Battery metals EV supply chain: key factors bottlenecking ramp-up over the next five years - Vault
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Battery metals EV supply chain: key factors bottlenecking ramp-up over the next five years 14 September 2022
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1
Introductions James Wellsted, Head of Investor relations & Corporate affairs
Programme
SFA(Oxford) introduction – Henk de Hoop
Battery basics – Lakshya Gupta
Power train and EV battery trends – Lakshya Gupta
Lithium – Lakshya Gupta
Sibanye-Stillwater
– Unique, global portfolio of green metals – James Wellsted
Q&A
3
SFA(Oxford) - Consulting analysts in tomorrow’s commodities and technologies Henk de Hoop, CEO
5
SFA’s client network
Long-term relationships with significant players across the mine to market supply chain
Confidential: SFA (Oxford)
Battery basics
Lakshya Gupta, SFA (Oxford)
Confidential: SFA (Oxford)
7
Disclaimer, copyright & intellectual property
SFA (Oxford) Limited has made all reasonable efforts to ensure that the sources of the information provided in this
document are reliable, and the data reproduced are accurate at the time of writing. The analysis and opinions set out in the
document constitute a judgment as of the date of the document and are subject to change without notice. Therefore, SFA
cannot warrant the accuracy and completeness of the data, and analysis, contained in this document. SFA cannot be held
responsible for any inadvertent occasional error, or lack of accuracy or correctness. SFA accepts no liability for any direct,
special, indirect, or consequential losses or damages, or any other losses or damages of whatsoever kind, resulting from
whatever cause through the use of, or reliance on, any information contained in the report. The material contained herein
has no regard to the specific investment objectives, financial situation or particular need of any specific recipient or
organisation. It is not to be construed as a solicitation, or an offer to buy or sell any commodities, securities or related
financial instruments. The recipient acknowledges that SFA is not authorised by the Financial Conduct Authority to give
investment advice. The report is not to be construed as advice to the recipient or any other person as to the merits of
entering into any particular investment. In taking any decision as to whether or not to make investments, the recipient
and/or any other person must have regard to all sources of information available to him. This report is being supplied to the
recipient only, on the basis that the recipient is reasonably believed to be such a person as is described in Article 19
(Investment professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005.
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No part of any report may be reproduced or distributed in any manner without the written permission of SFA. SFA
specifically prohibits the redistribution of this document, via the internet or otherwise, to non-professional or private
investors, and accepts no liability whatsoever for the actions of third parties in reliance on this report.
Confidential: SFA (Oxford)
8
Battery 101
Lithium-ion has become the industry standard
• Lithium-ion batteries have the highest potential performance • Performance is determined by composition of cell components.
relative to other commercial rechargeable batteries. • Ions move through the separator during normal operation, between the
• Required in BEVs to have acceptable performance, based on two electrodes of the cell.
consumer expectations from ICE cars.
Confidential: SFA (Oxford) Source: SFA (Oxford)
9
EV battery chemistries
Cathode metals make up bulk of battery bill of materials
2021
Battery pack commodity Contained value in one tonne of cells
component Commodity price NMC111 NMC532 NMC622 NMC811 NCA LFP
Casing Steel $849/t $127 $127 $127 $127 $127 $127
Current selector Aluminium $2,476/t $124 $124 $124 $124 $124 $124
Copper $9,318/t $652 $652 $652 $652 $652 $652
Anode Graphite $2,472/t $447 $447 $447 $447 $447 $447
Cathode Lithium $14,162/t $326 $326 $326 $326 $326 $198
Nickel $18,459/t $1,200 $1,791 $2,141 $2,843 $2,880 -
Cobalt $51,393/t $3,341 $2,004 $2,004 $976 $1,490 -
Manganese $3,934/t $240 $216 $142 $71 - -
Aluminum $2,476/t - - - - $10 -
Iron $259/t - - - - - $29
Total value $6,457 $5,687 $5,963 $5,566 $6,056 $1,577
Source: SFA (Oxford), Bloomberg.
Confidential: SFA (Oxford) Note: 2021 average prices are used to avoid distortions from steep price rises in 2022.Powertrain and EV battery trends
Lakshya Gupta, SFA (Oxford)
Confidential: SFA (Oxford)11
BEV light-vehicle production revisions
BEV outlook more than doubled globally within two years
Global BEV production forecasts 2026 BEV forecast revisions by region
million units m units
20 20.0
18 Q1'22 2026 production forecast up
Q4'21 120% in two years (+10m units)
19.5
16 Q3'21 19.3
Q2'21
14 Q1'21
19.0
Q4'20
12 Q3'20
18.6
Q2'20
10 18.5
Q1'20
8
18.0
6
4
17.5
2
0 17.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Q1'22 North Western China RoW Q2'22
forecast America Europe forecast
• BEV production appear to be weathering the global component supply disruptions better than ICE vehicle production.
