frank nikolic - vale - nickel for electric vehicle batteries: long term supply dynamics
TRANSCRIPT
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Nickel for Electric Vehicle Batteries: Long Term Supply Dynamics
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“This presentation may include declarations about Vale’s expectations
regarding future events or results. All declarations based upon future
expectations, rather than historical facts, are subject to various risks
and uncertainties. Vale cannot guarantee that such declarations will
prove to be correct. These risks and uncertainties include factors
related to the following: (a) the countries where Vale operates, mainly
Brazil and Canada; (b) the global economy; (c) capital markets; (d) the
mining and metals businesses and their dependence upon global
industrial production, which is cyclical by nature; and (e) the high
degree of global competition in the markets in which Vale operates. To
obtain further information on factors that may give rise to results
different from those forecast by Vale, please consult the reports filed
with the Brazilian Comissão de Valores Mobiliários (CVM), the French
Autorité des Marchés Financiers (AMF), the Stock Exchange of Hong
Kong Limited, and with the U.S. Securities and Exchange Commission
(SEC), including Vale’s most recent Annual Report on Form 20F and its
reports on Form 6K. The views expressed here contain information that
have been derived from publicly available sources that have not been
independently verified. No representation or warranty is made as to the
accuracy, completeness or reliability of the information. This
presentation should not be relied upon as a recommendation or
forecast by Vale.”
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Then and now…
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Electric vehicles have come a long way since
they were first invented back in the 19th century
19th and early 20th century:
the beginning + among the earliest automobiles
+ well adopted due to limited road
infrastructure (neighborhood cars)
Thomas Parker Thomas Edison
Mid 20th century: the decline + various internal combustion engine
improvements (muffler, electric starter)
+ decline of gasoline prices
+ improved road infrastructure meant
longer driving distances
Electric vans in use by East
German Deutsche Post
Henney Kilowatt
1990s: slow revival + energy crisis of 1970s and 1980s renewed interest
+ introduction of ‘test’ vehicles but low speed and very limited
range arrest penetration
+ success of hybrid
Toyota Prius
Honda EV Plus
2010 to today: start of the boom + greater environmental awareness
+ government subsidies
+ all major car manufacturers entering market
+ highway capable: extended range and higher speeds
+ significant R&D
+ declining battery costs per kWh
Nissan Leaf
Chevrolet Volt BMW i3
Renault Zoe
Smart EV (Daimler)
Tesla Model 3
GM EV 1
Roewe E50
Kia Soul EV+
Mitsubishi i-MiEV
Chery QQ3 EV
In the context of this
presentation, EVs include
hybrid (HEV), plug-in
hybrids (PHEV) and battery
electric (BEV). Colloquially
referred to as xEV.
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“There is no alternative to
electrification. We have to
tackle it,” Skoda chairman
Bernhard Maier, March
2016
“We want to make sure that we’re either
among the leaders or in a leadership
position,” Ford CEO Mark Fields April 28,
2016 when talking about electric vehicles
and unveiling plans to invest US$ 4.5B
over next 4 years to develop a line of 13
electrified vehicles by 2020
“100,000 would have been an
impressive number. Now, with some
400,000 pre-orders, the number is
almost unbelievable…real wake up call
for the rest of the industry,” Tesla CEO
Elon Musk, April 29, 2016
“We are investing a good
billion euros in the Mission
E alone. That shows how
seriously we are taking the
matter. We are not just
experimenting around to
see what comes out of it.,”
Porsche CEO Oliver Blume,
March 2016
“I don’t think anybody envisions
today a future without the
electrification of cars,” Renault
Nissan CEO Carlos Gosn, Nov 2015
“Electrification as an option for the
masses, not just at the top end,” GM
CEO Mary Barra, Nov 2015
No longer a fringe automotive segment. Major
players are investing heavily in EV development
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Nickel is one of the key ingredients for the
manufacture of lithium-ion batteries
Lithium
Carbonate
Cobalt
Sulphate
Nickel
Sulphate
Lithium Cathode
Material
Aluminum
Sulphate
0
50
100
150
200
250
Energy Density
Wh/kg
LFP NiMH LTO NiCd NiFe Lead
Acid
NCA NMC LCO LMO
Nickel Containing
Non-Nickel Containing
Why Nickel?
