Chemical Industry

The Brazilian Chemical Industry Road to Sustainability Industry Meeting for Sustainability

Associação Brasileira da Indústria Química

CNI - NATIONAL CONFEDERATION OF INDUSTRY – BRAZIL Robson Braga de Andrade President EDUCATION AND TECHNOLOGY DIRECTORSHIP – DIRET Rafael Esmeraldo Lucchesi Ramacciotti Education and Technology Director BRAZILIAN CHEMICAL INDUSTRY ASSOCIATION - ABIQUIM Chairman

Henri Armand Slezynger

Vice-Presidents

Carlos Fadigas de Souza Filho Pedro Emilio Suarez Marcos De Marchi Marcelo Lacerda Soares Neto Paulo Francisco T. Schirch Alfred Hackenberger João Benjamin Parolin

Counselors

Aníbal do Vale Carlos Alberto Schmid Ciro Mattos Marino Cristiano Melcher Domingos Henrique Guimarães Bulus Eduardo Kunst Eduardo Leite Cordeiro Isaac Plachta José Luis Gonçalves de Almeida José Veiga Julio Muñoz Kampff Laercio Valentin Giampani Luiz Antonio Veiga Mesquita Margareth Feijó Brunnet Michael Pronin Nelson Pereira dos Reis Paulo Eduardo Surnin Vieira Richard Ward Rui Chammas Theodorus van der Loo Vincent Kamel Wanderlei Passarella Weber Porto Wolfgang Heinz Guderle

Executive President

Fernando Figueiredo

Director of Institutional Relations

Renato Endres

Technical Board of Economics and Statistics

Fátima Giovanna Coviello Ferriera

Technical Director of International Trade Affairs

Denise Mazzaro Naranjo

Management of Regulatory Affairs

Nícia Maria Fusaro Mourão

and the Environment Management of Business Management

Luiz Shizuo Harayashiki

Management of Administration and Finance

Carlos Tsuyoshi Yamakawa

Communication Management

Marina Cardoso Galvão

The Brazilian Chemical Industry Road to Sustainability

brasília 2012

© 2012. CNI – National Confederation of Industry Any part of this publication may be reproduced provided the source is cited.

C748d

National Confederation of Industry. Brazilian Chemical Industry Association.

The Brazilian Chemical Industry Road to Sustainability / National Confederation of Industry. Brazilian Chemical Industry Association. – Brasília : CNI, 2012.

86 p. (Rio+20 Sectorial fascicle)

1. Sustainability 2. United Nations Conference on Sustainable Development I. Title II. Series CDU: 502.14 (063)

CNI National Confederation of Industry

ABIQUIM Brazilian Chemical Industry Association

Headquarters Setor Bancário Norte Quadra 1 – Bloco C Edifício Roberto Simonsen 70040-903 – Brasília – DF Tel.: 55 (61) 3317-9000 Fax: 55 (61) 3317-9994 www.cni.org.br

Headquarters Vila Olímpia Av. Chedid Jafet, 222 Bloco C – 4º andar 04551-065 – São Paulo – SP Tel.: 55 (11) 2148-4700 Fax: 55 (11) 2148-4760 http://www.abiquim.org.br/

List of figures

Figure 1.

Classification of chemical products according to CNAE 2.0 .................. 16

Figure 2.

Location of the main units of industrial chemicals in Brazil ..................... 18

Figure 3.

Composition of the net income of the Brazilian chemical industry, by segments (2010) (in US$ billion) .......................... 19

Figure 4.

Ranking of national chemical industries by country ................................ 20

Figure 5.

Brazilian trade balance in chemicals (in US$ billion) ............................... 21

Figure 6.

Participation of the Brazilian chemical industry in total GDP (%) ............ 21

Figure 7.

Distribution of industrial chemicals sales in 2010 (in US$ billion) ........... 22

Figure 8.

Sales evolution in industrial chemicals .................................................... 22

Figure 9.

Production and transport figures, 2001 to 2010 ...................................... 23

Figure 10. Planned and completed investments in industrial chemicals ................. 24 Figure 11. Total sums invested in industrial chemicals by State .............................. 24 Figure 12. Investment opportunities in the Brazilian chemical industry by the year 2020, according to the Chemical Industry National Pact .............................................................. 25 Figure 13. Investments in research, development and innovation in the Brazilian industrial chemicals industry ......................... 27 Figure 14. Number of jobs in the Brazilian chemical industry .................................. 27 Figure 15. Breakdown of TLC costs – 2010 .............................................................. 28 Figure 16. Variation of salaries paid and TLC, per employee – 1994 to 2010 (in current United States Dollars, per employee per month) ................... 29

Figure 17. Wage in the chemical industry and in general transformation industry ............................................................... 30 Figure 18. Energy supplies distribution of Abiquim member companies ................ 32 Figure 19. Total energy consumption in the chemical industry ................................ 33 Figure 20. Distribution of thermal energy consumption in the chemical industry ........................................................................... 34 Figure 21. Intensity of energy supplies consumption in the chemical industry .......................................................................... 35 Figure 22. Consumption intensity of electricity in the chemical industry .................. 35 Figure 23. Energy consumption and annual production of Abiquim member companies .............................................................. 36 Figure 24. Absolute consumption of water among Abiquim’s member companies ................................................................ 38 Figure 25. Water consumed in the chemical industry in processes and products. ..................................................................... 39 Figure 26. Intensity of water consumption among Abiquim members and the equivalent economic savings ..................................... 39 Figure 27. Emissions of CO2 in absolute terms, in combustion processes ............. 41 Figure 28. Emissions of sulfur dioxide in combustion and processes ..................... 41 Figure 29. Intensity of emissions of greenhouse gases from Abiquim members ........................................................................... 42 Figure 30. Reduction in the intensity of combustion emissions with the increase in the quantity of biomass in the fuel mix used by Abiquim members ........................................................ 43 Figure 31. Comparison between the Brazilian chemical industry and the world average for the segment ................................................... 43 Figure 32. Waste generated by the chemical industry ............................................. 45 Figure 33. Intensity of generation of solid waste in the chemical industry ............... 45 Figure 34. Generation of liquid effluents by the Brazilian chemical industry ............ 47 Figure 35. Total nitrogen in effluents from the chemical industry ............................. 47 Figure 36. Discharge intensity and treatment cost of effluents in the chemical industry ............................................................ 48 Figure 37. Investments and costs related to the environment among Abiquim member companies ...................................................... 48

Figure 38. Educational level in the chemical industry ............................................... 49 Figure 39. Accidents rate with and without loss time at Abiquim member companies .................................................................. 50 Figure 40. Accident lost time rate at Abiquim member companies ......................... 51 Figure 41. Accident rate with and without lost time in the global chemical industry ................................................................ 51 Figure 42. Severity in occupational accidents among Abiquim member companies ...................................................... 52 Figure 43. Number of deaths caused by accidents among Abiquim member companies ...................................................... 52 Figure 44. Number of accidents that generated disabilities among Abiquim member companies. ..................................................... 53 Figure 45. Safety inspections among Abiquim members ......................................... 54 Figure 46. Process safety events in the chemical industry ....................................... 55 Figure 47. Number of trips per year transporting chemicals by road ....................... 56 Figure 48. Accidents on road transport of chemicals ............................................... 57 Figure 49. The evolution in the management of health, safety and the environment by the global chemical industry in the period between Rio 92 and Rio+20, and post Rio+20 ...................................... 69 Figure 50. Community activities supported by Abiquim member companies ......... 71 Figure 51. Complaints from communities close to plant sites ................................. 71 Figure 52. Countries with plans to implement GPS (December 2011) ..................... 76 Figure 53. Opportunities for the national chemical industry, in relation to sustainability, facing competition from foreign chemical industries ........ 83

Table 1.

Variation of salaries paid and TLC, per employee, between 2001 and 2010 (in current United States Dollars, per employee a month) ...... 29

Table 2.

Labor costs for production in the chemical industry across the world (NAICS 325) ................................................................. 30

Table 3.

Energy consumption of the Brazilian chemical segment ........................ 32

Table 4.

Energy supplies distribution for the chemical segment .......................... 33

Table 5.

Consumption of the main raw materials in the Brazilian chemical industry (2010) ........................................................... 37

Table 6.

Main international instruments associated to industrial chemicals production ........................................................... 60

Table 7.

Main legal instruments covering industrial chemicals at federal level .......................................................................................... 63

Table 8.

Relevant themes and challenges for the chemical industry related to sustainability .............................................................. 80

Table of Contents

CNI presentation Sectorial presentation 1 Introduction ........................................................................................................... 15 1.1 The Brazilian chemical industry and Abiquim .............................................. 15 1.1.1

The chemical industry ..................................................................... 15

1.1.2 Abiquim ........................................................................................... 16 1.2 Objectives of this publication ....................................................................... 18 2 Economic, social and environmental characteristics of the segment ................... 19 2.1 Economic characterization ........................................................................... 19 2.1.1

Industrial chemicals ......................................................................... 22

2.1.2

The production of industrial chemicals by Abiquim members ....... 23

2.1.3

Investments in the industrial chemicals segment ........................... 23

2.1.4

Research, development and Innovation ......................................... 26

2.1.5

People employed in the chemical industry ..................................... 27

2.1.6

The cost of labor at the Brazilian chemical industry ....................... 28

2.2 Social and environmental characteristics .................................................... 31 2.2.1

Use of resources ............................................................................. 31

3 Economic, social and environmental regulations which affect the segment ........ 59 3.1 Main agreements and international regulatory aspects relevant to the segment: characterization of the international regulatory environment of interest to this segment. ..................................... 59

3.2 Main national normative instruments (voluntary and compulsory) currently in effect in the main external markets for this segment ................ 61 3.3 Main regulatory aspects and normative instruments (compulsory or voluntary) that affect the segment in Brazil ........................ 62 4 Business practices for sustainable development (1992-2011) ............................. 67 4.1 Main technological/innovation and management transformations incorporated by the segment in the production process ............................ 67 4.1.1 Highlights ......................................................................................... 69 4.2 Initiatives for disclosure of information and transparency about the social and environmental performances of the segment ............ 70 4.3 Initiatives coordinated by the association or sectorial institution ................. 72 4.3.1

Responsible care ............................................................................. 72

4.4 Certification and self-regulation initiatives developed by the segment ....... 73 4.4.1 Sassmaq ......................................................................................... 73 4.4.2

The ICCA Global Product Strategy – GPS ...................................... 74

5 Challenges and opportunities for the segment on its way to sustainability .......... 77 5.1 The main international trends for the segment in relation to sustainability ............................................................................ 77 5.2 Challenges for the segment in the context of sustainable development (market, technology and regulation) ...................................... 79 5.3 Opportunities for the sector in relation to sustainable development ........... 82 Conclusion .................................................................................................................. 83 Attachment: a track record of the history of Atuação Responsável ............................ 85

CNI Presentation

The diversity of the national industry and the significant availability of natural resources reveal excellent opportunities for the sustainable development of Brazil, combining economic growth, social inclusion and environmental conservation. The materialization of concerns related to sustainability in the strategic agenda of enterprises and governments is a reality. Apart from isolated cases of success, the consequences of this attitude are felt in entire sectors of the economy. Further advances are still needed, but the path has already been identified and going back is impossible. After coordinating an unprecedented critical thinking process on sustainability with 16 industry associations, the National Industry Confederation (CNI) delivers to the Brazilian society a wide range of information on progress, challenges and opportunities yet to come. The results presented here may not portray the significance of the discussion process experienced by the industry in preparing these documents. Developments on the process will be beyond the Rio+20 Conference, and are definitely incorporated on the daily lives of companies. The subject of sustainability is inserted differently in each of the industrial sectors. However, some elements are common to all. The continuous pursuit for efficiency in use of resources and the need to increase industrial competitiveness are on the agenda of all the sectors. Encouraging innovation and scientific and technological development is strategic on the transition to more sustainable patterns of production. Strategies to intensify actions coordinated internally in the industrial sectors and with governments and civil society organizations are no less important. The dissemination of sustainable practices by means of the supply chain and incentives for companies to undertake the role of integrated management of the territories are powerful tools. The sectorial volumes developed by industry associations are valuable contributions to addressing subjects such as sustainability and competitiveness of domestic industry. One of the most representative results of this process will certainly be the strengthening of structured programs of action with a focus on promoting sustainability in the

production. These initiatives will act as raw materials so that the industries involved and CNI are able to systematically publish documents presenting the national industry´s developments towards the goals of sustainable production. The documents presented here are intended to be a valuable contribution to enhance the debate on sustainability. Each of the sectorial associations is to be congratulated for their efforts.

