BlackRock Energy and Resources Income Trust (LSE:BERI) — Investor Presentation

0:03 Good morning, ladies and gentlemen, and welcome to the BLACKROCK ENERGY AND RESOURCES INCOME TRUST PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to

0:35 submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to Tom Hull. Tom, good morning, sir. Good morning. Thank you very much, everybody, for, for joining, or joining a replay of this, of this event. So just a quick introduction, to myself. My name is Tom Hull, one of the two co managers on the BLACKROCK ENERGY AND RESOURCES INCOME TRUST, alongside, my colleague, Mark Hume. I've been with BLACKROCK just under twenty years now, with my focus, for that time mostly on the mining sector and the broader natural resources space. And Mark has been with BLACKROCK just under ten years with almost twenty five years of industry experience, and his background is very much on the energy side of the business.

1:28 So between the two of us, we have all of the areas that the fund invests in covered. One thing that's really important to note is although it is the two of us that are ultimately accountable for the decision making within the portfolio, We sit within an incredibly well resourced team here within the equities division of BlackRock. We have a great array of other portfolio managers across materials, energy and agriculture as well as analysts who sit within the... Those those three those three segments as well. Everyone has a very varied background. So we have people like Mark, who's a petroleum engineer. We have mining engineers such as Aden, who works with me on on the materials pod.

2:18 And then we have expertise, you know, across that breadth of of the entire energy sector. I think it's really important when we think about energy. We don't think about conventional energy and so called renewable or clean energy as distinct. We think about one energy ecosystem and the way that all of these different sources of energy and demand for energy interact with each other. So having this holistic platform to us is is incredibly important. I think it's really sort of helpful to set the scene here as to what the trust is aiming to do. So if you look back five years ago, we made the decision to transition this trust away from just focusing on the mining sectors and the traditional or conventional energy sectors, you know, essentially hydrocarbons, to instead, incorporate, you know, a substantial amount of the portfolio into the energy transition.

3:23 And then really, there are a couple of reasons for this. The first was to reinject an element of structural growth back into the portfolio. When this trust was launched, you know, almost twenty years ago now, mining and conventional energy were two of the growthier parts of the market. If you think back to the two thousands, you know, a large part of market narrative was around the commodity super cycle, you know, the China super cycle. And that drove, you know, many years of structural growth for the mining and traditional energy sectors. However, as rates of economic growth, have cooled in China and as, the commodity intensity of that growth, has, reduced back in the two thousands for every, you know, 1% of GDP growth in China, you'd see 2% or more growth in demand for commodities.

4:23 Now, you know, for every 1% of economic growth in China, you're often seeing less than 1% growth in commodity demand. So you have shift both in the level of demand or economic growth in China and the commodity intensity of that. And so now, for much of the last ten years, we've seen these traditional energy and mining sectors thought of more as value sectors. And we really wanted to sort of reinvigorate the trust and inject that element of growth back into it. And if we look at what's happening in the energy transition space, it is not just about a change in the supply side, and we'll explore this a bit later. Yes. There is that greening and... Of energy trying to reduce the carbon intensity of energy of energy generation and and transmission.

5:17 But there is also the recognition that energy demand is really changing as well and the sources of those demand. And we've seen that, you know, first of all, really with the mainstream adoption of electric vehicles. But over the last couple of years, you know, the emergence of AI and data centers, you know, is a key driver of electricity demand and how countries around the world and energy systems around the world react to meet that rising demand and that... And which has really, really injected some interesting elements of structural growth back into a number of parts of the energy chain, you know, something that we find quite exciting. And so when we look at the portfolio today, you know, we see a portfolio that is quite different to how it was for for for for much of the last, you know, fifteen years before it. And that energy transition piece to us is really important.

6:15 We'll go into a little bit more detail later about how we're positioned today and some of the changes we've made over the last six to twelve months as we've really seen the opportunity set shift between these three buckets.

6:31 If we go and now look at these two charts here, I think the chart on the right hand side is perhaps a bit clearer to see. And this is this is this is a chart of that... Those three main sector breakdowns, you know, since, we made the transition, back in the middle of twenty twenty. And what you can see is that when we made that transition, initially, you know, for much of the last, you know, sort of four or five years, we've been underweight to the energy transition relative to that 30%, neutral position. So we've been running only sort of low 20s percentage in terms of the portfolio's exposure to the energy transition. Now as we went through 2023 and 2024, we began to to reduce that underweight.

