Executive summary. 1. Belgium is world-class for chemicals and plastics. 2. Why is Belgium so attractive for this industry?

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2 Executive summary 1. Belgium is world-class for chemicals and plastics 2. Why is Belgium so attractive for this industry? Belgium hosts the second world cluster for chemicals and plastics Belgium, a unique logistical platform in the heart of Europe Strong expertise for product and process technology Highly skilled labour force available High R&D-expenditures directed towards sustainable innovation Attractive tax incentives for foreign investors Supportive attitude by the Government 3. Belgium is building a future of sustainable chemistry Sustainability challenges will remain top of our agenda Top-end innovation will require our world level capabilities for R&D and production Industry consolidation will reinforce a winning cluster like Belgium 2

3 A long tradition of world renowned scientists Ernest Solvay ( ) Leo Baekeland ( ) Lieven Gevaert ( ) Christian de Duve ( ) Marc Van Montagu (1933- ) 3

4 The Belgian chemical and plastics industry is world-class The evidence 4

5 Belgium is the n 1 chemical country in the world on a per capita basis Sales of chemicals and plastics per capita (2013) Source: Feri 5

6 Three-quarters of the world s top chemical companies have chosen to invest in Belgium 11 of the top 15 chemical companies have production sites in Belgium in billion $ Top chemical companies (2013 sales) Production plant in Belgium Source : ICIS Chemical Business, 8-14 Sep 2014 * Quadrant EPP Belgium & Quadrant CMS 6

7 The share of the chemical industry in Belgium is even bigger than in Germany Share of the Belgian chemical industry in the total economy is 1.5 time bigger than the average share of the sector in the EU 6% 5% 4% 3% 2% 1% 0% Share of chemicals & plastics in the total economy* Source: SBS (Eurostat), 2011 figures; calculations essenscia Based on value added at factor cost *Total business economy; repair of computers, personal and household goods; except financial and insurance activities 7

8 Belgium is the dominant player for a wide range of key chemicals and plastics in Europe High-density polyethylene* PVC Floor, wall, ceiling coverings Polypropylene (PP) Polyurethane (PU) Biaxially orientated PP films Lubricating & mineral oil additives Propylene PVC PK Fertilizers Industrial gases (Nitrogen,Oxygen, Argon) Washing & cleaning preparations Ethylene Synthetic rubber Printing inks 0% 5% 10% 15% 20% 25% 30% Share of Belgium in total EU-production 8 Source: Prodcom (based on production sold) * For HD-PE, Belgian production data are confidential. Based on production capacity (source: Chemical Week)

9 Chemicals and plastics exports contribute increasingly to the Belgian standard of living Chemical trade balance increased by nearly 50% in 10 years in billion Trade balance (export - import) Chemical, petrochemical and plastic products* All products Belgium ** Sources: National Accounts Institute/NBB according to the communautarian concept *Harmonized System Sections VI+VII excluding pharmaceuticals (chapter 30) ** Chapters 01-99: all products 9

10 Why is Belgium so attractive for this industry? The reasons 10

11 First class availability of raw materials thanks to 3 major seaports Cargo handling Ports Northern Europe* Zeebrugge Oostende Antwerp Ghent Kortrijk Brussel Mons Charleroi Namur Hasselt Liège Bastogne Port Country 2010 (mio metric tons) Rotterdam NL 430 Antwerp B 178 Hamburg D 121 Amsterdam NL 91 Le Havre F 70 Bremen D 69 Zeebrugge B 50 Duinkerken F 43 Ghent B 27 Source: Port of Rotterdam * Range Le Havre - Hamburg Source: Flanders Port Area 11

12 The port of Antwerp hosts the largest chemical industry in Europe The industry within the ports of Antwerp and Rotterdam in mio Jobs % Port of Antwerp 38% Port of Rotterdam* % Port of Antwerp 23% Port of Rotterdam* Value added Direct Employment chemical industry other industries chemical industry other industries Source: National Bank of Belgium, Havenmonitor; 2012 figures * Rotterdam-Rijnmond 12

13 First class availability of raw materials thanks to the central location in the Western European pipeline network Pipelines offer a fast, efficient, cheap and ecological supply chain 13 Source: EPCA, Results of the Think Tank Sessions, August 2007

14 Belgium offers access to 80% of the European purchasing power within a 500 miles radius 14 Source: European Distribution Report, Cushman & Wakefield, 2008

