b'Overall demand from the ferrous alloys sector, primarily thevirtual halving of the London Metal Exchange (LME) price for nickel production of stainless-steel and specialty steel, still accountedfrom just over US$31,000/t at the start of 2023 to slightly above for 2/3rd of consumption with battery materials anticipated toUS$16,000/t by the close of the year.contribute 10% and non-ferrous alloys, electroplating, and variousThis weakening in the LME nickel price has seen a number of other applications making up the balance.However, whilst growthhigher-cost sulphide and ferronickel operations curtail production.in the stainless-steel sector continues to increase gradually aSome analysts estimate that 200ktpa (c. 5% of total nickel market) significant surge in demand is expected from the battery industry.of high cost-production has already been removed from the market Demand from the battery sector is predicted to escalate from itsin the second half of 2023 and early 2024, which is expected to present share to surpass 30% by 2032, driven almost entirely by thesupport the nickel price. In addition, market commentators have accelerating production of global EV batteries.Ten years later thenoted that growth in Indonesian supply is slowing with most of the demand from batteries is foreseen to expand even further, makingunfunded projects to be placed on hold in the near-term until prices up 35% of total demand (or 2Mtpa, equivalent to 4x forecast 2024return to levels that incentivize new production on a sustained basis. battery sector demand), with a corresponding decline in demandWhilst Centaurus now plans to produce a low carbon, low-cost from ferrous alloys to just over 50%. nickel sulphide concentrate from the Jaguar project, as opposed Despite the increase in demand, the rapid expansion of Indonesiasto nickel sulphate, this change positions the Company perfectly to output in 2023 kept the finished nickel market in a substantialmaximise exposure to the increased demand from the EV battery surplus with supply exceeding demand by 400kt in 2023. sector via sales to either established global smelters & refiners Whilst Indonesian production is still dominated by ferronickelwho produce nickel metal or a number of new entrants looking to production, in the form of Nickel Pig Iron (NPI), the global supply sideprocess sulphide concentrate directly into sulphate.The fact that a story of 2023 was the sustained transition of Rotary Kiln-Electricnumber of these alternative processing facilities will be located in Furnace (RKEF) operations to matte production and the ongoingInflation Reduction Act (IRA) compliant jurisdictions will only benefit build out of high-pressure acid leach (HPAL) to produce Mixedthe Company further.Hydroxide Precipitate (MHP) in Indonesia both of which facilitatedCentauruss goal is to have the Jaguar Nickel Sulphide Project in materially large volumes of nickel to flow into the Class 1 marketproduction by 2027, to meet the market at a time when the nickel and ultimately into the battery supply chain.The result of this was amarket is forecast to be moving back into a deficit situation.35,00030,000LME Nicket (US$/T)25,00020,00015,00010,000Jan 2023 Mar 2023 May 2023 July 2023 Sep 2023 Nov 2023 Jan 2024Figure 2: LME Nickel Price (JanuaryDecember 2023)Source: LMECENTAURUS METALS LIMITED ANNUAL REPORT 7'