Friedland tuned in from Singapore
Post-COVID demand for metals will bring on the revenge of the miners, the financier told attendees at AME Remote Roundup, the B.C. mineral exploration industry’s annual gathering
Robert Friedland returned to his old B.C. stomping grounds this week.
The legendary mining financier delivered the opening keynote speech for AME Remote Roundup, a virtual edition of the Association for Mineral Exploration’s annual conference. Friedland joined attendees via video from Singapore, his home base.
A member of the Canadian Mining Hall of Fame, the founder and executive co-chair of Vancouver-based Ivanhoe Mines has been called the “undisputed king of junior development” by the Mining Journal, which named him one of the industry’s 20 most influential people in 2015 and 2016. He recently launched Ivanhoe Capital Acquisition Corp., a special purpose acquisition company (SPAC) that plans to raise US$200 million to invest in mining and other businesses helping the world move away from fossil fuels.
In his forward-looking remarks, Chicago-born Friedland sounded bullish on the mineral exploration and mining sector, which he thinks will benefit enormously from global electrification. The former college buddy of Steve Jobs also recalled his time in Vancouver, where he became a junior-mining player in the 1980s before co-founding Diamonds Fields Resources in 1992.
“I go back to the old days, when we used to do this at the Bayshore hotel, where Howard Hughes used to live,” Friedland said, noting that he walked to what was then called the Cordilleran Roundup from his office. “And we had everybody there in one room. If you dropped a neutron bomb there, you could have killed the whole mining industry.”
We put together some highlights from Friedland’s AME Remote Roundup address.
Here comes the revenge of the miners
“The mining industry has been down for such a long time that most participants forgot what up looks like. So since everything by nature is cyclical, we’ve had most of the money in the world for the last 20 years [go] into broadband Internet, the cloud, telecommunications and other clearly disruptive technologies. But of course, mining also benefits from all of those disruptive technologies, and now that the world has gone through this profound shock of COVID-19, we’re beginning to wonder what is the world going to look like when governments address the recovery effort. People are waking up to the fact that certain elements in the periodic table are going to be huge winners. And so this begins the era of the revenge of the miners.”
Be careful what you wish for…
We’re very, very early in what’s called an up cycle. We’re sort of in the tenuous early days of putting our toes in the water. We won’t really see this the way I think we’re going to see it until 2023, 2024, 2025, when the world will really be focused on a $50- to $100-trillion enterprise to green and electrify the world economy. And that will have an unbelievably profound effect on the Cordilleran Roundup. And maybe we’ll buy the old Bayshore and turn it into a party centre, and it’ll make Vancouver more like Calgary used to be, when we used to burn oil and gas. And I think the prospectors, the geologists, have a very bright future.”
What politicians really do for a living
“If there’s one thing everybody wants, it’s a better life for the average person. And governments are run by politicians, and by definition, a politician is somebody who bribes you with your own money. And politicians are promising a better life. They’re promising cleaner air; they’re promising better water; they’re talking about arresting climate change; they’re talking about eliminating the burning of coal and hydrocarbon, without any idea, really, of what this is actually going to take.”
Electrify everything? Easier said than done
“When you go to electrify the whole world—and I’m not talking about just cars, but skateboards or hoverboards or snowmobiles or Ski-Doos or drones or airplanes or buses or trucks—as you electrify all that, it’s all a huge fraud if you don’t change the way the electrical energy is generated, distributed and stored. So the whole system has to be rebuilt, top to bottom, and that is what is bringing the onset of the revenge of the miners.”
Move over, old white guys
“The world is screaming for copper to electrify the world economy, and Tesla is utterly dependent on copper and nickel. It can’t possibly have that market capitalization unless a lot of Tesla cars get built, and that copper and nickel has to come from somewhere. And so the countervailing pressure to meet very high ESG [environmental, social and governance] standards in mining is going to make the whole enterprise even more interesting and difficult to do properly. So welcome to the new world. The situation is hopeless, but it’s not serious for the miners. It is possible to mine responsibly and in a better way, and we as an industry have to find a way to do that. And that applies to all aspects of the enterprise: exploration, development, construction, tailings disposal and reclamation.