15 The Belgian logistics platform offers a competitive differentiator for the chemical industry Considering costs, transport system, accessibility, supply, labour and know-how Best locations for logistics in Europe Regions* Ranking* Liège (Belgium) 1 Limburg (Belgium) 2 Hainaut (Belgium) 3 Nord-Pas-de Calais (France) 4 Namur (Belgium) 5 Luxembourg (Belgium) 6 Alsace (France) 7 Oost-Vlaanderen (Belgium) 8 Antwerp (Belgium) 9 Arnsberg (Germany) 10 Source: European Distribution Report, Cushman & Wakefield, 2010 * NUTS-2 definition 15

16 Storage terminals and distribution platforms at the service of the chemical industry in Belgium Tailor-made global logistics solutions for chemicals Logistical operators have built up considerable know-how in serving the chemicals industry. Production Support Platforms Gateway platforms On-site terminals Distribution platforms Source: Katoen Natie 16

17 Further investments in logistics infrastructure will secure our pole position The Combinant project JV BASF Antwerp Hupac IFB New multimodal terminal (road-rail) Open for third parties Investment of 29 million euro With support from the Flemish Government and the European Fund for Regional Development Railway connections Objectives Avoid impending congestion on the road Daily saving 10 km traffic jam 150,000 containers transfers from road to rail yearly Yearly reduction of as much as 30,000 t/co 2 emissions Operational since March

18 The high level of integration and diversity across the value chain is unique in the world Synergies in energy, process integration and logistics offer world class cost effectiveness RAW MATERIALS FEEDSTOCKS BUILDING BLOCKS COMMODITIES INTERMEDIATES FINAL PRODUCTS Natural gas / Crude Oil / Condensate C 1 Methane / refinery residue Synthesis Gas Methanol Formaldehyde Glues, Resins Ammonia, Nitric Acid Urea, AN, CAN, UAN Fertilizers Natural gas / Crude Oil / Condensate C 2 C2-C3 / Naphtha Ethylene PE, EDC, VCM Ethylene oxide PVC Glycols, EVOH, Ethyl NBO, Glycol Ethers Polymers, EPDM, Copolymers Natural gas / Crude Oil / Condensate C 3 C2-C3 / Naphtha Propylene, propane Polypropylene Propylene oxide, Acrylic acid Polyols, SAP Polymers e.g. Polyurethane Crude Oil C 4 Refinery off-gas / Naphta Mixed C4 Butadiene Polybutadiene Acrylonitrile, Butadiene, Styrene Crude Oil C 6 Naphtha Benzene, Toluene Cyclohexane, Caprolactam, Aniline BPA, Nylon 66, MDI Polycarbonate, Polyurethane Crude Oil C 7,8 Naphtha Mixed Xylenes O, P-Xylene PA, PTA PET Sea water / Brine Ship, pipeline, barge Cl Chlorine, NaOH EDC, Phosgene VCM Pipeline, barge, rail Rail, road Mainly road PVC, MDI, hypochlorites Plastics, polyurethane, bleach items are produced in the cluster 18 Source: EPCA, Results of the Think Tank Sessions, Aug 07

19 Constructive social relations are a long-time tradition in the Belgian chemical cluster High employee satisfaction compared to other industries Low intersectoral mobility* Limited number of strikes 0,12 days / year per employee Social concertation between employers and trade union Investment in human capital (training) funded by employers and employees 2 dedicated training centres: ACTA and Cefochim * Study by Prof. L. Sels (University of Leuven) 19

20 Highly skilled labour force ensures world-class technical expertise and operational excellence Production process sophistication: use of the world best s and most efficient process technology (score from 1 to 7; 1 = labour-intensive methods or previous generations of process technology, 7= the world s best and most efficient process technology) Mean (out of 148 countries) Top (Japan) Source: World Economic Forum, Competitiveness Report,

21 Operational excellence also leads to high safety at work Standardised incidence rate of accidents at work (per workers) More than 3 days lost (4 days absence or more) Chemical industry Belgium Chemical industry EU15 Manufacturing Industry EU Source: Eurostat 21

22 Operational excellence delivers world-class energy efficiency PJ/year Energy consumption at 2012 production levels World top according to benchmarking covenant Belgium (Flemish Region, at 2012 production levels) Source: Benchmarking Committee Flanders (annual report 2012) 22

23 Attractive tax incentives increase financial returns on capital intensive and R&D investments Tax-free return on qualifying equity Notional Interest deduction Special tax regime for expatriates Withholding tax exemptions Belgian tax incentives No capital duty Tax rulings with emphasis for multinationals R&D tax incentives VAT grouping 80% patent income reduction (maximum tax is 6.8%, lowest in the EU) 80% exemption payroll withholding tax for scientific researchers Refundable R&D tax credit system Increased investment deduction and flexible depreciation rules for R&D 23

