahaly actually, where he thinks if the election were held today, that Trump would narrowly win and I think so too.

Ryan Morfin:

And do you think the Hunter Biden news cycle that has been tampered by social media, do you think it’s going to take root with moderates or do you think it’s just going to be so partisan tainted as Russian interference that nobody’s going to pay attention to it?

Dan Proft:

I think it really matters how Trump and his campaign messages on it, including a Thursday night’s debate, how he brings it up. I mean, he’s not always necessarily the most deft at prosecuting a case and providing a little texture, he’s sort of a blunt instrument, people may have noticed, but this is important. I spoke with Rudy Giuliani on my show yesterday, and I thought he made a salient point in a New York way. Millions of dollars flowing to Hunter Biden, who has no background in private equity from Chinese communists interests, business interests. So what do you think they were buying at the time? Were they buying a guy who can’t stay off crack for two days? These are Rudy’s words. Or are they buying a vice-president?

Dan Proft:

And I think the challenge for the Trump administration is to say, “No, Joe, this isn’t about your son, I have no issue with your son. This is about you, the big guy.” As one email termed him. This is about the big guy and whether or not your son and perhaps other family members were trading on your office, not just for themselves, but also ultimately to cut you in as one of the emails indicates, Hunter Biden, asking for a 10% stake for the big guy, which Fox News has reported, according to their sources is Joe Biden. So they’ve got to bride it away from, he’s got to bridge it and the campaign has to bridge it away from Hunter and to Joe and say, “Look, it’s 2016 all over again.

Dan Proft:

And I will tell you, the American people, that the swamp is deeper than I thought, and it’s going to take more time to drain than I thought, another term, but you can either go with me, who’s making a genuine effort to drain the swamp and you’ve seen what I’ve been up against over the last three and a half years, or you can return government to these swamp creatures, which is what Joe Biden has been for 50 years.” I think if he bridges and he presents that choice, he frames it that way, then I think the story has some currency and it could frankly dominate the last 10 days of the campaign. So it’s really going to be a question of how he handles it and how he frames it.

Ryan Morfin:

Yeah. No, I think that’s right. The last debate didn’t do well for suburban women, but it did do well for Latino men and African-American men. Do you think this coalition or this voter turnout is going to be puzzling, more so than it was in 2016?

Dan Proft:

Well, I’ll tell you what, I mean, people were surprised that he got the same percentage of the Latino vote as Mitt Romney did four years earlier in 2016 because he was mischaracterized as calling Mexicans rapists and criminals and stuff, which of course, it’s not what he ever said, but these are the urban myths that surround President Trump and are propagated by the press corps and the Democrats. I mean, first of all, I hope that’s what happens. I’m an [inaudible 00:07:48]. I hope that’s what happens, because it would be such rich karmic justice for President Trump to be put over the top by Black and Latino voters after all that has been said about his so-called white supremacy, which doesn’t seem to bother Ice Cube, and it doesn’t seem to bother 50 Cent, but it bothers Joe Biden or moderator [inaudible 00:08:12] for these debates or town halls.

Dan Proft:

Look, in Florida for example, he’s running 30 points ahead of where he was with Latino voters in 2016. In Florida in 2016, he lost Latino voters by 28 points. Most of the recent polling has him in a statistical dead heat with Latino voters in Florida. So if he is able to build on the nearly one in three Latino voters he got in 2016, in places like Florida and Nevada, maybe even New Mexico, Arizona. And if he’s able to build up on some of the numbers that he got in the swing states with significant Black-American populations like Michigan and North Carolina, then I think it’s certainly is to his advantage in those states that he may actually destroy the so-called blue wall once again, that may actually be the tipping point.

Dan Proft:

So there’s every indication that there’s that possibility. Is he going to get 30% of the Black vote some people are dreaming of? Probably not, but he’s consistently been in the low 20s in terms of approval of Black-Americans and he’s consistently been a 30% plus of the Latino votes and some of these Latino voters in some of these swing states and I think it’s good because he’s making specific overtures to them, he’s Red rover, Red rovering people over the way he did with Ice Cube, even though there’s not an agreement across the board, but there’s agreement on some things. I think that’s what Republicans have failed to do for a long time. He’s made the overtures, he’s trying, he’s got some policy achievements that provide legitimacy for him with those constituencies and I wouldn’t be surprised if people are surprised by the percentage of Latino and Black voters that vote Trump.

