15th Global iron ore and steel forecast March 21st 2012 Perth WA
China, India and the world market balance Magnus Ericsson
孟瑞松
Global iron ore production
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Lรถf
Global iron ore grades
Chi Chinese ore grades d
S Source: R Raw M Materials t i l Data D t Iron I ore, 2011. 2011 061030
Anton Lรถf
Chinese iron ore imports
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Lรถf
Global steel growth 2030 Country/Region China
2000 127 236
Av. Growth, % 2010 2000 ‐ 2010 625 658 17.51
2015 902 671 6.00 102 854 102 854 9.00 121 007 2.00 64 853 2.00 49 036 4.00 112 920 0.20 53 259 4.00 176 982 0.00 119 710 2.00 79 020 79 020 5.00 17 264 0.50 1 799 577
2020 1 152 062 5.00 158 254 158 254 9.00 121 007 0.00 69 518 1.00 62 584 5.00 114 054 0.20 67 973 5.00 176 982 0.00 132 169 2.00 100 851 100 851 5.00 22 034 5.00 2 177 489
India
26 924 26 924
66 848 66 848
9.96
Japan
106 444
109 600
1.02
South Korea
43 107
58 453
3.47
Emerging Pacific Rim
28 169
40 304
3.91
North America
135 353
111 798
‐0.52
South America
39 110
43 775
184 925
176 982
4 % China ‐0.22 9 % India
C.I.S
98 489
108 425
1.23
MENA i l T k MENA incl. Turkey
30 074 30 074
57 413 57 413
6 65 6.65
RoW (Africa & Oceania)
16 690
16 839
0.48
836 521
1 416 095
5.47
Europe
Total World
1.59
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Löf
2025 1 322 640 2.80 243 493 243 493 9.00 121 007 0.00 73 064 1.00 79 874 5.00 114 969 0.00 86 753 5.00 176 982 0.00 138 911 1.00 127 489 127 489 4.00 28 657 7.00 2 513 840
2030 1 518 473 2.80 374 644 374 644 9.00 121 007 0.00 76 791 1.00 112 028 7.00 114 969 0.00 121 676 7.00 176 982 0.00 145 997 1.00 155 109 155 109 4.00 40 193 7.00 2 957 870
av. Growth, % 2010 ‐ 2030 4.1 4.05 9.0 9.00 0.5 0.50 1.4 1.38 5.3 5.25 0.1 0.14 5.3 5.25 0.0 0.00 1.5 1.50 51 5.1 5.10 4.5 4.48 3.3
Global iron ore demand Mt
4000
Total world
3500 3000 2500
Chi China
2000 1500
Rest of world
1000 500 0
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Lรถf
Raw Materials Group p • Raw Materials Data, Metals/Coal/Iron Ore • Strategy development – Mining companies, equipment & service providers • Mineral policy, investment promotion – Governments, Governments International organisations • Pre-feasibility/Feasibility studies – Financial institutions, institutions companies • Merged with Intierra to form IntierraRMG
Outline • India.
• China • Conclusions. Conclusions
I di India
Rare earths drawing: Kaianders Sempler.
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Anton Lรถf
Indian steel stages g Peak Point Point of Saturation Singapore
Japa n
EU
USA Point of Inflection
-0 6
00
20
Trigger Point
Ch
ina
Japan EU 15 Australia Singapore USA
India
China India 0
100
200
300
Per capita in KG
400
500
600
700
800
India steel industry evolution 2009
2020
2030
Steel production (Mt) 56 6 56.6 Iron ore demand (Mt) 142 I Iron ore production d ti (Mt) 257 Population (million) 1 210 Steel use per capita (kg) 47
110 175 411 1 480 74
222 355 832 1 800 123
Indian problems • Sinking g ore grades. g
• Increase operation scale. • Logistics. L i ti • High alumina problems in BF. BF • Beneficiation of magnetites. • Iron ore exporters vs steel companies.
China • Exploration • Structure • Production • Projects
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Anton Löf
Global exploration 16
Billion USD
30
14
Billion RMB
25
12 20
10 8
15
6
10
4 5
2 0
0 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources: Total world MEG, China Ministry of Land and Resoruces.
Total world China
Chinese exploration 1 Year 2009 total 30.30 billion RMB
Central gov Local gov Private
Source: MOLAR 2010.
Chinese exploration 2 Year 2009 total 26.11 billion RMB
Coal Gold Copper Iron ore Pb/Zn Uranium Tungsten Other Source: MOLAR 2010.
Chinese exploration • Major exploration efforts efforts.
