Evaluating and forecasting the. perspective Robert Baylis 30 th January 2013

Transcription

1 Evaluating and forecasting the lithium market from a value perspective Robert Baylis 30 th January 2013

2 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.

3 Overview Market dynamics: Producer market share by value Product value and volume Product markets: Technical products Battery products Organolithium & specialty products Market outlook and product impact Summary

4 Market dynamics

5 Lithium market share by value shows how product diversification can increase turnover substantially Sales by company across market area (US$M), 2011/12 Source: Rockwood Lithium; FMC Lithium; SQM; Tianqi; Talison; Ganfeng; Roskill estimates Notes: Rockwood LTE 2012; FMC FY 2011;SQM LTE 2012; Tianqi + Talison FY 2011/12; Ganfeng FY2011; Tianqi + Talison technical salts includes mineral sales

6 Product groupings can be roughly drawn around specific markets and product types Speciality/metal Organlithium Battery Technical Cat-grade lithium metal Butylithium Battery-grade lithium carbonate Technical-grade lithium carbonate High purity lithium salts Hexyllithium Battery-grade lithium hydroxide Direct-use minerals Vol lume Lithium aluminum Methyllithium Battery-grade lithium Technical-grade hydride (LAH) metal lithium hydroxide Lithium hexamethyldisilazide Phenyllithium Lithium salts, e.g. lithium fluoride Lithium hypochlorite Lithium bromide Lithium chloride Value

7 Profitability is not necessarily restricted to higher priced products, and will vary by producer depending on costs Rockwood Lithium: Profitability of selected lithium products, 2012 Source: Rockwood Lithium Note: Size of bubbles represents profitability of products

8 There are very few areas with which to increase added value in the lithium market, so all avenues are explored by producers Complexity, price and market size of selected lithium products, 2012 >90% by volume <US$10,000/t 5-10% by volume US$30-40,000/t <1% by volume >US$1,000/kg Source: Roskill estimates Note: Size of bubbles represents size of market in LCE terms; market volume representative of chemical market only (i.e. not including mineral direct use)

9 There is a significant contrast between market volume and market value, with organolithium and other specialty products contributing most to value World: Lithium market size by volume and value, 2012 (t LCE and US$) Source: Roskill estimates

10 Technical products

11 Technical products generally only require one or two process steps Mineral production Brine production Mineral products Mineral conversion Brine processing Lithium hydroxide Lithium carbonate Lithium chloride Technical-grade Battery-grade Low sodium metal High sodium metal Technical-grade Technical-grade Battery-grade High purity Lithium bromide

12 Lithium products for technical markets and their key end-uses Other salts Lithium hydroxide Lithium carbonate Minerals Air treatment Greases Glass-ceramics Glass Pool water treatment Reagents Ceramic & enamel frits & glazes Ceramics Vol lume Construction chemicals Dehumidification & CO2 removal Other Casting powders Glass-ceramics Glass Casting powders Other Aluminium smelting Other Other Value

13 Important factors to consider when supplying technical products Market is concentrated in Europe, USA and East Asia, but small volumes are consumed across a large number of countries Logistics and distribution networks are critical as volumes generally higher compared to other lithium products (especially when including minerals) Consumers may buy material in bulk or bagged; some carry stock, some want just-in-time Grade may be less critical for some applications, but will vary even within different end-use sectors Product form can also vary across end-uses, e.g. particle size Consistency and reliability of supply perhaps more important than grade Pricing is competitive

14 Battery products

15 Battery products also generally require only one or two process steps, but feed and quality control is much more rigorous Mineral production Brine production Mineral products Mineral conversion Brine processing Lithium hydroxide Lithium carbonate Lithium chloride Technical-grade Battery-grade Low sodium metal High sodium metal Technical-grade Technical-grade Battery-grade High purity Lithium salts

16 Lithium products for batteries and their markets Other salts Battery-grade lithium metal Battery-grade lithium hydroxide Battery-grade lithium carbonate Vol lume Lithium-ion electrolyte solutions Primary battery anodes Lithium-ion cathode materials Lithium-ion cathode materials Other Rechargeable Primary battery Lithium-ion primary batteries electrolytes electrolyte solutions Lithium polymer batteries Other Primary battery cathodes Other Other Value

17 Important factors to consider when supplying battery products Market is concentrated in East/South Asia, with lower volumes in Europe and USA, and in a smaller number of countries compared to technical products Logistics and distribution networks still critical (especially as volumes grow); metal products require careful handling Bagged material prevails to prevent contamination Grade is important, but impurities and foreign particles even more so Product form can also vary across end-uses, especially for metal products Consistency and reliability of supply imperative Competition is growing for lower value, higher volume salts (e.g. battery-grade lithium carbonate), but more restricted for higher value products Pricing is becoming increasingly competitive

