Aluminium and : 2019 trends and outlook to 2029 October 2019

Adam Coggins [email protected] www.roskill.com Disclaimer

The statements in this presentation represent the considered views of Roskill Information Services Ltd. It includes certain statements that may be deemed "forward-looking statements“. All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although Roskill Information Services Ltd. believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in general economic, market or business conditions.

While Roskill Information Services Ltd. has made every reasonable effort to ensure the veracity of the information presented it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only.

Overview

• Aluminium fluoride industry in 2019

• Aluminium industry in 2019

• Market drivers for the aluminium industry

• Future prospects to 2029

Aluminium fluoride Use of aluminium fluoride (AlF3)

• Used in the production of primary aluminium

• Lowers the bath operating temperature

• Replaces losses of and maintains (Na3AlF6) ratio

• Other minor uses include:

• Catalyst in organic synthesis

• Manufacture of ceramics and glasses

Relationship between AlF3 and acidspar

CaF2 FSA

H2SO4

HF ATH HF

ATH ATH

AlF3 AlF3 (LBD) AlF3 Relationship between AlF3 and acidspar

Demand for fluorspar in the production of primary aluminium is determined by three factors:

• unit consumption of aluminium fluoride in kg per tonne of aluminium produced

• competition from AlF3 produced from by-product fluorosilicic acid (FSA)

• the level of primary aluminium production worldwide

Relationship between AlF3 and acidspar

Demand for fluorspar in the production of primary aluminium is determined by three factors:

• unit consumption of aluminium fluoride in kg per tonne of aluminium produced

• competition from AlF3 produced from by-product fluorosilicic acid (FSA)

• the level of primary aluminium production worldwide

Relationship between AlF3 and acidspar

Demand for fluorspar in the production of primary aluminium is determined by three factors:

• unit consumption of aluminium fluoride in kg per tonne of aluminium produced

• competition from AlF3 produced from by-product fluorosilicic acid (FSA)

• the level of primary aluminium production worldwide

Relationship between AlF3 and acidspar

Demand for fluorspar in the production of primary aluminium is determined by three factors:

• unit consumption of aluminium fluoride in kg per tonne of aluminium produced

• competition from AlF3 produced from by-product fluorosilicic acid (FSA)

• the level of primary aluminium production worldwide

AlF3 production costs by category in 2019

• Main cost components = the raw materials, World: Aluminium fluoride production costs averaged, 2019 (%) with fluorspar and alumina trihydrate accounting for 41% and 24% respectively Logistics Labour 3% G&A 7% 1% • Producers in China have higher total costs overall with little variation in the composition Utilities 7% Fluorspar of cost components 41% Recurring • Highest production cost ~US$2,000/t (a capex Chinese producer), lowest production cost 8% ~US$790/t (a Lithuanian producer) Other raw materials ATH 9% 24% Source: Roskill Production cost curve relatively flat for AlF3 World: Production cost curve for selected major AlF3 producers, 2019 (US$/t)

Source: Roskill Aluminium fluoride trade and prices AlF3 exports in 2019 show:

• China still the main AlF3 supplier to international market, exporting globally (around 95kt this year)

• Chinese exports fell significantly in 2017 but have recovered in 2018 and ytd 2019

• EU and North American trade remains largely intra- regional

• AlF3 transport over long distances is no problem…

• Therefore regions, or countries, do not need to be self- sufficient.

Source: GTT and Roskill AlF3 trade prices

AlF3: Average import values of material from selected major producers, 2010 to 2019 (US$/t) 3,000

2,500

2,000

1,500

1,000

500

0

China Mexico Italy Tunisia

Source: GTT, Roskill AlF3 trade prices

AlF3: Average import values of material from selected major producers, 2010 to 2019 (US$/t) 3,000

2,500

2,000

1,500

1,000

500

0

China Mexico Italy Tunisia

Source: GTT, Roskill Chinese AlF3 export volumes

e AlF3: China: Exports, 1998 to 2019 (t) 200,000

150,000

100,000

50,000

0

Source: GTT, Roskill Chinese AlF3 export prices

AlF3: Average shipment values from China in 2019 (US$/t)

