1

Don Smale, Secretary-General

International Copper Study Group,

International Lead and Zinc Study Group and International Nickel Study

Group

Lisbon, Portugal

OECD Conference on Trade in Raw Materials

Paris, France, 3 November, 2014

Enhancing Market Transparency

and Cooperation Between

Countries Trading Minerals and

Metals

ICSG Membership Autonomous International Governmental Organization. Active industry involvement

Main source of unbiased information for governments, the public and the industry

Membership open to countries involved in copper production, use or international trade

23 member countries and the EU. 4 recent member states. Non-members can attend as observers.

Australia

Belgium

Chile

China

European

Community

Finland

France

Germany

Greece

India

Italy

Iran

Japan

Serbia

Spain

United States

Zambia

Luxembourg

Mexico

Peru

Poland

Portugal

Russian

Federation

Sweden

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3 3

International Lead and Zinc

Study Group Autonomous International Governmental Organization

Membership open to any country involved in lead and/or zinc production, usage, or trade

30 members (>85% of global lead/zinc industry). Key role in the industry.

Australia

Belgium

Brazil

Bulgaria

Canada

China

Finland

France

Germany

India

Iran

Ireland

Italy

Japan

Korea Rep.

Mexico

Serbia

South Africa

Sweden

Thailand

United States

European Union

Morocco

Namibia

Netherlands

Norway

Peru

Poland

Portugal

Russian Fed.

European Union

Greece

Portugal

Brazil

France

Japan

Sweden

Australia

Finland

Italy

Russian

Federation

Cuba

Germany

Norway

United

Kingdom

International Nickel

Study Group Autonomous International Governmental Organization

Co-located with ICSG and ILZSG resulting in significant cost savings

Enhancement of market transparency in the nickel market

Active industry involvement. Forum for discussions on nickel. 15 members.

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Role of Study Groups

Promote Market Transparency

– Closely monitor production, consumption, prices, stocks,

trade flows and market balances

– Reports and directories

Facilitate Co-operation Between Government and Industry

– Twice yearly meetings

– Special conferences/seminars

In-depth Research into Issues of Interest/Concern to Members

• – Environmental legislation

• – Economic developments

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Enhancing market transparency and cooperation between governments:

regular and affordable data on metal supply, demand and trade by country

Regular Press Releases on Monthly Bulletins and Yearbooks widely used by governments,

the industry, funds and analysts to make decissions affecting metals industry value chain.

World Non Ferrous Metal Usage 2002-2012.

Thousand Tonnes of Metal Kt

1,175

6,829

9,381

20,260

1,659

10,382

12,300

25,356

0 5,000 10,000 15,000 20,000 25,000 30,000

Nickel Usage

Lead Usage

Zinc Usage

Copper Usage

2012

2002

World Mine Production 2002-2012 Cu, Ni, Zn and Pb.

Kt. Metal Content.

2,868

1,248

9,174

13,577

4,994

2,178

13,149

16,697

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Lead Mine Production

Nickel Mine Production

Zinc Mine Production

Copper Mine

Production

2012

2002

6

Tracking changes in the global capacity of mines, plants and

fabricators is an essential activity to understand the future of the

non ferrous metal industry World Copper and Alloy Fabrication Capacity.

Plant Situation in 2014 in Kt gross weight

30,785

11,699

2,7665,511

1,622 6800

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Operational

in 2014: Old

and New

Plants

Plants Not

Reporting in

2014

Plants

Closed in

2014

Expected

Operational

2014

To Start

Operations

2015-2016

Projects

Delayed and

Planned

2017+

World Copper Mine Capacity Plans 2014-2017.

Recent Changes. Kt-Cu.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

ICSG Database December 2013 ICSG Database July 2014

COPPER CONCENTRATES MINE CAPACITY GROWTH PLANS 2014-2017

SX-EX CATHODE CAPACITY GROWTH 2014-2017 7

Lead supply is particular: most of supply from recycled lead-acid

batteries scrap. Most of zinc supply comes from mining, with most of

mine supply in China World Refined Lead Mined and Recycled - Kt. 2012

Refined Lead

Recycled, 5790,

56%

Refined Lead from

Mines, 4,592,

44%

0 100 200 300 400 500

Lead Mines

Capacity

Pipeline

New Mines Operational 2012

Commited New Mines + Expansions 2012-2014

World Zinc Mine and Recycled Supply

Kt of Metal Content in 2012

Zinc Mine

Production,

11478,

77%

Recycled Zinc

Refined

Production, 822,

6%

Zinc Scrap

Direct Melt,

2500,

17%

Peru9.4%

China36.0%Australia

11.1%

Other25.6%

Europe7.7%

Canada4.5%

India5.7%

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• Some countries tax exports of metals or other raw materials in order to encourage local processing or to assure that supplies do not leave the country

• In February 2014 the Study Groups issued a Report on Taxation, Royalties and Fiscal Incentives which provides information on trends in taxation of metals and ores

• Export restrictions on minerals is a current topic of concern

• Earlier this year Indonesia placed a ban on exports of unprocessed ores

• The objective is to capture value added processing within the country

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China & Indonesia - A key relationship

90+%

36% 35%

23%

Platinum (South Africa)

Nickel(Indonesia)

Iron Ore(Australia)

Copper(Chile)

