2016 International Lithium & Graphite Conference

www.morganadvancedmaterials.com
“The exponential growth of the lithium-ion battery
market and its impact on global graphite supply”
2016 International Lithium & Graphite Conference
Langham Hotel, Shenzhen, PRC, November 3-4, 2016
Richard Clark richard.clark@morganplc.com
Senior Technical Specialist

Contents
• Overview of Morgan Advanced Materials
• Current markets for natural graphite and usage in LIB
• Growth in Electric Vehicle and Energy Storage markets
• Emerging market opportunities for natural graphite
• The challenges to graphite as an anode material
• Conclusions
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2016 International Lithium & Graphite Conference November 2016

Morgan Advanced Materials
Founded in England in 1856
Ticker on LSE: MGAM
2015 revenue: GBP911.8 million (USD1.35 billion,CNY8.8 billion)
2 Divisions and 6 Global Business Units
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Focus on technically demanding, growth markets
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Energy
Electronics
Healthcare
Transportation
Security and Defence
PetrochemicalIndustrial

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Morgan Advanced Materials
Global Business Units
Thermal Ceramics 
Molten Metal Systems
Electrical Carbon 
Seals and Bearings
Technical Ceramics 
Composites and Defense
Systems

 indicates GBU with one or
more LIB industry solutions

Contents
• Conclusions
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Markets for natural graphite
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Source: “Natural Graphite: Raw material trends to 2020”, Suzanne Shaw, Roskill Information Services citing Roskill’s Natural and Synthetic Graphite: Global Industry Markets and Outlook, 9th edition 2015, used with permission
Natural graphite 2015: 1.19MT (USGS)
of which China produced 780kT (66%)
World’s inferred resources exceed 800MT
Lithium-Ion batteries in 2015 used c.85kT of
which 58kT was natural…
…but one “Megafactory” is projected to use
93kT of natural graphite from 2020
Other new markets include composites,
electronics, foils and large-scale fuel cells
Not just LIB!
USGS data from: http://minerals.usgs.gov/minerals/pubs/commodity/graphite/mcs-2016-graph.pdf

Perspective versus other LIB materials
2016 International Lithium & Graphite Conference November 2016 8
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Graphics from “Lithium Ion Battery Key Elements — More Than Just Lithium”, April 13, 2016, Emma Elgqvist, National Renewable Energy Laboratory
(NREL) and Clean Energy Manufacturing Analysis Center (CEMAC), used with permission
Materials mined are reported in metric tons
Total GWh of automotive lithium ion battery cells sold in
2015 was 8.4 GWh based on vehicle sales data and
average pack capacities of HEV’s, PHEV’s, and BEV’s

Lithium-ion batteries and use of graphite
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Source: Argonne National Laboratory, used under Creative Commons license
(https://creativecommons.org/licenses/by-nc-sa/2.0/legalcode)
• Main battery components
• Anode
• Cathode
• Electrolyte
• Separator
• In the vast majority of LIB, carbonaceous materials are
used in anode and cathode:
• Anode active material
• Anode conductive additive
• Cathode conductive additive
• Most common active material is graphite (natural or
synthetic)
• Most common conductive additive is carbon black
• Main market is electronic devices – but major changes
underway in xEV and ESS markets

Natural versus synthetic graphite – market size comparison
• Synthetic graphite electrodes (2015): 1.9MT
• China 50% of total
• Isostatic graphite (2015): 0.1MT
• Global production of natural graphite: 1.19MT.
• Natural graphite for LIB (2015): 0.06MT.
• Synthetic graphite for LIB (2015): 0.02MT.
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Technical choice – natural versus synthetic graphite
• Natural graphite:
• Attrition and intensive
purification are required
• Defined material parameters
 less flexibility to adjust to
new technology
• Dependent on natural sources.
May vary in properties:
reproducibility potentially an
issue
• Sphericalization needed to
avoid orientation issue
• Must be coated
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• Synthetic graphite:
• Attrition and modest purification
are required
• Material parameters can be
tailored to some extent 
better flexibility to follow
technology progress
• Synthesis experience is a
requirement for reproducibility
• Does not require
sphericalization
• Usually, but not always, coated
Reference: “Anode materials for Automotive Li-Ion Batteries”: Dr. M. Anderman, private communication

