will africa overcome its challenges to become a major iron ore producer?
DESCRIPTION
Anton Löf, Senior Analyst Iron Ore, from Raw Material Group, Sweden has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsyTRANSCRIPT
Anton Löf (Magnus Ericsson) Senior Iron Ore Analyst, Raw Materials Group
Will Africa overcome its challenges to become a major iron ore producer?
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Data Sources Used
State of the Market Report • Quarterly trends in exploration, mining and finance • Data, expert opinion and forward views • Published by IntierraRMG
Research and Databases • IntierraLive mining and exploration database • Raw Materials Data (RMD) • Mine Cash Cost Models & Curves • Underground Equipment Analysis
CIS 11 %
Europe excl CIS 2.4 % North America 10 %
Asia 27 %
Latin America excl Mexico 24 % Africa 10 % Oceania 15%
Global mining - 2011
Source: Raw Materials Data, 2013.
CIS 22 %
Europe excl CIS 8 % North America 14 %
Asia 11 %
Latin America excl Mexico 16.0 % Africa 20 % Oceania 9 %
Global mining - 1984
Source: Raw Materials Data, 2013.
African Iron ore produc/on 1984, 56 Mt (total world 815 Mt)
African Iron ore produc/on 2011, 69 Mt (total world 1980 Mt)
1. South Africa 4.58 2. Zambia .72 3. Ghana .55 4. Botswana .52 5. Congo DRC .49 6. Morocco .36 7. Mauritania .31 8. Tanzania .29 9. Zimbabwe .26 10. Mali .26
African mining countries
Source: Raw Materials Data, 2013.
%
Sierra Leone; 4,046,800,000
Guinea; 1,896,600,000
Liberia; 1,838,700,000
Mauritania; 1,773,300,000
Algeria; 1,254,100,000
South Africa; 1,148,000,000
Cameroon; 1,125,600,000
Ghana; 443,500,000
OTHERS; 2,140,700,000
African iron ore resource base
Iron content (metric tonnes) of all ores and all classifica3on categories
Source: IntierraLive, 2013.
African iron ore production
0
10
20
30
40
50
60
70
80
90
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Mt
Zimbabwe
Tunisia
South Africa
Morocco
Mauritania
Liberia
Egypt
Algeria
Value of global mining 2000 - 2011
Source: Raw Materials Data, 2013.
MUSD
Africa % of total world
South Africa % of Africa
Value of African mining 1995 - 2011
Source: Raw Materials Data, 2013.
Africa project activity I
0
1000
2000
3000
4000
5000
6000
7000
8000
AFRICA REST OF WORLD Source: IntierraLive, 2013.
Number of projects
Excluding copper and gold
0
200
400
600
800
1000
1200
1400
AFRICA REST OF WORLD
Source: IntierraLive, 2013.
Africa project activity II
Number of projects
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AFRICA REST OF WORLD Source: IntierraLive, 2013.
Africa project activity III
Source: IntierraLive, 2013.
Drilling activity
Source: IntierraLive, 2013.
Drilling activity
Drilling activity
Source: IntierraLive, 2013.
Others
Iron ore uranium vanadium Rare Earths
* Silver or Zinc/lead/silver projects are not included as Africa has shown less than 10% of global drilling ac3vity Source: IntierraLive, 2013.
Drilling activity
Number of projects
Origin of African funding Primary listing location of operators
Iron Ore
Source: IntierraLive, 2013.
African iron ore projects
• Activities stabilising/growing. • Gold, copper, PGMs, diamonds, coal strong. • South Africa losing its grip. • West Africa growth node. • Funding from Australia, North America. For iron ore also Europe
Vanadium drawing: Kaianders Sempler.
African exploration summary
• Large untapped geological potential.
African production forecast
0
50
100
150
200
250
300
350
Mt
• Infrastructure
• Political
• Resource Nationalization
• International economic conditions
African problems
Infrastructure
Country Project Logistics Senegal Faleme 700 km Guinea Simandou 650 km
Nimba 850 km (290 km Liberian coast) Liberia Putu 130 km
Western Range 250 km Gabon Belinga 560 km
Political
Source: Control Risks
• In 1970 only 5 countries in Africa, resource rent countries
• In 2010 it was 17 countries • Little evidence of meaningful industrialization
• Africa more dependent on International economic conditions. 1 % of crude steel production in 2012 came from Africa.
International economic conditions
Some African projects
Country Project
Capacity proposed (Mt/a) Owner progress
Senegal Faleme 25 ArcelorMittal, NMDC, government of Senegal Under review from lack of progress
Guinea Simandou 100 Vale, BSG on hold since Oct 2012
Simandou 95 Rio Tinto Rio commited but also depends on the governmnets spending
Nimba 35 BHP Billiton, Newmont for sale
Liberia Putu 30 Severstal on going
Western Range 19 ArcelorMittal in production, phase 2 dependent on gov.
Gabon Belinga 30 CMEC lost the rights
China taking over Africa?
Global M&A ac/vity
Notable last year was China’s 60% drop year-‐on-‐year in overseas deal-‐making. While copper, gold and iron ore con3nue to be the focus of Chinese ac3vity, both the number and value of these deals declined.
• Foreign expansion slow, not continuous. • Limited number of operating mines in Africa. • Lack of large scale experiences and technology. • Will increase in the future. • No Chinese companies yet among the top 25. • Long term security of supply remain serious problem for China.
Chinese foreign expansion
Chinese controlled foreign (African) operations
Source: Raw Materials Data 2011.
Chinese control of African mines
African Share of total Value
2005 2006 2007 2008 2009 2010 2011
13 13 12 12 11 10 10
Share of Chinese Controlled Production in Africa
2005 2006 2007 2008 2009 2010 2011
0.3 0.4 0.4 0.4 0.4 0.3 0.8
Will Africa step up and become the next big iron ore producing region
• Not in the next couple of years.
• Some mines.
• Most of the majors are hesitant.
• Projects on hold or being reviewed.
• But if the world population continues to grow till 2050+ at the same time as standards of living are increasing then eventually Western Africa will be needed as an iron ore producing region.
Africa drawing: Kaianders Sempler.
Mining is for many countries the only chance to start economic development!