Robson Braga de Andrade President of the National Confederation of Industry – Brazil

SECTORIAL PRESENTATION

Chemistry is the science that has made the greatest contribution towards the quality of life and also towards increasing the human life span. Chemical products are essential in the daily activities of humanity, in all senses and at all times. The basis of responsible chemistry is that of constant research and also the development of new products meeting the needs of society and with due care for the environment. Thus, we are sure that, on the threshold of what is called the Green Economy, Chemistry will be one of the sciences to most contribute to sustainable development. Through products and processes that get better every time, saving as many natural resources as possible, we feel that Chemistry will provide solutions for the major issues to be addressed at the Rio+20. The presence of risks in the production of chemicals is a fact that has long been acknowledged by the industry, and hence it comes as no surprise that this is the factor that has taken up most measures as a result of the Rio 92 summit and also the Rio+10 in Johannesburg, South Africa, for the safety of workers and of society in general. The management of the risks and their transformation to benefit the human species is part of the essence of the chemical industry, ever since it first started. In this regard, the information as here presented, gathered by Abiquim from the member companies of the association, allow the demonstration of a steady improvement in the performance of this segment in terms of health, safety and the environment over the last ten years. They also show the opening of the premises to the neighbouring communities and also the interest in listening to the communities and sharing information with them. We are convinced that most of the good results can be ascribed to the implementation of voluntary initiatives on the part of the companies, and here we highlight the Responsible Care® Program, coordinated by Abiquim, which reaches the milestone of 20 years of existing in 2012. As a mandatory condition to join the association, the Responsible Care® Program, as stated in its logo, represents a commitment to sustainability of the

chemical segment, suggesting concrete ways of meeting this commitment, based on the ethical posture of the segment. Chemistry is the science that has made the greatest contribution towards the quality of life and also towards increasing the human life span. Chemical products are essential in the daily activities of humanity, in all senses and at all times. The basis of responsible chemistry is that of constant research and also the development of new products meeting the needs of society and with due care for the environment. Thus, we are sure that, on the threshold of what is called the Green Economy, Chemistry will be one of the sciences to most contribute to sustainable development. Through products and processes that get better every time, saving as many natural resources as possible, we feel that Chemistry will provide solutions for the major issues to be addressed at the Rio+20. The presence of risks in the production of chemicals is a fact that has long been acknowledged by the industry, and hence it comes as no surprise that this is the factor that has taken up most measures as a result of the Rio 92 summit and also the Rio+10 in Johannesburg, South Africa, for the safety of workers and of society in general. The management of the risks and their transformation to benefit the human species is part of the essence of the chemical industry, ever since it first started. In this regard, the information as here presented, gathered by Abiquim from the member companies of the association, allow the demonstration of a steady improvement in the performance of this segment in terms of health, safety and the environment over the last ten years. They also show the opening of the premises to the neighbouring communities and also the interest in listening to the communities and sharing information with them. We are convinced that most of the good results can be ascribed to the implementation of voluntary initiatives on the part of the companies, and here we highlight the Responsible Care® Program, coordinated by Abiquim, which reaches the milestone of 20 years of existing in 2012. As a mandatory condition to join the association, the Responsible Care® Program, as stated in its logo, represents a commitment to sustainability of the chemical segment, suggesting concrete ways of meeting this commitment, based on the ethical posture of the segment.

Henri Slezynger

Fernando Figueiredo

President of the Administrative Board

Executive President

1 Introduction

1.1 The brazilian chemical industry and Abiquim 1.1.1 The chemical industry The chemical industry is an industry based on processes, which use chemical reactions for the synthesis of substances or products, based on other sources of materials or raw materials. Seen from the standpoint of raw materials, the industry can be divided into two large groups, organic chemicals and inorganic chemicals. In addition, the products can have different applications, as chemistry is the base for many production chains. In this case, the process agreed is that of dividing the industry into two segments once again, these being industrial chemicals and end use chemicals. However, the precise classification of this industry is no easy task, due to the wide scope of the universe of Chemistry. The classification of the chemical industry and its segments has already been the cause of much debate, which has made it more difficult to analyze the data related to the segment. In order to eliminate possible controversies, the UN has approved the international classification for the chemical industry, including it in Review No. 3 of the International Standard Industry Classification (ISIC), updated in Review No. 4. In Brazil, the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estatística – IBGE), with the support of the Brazilian Chemical Industry Association (Associação Brasileira da Indústria Química – ABIQUIM), has defined, based on criteria approved by the UN, a new National Classification for Economic Activities (Classificação Nacional de Atividades Econômicas – CNAE), and also promoted the classification of all chemicals, within this classification system.

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In 2006, the IBGE redefined the structure of the CNAE, adapting it to ISIC Review No. 4. After this review, the segments that comprise the activities of the chemical industry started being included in divisions 20 and 21 of CNAE 2.0, valid as from January 2007, as shown in Figure 1. Figure 1. Classification of chemical products according to CNAE 2.0 20. Manufacture of chemical products 20.1. Manufacture of inorganic chemical products 20.2. Manufacture of organic chemical products 20.3. Manufacture of elastomers and resins 20.4. Manufacture of synthetic and artificial fibers 20.5. Manufacture of agrochemical and pest control 20.6. Manufacture of soaps, detergents, cleaning products, cosmetics, perfumery and personal hygiene 20.7. Manufacture of paints, varnishes, enamels, lacquers and related products 20.9. Manufacture of chemical products and preparations 21. Manufacture of pharmochemical and pharmaceutical products Source: IBGE.

1.1.2 Abiquim The Brazilian Chemical Industry Association (Associação Brasileira da Indústria Química – ABIQUIM) was founded in 1964 to represent the chemical segment, both in Brazil and abroad. Abiquim’s main mission is to promote the sustainable development of the Brazilian chemical industry. Abiquim represents companies operating in the industrial chemicals segment; the other chemical industry segments are represented and accompanied by similar organizations. Its member companies account for more than 85% of the total turnover of the industrial chemicals segment in Brazil, or 43% of the total of the chemical industry as a whole. The industrial chemicals segment covers some three thousand products. To enable statistical monitoring of the segment, Abiquim produces its data based on a highly representative panel, which includes about two hundred industrial chemicals, manufactured by more than eight hundred companies, either Abiquim’s members or not. This sample follows the classification used by the IBGE, and subdivided by Abiquim, as follows: Production of Inorganic Chemicals • Production of chlorine and alkalis; • Production of intermediates for fertilizers; • Production of other inorganic chemicals. Production of Organic Chemicals • Production of basic petrochemicals;

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Industry Meeting for Sustainability

• Production of intermediate for resins and fibers; ◊ ◊ ◊ ◊

Intermediates for plastics; Intermediates for plasticizing agents; Intermediates for thermofix resins; Intermediates for synthetic fibers.

• Production of other organic chemicals as not previously specified ◊ ◊ ◊ ◊ ◊

Dyes and organic pigments; Industrial Solvents; Intermediates for detergents; Plasticizing agents; Other organic chemicals.

Production of resins and elastomers • Production of thermoplastic resins; • Production of thermofix resins; • Production of elastomers. Production of miscellaneous products and chemical preparations • Production of adhesives and sealants; • Production of additives for industrial use. (*) The breakdown of the products as shown in italics is not mentioned in the CNAE-

IBGE classification, but as Abiquim already studied these groups separately, it was decided to maintain the same subdivisions.

The institution brings together small, medium and large chemical companies, as well as companies providing services to the sector in the areas of distribution, logistics, transport and also treatment of industrial waste (called collaborating members). In December 2011, Abiquim had 122 chemical companies and 59 collaborating companies. Apart from the statistical monitoring of the performance of the industrial chemicals sector, Abiquim also monitors the Brazilian trade balance on chemicals and investment projects made by companies. It generates studies of the segment and is responsible for the development of the Brazilian version of the Responsible Care Program (Programa Atuação Responsável®). The information is presented in several publications, including the Brazilian Chemical Industry Guide (Guia da Indústria Química Brasileira), the Brazilian Chemical Industry Yearbook (Anuário da Indústria Química Brasileira) and the Dynamic Information System (Sistema Dinâmico de Informações – SDI). In addition, Abiquim’s members report social and environmental data, which are used to show the association’s aggregate results on health, safety and environment performance, and to produce the annual Atuação Responsável Report. Despite its relative importance in terms of the turnover for the segment as a whole, Abiquim’s members have approximately 270 industrial units, which represent part of the chemical factories in the country. The map in Figure 2 shows the number of industrial chemicals production units in Brazilian territory, spread across different States, based on the information contained in the 2010 Chemical Industry Guide.

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Figure 2. Location of the main units of industrial chemicals in Brazil

Abiquim’s structure consists of a Board of Directors, composed of leaders of member companies, elected for a period of two years; sector and issue specific committees, consisting of professionals from member companies; and a permanent staff responsible for providing support to the Board and committees, and for executing the activities necessary for the representation and advocacy of the interests of the Brazilian chemical industry. Abiquim is a member of the Brazilian Business Coalition (Coalização Empresarial Brasileira – CEB), of the Mercosur Chemical Industry Council (Conselho da Indústria Química do Mercosul – Ciquim), and the International Council of Chemical Associations (ICCA). Abiquim also supports the secretariat of the Brazilian Chemistry Committee (Comitê Brasileiro de Química - CB-10), of the Brazilian Technical Standards Association (Associação Brasileira de Normas Técnicas – ABNT). This institution organizes courses, conferences, seminars and other events, to promote capacity building, networking and experience sharing among its members, and the discussion of relevant issues. It also produces several technical publications, such as the Manual for Handling Emergencies in the Transport of Dangerous Goods, known by users as the “Pro-Quimica Manual”. Abiquim’s webpage at www.abiquim.org.br, provides information about the Brazilian chemical industry and also about activities carried out by Abiquim.

1.2 Objectives of this publication This document presents information about the Brazilian chemical industry represented by Abiquim, as a contribution made by this segment to the United Nations Conference for Sustainable Development (UNCSD) – Rio+20.

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2 Economic, social and environmental characteristics of the segment

2.1 Economic characterization The net income of the Brazilian chemical industry, considering all its different segments, reached an amount of R$ 226.4 billion in 2010, a 12.5% increase from 2009. In US Dollars, the net income hit a record of US$ 128.6 billion, which is 27.0% higher than the previous year. Industrial chemicals, with sales of R$ 107.7 billion, or US$ 61.2 billion, accounted for 48% of the total net income of the chemical industry in 2010. The segment of pharmaceutical products, with a net income R$ 36.2 billion (or US$ 20.6 billion) was responsible for 16%, while all other segments taken together accounted for 36% of the total, as we can see in Figure 3.

Figure 3. Composition of the net income of the Brazilian chemical industry, by segments (2010) (in US$ billion)

Source: Abiquim, 2011.

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This volume of sales of the Brazilian chemical industry puts the country in the seventh place amongst the most important chemical industries in the world, in 2010. It is important to note the recent leadership attained by China, who has just overtaken the United States as the most important world producer. In numerical terms, the Brazilian chemical industry has more than four thousand large, medium and small size companies, distributed across nearly all Brazilian States. The State of São Paulo, however, accounts for almost half of this total, followed by the States of Bahia, Rio de Janeiro, Rio Grande do Sul and Minas Gerais.

Figure 4. Ranking of national chemical industries by country Country

Income

China

903

United States

720

Japan

338

Germany

229

Korea

139

France

137

Brazil

128

India

125

Italy

105

United Kingdom

94

Russia

83

The Netherlands

73

Spain

70 Sources: ACC, Cefic and Abiquim.

Despite its size, the trading of chemicals in Brazil has shown a sequence of successive and increasing deficits in the foreign trade balance, as Figure 5 shows. The causes for this imbalance are many, and have been an Abiquim priority for many years. The elimination of the trade deficit based on strengthening national production and defending the industry from foreign competition has demanded active work from the association, either by supporting the Brazilian government at international trade negotiations or by promoting the use of other trade measures or incentives. The Brazilian chemical industry exports have shown a significant growth of 25.3% in 2010, reaching the total of US$ 13.08 billion. In contrast, imports also rose by 29.1%, reaching US$ 33.75 billion, resulting in the worsening of the trade deficit in chemicals, which jumped from US$ 15.71 billion in 2009 to US$ 20.67 billion in 2010. This year, it is possible to see an overall increase in chemicals demand in the domestic market, but the general increase of demand of manufactured goods in the Country, as-

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sociated with the global recession on the international market (resulting in global over supply), has encouraged an increase in the participation of imported products in the Brazilian economy. This year, imports from the sample of Abiquim’s Dynamic Information System (Sistema Dinâmico de Informações – SDI) increased, in volume terms, by 22.6%. This situation got worse by the combination of some other factors: incentives to imports offered by some Brazilian States, at the expense of the national producers, and also a greater volume of imports of finished products, which indirectly reduces the internal demand for intermediate chemicals. The segment of industrial chemicals has made important investments to increase capacity in recent years, especially in the case of basic petrochemical products and thermoplastic resins. However, the largest part of the growth in consumption of chemical products in the domestic market originated from the increase in imports.

Figure 5. Brazilian trade balance in chemicals (in US$ billion)

Source: Abiquim, 2011.

According to IBGE data, the participation of the Brazilian chemical industry in the Gross Domestic Product (GDP) was 2.5% in 2010. Considering the whole Brazilian industrial complex, in 2008 (the latest data available) the chemical segment was in fourth position, being responsible for, approximately, 10% of the total GDP of the transformation industry.

Figure 6. Participation of the Brazilian chemical industry in total GDP (%)

Sources: Abiquim and IBGE, 2011.

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2.1.1 Industrial chemicals In 2010, the segment of industrial chemicals had US$ 61.2 billion in sales, which represents 47% of the income generated by the chemical segment as a whole. Abiquim member companies accounted for almost 85% of the total income generated by the industrial chemicals segment. Figure 7 shows the breakdown per group of products, and Figure 8 shows how income has varied between 1990 and 2010.

Figure 7. Distribution of industrial chemicals sales in 2010 (in US$ billion)

Source: Abiquim, 2011.

Figure 8. Sales evolution in industrial chemicals

Source: Abiquim, 2011.

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2.1.2 The production of industrial chemicals by Abiquim members It is also important to present the variation of production as reported by Abiquim members, provided for the generation of indicators of performance in health, safety and the environment, sent by a group of approximately two hundred and fifty industrial units, owned by one hundred and ten chemical companies. In ten years, between 2001 and 2010, production increased from thirty-two million tons to almost fifty-two million tons, an increase of 62%. In terms of the production transported, the increase was even higher, rising from twenty million to forty-four million, a rise of 120% in the period, showing the decentralization of the activities of the value chains of the segment. It is also worth mentioning that almost all the increase was absorbed by road transport, which concentrates nearly 80% of the total transported in Brazil, followed by rail and sea transport, with 10% each.

