Good morning, and welcome to this St. Valentine's Day and to Bergen Carbon Solutions presentation of Q4 2024 and the latest progress over cutting-edge CCU technology. I'm Odd Strømsnes, and I'm the CEO of the company. The agenda is as follows: introduction of the main principles of our equity story. You have seen some of the slides before. Q4 2024 highlights, status and technology development, summary, and then we're rounding off with Q&As. As one of very true CCU companies, BCS continues to offer an attractive value proposition based on local development of sustainable carbon. This carbon is a key component into all batteries, which today, as we know, is produced in China with massive greenhouse gas emissions. Through our CO2-consuming electrolysis technology, we develop our carbon powder, such as CNT, synthetic graphite, and carbon black. All these carbon electrodes we can produce are critical for various battery chemistries.
Our current focus presented here today is still very technical: developing the process in order to be able to produce a consistent and well-defined carbon powder. Documenting precise repeatability of the process window is paramount for us to be able to take the next step. From a CCU perspective, we have already proved the concept of a complete carbon value chain, as we have documented carbon capture directly from fuel gas emitted by a large waste incineration plant here in Bergen. The world's massive electrification transformation needs more batteries, as the global battery demand will significantly increase until 2030. The global increase in the battery market, which we have just seen the start of, will take place regardless of the geopolitical uncertainty we now see. The growth will also be based upon an increased focus going forward on developing a sustainable and locally valued battery value chain.
Norway has good fundamentals for production of critical battery components based on our long-term sophisticated material knowledge and process experience from other industries. The fundamentals of our process are simple and based on exactly that: splitting the CO2 into oxygen and carbon through an electrolysis process, emitting the oxygen and harvesting the carbon on the cathode side of the process. We do this by consuming CO2 and with less power than by conventional production of carbon where it emits CO2. It is simple, but it is difficult. Development of cheaper and more effective batteries is ongoing on a global scale. New chemistries are continuously being developed with the aim to develop more energy storage per unit weight. CNT is a key component for all this and an important element in many of these new chemistries, and we know the demand will increase.
The CNT is a conductive agent, increasing the battery's conductivity, which makes the battery faster to charge and more durable. Our technology is novel. It is sustainable and offers a local alternative to the CNT production taking place globally today. The electricity consumption is a fraction of existing production methods. In a scaled production, implementing our new process steps, we believe we can compete on cost. In a geopolitical context, Bergen Carbon Solutions basically ticks all the boxes in a world where the price for CO2 emissions will probably increase, and protective incentives for sustainable and local production will stimulate industries like ours. The battery value chain is a true global industry with many players. Here we have listed some of them, primarily split into five areas: raw materials, materials processing, cell components, cell manufacturing, and system assembly.
It is important to note BCS is an upstream company in this value chain. We are a raw material supplier, providing critical material, potentially to all the four subsequent downstream areas shown here. This picture is just a snapshot of some of the companies in the value chain. Huchems, for instance, as a chemical company, is typically within material processing, while Morrow and Beyonder are typically cell manufacturing companies. This means that our client ecosystem is massive, with a huge number of potential off-takers, where we could go from drop-in replacement of our green carbon into a fossil blend for processing or cell component company, or as critical sustainable material towards the cell manufacturer or assemblers themselves. They all need active and conductive additives to improve the battery's performance, and the greener and the more locally it is produced, the better.
A recent contract award to a local Norwegian player providing sustainable anode raw material for a large American automobile manufacturer is definitely a good proof of this. Another long-term aspect of the benefit of being to the left on this chart is the flexibility towards new technologies, as the continuous change in battery chemistries will call for modifications to the cell manufacturing, with consequential higher CapEx the longer to the right you go on this chart. I think it's prudent to state that this is a complex and new value chain to not only the Norwegian industry, but to a certain degree also European industry. Many players have internal vertical value chains, and many have focused today on completion of their large CapEx investments rather than exploring the potential of new value chains. We believe this will change.
