The DuPont MECS Executive Forum

INNOVATING TO ZERO – ZERO SO2 EMISSIONS APPROACHES AND CHALLENGES Paris – 3 November 2014

EXECUTIVE SUMMARY

INNOVATING TO ZERO – ZERO SO2 EMISSIONS APPROACHES AND CHALLENGES

THE DISCUSSION

Sulphur and sulphuric acid producers operate in a global community, in terms of trade, working conditions, operations and emissions. It is clear that companies in the sulphuric acid industry who want to retain a license to operate and a license to grow need the approval of local and national authorities, as well as from the communities in which they are located.

On a macro scale, all sulphur and sulphuric acid producers will need to demonstrate compliance with the Gothenburg Protocol and the Boardman 2020 Emission Reduction plan and put in place long-term plans to reduce SO2 emissions and overall environmental footprint. On a micro scale, they also have to meet the World Health Organisations SO2 air quality targets. And, at a more local level, they need to fulfil local ambient air quality criteria.

Compliance with all the different targets and regulations therefore has to be considered as a main driver for production capacity and technological plans – both current and future. That may result in complex processes that have to integrate real time measurements and entail modelling, production capacity adjustments and technology changes or add-ons such as post-treatment or recovery processes. Installations that do not meet the emissions targets may have to close. Each producer has to develop his own approach and find out what is best suited to his site.

It is in discussions such as those of this executive forum that we can assist each other by sharing ideas, approaches and solutions, and help the industry in general move forward with the reduction of SO2 emissions so it can continue to grow and prosper.

Thierry Marin, EMEA Clean Technologies Director, DuPont Managing Director, MECS

The DuPont MECS Executive Forum was attended by around 100 senior executives from the sulphur and sulphuric acid industry. They included operators, technology providers, engineering companies, decision makers and many more. Live polling took place throughout the forum. Charts highlighting the results are included in the summary at the relevant stage.

THE PANEL

MODERATOR:

PANELLISTS:

Thierry Marin EMEA Clean Technologies Director, DuPont and Managing Director, MECS

Vladimir UshakovHead of the Sulphur Project, OJSC MMC Norilsk Nickel

Marcio Senne de MoraesGlobal Director for External Affairs, Vale

Steve Puricelli Vice President, MECS

Iliass ElfaliSafi Site Director, OCP

WHY IS SO2 EMISSION REDUCTION IMPORTANT?

The forum began by discussing the reason for the increasing importance of SO2 emission within overall corporate goals and the trends related to emission reduction in the industry. The first lesson in the impact of SO2 emission on air quality dates back to the 1952 London weather inversion, when around 4,000 people are known to have died. Since then countries have been collecting more and more data. Big improvements have been made by the sulphuric acid industry, but there is still opportunity to advance further.

The basis (of all calculations) is the social cost of SO2 emission. We have to find a balance between what we produce and the cost on healthSteve Puricelli, MECS

What was accepted in the past is no more accepted today. People are expecting not only a neutral impact, but a positive impact from our operations.Iliass Elfali, OCP

Emissions reduction is the starting point of any land or water reclamation. If you keep on having acid rain, you are not going to be able to plant anything. The fish are not going to come back.Marcio Senne de Moraes, Vale

RECONCILING SHORT-TERM SHAREHOLDER DEMANDS WITH THE NEED FOR A LONG-TERM EMISSIONS SOLUTION

The forum moved on to discuss the key challenge of maintaining a long-term focus on emissions while satisfying shareholder and stakeholder requirements.

Speaking of its large-scale, bulk-mining projects, Marcio Senne de Moraes of Vale explained that the company had to take a very long-term view.

We try, more and more, to participate in collective action initiatives which shed light on the need for the longer term.Marcio Senne de Moraes, Vale

“

“

“

“

How important are SO2 emissions reductions within your overall corporate goals?

Important

Not Important81%

19%

?

? How significant has the impact of more stringentregulations been on your company?

