Robert Friedland: Copper is a national security issue
Mining companies will have to be “real heroes” and governments will have to accept the industry if the world is to successfully transition to clean energy and transport, said Friedland, founder and co-chairman of Ivanhoe Mines Ltd., which explores and develops mines in Africa.
The world is yet to grasp the scale of disruption in replacing fossil fuels, with most people in urban areas unaware of where materials in everyday life come from, he said.
While the 70-year-old billionaire is taking a long-term view, his words of warning contrast with those of some of his colleagues at the conference who are reluctant to accelerate growth plans in a cyclical market, reports Bloomberg.
His comments seem more in line with bullish analysts such as Nicholas Snowdon of Goldman Sachs, who predicts record-high prices as the metals heads towards the tightest conditions since the mid-2000s.
Mining is suffering from years of underinvestment, with America very under-explored because for 20 or 30 years “it wasn’t cool to mine,” Friedland said. Where future supplies come from “is going to be a matter of fervent debate” as will how to tax and regulate them.
Massive investments are needed to electrify economies. The US power grid, which “is a joke” compared with China’s, needs $10 trillion and “astronomic amounts” of the right metals to get up to scratch, he said.
“In the short term, we’ve had a big rise in the price of copper,” Friedland said. “But for the medium term, copper has really become a national security issue. It’s central for what we want to do with our economy.”
While the industry should now be seen as part of the solution in global decarbonization, it also faces challenges to decarbonize, he said. Ore quality around the world is deteriorating, meaning volume has to rise and carbon emissions increase. Mining will need both hydroelectric and nuclear power as well as renewable, he said.
People should expect a carbon tax on everything, he added.
Speaking at the Mines and Money conference in London in 2019 , Friedland commented: "Copper demand is going to be psychedelic!" The numbers back up the self-confessed “ex-hippy” and his predictions for an exponential rise in demand. The average petrol engine vehicle requires 20kg of copper, a hybrid 40kg, and a plug-in EV 109kg, while the cars of the future will need as much as 163kg of the metal. EV sales are expected to rise from 2 million units in 2018 to 21 million units by 2030.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.