Disruptive technology in existing infrastructure - bringing Circular Economy to the next level

2019-05-22

Recovered Carbon Black

Westin Grand Berlin Berlin, GERMANY

Fredrik OlofssonSales manager

Scandinavian Enviro System’s

recovered Carbon Black (rCB)

Taking a leading position in a global

industry with a game changing

technology that...

• solves the global waste tire problem

• slashes CO2 emissions,

• provides a solution to global

vehicle industry on recycling

...and get better profitability

than the old technology

Important

events

2018

• DECEMBER: MoU signed with EE-TDF Cleveland LLC for plant establishment in

Texas, USA.

• JUNE: MoU signed with Treadcraft Limited for a plant establishment in New York

State, USA.

• MAY: MoU signed with Windspace A/S for a plant establishment in Denmark.

• APRIL: Quality anniversary: over 40 millions rubber components with Enviro´s

rCB have been delivered to Volvo Cars. Annual volume rate now approximately

20 million components.

• Working capital consolidated current during the year via offset issue in total of

13,7 MSEK and inflow of approximately 84,5 MSEK gross via rights issue.

First quarter 2019

• FEBRUARY: Elysium ApS (planned JV with Enviro as co-owner) signs an

conditional rent agreement of land for plant establishment.

• MARCH: A life cycle assessment (LCA) is executed for Enviro´s. Results states

that production of our rCB reduces approximately the CO2 emissions with 80%

compared to production of virgin CB.

Enviro’s rCB reduces CO2 emissions by over 79 %, better than earlier estimates

Recovered carbon black leads to

CO2eq emissions that are 79-84

percent lower than the emissions

from the production of virgin

carbon black – a figure

considerably better than earlier

estimates of 60 percent.

Global Warming Potential, GWP,

index used to make it possible to

compare the greenhouse effect for

greenhouse gases at a joint scale

with the greenhouse effect for

carbon dioxide.

The LCA results show, among other things,

that for each kilo of recovered carbon black

that replaces virgin carbon black, total

emissions are reduced by 1.43-2.00 kg of CO2.

The LCA study was carried out in accordance with ISO 14040/14044 for life cycle analysis.

- 4 -

study

LCA (Life Cycle Assessement), 30 000 mT plant based on Enviro technology

Flights Stockholm – New YorkReduced CO2 impact

40 000-80%

CO2 reduction/ton steel

1 ton

Crude oil can be

replaced

ca 14 000 ton

- 5 -

The carbon black market is expected to grow with 8,8% annually,

to a market value of 30 billion USD 2023 – afterwards 6,6% per annum.

21,723,6

25,727,9

30,4

34,8

2019 2020 2021 2022 2023 2024 2025

Source: (both graphs): Smithers Rapra

Market growth

Estimated global carbon black

consumption

2018-2025 (billion USD)

Tire, 74%

MRG**, 20%

*Other such as ink, toners,

coatings and paint

** MRG Mechanical Rubber

Goods

Plastic, 4%

Other*, 2%

End-use

Proportion of market value

By product type (2017)

End-users

Carbon

black

CAGR

6,6%

www.grandviewresearch.com/industry-analysis/carbon-black-market

- 6 -

Carbon black prices increases more rapidly than oil prices as a consequense of increased demand and harder and

higher environmental requirements.

Sources: Cabot, Birla, Notch Consulting

MARIETTA, Ga.—Beginning May 1, Birla Carbon will

raise base prices for all its carbon black markets in

North America, a move it says is driven by increasing

operating costs.

All shipments made on or after the May 1 date will be

subject to the price adjustment or $170 per metric ton.

Those with supply agreements will see price increases

implemented upon renewal of the agreement, Birla

said in a news release.

BOSTON - April 2,2019 - Effective May 2, 2019, or as

contracts allow, Cabot Corporation will increase prices

for specialty carbon black products by up to 8 percent

in North America.

Enviro rCB; advantages, pricing, trends etc.

• No connection to oil price

• Low PAH content

• Huge CO2 footprint reduction (approx. 80%

compared to virgin CB)

• Long-term price agreements (fixed or connected to

other commodity)

• 10-15 % in discount compared to virgin CB.

• More and more applications are approved for 100%

substitution of the vCB with our rCB. Easier for

rubber and tire industry to make decisions

around introduction of our rCB.

- 7 -

Update around new products, customers and applications

• New rCB grades under development based on feedstock

(CE, Agriculture and mining)

• “CE” grade close to be commercialized. Approved by

leading compounder company, replaces virgin CB to 100%

(standard grade of rCB replaced 50%).

• Another leading solid tyre producer have approved our

rCB. Introduction of the rCB soon to be executed.

• Leading compound company want to start introduction of

our rCB.

• Ongoing discussions and evaluation of our rCB together with

major tire producers.

• Enviro´s rCB grades is approved continuously for new

applications.

