The 6 materials that really power the economy

0:01You know what I love, Damo? Things that save me time. You don't have YouTube premium, mate, so I just don't believe that. Granted, I'll give you that one. However, I've got one for you. A great time saver in personal finance is Money Week magazine. They spend a lot of time distilling the biggest stories in personal finance down into consumable chunks, so you don't have to scroll and scroll. They give practical tips on savings, investments, pensions, the UK economy, the global economy. It's like your five a day, but for finance. If you want to give Money Week a try, you can get six issues in print and the app absolutely free by visiting moneyweek.com forward slash money.

0:34After your trial, you'll save an extra£5 a quarter on the subscription, which is exclusive to Making Money listeners. And that's moneyweek.com forward slash money. But there's a link in the description if you just want to click that. You know, diamonds and gold are there. Copper, aluminium, all this other stuff, it's hidden away. We often focus on companies like Tesla or Arm, but we rarely think about the materials that make their technology possible. Ed Conway is the economics editor for Sky News and author of Material World, a substantial story of our future and past. Where does the battery in your phone or electric vehicle actually come from?

1:13Why are materials like lithium and copper so critical to achieving net zero? These aren't just commodities, they are the fundamental building blocks of the technologies that shape our world and our future. If we can't understand or if we don't understand the world we live in right now, how on earth can we possibly understand the world we want to live in? I walked around Queen's Park last night listening to Madonna's Material Girl. Oh, there we are. Yeah, yeah, just because of the... It's my theme tune now. Yeah, yeah, I can imagine. And I was looking through all of the windows just thinking, like, people just have no idea that this ethereal world versus the material world, as you call it.

1:54I'm like, sorry, we're hitting it already. I've got to... Yeah. Please explain to the audience what the ethereal world is. It's not ethereal. Okay, all right. We're going to have a few of those, aren't we? Yeah. So it's an idea. I've made it up. And I made up the idea of the material world as well. But the ethereal world is kind of, for me at least, it's the world that most of us inhabit, where we just think that all that matters is like brain power and ideas and physical stuff, getting stuff out of the ground, turning it into products and, you know, providing that kind of infrastructure. We just don't really think about that stuff much.

2:28But the problem with being in that kind of world of like brain spaces, all that matters, ideas are all that matters, is you forget that we're still reliant on the physical stuff. You know, like that we can have this conversation. We've got all of this stuff around us. It's all come from the ground. You know, it all had to be mined out of somewhere and turned into a product. And so the ethereal world is when you all work in services, and most people are, you know, financial services, that's a big part of the world, but also lots of other services, retail and stuff. You can just lure yourself into thinking that is everything.

2:59And the point of the material world is to say, no, there's this little, it may just be a small part of GDP, but there's this little layer that is underneath every other part of activity, every other activity in the economy. That layer is all important because without that, everything else is gone. It's the bottom Jenga block, isn't it? It's the bottom Jenga, exactly. You pull that out. It's the foundations and it all goes. And it turns out, actually, when you look at the foundations, because no one's been focusing much on this stuff because we're all in the ethereal world, it turns out there's just loads of interesting stories that have been kind of untapped for a long time.

3:30So that's the ethereal world. You focus on six. You focus on six materials. They are, well, you can say what they are. Okay, all right. Sand, salt, iron, copper, oil, and lithium. Yeah, why those six? Well, it's not a definitive list. There are other materials maybe available. But it's just a good starting point to start thinking about, okay, this physical world around us, how does it actually come about? Where does the glass come from? Where do the silicon chips come from? Where does the concrete that's kind of underneath the literal foundations of our world, where does it actually come from?

4:09And a lot of that, that's sand, sand that goes into glass. You melt down sand and you get glass, particular types of sand. You've got to have the right sand. You put the right kind of sand into a mix with a few other materials and you have concrete and cement. You get a particular type of silicon. So it's kind of called quartzite. Technically not a sand, but it could be a sand in chemical terms. And you melt that down and go through an incredibly kind of detailed process and you end up with silicon chips. So each of these things allows you to kind of tell the story both of the history of the physical world around us.

