Vincent Ledoux Pedaille's talk on EV's Lithium & Battery Supply Chain realities at the EV Momentum Summit Berlin, 19 June 2018

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Lithium & Battery Supply Chain
Are electric vehicle makers putting the cart before the horse?
June 2018
Vincent Ledoux-Pedailles
Associate Director
Lithium & Battery Materials Research
Vincent.ledouxpedailles@ihsmarkit.com

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Governments to set strict targets to lower
CO2 emissions
Leading solution: greener transportation
modes powered by clean electricity stored
in batteries

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Battery is the most important cost of an
electric car
Large investments in Li-ion battery
factories will lead to further drop in battery
costs

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Lithium a crucial battery raw material but its
production is limited while demand surges
Lithium prices move up by more than 200%
following a lack of material
Li

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Some investments are being made but more
is needed; most lithium projects suffer delays
Upcoming producers are securing
partnerships to gain expertise and funding

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Lithium supply chain, simple but fragmented
Upstream Middle stream Downstream
End-Users
Lithium
Supply Lithium-ion
Battery
Battery Manufacturing Chain
Electric Vehicles
12
3
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Upstream Middle stream Downstream
End-Users
Consumer Electronics
EV
Energy Storage
Lithium Producers Battery Manufacturing Chain
Cathode
Other Battery Raw
Materials
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GROWTH OF
ELECTRIC VEHICLES

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EV adoption needs to accelerate to align with governments’ targets
2016 2017
Germany: Change to taxes and incentives to achieve
only zero-emission vehicle sales EU-wide by 2030
Netherlands: Ban all fossil fuel
passenger car sales by 2025
Norway: Change to taxes &
incentives to achieve only zero
or low emission sales by 2025
India: End the sale of petrol
and diesel cars by 2030
France: End the sale of cars emitting
greenhouse gases by 2040
UK: End the sale of all new conventional petrol
and diesel cars and vans by 2040
China: “New Energy”
Vehicles to make up at least
20% of vehicle sales by 2025

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Recent automakers’ announcements: the world is moving fast
2017
BMW
EVs to be 15-25% of
sales by 2025 BYD
BYD expects all
China sales to be EV
by 2030
Volvo
All Volvo cars to
be electric or
hybrid from 2019
Mercedes
10 EVs by 2022 EVs
to be 15-25% of sales
by 2025
Volkswagen
VW announced plans
to invest $84b to bring
300 new EV models to
the market by 2030
GM
At least 20 new
EVs by 2023
Ford
Spend $11
Bn on EV
through 2022
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Toyota
Hybrid and electric
vehicles to make up half
of its sales by 2030.
2018

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EV vs ICE growth, a gradual take over
8% EV
35% HEV
50% ICE
7% PHEV
0
20
40
60
80
100
120
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Millions
Light Vehicle Engine Production
EV PHEV HEV Fuel Cell ICE © 2018 IHS Markit

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LITHIUM
DEMAND
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E-Mobility
Electronics
Industrial applications
Energy storage
Industrial applications still dominate global lithium demand
Lithium demand in 2017 – 230Kt
© 2018 IHS Markit
Source: IHS Markit
54%
23%
22%
1%

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2017 - 230kt
19% 71%
7%2%
16%py
2025 - 800kt
E-MobilityIndustrial
Electronics
Batteries and EV leading growth in global lithium demand
Source: IHS Markit
54%
23%
22%
1%
46%
Batteries
81%
Batteries

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LI-ION BATTERIES
INDUSTRY

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After portable electronics, E-mobility is now taking over the Lithium-battery market
2000
2GWh
2017
134GWh
2025
>800GWh
Lithium-ion battery market evolution

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0
60
2016 2020
GWh
North America
0
60
2016 2020
GWh
Europe
0
50
100
150
200
250
300
350
2016 2020
GWh China
0
60
2016 2020
GWh
Japan, Korea
China is powering growth in Lithium-ion battery manufacturing

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0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$900/kWh
US$perkWh
Cheaper EVs helped by falling battery costs
~200/kWh
Cost to decrease further:
• Economies of scale
• Manufacturing process
improvement
• EV simpler and faster to build
than ICE
Goal
$100/kWh
2010
40kWh
Battery Pack Cost
$36,000
2020 $4,000
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Energy cell average cost
© 2018 IHS Markit
Source: IHS Markit

