Robert Friedland, the founder of Toronto-listed Ivanhoe Mines, told delegates at the Mines & Money conference in Hong Kong on Tuesday that a greater adoption of clean technologies would be extremely positive for metals such as copper, palladium and platinum.
Metal miners, he said, should be seen as the solution rather than the problem. “If you want to clean a gasoline engine in a car you need palladium, if you want to clean a diesel engine in a boat or a ship you need platinum and if you want a hydrogen fuel cell automobile that has no pollution at all you need even more platinum,” he said. “If you don’t want to burn coal or hydrocarbons you have to go all electric and if you do that, no matter what technology you use, you need copper.”
This is an uncomfortable reality for many environmentalists. To meet the demand for metals in a clean economy, we will need to invest even more capital into the discovery and extraction of ores — whereas in reality the amount of investment is falling, according to Friedland.
This is through no fault of his own. Ivanhoe is behind the exploration and development of the world’s biggest undeveloped copper-and-gold discovery at Oyu Tolgoi in Mongolia, as well as the largest precious metals discovery at Platreef in South Africa and the world’s highest-grade underground copper discovery in Kolwezi in the Democratic Republic of Congo. All three are in the early stages of production and will continue to operate for generations.
Even so, Friedland is predicting that a stronger global economy will produce a shortage of copper by 2018 that will help prices to rally from current lows.
In the longer term, mass urbanisation in developing markets will create billions of people who want to consume like Americans (which equates to roughly $3 million of raw materials in a lifetime, according to one of Friedland’s slides).
But if you want to consume like a Californian, without choking to death, you need to have Californian environmental standards — and the American tycoon is confident that even China is heading in that direction. “I guarantee this is a phenomenon you can take to the bank,” he predicted.
The success of fuel cell technology could be even more positive for metals prices. Hyundai has now released the first fuel cell vehicle from a major manufacturer, while Toyota’s version will replace the Prius in 2015. Other manufacturers are not far behind.
Fuel cells are a totally different proposition to conventional electric cars, such as Elon Musk’s Tesla. With 80% of China’s electricity fuelled by coal, a Tesla running in Beijing is hardly a green vehicle — it’s a coal-powered car. But fuel cells work by stripping hydrogen out of a hydrocarbon such as natural gas, leaving water vapour as the only exhaust gas. This takes up to 20 times more platinum than is used in a catalytic converter.
There are also several new sources of metals demand that Friedland is excited about. These include the discovery that zinc is now recognised as one of the most potent fertilisers on the planet, which the Chinese reacted to by mandating the inclusion of it in all fertilisers.
Another interesting application is the use of copper as an anti-bacterial surface, particularly in hospitals. The World Health Organisation has recognised this application, which could spawn a whole new industrial application for the metal.
The promise of germ-free hospitals, high-yielding crops and clean cars is certainly a new type of sales pitch for an old-economy industry like mining but Friedland is an unapologetic advocate.
“If you don’t grow it, you have to mine it,” he said. “Every single thing you touch and experience in our material world that is useful to human beings is either grown or mined.”
And with that he left the stage, complaining that the poor air quality in Hong Kong was making him “cranky”.
“It’s really serious that we get on with it and find the raw material we need to build a better world,” he said.