Heidi Crebo-Rediker: So I think we actually do have a national emergency. And certainly, you know, policymakers and companies understand that when China shut off access. And so, you know, that was the moment. I think that was the moment where it really hit that that not only overreliance, but an up to 100% reliance that's like that. I mean, the Chinese cut off access to the technology that they had developed for refining, for extracting. They actually, when we had that one year pause, one of the things that, that the Council on Foreign Relations partner, Silverado Policy Accelerator, they had done a lot of work on what the, what China was actually exporting after, after that October lifting of the, of the, export controls there, exporting, magnets. But they're not exporting those rare earths or the technology that we need to actually, produce the same for ourselves.

Joe Weisenthal: Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal and I'm Tracy Alloway. Tracy, you know, we do this episode on various areas of technology in which China is perceived to be ahead of the US. And they're very interesting and I learn a lot. It's not obvious to me like what lessons there are or anything. Some of there's some of these things it's like we're really far behind. I don't think we're ever going to catch up. This is very interesting and academic. But what exactly is the point of talking about all this? I don't know if there's anything to do with this information.

Tracy Alloway: You know, what I thought you were going to say is that we are sometimes accused of identifying strategic choke points or areas of difficulty on the podcast, and then coming up with absolutely no solutions for how to fix them. I will be the first to admit I have no solutions. If someone accuses me or I'm saying you have not offered any solutions, you know, I, I just say that's not my job. I'm just a mere podcaster. I'm just asking questions.

Joe Weisenthal: We enunciate the problem and leave it to others to figure out. We leave it. We leave the problem to others to figure out. But, you know, there are there are people who are doing more than identifying choke points. There are people who are identifying, areas and vulnerabilities, etc.. So people actually are thinking about solutions. They're not all pie in the sky. You know, I've seen people on Twitter, it's like, oh, I know how to sort of, be more like, Chinese. And, you know, why don't we just try to be more.

Tracy Alloway: You've seen people on Twitter about how to be more Chinese.

Joe Weisenthal: Yeah. There is a Chinese joke. They just say, why don't you? Why doesn't the U.S. just adopt, Marxism-Leninism with Chinese characteristics? It's really that. Well, no. And then we can do that. On a serious note, the one you see most often is, well, why doesn't the U.S. just ease up on some of its regulation, like China, in order to get things done quickly? That's the trick. Spend more money or something like that. Encourage actors to pursue things that aren't necessarily so short term, etc.. Yes, there are in theory, solution. Anyway, let's have a conversation which we actually talk about ideas that may be somewhere in the realm of, feasible.

Tracy Alloway: Excellent. I'm ready. And this is also this is on an interesting topic that's come up a number of times on Odd Lots at this point.

Joe Weisenthal: That's right. So we're going to be talking about a very core topic. And of course this is US vulnerability to sort of strategic minerals rare earths etc., which we know that China dominated, which in theory of China were to completely shut off access. You know, not just military, high tech, etc. all kinds of problems. So what do we actually what could actually be done to alleviate this vulnerability? We really do have the and China's dominance was also a crucial turning point in the trade negotiations with the US. And also I think you get a sense of I don't want to say desperation on the US side, but like maybe urgency on the US side just by looking at the headlines that seem to come out on a nearly daily basis about like, oh, we found a huge critical mineral deposit in Utah. So, you know, we're all saved.

Tracy Alloway: It's also worth noting, before we go further, this is an area in which there's probably a decent amount of overlap from the last administration to this one.

Joe Weisenthal: Yeah, we did an episode, a little while ago with Peter Harrell. Who talked about some of these deals that the administration is making with equity stakes in private companies. I think Vulcan came up as one of them. And so, yes, we're going to be talking about what we're further, we can go in terms of actually having a healthy, robust domestic, domestic environment for our own strategic commodities, etc.. Anyway, we really do have the perfect guest. We're going to be speaking with Heidi Crebo-Rediker. She's a senior fellow at the Council on Foreign Relations, a former chief economist at the State Department. And she is the coauthor of a brand new report for the CFR. Looking at exactly this question, what can the US do in this room? So, Heidi, thank you so much for coming on the ad. Last part.

Heidi Crebo-Rediker: Thanks for having me on.

Joe Weisenthal: Tell us what is, what's this new report all about?