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Lithium-ion batteries displaced NiMH but what will replace them in 20 years?
Future cell technologies
• Solid-state
• LiS Lithium Sulfur
• Li-air
• Vanadium flow
• Etc.
Rise and total dominance of lithium-ion
Now 2025
Demise of NiMH
GWh
installed
© 2018 IHS MarkitSource: IHS Markit

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0.0
0.5
1.0
1.5
2.0
2.5
2017 2021 2025 2030 2050+
MilliontonsLCE
Once global fleet
is electric,
battery recycling
should lower
demand
Rise and fall of lithium industry – caused by recycling?
Risk to long term lithium demand
• Example - lead-acid batteries now
99% recycled
• Li-ion battery recycling process still
uneconomical & years from reality
• Using batteries in second life
applications will arrive before efficient
recycling of raw materials
• Long term, recycled lithium could
become secondary source of lithium
Today’s
lithium
demand
Moving world’s vehicle
fleet to electric will lead to
higher demand of lithium
David Deak – CTO Lithium Americas
Extreme view of impact of recycling on lithium demand

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Cathode technology: de-risking the supply chain
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
LCO NCA LMO LFP NMC 111 NMC 433 NMC 532 NMC 622 NMC 811
Lithium Cobalt Nickel Manganese Aluminum Iron
NCM – A Leading Technology EvolvingCurrent Technologies
NCM 433 NCM 532 NCM 622 NCM 811NCM 111

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LITHIUM
SUPPLY
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Do we have enough lithium to power all cars in the world?
Global resources
250 Mt LCE
150 millions electric vehicles
by 2050 would require:
60Mt LCE
Proven
reserves
60Mt
Potential
total demand
>70Mt

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Ch
Rock Mining
Brine Mining
Chile
Chile
33%
Arg.
13%
Australia
45%
US
China
7%
<2%
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Global lithium production was ~230Kt LCE in 2017 (including DSO)

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LITHIUM SUPPLY
WHO CONTROLS IT?
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20172014 2021
90% 72% ~54%
Lithium production – historically concentrated but now fragmenting
Top four producers - market share
Source: IHS Markit © 2018 IHS Markit
72%

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Albemarle
SQM
Tianqi
FMC
Galaxy
Mt Marion
China various
Orocobre
27%
20%
13%
8%
7%
7%
6%
4%
Assets location Headquarters
Lithium producers – current snapshot
100K LCE

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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
China Australia USA Chile Argentina Canada Japan Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lithium
Feedstock
Production
2017 2025 2017 2025
Lithium
Feedstock
Ownership +
Offtakes
Agreements
2017 2025 2017 2025
Lithium
Chemical
Production
2017 20252017 20252017 2025
Lithium
Feedstock
Ownership
2017 20252017 2025
Lithium
Chemical
Ownership
Who really controls lithium?

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China Securing Existing and Potential Future
Source of Lithium
2011 2012 2013 2014 2015 2016
Investment Offtake
List of Chinese Companies securing lithium supply across the world
• Ganfeng and Tianqi have been investing in lithium abroad for years, now others
joining in
• Most Chinese companies investing are existing lithium players, but more from
further downstream (i.e. battery manufacturers and automakers) starting to
invest
2017 2018

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Tianqi
SQM
OptimumNano
Altura Mining
SQM
Lithium Americas
Jiangxi Special Elec. Mot.
Tawana Resources
Huayou Int.Mining
AVZ Minerals
Hanwa Co
Bacanora Minerals
Ganfeng
Lithium Americas
Ganfeng
Pilbara Minerals
Bangchak Petroleum
Lithium Americas
SQM
Kidman Resources
Nextview New E.
Lithium X
Nextview New E.
Bacanora Minerals
Sinomine
Prospect Resources
Suay Chin Int.
Kodal Minerals
Chemphys
NRG Metals
Golden Concord
Millennial Lithium
Toyota Tsusho
Orocobre
CATL
North America Lithium
Posco
Pilabara Minerals
Soft Bank
Nemaska
BlackRock
Bacanora Minerals
Some of the lithium investments since 2016:
Tianqi’s investment in SQM dwarfs recent lithium deals
Tianqi
SQM
$4.1Bn
2016
2017
2018
Size of the investment
Investor’s industry
Chinese
Investor

