Multi-year Expert Meeting on Commodities

Palais des Nations, Geneva 24-25 March 2010

Current Situation & Prospects for Copper, Nickel, Lead and Zinc

by

Curtis Stewart Head of Economics and Environment

International Lead and Zinc Study Group

International Nickel Study Group

"The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"

1

Curtis StewartHead of Economics and Environment

International Lead and Zinc Study GroupInternational Nickel Study Group

UNCTAD Multi-year Experts Meeting24 March 2010, Geneva

Current Situation & Prospects forCopper, Nickel, Lead and Zinc

2

Presentation Outline

Global Trends and Outlook

• Copper

• Nickel

• Lead and Zinc

Challenges and Emerging Issues

3

The Study Groups

Three independent intergovernmental organisations set up initially within the UN system:

International Copper Study Group (1992) 22 members

International Nickel Study Group (1990) 16 members

International Lead and Zinc Study Group (1959)30 members

The Study GroupsData Provision

Monthly Bulletins of Statistics on Copper, Lead & Zinc and Nickel

Biannual/annual reporting on mine, smelter an refinery start-ups, closures, expansions and planned development

Reporting on smelting and refining capacity and other plant details

Publication of data on principal end uses of metals

Studies on trends in downstream metals sectors

Interactive data on lead and zinc accessible through internet

Historical data series available on request

Monthly press releases distributed widely

4

5

Metals MarketsKey Issues

Prices collapsed in 2008 but recovered in 2009Nickel from $52,000/tonne in May 2007 to below 10,000 US$/tonne in December 2008, Copper fell from near $9,000/tonne to $2,770 in Dec.2008.Currently (March 2010) prices for nickel are ~$22,000/t and for copper ~$7,400/t Uncertainty in the market which remains volatileChina will remain the most important market

Production and Consumption

CopperNickelLead Zinc

7

Copper Mine Production by Copper Mine Production by RegionRegion

(thousand metric tonnes)(thousand metric tonnes)

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,500

1960 1980 2009

Tho

usan

d M

etric

Ton

nes

Cop

per

Africa North America Latin America Asia Europe Oceania

Copper Mine Capacity by Region, 1980 and 2009Copper Mine Capacity by Region, 1980 and 2009(thousand metric tonnes)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Africa Asia Europe NorthAmerica

Oceania SouthAmerica

1980

2009

Nickel Mine Nickel Mine ProductionProduction

In thousand tonnesIn thousand tonnes

9

Lead Mine Production by Lead Mine Production by RegionRegion

(thousand metric tonnes(thousand metric tonnes))

10

11

Zinc Mine Production by Zinc Mine Production by RegionRegion

(thousand metric tonnes)(thousand metric tonnes)

12

Refined Copper Usage by Refined Copper Usage by RegionRegion

(thousand metric tonnes)(thousand metric tonnes)

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,0008,5009,0009,500

1960 1980 2009

Tho

usan

d M

etric

Ton

nes

Cop

per

Africa North America Latin America Asia Europe Oceania

Primary Nickel UsagePrimary Nickel Usagein thousand tonnesin thousand tonnes

13

Lead UsageLead Usage

14

Zinc UsageZinc Usage

15

Stocks, Prices and Balances

CopperNickelLead Zinc

Copper Stocks and Copper Stocks and Prices 2000Prices 2000--20102010

0

50

100

150

200

250

300

350

400

450

500

Jan

00Ju

l 00

Jan

01Ju

l 01

Jan

02Ju

l 02

Jan

03Ju

l 03

Jan

04Ju

l 04

Jan

05Ju

l 05

Jan

06Ju

l 06

Jan

07Ju

l-07

Jan

08Ju

l-08

Jan

09Ju

l-09

Jan-

10

Pri

ce L

ME

(U

S c

ents

/ou

nd

)

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

Th

ou

san

d m

etri

c to

nn

es

Price LME (UScents/pound) Stocks

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ICSG Global Refined Copper Market Balance & Forecast