“And so where we mine, how we mine, who’s employed in mining is being revolutionized. It’s not just going to be an enterprise for the old white guys from Canada. When you go to the Toronto Club, you see all those pictures of the old dead guys on the wall. It’s not going to be like that anymore. There’s going to be women in mining, and there’s going to be people of every colour, race and description.”
As markets get smarter, polluters will pay
“Markets themselves are going to be revolutionized, and they’re going to be modernized, and they’re going to be a lot smarter because they can utilize the sum total of the advancement of technology….We all have gotten used to idea that there’s really no one price for crude oil. Well, now all commodities will have differential pricing. There will be no one price for copper. There will be no more one price for gold. Everything will be priced in relation to its ESG components. It will be priced in relation to how much global-warming gas is created in making that commodity, because we are going to head to a price on carbon….So if you’re producing green copper with hydroelectric power, and you’re close to the end market, that will trade at a huge premium to an auto maker who wants to put a sticker on the car of the downstream costs of making that car in terms of global-warming gas.”
Brother, can you spare a carbon credit?
“There are going to be 30 grades of copper and 30 grades of nickel, or there may be markets made in carbon itself. If you have to pollute, you buy carbon credits. Elon Musk is living on carbon credits. Tesla is at $725 a share because every car he sells is getting a government subsidy. People like the idea of electric cars, and they’re just beginning to wake up that they need our metals to make those cars.”
America the bountiful
“We’re very excited about the United States. We think the United States is very underexplored, because American governments made it sort of toxic to be mining in the United States. Miners were the bad guys. But now even Joe Biden has said he will support the mining of copper in the United States because they know they need it. And there’s a long list of metals the United States Department of Defense wants for America’s national security, and they’d prefer that those metals be discovered in the United States.”
B.C., you don’t look so bad yourself
“I think British Columbia has fantastic exploration potential. Up there in the Golden Triangle, around Kamloops, we’ve looked at some very interesting things. As long as we think we can make a friendly long-term alliance with the original Aboriginal owners of that land, yes, it’s going to be possible to mine consciously in British Columbia.”
Mineral exploration as a non-invasive procedure
“Utilizing a huge amount of electrical energy to do the exploration is disruptive, and utilizing the number-crunching ability of supercomputers to interpret the geophysical information reduces the requirement to leave a big footprint on the ground in the exploration process. When you put electricity into rock, it doesn’t really feel it. The rock is not a sentient being. And when that copper, that gold, lights up at a kilometre or two deep and we see it, that’s really exciting. And to be able to validate that our geophysical information is real with a drill hole, as I’ve been telling everybody for years, it’s much better than sex.”
All hail the rock gods
“A lot of us that have a little more capital available are very anxious to talk to junior mining companies. Because after all, that’s where all the ideas some from. Everything starts with something. So it’s the deepest honour to talk to the explorationists, because in our world, the geologists are the gods. In our world, that’s where it all comes from. And there’s more wealth created in the discovery that sitting there tweaking those little dials for 40 years and actually mining it.”
Post-COVID, even dumb metal is a smart bet
“A year from now, when we have the next Roundup, I’m hoping we see a vibrant, recovering world economy. And I think we’ll see higher metals prices right across the board. You see that the precious metals are rising against the dollar, and base metals are rising against the dollar. And even iron ore, which is probably the lowest-IQ of the metals, has outperformed gold; it’s had a fantastic run. So all of these metals are in enormous demand as governments print money to engage in deficit spending to stimulate their economies in response to this pandemic. So an end is in sight. We’re closer to the end this pandemic than the beginning, and we all need to get back to work, rolling up our sleeves, and build a better world.”
Zooming in on capital
“And I think when we look back at this period in our lives, it will be a [time] where people had a period of introspection and we learned how to do things differently. We learned how to have a virtual conference. We learned how to do road shows with Zoom calls. And it’s not all bad, because I didn’t like flying on airplanes and going up and down elevators, talking to kids half my age, begging them to give me some money to do something. It’s easier to do it on a Zoom call and stay at home in your shorts and T-shirt, which I’ve been doing.”