Global Summary Mining Mar 2021

MAR 2021

GLOBAL SUMMARY MINING Week Commencing 15th March

Global Summary Mining | 20210315

Contents Global...... 4 Quantifying The Impact Of EV Adoption On Nickel: Stronger-Than-Expected Demand Ahead ...... 4 Mining - Weekly Projects Round-Up & Developments ...... 7 Mining - Weekly Projects Round-Up & Developments ...... 13

Africa...... 19 Africa Lithium Outlook: SSA To Offer Diversification Amid The Race To Secure Critical Materials...... 19

Asia...... 26 Asia Fertiliser Outlook: South East Asia To Drive Demand As Indian Rebound Fades...... 26

All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced, repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.

All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.

This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions Group Limited.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research. fitchsolutions.com 3 Global Summary Mining | 20210315

Global Quantifying The Impact Of EV Adoption On Nickel: Stronger-Than- Expected Demand Ahead

Key View

• As a key component of battery cathode chemistry in many existing and upcoming electric vehicles (EVs), nickel will remain an important metal to watch in the coming decade. • We are updating in this article our estimate of the impact of electric vehicle (EV) battery manufacturing on nickel consumption. • We expect nickel demand for EV battery manufacturing to experience an annual average growth rate of 29% over 2021-2030, outpacing both lithium and cobalt demand. Interestingly, this estimate has significantly increased from the forecast we laid out in our 2018 battery report, due to upwards revisions in our Autos team's EV sales forecasts. • Nickel demand will be supported by the metals persisting popularity in battery cathode chemistry, with downside risks caused by concerns over future supply availability.

As battery metals continue to rise to the forefront of attention in 2021, much of the attention has centered around lithium and cobalt. In turn, governments have enacted policies to encourage investment into the critical raw materials they deem essential to the green energy transition. At the same time, supply chain concerns surrounding nickel have begun to garner increasing focus. As a key component of battery cathode chemistry in many existing and upcoming electric vehicles (EVs), nickel will remain an important metal to watch in the coming decade.

We have long identified nickel as one of they key metals that will strongly benefit from the battery revolution concerning an accelerated EV uptake. In line with our views outlined back in 2018, nickel-based batteries have gained in popularity since.

Steep EV Sales Growth To Drive Demand For High-Grade Nickel Electric Vehicles Sales & Total Fleet

f = Fitch Solutions Autos Service forecast. Source: Fitch Solutions

We are updating in this article our estimate of the impact of electric vehicle (EV) battery manufacturing on nickel consumption. We expect nickel demand for EV battery manufacturing to experience an annual average growth rate of 29.2% over 2021-2030, outpacing both lithium and cobalt demand. Our EV nickel demand forecast has significantly increased from the forecast in our 2018 battery report, due to upwards revisions in our auto teams forecasts for EV sales.

We are estimating the added demand for nickel in the coming years building on our Autos' team views, using current and expected battery chemistry market share, estimated metal content in batteries and our EV sales forecasts. We note that our Autos team will revisit its forecasts for cathode chemistry demand in the coming months as battery manufacturing is a fast moving sector, which has undergone significant transformation particularly during the past year. We will therefore keep updating our estimates for nickel demand as the sector evolves.

Nickel To Outpace Lithium Battery Demand Growth EV Battery Demand - Lithium And Nickel (kt)

Source: Fitch Solutions

Our estimates of the impact of EV battery manufacturing on nickel demand that we present in this article rely on our 2018 forecasts for demand by cathode type, isolating demand for the lithium-nickel-manganese-cobalt oxide (NMC) chemistry, which we expect to be the preferred cathode of choice moving forward. We also maintain the underlying assumption that NMC 811 cathodes will rise to 80.0% of NMC market share by 2027, which will effectively raise the average nickel content from 34.6kg to 44.5kg for each NMC cathode produced. Automakers such as BMW, Hyundai and Renault use the NMC chemistry in their vehicles, and Tesla currently employs a lithium-nickel-cobalt-aluminum oxide (NCA) chemistry in its models. Going forward, Tesla will exchange its NCA chemistry for three different offerings based on vehicle cost and performance: lithium-iron-phosphate (LFP), NMC and a high-nickel, cobalt- free option.

NMC Demand To Surpass LFP, Bolstered By Chinese Subsidies EV Sales By Cathode Type (Volume)

Source: Fitch Solutions

Nickel demand will be supported by the metals persisting popularity in battery cathode chemistry, with downside risks caused by concerns over future supply availability. We expect nickel-dominant cathodes to be favoured for automakers' heavy duty and long-range vehicles, however a shortage of Class 1, battery-grade nickel may encourage automakers to explore lithium-iron-phosphate (LFP) batteries for mass market vehicles. For example, Tesla CEO Elon Musk iterated in February 2021, that Nickel remains the firm’s biggest obstacle ot successfully scaling lithium-ion cell production and has prompted Tesla to shift its standard range vehicles to contain LFP cathodes. Furthermore, the firm eachedr an agreement in March 2021 to source raw materials from the Goro nickel mine in New Caledonia for its batteries by serving as a technical and industrial partner. This signifies the continuing preference for nickel-heavy batteries due to higher energy density properties. Earlier in January 2021, Musk stated in an investor call that the company did not have enough battery cells to scale production for new vehicles such as its Semi truck. Tesla intends to use the high-nickel, cobalt-free cathode for its Cybertruck and Semi truck. We would expect nickel demand to be adversely impacted should other automakers follow Tesla's suit, by switching to LFP batteries in lower-range models due to concerns over raw materials security.

