Boliden AB · OMXSTO:BOL
Boliden AB — Investor Day (September 2009)
23 slides from Boliden AB's investor day presentation, Sep 2, 2009
Slide 1: Capital Markets Day: Market Update
Capital Markets Day 2 September 2009 Bildplatshållare Market Update Lennart Evrell President & CEO 1 2009-09-01 Supply and demand Volume S D Price 2 2009-09-01
Slide 2: Supply and demand in metal and mining
Supply and demand in metal and mining Steep curves, long lead times to expand supply capacity Price S D Volume 3 2009-09-01 Metal markets and prices… Reductions – Care and maintenance when cash flow is more negative at producing than at closing Low prices – Related to cash-cost curves and percentile
Slide 3: Analysis at troughs and peaks
Analysis at troughs and peaks Peak 2007 Min stocks Max output Metal price 2008 Dec Price at 60th percentile 2009 Q2 Mine output higher than Real demand demand lower than capacity Significant stock building 60 95 100 Cash cost C1 Normal costing 5 2009-09-01 Macro 6 2009-09-01
Slide 4: The "Supercycle" model
The “Supercycle” model Copper consumption vs GDP per Capita 12,0 Japan 11,0 Growth in metal demand 10,0 W Europe 9,0 Canada Potential 8,0 Saudi USA Australia 7,0 Malaysia Kg per capita 6,0 5,0 Russia Kazakhstan 4,0 Thailand 3,0 China World 2,0 Latin America Brazil 1,0 Indonesia Vietnam India Philipp
Slide 5: China's importance has grown further
China's importance has grown further Refined Copper - Global demand Q209 USA 9% Other 33% Europe 22% • China accounted for 36% of global demand in Q2 2009 • Chinese market is now larger than EU + US China 36% Source: CRU, Brook Hunt, ICSG Source: Based on data from CRU, calculations by Boliden 9 200
Slide 6: Construction and automotive users of zinc and copper
Construction and automotive users of zinc and copper Zinc Copper Construction 49% 35% Automotive 23% 11% 11 2009-09-01 Construction markets Production index 2004=100 Survey net index Percent Non-residential still growing in USA (upper right) Percent Strong trend in China (lower left) Weak European m
Slide 7: Automotive market
Automotive market Automotive production 900 800 700 Index 2000=100 600 Transfer of world production to Asia 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 China - car production USA - light vehicles IP Germany - car production China zinc cons USA zinc cons W Europe zinc cons Auto
Slide 8: Zinc market
Zinc market 15 2009-09-01 Zinc price and stocks 5000 900000 4500 800000 4000 700000 3500 600000 Stocks tonnes 3000 500000 USD/t 2500 400000 2000 300000 1500 1000 200000 500 100000 0 0 2003 2004 2005 2006 2007 2008 2009 LME Stocks Zinc price Source: Reuters Ecowin 16 2009-09-01
Slide 9: Zinc production and exchange rates
Zinc production and exchange rates USD versus other currencies FX % Production % 40 30 35 27 31 30 23 20 22 23 22 21 20 14 13 15 14 13 10 11 7 7 8 10 6 5 5 7 5 4 4 3 2 2 2 1 1 1 1 1 0 0 -2 -3 -10 o -10 D SD RO AD Po l na ru a ia a ia nd n ey lia K an i az ic Ira di si SE AU liv ib Pe go rk la hi st
Slide 10: China could be closer to mature levels by 2020
China could be closer to mature levels by 2020 Zink consumption Zinc percapita consumption per capita 6.0 5.3 5.3 5.1 5.0 4.4 4.0 3.7 3.4 3.3 2.9 kg 3.0 2.0 1.0 0.0 EU China Japan North America 2008 2020 Source: Based on © Brook Hunt data, Reuters Ecowin, calculations by Boliden 19 2009-09-01 Zinc s
Slide 11: 2009 zinc smelter cash cost curve
2009 zinc smelter cash cost curve 2009 ZINC SMELTER INDUSTRY COST DATA: FLEXED DATA 70 Cash Conversion Cost (c/lb Zn) 60 Kokkola Odda 50 40 30 20 10 0 0 2000 4000 6000 8000 10000 Total Slab Zinc (kt) © Brook Hunt & Associates Ltd 2009 Cash Conversion Cost Assumptions based on Cost level as 2007 adju
Slide 12: 2009 zinc mine cash cost curve
