Login to view all prices: Lithium · -8.0% 206.0: 214.6 CARBONATE INDEX-2.7% -41.0%-6.0% 204.3: 209.9 HYDROXIDE INDEX-6.6% -32.6%-12.0% 214.9: ... particularly given that regional

1 | BENCHMARK MINERAL INTELLIGENCE | LITHIUM PRICE ASSESSMENT APRIL 2019 REVIEW

LithiumCathode industry awaits subsidy impact

n China VAT reduction adds to pricing pressures; hydroxide adjustment continues

n VW reach 10-year supply agreement with Ganfeng Lithium

n Cathode consumers await downstream response to China EV subsidy reduction; high-nickel momentum expected to slow in favour of lower-cost chemistries

n Strong spodumene demand remains from converters without offtakes; price reduction continues

n CATL confirms RMB 9bn investment in new 100,000 tpa cathode project; Shanshan announces new Changsha expansion

n China lithium exports reach record highs in Q1, with carbonate exports up 432% and hydroxide up over 60%

AuthorsAndrew MillerSenior AnalystOffice: +1 754 248 [email protected]

Albert (Qi) [email protected]

Managing Director Simon Moores

Benchmark Mineral [email protected]

Contents:Market review ...............................2Prices .............................................3Supply ...........................................4 Demand .........................................5 Company Data ..............................7

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LITHIUM CARBONATE Lithium Carbonate, FOB South AmericaLithium Carbonate, CIF North AmericaLithium Carbonate, CIF AsiaLithium Carbonate, CIF EuropeLithium Carbonate, EXW China (Battery grade)Lithium Carbonate, EXW China (Technical grade)

LITHIUM HYDROXIDE

Lithium Hydroxide, FOB North AmericaLithium Hydroxide, CIF AsiaLithium Hydroxide, CIF EuropeLithium Hydroxide, EXW China

LITHIUM FEEDSTOCK Spodumene concentrate, FOB Australia

BENCHMARK MINERAL INTELLIGENCE

LITHIUM PRICE ASSESSMENT

April 2019

Login to view all prices: www.benchmarkminerals.com

LITHIUM GRADES

Benchmark Lithium Price Index

1M Y-O-Y YTD TODAY LAST

LITHIUM INDEX -4.0% -38.5% -8.0% 206.0 214.6

CARBONATE INDEX -2.7% -41.0% -6.0% 204.3 209.9

HYDROXIDE INDEX -6.6% -32.6% -12.0% 214.9 230.1

Source: Benchmark Mineral Intelligence

the decrease in the BMI Lithium Price Index

throughout April 2019

-4.0%1 April 2019 ReviewThe correction in lithium hydroxide prices continued into Q2 2019, with average prices down 6.6% in April. Price decreases in China were compounded by the country’s VAT reduction, however lithium carbonate prices were again more stable, reflecting the low margins for non-integrated carbonate converters and those that do not have existing offtake agreements for spodumene feedstocks.The more robust pricing for lithium carbonate may also represent a more promising demand outlook for H2, which has been strengthened by the reduction in China’s EV subsidies. Subsidy reductions are expected to lead to greater price pressures in upstream markets, forcing cathode producers to refocus attentions on low-cost output from existing production infrastructure. A number of sources have told Benchmark Minerals that they expect stronger demand growth for LFP production relative to high-nickel chemistries in H2, particularly given that regional subsidies are still available for electric bus applications. These pressures, along with questions about the medium-term demand outlook, saw one of the industry’s leading cathode producers, Umicore, warn of lower than expected earnings in 2019. Nevertheless, other producers (particularly in China) have not been deterred by short term uncertainty, with CATL confirming a new 100,000tpa cathode project it expects to roll out in two phases over the next five years; and Shanshan outlining plans to expand its Changsha operations by over 28,000 tonnes. Continued investment along the supply chain will come as a relief to auto OEMs that are facing increased supply chain challenges to meeting ambitious EV targets over the next five years. These challenges have seen auto makers take increased involvement in upstream markets, and VW this month took the first major step in securing its lithium supply base with a 10 years agreement with Ganfeng Lithium.

