The future of Energy Storage: Cobalt and Lithium Markets ......EV sales forecast to reach 2.1% of...

The future of Energy Storage: Cobalt and Lithium Markets Strategic View

Expomin - Webinar8 July 2020

© Benchmark Mineral Intelligence 20201

www.benchmarkminerals.com | [email protected]

HQ: London, UK | Offices: Fort Lauderdale, Shanghai, Santiago, San Francisco, Tokyo

Benchmark Mineral Intelligence Contact:

Jose Hofer, Senior Analyst, [email protected] | @j_m_hofer

http://www.benchmarkminerals.com/

mailto:[email protected]


mailto:[email protected]/@amiller_bmi


Expomin 2020 - Webinar8 July 2020










From niche to mainstream: the rise of Benchmark Mineral Intelligence

World’s number one intelligence provider for lithium ion battery supply chain, from raw material to cell

Actionable insight and strategic advisory

Li Co

C Ni

Cathodes

Anodes

Battery Cells Automotive / Energy Storage

Mn Si

Raw Materials

Proprietary Data• Prices • Market Data

True understanding of the entire supply chain


Benchmark offers a suite of prices, data and intelligence services…

4© Benchmark Mineral Intelligence 2020

PriceAssessments & Market Trackers

Forecasting &Consultancy

News & Bulletins/Events/Presentations

▪ Lithium (6 Carbonate, 4 Hydroxide, 1 Spodumene) ▪ Cobalt (Sulphate, Metal, Hydroxide)▪ Graphite (11 Flake, 3 Spherical Graphite) ▪ Nickel Sulphate (EXW China & ROW)▪ Lithium ion Battery Megafactory Assessment ▪ Anode & Cathode Market Assessments

▪ Lithium▪ Cobalt▪ Graphite▪ Nickel

▪ Lithium ion battery demand – EVs, Energy Storage, Portable Tech

Monthly(Lithium moving to

twice a month)

Quarterly

Regular

Quarterly

▪ News & analysis▪ Supply chain commentary & bulletins▪ Presentation archive▪ Webinars / Events

▪ Quarterly Review Magazine

Regular

Megafactories: State of the art


0

100

200

300

400

500

600

700

2016 2017 2018 2019 2020

Battery Megafactories Capacity 2016 - 2020 (GWh)

China Europe US ROW

6

Capacity from Megafactories increased 7-folded in 4 years

88 Active plants 2020

28

37

49

66

88

Active plants in red

* Over US$60 billion of

investment in cell capacity

to be built

*


455GWh

7

The lithium-ion battery arms race: China leads - EU follows

China North America Europe Asia (Ex-China)

China North America Europe Asia (Ex-China) Other

20292019

China 73%

USA 10%

Europe 6%

China 70%USA 9%

Europe 16%

2,224GWh

1557GWh

356GWh

200GWh≈ 1,670 kMT-LCE


8

EV sales forecast to reach 2.1% of global sales in 2020

*Assuming flat future raw material prices, excludes margin, module and pack costs, figure account for

top 80% of producers by scale only.

Global policy statements supporting EV adoption:

Note: ICE - Internal Combustion Engine

Brazil: Target of 30% penetration of electric vehicle sales by 2030

USA: No Federal target set, 10 states have set targets for 100% zero-emissions vehicles by 2050

Canada: Target of 30% penetration of electric vehicle sales by 2030Quebec targeting 100% zero emissions by 2050

China: Target of 5% penetration of electric vehicle sales by 2020, 20% by 2025

Japan and South Korea: Target of 30% penetration of electric vehicle sales by 2030

India: Proposal to end ICE sales by 2030

Norway and Netherlands: Proposal to end ICE sales by 2035, Germany by 2030. Considerations for EU wide ban by 2030

Italy: Target of 30% penetration of electric vehicle sales by 2030

Israel: Proposal to end ICE sales by 2030

Mexico: Target of 30% penetration of electric vehicle sales by 2030

UK and France: Proposal to end ICE sales by 2040

9

$290

$180

$135

$117$105

$97 $91

$0

$50

$100

$150

$200

$250

$300

$350

=

0

500

1000

1500

2000

2500

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

202

9

Increasing scale and new technologies

Lithium ion battery cell cost fall $/kWh*

(average NCM cell cost including cathode evolution)Megafactory Capacity (GWh)



ICE

Average EV cell costs falls to below $100/KWh in 2023-2024

10

EV sales as share of total cars (2020 penetration of 2.1%)



There are a number of factors underpinning the expected growth in EV penetration, notably government transport emission

policies, and Original Equipment Manufacturer (OEM) strategy.

