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State of the Market: Mining
 

State of the Market: Mining

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Mining On Top: Stockholm 2013

Mining On Top: Stockholm 2013
26-27 Nov 2013

State of the Market: Mining

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    State of the Market: Mining State of the Market: Mining Presentation Transcript

    • State of the Market: Mining Presenter: Chris Hinde, London Researcher: Sussie Gylesjö, Stockholm Mining on Top: Stockholm November 26th, 2013
    • ABOUT THE COMPANY Over 30 years of providing mining information: Databases, consultancy, maps, reports and conferences Databases ‒ Lease locations and ownership, company intelligence, drill results, project pipeline, due diligence reports, production statistics, finance, M&A activity etc. Reports ‒ Examination of the trends in exploration, mine development, metals production and finance. Events ‒ ‘Mining on Top’ conferences in Stockholm, Helsinki and London, and training seminars. Disclaimer: 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 use of the information contained herein and assume no responsibility for the use of the information.
    • FIRST, AN OVERVIEW Annual global output ORE (Mt) 7,000 WASTE (Mt) 13,000 TOTAL (Mt) 20,000 Aggregates 15,000 0 15,000 Coal Mines 8,000 7,000 15,000 Industrial Minerals 1,000 1,000 2,000 31,000 21,000 52,000 Metals Mines Total
    • CAUSE FOR HOPE Metals demand follows global GDP 25 % changes from previous year 20 15 10 5 0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 -5 -10 -15 Global GDP Aluminium Copper Zinc -20 Courtesy Professor Phillip Crowson
    • Prices follow OECD output 20 120 100 Non-ferrous metal prices Industrial output 10 80 60 40 5 20 0 0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 -5 -20 -40 -10 -60 Industrial output -80 -15 Note different scales for output and prices -20 -100 -120 Courtesy Professor Phillip Crowson Non-ferrous metal prices 15
    • And metals demand is linked to population and urbanisation Australia 100% Chile 90% COPPER CONSUMPTION Brazil SK USA: 80% 5.5kg/person Switzerland Russia 70% Malaysia G Japan Urbanisation 60% South Africa 50% World: Philippines 2.8kg/person Indonesia 40% Zambia 30% China Pakistan Thailand India 20% G = Germany Yellow = UK 10% SK = South Korea (17.4kg/person) 0% 1 10 100 Population (m) 1000 Source: ICSG, Raw Materials Group 10000
    • Shape of the international mining industry • Surface/underground ratio = 60/40 physical operations • Surface mines and quarries = 95% of all ore + rock output • Top ten companies = one-third of mined production • Total of almost 3,500 exploration and mining companies* (half of these being located in Canada). * These companies, and their projects/mines, are tracked in the IntierraLive database, and their performance reflected in the State of the Market reports.
    • Recent mining performance During the past few years, the mining industry has found itself between a rock and a hard place. Rock: Falling prices, with little prospect of an early recovery because of lacklustre demand. Hard Place: Pressure on operating costs and a heightened threat of resource nationalism. Problems compounded by the restricted supply of finance, especially for mineral exploration Disclaimer: 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 use of the information contained herein and assume no responsibility for the use of the information.
    • Coal: Price roller-coaster Story of the whole mining sector! Australian thermal coal (US$/t) 180 9 month collapse 140 20 month boom 100 Down again! 21 month recovery 60 3 years: stable 20 2004 2006 2008 2010 Monthly average price 2012
    • But no energy in coal this year Continued slump in coal prices Down 16% before ‘recovery’
    • Still, mining can not be ignored Extracted total worth some US$1,900 billion pa: US$700 billion - metals and gems US$660 billion - coal / lignite US$340 billion - cement and aggregates US$200 billion - industrial minerals
    • At the commodity level Mid 2013 MINED (‘000t) Coal Iron Ore Copper Gold Nickel Zinc PGMs Diamonds Bauxite Lead Top Ten Total 7,800,000 1,900,000 17,000 85 Moz 2.65 1,700 13,000 0.48 90 Mct 0.025 240,000 3,600 9,975,000 PRICE (US$/t) VALUE PA (US$ bn) 85 663 130 247 7,100 121 42,300,000 $1,300/oz 112 14,000 24 1,800 23 30,300,000 $950/oz 15 580,000,000 $115/ct 14 45 11 2,000 7 (124) 1,237
    • At the regional level: African exploration 56.4% 7.9% 7.9% 6.3% 5.1% Exploration financing in the 24 months to end-May 2013. Total = US$829m
    • Latin American exploration finance 24% Over 24 months to end-August 2013
    • Latin American exploration drilling 34% 32%
    • NOW THE CURRENT STATUS State of the Market: Mining and Finance Report Quarter to end-September
    • Global mining industry End-September 2013 57% of industry <US$1m in cash
    • Global exploration projects Red – Copper Yellow – Gold/Silver Green – Iron Ore Blue – Nickel/Lead/Zinc Purple – PGMs Pink – Aluminium White – Diamonds/Other Source: Raw Materials Database
    • Quarterly drilling reports
    • 18-month decline ?
    • SOTM: Mining and Finance Report
    • SOTM: Mining and Finance Report
    • Value of mining deals
    • SOTM: Mining and Finance Report 27% of year ago
    • Reason for optimism (RMG analysis) Extracted ore (Mt) Forecast
    • RMG analysis of projects Mining industry capital expenditure (US$ million) Forecast
    • Long-term demand certainty Twice world average Source: 2011, Minerals Information Institute, SME Foundation
    • If we are all American … By 2100, every world citizen born will need… Source: 2011, Minerals Information Institute, SME Foundation
    • Much more copper … By 2100, every world citizen born will need… Source: 2011, Minerals Information Institute, SME Foundation
    • Huge new coal discoveries … By 2100, every world citizen born will need… Source: 2011, Minerals Information Institute, SME Foundation
    • But we are already producing enough iron ore! By 2100, every world citizen born will need… Source: 2011, Minerals Information Institute, SME Foundation
    • State of the Market: Mining That’s it, thanks Chris Hinde Editorial Director IntierraRMG Tel: +44 (0)20 7780 7471 Email: chris.hinde@intierraRMG.com