1. Economics of Process Aid use Asia Tyre & Rubber Conference December 2 – 3, 2011 Hari Chandra Quantum Polymer Cleveland, Ohio

2. Contents GDP growth of fast growing economies Rubber output and price trends Options to ease pressure on NR demand Ecoreen and Ecorized Tire Rubber (ETR) Ecoreen use to reduce cost and NR consumption Findings and Recommendation

3. US GDP 1950 - 2010

4. GDP Growth China & India

5. Exchange: US$1 = 6.4 RMB

6. Indian Rupee Conversion rate US$1:INR 50

7. China Automobile production by year YearProduction (in million units) 19921.0 19991.2 20002.07 20012.33 20023.25 20034.44 20045.07 20055.71 20067.28 20078.88 20089.35 200913.79 201018.06

8. Indian automotive production YearCar Production 1999533,149 2000517,957 2001654,557 2002703,948 2003907,968 20041,178,354 20051,264,000 20061,473,000 20071,713,479 20081,846,051 20092,175,220 20102,814,584

9. World Auto Output YearUnits% change 199956,258,8926.20% 200058,374,1623.80% 200156,304,925-3.50% 200258,994,3184.80% 200360,663,2252.80% 200464,496,2206.30% 200566,482,4393.10% 200669,222,9754.10% 200773,266,0615.80% 200870,520,493-3.70% 200961,791,868-12.40% 201077,857,70526.00%

12. World Auto Output

13. Average Natural Rubber-SMR 20-Prices YearUSCent/KG 200064.3 200154.5 200275.9 2003100.5 2004122.5 2005139.4 2006195.8 2007216.7 2008254.4 2009183.8 2010333.6 2011470.7

16. MRB FOB NOON PRICES FOR SMR 20 (US Cents/Kg) January - October 2011

17. World Rubber Output in ( X 000) tons YearNRSRTotal 20006,76287017,632 20017,33210,48317,815 20027,32610,87718,203 20038,00511,34119,361 20048,77411,96120,707 20058,89612,10021,004 20069,70612,65322,444 20079,83313,38723,188 200810,04212,74322,779 20099,66212,08721,704 201010,29114,00224,293

18. Source: Malaysian Rubber Board

19. Growth of China & India Auto and NR& SR sectors for 2001 - 2010 Sector Growth Averages Average Annual Growth% China auto output19 % India auto output16% Natural Rubber (NR) output4 % Synthetic Rubber (SR) output2 % NR plus SR output3% NR – SMR 20 price increase19% China & India combined auto19%

20. Demand trend and price hike

21. Options to resolve scarcity Increase NR with planting Limits: speed and growth-gestation / Land Increase SR with investment in plants Limits due to fossil fuel raw material scarcity Design lighter weight tires Possible Recycled rubber Feasible

22. Recycled Rubber Abundant source: Used Tires

23. Used Tires in US One tire per population per year At 350 Million there are 350 Million Tire The amount of Rubber compound 3.0 Million Tons 60% Polymer – mix of NR and SR 1.8 Million Tons

24. Current Used Tire Disposal UsePercent Ground Rubber26.2 Tire Derived Fuel40.3 Used Tire 7.2 Civil Engineering 5.5 Reclaimed 2.5 Others 5.7 Land Fill12.6

25. Current Used Tire Disposal UsePercent & Rubber/Carbon Tons Ground Rubber26.2 % 786,000 Tons Tire Derived Fuel40.3 % 1,209,120 Tons Used Tire 7.2 % Civil Engineering 5.5 % Reclaimed 2.5 % Others 5.7 % Land Fill12.6 %

27. Devulcanization & Set backs Low green strength Poor Tack Increased Viscosity Inability to hold fillers Possible solution: Use of Liquid (Depolymerized) NR

28. Depolymerized Natural Rubber DPR ® applications Rubber Process Aid – ML4 drops by 5-20 units Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Has ability to bind large volumes (10X) of fillers

29. Impediments to use of DPR ® Liquid and difficult to handle Limited supply source High cost: When Natural Rubber was at $1.50 per LB DPR® was at $3.50 / LB

30. .. Ecoreen Process Aids DPR® Substitute Composed of Virgin polymers Pre cross-linked rubber (vulcanized Rubber)* * Types: Tire Rubber (T), Butyl Rubber (B), EPDM (EP), NR (N) and others

31. Ecoreen T for Tire Compounds Free Flowing Pellets Versus Liquid DPR® Function: Plasticizer to reduce mix cycle time and increases filler holding capacity Reactive: Cures with the rest of polymer matrix and non migrating

32. Ecoreen T -Tire Rubber DP Applications Rubber Process Aid – ML4 drops by 20 units. Improves tack & Green Strength Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Thermoplastic Rubber base Has ability to bind large volumes of fillers

33. Ecorized Tire Rubber (ETR) Tire Rubber Powder (Tire Crumb) is “ecorized” to different levels for use in various applications by treating ground tire powder with Ecoreen T process aid

34. Tire Crumb after milling (Ecorized) with 10 PHR Ecoreen T & Curatives

35. “Devulcanized” Tire Crumb with Curatives, no Ecoreen

36. Clay Versus Ecorized Tire Rubber (ETR) Comparison

37. SG of Clay and Tire Filled Mixes Mix # Clay Level Clay Mix SG Clay Mix Weight / Cu Ft. ETR LevelTire Crumb Mix SG 1100 1.2880 LB1001.12 2200 1.4490 LB2001.12 3300 1.5798 LB3001.12 4400 1.68105 LB4001.12 5500 1.75109 LB5001.12 6600 1.82114 LB6001.12 7700 1.89118 LB7001.12 8800 1.95122 LB8001.12 9900 2.00125 LB9001.12 101000 2.04127 LB10001.12 Weight of ETR filled at all levels: SG 1.12, weight 70 LB / Cu Ft

