Vince Matthews

Director Colorado Geological Survey

The Global Scramble for Minerals and Energy— Its Impact on America

Mike King, Executive Director

YOUR Geological Survey !!!

Geology of Water Resources

Promote Mineral and Energy Resources

Colorado Avalanche Information Center

Geologic Hazards

Educate

Assist State and Federal Agencies

Everything you need to know about Mineral and Energy in Colorado

Production of Natural Resources is an Important Part of Colorado’s Economy

$11.6 billion

0

2

4

6

8

10

12

1412.2

8.2

6.4

Revenue comparison of Colorado’s Important Economic Sectors (2005)

Minerals &

Energy

Agricultu

r

e

$ B

illio

n

Tourism

48% 96

%

Distribution of Colorado Mineral & Energy Value 2010 ($ Billions)

CO2 0.3

Natural Gas

7.0

Oil1.8

Minerals1.5

Coal1.1

Production of Natural Resources has Always been an Important Part of Colorado’s Economy

Just off 51st Street

Boulder 1902

Overall ImpactsAmericans will suffer from natural-resource-driven inflation

Americans may see increasing shortages of critical raw materials

Conflicts may arise with multi-national corporations operating in America

Pressures will mount to develop more of America ’s natural resources

How do we turn lemons into lemonade?

0

200

400

600

800

1000

1200

1400

China U.S. India

Population Comparison

China

U.S.

India

Land Area Comparison

0

1

2

3

4

5

6

7

8

9

10

China U.S. India

China U.S.

India

3.2

13.8

1.1

0

2

4

6

8

10

12

14

China US India

GDP Comparison - 2007

China

U.S.

India

Source: World Bank

10.4

3.5

8.1

0

2

4

6

8

10

12

China US India

GDP Growth Comparison 2004-06

China

U.S.

India

Source: World Bank

World Electrical Growth 1990-2009

World 8.3 terawatts increase (+70%)

China/India/U.S. 4.7 terawatts

(56%)

World Electrical Growth

India 0.59

U.S. 0.97

China 3.1

World Electrical Growth

Africa

Asia-Pacific

Europe-Eurasia

Middle East

South & Central America

North America

Industrial minerals:

Cement 45 1Fluorspar 51 1Rare earths 96 1

Metals:Aluminum 24 1Antimony 86 1Copper 16 2 Gold 9 4Lead 32 1Magnesium 75 1Molybdenum 22 3Silver 12 3Steel, crude 31 1Tin 35 1Tungsten 87 1Zinc 26 1

China’s Share of World Mineral Production in 2005

% Rank

Source: USGS, Menzie and Tse

China’s Production and Consumption of Copper

82%

Importe

d!

Source: USGS, Menzie, et al

Global Impact

457%

Global Impact

Metal prices fall further than during Great Depression The price of key industrial metals has fallen further over the last four months than occurred during the worst years of Great Depression between 1929 and 1933, according to research by Barclays Capital.  By Ambrose Evans-Pritchard Last Updated: 7:29AM GMT 03 Dec 2008

Global Impact

231%

Colorado ImpactDifficulty in manufacturing of copper products

Increased copper thefts

Increased costs to the consumer

Copper mine reopening

Pueblo man electrocuted while trying to steal wiring 10/27/09

50% of all copper mined in the world was in just the last 25 years

Industrial minerals:

Cement 45 1Fluorspar 51 1Rare earths 96 1

Metals:Aluminum 24 1Antimony 86 1Copper 16 2 Gold 9 4Lead 32 1Magnesium 75 1Molybdenum 22 3Silver 12 3Steel, crude 31 1Tin 35 1Tungsten 87 1Zinc 26 1

China’s Share of World Mineral Production in 2005

Source: USGS, Menzie and Tse

% Rank

Leading Importers of Iron Ore—1980–2003

0

20

40

60

80

100

120

140

160

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

Millio

n m

etr

ic t

on

s

China Japan Republic of KoreaGermany United States

Sources: U.S. Geological Survey Minerals Yearbook; United Nations Conference on Trade and Development.

