Critical, strategic and industrial:minerals leading the

Critical, strategic and industrial:minerals leading the next production revolution

Dr Richard Flook Managing Director

Mosman Resources Pty Ltd [email protected]

“Navigating a world of disruption”: three issues

1. The disruption is intensifying The centre of economic gravity is shifting east and south

Globalization patterns are changing, with rapid growth in data flows

The pace of technological progress is accelerating

As populations age, developed regions must rely more on waning productivity and greater migration

2. The gulf between those embracing change and those falling behind is growing Technology adoption is uneven across sectors, companies, and countries

Automation and AI adoption will bring occupational and skill shifts

Increasingly unequal societies are polarizing; social contract is perceived to be broken

Environmental stress is increasing; implications for the most vulnerable countries, industries, and people

3. Developing a more sustainable and inclusive society

11/04/2019 2 Source: Navigating a world of disruption, Mckinsey January 2019

Technology critical metals & minerals

11/04/2019 3 Source: Swedish Agency for Growth Policy analysis Ref:2016/227

Technological innovation Applications Innovation critical metals & minerals

• Permanent magnets • Electric motors • Wind turbines

Neodymium, Dysprosium, Praseodymium, Terbium, Gallium

• Lithium ion batteries • Electric vehicles • Energy storage • Electronics

Graphite, Lithium, Cobalt, Nickel, Manganese, Vanadium

• Special alloys • Vehicles • Refineries

Cobalt, Tungsten, Nickel, Chromium, Molybdenum

• Fuel cells • Electric vehicles • Energy storage • Electronics

Platinum, platinum group metals, graphite

• Solar cells • Solar collectors Silicon, molybdenum, beryllium, germanium, gallium, indium

Another view: EU critical raw materials list

11/04/2019 4

Original list 2011 Additions 2014 Additions (deletions)2017

Antimony

Beryllium Borates Baryte, Bismuth

Cobalt Coking coal, Chromium (Chromium)

Fluorspar

Gallium, Germanium

Heavy rare earths Hafnium, Helium

Indium, Light rare earths

Magnesium Magnesite (Magnesite)

Natural graphite, Niobium Natural rubber

PGM’s Phosphate rock Phosphorous

Tantalum, Tungsten Silicon metal Scandium, Vanadium

Source: Swedish Agency for Growth Policy analysis Ref:2016/227

FRAME: forecast and assessment of Europe’s critical raw materials needs by the Geological Surveys of EU countries

11/04/2019 5 Source:http://www.frame.lneg.pt/

And another list: USA critical raw materials list 2018

Critical Mineral Resources of the USA

Aluminium (bauxite) Fluorspar Manganese Tantalum

Antimony Gallium Niobium Tellurium

Arsenic Germanium PGM’s Tin

Barite Graphite (natural) Potash Titanium

Beryllium Hafnium REE Tungsten

Bismuth Helium Rhenium Uranium

Cesium Indium Rubidium Vanadium

Chromium Lithium Scandium Zirconium

Cobalt Magnesium Strontium

11/04/2019 6 Source:https://www.federalregister.gov/documents/2018/05/18/2018-10667/final-list-of-critical-minerals-2018

Green “Conflict & Technology Minerals”

11/04/2019 7 Source: https://www.iisd.org/story/green-conflict-minerals/

Only two take away messages….and neither are mine

“The only constant is change”

We will continue to be “living in a material world”

11/04/2019 8


"Ever-newer waters flow on those who step into the same rivers.“

Heraclitus of Ephesus (/ˌhɛrəˈklaɪtəs/;[1] Greek: Ἡράκλειτος ὁ Ἐφέσιος, Hērákleitos ho Ephésios; c. 535 – c. 475 BC) was a pre-Socratic Greek philosopher, and a native of the city of Ephesus

11/04/2019 9

“Living in a material world”

“You know that we are living in a material world

And I am a material girl “ Madonna Louise Ciccone (American singer-songwriter, actress and businesswoman. Referred to as the "Queen of Pop" since the 1980s, Madonna is known for pushing the boundaries of song writing in mainstream popular music, as well as imagery in music videos and on stage)

11/04/2019 10

Looking back: 1970’s - tea ladies & linen napkins

11/04/2019 11

Manufacturer • Glass • Ceramics • Refractories • Paint • Plastics • Metal products • Building products • Insulation • Roofing • & many others

