Economics of Process Aid use Asia Tyre & Rubber Conference December 2 – 3, 2011 Hari Chandra Quantum Polymer Cleveland, Ohio

Contents GDP growth of fast growing economies Rubber output and price trends Options to ease pressure on NR demand Ecoreen and Ecorized Tire Rubber (ETR) Ecoreen use to reduce cost and NR consumption Findings and Recommendation

US GDP

GDP Growth China & India

Exchange: US$1 = 6.4 RMB

Indian Rupee Conversion rate US$1:INR 50

China Automobile production by year YearProduction (in million units)

Indian automotive production YearCar Production , , , , , ,178, ,264, ,473, ,713, ,846, ,175, ,814,584

World Auto Output YearUnits% change ,258, % ,374, % ,304, % ,994, % ,663, % ,496, % ,482, % ,222, % ,266, % ,520, % ,791, % ,857, %

World Auto Output

Average Natural Rubber-SMR 20-Prices YearUSCent/KG

MRB FOB NOON PRICES FOR SMR 20 (US Cents/Kg) January - October 2011

World Rubber Output in ( X 000) tons YearNRSRTotal 20006, , ,33210,48317, ,32610,87718, ,00511,34119, ,77411,96120, ,89612,10021, ,70612,65322, ,83313,38723, ,04212,74322, ,66212,08721, ,29114,00224,293

Source: Malaysian Rubber Board

Growth of China & India Auto and NR& SR sectors for Sector Growth Averages Average Annual Growth% China auto output19 % India auto output16% Natural Rubber (NR) output4 % Synthetic Rubber (SR) output2 % NR plus SR output3% NR – SMR 20 price increase19% China & India combined auto19%

Demand trend and price hike

Options to resolve scarcity Increase NR with planting Limits: speed and growth-gestation / Land Increase SR with investment in plants Limits due to fossil fuel raw material scarcity Design lighter weight tires Possible Recycled rubber Feasible

Recycled Rubber Abundant source: Used Tires

Used Tires in US One tire per population per year At 350 Million there are 350 Million Tire The amount of Rubber compound 3.0 Million Tons 60% Polymer – mix of NR and SR 1.8 Million Tons

Current Used Tire Disposal UsePercent Ground Rubber26.2 Tire Derived Fuel40.3 Used Tire 7.2 Civil Engineering 5.5 Reclaimed 2.5 Others 5.7 Land Fill12.6

Current Used Tire Disposal UsePercent & Rubber/Carbon Tons Ground Rubber26.2 % 786,000 Tons Tire Derived Fuel40.3 % 1,209,120 Tons Used Tire 7.2 % Civil Engineering 5.5 % Reclaimed 2.5 % Others 5.7 % Land Fill12.6 %

Devulcanization & Set backs Low green strength Poor Tack Increased Viscosity Inability to hold fillers Possible solution: Use of Liquid (Depolymerized) NR

Depolymerized Natural Rubber DPR ® applications Rubber Process Aid – ML4 drops by 5-20 units Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Has ability to bind large volumes (10X) of fillers

Impediments to use of DPR ® Liquid and difficult to handle Limited supply source High cost: When Natural Rubber was at $1.50 per LB DPR® was at $3.50 / LB

.. Ecoreen Process Aids DPR® Substitute Composed of Virgin polymers Pre cross-linked rubber (vulcanized Rubber)* * Types: Tire Rubber (T), Butyl Rubber (B), EPDM (EP), NR (N) and others

Ecoreen T for Tire Compounds Free Flowing Pellets Versus Liquid DPR® Function: Plasticizer to reduce mix cycle time and increases filler holding capacity Reactive: Cures with the rest of polymer matrix and non migrating

Ecoreen T -Tire Rubber DP Applications Rubber Process Aid – ML4 drops by 20 units. Improves tack & Green Strength Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Thermoplastic Rubber base Has ability to bind large volumes of fillers

Ecorized Tire Rubber (ETR) Tire Rubber Powder (Tire Crumb) is “ecorized” to different levels for use in various applications by treating ground tire powder with Ecoreen T process aid