Figure 9. Production and transport figures, 2001 to 2010

Source: Abiquim, 2011.

2.1.3 Investments in the industrial chemicals segment A study conducted by Abiquim shows that companies operating in the segment of industrial chemicals plan to make investments totaling US$ 22.0 billion in Brazil up to 2016. Out of this total, US$ 7.6 billion go for projects that have been approved and are currently in progress. Another US$ 3.3 billion are miscellaneous investments in maintenance, process improvement, safety, environment and also replacement of equipment, among others. However, the projects that are still under consideration, corresponding to investments of US$ 11.1 billion, represent the largest single component.

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Comparing this data results from the survey covering the period between 2010 and 2015, there was a decline of approximately 10% in declared investment intentions. The value of investments at the end of 2010 came to US$ 24.7 billion. At present, some important projects are still at the planning stages, meaning that it is not possible to give precise information regarding actual investment values for the incoming years. In the study, companies’ estimates suggest that the planned investment projects up to 2016 may generate some four thousand five hundred new direct jobs in the segment. The breakdown of total investments by year is shown in Figure 10, and those by State in Figure 11.

Figure 10. Planned and completed investments in industrial chemicals

(*) Many investments have started before 2010, since the time for maturing many projects takes three to four years. Source: Abiquim, 2011.

Figure 11. Total sums invested in industrial chemicals by State

(In US$ billion)

Source: Abiquim, 2011.

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In the Chemical Industry National Pact, a document recently prepared by Abiquim to show challenges and opportunities to expand the Brazilian chemical industry, there is an indication of areas that could require investments of up to US$ 167 billion by 2020 (see Figure 10), out of which US$ 110 billion may be made in the industrial chemicals segment.

Figure 12. Investment opportunities in the Brazilian chemical industry by the year 2020, according to the Chemical Industry National Pact

Source: Abiquim, 2010.

Such opportunities are related to the strategic intention of “positioning the Brazilian chemical industry as one of the five largest in the world by 2020, allowing Brazil to produce a surplus in chemical products and also become the market leader in products from biomass and/ or green chemistry”. From this standpoint, the declared investment intentions, even including the projects now under feasibility evaluation, are clearly insufficient to supply the market, and revert the current trade balance deficit situation in chemicals. (Please see Figure 5). To allow the country to move towards the opportunities mentioned in the Pact, investments at least three times higher then those signaled in the study are needed. This disparity between intentions and opportunities as suggested by the Pact shows that there is still a lack of competitive conditions for the full development of the chemical industry in Brazil. As a first step to get new investments off the ground, companies with plants in operation in the country need to raise the level of capacity utilization of the existing plants. Next, to effectively unlock the investments and also attract new capacities, there is a need to eliminate some obstacles, as follows: a) access to basic and raw materials that are competitive in terms of prices and also with guaranteed volumes in the long term, with supply as established by contract (this point is extremely relevant, especially in a segment which is capital intensive, such as the chemical industry); b) solution of distortions in the tax system, with the loosening of the burden across production chains

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and the application of the principle of tax isonomy among similar products, and a firm defense against unfair competition; c) Brazil also needs to speed up investments in logistics infrastructure improvement, particularly in natural gas distribution and seaports availability, roads and other modes solutions to increase the efficiency of the logistics system and, by extension, the competitiveness of the products made here. Apart from the direct benefit that the sector should have resulting from investments in infrastructure, there should also be the indirect benefits, due to the high number of chemicals used in construction and also in basic sanitation; d) State support in technological development and innovation; e) facilitated access to credit, especially by small and medium sized companies, as a way of strengthening the production chain. The completion of the investments indicated in the Pact brings important benefits for the Country. They include the creation of more than two million jobs (direct jobs, indirect jobs and by income factor), the increase in the attractiveness for direct foreign investments, the increased importance of Brazil in international trade, the encouragement of the development of the heavy industries segment, the strengthening of the capital market and also the reduction of external vulnerability. To these we also add the expansion of the potential of biomass use, the support for the development of new technologies, and the creation of a culture of innovation and research, so important for the development of the country.

2.1.4 Research, development and innovation The chemical industry needs to continually make investments in research, development and innovation, to be able to introduce new products and solutions to the market and therefore, maintaining its competitiveness. A study made by Abiquim with 316 companies in the industrial chemicals segment showed that this set, representative of the national reality, invested 0.58% of its net income in Research, Development and Innovation (RD&I) in 2010. Despite of the fact that the number is within the percentage range shown by the world commodity-producing chemical industry, it is not only 25% less than in 2007 but also 21% lower than the global chemical industry, which includes integrated companies and also producers of chemical specialties. The low level of investments in RD&I in the Brazilian industrial chemicals industry is a cause of concern for Abiquim. It is true that the leading companies do invest sums closer to the world average, but the lion’s share of the segment still lacks a tradition of technological management and is largely dependent on the purchase or the transfer of technology for products and processes to be able to keep their business activities. Factors that have contributed to this low level of investment include the interaction between universities, research institutions and companies and also the low qualification both at industry and academia for scaling-up from research laboratory size to the pilot scale, and from there to commercial scale of operation.

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Figure 13. Investments in research, development and innovation in the Brazilian industrial chemicals industry

Sources: Chemical Week Magazine and Abiquim, 2011.

2.1.5 People employed in the chemical industry Despite of the fact that the chemical industry is not labor intensive, in 2010 the chemical segment as a whole, according to data released by IBGE and Abiquim, directly employed some four hundred thousand people, as own employees, out of which more than forty thousand were linked to Abiquim member companies, comprising around 10% of the total. Abiquim member companies also reported, in 2010, another forty thousand outsourced workers. The available information, shown in Figure 14, shows a gradual increase in the hiring of new professionals by the segment as a whole, albeit Abiquim members have kept their respective workforces stable between 2001 and 2010.

Figure 14. Number of jobs in the Brazilian chemical industry

Sources: IBGE and Abiquim, 2011.

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2.1.6 The cost of labor at the brazilian chemical industry Abiquim also monitors, on a regular basis, the variation of labor costs in the chemical industry. This cost is measured in terms of the total labor costs (TLC), which includes the analysis of the following items: salaries paid (which includes the base salary, overtime and also additional pay for risk exposure and shift work), other payments in cash (including Christmas bonus or 13th salary, holidays pay, extra bonus on holidays pay, profit participation, special gratifications for positions, additional pay for redundancy with the company, advance notification for resignation, redundancy pay and also special bonuses for assiduity), social responsibilities (or compulsory responsibilities, such as the company expenses with Government pension, Time at Work Security Fund (Fundo de Garantia do Tempo de Serviço – FGTS), education allowance, work accident payments, National Institute for Colonization and Agrarian Reform (Instituto Nacional de Colonização e Reforma Agrária – INCRA), Social Service for Industry (Serviço Social da Indústria – SESI), National Service for Industrial Learning (Serviço Nacional de Aprendizagem Industrial – SENAI) and the Brazilian Support Service for Micro and Small Businesses (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas – SEBRAE) and benefits (or voluntary responsibilities such as health, recreation, food, transport, day care assistance and private pension plans). Considering the information for 2010, the breakdown of the items that make up the total labor costs (TLC) in the segment of industrial chemicals had the following behavior:

Figure 15. Breakdown of TLC costs – 2010

Source: Abiquim, 2011.

In terms of values, the average TLC per employee, calculated in United States Dollars, rose by 12.8% in 2010, compared with the mean for the previous year, going from US$ 4,925 to R$ 5,553 per month. In this same period, the salaries paid, also per employee, increased by 11.9% in United States Dollar terms, going from US$ 2,211 to US$ 2,474 per month. Figure 16 and Table 1, show how the TLC, and also the salaries paid per employee, in United States Dollars, have varied over the past 17 years.

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Figure 16. Variation of salaries paid and TLC, per employee – 1994 to 2010 (in current United States Dollars, per employee per month)

Source: Abiquim, 2011.

Table 1. Variation of salaries paid and TLC, per employee, between 2001 and 2010 (in current United States Dollars, per employee a month) Year

2001

Salary Paid

1,128

949

TLC

2,392 2.12

TLC/salary paid

2002

2003

2004

2005

2006

2007

2008

2009

2010

993

1,143

1,456

1,724

2,078

2,409

2,211

2,474

2,023

2,107

2,496

3,252

3,788

4,502

5,403

4,925

5,553

2.13

2.12

2.18

2.23

2.20

2.17

2.24

2.23

2.24

Source Abiquim, 2011.

The sums paid by the Brazilian chemical industry, according to several different salary research agencies, were the highest among all the segments surveyed within the Brazilian economy in 2010: “One of the highlights was the Chemical and Petrochemical segment, which was in first position in the ranking of best average fixed salary, being on average 6.76% above the salaries of the second-placed segment. The Chemical and Petrochemical segment also stood out as the highest-paying segment for Managers, Technicians and Interns; second place for Managers; and third and fourth places respectively for the categories of University level professionals and middle supervision” (Source: Salary Survey conducted by Catho Online). Data released by the Ministry of Labor and Employment also shows that the chemical segment pays average salaries which are well above those paid by transformation industry in general.

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Figure 17. Wage in the chemical industry and in general transformation industry

Sources: RAIS / Caged – Ministry of Labor and Employment.

The direct comparison of the TLC as calculated by Abiquim with the labor costs of the chemical segment in other countries is no easy task. There is no clarity about the methodologies used, criteria for calculation, coverage of individual samples, and other aspects, which prevents the labor factor from receiving appropriate statistical treatment. Table 2 shows the most recent data from the Bureau of Labor Statistics (based on November 2009), for the labor costs of people allocated to production (“blue collar”), in the chemical industries of 15 selected countries, for the year 2007. For purposes of comparison with other countries, the national data was informed taking into account a subsample of companies willing to supply their data regarding personnel allocated to the production area. Table 2. Labor costs for production in the chemical industry across the world (NAICS 325) Countries

Year 2007

Republic of Ireland Belgium Sweden Germany Italy Austria France England Canada United States Japan Spain Brazil Korea Taiwan Mexico

44.44 43.99 41.28 41.24 38.02 37.36 34.28 33.51 30.54 29.21 29.15 27.20 21.82 21.43 9.49 5.84 Sources: U.S. Department of Labor, Bureau of Labor Statistics (November 2009) and Abiquim, 2011.

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2.2 Social and environmental characteristics 2.2.1 Use of resources 2.2.1.1 Energy Consumption Like other industrial segments, the chemical industry makes highly intensive use of energy. According to the 2011 issue of the Report of the National Energy Balance (Balanço Energético Nacional – BEN), with data for 2010, produced by the Energy Research Company (Empresa de Pesquisa Energética – EPE), of the Brazilian Ministry for Mines and Energy (Ministério de Minas e Energia – MME), the chemical industry consumed 7,443x103 (seven million, four hundred and forty-three thousand) tons of oil equivalent on their facilities (Table 3). Data supplied by Abiquim members show a total of energy consumed very close to this figure, of 7,806x103 TPE (seven million, eight hundred and six thousand). These figures mean that the chemical segment has been responsible for about 8.7% of the Brazilian industrial energy consumption, or 3.1% of total energy consumption in 2010. Once again, the data of relative distribution between the energy sources that constitute the matrix of the sector as presented by Abiquim (Figure 18) and by BEN (Table 4) show that the sector makes use of about 20% of total energy from renewable sources, and 80% from non-renewable sources, due to the prevalence of consumption of energy for heat generation, which accounts for 78% of total consumption, mostly supplied from fossil sources (Figure 19). Even though the participation of renewable energy has been increasing every year, due to the efforts made by the segment in diversifying energy sources and increasing the participation of renewable energy in the general matrix, fossil fuels continue to be the most important element of energy for heat purposes in the chemical industry, due to its availability and reliability. The trend shows an increase in the participation of renewable energy sources for heat generation, mainly in the locations where there is availability of wood, bagasse and cane straw, these last elements coming from processes based on biorefineries and first-generation alcohol producing units with integrated chemical factories.

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Table 3. Energy consumption of the Brazilian chemical segment

Source: National Energy Balance Report (Balanço Energético Nacional – BEN), 2011.

Figure 18. Energy supplies distribution of Abiquim member companies

Source: Abiquim, 2011.

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Table 4. Energy supplies distribution for the chemical segment

Source: National Energy Balance Report (Balanço Energético Nacional – BEN), 2011.

In absolute terms, energy consumption has remained stable around eight million TPE/ year, between 2001 and 2010, varying according to fluctuations in production and also in the balance in the use of energy supplies. As we can see in Figure 19, the electricity consumption alone showed a consistent increase in this period, rising from 1.267x106 TEP/year to 1.707x106 TEP/year, up almost 35%. This can be explained mainly by the need for greater transfer and pumping of products in production processes and also in distribution, motivated by the increase in production.

Figure 19. Total energy consumption in the chemical industry

Source: Abiquim, 2011.

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In spite of the fact that the absolute consumption of thermal energy in the chemical industry has remained stable in the period, there was an important change in the mix of supplies used, with the reduction of 6%% in the consumption of fuel oils. Natural gas and renewable fuels replaced them, with the total energy consumption remaining more or less constant, as Figure 20 shows.

Figure 20. Distribution of thermal energy consumption in the chemical industry

Source: Abiquim, 2011.

