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Slide1: 

China and India’s Ravenous Appetite for Natural Resources― Their Potential Impact on Colorado Vince Matthews Division Director Colorado Geological Survey

Slide2: 

Everything you need to know about Mineral and Energy in Colorado

Slide3: 

Production of Natural Resources is an Important Part of Colorado’s Economy Until a decade ago, the value of Colorado’s mineral and mineral fuel production was running around $2 billion per year.

Revenue comparison of Colorado’s Important Economic Sectors: 

Revenue comparison of Colorado’s Important Economic Sectors Minerals & Energy Agriculture $ Billion Tourism

Slide5: 

Distribution of Colorado Mineral & Energy Revenues 2005 ($ Billions) CO2 (0.200)

Slide6: 

Production of Natural Resources has Always been an Important Part of Colorado’s Economy

Slide7: 

Boulder 1902

Slide8: 

China India U.S.

Slide9: 

Population Comparison China U.S. India

Slide10: 

“I’ve taken a lot of people to Dalian, and they are amazed at how fast the economy is growing in this high-tech area. Americans don’t realize the challenge to the extent that they should.” --Win Liu, Director of U.S./EU projects “All the years of socialism and controls had taken us downhill to the point where we had only $1 billion in foreign currency. Today we have $118 billion. We went from quiet self confidence to outrageous ambition in a decade.” --Tarun Das, Confederation of Indian Industry China and India’s human resources are driving the explosive consumption of natural resources

Slide11: 

Land Area Comparison China U.S. India

Slide12: 

GDP Comparison China U.S. India

Slide13: 

GDP Growth Comparison China U.S. India

Slide14: 

China GDP Japan GDP 13X 26X GDP Growth Comparison China’s economy has grown much more rapidly than Japan’s did during a similar 25 year period of rapid economic growth.

China’s Share of World Mineral Production in 2003: 

China’s Share of World Mineral Production in 2003 Source: USGS, Kenzie, et al China ranks in the top three of the world’s producers of 15 strategic raw materials. Yet, that is not enough to supply their needs For instance, they are the # 2 copper producer in the world, but they still need to import 43% to fill their consumptive demand.

China’s Production and Consumption of Copper: 

China’s Production and Consumption of Copper Production supplemented by imports Source: USGS, Kenzie, et al

China’s Share of World Mineral Production in 2003: 

China’s Share of World Mineral Production in 2003 Source: USGS, Kenzie, et al China is the world’s #1 producer of iron ore. Again, internal supply met demand until the end of the 20th century.

Leading Importers of Iron Ore—1980–2003: 

Leading Importers of Iron Ore—1980–2003 Sources: U.S. Geological Survey Minerals Yearbook; United Nations Conference on Trade and Development.

Slide19: 

China’s growth in iron ore consumption in 2005 equaled ½ of the total U.S. production

Trends in Demand for Steel: 

Trends in Demand for Steel Source: International Iron and Steel Institute. Demand for iron ore is driven by the demand for steel.

Slide21: 

World Energy Consumption Hydro

Slide22: 

World Energy Consumption Oil

Slide23: 

OIL CONSUMPTION- China Source: BP

Slide24: 

Source: Wood McKenzie China’s internal oil production was sufficient to supply her needs until the mid 90s.

Slide25: 

OIL- CONSUMPTION India Source: BP

Slide26: 

OIL- U.S. Consumption

Slide27: 

OIL- U.S. Production Source: BP

Slide32: 

In 1956, M. King Hubbert Predicted that Lower-48 Production would Begin Declining in 1969. In 1956, M. King Hubbert Predicted that Lower-48 Production would Begin Declining in 1969.

Slide33: 

In 1969, M. King Hubbert Predicted that World Production would Begin Declining in 2000.

Slide34: 

OIL Price $75.12 This Spring

Slide35: 

Wattenberg oil well near Longmont Wattenberg is the 26th largest oil field in the United States including Alaska and the Gulf of Mexico.

Colorado Impact: 

Colorado Impact Oil prices increased 186% since 2002 Colorado’s production decline reversed in the last 5 years Wattenburg is the largest oil field west of the Mississippi (outside of CA and TX). Rangely still has large reserves (57R/65P). Commerce City refinery will be processing Canadian oil sands. Colorado Oil Production

Slide37: 

Oil shale is being seriously re-appraised.

Major World Oil Shale Resources: 

Major World Oil Shale Resources

Slide39: 

Colorado has the richest, thickest oil shale resources in the world.

Slide40: 

World Energy Consumption Natural Gas

Slide41: 

NATURAL GAS CONSUMPTION - China

Slide42: 

NATURAL GAS CONSUMPTION - India

Slide43: 

NATURAL GAS CONSUMPTION - U.S.

Slide44: 

Natural Gas- U.S. (Production)

Slide45: 

NATURAL GAS- U.S. . . . imports were necessary to fill the increasing demand.

Slide46: 

NATURAL GAS- U.S. Price The price reached $15.50 in December, but dropped back because of mild weather in the northeastern U.S.

