“Technology” metals scarcity & Umicore’s offering Q2 2011 · Increasing need for metals • Metal scarcity issues ... high-efficiency solar cells and other photovoltaic applications

“Technology”

metals scarcity & Umicore’s offering Q2 2011

Overview•

Increasing need for metals

•

Metal scarcity issues

•

Urban mining potential

•

Umicore’s involvement

Increasing need for metalsIncreasing need for metalsView of Guaralhos, BrazilView of Guaralhos, Brazil

4

Increasing need for metals especially with emerging markets growing

Source: BHP Billiton, 2011

Increasing metals need•

With growth of population

•

With increasing GDP per capita

•

Consumption per capita tapers off in Western countries

5

H

K

Be

ScCa

Li

Na

Ti

Mg

V MnCr Fe Co CuNi Zn Ga Ge As BrSe Kr

Al Si P ClS Ar

B C N FO Ne

He

Rb YSr Zr Nb TcMo Ru Rh AgPd Cd In Sn Sb ITe Xe

Cs La-LuBa Hf Ta ReW Os Ir AuPt Hg Tl Pb Bi AtPo Rn

Fr Ac-LrRa Rf Db BhSg Hs Mt UuuUun UuqUub

hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium

vanadium manganesechromium iron cobalt coppernickel zinc gallium germanium arsenic bromineselenium krypton

aluminium silicon phosphorus chlorinesulphur argon

boron carbon nitrogen fluorineoxygen neon

helium

rubidium yttriumstrontium zirconium niobium technetiummolybdenum ruthenium rhodium silverpalladium cadmium indium tin antimony iodinetellurium xenon

caesium lanthanidesbarium hafnium tantalum rheniumtungsten osmium iridium goldplatinum mercury thallium lead bismuth astatinepolonium radon

francium actinidesradium rutherfordium dubnium bohriumseaborgium hassium meitnerium unununiumununnilum ununquadiumununbium

H

K

Be

ScCa

Li

Na

Ti

Mg


Al Si P ClS Ar

B C N FO Ne

He




hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium




helium




Increasing need for metals

Technology metals

Increasing need for “technology”

metals Driven by technological evolution and environmental issues

6

% mined in 1980-2010

% mined in 1900-1980

Mine production since 1900

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Re Ga In Ru Pd Rh Ir REE Si Pt Ta Li Se Ni Co Ge Cu Bi Ag Au

% mined in 1980-2010

% mined in 1900-1980

REE = Rare Earth Elements

Increasing need for “technology”

metals Reflected in recent mine production



Russia planting flag on North pole in August 2007

“claiming”

land for its resources

Russia planting flag on North pole in August 2007

“claiming”

land for its resources

8

Metal scarcity issues Absolute metal scarcity

Earth crust is limited

Gradual depletion of “economically”

mineable resources

Limited number of highly concentrated sources

Some misconceptions on absolute scarcity of certain metals, e.g.:•

Lithium

•

Rare earths

•

Precious MetalsSource: US Geological Survey, 2002

9

Metal scarcity issues Limited substitution possibilities

Example: Opto-electric applicationsChallenge to maintain performance which is often based on specific critical-

chemical substance properties

Potential substitute often comes from same metal family:

Can you substitute scarce indium by scarce Gallium?

Consider side effect of substitution•

Toxicity

•

Recyclability

•

Price effects

10

Ru price

0

250

500

750

1,000

1,250

1988

1990

1992

1994

1996

1998

2001

2003

2005

2007

2009

$ / tr. oz.

Pd price

0

250

500

750

1,000

1,250

1988

1990

1992

1994

1996

1998

2001

2003

2005

2007

2009

$ / tr.oz

Metal scarcity issues Temporary metal scarcity

Temporary supply-demand imbalances•

Investments in mining capacity requires cash and time

•

Creates spikes and collapses in metal prices

•

Speculation on the commodities markets enhances the effects

Geo-political issues, based on concentrated sources, similar to oil, e.g.:•

Rare Earth Elements (REE) in China

•

Platinum in Southern Africa

•

Palladium in Russia

•

Lithium in the Andes

•

Cobalt in DRC (Congo)

Hoarding

in Russia

New application in hard disc drives

11

Source:C. Hagelüken, C.E.M. Meskers: Complex lifecycles

of precious

and special metals

in Linkages

of Sustainability. Strüngmann Forum Report vol. 4. T. Graedel, E. van der Voet (eds.) Cambridge, MA, MIT Press 2009.

