Charlotte McLeod
"We see a crisis coming in physical markets, and we see a requirement for much, much higher copper prices,” Robert Friedland said at the Rule Symposium.
A copper crunch is coming as demand builds and the hunt for viable deposits comes up short.
That’s according to Robert Friedland, a well-known mining industry financier whose current roles include board leadership positions at Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF) and Ivanhoe Electric (TSX:IE,NYSEAMERICAN:IE).
"We see a crisis coming in physical markets, and we see a requirement for much, much higher copper prices," he said in a recorded interview played at the Rule Symposium, held from July 7 to 11 in Boca Raton, Florida.
Copper demand “essentially infinite”
Speaking first about copper demand, Friedland described it as “essentially infinite,” noting that growing the global economy at 3 percent a year for the next two decades would require more copper than the world has ever mined.
In his view, the red metal is the most important element on the periodic table for humanity. It has well-known industrial uses, but Friedland also highlighted its ability to conduct electricity and heat — those characteristics make it essential in new applications like electric cars, artificial intelligence (AI) data centers and modern warfare.
“Military demand for this metal is going to go to infinity in the next few years,” he said, telling the conference audience that demand from this sector will put an “infinite value” on copper.
On a more basic level, Friedland pointed to the billions of people around the world that want to improve their quality of life with an electric fan or an air conditioner. Air conditioners alone require “astronomic amounts of copper,” he explained, but the red metal is also needed to generate and transmit the electricity they need to operate.
“There is no rational price for something you absolutely must have,” he said.
Ingenuity needed to boost copper supply
On the topic of supply, Friedland said the US is “ludicrously behind” other countries, especially China, when it comes to copper and other raw materials. “We're facing a generational crisis, and we really need to educate our children on the necessity of raw materials,” he told listeners at the Rule Symposium.
To illustrate his point, Friedland said performing a Google search uses the same amount of power that it takes to run a 100 watt light bulb for 10 seconds; an AI query uses enough power to run that same bulb for 2 to 3 minutes.
He also highlighted the need to transition away from copper produced using "dirty energy" like coal. In his view, green copper produced by companies like Ivanhoe Mines will command a premium in the years to come. The company's Kamoa-Kakula copper complex in the Democratic Republic of Congo produced 100,812 metric tons of copper in concentrate in Q2, and is expected to reach steady state production in the third quarter.
At the same time, Friedland thinks American ingenuity can provide supply solutions.
He mentioned I-Pulse, a private company where he is co-founder, chairman and CEO. Its partners include Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), BHP (ASX:RIO,NYSE:RIO,LSE:RIO), Newmont (TSX:NGT,NYSE:NEM) and Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK), and Friedland said most of its efforts are directed at developing and commercializing technology that will make it much easier to find mines and mine them with much less energy.
Friedland also commented on Ivanhoe Electric's Typhoon technology. Put simply, it allows the company to look into the Earth and see electrically conductive metals like gold, copper, silver and nickel. In May, Ivanhoe Energy announced an alliance with BHP to use Typhoon to explore areas of interest in Arizona, New Mexico and Utah.
“I think we may have hope for the future,” he said.
Intelligent portfolios need copper
Investors looking to get exposure to copper can buy copper stocks, but Friedland said those who have space to store it could also consider physical copper — the key is to figure out a form of exposure.
“I don't think any intelligent portfolio can be constructed without copper exposure,” he said. He sees copper as a long-term play that investors can buy and hold for their grandchildren.
Looking at timing, Friedland said that for the last few years a small community following mining stocks has traded copper equities between themselves. Now, however, he believes generalists are on the cusp of becoming interested, and he advised listeners to make sure they are early and not a day late.
“There is no rational price for something you absolutely must have,” Friedland said.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