Apr 2016 20182017 Apr 2019

100

400

350

150

200

250

300

LITHIUM CARBONATE (WEIGHTED AVERAGE)

Current price $11,535

Last price $11,850

% change -2.65%

LITHUM HYDROXIDE (WEIGHTED AVERAGE)

Current price $14,172

Last price $15,177

% change -6.62%

SPODUMENE CONCENTRATE (6% Li2O)

Current price $640

Last price $675

% change -5.19%


www.benchmarkminerals.com

BENCHMARK | LITHIUM PRICE ASSESSMENTAPRIL 2019


n Lithium Indexn Carbonate Indexn Hydroxide Index

Feedstock

Lithium Carbonate

The reduction in VAT, alongside falling spodumene feedstock costs, allowed for some minor adjustments in Chinese domestic lithium carbonate prices throughout April, with technical grade prices down 3.2% to an average of $9,950/tonne, and battery grade prices down 2.3% to $11,500. Increased exports from China, which climbed to record highs of 2,897 tonnes in March 2019, saw minor decreases in pricing into other regions, particularly for technical grade material. Prices into Europe fell to an average of $11,750 in April, down over 5% on March and over 11% on the start of the year. North American prices also decreased, down 4% at between $11,500 and $12,500. Prices of battery grade material were more stable at the start of Q2, reflecting the quality limitations of some new volumes to have entered the market since the start of the year. Prices into Asia fell back to February levels at an average of $13,000/tonne, while South American suppliers continued to report prices of between $11,500 - $14,000/tonne, as Q2 contracts continued the gradual decline towards China price levels.

Lithium hydroxide



Li2CO3

LiOH

2 Prices





LiOH, FOB NORTH AMERICA -1.72% -16.18% -9.52% $14,250 $14,500


Li2CO3, FOB SOUTH AMERICA -1.92% -13.56% -5.56% $12,750 $13,000


SPODUMENE (6% Li2O), FOB AUSTRALIA -5.19% -26.44% -26.86% $640 $675

0

10,000

5,000

15,000

20,000

25,000 ■ CIF Asia

■ FOB S America

■ EXW China (Battery)

■ EXW China (Technical)

2016 2017 2018 2019

AprApr

JunAug

Oct DecFeb

AprJun

AugOct Dec

FebApr

JunAug

Oct DecFeb

0

5,000

10,000

15,000

25,000

20,000

■ EXW China

■ CIF Asia

■ FOB N America

2016 2017 2018 2019

AprApr

JunAug

Oct DecFeb

AprJun

AugOct Dec

FebApr

JunAug

Oct DecFeb

The steady decrease in lithium hydroxide’s premium over carbonate continued through April 2019, led by an increase in technical grade supplies from China. EXW China prices fell to their lowest point since February 2016, at between $13,200-$14,700 in April, forcing down prices into export markets where the country’s producers had sold over 10,000 tonnes in Q1, up 60% yoy. The majority of battery-grade material was exported to Japan and South Korea, where prices slumped to an average of $14,750 in April, down over 9% on the start of the year. Price decreases were more notable into industrial markets, however, with reports of increased low-price shipments from China causing CIF Europe prices to fall 3.6% to an average of $13,500/tonne. Hydroxide prices are expected to continue to narrow on carbonate levels throughout Q2 and could see more pressure as new Chinese capacity enters the market in H2.

