Elkem Asa · OSL:ELK
Elkem Asa — Investor Day (October 2022)
43 slides from Elkem Asa's investor day presentation, Oct 26, 2022
Slide 1: Capital Markets Update, 26 October 2022
26 October 2022
Slide 2: Capital Markets Update
Capital Markets Update Xi Introduction and strategy update * Helge Aasen, CEO Silicon Products division * Inge Grubben-Stramnes, SVP Silicon Products Silicones division * Sophie Schneider, VP Silicones EMEA Green Ventures * Asbjorn Sovik, SVP Green Ventures & Digital
Slide 3: Helge Aasen
Helge Aasen 26 October 2022 3
Slide 4: Our main message
Our main message Elkem’s → Dual-play growth and green leadership strategy → Balanced across geographies and products Financial → Strong results, attractive dividend policy performance → Profitability driven by strong market positions Silicon → Low cost positions Products → Favourable industry dynami
Slide 5: Global economy and industry dynamics
Global economy: China growing faster than western world but re-industrialisation in the West Green transition: Focus on sustainability with electrification of transportation accelerating Geopolitical polarisation: Trade barriers creating opportunities for dual-play providers Industry dynamics: Under
Slide 6: Elkem's portfolio is well balanced for different scenarios
Elkem’ portfolio is wel balanced for different scenarios: * Growth/profitability ‘s + Eastern/Western markets= * + Upstream/downstream® By ee a ae X L, p Ee ane wee Ic Revenue split - by division in Carbo! Solutions | _& Americas 7% one %o Bl Production site por r 43% Bi sales oftice HQ U Asia 40% S
Slide 7: Our climate ambitions
Our climate ambitions ° • By 2031: Reducing absolute emissions* by 28% from 2020- 2031 while growing the business – delivering 39% improvement in product footprint** • By 2050: Achieving fully carbon neutral production (zero fossil emissions) globally • Grow supplies of advanced materials to green m
Slide 8: Our corporate strategy
Our corporate strategy Dual-play growth Green leadership → Balanced between geographic → Strengthening position as best in the regions (East & West) industry on low CO2 → Balanced across the value chain → Growing supplies to green transition & (Upstream & Downstream) creating green ventures Silicone
Slide 9: Inge Grubben-Strømnes
Inge Grubben-Strømnes 26 October 2022
Slide 10: Silicon Products - Highlights
Silicon Products - Highlights → Four business lines: Silicon, ferrosilicon, foundry alloys and microsilica → End markets driven by electrification, renewable energy, digitalisation and increased standard of living → Low cost commodity positions based on scale and operational excellence with improved
Slide 11: Silicon Products - Business lines: Silicon
Silicon Products - Business lines of division’s sales Raw materials Products Industry players** End markets Quartz Silicones (50%) Consumer goods Construction Coal and biocarbon Total production capacity Aluminium (30%) 205.000* mt in Norway and China → 175.000* mt silicon grades → 20.000 mt Silgrai
Slide 12: Silicon Products - Business lines: Ferrosilicon
Silicon Products - Business lines of division’s sales Raw materials Products Industry players* End markets Quartz Electrical steel (40%) Construction Coal and biocarbon Total production capacity Stainless steel (20%) Consumer goods → 185.000 mt in Norway and Iceland → 40% High Purity grades → 35% Re
Slide 13: Silicon Products - Business lines: Foundry alloys
Silicon Products - Business lines of division’s sales Raw materials Products Industry players* End markets** Ferrosilicon Iron foundries Automotive (50%) Total production capacity Engineering (35%) Alloying elements → 190.000 mt globally → 60% FSM → 20% Low potent inoculants → 20% High/Medium potent
Slide 14: Silicon Products - Business lines: Microsilica
Silicon Products - Business lines of division’s sales Raw materials Products Industry players* End markets Before Construction (30%) Construction and infrastructure Total capacity → 300.000 mt microsilica globally (40% Refractories (30%) Refractories and ceramics After sourced externally) → 35.000 m
Slide 15: Silicon Products - Competitive strengths
Silicon Products - Competitive strengths Raw materials Plants Customers End markets → Low cost hydro power → Operational excellence and economies → Strong brand and long-term → Well positioned to benefit from higher of scale relationships sustainability requirements → Captive quartz mines → Low carb
Slide 16: Silicon Products - Cost curves
Silicon Products - Competitive strengths Silicon cost curve Ferrosilicon cost curve Net operating cost (EUR/mt) Cash cost (EUR/mt) 5000 5000 4000 4000 3000 3000 2000 2000 Bremanger Thamshavn Iceland Salten 1000 1000 Rana 0 0 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 1st Quartile 2nd Quarti
Slide 17: Silicon Products - Competitive strengths: power positions
