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Geography of
steel raw
materials -
policy
implications.
Magnus Ericsson
OECD Workshop on steelmaking raw materials
Paris 2011 12 05
RE
E d
raw
ing
: K
aia
nd
ers
Se
mp
ler.
World mining for 150 + years
0
10
20
30
40
50
60
70
1850 1870 1890 1910 1930 1950 1970 1990 2010 2030Europe USA China USSR/CIS Australia/Canada 6 resource rich developing countries
Sources: Raw Materials Data, 2011 and Sames.
% of global mining
Mining:
• Society needs metals
• Global industry
• Iron ore, copper and gold dominates
• Cyclical business
• Long term industry
• Current decade positive – for miners
Background
• Metals are running out
• Mining is not sustainable
• China is holding the world to ransom
Myths
Are metals a
depleting
resource?
Manganese drawing: Kaianders Sempler.
Growth of resource base
Source: Crowson.
Metals are
not
running out !
Manganese drawing: Kaianders Sempler.
Vanadium drawing: Kaianders Sempler.
Is mining
sustainable?
Garpenberg - since 13th c.
Courtesy: Boliden.
Vanadium drawing: Kaianders Sempler.
Mining is for many
countries the only
chance to start
economic
development!
• China
• Structure of iron ore mining.
• Exploration.
• Projects and foreign investments.
• Conclusions.
Outline
The role of China • Exploration
• Foreign Direct Investment
• M&A
061030 Anton Löf
Structure of
Chinese iron
ore mining
Manganese drawing: Kaianders Sempler.
Global iron ore production
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 iron ore grades
061030 Anton Löf
Source: Raw Materials Data Iron ore, 2011.
061030 Anton Löf
Chinese
structure
Manganese drawing: Kaianders Sempler.
• Fragmented
corporate structure.
• Many small mines.
• Low grades, under
ground.
• Vertical integration.
061030 Anton Löf
Chinese
exploration
Nickel drawing: Kaianders Sempler.
0
2
4
6
8
10
12
14
16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
5
10
15
20
25
30
Total world
China
Sources: Total world MEG, China Ministry of Land and Resoruces.
Billion USD
Global exploration 1
Billion RMB
Chinese exploration 1
14%
27%
59% Central gov
Local gov
Private
Year 2009 total 30.30 billion RMB
Source: MOLAR 2010.
Chinese exploration 2
34%
14%
12%
10%
9% 2% 18%1%Coal
Gold
Copper
Iron ore
Pb/Zn
Uranium
Tungsten
Other
Year 2009 total 26.11 billion RMB
Source: MOLAR 2010.
Iron ore 2.55 billion RMB
061030 Anton Löf
Chinese
exploration
• Major exploration efforts.
• World’s largest
exploration spender.
• 400 MUSD iron ore 2009.
• No great results.
061030 Anton Löf
New
projects
Chinese overseas mines
061030
0
5
10
15
20
25
30
35
40
45
50
1990 Year
1995
2000
2005
2011
Chinese foreign operations
061030 Anton Löf
Source: Raw Materials Data 2011. So
urc
e:
Ra
w M
ate
ria
ls D
ata
, 2
011
.
Chinese foreign projects
061030 Anton Löf
So
urc
e:
Raw
Mate
rials
Data
, 2011.
Iron ore projects • Operating mines
Australia 19.3
Peru 7.0
Brazil 1.7
Canada 0.8 28.8
• Projects
Australia 65
Peru 10
Sierra Leone 3 78
Total ~ 110 Mt
061030 Anton Löf
Source: Raw Materials Data, 2011.
Chinese projects in Africa Country Metal Company Share % Type
Awaso Ghana Baux Bosai Min. 80 Oper.
Simandou Guinea Fe Chinalco 45 Project
Forécariah 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 Project
Dilokong South Afr. Cr East Asia Met. 85 Oper.
Weziswe South Afr. PGM JNMC 45 Project
Baluba Zambia Cu CNMC 72 Oper.
Chambishi Zambia Cu CNMC 85 Oper.
Gwabw/Njali Zambia U JNMC 30 Project
Muliashi Zambia Cu CNMC 72 Oper.
Munali Zambia Cu CNMC 50 Oper.
Lalapnazi Zimbabwe Cr Sinosteel 100 Oper.
So
urc
e:
Ra
w M
ate
ria
ls D
ata
, 2
011
.
061030 Anton Löf
New projects
• Foreign expansion slow -
not continuous.
• Will increase in the future.
• Long term serious problem.
• Control over imports in
focus.
• Not reach internal goals.
Chinese M&A
061030 Anton Löf
0
50
100
150
200
250
300
350
400
450
500
0
20
40
60
80
100
120
140
160
Chinese overseas M & A Word Total RMG Metal Price Index (RHS)
Billion USD
Summary China
061030 Anton Löf
• Engine of demand – reduced growth pace.
• Largest mining country –
many small, high cost mines.
• Largest exploration country since 2010.
• Foreign expansion slow, not continuous.
Policy implications
061030 Anton Löf
• Mineral supply – long term, serious problem.
• But no physical scarcity.
• Asessment of China’s role based on facts.
• Window of opportunity for emerging
economies.
• More proper political focus:
• R&D; Training; Balance mining/environment.
• Rare earths not a problem – Chinese import
dependency iron ore, copper is!
Magnus Ericsson
PO Box 3127
SE-169 03 Solna, Sweden
Tel: +46-8-744 00 65
Fax: +46-8-744 0066
www.rmg.se
Thank you !
REE drawing: Kaianders Sempler.
