China wants to be No. 1 in electric cars, so it needs copper and cobalt. Where does it find its most helpful suppliers and allies? On Canadian stock markets
Robert Friedland, the founder and executive co-chairman of Vancouver’s Ivanhoe Mines, calls copper “the new oil.” By that, he means copper is essential to the new electrified, battery-powered economy in the same way oil, a century ago, was essential to the era of mass mobility.
Copper’s conductivity – its ability to transmit electricity – is superb. You cannot build a smartphone, an electrical grid or an electric car without copper, and lots of it.
China has figured out that copper and other common and rare minerals are essential to its long-term industrial ambitions. It wants to own the source of those minerals, rather than buying them on the spot market. The country’s leaders believe that whoever controls the minerals controls the end product, not just domestically, but globally. Call it an extreme form of vertical integration – from mine site to retail channel.
China can’t do this alone and, as unlikely as it sounds, it has found some of its most helpful enabling partners among Canadian companies. Friedland is one of China’s strongest and most visible allies. Ivanhoe Mines controls the Kamoa-Kakula copper play in the Democratic Republic of Congo (DRC) – the world’s biggest undeveloped copper project.
It is a joint venture with China’s Zijin Mining, which owns 9.7% of Ivanhoe. In September, the Chinese conglomerate CITIC bought 19.4% of Ivanhoe, taking total Chinese ownership to more than 29% and surpassing Friedland’s own stake of 17%. In time, Ivanhoe may evolve into a Chinese company, with a direct-to-China copper pipeline.