The Situation and Development Tendency of Chinese Nickel and Cobalt Industry

Transcription

1 The Situation and Development Tendency of Chinese Nickel and Cobalt Industry Yongjun Li President and Board Chairman Jinchuan Group Ltd

2 Main Points The situation and development tendency of Chinese nickel -cobalt industry The profile of Jinchuan Group Ltd. 1

3 Point 1 The situation and development tendency of Chinese nickel-cobalt industry 2

4 Chinese nickel reserves The nickel reserve in China is 6.7 million tons in total, in which nickel and copper sulphide minerals accounts for 91% and the remainder is nickel oxide minerals. 80% of nickel sulphide minerals are from Jinchuan Nickel deposits in Gansu, and the remaining are scattered in Xinjiang, Yunnan, Sichuan, Jilin, Heilongjiang, Guangxi, Inner Mongolia, Shanxi and Qinghai provinces. Nickel oxide ores are mainly distributed in Panzhihua area in the south-west Sichuan province and Yuanjiang area in Yunnan province. The development and processing of nickel oxide ores are only in small scale because of low nickel grade in China. All the deposits are very hard to develop except for Jinchuan deposits, just because of low grade, small quantity reserves, poor environment and high cost. 3

5 Nickel Resources Distribution in China -Above 100 thousand tonnes nickel contained - Above 10 thousand tonnes nickel contained Less than 10 thousand tonnes nickel contained 4

6 Chinese Cobalt Resources There are not much cobalt resources in China, especially there is no independent cobalt orebody. The cobalt reserves are about 470,000 tons in total, in which 30% are located in Gansu province. Cobalt minerals are difficult to develop because they are associated with iron, copper and nickel deposits etc.. The cobalt is mainly extracted and recovered from the smelting process of nickel, copper and other heavy metals and some chemical processing systems because of low cobalt grade. Jinchuan owns the largest recoverable cobalt reserves in China. 5

7 Supply of Nickel - Cobalt In 2004, the Chinese nickel output (contained nickel metal) from mineral material is about 80,000 tons, including Xinjiang 3000 tons, Jinlin 5800 tons and Gansu 71,000 tonnes. The cobalt production is about 7500 tons in 2004,including Jinchuan cobalt 2200 ton tons which accounts for 29.3% in total in K t 6

8 The Nickel-Cobalt Supply of China in 2005 We forecast that by year 2005, Nickel production will reach 107 thousand tons in China, inculding Xinjiang3,500 tons, Jinlin 6,000 tons, Gansu 91,000 t tons and others 6,500 tons. Chinese cobalt tonproduction will keep the level of 7500 tons and Jinchuan K t cobalt will be 4000 tons in The nickel output contribution in China in 2005 Expected total tonnes Tonnes Gansu Xinjiang Jinlin Others Trillion RMB 7

9 Nickel Consumption in China Chinese nickel consumption exceeded 140,000 tonnes in It is expected that Chinese nickel consumption will be reach 170,000 tons in ton Tonnes Trillion RMB K t The nickel Consumption in 2004 Electrolytic nickel production Tonnnes Imported Stocks in last year 6000 Exported Consumption nickel consumption GDP 8

10 Nickel Consumption Structure The difference of nickel consumption structure between China and the world is mainly caused by higher nickel consumption in Chinese manufacturing industry than other countries and areas in the world. This difference will still exist in the next few years. Tonnes ton Trillion RMB K t Chinese Nickel First Use World Nickel First Use 9

11 Cobalt Consumption in China The annual cobalt consumption is increasing at the speed of 20.7% in China from 1998 to The cobalt consumption nearly reached 9000 tons in 2004 and will be approaching 10 thousand tons in The below figure shows cobalt consumption structure in China. According to forecast, cobalt demand in China will increase more than 20% annually in the next five years from