Ryan Morfin:

Yeah. No, I think there’s an undercurrent developing that I think people aren’t hearing in the news, just from some of the more granular pools that are out there, you mentioned Trafalgar. Let me ask you a question, do you have a landline anymore? I don’t. Do you still have a phone that rings… So how the heck are these people polling people and are they only polling a subset of the population who maybe are much older and still have landlines and haven’t digitized their iPhone personnel communication strategy?

Dan Proft:

Yeah, the combination. That’s why I encourage people to check out that interview that Lowry did of Cahaly at Trafalgar is, yes, it’s some cell phones, but it’s also a series of digital approaches to get people to answer a seven to nine question survey, which is really all you need to answer if you’re just trying to get the horse race number, if you’re just trying to get where people are on a particular race among a couple of candidates. And so no, that’s right. I think, yes, you can go landline to older populations so long that it’s representative of what you think the election day turn out is ultimately going to be, but most of the pollsters are at least using cell phones and then also some digital component as well.

Ryan Morfin:

But do you think anyone’s figured out, you said Trafalgar is the best, but I mean, they were accurate, but how accurate were they in ’16, do you think?

Dan Proft:

They were very accurate. I mean, they had most of the Rust Belt swing states right, I think all of them actually. And also Cahaly actually had 306 to 232 for the electrical count, he had the electoral count spot on. So you can’t get more accurate than that. I’m not somebody that dismisses polling, I’ve run too many campaigns, I’ve used polling and so I appreciate what it can provide and I also understand its limitation. There were other polls that were within the margin of error in some of these states, because I mean, remember, Trump won Pennsylvania by 50,000 votes and Wisconsin by 5,000 votes and so it was a couple of 100,000 votes spread across a handful of states that made the difference, so that is very narrow.

Dan Proft:

So there was a lot of polling that was in the neighborhood, but I think Trafalgar’s granular approach as the way that was described, provided a little bit more of a value add in terms of really getting down to both from a 95% confidence interval to more like a 98% confidence interval. And one of the other things by the way they do is for a statewide survey, they don’t do fewer than 1,000 completed interviews. Four or 500, 600 gets you 95% confidence interval, but they want to go at least 1,000 just to be sure, just to be that much more accurate to reduce the margin of error that much more.

Ryan Morfin:

Yeah, I heard some statistic this week that it was for every 1,000 calls, they get one person to answer all the questions. Do you think it’s something about our society today? How toxic the partisanship is that people do not want to talk about where their politics are or they don’t want to digitally leave a fingerprint with their survey results?

Dan Proft:

Yeah, I think so. Again, just using Trafalgar as the example, they really try to create a comfort level for people to believe, because it’s true, that there’s anonymity here, that you’re not going to be held to account for what you tell us about what you’re going to do on election day, that’s important. It sounds just toxic like, “Oh, social media people are mean.” It’s what people are seeing happen to people who don’t Hugh the orthodoxy in their workplace or at school or in social circles, the so-called cancel culture, which I think is rather euphemistic. I mean, it’s really more like a purge, like an Eastern Bloc toward a culture and a that’s Soviet culture that is rearing its ugly head in the society, has a lot of people justifiably reticent to be too forthcoming and that includes certainly with the people they don’t know.

Ryan Morfin:

You know what? I think cancel culture is too nice, I agree. I think Soviet purge culture is a more fitting adjective. I think we’ll start using that going forward.

Dan Proft:

There’s a great piece by an Eastern Bloc woman in Tablet over the summer where she talked about the Soviet mentality that’s taking hold in America. And one of the points she made and think about this, and you have your viewers think about this too. One of the features of Soviet culture of totalitarian culture is that you have a different life, you lead a different life in public that you lead in private. And that’s an exhausting way to live, to be a different person, feel like you’re forced to be somebody you’re not in public to satisfy the snitch culture, to satisfy the overlords, and then you’re a different person in private. And there’s a lot of evidence that that’s exactly what’s happening in America and people don’t like it, people are afraid about that and they unfortunately have reason to be.

Ryan Morfin:

Well, that is a scary thought and a fascinating way to describe what’s happening slowly in front of our eyes, I agree. What do you think is going to happen in the House in the Senate? It seems like the house is a foregone conclusion, but the Senate seems up for grabs.

