Speaking to a packed audience at the at the World Mining Investment Congress in London, Tuesday, charismatic mining entrepreneur Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX: IVN) treated the audience to his views on global warming, the future of the mining sector and the company's huge Mongolian copper/gold and coal projects.
On global warming his views are that it is most likely a natural and unstoppable occurrence with such climate swings happening many times in the past, but in all likelihood this time it is being exacerbated by human activity. And he sees this as a huge opportunity for the mining sector - notably in terms of demand for copper and energy products. He feels the way forward is nuclear power and clean coal generated electricity and that his principal company, Ivanhoe Mines, is particularly well placed to meet some of the needs for this. On the copper front he pointed to the rapid increase in output of hybrid cars, which require copper as the best conducting metal known (apart from gold and silver which are too expensive) and the need for ever increasing power distribution networks as the world moves to clean power.
With Ivanhoe's huge Oyu Tolgoi copper/gold project close to Mongolia's border with China well under development, despite so far not having reached a final fiscal arrangement with the Mongolian authorities, Friedland claims to control, with partner Rio Tinto (The best mining company in the world located in the capital of the world said Friedland playing to his London audience), what is arguably the world's largest known copper/gold deposit and the only known copper porphyry-type orebody running at 3 percent copper (most grade less than 1 percent). He also reckoned that the resource so far proved out is only a fraction of the total orebody.
The initial development of the project is well under way with the first mine shaft down to 1,385m completed in January this year in record time by the Mongolian development crew and a second shaft - the world's largest according to Friedland - already in progress, again with a Mongolian crew supervised by Canadian specialist contractor J.S. Redpath.
All this has been undertaken without a formal agreement in place as the Mongolian Government wrestles with the promulgation of a new mining law, which Friedland reckons is close. He says the country's Prime Minister has promised them the agreement will be reached soon and with the Parlaiment sitting at the moment it could be today, or tomorrow, said Friedland. He also put forward his views as to how such an agreement might operate feeling that a product share arrangement with government would be a much more transparent way of dividing revenues between the mine developers and the nation than the more standard royalty/tax system.
When Oyu Tolgoi comes on stream, projected average annual production will be 440,000 tonnes of contained copper in concentrate and 320,000 ounces of gold annually.
The strategic location of Mongolia, on the Chinese border, and rich with mineral resources including some of the world's cleanest coal reserves was also another of Friedland's themes. The Chinese, in recognition of this, have already built road and rail infrastructure up to the Mongolian border to take account of this and will be looking to the sparsely populated nation for major strategic supplies into the future.
Ivanhoe's own Ovoot Tolgoi coal deposit, held through 90% owned SouthGobi Energy Resources, is also close to the Chinese border and under development. As Friedland re-iterated the quality of these Mongolian coals is better in situ than some washed coals in other areas, and cleaner coal is absolutely vital for the Chinese power sector which has an appalling air pollution record.