BASF : Bank of America, Decarbonisation = Increased Metal Intensity Conference

Clean Mobility Drives Metals Demand

Matthias Dohrn, Senior Vice President,

BASF Precious & Base Metal Services

Bank of America, Virtual Conference

November 10, 2020

Agenda

BASF - We Create Chemistry

BASF Catalysts Division Drives Sustainable Solutions

Precious Metals

Base Metals (Battery)

2 November 10, 2020 I Clean Mobility Drives Metals Demand

BASF - We create chemistry

• Our chemistry is used in almost all industries
• We combine economic success, social responsibility and environmental protection
• Sales 2019: €59.3 billion
• EBIT before special items 2019: €4.5 billion
• Employees (as of December 31, 2019): 117,628
• 6 Verbund sites and 361 other production sites
• Around 100,000 customers from various sectors in almost every country in the world

3 November 10, 2020 I Clean Mobility Drives Metals Demand

BASF's segments

Many of our segments and divisions supply the automotive industry

Materials

Performance Materials,

Monomers

Chemicals

Petrochemicals,

Intermediates

	Surface
Industrial	Technologies	Nutrition
Solutions	Catalysts,	& Care
Coatings
Dispersions & Pigments,		Care Chemicals,
Performance Chemicals		Nutrition & Health

Agricultural

Solutions

Agricultural

Solutions

Other

Verbund

4 November 10, 2020 I Clean Mobility Drives Metals Demand

Agenda

BASF - We Create Chemistry

BASF Catalysts Division Drives Sustainable Solutions

Precious Metals

Base Metals (Battery)

5 November 10, 2020 I Clean Mobility Drives Metals Demand

BASF Catalysts covers the whole value chain for catalysts and battery materials production

Precious metal

Sourcing

Production

Catalyst / battery

Customer industries

& base metal sources

& trading

material production

Primary

PGM / Base

Battery

e-Mobility

sources (Mines)

Trading

materials /

fuel cell

	Iselin, London,
Open market	Shanghai, Tokyo,	Mobile	Mobile
Moscow
	emissions	emissions
PGM / Base	PGM / Base	Process	Process
Refining	PMC*	catalysts	industry

USA, Europe	Seneca, Rome,
Shanghai

Scrap

collectors

Black mass

collectors

6 November 10, 2020 I Clean Mobility Drives Metals Demand

* Precious Metal Chemicals Production

Primary sourcing of metals requires specific guardrails

• Enhanced sustainability in procurement management, including OECD Due Diligence Guidance for Responsible Sourcing of Minerals
• Dedicated task force and senior level committee to guide and decide on due-diligence action
• Comprehensive sustainability assessment tools through the chemical industry's Together for Sustainability (TfS) initiative, including mining- specific audit commensurate with multi-stakeholder-based IRMA audit
• Participation in various topic-specificinitiatives, e.g., "Cobalt for Development" (C4D) artisanal cobalt pilot mine in DRC, Global Battery Alliance (GBA), Responsible Minerals Alliance (RMI), International Platinum Group Metals Association (IPA), engagement in Atacama Lithium projects

7 November 10, 2020 I Clean Mobility Drives Metals Demand

PGMs from secondary sources are of increasing importance to enable a circular economy with a lower CO2 footprint

Companies collect spent automotive 1 and chemical catalysts for recycling

Automotive and chemical companies 6 use and dispose catalysts

Automotive catalysts reduce vehicle tailpipe	5
emissions and chemical catalysts more
efficiently produce fuels and chemical products

• • Full loop
• Sustainable supply
• Global footprint
• Trusted partner

2 BASF recycles spent automotive and chemical catalysts to recover PGM

3 BASF uses the PGMs to produce precious metal chemicals

4 BASF uses precious metal chemicals to produce new automotive and chemical catalysts

Recycling and recovery service for precious metal products provides a circular economy for which precious metal can be reclaimed for use in producing fresh salts and solutions for industrial applications

• Recycled PGMs offer a sustainable and environmental benefit from end-of-life materials
• All of the recovered metal we generate is used to supply our mobile emissions catalyst and chemical and process catalyst businesses
• The auto catalyst recycling market is the second largest source of PGM supply and is expected to grow significantly in future years

8 November 10, 2020 I Clean Mobility Drives Metals Demand

Sustainable, low carbon mobility requires adoption of powertrains

Tightening emission regulations and technology advances to lead adoption

Conventional
Internal combustion	Hybrid
engine (ICE);
ICE and electric motor;
catalyst required	Battery
	catalyst and battery
	Electric motor;
	required	Fuel cell
	battery required
	HEV
	Electric motor
			and hydrogen;
			catalyst required

