21 de Mayo 2011 CEO 360 Degree Presentation On the North American Chemicals & Materials Industry Presented to

2 Agenda A 2020 VISION OF THE GLOBAL AND NORTH AMERICAN CHEMICALS & MATERIALS INDUSTRY Chemicals & Materials Industry Story Till Date and Recent Updates Global Mega Trends and the Chemicals & Materials Industry Analysis of Growth Opportunities

3 Chemicals & Materials Industry Story Till Date Source: McKinsey, Frost & Sullivan Early 20 th Century Early 21 st Century Benefits from Pure Science and Fundamental Scientific Breakthroughs R&D and Access to Raw Material critical for the nascent industry Success factors depends on region and portfolio Global economic growth not dependent on Chemicals Key value driver: Growth of the industry is high compared to global GDP growth The chemicals industry is one of the pillars of the global economy High localised industry High degree of fragmentation Onset of Globalization and Consolidation Consolidated western hemisphere. Opportunities exist in Asia Developments in process technology and engineering Plastics and Polymers boom Emergence of the Pharmaceutical Industry Separation of the Pharma / Biopharma / Biotech Industries Emergence of sustainability and responsible care Focus on Application Development Global Presence Focus on price competitiveness, economies of scale and operational excellence Process Engineering Application Development Key Developments Critical Success Factors Chemicals Industry and the Economy Industry Structure

4 Source: Frost & Sullivan Story Till Date: Current Market Scenario Global Chemicals Sales: GLOBAL CHEMICALS SALES, 2009 Asia is the fastest growing region in the world with chemicals sales expected to grow at a CAGR of approximately 4-5% from The Asian chemicals market is mainly driven by China which is soon expected to surpass the US as the largest chemicals producer worldwide Japan is the second largest market in Asia driven predominantly by specialties. India is also a key constituent in the Asian pie due to its promising long term potential European chemicals sales are expected to grow at a CAGR of less than 2% per annum to 2020 Germany is the leading chemicals producer in Europe and is expected to maintain its position to 2020 Europe will lead the global chemicals industry in terms of regulatory compliance, sustainability and innovation. Chemical companies may also look to JVs / strategic alliances in other regions (such as the Middle East) to secure feedstock Global chemical sales are expected to grow at 2.5-3% during In this period, China will overtake the United States as the largest chemicals producing nation $ Billion

5 Story Till Date: Recession Update Chemicals Industry Outlook After Recession Chemicals Shipments: Historical and Forecast– US, EU, China and India Chinas spectacular growth in chemicals sales almost stagnated during , but is expected to continue a strong growth to 2015 US chemical sales is expected to rebound faster and may reach 2008 levels in However, EU chemical sales may take till 2013 to reach pre-recession levels Index 2000=100 Source: Data on historical chemicals shipments from ACC, Frost & Sullivan analysis

6 Market Metrics Total US Chemical Industry Revenues, Industry Revenues Per Category, , $US Billions Revenues, $US Billion Note: All figures are rounded; the base year is In 2010, revenues in the US Chemical Industry reached $694 billion. Revenues in the US market are likely to grow at a CAGR of 2.7 percent from 2010 to 2015, reaching $793 billion by The Basic Chemical category consisted of the largest share of the US market with a 34.1 percent share. Consumer Chemicals held the smallest share of the market by category with 8.1 percent share. US Chemical Industry: Industry Revenues Per Category, 2010, %

7 Market Metrics Basic Chemicals, Industry Revenues Per Subcategory, , $US Billions Revenues, $US Billion Note: All figures are rounded; the base year is In 2010, revenues in the US Basic Chemical Industry was $237 billion. Revenues in the US basic chemical market is likely to grow at a CAGR of 2.3 percent from 2010 to 2015, reaching $265 billion by Polymers are the largest sub- segment within the Basic Chemical category representing 33.3 percent of the market. Bulk petrochemicals and intermediates make up almost half of the market, the majority of which is consumed directly within the chemical industry for further processing Fertilizers is a suffering segment of the market due to depressed demand. Basic Chemical: Revenues Per Category, 2010, %

