 I've got a long title, the impact of China's economic turmoil and challenges in today's technology metal supply chain. And I'm sure you're guessing with this long title that the person who must have written this would have been Mr. Lipton. So let's start with Jack Lipton. Jack, can you tell us what the premise is of this panel? I'm starting to reason that what was your question? I should start by introducing myself. I'm the founder and the publisher for Investor Intel. And Jack Lipton is our most popular writer on Investor Intel. His numbers go through the roof no matter what he writes about. And Jack is like all of my writers. Don't always listen to me. Jack, what is this panel about based on the title? The supply chain. Is this the panel where we're talking about the Chinese economic system? Yes. Okay, so that's what it's about. How does the Chinese economic situation impact these global markets for technology? That's correct. And you have some very strong opinions on this, so I would like you to start with that. My colleagues are a little to the right of Rand Paul in the US. I think he's too liberal. In all of my life I've been a very conservative guy. Although I'm older than you, but I'm from a personal life. In any case, I've now changed my mind. Come to a conclusion. Forget about the turmoil in China. They're doing it right. China is treating its production of natural resources the way the United States and Canada and Britain did in 1943. They have to have these things. So they're not worried about costs or about investments or about people monetizing dirt and vein into a trainable asset. None of that matters to them. Their government guarantees that they will produce them. You'll never see a natural resource stop production in China because there's market turmoil. Yes, of course. If the crisis is zero, I'll always introduce it. I think that's correct. They are doing that right for a world that's going to be that is more and more based on technology. They're doing that right. Now, I'm not a fan of their political system. And I'm not a fan of their economic system, which I call fashion. Some people call them state-directed corporations. But it's working for them. It's working for them. And it's the reason we're having a problem. We have no for here. We can stop producing things simply because prices go down with no thought for the future. Now, what are you going to do if there's a consumer boom in Indiana and you haven't got enough technology else to make the falls and the cars and things they want? Well, you'll run the prices up and have another boom in prices. This is all real nonsense, folks. Okay, maybe I'm the only one. The only risk there is, any of this, is the risk of not having the material you need. Whatever you think about the Chinese, they figured this out on day one. They've solved it, but they're always going to have these materials. We have the problem because we've financialized everything and we've forgotten about the fact that the purpose of producing these materials is to use them, not to make money on them. Okay, so that's me. I'm an old guy. My bucket list got one thing. I want to get a new bird. That's it. The rest of you want all these, you know, Trump Tower and all that stuff. That's great. I think that the Chinese terminal doesn't matter to the production. They will be producing the words they need. And somebody in the hallway asked me, are the words no we're supplying? Yes. The man is down. There's too much material. So what do you think is going to happen to price? Okay, it's going to go down. This system will, that's the way this is the world works. It'll come back again. We all have long enough for it. I don't know. But I can tell you this. The Chinese will never stop producing this material so long as they have a need for it that is not a financial need, an actual need to make price. Think about that next time you pick up the Washington Journal in a minute or months, and suddenly they're telling you not to rip this or do it or do it. It's terrific. Okay, I'm torn between who's going to provide the rebuttal to Jack. I think I'm going to throw this at Paul LaRue from Linus because you spent a lot of time in China. You're competing with the Chinese, and of course Linus is producing two thirds of all the rare earths that are not out of China. So Paul, what do you have to say to Jack's comment? First, I will start saying that I have a great respect to the Chinese governments and presidents, and I had to deal with my past job in shutting down two factories in China, and I met a number of government officials. They are all great business guys. So think of China government as a bunch of very smart guys. Now, I think that we always talk about China where they are one point two billion people, and they are not all the same. So there is an agenda in the central government, and when I was competing with Alastair when we were younger, a long time ago, basically in 2002, the company was working for, we were producing all our products in France, in the US and in Japan. When I left, I was producing 100% of it in China, and they were triggering the resource, enforcing us to transfer in productions from France, Japan, US, to China. And it was very effective, because at the end of the day, my core business was phosphorous, and all the lamps, or let's say 90% of the lamps today, are made in China. So this has worked very well. I believe now the central government agenda is very different, because they have succeeded in leveraging the resource, they have succeeded in developing a very, very powerful