PCC EXOL - SURFACTANTS; ALCOHOL SULFATES,ALCOHOL ETHER SULFATES –––––––––––––––––––––––––––––––––––––––––––––––––––––––--

The company PCC EXOL started operating in its current configuration on 31st October, 2011,after acquiring PCC ROKITA surfactant business;the company HQ is located at Brzeg Dolny. PCC EXOL is Central Eastern Europe’s largest surfactant producer,it possesses four plants ,two for the production of nonionic surfactants and another two for the production of anionic surfactants.Three of those plants are located at Brzeg Dolny and one at Plock,right across the fences of the refinery-petrochemical company Orlen.There is an ethyleneoxide pipeline connection built between Orlen’s EO plant and PCC EXOL ethoxylation plant.

Company’s current surfactant production capabilities are shown below:

CAPACITIES OF PRODUCTION ––––––––––––––––––––––––––––––––-

ETHOXYLATION PLANTS :

PLANT I : capacity: 30 000 mtpa* technology: BUSS-Chemtech start-up year: 1969 location : Brzeg Dolny

PLANT II: capacity : 30 000 mtpa technology : BUSS-Chemtech start-up year: 2011 location : Plock

* this unit may run at lower operating rate

SULFONATION,SULFATION PLANTS :

PLANT I : capacity : 10 000 mtpa technology : MAZZONI MTFR reactor * start-up year: 1989 location : Brzeg Dolny

PLANT II : capacity : 30 000 mtpa technology : De Smet Ballestra MTFR reactor start-up year: 2008 location : BRZEG DOLNY investment : 25 million EUR

* MTFR: Multitube Film Reactor

VERY RECENT PRODUCTION ,OTHER RELATED ASPECTS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Ethoxylation plants No. I as well as No.II supply part of the raw material requirements of the sulfonation plants No.I and II.

Thus,for instance in the case of ethoxylation plant No. I a very recent production characteristic is shown below:

Nonionic surfactants output: 18 000 mt : of this :

captive use/as raw material for the sulfonation plant I: 4 000 mt domestic sales : 11000 mt export sales : 3 000 mt –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Total 18 000 mt –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––-

Similarly a simplified model is shown for the ethoxylation plant No. II :

Nonionic surfactants output : 30 000 mt: of this :

captive use/as raw material for the sulfonation plant II: 18 000 mtdomestic sales : 2 000 mt export sales : 10 000 mt

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Total 30 000 mt ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Typically,the operation of the sulfonation plant No.I is based on feedstcocks of cca. 50 % LAB and 50 % ethoxylated fatty alcohol.Likewise typically the operation of the newer sulfonation plant No.II is based on feedstocks of cca. 30%-35% of LAB and 70%-75 % ethoxylated fatty alcohols. We estimate PCC EXOL total LAB consumption /in 2011/was roughly 10 000 mt, and that of fatty alcohols and ethoxylated fatty alcohols for sulfation is about 23 000 mt to 25 000 mt/this for the sulfonation/sulfation plant No.I and No.II combined/ -in other words an estimated total consumption of fatty alcohols was about 18 000 mt in 2011 and about 20 000mt to 22 000 mt for 2012 is projected.

The sulfonation plant No.I/with the capacity of 10 000 mtpa as 100% product/ is connected via pipeline system with the newer sulfonation/sulfation plant/of a capacity 30 000 mtpa as 100% active material /. We believe the reason of this ,if necessary to enable the output of increased low dioxane concentration product ,since the elder-smaller sulfonation/sulfation plant is not equipped with the technological capability of producing this quality of product. Another reason of this connection is the fact,that the elder-smaller sulfonation/sulfation plant usually produces surfactants with active matter content of about 26%- 28%,whereas the newer plant usually produces product with active matter content of about 68%-72%.