18 Organolithium, metal and specialty products

19 Organolithium and specialty products generally require more process steps Mineral conversion Brine processing Lithium carbonate Lithium chloride Low sodium metal High sodium metal High purity Lithium salts Organolithium LDA/LAH/LHS

20 Organolithium and other specialty products and their uses Other Organolithium Specialty salts Lithium metal Lithium hydride Polymers High purity carbonate etc. Polymers Volume Lithium aluminium hydride(lah) Lithium hexamethlydialiszide Organic synthesis Agrochemicals Lithium inorganics (nitrate, sulphate etc.) Lithium organics (acetate etc.) Catalysts Alloys Other Other Other Other Value

21 Important factors to consider when supplying organolithium & specialty products Market is varied depending on product and end-use, e.g. catalysts and organoltihium in USA, Europe, East/Southeast Asia and India Logistics and distribution networks closer to end markets due to hazardous nature of organic and metal products, and products require very careful handling Bagged or sealed material prevails to prevent reaction and contamination Products designed and produced to tight customer specification, high level of technical support and R&D Consistency and reliability of supply imperative Competition is thin, especially for organolithium and high value inorganic and organics Pricing is opaque, cost of lithium in process becomes a minor concern

22 Market outlook

23 Consumption growth may exceed 11%py, even in the base-case scenario, as demand from 3C, EV and off-grid battery markets increase World: Consumption of lithium by end-use, (t LCE) 11%py 10%py Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.

24 Non-LIB market to grow 20% by 2017 = 20,000t LCE additional demand World: Consumption of lithium by type, 2007, 2012 & 2017 (t LCE) Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.

25 Volume will move upwards for battery-grade salts relatively quickly, but significant value will still remain in specialty products World: Lithium market size by volume and value, 2017 Source: Roskill estimates

26 Summary A wide spectrum of lithium products are produced to meet the needs of a diverse range of end-uses Volume is centered on relatively low priced lithium salts that, for the most part, are straightforward to produce Value is however centered on high value metal and organolithium products, which are not so easy to produce; competition in these is limited Non- rechargeable battery market forecast to grow by 20% in five years = 20,000t LCE additional requirement Rechargeable battery market forecast to grow by ~200% in five years = 90,000t LCE additional requirement Incumbent producers will look firstly to capture growth in high revenue generating products Secondly they will look at higher revenue generating battery products, perhaps shifting away from technical salts Thus potentially leaving new producers to fulfill demand at the bottom of the value chain; progressing downstream as opportunities arise

27 Roskill Information Services Lithium: Market Outlook to 2017 New Multi-Client Report Available March 2013 Pre-publication delegate offer available save 10% Roskill s Lithium Digest Tracking news and trends in the lithium business Available quarterly Free copies available

28 About the speaker Robert Baylis Managing Director; Manager Minor Metals Research Robert Baylis is Managing Director of Roskill Information Services Ltd. Roskill is based in London, UK, and provides reports and consultancy services on the supply, demand, end-use applications, trade and prices of industrial minerals, minor metals and steel alloys. Robert joined Roskill in 2006 focusing initially on the cobalt market, which, similarly to lithium, was starting to witness significant interest due to lithium-ion battery and emerging market demand growth. He first started researching the lithium market in mid-2008, authoring Roskill s 11th edition of its multi-client lithium report published in Since 2009, he has undertaken several singleclient research projects on lithium, as well as being a regular speaker at the Lithium Supply and Markets conference.

29 Roskill Consulting Group Global coverage In recent years we have served clients in the US, Canada, China, Russia, the EU, Japan, Brazil, Australia, South Africa and the Middle East. We are experienced in interviewing overseas, with the advantage of having several French, Spanish, Italian, Dutch and Chinese - speaking consultants. Tracking news and trends Our primary research is backed up by our uniquely comprehensive inhouse information system. This database is a fund of published and unpublished information, collated under 350 file headings, compiled from company reports, official national statistics, over 150 leading trade journals, technical and trade literature and many other reliable international sources. We also subscribe to a range of on-line resources, including comprehensive business information services and a trade database, so that we can analyse developments in metals and minerals markets as they happen. We have a staff of senior consultants, each with many years of consulting experience. In turn, they are supported by a team of analysts who are engaged in full-time metals and minerals research. This means that we are able to offer a wide range of consulting skills combined with detailed, practical knowledge of the metals and minerals business today.