Raw material impact of the lithium ion battery surge Simon Moores, Managing Director Benchmark Mineral Intelligence BMO Capital Markets, Global Metals & Mining Conference Hollywood, Florida, US 28 February 2017 www.benchmarkminerals.com
Raw material impact of the lithium ion battery surge
Simon Moores, Managing Director Benchmark Mineral Intelligence
BMO Capital Markets, Global Metals & Mining ConferenceHollywood, Florida, US28 February 2017
www.benchmarkminerals.com
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-60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 140%
Aluminium
Coal (Thermal)
Cobalt (metal)
Copper
Graphite (Spherical)
Iron ore
Lithium (Carbonate)
Lithium (Hydroxide)
Nickel
Bloomberg Commodity Index
Mineral & Metal Prices: Feb 2015 versus Feb 2017
Prices: 2015 v 2017
NCA NCM LCO LFP
Lithium Cobalt Nickel Aluminium Iron Phosphate
Mined Graphite Synthetic Graphite Silicon
• Anode on copper
• Separator
• Cathode on aluminium
Cylinder (18650, 2170)Pouch Prism
Battery Pack
EV Platform
Rolled / Cut
Lithium ion batteries: From mine to market
0
10
20
30
40
50
60
TeslaMotors (US)
LG Chem(US)
LG Chem(Nanjing)
LG Chem(Poland)
LG Chem(Korea)
BYD China(Shenzhen)
BostonPower(Liyan)
BostonPower(Liyan)
SamsungSDI (Xian)
SamsungSDI (Korea)
Panasonic(Dalian)
Lishen(Tianjin)
CATL(NingDe)
CALB(Luoyang)
2016 Capacity (GWh) Benchmark's 2020 Cell Production Capacity Forecast (GWh)
Lithium ion megafactory capacity expansion by end-2020 (GWh)
2017: 30GWh = ~30% of output
2020: 174GWh= ~70% output
The lithium ion megafactories are coming…
Lithium
o Up 2-3 x outside of China o Up 3-4 x within Chinao Lithium Carbonate & Lithium Hydroxide, both key battery raw materials
Lithium’s price spike is driving interest…
Price differences, function of supply chain
180-185k tpa LCE
Brine Hard rock (spodumene)
Chile68%
Argentina25%
China7%
Australia, 100%
Battery grade
76-83k tpa LCE
ChinaChile, Argentina, US, China
Lithium ion batteries now the driver…
Glass/Frits21%
Lithium ion batteries
22%
Grease15%
Air Con 8%
Other34%
Glass/Frits20%
Lithium ion batteries
42%
Grease10%
Air Con 8%
Other20%
Lithium’s End Markets
2006 2016Glass/Frits
16%
Lithium ion batteries
67%
Grease8%
Air Con 4%
Other5%
2020
• No huge oversupply of lithium
• 5 year growth trajectory: 12-15% a year
• Lithium Carbonate & Hydroxide Prices to remain high for the medium term
• No price crash
• Spodumene to fill the 2017-2018 supply deficit
• China has 30% excess capacity
• New brine resources 2020 and beyond
• M&A and JVs to continue • Albemarle, Tianqi, Ganfeng most aggressive
Lithium trends to watch…
Graphite
Anode grade graphite, dominated by China
1.5m tpa
Natural Spherical Graphite
Synthetic Graphite
China100%
China , 73%
Japan, 15%
Other, 12%
Battery grade
90-100k tpa
ChinaChina, Japan, Korea
All Graphite
Lithium ion batteries to challenge for top spot…
Refractories (Steel)
38%
Lithium ion batteries
0%Foundries21%
Lubricants10%
Recarburizer (Steel)
8%
Other 23%
Refractories (Steel)
27%
Lithium ion batteries
16%
Foundries17%
Lubricants10%
Recarburizer (Steel)
8%
Other 22%
Flake Graphite’s End Markets
2006 2016
Refractories (Steel)
29%
Lithium ion batteries
35%
Foundries17%
Lubricants9%
Recarburizer (Steel)
8%
Other 2%
2020
• 5 year growth trajectory: 13-16% a year
• Natural graphite anodes to increase market share over synthetic• Supply issue, improving quality, lower cost
• Synthetic will operate in a high quality niche
• CO2 footprint becoming a consideration
• Coated Spherical Graphite to become cheaper• From $12-16/kg today to sub $8/kg
• Silicon to not be a major substitution factor medium term• 3-6% additive to improve capacity
Graphite trends to watch…
Cobalt
o 2016: 100,000 tpa market o LME Cobalt metal Up >60% in 12 months o Battery grade precursor – Cobalt sulphate heptahydrate (premium)
After years of depression, cobalt’s price is spiking
DRC59%
Canada 9%
Australia 5%
Cuba6%
Russia 5%
Lithium ion dominance to grow…
Lithium ion batteries
20%
Superalloys 24%
Hard materials
12%
Ceramics/Pigment
10%
Other34%
Cobalt’s End Markets
2006 2016
Lithium ion batteries
51%
Superalloys 20%
Hard materials
8%
Ceramics/Pigment
8%
Other13%
Lithium ion batteries
62%
Superalloys 16%
Hard materials
6%
Ceramics/Pigment
6%
Other10%
2020
• 5 year growth trajectory: 8-10% a year
• Supply to return H2 ‘17 – Glencore (Katanga) amid rising prices
• Political resolution in DRC emerges
• Rising Prices: >60% increase in 12 months • ~$16/lb versus crisis price of ~$52/lb
• Battery demand the biggest prevailing factor
Cobalt trends to watch…
0
50000
100000
150000
200000
250000
2015 2016 2017 2018 2019 2020
Lithium (LCE) Graphite Anode Cobalt
65GWh
74GWh
What does this mean for raw material demand …
Benchmark’s conservative forecast
85GWh
110GWh
130GWh
170GWh
Benchmark’s Price Assessments…
Each month Benchmark Mineral Intelligence undertakes market price assessments for key minerals and chemicals used in the manufacturing of lithium ion batteries.
Our prices are collected and published through methodologies that are specific to: • Lithium• Graphite• Cobalt
Each price assessment gathers the prevailing volumes traded that month, rather than just a small volume, spot trade.
Benchmark is the world’s only company to be dedicated to the collection of lithium ion battery raw material data.
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Lithium Graphite
Cobalt Chemicals Coming in Q2 2017