Metal scarcity issues Structural scarcity for “technology”

metals

Many “technology”

metals come as a by-product from primary mining for “base”

metals

Supply of many “technology metals”

is price-inelastic•

Increased demand can only be met by primary production if demand for major metal rises accordingly

•

Short term demand surges lead to price peaks

Urban mining potentialUrban mining potential

13

Urban mining potential “Deposits”

can be much richer than primary mining ores

Primary mining

•

~5 g/t

Au in ore

•

Similar for PGMs

Urban mining

•

200-250 g/t

Au in PC circuit boards

•

300-350 g/t

Au in cell phones

•

2000 g/t

PGM in automotive catalysts

14

a) Mobile phones

1300 M units/ yearX250

mg

Ag

≈

325

t

AgX 24 mg Au ≈

31

t

AuX 9 mg Pd ≈

12

t

PdX 9 g Cu ≈

12,000

t

Cu

1300 M Li-Ion batteriesX 3.8

g

Co

≈

4900

t

Co

a+b) Urban mine

Versus primary production= 625 t Ag ≈

3%= 97 t Au ≈

4%= 36 t Pd ≈

16%= 162,000 t Cu ≈

1%

= 14,000 t Co ≈

19%

Global sales, 2009

b) PCs & laptops

300 M units/yearX1000

mg

Ag

≈

300

t

AgX 220 mg Au ≈

66

t

AuX 80 mg Pd ≈

24

t

PdX~500

g

Cu

≈150,000

t Cu

~140 M Li-ion batteriesX 65 g Co ≈

9100

t

Co

Urban mining potential Low loadings/unit but volume counts, e.g. in electronics

Tiny metal content per piece → Significant total demand

Other electronic devices add even more to these figures

15

Large total volumes•

Global sales in 2010 of ~70 million cars

•

Current car fleet of some1.3 billion

Demand for “technology metals”

rises in modern vehicles•

Car electronics

•

EV/HEV

•

etc.

Urban mining Low loadings/unit but volume counts, e.g. in cars

Metal demand in automotive

in 1000 t/a

Share* of primary

productionsteel 100,000 10 %Al 7 300 30 %Pb** 7 000 170 %Cu 1 900 12 %Ni 140 10 %…Pt*** 0.12 65 %Pd*** 0.14 > 60 %Rh*** 0.03 110 %

2008 data (rounded)

*

>100% → additional supply from recycling**

Pb use in batteries (mainly automotive)***

Pt, Pd, Rh mainly in autocatalysts

16

Cu

Co

Au

Pt

In

Sn

Ag

Pd

Ru

tonne CO2 /

tonne primary

metal

≈

≈

10,000

200

10

0

Source:Ecoinvent

2.0, EMPA/ETH-

Zürich, 2007

Urban mining prevents impact from non-recycling, such as hazardous emissions and use on land

Recycling mitigates environmental impacts of mining•

Less land & water use, less pressure on ecosystem

•

Lower energy consumption and lower CO2

footprint

for majority of metals

Umicore Hoboken produces 70,000 t metals/year emitting theoretically ~1M t CO2 less than primary metal production

Recycling also offers ethical sourcing possibilities•

Supply chain transparency can be increased

Urban mining potential Offers significant environmental and ethical advantages

Umicore’s involvementUmicore’s involvementUmicore flagship recycling plant

in Hoboken, Belgium

Umicore flagship recycling plant

in Hoboken, Belgium

18

Umicore’s involvement Key growth axes aligned with global megatrends

Market position Umicore is a leading producer of key

materials for rechargeable batteries for portable electronics

Market position Umicore is the largest recycler of precious metals, able to recycle up to 20 different metals

