An Introduction to Chemicals in Argentina

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Dear Reader,

We cordially welcome you to the Argentina Petrochemicals and Chemicals Industry Exploration 2016, the first book in a series of Industry Explorations between GBR and APLA, released exclusively at the 36° Latin American Petrochemical Annual Meeting. The 36th edition of the traditional point of meeting of the leaders and decision makers of the industry has been declared of National Interest by the Presidency of the Nation, confirming that this activity represents for both the host country and the entire region a magnificent opportunity to show the progress of the industry, its development and expansion in Latin America, an environment conducive to attracting new investment scenario. The aim of this cooperation work is to provide an investment guide, highlighting the opportunities for investment in Argentina’s petrochemical and chemical industries, particularly in light of the new government administration and the country’s upstream potential. A series of interviews with the key players from across the petrochemical and chemical industries in Argentina, as well as some of the companies providing key support services, such as distribution, third party and integrated logistics, and emergency response, are contained in this edition. You will also find insights from not only the country’s biggest petrochemical producers, including YPF and Dow Argentina, but also comparisons between Argentina and its largest competitors in Latin America, such as Mexico and Brazil. We explore the potential for a shale revolution here, hopefully similar to what happen in the United States, and discuss Argentina’s goal of producing enough petrochemicals to satisfy both domestic and regional demand. Additionally, we deeply discuss Argentina’s chemical distribution environment, in which more than 120 companies operate, and the potential for M&A activity now the country has removed international import restrictions. Please join us in reviewing the opportunities present in Argentina!

Jose Luis Uriegas President, APLA PERU Exclusive Data and

Interviews Maps BOLIVIA Leaders from both the Quantitative data help private and public sector readers better understand delve into the nuances and the position of Argentina, 72 64 56 48 nascent developments that especially relative to its PARAGUAY are shaping the industry. global competitors. JUJUY San Salvador 10, 14, 20, 28 9, 29, 34, de Jujuy Salta and many more 43, 58 FORMOSA SALTA 24 24 Asuncion BRAZIL Formosa TUCUMAN CHACO San Miguel Santiago de Tucumán del Estero Resistencia Posadas MISIONES CATAMARCA Corrientes Catamarca SANTIAGO Editorial La DE ESTERO CORRIENTES Rioja LA RIOJA SANTA Content FE SAN JUAN Global Business Reports’ 80 Córdoba journalists provide on-the- San Juan Santa Fe Paraná ENTRE ground analysis of the trends Mendoza CORDOBA San Luis RIOS that are shaping Argentina’s 32 32 URUGUAY oil and gas industry. Santiago SAN LUIS South MENDOZA Montevideo Pacific Buenos 8, 24, 48, 56, Aires La Plata Ocean South 82, 87, 98 CHILE Atlantic Ocean Santa Rosa BUENOS AIRES

LA PAMPA

NEUQUEN Neuquén An introduction to Chemicals Specialty Chemicals Services and Technology in Argentina RIO 48. Speciality Chemicals 82. The only way is up: Argentina’s EPC NEGRO Argentina Petrochemicals and Chemicals 2016 Viedma 40 8. Argentina’s Year of Change 50. Interview with Meranol providers give their view Industry40 Explorations 10. Interview with Argentina Investment and 51. Interview with DuPont Latin America 84. Interview with AESA Global Business Reports Trade Promotion Agency (AAICI) 52. Interview with Plaquimet and with Reagens 85. Interview with Techint Engineering and 11. Interview with APLA Varteco Construction Rawson 12. Interview with APLA 53. Interview with Lanxess 86. Interview with Odebrecht Argentina 13. Interview with Instituto Petroquimico 87. Argentina’s chemical Services sector: Seeing Area CHUBUT Argentino (IPA) new opportunities in sustainability • Total 2,780,400 km2 (*) 14. Interview with Camara de la Industria 88. Interview with Bolland Quimica y Petroquimica (CIQYP) Agrochemicals 90. Interview with Odfjell Terminals Considering 1,084,386 km2 of the Exclusive Economic Zone area, Argentina 15. The case for chemicals: Argentina’s growth 91. Interview with Emerson Process Management Argentina is 3,939,463 km2 prospects 56. Agrochemicals and Fertilizers: Enabling the 92. Interview with GE Water and Process In this figure the areas claimed are not included. 18. Interview with Instituto Petroquimico growth of Argentina’s agriculture Technologies 8th largest country International Boundary Argentino 63. Interview with Croplife Latin America 93. Interview with Siemens • Water (%) 1.57 SANTA Province Boundary CRUZ 19. Interview with IHS Markit 64. Interview with CASAFE 94. Interview with Restec National Capital 20. Interview with ICIS 65. Interview with Chamber of Fertilizers and 95. Interview with Intertek Population Province Capital 21. Interview with EY Agrochemicals (CIAFA) 48 • 2015 estimate48 43,431,886 Falkland Islands 66. Interview with Aapresid • Density 14.4/km2 Islas Malvinas 67. interview with Chemotecnica administred by U.K., claimed by Argentina N Rio 68. Interview with NOVA Distribution and Logistics ( ) * Area does not include territorial claims in Antarctica Gallegos Petrochemicals 69. Interview with Grupo los Grobo (965,597 km2, including the South Orkney Islands), the Falkland Islands (11,410 km2), the South Georgia (3,560 km2) 70. Interview with Arysta Lifescience Argentina 98. A unique situation: Chemical distribution in and the South Sandwich Islands (307 km2) Strait of 24. Partnerships create opportunities for 71. Interview with Rizobacter Argentina Magellan petrochemical dominance 72. Interview with Nufarm 103. Interview with Celsur Logistica TIERRA DEL FUEGO, ANTARTIDA E 28. Interview with YPF 73. Interview with Gleba 104. Interview with Brenntag Argentina ISLAS DEL ATLANTICO SUR 32. Interview with Dow 74. Interview with Agroservicios Pampeanos 105. Interview with BDP International Ushuaia 34. Map of petrochemical plants 75. Interview with Insuagro 106. Interview with Henry Hirschen This research has been conducted by 36. Interview with Braskem Argentina 76. Interview with UPL Argentina 107. Interview with Arubras Alice Pascoletti, Laura Brangwin, 37. Interview with Petroquimica Cuyo 77. Interview with Brometan 108. Interview with Grupo Simpa Harriet Bailey, Katherina Prügel 72 and Francis Lister 80 56 64 56 48 39. Interview with Compania Mega 78. Interview with Rotam 109. Interview with Mcassab Argentina 40. Interview with ExxonMobil Exploration 79. Interview with Reopen 110. Interview with Logistica Milo Edited by Mungo Smith Graphic design by Designa Argentina 111. Interview with Mesucan 41. Interview with Petrobras A Global Business Reports Publication 0 100 200 300 Kilometers For updated industry news from our 42. Interview with Carboclor 114. Final Thoughts on-the-ground teams around the world, 0 100 200 300 Miles 44. Interview with Refinor 116. Index please visit our website at gbreports.com, subscribe to our newsletter by signing up 45. Interview with YPF Tecnologia to our VIP list through our website, 60 or follow us on Twitter: @GBReports 74

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports GBR • Industry Explorations • ARGENTINA PETROCHEMICALS AND CHEMICALS 2016

AN INTRODUCTION TO CHEMICALS IN ARGENTINA

"Argentina is now at the right stage to focus on foreign investment and therefore should be of interest to U.S., European and Asian investors attending our Annual Meeting. Attendees from North America are looking for opportunities that could arise from Latin America, both as a potential market for their extra capacity, and as an opportunity for new production projects across the region."

- Jose Luis Uriegas, President, APLA Image: Profertil EDITORIAL Global Business Reports Global Business Reports FACTSHEET

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of change 6.000

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By Harriet Bailey 3.000

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Transition. This one word sums up much that there is to say about the huge upheavals years of Argentina’s economic decisions so rapidly. “The big questions now surround taking place in the politics, economics and foreign policy of Latin America’s third largest Argentina’s fiscal deficit, along with inflation levels. We need to recover credibility from country, Argentina, in 2016. President Mauricio Macri was voted in on December 10th, the international community, which is a challenge for Argentina as we need foreign in- 2015. To say that the Cambiemos coalition government found itself at the bottom of a vestment going forward,” explained Miguel Morley, president of agrochemical company -1.6% very long uphill climb would be an understatement. Agroservicios Pampeanos, part of Canada-based Agrium. “The government is attempting Current account Macri faced three big issues at the start of his four-year term: rocketing inflation, mount- to solve this problem whilst protecting the weakest segments of society. One in three balance (% of GDP) 8 ing international debt and an overvalued peso. In what has been dubbed his “macri- 22,303 Argentines are below the poverty line and it is challenging to take action while also pro- Source: IMF (2016 estimates) 9 economic shock treatment”, his first move was to abandonel cepo, “the clamp”, pegging USD tecting this segment.” the peso to the dollar, allowing Argentina’s national currency to float freely for the first Government subsidies on utilities, introduced to pay off energy providers and keep prices GDP per capita time since 2011. It quickly devalued by around one-third, falling into line with its street (PPP) at artificially low levels, have been removed, resulting in increases of up to 700% on

value of approximately 15 pesos to the dollar. This, however, led to even higher inflation, Source: IMF (2016 estimates) household bills. In response to public protest, Macri has promised to introduce a cap of exceeding 40% by the end of June, with some estimates in the capital Buenos Aires hit- 400%. By the end of the year, GDP is expected to have dropped by 1.5%, although it 43.5 ting 47%. During 2017, inflation is due to stabilise at around 27%. should recover by three to four points during 2017. MILLION population Just weeks into his time in office, Macri became the first Argentine President in thirteen However, Macri may be betting on short-term pain for long-term gain and a more favor- Source: IMF (2016 estimates) years to attend the World Economic Forum in Davos, signaling a new era for Argentina’s able climate closer to the election date in later 2019. Revising the previous government’s international relations and a focus on attracting foreign investment. In his first interview official figures, the incumbent government’s new statistics agency reported a $3 billion with the foreign press on the eve of his attendance, he stated his plan for the Argentina 437.8 trade deficit for the previous year; Argentina achieved a trade surplus of $126 million for of the future: “We have to be a predictable and trustworthy country. We have to show BILLION USD June 2016. “The current cabinet is one of the strongest Argentina has seen, containing GDP 17.9% investors that their rights will be respected, as well as that we will demand that they obey Total investment qualified professionals in the financial arena, so we are optimistic for the future,” contin- 7.7% Argentina’s laws.” Source: IMF (2016 estimates) (% of GDP) ued Morley. unemployment rate Source: IMF (2016 estimates) Making good on this statement, Macri’s government promised to resume the publication Source: IMF (2016 estimates) Considering Brazil’s internal woes and Macri’s aggressive actions both at home and of credible economic data. Going even further in allaying the fears of foreign investors, abroad, Argentina could yet become the most positive market for growth in South Amer- the first few months of 2016 also saw the new government reach an agreement with its ica. ▬ creditors after many years of refusing to pay, ostensibly due to lack of funds, of a $4.6 billion defaulted debt to a group of U.S. hedge funds led by Elliott Management. Macri 20082017 subsequently stated he would not be seeking further debt financing for another three to four years, effectively ruling out any more foreign loans until after the next election. 10,051 FORECAST Macri quickly set about re-building relationships with global powers, hosting U.S. Pres- USD 10 ident Barack Obama in March before paying a visit to Washington D.C. himself. This GDP per capita signaled a distinct break with the foreign policy. European leaders have either visited or Source: IMF (2016 estimates) 8

been visited by Macri, while Middle Eastern heads of state, such as the Emir of Qatar, 6 have also visited the Pink House in recent months. Macri estimates $100 billion in foreign investment is needed to get the country back on 4 track. By directing all of Argentina’s problems to be resolved as soon as possible, the 2 hope may be to win international backing sooner rather than late and has led to Macri 0 winning the moniker of “a man in a hurry” from President Obama. However, it could be argued that it is in itself a mistake to try to reverse the last 12 -2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations INTERVIEW Global Business Reports Global Business Reports INTERVIEW

What was the rationale behind the cre- figures from the last six years. Over the last ation of the new Investment and Trade six years, investment volumes in the region Promotion Agency? grew and reached an average of $125 bil- The Macri administration has a clear ob- lion annually. Yet Argentina, who used to jective of inserting Argentina back into the receive 16% of the region's FDI, attracted world economy. We come from a period of only 4% of the total last year. To make up APLA’s 2015 Annual Meeting was held Within Latin America, which countries political, economical and commercial isola- for this, Argentina should attract $200 bil- in Mexico. Could you provide us with have a strong potential for the future of tion, and this government understands that lion over the next eight years, an average a brief overview of what APLA aims to their chemical and petrochemical indus- economic growth will only be achieved of $25 billion annually. Since December achieve from its Annual Meetings and tries and what reasons lie behind this? through investment and wealth generation. 2015, we have already identified $40 -bil what attendees can expect? Every country has different characteris- There was a need for an agency that helped lion worth of commitments from different We celebrated our 35th Annual Meeting in tics. Brazil does not have abundant eth- both Argentinean and foreign investors industry players. Cancun, covering conventional and uncon- ane and struggles to remain competitive in with their processes. The Agency has two ventional hydrocarbons, their composition the production of ethane-related products. roles: on one side, Invest Argentina tries to What segments offer more potential, and throughout the Latin American region and However, the current low international oil promote investment, while ExportAr looks how can these investments help develop the sustainability of businesses. We have prices we are seeing means Brazil is as at helping local SMEs export their products value chains? held previous events in cities such as Rio competitive as it was four years ago. In and services, building up greater capacities. After a decade of no investment, there are Jose Luis de Janeiro, Mexico City, and Santiago, neighboring Argentina, although the do- Juan At some point Argentina had over 15,000 huge opportunities across all sectors: en- while our 2016 event is to be held in Bue- mestic market is around one quarter the exporting SMEs, today we only have 9,000 ergy, infrastructure, petrochemicals, ag- nos Aires. This has been a strategic choice; size of Brazil, it has very competitive un- Procaccini due to the trade barriers we had in place for riculture, mining and industry. We have Uriegas Argentina is in a burgeoning position be- conventional resources. When companies the last years. We provide training, financ- outstanding natural resources and excellent cause of its unconventional resources in can prove they can produce high volumes ing, modern tools and participation in glob- human capital. At the Investment Forum areas such as Vaca Muerta. Additionally, of shale gas, this will lead to higher in- al fairs, to reactivate the exporters segment. we recently held, attendance exceeded all the new government is more open to for- vestment volumes. Argentina has the op- With regard to Invest Argentina, we want expectations, in terms of numbers and the eign investment and promoting the indus- portunity to become very competitive and to work together with Argentinean and for- quality of the people that came to Buenos try, which will enable the country to take will be able to export to different markets 10 eign groups that have assets in the country Aires. We are preparing a plan of public advantage of its huge oil and gas reserves. within Latin America. 11 Executive President & CEO or want to further invest in Argentina. This investments worth $250 billion, and this President Moving north, Mexico has very competi- ARGENTINA INVESTMENT includes explaining to those investors that government is working on new legislation APLA A third of participants at the 2015 Annu- tive plants and raw materials as it is con- have never been to Argentina about how the for public-private partnerships (PPP) so the al Meeting were from the United States. nected to the North American pricing sys- AND TRADE PROMOTION country works, and offer them contact with world can help us move this plan forwards, What is the general feeling of foreign in- tem. The problem is in the short term; all AGENCY (AAICI) the whole public system, including minis- not only from a financial side but also from vestors towards the petrochemical and of the country’s additional ethane will be ters and provincial governors. We also aim a perspective of technology transfer and lo- chemical industries in Latin America, dedicated to the new Braskem/Idesa Eth- to have open channels of communication cal know-how development. and Argentina in particular? ylene XXI plant. Therefore I do not expect with them once they have decided to invest In order to invest in a country, you need U.S. attendees can use the conference to that we will see additional large invest- in the country. We want to reduce bureau- profitability and predictability. Another gain a more direct overview of the opment in the short term until this stabilizes. cracy and simplify processes, eliminating key aspect is the resources. Chile exports portunities available in countries such as From 2020 onwards we can expect signifi- the barriers that made Argentina less com- between $35 and $40 billion worth of min- Argentina, Mexico and Brazil, as well as cant additional availability of ethane and “ At the Investment Forum petitive, in terms of taxes, permitting and erals, 10 times more than Argentina, so emerging commercial and investment op- this could lead to further foreign invest- we recently held, attendance other aspects. Argentina has huge mineral potential that “ portunities. Those countries interested in ment in new plants. exceeded all expectations, in terms has not been exploited. The same happens Our 2016 event is to be held in trade with Latin America can gauge the of numbers and the quality of the As a destination for foreign investment, with our shale resources. Argentina has the Buenos Aires. This has been a size of the market from our meeting. Re- How does APLA expect to play a role in people that came to Buenos Aires. how does Argentina compare to other world's second largest shale gas deposit, strategic choice; Argentina is in a garding Argentina, the country is now at improving the prospects of the Argen- Latin American countries? which is still to be explored and developed. the right stage to focus on foreign invest- tine petrochemical industry in future? We are preparing a plan of public burgeoning position because of its We compared the levels of investment as Of course, the price of oil is not good, but ment and therefore should be of interest In terms of the region as a whole, although investments worth $250 billion, unconventional resources in areas a percentage of GDP in the different coun- technology costs are going down signifi- to U.S., European and Asian investors at- emerging countries are not growing at the and this government is working such as Vaca Muerta. Additionally, tries around the region, over the last six cantly. Then we have impressive lithium the new government is more open to tending our Annual Meeting. pace that was predicted a few years ago, on new legislation for public- years. Argentina's ratio was four or five reserves. We are seeing increasing numbers of U.S. we continue to maintain confidence in our foreign investment and promoting private partnerships (PPP) so the percentage points below countries like CEOs of companies like BP or Dow have a companies attend our events; they have markets as they grow. The population and the industry, which will enable the world can help us move this plan Colombia, Peru, Chile and Brazil. If we clear vision about the opportunities that Ar- experience from the shale gas revolution spending power of our people is growing forwards, not only from a financial consider a GDP of $600 billion, this means gentina offers. As the Agency, we are here country to take advantage of its and several petrochemical plants are set to and that will present many opportunities side but also from a perspective around $25 billion of investment annually, to help: our doors are open, we have high- huge oil and gas reserves. come online before 2020. Attendees from both for investment and as end markets. of technology transfer and local public and private, that Argentina should ly-trained personnel, and we want to work North America are looking for opportuni- This region, which is not homogeneous, know-how development. have received and did not receive. If you together with companies to make processes ties that could arise from Latin America, is increasingly working together through look at foreign direct investment (FDI) more efficient in Argentina. We have a 10 to both as a potential market for their extra APLA to try to become as competitive as specifically, it is very meaningful to look at 15-year growth period ahead of us, and the capacity, and as an opportunity for new possible. ▬ Argentina's figures from the 1990s, and the moment to invest is now. ▬ ” production projects across the region. Industry Explorations ” ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations INTERVIEW Global Business Reports Global Business Reports INTERVIEW

How important will South American porters of product has opened the door to demand, not just Argentine demand, be a new investment cycle. In this way, the to the development of Argentina’s pet- investment would probably be directed to rochemical industry? new capacity integrated with unconven- an overnight revolution here as in North particular require modernization; if we can The South American market, including tional production; more efficient processes America, but we can immediately increase increase capacity, our competitiveness as a Argentina and especially Brazil, is a net in order to optimize energy consumption; our production due to the country’s unused major player in Latin America will greatly importer of polymers and other chemical improved infrastructure such as port ex- capacity. improve. APLA also hosts an annual logis- and petrochemical products. In general, pansion, increased storage, and a focus on tics meeting; for 2016 this takes place in our region shows very attractive growth the railways; and innovation. Of course, Could you explain the reason behind Panama, as the expansion of the Canal this rates because there is still a gap to reach as we have seen in the past, particularly in APLA’s decision to hold the 2016 An- year affects the transportation plans of the the consumption per capita of most devel- the U.S. expansion process, the growth of nual Meeting in Buenos Aires? whole Latin American region. oped countries. The regional demand for the petrochemical industry will establish The main reason is the current economic In terms of Argentina’s network of gas imports reflects a strong market for petro- excellent conditions for downstream and and political situation in Argentina. It is a pipelines, it is good, but not good enough. chemicals and this situation will continue conversion sector growth. good opportunity to showcase Argentina’s It is very easy to add new production to if there is no additional capacity. Other re- potential to the 1,000 attendees we expect our existing infrastructure, but we need to gions rarely boast all three necessary driv- Does Argentina have the necessary hu- to host, who are mostly decision-makers improve the capacity of these pipelines to ers. For example, the Middle East abounds man capital to support the development and high-level executives looking to invest accommodate the increased production of in feedstock but lacks a domestic market of the country’s petrochemical indus- in the region. The 2015 Annual Meeting natural gas that we will see in the country. Ignacio exporting to China, or other markets with try? Manuel was held in Cancun as a result of the new a stronger demand for petrochemicals. In One of the major challenges for Argenti- Ethylene XXI plant in Mexico, which was Does APLA have any initiatives in place this way, Argentina has the potential to not na’s petrochemical industry is the human Diaz the most important investment in Latin to increase the availability of a skilled Millán only fully supply the domestic market but resource. The petrochemical and chemical America at that time. The next opportunity workforce in the region? also to competitively export petrochemi- industry employs more than 100,000 peo- now resides in Argentina, as the economic All of Latin America faces a problem in cals to the region. ple, and most of them have qualifications situation has improved with the change in terms of technical education, not just Ar- for their role. Around 30% are engineers government. gentina. It is essential for APLA to work Does South America aim to substitute or other skilled operators. New capacity in closely with universities and the govern- specialty chemical imports? the United States is expected to increase 12 What effect will an increase in produc- ment to provide people with these skills, In Argentina, most of the chemical trade plastics industry employment by more 13 Executive Director tion in Argentina have on neighboring and APLA, in association with IPA and President deficit is due to specialty chemical- im than 20%, while each of those direct jobs APLA countries? the University of San Martin, offers seven INSTITUTO PETROQUÍMICO ports. Nevertheless, I believe investment generates a further 6.3 new employees in It will impact all of the region because scholarships in the petrochemical industry ARGENTINO (IPA) opportunities in this field should be- di the rest of the economy. Within a span of Brazil uses naphtha feedstock as a raw to post-doctoral students from any coun- rected to those areas where the region has seven years, a new petrochemical complex material, while Argentina uses natural gas. try in Latin America. In order to ensure competitive advantages and vertical inte- and the resulting downstream industry We will not only be able to supply the de- the availability of qualified personnel for gration synergies such as in EOR, paints, would present an additional high demand mand in the domestic market, but will also the future development of the industry, we composite materials, and detergents, for qualified personnel. Thus, the -petro be able to export the over-supply of hydro- need to train people now. among others. Argentina´s scientific sys- chemical industry would be competing in carbons to neighboring markets in Chile, In terms of a technically trained work- Argentina is home to the world’s second tem is one of the most prestigious in the a highly competitive environment in order What changes have you seen in Argen- Paraguay and Uruguay. Our main product force, Argentina has been working for a largest shale gas reserves. What would world and we are becoming a very strong to recruit the best talent. At IPA, we are tina’s chemical industry during the last is ethane, which can be produced in abun- long time, through organizations such as the large-scale production of these re- pillar to develop innovation programs in focused on providing the best solution to two years and how important are the dance using shale gas, and we will also be Y-TEC and CONICET, to develop new sources mean for Argentina’s petro- new products, processes and services. The this challenge and we are proud to lead the chemical and petrochemical industries able to develop a range of petrochemical technology. The Ministry of Science, In- chemical industry? potential to increase added value to com- most prestigious petrochemical program in to the country’s growth and success? products for export. The petrochemical novation and Technology is also working Argentina’s petrochemical industry is one modity products is there. South America. In my opinion, the main change occurred industry has a long history in Argentina hard to develop our scientists and engi- of the few in the world that stands to be when YPF started developing Vaca Muerta and the extent of the Vaca Muerta reserves neers of the future. transformed by the exploitation of uncon- What should Argentina’s petrochemical Much of the Argentine petrochemical in partnership with Dow Argentina and will rejuvenate this. With this feedstock, ventional hydrocarbon resources. In gen- industry invest in? industry’s success depends on the large- other international companies. The petro- we can invite foreign investors to allocate Where can we expect to see the petro- eral, the development of any petrochemi- Argentina’s petrochemical industry expe- scale production of the country’s uncon- chemical industry has felt the feedstock capital to Argentina and develop future chemical industry in Argentina in the cal and chemical industry depends on three rienced almost four waves of development ventional resources, which has not yet deficit the most and therefore any oppor- world-class projects. medium term? drivers to succeed: the availability of raw since its beginning in 1942 (the first tolu- begun. Should investors invest in Argen- tunity to increase our production of raw Argentina is laying the foundations to pre- material, access to technology, and a mar- ene facility in Campana, Buenos Aires). tina’s petrochemical industry now? materials and gain investment is posi- What are some of the challenges that pare for future investment through open- ket. South America boasts these three driv- The main drivers focused on import substi- Investors should recall the first-mover ad- tive. We can compare Vaca Muerta to the could impede growth of the Argentine ing the market, improving infrastructure ers and they are especially converging in tution, feedstock integration and economy vantage. Those that take the risk in heavily shale plays in the United States, although petrochemical industry? and demonstrating Argentina’s reputation Argentina. development. The last wave of investment investing in an opportunity before others our ability to gain immediate foreign in- One of our biggest challenges is infra- as a business-friendly country. It is the fo- For the last six years, the American shale took place in the late 1990s and the early are those that later reap significant profit. vestment is dissimilar due to our smaller structure investment. We currently have cus of this government to gain investments revolution has breathed new life into the 2000s as a result of PBB Polisur expansion Now is the time to invest in Argentina’s domestic and regional market. As well as high logistics costs due to a lack of in- in various industries, with the petrochemi- country’s petrochemical industry. Argen- and the construction of YPF´s methanol petrochemical industry. IPA is fully ori- working capital, we also gain expertise vestment in the country’s infrastructure cal sector being a key area for growth. I tina’s own unconventional resources could plant and the Profertil complex. Today, the ented to support the requirements of the from companies with experience work- in recent years, particularly when trading hope to see important, world-class invest- similarly boost the Argentine petrochemi- development of unconventional resources industry, government and all other players ing in the United States. We will not see with neighboring markets. The ports in ment in Argentina over the next decade. ▬ cal industry. and a regional market composed of net im- involved in this unique opportunity. ▬

The case for chemicals:

ments stopped, however, when Fabricacio- which will require a three-part strategy. Argentina’s growth nes Militares, a part of the Argentine army, First, it must support its members by help- took control of much of the petrochemical ing them understand government rules and industry. The army still owns some strate- regulations, as well as by acting as a single prospects gic petrochemical and chemical plants that voice for their interests. produce nitric and sulfuric acids for explo- The second area lies in cooperating with sives. the government on issues such as competi- The second wave of the investment in pet- tiveness, and the third area focuses on the By Harriet Bailey rochemicals occurred in the late 1970s and safe and sustainable production of chemi- early 1980s. Fabricaciones Militares built cals and petrochemicals. Argentina’s first ethylene cracker in the late 1970s at Bahía Blanca, which became Can you describe CIQyP’s role as a rep- one of the most important petrochemical resentative of the chemical and petro- Jorge de centers in the country. chemical industries in labor negotiations Argentina’s chemical industry dates back 13% and 15% respectively. The remaining association is connected to more than 100 The third wave occurred in the late 1990s with unions? to the Second World War. “The military 50% of production came from paints and companies and provides its members with and early 2000s, characterized by the con- The chamber represents the chemical and began this industry in 1942 as a result of coatings, cosmetics and pharmaceutical the opportunity to network as well as gain Zavaleta struction of several new plants that were petrochemical industries before all relevant the war effort, but the Armed Forces only products. According to Jorge de Zavaleta, relevant industry information. “Our most propelled by the growing supply of natu- unions, except those at Bahía Blanca and consumed around 4% of the total manufac- executive director of the Chamber of the important event is the Latin American An- ral gas feedstock. Oil refining capacity Zárate-Campana. The chamber does not tured chemicals. YPF began its chemical Chemical and Petrochemical Industries nual Meeting, at which attendees can meet has remained about the same, at around communicate with these last two unions operations in 1944 and these two events (CIQyP): “The chemical and petrochemi- and interact with different companies from 500,000 barrels per day for the last 20 to 25 since they only operate regionally, unlike were really the foundations of the pet- cal industries in Argentina represent 12% all over the world to develop business and years, which has led to bigger investments most unions, which operate nationally. rochemical industry in the country,” ex- of total domestic industrial production, share ideas,” explained president Jose Luis 14 in natural gas and natural gas liquids than Labor negotiations start at the beginning of plained Enrique Grotz, partner and oil and and their exports represent 25% of total Uriegas. “Although our annual meetings 15 Executive Director in oil. The third wave ended in 2003, after every March when the chamber meets with gas leader at EY. industrial exports. The chemical and pet- have a focus on Latin America, we also re- CÁMARA DE LA INDUSTRIA which the petrochemical industry enjoyed unions to discuss the state of the market Argentina is now the third largest chemi- rochemical industries have a bright future ceive attendees from outside of the region QUÍMICA Y PETROQUÍMICA full production until 2007, when a combi- and their expectations for workers’ rights. cal industry in Latin America after Brazil thanks to the quality and size of the coun- who are looking for opportunities here.” and Mexico, accounting for almost 1% of try’s infrastructure, market, technology, The country is deceptively large; the (CIQYP) nation of issues arose. Declining oil and Negotiations end with the approval of the gas production combined with a series of labor minister. In these negotiations, the the global chemical industry in 2010 and an extensive history in hydrocarbons, and eighth-biggest in the world, it is almost tough winters to make petrochemicals suf- chamber serves as a facilitator between the directly employing more than 100,000 refineries.” 3,700 kilometers (km) from north to south, fer a shortage of natural gas. Winters after unions and chemical and petrochemical people. Chemical production in the same Representing the interests of the petro- and only around 620 km shorter than main- 2007 saw increasing demand for natural sector representatives. Most negotiations year totaled almost $25.5 billion and, of chemical and chemical industries in Ar- land United States is wide. Vaca Muerta, gas for household heating and other gas- focus on wages and rarely touch upon le- this, basic chemicals made up around one gentina, and Latin America as a whole, located in Neuquén province in the west, Can you provide a historical overview of consuming activities. The government pri- gal reform, since labor laws are difficult to quarter, with agrochemicals & fertilizers is the Association of Petrochemicals and is the largest shale deposit in the country the petrochemical sector in Argentina? oritized household consumption of natural amend. and specialty chemicals accounting for Chemicals Latin America (APLA). The and covers an area the size of Belgium and The petrochemical industry started in Ar- gas over the industry’s needs for steam and gentina in the 1950s and has seen three feedstock. How would you describe the outlook for waves of investment since then. The first Currently, petrochemical companies oper- the chemical and petrochemical indus- wave washed over Argentina in the 1950s ate on average at below 90% of their ca- try in Argentina? and 1960s, when multinational companies pacity. During winter, they have an aver- The chemical and petrochemical industry and important entrepreneurs came, not- age of 50% to 60% asset utilization. Some in Argentina represents 12% of the total ing the opportunities in the production of plants in Bahía Blanca that are incapable of Domestic Industrial Production, and their chemicals and petrochemicals. The country running at low capacity shut down almost exports represents 25% of total industrial had several advantages, such as its refining completely in the middle of winter. exports. The chemical and petrochemical capacity, which was exceptionally high for industries have a bright future thanks to the the time. Multinationals took advantage of What kind of investment should the quality and size of the country’s infrastruc- the feedstock provided by Argentina’s oil chemical and petrochemical industry in ture, market, technology, an extensive his- and gas industry that started in 1908. Com- Argentina expect, and what is CIQyP’s tory in hydrocarbons, and refineries. panies such as Monsanto entered Argentina strategy to take advantage of potential Importantly, Argentina has a mature hydro- to build plants, focusing on the production investment? carbon industry with gas pipes connecting of final products, such as plastics. Argen- CIQyP developed a new strategic roadmap all gas fields. Moreover, Argentina has vast tina also built the first gas pipeline in Latin for the chemical and petrochemical cham- unconventional resources that, if success- America in the 1940s, connecting Como- ber, as it is at the beginning of a new wave fully developed, would greatly benefit the doro Rivadavia to Buenos Aires. Invest- of investment, similar to the past three, petrochemical industry. ▬

