17Tsumugu Report 2020

CHORI CO., LTD.

Feature: Chori’s Strengths
Maricunga Salt Flat in Chile
The Maricunga salt flat is located 3,800 meters above sea level on the easternside of the Atacama region in northern Chile.
The region is known for its low impurity content and high-quality resources.
Lithium Raw Materials
Essentially, lithium can beproduced from either brinewater or mineral ore.
Brine extraction isconducted mainly in SouthAmerica, and Chile is the world’s
leading producer of lithium
extracted from brine water.

Human Resources
Expertise, technologies, and know-howCommunication skills
Organizational capabilities and anawareness of different cultures

Errazuriz Group
Established: 1960s

Procurement
Capabilities

Established: July 2016

Santiago, Chile

Location:

Santiago, Chile

Business
activities:

Mining, fishery,
food processing,insurance,
automotive, etc.

Details:

Able to commence commercial
production immediately due toits ownership of rights toextract brine water from theMaricunga salt flat.

Total cost:

Approx. ￥25.0 billion

Produced resource:

High-purity lithium compounds

Construction area:

Area surrounding Maricunga salt flat

Start of commercial production: 2022
Estimated production volume:

UniqueGlobal Network

History

Global bases and sales routes

An extensive business network

Product management teamCredibility (a proven track record)

Product procurement network

One of the first friendly trading
companies to be designated by China

Know-how in overseas trade

SIMCO SpA (Project Conductor)

Project Outline

Ability to Developa Global Supply Chain

Marketing capabilities

Partialinvestment

Location:

Responsiveness(Promptness)

Lithium Extraction
In general, lithium components are extracted frombrine water through an evaporation process.
The process of evaporating the brine water andextracting the lithium takes anywhere from one totwo years. The extraction process also depends on
weather conditions and has a significant impact on
the environment. For those reasons, Chori has
adopted a new extraction process for this project.

Approx. 20,000 MT per year
(converted to lithium-carbonate)

Lithium Compound
Production Projectin Chile

NetworkIn this section, we will discuss the three strengths demonstrated by Chori throughout this project.

Overview and Background of the Project

Chori’s Strengths
Cultivated since Its Establishment
Yasushi Ueda
Manager, Inorganic Fine Materials
Department
Chemical & Materials Business
Department

We will likely witness the growth of the lithium-ion battery market on the back of the global spreadof electric vehicles (EVs) and their rising demand. In 2017, Chori decided to take part in this projectbased on the belief that the lithium compounds produced by SIMCO SpA, a subsidiary of theErrazuriz Group, reflect the level of quality necessary for lithium-ion batteries as well as their risingdemand. For this project, we adopted a new production process to extract lithium components
from brine water in place of the conventional evaporation process.
Chori first engaged in the import of lithium compounds in the 1970s and has been involved inthe sale of lithium-ion battery materials to Asian markets in recent years. We will draw on thisexperience to contribute to the success of this project and fulfill our role of expanding sales oflithium-ion battery materials in Asia.

1819Tsumugu Report 2020

CHORI CO., LTD.

Inspection at Maricunga salt flat

UniqueGlobal Network×History

The History behind
Chori’s Lithium
Business and Its
Road to This Project
While lithium compounds have become
a topic of attention in recent years, owingin part to the awarding of the Nobel Prize
for the development of lithium-ion batteries, Chori has been involved in this field
for many years. Our journey began

in the 1970s with the import of lithiumcompounds from the United States,
which was followed by imports fromSouth America into the 1990s. At thetime, lithium compounds were limited totheir use in lubricants and heat-resistantglass and the market was so small that I,
who had just joined the Company, wasput in charge of their business right away.
However, the development of lithium-ion
batteries revolutionized the industry andtheir potential spurred an upsurge in theproduction of lithium compounds acrossthe globe. In addition to lithium compounds, in the 2000s Chori engaged in
the business of nickel, cobalt, andmanganese, all raw materials used inlithium-ion batteries.

Selection of Chori for the Projectand Utilization of Its Strengths

HumanResources
×Unique
Global Network

However, as demand for lithium-ionbatteries continued to grow, we
started to see shortages in the supplyof lithium compounds. This was when
we came across the opportunity toengage in this lithium compound production project with the Errazuriz
Group in Chile, with which we haveworked together with for over 20 years
in the vehicles business. Engaged in avariety of fields including construction
materials and food products, theErrazuriz Group boasts an extensive
business network consisting of arange of trading companies in Japan.
And for this project, they were insearch of a company that would team
up toward the discovery of a newlithium compound production process.
In general, the compounds are
extracted from brine water through aprocess of evaporation. This process
involves drawing brine water from wells
to the surface to create large pools andwaiting for it to evaporate. It takes roughly
two years to produce the compounds
and the costs involved are extreme. With
this in mind, as well the significant
environmental impact associated with theevaporation process, the Errazuriz Groupwas in pursuit of an alternative method
for the production of lithium.