downstream industry. And that's what they are focusing on, because being the king of magnet would be the trigger to becoming the king of hybrid cars of energy-efficient mothers. That's where the battle is now. And they don't have it necessary to leverage the resource anymore. So that's what's central, that's what's called China Co-LTD. I was in China three weeks ago, and then you have to deal with the 1.2 billion Chinese. And they are struggling with the price situation. And Chinese love money, and I like Chinese because they love money. I think we should all love money. And they hate losing money. And they are losing money these days. And they are losing money because the recent regulation increased the cost gap between the legal producers and the illegal producers. And the legal ones got really mad at this situation because they pay more, they are asked to enforce the environmental regulation, and they see a growing part of the production close to 40% today is from legal money. And that's why we saw recently a price decrease, the legal trying to fight against the illegal. But not later than yesterday and this morning, the 6th future group of China Co-LTD announced that we would reduce the production and go for a price increase because the situation was absolutely unbearable for them. So I think there are two agendas and we always need to discriminate between China Co-LTD and individual companies that don't necessarily have the same agenda. Next I would like to introduce you to Alastair Neal. If you don't know Alastair, he's a wonderful surprise at this event. He's one of the top North American consultants for rare earth companies in China, technology middle companies in China. He spent a lot of years in China. He provides us with a lot of data for investors to tell about what is really happening. I'd love your response to Paul's response, please, about what's really happening in China, Alastair, because I know you're right on top of this. Okay. This is so... Okay, that's all right. Thank you, Tracy. Yeah, I agree a lot with what Paul said. We both spent a lot of time in China living there and working there. And the key is that there are different levels of government in China as there are in every country, but the state puts out a vision, but it has to be implemented at a local level. And some of the local government officials are somewhat conflicted because they actually own and operate some of the illegal production because they can make more money running illegally than they can working for the government. So when the government says we have to shut down legal production, they have to look at their wallets because, as Paul said, they love money. There was once described to me that China's a bunch of capital is just surrounded in a communist balloon. And if you do business with them, you'll find that out very quickly. They are shutting down production. A large number of the legal producers are finding that they can't make money at today's prices. So they are actively reducing that. The question is, will the illegal production step back at the same time? The main market outside of China is Japan. Japanese are very pragmatic. When I was with Dasha or AMR, it took five years to qualify lands in the optical glass business in Japan. When China shut the doors in 2010, I qualified on a certificate of analysis overnight. So they will adjust. They will buy illegal material. It may be shipped out as calcium carbonate and arrive in Tokyo as Syrian carbonate. So they will blend that material in. But to get back to the earlier point about China, they're going through a real tough transition. People I talked to in Beijing, if they hit 4% growth this year, they're doing well. The RMB could go to 7%, so they're going to continue to devalue the currency. And that will have certain ramifications, obviously. Okay, so I'm now going to move to Guy Barrassa from the Damascus, Lithium. It's my understanding. I don't even know a lot about China. There's a lot of debate about whether or not there's an increase in electric vehicle demand or not in China. There's a lot of conflicting data in the media. We know, we've lost my story through it. But we do understand that there is an incredible increase in demand for Lithium. Can you respond to this? Well, of course. Maybe before, I would like to have some comments on the earlier presentation by Jeff. Absolutely. I think that the Chinese turmoil impact on the Lithium sector itself is only making a negative move on the financing capacity because that is, and investors are putting us in the same pattern as all the commodities going down because of the turmoil in China, whereas the Lithium has increased in price over the years and continues to increase. So, like Jack said, they're not concerned about the cost of the material. They bought the Talisman in Australia for a very important huge amount of money because they're dependent on outside source of Lithium in China. And that brings to your question about the increase in their vision of the Lithium supply chain in China. They have a vision, a very clear vision. The plan did not work as far as today getting the electric vehicles out in the numbers that they were looking for. One of the reasons, one of the couple reasons, the one, let's see, the Tesla Model S has been built for the pleasure of driving. So, it was a company, ESO, getting it sold in China because the people that can afford it usually don't drive, they sit in the back and the car does not meet the need of the people that can buy it. They also have extra taxes because it's a luxury