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SUSTAINABLE SUPPLY CHAIN MANAGEMENT &RAW MATERIAL SOURCING.20.11.2019NIELS ANGELHEAD OF SUSTAINABILITY AND INNOVATION MANAGEMENTSUPPLIER NETWORKFREDRIK ALTMANNDIRECTOR CORPORATE FINANCE, STEERING TREASURY CENTERSPETER ZISCHSENIOR MANAGER CHEMICALS AND BATTERY RAW MATERIALPURCHASING
THE BMW GROUP MANAGES THE CHALLENGES OF E-MOBILITY.RAPID INCREASEIN ELECTRIFIED VEHICLESMANAGEMENT OFCRUCIAL RAW MATERIALS500,000BY THE END OF 2019 ON THE UMMANGANGRAPHITECOPPERRARE EARTHALUMINUM2019 140,000103,00062,000NICKEL2018KEY CHALLENGESMARKET PRICE RISKSELECTRIFIEDVEHICLESRAW MATERIALMARKETSRAW MATERIAL MANAGEMENT – AN INTEGRAL PART OF CORPORATE PERFORMANCE.Sustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupSECURITY OF SUPPLYCOST OPTIMIZATIONTRANSPARENCYSUSTAINABILITY
BMW CONSIDERS THE TOTAL VALUE CHAIN OF BATTERY CELL:FROM CRADLE TO GRAVE.RAW MATERIALSAND REFININGCELL DESIGN ANDPRODUCTIONBATTERY»2ND LIFE«RECYCLINGEnvironmental andsocial standardsOptimized performance/ costsbased on BMW Group applicationCell/module/packdesignCell/module/pack designto foster recyclabilityRaw material optimizedfor chemistry designSecuring productioncapacityApplication onBMW Group sitesUse of recycled rawmaterialsReductionCO2 footprintBusiness Modelsto secure marketsDevelopment of recyclingprocesses with ability toclose material loopsSecuring raw materialsupplySustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupSecuring recyclingcapacities
BMW CORPORATE FINANCE SUPPORTS THE BMW GROUP ALONG THE ENTIREAUTOMOTIVE VALUE CHAIN IN ITS RISK MANAGEMENT FUNCTION.HEDGING OF MARKET PRICE RISKS HAS A LONGTRADITION AT BMW GROUP1998RAW MATERIALCOMMITTEEHEDGING OF PRECIOUS METALS (PLATINUM, PALLADIUM, RHODIUM)HEDGING OF NON-FERROUS METALS (ALUMINUM, COPPER, LEAD)2009COOPERATE GOVERNANCEARE FULFILLEDHEDGING STEEL RAW MATERIALS (IRON ORE, COKING COAL)ICS & KPICOMPLIANCE4-EYESPRINCIPLEHEDGING OF ENERGYHEDGING OF CO2COMPLETE STRATEGY REVIEW: VALUATION BASED APPROACH CONFIRMED2019SUPPORT OF RAW MATERIAL MARKET PRICE RISK MANAGEMENT BBA (JV CHINA)INCREASED FOCUS ON BATTERY MATERIALS: HEDGING OF NICKEL2020HEDGING OF ADDITIONAL BATTERY MATERIALSSustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupTREASURYMANAGEMENT SYSTEMPRODUCTHANDBOOK
FINANCIAL MARKET RISK MANAGEMENT ADDRESSES THE COMPANY’S NET RISKPOSITIONS AGAINST THE VOLATILITY OF THE CAPITAL MARKET.STRATEGIC OBJECTIVESOPERATIONAL CORE ELEMENTS%Increase planning securitytReduce earnings riskRisk bearing capacitySelective Approach(Minimum hedge quotas)relative valueMaintain opportunitiesOverlay ManagementThe operational implementation is selective and valuation driven– not speculative.Natural hedging improves the risk position of the BMW Group.Sustainable Supply Chain Management & Raw Material Sourcing @ BMW Group