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LITHIUM SUPPLY
DREAM & REALITY
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Lithium – despite a number of investment plans, more is needed to match demand
More Investment
needed
Demand
By 2025
Current
Demand
Investment
secured/in
discussions
Additional
570Kt
$6Bn
$3Bn
Who has/will invest?
• Existing lithium producers making
high ROI and enjoying high prices
(e.g. Albemarle, SQM, etc.)
• Number of players realise that EV
growth is real and battery raw
materials need to be secured:
✓ Financial players (e.g..
Blackrock)
✓ Chemical converters (e.g.
Ganfeng)
✓ Battery makers (e.g. LG)
✓ Car makers ((e.g. Great
Wall, Toyota)
230Kt
Average CAPEX US$15-16,000/mt

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But it takes time to develop new assets and make them operational
7-10 years
4-6 years
1.5-2
years
Brine
Rock
Conversion
Plant
• Most recent lithium projects have
suffered delays
• A number of milestone to achieve:
✓ Environmental study
✓ Permitting approvals
✓ Feasibility study
✓ Project financing
✓ Secure know-how

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Operating
3%
Construction
2%
Feasability
5%
Exploration
37%
Pre-exploration
53%
0
600
1,200
2011
Capacity
2017
Forecast
2017
Actual
2025
Forecast
2025
Actual
Lithium supply: A lot of ambition but reality is different
~400 lithium projects
MtLCE
Goal
Goal
Result
Result?
Capacity expectations vs reality Existing and potential lithium operations
© 2018 IHS MarkitSource: IHS Markit

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0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MillionsLCE
Others
Lithium Americas
Nemaska Lithium
Altura
Pilabra
Tawana/AML
Wodgina
Mt Marion
Orocobre
Galaxy Resources
FMC
Tianqi
SQM
Albemarle
Evolution of lithium supply feedstock
Growth 2017-2025
Forecast
16-17%py
to <800kt
Source: IHS Markit © 2018 IHS Markit

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LITHIUM
BALANCE & PRICES

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Market balance will depend on how fast EV are adopted
Supply looks sufficient but…
We expect tight market :
• Operational issues at lithium plants
will happen
• Not all plants deliver battery-grade
lithium
• Delays in plants start-up
• Base case demand forecast very
conservative
By 2025, if instead of 6 million EV we
have 10 million, market will be massively
undersupplied
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MillionsLCE
Lithium Market Balance
Production base case Production high case
Demand base case Demand high EV penetration

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0
100
200
300
400
500
600
700
800
900
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Spodumene Lithium Carbonate Lithium Hydroxide
Lithium prices jumped on the back of limited supply
High prices here to stay
• On contract prices more than
doubled between 2015 & 2018
• Short term, not enough lithium
resources to answer strong
demand from battery sector
• Market will remain tight, prices
won’t go back to historical level
• Some price erosion to be
expected
Contract Prices Lithium Chemicals & Spodumene
$/t Li Chem $/t Spod
More than X2
Source: IHS Markit © 2018 IHS Markit

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FINAL
THOUGHTS

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China Japan South Korea Europe USA Argentina Chile Australia Canada Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
Who Really Controls the Lithium-ion Batteries Supply Chain?
Lithium
Feedstock
Lithium
Chemical
Battery
Cathode
Li-ion
Batteries
Electric
Vehicles*
Production of:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2025
*Including HEV, PHEV & EV

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Summary
Chinese players securing lithium supply and account for 70% of recent
offtake agreements and investment deals
Now a reality - demand for lithium-ion batteries is set to grow +25%py
to 2025 driven by move to Electric Vehicles
China accounts for 7% of lithium extraction, yet controls 48% of lithium
chemical production
Of 400+ lithium projects, few new assets will come on stream; it takes 4-10
years to bring new lithium project on stream
Li
Market will remain in tight balance, potentially undersupplied; lithium
prices likely to stay high

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Contact details
Vincent Ledoux-Pedailles
Associate Director / Lithium & Battery Materials
Research
+44 203 159 3616 tel
+44 78179 49658 mob
vincent.LedouxPedailles@ihsmarkit.com
London