nickel: the companies and their markets - insg · nickel: the companies and their markets paul...

17‐10‐2012

1

Nickel: The Companies and Their Markets

Paul DewisonDirector, Base Metals

[email protected]

INSG Meeting: October 9th 2012

Outline

o Who are the nickel companies?

This presentation is intended to help answer:

o Who are the nickel companies?

o What is their strategy towards nickel?

o How does nickel fit within an overall business profile?

o How does nickel fit within companies’ minerals business profile?

o What groups of companies apply to nickel?

o ….. and what can we say about them?

o How is the nickel company profile evolving?

o Can we spot winners and losers looking forward?

17‐10‐2012

2

The Nickel MinersLittle change at the top

Company Base Output 2011 (kt Ni) Share 2011 Rank

2011 Share 2007 Rank 2007

Norilsk and Vale Clear Market Leaders

p y Ni) 2011 2007

Norilsk Nickel Russia 272 16.7% 1 17.7% 1Vale Brazil 234 14.4% 2 15.4% 2BHP Billiton UK / Australia 139 8.6% 3 8.1% 4PT Antam Indonesia 123 7.6% 4 8.6% 3Xstrata Switzerland 79 4.9% 5 5.5% 6Eramet France 78 4.8% 6 6.0% 5Jinchuan China 60 3.7% 7 4.2% 7Anglo American United Kingdom 54 3.3% 8 3.2% 8Nickel Asia Philippines 48 3.0% 9 2.0% 11Votorantim Brazil 41 2 5% 10 1 8% 12Votorantim Brazil 41 2.5% 10 1.8% 12Sumitomo Japan 38 2.3% 11 1.5% 14Sherritt Canada 34 2.1% 12 2.1% 10Cubaniquel Cuba 30 1.8% 13 2.8% 9Minera (Glencore) Switerland 28 1.7% 14 1.8% 13Larco Greece 22 1.4% 15 1.0% 16

Others 345 21.2% 18.4%

Total 1625 100.0% 100.0%

The Finished Nickel ProducersAgain, quite stable in the recent past

Leaders’ share eroded by growing presence of NPI

Company Base Output 2011 (kt Ni) Share 2011 Rank

2011 Share 2007 Rank 2007p y Ni) 2011 2007

Norilsk Nickel Russia 283 17.4% 1 20.2% 1Vale Brazil 242 14.9% 2 18.7% 2Jinchuan China 127 7.8% 3 8.0% 4Xstrata Switerland 106 6.5% 4 8.8% 3BHP Billiton UK/Ausralia 85 5.2% 5 7.3% 5Sumitomo Japan 62 3.8% 6 4.3% 6Eramet France 54 3.3% 7 4.2% 7Anglo American United Kingdom 49 3.0% 8 3.4% 8QNI Australia 35 2.2% 9 2.2% 12Sherritt Canada 35 2.1% 10 2.4% 11Minera (Glencore) Switerland 30 1.9% 11 2.1% 13Cubaniquel Cuba 30 1.8% 12 3.2% 9Cunico Macedonia 29 1.8% 13 1.1% 15Pacific Metals Co Ltd Japan 28 1.7% 14 2.5% 10Votorantim Brazil 21 1.3% 15 1.6% 14

Other Refined Ni & FeNi Producers 100 6.1% 11.8%Nickel Pig Iron Producers 260 16.0% 0.6%

Total 1575 100.0% 100.0%

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Mine and finished Ni product companies comparedlargely the same companies, but some key differences

Mined Nickel Finished Nickel

Norilsk Nickel

Vale

BHP Billiton

PT Antam

Xstrata

Eramet

Jinchuan

Anglo American

Norilsk Nickel

Vale

Jinchuan

Xstrata

BHP Billiton

Sumitomo

Eramet

Anglo American

QNINickel Asia

Votorantim

Others

QNI

Sherritt

Others Processed

Chinese NPI

Strategic Positioning of the Major Playersnickel companies vary enormously in their approach to the business

Bubble sizes indicate output of finished Ni in 2011. “Focus on Ni” indicates share of revenue accounted for. “Diversity in Ni” reflects product, market and geographical range of the company

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Describing nickel company business profiles (1)radar chart (1)

Overall Company Business

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Investment &Trade

Metal ProcessingMinerals

Extraction

Industrial ‐ SteelIndustrial ‐ Other


Business in Minerals

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Steel RMOther

Base MetalsPrecious Metals

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Business in Nickel

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Mining

Intermediates /Trade

FeNi / NPI

Refined MetalSpecial Products

Norilsk – Focussed on nickel across a broad rangetypes of company in nickel (1)

The market leader is different in type from its main competitors

Overall Company Business

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MineralsExtraction

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p y

Minerals Business

Business in Nickel

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FeNi / NPI

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Norilsk Nickel Revenues and Net Profit Revenues by Segment H1 2012