Synthetic graphite – one version
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Material input to produce 1 ton of synthetic graphite = 0.95 tons petroleum coke + 0.24 tons of coal tar pitch
Energy input to produce 1 ton of synthetic graphite = 1.5 MWh natural gas + 4.1 MWh electricity
(varies heavily with region, but ~US$300/ton energy total at current industrial prices in NY)
Energy pricing from: https://www.nyserda.ny.gov/Researchers-and-Policymakers/Energy-Prices/
Figure and original energy data from: “Material and Energy Flows in the Production of Cathode
and Anode Materials for Lithium Ion Batteries”: Argonne National Laboratory ANL/ESD-14/10
Rev.: Dunn, James, Gaines, Gallagher, Dai, Kelly, September 2015, used with permission
Oil – Green Coke –
Calcined Coke
Metallurgical coke by-product
- Distillation
Attrition,
(coating)

Production of natural graphite for anode applications
• Natural graphite
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Coating
Purification
Sphericalization
(mechanical)
Flotation
Mechanical separation
Mining
Increasing
Volume
Increasing
Value
Based on figure from www.IndMin.com/GraphiteAnalysis
Positive:
Graphite is a primary raw material (i.e. not a by-product)
Challenges:
• Offset between flake size and purification
• Larger flake size easier to purify, but takes more
energy to attrit and waste stream can be larger
• Process and uniformity of coating
• Cost
• Purification method
• Thermal / chemical
• Cost
• Safety and effluent stream
• Waste stream
• Conversion from flake to spherical graphite is
inefficient, typically 30% to 50%
• Low cost relies on selling the off stream

Challenges with increasing demand for anode materials
• Of the 1.19MT of natural graphite mined, only about 380,000 tons
is suitable as feed material for LIB. Ideally material from mine
would be 94-96% pure, +80 mesh and low cost
• Current demand = 0.06 MT, so even if yield is only 30%, current
usage is only about 50% of available suitable supply and
remainder can be absorbed by other applications
• Material for LIB is a premium graphite material – tightly sized and
high purity, but great care must be taken unless waste streams
are assigned zero or negative value and with a massive increase
in demand this will be an increasing concern
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Source: “The Supply and Demand Giga-Risk for Cobalt, Lithium and Graphite in Lithium-Ion Batteries, http://investorintel.com/

Usage of graphite in batteries – active materials in anode
Typical values for cells:
• For a cylindrical 3.2 Ah 18650 (portable power): 10g. graphite
• For a prismatic 21.5 Ah cell (HEV): 80g. graphite
Example products:
• Laptop: 8 x (3.2 Ah) 18650’s: 80g. graphite
• HEV: 56 x 21.5 Ah: 4.5kg. graphite
• EV example 1: 7,104 (3.4 Ah) 18650’s: 76kg. graphite
• EV example 2: 288 x 55 Ah: 59kg. graphite
• ESS example (2MW/1MWh) 14,080 x 6 Ah: 317kg. graphite
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Does location matter?
• Many junior miners attracted into space – limited current
production in NA (Eagle Graphite being one producer in NA)
• Desire to provide North America domestic material to Tesla has
prompted increased activity in USA and Canada
• Alabama Graphite; Canada Carbon; Canada Strategic Metals;
Caribou King Resources; Focus Graphite; Graphite One
Resources; Great Lakes Graphite; Lomiko Metals; Mason
Graphite; Northern Graphite; Zenyatta Ventures
• Full business strategy including supply chain management (and
all that entails) will be vital to success especially short-term
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“Graphite News: Graphite Mining in the US and the Best Graphite Stocks to Buy”, Charlotte McLeod, Investing News Network 2016

Contents
• Conclusions
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Global lithium ion rechargeable battery market 2010-2025
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• CAGR 2010-2015 > 20%
• CAGR 2015-2025 = 15%
Market information supplied by and used with permission of Christophe Pillot, Avicenne, “The Rechargeable Battery Market and Main Trends 2015 to 2025”, Lithium Battery International Summit, Shenzhen, China, April 9 to 12, 2016
31,800 MWh for
Electronic devices in
2015 still the largest
category for LIB currently
Key: energy by application
(CAGR 2015 to 2025)
Revenue = $16.7 billion
for cell makers

