Dan Dreyfus: America's Critical Minerals Crisis is Here

**SPEAKER_1** (0:00)
We've got Dan Dreyfus on the show.

**SPEAKER_2** (0:01)
He's with Boronite Capital.

**Dan Dreyfus** (0:03)
We're going to be measuring human progress by how much electricity we consume. The semiconductor industry, I view that as an industrial or infrastructure company. I mean, it's effectively a factory. We try to figure out where the world is going, and then we try to figure out what we're going to need to get there.
In the next 10 minutes, I am going to try to teach you about critical minerals, commodities, our incredibly fragile infrastructure here in the US that is going to require trillions and trillions of dollars of investment if we want to achieve our technological objectives, our reshoring, reindustrialization objectives, and our national security and military objectives. But first, a little bit of history.
We are at a very significant inflection point right now in US economic growth and what it's going to look like. Really from the early 2000s until just a few years ago, the US went through effectively what I think was an economic miracle where we created so much growth, so much market cap, so much value without really having to invest any capital at all. I mean think of all the companies that were created with no capital. You had Google with the search engine, you had Meta with social media. They bought WhatsApp for $30 billion with 12 employees, no capital whatsoever. You had the streaming platforms, you had the food delivery platforms, you had Apple Computer which was capital light, created trillions of market cap, you had software as a service. Absolutely no capital required to create all that value. At the same time, we were creating these companies. At the same time we were doing that, we were literally tearing down all of our critical infrastructure and moving it overseas to China. So we were really doubling down on that capital light mentality. But then it started to come back to bite us, right? We had COVID, we had the Russia-Ukraine conflict, we had the tariffs, now we have the Iranian conflict. And every time we had one of these geopolitical flare-ups, inflation spiked like a rocket. You need a telescope to see how high inflation went, and it never came down. And the reason for that is we let our supply chains get way too fragile and way too weak, and there's no resiliency in the supply chains. And now we're at this inflection point where we want to reshore everything that we tore down and moved to China, we want to re-industrialize, we have this technological compute revolution that is infinitely more infrastructure intensive than compute was in the last generations. And this is creating this really wild demand shock for infrastructural critical minerals, commodities, at the same time where there's a supply shock because we just haven't invested in this stuff for so long.
Now, there are so many capital cycles going on at the same time. I've never seen this many going on at the same time in my career. We have the aerospace cycle. Boeing and Airbus have a trillion dollars of backlog over the next 10 years. Now, throw in the space economy, which is going to compete for the exact same materials and backlog that Boeing and Airbus are trying to source. We have the grid, right? Anytime it gets a little bit cold in Texas, the ERCOT, the Texas grid is not connected to the rest of the US grid. Every time it gets a little bit cold, that grid shuts down and they're freezing in the dark. Then we've got, you know, here in California, Paradise, California, that power line that caught on fire and killed 300 people. Did you know that that power line was over 106 years old? There's parts of the grid in this country that are over 106 years old. And here in California, if half the people buy electric cars or there's robo taxis and we all go and plug them in at 6 p.m. after work and turn up the air conditioning, we're just gonna kill the grid. Boom, we're gonna kill it. We're all gonna be sitting in the dark. So the grid barely works for what we need it for right now. And we haven't even started talking about the tsunami of demand, electricity demand that AI is gonna bring. And there's power generation. You know, we've let China go and build multiples, more power generation than what we have here. And this is a trillion dollar plus capital cycle that's probably gonna be a trillion dollars every 10 years for the next 30 years. Data centers, this is now a trillion dollars per year, per year, all infrastructure, all commodities. Then there's semi-fabs.