Water Solutions for Global Mining: Competition, Costs & Demand Outlook, 2014–2019

ADVANCED WATER TREATMENT & DESALINATION GREENFIELD + WATER = BLUEFIELD

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MARKET INSIGHT

Water Solu5ons for Global Mining: Compe55on, Costs & Demand Outlook, 2014–2019

July 2014

ADVANCED WATER TREATMENT & DESALINATION

Water Solu5ons for Global Mining: Compe55on, Costs, & Demand Outlook 2014-‐2019 MARKET INSIGHT

About This Market Insight

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•  This Market Insight highlights the following:

-  An in-depth analysis of planned global hard-rock mining activity by mine, mining company, mineral, and US$ investment.

-  A five-year forecast (2014–2019) of the global hard-rock mining sector’s water demand by region and mineral type.

-  A five-year forecast (2014–2019) of the global hard-rock mining sector’s water & wastewater treatment investment.

-  Profiles of key water technology equipment and service providers active in the global water for mining sector, including mining revenue rankings of construction & design firms.

-  Profiles of leading mining companies and rankings of revenues per m3 water.

-  Mining company water withdrawals, recycled water use (m3), costs and efficiency ratios.

•  This Market Insight analyzes water solutions for copper, gold, nickel, and iron ore, which represent more than 88% of planned hard-rock mining investments worldwide.

•  This Market Insight draws on Bluefield Research’s Advanced Water Treatment & Desalination Insight Service and its ongoing deliverables.

Geographical Coverage

Water Treatment & Solutions Providers

Construction & Design Mining Companies

•  North America •  Latin America •  Asia-Pacific •  Africa •  Europe •  Middle East – North

Africa

•  Abengoa •  Acciona •  AECI •  Ashland Inc. •  Aveng Group •  BASF Mining •  CYTEC •  Clariant AG •  Doosan •  Evoqua •  Flowserve Corp. •  FLSmidth & Co •  GE •  IDE Technologies •  KSB Group •  Kurita Water •  Metso •  Nalco (Ecolab) •  Outotec •  Osmoflo •  Pall Corp. •  Pentair Ltd. •  RWL Group •  Seven Seas •  SNF FloMin Inc. •  Suez Environnement •  Veolia Water •  The Weir Group •  Xylem Inc.

•  AECOM •  AMEC •  Aveng Group •  Bechtel •  Black & Veatch •  CH2MHill •  Fluor •  Grupo ACS •  Hoctief AG •  Jacobs International •  KBR •  Kiewit •  Mott Macdonald •  MWH •  SNC Lavalin •  URS •  Worley Parsons

•  Alcoa •  AngloAmerican •  Barrick •  BHP Billiton •  Citic Pacific •  Codelco •  First Quantum •  Fortescue •  Freeport McMoRan •  Glencore •  Gold Corp •  Newmont •  Norilsk Nickel •  Nova Gold Res •  Rio Tinto •  Rusal •  Teck •  Vale •  Others

Company Segments Analyzed

•  Chemical Companies •  EPC Firms •  Filtration Companies •  Mining Companies •  Pump & Valve

Companies •  Specialized Mining

Equipment Companies

Market Insight Details



Table of Contents Slide #

Section 1 – Introduction

2  About This Market Insight 3  Summary

Section 2 – Market Drivers & Landscape

5 Summary 6  Water Stress and Mineral Footprints 7  Key Markets & Drivers 8 Planned Investments by Project Stage and Country 9 Planned Investments by Mineral Type and Country 10 Mining Sector Contribution to National GDP 11 Policy Drivers – Environmental Regulation 12 Policy Drivers – Mining Sector Growth 13 Australia Mining Sector Resets 14 South Africa Government Long-Term Water Supply Targets 15 Southern Africa, A Long-term Draw for Desalination 16 Planned Chile Copper Mining Investment & Desalination

Section 3 – Mining Company Water Benchmarks

18 Summary 19  Company Strategies & Positioning: Landscape Overview 20  Water Use by Mining Companies 21  Water Use by Source and Region 22  Mining Companies – Future Water Risk