car. But more important is their vision of electric vehicle. Electric vehicle is for somebody that has not succeeded in China. It's electric bike. You move from the scooter to the electric bike. If you want to show that you succeeded, you don't buy a Tesla. You buy a big BMW or big Mercedes because it's a gas engine. It's only their philosophy that it's moving slowly. But they won't get there. They have absolutely no choice. And the proof is the fact that they decided to purchase, like I said, the Tesla Model S in 2013 at a price that has absolutely no common sense versus our ratio of purchase for the raw material, but we don't care. I was able to attract the 2009-2010 the largest lithium processor in China by the name of Chen Qi-Lichang. They finally bought the Tesla for $840 million. One comment I got from them, I said, OK, now that you bought the largest one, are you still going to help us? It says yes. Put it on the shelf. We're first going to mine Australia, then we're going to mine Canada. They are 200 years in their vision of the development. They want to make sure that they're going to have the control on their file of the electrification of the transport in China. And they don't care about the price. They need the material. They buy it whatever they want. I think you brought up an excellent point. I mean, we all know that the Chinese are focused on the development of Australia. We see a lot of Chinese investment in the rarest space right now and then Canada. So what, tell us about the Chinese and the Americans, please. This is then, of course, Anthony Marquesi from Texas River Resources. Well, first of all, I want to comment on one of the earlier statements. All of this illegal production in China would not be possible without the cooperation of Chinese officials. China is a military country. So you have graft at all levels. None of this exists without graft. Everybody is lining their pockets. Now, if you remember a few years ago, different industry in the FDA, there was an issue with painted milk. What they do, they put the head of the FDA. They killed it. You had the FDA. Now there's no problems with the FDA. So China, when it belongs to, to stamp out illegal production or illegal activities, can do so because it's a militarily run country. At some point, China will decide that it wants to stamp out illegal production until they make an example out of a few executives. I think it will continue to exist. So that's my take on, you know, it's all a question of who's getting money, who's getting paid, and at what point does the country decide that they've had enough. With respect to, you know, Chinese investment in the United States, it's just not going to happen. As you may or may not be aware, in the United States, anytime a farm country makes an investment or wants to make an equity investment into a U.S. company you need, a federal government approval, until such time as the Chinese government allows the reverse U.S. company to take equity ownership in China, we're not going to see any type of Chinese investment in the United States. Thank you, Anthony. That's a perfect segue. There's a journalist from Wired Magazine that's been trying to get me to do a cover story on smuggling in China, out of China for the last three years, and I keep telling him, no smuggler wants PR. And on that topic, Alistair, I have been told by a very senior source in the rare earth industry that right now, 70% of all sales of rare earth exports outside of China are currently provided by smuggling sources. So Alistair, we know you know a lot about this. Can you talk about this? Well, one thing I didn't know in China, any number is possible. So it could be 70%, it could be 40%. It's still high. You know, I think the exports for total production is at 125,000, 50,000 tons. So you have somewhere in the neighborhood of 50,000 tons going out of China, possibly a little less. There could be as much as 25,000, 30,000 tons illegal production, possibly more. It's, as you say, no smuggler's going to tell you how much he ships. The one way of trying to match it up, unfortunately, it's difficult because countries qualify materials differently. But if you try and match up the exports tonnage from China to Japan and the imports from Japan and rare earth, there is a differential. And that obviously comes from other places like Hong Kong or Vietnam or rooted through different ports. So it is a challenge as I said earlier. Trying to stamp it out, I don't think it will ever be eliminated. What you have to try and do is mitigate the damage to an acceptable level. And that all comes down to, as Nancy is talking about, commitment by the government at all levels. It's going to take a few heads to roll. You know, a plan, they would go out and say, this month we shut down 10, 15,000 tons of production. The next month, they would shut down 10 or 15,000 tons of production, and happen to be the same factories. But they were able to report to the government this going back to like the Mao era when people gave numbers on grain production and the government would take 10% to ship away. There was nothing left for the people locally to overestimate their actual production. So, yeah, in China, anything is possible and the more difficult it is, the easier it is to happen. Then we're going to go right to Paul. Paul, obviously this benefits you in sales, because you're competing against smuggling sources. Does this help you or are the smugglers' prices just, you know, taking your mind and I mean, based on your sales, it looks like you're winning. I just want to