South Africans love claiming Tesla founder Elon Musk as one of their own, even though the affection isn’t reciprocated. After being tapped for a donation a couple years back, Musk famously sent Pretoria Boy’s High a big cheque – on condition they never contacted him again.
Musk left his homeland at 17 and is now proudly American, warmly embraced by the US media (including sitcom cameos) and the White House. In truth, his fame and fortune flows from an early bet on electric cars. That turned the obsessive genius into the poster boy for clean cars replacing carbon spewing internal combustion engines.
Ironically, the other global flag bearer for the electric car revolution is also a South African who left the homeland to make his fortune. He is not yet widely recognised as such, but after yesterday’s Glencore AGM, the smart money will start connecting the dots to the company’s visionary CEO, Johannesburg born and raised Ivan Glasenberg.
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I seriously considered investing in a trip to Cham in Switzerland after hearing that SA shareholder activist Theo Botha would be there. Botha, a fearless AGM questioner of the corporate high and mighty, is usually great value. But this time Glencore webcast proceedings, allowing the rest of us to follow proceedings without stimulating airline profitability.
Just as well. Botha is currently fixated with mining fatalities, of which Glencore had 16 last year. Just like at the recent Anglo American AGM, his questions ruffled the chairman’s feathers (Tony Hayward, the ex-BP boss). But this time nothing newsworthy emerged from Botha’s probing. I was hoping he would use the open microphone to ping Glencore’s board on the sordid saga of the Guptas, Zwane and Optimum Coal; and the company’s role in the sale of SA’s strategic oil reserves. He didn’t.
What we did get was even more valuable.
Courtesy of Glasenberg’s presentation, we were exposed to the way Glencore has positioned itself to benefit from the swing to electric cars, a megatrend of our age. And it made me reflect that while Musk might be the miner in this new gold rush, Glencore could be a far bigger beneficiary. It supplies the proverbial picks and shovels, which is where the serious cash is always made during booms of this kind.
We heard that the electric car revolution will require copious amounts of cobalt, copper and nickel – specifically for batteries inside the vehicles and the charging ports. Glasenberg explained that if growth predictions are accurate and 90% of the world’s cars are indeed electric by 2035, the impact on these “tier one commodities” will be enormous.
Those new electric cars are set to add 23m tons to the annual demand for copper. Current world production: 20m. They will also consume 1.8m fresh tons of nickel. Today’s supply: 2m tons. With cobalt, says Glasenberg, “the numbers are crazy” with 679,000 tons a year required for the new machines versus current global annual production of 100,000 tons.
Glencore is the world’s biggest cobalt and copper miner; and is number three in nickel. By contrast “a lot of our competitors have the bulk of theirs in early stage commodities,” says Glasenberg. In other words, don’t see Glencore as a resources business. Look at it as the biggest supplier to the electric car industry.
On that basis, maybe we should be comparing Glasenberg’s company with Musk’s, whose share price – driven by electric car mania – has outperformed Glencore by 57% in the last three years. If you believe the dying-internal-combustion-engine and suppliers-not-miners narrative, Glasenberg’s stock looks irresistible.