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations EDITORIAL Global Business Reports Global Business Reports EDITORIAL

Image: Profertil

means Argentina has the third largest shale Kirchner’s government passed the Hydro- of Argentina’s estimated unconventional ster government revenue. Making good corn and sorghum among other grains. Al- couraged to invest further in products and reserves in the world behind the United carbons Reform Law in 2014, aimed at re- reserves—802 tcf of gas and 28 billion on his campaign pledge, export taxes on most 20 million hectares alone is dedicated infrastructure.” 16 States and China. According to consul- ducing both government takings and taxa- barrels of oil—could be proved as techni- foodstuffs such as wheat, corn and beef – to the infamous soybean, with Argentina Argentina can therefore become not only 17 tancy IHS Markit’s senior director of Latin tion levels on new explorations, foreign cally recoverable, its oil production hori- which were at 23%, 20% and 15% respec- being the world’s third largest producer an important global player in terms of ag- America Chemicals, Rina Quijada: “In- investment was not forthcoming due to zon would extend more than 100 years and tively – were completely removed. Levies of the crop behind the United States and rochemical production, but has all the investors looking at Latin America will find regulatory uncertainty and a distinct lack its gas production more than 600, setting on soybean derivatives remain in place, Brazil. Using a mixture of crop protection gredients required to become an attractive Vaca Muerta in Argentina much more at- of free-market policies. it on the path not only to self-sufficiency, but were lowered from 35% to 30%. products, biotechnology and the no-till investment destination for multinational tractive today than in previous years. The The petrochemical sector has not seen an but also to being able to supply neighbor- Three months later, President Macri ar- growing system, introduced to Argentina petrochemical players, including world- biggest advantage Argentina has today, industry-changing investment in almost ing countries. “The petrochemical industry rived by helicopter to a field just outside in the 1970s, agricultural production dou- scale reserves, a new government bent on aside from its feedstock, is its new admin- two decades and, despite Macri’s reforms, has a long history in Argentina and the ex- Rosario in Santa Fe province. His appear- bled from around 50 million tons per year normalizing the economy and the capac- istration and proposed reforms.” new petrochemical complexes are unlikely tent of the Vaca Muerta reserves will reju- ance marked a turning point for the agri- in 2001 to 100 million tons a decade later. ity for rapid production increases. The In addition to having the second largest to be in the pipeline for another ten years. venate this. With this feedstock, we can in- cultural industry, including global players Active support from the highest levels improvements felt in future planning with shale gas reserves and the fourth largest Although the door has been opened to for- vite foreign investors to allocate capital to such as Monsanto and Syngenta, which had of government is invaluable in achieving the new administration should ensure that shale oil reserves worldwide according to eign investors looking for the next shale Argentina and develop future world-class assembled at the annual Expoagro event; a Argentina’s potential to feed the world. Argentina’s ranking on the World Bank’s the U.S. Energy Information Administra- revolution, much-needed transportation projects,” said APLA’s executive director President had not been in attendance since Agrochemical suppliers have survived Ease of doing business Index, currently in tion (EIA), the price of Argentina’s oil and and infrastructure projects failed to win Manuel Diaz. “I hope to see important, before the turn of the millennium. Ad- challenging times, when high export 121st place out of 189 countries in June gas was vastly different from the global political support during the previous gov- world-class investment in Argentina over dressing the assembled crowds, he spoke taxes reduced a farmer’s ability to buy 2015, rises and global players take advan- norm. As a result of generous state subsi- ernment; such issues will need to be ad- the next decade.” of an impending “production revolution” agrochemical products; removing these tage of the opportunities on offer in the dies imposed by Fernández de Kirchner, dressed quickly in order to attract the high in the fields of Argentina: “We know that restrictions has proved to be the neces- southern cone’s most dynamic region. Argentina’s hydrocarbons were the most volumes of foreign capital required. the world has a food crisis. We want our sary catalyst for an uptick in planting and According to Rodolfo Perez Wertheim, expensive in the world, with natural gas In 2011, as a result of the last administra- Chemical appeal valuable raw materials to provide the solu- therefore an increase in the need for both director general at chemical manufacturer per million British thermal units at more tion’s interventionist policies, Argentina tion.” He continued: “I have made it clear crop protection products and fertilizers. Meranol, there is no time like the present than three times international prices when became a net importer of energy for the It is not just in the petrochemicals space to the Ministry of Agroindustry that we The perceived improvement is felt in both for the government and the energy indus- Macri came into office. His administration first time since 1984. Raw material avail- where positive feeling abounds; agro- have to take responsibility for the smaller a surge in sales, and in communication try to come up with a strategy for future has started to phase out these subsidies and ability was severely depleted and, as such, chemical manufacturers also see the po- producers – who may in time become me- with the government, leading some firms, growth: “The chemical industry depends eliminate the gap with overseas markets, petrochemical complexes have not been tential for great opportunities at home and dium- or larger-sized producers – because such as Nova S.A., based in Santa Fe prov- on oil and gas and, at present, Argentina implementing a 10% decrease in the per- operating at capacity for more than half abroad. Upon taking office in December in order to achieve growth, we have to go ince, to expand their operations: “Business has a deficit in this matter. If the govern- barrel price in the first week of 2016. a decade. However, as this import/export 2015, Macri immediately demonstrated forward together, as one family.” owners need predictability, and the new ment agrees to supply energy to the whole Global players, such as Shell Argentina’s trend inverts, Argentina will rapidly be the importance of the agricultural indus- Almost 1.5 million square kilometres government is starting to provide this,” ex- industry, it will encourage the chemical president Teófilo Lacroze, believe that, able to absorb an increase in the availabil- try to Argentina’s overall economic might (km2) of the country’s 2.8 million km2 plained general manager Mauro Piva. “All industry to invest in different products. rather than regulating the price of oil and ity of feedstocks, while simultaneously by removing controversial restrictions on land mass is arable land used for Argen- of our distributors have a positive attitude We believe that this is going to happen, gas, the government should incentivize investing in the expansion and modern- agricultural products, introduced by Ar- tina’s legendary cattle ranches, sheep sta- with regards to the recent governmental therefore we think that the right moment new production. Although Fernández de ization of plants for further growth. If all gentina’s previous administration to bol- tions and crop fields, producing wheat, changes and, as a result, we have been en- to invest in the market is now.” ▬

Could you briefly explain the services ment mood. However, we believe there are and products IHS Markit can offer cli- investment opportunities available, and Dr. ents and how much of a role the chemical companies are looking at their infrastruc- segment plays in the company’s overall ture and making efficiency savings. strategy? Latin America is a developing region with Alfredo G. IHS Markit has been created from the a large market of more than 680 million merger between IHS and Markit to harness people; these economies continue to grow Friedlander the deepest sources of information, analyt- despite their economic and political issues. ics and expertise to forge solutions for in- We believe new investments in the region dustries and markets that drive economies will take place in countries with abundant, worldwide. We partner with leaders in busi- readily available, competitively priced Executive Director ness, finance and government to help our feedstock. In Mexico, Braskem/Idesa’s INSTITUTO PETROQUÍMICO customers be more efficient and make more new plant began production in April 2016. ARGENTINO (IPA) informed decisions to secure their future. This new capacity will be able to produce IHS Markit and its Chemical and Energy slightly more than one million ton/year divisions provide solutions for the oil-re- of ethylene and polyethylene derivatives, lated and petrochemical derivative indus- while the country’s energy reforms will As Argentina increases production of finished products at Rina tries. We are integrated from feedstock to make it easier for U.S. natural gas to enter What do you expect for the petrochemical industry in Argen- home, which imported products are most likely to be affected finished product and we cover the business Mexico in the near future. tina during the course of 2016? first? Quijada globally. We cover all the pieces of the in- Argentina has good potential, although We will not see any new plants starting up, because at the moment In general, we export our thermoplastics at a lower capacity formation puzzle which enables companies with many economic issues to overcome. no new projects exist. Nothing has been signed with engineering than we import, resulting in a yearly deficit. Thermoplastics are to evaluate solutions to help make deci- Investors looking at Latin America will or technology companies. However, it is likely that we will see strongly linked to GDP and, as this is expected to rise, so too will sions in line with market trends. find Vaca Muerta in Argentina much more efforts to increase capacity. Argentina is very short on gas, par- the demand for these products. Internal thermoplastic manufac- attractive today. The Vaca Muerta shale ticularly in winter. The lack of product also affects ethylene pro- ture could easily replace the requirement for import; however, the Could you tell us about some of your play, on the border with Chile in the Neu- Senior Director Latin America Chemicals duction, particularly in areas such as Bahia Blanca. I think that the manufacture of thermoplastics, such as polyethylene, requires an events, such as the IHS World Petro- quén province, has great potential for Ar- IHS MARKIT new government will try to improve supply. We have already seen improvement in our ethylene infrastructure. Aromatics are not as chemical Conference (WPC) and the gentina. A gas pipeline system is already in 18 improvements to the exchange rate; previously we saw problems responsive to GDP increases, while we will see greater fluctuation Latin American Petrochemical and Poly- place, it is abundant; but with international 19 with importing raw materials and exporting finished products. in the paraxylene market. mers Conference (LAPPC)? oil and gas prices at their lowest in more IHS Markit provides insight to clients than a decade, we might see some delays. Which products do you anticipate the industry will focus on Regarding IPA’s Petrochemical Industry Specialization de- through conferences throughout the year; An added bonus for Argentina is the new in future? gree program, who applies and how many students pass our main event is the World Petrochemical government: the country is slowly develop- This will depend on the new authorities of YPF. The petrochemi- through each year? Conference (WPC), which takes place an- ing a political environment conducive to at- cal department’s aim is to resurrect the aromatic industry, but one The degree program is a distance postgraduate learning program, nually in Houston, Texas, in March. This tracting foreign direct investment. The big- of the issues we currently face is the small sizes of a number of under the direction of IPA and the National University of San event includes a specific Latin American gest advantage Argentina has today, aside Argentine plants. This prevents them from competing economi- Martin (UNSAM). The program is designed to help higher edu- Petrochemical Summit and we also pro- from its feedstock, is its new administration cally and a number of projects are currently mothballed. The par- cation professionals with their general knowledge of the petro- duce a Latin American Petrochemical and and proposed reforms. axylene unit, for example, is only 40,000 tons/year (t/y) and uti- chemical industry, providing conceptual categories, decision pa- Plastics Conference (LAPPC) every No- lizes outdated crystallization technology, so is not economically rameters and patterns of action that allow them to improve their vember. Could you give us a final message about viable at present. Perhaps in the future, if funding is secured, the professional performance. the Latin American petrochemical in- construction of larger plants would allow the industry to compete. Around 30 people take the course each year. It has a total of 11 “ An added bonus for Argentina What views do international investors dustry’s future potential? I believe there may be very interesting possibilities for Argentina, subjects, five of which are obligatory. Applicants are required to is the new government: the hold on the petrochemical industries in Latin America’s market size is its great- working with Brazil, through the development of bi-national proj- have a degree in engineering or similar before they start, and the country is slowly developing a Latin America? est asset. Trade and an adequate business ects. A greater agreement between Brazil and Argentina, in terms overall degree takes around two years to achieve, culminating in political environment conducive During 2010 and through 2014, the BRIC environment will be necessary to grow the countries attracted investments globally. industry in the region. Meanwhile, grow- of export, shared trade and manufacture, would be very conve- a thesis. Approximately 50% of students are from Argentina, with to attracting foreign direct the remainder hailing from across Latin America. However, since 2014, Brazil and other ing demand will be met with increased im- nient for both countries in future due to their close proximity. investment. The biggest advantage countries in Latin America have reported ports. Countries such as Brazil will con- Argentina has today, aside from its As both Argentina and Brazil are looking to focus on specialty Considering the increasing focus on sustainability within the reduced economic growth. Today, invest- tinue to invest in local markets as well as chemicals, is there any rivalry that you see between the re- industry, will we see the hydrocarbon resource being used feedstock, is its new administration ment opportunities in the industry have abroad to access competitively priced feed- spective countries’ petrochemical industries? more in the energy or petrochemical sectors? and proposed reforms. slowed down. The investment environment stock supplies. With anticipated investment History shows that not many bi-national projects have gone ahead I think the greatest volume of natural gas will be used in the ener- in energy-related industries has deteriorat- in Vaca Muerta, the pipelines between Ar- between Brazil and Argentina. However, with our new govern- gy market. However, the development of new synthetic processes, ed and key economies in the region, such as gentina and neighboring countries could be ment, it seems likely that foreign investors will gain interest in for example those that produce useful feedstocks from methanol, Brazil and Venezuela, are reporting nega- an option for additional feedstock for the plant construction within Argentina, with a view to exporting to are of particular interest to the petrochemical industry. 50% of ” tive GDP performance for 2015 and 2016. petrochemical industry. We expect to see the Brazilian and wider Latin American markets. Taking toluene Argentinian energy usage comes from gas and, while there is the The chemical industry is global and there- moderate expansions at current production di-isocyanate (TDI) as an example, Rio Tercero is the sole pro- prospect of using new greener sources such as wind power, it is fore the economic fluctuations in China and facilities in the region. However, no signifi- ducer in Argentina and Brazil, but there is competition from for- expected we will continue to use the larger portion of our natural the increase of interest rates in the United cant additional capacity is expected in the eign markets. gas for fuel rather than as a feedstock. ▬ States have led to a more cautious invest- region through to 2020. ▬

courses designed to address specific needs pylene and butadiene, as well as some aro- Could you provide us with an overview es are very difficult to estimate. Nobody that companies may have. matics. The result is that there is less in- of EY’s petrochemical and chemical wants to move first, so a lot of research and centive to build an ethane cracker now that operations in Argentina and any recent investigation is being conducted but noth- Could you give us your opinion on the oil prices are low. milestones the company has undergone? ing concrete is taking place. The uncertain- state of the Argentine economy under Furthermore, the technology for alterna- EG: EY traditionally focused on energy, ty is related to the pricing of raw materi- the new government administration tive energy sources such as wind and solar chemicals and utilities as one large sector. als, which is a political rather than a market and any impacts on the petrochemical is also getting cheaper with every passing In 2014, as a result of dwindling invest- issue in Argentina. If the government puts industry? day, steering demand away from fossil fu- ment in these areas, the decision was made different regulations and taxes on raw ma- Argentina is now perceived as having a els. This suggests that oil price recovery to split this large segment up into a num- terials it will affect prices. With greater government more open to the rest of the could be slower this time than in previous ber of more focused specialties: Oil & Gas, clarity in the economic landscape, we will world that will try to align itself with the crude oil crashes. The proliferation of al- Power & Utilities, Mining & Metals, and see more action.

way other developed countries do things. ternative sources of energy, conservation EG Chemicals. We have 200 people dedicated The previous government had a more con- and recycling policies in many countries, to petrochemicals in Argentina, working What are the long-term factors that will frontational style, which put the country at and the current glut of oil and shale gas in with all the big names in their various ju- have an impact on future M&A in the odds with the rest of the world. The prob- international markets, create unfavorable risdictions. industry? lem in Latin America as a whole, not just conditions for the development of Vaca EG: We know we have distorted oil and in Argentina, is the lack of basic raw ma- Muerta at this time. How do you advise your petrochemical gas prices in Argentina. Oil prices here are George terials such as olefins and aromatics. We Enrique Grotz clients to optimize their costs? around $70 per barrel, while gas prices are will not see companies investing in plas- EG: One of the main factors is logistics; in around 7.5 MBtu. Argentina has a deficit Martin tics, solvents or any other chemical plant our experience, this is a key area for gain- of gas which will work until the point of if they do not have access to competitively & Germán ing efficiencies. Transport costs are very self-sufficiency. If you pay three times the priced raw materials. “ high in Argentina, so we analyze the way international price for a raw material, the fi- Government-controlled energy prices in Even if Argentina can become Cantalupi our clients transport both raw materials and nal product will not be as competitive. The Argentina in the last 20 years had removed self- sufficient in terms of energy finished products. Because of the difficul- current pricing in Argentina is good for the all incentives for drilling and exploration, ties we have seen in railroads in the last few industry’s development, but petrochemi- Senior Consultant production, low international crude oil and the country inevitably turned into a years, trucking has increased. We help our cal companies need to think longer term. prices will still be a problem. The cost ICIS net importer of energy. The main oppor- clients reduce transportation times and op- If their focus is on exporting, Argentina’s EG: Partner and Oil & Gas Leader 20 tunity for increasing Argentina’s raw ma- of naphtha-based ethylene production timize warehouse locations in order to re- pricing must be more aligned with interna- 21 is now comparatively low and results GC: Partner terials output currently lies with Dow and EY duce costs. tional markets. YPF’s joint venture in Vaca Muerta; the in a wider range of chemicals than gas most likely outcome of this will be extra cracking can provide. YPF and Dow agreed a $500 million Does EY have a final message for our gas production, which Dow can utilize in joint venture to explore for shale gas in GBR readers? Could you provide us with an overview the Bahia Blanca complex, leading to the Argentina. Does this signal a new wave EG: I am generally optimistic about the of ICIS’s operations and the services it construction of a new ethylene plant. But of investment in the country? petrochemical industry in Argentina and provides clients? even this project now has a more difficult EG: The shale gas vision has been a global believe that, once the business environment Our strategic positioning in the market path because international oil and gas pric- ” catalyst for activity and played a key role becomes more predictable and we see some started with the commodity price reports, es have declined. In addition, the current What is your final message about the fu- in Dow’s decision to move upstream. They long-term trends, we will see significant ac- which we provide on nearly 100 chemi- shale gas explosion in the United States ture for ICIS and where the company is moved first and they moved the fastest, and tivity in this area. We need to look ahead cals. Without an independent reference has made it almost impossible to compete. headed? took the crucial decision to move to the up- over the next two decades: in around ten such as ours, many companies have vague Many projects in Latin America have been We have tremendous volumes of useful stream business for the first time. This deci- years we will see Argentina become self- ideas about the value of a chemical prod- put on hold because of these concerns. information: historic supply and demand “ sion was not an easy one to take for a large sufficient in terms of hydrocarbons, which uct and are at a disadvantage to negotiate pricing and forecasts, short and long-term The current pricing in Argentina is corporation such as Dow and was no doubt will positively impact the petrochemical in- fair agreements with suppliers and buy- Is there enough appetite for developing price forecasts, news and analysis, confer- good for the industry’s development, influenced by other companies deciding to dustry. We then need to focus on exporting ers. We also have a comprehensive news the market here when there is already a ences and training. We are implementing but petrochemical companies invest in the Vaca Muerta shale play. EY – Argentina currently only exports around service. One of our biggest advantages is global over-supply of product? new ways to deliver our information and need to think longer term. If their works with companies mostly in the tax 0.8 million tons of product per year, but this having price and news reporters in strate- The main difference between the produc- continue to improve our website to make it focus is on exporting, Argentina’s arena, which is particularly important as does not make economic sense today. gic locations around the world, so we can tion of shale gas in the United States and more user-friendly. We are also improving pricing must be more aligned with there have been recent changes to Argen- GC: We also need to focus on gaining for- provide regional price information as well Argentina is that the wells in Vaca Muerta our methodology and accuracy and, hav- international markets. tina’s tax regime. eign investment. Local companies have not as global news 24/7. With several impor- are deeper, which increases production ing incorporated comprehensive record- At present, we are seeing six foreign com- invested in increasing capacity but, in most tant acquisitions the company has built costs. Even if Argentina can become self- keeping measures and transparency in our panies conduct due diligence into Argentin- cases, we have modern technology in the an important position in consulting and sufficient in terms of energy production, procedures, we are fully compliant with ian companies. The middle of 2015 saw the plants which will enable us to use the idle analytics - activities that complement our low international crude oil prices will still the guidelines of international organiza- start of some movement, but nobody has capacity to increase production in a mean- massive supply and demand database as be a problem. The cost of naphtha-based tions regulating price reporting agencies. yet decided to invest. Once the macro-eco- ingful way. We have an excellent opportu- well as our price histories and news. ethylene production is now comparatively ICIS strives to become the global bench- ” nomic issues have been solved, such as the nity in the short- to medium-term and I am We also organize many conferences per low and results in a wider range of chemi- mark for energy and petrochemical infor- exchange rate and government policies, we confident that, in the near future and once year and provide introductory and ad- cals than gas cracking can provide. Naph- mation, keeping in mind that the path to should see a flow of investment. conditions become more favorable to pet- vanced training courses on petrochemi- tha cracking yields slightly less ethylene, this goal passes through improved custom- GC: With the current economic uncertainty rochemical investors, we will see the result cals. We can also provide tailor-made but also gives heavier olefins such as pro- er service. ▬ following the election result, asset pric- of current decision-making. ▬

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations GBR • Industry Explorations • ARGENTINA PETROCHEMICALS AND CHEMICALS 2016

PETROCHEMICALS

"The chemical and petrochemical industry in Argentina represents 12% of the total Domestic Industrial Production, and their exports represents 25% of total industrial exports.The industry has a bright future thanks to the quality and size of the country’s infrastructure, market, technology, an extensive history in hydrocarbons, and refineries."

- Jorge de Zavaleta, Executive Director, CIQyP Image: YPF EDITORIAL Global Business Reports Global Business Reports EDITORIAL

Zavaleta, executive director of the Chamber of Chemical and Pet- of investment in the industry. “Compania Mega aims to be an es- But YPF knows it is at the start of a long road to fully exploiting rochemical Industries (CIQyP). He sees Argentina at the start of a sential protagonist in the processing of new gas production in the the opportunities offered by the Neuquén and Bolivian gas reserves. Partnerships create new wave of investment, and defined a new strategic roadmap for Neuquén basin and a reference for the oil and gas and petrochemical By ramping up the production of unconventional hydrocarbons, the future activity: “The chamber defined a chemicals and petrochemi- industries,” he continued. company can achieve its goal of obtaining 50% of its gas production cals outlook that looked to 2025. CIQyP explained to the Ministry of from the new formations by 2020, leading to an expansion in its opportunities for Industry that the development of the petrochemical industry would petrochemical production. “There is an important opportunity to cre- hinge on the development of the country’s hydrocarbon industry, Exploring next door ate a regional hub for petrochemical production in Argentina led by which would likely occur in earnest no earlier than 2020,” stated polyethylene, polypropylene (PP) and other polyolefins and deriva- petrochemical de Zavaleta. Sabelli stated that YPF’s next goal is to increase the supply of pet- tives,” he continued. “This will make it possible to replace imports Leading the way in terms of new investments since the change in rochemical products derived from natural gas liquids in order to and become a net exporter of petrochemicals.” government is YPF, which signed a $500 million, 50/50 agreement reduce the country’s dependency on imports from Bolivia. In July dominance to conduct exploration and development projects in Vaca Muerta 2016, the company made the first steps to realising this goal, signing with its latest collaborator, American Energy Partners, at the start of an agreement with its Bolivian counterpart, YPFB, to conduct its Positive partnerships 2016. “We believe that our new partner, American Energy Partners, first explorations in the country. If the estimated 2.7 trillion cubic will contribute expertise of the highest level to develop shale oil and feet of natural gas reserves can be proved, YPF and YPFB will invest In order to set the conditions necessary to invest in a world-scale By Harriet Bailey gas in Argentina. This partnership will definitely accelerate YPF’s in a joint venture worth more than $1 billion. plant, it seems likely that companies will need to work together. In unconventional learning curve,” explained former CEO Miguel Ga- At present, Argentina is a net importer of raw materials, and is re- August 2015, YPF announced its intention to acquire a 46% stake in luccio. “After the first stage is completed by mid-2018, the- proj liant on 1,300 km of pipelines running from Cordoba province to Petroquimica Cuyo and 50% of LyondellBasell’s Petroken for a total ect would enter into the full field development phase in “U.S.-style Bolivia. Refinor (Refineria del Norte S.A.), formed in 1992 as part of $122 million. By the end of the year, however, the deal had fallen shale manufacturing” mode.” of the YPF privatisation process, is the only downstream company apart; the Argentine Central Bank’s lack of physical dollars meant As the third largest petrochemical producer in South America, YPF in the Argentine northwest region and is operating at one third of its YPF could not complete the transaction. The acquisition would have wants to lead Argentina to energy self-sufficiency. A ready supply of available capacity due to lack of feedstock. Its Campo Duran plant not only allowed YPF to gain synergies, with Petroquimica Cuyo In November 2011, a major find in the Vaca Muerta shale play hydrocarbons would also allow for the country to be self-sufficient is linked to Bolivia by the Juana de Azurduy pipeline, constructed and Petroken having facilities in close proximity to YPF’s plants in in Neuquén province by Argentina’s national energy company in terms of petrochemicals and improve its manufacturing base. in 2011, and has been the sole operator of the feedstock Argentina Lujan de Cuyo and Ensenada respectively, it could also have paved Yacimientos Petrolíferos Fiscales (YPF) signalled a new era for the YPF’s chemical executive manager, Marcos Sabelli, recognises receives from Bolivia since 2012. “The possibility to increase gas the way for the world-scale plant YPF wants and Argentina needs. country’s petrochemical industry. Crippled by dwindling oil and gas the building blocks required to achieve YPF’s plan: “The success imports from Bolivia was a good opportunity for Refinor, consider- “The economies of scale fostered by such a consolidation could fa- reserves, Argentina had recently become a net importer of energy of YPF and Argentina’s petrochemical business rests on four pil- ing our strategic location,” said Fernando Caratti, Refinor’s general cilitate the development of a project for the construction of a new PP 24 for the first time since 1984. Just as the shale gas revolution in the lars: abundant feedstocks, a strong market, a world-scale plant, and manager. “Since then, the company has started to process Bolivian plant that would ensure the supply of domestic demand and generate 25 United States has reinvigorated its own stagnating petrochemical in- a world-class partner.” gas to make up for the decrease in domestic gas production.” export availabilities,” said Jorge R. Sampietro, general manager at dustry, similar sized reserves in Vaca Muerta could see the “Dead The company owns two petrochemical complexes in Argentina: Despite the dwindling supplies of raw materials, companies have Petroquimica Cuyo, on the merger’s advantages. Cow” reviving to breathe new life into upstream and downstream the La Plata Industrial Complex (CILP) in Ensenada, Buenos Aires attempted to improve yield from the hydrocarbons available. YPF YPF has previously implemented a number of successful partner- sectors and, in turn, improve the fortunes of an entire country. province, which has both a refinery and a petrochemical plant, and invested more than $450 million in a new continuous catalytic re- ships, including between U.S.-based Chevron and Malaysia’s na- Although the country boasts the three factors required to develop one in Plaza Huincul, to take advantage of the Vaca Muerta shale former unit at CILP to double its capacity for producing high-value tional energy company Petronas. A particularly prolific partnership any petrochemical industry - readily available feedstocks, access to play in Neuquén province. It also owns a 50% stake in Profertil, aromatics, used for generating the petrochemicals benzene, toluene is that between YPF and Dow, in which the former supplies the lat- technology, and a receptive domestic market, according to Ignacio one of the largest urea and fertilizer plants in the world (located in and xylene, from low-value naphtha. According to Rina Quijada, se- ter’s gas demands. Dow’s presence on the Argentine petrochemical Millan, president at the Argentine Institute of Petrochemicals (IPA) the port town of Bahía Blanca, Argentina’s chemical heartland), as nior director Latin America Chemicals at consultancy IHS Markit, scene is, at around six decades, almost as long as YPF’s and, despite - Argentina has been unable to capitalise on these findings as quick- well as a 38% stake in petrochemical company Compañía Mega. the Argentine petrochemical industry will be highly dependent on recent feedstock challenges, the country remains disproportionately as the North Americans for a number of reasons. A closed-door The remaining two shareholders in the latter partnership are Brazil- imported aromatics in the short term, as gas-based petrochemicals ly represented within Dow’s global strategy. “Dow’s subsidiary in policy to foreign investment from the previous populist government, based energy company Petrobras, which has a 34% shareholding and could increase production capacity for olefins and derivatives. Argentina is the country’s sixth largest in the world, even though combined with regulatory uncertainty and high taxation on new ex- receives LPG and natural gasoline from its investment, and Dow Ar- plorations, was far from attractive to foreign investors. Furthermore, gentina, which secured an additional ethane supply for a 28% stake. much-needed transportation and infrastructure projects failed to win The three companies made a $720 million investment in the com- political support; bottlenecks in pipelines need to be addressed and pany in 2001, marking the last new petrochemical installation in industrial rail transportation is all but non-existent in the country. Argentina; since then the industry has seen only refinery renova- In this regard, however, Argentina’s new, business-minded president tions and improvements. “Compania Mega is a producer of ethane, Mauricio Macri is aware of the need for action and the door to for- propane, butane and natural gasoline. We have two complementary eign investment has been flung wide open. “I know there is an enor- plants connected by a pipeline; our natural gas separation plant is lo- mous pending debt on infrastructure. We can develop not only the cated in Loma La Lata in the Neuquén basin, while our fractionation roads, but also the trains and waterways. There has been a huge lack plant, storage and loading facilities are in Bahia Blanca,” explained of investment,” he stated at an event in March 2016, “but working general manager Hugo Tormo. “During the last fifteen years Com- side-by-side with governors and mayors we will begin collaborating pania Mega has contributed significantly to Argentina’s commercial on solutions as soon as possible.” balance.” It will be a number of years until Argentina experiences the type of Tormo sees increasing production in Neuquén as a natural conse- transformative activity seen in the United States in recent years, or quence of the country’s overall goal to reverse its energy deficit, and even to the next Ethylene XXI plant, as in Mexico. Argentina has already supplies the domestic petrochemical industry with around not seen any investment in its petrochemical industry since the early two-thirds of its ethane requirements. He is optimistic about the new 2000s, when several new plants were built to provide capacity for government’s understanding of the requirements of both the national the growing supply of natural gas feedstock, according to Jorge de and international business communities and is already seeing signs

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations EDITORIAL Global Business Reports Global Business Reports EDITORIAL

