Executive summary

1. Belgium is world-class for chemicals and plastics

2. Why is Belgium so attractive for this industry?

• Belgium hosts the second world cluster for chemicals and plastics

• Belgium, a unique logistical platform in the heart of Europe

• Strong expertise for product and process technology

• Highly skilled labour force available

• High R&D-expenditures directed towards sustainable innovation

• Attractive tax incentives for foreign investors

• Supportive attitude by the Government

3. Belgium is building a future of sustainable chemistry

• Sustainability challenges will remain top of our agenda

• Top-end innovation will require our world level capabilities for R&D and production

• Industry consolidation will reinforce a winning cluster like Belgium

2

A long tradition of world renowned scientists

Leo Baekeland (1863-1944)

Marc Van Montagu (1933- )

Ernest Solvay (1838-1922) Lieven Gevaert (1868-1935)

Christian de Duve (1917- 2013)

3

The Belgian chemical and plastics industry

is world-class

The evidence

4

Belgium is the n°1 chemical country in the world

on a per capita basis

5 5

0

1000

2000

3000

4000

5000

€ Sales of chemicals and plastics per capita (2013)

Source: Feri

Three-quarters of the world’s top chemical

companies have chosen to invest in Belgium

6

11 of the top 15 chemical companies have production sites in Belgium

Production plant in Belgium

6

0

20

40

60

80

100

Top chemical companies (2013 sales)

Source : ICIS Chemical Business, 8-14 Sep 2014 * Quadrant EPP Belgium & Quadrant CMS

in billion $

The share of the chemical industry in Belgium is

even bigger than in Germany

Share of the Belgian chemical industry in the total economy is 1.5 time bigger

than the average share of the sector in the EU

7

0%

1%

2%

3%

4%

5%

6%

Share of chemicals & plastics in the total economy*

Source: SBS (Eurostat), 2011 figures; calculations essenscia Based on value added at factor cost *Total business economy; repair of computers, personal and household goods; except financial and insurance activities

0% 5% 10% 15% 20% 25% 30%

Printing inks

Synthetic rubber

Ethylene

Washing & cleaning preparations

Industrial gases (Nitrogen,Oxygen, Argon)

PK Fertilizers

PVC

Propylene

Lubricating & mineral oil additives

Biaxially orientated PP films

Polyurethane (PU)

Polypropylene (PP)

PVC Floor, wall, ceiling coverings

High-density polyethylene*

Share of Belgium in total EU-production

Belgium is the dominant player for a wide range

of key chemicals and plastics in Europe

Source: Prodcom (based on production sold)

* For HD-PE, Belgian production data are confidential. Based on production capacity (source: Chemical Week)

8

Chemicals and plastics exports contribute

increasingly to the Belgian standard of living

Chemical trade balance increased by nearly 50% in 10 years

9

12.5

18.4

0

2

4

6

8

10

12

14

16

18

20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

in billion € Trade balance (export - import)

Chemical, petrochemical and plastic products*

All products Belgium **

Sources: National Accounts Institute/NBB according to the communautarian concept *Harmonized System Sections VI+VII excluding pharmaceuticals (chapter 30) ** Chapters 01-99: all products

Why is Belgium so attractive for

this industry?

The reasons

10

Source: Flanders Port Area

First class availability of raw materials thanks

to 3 major seaports

Cargo handling – Ports Northern Europe*

Port Country 2010

(mio metric

tons)

Rotterdam NL 430

Antwerp B 178

Hamburg D 121

Amsterdam NL 91

Le Havre F 70

Bremen D 69

Zeebrugge B 50

Duinkerken F 43

Ghent B 27

Kortrijk

Oostende

Hasselt

Mons Charleroi

Namur

Zeebrugge

Ghent

Liège

Antwerp

Brussel

Bastogne

11

Source: Port of Rotterdam

* Range Le Havre - Hamburg

The port of Antwerp hosts the largest chemical

industry in Europe

Source: National Bank of Belgium, Havenmonitor; 2012 figures * Rotterdam-Rijnmond

