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15th Global iron ore and steel forecast March 21st 2012 Perth WA
China, Indiaand theworld market balance
Magnus Ericsson
孟瑞松
Global iron ore production
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Global iron ore gradesGlobal iron ore grades
Chi dChinese ore grades
S R M t i l D t I 2011
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Chinese iron ore imports
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Global steel growth 2030Av. Growth, % av. Growth, %
Country/Region 2000 2010 2000 ‐ 2010 2015 2020 2025 2030 2010 ‐ 2030China 127 236 625 658 17.51 902 671 1 152 062 1 322 640 1 518 473 4.1
6.00 5.00 2.80 2.80 4.05India 26 924 66 848 9.96 102 854 158 254 243 493 374 644 9.0India 26 924 66 848 9.96 102 854 158 254 243 493 374 644 9.0
9.00 9.00 9.00 9.00 9.00Japan 106 444 109 600 1.02 121 007 121 007 121 007 121 007 0.5
2.00 0.00 0.00 0.00 0.50South Korea 43 107 58 453 3.47 64 853 69 518 73 064 76 791 1.4
2.00 1.00 1.00 1.00 1.38Emerging Pacific Rim 28 169 40 304 3.91 49 036 62 584 79 874 112 028 5.3
4.00 5.00 5.00 7.00 5.25North America 135 353 111 798 ‐0.52 112 920 114 054 114 969 114 969 0.1
0.20 0.20 0.00 0.00 0.14South America 39 110 43 775 1.59 53 259 67 973 86 753 121 676 5.34 % China
4.00 5.00 5.00 7.00 5.25Europe 184 925 176 982 ‐0.22 176 982 176 982 176 982 176 982 0.0
0.00 0.00 0.00 0.00 0.00C.I.S 98 489 108 425 1.23 119 710 132 169 138 911 145 997 1.5
2.00 2.00 1.00 1.00 1.50MENA i l T k 30 074 57 413 6 65 79 020 100 851 127 489 155 109 5 1
9 % India
MENA incl. Turkey 30 074 57 413 6.65 79 020 100 851 127 489 155 109 5.15.00 5.00 4.00 4.00 5.10
RoW (Africa & Oceania) 16 690 16 839 0.48 17 264 22 034 28 657 40 193 4.50.50 5.00 7.00 7.00 4.48
Total World 836 521 1 416 095 5.47 1 799 577 2 177 489 2 513 840 2 957 870 3.3
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Global iron ore demandMt
Total world3500
4000
Chi2500
3000
3500
Rest of world
China
1500
2000
Rest of world
0
500
1000
0
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Raw Materials Groupp• Raw Materials Data, Metals/Coal/Iron Ore• Strategy development
– Mining companies, equipment & service providersproviders
• Mineral policy, investment promotionGovernments International organisations– Governments, International organisations
• Pre-feasibility/Feasibility studies– Financial institutions companiesFinancial institutions, companies
• Merged with Intierra to form IntierraRMG
Outline
• India.• China• Conclusions• Conclusions.
I diIndia
Rare earths drawing: Kaianders Sempler.
061030 Anton Löf
Indian steel stagesgPoint of Point of
Peak PointPoint of SaturationPoint of Saturation
Singapore JapanEU
Point of InflectionPoint of Inflection
aEU
USA
Japan
06
China
Trigger PointTrigger Point
Singapore
Australia
EU 15
2000
-06
India0 100 200 300 400 500 600 700 800
India
China
USA
0 100 200 300 400 500 600 700 800Per capita in KG
India steel industry evolutionIndia steel industry evolution
2009 2020 2030Steel production (Mt) 56 6 110 222Steel production (Mt) 56.6 110 222Iron ore demand (Mt) 142 175 355I d ti (Mt) 257 411 832Iron ore production (Mt) 257 411 832Population (million) 1 210 1 480 1 800Steel use per capita (kg) 47 74 123
Indian problemsIndian problems• Sinking ore grades.g g• Increase operation scale.
L i ti
• High alumina problems in BF
• Logistics.
• High alumina problems in BF.• Beneficiation of magnetites.• Iron ore exporters vs steel companies.
China• Exploration • StructureStructure• Production• Projects
061030 Anton Löf
Global exploration16 30Billion USD
Global explorationBillion RMB
12
14
16
25
30Billion USD Billion RMB
8
10
15
20
Total worldChina
2
4
6
5
10
02001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
Sources: Total world MEG, China Ministry of Land and Resoruces.
Chinese exploration 1Chinese exploration 1
Year 2009 total 30.30 billion RMB
Central govLocal govPrivate
Source: MOLAR 2010.Source: MOLAR 2010.
Chinese exploration 2Chinese exploration 2
Coal
Year 2009 total 26.11 billion RMB
GoldCopperIron oreIron orePb/ZnUraniumTungstenOther
Source: MOLAR 2010.Source: MOLAR 2010.
Chinese exploration
Major exploration efforts• Major exploration efforts.• World’s largest exploration spender.g p p• 400 MUSD iron ore 2009.
N t lt• No great results.
061030 Anton Löf
Global iron ore production
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
Chinese structure
F t d t t• Fragmented structure.• Many small mines.• Low grades, under ground.• Vertical integration.Vertical integration.
