Synthetic and Natural Graphite

The relative applications and fundamentals of

th synthetic
the th ti andd natural
t l graphite
hit markets
k t

Tom Burkett – Vice President GMS – SGL Group

Industrial Minerals Graphite & Graphene Conference
New York, NY November 25-26. 2013
SGL Group Overview

SGL Carbon and the relative applications and fundamentals of the synthetic and
natural graphite markets

What are the p

projections
j for growth
g in this market?

Can the synthetic graphite market benefit from interest in new carbon products?

What synthetic graphite producers and natural graphite consumers can do to offset
the damaging effects of volatile raw material prices - coke and natural flake?

Page 2
SGL Group - The Carbon Company is one of the world’s largest
manufacturers of carbon-based products

SGL today

• Comprehensive portfolio ranging from

carbon and graphite products to carbon
fibers and composites

• 45 production sites worldwide

• Service network covering more than 100

countries

• Sales of € ~1
1.7
7 bn in 2012

• Head office in Wiesbaden/Germany

• Approx.
Approx 66,700
700 employees worldwide

• Listed on Deutsche Bourse’s SDAX

• Established in 1878 = 135 years old

Page 3
SGL Group has a strong global footprint with 45 production sites

SGL Group worldwide Sales by region

Production sites RoW* 8%
 Performance Products Asia 28%
Germany
 Graphite Materials & Systems
18%
 Carbon Fibers & Composites
North Rest of
America Europe
23% 23%

* RoW = Latin America, Africa, Australia

Page 4
Broad Base

Core competencies

Comprehensive portfolio

Global presence

• High temperature technology

• Know-how in:
– Materials
– Engineering • Coarse-grain graphite
– Applications • Fine-grain graphite
• Expanded
p natural g
graphite
p
• Approx.
Approx 6,500
6 500 people worldwide
• Carbon fibers and composites
• 45 production sites
• Global network
• Near to our customers

Page 5
Fundamentals – Why Graphite ?

In the following slides we

we’ll
ll look at:

The fundamentals of Graphite

The Applications of Graphite

The Prospects of Growth for Graphite

Page 6
Carbon and Graphite growth is derived from
Market Needs where other materials fail

Main properties carbon and graphite materials

Mechanical
M h i l
strength

Thermal Electrically
shock and Thermally
resistance Conductive
Carbon &
Graphite
materials

Ultra High Corrosion

Purity resistance

Machinability

Page 7
The competitive advantages of carbon

No other material is lighter … … or stronger and stiffer

500
Density 7,9 Specific
(kg/l) strength 400
(k )
(km)
300

200 Aramid
2,7 Fiber
1,6 100 Glass SiC
Fiber
Al-alloys
Steel
0
0 100 200
Steel Aluminium CFRP Specific stiffness (100 km)

Other ceramics would break … … or fail at temperatures > 1.500 °C

Page 8
Synthetic graphite manufacturing is complex and requires
multiple steps for a total four to six months production time

Manufacturing process of synthetic graphite

Coke & graphite Binder pitch

Grinding Mixing

Shaping
p g
Extruding, vibration / die 4-5
molding, isostatic pressing months

Pitch
Carbonizing
i
impregnating
ti

Graphitizing

Finishing
Machining, purifying, 2-4
SiC coating weeks

Page 9
The unique properties of natural graphite are captured in
expanded graphite foils

Manufacturing process of expanded graphite

Natural g
graphite flakes Intercalation agent
g

Graphite salt
3-5
days
1,000°C
Thermal expansion

Compacting

3-5
days
Impregnated Sheets Foils
Sheets

Page 10
Fundamental long-term growth drivers for our businesses

Changed economic Climate Energy / raw

Key
ey c
challenges
a e ges
environment
i t change
h materials
t i l availability
il bilit

SGL Group
“Towards an ecologically sensitive world”
approach

Sustainable Energy Alternative Light

solutions Sustainability
efficiency energies weight

Carbon contributes to all four solutions

Page 11
Best Solutions: Best in class products, services and ideas to
satisfy current and future needs of our customers

Non-ferrous metals Semiconductor

Iron and steel
((e.g.
g aluminium)) solar and LED

• High-performance • Carbon and graphite • High-purity fine-grain

graphite electrodes cathodes in customized graphite for polysilicon
• Carbon and graphite d i
designs ffor primary
i andd monocrystal
t l
lining materials for blast aluminum growing
furnaces • Fine-grain graphite for • Coated graphite
continuous casting platters and susceptors
for LED and Epitaxy

Page 12
Best Solutions: Best in class products, services and ideas to
satisfy current and future needs of our customers

Mechanical High temperature

Automotive Chemicals
engineering
g g technology
gy

• Carbon Fiber JV with • CFRP light weight • Graphite heaters and • High Temp Corrosion
BMW & Mitsubishi components insulation material Resistant Sealing &
• Cylinder head gaskets • Fine-grain graphite for • C/C charging systems Gasket materials
• Carbon ceramic brake electrical discharge • Thermal
discs machining decomposition units
• Pump parts made of • Multi-tube heat
carbon and graphite exchangers