• Most recent upgrades driven by North America, as multiple OEMs commit to upgrading production footprint in the region. This has since been further
accelerated by the passing of the Inflation Reduction Act.
Confidential: SFA (Oxford) Source: SFA (Oxford), GlobalData12
Global BEV sales: H1’22
Strong consumer demand for EVs globally
Light-duty vehicle sales: H1'22 BEV sales excl. China: H1'22
Year-on-year change, % Total BEV '000 units
USA
Global-15 -10%
77%
China -2% Germany
100%
USA -18% UK
62%
Germany France
UK
South Korea
France BEV sales
Sweden m units
South Korea
Netherlands
Sweden
Netherlands Canada
Global 3.1
Canada Italy
Italy Belgium
Belgium
Japan
China 1.9
Japan
Spain
Spain
Australia
Australia 0 1 2 3 4
Poland Poland
-40% -20% 0% 20% 40% 60% 80% 100% 120% 0 50 100 150 200 250 300 350 400
• BEV sales in China doubled in H1’22, capturing 61% of global sales over the period.
• Almost all of the top 15 EV markets registered positive year-on-year growth in BEV sales, despite declining overall vehicle sales.
Confidential: SFA (Oxford) Source: SFA (Oxford), EV-Volumes13
Commodity price impact
Are EV sales inelastic to raw material prices?
Global BEV sales Cathode active material bill of materials
'000 units Indexed, Jan 2021 = 100
800 250
2022 CAM
price
700
200 So far in 2022, EV sales have appeared inelastic to battery metal prices. This
600 could be due to a number of factors:
• Strong demand pull
500 • OEMs not passing on rising production costs
2022 BEV 150
sales 2021 CAM • Boost in EV demand as a result pent-up savings post Covid
price (rhs)
400
• OEMs prioritising EV production during chip shortages
100 Reality is likely a combination of these but weighted towards the first two
300 2021
BEV points as…
sales
… the latter two do not justify EVs outperforming the rest of the automotive
200 sector.
50
100
0 0
Jan Feb Mar Apr May Jun
Confidential: SFA (Oxford) Source: SFA (Oxford), Bloomberg, EV-VolumesLithium – The ubiquitous battery metal
Lakshya Gupta, SFA (Oxford)
Confidential: SFA (Oxford)15
Market summary
Prices may have peaked; set to stabilise at historically high levels
Lithium supply-demand balance
LCE kt
$/t
88 65,500
100
47 54
36
8 10 10 16
60,000
0
-68 -8
-100 -59 50,000
Current balance
-195 -139
Incl. probable projects
-200 -178
37,000 40,000
Incl. low risk possible
-300 Li₂CO₃ price (rhs)
-308 30,000
-401
-400
18,645 26,000
20,000
-500
-615 10,000
-600
6,383
-700 0
2020 2021 2022 2023 2024 2025 2026
• Prices may have peaked, but they remain at extremely high levels for both lithium carbonate (Li2CO3) and lithium hydroxide (LiOH).
• The lithium market is forecast to move to mounting deficits from next year onwards, but supply from ‘probable’ and ‘low-risk possible’ projects could
potentially keep the market balanced through to 2025.
• Prices are likely to reach a floor in 2024, before starting to rise to incentivise higher-risk projects.
Confidential: SFA (Oxford) Source: SFA (Oxford), Bloomberg.16
Production costs
Very healthy margins in 2022; high royalties for Chilean operations
Operating costs excl. royalties: 2022 Operating costs incl. royalties: 2022
US$/t LCE US$/t LCE
Quartile 1 Quartile 2 Quartile 3 Quartile 4 Quartile 1 Quartile 2 Quartile 3 Quartile 4
10,000 30,000
Hard rock 2022F Li2CO3 price: $65,500/t Hard rock 2022F Li2CO3 price: $65,500/t
Brine Brine
25,000
8,000
20,000 Royalties up to 36%
6,000
15,000
4,000
10,000
2,000
5,000
Chile Chile Australia Australia Australia Chile
0 0
Production (LCE tonnes) Production (LCE tonnes)
Argentina Argentina
Confidential: SFA (Oxford) Source: SFA (Oxford)17
Lithium supply vs. demand
Supply stagnates as BEV demand proliferates
Lithium supply Lithium demand
LCE kt LCE kt
Probable
projects 512 2021 465
Low-risk
possible
projects 654 2022 647
Medium-risk
possible
projects 750 2023 818 +24.8% p.a.