Mining - Weekly Projects Round-Up & Developments

In this week's round-up we examine upwards revisions on our nickel and zinc price forecasts amid high bases at the start of the year, and review the latest updates from Impala Platinum's company strategy.

Zinc Prices: Upwards Revisions Though Price Rally To Ease

We have revised up our 2021 zinc price forecast to USD2,600/tonne, up from USD2,450/tonne previously, to account for the persisting price elevation throughout the first two months of the year. Declining Chinese consumption, particularly during H221, will weigh on the global refined zinc demand. At the same time, accelerated production growth in other markets coupled with large refined stocks housed in private warehouses, will offset a slowdown in Chinese production. Beyond 2021, we expect more significant increases in the refined zinc production surplus to cause prices to trend lower. We expect price volatility due to the Covid-19 pandemic to remain a key risk throughout the remainder of 2021, as news surrounding new variants of the virus, vaccine efficacy andac v cine nationalism continue to emerge.

Early 2021 Price Rally To Lose Steam LME Zinc Three-Month Rolling Forward (USD/tonne)

Source: Bloomberg, Fitch Solutions

Nickel Prices: Correction Likely To Stay Over 2021

We are revising up our 2021 average price forecast for nickel from USD15,250/tonne to USD15,750/tonne as prices started the year from a high base. We expect LME nickel prices will hover around current levels in the coming months as investors price in the recent Tsingshan announcement while economic stimulus in China and a weakening US dollar continues providing support. Prices will be supported in the near term by Chinese demand following the lunar new year holiday and a weakening US dollar. We are maintaining our bearish outlook on prices in 2021 compared with the year-to-date average of USD18,140/tonne as increasing supply over the year reduces the market deficit, maintaining lower prices. Over the long term, we believe a sustained market deficit will support higher prices over our forecast period.

Correction Likely To Stay As New Supply Ramps Up Three-Month LME Nickel, USD/tonne (daily)

Note: Horizontal red lines are Fitch Solutions forecasts. Source: Bloomberg, Fitch Solutions

Impala Platinum: Impala Canada Boosts Interim Operational Performance

Impala Platinum will continue to focus on cost containment and efficiency improvements, particularly through the replacement of older shafts with more efficient ones. Theompany c will also focus on its Zimbabwe operations as the government opens up to investment, presenting new growth opportunities. In its 2021 interim results, Impala Platinum reported a strong operational performance during the first half of FY2021 (ending December 30 2020). Refined platinum and palladium production increased by 20.0% and 47.0% y-o-y respectively. Total refined rhodium production grew by 20.0% y-o-y; however, nickel production experienced a 2.0% y-o-y contraction.

The firm has also increased its production guidance for FY2021 to 3.2-3.5koz from 2.8-3.4koz previously, while revising down its capital expenditure guidance to ZAR5.8-6.2bn, from ZAR6.0-6.8bn previously.

Revenue Improving Upon Price Rally Despite Covid-19 Operational Impact Impala Platinum - Revenue (USDmn) and Select Commodities Prices (USD)

Note: Quarterly revenue figures are an even split of the semi-annual reported revenue. Source: Bloomberg, Fitch Solutions

PROJECT DEVELOPMENT - MINING PROJECT UPDATES: MARCH 3-9 2021

Country Company Mine Commodity Update

Has reported new high-grade drilling results at the Australia Horizon Minerals Limited Windanya Gold project

BOWEN COKING COAL Coal - BOWEN COKING COAL LIMITED has commenced new Australia LIMITED, Sumitomo Hillalong Coking exploration program at the project Corporation

ANTIPA MINERALS LTD. has reported broad spaced, ANTIPA MINERALS LTD., IGO Copper, vertical, shallow air core drilling intersects highly Australia Paterson Limited Gold anomalous zones of gold‐copper mineralisation and multiple other pathfinder elements at the project

Copper, Has reported assay results at Constellation deposit of Australia Aeris Resources Limited Tritton Gold the project

Red 5 Limited has signed a letter of intent with MACMAHON HOLDINGS Australia King of the Hills Gold MACMAHON HOLDINGS LIMITED for the award of LIMITED, Red 5 Limited mining contract for the project

Country Company Mine Commodity Update

Copper, Australia Elementos Limited Cleveland Lead, Tin, Has identified a new drill target at the project Zinc

St Barbara Limited has selected MACMAHON MACMAHON HOLDINGS Australia Gwalia Gold HOLDINGS LIMITED as the underground mining LIMITED, St Barbara Limited contractor for the project

The federal government has awarded major project Australia TNG Limited Mount Peake Iron Ore status to the project

Osisko Mining Inc. has placed an order for grinding FLSmidth & Co. A/S, Osisko Canada Windfall Gold equipment and ancillaries from FLSmidth & Co. A/S for Mining Inc. the project

Has commenced a new 3500m diamond drill program Canada Anaconda Mining Inc. Goldboro Gold at the project

Wallbridge Mining Company Has reported new results from the definition drill Canada Fenelon Gold Limited program at the project

IAMGOLD Corporation has reported assay results from IAMGOLD Corporation, Canada Rouyn Gold the 2020 exploration diamond drilling program, Yorbeau Resources Inc. completed on Astoria target area at the project