WORLD COPPER BALANCE

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

'000MT

-1,000

-800

-600

-400

-200

0

200

400

600'000MT

Balance (after ajustments) World Refined Production (adjusted) World Usage

LME Nickel Prices and Stocks

2000 - 2010

19

33 58 9119

-46 -59

14 -4 25

-58 -40

5611

-27

7 26

-51

97 99 73 87

-200

0

200

400

600

800

1000

1200

1400

1600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2008 2010

BALANCE PRIMARY NICKEL PRODUCTION PRIMARY NICKEL USAGE

World Primary Nickel Balance – Annual Data

With 2010 Forecast

20

0

50

100

150

200

250

300

350

400

450

500

550

Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10

'000 tonnes

0

500

1000

1500

2000

2500

3000

3500

4000US$ per tonne monthly average

Stocks Lead LME Cash Settlement Price

Lead Stocks Lead Stocks and Pricesand Prices

21

-250

-200

-150

-100

-50

0

50

100

150

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f

'000 tonnes

Lead BalanceLead Balance

22

0

200

400

600

800

1000

1200

1400

Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10

'000 tonnes

0

500

1000

1500

2000

2500

3000

3500

4000

4500US $ per tonne monthly average

Stocks Zinc LME Cash Settlement Price

Zinc Stocks and Zinc Stocks and PricesPrices

23

-400

-300

-200

-100

0

100

200

300

400

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f

'000 tonnes

Zinc Metal World Zinc Metal World Balance Balance

24

China

Global Copper Use sustained by Chinese Growth

Copper and Copper Alloy Semis Production 1946- 2008 (2008 Not Fully Reported) by Country Gross Weight, Thousand Metric Tonnes

-

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

China United States Germany Japan Italy Korean Rep. Taiwan

U.S.S.R. (former) Russian Fed. France Mexico India Brazil Turkey

Spain Poland Sweden Egypt Greece Chile Rest of the World

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Chinese Zinc Trade Chinese Zinc Trade

Source: ILZSG

-1100

-900

-700

-500

-300

-100

100

300

500

700

1993 1995 1997 1999 2001 2003 2005 2007 2009

Concentrates Metal

IMPORTS

EXPORTS

'000 tonnes

Estimated Worldwide Estimated Worldwide Exploration BudgetsExploration Budgets

(in Billion US $)(in Billion US $)

28Source: Metals Economics Group

Exploration by Exploration by Region 2009Region 2009

29Source: Metals Economics Group

Top 10 Countries for Top 10 Countries for Exploration 2009Exploration 2009

30Source: Metals Economic Group

Long Term TrendsLong Term Trends

• Prices have been volatile, but adjusted for inflation, have tended to the level of 50 years ago or to fall slightly

• In general, no physical lack of metals• Production from lower grade ores• Improved mine restoration technology• Growing recycling, ‘urban mining’

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Challenges for the Challenges for the NonNon--ferrous Metals ferrous Metals

IndustryIndustryProvide supply to meet evolving demand, both near term and long term

Respond to changing demand and remain competitive and profitable

Develop new technologies to enhance environmental performance and reduce energy intensity

Ensure transparency and efficiency in the markets 32

Challenges for the Challenges for the NonNon--ferrous Metals ferrous Metals

IndustryIndustry

Possible trade restrictions, i.e. new carbon border tariffs and ‘carbon levies’

Sustainable Development – economic, environmental and social impacts

Changes in investment flows and relocation of operations in response to changing costs

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To learn more about the Groups:

www.icsg.orgwww.insg.org www.ilzsg.org

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Curtis StewartHead of Economics and Environment

International Lead and Zinc Study GroupInternational Nickel Study Group

UNCTAD Multi-year Experts Meeting24 March 2010, Geneva

Current Situation & Prospects forCopper, Nickel, Lead and Zinc