Lithium Industry: Outlook and Perspectives

info@signumbox.com www.signumbox.com Fidel Oteza 1921, ocina 1001 Providencia, SanDago, Chile 562-9460407

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Lithium: A mineral that is in everyones life

Lithium reserves are abundant and spread over the world

o Currently produced in countries with stable economies and governments

Lithium is a green mineral:

o Production from brine is based on solar energy

o Lithium can be recycled from used batteries

Lithium in energy storage/ batteries is strategic: without lithium, there is no battery.

o However the cost of lithium in a battery is negligible: it represents less than 3% of the total cost. Hence, minimal risk of being replaced.

Future perspectives are interesting: demand growing at 10%+ per year, with new technologies and greener processes supporting this trend into the future.

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Agenda

Demand growth drivers

Where can we find lithium?

Why is lithium unique?

Demand projections

Applications

Three demand growth drivers #1: Oil Dependency Iraq is the largest source of oil supply growth (IEA 2012)

Crude prices have remained high in historical terms

Rising transportation demand and upstream costs reconfirm the end of cheap oil

Big concern over security of supply Urgent need for new sources of energy such as electricity (hybrid and electric vehicles)

4 Source: InternaDonal Energy Agency, February 2012

Others OPEC 33%

Russia 10%

Saudi Arabia

8%

US 7%

Europe 4%

China 4%

Iran 3%

Canada 3%

Mexico 3%

Venezuela 2%

Iraq 2%

Brazil 2%

Nigeria 2%

UAE 2%

Others 15%

World Oil Production 2010

Transportation is the sector with the highest final energy consumption rate and contributes to about 23% of world CO2 emissions.

o China is the worlds largest energy consumer and is the world largest annual emitter of energy-related CO2.

o International Energy Agency (IEA) estimates that cumulative CO2 emissions over the next 25 years will increase long-term average temperature by 3.5C.

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Three demand growth drivers #2: Global Warming

Electricity and Heat

41%

Transport 23%

Industry 20%

Residential 6%

Others 10%

World CO2 Emissions by Sector in 2009

Source: InternaDonal Energy Agency, 2011

China 24%

US 18%

India 5%

Japan 4%

Others 49%

World CO2 Emissions by Country in 2009

Worldwide emissions must be reduced. Electrifying transportation is one of the main factors.

Source: International Energy Agency, World Energy Outlook 2011 6

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Oil Dependency and Global Warming are driving demand for new low-carbon fuels electrifying transportation

India has proposed tax exemptions for lithium-ion batteries used in electric-hybrid vehicles. (Bloomberg, March 2011)

China adopted a fuel economy target of 6.7 l/100 km for 2015, considering further increasing to 4.5 l/100 km by 2025. (International Energy Agency, 2011)

China will have 150 million electric bikes by 2015, compared with 120 million in 2010. (Bloomberg, December 2011)

Chinese government set an ambitious goal: by the end of 2011, the nation would be able to produce at least 500,000 hybrid and/or electric buses a year. (New York Times, December 2011)

President Obama Launched the EV-Everywhere Challenge Program in order to enable companies in the United States to be the first in the world to produce a 5-passenger affordable American electric vehicle with a payback time of less than 5 years by 2022. (US Department of Energy, March 2012)

Mobility is a major new force in the world of consumer electronics

o Growing markets: smartphones, tablets, laptops, among others

Gadgets are increasingly more affordable

Population effect in emerging economies such as China, India and Brazil

Almost 95% of the batteries used in electronic devices are based in lithium

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Three demand growth drivers: #3: Mobility and Consumerisation

q Demand for consumer technology will continue to advance in 2012 with record numbers of smartphones and tablets likely to be sold and demand from emerging markets, including the Middle East. (Deloitte, February 2012)

q By 2020 and within the course of one decade, real consumption in China will have doubled to $4.8 trillion and China will then be the worlds second-biggest consumer market after the United States. (Mc Kinsey&Company, October 2011)

Agenda

Demand growth drivers

Where can we nd lithium?

Why is lithium unique?

Demand projec;ons

Lithium is abundant and spread all over the world- more than 180 million tones of Lithium Carbonate Equivalent (LCE) are found in Hard Rock Minerals (Pegmatite) and Brine (Salt Flats) deposits.

10 LCE: Lithium Carbonate Equivalent *As of December 2011

NorthCarolina,US

Nevada,US

California,US

Texas,US

Serbia

BajaCalifornia,Mexico

Manono,Zaire

Western/SouthAustralia

Rusia

SichuanProvince,China

Quebec,Canada

Ontario,Canada

Alberta,Canada

Manitoba,Canada

Karalpa,Austria

StatesofMinasGeraisandCear,Brazil

Zimbabwe

Larritta,Finland

SalardeUyuni,Bolivia

Catamarca,Argentina

Jujuy,Argentina

Salta,Argentina

SalardeAtacama,Chile

Tibet,China

Pegmatite

Continental Brine

Geothermal Brine

Oil!eld Brine

Jadarites

Symbology

The majority of lithium reserves are found and produced in countries with stable economies and governments.

Bolivia 34%

Chile 31%

China 13%

US 8%

Argentina 6%

Australia 3%

Others 5%

Lithium Reserves by Country

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Even though 65% of lithium reserves concentrate in Bolivia and Chiles continental brines, lithium is also abundant and economically viable in hard rock minerals.

o Australia, which only has hard rock deposits, has become the second largest producer of lithium after Chile.

