Transcript Presentation

Canadian Mining and the China
Challenge
FOCAL
Canadian Foundation for the Americas
February 10, 2006
Canada’s Minerals and Metals
Value
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$41.8 billion – 4% of GDP
369,000 direct jobs
$17 billion paid in wages
14% of total Canadian exports
$333 million in R&D expenditures
60% of rail freight revenue
75% of port volumes
Leading destination for exploration
activity ($1 billion)
China’s Need for Resources
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1.3 billion people
Rapidly urbanizing
Rapidly modernizing
Not self-sufficient
Infrastructure gap
GDP growth: 9.5% (2004) and 9.9%
(2005)
• Mineral imports valued at US$151.8
billion
• Mineral exports valued at US$89.4 billion
China – Some Mining Facts
(2004)
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42,589 mining licences
49 to foreign companies
12,793 exploration licences
202 mineral deposits discovered
51 Canadian mining companies with
active interests
China Resource Needs (1)
• Iron Ore Production
385 Mt
• Iron Ore Imports
208 Mt
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Australia
38%
India
24%
Brazil
22%
Canada, Peru, South Africa
• Steel Production
273 Mt
China Resource Needs (2)
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Copper Imports
2.88 Mt
Aluminum Imports 7.0 Mt
Alumina Imports
5.9 MT
Nickel Imports
65,700 tonnes
Both copper and aluminum production
hindered by power shortages
China Resource Needs (3)
• …booming Chinese economy … good times roll
for Latin America’s private mining sector (DJCS,
Jan.27/06)
• Baosteel and nickel producer Jinchuan pledge
$950 M (US) to revive nickel plant in Philippines
(Reuters, Jan.30/06)
• Strong demand from China helped push copper
prices to record levels last year (Globe and Mail,
Jan.23/06)
• China’s
Jan.23/06)
’grab’ for commodities to continue (NP,
China Resource Needs (4)
• China has become aggressive in establishing
trade relations with resource-rich nations (NP,
Jan.23/06)
• Metal prices hit record highs as China
announces strong economic growth (CP, Jan.25/06)
• The base metal industry is enjoying great
market fundamentals and should continue to do
so for some time to come (Aaron Regent, CP, Jan.25/06)
Where the Deals Are
• Africa
• Brazil
• Canada (?)
• Chile
• Peru
• Philippines
Mineral Reserve Levels:
Crisis Looms
1977-2003
How many years
left?
Copper
 64%
10.5
Nickel
 44%
21
Lead
 92%
5.5
Zinc
 77%
7
Silver
 70%
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Implications for Canada
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As Seller
As Site for Investments
As Investor in Chinese Capacity
As Competitor