With Changes, the Mining Industry Could Have a Larger Role in Addressing Climate Change: Ivanhoe Mines’ Friedland
The mining industry could play a larger role in addressing climate change, but it will need to implement changes in how it operates, said Robert Friedland, the Founder and Executive Co-Chairman of Ivanhoe Mines from the BMO Capital Markets 33rd Global Metals, Mining & Critical Minerals Conference.
In a keynote address to the BMO Conference in Hollywood, Florida, Friedland, outlined the challenges facing the industry and what is being done to address them. At the top of his list: improving perceptions of the mining industry.
Rewarding sustainable miners
To change perceptions and persuade companies to embrace more sustainable mining practices, pricing models for metals must be reimagined, he said. For instance, he pointed out the shortfall of relying on companies that burn coal to produce the metals required to build electric vehicles, wind turbines and other solutions needed to reduce carbon emissions.
“What’s the point of mining copper if you have to burn coal to mine the copper? What is the fundamental rationale there?” he asked the packed hall. “It doesn’t make any sense for copper mines to produce that much global warming gas per unit of copper produced.”
For Friedland, part of the solution lies in developing a pricing model that rewards companies that can produce vital commodities such as copper in a more environmentally friendly way. Specifically, he called for differential metals pricing based on how environmentally friendly production is, rather than the single-price model that is currently used.
The approach Friedland outlined is similar to how there are different prices for sweet and sour crude oil. “If you’re burning coal to mine, that copper should trade at a big discount,” he argued.
Mining deficit
Rewarding environmentally sound mining is essential, but it will alone not be enough to solve the climate crisis, Friedland said. There is also an urgent need to expand base metals production to meet the energy transition’s needs.
According to BloombergNEF, the world needs to add about 80 million kilometers of grid growth by 2050 – a US$21 trillion-dollar investment.1 To provide context for the scale of that investment, there are about 150 million metric tons of copper sitting in the U.S. electrical grid today. But as Friedland points out, society has only extracted about 700 million metric tons of copper in all of history.
“Industry needs to mine as much copper in the next 22 years as we mined throughout human history, absent electrification,” said Friedland. “This has nothing to do with the electrification of the world economy.”
The shift to low- or zero-carbon electric vehicles and a greater need for energy-intensive data centers to support the boom in artificial intelligence will strain the fragile electrical system further, Friedland said. Scarcity of mineral resources and geopolitics may complicate mining supply chains even further, he added.
The future of mining
For all of the challenges facing the mining industry, Friedland is optimistic about the future. He has a front-row seat to the trends shaping the industry, including the new, innovative technologies being developed to find ore bodies faster and with greater precision. He also described new mining and extraction innovations in development that will make it possible to drill faster and deeper, using about a third of the energy inputs of current methods.
Saudi Arabia is emerging as an important partner in the journey to finance and support mining exploration, noted Friedland. Not only is Saudi Arabia providing much-needed energy stability, which Friedland said is a must if there is to be any hope for the energy transition, but it is also a country that welcomes miners.
According to Khalid Al-Mudaifer, Vice Minister for Mining Affairs, Ministry of Industry and Mineral Resources, Kingdom of Saudi Arabia, who joined Friedland on stage, the country desert nation has already committed US$100 billion to build a smart industrialization hub. As part of this investment, Saudi Arabia hopes to become competitive from an expertise and sustainability standpoint.
“We are going to use our late-coming advantage to our benefit,” said Al-Mudaifer. “We are building a mining industry that is competitive and balanced, that is also progressively embraces ESG on a competitive and investor-centric basis.”
Indeed, Friedland added that “Saudi Arabia actually wants to develop mining and be an exporter of capital to the rest of the world.”