Spodumene prices fell once again moving into Q2, with decreasing chemical prices impacting the rates received from offtake partners, and increasedsupply forcing producers to lower offers. Despite some concern that prices could fall to below the $600 mark in the coming months, prices of 6% material remained above this level at between $600-680/tonne in April. While supply-side price pressures remain due to the ramp up of new projects in Western Australia and Brazil, converters purchasing volumes outside of existing offtake agreements have continued to report a lack of availability of high-quality, consistent feedstocks. Despite supply limitations, a rebound in pricing is unlikely in the short-term, with decreasing spodumene production costs from new suppliers likely to allow for further price reductions for below-spec material.

Supply: Lithium carbonate

Lithium supply (LCE): April 2019

Supply: Lithium Hydroxide

Source: Benchmark Mineral Intelligence estimates Source: Benchmark Mineral Intelligence estimates




n Chile 29.3%

n Argentina 4.5%

n China 64.6%

n US 0.6%

n Other 1.2%


Nov Dec Jan Feb Mar Apr0

5,000

15,000

10,000

25,000

20,000

0

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4,000

6,000

12,000

10,000

8,000

Nov Dec Jan Feb Mar Apr

Tonn

es (L

CE

)

Tonn

es (L

CE

)

3 SupplyLithium ChemicalDevelopments in lithium chemical capacities continued to be focused in China throughout April 2019, with Ganfeng Lithium and General Lithium ramping up their new facilities, which combined provide an additional 51,000tpa nameplate capacity. In addition, General Lithium this month announced plans for a new 60,000 tpa facility that it aims to bring into production by the end of 2020. Its willingness to commit to new capacity so soon after launching its new Hubei facility may give some weight to rumours about permitting challenges. Regardless, production from these facilities is not expected to reach full capacity in 2019, but will account for the majority of new chemical supply from the Chinese market this year. Other major companies developing new capacity such as Yahua and Ruifu are expected to push back their ramp up schedule into H2, while Albemarle’s Xinyu hydroxide expansion and Tianqi’s Kwinana project are not set for production until later in the year. Outside of China, Argentine producer Orocobre announced a major milestone in its aim of establishing lithium hydroxide capacity in Japan with partner Topota Tsusho. A final decision between the parties approved investment in the Naraha lithium hydroxide plant, with commissioning scheduled for H1 2021. Another brine project in Argentina was also given the backing of its Asian partners in early-April, as Ganfeng Lithium increased its stake in Lithium Americas by $160m. The project is targeting an initial capacity of 25,000tpa lithium carbonate, with first production due for 2020.

Lithium Feedstock

The introduction of a number of new spodumene operations over the past 12 months has failed to dampen the appetite for new feedstock sources from converters without direct access to material through existing offtakes. With many converters only able to access small volumes that are available outside of offtakes, the need for consistent suppliers remains strong, however the future of many new projects will depend on their ability to scale up production and lower costs. Galaxy Lithium reported a cash-cost of $415/tonne from its Mt Cattlin project in March.Meanwhile, Pilbara Minerals, which is seeking to lower costs through increased scale, announced sales of almost 40,000 tonnes spodumene concentrate in Q1 2019, far ahead of other new producers. Outside Australia, Mitsui made a $30m investment in Brazilian developer Sigma Resources for 55,000tpa of battery-grade spodumene concentrate supply over a six year term.

4 Demandn INDICATORS

* Lubricant indicator - trade statistics for exports of petroleum oils and preparations, including lithium-based lubricant greases.** Ceramics indicator - trade statistics for exports of ceramics productsSource: Trading Economics; World Steel; US Federal Reserve; China Ministry of Industry and Information Technology; Battery Association of Japan; Intracen