4:41But then also, you know, you've noticed two of the materials are oil and lithium. So, you know, oil, that's part of the big fossil fuel story of still of our age today. I mean, we pretty much every product we touch on a daily basis will have some kind of connection with petrochemicals, like it or not. You know, the world is still run to some extent on oil and gas. we still, when we're eating most of the food, like 90 % of the food in the world is fertilized with fertilizers that come from gas. So we are quite literally actually consuming fossil fuels on a daily basis. But because we're not, I think because we're not spending that much time thinking about how does this world actually come into place, I think we're slightly deluded as to the extent to which we're reliant on this stuff.

5:29And so really the point of, you know, why those six, it just, for a book, it just gives you a kind of a, uh this this arc to be able to tell that story about the world that we inhabit um but like i say i i agonized i agonized over which things to include because you know there are loads of other things that are really important you know titanium aluminium um i wondered about whether should i include cobalt rather than lithium for the battery chapter because obviously the mining of cobalt as you'll probably have seen you know a lot of that happens in the democratic republic of congo the conditions are pretty abysmal seriously bad condition wars and child labor and all sorts of things yeah and it's and actually very there are very few materials which are quite so concentrated into one call it like truly unique place yeah you know like most minerals are spread around this they have everything essentially so so i kind of thought maybe that's the story you know as a journalist i'm a journalist i kind of thought well that sounds like the obvious kind of compelling story because it's like it's there in one place everyone's reliant on it but i had to decide to that and lithium.

6:31And actually, the interesting thing about cobalt is for all of that tragedy, and for all of what's happening in the DRC, we are getting a lot, lot better at making batteries without cobalt. So we still have them in your iPads and your mobile phones and everything else. But in a lot of electric cars these days, like the Tesla Model 3, the kind of low range, at least Tesla Model 3, that's got a type of battery that doesn't have any cobalt at all in it. And so over time, there are these amazing advances that are happening. But again, the kind of the the lesson the material world is because so much of it is happening below below beneath the surface of the items that we use and because not many kind of companies or people are talking about the wonder of what's going on inside i just feel like so much of it is hidden like batteries okay for instance do you know that they literally kind of expand and contract as you're charging them and using them 13 was it or something yeah that's right yeah you said in the book they're moving and i and like you think about this your phone's going like this it's like pulsing because it's mental isn't it and and that is happening there there's this life beneath this kind of surfaces of all the items we're using and some of it's like the complex items but so like technology but some of it's just simple stuff like concrete concrete is still right now it's the most boring material in the world supposedly but all that concrete out there in the city it is still kind of inhaling concrete is inhaling some of the carbon dioxide from the atmosphere and using that to cure itself to get kind of harder so there's there's this living world around us hidden within the seemingly boring material objects that we don't spend much time thinking about um and the more you can probe the more of those stories there are it turns out i want to i want to talk about some of this because i think the battery point especially because it's so interesting to people and elon is such a big character and he's at the heart of that the idea that my iphone is is powered by brine like kind of blew my mind yeah like salty water that's sat you know still in chili for three million years and now you break a layer of the salt crust and suck it out and turn it into a batteries kind of crazy right it's totally you call it you say this like beautiful thing of it's the paradox of the materials of the old world powering the new no it's like so so so the place that you're talking about is the uh the Salah de Atacama in in I wasn't going to try and say it the Salah de Atacama it's like the Salah is is like a salt lake in in in um uh South America and it's these it's it's a really bizarre place I went there and I kind of stood on the salt lake They were like, I went kind of strode out onto this enormous crackly surface of salt.