7:20 We then increased it again when, you know, the first signs of the Trump administration's, policy framework came in. But very recently, we've actually gone overweight the energy transition. And this is really because, for for two reasons. One, which is a positive thing, is that we've seen, the valuations, that energy transitions companies trade at go to a discount to overall market valuations for the first time in many, many years. So if you think back to that sort of post COVID period where, you know, we were underweight, those those green bars being firmly beneath that x x axis on x axis on the right hand side there, There was arguably quite a lot of hype embedded in some of the energy transition stocks.

8:07 People are extrapolating high growth rates well into the future and probably using costs of capital that were, you know, artificially low. Fast forward to today, and, it's completely, different. Growth rates are still high for many of these companies, but the sentiment towards them, you know, with the Trump administration coming in, really spooked markets, and really changed, market sentiment towards these areas from one of optimism to one of actually... I've got deep rooted pessimism. And we think it's thrown up now a number of really interesting opportunities from a valuation perspective. So we've changed that positioning. At the same time, our outlook for conventional energy has also softened.

8:56 So, if we think back, you know, to that post COVID period, you know, we had, you know, people calling for low oil prices for a very long time. If you remember, at one point even, oil prices went negative. And we... And energy equities were trading at, you know, very, very low multiples. And we thought that was just too pessimistic when we think about, the world's insatiable demand for energy of of all types, and that very strong correlation between, GDP per capita, and energy consumed per capita. We thought the market was just too pessimistic. And that's why we ran an energy overweight... Conventional energy overweight for much of the last five years.

9:42 However, today, all the markets are pretty well supplied, and we'll show some charts later that that that that show that. And so, actually, on a relative basis, we find the opportunities in these equities to be slightly less compelling today, especially relative to those energy transition opportunities than they were for much of the last five years. And hence, we've made that quite big shift in the portfolio. But it's not just about how we allocate between those three main buckets. It's also how about how we how we move between the different areas, within that. And you can see really over the last six or seven, months some of the shifts that have occurred under the hood here. And you can see some of the biggest changes have been within that traditional or conventional energy space, where we've reduced our exploration and production exposure.

10:33 This is the more oil price sensitive part of the portfolio. So really taken that down and almost halving of that position. And we've allocated some of that capital to the integrated energy companies, where we find the free cash flow yield still pretty attractive. But really, you know, quite a bit of that capital has been allocated to that energy transition piece. And you can see there, you know, an increase in our exposure to energy storage, but also a step up in our exposure to the electrification bucket and the renewable generation piece where we found some quite exciting opportunities as well. I do want to touch on income, generation because, whilst I talk about, you know, the energy transition being incorporated to try and reinject some structural growth back into the portfolio, It's also important to remember, that there is, you know, the income, focus of this trust, as well. And it's something that we know many of our shareholders, have have a have a have a long standing relationship with the trust because of this income element.

11:45 And what you can see on the left hand side there is that over the last three years, our sources of income have moved back to a, what I would consider, a better balance than perhaps what we had, you know, back five, six years ago when, you know, we were generating almost 40% of our income from option premium. That's now halved, back to sort of circa 20% with the underlying dividends, from the portfolio and some of our fixed interest securities generating the vast majority of our income. Frustratingly, on the right hand side, you can see there that over the last, you know, couple of years, the trust has traded at a pretty consistent discount to NAV of around about 10%, which, given our growth ambitions, is a touch frustrating, especially when you think of the quality of the underlying portfolio, the liquidity of the underlying portfolio.

12:44 But I would note that during this period, if you look at the announcements that are put out on a regular basis by the company, the Board has been fairly active in buying back shares. So we are aware, you know, of trying to manage this discount that the trust has been trading at. But I would also note this is an affliction that has hurt, you know, the broader investment trust sector, and so it's not unique or specific to Verint. Maybe now if we dive in to sectors themselves, and really, we think of the energy transition in sort of three main areas: clean power, including utilities that are generating clean energy the renewable energy technology, and then really importantly, the grid infrastructure and energy storage. This is a piece which, for many, many years, grids and networks have been thought of as low to no growth areas.