Australian Consolidated Industries Started in 1872 as Melbourne Glass Bottle Co. in Graham Street, South Melbourne

My business – industrial minerals & markets

11/04/2019 12

Alumina Foundry Mineral trading

Abrasives Flue gas desulphurisation Mineral fillers

Batteries Halloysite Mineral processing

Bauxite Garnet Mineral sands

Barite Geothermal minerals Paints & coatings

Bentonite Glass, flat & container Paper

Borates Glass, fibre and special Perlite

Brucite Gypsum Plastics

Building products High purity alumina Precipitated calcium carbonate

Calcium carbonate High purity quartz Precipitated silica

Cement Industrial minerals Proppants

Ceramics Industrial chemicals Refractories

Construction sands Iron ore sands Rubber

Colloidal silica Kaolin & calcined kaolin Salt

Copper slag LED’s Semiconductors

Diatomite Lime Silica sand and resin coated sand

Dolomite Limestone & marble Steel

Feldspar Lithium Sulphur

Fertiliser Magnesia Talc

Filtration Magnesite Vanadium

Agenda

Mega trends

Materials engineering

Energy

China

Other trends

The industrial minerals industry

Final thoughts

11/04/2019 13

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 14

Technological growth has doubled every 200 years since 1400

11/04/2019 15

“The next double-century (2000-2200) promises no fewer than 150 breakthrough innovations on par with the steam engine, antibiotics and the airplane.”

Source:https://hbr.org/2013/11/the-pace-of-technology-adoption-is-speeding-up & https://www.weforum.org/agenda/2017/04/the-end-of-forecasting/

Emerging technologies - one list

Driverless vehicles

The trillion sensor movement

The Internet of things (IoT)

Artificial intelligence (AI)

Virtual reality (VR)

Flying drones

Photonics

3D printing & contour crafting

11/04/2019 16 Source:http://globalblog.posco.com/foreseeing-future-steel-futurist-thomas-frey-talks-posco-evi-forum/

“IBM’s goal is to build quantum systems with roughly 50 qubits in the next few years“

3D Printed motor cycle and bicycle

11/04/2019 17 Source:https://arevoinc.com & https://3dprint.com/65937/3d-printed-motorcycle/

“The beauty of 3D printing is you can build something with the economics of one unit, because there’s no tooling required”

4D Printing : 3D plus reversible transformation

11/04/2019 18

4D-printed metamaterials can be temporarily transformed into any

deformed shape and then returned to their original shape on

demand when heated. (Image: Chen Yang/Rutgers University-New Brunswick)

Source: www.nanowerk.com

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 19

Materials engineering- my choices

2D materials

Batteries, semiconductors, photodetectors

Perovskites

Cheaper more efficient solar cells

Metal organic framework (MOF)

Sensors, catalysts, separation

Molecular recognition technology

Hydrometallurgy, metal recycling

11/04/2019 20

Graphene – started the 2D revolution

Graphene (C)

Antimonene (Sb)

Arsenene (As)

Borocene (B)

Germanene (Ge)

Phosphorene (P)

Silicene (Si)

Stanene (Sn)

Tellurene (Te)

“White graphene”(hBN)

11/04/2019 21

2D tin oxide anodes in sodium batteries

2D metal carbide or nitride

semiconductors

2D transition metal dichalcogenides (TMDC) eg MoS2 in solar cells &

photodetectors

Source: www.nanowerk.com

2-layer Graphene-stopping bullets

Researchers at The City University of New York (CUNY) have developed a unique 2 layer graphene-based material they call diamene that is flexible but becomes as hard as a diamond when it is impacted at room temperature

11/04/2019 22 Source: Nature Nanotechnolgy December 2017

Graphene shoes - 50% harder wearing

11/04/2019 23 Source: https://omnexus.specialchem.com/news/industry-news/inov-8-world-first-ever-graphene-sports-shoes

“Prior to this innovation, off-road runners and fitness athletes had to choose between a sticky rubber that works well in wet or sweaty conditions but wears down quicker and a harder rubber that is more durable but not quite as grippy..”

