Investing in energy transition materials

Wouter Klijn 01:16

James, welcome to the show.

 

James Richards Hi. Wouter, thanks very much for having me.

 

Wouter Klijn So let’s start at the beginning. What are transition materials and why should institutional investors care?

 

James Richards 02:15

You know, I think that the transition is one of the big structural thematics of the next couple of decades, and transition materials are what I call a wide range of commodities and materials that benefit from the process of the transition, and in many cases, the demand driven from the transition, coupled with the fact that it is never been so difficult to bring on new supply of a number of commodities, will create the conditions where, you know what I think could be the next super cycle for a wide range of commodities. And this is a very, very investable thematic, in my view,

 

Wouter Klijn 02:49

Before we get to the super cycle, can you tell me a little bit about where this idea came from? Because I understand this was more of an analyst driven idea to set up the strategy. Is that right? Yeah.

 

James Richards 03:00

I mean, you know, I think normally ideas are born in this, in the product team, and, you know, then they go and find a portfolio manager, you know, this one is something that came out through, you know, hours and meetings and the sort of the work that we were doing around, around the commodity space, and the same themes, you know, started to come up again and again, first of all, in copper. But then, you know, we began to get increasingly excited when we saw the same themes coming up across a wide range of commodities, and, you know, as far afield as vegetable oil and animal fats. And it was then that we saw that there was a sort of wide ranging, quite diversified, investable thematic here.

 

Wouter Klijn 03:41

So what’s the story with animal fats?

 

James Richards 03:45

Well, animal fats is so the renewable diesel chain, you know, particularly in the US, but also also wide. What are more widely, you know, is sealed by animal fats and vegetable oil. And you know, there is a, there is a fine, a finite supply of these things, and so you have to incentivize it. And the only way to incentivize new suppliers through price and, you know, the demand that is in there’s been created by stricter regulatory standards and and stepping up of requirements, you know, really places a challenge on those supply chains.

 

Wouter Klijn 04:22

Yeah. So is that in your portfolio animal fats and oils?

 

James Richards 04:26

We certainly think that the vegetables animal fats is a very interesting long term thematic,

 

Wouter Klijn 04:30

yeah. Okay, interesting. So coming from themes that you saw in copper and copper is, of course, a key material in electrification. So is this transition the story to renewable energy? Is it just about electrification, or are there themes involved in this as well?

 

James Richards 04:51

So I mean electric, if you look at the sort of the current opportunity set, electrification is an obvious one. You know, it has various aspects. You know. Renewables is one obvious aspect. Electric vehicles is another. And if you think about sort of the grid requirements of the increased demand for electricity, you know that that that that also has some pretty found profound implications. But it’s not just electrification. If you think about sort of hard to abate areas like like steel production, maritime fuels, aviation fuels, you know, the circular economy is a very is a very interesting area. You know, it’s a much, much wider area than just electrification.

 

Wouter Klijn 05:38

And I think you’ve mentioned digitization and urbanisation, as to key thematics that are related to the transition materials. In particular,

 

James Richards 05:47

I think one of the one of the interesting aspects that you get here is that you get demand that is driven by the transition but then you have a lot of other structural demand drivers that are also facing in the same direction and pulling on the same commodity demand chains. And so, for instance, AI and data centres will drive demand for copper and other and other commodities, but also the industrialization of India and Southeast Asia as they start to hit levels where commodity intensity picks up quite dramatically. You know, they’re essentially being competition with the transition and data centres for scarce supply of commodities and, you know, and that is quite exciting, I think, in terms of compromises will have to be made. I mean, if you look at the sheer population size in India, and you put a sort of average peak commodity intensity on it, like the numbers are mind boggling. And so, you know, compromises are going to have to be made. And the only way that you get those compromises made, and the signal that you get to to get substitution, and all the ways to get the numbers to work. You know, the only way you can get there is through price.

