Leveraging Canadian Mining Expertise to Sustainably Develop Emerging Economies

Gianni Kovacevic

Author

Gianni Kovacevic is an author, investor and strategist known as the realistic environmentalist who is known for the way he decodes complicated modern themes. His recently published book, “My Electrician Drives a Porsche?”, was introduced to audiences by way of a one-of-a-kind journey across America in an all-electric Tesla, now credited as the world’s first zero emission book tour. He is a graduate of electrical studies from The British Columbia Institute of Technology, and he is a sought-after expert in the analysis of the global energy matrix, natural resources, and in the study of how technology will impact commodities.


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Takeaways:

 

1- Canadians demonstrate a disconnect between the products they use every day and their knowledge of the mining industry. A greater understanding of the role mining plays in our everyday lives will most likely change public perception of mining for the better. 

2- Canada’s leadership in mining exploration and extraction is a valuable asset to leverage as more emerging economies will seek guidance and references to develop their own mineral endowments to prosper.

3- The rise in demand for electrification provides a tremendous opportunity for Canada: its territory holds a rich mineral endowment to source the minerals used for electricity.

Action:

 

Canadians are the world leaders in terms of mining knowledge and raising capital for mining projects. It’s time to tell the world that we’re open for business. We have to focus on building a finance market specifically for the extraction and exploration of Canadian natural resources. We have to promote the tax advantages we offer for mine exploration. Canada must lead the world in best practices for the exploration and extraction of natural resources.



We know you as “the realistic environmentalist.” What does this term mean to you?

 

Over the years there have been protests against mining projects in Canada and around the world, often for environmental reasons. Canadians don’t want their land to be disturbed by major development projects. There’s a popular term – NIMBY – which means “Not in My Backyard.” Today, the most commonly used is BANANA: “Build Absolutely Nothing Anywhere Near Anyone” – which is not possible. 

The elements we dig out of the earth have helped unleash incalculable value, and they will continue to do so. From high-tech, such as smartphones, laptops, drones, to clean technology, wind turbines and solar panels, to traditional, convenient technology such as washing machines, or even bicycles, all these every day products have one thing in common: a mining story.

“If we want to continue to produce clean technology that has longer life cycles, mining will be part of that journey. This perception of mining extraction enabling technology is key to shaping realistic environmentalists.”

Take steel, for example. We need steel to make wind turbines. How do we make steel? From coking coal, iron ore and limestone; these are resources we mine and extract to make clean technologies. If we want to continue to produce clean technology that has longer life cycles, mining will be part of that journey. This perception of mining extraction enabling technology is key to shaping realistic environmentalists.

Being a realistic environmentalist means that you understand that development requires natural resources that come from either extraction or from being grown. People who protest against the mining industry don’t always recognize the full development-cycle of the daily products they use. Having the greenest economy while having zero resource development is not possible. Our everyday activities are more connected to mining than we think.

“Communicating the necessity of mining should be an industry priority among governments, academia, businesses and investors.“

For the Canadian mining industry to continue to thrive, there needs to be an increase in awareness of why we extract in the first place. Communicating the necessity of mining should be an industry priority among governments, academia, businesses and investors.We must promote both the environmental and sustainable development of mines, and invite Canadians to take part in moving mining forward by learning what it is and by envisioning what could be.


How does realistic environmentalism impact your views on the future of the Canadian mining industry?

 

Canada is in an exceptional position because it holds valuable mineral endowments that support the rising clean energy economy and it has strong expertise in mining exploration and extraction. 

There are 7.5 billion people on earth. Research shows we can expect two billion people to move from developing economies to established ones in the next 30 years. Societies that never had running water or electricity in their homes before will soon join urban centers in search of a better life.

“Canada is a world leader in the extraction of natural resources that can empower the world’s rising economies: from Alberta’s energy centric expertise, to copper mining in British Columbia, to gold mining in Ontario and Quebec, to the fertilizer market in Saskatchewan.“

The need for natural resources will rise and create a new spending class. This new spending class will have a major environmental footprint. They, like us, will rely on extracted minerals and metals for their smartphones, cars, buildings, and other comforts. And if someone drives a car 500 km per week, it doesn’t matter if that person is in America or Thailand; the impact on the commodities and power used to produce and fuel that car is the same.

Canada is a world leader in the extraction of natural resources that can empower the world’s rising economies: from Alberta’s energy centric expertise, to copper mining in British Columbia, to gold mining in Ontario and Quebec, to the fertilizer market in Saskatchewan.It’s essential to scale our expertise to shape the global economy and provide emerging economies with the resources they will need to build their clean economies.


How can Canada take a leadership role internationally in terms of sustainable practices in mining?

 

Developing countries with strong mineral endowments can lift their economy into greater growth and prosperity if they develop their resources sustainably from the beginning – especially in an era when there is so much scrutiny on corporate efforts to include sustainability in their agendas. For a developing economy to gain from its mineral endowments, it will need considerable organization, different products, processes and partnership models that improve its mining operations.