PGM loadings increasing

Expanding

Future

PGMs

PGMs / Base Metals

Base Metals

PGMs



Platinum  Rhodium



Platinum



Lithium



Lithium



Cobalt



Platinum

 Iridium



Palladium



Palladium



Nickel



Nickel



Manganese



Ruthenium



Rhodium



Cobalt



Manganese

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Agenda

BASF - We Create Chemistry

BASF Catalysts Division Drives Sustainable Solutions

Precious Metals

Base Metals (Battery)

10 November 10, 2020 I Clean Mobility Drives Metals Demand

Auto demand has developed into dominant demand driver for PGMs

PGM demand as a share of the automotive market

100%
80%												Palladium
60%
											Platinum
40%
											Rhodium
20%
0%
1980	1990	2000	2010	2019	2029
		17%		10%					83%	88%
				58%		69%
		31%		41%		33%		38%		41%	50%
		0%		82%		86%		78%		86%	90%
Percentages represent share of total yearly demand; 2029 includes Pt substitution in LDG catalysts
11 November 10, 2020 I Clean Mobility Drives Metals Demand	Source: BASF Market Insight

Tightening emission regulations are primary driver of metal demand

Timeline of current and future emission regulations

2018	2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030
Implemented Regulations			Set To Be Implemented				Anticipated Regulations

LD	US Tier 3
		CA LEV III
HDon	US2010 + CARB optional low NOx	CA UL NOx Phase I (0.05g BSNOx FTP + LLC)	CA UL NOx Phase II (0.02g BSNOx)

US

EPA Clean Truck Initiative

CARB Advanced Clean Truck Initiative (ZEV Mandate: 5% in 2025, 55% by 2035)

HDoff

US Tier 4F

GHG Phase 2 N2O / CH4

LD

Euro 6d temp

Euro 6d

Euro 6d (all)

Euro 6e CF=1.0

Euro 7

Euro 8

CO2 95 g/km

CO2 81 g/km (-15%) vs. 2021

-37.5% vs. 2021

EU

HDon

Euro VI D

Euro VI E

Euro VII

HD CO2 review

-15% vs. 2021

-30% vs. 2021

HDoff

Stage IV

Stage V

Brazil

LD

PL 5

PL 6

PL7

PL8 w/ RDE

HDon

Euro V

P8 / Euro VI

LD

BS 4

BS 6

CO2 113 g/km

BS 6

BS 6 w/RDE

India

HDon

BS IV

BS VI

BS VI PEMS

BS VII

HDoff

TREM III

TREM IV

TREM V

LD

NS 5

NS 6a

NS 6b w/RDE

NS 7

China

HDon

NS V

NS VIa (2020: 50% NG; 2021: 75% Urban; 2022: 100% All Diesel)

NS VIb (Full PEMS)

NS VII

HDoff

Stage III

Stage IV + PN (est.)

LD

Euro 6c

Euro 6d

Euro 7

Korea

HDon

Euro VIc

Euro VId w/PEMS

Euro VII

HDoff

Global 4

Global 5

Japan

LD

2009 Post New Long Term

CO2 113 g/km

HDD GHG

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

LD - Current		LD - set to be implemented		LD - anticipated		HDoff - Current		HDoff - set to be implemented		HDoff - anticipated
HDon - Current		HDon - set to be implemented		HDon - anticipated

12 November 10, 2020 I Clean Mobility Drives Metals Demand Source: BASF Market Insight

Tighter regulations imply higher catalyst complexity

Increasing number of non-PGM catalyzed components in technology

2005	2010	2015 - 2025

LDD

LDG

HDD

• Real driving emissions testing
• Worldwide harmonized light vehicle test procedure
• Advanced engine technologies (multi-pointinjection, turbocharge assisted, lean burn, etc.)
• Non-PGMcomponents SCR, SCRoF, SCRoF(V), SCR(Z)

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Platinum market overview

Market surplus will persist through 2022 followed by declining output from South Africa and Pt substitution in gasoline catalysts pushing the market to deficit position; high stock levels expected to keep price muted

Pt market supply 2020 (k toz)

	27%									South Africa
		6.8m toz								Russia
			52%					Zimbabwe
	5%							North America
	7%							9%Recycling
	9%
Pt market balance forecast (k toz)*
1,165	972	1,251
		629
					-68					-2,729
							-626
										-1,757
2019	2020	2021	2022	2023	2024	2029

* Demand includes Pt substituted LDG catalysts beginning 2021 which will spur demand

Pt market demand 2020 (k toz)

	15%
3%				Autocat
			Jewelry
3%		39%
5.8m toz		Chemical
10%

Electrical

Petroleum

Other

30%

Platinum missing out on the precious metals rally:

• South African Pt supply severely impacted by COVID-19; to break below 4m toz by 2025 led by production cuts and mine depletion
• • Elevated Pd and Rh prices delaying mine closures in South Africa
• Substantial surplus balances through 2022 due to:
• • Automotive demand to decline again in 2020
  • Light-dutydiesel production declined 67% Q2 2020 vs. Q2 2019 in the EU
  • Chinese Pt jewelry market continues to decline
• Ample above ground stocks and investment holdings (~17m toz) to alleviate potential future market deficits

14 November 10, 2020 I Clean Mobility Drives Metals Demand Source: BASF, SFA Oxford, Metals Focus

Palladium market overview

Weak automotive outlook for 2020/2021 due to COVID-19 weighing heavy on demand; mid to long-term forecasted Pt/Pd substitution in LDG and possible supply from announced Pd-rich mine projects

Pd market supply 2020 (k toz)				Pd market demand 2020 (k toz)
				8%	4%
	22%
31%		South Africa	5%			Autocat
			Russia	2%			Jewelry
8.9m toz			Zimbabwe		8.8m toz		Chemical
			North America				Electrical
12%	31%	9%Recycling		81%		Other
4%

Pd market balance forecast (k toz)

						851
	114	317				+737
					-64
				-340
-586			-581
2019	2020	2021	2022	2023	2024	2029

Palladium price rallying despite market surplus

• 2020 marks the first market surplus forecasted since 2010
• Delays in Pd-rich mining projects due to COVID-19
• Weak automotive sales continues to impact demand
• Positive signs emerging as China auto market (largest gasoline market) rebounds, with sales above 2019 for April - July 2020
• Higher Pd loadings on autocats due to tighter emission regulations
• Pt substituted LDG catalysts to lessen future Pd demand

15 November 10, 2020 I Clean Mobility Drives Metals Demand Source: BASF, SFA Oxford

Rhodium market overview

Market remains tight driven by the recovery in Chinese automotive production and reduction of output from South Africa due to COVID-19 shutdown; severe shortages of rhodium projected in the future

Rh market supply 2020 (k toz)

31%

		South Africa
		Russia
0.9m toz	54%	Zimbabwe
	North America
2%
	9%Recycling
5%
8%

Rh market balance forecast (k toz)

-86	-47
		-162				-351
			-335	-342	-411	-398
2019	2020	2021	2022	2023	2024	2029

Rh market demand 2020 (k toz)

7%

8%

	Autocat
	Chemical
0.9m toz	Other

85%

Rhodium market deficits to remain through FC period

• South African Rh supply severely impacted by COVID-19(-22%YoY)
• South African supply expected to decline over the forecast period as conventional mines begin to shutter
• Higher Rh loadings on autocatalysts due to tighter emission regulations
• • Continued gain in LDG market share at the expense of LDD
• Rh has higher activity for NOx reduction compared to Pt and Pd making it difficult to substitute in an autocatalyst

16 November 10, 2020 I Clean Mobility Drives Metals Demand Source: BASF, SFA Oxford

Hydrogen economy: Decarbonizing industry/transport offers long-term PGM demand growth from electrocatalysts for hydrogen applications

Hydrogen	Ir	Pt	Distribution	Pt Pd Ru
generation

End uses

Pt RuIr

LOHC*		LOHC* Pt
production		conversion

FCEV

FCEV

H2

Electrolyzers	H2
for H2 production

Even a moderate emergence of the hydrogen economy could already consume a significant portion of today's Pt and Ir production.

Fertilizer Steel

Green syngas

Heat /

Power

	* Liquid organic hydrogen carriers (LOHC) are organic compounds that
17 November 10, 2020 I Clean Mobility Drives Metals Demand	can absorb and release hydrogen through chemical reactions

Agenda

BASF - We Create Chemistry

BASF Catalysts Division Drives Sustainable Solutions

Precious Metals

Base Metals (Battery)

18 November 10, 2020 I Clean Mobility Drives Metals Demand

EV forecast will have a major impact on Ni and Co demand for lithium-ion batteries

EV forecast comparison BEV plus PHEV (million vehicles)

Ni and Co demand sensitivity to EV forecast in 2030 (kt)

40					39
					31	>20
30					28
						million
20					17	vehicles
		12
10
3			8
0	2022	2024	2026	2028	2030
2020
	Bernstein	Benchmark	BNEF
	WoodMac	LMCA	BASF

1,500			+54%
1,000	+59%
500	+33%		+36%
015m	20m	25m	30m	35m	40m	EV sales
WoodMac	BASF			Bernstein
	2030 NiSO4 demand	2030 CoSO4 demand

• Broad range of opinions on policy impact, infrastructure challenges, total cost of ownership parity, range anxiety, and consumer preferences
• Cobalt is less sensitive due to its position in consumer electronics market and deemphasis in EV applications

