GUAYULE (WHY-U-LEE); NOUN A woody desert shrub native to northern and the southwestern United States, primarily Texas. can be extracted from the ’s branches, bark and roots. The Case for Guayule - The Rubber-Centric View

• 2015 Natural Rubber Production • Tire Industry – Raw Material Use  Global = 12,300,000 MT  Natural Textile: 3% Asia-Pacific = 11,300,000 MT

Rubber: 28% Chemical: 5%  US = 0

Steel: 15% Production by Region

/1000ha % Total Production

Asia 8,747 93% Africa 482 5% S. America 180 2% Synthetic Rubber: 23% TOTAL 9,704

Filler: 26% • 2015 Natural Rubber Consumption  US = 1,700,000 MT  ~ 70% used for tires

Overview: Natural Rubber Today

500% fluctuation in 5-years

100% increase in 10-months • Labor Rates • Competitive Crops • Supply-Demand Balance • Speculation Natural Rubber – The Situation

The single most important raw material for tire manufacturing is:

• Biologically single sourced  A single species () supplies 100% of NR  Clonal mono-cultures  Disease issues  Biodiversity

• Geographically concentrated  93% of global supply from SE Asia  Rapidly increasing labor costs  Competition with low-labor alternative crops (palm oil)  Climate change risk  Geo-Political issues / Political instability  Supply-demand imbalance as China/India demand grows

• A Market Traded commodity subject to speculation and price-volatility Fortunately …. Alternatives Exist Long Term Vision for Natural Rubber Supply – Biologically Diversified

Sustainable • Biologically Diversified • Geographically Diversified

Hevea Guayule Russian Dandelion (Hevea brasiliensis) ( argentatum) (Taraxacum kok-saghyz)

Long Term Vision for Natural Rubber Supply – Geographically Diversified

Sustainable • Biologically Diversified • Geographically Diversified

Hevea Russian Dandelion Guayule Tropical Climates Temperate Climates Arid Climates Guayule History – 1900’s

•Wild stands of guayule harvested.

•20 extraction by 1910.

•10,000 t of guayule rubber exported to US in 1910 (24% of total import). Guayule History – 1920’s-1940’s

1920’s •Intercontinental Rubber Company – Rockefeller •Farms in US 7,500 acres.

1940’s •US had 30,000 acres of guayule under cultivation by the end of the war. This was destroyed due to confidence that synthetic rubber would fully Replace natural rubber.

Guayule History – 1980’s Bridgestone Approach to Guayule Rubber BRIDGESTONE CORPORATION is the world’s largest tire and rubber company, operating in more than 150 countries around the globe Bridgestone Approach to Guayule Rubber

Bridgestone Bridgestone Agro Operations Biorubber Process Research Farm Research Center (Eloy, AZ) (Mesa, AZ) Agriculture Program and Associated Challenges

Goal To create a crop that can effectively integrate into and compete within the existing agricultural economy Process & Rubber Product Optimization

We must balance technical needs, process complexity, up-time capability and investment to deliver a cost-competitive product Bio-Rubber Process Research Center - Site Aerial View Adopting a Bio-Refinery Approach

• The process creates three products: rubber, resin and bagasse

• Potential uses for additional products include:

• Energy

• Higher value commodity product (liquid fuels through pyrolysis, fermentation, other biochemical processes)

• High value product for tire industry (fillers, bio-monomers, compounding chemicals)

• Consumer products (composite building materials)

Rubber = 5.5%

Field Dried Shrub Defoliated Resin = 6.5% HARVESTED & HARVESTED (15% water) Shrub DEFOLIATED Water = 15% 100% 92% Bagasse = 73% Envisioning a New Domestic Industry

Agriculture: Process: Products: • Tires

Cutting Cutting • 440,000 MT/yr harvest 1 harvest 2 • $1.4B USD Revenue Direct 2 years 2 years 2 years Final Rubber Seed harvest • 25% of US Demand

• Biomass with 9.5% Rubber (Dry • 10 Factories (AZ, TX, NM, CA) Weight Basis)  1,390 MT/day processing rate • 285,000 MT/yr • 2+2+2 cropping system  350 annual operating days Per Factory • $0.13 - $0.65 B Resin • 10 MT Biomass per cutting (15%  487,000 MT/yr biomass input USD Revenue moisture)

• Acquisition cost < $153/MT • 250 – 400 M gallons A $3.5+ Billion USD + RIN’s • $0.9 - $1.4 B USD Industry Revenue • 487,000 acres harvested annually at 25% scale • $149 M annual farm revenue (domestic rubber basis) Bagasse • $0.6 B USD Revenue 3.65 Million MT/yr

Bridgestone – October 1st 2015 “FROM SEED TO TREAD: BRIDGESTONE REVEALS FIRST TIRES MADE ENTIRELY OF NATURAL RUBBER COMPONENTS FROM COMPANY’S GUAYULE RESEARCH OPERATIONS”

The Bridgestone Group will continue its research activities with guayule and various other raw materials with the aim of achieving its long-term environmental vision of shifting towards 100 percent sustainable materials in tires by 2050.