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0:46BBC Sounds, music, radio, podcasts. Wake Up To Money from BBC Five Live. Hello and welcome to Wake Up To Money. More than£70 million worth of public money is going into restarting a tungsten and tin mine in Devon as the government tries to secure supplies of a mineral used in everything from defence to electronics. But can the investment turn around a project that struggled for many years? Meanwhile, social media giant Metas agreed to pay$18 billion to settle claims that Facebook and Instagram harmed children. And one of the world's biggest gaming events, Gamescom, gets underway today. Wake up to money from BBC Radio 5 Live.

1:29Good morning, good morning, and welcome to Wake Up To Money. It's Thursday, the 27th of August. It's just after five o 'clock. I hope you have your cup of coffee to hand. I've certainly got mine. It's a packed programme coming up. We're also going to be talking about some bumper results for NVIDIA. AI investments booming, but expectations are stratospheric. So what's going to happen? And central bankers and policymakers meet in Wyoming. Lots of questions now over the direction of the US economy, interest rates and so on. With me this morning, I have my guests as always. In the studio is Emma Hockley, Managing Director of Big Bear Plastics in Droitwich in the West Midlands.

2:07Good morning, Emma. Good morning. Thank you for having me. It's been a while since you were on the programme, but just remind us what it is your company does. So, yes, we are Big Bear Plastic Products Limited. We're a British manufacturing company based in Droitwich in Worcestershire. We are one of the largest and most influential thermoforming companies in the UK. We specialise in the manufacture of medium to very large size plastic moulded products. We supply things like panels for agricultural and construction machines, seat shells for aircraft, industrial packaging for the automotive industry, items for defence as well.

2:45And we also do compression moulding of lightweight composite parts such as headliners. You do a lot. We'll talk about that a little more in just a second. But first of all, I want to bring in my other guest, which is Sunil Krishnan, who's head of multi-asset at Aviva Investors. Good morning, Sunil. Good morning, Theo. Plenty on the table for you this morning as well. I mean, we've got NVIDIA, we've got Meta, we've got the run-up to the budget. There's an awful lot going on, isn't there? It's like this every day. You earn your money. Well, before we talk about all of that, I'm going to come back to Emma.

3:19So you're involved in supplying to a whole range of industries, as you've explained. That means you have a good finger on the pulse of what's happening in the economy. So where do you see things at the moment? Are you optimistic? Are you pessimistic? I think at the moment we are quietly optimistic. We're certainly following a strategy of growth ourselves at Big Bear and we are actively seeking and finding new business opportunities. which you know is has been challenging because of the environment that you know we're operating in along with with many other SMEs in this country which is a very challenging backdrop and we've we've had to contend recently with increased material prices after the Iran crisis and various other challenges along the way but yeah despite that we are very much focused on on what we're doing and and looking to you know take on new customers and new business opportunities.

4:19You mentioned the Iran crisis and obviously geopolitics come into almost everything at the moment. One of the areas you're looking to expand in is defence, I think. Yes, I think along with many, many companies at the moment, seeing that as an opportunity for growth. It's not great that this is a growth area, but for companies like you, when there are problems in the world. Yeah, absolutely. And I think, you know, British SMEs have shown how resilient we have been over the past few years and I think keen to support the the defence efforts of this country and and ready and willing to step up as required and you know I think now that we've we've finally had some positive news from the budget that's that's being signed off and people are able to look forward and I know there's a lot going on in terms of conferences and excitement and a lot of buzz around the the sector and we've recently secured our Joscar accreditation which is important to be a supplier in the defence sector um so we're sort of really setting ourselves up to to make sure that we're in a good position for for the requirements that we we know are going to come all systems go on that front but um you do have the headaches that so many businesses have at the moment for example um energy prices yes energy prices continue to be a challenge for us and for all businesses.

5:38I think, you know, we as a nation, we have one of the highest energy costs in the world. And that's really challenging when you're trying to compete on a global scale. But for Big Bear, we have managed to control that quite well. We buy our energy as part of a collective. So we've managed to forward buy. So it hasn't been too much of an issue. And I guess one of the positives, if you can call it that, is that everybody's in the same boat. So it doesn't necessarily put us in a more negative position against our, certainly our UK based competitors who are all in the same situation. But yeah, it is a constant challenge, especially in industry where you're running sort of very power hungry machines.

6:21Of course, we're in the run up to the budget at the moment. Everybody's talking about what the budget is going to contain. And there's a lot of focus at the moment on business taxes. What would you like to see? I just think it would be nice to see some support for business. You know, it seems to be that small businesses keep getting hammered time and time again. And there needs to be some recognition of what SMEs and family businesses are contributing to not just the economy, but to community and to employment. And, you know, we can't just keep being expected to see our costs rise and rise and rise.

