RARE EARTHS, SPECIALITY& STRATEGIC METALSINVESTMENT SUMMIT

IRONMONGERS’ HALL, CITY OF LONDON ● THURSDAY, 17 MAR 2011www.ObjectiveCapitalConferences.com

Recycling strategic & speciality metalsPeter Willis – Technical Consultant, Oakdene Hollins

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Oakdene Hollins

Opportunities in Recycling “Critical Raw Materials”

Peter Willis 17th March 2011

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Disclaimer Oakdene Hollins Ltd believes the content of this presentation to be correct as at the date of writing. The

opinions contained in this presentation, except where specifically attributed, are those of Oakdene Hollins Ltd. They are based upon the information that was available to us at the time of writing. We are always pleased to receive updated information and opposing opinions about any of the contents.

The listing or featuring of a particular product or company does not constitute an endorsement by Oakdene Hollins, and we cannot guarantee the performance of individual products or materials. This presentation must not be used to endorse, or suggest our endorsement of, a commercial product or service.

All statements in this presentation (other than statements of historical facts) that address future market developments, government actions and events, may be deemed "forward-looking statements". Although Oakdene Hollins believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance: actual results or developments may differ materially. Factors that could cause such material differences include emergence of new technologies and applications, changes to regulations, and unforeseen general economic, market or business conditions.

We have prepared this presentation with all reasonable skill, care and diligence within the terms of the contract with the client. Although we have made every reasonable effort to ensure the accuracy of information presented in this presentation, Oakdene Hollins cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions herein. Factors such as prices and regulatory requirements are subject to change, and users of the presentation should check the current situation. In addition, care should be taken in using any of the cost information provided as it is based upon specific assumptions (such as scale, location, context, etc.). Clients should satisfy themselves beforehand as to the adequacy of the information in this presentation before making any decisions based on it.

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Oakdene Hollins’ Work

Study into the feasibility of protecting and recovering critical raw materials through infrastructure development in the South East of England (European Pathway to Zero Waste, 2011)

Assessing rare metals as supply chain bottlenecks in priority energy technologies (European Commission Institute of Energy, 2011)

Lanthanides resources and alternatives (Department for Transport, 2010)

Materials security: Ensuring resource availability for the UK economy (Resource Efficiency KTN, 2008)

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Agenda

What are the EU “Critical Raw Materials”? Best Opportunities for Investors:AerospaceRE MagnetsFlat Panel DisplaysBatteries

Gap Analysis of Opportunities Conclusions

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Defining “Critical Raw Materials”

European Commission (2010) study “Critical Raw Materials for the EU”

41 metals and minerals assessed Combination of 2 factors: Economic Importance

Main applications Substitutability

Supply Risks Stability of producing countries Diversity of supply Recycling

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14 “Critical Raw Materials”

Source: mostly USGS for 2009; includes recycling where available

Large Volumes Small VolumesFluorspar – 5,100,000 Indium – 1,200Graphite – 1,130,000 Tantalum – 1,160Magnesium – 760,000 Platinum Group – 445Antimony – 187,000 Beryllium – 140

Rare Earths – 124,000 Germanium – 140 Tungsten – 94,000 Gallium – 118Niobium – 62,000Cobalt – 62,000

Production Volumes (tonnes)

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Current Importance of China

China as leading producer of 9 materials:Germanium (71%)Fluorspar (59%) Indium (50%)Gallium (32%)

Tantalum: Australia (48%)

Congo Kinshasa: Cobalt (40%)

Brazil: Niobium (92%)US: Beryllium (86%)Platinum Group:

South Africa (61%)

Rare Earths (97%)Antimony (91%)Tungsten (81%)Magnesium (77%)Graphite (71%)

Source: USGS for 2009

Other Leading Producers:

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Demand for “Critical Raw Materials”

10.2 10.1 9.8

7.36.5

5.3 4.94.2

3.4 3.4 3.0 3.0 2.7 2.5

0

2

4

6

8

10

12G

alliu

m

Nio

bium

Rare

Ear

ths

Mag

nesi

um

Indi

um

Tant

alum

Tung

sten

Antim

ony

Fluo

rspa

r

Ger

man

ium

Bery

llium

Gra

phite

Plat

inum

Grp

Coba

lt

Forecast CAGR for 2010-2020 (%)

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Forecasts for “Critical Raw Materials”

