china new energy (abstract) - maverlinn

China economic growth sets pace for securingenergy ressources for the 21st century

Confidential, January 2014

Summary

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Energy consumption in China is directly correlated to GDP growth

China has key assets to implement smart and successful energy policies

Moving abroad to acquire key IP or resources is needed

Success is based on pre-ops and post-ops management

Energy bottlenecks are driving resources management strategies

Presentation

• Economic growth will continue to fuel higher demand for energy

• Energy issues represent a key challenge for the future

• Leads for possible solutions and options

China is likely to account for one third of the expected energygrowth in the next 20 years

Source : Total, Shell

Comments :

• Primary energy demand 2030 vs2010: +33%, CAGR 1.4%

• 90% of the global growth from non-OECD countries

− China 33%

− India 26%0

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1960 1970 1980 1990 2000 2010 2020 2030

EJ/Y

ear

USA - Canada Europe China India Latin America MEA Others IMB

Global Energy Consumption(in EJ / Year)

But China GDP has been steadily decelerating in the last 4years

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GDP GDP growthSource : World Bank

China maintains its 2013 GDP growth target at around 7.5%to leave some leeway for economic restructuring…

622 713 790 874 930

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2006 2007 2008 2009 2010 2020 2030

China energy needs will continue to grow as Chinaeconomy develops

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Source : China statistical yearbook, UPS Monitor, NEB, EPRI, State Grid

China installed electricity needsforecast scenarios

CAGR : 10,6% / year

CAGR : 4,5% / year(source : State Grid)

CAGR : 3,3% / year(source : NEB)

Presentation




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Energy strategic planning including moving abroad ismainly based on scenarios methodology

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Energy policies in the long term rely on complex optimizations of sometimescontradictory results in the short term

EnvironmentalProtection

EconomicProsperity

EnergySecurity

Scenario 1

Scenario 3 Scenario 2

Energy scenario strategy

Three key driving forces :

• Energy security

• Environmental protection

• Economic prosperity

Typical explored scenarios :

• Watch and wait

• Shared urgency

• Leaders and laggards

Managing a large portfolio of strategic ressources worldwidemeans to handle a great diversity of risks to optimize returns

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Energy investment strategy

Return :

• Hurdle rate

• Objective

• Complex play

Risk :

• Typology

• Mini-Max

• Volatility

Return

Risk

Hurdle rate

Maxi

Even smart technological carbon neutral choice do bearunexpected catastrophic cost at times

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USA 108

Canada 18

Mexico 2

Brazil 2

Argentina 2 South Africa 2

France 59

UK 19

Germany 17

Other EU 70

Pakistan 2

Iran 2

Japan 55

Russia 32

South Korea 21

India 20

China 13

Global power mix(electricity prod.est.) :

Coal 40.9%Gas 21.3%Hydro 15.9%Nuclear 13.5%Oil 5.5%Others 2.9%

The total cost of the 1986 Chernobyl (Belarus) accident is estimatedUSD 235 billion of economic damage (UNDP)The cost of the 2011 Fukushima (Japan) accident is estimated USD250 billion of economic damage (Japan Center for Economic Research)

Presentation




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Leadership and risk management excellence are highyield assets to succeed in external growth

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Leadership Risk Management– Systematic approach– Research and know your

targets– First call status– Get culture settings right

– Practical approach– Adaptability and

determination– Momentum, timing– Post acquisition skills

Target A

Target CTarget BAcquirer

External growth

We favor integrated M&A approach with emphasis on bothstrategy and finance decision criteria for maximum impact

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• We rely on an international network in China, in Europe and beyond• Most of our customers are Fortune 500, dealing with complex growth issues

Strategy

Business

Impact

Integra

-tion

M&A

We serve industry leaders onimpact M&A and also advise onpreparation and integration tooptimize success

We emphasize multiculturalstrategic finance as our distinctivefootprint, meaning we integrateM&A, culture and strategy

In China

Abroad

Presentation




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So far China have invested over USD 780 billion abroad withenergy and metal accounting for USD 500 billion (64%)

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Key regions for investment :

• USA : n°1 but atypical portfolio,including $ 20 Bn in FIG and $16 Bn in energy

• Australia : energy $ 24.5 Bn,minerals $ 35 Bn

• Canada : energy $ 34.5 Bn,minerals $ 3.3 Bn

• Dominant regions :

− MEA, by far

− South America

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Metals

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Energy and metals account for 62% :

• Energy : USD 370 billion (47.4%)

• Metals : USD 115 billion (14.7%)

Source : Heritage Foundation

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QueenslandCurtis LNG

project

Brow seLNG project

TalisonLithium

Alumina FocusMinerals

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, Bn

Top resources investors 2008-2013China largest deals in 2013

China accounted for ~42% of all foreign acquisitions in Australia in 2013

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Country Deal Case : Australia

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China Canada Japan USA UK

Source : The Australian

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Deal story lineDeal background

Tianqi swiftly moved with a better but finally creative offer to get the deal

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“Strategic“ Case : Tianqi Ind. (China) – Talison (Australia)

• Tianqi was in competition with RockwoodHoldings, which made a lower offer at C$ 724million. Tianqi’s offer was then prefered

• In March 2013, Tianqi got the Australian Fednod for C$ 848 million

• Tianqi started to own 19,9% of the capital andclearance to later acquired the remaining 80%

• In December 2013, Tianqi and Rockwoodannounced a 51/49 joint venture for theacquisition of Talison

• Talison Lithium is a 25 years old miningcompany and producer of lithium, producing350,000 t of lithium products every year

• The company is listed on the TSX (Canada) andhas two key mining sites in Australia and Chile

Next steps

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Focus full energy on best opportunities

• A well prepared deal maximizes successchances (risk / return / integration)

• A trusted and expert M&A team makes adifference on the field

• A swift execution significantly enhance the dealprofile

• The integration investment management teamneeds to be quickly empowered

Leading a world of change, together

china new energy (abstract) - maverlinn

Economy & Finance