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

6,96037.913,3001290Actual

18,50363.318,5231446Malenbaum

31,3002833Leontief

20,00057.814,7001290USGS-Low

22,10079.719,5001705USGS-Med.

ManganeseCobaltCopperNickelYear

Rating the ProjectionsCopper - 2000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

USGS-

Med.

USGS-

Low

Leon

tief

Malen

baum

Actu

al

Nickel - 2000

0

500

1000

1500

2000

2500

3000

USGS-Med. USGS-Low Leontief Malenbaum Actual

Cobalt - 2000

0

10

20

30

40

50

60

70

80

90

USGS-Med. USGS-Low Leontief Malenbaum Actual

Manganese - 2000

0

5,000

10,000

15,000

20,000

25,000

USGS-Med. USGS-Low Leontief Malenbaum Actual

Nickel, Cobalt and Manganese Prices (2005 Dollars)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

Nic

kel (

$/po

und)

; Man

gane

se ($

/mtu

co

nt. M

N)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Cob

alt (

$/po

und)

Nickel Manganese Cobalt

Demand Projections based on Recent Trends

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Copper Cobalt Manganese Nickel

Copper growth 4.0%Nickel growth 4..25%Cobalt growth 6.0%Mang. Growth 1.0%

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 aTIFF (LZW) decompressor

are needed to see this picture.

2005 Nickel Production(Thousands of Tonnes)

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000

Other countries

Zimbabwe

Venezuela

Philippines

Greece

Botswana

South Africa

Brazil

Dominican Republic

China

Colombia

Cuba

New Caledonia

Indonesia

Canada

Australia

Russia

Nickel and Stainless Steel Demand Growth

QuickTime™ and aTIFF (LZW) decompressor

are needed to see this picture.

Nickel Demand in China

0

20

40

60

80

100

120

140

160

180

200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Primary Nickel Demand

Ni in Imported Stainless

Nickel Reserves

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000

Other countries

Zimbabwe

Greece

Botswana

Venezuela

Dominican Republic

Colombia

Philippines

China

Indonesia

South Africa

New Caledonia

Brazil

Canada

Cuba

Russia

Australia

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 aTIFF (LZW) decompressor

are needed to see this picture.

2005 Cobalt Production(Tonnes)

0 5,000 10,000 15,000 20,000

Other countries

Brazil

New Caledonia

Morocco

Cuba

Russia

Canada

Australia

Zambia

Congo

Cobalt Reserves(Thousands of Tonnes)

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Other countries

Morocco

Brazil

Canada

New Caledonia

Russia

Zambia

Cuba

Australia

Congo

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)

0 500 1000 1500 2000 2500

Mexico

India

Ukraine

China

Brazil

Gabon

Australia

South Africa

Manganese Reserves(Thousands of Tonnes)

0

20000

40000

60000

80000

100000

120000

140000

160000

Ukra

ine

Indi

aAu

stra

lia

Chin

aSo

uth

Afric

a

Braz

il

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 aTIFF (Uncompressed) decompressor

are needed to see this picture.

Nickel and Cobalt in Batteries for Hybrid Vehicles

6085.71Lead/Lead Acid

4.0822.65Cobalt/ Lithium Ion

1250Nickel/ NiMH

Metal Content 3 kwh battery (Kg)

Battery Weight, 3 kwh battery (Kg)

Metal/ Battery Type

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 aTIFF (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