Nickel: The Companies and Their Markets

Transcription

1 Nickel: The Companies and Their Markets Paul Dewison Director, INSG Meeting: October 9 th 212 Outline This presentation is intended to help answer: o Who are the nickel companies? o What is their strategy towards nickel? o How does nickel fit within an overall business profile? o How does nickel fit within companies minerals business profile? o What groups of companies apply to nickel? o.. and what can we say about them? o How is the nickel company profile evolving? o Can we spot winners and losers looking forward?

2 The Nickel Miners Little change at the top Norilsk and Vale Clear Market Leaders Company Base Output 211 (kt Rank Rank Share 211 Share 27 Ni) Norilsk Nickel Russia % % 1 Vale Brazil % % 2 BHP Billiton UK / Australia % 3 8.1% 4 PT Antam Indonesia % 4 8.6% 3 Xstrata Switzerland % 5 5.5% 6 Eramet France % 6 6.% 5 Jinchuan China 6 3.7% 7 4.2% 7 Anglo American United Kingdom % 8 3.2% 8 Nickel Asia Philippines 48 3.% 9 2.% 11 Votorantim Brazil 41 25% 2.5% 1 18% 1.8% 12 Sumitomo Japan % % 14 Sherritt Canada % % 1 Cubaniquel Cuba 3 1.8% % 9 Minera (Glencore) Switerland % % 13 Larco Greece % 15 1.% 16 s % 18.4% Total The Finished Nickel Producers Again, quite stable in the recent past Leaders share eroded by growing presence of NPI Company Base Output 211 (kt Rank Rank Share 211 Share 27 Ni) Norilsk Nickel Russia % 1 2.2% 1 Vale Brazil % % 2 Jinchuan China % 3 8.% 4 Xstrata Switerland % 4 8.8% 3 BHP Billiton UK/Ausralia % 5 7.3% 5 Sumitomo Japan % 6 4.3% 6 Eramet France % 7 4.2% 7 Anglo American United Kingdom 49 3.% 8 3.4% 8 QNI Australia % 9 2.2% 12 Sherritt Canada % 1 2.4% 11 Minera (Glencore) Switerland 3 1.9% % 13 Cubaniquel Cuba 3 1.8% % 9 Cunico Macedonia % % 15 Pacific Metals Co Ltd Japan % % 1 Votorantim Brazil % % 14 Refined Ni & FeNi Producers 1 6.1% 11.8% Nickel Pig Iron Producers %.6% Total

3 Mine and finished Ni product companies compared largely the same companies, but some key differences Mined Nickel Finished Nickel Norilsk Nickel Vale BHP Billiton PT Antam Xstrata Eramet Jinchuan Anglo American Nickel Asia Votorantim s Norilsk Nickel Vale Jinchuan Xstrata BHP Billiton Sumitomo Eramet Anglo American QNI Sherritt s Processed Chinese NPI Strategic Positioning of the Major Players nickel companies vary enormously in their approach to the business Bubble sizes indicate output of finished Ni in 211. Focus on Ni indicates share of revenue accounted for. Diversity in Ni reflects product, market and geographical range of the company

4 7. %. % Describing nickel company business profiles (1) radar chart (1) Industrial Describing nickel company business profiles (2) radar chart (2) Business in Energy & Precious Metals

5 % 7. %. % Describing nickel company business profiles (3) radar chart (3) Norilsk Focussed on nickel across a broad range types of company in nickel (1) The market leader is different in type from its main competitors Business Energy & Industrial Precious Metals

6 7. %. % 7. % 7. % Norilsk Nickel Revenues and Net Profit Revenues by Segment H , 2, USD million Revenues / Sales Net Profit Net Profit Margin 5% 4% 3% 15, 2% 1, 1% 5, % H % Around 5% of the revenues of the first nickel producer come from that metal. Nearly all other revenue derives from metal coproducts and by products In both mine and refined output, Norilsk is top of the ranking than Russia, Norilsk has divisions in Finland, Africa and Australia. Norilsk will lose share as a result of large project developments by others US$ 6.45 billion Apportiment estimated Nickel Copper Palladium Platinum Gold Nickel within a broad base metals biased mining portfolio types of company in nickel (2) Anglo. Xstrata and now First Quantum fall into this category Business Energy & Industrial ANGLO AMERICAN XSTRATA FIRST QUANTUM Precious Metals ANGLO AMERICAN XSTRATA FIRST QUANTUM ANGLO AMERICAN XSTRATA FIRST QUANTUM

