CRU Perth Tech Metals Briefing June 2018 Legal Notice This presentation is private and confidential. It must not be disclosed in whole or in part, directly or indirectly or in any other format without the prior written permission of CRU International Limited. CRU International Limited’s responsibility is solely to its clients and its liability is limited to the amount of the fees actually paid for professional services. Although reasonable care and diligence has been used in the preparation of this presentation, we do not guarantee the accuracy of any data, assumptions, forecasts or other forward-looking statements. We accept no liability to third parties, howsoever arising. CRU takes information security seriously and currently holds the UK Government approved Cyber Essentials certification. This certifies that we have the appropriate security controls across our organisation and third party suppliers to protect our information assets. CRU also has a privacy policy in place which explains how we handle personal data on our customers. Copyright CRU International Limited 2018. All rights reserved. 2 About CRU CRU's reputation with customers across mining, metals and fertilizers is for integrity, reliability, independence and authority. CRU's insights are built on a twin commitment to quality primary research and robust, transparent methodologies. CRU invests in a global team of analysts, the key to gaining a real understanding of critical hard-to-reach markets such as China. New office I Singapore We strive to provide customers with the best service and closest contact – flexible, personal, responsive. CRU’s office locations CRU – big enough to deliver, a high quality service, small enough to care about all our customers. 3 Technology Metals Capabilities Our value proposition Recognition We have a reputation as the foremost name in metals and minerals consulting and analysis Industry Speed of Global Independence knowledge response presence We are privately owned and CRU’s business is mining, Through CRUA we have not associated with any metals and fertilizer chemicals CRU has offices in the key existing data and models that producer, consumer, financial and we have been active in regions – Europe, Australia, can rapidly be customised. Our community or other this field for 40 years. You do China, Singapore, Mumbai team is dedicated to single stakeholder interest in the not pay us to ascend the North and South America client work industry industry learning curve 4 Technology Metals Capabilities Our team has extensive experience in key areas Strategy • General business strategy, growth and acquisitions; market entry business plan review; risk analysis; procurement strategy; government policy issues; infrastructure implications Market decisions • Specialised market studies for any part of the world; lenders market reports Valuation • Feasibility studies, mergers & acquisitions support, asset transfers (IPO support documents), credit decisions, project finance and specialized valuation of business elements Negotiation Support • Assistance to producers, consumers, traders, public authorities for contract review, negotiation and risk assessment 5 Technology Metals Capabilities Consulting Technology Metals Team Rebecca Gordon Head of Technology metals and Energy CRU Consulting (London) Nikhil Shah George Heppel Alex Laugharne Aleks Popovic Cobalt Outlook and EV Nickel Outlook Lithium Outlook model owner (London) (New York) Energy Markets (London) (London) Subject Matter Experts Lianjiang Lu Alice Yu Ying Dai Peter Searle Damodharan NK Mahesh Goenka Ben Jones Toby Green EV model Cobalt / Cobalt / Cobalt Lithium Total Cost of Energy & Policy Graphite & design Lithium supply Lithium supply expert demand Ownership Specialist Battery Materials (London) (Beijing) (Beijing) (London) (Mumbai) (Singapore) (London) (Sydney) 6 “Green” technologies are commonly more metal and mineral intensive Illustrative copper intensity by passenger vehicle type KGs per passenger vehicle Battery electric vehicles 3-4 times more copper intensive than ICEs! Gasoline Battery Electric Vehicles Hybrid Electric Vehicles Plug-in Hybrid Electric Vehicles Cathode composition by battery storage technology KGs per kWh Lithium nickel cobalt aluminum oxide battery 1:1:1 5:3:2 8:1:1 Nickel Metal Hydride (NiMH) (NCA) Aluminium Manganese Nickel Cobalt Lithium Batteries require significant volumes of Lithium, Cobalt, Manganese and Nickel 7 CRU developed 3 internally consistent futures for low carbon transition…. Deep green: rapid innovation, Mass ride sharing, highly supportive policy Light green: sustained innovation but some technology & policy constraints Brown: technologies and behaviours evolve slowly, with patchy policy support Policy support …and robustly evaluated their impacts on metal markets! 