1. 1 SOR Re-refining Process

2. 2 Re-refining Used Lubricating Oil  More than 500 million litres of Lubricating Oil is sold in Australia each year and at least 230 million litres is collected for recycling and reuse.  Used Oil becomes unfit for further use because of accumulating contaminants and the loss of performance from oil additives.  Re-refining and energy recovery by burning at high temperatures are recognised as methods of disposal that are environmentally acceptable.  Using re-refined oil helps reduce the depletion of the world’s oil reserves.  Re-refining oil supports the growing trend towards responsible recycling. Southern Oil Refineries Pty Ltd re-refines Used Lubrication Oils into Lubrication Base Oils and Fuel Oils. Southern Oil Refineries Pty Ltd re-refines Used Lubrication Oils into Lubrication Base Oils and Fuel Oils.

3. 3 Used Oil Product Stewardship The objectives of the Used Oil Product Stewardship program are to:  Ensure the environmentally sustainable management, re-refining and reuse of used oil by supporting economic recycling options through product stewardship arrangements in partnership with oil producers and recyclers  Ensure that oil producers progressively assume the costs of product stewardship and environmentally sustainable practices for used oil.  Increase the recovery rate of waste thus avoiding environmentally damaging disposal of used oil.  Ensure the products manufactured from waste oil meet the relevant Commonwealth health and environmental standards.  Levy and subsidy schemes have been developed whereby all new lube products are levied to create a pool of funds to be applied to collection and reprocessing costs.  Benefits are paid to used oil recyclers in proportion to the volume and quality of materials they recycle to the market.  Southern Oil Refineries is the first and currently the only company in Australia to produce a fully re-refined (lube to lube) base oils.

4. 4 benefit claimed benefit claimed by Recyclers aftersale ‘lost’ used oil (waste oil) Users:purchase products for use PSO levy (excise) LubricantImporter LubricantProducers(domestic) * Product Stewardship Program Recyclers: Products for sale oil enters the market ‘recovered’ used oil *

5. 5 Used Oil Collection  Collecting used oil removes used, spent or unwanted contaminants eliminating the chance of environmental damage.  This is the first step in the process of producing lube oil products from Southern Oil with equivalent or better specifications than original virgin lube oils.  Used Oil is stored by workshops, industrial sites and collection stations throughout Australia.  Contractors collect the oil and store it to be sampled and tested to make sure it is suitable for re-refining.  It is transported by road tankers to Southern Oil’s Refinery at Wagga Wagga NSW.

6. 6 Contaminants  Southern Oil’s re-refining process is based on the fact that molecules in lubricating oils are very stable. The base oil doesn’t lose it’s molecular structure or lubricating properties after prolonged use.  It’s effectiveness as a lubricant in vehicles and machinery reduces with time, because additives degrade and contaminants build up.  The chemical additives which are blended with the base oil to give special performance characteristics are gradually exhausted.  By removing the contaminants through re-refining and replenishing the additives, the lubricants from re-refined oils regain the same performance characteristics as the original lubricant.

7. 7 Composition of Used Oil  BASE OIL – The main component of Lube Oil. It does not ‘wear out’, but simply becomes dirty.  DEPLETED ADDITIVES – The additives in the lube oil lose their performance characteristics. The main contaminants are:-  WATER - Fuel burns to CO 2 and H 2 O. When an engine is cold the water created can pass through to the lube oil.  FUEL – Unburnt petrol / diesel passes through to the lube oil during engine start-ups.  CARBON – Forms as a result of incomplete combustion when an engine is warming up and passes through to the lube oil.  DUST – Small particles pass into the engine through the air breather.  METALS – Due to normal engine component wear.  OXIDATION PRODUCTS – Additive chemicals at elevated temperatures in the presence of oxygen can oxidise forming corrosive acids.

8. 8 Used Oil Reception  On arrival at the refinery the road tanker with 44,000 litres of used oil is tested for flash and chlorine to ensure there is not a high content of flammable fuel or solvents in the load.The Used Oil load is rejected if these tests fail.  The road tanker is unloaded as soon as the flash test is passed. The Used Oil is continuously sampled as it is pumped from the road tanker to the Guard Tanks where it is quarantined for analysis to ensure the load meets SOR’s supply specifications such as for viscosity and water content. The Used Oil is continuously sampled as it is pumped from the road tanker to the Guard Tanks where it is quarantined for analysis to ensure the load meets SOR’s supply specifications such as for viscosity and water content.  After passing analysis the Used Oil is accepted and pumped to the Used Oil Refinery Feed Tanks.  If the analysis fails to meet the required specifications, the load is pumped from the Guard Tank and returned to the supplier for disposal.

