European mining – future supply of EU’s metals · European mining – future supply of EU’s...
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European mining – future supply of EU’s metals Euro Mine Expo Conference Skellefteå, June 8-10 2010
Transcript of European mining – future supply of EU’s metals · European mining – future supply of EU’s...
European mining – future supply of EU’s metals
Euro Mine Expo Conference Skellefteå, June 8-10 2010
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KGHM in brief 2
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Agenda
Mining in Europe
Mining company of the future
Raw Materials Initiative
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Geological availability of minerals in Europe
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Market structure of metal mining companies
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Global exploration 2009
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European exploration 2008
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European mine production
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Number of mineral resources projects
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Global copper production and primary demand
Source: Brook Hunt
Stable economic growth in China will support copper demand
Plant closures and deferring many mining projects during financial crisis
Decreasing grades and increasing cost of production in mines worldwide
Copper looks an attractive long term investment
Perspective of copper market
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1992 1996 2000 2004 2008 2012 2016 2020 2024
Possible projects
Probable Projects
Highly Probable Projects
Base Case Production Capability
Primary copper demand
M t
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Copper mine production in Europe
• About 90% of the European copper mine production is concentrated in the CEE countries . • The biggest producers are Russia and Poland
• In CEE the mine production increased 1.2% during the last 10 years
• In the EU-15 countries mine production has been stable for the last 10 years at the level +/- 180 000 t/y, but on average dropped (-)0.3%
• During last 10 years the share of the CEE countries in refined copper production in Europe increased from 43% to 46%
• Average yearly growth of CEE refined production in the last 10 years was 1.2%
• Average yearly growth of EU-15 countries refined production in the last 10 years was (-)0.1%
Source: ICSG, KGHM Polska Miedz S.A. •
43% 46%
Copper mine production in Europe ('000 tons)
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Refined copper production in Europe ('000)
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Copper usage projection
• CEE countries’ share in European copper demand in 2009 was 27%.
• By the end of the 2025 this may be close to about 42%
Source: ICSG, Brook Hunt, KGHM Polska Miedz S.A. •
Current and future usage of refined copper in Europe
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• Copper usage in Western Europe is projected to slow considerably in the foreseeable future. • CEE countries will be the main source of copper demand in the future.
The structure of copper usage in Europe
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15%
42%
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KGHM key data
No. 2 European copper producer
8th largest copper producer
2nd largest silver producer
Listed on Warsaw Stock Exchange –
ticker ‘KGH’
KGHM
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Production cycle
KGHM - fully integrated producer of high quality copper
Core bussines of KGHM
Upstream Midstream Downstream
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World production vs KGHM production 1 854
1 411
1 183
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779698
523 439403 391
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Codelco Freeport -McMoran Copper
& Gold Inc.
BHP Billiton Group Xstrata Rio Tinto Group Anglo AmericanPlc.
Southern Copper KGHM Polska• • • • •
Norilsk NickelGroup
First Quantum
Copper mine production 2009
World 15 991 000 Mg
KGHM 439 038 Mg (2,74%)
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818 808
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540 533 532512
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Codelco Xstrata Jiangxi CopperCompany
Aurubis Nippon Mining MitsubishiMaterials
Corporation
SumitomoMetal
F-McM Copper KGHM SouthernCopper
Copper smelter production 2009
World 14.1Mt
Copper refined production 2009
World 18.3Mt
KGHM 502 461 Mg (2,7%)
42.3
38.434.8
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18.7 17.5 17.2 16.915.6
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BHP Billiton Group
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Industrias Penoles S.A. de C.V.
Volcan Compania Minera S.A.
