Boliden AB · OMXSTO:BOL
Boliden AB — Investor Day (November 2010)
37 slides from Boliden AB's investor day presentation, November 2010
Slide 1: Market Overview
Market Overview Lennart Evrell President & CEO Capital Markets Days - November 1-2, 2010 1
Slide 2: Forward looking statements
Forward looking statements Certain statements in this presentation are forward-looking, and the actual outcome could be materially different. Such forward-looking statements are based on Boliden’s present plans, estimates, assumptions, projections and expectations and are subject to risks and uncert
Slide 3: Demand - supply balance
Demand - supply balance Volume S D Price Capital Markets Days - November 1-2, 2010 3
Slide 4: Demand and supply in metals and mining
Demand and supply in metals and mining Price S D3 D1 D2 Volume Capital Markets Days - November 1-2, 2010 44
Slide 5: Copper mine industry cash cost
Copper mine industry cash cost Price 8300 USD/t Aitik Capital Markets Days - November 1-2, 2010 5
Slide 6: Cu open pit, supply curve turns negative and demand curve steeper
Cu open pit, supply curve turns negative(!) and demand curve is steeper than ever… Price S1 S D1 D Volume Capital Markets Days - November 1-2, 2010 6
Slide 7: Mines are closed at negative cash flow and restarted on the curve
Mines are closed at negative cash flow, below the curve, and are restarted on the curve… Price Volume Capital Markets Days - November 1-2, 2010 7
Slide 8: 85% capacity utilization can give price on the 50th percentile
…and 85% capacity utilization can give price on the 50th percentile Price D2 D1 50% -15% Volume Capital Markets Days - November 1-2, 2010 8
Slide 9: Cu prices will peak high. Volatility!
Cu prices will peak high. Volatility! Price P2 P1 Volume Capital Markets Days - November 1-2, 2010 9
Slide 10: Will Zn prices go as high as Cu?
Will Zn prices go as high as Cu? Price P2 P1 Volume Capital Markets Days - November 1-2, 2010 10
Slide 11: Metal market Short term
Metal market Short term Capital Markets Days - November 1-2, 2010 11
Slide 12: Demand, prices and TC
Demand, prices and TC Metal prices Global GDP Construction Automotive Metals demand Boliden customers Supply and main changes Metal balance Metal prices TC Smelters production capability Balance smelters – mines Treatment Charges Other Sulphuric acid Capital Markets Days - November 1-2, 2010 12
Slide 13: GDP, from bust to boom…or not
GDP, from bust to boom…or not Global growth recovered back to 5% Mature countries - comparing with a very weak period Inventory build and general recovery but… " # $%& '$( ! Capital Markets Days - November 1-2, 2010 13
Slide 14: Industrial production recovering
Industrial production recovering ! General industrial production recovered from the very weak period in 2009 Slower growth in Q3 " # $%& '$( % ! Capital Markets Days - November 1-2, 2010 14
Slide 15: Construction investments
Construction investments $ ! ! % Mature economies # Low level of investments " Effects of stimulus wanes China High and growing investments Overheating concern " # ) * # # * * ) * ! Capital Markets Days - November 1-2, 2010 15
Slide 16: Car production
Car production ) ' % ! ' Mature economies ( & Comparison with a very weak first half 2009 #& Slowing growth after Q1 #& Demand below normal "& "& China & Growth around +20% & & & & " $" # $+ & ! + Capital Markets Days - November 1-2, 2010 16
Slide 17: Metals demand forecasts
Metals demand forecasts * + ! ' * $ ' ( ,- ( ,- # # , , , ", #, , , , ", #, " " Global demand back at the previous peak World excluding China still well below the previous peak Capital Markets Days - November 1-2, 2010 17
Slide 18: Boliden industrial demand
Boliden industrial demand Boliden zinc metal Zinc - Industrial shipments Sales vs Trader Sales Boliden copper metal shipments Copper - Industrial Sales vs Trader Sales 50 35 45 30 40 35 25 30 20 25 kt kt 15 20 15 10 10 5 5 0 0 Industrial sales Trader sales Industrial sales Trader sales Base metals c
Slide 19: Metal supply – smelter production
Metal supply – smelter production ' - . ! ' ! ' - ! ' ! "& & " " "& & & #& # & "& & & & & & & & # " # " # . . . . Annual growth Q3 2010 9M 2010 Annual growth Q3 2010 9M 2010 Global + 10% +15% Global - 1% +3% Asia + 12% +18% Asia + 4% +10% North America 0% +8% North America - 7% -5% Europe + 10% +16%
Slide 20: Smelter industry – recent development
Smelter industry – recent development Closures and reductions Vedanta ordered to close the Sterlite Tuticorin smelter, environmental issue – 350 kt koppar Pan Pacific Copper and Mitsubishi - annual production combined of 1.1 mt – production reduced in Q4 – maintenance, poor concentrate terms, lack o
Slide 21: Metal market balance
Metal market balance ' - . !' ' / - ! ' - ! ' ' / - ! "& & "& & & #& & "& & & & & & " " & & " # " # # # Zinc Production increase in Asia, North America and Europe Increased metal stocks up to July, declining thereafter Copper Tight concentrate market in 2010 – constrained smelter production Decreasi