Slide48: 

Colorado has all, or parts, of seven of the top 50 natural gas fields in the nation! Four of the top 50 gas fields in the United States are located along I-70 below the Roan Cliffs

Slide49: 

Colorado Drilling Rigs

Slide50: 

Location of the 60,000+ wells drilled for oil & gas in Colorado.

Slide51: 

Colorado Drilling Permits

Slide52: 

Colorado has the fifth largest gas reserves in the nation. Colorado has the largest reserves of coalbed methane in the nation. Natural gas prices increased 186% since 2002 Colorado is the sixth largest gas producer in the nation. Colorado Natural Gas Production increased 21% in 2005 Colorado Impact Colorado Natural Gas Production

Slide53: 

World Energy Consumption Coal

Slide54: 

COAL- China

China’s Production and Consumption of Coal: 

China’s Production and Consumption of Coal

Slide56: 

COAL- India

Slide57: 

COAL U.S.

Slide58: 

China/U.S. Coal 51% of world consumption. 54% of world production.

Slide59: 

Colorado’s Coal is becoming increasingly desirable

Increase in Coal Spot Price: 

Increase in Coal Spot Price 2005 2004 $ per ton

2005 Spot versus Average Price for Colorado Coal: 

2005 Spot versus Average Price for Colorado Coal Spot Average price $ per ton Because most of Colorado’s coal is sold on fixed-price, long-term contracts, the average price is below the spot price.

Slide62: 

Colorado has the seventh largest bituminous coal reserves in the nation. Colorado has the largest reserves of compliance coal in the nation. Spot prices increased 76% since 2003 Colorado is the sixth largest coal producer in the nation. Colorado Impact Colorado Coal Production

Slide63: 

World Energy Consumption Nuclear

Slide64: 

NUCLEAR- China

Slide65: 

NUCLEAR- India

Slide66: 

India: 17 new reactors by 2012 China : 27 new plants by 2020

Slide67: 

NUCLEAR- U.S. The last nuclear power plant came on line in 1996 Since then has U.S. nuclear generation -- Increased? Decreased? Remained flat?

Slide68: 

NUCLEAR- U.S.

Slide69: 

And, the largest nuclear power generator in the world?

Slide70: 

The United States generates as much nuclear energy as France, Germany, Spain, Sweden, and the United Kingdom combined!

Slide71: 

The world’s existing 435 nuclear reactors currently need 180 million pounds of uranium each year.

Slide72: 

Uranium prices more than quadrupled since 2003

Slide73: 

State Land Board leases in the Maybell district Four new mines opened in Colorado in 2004 Western Colorado was in the heart of the uranium booms. Four new mines closed in Colorado in 2005 Possible In-Situ in Weld County Colorado Impact Nearly 3,000 new mining claims filed in Colorado in 2005, most for uranium.

Slide74: 

U.S. molybdenum exports to China and India

Slide75: 

~ $2.00/lb in 2002 $40/lb in July, 2005! MOLYBDENUM Price

Colorado MOLYBDENUM Production: 

Colorado MOLYBDENUM Production As a result of increased demand for molybdenum, the Henderson Mine added an extra shift and is now producing around the clock, the Climax Mine is scheduled for reopening in 2009, and the Mount Emmons deposit near Crested Butte is being evaluated for opening.

Slide77: 

Precious Metal Percentage Price Increases

Slide78: 

Base Metal Percentage Price Increases

Slide79: 

Percent Price Increase 01/2001 – 06/05 01/2004 – 06/05

Slide80: 

22% Imported in U.S. Cement producers China India U.S. U.S. cement manufacturing is 81% foreign owned

Slide81: 

China 2005 – Opened 70,000 new supermarkets 2006 – Will become #3 car manufacturer – 42% increase in capital investment 11th Five-year plan - Plan to build the equivalent of three Manhattan Islands

Slide82: 

“Chinese companies and their rivals are scouring the globe from Australia to Africa for access to the raw materials needed to sustain the Asian nation’s growth as commodity prices surge.” --June 23, 2006 (Bloomberg)

Slide83: 

Overall Impacts for Colorado Coloradans will suffer from effects of inflation Coloradans may see increasing shortages of critical raw materials Conflicts may arise with multi-national corporations operating in Colorado Pressures will mount to develop more of Colorado’s natural resources

Slide84: 

Production of Natural Resources has Always been an Important Part of Colorado’s Economy Because of new technology, this old 1800s copper mine is today being evaluated for additional development.

Slide85: 

The future is here! Are we ready?

Slide86: 

“The world is a football field now and you’ve got to be sharp to be on the team which plays on that field. If you’re not good enough, you’re going to be sitting and watching the game. That’s all.” --Rajesh Rao, founder and CEO of Dhurva Interactive from The World is Flat, by Thomas Friedman

Slide87: 

2004 Bachelors degrees in engineering

Slide88: 

The End! Of the talk, that is.