Marguerite Morrin IHS Markit

Global Soda Ash Overview
Global supply/demand overview and how Mexico fits

into the global picture
GLASSMAN LATIN AMERICA 2018

Wednesday 21 March 2018
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Soda Ash Capacity Dynamics are Constantly Shifting
2000 2018
Rank Company Caps MMT/Share Rank Company Caps MMT/Share

1 Solvay 6.79 / 15.5% Rank Company Caps MMT/Share 1 Solvay 7.32 / 10.3%
2 FMC 3.50 / 8.0% 1 Solvay 7.32 / 10.7% 2 Ciner 4.60 / 6.5%
3 General Chemical 2.55 / 5.8% 2 Tata 3.73 / 5.5% 3 Tata 3.73 / 5.2%
4 Sterlitamak 2.30 / 5.2% 3 Tronox (FMC) 3.68 / 5.4% 4 Genesis Alkali 3.68 / 5.2%
5 OCI Enterprises 2.09 / 4.8% 4 Ciner Group 3.06 / 4.5% 5 Shandong Haihua 2.85 / 4.0%
6 Brunner Mond 1.48 / 3.4% 5 Shandong Haihua 2.85 / 4.2% 6 NIRMA 2.73 / 3.8%
7 IMC Global 1.36 / 3.1% 6 NIRMA 2.70 / 4.0% 7 Ciech 2.43 / 3.4%
8 Ciech 1.10 / 2.5% 7 Ciech 2.41 / 3.5% 8 Sanyou Chemical 2.20 / 3.1%
9 Lianyungang Soda 0.90 / 2.1% 8 Sanyou Chemical 2.30 / 3.4% 9 Hubei Yuhua 2.10 / 2.9%
10 Shandong Haihua 0.90 / 2.1% 9 Hubei Yuhua 2.10 / 3.1% 10 Sisecam 1.93 / 2.7%
Top10 23.0/52.4% 10 Sisecam 1.93 / 2.8% Top10 33.6/47.0%
Top10 32.1/47.0%
Calculated on a shareholder basis

2017
World Capacity Changes
Net Decrease
NAM West Europe CIS S.E.Asia
0.5 Africa
0.5 0.5 0.5
0.0 0.0 0.5 0.0
0.0
Million MT
-0.5 0.0 -0.5
Million MT
-0.5 -0.5
Million MT
Million MT
-1.0 -0.5 -1.0
Million MT
-1.0 -1.0
-1.5 -1.5 -1.0 -1.5
-1.5
-2.0 -2.0 -1.5 -2.0
-2.0
-2.5 -2.5 -2.0 -2.5
-2.5
2000
2003
2006
2009
2012
2015
2018
2000
2003
2006
2009
2012
2015
2018
2000
2003
2006
2009
2012
2015
2018
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
-2.5
2000
2003
2006
2009
2012
2015
2018
Net Increase
SAM CEP ISC N.E. Asia
5.5 Middle East
5.5
Million MT
5.5 25
4.5 5.5
4.5 4.5 20
3.5 4.5
3.5
Million MT
3.5 15
Million MT
Million MT
2.5 3.5
Million MT
2.5 2.5 10
1.5 2.5
1.5 1.5 5
0.5 1.5
0.5 0.5 0
-0.5 0.5
-0.5
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
-0.5 -0.5 -5
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2000
2003
2006
2009
2012
2015
2018
2000
2003
2006
2009
2012
2015
2018
Includes Turkey
Annual Net Change
Cumulative Total
Capacity by Geography and Type
US has biggest commercial
World Capacity Change reserves of natural soda ash.
The newest commercial
40.0 natural production is in Turkey
35.0 Syntheti
Million Metric tons
c Other
30.0 5%
25.0 Natural
Syntheti
26%
c Hou
20.0 23%
15.0
Syntheti
10.0 c
Solvay
46%
5.0
0.0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Hou process is mostly in

Europe Asia Africa/ME US ROW
China, co-produces NH4Cl (a
Source: IHS Markit © 2018 IHS Markit
low grade fertilizer)