40%

50%

20,000

25,000

Revenues / SalesNet ProfitNet Profit Margin

% MarginUSD million

‐10%

0%

10%

20%

30%

0

5,000

10,000

15,000

2007 2008 2009 2010 2011 H1 2012

Nickel Copper Palladium

Platinum Gold Other

US$ 6.45 billionApportiment estimated

2007 2008 2009 2010 2011 H1 2012

Around 50% of the revenues of the first nickel producer come from that metal. Nearly all other revenue derives from metal co‐products and by‐products

In both mine and refined output, Norilsk is top of the ranking

Other than Russia, Norilsk has divisions in Finland, Africa and Australia. Norilsk will lose share as a result of large project developments by others

Nickel within a broad base metals biased mining portfoliotypes of company in nickel (2)

Anglo. Xstrata and now First Quantum fall into this category

Overall Company Businessp y

Minerals Business

Business in Nickel‐10.0%

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MineralsExtraction

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Mining

ANGLO AMERICAN FIRST QUANTUM

XSTRATA Base MetalsPrecious Metals


XSTRATA

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FeNi / NPI


XSTRATA

17‐10‐2012

7

Xstrata Revenues and Net Profit Revenues by Segment H1 2012

30%

35%

35,000

40,000


% MarginUS$ million

0%

5%

10%

15%

20%

25%

0

5,000

10,000

15,000

20,000

25,000

30,000

Xstrata is first of all a non ferrous metals mining company, with a big presence in processing. Nickel is part of this. Coal is also an important business for Xstrata

In 2011, Xstrata reversed a recent decline in output. Its profile in nickel is set to grow further with the start up of Koniambo

Taken with Glencore, Xstrata’s role in nickel is much larger, even before a merger

Alloys Coal Copper Nickel Zinc Other

Total US$15.5 Billion 2007 2008 2009 2010 2011 H1 12

Anglo American Revenues and Net Profit Revenues by Segment H1 2012

40%

50%

35,000

40,000Revenues / Sales

Net Profit

Net Profit Margin

% Margin

g

US$ million

0%

10%

20%

30%

0

5,000

10,000

15,000

20,000

25,000

30,000

Although nickel represents a small part of its revenues, the size of the company makes it important in the global market, set to become more so with output from Barro Alto

Business associated with steel, base metals and precious metals & diamonds each from a big portion of Anglo’s overall business portfolio

2007 2008 2009 2010 2011 H1 2012

Iron Ore etc. Met Coal Thermal Coal

Copper Nickel Platinum

Diamonds Other

US$16.4 billion

17‐10‐2012

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First Quantum Revenues and Net Profit Revenues by Segment H1 2012

40%

50%4,000


% MarginUS$ million

‐10%

0%

10%

20%

30%

0

1,000

2,000

3,000Net Profit Margin

In contrast, First Quantum is entirely a base and precious metals business, with copper being its dominant business

FQM’s initiative to diversify out of copper led it to look at nickel, where it has become a significant player

In volume, the big contribution comes from BHP’s former Ravensthorpe facility. It is also performing greenfield, with Kevista in Finland

2007 2008 2009 2010 2011 H1 2012

Copper Gold Nickel etc.

US$ 1.43 billion

Nickel within a broad steel materials biased mining portfoliotypes of company in nickel (3)

The mining giants Vale and BHP are in this group, but not Rio Tinto


Minerals Business


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VALE BHP BILLITON Base MetalsPrecious Metals

VALE BHP BILLITON

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FeNi / NPI

VALE BHP BILLITON

17‐10‐2012

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Vale Revenues and Net Profit Revenues by Segment H1 2012

40%

45%

50%

50 000

55,000

60,000

65,000Revenue/Sales

Net Result

Net Margin

% MarginUS$ million

0%

5%

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5,000

10,000

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50,000

2007 2008 2009 2010 2011 H1 2012

Iron ore giant Vale is the world’s second biggest nickel producer, having acquired a big stake in the industry with the purchase of Inco in 2005

Its revenue from nickel account for 10% of its total sales, where ferrous minerals account for 80%

Developing rapidly in the business, current projects include Onça Puma in Brazil and VNC (Goro) in New Caladonia

Ferrous Minerals Nickel

Copper Aluminium /Oth NF

Logistics etc.