Significant

Not Significant77%

23%

INNOVATING TO ZERO – ZERO SO2 EMISSIONS APPROACHES AND CHALLENGES

SHOULD LEGAL COMPLIANCE BE THE TARGET?

Opinion among panellists was unanimous that corporations have to go beyond mere legal compliance to retain the right to operate.

You have to go beyond the local laws and regulations in order to ensure that you are going to be seen as a good corporate citizen who brings back value in terms of social investment, but also in terms of environmental protection for the host communities.Marcio Senne de Moraes, Vale

“

PERCENTAGE

0 10 20 4030 50

Are you proactively communicating with local communities about SO2 emissions issues?

Yes, Very Proactively and Specifically

Yes, As Part of RegularEnvironmental Communication

Not Proactively, but On Request

Not At All

12%

32%

32%

24%

Currently in your operations, what is the first priority in improving emissions performance?

PERCENTAGE

44%

9%

16%

31%0 10 20 4030 50

Revising procedures and upgrading equipmentto minimize emissions, especially during

start-up, shutdown and malfunctions

Installing equipment that will not “emission limit”production over the entire operating campaign

Retiring old and inefficient assets and buildingnew “state-of-the-art” plants

Proactively upgrading existing assets to bestavailable control technology

?

?

THE COST OF EMISSION MEASUREMENT AND MONITORING

Panellists agreed that measurement and monitoring of SO2 emissions might be costly, but considered it a necessary first step in enhancing environmental performance. Air dispersion modelling based on weather conditions to simulate the dispersion of gases and adjust operations accordingly are increasingly used, but are not considered sufficient.

There are a lot of influencers that really have an impact: buildings, weather conditions, many factors that the theoretical models don’t take into account. If you look at the effect on a particular person at some point downwind, the amount of SO2 that they actually receive could differ very significantly from the model.Steve Puricelli, MECS

Monitoring stations are important to give actual feedback and can be used to adjust models to ensure predictions take into account other effects.

HOW DO STAKEHOLDER EXPECTATIONS FIT INTO THE DISCUSSION ON MONITORING?

Marcio Senne de Moraes from Vale gave several examples of the company’s activities starting with a new project in New Caledonia where part of the local community was not totally favourable to development. The company met with community leaders and struck a deal. It also works with a local NGO, which routinely monitors emissions 24/7 and publishes the results. Elsewhere, in Canada’s Sudbury basin, Vale has put together a community environmental monitoring team for its Clean Air Project composed of Vale people, local community representatives and local authorities.

The more people know about what you are doing, the better. If you are not perceived as being transparent (…) you end up having a problem.Marcio Senne de Moraes, Vale

Today, community expectations exceed mere compliance, especially when you have people living next door. Communicating with the community about our actions, achievements and vision is necessary.Iliass Elfali, OCP

HOW CAN COMPANIES IMPLEMENT EMISSION REDUCTION ACTIVITIES WITHIN EXISTING OPERATIONS?

Vladimir Ushakov, head of the new sulphur project at OJSC MMC Norilsk Nickel highlighted the challenge many large SO2 producers face in a monocity situation, were a single company is the only major employer. If it withdraws, the entire community will die out. Norilsk Nickel’s new project faces numerous challenges from its location which allows transport only via the Arctic Ocean and river; Temperatures in winter, a season which there last eight months, are regularly at -45°C. There is a significant skills shortage: 2,000 people will need to be brought in for a three and a half-year period, and there is a lack of construction materials. The sheer size of the operations requires technology on a scale that has never been tested before in an integrated scheme.

We consider ourselves like a large R&D centre. (…) Reducing our pollution (…) is a must, no matter what. It is up to us to integrate our technology seamlessly.Vladimir Ushakov, Norilsk Nickel

Other operations also take a multi-level approach that encompasses improving the efficiency of existing plants, upgrading equipment and investing in new plants of the last generation. However, working on reliability and process optimisation was considered key in achieving overall improvements.