9. 9 Used Oil Reception Used Oil INITIAL SAMPLE FOR FLASH TEST PRIOR TO UNLOADING CONTINUOUS SAMPLE FOR INTAKE SPECIFICATIONS Guard Tanks Used Oil Feed Tanks QUARANTINE TANKS USED OIL STORAGE

10. 10 Refinery Production Yields Light Fuel Oil ~5% 3,000 litres / day (naphtha and petrol diluents) Gas Oil ~10% 6,500 litres / day (diesel diluents) Light Lube Distillate ~37% 24,000 litres / day Heavy Lube Distillate ~16% 10,500 litres / day Residue ~20% 13,000 litres / day Water ~10% 6,500 litres / day Heavy Fuel Oil ~2% 1,500 litres / day Used Oil Daily Capacity ~ 65,000 litres / day

11. 11 Dewatering & Evaporation Sections  The used oil feed at a rate of approx. 65,000 litres / day is pretreated with caustic to reduce process fouling and help lower the acidity of the offgas.  The Used Oil is heated in the Dewatering Vessel. Water and Light Fuel Oil are distilled from the Dewatering Vessel, condensed and then separated.  The Light Fuel Oil is pumped to storage and sold as a furnace fuel.  The remaining defueled dry oil is directly fed to the Pre-flash Evaporator where it is heated under a vacuum.  The Gas Oil and the first cut of the Lube Distillate fractions are evaporated in the Pre-flash Vessel, condensed and fed directly to the Fractionation Column.  The remaining Lube Distillate and Residue fractions in the Pre-flash Vessel are fed to the Wiped Film Evaporator which are heated, also under a vacuum.  The second cut of the Lube Distillate is evaporated in the Wiped Film Evaporator, condensed and joins the first cut as Distillate Feed to the Fractionation column.  The remaining Residue from the Wiped Film Evaporator is pumped to storage and used offsite as kiln fuel.

12. 12 Caustic Treatment Wiped Film Evaporator (vacuum) Pre-flash Evaporator (vacuum) Dewatering USED OIL FEED CAUSTIC INJECTION EVAPORATOR FRACTIONATOR FEED RESIDUE TO STORAGE (DISPOSAL) WATER ~ 5% & OFF GAS (INCINERATED) LIGHT FUEL OIL ~ 5% TO STORAGE (SALES) Dewatering & Evaporation Sections FEED OFF GAS (INCINIRATED)

13. 13 Fractionation & Solvent Extraction Sections The combined Distillates from the Evaporators are fed directly to the Fractionation Column where they are separated into four fractions by vacuum distillation at temperatures from 20 o C to 300 o C. The produced fractions are Gas Oil, Light Lube Distillate, Heavy Lube Distillate and Heavy Fuel Oil. The Gas Oil and Heavy Fuel are pumped to storage and sold as furnace fuels. The Light and Heavy Lube Distillates are pumped to intermediate storage as feed supply for Solvent Extraction Treatment. The Light and Heavy Lube Distillates are individually fed to the Solvent Extraction Column where they counter flow with Solvent (NMP) which removes the last of contaminants (Extract) I.e. coloured, odorous, and polar components. This is necessary to meet Product Stewardship regulations which require the Re-refined Lube Base Oil specifications to be equivalent to Virgin Lube Base Oils. The solvent treated Lube Distillate requires further processing to recover entrained solvent before pumping to storage to be sold as Lube Base Oil. The Solvent that has absorbed Extract from the Lube Distillate also requires further processing to be recovered. The Extract is pumped to Heavy Fuel Oil storage.

14. 14 Fractionation & Solvent Extraction Sections Fractionation (vacuum) FRACTIONATOR GAS OIL ~ 10% DISTILLATE FEED HEAVY FUEL OIL ~ 2% TO STORAGE (SALES) HEAVY LUBE ~ 16% DISTILLATE EXTRACT OIL TO HEAVY FUEL OIL STORAGE LIGHT BASE OIL TO STORAGE (SALES) Solvent Extraction LIGHT LUBE ~ 37% DISTILLATE TO STORAGE (SALES) HEAVY BASE OIL TO STORAGE (SALES) Storage Tanks FEED ~ 300 o C ~ 20 o C ~ 150 o C OFF GAS (INCINERATED) SOLVENT

15. 15 Product Load Outs  Products from the Re-refining process are stored in dedicated tanks.  Samples are taken from each tank to ensure they meet to specifications.  An on site laboratory tests various quality parameters of each sample.  The Light Base Oil (SN150) and Heavy Base Oil (SN300) require a Certificate of Analysis (C of A) from the laboratory to verify the products meet the customers required specifications.  A sample is taken of the load out to the road tanker for the customer purchasing the product along with a copy of the C of A.

16. 16 Product Load Outs Heavy Fuel Oil Gas Oil Residue Base Oils Fuel Oils Residue Fuel Oils Light Fuel Oil Light Base Oil (SN 150) Heavy Base Oil (SN 300) SALES DISPOSAL