24 The Belgian chemical industry has a unique network to implement REACH & CLP Exchange of information, knowledge and experience between industry, regulators and service providers Coordinate communication throughout the supply chain VLARIP and WALRIP: two support tools for SME s Company European authorities Mentors REACH essenscia working groups Belgian authorities REACH: Registration, Evaluation and Authorisation of Chemicals CLP: Classification, Labelling and Packaging of substances and mixtures 24

25 The authorities in Europe and in Belgium actively support the chemical industry At regional level (Flanders) Round table on chemical industry by the Flemish Minister of Economy (started in 2005) Recognition of the chemical industry as a strategic sector in Belgium focus: innovation, competitiveness, infrastructure & logistics and social acceptance of the industry 12 action points At European level High Level Group on Chemicals initiated by the European Commission ( ) 22 recommendations At Belgian level High Level Group for a sustainable chemical and plastics industry in Belgium initiated by the Prime Minister (2012- ) 25

26 High R&D investments prepare the chemical and plastics industry for top-end innovation Belgian industrial R&D-investments Company R&Dexpenditures* (mio ) R&D-personnel (headcounts) Pharmaceuticals Chemical, petrochemicals and plastics Electrical equipment Machinery Telecommunications and electronics Motor vehicles Metal industry Food & beverages Source: Belspo, 2011 figures * Intra-mural expenditures 26

27 Major European R&D centers in Belgium: a few examples Total Petrochemicals Feluy: the largest R&D center of the Total Group Dow Corning: European headquarter is established in Belgium, Seneffe Procter & Gamble: European Research Centre in Brussels is a global business unit for Home & Fabric R&D Solvay: Research & Technology Brussels Center, the main R&D center of the group Recticel: International Development Centre in Wetteren Agfa-Gevaert: important R&D activities in Antwerp Huntsman: European headquarter & R&D center in Everberg Worldwide technical competence centers in the cluster of Antwerp BASF Antwerp for MDI Evonik-Degussa for methionine Bayer for Makrolon 27

28 R&D-expenditures Continuous increase of R&D-expenditures Innovation is a key development factor for the sector in Belgium 3,5 3,0 2,5 2,0 1,5 1,0 0,5 In billion euro 1,89 2,00 R&D-expenditures Chemical, plastics and life sciences industry in Belgium 2,17 2,28 2,32 2,34 2,29 2,46 2,72 2,75 3,09 0, Source: essenscia survey amongst member companies Provisional data 2013

29 Investments in the chemical industry in Belgium (i) BASF Antwerpen Antwerp Butadiene extraction plant Evonik Antwerp New plant for the production of shrimp feed additives Chevron Phillips Tessenderlo Expansion of H 2 S synthesisunit and new control room INEOS Oxide Zwijndrecht Expansion of ethylidene norbornene (ENB) unit Air Liquide Lillo New carbon monoxide production unit Indaver Zwijndrecht Heat and steam network 29

30 Investments in the chemical industry in Belgium (ii) Praxair Antwerp New air separation plants & extension pipelines Ferro Antwerp New production unit for phthalate free plasticisers Cargill Vilvoorde New pilot plant for the European research centre Surface Chemistry (Akzo Nobel Chemicals) Mons Relooking incinerator reduction of NOx emissions Dakota Nazareth New cryogenic micronisation line Alcon Puurs Expansion of production lines 30

31 Investments in the chemical industry in Belgium (iii) Baxter Bioscience Lessines Installation and qualification of an aseptic filling line under isolator Kuwait Lubricants Antwerp Bayer MaterialScience Antwerp Blending facilities and additional storage New steam boilers capacity for lubricants Nomacorc Thimister-Clermont Extrusion line synthetic wine corks GSK Vaccines Wavre Building for the production of clinical lots and start of expansion projects Pa and IPV Yara Tertre Modernisation ammoniac unit 31

32 Investments in the chemical industry in Belgium (iv) Kronos Europe Ghent New energy efficient line for the filtering and drying of pigments Christeyns Ghent New European distribution centre Revatech Engis Building of equalisation basins wastewater treatment Total Antwerp Modernisation of the refinery & chemical production platform MaSTherCell Gosselies Building of clean rooms for the production of ATMP Libert Paints Ghent New production and R&D site 32

