Evaluating and forecasting the

lithium market from a value lithium market from a value

perspective

Robert Baylis

30th January 2013

Disclaimer

The statements in this presentation represent the considered views of RoskillInformation Services Ltd. It includes certain statements that may be deemed"forward-looking statements“. All statements in this presentation, other thanstatements of historical facts, that address future market developments, governmentactions and events, are forward-looking statements. Although Roskill InformationServices Ltd. believes the outcomes expressed in such forward-looking statementsare based on reasonable assumptions, such statements are not guarantees of futureperformance and actual results or developments may differ materially from those inforward-looking statements. Factors that could cause actual results to differforward-looking statements. Factors that could cause actual results to differmaterially from those in forward-looking statements include changes in generaleconomic, market or business conditions.

While Roskill Information Services Ltd. has made every reasonable effort to ensurethe veracity of the information presented it cannot expressly guarantee the accuracyand reliability of the estimates, forecasts and conclusions contained herein.Accordingly, the statements in the presentation should be used for general guidanceonly.

Overview

• Market dynamics:

• Producer market share by value

• Product value and volume

• Product markets:

• Technical products• Technical products

• Battery products

• Organolithium & specialty products

• Market outlook and product impact

• Summary

Market dynamicsMarket dynamics

Sales by company across market area (US$M), 2011/12

Lithium market share by value shows how product diversification can increase turnover substantially

Source: Rockwood Lithium; FMC Lithium; SQM; Tianqi; Talison; Ganfeng; Roskill estimatesNotes: Rockwood LTE 2012; FMC FY 2011;SQM LTE 2012; Tianqi + Talison FY 2011/12;

Ganfeng FY2011; Tianqi + Talison technical salts includes mineral sales

Speciality/metal Organlithium Battery Technical

Cat-grade lithium metal

Butylithium Battery-grade lithium carbonate

Technical-gradelithium carbonate

High purity

lithium salts

Hexyllithium Battery-grade lithium hydroxide

Direct-use minerals

Lithium aluminum Methyllithium Battery-grade lithium Technical-grade

Volu

me

Product groupings can be roughly drawn around specific markets and product types

Lithium aluminum hydride (LAH)

Methyllithium Battery-grade lithium metal

Technical-gradelithium hydroxide

Lithium hexa-methyldisilazide

Phenyllithium Lithium salts, e.g. lithium fluoride

Lithium hypochlorite

Lithium bromide Lithium chloride

Value

Volu

me

Rockwood Lithium: Profitability of selected lithium products, 2012

Profitability is not necessarily restricted to higher priced products, and will vary by producer depending on costs

Source: Rockwood LithiumNote: Size of bubbles represents profitability of products

Complexity, price and market size of selected lithium products, 2012

There are very few areas with which to increase added value in the lithium market, so all avenues are explored by producers

>90% by volume <US$10,000/t

5-10% by volume US$30-40,000/t

<1% by volume >US$1,000/kg

Source: Roskill estimatesNote: Size of bubbles represents size of market in LCE terms; market volume representative

of chemical market only (i.e. not including mineral direct use)

World: Lithium market size by volume and value, 2012 (t LCE and US$)

There is a significant contrast between market volume and market value, with organolithium and other specialty products contributing most to value

Source: Roskill estimates

Technical productsTechnical products

Technical products generally only require one or two process steps

Mineral conversion Brine processing

Lithium carbonateLithium hydroxide Lithium chloride

Mineral production Brine production

Mineral products

Technical-grade

Technical-grade Battery-grade High purity

Battery-grade Low sodium metal High sodium metal

Lithium bromide

Technical-grade

Lithium products for technical markets and their key end-uses

Other salts Lithium

hydroxide

Lithium carbonate Minerals

Air treatment Greases Glass-ceramics Glass

Pool water treatment

Reagents Ceramic & enamel frits & glazes

Ceramics

Construction chemicals

Other Casting powders Glass-ceramics

Volu

me

chemicals

Dehumidification& CO2 removal

Glass Casting powders

Other Aluminium smelting Other

Other

Value

Volu

me

Important factors to consider when supplying technical products

• Market is concentrated in Europe, USA and East Asia, but small volumes are consumed across a large number of countries

• Logistics and distribution networks are critical as volumes generally higher compared to other lithium products (especially when including minerals)

• Consumers may buy material in bulk or bagged; some carry stock, some want “just-in-time”

• Grade may be less critical for some applications, but will vary even within different end-use sectors

• Product form can also vary across end-uses, e.g. particle size

• Consistency and reliability of supply perhaps more important than grade

• Pricing is competitive

Battery productsBattery products

Battery products also generally require only one or two process steps, but feed and quality control is much more rigorous

