Manganese Industry Outlook and Opportunities Elsabe Muller General Manager, Manganese Marketing May 2014 Disclaimer Forward-looking statements This release contains forward looking statements, including statements regarding: trends in commodity prices and currency exchange rates; demand for commodities; plans, strategies and objectives of management; closure or divestment of certain operations or facilities (including associated costs); anticipated production or construction commencement dates; capital costs and scheduling; operating costs and shortages of materials and skilled employees; anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; tax and regulatory developments. Forward looking statements can be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’, ‘annualised’ or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward looking statements. These forward looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are cautioned not to put undue reliance on forward looking statements. For example, our future revenues from our operations, projects or mines described in this release will be based, in part, upon the market price of the minerals, metals or petroleum produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations. Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals, petroleum or metals we produce; activities of government authorities in some of the countries where we are exploring or developing these projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; labour unrest; and other factors identified in the risk factors discussed in BHP Billiton’s filings with the U.S. Securities and Exchange Commission (the “SEC”) (including in Annual Reports on Form 20-F) which are available on the SEC’s website at www.sec.gov. Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or review any forward looking statements, whether as a result of new information or future events. No offer of securities Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction. Reliance on third party information The views expressed in this release contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This release should not be relied upon as a recommendation or forecast by BHP Billiton. Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 2 Content Manganese market: review and outlook Improving industry productivity Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 3 Ongoing demand growth for the next 10 years Global crude steel production (million tonnes) Global manganese ore demand in alloys (million tonnes, contained Mn) 3 000 30 1.8% 2 500 25 1.7% 2.6% 2 000 2.4% 20 3.3% 3.2% 3.6% 5.5% 1 500 15 4.5% 1 000 4.6% 6.9% 10 500 5 0 0 2000 2005 2010 2015e 2020e 2025e 2030e China 7.2% 2000 2005 Rest of world 2010 2015e 2020e 2025e 2030e China x% Source: BHP Billiton, World Steel Association Elsabe Muller, General Manager Manganese Marketing, May 2014 Rest of world CAGR over the 5 year period Source: BHP Billiton, IMnI, CRU Slide 4 Manganese intensity use to stabilise Historical rise in manganese intensity use Global Alloy Unit Consumption (gross kg alloy/t steel) • Changing steel specifications and enduse patterns over past decade. • A shift to long/construction steel products in developing countries. • Intensity view largely aligned amongst industry analysts until recent years. 10.0 IMnI CRU Metal Expert 8.0 6.0 SiMn Outlook • Global average intensity use continues to be driven by China and India. • Intensity use has stabilised and is expected to decline gradually. • Manganese demand growth expected to be more in proportion to steel production growth in the long term. 4.0 2.0 HCFeMn Refined 0.0 Source: IMnI, CRU, Metal Expert Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 5 Manganese ore import dependency to grow China ore supply and demand (kt, contained Mn) India ore supply and demand (kt, contained Mn) 12 000 1 800 Apparent consumption Apparent consumption Inferred production Inferred production 1 600 10 000 1 400 8 000 1 200 1 000 Growing import dependency 6 000 Growing import dependency 800 4 000 600 400 2 000 200 0 2007 2008 2009 2010 2011 Source: IMnI Annual Report 2012 Elsabe Muller, General Manager Manganese Marketing, May 2014 2012 0 2007 2008 2009 2010 2011 2012 Source: IMnI Annual Report 2012 Slide 6 Manganese reserve base and product qualities Manganese reserve base1 (contained manganese) 1 billion tonnes 100 million tonnes 500 million tonnes Ukraine (Mid-grade) (Typical product quality) Kazakhstan (Mid-grade) China (Low-grade) Ghana (Low-grade) Brazil (High-grade) Gabon (High-grade) South Africa (High and mid-grade) India (Mid-grade) Australia (High-grade) 1. Defined by the US Geological Survey (USGS) as that part of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices. The reserve base includes those resources that are currently economic (reserves), marginally economic (marginal reserves), and some of those that are currently subeconomic (subeconomic resources). Source: BHP Billiton analysis, Roskill 2012, USGS Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 7 South African export