13:49 Now with rising electricity demand across major economies driven by the electrification of transport, the reshoring of manufacturing in The US, and the emergence of the importance of data centers and AI, these grids have become... Gone from being no or low growth to actually having an element of growth to them. This is really exciting, and an area we think we can find some differentiated, investments. If we look there at the middle pillar, energy efficiency, obviously, growing the supply of energy is very important given the factors that we're seeing in the energy market. But doing more with the same, extracting, more juice from the lemon is also really important.

14:35 Reducing wastage, doing more with less, is something that is not only, you know, good for environmental outcomes, but critically is now... Is driven, by economic forces. I think that's something that I'd like to stress across these three pillars, is, actually, we are entering an era now with an... With the energy transition where it is going to be driven by security supply and economics and supported by regulation, not driven by or dependent on regulation. I think that's really important to think about the sustainability or durability of some of the trends, we can see. We then got the final pillar, which is clean transportation.

15:22 Think here, you know, the most notable thing that people point to, are electric vehicles. You know, obviously, you see that in the in the world around you, being driven very much by China. But also, you know, you are starting to see Western countries, catch up, in their growth rates of of EV adoption. Arguably, Western countries have lagged in terms of infrastructure investment. So you've not quite seen the pace of adoption be what some would have hoped three or four years ago. But as you see, the rapid improvement in vehicle technology and the infrastructure begins to catch up, this is a trend that we think will continue over the next five to ten years and offer up some really interesting investment opportunities, you know, throughout the supply chain, for these.

16:12 I do want to touch on energy security because I think this is something, you know, that is often overlooked. And it's where all forms of energy are going to need to play a role as as countries look to foster greater self sufficiency. And you can see this whether you're looking at China, with its significant growth in in clean energy generation, also coming alongside, you know, investment in other forms of of of generation. And so we very much think you're going to see an all of the above approach and need to reinvest in traditional energy, hopefully, whilst also making it cleaner. So switching out coal to gas, for example, which has been, you know, one of the key drivers of improving emissions intensity in in The United States grid, for example, over the last ten plus years, but also investing in clean power to meet that rising demand for power across global economies.

17:19 I've touched on it in some earlier comments, but I think it's really important to think about, you know, the reemergence of growth of electricity demand in Western economies. And we've got some examples here, and the right hand side focuses on The US, where post the financial crisis, you know, really for much of the last fifteen years, you've seen anemic growth in electricity demand. You know? And that's as we've seen manufacturing hollowed out and and offshore. You've seen a declining commodity intensity of GDP growth, really as the service sector has dominated economic growth over the last ten to fifteen years.

18:07 Now you're starting to see a very different shape to that economic growth. You see a step change in the capital the capital expenditure plans of the technology companies as they look to really, you know, have a generational investment in data centers and and AI querying. And you can see that in terms of the energy demand forecast from such activities on the left hand side there. And that's really transforming that that energy demand, that electricity demand in The US. And this is not using, you know, optimistic figures for for the adoption of electric vehicles. And actually, if you do see a faster than expected adoption of electric vehicles, that will only add to these growth rates that you see here.

19:00 And I think, you know, that chart on the right hand side really does show the importance of it's an everything above, solution to to to energy markets. So whilst the majority of the growth in electricity chip consumption is going to be met through the addition of renewables, principally solar, but also to a lesser extent, wind, we are still going to need that baseload of, you know, gas fired power there. And that's why we see plenty of investment opportunities still on that conventional energy side and in industries associated with electricity generation from conventional sources. Important here just to stress, you know, the continued technology improvements that we're seeing when it comes to renewable generation.

19:52 And you can see here charts on the left hand side, which show the improvement in efficiency of photovoltaic solar modules, and, you know, the collapse really, in the dollars per watt of solar energy, which is really important and really exciting. Now one thing I think that has been overlooked whilst people are focused on this exciting trend has been the stability of grids and the investment in grids to allow these intermittent sources of production to be a larger feature of grids. I think that's something, you know, that has really been highlighted by some of the recent blackouts. But for us, rather than, you know, see that as something that should be used as political mudslinging, to push back against the rollout of renewables.