 

Wouter Klijn 07:03

So there’s a couple of big trends involved. You just mentioned one around the super cycle in commodities. So when you sort of look back over time, have we had some of these super cycles before?

 

James Richards 07:16

I mean, I do have a history degree, but not much of a history student, so I’m kind of more focused on, on the most recent, which is, you know, the early, the early years of my career were with the China driven super cycle. And, you know, that was one of the reasons, where I saw, you know, clear echoes of what I was seeing, you know, today, you know, versus what I was seeing there are seeing above trend demand for commodities driven by China hoovering up, you know, pretty much every commodity in sight. And you know, decades worth of under investment in commodities at the time. So you had a relatively curtailed supply side. And that’s really important is, you know, in order to make money in commodities, the supply side has to struggle to keep up with demand. And so, you know, commodity with 20% demand, keiger, you’re not necessarily going to make money if the supply side is a lot, is it elastic? And so, you know that supply side is really, really important, but it is a different super cycle, I think, from from the China driven super cycle. In the the China driven super cycle, I think mainly had winners, whereas in this super cycle, I think, you know, there are clear winners and losers in terms of in terms of demand, you know, and you know, the transition kind of gives the clue to that in thermal coal, demand should decline over time. All demand should decline over time. You know, we’re talking, we’re talking longer term here. And you know, there are areas like, I think, although there are some demand benefits for steel, you know, the process of decarbonizing steel is quite, is quite difficult and expensive. And so I think there is, there’s some difficulties around that. And you know, I’m in Australia, and you know, there’s a school of thought which, which says that iron ore is benefited by the transition. I don’t really believe that, you know, I think that the iron iron ore, and particularly lower grade iron ore, is one, is one of the commodities I have big question marks on on a 10 to 15 year view.

 

Wouter Klijn 09:18

Why is that? Because you could imagine, that you know, steel is still used in some of the infrastructure. I mean, you know, you think of windmills, probably mainly carbon fibre, but there’s still elements of steel.

 

James Richards 09:31

Sure. But if you’re, if you’re going to produce low carbon, low carbon steel, you know, the the miners are working with the steel companies on technologies, but you know, there’s a lot of unanswered questions around what the cost implications of those that are, what the capital implications of those are, and who’s going to pay for it. And so I’m not I, I think that I find it difficult to see a world that doesn’t use Pilbara, Pilbara, but I just don’t know exactly what that world looks like. And. And what, and what the what the implications are for their position on Costco.

 

Wouter Klijn 10:04

Yeah, yeah. So another element of this super cycle that is relatively unique to this one is there’s an element of a de commoditization of certain materials. And I think it’s an interplay where ESG credentials, geopolitical alignment and some processing capabilities can cause changes in prices and cause some price premiums. Can you explain that a little bit?

 

James Richards 10:30

So it’s something I believe in quite strongly. And you know there is, there’s active debate, and you definitely come across people in the industry who disagree with my point of view on this, but, but my point is this is that, essentially, you know, as we begin to look forward for different things in a, you know, a tonne of commodity, of commodity product, the features that we that we need to promote, are going to have to be incentivized in some way. So if you want a low carbon tonne of aluminium, you’re gonna have to pay a premium for that. And if you look at the producer’s day, you get some people who do get premiums for that. You get you get some who don’t. And there are some commodities where it’s quite difficult to see these premium but we’ve seen a really interesting example this year in rare earths, where, you know, the world has priced rare earths for the immediate part, for the last few years on essentially the China price. And you know, supply chain security suddenly come right to the front of people’s focus and and you know, the US government has done a deal with with a large US rare earth producer this year, giving a price floor which was very significantly above the China price. And so, you know, if you particularly in a world where you mind about the security of your supply chain, there are areas where you’re gonna have to pay a differentiated price, I think, to incentivize

 

Wouter Klijn 12:06

Yeah, so the rare earths were a bit of a outlier, I think, in recent times, where they spiked up, and I think more recently, came down a bit. But I remember you talked about like the teslaization of rare earth stocks. Can you explain it a little bit?

 

James Richards 12:23

I’ve been doing this, this for 20 years, and I’m kind of used to generous participation in in in metals and mining being been sporadic and selective, and multiples generally being quite low. And you’ve seen, you know, so you’ve seen in various, in various spaces, this year, the the multiples suddenly expand dramatically, as as, I guess a wider investable public has come into the stocks. And, yeah, I mean, as rare earths were, were right at the forefront of attention, you know, the multiples did expand, you know, very, very dramatically, which is, you know, which is a lot of which is very pleasurable all around,

 

Wouter Klijn 13:07

yeah, so did you do some profit taking on that?

 

James Richards 13:09

I think Fidelity would really like me not to answer that.

 

Wouter Klijn 13:16

Fair enough. So rare earths are intricately linked to China. And I think we’ve seen in a number of transition materials, where, where China comes up. I saw somewhere a statistic that I already control 70% of global mineral refinery capacity. That makes you think, are there geopolitical elements that you have to be aware of when you invest in this space, because obviously there are some tensions between China and some of the Western developed countries. If they have a sort of a stronger strangle hold over some of these materials that can potentially impact valuations, there might be strategic considerations that come into play. Is that something that you keep in mind when you look at this?

 

James Richards 14:02

I mean, absolutely. I mean, you know, rare earth, as you said, is a really good example. I mean, it’s not 70% processing in rare earths. It’s more like 90. And, you know, magnet making is also dominated by the by the Chinese. And, you know, I think, I think, given, the events of this year, people are very, very sensitive. You know, people have, certainly, over the last two or three years, have become a lot more sensitive as to where their supply chains are. You know, we’ve seen, we’ve seen several geopolitical events over that period increase that consciousness and and so if you, if you want trade routes to and supply chains to shift, you’re going to have to incentivize that. And there are some areas, you know, and we talked about about rare earths, where the process of that incentive incentivization has begun, and you’ve seen stocks, individual stocks, benefit quite significantly from that. And there are some where it hasn’t so. And you know, China dominates with the world’s processing of a number of metals. But, you know, you look at copper smelting, and and, and some other, some other processing industries, and you know, there aren’t, at the moment, huge incentives being offered. And, you know, and the there is limited incentive to build new capacity in the West, and in the longer term, we’re going to have to think about whether that’s right or not, and how we change that.

 

Wouter Klijn 15:32

Yeah, yeah. Now another potentially geopolitical, and definitely a political topic is the Trump presidency. Of course, we have seen the impact on, you know, the energy transition in the US, where less attention for for renewable energy. But how do you look at that in terms of investing in the transition materials? Does that impact your strategy a lot?

 

James Richards 15:57

It’s great. Stat in the in the bhp commodity review at mid year, you know, it said that. It said that China had installed, I think, as much wind and solar in the first six months of this year, equivalent to 90% of the wind and solar ever built in the US. And that is, I mean, mind blowing. And you look at quite significant rollout in other Asian countries, Africa is beginning to, is beginning to instal some meaningful amounts of renewable energy as well. And so you definitely have some gives and takes, and even in the US, like I’m not going to comment on policy, on policy, but you’ve seen some areas where which have been much, much stronger than than expectation, as well as some areas which are probably where our demand expectations have dropped a bit.

 

Wouter Klijn 16:52

And what about the tariff war that we saw earlier this year? I remember you were speaking at one of our events in February, and there was a lot of questions around Trump, but a tariff war hadn’t happened yet. And, you know, materials, commodities, it’s a global trade. Did that get a bit of a knock from them?

 

James Richards 17:11

Well, we obviously saw a lot of volatility in the in the first in the first half of this year. And you know, the lack of visibility was, I think, difficult for producers and customers were kind of feeling their way to a degree. But I mean, kind of, if you think about what you actually saw, speculation about copper tariffs led to a huge amount of the world’s visible and invisible copper inventories heading to the US, tightening the global market and and and so and so, arguably, was copper positive. And you know, there’s still a large, a large amount of inventory sitting in the US, which you know, would need shifting if it was to come available to China or the rest of the world. And you know, tariffs can create new profit pools and and as well, as well as reduce, reduce other ones. And so, like, I think, for an active portfolio manager, you need to watch change and when, regimes shift, you need to be mindful, but more often not, they create opportunities as well as risks.

 

Wouter Klijn 18:26

Yeah, yeah, for sure. Now, Trump is not the only one that sort of affects the energy transition. We also seen a lot more demand coming from the rise of artificial intelligence and use of artificial intelligence, especially data centres where, you know, they’re quite energy hungry operations. How do you look at that? Is that affecting you? Think the transition could derail it? Could it, you know, delay it? What’s your What, what’s your take there?

 

James Richards 18:55

I mean, it’s, it’s something that that we factor into the way we think about commodity demand and, and, you know, is, is it’s nice to have in many cases, rather than utterly central to investment cases. And, yeah, as I said, I think earlier, like we see AI and and data centres as, as competing with, with other significant structural drivers for in some cases, you know, quite scarce supply of commodities. So, I mean, it’s definitely, it definitely, for me, a positive, but it’s one of a number of positives. It’s not the it’s not a main driver, and it’s not massively significant, particularly in copper today, so and so the relevance is still to come.

 

Wouter Klijn 19:41

We have seen that some of the key players, such as Amazon and Google that they’re looking now at nuclear energy generation. And I think in some of the white papers you’ve written, you talk about uranium as potentially experiencing a structural demand Renaissance.

 

James Richards 19:58

And I think that’s happening all. Already like, because obviously you had a long period of decline, you know, from which lasted for a prolonged period of time. You know, partly because of nuclear accidents in the past, but people have begun to understand that, particularly as you roll out renewables, you need a base load of low carbon power, and nuclear is an obvious source of that. And so you’ve seen, and again, like the tech players, are nice to have and definitely additive to the demand story. But what you’ve also seen is a series of governments change their view around around nuclear, and in some cases, make u turns. And you’ve seen, again, like China, just drive nuclear power growth, which leads to significant amounts of uranium demand. And then longer term, obviously, and you know it again. It’s a It’s tomorrow’s story, rather than necessarily today’s you’ve got, you’ve got the innovation of small modular reactors, which I think changed the use case for for nuclear. And are tremendously exciting potential, you know, tremendously exciting potential innovation.

 

Wouter Klijn 21:18

So how do you look at nuclear, or, more specifically, uranium as the material in the context of your strategy, because I could imagine that some people also invest in this type of strategy with an element of ESG in the back of the mind. It’s not necessarily an ESG strategy, but there are elements there where you can think the E is obviously very relevant when you invest into the energy transition. But at the same time, uranium also has, you know, dual use. It has some issues with pollution. How do you look at it from that angle? Do you get questions around that?

 

James Richards 21:55

Less so than you think. You know, sustainability is important to us, and you know, I kind of often say that, you know, I’ve been an ESG analyst for a lot longer than the most because if you think about metals and mining, it’s, it’s inherently an impactful activity. But a lot of what we know, what we could now call ESG, have been, you know, business issues for for the majority of my career, availability of water, how you get on with the local communities? You know, they’re not new issues, just because we now call them ESG. And so, you know, this has always been a part of how we think about about stocks. You know, safety. You know, if you’re running, if you’re running an operation properly, you should be able to keep your employees safe. And so and so. We apply those same frameworks to to Uranium companies. We don’t punish uranium for for its use, for its potential use in weapons, because we do see it as critical to the to the transition.

 

Wouter Klijn 23:00

Yeah. Now, if we delve a little bit into the way you approach investing in this space, this is not a commodity strategy, necessarily. You invest in stocks. You invest in equity. Why do you choose this route and not go to the raw materials?

 

James Richards 23:16

I feel, I feel quite passionate about this because, you know, I really feel that commodity based strategies are the wrong way to do this. And there are various reasons for this, you know, one is, I think liquidity can can force you to make compromises and into going to areas that you don’t necessarily want to go into. Because, you know, in several of the interesting areas that we’re talking about. There isn’t really a liquid, a liquid instrument to play. Rare earths is a good example, very difficult to play as a commodity. And then, you know, as a I would say this is an equity person. But you know, the way that we choose stocks is focusing on, ideally, the low cost, high quality assets, ideally with growth, with solid capital allocation. And we’re looking for, ideally for assets that generate free cash flow through the cycle. And so, for instance, you can, you can own a commodity, but if you own a low cost producer of that, of that commodity on a flat commodity price, you can own quite a decent carrying yield. And obviously, if the commodity then does what you expect it to and goes up, then you have leverage to that. And if you’re growing as well, then, then, then, then you get further leverage. And so as long as I think you are picking the right kind of stocks, you know, I will always believe that equities is a superior way to do this than commodities.

 

Wouter Klijn 24:57

And how do you sort of limit or define. Your Universe, because we talked earlier about animal fats. I know there’s, I think wood pulp as well, is in material in your portfolio. How do you sort of limit it to the relevance to the energy transition?

 

James Richards 25:15

We’ve intentionally looked widely because, you know, I think, I think you can think about this matter too narrowly, and the the impact it’s going to have on our on our lives, you know, getting to where we need to get to is not narrow and so and so we are constantly looking for new areas, and particularly less well understood areas. You know, chemicals is a really good example in that you have there a space where you ask management teams about the relevance of transition to their portfolios and and I haven’t yet got that many really good replies. And so chemicals is an example of so we’re looking to expand the universe rather than contract it, because we think that the opportunity set is even wider than we’ve envisaged. And as you say, we’ve construed this, the opportunity set is more widely than most.

 

Wouter Klijn 26:09

Yeah, what sort of chemicals are involved in energy transition?

 

James Richards 26:13

Well, this is, I mean, this is, this is the point is that I don’t think that that people have a good grip on, you know, polysilicon is an obvious one where, where where there is demand benefits and solar, but in the same way as as copper goes into all these applications, it can’t be true that, that there aren’t a wide range of chemicals that are driving this in a way that I don’t think is is sufficiently understood. Yeah, so look, silicone is also, you know, going, going to into a you also see demand benefits in silicones. So it’s, it’s, they are there, but just, it needs some finding.

 

Wouter Klijn 26:52

Yeah, is there any application in, say, coolants, or is that just water?

 

James Richards 26:59

You know, it’s very the thing I really like about talking about this area is everybody I talk to gives me ideas, and you’ve given me something to go and work on.

 

Wouter Klijn 27:11

Fair enough. So when you look at this area, there’s obviously a lot of commodities involved. There’s a lot of metals involved. We’re sitting here in Australia talking about this topic. And obviously Australia is a very mining heavy commodity heavy economy. To what degree does this strategy correlate with, say, an Australian Equities portfolio,

 

James Richards 27:30

As far as commodity share demand drivers, and particularly in terms of China, there should be some correlation, particularly with the mining slice, you know, I think over time, you know, copper and commodities that are geared to this thematic, in my view, should, should outperform some of the commodities which are more geared, I think, to the previous Super Cycle rather than the next one. That’s my view.

 

Wouter Klijn 28:01

Yeah. So we have a lot of iron ore here, which obviously is not escorted, but also lithium.

 

James Richards 28:08

So lithium, lithium obviously sees tremendous demand. You and this, you know, I’ve talked about supply being as important as demand and inside and understanding the supply side being been utterly critical to this. And you know, lithium is a commodity where the China is supporting on an immense amount of supply. And so economics in that industry have been pretty challenged long term. Assuming that lithium continues to grow at Advanced caga, then you know, we have to keep on bringing on new supply, and so that has to be incentivized somehow. And so, you know, I see the future for lithium has been brighter than it is today, but not necessarily anytime soon, although, you know, things can change so fast. And you know, we’ve seen a couple of months ago, suddenly everybody was talking about anti involution in China and the need to make industries profitable. And so think things can change pretty fundamentally, very, very quickly, and that’s why I think you need an active portfolio manager keeping an eye on on this and reacting as things change, rather than more passive strategies.

 

Wouter Klijn 29:23

Yeah, do you also keep an eye on, sort of, like, new materials coming out?

 

James Richards 29:29

I mean, keep an eye on everything. I’ll be honest, like it’s like, that’s why it’s insanely exciting and interesting space, because you see these innovations, and the majority of things that you see can’t go nowhere. Some of them are uninvestable, but things can, things can change. And you particularly need to keep, at the moment, an eye on what’s happening in China, because so much innovation is happening there. And so I. You know, this is a space that’s characterised by innovation and change, and so reacting to that and sensing the opportunities as they come and the threats as they come as well is part of the day job.

 

Wouter Klijn 30:11

Yeah, because there is a lot of innovation in this space. Like, I think a couple of months ago, there was a lot of chatter about superconductors, and they were getting closer to that, that will be a game changer. I’ve seen to this space

 

James Richards 30:23

Well, and people only, people talk about game changers in the nuclear area as well. And so in a number of these cases, you know, the world may well get there, but it’s whether it’s five years, 10 years, 15 years, you know, it’s, you can see the world the way the world’s heading. It’s just, it’s when, when we’re going to get to that destination is often, is often unclear, and something, and some things, will get there faster and but in many cases, things get pushed out. Yeah, I saw a really interesting stat the other day with great minds predicting innovations, and the innovations they predicted were almost always correct. They just, they just, would, they just their prediction was just too early.

 

Wouter Klijn 31:09

Yeah, that’s, that’s the question, when to, you know, jump into a particular material as well. Because so,

 

James Richards 31:15

I mean, that is really, really important, because you can get, you can lose enormous amounts of money in investing in a great demand story that that is just uninvestable near tan, because that, and that’s why, you know, I said again and again and again, you need to think about demand, but you need to think about supply almost as much As demand, because I don’t want to lose money for two years and be right in tan, you know, I think it’s really important to invest in the long term but with a short term focus,

 

Wouter Klijn 31:53

Yeah, because we looked a little bit into where we’re at with nuclear fusion. And one of the approaches that has been tried here in Australia uses boron, but I presume it’s a little bit too early to jump into boron in a moment?

 

James Richards 32:08

Boron is something I look at every now and again, and I haven’t found and I can see work be exciting, but I haven’t. I haven’t, I haven’t got the stage where I’m excited enough, yeah, yeah. But, and, and if I think about the first time I find it exciting, I’m very glad I didn’t invest at that point, because it would not have been exciting.

 

Wouter Klijn 32:32

Fair enough. Fair enough. So I asked you about the correlation with Australian equities, because obviously this can function as a bit of a diversification strategy. When you look at investment styles, where do you think this has overlap? Because you could imagine that some of these commodity plays could potentially be value stocks, a bit of the cyclical companies there. Does that turn out to be true? Is this sort of a value play?

 

James Richards 33:02

I think, I think if you look at, if you look at the way that we invest, it’s very much valuation focused, but with a strong quality overlay in that we want to be in good assets. We don’t love leverage on the balance sheet and and so and so. I mean, I think if you look top down portfolio, it screens well for value. And as you say, multiples are different across different commodities. But So yeah, from a top down basis, we screen as value, but if you look under the under the under the lid, it’s a little bit more complicated.

 

Wouter Klijn 33:46

Yeah, so this strategy plays into the energy transition. And of course, the purpose of the energy transition is to basically decarbonize the economy, the global economy. But how does this sit next to, sort of a decarbonization goal or an emissions reductions goal? Because, you know, the production of some of these materials are potentially quite intensive in that perspective. How do you think about that?

