Ubs critical raw materials seminar, frankfurt, march 2011
Transcript of Ubs critical raw materials seminar, frankfurt, march 2011
Dr. Heinz Schimmelbusch
Chief Executive Officer
AMG Advanced Metallurgical
Group N.V.21 March 2011
Major Challenges in Minor Metals
2
THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMGADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHERDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITHTHIS 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 acquiresecurities 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 connectionwith, 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 anyaccompanying 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 mentionedin 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 ofapplication 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, expressor 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. TheCompany and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, noneof the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from anyuse 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 acceptanceof new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economicconditions. 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 anyof the forward-looking statements contained in this presentation.
The information and opinions contained in this document are provided as at 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.
Cautionary Note
3
Introduction
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AMG Advanced Metallurgical Group N.V.
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
Revenues: $990.5M
Employees: 2,600
Production facilities: Netherlands, Germany, UK, USA, Brazil, France,
Turkey, Canada, Czech Republic, China, Mexico,
Belgium, India, Poland, Sri Lanka
Enterprise Value: €560 million
52 week range: €6.25–€14.55
Recent share price: €14.49 (18 March 2011)
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Critical Raw Materials: AMG’s Involvement
1
HHydrogen
1.0
3
LiLithium
6.9
11
NaSodium
23.0
19
KPotassium
39.1
37
RbRubidium
85.5
55
CsCaesium
132.9
87
FrFrancium
223.0
88
RaRadium
226.0
4
BeBeryllium
9.0
20
CaCalcium40.1
38
SrStrontium
87.6
56
BaBarium
137.4
39
YYitrium
88.9
57-71
89-103
21
ScScandium
45.0
22
TiTitanium
47.9
40
ZrZirconium
91.2
72
HfHafnium
178.5
104
RfRutherfordlium
261
23
VVanadium
50.9
41
NbNiobium
92.9
73
TaTantalum
181.0
105
DbDubnium
262
24
CrChromium
52.0
42
MoMolybdenum
95.9
74
WTungsten
183.9
106
SgSeaborgium
263
25
MnManganese
54.9
43
TcTechnetium
99
75
ReRhenium
186.2
107
BhBohrium
264
26
FeIron
55.9
44
RuRuthenium
101.0
76
OsOsmium
190.2
108
HsHassium
265
27
CoCobalt
58.9
45
RhRhodium
102.9
77
IrIridium
192.2
109
MtMeitnerium
266
28
NiNickel
58.7
46
PdPalladium
106.4
78
PtPlatinum
195.1
110
DsDarmstadtium
269
29
CuCopper
63.5
47
AgSilver
107.9
79
AuGold
197.0
111
RgRoentgenium
272
30
ZnZinc
65.4
48
CdCadmium
112.4
80
HgMercury
200.6
112
UumUnunbium
277
5
BBoron
10.8
13
AlAluminum
27.0
31
GaGallium
69.7
49
InIndium
114.8
81
TlThallium
204.4
113
UutUnuntrium
284
6
CCarbon
12.0
14
SiSilicon
28.1
32
GeGermanium
72.6
50
SnTin
118.7
82
PbLead
207.2
114
UuqUnunquadium
289
7
NNitrogen
14.0
15
PPhosphorus
31.0
33
AsArsenic
74.9
51
SbAntimony
121.8
83
BiBismuth
209.0
115
UupUnunpentium
288
8
OOxygen
16.0
16
SSulfur
32.1
34
SeSelenium
79.0
52
TeTellurium
127.6
84
PoPolonium
210.0
116
UuhUnunhexium
292
9
FFluorine
19.0
17
ClChlorine
35.5
35
BrBromine
79.9
53
IIodine
126.9
85
AtAstatine
210.0
2
HeHelium
4.0
10
NeNeon
20.2
18
ArArgon
40.0
36
KrKrypton
83.8
54
XeXenon
131.3
86
RnRadon
222.0
57
LaLanthanum
138.9
89
AcActinium
132.9
90
ThThorium
232.0
58
CeCerium
140.1
59
PrPraseodymium
140.9
91
PaProtactinium
231.0
60
NdNeodymium
144.2
92
UUranium
238.0
61
PmPromethium
147.0
93
NpNeptunium
237.0
62
SmSamarium
150.4
94
PuPlutonium
242.0
62
EuEuropium
152.0
95
AmAmericium
243.0
64
GdGadolinium
157.3
96
CmCurium
247.0
65
TbTerbium
158.9
97
BkBerkelium
247.0
66
DyDysprosium
162.5
98
CfCalifornium
251.0
67
HoHolmium
164.9
99
EsEinsteinium
254.0
68
ErErbium
167.3
100
FmFermium
253.0
69
TmThallium
168.9
101
MdMendelevium
256.0
70
YbYtterbium
173.0
102
NoNobelium
254.0
71
LuLutetium
175.0
103
LrLawrencium
257.0
12
MgMagnesium
24.3
6
Ti Alloys for Aerospace
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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 - 10-20% estimated growth per annum
Natural Graphite
Anodes
Nuclear waste solutions
Technology Leaps Trigger Rapid Demand Growth
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2010 2015
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) 37,152 167,232
E-Cars – Natural Graphite
One car* battery =* Based on 30 kWh
Nissan Leaf (25 kWh) BMW Mini EV (35 kWh)
24 kg of graphite
Sources: Credit Suisse, GK, company estimates
Separator
Anode(Graphite)
−
Cathode(Lithium)
+
Li+
→
e-
→
e-
Li+ Li+
Li+ Li+ Li+
Li+ Li+ Li+
Li+ Li+ Li+
Electrolyte Electrolyte
4.5x in 5 Years!
