Sumitomo Metal Mining IR-Day 2020

【Battery Materials Business】Battery Materials Div.

2020.12.21

Isao AbeExecutive OfficerGeneral Manager of Battery Materials Div.

Briefing contents

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Environmental restrictions and electrification in automotive industry

SMM Battery Materials Business Strategy

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1. Goals in set in COP21 (2015 Paris Agreement)

Reduce worldwide CO2 emissions by 60% by 2050

Reduce small vehicle CO2 emissions by 2G/t a year

Cut fuel efficiency for all vehicles by half to complete the goal

Cut fuel efficiency for all new vehicles by half by 2030

Each country is laying out CAFE (corporate average fuel efficiency) restrictions to meet with the goals of the agreement

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2. Restriction Situation in Each Country

1. EU 20 million vehicles/year• CAFE Restriction: Existing automobile companies are obligated to reduce CO2 by a fixed rate• CO2 emissions 2015: 120g/km -> 2021: to 95g/km (with penalty applied )

2. China 25 million vehicles/year• CAFC Restriction (same as CAFE)

Average fuel efficiency 2020: 20km/ℓ -> 2025: 25km/ℓ• NEV Restriction

Each company is obligated to produce a fixed number of NEV (New Energy Vehicles) relative to the number of gasoline / diesel vehicles they sell

• Companies that do not meet restrictions through a combination of CAFC and NEV are obligated to buy credits from other companies

* “Fuel efficient vehicles” like HEV are equated to the sale of 0.2 - 0.5 gasoline vehicles

3. US 19 million vehicles/yearFuel efficiency rate around 18km/ℓ continues

4.Japan 5 million vehicles/year

Average fuel efficiency 2016 Actual Results: 19.2km/ℓ -> 2030 Standard: 25.4km/ℓListed vehicle sale results for each country are the 2019 actual results

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3. Market Size for Major Battery Materials(million USD)

0

10,000

20,000

30,000

40,000

2016 2017 2018 2019 2020Estimate

2021Forecast

2022Forecast

2023Forecast

2024Forecast

2025Forecast

Four Major Lithium Ion Battery (LiB) Materials World Market Size Shifts and Forecast

Cathode material

Anode material

Electrolytic solution

Separator

Market size of the four major materials will be US$ 36.6 billion (2025 estimate)Cathode material will account for roughly half of that

⇔Short-term, the overall automobile market will slump and xEV will also be affected

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Source: “Global Market of Major Four Li-ion Battery Components: Key Research Findings 2020” (released on October 21st , 2020) by Yano Research Institute Ltd.

4. xEV Sale Number Estimates

Market growth in 2020 is sluggish due to COVID-19Estimates have HEV/PHEV accounting for 6.5 million of the 100 million vehicle automobile market in 2023, and BEV accounting for 5 million

(B3 Report2020/5)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2018 2019 2020 2021 2022 2023

xEV Sale Numbers (2020 and after is forecast)

BEV

PHEV

HEV

MHV

World-wide automobile sales for 2019were approx. 90 million

(includes trucks and buses)

(Mild hybrids)

Thousand Vehicles

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“xEV,” “Electric car”: Includes Plug-In Hybrid (PHEV) and Hybrid (HEV/MHV) vehicles in addition to BEV

5. xEV Sale Numbers (actual results by region)

USA

EU

JapanChina

Other

Automobile Sale Numbers (2019)

20 million19 million

20 million

25 million5 million

Total 90 millioncars

USA

EU

Japan

China

Other

Data: Japanese Automobile Manufacturers Association

380,000

230,000

20,000

960,000

90,000

Total 1.7 million

cars

BEVSale Numbers (2019)

Data: B3 Report

xEV market share is still small, even in developed countries, and expected further growth

USA

EU

Japan

China

Other

xEVSale Numbers (2019)

1.08 million

1.49 million

Total 6.2 million

cars2 million

1.05 million

600,000

Data: B3 Report

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6. xEV Battery Volume Comparison

0.75kWh 8.8kWh

100kWh

BEV (electric vehicle) has over 100X the battery volume of HEV(large battery installed in place of engine)

->Usage volume of materials such as cathode material is also very large

Volume for batteries installed in HEV, PHV and BEV

HEV PHV

BEV

(representative vehicles)

Reference: Rechargeable AA Battery 2Wh

100X

10X

10X

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0

50

100

150

200

250

300

350

400

2018 2019 2020 2021 2022 2023

GWhxEV Battery Demand Estimates (Volume)

It’s forecasted that material demand will grow rapidly along with the popularization of xEV

(B3 Report2020/5)