IAMGOLD Corporation, IAMGOLD Corporation has reported additional assay Canada Sumitomo Metal Mining Co., Cote Gold results from the delineation diamond drilling program Ltd. at the project

Copper, Thunder Bay Gold, Nickel, Has commenced a 40000m diamond drill program at Canada Clean Air Metals Inc. North Palladium, the project Platinum

Country Company Mine Commodity Update

Copper, Has reported an initial mineral resource of 1127.4mnt Canada Tudor Gold Corp. Treaty Creek Gold at the project

Canada Renforth Resources Inc. Parbec Gold Has reported drill results at the project

Has reported additional results from the 2020 drill Canada Probe Metals Inc. Val-d'Or East Gold program at the project

Has reported further strong results from site operations Congo (DRC) AVZ Minerals Limited Manono Tin at the project

Has reported assay results from down-plunge extension Cote d`Ivoire Roxgold Inc. Seguela Gold drilling below the high grade Koula deposit of the project

Has identified new, near surface, high grade Dominican Copper, Unigold Inc. Neita mineralization at Candelones Extension deposit of the Republic Gold project

Has delivered and mobilized two new drilling rigs and continued high grade gold results from surface drilling Fiji Lion One Metals Limited Tuvatu Gold and underground channel sampling programs at the project

Mali Cora Gold Limited Sanankoro Gold Has awarded new exploration permit for the project

Auris Minerals Limited, Auris Minerals Limited has received high grade gold New Zealand OceanaGold Corporation, Sams Creek Gold results from diamond drilling at the project Sandfire Resources Ltd

Ascendant Resources Inc., Copper, Ascendant Resources Inc. has reported an updated Portugal Empresa de Desenvolvimento Lagoa Salgada Gold, Lead, mineral resource of 12.1mnt at the project Mineiro SA Tin, Zinc

Country Company Mine Commodity Update

Copper, United States KGHM Polska Miedz S.A. Robinson Is planning to divest the mine Gold

United States KGHM Polska Miedz S.A. Carlota Copper Is planning to divest the mine

Source: Company announcements, Fitch Solutions

Mining - Weekly Projects Round-Up & Developments

In this week's round-up we outline our view on the commodities complex within our Monthly Commodities Strategy, quantify the impact of electric vehicle adoption on the nickel market and analyse the impact of Tsingshan's announcement on class-1 nickel supply.

Monthly Commodities Strategy: Key Metals, Agricultural Commodities Close To Peaking

The outlook for commodities has become increasingly positive in 2021, and we at Fitch Solutions have made a number of upward revisions to our forecasts in recent weeks, most notably to nickel, cotton, natural gas (henry hub), zinc, rice, and steel. The positive macroeconomic backdrop for commodities will help prices across all sub-sectors average higher in 2021, and we see copper and nickel, corn and soybean averaging at a seven-year high in 2021, iron ore at an eight-year high, palm oil at a 10-year high. While the oil market is also on a recovery trend, the uptick will be less impressive relative to previous years, and we currently see Brent averaging below 2019 levels. Strong momentum for metals will most likely keep prices in an uptrend, but we are bearish on base metals and iron ore on a six-month horizon, as we believe a more nuanced fundamental picture will emerge later in the year. Accelerating inflation, leading ot DM central bank tightening and weakening EM FX, could put additional downside pressure on industrial commodities.

Looking beyond 2021, we see some bright spots among commodities, but we not believe that we are currently in the middle of a commodities super cycle, which is a view held elsewhere. The prices of metals key to the green and tech economy, such as copper and nickel, will shine and average higher in the coming years, but we maintain a rather modest outlook on other commodities.

Good Performance Across Commodities In 2021, Risks Of A Relapse In 2022 Fitch Solutions Commodity Prices Indices, % chg y-o-y

Note: Composite equally weighted price indexes based on Fitch Solutions annual average price forecasts. Source: Fitch Solutions

Quantifying The Impact Of EV Adoption On Nickel: Stronger-Than-Expected Demand Ahead

As a key component of battery cathode chemistry in many existing and upcoming electric vehicles (EVs), nickel will remain an important metal to watch in the coming decade. We are updating in this article our estimate of the impact of electric vehicle (EV) battery manufacturing on nickel consumption. We expect nickel demand for EV battery manufacturing to

experience an annual average growth rate of 29% over 2021-2030, outpacing both lithium and cobalt demand. Interestingly, this estimate has significantly increased from the forecast we laid our in our 2018 battery report, due to upwards revisions in our Autos team's EV sales forecasts. Nickel demand will be supported by the metals persisting popularity in battery cathode chemistry, with downside risks caused by concerns over future supply availability.

Steep EV Sales Growth To Drive Demand For High-Grade Nickel Electric Vehicles Sales & Total Fleet

f = Fitch Solutions Autos Service forecast. Source: Fitch Solutions

Indonesian Nickel Matte Supply Deal Adds Upside Risk To Near-Term EV Battery Supply

A recent nickel matte supply deal between Tsingshan Holding Group, Huayou Cobalt and CNGR Advanced Material will likely alleviate near-term supply concerns, with the scope of Class 1 nickel supply risk depending on the technology behind the company's nickel matte processing. Within the context of the Tsingshan supply deal, we maintain our positive outlook for Indonesia’s expanding role in the electric vehicle battery supply chain. We expect to see continuing high-pressure acid leach nickel smelting projects in Indonesia, though we note permitting delays for waste disposal may hinder the development timeline.