Energy savings The chemical segment has been making a great effort to increase energy efficiency. Initially, between 2001 and 2005, companies pursued to reduce the use of liquid fuels, especially fuel oils, replacing them with natural gas, and also investing in boilers and other energy related equipment. Due to the higher efficiency in natural gas burning and also the absence of the need to heat up the gas prior to burning, losses were reduced. At the same time, companies invested in energy management, focusing on steam economy, co-generation and also on saving electricity, by using more efficient motors and illumination. On top of this, we add the start up of new industrial units, which bring in technologies that are more energy efficient. The stable consumption in absolute terms meant a significant effort to save energy, considering that, between 2001 and 2010, as already mentioned, there was an increase of 62% in production. As a result, the consumption intensity (or specific consumption) related to production showed an equivalent decline. As one can see in Figure 21, the saving was made at the thermal sources, with a 60% reduction, while the other 2% came from saving electricity.

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Figure 21. Intensity of energy supplies consumption in the chemical industry

Source: Abiquim, 2011.

Figure 22. Consumption intensity of electricity in the chemical industry.

Source: Abiquim, 2011.

It is also interesting to note that Abiquim members managed, between 2001 and 2010, to reduce their energy consumption by company by almost 10%, while the production increased by 55%, as can be seen in Figure 9.

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Figure 23. Energy consumption and annual production of Abiquim member companies

Source: Abiquim, 2011.

2.2.1.2 Raw Materials The industrial chemicals industry uses a range of different raw materials, both organic and inorganic, for synthesizing their products. In Brazil, the main organic raw materials sources are natural gas (as a source of methane), ethane and propane, the liquid oil by-products (naphtha and refinery condensates) and, more recently in larger quantities, biomass (especially ethanol). In our country, mineral coal, shale oil and the new option of shale gas are not important sources at this time. Due to the favorable conditions that Brazil enjoys in the agricultural area, there has been an increase in the use of raw materials derived from biomass, in particular ethyl alcohol (ethanol) produced by the microbiological fermentation of sucrose from sugar cane, and sucrose itself. New technologies for the production of “second generation” ethanol (coming from cellulose) and other alcohols through fermentation should increase the availability of renewable raw materials for the chemical industry. In addition, the introduction of technologies to allow the use of glycerin obtained from the production of biodiesel for the production of propene; and for the production of synthesis gas through thermochemical processes based on biomass, has the potential to increase the use of raw materials of renewable base in the Brazilian chemical industry in this decade. It is estimated that by 2020 there will be a participation of almost 10% of products made from renewable raw materials in relation to the total supply of petrochemical products.

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However, despite the favorable expectations, we do not see the moment, at least in the incoming 30 years, when these renewable options will exceed petrochemical production. However, they constitute an excellent option for the production of greater added value chemicals, now as well as in the longer term. Another part of the industry processes inorganic raw materials for the production of chemical substances. Among these, we can mention sulfur (S), calcium orthophosphates and also sodium chloride (NaCl).

Table 5. Consumption of the main raw materials in the Brazilian chemical industry (2010) Organic Raw Materials

Annual Consumption

Inorganic Raw Materials

Annual Consumption

Naphtha

10.0 million tons

Sodium Chloride

2.4 million tons

Natural Gas

1.2 million cubic meters

Sulfur

2.3 million tons

Ethane and Propane

0.5 million tons

Phosphate Rock (P2O5)

1.3 million tons

Ethanol

20 thousand tons Sources: Abiclor, 2010 and Abiquim, 2011.

2.2.1.3 Water Consumption The chemical industry, like many other economic activities, needs a significant quantity of water for the manufacture of its products. In most cases involving organic chemistry, water is predominantly used in production processes (for cooling and for steam generation, for example) and is not incorporated into the final products themselves. In the case of inorganic chemistry, apart from use in the manufacturing processes, there is incorporation of water into the main products, such as caustic soda and intermediates for fertilizers. Information obtained by Abiquim from its members for the purpose of the publication of the “Responsible Care Performance Indicators Report” allows the demonstration of the variation in water consumption between 2001 and 2010. Abiquim’s members have kept absolute consumption relatively constant, around three hundred million m3/year. Considering a per capita consumption of two hundred liters of water per year, the consumption of the chemical industry associated to Abiquim is comparable to a city of four million, one hundred thousand inhabitants. The main water supply sources are surface waters (rivers), coming from companies own systems or from water companies, which supply about 80% of the demand. The remaining 20% comprises underground water, seawater and other sources.

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Figure 24. Absolute consumption of water among Abiquim’s member companies

Source: Abiquim, 2011.

Water savings Similarly to the energy case, the maintenance of a stable absolute water consumption in times of production increase shows the significant efforts member companies have made over the past ten years to save water. As Figure 25 shows, the stability in absolute consumption has made the consumption intensity in processes and products, measured in m3/t of product, fall by 34%, due to the increase recorded in production over the period. The main causes for the savings recorded by the group of member companies can be linked to the reduction of effluents, steam economy and, significantly, the recycling of liquid effluents by some hydrointensive producing units (see the chapter about effluents, to follow). It is expected that the consumption of water per ton of product should become stable over the next five years, since most actions towards reduction in water use and also the investments in present units have already been made. New reductions may occur due to the start-up of new units with more water efficient technologies.

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Figure 25. Water consumed in the chemical industry in processes and products

Source: Abiquim, 2011.

This savings not only result in lower consumption with preservation of natural resources, but also has relevant economic importance. Considering an average cost of R$ 0.70/m3 for “new” water entering production processes, we can say that Abiquim member companies, taken together, spent R$ 2.22 less per ton of product made in 2010 than if they had kept the same consumption rate they had in 2001. In all, the total saving results in more than R$ 115 million or US$ 65 million this year alone.

Figure 26. Intensity of water consumption among Abiquim members and the equivalent economic savings

Source: Abiquim, 2011.

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Environmental aspects Air emissions Characterization and quantification The industrial chemicals industry is highly diversified, but the atmospheric emissions do not follow this characteristic. Most processes only release carbon dioxide and water, whether as a result of fuel burning or of chemical reactions in which these same substances are involved. In smaller proportions, there is also the release of other gases, mainly methane (CH4), nitrous oxide (N2O), nitrogen oxides (NOx), and sulphur dioxide (SO2). The first two compounds are greenhouse gases (GHG), released as a result of synthesis reactions. The last two, which are acid gases, are associated with acid rain; sulfur dioxide (SO2) can be released from sulfuric acid plants as an emission from manufacturing process, or as an emission of the burning of sulfur containing fuels. Finally, NOx comes from the burning of fuels only. Abiquim annually informs CO2 and SO2 emissions, for the purposes of producing its Atuação Responsável Report in the areas of health, safety and the environment (HSE). The information about N2O and CH4 were collected from twenty different companies and were presented in full detail in the document produced by Abiquim: “Quantification of gas emissions with the potential to generate greenhouse effect in production processes: Chemical Segment”, 2009, sent to the Ministry of Science, Technology and Innovation (Ministério da Ciência, Tecnologia e Inovação – MCTI), to comply with the requirements of the Convention on Climate Change. In this document there is information about process emissions from the production of acrylonitrile, adipic acid, phosphoric acid, nitric acid, ammonia, caprolactam, dichloroethane and vinyl chloride, ethane, titanium dioxide, methanol, carbon black, ethylene oxide (oxirane), and urea. The analysis of the information received shows, as we had anticipated in the presentation of the energy consumption in the chemical industry, stability at the absolute value of CO2 emissions from burning of fossil fuels. In the case of emissions from chemical processes, the absolute increase mentioned in Figure 27 is due to the increase in the production from these processes, related to the growth of the Brazilian economy in this past decade. Differently from cases where fuel is burnt, in which there is room for additional efficiency gains, synthesis processes generating CO2 as a by-product have much tougher room for improvements, since their efficiencies depend on stoichiometry (the proportion between reagents and products) of the synthesis reaction of each case.

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Figure 27. Emissions of CO2 in absolute terms, in combustion processes

Source: Abiquim, 2011.

In the case of sulfur dioxide, as shown in Figure 28, the stability in the emission from the process is due to the maintenance of the sulfuric acid plants production level, as they constitute the main emitting sources. In the case of combustion emissions, the variation follows the change of fuels as mentioned (fuel oil and coal to gas and biomass), the substitutes having much lower sulfur contents in their composition than the original ones. The oscillations seen in the period can be explained by changes in the mix of fuels used and the corresponding sulfur content.

Figure 28. Emissions of sulfur dioxide in combustion and processes

Source: Abiquim, 2011.

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Efforts towards reduction The analysis of the intensity of emissions demonstrates the level of effort that the industrial chemicals industry has made to reduce its emissions. Companies, encouraged by Atuação Responsável, have voluntarily reduced greenhouse gases (GHG) emissions via the implementation of Clean Development Mechanisms (CDM) projects and by adopting cleaner production technologies. As a result, as can be seen in Figure 29, the intensity of emissions of carbon dioxide (CO2), nitrous oxide (NO2) and methane (CH4) has gone down significantly between 2001 and 2010. Total emissions for the whole chemical production was 47% less, due to savings in fuel consumption, increased participation of biomass (see Figure 30) and, more importantly, thanks to investments made to reduce N2O and CH4 emissions, in particular in the production of adipic acid. Combining all these factors, the Brazilian industrial chemicals sector has achieved a prominent position among the global chemical industry, represented by the International Council of Chemical Associations (ICCA). Data compilation received by this institution from forty chemical associations across the world confirms that the intensity of greenhouse gases emissions needed to produce chemicals in the Brazilian chemical industry is well below the international average. In 2007, the last year with consolidated information, it was 43% below the ICCA level as a whole (please see Figure 31).

Figure 29. Intensity of emissions of greenhouse gases from Abiquim members

Source: Abiquim, 2011.

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Figure 30. Reduction in the intensity of combustion emissions with the increase in the quantity of biomass in the fuel mix used by Abiquim members

Source: Abiquim, 2011.

Figure 31. Comparison between the Brazilian chemical industry and the world average for the segment.

Source: Abiquim, 2011.

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Opportunities for reducing greenhouse gases emissions In spite of everything that has been done, there are still opportunities for further reductions in the intensity of greenhouse gases emissions from the chemical industry in the incoming years. Abiquim considers that these opportunities may arise from: • Continuation of efforts to save energy at existing installations (process improvements, bottlenecks removal, acquisition of more efficient equipment, etc.); • Construction of new production units with more efficient technologies which use less energy and have greater production capacities; • Increased use of renewable sources of energy (biomass) in the energy matrix and continuity in the trend to replace liquid fuels by gaseous ones; and • Increased use of renewables in raw material sources for chemicals production.

Waste generation Characterization and quantification The chemical industry generates wastes in its industrial processes in other operations that support production. Part of them is classified hazardous and part as non-hazardous, according to Brazilian legislation, which follows standards similar to those present in developed countries with a greater degree of industrialization. Waste management depends on the classification of the wastes in question and, whenever technically and economically feasible, follows the concept of sequential priority of reduction, reuse, recycling, treatment and final disposal. However, there are differences in the logic of waste generation from production processes (whether hazardous or not) and general waste. In the case of the former, the quantity of waste is a function of the stoichiometry of the synthesis reactions, the efficiency of the technology used and the management of operation as such. In the case of the latter, generation is a function of administrative support activities characteristics and their management. From 2001 to 2010, the total quantity of waste generated, in absolute terms, has followed the increase in chemical production. However, when we look at the generation of hazardous waste alone, we see that its increase has been proportionally larger than production; this can be explained by the gradual increase in production of chemicals that generate more hazardous waste in Abiquim member companies production mix.

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Figure 32. Waste generated by the chemical industry

Source: Abiquim, 2011.

However, as Figure 33 also shows the stability in the intensity of generation of total wastes, related to the proportion to the total quantity of products. This shows that the industry is getting close to the limits of its current technologies, and the difficulty of reducing the intensity of generation of solid waste is, indeed, one of the major challenges for this segment in years to come.

Figure 33. Intensity of generation of solid waste in the chemical industry

Source: Abiquim, 2011.

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Opportunities for reducing solid waste generation The logic of the waste generation shows that, differently from the case of air emissions, where different possibilities of obtaining more significant reductions may be found, there are technical limits that are more difficult to overcome in order to obtain reductions in waste generation from production processes. Even so, it is possible to see some improvements over the next few years, as a result of: • Start up of new production units using more efficient technologies; • Better use of waste streams, with the identification of new methods of incorporation into other products, thereby reducing disposal; • Use of more selective raw materials or catalysts in some processes; and • Better routine maintenance operations and planned large maintenance shutdowns in production units.

Effluents discharge Characterization and quantification Likewise the case of air emissions, the volume of effluents discharged by Abiquim members remained stable throughout the past decade; in fact, there was even a reduction of 13% when figures from 2001 and 2010 are compared, as can be seen in Figure 34. In this same Figure we can see the main cause for this stability: the increased level of effluents recycling, which soared from less than 5% of the volume released in 2001 to an average of 30% registered since 2003. However, the volume of effluents released is equivalent to the volume of treated sewerage of a one million eight hundred thousand inhabitants city. It is also worth highlighting the fact that the nitrogen content in the effluent, one of the indicators of quality as required by the legislation, despite its fluctuation, is still within the legal standards for pouring into water bodies, considering the precision of the information, as Figure 35 shows.

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Figure 34. Generation of liquid effluents by the Brazilian chemical industry

Source: Abiquim, 2011.

Figure 35. Total nitrogen in effluents from the chemical industry

Source: Abiquim, 2011.

Reduction of impacts and costs The reduction in the volume of effluents discharged, together with the increased production of the segment between 2001 and 2010, has made the discharge intensity, measured in m3 per ton of product, fall by 60%. The combined efforts in controlling water consumption and effluent discharge have allowed the sector not only to keep the environmental impact under control (even with a small reduction), but has resulted in a reduction of R$ 3.89/m3 in the costs of effluents treatment in 2010, had the rates of 2001 been maintained. This means that this segment saved some R$ 470 million (US$ 270 million) in 2010 alone by better managing its effluents.