20:41 We see that as, well, what is going to be the missing piece of the jigsaw to allow these forms of generation to thrive within networks and grids? And it's going to be that investment in storage, smart... And and smart grids backup power. And that's, you know, where we can then go, and look for some esoteric investment opportunities, for for the trust. If we then turn to conventional energy, and here we've become slightly less excited than we were twelve or twenty four months ago. And that's really because in the second half of this year, we expect oil markets to remain imbalanced, if not slightly oversupplied. And, really, when you look at some of the events that we see geopolitically over the last couple of months, you might have expected those to send the oil price, you know, back up to sort of that $100 a barrel range that we've seen in the past.

21:37 But the fact that, you know, we didn't see that, I think, shows two things. One, the markets aren't too concerned if a modest amount of supply came out of the market for a short period of time because there's ample spare capacity and inventory to manage through a temporary disruption. And two, you didn't see the events in in in The Middle East regarding, you know, major oil producers spiral and and threaten world production outside of more than one country. And, you know, that lack of contagion is something that is different today versus, I think, other periods in history where we see potential geopolitical strife.

22:25 And so, you know, for that reason, we think there's less right tail or significant upside price risk from geopolitical shocks for the balance of 2025. And so we've become, you know, just less positive on the outlook for conventional energy. However, when we look out into 2026 and 2027, what's really important to look at there is the fact that The US is now a really important producer of of of oil. And unlike

22:55 some large offshore assets, where once you've made that investment, that supply pumps, albeit with a decline rate, for for many, many years, in The US, you know, you have very much, you know, short life assets in the shale in the shale industry, high decline rates, a need for lots of reinvestment to maintain, let alone grow production. As we started to see a falling rig count and a lower reinvestment rate at these lower oil prices, at some point, you know, that will cause that supply in The US to plateau and then eventually then eventually begin to to to come down on the other side of the curve, and that will begin to tighten oil markets again. So we look out into 2026, 2027, and we do see a slightly brighter picture. And we do think on the demand side, that people's talks of peak oil and then a and then a sharp sharp contraction demand, are overdone.

23:52 And, actually, we think that, you know, oil demand will remain higher for longer. And so, you know, we do think once we're past this point of sort of oversupply, there are gonna be some interesting investment opportunities once again reemerge. And I think these charts here really really really point to that. And you can see on the left hand side there, you know, a lot of people a few years ago were focused on that green line, that net zero trajectory. And I think you've seen a lot more, you know, the emergency pragmatism in the market. And now we see, you know, a far slower, smoother glide down in oil demand and oil output over the next twenty to twenty five years. And that chart on the right hand side there points to what I was talking about in terms of, you know, that slowing of production growth in from The US. You look out beyond that 2027, you know, and at current oil prices, you'll probably see that, you know, plateau and if if anything roll off down the other side.

25:00 One of the reasons we haven't taken, you know, the conventional energy sector down more than we have done really is the is the relative value that we see in the energy equities today. You still have, you know, the European integrators, for example, trading on very attractive free cash flow yields. And so when we view that relative to some of the other opportunities in the market, say, we compare the valuation to the diversified mining companies, We find their valuation still very supportive, and so we haven't taken them down further than we already have done. We touched on the mining side. And really, you know, mining is a you know, a tale is of of a number of positives really offset by one major negative.

25:54 And actually, the positive side, you've seen companies remain very disciplined in the mining sector. You really have seen, you know, a lack of exuberant investment in in new supply. People are very cautious in their price forecast that they are putting in to to models when when thinking about allocating future capital. You've seen balance sheets remain very strong. You've not seen reckless m and a. And a lot of mine commodity prices are still at, you know, quite robust levels. However, you know, the reason you've not seen this supply discipline translate into brighter prices on the mining side is really, you know, the subpar performance from from China's economy. In particular, know, some of the steel intensive areas of China's economy, you know, on real estate and what I define sort of conventional infrastructure.

26:51 Also post COVID, you've had some pretty strong cost inflation in 2022 and 2023 in the operating costs and capital cost side for mining companies. So margins have struggled to really expand.

27:11 If we look at what's going to drive mined commodity demand going forward and whilst you can't escape what China is... China's economy and its impact on on mined commodities, you are seeing a a change in the shape of of of that... Of of of the demand growth for for for mined commodities. And nowhere is this more evident than in copper on the right hand side there. What you can really see over the next ten years, you know, we expect demand to be driven, really, demand growth to be driven by the investment in clean clean energy technologies as well as as electricity grids and and AI and data center demand.