38. SG of Ecoreen TC Vs Clay Clay Ecoreen TR

39. Cost of weight Vs Volume Fillers: Clay and E. Tire Crumb Weight per LB, Volume per Cu Ft – 6 ’ X 4 ’ X ½” Mat Filler Level Clay Filler Cost $/LB E.Tire Crumb Cost / LB Clay Filler $ per Cu Ft E.Tire Crumb $ per Cu.Ft 100 0.700.76 $ 55.94 $ 53.14 200 0.570.64 $ 51.24 $ 44.75 300 0.480.57 $ 47.05 $ 39.86 400 0.420.52 $ 44.05 $ 36.36 500 0.380.49 $ 41.52 $ 34.26 600 0.340.46 $ 38.63 $ 32.16 700 0.310.44 $ 36.58 $ 30.77 800 0.290.43 $ 35.30 $ 30.07 900 0.270.41 $ 33.71 $ 28.67 10000.260.40 $ 33.11 $ 27.97

40. Cost per LB Ecoreen TC Vs Clay Ecoreen TR Clay

41. Cost by Volume ECoreen TC Vs Clay per Cu Ft (6 ’ X 4 ’ X ½”) Clay Ecoreen TR

42. Filler PHRMix with ClayMix with ETR 063% 10038%60% 20028%58% 30022%58% 40018%57% 50015%57% 60013%57% 70012%56% 80010%56% 9009%56% 10009%56% RHC Content in Clay and ETR Filled N 110 Black Mix

43. RHC: Rubber Hydro Carbon

44. Advantages of ETR based Mix Lighter weight – constant SG at 1.12 at all levels Higher recycled content Releases pressure on demand for NR and SR Able to reduce costs substantially while meeting quality standard

45. Ref:9340 Material$ per LBParts%$/ LB Mix Rubber $ 2.0010053% $ 1.07 N 330 Black $ 0.456032% $ 0.14 Zinc Oxide $ 0.9353% $ 0.02 Stearic Acid $ 0.6321% $ 0.01 Wax $ 0.452.51% $ 0.01 Antioxidant TQ $ 1.8511% $ 0.01 6PPD $ 2.301.51% $ 0.02 N. Oil $ 0.53158% $ 0.04 Ecoreen TR $ 0.4300% $ - Total1871 $ 1.32 Tire Tread Mix – No Ecoreen TC

46. Ref:9340 Material$ per LBParts%$/ LB Mix Rubber $ 2.0010026% $ 0.52 N 330 Black $ 0.456016% $ 0.07 Zinc Oxide $ 0.9351% $ 0.01 Stearic Acid $ 0.6321% $ 0.00 Wax $ 0.452.51% $ 0.00 Antioxidant TQ $ 1.8510% $ 0.00 6PPD $ 2.301.50% $ 0.01 N. Oil $ 0.53154% $ 0.02 Ecoreen TR $ 0.4320052% $ 0.22 Total3871 $ 0.86 Tire Tread Mix with 200 PHR Ecoreen TC

47. Ref: 9338 / N 1109339 / N 2209340 / N 330 Material $ / LB MaterialParts % $/ LB Mix Parts % $/ LB Mix Parts % $/ LB Mix Polymer 2.0010063 1.25 10057 1.1510053 $ 1.07 Black and Oil 0.684830 0.20 6236 0.197540 $ 0.19 Activators 0.8474 0.04 74 0.0374 $ 0.03 Anti Degradants 1.2953 0.04 53 53 $ 0.03 ETR 00 - 00 - 00 $ - Total 160100 1.53 1741001.42187 $ 1.32 Premium Tread Mixes

48. Ecorized Tire Rubber costs $0.43 per LB

49. ETR at loadings from 0 to 100 ETR cost: $0.43 per LB

50. Ecoreen 2.0 costs $0.65 per LB

51. Three Products 1. Ecoreen T Process Aid ($0.65) Not made into product by itself 2. Ecoreen Master Batch For blending and making products by itself ($0.80) 3. Ecorized Tire Rubber (ETR) Polymer filler to reduce cost and improve process / product ($0.43)

52. Control 9346 9345934393449342 Ecoreen 50%Ecoreen 25%Ecoreen TR 500 PHREcoreen TR 100 PHR $1.20 /LB $1.40/LB $1.14 / LB $1.60 / LB $0.95 / LB

53. Examples of poor flow in spider test

54. Findings Ecorized Tire Rubber decreases cost of product through loading high levels in tire mixes and molded products while improving processing characteristics and final product performance

55. Recommendation Ecorized Tire Rubber / Crumb can be used at high loadings (100 to 500 PHR) in tire tread and retread formulations. Quantum will provide anyone masterbatch samples upon request with specification

56. ` Mix 2 Masterbatch

57. Final compound with cure

58. Mix 2 Tire

59. Mix 1 Tire

60. Mix 223 Tire Mix 2 Tire

61. Thanks to Asia Tyre Rubber Conference 2011 Organizers for this opportunity