33 Government funded competence centers foster talent and innovative solutions Cori stimulates scientific and technological development in the coating industry. VKC (Vlaams KunststofCentrum) is the Flemish technological centre of expertise for Plastics Processing. EMRA (Environmental Materials Research Association) gathers the Environment, Materials and Process expertise and capabilities of 6 Research Centres. The Ghent Biotech Valley brings together world-class expertise in the fields of medical, industrial and agricultural biotechnology. 33

34 A strong collaboration between the Belgian chemical industry, schools and universities Education Covenant between essenscia, trade unions and associations of secondary schools Aim: encourage youngsters to choose for scientific branches System of cooperative education masters degree in analytic science combining high school education with practical work experience in companies on a 50/50 basis professional bachelor degree in process techniques combining high school education with practical work experience in companies on a 20/80 basis Chair Master after Master programme on process safety engineering at the University of Leuven First chair between a sector federation (essenscia) and a university Aim: offer a high EU-level study program in process safety engineering 34

35 Belgium is building a future of sustainable chemistry 35

36 The Belgian chemical industry aims at becoming the sustainable chemical cluster in the world Mission statement The world is facing important challenges in the use of energy, natural resources, and the provision of food, water and health for its population. Chemistry, Materials and Life Sciences are essential to making the world's development sustainable. Our innovative research is crucial to the development of new products, applications and services. Our industry is central to a successful future and to improving everyone's quality of life. 36

37 Examples of high-tech, sustainable innovations in Belgium (i) The MTO/OCP pilot plant at Total Petrochemicals (Feluy) The Pilot PLA plant, a JV Total Petrochemicals / Galactic for the production of bioplastics from renewable origin Specialty chemicals company Lanxess develops solutions that enable Green Mobility Indaver, a leader in sustainable waste management LIPAMAX : enzymatic treatment for fat removal developed by Realco Proviron s ProviAPTTM, harnessing the potential of microalgae Evonik s first production plant AQUAVI Met-Met dipeptide for shrimp aquaculture 37

38 Examples of high-tech, sustainable innovations in Belgium (ii) Nanocyl, a leading supplier of Carbon Nanotubes Technology (CNT)-based products Derbigum, the specialist in highly reflective roofing membrane Recticel, a worldwide leader of a wide range of innovative polyurethane foams Soudal, world expertise in sealants, PU foams and adhesives LiFePO 4, a revolution in battery-technology by Prayon Solvay investing in the Solar Impulse project, a solar airplane 38

39 The MTO/OCP pilot plant at Total Petrochemicals in Feluy a world first The pilot plant combines the methanol-to-olefines process (MTO) and the Olefin Cracking Process (OCP) Benefited from the expertise in process engineering at the Feluy Research Centre Diversified feedstock for making petrochemicals Higher yield of good-quality light olefins 39

40 Futerro, a pilot PLA plant for the production of bioplastics from renewable origin JV Total Petrochemicals / Galactic to develop a production technology for PolyLactic Acid (PLA) bioplastics of renewable vegetable origin with the financial support of the Walloon Region. Lactic acid is obtained from the fermentation of sugar or starch. On stream since ,500 tonnes/y PLA bioplastics have many applications Recovering and Recycling PLA: the most environment friendly option ECO-Benefits (points) ECO-Benefits are based on the standard eco-indicator 99 scores (Taking in account elements such as ecotoxicity, fossil fuels, climate change, ) Composting Incineration Anaerobic digestion LOOPLA LOOPLA : «Cradle to Cradle» concept L-Lactic Acid Endless cycle PLA 40 Source: Galactic

41 Specialty chemicals company LANXESS develops solutions that enable Green Mobility Green Tires combine a number of advantages Lightweight plastics are used in engine applications, door structures, front ends, Weight reduction by 10 to 50%. High-tech polymerization world-scale facility in Antwerp, Belgium, started in July 2014, with annual capacity of 90,000 tons. Processed in global network. 41

42 Indaver, a leader in sustainable waste management World class treatment installations for commodities and complex hazardous waste Highly specialised in waste management from the chemical industry Total Waste Management projects Focus on energy and material recovery Waste management: 3 million tons per year 50% recovery of energy (steam, electricity) from waste for own installations, neighbouring companies and 140,000 households 40% sustainable re-use of waste materials (PMD, mercurial waste, ). Between 80% and 100% of recycling efficiency 10% safe storage and neutralisation via landfilling, physico-chemical processing and waste water treatment Aiming at the lowest possible CO2 footprint and environmental impact Source: Indaver 42