Argentina is the world’s 24th largest economy,” said Gaston Remy, Brazilian economy slowing down at the same time as Argentina’s is The need to ensure Argentina keeps pace with global technology in gest advantage Argentina has today, aside from its feedstock, is its president at Dow Argentina. “Dow has been recognized as the leader opening up, Brazil could face an oversupply of PP, leading Braskem the energy sphere is being advanced by Y-TEC, a research and de- new administration and proposed reforms.” of Argentina’s petrochemical industry for the last 60 years.” to increase its exports to its southern neighbor. In turn, Petroquimica velopment (R&D) organization established by YPF and the National Not all of Argentina’s petrochemical plants are currently operat- Dow’s main production site is its 120-hectare petrochemical com- Cuyo and Petroken could initially struggle to remain competitive un- Scientific and Technical Research Council (CONICET) in 2013. Its ing at full capacity and, at peak periods, some are unable to operate plex in Bahia Blanca, in which it invested 450 million pesos for ex- til they are able to up their production, which will require additional aim is to reduce costs across Argentina’s energy stream by devel- because of the lack of feedstock. It was reported Dow was forced pansion in November 2014. In a shock move upstream, Dow signed steady supplies of raw materials. oping home-grown technologies, rather than importing them from to cease operations at two of its PE plants in October 2015 while, a $350 million joint venture agreement with YPF to explore the El Braskem’s bet on the future of Argentina’s abundant unconventional abroad. “For example, polymers with oleophilic and hydrophobic during winter, households and petrochemical complexes compete Orejano gas field in Neuquén eighteen months previously. “[Its] hydrocarbon resources also led it to make a play for Solvay Indupa, characteristics could solve environmental issues. We are also study- for available raw materials. “The winters of 2012 and 2013 were advantages include abundant water resources, a century-old hydro- the corporation’s Argentine producer of PVC and soda; the purchase ing new technology to obtain internal olefins to produce surfactants particularly challenging as household demand for natural gas was carbon industry, connection with pipelines and, unlike some areas was, however, vetoed by Brazil’s competition authority in Novem- for enhanced oil recovery. Additionally, we have started work on a particularly high and the government prioritized supplying house- in the United States, relative under-population,” explained Remy of ber 2014. Despite this, de Azevedo considers Argentina an important product that includes a new catalyst to obtain acrylonitrile, a key ele- holds with natural gas,” said Javier B. Sato, commercial manager the decision to invest in exploration. “Dow has often been a first- market for Braskem into the future and the company’s strategy in ment for the production of several derivatives of great significance downstream at Petrobras. mover within the industry and is deeply committed to supporting this regard is to act as a local player, recognising the mutual benefits for the industry,” continued Galuccio. Argentina therefore already has the capacity available to increase Argentina’s development and to the company’s sustainable growth in cross-country trade: “Braskem imports naphtha from Argentina Two years after its inauguration and YPF’s original R&D team of 75 production without the need for significant investment, before in- in the country.” and exports back polymers. For Brazil, Argentina is a natural market people has been bolstered to around 350 researchers based at a new, vesting in moderate expansion works over the next three years. This Dow and YPF reaffirmed their commitment to Argentina in late and Braskem tries to see Argentina as an internal market,” said de 495 million peso Science and Technology Center within YPF’s La will allow time for the various upstream projects to get underway 2015, adding a further $500 million to their exploration fund for the Azevedo. Plata complex. The space has around 60 dedicated laboratories, fo- and for commodity prices to rise, stabilising the market in Argentina El Orejano site. Estimates suggest production could reach an aver- cusing on the four areas of upstream, downstream, renewable energy and demonstrating to those companies currently sitting on the fence age of two million cubic meters per day by the end of 2016 - three and materials engineering. CONICET’s 10,000 researchers and ca- to commit to profitable joint ventures for the future. EY’s Grotz times current levels. IPA’s Millan believes Argentina’s petrochemi- A future investment pabilities nationwide are also available to work on Y-TEC projects. takes a long-term view on the petrochemical’s current situation: cal industry is worth the investment: “Investors should recall the first “In around ten years we will see Argentina become self-sufficient mover advantage. Those that take the risk in heavily investing in an Awareness among foreign companies of the potential in Argentina’s in terms of hydrocarbons, which will positively impact the petro- 26 opportunity before others are those that later reap significant profit.” unconventional hydrocarbons, combined with the new administra- Politically advantaged chemical industry. We then need to focus on exporting - Argentina 27 tion’s focus on promoting growth within the petrochemical industry, currently only exports around 0.8 million tons of product per year suggests it is only a matter of time before Argentina achieves the Determined local players, interest from across Latin America and - but this does not make economic sense today.” Everybody needs good neighbours investment required to kick-start new developments along the entire an awareness of the requirement for a trained workforce have been With all of YPF’s activity on the exploration and production side, energy stream. However, Argentina’s growth could be hamstrung by in place in Argentina for a couple of years; the complementary fac- as well as in R&D, combined with its partnerships over the last few As well as the benefits for Argentina from companies joining forces, a lack of qualified personnel to staff new sites, and the human re- tor is a supportive government, which is set to change the fortunes years, the company’s aspiration is clear. “The incorporation of stra- IPA also considers Argentina working more closely with neighbor- source is described by IPA’s Millan as one of the major challenges of the petrochemical industry. It now needs to create a political en- tegic partners responds to the objective of ramping up the unconven- ing Brazil on bi-national projects as bringing certain advantages. for Argentina’s petrochemical industry. “The petrochemical industry vironment conducive to foreign investment by promoting freedom tional natural gas production to reach energy self-sufficiency and to This would increase Argentina’s domestic market – an attractive employs more than 100,000 people, and most of them have quali- for chemical companies to operate and improving links between Ar- expand the petrochemical business,” commented Galuccio. “We’re prospect for potential investors. “A greater agreement between Bra- fications for their role. Around 30% are engineers or other skilled gentina and other economies worldwide. “Investors looking at Latin getting closer to realizing our objective of energy self-sufficiency zil and Argentina, in terms of export, shared trade and manufacture, operators,” said Millan. America will find Vaca Muerta in Argentina much more attractive by putting into production the resources that can change the energy would be very convenient for both countries in the future due to their Argentina’s current output of students with an engineering degree today than in previous years,” said IHS Markit’s Quijada. “The big- future of our country.” ▬ close proximity,” suggested Alfredo G. Friedlander, IPA’s executive is around 6,000 to 8,000 per year; a new petrochemical complex director. would require around 10,000 to 15,000 new engineers, of a total of With a population of more than 200 million compared to Argentina’s around 50,000 new technically skilled employees. Over the seven- 43 million, Brazil has the largest domestic market in Latin America. year timeframe it would take to construct a new petrochemical com- All the countries in the Southern Cone are net importers of polymers plex, around 20% of those graduates would need to assume one of and other petrochemicals, reflecting a strong regional demand that those roles on an annual basis. “A new petrochemical complex and could be satisfied with increased local production. the resulting downstream industry would present an additional high Brazil’s Braskem, which claims to be the largest polypropylene (PP) demand for qualified personnel. Thus, the petrochemical industry producer in the Americas and the largest polyethylene (PE) producer would be competing in a highly competitive environment in order to in Latin America, maintains a presence in Argentina to both serve recruit the best talent,” Millan continued. its clients across the Southern Cone, and as a lucrative end-market YPF has taken steps to attract and retain the necessary professionals for its products. “Argentine demand for PP exceeds domestic pro- to accompany its growth, not least by providing assistance with relo- duction capacity, so the industry needs PP imports from Braskem to cating personnel to its various sites across the country. The company continue to run smoothly. At the same time, Argentina has a trade has also signed agreements with Argentine universities to develop deficit in high-density PE,” explained Marcio Sanita de Azevedo, and train its workforce of the future. “Young professionals join the general manager at Braskem Argentina. company through specific programs, and we have implemented paid While Braskem’s PP production capacity reaches almost two million work experience programs and internships in order to increase num- tons per year (tpy), its Argentine competitors, Petroquimica Cuyo bers of engineering students and promote technical education within and Petroken, produce a combined total of only 310,00 tpy. With the our communities,” explained YPF’s former CEO, Miguel Galuccio.

PETROCHEMICAL EXPORTS Marcos

Thousand Tons Sabelli 2.000

Chemical Executive Manager What is YPF’s vision for the petrochem- 1.500 YPF S.A. ical industry in Argentina? YPF is the engine of the petrochemical industry in Argentina, being the first petrochemical producer in Argentina and one of the top three in the South American mar- 1.000 ket. Though Argentina exports or burns some petrochemical feedstock, the country continues to import many specialty petro- What is the strategy of YPF´s Down- Could you tell us more about YPF’s pet- already produces. Since 2010, Argentina chemicals. YPF wants to lead Argentina stream segment? rochemical clients and the global mar- has been short in gasoline and gasoline not only to energy self-sufficiency, but also 500 The downstream segment aims to maxi- kets which the company supports? components. Yet YPF has been in naphtha petrochemical self-sufficiency. After fully mize integration, add value, and improve YPF exports to countries throughout South for many years and was one of the main supplying the domestic market, YPF wants the production and quality of fuels and America, Europe, and the United States. suppliers of naphtha feedstock to Braskem to lead the Argentine petrochemical indus- petrochemical products offered to the mar- Nevertheless, YPF mainly exports to Bra- in Brazil. Given the abundance of naphtha try to becoming an important supplier in South America. ket by taking advantage of the synergies zil. Though commercial travel from Bue- as a feedstock for aromatics, it made sense 0 among YPF’s chemical and refining activi- nos Aires to the north of Brazil is some- to invest $450,000 in a new continuous 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 28 ties, as well as its natural gas production. times more expensive than to Rotterdam or catalytic reformer unit for the production Argentina has not seen an industry- 29 The Complejo Industrial La Plata (CILP), Houston, it makes sense to export to Bra- of aromatics. changing investment since the late or La Plata Industrial Complex, for ex- zil and other Mercosur countries given the 1990s. Will YPF make the next big investment in Argentina’s petrochemical ample, illustrates the strategy behind the common external tariff (and the distance How will YPF’s downstream segment PETROCHEMICAL IMPORTS

decision to create a single downstream of Argentina from the rest of the world). take advantage of the increased produc- industry? segment. According to YPF’s downstream YPF´s petrochemical complexes are stra- tion of unconventional natural gas? YPF aims to build a world-scale petro- strategy, the CILP is meant to function as a tegically located close to competitive sup- Part of YPF’s strategy involves the direct chemical plant. Even if Argentine demand single complex, benefitting from the syner- ply routes; it therefore makes sense to integration of the company’s upstream nat- for petrochemicals may not justify the Thousand Tons gies between the refinery and petrochemi- further integrate with the south of Brazil, ural gas production with its petrochemical construction of a world-scale plant, future 2.500 cal plant. At the CILP, the petrochemical with which Argentina can easily exchange production, without the need for a refinery. regional demand does. Once Argentina, plant receives light naphtha and liquid pe- goods and raw materials. As petrochemical companies in the United Brazil, and other countries in the region troleum gas (LPG) from the refinery as its YPF’s Argentine and Brazilian clients are States have done, YPF hopes to take ad- resume growth, there will be a huge petro- two main raw materials, and sends back similar, and include other petrochemical vantage of the rich gases produced from chemical market to supply. 2.000 gasoline blend stocks and other products. companies that buy YPF’s basic and inter- unconventional gas fields. The success of YPF and Argentina’s pet- The petrochemical plant and the refinery mediate chemicals as well as transformers Argentina is already rich in gases such as rochemical business rests on four pillars: share the same maintenance and techni- that buy the company’s specialty products ethane, propane, and butane. Regarding abundant feedstocks, a strong market, a cal personnel, as well as industrial water, for applications further downstream. Some ethane, Dow Argentina and other compa- world-scale plant, and a world-class part- 1.500 steam, and hydrogen. The petrochemical of YPF’s important clients in Argentina in- nies use much of it as feedstock and the ner. The development of Argentina’s un- plant generates hydrogen and octane value clude Unilever, Procter & Gamble, Petro- rest is used as fuel; propane, meanwhile, conventional oil and gas industry will sup- products, which the refinery then uses to bras and Río Tercero, among others. is exported by Argentinian companies. As ply the raw materials, and South America desulfurize diesel and blend into the gaso- unconventional natural gas production in- will provide the market demand. Yet Ar- 1.000 line pool. Why has YPF decided to focus on increases in the short and medium term, Ar- gentina still needs a world-scale plant to YPF’s strategy is to keep building an inte- creasing its aromatics production ca- gentina will be increasingly able to sup- supply that market and YPF still needs to grated company. The petrochemical sector pacity in recent years? ply the country’s domestic gas needs and solidify a world-class partner. YPF would has enormous potential in Argentina and is The investment in increasing YPF’s aro- decrease natural gas imports both as LNG give and take from such a partnership. a key part of the company’s growth strat- matics production capacity reflects the and from Bolivia. Now that YPF has fur- YPF would take advantage of the partner’s 500 egy in an industry which is competitive company’s strategic focus on vertical ther increased its production of aromat- expertise in products such as polyethylene, on a regional level. We believe that YPF forward integration. YPF’s investments, ics, the company’s next strategic goal is while the partner would take advantage of has a unique opportunity to become the whether they relate to acquisitions or to to supply Argentina and the region with YPF’s proven ability to oversee billion- petrochemical industry’s leader in Latin capital expenditures, look to take full ad- petrochemical products from competitive dollar projects and to run petrochemical 0 America. vantage of the raw materials the company natural gas liquids. plants in Argentina. ▬ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations

INTERVIEW Global Business Reports Global Business Reports INTERVIEW

Gastón Remy

advantages include abundant water re- allow Argentina to achieve its full reindus- President sources, a century-old hydrocarbon indus- trialization potential and make the most of DOW ARGENTINA try, connection with pipelines and, unlike raw materials to the benefit of the produc- some areas in the United States, relative tion chain as a whole. Going through each under-population. of these four stages requires a coherent The impact of the shale boom in the United plan and policies that will assure a con- States had a profound impact on its petro- tinued gas supply and promote industrial- chemical industry, but imagine the impact ization by preventing the exclusive use of How important has Dow been to the de- nologies. tial component in the development of ad- that such a boom would have in Argentina, natural gas during the primary stage. velopment of Argentina’s petrochemical Dow’s success in Argentina is the prod- vanced manufacturing industries. When where the ratio of resources to economic industry? uct of the nexus among the country’s own used as a chemical feedstock, natural gas output and population is much larger. Even What will Dow’s leadership look like in Dow has been recognized as the leader of competitive advantages in the agribusiness creates additional value as much as eight if Argentina underachieves, the impact Argentina in the years to come? Argentina’s petrochemical industry for the and hydrocarbon industries, the alignment times the value of the gas itself. could still be massive. In 2015, Dow launched seven sustainabil- last 60 years. Dow has often been a first- of Dow’s core business with these two in- The availability of resources enhances ity goals to help redefine the role of busi- mover within the industry and is deeply dustries, and Dow’s reputation and pres- Dow’s opportunities in the country. With What impact would a shale revolution ness in society. The first goal aims to lead committed to supporting Argentina’s de- ence in Argentina. high-quality and abundant feedstock, Dow have beyond Argentina’s petrochemical the development of a societal blueprint that velopment and to the company’s sustain- will be able to think bigger, to continue ex- industry? integrates public policy solutions, science able growth in the country. How has Dow reacted to declining oil panding its presence in Argentina, and to The multiplier effect of industrial resourc- and technology, and value chain innova- 32 Counting the direct and indirect employ- and gas production in Argentina? conquer new markets. Dow anticipates that es, added to the production of unconvention to facilitate the transition to a sustain- 33 ees that contribute to the company’s op- Up until the end of the 1990s, Dow great- this additional supply will allow the com- tional hydrocarbons, may be represented able planet and society. erations, Dow employs 3,800 people in ly benefitted from the abundant supply of pany to keep a competitive cost position as by four “waves” of investment and indus- Pursuing sustainability means that future Argentina. As a key strategic industrial competitive raw materials from Loma de well as strengthen its position to generate a trialization that expand through the petro- generations will be better off as a result of partner, Dow has invested more than $2 la Lata field. Yet, when the production positive return on investment. chemical production value chain: hydro- our decisions. Many well-meaning busi- billion during the last 15 years. Its strong decline started, Dow had two options af- carbon production, petrochemical industry ness, government and societal stakeholders performance resulted in sales of more than ter suffering a series of difficult winters What impact would a shale revolution development, manufacturing byproducts around the world are working toward sus- $2.4 billion in 2014 and exports that sur- throughout the 2000s. Dow would either have on Argentina’s petrochemical in- and research and development (R&D). tainability through individual actions, but passed $600 million, strengthening Argen- be part of the problem or part of the so- dustry? The first is the most basic instance of re- we have not yet all come together to define tina’s commercial balance and replacing lution. Eventually, Dow took the informed To understand the impact of a shale boom source reutilization: shale gas extraction and deliver a coordinated blueprint. On a imports with local production. and important decision to be part of the on Argentina’s economy, it would be use- and production. This introduces large path to a sustainable society and planet, ef- solution by partnering with YPF to be one ful to recall the impact that such a boom amounts of raw material into the system. forts must be combined into one proactive, Conversely, how important is Argentina of the first investment catalyzers in the up- had on the petrochemical industry in the During the second stage, the extracted gas comprehensive strategy and implementa- to Dow’s global strategy? stream gas sector. In 2013, YPF and Dow United States. From 2007 to 2009, pet- is used to maximize basic industries, such tion blueprint. Dow’s subsidiary in Argentina is the com- entered into a joint venture by which Dow rochemical facilities were shutting down as petrochemicals, which benefits from the Dow is committed to helping lead this pany’s sixth largest in the world, even will fund the development of El Orejano, in the United States and companies were constant supply of raw materials used in transition. As the world leader in combin- though Argentina is the world’s 24th larg- a Vaca Muerta gas field. The company has thinking about moving operations to other production plants allowing it to generate ing the power of science and technology est economy. As a result, Dow Argentina been carrying out a pilot to produce shale regions, such as the Middle East. Now, the supplies used by other industries. The third to passionately innovate what is essential is disproportionately represented in terms gas, which will contribute to an increase in American petrochemical industry has $140 stage involves an extra step in resource in- to human progress, Dow will advance sus- of Dow’s business presence in Argentina. the availability of gas in a key region for billion worth of investments in more than dustrialization by engaging companies that tainability by collaborating at the intersec- This is because the company operates in Dow. Currently, the area holds 38 wells in 100 ongoing projects, has created 700,000 invest in new energy plants and manufac- tions of business, government and society two key platforms of the Argentine econ- production, 21 horizontal and 17 vertical, connected jobs, and will move from a trade turers of byproducts in the primary sec- – with everyone from customers, suppliers omy. On the one hand, Dow is the third and production reaches about 2,000,000 deficit in petrochemical products to a sur- tor, such as plastic transformers, container and other industry stakeholders, to govern- largest player in the agribusiness; while cubic meters of gas per day. plus of $30 billion by 2018. producers, and other manufacturers. This ments, non-governmental organizations on the other, Dow is the largest and best- The potential of unconventional resources When compared to Argentina, the United stage adds yet another layer of value to the (NGOs), educational institutions, commu- integrated petrochemical player in the hy- makes us think not only about Argentina’s States has a population that is seven times raw material and contributes to the gen- nities and civil society. drocarbon value chain, especially thanks recovery of energy self-sufficiency, but bigger and an economy that is 32 times eration of products for mass consumption. Recalling the abundance of Argentina’s to the company’s plastics business. A third also about a new era for the petrochemi- larger. And yet, the shale resources of the The fourth stage focuses on establishing unconventional resources and Dow’s early platform under development in Argentina cal industry. Natural gas and its value-add- United States are 82% the size of Argen- and strengthening R&D centers that can participation in their development, I can- relates to infrastructure and mining, for ing potential, whether as fuel or feedstock tina’s. Moreover, the vast majority of these continue to explore new technologies and not think of a country where Dow is better which Dow has both solutions and tech- for downstream processing, is an essen- resources are located in Neuquén, whose provide workforce training. This stage will poised to lead the blueprint. ▬

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations Global Business Reports Global Business Reports MAP MAP Petrochemical Plants

1 Bahía Blanca Area • PBBPolisur S.A. • PROFERTIL S.A. • YPF S.A.

2 Ensenada Area • MAFISSA • PETROKEN S.A. • YPF S.A.

3 Gran Buenos Aires Area 6 • ATANOR S.C.A. 5 • INDUSPOL AISLACIONES S.R.L (Junín) • PETROQUÍMICA ARGENTINA S.A. (San Miguel del Monte) 7 4 3 4 Campana - San Nicolás Area 2 • ATANOR S.C.A. • BUNGE ARGENTINA S.A. • CABOT ARGENTINA S.A.I.C. 34 • CARBOCLOR S.A. 35 • CARBOQUÍMICA DEL PARANÁ S.A. 1 • DAK AMERICAS ARGENTINA S.A. • PETROBRAS ARGENTINA S.A. 8

5 San Lorenzo - San Martín Port - General Lagos Area • AKZO NOBEL ARGENTINA S.A. • ARAUCO ARGENTINA S.A. (Chemical Division) • DOW QUÍMICA ARGENTINA S.A. • EVONIK METILATOS S.A. • PETROBRAS ARGENTINA S.A. • STYROPEK S.A. • VARTECO QUÍMICA PUNTANA S.A.

6 Rio Tercero Area • ATANOR S.C.A. • FÁBRICA MILITAR RIO III • PR. III S.A.

7 Luján de Cuyo Area • PETROQUÍMICA CUYO S.A. • YPF S.A.

8 Plaza Huincul Area • YPF S.A. 0 100 200 300 Kilometers 0 100 200 300 Miles

Márcio Sanitá

de Azevedo & plant’s former catalyst with a PTK catalyst though the Argentine producers will strive in the late 1990s. Petroquímica Cuyo is to remain competitive. Nevertheless, more Emilio Nager now able to produce the following prod- competition will undoubtedly be healthy MSA EN ucts: homopolymers, impact copolymers, both for the Argentine economy and for the random copolymers, high-rubber PP, ran- development of local plastics markets. dom copolymer type 3, and a high-speed, MSA: General Manager between Argentina and Brazil through Mer- Braskem tried to acquire Solvay Indupa, an low-water carryover grade of PP for extru- How important are Cuyolen and Cuyo- EN: Commercial Manager cosur and of the presence of several impor- Argentine producer of PVC and soda, but the sion. The company can also produce ter- tec as brands for the successful commer- BRASKEM ARGENTINA S.A. tant plastics converters. As an example of the Brazilian competition authority blocked the polymers and random block copolymers, cialization of the company’s products? integration between the Brazilian and Argen- transaction. Moreover, the opportunities cre- though these two products are not now Customers associate those brands with the tine petrochemical industries, Braskem im- ated by the development of the country’s un- commercially available. assurance of high-quality products and A conglomeration of companies became ports naphtha from Argentina and exports conventional resources have certainly been In 1988, Petroquímica Cuyo’s production technical service, as well as with the com- Braskem in 2002. Can you provide some back polymers. For Brazil, Argentina is a on Braskem’s radar. Jorge R. capacity was 60,000 TPY and has now pany’s commitment to the development background about Braskem’s presence in natural market and Braskem tries to see Ar- grown to 130,000 TPY. In 2015, Petro- of product grades that meet the industry’s Argentina? gentina as an internal market. In Argentina, Dow manufactures polyeth- Sampietro química Cuyo’s utilization rate will be ever-changing needs. Petroquímica Cuyo Braskem inaugurated a branch in June 2005, ylene, while Petroquímica Ensenada and 97%, with PP production approximating has developed close relationships with the but the company’s relationship with the Ar- Braskem brought Green Plastic to the Petroquímica Cuyo manufacture poly- 125,000 TPY. company’s customers, helping them select gentine market began with distribution be- Argentine market and has introduced propylene. Who are Braskem’s clients in The plant can run at almost 100% utili- new machinery and developing new grades fore opening a local office. For example, certain applications for Green PE, or PE Argentina? zation rate, since YPF’s Luján de Cuyo needed to run that equipment. Therefore, Ipiranga, a predecessor company, had dis- produced from sugarcane ethane. How Braskem’s customers include companies Refinery and three other minor basic raw we strongly believe that Cuyolen and Cuy- General Manager tributed polyolefins in Argentina since 1995. receptive has the Argentine market been that wield most kinds of plastic converting material suppliers provide a reliable and otec are very well positioned brands that Three of Braskem’s five business units are to Green PE? technology: injection molding, blow mold- PETROQUÍMICA CUYO S.A.I.C. abundant source of propylene. In 1990, the will remain in the market for many years 36 basic petrochemicals, polyolefins, and vi- At Argenplas, an international plastics trade ing, stretch film, blow film, and biaxially refinery supplied 70,000 TPY of propyl- to come. 37 nyls. The Argentina office is the first one in- fair, Braskem presented the application of oriented PP. Braskem’s profile of custom- ene; in 2015, it will supply almost 100,000 augurated outside of Brazil, and it is a part Green PE in the packaging of Sussex Ten- ers is the same as its local competitors, but TPY. Due to the lack of U.S. dollars in Argen- of the polyolefin business unit. The Buenos dencia, an Argentine brand of paper tow- Braskem aims to act as a local supplier. tina’s Central Bank at the time, YPF Aires-based office is responsible for serving els. Green PE has a different value proposal Sometimes Braskem vies for customers with Who are the main PP consumers in the was unable to complete a deal by which polyethylene (PE) and polypropylene (PP) compared to naphtha-based PE. It is a niche local producers, and sometimes shares cus- market and how fast will this market it would have acquired 50% of Petroken clients in Argentina, Paraguay, Uruguay, and product with a different approach regarding tomers with them. Braskem’s main competi- grow in Argentina? and 46% of Petroquímica Cuyo in late Bolivia. Braskem also exports benzene and volumes and pricing. When Braskem evalu- tion strategy is to act as a local player. Some of the most important plastic trans- 2015. However, if the deal were to be polyethylene to Argentina, but the Argentina ated expanding the reach of PE in South formers in Argentina include Mazzieri & completed in the future, what would be office does not handle this. Braskem does America, Argentina stood out as a receptive YPF has outlined a goal to lead the Ar- Cía, the largest raffia manufacturer in Ar- the impact of this kind of market con- not export vinyls to Argentina since a local market where packaging for products like gentine petrochemical industry towards Petroquímica Cuyo began manufac- gentina; BOPP Argentina, a bio-oriented solidation on Argentina’s petrochemical producer fully supplies demand. diapers and paper towels already used Green self-sufficiency, including with regard to turing commodity polypropylene (PP) PP films producer; DNS, a fiber- manu industry? Brakem is the largest PP producer in the PE. polyolefins. Does YPF’s self-sufficiency products branded as Cuyolen in 1988 facturer; Ferva Dema, a pipe and fittings It is very difficult to comment on the even- Americas and is the largest PE producer strategy pose a risk for Braskem’s poly- and later specialty polyolefins branded manufacturer; and Emeplast, an injection tual impact of a deal that has recently fallen in Latin America. In Argentina, polyolefin Part of Braskem’s strategy includes ex- olefin business unit in Argentina? as Cuyotec in 1999. What explains the molder. In the 1990s, Petroquímica Cuyo apart due to YPF´s inability to make effec- sales are slightly more balanced towards PE panding in selected international markets Argentine demand for PP exceeds domestic timing of Petroquímica Cuyo’s product exported about 30% of its production. Yet, tive the necessary payments on due time than PP. and finding new business opportunities. production capacity, so the industry needs offering? as the Argentine market developed, exports and which, in my opinion, is not very likely The Ethylene XXI joint venture in Mex- PP imports from Braskem to continue to run In 1980, Petroquímica Cuyo contracted diminished. to be put back to life. Certainly, the econo- How important is Argentina to Braskem’s ico between Braskem and Idesa is a clear smoothly. At the same time, Argentina has a BASF technology to construct a PP plant mies of scale fostered by such a consoli- global sales and long-term strategy? example of that strategy. Does Braskem trade deficit in high-density PE. Braskem ex- with a capacity of 60,000 tons per year Braskem’s PP production capacity in dation could facilitate the development of In recent years, Argentina has represented foresee a project with an Argentine com- pects to supply Argentina with PP and high- (TPY) that would take advantage of the Brazil is almost two million TPY, where- a project for the construction of a new PP between 15% and 20% of export volume pany on the scale of Ethylene XXI? density PE for years to come. propylene produced in YPF’s Luján de as Argentina has a total production ca- plant that would ensure the supply of do- produced in Brazil. Braskem also produces It is clear that the company’s growth path is Cuyo Refinery. At first, Petroquímica Cuyo pacity of 310,000 TPY, looking at Petro- mestic demand and generate export avail- in the United States and Europe; this pro- in the Americas and Braskem is always look- What are Braskem’s short-term plans for produced solely homopolymers given the química Cuyo and Petroken combined. abilities. However, a possible new PP plant duction is not however exported to South ing for opportunities in the region. The pet- Argentina? unavailability of ethylene. Homopolymers How significant is the PP competition project, to be completed no sooner than America. rochemical industry is based on competitive Braskem wants to grow in Argentina, and production began in 1988. from Brazil? five to eight years from now, should be Argentina has always been an important and abundant raw material; Braskem would has already demonstrated its interest in es- Petroquímica Cuyo expanded the com- If the Brazilian economy continues to slow based on a Propane Dehydrogenation unit market for Braskem, even throughout the consider a joint venture or some other form tablishing an Argentina-based plant through pany’s product offering by securing ethyl- down, Brazil will face an oversupply of PP that might utilize as raw materials the natu- ups and downs of the Argentine economy. of a project in whichever country where its attempt to acquire Solvay Indupa. Yet ene from Bahía Blanca and San Lorenzo that will be exported to Argentina and oth- ral gas liquids to be produced, in the fu- Braskem has maintained Argentina in its these two factors are present. Argentina is an Braskem’s growth within Argentina will de- throughout the 1990s, as well as the tech- er countries. Therefore, we foresee an in- ture, from the development of Argentina’s long-term strategy in light of the integration attractive country for Braskem. For example, pend on several market factors. ▬ nical support of Novolen to replace the crease in Brazilian exports to Argentina, al- unconventional oil and gas resources. ▬

Hugo Tormo

General Manager COMPANIA MEGA

Could you provide us with an overview Our exports are approximately 230,000 tpy term, in the context of local economic of Compania Mega from its founding in of propane, 80,000 tpy of butane and our reforms? 2001 to where the company is today? entire natural gasoline production. Our ex- Argentina is working to reverse its energy Compania Mega is an Argentinian produc- ports have decreased over time as a result deficit. Companies have benefitted from er of ethane, propane, butane and natural of restrictions on raw material consump- an important change downward of rates of gasoline. The investment in implementing tion in winter and increased sales to supply export duties and the normalization of the the whole project amounted to $720 mil- the domestic market. In winter, Compania peso/dollar exchange rate. However, Ar- lion. We have two complementary plants Mega’s facilities operate at around 70% ca- gentina’s current policy of holding domes- connected by a pipeline; our natural gas pacity. Large companies across Argentina tic butane prices at an artificially low level, separation plant is located in Loma La Lata have to give priority to domestic consump- of around 40% of export prices, is chal- in the Neuquén basin, while our fraction- tion of gas for heating homes. lenging. We feel the current government ation plant, storage and loading facilities understands the business community and are in Bahia Blanca. Could you outline the infrastructure up- this is encouraging. Looking ahead, the in- The initial strategic reasons behind estab- grades required for Compania Mega to dustry as a whole is starting to see the way 39 lishing Compania Mega sixteen years ago remain competitive as a petrochemical forward for larger players to invest in new remain in place today. Our shareholder manufacturer? developments to increase the country’s gas YPF, with a 38% stake in the company, We are seeing some bottlenecks in terms of supply and, as a result, increase the supply supplies our raw materials from its produc- our pipeline and our two processing plants. of petrochemical products. We are optimis- tion fields in the Neuquén basin; Brazil- We therefore need to invest in expanding tic and we have already seen signs of this based energy company Petrobras, which our processing capacity so that the com- investment as one of Argentina’s main in- holds a 34% share in the company, assures pany can expand its operations in line with dustry players announced its initiative to a source of long-term supply of LPG and increasing production in Neuquén. We are double its local petrochemical production natural gasoline, within the framework of currently analyzing a plan to increase our and its participation in upstream activity. the Mercosur trade integration; while Dow production capacity by 50% by installing Argentina, which holds the remaining eq- a third turboexpander train at our Loma La With the opportunity to develop Argen- uity in Compania Mega, secures an addi- Lata site and to eliminate the bottlenecks. tina’s unconventional resources on the tional ethane supply that allowed the ex- horizon, what can we expect for Compa- pansion of PBBPolisur, strengthening the What environmental management sys- nia Mega in the future? Argentine petrochemical industry’s supply tems and processes does Compania I foresee a great future for Compania of raw materials. During the last fifteen Mega have in place and how important Mega. We have supportive shareholders years, Compania Mega has contributed are sustainable operations to the petro- who are actively trying to improve Argen- significantly to Argentina’s commercial chemical industry in Argentina? tina’s energy matrix; we possess relevant balance. Our integrated management system is technologies and modern plants; we are based on our ISO 9001, ISO 14001 and strategically located; we have highly quali- Could you tell us about the main petro- OSHAS 18001 certifications. Compania fied personnel trained in the latest safety chemicals produced by Compania Mega Mega is focused on maintaining the best standards; and we have a strong network of and its market share? performance processes and the lowest en- service suppliers underpinning our opera- Compania Mega supplies the domestic vironmental impact. We have made several tions. Two years ago, as part of the com- petrochemical industry with approximate- modifications to the plant’s original design pany’s strategic planning, we modified our ly two-thirds of its ethane requirements. aimed at reducing our energy consumption vision for the future. Compania Mega aims Overall, our production amounts to around and gas emissions. to be an essential protagonist in the pro- 630,000 tons per year (tpy) of ethane, cessing of new gas production in the Neu- 350,000 tpy of propane, 200,000 tpy of bu- What do you expect for Argentina’s quén basin and a reference for the oil and tane and 100,000 tpy of natural gasoline. petrochemical industry in the medium gas and petrochemical industries. ▬

Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations INTERVIEW Global Business Reports Global Business Reports INTERVIEW

Daniel Javier B. De Nigris Sato

Lead Country Manager Commercial Manager, Downstream the company produces part of its own ben- petrochemical assets will mostly serve to EXXONMOBIL EXPLORATION PETROBRAS zene and ethylene and has in-country poly- sustain current operations rather than grow- ARGENTINA styrene and SBN plants. Apart from that, ing them. Petrobras supplies the markets in Argen- Competitive raw materials are vital to the tina with expandable polystyrene, polyester company’s petrochemical business in Argen- resins, resins and emulsions. Petrobras can tina as the company exports much of what also supply Chile, Uruguay, Bolivia, and it produces in the country. Cheaper natural Paraguay with its integrated styrene mono- gas leads to cheaper products, such as ethyl- ExxonMobil’s affiliates have been present in Argentina for over wells may reach up to 2,500 meters, the longest horizontal wells mer plant. When running at full capacity, ene and benzene. Before thinking about ex- 100 years. Please describe ExxonMobil’s past and current in- drilled in Vaca Muerta to date. Petrobras Argentina’s petrochemical plants panding operations like those in our styrene volvement in Argentina? We first drilled in the block in 2013 and 2014, and we were very can supply both Argentina and the South- monomer plant, for example, the company It has been a privilege to be a business partner with Argentina for encouraged by the impressive results we achieved. The pilot proj- ern Cone. Petrobras’s petrochemical unit must first secure cheaper feedstock. more than 100 years. While the business has changed over time, ect will help us build on those results so that we can continue to has 363 pump stations and processes all of Argentina has remained an important country in the ExxonMobil assess the productivity and recovery of the formation in the hope of the crude oil produced by the company’s What role will Petrobras play in the de- global portfolio. Here, we’ve been involved across the upstream, eventually developing a commercial project. E&P division at its refinery in Bahía Blan- velopment of Argentina’s petrochemical downstream and chemicals businesses, as well as business services. XTO Energy is providing operational support for this project, and ca. Petrobras also buys and refines crude oil industry? Right now, our upstream operations are a key focus in Argentina. brings many decades of experience and expertise. from other producers. Petrobras does not have specific plans to We recently announced a pilot project in our Bajo del Choique- expand its petrochemical business within La Invernada block in Neuquén province, in the Vaca Muerta for- In recent years we have witnessed the United States leverage its What is the greatest challenge for Petro- Argentina. Although the company plans to 40 mation. According to the International Energy Agency, the Vaca natural gas advantage to stimulate its chemical industry. Some bras’s styrene monomer plant in Argen- invest in oil and gas production, we will 41 Muerta holds the world’s second-largest shale gas resources and commentators have even called this phenomenon a hydraulic tina? maintain our petrochemical division in the the fourth-largest shale oil resources, and that means there’s cer- fracturing-led “manufacturing renaissance.” How can Latin Wintertime conditions pose significant prob- country at its current size and scope. Re- tainly a lot of international attention on this area and discussions America – or Argentina specifically – get there? lems for Petrobras’s styrene monomer plant gardless of the owner, Petrobras’s current about how to commercially develop it. That is a great question and it highlights a real success story that in Argentina as households compete with re- petrochemical assets will continue to thrive In addition to the pilot project, we are a partner in several oth- has unfolded over the past few years in the United States, where, by fineries and petrochemical plants for natural because Argentina needs our products. Were er blocks, including Los Toldos, Loma del Molle, Pampa de la some estimates, there are about $150 billion in chemical industry gas and LPG. Households need it for heat- these assets to cease activity, Argentina Yeguas, Sierra Chata and Parva Negra. projects announced or in the planning phases across industry. That ing and petrochemical plants need it both for would have to import these products. As mentioned before, we also have a large Business Support Cen- scale of investment has an immense capacity to drive economic Could you provide us with an overview of producing steam and as a raw material. The ter, which many people may not be aware of. It is located in Buenos growth and development, and, as you mentioned, it has been en- Petrobras’ petrochemicals segment and winters of 2012 and 2013 were particularly What kind of growth does Petrobras see Aires and is part of a larger ExxonMobil global network of centers. abled by the surge in domestic natural gas production and its as- its operations in Argentina? challenging since household demand for nat- in the Argentine petrochemical industry? It provides important human resources, tax controllers, information sociated liquids, primarily ethane. Though Petrobras has been present in Ar- ural gas was particularly high and the gov- Petrobras believes that the petrochemical in- technology, procurement and other supports to ExxonMobil affili- Over the course of the next decade, the demand for chemical prod- gentina since 1993, the company entered ernment prioritized supplying households dustry will grow in Argentina. Home to the ates in the Americas, Europe and Africa. It was established in 2004 ucts is projected to rise by nearly 45%, or about 4% per year, driv- the petrochemical and refining business in with natural gas before refineries and pet- world’s second largest shale gas reserve and and now employs around 1,600 highly qualified people. en by population growth, urbanization and an expanding economic Argentina when it bought Perez Companc rochemical plants. Petrobras had to power fourth largest shale oil reserve, the country middle class. Nearly three-quarters of that growth is expected to and PeCom Energía in 2002. Petrobras Ar- its styrene monomer plant with other fuels, is set to have a secure supply of feedstock. In 2015, the government of Neuquén approved ExxonMobil’s come from developing countries. Demand in Latin America is actu- gentina is the country’s exclusive producer which are less efficient. With proper government and administration, investment plans for the Vaca Muerta and this year CEO Rex ally projected to outpace the robust global average, led by countries of various petrochemicals that include sty- the country will develop those resources. The Tillerson met with new Argentine President Macri, encourag- like Brazil and Mexico. rene monomer, polystyrene, styrene butadi- Where will Petrobras direct its invest- petrochemical industry will subsequently be ing speculation that ExxonMobil may ultimately invest $10 bil- The chemical industry has a strong role to play for any region with ene synthetic rubber and bi-oriented poly- ments in its Argentine activities? in a position to compete successfully against lion dollars in shale extraction. What is the likely timeline on abundant, competitively priced natural gas and liquids feedstock styrene at its petrochemical facilities in San Although only six percent of Petrobras’s major petrochemical-producing countries this investment? seeking to realize the full potential of its resource. Lorenzo and Zárate. At San Lorenzo, Petro- revenue is generated by our operations out- such as the United States and Russia. The approval of the pilot project by the provincial government of Ultimately, several factors will need to converge to ensure the high- bras produces 160,000 metric tons of sty- side of Brazil, and less than six percent of Argentina can become a major supplier Neuquén was great news for us. I have to say that the Neuquén est probability of future success. If upstream development projects rene per year (mty) and about 55,000 mty of our new investments will be dedicated to ex- of petrochemicals to South America if the province has demonstrated its commitment to developing the oil geared toward unlocking Argentina’s abundant unconventional re- elastomers. At Zárate near Buenos Aires, the ternal activities, Petrobras will continue to country succeeds in manufacturing low-cost and natural gas sector, and we have been pleased by its focus on sources are successful, and if the right blend of policies and regula- company produces 65,000 mty of polysty- invest around $700 million a year in Argen- products. Dow’s belief in Argentina’s pet- creating an environment that encourages investment. tions are put in place with a focus on providing the stability needed rene and 12,000 mty of the same at a smaller tina. About seven percent of Petrobras’s to- rochemical potential has motivated it to in- The pilot project is a five-well program that will also include early to encourage investments with a multi-decade time horizon, then bi-oriented polystyrene plant that produces tal investments will go to the petrochemical vest in the upstream sector to secure a steady production facilities, a gas pipeline and an oil terminal. It is a joint Argentina may indeed find itself well-positioned to contribute to 12,000 mty. and fuel division over the next few years, but stream of feedstock necessary for the long- venture with Gas y Petroleo del Neuquén. We started drilling the supplying the chemical products that a rapidly expanding Latin The production of styrene monomer is Petro- most investments will go to the company’s term viability of its petrochemical activities first well in late August. We expect that the horizontal leg of the American middle class, and indeed the world, demands. ▬ bras’s most integrated business in Argentina; E&P division. Investments in Petrobras’s in Argentina. ▬

Alfredo B. 10 words: With a 300 meter dock on the pany a competitive advantage. Many of Paraná de las Palmas River, Carboclor Carboclor’s products are shipped in bulk Fernández upgrade storage facilities and in drums to different destinations. Its 40 words: Carboclar is a Latin American integration with a logistics business unit leader in the production of oxygenated sol- makes it economically feasible to trans- vents and octane enhancers. By integrating port products whose transportation would General Manager production and logistics units, the compa- be otherwise difficult to outsource. The in- CARBOCLOR S.A. ny hopes to gain a competitive advantage crease of waterway transportation would that will allow it to maintain its dominant also significantly reduce freight costs. Car- market share. boclor’s proximity to a deep river like the Paraná River would allow the company to Please provide us with an overview of transport more volumes at lower costs. Carboclor’s operations and facilities in Latin America? Which industries will be Carboclor’s Carboclor was founded in 1968 as a pet- main growth drivers in Argentina? rochemical company and has become the Carboclor’s products include diluents, sol- main isopropyl alcohol (IPA) manufactur- vents, and other chemicals for paints and er in Central and South America. The com- dyes. We will benefit from the develop- Image: Petroquímica Cuyo S.A.I.C. pany provides reception, storage and ship- ment of interconnected industries such as the automotive industry and we antici- ment of chemicals, in addition to logistics and distribution services. Our production pate growth in the pharmaceutical indus- plant is located in Campana, on the shores try. Sales to the Argentine market consti- ETHANEPROPANE BUTANE of the Paraná de las Palmas River in Bue- tute about 70% of our revenue in country, Thousand Metric Tons Million Metric Tons Million Metric Tons nos Aires Province, Argentina, which has while exports comprise the remainder. Ar- 900 1.50 given the company several geographic ad- gentina’s general industrial performance is 1.10 42 vantages, such as a 300 meter dock port therefore a main driver of growth for Car- 43 that can receive offshore vessels. More- boclor. 880 1.40 over, Carboclor is three kilometers (km) 1.08 away from national route 9 (Panameri- Can you describe Carboclor’s competi- 860 1.30 cana), which facilitates road transportation tion with regard to its production and 1.06 between the plant and the rest of South logistics business units? America. 840 1.20 1.04 Carboclor separates itself from the com- Carboclor has been focusing on the ex- petition by offering distribution services 1.02 pansion of its logistics and port services. to diverse markets. We also face competi- 820 1.10 Please tell us more about increased stor- tion in the IPA sector from American and 1.00 age capacity at the port? Brazilian producers, although we do hold 800 1.00 The company started evaluating the ex- 40% of the Brazilian market. Competition 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 pansion of its port and logistics services in also depends on the commodity price environment. When commodity prices are low, 2012 and completed part of this expansion PROPYLENE BUTYLENE NAPHTHA at the end of 2015. Carboclor now offers competition is fierce. In spite of this, Car- Thousand Metric Tons Thousand Metric Tons Million Metric Tons boclor has succeeded in tripling sales of a the storage of liquid petroleum gas (LPG), 350 360 2.60 offering four tanks with a combined stor- special type of IPA destined for the Brazil- age capacity of 2,600 cubic meters (m3), ian pharmaceutical market. bringing our total storage capacity to 340 340 2.40 120,000 m3. Both third parties and Carbo- What plans does Carboclor have for the clor itself will benefit from the new LPG next three years? 330 320 2.20 storage services. Carboclor already offers Carboclor will focus on improving plant the rental of petrochemical and chemical technology and optimizing costs. The tanks, which range from 500 m3 to 1,500 company is a Latin American leader in 320 300 2.00 m3 in terms of storage capacity. the production of oxygenated solvents and octane enhancers. A leading company like 310 280 1.80 What is the strategic importance of Car- Carboclor must constantly seek to imple- boclor’s logistics business unit? ment innovation in its processes and the The integration of Carboclor’s production most state-of-the-art technology to accom- 300 260 1.60 and logistics business units gives the company market growth. ▬ 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Fernando Caratti &

Matías Paz in Argentina, not because this was the first Y-TEC’s business around the six areas for company with CONICET’s involvement which we will be developing technologies. Cossio but because we were not prepared from If we identify an opportunity and have a cultural perspective to be involved in a the capabilities to develop the technology company the way that it is now with Y- needed, we will put together a project. We FC: General Manager TEC. expect that these technologies complement MPC: Legal and Institutional FC each other and help Y-TEC’s objective. We Affairs Manager YPF provides Y-TEC with capital and have defined some technical areas in which REFINOR leadership. Could you describe the rela- we want to specialize, which include: ma- tionship you have with YPF? terials, synthesis processes, geosciences When we created Y-TEC we decided that and other areas. Every project invites each Could you explain the reason behind the strategy and leadership of the company of these technical areas to contribute their Refinor’s formation in 1992 and how the In 1994, the company was encouraged to order to improve our capacity to import Santiago had to be in hands of the private sector, knowledge to reach the objective. company has evolved since that time? join the retail market and created a net- Bolivian gas. which is why YPF owns 51% of the com- Refinor (Refinería del Norte S.A.) was -es work of service stations. By 1999, Refinor pany. The business model is a joint ven- Being YPF’s R&D branch, what kind of tablished in December 1992 as part of the had a 20% share of the Northwestern mar- Argentina’s chemical industry saw a Sacerdote ture between both the public and private influence will other clients have in the YPF privatization process. The Campo ket; today, the company is the second-larg- turning point in 2011, when it became sector that is aimed to capitalize on all of development of new technologies? Durán refinery and its gas processing fa- est player in the region. Refinor has made a net importer of raw materials. Could the country’s research capabilities and ap- Our commercial model is to patent new cilities, both located in the Northwest ba- several investments in recent years, such you tell us more about Refinor’s role in plying them to find business opportunities. technologies and transfer those to clients. sin, together with 1300 kilometres (km) of as in the reforming unit, in LPG storage this? Our participation in the company is not On top of R&D, we offer technical servic- 44 pipelines up to Córdoba province, made up and dispatch facilities, a new isopenthane When Argentina’s gas production de- minor as we still own 49% of the shares. es that will bring us close to our clients. 45 Refinor at that time. unit, and in new compression facilities in creased at the start of the decade, this was In the original design, the challenge was Our relationship with YPF is strong given felt even more dramatically in the Argen- General Manager to determine how CONICET’s research that we know where its short and medium tine Northern basin. The possibility to YPF TECNOLOGÍA S.A. (Y-TEC) would fit into the new company. In the term strategic initiatives are headed. Y- increase gas imports from Bolivia was a last two years, we have been solidifying TEC’s aim is to anticipate the technologies good opportunity for Refinor, considering Y-TEC’s business model and today, the that these initiatives will require. Our pro- our strategic location and, since then, the company is fully functional. We are imple- posal is to promote consortiums. We hope company has started to process Bolivian menting a business model by which the en- to see cases in which a group of companies gas to make up for the decrease in domes- tirety of CONICET’s research capabilities will present a technological challenge, a tic gas production. is at the disposal of Y-TEC’s projects. We shared problem, for Y-TEC to find a solu- Where do you expect to see Refinor by How did the idea of Y-TEC come about are also about to inaugurate a new facil- tion. We also expect to partner with other the end of the decade? and how has the project been unfold- ity with the best equipment and technol- technology companies and work together Because we are operating at one third of ing? ogy available in the country to begin our in finding solutions. our production capacity, it is necessary to The company is an association between research projects. focus our activities towards higher-margin YPF and the National Scientific and Tech- What would you identify as the biggest profit channels while being cost competi- nical Research Council (CONICET). The How fast has Y-TEC grown in terms of challenge facing the production uncon- tive. The foundation for our success lies idea to create Y-TEC came from the need budget and personnel? ventional resources, such as hydraulic in our approach to the client, our product to build relationships between the private, When Y-TEC was created, YPF’s entire fracking, in Argentina? differentiation and quality, and our service public, and research sectors. It is a concept R&D team of about 75 people moved to The challenge with developing unconven- provision. Our strategy will be based on that the CONICET had thought about ap- Y-TEC. The philosophy behind the proj- tional resources is finding ways of making opening more service stations in the re- plying in different sectors, including bio- ect was that Y-TEC become YPF’s R&D production more economic. You cannot gion’s urban centres, as well as in those technology, energy, microelectronics and branch. Today, there are over 300 research- achieve this with a single technology; rath- areas where other companies do not have health. When YPF was nationalized, a ers involved in Y-TEC’s projects. er you need to find the right combination. service stations. We also hope to work researcher named Eduardo Dvorkin pub- We need to have a better understanding with the government on the possibility lished an article making the case that Ar- Being an independent company, will of the geological characteristics of basins of increasing the northern basin explora- gentina needed to develop its own technol- Y-TEC begin to commercialize its own and the fracking process. Once you clarify tion activities to improve our access to ogy. President Fernández read the article products and look to become less depen- what your objective is, which in this case raw materials. With the reactivation of the and the idea of creating a national compa- dent on YPF? is to develop technologies that contribute railways, we will also have access to feed- ny dedicated to developing technology for Yes, Y-TEC’s plan is to commercialize to reducing operating costs, you can iden- stock from other regions. ▬ the energy industry was born. Materializ- products and become less dependent on tify what technical areas needed to reach ing an idea such as this was unprecedented YPF for revenue. We will look to support it. ▬

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SPECIALTY CHEMICALS

"Thermoplastics are strongly linked to GDP and, as this is expected to rise, so too will the demand for these products. Internal thermoplastic manufacture could easily replace the requirement for import; however, the manufacture of thermoplastics, such as polyethylene, requires an improvement in our ethylene infrastructure."

- Alfredo Friedlander, Executive Director, IPA Image: Lanxess S.A. EDITORIAL Global Business Reports Global Business Reports EDITORIAL

space, while clients would feel confident in lead in green chemistry in the region. “We the sector with the Chamber of Industrial Specialty Chemicals terms of sustained availability of the prod- believe in a green world and take sustain- Chemicals and Petrochemicals, and came uct. “We identified the chance for Varteco ability very seriously. We are following the to the conclusion that investment of around to grow in the bio-based plasticizer market policies being developed globally and the $30 million is required to ensure Argentina because some companies are interested government is also implementing responsi- is at the forefront of specialty and perfor- By Harriet Bailey in non-phthalate and “green” options at ble practices in terms of the environment,” mance chemical trends. Perez Wertheim of competitive prices. We established a com- explained director Eric Engstfeld. “The en- Meranol believes it is now up to the gov- mercial affiliate in Barcelona and started to trance to South America is Argentina, par- ernment to make good on this assessment: sell this bio-based plasticizer in Europe,” ticularly because of the new government’s “Our industry, and the structural growth of explained Diego Garcia Touza, director at more open policies.” the country, depends on the critical supply The specialty chemicals industry in Argen- Specialty chemical company Meranol ex- Reagens Varteco. This is a sentiment with which Argentina’s of energy and therefore the government will tina manufactures a vast array of products ports around 10% of its product to neigh- Reagens Varteco was formed in 2014 from Ministry of Production appears to agree. It have to play a role in increasing its energy from solvents and surfactants, to perfor- bouring countries Brazil, Bolivia and Para- Argentina-based Varteco and Italy’s Rea- carried out a study on future possibilities in offering.” ▬ mance polymers and polyester resins. Such guay, but expects to expand this market to gens, combining the former’s knowledge products have a wide variety of applications Chile and Uruguay in the near future. It of the regional market with the latter’s across a number of industries, including has a leading 45% share of the aluminium advanced stabilizers technology. The com- personal care, paints, and pharmaceuticals, sulfate market as its competitors, Arquimia pany is now building a plant to manufacture among others. According to IPA president and Faisan, both import sulfur and are not propylene glycol from glycerol, in partner- Ignacio Millan, the specialty chemical in- vertically integrated. The company experi- ship with Y-TEC and INCAPE, but it also dustry in Argentina has the potential to not enced 60x growth over the last two decades, sees the opportunity to create this chemi- only create new products, processes and and an increased consumption of alumini- cal from bio-based chemicals. “Based on services, but also to add value to commod- um sulfate for water treatment plants, com- Varteco’s commodity chemicals business ity products, which typically see lower mar- bined with competitor BASF closing its profits, we could develop new interesting gins. “I believe investment opportunities in sulfation plant in late 2015, should ensure bio-based chemicals businesses,” continued this field should be directed to those areas the success of Meranol’s growth strategy. Touza. “I believe we could develop other where the region has competitive advantag- “Over the last two years, Meranol invested interesting businesses from these chemi- 48 es and vertical integration synergies such as more than $20 million in new products in cals, such as propylene and ethylene glycol 49 in EOR, paints, composite materials, and the surfactants line, oriented towards pro- based on glycerol use.” detergents, among others,” clarified Millan. duction of H-LAS and S-LES. The aim with Global players appear to be leading the way However, in spite of Argentine know-how these new products is to double the present in terms of manufacturing products that ca- in a number of these areas, the country turnover and develop markets in the health ter to the increased requirement for sustain- lacks the feedstocks to work with; much of and personal care sectors,” explained direc- ability. DuPont’s Juan Vaquer, president of the country’s chemical trade deficit is due to tor general Rodolfo Perez Wertheim. the company’s Latin American operations, imports of chemicals from this sector. “The Europe-headquartered chemical company believes the region shows a propensity for problem in Latin America as a whole, not Lanxess, meanwhile, produces perfor- bio-based materials: “We are now facing a just in Argentina, is the lack of basic raw mance chemicals in Argentina, in particular new era in plastics, with the focus being the materials such as olefins and aromatics. We chromium salts for leather tanning. Accord- switch from petroleum-based to renewable will not see companies investing in plastics, ing to country manager Enrique Worman, raw materials. Our goal now is to produce solvents or any other chemical plant if they being located in Argentina poses some dis- bio-based polymers, while maintaining a do not have access to competitively priced tinct advantages; the country is known for high level of functionality and cost competi- raw materials,” explained George Martin, its leather goods, providing a local market, tiveness… . DuPont’s scientists concentrate senior consultant at chemical consultancy while its plant in Zárate is the only sodium a great deal of effort on the development ICIS. dichromate plant in Latin America, and one of bio-based products, materials and fuels. This problem is only set to increase as a of only two Lanxess plants that produce the Reducing our dependence on fossil fuels is more stable economy, open to foreign in- chemical worldwide. The leather business a mission we take very seriously, and bio- vestment, will require more performance exports around 70% of its production, and based products are mission-critical.” chemicals to satisfy the needs of both con- Lanxess Argentina’s domestic sales only Local player Plaquimet, which produces sumers and industry. “Thermoplastics are account for around 2% of its global total. polyester resins and gel coats, aims to be strongly linked to GDP and, as this is ex- Green fingers a market referent for sustainable chemical pected to rise, so too will the demand for An area which Argentine companies may use. It currently manufactures around 80 these products. Internal thermoplastic man- be able to capitalize on is in green chem- different resins for end markets including ufacture could easily replace the require- istry. European markets in particular are construction, infrastructure, transportation ment for import; however, the manufacture exploring sustainable options as a result and energy, with its flagship product being of thermoplastics, such as polyethylene, of consumer demand, but lack the space to the Polymet line of resins. The company requires an improvement in our ethylene grow crops for plant-based chemicals. Ar- is promoting the use of green chemicals infrastructure,” explained Dr Alfredo G. gentina’s high levels of soybean production among its clients and believes Argentina’s Friedlander, IPA’s executive director. suggests it could be a key competitor in the new administration can ensure it takes the Image: Bolland

In dollar terms, Meranol’s net sales have and consumer, and we get a commission. provinces through its Agribusiness opera- ical. The region is very efficient in bio- increased by around 15% since 2012. We choose companies that have comple- tions. based materials and DuPont is working on What has been behind this growth? mentary products to our business lines for new developments in this area. Meranol has taken advantage of the sur- market applications. With a focus on your agrochemical so- Although the solar panel industry in Ar- factants market to increase our volumes, lutions, what are some of your flagship gentina is underdeveloped, it is an impor- which prompted our recent investment to Where does Meranol see the highest products in this area, and how can Du- tant business line for DuPont as demand diversify production. Firstly, the El Niño costs for the company and how does it Pont play a role in advancing the agri- is growing. We offer a broad portfolio Southern Oscillation (ENSO), which raise funds? cultural industry in Argentina? of photovoltaics, as well as the materi- causes higher rainfall, led to an increased The chemical industry is capital-, raw ma- DuPont’s offerings bring innovative sci- als used to manufacture the modules. We aluminum sulfate demand for water treat- terial- and technology-intensive. In sulfa- ence and solutions to meet the challenges develop and promote proven materials ment. Secondly, the only producer of sul- tion, raw material costs can reach almost faced by farmers both today and into the such as Tedlar® polyvinyl fluoride film fation products in Argentina shut down 75%, whereas in sulfuric acid it is much future. In that regard, being close to our for the back-sheets that provide electrical their ageing plant, which opened up the less as this is a cheaper product, reaching customers is critical and we need to un- and weathering protection for solar pan- market for Meranol. The installed capac- 50% of costs. Meranol made a wise move derstand their current and future needs. Al- els, while Solamet® metallization pastes ity in Argentina for sulfonic acid is very and decided to invest in pesos for the new though developments are worldwide, our drive higher efficiency and power output. Rodolfo important. plant as we saw that things in Argentina Juan differential is to work closely with farm- Additionally, the frame of traditional pho- were going to change. We have two op- ers, helping them deliver healthy and prof- tovoltaic modules is made with Rynite®. Which are the key markets for applications to finance; either via the banks, or our itable crops. We conduct extensive laboratory and field Perez tion of Meranol’s products? listing on the Buenos Aires stock exchange Vaquer Due to an increasing global population and testing on material performance to ensure Meranol’s products serve a wide array of (BCBA). the demands of a rapidly expanding mid- they will stand the test of time in real-life Wertheim applications and, thankfully, we do not dle-class for more and better food, a grow- conditions. DuPont itself owns and uses depend on one particular sector. Sulfonic Looking to the future, where can we ing demand for grain and other agricultural photovoltaic systems at several facilities acid and alcohol sulfates are active in- expect to see Meranol in the next three products over the long-term is expected. At worldwide. gredients that can be complementary or years? the same time, the world has limited areas 50 Director General supplementary depending on the client’s Meranol is following its policy of continu- President of new land for farming, so it is imperative What are some of the advantages of be- 51 MERANOL application. The new plants will see us be- ous growth. In the next three years, all of DUPONT LATIN AMERICA that we increase the productivity of every ing a broad-spectrum chemical compa- coming a key player in the home and per- our projects currently underway or in the acre. Argentina’s location and geography ny in a developing region? sonal care sectors. pipeline will be completed and consoli- gives the nation an important competitive In today’s competitive global marketplace, dated. These projects include our new sul- advantage in this regard. being an experienced company with two What is Meranol’s positioning in the lo- fonation and sulfation plants and our new centuries of experience operating manu- cal and export market? aluminum sulfate plant in the Chaco prov- Could you tell us more about DuPont’s facturing facilities in more than 90 coun- Could you tell us about the recent most Our two local competitors for aluminium ince. This has a regional development fo- Could you provide us with a brief over- leadership in the bio-based polymers tries around the world is a great differen- important areas of focus for Meranol? sulfate are not vertically integrated. They cus on the water treatment business. view of DuPont’s operations in Argen- and photovoltaic technology sectors, tial. Our long and solid history helps us Meranol has grown by 60 times since buy sulfur in the market and they have to tina and its three business segments? and the advantages of using these types attract and retain scientists and engineers 1993, following diversification in our pro- take the sulfuric acid market price into Do you have a final message for GBR’s DuPont Argentina is a market-oriented of materials? with the broadest experience. DuPont in- duction strategy and our vertical integra- consideration for their cost of production. readership? science company delivering science-based DuPont aims to address sustainability both vests $2 billion in R&D annually and has tion with sulfur chemistry. In line with Meranol’s vertically integrated strategy is The Chamber of Industrial Chemicals and solutions. The company has been operat- within the company – by decreasing our a portfolio of hundreds of thousands of our strategy, we have invested more than therefore an advantage and positions us as Petrochemicals, together with Argentina’s ing in Argentina since 1937, when it built dependence on petroleum and recycling products. This is a great differential and $20 million in our integrated sulfur plant, a leader in the market with a 45% share. Ministry of Production, carried out a study the first rayon plant under the name Duci- waste – but also by manufacturing prod- certainly helps our customers maximize which now includes a new sulfonic plant Export conditions in Argentina have not evaluating future possibilities in the sec- lo. Since that time, DuPont has grown and ucts that enable our customers to improve their business results by applying DuPont H-LAS and pre-commissioning for a new been favorable in recent years, however, a tor. They reached the conclusion that there expanded, not only in the textile industry, their sustainability efforts. In terms of expertise, technology, and process knowl- S-LES plant. With this strategic produc- small part of our business has seen us ex- is an opportunity gap for investment of but also in areas such as refrigeration gas- plastics and polymers, DuPont’s innova- edge. tion focus, Meranol aims to double its porting to neighboring countries. With our around $30 million. Meranol will play a es, engineering polymers, packaging mation in this area stems from the develop- Nowadays, these advantages are even more present turnover. The new plant will en- new sulfonation plant, we aim to export part in this by contributing our experience terials and synthetic fibers. In 1990, the ment of nylon. We are now facing a new important due to the opening of our inno- able the company to quadruple its sulfona- 10% of our production with opportuni- in the development of specific surfactants company adopted the international name era in plastics, with the focus being the vation and collaboration centers, such as tion activities, from 9,000 metric tons per ties in southern Brazil, Bolivia, Paraguay, for those markets. Our industry, and the of DuPont. switch from petroleum-based to renewable our collaboration center in Buenos Aires. year (mt/y) to 37,000 mt/y. Chile and Uruguay. structural growth of the country, depends Currently, DuPont has more than 500 per- raw materials. Our goal now is to produce These are facilities designed to welcome We are also working to expand our iron on the critical supply of energy and there- sonnel in Argentina, and is headquartered bio-based polymers, while maintaining a partners to work with us jointly to generate oxide plant. Over the last few years, our Meranol acts as a representative in Ar- fore the government will have to play a in Buenos Aires. The company also has high level of functionality and cost com- solutions to challenging problems. production has increased by 10%, but new gentina for international companies. role in increasing its energy offering. ▬ an office in Sante Fe province, an enzyme petitiveness. DuPont’s scientists concen- This kind of contact has proven to be of investment in processing aims to see a fur- How do you choose which lines to rep- plant in Córdoba province, an engineering trate a great deal of effort on the develop- great value to our key partners as it gives ther 40% increase. Meranol also produces resent? polymer plant in Buenos Aires province, ment of bio-based products, materials and them access to worldwide technology, aluminium sulfate and linear alkyl ben- We principally represent European compa- a seed production plant in Salto, and an fuels. Reducing our dependence on fossil knowledge and expertise synergies, help- zene sulfonic acid at its integrated plant in nies for which we import and sell products, experimental station in Pergamino. Du- fuels is a mission we take very seriously, ing pave the way in their own innovation Buenos Aires. or act as a nexus with the local supplier Pont is also present in numerous Argentine and bio-based products are mission-crit- processes. ▬

