Major Challenges in Minor Metals

Size: px

Start display at page:

Download "Major Challenges in Minor Metals"

Wilfrid Rose
6 years ago
Views:

1 Major Challenges in Minor Metals 21 March 2011 Dr. Heinz Schimmelbusch Chief Executive Officer AMG Advanced Metallurgical Group N.V.

2 Cautionary Note 2 THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE COMPANY ) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe, expect, anticipate, intends, estimate, forecast, project, will, may, should and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority. The information found in this presentation accompanied a speech delivered by Dr. Heinz Schimmelbusch on 21 March 2011 at the UBS Critical Raw Materials seminar in Frankfurt, Germany. The presentation materials were intended to be taken in context with the verbal comments made by Dr. Heinz Schimmelbush at this seminar.

3 3 Introduction

4 AMG Advanced Metallurgical Group N.V. Listed: Founded: 2006 Revenues: NYSE-Euronext Amsterdam: AMG $990.5M Employees: 2,600 Production facilities: Enterprise Value: Netherlands, Germany, UK, USA, Brazil, France, Turkey, Canada, Czech Republic, China, Mexico, Belgium, India, Poland, Sri Lanka 560 million 52 week range: Recent share price: (18 March 2011) 4

5 5 Critical Raw Materials: AMG s Involvement 1 H Hydrogen Li Lithium Na Sodium K Potassium Rb Rubidium Cs Caesium Fr Francium Ra Radium Be Beryllium Ca Calcium Sr Strontium Ba Barium Y Yitrium Sc Scandium Ti Titanium Zr Zirconium Hf Hafnium Rf Rutherfordlium V Vanadium Nb Niobium Ta Tantalum Db Dubnium Cr Chromium Mo Molybdenum W Tungsten Sg Seaborgium Mn Manganese Tc Technetium Re Rhenium Bh Bohrium Fe Iron Ru Ruthenium Os Osmium Hs Hassium Co Cobalt Rh Rhodium Ir Iridium Mt Meitnerium Ni Nickel Pd Palladium Pt Platinum Ds Darmstadtium Cu Copper Ag Silver Au Gold Rg Roentgenium Zn Zinc Cd Cadmium Hg Mercury Uum Ununbium B Boron Al Aluminum Ga Gallium In Indium Tl Thallium Uut Ununtrium C Carbon Si Silicon Ge Germanium Sn Tin Pb Lead Uuq Ununquadium N Nitrogen P Phosphorus As Arsenic Sb Antimony Bi Bismuth Uup Ununpentium O Oxygen S Sulfur Se Selenium Te Tellurium Po Polonium Uuh Ununhexium F Fluorine Cl Chlorine Br Bromine I Iodine At Astatine He Helium Ne Neon Ar Argon Kr Krypton Xe Xenon Rn Radon La Lanthanum Ac Actinium Th Thorium Ce Cerium Pr Praseodymium Pa Protactinium Nd Neodymium U Uranium Pm Promethium Np Neptunium Sm Samarium Pu Plutonium Eu Europium Am Americium Gd Gadolinium Cm Curium Tb Terbium Bk Berkelium Dy Dysprosium Cf Californium Ho Holmium Es Einsteinium Er Erbium Fm Fermium Tm Thallium Md Mendelevium Yb Ytterbium No Nobelium Lu Lutetium Lr Lawrencium Mg Magnesium 24.3

6 Ti Alloys for Aerospace 6

7 Technology Leaps Trigger Rapid Demand Growth 7 Consumer Electronics Tantalum for capacitors Aerospace Titanium quantities for the Airbus A350 and Boeing 787 is over 2.5 times the amount used on aircraft they are replacing Solar Silicon metal demand for solar applications was 180,000 tons 10% of global production 20% growth per annum estimated Electric car E-Car Mineral Lithium Cathodes % estimated growth per annum Natural Graphite Anodes Nuclear waste solutions

E-Cars Natural Graphite Anode (Graphite) e - Separator e - Cathode (Lithium) +

Electrolyte Nissan Leaf (25 kwh) One car * battery = * Based on 30 kwh BMW Mini

8 E-Cars Natural Graphite Anode (Graphite) e - Separator e - Cathode (Lithium) + Li + Li + Li + Li + Li + Li + Li + Li + Li + Li + Li + Li + Electrolyte Electrolyte Nissan Leaf (25 kwh) One car * battery = * Based on 30 kwh BMW Mini EV (35 kwh) 24 kg of graphite Total Auto Sales (units) 70,169,000 91,872,000 % E-Car 1.1% 3.8% E-Car Sales (units) 774,000 3,484,000 Natural Graphite Needed (mt) 37, , x in 5 Years! 8 Sources: Credit Suisse, GK, company estimates

9 Demand Growth Critical Metals and Technology Development Ti Mg Cr V Sb Nb Ta Si C 9 Technology Development

10 Demand Growth Critical Metals and Technology Development Mg Ti Sb Cr Si Nb Ta V C 10 Technology Development

11 Reserve Depletion and Big New Finds Tantalum Greenbushes Tin Talison Global Advanced Metals, Australia (founded 1889) Niobium CBMM, Brazil (founded 1955) Molybdenum Jin Dui Cheng, Shanxi Province, China (founded 1970s) Rare Earths ( REE ) Bayan Obo, Inner Mongolia, China (founded 1980s) All are still the world s largest mines the same as 30 years ago 11 (1) World Titanium Market 2009 PSC VSMPO-Avisma Corporation

