Li $ LG Chem of South Korea FDI in Bolivia’s Lithium Industry LG Chem Global Strategy Team Scott He Harvey Hong Arash Parham Kenneth Turner

Li $ Executive Outline  LG Chem Company Overview & Global Strategy  Lithium Opportunity  Risks & Challenges  Proposed FDI Project  Go/No Go Decision

Li $ The LG Chem Company Company Highlights Former LG Group Chem Division Publicly traded (Korean Stock Exch.) 2 primary segments – IEM and Petrochemicals 13,000 employees worldwide 2008 Net Income KRW 1 trillion Key recent partnerships Lithium Battery supplier for: - GM (fuel cells) - Hyundai-Kia - Volvo

Li $ Global Strategy Vertical integration Hedging against future price increase of lithium carbonate Lithium Mining Extraction from Salar de Uyuni, Bolivia state-owned COMIBOL Lithium Manufacturing Plant Processing of lithium carbonate and other marketable elements – potassium chloride, boric acid, and magnesium chloride Production of Lithium-Ion Cells Hi-tech phase- LG Chem as leader in lithium –ion technology Lithium Ion Battery Pack Manufacturing Final phase before batteries go to factories to go into laptops, cell phones, and cars “For core business reinforcement, we need to achieve cost leadership, product leadership and market leadership. In difficult times with depressed demand and a global glut, our first and foremost challenge is to ensure cost leadership by reducing costs. By doing so, we can provide better products at cheaper prices than our competitors” - LG Chem CEO Kim Bahn-suk Lithium Battery Value Chain

Li $ Opportunity – Supply & Demand Opportunity – Supply & Demand Lithium Industry

Li $ Opportunity – Supply & Demand Opportunity – Supply & Demand Lithium Battery Industry Lithium-Ion Battery Facts – Now, 84% of portable devices use lithium-ion batteries – Predicted, 60% of all electric vehicles in 10 years will operate on lithium-ion batteries (superior performance) LG Chem Top Competitors in Lithium Battery Industry – Sanyo (Japan) – BYD (China) – Johnson Controls-Saft Joint Venture (US-France) – Enerdel (US) – A123 (US) – Electrovaya (Canada – China BAK Battery (China)

Li $ Risks & Challenges Political Risk - Slow transition to democracy - Pro-nationalism v. Pro-privatization - Expropriation - Poor Democracy (<$10,000 PPP GDP per capita) Political Risk Mitigation - Political Risk Insurance: (KEIC) Korea Export Insurance Corporation Source: ONDD 2010.

Li $ Past Economic Stress – Latin Amer. Debt Crisis 1980’s – Hyperinflation (nearly 60,000%) – Foreign exchange fluctuations – Recovery via economic austerity Current Position – 100% IMF Debt relief in 2005 – Trade Surplus – Low sovereign debt/GDP – Current Account & Fiscal Surplus – Fitch currency rating “B” – Key risks remain – Central Bank Risks & Challenges Risks & Challenges (cont.)

Li $ Proposed FDI Project Resource seeking greenfield JV with COMIBOL 40% share in $350M Lithium processing plant Positive NPV over 15-year horizon, highly dependent on the market price of lithium carbonate

Li $ Go/No Go Decision NO GO o Political Environment  Erratic behavior of current government  Local population is anti-foreign investment  Strict regulatory environment  (maximum 40% share, limited management control)  Unreliable source of lithium due to uncertain political environment o Rate of Return (Risk vs. Reward)  Capital intensive project with cost overrun risks o Assessment score below target (<75)

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