information that has been cultivatedthrough this business were looked upon
to guide this project forward.
The other reason for Chori’s selection was that it had a clear exit strategy
in place. The production of lithiumcompounds without the existence of aproper sales and exit strategy would
not appeal to any supplier. For thatreason, rather than focusing our attention on investments, we suggested thetype of needs that are apparent amongcustomers worldwide and establisheda framework to promptly address suchneeds. The ability to develop such anexit strategy, to sell commodities, represents one of Chori’s strengths. We
excel at leveraging our extensive information network to identify needs and at
producing and selling commodities thatreflect those needs. Chori’s ability tosell such commodities was a criticalfactor in being selected for the project.

HumanResourcesEnvironmentfriendly

Strengths andDistinctive Qualitiesof the New Lithium
Production Process

In our new production process, lithiumcompounds are produced by extracting
only the lithium components from thebrine water. The conventional evaporation process entailed the evaporation ofgroundwater, which reduced the water
volume of salt flats and involved the riskof people residing at the foot of mountains not being able to draw water fromwells, in addition to the loss of marine
habitats. On the other hand, the newprocess is extremely friendly to theChori’s Lineup of Lithium-Ion
Battery Materials
Cathode Materials

Chori was selected to unite with theErrazuriz Group on this project for two
main reasons. One reason is the factthat Chori is a “supermarket of raw
materials,” or in other words, it
handles a range of raw materials forlithium-ion batteries.
Chori’s extensive track record in thesale of lithium and related materials,
such as nickel, cobalt, and manganese,
has afforded the Company a wealth ofknowledge in production technologies
and markets. In addition to raw
materials, we engage in the handling ofcathode materials, anode materials, andother related materials, which allows us
to provide the full lineup of ingredientsfor batteries. In reality, the number of
trading companies that mirror our business is limited, as most companies
focus on a particular type of material.
Accordingly, Chori’s track record in thebusiness of lithium and the network ofExtraction of lithium components from the groundwater beneath the massive salt flat

Manganese compounds/manganese metal
Lithium compounds
Nickel compounds/briquette
Cathode materials(nickel-lithium oxide, lithium-manganese oxide)
Conductive auxiliary agent
Anode Materials
Silicon anode materials
Carbon anode materialsConductive auxiliary agent
Separator Materials
Separator coatings
Electrolyte Materials
Lithium compounds
Fluorine materials

Lead cathode
Anode
Separator

CathodeLead anodeenvironment as it involves returning thedrawn water to the salt flat, thereby
maintaining its water volume. Inaddition, the new liquid compound
production process has enabled us to
drastically reduce production time incomparison with the evaporation process, and because it does not hinge on
weather conditions, the new process
allows us to adjust the production
volume according to market conditions.
Another distinctive quality of the newprocess is its low production costs,
which we were able to achieve throughour global pursuit of manufacturers withcutting-edge technologies. We took
advantage of the product quality
assessment and analysis capabilities ofCHORI Analysis & Technology Service(Suzhou) CO., LTD. by visiting manufacturers together with a production
advisor from this Group company inorder to pursue the highest-quality
products at the lowest costs possible.
As a result, we were able to reduce ourcosts by a significantly greater amountthan what we had initially anticipated.

HumanResources

Pursuit of FurtherBusiness Growth
While we have succeeded in lowering
environmental impact, improving theefficiency of production management,
and reducing costs through the introduction of our new production process,the lithium compound market continues
to be dominated by three global manufacturers. Just as it would be difficult toconvince someone who has been consuming the same product to switch tosomething completely different, goinghead to head with the world’s threeleading manufacturers is certainly not aneasy task. With that said, rather thancompeting against the industry’s major
players for the production of lithiumcompounds, Chori will step up its
approach of appealing to customers
that embrace the distinctive qualities of
its raw materials and gear its sales

efforts to that target market. By harnessing our strengths in the form of low
environmental impact and more-efficient
production management, we will differentiate ourselves from the threeglobal manufacturers and overcome thismassive obstacle.
Despite the unfavorable market
environment stemming from the spreadof COVID-19, the project is moving
steadily toward its next stage. Inaddition to the new lithium compound
production process, we are gearing up
to launch a project that places evengreater emphasis on the environment.
With that said, we hope you look forward to Chori’s continuous pursuit ofbecoming a company that fulfills its
responsibilities to both local communities and the environment.

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