T1 Energy Inc.

Hello and welcome to Friar Q3 2021 Earnings Release and Conference Call. Throughout the call, all participants will be in listening-only mode, and afterwards there will be a question-and-answer session. Today, I am pleased to present our first speaker, Vice President of Investor Relations, Jeffrey Spittel. Please begin your meeting.

Good day, and welcome everyone to Friar Valerie's Third Quarter Earnings Conference Call. With me today on the call are Tom Jensen, our Chief Executive Officer, and Stephan Foride, our Chief Financial Officer. During today's call, management may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of material risks and other important factors that could affect our actual results, please refer to our filings with the Securities and Exchange Commission, which are available on the Investor Relations section of our website and the earnings press release issued earlier today. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended September 30th, 2021, and other reports that we may file with the FCC. With that, I'll turn the call over to Tom.

Thank you, Jeff, and good morning, good afternoon, and good evening, wherever you might be dialing in from. It's a pleasure, of course, for me to be having this second earnings call for our third quarter earnings. and to give you important updates on the progress of our business. And to just sort of skip through to the most important part, we are experiencing tremendous commercial momentum in the rollout of clean battery solutions worldwide. And I'm very happy to be speaking to you today to give you more insight into all the hard work that the passionate and dedicated people at Freyr have been working on since the last earnings call. Today is making a significant progress towards our commercialization efforts. We are making commercial and strategic progress across the board. We're building out the operational foundation to deliver an increasing number of battery cells into an exponentially booming market. And we're developing and financing our expansions to scale to basically ensure that we can be relevant for the customers in time. So we are today announcing that we're negotiating offtake agreements in excess of 150 gigawatt hours in cumulative volumes between 2023 and 2030. This will start deliveries already in 2023 and increase on an annualized basis leading up to 2030. In addition to this, we have a broad and expanding pipeline of opportunities across all market segments, and I'll go into depth around our progress on the customer front. Earlier this year, in October, we announced the joint venture that we have established with Koch Strategic Platforms. We're progressing in the development of that joint venture, and we'll get back to how we are thinking about expanding capacity expansion to build into this exponentially growing customer base. We are also then accelerating our capacity expansion also in Finland, which we announced in the last earnings call, and both of these, coupled with our progress in Norway, gave us a strong and diversified production base to deliver world-leading battery cell solutions. We are on track with the development of our customer qualification plant and we're on schedule for starting that up in the second half of next year. We're also very pleased today to announce that we have entered into a supply agreement with Glencore for initial cobalt needs all the way through to 2028. We will then be making the concept selection, or we have made the concept selection, I should say, for our first commercial facility with a targeted startup in the second half of 2023, and we're now combining the development of Gigafactory 1 and 2, as has been alluded to in previous calls. We are accelerating the debt-based financing solutions to support the final investment decision on that joint development, and we're going to make that final investment decision During the first half of 2022, being on track for startup production in the second half of 2023, as we previously communicated to the market. Let me then go into the overview of our commercial progress. So we are basically seeing that the market short environment accelerating rate. That gives us an opportunity, generally speaking, to high-grade the customer portfolio as we are preoccupied with driving value of the batteries that we produce as opposed to just producing volumes for volume's sake. And if I then take you through the funnel of opportunities that we have in the making, we are today announcing that we have two conditional off-take agreements in advanced stages of negotiations. These two are globally leading companies in the ESS space and in the energy space in general. and the total demand between 2023 and 2030 from these two customers alone exceeds 50 GWh of potential demand. On top of this, we have seven off-take agreement negotiations ongoing, which in total adds an additional 100 GWh of demand potential in the same period on top of the 50 GWh that we now have in final stages of negotiation. We also have a top 25 prospective customer list. and these customers are increasing their demand projections with us every time we speak to them and we are now in technical review with all of them all under NDA and the total needs for these customers on aggregate add up to more than three terawatt hours of cumulative demand between 2024 and 2030. We don't anticipate of course to be able to deliver all of that anticipated demand but we are increasingly certain that we will be a relevant supplier On top of all of these developments, we have more