Green Deal cannot be simply turned off, says key manager of coal baron Tykač

Seznam Zprávy, Zuzana Kubátová, 22 April 2025                  Link to the original article

The tariff wars sparked by Donald Trump are a side effect of the ongoing battle for critical raw materials. China has dominated them, and the US is now trying to reverse its lead, says Alan Svoboda, head of Sev.en Global Investments.

You can also listen to the interview in audio format.

Access to precious metals and other raw materials, essential for advanced technologies, modern energy, the arms industry and decarbonization, is becoming a major strategic advantage for global powers. China was the first to realize this, gradually controlling their main deposits in Southeast Asia, South America and Africa.

The United States is now trying to catch up with China's lead, says Alan Svoboda  , head of the Sev.en Global Investments group , which is in charge of the foreign expansion of Czech billionaire Pavel Tykač . "The game is now about control over the world's raw materials. I think that's what the main fight between America and China will be about, and America is waging war with trade weapons," Svoboda says in the Agenda podcast.

According to him, the ongoing battle for raw materials explains the seemingly incomprehensible steps of Donald Trump, who is instigating tariff wars, laying claims to foreign territory, and upsetting the established world order.

What do you think about the tariff wars that are starting around the world?

When we started our international expansion, we decided to go to markets where we didn't have to worry about any political risks, lack of law enforcement, or non-transparent behavior. That's why we invested in the European Union, England, America, and Australia.

We have been finding recently that even in these stable economies, one cannot predict what will happen suddenly and how it will affect business. When the energy crisis broke out, Australian politicians suddenly became very socialist, regulating the markets, imposing new fees and aggressively interfering with the rules. Now we see Trump usurping all the power that his office gives him to lead a business-style negotiation with the rest of the world.

What will this do to world trade and investor behavior?

This has made them very nervous because it undermines trust in institutions and established practices more or less everywhere.

Did this make you nervous at Sev.en Global Investments? Are you changing your strategy in any way?

Of course, it has an impact on us. We are a very opportunistic investor, we go where the doors are closing, so to speak. We have historically focused on energy and electricity generation from gas and coal. That is what we have been looking at in America for a long time and we have been close to acquiring such power plants.

But now America has seen eye to eye in supporting artificial intelligence, and that brings with it the need for new data centers, and therefore the need for huge electricity production capacities. With the arrival of Trump, American green policy is changing and interest in coal and gas power plants is returning. Everyone wants them now, even the old, less reliable and high-emission ones. All of this is now in vogue and is being offered at prices that seem disproportionate to the risk and the cost of our capital. So, we have to clear the field where we saw an opportunity. Because we are an investor who goes against the mainstream.

So, has the fringe fossil fuel business in the US become mainstream in just a few weeks?

We are just looking further. Now we are interested in investing in mining in America or Canada, that is a new opportunity for us. Mining is becoming a strategic issue for countries like America. We see interesting projects in various stages of development that make sense to invest in.

Strategic mining

What can be considered strategic raw materials, interesting for investors?

Raw materials are essential for the military industry, for energy, for achieving sustainability. Their main deposits are often controlled by China or are in unstable territories in the third world, which is the impetus for America to search for them on its home territory, or possibly in Canada.

Now it's simply a matter of control over the world's raw materials. I think that's what the coming fight between America and China will be about. America is fighting with weapons of trade, China will fight with weapons that rely on resources of mineral wealth.

Where do you think the fight for raw materials will take place, where is the space for it?

China apparently realized much earlier than the rest of the world that raw materials could be a political weapon and a strategic advantage. So before others noticed, Chinese companies had taken over many places around the world where they mine and have rights to these raw materials. This applies to South America, Africa, and Southeast Asian countries. Only in recent years have local jurisdictions been holding them back, reserving the right to approve which next investor enters their market, where they come from, and what their intentions are.

So it is one thing to prevent China from continuing its expansion into new territories. And it is another thing to support projects that are of strategic importance for maintaining relative independence from China. America and Canada, and eventually Australia, have a number of such deposits, they just need to be invested in their development.

A shaky balance

You recently returned from a trip to Australia, Singapore, and Hong Kong. How do businesspeople there assess the ongoing changes?