9:23And it turns out that in some places it's, you know, maybe kind of a meter thick. And in some places it goes down much further. But beneath that big crust that you can, you know, you can look up the pictures. Beneath that crust, there's this enormous kind of underground reservoir of briny water. So salty. And in this case, it's got all of these unusual salts, including lithium. and it's a surreal place and you know part of the the explanation for how on earth all this lithium ended up being there I mean they're still debating it now but this is one of the driest areas in the world it's this dry dry desert you've got the Andes as well and just due to these strange geological conditions this stuff has just gathered there over millions of years and so you have this strange it's quite a kind of vertiginous feeling you're standing there thinking only a few you know feet beneath me is this ginormous kind of vat this reservoir uh of of lithium and all these chemicals um and then like i was standing out there on this kind of crackly surface and then someone over there shouted you're not supposed to be there and it turns out you're not supposed to walk on there um because like the salt is so sharp that if you fell over it would just slashy.

10:38So then I kind of was like, okay, how do I get that? But you take a picture with your phone that's powered by that juice. And so that juice, we get the, they literally kind of pump the brine out of the cellar. And this is like, there's one, there's other ways to get lithium, but this is, you know, the biggest reserves of it right now. They pump the brine out. And then I think what's even like, for me, what's even more mind blowing is one of the materials in this book is salt. And it's like, I reckon, the most underrated of all. And in the ancient era, in order to get salt, the Phoenicians back in the kind of, I don't know, 2 ,000, 3 ,000 years ago, they worked out that they could just create these little pools.

11:21So you basically take the seawater and you just channel it into these evaporation pools. And gradually, over time, the sun does its work and that kind of precipitates away the salt and you're left with these piles of salt. And that's how, you know, in ancient ways, they used to make salt, at least in hot countries. The way that they get the lithium out and they precipitate away that all the other salts, today, for lithium-ion batteries, is the same way that people were doing it 3 ,000 years ago in the Mediterranean. They're using the same evaporation pools, except this time the pools are much bigger.

11:51So you look on Google Maps and you can see - They look beautiful, but they're kind of like weird, aren't they? They're like blue and yellow. And isn't those like - Yeah, and they're visible from space. They look beautiful the colors are actually down to the kinds of things that are the chemicals that are left in there. So actually they're green towards the end. It goes greener and greener as you evaporate more and more of the other stuff away. And the greenness isn't the lithium, it turns out. The greenness is, I think, boron randomly because they've still got some boron left. But eventually you get left with this concentrate.

12:23And it's the weird thing about lithium. So again, this is the stuff that's inside our batteries that's powering your smartphone. It's also like really uh it's a lubricant it's the ultimate lubricant the ultimate the ultimate lubricants you use lithium i just bear with me lithium ultimate lubricant it is mostly used for like you know uh hardware purposes like for you know don't put it on your machine machinery The idea is tea. For machinery. For machinery. And so actually there's this slightly random consequence of the fact that lithium prices went through the roof. I mean, they've come down a bit now.

13:04But they went through the roof. And suddenly all these people working in kind of hardware and machinery were having trouble because they couldn't get the hold of the lubricants they need. But anyway, you can put your finger into this liquid of lithium. And it's kind of weird because it's just the feeling of this liquid is strange and incredibly slippery. and you know that inside there once that's been processed that is going inside the you know the electric cars and all of the devices we need today and the reason why lithium is so important is you know we've committed to all of these environmental goals we just don't get there without batteries you know that you can have a long conversation about net zero but the technology is just not going to happen if we don't have batteries leaving aside you know you would we wouldn't have smartphones if it wasn't for lithium-ion batteries and and actually to me the wildest thing, okay, is that 100 years ago, when cars were first becoming a thing, 120 years ago, it was not a foregone conclusion that it was going to be the petrol car, the internal combustion engine that was going to win out that battle.