28:02 This is very different to, you know, the the the mental model that most people have of what drives copper demand growth should typically be in Chinese real estate, which is really falling in its importance in terms of of share of copper demand. I think it's also really important to remember just how materials intensive the energy transition is going to be. If we look at, you know, the materials intensity of solar and wind compared to, say, gas generation, they are... Solar and wind are orders of magnitude more commodity intensive, in particular, in aluminum and copper.

28:48 And that's, you know, I think quite exciting. And it is also front end loaded. If you think about traditional energy generation, you obviously have to spend your capital to build your electricity plant, and then you have to commit energy and resources to extracting the fuel stuffs to to feed that gas turbine or that coal turbine for for the next, you know, twenty to to thirty years. However, with the tran... With transition and and clean technologies, you know, because you are utilizing wind or solar as your input, all of those commodities that you utilize are employed in the the establishment of that generation.

29:37 So the manufacturer of the solar panels and then the mounting of them and installation of the concrete, need to go on steel. Those panels need to sit on. And for the wind turbines, the enormous amounts of steel and cement that are required in the foundations, plus then the the materials that are used in the the in the blades for for for the turbines themselves. And so that's really exciting because, you know, you have... You know, you need to have this massive initial investment in that generation capacity, which is very materials intensive. And it's something I still think is being underestimated today. You know, you read some of the academic papers on, you know, the theoretical adoption of renewables within grids globally. And, you know, I've always been quite surprised at the lack of constraining factor being materials availability.

30:28 It's often not even considered, even though in some of them, you end up consuming, you know, 50% to 70% of the world's supply annually at one of these commodities. And I find that to be, you know, quite interesting, quite exciting when we think about the outlook for demandsupply balances for mined materials. And, you know, you are not seeing companies respond to this positive outlook. You can see there, you know, on on the left hand side, this is a sector that is retrenched in terms of its capital expenditure. You know, we have seen a little bit of an increase in expansionary CapEx as a share of overall CapEx in the last few years, but nothing like the levels that we saw in the China super cycle or in that post GFC boom.

31:13 And you can see there in the chart on the on the right hand side, you know, that, you know, you you see an improvement from those sort of twenty sixteen, twenty seventeen lows in terms of CapEx as a proportion of depreciation, but it's gone but it's gone nowhere near the sort of three times multiple that we saw during that period of overinvestment post the global financial crisis. And I think this really sets the sector up from a from a from a from a company perspective to be quite resilient going forwards. And this is a sector where I don't think that resilience of balance sheet, resilience of assets is really being factored into valuations. And you can see that whether you look at valuations relative to MSCI on the left hand side there, or, you know, relative to, the sector's own history in terms of EVEBITDA, on the right hand side there.

32:10 I will I will close off there. I will move back to the summary, sheet, so that, we can then, take questions, from the audience. So, why don't we why don't we open it up for any questions, and, then let's go from there. Tom, that's great. And thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can all be accessed via your investor dashboard. Tom, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But, Tom, perhaps if we dive straight into it, the first question that we have here reads as follows.

33:03 What is the impact on this trust if inflation expectations start to rise? Yeah. So I think it's a really interesting question. So I think the last time we saw inflation expectations start to rise, was, you know, really because commodity prices were one of the key drivers of those inflation expectations rising when we think back to, you know, performance of of oil prices during that time as well as other other commodities. So I think if for whatever reason we, you know, an exogenous shock to to supply chains, etcetera, begins to to cause inflation again, that is going to throw up investment opportunities that I think are going to be more centered in our universe than they are perhaps in the market as a whole.

33:50 And so whilst, you know, obviously, it provides a headwind for operating costs for some of our companies, you know, through hopefully astute stock selection, we will be able to find those that are going to benefit more than they will suffer, from any pickup in the in in the inflationary environment. I think that's something which, you know, is perhaps not as prevalent in other parts of, of the market as it is in, you know, this this sort of energy and resources space. Thanks, Tom. And just turning to the next question that we have here. What does the electric vehicle revolution mean for oil demand? Yeah. So I think it's it's really interesting if you look at, you know, the demand for sort of all types of energy.