The industry within the ports of Antwerp and Rotterdam

12

59% 38%

0

1000

2000

3000

4000

5000

6000

Port ofAntwerp

Port ofRotterdam*

Value added

in mio €

chemical industry other industries

48%

23% 0

5000

10000

15000

20000

25000

Port ofAntwerp

Port ofRotterdam*

Direct Employment

Jobs

chemical industry other industries

Pipelines offer a fast, efficient, cheap and ecological supply chain

Source: EPCA, Results of the Think Tank Sessions, August 2007

First class availability of raw materials thanks to

the central location in the Western European

pipeline network

13

Belgium offers access to 80% of the European

purchasing power within a 500 miles radius

14

Source: European Distribution Report, Cushman & Wakefield, 2008

The Belgian logistics platform offers a competitive

differentiator for the chemical industry

Regions* Ranking*

Liège (Belgium) 1

Limburg (Belgium) 2

Hainaut (Belgium) 3

Nord-Pas-de Calais (France) 4

Namur (Belgium) 5

Luxembourg (Belgium) 6

Alsace (France) 7

Oost-Vlaanderen (Belgium) 8

Antwerp (Belgium) 9

Arnsberg (Germany) 10

Source: European Distribution Report, Cushman & Wakefield, 2010

* NUTS-2 definition

Considering costs, transport system, accessibility, supply, labour and know-how

15

Best locations for logistics in Europe

Storage terminals and distribution platforms at the

service of the chemical industry in Belgium

16

• Tailor-made global logistics solutions for chemicals

• Logistical operators have built up considerable know-how in serving the chemicals

industry.

Distribution platforms

Gateway platforms Production Support Platforms

Source: Katoen Natie

On-site terminals

Further investments in logistics infrastructure

will secure our pole position

The “Combinant” project

• JV BASF Antwerp – Hupac – IFB

• New multimodal terminal (road-rail)

• Open for third parties

• Investment of 29 million euro

• With support from the Flemish Government and

the European Fund for Regional Development

Objectives

• Avoid impending congestion on the road

• Daily saving 10 km traffic jam

• 150,000 containers transfers from road to rail

yearly

• Yearly reduction of as much as 30,000 t/CO2

emissions

• Operational since March 2010

Railway connections

17

The high level of integration and diversity across

the value chain is unique in the world

Source: EPCA, Results of the Think Tank Sessions, Aug 07

Synergies in energy, process integration and logistics offer world class cost effectiveness

RAW MATERIALS FEEDSTOCKS BUILDING

BLOCKS COMMODITIES INTERMEDIATES

FINAL

PRODUCTS

Methane / refinery

residue Synthesis Gas

C2-C3 / Naphtha Ethylene

PE, EDC, VCM

Ethylene oxide

PVC

Glycols, EVOH, Ethyl

NBO, Glycol Ethers

Polymers, EPDM,

Copolymers

C2-C3 / Naphtha Propylene, propane Polypropylene

Propylene oxide,

Acrylic acid

Polymers e.g.

Polyurethane

Refinery off-gas /

Naphta Mixed C4 Butadiene Polybutadiene

Acrylonitrile,

Butadiene, Styrene

Naphtha Benzene, Toluene

Cyclohexane,

Caprolactam,

Aniline

BPA, Nylon 66, MDI Polycarbonate,

Polyurethane

Naphtha Mixed Xylenes O, P-Xylene PA, PTA PET

Chlorine, NaOH EDC, Phosgene VCM PVC, MDI,

hypochlorites

Plastics,

polyurethane ,

bleach

Natural gas / Crude

Oil / Condensate

Natural gas / Crude

Oil / Condensate

Natural gas / Crude

Oil / Condensate

Crude Oil

Crude Oil

Crude Oil

Sea water / Brine

C1

C2

C3

C4

C6

C7,8

Cl

Polyols, SAP

Ammonia, Nitric Acid Urea, AN, CAN, UAN Fertilizers

Methanol Formaldehyde Glues, Resins

Ship, pipeline, barge

Pipeline, barge, rail

Rail, road

Mainly road

items are produced in the cluster 18

Social

concertation

between

employers and

trade union

* Study by Prof. L. Sels (University of Leuven)