Product output estimates of the sulfonation/sulfation plants are given below: /in mt per year/

Plant No.I Plant No. II Production total Capacity total 2009 : 8500 23 000 31 500 40 000 2010 : 8000 29 000 37 000 40 0002011 : 9000 30 000 39 000 40 000

The production structure started to change in favour of the alcohol ether sulfates in 2011,following the start-up of the new ethoxylation plant No.II.Prior to this plant going on stream,the predominat product was alcohol sulfate. In the start-up year the newer plant operating rate was about 77%.Within the production structure,the estimated output of sulfated alcohols and alcohol ether sulfates are given below: /mtpa/

Plant No.I Plant No. II Total AES

2009 : 5500 13000 185002010 : 5000 20000 250002011 : 5000 24000 29000

Note: the figures denote product quantities as 100% acitve matterFurthermore the share of oleochemicals based fatty alcohol sulfates and fatty alcohol ether sulfates in the total AESoutput is about 65%-70%,the rest of the production is based on synthetic fatty alcohols/pareth -sulfates and -ether sulfates/.

RAW MATERIAL SUPPLY ––––––––––––––––––––––––––––––

PCC EXOL basic raw materials are:

Ethyleneoxide, Lauryl alcohol/for laureth sulfate/LAB,Synthetic fatty alcohols/for pareth sulfate/Coconut oil/for laureth sulfate/ Tridecylalcohol/for pareth sulfate/ Nonylphenol Sulphur Caustic soda

Ethyleneoxide ––––––––––––––––

There is in place a medium term contract with the refinery-petrochemical complex of Orlen Plock for the supply of ethyleneoxide /as well as DEG-this latter one fore the production of PEG type nonionics at the PCC EXOL Plock site/ worth of 400 million Polish Zloties,which equals cca.125 million USD/ between the period 2012- 2017. We estimate this sum may equal about a total of cca. 100 000 mt of EO ,which is translated as cca. 20 000 mt – 23 000 mt of EO per year. OrlenPlock is the major source of ethylene oxide to PCC EXOL.When not available,some quantities of EO are brought in from mainly INEOS Cologne plant as well as from Sibur Nizhniy Novgord/Russia/ . The Brzeg Dolny located ethoxylation plant estimated annual ethyleneoxide re-quirement is about 10 000 mt – 12 000 mt.

Lauryl alcohol /C12/––––––––––––––––––––––-

This one is being imported from Asia-Pacific Rim ,mainly from Indonesia,Philippines,Thailand but also from Malaysia through the port of Rotterdam ;suppliers include Ecogreen Oleochemicals , ICOF Europe and KAO Chemicals as well as Berg and Schmidt.

Synthetic fatty alcohols /C12-C14/––––––––––––––––––––––––––––––––––––––-

Is imported mainly from Western European synthetic fatty alcohols manufacturers as for instance Shell but also from other WE producers of synthetic fatty alcohols. Thus,in 2011 the estimated synthetic fatty alcohols consumption if PCC EXOL was about 3300mt,of this Shell supplied about 1400mt of NEODOL TM synthetic fatty alcohol for ethoxylation and sulfonation.

Coconut oil /C12-C14/–––––––––––––––––––––––-

Is supplied from the refineries around Rotterdam/based on raw coconut oil imported from Asia-Pacific Rim region. /

Tridecylalcohol –––––––––––––––––-

PCC EXOL purchases tridecylalcohol exclusively from EXXON Mobil Chemical Belgium,under the TM Exxal 13.Thus in 2011 PCC EXOL purchased about 1400 mt of tridecylalcohol produced by Exxon USA -Baton Rouge?./This type of anionic surfactant has been produced since 2011/. In general, oleochemical based raw material is purchased via traders as ICOF Europe GmbH as well as Wilmar Europe Trading VB ; PCC EXOL has especially privileged relationship with the HansaGroup AG and this both in the field of raw material supplies as well as in the field of product sales -exports ,specifically to Germany. PCC EXOL fatty alcohol consumption more than doubled between 2008 and 2012 .In 2011 fatty alcohol purchase prices for PCC EXOL varied between 2600 USD/mt to 2900 USD/mt.

Sulphur––––––––-

Liquid sulphur is purchased from the Polish company Siarkopol;

Caustic soda/lye/–––––––––––––––––––

Caustic soda is usually purchased from the company PCC Rokita located in Brzeg Dolny.