14:00You had at the same time, you had people with battery cars. This is, you know, in 1900 or so, you had battery cars doing the streets of New York and London. You had steam powered cars, so like steampunk cars. and you had petrol cars. And the reason actually, in many ways, electric cars were better because the motors are more efficient, just a better way of turning energy into movement. But the reason they didn't win out was just because the batteries were rubbish. They just couldn't make a long range battery. And so if we had had lithium ion batteries and worked out how to do that, and it's hard to make, to get that salt out and turn it into something that you can harness.

14:37But if we'd had that, the world would have been a completely different place. History would have been different. We wouldn't never - a car as well at the time do you know what i mean yeah they were doing amazing things they were doing amazing things but in a way in a weird way um the the one bit the one bit that was missing that actually would have made everything a lot more a lot more easy because if you think think about a car today think about like an internal combustion engine it is one of the most extraordinary things it's a bit mental like hundreds if not thousands of different parts that are clanging away inside you have explosions happening it's designed to create create explosions and harness that into movement and not break down yeah mine breaks down a lot all the thousands of parts are broken down on mine but that's but that's the thing isn't it that they are they are quite complex contraptions and and actually the interesting story like right now is is to make a to make an internal combustion engine turns out to be like really difficult and that is the one thing that China has really struggled to do for years and years and years.

15:35It was not for nothing that it was mostly European, American and Japanese companies that were able to dominate car manufacture. Making an electric motor is a very different thing. It's actually much easier. There's fewer moving parts. And it's kind of just wiring copper into it in a particular way. And the fact that China is now kind of winning out in the electric car business is partly a story of the fact that we've shifted. It's this disruptive innovation moment. We've shifted from that amazing contraption with all those hundreds of different parts, which we're really good at making, to this other business entirely.

16:11Making electric cars is just another world. But you speak about China winning, and I think there's a lot of paranoia around who's going to control the batteries, who's going to control electric. We see America saying, we're going to pull up the drawbridge. What I got from your book was that the world is so connected that people are going to have a really hard time doing that. Do you think that's the case? I think, yeah, I mean, I think in practice, yes, because the stuff, you know, the stuff that comes out of the ground, you can't control where it's coming out of the ground. The complexity of turning that stuff that comes out of the ground, think about a semiconductor, okay?

16:44So when you get that lump of rock out of the ground, so the computer chip that goes inside our smartphones, our computers, everything basically, because, you know, most devices these days have a semiconductor one way or another. that thing is a little piece of silicon that's come out of the ground a long time ago as a piece as a lump of rock a lump of quartz and in order to turn that quartz into a silicon chip that needs to go through so many different processes you know it needs to be broken down kind of melted down reconstituted time and time and time again just to get it to a level of purity and a level of perfection i mean that's the silicon chip we don't bang on about it enough i think but the silicon chip it's the most even the wafer that go that you're then imprinting all of these little transistor switches on and those switches are amazing that the switches are smaller i always find this kind of mind-blowing they are so small that they are invisible they're you you cannot even see them because they are smaller than the wavelength of visible light so even if you had the best optical microscope in the world it would just see a flat surface i find that you need how How did they use machines?

17:48They used machines that are able to work at wavelengths that are smaller than light. It's totally science fiction. It's totally science fiction. And there's one company in the world that can make those machines. One company in the world, a company called ASML in the Netherlands. And the way that they do it is even more kind of like sci-fi-ish. Like no one would make this up. um you they have this kind of machine that has this this vacuum vessel inside um this by the way is just to create so what you need to do because light is so big and the wavelength of light is how too many nanometers wide you need to create a form of light that's much smaller than that so that then that light can basically zap certain shapes onto the onto the silicon and And you're zapping the shapes and that shape eventually becomes a switch.

18:40And that's your switch transistors. And you have billions of them to create, you know, technology in all of our devices. In order to create that light, just the light, they need this machine called an extreme ultraviolet lithography machine, which drops inside this vessel in this vacuum chamber. It drops down molten tin. So you've got molten tin being melted. It drops it down at a very, you know, terminal velocity of molten tin, whatever that is, inside this kind of vessel. One laser and then two lasers, both of which happen to be the two most powerful lasers in the world, smash that into smithereens.