Section 4 – Water Solutions Providers

24 Summary 25  Water Supply Chain Highlighting Key Players 26  Meeting the Key Water Challenges in Mining 27  Global Desalination for Mining Activity 28  Seawater Desalination for Mining Projects 29  Leading International EPCs in Mining 30 Acid Mine Drainage and Wastewater Treatment 31 Large Water Supply & Pipeline Projects

Section 6 – Water Solutions Provider Company Profiles

44  Chemical Company Profiles

AECI Ashland BASF Clariant AG Cytec Dow Kurita Nalco SNF Flomin

45 Specialized Mining Company Profiles

Aquarion FLSmith & Co. Osmoflo Outotec Pall Corp.

Slide #

Section 4 – Water Solutions Providers (continued)

32 Recent Water Related M&A and Partnership Activity in the Mining Sector 33  Recent Market Entry for Water Suppliers in Mining

Section 5 – Market Outlook

35  Summary 36  Growth of Mining Production 37  Water Use by Mineral Type 38  Water Use by Mineral and Country 39  Mining Forecast Methodology & Assumptions 40  Projected Water Use by Hard Rock Mineral and Region 41  Projected Mining Water Use by Region 42  Projected Mining Water Use by Source (continued)

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Table of Contents (continued) Slide #

Section 6 – Water Solutions Provider Company Profiles (continued)

46 Pump & Valve Supplier Company Profiles

Flowserve KSB Group Metso Pentair The Weir Group Xylem

47 Diversified Water System Integrator Profiles

Evoqua GE Water and Process Suez Environnement Veolia Water

48 Desalination Company Profiles

Abengoa Acciona Water Aveng Water IDE Technologies RWL Water Seven Seas Water Valoriza Agua

Section 7 – Mining Company Profiles

50  Anglo American 51  Barrick Gold Corporation 52  BHP Billiton 53  Codelco 54  Freeport McMoRan Copper & Gold 55  Fortescue Metals Group 56  Glencore Plc 57  Goldcorp Inc. 3

Slide #

Section 7 – Mining Company Profiles (continued)

58  Norilsk Nickel 59  Newmont Mining Corp. 60  Rio Tinto 61  Rusal 62  Teck Resources 63  Vale S.A.

Section 8 – Planned Mining Projects & Investments

65–72 Planned Mining Investment Database (200+ projects)

Inputs include:

Project Name Project StatusCountryWater StressPrimary MineralMine Owners (% stake)Investment (US$)

Water Solutions for Global Mining: Competition, Costs & Demand Outlook, 2014–2019 is part of Bluefield’s Advanced Water Treatment & Desalination Insight Service. Advanced Water Treatment & Desalination Insight Service provides clients with a steady stream of in-depth analyses of evolving water treatment markets, company strategies, demand shifts, and the underlying drivers for greenfield opportunities.. Learn more at www.bluefieldresearch.com.



Sample Analysis: Key Markets & Drivers (Section 2, Slide 7)

Key Drivers for Water Technology & Management Solutions

The demand for water solutions is largely bifurcated between securing water supplies (e.g. desalination, groundwater) and mandated treatment of effluents (e.g acid mine drainage), thereby creating a mix of opportunities for water technology and system suppliers.

Source: Bluefield Research

Chile Australia Peru South Africa Canada Brazil United

States Indonesia

Mining Policies

Scarcity of Water Supply

Mine Dewatering Risk

Acid Mine Drainage

Primary Mining Products (Hard Rock)

•  Copper •  Copper •  Gold •  Iron •  Nickel

•  Copper •  Gold

•  Gold •  Iron

•  Copper •  Gold •  Nickel

•  Iron •  Nickel

•  Copper •  Gold •  Iron

•  Gold •  Nickel

Mining % GDP 19% 10% 12% 9% 4% 4% 2% 2%

Strong Impact High Impact Medium Impact Limited Impact

•  More mature economies– Australia, Canada, and the US– have established environmental mandates on mining activities that are slowly being adopted in emerging markets.

