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Benchmark Lithium Supply Presentation 2015 By Andrew Miller

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Lithium, Electric Cars, Batteries, Tesla, Gigafactory, Ganfeng Lithium, International Lithium.

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Benchmark Lithium Supply Presentation 2015 By Andrew Miller

  1. 1. Benchmark  |  World  Tour  2015     Niche  Minerals  vs.   Commodi;es:   Opportuni;es  &  risks  in  baCery   raw  material  markets     Andrew  Miller,  Benchmark  Mineral  Intelligence,  UK   amiller@benchmarkminerals.com  |  www.benchmarkminerals.com    
  2. 2. A  new  genera;on  of  growth  markets   Source:  Penflip,  Benchmark  Mineral  Intelligence   1800s   1st  Industrial  Revolu;on     •  Metallurgy   •  Steam  power   •  Cement     Raw  materials:   Coal,  clay,  limestone   1900s   2nd  Industrial  Revolu;on     •  Electrifica;on   •  Transporta;on   •  Chemicals   Raw  materials:   Iron  ore,  petroleum   2000s   3rd    Industrial  Revolu;on     •  3D  prin;ng   •  Aerospace   •  Advanced  materials   •  BaCeries    
  3. 3. Global  economic  slowdown     •  Slowing  growth  in  emerging   economies     •  Slowing  economic  development   limi;ng  sales  into  tradi;onal   end-­‐markets   •  Industrial  markets  slowing  –  new   lower  equilibrium?         A  new  genera9on  of  growth  markets  
  4. 4. Source:  The  Wall  Street  Journal   •  China’s  economy  underperforming   for  first  ;me  in  a    genera;on   •  2015  GDP  growth  target  lowered  to   7.3%     Long-­‐term  objec;ves  remain:     •  Develop  downstream  markets   •  Protect  domes;c  resources   •  Secure  low-­‐cost  resources  abroad   •  Value-­‐added  economy     •  The  materials  China  has  needed  over   the  past  20  years  will  change  on  the   next  20  years   China’s  evolu9on  
  5. 5. Rising  cri9cality  
  6. 6. Explora;on   Mining   Processing   Trading   End-­‐markets   Supply  chain  dis9nc9ons  
  7. 7. •  Explora;on  commonplace  in  commodi;es     •  New  for  niche  minerals  /  specialist   products  –  since  2009     •  Explora;on  widening   •  Lithium:  Argen;na,  Chile,  Bolivia,   USA,  Canada,  Ireland,  Mongolia,   Australia  +   •  Graphite:  Canada,  Australia,   Mozambique,  Madagascar,  Sweden  +   •  Rare  earths:  USA,  Canada,  Australia,   Greenland,  Mongolia  +     •  Cobalt:  USA,  Canada,  Russia  +   Explora9on  
  8. 8. Commodi9es   •  Extrac;ng  material  in  bulk   •  Distribu;on  and  logis;cs  key   •  Large-­‐scale  opera;ons   •  Resource  loca;on  diverse   Niche  Minerals   •  Small  opera;ons   •  Focus  on  processing     •  High  produc;on  costs     •  Specialist  products     Mining  
  9. 9. Extrac;on   Processing   Separa;on  &   refining   Distribu;on   Logis;cs   Source:  Gapso  Analy;cs,  Benchmark  Mineral  Intelligence   $ $ $ $ $ $ = Niche Minerals $ = Commodities Processing  
  10. 10. Trading   •  Exchange  traded   •  Subject  to  financial   instruments   •  Markets  more  fluid   •  Short-­‐term  fluctua;ons   •  Non-­‐exchange  traded   •  Tradi;onally  annual/  bi-­‐ annual  contrac;ng   •  Rigid  markets   •  Supply-­‐chain  security  to   force  moderniza;on   Commodi9es   Niche  Minerals  
  11. 11. Trading   Price  divergence     •  Commodi;es  ;ed  closely  to   industrial  markets   •  Slowing  growth  in  emerging   economies  paint  bleak   picture   •  China’s  currency  devalua;on   to  limit  any  short-­‐term   recovery   •  Several  micro  and  macro   impediments  to  recovery  
  12. 12. -­‐40%   -­‐30%   -­‐20%   -­‐10%   0%   10%   20%   30%   Nickel Tin Copper Aluminium Cobalt Graphite Lithium Prices:  Commodi9es  vs.  Niche  Minerals                   (Jan  ‘15  –  Sept  ’15)   Source:  London  Metal  Exchange,  Benchmark  Mineral  Intelligence   Trading   •  Niche  minerals  proving  more   resolute   •  Fortunes  have  become  removed   from  tradi;onal  markets   •  Slow  turning  circles,  but  greater   upward  pressure   •  Diverging  trends  already   emerging  
  13. 13. Commodi9es:       •  Homogenous  requirements     •  Focus  on  volumes  and  reliable  supply     •  Industry  specs  established     Niche  Minerals:     •  Several  grades  –  differing  specs     •  Refining  process  key     •  Specs  s;ll  in  development     End-­‐markets  
  14. 14. •  Industrial  markets  to  seCle  at   new  lower  equilibrium   •  Technology  markets  the  new   areas  of  notable  growth   •  Evolu;on  in  the  way  we  create,   store,  distribute  and  consume   power   •  Forecasts  predic;ng  growth  in   orders  of  magnitude   •  Raw  material  markets  under   prepared  for  surge  in  demand       The  technology  economy  
  15. 15. Evolving  industry  dynamics   Supply-­‐chain  visibility       •  Fear  of  supply  disrup;on  –  e.g.   China  rare  earths   •  The  need  to  secure  raw  material   supply  chains  reaching  cri;cal  level   •  Tradi;onal  vs  emerging  markets   •  Supply  chain  visibility  impera;ve     •  Pressures  for  sustainable  sourcing  
  16. 16. The  Karooshy  Price  Vola;lity  Curve   Evolving  industry  dynamics  
  17. 17. Microeconomic  developments  accelera9ng  
  18. 18. Microeconomic  developments  accelera9ng  
  19. 19. Differen9a9ng  between  the  disruptors   Project  variables:   1.  Grade   2.  Loca;on   3.  Infrastructure   4.  Management  team   5.  Industry  experience   6.  Customer  base  
  20. 20. Differen9a9ng  between  the  disruptors  
  21. 21. Conclusions   1.  Niche  minerals  differ  from  tradi;onal   commodi;es  on  several  levels   2.  The  emergence  of  new  hi-­‐tech  markets   will  require  larger  volumes  of  refined   material   3.  This  new  supply  is  becoming  a  cri;cal   issue   4.  To  maximise  these  opportuni;es,  a  full   understanding  of  niche  mineral   complexi;es  is  required   5.  New  investment  models  will  be   needed  to  benefit  from  new  growth   sectors  

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