High employee satisfaction compared to other industries

• Low intersectoral mobility*

Limited number of strikes

• 0,12 days / year per

employee

Investment in human capital

(training) funded by employers

and employees

• 2 dedicated training centres:

ACTA and Cefochim

Constructive social relations are a long-time

tradition in the Belgian chemical cluster

19

Highly skilled labour force ensures world-class

technical expertise and operational excellence

Source: World Economic Forum, Competitiveness Report, 2013-2014

Mean

(out of 148

countries)

Top

(Japan)

Production process sophistication: use of the world best’s and most efficient process

technology (score from 1 to 7; 1 = labour-intensive methods or previous generations of process

technology, 7= the world’s best and most efficient process technology)

3 4 5 6 7

3.9

4.5 5.8

6.5

20 20

Operational excellence also leads to high safety

at work

0

1.000

2.000

3.000

4.000

5.000

6.000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Chemical industry Belgium

Chemical industry EU15

Manufacturing Industry EU15

Standardised incidence rate of accidents at work (per 100000 workers)More than 3 days lost (4 days absence or more)

Source: Eurostat

21

Operational excellence delivers world-class

energy efficiency

22 22

220

230

240

250

260

270

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PJ/year

Energy consumption at 2012 production levels

World top according to benchmarking covenant

Belgium (Flemish Region, at 2012 production levels)

Source: Benchmarking Committee Flanders (annual report 2012)

Attractive tax incentives increase financial returns

on capital intensive and R&D investments

Withholding tax

exemptions

Tax rulings

with

emphasis for

multinationals

Special

tax regime for

expatriates

No capital duty

VAT grouping

R&D tax

incentives

Notional

Interest

deduction

Belgian tax

incentives

23

80% patent income reduction (maximum tax is 6.8%, lowest in the EU)

80% exemption payroll withholding tax for scientific researchers

Refundable R&D tax credit system

Increased investment deduction and flexible depreciation rules for R&D

Tax-free return on qualifying equity

• Exchange of information, knowledge and experience between industry, regulators and service providers

• Coordinate communication throughout the supply chain

• VLARIP and WALRIP: two support tools for SME’s

REACH: Registration, Evaluation and Authorisation of Chemicals

CLP: Classification, Labelling and Packaging of substances and mixtures

REACH

The Belgian chemical industry has a unique

network to implement REACH & CLP

essenscia

working

groups

Belgian

authorities

Company European

authorities

Mentors

24

At regional level (Flanders)

• Round table on chemical industry by the Flemish Minister of Economy (started

in 2005)

• Recognition of the chemical industry as a strategic sector in Belgium

• focus: innovation, competitiveness, infrastructure & logistics and social

acceptance of the industry

• 12 action points

At European level

• High Level Group on Chemicals initiated by the European Commission (2007-

2009)

• 22 recommendations

At Belgian level

• High Level Group for a sustainable chemical and plastics industry in Belgium

initiated by the Prime Minister (2012- )

The authorities in Europe and in Belgium actively

support the chemical industry

25

Source: Belspo, 2011 figures

* Intra-mural expenditures

Belgian industrial R&D-investments

Company R&D-

expenditures*

(mio €)

R&D-personnel

(headcounts)

Pharmaceuticals 1708 4199

Chemical, petrochemicals and plastics 718 3506

Electrical equipment 319 3365

Machinery 256 2474

Telecommunications and electronics 169 284

Motor vehicles 168 901

Metal industry 166 924

Food & beverages 146 1526

High R&D investments prepare the chemical and

plastics industry for top-end innovation

26

• Total Petrochemicals Feluy: the largest R&D center of the Total Group

• Dow Corning: European headquarter is established in Belgium, Seneffe

• Procter & Gamble: European Research Centre in Brussels is a global business unit for

Home & Fabric R&D

• Solvay: Research & Technology – Brussels Center, the main R&D center of the group