Difficult market to assess – huge changes in progress
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>76,000t., of which 52,000 t. natural
Yano Research Institute
Avicenne Energy
Avicenne market information supplied by and used with permission of Christophe Pillot, Avicenne, “The Rechargeable Battery Market and Main Trends 2015 to 2025, 33rd International Battery Seminar and Exhibit, March 21, 2016
Major change 2015 to 2016 is growth of sales of New Energy Vehicles
(EV and PHEV combined) in China
Most market analysts agree about
2/3 of graphite used is natural
Yano Research Institute market information supplied by and used with permission of Sachiya Inagaki, Yano Research Institute, “LIB Materials Market Trends”, The Battery Show Conference, September 13, 2016

Growth of NEV dramatically changes market size
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Yano Research Institute market information supplied by and used with permission of Sachiya Inagaki, Yano Research Institute, “LIB Materials Market Trends”, The Battery Show Conference, September 13, 2016
Benchmark Mineral Intelligence is projecting the total quantity of anode graphite required to address the demand
will increase to between 250,000 tons and 400,000 tons per year by 2020 – and this will equate to considerably
more medium flake feedstock (360,000 tons per year minimum by 2020 assuming current percentage natural)
Benchmark Mineral Intelligence data from http://benchmarkminerals.com/Blog/graphite-demand-from-lithium-ion-batteries-to-more-than-treble-in-4-years/, May 4, 2016
China Daily (July 19)
reported that NEV sales
in China are up 162% at
170,000 units (134,000
EVs and 36,000 PHEVs)
in H1, 2016
http://www.chinadaily.com.cn/business/motoring/2016-07/19/content_26143684.htm

The dawning of the Megafactory age
• LG Chem (Nanjing, China) – 7GWh; 50,000 batteries for EVs (or 180,000 for PHEVs) expanding to
200,000 by 2020 (or 700,000 for PHEVs)
• Tesla (Nevada, USA) – 35GWh; batteries for 500,000 cars by 2020
• will be the largest workplace in the USA (by far) and the largest building in the world by footprint
• Foxconn (Anhui, China) – 15GWh
• BYD (China) – 20GWh
• Boston Power (China) – 10GWh
• Above would represent 287,000 tons of graphite in anodes (assuming constant chemistry) by 2020
…but would still only represent 1.5 million cars out of a world market of about 76 million per year (*)
…Bloomberg New Energy Finance is projecting this rising to 41 million Electric Vehicles (35%) by 2040
• Sources:
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http://www.koreatimes.co.kr/www/news/tech/2015/10/133_189601.html
http://bgr.com/2016/08/08/tesla-gigafactory-size-cost-elon-musk/
https://www.tesla.com/sites/default/files/blog_attachments/gigafactory.pdf
http://benchmarkminerals.com/Blog/the-battery-megafactories-are-coming/
Fortune Minerals Limited Investor Presentation August 2015
http://www.gbm.scotiabank.com/English/bns_econ/bns_auto.pdf
https://about.bnef.com/press-releases/electric-vehicles-to-be-35-of-global-new-car-sales-by-2040/
* non-commercial – full market c. 90 million

Energy Storage market is highly segmented, but growing fast
• Emergency Reserve Power (UPS)
• Continue power when main supply is interrupted
• Frequency regulation
• Maintain power plant generated frequency within
½% of target (such as 50Hz or 60Hz)
• Grid management
• “Spinning” reserve
• Buffering of supply/demand balance for 15 to 45
minutes
• Peak shifting
• Balancing demand spikes without overproducing
• Bulk load shifting
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Decreasing
cost required,
but increasing
volume
Will be different to xEV
market, once saturated

Market size heavily depends on cost/kW-h
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“Electric Energy Storage Technology Options”, ID1022261, D. Rastler, EPRI December 2010, used with permission
Energy storage deployment numbers from GTM Research, U.S. Energy Storage Monitor and IHS Markit Grid-Connected Energy Storage Forecast Database
Target (battery) market size (U.S. only)
ApplicationPresentValue
Key:
Freq. Reg.: Frequency Regulation
Sta: Stationary
T&D: Transmission and Distribution
Dist: Distribution
ESCO: Energy Services Company
Ind: Industrial
DESS: Distributed Energy Storage Systems
Com: Commercial
Res: Residential
PQ: Power Quality
Current deployment is very small
(221MW in 2015, USA), but growing
very fast (243% YoY growth),
Lithium-Ion is dominating (99% in
Q2, 2016)
Global deployment 1.4 GW in 2015,
projected 2.9 GW in 2016, dominated
by Lithium-Ion, still relatively small by
2020 compared to xEV, but will be
significant by 2030 (up to 240GW)
“Investment Themes in 2015: Dealing with Divergence”, Citi GPS: Global Perspectives and Solutions, January 2015

