Strategies for More Effective Critical Materials Use 3 December 2010 Trans-Atlantic Workshop on Rare Earth Elements and Other Critical Materials for a Clean Energy Future Peter C. Dent VP Business Development Electron Energy Corporation 924 Links Avenue, Landisville, PA 17538 www.electronenergy.com

Real World Views “The purpose of a business is to serve a customer” Peter F. Drucker “Effective” – “Do the Right Thing” Provide customer value Fulfill a need Better Performance Lower Cost Realistic expectations Solutions MUST make sense commercially Sustainable manufacturing & supply chains Environmentally responsible 4/15/2018 2

EEC’s Beginnings Marlin Walmer - innovator and pioneer in magnet materials Founded Electron Energy Corporation in 1970 First non-captured commercial Samarium Cobalt (SmCo) producer in the world Last US Rare Earth magnet producer (Samarium Cobalt or Neodymium Iron Boron - NdFeB) Marlin Walmer 1/11/29 – 12/12/99

About EEC Landisville, PA – 40,000 sq ft single site 118 employees Small Business One Modern Manufacturing Site Samarium Cobalt magnet producer ISO 9001:2000 Certified Compliance with DOD Domestic Preferences of Specialty Metals (DFARS 225.252-7003, 7008, 7009) Defense Directorate of Trade Controls Registered

Real World View of Magnet Materials Production Japan, US, European producers close plants, move production WW Total Market Size $7B 2010, $15B by 2020 NdFeB magnets 72% Alnico ½ SmCo 63% CHINA Rare Earth Oxide Ore production 97% Hard ferrites 66+ % Rare Earth pure Metals nearly 100% 4/15/2018 5/18/2010 IVEC 2010 5

Typical Manufacturing Process for Sintered Rare Earth Magnets – Labor is predominant cost Magnetizing & Testing Induction Melting or co-reduction Ball milling or Jet milling To m scales Sintering, Solution and Heat treatment ~ 200 - 500 m Crush into Pressing Grinding, lapping, honing, Or wire EDM Machining Raw Materials Sm, Co, Fe,Cu, Zr (SmCo) Nd, Pr, Dy, Fe, Co, B (NdFeB) Crushing

Criticality Matrix (US National Academies, 2008) -Increase use of periodic table of elements -Semiconductors- 24 plus new elements used in 2000 and beyond -11.3 Tons/year per person non-fuel minerals in USA, - ? T/yr developing world -New inventions -Changing demographics Criticality Matrix (US National Academies, 2008) This matrix was devised by the U.S. National Academies and published in 2008 in Minerals, Critical Minerals, and the U.S. Economy (2008). The matrix preceded by a detailed explanation of the conclusions from which it was created is (free) on the Internet at http://books.nap.edu/openbook.php?record_id=12034&page=165#p200140369960165001 4/15/2018

Magnet Sales Worldwide Market is growing due to automotive & more uses, miniaturization People pay lots more for better magnet performance ($5.4/kg Ferrite, $90/kg Nd) Smaller magnets make smaller less costly systems Lower systems costs will increase market “More electric” means more magnets Data courtesy of Webmagnetics.com

Material Usage Heavy Rare Earths (HRE’s) Light Rare Earths (LRE’s) Perspective 30 years ago? Mother nature’s gifts Unique properties Benefits vs. cost of replacement Light Rare Earths (LRE’s) Heavy Rare Earths (HRE’s) 5/18/2010 IVEC 2010 9 9 9