Dan Proft:

Yeah. I think the Senate tracks with the presidential outcome, although I can see a scenario in which Biden wins and Republicans retain the Senate. I think some of those swing state senators Republicans are going to come in, regardless of who’s successful at the top of the ticket in their state. Don’t forget, the Republicans are also guaranteed a pickup with Tuberville over Doug Jones in Alabama, virtually guaranteed. So that bumps up the number that Democrats need by one, for starters, for opener. Yeah, the House, I think, Trump would have to run the table at these swing states and there would have to be probably something, maybe watershed is too strong, but something significant happened in the last two weeks.

Dan Proft:

I mean, maybe if this Hunter Biden story got legs and people really started to look at Joe Biden as an emblematic of the pay-to-play culture or the self-enrichment culture in D.C. that they loathe, but the house is a big lift and because so much of the House runs through suburban areas that frankly, have not fared well for Republicans, including Trump for some time. I mean, it’s one thing to remember as well that these suburban areas where Democrats made their bones in 2018 to retake the House, they were trending away from Republicans before Trump was elected in 2016 for all kinds of reasons. And I think that trend has continued largely because of sort of the hate has no home here, white leftist women in suburbs, and some of the male impersonators they’re married to.

Dan Proft:

So that’s a struggle, that’s a struggle for a Republican treadmill. And frankly, this is why, and I’d be happy to do it as somebody who’s been a longtime Republican operative and conservative, I’d be happy to trade out every one of those hate has no home here or champagne socialists sentimental barbarians in leafy suburbs for a Latino entrepreneur, a Black entrepreneur, middle income family that’s playing by the rules and doing everything right and working their way up the ladder, I’d be happy to make that trade every day and twice on Sunday to reshape the Republican party around people that work and play by the rules rather than around these ghastly view watching shrews that we pay too much attention to.

Ryan Morfin:

Yeah. Let me ask you a question, the stimulus package seems like it’s on ice, it’s not coming. The delta between 1.8 trillion, again, 1.8 trillion and 2.4 trillion, these numbers boggle my mind. So is the 600 billion or so of stimulus that would be used to bail out Northern states, pensions and government overspending, bloated administrative staff. You live in Illinois, when does it explode? If there is no stimulus, how close are you guys to the apocalypse up there? How bad is it? How big is the donut hole of the budget?

Dan Proft:

I mean, it’s massive. Moody’s earlier this fall put it at $400 billion in total debt in Illinois, the estate that has a $40 billion annual general revenue fund budget, it’s not solvable the ordinary way. How close are we? Well, I would say this, it seems to me, you have to have something, again, significant happen as the canary in the coal mine, that the entire mineshaft is collapsing and that means a pension fund. In states like California, Connecticut, Kentucky, New York, Illinois, these terribly run states, I think there’s just a suspension of disbelief that the doomsday of math is only an opinion and it’s not something that will be realized because we’ll just find a way, things will just work themselves out and so on and so forth.

Dan Proft:

And of course, that’s not true, but I think the critical mass of popular recognition won’t come until a pension fund capsizes and is unable to pay out current beneficiaries. In Illinois, that’s most likely to be the Chicago Police Pension Fund first, both the Chicago Police and Chicago Fire Pension funds are less than 25% funded and that was before COVID and obviously the stock market rebound has allowed those pension funds to continue to flow, but they’re still death spiraling as you know, being a financial professional. And so when that happens, then hands will be forced and the decisions that have been pushed off for generations will have to be made, but I just don’t think there’s the political will to do anything right now.

Dan Proft:

I think you have big city mayors and blue state governors counting on a Biden win and a bailout, whether it comes in right now and some sort of compromise between Pelosi and the White House or whether it comes after Joe Biden is inaugurated, this is their thinking. But I just don’t think it’s going to be as easy as they think it is and there’s frankly, not enough money to do much other than buy a little bit more time, even at the 600 billion number, once you start spreading it around to states that are already in the hundreds of billions of dollars in debt in unfunded liabilities, you eat it up pretty quickly.

Dan Proft:

So what they’re looking for is what they’ve always looked for, which is short-termism, access to municipal facility the feds set up with the CARES Act to get a bailout as much as possible, to try to bang your tin cup around the rail in D.C. in a Biden administration. I mean, these are their strategies to deal with completely untenable balance sheet issues. When does it happen? Like I said, I think the Chicago Police Pension Fund, if nothing is done, will be unable to pay current beneficiaries by the end of 2021, assuming you don’t have some 20% return in the market.

