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Lithium, a new source of energy Rio de Janeiro, April 2015 Fidel Oteza 1921, office 1001 Providencia, Santiago, Chile Info@signumbox.com 562-29460407 569-66690429 www.signumbox.com 1

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1.Introduction Questions that we are going to try to answer Is there enough lithium in the world to meet demand? Are countries prepared for the electrification of transportation? Will batteries for energy storage systems become the largest application for lithium? Can lithium replace oil? Will Chile, Argentina and Bolivia become the new middle east?

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3 1. Introduction Oil prices and global warming: drivers for safer and greener technologies Oil prices Oil prices not only respond to supply-demand conditions but also to geopolitical conditions Oil prices are currently at low levels, but production is concentrated in middle-east high levels of unrest and demand for regime changes. The US is becoming a relevant player as an oil producer (shale oil), but at higher costs. Global warming According to the IEA the transport sector is responsible for almost 23% of CO2 emissions and CO2 emissions from transport are dominated by road China, US and Russia are the largest countries in terms of CO2 emissions

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Lithium has a high electrochemical potential Lithium has a low atomic mass (6.941 g/mol) Lithium has a low density (around 0.53 g/cm3 at 20C) Lithium-ion technology has been developing since the seventies; however, in 1991 Sony was the first company to start massive production of lithium-ion batteries. Once the advantages over other technologies were recognized, applications began to expand. 4 1.Introduction Why Lithium? Sony introduced the first lithium ion cell early the ninetees

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2. Lithium resources and supply Lithium is found in different forms 5 Continental Brines Geothermal Brines SeeHard rock minerals Lithium is found in continental brines as well in hard rock minerals. Chile and Bolivia have about 2/3 of worldwide reserves in the form of continental brines. Lithium minerals are found mainly in the form of spodumene in Australia and China. Seawater is the largest source of lithium resource.

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6 2. Lithium resources and supply Lithium reserves are concentrated in Chile, Argentina, Australia and China

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7 2. Lithium resources and supply Salar de Atacama in Chile has the best quality reserves of lithium Source: Peter Ehren.

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8 2. Lithium resources and supply Salar de Atacama in Chile has the best environmental conditions Source: Peter Ehren.

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2. Lithium resources and supply Production process: Continental brines (Chile) Brines contained in dry lakes Solar evaporation ponds Pumping Lithium Chloride Solution Remotion of additional water and crystalization of salts Chemical plant Lithium Carbonate (Li2CO3) 1% Li 6% Li Remotion of magnesium and precipitation with soda ash (Na 2 CO 3 ) Precipitation with calcium oxide, cal (CaO) or with soda caustic (NaOH) Lithium Hydroxide (LiOH) 9

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10 Pegmatites Crusher Open pit mining Spodumene recovery Mica removal and separation Chemical plant Lithium carbonate (Li2CO3) Lithium Hydroxide (LiOH) Lithium carbonate (Li2CO3) Lithium Hydroxide (LiOH) 1,1% Li2O 6% Li2O * Pegmatites: - Spodumene: LiAl(SiO 3 ) 2 - Petalite: LiAlSi4O10 - Lepidolite: (KLi 2 Al(Al,Si) 3 O 10 (F,OH) 2 Li2O: Lithium oxide 10 2. Lithium resources and supply Production process: Hard rock minerals

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Source: Rockwood Lithium. 2. Lithium resources and supply Lithium is not a commodity Li-Acetylide Methyl- lithium Phenyl- lithium LDA LHS Li-t- Butoxide Li- Methoxide Li- Hydride Li-tri (t-butoxy)- alanate Li- Amide Li- Salicylate Li- Citrate Li- Benzoate Li- Acetate Li- Zeolite Potash Bischofite Li- Sulphate Li- Nitrate Li- Phosphate Li- Silicate Li-Tetra- borate Li- Chromate Sabalith Li- Nitride Li- Bromide Li- Fluoride Li- Peroxide Li- Hydroxide CO2- Absorption Products Li- Iodide Li- Perchlorate LiBOB Anodes Foils Lithium Carbonate Lithium Chloride Brines Butyl- lithium Li- Alanate Lithium Metal

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12 Total Lithium Production 160,000 Li2CO3 73,600 LiOH 30,300 Li Concentrate 28,300 Li Metal 5,400 BuLi 8,000 LiCl 8,800 Other 6,200 Brines 90,000 Minerals 70,000 Note: numbers are rounded. Source: signumBOX estimates. 2. Lithium resources and supply Lithium carbonate is the most important chemical compound Tones LCE

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13 Lithium production is concentrated in Australia, Chile and China Production in Chile has many advantages, make it the lowest cost producer: High lithium/potassium concentration Low evaporation rate (driest dessert in the world) Low magnesium/lithium ratio (magnesium must be removed) 10 years ago there were more than 100 of lithium exploration projects in the world. Currently there are about 40 projects, and 5 of them are about to start producing in the coming (Argentina and Canada). Source: signumBOX estimates. 2. Lithium resources and supply Australia is the largest lithium producer Tones LCE