“

“

“

“

INNOVATING TO ZERO – ZERO SO2 EMISSIONS APPROACHES AND CHALLENGES

WHAT CHANGES ARE NECESSARY FOR COMPANIES TO SUCCESSFUL OPERATE WITHIN THE TIGHTER EMISSION LIMITS?

The discussion moved on to discuss the effect of emissions reduction activities on operating margins and the changes that are needed for operations to run within the tighter emission limits. Processes are generally limited by equilibrium. There is only a certain amount of SO2 that can be converted and recovered. Once companies hit that limit, they are done. That means more analysis, better trained operators, an improved understanding of all the situations a plant can face and how to react to them proactively. This requires training, process optimisation, skills development, as well as equipment upgrades.

Continuous monitoring is going to have to become the standard. We cannot have a lot of variation on the inputs into the plant and expect to have a tight output on the backend.Steve Puricelli, MECS

Combining procedures and skills/behaviours is the first front in the battle. We cut SO2 emissions during start-up by 30 – 50% only through training, skills development and operation procedures alone.Iliass Elfali, OCP

EMISSIONS OF NEW PROJECTS

This session of the forum debated the question of whether the threshold for a new project should be set according to companies’ individual global corporate visions or should be made locally, based on local conditions.

Companies have to adhere to local rules and regulations. We can achieve this with new technologies, but it can be complicated. We have a copper site and a nickel site in one location. They have site-specific requirements. Meeting them with one integrated system is quite difficult.Vladimir Ushakov, Norilsk Nickel

Panellists agreed that local laws and regulations are the baseline for all activity, but that most companies had to go beyond that to be good corporate citizens. Companies have to think about the social licence to operate, as well as the legal licence.

You want to be a corporate citizen that makes a difference. Why? Because the chances are better that you will be the partner of choice for new projects in different countries.Marcio Senne de Moraes, Vale

We don’t want to start a site with environmental constraints from the beginning. So, we go even further in terms of environmental performance goals right from the start. Our ambition is zero emissions. That affects how we design the plant and encourages innovative solutions. We think zero is achievable.Illias Elfali, OCP

THE MERITS AND DRAWBACKS OF SCRUBBING VERSUS HIGHER CONVERSION

When running in a steady state, it is fairly easy to adapt to small variations in the process. Training and operator interface allow most companies to adjust on the run. The real difficulty comes when faced with so-called SSM situations – start-ups, shut downs and malfunctions. Many environmental groups are targeting these events as they offer companies exceptions from their permits and allow them higher emission rates.

Over time, start-ups will require bigger heaters, longer heating and all beds will need to be completely hot before the plant is started up and begins minimising SO2 emissions. Catalysts will age over time, so activity will go down and adjustments will need to be made. Equipment malfunctions and failures are inevitable. Shut-downs will become increasingly frequent to fix malfunctions, because operating limits are becoming much, much tighter.

? Are SO2 emissions a limiting factor for productionin your company?

38%

62%Yes

No

“

“

““

“

The options are to reduce the SO2 strength and the overall production rate. That will limit the amount of production. Operating margin considerations will become very important, as will careful examination of the events that might curtail production.

The polling results to question 6 show that the majority would rather adjust SO2 levels with an improved catalyst, through conversion than through tail gas scrubbing. The “magic eraser” of tail gas scrubbing is very costly, but very effective. However, the SO2 has just been taken out of the air and put into the water or into the soil. The sulphuric acid industry faces an increasing problem, as focus turns from air pollution to ground pollution. That leaves emerging regenerative solutions.

Do you make a bigger investment now and put something in that will give you flexibility in the future or do you wait for the future to come and potentially have to retro-fit at a higher price?It’s a tough decision.Steve Puricelli, MECS.

Sulphuric acid producers need to consider all options, their limitations and the cost/benefit analysis and understand that today’s regulation may not be acceptable in the future.