8 Chemicals Industry: Story Till Date The Chemicals Industry Has a Constant Challenge to Maintain and Grow Margins Raw Material Price Fluctuations Price Pressure from Customers Long Investment Cycles Increasing Regulatory Requirements Changing Competitive Landscape Chemicals & Materials

9 Agenda A 2020 VISION OF THE GLOBAL AND NORTH AMERICAN CHEMICALS & MATERIALS INDUSTRY Chemicals & Materials Industry Story Till Date and Recent Updates Global Mega Trends and the Chemicals & Materials Industry Analysis of Growth Opportunities

10 Global Megatrends and their Implications Mega Trends Allow Companies to Determine Opportunities and Threats FROST & SULLIVANs CHEMICALS AND MATERIALS PRACTICE IDENTIFIES FOUR MEGA TRENDS FUNCTIONALITY & PERFORMANCE HEALTH & WELLNESS LOW CARBON ECONOMY GLOBALISATION Why look at Mega Trends? Good companies understand what their customers want; great companies understand why. These organizations are better prepared to meet and provide what their customers would want next Considering the impact of major megatrends allows businesses to determine and respond to opportunities and threats A Mega Trend is a long term global transformation process Mega Trends arise at the interplay between changes that are happening to us as individuals, changes happening to the world at large and our changing requirements and needs What is happening to us? (Demographic Trends) What is happening to the world around us? What are our changing needs? MEGA TRENDS

Million Vehicles 29.6% 8.5% 23.8% 6.0% 23.0% Million Units 0.8% 6.3% 86 Million Vehicles 34.4% 23.3% 6.2% 20.6% 3.9% 0.9% 8.3% World Automotive Market: Light Vehicle Sales Source: Frost & Sullivan Growth in automotive sales has an impact on demand for products such as: By 2015, global automotive light vehicle sales is expected to grow to 86 million vehicles per annum. Asia is the fastest growing market and is expected to account for over a third of all light vehicles sales. This will also impact the growth in demand for chemicals and materials used in transportation such as automotive refinish coatings Globalization Demand Growth for Chemicals is Linked to End User Industry Growth Source: Frost & Sullivan Global Automotive Refinish Coatings Western Europe India 0% 8% 16% Current Market Volume (Million lbs) CAGR ( ) North America Japan Eastern Europe China

12 While the global chemicals industry is expected to grow at a CAGR of approximately 2-3% in the long term, demand from the Asia Pacific region is expected to grow faster than other regions at 4-5% We also note that additional capacities and increasing capital investment in the Asia Pacific / Latin American region has resulted in a steep growth in production of chemicals in these regions Source: Cefic data Chemicals Demand Growth Forecast: Chemicals Industry Production Growth Source: Frost & Sullivan CAGR: 4-5% Globalization Global Shift in Production & Demand Index 1997=100 $ Bn

13 The Middle East has significant feedstock advantages Chemicals production in the region has focused on petrochemicals and this trend is expected to continue Saudi Arabia leads in terms of new capacities. The UAE and Abu Dhabi also aims to increase their presence in petrochemicals significantly over the next decade Over 80% of the new projects are olefins and aromatics APAC on the other hand, benefits from low cost production and high growth of local demand PetrochemicalCapacity OutlookGlobal Supply-Demand Impact Ethylene Large increases in ethylene capacity expected, additional increase of about 35 Mn MT expected by 2013 in ME and APAC Massive build up of capacities will see oversupply of ethylene, and is expected to affect market dynamics. Demand growth is only 3% as against the capacity growth at 4 % Benzene Benzene capacity to be added – 1.5 Mn MT in ME and 3.1 Mn MT in Asia-Pacific by 2012 Shortage of investments under this segment; opportunities exist Propylene Propylene capacities of 9.2 Mn MT is expected by end of Polypropylene capacity of 9 Mn MT is expected by 2012 in the ME and Asia-Pacific regions Supply and Demand is expected to be balanced Methanol A total of 7 Mn MT of Methanol Capacity addition expected by 2011 in ME and APAC Supply and Demand is expected to be skewed till 2012 after which balance will return Middle East Ethylene Capacity, Source: Frost & Sullivan Million Tonnes Percentage (%) Globalization: Competitive Perspective Upcoming Capacities in ME and APAC Threaten Supply-Demand Balance