Ryan Morfin:

You got California, you got Connecticut, New York, New Jersey, Massachusetts, I mean, they’ve all got their handout looking for a way to cure this overspending, if you will, and raiding the pensions.

Dan Proft:

Well, right, but I mean, if they get their handout, so everybody else has their handout too, who doesn’t want free federal money? If you’re a governor, I don’t care if you’re a Republican or a Democrat, they all do and that’s the problem they have is it’s a handful of terribly governed states, Illinois being the worst governed state in American history based on the numbers. What incentive does a congressional delegation in Texas or Wisconsin or South Carolina have to rally to bailout Illinois with their taxpayers dollars?

Dan Proft:

They have no incentive. So you’re either going to continue this fantasy world of pretending we don’t need an economy, we can just have the government print money and bail everybody out of their obligations, or you’re not going to get anything or anything close to what you need and decisions will be forced at the state and local level with these states that have put themselves in the position that we’re describing.

Ryan Morfin:

Oh boy, well, no wonder these kids are burning down their cities. I mean, we’re misspending everything and leaving them with a huge tab to try to figure out how to pay later, it’s not looking too bright.

Dan Proft:

If they were only rioting over that, I might have some more respect for them than I do, but unfortunately, that’s not why they’re rioting.

Ryan Morfin:

Yeah. No, I don’t disagree with you there. It’s a shame what they’re doing to small businesses everywhere. A lot of these people put their life savings at risk to go start that business and now, it’s being burnt down and destroyed in front of their eyes. It’s mob rules, it’s disgusting. Well, one question I have for you is, you mentioned Hunter Biden being bought and paid for by the CCP, do you think we go to a normalized relationship with China if Biden wins and how aggressive do you think it gets if Trump wins with China?

Dan Proft:

Yeah. I mean, normalize, I think is a very euphemistic way to describe what the relationship would be between Joe Biden or the approach there would be between Joe Biden and the Chinese. I mean, we would go back to the Obama era approach to, America’s enemies aren’t really America’s enemies, they’re just friends we haven’t made yet, all we have to do is dropship some cash to the Iranians and they could be our friends and all we have to do is be nice and state dinners to President Xi and they’ll be our friends and continue to appease our enemies. I mean, that’s really the Obama-Biden foreign policy.

Dan Proft:

And so I assume that will be the Biden-Harris foreign policy if he was to be successful and that would be terrible for this country, just as we’re starting to finally uproot the Chinese influence infrastructure that’s domestic, the Confucius Institutes, what they’ve done in terms of influencing our academic quarters, in addition to the intellectual piracy, in addition to the human rights violations, in addition to the lack of a reckoning for their role in the COVID-19 spread. I mean, look, if Trump is victorious, I hope, and I expect that America’s enemies, foreign and domestic, will be treated the way that the guests were at the Red Wedding in Game of Thrones, that’s what should happen.

Dan Proft:

There should be an absolute reckoning for China across the board, from concentration camps for Uyghurs, to the COVID virus, to their continued efforts to insinuate themselves in American life to the detriment of American lives. And for the swamp creatures who traffic in America’s enemies for personal enrichment, I don’t care if it’s Hunter Biden, I don’t care if it’s Republicans, I don’t care… I mean, Dennis Hastert is a former Republican house speaker from Illinois, he was lobbying for foreign governments right after he was speaker and Republicans have done it too and I don’t like it.

Dan Proft:

I go back again to say, “Do you want to take a hardline against the Chinese communists, the Chinese Communist regime that is intent on displacing America as the world’s hegemon? Do you want to take a hardline against the swamp creatures that have allegiance only to greenbacks or do you want somebody that is going to take a bicycle chain to the playground, both inside the Beltway and at the UN and with respect to America’s enemies?” I think the choice is really stark. I wish President Trump could present it in such stark tones and avoid getting into silly Twittering about Tony Fauci throwing out first pitches. If he could focus on these big things, to borrow from Fred Smith at FedEx, “If he could continue to make the main thing, the main thing, I think he’d win this race going away. It’s his personality that gets in the way.”