“graphene-enhanced rubber outsoles and Kevlar – a material used in bulletproof vests – on the uppers”

Graphene jacket –US$695 (free shipping)

11/04/2019 24

“A GRAPPLING HOOK SHORT OF A BATSUIT”

Source:https://www.vollebak.com/product/graphene-jacket-1/

“Graphene Jacket. • Part jacket. • Part science experiment. • Made with the only material in

the world with a Nobel Prize”

Graphene G+ Aero jersey

11/04/2019 25 Source: http://www.directa-plus.com

Unveiled today at the

EUROBIKE 2018 trade

show in Friedrichshafen,

Germany, the new jersey

is designed to leverage

the unique properties of

Graphene Plus (G+) to

dissipate heat from the

rider’s body enabling

them to focus less on the

conditions around them

and more on performance

Graphene – “it’s a very noisy market”

“200 companies claim to be producing graphene at commercial levels

In addition, many small lab-scale start-ups are hoping to become graphene producers and are waiting in the wings

No shortage of companies that want to play in this space

Result is a current significant overcapacity of production

More capacity to produce graphene than actual demand”

Graphene companies need: solid scientific base, engineering and process skills & customer centric collaboration

11/04/2019 26 Source:https://www.azonano.com/article.aspx?ArticleID=5135

Perovskites-cheaper solar collection

Hybrid perovskites: mix of organic and inorganic ions with the same crystal structure as calcium titanium oxide (CaTiO3).

Most solar cells are made of silicon, such cells are difficult to manufacture, requiring vacuum chambers and temperatures above 1000°C

Research efforts have recently focused on a new type of solar cell, based on metal halide perovskites

Perovskite solutions can be inexpensively printed to create more efficient, inexpensive solar cells

11/04/2019 27

“Australian team reports new world efficiency record with perovskite solar cells” April 2017

Source:www.energymatters.com.au/renewable-news/silicon-perovskite-solar-em5983/

Cheaper, more efficient solar cells

11/04/2019 28 Source: National Renewable Energy Laboratory

Perovskite/ crystalline silicon TF

tandem cell 30%

efficiency ----

cf market 14-25%

efficiency

Organic Solar Cell

11/04/2019 29

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 30

The BP energy outlook - 2017

"We are seeing a shift in the global

energy mix, driven by

environmental concerns &

advances in technology."

11/04/2019 31 Source: BP Energy Outlook 2017

2020’s expected to be the decade of peaking

11/04/2019 32

1. Renewables are projected to be the fastest-growing fuel source, growing at 8% CAGR

Source: BP Energy Outlook 2017 & Carbon Tracker

2. Solar PV expansion in electricity larger than all renewables combined (IEA October 2018)

3. 50% renewables by 2050

Or ~65% renewables by 2050?

11/04/2019 33 Source: Bloomberg New Energy Finance & IEA

New! India to be third largest solar market in 2017 replacing Japan

Australia – 40% annual increase of wind & solar to NEM

11/04/2019 34 Source: AEMO 2019 | Quarterly Energy Dynamics - Q4 2018

NEM: National Electricity Market

Solar energy challenges & developments

11/04/2019 35

Shell to take over German home battery company Sonnen

Energy integration & storage – batteries (LIB vs others?)

Improved efficiency and cost – perovskites, organics?

Material durability – life of PV units is around 25~30 years

Building & window solar integration – EU Be Smart & BIPV

Building integration: Tesla solar roof tiles

Tesla began production of Solar Roof tiles at New York factory January 2018

11/04/2019 36 Source: Tesla January 2018

Slow progress due to: • Need to prove 30 year life • Expensive compared to

traditional tile + panels

Window integration: double-pane solar windows

In order to transform a window into a tandem luminescent sunlight collector, the Los Alamos team deposited a layer of copper indium selenide quantum dots onto the surface of the back pane and a layer of greatly emissive manganese-doped quantum dots onto the surface of the front glass pane.

11/04/2019 37

Engineered Quantum

Dots Used for Powering

Double-Pane Solar

Windows

Source:Los Alamos National Laboratory January 2018

Window integration: vanadium nanoparticles

Vanadium dioxide nanoparticle-based films have approximately twice the solar modulation values for high and low temperatures as conventional thin films

11/04/2019 38

U.S. Department of Energy’s (DOE)

Argonne National Laboratory have

patented a new process for

economically manufacturing

energy-efficient windows with

Vanadium nanoparticles

Source:https://www.nanowerk.com/nanotechnology-news2/newsid=51027.php

-100%

-80%

-60%

-40%

-20%

0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Land-based Wind (-41%)

Distributed PV (-54%)