THE ROLE OF OPERATIONAL EXCELLENCE AND TRANSPARENCY

Questions from the floor towards the close of the forum focused on the length of time for return on investment to be made, best solutions and technologies suited to particular plants and situations, key learnings made by the panellists over the lifetime of their projects, the difficulty of integrating various technologies under different licences and who bears the responsibility for communicating with local communities.

Iliass Elfali explained that he key learnings made at OCP in the preparation of the Safi project have been that technology is not the most complicated part of the question. It is always possible to choose the most efficient technology. For OCP is has been a focus on operational excellence that has made a lot of difference to environmental performance.

It is all about operational excellence before investing in equipment.Iliass Elfali, OCP

Addressing the last question, Marcio Senne de Moraes gave Vale’s viewpoint that companies have to be proactive to establish true partnerships with central government, provincial government, local government, community leaders, civil society and NGOs. He also highlighted the role multi-lateral agreements with international organisations can play in making local government and community discussions easier as they bring legitimacy, but also help with measurement and KPIs. Transparency, in his eyes, builds trust. An open line of communication with the people surrounding operations is part of that.

The more transparent you are, the greater chance you have to succeed.Marcio Senne de Moraes, Vale

? To increase production, would you rather focus on treating tail gas (scrubbing) or optimising sulphur recovery (improved catalystconversion)?

25%

75%

Tail Gas Treatment (Scrubbing)

Enhanced Sulphur Recovery (Catalyst/Conversion)

“

“

“

INNOVATING TO ZERO – ZERO SO2 EMISSIONS APPROACHES AND CHALLENGES

IN SUMMARYThe DuPont MECS Executive Forum on sulphur dioxide emission reduction highlighted three key points.

• Firstly, that obtaining and maintaining a licence to operate is key to ensuring business continuity.

• Secondly, that shareholders and stakeholders do expect compliance. For them, compliance is a given. In future, pressure will come from local communities who increasingly have a voice and an ability to influence corporate plans.

• And finally, options exist. From closing high polluting facilities to upgrading existing technology. However, the ultimate solution involves more than the selection of the appropriate technology. It consists of achieving a good balance between maintaining the integrity of equipment and a strong commitment to operational discipline while developing, as well as improving operator skills.

Combining operational discipline with technology puts us in the best place to meet our commitment towards the community in terms of emissions reduction.

ABOUT DUPONTDuPont Sustainable Solutions (DSS) is one of 12 DuPont businesses. Bringing customers the benefits of an integrated global consulting services and process technology enterprise, DSS applies DuPont’s real-world experience, history of innovation, problem-solving success, and strong brands to help organisations transform their workplaces and work cultures to become safer, more operationally efficient and more environmentally sustainable.

For additional information about DuPont Sustainable Solutions and its commitment to protecting people and the environment, please visit:

www.sustainablesolutions.dupont.co.uk

DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802. The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.

For more information about DuPont, please visit:

www.dupont.com

Copyright© 2014 MECS, Inc. All rights reserved. The DuPont Oval Logo, DuPont™, The Miracles of Science™ and all products denoted with a ® or ™ are trademarks or registered trademarks of E. I. du Pont de Nemours and Company or its affiliates.

Brussels, BelgiumMECS Europe/Africa BVBATel: +32-2-658 2620europe-africa@mecsglobal.com

Moscow, RussiaTel: +7-495-797 2200moscow@mecsglobal.com

Dubai, United Arab EmiratesTel: +971-4-428 5615dubai@mecsglobal.com

Johannesburg, South AfricaTel: +27-11-218 8618southafrica@mecsglobal.com

MECS also has regional offices in Asia Pacific and the Americas.

Mumbai, IndiaMECS India Private Ltd.Tel: +91-22-6751 5000india@mecsglobal.com

MECS Inc. (Headquarters)Chesterfield, Missouri 63017 USATel: +1-314-275 5700northamerica@mecsglobal.com