emphasize one thing. We talk about Chinese, but if Chinese smugglers are a product out of China, it's because people buy it. And so, the responsibility is big, like when we discuss about drugs and some people are producing drugs but some people are buying drugs and it's up to the buyers to make sure of where the rears come from and come into your question. If you sell a winter vine, you very often deal with government-related organization and you have very thick contracts. And one item of these contracts is the place that you, the wind, investigated as much as you can where the raw materials are coming from. And you know, when you have sometimes the guys realize that for the last five or ten years they signed a contract and they have absolutely no evidence in their whole company that they ever spend a minute to investigate where the materials are coming from. And so it's true for the smuggler product. It's true for whatever you buy as a magnet, for instance, from China. It's very difficult to know where the material comes from and that is essential. So, yeah, that's an advantage we have. We deal with a number, a few numbers of magnet makers inside and outside China to just provide to the end user a secure traceable supply chain. So if you buy this magnet and smite from Linus, this is the batch number, you can check it through. And that has a very big value today. And I think there is a lot to be changed in the behavior of purchases. It's a responsibility of everyone. I think where we're leaning towards, of course, are the sensitive topics of geopolitics and let's talk about military sources and throw this panel another loop here. And let's talk to Anthony. Obviously, Anthony, when you're talking about your contract with the Department of Defense, you keep speaking in generalizations. You have to protect what you're saying, but it doesn't take a rocket scientist to figure out that if they want high purity, rare earth oxides is obviously an interesting market sector. Can you tell me if the Chinese are producing this or they're selling it or can you talk to this topic in general? Well, the issue of ultra-high purity, in other words, greater than four nines, purity. There is a market out there. I can't comment on why the Department of Defense wanted what they wanted from us in that purity level, but needless to say, there are a lot of military applications for ultra-high purity products and to the best of my knowledge, it's a very expensive, difficult to produce product and I think that's one of the areas where the new technologies actually have an edge over China. To the best of my knowledge, most solid extraction systems can only get to a four nines. You then have to switch over to an iron exchange process which is why it becomes so expensive. So I do think that with new technologies, this is one area where I think we have an edge over China. But I just wanted to make a comment earlier. It's interesting, as many companies do, produce a required annual sustainability report. So they have two reports. One, conflict minerals, which is a joke because they really don't know where they come from, so they try to estimate. But secondly, sustainability, in terms of the raw materials that you're producing, how much pollution do they actually generate? Interestingly, they do not mention rare earths at all in any of their... And that's because they don't really know. We've spoken to people at that company. If you think that the engineers at Apple have any idea how much rare earth they use, you're out of your mind. It's an assembler. All they do is they go to their Chinese supplier and say, I need a specific component that fits in a specific area and it needs to do certain things. If you think that the Chinese come back and they say, okay, we can provide this, but hey, by the way, there's a certain amount of rare earth and here's what gives you out of your mind. The Apple has no clue, for the most part, where or rather the extent to which rare earth products are used in their product. And then most companies are the same way. I once asked someone at Boeing who was producing, it was in the paper, they were producing some destructive lasers. Where you get in the raw materials, here are lasers. And they came back and said, oh, we're getting them from Germany. They don't produce, there's no raw material from lasers that come from Germany. Ultimately, it's obviously China. But the point is most industrial companies and engineers have no idea where raw materials come from. And the fact of the matter is that all that the purchasing managers care about is I can get at the lowest possible cost. All the Japanese car manufacturers purchase illegal rare earths. You're kidding yourself if they don't. Their job is to produce the car as cheaply as possible. And there's no label on the rare earth that says, oh, this came from Linus versus some illegal mine. So that engineer or that purchasing manager's bonus is based on how low they can keep their raw materials cost. And if it comes from an illegal source and there's no way to trace it, who's to know? We're talking about this certification. And obviously it requires buying from the end users. But I think in your quarterly report, Paul, you guys talked about 50% or close to 50% of illegal mining from China was responsible or was coming out of China was illegal and that was responsible for pressing the presence. What can we do? Is there anything we can do to get more certification similar to blood diamonds, what we saw there? Even without Chinese buying, is there a way to approach that matter? I