% of Chinese demand from largest source country

selected metals - 2012

Source: USGS, Wood Mackenzie, Citi Research

China is more dependent on Indonesia for nickel supply than it is any other single country (with exception of PGMs)…

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China & Indonesia - A key relationship

Source: USGS, Wood Mackenzie, Citi Research

… but Indonesia realizes a much smaller fraction of the product value than the other countries (who ship a much greater proportion as higher valued added product)

~100%

14%

29%

80%

PGM(South Africa)

Nickel(Indonesia)

Iron Ore(Australia)

Copper(Chile)

Export Value as % of Metal Value Selected Source Country /Metals to China

Selected Metals - 2012

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12

0

100 000

200 000

300 000

400 000

500 000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

LM E (t) Shanghai (t)

Copper Exchange

Stocks

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

LM E (t) Shanghai (t)

Zinc Exchange Stocks

Lead Exchange Stocks

0

50 000

100 000

150 000

200 000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

tonnes

Source: LME, SHFE, Comex. Citi @ Joint ICSG/INSG/ILSG

Nickel Exchange

Stocks (LME)

Feb 2014: >126

Kt of nickel on

warrant in LME

Feb 2014:

>582 Kt of

Zinc on

warrant

in LME

Feb 2014: >171 Kt

of lead on warrant

in LME

Visible and hidden stocks of refined metals: a recurrent topic across

Study Groups members, because it affects metal price movements and

public revenues

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Refined Export Tax:

Operational Suspended Operational

Changes in regulations affecting metals are tracked by

each Study Group and regulatory reports are delivered to member countries periodically

0% 20% 40% 60% 80% 100%

Copper

Lead/Zinc

Barriers to Byproducts Recovery by Industry

Not present in ore/ concentrate

Outside core business

Technology not available

Extraction not economic

Processing techniques prohibit extraction

Studies of common interest are developed jointly. An example

is the recovery of by-products of copper, nickel, lead and zinc,

including molybdenum, cobalt, rhenium, selenium, tellurium,

bismuth and rare earths.

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Refined Copper Market Forecast

ICSG Meeting, 13-14 October 2014

2010-2014: 5 years of small deficits in a very tight market 2013: -272 Kt-Cu deficit. Adding bonded stock change, the deficit was -519 Kt-Cu in

2013

15

-400-300-200-1000100200300400500600700

02,5005,0007,500

10,00012,50015,00017,50020,00022,50025,00027,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

'000MT'000MT WORLD COPPER BALANCE

Balance World Ref ined Production (adjusted) World Usage

2014: world refined copper demand and output growing

at similar volumes ~ +1.1 million tonnes / a year. 16

Selected

Countries

Dif.

Kt Cu

Dif.

%

share in world

usage (2014)

DECLINESRussian Fed. -114 -17% 2%

Autralia, Oman,

North Korea-65 -48%

GROWTHChina 636 6.6% 46%

EU 225 7.4% 15%

Gulf + N Africa 65 10.3% 3%

Japan 54 5.4% 5%

United States 50 2.7% 8%

Korean Rep. 30 4.1% 3%

Taiwan 30 7.0% 2%

Malaysia 18 8.9% 1%

Brazil 17 3.9% 2%

India 15 3.3% 2%

Thailand 12 4.8% 1%

World 1,058 5.0%

Selected

Countries

Dif.

Kt Cu

Dif.

%

share in world

production

(2014)

DECLINESKazakhstan -85 -25% 1%

Chile -78 -3% 12%

Zambia -26 -5% 2%

Philippines -23 -15% 1%

GROWTHChina 616 9% 33%

Congo 126 20% 3%

India 102 17% 3%

Japan 89 6% 7%

United States 76 7% 5%

Spain 67 19% 2%

Mexico 45 13% 2%

Indonesia 31 15% 1%

Iran 16 8% 1%

Sweden 12 6% 1%

Finland 12 10% 1%

World 1,088 5%

World Ex-China 472 3% 67%

Joint Seminars Held by the Study Groups

• International Metals Recycling (October 2014)

• Individual Regional Seminars on Mining and Metals in China, India and Europe ( September 2011, October 2012, February 2014)

• By-products Of Copper, Nickel, Lead And Zinc (October 2013)

• Financial Aspects Of The Metals Industry (April 2013)

• How Society Benefits From Mining And Metals Production (April 2012)

• Materials Stewardship For Mining And Metals (April 2011)

• The Contribution Of Metals To Our Sustainable Future (October 2010)

• New And Innovative Applications For Metals (April 2010)

• Post-crisis Metals: What Will Be Different? (October 2009)

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Improving metal markets transparency and

multilateral

cooperation: challenges for the future

• Metal market price discovery: stocks out of metal exchanges

• Overcapacity of the world metal fabrication industry

• Over-indebted operators across metal value chains

• Capital expenditures costs for non ferrous mining projects increasing

• Environmental, energy, water, labour constraints for mining

• Absence of metal scrap supply and metal scrap theft statistics

• Market integration between metal producers and metal end users

• Precious metals as byproducts, conflict minerals, critical materials

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19

Don Smale, Secretary-General

International Copper Study Group,

International Lead and Zinc Study Group and International Nickel Study

Group

Lisbon, Portugal

OECD Conference on Trade in Raw Materials

Paris, France, 3 November, 2014

Enhancing Market Transparency

and Cooperation Between

Countries Trading Minerals and

Metals