critical mining countries of the Energy transition Perú Chile

critical mining countries

1. Critical mining countries
of the energy transition:
Peru and Chile"
Julian Kettle SVP, Vice Chairmanof Metalsand Mining
Wood Mackenzie

2. -5
0
5
10
15
20
25
30
35
40
2000 2010 2020 2030 2040 2050
Bt CO
2
ETO Scenario AET1.5 AET2
Global energy-related CO₂ emissions, Bt
Net zero before 2050 is needed to meet ambitious Paris goals
Scenario Trajectory Policy Enablers
Energy
Transition
Outlook
Consistent with 2.3 ˚C
global warming
Evolution of current
policies and aligns
with the SPOs
released in H1 2023
Steady
advancement of
current and nascent
technologies
(ETO base case)
Announced
Pledges Case
Scenario
Consistent with below
2 ˚C warming (Global
net zero by 2060)
Aligned with NZE
pledges announced
in the run up to
COP28
Incorporates policy
response to the
current energy
crisis, and
geopolitical
challenges
(AET-2)
Paris-aligned
Scenario
Consistent with 1.5 ˚C
warming (Global net
zero by 2050)
Aligned with most
ambitious goal of
Paris Agreement
Early peak energy;
rapid hydrogen and
carbon removal
deployment;
consumer shift
(AET-1.5)

3. Structural shortages develop unless $200bn is invested in supply
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
2030 2030 2030 2030 2030 2030 2030 2030 2030 2030 2030 2030
Lithium (CE)CobaltGraphiteNeodymium Zinc Lead Copper NickelAluminiumThermal coalHCC Iron Ore
BRMs REEs Base metals Bulks
2030 Supply Shortage (% of demand)
ETO -BRMs
ETO -Base metals
ETO -Bulks
Committed primary supply versus demand in 2030 –Base Case 2.3
o
C warming

4. ETO -BRMs
ETO -Base metals
ETO -Bulks
-50%
-30%
-10%
10%
30%
2030 2030 2030 2030 2030 2030 2030 2030 2030 2030 2030 2030
Lithium (CE)CobaltGraphiteNeodymium Zinc Lead Copper NickelAluminiumThermal coalHCC Iron Ore
BRMs REEs Base metals Bulks
2030 Supply Shortage (% of demand)
1.5
0
C demand puts huge pressure on supply ($400bn capex)
Paris-aligned AET1.5
Committed primary supply versus demand in 2030 –AET1.5
o
C warming scenario

5. Policy
COP delivers a framework
but is slow
Framework needs to
translate into Policy
Pledges # policy
Covid-19 Debts and the
economic cycle
Recession, inflation, interest
rate cycle put pressure on
government budgets
The Five Energy TransitionPillar’s
Limitations:
»Political cycles (democracy)
»Lack of global alignment
»Countries moving at different
speeds
»Concerns around a Just
transition
»Who pays?
»Developed World Legacy
»Society

6. Governments are aligning to counter China’s dominance
Green Deal: Streamlined regulation
Critical Raw Materials Act: Raw materials
content benchmarks
Battery regulation: domestic sourcing,
recycled content and carbon footprint
CBAM:Drives decarbonisation
China Has established its dominance in
the EV/Energy transition ecosystem
Continuation of new energy vehicle
subsidies to 2027. Does China need to
do anything more?
IRA: $369bn Energy Security and
Climate Change
Section 30D: Clean Vehicle Credit
Section 45X: Advanced manufacturing
production credit
US
US free trade partner
Critical minerals
agreement with US
EU
Critical minerals
agreement with EU
Minerals security
partnership member

7. Circular economy
Greater recycling increases
supply
Reduces the need for primary
Uberisationlowers demand
Lower carbon footprint
Reduced waste
The Five Energy TransitionPillar’s
Limitations
»Inefficient collection
»Degradation/contamination
»Technical first use # second
use
»Costs
»Policy
»Society

8. Scrap is part of the solution to deliver the energy transition
Primary “land bank” needs to be built up first then policy and societal attitudes need to change to
ensure scrap recycling and re-use is maximized
0
100
200
300
400
500
600
0%
10%
20%
30%
40%
50%
20002005201020152020202520302035204020452050
LME Price (2023$) c/lb Cu
% of total copper consumption
Smelter % Refinery %
Global copper scrap consumption and LME copper price
0
10
20
30
40
50
2020 2040 2040:
Increase
scrap
utilisation
to match
availability
2040:
Increase
recycling
collection
rates and
maximise
utilisation*
Total Scrap (Direct Use, Smelter &
Refinery)
Primary (Mined)
Total Cu consumption, scrap v primary under
different recycling rates (Mt)

9. End of life feedstock will make an impact in the 2030s
Secondary supply of battery materials mitigates the need for primary
0
1,000
2,000
3,000
4,000
5,000
6,000 Recycled supply
Demand from batteries
0
50
100
150
200
250
300
0
500
1,000
1,500
2,000
2,500
37% 70% 88%7% 22% 39% 20% 33% 70%
Lithium (kt LCE) Cobalt (kt) Nickel (kt)

