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GE Lighting Price Increase Announcement June 1, 2011.

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Presentation on theme: "GE Lighting Price Increase Announcement June 1, 2011."— Presentation transcript:

1 GE Lighting Price Increase Announcement June 1, 2011

2 2 GE Proprietary Information 5/5/2015 What are Rare Earths (REs)? 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 17 elements from near the bottom of the periodic table

3 3 GE Proprietary Information 5/5/2015 White (R60%G30%B10%) Red 60% 95% Y Green 30% 20% Ce 38% La 12% Tb 30% Other Blue 10% 2% Eu + += 57% Y 6% Ce 3.6% Tb 3% Eu 11.4% La 19% others 5% EU 100 % 70 % 2%2% 100% RE% 98% Other Avg. Rare Earth content - phosphors REs comprise 65% of lamp phosphors

4 4 GE Proprietary Information 5/5/2015 Why do RE prices continue to rise? 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 3. China continues to reduce rare earth export quotas 4. Export duties (VAT) imposed to encourage “domestic” production of finished goods in China

5 5 GE Proprietary Information 5/5/2015 Rare Earth costs Neodymium, used in Reveal glass, has increased in cost 11x since 2009! Jan. 2009 85k RMB/MT Today 930k RMB/MT ($/Kg in China; 99% purity) Source: RE prices are rapidly inflating costs of phosphors used in LFL & CFL products

6 6 GE Proprietary Information 5/5/2015 Global challenge impacting everyone May 19, 2011 China Tightens Rare Earth Rules

7 7 GE Proprietary Information 5/5/2015 RE-Like inflation on everyday items What would prices be if you experienced Neodymium inflation rates on some common everyday items? What would you do differently? Jan ‘09 Mar ‘11 Jan ‘09 Mar ‘11 Jan ‘09 Mar ‘11 Jan ‘09 Mar ‘11

8 8 GE Proprietary Information 5/5/2015 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 9 GE Proprietary Information 5/5/2015 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; 4 th introduced May 27 th 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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