2018 Q1 2019 FEB MAR APR

BELGIUM

LUBRICANT INDICATOR* -1.11% - - - -

INDUSTRIAL PRODUCTIONM-O-M - - 6.50% - -

Y-O-Y - - 0.00% - -

CHINA

EV PRODUCTION 59.82% -47.94% -35.16% 116.95% -

CERAMICS INDICATOR** -3.35% - -61.20% - -

INDUSTRIAL PRODUCTIONM-O-M - - 0.43% 1.00% -

Y-O-Y - - 5.30% 8.50% -

GERMANY

CERAMICS INDICATOR** 2.25% - - - -

INDUSTRIAL PRODUCTIONM-O-M - - 0.70% - -

Y-O-Y - - -0.40% - -

JAPAN

LI-ION BATTERY SALES - - -31.41% - -

LITHIUM BATTERY EXPORTS -1.85% - -45.28% - -

INDUSTRIAL PRODUCTIONM-O-M - - 0.70% -0.90% -

Y-O-Y - - -1.10% -4.60% -

SOUTH KOREA

LITHIUM BATTERY EXPORTS 19.80% -8.74% -18.60% 27.87% -

INDUSTRIAL PRODUCTIONM-O-M - - -2.60% - -

Y-O-Y - - -2.70% - -

US

LUBRICANT INDICATOR* -0.96% - -18.52% - -

INDUSTRIAL PRODUCTIONM-O-M - - 0.10% -0.10% -

Y-O-Y - - 3.50% 2.80% -




Source: Trading Economics; World Steel; US Federal Reserve; China Ministry of Industry and Information Technology; Battery Association of Japan; Intracen; OECD

Foreign exchange

Industrial production

90Feb2012

Dec2013

Dec2014

Dec2015

Dec2016

Dec2017

Feb2019

100

120

110

China US

Source: China Ministry of Industry and Information Technology Source: Intracen Source: Battery Association of Japan

CHINA NEV PRODUCTION JAPAN LI ION BATTERY SALESLITHIUM BATTERY EXPORTS (VALUE)

CHINA JAPAN SOUTH KOREABEV PHEV EV OTHER

*Not all figures yet reported

$/0,

000

May

18

Jun

18

Aug

18

Sep

18

Oct

18

Nov

18

Dec

18

Jan

19

Feb

19

Mar

19*

Apr

19*

Jul 1

8

0

500,000

1,000,000

15,000,000

20,000,000

Jan

19

Feb

19

Mar

19

Apr

19

May

18

Jun

18

Jul 1

8

Aug

18

Sep

18

Oct

18

Nov

18

Dec

18

0

50,000

100,000

Uni

ts

150,000

250,000

200,000

Qua

ntity

May

18

Jun

18

Jul 1

8

Aug

18

Sep

18

Oct

18

Nov

18

Dec

18

Jan

19

Feb

19

Mar

19

Apr

19

0

30,000

60,000

90,000

120,000

150,000

6.0

Jan2014

Jan2016

Jan2015

Apr2019

Jan2018

Jan2017

1,250

150

900

100

7.0

KRW JPY RMB

FEB SHORT TERM (0-3

MTHS)

MED TERM (3-6

MTHS)

LONG TERM (6-12

MTHS)

BELGIUM

CHINA

GERMANY

JAPAN

S KOREA

US

Demand indicators

Demand trendsThe intervention of western auto OEMs in the lithium market marked a significant milestone in April, as VW signed a 10 year supply agreement with Ganfeng Lithium. Previously only BMW and Tesla had publicly announced lithium supply partnerships and the VW agreement represents much larger potential volumes, with the company aiming to introduce 70 electrified models over the coming decade. These models will aim to challenge the affordable electric offerings that, to date, have been dominated by Chinese auto manufacturers. The prices of these models will however come under pressure in H2 with the reduction in China’s EV subsidies. The subsidy removal will see EV producers put increasing pressures on battery cell costs over the coming months, which in turn will be passed on to cathode producers that are already suffering under the pressure of tightening margins, technology requirements and slower than expected demand growth; as exemplified in Umicore’s downgrade in expected revenues. Sources have told Benchmark Minerals that pressures on cathode producers could see many companies refocus on LFP cathode production which has the benefit of existing capacity and lower input costs. A resurgence in LFP demand could also be supported by continued growth in electric bus adoption in China, with regional subsidies still available for certain applications. As a result, the outlook for lithium carbonate-based cathode expansions could be strengthened in the second half of 2019, while the momentum towards high-nickel, hydroxide-dependent chemistries will likely slow in the medium-term.In the short-term, uncertainty about the ramifications of China’s reduced subsidies, alongside continued price decreases, means the majority of consumers are holding back from committing to major new volumes until market conditions stabilise.




