2
▪ Introduction of XENOPS Chemicals
▪ Global facts and figures
▪ Focus on China – trade statistics and future trends
▪ Pricing and outlook
▪ “European” supply alternative
Agenda
3
Our core business
Customer specific sourcing of critical raw materials for Life-Science industries
5
▪ Introduction of XENOPS Chemicals
▪ Global facts and figures
▪ Focus on China – trade statistics and future trends
▪ Pricing and outlook
▪ “European” supply alternative
Agenda
6
Fluorspar conference 2019Hot topics to be discussed
▪ China: reduced exports, consuming market hub
▪ Emergence of new sources: Africa, Canada, Mongolia
▪ Squeeze on mineral supply for global markets; recession alleviates this
▪ “Acidspar spot prices on record high”
▪ “Ever-tightening supply”
7
Fluorspar conference 2009Look 10 years back – any lessons learned?
▪ China: reduced exports, consuming market hub
▪ Emergence of new sources: Africa, Canada, Mongolia
▪ Squeeze on mineral supply for global markets; recession alleviates this
▪ “Acidspar spot prices on record high”
▪ “Ever-tightening supply”
8
Presentations at Fluorspar 2009”Interesting times for fluorspar – here to stay”
▪ “An overview of the acidspar supply/demand balance”
▪ “Trends in aluminium & steel – implications for fluorspar”
▪ “Case study of Sephaku’s Dinokeng Fluorspar Project”
▪ “Newfoundland project - in production in three years”
▪ “Fluorspar production status & developments in Mongolia”
▪ “Trade protectionism & the likely impact of the WTO challenge by the EU & USA”
9
Fluorspar production in 2018China and Mexico were the dominating producers
China61%
Mexico19%
South Africa4%
Mongolia4%
Vietnam4%
Spain3%
Others5% Others include:
▪ Morocco▪ Germany▪ Thailand▪ UK▪ Canada▪ Iran▪ Pakistan▪ Brazil▪ Argentina
Global production of fluorspar in 20186 mtons
10
Global production of fluorspar in 20186 mtons
Fluorspar production in 2018Constant ratio of metspar and acidspar over the years
40% Metspar (CaF2 <97%)= 2.4 Mio. tons
60% Acidspar (CaF2 >97%)= 3.6 Mio. tons
11
35% = 1.26 Mio. tonsfor aluminum trifluoride
via hydrofluoric acid
60% = 2.16 Mio. tonsfor fluorocarbons
via hydrofluoric acid
Acidspar consumption in 2018Production of hydrofluoric acid was the biggest segment
5% = 0.18 Mio. tonsfor fluxes, glassmaking,
welding rods
Global production of acidspar in 20183.6 mtons
12
Acidspar global exports in 2018Mexico was the dominant exporter
506
275
217203
87 8772
Mexico Vietnam South Africa China Mongolia Spain Others
ktons/year
▪ Global exports of acidspar in 2018 at 1.45 Mio. tons
▪ 40% of the global acidsparproduction was exported
* *min. 97% CaF2?
1 many1 1 many 1 many Number of companies
13
▪ Global imports of acidspar in 2018 at 1.44 Mio. tons
Acidspar global imports in 2018The main importers were USA, Italy, India and Germany
374
216201
158
86 86 8672
58
101
USA Italy India Germany UAE China Japan Canada Tunisia Others
ktons/year
* *Netherlands 87 ktons
14
Metspar global exports in 2018Mongolia and Mexico were the dominant exporters
ktons/year
▪ Global exports of metspar in 2018 at 1.40 Mio. tons
▪ Nearly 60% of the global metsparproduction was exported
462
378
196
7056
4228 28
140
Mongolia Mexico China Italy Morocco Thailand Iran Pakistan Others
15
▪ Global imports of metspar in 2018 at 1.34 Mio. tons
▪ Fragmented market
Metspar global imports in 2018China was the main importer
ktons/year416
201
9480
67 6754
4027
295
China Russia Turkey USA Japan SouthKorea
India Indonesia Finland Others
17
Rebranding of Mexichem“We’re no longer Mexi, and we are no longer Chem”
Union Trademark 018090396Application under examination Application day: Jul. 4, 2019
Union Trademark 018105541 Application published Application day: Aug. 8, 2019
“… To quote Max Planck, the renowned physicist: “When you change the way you look at things, the things you look at change.”
So in order to change as a company, we’re changing how we look at things. Our ImpactMark will be updated every year with our performance. Its three loops indicate the past three years. As we do better, the lines will progress outward...”
