Ubs critical raw materials seminar, frankfurt, march 2011
Major Challenges in Minor Metals Dr. Heinz Schimmelbusch Chief Executive Officer AMG Advanced Metallurgical21 March 2011 Group N.V.
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Technology Leaps Trigger Rapid Demand Growth Consumer Electronics Tantalum for capacitors Aerospace Titanium quantities for the Airbus A350 and Boeing 787 is over 2.5 times the amount used on aircraft they are replacing Solar Silicon metal demand for solar applications was 180,000 tons 10% of global production 20% growth per annum estimated Electric car “E-Car” Mineral Lithium Cathodes - 10-20% estimated growth per annum Natural Graphite Anodes Nuclear waste solutions7
E-Cars – Natural Graphite → → Anode e- e- Cathode(Graphite) Separator (Lithium) − + Li+ Li+ Li+ Li+ Li+ Li+ Nissan Leaf (25 kWh) BMW Mini EV (35 kWh) Li+ Li+ Li+ Li+ Li+ Li+ One car* battery = 24 kg of graphite * Based on 30 kWh Electrolyte Electrolyte 2010 2015 Total Auto Sales (units) 70,169,000 91,872,000 % E-Car 1.1% 3.8% E-Car Sales (units) 774,000 3,484,000 Natural Graphite Needed (mt) 37,152 167,232 4.5x in 5 Years! 8 Sources: Credit Suisse, GK, company estimates
Critical Metals and Technology Development Demand Growth Ti Mg Cr Sb Nb V Ta Si C Technology Development9
Critical Metals and Technology Development Ti Mg Cr Demand Growth Ta Sb Si Nb V C Technology Development10
Reserve Depletion and Big New Finds Tantalum Greenbushes Tin – Talison – Global Advanced Metals, Australia (founded 1889) Niobium CBMM, Brazil (founded 1955) Molybdenum Jin Dui Cheng, Shanxi Province, China (founded 1970s) Rare Earths (“REE”) Bayan Obo, Inner Mongolia, China (founded 1980s) All are still the world’s largest mines – the same as 30 years ago11 (1) World Titanium Market 2009 PSC VSMPO-Avisma Corporation
Recycling – Only a Partial Solution, but Growing Hurdles Lack of collection systems, unattractive economics Lack of technologies, expensive development Dissipation – metals “vanishing” into the end products Conclusion What can be (easily) recycled, is recycled Rarely big technology developments12 (1) AMG estimates
Critical Raw Materials: Primary Supply, Recycling, Demand Severe Rapid Supply Demand Risk Growth Tantalum Niobium Magnesium Chromium Metal Graphite Silicon Metal Lithium Titanium Vanadium Cerium Limited Recycling Potential The world without government action13 Source: Institute for Applied Technology, UNEP, July 2009; AMG
Critical Raw Materials: Primary Supply, Recycling, Demand Severe Rapid Supply Demand Risk Growth Silicon Metal Titanium Tantalum Graphite Niobium Magnesium Vanadium Cerium Chromium Metal Lithium Limited Recycling Potential The world with government action14 Source: Institute for Applied Technology, UNEP, July 2009; AMG
Critical Raw Materials EU Definition “The EU is highly dependent on imports of „high tech‟ metals such as cobalt, platinum, rare earths, and titanium. Such materials play an essential role in the development of innovative „environmental technologies‟ for boosting energy efficiency and reducing greenhouse gas emissions. Some raw materials can be considered to be particularly critical, because of three reasons: their significant economic importance for key sectors high supply risks lack of substitutes” - ad hoc group of the Raw Materials Supply Group in a report to the European Commission, June 201018
Critical Raw Materials EU Listing 14 The EU identified 14 critical raw materials to the European economy Antimony Indium Beryllium Magnesium Cobalt Niobium Fluorspar PGM Gallium Tungsten Germanium Tantalum Graphite Rare Earth19 (1) EU Report on Critical Raw Materials, June 2010
Critical Raw Materials “Critical” raw materials20 (1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
Critical Raw Materials In addition to the “EU 14” materials, AMG believes that following are critical based upon the EU criteria: Vanadium (1) Silicon metal Titanium sponge (1) Chromium metal Mineral Lithium (1) This critical list would include 11 materials that involve AMG That would bring the 14 “EU Critical Materials” to 1921 (1) Included as “critical” by the U.S. National Academies (U.S. Congress‟ Scientific arm)
Critical Raw Materials - Sovereign Strategies Sovereigns Reduced domestic production Foreign processors welcome to produce in country Export Restrictions Reduced depletion, environmental impact Acquisition of Global industry leadership foreign assets and headquartered in country technology Price increases25
China’s Position in Critical Minor Metals Metal Activity Trade Restrictions Market Share Antimony Mining Export Quotas 90%+ Tantalum Processor ----- 10% Silicon Metal Mining Tariffs 50%+ Vanadium Slag ----- 33% Graphite Mining, Smelting Tariffs 70% Titanium Sponge Production Tariffs 33% Niobium Processing ----- N/A Strontium Production Export Quotas 90%+ Cerium Mining Export Quotas 90%+ Chromium Metal Smelting ----- 50%+ Magnesium Production ----- 80%+26 Sources: AMG,
Cerium Revisited Volatility will be even higher in the future27 Sources: AMG
Germany’s dependency on China – selected metals: Metal China’s Production Germany’s Import Rank Percentage Titanium 1 100 Vanadium 2 100 Silicon Metal 2 85 Chromium Metal 1 100 Strontium 1 10028 Source: AMG
AMG’s Strategy ■ Serve growing end markets with high value-added specialty metal products and engineering solutions, related to CO2 reduction and conservation of natural resources ■ Execute through a combination of: ■ Vertical integration ■ Industry consolidation ■ Continuous investment in productivity and technology30
Conclusion Minor Metals are essential to the global economy Governments now have significant and increasing roles Very attractive rewards, but very high barriers of entry Due to technology, this will remain a long-term business31
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