That's why we have been active presenting on a number of events and conferences, resulting in a dialogue with more than 35 companies during 2024, which is only a snapshot of the massive client universe we can see. The potential here, we believe, is enormous. As a consequence of my previous slide, and by the fact that we have a number of potential partners and clients in the carbon raw material space, we have been accepted as a member of the European Advanced Carbon and Graphite Material Association. This association of the European carbon value chain aims to build a competence with a global goal of delivering European carbon. We believe this can be beneficial for us going forward, and we will have our meeting during this spring. Electrification through the global growth in the battery market is indeed a mega trend, and mega trends are always important to watch.
Never take your eyes away from that. In five years from now, 50% of all new cars sold are electric vehicles on a global scale. In Europe alone, it's 70%, and in China, 90%. Today, there is a fair competition with falling prices and oversupply of batteries, and the global battery value chain is dominantly totally by China. However, with the anticipated global growth, the battery oversupply is considered by most to be temporary, and with the global geopolitical situation, local actions will be taken to aim to reduce the substantial Chinese dominance. There are therefore many good reasons to assume that European and U.S. players in the battery value chain will succeed and that the Western battery supply chain will not be a copy of the collapsed Western solar industry we saw for some years back. I will go through 2024 highlights.
I'm actually very satisfied to summarize the key developments which took place last year: implementation of new small and medium-scale electrolyzer cells for increasing our ability to develop and speed up the development for a well-defined and consistent carbon powder. We progressed on the advanced electrolyte recycling and the purification process, and we were kicking off the battery lab in-house, and we have actually produced more than 100 coin cell batteries during last year. We strengthened our financial position and expanded strategic partnerships. By reducing burn rate throughout 2024, we have now seen a 23% cut relative to 25% due to cost reduction and organizational reshaping, achieving a higher efficiency with fewer employees. We secured NOK 14 million from SkatteFUNN funded over three years and additional support from Innovasjon Norge. We signed LOIs with Morrow Batteries and Beyonder and extended our existing MoU with Huchems.
Our financial numbers presented here confirm no need for further funding, as we continue to have the finances in plan for execute on our strategy. We are showing here a 23% reduced yearly cash burn rate from 2024 to 2025, and the need for CapEx going forward is very limited. The cash burn in this last quarter is NOK 13.3 million, and this corresponds to a NOK 3.3 million quarterly cash burn reduction compared to Q4 in 2023. We still have a solid cash position now at NOK 170 million, still zero debts, and a satisfactory equity position. In addition to the NOK 14 million from SkatteFUNN, we are continuously working on other relevant funding opportunities. An update of the technology development work we do. During 2024, we announced two intentional technology agreements with Morrow and Beyonder.
The parties believe that a local high-quality raw material supply of tailor-made carbon products produced with our CO2-consuming production process could actually become one of the most valued competitive advantages for the Norwegian battery industry going forward. Following completion of their ongoing ramp-up activities and market penetration based on their existing battery chemistries, we anticipate to start testing and evaluation of our carbon powder within new and adjusted battery chemistries going forward. The one-year extension of the Huchems MoU is definitely a clear sign of interest to our technology despite our delays meeting their specifications, as we have previously announced several times. BCS progress is currently being monitored by Huchems as part of the current agreement. The BroadBit project is currently closed. However, further development tests will be conducted internally in our own battery lab.
At a different domestic academic institution in Oslo, Bergen, and Trondheim, we are conducting various tests with specialized equipment and experiments. This work will be strengthened from our side, as it's also key for participation into future funding initiatives. The degree of cooperation between the players in the Norwegian battery industry was in 2024 strengthened, driven very much by a general common interest and organized by Forskningssentrene for Miljøvennlig Energi (FME). The intention is to strengthen the cooperation in the industry and bring new and sustainable carbon materials into the next-generation battery market. Joint research project with the Horisont Energi is on the development of next-generation sodium-ion batteries is progressing well. Our powders are evaluated as potential conductive additives in their chemistries.