19
Rebranding of MexichemMexichem Fluor becomes Koura
Mexichen reporting structure: 3 business groups
Mexichem Fluor Business Group sales 2018▪ 837 Mio.USD▪ + 23% compared to 2017▪ 12% of Mexichem sales
Mexichem Fluor Business Group EBITDA 2018▪ 362 Mio.USD▪ + 40% compared to 2017▪ EBITDA margin of 43%▪ 26% of Mexichem EBITDA
20
▪ Introduction of XENOPS Chemicals
▪ Global facts and figures
▪ Focus on China – trade statistics and future trends
▪ Pricing and outlook
▪ “European” supply alternative
Agenda
21
China’s impact on the fluorine value chainWhy is China so important for the global fluorochemical industry?
▪ Largest producer & consumer of acidspar in the world
▪ Largest producer & consumer of hydrofluoric acid in the world
▪ Largest producer & consumer of fluorocarbons in the world
▪ Largest producer & consumer of aluminum trifluoride in the world
22
Fluorspar consumption in China in 2018Total consumption is approx. 4 mtons/year
1,49
2,55
3,25 3,35
3,763,90
4,12
3,65
2011 2012 2013 2014 2015 2016 2017 2018
mtons/year
23
Fluorspar consumption in China in 2018China became a net-importer of fluorspar last year
Import Export Trade balance
500
1.000
1.500
(500)
(1.000)
(1.500)
ktons/year
Trade flows in 2018:
▪ Total imports: 511 ktons
▪ Total exports: 403 ktons
▪ Net-import: 108 ktons
24
Chinese acidspar trade in 2018China is a net-exporter of acidspar
Total acidspar exports: 202 ktons Total acidspar imports: 91 ktons
30.633
21.89819.944
9.378
6.954
2.10538
Mexico South Africa Myanmar Vietnam Mongolia Morocco Others
57.379
50.896
39.279
23.076
17.300
10.350
3.668
India Japan Netherlands Germany SouthKorea
Canada Others
Exports in tons Imports in tons
25
Chinese metspar trade in 2018Import volume is more than twice as much as export volume
Total metspar exports: 201 ktons Total metspar imports: 420 ktons
340.089
49.11615.949 6.912 5.910 881 443 225
Exports in tons Imports in tons
46.451
36.99333.879
25.976
18.957
13.214
4.454 4.124 3.008 2.933 2.210
8.670
26
Chinese fluorspar trade in 2018The annual update…
▪ China exported same amounts of acidspar and metspar in 2018
▪ China imported 4,6 times more metspar than acidspar in 2018
▪ China is a net-importer of metspar, but not a net-importer of acidspar yet
[ktons] Acidspar Metspar Total
Exports 202 201 403
Imports 91 420 511
Balance +111 -219 108
27
Chinese acidspar trade in 2019/1-6More imports from Myanmar
Total acidspar exports: 98 ktons Total acidspar imports: 32 ktons
16.327
7.257
4.551
3.126
Myanmar Mongolia Mexico Others
Imports in tons34.847
19.957
16.574
9.187
5.381 4.436 4.5542.560
Exports in tons
28
Chinese metspar trade 2019/1-6Mongolia continues to be the major origin of metspar imports
Total metspar exports: 90 ktons Total metspar imports: 199 ktons
Imports in tons
173.831
8.190 4.913 3.831 2.852 1.575 1.217 2.364
Exports in tons
31.071
17.117
12.61910.510
8.819
4.380 5.192
29
World fluorspar reserves in 2018The Chinese “dilemma”
Mexico21%
China13%
South Africa13%
Mongolia7%
Vietnam2%
Spain2%
Others42%
▪ China consumes approx. 67% (4 mtons) of the global fluorspar production
▪ China has only 13% (40 mtons*) of the global fluorspar reserves
310mtons
*Chinese sources indicate a proven reserve of 242 mtons
30
China’s strategy to secure fluorspar supplyCharacteristics of Chinese fluorspar deposits
(1)Resource-rich, but low-level of explorationAs of 2018, China has 250 million tons of fluorite, the real development value is about 100 million tons, the basic reserves is about 45 million tons(2)Concentration of depositsFluorite deposits are distributed in 27 provinces, but mainly concentrated in Inner Mongolia, Zhejiang, Jiangxi, Fujian, Hunan provinces(3)More single-type fluorite deposits than associated depositsBy the end of 2011, there were 701 single-type fluorite mines (57.2% of the total resources), and 42 associated fluorite mines (42.8%).(4)Single-type fluorite: less rich oreAverage CaF2 grade of single fluorite ore is 35% to 40%, grades greater than 65% accounts for 20%, CaF2 grade greater than 80% less than 10%.(5)Low content of CaF2 in the associated fluorite mine The content is below 26%, mainly in Hunan and Yunnan. Mainly tungsten, tin, lead and zinc ore, iron associated with fluorite ore, low utilization.(6)Ratio of exploitation and reserve is lower than the international averageChina's fluorite resources are rich, accounting for about 14% of the global reserves, but China's fluorite production is as high as 60% of the world, the storage ratio is unbalanced.