804 2024 999
813 2025 1,214
1,707 1,231 1,101 794 +282 kt 2026 +944 kt BEVs = 73% of growth 1,409
Australia Chile Argentina Japan USA W. Europe China
+159 kt +98 kt +24 kt +59 kt +104 kt +216 kt +351 kt
Greenbushes +69 kt Carmen +62 kt Olaroz +21 kt +40 kt BEVs +83 kt BEVs +179 kt BEVs +276 kt BEVs
Wodgina +56 kt La Negra +37 kt +19 kt MHEVs +31 kt PHEVs
Pilgangoora +29 kt +21 kt HDEVs
Mt. Marion +26 kt
Mt. Cattlin -20 kt
Source: SFA (Oxford). Note: Regional demand figures exclude non-automotive
Confidential: SFA (Oxford) battery demand. Chart figures may not sum owing to independent rounding.18
Battery recycling
Rapidly growing but does not displace requirements from new mines
Cathode metal value contained in scrapped BEVs (global)
US$ bn, 2021 avg. commodity prices
6
5.4
5
Lithium
3.9
4
Nickel
3 2.6
Cobalt
1.7
2
1.1
1 0.67
0.39
0.11 0.21
0.02 0.05
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Scrapped LiBs by source - Europe
GWh EoL EVs
120 Gigafactory scrap
100
80
60
40
20
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Confidential: SFA (Oxford) Source: SFA (Oxford), Bloomberg19
The fallout
Project execution risks could jeopardise 15 million BEVs (48%) in 2030
Lithium demand vs. supply in 2030 incl. projects
LCE kt
2% 6%
16%
High risk 20%
2,000 possible 6% 16%
Potential supply Higher 20% Potential supply
Higher risk supply by project type risk by deposit type
≈15.4 million 49% 2030 supply 2030
Medium risk 51%
BEVs
possible 58%
Projects
32 million BEVs in 2030
1,500 98% 58%
BEVs
Low risk possible Expansions & restarts Brine (continental) Hard rock (spodumene)
Lower risk supply
≈11.2 million Projects Higher risk Hard rock (other) Brine (geothermal)
BEVs
Probable
1,000
Recycling
35%
45% Potential supply Lower Potential supply
by project type risk by deposit type
2030 55% supply 2030
500
Hybrids Mainly fulfils
Existing 65%
hybrids and
mines
other demand
Other
0
Demand Supply
Source: SFA (Oxford).
Note: Other hard rock deposits include lepidolite,
Confidential: SFA (Oxford) petalite, zinnwaldite, and various clay minerals.20
Conclusion
EV trends
• BEV sales continue to surprise to the upside, despite significant macro and logistical headwinds
• Important to appreciate regional differences in fleet penetration
• OEMs keep upgrading EV production targets, committing large sums of capital to transition to EVs
• Governments continue to influence consumers through a carrot and stick approach
Lithium markets
• Incoming structural impediments could slow growth rates from mid-decade
• Significant execution risk perceived in lithium project pipeline
• Total potential impact of roughly 15m BEVs by 2030
• This could provide a longer tail to cleaner ICE cars, and hence PGM demand, in the 2nd half of the decade
Confidential: SFA (Oxford)Sibanye-Stillwater – Unique, global portfolio of green metals James Wellsted
Sibanye-Stillwater – diverse commodity portfolio across five continents Listings JSE Limited share ticker: SSW NYSE ADR ticker: SBSW Market cap R153bn / US$10bn1 Precious metal output in 2021 3.6Moz 6E PGMs and 1.07Moz gold A diverse portfolio of mining and processing operations and projects and investments across five continents Source: Company information 22 Notes: 1. Rounded up as per close on 29 April 2022
Considered, deliberate progress on battery metals strategy
• Geographical and commodity diversification creates a more robust and sustainable business
2021 – New Century
(tailings retreatment)
2021 – Rhyolite-Ridge Project (Li)
2021 – Sandouville (Ni) 3 28 27 25
2021 – Keliber (LiOH) Li
Lithium
Ni Co Mn
Nickel Cobalt Manganese
2 years 2019 – SFA (Oxford)
92 29
planning Green metals 4 Recycling U
Uranium
Cu
Copper
Tailings
retreatment
Growth
PGM 46 78 45
Recycling Pd Pt Rh
2 years 2017 Palladium Platinum Rhodium
Stillwater
planning 3 2019
US PGMs Lonmin
46 78 45 77 44
SA PGMs 2
2016
Aquarius
2016
Rustenburg
Pd
Palladium
Pt
Platinum
Rh
Rhodium
Ir
Iridium
Ru
Ruthenium
Tailings
retreatment
SA
gold 2013 2018 2020
2013 DRDGOLD
Cooke DRDGOLD 92 79
1
Wits Gold
U
Uranium
Au Gold
Tailings
retreatment
Time
Our value creation benefits all stakeholders in multiple jurisdictions
Source: Company information
23Securing our value position in unique Keliber lithium project
Keliber is an advanced Lithium Hydroxide project in Finland
• Aiming to be the 1st fully integrated European lithium producer with direct
access to the European BEV market
• Investment to date and estimated funding
- Investment to date of €176m for our 50%+1 shareholding in Keliber