Page 13
 Best Solutions: Best in class products, services and ideas to
satisfy current and future needs of our customers

Energy and environ- High performance

Aerospace Automotive
mental technology
gy sports
p

• Carbon fibers for wind • Primary structural • Carbon fiber fabrics and • Carbon fiber for
power plants CFRP components prepregs for high- innovative automotive
• Cold
C ld storage
t systems
t • Carbon
C b fib fibers ffor performance sports manufacturing
for truck air conditioning aircraft brakes • C/C-brake discs for processes
• Graphite for solar wafer • C/SiC for satellite mirror Formula 1 racing • Fuel cells – automotive
production and energy support & stationary
storage

Page 14
New Markets and Materials:
Products in their infancy with Bright Futures

Pyrolytic Graphite
Graphenes 1 Carbon Nanotubes 2
Sheet 3

• Application and Potential Applications in:

• Electronics
• Li-ion Batteries
• Electrical and Thermal Storage
• Medical
• Construction
• Automotive
• Chemical and H2O Purification

• It’s not a question of IF; but WHEN

Photo Sources: 1-Hitco/SGL; 2- The Guardian; 3-Panasonic Corp

Page 15
Raw Materials

In the following slides we

we’ll
ll look at:

Natural Graphite as a Raw Material and our view of the market fundamentals

Coke as a Raw Material and our view of the market fundamentals

SGL’s Current view of these two markets

Page 16
Natural Graphite as a Raw Material - Market Drivers

• Small global business, acts like a commodity

• Seasonal influence

• Sovereign influence

• Family ownership = different profit motives

• Natural ( from the ground ) variation driving different economics

• Base industries – Refractories, Steel, Expanded Graphite

• New
N M
Market
k t entrants
t t – Li-ion,
Li i graphenes
h

• Purification technology & environment

Page 17
The Scarcity of Natural Graphite

Total Mine Extraction

Typical
yp Run of Mine Flake
3 % - 8%

Typical Large Flake (80-30 Mesh)

approx 30
30-40%
40%

1000 Mt Mined could equal

9 – 32 Mt of Large usable flake

Page 18
 Natural Graphite Flake Pricing Index ( 2010 ‐ 2014 )
2010 = 100%

240% 23 %
234%
227% 228%

220%
210%

198%
200%

184% 182%
180% 175%
183% 170%

160%
160% 167% 168%
152%

140% 134%
141%

120%

100%
100%
2010 2011 2012 2013 2014
NG Low Purity (97%) NG Medium Purity (99%) NG High Purity (99
(99.95%)
95%) NG Ultra High Purity (99.98%)
(99 98%)

Page 19
Coke as a Raw Material - Market Drivers

• Global Market Drivers – Steel, Aluminum and Power

• Global Oil and Coal Economics

• Environmental drivers
– New Pitch regulations
– Coal for Electric Generation
– Coke Battery
y Declines

• Capex constraints at Refineries that change availability

• Competition among all grades of coke…

– Fuel grade, Met Coke, Anode grade, Pitch Coke, Needle Coke

Page 20
 Coke prices for Synthetic Graphite
2008 = 100
240%
226%
230%

220%
209%
210%

200%

190%

180% 175%

170% 164%

160% 152%
148% 148%
150% 142% 144%

140% 134%
126% 128%
130%

120%
110% 110%
107% 105%
110%
100%
100% 94%

90% 82%
80%

70% 64%

60% 56%

50%
2008 2009 2010 2011 2012 2013
Petroleum Anode Petroleum Needle Pitch (Isotropic) Pitch (Semi‐Isotropic)

Page 21
How we manage the raw materials pricing dynamics

• Where possible pass through cost increases

• Develop new technologies that allow us to use lower cost raw materials to produce
higher value-add products.

• Develop technologies to Blend raw materials

• Improve Yields through the process technology improvements

Page 22
SGL’s position on Coke and Natural Graphite

• High Purity NG and Coke are critical to our Success

• There is no shortage of either NG or Coke in the world

• SGL does Not wish to become a Miner, we plan to maintain flexibility as a Consumer

• There is economical room for 3-5 more mines to open on a global basis
• This assumes a reasonable growth rate for Li-ion Batteries

• Graphite Anode Material for Li-ion batteries will remain a mix of synthetic and
natural for the foreseeable future

• Shift in Needle Coke market ( GTI and Chinese producers) should provide more
favorable market conditions

Page 23
Summary

New Applications

Li-ion
Li ion Batteries, LEDs, New Batteries, Solar, Electronics, etc…
Will drive graphite demand, both Natural and Synthetic

New Materials such as Graphenes and Nanotubes

Will come forward over time to develop new industries

Virtually all technologies require higher purity levels

levels, improved/increased consistency

Coating Technology open doors for growth of Carbon and Graphites

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 Th k you ffor your attention
Thank tt ti

Page 25