31
China’s strategy to secure fluorspar supplyWhat might China consider to secure the fluorine value chain?
▪ January 2019: the National Geological Survey Work Conference was held in Beijing: „… Global demand for fluorspar will continue to increase substantially, which will stimulate geological exploration… The surrounding countries Mongolia and Thailand are also the preferred target areas for geological exploration cooperation…“
▪ Investments in foreign countries to secure raw material supply
▪ Pakistan, Thailand, Myanmar and Zambia are new countries for fluorspar production, reflecting that these countries are currently hotspots for fluorspar investments
32
Chinese fluorspar imports from MongoliaOnly minor imports of “real” acidspar
tons/year
“Alternative facts” for 2018:
▪ Imports of acidspar: 87 ktons
▪ Imports of metspar: 287 ktons
▪ Mongolian trade data: total acidspar exports 165 ktons
0 6.954 7.527
131.451
340.089
173.831
2017 2018 2019/1-6
Imports of acidspar
Imports of metspar
33
Chinese acidspar imports from MongoliaImports started middle of 2018
▪ Imports in 2018: 6.954 tons
▪ Imports in 2019/1-6: 7.527 tons
tons/month
Probably to Europevia China
Acidspar
34
Chinese metspar imports from MongoliaSeasonal effects are clearly visible
▪ Imports in 2018: 340.089 tons
▪ Imports in 2019/1-6: 173.831 tons
tons/month
Metspar
35
Chinese fluorspar imports from MongoliaWhy is so much more metspar than acidspar imported?
▪ Most of the “acidspar” has a CaF2 content lower than 97% → metspar (HS 252921)
▪ Imports into China are subject to taxes and duties:
▪ Value added tax: 17% → 16% (May 2018) → 13% (April 2019)▪ Consumption tax: nil▪ Custom duties: MFN duty rate is 3%
→ metspar at 1,5% (Asia Pacific Trade Agreement)
▪ Metspar can be everything with a CaF2 content lower than 97%: powder, lumps, briquettes, ore etc.
▪ We believe a significant volume of the imported metspar is used (directly or after further enrichment) for HF-production in China
36
Mongolian fluorspar exportsIs Mongolia the “new China” for fluorspar exports out of Asia?
▪ Mongolia's fluorite production rebounded in 2018 and 2019
▪ China is the largest export market for Mongolian fluorspar, followed by Russia
▪ The Mongolian government believes that mining investment is the main driving force for the country's economic growth
▪ In the past decade, the political situation has changed frequently, which has complicated the domestic investment environment, and resource nationalism has also risen in recent years
▪ Even in the case of political instability, Mongolia and China still maintain a positive cooperative relationship and are committed to maintaining close political and economic ties
37
Mongolian fluorspar exportsIs Mongolia the “new China” for fluorspar exports out of Asia?
Resource of fluorspar
Favorable mining policy & support by authorities
Currently approx. 20 fluorspar processing plants in operation – more projects to come
Quality: most of current production is not “real” acidspar
Infrastructure: lack of reliable railway system
Climate: seasonal production / transportation due to cold winters
Russia and China: huge markets in the backyard – no need to export to other countries,
prices in China probably highest in the world
-
+
+
-
-
+
-
38
New Mongolian fluorspar projectsIs Mongolia the “new China” for fluorspar exports out of Asia?
▪ The Mineral Resources and Petroleum Authority announced that five new fluorspar projects with approved feasibility study will be launched in 2019
▪ Two projects will be in Dornogovi Province, others in Dundgovi, Sukhbaatar and Khentii provinces
▪ The Association of Mongolian Fluorspar Miners proposed exporting fluorspar through a general terminal
▪ The Mandal-Ovoo fluorite deposit hasn’t been mined despite completing its feasibility three years ago
▪ Berk Uhl JSC recently discontinued its operations at the Delgerkhaan deposit due to issues caused by lack of infrastructure
39
Status of Chinese fluorsparChinese fluorspar is “disconnected” from global markets
▪ China’s role in the global fluorspar market changed significantly
▪ China became a net-importer of metspar, and a net-exporter of acidspar of just 100 ktons/year
▪ Can you still get a 98% CaF2 quality, with SiO2 < 1% and CaCO3 < 1% from China?