Capacity by Geography CIS
CEP 4.6 MMT NEA
3.8 MMT 31.3 MMT
WEP
5.5 MMT
NAM
13.5 MMT
SEA
0 kt
NAM
AFR13.5 MMT WEP
MDE 1%
6% 8% CEP
6%
NAM CIS
20% 7%
SAM ISC
0.4%
ISC 3.9 MMT
6%
AFR MDE
NEA SAM 700 KT 4.4 MMT
46% 250 KT

Soda Ash Use Patterns Change
The biggest end use is flat glass,
is driven by Construction
World Demand by End Use
100%
90%
Others Chemical
80% 17% s
9%
70% P&P
[PERCE
60% NTAGE]
Mining
50% [PERCE Flat
NTAGE] Glass
40% 27%
Soap &
30%
Det
[PERCE
20% NTAGE] Containe
r Glass
Other
10% 20%
Glass
6%
0%
China WEP U.S. CIS India Mexico SAM CIS World
World Demand 2017 = 58.9 MMT
2nd biggest end use is Container

glass. Niche for Alcoholic Beverages
CIS
Demand by Geography CEP 3.6 MMT NEA
AFR 1.5 MMT 27.3 MMT
MDE [PERCE
SAM [PERCENTAGE] WEP
[PERCENTAGE] 6.3 MMT
NTAGE]
NAM
PERCE NEA
NTAGE] [PERCE
NTAGE]
WEP
ERCE
TAGE]
CEP
PERCE
SEA
NTAGE]CIS ISC SEA 2.9 kt
[PERCE
[PERCE [PERCE
NTAGE]
NTAGE] NTAGE]
NAM
6.6 MMT
SAM ISC
2.6 MMT 4.4 MMT
AFR MDE
1.4 MMT 2.3 MMT

Demand by Geography
Per Capita Demand 2017
Bubble Size: Demand
• Much of the world’s demand is in China, 44% 22
• Driven by housebuilding 20
Kg per Capita
18 US China
• WEP and US are mature markets 16
WEP
• SAM growth driven by Lithium 14
CEP
12
CIS
• ISC growth has been driven by soaps & 10
detergents – Potential for Glass 8 MDE
6
• SEA growth is mixed but includes a lot of new 4
[SERIES
NAME],
glass capacity 2
India
Africa
• Africa growing but from a very low base 0
-2
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
Source: IHS Markit Million Metric Tons © 2017 IHS Markit

Outlook for Global Supply vs Global Demand
Soda Ash Demand, China vs ROW World Capacity Changes
40 4.0
35
3.0
Million Metric Tons

Million Metric Tons
30
2.0
25
20
1.0
15
0.0
10
5 -1.0
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
-2.0
2010 2012 2014 2016 2018 2020 2022
China World Excl. China NAM Middle East ISC NEA Europe ROW
Source: IHS Markit © 2018 IHS Markit Source: IHS Markit © 2018 IHS Markit

Shifting Market Dynamics China Soda Ash Price Comparison
330
• Markets seeing increased volatility 310
Dollars Per Metric Ton

• Soda ash supply/demand dynamics shifting 290
270
• Chinese market has matured and new
250
environmentally focus impacting on supply
230
• Volatility in energy/raw materials 210
• A new supply source, Turkey, entering the 190
market 170
150
• Flat glass still drives demand, also some
130
traditional & new demand sectors supported by
110
environmental concerns
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Calc Export Price (FOB)
Avg Dom Price, Light Ash (Del), Excl. VAT
Source: IHS Markit
Avg Dom Price, Heavy Ash (Del), Excl. VAT © 2018 IHS Markit

Soda Ash Trade

Soda Ash Trade has Grown Faster than Demand
Soda Ash Regional Net Trade 2017
• Trade is very important in soda ash industry 8.0
Million Metric Tons

• 25% of production is shipped to be consumed 6.0
in other regions
• World trade has grown faster than demand 4.0
• Since 2010 World demand has grown by 2.0

3.5%/y vs trade growth of 4.3%/y
• The biggest change is in the Middle East 0.0
• Net exports from Turkey are growing as new -2.0

capacity comes on stream
-4.0
Middle Africa CEP CIS WEP SEA NEA ISC NAM SAM
East
Imports Exports Net Exports 2017 Net Exports 2022

