Impact of Environmental and

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1 Adapting to a Changing Game: Impact of Environmental and Political Landscape Changes David Lines - Principal

2 Strategic Planning Project Screening and Feasibility Studies NexantThinking Nexant Training Expert Witness and Litigation Support Commercial and Market Analysis Merger and Acquisition Transaction Support Technology Evaluation and Management Project Finance

3 Agenda Adapting to a Changing Game Global polyolefin demand trends Is the current consumption trend sustainable? What are the risks to the plastics industry? Is the plastics future sustainable?

4 Global polyolefins demand Global Polyolefins Demand by Region 2017-e = Approx. 164 million tons Western Europe South America Middle East North America Eastern Europe Central Europe Africa China Asia (excl. China) Polymer demand is driven by industrial production and consumer trends, varying by country maturity Asia (excl. China) North America Western Europe Middle East South America Eastern Europe Central Europe Global Polyolefins Demand Growth by Region (Percent Volume Growth) Global China Africa

5 High growth opportunities exist in specific markets Market Size, Million Tons Growth Markets Polyolefins per Capita Consumption, 2017 & Consumption per capita (2017,2025),kg United States Western Europe Consumption China per Capita (kg) India Asia (ex China,India) 2025 Note: Bubble size reflects size of population Developed Markets Developed markets are maturing to lower rates of consumption growth, while growth markets will drive global demand

6 China dominates Asia Pacific demand and will underpin future polyolefin consumption growth in the region Demand, Thousand Tons 150 Asia Pacific Polyolefin Demand, % AAGR China India Asia (ex China, India) Consumption growth will be driven by use in a wide range of market segments including consumer, automotive, construction, general industrial and agriculture

7 Demand growth for polyolefins has varied over time yet the trend remains linked to economic growth Percent Growth Global Polyolefin Demand and GDP Percentage Growth Asia has been the historic driver of GDP growth and projected to drive global growth 5 Chinese economic growth will ease to a soft landing as the economy matures Urbanisation is the macro trend driving consumer polyolefin consumption in Asia. Global Polyolefins Global GDP Asia Pacific GDP China GDP

8 To satisfy demand China will continue to be the largest importer of polyolefins Polyolefin Net Trade Thousand Tons North America Western Europe 122 (1 872) (15 984) China (19 892) To China Middle East South America (1 653) (3 062) Africa (3 301) (3 315) North America increasingly geared towards exports as new wave of polyolefin plants come online, while Middle Eastern export growth is slowing

9 However, is the current consumption trend sustainable? 8% Cascade Recycling 2 4% process losses Global flows of plastic packaging materials 14% incineration/energy recover 2% closed loop recycling 1 Plastic Packaging Materials 40% Landfill 1 Closed-loop recycling: Recycling of plastics into the same or similar quantity application. 2 Cascaded Recycling: Recycling of plastics into other lower-value applications 32% Leakage Source: Ellen MacArthur Foundation 76% of plastic packaging waste is a resource that must be used

10 Could the Circular Economy model be the answer to long term plastic sustainability? Nutrients Renewable Make / Remake Reuse / Recover Return Safely to Biosphere Industrial Dispose Use / Return Circular economy is a simple concept, but a complex change that requires society, technology, governments and business to change Source: KFM Associates and Nexant

11 Innovation is required across the plastic value chain Source: KFM Associates and Nexant Resources Operations Customer Operations Consumer Use End of Use Redesign Innovation Mono-material format packaging Reduce uncommon plastics that escape collection Bio-chemicals Reuse Innovation More durable and repairable Transparency of composition Ease of disassembly Recycle System Innovation Landfill restrictions Labeling/marker regulation Collection infrastructure Plastics to fuels and chemicals Source: Borealis, Borealis mono-blister Collaboration across the plastic value chain essential, including petrochemical industry

12 What are the risks to plastics industry if business as usual continues? San Francisco bans plastic grocery bags (March 27, 2007) China bans plastic waste imports (January 1, 2018) Iceland Supermarket UK will completely ban plastics (2023) If we don t fix this and soon, others will make emotional decision leading to disastrous consequences for the plastics industry!! 2030 / 2040 initiatives will be too late.

13 Demand, Thousand Tons What are the risks to the plastics industry? A ban in major economies in uncommon packaging plastics that escape recycling collection systems.? PVC 20 Global Demand for Uncommon Packaging Materials, 2017-e 30 EPS(foam) PS Polystyrene Expandable Polystyrene PVC Consumption of these plastic materials could fall by 30 million tons by 2025 due to anti-waste legislation in major economies!

14 What are the risks to the plastics industry? A broader ban in major economies that includes small format packaging and multi-layer packaging material Small-format packaging Uncommon Plastic Packaging Materials Multi packaging material PVC EPS(foam) PS Demand will fall by 70 million tons by 2025 if small format and multi-layer packaging is included in the anti-waste legislation in major economies!

15 Is there a sustainable future for plastics? High growth opportunities in Asia Pacific China will continue to be the global driver of polyolefin consumption Chinese polyolefin demand will be satisfied mainly by imports Current plastic waste management is unsustainable for the planet Industry to be much more proactive, working with NGO s, accelerating actions, advocacy and advertising Risk that a major economies will ban plastics that escape recycling collection systems is real. Redesign/replace. The Circular Economy is part of the solution Innovation and collaboration across the plastic value chain. The plastics industry is part of the solution, engage NOW!

16 Nexant proposition Strategic Planning Commercial Analysis Transaction Support Technology Assessment Independent Expert Corporate strategy development and business planning; master planning Strategy analysis portfolio analysis, market segmentation, feasibility studies Strategic options and screening innovation strategy, market entry, company and product acquisition screening, corporate vision development, management workshops Market assessment including supply/demand projections, trade-flow forecasts, price modelling, value chain analysis Competitor analysis, market research (market participant interview programmes) Financial modelling and valuations Corporate development buy-side due diligence; vendor due diligence Private equity commercial and technical due diligence support Project finance lenders independent market, technical and environmental consultant roles Technology and operational benchmarking Cost of production modelling and benchmarking Technology evaluation and screening Expert advisor/witness Litigation support Training in Chemicals, Polymers and Bio industries with emphasis on technology, economics and markets Differentiation Deep industry knowledge Able to identify commercially viable strategic options In-house database with a proven methodology accepted by Boards and banks High-quality risk and value focused approach based on real market and technical insight Strong team of engineers with deep understanding of chemicals process technology Highly experienced and credible Tailored materials to fit needs

17 Adapting to a Changing Game: Impact of Environmental and Political Landscape Changes David Lines - Principal