Nonylphenol ––––––––––––––

There are limited purchases of nonylphenol/cca. 500mtpa to 600mtpa/from the Polish company PCC Synteza at Kedzierzyn-Kozle.

LAB ––––

Main LAB suppliers are Sasol Augusta /Italy/ plant, Chemische Fabrik WIBARCO/Ibbenburen,Germany/, occasionally CEPSA Quimica San Roque plant /Spain/.

TRADE

It is quite difficult to estimate the 2011 AES /as 100% active matter /export by PCC EXOL ,although there is some evidence,that these sales to abroad amounted about cca. 15 000 mt to 17 000 mt of AES /as 100% active matter/

Sales assessment in terms of value % are given below: Export destination of anionic surfactants by PCC EXOL:

- European Union /particularly Germany and Austria/ ....65%- Russia,Turkey,Serbia,Ukraine,Belarus region ...............30%- Other regions ................5%

It must be emphasized though ,that PCC EXOL is at the very beginning of its trading activities;at this point the company needs more trading skills and assets to succeed on international markets including the establishment of its sales network to facilitate a substantially increased direct sales share in total exported product sales.

Note: in the period between 2007 and 2011 the value of exported anionic surfactants/including AES as well as LABS soared from cca. 6,5 million USD up to about 41 million USD.

MARKET SHARE ESTIMATES––––––––––––––––––––––––––––––––

According to PCC EXOL the company,s surfactants market share in the Central Eastern European region is estimated cca. 14 % ;PCC EXOL’s market share in anionic alcohol sulfates as well as alcohol ether sulfates is about 15% - the company regards and treats this region as well as Germany as of their primary interest ;no less significance is being attributed to the regions including the Russian Federation,Turkey as well as South West Balkan region and Ukraine. In general direct sales acount for about 55% of the total sales,while as much as 45% of total sales are carried out through traders and distributors. On the domestic/Polish /market major clients in the household industry and cosmetics sector include Unilever /Bydgoszcz plant/,Oriflame/Ostrowiec,Pila,StalowaWola,KaliszGrudziadz,Zielo-na and Tychy plants/Reckitt-Benckiser/ Nowy Dwor Mazowiecki plant/and L’Oreal Polska.It is important to note,that by the construction and start-up of the new sulfonation/sulfation plant of PCC Exol at Brzeg Dolny, the production and sale of anionic surfactants especially for the household industry and cosmetic sector becomes the company,s core business.

PRODUCT PORTFOLIO /as per 2010-2011/––––––––––––––––––––––––––––––––––––––––––––––-

Anionic Surfactants

ABS Acid Dodecylbenzene Sulfonic Acid

ABSNa Sodium Dodecylbenzenesulfonate

Rosulfan D Sodium Decyl Sulfate

Rosulfan L Sodium Lauryl Sulfate SulforokanolL170/1 Sodium Laureth* Sulfate + 1EO SulforokanolL225/1 Sodium Laureth* Sulfate + 2 EO SulforokanolL270/1 Sodium Laureth* Sulfate + 2 EO SulforokanolL270/1A Sodium Laureth* Sulfate +2 EOSulforokanol L327 Sodium Pareth* Sulfate + 3 EO SulforokanolL327/1 Sodium Laureth* Sulfate + 3 EO Sulforokanol L370 Sodium Pareth* Sulfate + 3 EO SulforokanolL370/1 Sodium Laureth Sulfate + 3 EO SulfosuccinateL3/40 Disodium Laureth Sulfosuccinate

Sulfosuccinate N5 Disodium Nonoxynol-5 Sulfosuccinate 9040-38-4

*: SLES is derived from oleochemical/coconut oil/ C12-C14 SPES is derived from petrochemical feedstock C12-C14Nonionic Surfactants