Tire Crumb after milling (Ecorized) with 10 PHR Ecoreen T & Curatives

“Devulcanized” Tire Crumb with Curatives, no Ecoreen

Clay Versus Ecorized Tire Rubber (ETR) Comparison

SG of Clay and Tire Filled Mixes Mix # Clay Level Clay Mix SG Clay Mix Weight / Cu Ft. ETR LevelTire Crumb Mix SG LB LB LB LB LB LB LB LB LB LB Weight of ETR filled at all levels: SG 1.12, weight 70 LB / Cu Ft

SG of Ecoreen TC Vs Clay Clay Ecoreen TR

Cost of weight Vs Volume Fillers: Clay and E. Tire Crumb Weight per LB, Volume per Cu Ft – 6 ’ X 4 ’ X ½” Mat Filler Level Clay Filler Cost $/LB E.Tire Crumb Cost / LB Clay Filler $ per Cu Ft E.Tire Crumb $ per Cu.Ft $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 27.97

Cost per LB Ecoreen TC Vs Clay Ecoreen TR Clay

Cost by Volume ECoreen TC Vs Clay per Cu Ft (6 ’ X 4 ’ X ½”) Clay Ecoreen TR

Filler PHRMix with ClayMix with ETR 063% 10038%60% 20028%58% 30022%58% 40018%57% 50015%57% 60013%57% 70012%56% 80010%56% 9009%56% 10009%56% RHC Content in Clay and ETR Filled N 110 Black Mix

RHC: Rubber Hydro Carbon

Advantages of ETR based Mix Lighter weight – constant SG at 1.12 at all levels Higher recycled content Releases pressure on demand for NR and SR Able to reduce costs substantially while meeting quality standard

Ref:9340 Material$ per LBParts%$/ LB Mix Rubber $ % $ 1.07 N 330 Black $ % $ 0.14 Zinc Oxide $ % $ 0.02 Stearic Acid $ % $ 0.01 Wax $ % $ 0.01 Antioxidant TQ $ % $ PPD $ % $ 0.02 N. Oil $ % $ 0.04 Ecoreen TR $ % $ - Total1871 $ 1.32 Tire Tread Mix – No Ecoreen TC

Ref:9340 Material$ per LBParts%$/ LB Mix Rubber $ % $ 0.52 N 330 Black $ % $ 0.07 Zinc Oxide $ % $ 0.01 Stearic Acid $ % $ 0.00 Wax $ % $ 0.00 Antioxidant TQ $ % $ PPD $ % $ 0.01 N. Oil $ % $ 0.02 Ecoreen TR $ % $ 0.22 Total3871 $ 0.86 Tire Tread Mix with 200 PHR Ecoreen TC

Ref: 9338 / N / N / N 330 Material $ / LB MaterialParts % $/ LB Mix Parts % $/ LB Mix Parts % $/ LB Mix Polymer $ 1.07 Black and Oil $ 0.19 Activators $ 0.03 Anti Degradants $ 0.03 ETR $ - Total $ 1.32 Premium Tread Mixes

Ecorized Tire Rubber costs $0.43 per LB

ETR at loadings from 0 to 100 ETR cost: $0.43 per LB

Ecoreen 2.0 costs $0.65 per LB

Three Products 1. Ecoreen T Process Aid ($0.65) Not made into product by itself 2. Ecoreen Master Batch For blending and making products by itself ($0.80) 3. Ecorized Tire Rubber (ETR) Polymer filler to reduce cost and improve process / product ($0.43)

Control Ecoreen 50%Ecoreen 25%Ecoreen TR 500 PHREcoreen TR 100 PHR $1.20 /LB $1.40/LB $1.14 / LB $1.60 / LB $0.95 / LB

Examples of poor flow in spider test

Findings Ecorized Tire Rubber decreases cost of product through loading high levels in tire mixes and molded products while improving processing characteristics and final product performance

Recommendation Ecorized Tire Rubber / Crumb can be used at high loadings (100 to 500 PHR) in tire tread and retread formulations. Quantum will provide anyone masterbatch samples upon request with specification

` Mix 2 Masterbatch

Final compound with cure

Mix 2 Tire

Mix 1 Tire

Mix 223 Tire Mix 2 Tire

Thanks to Asia Tyre Rubber Conference 2011 Organizers for this opportunity