Heidi Crebo-Rediker: So so you're right that everyone's identified the problem and that, I mean, it's been a long time coming. This is like a slow train coming at us for for decades. At this point, it's not a surprise that China, has dominated this market for a variety of reasons. And it's not a surprise that they've weaponized it. They've done it over the years. We did pay attention, but we sort of forgot about it, in many ways. But right now we have an inflection point where we really need to get this sort of Damocles off of, off of the United States. And actually, it's it's really we our challenge is the same challenge that a lot of other advanced economies have right now with this incredible chokehold, not just on critical minerals, but particularly rare earths, particularly heavy rare earths that are the foundation of magnets which go in everything.

Tracy Alloway: Can I, just back up in history for a second? Because I think it will help us contextualize where we are right now. But what were the conditions that allowed China to basically gain dominance in this particular area? Did they make a strategic decision at some point saying, you know, we're going to be the world's, not manufacturer of, of rare minerals and rare earths, but we're going to we're going to make this, you know, a priority for ourselves.

Heidi Crebo-Rediker: Yes. Made in 2025, was their big strategic plan. They had invested a lot in, in rare earths, you know, particularly their domestic rare earths, to like many, many years before that. But they decided they wanted to dominate. And they really they did a very smart job of creating an entire ecosystem. So both domestic China extraction, processing and then they came up with the all of the products that were that would be the leading demand, which you really need to have for the creation of a market and the demand meaning the, you know, new energy, wind turbines, particularly their, you know, their, their EVs and also defense. So you have a whole like, demand pool and you also have state companies that don't have to be profitable. And that's pretty key if you're competing over on the globe to, to actually mine and process. They also have a lot of hold on the technology for processing. And so in traditional mining, you know, they've really they've made a massive strategic investment. And we for a variety of reasons did not.

Tracy Alloway: Joe, this reminds me of the episode we did with Dan Wang, where he made sort of similar points about the tech ecosystem that's developed around Shenzhen and how that, like, allows innovation to really thrive. And then also this idea that, well, if you don't necessarily care about returns on capital as much as the US, certainly then you kind of have a leg up when you're developing something like this that might not pay off for a very long time. And this always seems to be an issue when we're talking about some matters of national defense, because right when it comes to national security, you have this other priority that is not profit related.

Joe Weisenthal: Everything that we've done that has some every episode we've talked about, this comes up with we're talking about literally the defense industry is and the defense suppliers or other strategic things. Here is there's other goal that you have in which profit can't be the only you have at least two bottom lines. One is related to security and one's related to profit. And so you have this tension. So how did you do this report. What was the process by which this was, you researched this, who did you talk to etc., so that you could, publish this.

Heidi Crebo-Rediker: So the I mean, the report itself is on how well we put all of the emphasis on, on mining, on the extraction coming up with the processing and the, the end products, for example, magnets. The the thing is, we can't actually out mine out process and outspend China. Certainly not at scale and not in a cost effective way. So what is another? We have basically a huge timing mismatch. Will we get there eventually with friends, allies, you know, all of the different countries that are working on this same problem together eventually. But it's going to take a very long time and we don't really have time. So we looked at how innovation could actually, leapfrog the China choke hold on critical minerals and particularly rare earths. And so that was really the starting point. How do you solve for national and economic security in a way that really plays to U.S. strengths in innovation? And, and then when we took a look around, we found there were some really exciting companies that had taken research and development from like 15 years ago, and they were ready to scale and starting to scale. And so that was really what the excitement was about.

Joe Weisenthal: Just real quickly, what do you say you took a look around like what was the how did you sort of identify the people? Like who did you talk to and how did you identify the people who pointed you to? Look, there was a lot of interesting, genuine science and tech that can be, scaled up. How did that process work?

Heidi Crebo-Rediker: So I started with the national labs because we we don't give enough credit to the fact that a lot of the great innovations that come out in are commercialized, that we all, we all know and love actually had their origin in our national lab system. And sort of a national jewel. And so Ames National Lab has this critical material innovation hub. And a lot of the companies that are doing this, like the various types of breakthrough technology came out of or are working with Ames National Lab. And so I started like poking around from there and then really word of mouth. So as soon as as soon as we got the word out that we were working on this, it's a it's a very enthusiastic, mission driven community that wants to all leapfrog this challenge through innovation. Plus, people like talking about their problems. Right.