Ryan Morfin:

Isn’t that the truth? Well, no, it’s going to be interesting. How soon before Kamala Harris becomes president, what would you say? What’s the gut check there? How many months or years,

Dan Proft:

I have no idea. I mean, whether Joe Biden is, and obviously, I don’t wish him ill health, and I don’t wish anyone ill health. So let’s say Joe Biden is elected, and let’s say he serves his term in good health, fine, it doesn’t matter. Just like it doesn’t matter in this campaign. He’s completely turned over to the Marxists that control the Democrat Socialist Party. I mean, there’s just no question about it. His town hall, this is an underreported Q&A from his town hall last Thursday evening, but it’s so indicative. I mean, Joe Biden learned what transgenderism was five minutes ago and then three minutes after that, he declared it the civil rights issue of our time.

Dan Proft:

And then at the town hall on Thursday night, he’s asked a question by a mom who has some eight year old, an eight year old kid who is a boy identifying as a girl and Joe Biden is out there pounding his shoes, saying, “Yes, it’s so important that eight year olds get to choose their gender identity if they feel like that’s going to be a more comfortable way for them to live.” I mean, you turn over these decisions to pre adolescents, this is lunacy, this is absolute lunacy and Joe Biden is just a wholly owned subsidiary of this cultural Marxist, Jacobin left that has taken over the Democrat Party. So assume his health is fine, it won’t matter. He is going to do the bidding of… Look at his platform, it was crafted by Bolshevik Bernie and company on the economic front and on the cultural front, he’s given over to the Identitarian thugs.

Ryan Morfin:

Oh boy. Well, we’re all hoping for a good outcome, a swift outcome, I think, because I think if there is a very close race that stays in the courts until January, I think the markets are going to go upside down and I don’t know what your thoughts are, assuming it’s close, how fast do you think they’re going to prosecute this election?

Dan Proft:

Well, I mean, I could see something akin to Florida in 2000, where it comes down to maybe one or two jurisdictions in a particular state, or maybe a couple of few jurisdictions in a couple of states. And in that case, you know what happens, we saw it in 2000, the legal teams from both sides descend in those areas and everything is poured over and everything is litigated and then the lower courts decision is appealed by the losing party, which is appealed to the Supreme Court. So I mean, that’s a process. Will it happen expeditiously as compared to how things normally make their way through the courts? Sure, but even then, in Florida, in 2000, it was a month. Could this be a month? Could it be two months? It’s possible.

Ryan Morfin:

I’ll leave you with one final question before we get to call it the human factor around it. The curriculum in our schools, you mentioned Confucius Institutes, teaching Mandarin, teaching kind of, call it socialism, why do you think our youth population is starting to really gravitate towards socialism more and more?

Dan Proft:

Because that’s what they’ve been taught. I mean, all the cultural institutions have been taken over methodically over the last 50 years by Marxists and now, they’re pressing the pedal down with The 1619 Project and the backing of The 1619 Project by the New York Times by the Pulitzer Foundation, this fraudulent story about America’s history that’s been roundly criticized by respected historians across the political spectrum, mainly leftist because that’s mainly who’s in academia and yet it doesn’t matter. And now that’s being dropshipped, packaged up and dropshipped to K-12 school systems. This has been going on for 60 years and now people are waking up to it because of remote education and Zoom classes and so forth.

Dan Proft:

And like, “Wait, wait, what are you being taught? Wait, what did they just say?” This is why teachers don’t want parents listening in on the Zoom classroom, there’s a reason for that. I mean, a long time ago, college campuses became largely totalitarian reeducation camps and that’s now made its way down to the K-12 level with critical race theory, with Identitarian politics, with people who want your children to live a life of grievance and turn them into political activists rather than developing their intellectual capacity and their skillsets to pursue a productive life in whatever career they choose.

Dan Proft:

Yeah, I mean, when all you hear is how bad America is and how bad capitalism is and you hear a utopian vision from sentimental barbarians that sounds really flowery and wonderful, where we’re all going to get in a kumbaya circle and share a Coke and live happily ever after in some commune based on the Vanguard class, redistributing from those who have to those who need, then it has appeal, it has appeal right until you a get stake in the game, right? Until you grow up and recognize there are trade offs in life and you perhaps start to question whether something is morally correct that’s predicated on taking, which is just another way of saying violence.

