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Ethylene Vinyl Alcohol (EVOH) INVESTMENT OPPORTUNITY SCORECARD CHEMICALS

October 2020 CHEMICALS High Potential Moderate Potential Low Potential Vinyl Alcohol (EVOH) OPPORTUNITY DESCRIPTION: Opportunity to setup (EVOH) manufacturing plant of 35 – 40 KMT capacity in KSA to serve regional/global market DEMAND INVESTMENT OVERVIEW MARKET SIZE, KMT INVESTMENT HIGHLIGHTS VALUE PROPOSITION

. Expected investment size of USD 183 Mn . KSA has strategic location and access to feedstock enabling it to serve emerging markets like India, Africa and South east Asia 3.0% 164 . Plant capacity: 35 – 40 KMT 159 9 155 1 . Leverage favorable trade agreements (such as GAFTA) and strong logistics 8 . Expected IRR: More than 12% 150 1 146 1 infrastructure to enhance export capability 142 1 5 1 . KSA is one of the largest chemical producers in the world and contributes ~10% 1 163 to the global output 154 158 149 141 145 . First mover advantage given non-existent local production of EVOH and lack of competition from any major global/local player

2020 2021 2022 2023 2024 2025 KSA Global

KEY DEMAND DRIVERS MARKET OVERVIEW . Large scale planned investments in developing automotive, GLOBAL TRENDS plastics and packaging clusters to mainly drive demand for . Currently manufacturing of EVOH limited to North America, EU, UK and China leading to oligopolistic supply and creating scope EVOH in the region for new entrants to serve consumers in Middle East and Africa regions by creating regional manufacturing hub . Rising disposable income, increase in population, and . Due to its flexible, crystal clear, and glossy thermoplastic copolymer with flex-crack resistance, and very high resistance to demand for convenient, ready-to-eat food have increased hydrocarbons, oils and organic solvents, EVOH is especially suited for packaging of food, drugs, cosmetics, and other the demand for packaged food in KSA perishable or delicate products to extend shelf . EVOH is primarily used for manufacturing laminated or . EVOH films are usually not or only slowly biodegradable. However, blending with other compounds or copolymerization with coextruded flexible food packaging films and also in blow other monomers can greatly increase the decomposition rate. Therefore, blend of EVOH and (PVOH) is molded or thermoformed food containers and bottles becoming increasingly popular therefore driven by growth in food and beverages industry

2 CHEMICALS Ethylene Vinyl Alcohol (EVOH) ENABLING SUPPLY FACTORS SCALABILITY AND LOCALIZATION IMPORT DEPENDENCY ENABLERS Grade: Low Medium High

. Primary raw material – Ethylene (EVA) is produced in Rabigh (Makkah . Currently 100% of the local demand for . Up to 75% of project financing by Saudi Industrial Province) and Jubail where the flexible packaging industry could serve as the customer EVOH in KSA is met by imports Development Fund (SIDF) base for EVOH producer . 2-year grace period for the repayment of loans . NICDP’s plan to develop plastics and packaging clusters can potentially be targeted for . Expat worker levy waived-off for industrial downstream synergies of EVOH manufacturers until October 2024

COST OF DOING BUSINESS IN KSA Ethylene Vinyl Alcohol (EVOH) value chain Factor Ranking Amongst Regional Peers

Ethylene Electricity tariffs for $48 industrial players /MWh

EVOH Packaging Productivity adjusted $3.3 wages /hour Vinyl Acetate Monomer (VAM) Key raw materials Logistics Performance Index 3.2 Investment scope (1 – 5) Further downstream opportunities Customs Clearance Index 2.7 Key stakeholders (1 – 5)

Ease of getting credit (0 – 100) 50

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# SCORECARD SECTION DEFINITIONS

Size of market in value/volume in KSA and/or Region (MENA/GCC) covering future projections based on available estimates 1 Market size from published /government sources 2 Demand drivers A select number of factors that will influence future demand for the related product/service An overview of key financial metrics summarizing the investment opportunity along with the expected return based on the 3 Investment highlights suggested investment size

4 Value proposition Summary of key differentiators that position KSA as a strategic choice over other regional/global peers

5 Market readiness An overview of KSA market structure, market maturity and level of participation by local and global players

6 Competitor analysis List of the local & international players manufacturing the underlying product in Saudi Arabia and their market share

7 Global trends Latest business developments within the sector/product category

Ease of scaling the business across the value chain or into new adjacent products or geographies that would maximize the 8 Scalability and localization opportunity’s investment returns and the ability and potential to locally manufacture the product and its components An overview of the countries from which Saudi Arabia is importing the product and their value/volume and share in total 9 Import dependency imports 10 Value chain analysis The process or activities that would potentially need to be carried out to deliver the underlying product or service Government institutions, organizations, and/or authorities that participate or influence the market for the underlying 11 Key stakeholders product/service

12 Enablers Factors that enable investment in the underlying opportunity

13 Cost of doing business in KSA Key factors that position KSA as a competitive destination for investment in the region

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