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NatureWorks LLC. BIO-BASED MATERIALS February 22-23, 2005 Peter C. Clydesdale peter_clydesdale@natureworksllc.com, OR peter_clydesdale@natureworkspla.com. 2. 2. NatureWorks LLC - a new vision, an expanding start up,.

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natureworks llc

NatureWorks LLC

BIO-BASED MATERIALS

February 22-23, 2005

Peter C. Clydesdale

peter_clydesdale@natureworksllc.com, OR

peter_clydesdale@natureworkspla.com

2

natureworks llc a new vision an expanding start up
NatureWorks LLC - a new vision, an expanding start up, ...
  • NatureWorks was formed in 1997 with the intent of creating a company to develop more sustainable plastics fromannuallyrenewable resources
  • This intent aims to meet the needs of todaywithout compromising the earth’s ability to meet the needs of tomorrow

3

with increasing resources
… with increasing resources
  • Since then we’ve grown to more than 200 people
  • The Blair, Nebraska polymer plant officially opened in April 2002
  • 300 (400) million pounds of PLA (LA) capacity is available to serve the globe
  • A unique and extensive patent position has been built
  • 3 primary commercial platforms - packaging, fibers and consumer products - are in place today

4

what is pla
What is PLA?
  • PLA is a polymer made from lactic acid
    • Lactic acid is a naturalproduct
    • It is found in the body, yogurt, & many other foods
  • Lactic acid is made from fermentable sugars
    • Sugars are found in plants
    • NW uses corn sugar (dextrose) today to make lactic acid
  • Sugars are made from CO2 via photosynthesis
    • Photosynthesis involves carbon
is sustainability enough to drive the adoption of bio polymers
Is SUSTAINABILITY enough to drive the adoption of bio-polymers?
  • Sustainability is a complicated topic
  • There is little agreement on what it means or how to measure improvement
  • Many talk about it, only a few act on the talk
  • Although NW is involved with many innovative companies, widespread brand adoption is critical long term
  • Brand adoption still depends on performance, cost, and the availability of an efficient delivery / disposal infrastructure
  • The tide seems to be turning, though …
    • Kyoto Protocol / Global warming
    • Rising oil prices
    • Pollution (white, air, water, other) concerns
    • Health & lifestyle issues
    • Corporate responsibility
    • AICHI Expo. (2005), Green Olympics (2008), Shanghai Expo. (2010)

6

slide8

Reduce Dependence on Petroleum

Reduce Environmental Footprint

NatureWorks’ current raw material source

Traditional raw material source

6

renewable resource benefits

OIL

OIL

OIL

Renewable Resource Benefits

Process Energy

Conventional Plastics

M’fg Process

+

+

Process Energy

NatureWorksTM

PLA M’fg Process

+

+

CO2

environmental footprint benefits
Environmental Footprint Benefits
  • Measure all inputs and outputs in a Life Cycle Analysis (LCA):
    • Raw materials, upstream and downstream
    • All products through manufacturing and product use and disposal
  • Energy, CO2, other impacts on environment
pla net green house gas emissions cradle to pellets
PLA Net Green House Gas Emissions: Cradle to Pellets

56% less GHG than PET

PLA using fossil energy

CO2 Kg / ton

Lignocellulosic with Energy Integration

slide12

Fossil Resource Use & GHG Emission ReductionsExample:PLA vs. PS Cups1

31% less fossil fuel use

32% fewer GHG emissions

1 Up to Cup Production; Current Blair production data;

HIPS&GPPS; European Industry data, APME

sustainable materials ideal
Sustainable Materials Ideal

Scorecard

  • Renewable resource
  • Minimum environmental footprint
    • Small enough so the ecosystem can still balance
  • Completely recyclable
    • Carbon level
    • Material level
  • Safe ingredients (both human and environment)
  • No persistent compounds
  • No negative impact on food supply (enhance food and feed)
does natureworks pla differ from traditional plastics
Does NatureWorks PLA Differ From Traditional Plastics?

Running out

Not sustainable

Scarce

Crude Oil

Iraq

Mid-east

Dinosaurs

Pump

Drill

Barrels

More GH gases

Difficult to biodegrade

vs.

vs.

vs.

vs.

vs.

vs.

vs.

vs.

vs.

vs.

vs.

vs.