The setup will bring valuable feedback on the performance of our powders and proposed next step, as well as intelligence on other materials for this is very interesting for next-generation battery chemistry. In the end of 2022, we changed our strategy, and we have talked a lot about that. As part of this change to strategy, where we moved away from targeting production for a general carbon market for a wide number of applications, we moved towards being a technology development provider focusing towards the battery market, as this is a growing sustainable high-end market with a high entry barrier, but also a high willingness to pay for the right quality. Investment into battery lab and smaller cell testing equipment has enabled us to reduce our OpEx and significantly speed up the development work much faster. Feedback loop of our test results. We are now a technology development company.
We are not a production company. That's an important message. This has required new skill sets and competences, now focusing 100% towards our core technology process. Today we have a steady headcount of 22, and that is actually a 35% reduction in 15 months. I would say humbly that we have never progressed our development work any faster than we do today. Here is a picture of most of the technology group, headed up by our temporary CTO, Rita Glenne, supported by our two technology managers, Wenjing Su and Håvard Husby. This is a technology leadership team with massive relevant competency and industrial experience. This is just what we need. BCS' ability to attract young talent, I would say now is undisputable. We can offer an attractive, sustainable technology solution to young engineers.
I'm very pleased with this team, and I'm confident that they form the competence base we need to build a company going forward. Producing CNT is difficult, and it's all about size and form. As small particles as possible, with as much surface as possible. Thousand times thinner than a hair. 10-100 nanometers diameter with a surface area of 100-200 square meters per gram. The vast majority of all major battery chemistries today contain CNT, and it's today produced fossil-based in China, as I've said several times. For us now, it's still all about further developing our technology, defined here into three stages. First, transforming the CO2 into solid carbon through our electrolysis process, achieving a stable and well-defined technology platform by optimizing the input parameters.
Secondly, the post-electrolysis phase, defined by separation and filtering out the carbon, as well as cleaning of the electrolyte, enabling full recycling. This is very important for our total OpEx picture. Thirdly, testing out our carbon products in different battery chemistries in order to verify and benchmark our product versus what the market can offer. The first and most important step here is obviously the electrolysis. For this equipment, it's all about operability, it's all about size, and it's all about speed. The smaller volume we test in, the faster we get results, and the cheaper the process is. During 2024, we have been investing into new equipment, and we now have four different-sized cells, same principal function, but for slightly different purposes. We do our most fundamental studies in the smallest unit, the micro cell.
For further technology verification, and the cell we run mostly for the time being, we use is the lab cell, which has a volume of 4 liters. Here we now harvest the results of two runs per day, seven days per week. From this unit, we do great leaps in our technical progress. In addition, we now have a 40-liter scale cell ready and commissioned, where we will do pre-pilot testing and work to monitor larger volumes when we are ready. For more extensive volume testing, we can use our 100-liter production cell. However, this is not used much for the time being. We expect that this equipment setup is sufficient for us to conclude on our technology platform going forward. As such, we do not expect further major investments.
It is important to note that we are focusing on quality and we are not focusing on volume in terms of production. In our second step, we apply the separation unit to separate carbon from the electrolyte and subsequently rinse and recycle the electrolyte. We have now developed a method for more than 95% electrolyte recycling, cutting costs and definitely increasing our competitiveness. We have filed a patent on this, and that has progressed both in Norway and globally. In our final step, the battery lab has equipment for testing our powders in different applications. The lab will allow us to conduct in-house cell manufacturing and performance testing, significantly reducing development time and time to market. Previously, that loop took many months, as we now are down to two weeks. Material testing and production of battery cells has started, and we have successfully fabricated more than 200 test cells.
This initiative is a training ground and a showroom, I would say, for innovation and indeed welcomed among key stakeholders we talk to. Further news from the battery lab will be available on our web page as we progress. Together with our industrial partners, we have worked with several of the dominating cathode technologies, including LFP and NMC. Initial tests show good results with our powder into LFP chemistries, which is a chemistry with an increased global footprint. There will be a blend of different chemistries for a number of varying applications going forward. One of these chemistries that we have pinned down as a high potential is lithium sulfur.
