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Fluorochemicals

Downstream markets for fluorochemicals through to fluoropolymers and fluoroelastomers

Prague 23 October 2019

Samantha Wietlisbach Director Minerals Research and Analysis +41 44 283 6336 [email protected]

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What we’ll cover today

Fluorochemical chain

Overview of global fluorspar and HF market

Fluorocarbon types and applications

Fluoropolymers, fluoroelastomers

Inorganic fluorine chemicals

Level of integration in fluorochemical chain

A quality source of acid spar is the starting point for a successful fluorochemical

Acid Spar Hydrofluoric Fluoroaliphatics H SO Organic >97% 2 4 acid fluorochem CaF2 HF Fluorocarbons

Polymerisation Direct use Aluminium Direct Direct Inorganic fluoride uses uses fluorochem

Fluoropolymers Refrigerants Primary Welding Flux aluminium Electrodes shield production arc welding Foam blowing Fluoroelastomers F content 66-70% agents

China produces and consumes more than half the world’s fluorspar

Global Fluorspar Production 100% CaF2 — 2019 Global Fluorspar Consumption 100% CaF2 — 2019

Other Other Japan Countries W Europe 4% Central and 2% 6% 3% Eastern Vietnam Europe 4% 4% Africa Other Asia 5% 6% Mongolia 8% Western Europe China 9% China 54% 57%

Chinese consumption of fluorspar by application Downstream hydrofluoric acid production is the main use for fluorspar

• Both HF production and AlF3 production Chinese consumption of fluorspar—2019 require acid spar, usually >97% CaF2 Others 5% • In steel production a minimum of 80% Steel CaF2 is required 11%

Aluminium HF fluoride 59% 25%

Hydrofluoric acid capacity Only minor capacity increases forseen in China and possibly Africa leading up to 2024

Global capacity for HF—2019Sales • China leads the world in HF capacity, Other countries production and consumption 11% • About 27% of HF production is traded Japan 6% • S Korea and the USA are major importers Western Europe • AAGR 1.8% over the next 5 years 11% China 57%

North America 15%

Fluorocarbons account for almost two thirds of global demand in 2019

• Fluorocarbons, used as Global consumption of HF—2019 refrigerants or polymer precursors are the largest segment Other 22% • Metal treatment and glass Uranium fuel production processing are the main direct 1% uses Petroleum • Uranium hexafluoride, yellow cake alkylation catalyst is made from HF 1%

• Other uses includes inorganic and Glass other aliphatic fluorochemicals processing 2% Fluorocarbons 64% Metal treatment 10%

Dont confuse applications of fluorocarbons

Emissive Feedstock

• Refrigeration • Fluoropolymers • Air conditioning >Polytetrafluoroethylene (PTFE) • Foam blowing agents >Polyvinylidene fluoride (PVDF) • Aerosols >Others • Cleaning solvents • Fluoroelastomers

Global consumption of fluorocarbons by end use—2017 Polymer precursors are the largest downstream application for fluoropolymers

Global consumption of fluorocarbons by end use—2017 • About 45% of fluorocarbons

kt used as polymer precursors 900 • Refrigeration and AC 40% 800 Other • Foam blowing ca 10% 700 Foam blowing agents 600 Refrigeration and air conditioning • Other uses include aerosol 500 propellents and solvent Polymer precursors cleaning 400

300

200

100

Examples of common fluorocarbons

Name AKA Applications HCFC Refrigeration; air conditioning, foam blowing; Chlorodifluoromethane HCFC-22 polymer precursors 1-Chloro-1,1-difluoroethane HCFC-142b Polymer precursors HFC 1,1,1,2-Tetrafluoroethane HFC-134a Refrigeration; air conditioning 1,1-Difluoroethane HFC-152a Aerosols, polymer precursors Difluoromethane HFC-32 Refrigeration; air conditioning HFO 2,3,3,3-Tetrafluoro-1-propene HFO-1234yf Refrigeration; air conditioning 1-Chloro-3,3,3-trifluoropropene HFO-1233zd Foam blowing, solvent cleaning Trans-1,3,3,3-Tetrafluoro-1-propene HFO-1234ze(E) Foam blowing, aerosol,

Consumption of HCFCs still dominate global demand

Consumption of fluorocarbons by type

CFC HFO 1% 3%

HCFC HFC 53% 43%

Consumption of fluorocarbons as feedstocks increasingly important

Consumption by application: 2017 Consumption by application: 2022 Aerosol Aerosol Foam Propellants Solvent Foam Solvent Propellants Blowing 3% Cleaning Blowing Cleaning 3% Agents 1% Agents 1% 10% 7%

Refrigeration 2017 & Air 2022 Refrigeration 1,9 million mt Conditioning & Air 44% 2,2 million mt Conditioning 40% Polymer Feedstocks Polymer 42% Feedstocks 49%

Global manufacturing footprint of fluorocarbons

Percentage of global capacity

Dongyue Group Juhua Group Chemours Sinochem Lantian Arkema Honeywell Meilan Group Changshu 3F Zhonghao Mexichem Solvay Other ROW Other China 0 5 10 15 20 25 30 China USA Europe Japan ROW Source: IHS Markit

Fluorocarbons as polymer and elastomer precursors Raw Materials Monomers Polymers & Elastomers Chlorodifluoromethane Tetrafluoroethylene Polytetrafluoroethylene (PTFE) HCFC-22 Copolymers Hexafluoropropylene Fluoroelastomers Perfluoropropyl vinyl ether Perfluoroalkoxy Polymers (PFA) Terpolymers Chlorodifluoroethane Vinylidene fluoride Polyvinylidene fluoride (PVDF) HCFC-142b Copolymers

Trichlorotrifluoroethane Chlorotrifluoroethylene Polychlorotrifluoroethylene (PCTFE) CFC-113

Difluoroethane Vinyl fluoride Polyvinyl fluoride HFC-152a

Fluoropolymers World consumption of fluoropolymers — 2018 • China has over half of the kt production and about 40% of the 140 total consumption 120 • In the US, Western Europe and 100 Japan the markets are mature • PTFE AAGR >4% over next 5 years 80 60

0 United Western China Japan Rest of the States Europe World

PTFE uses, properties and performance Barrier Filter- properties membranes

Self lubricating Containers ball bearings Physical properties Chemical properties • Water repellency • Chemical inertness Non-stick • Surface lubrication • Insolubility cookware • Friction • Acid resistance

Wire and cables Mechanical properties Thermal and electrical • Stress • Heat insulation • Strain • Thermal conduction • Wear • Dielectric properties Wear /guide rings Electrical sensors and transducers

PTFE - physical state depends on end use application

In Western Europe granular resins are the most popular grade Granular resin Western European capacity for PTFE by type • Thick walled tubing Other • Molded parts 7% Aqueous dispersions Fine powders 20% • Sintering and stretching • Extruding thin sections Granular resin 52% Aqueous dispersions • Tough coatings Fine • Fibre impregnation powders

PTFE fine powder sintered and pressed to produce microporous material Good durability and performance under harsh conditions

Consumption of PTFE fine powders Other • Automotive applications use 30% 11% • Laminated breathable waterproof textiles

Automotive • Tubing for covering bare wire 30% Wire and • Wiring for ships, aerospace defense Cable 16%

Tubing 16% Textile laminates

PVDF is the largest fluoropolymer in the «other» category

World consumption other fluoropolymers—2018 • PVDF is growing fast with applications in electric vehicles PVDF • PVDF binders in electrodes and separators in lithium ion batteries FEP • Recent capacity expansions in Europe, US and China

PFA

PVF

United States Western Europe China Japan

Fluoroelastomers World consumption of fluoroelastomers by type

FFKM 3 main groups of fluoroelastomers FVMQ 1% 8% • Fluorocarbon elastomers – FKM and FEPM • Fluorosilicone elastomers – FVMQ • High Perfomance specialty - FFKM

FKM is the main fluoroelastomer >90% of the market

FKM 91%

China has the largest global capacity for fluoroelastomers

World capacity of fluoroelastomers by type • Chemours, Solvay and Daikin have a large

35 presence in China

30 • Shandong Huaxia Shenzhou New material has the largest plant 10 ktpa 25

World consumption of fluoroelastomer FKM by type The global automotive production growth drives the fluoroelastomer market

World consumption of FKM by end use 2018 Other 64% 16% Automotive

Chemicals/pl astics, oil & glass processing 9% 11% Aerospace

Aerospace Automotive 9% 64% 11% Chemicals plastic / oil

Inorganic fluorochemicals Europe is a major producer of inorganic fluorochemicals

• In Western Europa ca 30 kt HF consumed in inorganic fluorochemicals • Fluorine gas • Uranium hexafluoride • Boron trifluoride / fluoroborates • Sodium fluoride

• Fluorosulfuric acid / sulfonic acid HSO3F • Sulfur hexafluoride • Potassium and sodium fluoride / bifluoride • Lithium hexafluorophosphate

Lithium hexafluorophosphate production AAGR 25% over the next 5 years Market penetration of EVs driving growth in inorganic fluorine chemicals

World production EVs and ICE World production LPF as LCE equivalent 1000 units 180,000 kt LCE 160,000 20.0

140,000

120,000 15.0

100,000

80,000 10.0

60,000 5.0 40,000

20,000 0.0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 China USA Japan Other Asia EMEA EV ICE © 2019 IHS Markit © 2019 IHS Markit

Fluorine chain integration – outside of China

Acid Spar Inorganic Fluoro Fluoro Fluorocarbons >97% HF fluorine polymers elastomers CaF2 chemicals

What this means for suppliers and industries over the next 5 years

Inorganic fluorochemicals AAGR around 4-5% globally, but • Batteries much smaller markets for Li-ion • Catalysts batteries and catalysts

Fluoropolymers AAGR 2018-2022 globally 4% PTFE • Chemical industry major market And ca 5% for others • Many consumer uses

Fluoroelastomers AAGR 2.4%, heavily dependent on • Automotive applications important growth in automotive and aerospace markets • Synthetic rubber for harsh conditions

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Fluorine chain integration – China

Acid Spar Inorganic Fluoro Fluoro Fluorocarbons >97% HF fluorine polymers elastomers CaF2 chemicals