We flew from Cape Town to Limpopo, South Africa on one of billionaire Robert Friedland’s private jets -- a Gulfstream G450, although he prefers his Dassault Falcon.
The group of investors travelling with Friedland to see his Ivanhoe Mines’ African mining portfolio took a chartered bus from the airport to the lodge where we were staying. Even before the bus came to a complete stop, Friedland was getting antsy. He leapt to his feet and stormed into the hotel talking into a satellite phone while his guests were still undoing their seatbelts. Watching Robert Friedland those few days in Africa in 2014 was unforgettable. I have never met anyone as charismatic or intense.
Robert M. Friedland (August 18, 1950) is the most successful explorer and mine developer of his generation having principally financed and led several world class mine discoveries in Canada, Mongolia, Congo and more. His Ivanhoe Pictures produced the 2018 blockbuster, Crazy Rich Asians, and as an angel investor Friedland was one of the earliest backers of XM Satellite Radio. Prior to his business career Friedland was a college roommate of Apple founder Steve Jobs and led the Oregon commune where Jobs found inspiration for his company’s name.
Friedland draws from broad life experiences to be a colorful storyteller and can be very intimidating. In the Congo he kept telling me with a straight face that Malaria mosquitoes would love my sweet, white skin.
He reminds me of President Trump for a few reasons. He’s an irreverent American born billionaire of similar vintage who speaks using vivid, visual language; he’s adept about popular culture; and he has a long history of battling the media. Friedland rarely gives interviews. When I heard he gave his first ever podcast interview to promote his new commodity exchange startup, Abaxx Technologies, I was as keen to listen as when Kanye West recently appeared on Joe Rogan.
The interview begins with a story about Mongolian camel polo. “And it's a very rough game. I mean, they basically started playing polo, allegedly where the ball was a human head. I mean, this goes back to Genghis Khan and beyond.”
Discussing the Coronavirus you get a sense of Friedland’s unusual language. “A bat flew out of a cave in Yunnan, maybe his name was Wilmer and he took a shit into a rice patty, somewhere in Southern China and where a pig was sitting. And that virus from the bat got to the pig and then Mr. Wong took the pig to market in Wuhan and that virus has gone global and perhaps it's going to be responsible for evicting the president of the United States from the White House. So we have a very fragile system where, when a butterfly flaps its wings, the whole world changes.”
Friedland’s message is mining’s essential role in the transition from fossil fuels. “...the reduction in the use of hydrocarbon and coal in the way we generate and transmit energy will be the largest transition in the evolution of our species that's happened in recorded modern history.”
He spoke of pop-culture’s “subliminal crucification of the mining industry… The miners are the bad guys, when actually the miners are giving you everything you need to live a modern life.”
“You don't like crude oil. You don't like coal. You want the world to be green. Well, then we're going to, you know, we're going to see the revenge of the miners. We're going to need much higher metals prices to stimulate the exploration and production process.”
“We only have one periodic table of elements to work with... So nickel, cobalt, and copper, along with the aluminum and the scandium to lighten the car body are huge winners, if you want to electrify the car. But what about generating the power?”
“People don't understand that an electric car is only as good as the electricity that powers it.”
“We've got solar power, but the sun doesn't shine all the time and we've got wind power, but the wind doesn't blow all the time. And those big windmills chew up a lot of birds. You know, if you're flying North with your girlfriend, you're a Canada goose and you're just having a conversation with your girlfriend. All of a sudden, poof! She's just a big cloud of feathers, cause you flew into a windmill. There is no free lunch in mother nature.”
“Every mine is located somewhere.. And so you have to worry about what is a sustainable long-term deal between international capital and the people who grew up around the mine.”
“You've got a great mine if you're at the bottom of the world cost curve. You can afford to build schools and hospitals and do agricultural projects and employ women and train people and really benefit the local community. But you need a great mine to do that. You need a tier one world-class mine with a hundred years of life and at the bottom of the world cost curve.”
“It's very dangerous to build a mine wherever you have a positive water balance. You've probably never thought about this, but the positive water balance is where rainfall and snow exceeds evaporative loss. So if you go to Brazil and you see all that endless jungle, that looks like broccoli from an aircraft, it's raining more than it's evaporating. So if you build a tailings pond - that's the waste from the mining - you have to guarantee the integrity of that tailings pond in perpetuity. And that's a long time.”
“The highest grade copper is the greenest copper. If my copper mine is 10 times the grade of your copper mine, I'm using 1/10th of the concrete, 1/10th of the steel, 1/10th of the electrical energy, my tailings dam is 1/10th as big. So my footprint on the earth is much smaller. Someday we'll be mining Mars. You know, we'll go to another planet to do the mining, but right now we're stuck with terrestrial mining.”
“...not all copper is the same. It may all trade at the same price right now. Today, the price of copper is say $7,100 a ton. In the future, you're going to have 40 grades of copper trading based on how much global warming gas it produces.”
Friedland and podcast host Erik Townsend are both angel investors in a startup called Abaxx Technologies. Abaxx is building a new commodity trading exchange to help consumers “differentiate a commodity priced off of the lowest cost coal mine in China, with best in class ESG production,” according to Abaxx founder Josh Crumb, formerly of Goldman Sachs, Goldmoney, and the Lundin Group. “To move the world forward we need more investment and a better cost of capital for the extractive companies trying to do better; ESG needs to be smarter than just long-BigTech, short-natural resources.”
Abaxx has been in development for two years and has built a team consisting of veteran technologists and commodity traders from Goldman Sachs and the NYMEX. Next year the company aims to introduce a new market for Liquid Natural Gas (LNG), an important commodity in the global energy transition, and gradually introduce other markets thereafter.
Crumb says Abaxx intends to build the SmarterMarkets Podcast as a voice for the resource industry within the ESG movement, and that there is no better voice to kick off that movement than Friedland.
Abaxx is going public via a reverse takeover of New Millennium Iron (NML on the TSXV), which Friedland discussed at the end of the podcast. “It only takes a tiny fraction of 1% of all the smart people in the world to get it. And the value goes up.”
There are many more lessons and laughs from the world of mining and beyond in the interview. Listen and Subscribe to the SmarterMarkets Podcast with Robert Friedland.