Megafactory highlight

MEGAFACTORY PROFILELOCATION Suminoe, Japan

TARGET CAPACITY 18 GWH

STAGE Production

CHEMISTRY NCA

CAPACITY BY 2023 18 GWh

Panasonic

Total battery megafactory capacity by 2023

795 GWh

Source: Benchmark Mineral Intelligence’s Battery Megafactory Assessments

5 Company data

n STOCK PERFORMANCE*

COMPANY TICKER COUNTRY CURRENCY MARKET CAP SHARE PRICE PREV MONTH SHARE PRICE

PRODUCERSALBEMARLE CORP ALB US USD 7,950.00 75.06 81.98 ▼

ALTURA MINING LTD AJM AUSTRALIA AUD 223.17 0.10 0.14 ▼

AMG NV AMG NETH’LANDS EURO 847.55 27.02 27.74 ▼

LIVENT CORP LTHM US USD 1,570.00 10.78 12.28 ▼

GALAXY RESOURCES LTD GXY AUSTRALIA AUD 594.99 1.46 1.88 ▼

JIANGXI SPECIAL ELECTRIC MOTOR CO LTD 002176 CHINA RMB 9,930.00 5.82 6.07 ▼

JIANGXI GANFENG LITHIUM CO LTD 002460 CHINA CNY 29,790.00 24.64 27.59 ▼

MINERAL RESOURCES MIN AUSTRALIA AUD 2,930.00 15.59 15.80 ▼

OROCOBRE LTD ORE AUSTRALIA AUD 871.39 3.33 3.37 ▼

PILBARA MINERALS LTD PLS AUSTRALIA AUD 1,130.00 0.61 0.79 ▼

SICHUAN YAHUA INDUSTRIAL GROUP CO 002497 CHINA RMB 6,790.00 7.07 7.91 ▼

SOCIEDAD QUIMICA Y MINERA DE CHILE SQM US USD 9,320.00 35.64 38.44 ▼

ALLIANCE MINERAL ASSETS A40 AUSTRALIA AUD 215.37 0.17 0.17 uTIANQI LITHIUM INDUSTRIES INC 002466 CHINA CNY 33,840.00 29.63 35.16 ▼

YOUNGY CO LTD (RIONGJIE) 002192 CHINA RMB 7,300.00 28.13 29.09 ▼

DEVELOPMENT STAGEABERDEEN INTERNATIONAL INC AAB CANADA CAD 4.80 0.05 0.05 uANSON RESOURCES LTD ASN AUSTRALIA AUD 29.40 0.06 0.07 ▼

ARDIDEN LTD ADV AUSTRALIA AUD 5.04 0.00 0.00 uARGOSY MINERALS LTD AGY AUSTRALIA AUD 74.06 0.07 0.12 ▼

AUROCH MINERALS LTD AOU AUSTRALIA AUD 5.73 0.06 0.06 uAVALON ADVANCED MATERIALS INC AVL CANADA CAD 12.21 0.04 0.04 uBACANORA LITHIUM PLC BCN UK GBP 30.59 22.75 21.75 ▲