Ryan Morfin:

I think we saw that experiment. Yeah, it’s called the chop, right? You kind of…

Dan Proft:

Yeah, well, right, exactly. Right, you want autonomous zones. But again, what did the politicians do? They turned their cities over to the mob. Shelby Steele is perhaps the most brilliant on this. I mean, if you haven’t read his book, White Guilt, from about 15 years ago, everybody should. These people that were involved in Civil Rights Movement in the 60s said, “Look, what the political class told us was that your identity is the means to make a claim to power.” It was initially race and then gender and then sexual orientation and now we’re back to race as we’re redefining American history, largely, but not exclusively. That is the end of America, that is the end of peaceful pluralism, that is a new racial order.

Dan Proft:

As Shelby Steele said, “The problem with slavery was that it established a racial order, it established a power structure based on race.” Well, that’s exactly what the left wants to do today. And for those who think you appease your way to being able to live in the Jacobin world of the new French revolutionaries, you better go back and read your history about the French Revolution and this includes you, Jeff Bezos and how many of those who thought they would just finance a little bit of it, all those C-suite execs and Fortune 500 companies writing checks to Marxist organizations like Black Lives Matter, just go back and reread the French Revolution and how those Robespierre treated you in the end as soon as they got power.

Dan Proft:

They despise you, they despise the Ted Wheelers and the Jakob Fries and the Jenny Durkans and the Lori Lightfoots of the world. They have no use for them other than to bully them until they get power and then they’re the first ones in the stocks, okay? And that’s what’s happening. But all of the cultural institutions have the same ideological disposition and now you overlay Big Tech with the ability to silence opposing viewpoints, and you really have a recipe for a powder keg and I think that’s where we’re at unfortunately.

Dan Proft:

I’m very commonsensical realistic about these things, but you can’t look around and see what’s happening and see who’s in charge while those in charge are crying about systemic this and systemic that, they’re in charge of the systems. There’s a play being made there, it’s all predicated on power and they see the path of least resistance to power. And when they’re in power, there is no toleration, there is no tolerance of descent. And that is a dangerous road on which we’re traveling collectively.

Ryan Morfin:

And do you think the social media giants get broken up? You saw Google got dropped today for an antitrust lawsuit.

Dan Proft:

Yeah, I don’t think that happens in a meaningful way for some time, at least. And I think there’s other ways to approach that rather than antitrust litigation, I’m not necessarily a fan of that. It’s like Elizabeth Warren, you have separate operating systems from hardware. Well, so what? I mean, you just create another company that’s going to behave in the same way that these companies currently behave. So I don’t know that that addresses the problem that I’m talking about. They’re just into wealth redistribution, I’m into living in a peaceful pluralist society, but I think there does need to be a reckoning with Big Tech, and I think it comes more through transparency than it does through antitrust litigation.

Ryan Morfin:

So I heard a stat today, there’s 60 million hours a day being saved because people aren’t driving to and from work, how is that impacting talk radio or people listening still at home, in your opinion? Are people more productive working from home? What are your thoughts?

Dan Proft:

Well, I think talk radio is doing better than commercial real estate, I’ll say that. Yeah, I think the world was changing anyway. I mean, in 10 years, everybody’s car dashboard is going to look like a Tesla anyway, so it’s going to be internet based and with the advent of the popularity of the podcast, we’ve actually seen a real migration from terrestrial listenership to a podcast downloads and listening online, which is fine. We bounced back from the nadir of everybody being frozen in place in the first part of March and April, but talk radio was one of the outlets, particularly for people that are centered right in orientation to get information.

Dan Proft:

And so there’s a real stickiness with talk radio, it’s like television, it’s not going to go away. It may change form in terms of how people consume it, but it’s not going to go away. And radio is particularly unique as a communication medium, because it’s two way, it’s interactive in a way that reading a newspaper or watching a television program isn’t. So we’re okay on that score. In terms of people going to work, I don’t know. I mean, I read some of the same articles you read in The Wall Street Journal, and initially you saw a productivity bump, and people were worried about their jobs, and they want to make sure that they don’t miss a beat by working from home, working remotely.

Dan Proft:

And then that started to dissipate over time and you have a lot of HR people now saying, “We really need to get everybody back in the office, at least some part of the time, because that collaborative environment with senior level people working with junior level people and just being creative and having that environment in terms of problem solving and so forth, product development, that really is a value add that is difficult to replicate if everybody’s on a Zoom call.” So I think perhaps commercial real estate may not take the longterm hammering that some are predicting because you are still, for a lot of employers and a lot of businesses, you are still going to need to have an office footprint to have a collaborative work environment.