Nickel battery formulations offer highest energy density
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Electric vehicles have had a significant growth
rate and nearly tripled market share since 2010
Global Production of Cars and xEV Market Share (million passenger vehicles)
Source: Takeshita 2015, OICA
68.5
EV CAGR 22% ICE CAGR 2.9%
2015
66.3
2.2
(3%)
2010
58.2
57.4
0.8
(1%)
Internal Combustion Cars (ICE)
Electric Cars
incl. Hybrid, Plug-in Hybrid, and Pure EV
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Nickel containing batteries are capturing more
market share as well
Source: Takeshita 2015
60%
40%
80%
20%
0%
100%
2011 2015 2012 2014 2010 2013
Non-Nickel
Nickel
Containing
Nickel selection bias in xEV batteries Distribution in xEV batteries by Nickel content
100%
80%
40%
0%
60%
20%
NCM 523
(30.4% Ni)
NCM 622
(36.3% Ni)
2014 2011 2010 2012 2013
NCA
(48.9% Ni)
NCM 111
(20.3% Ni)
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Nickel consumption in the battery segment has
been growing, outpacing all other non stainless
segments
55
50
45
40
35
0
‘000 mt Ni
Auto 14% CAGR Non-Auto 2%
Aggregate 5.4%
2015 2010
Nickel Consumption in Battery Segment
Source: Takeshita 2015, Wood Mackenzie, Vale Analysis
6.0
5.4
4.0
2.2
1.8
0.2
Stainless Battery Non-Ferrous Plating Alloy Steel Foundry
& Other
Comparing nickel segment CAGR 2010-2015 (%)
Non-Automotive
Nickel in xEV Batteries
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Looking ahead…
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Although there are differing views on how fast the
electric vehicle production will grow, it’s not a matter of
if but when the growth will take off
Source: Takeshita 2015, Goldman Sachs, Bloomberg, Deutsche Bank, Conaccord Genuity, Vale Analysis
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30
20
0
5
10
15
‘000 000 cars
14-28% CAGR
2020 2025 2015
Goldman Sachs
Deutsche Bank
Bloomberg
Takeshita
Outlook in the Production of xEVs (HEV, PHEV, BEV)
23% market share
new car production
14%
7%
Conaccord
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One of the reasons for the projected increase in the
adoption of electric vehicles is the decreasing cost. One
analyst projects cost equality by early 2020s
2010 2015 2020 2025
0
16
12
8
4
‘000 USD
Cost Comparison between ICE and xEV Powertrains
Internal Combustion Engine
Electric Vehicle
Source: Deutsche Bank
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As a consequence, nickel demand from the battery
segment is expected to grow at a faster pace than
seen historically with upside potential
Source: Takeshita 2015, CRU, Macquarie, Vale sources
0
50
100
150
200
‘000t Ni
2015
5-13% CAGR
2020 2025
Forecast nickel consumption in the battery segment
Macquarie view
Upside view from
Major Cathode Mfg.
Takeshita view
Downside view from
Major Cathode Mfg.
CRU view
Potential opportunity from
energy storage applications
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EV Battery
Nickel Supply
Dynamics
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EV batteries require high purity nickel sulphate, and
there are three main routes to get there
Integrated
Refineries SMM
Norilsk (OMG)
Jilin Jien
Jinchuan
Intermediates/
byproduct streams Ravensthorpe
Ramu
Vale (VNC)
Chinese
Refined nickel
metals Vale
BHP
Sherritt
Glencore
Solvent Extraction
Refining
Dissolved in
sulphuric acid
exam
ple
s
ex
am
ple
s
exam
ple
s
Nickel Sulphate Nickel Sulphate Nickel Sulphate
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Nickel Products Stainless Alloys Plating /
Batteries
Comments
Stainless Scrap Availability fluctuates
Nickel Pig Iron (NPI) Low nickel, less expensive
FeNi Ideal for Stainless
Others such as Uni,
Tonimet, NOS
Higher purity, mainly stainless
applications
Cathode Wide field of applications
Briquette Wide field of applications
Pellets High purity, high alloys or special
applications
Powders High purity, special applications and salts
Not all nickel products are suited for lithium batteries.
Handleability, dissolving time as well as purity come into
play when selecting the appropriate product.
High
purity
Cla
ss 2
C
lass 1
Low
purity
Lithium battery cathode makers need clean nickel sulphate
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There will be increased competition for the
most suitable nickel units
Source: Wood Mackenzie, Vale Analysis
Class I and High Purity Chemical Nickel Balance 2015 vs. 2025
0
200
400
600
800
1,000
1,200
1,400
market deficit
‘000t Ni
Excess to Inventory
2025
Demand
2015
Demand
Supply of
Class I or
High Purity Chemical
Demand for Class I from SS
Alloys, Plating, Foundry,
Non-Ferrous, and others
Battery
Improved dissolving time: briquette, pellets
Long dissolving time: Cathode
Ideal for use: powders, Ni sulphate
Supply Dynamic
Not expecting supply
development for Class I, and
very limited HPAL for refining
into nickel sulphate –
Indonesian development is
geared towards FeNi
Demand Dynamic
Demand is expected to continue
growing. Ideal use products will
be insufficient for battery use,
and battery segment will need to
dip into metallic nickel products
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o Rapid growth in Electric Vehicle production
over the next decade will drive nickel
consumption in EV battery applications
o Batteries will be the fastest growing nickel
segment over the next decade, with
significant upside potential
o Not all finished nickel products can be
economically used within the battery supply
chain
o There will be intense competition for suitable
units, particularly as the nickel market shifts
towards deficits in the future
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