Transcript Magnesia: Macro and micro economic factors

Magnesia 2011: Macro and
micro economic factors
Industrial Minerals
MagMin 2011
Vasili Nicoletopoulos
V.Nicoletopoulos MagMin 2011
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Magnesia 2011: Macro and micro economic
factors
Contents
1. The global and European situation: economics,
finance, politics & policies
2. The Magnesia market today
3. Environmental issues facing the magnesia industry
4. New opportunities and growth in the magnesite sector
5. Conclusions
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1. Review of the global and European situation
– Economics…
• World economies since MagMin 2009: Contrary to my
own predictions, a boom in Asia & elsewhere more than
makes up for [predicted] fall in many EU countries
[Ireland, Spain, Greece, Portugal,…?]
• EU economy: Germany up, South down, others inbetween
• Davos 1/11: Zhu Min, special IMF adviser, coined phrase
“3-speed” recovery : emerging economies set to grow by
> 6 pct in 2011, US by 3 pct, euro area by < 2 pct
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…1. Review of the global and European
situation – Economics…
• EU stimulus packages, European Stability Mechanism: for how
long?
• US: anemic GDP growth, printing money, stimulus packages – ibid
• Rest of World
-China, India booming
-Brazil, Russia doing well
-China top manufacturing country by output, returning to early
19th century position & ending US’s 110-year run as largest
goods producer. Inflation concerns loom large for miners
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…1. Review of the global and European
situation – Economics…
• US-China ‘$ Gulf Stream’ – Australia-China ties
• China's ambitious, high-growth 5-year plan stirs
climate debate
• EU budget problems & privatization: Coal miners
in Poland protest
• Fuels: oil up, gas [LNG, fracking]; nuclear major
setback – China, Lithuania insisting, Turkey w/
Russia, but Germany & Italy cancelling nuclear
program
• Commodities boom…or bubble?
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…1. Review of the global and European
situation – Economics
• Australian mining companies recruiting at Expo
in Alberta 5/11
• High oil prices start to hit demand
• Indian Premier calls urgent meeting on coal
shortage
• Beware risks inherent in the global recovery
• RTZ Chairman: "near-term, world financial
markets remain fragile. Persistent economic &
financial imbalances continue to pose risks"
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1. Review of the global and European situation
- Finance
• World banking & finance: both tight
• Interest rates rising again
• Treasurer’s role: after 30 years of declining real interest
rates, need new mindset: building robustness into capital
structures to cope w/ more inflation, higher real interest
rates, adverse demographics, declining saving rates in
larger Asian economies
• Magnesia currencies: low USD vs euro/ yen/ real/
Australian dollar - slightly down vs RMB; DPRK: officially
USD1=KPW100, market closer to USD1=KPW3000, ie.
Nov. ’09 redenomination all but neutralized
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1. Review of the global and European situation
– Politics & Policies
• EU, US: Inequalities, unemployment. Among & within EU
countries: eg. Germany plans restructuring Greece’s
sovereign debt if reforms fail
• Rising middle classes elsewhere
• N. Africa & M. East: major turmoil  oil/gas, immigration
• N. Korea problems
• Blow to push for single EU patent regime
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1. Review of the global and European situation
- Politics and policies, mining…
• China restricting exports of some minerals,
metals. Reasons: own consumption,
environment, cost
• EU RMI – criticality - Raw Materials Initiative:
Trade and internal market
• Resource efficiency strategy
• WTO examining ‘1st wave’ of Chinese export
restrictions
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…1. Review of the global and European
situation - Politics and policies, mining
• The new geopolitics of oil
• RTZ: ‘Australia, don’t ETS before US, China’
• Rising role of resource nationalism [Ernst & Young] –
magnesia unaffected
• Chinese buying binge for mining companies – ibid
• EUROFER legal action against EU ETS
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2. Review of the Magnesia market situation…
•
•
•
•
Focusing on demand, economics & politics
I. Wilson to cover supply
A suppliers’ market
Chinese smuggling continues: ‘400-500 ktpy or 50% of
exports to Japan, S. Korea, Taiwan [Asian Metal]
• New projects on stream: S.Arabia, Turkey,…
• ‘Magnesia's phoenix and flyers’ IM May 2011
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2. Review of the Magnesia market situation,
steel…
• 2010: biggest increase in 55 years!
• Global 3/11 crude production: new monthly record 129.3
Mt, driven by growth in Asia even after Japan's
earthquakes/tsunami
• China's 2/11 daily crude 1.94 Mt; year-end capacity 768
Mt -- biggest task: controlling excess capacity–CISA;
small blast furnaces stop using costly imported iron ore
• US: Q1 losses, but signs of improving global economy
spurring demand. U.S. Steel ‘sold out in N.America’
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…2. Review of the Magnesia market
situation, steel…
• ArcelorMittal SA sees sharp drop in Q1 profit
• German carmakers’ sales soar
• Rautaruukki better-than-expected Q1 ’11 - robust sales,
higher prices
• Turkey's crude up 31 pct Q1 ’11: 7.9 Mt
• Ernst & Young: concern about global over capacity &
continued increase in input costs
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…2. Review of the Magnesia market situation,
steel, mi. mt
Europ.