Ryan Morfin:

Yeah, I think we’re starting to see the mental health dissonance and friction of people not being in the office and working from home. And I think short-term tremendous productivity gain, medium term, we’re going to see in the second wave, I think, a slow down of that output as people are just tired of working from home. So this part of the show-

Dan Proft:

I would just say, add quickly to, it’s the same thing with schools, initially, kids, Zoom calls or hybrid and so on and so forth, but that’s going to get old and what do we know? We know that kids, particularly in younger grades, the earlier grades, learn better in a classroom environment, so that’s where parents are going to want them.

Ryan Morfin:

Yeah, no doubt. And it’s also, without childcare, a lot of families can’t go to work. So it’s going to be an interesting keeping schools open. I saw a stat recently that, the fastest growing job markets are the ones where the schools are open, go figure. Well, so this part of the show is called The Human Factor. We asked the same six questions to all of our guests from season two and it’s mostly whatever comes to the tip of your tongue, yes or no questions. And so, we’ll kick it off with the first one, if there was a COVID vaccine available today, would you take it?

Dan Proft:

Yes.

Ryan Morfin:

Who wins the election on November 3rd?

Dan Proft:

Trump.

Ryan Morfin:

What type of economic recovery shape are we in? Is it U, V, K, W?

Dan Proft:

I think it’s a K. I think there’s a disparity across sector.

Ryan Morfin:

Yep, I agree. Is there anything you achieved this summer that you’re particularly proud of while you were on lockdown?

Dan Proft:

My first hole in one.

Ryan Morfin:

Ooh, which course was that on? That’s awesome.

Dan Proft:

A momentous occasion. I’m ready to be received by my maker now that I’ve [inaudible 00:40:44]. Number five at Bull Valley in Woodstock, Illinois, and that is a tough track for anybody who’s played Bull Valley.

Ryan Morfin:

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

Dan Proft:

Yeah. I mean, obviously, those companies that have done well even despite these lockdown whack-a-mole policies around the country, so that would certainly include Big Tech companies, the Amazons of the world and so forth.

Dan Proft:

But I would say this, more so than looking at the sector, I think the way that the entrepreneurs set across sector, the resilience they’ve shown is the most encouraging thing, it’s just a reminder how entrepreneurial, how creative the American people are that they can take all this being thrown at them, both something that they can’t control and there being the virus and something that they can’t control, which is the whimsy of politicians, and still figure out a way to keep the lights on, to keep the bills paid, to get the kids to school, or to get the kids educated in whatever fashion is available.

Dan Proft:

I’m really, the thing that I’m most encouraged about is the ingenuity of the human being, of the entrepreneur, or just that spirit, sort of the Protestant ethic and the spirit of capitalism that Max Weber wrote about, that’s the thing that’s most encouraging to me about America’s recovery is the ingenuity and the resilience of Americans.

Ryan Morfin:

I totally agree. Anything that you’re watching, listening, or reading right now that you’d love to share with our readers?

Dan Proft:

I’ll tell you a book that I, I mean, there’s many books, but the first one that popped to mind is a book called The Coming of Neo-Feudalism by Joel Kotkin, who is a former New York Times columnist now at the Manhattan Institute, but that’s worth a read. I think that’s a pretty good distillation of where America is headed and why we need to pull out of where we’re headed.

Ryan Morfin:

Fantastic. So where can people find you on the radio or on the internet if they want to listen to your show in the mornings?

Dan Proft:

So I’ve got two, I’ve got to have a morning show in Chicago, that’s a morning drive, 5:00-9:00 A.M, Chicago’s Morning Answer is what it’s called. So you go to 560theanswer.com, 560the answer.com. And it’s a Salem Station, my friend Mark Davis, who broadcasts in Dallas, he’s part of the Salem family with me. 560theanswer.com is where you find that show and you can listen online, or @DanProftShow, my name, show.com for my syndicated show, which is in about 50 markets around the country.

Ryan Morfin:

Fantastic. Well, thanks so much for sharing your thoughts and your insights and I look forward to seeing you soon.

Dan Proft:

Ryan, a pleasure. Thank you.

Ryan Morfin:

Thanks for watching Non-Beta Alpha and before we go, please remember to like and subscribe, [inaudible 00:43:50] the podcast and our YouTube channel. This is Non-Beta Alpha and now you know.

 

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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

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