Polikol 1500 PEG-34 Polikol 1500Flakes PEG-34 Polikol 200 PEG-4 Polikol 300 PEG-6 Polikol 400 PEG-9 Polikol 4500 PEG-100 Polikol 4500Flakes PEG-100 Polikol 600 PEG-13 Polikol 6000 PEG-136 Polikol 6000flakes PEG-136 Polikol 8000 PEG-180 Polikol 8000Flakes PEG-180 Rokacet K7 Cocoate + 7EO -RokacetKO300G Glyceryl Cocoate + 7 EORokacet O7 Oleate + 7 EO Rokacet R26 Castor Oil + 26 EO Rokacet R40 Castor Oil + 40 EO Rokacet R70 Castor Oil + 70 EO Rokacet RZ17 Rapeseed Oil + 17 EO Rokacet RZG12 Rokacet S24 Stearate + 24 EO Rokacet S7 Stearate + 7 EO Rokafenol N10 Nonylphenol + 10 EO Rokafenol N14 Nonylphenol + 15 EO Rokafenol N22 Nonylphenol + 22 EO RokafenolN22/30 Nonylphenol + 22 EO Rokafenol N3 Nonylphenol + 3 EO RokafenolN30/70 Nonylphenol + 30 EO Rokafenol N4 Nonylphenol + 4 EO

TECHNOLOGY OF SULFONATION/SULFATION

SULFONATION/SULFATION PLANT NO. II – CAPACITY: 30 000 mtpa - 2008

PCC EXOL started opearating its second 30 000mtpa sulfonation/sulfation plant based on De Smet Ballestra MTFR type reactor technology,which is essentially a continous process –as mentioned earlier,based on a total investment of 36 mil.USD;the plant started operating on June 25th, 2008 at PCC EXOL BRZEG DOLNY site.The heart of the process is the multitube film reactor-MTFR. The process technology capacity is as mentioned about 30 000mtpa as 100% active matter of sodium or ammonium salt of benzensulfonic acid,which is equivalent to a capacity of 3800kg/h of sodium or ammonium salt of benzensulfonic acid. The components- hubs of the process technology are: 1/ air drying2/liquid sulfur storage and feed to the process3/ combustion of liquid sulfur to SO2 and its further oxidation to SO3 on Vanadium Pentoxide catalyst4/ heat recovery5/ continous film sulfonation in an MTFR type reactor consisting of 90 tubes/the capacity of 1 reactor tube is about 40kg of pro- duct per hour/. 6/ acid neutralization under vacuum/”de-dioxanization” step7/ purification of exhaust gases on vet filter and SO2 scrubber ;

As mentioned earlier the estimated annual output of this new sulfonation/sulfation plant is about 35% weight of LABS and about 65% of AES and AS.

The plant is suitable for producing high quality products,in-cluding cosmetic grade ones,usually in the form of paste or gellish product of cca. 68%-72% of active matter content, as opposed to the smaller-elder sulfonation/sulfation plant,which usually produces products of 26%-28% active matter content of higher dioxane concentrations,which does not comply with stricter quality requirements posed by the cosmetic industry. Another striking difference between the two sulfonation/sulfation plants is the level of automation in favour of the newer plant. It must be noted however,that the 30 000 mtpa newer sulfonation/sulfation plant lacks the so called Dryex unit,which otherwise allows to obtain the corresponding anionic surfactant /LABS or AES for that matter/ in stable and free-flowing ,dry form. The investment payback period is estimated to 8 to 10 years –according to PCC EXOL .

Critical development affecting the production process /as declared by the licensor/:

-The Vacuum Neutralization Unit allowing the production of “dioxane-free” alcohol ether sulphates ;

-The new Exhaust Gas Treatment Unit based on “wet-filter” and capable of allowing a virtually total recovery of the organic product entrained into the exhaust gas ;

-The new SO3-absorber using organic feedstock to react the SO3 during the step of product changeover

SULFONATION/SULFATION PLANT NO. I –CAPACITY: 10  000 mtpa - 1989

This plant was put on stream in 1989 and the technology is based on MAZZONI/now De Smet Ballestra/ MTFR continous sulfating/sulfonating reactor;the reactor itself contains 35 reactor tubes /note: these MTFR type reactors are said to be easily scaled up or scaled down ,thus increasing or decreasing the nominal capacity of the installation/. Basically this process is the less developed predecessor of the more modern,highly automated process applied at the newer 30 000 mtpa capacity plant;also the plant is not capable of producing sulfated products of cosmetic industry quality;furthermore this plant usually produces liquid products with active matter content about 26%-28% .