Indonesia Positioned To Reap Nickel Price Benefits Selected Countries - Nickel Production,' 000 tonnes (2015-2030)

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

PROJECT DEVELOPMENT - MINING PROJECT UPDATES: MARCH 10 - 16 2021

Country Company Mine Commodity Update

Has completed front-end loading 3 report for the Australia TNG Limited Mount Peake Iron Ore beneficiation plant at the project

Is on track to deliver first gold production from the Australia Red 5 Limited King of the Hills Gold mine in mid-2022

ANTIPA MINERALS LTD. has reported that reverse Copper, ANTIPA MINERALS LTD., circulation drill testing of initial greenfield targets Australia Wilki Gold, Lead, Newcrest Mining Limited intersects minor zones of anomalous gold, copper Zinc mineralisation at the project

Auris Minerals Limited has completed the first hole of Auris Minerals Limited, Australia Forrest Copper the six diamond drill holes for 2540m planned at the Westgold Resources Limited project

Australia Artemis Resources Limited Carlow Castle Copper, Gold Has reported drill results at the project

Country Company Mine Commodity Update

Castelo de Has reported an updated mineral resource of 2.2Moz at Brazil TriStar Gold Inc. Gold Sonhos the project

Velocity Minerals Ltd. has received an initial inferred GORUBSO-KARDZHALI AD, Bulgaria Obichnik Gold mineral resource of 0.2Moz for Durusu zone of the Velocity Minerals Ltd. project

Has commenced a 4000m diamond drill program at the Canada Anaconda Mining Inc. Point Rousse Gold project

Has reported new analytical results from the ongoing Canada Osisko Mining Inc. Windfall Gold drill program at the project

Has reported an updated mineral resource of 0.7Moz at Canada Granada Gold Mine Inc. Granada Gold the project

Has reported new wide, high-grade intersections in Canada Kirkland Lake Gold Ltd. Detour Lake Gold Saddle zone at the project

Has reported the results from the first drill holes Canada Marathon Gold Corporation Valentine Gold completed under the 2021 exploration program at the project

Has reported complete and partial drill assay results Canada Talisker Resources Ltd. Bralorne Gold from ongoing stage one 50000m drill program at the project

Has reported an updated inferred resource of 1.2Moz at Canada Gold Terra Resource Corp. Yellowknife City Gold the project

Country Company Mine Commodity Update

Has reported additional assay results from southwest Canada Troilus Gold Corp. Troilus Copper, Gold zone at the project

Imperial Metals Corporation, Imperial Metals Corporation has discovered new zones Canada Red Chris Copper, Gold Newcrest Mining Limited of higher grade mineralization at the project

African Gold Group, Inc. has reported positive test African Gold Group, Inc., Mali Kobada Gold results from metallurgical testing on sulphide material Government of Mali at the project

Firefinch Limited, Government Firefinch Limited has intended to ommencc e mining of Mali Morila Gold of Mali satellite pits at the project in mid-2021

Has reported the results from 14 diamond drill holes Gold, Lead, Mexico Discovery Metals Corp. Cordero targeting the Josefina and odosT Santos high-grade vein Zinc trends at the project

A pre-feasibility study has reported that the mine will Nicaragua Calibre Mining Corp. Pavon Gold produce 47koz/yr of gold over a mine life of 4 years

Has reported positive drill results from expansion Nicaragua Mako Mining Corp. San Albino Gold drilling at the project

Has confirmed significantones z of mineralisation in the Spain Elementos Limited Oropesa Tin current campaign to convert existing inferred resources into indicated resources at the project

Has reported initial underground drilling results at the United States Arizona Gold Corp. Copperstone Gold project

Country Company Mine Commodity Update

Has reported assay results for five-large diameter core United States Viva Gold Corp. Tonopah Gold holes from previously announced reverse circulation and core drilling program at the project

Has reported that initial surface and underground United States Gold Bull Resources Corp. Sandman Gold sampling has produced favourable assay results at the project

Source: Company announcements, Fitch Solutions

Africa Africa Lithium Outlook: SSA To Offer Diversification Amid The Race To Secure Critical Materials

Key View

• We at Fitch Solutions expect to see an increase in lithium development projects in Africa, amid our bullish outlook for a sustained recovery in prices. • We estimate there are eight lithium mining projects currently in development in Africa - in Zimbabwe, Namibia, Mali, Ghana and the DRC - which is still small relative to the number of projects being developed in the Americas, Australia and Europe for example. • Zimbabwe will remain the largest lithium producer in Africa in the near-term, with production growth underpinned by the Arcadia lithium project and government support. • The advancement of the Karibib project in Namibia could benefit ESG ocusedf European battery manufacturers. Meanwhile, political instability in Mali will pose risks to project development. • Continued success at AVZ Mineral's USD454mn Manono project in the DRC, will add upside to the development of the domestic lithium sector within 2021. Still, projects in countries with lower levels of country risk, such as Ghana, will be more likely to attract financing from the risk-averse investor.

We at Fitch Solutions expect to see an increase in lithium development projects in Africa, amid our bullish outlook for a sustained recovery in prices. Lithium is a critical raw material (CRM) necessary for the transition to a green economy, with applicable uses in lithium ion batteries which are commonly utilised in EV manufacturing as well as in electric devices or alongside solar panels to store excess solar energy. Efforts to diversify lithium sources will attract foreign investment into Africa in the coming years as major economies look to secure lithium for their battery supply chains. We expect mining firms ot broaden exploration activities to Africa in countries such as Zimbabwe, Namibia, Mali, Ghana and the Democratic Republic of Congo (DRC). This includes all African countries with known reserves, those which are current lithium producers, such as Zimbabwe and Namibia as well as those with ongoing lithium developments.

