Lithium, a new source of energy Rio de Janeiro, April 2015 Fidel Oteíza 1921, office 1001 – Providencia, Santiago, Chile Info@signumbox.com 562-29460407 569-66690429 www.signumbox.com

Introduction Questions that we are going to try to answer Is there enough lithium in the world to meet demand? Are countries prepared for the electrification of transportation? Will batteries for energy storage systems become the largest application for lithium? Can lithium replace oil? Will Chile, Argentina and Bolivia become the new middle east?

1. Introduction Oil prices and global warming: drivers for safer and greener technologies Oil prices Oil prices not only respond to supply-demand conditions but also to geopolitical conditions Oil prices are currently at low levels, but production is concentrated in middle-east  high levels of unrest and demand for regime changes. The US is becoming a relevant player as an oil producer (shale oil), but at higher costs. Global warming According to the IEA the transport sector is responsible for almost 23% of CO2 emissions and CO2 emissions from transport are dominated by road China, US and Russia are the largest countries in terms of CO2 emissions

Introduction Why Lithium? Lithium has a high electrochemical potential Lithium has a low atomic mass (6.941 g/mol) Lithium has a low density (around 0.53 g/cm3 at 20ºC) Lithium-ion technology has been developing since the seventies; however, in 1991 Sony was the first company to start massive production of lithium-ion batteries. Once the advantages over other technologies were recognized, applications began to expand. Sony introduced the first lithium ion cell early the ninetees

2. Lithium resources and supply Lithium is found in different forms Continental Brines Geothermal Brines Lithium is found in continental brines as well in hard rock minerals. Chile and Bolivia have about 2/3 of worldwide reserves in the form of continental brines. Lithium minerals are found mainly in the form of spodumene in Australia and China. Seawater is the largest source of lithium resource. See Hard rock minerals

2. Lithium resources and supply Lithium reserves are concentrated in Chile, Argentina, Australia and China

2. Lithium resources and supply Salar de Atacama in Chile has the best quality reserves of lithium Source: Peter Ehren.

2. Lithium resources and supply Salar de Atacama in Chile has the best environmental conditions Source: Peter Ehren.

2. Lithium resources and supply Production process: Continental brines (Chile) Remotion of additional water and crystalization of salts Pumping Brines contained in dry lakes Solar evaporation ponds Lithium Chloride Solution 6% Li 1% Li Chemical plant Remotion of magnesium and precipitation with soda ash (Na2CO3) Lithium Hydroxide (LiOH) Lithium Carbonate (Li2CO3) Precipitation with calcium oxide, cal (CaO) or with soda caustic (NaOH)

2. Lithium resources and supply Production process: Hard rock minerals Open pit mining Mica removal and separation Pegmatites Crusher Spodumene recovery 6% Li2O 1,1% Li2O Chemical plant * Pegmatites: Spodumene: LiAl(SiO3)2 Petalite: LiAlSi4O10 Lepidolite: (KLi2Al(Al,Si)3O10(F,OH)2 Lithium carbonate (Li2CO3) Lithium Hydroxide (LiOH) 10 Li2O: Lithium oxide

2. Lithium resources and supply Lithium is not a commodity Li-Acetylide Methyl- lithium Phenyl- LDA LHS Li-t- Butoxide Li- Methoxide Hydride Li-tri (t-butoxy)- alanate Amide Salicylate Citrate Benzoate Acetate Zeolite Potash Bischofite Sulphate Nitrate Phosphate Silicate Li-Tetra- borate Chromate Sabalith Nitride Bromide Fluoride Peroxide Hydroxide CO2- Absorption Products Iodide Perchlorate LiBOB Anodes Foils Lithium Carbonate Chloride Brines Butyl- Alanate Metal Source: Rockwood Lithium.

Total Lithium Production 2. Lithium resources and supply Lithium carbonate is the most important chemical compound Tones LCE Total Lithium Production 160,000 Li2CO3 73,600 LiOH 30,300 Li Concentrate 28,300 Li Metal 5,400 BuLi 8,000 LiCl 8,800 Other 6,200 Brines 90,000 Minerals 70,000 Note: numbers are rounded. Source: signumBOX estimates.

2. Lithium resources and supply Australia is the largest lithium producer Tones LCE Lithium production is concentrated in Australia, Chile and China Production in Chile has many advantages, make it the lowest cost producer: High lithium/potassium concentration Low evaporation rate (driest dessert in the world) Low magnesium/lithium ratio (magnesium must be removed) 10 years ago there were more than 100 of lithium exploration projects in the world. Currently there are about 40 projects, and 5 of them are about to start producing in the coming (Argentina and Canada). Source: signumBOX estimates.