8 Technology Metals Capabilities CRU designed and maintains one of the most sophisticated EV adoption models globally • CRU’s coverage of battery materials Policy Technology Macro is underpinned by an excellent Carbon Autonomous Consumer knowledge of the technological, cost Emission Cost Cars Preferences LT Car Demand Electricity EV Policy Oil Prices Car Sharing and policy developments of this new Growth Generation industry Volume/type of cars on Materials • Our EV forecasting model maps out road Manufacturing the entire global fleet of vehicles, and Capabilities (EVs, Hybrids, ICE, fuel cell) Price / Quality Availability converts this back to GW/h of Trade-off Lithium-Ion Battery demand Characteristics OEM Strategy Material Selection • These GW/h can be converted into raw materials demand using a series Demand for Different Materials of inputs to describe intensity in use Carbon Steel AHSS Copper Electrical Steel Battery Materials Non-metal Aluminium (Co, Ni, Li) Materials 9 Large & rising market share for EVs across both green scenarios by 2030… Global vehicle sales by power Global vehicle sales by power Global vehicle sales by power train, brown train, light green train, deep green Million Million Million 2017 2020 2025 2030 2035 2017 2020 2025 2030 2035 2017 2020 2025 2030 2035 Petrol Diesel Petrol Diesel Petrol Diesel Hybrid Plug-in hybrids Hybrid Plug-in hybrids Hybrid Plug-in hybrids BEV Fuel cell BEV Fuel cell BEV Fuel cell …increased ride sharing weakens vehicle sales growth in deep green world 10 Power demand continues to grow across all scenarios… Electricity demand growth by scenario, 2016-2030 TWh Demand Income Efficiency EV Base Demand Income Efficiency EV Base Demand Income Efficiency EV Base '16 effect gain demand case '30 '16 effect gain demand case '30 '16 effect gain demand case '30 Electricity by generation technology, 2016-2030 % global market Coal - brown Renewables - brown Coal - light green Renewables - light green Coal - deep green Renewables - deep green 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 11 Copper and lithium demand markedly higher in greener futures… Global copper demand by scenario Global lithium demand by scenario Million tonnes Thousand tonnes (lithium carbonate equivalent) 2017 2020 2023 2026 2029 2032 2035 2017 2020 2023 2026 2029 2032 2035 Global thermal coal demand by scenario Global iron ore demand by scenario Million tonnes Million tonnes 2017 2020 2023 2026 2029 2032 2035 2017 2020 2023 2026 2029 2032 2035 …but coal demand expected to be hit* *Global demand insights are distinct from the impact on seaborne market 12 Technology Metals Capabilities Agenda 1. The electric vehicle paradigm shift: the impact of auto sector transformation on commodity markets - George Heppel 2. Making the Grade: How Battery Specifications Lead to Tightness in Lithium, Graphite and Nickel Sulphate - Toby Green 3. The year of cobalt: analysing the disconnect between market fundamentals and cobalt prices - George Heppel 13 The electric vehicle paradigm shift George Heppel, Editor June 2018 Legal Notice This presentation is private and confidential. It must not be disclosed in whole or in part, directly or indirectly or in any other format without the prior written permission of CRU International Limited. CRU International Limited’s responsibility is solely to its clients and its liability is limited to the amount of the fees actually paid for professional services. Although reasonable care and diligence has been used in the preparation of this presentation, we do not guarantee the accuracy of any data, assumptions, forecasts or other forward-looking statements. We accept no liability to third parties, howsoever arising. CRU takes information security seriously and currently holds the UK Government approved Cyber Essentials certification. This certifies that we have the appropriate security controls across our organisation and third party suppliers to protect our information assets. CRU also has a privacy policy in place which explains how we handle personal data on our customers. Copyright CRU International Limited 2018. All rights reserved. 15 Through its extensive analysis base, CRU already covers many facets of the battery metals industry. The battery metals market outlook pulls together our knowledge from these sector to give a comprehensive overview of long-term demand implications from the electric vehicle sector. Manganese Market Outlook Battery- related Lithium Market Outlook consultancy projects Cobalt Market Outlook CRU Battery Metals Nickel Market Outlook Market Outlook 2018 CRU xEV Graphite Electrodes Market Outlook production model Precious Metals Market Outlook 16 The key questions we answer… 1. How many vehicles