19:16And in that process, literally as it falls down, laser, and that explosion creates a teeny tiny bit of extreme ultraviolet radiation or light or whatever you want to call it. And that's going bang, bang, bang, bang, bang, all of that time just to create little tiny bits of light that then funnel through these mirrors, which by the way, are the most flat surfaces, the mirrors that they create, which are made of glass, which is made of sand, which is back to the book. But the mirrors, if you expanded these mirrors about the size of a kind of small pizza, if you expanded these mirrors to the size of the continental United States, the biggest deviation I think would be less than a millimeter.

19:55Those mirrors then bounce this light down onto your waiting silicon wafer in order to create something that is smaller than light. And it's smaller than a coronavirus these transistors so all of that stuff is amazing but in order to get a kind of silicon wafer the thing you're bouncing it onto that you're then kind of grinding bits off to create your little transistor that goes into our phones um so that we can then use them and go oh it's a bit slow today but it's like oh you know it is amazing what's going on in there but even before you're getting to that you need this little bit of silicon wafer that has been taken from a rock in the ground, blasted out of some quarry and turned into something that is the most perfect thing that humankind has ever made.

20:42So if I talk about the flattest thing in the world, but this is the most perfect thing in terms of the chemical structure. Hey, you, mate. You just see the heat in my heart. You were like, what? It's among the most perfect things. But this is the most perfect thing that humankind can mass produce. There's only one of you, mate. There's a one of one, exactly. But this, but so this thing basically is 99.9999999. It's 10 nines percent pure. That's like purer than anything. It's purer than anything we are capable of doing on a large scale. But not just that, the atoms are perfectly lined up in this amazing kind of structure.

21:20We, just the fact that we can make that is crazy. It's crazy. And we do that on a daily basis and we turn stone into something perfect, something perfect. And then it goes inside billions of phones. And no one pays any attention to it. And we order Deliveroo on it. Yeah, exactly. You do a Deliveroo, you know? And, and it's, there's a wonder in all these objects. But yeah, back to your question, that journey, sorry, it's a really long answer. It's all right. That journey that the silicon has taken around the world, that's, that's gone around the world a few times from one place to another to be turned into this that machine that you're you and by the way at one certain places there's certain materials you can only get in one part of the world that you need um that machine that makes the silicon chips that does the extreme ultraviolet lithography it's a dutch machine but it's not just dutch machine inside it's got parts from germany the lenses are made by this this german company zeiss you've got lasers uh from another german company called trump you've got kind of parts from all over the world this is a pencil or whatever it is you know that that poem or the thing that you spoke about yeah the essay so there's yeah exactly it's that it's that but infinitely more complex the world is much more complex than i think we we kind of we care to to think about a lot of the time it's dizzyingly complex so when with trump's ambitions to you know de-globalize almost do you think they're just gonna they they they hit a brick wall in terms of It's just not practical for you to hope to build everything domestically.

22:49You can't build everything domestically. And I think certainly even a semiconductor is about the most complex thing, you know, a computer chip. You couldn't, even the US actually, which has a lot of this stuff, even the US couldn't build it, couldn't make it all domestically. But I think, you know, where I'm sympathetic actually to the Trump position is we definitely are in a world now where with some of these new industries, China is incredibly dominant. And we can just be relaxed about that and say, well, it's fine that 90 % of the world's batteries or 80 % or so are going to come from China, which they kind of do at the moment.

23:30But that's never really been the way it's been in the past. And so for an economist, you'd look at that and go, well, it's fine. We just get all of our solar panels from China, and we'll get all of our batteries from China. And they can do it really cheaply. So we can have all the electric cars we want. They can make great cars these days. So let's just enjoy that. But in kind of the real world where you're worried about diplomacy and everyone's a bit nervous about a new Cold War, maybe that's a more dysfunctional kind of environment. And so I go, to be honest with you, I sometimes feel very nervous about it.

