The Case for Battery Energy Metals

The Case for Battery Energy Metals

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The Green Energy Revolution

Global Need 5 Air Pollution is a Global Threat The W.H.O.estimates 4.2 million people die from air pollution every year [1] More than 133 million Americans live in areas with exposure to unhealthy levels of air [2] Ambient air pollution is linked to 5.4% of all deaths worldwide, according to W.H.O. [1] And we know the predominant root causes. Source: 1. http://www.who.int/airpollution/en/ 2., http://www.lung.org/our-initiatives/healthy-air/sota/key-findings/ 3. Map; Institute for Health Metrics and Evaluation (IHME), 2017

The Cause 6 Greenhouse Gas Emission Sources Agriculture Transportation The transportation sector generates 28.5% of GGE the largest contributor worldwide [1] Commercial & Residential 11% 9% 28% Passenger vehicles account for 51% of VOC emissions in Canada alone [2] 22% Industry 28% Electricity Road vehicles account for 80% of GGE increases since 1970 [3] The response to transportation GGEs has already begun. Source: 1. https://www.epa.gov/climate-indicators/greenhouse-gases 2. https://www.canada.ca/en/environment-climatechange/services/air-pollution/sources/transportation/cars-trucks-vans-suvs.html 3. International Energy Agency

Global Response 7 Global Change is Already Underway Unified Response Members of the Clean Energy Ministerial s Electric Vehicles Initiative will facilitate the global deployment of 20 million EVs Including plug-in hybrid electric and fuel cell [1] The Paris Declaration specifies 20% of road vehicles will be electrically powered by the year 2030 [1] Government Countries that signed a Government Fleet Declaration in 2016 Canada, China, France, Japan, Norway, Sweden, UK, & USA pledging the increase of electric vehicles in government fleets Planned governmental restrictions of ICE vehicles or similar: Trucks Cars Scooters 2025 Netherlands only EVs sold 2030 Germany to extinguish gas and fossil fuel vehicles India, Norway will sell only EVs and hybrids Barcelona, Copenhagen, Vancouver to ban gas vehicles 2040 France, UK to ban petrol and diesel car sales California to ban gasoline-powered vehicles 2050 France will be carbon neutral Source: 1. International Energey Agency https://www.iea.org/newsroom/news/2016/november/major-countries-commit-toincrease-the-share-of-electric-vehicles.html

Global Response 8 [It does not matter] If it says Made in Japan, Made in China, Made in the United States, the important thing for humanity is that we get great battery technology. - Warren Buffett

Industry Response 9 Global Change is Already Underway Industry Brands Committed to EVs 100% EV by 2019 Committed to an all-electric vehicle lineup by 2019. 20 EVs by 2023 Committed to 20 all-electric vehicles by 2023. $40 billion by 2030 Commitment from Volkswagen AG to build electrified versions of 300-plus global models. $1.6 billion by 2021 Pledged $1.6 Billion to US-based plant by 2021. $100% EV by 2022 All electric vehicles, with 50 models by 2022. $100% EV by 2022 All electric vehicles, with 50 models by 2022. $4.5 billion by 2023 Committed to EVs by creating Team Edison, with $4.5 billion to design and launch 13 EVs by 2023. Global leader $1 Billion to an E-SUV factory, $10 Billion to EVs overall. Source: https://mashable.com/2017/10/03/electric-car-development-plans-ford-gm/#uxn4j2g9oiqr

Industry Response 10 Automakers See EVs as the Future Brand Sales of EV and Hybrid-EV Globally (2016) Between Government Commitments and Automakers NMC 120 LFP NMC NCA NMC LMO NMC NMC LFP/ NMC LMO NMC NMC NMC NMC- LFP- NMC- NMC- NMC- LMO LMO NMC NMC NMC NMC NMC LFP- LMO- NMC- LMO 100 80 Electric car stock is estimated to reach 60 40 9 20 million by 2020 20 -- 40 70 million by 2025 [2] EV PHEV Li-ion Battery Type What BYD has already done is ridiculously difficult to do, and they ve done it anyway. - Charlie Munger [1] The commitment to EVs with lithium-ion batteries needs cobalt production to match Source: 1. http://www.ev-volumes.com 2. https://www.iea.org/publications/freepublications/publication/globalevoutlook2017.pdf

