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Posts tagged ‘oilsands’

Some Robert Friedland riffs

July 29th, 2015

The “miner’s miner” talks commodities, jurisdictions, markets and majors

by Greg Klein

A “miner’s miner” was how Rick Rule introduced Robert Friedland. The founder and executive chairperson of Ivanhoe Mines TSX:IVN also serves as executive chair of the Sprott-Stansberry Natural Resource Symposium in Vancouver, where he delivered the opening day’s keynote speech on July 28. That was the original plan, anyway. Instead, a relaxed-looking Friedland eschewed a script to sit back and, in response to questions posed by Rule, discuss commodities, jurisdictional risk, markets and the problem with the majors.

Friedland’s favourite metals? They’re currently copper, platinum, palladium and zinc—stuff for which he sees bright futures and, not surprisingly, the stuff he’s currently pursuing. He also likes diamonds but considers himself “an agnostic on gold.”

The “miner’s miner” talks commodities, jurisdictions, markets and majors

A community group poses on Ivanhoe’s Platreef
project, expected for 2019 production.

“Copper is the metal if you believe in human advancement,” Friedland says. “Gold is the opposite.” Meanwhile this market has either hit bottom “or it’s the end of the world.” He says he’s never seen such a severe devaluation, with stocks “priced for Armageddon.”

He’s cynical of the prognosis industry. The media report obituaries for all commodities, disregarding the bullish case that Friedland sees for some metals. JP Morgan, he points out, couldn’t predict oil’s fall. Goldman Sachs’ forecasts come from “just two guys, they don’t really know, they go to the bathroom about as often as the rest of us.”

As for his own forecasts, Friedland sees economic recovery and growth, as well as specific mining opportunities because “you can’t have economic growth without copper.” He notes recovery in Europe and describes the U.S. undergoing a “slow, gentle, lousy recovery,” but a definite recovery just the same.

He considers the collapse of Chinese equity markets to be an issue separate from the country’s underlying economy. “It’s definitely not 1929 in China,” Friedland emphasizes. Run by a powerful boss, the country’s “command economy” continues to grow. Chinese hold huge personal savings. With a currency stronger than the U.S. dollar, the country now has its own de facto reserve currency.

Even if China’s economy grows 3% to 4% a year, “it’s still an enormous disruption.”

Getting back to commodities, he argues that Saudis killed the Alberta oilsands and devastated U.S. shale “but no one can do that to copper.” Friedland dismisses some copper miners as “little old ladies waiting to die,” saying some grades fall so low that companies are “practically mining air.”

Serious debt prevents most majors from building big copper mines, Friedland contends. Yet his Oyu Tolgoi discovery, “the world’s highest-grade copper mine,” will undergo major expansion following last May’s agreement between operator Rio Tinto NYE:RIO and the Mongolian government.

The long, painful process of building Oyu Tolgoi “was like a woman giving birth to a 20-kilogram baby.” But it’s high grades, not jurisdictions, that attract Friedland. In fact he sees jurisdictional risk everywhere.

But the Democratic Republic of Congo inspires him to say, “If I were a dry cleaner I’d work there.” Just the same, a deal announced in May with the Zijin Mining Group on Ivanhoe’s Kamoa copper discovery would help “defuse” jurisdictional risk thanks to China’s “very good relations” with the DRC. Once again Friedland finds very high grades—the world’s largest undeveloped high-grade copper discovery—as well as the cost benefits of a country with cheaper currency.

Ivanhoe’s other DRC project, the past-producing Kipushi mine, boasts world-class zinc grades as well as copper. As an additive for agricultural fertilizer, zinc has “an absolutely brilliant future,” Friedland says.

More high grades in South Africa’s Bushveld complex are complemented by the “ever-depreciating rand.” Friedland expects Ivanhoe’s majority-held Platreef to begin production by 2019, making it among the world’s largest platinum-palladium mines, as well as a producer of nickel, copper, gold and rhodium.

While other South African miners struggle with very deep, highly labour-intensive operations, Platreef will be shallower and mechanized. “No one has to lift more than a pencil.”

As a self-made success, Friedland denigrates those who run some of the world’s biggest companies. Pointing to the iron ore wars, he says the big players seem committed to “destroying each other through a war of attrition”

He says the people who run major miners “are just driving the bus.” Heads of companies like Anglo American and BHP Billiton NYE:BHP don’t hold significant stock positions in their companies, he claims. While majors struggled through the adversity of the last few years, boards blamed CEOs and fired them. Their replacements, Friedland insists, are “risk-averse.”

As for the guy who first hit the big time over 20 years ago at Voisey’s Bay, “I made my own money.”

The Sprott-Stansberry Vancouver Natural Resource Symposium continues to July 31.

A Canadian REE powerhouse?

July 24th, 2014

It might be closer than you think, says the Canadian Rare Earth Elements Network

by Greg Klein

Now here’s an ambitious goal—for Canada to supply 20% of the world’s critical REEs by 2018. That’s the target set by the Canadian Rare Earth Elements Network, at the impetus of exploration companies among its membership. While CREEN chairperson Ian London concedes the plan might not be fulfilled so soon, he emphasizes that Canada has about a third of the non-Chinese world’s advanced rare earths projects, more than a third of the world’s known critical rare earths resources and a greater degree of rare earths expertise than many people realize.

