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Proprietary Information of Albemarle Corporation

The Challenging

Scenario in

the Lithium EraDavid Klanecky

VP Lithium Upstream Division


Challenge: Macro Trends Driving Lithium Growth Opportunity

Health

• Aging population

• Pharmaceutical synthesis

• Increased respiratory distress and illness

Salts

Specialties

Mobility

• Battery performance, cost and safety

• Demand for mobile devices and tools

• Electrification of transportation

Salts

Electrolyte Additives

Metal

• Power grid efficiency and renewable use

• Weight reduction in aerospace and large

format transport (metals and plastics)

• Friction reduction (grease and eco-tires)

Salts

Metal

Organometallics

Energy

Efficiency

2

Lithium is a Key Enabler to Solving Global Issues


Li-Ion Batteries Enabled Consumer Product Innovation

3

1992

1st Mass

Produced Li-

Ion Battery

Cell

2007

iPhone

debuts

Smartphones | Tablets | Laptops | Wearables | Power tools

2003

Cell phones

become

mainstream

In 5 years, Li-Ion batteries went from a niche end-use to the #1 consuming market for Lithium with

explosive growth from consumer electronics and expansion into additional consumer devices:

power tools, lawn and garden equipment, forklifts, golf carts, etc…

Future Growth Driven by Expanded Use of Batteries in Numerous Consumer Devices


Battery Market Expectations

Consumer Electronics (CE)CAGR (2016-21): ~8%LCE Content: < 0.1 kgs

Battery Markets Continue to Accelerate Lithium Demand

Source: Based on Internal Albemarle Demand Model and third-party data

Transportation (EV, Trucks/Buses)CAGR (2016-21): 32 – 35%LCE Content: 40 – 100 kgs

Grid Storage (ESS)CAGR (2016-21): > 40%LCE Content: > 1,000 kgs

4

EV Sales grew 58% in 2017


BEV, PHEV,

HEV

Battery Electric Vehicles Value Chain Enabled by Lithium

5

Li Carbonate

Li HydroxideCathode, Anode,

Electrolyte

Cylindrical,

Pouch, Prismatic

xEV, PEV,

ESS, CE

Performance Products

BatteryComponents

BatteryCells

BatteryPacks

EV Manufacturer


Clutch

Conventional

Internal Combustion

Engine Power flow

Internal

Combustion

Engine

TransmissionDrive

Shaft

(Plug-in) Hybrid Electric

Parallel Power flow (Toyota Prius)

Internal

Combustion

EngineTransmission

Drive

ShaftLithium

Battery

Clutch

Lithium

BatteryElectric

MotorTransmission

Electric

Motor

Extend Range Electric

Series Power flow (Chevrolet Volt,

BMW i8)

Lithium

Battery

Electric

MotorTransmission

Battery Electric

Vehicle(Tesla, GM Bolt)

Lithium Use Grows with Automotive Technology Evolution

Internal

Combustion

Engine

Electric

Generator

Clutch

6

ICE

PHEV

PHEV

BEV

Proprietary Information of Albemarle Corporation 7

Continued Declines in Lithium Ion Battery Costs Expected

Source: Bloomberg New Energy Finance Summit (April 2016)

• According to a well known

automaker, lithium ion battery

costs declining to that of an

internal combustion engine

($100/KWh) is “…achievable

by 2025”

8

Many Auto Companies are pursuing larger Electrification Strategies


Electric car models by style and range through 2020

9


New Battery Materials Will Involve Lithium

10

Battery Type Market Share in Transportation

No Disruptive Non-Lithium Energy Storage Technologies on the Horizon

Source: Lux Research 2016 Report

Considerations Driving

Continued Innovation

in Battery Design:

• Safety

• Cost

• Power

• Durability

• Energy Density


Demand Outlook – Thoughtful & Comprehensive Approach

11

0%

5%

10%

15%

20%

400 600 800 1.000

EV

Pe

ne

trati

on

Total Lithium Demand (kt LCE)

ALB Outlook

2025 EV and Lithium Outlook1 Demand Buildup by Application

1Includes estimates from Roskill, BMO Capital Markets, Citi Investment Research, Deutsche Bank, Goldman Sachs, Instine|Numora (America), Morgan Stanley, UBS, Oppenheimer, SQM, and FMC2Includes grid storage or ESS volumes

Demand in kt LCE

Application

2017

Demand

’17 – ’25

CAGR

2025

Demand

Transportation 50 35% 550

Consumer Electronics2 60 8% 110

All Other/Industrial 110 3 – 4% 140

Total 220 ~18% 800

Key EV Demand Inputs• 12.4% EV (BEV + PHEV) penetration in 2025

• 51 kWh EV battery; 13 kWh PHEV battery

• 0.85 kg LCE/kWh for cathode; 0.10 kg LCE/kWh

electrolyte


Supply to Remain Relatively Balanced versus Demand

• Relative size of lithium profit generation and resulting equity valuation

• Duration of resource quotas and time to earn returns on capital deployed

Established majors have strong incentive to commission capacity as demand warrants

• Brine and hard rock sources are all different and therefore require unique extraction and process technology development

New brine projects typically take 10 years to reach quality product levels

• Sets pricing floor in low teens USD per MT

Market needs high-cost hard rock capacity to meet accelerating EV demand

• Technical and processing challenges to making battery grade (BG) product for EV’s

• Some lower quality resources and conversion capacity unable to economically achieve BG quality requirements of automotive industry

Experience curve for new entrants to produce EV grade

12


The Challenging

Scenario in

the Lithium EraDavid Klanecky

VP Lithium Upstream Division

the challenging scenario in the lithium eracongreso.expomin.cl/descargas/presentaciones/10... ·...

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