CIS
CEP
Net Exports by Region +1.8 MMT
+32 KT NEA
+189 KT
WEP
-1.6 MMT
SEA
-2.9 MMT
NAM
+5.6 MMT
SAM
-2.3 MMT ISC
MDE -884 KT
AFR
902 KT +926 KT

Top Exporters, Turkey becoming a Major Player
Top Exporters, Share
60%
• Natural soda ash producer, the US, is
Share of Global Exports

dominant exporter 50%
• China historically 2nd largest exporter

40%
• Turkey becoming a major player
30%
• Beypazari (expansion) and Kazan (new
plant) 20%
• 3 MMT new capacity on stream in 2017/18

10%
• New natural capacity has low production
costs 0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
• Now the 2nd largest exporter in the world
China US Turkey Bulgaria

Major Import Markets
Imports by Region
4.0
• Three most 3.5

SEA SAM WEP
significant
Million Metric Tons

3.0
importers are
SEA, SAM and 2.5
WEP 2.0
• All regions are 1.5

being targeted
1.0
by new Turkish
capacity 0.5
0.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
NAM SAM WEP CEP CIS AFR MDE ISC NEA SEA

Supply
Cost Volatility & Impact on Supply

Chinese Price Volatility
China Soda Ash Price Comparison
330
• Price volatility in China 310
influenced by availability
Dollars Per Metric Ton

290
270
• And also by changes in costs 250
• China is a significant exporter 230

210
and thus can impact Rest of
190
World
170
• Exports fell from 1.98 Million Mt 150
in 2016 to 1.52 Million Mt in 130

110
2017
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Hou Cash Costs (Excl NH4Cl credit) Solvay Econo. Cash Costs
Calc Export Price (FOB) Avg Dom Price, Light Ash (Del), Excl. VAT
Avg Dom Price, Heavy Ash (Del), Excl. VAT

Changes in China
• China’s government is moving to greener

economy
• Reducing pollution through government checks
• Implementing stricter controls on industrial
capacity
• Incentivising air/water waste emission
reduction
• Decrease energy consumption by 15% by 2020
• Reduce VOC emissions by 10% by 2020

Environmental restrictions in China helped push up prices from Jan 2016 to Dec 2017
Thermal coal: Coke: ¥629 to

¥399 to ¥748 per ton ¥2204 per ton
Metallurgical coal:
536¥ to 1418¥ per ton
Power: Steam: Ammonia: Steel: output

¥0.47/kWh to ¥62.1 to ¥107.4 ¥326 to ¥451 grew 5.7% in
¥0.60/kWh per ton per ton 2017
Raw material/energy costs saw increases in 2017 driven by environmental checks
Raw Material and Energy Costs for China, US and West Europe
300
250
US$ per mt
200
150
100
50
0
China Hou 2016 China Hou 2017 China Solvay China Solvay WEP 2016 WEP 2017 US 2016 US 2017
2016 2017
Salt Ammonia CO2 Energy Coke Limestone Trona Fixed Cost

Delivered Costs to Major Import Regions
Delivered to Brazil Delivered to the Mediterranean
350 250
300
200
$ Per Metric Ton
$ Per Metric Ton

250
150
200
150 100
100
50
50
0
0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
US WEP China Solvay Turkey WEP Coal WEP NG Turkey US

Regional Market Dynamics

CIS
Regional Demand -0.3% +1.3%
NAM 30 NEA
+0.6% +1.6% CEP +2.7% +1.1%
20
WEP 30
+0.8% +2.4%
30
+1.0% +0.8% 10
30 20
20 30
-
20 10
10 20 2017 2022
10 -
- 10 2017 2022
2017 2022
0
- 2017 2022
2017 2022
30 MDE
+1.0% +1.8%
20
30
SAM 10
+0.9% +4.5% 20
30 -
10
2017 2022
20 -
2017 2022 SEA
10 ISC +3.2% +3.6%
AFR
+3.9% +4.4% 30
- +3.3% +3.4%
2017 2022 30 30 20
20 20 10
10
10 -
Region - 2017 2022
- 2017 2022
AAGR 12-17 AAGR 17-22
2017 2022 Demand | Million Metric Tons
How Turkey Competes 3.6 MMT 6.0MMT 2.4MMT
Exports Capacity Demand
44%
44%
Kazan Soda – Kazan 87%
Derince 2.5MT/Y, Aug 17 / Q1 2018 99%
Trona based
Turkey % Share in MDE
327 km
Kazan
255 km Beypaziri
Turkey
Eti Soda – Beypazari
1MT/Y Trona based
Expansion: 0.5MT/Y, March 2017 Sisecam – Mersin
Trona based 1.3MT/Y
Mersin
Solvay based
Chemicals Enter New Frontiers: Industry Innovates and Adjusts to Uncertainty in Energy and Economy
Europe Challenges
Imports to West Europe CEP Capacity vs Demand
2.5 4.0
Million Metric Tons