Tracy Alloway: Describe for us the state of the US, I guess rare earths industry at the moment. And then also what you would describe as the key choke point in this particular strategic choke point, like where is the biggest source of trouble or inability to actually do this at scale?

Heidi Crebo-Rediker: So in terms of the there are two different parts the U.S. used to produce, a significant amount of of rare earths, primarily light rare earths and p materials, in Mountain Pass mine, had, you know, a variety of challenges, including not being commercially viable. But that was not the only reason. But we do actually have rare earths in the United States. And we and we were a mining, you know, a mining powerhouse many years ago. I mean, remember like California 49 ers and people going out with picks and shovels. Yeah, many, many years, many years ago. So we do have mines and we have resources. But there are always, you know, there are always consequences and trade offs there. You know to mine is often toxic. You have environmental concerns. You have a lot of waste that through traditional mining gets generated. So we were more than happy for the Chinese to take on that, those set of problems and then sell them to us at a very low cost. That's how we all became dependent on them. And, and so that is, I think where we are right now, we do have a lot of partnerships that are being formed. And, you know, with Saudi with, South Korea, there are Australia. I mean, we're sort of doing what we can to go the traditional mining route. But the I think the really interesting thing is how we can get there, like much faster, much cleaner, and with much more cost effectiveness and even competitiveness, cost competitiveness with China through some of these new technologies, mining in the US.

Joe Weisenthal: Let's talk about, when we when you talk about the technologies that could actually get us to parity or something like that. Are they more on the mining side? Are they more on the refining side or both? Like, let's talk about these technologies.

Heidi Crebo-Rediker: Okay. So let me give you let me give you a couple of examples. So back when China cut off Japan's rare earth access in 2010, the Department of Energy, through its, I mean, people don't know Arpa-E. Generally they think of DARPA, but but Department of Energy has its own research. Grant facility, and they do big problems and put them out there. So they did this in 2011. They sprinkled around a lot of grant research funding for materials that you could create a magnet with. It did not require rare earths. And lo and behold, the company in Minnesota, a scientist in Minnesota, University of Minnesota, created a rare earth free magnet. So there's a material design approach to this that either drastically reduces how much rare earths you actually need in magnets. And there's a company, called Nylon Magnetics that actually is it's commercialized, it's scaling. It actually is is, you know, scaling up massively a new facility in Minnesota. So that's sort of the material engineering approach to it. And then there's this whole other basket of, of biotech, innovations. And you know, if you want me to go into this, please.

Joe Weisenthal: Yeah.

Heidi Crebo-Rediker: Okay. So so, you know, there are companies like, Alter Research Technology and they again, are affiliated with this Ames National Lab. They, they have programed proteins. So those proteins are, are basically like, like robots that go in to waste. And they'll get to, to sort of the importance of waste in a minute. But they will go into waste or other types of, of tailings, things that come out of, of mines. And they will go in and specifically target the protein, will target a specific rare earth and extract it. And so it is clean, it's fast. It relies on, on a very large resource that we have. We have a lot of waste. So it's a domestic, you know, it's a domestically sourced, resource. There are a number of other, you know, ways that we are very in a very clean, fast and cost competitive way using technology to actually mine waste. And, and that's actually one of our it's like we we shouldn't consider waste at this point to be a liability. It's literally America's next mine.

Joe Weisenthal: So I have a serious question. But first, did you first know? First, I'm so curious about the little protein robot. So what does that process actually look like?

Heidi Crebo-Rediker: So I don't know what the I, I don't know, I'm not a I'm not a molecular, you know, technologist and and molecular technologists out there listening. That'll be the follow up episode. But there but this is something that's been again, long in the making in terms of, of the tech that's been developed. And so it's basically you, you know, that this particular company is commercializing the technology, but it is, it's a protein that is altered so that it can go in and sort of micro target specific rare earth elements. And that is I think it's kind of revolutionary. It's super disruptive. And the same with all of these companies that were part of this, this study that we did, they are at the they are at the cusp of being ready to scale and scale fast.