24:07And I sometimes feel like, well, the world is extraordinary and we're able to make all of these things and therefore we'll be able to solve our way out of this. And the reality is probably somewhere in between. Last time we recorded, Tomei, and you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes and they were charging me thousands. They saved me some money, but yeah, I had to move on.

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25:48I love the team. Compliance slows down all my deals because every time I get to the finish line, they've got to check documents, KYC, GDPR, and it's just a nightmare. It slows the deal down by like two, three weeks. It's always on both sides as well, isn't it? Sometimes it can be blocked on the other side. Well, that's where today's sponsor can help. Indeed. Vanta helps companies of all sizes get secure and compliant fast. And they stay that way. They do it by automating compliance with over 35 security and privacy frameworks like SOC2, ISO 27001, and HIPAA. Yeah, all of them. And this saves businesses so much time and money.

26:23According to a recent IDC study, Vanta customers save over half a million dollars a year in costs. Not bad. And they also help you complete security questionnaires up to five times faster, which is great because everybody hates filling out forms. If you're a business that needs to prove security and compliance, visit vanta.com forward slash making money to sign up for a completely free demo today. That's vanta.com forward slash making money. There's a link in the description though, so you can just click that. Do you think so? If there were to be an alternative, do you think there's any country that could take over China in actually physically producing all of these?

26:59I mean not at this stage you said that every western country tried met their ambitions of batteries and everyone's like we're going to build a gigafactory they would China would still be 70 % of production even if everyone delivered and we know they won't you know so they're well out in front you've read the book haven't you yeah I've read the book yeah I listened to it well on Audible so I appreciate that you you did the Audible I thought it was really good I mean, maybe that's... Did I send you to sleep? No, no, no, no. I thought it was really well read. And it was, yeah, it was just fascinating.

27:36I mean, it's kind of like, you know... It's just, you can tell, like, it's just interesting. This stuff is all interesting. And for me as a journalist, it's like, why is no one... There's so many, like, little scoops in there. But it's not like they're scoops where I'm having to kind of dig them out. Yeah. It's just, there's interesting stuff. But because it's beneath the surface of these devices or these sectors that no one spends much time thinking about, Like it's all just there. But a lot of the, like the key thing that I wanted to kind of have in this conversation was a lot of the problems that we face because of the ethereal world, all these people thinking about the way we should conduct ourselves with each other and geopolitics.

28:11The material world might be the thing that anchors, that stops that from happening. Because, you know, if you want your iPhone, you've got to get on with China or other places, you know. Yeah. I think you have to just be, you have to be kind of realistic. Yeah. And being realistic means kind of looking at all the devices we're using and recognizing that they have this hidden life. And the hidden life actually often just doesn't observe the politics that we often think about. There are parts, you know, in an iPhone and iPad from China, but actually there are parts from the UK, you know, or at least parts that are designed in the UK.

28:48And there are parts as well that come from Europe. And all of us, we're all kind of interlinked in this world. And if you're being, you know, optimistic and hippie-ish, actually, it's an amazing story, because we all do collaborate on making the world a better place. And a lot of the technologies, the thing that's kind of tantalizing about this is, we have a lot of the technology to enable us to do things like net zero, which, by the way, is, and you'll know from having read the book, it is the most difficult thing, the biggest challenge we have ever signed up to. It is a much bigger deal than anyone really conceives of.

29:22When politicians were saying, oh, we'll do net zero, they had no idea of what it would actually involve. They didn't really even thinking about the fact that, by the way, 90 % of the food that we're eating is there thanks to fertilizers made from natural gas, because people don't really kind of think that much about how the world around them actually comes there. And so, but even though it's a massive, massively difficult thing, a lot of the technology is now getting there to enable us to do it. And I think the real obstacle is politics. And it is, it's that question of, you know, how relaxed is everyone going to be about, about the fact that we're very reliant on China to make this happen right now, at least.