14 Beauty ProductsFashionAesthetic DesignHealthcare Personal Care Functional Foods Fitness Personal Protection THE CHEMICALS & MATERIALS INDUSTRY MAKES THESE POSSIBLE Health and Wellness Drives Products and Concepts Such As:

15 Towards Better Health and Disease Prevention Growing Demand for Functional Foods, Beverages and Ingredients Obesity: Percentage of population older than 15 with a BMI greater than 30 Includes: Satiety Ingredients / Appetite Suppressants Fat Burners Others: Carbohydrate blockers, Fat blockers, Metabolism regulators, Mood regulators Focus on the prevalence and rise of obesity amongst the global populace has given rise to opportunities for weight management ingredients Revenues in $ Mn Global Weight Management Ingredients, CAGR : 9.2% Revenues in $ Mn CAGR : 21.3% Revenues in $ Mn CAGR : 8.6% Australian Functional Foods Market US Heart Health Ingredients Market Includes: Phytosterols Omega-3 PUFA Beta-glucan Soy Ingredients Others Includes: Energy Drinks Sports Drinks Functional Waters Fruit & Vegetable Drinks Soy Milk The need for prevention and better general health has driven the demand for functional F&B products and consequently the market for specific functional ingredients

16 Health and Wellness Feel Good Factor: Going Beyond General Health INCREASING FOCUS ON PERSONAL CARE CAGR : 7.2%CAGR : 18.5% Chinese Personal Care Active Ingredients Market Indian Personal Care Inactive Ingredients Market The global personal care market in 2009 was estimated to be around $328 Billion and expected to grow at a CAGR of approximately 5-6% to 2015 The increasing focus on personal care not only drives the market for active and inactive ingredients in personal care products but also the market for nutricosmetics CAGR : ~15% US and NA Nutricosmetic Ingredients Market Personal care nutricosmetics are products when ingested have an effect (preventive or reactive) on skin, nails and hair. The ingestion of nutricosmetics is mainly through food fortification / supplements Revenues in $ Mn US and NA Nutricosmetic Ingredients Market, 2008

17 It is imperative to constantly raise the bar for functionality and performance of products and services to maintain competitiveness in a rapidly evolving marketplace Functionality & Performance Providing Greater Functionality & Performance is Necessary to Survive Rapidly Evolving Functionality in Automobiles 1 st gen Corolla: th gen Corolla: th gen Corolla: 2006 Evolution of Portable Media Devices Sony Walkman: 1979 Sony Discman iPods: Nano, Shuffle Multifunctional Devices

18 Functionality & Performance Chemicals and Materials Enable Improved Functionality and Performance Advances in packaging materials enable superior convenience and greater shelf life Microwaveable products and non stick cookware make cooking faster and easier In sports, chemicals and materials enable superior performance Alternative Building Materials for Unique Structures Anti-reflective coating A commonly used non stick coating is PTFE – polytetra fluoroethylene Enhancing Functionality and Performance of Paints & Coatings Modern tennis raquets are made of materials such as carbon and graphite Anti-graffiti Anti-climb Heat resistant Fluorescent Paint

19 Consumer Demand Legislation Shareholder Value Profits Internal ContextExternal Context The Chemicals Business Increase in brand value and profits results in greater shareholder value In 2008, a survey by TNS indicated that 45% of British and 53% of American respondents would pay more for eco friendly products Lower operational costs (by optimizing consumption of energy and resources) Since 1990, DuPont has saved more than $ 3 Billion through energy efficiency programs. 3M has saved $ 82 Million between 2001 and 2005 and reaped another $ 10 million in 2006 alone Widespread consumer preferences and pressures drive legislation for nations and businesses to reduce emissions A host of local environmental legislations also apply. Companies may also benefit from the sale of carbon credits Reduced raw material costs (through efficiency, recycling, waste management) This figure is much higher for Brazil (83%) and Thailand (94%) Key Drivers for Participating in the Low Carbon Economy Low Carbon Economy Key Drivers for the Low Carbon Economy Source: Frost & Sullivan