Renewable

Sustainable

Abundant

Carbohydrates

Iowa

Mid-west

Dirt

Bushels

Plant

Harvest

Fewer GH gases

Easy to biodegrade

US

PRC

JPN

responsibility is the next big thing for brands and the ball is starting to roll
Responsibility is the next big thing for brands, and the ball is starting to roll
  • The landscape is rapidly changing for businesses
  • Consumers expect corporations to be more responsible
  • Consumers are looking for actions, not just words, when it comes to corporate responsibility
  • Responsibility (or making a positive impact) is becoming a necessary part of doing business in today’s world
slide18
The same container that holds your soft drink could become branded trash
  • The opportunity is for brands to start actively (and publicly) working toward eliminating the negative repercussions of their commercial success

10

slide19

Many audiences have opinions & influence, and are starting to “force” the issue with influential brands ...

slide20
Brands adopting NatureWorks PLA realize it’s an opportunity to show that they are becoming more responsible, too
what are the longer term prospects
What are the longer-term prospects?
  • Category growth is expected to exceed 13% per annum over the next 3 years
  • Global demand is forecast at more than 338,000 tons by 2008
  • U.S. market value alone is worth more than $490 million today
  • Market globally is being driven by:
    • Increase of “fit-for-use” applications - computer cases, H2O bottles, etc.
    • More competitive price structure - oPS vs oPLA film (U.S.)
    • Greater government / legislative traction - e.g. Taiwan, Korea, JPN
    • More unified biodegradation standards - MOU between Japan, EU, US and China has led to more “+” global interactions
    • Increase in collaborative R&D efforts - HDT, PLA foam, PLA alloys, etc.
    • Higher levels of consumer education/wealth, & user adoption

Fredonia Group, December 2004; NW internal

2

current market share
Current Market Share

Frost & Sullivan, 2003

2

slide26

NatureWorks PLA Industrial compost Recycling Incineration Hydrolysis

Trash/landfill

NatureWorks PLA -

sugar

Product

PS Foam Trash/landfill Incineration

PET Bottles Recycling Trash/landfill Incineration

PET & PS

FOAM - oil

WHERE IT COMES FROM

WHERE IT GOES

key challenges
Key Challenges
  • Poor experiences in the past with bio-based materials
    • Starch / poly-olefin blends, inferior performance, etc.
  • Risks of trying something new
    • PLA a virtual “drop in” on PET and PS lines
  • Perception of higher costs (material, switching, etc.)
    • Efficiencies are improving so that high oil prices - while helpful - are not really required to “make the sale”
    • PLA density / down gauge advantages versus PET

15

key challenges cont d
Key Challenges (cont’d)
  • Physical recycling & disposal
    • Large volumes are needed to develop a dedicated infrastructure, but some companies are finding solutions
  • Lots of talk, not much action –
    • Governments need to move more from research to retail
    • Plenty of “eco” talk, little “eco” walk, lots of “eco” bullets
  • GM Issue
    • No GM can be found in PLA (3rd-party certification)
    • There is no advantage to having GM in PLA
    • A road to a sustainable future is better than no road at all
slide30

PLA is a significant step toward a

better future. It uses an annually renewable resource,

instead of petroleum, to make one of the world’s most

common materials, plastic.

PLA represents a significant step

change that consumers seem to desire.

A product of fermentation and distillation,

PLA only requires a commercially

available source of plant sugar.

PLA does not contain any

genetic material.

  • - PLA reduces petroleum dependency & GHGs, and is a positive step toward more sustainable manufacturing.
  • - PLA has distinct disposal advantages over comparable petroleum-based plastics.
  • - Raw material can be replenished every 100 days instead of every 100 million years.
  • - PLA represents an opportunity for positive change at major brand owners.
  • -- NatureWorks is committed to continued process improvement to enhance the environmental profile of its operations and products.
  • - Like other plastics, PLA is carbon based. The ultimate carbon source is corn, not crude oil.
  • -- PLA has been certified to be free of any genetic material by GeneScan Inc., recognized by both government and NGOs as the leading authority for testing food, feed and raw materials.
  • -- If desired, customers can contract directly with growers for an offset amount of identity-preserved corn.
  • - To succeed in the global market, a large-scale, stable sugar source is needed that allows PLA to be price competitive today with PET, and eventually, PS.
  • - Corn is the least expensive and most abundant source of commercially available sugar in the world today.
  • - Even at full global capacity, NW will use less than .005 percent of the annual U.S. corn crop.
slide32

Biopolymers like NatureWorks PLA can be points of inspiration and differentiation to help brand companies rethink material choices in order to build new (and better) brand attributes.

20

slide33
NATURAL, SAFE, FRESH -made from nature, ideal for food packaging

END-OF-LIFE- corn-to-compost; burns cleaner, may be recycled

BEAUTIFUL - can be transparent like glass, or opaque like ceramic

DETAIL-can be easily and deeply embossed

TEXTURE- easy to twist and fold; stiff

PATINA- unique abrasion resistance

Brands are starting to pay attention to emotional attributes as much as they do the physical ones

21

pop banners posters
POP Banners / Posters

Your foodcomes from nature.

Now sodoes your container.

slide37

“Let me win; if I cannot, let me be brave in the attempt.” - Motto of the Special Olympics

20