Ric Gros Chief Executive Officer METS Ignited Australia Ltd

Australian Lithium IndustryOptimising the Integrated Value Chain

EXPOMIN 2018 – 15th International CongressLithium: Market and Technologies

Objectives:

• Accelerate commercialisation of innovation

• Increase industry capabilities

• Drive export growth

• Develop the workforce of the future

• Identify opportunities for regulatory reform

10,994km

travelled

6000+conversations

6 states

5one

on0

one's

12workshops

Close consultation with industry informed the Sector Competitiveness Plan

METS Ignited is one of six industry growth centres which are front and centre of the Australian Government Innovation Policy

The GVA of the METS sector has grown substantially over the last decade and leveraged the construction boom

21 23 3044 35

4862

52 49 43

23 2630

3837

48

66

5751

43

07-08

61

06-07

49

72

09-10

82

44

08-0905-06

100

12-13 13-14

128

109

96

10-11 11-12

86

14-15

The Australian METS sector, Gross Value Added, 2005-06 to 2014-15, $ billions, current prices

SOURCE: ABS, Team analysis

SpecialisedNon-specialised

102%

87%

Total growth2005-06 to 2014-15, %

The Megatrends driving a global opportunity

Megatrend SustainabilityCO2 Reduction

Electrification of Mobility

Green Energy

Storage

Storage

Storage

Knowledge / Innovation

Curve

Remote Operations

HH Devices

Industry 4.0

Storage

Battery markets and the future

• The Li-ion market was less than 6 GWh 10 years ago; in 2016, this market is estimated to have surpassed 70 GWh

• Roskill are currently forecasting average annual battery market growth of 14 per cent per year out to 2025, when the market is expected to reach 223 GWh.

• Li-ion battery demand has created a boom for key input commodities lithium, graphite and cobolt, resulting in rising demand, prices spikes, and increased investment activity

Li-ion battery Characteristics

World lithium production

Battery markets have some emerging issues, which could impact future trends...

• With forecast demand growth, battery markets are skewed with China becoming increasingly dominant.

• China is the largest producer of flake and spherical graphite, lithium-ion anode and lithium-ion batteries.

• China is constructing several Li-ion factories, pushing the country’s share of Li-ion battery production to more than 60 per cent by 2020.

• It is not yet clear yet how far Australia can progress beyond mining and into other parts of the battery supply chain.

• Lithium concentrates produced from mineral mines need to be processed into higher purity lithium products before they can be used in batteries.

Top five lithium mine reserves

Other key drivers – Graphite and Cobolt• China currently dominates graphite production• The estimated world total graphite reserve is 230 million tonnes• New graphite deposits are emerging at various sites around the

world, including Madagascar, Mozambique, Namibia, and Tanzania. • The global graphite market is expected to lift from just under $14

billion in 2013 to almost $18 billion by 2020.

…..Australia has modest deposits of graphite • Cobalt prices experiencing continued volatility• Refined cobalt supply is expected to fall below consumption, as a

result of Li-ion batteries and aerospace industries – albiet offset by a shift towards battery technologies requiring less cobalt.

• Cobalt demand expected to grow at annual rate of 4% in the next 3 years, with primary source from mines in the DRC.

• China is the world’s leading producer of refined cobalt, owning 70 per cent of global refinery capacity.

• A deficit of 7,000 tonnes of cobalt is expected by 2020

Top five graphite mine reserves

Top five cobolt mine reserves

Production costs for Li-ion batteries is in decline• The price of lithium-ion batteries in 2016 was $273/kWh – a

drop of 73% since 2010. • The steep decrease in prices due to technology improvements

and economies of scale.• Fierce competition between the major manufacturers has

been instrumental in bringing down prices.

Up-swing in Li-ion battery sales for passenger EVs, but installed capacity is still much larger. • Passenger EV sales were lower than forecast from 2011 to H1 2015 and production

capacity well ahead of demand. • Increase in passenger EV sales over 2016/17, has resulted in quarterly battery

demand of more than 6GWh, with sales dominated by Panasonic, linked to Tesla Motors.

• In 2016, new EV sales consumed over 20 GWh, while installed capacity was five times this size.

• Demand for batteries from electric buses far outstripped that of other passenger vehicles in 2016.

Battery Prices are expected to continue to fall

• BNEF forecasts indicate lithium-ion battery pack prices could fall to as low as $73/kWh

• Intense price competition is leading manufacturers to develop new chemistries and improved processes to reduce production costs.

• Forecast suggest a battery in a Korean manufacturing plant in 2017 costs $162/kWh, dropping to $74/kWh in 2030.

