Metal prices are set to bifurcate between products that line up with environmental, social and governance standards and those that do not, mining entrepreneur Robert Friedland said Jan. 18 during an annual Canadian exploration conference.
Friedland is the founder and co-chairman of British Columbia-based Ivanhoe Mines Ltd. and has backed a handful of notable base metal discoveries in the past few decades. In a keynote address at the virtual Mineral Exploration Roundup conference held by the Association for Mineral Exploration in British Columbia, he focused on the importance of exploration and mining in economies that are trying to be less carbon intensive.
"There will be no one price for copper. There will be no more one price for gold," Friedland said. "Everything will be priced in relation to its ESG components and will be priced in relation to how much global warming gas is created in making that commodity."
Friedland said he expects copper produced with less carbon emissions to eventually price at a premium to fossil fuel-intensive metal.
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Given the expected demand for metals such as copper and nickel in coming years, Friedland took a bullish view on prices.
"We're ... sort of in the tenuous early days of putting our toes in the water," he said. "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 trillion to $100 trillion enterprise to green the world economy, to electrify the world economy."
Friedland said he has been in talks with German and Japanese automakers, and they are "critically concerned" about supply chains when it comes to electric vehicles on the ESG front. He doubts that automakers will turn to owning mines to control metal sourcing as they look to address supply chain issues but said they might consider using other ways to finance the sector and secure metal.
"The carmakers don't want to be miners, because if your tailings dam fails, the environmental liability would kill the carmaker," Friedland said.
Some may look to streaming deals, where a buyer typically provides up-front capital and promises to pay a relatively nominal sum for a portion of the future supply. Some automakers have already looked to secure supply through long-term contracts, but streaming has largely been the arena of royalty and streaming companies, which have emerged as important sources of capital for mine development in the past decade or so.
"That would provide another competing source of capital to floating a junk bond or selling equity on the markets," Friedland said, noting that there could be a trickle-down effect for the exploration sector.