3.5
Million Metric Tons
2.0
3.0
2.5
1.5
2.0
1.0 1.5
1.0
0.5
0.5
0.0
0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
NOV
Turkey CEP CIS United States ROW 17 Capacity Demand

China is the biggest & most Dynamic Market in the World
China Demand and Supply
35.0
• Largest, fastest growing market in last 20 years,
Million Metric Tons

but growth has slowed 30.0
• China dominates its own domestic market 25.0
• Has built capacity to meet demand 20.0
• 90% synthetic capacity, Hou process dominates 15.0
• Capacity exceeds demand - exports to 10.0

surrounding regions
5.0
• Historically World’s 2nd biggest exporter now 3rd
• Greater focus on environmental issues 0.0
Demand Capacity

US Historical Context
US Supply Demand Dynamics
16.0
• US capacity far exceeds demand

14.0
• Domestic demand fell after the financial crisis
Million Metric Tons

12.0
• But exports have grown
10.0
• US dominates North America (Canada,
Mexico) region thanks to its low production 8.0
costs
6.0
• US also has influence in other parts of the
world 4.0
• No 1 exporter in the world 2.0
0.0
Domestic Demand Exports Capacity


US rail costs reduce competitiveness • Exports are 58% of production;
have grown by 6%/y since 2010
Portland • Exporters saw significant rail
freight increase since 2016
• Turkey has better freight to east
coast
• Domestic demand is below
North pre-recession levels
Carolina • Container glass, largest end
use, is declining
• 11 float-glass plants shut
between 2007-2014, demand
has recovered but local glass
plants struggling to keep up
Port • No major soda ash capacity
Arthur expansions scheduled
Freight from
Turkey $40
US dominance in NAM is absolute but its influence in other markets is threatened
US Export Destinations
50%
Other
Share of Total Exports
5%
40%
Europe
NAM
7%
20%
30%
20%
Asia
42% SAM
10% 26%
0%
Total Asia NEA SEA SAM WEP NAM ROW
Confidential. © 2017 IHS MarkitTM. All Rights Reserved. US exports by region

Mexico supplied through the US via rail – Some local production exists
Port Laredo –
Largest Soda Ash Rail Gateway
Mexico is the worlds 2nd largest importer

Trona Reserves of soda ash – mostly from the US
Mexico is home to natural

Trona reserves that yet to be
Rail Costs
exploited
Much of Mexico’s supply comes via
Union Pacific Rail - costs are increasing
Industria del Alcali

Domesti
1 local synthetic producer – Other c
19.5%
meets approximately 19.5% of Imports
0.4%
Rail Gateway total supply in Mexico
Soda Ash Plant US
Imports
80.1%

Mexico demand is seeing changes through investments
O-I/Constellation
Ambitious plans to expand

Bacanora Lithium container glass
Set to be the first Lithium
project to extract from clay Vitro Expansion Monterrey
Expansion plans currently on

hold
Saint Gobain Saltillo

Timmins Gold Plans to build new float plant
San Francisco mine Gold Chemical
output increase planned this Others s
Metals/Mi7% 4%
year – new mine in Sanora ning
8%
Flat
Glass
STPP & [PERCEN
Lithium Project TAGE]
Auto Glass Detergent
Gold Project s
17%
Automobile production grew 8.9% Container
Flat Glass Demand Growth Glass
driving flat glass demand 2012 – 2017 %AAGR: 1.7% Other 38%
Container Glass Glass
2017 – 2022 %AAGR: 3.7% 4%
South America Market Profile
South America Per Capita Demand South America Supply Demand
Bubble Size: Demand 4.5