34:40 And, you know, I think we've... Everyone's been slightly surprised that despite the fact that you've seen, you know, significant adoption of EVs globally, albeit a slightly lower pace than some would have thought three or four years ago, you know, oil demand continues to make record highs. And I think that's because, you you do have, you know, many, many other sources of oil demand than just light vehicle transport. Now if... As we go through the next ten to twenty years, you know, will battery technology and other technologies, you know, also be in a transition away from, you know, diesel and petroleum for heavy trucking, you know, maybe even some forms of marine and and air transport?

35:26 Perhaps. But those are going to be far, far harder to, move away from liquid hydrocarbon fuels, than, you know, some forms of some forms of light vehicles that we've seen, transition, to date. And so I think the pace of decline of oil demand, that some have forecast is perhaps just a a touch pessimistic. And when you look at the valuations that, oil producers trade on, you know, I'd argue that they are pricing in two things. One, a more rapid decline in in the market for their... The end markets for their products. And two, an assumption that they misuse the cash flows that are being generated today. And I think, actually, management teams across the extractors industry, you know, are becoming a lot more astute and a lot less of that sort of boom bust mindset that we perhaps saw, in the commodity super cycle, and then in the subsequent sort of twenty ten through sixteen period, where I think many of the mistakes of that commodity super cycle, you know, were indeed repeated, you know, in in in that period, which is probably why that muscle memory of investors, you know, does, you know, think quite poorly of the capital allocation of these these groups of companies because of, you know, several poor experiences during their investment lifetimes.

36:50 Thanks, Tom. The next question that we have here is on China. And I know you touched on this during the presentation, but perhaps if there's anything further to add. The question asks, do we need to see a stronger China for the miners to perform well? Can China turn around its struggling economy? Yeah. So I think to see miners outperform oil companies and the other areas that we can invest in, in our... In in in our trust, I think we need to see a China which stops getting worse. I don't think you need to see, you know, the sort of stimulus bazooka, be deployed like it was, say, at the end of twenty fifteen, beginning of twenty sixteen, you know, where you really saw an enormous injection of stimulus into,

37:38 what you probably think of as the old economy in China, you know, around real estate, etcetera. You just need to, I think, see some of the areas stop getting worse. And we're starting to see that in... You know, on the real estate side, albeit, you know, from a very low base. But I think you've also then got to look at other areas of China where you are seeing substantial growth. If you look at the grid investments in China and investments in renewable energy generation, they have been nothing short of spectacular. I mean, if you look at the latest data, I mean, China installed the same amount of solar in a month that some countries would have, you know, as their entire installed base, just under a 100 gigawatts.

38:23 You know, remarkable pace of deployment of of of energy. And so actually, when you look at the copper demand from China, it's not nearly as as as bad as you would fear if you just looked about it through the the lens of real estate. And so I think you have to also think about that changing nature of China's economy. Now, obviously, there are going to be losers within within this. You know, so you look at the bulk commodities, iron ore and metallurgical coal, for example. You know, the outlooks for those industry... For the prices of those commodities is probably, you know, quite a lot less exciting today than at other points in the last ten to fifteen years. However, you know, when you look at, for example, the shape of the cost curve in iron ore, it's still pretty steep. The world's best iron ore producers, you know, are still generating gross margins, you know, 60 to 70%.

39:22 That's a pretty fabulous business, you know, if you think we're, you know, a cyclical low for the for the end uses of that of that iron ore, which goes into steelmaking in China. You know? So,

39:36 yes, I think if you if you are a China bet, if you think that China is in in a in a vicious debt spiral, and you think you're going to see continued sort of negative growth in in real estate, etcetera, and that then that will have contagion into other areas of Chinese economy, then, yes, it would be hard to be positive on mining. I don't think we're that pessimistic. I think I think we're, you know, a lot more sort of in the middle of the road as to, you know, where China's economy goes from our team's perspective. Yeah. And that means, I think, that you can then start to focus on some the more esoteric opportunities in mining that are being driven by the emerging system exciting new technologies, the broader adoption of renewable energy globally and the commodity reintensification of GDP growth you know, in in non Chinese economy. So you look at, you know, The US and Europe, for example, reassuring of manufacturing, growth in energy, electricity generation.

