state of the market: mining
DESCRIPTION
Mining On Top: Stockholm 2013 26-27 Nov 2013 State of the Market: MiningTRANSCRIPT
Presenter: Chris Hinde, London
Researcher: Sussie Gylesjö, Stockholm
Mining on Top: Stockholm
November 26th, 2013
State of the Market: Mining
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.
ABOUT THE COMPANY
ORE WASTE TOTAL (Mt) (Mt) (Mt)
Metals Mines 7,000 13,000 20,000
Aggregates 15,000 0 15,000
Coal Mines 8,000 7,000 15,000
Industrial Minerals 1,000 1,000 2,000
Total 31,000 21,000 52,000
FIRST, AN OVERVIEW
Annual global output
CAUSE FOR HOPE
Metals demand follows global GDP
-20
-15
-10
-5
0
5
10
15
20
25
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
% c
han
ges f
ro
m p
revio
us y
ear
Global GDP Aluminium Copper Zinc
Courtesy Professor Phillip Crowson
Prices follow OECD output
Courtesy Professor Phillip Crowson
-20
-15
-10
-5
0
5
10
15
20
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Ind
us
tria
l o
utp
ut
-120
-100
-80
-60
-40
-20
0
20
40
60
80
100
120
No
n-f
err
ou
s m
eta
l p
ric
es
Industrial output
Non-ferrous metal prices
Note different scales for output and prices
And metals demand is linked to
population and urbanisation
Source: ICSG, Raw Materials Group
Indonesia
Pakistan
Philippines
Switzerland
Thailand
Zambia
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 10 100 1000 10000
Urb
anis
atio
n
Population (m)
India
Brazil
USA:
5.5kg/person
World:
2.8kg/person Japan
Russia Malaysia
Chile
Australia
G = Germany Yellow = UK
SK
SK = South Korea (17.4kg/person)
G
South Africa
China
COPPER
CONSUMPTION
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.
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.
Recent mining performance
Coal: Price roller-coaster
Story of the whole mining sector!
Australian thermal coal (US$/t)
Monthly average price
2004 2006 2008 2010 2012
180
140
100
60
20
3 years: stable
20 month boom
9 month
collapse
21 month
recovery
Down again!
Continued
slump in
coal prices
Down 16%
before ‘recovery’
But no energy in coal this year
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$200 billion - industrial minerals
Coal 7,800,000 85 663
Iron Ore 1,900,000 130 247
Copper 17,000 7,100 121
Gold 2.65 42,300,000 112
Nickel 1,700 14,000 24
Zinc 13,000 1,800 23
PGMs 0.48 30,300,000 15
Diamonds 0.025 580,000,000 14
Bauxite 240,000 45 11
Lead 3,600 2,000 7
Top Ten Total 9,975,000 (124) 1,237
At the commodity level
MINED (‘000t)
PRICE (US$/t)
VALUE PA (US$ bn)
Mid 2013
$1,300/oz
$950/oz
$115/ct 90 Mct
85 Moz
At the regional level: African exploration
56.4%
7.9% 7.9%
6.3%
Exploration
financing in the
24 months to
end-May 2013.
Total = US$829m 5.1%
Latin American exploration finance
Over 24 months to
end-August 2013
24%
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
<US$1m
in cash
57% of
industry
Global exploration projects
Source: Raw Materials Database
Red – Copper
Yellow – Gold/Silver
Green – Iron Ore
Blue – Nickel/Lead/Zinc
Purple – PGMs
Pink – Aluminium
White – Diamonds/Other
Quarterly drilling reports
?
18-month decline
SOTM: Mining and Finance Report
SOTM: Mining and Finance Report
Value of mining deals
SOTM: Mining and Finance Report
27% of
year ago
Reason for optimism
(RMG analysis)
Forecast
Extracted ore (Mt)
Forecast
RMG analysis of projects
Mining industry capital expenditure (US$ million)
Long-term demand certainty
Source: 2011, Minerals Information Institute, SME Foundation
Twice world
average
By 2100, every world citizen born will need…
Source: 2011, Minerals Information Institute, SME Foundation
If we are all American …
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: [email protected]