Solution: EVs 11 EV Adoption is Rising 2019 in Europe 2023 in China 2025 in USA 1. Cost-of-Ownership expected to reach parity with ICE 2. Chinese Consumers are willing to pay equally for EVs with sufficient vehicle driving range [1] 3. Accessibility 81% of Americans live within 5 miles of an EV charging station [1] Electric Vehicle Sales by Country (2017) Projected EV and ICE Vehicle Sales (millions) 579,000 EVs and PHEVs Sold 198,350 118,770 0 Cars Sold 120 100 80 60 40 20 1% 3% 8% 24% 43% 54% 62,260 54,560 54,100 47,250 2,280 2,000 360 0 2015 2020 2025 2030 2035 2040 China United States France Norway Germany Japan United Australia Kingdom India Brazil EV SALES ICE SALES [2] [3] Source: 1. https://cleantechnica.com/2018/03/11/14-experts-share-2018-electric-vehicle-predictions-developments-2/ 2. Statista/IEA 3. http://www.oecd.org/publications/global-ev-outlook-2016-9789264279469-en.htm

The Need for Cobalt

Cobalt in Demand 13 The Battery Sector Demands Cobalt Batteries Represent Over 75% of chemical cobalt demand Approx. 50% of global cobalt demand Over 35% of lithium demand Cobalt In Common Vehicle & Device Batteries EV: 51kg Laptop: 30-50g Cobalt Demand Use by Sector 2017 Others 2017 Hybrid EV: 10-63kg Tablet: 20-35kg Ceramics/ Colours Hard metals 5% 8% 19% 18% 50% Batteries Powerwall: 10kg Phone: 5-10g Super Alloys Source: Benchmark Mineral Intelligence 2018

The Need for Cobalt 14 Cobalt in Batteries There Are 5 Types of Lithium-ion Batteries These 3 use cobalt, and are heavily in demand: NCA Nickel-Cobalt-Aluminum 9-15% NMC Nickel-Manganese-Cobalt 19-33% LCO Lithium-Cobalt-Oxide 60+% Over 70% of EVs sold in 2016 used lithium-ion batteries containing cobalt NMC and NCA battery demand is expected to grow given their power, safety, and longevity characteristics, and in China, NMC demand is bolstered by a government subsidy Used in EVs (cars, trucks), electric bikes, laptops, energy grid storage Greater energy density Have a higher cost Cobalt Lithium Other materials Used in EVs (cars, scooters), power tools, energy grid system storage Greater life span Have higher power NCA and NMC represent over 70% of all EV batteries Used in devices like laptops, tablets, smartphones, household electronics Greater energy density Have shorter life span Why Use Cobalt in Batteries? Lithium-ion batteries using cobalt: have higher energy density are capable of storing large amounts of energy in a small area are lighter and great for increasing driving range are safer with a longer life span have short recharging time 40% of cobalt is used to make rechargeable batteries Source: https://electrek.co/2016/11/01/breakdown-raw-materials-tesla-batteries-possible-bottleneck/

Supply and Demand 15 Supply Challenges and Surging Demand Cobalt Refined Production 2017 58% of refined cobalt produced by China Capacity expansions could reach 10x Chinese new-energy vehicle market is booming Up 75% QoQ and 55% YoY Chinese internal demand is highest globally Current Mine Production DRC 64,000 MT Australia 5,000 MT Canada 4,300 MT Cuba 4,200 MT * Philippines 4,000 MT Global Cobalt Demand in 2018 Demand will exceed 105,000 tonnes Yet, over 50% comes from DRC Politically unstable Linked to child labor, human rights issues DRC 65% Russia 5% Australia 4% Cuba 5% Philippines 4% In 2017, the Democratic Republic of Congo produced nearly two-thirds of the world s supply of cobalt 99% of cobalt mined as a by-product Metric Tonnes REFINED COBALT SUPPLY Could hit deficit at EV adoption peak in 2022/2023 120,000 Other 17% 100,000 80,000 60,000 Global Cobalt Demand in 2026 Demand will exceed 180,000 tonnes Tesla implied it wanted only North America cobalt [2] 2018 105,000 Tonnes 71% 2026 180,000 Tonnes 40,000 20,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E Source: Darton Commodities Source: 1. Benchmark Mineral Intelligence, 2. https://investingnews.com/daily/resource-investing/critical-metalsinvesting/cobalt-investing/cobalt-outlook/ 3. https://www.ft.com/content/f4d3567c-277b-11e8-b27e-cc62a39d57a0