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Figure 36. Discharge intensity and treatment cost of effluents in the chemical industry

Source: Abiquim, 2011.

Environmental investments and costs Abiquim member companies closely control costs and investments made to run its activities, which include management systems and equipment used for environmental control in their production units. Figure 37 shows those investments and costs exclusively related to environmental control and management at production sites.

Figure 37. Investments and costs related to the environment among Abiquim member companies

Source: Abiquim, 2011.

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Social Aspects Qualification of Labor The chemical industry is intensive in terms of capital and technology, and its manufacturing processes are mostly fully automated. As a result, the industry is not labor intensive, but, on the other hand, relies heavily on highly qualified personnel, which receive very competitive salaries and benefit packages, when compared with other segments in the national economy (please see item 2.1). The need to have highly qualified personnel means that the educational level in the chemical industry is high. As can be seen in Figure 38, the educational level in the chemical industry is above the average of the transformation industry in general; in addition, it proportionally employs more professionals with university degrees and postgraduate level, even though the number of people employed at this later level is still low and should be expanded. Several university level professions constitute companies’ workforce but, as one might have anticipated, some 20% of those employed have degrees in chemistry or chemical engineering.

Figure 38. Educational level in the chemical industry

Sources: RAIS / Caged – Ministry for Labor and Employment.

Employment by gender Abiquim does not conduct research on the division of employment by gender in the chemical industry. This issue is no longer relevant for the segment due to the culture of equal opportunities for men and women existing in human resources policies of its member companies.

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Health and Safety Safety in the workplace The analysis of performance on occupational health and safety at Abiquim member companies between 2001 and 2010 confirms the efforts made to prevent accidents and, should these occur, to make them as mild as possible. As figures reported, most companies achieved levels comparable to the best international standards for the segment, when benchmarked with data reported by the International Council of Chemical Associations (ICCA), and also national associations that have national Responsible Care® programs in place. The total number of occupational accidents by company, which includes those with and without loss time for all workers in the industry, was reduced by 54% over ten years, as shown in Figure 39. Taken in isolation, the reduction on accident rates among contracted workers is even more impressive, registering a reduction of 62% over this same period, while the reduction of accidents involving own workers came down 43%.

Figure 39. Accidents rate with and without loss time at Abiquim member companies

Source: Abiquim, 2011.

The results on occupational accidents regarding working lost time rates show the same behavior and even more significant values. Once again, taking the set of all workers, we obtain a reduction of 48%: 67% for contracted personnel and 13% for own workers.

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Figure 40. Accident lost time rate at Abiquim member companies

Source: Abiquim, 2011.

When comparing accident rates of countries with the largest chemical industries in the world (with the exception of China) and also the set of associations that report their data to ICCA (an average of thirty-two associations per year), it is possible to say that Abiquim members results are better than the ICCA average and also better than the results posted by Germany, but still worse than those reported by the United States and by Japan. This fact encourages Abiquim to work for even better results in the incoming years. Figure 41. Accident rate with and without lost time in the global chemical industry

Sources: Abiquim, 2011 and ICCA, 2010.

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The reduction on the rate of occupational accidents is very important; nevertheless, it is as important as the reduction of the severity of such accidents. Between 2001 and 2010, there was a reduction of 41% in the severity rate for the set of all workers, with 44% for the contracted workers and 43% for own workers. We regret the loss of thirty-six workers over these ten years and the incapacitation of twelve more. Figure 42 shows an important piece of data: notwithstanding the fact that the chemical industry deals with hazardous processes and products, process accidents (normally caused by equipment failure) led to the deaths of seven workers, or 25% of the total. On the other hand, this figure also shows that there is a need to reinforce awareness raising regarding typical occupational safety among workers.

Figure 42. Severity in occupational accidents among Abiquim member companies

Source: Abiquim, 2011.

Figure 43. Number of deaths caused by accidents among Abiquim member companies

Source: Abiquim, 2011.

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Figure 44. Number of accidents that generated disabilities among Abiquim member companies

Source: Abiquim, 2011.

Taken together, these results show that accidents in the chemical industry represented by Abiquim have become less common and that the severity of such accidents is falling at more significant rates, meaning that, in addition to being less common, the accidents have been less serious. It is worth registering the fact that the rates achieved by companies reflect the importance given by them to level the safety rates of own and contracted workers. In the segment, outsourcing is not a factor contributing to increase work-related accidents.

Safer workplace Despite the positive results obtained, there is still a long way to go, because in terms of safety, the target must always be “zero accidents”. In this regard, companies have invested and made individual actions to improve their processes, controls, the qualification and also the safety culture of the professionals working for them, whether own or contracted from third parties. At the same time, they are fully aware of the importance of promoting collective actions, based on Responsible Care, such as mutual support to those with less performance, as a way of speeding up the reduction and also exceeding current limits.

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Process and transport safety. Process safety Albeit this is not a general rule, the chemical industry dedicated to producing industrial chemicals employs processes, raw materials and products with different levels of risk. Consequently, companies may face events in their operations that may impact workers, the environment, nearby communities as well as their own installations. Thanks to investments and safety enhancements in operational and maintenance practices, the overwhelming majority of process related accidents among Abiquim members has been of minor severity. To prevent such accidents to happen, companies have made heavy investments in sophisticated control systems and equipment to improve process safety at existing plants and have required strict safety standards in the project and construction of new ones. Also worth noting are the investments made by companies in capacity building of their operation and safety professionals and in the development of a culture of safety. Safety inspections are important preventive tools used to identify possible risk situations and act to eliminate them, whenever possible. Abiquim members have been active in doing safety inspections for many years, as Figure 45 shows. It is worth noting not only the number of inspections as such, but also, the amount of items solved as a result of the inspections made has increased over the years, with an efficiency of items resolved around 90% (workplace safety inspections included in have included inspections for against work accidents).

Figure 45. Safety inspections among Abiquim members

Source: Abiquim, 2011.

Between 2001 and 2010, companies managed to keep their operations under control, but still not succeeding in avoiding process accidents to happen, as Figure 46 shows. The figure also shows that the consequences of the accidents registered varied, but none of them has been considered a major industrial accident, the focus of ILO Convention No. 174, adopted by Brazil. One cannot deny that some of these accidents

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have unfortunately caused injury or even death of workers, but none of them have brought consequences to neighboring communities or to the environment. Process events in the chemical industry, considering those among Abiquim member companies, have mostly been limited to damage to company property, restricted to the internal environment of the industrial units. Figure 46. Process safety events in the chemical industry

Source: Abiquim, 2011.

Safer processes Abiquim members consider that all accidents can be avoided, and this belief encourages companies, through the Responsible Care Program, to seek the ultimate target of “zero accidents”. Indeed, it is possible to reduce the occurrence and gravity of events in industrial processes, and there are some alternatives that have been implemented by member companies, which will be enhanced in the incoming years: • Use technologies and systems that are safer, in particular on critical equipment at existing chemical units and in the project of new ones (in this case, seeking to avoid, for example, consequences like the “domino effect”, that could affect several units or parts of one same unit); • Increase the awareness knowledge of process operators and maintenance technicians, about the risk scenarios of their units and activities; • Reduce inventories of hazardous substances in processes and inventories. The paths of chemistry Another characteristic of the industrial chemicals sector in Brazil is the need to transport its products, many of which are hazardous, between manufacturing units and their customers. Here, as already mentioned, there is a predominance of road transport for the transport of chemicals, just like the transport of products in general. As a result, a growing number of trips made by trucks transporting chemicals take place in Brazil every year, with no change in this situation anticipated in the next 20 years.

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The results of the dependency on road transport are higher logistic costs, increases in the odds of accidents involving hazardous products, and traffic problems in some cities. Sao Paulo city, the country economic center, for instance, has limited the number of hours trucks may circulate in the urban area, producing huge impacts on the transport of goods not only in the city and the urban area, but also in many other cities across the Country.

Figure 47. Number of trips per year transporting chemicals by road

Source: Abiquim, 2011.

Transport Safety Transport Safety, aiming at reducing accidents outside industrial units, demands a structure in place not only to prevent them from happening, but also to give rapid response whenever they actually take place. Such a structure involves chemical companies themselves, transport companies, companies providing emergency services, the highway police, the Fire Brigade, the Civil Defense, environmental organizations and health services. The dependency in road transport imposes special attention on the chemical sector in terms of the quality of the roads used and the qualification of transport companies chosen for the job. On their part, Abiquim member companies, whether chemical producers or transporters, have improved their controls at all stages of the transport process, seeking to prevent accidents and, should they occur, minimize their consequences to people, the environment and to property. Companies efforts have not been enough to eliminate accidents, but their frequency, measured in accidents per 10,000 trips, has shown little variation between 2001 and 2010, as Figure 48 shows.

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Figure 48. Accidents on road transport of chemicals

Source: Abiquim, 2011.

Safety management in the transport of chemicals in Brazil has been concentrated on the prevention of accidents. In this regard, some points are worth noting: transport companies have made remarkable improvements in their culture of safety and management systems, have provided better training for logistics operators, particularly the drivers, and have spread the use of monitoring systems in their fleets; chemical companies have tightened their control and increased the level of demand when hiring transport companies (see more at item 4.4, on the SASSMAQ system), and have increased the use of CIF mode freight services and reduced the FOB ones, adding more control over the transport used by their customers. Of particular importance, major investments have been made by transport companies in transport equipment, which has led to a gradual decline in the age of vehicles used. Currently, Abiquim transport member companies have fleets with an average age of five years, while chemicals transport companies in general have an average fleet age between seven and ten years, compared to almost twice recorded just ten years ago. New vehicles reduce the risk of accidents and also use less fuel per transported ton by kilometer travelled, thereby contributing to reduce greenhouse gases emissions. The external factors that have an effect on the number of accidents counterbalance these internal actions. Statistically, the increase in the number of transport trips, as shown in Figure 47, already brings in an increase on the risk of accidents, as there are more vehicles in transit. Other factors that increase the risk and that must also be considered are: the gradual worsening of the conditions of many roads used, and also the higher number of other vehicles in circulation, which has generated more collisions that end up involving the ones used in the transport of chemicals.

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The importance of transport safety has made Abiquim develop instruments to support it. Since 1989, Abiquim operates Pró-Química, an emergency information center dedicated to provide support during transport (and also in other chemical related) accidents. Abiquim also produces the Brazilian version of the manual for emergency response in transport; manages the SASSMAQ system for assessing transport companies management on quality, health, safety and the environment, as well as the Olho Vivo na Estrada (Close Attention to the Road) program, aimed at increasing the safety awareness level of drivers transporting hazardous products.

Opportunities for improvement The numbers show stability in the frequency and severity of accidents in the transport of chemicals in Brazil. This fact in itself is highly relevant, considering the increased risk of accidents in recent years, due to the higher quantity transported (more trips), on roads that get busier every day. The chemical segment feels it is possible to reduce accident rates in the transport of chemical products in the medium term, but to achieve better numbers it will be necessary to: • Reduce the proportion of cargo transported by road, increasing the participation of rail and sea transport; • Continue the process of improving road transport companies, using SASSMAQ as a reference, the investments in equipment to control fleets and also the capacity building of logistic operators, drivers in particular; • Invest in the design of new transport equipment, to make them more resistant in the event of a collision; and • Improve the quality of the roads used to transporting chemicals, especially the hazardous ones.

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3 Economic, social and environmental regulations which affect the segment

3.1

Main agreements and international regulatory aspects relevant to the segment: characterization of the international regulatory environment of interest to this segment

The industrial chemicals segment is affected by international agreements and regulations, both at a global level and within the Mercosur. Therefore, this segment must comply with all agreements and foreign trade regulations and also those intended to control the international transport of chemical products. International Conventions and other non legally binding (voluntary) instruments, covering processes and also different products or families of products, have been developed and implemented as a result of global concerns about pollution, climate change, and the effects of synthetic chemicals and waste on human health and the environment..

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Table 6. Main international instruments associated to industrial chemicals production

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Instrument

Purpose

UN Recommendations for the Transport of Dangerous Goods (non-binding) and Maritime (IMO) and Air Regulations (IATA) (mandatory)

To provide the parameters to ensure safety in international transport of hazardous products and also to be a reference for national legislation on the issue.

1956

Vienna Convention

Protection of the stratospheric ozone layer.

1983

Basel Convention

Trans boundary control of hazardous waste

1988

Montréal Protocol

Definition of parameters and substances to be eliminated as part of the implementation of the Vienna Convention.

1989

ILO Convention 170

To control exposure to hazardous chemicals in the workplace.

1990

United Nations Convention on Climate Change

Control of greenhouse gases (GHG) emissions and mitigation of the consequences of climate change.

1992

Convention for the Prohibition of Chemical Weapons

Elimination of arsenals of chemical weapons, and prevention of production or use of substances as chemical weapons precursors.

1993

ILO Convention 174

Prevention of major process accidents at industrial plants.

1993

Rotterdam Convention

To implement the Previously Informed Consent for the International Trade of Certain Chemicals and Hazardous Pesticides (PIC).

1997

Stockholm Convention

Elimination of the production and emission of Persistent Organic Pollutants (POPs).

2001

Globally Harmonized System for the Classification and Labeling of Chemical Substances (GHS) (non-binding)

Harmonization of the classification and labeling of chemicals on a world basis (except for the transport of hazardous chemicals)

2001

Strategic Approach for the International Chemicals Management – SAICM (non-binding)

Co-ordination of international action to ensure the compliance with the text of the caput of Paragraph 23 of the Johannesburg Plan of Implementation, which establishes the “2020 target” of minimization of all significant adverse effects to human health and the environment.

