The changing outlook for copper, nickel, lead and zinc

Transcription

1 Multi-year Expert Meeting on COMMODITIES AND DEVELOPMENT 6-7 April 2009, Geneva The changing outlook for copper, nickel, lead and zinc by Mr. Curtis Stewart Head of Economics and Environment International Lead and Zinc Study Group International Nickel Study Group "The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"

2 The Changing Outlook for Copper, Nickel, Lead and Zinc Curtis Stewart Head of Economics and Environment International Lead and Zinc Study Group International Nickel Study Group UNCTAD Multi-year Experts meeting April 6, 2009 Geneva 1

3 Presentation Outline The Study Groups Global Trends and Outlook Copper Nickel Lead and Zinc Challenges Energy Issues and Climate Change Policies Potential Trade Issues 2

4 The Study Groups Three independent intergovernmental organisations set up within the UN system: International Lead and Zinc Study Group (1959) 30 member countries International Nickel Study Group (1990) 15 member countries International Copper Study Group (1992) 21 member countries 3

5 The Study Groups Located in Lisbon, Portugal since January 2006, with significant cost savings and synergies Share one common Secretary-General Significant role for industry representation Invite observer countries, industry and observer organisations such as UNCTAD, World Bank, UNIDO, Common Fund for Commodities and metals associations 4

6 The Study Groups A Forum for Discussion Markets: forecasts of supply and demand for metals a year ahead Trade: monitoring of international trade in metals Environmental policy: sharing information on approaches to regulation Industry Advisory Panel: metals industry executives provide input to member governments Study Group Sessions: up to 200 participants at ILZSG (the largest) 5

7 The Study Groups Data Provision Monthly Bulletins of Statistics on Copper, Lead & Zinc and Nickel Biannual/annual reporting on mine, smelter an refinery start-ups, closures, expansions and planned development Reporting on smelting and refining capacity and other plant details Publication of data on principal end uses of metals Studies on trends in downstream metals sectors Interactive data on lead and zinc accessible through internet Historical data series available on request Monthly press releases distributed widely 6

8 The Study Groups Attending the Meetings All industry representatives from member countries are welcome to participate in Study Group Sessions Industry or government delegates from non-member countries can request participation in Study Group Meetings The Study Groups are unique forums where mining ministries can meet their global counterparts and the international metals industry We hope that this information today will encourage you to come and join us in Lisbon 7

9 Metals Markets Key Issues Prices collapsed in 2008 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 $3,400 in 4 months. Some stabilization in prices in early 2009 Great uncertainty in the market Numerous production cuts and suspensions The market remains very volatile China will remain the most important market 8

10 World Refined Copper Production (thousand metric tonnes copper) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Refinery primary Refinery SX-EW Refinery secondary 9

11 Thousand Metric Tonnes Copper 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Copper Mine Production by Region (thousand metric tonnes) Africa North America Latin America Asia Europe Oceania 10

12 Thousand Metric Tonnes Copper 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Refined Copper Usage by Region (thousand metric tonnes) Africa North America Latin America Asia Europe Oceania 11

13 ICSG Copper Mines and Plants Capacity Projections WORLD COPPER PRODUCTION CAPACITY EVOLUTION 000 s metric tonnes Cu % change SX-EW 3,659 4,118 4,769 5,154 5,723 6, % Concentrates 14,228 14,505 15,063 15,527 16,392 16, % Mines Total 17,887 18,623 19,832 20,681 22,115 23, % Smelters 16,591 17,254 17,818 18,200 18,525 18, % Electrolytic Refineries 17,126 17,572 18,195 18,365 18,580 18, % Refineries Total 21,525 22,478 23,723 24,320 25,062 25, % Year on Year Changes (tonnage) 2007/ / / / /12 Accumulated SX-EW ,528 Concentrates ,660 Mines Total 736 1, , ,188 Smelters ,119 Electrolytic Refineries ,559 Refineries Total 953 1, ,106 Data Source: ICSG Mines and Plants Directory June

