Chemicals sector : earning the right to growth. Vincent De Cuyper General Manager of Solvay Chemicals. SOLVAY INVESTORS DAY September 26, 2007

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1 Chemicals sector : earning the right to growth Vincent De Cuyper General Manager of Solvay Chemicals SOLVAY INVESTORS DAY September 26, 2007

2 Positioning Strategy drivers Execution : Soda Ash in Bulgaria, Epicerol, Hydrogen peroxide (HPPO)

3 CHEMICALS Our positioning In % of 2006 sales = EUR 2,998 M Electroch emistry and fluor products cluster; 38% 67% Oxygens cluster; 16% 7% 26% Organic; 2% Minerals cluster; 44% Exploit growth opportunities in emergent regions Continuous review of business portfolio 3 19% 11% 11% Glass Paper Detergents 18% Chemicals 5% Construction

4 Work on selective leadership C H E M I C A L S Main Products Europe World Soda ash 1 1 Hydrogen peroxide 1 1 Sodium bicarbonate 1 1 Caustic soda 1 3 Fluorinated products 1 2 SODA ASH 230 (2008) Solvay Degussa Arkema FMC EKA Kemira Zhong Cheng Mitsubishi DC Chemical kt / year Kingboard 7 5,5 3 2,8 2,5 2,2 2,1 2 1,6 1,5 HYDROGEN PEROXIDE Solvay FMC Tata OCI General Chemical Shandong Sterlitamak Tangshan Sisecam Ciech Mton/y

5 Delivering on a strong model C H E M I C A L S Leverage and exploit synergies among businesses common success factors Global presence Global supply chain Global sourcing Operational excellence Technology leadership Integrated sites Feedstock integration Strong cost management Disciplined use of cash Growing performances REBIT/employee (EUR) % M EUR Disciplined use of Cash Cash flow from operations Capex 5

6 Positioning Strategy drivers Execution : Soda Ash in Bulgaria, Epicerol, Hydrogen peroxide (HPPO)

7 Strategy earning the right to growth C H E M I C A L S Intensification of geographic expansion Technological innovation Growth in specialties Consolidation in Essentials 7

8 C H E M I C A L S Strategy Drivers Globalization SODA ASH of manufacturing operations expanding presence in emerging economies (Asia, Eastern Europe) Strengthen Bicarbonate R&D, commercial development and extend production capacity Exploit opportunities for reduction of energy dependence SODA ASH Geographic expansion of manufacturing operations in emerging economies (Mercosur, Asia, East Europe) Intensified R&D efforts on current production processes and breakthrough technologies Further development of HPPO partnership concept 8 PEROXIDE

9 C H E M I C A L S Strategy Drivers SODA ASH Capitalize on new EPICEROL process to extend business in Asia Optimization of EU plant network and gradual conversion to membrane technology EDS Electricity sourcing Development of 365mfc market for foams and solvents Development of inorganic specialties in Asian semiconductor and electronic industries FLUOR Be a competitive and innovative player. Reduce exposure to refrigerant market. 9

10 C H E M I C A L S Work on competitiveness Energy Combined cyle Roselectra, Italy Conversion Conversion trona calcinors, U.S.A Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Membrane technology Replacing mercury cells Rosignano, Italy Energy/Turnover (Ch+Pl) Gaz US F&A (%) Gaz Zee Yn+1 (%) Elec D Yn+1 (%) Oil 12M strip (%) Electricity Exeltium consortium, France Steam - High efficiency boiler Devnya - Steam/heat recovery in Germany 2008/9 10

11 C H E M I C A L S Means for growth Discipline in cash use reinvested in future growth M EUR 500 Cash flow from operations CAPEX (incl. acquisitions) GROWTH 100 MAINTENANCE

12 C H E M I C A L S CAPEX allocation Medium term capital expenditures (incl. acquisitions) Maintenance Geographic expansion Soda ash Bulgaria +300kT/y Hydrogen peroxide HPPO projects : Belgium 230 kt/y Thailand 330kT/y Electrochemistry Epicerol Thailand 100 kt/y Growth in specialties MEUR sales by

13 Sustainable and profitable growth C H E M I C A L S Secure LT margins higher REBIT/sales by 2010 in the current business climate 15% 10% 10% 10% 11% 8% 7% 5% AVG REBIT/sales : 9% (annual growth : sales +3%, REBIT +5%) 0%

14 Positioning Strategy drivers : earning the right to grow Execution : Soda Ash in Bulgaria, Epicerol, Hydrogen peroxide (HPPO)

15 A GLOBAL LEADER IN SODA ASH Expansion in Bulgaria Sodium Carbonate (Na 2 CO 3 ) molecule

16 C H E M I C A L S A global leader in SODA ASH World largest producer with the largest geographical network (production and sales) Soda Ash Average Plant Capacity (kt/y) 871 Competitiveness through world scale and state of the art plants 8 6 Uniquely positionned to promote soda ash production from either trona or Solvay ammonia process Solvay Process Trona Trona-Brine 447 TODAY 4 IND AVG (Solvay not included) Solvay FMC Tata Chemicals OCI General Chemical Access to competitive sources of thermal energy Reference in product and market development for specialties (Bicarbonate) Upstream integration (salt and limestone) 16