12 Macro Economy & Nickel Market of China ---Unfavorable factors In the next five years, central government will continue on the regulation and control in economic field to speed up changing its economic increasing means, promote state policy of resource-efficiency efficiency and environmental protection. The government took measures on steel, electrolytic aluminum, concrete and real estate industry to slow down too-heated investment change(%) total investment(100m) % 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% % 11

13 Macro Economy & Nickel Market of China Unfavorable factors: 2) ) High nickel price during recent 3 years ( ) leads to substitute material of 400 series of stainless steel and reduces nickel demand. 3) Caused by revaluation of RMB, the export of the manufacturing industry products will be slowed down and this also make effect on nickel demand Total Value of Exports change(%) total vum(100m) % 96% 88% 80% 72% 64% 56% 48% 40% 32% 24% 16% 8% 0% 12

14 Macro Economy & Nickel Market of China ---Favorable factors: 1)Chinese government will focus on farmers and lower-income group to increase their income, which will enhance social purchasing power. The new w cycle of consumption upgrade will stimulate the increasing of nickel consumption. 2) The nickel price will see declining trend in a period of future time and it will lead to increasing nickel consumption. Total Retail Sales of Consumer Goods change(%) Total Vol % 30% 27% 24% 21% 18% 15% 12% 9% 6% 3% 0% 13

15 Main Macro Economy & Nickel Market of China ---Favorable factors: 3) Although the governmental macroeconomic regulation policy restrains the demand in steel industry for a while, but it belongs to a new regulative stage on the up trend. We think that overall steel demand in China is increasing ing steadily. After 2 or 3 years adjustment, the steel industry will be changed on means of increase, consumption configuration characteristic will keep as multilevel,, diversity and gradually develop to high level field. Besides, the development of industrialization and urbanization will also stimulate steel demand Million tonnes Chinese steel consumption and change Consumption Change % Jun

16 Macro Economy & Nickel Market of China ---Favorable factors From long-term view, China will still be the most vigorous area of steel demand in the world and this is one of main favorable factors in Chinese nickel industry. Chinese steel output and apparent consumption Million tonnes Output Apparent consumption E 2005E 15

17 Macro Economy & Nickel Market of China ---Favorable factors: 4)Future stainless steel industry will still be a main consuming field of nickel. 5)Chinese GDP increases steadily. It is expected that China will maintain 9% economic growth rate in the coming years, and the nickel demand will also keep the steady growing tendency. The increase of GDP 16

18 Chinese Nickel Balance in the future In 2005, the nickel consumption in China is expected to reach 170,000 tons while output is 107,000 tons. By 2010, the demand is forecasted to reach near 250,000 tons, with an expected output of about 200,000 tons. We believe that the nickel consumption growth will slowdown after total annual consumption reaches 200,000 tonnes in China demand supply Chinese Nickel Market Balance (000 tonnes) Source: CSSC 17

19 Current Situation of Stainless Steel Industry in China Estimated Chinese stainless steel output of 2.3 million tonnes in 2004; apparent consumption of 4.6 million tonnes. It is predicted that the Chinese stainless steel production will reach 3.5 million tons and the apparent consumption will be 5.5 million tons in Source: CSSC 18

20 Expected Capacity of Major Stainless Steel Plants According to incomplete statistics, if all the following projects are built up, the production capacity of Chinese stainless steel from cold rolling will exceed 10 million tons. Unit:1000 tonnes Company 2005E 2006E 2007E Baosteel Taiyuan Iron&steel Tangshan Stainless Jiuquan Steel Hangzhou 700 Sha Gang 700 Zhangjiagang Pohang Walsin Lihwia 1000 Yieh united Tang Eng 500 Shanghaqi Krupp Stainless 500 Ninbo Baoxin 600 TOTAL

21 Prediction of consumptions and output of stainless steel in China Million tonnes The stainless steel production in China will exceed 8 million tonnes by 2010 and the apparent consumption will nearly reach 8 million tonnes. 20

