Chemical Recycling transforming the plastic waste economy · recycling industry EU (the worlds largest plastic waste exporter) in trouble: • Not enough plastic recycling capacity

Chemical Recycling transforming the

plastic waste economy

4Q report

20 March 2020 | 2

20 March 2020 | 3

PPABS

PE

20 March 2020 | 4

The Plastic Paradox

10 % is

recycled

27 mtons

from EU

Source:

Goldmansachs - the-plastics-paradox 2018

EllenMacarthurFoundation – New Plastic Economy

100 BUSD

lost to

market

World

production

of waste is

242 million

tons

5 years

to 55%

20 March 2020 | 5

What made this happen?

www.nationalgeographic.com/environment/2019/05/shipping-plastic-waste-to-poor-countires-just-got-harder/

www.plasticpollutioncoalition.org/pft/2019/3/6/157000-shipping-containers-of-us-plastic-waste-exported-to-countries-with-poor-waste-management-in-2018

www.nationalgeographic.com/environment/2018/11/china-ban-plastic-trash-imports-shifts-waste-crisis-southeast-asia-malaysia/

P L A S T I C W A S T E H A N D L I N G G L O B A L L Y

China enacted a «Plastic ban» on waste importsmillion tonnes will have to be

allocated between 2019-2030120

BASEL Convention is amended restricting free flow of

plastic waste to poor countries (180+ countries signing!)

of plastic waste exports goes to

poor countries without proper

recycling industry78 %

EU (the worlds largest plastic waste exporter) in trouble:

• Not enough plastic recycling capacity

• New export limitations

of plastic waste must be recycled -

EU requirement by 202555 %

Europe and US changes waste stream to Southeast Asian

countries leading to an immediate environmental crisisshipping- containers from US to

Asia in 2018157,000

20 March 2020 | 6

H I G H G R O W T H N A S C E N T M A R K E T

Massive growth is new plastic-to-product market

Source: McKinsey&Company

2030: >200 million tonnes plastic reused2030: “Alternative reuse” of plastic

biggest profit growth

>50 million tonnes

for pyrolysis ~25 BUSD for

pyrolysis

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M A R K E T M A C R O O U T L O O K

Global players scrambling for developing their position

Oil majors Chemical majors Recycling majors

Company examples

“REMONDIS has in i t ia ted a

pro ject to develop and operate

so-ca l led chemica l recyc l ing

fac i l i t ies .“

Company examplesCompany examples

Stated ambition:Stated ambition:Stated ambition:

“BASF is work ing on

recover ing and recycl ing o f

plast ics through our

ChemCycl ing pro ject.“

“Neste targets to process more

than one mi l l ion tons o f p last ic

waste annua l ly by 2030.“

See major opportunities in

alternative fuels

Expect chemical recycling to

become a major factor

Need to increase recycling –

require chemical recycling

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Chemical Recycling is the only solution

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T E C H N O L O G Y R E F I N E M E N T S

Feedstock handling system

B Technology

20 March 2020 | 10

T E C H N O L O G Y R E F I N E M E N T S

Pyrolysis reactor

B Technology

20 March 2020 | 11

T E C H N O L O G Y R E F I N E M E N T S

Unique catalyst solution

B Technology

20 March 2020 | 12

T E C H N O L O G Y R E F I N E M E N T S

Distillation column and storage

B Technology

54

20 March 2020 | 13

T E C H N O L O G I C A L U N I Q U E N E S S

Quantafuel transforms plastic waste to recycled, high-quality products

in a unique catalytic PtL process

Plastics

PE

PP

Pyrolysis oil (in

gaseous state)

Alkanes 40%

Aromatics 30%

Olefins 30%

Suitable product

hydrocarbons

Alkanes > 90 %

Final, separated

products

“Naphtha” ~16%

(C6H14 – C10H22)

(160 kg / 230 l per tonne)

Diesel ~56%

(C10H22 – C22H44)

(560 kg / 710 l per tonne)

Heating Oil ~8%

(C23H48 – C28H58)

(80 kg / 85 l per tonne)

+ ~10% permanent gases – used for heating of plant

(plant self-sufficient with energy – providing ~1-1,5 MW in surplus heating)

Reactors

Quantafuel

Catalyst system

(QCS 9.0)

Distillation

+ ~10% carbon rich ash

2 3 4

(80% of input mass)(90% of input mass)

Total

- 800 Kg

- 1035 litre

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One production process – two markets

T I T L E

Recycled Carbon

Fuels (RCFs)

Recycled

Petrochemical

Feedstock

Drop in Fuel – EU

REDII

Similar to biofuels

mandate

Co-mingled

Petrochemical

Feedstock

High Est :

1400–1700 USD/MT (HVO)

Low Est :

1000 USD/MT (RME)

High Est : 1500 USD (bio)

Low Est* : 700 – 1 000

USD/MT

*Prices based on observed market sentiment

PRODUCT MARKET PRICE

20 March 2020 | 16

The consumer-goods industry under preassure

«Nestlé today announced that it will invest up to CHF 2 billion to lead the shift

from virgin plastics to food-grade recycled plastics and to accelerate the development of innovative sustainable

packaging solutions.Building on its 2018 commitment to

make 100% of its packaging recyclable or reusable by 2025.»