than 60 prospective customers in addition, many of which are now also under NDA and starting technical review. They are European and US-based, predominantly companies, but also select Asian companies that are coming into the US and European markets across the EV segment, the ESS segment, and the mobility segment. Being a provider of clean battery solutions with a diversified production footprint across Norway, Finland, and the United States with a world-leading technology in 24M is providing a lot of interest in what we are delivering, and we're very happy today to be announcing that we've made substantial traction on the commercialization of our offering. So, developing a sustainable supply chain is core to having a low-cost, decarbonized supply of clean battery solutions. And we're therefore extremely proud to be announcing the cobalt agreements that we've entered into with Glencore. We've contracted up to 1,500 metric tons of sustainably sourced cobalt metal cup cathodes. These will be produced at Glencore's Nickel Lake facility in Norway. We have a joint ambition to reach 100% decarbonization of cobalt and other Thank you very much. Thank you very much. or Rhodes to commercialization started, of course, when we had the honor and privilege of listing on the New York Stock Exchange on July 8th this year. And quite a lot has happened since, and it's not that long ago since we actually became known to the battery industry from a listed on the New York Stock Exchange perspective. Since then, Koch Strategic Platforms and Fayed have announced the formation of our joint venture, and we've also announced that we're investing into 24M Technologies Adding additional exclusivity protection around the technology for deployment in the US. We have now made the concept selection, what we refer to internally as Decision Gate 2, for our first commercial Gigafactory. And that is now a combination of what we previously labeled Gigafactory 1 and 2. We're developing that now in one goal with increased throughput capacity relative to what we stated earlier. We will then continue to add off-stake agreements to the ones that we are indicating today so that we fill up capacity in our Gigafactory 1 and 2 and also add capacity to further capacity expansions. The visibility we have on off-stake today makes us sold out on the first Gigafactory 1 and 2 up until 2030, which then triggers us to accelerate development of additional capacity expansions We are making the final investment decision on Gigafactory 1 and 2 sometime in the first half of this year. We're optimizing that facility still. We've made the concept selection and we're still on track to start that up with commercial production of batteries in the second half of 2023. So, growth in the US. announced earlier this year an initial ambition of establishing up to 50 gigawatt hours of annualized capacity in the United States clean battery solutions together with Koch Strategic Platforms. This joint venture leverages the existing relationship with key potential U.S.-based customers and obviously gives us access to one of the largest private enterprises in the U.S. and their very strong presence across the energy space with logistics, energy competence, building large facilities, and at least their presence in and connections with core customers and different partners along the value chain for developing large scale battery solutions in the US. We have together with Koch Strategic Platforms aligned strategically with 24M Technologies, the technology platform that we will be using to build batteries across all market segments, not only Thank you very much. As also mentioned earlier this year, we have entered into initial agreements with the Finnish Minerals Group as well as the City of Vaasa. We have 90 hectares of prime development acreage just outside the City of Vaasa, which we're now going to accelerate in terms of developing viable value proposition and business concepts to expand capacity also in the Finnish region. This marries up very well with access to localized and regionalized raw materials, which there is plentiful of in the Finnish region, in addition to a broad variety of other critical input factors for battery cell production in Norway and Sweden. We are very excited about having an additional footprint in the Nordic region, and that will be another area where we can expand capacity, again, feeding into an exponentially growing customer base. So we are on schedule for the customer qualification plant. And as you can see on this picture, the beauty of the 24M technology is that we can establish capacity inside existing manufacturing facilities or inside buildings. This is a 13,000 square meter building which we secured earlier this year and we're on track to install Norway's first large-scale lithium-ion battery production facility which will be an actual industrial-scale production line of the 24M technology. All the critical path equipment is scheduled for delivery in the first half of 2022, and we're on track for combining all of those pieces together and starting up production of the 24M-based batteries in the second half of 2022. As also mentioned, based on the learnings and the insights that we're getting through the customer qualification plan development, we have now decided to combine the development of Gigafactory 1 and 2 into one larger development. We have an 18,000 square meter plot a little bit north of where this building is located and we are targeting to build out at least eight production lines of the similar sized equipment