Total US$23.5 Billion

BHP Billiton Revenues and Net Profit Revenues by Segment H1 2012

40%

45%

50%

70,000

80,000

Revenues / Sales

Net Profit

Net Profit Margin

% MarginUS$ million

0%

5%

10%

15%

20%

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10,000

20,000

30,000

40,000

50,000

60,000Net Profit Margin

A giant in mining with revenues running at around $70 billion annually and a net profit ratio of around 25%

A major focus is on bulk steel making raw materials. Nickel forms part of this business, and is to be found within the company’s “Stainless Steel Raw Materials” grouping

While BHP is placing some investment in nickel, it has divested assets in this sector

Petroleum Aluminium Base Metals

Diamonds etc. Stanless Mat. Iron Ore

Manganese Met Coal Energy Coal

US$16.4 billion07/08 08/09 09/10 10/11 11/12 H1 12

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10

The base metals processorstypes of company in nickel (4)

Sumitomo MM and Jinchuan are leaders in nickel


Minerals Business


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MineralsExtraction

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Mining

SUMITOMO METAL MINING JINCHUANBase MetalsPrecious Metals

SUMITOMO METAL MINING JINCHUAN

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FeNi / NPI

SUMITOMO METAL MINING JINCHUAN

Sumitomo Metal Mining Revenues and Net Profit Revenues by Segment H1 2012

40%

50%

1,250

1,500

Revenue/Sales

Net Result

% Margin

Sumitomo MM Revenues and Net Profit

Yen billion

0%

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250

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07/08 08/09 09/10 10/11 11/12 H1 2012

Net Margin

Turning to a very different type of company, metals processor Sumitomo Meta Mining is the 6th largest nickel producer

SMM is increasingly active in sourcing captive feed material at the mine source. It is involved in the 30 ktpy Taganito Project in the Philippines, scheduled for completion in 2013

With this, SMM intends to raise its smelter output to 100 ktpyNi. Ultimately, it targets 150 ktpy Ni

07/08 08/09 09/10 10/11 11/12 H1 2012

Minerals Materials

Copper Smelting Gold Smelting

Nickel Smelting Other Smelting

Total Yen 410 Billion

17‐10‐2012

11

Nickel focused, raw and semi‐processed materials biastypes of company in nickel (5)

A range from ore extraction to sophisticated first level processing


Minerals Business


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Mining

PT ANTAM NICKEL ASIA

TALVIVAARA Base MetalsPrecious Metals


TALVIVAARA

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FeNi / NPI


TALVIVAARA

PT AntamRevenues and Net Profit Revenues by Segment H1 2012

40%

50%20,000

Revenue/Sales

Net Profit

% MarginLocal Currency

0%

10%

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30%

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5,000

10,000

15,000

2007 2008 2009 2010 H1 2012

Net Profit Margin

PT Antam is focused on ore, producing nearly 8 Mt in 2011

Relatively weak in ore processing, In 2011 the company produced at little less than 20 kt of ferronickel.

As part of a drive by Indonesia to add value to its ores, PT Antam recently secured US$650 million in loans to allow it to develop a 27 ktpy ferronickel facility at East Halmahera, North Maluka

2007 2008 2009 2010 H1 2012

Nickel Gold Others

Rp 4.5 billion

17‐10‐2012

12

TalvivaaraRevenues and Net Profit Revenues by Segment H1 2012

50%500

Revenue/Sales

Net Result

% Margin

Talvivaara Revenues and Net Profit

Euro million

‐25%

0%

25%

‐250

0

250

2007 2008 2009 2010 2011 H1 2012

Net Result

Net Margin

Also In Finland, we have the new one project company Talvivaara with its unique bioleaching process producing nickel in intermediate form, with some zinc

While output is currently running at 20 ktpy product output, it is position to ram this up to 50 ktpy, with ambitions to take this up to 100 ktpy Talvivaara’s product profile should also broaden, including copper and uranium

Nickel Zinc

Total Euro 73 Million(apportionment estimated)

2007 2008 2009 2010 2011 H1 2012

Nickel focused, end‐product FeNitypes of company in nickel (6)

Pyro processing of on‐site laterites


Minerals Business


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Base MetalsPrecious Metals ‐10.0%

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FeNi / NPI

17‐10‐2012

13

Companies with a broad range extraction and industrial businesstypes of company in nickel (7)

Though individually different, companies all have a broad business footprint


Minerals Business


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ERAMET SHERRITT

VOTORANTIM Base MetalsPrecious Metals

ERAMET SHERRITT

VOTORANTIM

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FeNi / NPI

ERAMET SHERRITT

VOTORANTIM

ErametRevenues and Net Profit Revenues by Segment H1 2012

40%

50%6,000

Revenue/Sales

Net Result

% MarginEuro million

‐20%

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0%

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2,000

4,000

2007 2008 2009 2010 2011 H1 2012

Net Margin

Nickel is one of three business areas for the French company Eramet. While nickel accounts for over 35% of revenue.

The other segments are manganese and alloys, placing the company overall squarely in the high end steel materials business.