Joe Weisenthal: All right. This is my next serious question, which is, you know, all of this sounds great. Protein robots sounds amazing. Why aren't we doing this already? If the technology exists.

Heidi Crebo-Rediker: So we're focused on and this is, you know, this this takes a, a strategy and a and a strategy that focuses on the innovation side. We're very focused on the how do we compete head on with traditional mining. And that's good. And it's important. This is a huge complement to that. We haven't really done it yet. We've done it piecemeal. So you have a lot of a lot of people in this community that are highly focused on the technology, commercializing it early stage and then figuring out how to go from there. The, I think we have, again, it's a huge opportunity that's out there. When I think about where we are, I think about the shale revolution and how we had fracking technology for, for like decades. And then we reached a point where that technology unlocked an energy revolution in the United States. And it was like an overnight switch flipped. And suddenly we're an energy giant, an energy producing giant. And so I do feel there's something similar in what we're seeing right now in the technology around critical minerals and rare earths. I think we could really use a big switch flipped to suddenly have abundant, though those doesn't come along very often. We should have, people have to appreciate that more.

Joe Weisenthal: I'm reading this press release from Berkeley. As reported in Nano Letters. The researchers genetically engineered a harmless virus to act like a smart sponge that grabs rare earth minerals, rare earth metals from water and with a gentle change in temperature and acidity, releases them for collection. Sounds really cool. I have to go, watch a YouTube later.

Joe Weisenthal: Talk to us about, one of the themes that it comes up in a lot of these conversations is the importance of offtake agreement.

Heidi Crebo-Rediker: Yeah. So, right, like, right now we can, American companies, they currently do have access to Chinese rare earths. And so it may might be very risky for anyone to invest in these technologies, knowing that at least for the very, you know, the beginning years went before the cost curve has come down. The, competitors might be cheaper.

Joe Weisenthal: The proverbial valley of death.

Heidi Crebo-Rediker: Yeah.

Joe Weisenthal: How do you solve that problem? Of guaranteeing that there is demand for when these companies, release harmless viruses that act like a smart sponge. Incredibly rare earth metals from water.

Heidi Crebo-Rediker: So first, there has to be. This is not just on government to do. I mean, a lot of people point at the massive, you know, very muscular industrial policy that the Trump administration is using right now. And I think that that is that is a very good thing. But it also takes, it takes companies actually coming together more in a consortia, type of arrangement to have collective offtake agreements. You have certain companies that have been very forward leaning in their offtake agreements with certain, I mean, Niran Magnetics is a good case that, that they have some auto, OEMs that have been working with them for, for years now. You have been Vulcan, you brought up earlier, but Vulcan is kind of the poster child for when you get the technology, the industrial policy and the commercial all together working, to, to solve. And and they actually are I think they're the first innovation, targeted, industrial policy scale up, rapid scale up. Vulcan's only three years old. They they closed their Series A in August. I mean, we're talking about 1.4 billion that they got in a, in a, in a, consortium together with a company called ReElement that recycles magnets. They take the rare earths and they actually manufacture magnets. That is, that is incredibly interesting. They do it on a they're doing it on a, on a, like a super fast, scaling time, time horizon. I think they are aiming for 2027 to start rolling product out and have been going through the validation process with all of their, their different types of magnets. So they're doing this on an accelerated basis. They got funded by every branch in the military. So they have a built in supply, you know, a demand from the US military right there. They also have semiconductor and and aerospace. They're really looking to target the national security and the top economic security challenges. And they have the partners to do that. So I think that's a good example of how we want to do this moving forward.

Joe Weisenthal: Adjacent to the offtake issue, who actually owns the wastewater that we could potentially be, you know, extracting valuable things from.