• Recticel: International Development Centre in Wetteren

• Agfa-Gevaert: important R&D activities in Antwerp

• Huntsman: European headquarter & R&D center in Everberg

Worldwide technical competence centers in the cluster of Antwerp

• BASF Antwerp for MDI

• Evonik-Degussa for methionine

• Bayer for Makrolon

Major European R&D centers in Belgium:

a few examples

27

R&D-expenditures

Source: essenscia – survey amongst member companies

Provisional data 2013

• Continuous increase of R&D-expenditures

• Innovation is a key development factor for the sector in Belgium

R&D-expenditures

Chemical, plastics and life sciences industry in Belgium

1,89 2,00

2,17 2,28 2,32 2,34 2,29

2,46

2,72 2,75

3,09

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

In billion euro

Investments in the chemical industry in

Belgium 2013-2014 (i)

29

BASF Antwerpen – Antwerp

Butadiene extraction plant

Evonik – Antwerp

New plant for the production of shrimp

feed additives

INEOS Oxide – Zwijndrecht

Expansion of ethylidene

norbornene (ENB) unit

Indaver – Zwijndrecht

Heat and steam network Air Liquide – Lillo

New carbon monoxide production

unit

Chevron Phillips – Tessenderlo

Expansion of H2S synthesis-

unit and new control room

30

Cargill – Vilvoorde

New pilot plant for the European

research centre

Investments in the chemical industry in

Belgium 2013-2014 (ii)

Praxair – Antwerp

New air separation plants &

extension pipelines

Ferro – Antwerp

New production unit for

phthalate free plasticisers

Surface Chemistry (Akzo Nobel

Chemicals) – Mons

Relooking incinerator reduction of

NOx emissions

Dakota – Nazareth

New cryogenic micronisation

line

Alcon – Puurs

Expansion of production lines

31

Investments in the chemical industry in

Belgium 2013-2014 (iii)

Kuwait Lubricants – Antwerp

Blending facilities and additional storage

capacity for lubricants

Yara – Tertre

Modernisation

ammoniac unit

GSK Vaccines – Wavre

Building for the production of clinical lots and

start of expansion projects Pa and IPV

Nomacorc – Thimister-Clermont

Extrusion line synthetic wine

corks

Baxter Bioscience – Lessines

Installation and qualification of an

aseptic filling line under isolator

Bayer MaterialScience – Antwerp

New steam boilers

32

Investments in the chemical industry in

Belgium 2013-2014 (iv)

Kronos Europe – Ghent

New energy efficient line for the filtering

and drying of pigments

Revatech – Engis

Building of equalisation

basins wastewater

treatment

Libert Paints – Ghent

New production and R&D site

Christeyns – Ghent

New European

distribution centre

MaSTherCell – Gosselies

Building of clean rooms for the

production of ATMP

Total – Antwerp

Modernisation of the refinery

& chemical production

platform

Government funded competence centers foster

talent and innovative solutions

• Cori stimulates scientific and technological development in the coating

industry.

• VKC (Vlaams KunststofCentrum) is the Flemish technological centre of

expertise for Plastics Processing.

• EMRA (Environmental Materials Research Association) gathers the

Environment, Materials and Process expertise and capabilities of 6 Research

Centres.

• The Ghent Biotech Valley brings together world-class expertise in the fields

of medical, industrial and agricultural biotechnology.

33

• Education Covenant between essenscia, trade unions and associations of

secondary schools

• Aim: encourage youngsters to choose for scientific branches

• System of cooperative education

• masters degree in analytic science combining high school education with

practical work experience in companies on a 50/50 basis

• professional bachelor degree in process techniques combining high

school education with practical work experience in companies on a

20/80 basis

• Chair Master after Master programme on process safety engineering at the

University of Leuven

• First chair between a sector federation (essenscia) and a university

• Aim: offer a high EU-level study program in process safety engineering

A strong collaboration between the Belgian

chemical industry, schools and universities

34

Belgium is building a future of

sustainable chemistry

35

The world is facing important challenges in the use of energy, natural

resources, and the provision of food, water and health for its population.

Chemistry, Materials and Life Sciences are essential to making the world's

development sustainable. Our innovative research is crucial to the development

of new products, applications and services. Our industry is central to a

successful future and to improving everyone's quality of life.