30

40

80

0

120

110

70

90

100

10

50

20

60

20312020 20402033

110

98

2035

92

107

Million units sold

112

102

2015

117

20192016 20272017 2018 2021 20362022

113

2023

99

2024

106

2025 2026 2028

116

2029

100

2030 2032 20372034

114112

2039

115

105

9296

2038

93

114

96

109115 116 117

99

Other Total Electric Vehicles Sold - DownsideTotal Electric Vehicles Sold - Base Total Electric Vehicles Sold - Upside

Source:

28%32%

24%

41%

56%

49%

EV penetration rate by scenario

3%10%

13%11%

81%

71%

60%

Supply chains & cathode mix


China leads global capacity today, and will likely continue to do so for next decade

12

Total Lithium-ion battery megafactory capacity by region, 2030 (GWh)

North America

171

Global China Europe

2,582

1,862

452

2020 2025 2030

China will continue to dominate cell manufacturing with demand for European and US made cells out-stripping supply. This is especially the case for Tier 1 producers who may only have limited volumes available outside the large OEMs

How much raw material does a 30GWh LIB Megafactory consume?

13

30 GWh = 25,000 MT-LCE


Lithium

25,000 tonnes

Nickel

19,000 tonnes

Cobalt

6,000 tonnes

Graphite anode

33,000 tonnes

Raw materials becoming a higher proportion of cell costs

12.4%

10.1%

9.4%

4.6%

3.8% 4.1%

1.3%

22.4%

45.5%

11.7%

18.4%

2.0%

Capital Consumables

Energy

Labour

Real Estate/Shipping

Cathode

Anode

Electrolyte/Packaging

Lithium RemainderNickel Manganese Cobalt

Cathode54.3%

NCM 811 battery cell cost estimate; RHS chart is the cathode split out by its components

14

Cathode Cost Split by raw

materials and other costs

With solid state unlikely to meet mass commercialisation until the 2030’s we do not expect major changes to cost structure


And demand for Energy Storage is becoming more important

15

Today demand for LIB (Transportation – Energy Storage Systems - Portables) accounts for 55% of total Demand


Note: LTO - Lithium–titanate, LFP - Lithium iron phosphate, LMNO – Lithium Manganese Nickel Oxide, LMO - Lithium Manganese Oxide , NMC - Lithium Nickel Manganese Cobalt Oxide, NCA - Lithium Nickel Cobalt Aluminum Oxide, LCO - Lithium Cobalt Oxide

109

Total Cobalt demand

60

Battery demand

49

Other demand

‘000 tonnes

63%

31%

Electricvehicles

Portable devices

6%Stationary

grid storage

26%

15%

58%

LCO

NCA1%

LMNO

NCM

76%

24%

Cobalt containing

Non-cobaltcontaining

36%

16%10%

11%

8%

8%6%

6%

Super Alloys

Magnets

Hard Facing

Hard metalsCeramics/Colours

Catalysts

Others

Tyres, soaps, paint driers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

LCO NCA NCM 111 NCM 532 NCM 622 NCM 811 LMO LMNO LFP Other

Cathode evolution – next 10 years

16© Benchmark Mineral Intelligence 2020

NCM is and will continue to be the predominant chemistry for the next ten years

* Includes NCM 111, 532, 622 & 811

NCM 811

NCM 622

NCM 532

NCM 111

LFP

Investments in the Lithium-ion Battery Supply Chain


90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

2020 2021 2022 2023 2024 2025

Cobalt Demand Ex-Post Analysis

Pre-covid (Q1) Post-covid (Q2)

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

2020 2021 2022 2023 2024 2025

Cobalt Supply Ex-Post Analysis

Pre-covid (Q1) Post-covid (Q2)

Covid 19 Impact – dual effect on both Supply and Demand


Long –Term

disincentives

on

Investment

Short –Term

recovery of

new Demand

forecast

Demand quickly recovers, while the effect on project delays is long lasting

19

>$300bn committed

EV supply chains are complicated and need billions in investment

Investment in clean tech can also include processing, components, R&D and new technologies

ExtractionChemical

Processing

Cathode/Anode

Production

Cell

ManufacturingApplication

Li Co

C Ni

Lithium (spodumene/ brine

producers)

▪ 26 producers (up from

16 in 20261)

▪ 48 new projects in

pipeline

$130bn planned

Cell Megafactories

▪ 88 current producers

(up from 28 in 2016)

▪ 29 new plants

▪ 72 expansion projects

Full BEV light vehicle

producers

▪ 54 producers, up from

31 in 2015 and a

quadrupling of

production

$40bn required

Cathodes

Anodes

+

—

Cathodes

▪ 73 producers

▪ 11 new producers


Anodes

▪ 49 producers


$15bn required

Nickel Sulphate

▪ 36 producers


Lithium Chemical Plants

▪ 69 producers (up from

25 in 20161)

▪ Increasing to 114

$50-70bn required(split across lithium,

cobalt, nickel, manganese)

1. Excludes some small-scale Chinese producersSource: Benchmark Mineral Intelligence and RHO Motion

It takes much longer to build a lithium project than a battery or car plant –with the current pace, lithium shortages are expected