This is where Canada can be the number one reference to which developing economies turn for guidance and consultation on mining. Our best practices in mining exploration and extraction should be marketed as our greatest strength. We have the capabilities to offer an essential foundation for international emerging mining companies to innovate faster by providing a framework that guides executives on what to concentrate on and industry benchmarks to get their operations above par.

“Canada’s best practices in mining exploration and extraction should be marketed as our greatest strength.“

This is essential. The collapse of Vale’s Brumadinho iron ore tailings dam in Brazil reminds the international mining economy that significant changes to regulations and to industry practices will be mandatory. With an international push for reliable mining expertise, Canada can sustain and spread a continuous-improvement mining culture and fight reluctance to change bad practices. Canada is in a position to help streamline permitting for foreign mining companies seeking consultation to navigate regulations requiring high environmental reporting.

Canada’s ability to lead on these fronts is clear, but we must take the world stage as the nation that can consult on the extraction of minerals in a sustainable and safe way.As a start, we have to focus on real case scenarios where Canadian mining companies played an essential role abroad in solving sustainable and socioeconomic problems. We saw this dynamic play out when a Canadian mining exploration company developed a new copper mine in Panama.

“Canada’s ability to lead on these fronts is clear, but we must take the world stage as the nation that can consult on the extraction of minerals in a sustainable and safe way.“

Before the development of the mine, the mortality rate among infants was 1 in 5 babies because of dysentery due to dirty water. Deforestation was taking place, and local farmers practiced subsistence farming to feed their families. Thirty years after the mine’s development, the region now has a lower mortality rate among newborns since Canadians on-site exposed the reason for the children’s death. Throughcooperation with local communities, the Canadians taught agriculture techniques that did not require deforestation. In addition, the new roads that were built for the mine site now allow for greater mobility among farmers to reach bigger centers to sell their crops. The challenges that the Canadian copper mine tackled will resemble many others and by highlighting more successful mining case studies abroad, we will place Canada on center stage globally.

Canadians are the world leaders in terms of mining knowledge and raising capital for mining projects. It’s time to tell the world that we’re open for business. We have to focus on building a finance market specifically for the extraction and exploration of Canadian natural resources. We have to promote the tax advantages we offer for mine exploration. Canada must lead the world in best practices for the exploration and extraction of natural resources.


In what tangible does mining contribute to the growing clean energy economy, and what does that means for the mining industry’s future?

 

Metals and mining are key to the future of global energy, which makes electrification a tremendous opportunity for Canada.Today, electricity accounts for only 19% of final energy usage. Although the role of electricity in the global energy mix remained static for a long period, it is anticipated to rise to 50% of final energy usage in the next 30 years. This will have a major impact on mining and its supply chains. Metals that enable electrification include copper, nickel, lithium, cobalt, graphite and even aluminum. These metals make electricity possible. They are the enablers of the generation, transfer and utilization of electricity.

“Metals and mining are key to the future of global energy, which makes electrification a tremendous opportunity for Canada.“

Today, we use oil as the main power source for transportation; accounting for 60% of the world’s oil consumption. But we are seeing a higher demand for energy that is not derived from fossil fuels. Imagine how many millions of busses, transportation vehicles, and passenger vehicles will run on electricity instead of oil and gas in the next twenty years? It’s important to note that it won’t be industry driving this pivot, it is mandated by countless governments around the world as they tackle urban pollution and their climate change goals. This is the way of the future: a more economic and sustainable business model for transportation companies. And this will have a very significant impact on the demand for the mining industry’s products.


You have said that “oil and copper will decouple the price of oil and copper.” Can you expand on this? What do you see as the correlation between these two commodities?

 

If you look at the cost of copper and oil over the past 40 years, oil has always been the dominant commodity. Today, there is demand for approximately 100 million barrels of oil each day. With 365 days in the year, at $60 per barrel, this represents a $2 trillion “cost” to the global economy. If the price of oil spikes or drops, it has a direct impact on global gross domestic product (GDP). For example, when the price of oil went from $100 a barrel to $30-40 a barrel four years ago, that created approximately a 2% tax break for the world.

Today, copper is a 24 million tonne per year market. Based on copper’s average price of $6,500 a tonne, it is currently worth $150 billion per year. Compared to oil, copper is far less important to the global economy. Historical patterns over the past 40 years or so show that the prices of oil and copper have been correlated 90% of the time, but I think this will break down in the near future because the value of copper will increase in line with growing demand due to global electrification and the technology that enables it.I believe that the demand for copper will double in the next 15 or 20 years, which will have a quadrupling effect on the value of copper in the global economy. It will become more important as a commodity, as a manufacturing input and as a product. This can only be seen as a huge opportunity for Canada’s mining industry.


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