10. Technology
Is revolutionising energy
storage
Helps mitigate material
shortages and risk
Mining technology:
Improves productivity
Tailings reprocessing
potentially lowers
capex and opex
The Five Energy TransitionPillar’s
Limitations
»Timescales to commercialise
»Reliance on China
»Knowledge transfer
»Capex requirement
»Project returns
»Policy
»Society

11. The transition to next-generation cathodes is well underway
Helping to mitigate potential structural shortages and reduce ESG risks
Cathode Metals Intensity
0.0
0.5
1.0
1.5
2.0
2.5
LFP
LMFP
NMC811
NMCA
NMX
LNMO LMRO
Iron-based Nickel-based
kg/kWh
Lithium Nickel Manganese Cobalt
Aluminium Iron PhosphorousOxygen
Decrease in lithium
content
Decrease in nickel
and cobaltcontent
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20202022202420262028203020322034
LCO L(M)FP
Low nickel NMC Mid nickel NMC
High nickel NMC N(M)CA
Mn rich Na-ion
Solid-state Advanced
Cathode market share

12. China dominates the energy transition eco-system
Technology transfer and acquiring knowledge will be challenging and critical
Mining Refined/chemicals Components Cell
Raw Materials Manufacturing
Electric vehicle
Sales
China share of
production in
2022
1
st
largest non-China
share
2
nd
largest non-China
share
3
rd
largest non-China
share
All others
24% 67% 82% 79% 59%
3% 74% 74% 87%
3% 84% 80%
74% 52% 80%
4% 76% 85%

13. The Five Energy TransitionPillar’s
Primary Supply
Demand growth assured
More primary supply necessary
due to grade decline and
depletions
Lack of scrap material means
primary supply is the only
solution in many instances
Many uses can only utilise
primary metal
Limitations
»Shareholder reluctance
»Focus on decarbonisation
spend
»Project returns
»Wrong price signals
»Risk appetite
»Lack of advanced projects
»Policy
»Society

14. Early stage mine projects will typically deliver after 2030
Project Lead Times (years) throughout the supply chain are long and rising
0 1 2 3 4 5 6 7 8 9 101112131415
EV
Battery
Cathode
Raw
materials
BYD, China
VW, Germany
Tesla, China
Ultium, US
CATL, Germany
Lithium, mineral
Northvolt, Sweden
Easpring/FMG, Finland
LG ES, Poland
XTC New Energy, China
Dynanonic, China
Lithium, brine
Nickel, sulphide
Nickel, HPAL
Copper

15. Industry under-investment is stark and needs to be front-loaded
Capex needs to accelerate aggressively to deliver the metals for a Paris-aligned pathway
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10
20
30
40
50
60
70
80
90
2015201620172018201920202021202220232024202520262027202820292030
AluminiumCopperLeadNickelZincLithium ExtractiveCobalt ExtractiveAET1.5 capex requirement to 2030 smoothed
Global Metals Investment Capex ($Bn)

16. Copper theoretical shortfall grows from 4Mt in 2030 and 15Mt by 2040
Projects need to be sanctioned but meeting requirements by 2030 will be “challenging”
Global Copper Production and Primary Demand (Base Case ETO 2.3
o
C)
0
5
10
15
20
25
30
35
40
1992 1998 2004 2010 2016 2022 2028 2034 2040 2046
Mt
Possible Projects
Probable Projects
Base Case Production Capability
Primary Demand

17. The Five Energy TransitionPillar’s
Societal buy-in
Mining has a legacy of poor environmental
performance
Mining has been on the back foot
Lack of understanding driven by NGO’s,
Social Media and lack of fact checking
We don’t shout about our successes
Nimbyism (not in my back yard
Education, Education, Education
We must promote our industry!
#NOMETALSNOTRANSITION
Limitations
Rising ESG awareness
Shareholder reluctance
»Rising ESG awareness
»Lower appetite for risk
»Shareholder reluctance
»Risk appetite
»Shortage of advanced projects
»Policy
»Society

18. Net Zero
Energy
Transition
The Five Energy TransitionPillar’s
All need to be aligned and
to play their part IF we
are to accelerate the
transition to deliver net
zero

19. Investment in mining, smelting and refining approaches $1.5tn
Metal Capex Requirement to meet Net-zero aligned pathway (AET 1.5
o
C)
0 100 200 300 400 500 600 700
Copper
Nickel
Aluminium
Lithium
Zinc
Alumina
Cobalt
Nd-Pr
REO
Si metal
Mn
Cr
US$ billions
2030 2040 2050
Picking one winner is easy but all will be winners as the transition is metals-hungry

20. Project Capacity (kt)
Chile 4239 25%
USA 2143 12%
Peru 1945 11%
Argentina 1033 6%
Canada 1030 6%
Russia 794 5%
PNG 747 4%
Ecuador 694 4%
Australia 580 3%
Mexico 535 3%
Indonesia 520 3%
Philippines 512 3%
DRC 392 2%
Zambia 346 2%
Others 1671 10%
Total 17181
Despite ESG risks Chile and Peru have huge Copper endowments
Country Climate change risk and scale of Copper Project opportunities

21. “ THE ENERGY TRANSITION STARTS AND ENDS WITH METALS”
#NOMETALSNOTRANSITION