Steel raw materials –

Iron ore

Magnus Ericsson

Magnus Ericsson

9th Annual Steel Markets Europe

London, May 23-24, 2013

孟瑞松

Chinese iron ore imports

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Source: Raw Materials Data Iron ore, 2013.

Iron ore mines/ projects

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Source: Raw Materials Data Iron ore, 2013.

Global iron ore cash cost

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Source: Raw Materials Data Iron ore, 2013.

• Demand / Supply

• China

• Nordic countries

• Political interest

• Conclusions

Outline

Raw Materials Group

• Part of the IntierraRMG group since 2012

• 30 years industry leadership in data, mapping,

analysis and reporting.

• IntierraLive and Raw Materials Data.

• Strategy development

– Mining companies, equipment & service

• Mineral policy, investment promotion

– Governments, International organisations

• Pre-feasibility/Feasibility studies

– Financial institutions, companies

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Demand/

Supply

Manganese drawing: Kaianders Sempler.

World population growth

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0

1

2

3

4

5

6

7

8

9

10

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Bil

lio

n

World More developed regions (OECD)

Urbanisation 1950-2050.

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—

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

More developed regions Less developed regions

Urb

an

po

pu

lati

on

in

th

ou

san

ds

Global iron ore production

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Source: Raw Materials Data Iron ore, 2013.

Iron ore mines/ projects

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Source: Raw Materials Data Iron ore, 2013.

African project activity

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0

200

400

600

800

1000

1200

1400

AFRICA REST OF WORLD

Source: IntierraLive, 2013.

African project activity

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0%10%20%30%40%50%60%70%80%90%

100%

AFRICA REST OF WORLD

Source: IntierraLive, 2013.

Project delays

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• Supply constraints increasing.

• Under estimated infrastructural problems.

• Lack of investors.

• Political risks/ resource nationalisation.

• Permitting processes.

Project delays

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• Fortescue 150-115 Mt.

• Simandou project, change of government –

revision of terms.

• Belinga, not to be awarded until 2014, after

Chinese CMEC lost the rights.

• El Mutun, Jindal lost the rights.

• BHP’s outer harbour.

• LKAB environmental permits.

• Carajás railway expansion halted.

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Demand/

Supply

Manganese drawing: Kaianders Sempler.

• Underlying demand

drivers remain in place.

• Supply constraints

increasing.

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China

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Chinese structure

• Fragmented structure.

• Many small mines.

• Vertical integration.

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Chinese

production costs

• Small mines most < 0.5-1 Mt.

• Deeper underground.

• Cost components increasing.

• Max total volume 200- 300 Mt.

• Marginal cost of production ?

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European

iron ore

Nickel drawing: Kaianders Sempler.

European iron ore

mines/projects

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Source: Raw Materials Data Iron ore, 2012.

European capital raising

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$-

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

Jan 2010 - May 2013 Capital Raising by Focus

Exploration Development

Capital Expenditure Asset Acquisition

Nordic iron ore projects

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Source: Raw Materials Data Iron ore, 2012.

Loca-

tion

Total

resources

(Mt)

Total ore

reserves

(Mt)

OP/UG Start Cap.

Mt/a

Beowulf Swe 300.6 OP 10

Dannemora Mineral Swe 34.9 35.1 UG 2012 2.5

Grängesberg Iron Swe 163.1 82.4 UG Q4 2015 2.5

Kiruna Iron Swe 667.7 OP 2-5

LKAB (Leveäniemi,

Mertainen) Swe 937 953 OP

2013-

2014 12.5

Nordic Iron Ore Swe 94.1 UG 2015 2.5

Northern Iron Ltd Nor 458.7 172.3 OP 2.8

Northland Resources Swe/Fin 855.2 345.5 OP 2012-14 5

Rana Gruber AS Nor 250 UG <1.5

Nordic conclusions

• European leaders: today and in the future.

• High quality ore and products.

• Cost levels high but not yet prohibitive.

• Close to market in Europe.

• Alternatives to ”Big 3”.

• Long mining history – industry accepted by most.

• Policy changing, supporting local mines.

• Baltic cluster vibrant developments.

• Leading research centre at Luleå.

Vanadium drawing: Kaianders Sempler.

Political

initiatives

• China

• EU

• Africa

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China taking

over Africa?

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Chinese foreign expansion

• Foreign expansion slow, not continuous.

• Limited number of operating mines in

Africa.

• Lack of large scale experiences and

technology.

• Will increase in the future.

• Long term security of supply remains

serious problem for China.

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• Raw Materials Initiative.

• European Innovation Partnership.

• Strong focus on speciality metals.

• Recycling and mining.

• Nordic countries in the lead.

EU policy

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Africa Mining Vision

• African Mineral

Development Center

(AMDC)

• Starts 2013

• African exploration

initiative.

Vanadium drawing: Kaianders Sempler.

Political initiatives

• China early stage.

• EU reviewing

policies.

• Opportunity to

redefine Africa’s role.

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Conclusions

Molybdenum drawing: Kaianders Sempler.

Conclusions

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• Demand drivers remain in place.

• Supply constraints increasing.

• Chinese overseas expansion slow.

• In Europe small newcomers will emerge.

• Increased political interest/actions.

• Prices will fall but remain on a high level.

Magnus Ericsson

PO Box 3127

SE-169 03 Solna, Sweden

anton.lof@rmg.se

Tel: +46-8-744 00 65

Fax: +46-8-744 0066

www.rmg.se

www.intierrarmg.se

Thank you !

NIckel drawing: Kaianders Sempler.

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Metals first isolated in

Sweden/Finland

Please visit www.rmg.se