Eric

Engstfeld Could you tell us more about your main product lines and the a business unit within the performance travel to Brazil to address issues related to Director end markets for these products? chemical business segment, acquired a product quality and improvements. The PLAQUIMET Our Polymet resin line, which is our brand name for polyester resin, is very successful. All our products are tested and produced family-owned Argentine company known Burzaco plant also received the operators in compliance with international standards, so when big players as Darmex, which was focused on both the of the bladder plant constructed in China, need a product, they demand the Polymet line, which encompass- production of tire bladders and highly in- which was completed in late 2015. Final- es a large number of resins. novative release agents. LANXESS bought ly, the Burzaco plant also provides tech- the company to become a global leader nical assistance to the bladder plant that Could you provide us with a brief overview of Plaquimet? Your reactor is one of the largest in South America for manu- for release agents and to strengthen Rhein LANXESS acquired in 2012. Plaquimet was founded in 1979 and we now have more than 100 facturing polyester. Could you tell us more about your facili- Chemie in Latin America as a production employees. Our core business is in polyester resins and today we ties and training laboratory? hub for tire manufacture. Release agents offer gel coats to complement these resins for the composites in- We have one of the biggest facilities for polyester manufacturing are used to prevent tires from sticking to What are some of advantages and dis- dustry. The company has a separate unit that covers distribution of in Latin America. Plaquimet has also created a training labora- either the bladder or mold in the curing advantages of LANXESS’s presence in materials related to composites that are not produced by Plaqui- tory for our customers and universities. Because these types of Enrique process. Since 2010, LANXESS has pro- Argentina? met, such as fiber glasses, peroxides, and application equipment, materials are relatively new both in the world and in Argentina, vided this know-how to Brazil, the United LANXESS’ presence in Argentina has among many other products. Approximately 70% of our turnover there is a need to train end users and professionals to adopt these Worman States and China. some logistical advantages. Argentina is in comes from polyester resins and gel coats, 20% comes from dis- materials. Plaquimet would be open to joint ventures because al- LANXESS’ sales in Argentina total $150 the middle of the leather hub; Brazil, Uru- tribution products, and the remainder comes from our new unit though we are locally established with an R&D laboratory, facili- million, $120 million of which stem from guay, and Argentina are some of the larg- for polyurethane. ties, and professionals working towards developing new resins, local production, with the remainder com- est leather producers in the world. Another ing from distribution. Rhein Chemie ex- advantage relates to Argentina’s industrial Our main business is in Argentina, and to a lesser extent in Brazil, we recognize that there are more experienced players than us in Country Manager ports about 85% of production and the know-how, as the Argentine labor force is as well as other countries in the region. the global composites market with world-leading knowledge and LANXESS S.A. technologies. ▬ leather business unit exports about 70%. highly qualified. However, one disadvan- (ARGENTINA) tage is that Argentina is far from chromite, 52 Where in Argentina does LANXESS a raw material for chromium salts, which 53 have production sites? is mostly extracted in South Africa. Never- LANXESS has three production sites that theless, when compared to its competition, manufacture performance chemicals in LANXESS is the only company that boasts Diego Argentina, located in Burzaco, Merlo and back integration, owning its own chromite Zárate. The production sites in Burzaco mine in South Africa. and Merlo came with the acquisition of Garcia Touza Darmex; Burzaco manufactures bladders Who are LANXESS’ main competitors? Director Can you provide some background and release agents, while the latter manu- LANXESS has about 10 major competi- REAGENS VARTECO about LANXESS in Argentina? factures mica, an important ingredient for tors when it comes to tanning products, What effect has the opening up of the market had on plastics LANXESS began operating independently the manufacture of release agents. The which is a capital-intensive business. How- manufacturers in Argentina? in 2004, when Bayer spun off its chemicals Zárate site manufactures tanning products ever, LANXESS in Argentina mostly com- The change from one import/export system to another has left division and parts of its polymers segment. and chromium salts. petes with other economies such as Russia, many chemical companies in limbo. CIQyP is in talks with the Nevertheless, the Zárate plant was inaugu- China, Turkmenistan and, most recently, Ministry of Production and is trying to explain that some chemi- rated in 1980. Globally, LANXESS has 10 In 2014, sales made in Latin America Oman. The competitiveness of LANXESS cal businesses should be regulated with non-automatic licenses business units that comprise the compa- constituted about 11% of LANXESS’ in Argentina has much to do with variables Could you provide us with an overview of Reagens Varteco based on technical standards, as accepted by the World Trade Or- ny’s three business segments: performance global sales. How important is Argen- such as inflation and exchange rates, the and why it was necessary for the two companies to align? ganization. polymers, performance chemicals, and tina to the company’s global sales and proximity of raw materials, and the qual- Reagens Varteco was formed in December 2014 from the union of advanced intermediates. From Argentina, strategy? ity of logistics. Another competitive chal- Varteco, which has local knowledge and experience of working in What can we expect for the chemical industry in Argentina in LANXESS produces only performance Sales made in Argentina constitute about lenge has been the cost of labor, which has Argentina and South America, and Reagens, which has advanced the future and how can Reagens Varteco play a role? chemicals but distributes products from 2% of global sales; however, the country is increased in recent years since inflation stabilizers technology. As part of the partnership agreement, Var- A particular area of interest for the future will be oleochemicals the three business segments. In particular, a key strategic branch for LANXESS glob- has outpaced the devaluation of the peso teco brought its PVC stabilizer business to Reagens Varteco and, and bio-based chemicals. Companies in palm-oil rich countries, LANXESS Argentina produces perfor- ally. The Zárate plant is one of only two against the dollar. The new government in return, Reagens provided the technology for a new plasticizer such as Malaysia, are buying companies in Europe. The main mance chemicals related to tires (Rhein LANXESS plants that produce chromium has already undertaken fiscal initiatives plant in San Luis, which started construction in January 2015. oleochemical business in Argentina is biodiesel, and we also have Chemie) and leather. salts for tanning. The Burzaco plant is one that have resulted in the devaluation of the We expect to manufacture PVC stabilizers based on calcium-zinc a good bio-based plasticizers business based on soybean oil. I be- In 2004, LANXESS spun off two busi- of Rhein Chemie’s largest bladder plants peso against the dollar, which should make and calcium-organic technology. It will be the first production of lieve we could develop other interesting businesses from these nesses related to textile and paper, which and exports know-how to other plants. For LANXESS’ exports from Argentina more calcium-organic stabilizers in South America. Reagens is also chemicals, such as propylene and ethylene glycol based on glyc- prompted LANXESS’s branches around example, LANXESS constructed a bladder competitive. However, LANXESS in Ar- providing all the technology related to formulation and manufac- erol use. Based on Varteco’s commodity chemicals business prof- the world, including Argentina, to un- plant in Brazil in 2012. The new Brazilian gentina has a competitive advantage in that turing, which represents a big advance in terms of technology for its, we could develop new interesting bio-based chemicals busi- dertake a realignment of the company’s plant’s operators all came to Argentina for the Zárate plant is the only sodium dichro- Varteco. nesses. ▬ business units. In 2010, Rhein Chemie, training and Argentine operators frequently mate plant in Latin America. ▬

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations GBR • Industry Explorations • ARGENTINA PETROCHEMICALS AND CHEMICALS 2016

AGROCHEMICALS

"Argentina has an incalculable potential, particularly in terms of the agricultural sector. The Argentine farmer is part of a value chain which has incorporated a range of technology in recent years, including in seeds, equipment and knowledge. They are now positioning themselves to be competitive on a global level, unlike other markets in Argentina which find it difficult to compete internationally."

- Mauro Piva, General Manager, Nova S.A. Image: CASAFE EDITORIAL Global Business Reports Global Business Reports EDITORIAL

Agrochemicals and fertilizers: enabling the growth of Argentina’s agricultural industry

By Harriet Bailey

With the world’s population set to grow account for 50% of South America’s agricultural practices the norm across the in- popular, support for more stringent safety to nine billion people by the middle of the cultural exports. The organisation focuses dustry, the first being Deposito OK, which regulation. CASAFE is also supported by century - spurred on by China’s termina- on the crop science industry, and has 25 aims to certify facilities used for the stor- CropLife Latin America in its attempts to tion of its almost 40-year old one-child member associations from 18 different age of agrochemicals. “We have around standardise the crop protection industry: policy in 2016 – global food producers will countries across the region. “We chose 600 to 700 certified facilities in Argentina, “As in other regions, we have two signa- be under increasing pressure to improve to hold the 2016 International Forum in which is around 50% of the total facilities ture programs. The first is CuidAgro, in yields and use resources more efficiently. Buenos Aires because we anticipated the in the country. The uncertified facilities are which we train farmers in the application Argentina, as the world’s third largest pro- change of government and the new oppor- usually smaller, local sites; multinational of good agricultural practices. The second ducer of soybeans, fifth largest producer of tunities for agriculture in the country as a companies will not sell their products to is CampoLimpio, which covers the collec- 56 corn and tenth largest producer of wheat, result,” explained the association’s presi- such facilities,” explained Federico Land- tion and safe disposal of plastic contain- 57 could do both. dent, Jose R. Perdomo. “Argentina uses graf, CASAFE’s executive director. ers for crop protection products. These In a speech to farmers following the of- modern technologies in its practices, espe- CASAFE’s second program is Agro- programs are complementary to similar ficial announcement of the removal of cially when compared with other countries limpio, a program endorsing the glob- CASAFE programs,” continued Perdomo. agricultural levies in December 2015, in the region that do not have as much ac- ally recognized triple rinsing protocol of A third program run by CASAFE is Spray President Macri showed his awareness of cess to technology. It has been proven to chemical containers and their subsequent OK, which it hopes to begin rolling out Argentina’s potential to be the supplier for be capable of delivering large-scale pro- recovery. CASAFE is ultimately lobby- across the country in 2017. Currently, any- the increase in demand: “We have to go duction at a low cost because of its high ing government for a nationwide law to body can use spraying equipment without from being the breadbasket of the world to productivity levels.” enforce the collection of these containers certification. CASAFE, in partnership the supermarket of the world.” after use. Rotam Argentina, Dow Agrosci- with the Institute of Standardization and During the current government’s four-year ences and Rizobacter are also establishing Certification, aims to certify companies, term, the intention is to intensify produc- Lobbying for change a foundation to ensure the safe packag- operators and the machinery itself for both tion from 100 million tons per year (tpy) ing and storage of agrochemicals. “When ground and aerial application of crop pro- to 160 million tpy – an increase of 60%. Argentina’s agricultural industry has a agrochemicals are properly applied and tection products. “Most companies do not The impact of removing taxes on crops healthy relationship with the domestic ag- containers are disposed of correctly, there own their own spraying equipment, prefer- such as wheat and corn has already been rochemical industry, whose products will is no problem; however, when the correct ring to rent it from larger companies. Our felt, with output set to hit record highs by be key in improving yields. Representing procedures are not followed, toxic mate- aim is to ensure best practice in the use 2017. “We can expect wheat acreage to the interests of agrochemical companies rial can leach out into the environment and and maintenance of these machines,” said grow by one million hectares to around across the spectrum, from multinationals, pose a danger to human health,” explained Landgraf. 4.7 million hectares; this will however still including Monsanto and Syngenta, to lo- Rotam Argentina country manager, Javier CIAFA, which has 53 members, is a unit- be lower than the six million hectares we cal players such as Agrofina and Gleba, are de la Rua. ing voice for agrochemical companies in have previously seen,” said Ulrik Ekonen, two organizations: the Chamber of Agri- CASAFE typically represented the in- Argentina. It works with regional and na- south Latin America manager at Nufarm cultural Health and Fertilizers (CASAFE) terests of multinational companies in Ar- tional government agencies on legislation Argentina. “Argentina’s corn production and the Chamber of Fertilizers and Agro- gentina. With the government’s recent ap- affecting the industry, and also works with will increase by around 700,000 hectares chemicals (CIAFA). peasement of the industry, the opportunity farming associations to achieve its objec- to 3.4 million hectares.” CASAFE, in particular, focuses on pro- for growth may mean more international tives. Although it has no barrier to mem- Regional bodies are also aware of the role moting best practice and the responsible players decide to expand their operations bership, CIAFA is known for its work with Argentina’s agricultural industry can play use of crop protection products to both in the country. Global corporations also Argentinian chemical companies: “We can in feeding an ever-increasing global popu- regulatory bodies and the public. It has bring with them global standards, which promote local players by price and avail- lation and, according to CropLife Latin two programs in place to standardise prac- should work in CASAFE’s favour when ability. If you import product from abroad, America, Argentina and Brazil together tices in Argentina and to make good agri- seeking increased governmental, as well as it could take around three months to ar- Image: Mikadun / Shutterstock

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations EDITORIAL Global Business Reports Global Business Reports EDITORIAL

FERTILIZERS CONSUMPTION EVOLUTION (Country Total) Source: Fertilizar

Thousand Tons Imported Local 4000

3500 rapid opening up of the market and the ef- this number was even further reduced in the return on investment was high. This cant production deficit. More than 90% of

3000 fect uncontrolled competition may have on 2015 as farmers were forced to tighten led to an over-reliance on soybean crops to Argentina’s total fertilizer consumption – local players. Under the previous admin- their belts. Giraudo continued: “Aapresid the detriment of other crops and nutrients more than 1.5 million tons – was imported, istration, domestic chemical companies then went on to develop a program for the were leached from the soil without being while urea demand was at around 600,000 2500 enjoyed import restrictions on formulated strategic use of fertilizers, leading to fur- replaced,” explained Fertilizar president tpy,” explained Miguel Morley, Profertil’s products from abroad; with the removal of ther improvements on the quality and sta- and Bunge marketing manager Jorge Bas- president.

2000 these restrictions, combined with a lack bility of crop yields, while reducing water si. “Rules have to be made in order to fo- While Profertil is Argentina’s domes- of investment into improving checks on usage.” cus on this sustainability objective and to tic fertilizer company, its main compe- imported products, the industry fears low Fertilizar is Argentina’s non-profit fertil- ensure the quality of the soil. In the future, tition comes from U.S.-headquartered 1500 quality chemicals will make their way izer association, working on behalf of the we will also have rules for the correct us- Bunge. While Argentina’s annual harvest into the value chain. “Competition in the industry to promote the responsible use of age of agrochemicals.” is around 100 million tpy, Bunge’s Bassi agrochemical market is high in Argentina fertilizers and the stewardship of high-pro- Compared to two decades ago, Argentina’s claims the fertilizer market is only around 1000 and we need more control over Chinese ductivity environments. One of its main fertilizer production is fairly strong, due three million tpy. This dropped to approxi- companies importing into Argentina,” ex- activities at present is working with the partly to YPF and Agrium’s joint venture mately 2.5 million tpy in 2015 but, with 500 plained Seara. “The industry needs to see government to bring in the Soil Improve- into Profertil. The urea plant, located in improved agricultural tariffs in Argentina several stages of checks on imported prod- ment Law, which aims to incentivize farm- Bahia Blanca, now produces around 90% and the focus on the Soil Improvement ucts, covering areas such as environmental ers to use more fertilizers, and ultimately of Argentina’s urea and 89% of Argen- Law, he expects demand to increase to 4.5 0 protection, processing and impurities, as improve the quality of Argentina’s already tina’s ammonia, and was able to export million tpy in the near future. “We could 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 SENASA does not conduct 100% checks.” fertile soil, by providing a tax break on 15,000 tons in 2014. Profertil has trans- see a complete turnaround in the Argentine fertilizer usage. “Fertilizers are crucial formed domestic fertilizer production, agricultural model in the next two to three FERTILIZERS MARKET EVOLUTION (2015) for the industry in producing more wheat with around 45% of the fertilizers used in years as we encourage farmers to take Source: Fertilizar Fertile soils and corn, rather than relying on soybean Argentina being nitrogen based and reliant care of the soil and adopt environmentally 58 59 VOLUME (THOUSAND TONS) crops. Ten years ago, soybean planting on natural gas as a feedstock: “The domes- friendly measures,” said Bassi. Argentina is particularly proud of its fer- was both very cheap and very easy, while tic urea market in particular faced a signifi- It appears that not only Bunge is aware of Fertilizers Group First Quarter Second Quarter Third Quarter Total tile soil, which has been safeguarded since Nitrogenous 148 391 65 0 1.189 the late 1980s by Aapresid. This associa- Phosphatic 82 311 69 0 1.083 tion was established by farmers concerned Sulphur 13 29 52 94 about soil erosion stemming from poor Potassic 622 32 60 land management, with the aim of us- Others717 24 48 ing good agricultural practices to prevent Total 256 770 144 82.474 further erosion by winds and flooding. Although the no-till growing method was DISTRIBUTION (%) introduced to Argentina’s farmers in the Fertilizers Group First Quarter Second Quarter Third Quarter Total 1970s by the National Institute of Agri- cultural Technology (INTA), a lack of spe- Nitrogenous 12 33 55 100 cialized machinery meant the practice was Phosphatic 8 29 64 100 not widely adopted. “It was the middle of Sulphur 14 31 55 100 the 1990s when no-till farming really took Potassic 10 37 53 100 off,” explained Maria Beatriz Giraudo, Others 15 35 50 100 president of Aapresid. “Approximately Total 10 31 59 100 92% of farmers use the no-till method nowadays. When the system is combined rive. This is not ideal in a market as dy- to share ideas, problems and solutions, as with crop rotation, it improves all the soil’s namic as ours, so local products have the well as to network with firms. CIAFA and physical, chemical and biological proper- advantage,” explained Armando Allinghi, CASAFE share a good relationship and ties. Our soils are now in great shape to CIAFA’s executive director. there are many areas on which we share withstand issues that may arise in the fu- Member company Gleba, which has been points of view. However,” remarked Gle- ture, such as flooding and drought cycles.” in the market since 1950 and now has an ba’s commercial manager Miguel Seara, As well as maintaining the fertility of the annual turnover of around $40 million “it is also beneficial that we are able to soil through no-till farming methods, Aa- following a cash injection of $1.5 million discuss different points of view with com- presid is also aware of the benefits of using into its plant at the turn of the decade, is plete freedom and openness.” fertilizers appropriately. Of the 40% of a supportive of the opportunities provided For Gleba, one of the main issues affecting farmer’s revenue spent on agrochemicals, by CIAFA: “CIAFA is a great platform the agrochemical industry at present is the only 10% of that is allocated to fertilizers;

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations EDITORIAL Global Business Reports Global Business Reports EDITORIAL

the potential in Argentina’s fertilizer mar- This new openness in the market could Around 200 million liters of glyphosate Joining forces procedures in certain weather conditions, fields, which will improve the sustainabil- ket; Rizobacter, a local company focusing mean that chemical importers, such as and nine million liters of 2,4-D are sold required wind speeds for best results and ity of our farmland.” on seed treatments and active ingredients InsuAgro, are bypassed by their suppli- in Argentina per year, with local company Public opinion surrounding the use of correct safety distances for highly populat- Aapresid is also working with the govern- for agrochemicals, and with an annual ers in favour of establishing their own op- Chemotecnica producing more than half of agrochemicals is of concern to compa- ed areas. However, the program has not yet ments of Santa Fe, Cordoba and Buenos turnover of $100 million, is set to expand erations in Argentina. The company was the country’s 2,4-D requirements. UPL Ar- nies and growers alike. Both CIAFA and reached everyone involved, as outlined by Aires provinces to gain certification for into the fertilizer arena. “Our objective launched in 2002 and distributes for cli- gentina, which is moving away from com- CASAFE focus on the need for educa- Arysta’s Maier: “One of the big problems sprayers, with the aim of rolling this pro- is maintaining the soil’s fertility. We are ents such as Arysta LifeScience and FMC modity agrochemicals to a more differen- tion about the benefits of crop protection we have in this area is the use of contracted gram out across the country following suc- finishing our fertilizer plant for micro- Brazil, as well as international companies tiated portfolio, stated herbicides have a products, particularly in conjunction with chemical sprayers, who are paid by hectare cess in these key regions. “Misusing agro- granulated, phosphorous-based fertilizers from Europe, China and India. “The only 65% market share compared to other types responsible use programs, and CASAFE and therefore do not always take product chemicals is an acute problem which we with high solubility in partnership with De challenge we may face is the potential for of crop protection products: “Because of has also initiated a social media campaign application issues, such as wind speed and are working very hard to solve,” explained Sangosse,” said Ricardo Yapur, president foreign players to leverage the low com- Argentina’s no-till system, farmers con- to reach out to young people. “The pub- direction and proximity to populated areas, Aapresid’s Giraudo. “The ultimate aim of Rizobacter. “When our fertilizer plant modity price period and enter the market, sume herbicides year round. Insecticides lic has a negative perception of the crop into account. CASAFE is working hard to would be that without certification, work- starts operating, the high demand for fer- which may cause interference in distribu- and fungicides, on the other hand, are sea- protection industry due to the improper use educate people in the effects of product ers would be unable to use such products.” tilizers will bring the company increased tion. However, InsuAgro remains a small sonal products and account for $300 mil- of agrochemicals,” said CIAFA’s Allinghi. drift, for which there was a big campaign profitability. Rizobacter will be the exclu- enough company to be an agile player and lion and $250 million of the overall mar- “By encouraging best practice across Ar- in 2015. If these sprayers adhere to the sive producer of De Sangosse products in quickly respond to change,” said com- ket respectively,” said Fernando Lespiau, gentina, this will both improve the efficacy guidelines, there will be no problems with Lining up the alternatives Argentina.” mercial director Jose Mrejen. “We foresee commercial director at UPL Argentina. of crop protection products and lower the either ground or aerial application.” a good period of growth ahead across all Glyphosate alone accounts for $800 mil- associated risks.” Furthermore, argues UPL’s Lespiau, more An area which is coming into its own in crop areas we supply to, which should im- lion of the $2.5 billion agrochemical in- Best practice is particularly important than 50% of Argentina’s arable land is not Argentina is biotechnology, which aims to A phoenix rising prove our revenue stream.” dustry in Argentina, but is losing ground in the application phase of various agro- owned by the farmers who grow crops on genetically improve a plant’s growing hab- Contract manufacturer Reopen, which to specialised formulations as a result of chemicals, and CASAFE works with the it, “which leads to a focus on production its, for example by improving its resilience As well as affecting sales in the fertil- formulates products on behalf of mul- increasing glyphosate resistance in weed Ministry of Agro-Industry to promote and profit rather than environmental stew- to pests and extreme weather conditions. 60 izer industry, farmers also avoided buying tinationals including Sumitagro, Dow varieties. Companies such as Arysta Life- their safe and effective use. This covers a ardship. Argentina requires some new leg- According to Agrofina’s Busanello, the 61 crop protection products in an attempt to Agrosciences and Bayer, is using this Science are shifting the focus of their re- variety of topics from standard spraying islation on how to properly manage rented mergers of Dow and DuPont, and Chem- curb their outgoings, explained Nufarm’s period of decreased agrochemical usage search and development activity onto new Ekonen: “The business environment has to improve its plant. Seeing potential for preparations, which is proving a shrewd been very tough. In the six months before growth in the future, it is installing modern move: “Our main product and income the elections, farmers were increasingly technologies to remain at the forefront of generator controls grasses which have uncertain about the future of the industry the tolling business. “The requirement for become glyphosate resistant,” explained and decided not to plant crops. These fac- agrochemicals will slowly increase by the Eduardo Maier, director of marketing and tors affected the majority of the agrochem- end of the year; although conditions for R&D. “Clethodim ranks number three ical companies in Argentina in some way agricultural producers are good at present, worldwide for herbicides and, despite the and the pressure on margins was huge.” they are cautious about future investments. overall decrease in the agrochemical mar- Argentina’s agricultural production for the New crop growth will require both more ket last year, it saw a 25% increase in sales year dipped below 2014 levels as farm- herbicides and more insecticides,” said volume.” ers refused to plant new crops in protest vice-president Fabian Gomila. Agrofina is one of very few companies in at the uncertain political situation, result- Argentina which has the capabilities to ing in an overall turnover of around $2.4 synthesise its own products. With 85% of billion for the industry, down from $2.7 Weed resistance the global agrochemical market based on billion a year previously. Nevertheless, sales of commodity chemicals, and 93% in the rapid pace of agriculture - over other The three most commonly used crop pro- Argentina, national players such as Agro- industries which rely on plants and pipe- tection products in Argentina are glypho- fina need to innovate in order to compete lines – means farmers can react almost sate, making up around 78% of total ag- against multinationals and provide new so- immediately to economic developments. rochemical sales in the country in 2013, lutions for farmers: “We have deep process “When it seemed likely Macri would win, followed by atrazine and 2,4-D. Monsanto knowledge on new ways to formulate and farmers immediately began to buy seed. discovered glyphosate in 1970 and it was manufacture product and this has become Corn acreage grew 500 hectares in under a brought to market under the trade name our core business,” said CEO Horacio month because of the possibility of a new Roundup in 1974. The company then pro- Busanello of Agrofina’s parent company, government and, in turn, fertilizer sales duced glyphosate-resistant seeds, increas- Grupo Los Grobo. “Being an Argentinian increased,” said Ekonen. “Before the an- ing crop production dramatically; it there- company, we are able to tailor our products nouncement that taxes on corn and wheat fore comes as no surprise that around 90% to the local market, unlike multinationals would be eliminated, the port was already of Argentina’s main crops, such as corn which produce the same chemicals for all discounting freight prices.” and soybeans, are genetically modified. their markets.”

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations EDITORIAL Global Business Reports Global Business Reports INTERVIEW

“ Could you provide us with a back- which allow not only the correct imple- There is not a real consciousness ground to CropLife Latin America and mentation of technology, but also for farm- explain the importance of its activities in ers and the industry to have confidence in of healthier foods among our local the region? CASAFE that it is monitoring and follow- consumers and there is no clear China’s acquisition by Syngenta, are in- of traditional and greener products, is in- CropLife Latin America is a nonprofit or- ing new technological advances as in the dicative of wider global trends in this area: tended to manage the bridge between cur- legislation concerning fresh food ganization working primarily in the crop rest of the developed world. “Companies are realizing there is no sin- rent usage trends and the requirements of production. A small number of science industry. We have 25 member as- CropLife Latin America is an agent of gle solution to increasing yield and it will the future,” continued Raimondo. producers are concerned about how sociations in CropLife Latin America, transmission of best practices through take a combination of biotechnology and Aapresid is also promoting greener farm- to produce fresh products using from 18 different countries. April 2016 the authorities and our network of asso- agrochemical technology to achieve the ing practices with financial incentives, sustainable and safe solutions and, marked our ninth iteration of our Inter- ciations. We are the spokespeople for the desired effect. In five years, the chemical based on the European Commission’s for domestic consumption, quality is national Forum, which is focused on sus- industry and try to educate all our stake- market will look very different to now.” Roundtable on Responsible Soy certifica- low and chemical usage is higher. For tainable agriculture through innovation. holders on how the industry is committed The industry as a whole is also feeling tion: “ This standard, implemented to meet external demand, buyers establish the Argentina in particular is vital to this aim to science, innovation, and the production the impact of the global trend for sustain- the requirements of the European Renew- rules and production uses greener and because it is a key exporter of crops in the of food. We are helping to introduce bio- able operations and green solutions. This able Energy Drive, covers areas such as gentler chemicals. region, alongside Brazil; together, these technology to Latin America in accordance is particularly felt by multinationals and protection of biodiversity, water use and two countries account for 50% of South with the regulatory frameworks within domestic companies working on joint ven- soil fertility. Our certification program Jose R. America’s agricultural exports. each country. tures with international players, such as is much wider: Certified Agriculture is a The reason we chose Argentina as the lo- - Pablo Raimondo, Chemotecnica, which is moving towards Quality Management System (QMS) that Perdomo cation of the 2016 International Forum How is Latin America’s agricultural in- a more environmentally friendly portfolio aims to unify the good aspects of imple- General Manager, is because we anticipated the change of dustry positioned on the world stage and of products with several U.S. companies. menting a productive model based on the Brometan government and the new opportunities how can it fend off competition from “We are seeing the market for solvent- no-till method and the principles of sus- for agriculture in the country as a result. other developing markets such as Africa based formulations reduce, while demand tainable, profitable and highly productive Argentina uses modern technologies in and Asia? for green products and environmentally agriculture,” explained Giraudo. “Farm- its practices, especially when compared Latin America is the largest crop produc- President friendly solutions is increasing,” said the ers following this program receive a bet- with other countries in the region that do ing market in the world in the context of CROPLIFE LATIN AMERICA company’s president, Alejandro Golfari. ter payment for adopting sustainable soil apply pesticides or fungicides if the ” dif- not have as much access to technology. It both volume and sales. The region holds 62 Some companies are modifying their practices.” ference will only be around 7% of yield has been proven to be capable of deliver- between one quarter and one third of the 63 entire business model to embrace bio- increase. However, if farmers can improve ing large-scale production at a low cost arable land in the world, which means we solutions, such as Brometan, which is the the differential to 30% or 40%, demand for because of its high productivity levels. We are already producing 16% of the world’s only company in Argentina working on A package deal crop protection products will rise,” he ex- support not only large operations on the food requirements. This could rise to 50% crop-oriented biological controls. Its so- plained. “Focusing on the crop protection path towards growth and sustainability, but in the future, because we have the land lutions are typically more expensive than Agrochemical companies are acutely and environmental health sectors will en- also medium- and small-sized farms, which available, adequate water supplies, a suit- traditional crop protection products, but aware of their importance in ensuring Ar- able us to achieve the government’s goal.” require different policies that also support able climate and the human capability. It it claims the return on investment is far gentina’s future on both a domestic and The aim of the incumbent government is to the market-driven economy. Such policies is a matter of developing a sustainable and higher than normal. Working with global global level, and the need to move away increase Argentina’s agricultural output by are conducive to growth and investment, responsible way of transitioning the tech- companies on innovative solutions, gen- from glyphosate, and its compatriots at- 60% by the end of the decade. With farm- and this aspect of agricultural support was nology. We have the potential to be more eral manager Pablo Raimondo notices razine and 2,4-D, to more specialist, sus- ers regaining around 20% of their profits lacking with the previous regime. productive in the future because half of our the differences between attitudes towards tainable products. “The Argentine farmer from the removal of export taxes, leading current food production is carried out by chemical usage internationally compared is part of a value chain which has incor- to an increase in agricultural production, “ One of your member associations is 16 million small and medium-sized farm- The reason we chose Argentina with Argentina. “There is not a real con- porated a range of technology in recent agrochemical companies are seeing 2016 CASAFE. How do CropLife and CASA- ing operations; these are the people that we as the location of the 2016 sciousness of healthier foods among our years, including in seeds, equipment and as a transition year on the way to an in- FE work together to promote the impor- are targeting to introduce new technologies International Forum is because local consumers and there is no clear legis- knowledge,” said Nova’s Piva. “Argentina crease of around 20% by the end of 2017. tance of crop science within Argentina? into their farming practices. lation concerning fresh food production. A has an incalculable potential in terms of Argentina has the potential to increase we anticipated the change As in other regions, we have two signature small number of producers are concerned the agricultural sector.” productivity, not only by converting up to of government and the new programs. The first is CuidAgro, in which What is your outlook for the future of about how to produce fresh products us- The first improvement in agricultural four million more hectares of viable land opportunities for agriculture in the we train farmers in the application of good Argentina’s agricultural industry when ing sustainable and safe solutions and, yield followed the introduction of hy- into crop fields, but also by increasing its country as a result. Argentina uses agricultural practices. The second is Cam- taking the new government’s current for domestic consumption, quality is low brids in the 1980s, while the second fol- use of biotechnology. The fertilizer indus- modern technologies in its practices, poLimpio, which covers the collection and and proposed measures into consider- and chemical usage is higher,” claimed lowed the introduction of no-till farming try, spurred on by the Soil Improvement especially when compared with other safe disposal of plastic containers for crop ation? Raimondo. “For external demand, buy- and genetically-modified seeds in the Law and Profertil’s expansion of its Bahia countries in the region that do not protection products. These programs are The measures that President Macri has ers establish the rules and production uses 1990s; Argentina is now long overdue for Blanca site in 2013, is also growing. Com- have as much access to technology. complementary to similar CASAFE pro- taken in his first 100 days in office lead greener and gentler chemicals.” a third wave of improvement in the sec- bining better practices and increasing the grams, such as Agrolimpio. me to believe that we can adopt a positive However, with external markets leading tor. Chemotecnica’s Golfari believes this usage of fertilizers, seed technology and In terms of how we can assist CASAFE, outlook for Argentina’s future. There is a the way, Argentina and the rest of South will stem from precision chemical use and crop protection products should see the we provide expertise on issues surround- clear commitment and plan for what needs America will soon follow. Brometan be- combining new crop protection technolo- sector produce not only enough to satisfy ing crop science, such as chemical toxicity, to be done. We believe the new cabinet will lieves it is at the forefront of a change in gies with fertilizers: “As yields increase, domestic demand, but also create a sur- ” intellectual property, legislation, and best deliver on their promises, which will lead attitudes and is developing products ac- it will become even more important to plus to dominate the supply chains of such practices around the world. We are able to to foreign investment returning to Argen- cordingly. “Our portfolio, with its spread protect crops; farmers may not choose to crops across South America. ▬ assist in creating regulatory frameworks tina. ▬

