Global mining towards 2030 !

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Suomen mineraalistrategian avajaisseminaari,

Esbo 17:e mars 2010.

Magnus Ericsson

Mining can be sustainable -Garpenberg mine since 13th c.

Courtesy: Boliden.

Copper price in real terms 1771 - 2001

6000 USD/t

Source: Crowson 2004.

Long term copperprice cycles

Source: UBS.

Technical development

Drilling technology during 100 years

Copper drawing: Kaianders Sempler.

Mining is: InternationalLong term Cyclical

Agenda

• Long term trends• Nordic countries in the world• Policy implications

Vanadium drawing: Kaianders Sempler.

Long term trends DemandSupply

Special properties of metals

• High strength• Affordable cost• Conduct heat and electricity• Beautiful• Undestructable

Source: T. Graedel, Yale University.

Metal end useSteelCopper

Gold

Source: Raw Materials Group, Stockholm 2009.

China stimulus

Source: NDRC

Copper use vs GDP/capita

Source: Häggström, Handelsbanken 2006.

0

500

1000

1500

2000

19001910192019301940195019601970198019902000200820102020

Global steel productionMt

Source: IISI/WSA, RMG projections.

3.3 % AGRConservativelong term trend projected to 2020

6 % AGR

0.5 % AGR

3 % AGR

8 % AGR

Mineral criticality

Source: Eggert 2007

Impa

ct o

f sup

ply

rest

rictio

ns

Supply risk

Mineral C

ritica

lity

Reliability of Supply:• Geological• Technical• Environmental &

Social• Political• Economical

Supply restrictions:• Price elasticity• Substitution• R&D

Iron oreManganese

Lithium

Aluminium

Copper

PGMs

REE

Vanadium drawing: Kaianders Sempler.

Demand summary• Metals cannot be replaced.• Extended period of growth.• China/Asia major engines.• Infrastructure & personal use.• Decline less dramatic than expected – long term growth will slow down but remain steady.

• New strategic metals.

REM drawing: Kaianders Sempler.

Supply

0

10

20

30

40

50

60

70

1850 1870 1890 1910 1930 1950 1970 1990

% of global mining

Global mining – 19th/20th century

Value of global mining

Source: Raw Materials Group, Stockholm 2009

Value of metals, diamonds and uranium

Metals value at mine2008 total ~ 463 billion USD, metals, diamonds and uranium

Source: Raw Materials Group, Stockholm 2009

Corporate concentration increasing

Concentration by metal

Source: Raw Materials Group 2010.

%

Corporate concentration% of total value of non-fuel metal production at the mine stage

Sour

ce: R

aw M

ater

ials

Gro

up,

2009

.

Production by foreign companies

0 10 20 30 40 50 60 70% of world production

Bauxite

Copper

Gold

Zinc

Nickel

Iron ore

Sources: UNCTAD, based on Raw Materials Data, 2007.

0

10

20

30

40

50

60

70

Gold Nickel Bauxite Iron ore Copper Zinc Aluminium Tin

MEC states CPE states Total state

Sour

ce: R

awM

ater

ials

Gro

up, S

tock

holm

.

Not

e: A

lum

iniu

m re

fers

to re

finer

y pr

oduc

tion.% of total mine production

State mining

0

1000

2000

3000

4000

5000

1990 2000 2009

10 11:25 26:100

Sour

ce: R

awM

ater

ials

Gro

up, S

tock

holm

.

kt

Copper mines get bigger

Exploration

Sources: 1995-2008 MEG, 2009-2011 RMG.

Harsh conditions –remote areas

Grades in copper production

Mean value 0.7 %

Source: Raw Materials Group, Stockholm 2009

Grades in greenfieldcopper reserves

Mean value 0.6 %

Source: Raw Materials Group, Stockholm 2009

Increasingly difficult

• Remote locations• Harsh conditions• Lower oregrades• Deeper orebodies• Long permitting process

• Lack of people soon again ?!