THE NEED FOR BATTERY MATERIALS INCREASES SUBSTANTIALLY.PROCUREMENT2025ManganeseFINANCENo financial market forderivative hedgingGraphiteCobaltEnsure physical supply of the materialFinancial market for derivativehedging slowly developingLithiumEnsure physical supply of the materialFinancial market for derivativehedging not sufficiently developed2019NickelDerivative hedging since 2017Indication of financial market readinessSustainable Supply Chain Management & Raw Material Sourcing @ BMW Group
BMW GROUP’S ROADMAP: LEADING POSITION IN MANAGING RAW MATERIALRISKS AND SECURING LONG-TERM PROFITABILITY.BEV/PHEVBEV/PHEVBEV/PHEVSECURING LONG-TERM, STRATEGIC ACCESSTO CRUCIAL RAW MATERIALSTo secure the long-term supply for raw materials and to improve thetraceability of ESG critical materials, BMW Group is working closelywith it’s TIER n suppliers.TIER 1BATTERYMATERIALSREFINERYRISK EVALUATION & ACTIONSUSTAINABILITYSECURITY OF SUPPLYPRICE RISKTIER 2RAW MATERIAL MANAGEMENTSustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupMININGTIER N
BATTERY SUPPLY CHAIN – KEY CHALLENGES.SUSTAINABILITYSECURITY OF SUPPLYCOMPLIANCE AND HUMAN RIGHTSRIGHTS OFINDIGENOUSPEOPLEWORKWORKINGCONDITIONSASMSECURITY ONRULE OF LAWCORRUPTIONRAW MATERIAL DEMANDCHILDLABOURINNOVATIONENVIRONMENTAL TEMSWEATHERRISKSSustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupLAND TSECONDARYRESOURCESPOL. HEALTH / CLIMATE NOPOLYS
DEVELOPMENT OF OPTIONS FOR STRATEGIC ACTIONSREQUIRES DIVERSE SUPPLY CHAIN KNOWLEDGE AND GLOBAL EXPERTISE.MININGPROCESSINGCOST ANALYSISSUSTAINABILITYFINANCINGLOGISTICSRAW MATERIAL TEAMS GOES LOCALSTORAGE6%BUSINESS CASEQUALITY / rs 17%ACCOUNTINGTAXESPRODUCTION RISKSSustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupPOLITICAL RISKSGLOBAL STRATEGY58%others 3%11%37%3%4%33% 5%
COMMITMENT TO RAW MATERIAL EXTRACTION: CROSS-INDUSTRY PILOTPROJECT TO PROMOTE SUSTAINABLE ARTISANAL MINING.FACTS & FIGURESINITIATED BYIMPLEMENTED BY3 YEARSJAN 2019 – MAR 2022KOLWEZIDR CONGOFORMALISATION OF ARTISANAL MININGSustainable Supply Chain Management & Raw Material Sourcing @ BMW GroupSUPPORT FOR ARTISANAL COMMUNITIES
THE BMW GROUP COBALT STRATEGY IS THE BENCHMARK FOR THE INDUSTRY.BMWDUE DILIGENCEPROGRAMMESECURING SUPPLY OF COBALT FROMMOROCCO/AUSTRALIA FOR GEN5 WITHHIGH SUSTAINABILITY STANDARDSINVOLVEMENT IN INITIATIVESCROSS-INDUSTRY PILOT PROJECT TOPROMOTE SUSTAINABLE ARTISANALMININGSustainable Supply Chain Management & Raw Material Sourcing @ BMW Group
WE ARE SHAPINGTHE MOBILITYOF THE FUTURE.
Sustainable Supply Chain Management & Raw Material Sourcing @ BMW Group HEDGING OF MARKET PRICE RISKS HAS A LONG TRADITION AT BMW GROUP 1998 BMW CORPORATE FINANCE SUPPORTS THE BMW GROUP ALONG THE ENTIRE AUTOMOTIVE VALUE CHAIN IN ITS RISK MANAGEMENT FUNCTION. COOPERATE GOVERNANCE ARE FULFILLED RAWMATERIAL COMMITTEE