36

Mission statement

The Belgian chemical industry aims at becoming

the sustainable chemical cluster in the world

Examples of high-tech, sustainable innovations in

Belgium (i)

• The MTO/OCP pilot plant at Total Petrochemicals (Feluy)

• The Pilot PLA plant , a JV Total Petrochemicals / Galactic for the production of bioplastics

from renewable origin

• Specialty chemicals company Lanxess develops solutions that enable “Green Mobility”

• Indaver, a leader in sustainable waste management

• LIPAMAX : enzymatic treatment for fat removal developed by Realco

• Proviron’s ProviAPTTM, harnessing the potential of microalgae

• Evonik’s first production plant AQUAVI® Met-Met dipeptide for shrimp aquaculture

37

Examples of high-tech, sustainable innovations in

Belgium (ii)

• Nanocyl , a leading supplier of Carbon Nanotubes Technology (CNT)-based products

• Derbigum, the specialist in highly reflective roofing membrane

• Recticel, a worldwide leader of a wide range of innovative polyurethane foams

• Soudal, world expertise in sealants, PU foams and adhesives

• LiFePO4, a revolution in battery-technology by Prayon

• Solvay investing in the Solar Impulse project, a solar airplane

38

The MTO/OCP pilot plant at Total Petrochemicals

in Feluy – a world first

• The pilot plant combines the methanol-to-olefines process (MTO) and the Olefin

Cracking Process (OCP)

• Benefited from the expertise in process

engineering at the Feluy Research Centre

• Diversified feedstock for making petrochemicals

• Higher yield of good-quality light olefins

39

Futerro, a pilot PLA plant for the production of

bioplastics from renewable origin

• JV Total Petrochemicals / Galactic to develop a production technology for PolyLactic

Acid (PLA) bioplastics of renewable vegetable origin with the financial support of the

Walloon Region. Lactic acid is obtained from the fermentation of sugar or starch.

• On stream since 2010.

• 1,500 tonnes/y

• PLA bioplastics have many applications

• Recovering and Recycling PLA: the most environment friendly option

ECO-Benefits (points)

• ECO-Benefits are based on the standard eco-indicator 99 scores

(Taking in account elements such as ecotoxicity, fossil fuels, climate change,…)

3 1020

160

0

20

40

60

80

100

120

140

160

180

200

Composting Incineration Anaerobic digestion LOOPLA™

Endless

cycle

PLAL-Lactic Acid

Source: Galactic

LOOPLA™ : « Cradle to Cradle » concept

40

Specialty chemicals company LANXESS

develops solutions that enable “Green Mobility”

41

• “Green Tires” combine a number of advantages

• Lightweight plastics are used in engine applications, door

structures, front ends,… Weight reduction by 10 to 50%.

High-tech polymerization world-scale facility in Antwerp,

Belgium, started in July 2014, with annual capacity of

90,000 tons. Processed in global network.

Indaver, a leader in sustainable waste management

• World class treatment installations for commodities and complex hazardous waste

• Highly specialised in waste management from the chemical industry

• “Total Waste Management” projects

• Focus on energy and material recovery

• Waste management: 3 million tons per year

50% recovery of energy (steam, electricity) from waste for own installations, neighbouring

companies and 140,000 households

40% sustainable re-use of waste materials (PMD, mercurial waste, …).

Between 80% and 100% of recycling efficiency

10% safe storage and neutralisation via landfilling, physico-chemical processing and waste

water treatment

Aiming at the lowest possible CO2 footprint and environmental impact

Source: Indaver

42

43

LIPAMAX : enzymatic treatment for fat removal

SCREENING

&

DEGRITTING LIPAMAX

BIOLOGIC

TANK

SECONDARY SLUDGE PRIMARY SLUDGE

DECANTATION WASTE

WATER

• Transformation of lipids in fatty acids

• All the fatty acids are reinjected in biologic tank

• Full recycling of fat in wastewater treatment plant

• Savings of 73,000 T/year of fat disposal

• Savings on transport + no incineration → savings on greenhouse gas emissions

Proviron’s ProviAPTTM, harnessing the potential

of microalgae

• ProviAPT® is a highly efficient cultivation process which exploits fully all interesting

properties of microalgae

• Algae produced at Proviron’s pilot plant at Hooge Maay are applied

already in aquaculture (ProviFeedTM Nannochloropsis)