Silicon Products - Competitive strengths Elkem position → Norway – long-term contracts in liquid market, short/medium term hedging ratio > 85% → Attractive locations and area pricing → CO2 compensation → Iceland – long-term contract → Canada – captive hydro power combined with public industrial tari
Slide 18: Silicon Products – Market dynamics
Silicon Products – Market dynamics Net exporting country / region Net importing country / region → China is balancing global markets through export to Rest of Asia, Europa and North America where Major supply flow demand is exceeding capacity to supply → EU and US have implemented Anti Dumping Dutie
Slide 19: Silicon Products - China silicon production
Silicon Products - Competitive strengths → China’s silicon production established as low-cost exports → Domestic demand is increasing due to solar, silicones and aluminium → Production costs are increasing → Higher energy cost due to scarcity, strong demand and more imports → Stricter environmental
Slide 20: Silicon Products - Summary
Silicon Products - Summary → Suppling materials to markets supported by strong megatrends → Low cost positions based on operational excellence, economies of scale and long-term competitive renewable energy → Strong market positions in specialty niches → Focus on maintaining leading cost positions, r
Slide 21: Sophie Schneider
Sophie Schneider 26 October 2022
Slide 22: Silicones – highlights
Silicones – highlights Silicones bring unparalleled properties and performances to Light weighting Thermal management Long-term reliability (weather, UV) materials, which are essential in multiple industries. Battery thermal management Electronic assembly Nonflammable materials Electrical & fire saf
Slide 23: Silicones global market
Silicones (BUSD) → 5 global integrated players + emerging Chinese local players → Total market size is ~ 16 BUSD Global silicone market 22 BUSD → 8.5% Elkem market share in 2020 16 BUSD % (2020) Compound N°4 in Europe and APAC Annual N°2 in Central & South America Growth → Silicone demand global ann
Slide 24: Silicones consumption and emissions savings
Silicones → Due to their benefits and widespread presence in consumer society, silicones consumption grows as GDP per capita rises. → The use of silicones and related products reduces the carbon footprint of many essential products and services. → In addition, Elkem’s Silicone division has plans and
Slide 25: Silicones megatrends
Silicones Rising middle class Digitalisation Ageing population Mobility Decarbonisation Industry players Industry players Industry players Industry players Industry players 25
Slide 26: Silicones end-market segments
Silicones Healthcare & Personal Silicones Division 2019-22 Consumer & packaging Silicones Division 2019-22 Chemicals Silicones Division 2019-22 Care → Leading position in Release → Intermediates (silicones → Medical adhesives, long term coatings for food & label polymers) sold to chemical implants,
Slide 27: Product innovations for electric mobility
Silicones Delivered a series of product innovations for electric mobility over the past 3 years: ≈25% of global sales with NEW products <5 years 17 product innovations BLUESIL ™EV SEAL 60 L RED AmSil™ & AmSil Silbione™ EV battery pack sealing solution BLUESIL™LSR 393X/30 Combine the advantages of si
Slide 28: Silicones specialisation investments
Silicones 2021 2022 2023 2024 Timing: 1Q 2022 Location: U.S. Invest in specialty capabilities & technology Asia: Acquisitions of POLYSIL, China (2019) and Timing: 4Q 2021 BASEL Chemie, S. Korea (2020) Location: China Europe: OFS specialty silicones plant acquisition, France (2021) Timing: Start-up:
Slide 29: Landmark upstream capacity investments
Silicones → Landmark investments underway on upstream capacity on both Elkem’s Eastern & Western silicone manufacturing chains Capacity increase: +25% / +20 ktpa Capacity increase: +50% / +117 ktpa Start-up: H2 2023 Start-up: H1 2024 → Build a competitive upstream capacity supporting downstream 2025
Slide 30: Specialisation, competitiveness and scale
Silicones Specialisation Competitiveness and scale → Specialise our portfolio through differentiation in → Improve profitability through operational order to increase and stabilise margins through excellence and scale the cycle New innovation center ATRiON in Shanghai → 2 new global innovation centr
Slide 31: Asbjørn R. Søvik
Asbjørn R. Søvik 26 October 2022
Slide 32: Green Ventures – Vianode business case
Green Ventures – Vianode Vianode business case in brief Vianode in the value chain Targeting high growth markets with significant regional undersupply and regulatory push for sustainability and localisation. Highly-efficient and automated production process based on proprietary technology leading to
Slide 33: Global announced cell production capacity
Green Ventures – Vianode GLOBAL ANNOUNCED CELL production CAPACITY BY REGION (TWh) ANNOUNCED CELL PRODUCTION CAPACITY IN EU & NAM (TWh) 6.6 CAGR 1.9 CAGR 6.1 0.2 1.7 0.2 0.7 30% 5.6 0.2 0.6 5.1 1.4 0.7 30% 0.6 1.1 4.6 0.2 32% 0.5 1.0 1.2 0.6 0.2 0.9 3.9 0.4 0.6 0.7 1.0 0.2 0.6 3.2 0.3 0.5 0.8 0.2 0.
