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Lithium Market

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In 2020, the demand for lithium is expected to reach 55,000 metric tons, much less

than the estimated supply of 70,000 metric tons

*Excludes U.S. Production Data

Source: Report on Sustainable Lithium Supplies through 2020 in the face of Sustainable Market Growth; news articles

Key Insights

In 2008, over 27,400* metric tons of lithium carbonate equivalent was produced, more than double the amount as compared to 2002

Recently, the interest and demand in lithium minerals has increased significantly, driven by the increased importance and production of lithium-ion

batteries as the next generation power source

According to predictions for 2020, by Patricio de Solminihac, VP & COO, SQM, annual demand in 2020 for lithium carbonate equivalent is expectedto reach 55,000-65,000 metric tons, and about135,000-145,000 metric tons in 2030

According to the geologists, supply is expected to increase as new players enter the supply market with increases in demand; creating a surplus of

more than 4,500 and 16,000 metric tons in 2010 and 2020, respectively

According to the experts, even a significant increase in lithium price would not affect the demand for the mineral or the cost of the batteries, as the

actual raw cost of the lithium in vehicle batteries is currently less than 3% as a proportion of cost

Additionally, with a relatively small number of producers controlling a large percentage of global production, an effective oligopoly is expected to

make lithium a strategic commodity in near future

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Total Lithium Demand and Supply, 2002-2020

metric tons

Surplus of 4,500

metric tons

Surplus of 16,000

metric tons

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Use Segment 2002 2007 2020 % Growth per

annum

(% of Total) 02-07 07-20

Air Conditioning 8 7 5 5.9 3.4

Aluminium Process Add 6 3 1 -1.5 -2.6

Batteries 6 14 39 26.5 15.6

Ceramics Glazing 13 10 6 2.8 2.2

Glass/Ceramic Li Add 23 28 16 12.2 2.4

Lubricants 9 8 5 7.3 3.0

Pharmaceuticals 5 5 3 6 3

Polymer Process 4 4 2 4.6 2.6

Synthetic rubber 4 4 2 5.8 3.0

Other Plus Alloy 22 17 21 2.6 8.3

User Segment Overview

Percent

Key Insights

The major industrial markets for lithium : Ceramics, Glass,

Aluminium, Greases and Rubber - have all benefited from

high rates of GDP growth, increasing overall lithiumconsumption; however, the main driver of lithium demand

has been its use in rechargeable batteries

According to USGS estimates, in 2008, the global end-use

markets for lithium were: Batteries, 25%; Ceramics and

Glass, 18%; Lubricating greases, 12%; Pharmaceuticals

and Polymers, 7%; Air conditioning, 6%; Primary

aluminum production, 4%; Continuous casting, 3%;

Chemical processing 3%; and Other uses, 22%

Battery type 2007 2020 % Growthp.a

% of Total 07-20

Primary Batteries 21 8 8

Secondary Batteries 79 54 12

EV Batteries 0 38 N/A

Battery Use of Lithium, By Type

Percent

By 2020, the demand for lithium is expected to be driven by Batteries, contributing

39% to the total lithium demand

Source: Report on Sustainable Lithium Supplies through 2020 in the face of Sustainable Market Growth; news articles

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Chile, Australia, China and Argentina are the major producers of lithium in the

world, accounting for 93.4% of the total market

*Excludes U.S. Production Data

Source: Mineral Commodity Summaries 2009; news articles

Key Insights

Chile, the largest producer of lithium in the world, produced 12,000 metric tons of lithium in 2008, followed by Australia with 6,500 metric tons

Chile, Australia, China and Argentina, together accounted for about 93.4% of the total lithium production in 2008

Supply of lithium is dominated by producers of lithium from brines in the Americas - SQM, Chemetall and FMC Lithium and the sole mineral producer

Talison Minerals of Australia Despite increasing its domestic production of lithium minerals and lithium from brines by 15% per year since 2000 and developing new projects,

China accounted for only 13% of the total lithium production in 2008 supplying 3,500 metric tons to the market

Strategic investors are positioning themselves in lithium source types that are not yet being exploited, including hectorite clay and oilfield brines - two

source types that would rank ahead of hard rock pegmatite/spodumene for rapid development

Hard rock pegmatite/spodumene, although now being mined in some places like China, is generally cost prohibitive or at least disadvantaged when

compared to brines

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World Mine Production*, 2008

Percent

100% = 27,400 metric tons

Total Global Resources & Reserves of Lithium, 2008

Percent

100% = 30.1 million tons

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Deposit Country Top LithiumProducingCompanies

Reserve About

Salar de AtacamaChile SQM Brine In 1997, SQM started to produce lithium carbonate and supplied about 9,000 tonsof lithium carbonate in the market

In the period between 1998-2004, expanded its capacity from 9,000 to 18,000 andthen to 28,000 ton/year

The Companys all nine productive plants are located at The Atacama Salt Desert,located between the first and second region of Chile

Chemetall LithiumBrine Chemetall's Lithium activities started in 1923 with the production of Lithium metaland salts

In the period between 1990-1996, Chemetalls SCL and Silver Peak operationsproduced Lithium carbonate from minerals and from brines

The Companys product line comprises more than 80 different commerciallyavailable Lithium compounds as well as custom tailored products

Salar de HombreMuerte

Argentina FMC Lithium Brine In 1995, FMC Lithium purchased the Salar del Hombre Muerto, an Argentine salarcontaining high uniform concentrations of lithium with low levels of othercontaminants

The deposit site is located in the high Andes at about 13,200 feet above sea level

Greenbushes Australia Talison Minerals Minerals The Company was formed in August 2007 when a consortium of US private equitycompanies led by Resource Capital Fund bought the assets of the AdvancedMinerals Division of Sons of Gwalia

The company's Western Australian operations contain the world's largest reservesof lithium and tantalum, making it a global leader in the supply of these advancedmaterials

Supply of lithium is majorly dominated by producers of lithium from brines in the

Americas including SQM, Chemetall Lithium and FMC Lithium

Source: Company websites; news articles

The two producers of lithium products in Chile, SQM and Chemetall SCL, account for more than 65% of the world market

The lithium carbonate price has been rising since 2005 on account of market shortage caused by:

a strong increase in the demand fueled by battery applications

production problems in the Salar de Atacama