Zinc mines 23 2009-09-01 2009 zinc mine cash cost curve 2009 ZINC INDUSTRY COST DATA: FLEXED DATA 90 80 Boliden C1 Cash Cost (c/lb Zn) Garpenberg 70 Tara 60 50 40 30 20 10 0 0 2000 4000 6000 8000 10000 12000 14000 16000 Cumulative Production (Paid Mlbs Zn) © Brook Hunt & Associates Ltd 2009 C1 Cash
Slide 13: Head grades are declining
Head grades are declining Zinc head grades 10.0 9.0 © Brook Hunt 8.0 Zn Grade (%) 7.0 6.0 5.0 4.0 3.0 1978 1988 1998 2008 2018 2028 Year Arithmetic Weighted (Mlbs) Source: © Brook Hunt 25 2009-09-01 Zinc mine capacity by source 2008-2020 Base case production - net change 2008-2020 16.0 million tonne
Slide 14: Cash cost to increase
Cash cost to increase Zinc cash cost C1 Normal costing 100 Based on Brook Hunt 2015 50 simulation on mines in operation, 0 probable and US c/lb possible projects -50 using long term price assumptions -100 -150 -200 0-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 Percentile of global mine
Slide 15: Copper market
Copper market 29 2009-09-01 Copper price and stocks 10000 1400000 9000 1200000 8000 7000 1000000 Stocks tonnes 6000 800000 USD/t 5000 600000 4000 3000 400000 2000 200000 1000 0 0 2003 2004 2005 2006 2007 2008 2009 LME Stocks Comex stocks SHFE stocks Copper price Source: Reuters Ecowin 30 2009-09-01
Slide 16: Copper production and exchange rates
Copper production and exchange rates USD versus other currencies FX % Production % 50 30 28 40 40 35 33 31 20 30 22 23 21 20 9 15 16 10 8 14 7 7 12 7 11 8 10 5 5 5 10 4 4 3 5 3 2 2 2 1 4 0 0 -2 -10 -10 o D In SD D il A r RC le ru na a a nd a O n a K an az ic in si si bi Ira SE Ka CA AU R hi Pe hi st
Slide 17: Copper smelters
Copper smelters 33 2009-09-01 Copper smelter cash cost curve (flexibility and ability to extract by-products not reflected) 2009 COPPER SMELTER INDUSTRY COST DATA: FLEXED DATA 45 40 Rönnskär Net Cash Cost (c/lb Cu) Harjavalta 35 30 25 20 15 10 5 0 -5 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10
Slide 18: Copper smelters are complex
Copper smelters are complex… Fundamental characteristics for competitive position – Flexibility to different feeds – Recycling capability, E-scrap Limited info on planned closures – Financial situation and outlook – Environmental pressure Copper mines 36 2009-09-01
Slide 19: 2009 Copper mine cash cost curve
2009 Copper mine cash cost curve Aitik Boliden Assumptions based on actual prices and terms Zn 60 c/lb (1311 USD/t) Pb 60 c/lb (1331 USD/t) Exchange rates YTD 2009 Source: © Brook Hunt 37 2009-09-01 Head grades are declining Copper head grades 1.7 © Brook Hunt Ltd 2009 1.5 Copper Grade Cu % 1.3 1.1
Slide 20: Base case, copper mine capacity by source
Base case, copper mine capacity by source 2008-2020 Base case production - net change 2008-2020 20.0 15.6 15.0 14.0 10.0 kt 5.0 1.4 1.5 0.0 0.0 -1.1 -1.6 -3.4 -5.0 on n 08 ns s e 20 ts re g tio ec 20 20 io an iti su uc oj ns ttr ch od od lo pr od A pa C Pr Pr l ta ew pr Ex To dy N ea St New projects
Slide 21: Copper mine capacity down, smelter up
Copper mine capacity down, smelter up – Base Case 25,000 20,000 15,000 kt 10,000 5,000 0 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 Base case mine production capability Base case smelter capability Primary demand Substantial smelter ca
Slide 22: Conclusion: Development in China fundamental to market
Conclusion: Development in China fundamental to the market development Copper consumption vs GDP per Capita 12,0 Japan 11,0 Growth in metal demand 10,0 W Europe 9,0 Canada Potential 8,0 Saudi USA Australia 7,0 Malaysia Kg per capita 6,0 5,0 Russia Kazakhstan 4,0 Thailand 3,0 China World 2,0 Latin Am
Slide 23: Boliden produces metals that make modern life work
Boliden produces metals that make modern life work