Consensus of 8-12 million EVs by 2025, but 2030 deviates by >20 million vehicles

19 November 10, 2020 I Clean Mobility Drives Metals Demand

Source: BASF Market Insight

Shift towards high-Ni CAM will spur demand for nickel at the expense of cobalt

Chemistry mix forecast	Typical metal content
(%)	(% CAM)

100%									NCM 811		48%
								LFP/LMO	6%
90%
									36%
								LCO	NCM 622
80%								12%
70%								NCA	NCM 111	20%	Ni	Co
							20%
60%								Low-Ni NCM	LCO	0%	60%
									0%
50%								Mid-Ni NCM	LFP and
								LMO	0%
40%									54%
								NCA	5%
30%
20%								High-Ni NCM	 High-NiCAM will result in higher energy density leading to increased
10%								Other	performance and range
0%								 China will dominate production for LFP driven by demand from
2016	2018	2020	2022	2024	2026	2028	2030	auto producers while vast majority of NCA will derive from Japan

High-Ni NCM expected to become the dominant battery technology, impacted in the short-term by LFP

20 November 10, 2020 I Clean Mobility Drives Metals Demand

Source: BASF Market Insight

Nickel market overview

Use of nickel within Li batteries to increase as cell manufacturers continue technology shift toward high-nickel cathode chemistries to increase vehicle range and battery energy-density

Ni market supply 2020 (kt)

29%

38%

2,313 kt

	Class 1 vs. class 2 Ni supply 2020	Ni market demand 2020 (kt)
				5%
Indonesia				26%
Philippines	48%		Class 1			Battery
New Caledonia			2,292 kt
		Class 2		Stainless steel
Russia
52%					Other
Other

9%

15%

9%

9%	69%

Class 1 Ni supply / demand (kt)*

4,000				Demand forecast total (class 1)

Demand forecast battery

3,000		Supply deficit						Forecasted deficits
		Flexible class 1 supply
2,000		Current supply (nameplate capacity)
1,000
0	2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030

* Supply includes flexible supply of class 1 nickel (~300 kt)

Class 1 nickel market expected to face a deficit 2026

• Demand from the EV sector expected to triple by 2025 and exceed 950 kt by the end of the forecast
• Expect BEVs to utilize >55% of high-Ni battery chemistry by 2030
• Majority of supply growth will be from class 2 nickel as a result of Nickel Pig Iron (NPI) producing mines in the Philippines and Indonesia
• Innovations in HPAL nickel refining have the potential to meet class 1 nickel demand from batteries by the mid-2020s

21 November 10, 2020 I Clean Mobility Drives Metals Demand

Source: BASF Market Insights, Wood Mackenzie, Benchmark Minerals, BloombergNEF

Cobalt market overview

Cobalt contained in high-nickel cathode chemistry batteries still implies a significant growth trajectory, with cobalt demand from Li batteries forecasted to grow by over three times by 2030

Co market supply 2020 (kt)

	7%
9%			Africa
3%			Russia
2%			Indonesia
4%	120 kt
		North America
			Other
	75%	9%Recycling

Co market demand 2020 (kt)

33%			Battery
37%		Superalloys
	89 kt		Hard materials
		Catalysts
6%			Other
8%	16%

Co supply / demand (kt)

500	Demand forecast total						Forecasted deficits
400	Demand forecast battery
	Supply deficit
300	Current supply (nameplate capacity)
200
100
0	2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030

Cobalt to shift to a deficit position beginning in 2028, driven by continued growth from batteries

• Cobalt has two innate properties that make it ideal for battery applications: thermal stability and high energy density
• DRC expected to account for ~70% of the global cobalt mined in 2020
• Artisanal miners in the DRC account for an estimated 15% of global cobalt supply
• Demand forecasted to grow by 12% CAGR through 2030 propelled by battery

22 November 10, 2020 I Clean Mobility Drives Metals Demand

Source: BASF Market Insights, Wood Mackenzie, Benchmark Minerals, BloombergNEF

Summary

Market

Performance

BASF's competitive advantage

• Evolution of new powertrain concepts and transformation of the automotive industry in full swing
• Automotive industry being driven by tightening emission regulations and lower CO2 footprint
• Strong growth momentum projected for battery electric vehicles (BEVs) and hybrids
• Precious and base metals are vital to achieving the performance and needs of the automotive industry
• Electromobility creates opportunity for BASF; positioned to secure demand for emissions catalysts
• BASF poised to enhance clean mobility through sustainably sourced metals
• BASF is well positioned with its metal recycling and relationships with mines to support clean mobility
• Largest chemical supplier to automotive industry, unparalleled access and market knowledge
• Market leader in mobile emissions catalysts and battery materials with a strong technology position
• Global presence and regional R&D and production capabilities
• Financial power to grow asset base and capitalize on market trends

23 November 10, 2020 I Clean Mobility Drives Metals Demand