Mineral conversion Brine processing

Lithium carbonateLithium hydroxide Lithium chloride

Mineral production Brine production

Mineral products

Technical-grade

Technical-grade Battery-grade High purity

Battery-grade Low sodium metal High sodium metal

Lithium salts

Technical-grade

Lithium products for batteries and their markets

Other salts Battery-grade

lithium metal

Battery-grade

lithium

hydroxide

Battery-grade

lithium

carbonate

Lithium-ion electrolytesolutions

Primary batteryanodes

Lithium-ioncathode materials

Lithium-ioncathode materials

Other Rechargeable Primary battery Lithium-ion

Volu

me

Other Rechargeable“primary” batteries

Primary batteryelectrolytes

Lithium-ion electrolytesolutions

Lithium polymer batteries

Other Primary batterycathodes

Other Other

Value

Volu

me

Important factors to consider when supplying battery products

• Market is concentrated in East/South Asia, with lower volumes in Europe and USA, and in a smaller number of countries compared to technical products

• Logistics and distribution networks still critical (especially as volumes grow); metal products require careful handling

• Bagged material prevails to prevent contamination

• Grade is important, but impurities and foreign particles even more so

• Product form can also vary across end-uses, especially for metal products

• Consistency and reliability of supply imperative

• Competition is growing for lower value, higher volume salts (e.g. battery-grade lithium carbonate), but more restricted for higher value products

• Pricing is becoming increasingly competitive

Organolithium, metal and Organolithium, metal and

specialty products

Organolithium and specialty products generally require more process steps

Mineral conversion Brine processing

Lithium carbonate Lithium chloride

Low sodium metal High sodium metal

High purity Lithium salts Organolithium LDA/LAH/LHS

Organolithium and other specialty products and their uses

Other Organolithium Specialty salts Lithium metal

Lithium hydride Polymers High puritycarbonate etc.

Polymers

Lithium aluminium hydride(LAH)

Organic synthesis Lithium inorganics (nitrate, sulphate etc.)

Catalysts

Volu

me

etc.)

Lithium hexa-

methlydialiszide

Agrochemicals Lithium organics (acetate etc.)

Alloys

Other Other Other Other

Value

Important factors to consider when supplying organolithium & specialty products

• Market is varied depending on product and end-use, e.g. catalysts and organoltihium in USA, Europe, East/Southeast Asia and India

• Logistics and distribution networks closer to end markets due to hazardous nature of organic and metal products, and products require very careful handling

• Bagged or sealed material prevails to prevent reaction and contamination

• Products designed and produced to tight customer specification, high level of technical support and R&D

• Consistency and reliability of supply imperative

• Competition is thin, especially for organolithium and high value inorganic and organics

• Pricing is opaque, cost of lithium in process becomes a minor concern

Market outlookMarket outlook

World: Consumption of lithium by end-use, 2000-2017 (t LCE)

Consumption growth may exceed 11%py, even in the base-case scenario, as demand from 3C, EV and off-grid battery markets increase

11%py

10%py

Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.

10%py

World: Consumption of lithium by type, 2007, 2012 & 2017 (t LCE)

Non-LIB market to grow 20% by 2017 = 20,000t LCE additional demand

Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.

World: Lithium market size by volume and value, 2017

Volume will move upwards for battery-grade salts relatively quickly, but significant value will still remain in specialty products

Source: Roskill estimates

Summary

• A wide spectrum of lithium products are produced to meet the needs of a diverse range of end-uses

• Volume is centered on relatively low priced lithium salts that, for the most part, are straightforward to produce

• Value is however centered on high value metal and organolithium products, which are not so easy to produce; competition in these is limited

• Non- rechargeable battery market forecast to grow by 20% in five years = 20,000t LCE additional requirement

• Rechargeable battery market forecast to grow by ~200% in five years = 90,000t LCE additional requirement

• Incumbent producers will look firstly to capture growth in high revenue generating products

• Secondly they will look at higher revenue generating battery products, perhaps shifting away from technical salts

• Thus potentially leaving new producers to fulfill demand at the bottom of the value chain; progressing downstream as opportunities arise

Roskill Information Services

“Lithium: Market Outlook to 2017”

• New Multi-Client Report Available March 2013 • Pre-publication delegate offer available – save 10%

“Roskill’s Lithium Digest”

• Tracking news and trends in the lithium business• Available quarterly

• Free copies available

Robert Baylis Managing Director; Manager – Minor Metals Research

About the speaker

Robert Baylis is Managing Director of Roskill Information ServicesLtd. Roskill is based in London, UK, and provides reports andconsultancy services on the supply, demand, end-use applications,consultancy services on the supply, demand, end-use applications,trade and prices of industrial minerals, minor metals and steelalloys. Robert joined Roskill in 2006 focusing initially on the cobaltmarket, which, similarly to lithium, was starting to witness significantinterest due to lithium-ion battery and emerging market demandgrowth. He first started researching the lithium market in mid-2008,authoring Roskill’s 11th edition of its multi-client lithium reportpublished in 2009. Since 2009, he has undertaken several single-client research projects on lithium, as well as being a regularspeaker at the Lithium Supply and Markets conference.

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