Roger Shamel, President

Consulting ResourcesCorporation

Lexington, Massachusetts

CHLOR-ALKALIINDUSTRY OVERVIEW

TOPIC OUTLINE

• BACKGROUND

• INDUSTRY OVERVIEW

• MERCURY-RELATED ISSUES

• SUMMARY AND CONCLUSIONS

• QUESTIONS

CONSULTING RESOURCES CORPORATION

• CHEMICAL MANAGEMENT CONSULTING FIRM

• FOCUSED ON BUSINESS RESEARCH AND ANALYSIS

• SPECIAL EMPHASIS ON CHLOR-ALKALIS

• FOUNDED IN 1981 BY ADL ALUMNI

• EMPHASIS ON QUALITY SERVICE

SOURCE: CONSULTING RESOURCES CORPORATION

GDP

SODIUM OXIDE DEMAND

CHLORINE DEMANDAND PRODUCTION

CAUSTICSODASODABALANCE

CAUSTIC SODA PRODUCTION

SODA ASH DEMAND AND PRODUCTION

CHLOR-ALKALI INTERRELATIONSHIPS

SOURCE: CONSULTING RESOURCES CORPORATION

CHLOR-ALKALI BUSINESS ACTIVITY CYCLES

SOURCE: CONSULTING RESOURCES CORPORATION

TIME

RELATIVE BUSINESS ACTIVITY LEVEL

GDP

CHLORINE

CAUSTIC SODA

SODA ASH

NOW

U. S. CHLOR-ALKALI PLANT LOCATIONS

SOURCE: CONSULTING RESOURCES CORPORATION

CHLORINE/CAUSTIC

(“M” = some mercury capacity)

SODA ASH

M M M

MM

M

M

M

M

MM

U.S. CHLORINE PRODUCTION: 1980 - 2005(MILLIONS OF TONS)

SOURCE: THE CHLORINE INSTITUTE AND CONSULTING RESOURCES CORPORATION

1980 1984 1988 1992 1996 2000 2004

14

10

6

2

GLOBAL CHLORINE DEMAND BY END USE: 2002TOTAL DEMAND = 45 MM TONS

SOURCE: CONSULTING RESOURCES CORPORATION

EDC/VCM36%

OTHER12%

PULP & PAPER

3%

WATER TREAT-MENT

5%

ORGANICS25%

INORGANICS19%

U.S. 30%

ROW 40%

W.EUROPE

21%

GLOBAL CHLORINE DEMAND BY REGION: 2002TOTAL DEMAND = 45 MM TONS

SOURCE: CONSULTING RESOURCES CORPORATION

JAPAN 9%

PULP15%

OTHER40%

GLOBAL CAUSTIC SODA DEMAND BY END USE: 2002TOTAL DEMAND = 48 MM TONS

SOURCE: CONSULTING RESOURCES CORPORATION

INOR-GANICS 17%

ORGANICS 28%

KEY ISSUES IMPACTING CHLOR-ALKALIS

• SHIFTING TECHNOLOGY

• TIGHTENING REGULATION

• MATURE, CYCLIC GROWTH

SOURCE: CONSULTING RESOURCES CORPORATION

THE ECONOMY

PLANT ECONOMICS

REGULATIONS

TECHNOLOGY

SHUTDOWN COSTS

KEY FACTORS INFLUENCING CHLOR-ALKALI PLANTS

SOURCE: CONSULTING RESOURCES CORPORATION

SOME MERCURY CELL PLANT FACTS

SOURCE: CONSULTING RESOURCES CORPORATION

• MERCURY FORMS AN AMALGAM WITH SODIUM

• THE AMALGAM YIELDS MERCURY AND CAUSTIC

• THUS, MERCURY (Hg) IS NOT CONSUMED

• 11 U.S. Hg PLANTS (27%) = 14% OF CAPACITY

• U.S. ABOUT 4% OF GLOBAL Hg CELLS

SOME MERCURY CELL PLANT ISSUES

SOURCE: CONSULTING RESOURCES CORPORATION

• MERCURY CELL TECHNOLOGY IS MATURE

• MUCH STRICTER REGS, CONTROLS THAN BEFORE

• FUTURE GROWTH LARGELY MEMBRANE CELL

• MERCURY EXIT BARRIERS ARE HIGH

• MERCURY’S FUTURE HARD TO PREDICT

SUMMARY AND CONCLUSIONS

SOURCE: CONSULTING RESOURCES CORPORATION

• A CRITICAL AND COMPLICATED BUSINESS

• MERCURY PLAYS AN IMPORTANT ROLE

• BUT INDUSTRY GROWTH IS IN MEMBRANES

• HANDLING EXISTING MERCURY IS COMPLEX

• OPEN DIALOG IS VITAL