EU (27)
2004
340
203
2005
334
2006
Asia
Σ*
N.Amer
S.Amer
113
134
46
513
283
113
1 072
196
113
128
45
596
353
113
1 144
355
207
120
132
45
672
419
116
1 247
2007
365
210
124
133
48
757
489
120
1 346
2008
342
198
114
125
47
771
500
119
1 327
2009
266
139
98
82
38
805
574
86
1 229
2010
315
173
109
112
44
898
627
110
1 414
% 10/09
18.6
24.6
11.2
35.7
15.9
11.6
9.3
25.2
CIS
China
Japan
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*Also includes Africa, M.East, Australia, N.Zealand
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2. Review of the Magnesia market
situation, cement, mi. mt
China
India
USA
Turkey
Brazil
Japan
Iran
Spain
Vietnam
Russia
2010e
1800
220
64
60
59
56
55
50
50
49
Egypt
Korea
S.Arabia
Indonesia
Italy
Mexico
Germany
Thailand
Pakistan
Other Countries
2010e
48
46
45
42
35
34
31
31
30
520
World Total ’10 : e3300
World Total ’09 : e3060
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…2. Review of the Magnesia market situation…
Refractories
• Global demand to rise 5.3% pa through ’14, to
40.7 million metric tons.
• China to remain largest national market,
comprise the majority of global demand
• RHI seeking security of supply, acquires SMA
Magnesia for fused magnesia supply
• M&A: Krosaki Harima buys Tata Refractories
majority 4/11, RHI/Magnesita?
• RHI Q1 sales up 21% but profit margin down
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…2. Review of the Magnesia market
situation
CCM
• Good market
Brucite
• Chinese export market keeps active
Trade policy
• EU ccm antidumping terminated 2010, dbm May 2011–
1st time in over two decades w/o EU MgO antidumping
• US: mag-carbon brick industry materially injured by
subsidised imports fm China & Mexico, in line w/ Dept of
Commerce’s decision
• EU Chinese ceramic tiles anti-dumping duties
• WTO and the Chinese export regime
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3. Environmental issues facing the magnesia
industry…
ETS
• In the EU/EFTA, & ~ nowhere else!
• Free allowance allocation rules
• Possible financial support for indirect emission costs…but
state-aid issues
• SILC initiative on funding to reduce GHG
• Organized criminals stealing EU ETS permits, sparking police
hunt across, battering confidence in the 80 billion-euro market
• Roadmap to a competitive low carbon economy in 2050
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…3. Environmental issues facing the magnesia
industry
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•
•
•
•
EU Energy taxation proposals
SOx/NOx emissions reduction --> trading in the EU?
REACH
CLP: MSDS etc
BAT: EU MgO producers’ case before EU General
Court of Justice
• DPRK eyes carbon market
• Euromines new Communications Committee
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4. New opportunities and growth in the
magnesite sector…
MgO production side:
• Natural gas: price down, new ‘deposits’ due to frack
sands
MgO demand side:
• Major breakthrough for a new application
[environmental?] still missing
• Potential exception: Novacem, Calera, TecEco etc.
cement absorbing CO2 & other GHG, converting into
carbonate [CO3] - ‘Can effectively store CO2 & other
pollutants in building materials: CO, NOx, SO2, Hg,
particulates,…’
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…4. New opportunities and growth in the
magnesite sector
Other
• EU Innovation strategy
• Brucite as an alternative magnesium hydroxide source to
reduce CO2 output?
• Can Mg(OH)2 replace aluminium tri hydrate in certain
applications?
• Other?
• In processing: have not been following – RE ‘turmoil’,
calcination, SOx/NOx reduction?
• Blow to push for single EU patent regime
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Closing Remarks - ‘Take home’ General…
•
•
•
•
World economies defy gravity
Rebound in 2010, 2011…mostly in Asia
Strong BRIC role
China could get as strong as in the early
19th century & ending US’s 110-year run as largest
goods producer
• Are govt stimulus packages [+US printing $]
sustainable? – debts, deficits
• Inequalities, unemployment,…
• Fuel uncertainty
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…Closing Remarks - ‘Take home’ Magnesia…
•
•
•
•
•
•
Strong rebound from 2009
Suppliers’ market
‘Security of supply’ comeback
Capacity additions
No new applications, so far…
EU: high emphasis on environment…with nobody
else following - ‘Until recently, China the enemy of
EU magnesia & EC its’ ally; now roles reversed!’…
• …but EU producers still profitable
• China: from exporter to ‘regulator/driver’ [&
consumer? but wherefrom?]
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Thank you very much
Vasili Nicoletopoulos
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