Utility-scale PV (-64%)

Modeled Battery costs (-73%)

LED bulbs (-94%)

Cost reductions since 2008

11/04/2019 39 Source: US DOE 2016

“Sometime between 2020 and 2025, the cost to store energy in batteries is expected to reach parity with the internal combustion engine” Enertopia 2017

Growth of EV – China , USA & EU

11/04/2019 40 Source:http://www.businessinsider.com/china-holds-the-keys-to-the-electric-car-revolution-2017-12/?r=AU&IR=T

“Almost every major European carmaker will

launch one or more electric vehicle (EV) models over

the next 18 months”

2040: 35% of new sales will be

EV 2035?: China ban

of ICE vehicles

2030: Cars sold in India, Israel,

Sweden, Norway & Denmark to be

electric

2030: Electric cars cheaper

than gasoline-powered cars

24% CAGR 2018-30

Uncertainty but growing consensus

11/04/2019 41 Source: https://seekingalpha.com/article/4207189-cobalt-27-forget-nickel-exposure?isDirectRoadblock=true

Ford’s Head of Energy Storage Research, about EV penetration rates:

“we, as automakers, will have to electrify our fleets by 2025"

Volkswagen: Announcements March 2019 • plans 22 million EV’s in ten years • 70 new electric models by 2028 • possible participation in battery cell

manufacturing facilities in Europe • installing 400 fast-charging stations by 2020 • Volkswagen forms European Battery Union

with Northvolt

Electric vehicle developments

11/04/2019 42 Source: Posco 2017, Alkane Resources 2017

Electric cars, autonomous driving, car connectivity, and A.I. Standard EV requires ~5 times the rare earth permanent magnets as ICE vehicle Light weighting- higher strength steel (Giga Steel), glass (Corning Gorilla glass),

magnesium, aluminium, composites

All style All plastic

OR

Posco PBC-EV: 26% steel weight reduction

11/04/2019 43 Source: Posco 2017

1. Advanced high strength steel(AHSS): Giga Steel

• tensile strength > 1 Giga Pascal • 6 types of giga steel • tailored for different parts • developing ultra-light high-strength steel

2. Posco Body Concept (PBC): advanced construction method

Metal competition from composites

Ford & Magna develop weight-saving composite sub frame prototype

Ford Explores 3D Printed Large-scale Auto Parts: Breakthrough for vehicle manufacturing

Henkel’s lightweight metal-replacing composite technology to be used in Volvo models

Arkema unveils next-gen composites for auto & wind power

Covestro composites for cost-effective lightweight construction

Opportunities for functional mineral fillers

11/04/2019 44 Source: http://omnexus.specialchem.com/channel/metal-replacement

Carbon fiber reinforced plastics (CFRP) demand

11/04/2019 45 Source: SGL Carbon Presentation January 2019

51 59 66 72 83 91 101 112

156

194

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017e 2020e 2022e

‘00

0 m

t p

a

Solar energy and vehicles

11/04/2019 46

Rooftop PV panels recharge the 3.7-volt lithium-ion auxiliary battery

PV panels also supply power to the traction battery while the vehicle is parked, providing enough charge to drive up to 6.1 km/day

2017 Prius plug-in hybrid vehicle (PHV)

Tesla - Model 3 to include a solar roof option

Source:https://futurism.com/the-next-car-you-buy-could-be-solar-powered/

Lightyear One - world’s first solar-powered passenger car on roads 2020

Sono Motors -first mass-produced EV that can charge it’s battery using solar power

Losers: Road & automotive lubricating oils

11/04/2019 47

17.2 17.4 17.3 16.9 15.9

22.7 23.8 25.6 27.2 28.9

2.8 3.0

3.4 3.7 4.0

0

10

20

30

40

50

2017 2020 2025 2030 2035

Million tonnes

Other transport

Non transport/industrial

Road transport/ automotive

Source:https: www.mckinsey.com

CAGR (%) 2017-25 2025-35

Other transport 2.5% 1.6%

Non transport/industrial 1.5% 1.2%

Road transport/automotive 0.1% -0.8%

Total 1.0% 0.5%

Assumption: Battery cost reduces to below $100/kWh—the point at which EVs and ICE vehicles reach cost parity—by 2025

