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 Ernest Solvay (1838-1922)

Leo Baekeland (1863-1944)

Christian de Duve (1917- 2013)

Lieven Gevaert (1868-1935)

Marc Van Montagu (1933-

)

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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 €

Sales of chemicals and plastics per capita (2014)

5000 4000 3000 2000 1000 0

Source: Feri

5

Three-quarters of the world’s top chemical companies have chosen to invest in Belgium 12 of the top 15 chemical companies have production sites in Belgium Top chemical companies (2013 sales) in billion $

100 80 60 40

20 0 **

Source : ICIS Chemical Business, 8-14 Sep 2014 Production plant in Belgium

* Quadrant EPP Belgium & Quadrant CMS ** via subsidiary CRI-catalyst

6

Chemicals and plastics exports contribute increasingly to the Belgian standard of living Chemical trade balance increased by more than 30% in 10 years Trade balance (export - import) in billion €

20 18 16 14 12 10 8 6 4 2 0

Chemical, petrochemical and plastic products* 15,3 11,6

All products Belgium **

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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

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Why is Belgium so attractive for this industry? The reasons

8

First class availability of raw materials thanks to 3 major seaports Cargo handling – Ports Northern Europe* Port

Country

2013 (mio metric tons)

Zeebrugge Antwerp

Oostende Kortrijk

Ghent Brussel

Hasselt

Liège Mons

Charleroi Namur

Bastogne

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

Source: Port of Rotterdam * Range Le Havre - Hamburg

Source: Flanders Port Area

9

First class availability of raw materials thanks to the central location in the Western European pipeline network Pipelines offer a fast, efficient, cheap and ecological supply chain

10

The high level of integration and diversity across the value chain is unique in the world Synergies in energy, process integration and logistics offer world class cost effectiveness RAW MATERIALS

FEEDSTOCKS

BUILDING BLOCKS

COMMODITIES

INTERMEDIATES

FINAL PRODUCTS

Methanol

Formaldehyde

Glues, Resins

Ammonia, Nitric Acid

Urea, AN, CAN, UAN Fertilizers

PE, EDC, VCM

PVC Glycols, EVOH, Ethyl NBO, Glycol Ethers

Natural gas / Crude Oil / Condensate

C1

Methane / refinery residue

Synthesis Gas

Natural gas / Crude Oil / Condensate

C2

C2-C3 / Naphtha

Ethylene

Natural gas / Crude Oil / Condensate

C3

C2-C3 / Naphtha

Propylene, propane

Crude Oil

C4

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

Crude Oil

Crude Oil

Sea water / Brine

C6

C7,8

Cl

Ethylene oxide Polypropylene Propylene oxide, Acrylic acid

Polyols, SAP

Polymers, EPDM, Copolymers Polymers e.g. Polyurethane

Ship, pipeline, barge Pipeline, barge, rail Rail, road Mainly road

items are produced in the cluster

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

Highly skilled labour force ensures world-class technical expertise and operational excellence 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)

4

6.5

3

5

Mean (out of 140 countries)

4.9

7

6.0

Top (Switzerland)

Source: World Economic Forum, Competitiveness Report, 2015-2016

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Operational excellence also leads to high safety at work Accident frequency rate Number of accidents per million of hours

50 40 30,49

30

28,92

26,98

26,51

26,68

27,87 24,49

23,97

22,81

21,28

20 10

14,9

14,4

14,4

14,3

14,6

14,4

13,2

13,2

12,5

12,3

19,19

10,1

0

2003

2004

2005

2006

2007

2008

Chemical & Life sciences industry

2009

2010

2011

2012

2013

Manufacturing industry Source : Occupational Accidents Fund

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Operational excellence delivers world-class energy efficiency

Energy consumption at 2013 production levels PJ/year

270 260 250 240

230 220 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 World top according to benchmarking covenant Belgium (Flemish Region, at 2013 production levels) Source: Benchmarking Committee Flanders

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Attractive tax incentives increase financial returns on capital intensive and R&D investments Tax-free return on qualifying equity

Notional Interest deduction

Special tax regime for expatriates

Withholding tax exemptions

Belgian tax incentives

No capital duty

Tax rulings with emphasis for multinationals VAT grouping

R&D tax incentives  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

15

The Belgian chemical industry has a unique network to implement REACH & CLP • 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

Company

European authorities

REACH Mentors

Belgian authorities

essenscia working groups REACH: Registration, Evaluation and Authorisation of Chemicals CLP: Classification, Labelling and Packaging of substances and mixtures

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High R&D investments prepare the chemical and plastics industry for top-end innovation Company R&Dexpenditures* (mio €)

R&D-personnel (headcounts)

Pharmaceuticals

2293

4652

Chemical, petrochemicals and plastics

732

3370

Computer, electronic and optical products

552

3030

Motor vehicles

371

1371

Machinery and equipment

314

2690

Basic metals

156

1065

Other transport equipment (spacecraft, …)

148

693

Electrical equipment

140

1198

Belgian industrial R&D-investments

Source: Belspo, 2013 figures (NACE 2) * Intra-mural expenditures per sector of products

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Presence of lead plants and R&D-centers in Belgium with focus on sustainable innovation Lead plants: worldwide technical competence centers in the Belgian chemical cluster • BASF Antwerp for MDI • Evonik for methionine • Covestro for Makrolon Key R&D-centers:

• 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 • Soudal: R&D-center in Turnhout

• Eastman Chemical Company: R&D-center in Ghent 18

A strong collaboration between the Belgian chemical industry, schools and universities • 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

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The authorities in Belgium actively support the chemical industry At Belgian level

• High Level Group for a sustainable chemical and plastics industry in Belgium initiated by the Prime Minister (2015-…) At regional level • 2 competitivity clusters for open innovation, catalysators for a thriving sustainable chemistry

Flanders Innovation Hub for Sustainable Chemistry

Walloon Competitivity cluster

 Production of sustainable products and materials  Sustainable integration of materials  Treatment and valorisation of waste

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Belgium is building a future of sustainable chemistry

21

Megatrends lead to new market opportunities

2020

2025

1.2

billion cars

67%

of the population live in cities

2030

2050

+ 50% energy

9

billion people

36 Source: BASF

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, … 23

Chemical intensity in many sectors will continue to increase in the future The use of products from the chemical industry as intermediate goods for customer industries will increase by 27% on average towards 2030

24 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

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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)

LOOPLA™ : « Cradle to Cradle » concept

200

160

180

L-Lactic Acid

160 140 120

Endless cycle

100 80 60 40

PLA

3

10

20

20 0

Composting

•

Incineration

Anaerobic digestion

LOOPLA™

ECO-Benefits are based on the standard eco-indicator 99 scores (Taking in account elements such as ecotoxicity, fossil fuels, climate change,…)

26 Source: Galactic

Specialty chemicals company LANXESS develops solutions that enable “Green Mobility”

• “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. 27

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)

28

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: Antifouling coatings

Electronic packaging

Flame barriers coatings

Thermoplastic body parts

29

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

30

Agfa Graphics, a unique solution provider for the printing industry 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

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Solvay, main partner of the Solar Impulse 2 which circumnavigates 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

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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

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essenscia Belgian Federation for Chemistry and Life Sciences Industries

Contact Yves Verschueren, Managing Director T +32 2 238 98 12 - [email protected]

Corine Petry, Head of Communication T +32 2 238 99 12 – [email protected] www.essenscia.be

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