• Ongoing discussion with rubber and tire industry for off-takes

linked to new planned plants.

- 8 -

The interest in Enviro´s material have increased significantly the latest years.

• Rapid increase during the

year from 9 to over 18

applications and a growth

potential volume from 2 000

mT to 18 000 mT.

• Global demand with interest

from Europe, India, China and

USA

• Backlog is expected to

growth and create challenges

in deliverability of rCB from

existing Swedish plant the

coming months.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Volume, mTQualified interest from customers for Enviro´s rCB.

- 9 -

study

During 2018/2019 Enviro have experienced significant higher interest in our material

March 2019 September 2018

Customer Customer segment Application % rCB Volume ton annually Status Volume ton annually

AnVA Producer/compounder Grommets (Volvo Cars) 100 80 Active orders 80

AnVA Producer/compounder Sealings (Alvenius) 100 8 Active orders 8

Elastomeric (Hexpol) Solid Tire Producer Solid Tires 25-50 150 Active orders 150

AnVA Producer/compounder Not Public 100 Not public Awaiting order Not public

AnVA Producer/compounder Not Public 100 Not public Awaiting order Not public

AnVA Producer/compounder Not Public 100 Not public Awaiting order Not public

Multinational Tire producer 2 Solid Tire Producer Solid Tires Not public 240 Awaiting order 300

Multionational Compounder 1 Producer/compounder Rubber cloth 25-50 500 Awaiting order Not public

Carbon Black Trader Trader Various Not public 1000-2000 Awaiting order Not public

Multionational Compounder 4 Producer/compounder Various including conveyor belt 25-100 500-1000 Awaiting order Not public

Rubber Producer Compounder Various Not public 0 Awaiting order Not public

Rubber producer Producer/compounder Various 100 220 Awaiting order 120

HGF (Hamstad Gummifabrik) Producer/compounder Agriculture applications 100 50 Awaiting order Not public

Multionational Compounder 1 Producer/compounder Automotive applications Not public 0 Production trial Not public

Multionational Compounder 2 Compounder Rubber compounds 50-100 >1000 Production trial Not public

Multinational Tire producer 5 Tire and Rubber Producer Tire and rubber applications 10-100 >8000 Production trial Substantial

Multinational Tire producer 3 Tire and Rubber Producer Agriculture/solid tires 10-100 1000-5000 Production trial

Multionational Compounder 3 Producer/compounder Conveyor belts Not public 0 Production trial >3000

Multionational Compounder 5 Tire and Rubber Producer Solid Tires and conveyor belts 50-100 500 Awaiting order

Approx: 13 200 - 18 000 Approx: 5 000 - 9 000Accumulated

- 10 -

Recovered carbon black takes ground and the interest from leading players enhances.

2019

Some of the

participants;

Michelin

Continental

Hexpol

Semperit

Hankook

Birla

2018

rCB is presented as

a part of the sector.

”Will increase recycled materials

in new tire production to 10%

before 2025”

”Will increase the recycled

materials in vision 2025” [graph

shows a goal of 25-50]%]

”Ambition 2048: Tires will be

made using 80% sustainable

materials and 100% of tires will

be recycled”

- 11 -

The interest to make investment in Enviro´s technology is obtained from all over the globe.

Numbers of potential plant

investors that has approached

Enviro

2014-2018

Number

Plant project with ongoing mature discussions.

0

10

20

30

40

50

60

2014 2015 2016 2017 2018

Site evaluation

Buffalo, NY

Customer Plant capacity Status Customer sector Country

Windspace 30 kT MoU Financial Investor Denmark

Treadcraft 30 kT MoU Recycling USA

EE-TTD Cleveland LCC 30 kT MoU Tire recycling USA

ArticCan 30 kT MoU Energy/recycling Canada

Not public 30 kT Quotation Recycling/Investor USA

Not public 30 kT Quotation Investor/Industry Abu Dhabi

Not public 18 kT Quotation Tire produer Chile

- 12 -

study

The Swedish plant in Åsensbruk verifies technology and material – as well as creates opportunities for

development of new recycled materials.

• Investment in Åsensbruk verifies

our technology furthermore.

• Increases opportunity to

industrial operation.

• Increases capacity

• Start recruitment in order to

increase densities

• Request from customers that

want to secure deliveries right

now and from new plants.

• Certification according to ISO

9000/14000 will be executed

Q2/Q3 2019

• Development of new rCB

grades

• Research and evaluation

opportunity around recycling

technology for other waste

streams such as carbon fiber.

• Evaluation and development of

our oil fractions are executed

together with research

institutes and companies in the

oil sector.

Enviro´s main know-how is recovery of ELT´s but our technology works

excellent for recovery of high quality carbon fiber.

- 14 -

Thank you, please visit our web page for

more valuable information.

www.envirosystems.se