Source: GTT, Roskill Aluminium Aluminium production by country: World: Primary aluminium production by country, 2018 (%) • China by far the largest aluminium producer in 2019 (as well as by far the largest fluorspar producer and by far Australia the largest aluminium fluoride producer) 3% India • World primary aluminium production has tripled since 4% 1998 UAE China [PERCENTAG 56% • China has been the main contributor to world aluminium E] output growth since 2008 Canada 5% Russia • World production has slowed in recent years 6% Source: WBMS

Aluminium demand driven by transport applications: Estimated aluminium demand by market segment (%)

• 5.9%py growth since 2008 Consumer Other durables 5% • End uses of aluminium diverse 5% Tansport Packaging 27% • Lightweight 8%

Foil stock • High strength-to-weight ratio 8%

• Reduces fuel consumption Machinery & equipment Construction • Enhanced environmental [PERCENTAGE] 25% compliance Electrical 13%

Source: Roskill Future prospects for aluminium to 2029 Aluminium outlook: aerospace • Demand for air travel expected to grow strongly over the next 20 years, led by Asia Pacific region

Boeing: World forecast traffic by region (Bn RPKs)

Note: RPKs = Revenue Passenger Kilometres; Within Asia Pacific excludes travel within China

Source: Boeing Commercial Market Outlook, 2019-2038 Automotive: hybrid and EV sales to exceed ICEs by 2029

• xEV sales have grown by 26%py since 2010, compared to 3% in total vehicle sales

• Sales in 2018 reported xEVs to total 5.38M units – market penetration ~5.5%

• Roskill’s Automotive & Battery Materials model forecasts growth in xEV sales of 29%py to 2025

• Total vehicle sales to grow by 1.7%py over same period

• Market penetration to reach 29% in 2025 and >50% in 2029

Source: Roskill Automotive: triple revolution

Shared & on-demand driving

Autonomous vehicles

Vehicle electrification Automotive: triple revolution

• Uber, Lyft, DiDi Chuxing now • Expected to impact the taxi • EV revolution underway with

widespread industry HEV/EV sales reaching 5.3M in 2018

• Cost, convenience, congestion

and environmental advantages: • Market share for HEV/EV sales demand drivingdemand

- ~5.5% in 2018, ~9% by 2020 attractive to consumers and policy & ~30% by 2025 makers

Autonomousdriving • Inc. model ranges/variety

Consumers with no/little previous electrificationVehicle

Shared&on experience more open to new concepts • Previous ‘revolutions’ will help drive EV uptake

Source: Roskill Automotive: new driving methods = demand destruction • HEVs pioneered market penetration (2.3M sales 2018) • BEV sales forecast to exceed HEV sales in 2019, with PHEVs to out-sell HEVs in 2021 • BEV and PHEV sales to grow by >35%py to 2025, compared to ~9%py for HEVs

• Demand destruction from new driving concepts to increase 32%py to 2025, reaching 2.8M units

Source: Roskill Automotive: incentives, subsidies and policy

• China to stop subsidizing EVs with ranges <200km per charge, favouring vehicles with >300km range • Removes high energy density requirements for new EV battery projects • Banning the construction and commissioning of new ICE vehicle plants

• EU agrees new 2030 CO2 limit on vehicles, 37.5% less CO2 compared to 2021 • VW stated new targets will require over 40% of EU sales to be EVs by 2030 • Germany earmarked US$1.2Bn to support EV battery cells & research into solid-state batteries

• US Government plans to end subsidies for EVs and renewable energy sources in 2020-2021 • Likely to be contested by Democratic House of Representatives • California commits to 100% electric buses in cities by 2029, with a gradual roll out from 2023

Source: Roskill Roskill’s multi-client reports A range of annual reports Roskill’s consultancy offer An expert team of consultants providing bespoke client solutions

Roskill Consulting Group

Market and Strategic SEA & supply chain Cost studies consulting Sustainability analysis New Roskill fluorspar report available soon:

1. Executive Summary 2. Fluorspar Flowchart 3. Production of fluorspar, HF and AlF3 4. International Trade 5. Prices 6. Outlook 7. Background 8. Country Profiles 9. End-uses 10. Company Profiles

Adam Coggins Kerry Satterthwaite George Coles [email protected] [email protected] [email protected] +44 (0)208 417 0087 +44 (0)208 417 0087 +44 (0)208 417 0087