7. xEV Battery Demand Estimates

TeslaGigafactory35GWh

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Briefing contents

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1

2

Automobile environmental restrictions and the push towards electric

SMM Battery Materials Business Strategy

1. Battery Materials Business Strategy

1. Stable SupplyHaving a fully-integrated supply chain from MineralResources, Smelting & Refining to Materials

2. Long-term ContinuityResearch laboratory specializing in the development of battery materials (Battery Research Laboratories: NiihamaCity, Ehime Prefecture)Recycling of raw materials utilizing Smelting and Refining technology and processes

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2. Stable Supply (Supply Chain)

A fully-integrated supply chain from Mineral Resources, Smelting and Refining to Materials

Metal ⇒Material Production

Isoura Plant (Ehime Prefecture)

For secondary batteries in

automobiles

Intermediate Product⇒Refined Metal

Niihama Nickel Refinery(Ehime Prefecture)

Harima Refinery(Hyogo Prefecture)

Refined into nickel sulfate

Taganito HPAL Nickel Corporation (THPAL) (Philippines)

Mineral Ore⇒Intermediate Product

Mixed nickel-cobalt sulfide

Low-grade nickel mineral oresmelted and refined with HPAL

Nickel battery materials(Lithium nickel oxide, etc.)

Sumiko Energy Materials Co., Ltd.Naraha Plant (Fukushima Prefecture)

Transportedto Japan

Transported to next plant

after processing into nickel sulfate

High Pressure Acid Leach

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3. Battery Materials Business Fundamental Production Process

Ni Compound Liquid

Reaction

Separation of Solid and Liquid

Drying

Inspection

Calcination

Mixing

Baking (Synthesis)

Deagglomeration

Sieve / Packing

Inspection / Shipment

Precursor

Lithium raw material

Nickel hydroxidePrecursor

Lithium nickel oxideNMC(Ternary)

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4. Cathode Material Production Sites

Sumiko Energy Materials Co., Ltd. (Baking)

Isoura Plant (Precursor / Baking)

Harima Refinery (Precursor)

Precursor plant (Operating from 2018) newly established at Harima Refinery (Hyogo Prefecture)Production is through proceeding process in two sites (precursor), following process in two plants (Baking)

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5. Battery Materials Growth StrategyCathode Material Growth Strategy

• Demand for automobile secondary batteries will expand along with the advancement of the switch to EV.

• We will continue full production while observing market and customer trends and responding appropriately.

Shift of cathode material production capacity(NCA)

(monthly production)*Year stated is the year investment plan announcement was released.

850t

3,550t

4 billion yen

2016

18 billion yen

15 billion yen

2014

(Investment amount)

1,850t

4,550t

2017

(Production capacity)

During 2024 3-Year Business Plan

NCANMC

Nickel hydroxide

Total

10,000t

Securingnew

mineral resources

Recyclingprocess

4.8 billion yen 2013

300t2 billion

yen 2008

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Customer Manufacturing Base

Product(secondary battery)

Consumers

Customer recycle base(Decomposition / Recycling)

Spent productsToyo Smelter & Refinery, Niihama

Nickel Refinery(Copper, Nickel smelter and refinery)

Isoura Plant Cathode Material Production

Ni Compound

Cathode material

SMMNi, Co Recycling Base

Valuable process waste

Ni, Co Compound

: Current Situation

: Future

Current: Primarily only Ni (+Cu) is being recycled at the smelter and refineryfrom process waste

Future: Specialized processes will be established, making it possible to recover Co and other valuables from automobile batteries recovered from consumers ( flow)

6. Future Concept - Lithium Ion Battery Resource Recycling

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7. New Recycle Process Pilot Plant

Pilot plant (Niihama City, Ehime Prefecture)

Development of a new recycle process for lithium-ion batteriesPilot plant operations started from March 2019

Existing methods only allowed for recovery of Copper / Nickel

Impurities in secondary batteries are separated out all at once through our unique pyrometallurgical process

We can selectively recover nickel, cobalt and copper as alloys

Cobalt will also be reusable as a battery material

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NoteThe materials provided herein are not intended as disclosure under the Securities Law, and no warranty is made as to their completeness or accuracy. Any projections included in these materials are based solely on information available at the time of this briefing, and are subject to change based on market conditions, competitive conditions, and a number ofother factors.Therefore, we ask that you refrain from making any investment decisions based on these materials alone. The Company cannot be held responsible in any way for any losses that may occur as a result of the use of these materials.All copyrights, trademarks, and intellectual property rights attaching to the materials herein are the sole property of Sumitomo Metal Mining Co., Ltd.

Sumitomo Metal Mining Co., Ltd

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https://www.smm.co.jp/E/