43 LIPAMAX : enzymatic treatment for fat removal WASTE WATER SCREENING & DEGRITTING LIPAMAX BIOLOGIC TANK DECANTATION PRIMARY SLUDGE SECONDARY SLUDGE Transformation of lipids in fatty acids All the fatty acids are reinjected in biologic tank Full recycling of fat in wastewater treatment plant Savings of 73,000 T/year of fat disposal Savings on transport + no incineration savings on greenhouse gas emissions 43

44 Proviron s ProviAPT TM, harnessing the potential of microalgae ProviAPT is a highly efficient cultivation process which exploits fully all interesting properties of microalgae Algae produced at Proviron s pilot plant at Hooge Maay are applied already in aquaculture (ProviFeed TM Nannochloropsis) Use in feed and food applications, as nutritive supplements and in cosmetics are investigated through collaborations in the frame of Flanders Food and FISCH projects Algae can be envisaged as a sustainable substitute for fossil oil as an energy source or as a source for platform chemicals for biochemicals or biopharmaceuticals 44

45 Evonik starts construction of the first production plant for methionine dipeptide AQUAVI Met-Met a feed additive specially developed for shrimp in aquaculture consumers benefit from improved food quality significantly reduces the consumption of fish meal in shrimp aquaculture. lowers feed costs environment is less polluted reduces the strain on fishing grounds worldwide helps water purity by reducing the amount of waste produced by the animals and nitrogen output into the environment first dipeptide in the world to be produced on commercial industrial scale and be economically viable for use in animal nutrition.

46 Nanocyl, a leading global supplier of Carbon Nanotubes Technology (CNT)-based products Carbon Nanotubes are the most electrically conductive additives available today on the global market. The Nanocyl patented process was originally developed at the University of Namur by Prof. Nagy and at University of Liège by Prof. Pirard. Examples: Antifouling coatings Electronic packaging Flame barriers coatings Thermoplastic body parts 46

47 Derbigum, the specialist in roofing membrane that reduces the energy consumption of buildings DERBIBRITE is a highly reflective membrane which acts as a passive cooler to reduce the energy consumption. DERBIPURE is the first white roofing membrane with a base of organic raw material, without the use of bitumen Thanks to a patented exclusive coating, DERBIBRITE NT and DERBIPURE reflect up to 80% of the sun's rays and therefore reduces the temperature in the building by 5 C Increased return of solar panels Reduced costs for air conditioning Source: Derbigum 47

48 Recticel, a worldwide leader of a wide range of highly innovative polyurethanes A unique chemistry for light stable polyurethane Combined with a patented spray technology For the production of dashboard skins & other interior trim Revolutionary breakthrough in car interiors surfaces As a foamed material in top class intimate apparel, shaping the natural curves Insulation High insulation values of PU makes the construction of passive houses possible. Collaboration with Wienerberger building a massive passive house 48

49 Soudal - world expert in: sealants, PU foams and adhesives for the construction, DIY and industrial applications. A pioneering role in the development of new expanding, semi-flexible insulating polyurethane (PU) foams that can be used easily to fill joints and gaps: Flexifoam - ready to use, elastic, one-component PU gun foam, provides durable acoustic and thermal insulation Launched SMX - the first expanding foam without free isocyanates which is harmless to consumers The Soudal Window System offers a highly efficient installation of window frames which leads to higher energy savings also in passive houses. 49

50 LiFePO 4, a revolution in battery-technology by Prayon A new generation of batteries allowing a maximum storage of energy within a minimum amount of space Based on iron phosphate technology, enriched with bore The best solution for battery equipped cars, available as from 2010 Patented technology in collaboration with CEA-Liten (Laboratory for new energy technologies) 50

51 Solvay, main partner of the Solar Impulse 2 which will soon circumnavigate the world without fossil fuel A symbol for innovation and sustainable development A springboard for advanced materials solutions and developments new lightweight materials to minimize weight and energy consumption new battery components with improved capacity and performance new films for encapsulation of the photovoltaic cells 51 Source: Solvay

52 Industry consolidation will reinforce the role of the Belgian chemical clusters Europe is facing challenges: centre of gravity shifting toward Asia, US & ME Industry will readjust through further consolidation, process integration and innovation The Belgian clusters generate smarter operations throughout the value chain maximization of synergies (energy, services, utilities) skilled workforce focus on sustainable chemistry 52

53 This presentation is supported by:

54 essenscia Belgian Federation for Chemistry and Life Sciences Industries Contact Yves Verschueren, Managing Director T yverschueren@essenscia.be Corine Petry, Head of Communication T cpetry@essenscia.be 54