Battery minerals

11/04/2019 48

Headline minerals • Lithium • Graphite • Cobalt • Nickel • Manganese

Standing out from the crowd

11/04/2019 49 Source: https://stockhead.com.au 2018

“Miners are fighting cannabis

and crypto plays for cash”

says resources boss

Lithium demand: >15% CAGR 2017-27

Market Type 2017 2027 Vehicle CAGR

LCE CAGR

Electric vehicles (millions) Battery 0.8 15.5 34% 29%

Plug in hybrid 0.4 4.1 26% 30%

Lithium (kMT LCE units) Hydroxide 34 416 28%

Carbonate 105 367 13%

Other 73 95 3%

Total 212 878 15%

11/04/2019 50 Source: Roskill & Livent 2018

Plus energy storage market: 40% CAGR (2018-23) forecast in USA

Lithium issues

11/04/2019 51 Source: Orocobre May 2017, SQM January 2018

• Lithium under or oversupply • Lithium prices- spot & contract • Start up issues • Processing & by-products • Brine vs rock vs clay • Disconnected financial markets • Supply chain alignment • Battery production capacity • Storage vs electric vehicles • Future battery technology

Future Battery technology – VW view

11/04/2019 52 Source: Volkswagon

And more

Vanadium Flow batteries Expected to share storage battery market with LIB

LIB with silicon or LTO anodes 100% silicon-theoretical ten times more energy storage compared to graphite anodes. Problem is 400%

expansion from lithium absorption. Solution: Silicon enhanced graphite anodes LTO (lithium titanium oxide) anodes: ultrafast recharging, enhanced battery life and safety performance

Lithium sulphur and lithium-air

Tesla/Maxwell dry electrode battery

Many others: zinc-air, magnesium, sodium, potassium, ceramic-based high-temperature tin oxide nanoparticles enhanced with antimony on a graphene base anode

Pumped hydro storage

Hydrogen fuel & fuel cells

11/04/2019 53

Estimated global battery start up investment 2018 US$1.6 Trillion

Associated technology developments: Example 1

Battery connector lifespans increased from 250 charge cycles to 10,000 at temperatures of 150° C and above

Nickel-tungsten and silver-tungsten alloys

11/04/2019 54 Source: Xtalic Corporation

Example 2: lithium production by-products

Company Deposit/operation Lithium mineral By-product

Rio Tinto Jadar (Serbia) Jadarite Boron products

ioneer Rhyolite Ridge (USA) Sepiolite/ Searlesite Boric acid

Piedmont Lithium Carolina Spodumene Belt (USA) Spodumene Quartz, feldspar, mica

Advantage Lithium Cauchari (Argentina) Brine SOP

Litio Minera Mariana (Argentina) Brine SOP

Bearing Lithium Blanco (Chile) Brine Potassium chloride

European Lithium Wolfsberg (Austria) Spodumene Quartz, feldspar

Avalon Adv. Mat. Separation Rapids(Canada) Petalite/Lepidolite Feldspar

Pilbara Minerals Pilgangoora (Australia) Spodumene Tantalum

Desert Lion Energy Rubicon/Helikon (Namibia) Petalite/Lepidolite Tantalum

Neometals Kalgoorlie refinery (Australia) Spodumene leach residue Synthetic zeolite (Al/Si)

European Metals Cinovec (Czech Republic) Zinnwaldite Tin, tungsten, SOP

11/04/2019 55 Source: Company reports 2018 & 2019

Example 3: HPA (4N+) from kaolin for LED’s & batteries

High purity alumina

(HPA) projects Altech Chemicals Pure Alumina FYI Resources Alpha HPA

Capacity (tpa) 4,500 8,000 8,000 10,200

Capex (USD M) 298 271 179 161

Av. Sale Price (USD/mt) 26,900 25,200 24,000 25,000

Av Production Cost

(USD/mt) 9,900 7,668 6,467 6,403

Project Stage FIDS

October 2017

PFS

June 2018

PFS

September 2018

PFS

November 2018

Anticipated start up 2021-2022 2022-23 2021 2022

Raw Material Kaolin, Meckering

Western Australia

Kaolin, Yendon

Victoria

Kaolin, Cadoux

Western Australia “Industrial Chemical”

Process HCl leach HCl leach HCl leach Solvent extraction

11/04/2019 56 Source: R Flook & company reports

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 57

China: Prepare for change

11/04/2019 58

China : Key trends

China growth to continue and GDP to overtake USA GDP by 2030

Decade of rapid growth in basic industries (steel, cement & plate glass) coming to an end