7 75

3 2 1 0 -1 -6 -7 -9 -10 -21

-25

-20

-15

-10

-5

0

5

10

Forecast Surplus (Deficit) - 2020 (%)

Plat

inum

Grp

Indi

um

Antim

ony

Fluo

rspa

r

Ger

man

ium

Coba

lt

Tung

sten

Nio

bium

Gra

phite

Gal

lium

Mag

nesi

um

Rare

Ear

ths

Tant

alum

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Prices of “Critical Raw Materials”

31,847

1,151506 499

16589

40 31 3012

6.63.3

1.16 0.42

$0

$1

$10

$100

$1,000

$10,000

$100,000

Plat

inum

Grp

Ger

man

ium

Indi

um

Gal

lium

Bery

llium

Tant

alum

Nio

bium

Tung

sten

Rare

Ear

ths

Coba

lt

Antim

ony

Mag

nesi

um

Gra

phite

Fluo

rspa

r

Price – 3 year Average ($/kg)

Source: mostly Metal Pages

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Dominant Applications

Source: European Commission (2010)

Seven raw materials have over half their consumption in a single application: Antimony (Flame Retardants – 72%) Fluorspar (Chemicals - 60%) Gallium (Integrated Circuits – 66%) Germanium (Optics – 55%) Indium (Flat Panel Displays – 74%) Magnesium (Casting Alloys – 50%) Niobium (Steel Alloys – 83%) Platinum Grp (Catalysts – 60%) Tungsten (Cemented Carbides – 60%)

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Screening Methodology

Selection Criteria: Include all dominant applicationsAnalyse markets using multiple raw materials Rank economic value of raw material containedExamine carbon impacts of markets

Selected 12 markets for further analysis:Supply chain mapsExisting practice infrastructureTechnical feasibility & economic viabilityStakeholder consultation

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High Opportunities – Aerospace

Up to 12,000 aircraft to retire by 2020

Move away from ‘wild destruction’

Smart dismantling can recover 85% of weight

Reuse superalloys in engines (Co, Nb, Ta) & landing gear (Be)

Recycle (Al-Mg alloys) Implementation by

accreditation & standardsSource: Airbus

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High Opportunities – RE Magnets

Hard disk drives (HDD) as current opportunity

Hitachi with process to cut HDD & remove RE magnets for recycling

Need to segregate, not shred with WEEE

Wind Turbines & (H)EVs as long term opportunity due to long lifetimes

Source: Hitachi

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High Opportunities – Flat Panel Displays

80% of In used to make ITO (mostly for FPs)

Recycling of In process waste common

Easy to separate FPs from WEEE as easily recognisable

Pilot scale technologies being developed to remove ITO to recycling

Medium timeframe for FPs in waste stream

Solar PV for long term

Source: ValpakSource: WRAP

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High/Med Opportunities – Batteries

800 t of NiMH, 600 t of Li-ion in UK waste

Low collection rates for portable batteries: NiMH(2%) & Li-ion (1.5%)

Need for better collection & labelling

Co recovered but RE & Graphite lost in slag

Optimise recycling (H)EV batteries as long

term opportunity Possible (cascaded) reuse

Source: Valpak

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Other Opportunities Identified

Improve collection: Beverage Cans (Magnesium) Catalytic Convertors (Platinum Groups)

Medium Opportunities: Cemented Carbide Tools (Cobalt, Tungsten) Catalysts (Rare Earths) Flame Retardants (Antimony) Steel Production (Graphite, Fluorspar)

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Gap Analysis on Recycling

76 7268

6054 52

43

158 6 5 2 1 0

0102030405060708090

100

Indi

um

Antim

ony

Mag

nesi

um

Tung

sten

Coba

lt

Plat

inum

Grp

Rare

Ear

ths

Bery

llium

Nio

bium

Gra

phite

Tant

alum

Gal

lium

Fluo

rspa

r

Ger

man

iumR

aw M

ater

ial C

onsu

mpt

ion

(%)

Consumption in High & Medium Opportunities

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Conclusions

Recycling not enough: High demand growth Long product lifetimes Problem of dispersive usage

Recycling can contribute to supply: Improve collection Advanced sorting techniques Implement new technology Design for disassembly & reuse

Some raw materials with little opportunity: Dispersive applications Consumed in process

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Peter Willis

peter.willis@oakdenehollins.co.ukwww.oakdenehollins.co.uk

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