UNCTAD Secretary-General's
High-Level Multi-Stakeholder Dialogue on Commodities
in the context of UNCTAD XII
28-29 January 2008
Trends in Mining
Present & Future
By
Mr. Magnus Ericsson
President, Raw Materials Group, Sweden
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
UNCTAD
Dialogue on Commodities
Geneva 28-29 January 2008
TRENDS IN
MINING –
PRESENT &
FUTURE
Manganese drawing: Kaianders Sempler.
Magnus Ericsson
GLOBAL MINING GEOGRAPHY
GLOBAL MINING –
GEOGRAPHY 2006
1. China 10.1%
GLOBAL MINING –
GEOGRAPHY 1990
GLOBAL MINING –
GEOGRAPHY
70
% of global mining
60
50
40
30
20
10
0
1850
1870 1890
1910 1930
1950
1970 1990
VALUE OF GLOBAL MINING
1995 - 2006
Billion USD
350
300
250
200
150
100
50
0
1995
2000
2001
2002
Sources: Raw Materials Data, 2007.
2003
2004
2005
2006
METALS VALUE
AT MINE
YEAR 2005 TOTAL
6%
7%
~ 250 billion USD
4%
2%
11%
18%
23%
29%
Source: Raw Materials Group, Stockholm 2006.
Gold
Iron ore
Copper
Nickel
Zinc/lead
PGMs
Bauxite
Other
VALUE OF
WORLD MINING
YEAR 2005 TOTAL
~ 910 billion USD
14%
27%
51%
2% 6%
Source: Raw Materials Group, Stockholm 2006.
Metals
Industrial minerals
Diamonds
Coal & uranium
Crushed rock
SPECIAL PROPERTIES
OF METALS
•
•
•
•
•
•
High strength
Affordable cost
Conduct heat and electricity
Beautiful
Undestructable
Mines must be located at source
Source: T. Graedel, Yale University.
AGENDA
•
•
•
•
Demand
Exploration
Mining
Conclusions
DEMAND
Vanadium drawing: Kaianders Sempler.
DEMAND
SUMMARY
• Extended period of growth.
• China, India engines but East
Europe, CIS also strong.
• Infrastructure & personal use.
• No (?) signs of weakening but
it will come to an end.
Vanadium drawing: Kaianders Sempler.
EXPLORATION
Nickel drawing: Kaianders Sempler.
GLOBAL EXPLORATION
1995 - 2008
Projected
Billion USD
12
10
8
6
4
2
0
1995
1997
Sources: RMG, MEG.
1999
2001
2003
2005
2007
GLOBAL EXPLORATION
Sources: RMG, MEG.
EXPLORATION
SUMMARY
• Exploration increasing, peak
soon reached.
• Exploration more difficult –
M&A in favour.
• Politically secure regions in
favour.
• New technologies necessary.
Nickel drawing: Kaianders Sempler.
• Government support !?
MINING
REM drawing: Kaianders Sempler.
MINING COMPANIES
Total 4 100 companies
149
957
Majors
Medium & small
Juniors
3067
Source: Raw Materials Data, Stockholm 2007.
CONTROL OF MINING
Metals total 332 billion USD
83
17
Source: Raw Materials Data, Stockholm 2007.
Majors
Medium & small
Juniors
Ira
n,
Po
Ru
I
l
ss sl am a nd
ian
ic
R
Fe
de ep.
ra t
ion
Br
a
Sw zi l
ed
en
Ch
ina
Ve Ind i
a
ne
zu
ela
Me
xi
Uk c o
rai
n
Ca e
na
da
Un
C
u
Co
i
ng te d S ba
o,
t
De ate s
m.
R
Au ep.
str
al i
a
Ne
Ch
w
Ca
ile
l
So e don
uth
ia
Ka Afri
c
za
kh a
s ta
n
P
Co eru
lo
Ind m bia
on
e
Na s ia
mi
Pa
bi
B
pu
a N otsw a
an
ew
Ta
Gu a
nz
ine
an
ia,
Za a
Un
mb
ite
d R ia
M o ep.
ng
oli
a
Ma
Gu li
ine
Gh a
an
Ga a
Ar bon
ge
nti
na
TNCs IN GLOBAL MINING
100
90
80
70
60
50
40
30
20
10
0
0
0
Sources: UNCTAD, based on Raw Materials Data, 2007.
PRODUCTION BY
FOREIGN COMPANIES
Bauxite
Copper
Gold
Zinc
Nickel
Iron ore
0
10
20
30
40
50
60
% of world
70 production
MINING M&A NOV 2007
LME Index
billion USD
250
4500
4000
200
3500
3000
150
2500
2000
100
1500
1000
50
500
0
0
1998
1999
Source: Raw Materials Data.
2000
2001
Value
2002
2003
BHPB + Rio
2004
2005
LMEX
2006
2007
% of total value of non-fuel mineral productionat the mine stage
35
30
25
20
15
10
5
0
1990
1995
2000
Largest
2003
3 largest
2004
2005
10 largest
2006
Source: Raw Materials Group, Stockholm 2007.
CORPORATE
CONCENTRATION
RMG TOP COMPANIES 06/07
Metals
Controlling company
Country Share of value of
Cumulative
mine production (%) value (%)
1 CVRD/Inco
Brazil
2 BHP Billiton
Australia
3 Anglo American
UK
4 Rio Tinto/Alcan
UK
5 Freeport/Phelps Dodge USA
6 Codelco
Chile
7 Xstrata/Falconbridge Switzerland
8 Norilsk Nickel
Russia
9 Barrick
Canada
10 Grupo Mexico
Mexico
5.2
4.6
4.5
4.4
3.4
3.4
3.0
2.7
1.8
1.6
Source: Raw Materials Data.