061030 Anton Löf
Iron ore production costsType of mining
Efficientopen pit
Difficultopen pit
Efficientopen pit
Difficultopen pit
Costs (USD/t) 5 12 10 20 5 12 10 20(USD/t) 5-12 10-20 5-12 10-20
Type of oreHigh grade
DSOHigh grade
DSOBeneficiation
necessaryBeneficiation
necessaryCosts (USD/t) 5-12 5-12 15-20 15-20
Total range O ( S / ) * **FOB (USD/t) 10-24 15-32 30-56 * 60-105 **
Freight to China (USD/t) 20-30 20-30 20-30 20-30(USD/t) 20 30 20 30 20 30 20 30Cost CFR China 30-55 35-65 50-85 80-135
Source: Jacques Astier, Mineral Economics 2011, forthcoming.
Chinese production volumesUSD/t
Sources: J. Astier, RMG.
061030 Anton Löf
Sources: J. Astier, RMG.
Chinese cost curvesUSD/t
Sources: J. Astier, RMG.
061030 Anton Löf
Sources: J. Astier, RMG.
Chinese production costs
• Small mines most < 0.5-1 Mt.• Max total volume
300- 400 Mt300- 400 Mt.• Marginal cost of production
>140-150 USD/t• Deeper underground.
061030 Anton Löf
Chinese foreign expansion
124
5
17
0.1
24
0.5
World production
Ferro-Chrome
1048
124
370
17
102
24ChineseproductionPlanned Chinese
Bauxite
Iron ore
14 0.64 0.27
foreign expansionIron ore
Copper
0% 50% 100%
Source: BGR 2007.
Chinese foreign projectsChinese foreign projects
.s
Dat
a, 2
011
Raw
Mat
eria
lsSo
urce
: R
061030 Anton Löf
Iron ore projects• Operating mines
Australia 19.3Australia 19.3Peru 7.0Brazil 1.7Canada 0.8 28.8
• ProjectsAustralia 65Peru 10Sierra Leone 3 78Sierra Leone 3 78Total ~ 110 MtSource: Raw Materials Data, 2011.
061030 Anton Löf
,
Chinese projects in AfricaCountry Metal Company Share % TypeCountry Metal Company Share % Type
Awaso Ghana Baux Bosai Min. 80 Oper.Simandou Guinea Fe Chinalco 45 Project Forécariah Guinea Fe China Int F 50 ProjectForécariah Guinea Fe China Int. F. 50 Project Bong Liberia Fe China Union 100 Project Tonkolili Sierra L. Fe Shandong 25 Project Avantuur South Afr Mn Baosteel 11 ProjectAvantuur South Afr. Mn Baosteel 11 Project Dilokong South Afr. Cr East Asia Met. 85 Oper.Weziswe South Afr. PGM JNMC 45 ProjectBaluba Zambia Cu CNMC 72 Oper D
ata,
201
1.
Baluba Zambia Cu CNMC 72 Oper. Chambishi Zambia Cu CNMC 85 Oper.Gwabw/Njali Zambia U JNMC 30 Project
w M
ater
ials
D
Muliashi Zambia Cu CNMC 72 Oper.Munali Zambia Cu CNMC 50 Oper.Lalapnazi Zimbabwe Cr Sinosteel 100 Oper. So
urce
: Raw
p p S
Chinese FDI• Foreign expansion slow - not
continuous.• Will increase in the future.• Long term serious problem
for China.for China.• Focus control over imports .
Not reach internal goals of• Not reach internal goals of control over imports.
ChinaChina• Largest miner –many small, high cost mines.• Engine of demand –reduced growth pace
• Largest explorer since 2010. Poor results.reduced growth pace.
• Foreign expansion slow, not continuous.• Continued high demand for quality ore.
061030 Anton Löf
g q y
World marketWorld marketrs
Sem
pler
.ra
win
g: K
aian
deSe
leni
um d
Crude steel growth patternCrude steel growth pattern
China and India steelproductionsteelproduction
1 600 000tonnes
1 200 000
1 400 000 Chinatonnes
800 000
1 000 000
400 000
600 000
India
0
200 000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
India
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Steel: two key questions
• Where will China end up?– S. Korea: 974 kg/capS. Korea: 974 kg/cap– USA: 203 kg/cap
• How fast will India grow?• How fast will India grow?– As China 21 % /year (2000 – 2007)
Slower faster– Slower - faster
Restrictions in iron ore trade• Exercised export duties
India: 10 % lump 20 % fines– India: 10 % lump, 20 % fines– China: 10 %Viet Nam: 20 %– Viet Nam: 20 %
– Argentina: 10 %
• Exercised quantitative restrictions:• Exercised quantitative restrictions:– India: state trading enterprisesMalaysia non automatic export licence– Malaysia: non‐automatic export licence
Source: Universität Bonn
ConclusionsConclusions• Demand outlook still strong.• China, later India will drive demand.• Supply constraints increasingSupply constraints increasing.• India reduced exports.
Chi i• China overseas expansion.• Prices will fall but remain on a high level.• Rare earths not a problem – Chinese import dependency for iron ore and copper is!
061030 Anton Löf
p y pp
Thank you !Magnus Ericsson
PO B 3127
y
PO Box 3127
SE‐169 03 Solna, Sweden
Tel: +46‐8‐744 00 65
Fax: +46‐8‐744 0066
www.rmg.seREE drawing: Kaianders Sempler.
Metals first isolated in Sweden/Finland
061030
Sweden/FinlandPlease visit www.rmg.se