Armando Could you tell us about CASAFE and is something for which we are lobbying. the association’s operations in Argen- We also advocate a triple rinsing protocol, Allinghi tina? which removes 99.9% of the residual agro- CASAFE is a chamber that represents the chemical prior to recycling. interests of the agrochemical industry, We certify facilities for the storage of ag- with a particular focus on best practice rochemicals through our Deposito OK cer- and the responsible use of crop protection tification program. We have around 600 to products. The association counts both na- 700 certified facilities in Argentina, which Executive Director tional and multinational companies among is around 50% of the total facilities in the CHAMBER OF FERTILIZERS its members. CASAFE also focuses on country. The uncertified facilities are usu- AND AGROCHEMICALS (CIAFA) communication and education, using so- ally smaller, local sites; multinational com- cial media campaigns to highlight the need panies will not sell their products to such for crop protection products. We are also facilities. Finally, Spray OK is a program highly active in product stewardship, as we are working on and which we hope to this is an area where responsible use by have up and running by the start of 2017. Federico growers makes a real difference to both ef- Similar to Deposito OK, it is a certifica- ficacy levels and product safety standards. tion companies can gain for their spraying Landgraf machinery. Most companies do not own What is the relationship between CASA- their own spraying equipment, preferring Could you tell us about CIAFA since its and sell these products here, reaching high production levels on the one hand, and FE and the regulatory bodies in Argen- to rent it from larger companies; our aim is foundation in 1990 to the present day, standards and mitigating the wait on the worker safety on the other? tina, and how does CASAFE work to- to ensure best practice in the use and main- covering any recent major milestones? supply chain. The public has a negative perception of wards industry-positive legislation? tenance of these machines. CIAFA has 53 member companies, 35 of the crop protection industry due to the im- CASAFE works hand-in-hand with the which focus on crop protection products, In what ways does CIAFA work with proper use of agrochemicals. By encourag- Ministry of Agroindustry, focusing on pro- Could you tell us more about the state of with the remainder covering fertilizers. Our regional and national regulatory bodies ing best practice across Argentina, this will President 64 moting best practice. We have a technical Argentina’s agricultural industry com- key objective is to connect these companies to ensure progressive legislation for the both improve the efficacy of crop protection 65 CASAFE document that details best practices for the pared to that in neighboring countries? with government representatives who are industry? products and lower the associated risks. safe and effective use of crop-protection Argentina has very fertile soils so the use legislating on the various issues that affect Depending on the nature of the work, we Technology and new formulations can also products, covering all topics from correct of fertilizers is not as important an issue them. We also work with farming associa- work at both a federal and a national level. help to reduce the impact of these products spraying procedures in certain weather as the use of crop protection products. As tions to achieve our objectives and present- The aim is to work with government in the in populated areas. It is easy for our produc- conditions; required wind speeds for best an example, soybean farmers will allocate ing a united voice; this is more effective development of laws pertaining to the crop ers to introduce new technologies, as the results; and location-specific requirements 30% of their resources to such products, than for each company to communicate protection industry, and this entails work- uptake by farmers is rapid when compared for the maintenance of safety in sensitive compared to around 10% on fertilizers. with government figures individually. ing with various ministries, including the with other countries. areas such as rivers and highly-populated The most important crop protection prod- Our website also contains information on Ministry of Agro-Industry. At a regional areas. We have performed 14 field tests to ucts for growers are herbicides, with 78% crop protection products and fertilizers level we work with local governments to Could you tell us more about how Mac- confirm this data is correct. This document of that market taken up by glyphosate. for use by producers and farmers, such as improve safety and understanding of pesti- ri’s agricultural reforms will improve the is also provided to schools and teachers in which products control which type of pest cides, for example. situation for the agricultural industry farming areas as this is an effective way to What can we expect for the future of the or weed. We also have the Agro Deposito through 2016? “ reach parents and improve their methods. agrochemical industry in Argentina, in program which concerns the safe storage What sort of technological developments President Macri has reduced taxes and CASAFE is a chamber that We also have a program to promote the light of the global population increases and management of these products. can we expect in the agrochemical indus- opened the market so producers now have represents the interests of the wearing of personal protective equipment and the requirement for more food? try in the future? the opportunity to vary the crops they grow agrochemical industry, with a when using crop protection products. The agricultural industry is very impor- One of CIAFA’s main objectives is to I believe seed technology will be particu- and export goods such as wheat, corn and particular focus on best practice tant for both Argentina, in terms of the promote local agrochemical companies. larly important, because new genetically sunflower without as many difficulties as and the responsible use of crop CASAFE has three programs to ensure income we generate, as well as the world How can you ensure farmers choose lo- modified seed products under development before. As well as an increase in our local protection products. the safe use of crop protection products. as a whole, as we are capable of produc- cal products in a market dominated by have different resistances to pesticides. market, I think we will also see the size of Could you tell us more about Agro- ing more food. In addition to Argentina, multinationals? Likewise, the development of new ag- the average farm expand. An increased use limpio, Deposito OK and Spray OK? Brazil and some countries in the former We can promote local players by price and rochemicals will create products able to of technology will also encourage greater As with many products, such as batteries USSR could increase crop production; the availability. If you import product from tackle strains of weeds that are developing yield. Although there may be some financ- and car tires, the disposal of agrochemi- United States and Europe, however, are at abroad, it could take around three months a resistance to the most commonly used ing problems, which could limit growth, the cals requires specific attention. When the their limit. We think we could increase our to arrive. This is not ideal in a market as herbicides. The demand for fungicides will feeling among farmers and the agrochemi- correct procedures are followed, the risk is output by 60% through fertilization, bet- dynamic as ours, so local products have the also increase as the climate becomes hotter cal industry in general, around both produc- ” removed. Our aim with Agrolimpio is to ter practices and the development of more advantage in this case. In Argentina, we and wetter. New formulations will also be tion and new technology, is positive. The promote the recovery of empty agrochem- arable land. In the next decade, our farm- have the opportunity to produce the most key to combatting this. new administration also wants to increase ical containers. CASAFE believes Ar- ers could be producing 160 million tons of important herbicides, among other pes- production from 100 million tons per year gentina requires a national law to enforce grain per year, compared to 100 million ticides. Some of our member companies Could you tell us more about how CIA- (tpy) to 160 million tpy over their four-year the collection of these containers and this tons at present. ▬ have the ability to synthesize, formulate FA can ensure a balance between high period in government. ▬

Maria Beatriz Giraudo area. Finally, we are seeing the market for porting to 30 days. Over a period of two solvent-based formulations reduce, while years this was increased to 120 days, but Former President demand for green products and environ- many of our distributors did not have the AAPRESID mentally friendly solutions is increasing. working capital to sustain themselves This is very important due to Argentina’s through this time. Brazil’s agrochemi- size and highly variable climates; we have cal market has decreased, which has also to tailor our products and services to each had an effect on our sales, although we are region. The environmental health solu- still seeing strong demand for our products tions market is growing in Argentina and, from other Latin American countries and when compared to the United States and South Africa. Our sales volume reached How has Aapresid developed over the last quarter of a cen- How important are programs such as Responsible Use and Europe, has the potential to grow expo- $32 million last year, of which around $3 tury and what services do you provide your members? could you tell us more about sustainability and environmental nentially. We are the market leaders with million was in exports; this can be con- The association began as a group of around 20 farmers in the stewardship in Argentina’s agricultural industry? Alejandro a one-third share of the market; our com- trasted with our record year of 2010 when late 1980s in response to concern surrounding poor land manage- Misusing agrochemicals is an acute problem which we are work- petitors are Bayer, Syngenta, BASF and a we generated revenues of $38 million, of ment, leading to soil erosion. The aim was to use local farming ing very hard to solve. Almost two decades ago we implemented a few smaller, local companies. Our aim is which $10 million was exports. We expect to promote no till farming methods and as a tool to prevent ongo- program called Certified Agriculture, which guarantees that those Golfari to triple or even quadruple our business to to see a slow return to improved sales as a ing erosion from the water and the air. At present, Aapresid has with this certification are working in an environmentally friendly consolidate our market share. We have two result of Argentina’s new economic situa- around 2,500 members; these are farmers from both established manner and in accordance with the law. There are protocols for lines of development in this area, focusing tion and a reduction in export taxes. and smaller farms across the country, as well as technicians. various soil and water samples to be checked and reported. This on pheromone synthesis and vector control quality control program is gaining ground among farmers who of emerging diseases such as the Zika vi- Considering President Macri’s aim to Could you tell us more about the introduction and promotion see the need for such certification programs internationally. We make Argentina the supermarket of the President rus and Dengue fever. 66 of no-till farming in Argentina? also provide financial incentives from external economic reserves 67 CHEMOTECNICA world, how can Argentina improve its The no-till system was introduced to Argentina in the 1970s when to encourage more farmers to become certified. Could you tell us more about your agricultural output? a group of farmers with the National Institute of Agricultural product basket and how you tailor your Argentina has the potential to double its Technology (INTA) began to prove the no-till concept in Cordoba What initiatives does Aapresid have in place to promote good products for use in Argentina? output by 2050. Unlike Brazil, which has province. At the beginning, the biggest obstacle was obtaining agricultural practices to its members? Volume is still a main driver for us and a surplus of land to convert to farmland, agrochemicals for weed control that were both compatible with The main way we can do this is at our Annual Congress in August, therefore we produce the commodity crop Argentina’s farmland has almost reached the no-till method and reasonably priced. Furthermore, due to the at which institutional specialists, technicians and farmers come protection products; 200 million liters of capacity. We have to increase yield per lack of specialized machinery, no-till farming was in large part together to share ideas. In 2015, almost 5,000 people from across glyphosate and nine million liters of 2,4- hectare through new technologies, at abandoned. Argentina attended the event, with the same number viewing the D are sold in Argentina on an annual ba- which Argentina is very adept. The first By the middle of the 1980s, soil erosion had again become such congress online from 25 countries worldwide. It is the largest ag- sis. We can produce 37 million liters of yield increase was the introduction of hy- a problem that there was renewed interest in no-till farming. Al- ricultural event globally. Could you introduce us to Chemotec- glyphosate and 4.8 million liters of 2,4-D. brids in the 1980s. The second technologi- though adoption of this technique increased, it was very hard to nica’s history and its development over The aim of our SC formulations plant is cal improvement, at the turn of the centu- encourage such a dramatic shift in agricultural practices. A group What will Aapresid be focusing on in future? the last 70 years? to produce specific herbicides to combat ry, was direct farming and GMO varieties of farmers began to prove the technology and developed the spe- We strongly believe that following good agricultural practices is Chemotecnica is a national company that glyphosate and 2,4-D resistance in plants. that enabled us to broaden the agricultural cialized machinery required. Farmers and the machinery then be- the only way to create economic, environmental and social sta- has been in the market since 1943. We One of the interesting things about Che- frontier. The next improvement will have gan to work together to develop machinery not just tailored to bility in the agricultural industry. The keys to this are the no-till conduct synthesis and formulation of ag- motecnica is that we have studied and to come through fertilization, new herbi- the new requirements of no-till farming, but also to the needs of system; continued soil coverage by either crops or protective cov- rochemicals, selling directly to farmers developed formulations specifically for cides, insecticides and fungicides. We will individual regions. erings protecting the soil from exposure to air, wind and rain- through our network of distributors. Our the Latin American market and have reg- also need to focus on precision agriculture However, it was the middle of the 1990s when no-till farming re- fall; crop rotation to improve diversity and intensity; integrated last investments were for two new plants istered products from Mexico to Chile. by targeting fertilizers on the areas they ally took off, following the approval of genetically modified soy- management of weeds, insects and diseases using strategic and for suspension concentrate (SC) formula- Conditions such as temperature, rainfall are required and, as a result, insecticide beans for use in Argentina. Approximately 92% of farmers use the balanced nutrition; choosing specific agrochemical and biologi- tions, with a monthly capacity of 400,000 and water quality vary so our formulations and fungicide use will rise. As yields inno-till method nowadays. When the system is combined with crop cal controls; with responsible use of crop protection products in liters each. Our business is split 70:30 be- are specific to particular regions. We have crease, it will become even more impor- rotation, it improves all the soil’s physical, chemical and biologi- terms of correct product choice, operators and application. tween crop protection products and en- already developed a water-based formula- tant to protect crops; farmers may not cal properties. Aapresid then went on to develop a program for With so many of Argentina’s farms using the no-till method, our vironmental health solutions. Within the tion for cipermethrin with very good re- choose to apply pesticides or fungicides the strategic use of fertilizers, leading to further improvements on mission has shifted towards promoting a sustainable system for former, 50% of our sales volume is attrib- sults. if the difference will only be around 7% the quality and stability of crop yields, while reducing water us- food, fiber and energy, based on our network of innovators. Here uted to contract manufacturing, where we of yield increase. However, if farmers can age. These farming practices have also lead to an increase in the at Aapresid, we believe we can be a strategic collaborator with lo- have seen steady growth since 2007. We What is Chemotecnica’s market share improve the differential to 30% or 40%, capture of atmospheric carbon, equipping us with a new tool in cal, provincial and national governments. ▬ are also working on a joint venture with and how have the company’s operations demand for crop protection products will the fight against climate change. Our soils are now in great shape U.S. companies to produce herbicides, in- changed over the last few years? rise. Focusing on the crop protection and to withstand issues that may arise in the future, such as flooding secticides and fungicides and have com- In 2012, the government imposed restric- environmental health sectors will enable and drought cycles. pleted two SC formulation projects in this tions on the collection of money from ex- us to achieve the government’s goal. ▬

Could you provide us with an overview of Republic. Could you tell us more about your Could you provide us with an overview One of the things we need to improve is Nova? expansion plans across Latin America? of Agrofina’s operations and any recent the standards of application for agrochem- Nova was created by my father in 1985 togeth- The last three years has seen us create our key milestones? icals. We need to adopt certain European Mauro er with Ing. Carlos Milergeli. At that time, the foreign trade department. We have started to Horacio Agrofina is more than 35 years old. The practices. This requires education, training focus was on developing, producing and sell- register our products in Uruguay, Paraguay, company started life as an R&D-focused and certification for the sprayers and great- Piva ing coadjuvants for the local market around Bolivia, Chile, Peru, Colombia, Ecuador, Do- Busanello contract manufacturer, but then moved er communication with the general public Rosario and the surrounding areas. We then minican Republic, Mexico and Nicaragua, to into our own production and sales. In about the standards the industry have ad- started to develop other agrochemicals, in- name a few countries. This involves setting 2008, Agrofina was acquired by U.S.- opted. For me, certifying sprayers should cluding biological inoculants, seed therapies, up a company in each country from which based investment fund Matlin Patterson, be part of the government’s agenda. You General Manager insecticides, fungicides and herbicides. Today, to trade. We are able to offer unique, tailored CEO which led to a more pronounced focus on have to have a license to drive a car and NOVA S.A. Nova’s products cover all phytosanitary prod- services to our clients abroad because we are GRUPO LOS GROBO sales and product development. Grupo Los I believe the same should be true of those uct areas. working locally, rather than via a central head- Grobo acquired the company in 2013. who use chemicals. I believe the new Min- quarters. We now have a production plant in Za- istry of Agro-Industry will be able to ad- Could you tell us more about your product rate which houses roughly 180 of our 290 dress this issue and come up with a solu- basket and any flagship products you have Why does Nova choose to maintain its own employees. We also have our own good tion. for use in Argentina? distribution chain considering the infra- laboratory practice-certified R&D facili- Over the last four years, Nova has invested structure challenges in Argentina? ties with 30 people. The remainder work Many companies choose to outsource heavily in product development. We have ap- Nova has a network of around 740 distributors in commercial, administration and finan- their distribution to a 3PL. Why does proximately 70 registered agrochemicals, and and cooperatives to whom we sell our product; cial services in Buenos Aires. Over the Agrofina choose to maintain its own dis- our plan is to increase this to 130 registered they then sell our products on to the agricul- last four years the company has increased tribution chain? products in the next three years. We generate tural producers. Our sales team comprises of its sales from $40 million to $120 million Since Grupo Los Grobo acquired Agro- around $60 million in turnover, mostly from 15 agronomic engineers across five regions, in a U$S 2,5 billion market. We are cur- fina three years ago, we have been work- our herbicide segment, into which we are in- as well as a registration and technical depart- rently putting our growth plan in place, in ing very hard to develop our marketing, vesting 60% of our research dollars. Nova is ment. Running our own logistics operations which we are launching new products at technical assistance and sales teams. The focusing on reformulating glyphosate-resis- from our site in Canada de Gomez, rather than the rate of around two per year. From now most valuable asset a company can have tant products, as it is a serious problem for our using a third-party logistics provider, is a huge until 2020 we will have launched a further is its customers. Reaching a certain level market. advantage for the company. We can ensure the 10 ten products into the market, meaning of customer intimacy and developing our 68 Because we are an Argentinian company, we quality of our products both as they leave our our portfolio will compare favorably with network is part of our operations; by out- 69 have a rapid process for bringing products to site and as they arrive with the consumer, and some of the largest companies in the mar- sourcing this aspect of the chain we would market. We can quickly react to client needs we can provide delivery in around 48 hours ket. be leaving part of our shareholders’ value without having to seek approval from a glob- across the country. in third party hands. Furthermore, to avoid al headquarters, which is particularly helpful Agrofina has its own technologies, en- credit risk, we need to have many differ- when solving problems such as insect plagues. Looking to the future for Argentina’s agri- abling it to conduct synthesis in house. ent points of sale rather than relying on a Our distributors quickly find out what our cli- cultural industry, how do you see agrochem- Could you tell us more about your R&D single distributor. ents need and we create formulas to suit their icals playing a role in increasing production and manufacturing plants in Argen- requirements. and what role will Nova play in this? tina? How has Argentina’s agricultural in- Future expectations are favourable. All of At the global level, 85% of the agrochemi- dustry changed since the election and Could you tell us more about your facilities our distributors have a positive attitude with cal market is off-patent, while at the lo- what impact will this have on sales of at both your manufacturing plant and in regards to the recent governmental changes cal level it is around 93%. The biggest crop protection products? your pilot plant? and, as a result, we have been encouraged to “ off-patent companies are multinationals, We will see the market growing for two “ We have a 14-hectare site, which equates to invest further in products and infrastructure. making it hard for us to compete in this reasons: one is the addition of up to four At the global level, 85% of the Future expectations are favourable. around 20,000 m2. We recently bought a fur- We are able to look towards long-term plan- agrochemical market is off-patent, area. We do, however, have deep process million hectares of viable land for growing All of our distributors have a positive ther 5-hectare plot in a nearby industrial park ning, which was previously very difficult to do while at the local level it is around knowledge on new ways to formulate and crops. The other, more important, reason is in order to develop a plant for solid herbicide in this country. Argentina has an incalculable manufacture product and this has become the increased use of technology. In 2015, attitude with regards to the recent 93%. The biggest off-patent production. Four years ago, we started to di- potential, particularly in terms of the agricul- our core advantage. Being an Argentinian technology use was minimized because of governmental changes and, as a result, companies are multinationals, making we have been encouraged to invest versify into genetic engineering and to think tural sector. The Argentine farmer is part of a company, we are able to tailor our products the uncertainty surrounding the political about how we can develop by-products of our value chain which has incorporated a range of it hard for us to compete in this area. further in products and infrastructure. to the local market, unlike multinationals climate. The new government’s first steps long-term fermentation processing into en- technology in recent years, including in seeds, We do, however, have deep process which produce the same chemicals for all have been in the right direction and they We are able to look towards long-term zymes for the food and biofuel industry. We equipment and knowledge. They are now po- knowledge on new ways to formulate their markets. have delivered on their campaign promises planning, which was previously very built a pilot plant and have five technicians sitioning themselves to be competitive on a and manufacture product and this has Over the next five to ten years we do not so far. Farmers will therefore invest more difficult to do in this country. focused on this research. Furthermore, we are global level, unlike other markets in Argentina become our core advantage. expect there to be any revolutionary prod- in seed technology, fertilizers and crop building an industrial plant to produce differ- which find it difficult to compete internation- ucts in this field. Therefore we believe we protection products to increase yield, as ent types of enzymes on a large scale in or- ally. Argentina can be the leader in raw materi- are right to focus on the areas of formula- crop prices will not dramatically increase der to position ourselves in all markets, as en- als production, for example. tion innovation and efficiency. in the near future. The only way to off- zymes are vital to many production processes. For our part, Nova plans to double its turnover, set low prices in the market is to produce invest heavily into new facilities and products How important are associations such as more per hectare, and technology will en- ” As well as Argentina, Nova recently and diversify the company into different sec- ” CASAFE and CIAFA to the agrochemi- able farmers to do this. I would predict an launched in Uruguay and the Dominican tors. ▬ cal industry in Argentina? output increase of 20% for 2017/18. ▬

Could you provide us with an overview containing clethodim: Lord and Kosako. Could you introduce us to Rizobacter as You received the Phelps medal for inno- of your operations in Argentina, includ- Clethodim ranks number three in Argen- a local Argentinean company which now vation in 2012. Could you tell us more ing any recent major milestones? tina for herbicides behind glyphosate and has a physical presence in a further six about your R&D work and how Argen- Eduardo Although Arysta LifeScience has been 2,4-D and, despite the overall decrease in Ricardo countries and commercial activities in 25 tina can lead the way in this area? present in Argentina since 2005, the com- the agrochemical market last year, it saw a countries worldwide? Overall, 30% of company turnover is rein- Maier pany really started growing from 2011 25% increase in sales volume. The prod- Yapur Rizobacter is an Argentinian company vested back into the company; 20% of this onwards. Our purchases of Grupo Bio- uct controls grasses which have become with turnover of $100 million; $20 million covers personnel and equipment, with the quimico Mexicano (GBM) in 2007 and glyphosate resistant. We are also working is generated from our international opera- remaining 10% being invested in innova- Goëmar in 2014 extended our coverage on a new herbicide for chemical fallow, tions, with the remainder coming from our tion. Rizobacter invests in biologic prod- Manager of Marketing and R&D into the biological products aspect of the corn and sugarcane called Dynamic, which President domestic activity. The company is ISO ucts and we are always coming up with ARYSTA LIFESCIENCE agrochemicals industry. GBM produced should reach the market in 2016, and Cel- RIZOBACTER 9,000, ISO 14,000 and ISO 18,000 certi- new innovations as a result of this strong ARGENTINA bio-stimulants from plant extracts, while ebrate, a combination of clethodim and fied and is audited by PwC. Our six global investment. It is very important for Rizo- Goëmar’s products were based on sea- amicarbosone manufactured by Chemtura, locations are in Paraguay, Uruguay, Bra- bacter to be partnered with institutes and weed extracts and, with these products, used for controlling grasses and volunteer zil, Bolivia, South Africa and the United larger companies such as our partners be- plants become more robust and more re- corn. Finally, we are bringing out a con- States. We have three strategic alliances cause of our size and the fact we do not sistant to fungi and diseases. It is difficult centrated version of clethodim which, at with large multinationals: Switzerland- have all the necessary resources for R&D. to demonstrate the benefits of combining 36% EC, will be 50% stronger than cur- based Syngenta, which provides us with We make agreements with researchers at agrochemicals with biological products to rent formulations; this will enable farmers seed treatment products; Momentive from universities to make developments on farmers but this is an area of increasing re- to use less product per hectare. the United States, which supplies us with products we are interested in and then have search worldwide and we expect to grow Around four years ago, Arysta decided to silicons for agricultural applications; and first refusal on the product if we believe it exponentially in the coming years. formulate clethodim in Argentina using a De Sangosse from France, from whom is usable and fits within our vision. In 2015, Arysta merged with Chemtura contract manufacturer rather than import source pest control products for early- AgroSolutions and Agriphar Crop Solu- it from abroad. This enabled us to survive stage treatment of plants. The international In terms of your work on the environ- tions, as part of a global buyout by spe- in the market as the government restricted market is very dynamic, and we export to ment, we would like to hear more about cialty chemical company Platform Spe- imports of formulated products. 25 countries worldwide. Although our op- your initiatives to find new sustainability cialty Products, and we now have a total erations in 2015 were challenged by Ar- measures, and why you think this is im- of 21 employees. Chemtura had better Could you tell us more about the impor- gentina’s dollar exchange rate, the market portant? 70 distribution channels in Argentina, which tance of environmental stewardship in is now more favourable and Rizobacter We understand that the sustainability of 71 has benefited our operations, while our Argentina and the role associations such will have a strong focus on international a system is fundamental. Therefore, we product portfolios were very comple- as CASAFE and CIAFA play in promot- trade going forward. are always looking to bring products to mentary. Chemtura focused more on seed ing this? the market that help advance this area in treatments, particularly for peanuts, while This is an area where Argentina needs Could you tell us more about your three some way, whether they be applicable to Arysta’s product basket included herbi- to catch up with other countries. Both plants in Argentina and your product all crops or one. Our objective is maintain- cides and biological products. Although CASAFE and CIAFA are united in their portfolio? ing the soil’s fertility. We work with our peanuts are a small-to medium-sized crop efforts to increase the focus on steward- The market for inoculants in Argentina is industry peers for this initiative because it of 10.4 million hectares in Argentina, it is ship, by implementing programs such as one of the biggest in the world and, be- is not possible for one company alone to very profitable. Our combined distribution Agrolimpio and Deposit OK. One of the cause of this, we have a very modern in- make progress in this area. Ensuring sus- networks are now very strong in the main big problems we have in this area is the oculants production plant. In 2015, we tainable measures are implemented is the agricultural regions of Argentina, but we use of contracted chemical sprayers, who inaugurated our formulation plant in col- only way to continue production for the are aiming to grow our market presence are paid by hectare and therefore do not al- laboration with DuPont and are finishing next twenty years. “ in the center and south of Buenos Aires ways take product application issues, such “ our fertilizer plant for micro-granulated, province, as well as the north east of the as wind speed and direction and proximity phosphorous-based fertilizers with high Could you provide us with your insights country. to populated areas, into account. solubility in partnership with De Sangosse, into the future of the agrochemical in- It is difficult to demonstrate the From our revenues of less than $10 million Our objective is maintaining the soil’s in time for its opening in June 2016. dustry and Rizobacter’s role in it? benefits of combining agrochemicals at the start of the decade, Arysta generated Arysta celebrates its 15th anniversary fertility. We work with our industry Rizobacter’s product portfolio is com- In recent years, we have invested in our with biological products to farmers but $48 million in 2015 and we expect to see this year. What can we expect for the peers for this initiative because it is not prised as follows: 40% inoculants for company to ensure we are ready to face this is an area of increasing research sales of $51 million for 2016 as a com- company in future? seeds and seed treatments, 40% active any challenges that may arise. The more possible for one company alone to make worldwide and we expect to grow bined group with Agriphar Crop Solutions We are working on a new biological prod- ingredients/surfactants and the remainder Argentina produces and exports, the more progress in this area. exponentially in the coming years. and Chemtura Agrosolutions. uct affecting adult insects called Nocto- are varied products, including the fertil- we will have to produce to meet the mar- vi, which is an oil resin combined with a izers we already sell. When our fertilizer ket’s needs. We also believe the solution Could you introduce us to your product small quantity of insecticide. This is used plant starts operating, the high demand is neither genetic nor chemical, but a col- basket and any flagship products you in strips every 50 meters and kills adults for fertilizers will bring the company in- laboration of the two technologies. With have for use in Argentina? before they breed, reducing the need for creased profitability. Rizobacter will be the regards to Rizobacter, global market con- Our main product and our main income further applications of an insecticide. We exclusive producer of De Sangosse prod- solidation is more an opportunity than a generator is clethodim, for which Bayer are also working hard with new bio-so- ucts in Argentina. We also expect to see threat; the larger a company, the less ag- CropScience has been our main client for lution products, which have big potential strong growth from exporting our products ile it is, and this is where agile, fast-acting ” almost 30 years under the Select brand. for the coming years as they improve both ” to South American countries in high vol- companies such as Rizobacter can flour- We are now selling two of our own brands crop yield and quality. ▬ ume. ish. ▬

Miguel How did Gleba create its distribution network and how do Ulrik you reach clients now? In the commercial and marketing spaces, Gleba’s management Could you tell us about Nufarm’s opera- ares to around five million hectares; this Seara already knew the key players from previous roles, so it was easy Ekonen tions in Argentina and how it has devel- will, however, still be lower than the six to build up a base of support. One of the most important things for oped over the years? million hectares we have previously seen. us to do was to work on our credit department, and we appointed Over ten years, Nufarm grew from a $10 Argentina’s corn production will increase a specific credit manager. A good manager with knowledge, ex- million to a $100 million business. We by around 700,000 hectares to 3.8 million Commercial Manager perience and connections in the market is key to our operations. South Latin America Manager have pursued a strategy of formulation dif- hectares, which will also impact the sales GLEBA In the past, Gleba sold products to buyers and big companies but NUFARM ARGENTINA ferentiation, which addresses certain gaps of fertilizers, crop protection products and we now have more than 100 clients, all of whom have their own in the market. Nufarm also has a strong machinery. If all this happens, we can ex- risks. background in barter, and 30% of our sales pect the agricultural market to increase are paid for in crops such as soya, which from last year’s $2.3 billion to $2.5 billion. With the support the agricultural industry is receiving from we then sell. This provides farmers with a the government, what can we expect to see in the industry in different way to manage their outgoings. Could you tell us about the importance future? Nufarm’s strategy focuses on five crops: of associations such as CASAFE and The previous government protected local industry and stopped soya, corn, cereals, pastures, and tree nuts CIAFA to the agrochemical industry in the importing of formulated products from China, for example. and vines, with the first two being most Argentina? The new government is rapidly opening up Argentina to foreign prevalent, as well as four worldwide hubs, We participate in both chambers because, markets, but it must also keep in mind the needs of local produc- one of which is Latin America. We cur- traditionally, CIAFA represented local ers. We are, however, speaking with the new Minister for Agricul- rently have a market share of around 3.5%, companies and CASAFE represented mul- ture, and the new government in general seems to be more open although we want to increase this to 8% by tinationals. Now they are starting to work to communication with industry. Competition in the agrochemical the end of the decade. We do not yet have together to advance particular causes, such market is high in Argentina and we need more control over Chi- coverage in all the regions of Argentina, so as the safe collection of chemical contain- nese companies importing into Argentina. The industry needs to we want to expand across the country. ers. They understand that it is important see several stages of checks on imported products, covering areas for both the end-user and the public to un- such as environmental protection, processing and impurities, as 72 You launched Nufarm System in 2014. derstand the facts about crop protection SENASA does not conduct 100% checks. ▬ 73 Could you tell us more about this and products and their benefits to the agricul- Could you provide us with an overview of Gleba’s operations the importance of innovation for the tural industry when used correctly. These and your four divisions? crop protection industry? associations are also able to promote edu- Gleba was founded in 1950 and we now have four divisions: Nufarm System is our way of getting clos- cation, training and certification programs, home and gardening, agribusiness, export, and formulation. In er to the end user. It is a decision-making such as certifying chemical sprayers and 1996, we joined the Chile-based company Anasac and, in 2006, software that allows farmers to make bet- warehouses for distribution. It is important when Anasac acquired 100% of Gleba, the decision was made ter product choices and learn more about to have associations such as these now we to change our focus. An investment of $1.5 million was injected their responsible use. In Australia we also are seeing increased communication with into the company for the development of our plant near La Plata, have a product called SprayWise, which Argentina’s new government. Buenos Aires province. This was a new start for us, because we combines this type of information with needed to create several different departments. The idea was to weather forecasting, letting farmers know Could you tell us about your plans for sell our products for distribution, but this proved challenging as the best timeframes for spraying. It is a the future of Argentina’s agricultural the Gleba brand was unknown at that time. The objective was to “ work in progress for Latin America. industry and Nufarm’s role within it? quickly formulate products that were going off patent and to build We believe Argentina will continue to be a brand name with a portfolio of specialty, post-patent products. How did the outcome of Argentina’s a big player, particularly in the soya, corn While in 2005, 95% of our business came from contract manu- When it seemed likely Macri would election affect the agricultural indus- and wheat markets. This will also drive facturing, this has now reversed, and 95% of our revenues are win, farmers immediately began to buy try? growth in the biodiesel market. If the gov- generated from our own-brand products. When I started with the corn seed. Corn acreage grew 500 When it seemed likely Macri would win, ernment creates the right conditions for company ten years ago, we were generating $10 million in turn- hectares in under a month because of farmers immediately began to buy corn investment, it will pull production from over; this has since increased to $40 million. the possibility of a new government and seed. Corn acreage grew 500 hectares in the field. We also need to find the right a lift on export taxes. under a month because of the possibility legal frameworks for patent protection as Could you tell us more about your product portfolio and any of a new government and a lift on export we will see more biotechnology coming flagship products? taxes. In turn, fertilizer sales increased. through. For Nufarm, we envision a busi- We formulate soluble liquid and suspension concentrate (SC) her- Before the announcement that taxes on ness where doing things differently to our bicides, such as Katana, Tiento, Bectra and Bagual, as well as pes- corn and wheat would be eliminated, the competitors will mean we can double our ticides, insecticides, and fungicides in emulsion concentrate, SC port was already discounting freight pric- turnover. We are now reliant on the gov- and powder formulations. We also maintain some contract manu- es, highlighting the speed with which the ernment to improve the energy matrix and facturing work for companies such as Sumitagro and FMC Cor- agricultural industry moves in this country. road infrastructure in this country, as with- poration. One of our main fungicide products is Janfry Xtra, an ” In terms of specific crops, we can expect out this it will be very hard for industry to SC product, while our main insecticides are Comba Xtra, Vento wheat acreage to grow by 1.4 million hect- flourish. ▬ and Fast Ultra.

