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

The Belgian chemical and plastics industry

is world-class

The evidence

3

Belgium is the n°1 chemical country in the world

on a per capita basis

44

0

1000

2000

3000

4000

5000

in EURSales of chemicals and plastics per capita (2014)

Source: Feri

Three-quarters of the world’s top chemical

companies have chosen to invest in Belgium

5

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

Production plant in Belgium

5

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 $

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)

6

Chemicals and plastics exports contribute

increasingly to the Belgian standard of living

Chemical trade balance increased by more than 30% in 10 years

7

11,6

15,3

0

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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 ; provisional data 2014

Why is Belgium so attractive for

this industry?

The reasons

8

Source: Flanders Port Area

First class availability of raw materials thanks

to 3 major seaports

Cargo handling – Ports Northern Europe*

Port Country 2013

(mio metric tons)

Rotterdam NL 440

Antwerp B 191

Hamburg D 139

Amsterdam NL 96

Bremerhaven D 79

Le Havre F 67

Dunkirk F 44

Zeebrugge B 43

Zeeland Seaports B 33

Ghent B 26

Kortrijk

Oostende

Hasselt

MonsCharleroi

Namur

Zeebrugge

Ghent

Liège

Antwerp

Brussel

Bastogne

9

Source: Port of Rotterdam

* Range Le Havre - Hamburg

Antwerp is to Europe what Houston, Jubail

and Singapore are to their regions: The continent’s largest integrated chemical cluster

Houston

Singapore

Antwerp

Jubail

Limited list of companies with production plants in the Port of Antwerp

10

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

First class availability of raw materials thanks to

the central location in the Western European

pipeline network

11

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 FEEDSTOCKSBUILDING

BLOCKSCOMMODITIES INTERMEDIATES

FINAL

PRODUCTS

Methane / refinery

residueSynthesis Gas

C2-C3 / Naphtha Ethylene

PE, EDC, VCM

Ethylene oxide

PVC

Glycols, EVOH, Ethyl

NBO, Glycol Ethers

Polymers, EPDM,

Copolymers

C2-C3 / Naphtha Propylene, propanePolypropylene

Propylene oxide,

Acrylic acid

Polymers e.g.

Polyurethane

Refinery off-gas /

NaphtaMixed C4 Butadiene Polybutadiene

Acrylonitrile,

Butadiene, Styrene

Naphtha Benzene, Toluene

Cyclohexane,

Caprolactam,

Aniline

BPA, Nylon 66, MDIPolycarbonate,

Polyurethane

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

Chlorine, NaOH EDC, Phosgene VCMPVC, 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 12

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

1313

Operational excellence also leads to high safety

at work

14

14,9 14,4 14,4 14,3 14,6 14,413,2 13,2 12,5 12,3

10,1

30,4928,92

26,98 26,51 26,6827,87

24,49 23,9722,81

21,2819,19

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Accident frequency rate

Chemical & Life sciences industry Manufacturing industry

Source : Occupational Accidents Fund

Number of accidents per million of hours

Operational excellence delivers world-class

energy efficiency

1515Source: Benchmarking Committee Flanders

220

230

240

250

260

270

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

PJ/year

Energy consumption at 2013 production levels

World top according to benchmarking covenant

Belgium (Flemish Region, at 2013 production levels)

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

16

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

17

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

18

• 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

19

20

BASF Antwerpen (Antwerp)

New technology production of

superabsorbant polymers

Investments in chemicals in Belgium 2014-

2015 (i)

Lanxess (Lillo)

Start of new polyamide unit

Eval (Antwerp)

Expansion of production capacity of ethylene

vinyl alcohol (EVOH)

Nippon Shokubai (Zwijndrecht)

New acrylic acid plan + extension

production capacity SAP

Janssen (Geel)

Renovation of chemical

production plant

21

Investments in chemicals in Belgium 2014-

2015 (iii)

Chembo (Blandain-Tournai)

Opening of a new building

Soudal (Turnhout)

Expansion of the operating

area and facilities

3M (Zwijndrecht)

New production line

for solvent-free glues

AkzoNobel (Ghlin)

New production lines for

organic peroxides

Imperbel/Derbigum (Lot)

Modernisation and

expansion

On-going investments, a key asset for the

future of the chemical industry in Belgium

22

1,56

1,73

2,44

2,04

1,421,35

1,86

1,60

2,05

1,78

0,0

0,5

1,0

1,5

2,0

2,5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

in billion euros

Chemical, plastics and life sciences industry in Belgium

Source: Statistics Belgium

Provisional data 2014

Trend 2005-2014: 1,78

• Education Covenant between essenscia, trade unions and associations of

secondary schools

• To encourage youngsters to choose for scientific branches

• System of cooperative education

• Combining high school education with practical work experience in

companies (masters degree in analytic science, bachelor degree in

process techniques)

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

University of Leuven

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

A strong collaboration between the Belgian

chemical industry, schools and universities

23

Belgium is building a future of

sustainable chemistry

24

Megatrends lead to new market opportunities

67%of the population

live in cities

1.2billion cars

2020 2025 2030 2050

+ 50%energy

9billion people

Source: BASF

36

26

Solutions come from chemistry and life sciences

• Energy saving innovations: insulation in buildings, lighter platics in

cars for less fuel consumption, …

• Diversifying raw materials: materials for renewable energy,

bioplastics, …

• Food: fertilisers for higher crop yields, GMO’s, plastics packaging for

better preservation, …

• Improving water quality: plastic piping for zero water loss, water

treatment, …

• Health: vaccines, medicines, personal care products, …

Chemical intensity in many sectors will continue

to increase in the future

27

The use of products from the chemical industry as intermediate goods for

customer industries will increase by 27% on average towards 2030

Source: VCI – Prognos (on behalf of VCI) based on a survey among experts

Examples of high-tech, sustainable innovations

in Belgium

• Futerro, a pilot plant for the production of bioplastics from renewable origin

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

• Prayon, a revolution in battery-technology for cars

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

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

• Agfa Graphics develops a revolutionnary low-migration ink

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

28

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

29

Specialty chemicals company LANXESS

develops solutions that enable “Green Mobility”

30

• “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.

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)

31

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

32

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

33

Agfa Graphics, a unique solution provider for the

printing industry

34

Innovation in a revolutionary low-migration ink

• Inkjet, the key technology for future packaging needs and trends

Variable run lengths in printing - Just in time printing

Waste reduction of ink and substrate, no VOC’s

• Agfa low-migration inkjet inks allow safe direct printing on primary

food packaging

Printing direct on the food container, drink bottles etc

No need for labels results in lower cost and waste

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

35

Industry consolidation will reinforce the role of the

Belgian chemical clusters

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

• 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

36

Brussels, a prominent and unique location

• A strategic and central position at the political heart of Europe (many

international organizations and major corporate headquarters)

• Access to a potential market of 500 million people

• A first-class logistical and business infrastructure (excellent transport

facilities and top-rate telecommunications network)

37

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

38