BIRIMIAN LIMITED BGS AUSTRALIA AUD 37.03 0.14 0.16 ▼

CADENCE MINERALS PLC KDNC UK GBP 13.18 0.15 0.14 ▲

CORE LITHIUM LTD CXO AUSTRALIA AUD 29.17 0.04 0.05 ▼

DAJIN RESOURCES CORP DJI CANADA CAD 7.61 0.05 0.05 uEXORE RESOURCES ERX AUSTRALIA AUD 33.98 0.07 0.08 ▼

EUROPEAN LITHIUM LTD EUR AUSTRALIA AUD 70.45 0.10 0.12 ▼

EUROPEAN METALS HOLDINGS LTD EHM AUSTRALIA AUD 60.12 0.41 0.30 ▲

IONEER LTD INR AUSTRALIA AUD 287.62 0.20 0.17 ▲

INFINITY LITHIUM CORP INF AUSTRALIA AUD 17.31 0.09 0.08 ▲

INTERNATIONAL LITHIUM CORP ILC CANADA CAD 7.29 0.06 0.06 uKIDMAN RESOURCES LTD KDR AUSTRALIA AUD 524.21 1.29 1.22 ▲

LAKE RESOURCES NL LKE AUSTRALIA AUD 18.64 0.05 0.05 uLEPIDICO LPD AUSTRALIA AUD 124.18 0.04 0.03 ▲

LICO ENERGY METALS INC LIC CANADA CAD 3.16 0.10 0.10 uLIONTOWN RESOURCES LTD LTR AUSTRALIA AUD 40.79 0.03 0.02 ▲

LITHIUM AMERICAS LAC CANADA CAD 438.36 4.94 5.06 ▼

LITHIUM AUSTRALIA NL LIT AUSTRALIA AUD 36.37 0.08 0.08 uLITHIUM POWER INTERNATIONAL LPI AUSTRALIA AUD 60.38 0.23 0.20 ▲

NEMASKA LITHIUM INC NMX CANADA CAD 283.94 0.34 0.34 uNEOMETALS LTD NMT AUSTRALIA AUD 119.67 0.22 0.23 ▼

NEO LITHIUM CORP NLC CANADA CAD 84.60 0.72 0.86 ▼

PROSPECT RESOURCES LTD PSC AUSTRALIA AUD 36.83 0.02 0.02 uNEVADA ENERGY METALS BFF CANADA CAD 1.21 0.12 0.12 uPIEDMONT LITHIUM LTD PLL AUSTRALIA AUD 87.15 0.13 0.10 ▲

PREMIER AFRICAN MINERALS PREM UK GBP 6.83 0.11 0.09 ▲

PURE ENERGY MINERALS PE CANADA CAD 11.41 0.07 0.08 ▼

SAVANNAH RESOURCES PLC SAV UK GBP 49.36 5.60 5.10 ▲

ULTRA LITHIUM INC ULI CANADA CAD 6.37 0.09 0.09 uCONSUMERSBASF SE BAS GERMANY EUR 66,780.00 72.74 65.58 ▲

BEIJING EASPRING MATERIAL TECH CO., LTD. 300073 CHINA RMB 10,870.00 24.89 27.55 ▼

JOHNSON MATTHEY PLC JMAT UK GBP 6,460.00 3,337.00 3,142.00 ▲

LG CHEM LTD 051910 S. KOREA KRW 25,480,000.00 361,000.00 366,000 ▼

NIPPON CHEMICAL INDUSTRIAL CO 4092 JAPAN JPY 18,860.00 2,114.00 1,963.00 ▲

PANASONIC CORP 6752 JAPAN JPY 2,500,000.00 1021.00 954 ▲

SAMSUNG SDI CO LTD 006400 S. KOREA KRW 16,260,000.00 236,500.00 214,500 ▲

UMICORE SA UMI BRUSSELS EUR 8,500.00 34.50 39.59 ▼

Source: Bloomberg *Share prices recorded as of market close on final day of the month

PERFORMANCE




Login to view all prices: Lithium · -8.0% 206.0: 214.6 CARBONATE INDEX-2.7% -41.0%-6.0% 204.3: 209.9 HYDROXIDE INDEX-6.6% -32.6%-12.0% 214.9: ... particularly given that regional

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