20

Unplanned

new supply

Example — Lithium chemicals Supply Demand balance

Mining

Chemical

Processing

Cathode

Production

Cell

Manufacturing

Application

5

3

2

1

5

4 763 510 2 8 25

3

5

8

2

Expected

Minimum

Approximate timeline to progress supply step

Source: Benchmark Mineral Intelligence Lithium Forecast

0

1,500,000

3,000,000

4,500,000

6,000,000

20

16

20

15

20

20

20

18

20

17

20

21

20

19

20

22

20

23

20

24

20

25

20

30

20

26

20

27

20

28

20

38

20

29

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

39

20

40

Total Demand

Secondary supply

Possible additonal tonnes

Probable additonal tonnes

Highly Probable additonal tonnes

Operational supply

0

500,000

1,000,000

Cobalt Market - I ’s si p p D S pp

21

Example — Cobalt chemicals Supply Demand balance

Mining

Chemical

Processing

Cathode

Production

Cell

Manufacturing

Application

5

3

2

1

5

2 8 250 1 3 4 5 6 7

5

3

2

8

Minimum

Expected

Approximate timeline to progress supply step

Source: Benchmark Mineral Intelligence Lithium Forecast

20

34

20

23

20

18

20

27

20

21

20

17

20

32

20

16

20

15

20

28

20

19

20

37

20

20

20

36

20

22

20

24

20

25

20

26

20

29

20

30

20

31

20

33

20

35

20

40

20

38

20

39

Possible additonal tonnes

Total Demand Probable additonal tonnes

Secondary supply

Operational supply

Highly Probable additonal tonnes

Unplanned

new supply

Market outlook


There is no one lithium price – 11 grades assessed


Supply

Demand

Supply & Demand

Location China

Contract Basis EXW, VAT Included

Currency RMB

Shipping port Domestic

Form Power

UOM Tonnes

Delivery window 30 days

Min size 5 tonnes

Max size 500 tonnes

Main suppliers China

Consumption (2017) 96,000 tonnes

Production (2017) 75,500 tonnes

Publication Final working day of the month,

4pm GMTLithium Carbonate

Formula Li2CO3 Li2CO3

Li2CO3 Content Min 99.5% Min 99.0%

Particle size <15 µm <40 µm

Common

impurities

Na<0.025%;

Mg<0.008%,

Ca<0.005%; Fe<0.001;

Si<0.003%

Na<0.15%;

SO4<0.35%;

Ca<0.04; CI<0.02

Key

Specification

Lithium Chemicals – price gap by market


(5,000)

-

5,000

10,000

15,000

20,000

25,000

30,000

Jan

-18

Fe

b-1

8

Ma

r-1

8

Ap

r-18

Ma

y-1

8

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Ma

r-1

9

Ap

r-19

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Ma

r-2

0

Ap

r-20

Ma

y-2

0

Li2CO3 BG Prices (US$/MT)

Difference Lithium Carbonate CIF Asia EXW China

Lithium Carbonate (CIF Asia, Min 99.0%) PriceMid

Lithium B-G Carbonate (EXW China) PriceMid

(5,000)

-

5,000

10,000

15,000

20,000

25,000

Jan

-18

Fe

b-1

8

Ma

r-1

8

Ap

r-18

Ma

y-1

8

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Ma

r-1

9

Ap

r-19

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Ma

r-2

0

Ap

r-20

Ma

y-2

0

LiOH BG Prices (US$/MT)

Difference Lithium Hydroxide CIF Asia - EXW China

Lithium Hydroxide (CIF Asia, Min 55.0%) PriceMid

Lithium Hydroxide (EXW CHina, Min 55.0%) PriceMid

Long-Term lithium supply – Price incentive


• Expansions have stalled at a critical stage in meeting 2022-onwards demand growth

• New entrants need to see economic incentives according to the energy storage sector

• Unitary CAPEX between US$ 20,000-30,000/MT:• Risk - Demand• Return of investment• Provision of capital (debt/equity)

Price Incentives

Cobalt - In the immediate term supply can meet demand, but without higher prices development horizon will not sustain this


2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Balance - Operational, highly probable

Balance - Operational, highly probable, probable

Average price

-

20,000

40,000

60,000

80,000

100,000

120,000

Jan

-18

Fe

b-1

8

Ma

r-1

8

Ap

r-18

Ma

y-1

8

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Ma

r-1

9

Ap

r-19

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Ma

r-2

0

Ap

r-20

Ma

y-2

0

Cobalt Price Indexes (US$/MT)

Co(OH)2 (CIF Asia, Min 20% PriceMid

CoSO4 (EXW China, Min 20.5% PriceMid

Co Metal (EXW Europe, Min 99.8%) PriceMid


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The future of Energy Storage: Cobalt and Lithium Markets ......EV sales forecast to reach 2.1% of...

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