Nickel, Cobalt & Manganese History and Factors Affecting Future Demand Difficulties of Projecting Demand • Metal Demand is subject to unpredictable factors, both transient and transformational • Four examples from the mid-1970s demonstrate the difficulty: USGS Medium and Low Projections, Wassily Leontief, and Wilfred Malenbaum Forecasting Demand is a Risky Effort Year Nickel Copper Cobalt Manganese USGS- Med. 1705 19,500 79.7 22,100 USGS-Low 1290 14,700 57.8 20,000 Leontief 2833 31,300 Malenbaum 1446 18,523 63.3 18,503 Actual 1290 13,300 37.9 6,960 Rating the Projections Copper - 2000 Nickel - 2000 35,000 3000 30,000 2500 25,000 20,000 2000 15,000 1500 10,000 5,000 1000 0 500 f e m u Actual 0 Leonti lenba a USGS-Med. USGS-Low M USGS-Med. USGS-Low Leontief Malenbaum Actual Cobalt - 2000 Manganese - 2000 90 25,000 80 70 20,000 60 15,000 50 40 10,000 30 20 5,000 10 0 0 USGS-Med. USGS-Low Leontief Malenbaum Actual USGS-Med. USGS-Low Leontief Malenbaum Actual Nickel, Cobalt and Manganese Prices (2005 Dollars) 10.00 80.00 9.00 70.00 8.00 60.00 7.00 6.00 50.00 5.00 40.00 cont. MN) 4.00 30.00 3.00 Cobalt ($/pound) 20.00 2.00 1.00 10.00 Nickel ($/pound); Manganese ($/mtu 0.00 0.00 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 Nickel Manganese Cobalt Demand Projections based on Recent Trends 70,000 2,000 Copper growth 4.0% 1,800 60,000 Nickel growth 4..25% Cobalt growth 6.0% 1,600 Mang. Growth 1.0% 50,000 1,400 1,200 40,000 1,000 30,000 800 20,000 600 400 10,000 200 - - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Copper Cobalt Manganese Nickel Nickel • Component in most Stainless Steels • Element in some Steel Alloys • Plating • Batteries (Ni-MH) are a small but growing use of Nickel • 2005 Mine production: 1.5 Million Tonnes • Reserves: 62 Million Tonnes Western World Nickel Use in 2000 QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. 2005 Nickel Production (Thousands of Tonnes) Russia Australia Canada Indonesia New Caledonia Cuba Colombia China Dominican Republic Brazil South Africa Botswana Greece Philippines Venezuela Zimbabwe Other countries 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Nickel and Stainless Steel Demand Growth QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. Nickel Demand in China 200 180 Primary Nickel Demand 160 Ni in Imported Stainless 140 120 100 80 60 40 20 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Nickel Reserves Australia Russia Cuba Canada Brazil New Caledonia South Africa Indonesia China Philippines Colombia Dominican Republic Venezuela Botswana Greece Zimbabwe Other countries 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Cobalt • Essential Metal for Advanced Economies: Superalloys, Carbides, Batteries, Tool Bits and Surface Treatments • Nickel Can Substitute for Cobalt in Some Applications, but not all • Generally Cobalt is a by-product of Nickel or Copper Production • 2005 Mine Production: 52,400 Tonnes • Reserves: 7,000,000 Tonnes Uses of Cobalt QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. 2005 Cobalt Production (Tonnes) Congo Zambia Australia Canada Russia Cuba Morocco New Caledonia Brazil Other countries 0 5,000 10,000 15,000 20,000 Cobalt Reserves (Thousands of Tonnes) Congo Australia Cuba Zambia Russia New Caledonia Canada Brazil Morocco Other countries 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Manganese • Primary use is in steel production • Specialty steel and aluminum alloys • 200 Series Stainless Steel • Batteries: Conventional Alkaline and Advanced Lithium-Ion • 2005 Production: 9,790 Thousand Tonnes • 2005 Reserves: 430,000 Thousand Tonnes 2005 Manganese Production (Thousands of Tonnes) South Africa Australia Gabon Brazil China Ukraine India Mexico 0 500 1000 1500 2000 2500 Manganese Reserves 160000 140000 (Thousands of Tonnes) 120000 100000 80000 60000 40000 20000 0 Ukraine India Australia China South Africa Brazil Gabon Mexico Potential Demand Change: Automobile Design • Rising Fuel Costs are promoting innovations in automobile design • Major Competing Technologies are Advanced Diesel Engines and Hybrid and Electric Vehicles. • Current and projected designs of hybrid and electric vehicles use batteries based on metals from nodules and crusts • Changes in SLI systems (12 volt vs 36 volt) US Sales of Hybrid Cars by Month QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture. Nickel and Cobalt in Batteries for Hybrid Vehicles Metal/ Battery Battery Metal Content 3 Type Weight, 3 kwh kwh battery (Kg) battery (Kg) Nickel/ NiMH 50 12 Cobalt/ 22.65 4.08 Lithium Ion Lead/Lead 85.71 60 Acid Implications of Battery Choice • Annual World Production exceeds 55 Million Automobiles/year • 10% Penetration by Hybrid Vehicles could require 66,000 tonnes of Nickel or 16,500 tonnes of Cobalt (4.5% or 31% of current world production respectively) • Alternative Lithium-Ion batteries could use Nickel, a Nickel/Cobalt combination or Manganese Battery Design Continues to Evolve: Manganese Li-Ion QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. Some Factors Affecting Nickel, Cobalt and Manganese Supply • Supply – Stability of Cobalt exports from the Dem. Rep. Of Congo – Russian Export vs Domestic Consumption of Nickel – Development and Expansion of Major Nickel Deposits (Vosey’s Bay, Goro) – Improved application Pressure Acid Leach processing for Laterites Factors Affecting Nickel, Cobalt and Manganese Demand • Economic Growth in China and other Developing Countries • Use of 200 Series Stainless Steel in place of Nickel-based Stainless • Adoption of Hybrid and Electric Automobiles with High-Capacity Batteries Implications for Seabed Production • Land based reserves of Cobalt, Nickel and Manganese can need demand, so metals from the seabed must compete for market • Economic growth in China and Russia, followed by India and Brazil, will increase need for new sources of nickel and cobalt • By-product relationships are advantage for seabed minerals • Long term contracts for production of specialty products (electrolytic manganese, nickel and cobalt for batteries) could reduce risk and improve economic outlook.