40:44 This is, you know, once again increasing the commodity intensity of GDP growth, which is a very different situation than we found for most of the last twenty years in these economies.

40:57 Perfect. Thank you. Do you think we could see more strength in gold and silver prices? So precious metals have been, you know, a real bright spot in mining over the last couple of years, And that's really as you've seen, you know, a complete shift in who the marginal buyer of gold has been in the market. And for much of the last sort of fifteen to twenty years, the direction of gold price has been determined as to as by whether Western investors are buying or selling gold, largely based on their views on US ten year real interest rates. Now because typically, as US real interest rates rise, there's an opportunity cost to holding gold. And so demand for it falls or even investors become suppliers of gold into the market.

41:46 And conversely, if real interest rates go less positive and even go into negative territory, then that opportunity cost of holding gold doesn't... You know, diminishes and demand increases.

41:58 Today, you've got a very different scenario where you've, really since the Russian invasion of Ukraine, seen the emergence of central banks, as, you know, the key driver alongside Chinese consumers of gold demand. And that's caused a complete change in the correlation of gold with other macroeconomic indicators. So, you know, that correlation between U. S. Renal rates and the gold price, which is also very high for much of the last fifteen years, that over the last two, three years is basically up to zero. So that's pretty exciting from a gold market perspective. And I think it's something that is not going to change again, change overnight in the other direction when we think about the more fragmented world we are in now geopolitically as well as, I think, the challenging fiscal situation that, many governments around the world now find themselves in, and therefore, the concerns people have, about the value of paper or, so called fiat currency.

43:08 And other alternative currencies, gold being one of them, has been a beneficiary, and I think we'll continue to be a beneficiary of that in the future. Thanks, Tom. And perhaps one final question just to wrap up with. How does the current high level of geopolitical risk impact this investment trust?

43:29 Yeah. So I think if you had painted a picture of some of the events that have gone on in the last twelve to eighteen months geopolitically. I think if you had painted that picture twelve or eighteen months ago, people would have been a lot more excited about the outlook for oil prices than the reality that has played out. And as I touched upon in the presentation, I think that's a function of the the lack of contagion, you know, thankfully, from a from, you know, in terms of in terms of conflict from what we've seen. But also, you know, a oil market, which is pretty well supplied, you know, at least in the short run. So I don't think the geopolitical impacts on this portfolio are as large as, you know, the perception of them might be.

44:26 Perfect. Thanks, Tom. And if there are any further questions that do come in, we'll make these available to you immediately after the presentation has ended. But, Tom, perhaps before really now, just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great. Great. Well, first of all, thank you, everyone, who's stayed with the presentation and the Q and A, till the end. Really do appreciate the time and interest, you know, in in our in our products, and our trust and and and the team and the team running it. You know, I think we're at a pretty exciting point, especially for the energy sector. And when I say energy sector, I mean energy ecosystem. You know, we are at the point of some pretty exciting technological breakthroughs in terms of the cost competitiveness of renewable power, and at the same time, the optimism in the investment community about, you know, the role of renewable generation is probably as low as it ever has been.

45:26 And so you've got valuation opportunities here that haven't existed for many, many years despite the structural growth outlook actually being pretty exciting. And you've got more legs to this growth that I think we had three, let alone five years ago with, you know, the onshoring of manufacturing, the growing demand for electricity, in in Western economies and the need to reinvest in grids, not only because of that growth, but also for a plate aging infrastructure. And so the variety of investment opportunities we see today, when it comes to that energy ecosystem, I think, are a lot broader than many people, would would would would have at first at first glance or at first thought.

46:12 And so I think for an active investor in this space, it's a really exciting time. And I still do think, as we look out longer term, that materials intensity of some of these structural changes that we're seeing is, is quite underappreciated. We can see it in, you know, some of the recent announcements around rare earths, for example, in in The US, just how critical some of these materials are and how necessary policy reaction sometimes is. And I think that means there are some, I think, quite exciting investment opportunities for those in the material space that are looking to take or are willing to take a slightly longer term, more strategic time horizon. But once again, thank you for staying the course during this presentation and Q and A. And please do reach out with any other questions that you have. We'd be delighted for us and the team to get back to you.

47:08 Perfect, Tom. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf management team of the BLACKROCK ENERGY AND RESOURCES INCOME TRUST PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.