Source: Raw Materials Data, Stockholm 2005.
5.2
9.8
14.3
18.7
22.1
25.5
28.5
31.2
33.0
34.6
Rank 2005
4 (13)
1
2
3 (~100)
10 (7)
5
14 (11)
6
15
8
RMG TOP COMPANIES
Metals & Coal
Controlling company
1 Rio Tinto
2 BHP Billiton
3 Anglo American
4 State of India
5CVRD
6 Peabody Energy
7 Codelco
8 State of Poland
9 Arch Coal
10 RWE
Country Share of value of
mine production
(%)
Cumulative
value
(%)
UK
Australia
UK
India
Brazil
USA
Chile
Poland
USA
Germany
3.5
6.8
9.7
12.5
14.4
16.2
17.6
18.9
20.1
21.2
Source: Raw Materials Data.
Source: Raw Materials Data, Stockholm 2005.
3.5
3.2
2.9
2.8
1.9
1.9
1.4
1.3
1.1
1.1
RMG TOP COMPANIES 07
Metals
Controlling company
1 BHP/Rio
2 CVRD
3 Anglo American
4 Freeport
5 Codelco
6 Xstrata
7 Norilsk Nickel
8 Barrick
9 Grupo Mexico
10 Newmont
Country Share of value of
Cumulative
mine production (%) value (%)
Australia
Brazil
UK
USA
Chile
Switzerland
Russia
Canada
Mexico
USA
8.7
5.2
4.5
3.4
3.4
3.0
2.7
1.8
1.6
1.1
Source: Raw Materials Data.
Source: Raw Materials Data, Stockholm 2005.
8.7
13.9
18.4
21.5
25.5
28.5
31.2
33.0
34.6
35.7
Rank 2006
2 (4)
1
3
5
6
7
8
9
10
11
VERTICAL INTEGRATION
Top 20 miners’ control of refining
90
80
70
60
50
1995
40
2005
30
20
10
0
Zn
Cu
Al
Source: Raw Materials Data, Stockholm 2007.
Ni
CORPORATE
CONCENTRATION
Nickel
Norilsk
Inco
BHP Billiton
Molybdenum
Codelco
Chromite
Phelps Dodge Grupo Mexico
Euroasian Kermas
Titanium
Rio Tinto
Xstrata
Iluka
Anglo
Tantalum
Sons of Gwalia
Platinum
Anglo
Palladium
Cabot
Impala
Norilsk
0
Norilsk
Anglo
20
40
Source: Raw Materials Data 2007.
60
Impala
80
100
% of world
production
GEOGRAPHICAL
CONCENTRATION
Cobalt
Congo
Canada Zambia
Chrome
South Africa
Molybdenum
USA
Tin
Kazakhstan India
Chile
Indonesia
China
China
Peru
Tantalum
Australia
Platinum
Mocambique Brazil
South Africa
Tungsten
Russia
China
0
Canada
Canada Australia
20
40
Source: Raw Materials Data 2007.
60
80
100
% of world
production
IRON ORE DEMAND
Domestic/import
Import
dependence
South Korea
100 %
USA
23 %
India
0%
Russia
11 %
Japan
100 %
EU 27
88 %
China
58 %
0
100
200
300
Source: UNCTAD, RMG 2006.
400
500
Mt iron ore
CHINESE FOREIGN
EXPANSION
Ferro5
chrome
0.1 0.5
World production
124
Bauxite
Iron ore
17
1048
Copper
370
14
0%
Source: BGR 2007.
50%
0.64
24
Chinese
production
Planned Chinese
foreign expansion
102
0.27
100%
% of world
production
MINING
SUMMARY
• Slow supply response –
but will catch up.
• Increasing competition:
M&A activity at peak.
Middle ground disappearing.
China & India enter the scene.
Vertical integration/diversification
• More state intervention.
• Speed of change increase.
REM drawing: Kaianders Sempler.
CONCLUSIONS
Tungsten drawing: Kaianders Sempler.
CONCLUSIONS
• Corporate concentration increasing.
• More M&A necessary to meet societal demands:
– Exploration
–R&D
• Emerging markets’ companies entering the race.
• Window of opportunity.
• China/India - we have only seen the beginning.
• Government interest increasing.
• Outsiders: Steel companies coming in!
WORLD MINING to 2030
% of global mining
70
Europe
60
USA
50
China
40
30
USSR/CIS
20
Australia/Canada
10
0
1850 1870 1890 1910 1930 1950 1970 1990 2010 2030
Sources: Raw Materials Data, Stockholm 2004 and Sames.
Forecast
6 resource rich developing
countries
THANK YOU !
Raw Materials Group
Magnus Ericsson
PO Box 3127
SE-169 03 Solna
Tel: +46-8-744 00 65
Fax: +46-8-744 0066
E-mail: magnus.ericsson@rmg.se
Tungsten drawing: Kaianders Sempler.
www.rmg.se
EXPLORATION vs M&A
1995 - 2007
Billion USD
250
200
150
100
50
0
1995
1997
Sources: RMG, MEG.
1999
2001
2003
2005
2007