Slide 34: Anode material demand in EU & NAM
Green Ventures – Vianode → ANODE MATERIAL DEMAND IN EU & NAM (million tonnes) → Vianode’s POTENTIAL CUSTOMERS1 and link to oems1 Anode graphite share (2030) Anode graphite demand Anode market value (2030) above 90% ~1,000mt/GWh ~20 BUSD 1.8 1.6 1.4 CAGR 1.2 30% 1.0 Supply gap of 0.8 +90% without Via
Slide 35: EU Critical Raw Materials Act and US IRA
Green Ventures – Vianode “EU Critical Raw Materials Act (CRMA)” → The CRMA’s objective is to develop a sustainable supply of raw materials needed to reach EU climate neutrality ambitions “US Inflation Reduction Act (IRA)” → Increasingly attractive to for OEMS and battery cell producers to source fro
Slide 36: Vianode material characteristics
Green Ventures – Vianode Key characteristics: → Faster charging Reversible capacity (range) High energy → Increased range → Long service life and recyclable Balanced → Increased safety Fast charge → Vianode offers a wide range of materials for Li-ion batteries within EV and ESS Fast charge capabilit
Slide 37: Vianode emissions
Green Ventures – Vianode Technology (closed system) with: Emissions → High yields 100% → Low energy consumption → Low emissions 10% Emissions from conventional Emissions from Vianode production production 1 Indirect CO2 emissions based on data from www.nve.no and www.iea.org 37
Slide 38: Vianode next steps and ambition
Green Ventures – Vianode → → → → → → → → Accelerate market access through supplying qualification volumes → Prepare a solid base for the next financing and reach bankability → → → Gain production experience in full scale equipment → Establish standard operating procedures for an accelerated → ramp-u
Slide 39: Elkem biocarbon business in brief
Green Ventures – Biocarbon Elkem biocarbon business in brief Elkem Biocarbon in value chain Significant undersupply of Biocarbon to metallurgical markets. Elkem requires a minimum 200-250.000 mt of biocarbon by 2030. Based upon technological advancements and process know how from operating smelters.
Slide 40: Biocarbon undersupply requires multiple projects
Green Ventures – Biocarbon but significant undersupply requires multiple projects Supply of biocarbon not even close to cover demand Elkem pursuing parallel tracks for biocarbon development → CO2 from coal constitutes 40% of total CO2 emissions – in 2021, → Developing suppliers internationally the E
Slide 41: First large-scale biocarbon plant planned for 2025
Green Ventures – Biocarbon First large-scale plant planned for in 2025 → Qualify product and accelerate market access → All process steps Up to 4000 tonnes per → Industrial environment In start-up → Verify technology year → Located at Chicoutimi (Canada) → Gain production experience in large scale p
Slide 42: Green Ventures
Green Ventures →Opportunities with a green profile and focus on value creation →Based on Elkem technology and process knowledge →With partners to realise scale, achieve synergies or mitigate risk →When attractive sell-down or possible IPO to realise value 42
Slide 43: Delivering your potential
~ Elkem Delivering your potential