While this is not a very commercially ready chemistry yet, some of the unique characteristics of our materials add much value to this final product and may help overcome some of the challenges on the way to commercialization of this battery chemistry. We have recently conducted initial battery cell performance testing with our carbon powder, with, I would say, promising results. To learn more on this progress, we will ask you to look at our web pages. We continuously develop our technology in all aspects, I would say, of our process. Our testing shows steady improvements. However, our process still requires optimization to create a consistent and well-defined powder in order to meet the quality requirements from the industry. This is also what we have said in previously quarter presentations.
We are not there today that we are meeting all the market specs for the battery industry. This is a novel technology. The process is complex and has taken longer time to develop than we expect. We are narrowing in on the process window by exploring optimized routes to also close in on the specs. The technology barrier is high, but so is the reward when we are there. I am confident that what we do now is the right thing, that our efforts and our full focus towards our core technology is the correct priority. At 100%, our focus remains on the process quality and advancement in test equipment and speeding up the result of our testing. In order to summarize overall, I am very satisfied with my team and what we have been able to achieve during 2024.
During the last two years, we have turned the company into a pure play technology development company in line with the strategy towards developing carbon powders for the battery industry. During the last year, we have seen a massive reduced cash burn rate achieved through organizational reshaping, fewer employees with higher efficiency and lower OpEx. We secured funding from SkatteFUNN with additional funding applications ongoing as we speak. We have a steady technology development focus with new scale electrolyte now commissioned, accelerating our process optimization speed. I would say that we have cemented our strategic direction towards developing carbon powders for the battery industry. That concludes my presentation. Thanks for the attention. Now we're going over to Q&As. Thank you.
First, we would like to clarify that we do not comment on inquiries that are not directly addressed to the company.
Additionally, we do not comment on unfounded rumors, speculations, or matters that fall outside the scope of business for BCS. Question number one. Do the people around Odd have the right competency for BCS to succeed?
I mean, I just talked about 35% headcount reduction during the last 15 months. I would say the competence blend is definitely changed. I would say no, we do have the right competency. There are still room for improvements in terms of experience, relevant industrial experience. I would say that we are definitely an attractive employer. We are able to recruit talent. I am very, very happy now with the team we have, with a complete focus on the core technology. We do not have much resources now supporting expansion, general engineering. We have a completely different strategy there. The answer is yes.
Question number two.
The lack of media visibility, is this a deliberate strategy or a weakness?
First of all, I would say that I would argue that we lack visibility. I would say that we have participated in many visible events over the last years, all the major conferences. We are a presenter. We have been participating in many relevant events in Europe, large events. We are a technology development company. We need to focus on the core process. I think that there are probably strategic elements with our visibility, which is different than it was three, four years ago. That is deliberate.
BCS focusing on the most complex applications, wouldn't it have made more sense to start with simpler applications to get to market faster?
Okay, this is a good question.
I think the company ever started off by looking at the general market with a lot of potential and products. I mean, we are looking to a market with just a 30% global growth per year. It's a huge market with a dramatic increase. It's a difficult product, high entry barrier. When we are staffing up and qualifying our team, we will manage that technology entry barrier. I think the reward is huge, high willingness to pay. I think what's important to note is that the real driver for large-scale consumption of multiple carbon nanotubes in the world is through batteries. It is natural to focusing totally on that market. As a general comment, I will also say it's always a good strategy for a company to be narrowing down the focus on what kind of products you are looking into.
All kinds of products will have their specifications and requirements.
Have BCS reached any milestones, or are they continuously being pushed forward into the future?
I mean, what we are working on now is really simple, and it's not that simple. We are developing a consistent and well-defined powder. In order to do that, we need to have full control over the process. That is what we're working on. I would say we are reaching small milestones every day. That is technology milestones. We are talking to relevant clients every day. Some of them we have announced, but most of them we have not. I would say that we are working on internal milestones as part of a technology development company.
How does BCS envision scaling after achieving the required specification?
What are the biggest challenges in moving from producing, let's say, 100 grams to a ton with consistent quality?
Today, as I said, we are not producing for volume. We're producing very small amounts for testing verification purposes only. Again, developing a process for a consistent and well-defined powder. That's basically what we do. To comment more on that, I'm not going to do. It's always difficult to give predictions and forecasting for a development company.
You have previously mentioned that you're working with multiple customers. Have any of them withdrawn, or are you still in dialogue with them all and potentially other players?
I think one of the pages we showed there today is quite interesting. It's a snapshot of the global value chain. I mean, there's a huge number of potential partners out there. We are talking to a few.
I would say that that dynamic process is continuing. That's going well. That is long processes. At one point in time, we need to start qualifying the product with certain partners.
If a breakthrough is achieved, what will be the next steps in the development process?
I mean, a breakthrough for us now is achieving a process where we are on a repeatable basis able to make a consistent and well-defined powder. I mean, that is basically to really get control over process. That's what we're working on. That is what we now will define as a breakthrough, to really have control over our technology.
Yeah, another one here. What is BCS' main problem? Is it quality, price, technology, lack of qualified personnel, funding, or something else?
That was a big question. I wouldn't say that we have a problem.
We have challenges of technical nature. We have the right team in place to handle it. Again, these are new technology frontiers. You're not able to predict everything around next turn. That is work we are doing on a gradual basis. We're aiming to really, again, get full control of the process we're running.
We have gotten one. Our final question now will be, are you using similar amounts of resources internally on producing graphite as CNT?
Today, we are focusing on CNT as a product primarily. Establishing that process window, which we are now doing, will be applicable for many of these carbon electrode products. What we're working on now will be deterministic for a wide number of carbon products.
Did you move more of the testing to partners, or is the battery lab very central in your testing?
I would say that the battery lab is indeed very central. It is getting more and more important for us. There is no question about that. That was investment we did last year. I mean, we have done a dramatic change in the mix of our staff. Much less focus on expansion, general engineering. We are buying equipment much more on an off-shelf type of philosophy versus previously where we designed it ourselves. Our OpEx cost is reduced by the fact that we are spending much less consumables of doing our tests since we are running much smaller test cells. With our focus and with our new strategy, I think that we are in a much better position in terms of the number of headcounts we need to solve the problems we are working on.
You mentioned that you had your products in 100 cells. Yeah, now.
Do these battery cells, do they work?
Yeah, they work. First, we are mounting them using our own carbon powder, constructing the battery cells and testing them and checking out the battery's performance. We do that versus other battery cells, which have commercially available carbon powders, which are made fossil. We are checking our performance or batteries with our CNT versus competition powders and benchmarking the performance.
Okay. You are focusing on lithium-sulfur batteries. Is this a relatively novel thing?
Yeah, I mean, as I said, it is a battery chemistry, which is not really commercialized yet, but I think the market in general views it as a massively high-potential market with a high energy density. We think that that type of chemistry will be the answer to many of the battery chemistries of tomorrow.
We have started off by testing out that chemistry, but now we are also testing other chemistries. We have just started LFP chemistry testing. We will basically broaden our testing applications as we go along. Yeah.
Do you see any scope for commercialization of just this process, or is that off the table now? How to do that?
I mean, the commercialization element of it is the fact that we will be able to run our process much more cost-effective. That is for internal purposes.
The last thing I had to SkatteFUNN grant, when will this be recorded as revenue? Have you already for 2024? For the next three years.
For the next three years. Did you take some of it in the fourth quarter?
No, we did not. That is starting this year.
Okay. Thank you.
Okay.
Thank you, Petter, for your questions. Petter Slyngstadli from Norne Securities. I think if we have time, we have one more question from our live audience that we can try to follow up. Are you using the CNTs primarily as an additive for the anode or the cathode?
Primarily, it's for the cathode. That will form part of the chemistry mix on the cathode side. There are also battery applications where you can use the CNT also as a mix into the anode side.
Our last question for today will be, are you delivering this material? Is it like a dry powder or in fluid, or how is it distributed?
I mean, we are producing it as a dry powder, and then we're mixing it into different fluid-based solvents, I would say, in order to apply into the battery.
Okay.
I think that concludes the Q&A and therefore also the presentation.
Thank you.
Thank you.