Why Copper

STRUCTURAL INDUSTRY TRENDS

“A declining resource base and aging assets will require miners to access new resources in key new geographies to meet future demand” – Glencore, BAML presentation May’17

Mongolia Copper

Adapted from Glencore, BAML presentation May’17 - new copper geographies listed are highlighted in gold, with the largest consumer of copper, China, highlighted in black


OUTLOOK FOR COPPER

INCREASINGLY FAVORABLE FUNDAMENTALS

Copper Fundamentals

Record consumption of copper and depletion of reserves

  • Copper ranks 3rd in global metal consumption
    (~US$120 billion pa primary demand)
  • Robust demand in downturn and expectations for future growth
    • Bernstein estimates global copper supplies would need to double to meet forecasts demand for electric cars by 2035
    • Refer to Glencore May’17 BoAML presentation for excellent summary on outlook for EVs
  • Previous commodity cycle’s new supply has peaked
  • Estimated 4% pa average decline in existing capacity1

...mine project pipeline at lowest level in 6 years

  • “The global copper industry needs a new Escondida mine (the worlds largest copper mine) every 15 months over the next 10 years in order to meet global demand ...”
    JS (CEO Rio Tinto)
  • Lack of new exploration projects in the pipeline

Without projects supply gap will exceed 15Mt by 2035

Mongolia Copper

Many key operations set to exhaust their current reserves
Peak historic/forecast annual copper production (‘000t) vs Expected LOM (year)

Mongolia Copper

Almost all the uncommitted projects are needed by 2035
Forecast committed copper mine production and potential from uncommitted projects*

Mongolia Copper

* Committed production after disruption; Uncommitted before any adjustments

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