Growth of resource base

Source: Crowson.

REM drawing: Kaianders Sempler.

Supply summary • Slow supply response –10-15 years to develop a mine.• Deposits deeper, lower grades and more remote areas.• State influences increase, has an important role.• China not the big crook – yet?• Development motor.• No scarcity of metals.• Lack of water/energy –climate impact.

Metal price index

Source: Raw Materials Group, Stockholm 2009.

Nickel drawing: Kaianders Sempler.

Nordic countries in a global context

European metal mines

Source: Raw Materials Data, Stockholm 2010.

• Small production – but European leaders.

• Exploration dynamic.

• Nordic countries one unit: Finland, Sweden, Norway.

• Model mining regimes.

• Government’s role important.

RMG Top companies 2008Controlling company Country Share of value of Cumulative

mine production (%) value (%) 1 Vale Brazil 6.8 6.82 BHP Billiton Australia 5.2 12.03 Rio Tinto UK 4.2 16.24 Anglo American UK 3.6 19.85 Freeport McMoran USA 2.6 22.56 Xstrata Switzerland 2.1 24.67 Codelco Chile 2.0 26.68 Norilsk Nickel Russia 2.0 28.5

21 Polish Copper Poland 0.6131 LKAB Sweden 0.4264 Boliden Sweden 0.22

115 Agnico-Eagle Canada 0.09234 Outokumpu Finland 0.03

Source: Raw Materials Data, Stockholm 2005.

Nordic top mines 2008Mine Metal Country Company Rank

mine1 Kiruna Fe Swe LKAB 532 Malmberget Fe Swe LKAB 1063 Tellnes Ti Nor NL Industries 283 4 Aitik Cu Swe Boliden 2855 Garpenberg Zn/Pb Swe Boliden 306 6 Zinkgruvan Zn/Pb Swe Lundin Mining 3867 Kristineberg Zn/Pb Swe Boliden 4608 Kemi Cr Fin Outokumpu 4859 Pyhäsalmi Zn Fin Inmet 500

10 Rana Fe Nor L Nilsen & söner 78111 Svartliden Au Swe Dragon 84712 Orivesi Au Fin Dragon 927

Source: Raw Materials Data, Stockholm 2005.

Mining projects

Source: Raw Materials Data, Stockholm 2007.

Bothnian cluster market shares

0 50 100

MiningExplorationSmeltingFlash smeltersDrill unitsSAG mills

Source: Noras, Ericsson 2006.

% estimate of total world

Mining cluster in northern Europe

Source: Noras, Ericsson 2006.

BarentsBothnian

Baltic

Nickel drawing: Kaianders Sempler.

Nordic countries• Small globally but leaders in Europe.• Revival with international companies.• Regional growth motor.• Cluster world leading.• Opportunities in new strategic minerals.• Political role under-played:

in Europe and globally.• R&D key to future.

Manganese drawing: Kaianders Sempler.

Policy implications

Manganese drawing: Kaianders Sempler.

Policy implications

• Policy - legislation – regulations.• Nordic countries act as one unit.• European leaders.• Development corridors/centres.• Support clusters.• Research & development.• Government’s role important.• Global/European role –

Mining for Development.• Long term efforts.

Global mining 2030 !

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• Metals still foundation for growth and wealth.• Deep sea deposits important.• China controls largest mining companies.• Nordic countries Europe’s treasure chest for minerals.• Mining remains in Nordic countries –manufacturing moves to Thrid World.• Nordic development model applied around the world.• New technologies makes low grade ores useful. • Water and energy lean technologies.

Tungsten drawing: Kaianders Sempler.

Raw Materials GroupMagnus Ericsson

PO Box 3127 SE-169 03 Solna, Sweden

Tel: +46-8-744 00 65 Fax: +46-8-744 0066

E-mail: magnus.ericsson@rmg.se

www.rmg.se

Kiitos/Tack!