Consumption of Finished Steel

Source: USGS

China increased 8 times over

India increased 4 times over

Price of Scrap Iron

559%

China2005 – Opened 70,000 new supermarkets

2006 – Became #3 car manufacturer

2008 – Became #2 car market

2009 – Became #1 car manufacturer

2009 – Became #1 exporter

2009 – Became #1 car market

2009 – Became #2 economy

Ball mill gets real Leadville welcome

Image courtesy of Leadville Herald Democrat

U.S. molybdenum exports

21,900

34,500

41,400

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2003 2004 2005

Molybdenum Exports

MOLYBDENUM Price

997%

Ball mill gets real Leadville welcome

Image courtesy of Leadville Herald Democrat

MOLYBDENUM Price

997%

MOLYBDENUM Price

MOLYBDENUM Price

~ 100 Known Occurrences of Molybdenum

Precious & Base Metal Increases 01/03 - 04/13

Silver438%

Platinum

255%

Gold 297%

Palladium

284%

Zinc 497%

Lead 800%

Aluminum 144%

Nickel 630%

Tin 229%

Average Price Increase

379%

Selenium

Germanium

Iridium Manganese

Titanium

Cadmium Chromium

Cobalt

Tungsten

Vanadium

671%908% 719

%581%

531%

245%

1620%

8

Tellurium1123%

600%

2060%

193% 486%Magnesium362% 580%

Rhenium

685%

Antimony Bismuth

Average Price Increase

746%

Percentage Price Increase in the last two years

(1/09 – 1/11)

Increase in Coal Spot Price

17

37

0

5

10

15

20

25

30

35

40

2005

2004

2005 Coal Price Spot versus Contract

24.4

37

0

5

10

15

20

25

30

35

40

SpotContract

2007$29.75

“Chinese companies and their rivals are scouring the globe from Australia to Africa for access to the raw materials needed to sustain the Asian nation’s growth as commodity prices surge.”

--June 23, 2006 (Bloomberg)

Renewable EnergyWIND

- Neodymium- Molybdenum- Iron Ore SOLAR

- Cadmium- Tellurium- Indium-

Germanium- Gallium- Selenium- Silicon- Copper

Commodity Primary Sources Applications in Alternative EnergyAntimony China Thermoelectric/paraelectric materialsBarium China Thermoelectric/paraelectric materialsBismuth China, Mexico Thermoelectric/paraelectric materialsCobalt Kinshasa,Australia Photovoltaics (solar cells)Gallium China Photovoltaics, paraelectric materialsGermanium Belgium,Canada Photovoltaics (solar cells)Indium China, Canada Solar cells, thermo/paraelectricManganese Gabon, S. Africa PhotovoltaicsNickel Canada Fuel cellsPlatinum group South Africa Fuel cells, para/thermoelectric mtrlsRare Earths China Fuel cells, para/thermoelectric mtrlsScandium China, Russia Thermoelectric/paraelectric materialsSelenium Canada Solar cells, thermoelectric materialsStrontium Mexico Thermoelectric/paraelectric materialsTantalum Brazil Thermoelectric/paraelectric materialsTellurium Belgium, Germany Solar cells, thermoelectric, Tin Peru Thermoelectric materialsTitanium Australia, S. Africa Solar cellsVanadium Czech Rep., S. Africa Fuel cellsZinc Canada, Mexico Photovoltaics, fuel cells, thermoelectric

Strategic and Critical Materials with uses in Alternative Energy applicationsfor which the U.S. is dependent on imports for 50% or more of consumption

0

20

40

60

80

100

120

Percent imported

REE = Rare Earth Elements = 15 + 2 neodymium, lanthanum, terbium, dysprosium,cerium,europium,yttrium,praesodymium

praesodymium

cerium

lanthanum

neodymium

samarium

gadolinium

Toyota Prius

Rare Earths

“The biggest user of rare earths of any object in the world!”

China Grabs the Market

China Controls 97.3% of the Market

HONG KONG — China is set to tighten its hammerlock on the market for some of the world’s most obscure but valuable minerals.