6:55You know, we need to have some support and some recognition of our contribution. And just put that into a little bit of context for me. You've got about 80 employees. Would you be recruiting more if the tax system was a little bit more positive from your point of view? Yes, potentially we would be. We're certainly in a period of growth, so we will be looking to increase our workforce. We have sort of fluctuated over the years as demand increases. And, you know, I think certainly our trajectory is one of one of positivity and growth. So we will be looking to recruit and we do see our sales. We are an important employer in Droitwich.

7:36But yes, I think the new employment law costs, employment law rules and regulations are making it challenging for employers. And, you know, it does seem to be a lot of red tape where the employer is seemingly automatically regarded as the bad guy, where it's in my experience and my experience of other SME owners, it's generally not the case. You know, we value our employees extremely highly and want them to be successful and want to support them. And we do. So it does make it difficult for us when we do have challenging situations. So you'll be going into the budget. Fingers crossed then. Yes, definitely.

8:16OK, well, I want to bring Sunil in now because our top story this morning, revenues have more than doubled. The biggest publicly traded company in the world, the most valuable publicly traded company in the world. That, of course, is chipmaker NVIDIA. The tech giants at the heart of the AI boom. Its products are used by the likes of Meta and Microsoft in their artificial intelligence operations and data centres. That's a massive part of its business. And you can see that in its quarterly profits, which were put out late last night. Revenues from data centres grew by 117 % year on year to a colossal$89 billion.

8:59The share price did go up. It increased by 4.7 % in after-hours trading. Sunil, these are huge numbers, aren't they? Revenues more than doubled. Did that catch the market by surprise a little? I'm not sure it did, in the sense that when you look to the immediate reaction to the reporting in that after-hours session, actually the stock was flat or even very slightly down. And I think what that shows is investors are really very confident in the ability of NVIDIA in that broader AI complex to continue to grow very strongly in the near term. Where I think the investor debate is stronger is in two areas.

9:47Firstly, how much is it costing to keep the flywheel spinning? and so for example you see that nvidia is spending twice as much on long-term agreements with its own suppliers to ensure that they're getting components etc than they were a year ago and the other key question is okay we think we have visibility for perhaps the next 12 months in terms of very strong demand but can anyone give us any assurance beyond that and i think generally the debate within the market has said, probably for the last three years or so, right, we think we understand that AI will be a very strong force for 12 months.

10:27We're not sure beyond that. And perhaps the real positive to come out of the NVIDIA commentary, more than the official reporting it came through in the comments from the chief financial officer, was that their expectations about revenue growth, not just next year, but even in 2028, are significantly higher than analysts had been expecting. So does this suggest that the AI boom, all the intentions to build all these data centres all around the world, the amount of investment that's forecast, for the moment there's no sign of that diminishing or expectations being reduced? I think that's a very good summary and I certainly think NVIDIA yesterday did nothing to damp those expectations and really bearing out the thesis that I think a lot of investors do expect that there will be competitive challenges to the big US providers, if you like, of AI, the cheaper Chinese models, etc.

11:24But I think as far as NVIDIA is concerned, they feel they can just sit back and watch their clients fight it out. And really nothing to change that picture came through overnight. There is, though, this ongoing concern that it's all quite circular, that you have these AI companies that are all interconnected, supplying one another, investing in one another, that it would only take one spoke in the wheels to set things off course. Is that something that concerns you? I think it concerns the broader market. I suppose what you would say is at the moment there is a very powerful and positive flywheel effect where the plans that companies have, their own optimism about their future creates significant investment demand today.

12:12But of course, what we've seen with investment cycles in the past is that the flywheel spins into reverse. And perhaps the one that's most familiar to many of us is perhaps maybe more in, let's say, if you look at what happens to a country's property market, both particularly in the business sector, which is when there's optimism and lots of development, then prices seem to rise and rise and rise. But those things can go into reverse. So I think investors are watching for that pretty closely. But that's where that longer term confidence from, if you like, not so much I spoke, but the hub of the entire wheel, which is NVIDIA, I think really is supportive for investors.

12:50It's not necessarily something that lifts the entire market. I think over recent quarters, we've seen NVIDIA news be something that we will be talking about, and you will be talking about, but not necessarily something that sets the tone for the entire market for a long period of time. So some differentiation, but I think definitely that confidence from the hub, I think, will ease those fears of an immediate breakdown in circular financing. Looking the other way, I mean, is there a law of diminishing returns here that expectations on NVIDIA are now so high, it can't really, well, it would have to do an awful lot to meet all the expectations and growth and keep the share price rising?