7 Xstrata Revenues and Net Profit Revenues by Segment H , 35, US$ million Revenues / Sales Net Profit Net Profit Margin 35% 3% 3, 25% 25, 2% 2, 15, 15% 1, 1% 5, 5% H1 12 Xstrata is first of all a non ferrous metals mining company, with a big presence in processing. Nickel is part of this. Coal is also an important business for Xstrata In 211, Xstrata reversed a recent decline in output. Its profile in nickel is set to grow further with the start up of Koniambo Taken with Glencore, Xstrata s role in nickel is much larger, even before a merger % Total US$15.5 Billion Alloys Coal Copper Nickel Zinc Anglo American g Revenues and Net Profit Revenues by Segment H , US$ million 5% Revenues / Sales 35, Net Profit Net Profit Margin 4% 3, 25, 3% 2, 15, 2% 1, 5, 1% H1 212 Although nickel represents a small part of its revenues, the size of the company makes it important in the global market, set to become more so with output from Barro Alto Business associated with steel, base metals and precious metals & diamonds each from a big portion of Anglo s overall business portfolio % US$16.4 billion Iron Ore etc. Met Coal Thermal Coal Copper Nickel Platinum Diamonds

8 7. % 7. % First Quantum Revenues and Net Profit Revenues by Segment H , US$ million 5% 3, Revenues / Sales Net Profit NetProfitMargin 4% 3% 2, 2% 1% 1, % H % In contrast, First Quantum is entirely a base and precious metals business, with copper being its dominant business FQM s initiative to diversify out of copper led it to look at nickel, where it has become a significant player In volume, the big contribution comes from BHP s former Ravensthorpe facility. It is also performing greenfield, with Kevista in Finland US$ 1.43 billion Copper Gold Nickel etc. Nickel within a broad steel materials biased mining portfolio types of company in nickel (3) The mining giants Vale and BHP are in this group, but not Rio Tinto Business Energy & Industrial VALE BHP BILLITON Precious Metals VALE BHP BILLITON VALE BHP BILLITON

9 Vale Revenues and Net Profit Revenues by Segment H , 6, 55, 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, US$ million Revenue/Sales Net Result Net Margin H1 212 Iron ore giant Vale is the world s second biggest nickel producer, having acquired a big stake in the industry with the purchase of Inco in 25 Its revenue from nickel account for 1% of its total sales, where ferrous minerals account for 8% Developing rapidly in the business, current projects include Onça Puma in Brazil and VNC (Goro) in New Caladonia 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % Total US$23.5 Billion Ferrous Nickel Copper Aluminium /Oth NF Logistics etc. BHP Billiton Revenues and Net Profit Revenues by Segment H , US$ million 5% 7, 6, Revenues / Sales Net Profit Net Profit Margin 45% 4% 35% 5, 3% 4, 25% 3, 2% 2, 15% 1% 1, 5% 7/8 8/9 9/1 1/11 11/12 H1 12 A giant in mining with revenues running at around $7 billion annually and a net profit ratio of around 25% A major focus is on bulk steel making raw materials. Nickel forms part of this business, and is to be found within the company s Stainless Steel Raw Materials grouping While BHP is placing some investment in nickel, it has divested assets in this sector % US$16.4 billion Petroleum Aluminium Diamonds etc. Stanless Mat. Iron Ore Manganese Met Coal Energy Coal

10 % 7. % The base metals processors types of company in nickel (4) Sumitomo MM and Jinchuan are leaders in nickel Business Energy & Industrial SUMITOMO METAL MINING JINCHUAN Precious Metals SUMITOMO METAL MINING JINCHUAN SUMITOMO METAL MINING JINCHUAN Sumitomo Metal Sumitomo Revenues MM Revenues and Net and Profit Net Profit Revenues by Segment H ,5 Yen billion 5% 1,25 Revenue/Sales Net Result 4% Net Margin 1, 3% % 1% 7/8 8/9 9/1 1/11 11/12 H1 212 Turning to a very different type of company, metals processor Sumitomo Meta is the 6th largest nickel producer SMM is increasingly active in sourcing captive feed material at the mine source. It is involved in the 3 ktpy Taganito Project in the Philippines, scheduled for completion in 213 With this, SMM intends to raise its smelter output to 1 ktpy Ni. Ultimately, it targets 15 ktpy Ni % Total Yen 41 Billion Materials Copper Smelting Gold Smelting Nickel Smelting Smelting

11 7. %. % 7. % 7. % Nickel focused, raw and semi processed materials bias types of company in nickel (5) A range from ore extraction to sophisticated first level processing Business Energy & Industrial PT ANTAM TALVIVAARA NICKEL ASIA Precious Metals PT ANTAM NICKEL ASIA TALVIVAARA PT ANTAM NICKEL ASIA TALVIVAARA PT Antam 2, 15, Revenues and Net Profit Revenues by Segment H1 212 Local Currency 5% Revenue/Sales Net Profit 4% Net Profit Margin 3% 1, 2% 5, 1% H1 212 PT Antam is focused on ore, producing nearly 8 Mt in 211 Relatively weak in ore processing, In 211 the company produced at little less than 2 kt of ferronickel. As part of a drive by Indonesia to add value to its ores, PT Antam recently secured US$65 million in loans to allow it to develop a 27 ktpy ferronickel facility at East Halmahera, North Maluka % Rp 4.5 billion Nickel Gold s

12 Talvivaara 5 Talvivaara Revenues Revenues and Net and Profit Net Profit Revenues by Segment H1 212 Euro million 5% 25 Revenue/Sales Net Result Net Margin 25% % H % Also In Finland, we have the new one project company Talvivaara with its unique bioleaching process producing nickel in intermediate form, with some zinc While output is currently running at 2 ktpy product output, it is position to ram this up to 5 ktpy, with ambitions to take this up to 1 ktpy Talvivaara s product profile should also broaden, including copper and uranium Total Euro 73 Million (apportionment estimated) Nickel Zinc Nickel focused, end product FeNi types of company in nickel (6) Pyro processing of on site laterites Business Energy & Industrial Precious Metals

13 % 7. % Companies with a broad range extraction and industrial business types of company in nickel (7) Though individually different, companies all have a broad business footprint Business Energy & Industrial ERAMET VOTORANTIM SHERRITT Precious Metals ERAMET SHERRITT VOTORANTIM ERAMET SHERRITT VOTORANTIM Eramet Revenues and Net Profit Revenues by Segment H , Euro million 5% Revenue/Sales Net Result 4% 4, Net Margin 3% 2% 1% 2, % 1% H % Nickel is one of three business areas for the French company Eramet. While nickel accounts for over 35% of revenue. The other segments are manganese and alloys, placing the company overall squarely in the high end steel materials business. After a long history in New Caladonia, Eramet is now looking to widen its presence in nickel with Weda Bay in Indonesia Euro 1.73 billion Nickel Manganese Alloys

14 Sherritt Revenues and Net Profit Revenues by Segment H , US$ million 5% Revenue/Sales Net Result Net Margin 4% 2, 3% 1, 2% 1% H1 212 A relatively small company, Sherritt s main business is in energy, mostly at the extraction stage Sherritt s presence in nickel and cobalt is tied to its long association with State interests in Cuba through Moa Nickel The company is transforming itself in nickel through the Ambatovy project in Madagascar. It also acquired a large share in the Sulawesi project in Indonesia. From Rio Tinto % US$.95 billion Nickel Cobalt Fertilisers Metals Coal Oil & Gas Power Votorantim Revenues and Net Profit Revenues by Segment H , 35, 3, Real billion Revenue/Sales Net Result Net Margin 5% 4% 25, 3% 2, 2% 15, 1% 1, 5, % H % Brazilian focussed Votorantim is another long established player in nickel Votorantim s main business is in minerals extraction and first processing, where metals compete with cement for leadership. It also is present in steel and pulp In metals, nickel business is significant, theough it comes some way behind zinc and aluminium Total Real 11.8 Billion Cement Metals Aluminium Nickel Zinc Steel Pulp

15 Steel companies reaching back into nickel types of company in nickel (8) Highly focussed on raw materials sourcing Business Energy & Industrial Precious Metals Glencore A trading company involved directly in minerals types of company in nickel (9) Dominance of trading business in turnover belies the huge industrial business Business Energy & Industrial Precious Metals

16 % 7. % Glencore Revenues and Net Profit Revenues by Segment H , 2, 175, US$ million Revenue/Sales Net Result Net Margin 25% 2% 15, 125, 15% 1, 75, 1% 5, 5% 25, H1 212 In terms of revenue, Glencore far outstrips even the largest mining companies. Most of the revenue is in trading In its industrial business, Glencore is a little behind the biggest mining majors. All business, including industrial is split between energy, metals and agriculture, Nickel industrial operations are small in relation to overall business, but significant overall. % US$18 billion Note: The non marketing industrial activities account for US$7.1 billion in revenue Marketing Zinc Copper Alumininium Steel Mat etc. Energy Agriculture Glencore and Xstrata natural partners? implications of a company merger Excluding Glencore marketing, there is a match in business range Business Energy & Industrial GLENCORE XSTRATA Precious Metals GLENCORE XSTRATA GLENCORE XSTRATA

17 Nickel products and their markets Going forward, this evolving matrix is very relevant in a changing supply picture Percentage (%) Pellets, Powders, Salts, Ni Oxide Premium Electro Electro Briquettes FeNi NPI All Nickel Stainless Steel 7.9%.1% 13.% 9.7% 18.2% 16.2% 65.1% Steel Mill.3%.1% 3.4%.3%.4% 4.5% Foundry.1% 3.4%.4% 3.9% Nickel Alloy 2.8% 4.5% 2.5% 9.8% Electoplating 2.5% 4.1% 3.3% 9.9% Uses 2.1% 2.% 2.7% 6.8% Total 15.6% 1.9% 28.3% 1.4% 18.6% 16.2% 1 Thank You. For further information on this presentation, contact: paul.dewison@intierrarmg.com This presentation is produced by IntierraRMG (UK) Ltd in the United Kingdom. UK OFFICE ADDRESS Abbey House, Fifth Floor St John Street London EC1M 4DZ, U.K. Phone: +44 () General enquiries: reports@intierra.com UK OFFICE CONTACTS Paul Dewison Director, paul.dewison@intierrarmg.com Chris Hinde Editorial Director chris.hinde@intierrarmg.com