17 C H E M I C A L S SODA ASH Market Business fundamentals currently good 60 Soda Ash World Market (Mt/y) CAGR= 3,9%/y 88% Healthy operating rates Increasing demand worldwide + 4% fast growth in emerging regions (Eastern Europe, CIS, Asia, mercosur) Growth of specialty derivatives of soda ash (e.g. bicarbonate) 0 80% Total Capacity (Mton/y) Demand (Mton/y) Operating rate (%) Source: CMAI,

18 SOLVAY SODI Investments for sustainable growth C H E M I C A L S Largest European operation (1.2 Mt/y) Optimal access to large raw material resources Excellent logistics with direct connection to Black Sea via Port of Varna West 2007 : EUR 50 M investment to expand capacity to 1.5 mt/y (by 2008) : to support growth in the dynamic markets of the Balkans, the Community of Independent States (CIS) and the Middle East EUR 70 M Investment to upgrade the site s power supply (by 2008) CIS+Baltic Soda Ash Consumption (Mt/y) 2,7 3,6 CAGR= 4,1%/y 4,4 Source: CMAI

19 EPICEROL PROCESS Growing Green Epichlorhydrine (C 3 H 5 OCl) molecule

20 Epichlorohydrin worldwide market C H E M I C A L S SOLVAY Epichlorohydrin producer number 4 worldwide (Dow, Hexion, FPC), Production sites: FRANCE (Tavaux) - 40KT/y Germany (Rheinberg) 56 KT/y Demand in 2007 (KT/y) 580 Expected Growth (CAGR ) 8,5% 7,0% Glass reinforced fiber Bonding and adhesive Protective coatings ,5% 2,7% Europe NAFTA Asia RoW Source: Solvay analysis Europe NAFTA Asia RoW Source: Solvay estimates

21 Glycerine alternative renewable feedstock C H E M I C A L S 400% 300% Propylene price /T Glycerin price /T Chlorine Growing market waiting for new capacities 200% 100% 0% Source: ICIS, HBI,Solvay analysis estimates Oil derivative: propylene Epichlorohydrin? Reinvestment under question Synthetic glycerin Hydrochloric acid 3000 Glycerin production (estimates) Example: 1 ha of rapeseed 1T of oil 0,1T of methanol 1T of biodiesel: green fuel mixed with standard diesel By-product from biodiesel production process Available 21 0,1T of glycerin Source: ICIS Affordable cost

22 The Epicerol process From lab to market C H E M I C A L S Targeting the growing Asian market, investment in a 100kT/y capacity in Map Ta Phut (TH), startup expected by the end of 2009 Represents 25% of the market growth from 2007 to 2012 TAVAUX, France Other projects under study in various parts of the world First lab trials in Bruxelles (B) Pilot Plant in Tavaux (F) April 2007, startup of a 1st industrial unit of 10kT/year of Epicerol in Tavaux (F) 22 New Epicerol line Average line size in the world 22 patent applications

23 H 2 O 2 FOR PROPYLENE OXIDE it s time to scale up Hydrogen Peroxyde (H 2 O 2 ) molecule

24 H 2 O 2 for propylene oxide A partnership of technology leaders C H E M I C A L S DOW and BASF LEADERS IN PO Joint development of the H 2 O 2 to PO technology No co-products Reduction of investment by 25% SOLVAY LEADER IN H2O2 Development of the high yield technology for H 2 O 2 Displacement of the H 2 O 2 technology frontier (landmark in H 2 O 2 production) Reduction of investment by 35% Source: CE, Chementator 2005 HPPO :ENVIRONMENTAL PERFORMANCE Reduction of energy usage by 35% Reduction of waste water by 70 to 80% 24

25 PO developments a major growth opportunity for H 2 O 2 C H E M I C A L S STRONG H2O2 GROWTH FOR PO Each new HPPO plant adds 10% to the total existing H 2 O 2 market SOLVAY IN GOOD POSITION TO CAPTURE FUTURE GROWTH In the forefront of H2O2 production technology Technology leadership is a never ending game (R&D budget 09/05 +50%) STRONG GROWTH OF PO Estimated average annual growth rate ( ): 4,6% A new world scale PO plant needed every 2 years China will double its 2005 consumption by 2010 World PO growth ( ) 2,6% 2,9% 12,6% 7,3% 4,6% Western Europe United States China Mexico Total Source: SRI Consulting CEH,

26 H 2 O 2 MEGA PLANTS value for Solvay C H E M I C A L S ECONOMIES OF SCALE Mega H 2 O 2 plants reach a new level of economies of scale SYNERGIES 26 The mega H 2 O 2 plants will benefit from synergies of large integrated sites SOLVAY WILL REINFORCE ITS LEADERSHIP BY Doubling production capacity within 4 years Building a strong position in Asia First HPPO plant under construction at Zandvleit (B) Zandvleit 230kT/y, Thailand 330kT/y The two plants add 76% to Solvay s current capacity 330 H2O2 Average Plant Size (kt/y) Ind AVG Today AVG Zandvleit Thailand Solvay 2010

27 CONCLUSIONS C H E M I C A L S Sustainable and profitable growth : secure LT margins Sound business fundamentals in core activities Growth projects ahead grounded on new technologies Actively work on geographic expansion 27

28 To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations; changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals; regulatory approval processes, all-in scenario of R&D projects and other unusual items. Consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "believes," "may," "could" "estimates," "intends", "goals", "targets", "objectives", "potential", and other words of similar meaning. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update any forward-looking statements"