14 2008/2009 Forecast For Copper '000MT 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 WORLD COPPER BALANCE '000MT ,000 Balance (after ajustments) World Refined Production (adjusted) World Usage Note: ICSG Forecast published 7th October

15 World Primary Nickel Production in 1000 tonnes Africa 5% 1997 (1017.6) America 25% Asia 18% Africa 3% America 23% 2008 (1,386.6) Asia 27% Oceania 12% Europe 40% Oceania 11% Europe 36% 14

16 World Primary Nickel Usage in 1000 tonnes Asia 41% 1997 (1016.4) Europe 38% Oceania 0.2% Africa 3% America 18% Asia 52% 2008 (1,267.9) Europe 32% Oceania 0.2% Africa 3% America 13% 15

17 World Primary Nickel Balance in 1000 tonnes Area 2006 % change 2007 % change 2008 f % change 2009 f % change Production Usage Balance (f) forecast date: October 7,

18 Nickel projects Cutbacks and Cancelations Capacity (Ni content, t/y) Ore & Concentrate Intermediate Products Refined products Cancelled Developments Care and Maintenance Potential Project Developments

19 Nickel Cutbacks late 2008-early Operations have announced capacity taken out of production 15 New Projects with start up stretched out or delayed slightly 6 New Projects cancelled or indefinitely delayed 16 countries have seen cutbacks 18

20 World Primary Nickel Balance 1600 in 1000 tonnes f 2009f BALANCE PRIMARY NICKEL PRODUCTION PRIMARY NICKEL USAGE 19

21 LME nickel prices and stocks Prices (Cash, US$/tonne) Stocks (tonnes) JFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJJASO

22 Lead Stocks and Prices Nov 2001 Nov '000 tonnes US$ per tonne monthly average Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 0 Stocks Lead LME Cash Settlement Price Source: ILZSG / LME 21

23 '000 tonnes Lead Metal World Balance Source: ILZSG f 2009f 22

24 '000 tonnes Zinc Stocks and Prices US $ per tonne monthly average Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Source: ILZSG / LME Stocks Zinc LME Cash Settlement Price 23

25 Zinc Metal World Balance '000 tonnes Source: ILZSG f 2009f 24

26 Lead and Zinc Closures, Cutbacks and Delays From Oct 2008 through Feb Closures 21 Cutbacks 9 Delayed Projects These involved 20 countries 25

27 Investment Outlook 12 Global Mining Exploration Expenditure With 2008/2009 estimates In US $ billions e Source MEG and Raw Materials Group, Stockholm 26

28 Energy Issues and the Non-ferrous Metals Industry The evolving carbon-constrained regulatory environment is a challenge New technologies to maintain competitiveness, enhance environmental performance and reduce energy intensity will be introduced Sustainable Development with three strands economic, environmental and social, is related to this trend 27

29 Putting a Cost on Carbon Emissions Trading Schemes (ETS) put a cost on carbon UN climate panel economists say the cost of CO2 needs to reach ($30-50) per ton to avoid a global climate change of over 2 degrees C costs vary widely, having fallen as economy slows. 28

30 The Impact of Emission Trading Schemes on Energy Costs Future cost of energy = Basic energy cost + Carbon costs Cost of Energy $ Increase due to ETS Year Basic Energy Cost

31 Costs of a Carbon Tax Impact of a US $50 t tax Average percent increase in mining cost Lead 7.1 % Metal Nickel Copper 8.8% 12.5% Zinc 13 % Percent Change in Cost Source: Minecost.com 30

32 Challenges for the Future New costs related to permits for carbon emission Possible trade restrictions, i.e. new tariffs and carbon levies, which may result in WTO actions ETS will be a new revenue source for governments Recycling becomes more attractive as energy costs increase Possible relocation of operations in response to changing costs Possible changes in flows of investment 31

33 To learn more about the Groups: Intergovernmental Forum Mining, Minerals, Metals and Sustainable Development 32