• World’s largest g exploration p spender. p • 400 MUSD iron ore 2009. • No N greatt results. lt
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Anton Löf
Global iron ore production
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Lรถf
Chinese structure • Fragmented F t d structure. t t • Many small mines. • Low grades, under ground. • Vertical integration.
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Anton Löf
Iron ore production costs Type of mining Costs (USD/t) Type of ore Costs (USD/t) Total range FOB O (USD/t) ( S /) Freight to China (USD/t) Cost CFR China
Efficient open pit
Difficult open pit
Efficient open pit
Difficult open pit
5-12 5 12 High grade DSO
10-20 10 20 High grade DSO
5-12
5-12
15-20
15-20
10-24
15-32
30-56 *
60-105 **
20-30 20 30
20-30 20 30
20-30 20 30
20-30 20 30
30-55
35-65
50-85
80-135
5-12 5 12 10 20 10-20 Beneficiation Beneficiation necessary necessary
Source: Jacques Astier, Mineral Economics 2011, forthcoming.
Chinese production volumes USD/t
Sources: J. Astier, RMG. 061030
Anton Lรถf
Chinese cost curves USD/t
Sources: J. Astier, RMG. 061030
Anton Lรถf
Chinese production costs • Small mines most < 0.5-1 Mt. • Max total volume 300- 400 Mt. Mt • Marginal cost of production >140-150 USD/t • Deeper underground. 061030
Anton Löf
Chinese foreign expansion 5
FerroChrome
0.1 0.5 World production
124
17
24
Bauxite 1048
Iron ore
370
14
Copper 0% Source: BGR 2007.
50%
0.64
102
0.27 100%
Chinese production Planned Chinese foreign expansion
Source: R Raw Materials s Data, 2011.
Chinese foreign projects
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Anton Lรถf
Iron ore projects • Operating mines Australia Peru Brazil Canada • Projects Australia Peru Sierra Leone Total
19.3 7.0 1.7 0.8 65 10 3 ~ 110 Mt
Source: Raw Materials Data,, 2011.
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Anton Löf
28.8
78
Chinese projects in Africa Awaso Ghana Simandou Guinea ForĂŠcariah Guinea Bong Liberia Tonkolili Sierra L. Avantuur South Afr. Afr Dilokong South Afr. Weziswe South Afr. Baluba Zambia Chambishi Zambia Gwabw/Njali Zambia Muliashi Zambia Munali Zambia Lalapnazi p Zimbabwe
Baux Fe Fe Fe Fe Mn Cr PGM Cu Cu U Cu Cu Cr
Bosai Min. Chinalco China Int Int. F. F China Union Shandong Baosteel East Asia Met. JNMC CNMC CNMC JNMC CNMC CNMC Sinosteel
80 45 50 100 25 11 85 45 72 85 30 72 50 100
Oper. Project Project Project Project Project Oper. Project Oper Oper. Oper. Project Oper. Oper. Oper. p
Source: Raw S w Materials D Data, 2011.
Country Metal Company Share % Type
Chinese FDI • Foreign expansion slow - not continuous. • Will increase in the future. • Long term serious problem for China. • Focus control over imports . • Not reach internal goals of control over imports.
China • Largest miner – many small, high cost mines. • Engine of demand – reduced growth pace pace. • Largest explorer since 2010. Poor results. • Foreign expansion slow, not continuous. g demand for quality q y ore. • Continued high 061030
Anton Löf
Selenium drawing: Kaianders Sempler.
World market
Crude steel growth pattern
China and India steelproduction tonnes
1 600 000
China
1 400 000
1 200 000
1 000 000
800 000
600 000
400 000
India
200 000
0 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
Source: Raw Materials Data Iron ore, 2011. 061030
Anton Löf
Steel: two key questions • Where will China end up? – S. Korea: 974 kg/cap – USA: 203 kg/cap
• How fast will India grow? – As China 21 % /year (2000 – 2007) – 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 enterprises – Malaysia: non‐automatic export licence Malaysia non automatic export licence Source: Universität Bonn
Conclusions • Demand outlook still strong. • China, later India will drive demand. • Supply constraints increasing increasing. • India reduced exports. • China Chi overseas expansion. i • Prices will fall but remain on a high level. • Rare earths not a problem – Chinese import dependency p y for iron ore and copper pp is! 061030
Anton Löf
Thank y you ! Magnus Ericsson PO B 3127 PO Box 3127 SE‐169 03 Solna, Sweden magnus.ericsson@rmg.se Tel: +46‐8‐744 00 65 Fax: +46‐8‐744 0066
www.rmg.se REE drawing: Kaianders Sempler.
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Metals first isolated in Sweden/Finland Please visit www.rmg.se