•  Chile’s US$16.4 million fine on and temprary shutdown of Barrick Gold’s operations and Peru’s move to evaluate environmental impacts through SENACE signals stronger regulatory enforcement in the region.

•  Broader mining oversight– via public pressure– has been a recent effect of water scarcity and competition for supply. As a result, seawater desalination supply is on the rise in key markets including Chile, Namibia, and Australia.

•  More than 6,000 closed mines in South Africa have sparked debate over acid mine drainage and its impact on existing water source. An analysis of 40 copper mines in the US indicated an average treatment cost of US$1.28/m3, highlighting the potential cost. South Africa’s DWR has estimated US$1 billion in costs.

•  The impact of the mining sector on GDP alters the discussion at a political level, focusing attention on the mining sector and potentially slowing sweeping changes to policies and regulations on the sector.

Analysis



Bluefield’s analysis of 15 leading mining companies highlights the growing impact of water management on their ongoing operations

Sample Analysis: Water Use by Mining Companies (Section 3, Slide 20)

*Only Glencore’s revenues from its metals and minerals division included. Revenues from the energy and agriculture groups were excluded, falling outside the scope of this report. Note: The companies analyzed are intended to be reflective of the mining sector. Source: Mining Companies, CDP, Bluefield Research

•  These leading mining companies report a combined 25.3 million m3/d of water usage in 2012, of which 62% was recycled. While this represents a significant share, planned mining capacity additions are expected to add to the demand for increased recycling.

•  As a benchmark, mining companies have reported revenues per cubic meter withdrawn as an indicator of water efficiency per dollar. BHP Billiton stands out with US$344/m3 withdrawn.

•  The wide disparity between BHP Billiton’s US$344/m3 and Newmont’s US$19/m3 highlight the impact of mineral focus and availability of water.

-  Brazil-based Vale S.A. water usage is largely a result of its high water usage iron ore mining. Further, much of its activities are in low water-stress regions.

-  In contrast, Newmont Mining and Codelco’s recycled water use is 32% and 75%, respectively. The potential mandates of costly desalination for mines in Chile, could force a change to greater reuse for these companies.

Analysis

Glencore Xstrata* $90/m3

Rio Tinto $135/m3

Newmont $19/m3

Vale $142/m3

BHP Billiton $344/m3

Rusal $84/m3

Freeport McMoRan $93/m3

Codelco $88/m3

Anglo American $235/m3

Norilsk Nickel $94/m3

Teck $88/m3

Alcoa $232/m3

Barrick Gold $130/m3

GoldCorp $111/m3

Fortescue $143/m3

0 200 400 600 800 1,000 1,200 1,400 1,600

million m3/yr

Withdrawn

Recycled

0 20,000 40,000 60,000 80,000 100,000 million US$

Copper

Gold

Iron

Nickel

Coal

Other

Revenue per m3

withdrawn Revenues (2012) Water Use (2012)

Recycled Water Data Undisclosed





Water Solutions for Global Mining: Competition, Costs & Demand Outlook, 2014-2019 Publication Date: July 2014

This Market Insight highlights the following: -  An in-depth analysis of planned global

hard-rock mining activity by mine, mining company, mineral, and US$ investment.

-  A five-year forecast (2014–2019) of the global hard-rock mining sector’s water demand by region and mineral type.

-  A five-year forecast (2014–2019) of the global hard-rock mining sector’s water & wastewater treatment investment.

-  Profiles of key water technology equipment and service providers active in the global water for mining sector.

-  Mining company water withdrawals, recycled water use (m3), costs and efficiency ratios.

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© 2014 BLUEFIELD RESEARCH, LLC.

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Water Solu5ons for Global Mining: Compe55on, Costs & Demand Outlook, 2014-‐2019

Water Solutions for Global Mining: Competition, Costs & Demand Outlook, 2014–2019

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global mining

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