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Will Africa overcome its challenges to become a major iron ore producer?

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Anton Löf, Senior Analyst Iron Ore, from Raw Material Group, Sweden has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please …

Anton Löf, Senior Analyst Iron Ore, from Raw Material Group, Sweden has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsy

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  • 1. Anton Löf (Magnus Ericsson)Senior Iron Ore Analyst, Raw Materials Groupanton.lof@rmg.seWill Africa overcome its challenges tobecome a major iron ore producer?
  • 2. About IntierraRMG• 30 years leadership in data, mapping, analysisand reporting.• Lease ownership, company evaluations, M&A,due diligence, production statistics and project pipeline.•  Market and project reports, material flows analysisand mineral economics policyDisclaimer:IntierraRMG makes reasonable and diligent efforts to obtain accurate information for our clients and presentations. No warranty, expressed or implied is made regarding the accuracy, adequacy,completeness, reliability, or usefulness of any information contained herein. Neither IntierraRMG nor the contributors of data to this presentation shall be held liable for any improper or incorrect useof the information contained herein and assume no responsibility for the use of the information.
  • 3. Data Sources UsedState of the Market Report•  Quarterly trends in exploration, mining and finance•  Data, expert opinion and forward views•  Published by IntierraRMGResearch and Databases•  IntierraLive mining and exploration database•  Raw Materials Data (RMD)•  Mine Cash Cost Models & Curves•  Underground Equipment Analysis
  • 4. CIS 11 %Europe excl CIS2.4 % North America 10 %Asia 27 %Latin America excl Mexico24 %Africa10 % Oceania 15%Global mining - 2011Source: Raw Materials Data, 2013.
  • 5. CIS 22 %Europe excl CIS8 % North America 14 %Asia 11 %Latin America excl Mexico16.0 %Africa20 % Oceania 9 %Global mining - 1984Source: Raw Materials Data, 2013.
  • 6. African  Iron  ore  produc/on  1984,  56  Mt  (total  world  815  Mt)  
  • 7. African  Iron  ore  produc/on  2011,  69  Mt  (total  world  1980  Mt)  
  • 8. 1.  South Africa 4.582.  Zambia .723.  Ghana .554.  Botswana .525.  Congo DRC .496.  Morocco .367.  Mauritania .318.  Tanzania .299.  Zimbabwe .2610. Mali .26African mining countriesSource: Raw Materials Data, 2013.%
  • 9. Sierra  Leone;    4,046,800,000    Guinea;    1,896,600,000    Liberia;    1,838,700,000    Mauritania;    1,773,300,000    Algeria;    1,254,100,000    South  Africa;    1,148,000,000    Cameroon;    1,125,600,000    Ghana;    443,500,000    OTHERS;    2,140,700,000    African iron ore resource baseIron  content  (metric  tonnes)  of  all  ores  and  all  classifica3on  categories  Source: IntierraLive, 2013.
  • 10. African iron ore production0  10  20  30  40  50  60  70  80  90  2003   2004   2005   2006   2007   2008   2009   2010   2011   2012  Mt  Zimbabwe  Tunisia  South  Africa  Morocco  Mauritania  Liberia  Egypt  Algeria  
  • 11. Value of global mining2000 - 2011Source: Raw Materials Data, 2013.MUSD
  • 12. Africa % of total worldSouth Africa % of AfricaValue of African mining1995 - 2011  Source: Raw Materials Data, 2013.
  • 13. Africa project activity I0  1000  2000  3000  4000  5000  6000  7000  8000  AFRICA   REST  OF  WORLD  Source: IntierraLive, 2013.Number of projects
  • 14. Excluding copper and gold0  200  400  600  800  1000  1200  1400  AFRICA   REST  OF  WORLD  Source: IntierraLive, 2013.Africa project activity IINumber of projects