Press release 16.01.2020

20 March 2020 | 17

1) Revenue is based on average FAME/HVO market price of USD 1 000 / MT

S K I V E E C O N O M I C S

Quantafuel Skive with 15.1 MUSD rev and 8.9 MUSD EBITDA with 60 MT

and 45 MUSD and 29 MUSD with 180 MT in 2022

2021 economics with 60 MT first plant 2022 economics with 180 MT capacity

15,1 1,2

1,5

2,5

1,08,9

45.2 3.6

3,0

5.7

4,2

28,7

Revenues Direct

expenses

Personnel Other OPEX Service fee

Quantafuel AS

EBITDA Revenues Direct

expenses

Personnel Other OPEX Service fee

Quantafuel AS

EBITDA

MUSD

EBITDA:

59%

EBITDA:

63%

1) 1)

20 March 2020 | 18

Consumer good companies screeming for solutions

“We’re going to turn it into the biggest plastic recycler in the world.”

Russel Hardy, CEO Vitol – January 2020 Financial Times

“Moreover, the partnership is a first step to build up a broad supply base for Chemcycled products. This enables us to support our customers in achieving their sustainability targets.”

Hartwig Michels, president Petrochemicals, BASF

20 March 2020 | 19

P&L 2019

Quantafuel Statement of Operations Q4 2019 2019 Q4 2019 2019

Unaudited  Unaudited  Unaudited Unaudited

Company Company Group Group

(kNOK) (kNOK) (kNOK) (kNOK)

Revenues 466 47,134 - -

Other income - 497 - 497

Total revenues and other income 466 47,630 - 497

Cost of materia ls - 69,318 - 193,087 351 - 1,236

Sa laries and personnel costs 23,442 - 23,271 20,709 - 29,038

Depreciation - 1,112 - 1,216 - 3,212 - 3,352

Other operating expenses - 6,835 - 18,524 - 5,148 - 19,533

Total operating expenses - 53,822 - 236,098 12,700 - 53,159

Operating profit (/loss) - 53,356 - 188,467 12,700 - 52,662

Net financial gain (/loss) 9,831 - 11,904 8,845 - 14,442

Profit (/loss) before taxes - 43,525 - 200,371 21,545 - 67,103

20 March 2020 | 20

Balance 2019

Quantafuel Balance sheet 2019 2019

Unaudited Unaudited

Company Group

(kNOK) (kNOK)

Assets

Property, plant and equipment 1,541 358,748

Right-of use asset 3,043 44,602

Investment in Associates 17,156 -

Intangible assets 19,892 23,339

Other non-current assets - 3,232

Total non-current assets 41,632 429,921

Accounts receivables - -

Other receivables 63,305 13,540

Cash and cash equiva lents 145,437 150,666

Total current assets 208,742 164,206

Total assets 250,374 594,127

Quantafuel Balance sheet 2019 2019

Unaudited Unaudited

Company Group

(kNOK) (kNOK)

Equity and Liabilities

Shareholders ’ equity 112 112

Premium reserve 502,481 502,481

Uncovered loss - 447,952 - 282,965

Non-control l ing interests - 68,510

Total equity 54,641 288,138

Deferred tax 57,083

Loans to financia l insti tutions 98,825 115,555

Long-term leas ing l iabi l i ty 2,226 41,141

Total non-current liabilities 101,051 213,779

Short-term leas ing l iabi l i ty 933 4,366

Accounts payable 61,806 59,481

Trace, other payables and provis ions 3,587 10,481

Finance debt

Other current l iabi l i ties 28,355 17,882

Total current liabilities 94,682 92,210

Total equity and liabilities 250,374 594,127

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O W N T H E V A L U E C R E A T I O N

Quantafuel’s business model is to build, own and operate PtL plants,

each established as a separate SPV

Service fee

Local partner

• Invest capital

• Local competence

• Potentially contribute with feedstock

Plant owning SPV

• Quantafuel ownership >50 %

• Plant construction and operations

• Plant financing

• Secure feedstock and fuel sales

• Plant technology and design

• Plant planning, construction and

commissioning

• Operational support

2

Plant price

1

Dividend

3

Thank you!