Slide 22: Metal prices
Metal prices USD/t kt USD/t kt Zinc Copper 5,000 1,000 10,000 1,400 4,500 900 9,000 1,200 4,000 800 8,000 3,500 700 7,000 1,000 3,000 600 6,000 800 2,500 500 5,000 2,000 400 600 4,000 1,500 300 3,000 400 1,000 200 2,000 200 500 100 1,000 0 0 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005
Slide 23: Concentrate supply – mine production
Concentrate supply – mine production ' - . !' ! ' - ! ' ! "& "& " " "& "& & & & & & & & & & & & & " # " # . . . . Annual growth Q3 2010 9M 2010 Annual change Q3 2010 9M 2010 Global + 7% +11% Global + 2% 0 Asia + 9% +20% Asia + 2% -1% North America + 8% +4% North America + 9% -6% Europe + 2% -2% Euro
Slide 24: Treatment charges
Treatment charges 01 2 + ! ' ! 34$5 01 2 $ ' ! 34$5 ! ! ! ! # # " # 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 " / 0 1 / ) / # 2 2 / 3 # , " " Spot TC stabilized - Chinese Spot TC up sharply in Q4 – smelter buying activity slowed maintenance stops, Chinese smelter buying activity slowed Capit
Slide 25: Metal performance
Metal performance 6 ' ! Source: Reuters Datastream All metals have performed strongly in the recovery # * Zinc was pushed down lower than copper relative to 4 cash cost 5 # # 7! ) 7! ) 7! Capital Markets Days - November 1-2, 2010 25
Slide 26: Summary – short term market
Summary – short term market Economy Chinese economy remains strong Slowing economic growth in mature countries Construction activity low in mature countries – high in China Automotive and industry production growth slowing Metals market Global demand back at peak - mature well below, Asia well above
Slide 27: Market outlook medium to long term
Market outlook medium to long term Capital Markets Days - November 1-2, 2010 27
Slide 28: Developing world has grown in importance
Developing world has grown in importance 2009 Developing markets 46% 1 68 9 7 6 7 68 * < % < ! 68 8; 5 + # 9 : %& ' Capital Markets Days - November 1-2, 2010 28
Slide 29: Metals growth zone
Metals growth zone + ! ' % ! $ ' % ! + / 2! 3 9 5 $ / 2! 3 9 5 & #& + 8:9 )6 8<! + 8:= )6 8<! 8:9 )6 8<! 8:= )6 8<! & ! 8:9 )6 8<! & ! 8:= )6 8<! * 8: )6 8<! * 8: )6 8<! & & & & #& & "& #& & & & %& '$ # $( ,- %& '$ # $ " $( ,- & & " " # # " " # # ! : 01 3 9 5 ! : 01 3 9 5 + ! * + ! * Developing coun
Slide 30: Metals demand growth projected to be high
Metals demand growth projected to be high Global zinc demand Global refined copper demand ' ' mt metal 25 35 2010 - 2025 Source: Brook Hunt 2020 - 2025 4.6% growth p.a. Source: Brook Hunt 3.6% growth p.a. 30 20 1980 - 1989 1.8% growth p.a. 1990 - 1999 2002 - 2009 25 3% growth p.a. 1.2% growth p.a. 1
Slide 31: Examples of depleting zinc mines
Examples of depleting zinc mines Production Mine estimate 2010 in Closed by kt metal Brunswick, Canada 210 2013 Century, Australia 505 2015 Lisheen, Ireland 170 2014 Perseverance, Canada 130 2013 Skorpion, Namibia 164 2016 Total 1,179 Source: Brook Hunt – A Wood Mackenzie Company Capital Markets Day
Slide 32: Head grade decline in copper
Head grade decline in copper Capital Markets Days - November 1-2, 2010 32
Slide 33: Zinc supply
Zinc supply 8 . !' ! - - ! 8 . ! ' ! - - ! ' ' ;" ' ' ;" ( ,- ) & , ? # @ ( ,- ) & , ? # @ 3 > 3 3 > 3 > 3 # 3 3 > - @ 3 3 > - @ 3 3 > ( 3 @ ( # 3 @ " A # ? 3 A # ? 3 " " Overcapacity for smelting Short term mine capability over demand Disruptions can quickly tighten the market Capital Markets Days
Slide 34: Copper supply
Copper supply 8 ! ' ! - - ! 8 ! ' ! - - ! ' ' ;" ' - ;" # " ( ,- ) & , ? # @ ( ,- ) & , ? # @ " " " 3 > 3 3 > 3 > - @ 3 3 > 3 3 > ( 3 @ ( 3 @ # @ # # 0 # 1 " " Overcapacity for smelting Tight concentrate market There are possible projects for long term balance Capital Markets Days - November 1-2, 20
Slide 35: Cash cost now and in the future
Cash cost now and in the future $2 - $ ' ! ! !2 - . !' ! ! < ' $ < ' $ " " ( ,- ) & , ? # @$( ( ,- ) & , ? # @$( ! ! ! ! ! ! $ ' % ! $ ' % ! 6 8 6 8< 6 6 6 8 6 8< 6 6 Similar cash cost floors in the future High incentive prices for projects Metal price volatility to remain or increase Capital Market
Slide 36: Downside risk in prices if markets turn weaker
Downside risk in prices if markets turn weaker + ! ! ' ! ! $ ! ' ! ! 01 2 < ' $ 01 2 < ' $ 01 2 01 2 # # " " # # - * - * 5 : @ 5 : @ 9 @ < @ @ 9 @ Price historically bottoms out at Copper has been well above 90th 60th percentile percentile cash cost in trough Trough years on average at 90th years pe
Slide 37: Summary - Medium to long term market
Summary - Medium to long term market Economy Developing countries - high proportion of world GDP Several large population nations will be in the metals growth zone Metals market High growth in developing countries Stagnation or decline in mature countries Cash cost floors to remain at current levels