Heidi Crebo-Rediker: So we have lots of different types of waste. So we have I mean, we have coal ash, we have tailings from mines that are still operating where they extract, like the the super valuable part of and the easy to extract. And then they have all the other mine tailings that just sit there that have a lot of for example, rare earths in them. They have we have, you know, we have some really, really toxic areas that, that are sitting in ponds and, and, you know, like giving a lot of problems to water supplies. And, we have a huge amount of, of waste that we can draw from, industrial waste that comes from, from mines where you have primary metals that are, that are extracted. But you have the piles of tailings that sit there on the side because they are either not, there's no commercial viability to extract them or they are, you know, they're just considered they're considered piles of waste, both in operating mines and in mines and closed down. You have coal ash that is, you know, sort of toxic leftover waste from from coal mining. You have e-waste, which is, I think, one of the more promising areas we actually, if you look at old, hard drives and cell phones and batteries and the like, there are tons of, of rare earths that are in there and actually magnets that are in there from years, you know, when, when we actually had much greater rare earths, you know, intensity in those magnets before we started to like, having to have to scale back. So if you look at the waste ecosystem, we have a lot of domestic, opportunity. And that's actually why I think Vulcan is a really good example. They pull from domestic recycled e-waste and then they process and manufacture magnets in a completely domestic cycle.

Joe Weisenthal: Joe, that's interesting about coal ash. I could have, I could have been mining my ashes from burning the coal stove in Connecticut that first year, mining them for rare earths.

Tracy Alloway: If only I had not yet another, yet another missed opportunity to exploit and to monetize my natural resource.

Joe Weisenthal: To monetize, the natural resources on your land that you had in Connecticut.

Joe Weisenthal: Let's talk about, okay, so we understand there's various, measures and opportunities and resources and technological opportunities and things that work in the lab, things that are already us, scaling up, etc.. Talk to us more like from a policy perspective, what do we need to do to get from what we already have cooking in what's already in the works, to where we feel good about where we are and from this policy, what it need to happen in the form of legislation or does the government, the federal government as currently constituted, have the cash and the policy levers to pull without, new laws being passed?

Heidi Crebo-Rediker: So policy plays an enormous role. And the the first thing we need to do is actually understand that we can't do a fragmented approach to this because you end up losing innovation that might actually change the the chessboard entirely. With China. You also have to deal with, with waste from a policy basis because we actually don't track waste. It's very hard to find data on how much e-waste the US produces. We ship some of it to Asia. That is very likely fed back into China's massive recycling machine. We shouldn't be exporting. If you if you consider this is America's next mine, there there are ways to address policy that can, you know, provide the data, maybe restrict the exports so we know exactly what value is hidden inside all of the stuff that we're exporting. And, and then come up with a whole like a whole strategy that is a critical minerals innovation strategy that sits alongside our other critical minerals strategy and develop that, through not only the policy tools around waste, but also financial tools. Where are the valleys of death? Where do we find them? How can we solve them? How can we use government as a, as a, a portal to get companies together and consortia to actually have those offtake agreements early on and also work with the material engineers to design what they're going to need earlier on in the process there. Like, there are a lot of good ways to do this. One of the big takeaways is that there is a specific equity valley of death that a venture like entity could help solve this for, because you don't have the venture outside of some really big frontier, you know, risk takers that will invest in, in difficult technology. So I think having some kind of, counter that we have now in the, you know, in the instruments that DoD has, you know, we have a whole range of different agencies that have all loan based. They're almost all loan based instruments. And that's not what this is like. These are tech companies and they really can't sustain debt. They're not there. You need to have that VC come in early on and help them through various series of fundraising. Partner with others, bring in other like private VCs throughout the process. And we need to and we do have one of those right now. That is In-Q-Tel. It is not technically, I don't know if you you've heard of In-Q-Tel before the CIA's the serum.

Joe Weisenthal: It is. Okay. Very good.

Heidi Crebo-Rediker: And they they are actually they they recognize this gap in the capital structure and the actual ability for these, breakthrough technologies to fundraise. And so they actually created a separate fund within In-Q-Tel called their Compass Fund. And they're not just the it's not just the CIA. They're a nonprofit. They work for sort of across the intelligence agencies, and they've grown over the past 25 years from what they started out, which was really a very like a boutique VC for specific solving specific problems for the intelligence world. So they have invested. And actually going back to one of your earlier questions, how did I find these companies? Well, it ends up that they have invested they invested in two, companies that I had found through Ames National Lab. And so it was, I think they were extremely helpful and thinking through what the gaps actually were. And we really nailed this early stage, VC needing to come from government. It's a market failure until we have solve for that market failure, these will just lie on the shelf.

Joe Weisenthal: In-Q-Tel has one mission to be the most sophisticated source of strategic technical knowledge and capabilities to the U.S government and its allies. That's through capital. That's an interesting one. We should do an episode. We should have for sure.

Joe Weisenthal: Okay, so since we're talking about the CIA and you brought up the military earlier, this is going to be a natural segue, I promise. You bring up a historical analogy in your paper, a previous choke point that was militarily very, very significant for the US at a very, very historical time, which we actually managed to solve through industrial policy. How much relevance does that particular analogy have to our current situation?

Heidi Crebo-Rediker: Well, I love this analogy because in, in as we were contemplating entering World War Two, the Japanese cut off the supply chain for natural rubber in Southeast Asia, and we were dependent on this flow for 90% of our rubber. Right. And we can't grow rubber trees, right? Rubber. Rubber came from Southeast Asia for a reason. And what we did was we actually, we took technology, synthetic rubber technology, and we scaled it like crazy. So we actually were able to, provide for, you know, for, for trucks and tanks and everything that rubber goes into that we had never even thought about. But until it was gone and we were not able to to actually enter World War Two without the ability to provide something in replacing that rubber supply. And so we did it both through a rapid warp speed, Manhattan Project. Like, I mean, we think of Manhattan Project for the for the atomic bomb. But at the same time, I think there's a good case to be made that without synthetic rubber, we would not have won World War Two. The the other side of that was that we did a huge, you know, all of the population should chuck in their extra rubber tires and their raincoats and their garden hoses and whatever you could for the war effort so that we could actually use and recycle, rubber that we had already here. So it's a two pronged, I think, analogy that works. There are some, great, like posters from World War two about recycling your tires and things like that.

Joe Weisenthal: Nice graphic design to find. Go. I have boxes of like old, so old iPhones and stuff, that randomly and recycle them for the rare earth. I bet I have like ten lab, ten old laptops and random stuff. And the way that, I mean, the way that the cycles of like, upgrades happened, I mean, everybody has tons of, like, old laptops where the software doesn't work anymore. And so this is actually a huge opportunity. So if we could, we could actually make it a national priority. And there are ways to do that through government incentives. You know, we can there ways that companies can do that through paying for old, you know, old unused, unusable, technologies and, and the like, and then have, maybe get a government credit there. Like a lot of ways you can be creative. Yeah. About getting this, this entire system to rev up.

Tracy Alloway: You mentioned warp speed just then. And so, you know, the obvious thing that comes to mind is also the vax, the Covid vaccination efforts. Can these types of programs exist without a coinciding national emergency to sort of galvanize everyone into action? And I totally take it that competing with China is one of those rare areas of bipartisan agreement nowadays. But at the same time, shortages, potential choke points in rare earths has been a long running issue. We've been aware of it for a while. So far, we haven't really done that much. What's going to galvanize people now and really lend this whole effort, a sense of urgency?

Heidi Crebo-Rediker: So I think we actually do have a national emergency. And certainly, you know, policymakers and companies understand that when China shut off access. And so you that was the moment I think that was the moment where it really hit that that not only overreliance, but up to 100% reliance that's like that. I mean, the Chinese cut off access to the technology that they had developed for refining, for extracting. They actually when we had that one year pause, one of the things that, that the Council on Foreign Relations partner, Silverado Policy Accelerator, they had done a lot of work on what the what China was actually exporting after, after that October lifting of the, of the, export controls. They're exporting, magnets, but they're not exporting those rare earths or the technology that we need to actually, produce the same for ourselves.

Joe Weisenthal: Yeah, it's interesting that, like, they won't export the rare earths, they'll export the finished material, which is the end component.

Heidi Crebo-Rediker: Yeah, yeah.

Joe Weisenthal: Well, you want to, you want to clone the value chain.

Heidi Crebo-Rediker: Yeah.

Joe Weisenthal: Right. And you're doing it for the low margin, the low margin sales. Do you feel like, you know, I mentioned it seems like there is some continuity on some of this stuff from the last administration to this one. Do you, when you're in DC talking to people, do you sense from the on the policy side or on the government side, do you feel that there is a sort of intensity and focus? Because again, when you, you know, you go back to World War Two, one thing I associate with that time is just an incredible amount of like focus on solving specific things in coordination. Do you sense that that exists?