12 Recycling Only a Partial Solution, but Growing Hurdles Lack of collection systems, unattractive economics Lack of technologies, expensive development Dissipation metals vanishing into the end products Conclusion What can be (easily) recycled, is recycled Rarely big technology developments 12 (1) AMG estimates

13 Critical Raw Materials: Primary Supply, Recycling, Demand Severe Supply Risk Rapid Demand Growth Tantalum Niobium Magnesium Chromium Metal Graphite Lithium Limited Recycling Potential Silicon Metal Titanium Vanadium Cerium The world without government action 13 Source: Institute for Applied Technology, UNEP, July 2009; AMG

14 Critical Raw Materials: Primary Supply, Recycling, Demand Severe Supply Risk Limited Recycling Potential Rapid Demand Growth Silicon Metal Titanium Tantalum Graphite Niobium Magnesium Vanadium Cerium Chromium Metal Lithium The world with government action 14 Source: Institute for Applied Technology, UNEP, July 2009; AMG

15 Volatility Titanium Sponge $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ $70 $60 $50 $40 $30 $20 $10 $0 Fe Vanadium $14,000 $12,000 $10,000 $8,000 $6,000 Antimony $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 Silicon Metal $4,000 $2,000 $ $1,500 $1,000 $500 $ Sources: AMG, Bloomberg

16 Volatility - Cerium $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Sources: AMG, Bloomberg

17 Critical Raw Materials: Definition 17

18 Critical Raw Materials EU Definition The EU is highly dependent on imports of high tech metals such as cobalt, platinum, rare earths, and titanium. Such materials play an essential role in the development of innovative environmental technologies for boosting energy efficiency and reducing greenhouse gas emissions. Some raw materials can be considered to be particularly critical, because of three reasons: their significant economic importance for key sectors high supply risks lack of substitutes - ad hoc group of the Raw Materials Supply Group in a report to the European Commission, June

Critical Raw Materials EU Listing 14 The EU

Tungsten Germanium Tantalum Graphite Rare

19 Critical Raw Materials EU Listing 14 The EU identified 14 critical raw materials to the European economy Antimony Indium Beryllium Magnesium Cobalt Niobium Fluorspar PGM Gallium Tungsten Germanium Tantalum Graphite Rare Earth 19 (1) EU Report on Critical Raw Materials, June 2010

20 Critical Raw Materials Critical raw materials 20 (1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials

21 Critical Raw Materials In addition to the EU 14 materials, AMG believes that following are critical based upon the EU criteria: Vanadium (1) Silicon metal Titanium sponge (1) Chromium metal Mineral Lithium (1) This critical list would include 11 materials that involve AMG That would bring the 14 EU Critical Materials to (1) Included as critical by the U.S. National Academies (U.S. Congress Scientific arm)

22 Critical Raw Materials: Geography 22

23 Critical Raw Materials Government Controls Titanium Vanadium Chromium Magnesium Titanium Magnesium Antimony Magnesium Chromium Antimony Graphite REE Magnesium Silicon Titanium Vanadium Graphite Titanium Government Controls Tantalum Niobium Magnesium Tantalum Vanadium Tantalum Graphite Tantalum 23 Source: AMG

24 Sovereign Strategies: an Interpretation

Restrictions Reduced depletion, environmental impact Acquisition of foreign

25 Critical Raw Materials - Sovereign Strategies Sovereigns Reduced domestic production Foreign processors welcome to produce in country Export Restrictions Reduced depletion, environmental impact Acquisition of foreign assets and technology Global industry leadership headquartered in country Price increases 25

26 China s Position in Critical Minor Metals Metal Activity Trade Restrictions Market Share Antimony Mining Export Quotas 90%+ Tantalum Processor % Silicon Metal Mining Tariffs 50%+ Vanadium Slag % Graphite Mining, Smelting Tariffs 70% Titanium Sponge Production Tariffs 33% Niobium Processing N/A Strontium Production Export Quotas 90%+ Cerium Mining Export Quotas 90%+ Chromium Metal Smelting %+ Magnesium Production %+ 26 Sources: AMG,

27 Cerium Revisited 27 Sources: AMG Volatility will be even higher in the future

28 Germany s dependency on China selected metals: Metal China s Production Rank Germany s Import Percentage Titanium Vanadium Silicon Metal 2 85 Chromium Metal Strontium Source: AMG

29 Magnesium Market Statistics Conclusion 29

30 AMG s Strategy Serve growing end markets with high value-added specialty metal products and engineering solutions, related to CO 2 reduction and conservation of natural resources Execute through a combination of: Vertical integration Industry consolidation Continuous investment in productivity and technology 30

31 Conclusion Minor Metals are essential to the global economy Governments now have significant and increasing roles Very attractive rewards, but very high barriers of entry Due to technology, this will remain a long-term business 31

Periodic Table Of The Elements

Periodic Table Of The Elements H Hydrogen NOTE: The classification of some elements, especially METALLOIDS and OTHER METALS, is often artbitrary because these elements have characteristics of both 8 9 0 Li Be metals and nonmetals. As