Global Commodities Forum Palais des Nations, Geneva 22-23 March 2010 Current situation and prospects for copper, nickel, lead and zinc by Mr. Don Smale, Secretary General, International Lead and Zinc Study Group International Nickel Study Group International Copper Study Group "The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"
Current Situation & Prospects for Copper, Nickel, Lead and Zinc Don Smale Secretary-General International Lead and Zinc Study Group International Nickel Study Group International Copper Study Group UNCTAD Global Commodities Forum 22-23 March 2010, Geneva 1
Presentation Outline Global Trends and Outlook Copper Nickel Lead and Zinc Challenges and Emerging Issues 2
The Study Groups Three independent intergovernmental organisations set up initially within the UN system: International Copper Study Group (1992) 22 members International ti Nickel Study Group (1990) 16 members International Lead and Zinc Study Group (1959) 30 members 3
Metals Markets Key Issues Prices collapsed in 2008 but recovered in 2009 Nickel from $52,000/tonne in May 2007 to below 10,000 US$/tonne in December 2008, Copper fell from near $9,000/tonne to $2,770 in Dec.2008. Currently (March 2010) prices for nickel are ~$22,000/t and for copper ~$7,400/t Uncertainty in the market which remains volatile China will remain the most important market 4
10,000 Copper Mine Production by Region (thousand metric tonnes) tric Tonne s Copper Tho ousand Me 9000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1960 1980 2009p Africa America Asia Europe Oceania 5
Copper Mine Capacity by Region, 1980 and 2009 (thousand metric tonnes) 8,000 7,000 6,000 5,000 4,000 3,000 1980 2009 2,000 1,000 0 Africa Asia Europe North Oceania South America America
Nickel Mine Production In thousand tonnes 7
Lead Mine Production by Region (thousand metric tonnes) 8
Zinc Mine Production by Region (thousand metric tonnes) 9
Refined Copper Usage by Region (thousand metric tonnes) 12,000 Thou usand Metr ric Tonnes Copper 10,000 8,000 6,000 4,000 2,000 0 1960 1980 2009p Africa America Asia Europe Oceania 10
Primary Nickel Usage in thousand tonnes 11
Lead Usage 12
Zinc Usage 13
20,000 World Refined Copper Production 1960-2009p (thousand metric tonnes copper) 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Refinery Primary Refinery Secondary Refinery SX-EW 14
Global Copper Use sustained by Chinese Growth Copper and Copper Alloy Semis Production 1946-2008 (2008 Not Fully Reported) by Country Gross Weight, Thousand Metric Tonnes 25,000.0 20,000.0 15,000.0 10,000.0 50000 5,000.0-1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 China United States Germany Japan Italy Korean Rep. Taiwan U.S.S.R. (former) Russian Fed. France Mexico India Brazil Turkey Spain Poland Sweden Egypt Greece Chile Rest of the World 15
500 450 400 350 Copper Stocks and Prices 2000-2010 2010 2,500 2,250 250 2,000 1,750 /ound) and metric tonnes 300 250 200 150 100 50 1,500 1,250 1,000 750 500 250 Price LME (US cents Thous Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul-07 Jan 08 Jul-08 Jan 09 Jul-09 Jan-10 Jan 02 J Jul 01 Jan 01 J 0 0 Price LME (UScents/pound) Stocks 16 J J Jan 00 Jul 00
ICSG Global Refined Copper Market Balance & Forecast '000MT 20,000000 17,500 15,000 12,500 10,000000 7,500 5,000 2,500 0 WORLD COPPER BALANCE 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 '000MT 600 400 200 0-200 -400-600 -800-1,000 Balance (after ajustments) World Refined Production (adjusted) World Usage
LME Nickel Prices and Stocks 2000 2010 18
1600 World Primary Nickel Balance Annual Data With 2010 Forecast 1400 1200 nes 1000 000 ton 800 600 400 200 0-200 91 97 99 58 56 73 87 33 19 14-4 25 11 7 26-46 -59-58 -40-27 -51 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2008 2010 BALANCE PRIMARY NICKEL PRODUCTION PRIMARY NICKEL USAGE 19
Lead Stocks '000 tonnes 550 and Prices US$ per tonne monthly average 4000 500 450 3500 400 3000 350 2500 300 250 2000 200 1500 150 1000 100 50 500 0 0 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Stocks Lead LME Cash Settlement Price 20
Lead Balance '000 tonnes 200 150 100 50 0-50 -100-150 -200-250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f 21
'000 tonnes 1400 1200 1000 800 600 400 200 Zinc Stocks and Prices US $ per tonne monthly average 4500 4000 3500 3000 2500 2000 1500 1000 500 0 0 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Stocks Zinc LME Cash Settlement Price 22
Zinc Metal World Balance '000 tonnes 500 400 300 200 100 0-100 -200-300 -400 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f 23
Chinese Zinc Trade '000 tonnes 700 EXPORTS 500 Source: ILZSG 300 100-100 -300-500 -700-900 -1100 IMPORTS 1993 1995 1997 1999 2001 2003 2005 2007 2009 Concentrates Metal 24
Estimated Worldwide Exploration Budgets (in Billion US $) Source: Metals Economics Group 25
Exploration by Region 2009 Source: Metals Economics Group 26
Top 10 Countries for Exploration 2009 Source: Metals Economic Group 27
Lead 7.1 % Costs of a Carbon Tax Impact of a US $50 t tax Average percent increase in mining cost Met tal Nickel Copper 8.8% 12.5% Zinc 13 % 0 5 10 15 20 Percent Change in Cost Source: Minecost.com com 28
Challenges for the Non-ferrous Metals Industry Ensure the supply of concentrates, secondary material and refined metal to meet evolving demand, both near term and long term Respond flexibly to changing demand while remaining profitable Develop and implement new technologies, including those related to recycling, to maintain competitiveness, enhance environmental performance and reduce energy intensity Ensure transparency and efficiency in the markets for raw materials, metals and products (The International Metals Study Groups have an important role here in meeting the data and analysis needs of the industry) 29
Challenges for the Non-ferrous Metals Industry Possible trade restrictions, i.e. new carbon border tariffs and carbon levies, which may result in WTO actions. Governments have a role in reducing barriers to trade Challenges presented by the three strands of sustainable development economic, environmental and social Possible changes in investment flows and relocation of operations in response to changing costs 30
To learn more about the Groups: www.icsg.org www.insg.org www.ilzsg.org 31
Current Situation & Prospects for Copper, Nickel, Lead and Zinc Don Smale Secretary-General International Lead and Zinc Study Group International Nickel Study Group International Copper Study Group UNCTAD Global Commodities Forum 22-23 March 2010, Geneva 32