22 Nickel consumption in battery industry will continue to increase In 2004, the nickel consumption in Chinese battery industry reached 13,000 tonnes. Export of Nickel-cadmium, cadmium, Nickel-hydrogen and Lithium Ion Batteries from China (millions) The small rechargeable battery industry remains the largest cobalt consumption driver in China with an estimated consumption of 5,200 tonnes in 2004, which accounts for 57% of total consumption. source:chinese customhouse 21

23 Output of Ni-Co related battery materials in China High energy materials such as foam nickel, spherical-shaped nickelous hydroxide and hydrogen-storage alloy powder as well as various kinds of nickel powders and nickel-cobalt oxide powders are the materials for producing power batteries and fuel batteries. Therefore, they will be the main material to be developed. 22

24 Forecasted of nickel market With the large-scale project carrying out and macroeconomic control in China, the nickel market of the world will become balanced gradually or even overstocked sometimes in the next 3-5 years. The long-term nickel price will retain a reasonable level

25 Point 2 The profile of Jinchuan Group Ltd. 24

26 Profile of Jinchuan Largest producer of nickel, cobalt and precious metals and important copper producer in China. A large mining group engaged in mining, concentrating, metallurgy, chemical engineering and product further processing. 25

27 Profile of Jinchuan -- Resources Jinchuan s nickel mine is one of the most famous large multi-metal associated nickel and copper sulphide deposits in the world. Ore(mt) Ni(mt) Cu(mt) Co(kt) PGM(g/t) Total Remaining Additional Rank in China No.1 No.2 No.1 No.1 26

28 Share Holders of Jinchuan Jinchuan Government of Gansu Province 51.42% China State Development Bank 25.44% ShangHai BaoSteel Group Corp. 10% TaiYuan Iron and Steel (Group) Co. Ltd 10% Gansu Industry Trans. Investment Company 3.14% 27

29 History of Jinchuan 1958: Jinchuan Nickel Deposit was discovered 1964: The first bulk of electrolytic nickel was produced 1971: The first bulk of electrolytic copper was produced 1979: Jinchuan became one of utilizing base of resources 1983: Output of nickel broke 10,000tons 1985: Output of nickel reached 20,000 tons 1993: Flash Furnace was established 1995: No.1 electrolytic nickel with brand of Golden Camel was listed in LME 2001: Jinchuan Group Ltd was established 2003: Output Ni:60,000 tons, Cu: 100,000 tons 2004: Output Ni:71,000 tons Cu: 125,000 tons 28

30 Profile of Jinchuan Production plan products Nickel (t) 91, , ,000 Copper (t) 170, , ,000 Cobalt (t) 4,500 6,000 8,000 Chemicals (t) 800,000 1,180,000 2,800,000 29

31 To realize to our target Jinchuan will 1)Conduct technical improvement for the expansion of main production on lines The annual mining capacity of JNMC will increase from 5.6 mt to 10 mt by

32 The measures to realize the target of JNMC The annual ore beneficiation capacity will increase from 5.6 mt to 10 mt by

33 The measures to realize the target of JNMC The 250,000 mt/a copper smelting expansion project was completed in 2005 and the refining expansion project will be put into operation in November of

34 The measures to realize the target of JNMC The nickel smelting production line of 1.0 mt/a concentrate treatment will be built up in September of

35 The measures to realize the target of JNMC Increasing the refining capacity and enlarging the production scale of chemical engineering. 34

36 To realize to our target Jinchuan will 2)Speed up the geological exploration at Jinchuan deposit and periphery areas to increase the resources. 3)Conduct risk exploration by cooperation with mining corporations at home and abroad through investment, technology and trade cooperation etc. 4) Complet the corporation management structure and strengthening the inner management of the corporation so as to connect the managerial system of the corporation with international current system. 5)Properly reduce the share-holding holding proportion of the government and further realizing multiple shareholder system, and 6)JNMC is planned to be listed probably in Hongkong or London in

37 Thank you! 36