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14 Total lithium demand reached in 2014 about 150,000 160,000 tones as LCE. Batteries are the main application for lithium (40% app of total demand): 67% of the consumption of lithium carbonate and 30% of the use of lithium hydroxide. Lithium is also widely used in lubricating greases in the form of lithium hydroxide. Other interesting applications: lithium alloys, medicine, metal treatment, among others. Source: signumBOX estimates. 3. Lithium demand Batteries are the main application for lithium

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15 Source: signumBOX estimates. 3. Lithium demand Batteries are the main application for lithium

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16 Lithium carbonate / hydroxide is used as a cathode material in rechargeable batteries Lithium metal also used in primary batteries Lithium chloride is used in the the electrolyte in rechargeable batteries 62,000 tones LCE 40,400 tones LCE Source: signumBOX estimates. 3. Lithium demand Batteries for portable devices represent the largest use for lithium in batteries

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17 Recent market trends: The announcement made by Tesla regarding the construction of the giga-factory in Nevada was very welcomed by the industry. Capacity for batteries for 500,000 vehicles in 2020 (currently capacity for 35,000 vehicles) The State of Nevada offered US$ 1.3 billion of tax credits The cost of the gigafactory is estimated at US$ 5 billion, but some analysists estimate that would reach around US$ 6 billion. Tesla autonomy reaches 250 miles (industry average: 75 110 miles) The battery uses standard cells (18650). Advantage in costs. The Chinese government intents to distribute 5 million electric cars (Evs and P-HEVs) by 2020 to solve the Nations environmental problems. Global EV market demand is expected to grow from 2.4 million units in 2014 to 8 million in 2020. We assume a conservative scenario, with Tesla supplying 250,000 EVs by 2020 (instead of 500,000). Source: signumBOX estimates. 3. Lithium demand Batteries for hybrid / electric cars

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18 Source: signumBOX estimates. Tesla Roadster: 40 Kg LCE 3. Lithium demand Lithium consumption in batteries Iphone battery 2.5 grs LCE Lenovo battery 30 50 grs LCE Grid storage project tones of LCE Toyota Prius Plug-in Hybrid: 4.4. Kg LCE

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19 Source: signumBOX estimates from various sources. 3. Lithium demand Battteries for HEV and EVs 1.000 US$/KWh 500 US$/KWh 150 US$/KWh

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20 Source: signumBOX estimates, JOGMEC. Battery MaterialMain advantageMain disadvantageApplicationsLithium contentLithium material Lithium Cobalt Oxide (LCO) Balanced yieldLow cycle lifeElectronic devices7%Lithium carbonate Nickel manganese cobalt oxide (NMC) SafetyHigh cycle life / lower capacity HEV7%Lithium carbonate / Lithium hydroxide Lithium Manganese Oxide (LMO) Low costHigh cycle life / lower capacity EV P-HEV4%Lithium carbonate Nickel Cobalt Aluminum (NCA) High capacityNot safetyEV P-HEV7%Lithium hydroxide Lithium iron phosphates (LFP) High thermal stability / Safety High cycle life / lower capacity HEVs - EVs4%Lithium carbonate / Lithium hydroxide Materials for Metal Oxide Cathodes 3. Lithium demand Battery materials

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21 3. Lithium demand Energy Storage Systems Challenge: Match supply and demand in real time According to the US Department of Energys Energy Storage Database: Total energy storage systems: 1,250 projects in the world / 184,574 MW Pumped hydro: 341 projects in the world / 177,427 MW Electrochemical (Li-ion batteries): 386 projects / 690 MW Economics of pumped hydro are very difficult to compete with (for chemical solutions) Non battery solutions are by far the current leader in cost, but lithium ion batteries cost is falling Pumped hydroCAES (Compressed air energy storage) Flywheels

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22 3. Lithium demand Total Energy Storage Systems

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23 3. Lithium demand Batteries for Energy Storage Systems

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24 3. Lithium demand Battery for Energy Storage Systems

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Batteries for hybrid and electric vehicles are going to be the largest application for lithium demand. Today represents about 6,0% of total lithium demand In 2025 would account more than 35% of the total lithium demand. Total lithium demand would reach 390,000 tones in 2025 (including inventories). 25 Source: signumBOX estimates. CAGR: +8.6% 3. Lithium demand Forecasting lithium demand

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4. Final Conclusions Questions that we are going to try to answer Is there enough lithium in the world to meet demand? Yes Are countries prepared for the electrification of transportation? LatinAmerican countries not yet.. Will batteries for energy storage systems become the largest application for lithium? No, batteries for hybrid and electric cars are going to be the largest application for lithium Can lithium replace oil? No, automakers are going to diversify technologies Will Chile, Argentina and Bolivia become the new middle east? No

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Fidel Oteza 1921, office 1001 Providencia, Santiago, Chile info@signumbox.com 562-29460407 569-66690429 www.signumbox.com 27 Many thanks for your attention. Please ask for the updated version of this presentation at daniela.desormeaux@signumbox.com