Robert Friedland, Founder & Executive Co-Chairman of Ivanhoe Mines Ltd. (TSX: IVN), was the keynote speaker at the “Discoveries of the 21st Century” session at the PDAC Conference on March 2, 2020.
Mr. Friedland’s presentation focused on mining, the environment, urbanization, the green economy, infrastructure, electric vehicles, and Ivanhoe’s three projects in southern Africa:
- Kamoa-Kakula copper project in the Democratic Republic of Congo (DRC), a joint venture between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the Government of the DRC (20%)
- Kipushi zinc-copper project in the DRC, Ivanhoe Mines (68%) and DRC’s state-owned mining company, Gécamines (32%).
- Platreef platinum-to-palladium project in South Africa; Ivanhoe Mines indirectly owns 64% of the project through a subsidiary (Ivanplats), South African group (26%), and a Japanese consortium (10%).
“The greatest environmental risk to human health is the air pollution that’s associated with urbanization,” Friedland says.
According to the information presented, air pollution kills more people in the U.K. than car crashes. Combustion particles (the red dots in Diagram 1) are much smaller than dust or pollen, get into a person’s bloodstream, and deposited throughout the body.
Diagram 1: Size of Combustion Particles Versus Dust
Political pressures are building around the world for Green New Deals, whereby clean-generated electricity replaces fossil fuels to combat climate change and pollution.
Companies seek ways to adopt Environmental, Social, and Governance (“ESG”) policies to do their part for the environment. As an example, Blackrock sent a letter to the CEOs of its invested companies and a letter to its clients, addressing a focused mandate on sustainable investing. See eResearch’s article from January 2020.
To kick-start the economy and with zero-cost dollars in a low-to-no interest rate environment, governments are going to use fiscal stimulus. Governments will focus on green infrastructure projects that will get the most political capital from constituents.
Junior Mining companies exploring for commodities tied to green projects, such as electric vehicles, should benefit. These commodities include copper, nickel, platinum, palladium, rhodium and cobalt.
This will lead to what he calls “The Revenge on the Miners.”
Robert Friedland explains the opportunity by looking at a chart of the value of the oil commodity relative to other commodities (see Diagram 2). If oil, the large black box, needs to be replaced in the green economic future, then money needs to flow into the smaller boxes of copper (Cu), nickel (Ni), platinum (Pt), palladium (Pd), cobalt (Co) and rhodium (Rh).
Diagram 2: Global Market Value of Various Commodities Compared to Oil
“Copper is the EV story”, said Mr. Friedland
According to data from BHP and Bernstein Research, a Tesla Model 3 electric vehicle (EV) requires 109 kg of copper for each vehicle compared to 20 kg in a Ford Mustang – 5 times as much copper in an EV than a regular internal combustion engine (see Diagram 3).
But that is only part of the copper solution as he explains, the aging electrical infrastructure needs an overhaul, and half of the U.S. power generation comes from coal, which would need to be replaced by green energy (solar, wind) and battery storage, which all require copper.
Finally, in various studies, copper, silver and their alloys exhibit antibacterial, antiviral and anti-fungal properties. He believes because of the recent pandemic, manufacturers and governments will shift from stainless steel to copper covered surfaces as copper is less expensive than silver.
With three projects in southern Africa, focusing on copper, zinc, platinum and palladium, Robert Friedland believes that Ivanhoe Mines will be properly positioned to ride the upcoming mineral demand that the green economy will bring.
To view the full presentation, visit the Ivanhoe Mines website.
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