Pan American Silver Corporation
Cia. Minas Buenaventura
Polymetal
Hochschild Mining
Kazakhmys
Southern Copper Corporation
Silver mine production 2008
World 680.9 mln troz
KGHM 38.4 mln troz (5,64%)
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Expanding KGHM resource base
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Exploration
Expanding existing reserves • near mine & in-mine exploration:
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KGHM Polska Miedz (Poland) • •
I•n• -•m•i • n• e• • &• •n• e• a• r• • m•i •n•e• •e•x•p•l•o•r•a•t•i•o•n• •
L• o• c•a• l•i • s• a•t •i•o•n• •o•f• •d•r•i•l•l• •h• o• l•e•s• • •D•r•i• l •l • e• d• •h•o•l•e•s• •
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Weisswasser (Saxony, Germany)
Brownfield & greenfield exploration • Exploration program: 2010-2012 • 7 drill holes • Depth of mineralisation: 800-1500 m • Expenditures: 23 mln EUR • Hipothetical resources: apx. 100 mln Mg of ore (1,5 mln Mg Cu)
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Nowiny (Poland) Greenfield exploration
• Exploration program: Sep 2010 - Dec 2013 • Drill holes: 3 (IQ 2011), 2 (IIQ 2012) • Depth of mineralisation: 200-700 m • Expenditures: 4-5 mln USD • Hipotetical resources : 50-100 mln Mg (1 mln Mg Cu Eq. )
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Synklina Grodziecka (Poland) Brownfield & greenfield exploration Exploration programme 2010 - 2013 Drill holes: 9 (IQ 2010-2011), 6 (IIQ 2012) Depth of mineralisation: 1200-1300m Expenditures: 23-25 mln USD Estimated resources: Niecka Grodziecka 57,2 mln Mg Cu ore 0,67 mln Mg Cu Wartowice 59,0 mln Mg Cu ore 0,71 mln Mg Cu Average Cu content - 1,58 %
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Szklary (Poland) Exploration programme 2010-2011 Drill holes: 54 Depth of mineralisation: 10-40m Expenditures: 1 mln USD Estimated resources: Metal content – 13 800 [Mg] Cut off grade – 0,3% Ni Average Ni content – 0,55% Ni
Other exploration
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Main issues of European Mining
Exploration and mining - increasingly difficult Land access: conflict of interest
Complexity of regulatory framework, related procedures, increased costs.
Need for simplification!
Permitting and appealing issues: very long processes, too many instances and possibilities to appeal
Poor understanding of industrial requirements and constraints among authorities
Increased workload for industry and authorities (often understuffed!)
Increasing trade distortion
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Bad image within the population: dangerous branch (people & environment), dirty industry
Human resources: Age pyramid
Know-how, loss of competences at all levels
Education: low interest and status for the mining industry at all stages and levels
Technology and R&D: Lack of support from EC between 2000-2006
Source: Mineral Resources for Europe
Main issues of European Mining
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Crucial facts explaining the current situation of extractive industry in the EC.
Public introduction of the EC Working Document SEC 2007 (771) held in
June 2007 by DG Ent. & Industry. It describes the situation of
non-energy raw materials branch in the EU.
Main topics of the document: • Importance of raw materials for the EU economy • Trends on the international raw material markets • Risks associated with the supply of raw materials for the future of EU
economy
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Key assumptions of the new policy in raw materials
- May 2008, DG Ent. & Industry
1. Increase the sustainable supply of raw materials from European Sources
2. Ensure sustainable and more transparent supply from third countries
3. Encourage capacity building in developing countries 4. Encourage greater efficiency in the use of resources 5. Establish an adequate EU Knowledge Base on raw
materials
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Mining Company of the Future – the scope of idea
Global Integrated Enterprise – How will we operate globally?
Aging Workforce – What will we do with the shortage of skilled resources?
Collaborative Innovation – How can we effectively innovate and learn from our partners?
IT Effectiveness – How can we manage better with less?
Cost Reduction – Which areas should we focus on for cost reductions ?
Remote Operations – How can we manage safely away from the mine site? source: IBM & EIT+ Meeting, Switzerland April 8-9, 2009
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The EC Raw Materials Initiative
The integrated strategy is based on 3 major pillars:
1. Access to Raw materials on world markets at undistorted conditions;
2. The right framework to foster sustainable supply of raw materials from EU sources;
3. Increase resource efficiency and promoting recycling in the EU.
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The Raw Materials Initiative activities
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The Raw Materials Initiative activities
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Other RMI activities
• Promote skills and focussed research on innovative exploration and extraction technologies, recycling, materials substitution and resource efficiency
• Increase resource efficiency and foster substitution of raw materials
• Promote recycling and facilitate the use of secondary raw materials in the EU.