The Australians' view of the latest developments is interesting. They have always been proud that Australia is so far away that it is more or less unaffected by anything that happens in the rest of the world. That they deal with domestic politics and are doing well. Now, paradoxically, with Trump constantly coming up with new tariffs and new decrees that affect the functioning of the global economy, it is also affecting Australia. Even there, they realize that they must join the ongoing dialogue and take a position.

Australia also has its own agenda with China, they have close relations with England. It's about a delicate balance of different relationships and what Trump is doing has adverse consequences for that balance. He is moving very harshly and ruthlessly in that delicate environment. The question is how it all comes back together. And whether America will come out of this stronger and more successful, as he would like. Or not.

Changes in the global order have caught Europe at a stage where it has begun to address its competitiveness. Do you think it will be a passive bystander to the ongoing processes, or does it have the strength to intervene in them?

What relates to the arrival of Donald Trump is a huge wake-up call for Europe. Waking up from dreams that the main thing Europe has to deal with are various petty things and the regulation of all possible market segments. At the same time, we completely missed the main strategic questions: how to ensure a raw material base that is robust and independent of political events, how to ensure sufficient energy, how to support critical sectors such as semiconductor production or artificial intelligence. Only now is Europe starting to catch up. It is starting to fully realize that the ideology they put before everything has driven them into a dead end, and that they are playing second or third fiddle in the world.

I assume that by this ideology you mean the Green Deal, i.e. charging for carbon emissions, supporting decarbonization and regulating the fossil fuel business. How do you think the effort to reduce emissions in the world will continue after Donald Trump rejected it?

I think that now with the advent of Trump, the pendulum may swing the other way before it stabilizes somewhere long-term. Politics change, and sometimes it's a healthy change. For example, banks are willing to finance projects that they previously refused.

You've been quite vocal about banks' resistance to the fossil fuel business. In one of your past interviews, you described how you have trouble getting loans even for mining metallurgical coal used in the steel industry. Is this no longer the case today?

In America, things have already changed fundamentally, Europe is still living on a cloud in this regard. But we will see, perhaps under the pressure of competition from American banks, that they will eventually change their approach as well. I think that things in America are moving towards a rational approach. Which also means that America will not completely sidestep the path to carbon neutrality and environmental sustainability. But that will take a more pragmatic path. It's just – as I said - the pendulum is now swinging a little in the other direction, so they are throwing the baby out with the bathwater. But some things will probably eventually return to balance.

Green for coal

What does the current US shift away from decarbonization look like in practice?

Now coal-fired power plants have been given the green light. They don't have to close, coal mining is increasing, everything is done in the name of higher energy production because it moves America forward. Energy creates America's lead precisely in technologies such as artificial intelligence. That is the priority that America has chosen. In the end, these new technologies may offer a different solution to sustainable development than the previous path, which sometimes didn't make sense.

Just one example: The big decarbonization package passed under President Biden, for example, funded the construction of a facility to capture CO2 from the air and store it. But the energy intensity of that facility was such that to operate it would produce six times more emissions than it was capable of capturing. It was completely absurd, yet it got support, and yet investors were found for it. I think these crazy things are going to wash away a little now, the environment in America is going to clean up.

What do you expect in Europe in this regard? Political pressure to cancel or fundamentally soften the Green Deal is growing; for example, in the Czech Republic, the government and opposition parties are now in agreement on this before the elections.

I wish it were similar here to America. But unfortunately, there are several groups that have found business opportunities in the model of subsidies and support and do not want to give them up. In Europe, the trend is growing, but it also has great opposition, there are still many who believe in the idea of the Green Deal or have their own interests in it. But even if the departure from the Green Deal eventually gains support, the question is how to do it.

Decarbonization support cannot be simply turned off overnight, that would change a lot of things. All the money collected from allowances today goes back into national and European budgets; they finance a lot of things. If you suddenly turn off these financial sources, consumers may get cheaper electricity, but the entire national and European system will lose its basic source of financing. It needs to be thought through carefully. Maybe it would be enough to cut back on the gas and not put additional pressure on sectors like the automotive, chemical or oil industries. Just bring things back to a certain ratio, to some non-ideological plan.