think Alster should take a run at this. Well, I think the real challenge is when you look at the supply chain for rare earths, very few of them actually go into the final product. If you look at the magnet's supply chain, you make neodymium oxide that becomes neodymium metal that then becomes neodymium alloy. That then becomes a magnet that is shipped to somebody who slices and dices it or whatever to make a component that is then assembled into an iPhone or a motor or something else. So it's a little more challenging in that regard. FCC lensing is one of the few uses where you actually see it go into the final product. You know, it does come, you know, Apple does do things like Anthony said about tantalum and so forth, but I think it's a, the problem is if it ever goes inside China, your traceability disappears. Like there's just absolutely no, I'll give you a personal example. To show, you know, you get ISO 9000 and then you have a tier one supplier come in for a catalytic converter audit and they go to the suppliers and they said, okay, we want traceability and production manager factory basically said, oh, it's lunchtime and we went for lunch. Right after lunch there's a brand new book that showed the traceability of that box. So anything, let's say, anything's possible and once you go inside China, it's a black box. So getting that traceability, you could mine TIN in Malaysia and send it into China, you don't know where it came from. For the answer is a lot, I don't know. No, but where's the main piece when we need them? No, but honestly, if you look in from KVAC, from KVAC and we've seen the disaster at their campaign for forest and should probably shut down some forest companies in KVAC because of the campaign for Northern Forest, Boreal Forest. So it can be that. But honestly, I do believe that the end users have a serious problem with themselves. I absolutely do not agree in agreement with my colleague when he says that the engineers don't know anything about what's going on in China. They all know about it, they all shut their eyes and I think that both agonists may be the best example on top management saying that they need to deliver, they need to have cost control and they need to get their own material. We simply have companies that are too big like the Tesla, this world or the Apple, they need to do their numbers, they need to get their own material, they don't care what it comes from and what we're talking about technology and it is common and I've seen on the listen space I know nothing about rare earth but I know a lot about the listen in China and I can tell you that in the past two years we've seen tremendous increase in export from China to Korea and Japan which nobody would have expected three years ago because there was a demand for domestic market in China very poor quality batteries but it was good for their use of domestic and there was other specs for real batteries in Japan and Korea cattle material producers why did it increase and how can they do that? Well, obviously they were able they were overcapacity in the supply in the manufacturing but the end users decided that they would lower their specs so as of today somebody that could not buy from Korea or Japan would not agree to buy no specs, material and the listen space because there is no new supply coming to the market from the big three are forced to lower their specs to be able to consume producing batteries so they are mixing material and low quality so they know about it but there is nothing that was thought of doing in advance nobody seems in these companies to understand it takes 10-15 years to develop a mining project to be able to supply new material so they take the plan B in the plan C and that C is to lower their specs that's an additional point I think the only way that you can get that traceability is to develop basically the mined magnet supply chain outside of China and I think that's the only way it will ever be addressed I think the end users are very sensitive to the situation so it's more one-to-one relationship with many users in particular we say well I want to make sure where the raw material comes from where it's manufactured in metal, the volume magnet etc we can probably we must do more we must probably work on increasing the awareness of the consumers simply because the consumers are the one making the final decision that's the way it works now coming to the point of the answer so liners can supply rears as carbonate, oxide metal and alloy so the two last things that's the two toys and recently a number of users came to us about why not to supply to us magnets because at the end of the day that would be the safest way for us to make sure that the rears inside comes from magnets and you know we gave up, we in the western world gave up rears 30 years ago we gave up manufacturing manufacturing excellence for me is where China is leading all of us the best Chinese companies are really much ahead in manufacturing excellence into business creativity so taking this example and then user magnet ask us a quotation from magnets take my phone I ring a few Chinese guys in the morning in the afternoon I had a very clear offer we spent five minutes on the phone negotiating that deal I go for non-Chinese magnets guess where they are it took one month and the typical answer the price is just way too high I would spend two weeks negotiating the bit down and if I ask one hundred times we say well we start with 100 questions and so there is all this dynamism that is missing as Amanda said we are in the US or North America