• Use in feed and food applications, as nutritive supplements and in cosmetics are

investigated through collaborations in the frame of Flanders’ Food and FISCH projects

• Algae can be envisaged as a sustainable substitute for fossil oil as an energy source or

as a source for platform chemicals for biochemicals or biopharmaceuticals

44

Evonik starts construction of the first

production plant for methionine dipeptide

AQUAVI® Met-Met

a feed additive specially developed for shrimp

in aquaculture

consumers benefit from improved food quality significantly reduces the consumption of fish

meal in shrimp aquaculture.

lowers feed costs

environment is less polluted reduces the strain on fishing grounds

worldwide

helps water purity by reducing the amount

of waste produced by the animals and nitrogen

output into the environment

first dipeptide in the world to be produced on

commercial industrial scale and be

economically viable for use in animal nutrition.

Nanocyl, a leading global supplier of Carbon

Nanotubes Technology (CNT)-based products

• Carbon Nanotubes are the most electrically conductive additives available today on the

global market.

• The Nanocyl patented process was originally developed at the University of Namur by

Prof. Nagy and at University of Liège by Prof. Pirard.

• Examples:

Electronic packaging

Antifouling coatings

Thermoplastic body parts

Flame barriers coatings

46

Derbigum, the specialist in roofing membrane that

reduces the energy consumption of buildings

• DERBIBRITE is a highly reflective membrane which acts as a passive cooler to reduce

the energy consumption.

• DERBIPURE® is the first white roofing membrane with a base of organic raw

material, without the use of bitumen

• Thanks to a patented exclusive coating, DERBIBRITE NT and DERBIPURE®

reflect up to 80% of the sun's rays and therefore reduces the temperature in the

building by 5°C

• Increased return of solar panels

• Reduced costs for air conditioning

Source: Derbigum 47

Recticel, a worldwide leader of a wide range of

highly innovative polyurethanes

A unique chemistry for light stable polyurethane

• Combined with a patented spray technology

• For the production of dashboard skins & other interior

trim

• Revolutionary breakthrough in car interiors surfaces

• As a foamed material in top class intimate apparel,

“shaping the natural curves”

Insulation

• High insulation values of PU makes the construction of

passive houses possible.

• Collaboration with Wienerberger building a massive

passive house

48

Soudal - world expert in: sealants, PU foams and adhesives

for the construction, DIY and industrial applications.

A pioneering role in the development of new expanding, semi-flexible insulating

polyurethane (PU) foams that can be used easily to fill joints and gaps:

• Flexifoam - ready to use, elastic, one-component PU gun foam, provides

durable acoustic and thermal insulation

• Launched SMX - the first expanding foam without free isocyanates which is

harmless to consumers

The Soudal Window System offers a highly efficient installation of

window frames which leads to higher energy savings

also in passive houses.

49

LiFePO4 , a revolution in battery-technology

by Prayon

• A new generation of batteries allowing a maximum storage of energy within a

minimum amount of space

• Based on iron phosphate technology, enriched with bore

• The best solution for battery equipped cars, available as from 2010

• Patented technology in collaboration with CEA-Liten (Laboratory for new energy

technologies)

50

Solvay, main partner of the Solar Impulse 2 which

will soon circumnavigate the world without fossil fuel

• A symbol for innovation and sustainable development

• A springboard for advanced materials solutions and developments

• new lightweight materials to minimize weight and energy consumption

• new battery components with improved capacity and performance

• new films for encapsulation of the photovoltaic cells

Source: Solvay

51

Industry consolidation will reinforce the role of the

Belgian chemical clusters

• Europe is facing challenges: centre of gravity shifting toward Asia, US & ME

• Industry will readjust through further consolidation, process integration and

innovation

• The Belgian clusters generate smarter operations throughout the value chain

• maximization of synergies (energy, services, utilities)

• skilled workforce

• focus on sustainable chemistry

52

This presentation is supported by:

essenscia

Belgian Federation for Chemistry and Life Sciences Industries

Contact

Yves Verschueren, Managing Director

T +32 2 238 98 12 - yverschueren@essenscia.be

Corine Petry, Head of Communication

T +32 2 238 99 12 – cpetry@essenscia.be

www.essenscia.be

54