Moving from low value polluting industries to high value manufacturing Targeting over 70% domestic market share of key industries

New energy vehicles, new and renewable energy equipment, industrial robots

“ China Manufacturing 2025”: Innovation driven manufacturing Targeting over 60% share of manufacturing value added contributed by hi-tech industries

Targeting over 25% share of manufacturing value added of GDP

Targeting manufacturing currently in Germany, Japan and South Korea

China the producer and consumer

“ Make our skies blue again”: pollution control and monitoring

First national law on soil pollution (1st January 2019) 11/04/2019 59

0

200

400

600

800

1000

1200

2017 2023 2028

North America

Europe

Asia

China

Battery megafactory capacity by region (GwH)

11/04/2019 60

China is expected to account for over 50% of the world’s battery capacity for at least the next decade.

Source: Benchmark

China: new opportunities- 7 top silica sand importers

11/04/2019 61

Stable

Declining

Declining

Source: R Flook

Growing imports

Australia: Significant silica

sand export projects

• Diatreme • VRX Silica • Others

Regional silica sand export

projects

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 62

Other significant trends

Mergers and acquisitions: typical low growth strategy; everyone wants to be number one

Circular economy

Plastic recycling about 2% → “certified circular polymers”

Refractory recycling about 4%

Lithium ion battery- “without recycling mass electrification will not work”

Bio based polymers: eg Itaconix

CO2 emissions and reductions: breakthrough technologies required

Globalism vs Nationalism: tariffs and trade barriers

Preparing for the Indian & then African century

11/04/2019 63

IMF “four clouds” • Brexit

uncertainty • trade tensions

and tariff escalations

• global financial tightening

• accelerated slow-down in the Chinese economy.

Centre of economic gravity is shifting east and south

11/04/2019 64

Top 10 Economies 2030 (GDP PPP) 1. China: $64.2 trillion 2. India: $46.3 trillion 3. US: $31 trillion 4. Indonesia: $10.1 trillion 5. Turkey: $9.1 trillion 6. Brazil: $8.6 trillion 7. Egypt: $8.2 trillion 8. Russia: $7.9 trillion 9. Japan: $7.2 trillion 10. Germany: $6.9 trillion.

1 2

3

4

5

6

7

8

9

10

Source: Standard Chartered & McKinsey January 2019

51% of global consumption in developing

economies

34% of global

consumption in Asia

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 65

Why Industrial minerals are important

11/04/2019 66 Source: www.imformed.com

CAGR ( to 2025) selected markets & sub markets

11/04/2019 67

0% 5% 10% 15% 20% 25% 30% 35%

Battery electric vehicles (number)

3D printing (value)

Lithium ion batteries (tonnes)

North America fraccing sand (tonnes)

Solar PV energy (value)

LED production (units)

Glass ultrathin (value)

Carbon fiber reinforced plastics (tonnes)

Ceramic tiles (value)

Agricultural Micronutrients (value)

Glass flat (tonnes)

Renewable energy (value)

Glass containers (value)

Industry & Water treatment (value)

Paint and coatings (tonnes)

Plastic waste (tonnes)

Steel (tonnes)

Pulp & paper (value)

Source: R Flook & Company Reports

How profitable are industrial minerals?

Company (Division/Year if not 2018) Sales EBITDA EBITDA/Sales

Imerys €4.59B €0.79B 17%

US Silica * adjusted for write downs US$1.56B US$0.27B 17%

Sibelco €3.52B €0.65B 19%

Venator US$2.27B US$0.44 19%

Mineral Technologies US$1.68B US$0.33B 19%

Omya (2017) ~€3.33B ~€0.7B ~20%

Rio Tinto (mineral sands, borates, salt) US$2.65B US$0.76B 29%

Albemarle US$3.38B US$1.01B 30%

Garnet International (2016) A$165M A$58M 35%

Martin Marietta (Magnesia division) US$269M US$99M 37%

Livent US$442M US$196M 44%

Iluka A$1.24B A$0.54M 44% (35% 2017)

11/04/2019 68

Source: Company Reports

1

2

3

Market development & innovation- some examples

English China Clay - former world leading industrial mineral producer 1960’s 50% of global paper pigment business 1980’s competition from cheaper Brazilian kaolin and then GCC 1990’s decision to focus more closely on original china clay business & paper chemicals 1999 bought by Imetal who changed name to Imerys for £756m.

