Sustainable Arctic Development

Sustainable Arctic Development

Scott Minerd Chairman of Investments and Global Chief Investment Officer

October 2014

What is the opportunity in the Arctic?

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The Arctic spans eight nations.

Source: UNEP/GRID-Arendal

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The Arctic is an emerging market in a stable business environment.

2013 Ease of Doing Business Index (1=Best)

140

120

100

80

60

40

20

0 Arctic Average

Developed Market Average

China

Emerging Market Average

Brazil

India

Source: World Bank. Data as of 9/12/2014

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4

The Arctic contains 22% of the world’s undiscovered oil and gas.

Worldwide Undiscovered Oil and Natural Gas

Oil

Natural Gas

Arctic 13% Arctic 30%

Rest of World 87%

Rest of World 70%

Source: USGS, Guggenheim Investments.

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The Arctic is already a major mineral producer.

Arctic Share of Global Mineral Extraction

45% 40% 40%

35%

30% 26%

25%

25% 22% 20% 20% 15% 15% 11%

10%

10%

9%

5%

0% Palladium

Gem stones

Rare Earth Elements

Nickel

Diamonds

Platinum

Cobalt

Zinc

Tungsten

Source: The Coming Arctic Boom, Scott Borgerson (2013), IISS, Schroders, Guggenheim Investments.

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6

New shipping routes make that wealth accessible.

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7

As ice in the Arctic Sea melts‌ September Average Sea Ice Extent

9.0M

8.0M

sq. km

7.0M

6.0M

5.0M

4.0M

3.0M 1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Source: National Snow and Ice Data Center

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‌it opens the possibility for a surge in Arctic shipping traffic.

Projected Traffic Along the Northern Sea Route

Transit

100

CAGR = 6.5% The Northern Sea Route - East The Northern Sea Route - West

80

Million Tonnes

From Murmansk to Northern Sea Route's Starting Point 60

40

20

0 2016

2020

2030

Source: The Issues and Prospects of an Expanded Arctic Transportation Network, Alexei Konovalov (2012)

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9

The Northern Sea Route offers substantial time savings.

Distances and Days Saved from Kirkenes (Norway) and Murmansk (Russia)

Destination

Through Northern Sea Route

Via Suez Canal

Days Saved

Distance, Nm

Speed (Knots)

Days

Distance, Nm

Speed (Knots)

Days

Shanghai, China

12,050

14.0

37

6,500

12.9

21

16

Busan, Korea

12,400

14.0

38

6,050

12.9

19.5

18.5

Yokohama, Japan

12,730

14.0

39

5,750

12.9

18.5

20.5

Source: Tschudi Shipping Company A/S, cited in Lloyd’s, “Arctic Opening: Opportunity and Risk in the High North”.

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What needs to happen now?

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Infrastructure along shipping routes would support growing commerce.

Source: The Arctic Institute

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Some of the Arctic’s most pressing infrastructure needs include…

Roads

Railways

Airports

Ports

Pipelines

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What needs to happen next?

Enhance scientific and technical understanding

Prioritize sustainable development

Promote international cooperation

Develop Arctic infrastructure

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Disclosures and Legal Notice Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Aviation, Guggenheim Real Estate, LLC, Transparent Value Advisors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.

This material herein is for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. No representation or warranty is made by Guggenheim Investments or any of their related entities or affiliates as to the sufficiency, relevance, importance, appropriateness, completeness, or comprehensiveness of the market data, information or summaries contained herein for any specific purpose. The views expressed herein are subject to change based on market and other conditions. The opinions expressed may differ from those of other entities affiliated with Guggenheim Investments that use different investment philosophies. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy.

Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. Š2014 Guggenheim Partners, LLC. No part of this presentation may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC.

Guggenheim Partners

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