After a long history in New Caladonia, Eramet is now looking to widen its presence in nickel with Weda Bay in Indonesia

2007 2008 2009 2010 2011 H1 2012

Nickel Manganese Alloys

Euro 1.73 billion

17‐10‐2012

14

SherrittRevenues and Net Profit Revenues by Segment H1 2012

40%

50%3,000

Revenue/Sales

Net Result

% MarginUS$ million

0%

10%

20%

30%

0

1,000

2,000

2007 2008 2009 2010 2011 H1 2012

Net Margin

A relatively small company, Sherritt’s main business is in energy, mostly at the extraction stage

Sherritt’s presence in nickel and cobalt is tied to its long association with State interests in Cuba through Moa Nickel

The company is transforming itself in nickel through the Ambatovy project in Madagascar. It also acquired a large share in the Sulawesi project in Indonesia. From Rio Tinto

2007 2008 2009 2010 2011 H1 2012

Nickel Cobalt Fertilisers

Other Metals Coal Oil & Gas

Power

US$0.95 billion

VotorantimRevenues and Net Profit Revenues by Segment H1 2012

40%

50%

35,000

40,000

Revenue/SalesNet ResultNet Margin

% MarginReal billion

‐10%

0%

10%

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0

5,000

10,000

15,000

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2007 2008 2009 2010 2011 H1 2012

Brazilian focussed Votorantim is another long established player in nickel

Votorantim’s main business is in minerals extraction and first processing, where metals compete with cement for leadership. It also is present in steel and pulp

In metals, nickel business is significant, theough it comes some way behind zinc and aluminium

Cement Other Metals Aluminium

Nickel Zinc Steel

Pulp

Total Real 11.8 Billion 2007 2008 2009 2010 2011 H1 2012

17‐10‐2012

15

Steel companies reaching back into nickeltypes of company in nickel (8)

Highly focussed on raw materials sourcing


Minerals Business


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MineralsExtraction

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Base MetalsPrecious Metals ‐10.0%

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FeNi / NPI

Glencore – A trading company involved directly in mineralstypes of company in nickel (9)

Dominance of trading business in turnover belies the huge industrial business


Minerals Business


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MineralsExtraction

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Mining

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FeNi / NPI

Base MetalsPrecious Metals

17‐10‐2012

16

GlencoreRevenues and Net Profit Revenues by Segment H1 2012

20%

25%

175 000

200,000

225,000Revenue/Sales

Net Result

Net Margin

% MarginUS$ million

0%

5%

10%

15%

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

2007 2008 2009 2010 2011 H1 2012

In terms of revenue, Glencore far outstrips even the largest mining companies. Most of the revenue is in trading

In its industrial business, Glencore is a little behind the biggest mining majors.

All business, including industrial is split between energy, metals and agriculture, Nickel industrial operations are small in relation to overall business, but significant overall.

2007 2008 2009 2010 2011 H1 2012

Marketing Zinc Copper

Alumininium Steel Mat etc. Energy

Agriculture

US$108 billion

Note: The non‐marketing industrial activities account for US$7.1 billion in revenue

Glencore and Xstrata – natural partners?implications of a company merger

Excluding Glencore marketing, there is a match in business range


Minerals Business


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GLENCORE XSTRATA Base MetalsPrecious Metals

GLENCORE XSTRATA

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FeNi / NPI

GLENCORE XSTRATA

17‐10‐2012

17

Nickel products and their marketsGoing forward, this evolving matrix is very relevant in a changing supply picture

Percentage (%)Pellets, Powders,

Salts, Ni OxidePremium Electro

Other Electro

Briquettes FeNi NPI All Nickel

Stainless Steel 7.9% 0.1% 13.0% 9.7% 18.2% 16.2% 65.1%

Other Steel Mill 0.3% 0.1% 3.4% 0.3% 0.4% 4.5%

Foundry 0.1% 3.4% 0.4% 3.9%

Nickel Alloy 2.8% 4.5% 2.5% 9.8%

Electoplating 2.5% 4.1% 3.3% 9.9%

Other Uses 2.1% 2.0% 2.7% 6.8%

Total 15.6% 10.9% 28.3% 10.4% 18.6% 16.2% 100.0%

Thank You. For further information on this presentation, p ,

contact: [email protected]

This presentation is produced by IntierraRMG (UK) Ltd in the United Kingdom.

UK OFFICE ADDRESS UK OFFICE CONTACTS

Abbey House, Fifth Floor74‐76 St John StreetLondon EC1M 4DZ, U.K.Phone: +44 (0) 20 7780 7470

General enquiries:[email protected]

Paul DewisonDirector, Base MetalsEmail: [email protected]

Chris HindeEditorial DirectorEmail: [email protected]

nickel: the companies and their markets - insg · nickel: the companies and their markets paul...

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