▪ Chinese fluorspar doesn’t have a major impact on global markets anymore
▪ Mongolia won’t continue China’s previous role being the leading exporter to global markets
“China is losing its fluorspar advantage slowly”- Chinese fluorspar trader -
40
▪ Introduction of XENOPS Chemicals
▪ Global facts and figures
▪ Focus on China – trade statistics and future trends
▪ Pricing and outlook
▪ “European” supply alternative
Agenda
41
Pricing setting of fluorsparWhat is the mechanism considering China’s new role?
Highest price in 2019 – until today: 665 $/dmt CIF Europe for 90% CaF2
1,000 $/dmtfor acidspar ?
42
Price setting of fluorsparPricing of acidspar in China
▪ There are only a few large-scale fluorite mining enterprises, for example:
▪ Jinshi Resources Group Co., Ltd.▪ Zhejiang Wuyi Shenlong Flotation Co., Ltd.▪ Sinochem Blue Sky Group Co., Ltd.▪ Inner Mongolia Huasheng Fluorite Mining Co., Ltd.
▪ China implemented a weekly price determination
▪ Fluorite commodity index → how reliable?
▪ Due to the changed role of Chinese fluorspar for global markets, China can’t be the reference for price setting anymore
43
Price setting of fluorsparWho has the power to determine prices?
▪ A price setter is a company (or organization) that's powerful enough to set the market price that they can charge customers with
▪ The greater the market share that company has, the more market power in setting prices it has
▪ Factors: product differentiation (quality), low-cost production, volume, place and condition of the market
44
OutlookSupply & Demand balance
Supply
▪ Overall, the fluorspar market remains tight, even when the new producers are running at nameplate capacity next year
▪ There are new projects, but it is not clear when they will start commercial production
▪ Plan B: sell to China
Demand
▪ Biggest threat: trade war & Brexit → global recession
45
OutlookThe transatlantic cheese war
▪ The US is allowed to impose punitive tariffs on imports of $7.5 billion for Airbus' illegal subsidies
▪ On October 18, the surcharges came into force: 10 percent on aircraft, 25 percent on agricultural and industrial goods
▪ The transatlantic aviation-subsidy war, which has lasted 15 years, is far from over
▪ Next, the WTO will determine the extent to which the EU may impose tariffs on America for its aid to Boeing
▪ The fact that the Trump administration made its first victory is simply because the Europeans did complain later
▪ Brussels has a retaliatory list for US products worth $12 billion in the drawer
"I always liked American wines rather than French - even if I do not drink wine. I just like what
they look like"
46
▪ Introduction of XENOPS Chemicals
▪ Global facts and figures
▪ Focus on China – trade statistics and future trends
▪ Pricing and outlook
▪ “European” supply alternative
Agenda
47
Opportunity to fill the supply gapChina situation favors developments of sources outside of China
▪ The trend of increasing fluorspar consumption within China, combined with less domestic production favor development of fluorspar sources outside of China
▪ However, it takes 10 years or more to put a new fluorspar mine into operation
▪ Recent loss in global acidspar output approximately at 800 ktons/year; demand for acidspar is expected to be at 2.5% CAGR until 2025
▪ The tight fluorspar supply situation in China is exacerbated by the later-than-scheduled arrival of new supply from Canada and South Africa
▪ In this tight supply situation, we are pleased to introduce a new alternative source for acidspar, especially for customers in Europe and the Mediterranean
48
New acidspar source for European marketsGujarat Fluorochemicals subsidiary to expand in Morocco
▪ GFL GM Fluorspar SA, a subsidiary of Gujarat Fluorochemicals Ltd., India, is to expand production capacity of acidspar at its Taourirt operation in Morocco
▪ The mine and beneficiation plant have been operational since 2018 with a capacity of 40.000 tpa acidspar, which is now planned to be increased to 60.000 tpa, expected to be complete by Q2 2020
49
New acidspar source for European marketsGujarat Fluorochemicals subsidiary to expand in Morocco
▪ Strategic location of the mine in the north-east of Morocco
▪ Distance of only 95km north to the port of Nador
▪ Max. seven days shipping time to the main ports in Europe
▪ Supply will be targeted primarily, but not only to customers in Europe and the Mediterranean
▪ Second biggest “European” acidsparproducer after Spain
50
New acidspar source for European marketsGujarat Fluorochemicals subsidiary to expand in Morocco
▪ The acidspar has very low content of arsenic, iron and phosphorous
▪ Quality fully approved by customers
▪ Regular shipments to customers
51
New acidspar source for European marketsGujarat Fluorochemicals subsidiary to expand in Morocco
▪ GFL, part of the multi-billion INOX Group of Companies, is India’s largest poly-tetrafluoroethylene (PTFE) producer with hi-tech state of the art technology plants at Dahej, Gujarat
▪ GFL has appointed XENOPS Chemicals, Germany, as marketing and sales agent