20 Chemicals and Materials Drive Low Carbon Trends in the Automotive Industry Case study: Options to Decrease Dependence on Fossil Fuels by PU ABS PA PP Thermosets Others 0% 3% 6% 0%25%50% Percentage of Total Market Volumes, 2008 CAGR ( ) Miles per gallon Source: Association of International Automobile Manufacturers Increasing Fuel Economy Automotive Light Weighting Trend Drives opportunities for plastics in passenger vehicles Plastics in Passenger Vehicles, Global Alternative Fuel Vehicles / Fuel Options Source: Frost & Sullivan EU Biofuels Supply-Demand ( ) Electric Vehicles – Huge Materials Opportunity Battery Materials Laminates, Electrodes Electrolytes, Casing Transmission Cooling fluids, Gear oils, Clutch fluids Glazing Panoramic roof, Side windows, Polycarbonates, Acoustic laminates Electronics/wiring High tension cables, Charging ports, Cable sheaths Rolling resistance Tyre additives Interior Insulation

21 Glocalization is the process by which global businesses are getting closer to their customers across regions and applications. Think Global, Act Local! Outlook Glocalization: Could be the Emerging Mega Trend for the Next Decade = GLOBALIZATION + LOCALIZATION Irrespective of business model or area of focus, companies will increasingly attempt to get closer to their customers. This could mean: Glocalization is the emerging trend to watch out for Physical proximity Consumer focus: Chemical companies are not just looking at their customer, but at their customers customers. The current focus on megatrends is just the beginning Delve downstream: Going further down the value chain Customized solutions: Increasing consolidation in the end user industries could result in tremendous bargaining power and customized products / services Product portfolio differentiation: Global companies will increasingly look towards opportunities in product development / application development that are specific to a particular region / geography

22 Agenda A 2020 VISION OF THE GLOBAL AND NORTH AMERICAN CHEMICALS & MATERIALS INDUSTRY Chemicals & Materials Industry Story Till Date and Recent Updates Global Mega Trends and the Chemicals & Materials Industry Analysis of Growth Opportunities

23 Analysis of Growth Opportunities Introduction Market Opportunities Broad Specific Frost & Sullivan supports chemical companies by identifying company specific growth opportunities through a Growth Innovation Funnel Specialty chemicals present growth opportunities in most parts of the world Frost & Sullivans analysis of selected attractive segments in key regions (Europe, US, China and India) Sub-sector focus for growth opportunities: Construction and Utilities Case Study: Market Opportunities in Battery Materials Frost & Sullivans analysis of key growth opportunities globally (by region, sub sector, and application)

24 North America Latin America MEAF Europe APAC Commodity Chemicals Specialty Chemicals Commodity Chemicals Specialty Chemicals Commodity Chemicals Specialty Chemicals Commodity Chemicals Specialty Chemicals Commodity Chemicals Specialty Chemicals Growth of Commodity Vs. Specialty Segments, By Region (% of Total Sales): CAGR: 3-4% CAGR: 4-5% CAGR: 5-6% CAGR: 4% CAGR: 9-10% % of Total Sales Analysis of Growth Opportunities Specialty Chemicals to Witness Faster Growth in Most Regions As is evident from the graph above, the next decade could be the decade of specialty chemicals. The % of specialty chemicals as part of the overall chemicals sales will increase in all regions to 2020 Across the world, sales of specialty chemicals could grow twice as fast as the market. Similar to the overall chemicals sales, growth of specialty chemicals is highest is the Asia Pacific region at 9-10% (CAGR ) Globally, specialty chemicals is expected to grow at a CAGR of 5-6% to 2020