Contents
• Conclusions
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Graphene
• One emerging market for graphite is graphene produced by a top-
down method. Early large-scale markets are as conductive
additives for LIB (can be in conjunction with CNTs) and in
automobile and bicycle tires
• Potentially large markets although percentage additions are
small
• 12 million tons (2014) of carbon black was used globally, with
tires as the major application (>70%) – a 2% conversion would
equate to a >150kT market for graphene/graphite. CAGR 3.9%.
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Carbon Black Market Analysis By Application (Tires, High Performance Coatings, Plastics) And Segment Forecasts to 2022”, April 2016, Grand View Research

Recarburizer – carbon raiser
• Used in the production of cast iron
and steel
• Low sulfur, high carbon material is
required
• Most common carbon source is
calcined petroleum coke - scrap
electrode graphite is also used
• Can use suitable natural graphite,
although value is very low relative
to anode materials
• Market estimate is 22% graphite (as
a percentage of all carbon materials
used in this application) and is
projected to reach US$168 million
by 2018
• Estimate for the total demand for
recarburizers in the iron and steel
industry is:
• 573,000 to 955,000 tpa for EAF
(Electric Arc Furnace) steel
• 2,300,000 tpa for gray iron and
ductile iron combined
Graphite Supply Chain 2016 Conference and Workshop 26
11/15/2016
http://www.gosreports.com/2015-market-research-report-on-global-graphite-recarburizer-industry/
“Recarburizer Overview – October 2014”, Syrah Resources Limited

Contents
• Conclusions
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Modifications to existing technology
• Use of Silicon to replace graphite
• Tremendous progress, but still a relatively small percentage
conversion and almost 100% as an addition not replacement
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Leaders include
Amprius, Enevate,
Enovix, Nexeon,
Shin-Etsu Chemical
and Paraclete Energy

New technologies under consideration
“Lithium-ion batteries have revolutionized the way we communicate through personal electronics. But
there is an even bigger revolution on the horizon. More powerful beyond-lithium-ion batteries will
completely transform the power grid and usher in an age of electrically powered transportation” –
George Crabtree, JCESR Director
JCESR is the US Department of Energy’s Batteries and Energy Storage Hub, founded in 2012.
Foci of JCESR are:
• Multivalent intercalation (using Ca2+, Mg2+ or Al3+ in place of Li+)
• Chemical transformation (such as Li-S, Li-O, Na-S)
• Non-aqueous (organic) redox flow
• Solid-state batteries are also moving forward
• Common features – many technical challenges and none of the above need graphite
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How secure is the use of graphite in lithium-ion batteries?
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Figure adapted from: “The energy-storage frontier: Lithium-ion batteries and beyond”:
Crabtree, Kócs, Trahey, MRS Bulletin, Volume 40, Issue 12, December 2015, pp. 1067-1078,
based on additional input from Crabtree at ANL Energy Storage Conference August 31, 2016
20 year incubation
1971 conceptualization 1991 commercialization
Four main factors weigh heavily in favor of
graphite’s continuing rapid expansion:
• The gestation period for truly new
battery technology is very long (20+
years);
• The current potential replacement
technologies under review have many
technical challenges;
• Industries using these power sources
are generally very conservative (slow to
change);
• The shear volume of production in
place for anode materials precludes
most materials as possible
replacements

Conclusions
• The use of graphite as an anode material is growing very rapidly without
sign of a widespread replacement by a successor
• Rapid growth of the xEV market, particularly in China is driving the need
for additional supply
• ESS is beginning to emerge, although at a much lower level than xEV
• Low conversion yields in the sphericalization process for NG will make
supply chain management and business strategy critical moving forward
– waste stream materials must be utilized to avoid associated anode cost
increases - these are not acceptable to the battery manufacturers
• New applications for graphite can be developed with the possibility of
relatively low cost and high purity raw material
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www.morganadvancedmaterials.com
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2016 International Lithium & Graphite Conference

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