A Canadian REE powerhouse might be closer than you think, according to the Canadian Rare Earth Elements Network

The 2018 target was set a year ago, based on the fact that Canada has nine rare earths projects that have reached at least a preliminary economic assessment. “But if financing doesn’t happen, the projects aren’t going to proceed per the schedule,” London tells ResourceClips.com. Even so, the nine projects comprise “one-third of the best REE opportunities in the world,” he maintains.

And, despite the near cut-throat competition of junior explorers, at least some of the companies holding those projects actually co-operate with each other. That was another ambitious CREEN goal, but one that’s already been achieved.

CREEN describes its membership as “mining companies, academia, government, research centres, consulting firms and other organizations that are working together to develop innovative solutions to the various challenges faced by this sector.”

“We had a technical workshop about a month ago where I convened a meeting of about 35 technical leaders from the prospective producers and consulting engineering firms,” London says. “When the technical leaders and their consultants, many of whom have worked on several projects, got talking, by the end of the day they identified about 21 areas on which they shared some common issues and short-listed five prospective research projects.”

No CEOs were present. “When you get engineers talking, without any sort of corporate protocol, they actually speak the same language. CREEN has a technical advisory committee and we structured it so you roll up your sleeves and examine some hypotheses. Then you find engineers and scientists like solving problems.”

A former president/CEO of Ontario Hydro International, London holds a degree in metallurgical engineering as well as an MBA. He’s also worked with several new technology and alternative energy companies.

A Canadian REE powerhouse might be closer than you think, according to the Canadian Rare Earth Elements Network

The multi-stage continuous flotation unit at the Saskatchewan Research Council’s pilot plant is “ideally suited for rare earths separation.”
(Photo: SRC)

“I’ve been in this sector for eight years and I’m amazed at the number of individuals working on rare earths-related process technologies or applications at different universities that nobody knows about. There’s a scientist here, or an engineer there, who’s working on a PhD and is moving forward. But there was no forum for them to get together.”

Rare earths expertise in Canada and elsewhere in the West is further ahead than commonly perceived, London argues. “But it’s disjointed. There are experts at different Canadian universities who I’m not sure have ever spoken to each other because they have different areas of specialization. One would be on beneficiation, one would be on hydrometallurgy, one would be on separation. By establishing CREEN, we gave them a platform so they could get together and we now have a common goal.”

Actual mining should inspire even greater interest, he says. “If you get into production, you now have a playground for academics. It’s nice to do studies, but they want something to work on.”

Rare earths processing is “more chemistry than it is metallurgy or traditional processing,” London adds. “But we have a lot of smart guys who are comfortable with metallurgy and chemistry.”

One CREEN member, the Saskatchewan Research Council, operates a Saskatoon pilot plant that it calls “one of the few centres in Canada with an emphasis on rare earth minerals.” SRC chief geoscientist Bryan Schreiner tells ResourceClips.com, “There are other labs across the country that can do rare earths work too, but we’re emphasizing that as a major component for our pilot plant.”

The facility is intended to develop new and improved methods for processing a surprising array of minerals including potash, uranium, gold, base metals, coal, oilsands and oil shale. “We built this very modular so we can reconfigure the components of the equipment and develop a different process plant depending on what the mineral is,” Schreiner explains. “In particular we have a continuous flotation machine that’s ideally suited for rare earths separation.”

A Canadian REE powerhouse might be closer than you think, according to the Canadian Rare Earth Elements Network

Ian London

London says Canada also benefits from “tremendous relationships around the world.” In 2012 Canada’s Metallurgy and Materials Society asked London to organize one of the world’s first international symposiums on rare earths processing. It received 44 papers from nine countries. “Last year we had 53 papers from 17 countries—10 from China,” he points out. “They’ve been published in a book. If you keep it at a technical level, people will talk. The rare metals sector tends to be market-driven—what your shares are worth, how much money you can raise. But we’re at the stage now where there are Indians working with the Chinese, with Canadians and Americans.”

This year’s symposium takes place at COM14 in Vancouver from September 28 to October 1.

As for China, it not only holds much of the world’s expertise but it’s often estimated to provide about 90% of global supply—or even 95% according to evidence heard by a Canadian parliamentary committee. Mining analyst Luisa Moreno attributes about 36% of the world’s resources to China, but they’re diminishing. Recent reports from that country, meanwhile, show no easing of export restrictions.

The two Western sources, Molycorp’s (NYE:MCP) Mountain Pass mine in California and Lynas’ Mount Weld in Australia, “are both struggling,” London says. “More importantly, they’re primarily light rare earths. We have a unique advantage in the amount of critical rare earths we have.”

“The world wants alternative sources of supply. What they’re also looking for is the brains to go along with it. The Chinese created hundreds of thousands of jobs around the industry because the world buys their products, their technology.”

But he sees a limit to vertical integration at home. “Canada’s not fooling itself into thinking we’re going to be a magnet-maker to the world. We can provide separated rare earths and further downstream processed metals, and let others focus their attention on refining it into magnetic alloys, or magnets or phosphors, and together we can have supply chains.”

Over the next three years CREEN’s near-term goal is to support opportunities to place Canada as a key rare earths producer. Looking three to 10 years ahead, the organization wants to encourage further technological development, downstream processing, new applications and highly qualified personnel.

“It’s a challenge, but it’s clearly an opportunity,” London says.

Read more about Canadian rare earths research.