2006

International legally binding instrument on Mercury

Reduce the use of Mercury and increase the capacity of safe storage of this substance; reduce the demand for mercury in products and processes; deal with the aspects related to wastes containing mercury.

Under negotiation

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Entry into Force

3.2

Main national normative instruments (voluntary and compulsory) currently in effect in the main external markets for this segment

Until quite recently, there were no normative instruments in effect in other countries with a real impact on the industrial chemicals segment. To a certain extent, it can be said that national or regional legislations were considerably simple to be complied by national chemical companies at their export operations. This situation changed after the enactment of the European Union (EU) legislation on chemical substances, the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), approved in December 2006. The REACH regulation also set up the European Chemicals Agency (ECHA) and replaced the previous chemicals Directives in place in the EU. Regardless of the fact that REACH applies directly only to companies based on EU countries, it impacts all companies exporting to the EU market. This is a direct result of the provisions included under item 3, of Article 1, of Chapter I, which establishes that the commercialization of chemicals within the EU can only be carried out by producers, importers and downstream users (DUs) of chemical chains if data about the chemical substances are provided to clients before the products enter the market, to make sure the products do not affect human health or the environment. If data is not provided, the product may not be commercialized within the EU. REACH also establishes that all chemicals produced or imported by the European Union and commercialized as such, in preparations or in articles (if they are to be intentionally released into the environment), must be registered at ECHA. However, the exporting company does not registers its substances directly; there is a need to hire or appoint an Only Representative, located within the European Union, who will be the legal entity responsible for the chemicals entering the market. It could be that some uses of a certain substance are authorized, while others are not, based on the exposure of people or the environment to some hazardous property that the substance may have. The relation between REACH and commercialization is direct, affecting all value chains, not being restricted to stricto sensu chemicals, including substances present in articles, under specific conditions. To comply with REACH, even being outside the EU, Brazilian producers must produce, or participate in the production of, the information about the substances they export to the countries in the block, and then pass them on to their customers or importers, in order to have their substances registered and possibly approved for commerce. Aside from the technical difficulties to carry out the tests that may be necessary, the costs for doing such tests are proving to be high. In spite of all the difficulties brought by REACH, the sophistication of its clauses and the costs of compliance, it has become a benchmark for national legislation on control of chemicals, due to its rigor and scope. It must be said that REACH has introduced several innovations, such as the safety dossiers of registered substances, the creation

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of the figure of the Only Representative, forums for exchange of information between manufacturers and users of substances or groups of substances – SIEFs, among others. Based on the REACH experience, other countries, such as China, Korea and Japan, have reorganized, or are in the process of reorganizing, their own legislation for chemicals control.

3.3 Main regulatory aspects and normative instruments (compulsory or voluntary) that affect the segment in Brazil The industrial chemicals sector, like the other industrial segments in Brazil, is subject to countless laws, decrees and regulatory instructions (federal, state and municipal), compulsory standards in areas related to labor, social protection, taxation, environment, and safety (products and facilities), among others. Due to the Brazilian federative structure, some aspects are regulated on a national basis, while others are also regulated by state or even by individual municipalities. In many cases, such as the environmental, the legislation is concurrent, which means that their instruments may be federal, state or municipal, provided there is respect for hierarchy between federative levels. Companies find it very difficult to know all the regulations and other legal requirements affecting their business, due to their quantity and variety, and also the proliferation of new instruments created by the executive and legislative among the three Federation levels. Many regulations applicable to the chemical segment may be considered as common to general process industries, due to their similarities. In their vast majority, they regulate operational activities or people who work with the industrial segment as a whole. Only a small number of regulations, in the case of industrial chemicals, cover the products themselves. Currently, there is no wide-scope legislation in Brazil applicable to this class of products, differently from what happens in Europe, the United States, Japan and other countries with important chemical industries. Even with the large number of legal instruments, it is possible to mention the most relevant ones, presented in Table 7.

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Table 7. Main legal instruments covering industrial chemicals at federal level Instrument

Purpose

Environmental

Federal Constitution of 1988

To establish the principles of the National Environmental Policy.

National Environmental Policy (Law No. 5,938/81)

To define the National Environmental Policy and to regulate the management structure for environmental planning and protection – the National Environmental System (Sistema Nacional do Meio Ambiente - SISNAMA).

National Solid Waste Policy (Law No. 12,305/10).

To implement the National Solid Waste Policy, establishing its principles, purposes and instruments, the integrated management and also the management of solid waste, including those which are hazardous, the responsibility of the generators and also the Government, and the economic instruments as applicable.

National Climate Change Policy (Law No. 12,187/09)

Provision of the instruments for the appropriate management of emissions of greenhouse gases (GHGs) in Brazil.

National Water Resources Policy (Law No. 9,433/97)

To implement the National Water Resources Policy and to create the National System for Water Resources Management.

Conama Resolution No. 237/97

To set criteria for environmental licensing; the competence of the Federal Government, States and Municipalities; listing of the activities subject to licensing; Environmental Studies; Studies of Environmental Impact and Report on Environmental Impact.

Environmental Crimes Law (Law No. 9,605/98)

To establish criminal and administrative sanctions for environmental crimes, conduct and activities harmful to the environment.

Social, Health and Safety

Brazilian Consolidated Labor Laws (Consolidação das Leis do Trabalho – CLT) (Decree-Law No. 5,452/43)

To set conditions that govern individual and collective labor relations between workers and companies.

ILO Convention 170, adopted by Legislative Decree No. 67/95

To ensure safety in the use of chemicals in the workplace.

ILO Convention 174, adopted by Decree No. 4,085/2002

Prevention of major industrial accidents.

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Table 7. Main legal instruments covering industrial chemicals at federal level NR 4 – Specialized Services of Safety Engineering and Labor-related Medicine.

To create Specialized Services in Safety Engineering and Labor-related Medicine, in order to promote health and protect the integrity of the worker in the workplace.

NR 5 – Internal Commission for Accident Prevention (Comissão Interna de Prevenção de Acidentes – CIPA)

To establish the Internal Commission for Accident Prevention (Comissão Interna de Prevenção de Acidentes – CIPA).

NR 6 – Personal Protection Equipment

To regulate the use of personal protective equipment – PPE.

NR 7 – Program for Medical Control of Occupational Health

To establish requirements to employers to develop and implement a Program for Medical Control of Occupational Health (Programa de Controle Médico de Saúde Ocupacional – PCMSO), with the aim of promoting and preserving the health of workers.

NR 13 – Boilers and Pressure Valves

To establish safe conditions for operation of boilers and pressure valves.

NR 15 – Insalubrious Operations and Activities

To set limits, criteria and parameters for work under insalubrious conditions.

NR 20 – Combustible and flammable Liquids

To establish parameters for safety in handling and storage of combustible and flammable liquids.

MTE Decree No. 4,085/02

To enact the ILO Convention No. 174 and Recommendation No. 181 on the Prevention of Major Industrial Accidents.

People with disabilities (Law No. 7,853/89)

To regulate the support for people with disabilities, as also their social integration, establish the National Co-ordination for the Integration of People with Disabilities (Coordenadoria Nacional para Integração da Pessoa Portadora de Deficiência – Corde); institute the jurisdictional tutorship over collective or diffuse interests of these people, as also to discipline the activities of the Prosecution Office and take other measures.

ABNT NBR 14725-1: Chemical Products – information about health, safety and the environment. Part 1: Terminology

Supply a glossary of terms to use in ABNT Classification and Labeling standards.

Continues >>>

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>>> Continuation

Table 7. Main legal instruments covering industrial chemicals at federal level ABNT NBR 14725-2: Chemical Products – information about health, safety and the environment. Part 2: System of classification of hazards

Supply the elements for the classification of hazards of chemical substances, according to the Globally Harmonized System for the Classification and Labeling of Chemicals (GHS).

ABNT NBR 14725-3: Chemical Products – information about health, safety and the environment. Part 3: Labeling

Supply the elements for the labeling of packaging containing chemical substances according to the Globally Harmonized System for the Classification and Labeling of Chemicals (GHS).

ABNT NBR 14725-4: Chemical Products – information about health, safety and the environment. Part 4: Chemical Material Safety Data Sheet (MSDS)

To provide criteria and parameters for the preparation of chemical material safety data sheets (FISPQ/MSDS).

Products Controlled by the Federal Police (Law No. 10,357/01)

To set regulations for the control and inspection of chemical products that directly or indirectly may be used for the illicit preparation of narcotic substances, psychotropic substances or others that develop physical or psychological dependence, and to establish other measures.

Decree-Law No. 96,044/88

Approve the Regulations for the Transport of Hazardous Products by Road.

Economic Consumer Defense Code (Law No. 8,078/90)

To establish regulations for protection and defense of the consumer, public order and social interest.

AR.PAR/4 – Agreement on Regional Tariff Preferences No. 4 – 27 April 1984

To promote commerce between Mercosur countries.

AAP.CE/18 – Agreement on Economic Complementation No. 18 (Mercosur) – 29 November 1991

To promote commerce between Mercosur countries.

AAP.CE/35 – Agreement on Economic Complementation No. 35 (Mercosur - Chile) – 25 June 1996

To promote commerce between Mercosur countries and Chile.

AAP.CE/36 – Agreement on Economic Complementation No. 36 (Mercosur – Bolivia) – 17 December 1996

To promote commerce between Mercosur countries and Bolivia.

AAP.CE/53 – Agreement on Economic Complementation No. 53 (Mercosur – Mexico) – 7 June 2002

To promote commerce between Mercosur countries and Mexico.

AAP.CE/58 - Agreement on Economic Complementation No. 58 (Mercosur – Peru) – 30 November 2005

To promote commerce between Mercosur countries and Peru. Continues >>>

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>>> Continuation

Table 7. Main legal instruments covering industrial chemicals at federal level

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AAP.CE/59 – Agreement on Economic Complementation No. 59 (Mercosur – Colombia – Ecuador – Venezuela) – 18 October 2004

To promote commerce between Mercosur countries and Colombia, Ecuador and Venezuela.

ACP MS-India – Agreement for Preferential Commerce between Mercosur and India – 25 January 20044

To promote commerce between Mercosur countries and India.

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4 Business Practices for Sustainable Development (1992-2011)

4.1

Main technological/innovation and management transformations incorporated by the segment in the production process

The industrial chemicals segment is highly diversified and therefore it is difficult to list all most technological transformations, innovations or management transformations incorporated over the past twenty years. It is possible, however, to speak generically about the issue, using the main raw materials used by the industrial chemicals industry as a basis for comparison, and the moment the chemical segment is going through. The chemical industry, as mentioned in item 2.2 of this document, uses several raw materials, but in general they are divided into two major blocks: inorganic materials (extracted from minerals) and organic (from coal, fossil sources and biological sources). The production of chemicals based on inorganic raw materials is relatively well known, technologically speaking, and innovations in this industry (with the exception of catalysts, one may say) has been more restricted to applications. In the case of organic based industries, there is a need to distinguish those that had predominated in a certain period of time. Ever since the 1940s, the main sources of raw materials for the industry at global level have been oil and natural gas, developing the petrochemicals industry and replacing coal as the primary source. We can also say that the main technological routes in petrochemicals are also well known, however, due to the enormous diversity of substances resulting from the chemical reactions and also the variations in the composition of raw materials, a lot can still be done in terms of development of new products. Innovations coming form this industry are fundamental in the present and will continue to be in the future, providing means to enhance quality of life for societies worldwide. Despite their use in some applications, raw materials from biomass, another organic source, do not have relevance in quantitative terms, when compared to oil and natural gas.

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These two large blocks of raw materials also define the main chemical processes used by the industry, but still there is a need to understand the wider context of discussions about processes and chemical products. In the period before the Rio 92 UNCSD, the industry had a focus on production, on controlling pollution and waste from manufacturing units, and also in preventing accidents, major ones in particular (see Figure 49: “1st and 2nd waves”). Therefore, there was a significant prevalence of investments in safer and more efficient process technologies. The Rio 92 UNCSD showed, in the text of Chapter 19 of Agenda 21, that the global concern towards the chemical industry had changed and, in spite of the need to continue to enhance chemical processes performance, product safety had become the main challenge. After Rio, among other examples, the Conventions of Rotterdam and Stockholm were negotiated and came into force, the GHS was developed and the Intergovernmental Forum of Chemical Safety (IFCS), created to promote the implementation of Chapter 19 of Agenda 21. Between 1992 and 2011 the chemical industry continued to improve its processes, but started to invest further in order to know the hazard characteristics of their products and the exposure to them by humans and the environment (See Figure 39: “3rd wave”). The Responsible Care Program was launched in Brazil in 1992 (the eighth country to formally adopt it), seeking to support the Brazilian chemical industry in this effort. One cannot deny the importance that ISO 14000 environmental management standards, ISO 9000 quality management standards and OHSAS 18000 for occupational safety, all developed in the 1990s, have had on raising awareness and improving performance in the areas they cover. Certifications of compliance to these standards became an integral part of commercial relations between companies, having led to the spreading of good management practices among all business segments, including the chemical industry. However, in the case of the chemical industry, they do not cover all the important areas, such as process and transport safety, which is a distinguishing factor in Responsible Care. It is worth noting that the adoption of Responsible Care by Abiquim members has made it easier for them to get ISO and OHSAS certifications. The Rio+10 Summit held in South Africa strengthened the importance of product safety by establishing, on paragraph 23 of the Johannesburg Plan of Implementation, the Strategic Approach for International Chemicals Management (SAICM) and its decision making forum, the International Conference on Chemicals Management (ICCM), aiming to meet the “2020 target” of minimization of adverse effects of chemicals on health and the environment. It is true that many companies are already conducting more ambitions actions, discussing life cycle, excellence and sustainability, but without losing sight of safety and efficiency of processes and products. Finally, we must highlight the introduction of the concept of “Green Chemistry”, defined as the design, development and implementation of chemical products and processes to reduce or eliminate the use or generation of substances that are harmful to human health and the environment. Built around twelve core principles, it has attracted the attention of academia and companies, providing, in the language used by chemical professionals, the basic elements that define what an environmentally responsible Chemistry should be.