25 Analysis of Growth Opportunities Opportunity Analysis: Attractive Segments by Key Regions Source: Frost & Sullivan INDIA CHINA EUROPE UNITED STATES Market Size Growth Rate CAGR Textile Chemicals Paints and Coatings Structural Adhesives Low Med High Low Med High Low Med High Low Med High Attractive Segments in the Chemicals Industry Pulp & Paper Chemicals Admixtures Surfactants Water Treatment Chemicals Polymers Surfactants Nutraceutical Ingredients Plastic Additives Construction Chemicals Biolubricants Biopesticides Catalysts Home and Fabric Care Ingredients Paints & Coatings Plastic Additives Leather Chemicals Paints & Coatings

26 Key Market Opportunities to 2020 Growth Opportunities in Construction and Utilities GROWTH OPPORTUNITIES: CONSTRUCTION AND UTILITIES WATER TREATMENT The scarcity of water and with large geographic areas facing drought and desertification challenges, this is a critical area for investment Significant opportunities in Israel, Singapore, Japan, Australia and Middle East in sectors such as water separation technology, chemicals and desalination WIND POWER The Chinese wind power sector is witnessing rapid growth. In 2008 the installed capacity was 12,210MW in China, a y-o-y growth of 106.7%. This presents significant opportunities for structural adhesives and composite materials. Other regions that are attractive for wind power are: India and the US INSULATION SYSTEMS Exterior Insulation and Finishing Systems (EIFS) is a type of synthetic wall cladding for exterior walls and provides an insulated finished surface and waterproofing. External wall insulation using this can achieve 30-40% energy savings. EIFS is a key application for dry mix mortars and redispersible powders COMPOSITE MATERIALS Low cost carbon and glass fiber for building and industrial applications including construction panels in building and power infrastructure have high growth potential Increasingly, non corrosive composite materials are being used in metal and wood replacement GREEN MATERIALS The demand for bio based adhesives and green coatings (low or no VOC) are expanding globally. Technologies emerging in the green building industry in North America, Europe and Southeast Asia include smart windows, vacuum windows and door panes, PV materials, LED lighting and recycled materials OTHERS Next generation solar systems, ocean thermal technology, algae cells for electricity generation and tidal and wave energy applications also represent opportunities in the near future. These areas are attractive significant funding from government and private sectors alike

27 Market Opportunities by Application: Case Study Battery Materials: Nissan could not find a supplier in Europe No existing EU producer SEPARATORS PP based separators are the most commonly used in rechargeable lithium ion batteries Multilayered polymer separators are also gaining ground Newer technologies are emerging such as aramid based separators and PVDF separators which offer high temperature resistance CATHODE These electrodes typically have aluminum as the current collector Active materials used include LiMn2O4 and LiCoO2 LAMINATE FILM The laminate film has similar structure to packaging laminates However, the presence of corrosive electrolytes is the biggest challenge in its construction Aluminum laminates with PET coating are most commonly used here European suppliers of aluminum laminates have struggled to meet the performance requirements of the laminate ANODE Copper is used as the current collector Active materials used includes graphite and LiC6 ELECTROLYTE The electrolytes are typically lithium salts such as LiPF6 dissolved in EC, DEC solvents Players such as Merck exited the market in 1990s and are now re-entering US Government grants encouraging others to enter

28 GATE2GATE2 GATE2GATE2 Create a growth pipeline through macro analysis of specific criteria applied to appropriate target markets - Prioritize 3-4 opportunities Conduct deep dive and obtain relevant information Prioritize 3-4 opportunities Conduct deep dive and obtain relevant information Develop tactical business plan and implementation strategy Develop a monitoring, evaluation, and optimization strategy Develop tactical business plan and implementation strategy Develop a monitoring, evaluation, and optimization strategy GROWTHWORKSHOPGROWTHWORKSHOP GROWTHWORKSHOPGROWTHWORKSHOP Growth workshops prioritize output and strategize next steps Gate 3 Business Strategy and Implemen tation Gate 3 Business Strategy and Implemen tation Broad list of Potential Opportunities Defined short list of most easy to implement and high ROI opportunities GROWTHWORKSHOPGROWTHWORKSHOP GROWTHWORKSHOPGROWTHWORKSHOP GATE1GATE1 Identifying Company Specific Growth Opportunities Growth Innovation Funnel

29 THANK YOU Lorena Isla Research Manager Direct: Mauricio Soberón Account Executive Direct: