Robert Friedland: Copper Price Needs to Double to Incentivize New Supply

Base Metals Investing

For Friedland, copper has not caught up to gold in an incentive price sense — the yellow metal broke US$2,000 for the first time this week. 

The resource space has been shaken by the coronavirus pandemic in 2020, and many believe COVID-19 has only accelerated trends that were already expected to materialize in a few years.

Speaking at this year’s Sprott Natural Resource Symposium, mining billionaire Robert Friedland said the virus is forcing everyone to look at the world in a new way.

“When we come out of this virus in perhaps two or three years, a lot of people are going to be looking to create a better world,” he said. “Most importantly, people want to look at a blue, clean sky.”

Friedland said countries want to create economic activity with government-mandated stimulus, which he predicts will to tend to be green and will involve the electrification of the world economy.

“Everything is going to be electric, and the world is going to realize you can’t get there without certain critical metals,” he said. “The new oil is copper, nickel, cobalt.”

In an interview with Sprott’s (TSX:SII,NYSE:SII) Rick Rule, the founder of Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF) also shared his thoughts on incentive prices to bring more base metals supply into the market.

“The mining industry has to reinvent itself … it takes a very long time before a rise in price results in a meaningful increase in production of metals,” he said. “The copper price probably needs to double its current price for the average low-grade copper porphyry in Peru or in Chile to become viable.”

For Friedland, copper has not caught up to gold in an incentive price sense — the yellow metal broke the US$2,000 per ounce level for the first time this week.

When asked about the financing landscape, Friedland said the revenge of the miners has begun.

“There’s an enormous amount of liquidity behind any enterprise that would yield a better world for our kids or grandkids … and that’s going to put a much higher value on high-quality metals production.”

Friedland believes mining is being looked at with a new lens financially, socially and governmentally, which is going to change how metals are actually priced.

“It’s not just not to burn coal or hydrocarbons, it’s the entire supply chain that needs to be revolutionized, and that’s going to put a huge premium on Congolese copper,” he said. “Actually Congo is the best place to mine copper.”

Ivanhoe Mines is developing the Kamoa-Kakula copper discovery in the Democratic Republic of Congo (DRC), as well as the Platreef platinumpalladium-nickel-copper-gold discovery in South Africa. The company is also working on the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-silver mine, also in the DRC.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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