Ubs critical raw materials seminar, frankfurt, march 2011

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Ubs critical raw materials seminar, frankfurt, march 2011

  1. 1. Major Challenges in Minor Metals Dr. Heinz Schimmelbusch Chief Executive Officer AMG Advanced Metallurgical21 March 2011 Group N.V.
  2. 2. Cautionary Note THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Companys financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company‟s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority. The information found in this presentation accompanied a speech delivered by Dr. Heinz Schimmelbusch on 21 March 2011 at the UBS Critical Raw Materials seminar in Frankfurt, Germany. The presentation materials were intended to be taken in context with the verbal comments made by Dr. Heinz Schimmelbush at this seminar.2
  3. 3. Introduction3
  4. 4. AMG Advanced Metallurgical Group N.V. Listed: NYSE-Euronext Amsterdam: AMG Founded: 2006 Revenues: $990.5M Employees: 2,600 Production facilities: Netherlands, Germany, UK, USA, Brazil, France, Turkey, Canada, Czech Republic, China, Mexico, Belgium, India, Poland, Sri Lanka Enterprise Value: €560 million 52 week range: €6.25–€14.55 Recent share price: €14.49 (18 March 2011)4
  5. 5. Critical Raw Materials: AMG’s Involvement 1 2 H He Hydrogen Helium 1.0 4.0 4 5 6 7 8 9 10 3 Li Be B C N O F Ne Beryllium Boron Carbon Nitrogen Oxygen Fluorine Neon Lithium 9.0 10.8 12.0 14.0 16.0 19.0 20.2 6.9 11 12 13 14 15 16 17 18 Na Mg Al Si P S Cl Ar Sodium Magnesium Aluminum Silicon Phosphorus Sulfur Chlorine Argon 23.0 24.3 27.0 28.1 31.0 32.1 35.5 40.0 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 K Ca Sc Ti V Cr Mn Fe Co Ni Cu Zn Ga Ge As Se Br Kr Potassium Calcium Scandium Titanium Vanadium Chromium Manganese Iron Cobalt Nickel Copper Zinc Gallium Germanium Arsenic Selenium Bromine Krypton 39.1 40.1 45.0 47.9 50.9 52.0 54.9 55.9 58.9 58.7 63.5 65.4 69.7 72.6 74.9 79.0 79.9 83.8 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Rb Sr Y Zr Nb Mo Tc Ru Rh Pd Ag Cd In Sn Sb Te I Xe Rubidium Strontium Yitrium Zirconium Niobium Molybdenum Technetium Ruthenium Rhodium Palladium Silver Cadmium Indium Tin Antimony Tellurium Iodine Xenon 85.5 87.6 88.9 91.2 92.9 95.9 99 101.0 102.9 106.4 107.9 112.4 114.8 118.7 121.8 127.6 126.9 131.3 55 56 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 Cs Ba 57-71 Hf Ta W Re Os Ir Pt Au Hg Tl Pb Bi Po At Rn Caesium Barium Hafnium Tantalum Tungsten Rhenium Osmium Iridium Platinum Gold Mercury Thallium Lead Bismuth Polonium Astatine Radon 132.9 137.4 178.5 181.0 183.9 186.2 190.2 192.2 195.1 197.0 200.6 204.4 207.2 209.0 210.0 210.0 222.0 87 88 104 105 106 107 108 109 110 111 112 113 114 115 116 Fr Ra 89-103 Rf Db Sg Bh Hs Mt Ds Rg Uum Uut Uuq Uup Uuh Francium Radium Rutherfordlium Dubnium Seaborgium Bohrium Hassium Meitnerium Darmstadtium Roentgenium Ununbium Ununtrium Ununquadium Ununpentium Ununhexium 223.0 226.0 261 262 263 264 265 266 269 272 277 284 289 288 292 57 58 59 60 61 62 62 64 65 66 67 68 69 70 71 La Ce Pr Nd Pm Sm Eu Gd Tb Dy Ho Er Tm Yb Lu Lanthanum Cerium Praseodymium Neodymium Promethium Samarium Europium Gadolinium Terbium Dysprosium Holmium Erbium Thallium Ytterbium Lutetium 138.9 140.1 140.9 144.2 147.0 150.4 152.0 157.3 158.9 162.5 164.9 167.3 168.9 173.0 175.0 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 Ac Th Pa U Np Pu Am Cm Bk Cf Es Fm Md No Lr Actinium Thorium Protactinium Uranium Neptunium Plutonium Americium Curium Berkelium Californium Einsteinium Fermium Mendelevium Nobelium Lawrencium 132.9 232.0 231.0 238.0 237.0 242.0 243.0 247.0 247.0 251.0 254.0 253.0 256.0 254.0 257.05
  6. 6. Ti Alloys for Aerospace6
  7. 7. 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
  8. 8. 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
  9. 9. Critical Metals and Technology Development Demand Growth Ti Mg Cr Sb Nb V Ta Si C Technology Development9
  10. 10. Critical Metals and Technology Development Ti Mg Cr Demand Growth Ta Sb Si Nb V C Technology Development10
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Volatility Titanium Sponge Fe Vanadium$40,000 $70$35,000 $60$30,000 $50$25,000 $40$20,000 $30$15,000$10,000 $20 $5,000 $10 $0 $0 00 01 02 03 04 05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10 Antimony Silicon Metal$14,000 $4,500$12,000 $4,000 $3,500$10,000 $3,000 $8,000 $2,500 $6,000 $2,000 $1,500 $4,000 $1,000 $2,000 $500 $0 $0 00 01 02 03 04 05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10 15 Sources: AMG, Bloomberg
  16. 16. Volatility - Cerium$70,000$60,000$50,000$40,000$30,000$20,000$10,000 $0 00 01 02 03 04 05 06 07 08 0916 Sources: AMG, Bloomberg
  17. 17. Critical Raw Materials: Definition17
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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)
  22. 22. Critical Raw Materials: Geography22
  23. 23. Critical Raw Materials – Government Controls Titanium Vanadium Chromium Magnesium Chromium Titanium Antimony Graphite Magnesium Antimony REE Magnesium Silicon Titanium Titanium Magnesium Vanadium Graphite Graphite Tantalum Tantalum Niobium Magnesium Tantalum Tantalum Vanadium Government Controls23 Source: AMG
  24. 24. Sovereign Strategies: an Interpretation
  25. 25. 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
  26. 26. 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,
  27. 27. Cerium Revisited Volatility will be even higher in the future27 Sources: AMG
  28. 28. 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
  29. 29. Magnesium  Market Statistics Conclusion29
  30. 30. 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
  31. 31. 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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