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Figure 49. The evolution in the management of health, safety and the environment by the global chemical industry in the period between Rio 92 and Rio+20, and post Rio+20

Source: Abiquim, 2011.

4.1.1 Highlights In the industrial chemicals industry, inorganic or organic based, there is a predominance of continuous processes, in which the scale of production and the use of the installed capacity define much of the operational efficiency and competitiveness of companies. For this reason, in the search for greater safety and less pollution, chemical factories’ projects have incorporated a growing sophistication of operational controls, initially using analog systems and in the past twelve years, digital electronics. Another important improvement has occurred in heat generation systems, which have increased their efficiency, mostly motivated by the increase in boilers size and work pressure, and by the replacement of fuel oils by gas and co-generation. The use of water per ton of production was also reduced, as a result of effluents recycling, the broad introduction of cooling towers, condensate recovery and other water management strategies. Effluent treatment stations once considered a cost font only, providing “end of pipe” treatment, were transformed into important units within the production system.

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4.2

Initiatives for disclosure of information and transparency about the social and environmental performances of the segment

Abiquim, by adopting Responsible Care, has agreed to publicly disclose the performance results of its member companies in health, safety and the environment (HS&E). For this reason, Abiquim has developed some important instruments: • Annual Responsible Care Reports: used to present the results of its member companies in HS&E, using the performance indicators defined for the Program; • Responsible Care Conferences: used to present relevant topics in HS&E, the developments and enhancements made in the Responsible Care Program, and to allow networking and experience sharing among member companies professionals, Government Representatives and other stakeholders, including worker’s union representatives and community leaders living close to member companies’ sites; • National Advisory Council (inactive) and Advisory Community Councils: used as discussion forums in HS&E and Responsible Care development, involving national or community leaders or local communities and company representatives; • AR Channel: a webpage dedicated to provide information about the Responsible Care Program; • Publications: Used to inform member companies’ professionals and other interested parties; • Courses and other events: used for capacity building of member companies’ professionals as well as of non-members.

The actions carried out by Abiquim are just a fraction of what the companies do. Nearly all Abiquim member companies do some kind of activity with neighboring communities, as a way of supporting local social and environmental projects, therefore increasing integration, dialogue and transparency. Many companies have open-house programs and welcome different types of visitors on a normal basis, as shown in Figure 50. Transparency has brought excellent results. Companies inform to Abiquim, the number of complaints made by their neighbors as part of the performance indicators data collected for the Annual Responsible Care Report. As Figure 51 shows, complaints have fallen by more than 40% between 2001 and 2010.

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Figure 50. Community activities supported by Abiquim member companies

Source: Abiquim, 2011.

Figure 51. Complaints from communities close to plant sites

Source: Abiquim, 2011.

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4.3 Initiatives coordinated by the association or sectorial institution 4.3.1 Responsible care Abiquim celebrates in 2012 the twentieth anniversary of the national Responsible Care Program, called Programa Atuação Responsável®. Responsible Care was launched in Canada by the Chemistry Industry Association of Canada in 1985, and has been introduced in more than 60 countries, under the coordination and leadership of the International Council o Chemical Associations (ICCA). Launched in April 1992, on the eve of the Rio 92 summit, the Brazilian Atuação Responsável is the initiative promoted by Abiquim to support its member companies’ management in health, safety and the environment, as a means to achieve sustainability. Atuação Responsável is restricted to Abiquim member companies, having been a condition of membership to the association since 1998. Atuação Responsável’s history starts with the establishment of a special committee by Abiquim’s Board of Directors, with the specific mission of evaluating the opportunity of developing a national Responsible Care program. The committee, under the co-ordination of the CEO of Union Carbide in Brazil, Dr. Jean Daniel Peter, after one year of analysis of the concept and content of the programs existing at the time, particularly those in Canada and the United States, concluded that Abiquim should develop its own initiative and made a recommendation to the Board on this regard. The name Atuação Responsável was chosen and Abiquim publicly adopted the initiative in April 1992, at a ceremony at Abiquim’s head office, at which the leadership of 91 member companies signed the first “Declarations of Commitment”. Atuação Responsável, together with the international efforts made by the global Responsible Care, demonstrate the chemical industry’s commitment in voluntarily adopting standards for continuous improvement in health, safety and environmental performance. Its launch also represents the start of a new attitude of proactivity, transparency and dialogue with stakeholders, with an ethic of stewardship and responsibility, regardless of the existence of legislation. Its implementation represents a “Commitment to Sustainability” by the Brazilian chemical industry. It is possible to assign to Atuação Responsável much of the improvement in performance shown in this document. This better performance has enabled substantial reduction of impacts on human health and on the environment resulting from processes and products, while also reducing costs for companies and society as a whole. Companies’ efforts through Atuação Responsável have contributed to the improvement of social conditions and quality of life of chemical industry workers, local communities around sites, and the public in general.

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Attachment 1 of this document shows the most relevant facts in the history of the Brazilian Responsible Care Program. The tool for the implementation of Atuação Responsável is its Management System, described in the document “Atuação Responsável: Management System Requirements”, produced by Abiquim in December 2011. It presents the mandatory requirements that must be implemented by member companies as well as those considered complementary, but good to have ones. Atuação Responsável’s requirements shall be incorporated into companies’ management system, taking into account each company’s structure and culture. As the first step to participate in Atuação Responsável, each member company CEO signs the so-called “Declaration of Participation”, committing his/her organization to follow Atuação Responsável’s Guiding Principles and declaring support to the Program. An audit system assesses companies’ compliance periodically.

4.4 Certification and self-regulation initiatives developed by the segment 4.4.1 Sassmaq Improving chemical safety and environmental protection along the many value chains connected to the industrial chemicals sector is a strategic priority for Abiquim, as stated by Atuação Responsável. To move from words to actions, Abiquim has developed concrete instruments to support performance improvement among some segments related to the chemical industry. One of such instruments is the Health, Safety, Environment and Quality Assessment System (Sistema de Avaliação de Segurança, Saúde, Meio Ambiente e Qualidade – SASSMAQ). The Road Transport module, the first to be launched by Abiquim in May 2001, is based on the initiative of the European industry known as Safety & Quality Assessment System – SQAS, developed by the European Council of Chemical Industry Federations- CEFIC. Sassmaq’s main aim is progressively reduce the risk of accidents in chemicals transport and distribution operations. The system provides an assessment of the management system and performance of companies that provide services to the chemical industry in all modes of transport. Besides the road transport module, other ones have been developed and launched by Abiquim: Cleaning Station module (for companies that wash and decontaminate tanks, isotanks, tank carriages and packaging used in the transport or storage of chemicals),

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the Rail Transport module, and the Emergency Services module (for companies that provide emergency response services during accidents in the transport of chemicals). Independent (third party) certification companies accredited by Abiquim perform the assessment. The assessment covers the so-called “core elements”, covering administrative, financial and social aspects of the company, as well as the “specific elements”, related to the services offered and the operational structure. Once approved, companies receive a third-party certificate and have their names released at Abiquim’s Sassmaq site (www.abiquim.org.br/sassmaq). Sassmaq is not mandatory for transport or service companies, but it generates an important differentiating factor for certified companies, by providing evidence that they offer qualified services to the chemical industry and other industrial segments that handle hazardous products. Currently, more than 700 companies have been assessed under SASSMAQ for road transport. Regardless of the fact that there is no legal obligation to adopt SASSMAQ, Abiquim members, decided, as part of their commitment to Atuação Responsával, to only use transport companies certified under SASSMAQ. For products in bulk, this voluntary commitment started in March 2005, and for products in packages, one year later.

4.4.2 The ICCA Global Product Strategy – GPS As a member of the International Council of Chemical Associations, Abiquim has been deeply engaged in the process of developing drawing the Global Product Strategy, or GPS. GPS was first discussed in 2003, as a voluntary response by the global chemical industry to the demand for further information about the hazards and risks present in chemical substances. GPS was formally launched in 2006, at the first International Conference on Chemicals Management (ICCM), in Dubai, United Arab Emirates, when the Strategic Approach to International Chemicals Management (SAICM) was adopted. To implement the GPS, the ICCA agreed to: • Develop a Product Stewardship Guide; • Develop a system for implementation of the strategy; • Define an assessment process for substances, based on risk; • Improve the flow of information about chemicals; • Develop partnerships with international organizations and other interested parties; • Share relevant information on chemicals, within the industry and with the public; • Conduct research to avoid information gaps and to identify emerging issues; • Publicize GPS inside and outside the industry; and • Develop advocacy principles.

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The main GPS product is the GPS Safety Summary, prepared by chemical companies, which offers information on the characteristics and uses of a chemical substance, to allow understanding by the general public and therefore, show that products are safely managed throughout their life cycle. The information contained in the Summary Reports is not intended for use in support of medical emergencies or treatment of intoxications, for example. Likewise, the Summary does not provide a complete set of information for chemical safety in the workplace, which continues to be presented on Material Safety Data Sheets (MSDSs). Companies are also responsible for the preparation of the Summaries for their substances but, as in the case of REACH, they are encouraged to exchange information with other companies, to develop common Summaries, whenever possible. To prepare the Summaries, companies must be fully aware of the hazards each substance has, as well as the exposure routes to people and the environment for each use considered. Once produced, these Summaries are made public, preferably by electronic means. To support the implementation of GPS in companies, two important instruments have already been developed: a) ICCA Guidance on Chemical Risk Assessment: describes the necessary steps for develop hazard and the exposure assessments of chemical substances; b) The GPS portal on the Internet: allows the insertion of the Summaries by companies, their public disclosure, and also, the exchange of information between companies during the preparation of their MSDSs and Summaries.

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Over the last three years, in order to promote and support GPS implementation by companies at country level, the ICCA has been offering, through national chemical associations, training seminars for the implementation of GPS, mainly aimed at small and medium sized businesses. They present the guiding concepts behind this initiative and go deep into the contents of the Guidance on Chemical Risk Assessment document. ICCA requests that each association establishes its GPS implementation plan, to make sure the target of producing, until 2020, risk assessments and Summaries for all chemicals placed in the market by companies belonging to ICCA members associations.

Figure 52. Countries with plans to implement GPS (December 2011).

Source: ICCA, 2011.

Between 2010 and 2011, Abiquim’s Product Stewardship Committee worked to develop the Brazilian GPS Implementation Plan, which was submitted to the ICCA in October, 2011. Among the actions proposed, and implemented, it is worth mentioning the organization of a two-day seminar “Chemicals Risk Analysis based on the ICCA Guidance”. Held in June 2011, the event had the participation of 93 professionals representing 37 different institutions, including industry, Government and other industrial associations in Latin America. Another action, also in 2011, was the translation of the 2nd edition of GPS Guidance into Portuguese.

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5 Challenges and opportunities for the segment on its way to sustainability

5.1 The main international trends for the segment in relation to sustainability Chemistry is moving quickly forward, in accordance with social progress and the technology and information revolutions that are sweeping across the world. Despite the economic, political and social uncertainty in the short and medium terms, and the technological and environmental uncertainties in the longer term, some international trends may be highlighted for the chemical sector along the road to sustainability. In the current decade, the chemical industry will continue to make safer and “greener” products and processes, aiming to meet the “2020 target” established at the Rio+10 Summit in Johannesburg, which says that “by 2020 chemicals will be produced and used in ways that lead to the minimization of all significant adverse effects on health and the environment”. However, we can already see that the paradigm has been shifting from the management of health, safety and the environment (HSE) to management for sustainability, in line with the concept of Sustainable Development, with a focus on sustainable patterns of consumption and production. Every day, more people talk about green chemistry and sustainable chemistry, as options for supplying solutions to society, in the context of a green economy or a sustainable economy.

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We see the start up of the “nanochemistry cycle” and the strengthening and dissemination of Chemistry based on renewable feedstocks. In the incoming decades, new products and processes from these two entrant alternatives will coexist with petrochemicals and carbochemicals, as well as inorganic chemicals, which will continue to play an important role in providing sound solutions for society. Nanotechnology will surely develop and become yet another important segment within the chemical industry. The chemistry of renewables will also grow, as the result of the increasing use of raw materials from new or existing bio sources, made possible as technologies to consume cellulose fractions, algae and glycerin are developed. However, the point of equilibrium in the use of biomass by the chemical industry for chemicals production will depend on competition with foodstuffs and energy. The diversification of raw materials and energy sources used in the chemical industry will grow, but their prices will also grow, due to the competition for new resources on a global scale. In this scenario, the intensification in the use of recycled materials as alternative to raw materials and waste as an energy source will become a reality, complementing the traditional matrix. The balance between voluntary initiatives and legal obligations will be consolidated, as a way to speed up innovation and efficiency, without setting aside the need to impose criteria and responsibilities considered essential by society. In this context, Atuação Responsável becomes even more important for the chemical industry and its values chains, supporting their activities, and contributing to move towards Sustainable Development. The tools to allow integrated (environmental, social and economic) life cycle analysis will be developed and will be part of the definition of companies’ corporate strategies, by helping assess the best alternatives from a broader perspective. Corporate social responsibility (CSR) is another area that has increased its importance recently. For the chemical industry, CSR covers actions towards its workforce and nearby communities, but more importantly, has to do with its products, which provide solutions for social demands and contributes to enhancing quality of life and promote sustainability. The chemical industry has a fundamental role in the eradication of poverty, on providing useful solutions for society and also high-value jobs. Undeniably, we believe that the future key concept for the success of chemical companies will be connected to their ability to design safe molecules, produced by safe, efficient and reliable manufacturing processes. Their products, developed jointly with their value chains, customers and society at large, will provide innovative solutions to sophisticated demands, considering their life cycle, under conditions of sustainability.

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5.2 Challenges for the segment in the context of sustainable development (market, technology and regulation) The trends identified for the chemical industry regarding sustainability allow the recognition of different types of challenges. They can be classified according to their relation to the economic, social, or safety/environmental pillar of relevance to the chemical industry. Some may be related to more than one pillar. Apart from the challenges to be faced due to the trends identified, there are others which are already long-standing but which must also be exceeded if we wish to have a sustainable and competitive chemical industry in Brazil. The National Pact for the Chemical Industry highlights the following: • Availability of raw materials which are competitive in terms of price, availability of volume, protected by supply contracts; • Solution of tax system distortions, unbalances along the chain, tax equality and defense against unfair competition; • Improvement of the logistic infrastructure, especially in the areas of gas distribution, ports, roads and other modes of transport; • Decisive support by the State for technological development and innovation; and • Access to credit for the strengthening of the value chain, for exports and also for technological development and innovation. It is also possible to identify challenges linked to the sustainability pillars and trends. In some cases, it is possible to conceive feasible answers, while for others the solution is not yet visible and needs to be identified. Table 8 presents a synthesis of issues for reference and challenges to be addressed.

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Table 8. Relevant themes and challenges for the chemical industry related to sustainability Economic Issues

Social Issues

Environmental and Safety Issues

Generation of wealth by the chemical industry (investments, multiplying effect, increase of capital, etc.).

Social contributions of the chemical industry (decent jobs, actions and ethical products, philanthropy, support to cultural activities, community actions and the like).

Impact of operations and products of the chemical industry (consumption of natural resources and energy, disposal of waste, prevention of accidents and response to emergencies, etc.).

• How to maximize the generation of economic value by the chemical industry?

• How to produce chemicals that have a relevant social function? • How to make better contributions towards the elimination of poverty and for the improvement of social, economic and cultural conditions?

Raw Materials (economic aspects: cost and availability): • How to guaranty the appropriate supply of raw materials at competitive prices?

Raw Materials (social aspects: royalties, ethics in use of biofuels and raw materials from renewable feedstocks). • How to use raw materials to optimize social value?

• How to minimize or eliminate the impact of operations and products on people and on the environment?

Raw Materials (environmental aspects: use of natural resources, environmental impacts of production of raw materials). • How to minimize the consumption of natural resources?

Science, technology and innovation.

Direct and indirect jobs.

Safe products.

• How to increase the speed in scientific and technological development and innovation, to meet demand?

• How to offer jobs that meet social and personal needs of the people working in industry?

• How to develop and encourage the use of safe products?

• How to introduce new technologies, such as nanotechnology and biological technologies quickly but at the same time safely and efficiently? Which routes, products and applications will prevail?

• How to influence the generation of direct jobs?

• How to manage knowledge within an environment of fast evolution, considering the speed of generation and diffusion? Logical infrastructure. • How to optimize the current logistic infrastructure? • How to encourage the creation of more efficient logistic infrastructure?

The role of the chemical industry in quality of life. • How to develop solutions that help to maximize the quality of people’s life?

Safe operations. • How to prevent personal accidents, as well as process and transport accidents? Continues >>>

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>>> Continuation

Table 8. Relevant themes and challenges for the chemical industry related to sustainability Energy generation and use.

People qualification.

• How to ensure an adequate supply of energy at competitive prices?

• How to qualify the necessary people to work in companies that are more and more sophisticated, demanding and also exposed to competition? • How to develop and maintain an appropriate corporate culture to operate in quickly transforming environments, seeking compliance with ever more demanding standards and aimed at sustainability?

Control of liquid and gas emissions. • How to use energy with the least possible environmental impact? • How to contribute towards the reduction of generation of greenhouse effect gases throughout the life cycle of the products and also help tackling the global climate change? • How to preserve water resource areas and other bodies of water?

Economic management of solid waste.

Social management of solid waste.

Environmental management of solid waste.

• How to transform solid wastes into raw materials under competitive conditions?

• How to transform solid waste into worthy sources of income for the low-income population?

• How to reduce the generation of solid waste?

Economic impact of new developments.

Social impact of business ventures.

Environmental impact of developments.

• How to maximize the economic gains of current and new enterprises?

• How to maximize social gains of current and new enterprises?

• How to reduce the environmental impacts of current and new developments?

• How to proceed with appropriate disposal?

Cross-cutting Issues Management • How to maintain the steady improvement of the performance of processes and products among the chemical industry? How can sustainability be achieved? • How to create and maintain organizational structures that are agile, productive and innovative? • How to make the integrated management of all dimensions of company business? • How to take the sustainability values out to the value chains? • How to make small chemical companies achieving the performance levels of large companies? Image and reputation • How to change the image of the industry and of chemicals in general, from something potentially dangerous and dirty, into a valued citizen, provider of sustainable solutions? • How to ensure shareholders satisfaction while, at the same time, meeting the expectations of the other interested parties? Regulation • How to defend the interests of the segment in relation to sustainability? • How to keep a balance between voluntary initiatives and legal obligations? How to encourage the former while ensuring the efficiency and effectiveness of the latter?

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5.3 Opportunities for the sector in relation to sustainable development The NationalPact shows that the Brazilian chemical industry is important for the development of the country and that it can be, and indeed wants to be, the world leader in sustainability within the chemical business. The Brazilian chemical segment can secure great benefits if companies know how to use sustainable development to promote their products as important solutions for sustainability. Some conditions can contribute to make the Brazilian chemical industry a more valuable industry and sustainability champion: • Abundance of natural resources and environmental conditions that are favorable to biomass production; • National availability of petrochemical feedstocks; • Large and demanding domestic market, with a tendency for further expansion; • Need to eradicate poverty in the Country and improve quality of life of the Brazilian population; • Abundance of renewable energy sources; • Abundance of areas for new production site developments.

Opportunities appear in the quest for solutions for the challenge presented in Table 8 of item 5.2. The detailed analysis, however, is outside the scope of this document, but it is possible to qualify the issues which we consider there are advantages for the national industry with respect to sustainability. Figure 53 shows a view of the issues as detailed in Table 8, from the standpoint of opportunities related to the Brazilian chemical industry, as far as sustainability is concerned. Region 4 is the region where the prospects are greatest, while region 1 is the one where the smallest opportunities are and, therefore, where the most difficult challenges exist.

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Figure 53. Opportunities for the national chemical industry, in relation to sustainability, facing competition from foreign chemical industries

Source: Abiquim, 2012.

Conclusion The Brazilian chemical industry has what it takes to be the world leader in sustainability. The industry reinforces its commitment to sustainability, as expressed in the Atuação Responsável Program, working thoroughly towards making this potential a reality.

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Attachment: A track record of the history of Atuação Responsável

Year

Main Facts

1991

Creation of Atuação Responsável’s Executive and Technical Committees; discussion about program models (with the adoption of the model used by the American Chemical Manufacturers Association – CMA); Definition of the 12 Guiding Principles; launch of the concept of Atuação Responsável “Regional Offices” to help spread the Program among the areas where the chemical industry is concentrated in Brazil.

1992

Launch of the Program; Signature of the Declarations of Commitment; Publication of the Coordinator’s Guide; Organization of the 1st Atuação Responsável Seminar and creation of the first Atuação Responsável “Regional Offices”.

1993

Creation of the list of Management Practices based on the model used in the United States.

1994

Development of the Implementation Guides for the Process Safety (SEPRO) and Employees Health and Safety (SST) Codes of Management Practices.

1995

Development of the Implementation Guides for the Transport and Distribution (TRADI) and Environmental Protection (PA) Codes; Start of the self-assessment process for the implementation of SEPRO and SST Management Practice Codes; Organization of the event “Quality and Responsible Care: Managing the Chemical Industry by the year 2000”.

1996

Development of the Implementation Guide for the Community Dialogue, and Emergency Response ( DCPAE) Code; Launch of the Atuação Responsável Partnership Program; Start of the self-assessment process for the TRADI and PA Management Practice Codes.

1997

Development of the Implementation Guide for the Product Stewardship Code; Creation of the annual Atuação Responsável “Declaration of Commitment”; Organization of the 1st Atuação Responsável Conference; Start of the selfassessment process for the DCPAE Code.

1998

Start of the mandatory commitment to Ação Responsável as a condition for membership to Abiquim; Development, and disclosure to members, of the set of Atuação Responsável’s performance indicators.

1999

Association of the first two Partner Companies to Abiquim. Continues >>>

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Year

Main Facts

2000

Realization of a public opinion survey to evaluate the image of Abiquim, Chemistry and the chemical industry.

2001

Publication of the first Atuação Responsável Report; Start of the evaluation about the convenience of implementing the first Program review.

2002

Celebration of the 10th anniversary of the Program. Development of Atuação Responsável’s 1st model of the independent external (3rd party) verification system – VerificAR, and the conduction of the two pilot audits; Decision taken to start the first Program review.

2003

Definition of the second Atuação Responsável model and start-up of the review process, with the production of the preliminary versions of the Program’s Vision, Mission and Guiding Principles.

2004

Formation of the National Advisory Council (Conselho Consultivo Nacional – CCN); Approval of the texts on Vision, Mission and Guiding Principles; Start of preparation of the new set of Atuação Responsável’s Directives.

2005

Production of the 1st set of Guidelines; Start of VerificAR’s revision; Design and implementation of Atuação Responsável’s webpage, the Canal AR.

2006

Review of the methodology of VerificAR; Start of the preparation of the Directives’ texts.

2007

Preparation of VerificAR’s reference documents; Conduction of pilots to validate VerificAR’s methodology; Completion of the Directives’ implementation levels texts; Start of the training courses for the application of the revised model of Atuação Responsável and VerificAR.

2008

Broad application of VerificAR; Introduction of PreparAR’s (gateway to Atuação Responsável) basic concept and signing of the agreement with São Paulo State Chemical Industry Union (Sindicato da Indústria de Produtos Químicos de São Paulo) – Sinpoquim.

2009

Introduction of Atuação Responsável’s Implementation Plan. Logo text changed from “A Commitment of the Chemical Industry” to “A Commitment to Sustainability”, in agreement with the changes made by the ICCA at a global level.

2010

Organization of Atuação Responsável’s 13th Conference and CCPS’ (Center for Chemical Process Safety) 2nd Latin American Process Safety Conference.

2011

Introduction of the new Atuação Responsável Management System, which replaces the set of Directives, the new “Declaration of Commitment” and the new “Declaration of Participation”.

2012

Celebration of the Atuação Responsável’s 20th anniversary and organization of the 14th AR Conference.

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CNI – NATIONAL CONFEDERATION OF INDUSTRY - BRAZIL DIRECTORY OF INSTITUTIONAL RELATIONS - DRI Mônica Messenberg Guimarães Director of Institutional Relations ENVIRONMENT AND SUSTAINABILITY UNIT - GEMAS Shelley de Souza Carneiro Executive Manager - Environment and Sustainability Unit Technical Support Percy Soares Neto (Environment and Sustainability Unit – CNI) Marcelo Fernandes (Fundação Dom Cabral) Editorial Support Priscila Maria Wanderley Pereira (Environment and Sustainability Unit – CNI) BOARD OF COMMUNICATION – DIRCOM Carlos Alberto Barreiros Director of Communications EXECUTIVE ADVERTISING AND PUBLICITY MANAGEMENT – GEXPP Carla Cristine Gonçalves de Souza Executive Manager Armando Uema Editorial Production BRAZILIAN CHEMICAL INDUSTRY ASSOCIATION - ABIQUIM Executive President

Fernando Figueiredo

Director of Institutional Relations Renato Endres (Director) Andrea Carla Barreto Cunha (Advisor) Ana Paula Pereira (Advisor) Monica dos Santos Rollo (Assistant) Technical Board of Economics and Statistics

Fátima Giovanna Coviello Ferreira (Director) Elaine Andreata Azeituno (Advisor) Rita de Cássia Rodrigues (Advisor) Alessandra de Sousa Moura (Assistant)

Technical Director of International Trade Affairs

Denise Mazzaro Naranjo (Director) Eder da Silva (Advisor)

Management of Regulatory Nícia Mourão (Manager) Affairs and the Environment Camila Hubner Barcellos (Advisor) Mariana Doria (Advisor) Obdúlio Diego Juan Fanti (Advisor) Elaine Francisca Oliveira (Assistant) Management of Luiz Shizuo Harayashiki (Manager) Business Management Francisco Ruiz (Advisor) Murilo Campanelli (Advisor) Gisette Nogueira (Advisor) Management of Administration and Finance

Carlos Tsuyoshi Yamakawa (Manager)

Communication Management Marina Galvão (Manager) Felipe Torres (Advisor) Fernando Tavares (Advisor) Legal and Tax Assistance

Claudio Manoel Alves (Advisor)

External Consulting

Marcelo Kós Silveira Campos (Consultant)

Aline Santos Jacob Standardization Grifo Design Editorial Project

Associação Brasileira da Indústria Química