13:29Absolutely. I would say that probably the last maybe four or five quarters prior to this had seen Nvidia's share price fall on its earnings announcement. And perhaps what we've just seen isn't necessarily the start of a trend, but I think it does show, the past experience does show that expectations have struggled, but it hasn't necessarily prevented the progress either of NVIDIA as a whole or the broader market. We do perhaps maybe with NVIDIA these days get quite a little speculative activity in the short term, just in the run up to earnings, effectively betting one way or the other on what the specific numbers will be.

14:11But broadly, the pattern has been once the smoke has cleared from earnings, both NVIDIA and large parts of the sector, particularly thinking about semiconductors and the supply of chips, etc. have retained a pretty strong tailwind behind them. I wouldn't expect to see much different this time. OK, it's something we'll be talking about for a long time to come, I think. Production at a mine said to have one of the most significant deposits of tungsten in the Western world is due to go into full production in the coming days. The government's investing£71 million to restart Tungsten West's Hermidon mine near Plymouth in Devon.

14:52It said that increasing demand was being driven by the critical minerals use in defence, aerospace, next generation energy and electronics, and that the move will create 350 jobs. The chief executive of Tungsten West, the company seeking to restart the mine, is Geoff Court, and he joins us now. Good morning, Geoff. Good morning, Theo. Thank you for having me this morning. First of all, just tell us, why do we need tungsten and why do we need British tungsten? Well, tungsten's quite a unique metal. It's a critical mineral recognised by many governments around the world. If it's not used in something, it's most likely used to manufacture something as well.

15:35It's got some very unique properties and it supports a number of the industrial economies in the Western world. And we're sitting on one of the world's largest deposits right here near Plymouth in Devon. But this is a mine that, you know, its heydays were in, I think, the 1930s and early 40s. You know, reopening has proved problematic. What do you need the government money for? The operation certainly has had a long history. It operated in the past in a number of different phases in World War I and World War II to supply the defence effort. More recently, it operated in larger scale from 2015 to 2018.

16:17So since 2019, Tungsten West came into existence to restart the project. And since releasing our feasibility study last year, we've now been looking for the funding package to complete the project going forward. This piece and the investment from National Wealth Fund this week completes that funding package for us to get us back into full phase production. And we're targeting that to start very soon and to reach full scale production at the end of Q1 2027. And that's what the National Wealth Fund UK government investment does for us. And when you say full scale production, just outline for me what that'll actually mean.

16:54We'll produce nameplate full capacity around 3 ,300 tonnes of tungsten trioxide, which is a concentrate per annum when we're running. Globally, the world produces around 80 ,000 tonnes, largely dominated by China. Russia's also one of the largest producers of this product. Outside of those two, which account for around 80 or 85 % of oil production, you can imagine 3 ,300 tonnes is fairly significant. It represents around 20 % of production outside those two countries. So globally, very significant and also very significant for the UK economy. And in terms of what the government's getting for its money, the taxpayers buying 100 million shares at 36p, I believe.

17:42And back in January, you're trading at 10p a share. So it looks from your perspective like you're getting a pretty good deal here, doesn't it? It's the journey for the company certainly been an interesting one. And the share price reflects what I think is a reasonable estimate of the value of where we are today. obviously moving into production is our next very important phase. The government's invested at 36p. Currently, we're trading a fair bit higher than that. So in the last three days, they've made a return of around 30%, which isn't bad for an investment that was announced earlier in the week.

18:20So it's a pretty good return so far. We hope to give the UK government even better returns as we move the asset into production very shortly. But those returns are very dependent, aren't they, on the tungsten price staying high. It's high at the moment, but it hasn't always been the case. How confident are you of that? The price has certainly changed a lot. The feasibility study August last year, 12 months ago, had a price of US$400, a 10 kilo unit of tungsten. We're now at a price point around 3 ,000. So it's fundamentally very different and it's moved a lot in those 12 months. The biggest underlying trend in that is really what China's doing, being the dominant producer.

19:04The last three or four years, it's moved from reducing its domestic capacity of production, but increasing its demands in industry and strategic investments. And that trend's continued. The last two years, it's moved to a net importer of concentrate. So the fundamental market in China over the last several years has very much changed. We don't see anything affecting that go forward position. So that's one really important piece. The other piece in the commodity markets is to make sure you're a very low cost producer globally. And that includes also the Chinese producers. And we are. We're at the very low end of the cost curve, which makes us robust no matter what happens outside the gate and in the global market.

19:47So if you're so robust and if the prospects are so good, why can't this be done through private funding? Why do you need the taxpayer to step in? Well, we looked at a variety of different funding options. We did a raise in the market earlier in the year. We completed that in February, which was just over£40 million, which has been the funds we've been using to progress the project and advance construction up till today. We went through a variety of discussions with a whole host of different providers, from pure debt providers to a hybrid combination of debt and equity providers, which is what we've seen the National Wealth Fund invest in at the moment.