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Critical Metals and Technology Development
Ta
Sb
Si
V
Ti
Mg Cr
Nb
C
Dem
an
d G
row
th
Technology Development
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Critical Metals and Technology Development
Dem
an
d G
row
th
Technology Development
TaSb Si
V
Ti
Mg
Cr
Nb
C
11
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
Reserve Depletion and Big New Finds
(1) World Titanium Market 2009 PSC VSMPO-Avisma Corporation
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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
Recycling – Only a Partial Solution, but Growing
(1) AMG estimates
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Critical Raw Materials: Primary Supply, Recycling, Demand
Severe
Supply
Risk
Rapid
Demand
Growth
Limited
Recycling
Potential
Chromium Metal
Tantalum
Cerium
GraphiteLithium
Silicon MetalTitanium
Vanadium
The world without government action
Source: Institute for Applied Technology, UNEP, July 2009; AMG
MagnesiumNiobium
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Critical Raw Materials: Primary Supply, Recycling, Demand
Severe
Supply
Risk
Rapid
Demand
Growth
Limited
Recycling
Potential
Chromium Metal
Tantalum
Graphite
Lithium
Silicon Metal
Titanium
Vanadium
The world with government action
Source: Institute for Applied Technology, UNEP, July 2009; AMG
Magnesium
Niobium
Cerium
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$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
00 01 02 03 04 05 06 07 08 09 10
Volatility
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
00 01 02 03 04 05 06 07 08 09 10
Antimony Silicon Metal
Titanium Sponge Fe Vanadium
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
00 01 02 03 04 05 06 07 08 09 10
$0
$10
$20
$30
$40
$50
$60
$70
00 01 02 03 04 05 06 07 08 09 10
Sources: AMG, Bloomberg
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$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
00 01 02 03 04 05 06 07 08 09
Volatility - Cerium
Sources: AMG, Bloomberg
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Critical Raw Materials:
Definition
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“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 2010
Critical Raw Materials EU Definition
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The EU identified 14 critical raw materials to the European economy
Antimony
Beryllium
Cobalt
Fluorspar
Gallium
Germanium
Graphite
Critical Raw Materials EU Listing 14
(1) EU Report on Critical Raw Materials, June 2010
Indium
Magnesium
Niobium
PGM
Tungsten
Tantalum
Rare Earth
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Critical Raw Materials
“Critical” raw
materials
(1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
21
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 19
Critical Raw Materials
(1) Included as “critical” by the U.S. National Academies (U.S. Congress‟ Scientific arm)
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Critical Raw Materials:
Geography
23
Critical Raw Materials – Government Controls
Graphite
Antimony Graphite
REE Magnesium
Silicon Titanium
Vanadium
Tantalum
Niobium
Magnesium
Vanadium
Tantalum
Tantalum
Titanium Vanadium
Chromium Magnesium
Titanium
MagnesiumTitanium
Tantalum
Antimony
Graphite
Chromium
Magnesium
Government Controls
Source: AMG
Sovereign Strategies:
an Interpretation
25
Acquisition of
foreign assets and
technology
Critical Raw Materials - Sovereign Strategies
Sovereigns
Foreign processors welcome
to produce in country
Global industry leadership
headquartered in country
Reduced domestic
production
Reduced depletion,
environmental impact
Price increases
Export Restrictions
26
China’s Position in Critical Minor Metals
Metal Activity Trade Restrictions Market Share
Antimony Mining Export Quotas 90%+
Tantalum Processor ----- 10%
Silicon Metal Mining Tariffs 50%+
Vanadium Slag ----- 33%
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 ----- 50%+
Magnesium Production ----- 80%+
Sources: AMG,
27
Volatility will be even higher in the future
Cerium Revisited
Sources: AMG
28
Germany’s dependency on China – selected metals:
Metal China’s Production
Rank
Germany’s Import
Percentage
Titanium 1 100
Vanadium 2 100
Silicon Metal 2 85
Chromium Metal 1 100
Strontium 1 100
Source: AMG
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Market Statistics
Magnesium
Conclusion
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■ Serve growing end markets with high value-added specialty metal
products and engineering solutions, related to CO2 reduction and
conservation of natural resources
■ Execute through a combination of:
■ Vertical integration
■ Industry consolidation
■ Continuous investment in productivity and technology
AMG’s Strategy
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