Luke H PhD Conference 2012

20
Africa’s iron ore potential & implications for the global market Luke Hurst (Economics, Crawford School) High Impact Public Policy Research in the Asian Century Crawford School of Public Policy 27 November 2012

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Transcript of Luke H PhD Conference 2012

Page 1: Luke H PhD Conference 2012

Africa’s iron ore potential & implications for the global market

Luke Hurst (Economics, Crawford School)

High Impact Public Policy Research in the Asian Century Crawford School of Public Policy 27 November 2012

Page 2: Luke H PhD Conference 2012

Impact of China’s rise on the iron ore market

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Impact of China’s rise on the iron ore market

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Africa’s iron ore potential

•  475-575mt/a (RBC Capital Markets, 32 mines by 2017)

•  300mt/a (Ocean Equities, 16 mines by 2017)

•  47mt/a (BREE, Guinea & Mauritania by 2017)

•  Obstacles for project development:

o  Lack of infrastructure

o  Lack of knowledge capital

o  Unpredictable governance

o  Western banks hesitant to lend

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Method

•  27 projects (greenfield and expansions)

•  3 risk based scenarios

•  Risk index 1.  Host operational risk 2.  Host political risk 3.  Project infrastructure requirements 4.  Investor experience 5.  Investor-government relations 6.  Funding risks 7.  Chinese ownership & funding

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West & central African iron ore scenarios

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West African exports (BREE 2012)

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West & central African iron ore scenarios

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Low risk capacity West African exports (BREE 2012)

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West & central African iron ore scenarios

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West & central African iron ore scenarios

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Forecast global export demand

2011 2012 2013 2014 2015 2016 2017 2018* High risk Medium risk Low risk Global export demand (BREE 2012) 1075 1149 1213 1279 1355 1439 1500 1561

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Potential for export over-capacity

2011 2012 2013 2014 2015 2016 2017 2018* High risk 0.0% 8.0% 12.1% 17.3% 17.4% 17.8% 23.7% 25.9% Medium risk 0.0% 5.0% 7.3% 10.5% 9.9% 9.3% 12.0% 11.5% Low risk 0.0% 2.5% 3.6% 5.2% 4.9% 4.7% 6.0% 5.8% Global export demand (BREE 2012) 1075 1149 1213 1279 1355 1439 1500 1561

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Ave. CIF A$50-80/t

Import demand (2018) 1561 mt

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Some public policy implications

AUSTRALIA

•  Tax revenues

•  Employment impacts

AFRICA

•  Governance and institutions

CHINA

•  Engagement with developing countries