- Maximum amount to buy out minorities to increase shareholding from 50%+1 ~>80% is
estimated at €196m - to be completed by Oct 2022
- Finnish Minerals Group considering to retain ~20%
Syvajarvi mining area
- Sibanye-Stillwater to underwrite a further €104m equity raise
- Post these investments Keliber would have raised €250m in equity and will then
raise minimum of €250m of debt to ensure the project is fully funded
• Definitive feasibility study (DFS) and 31% increase in ore reserves confirms
quality and value
• Continued improvement in lithium market outlook
• Permit approvals progressing well with the Kokkola Processing plant
environmental permit granted
Planned Kokkola lithium chemical plant
Enhancing our green metals footprint in Europe
24Positioning for value – supplying critical metals into key regional ecosystems
SANDOUVILLE (Nickel refinery in France)
Acquired 100% on 4 Feb 2022 for €85m. Ramping up nickel products & cobalt
production
Prime location- Europe’s industrial heart - Le Havre, France’s 2nd largest industrial port
Planned scoping studies for Nickel sulphate, PGM autocat recycling and battery metals
recycling facilities subject to feasibility studies
RHYOLITE RIDGE (strategic lithium project in the US)
Post granting of permits and conditions precedent - will acquire a 50% interest in project –
7.1% share in ioneer acquired in Oct 2021 for US$70m
Boric acid credits position project as first quartile cost producer
Offtakes secured – Ford (5-year from 2025 - 35% of production) & South Korean battery
maker Eco
Unique global portfolio of green metals
25Strategically well placed for future scenarios
✓ Positive fundamental outlook for battery metals – strong demand pull & supply challenges 3. STRATEGIC DIFFERENTIATORS
✓ PGM business well placed for extended ICE cycle and developing hydrogen economy
Recognised as a force for good
✓ Green metals portfolio positioned for supply of critical metals into chosen regional supply
chains
Unique global portfolio of green
✓ Establishing key partnerships and investments in strategic ecosystems to further our impact metals and energy solutions
that reverse climate change
as a force for good
✓ Unique, diversified portfolio ensures balance & risk mitigation and solid financial position
Inclusive, diverse and bionic
provides significant optionality
Instrumental in building
pandemic-resilient ecosystems
26Questions? Email: ir@sibanyestillwater.com James Wellsted +27(0)83 453 4014 Henrika Ninham +27(0)72 448 5910 Tickers: JSE: SSW and NYSE: SBSW Chris Law +44(0)792 312 6200 Website: www.sibanyestillwater.com
Appendix
Nickel & Cobalt Confidential: SFA (Oxford)
30
Nickel market summary
Surging supply to keep nickel price subdued
Nickel supply-demand balance
• The nickel market is predicted to return to surplus this year (258 kt). kt $/t
Outlook
350 30,000
• Refined nickel production is forecast to rise by 18% to 3.1 mt this year, lifted by 319
rapid expansion of NPI and HPAL production in Indonesia.
300
• The pressure on class 1 nickel is easing. 258 252
250 25,000
• Net nickel demand is forecast to expand by 4% to 2.9 mt in 2022. 222
200
• SFA forecasts an average price of $25,000/t in 2022.
146
• The price risks are to the downside as the economic outlook has deteriorated. 150 20,000
100
50 15,000
27
0
-50 10,000
-100
-116 Refined balance Price (rhs)
-150 5,000
2020 2021 2022 2023 2024 2025 2026
Source: SFA (Oxford), Bloomberg.
Confidential: SFA (Oxford) Note: Balances exclude supply from probable and possible projects.31
Cobalt market summary
Surplus market in 2022 as supply response arrives
Cobalt supply-demand balance
• The cobalt market is predicted to shift to a 7 kt surplus this year, as supply growth kt $/t
outpaces demand. Outlook
20 80,000
• Automotive battery demand continues to increase rapidly, adding 28 kt (+60%) 12
10 7
this year to 75 kt (65 kt from BEVs). 70,000
0
• The market is projected to slip back into deficit in 2023.
-4 60,000
-10
• The price is forecast to average $66,750/t in 2022. -8
• The risk of recession in Europe or the US adds some potential demand downside. -20 50,000
-25
• Price risks are to the downside owing to inflationary pressures and slowing economic -30
growth. 40,000
-40
-50 30,000
-51
-60
20,000
-70
Balance
10,000
-80
-79
Price (rhs)
-90 0
2020 2021 2022 2023 2024 2025 2026
Source: SFA (Oxford), Bloomberg.
Confidential: SFA (Oxford) Note: Balances exclude supply from probable and possible projects.You can also read