Miners To Look To Africa To Diversify Supply Global - Lithium Mine Production, 2020 (Metric Tonnes)

Source: USGS, Fitch Solutions

Zimbabwe: Set To Remain Largest African Producer In The Short-Term

Zimbabwe will pave the way for lithium mine advancement in Africa, underpinned by the Arcadia Lithium Development. In 2020, Zimbabwe was the sixth largest lithium producer in the world, and its position stands to benefit from key developments such as the USD162mn Arcadia large-scale lithium project, near the city of Harare. The project is currently owned by Prospect Resources, and is one of the most advanced lithium projects globally, with the firm having secured off-take agreements across both Europe and Asia and having received full-permitting to commence production. In March 2021, Prospect announced that it has begun to develop a smaller commercial scale pilot plant for the production of technical-grade petalite in an effort to de-risk an accelerated production timeline. The firm will then ampr up production in two phases from 1.2mtpa to 2.4mtpa, with a targeted commencement in 2022.

Previously, on August 17, Prospect announced a seven-year offtake agreement with Belgian firm, Sibelco, positioning the mine to become the largest global supplier of ultra-low iron petalite. Under the agreement, Prospect will supply Sibelco with up to approximately 10kt of lithium carbonate equivalent (LCE) per year. Past assays have demonstrated that Arcadia could be the only lithium mine capable of supplying the premium glass and ceramics market both spodumene and petalite, giving Zimbabwe a differentiation strategy advantage. Other prominent lithium developments within Zimbabwe, include Premier African Minerals Zulu lithium project which was granted an exclusive prospect order (EPO) in March 2021. The company aims to initiate a definitive feasibility study (DFS) to be completed within 14 months.

Arcadia To Fuel Large Production Gains Zimbabwe- Lithium Production, Lithium Carbonate Equivalent (LCE)

f = Fitch Solutions forecast. Source: USGS, Fitch Solutions

The government will help bolster mining investment in the lithium sector through a series of support initiatives. In January 2020, the government of Zimbabwe confirmed that it is on track to achieve its targeted USD12bn mineral export goal by 2023, marking a 344% increase over USD2.7bn in mineral exports registered in 2017. Although the government's projected export target is quite ambitious given the narrow timespan, it affirms theountr c y's bright outlook for the sector. Furthermore, the government expects commodities to drive its broader effort to significantly boost the ountrc y’s national income by 2030. The Arcadia lithium project is expected to be a strong contributor to Zimbabwe’s 2023 extractive export target. The government also holds long-term plans to build a lithium ore processing plant in Bulawayo, which if realised, would encourage investment by increasing value-added domestic offerings.

Sustained Price Recovery To Benefit Project Renewal In Namibia China Lithium Carbonate 99.5% (USD/tonne)

Fitch/Solutions

Namibia: Sustainable Production At Karibib Positioned To Appeal To ESG-Focused Manufacturers

Lithium production in Namibia has lagged behind Zimbabwe, as weak prices have slowed project investment. Lithium production took off in Nambia in 2018, with Desert Lion Energy exporting lithium concentrate from the firm’s ubicR on and Helikon mines. However, the country did not produce any lithium in 2019, and many key projects have stalled amid the slump in global lithium prices beginning in August 2018. For example, Desert Lion halted all of its Namibian lithium operations in September 2018 before merging with global lithium exploration and development company, Lepidico Limited in July 2019. We expect Lepidico’s large- scale lithium project will offer upside potential to future domestic production in the medium term, as electric vehicle demand narrows the present lithium surplus. In March 2021, the firm increased mineral resources for its USD139mn Karibib project, now reaching 11.9mnt at 0.45% lithium dioxide across all categories. Previously, in May 2020, Lepidico revealed the definitive feasibility study (DFS) for phase one of the project. The project also includes both of the firm's idled Rubicon and Helikon deposits.

With an estimated annual production of 7kt of lithium carbonate equivalent (LCE), the advancement of the Karibib project could benefit ESG ocusedf European battery manufacturers. This is due to the utilisation of Lepidico’s patented L-Max and LOH-Max technologies, which enables the firm ot achieve low-cost production of lithium hydroxide in a more sustainable manner. Steam is the only material emission involved in the L-Max process, while LOH-Max avoids the creation of the problematic byproduct sodium sulphate. Fully permitted, Lepidico is scheduled to award the EPCM contract for a 60ktpa concentrator for Karibib by the end of Q221, adding upside to our outlook for Namibian lithium production.

DRC AND MALI BOAST HIGHEST RESERVES WITHIN THE CONTINENT Total Indentified Lithium eserR ves Share of Global Reserves Share of African Reserves (mnt)

DRC 3 3.5% 69.1%

Mali 0.7 0.8% 16.1%

Zimbabwe 0.5 0.6% 11.5%

Ghana 0.09 0.1% 2.1%

Namibia 0.05 0.1% 1.2%

Source: USGS, Fitch Solutions

Mali And The DRC: Highest Reserves, Yet Higher Risks

In contrast, political instability in Mali will pose risks to the development timelines of lithium projects. In August 2020, Firefinch (formerly Mali Lithium) reported that its operations had been unaffected by the previous military coup on August 18, during which President Ibrahim Boubacar Keïta resigned and dissolved Parliament. However, Firefinch announced in its February 2021 investor presentation that it aims to de-merge its Goulamina lithium project to continue to focus on its gold assets such as the Massigui and Dankassa gold projects.