for two weeks here and North America is definitely a low market so well here but I think a big user of magnets how much magnets are manufactured in the US? no? I mean that is the missing point and that is the missing point we need to have it's not only resource we need to close the gap there is today at every 23,000 tons of magnets as big block produced in China 15,000 tons outside China it used to be the same level around the 12,000 tons for China and outside China in 2005 but the rest out of China the rest remained flat and China increased to 28% a year and they are good so it's a matter of putting together governments I mean this is a big advantage of China this is a driven country the main real plans industrial plans, strategic plans say well we need, we want to operate the electrical cars when does it start and we put the ring on the mountail well here it's kind of making the rules as far as I know and the supply chain is not in place there is a lot to be developed but the China we spoke and quite spoken to several manufacturing manufacturers in the US we are not in the no longer in the business of these types of magnets they are not willing to finance they are willing to put a dime into a US supply of products to make the magnets they'll just tell you to talk to the government so the problem in the United States is everybody points to everyone else and says not my job to develop the market talk to the government talk to someone else, don't talk to me so I think the US used that Europe was that? the US used that Europe everybody wants everyone else to develop the market and let me take this step further my background is investment I know where a large Chinese bank wanted to buy an American magnet maker and I said there's no way they're going to let you buy them they're fifth generation Americans and their response was we'll just buy them through this very large American bank so yes, Chinese are ahead of us in strategy, Paul, I agree with you so now I'm going to take us to very controversial topics since Jack's not here we're going to hijack this and talk more about China specifically about China's advantages one challenge we have in Investor Intel is publishing real numbers that are real we have an Asian correspondent which we joke is really a representative of the Chinese government because we never get the same kind of copy twice, two weeks in a row Jack's joke is always when Hong is gone for four weeks he's being reprogrammed so the issue is we're told that the Chinese control 90% of world supply or Earth they control 95% of the processing which is a story we hear over and over and over again yet our Russian correspondent tells us that Russia is producing and processing 10% of the world supply Russia's very rarely discussed with what facts they're actually involved in but they keep putting out news items to us about their investments in technology, metals market so where I want to take this panel next because I can't wait to hear your responses is about the real import versus export out of China we believe that the Chinese are actually going to need to import more technology metals here in the next little while because their demand is so high and the rest of the world is really going to be at their beck and call because they're not going to export to us I don't know if you agree with this ski if you want to take this on first or talk about import and exports of technology metals out of China I'm just going to concentrate on this there's no advantage to China for Lithium because they're already importing most of the Lithium that they are transforming so on a world basis it's an advantage for all the Lithium sector, other producers because they're driving the price up because of their high cost of production because the highest cost of producing some compounds is the Lithium units their Lithium units come mainly from Australia and therefore there's no advantage there the Arab like I said earlier started to increase significantly their export at some point they may control if they want it they could control the Lithium cattle material they could control the batteries it might come to that at that point some maybe a decade from now Japan was representing what was the largest 10 years ago the largest cattle material producer now they have lost their market share while they keep kept the same production level but increase in new cattle manufacturers outside of Japan made them not insignificant but they went from 95% of the production to below 20% a lot of increase in the capacity in China a lot of capacity of the strong compounds exported to these two countries mainly but at one point when they decide they will just like fuller stop exporting or storing down and do the cattle material themselves they presently do cattle material but for the domestic market like I said that quality but they're increasing their capacity at some point they will be able to jump to the other high quality cattle material and they could they could take the control should we expect any off-take agreements with the Chinese here again anytime soon? for me, no, absolutely not we have from the start said that we were not going to be shipping spots in China as a raw material to China like that is currently doing we decided to transform into high-evaluated metro-side of its own colony in Quebec specifically to have a geographical and geopolitical to diversification of the main sources currently most of the 52%, 55% of the world's supply comes from Chile and Argentina the rest comes from China converting from one single source Australia so