 

James Richards 34:16

I mean, this is the, this is the consistent RNA is that, you know, it’s, it’s a lot of, on the face of it, the carbon footprint of the portfolio is, is higher than you’d like it to be, because, you know, these, these activities, have a physical footprint. There’s, there’s heavy processing, and there’s trucks and and there is, there’s a significant amount of mission emissions involved, but, and you know, those emissions are more for some commodities, and then they offer for others. But these commodities, we think are necessary to unlock the transition. And so, you know, the view we take is that, you know. We are willing to take that footprint in the short term, but in the longer term, we’re looking for producers to reduce their emissions and to get and have a realistic pathway to a better point in the future.

 

Wouter Klijn 35:14

Yeah, it’s sort of along the same lines as you know, if you have a portfolio of windmills, it’s not necessarily low carbon, but obviously it’s going to help with the energy transition,

 

James Richards 35:25

Yeah, and, but I think direction of travel is also really important in that, you know, there are, in most cases, there are ways to decrease that footprint quite, quite materially. And so you want to see companies working along that path, and and and kind of helping and sponsoring innovation to help with the remaining emissions where it’s more difficult to shift, yeah, and that’s why, and, you know, so we think about scopes one and two, but we think about scope three as well, because, you Know, supply chain emissions are important, and the extent to which the company, a company, can influence its supply chain emissions, you know, is something that that we think about a lot.

 

Wouter Klijn 36:10

Your strategy does sometimes get compared to other climate solutions out there in the market. And I think you’re quite passionate about the fact that you have a different way to approach what you see as the enablers of the transition. Can you tell me a little bit about that?

 

James Richards 36:26

Yeah, I mean, I think there are many valid ways to approach this, but I think you need, you need to know what, you need to know what you’re doing. And I think it’s quite difficult to have the same level of expertise in the commodity space and in the technology space, you know, I think the very different multiples, the risks and the challenges are different across both and so I think a more focused strategy in both areas kind of makes sense. And, you know, the thing that I love about the way that we’re doing here is that, if you have the transition developing faster in China and the east, you versus the west from the technology side, I think the winners and losers are different because, you know, Chinese decarbonization is not necessarily going to use Western providers. In fact, it’s most unlikely to and vice versa. Whereas, if you’re going to consume a unit of commodity, it doesn’t really matter where that unit’s been. In many cases, it doesn’t matter where that unit has been is being consumed.

 

Wouter Klijn 37:40

Yeah, I think you said in a previous conversation, I don’t I don’t care where the copper is sold, as long as it’s sold.

 

Speaker 2 37:48

That’s probably more brutal than I was intending to be. But in the spirit there, I can understand why I said that.

 

Wouter Klijn 38:00

Fair enough. We might finish up with a bit of a left field question. We were close here to Martin Place, and there’s like 400 people aligned outside of the gold place. Now there’s some limited applications of gold in industrial use, but is this a transition material, or is this not in the portfolio?

 

James Richards 38:18

I mean, there’s, there’s been many times this year where I wish that that we thought that gold was a transition material, but I’ve been, I think the the relevance is minimal silver. You know, obviously has some, some some applications in, in in photovoltaics in particular. And you do get, I mean, so there’s a fair amount of gold in the portfolio, because, because gold and others, is often produced by silver, by companies who also produce silver and and also companies who also produce copper and so and so there is, there is gold exposure in the portfolio. But do we target pure play gold companies? No, because we don’t think that kind of that thematic appear.

 

Wouter Klijn 39:03

Fair enough. Fair enough. Well, James, thank you very much for this conversation, and thanks for coming to our offices. Well, thank you very much for having me. This podcast was sponsored by fidelity international as such, the sponsor may make suggestions for topics, but final control remains with the investment Innovation Institute.

 

Wouter Klijn 39:38

Thank you for listening to the i three podcast. For more information, please visit our website at WWW dot i three. That’s the letter i The number three, Dash invest.com and don’t forget to like subscribe and review. Thank you very much.