Global Metal Production 2008 - Record Year Item 2008 Mine Prod. (Metric Tonnes) Raw Steel 1,360,000,000 Uranium (2007) 41,279 Pig Iron 958,000,000 Lithium 27,400 Aluminum 39,700,000 Silver 20,900 Copper 15,700,000 Cadmium 20,800 Manganese 14,000,000 Bismuth 5,800 Zinc 11,300,000 Boron 4,100 Lead 3,800,000 Gold 2,330 Nickel 1,610,000 Selenium 1,590 Magnesium 808,000 Zirconium 1,360 Strontium Materials 512,000 Tantalum 815 Molybdenum 212,000 Yttrium (2001) 600 Antimony 165,000 Indium 568 Rare Earths (mixed, oxides) 124,000 Palladium 206 Cobalt 71,800 Platinum 200 Vanadium 60,000 Rhenium 45 Niobium (Columbium) Rhodium 30 Tungsten 54,000 Hafnium 25 -A steel world -Recycling effectiveness of large vs. small, mid size -expectations -Large users volume, mature recycle -Rare metals have high price and big incentives Courtesy: Jack Lifton 4/15/2018 10

Rare Earth Mineral Production China REE worldwide reserves 2 years ago over 50% today substantially less Reason, more discoveries 100 plus potential sites for REE’s discussed for development worldwide 5-6 new non-Chinese mining operations will likely be developed Lots of investment is flowing to major REE producers well funded Downstream supply chain needs Non-Chinese customers, OEM’s 4/15/2018 11

(Im)balance of Supply-Demand Forecast Global Demand for Individual Rare Earths in 2014 (±15%) (Im)balance of Supply-Demand - Air Products O2, N2 -steel -Reduce use of higher demand -Increase use of lower demand (Ce, Sm) – unsold material = cost, wildcard -Thorium? Rare Earth Oxide Demand Supply/Production   REO Tonnes % Lanthanum 51,050 28.40% 54,750 26.90% Cerium 65,750 36.50% 81,750 40.20% Praseodymium 7,900 4.40% 10,000 4.90% Neodymium 34,900 19.40% 33,000 16.30% Samarium 1,390 0.80% 4,000 2.00% Europium 840 0.50% 850 0.40% Gadolinium 2,300 1.30% 3,000 1.50% Terbium 590 0.30% 350 0.20% Dysprosium 2,040 1.10% 1,750 0.90% Erbium 940 1,000 Yttrium 12,100 6.70% 11,750 5.70% Ho-Tm-Yb-Lu 200 0.10% 1,300 Total 180,000 100% 203,500 100.00% Source: Dudley J Kingsnorth IMOCA 2009 4/15/2018 4/15/2018 IVEC 2010 12 12

Rare Earth Supply-Demand Source: Industrial Minerals Company of Australia 4/15/2018 13 13

Rare Earth Prices -Fe, Co, Tb, Ce, Au, Re price comparisons -REE price disparities ($3/kg-$500/kg pre July 8, 2010, $10-12/kg avg.) 4/15/2018 14

Core Issues What will be impact of new RE applications (wind power, Li vs. NiMH batteries, lighting, MCE refrigeration, To Be Invented) ? 1000’s of REE applications, how many can be helped? Who will make it to market profitably & sustainably grow over time? What will China do? –Wildcard factor, SEO’s Can private sector fix problems alone? 4/15/2018

REE Supply Core Strategies -Market Driven- Stockpile raw materials – price/availability disruptions Mitigate/Replace REE usage (short-medium term) Incremental Process improvements (Kaizen – Japan NdFeB) Better magnet technology (same flux with less material) => mitigate Hi electrical resistivity NdFeB, SmCo (DOE) Nanocomposites (NdFeB, SmCo) add 30% Fe New magnet systems (non REE) Leapfrog, disruptive technologies Develop / Adopt Recycling with ROI Develop applications for Ce, Sm, Pr and others in over supply – grow business Secure long term reliable, sustainable supply Develop & recruit people to innovate Engage with US government to affect appropriate REE policies Move from Studies => Resource Allocation & Action Multi faceted, balanced, realistic public policy approaches & expectations Be EFFECTIVE 4/15/2018 16

Questions www.electronenergy.com www.usmagnetmaterials.com Electron Energy Corporation 924 Links Avenue Landisville, PA 17538 (717) 898-2294 Peter C . Dent (717) 459-1001 direct (610) 349-5525 cell pcd@electronenergy.com www.electronenergy.com www.usmagnetmaterials.com 4/15/2018 17