trends in mining present & future -...
TRANSCRIPT
UNCTAD Secretary-General's High-Level Multi-Stakeholder Dialogue on Commodities
in the context of UNCTAD XII
28-29 January 2008
Trends in Mining Present & Future
By
Mr. Magnus Ericsson President, Raw Materials Group, Sweden
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
UNCTADDialogue on Commodities
Geneva 28-29 January 2008
TRENDS IN MINING –
PRESENT & FUTURE
Magnus Ericsson
Manganese drawing: Kaianders Sempler.
GLOBAL MINING -GEOGRAPHY
GLOBAL MINING –GEOGRAPHY 2006
1. China 10.1%
GLOBAL MINING –GEOGRAPHY 1990
0
10
20
30
40
50
60
70
1850 1870 1890 1910 1930 1950 1970 1990
% of global mining
GLOBAL MINING –GEOGRAPHY
VALUE OF GLOBAL MINING1995 - 2006
0
50
100
150
200
250
300
350
1995 2000 2001 2002 2003 2004 2005 2006
Billion USD
Sources: Raw Materials Data, 2007.
18%
29%
23%
11%6%
4%2%7%
GoldIron oreCopperNickelZinc/leadPGMsBauxiteOther
METALS VALUE AT MINE
YEAR 2005 TOTAL ~ 250 billion USD
Source: Raw Materials Group, Stockholm 2006.
VALUE OF WORLD MINING
27%
6%2%
51%
14% MetalsIndustrial mineralsDiamondsCoal & uraniumCrushed rock
YEAR 2005 TOTAL ~ 910 billion USD
Source: Raw Materials Group, Stockholm 2006.
SPECIAL PROPERTIES OF METALS
• High strength• Affordable cost• Conduct heat and electricity• Beautiful• Undestructable• Mines must be located at source
Source: T. Graedel, Yale University.
AGENDA
• Demand• Exploration• Mining• Conclusions
Vanadium drawing: Kaianders Sempler.
DEMAND
Vanadium drawing: Kaianders Sempler.
DEMANDSUMMARY
• Extended period of growth.
• China, India engines but East Europe, CIS also strong.
• Infrastructure & personal use.
• No (?) signs of weakening but it will come to an end.
Nickel drawing: Kaianders Sempler.
EXPLORATION
GLOBAL EXPLORATION1995 - 2008
0
2
4
6
8
10
12
1995 1997 1999 2001 2003 2005 2007
Billion USD
Sources: RMG, MEG.
Projected
GLOBAL EXPLORATION
Sources: RMG, MEG.
Nickel drawing: Kaianders Sempler.
EXPLORATIONSUMMARY
• Exploration increasing, peak soon reached.
• Exploration more difficult –M&A in favour.
• Politically secure regions in favour.
• New technologies necessary.
• Government support !?
REM drawing: Kaianders Sempler.
MINING
MINING COMPANIES
3067
957
149
MajorsMedium & smallJuniors
Total 4 100 companies
Source: Raw Materials Data, Stockholm 2007.
CONTROL OF MINING
17
83
Metals total 332 billion USD
Source: Raw Materials Data, Stockholm 2007.
MajorsMedium & smallJuniors
TNCs IN GLOBAL MINING
000
10
20
30
40
50
60
70
80
90
100
Pola
nd
Iran,
Isla
mic
Rep
.
Rus
sian
Fed
erat
ion
Bra
zil
Swed
enC
hina
Indi
aVe
nezu
ela
Mex
ico
Ukr
aine
Can
ada
Cub
aU
nite
d St
ates
Con
go, D
em. R
ep.
Aus
tral
iaC
hile
New
Cal
edon
iaSo
uth
Afri
caK
azak
hsta
nPe
ruC
olom
bia
Indo
nesi
aN
amib
iaB
otsw
ana
Papu
a N
ew G
uine
aZa
mbi
a
Tanz
ania
, Uni
ted
Rep
.M
ongo
liaM
ali
Gui
nea
Gha
naG
abon
Arg
entin
a
Sources: UNCTAD, based on Raw Materials Data, 2007.
PRODUCTION BY FOREIGN COMPANIES
0 10 20 30 40 50 60 70% of world production
Bauxite
Copper
Gold
Zinc
Nickel
Iron ore
MINING M&A NOV 2007
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
LME Index
0
50
100
150
200
250billion USD
Value BHPB + Rio LMEXSource: Raw Materials Data.
CORPORATE CONCENTRATION
0
5
10
15
20
25
30
35
1990 1995 2000 2003 2004 2005 2006
Largest 3 largest 10 largest
So
urc
e: R
awM
ater
ials
Gro
up
, Sto
ckh
olm
200
7.% of total value of non-fuel mineral productionat the mine stage
RMG TOP COMPANIES 06/07Metals
Controlling company Country Share of value of Cumulative Rank 2005mine production (%) value (%)
1 CVRD/Inco Brazil 5.2 5.2 4 (13)2 BHP Billiton Australia 4.6 9.8 13 Anglo American UK 4.5 14.3 24 Rio Tinto/Alcan UK 4.4 18.7 3 (~100)5 Freeport/Phelps Dodge USA 3.4 22.1 10 (7)6 Codelco Chile 3.4 25.5 57 Xstrata/Falconbridge Switzerland 3.0 28.5 14 (11)8 Norilsk Nickel Russia 2.7 31.2 69 Barrick Canada 1.8 33.0 15
10 Grupo Mexico Mexico 1.6 34.6 8
Source: Raw Materials Data, Stockholm 2005.
