PDAC: Friedland previews ‘Revenge of the Miners’

Renowned mining mogul Robert Friedland took a theatrical approach to introduce his message to PDAC convention attendees in early March. The Star Wars theme song filled the packed conference room while iconic yellow text scrolled up from the bottom of screens flanking the stage before Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) founder and co-chairman delivered his presentation titled Revenge of the Miners.

“We made this little parody just to wake you up,” he told his audience at the Metro Toronto Convention Centre.

Friedland sees world leaders moving toward massive investments aimed at combating climate change and urban air pollution, which will be a boon to miners producing key metals such as copper, PGMs, nickel and zinc.

“The next thing that governments are going to do, since we’ve already reduced the cost of money to zero, is to get into an orgy of government spending. And most of that government spending will be tied to the environment.”

Friedland says “Green New Deal” schemes proposed by United States presidential hopeful Bernie Sanders and member of congress Alexandria Ocasio-Cortez total US$20 trillion and US$90 trillion, respectively.

“If we get a Green New Deal where bankers just hit the zero keys … it would make our day, all of us in this audience. It would be quite phenomenal.”

Ivanhoe is developing three advanced projects: the Kamoa-Kakula (copper) and Kipushi (zinc-copper) projects in the Democratic Republic of the Congo and the Platreef (PGMs) project in South Africa.

“January of this year was the hottest January recorded in 141 years,” Friedland says. And urban air pollution is an immediate and growing global concern.

“If the world gets three degrees warmer in the next hundred years, people in Russia or Canada — especially if you live in Winnipeg — might think that’s not such a bad thing. But the urban air pollution is going to get you right now. It’s costing the global economy about US$5 trillion and killing 7 million people a year. It’s a lot more serious than the coronavirus.”

“We’re going to have 6.7 billion people living in cities — or 68% of the global population — in your lifetime.”

Friedland sees massive potential for miners stemming from the rise of electric vehicles (EVs) to replace internal combustion vehicles that produce much of the carbon emissions related to climate change and the particulate matter polluting the air in urban environments.

“Who benefitted the most from the viral disruptive outbreak of the [internal combustion] automobile? It wasn’t the car manufacturers … It was John D. Rockefeller and the guys in the oil business.”

“Oil became the world’s largest business, the largest enterprise ever entered into by human beings. And when you disrupt something that big, it has a huge impact on the prospectors and developers that have to find the metal to deal with it.”

“EV sales in Europe are scheduled to hit 7.7 million units by the end of this decade — it’s just getting started. And the demand for the underlying metals has not yet started.”

The introductory slides from Robert Friedland’s presentation at the PDAC convention in Toronto. Photo by David Perri.

Friedland highlights how governments across the globe are beginning to mandate the use of electric vehicles, from busses and trains in Great Britain to garbage trucks in New York City. “All electric garbage trucks — huge improvement. The only thing you’re going to smell is the rotting fruit coming off the back.”

In the coronavirus he sees specific opportunity for producers of copper with its anti-microbial properties. “Every surface in every hospital will be covered in copper. This is now mandated by the United States’ military in military hospitals.” Friedland envisions increased copper demand coming from everything from cruise ships and airports to fitness equipment. “Stainless steel loves viruses,” he says.

Meanwhile copper grades and discoveries are in decline, he says.

“We’re about to go into a massive deficit. The world has mined around 600 million tonnes of copper in human history. If we can maintain 3% world GDP growth for the next 20 years, the world needs to mine more copper in the next 20 years than was mined throughout human history.”

“And this comes at a time when we want to electrify the entire world.”

While copper is key for electrification and addressing environmental concerns, he says, PGMs will also play a huge role, specifically in hydrogen fuel cells that will power larger electric vehicles. “There is no known technology for the proton exchange membrane in a hydrogen fuel cell that doesn’t need platinum.”

“Palladium is used to clean a gasoline engine. Because China is tightening its standards on cleaning the air to protect the health of their people, the palladium price has gone crazy because you need it. It’s out-performed all other metals except for rhodium.”

“Gold isn’t that great. It got out performed by palladium. Gold throughout human history has never been as valuable as palladium is today.”

“What really makes a bull market is when something is needed for human health.”

“Volkswagen is loading 0.4 of a gram of rhodium into the catalytic converter on every diesel vehicle they make.” The spot price for rhodium is above US$12,000 per oz.

“If I was talking to you a year ago and I said, ‘Go buy rhodium, it’s going to go up 10-fold next year,’ you’d think I was crazy. But I’ve seen molybdenum go from US$1 to US$30 a pound in the past. And the copper bulls are talking about it going from US$2 to $4 a pound — they don’t understand. When this world comes out of the current viral slowdown and governments engage in huge, green deficit spending to change the way we breathe our air, to change the way we generate power, you’re going to need a telescope to see the copper price.”