The Goulamina project possesses high-grade spodumene concentrate and is fully permitted, but is likely to face difficulties attracting interest in the near-term due to the country's high country risk. Firms will seek to avoid conflict-ridden Mali in the coming quarters, evidenced by existing firms offloading assets. In August 2020, Anglogold Ashanti and Barrick Gold announced that they would be selling their 80.0% interest in the Morila gold mine to Mali Lithium. The reach of the coup will extend to administrative procedures, likely resulting in additional delays and red tape for mining firms.

On the other hand, Kodal Minerals Bougouni lithium project may add upside to Mali's lithium development. In September 2020, Kodal Minerals announced that it signed a memorandum of understanding (MOU) with Chinese firm Sinohydro to develop

its USD117mn Bougouni lithium project. Sinohydro's previous experience in Mali developing large public infrastructure projects will increase the likelihood of the project's advancement amid the backdrop of high political risk. We highlight political instability posing a larger obstacle to the project's timeline. As of March 2021, Kodal is awaiting mining licence approval from the transition government.

Mali and The DRC Present Largest Security Risks SSA - Short- Term Political Risk Index, Security & External Threats

Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Short-Term Political Risk Index

Continued success at AVZ Mineral's USD454mn Manono project in the DRC, will add upside to the development of the domestic lithium sector within 2021. In March 2021, AVZ reported wide intercepts of high-grade lithium mineralisation as a result of recent drilling targeting ground-water monitoring. With a 20-year mine life, and likely expansion of the project's resource base, which already includes a 400mnt high-grade open pit resource, Manono is well-positioned to be a leading lithium producer in SSA. In the April 2020 feasibility study, Manono was estimated to produce up to 700,000 tonnes per annum of lithium spodumene. AVZ holds a 65.0% stake in the project with the rest of the ownership held by a joint venture between AVZ and the Congolese government through Dathcom Mining. The firm xpectse the reach a final investment decision within the second quarter of 2021, with construction expected to begin in August.

Ghana and the DRC's Established Mining Sectors To Benefit Lithium Investment Select Countries - Mining Industry Risk Reward Index Scores and Mining Industry Value (MIV)

Note: Scores out of 100; higher score = more attractive market. Source: National Sources, Fitch Solutions Mining Risk/Reward Index

Although investors focused on battery metals have begun to shift away from the DRC's cobalt resources, due to humanitarian concerns over child labour, formal lithium mining is likely to mitigate this risk. Still, projects in countries with lower levels of country risk, such as Ghana, will be more likely to attract financing from the risk-averse investor. In January 2021, reports stated that IronRidge has completed a successful scoping study on its Ewoyaa, hard-rock lithium project in Ghana, which details a 2.0mntpa operational capacity. Furthermore, Ewoyaa's close proximity to existing infrastructure will boost project feasibility.

LITHIUM DEVELOPMENTS IN AFRICA Capex Country Company Mine Phase Notes (USDmn)

January 2021 - A scoping study has reported that the mine will produce 295kt/yr of Li2O New spodumene concentrate over a mine life of 8 Ghana IronRidge Resources Ewoyaa 68.1 Project years; Indicated Resources: 4.5mnt;The project includes Ewoyaa, Abonko and Kaampakrom deposits

February 2021 - Firefinch Limited is planning New to spin off the project; Expected Production: Mali Firefinch Limited (100%) Goulamina 194 Project 436kt/yr; Mine Life: 23years; Proved Reserves: 8.1mnt

May 2019 - Premier African Minerals Limited New has appointed KME Plant Hire Proprietary Zimbabwe Premier African Minerals (100%) Zulu Project Limited to carry out drilling works at the project; Inferred Resources: 20.1mnt

December 2019 - Prospect Resources has announced the results of definitive feasibility New Zimbabwe Prospect Resources (87%) Arcadia 197.4 study at the project; Proved Reserves: Project 11.3mnt; Mine Life: 15.5years; Expected Production: 173kt/yr

September 2020 - Kodal Minerals has signed New a memorandum of understanding with Mali Kodal Minerals Bougouni Project Sinohydro Corporation Limited to develop the project; Indicated Resources: 11.6mnt

Canadian strategic metals New Zimbabwe Kamativi Indicated Resources: 26.3mnt company Chimata Gold Corp Project

January 2021 - An independent study has found lowest carbon footprints of lithium at the project; January 2021 - AVZ Minerals Limited has signed strategic offtake agreement with Ganfeng Lithium Co Ltd for New Congo (DRC) AVZ Minerals (60%) Manono 545.5 the project; September 2020 - AVZ Minerals Project Limited has executed a share sale purchase agreement with Dathomir Mining Resources SARL to acquire an additional 10% stake in the project; Proved Reserves: 44.6mnt; Mine Life: 20years; Expected Production: 700kt/yr

May 2020 - Lepidico has delivered compelling Namibia Lepidico (80%) Karibib definitive feasibility study for the project; Proved Reserves: 1.9mnt; Mine Life: 14years

One of the largest lithium mines in Africa, Zimbabwe Bikita Minerals Bikita Operational operating since the 1950s.