Omya – alkalai paper making, filler and coating GCC & PCC 1950’s alkalai paper making and GCC pigments replaced kaolin Rapid growth then threat from on-site PCC, countered by PCC acquisition (Huber) Now world leading paper pigment business (sales ~ €3.3 billion) of both PCC and GCC

Mineral Technologies – developed on site PCC plants Diversified through Amcol acquisition

Imerys – mainly growth through acquisition breathable plastic film pigments perlite microbeads

Sibelco – high purity quartz (Iota) for semiconductors and photovoltaics

Garnet International – garnet marketing (PBT/sales 30%)

11/04/2019 69

Pricing- selling vs marketing

$ Revenue is vanity

$ Profit is sanity

$ Cash is reality 11/04/2019 70 Source: Unknown Bankers

Some pricing considerations • Cost plus – lazy approach • Profit maximisation approach

• Customer analysis • Cost to customer • Value to customer

• Competitor analysis • Spot vs contract & terms

→ Profit maximisation

“selling concept focuses on the needs of the seller while the marketing concept focuses on the needs of the buyer”

Customers usually want same supplier & reduced price

Alkane is intending to produce a range of zirconium, hafnium, rare earth (including praseodymium and neodymium) and niobium materials “As a foundation to achieving financing, Alkane continues to seek fair and binding offtake

agreements for the materials the Dubbo Project will produce

The inherent challenge is that potential customers are still mainly buying from China, and although they are interested in establishing a non Chinese supply chain to diversify supply risk, they want to pay discounted prices to new entrants

Alkane’s wholly owned subsidiary, Australian Strategic Materials (ASM), is not willing to become bound to an inferior pricing position; nor is it in Australia’s national interests”

I-Minerals is developing halloysite, quartz, K- feldspar and kaolin “To gain market share in the quartz and K-spar markets the Company would need to displace

current suppliers, primarily through pricing, and at the same time require customers to undertake additional reformulation to accommodate new minerals in the production process”

11/04/2019 71 Source: Alkane Resources February 2019, I-Minerals March 2019

Understanding global supply chains

11/04/2019 72 Source: www.wbs.ac.uk/news/

Opportunity

Opportunity

Specifications & performance- sometimes a moving target

11/04/2019 73

Analysis of LiFePO4 cathode from eight suppliers- high amounts of impurities, in particular Mn and Mg, in one batch resulted in an unacceptable cycle life for the batteries.

Customers now talk about ppb impurities in lithium

Source: https://www.azom.com/article.aspx?ArticleID=16278

Agenda

Mega trends


Energy

China

Other trends


Final thoughts

11/04/2019 74

“Predictions are very difficult -especially if they are about the future! ”

11/04/2019 75 Source: Reserve Bank of Australia 2016

Australian Reserve Bank were 90% confident 2017 GDP would

be between 1.0% & 5.5% !!

Always a surprise: Clay to fight bacteria in wounds

Reduced iron-bearing clay can kill some strains of bacteria including bacteria grown as biofilms - Mayo Clinic August 2018

11/04/2019 76 Source: https://newsnetwork.mayoclinic.org August 2018


Final word from a naturalist, geologist and biologist,

Charles Darwin;

“It is not the strongest of the species that survive, nor the most

intelligent, but the one most responsive to change.”

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Author Profile

Dr Richard Flook has worked for both suppliers and consumers of minerals with global companies including, Steetley plc, Anglo American, Commercial Minerals (now Sibelco), Normandy Mining Ltd, Omya AG and Shinagawa Refractories.

Richard has been CEO, Managing Director & Director of Asian and Australasian companies. He has specialized in new business opportunities including strategic planning, trading, market development and acquisitions in the industrial minerals industry and has been involved in managing and developing mineral operations and businesses in Asia and Australasia.

Richard is a Fellow of the Australasian Institute of Mining & Metallurgy (FAusIMM (CP)) and the Australian Institute of Company Directors (FAICD). He is a graduate of Sydney University (BSc First Class Honours, PhD) and the University of NSW (Master of Commerce).

Richard is now the Managing Director of Mosman Resources, a private consulting business, specialising in the production and marketing of industrial minerals and chemicals.

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Documents

Critical, strategic and industrial:minerals leading the