that we're installing into the custom qualification plant. In our communication to investors earlier, we believe that Gigafactory 1 and 2 would have a combined capacity of 13 gigawatt hours in actual throughput production annually. We now see based on the knowledge we have on the production facilities that we are increasing that throughput capacity quite substantially over and above the 13 gigawatt hours that we have mentioned before. We're proceeding, We have made the concept selection earlier this or last week and we are really excited about moving forward towards the final investment decision of Norway's first commercial gigafactory of double-digit gigawatt-hour output. Now, on the raw material supply, I've already mentioned the agreement with Glencore, which Beyond securing a critically important input through the 1,500 tons of cobalt also points direction to collaborating with Glencore on other metals and metal sulfates, etc., that we need to go into our production. But in addition to this, we have already secured five out of the 13 inputs we require to the customer qualification plant through our partner, Itochu, and the sub-suppliers that are already approved suppliers into the 24M The remaining eight is well advanced, and we are on track to ensure that we have sufficient and relevant qualified material to produce the initial batteries in the customer qualification plant. We will be speeding up and accelerating our efforts to localize and regionalize battery cell supply, or battery cell raw material supply, I should say, into our gigafactories. and the Glencore announcement is one important step in that regard, but we will now be gradually also announcing to the market additional partnerships to basically ensure that we have localized and regionalized and qualified raw materials going into our commercial facilities. We're also well advanced in examining downstream integration. Both modules and PAC partnerships are now in advanced stages of negotiation and discussion. And we will also be adding a module facility coupled with our cell manufacturing facility in Gigafactory 1 and 2. So in all, we are expanding our presence up and downstream from the cell manufacturing footprint, and we're seeing that the attractiveness of Freyja as a partner being both a customer and supplier of clean battery solutions and clean battery raw materials into cell production is something that is resonating with all of the major players in this space. So let me then just remind our investors about why we are so excited about the 24M technology. So the 24M technology, as all now have come to realize, is an MIT spin-off More than 12 years in the making and have fundamentally revolutionized not only how the battery cells are designed but also more importantly how they are produced. The innovative design provides us with an opportunity to build thicker electrodes which will dramatically reduce material costs and also allow us to put more energy carrying material into the same volumetric unit of final battery solution. It is highly flexible and can be deployed at multiple different scales across not only the ESS market and commercial mobility markets, but also in the EV market applications. We are very excited about the developments of the technology pertaining to the EV space, and we see increasing interest and attention from the large automotive OEMs around the 24M technology. It's also mentioned before, this is a chemistry agnostic or chemistry flexible platform that can feed into the existing supply chains. So we can produce NMC batteries, LFP batteries, any known chemistry being used in conventional lithium ion battery cell production today, while also offering a bridge into future metal anode solutions or solid state solutions over time. The really important innovation in this production platform is that it fundamentally reduces the footprint and the complexity of producing lithium-ion battery cells. We're going from 15 to 5 production steps, and with that dramatic reduction in footprint, which is more than an 80% reduction in footprint, 50% reduction in capex, substantial reduction in energy consumption and labor cost consumption, provides us not only with an opportunity to provide more cost-effective solutions to our customers, but it allows us to optimize the production of batteries further as we move into the future where still improved energy densities, improved cycle time, improved charge rates and at least reduced costs will be a requirement to basically deliver into the energy transition that is upon us. Finally, this is a more sustainable solution as we will have limited waste in the production if at all anything and the ability to recycle any of the production waste we have is dramatically better than that of conventional production. And since we are not using solvents and binders, but we're using the electrolyte as the solvent and the binder, we basically have a much less chemically sort of, let's call it, challenged final product, which also allows for ultimate recycling to be done in a much better way. So we are very happy with our relationship with 24M. This is a step into the future. It offers step change performance and cost improvements relative to conventional production. And we are very excited about this technology and very excited about being the company to take it to multiple gigawatt hour scale in Europe and the United States. Let me now hand it over to our CFO to take you through the third quarter earnings financial aspects before I conclude with some concluding remarks. Stefan?