Source: Fitch Solutions Global Mines Database

Asia Asia Fertiliser Outlook: South East Asia To Drive Demand As Indian Rebound Fades

Key View

• Although Asia, led by China and India, will remain the largest consumer of fertilisers globally, the outlook for usage in China and India is lacklustre as both countries aim to tackle the severely excessive application of fertilisers. • Chinese potash inventories remained elevated for much of 2020 and allowed the Chinese consortium of buyers to agree on a new potash contract on April 30 2020 at just USD220/tonne, below the last contracted signed in 2018/19 at USD290/tonne. • China’s Canpotex contract expired in October 2020, and lower inland inventories in China could lead to a higher price during the next contract renegotiation, although this could be challenged by a recent potash deal between China and the BPC. • The Indian government will maintain fertiliser subsidies in 2020/21 but continues to promote balanced usage in a bid to reduce chemical fertiliser consumption. It is estimated that the share of urea consumption as part of nitrogen-based fertilisers is at 80% in India. • South East Asia remains the bright spot for fertiliser consumption in Asia, while Indonesia is expected to be an outperformer and Vietnam an underperformer. Emerging markets in Asia such as Myanmar and Cambodia will also see growth as demand starts from a low base. • India is undergoing a revival of its nitrogen fertiliser industry, which will lead to lower imports in the coming years. That said, fertiliser sales in India have been trending upwards in 2019/20 owing to healthy monsoons, strong growth in the domestic agricultural sector and buying surge due to Covid-19-related lockdowns.

China's Consumption On The Decline, Brazil's Rising Global - Consumption Of Fertilisers, % nutrients

Source: FAO, Fitch Solutions

Asia Regional Consumption: Weak Outlook

Asian fertiliser consumption will prove better than we previously expected in 2020 despite efforts to reduce excessive usage, mainly because of improved consumption in India where the 2020 monsoon brought abundant rainfall. We expect demand to grow only modestly from 2021 to 2024, with potential for a mild increase in 2021 calendar year owing to high domestic grain prices encouraging more plantings. While fertiliser consumption will be strong in South Asia with the rise in crop production over the short

term, growth in Indian demand will most likely begin to taper off vo er the coming years (especially nitrogen fertiliser consumption) as the country has embarked on a long-term trend towards increasing the efficiency ofer f tiliser application. China's demand will be on the decline owing to environmentally friendly policies.

Regional Outlook To Soften Driven By China And India Overuse Select Countries - Fertiliser Consumption By Type (LHS) & Application (RHS)

Sources: World Bank, FAO, Fitch Solutions

South East Asia: Agricultural Yields To Support Uptick

We estimate crop production in the region to remain broadly healthy in 2020/21 as was the case in 2019/20 with rice and palm oil output on a steady uptrend. In the coming years, underlying trends for the agribusiness sector will be positive for fertiliser demand.

• We are particularly positive regarding demand growth in Thailand, Indonesia and emerging agribusiness countries such as Cambodia and Myanmar, which are recording robust growth in crop output. For example, fertiliser imports in Myanmar have been growing at a fast pace in recent years. • Vietnam's demand will be weak owing to an excessive application of fertilisers and the slowdown in crop production growth as a result of area cultivated and yield expansion constraints. • The positive trends in South East Asia will be particularly positive for nitrogen demand (rice, fruit and vegetables) and potash consumption growth (palm oil and sugar crops, for example, need more potash-based nutrients than grains).

Fertiliser Trade Opportunities Across Asia Select Countries - Fertiliser Trade Balance, USD '000 (2014-2019)

Note: Positive value denotes trade surplus in product category. Source: Trade Map, Fitch Solutions

China Production And Consumption: Slowdown Evident

The operating environment for China's fertiliser and pesticide sector is becoming increasingly challenging amid the rise in environmentally friendly policies and we expect only minimal growth in Chinese ammonia and urea production in 2021. Production has been on a declining trend as fertiliser and pesticide output trend lower. Apart from stricter policies and enforcement of rules, elevated coal prices over recent years have pushed up the cost of urea production. As a result, the production capacity of ammonia and urea has been contracting over recent years and, therefore, China's fertiliser exports will most likely remain on a downtrend in the coming years. Crop production will also either decline year-on-year in 2020/21 (rice, wheat, cotton), or if it grows, absolute output will remain below record levels seen in recent years (corn). Furthermore, the Covid-19 outbreak in the country will lead to logistical concerns over the short term while greater efforts to ensure environment security may take centre stage. This, coupled with an active policy to reduce the overuse of fertiliser, will lead to stagnant or decreasing usage in 2020/21 despite high prices encouraging plantings.

Crop Production Mostly On The Rise In 2020/21 Select Countries & Crops - Production Growth, % change y-o-y

f = Fitch Solutions forecast. Source: Local statistics, USDA, Fitch Solutions

China is a major importer of potash acquired by means of annual contracts in the second half of the calendar year. As of Q120, China had not initiated a potash contract owing to high existing inventories in stock and this gave Chinese buyers significant oomr for price manoeuvres. The contract was eventually signed on April 30 2020 at just USD220/tonne, down from USD290/tonne signed in 2018/19. This trend encouraged major global suppliers to reduce their annual production capacity as global prices weakened. One of China’s contracts, with Canpotex, expired in October 2020, and thus Canpotex members are no longer placing product in Chinese warehouses. According to Nutrien management, local Chinese potash prices are higher than the April 2020 contract and inventories are relatively low, suggesting a higher-priced contract in 2021 year-on-year. However, contract negotiations are likely to be challenging for the Canpotex members as the Consortium of Chinese buyers (Sinochem, CNAMPGC, CNOOC) agreed to a contract price of USD247/tone CFR with the Belarussian Potash Company. Canpotex has stated that this price is considerably below current potash price levels (which are over USD300/tonne in some cases)

Over the medium term, China's demand for fertiliser will contract, particularly in the case of nitrogen fertilisers. The authorities' increasingly strict stance on environmental protection is impacting the use of fertiliser, as China's excessive application of inputs has led to severe soil degradation. While we are positive on the outlook for other agricultural inputs, including machinery, seeds and agtech adoption, the outlook for growth of fertiliser sales in China is bearish.

