MMG Ltd. · HKEX:1208
MMG — International Zinc Association Update February 2014
25 slides from MMG's conference presentation, February 2014
Slide 1: Perspectives of the Zinc Industry
Andrew Michelmore Perspectives of CEO of MMG Limited the Zinc Industry Chairman of International Zinc Association International Zinc Association
Slide 2: MMG Overview
MMG Overview Izok Corridor copper/lead/ silver/zinc Sepon Copper Dugald River Kinsevere Zinc-lead-silver Copper Century Golden Grove Zinc/lead/silver Copper/gold/lead/ Legend silver/zinc Operating assets Rosebery Copper/gold/lead/ Development assets silver/zinc Exploration areas International Zinc A
Slide 3: About MMG
About MMG • Mid-tier global resources company which explores, develops and mines base metal deposits around the world. • Headquartered in Melbourne, Australia. • Listed on the Hong Kong Stock Exchange (Stock Code: 1208). • Experienced international management team. • Mining operations in Australia,
Slide 4: MMG – Major zinc producer
MMG – Major zinc producer Century (Queensland, Australia) Australia’s largest open pit zinc mine 480,000 tpa zinc in concentrate Closure mid-2015 Golden Grove (Western Australia) Underground mine producing zinc, copper and lead plus precious metals concentrates 50,000 tpa zinc in concentra
Slide 5: Zinc demand
Zinc demand Market expectations of zinc demand growth are in excess of 5% per annum for the next five years, underpinned by continued growth in the Chinese steel sector and trend towards value added steels. Global Zinc Demand Forecasts 18,000 17,000 16,000 15,000 14,000 zinc (kt) 13,000 12,000 11,00
Slide 6: Chinese consumption will grow steadily
Chinese consumption will grow steadily International Zinc Association Source: World Bank, Wood Mackenzie 2Q’13 Zinc Metals service
Slide 7: Chinese smelter capability
Chinese smelter capability 2009 2010 2011 2012 2013 2014 2015 China Capacity 5900 6668 6760 7068 7198 7585 7910 Capability 4246 5100 5109 4820 5335 6805 7305 Market adjustment 0 0 -900 -850 Production 4246 5100 5109 4820 5335 5905 6455 Annual change % 8.8 20.1 0.2 -5.7 10.7 10.7 9.3 Production/capac
Slide 8: Big 4 closure schedule
Big 4 closure schedule Zn mine production closure 1200 1000 800 Zn (Kt) 600 Mine Closures 400 200 New Projects (ex China) from 2014 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 • The world is entering a period of significant loss of mine capacity Source: Wood Mackenzie 4Q’13 and MMG Analysis Inter
Slide 9: Mine projects that constitute new projects from 2014
Mine projects (excl. China) that constitute ‘new projects’ from 2014 – Production profile 2014 2015 2016 2017 2018 2019 2020 Alpamarca Peru 7 8 8 8 8 8 8 Bisha Eritrea 30 45 85 115 145 120 Boleo Mexico 5 10 11 11 11 11 11 Dugald River Australia 50 110 210 210 210 Hera - Bulk Conc Australia 6 11 11 1
Slide 10: Project pipeline
Project pipeline Average zinc grades for many projects are below those of existing major producers. International Zinc Association Source: Public company reports, MMG analysis
Slide 11: China mine production faces challenges
China mine production faces challenges The scope for Chinese mine production to further expand is challenged by • Low ore grades • Relatively small operating scale • Increasing labour, power and compliance costs • Higher treatment charges International Zinc Association
Slide 12: Summary
Summary • Zinc demand is increasing. • Mines are closing. • Limited new mine capacity to fill the supply gap. • Market needs to provide the necessary incentive for this investment through a higher price. International Zinc Association
Slide 13: International Zinc Association
International Zinc Association • Primary goal of IZA is to grow and protect the zinc market through innovative programs in environment & sustainable development, technology & market development, and communications. • IZA represents 60% of global zinc and 80% of Western production. Regular Members Lo
Slide 14: Galvanized Autobody Partnership (GAP)
