Slide 1: Is the Mining "Super Cycle" for Real?
LUNDIN MINING 25th August 2005 IS THE MINING ”SUPER CYCLE” FOR REAL ? Magnus Ericsson Tungsten drawing: Kaianders Sempler, see www.rmg.se
Slide 2: Dagens Nyheter article on gold and copper rush
SONDAG 3 JULI 2005 DAGENS NYHETER EKKONOMI. sees er oeae er ay es | ee wv an SAX +1,3 | Dow Jones — 2,6 Nasdaq — 1,5 | Dollar + 15 6re Euro + 10 Gre Ranta 3 man + 0,0 Ranta 5 a1 som gick iar +12,8 % iar— 4,3 % iar—5,3% Slutkurs fredag 7:90 kr Slutkurs fredag 9:50 kr | Ifredags 1,50 % lredags 2 Rekor
Slide 3: Zinc price and LME stocks through week 31 2005
Zinc price (LME cash settlement, weekly averages) and LME stocks through week 31 2005 Price forecasts Overlayed with annual mine production (metal content). leanual average) 1650 9500 kt world prod 8930 kt 1600 8830 kt ‘8800 kt 7350 kt 7170 kt 7280 kt 6820 kt 2920 kt OP prod 850 1150 kt 960 kt 800 7
Slide 4: Lead price and LME stocks through week 31 2005
USD /t 1000 900 800 700 600 500 2700 kt 2530 k ‘mal 1996 Lead price (LME cash settlement, weekly averages) and LME stocks through week 31 2005 3050 kt 1998 LME stocks (no scale) 3050 kt 2800 kt Overlayed with annual mine production (metal content). 3000 kt 2790 kt 3000 kt 2820 kt 3050 kt 2820 kt 199
Slide 5: Copper price and LME stocks through week 31 2005
Copper price (LME cash settlement, weekly averages) and LME stocks through week 31 2005 Overlayed with approximate mine production (metal content). cuir lrecres ) USD/t 3500 13670 kt 1360 kt 13700 kt world prod \\ 3000 12290 kt 11100 kt 9570 kt 9950 kt 80 kt 9870 kt OP prod 2500 2000 3720 kt 3720 kt
Slide 6: Gold price through week 31 2005
Gold price (London pm fix, weekly averages) through week 31 2005 Overlayed with annual mine production (metal content). Price forecasts (annual average) USD / oz / 450 / 440 KA 2640t 380 2570t 2580 \ 2480 t 2500 | 370 2360 t \ 2280t 2270 t 2560 t world prod 1450 t 1470t OP prod 1290t 1230t 1240t 124
Slide 7: Agenda
AGENDA • DEMAND • SUPPLY • SUMMARY
Slide 8: Raw Materials Group
RAW MATERIALS GROUP • MINING COMPANIES • FINANCIAL INSTITUTIONS • GOVERNMENTS • MINING EQUIPMENT PRODUCERS • INTERNATIONAL ORGANISATIONS • UNCTAD IRON ORE TRUST FUND • UNIVERSITY OF DUNDEE, Scotland • IMPERIAL COLLEGE, London
Slide 9: Demand
DEMAND Some facts on: • China • Intensity of use REM drawing: Kaianders Sempler.
Slide 10: China's Metal Consumption
CHINA’S METAL CONSUMPTION Source: Jim Lennon, Macquarie Bank.
Slide 11: End Uses for Copper China
END USES FOR COPPER CHINA Consumer Products Machinery 11% 9% Transport 15% Building Electrical 15% 50% Source: UBS.
Slide 12: End Uses for Copper USA
END USES FOR COPPER USA Consumer Products Machinery 9% 11% Transport 12% Electrical 25% Building 43% Source: UBS.
Slide 13: Electric Capacity in China
200000 400000 1000000 M W 1200000 0 600000 800000 94 199897 95 217224 96 236542 97 254238 Source: UBS. 98 277289 298768 99 00 319321 338487 01 02 356571 03 391408 440700 516700 596700 674700 740000 790000 820000 IN CHINA 850000 880000 910000 940000 970000 1000000 1030000 1060000 ELECTRIC CAPACITY 10
Slide 14: Population Growth
POPULATION GROWTH Million non-Japanese in Asia earning > 5 000 USD/year 1200 1000 800 600 400 200 0 2002 2010 2020 Source: Humphries, 2003.
Slide 15: China's Metal Consumption
CHINA’S METAL CONSUMPTION % of world total 25.0 20.0 15.0 Zn Cu Pb 10.0 5.0 0.0 1995 2000 2004 Source: ILZSG and Bloomsbury.
Slide 16: China's Mining Output
CHINA’S MINING OUTPUT % of world total 35.0 30.0 25.0 20.0 Zn Cu 15.0 Pb 10.0 5.0 0.0 1995 2000 2004 Source: ILZSG and Bloomsbury.
Slide 17: Copper Prices Since 1850
COPPER PRICES SINCE 1850 Source: Jim Lennon, Macquarie Bank.
Slide 18: Intensity of Use vs Metal Prices
INTENSITY OF USE VS METAL PRICES Source: UBS.
Slide 19: Copper Intensity of Use and Real Price
COPPER INTENSITY OF USE AND REAL PRICE Source: UBS.
Slide 20: Demand Summary
DEMAND SUMMARY • Growth of population with purchase power – in Asia in particular. • Intensity of use – increasing. • Strong demand - extended period of time.
Slide 21: Supply
SUPPLY • Fragmented industry. • Sufficient exploration? • Energy costs soaring. Nickel drawing: Kaianders Sempler.
Slide 22: Value of World Mining
VALUE OF WORLD MINING YEAR 2003 TOTAL ~ 350 billion USD 22% Metals Industrial minerals Coal & uranium Crushed rock 32% 35% 11% Source: Raw Materials Group, Stockholm 2004.