Heidi Crebo-Rediker: So just as with World War Two, there were there were a lot of officials flagging the fact that we were over dependent on single sources or, when it was like the, the, the choke point was the shipping lanes and that there's a huge parallel here. We have during the, during the Biden administration. One of the first things during the first hundred days, the Biden administration did a resilience study and basically looked at where the where the choke points were. This was after Covid. It was looking at pharmaceuticals. It was looking. But one of the big takeaways was that we were so over dependent on China for rare earths and critical materials, critical minerals, that we had to do something ASAP. The Trump administration and Trump one also understood that we had this huge, vulnerability in critical minerals. And they had they passed it, you know, a number of executive orders and tried to sort of get the whole process started for mining, permitting, you know, reducing, permitting times, environmental, you know, restrictions and, and, and timelines. But I think it's, it's again, it's a, it's a, it's a complete parallel with what happened in the run up to, to World War two. We actually have seen this coming for a very long time. And it wasn't until China shut off the access that it that the U.S. and Europe kind of woke up to the fact that this is a big problem.

Joe Weisenthal: How often do you hear people in DC talk about the potential for capital misallocation when it comes to rare earths, or is the idea of, like a cylinder with magnets is like, not not as much of a looming concern given the urgency of the problem?

Heidi Crebo-Rediker: I think that that the, demonization of risk taken on Solyndra has really plagued us for a long time. We have to be much more ready to take risk and be like, hold hands on a bipartisan basis and realize that this is a big moment where we have to actually take more risk.

Joe Weisenthal: So I do love all the analogies we've used in this conversation. So obviously synthetic rubber. But you mentioned fracking before, and a lot of people will concede that fracking was incredibly crucial to America's, you know, economic well-being nowadays. And we've become an energy exporter. But at the same time, there's an externality, a negative externality associated with fracking, which is environmental damage. And there's a lot of concern and also controversy about how much impact that actually has. What are the trade offs that the US would have to think about as we encourage more of a domestic rare earth industry?

Heidi Crebo-Rediker: So again, there are there are tradeoffs and I think one of the, you know, I'm going to pivot back to the innovation because I think one of the ways we can do this in a clean way is through some of these new technologies. You were talking about Berkeley and there, you know, so Rio Tinto is is using, a proprietary new microbe, that they have that they've just started, utilizing in some of their old mines in Arizona where they didn't have the ability to economically extract copper, but using microbes, they are able, in a clean way, to use a biotech solution to actually extract copper on a cost competitive basis, that they were not able to extract. And they're rolling this out right now. They'll be doing it, you know, in the coming in the, in the months ahead. And I think it's really noteworthy that, that you have a, you know, a large mining company that is taking a plunge into a biotech solution to how to unlock value, that they thought the mine was basically, you know, it was it was closed. So we can do that in a way that is clean. We can do it in a way that's fast and cost competitive and so I think that there are ways to do that. And with using innovation, I don't think I think we need to be very mindful of that because mining and refining are dirty businesses. That's just that's life. And if we can do them, if we do them in a cleaner way, then that is a much more sustainable way to actually have, you know, have an industry moving forward that actually suits the national interest.

Tracy Alloway: Who did that? Biotech, VC episode. So much interesting biotech stuff that I never really thought about.

Joe Weisenthal: Yeah, like I never thought my name would. Sounds of it much more to do. And, learning about some of this and, you know, one one thing you mentioned, the national labs, they're under threat, right? I mean, like, you talked about them as being there's, important crown jewels of the U.S. economy as industry, all these stories about funding cuts, etc.. What is the intersection there? And from your perspective anyway? Are we undercutting our own efforts through some of these, through some of these budgetary choices?

Heidi Crebo-Rediker: Absolutely. I mean, this is this is something that we do really, really well. The whole world looks at the way that the DARPA and Arpa-E and the national labs that are associated are actually like huge innovation engines. And it's, you know, often it's it's a matter of of, you know, people coming in, entrepreneurs coming in and understanding what the applications of the science can be to commercialize it. But this is exactly the time where we have to double down on the innovation and the investment in R&D. That is not only in the national labs, but also universities, because that's where this is coming from as well. Niron's, you know, breakthrough came from the University of Minnesota. So I think, you know, you want to you want to make sure that right now, in this particular moment where the where the the solutions can come from biotech as opposed to mining tech. You don't want to be cutting off any channels of investment in R&D right now.