3. Lithium demand Batteries are the main application for lithium Total lithium demand reached in 2014 about 150,000 – 160,000 tones as LCE. Batteries are the main application for lithium (40% app of total demand): 67% of the consumption of lithium carbonate and 30% of the use of lithium hydroxide. Lithium is also widely used in lubricating greases in the form of lithium hydroxide. Other interesting applications: lithium alloys, medicine, metal treatment, among others. Source: signumBOX estimates.

3. Lithium demand Batteries are the main application for lithium Source: signumBOX estimates.

3. Lithium demand Batteries for portable devices represent the largest use for lithium in batteries Lithium carbonate / hydroxide is used as a cathode material in rechargeable batteries Lithium metal also used in primary batteries Lithium chloride is used in the the electrolyte in rechargeable batteries 62,000 tones LCE 40,400 tones LCE Source: signumBOX estimates.

3. Lithium demand Batteries for hybrid / electric cars Recent market trends: The announcement made by Tesla regarding the construction of the giga-factory in Nevada was very welcomed by the industry. Capacity for batteries for 500,000 vehicles in 2020 (currently capacity for 35,000 vehicles) The State of Nevada offered US$ 1.3 billion of tax credits The cost of the gigafactory is estimated at US$ 5 billion, but some analysists estimate that would reach around US$ 6 billion. Tesla autonomy reaches 250 miles (industry average: 75 – 110 miles) The battery uses standard cells (18650). Advantage in costs. The Chinese government intents to distribute 5 million electric cars (Evs and P-HEVs) by 2020 to solve the Nation´s environmental problems. Global EV market demand is expected to grow from 2.4 million units in 2014 to 8 million in 2020. We assume a conservative scenario, with Tesla supplying 250,000 EVs by 2020 (instead of 500,000). Source: signumBOX estimates.

3. Lithium demand Lithium consumption in batteries Lenovo battery Iphone battery 2.5 grs LCE Lenovo battery 30 – 50 grs LCE Toyota Prius Plug-in Hybrid: 4.4. Kg LCE Grid storage project …tones of LCE Tesla Roadster: 40 Kg LCE Source: signumBOX estimates.

3. Lithium demand Battteries for HEV and EVs 1.000 US$/KWh 500 US$/KWh Source: signumBOX estimates from various sources.

3. Lithium demand Battery materials Materials for Metal Oxide Cathodes Main advantage Main disadvantage Applications Lithium content Lithium material Lithium Cobalt Oxide (LCO) Balanced yield Low cycle life Electronic devices 7% Lithium carbonate Nickel manganese cobalt oxide (NMC) Safety High cycle life / lower capacity HEV Lithium carbonate / Lithium hydroxide Lithium Manganese Oxide (LMO) Low cost EV – P-HEV 4% Nickel Cobalt Aluminum (NCA) High capacity Not safety Lithium hydroxide Lithium iron phosphates (LFP) High thermal stability / Safety HEVs - EVs Source: signumBOX estimates, JOGMEC.

3. Lithium demand Energy Storage Systems Challenge: Match supply and demand in real time According to the US Department of Energy´s Energy Storage Database: Total energy storage systems: 1,250 projects in the world / 184,574 MW Pumped hydro: 341 projects in the world / 177,427 MW Electrochemical (Li-ion batteries): 386 projects / 690 MW Economics of pumped hydro are very difficult to compete with (for chemical solutions) Non battery solutions are by far the current leader in cost, but lithium ion batteries cost is falling Pumped hydro CAES (Compressed air energy storage) Flywheels

3. Lithium demand Total Energy Storage Systems

3. Lithium demand Batteries for Energy Storage Systems

3. Lithium demand Battery for Energy Storage Systems

3. Lithium demand Forecasting lithium demand Batteries for hybrid and electric vehicles are going to be the largest application for lithium demand. Today represents about 6,0% of total lithium demand In 2025 would account more than 35% of the total lithium demand. Total lithium demand would reach 390,000 tones in 2025 (including inventories). CAGR: +8.6% Source: signumBOX estimates.

4. Final Conclusions Questions that we are going to try to answer Is there enough lithium in the world to meet demand? Yes… Are countries prepared for the electrification of transportation? LatinAmerican countries not yet.. Will batteries for energy storage systems become the largest application for lithium? No, batteries for hybrid and electric cars are going to be the largest application for lithium Can lithium replace oil? No, automakers are going to diversify technologies Will Chile, Argentina and Bolivia become the new middle east? No…

Many thanks for your attention. Please ask for the updated version of this presentation at daniela.desormeaux@signumbox.com Fidel Oteíza 1921, office 1001 – Providencia, Santiago, Chile info@signumbox.com 562-29460407 569-66690429 www.signumbox.com