20:26And we want to define the right partner for the project. And that could involve a variety of things. What we've seen recently is the UK government certainly very, very keen to secure a strategic supply of tungsten to support local UK industry, but also strategic investments in new age energy and defence. And when we balanced all those options up and we saw the interest from the UK government to be a strategic stakeholder, we were delighted. and we saw that as being by far the best partner for the long run for the project. And there are local economic implications of this as well? Yeah, absolutely.

21:02I think you mentioned earlier, we're a growing business when it comes to recruitment and employment. We're around about 150 people. Currently, today, we'll move to 350 people when we hit that nameplate production capacity at the end of quarter one, 2027. So we're right in the middle of a very significant growth phase of employment. But there's also indirect jobs that support the project outside of us and local benefits to the economy and the southwest as well. Geoff, thanks very much indeed. That was Geoff Court, who's chief executive of Tungsten West. And Emma, as a manufacturer, presumably Tungsten is on your radar as well.

21:42Well, we are a plastics manufacturer, so not possibly as much as maybe on others. But yes, of course, I mean, we're aware of it. And it's great to hear that there's some government investment in manufacturing. And on a more general view, are you in favour of the government investing in strategic resources that are necessary for manufacturing? Or do you think it's better to get the products where they're cheaper potentially from abroad? And you're happy with that? I think in principle, we should try and be as independent as we can as a nation and look to reshore. and we've seen how fragile the global supply chains can be over recent years.

22:21So I think anything we can do to try to strengthen our own supply of critical components is a good thing. And it's good the government are getting behind this particular project, but I think there's a lot of other things as well where perhaps we need some investment as well. Certainly, perhaps, is the North Sea going to be the next step? I don't know, but I think we just certainly need to be more mindful of how fragile those chains are and how vulnerable we potentially could be if we're not able to source the parts and the products that we need and we require. And I guess that brings in the other question.

23:01If there's a limited supply of money, we know that. Where do these strategic investments go? Well, absolutely. But, yeah, I think if we have a robust supply chain and we have a robust manufacturing base, we're pretty resourceful as a nation and I think we can probably come up with the goods most of the time. So yes, if we've got the ability to manufacture, we've got resources, we've certainly got the capability and the people who can do it. So if the government's getting behind that, then I think that's positive. So Neil, let me bring you in here. I mean, people in the market's generally in favour of strategic investments in what are seen as key or potentially key industries?

23:47I think the markets see probably two aspects to this. One is it doesn't really matter what private investors think. It's coming anyway. And we've seen plenty of signs of this, but we will see more. So, for example, in the tungsten market, one of the factors that is driving such an increase in prices on the Western exchanges is that, for example, example, the US has said, as of next year, in certain defence applications, we will not accept tungsten from the likes of China, North Korea, etc. So this resource nationalism theme is perhaps most visible in something like tungsten, but I think we're seeing it more and more places.

24:25So whatever investors think, it's a reality. And I think it probably does reflect the strategic reality of how things have evolved from the peak of globalisation, where the best way to improve a country's prospects was to be as efficient as possible. Let's just do what we're good at and get everything else from abroad. Having said that, I do think that what investors do care about and express judgments about is the productivity prospects for the global economy as a whole and for countries in particular. And I think we view this theme of resource nationalism both as a really important theme for financial markets across a range of quantities and factors, but also one which is to be seen as if like resilience over efficiency.

25:13So if you think about that globalization phase, the expansion of the World Trade Organization and so on, as a factor which supported greater productivity, greater profitability for companies, if instead we decided to take more of a balance and think more about, if you like, insurance policies. So what if we lose the supply of tungsten from China? That typically tends to mean two things. Firstly, you can't guarantee that all of your strategic investments are going to be winners. So there's some inefficiencies there. And also, like with any insurance policy, you don't know that it will necessarily pay out or that you'll need it.

25:51So for those reasons, I think investors see it as A, inevitable, but B, not necessarily something that turbocharges growth for everybody and we'll just have to see which countries are better able to mitigate the downsides okay it's another thing that we'll be talking about for a long time to come and of course in case of britain it's not just tungsten we're talking about there's also lithium mining and other stuff going on down in the southwest of england now um are you looking forward to grand theft auto 6 it's due to be released on playstation 5 and xbox consoles in november It's expected to be the biggest video game launch of the decade and previews are going to be happening today.

26:31Have you got your pre-order in? Have you scheduled time to play it or even booked the day off work? Or is it something you're hoping to avoid? After more than a decade since GTA V, can the new game possibly live up to the hype? Get in touch with us on that one on text 85058, WhatsApp 08085 909693. And if you're listening to us on BBC Sounds or on the podcast, use the hashtag WakeUpToMoney on social media.

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