Chinese Fertiliser Usage Stagnating China - Fertiliser Usage By Type (Mn tonnes)

Source: FAO

India: Short-Term Outlook Robust But Demand To Cool Over Coming Years

India's fertiliser consumption growth was positive in 2020 as the farm sector benefited from a good monsoon and makes progress under the Modi government, while strong capex and related investments to drive farmer incomes gain traction. The Indian agricultural sector fared well in H120 as the Covid-19 pandemic and subsequent efforts to ensure domestic food security came to the fore. That said, government initiatives to limit urea consumption are slowly paying off. Over the long term, we expect India’s fertiliser consumption rates to begin cooling off as the sector matures. The government’s ongoing goal of improving efficiency in the use of fertiliser will weigh on sales volume growth, but crop production expansion will remain robust depending on the outcome of ongoing farm reforms, which should provide some support to fertiliser use. We see downside risks to this view as the government may attempt to liberalise or decrease urea pricing in the coming years to rebalance fertiliser use.

Robust Growth In Indian Fertiliser Usage India - Cumulative Monthly Fertiliser Sales (metric tonnes)

Source: Department of Fertilisers

India's Fertiliser Policy: Usage Imbalances To Remain Pronounced Until Potential Urea Reform

While India's government is likely to maintain its support for agriculture via fertiliser subsidies in the coming years following the re- election of Prime Minister Narendra Modi in 2019, the overarching goal to instil a more balanced use of fertiliser (away from urea) and to boost fertiliser efficiency willeep k demand growth subdued over the coming years. Elevated input subsidies in India, particularly for urea fertilisers, have led to fertiliser overuse, severe imbalance in fertiliser use (overuse of nitrogenous fertilisers at the expense of phosphatic and potassic fertilisers), and soil degradation and sub-optimal yields. Aware of this weakness, Modi is aiming to reduce fertiliser use and has in the past considered reforming some of the most sensitive policies before renouncing; however, reforming the sector is politically sensitive given the weight of farmers in elections. Modi has implemented other fertiliser and agricultural policy changes that are transforming the fertiliser sector and that are aimed at improving its efficiency. These are outlined below.

• Since 2015, all urea fertiliser consumed in the country must be neem-coated, which allows for a slower and more efficient release of the nutrients into the ground. • The distribution of Soil Health Cards, launched in 2015, aims to address the imbalanced application of fertilisers. • The rolling out of the Direct Benefit rT ansfer (DBT) Policy in 2018, which is a new subsidy-dues settlement system, aims to improve subsidy efficiency. The DBT Policy (whereby the government pays subsidies to fertiliser companies only after they have made authenticated sales to farmers) is another sign that the Indian government is looking to increase efficiency in the sector. • The roll-out of phase two of the DBT Policy will encourage the direct transfer of subsidy funds to farmers directly in a bid to improve efficiency. The government is targeting the implementation of phase two in 2020/21, and has allocated INR795bn for fertiliser subsidies in FY22. However, some local reports suggest that additional changes to the DBT program might be put on hold due to the ongoing farm protests. • The urea policy is another aspect of fertiliser policy reform in which India has made little progress. Urea remains the only fertiliser yet to be deregulated, and very low set prices have encouraged farmers to increase the use of nitrogen fertiliser. This has created severe imbalances in overall fertiliser consumption that have adversely affected soil health and long-term yields.

INDIA - FERTILISER SUBSIDY RATE UNDER THE NUTRIENT-BASED SUBSIDY SCHEME Nutrient 10-Nov 11-Dec 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21e

Nitrogen 23.2 27.2 24.0 20.9 20.9 20.9 15.9 19.0 18.9 18.9 17.0

Phosphorous 26.3 32.3 21.8 18.7 18.7 18.7 13.2 12.0 15.2 15.2 13.7

Potassium 24.5 26.8 24 18.8 15.5 15.5 15.5 12.4 11.1 11.1 10.0 e = Fitch Solutions estimate using subsidy rate from the Ministry of Chemicals and Fertilizers. Source: Ministry of Chemicals and Fertilizers, Fitch Solutions

India's Fertiliser Production: Witnessing A Boom

India's government aims to reduce its import dependence on nitrogen fertiliser and is reviving brownfield plants and encouraging investment in greenfield projects. Chambal Fertilisers and Chemicals, one of the largest private sector fertiliser producers in India, commenced commercial production from its Gadepan-III Plant in January 2019. At least five other projects are also being developed, which are supposed to come online out to 2024 and will significantly boost India's nitrogen fertiliser production. The public sector is heavily driving this trend as many of these projects are being undertaken by newly created public sector joint ventures. As a result of these investments, we expect India's fertiliser net imports to trend lower in the coming years.