Making the Business Case for Conversion Peter Maxson, Director Concorde East/West Sprl UNEP Global Mercury Chlor-alkali Partnership Expert Group Meeting to Identify Barriers and Opportunities Vienna, Austria 28-29 June 2016

PMaxson - Making the Business Case for Conversion Overview Economic and regulatory aspects of conversion Factors to consider Highlights from “Cost of Conversion” Regulatory requirements Disposition of mercury stocks Objective Convince firms to convert? Or show the best way to convert? PMaxson - Making the Business Case for Conversion

Factors to consider regarding conversion Economic, regulatory Domestic regulatory requirements International agreements and obligations The marketplace, present and future Availability and sources of financing (domestic, international development funding, etc.) Internal company or external financing Energy costs and trends Cost of clean-up Allowance for uncertainties PMaxson - Making the Business Case for Conversion

Factors to consider regarding conversion Social Corporate social responsibility, relations with stakeholders Human health risks (workers, general public) Environmental Environmental impacts (emissions, releases) Hazardous materials management, records Hazardous waste disposal issues Technical [To be dealt with during other sessions] PMaxson - Making the Business Case for Conversion

Highlights from “Cost of Conversion” (1) Conversion to membrane brings benefits: lower O&M costs (energy, personnel, maintenance, etc.) high-quality caustic (and no mercury contamination) no costs of handling, storing, reporting on mercury and mercury wastes (spills, sludges, accumulations...) reduced cell footprint > increased capacity overall lower cost per unit production of chlorine and caustic non-economic benefits = environment, social, health PMaxson - Making the Business Case for Conversion

Highlights from “Cost of Conversion” (2) Conversion to membrane incurs costs: Planning Decommissioning and demolition Downtime Construction and process modifications Site clean-up Higher purity brine required Lower chlorine quality Likely concentration of caustic needed PMaxson - Making the Business Case for Conversion

Making the business case historically low interest rates bilateral and multilateral funding opportunities chance to expand capacity, modernize process flow and adapt to new market realities from “Cost of Conversion,” depending on a great number of assumptions: Up to 15 years payback time in a high-cost, highly regulated environment (e.g., EU) As little as 5 years payback time in a lower-cost, more flexible environment (e.g., India) PMaxson - Making the Business Case for Conversion

Current and future regulatory drivers International agreements and obligations (Minamata Convention) Federal regulations State/local regulations releases to water (Water Framework Directive) Best Available Technology related regulations mercury stocks monitoring and reporting carbon pricing PMaxson - Making the Business Case for Conversion

Disposition of mercury stocks Virgin mercury Storage cost Sale or disposal cost Recovered and excess mercury Cost of cleanup before sale Disposal cost Three markets for mercury (US, EU, RoW) PMaxson - Making the Business Case for Conversion