--August 31, 2009 (The New York Times )

World faces hi-tech crunch as China eyes ban on rare metal exports –August 24, 2009 (London Telegraph)

China Considers Rare-Earth Reserve in Inner Mongolia –September 2, 2009 (Bloomberg News)

As hybrid cars gobble rare metals, shortage looms –August 31, 2009 (Reuters)

22% Imported

Cement producers

1. China

2. India

3. U.S.

China Consumes ½ of all the concrete in the world

20032004

U.S. cement manufacturing is 81% foreign owned

( 2000 = 100 )

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100

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600

700

800Ja

n-00

May

-00

Sep-

00Ja

n-01

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-01

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01Ja

n-02

May

-02

Sep-

02Ja

n-03

May

-03

Sep-

03Ja

n-04

May

-04

Sep-

04Ja

n-05

May

-05

Sep-

05Ja

n-06

May

-06

Sep-

06Ja

n-07

May

-07

Sep-

07Ja

n-08

May

-08

Sep-

08

Energy Fertilizers Agriculture Metals/minerals

Haniotis, 2008, Conference on ‘‘The Food Crisis” of 2008: Lessons for the Future”, Imperial College London

Fertilizers

EnergyMetals/Minerals

Agriculture

Increase in Price of Commodities

Fertilizers - Dollars per ton

$165 per ton

$853 per ton

Source: USDA

Sources: USGS Data Series 140– Graphing: mazamascience.com

U.S. Energy Split

Oil

Natural Gas

Coal

Ura

niu

mRe

new

able

s

Rene

wab

les

Tran

spor

tatio

n

Heat

Electricity

Commodity Percent of U.S. Percentage Price Percent Imported energy supply Increase  2003-07 (2007 Net)

Coal 24 381 0

Oil 37 306 67

Uranium 9 481 89

Natural Gas 24 206 16

Hydroelectric 2.5 - -Biomass 3.6 - -Solar .1 - -Wind .5 - -Geothermal .3 - -

93%

7%

Source: EIA, Annual Report 2009

U.S. Energy Split

Hydro Generation – U.S.

World Coal Consumption

COAL Consumption- China

China’s Production and Consumption of Coal

Coal Spot Price 5/07 – 7/10

China begins net import of coal

12/06

$38 per ton

$140 per ton

+ 63%

COAL Consumption- India

14%

imported!

COAL Consumption- U.S.

0%

imported!

China/U.S. Coal

62% of world consumption.

58% of world production.

19 % Russia

29 % United States

62% 0f World Coal Reserves

14 % China

COAL Production - Colorado

World Nuclear Consumption

NUCLEAR- China

NUCLEAR- India

China : 32 new plants by 2020

4 per year through 2015

9 GW to 60 GWIndia: 17 new reactors by 2012

NUCLEAR- U.S.The last nuclear power plant came on line in 1996

Since then has U.S. nuclear generation --

Increased?Decreased?Remained flat?

NUCLEAR- U.S.

Last nuclear power plant came online.

And, the largest nuclear power generator in the world?

The United States generates as much

nuclear energy as—

France, Germany, Spain, Sweden, United Kingdom

combined!

World Nuclear Power Consumption

436 Plants Operating

55 Under Construction

50 - 60 Countries Applied to IAEA

The world’s existing 436 nuclear reactors currently need 180 million pounds of uranium each year.

0

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180

Million Pounds

Needed Produced

80 million pound gap

Con

sum

ptio

n

Pro

duct

ion

Source: Cameco

World Oil Consumption

OIL CONSUMPTION- China

Source: BP

56%

Imported!

OIL- CONSUMPTION India

Source: BP

76%

Imported!

OIL- U.S. Consumption

61% imported!

Oil Production - Colorado

OIL- U.S. Production 1900 - 2009

Source: EIA

44%Less

5% 19481% 1924

10% 1959

20% 1969

30% 1975

40% 1980

50% 1986

60% 1990

70% 1995

80% 2000

90% 2004

50% of the OILConsumed by theHuman RaceUsed Since 1986

90% of the OILConsumed by theHuman RaceUsed Since 1959

Start 1859

(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2008)Copyright J. D. Hughes GSR Inc, 2008

1094 Billion barrelsConsumed

85% of the world’s oil comes from just 20of the 65 producing countries

54 of the 65 producing countries are in decline

Mexico’s declining production at Cantarell field accelerating

Mexican state oil company Pemex said Wednesday that production at its Cantarell oil field, the world’s second-largest, will drop faster than expected. 08/03/06

2005 producing 2.2 million barrels per day2009 producing 0.6 million barrels per day

In only five years

At 5% decline rate

The world will need

19 million barrels!