Slide 23: Metals Value at Mine
METALS VALUE AT MINE YEAR 2003 TOTAL ~ 125 billion USD Gold 6% 2% 12% Iron ore 7% 10% Copper 25% Nickel Zinc/lead PGMs 19% Bauxite 19% Other Source: Raw Materials Group, Stockholm 2004.
Slide 24: Global Mining
GLOBAL MINING % of global mining 70 Europe 60 USA 50 China 40 30 USSR/CIS 20 Australia/Canada 10 6 resource rich developing countries 0 1850 1870 1890 1910 1930 1950 1970 1990 Sources: Raw Materials Data, Stockholm 2004 and Sames.
Slide 25: Zinc Mining
ZINC MINING TOTAL 68 mines, 83 Mt ore, 5.5 Mt zinc. 7% Metal extracted 2% Metal not extracted Rock 91% Source: Raw Materials Group, Stockholm 2005.
Slide 26: Corporate Concentration Various Commodities
CORPORATE CONCENTRATION VARIOUS COMMODITIES Five largest companies share of world production (%). 100 90 80 70 60 1997 50 2000 40 2003 30 20 10 0 Zinc Lead Copper Pt Nickel Diam. Coal Steel Stainless Paper Sources: Raw Materials Data, Stockholm 2004, Deutsche Bank.
Slide 27: Control of Zinc Mining 2004
CONTROL OF ZINC MINING 2004 Controlling company Country Volume of Share of mine production total world production (kt) (%) 1 Zinifex Australia 609 6.3 2 Teck Cominco Canada 602 6.2 3 Noranda Canada 528 5.4 4 Glencore Switz. 415 e 4.3 - China China 407 e (4.2) 5 Anglo American UK 373 3.8 6 Vedanta UK
Slide 28: Control of Lead Mining 2004
CONTROL OF LEAD MINING 2004 Controlling company Country Volume of Share of mine production total world production (kt) (%) 1 BHP Billiton Australia 272 8.9 2 Doe Run USA 249 e 8.2 3 Xstrata Switz. 166 5.4 4 Teck Cominco Canada 117 3.8 5 Zinifex Australia 108 3.5 - China China 100 e (3.3) 6 Volcan Pe
Slide 29: Control of Copper Mining 2004
CONTROL OF COPPER MINING 2004 Controlling company Country Volume of Share of mine production total world production (kt) (%) 1 Codelco Chile 1 838 12.7 2 BHP Billiton Austr. 1 060 7.3 3 Phelps Dodge USA 1 035 7.1 4 Grupo Mexico Mexico 880 6.1 5 Rio Tinto UK 738 5.1 6 Anglo American UK 698 4.8 7 Glen
Slide 30: Largest Zinc Mines
5 LARGEST ZINC MINES Source: ILZSG.
Slide 31: Largest Lead Mines
5 LARGEST LEAD MINES Source: ILZSG.
Slide 32: Largest Copper Mines
5 LARGEST COPPER MINES (kt) 3000 40 % 35 2500 30 2000 25 1500 20 15 1000 10 500 5 0 0 1984 1988 1991 1994 2000 2003 production of 5 largest mines % of W W total output Source: Bloomsbury.
Slide 33: Zinc Mine Expansion Western World 1978-2003
ZINC MINE EXPANSION Western World 1978-2003
Slide 34: Lead Mine Expansion Western World 1978-2003
LEAD MINE EXPANSION Western World 1978-2003
Slide 35: Exploration 1995-2004
EXPLORATION 1995 - 2004 Billion USD 6 5 4 Others 3 Zn & Pb Cu 2 1 0 1995 1997 1999 2001 2003 Sources: Raw Materials Data and MEG.
Slide 36: Energy Requirements Mining & Smelting
ENERGY REQUIREMENTS MINING & SMELTING MJ/ton metal 500 400 300 200 100 0 Al Mg Ti Fe Sn Zn Ni Cu Pb Smelting GJ/ton Mining/Milling GJ/ton Source: Mineral & Metals Review
Slide 37: Supply Summary
SUPPLY SUMMARY • Geographical relocation. • Still fragmented particulalry Zn/Pb. • Truly global sector. • New, vigilant actors: Juniors, China, India. • Exploration lagging. • New capacity will take time. • Energy cost containment – key issue.
Slide 38: European Zinc
EUROPEAN ZINC Mining Refining 2004 2004 Europe 2000 2000 World total 1995 1995 0 2000 4000 6000 8000 10000 (kt) 0 4000 8000 12000 (kt) Source: ILZSG.
Slide 39: European Copper
EUROPEAN COPPER Mining Refining 2004 2004 2000 Europe 2000 World total 1995 1995 0 4000 8000 12000 16000 (kt) 0 4000 8000 12000 16000 (kt) Source: Bloomsbury.
Slide 40: Zinc Grades
ZINC GRADES 25. Galmoy Zinc mine, Ireland: 4 Mt, 14.1 % 82. Zinkgruvan Zinc mine, Sweden: 19.1 Mt, 9.7 % 121. Storliden Zn/Cu mine, Sweden : 1.2 Mt, 7.9%
Slide 41: Thank You!
THANK YOU! Want to know more on: Vanadis, Ytterby, the nickel ”tomte” or Münchausen and tungsten? Visit: www.rmg.se Drawing: Kaianders Sempler.
Slide 42: Contact
CONTACT Raw Materials Group Magnus Ericsson PO Box 44062 SE-100 73 Stockholm, Sweden Tel: +46-8-744 00 65 Fax: +46-8-744 0066 E-mail: magnus.ericsson@rmg.se www.rmg.se