• The BNEF battery price survey provides an annual industry average battery price for EVs and stationary storage.

• The learning rate (the price decrease for every doubling of capacity) is 19%.

Source: Bloomberg New Energy Finance

Passenger EV forecasts continued growth, driving the Li-ion market

• BNEF forecasts annual demand for lithium-ion batteries from new EV sales of 408GWh in 2025 and 1,293GWh in 2030

• Demand from EVs, stationary-storage market forecast at 65GWh in 2025.

• BNEF forecasts behind the-meter stationary storage alone will top 200GWh in 2030.

• Batteries are the primary reason why passenger EVs are more expensive than ICEs today

Source: Bloomberg New Energy Finance

Source: Bloomberg New Energy Finance

• BNEF forecast an additional 154GWh of capacity to be built over the next five years, bringing global capacity to 273GWh by 2021

• Battery manufacturers agree with BNFE growth projections driven by demand from EVs and stationary storage

• Shift in capital from battery companies to build new capacity, driving increased sales and a reduction in battery prices.

Li-ion Battery Manufacturing Asset Map

Production Capacity is exploding around the world

Source: Bloomberg New Energy Finance

Research hints a ‘Beyond Lithium’ Technology For EV Battery Improvements (Panasonic) and Toyota is also exploring other options

• According to a recent article in the Nikkei Asian Review, battery research has seen a big shift in recent years.

• At one time, nearly half of the presentations at the Battery Symposium in Japan were about fuel cells and Li-ion battery cathode materials.

• Since 2012, these topics have been replaced by themes of solid-state, lithium-air and non-lithium batteries.

• Lithium-ion chemistries have a maximum energy density, dictated by the laws of physics, and today’s batteries are not to far from theoretical maximum.

• Toyota is focusing on solid-state and Li-air batteries targeting EV to go 500 km” on a single charge

• Seeking rechargeable batteries that can generate 800 to 1,000 watt-hours per liter.”

• That would double to triple energy density of today’s best Li-ion batteries.

Lithium supply response has reacted to demand position

• The majority of global Lithium reserves are brine deposits, however the nature of spodumene deposits enable more rapid capacity additions.

• Australia is expected to dominate the front of the lithium value chain for the foreseeable future, with projects at Greenbushes, Mt Cattlin, Mt Marion and Pilgangoora all ramping up production.

Australian lithium projects

However both production methods face technology challenges driving extraction and processing improvements

• Capital intensity is comparable when downstream conversion factors are taken into consideration.

• Operating costs at Brine production are lower than Spodumenewhen converting to Lithium Carbonate

• Environmental concerns coupled with the resource chemistries provide incentives for new extraction and processing technologies

• Spodomene –processing / conversion technologies

• brine deposits –extraction and water technologies

• lengthy evaporation pond cycles

• Processing technologies

• solvent extraction, ion-exchange, selective crystallisation

• Measuring equipment, logistics and management services

Greenbushes Mine WA (AFR)

Value add from integrated industry development

• Now is the time to act for Government, industry and academia as part of general efforts to provide value added to the industry

• Focus on technology and innovation opportunities to optimize the value chain

Lithium Value Chain USD Million - 2025

Source: AMEC, 2018

A METS Ignited initiative…Promoting a prospective CRC for a new Australian energy industry • Identify new industry and business opportunities • includes connecting, leveraging, facilitating business cases & seeking

sources of funding & investment...

Regional Cluster Development – Case Study Western Australia

• Strategic positioning in value chain participation• Shift to producing battery grade mineral

production• Developing the “Lithium Valley” concept:

• Perth or the Kwinana to lead expertise in cathode metals.

• Kwinana - a downstream processor of lithium.

• Tianqi - roaster capacity to create lithium hydroxide –operation expansion

• Greenbushes lithium and tantalum mine to build a lithium processing plant adjacent to Tianqi

• Esperance to establish a nickel sulphate product for the battery minerals market.

Innovation is more critical than ever before

Year Time to Double Knowledge

1900 100 years

1950 25 years

2014 13 months

The Age of IoT 12 hours

Knowledge Doubling Curve

“Industry Knowledge Priorities are those outcome-focussed bodies of information or skills that need to be developed to create sustainable global competitive advantage for the Australian METS sector.”

Driving Industry Knowledge Priorities

Chile & Australia – Opportunities for Strategic Collaboration

Collaboration – Industry and Research

Cluster DevelopmentNational Strategy

Thank you

See the METS roadmap 10 Year Sector Competitiveness Plan

Stay in touchNetwork Associate @ www.metsignited.org

Join the conversation@metsignited

METS Ignited Australia Ltd