Supply and Demand 16 Supply Challenges and Surging Demand Growth Challenge Cobalt is mined as a by-product to nickel and copper, and is reliant on other projects. Cobalt Price to LME Warehouse Level Cobalt supply is expected to increase in the short to medium term at a slower pace than demand. COBALT SUPPLY* COBALT PRICE Cost impact resulting from cobalt price decline Cost impact resulting from cobalt price increase 586.00 t 11 May 18 900 40.94 USD/lb 11 May 18 45 800 40 12% 10% 8% 6% 4% 2% 0% -2% TONS 700 600 500 400 300 200 100 35 30 25 20 15 10 5 (USD/LB) -4% -6% -8% $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 Jan 4 2013 Feb 28 2014 Apr 24 2015 *London Metals Exchange Warehouse Levels Jun 17 2016 Aug 11 2017 [2] Source: 1. Infomine.com

Energy Storage Systems 17 Other Global Needs for Cobalt: Energy Storage Energy Storage Systems (ESS) Represent Growing Need For Lithium-ion Batteries Used for power regulation for critical infrastructure on a large scale Needed for back-up power solutions and renewable energy systems Required for smart grid applications Renewable Home Energy Storage (HES) is Also Growing A Powerwall is used for HES, storing electricity for solar self-consumption, time of use load-shifting, backup power, and off-the-grid use. Tesla is using NMC batteries in 14 kwh Powerwalls and 210 kwh Powerpacks. The Renewables Race is a Global Undertaking Expected growth is projected at 13.8% CAGR between 2015 and 2020 3,000 2,500 2,000 Forecast CAGR: 13.8% 1,500 1,000 500 0 2015 2016E 2017E 2018E 2019E 2020E Source: Tesla, Statista (IRENA)

Big Commitments 18 Other Global Needs for Cobalt: Gigafactories The Era of the Gigafactory Gigafactory Commitments Tesla Plans for as many as 20 Gigafactories in the future, 2 to 3 near-term in the US Annual production will exceed the global production of lithium-ion battery cells in 2013. Will be enough to provide energy storage for 500,000 Model 3 cars in 2018. Elon Musk has said he will announce probably four new Gigafactories in 2018. One has long been slated for Europe, and another has been confirmed to be in the works in Shanghai, China. Tesla has indicated plans for as many as 20 Gigafactories in the future. Indications suggest 2 to 3 in the U.S. in the near term. Estimates of a Gigafactory s final size compare to the area required to park 93 Boeing 747 airplanes. Energy Absolute Boston Energy & Innovation CATL Plans for a $2.9 billion factory in Asia, annual production capacity of 1 GWH/y, scaling to 50 GWH/y in 2020 BEI & Partners confirmed plans to build a 15 GWH/y plant on IBM s former Huron Campus in New York Plans to raise $2 billion to build a factory second only to Tesla s Gigafactory, could be online by 2020 Source: https://www.greentechmedia.com/articles/read/10-battery-gigafactories-are-now-in-progressand-musk-may-add-4-more#gs.o7j3s8e

Big Commitments 19 Other Global Needs for Cobalt: Gigafactories Planned Lithium-ion Megafactory Capacity by 2023 LANNED LITHIUM ION MEGAFACTORY CAPACITY BY 2023 36 Megafactories in pipeline for 2023: 470 GWh of capacity KOREA KOREA Asia (excl. China) LFP NCM China Europe US 0 10 20 30 40 50 GWh 0 10 20 30 40 50 GWh Source: Statista

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