Lithium ion’s role in the Energy

Storage Revolution:

The impact on raw materials

Benchmark World Tour 2016

Washington DC, 21 October 2016

Simon Moores, Managing Director

www.benchmarkminerals.com

Electric Buses:

Tianjin, China

(Benchmark)

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Lithium Graphite

Cobalt

Graphite Supply Chain 2016, 13-15 November, Newport Beach, CA

Some of our speakers…

The ability to store energy en mass is a game-changer…

Pure electric vehicles Grid: Peak shifting Making solar mainstream

An efficient, modern grid for the 21st century

…But rechargeable battery industry is young

• 1st Commercial lithium ion battery in 1991

• Take-off in 2005 – advent of the smartphone

Megafactory supply by region…

0 10 20 30 40 50 60 70 80

China

Europe

US

Korea

Est Capacity by end-2020 Existing Capacity Today

… and battery cell costs are falling

0

500

1000

1500

2000

2500

3000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

High Low

Lithium ion cell costs ($/per kWh)

2016-2020: 15-20% a year

2000 to 2015: 12-14% a year

Started by Musk, Finished by China?

• Tesla: Gigafactory sparked lithium ion arms race

• Evolution of Apple, Google, Amazon and Tesla will add further momentum

… The lithium ion megafactories are coming

• Over $20bn committed to creating lithium ion battery megafactories

• These are new or expanding cell plants going from megawatt to gigawatt capacity

Critical lithium ion battery raw materials

Batteries

Lithium

Graphite Nickel

Cobalt

Lithium

Lithium supply: where we are today …

Chile37%

Australia41%

Argentina13%

Other9%

CHART TITLEChile

U.S.Argentina

China

Other

Carbonate

Chile

U.S.

China

Other

Hydroxide

LCE Feedstock / Source, 2015 supply = 160,000 tpa

Expect majority of 2016-2020 gap to be filled by Australian spodumene…

Lithium Demand: 100,000 to 120,000 tonnes by 2020 to keep balance

• A surging battery industry • Long term orders in China through the roof • Major lithium ion producers preparing for a 4-6 fold increase in cathode buying by 2020• Tesla will need to source lithium hydroxide from China initially

Do not expect any new brine resource before 2020…

• Chile: No resolution in the Atacama for SQM, continued arbitration with CORFO• Push away from Chile? SQM and ALB into Argentina – how serious?• Chile increasing competition – Wealth Minerals granted Atacama access

• Argentina: FMC plan hydroxide expansion but questions over brine supply

• China: no big production expected, >$1bn spent, <10% of output, BYD now involved

• US: Nevada development continues, new tech needed

• Long lead development lead times: 7 years average

+10,000 tpa

+20,000 tpa

+25,000 tpa

2017 2018 2019 2020

Existing: Olaroz

Existing: Atacama

New: Cauchari

Expect majority of 2016-2020 gap to be filled by Australian spodumene…

• Galaxy Resources, Neometals prepare to fill majority of short term gap• Next phase of producers: Pilbara Minerals you will hear from

Canada: • Major developments in Quebec to watch • Nemaska Lithium, backed by Johnson Matthey + Quebec Government• Potential return of ex-Canada Lithium carbonate plant, feedstock still needed

Converters driving demand:

Ganfeng Lithium > Well publicised deals with Australian and Canadian developers

Sichuan Tianqi > Hydroxide expansion underway to 30,000 tpa > SQM stake

Albemarle / GRM> On the acquisition trail, want 50% of market by 2020

Graphite

Graphite Introduction

Brazil21%

China66%

India7%

China

Flake Graphite Feedstock Supply in 2015 = 400,000 tpa +200,000 tpa value added Uncoated Spherical Graphite Supply in 2015

Anode market: no preferred material, consentient available supply is key

Natural Spherical

Synthetic

Other

Natural Spherical

Synthetic

Other

2015: 80,000 tpa 2020: 250,000 to 400,000 tpa

Flake Graphite Feedstock needed = 110,000 tpa

Flake Graphite Feedstock needed = 325-375,000 tpa

Addressing China environmental concerns…

• Air Pollution exists…

Addressing China environmental concerns… • Water pollution / acid disposal still an issue…

• Chinese government has been closing down smaller producers since 2012

• The market has done a better job

• Major professional producers still exist

Graphite Anode Demand: 150,000 to 170,000 tonnes by 2020 to keep balance

• A surging battery industry • Long term order frenzy in China following lithium • Expansions at major anode producers in China, especially BTR • 75% of anode material by 2020 = natural spherical

Uncoated spherical prices

2000

2500

3000

3500

4000

4500

H12010

H22010

H12011

H22011

H12012

H22012

H12013

H22013

H12014

H22014

H12015

H22015

H12016

h22016

H12017

h22017

H12018

H22018

H12019

H22019

H12020

H22020

Low: Uncoated Spherical 15 micron 99.95% C High: Uncoated Spherical 15 micron 99.95% C

Price ranges increasing

Cobalt

DRC59%

Canada 9%

Australia 5%

Cuba6%

Russia 5%

Cobalt: Structural Problem 1. DRC

• Price have begun to rise 10%

• Some speculators began stockpiling in June

• Availability and sustainability thrown into question in recent months – not for the first time…

• By-product production makes supply even more unresponsive

• Geographical occurence makes supply chain transparency challenging

• Caught between a commodity (LME traded) and its true position as a niche mineral

• Arguably makes it the most critical of critical minerals...

Cobalt raw material supply in 2015

Nickel

Copper

Source: Benchmark Mineral Intelligence

Source: LME

Cobalt: Structural Problem 2. By-product

Price curve previously a result of DRC

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

(US$/lb)

Cobalt deficit, DRC instability

Cobalt suprlus, China destocking

Low Prices = lack of interest / Exploration

LME Cobalt Metal Price does not reflect the chemical/battery market

Cobalt’s CSR problem:

• Problems of illegal mining only impacts <15% of cobalt supply

• Issue needs industry collaboration

• New sources will not fill the DRC gap

• Pressure from major end users needed

Calling all supply chain leaders …

The path to half a terawatt, raw materials need to evolve …

0

100000

200000

300000

400000

500000

600000

700000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

GWh Cobalt Lithium (LCE) Graphite Anode

65GWh

70GWh

140GWh

110GWh

85GWh

180GWh

220GWh

280GWh

350GWh

440GWh

500GWh