Toyo Ink SC : Carbon Nanotube Dispersions Business for Lithium ion Battery Business Briefing Question & Answer session summary

Carbon Nanotube Dispersions Business for Lithium ion Battery

Business Briefing for the First Half of Fiscal Year Ending December 31, 2023

Question & Answer

• Date/time: Aug. 22, 2023 11:00am - 12:00am (Japan time)
• Speakers:

Hideki Okaichi: President and Representative Director, TOYOCOLOR CO., LTD. Satoshi Ooi, Executive Vice President of TOYOCOLOR CO., LTD.

Koji Obata, General Manager, Functional Materials Division of TOYOCOLOR CO.,

LTD.

• Presentation Material： https://schd.toyoinkgroup.com/en/ir/archives/pdflib/2023/document20230821.pdf

TRANSLATION:

This is a transcript of Financial Results Briefing for the First Half of the Fiscal Year Ending December 2023, Question & Answer session, held on Aug. 22, 2023. This is an English translation of the Japanese original, prepared only for the convenience of shareholders residing outside Japan. The original Japanese version will prevail should there be any difference in the meaning between the English version and the Japanese version.

DISCLAIMER:

The forecast or projections in this material are based on the assumptions and beliefs of our management in light of the information available as of Aug 22, 2023. Changes in global, economic and business conditions could cause actual results to differ materially from these forecasts.

The content of this transcript have been edited or revised by the company.

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Question & Answer

(page7)

Q.1 : The first one, regarding page seven of the document, in terms of battery types and products developed. Currently, as for CNT, it is mainly ternary or NCA. On the other hand, for those with poor conductivity, such as LFP, it is necessary to add more conductive agent to some extent. That being the case, I think CNT would be more advantageous than carbon black.

I am unsure if, including your company, no one might be using CNT for LFP. Looking at this chart I would assume you are not using them, so let me first inquire if something like the superiority of CNT over LFP will come up in the future.

A.1(Okaichi) : As for LFP, as you can see here, our customers are basically using LFP because it is low-cost and low-capacity. They would be satisfied with a cruising range of around 100 kilometers, 150 kilometers, or 200 kilometers. In return, the cost is low, for example, delivery vehicle is the most common, as far as I can hear right now. We are aware that CNT, which is

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more expensive, is basically not used because it is used in buses and other applications where it can be recharged every day.

A.1(Ooi) : I would like to follow up. As mentioned earlier, due to low cost and low capacity aspects, the main focus is on the low end. And, as you mentioned, the insulation is very high. In short, it is an active material with poor conductivity, so the market is now distributing LFP with a tight carbon coating on the surface. If this is the case, it is difficult to provide the benefits of CNT.

Therefore, we are not targeting this area. However, LFMP is about to be introduced in the future. This is a lithium phosphate, iron, and manganese compound, which has even worse insulation properties. In this case, carbon-coated active materials will be distributed, but there is a possibility that our highly conductive CNT will need to be added as an auxiliary agent in the future. We are in the process of conducting marketing activities.

Q.2 : Are you saying that there is not necessarily a possibility here to change from carbon black to CNT?

A.2(Ooi) : There is a need to further improve the performance of LFMP. We are conducting our marketing activities to see whether our carbon nanotubes' value matches with the needs.

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(page10)

Q.3 : On page 10, in terms of conductive agents, the percentage of sales is expected to grow from 40% to 48%. I think this is roughly 25% annual growth over four years if I do the math. What is the current composition ratio of carbon black and CNT in conductive auxiliaries, and to what extent will the composition ratio change in 2025?

A.3(Ooi) : It's slightly difficult to say, but I think that only the high-capacitylithium-ion batteries distributed in the world today probably use carbon nanotubes in more than 60% of them.

Why, then, is there a need for carbon black? That is because older model designs required the use of carbon black, which, I think will be increasingly converted to CNT in high-capacity LiB applications over time. Although it is difficult to predict the final percentage, I believe that the CNT ratio will reach a little over 70% by 2025.

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There are hybrid systems, too. To be honest, we cannot determine the details of battery manufacturers, but I would assume that carbon nanotubes will be used in high-capacity LiB at a ratio of about 70%.

Q.4 : Please tell us about your company's share of the CNT market, as well as what your competitors are doing.

A.4(Okaichi) : As you can see in the chart below, our market share is still 4% in 2023.

As far as we are aware, if we pick up only CNT dispersions from this list, we think we have about 20% to 25% of the market share.

As for competition, there are cases where the CNT production is an internal project of the battery manufacturer or something like that, so it is a balance of whether we can call it competition or not. We are well aware that there are many competitors in Japan, Korea, China, and other battery-producing countries.

(page14)

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