Joe Weisenthal: Heidi Crebo-Rediker thank you so much for coming on Odd Lots Fascinating report. Encourage everyone to go read it and check it out. There are actually some ideas out there, not just people identifying problems. That was great. Thank you so much.

Heidi Crebo-Rediker: Great to be with you.

Tracy Alloway: Tracy I really want to learn more about, you know, industrial biotech.

Joe Weisenthal: Yeah, I mean, we mentioned it during the conversation, but I feel like there could be tons of interesting episodes on the crossover of that sort of natural science and mining and stuff like that.

Tracy Alloway: Well, I'm looking at a page on Rio Tinto's website right now, and the title is Life Finds a Way microbes. And then it says while dinosaurs vanished, their tiny companions microbes adapted and thrived, proving their resilience over time. And now they can be used as some of our most groundbreaking advancements, in mining. So that's pretty cool.

Joe Weisenthal: Yeah. That's exciting.

Tracy Alloway: Let's do let's get a scientist or something on to talk about microbes.

Joe Weisenthal: Science. I kind of want to see how all of this works, but of course you can't actually see the microbes, so I'll just have to think about it.

Tracy Alloway: Just imagine there's gotta be a YouTube. At least we could go on the road to some mine, right? I'm sure. And like there's just a heavy water passing. You want to know that something just look like someone?

Joe Weisenthal: No, but I thought that was really interesting. I guess I thought, you know, in my mind, when I think about some of the when I thought about the Rare Earth challenge before, I sort of assumed, I suppose, that, okay, the US probably could, overcome our industrial reliance at the cost of a lot of money, basically a lot of loss making investment, because, again, that's that's the nature of, defense. National security is okay. You just have to sometimes spend money, etc.. So it's interesting, the prospect that our technologies that not only could solve perhaps the sort of strategic element, but that actually could be cost competitive, perhaps could create export opportunities, could perhaps also be, for profit. That's very interesting. And I hadn't really appreciated that prior to a day's report.

Tracy Alloway: Yeah, I think the overall thrust of the report, this idea of like, okay, you're not going to beat China necessarily on its own territory or you're certainly not going to beat them in the same way that China has developed this industry by, you know, basically ignoring a lot of environmental, concerns and things like that. So you have to turn to the US's own competitive advantage, which is research and development.

Joe Weisenthal: Yeah. And also like huge amounts of government capital, which, you know, sometimes we have an issue deploying, sometimes we don't. It was super interesting that Heidi described, you know, the recent cutting off of China's rare earths as like the moment where people have really realized this is an issue. And so there is the potential to actually galvanize some action. I have no doubt in my mind that the US has the sort of capacity the know how, the science, the natural resources, the money, etc. to do it. I only question, of course, whether we have the sort of organizational capacity. And of course, you know, the now the national research labs are sort of the prime example of the concern here is the site with which a lot of these innovations come from. There is this widespread acknowledgment that this is a very serious thing. And apparently, you know, they're seeing their budgets impaired at the same time. Can everyone get on the same page? Can we prioritize them? Can we say like, no, we want to like, move in concert? Or do you just hit these like various like political fight in these various factions, etc., that are not coordinated? They're not on the same page that are working at cross-purposes. I am that remains that remains my my main source of concern. But for a legitimate concern, I would say perhaps to your point, maybe there has been some galvanization and maybe there are some paths here.

Tracy Alloway: Well, I'm still on this Rio Tinto. So yeah. You're saying it's great. It's they keep making references to Jurassic Park, which is not something I expected. From Rio Tinto. But anyway, shall we leave it there?

Joe Weisenthal: Let's leave it there.

Tracy Alloway: All right. This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me @TracyAlloway

Joe Weisenthal: And I'm Joe Weisenthal. You can follow me @thestalwart. Follow our producers, Carmen Rodriguez @CarmenArmen Das Bennett and @Dashbot and Cale Brooks @calebrooks. And if you want more Odd Lots content, you should check out our daily newsletter. You'll find that at bloomberg.com/oddlots and you can join fellow listeners in conversation 24-7 in our discord discord.gg/oddlots And if you enjoyed this conversation then please like or leave a comment. Or better yet, subscribe! Thanks for watching.