Source: Raw Materials Data.
RMG TOP COMPANIESMetals & Coal
Controlling company Country Share of value of Cumulativemine production value
(%) (%)
1 Rio Tinto UK 3.5 3.52 BHP Billiton Australia 3.2 6.83 Anglo American UK 2.9 9.7 4 State of India India 2.8 12.5 5CVRD Brazil 1.9 14.46 Peabody Energy USA 1.9 16.27 Codelco Chile 1.4 17.6 8 State of Poland Poland 1.3 18.99 Arch Coal USA 1.1 20.1
10 RWE Germany 1.1 21.2
Source: Raw Materials Data, Stockholm 2005.
Source: Raw Materials Data.
RMG TOP COMPANIES 07Metals
Controlling company Country Share of value of Cumulative Rank 2006mine production (%) value (%)
1 BHP/Rio Australia 8.7 8.7 2 (4)2 CVRD Brazil 5.2 13.9 13 Anglo American UK 4.5 18.4 34 Freeport USA 3.4 21.5 55 Codelco Chile 3.4 25.5 66 Xstrata Switzerland 3.0 28.5 77 Norilsk Nickel Russia 2.7 31.2 88 Barrick Canada 1.8 33.0 99 Grupo Mexico Mexico 1.6 34.6 10
10 Newmont USA 1.1 35.7 11
Source: Raw Materials Data, Stockholm 2005.
Source: Raw Materials Data.
VERTICAL INTEGRATION
0
10
20
30
40
50
60
70
80
90
Zn Cu Al Ni
1995
2005
Source: Raw Materials Data, Stockholm 2007.
Top 20 miners’ control of refining
CORPORATE CONCENTRATION
0 20 40 60 80 100
Nickel
Molybdenum
Chromite
Titanium
Tantalum
Platinum
Palladium
Source: Raw Materials Data 2007.
Norilsk Inco BHP Billiton
Codelco Phelps Dodge Grupo Mexico
Euroasian Kermas Xstrata
Rio Tinto Iluka Anglo
Anglo Impala Norilsk
Norilsk Anglo Impala
Sons of Gwalia Cabot
% of world production
GEOGRAPHICAL CONCENTRATION
0 20 40 60 80 100
Cobalt
Chrome
Molybdenum
Tin
Tantalum
Platinum
Tungsten
Source: Raw Materials Data 2007.
Congo Canada Zambia
South Africa Kazakhstan India
USA Chile China
Indonesia China Peru
South Africa Russia Canada
China Canada Australia
Australia Mocambique Brazil
% of world production
IRON ORE DEMANDDomestic/import
0 100 200 300 400 500
South Korea
USA
India
Russia
Japan
EU 27
China
Source: UNCTAD, RMG 2006.
Mt iron ore
Importdependence
100 %
23 %
0 %
11 %
100 %
88 %
58 %
CHINESE FOREIGN EXPANSION
14
1048
124
5
370
17
0.1
0.64 0.27
102
24
0.5
0% 50% 100%
World production
ChineseproductionPlanned Chineseforeign expansion
Ferro-
chrome
Bauxite
Iron ore
Copper
Source: BGR 2007.
% of world production
REM drawing: Kaianders Sempler.
MININGSUMMARY
• Slow supply response –but will catch up.
• Increasing competition: M&A activity at peak.
Middle ground disappearing. China & India enter the scene.
Vertical integration/diversification
• More state intervention.
• Speed of change increase.
Tungsten drawing: Kaianders Sempler.
CONCLUSIONS
CONCLUSIONS• Corporate concentration increasing.• More M&A necessary to meet societal demands:
– Exploration– R & D
• Emerging markets’ companies entering the race.• Window of opportunity.• China/India - we have only seen the beginning.• Government interest increasing.• Outsiders: Steel companies coming in!
WORLD MINING to 2030
0
10
20
30
40
50
60
70
1850 1870 1890 1910 1930 1950 1970 1990 2010 2030
Europe
USA
China
USSR/CIS
Australia/Canada
6 resource rich developingcountries
Sources: Raw Materials Data, Stockholm 2004 and Sames.
Forecast
% of global mining
Tungsten drawing: Kaianders Sempler.
Raw Materials GroupMagnus Ericsson
PO Box 3127 SE-169 03 Solna
Tel: +46-8-744 00 65 Fax: +46-8-744 0066
E-mail: [email protected]
www.rmg.se
THANK YOU !
EXPLORATION vs M&A1995 - 2007
0
50
100
150
200
250
1995 1997 1999 2001 2003 2005 2007
Billion USD
Sources: RMG, MEG.