Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Mike Harrison.
Michael Harrison - First Analysis
Hi, good morning.
Joseph M. Scaminace
Good morning, Mike.
Michael Harrison - First Analysis
Couple questions on batteries. Steve, you noted in your battery outlook that you expect to see a negative impact on demand [ph] related to substitution of lower cobalt containing materials. Obviously that’s a reference to some of the next generation lithium ion batteries that are using alternative cathode chemistries. But when we’ve talked about this previously, you seem to some extent to expect that that impact would be relatively small that the – the timing of it would be at least a few years off. And you also had highlighted it as an opportunity to move into types of cathode materials, mixed metals is what you referred to. So I guess what I’m asking what should we make of this comment that you are making here today, is this substitution happening sooner than you anticipated, is it affecting a larger number of batteries? Are you getting less traction than you had hoped in terms of your own supply of mixed metal materials? Talk about that if you could?
Stephen D. Dunmead
Yes, part of the confusion may be that when I was talking about volume there I was talking about cobalt volumes. If you talked about total physical volume the story is probably different because we are getting penetration in our mixed metal chemistries; as we have discussed before from our standpoint we are not sure that we really what the chemistries are because we know that the space is growing and that we want to continue to participate in it. And so the comments were simply that the overall battery market is going to be up but the combination of still some de-stocking happening at the lithium-ion battery producer level coupled with some fraction of substitution which I think is happening just about the way that we’d expected it to, ends up giving us about three to 5% increase in cobalt volume as opposed to growing at the same rate as the battery market is.
Joseph M. Scaminace
And Mike we are not worried about, you know, in terms of the cathode material that will be going into new battery applications there is every indication that a lot of that cathode material will have cobalt contained in it. There are some technologies that are non-cobalt, you know iron phosphate for example, but you know in the current markets, you know, they all continue along with the same chemistry, I think we will continue to see you know when the market returns growth in portable electronics et cetera, and I think that’s probably combined with Steve’s answer hopefully filled that in for you.
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