Magnesia: Macro and micro economic factors - PowerPoint

Document Sample
Magnesia: Macro and micro economic factors - PowerPoint Powered By Docstoc
					Magnesia 2011: Macro and
 micro economic factors
       Industrial Minerals
          MagMin 2011

        Vasili Nicoletopoulos




         V.Nicoletopoulos MagMin 2011
                 version May 12         1
  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




                    V.Nicoletopoulos MagMin 2011
                            version May 12                2
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 in-
  between
• 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




                         V.Nicoletopoulos MagMin 2011
                                 version May 12           3
 …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




                         V.Nicoletopoulos MagMin 2011
                                 version May 12                        4
    …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?
                  V.Nicoletopoulos MagMin 2011
                          version May 12          5
 …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"
                  V.Nicoletopoulos MagMin 2011
                          version May 12           6
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
                      V.Nicoletopoulos MagMin 2011
                              version May 12                7
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




                     V.Nicoletopoulos MagMin 2011
                             version May 12               8
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

                    V.Nicoletopoulos MagMin 2011
                            version May 12           9
 …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




                     V.Nicoletopoulos MagMin 2011
                             version May 12               10
    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




                    V.Nicoletopoulos MagMin 2011
                            version May 12               11
  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’



                     V.Nicoletopoulos MagMin 2011
                             version May 12              12
    …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




                     V.Nicoletopoulos MagMin 2011
                             version May 12                 13
  …2. Review of the Magnesia market situation,
                  steel, mi. mt

            Europ.     EU (27)    CIS     N.Amer      S.Amer         Asia    China    Japan    Σ*
   2004         340         203     113        134          46        513       283     113   1 072
   2005         334         196     113        128          45        596       353     113   1 144
   2006         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      15



*Also includes Africa, M.East, Australia, N.Zealand


                                      V.Nicoletopoulos MagMin 2011
                                              version May 12                                        14
2. Review of the Magnesia market
     situation, cement, mi. mt
                      2010e                           2010e
China                 1800          Egypt               48
India                  220          Korea               46
USA                     64          S.Arabia            45
Turkey                  60          Indonesia           42
Brazil                  59          Italy               35
Japan                   56          Mexico              34
Iran                    55          Germany             31
Spain                   50          Thailand            31
Vietnam                 50          Pakistan            30
Russia                  49          Other Countries    520
World Total ’10 : e3300
World Total ’09 : e3060
                      V.Nicoletopoulos MagMin 2011
                              version May 12                  15
…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
                  V.Nicoletopoulos MagMin 2011
                          version May 12          16
    …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

                     V.Nicoletopoulos MagMin 2011
                             version May 12              17
 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




                        V.Nicoletopoulos MagMin 2011
                                version May 12                  18
…3. Environmental issues facing the magnesia
                  industry

• 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


                   V.Nicoletopoulos MagMin 2011
                           version May 12          19
     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,…’


                     V.Nicoletopoulos MagMin 2011
                             version May 12              20
…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

                     V.Nicoletopoulos MagMin 2011
                             version May 12            21
      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


                    V.Nicoletopoulos MagMin 2011
                            version May 12             22
    …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?]


                     V.Nicoletopoulos MagMin 2011
                             version May 12              23
  Thank you very much
         Vasili Nicoletopoulos




V.Nicoletopoulos MagMin 2011
        version May 12           24

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:63
posted:8/8/2012
language:Latin
pages:24