25
4.0
Million Metric Tons

Chile 3.5
20
3.0
Kg per Capita
15 2.5
2.0
10
Argentina
Colombia 1.5
Peru
5 1.0
Brazil 0.5
0
Venezuela 0.0
2000 2004 2008 2012 2016 2020 2024
-5
0 200 400 600 800 1000 1200 1400
Capacity Demand
-000- Metric Tons

South America is an Attractive Market for Exporters
Imports to Brazil, Argentina, Brazil, Market Share Soda Ash Imports, Brazil, Chile, Argentina
2.0
100%
1.8
Million Metric Tons

90%
80% 1.6
Market Share
70% 1.4
60% 1.2
50% 1.0
40% 0.8
30%
0.6
20%
0.4
10%
0.2
0%
0.0
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
US Europe Turkey China ROW

US Europe Turkey China Other

Chapter &
Summary Slide
Conclusions
Environmental Considerations driving demand

Global Soda Ash Outlook
Soda Ash Operating Rates
95%
• Strong demand outlook

• Short term there is excess capacity 90%
Forecast
• Markets may be competitive

85%
• China should resume exports but China
is very influenced by government policy
80%
• New Turkish capacity will influence a shift
in global trade patterns 75%
70%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
World World, Excl China
Source: IHS © 2013 IHS

Summary Page
2000 – 2018 has seen saw significant shifts in

profile of key soda ash market players
Growth in China has influenced global volatility
New trona based capacity in Turkey will challenge

existing suppliers
Strong prospects for demand in Mexico and South

America
Contact details
Marguerite Morrin
Executive Director \ Chemicals
+44 (0) 208 544 7858 tel
+44 (0) 773 9939893 mob
Marguerite.Morrin@ihsmarkit.com
London
Matthew Hancock
Senior Analyst \ Chemicals
+44 (0) 20 3159 3728 tel
+44 (0) 7973 935129 mob
Matthew.Hancock@ihsmarkit.com
London

IHS Markit Customer Care
CustomerCare@ihsmarkit.com
Americas: +1 800 IHS CARE (+1 800 447 2273)
Europe, Middle East, and Africa: +44 (0) 1344 328 300
Asia and the Pacific Rim: +604 291 3600
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Global Soda Ash Overview

Global supply/demand overview and how Mexico fits

GLASSMAN LATIN AMERICA 2018

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Rank Company Caps MMT/Share Rank Company Caps MMT/Share

Calculated on a shareholder basis

Hou process is mostly in

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

World Demand 2017 = 58.9 MMT

2nd biggest end use is Container

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Bubble Size: Demand

• Much of the world’s demand is in China, 44% 22

Source: IHS Markit Million Metric Tons © 2017 IHS Markit

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Million Metric Tons

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Dollars Per Metric Ton

• A new supply source, Turkey, entering the 190

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

• Trade is very important in soda ash industry 8.0

Million Metric Tons

• Since 2010 World demand has grown by 2.0

• Net exports from Turkey are growing as new -2.0

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Share of Global Exports

• China historically 2nd largest exporter

• 3 MMT new capacity on stream in 2017/18

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

• Three most 3.5

Million Metric Tons

• All regions are 1.5

Source: IHS Markit © 2018 IHS Markit

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Dollars Per Metric Ton

• China is a significant exporter 230

in 2016 to 1.52 Million Mt in 130

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

• China’s government is moving to greener

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Thermal coal: Coke: ¥629 to

Power: Steam: Ammonia: Steel: output

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Delivered to Brazil Delivered to the Mediterranean

$ Per Metric Ton

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Million Metric Tons

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Million Metric Tons

• China dominates its own domestic market 25.0

• Has built capacity to meet demand 20.0

• 90% synthetic capacity, Hou process dominates 15.0

• Capacity exceeds demand - exports to 10.0

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

• US capacity far exceeds demand

Million Metric Tons

• No 1 exporter in the world 2.0

Domestic Demand Exports Capacity