Galvanized Autobody Partnership (GAP) • Automotive market consumes 600,000 TPY of zinc — GAP program aims to ensure that new steels developed for the auto industry can be galvanized. • Zinc-coated steel has maintained its position as the material of choice for body-in-white applications. • Aluminum
Slide 15: Galvanized Autobody Partnership (GAP)
Galvanized Autobody Partnership (GAP) Impact to date: 120,000 TPY • From 2000 to 2013, the average auto content of advanced high-strength steels (AHSS) went from zero to 200 lbs. • In the absence of GAP, this could have gone to aluminum, plastics or AHSS with non-zinc coatings. • GAP program deliver
Slide 16: Continuous Galvanized Rebar
Continuous Galvanized Rebar • Rebar market is 200 million TPY of steel, little of which is protected against corrosion by either epoxy or zinc. • With 10% market penetration, and at zinc’s pick-up rate of 2% when galvanized, the potential market is 400,000 TPY of zinc. International Zinc Association
Slide 17: Continuous Galvanized Rebar
Continuous Galvanized Rebar • IZA has developed a new process for continuously coating zinc to rebar, which places galvanized at a lower price than the market leader, epoxy, but offers superior corrosion protection. • The original pilot line at New Steel in Xiamen China is operating, and a second li
Slide 18: Zinc Nutrient Initiative (ZNI)
Zinc Nutrient Initiative (ZNI) • Goal is to capitalise on the market potential for zinc in fertilizers, estimated to be 585,000 TPY globally. • Focusing on China and India due to their large markets and zinc-deficient soils. • Activities include policy change, education and marketing. Zinc Impact to
Slide 19: Health and Corporate Social Responsibility (CSR)
Health and Corporate Social Responsibility (CSR) • Zinc deficiency affects 2 billion people worldwide and causes 450,000 deaths annually in children. • IZA taking global lead in advocating programs aimed at addressing zinc deficiency. • IZA partnering with UNICEF, CHAI, the Gates Foundation, USAID a
Slide 20: Health and Corporate Social Responsibility (CSR)
Health and Corporate Social Responsibility (CSR) Impact to Date: • Zinc Saves Kids has had a huge impact in Peru and Nepal. • IZA and Member Companies now have programs in 8 countries. • Industry funding for zinc health initiatives now over $3 million annually. International Zinc Association
Slide 21: MMG: 1000 Days Project
MMG: 1000 Days Project • Lao PDR – severe zinc deficiency and stunting in 40% of children. • Zinc micronutrient distribution to 180,000 children in three provinces in southern Lao PDR. • Mixed public/private partnership with UNICEF, Lao Ministry of Health, Population Services International and Unive
Slide 22: Regulatory
Regulatory • IZA provides global and regional responses to zinc regulatory challenges and on strong program of applied research. • Programs include REACH and IMO. • IZA has produced critical information needed for regulatory agencies to base their decisions on sound science. Impact and Cost Savings:
Slide 23: Environment & Sustainability
Environment & Sustainability • Goal is to protect market access and to position zinc as a material of environmental choice. • IZA assesses and communicates the sustainability of zinc through: o Zinc for Life initiative o Recycling Program • Comprehensive environmental research program providing soun
Slide 24: Environment & Sustainability
Environment & Sustainability Impact to Date: • IZA has developed a Sustainability Charter and a set of Guiding Principals for the zinc industry. • IZA completed first Global Life Cycle Inventory for primary zinc and zinc sheet. • With Yale University, IZA completed the first global zinc stocks and f
Slide 25: Summary
Summary • Significant opportunities for growth in zinc. • High potential programs at various stages of development. • Some programs contributing significantly to helping solve world problems and to an improved industry image. International Zinc Association
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