Largest lithium resources are contained in seawater but at low concentrations.

Chile 38%

Australia 31%

Argentina 13%

China 10%

US 3%

Others 5%

Lithium Supply by Country 2001

Source: signumBOX estimates, January 2012

Agenda

Demand growth drivers

Where can we nd lithium?

Why is lithium unique?

Demand projec;ons

Lithium: A metal with unique characteristics

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Has the highest specific heat capacity among solids Has a high electrochemical potential

Has a low atomic mass

Has a low density

Widely used in heat-resistant glass and ceramics, aluminum alloys and lubricating greases, and energy storage / batteries.

Due to the unique combination of several favorable properties, lithium is used in various applications: Lithium in Glass and Ceramics: Lithium favors the melting process because it decreases

viscosity, thermal expansion and the melting point of glasses and ceramics.

Lithium in Batteries: Primary (non rechargeable) and secondary (rechargeable)

Almost 95% of the batteries used in electronic devices are based in lithium Electrifying transportation: hybrid and electric vehicles, electric bicycles, electric

scooters, among others

New uses as grid storage energy

Battteries

29%

Frits 16% Glass

13% Lubricating

greases 14%

Air conditioning

4%

Continuos Casting Powders

5%

Medical 3%

Aluminum 4%

Polymers 3%

Others 9%

Lithium Consumption by Application (2011)

Portable devices

rechargeable 72%

Portable devices non rechargeable

8%

Hybrid and Electric cars

9%

Hybrid and Electric bikes/

scooters 10%

Grid storage 1%

Lithium Consumption in Batteries (2011)

Source: signumBOX estimates, January 2012 14

Since Sony introduced the first lithium-ion cell at the beginning of the 1990s, manufacture of lithium ion batteries in Japan has increased at rates above 30% per year (on average).

Source: Battery Association of Japan 15

0

500000

1000000

1500000

2000000

2500000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Manufacture of Rechargeable Batteries in Japan (Th. units)

Small sealed-type batteries Lead acid

Others

Other alkaline

Nickel Metal Hydride

Lithium ion

Agenda

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Demand growth drivers

Where can we nd lithium?

Why is lithium unique?

Demand projec;ons

Batteries for portable devices: A promising future

LCE: Lithium Carbonate Equivalent CAGR: Compound Annual Growth Rate

17 Source: signumBOX estimates, January 2012

Powertools: -Lithium Content in the battery: 40 60 grams LCE -Total lithium consumption 2011: 1,100 tones LCE -Total lithium consumption 2025: 8,000 tones LCE -CAGR 2011 2025: 15.2%

Laptops: -Lithium Content in the battery: 30 40 grams LCE -Total lithium consumption 2011: 14,000 tones LCE -Total lithium consumption 2025: 44,000 tones LCE -CAGR 2011 2025: 8.5%

Mobile Phones: -Lithium Content in the battery: 1 3 grams LCE -Total lithium consumption 2011: 4,300 tones LCE -Total lithium consumption 2025: 9,800 tones LCE -CAGR 2011 2025: 6.1%

Smartphones: -Lithium Content in the battery: 2 3 grams LCE -Total lithium consumption 2011: 1,700 tones LCE -Total lithium consumption 2025: 9,600 tones LCE -CAGR 2011 2025: 13.2%

Tablets: -Lithium Content in the battery: 20 30 grams LCE -Total lithium consumption 2011: 1,200 tones LCE -Total lithium consumption 2025: 17,000 tones LCE -CAGR 2011 2025: 20.8%

Batteries for hybrid and electric vehicles: Driving the future

LCE: Lithium Carbonate Equivalent

In hybrid electric vehicles the amount of lithium varies between 0.8 to 2 Kg In plug-in electric vehicles the amount of lithium ranges between 1 to 10 Kg In pure electric vehicles the amount of lithium varies from 8 Kg to 40 Kg

18 Source: signumBOX estimates, January 2012

Toyota Prius Plug-in Hybrid: 3.6 Kg LCE Mitsubishi i-MiEV: 10 Kg LCE

Tesla Roadster: 40 Kg LCE

0

100,000

200,000

300,000

400,000

500,000

600,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Lithium Demand Forecast 2011 2025 (tones LCE)

Other lithium applications

Batteries for hybrid and electric vehicles

Batteries for grid

Batteries for portable devices

Batteries and other applications will drive lithium demand growth to 10%+ per year for the next 13 years

LCE: Lithium Carbonate Equivalent CAGR: Compound Annual Growth Rate

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Application / Tones LCE 2011 2025 CAGR 2011 - 2025 Batteries for portable devices 30,416 111,176 9.7% Batteries for grid 500 7,500 21.3% Batteries for hybrid and electric vehicles 6,967 204,901 27.3%

Other lithium applications 91,400 174,994 4.7% Total Lithium Demand 129,282 498,571 10.1%

Source: signumBOX estimates, January 2012.

The above graphs predictions of demand growth should not be considered reflective of the Fund, which is subject to significant fluctuation and may lose value.

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The upward trend in prices is expected to continue into the future..

Lithium Industry: Outlook and Perspectives

info@signumbox.com www.signumbox.com Fidel Oteza 1921, oficina 1001 Providencia, Santiago, Chile 562-9460407

Neither the fund nor SEI were involved in the preparation of the presentation and they have not adopted the article as their own material.