2007-- IEA says existing fields have 3.7% decline2008-- IEA says existing fields have 6.7% decline

Declines never sleep!

1 of 65 producing countries

02000400060008000

1000012000

USA

USA

Peak 1970 Source: BP Annual Energy Report

0

5000

10000

15000

20000

25000

USA

MexicoNorwayUKIndonesia

Peak 1997

5 of 65 producing countries

Source: BP Annual Energy Report

0

5000

10000

15000

20000

25000

30000

35000

45 small producers

USA

Peak ~2000

50 of 65 producing countries

Source: BP Annual Energy Report

0

10000

20000

30000

40000

50000

60000

45 small producers

USA

61 of 65 producing countries BrazilAlgeriaCanadaChina

KuwaitUAENigeriaLibya

IraqVenezuelaIran Peak 2004

Source: BP Annual Energy Report

0

10000

20000

30000

40000

50000

60000

70000

45 small producers

USA

QatarAngola

63 of 65 producing countries

Flat 2004

Source: BP Annual Energy Report

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

0

10000

20000

30000

40000

50000

60000

70000

80000

45 small producers

USA

Saudi Arabia

64 of 65 producing countries

Flat?Source: BP Annual Energy Report

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

FSU Former Soviet Union nations

45 small producers

USA

Saudi ArabiaFSU

65 of 65 producing countries Slight Increase

Source: BP Annual Energy Report

Exporting 1.0 million barrels of oil per day Importing

0.2 million barrels of oil per day

Crude Oil Prices

Oil shale is being seriously re-appraised.

World Natural Gas Consumption

NATURAL GAS CONSUMPTION - China

4% imported!

NATURAL GAS CONSUMPTION - India

24%

imported!

NATURAL GAS CONSUMPTION - U.S.

8%

imported!

NATURAL GAS Production - Colorado

Natural Gas

Clean

Burning!

Cheap!

Unlimited Supply!

America’s Silver Bullet?

Low Carbon Footprint!

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Imports

Electrical

Natural Gas Electrical Generation vs Natural Gas Imports

Electricity from Natural Gas

Natural Gas Imports

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

Jan-

95

Jul-9

5

Jan-

96

Jul-9

6

Jan-

97

Jul-9

7

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Mill

ion C

ub

ic F

eet

of

Gas

U.S. Monthly Natural Gas Production

Well Completions8,900 30,180

Average Initial ProductionIP

286

528

0

100

200

300

400

500

600

1998 2007

Avg Reserves per WellReserves

439

1128

0

200

400

600

800

1000

1200

1998 2007

Rockies Trends

Natural Gas – America’s Silver Bullet?

America’s Silver Bullet?

(data copyright IHS Energy, Diagram prepared and copyright by EOG Resources Inc., 2006)

60%FromMostRecentFOURYEARS

Natural Gas – America’s Silver Bullet?

Oil

Geothermal

SolarWind

Coal

Natural Gas

Efficiency

Conservation

Hydro Nuclear

Biomass

Geothermal Energy

Direct Use

Electric Generation

Geoexchange Heat Pumps

Below the 690 apartments—not to mention the gyms, bars, dry cleaners and movie theater—that make up the 15-acre Linked Hybrid residential complex in Beijing, China, are 660 geothermal wells that eliminate the need for air conditioners and boilers. Each well funnels water 325 feet beneath the ground into bedrock, where the constant 55ºF temperature either heats or cools it before it’s pumped back to the surface and piped through the building’s concrete floors. The system will reduce energy costs by up to 30 percent in the summer and up to 40 percent in the

winter.

The Escalator DilemmaNatural Forces are Working Against Our Goals

Deplet

ion of

Natu

ral R

esou

rces

Demand for Energy

Dem

and

Greenhouse G

as

Reduction

The future is here! Are we ready?

“The world is a football field now and you’ve got to be sharp to be on the team which plays on that field.

If you’re not good enough, you’re going to be sitting and watching the game. That’s all.”

--Rajesh Rao, founder and CEO of Dhurva Interactive

The End!

Of the talk, that is.