Could you tell us more about your product portfolio and any Jose flagship products, as well as how you can tailor these products Miguel for use in Argentina? Manufacturing our own products had made up 50% of our op- Mrejen erations but, as we have focused on our distribution services for Morley clients such as Arysta LifeScience and FMC Corporation in recent years, this has decreased to around one-third of the business. We avoid selling glyphosate, meaning sales of the commodity ac- Commercial Director count for only around 5% of our turnover. We strive to provide President INSUAGRO technical product support and focus on niche products with high AGROSERVICIOS margins and therefore high profitability. InsuAgro always looks PAMPEANOS for product differentiators; if we are not producing a chemical with our own active ingredient, then it will be our own formulation. Do you have a final message about the future of the agricultural industry in Argentina and InsuAgro’s role within it? Agroservicios Pampeanos (ASP) began ASP works with Aapresid and Fertilizar It is InsuAgro’s aim to be a leading agrochemical exporter. De- in Argentina in 1995. Could you provide on research and development (R&D) op- spite current low commodity prices, the agrochemical industry us with an overview of the company’s portunities for fertilizers. Could you tell here has huge potential. It is a very dynamic part of the Argentine development over the past two decades us more about the importance of innova- economy and, as suppliers, we will undoubtedly be sharing the and tell us about any major milestones, tion in this area and the effect the Soil Im- prosperity. The only challenge we may face is the potential for such as your acquisitions of UAP and a provement Law will have on the market? foreign players to leverage the low commodity price period and division of DuPont? We come from a strong technical position. enter the market, which may cause interference in distribution. ASP, as part of Canada-based Agrium, Our R&D focuses on providing strong, However, InsuAgro remains a small enough company to be an was attracted by Argentina’s free market- technically sound services to our custom- agile player and quickly adapt to changes. We will continue to oriented policies, coupled with incentives ers. ASP has a strong presence in most im- deliver high quality products and look after the environment. We for foreign investors that were in place at portant agricultural areas, with agronomists foresee a good period of growth ahead across all crop areas we 74 the time. Agrium followed up the establish- who work with our suppliers on running Considering the recent change in govern- InsuAgro was founded almost 15 years ago. Could you tell us supply to, which should improve our revenue stream. ▬ 75 ment of ASP with investment in the Profer- trials with farmers. Our services and sales ment and President Macri’s public dec- more about the company’s history and any major milestones til urea facility, which is now a joint venture are based on technical recommendations. larations of support for the agricultural over the last decade and a half? with YPF. ASP started with four farm cen- ASP is known for providing innovation and industry, what can we expect to see in Having previously worked at Japan-headquartered Ishihara be- ters along the railways, which we thought technology, for example in our introduction future? fore it exited Argentina following the 2001 crisis, we gathered was an excellent way to transport fertilizers of logistics for fertilizers in bulk. We are The new government has solved problems the qualified human capital left behind, together with the contacts to plants; however, Argentina’s railways also launching a satellite precision mobile from the past and generated a positive en- we had made, to launch InsuAgro. Luckily, clients were willing have not received investment since then application (Echelon), which supports farm- vironment for future production. The Soil to support us in this endeavour and it was a success. We began and therefore the proximity to the railways ers with imagery and guidance on variable Conservation bill currently making its way to distribute products for FMC Brazil in 2004, as well as import- is no longer significant. In 1997, we added rate applications, complemented by a team through Congress is a step in the right di- ing from our suppliers and working with international companies 14 farm centers as green field sites, which of professionals. rection. If we want our children and grand- from India, China and Europe. were established in a similar manner to our Could you tell us about your work in children to enjoy the merits of good soil, we While we are a small company compared with multinational play- Crop Production Services (CPS) facilities promoting the safe use of crop protection need to increase our use of fertilizers. I be- ers, we are bigger than many small commodity producers in the in the United States. CPS is now our domi- products and the importance of educat- lieve there will be challenges in the future, domestic market. We are one of the few independent distributors nant brand in North America. ing the public in these areas? but with the change in government we will in Argentina able to work without having to report to bureaucratic In 2001, the Argentine crisis occurred, The opportunity to promote best practices see positive changes soon. headquarters. This facilitates our work with clients and we have which led to the collapse of many markets. I and to educate local populations is present The big questions now surround Argentina’s fantastic customer loyalty. InsuAgro has an experienced sales joined the company three years later, when in our activity with suppliers, and is some- fiscal deficit, along with inflation levels. team with strong expertise in the sector. We have seen high rates the decision was made to revive the Ar- thing we are actively pursuing. We have a The government is attempting to solve this of growth and were therefore able to join the Buenos Aires stock gentine business. We closed our operations strong distribution network across the coun- problem whilst protecting the weakest seg- exchange in 2006 as another way of raising working capital. in Bolivia but continued with our Chilean try, which provides a strong foundation but ments of society. One in three Argentines business. We then acquired the retail facili- needs to be capitalized on further. ASP hosts are below the poverty line and it is chal- How has the opening up of the Argentine economy affected ties of DuPont, which included a chemical safety days, which involve opening up our lenging to take action while also protecting your role as an importer of agrochemical products? formulating center in Santa Fe. Today, we farm centers to children from local schools this segment. We need to recover credibility Argentina constantly experiences changes on the import scene. have 43 farm centers in Argentina and have to learn about aspects of safety in a rural en- from the international community, which is After the 2001 crisis, the number of distributors decreased due to grown our green field farm centers. ASP vironment. We also invite the fire brigade to a challenge for Argentina as we need for- the challenging environment; now, Argentina’s new openness has grew steadily until 2011, which is when demonstrate how to operate fire extinguish- eign investment going forward. The current enabled more suppliers, mainly from China and India, to enter foreign investment in Argentina declined. ers, for example. Furthermore, levels of cabinet is one of the strongest Argentina has the market. Our approach is more traditional, and is based on cli- We acquired a Brazil-based blending facil- road accidents in Argentina are particularly seen, containing qualified professionals in ent loyalty and focused on high-value and high-quality products. ity in 2012 and have been operating it ever high and we also focus on promoting and the financial arena, so we are optimistic for Having said that, we do work with trustworthy suppliers from since. emphasizing road safety. the future. ▬ both China and India.

less effective as weeds are developing a resistance to the product, so we are looking into solutions provided by systemic and residu- with low chemical charge. This is however just the beginning; Argen- al treatments. This is also leading us to return to older compounds Pablo tina and the whole region is still far from other more developed coun- Fernando for creating new molecules and formulations, mainly in herbi- tries and we still have a long way to go. We believe Argentina and cides, which have a 65% market share. Because of Argentina’s Raimondo South America will play key roles as food producers. Our challenge is Lespiau no-till system, farmers consume herbicides year round. Insecti- to provide the market with well-balanced and effective products help- cides and fungicides, on the other hand, are seasonal products and ing the farmers in the adoption of new technologies. account for $300 million and $250 million of the overall market respectively. Due to Argentina’s temperate climate, only around Brometan is moving towards a portfolio of more sustainable prod- General Manager half of the soybean planting areas require fungicide, for example. ucts. How receptive are Argentine farmers to these? BROMETAN We are trying to work on solutions that not only target resistance There is not a real consciousness of healthier foods among our local Commercial Director but also avoid the development of new resistance across the fun- consumers and there is not a clear legislation concerning fresh food UPL ARGENTINA gicide, insecticide and herbicide markets. production. For domestic consumption, quality is low and chemical UPL is also one of the world leaders in post-harvest protection usage is higher. For external demand, buyers establish the rules and and distributes DECCO products in Argentina. Our share of the production uses greener and gentler chemicals. Our portfolio is in- $10 million post-harvest grain market is around 50%, while in tended to manage the bridge between current usage trends and the re- fruit and vegetables our share reaches 80%. quirements of the future.

How can the industry promote best practice in terms of appli- What are your expectations for the future of Brometan and its cation of agrochemicals on the one hand, and high production growth in the market? levels on the other? We strongly believe Brometan is in the right place at the right time. Although everyone in the industry is trying to promote best prac- Could you provide us with an overview of Brometan from its South America, and particularly Argentina, are intending to be global tice, there are two issues unique to Argentina which make this founding in 1976 to the present day, including any recent major providers of good quality, fresh products for the global market. As difficult. The first is that more than 50% of the area is planted milestones? soon as the export industry picks up, growers will be able to look at on rented land, which leads to a focus on production and profit Brometan was founded almost 40 years ago and currently operates in the different options available. Many growers focused on exports are rather than environmental stewardship. Argentina requires some Argentina and Uruguay, with an ambitious vision to be a regional com- highly adaptable and interested in introducing new technologies to in- new legislation on how to properly manage rented fields, which pany. New management was put in place a decade ago, and the com- crease yield and quality, and many new international companies will 76 will improve the sustainability of our farmland. The second issue pany’s strategic focus was moved to providing sustainable solutions participate in these business opportunities. ▬ 77 is that many labourers are contracted by third parties, both for for high-value crops. We improved our nutritional portfolio with bio- spraying and harvesting. Companies and the government should stimulant and specialist fertilizers, and Brometan is the only company work together to develop training programs to ensure high quality in Argentina working on pollination and biological controls. Our mar- agrochemical application across the board. keting is crop-oriented and we distribute our products across the coun- Unlike glyphosate, which is systemic, contact herbicides require try, using five strategically located warehouses to supply the market. greater skill and capability from the sprayer. Poor application The company works via push-and-pull programs; we have a sales Could you provide us with background to UPL’s presence in practices that may have worked for glyphosate, such as spraying force of ten sales consultants complemented by a team of 17 agrono- Argentina and the importance of Latin America to the com- in high winds, will therefore not provide effective crop control. mists working in the field with local growers and technicians, coming pany’s corporate strategy? We try to promote application quality through workshops with up with new technologies. Our main warehouse and administration UPL started its Latin American operations 10 years ago, initially our distribution network, while Aapresid also holds relevant offices are located in Buenos Aires. Brometan’s vision is to find and in Argentina and Mexico. Today, the region is UPL’s largest, ac- workshops. develop sustainable solutions for high-value crops. In this way, we can counting for 27% of total sales. We have since opened offices be perceived as the best commercial option for international compa- in Costa Rica, Colombia and Brazil, and have three production What can we expect for the future of the agricultural industry nies on their way to initiate and establish new business in our country. facilities in the region in the latter two countries and Argentina. in Argentina? In 2005, UPL acquired Reposo, followed by Icona two years later. Many products will be going off patent in 2017, which will lead Brometan began working with Belgian company Biobest in 2012. Reposo’s production facility is located 80 kilometers (km) from to a natural increase in the size of the market. There are also no Could you tell us more about this collaboration? Buenos Aires, while Icona has two facilities, one in Buenos Ai- blockbuster products in the pipelines of the big R&D companies. Together with Biobest, Brometan has developed a new breeding pro- res and one in San Luis province. The two companies merged The key issue is market access and only those companies with gram to produce an indigenous bumblebee species for pollination. in 2007 and became Icona, in line with UPL’s corporate strat- access to consumers will survive, so we are likely to see more Until now, no local species have been successfully bred in confine- egy of becoming a multinational company, before re-branding to consolidation within the industry. ment. The advantage of bio-pollination against manual or chemical UPL Argentina. The company is also moving away from contract Argentina also needs to improve its transport logistics. At pres- pollination is the increased yield and the quality of the fruit. This na- manufacturing, as was the business model followed by Reposo ent, 100% of grain production is moved by truck, but we need to tive bumblebee enables us to introduce our product not only in the and Icona, to a portfolio which offers customers added-value utilise our railways and rivers. Argentine market, but also in the rest of South America. Legislation products. prevents the introduction of a non-native or exotic species, which is Looking ahead, what are UPL’s plans for future growth? why we focused our efforts on developing local species widespread Could you tell us more about the transition process taking Our target is to double our business on both a global and regional throughout the region. place within UPL Argentina’s product portfolio? level in the next four years. We have been working on develop- UPL Argentina is reducing its dependency on glyphosate-related ing and registering new product solutions and we are now taking Could you tell us more about Brometan’s product portfolio? products, which currently account for $800 million of the $2.5 these products to market. UPL wants to increase its revenue and Over the last ten years, we have successfully included a wide range of billion crop protection product market. The chemical is becoming will focus on this rather than expanding its market share. ▬ specialty products into our portfolio, contributing to a healthier planet

our working practices. We decided to increase our facilities to Javier de la Rua & JR: Country Manager Fabian manufacture a compatible family of products. First we created a ROTAM ARGENTINA separate, re-sized facility for insecticides, followed by growing JCPS: Business Development Manager Gomila the capacity of our warehouses to store these products. We now Jadyr Carlos Piva ROTAM LATIN AMERICA have separate facilities for each market and can, in some cases, SOUTH offer our clients dedicated warehousing space when required. Clients choose Reopen because we are their one-stop shop: we de Sousa do everything, from manufacturing to packaging, and have good Vice President cross-contamination prevention protocols. In 2014, we achieved REOPEN S.A. Bureau Veritas ISO 9001 certification for our facilities after almost two years of hard work.

Could you tell us more about Rotam’s have global solutions, and all companies Could you tell us how you ensure worker safety when working product mix and any new products in realize this is the best route to success. As with hazardous chemicals? the pipeline? part of this aim, we are establishing a foun- We provide personal protective equipment to all of our employees JR: We have many effective herbicides dation with Dow Argentina and Rizobacter and are working on improving our production facilities through- and fungicides in the pipeline that we be- with the objective of working with the state out the site, in particular the areas of suction, charging and load- lieve will be the future for the market. Our on all issues related to the packaging and ing systems. We are also building a new fire suppression system, azoxystrobin supply comes from Syngenta, re-use of agrochemical bottles. When ag- which was an expensive investment in terms of both capital and while we have good deals in place with rochemicals are properly applied and con- installation time. All of our procedures have specific safety rec- China for raw materials. Our products, tainers are disposed of correctly, there is no ommendations and methodologies to control the risk of toxic or which are more complex than glyphosate problem; however, when the correct proce- high-risk intermediates. and 2,4-D, will add more value to end us- dures are not followed, toxic material can JR ers. leech out into the environment and pose a Reopen is celebrating its 35th anniversary this year. Could How do industry associations such as CIAFA work for the JCPS: Glyphosate is a commodity prod- danger to human health. you provide us with an overview of Reopen since its founding benefit of their members? uct and it is therefore very difficult to do in 1981 to the present day? CIAFA provides us and other companies with representation in 78 something different with it; all that is re- What effect has the new government had My father founded the company to manufacture household prod- front of government bodies, as well as protection for the Argen- 79 quired is volume and price, and this is not on the agricultural industry in Argentina ucts and to provide contract manufacturing services. We then tine industry. With its knowledge of the industry, CIAFA is able Could you provide an overview of Rotam Rotam’s business model. Our focus is on so far? began to offer other services such as mosquito coils and mats, to lobby for measures such as importation taxes to protect our on a global level and its operations in Ar- specialty agrochemicals that provide real JR: The changes that have already been and liquid and powder insecticides, before moving into the ag- products against cheaper imports. gentina since 2005? added-value in areas of increasing impor- made have been very positive; we now rochemical market in the 1990s. Our chemists travelled to Osa- JR: Founded by the Lu family, Rotam has tance, such as glyphosate-resistant weeds. have greater access to ministers, which ka, Japan for R&D training and subsequently worked to adapt Looking to the future, what can we expect for Reopen in the been operational worldwide for more than Our research and development infrastruc- improves their understanding of our in- Japanese formulas for the Argentine market. This sometimes in- short term? 50 years. They were initially in pharma- ture, comprising laboratories, synthetic dustry when making policy decisions. We volved replacing compounds with analogous chemical products We believe we are well prepared for the future. Although con- ceuticals, before seeing the opportunity chemistry, molecular analysis, purification also believe this government will be easier more readily available in Argentina. In 1992, we began to for- ditions for agricultural producers are good at the moment, they to move into the agrochemical industry. and formulation development, is located in to predict in areas such as importing. The mulate small quantities of agrochemicals for Japan-based Sumi- are cautious about future investments. The agrochemicals re- Around two decades ago, they decided to China. This enables us to premix a number clear messages we are receiving from the tomo Corporation; Argentina was a pilot country for the company quirements increase every year and we are constantly looking for expand their China-based business into dif- of active compounds in the same formula- government have improved our planning and we grew with it as it increased its market share. Although we improvements, such as investment in modern technologies and ferent locations worldwide, and now Ro- tion, allowing for one multifunctional prod- abilities; we have clearer goals for the fu- initially formulated emulsion concentrate products, insecticides equipment in order to satisfy market demand. We regularly work tam has operations in more than 60 coun- uct for the end user. We are currently work- ture and are positive about the future poten- and herbicides, we then incorporated suspension concentrate (SC) with our clients to establish an annual plan and keep updating it tries. These are mainly in Brazil, Argentina, ing on a formulation project incorporating tial of Argentina’s agrochemical industry. products into our portfolio, creating new facilities for these for- considering the demand forecast, which will enable us to remain Colombia, and the United States, as well as four active compounds for our Argentine Where we see the greatest risk to business mulations in 1993. Around the same time, we went into business a key competitor into the future. ▬ some African and Asian countries. Rotam’s and Brazilian markets, and it is this type is the aggressive pricing policies of our with another Japanese company called Ando, which specializes in headquarters remain in Hong Kong, while of technology we believe has a long-term, competitors. agrochemicals for fruit and vegetables. In 1995, we started work- the main manufacturing site is near Shang- promising future. ing with Dow Agrosciences, producing a powder product based hai. Looking ahead, what can we expect for on chlorpyrifos. We also work with BASF and BAYER, out of a Rotam entered the Argentine market just How important are associations such as Rotam Argentina in future? total of 10 main clients. over ten years ago with insecticide prod- CASAFE to the agrochemical industry JR: Our aim is to have the right product for In 1998, we bought our eight-hectare site and started to build our ucts, before acquiring registrations in fun- and in what ways does the company pro- the farmer at the right time and to provide current plant, including warehouses, offices and clean rooms. gicides and herbicides. Today, Rotam Ar- mote best practice? effective logistics and financial tools for Production and development for glyphosate facilities began in gentina generates more than $20 million in JR: We know it is our responsibility to each client. We are here for the long term 2000. Since that time, we have added 18 new buildings to the site. turnover annually, with an expectation of at reach the end user, and the most effect way and wish to develop good customer interac- least 20% growth per year in the coming for us to do this is to provide adequate edu- tions. Furthermore, while many companies Why do companies choose Reopen as their contract manufac- years. However, we are not focused solely cation in product application. We are also were reducing their staff numbers in 2015, turer in Argentina? on growth; our long-term goal is to devel- conscious of our social responsibility and Rotam hired three new employees. With We aim to have a good relationship with our clients. We have an op our network with farmers and our more this is where our membership of CASAFE our new products, we believe we can grow Open Door policy, which means that they can visit the plant any- than 300 distributors. comes in. The idea is to work together to our business by more than 20% in 2016. ▬ time to control the production, take inventory, or simply observe

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations GBR • Industry Explorations • ARGENTINA PETROCHEMICALS AND CHEMICALS 2016

SERVICES AND TECHNOLOGY

"The main change in the coming years will be the clean fuel regulations, which will mostly affect the refinery sector. These will be a game-changer, with the demand of hydrogen for refineries increasing significantly. Hydrogen is also crucial for improving the quality of fuels. Future regulations requiring the reduction of fuel sulfur content will certainly require hydrogen, which is at the heart of these purification processes."

- Gonzalo Ramón, Managing Director Argentina & Uruguay, Air Liquide Image: Odebrecht EDITORIAL Global Business Reports Global Business Reports EDITORIAL

The only way is up: Argentina’s EPC Infrastructure challenges Odebrecht is confirmed for a $200 million project from the province of Córdoba to ex- providers give their view According to APLA executive director pand its pipeline system, but is awaiting a Manuel Diaz, one of Argentina’s biggest further $300m in contracts across the coun- challenges is infrastructure investment, try. Rival firm Techint is currently working while IPA’s president Ignacio Millan be- on one section of the north-eastern natural By Harriet Bailey lieves the country’s railways, ports and gas pipeline, but says further expansion storage capacity should be the focus of the of the network into Misiones province, Macri administration. The long-awaited on the border with Brazil, is likely to be expansion of the Panama Canal, in order suspended. In terms of industrial gas pipe- to increase capacity for the new generation lines, the firm looks to the upstream sec- of super tankers, has seen modernization tor to provide answers: “We are analyzing plans given the green light in port towns perspectives on how much gas is going to along the U.S. Gulf Coast; Argentina, be available in order to evaluate what sort meanwhile, has delayed new investment of capacity needs to be developed,” said into its ports due to economic uncertainty Gabriel Rubacha, commercial manager for and a weak oil and gas industry. Techint’s southern cone operations. “If the Argentina boasts the second-longest river Bahía Blanca petrochemical complex sees in South America after the Amazon; at expansion, there may be a need to have an 4,880 km, the Paraná River connects the additional pipeline to transport gas from 82 Service providers in Argentina, which may and maintenance services. The last few chemical-producing ports of Zárate and Neuquén to Bahía Blanca.” 83 have worked on large-scale petrochemical fallow years in Argentina’s petrochemi- Campana with the Atlantic Ocean, but is Infrastructure questions then will be ad- plant projects in previous years, have seen cal industry have enabled AESA to build so far an under-utilised resource. Carbo- dressed only if the requirement is in place. limited activity from the sector during the on its experience on some of the country’s clor, the main isopropyl alcohol manufac- Despite the need for more raw materials last decade. However, potential reductions largest projects, such as in Bahía Blanca turer in Latin America, is located on the in Argentina, a lack of foreign investment in one market are usually balanced out by or on YPF’s La Plata refinery, as well as shores of the Paraná and has a 300 me- and limited dollars in the bank have kept growth in other areas, and it is testament to on more recent projects across the South ter dock port to receive offshore vessels. plans for new refineries and petrochemical their flexibility that they have been able to American region, to ensure it remains at “Carboclor’s proximity to a deep river like plants off the table. Low international oil maintain strong growth in what has been the forefront of refining and petrochemi- the Paraná River would allow the company prices have also stifled appetite for growth: a challenging time for many of their key cals service provision. “In order to be able to transport more volumes at lower costs,” “In terms of building a new petrochemical clients. to work on such big projects, we have had said general manager Alfredo Fernandez. plant in Argentina, the starting point will However, the recent hydrocarbon discov- to develop a strong engineering depart- “The increase of waterway transportation be the normalization of international oil eries in Vaca Muerta, YPF’s aim to lead ment over the last seven years, rather than would also significantly reduce freight prices,” commented Odebrecht’s business Argentina to energy self-sufficiency and relying on the knowledge of other engi- costs.” development director Pablo Brottier. “The a new openness to foreign investment sig- neering companies,” stated Mascheroni. However, it is not just port infrastructure earliest we could see a new world-class nal the potential for a significant ramping “We also developed our knowledge and that is lacking. According to EPC firm plant come online in Argentina – if the oil up of production. With feedstock supplies experience in construction as the complex- Odebrecht, its discussions with the Cham- prices start to recover this year – would be ensured until at least 2050, engineer- ity of our projects increased, for example ber of Construction and other develop- 2023.” ing, procurement and construction (EPC) in the middle of the jungle in Peru and near ment organizations indicate the previous Techint, however, takes a different view: companies will again be in high demand the Rio Grande in Bolivia.” government built up a $6 billion backlog “Companies will look at the big picture from both up- and downstream players. One way in which AESA has changed its in infrastructure investment. As well as and make decisions based on their long- “As petrochemical investment comes into methods to align with the current challeng- spending money on modernizing the ports, term strategies. We will probably see some the country, particularly from players such es facing EPC companies is to implement the nation’s domestic and industrial gas activity in this regard in late 2016,” said as Dow and YPF, AESA can be very sup- project modularization. This has enabled pipeline network could also do with an Rubacha. portive of EPC projects,” claimed general AESA to reduce its workers’ exposure to update. “It is good, but not good enough,” Despite the uncertainty surrounding the manager Adrian Mascheroni. risk, as well as improve project completion said APLA’s Diaz. “It is very easy to add issue, Argentina’s EPC firms are adamant AESA is YPF’s EPC service provider; times: “In the La Plata project, for exam- new production to our existing infrastruc- that they are ready for the next wave of ex- with more than 65 years of experience ple, we were able to go from construction ture but we need to improve the capacity pansions and new builds, using the experi- operating in the energy industry, it cov- to execution without any corrections to the of these pipelines to accommodate the in- ence they have built up in other sectors and ers four main business lines: engineering, model, which is normally very difficult to creased production of natural gas that we jurisdictions over the past decade. ▬ manufacturing, construction and operation achieve,” continued Mascheroni. will see in this country.” Image: Odfjell Terminals TAGSA

Could you provide us with an overview standards are probably above our competi- of Techint Engineering and Construc- tors, but we believe it is worth maintaining Could you provide us with an overview pre-commission and testing phase. This tion’s operations in Argentina? as one of our key principles. As a company, of AESA’s work with the petrochemicals should enable us to bring this project in on Even though worldwide we are better we are chosen for projects because of the industry and the various projects the time and will be a great accomplishment known for pipelines, Techint built most of added value we can bring, and not just be- company has worked on? for both AESA and YPF. It should also the big petrochemical complexes here in cause we are more competitive. In terms of We managed some petrochemicals projects open doors for us in terms of working with Argentina; we have a strong background in the environment, we believe having a clean around 15 years ago but, over the last de- other companies in the refining and petro- the petrochemical sector, as well as oil & site is not only environmentally sound, but cade, our main focus has been on refineries chemicals sectors. gas, refining and other markets. We worked will also be safer. and gas projects. As petrochemical invest- on all YPF’s refineries and recently on two ment comes into the country, particularly What role will AESA play in YPF’s pet- of the expansions of Axion’s refinery in What is the situation like for qualified from players such as Dow and YPF, AESA rochemicals strategy to increase home- Campana, when it was still managed by personnel in the EPC industry and does can be very supportive of EPC projects. grown production? Exxon. In 2014, we were awarded a con- Techint have any initiatives in place to Our first petrochemicals project was a As we are a contractor in the market, our tract for another project at the La Plata re- promote jobs in the sector? small refinery in Bahia Blanca. We have main contribution will be as part of the finery, but this has since been suspended. Today we have a good balance of young increased our capabilities since that time, construction contractors in partnership We are establishing a base in Neuquén and qualified personnel. However, if large enabling us to work on projects such as with other players on this EPC project. province in order to provide services for oil projects in the Vaca Muerta region go YPF’s La Teja refinery in Montevideo, There are fewer key players at the moment companies there. ahead simultaneously, or the mining sector Uruguay and its La Plata refinery in -Ar with the exit of Skanska, which is good for Although there are many construction com- rebounds, we will start to see a bottleneck gentina. us, but poor for the country as it reduces panies which have experience in executing in terms of staffing. This means we have to Adrian competition. The main challenge for the Gabriel projects, we are probably the only remain- compete on salaries. Could you tell us more about the cur- future is to develop construction compa- ing engineering, procurement and construc- Techint has a summer internship program rent coke project you are working on nies that are able to implement these com- Mascheroni Rubacha tion (EPC) company in Argentina able to for students in their final year of univer- and how the successful completion of plex projects. ▬ execute a major EPC project. sity, which can lead to a permanent posi- this project will affect AESA’s outlook tion with us in the future. We also have in Argentina? General Manager Could you tell us about some of the proj- our young professionals training program, There will be three main phases of this ects Techint has worked on, telling us whereby our new hires are sent to work in AESA (PETROCHEMICALS) project: running hydraulic testing of the 84 why you were awarded the contract? all areas of the business to gain experience. 85 pipelines, isolating the pipelines and the We teamed up with Snamprogetti on build- Most of the senior management personnel Commercial Director Southern Cone ing the Profertil urea and ammonia plant, in the company have been trained on this TECHINT ENGINEERING a lump-sum turnkey project which was at program. AND CONSTRUCTION that time the largest single facility of its type ever built. For these types of projects, What is your outlook for the future of the clients typically look for certain differen- petrochemical industry in Argentina? tiating technologies, processes or licenses I believe a key component for future proj- and we had that in our 50/50 joint venture. ects is the international price of oil, al- We believe we provide added value to our though it is not the unique factor that will customers, giving assurance of completing affect investments. Companies will look at “ projects on time and within schedule. We the big picture and make decisions based on are currently building one section of the their long-term strategies. We will probably Even though worldwide we are northeastern natural gas pipeline, which is see some activity in this regard in late 2016. better known for pipelines, Techint the only section close to completion. We built most of the big petrochemical executed this project in time, before the wet Having spent 70 years in Argentina this complexes here in Argentina. season, ensuring we will be able to stick to year, could you perhaps tell us your vi- our original schedule. sion for Techint into the future? We have big expectations for Techint in Ar- Techint has in-depth knowledge of the gentina and aim to return to our position as technical standards, laws and regula- industry leader. Even though we were very tions in the markets you operate in. active in oil and gas and mining during the ” Could you tell us more about the situa- last decade, we have not had as big a mar- tion in Argentina? ket share as we would like here, but we held Techint has been present in Argentina for a strong position in other markets. We be- 70 years, so we have an in-depth knowl- lieve there are opportunities where Techint edge of the working environment here. We can add significant value to upcoming proj- know about the real level of productivity ects, building on our experience from other and can cost our projects accurately. We jurisdictions. We are pushing hard to have a also pride ourselves on our safety culture, greater involvement in this new era for Ar- which we put above all other activities. Our gentina. ▬

