735 17.9 15,0 14.2 Terrafame employees 754 10,0 9.6 5,0 - PowerPoint PPT Presentation

» Business review January – December 2019 Joni Lukkaroinen CEO 21 Feb 2020

» January – December 2019 in brief  Net sales for the financial year EUR 310.4 (325.8) million.  EBITDA EUR 32.0 (32.8) million.  Operating result EUR -5.6 (3.0) million.  Metal prices fluctuated strongly during the year.  Nickel production increased to 27,468 (27,377) tonnes.  Zinc production 55,222 (61,608) tonnes.  The construction of the new battery chemicals plant progressed as planned and process equipment installations and the establishment of the production organisation were launched.  Occupational safety matters have been systematically emphasised at the site.  The discharge pipe of Lake Nuasjärvi was in operation from April to mid-July, and the release of water was restarted in late August. The substance concentrations of purified water released from the site remained below permit levels. Unless otherwise stated, the figures in parentheses refer to the corresponding period of the previous year.

» Safety is one of our cornerstones

» Last year was challenging with occupational safety especially at the battery chemicals plant construction site Rolling 12 mont lost-time injury frequency (LTIFR) 30,0 Partner 25,0 companies appr. 20,0 735 17.9 15,0 14.2 Terrafame employees 754 10,0 9.6 5,0 employees 0,0 2015 2016 2017 2018 2019 Terrafame Partner companies Total LTIFR on 31 Dec 2019.

» Battery chemicals plant’s commercial production will start in 2021

» In Europe, electric vehicle sales increased 35% compared to full year 2018 Regional monthly EV sales (‘000 units) 700 600 Rest of the World 500 Asia Pacific Other 400 Japan 300 EU & EFTA US & Canada 200 China 100 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Source: Rho Motion

» Both battery size of electric vehicles and the amount of nickel in the battery have increased EV battery chemistry Average battery size (kWh) 100 % 60 NCM811 50 80 % NCM622 40 NCM523 60 % NCM111 30 NCA 40 % 20 LTO 20 % LMO 10 LFP 0 % 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2018 2018 2019 2019 2019 2019 2018 2018 2018 2018 2019 2019 2019 2019 Lähde: Rho Motion NCMXXX = N nickel, C cobalt, M manganese and their mutual relations

» Terrafame is moving forward in the value chain PROCESSED DOWNSTREAM RAW MATERIALS CHEMICALS/SALTS CELL & PACK MATERIALS APPLICATIONS CATHODE PRE-CURSOR ACTIVE CELL PACK MATERIALS MATERIALS Nickel ore Nickel sulphate Cathode materials Battery cell Electric vehicles Cobalt ore Cobalt sulphate Battery management Anode materials Plug-in hybrids system Manganese ore Manganese sulphate Electrolyte materials Lithium ore Lithium hydroxide Separator materials Source: Internal, 2019

» Key figures January ̶ December 2019

» Strong nickel price fluctuations continued in 2019  The uncertainty of the global economy Nickel price development (USD/t) 1 Jan 2016–31 Dec 2019 and markets’ speculation on Indonesia’s 20 000 nickel ore ban affected the price development during the year.  In 2019, the average price of nickel was 15 000 13,926 USD/t, which was 6% higher than in 2018.  In Q4 2019 the average price was 15,450 10 000 USD/t which was 34.0% higher than the price in Q4 2018, but very close to the price in Q3 2019. 5 000  At the end of the year, combined LME 1.1.16 1.4.16 1.7.16 1.1.17 1.4.17 1.7.17 1.1.18 1.4.18 1.7.18 1.1.19 1.4.19 1.7.19 31.12.19 1.10.16 1.10.17 1.10.18 1.10.19 and SHFE nickel stocks corresponded to appr. 4 (5) weeks’ demand. Day price for nickel on the London Metal Exchange (USD/t) Day price for nickel on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

» The price of zinc kept declining in 2019  The zinc prices have been declining, Zinc price development (USD/t) 1 Jan 2016–31 Dec 2019 although reported stocks levels were on 4 000 low levels. During the end of the year, the uncertainty of the global economy affected also to the price. 3 000  In 2019, the average price was 2,547 USD/t, which was appr. 12.8% lower than in 2018. 2 000  In Q4 2019, the average price was 2,388 USD/t, which was 9.2% lower than in Q4 2018 and 1.6% lower than in Q3 2019. 1 000 31.12.19 1.1.16 1.4.16 1.7.16 1.10.16 1.1.17 1.4.17 1.7.17 1.10.17 1.1.18 1.4.18 1.7.18 1.10.18 1.1.19 1.4.19 1.7.19 1.10.19  At the end of the year, combined LME and SHFE nickel stocks corresponded to Day price for zinc on the London Metal Exchange (USD/t) under one week’s demand. Day price for zinc on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

» Metals production was affected by repair measures in the bioleaching as well as the metals production plant’s scheduled maintenance stoppage and power failure with its multiplier impacts in Q4 Rolling 12 month nickel production (t) Rolling 12 month zinc production (t) 35,000 70,000 60,000 30,000 50,000 25,000 40,000 20,000 30,000 15,000 20,000 10,000 10,000 5,000 ,0 ,0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

» Net sales EUR 310.4 million ̶ EBITDA was at the 2018 level Operating result Net sales (EUR million) EBITDA (EUR million) (EUR million) 350 40 5 325.8 300 310.4 3.0 32.8 30 32.0 250 0 200 20 150 -5.6 -5 100 10 50 0 0 -10 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019

» EUR 88.5 million were used to improve productivity and increase capacity Equity and liabilities (EUR million) Capital expenditure (EUR million) 764 750 130,6 685 140 800 682 685 700 120 42,1 322 350 600 Sustaining capex 100 349 366 345 81,5 Equity Improving 500 80 productivity 400 Liabilities 28,4 and increasing 60 capacity (mainly 300 Environmental 88,5 the battery 40 provision 200 chemicals 53,1 20 plant) 100 0 0 31.12.2018 31.3.2019 30.6.2019 30.9.2019 31.12.2019 2018 2019

» Significant events after the end of the financial period  The Finnish Government decided on 6 February 2020, to grant a uranium recovery permit to Terrafame.  The end of 2019 was extremely rainy. As a result, a neutralization process was put into operation in December in order to purify and reduce the process solution. This is estimated to increase the sulphate load of water released from the area during 2020.  A new record for monthly nickel production, 2,887 tonnes, was achieved in January 2020.

» Near-term outlook  Since the end of the review period, the price of nickel in the London Metal Exchange (LME) has remained at the USD 13,000 per tonne level. Nonetheless, the fluctuation of prices has continued to be strong.  The process equipment installation work at the battery chemicals plat is progressing and the commercial production of battery chemicals will commence in early 2021.  Terrafame will continue to take measures to improve its safety culture, production and cost efficiency.

21.2.2020 Dokumentin nimi www.terrafame.com