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GE Lighting

GE Lighting. Price Increase Announcement June 1, 2011. What are Rare Earths (REs)?. 17 elements from near the bottom of the periodic table. Unique properties have led to a wide variety of applications and are important economically, environmentally and technologically

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GE Lighting

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  1. GE Lighting Price Increase Announcement June 1, 2011

  2. What are Rare Earths (REs)? 17 elements from near the bottom of the periodic table • Unique properties have led to a wide variety of applications and are important economically, environmentally and technologically • Use of REs in high performance products has significantly increased over last 2 decades • Industry applications: Lighting, EV batteries, military weapons, TV & laptop screens, catalytic converters, magnets, semiconductors • Toyota Prius uses 1kg/2.2lbs of Neodymium in each vehicle

  3. Avg. Rare Earth content - phosphors Red 60% Green 30% Blue 10% White (R60%G30%B10%) 2% Eu 5% EU 3% Eu 20% Ce 57% Y 38% La + = + 98% Other 95% Y 6% Ce 12% Tb 11.4% La 3.6% Tb 30% Other 19% others 70% 2% 100% 100% RE% REs comprise 65% of lamp phosphors

  4. Why do RE prices continue to rise? 3. China continues to reduce rare earth export quotas 4. Export duties (VAT) imposed to encourage “domestic” production of finished goods in China 1. Increased demand for rare earths in widely used products 2. China undercut world prices in the 1990s and now produces 95% of the world’s RE supply

  5. Rare Earth costs RE prices are rapidly inflating costs of phosphors used in LFL & CFL products Neodymium, used in Reveal glass, has increased in cost 11x since 2009! Today 930k RMB/MT Jan. 2009 85k RMB/MT ($/Kg in China; 99% purity) Source: metals-pages.com

  6. Global challenge impacting everyone China Tightens Rare Earth Rules May 19, 2011

  7. RE-Like inflation on everyday items What would prices be if you experienced Neodymium inflation rates on some common everyday items? Mar ‘11 Mar ‘11 Mar ‘11 Mar ‘11 Jan ‘09 Jan ‘09 Jan ‘09 Jan ‘09 What would you do differently?

  8. Other inflation • Incandescent Aline: • Increased costs to meet customer demand: keep factory open, add’l shifts (wages), other base costs • Market decline driving component cost increases • LFL/Halogen: • Higher LFL phosphor content required for higher CRI product to comply with July 2012 legislation • Halogen transitioning to Silver Par & HIR+ to meet legislation effective July 2012 • Transportation: • Ocean freight • Oil inflation

  9. GE response • Sourcing to protect supply & minimize cost: • Stockpile RE material • Maximizing “blends” procurement & number of suppliers • Securing long term agreements w/non-Chinese mines • Technology to reduce usage: • Product design projects to reduce RE content • Longer term R&D innovations • Government Relations: • NEMA involvement in DOE legislation extension • Support 3 bills currently in U.S. Congress; 4th introduced May 27th • Pricing to ensure supply: • 5% general price increase – amount varies by product line • Announced 6/1/11, effective 8/1/11

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