capacity is a key driver in the industry Current export capacity Metalloys • Strong capacity growth in recent years driven by innovative export options including interim bridging capacity provided by Transnet. • Challenges of long distances and increasing costs and complexity. • Recent export growth has outpaced incremental demand growth. Hotazel Richards Bay Durban Saldanha Cape Town Rail Corridor Road Corridor Port Elizabeth Coega Future Corridor Outlook • The industry welcomes progress on longterm, structural solutions. • Growth opportunities for all participants. • Evolving trends of global ore product mix with the introduction of growing South African ore supply. Source: BHP Billiton, Transnet Company Reports Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 8 Growth of South African export capacity will increase the share of medium-grade ore supply Proportion of supply by grade type (% of economical supply, tons of ore) South Africa rapidly expanding market share High grade > 40% Mn Medium grade 30-40% Mn • Recent growth has increased Mamatwantype ore supply. • Anticipated growth mostly from mines in the Kalahari producing Mamatwan-type ore. • Recent export growth has outpaced incremental demand growth. Price relativity • Strong growth of a single ore type may put additional pressure on competitiveness as price relativities decline. • Growth opportunities for all participants. • Evolving trends of global ore product mix with the introduction of growing South African ore supply. Low grade < 30% Mn 2010 2015e 2020e 2025e 2030e Source: BHP Billiton, IMnI, CRU Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 9 Content Manganese market: review and outlook Improving industry productivity Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 10 Working together to add value Increasing efficiency Improving margins Increasing transparency Spot sales Robust indices Focus on product quality E-documentation Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 11 Evolution of commodity markets Commodity markets often follow a similar pattern of market evolution: 1. 2. 3. 4. Commodity Further market development Shorter-term pricing periods Market transparency Physical trading platforms Physical trading platforms Risk management tools Index pricing Journalistic pricing Benchmark pricing Short term pricing Established index BHP Billiton portfolio Crude oil Yes Energy coal Yes Copper Yes Aluminium Yes Nickel Yes Gold Yes Soybeans Yes Corn Yes Coffee Yes Freight Yes Iron ore Yes Steel (incl. scrap) Yes Metallurgical coal Evolving Manganese ore Evolving Alumina Evolving Source: BHP Billiton Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 12 Factors feeding into ore selection Ore selection is critical to competitive alloy production Environmental restrictions Tight margins Cash flow pressure Plant capabilities Ore selection Key process impacts of ore selection Low quality ore High quality ore Ore price ↓ Ore price ↑ Productivity ↓ Productivity ↑ Electrical Power /Carbon source ↑ Electrical Power /Carbon source ↓ Process stability ↓ Process stability ↑ Alloy quality ↓ Alloy quality ↑ Environmental impact ↑ Environmental impact ↓ Asset life ↓ Asset life ↑ Blending Flexibility ↓ Blending Flexibility ↑ Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 13 E-documentation platforms improve efficiency, security and working capital management Benefits: External platforms Improved productivity and efficiency: BHP Billiton E-doc transaction volume for manganese (number of transactions) • Transmit and track documents in real time 350 • Minimise human error Carriers & shipowners • Minimise administrative delays • Reduce repetitive communications 300 250 • Decrease requirement for letters of indemnity Banks 200 Enhanced security: • Improve authentication: e-signatures Smelters/ Steel mills • Retain control of transaction documents Optimised working capital management: Mn ore/alloy suppliers 150 100 50 • Better management of credit facilities • Improve predictability of cash flow 0 CY10 CY11 CY12 CY13 Source: BHP Billiton Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 14 Summary • Long term drivers of steel demand remain intact with continued urbanisation in developing countries, although China production poised to peak and decline after 2025. • Manganese demand growth remains robust, albeit at a slower pace, and will be increasingly satisfied by imports. • Growth of South African export capacity key to meeting demand growth, and will increase the share of medium-grade ore supply in the long term. • The manganese industry continues to face challenges that will drive us to find ways together to improve competitiveness. • This will impact market-based pricing, raw material preferences and transaction channels and methods. • BHP Billiton is well-placed to provide an optimal blend of medium- and high-grade ores. • Through technical support, BHP Billiton can support our customers to improve their longterm competitiveness. Elsabe Muller, General Manager Manganese Marketing, May 2014 Slide 15
© Copyright 2024 ExpyDoc