Market position Umicore provides catalysts for 1 out of 3 cars in the world, with smaller position for trucks &

non-road vehicles

Market position Umicore supplies key innovative materials for high-efficiency solar cells and other photovoltaic applications

Growth opportunity Expand recycling through UHT technology

Growth opportunity Expand autocat

activity into new segments

Growth opportunity Develop Umicore’s presence in PV materials

Growth opportunity Expand battery materials activity into (H)EVs

More stringent emission controlResource scarcity

Renewable energy Electrification of the automobile

19

Umicore’s involvement Exposed to global markets

64 production sites

+ 34 other sites/offices

14,386 employees worldwide,

of which 4,828 in associated companies

Direct customer exposure mostly to Europe

End-user market exposure worldwide

Turnover by destination

Europe63%North

America8%

South America

7%

AsiaPacific17%

Africa5%

20

Umicore’s involvement Business model based on efficient use of resources

(Precious) metals price passed through to customer

Reducing metal content, while improving product performance, creates win-win

Recycling (own) production scrap and end-of-life materials allows to close the loop,

thereby aiming to minimize environmental impact

material solutionsMetals

Applicationknow-how

Recycling

Material solutions

Chemistry Material science

Metallurgy

End product performance

Material cost

Total value recovered

Recycling cost

Focus on

Focus on

21

H

K

Be

ScCa

Li

Na

Ti

Mg


Al Si P ClS Ar

B C N FO Ne

He




hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium




helium




H

K

Be

ScCa

Li

Na

Ti

Mg


Al Si P ClS Ar

B C N FO Ne

He




hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium




helium




Umicore’s involvement Recovery of “critical”

“technology”

metals

H

K

Be

ScCa

Li

Na

Ti

Mg


Al Si P ClS Ar

B C N FO Ne

He




hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium




helium




Technology metals EU critical metals

(Raw Materials Initiative)

Umicore’s recycled metals (partially recycled)

H

K

Be

ScCa

Li

Na

Ti

Mg


Al Si P ClS Ar

B C N FO Ne

He




hydrogen

potassium

beryllium

scandiumcalcium

lithium

sodium

titanium

magnesium




helium




Zn

refiners

Electronic scrap, rechargeable batteries

& other

Electronic scrap, rechargeable batteries

& other Automotive & process catalysts

Automotive & process catalystsIndustrial residuesIndustrial residues

22

Growth based on Cleantech•

60% of revenues already in Cleantech

•

85% of R&D focused on Cleantech

Targets set for period 2015-2020•

Organic revenue growth potential of 10%+ on average

•

Goal to generate average ROCE of 15%+

Means to finance growth available

•

Gearing ratio (ND/ND+E) <20%

•

Net debt / EDITDA < 1

Umicore’s involvement Capacity to grow

Materials technology company

focused on Cleantech applications

Growth takes environmental, social and stakeholder aspects into account

Key figures (in million €) 2008 2009 2010

Turnover 9,124.0 6,937.4 9,691.1 Revenues 2,100.3 1,723.2 1,999.7

REBIT 354.6 146.4 342.5

R&D 165.0 135.7 135.0 Capex 216.0 190.5 172.0

ROCE 17.8% 8.1% 17.5%

Conclusions•

Increasing need for metals, especially “technology”

metals

•

Metal scarcity issues, especially for “technology”

metals

•

Urban mining offers a solution and has potential

•

Umicore’s product/service exposure and its business model well aligned with these issues

2424

Forward-looking statements

This presentation contains forward-looking information that involves risks and uncertainties, including statements about Umicore’s plans, objectives, expectations and intentions.

Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Umicore.

Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could

vary materially from those anticipated, expected, estimated or projected.

As a result, neither Umicore nor any other person assumes any responsibility for the accuracy of these forward-looking statements.

Documents

“Technology” metals scarcity & Umicore’s offering Q2 2011 · Increasing need for metals • Metal scarcity issues ... high-efficiency solar cells and other photovoltaic applications