if tomorrow something happens somewhere you're linked to three locations so we do believe and that's why I'm very glad that the Chinese decided to buy Talisman because it's driving the cost of some compounds up and that will justify diversification and new commerce into the game and Quebec and Canada is the best place to have a new supply so Paul your sales are obviously affected by this can you comment just a year and a half ago we were going through some troubles and one of the lenders was really checking to detail it was going on in Linus including on the business site and they said well we'd like to interview some of the customers I would like to interview including the Chinese customer so that's the problem so I run one of them and I asked him if he would agree and be interviewed by a banker basically and he said well I'm fine as long as I miss some training because I've never did that before so I still agree let's have one of them come together and here we go so Louis what's your name, what are you doing what's your company doing, what's the product etc and then we come to the major question so why are you buying from Linus and Louis answered because you provide me with long term contract that's an introduction of an interview we know each other for 15 years I saw product viewers wrote that before as well as today and never never sign a long term deal with you and you never ask me for a long term deal and so what's the point we know each other very well if you want a long term contract why you never bring this on the table you never have a long term contract because when we sign a deal with you for a while, two containers or whatever why you stick to your commitment sometimes you are late in the deal it was a year and a half ago but you will never change the conditions and that's what he called long term and so again there is opportunities for us in that market Anthony do you want to comment not really one of the things I do want to comment on which this topic is I don't think people realize the extent to which world events could potentially in an instant impact what we're doing here since we're talking about China I don't know if people follow what's going on in the South China Sea with the United States now beginning to send patrol ships to some of the islands that China has been building but you have a real potential for some fairly significant world events to have a replay of 2011 and I think most people I believe falsely assume that because the Chinese are doing so much business with the western world that they would never do anything militarily against one of those countries and that's in my opinion go back in history World War I especially you'll see that this is not the case and by the military it's not run by business people and so all I can say is watch what's going on in the China seas because I do think that has a real potential to affect world markets for locomotives not just the rare of them this time last year each of the different countries outside of China has taken a different approach to securing the supply chain this time last year we had a number of customers at our plant in Malaysia and Jara, our senior secured lender is actually the Japanese Government right and that is because their job is to assure the supply of essential raw materials they've booked 225 real $225 million on the table to do this right and we also had the resource alliance from Germany who had mapped the supply chain and done the research and had some chats on a regular basis they've not actually put anybody on the table and to your point earlier you're over here in the US it's like we'll go and talk to somebody else so both of the representatives from Jara, the representative from resource alliance got upset all of the conditions that led to the situation 2010-2011 still exists it was funny because it was about a week after there was one of those summons in your hand R.A. and Lee sort of shaking hands but refusing to look at each other at the conference so if the things that you're talking about do happen Anthony the Japanese actually are in good shape right because they actually put their money on the table and guess what we will survive Alistair can you call on that I love your call especially about the Japanese to put that dining table to Paul's point people ask me how can you trust the Chinese and I think the best way of describing that is to Paul's point about long term contract in North America Europe when you get together you usually have a lawyer attached to your hip and so people trust you like when you meet somebody for the first time you trust them until they prove to you that they're a crook in Asia Japan South Korea, China they assume you're a crook until you can prove to them that you're not that's a longer process and that's why things take time a lot of time developing relationships but on the other hand once you have that relationship it lasts for a long time you negotiate the JV for a French company in Inner Mongolia the document was huge and I basically told them I'll sign the documents for you put it in a drawer or lock it the minute you have to open that drawer to read the contract you're in trouble it's all about in Asia relationships they see lawyers as notators because they recognize that you can't put every eventuality in a black and white and so at the end of the day if there's a problem until you sit down and you work it out and I think to me that's why after being there for 20 years there's a few people you can shake hands with and it's actually better that way than signing a piece of paper