  • 15. 0%  10%  20%  30%  40%  50%  60%  70%  80%  90%  100%  AFRICA   REST  OF  WORLD  Source: IntierraLive, 2013.Africa project activity III
  • 16. Source: IntierraLive, 2013.Drilling activity
  • 17. Source: IntierraLive, 2013.Drilling activity
  • 18. Drilling activitySource: IntierraLive, 2013.
  • 19. OthersIron oreuraniumvanadiumRare Earths*  Silver  or  Zinc/lead/silver  projects  are  not  included  as  Africa  has  shown  less  than  10%  of  global  drilling  ac3vity  Source: IntierraLive, 2013.Drilling activityNumber ofprojects
  • 20. Origin of African fundingPrimary listing location of operatorsIron OreSource: IntierraLive, 2013.
  • 21. African  iron  ore  projects  
  • 22. • Activities stabilising/growing.• Gold, copper, PGMs,diamonds, coal strong.• South Africa losing its grip.• West Africa growth node.• Funding from Australia, NorthAmerica. For iron ore also EuropeVanadium drawing: Kaianders Sempler.African exploration summary• Large untapped geological potential.
  • 23. African production forecast0  50  100  150  200  250  300  350  Mt  
  • 24. •  Infrastructure•  Political•  Resource Nationalization•  International economic conditionsAfrican problems
  • 25. InfrastructureCountry Project LogisticsSenegal Faleme 700 kmGuinea Simandou 650 kmNimba 850 km (290 km Liberian coast)Liberia Putu 130 kmWestern Range 250 kmGabon Belinga 560 km
  • 26. PoliticalSource:  Control  Risks  
  • 27. •  In 1970 only 5 countries in Africa, resource rentcountries•  In 2010 it was 17 countries•  Little evidence of meaningful industrialization•  Africa more dependent on International economicconditions. 1 % of crude steel production in 2012 camefrom Africa.International economic conditions
  • 28. Some African projectsCountry ProjectCapacityproposed (Mt/a) Owner progressSenegal Faleme 25ArcelorMittal, NMDC,government of Senegal Under review from lack of progressGuinea Simandou 100 Vale, BSG on hold since Oct 2012Simandou 95 Rio TintoRio commited but also depends on thegovernmnets spendingNimba 35 BHP Billiton, Newmont for saleLiberia Putu 30 Severstal on goingWestern Range 19 ArcelorMittalin production, phase 2 dependent ongov.Gabon Belinga 30 CMEC lost the rights
  • 29. China taking over Africa?
  • 30. Global  M&A  ac/vity  Notable  last  year  was  China’s  60%  drop  year-­‐on-­‐year  in  overseas  deal-­‐making.  While  copper,  gold  and  iron  ore  con3nue  to  be  the  focus  of  Chinese  ac3vity,  both  the  number  and  value  of  these  deals  declined.  
  • 31. •  Foreign expansion slow, not continuous.•  Limited number of operating mines in Africa.•  Lack of large scale experiences and technology.•  Will increase in the future.•  No Chinese companies yet among the top 25.•  Long term security of supply remain serious problem for China.Chinese foreign expansion
  • 32. Chinese controlled foreign (African) operationsSource: Raw Materials Data 2011.
  • 33. Chinese control of African minesAfrican Share of total Value2005 2006 2007 2008 2009 2010 201113 13 12 12 11 10 10Share of Chinese Controlled Production in Africa2005 2006 2007 2008 2009 2010 20110.3 0.4 0.4 0.4 0.4 0.3 0.8
  • 34. Will Africa step up and become the next bigiron ore producing region• Not in the next couple of years.• Some mines.• Most of the majors are hesitant.• Projects on hold or being reviewed.• But if the world population continues to grow till 2050+ atthe same time as standards of living are increasing theneventually Western Africa will be needed as an iron oreproducing region.
  • 35. Africa drawing: Kaianders Sempler.Mining is for manycountries the onlychance to starteconomicdevelopment!
  • 36. Thank You.For a copy of this presentation, contactmarketing@intierraRMG.comanton.lof@rmg.se