Argentina’s chemical technologies, we are on a steady path of Ricardo Vieira & increasingly monitoring our customers’ assets and developing new solutions to their services sector: challenges,” outlined Roman Borruel, GE Pablo Brottier Water and Process Technologies’ southern Seeing new cone regional manager. Green-friendly programs are often a byproduct of new technologies and in- opportunities in creased efficiencies, benefiting both the RV: CEO environment and the company’s balance PB: Business Development Director, sheet. When GE worked on a new cool- Industrial Engineering sustainability RV ing water treatment for YPF’s Complejo ODEBRECHT ARGENTINA Industrial Ensenada project in 2013, it was able to maintain key performance indicators for asset protection while using new By Harriet Bailey molecules without phosphorous, meeting environmental targets in the process. Could you provide us with a brief introduction to The Ode- group we also have Odebrecht Engineering and Odebrecht Defense “At the beginning we were able to deliver brecht Group and Odebrecht’s presence in Argentina? and Technology supporting us in providing the most competitive corrosion rate specs, but at a higher cost. RV: The Odebrecht Group comprises 15 companies and several and efficient solutions. To keep within YPF’s budget, we had to subsidiaries. The company has been present in Argentina for 29 Argentine operations play a key role in the problems via its Productos Quimicos Bol- reduce water and chemical consumption years, initially via our infrastructure division. Our first focus was What are your thoughts on the future viability of a world-scale portfolio of many of the world’s leading land brand, registered in 1998. “Bolland at this site. This was the most interesting highway construction with local partners, before we opened our petrochemical plant in Argentina? service providers, while their capabilities has participated in the oil chemical busi- challenge because it required changing industrial engineering division and contributed to the country’s oil In terms of building a new petrochemical plant in Argentina, the have enabled Argentina’s petrochemical ness since 1979. Over the last two decades, plant water usage habits. Overall, our so- and gas pipeline expansion projects. We work collaboratively and, starting point will be the normalization of international oil prices. and agrochemical companies to be at the our company has achieved a relevant po- lution achieved asset protection, environ- with Braskem’s arrival in 2013, the Odebrecht Group now has a For local shale production, the break-even point is around $50 to forefront of technological advances. Glob- sition in the Argentine market, and today mental targets and economic savings,” 86 growing presence within Argentina. $60 per barrel. The country produces about 520,000 barrels of oil al players such as solution provider Emer- Bolland´s market share is more than 50%,” continued Borruel. 87 per day and 118,000 million m3/d of gas at present, and Odebrecht son and terminal storage company Odfjell stated commercial administration manager Taking its lead from North America and As a key player in Argentina’s infrastructure projects, what is forecasts it will take approximately seven years to double produc- have more than half a century’s worth of Adolfo Sánchez Zinny. Europe, the new administration in Argen- the current state of the country’s public works? tion on a full development scenario. Taking into account the pro- history in Argentina, but the longest-serv- This area of Bolland’s business is also one tina has created a sub-secretary focused on RV: The chamber of construction and other key development or- cess for building a new petrochemical plant, which takes around ing company in this sector by far has to be of its most innovative, developing dif- energy efficiency, as awareness of the ben- ganisations are indicating that the backlog in infrastructure invest- seven years from start to finish, the earliest we could see a new technology specialist Siemens. ferent formulation lines for the treatment efits of environmentally friendly measures ment is $6 billion. This is principally in the areas of energy genera- world-class plant come online in Argentina - if the oil prices start to Active in Argentina since 1908, it works of oil, gas and water specific to each cli- on reducing operational costs becomes ap- tion, transport and logistics. recover this year - would be 2023. with around 50 companies from domesti- ent's’ needs. It has operational bases and parent. Siemens carries out sustainability Within the industry, we still have a backlog of contracted pipe- cally-owned businesses to multinationals research and development laboratories in audits on its own business units to make line projects; we are awaiting $300 million to be confirmed by What projects are you currently engaged with? on new solutions for plant and warehous- close proximity to all the oil and gas pro- savings, and feeds this knowledge into its the clients of gas pipelines and compression stations across the Odebrecht is currently working on the Juan Manuel de Rosas water ing challenges. “Our software covers the duction areas in the country, enabling it to systems. “In terms of where a company country’s gas network. Tax, licensing, the access to gas and the treatment plant, which will serve 1.5 million people. The $1.2 bil- entire lifecycle of a plant, from design to provide up-to-the-minute advances in its can make savings, 70% of energy con- industry’s jurisdiction are some of the main challenges facing the lion project has taken six years to build and we are at 98% comple- automation, and can also simulate pro- technology where they are most needed. sumption is related to motors. By using petrochemical and chemical sectors. January 2016 saw us pre-con- tion in time for the inauguration. cesses and manufacturing. Our solutions “In terms of innovation, the chemical high-efficiency motors, companies can firmed for another $200 million project to build three out of 10 gas Our Del Bicentenario project is a waste treatment plant, inaugurat- are linked with Industry 4.0, a new in- service sector is continuously evolving,” reduce their consumption by 20%,” said pipelines, requested by the provincial government of Córdoba to ed in June 2014 by the ex-President, Cristina Kirchner. Odebrecht dustrial revolution in which all technical continued Zinny, “not only because of the Köckritz. expand their pipeline system. Although medium-sized projects are has recently been awarded a new government project to increase processes will be able to be supported by different needs of mature oil fields, which According to gas supply company Air Liq- important, looking to the future we want to participate in larger treatment capacity by 333 cubic meters per second to be able to a cloud-based network,” explained Alejan- make up the majority of the fields in Ar- uide, new regulations are driving the need infrastructure projects. discharge treated water into La Plata River, which receives 70% dro Alfredo Köckritz, head of the Process gentina, but also due to unconventional for greener alternatives in industry. In turn, of the sewage from the city of Buenos Aires. Once completed, this Industries and Drives and Digital Factory fields such as Vaca Muerta.” companies aim to be ahead of the curve Technologically speaking, can Argentina compete internation- plant will be the second largest in the world. divisions in Argentina. “With our prod- General Electric is a newcomer to the and ensure their clients are using future- ally and what part is Odebrecht playing in bringing the latest The third project is called Soterramiento del Ferrocarril Sarmiento, ucts, services and solutions we can support Argentine market, but clients are proving proof technologies wherever possible. As technology to its projects? an underground railway requested by the public. It will be built our clients’ needs and add value to their eager to implement innovations which can noted by Gonzalo Ramón, managing di- RV: Although Argentina has technology, there is room for a new with a consortium of companies. The line is 70 years old and cross- business.” help to reduce operational costs, increase rector for Argentina & Uruguay, increas- wave of improvements. Odebrecht’s 70-year history and 30-year es the center of the city; with an influx of passengers this can cause Bolland has been providing equipment and efficiency, and adhere to regulatory- re ing legislation will bring opportunities international presence ensures we have access to the latest technol- congestion. We are building an underground tunnel so that the line services to companies across the southern quirements. “The local economy is in a for the market: “The main change in the ogy for all of our projects, which is often the reason why we are will eventually work like the metro. With the latest technology, this cone’s hydrocarbon industry for almost transition period, so companies are seek- coming years will be the clean fuel regula- selected. Although we are able to execute conventional EPC proj- $2.5 billion project will take 56 months to complete. The project 80 years, and is particularly active in the ing new ways to be more productive, and tions, which will mostly affect the refinery ects, if private investors or national and regional governments want was paralyzed due to a lack of financial and political support. How- oil and gas, refining and petrochemical operating their assets by doing more with sector. These will be a game-changer, with to develop and construct a project requiring innovative engineering ever, the new government has made the importance of this develop- industries. Bolland also provides integral less. They are therefore receptive to new the demand of hydrogen for refineries in- solutions, this is where Odebrecht can contribute most. Within the ment clear and we are currently looking for financing. ▬ chemical services solutions to operational products and, in terms of our new digital creasing significantly.” ▬

Adolfo S. Zinny

President BOLLAND

Bolland´s Productos Químicos Bolland was registered in 1998. Could you provide us with an overview of the company´s chemical services segment and how it has developed over the last two decades? Bolland has participated in the oil chemical business since 1979. Over the last two decades, our company has achieved a relevant position in the Argentine market, and today Bolland´s market 88 share is above 50 %. We serve all the oil companies that operate and development laboratory and it also has laboratories in each in Argentina. of the principal oil fields we serve to control our business and the quality of the solutions we apply. As per innovation, the chemical Could you introduce us to your product basket and any flag- service sector is continuously evolving. Not only because of the ship products used in the chemical services sector, such as the different needs of mature oil fields, the majority of the fields in BX 200 Series Biocide System? Argentina, but also due to the non-conventional fields, like Vaca Bolland provides the oil companies with a wide and complete Muerta. range of chemical products. Among them are demulsifiers, fric- tion reducers, corrosion inhibitors, scale inhibitors, biocides, hy- What emphasis is placed on operating sustainably within Ar- drogen sulphide scavengers, oxygen scavengers, scale removers, gentina and what can companies do to be more environmen- paraffin/asphaltene inhibitors, hidrate inhibitors, foamers,- de tally friendly in their operations? foamers, flocculants, dispersants, reverse emulsion breakers, spe- The Argentine oil industry has to recover productivity in order to cific solvents, etc. assure sustainability. To do so, all the industry players (operating companies, oilfield service companies, unions, suppliers, contrac- Why is Bolland the oilfield chemicals service provider of tors, the Government) have to participate in an open discussion choice, and will the company remain in this position now that to define a program approved by consensus to improve operating import restrictions have been lifted? efficiency. Nowadays, the environment is also a key issue for the We have a thorough understanding of our customers’ needs. And industry and Bolland is particularly committed to developing its we are very committed to developing “tailor-made” solutions for activities taking into account all the environment regulations set their particular technical situations. Bolland does not only pro- forth by the Argentine Government. vide chemical products, but it also applies those products in the oil field. So, we are 100 % responsible for the results of our ser- With the new government in Argentina and an opening up of vice. Import restrictions have not impacted on our business and the market, what do you expect for Argentina´s petrochemical we believe that nothing of the sort will happen now that these industry in the medium term and how will Bolland continue restrictions are lifted. to play a role in it? Bolland’s competitors in the petrochemical business are all inter- Could you tell us more about Bolland´s research and devel- national companies. And almost all the leaders are operating in opment laboratory and the importance of innovation in the Argentina. So, we do not expect that big changes will take place chemical services sector? due to the new rules of the game. In our opinion, laboratories are a key issue for the development We are optimistic about the future of the industry and the future and control of our chemical business. Bolland has a main research of Bolland. ▬

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports INTERVIEW Global Business Reports Global Business Reports INTERVIEW

Odfjell inaugurated the Campana terminal chemicals would not necessarily adversely Marcelo in 1998. The Campana terminal started affect the company. Even if Argentine pro- with 42 tanks and now has 102. ducers substitute the import of certain spe- Can you provide an overview of Emer- Argentina faces similar opportunities to Many of the goods that pass through cialty chemicals, those chemicals might son Process Management in Argentina the United States. Agrochemicals are also Pedriel Odfjell’s terminals relate to the petro- still need certain raw materials imported. and the services and products it pro- a key part of our businesses in Argentina chemical, chemical, and fuel activities Moreover, Argentina will continue import- vides client companies? and Brazil, and could be easily furthered in the Buenos Aires – Rosario industrial ing certain chemicals for some time. For Emerson is a manufacturing company that by shale gas. In the plastics area, ethane belt, where clients in these industries need example, Argentina does not have the nec- provides industry solutions, within which crackers and polypropylene are an inter- Commercial Manager proper installations to receive their im- essary scale to build monomer plants (raw Emerson Process Management provides esting area that we have been involved ODFJELL TERMINALS ported goods. material for plastics) whereas Brazil does. automation solutions to the process indus- with for many years. TAGSA Odfjell has served the petrochemical and The greatest risk for Odfjell in Argentina is tries. I lead an industry solution group for chemical industry in Argentina for the last a general slowdown in the chemical indus- oil refineries and petrochemicals, provid- What are customers looking for from 50 years and has served the main multi- try for both imports and exports. ing solutions to improve availability, re- Emerson and how can you provide them national chemical, petrochemical, and oil liability and operations, for example by with tailored services? companies. Services provided to the petro- How do the goods received in Dock Sud reducing energy consumption with more In many cases, we start our work with cus- chemical and chemical industry constitute and Campana differ? flexible operations. tomers by reviewing their top initiatives about 65% of the company’s revenue in Before 2012, Odfjell serviced the same We have seen the trends for clean fuels and how technologies will enable their Argentina. goods in both Dock Sud and Campana. Af- and reduced emissions globally from a goals. From this point, we derive a matrix ter 2012, the Dock Sud terminal almost ex- Marcelo regulatory compliance point of view, and of short-term projects that will have an im- What is the relationship between Odfjell clusively serviced clean petroleum prod- work with customers all around the world pact in less than a year, and develop a set SE, the Odfjell Terminals South Ameri- ucts (CPP) such as diesel, gasoline, and towards achieving regulatory compliance of intermediate and longer-term projects ca, and Odfjell Terminals Tagsa S.A.? other fuels after Buenos Aires Province Carugo in the most cost-effective way. Our efforts that will have more impact but will also re- Odfjell Terminals Tagsa S.A. (OT Tagsa) banned the storage of non-CPP products. are directed towards reduced carbon di- quire more time and investment. is part of the Odfjell Terminals South Odfjell is now talking with the Dock Sud oxide emissions and continuous monitor- America. Odfjell SE and the South Ameri- Port Authority to allow storage of products ing of emissions in line with regulatory What are some of the latest technologies can Group are separate entities. Odfjell SE other than CPP. In Campana, Odfjell can compliance. With Project Certainty, our Emerson has implemented or has in the 90 started operating in the early 20th Century currently receive any product, which must tools, technology and early engagement pipeline? 91 and is now traded on the Oslo Stock Ex- often be transported 70 km back to Buenos have enabled projects to achieve up to a Over the years, our new sensor technolo- change; the South American Group began Aires City. Director Global Refining 20% reduction in cost without impacting gies and the possibility of wireless de- its activities in 1969 when the Dock Sud EMERSON PROCESS on schedules. ployment of these technologies online has terminal was inaugurated and is now pri- Does Odfjell plan to expand its storage MANAGEMENT Another industry trend in the downstream created more cost-effective solutions for vately owned and operated by the Odfjell capacity in Argentina? industries is the integration of capital proj- our clients. Although sensor prices have family with headquarters in São Paulo. Like many Argentine companies, Odfjell ects during turnarounds. We have seen reduced, their functionality has increased The South American Group owns com- has delayed new investments aimed at ex- petrochemical plants increase their turn- with improved data and analytics. Im- panies in four South American countries. panding the company’s storage capacity as around budget for capital projects by be- proved software is also enabling the pro- Each country has its own company man- a result of capital controls. Odfjell’s last tween 10% and 50%, in order to increase vision of meaningful data and analytics to agement, yet operate under the Odfjell expansion was in 2013, which raised the reliability or operational efficiencies, and companies. This changes the game from Can you provide some historical back- Terminals brand name. The four country- company’s number of tanks to more than “ without increasing turnaround time. Al- waiting for failure to occur to being able to ground about Odfjell Terminals in Ar- specific companies are Tagsa in - Argen 200. However, OT Tagsa’s shareholders though leading companies have been able predict what will happen and taking pre- gentina? tina, Terquim in Chile, Granel Química in regard Argentina with optimism in antici- We have strong hopes for Argentina to leverage the integration of capital with ventive action. Odfjell inaugurated the Dock Sud terminal Brazil, and Depósitos Químicos Mineros pation of positive reform. in terms of both chemicals turnaround time successfully, other com- in 1969, the company’s first in Argentina. in Peru. Though Odfjell SE is a separate OT Tagsa is particularly interested in the and refining and plan to make panies are not managing this as effectively. Does Emerson Process Management From Argentina, Odfjell spread through- group, the terminals of the South Ameri- increased activity generated by the devel- investments in both areas. have a final message for our readership? out other terminals in South America and can Group are associated terminals. opment of Vaca Muerta and unconvention- How important is Argentina to Em- The future for Emerson is bright and we then to the world. Odfjell’s Dock Sud ter- al hydrocarbon resources. Increased hy- erson’s global strategy, and how sig- have had a strong presence in Argentina minal started with eight tanks and now has Marcos Sabelli, YPF’s chemical execu- drocarbon production could require more nificant is the chemicals segment to the since 1960. Given that the shale reservoirs 101 tanks. tive manager, has outlined a vision for capacity to transport, store, and export the company? have opened up opportunities for Argen- In the mid-1990s, the Campana - Zárate an Argentine petrochemical industry extracted resources; it will also require the We have strong hopes for Argentina in tina, this will hopefully lead to investment industrial area began to rapidly develop. that relies less on petrochemical im- construction of another refinery, which ” terms of both chemicals and refining and because this is what Argentina has been Given this industrial development, Odfjell ports, particularly those of specialty would require CPP-related services. plan to make investments in both areas. lacking in the past. The strategies we are identified the necessity within the market chemicals. Does this vision pose a risk OT Tagsa tends to expand its capacity in Argentina has been suffering due to not running globally today are helping cus- for a new terminal in Campana, which is or an opportunity for Odfjell? anticipation of increased future demand. being self-sufficient in the oil and gas tomers achieve flexibility and leadership 70 kilometers (km) north of Buenos Ai- Though Odfjell provides services for Ar- Once the company perceives sustained segment and having to rely on imports to positions in their industries whilst main- res City. While the Dock Sud terminal is gentine exporters, the company special- growth in the petrochemical and chemical satisfy public and industry demand. The taining regulatory compliance. The com- established on land belonging to Buenos izes in handling imported chemical goods. industry, Odfjell will make the necessary advent of shale gas has opened up many bined factors of conducting projects on Aires Province, the Campana terminal is Higher volumes of imports certainly ben- investments to accompany that growth opportunities for the chemical environ- time and within budget will be extremely established on land belonging to Odfjell. efit Odfjell, yet fewer imports of specialty with new tanks. ▬ ment in Argentina. Given current pricing, helpful to Argentine customers. ▬

Eduardo Pavani & Could you provide us with a brief over- a day, seven days a week. We have been view of the company’s operations in Ar- committed to our clients for the last 108 Roman Borruel gentina and any recent key milestones? years in Argentina and will support them Siemens has been in Argentina since 1908, at any time. Furthermore, Siemens can also which is a particularly long time compared be of assistance in creating new machines to our competitors. We have a large port- across many industries, such as a solution folio of products and services, as well as for sowing soya in the agrochemical indus- EP: Regional Executive Latin America expertise and know-how in applications. try. RB: Regional Manager South Cone Siemens can also provide concept engi- GENERAL ELECTRIC WATER & neering, process engineering and process What is your perspective on the provi- PROCESS TECHNOLOGIES EP instrumentation to the oil & gas and pet- sion of technical education in Argen- rochemical industries and we are looking tina and what initiatives does Siemens forward to putting that to good use in the have in place to promote the teaching of expansion plans of the petrochemical clus- STEM subjects? ter in Bahía Blanca. With the knowledge we have in Argentina, we have a position as a benchmark for edu- Alejandro What services, products and solutions cation in the region. Because our standards GE Water and Process Technologies is one of six business divi- customers. Communication, environmental health and safety, as- does Siemens offer and are these specifi- of education are very high, and specific sions of GE Power and Water. Could you tell us more about this set protection and value-added projects are the four components cally tailored to the needs of Argentine technical specialisation is required to work segment’s development? of VGP. Alfredo companies? at Siemens, many people learn additional EP: GE acquired this business 14 years ago and, from that time, GE Siemens’ Vision 2020 is based on three pil- skills once they have started with the com- has built a platform to address the challenges surrounding water. Would you be able to share a case study of a particular project lars: automation, electrification and digital- pany. Through the Siemens Foundation, we Today, GE has the capabilities to solve the toughest challenges in in Argentina? Köckritz isation. Our software covers the entire life- provide university students with lab train- this regard. We customize solutions to the water challenges faced RB: We carried out a project with YPF CIE (Complejo Industrial cycle of a plant, from design to automation, ing and workshops, while some of our em- 92 by our customers and we do this with an environmentally friendly Ensenada) in 2013. We were in charge of cooling water treatment, and can also simulate processes and manu- ployees are also lecturers at the country’s 93 focus. The next step is to transfer GE Water from an industrial com- but new regulations meant that phosphorus content in wastewater facturing. Our solutions are linked with In- universities. Other university lecturers are pany to a digital company. GE is building a new platform called had to be reduced to meet environmental targets. Phosphorus is a Country Division Head Process Industries dustry 4.0, a new industrial revolution in Siemens solution partners and receive free Predix, which will be used as a core for all the applications for key component of the cooling program as a corrosion inhibitor, so and Drives / Digital Factory which all technical processes will be able training, as they provide the teaching for digital services. We plan to improve our services to customers with we had to rethink our cooling program using new molecules with- SIEMENS S.A. to be supported by a cloud-based network. the next generation of Siemens employees. continuous monitoring of their assets using the power of the inter- out phosphorus, whilst maintaining the key performance indicators With our products, services and solutions The company also supports a technical net. Currently, we have more than 600 different customers’ assets for asset protection. At the beginning we were able to deliver cor- we can support our clients’ needs and add high school and, for other schools around connected to our platform centers, located in Pennsylvania, China rosion rate specs, but at a higher cost. To keep within YPF’s budget, value to their business. the country, we hold a competition based and Belgium, and our Latin American platform in Sao Paulo. we had to reduce water and chemical consumption at this site. This We have already developed a solution for on energy efficiency or resources. This is RB: We have a combined portfolio that includes chemicals, equip- was the most interesting challenge because it required changing a global agrochemicals company here in judged by a committee of university lec- ment and analytical instruments. In terms of the chemical segment, plant water usage habits. Overall, our solution achieved asset pro- Argentina, which will subsequently be turers and industry leaders, with the win- we have a portfolio for water treatment that includes cooling, boil- tection, environmental targets and economic savings. “ rolled out to the company’s operations ner coming to Buenos Aires and receiving ing, and wastewater, and we have a process portfolio for refining, worldwide. Argentina is a major supplier a gift for the school. We also take school chemical processes and oil and gas. Could you tell us about some of your new technologies and how Siemens has been in Argentina since of cereals and soybeans for the world, with children on trips to our plants to see auto- receptive Argentinian companies are to new solutions? 1908, which is a particularly long time huge potential for growth and excellent mation processes in action. How important is Latin America, and Argentina specifically, to RB: The local economy is in a transition period, so companies are compared to our competitors. engineers. It makes sense that our country your overall corporate strategy? seeking new ways to be more productive, and operating their as- would be chosen to develop services for What can we expect for the future of for- RB: Argentina has an energy deficit and GE is in a strong position sets by doing more with less. They are therefore receptive to new multinationals. eign investment in Argentina and what to help the country with its energy supply. We are able to help not products and, in terms of our new digital technologies, we are on are your hopes for Siemens in the future? only with chemical applications but especially with equipment to a steady path of increasingly monitoring our customers’ assets and Could you tell us more about the nature Foreign investment will arrive in Argen- produce and treat water. developing new solutions to their challenges. of Siemens’ clients in Argentina and any tina. We need stable conditions for inves- added value services you can provide? tors to be sure their money is safe in this In terms of clients and partnerships, why do clients choose GE What is your vision for GE Water and Process Technologies in ” As well as serving multinationals, we also country. For Siemens, we have to go to Water and how do you work with them to create customized the future? provide solutions for domestic compa- the industry and show them what we can solutions to their problems? EP: GE is leading digitalization and the digital platform. Our aim nies in Argentina. Such companies do not do with Argentine engineering, while si- RB: Our approach is to seek long-term partnerships with our clients is to be more connected with other parts of GE and to provide more need to come up with their own technol- multaneously emphasising the support of a rather than mere transactional deals. We are looking for solutions digital solutions. We hope to be more aware of the challenges that ogy when we already have the solutions for global company with global products and in order to reduce their operational cost, increase efficiency and our customers face and addressing these challenges collaboratively. improving their plants, energy distribution solutions. We must lead the way in creating productivity while meeting regulatory requirements. Water is a scarce resource that will become increasingly limited in and warehousing capabilities. Siemens has solutions that add value in all our clients’ EP: We do not sell products or services; we sell value. We also have the future, so we look forward to provide solutions to solve cus- 50 major contracts with Argentine compa- production processes and providing reli- a Value Generation Plan (VGP) document which we share with our tomer water challenges. ▬ nies to provide aftercare servicing 24 hours able services throughout the country. ▬

Could you explain the reason behind we provide safety advice both at the plant Alberto Sosa Crosa & Restec’s formation in 1990 and the situ- and through the entire transportation chain, ation for the chemical industry at the covering such issues as correct chemical time? signage, fire extinguishers and safe routes. Daniel Campos The company was born out of the neces- We also provide extensive auditing with sity for improved safety in Argentina. In a focus on the cost-effectiveness of client the 1990s, emergency response teams did improvements. Internally, we hold regu- not exist in Argentina or Latin America as lar training sessions including weekly re- a whole. At that time, the petroleum com- sponse team training and the maintenance AS: Managing Director pany Esso, which is now Axion, created of our trucks and vehicles. DC: Operations Manager a partnership with my father to provide INTERTEK ARGENTINA, such services. He started with one pump, Following an emergency, what services BOLIVIA, PARAGUAY, URUGUAY one hose and a lot of determination. In the can Restec offer to deal with environ- early days, response groups were non-spe- mental issues? cialized firefighters; however, we saw the Restec is the only company to incorporate need for a specialized response team and applications for both hazmat response and AS DC decided to go to the United States to learn bioremediation in one service, and both Eduardo their methods. The first major emergency services require separate certifications. we attended was in 2001 and the company This is very difficult to do across Argen- Could you give a brief introduction to Intertek and Argentina’s plants and in the industry and Intertek provides trusted results. For grew rapidly in the early 2000s. This led tina as it is a federal country and we are re- role within the global company? those clients who really want to keep a check on the whole process, Rosa to a restructuring of our operational capa- quired to have certifications for every prov- AS: Founded in 1885, Intertek is a multinational company, head- this is not seen as a cost but as an investment, as they are saving bilities and the purchase of more specialist ince. Obtaining these certificates is a long quartered in London and present in 120 countries worldwide, with money by reducing risk. equipment and vehicles. process which can take up to three years more than 1,000 laboratories and 35,000 employees. We work in a per province. wide range of industries including oil and gas, mining, agriculture How does Intertek ensure their employees meet the high inter- How has the company developed over After the incident is contained and the and pharmaceuticals, among others. Intertek is the leader in certi- national standards the company promises? 94 the last few years and what sort of com- threat to life is removed, our bioremedia- fication and auditing of operations in all markets linked to oil and AS: We started with 10 employees and now have more than 400. 95 petition does Restec face? tion teams take samples of the surround- commodities. We hire locals in each of our offices in the region as Intertek’s pol- President In 2015, Restec attended 100 emergencies, ing soil and rivers for laboratory analysis. When our Buenos Aires offices opened in 1984, our main focus icy is to promote personal development and training in country. RESTEC averaging just over eight emergencies per Depending on the nature of the spill there was in oil and petrochemicals as Intertek was a strong player in Nowadays we can carry out 100% of the testing here rather than month. In 2016, we saw four emergencies are broadly two options: we can take the auditing and inspection in this industry on a global scale. As time sending samples to the United States. in the first month of the year. Because the soil and dispose of it in a hazardous waste went on, we began offering services to the agricultural sector and DC: The International Federation of Inspection Agencies (IFIA) chemical industry in Argentina is seeing plant, or we can provide biophysical reme- expanding our offices and laboratories across Argentina. Buenos binds all the certification agencies together globally. All of our rapid growth, and 90% of internal transpor- diation at the site. Although the latter op- Aires is the headquarters for our Paraguay, Uruguay and Bolivia inspectors are certified by IFIA both in petrochemicals and agro- tation is provided by trucks, we are seeing tion is more time-consuming and expen- operations and for our agricultural services across Latin America. chemicals as IFIA is the only body that offers transparency of ex- numerous safety issues. sive, it has a less detrimental impact on pertise and operations around the world. At this point, around 75% of the chemi- the environment. Because there is no ob- Which industries does Intertek serve in Argentina and why do “ cal companies in Argentina use Restec’s ligation for a client to have an emergency clients choose Intertek as their auditing and certification part- How has the chemical industry developed in recent years and services; companies such as BASF, Dow, response team as part of their operations Because the chemical industry in ner? what are your projections for the coming years under the new Chemours and Petroquimica Cuyo are – unlike in neighboring Chile and Brazil – government? Argentina is seeing rapid growth, AS: With Argentina becoming a world leader in agriculture, pro- among our 87 clients. Although there are the choice of procedure is made by the cli- ducing 100 million tons of grains a year, we maintain a strong DC: Argentina is a nation which has oil, but the country has been and 90% of internal transportation two competitor companies in Argentina, ent and local authorities. focus on the sector’s operations and exports. One milestone was a net importer of oil in recent years. Many big companies have is provided by trucks, we are seeing the remaining 25% of the market who are installing two important laboratories in Rosario to cater to the ag- reduced their imports, and have cut back on some of their manu- numerous safety issues. not in our client base has less to do with What can we expect for Restec by the ricultural sector’s needs. Our other strengths lie in oil and gas and facturing operations in Argentina. The industry has dropped off in this competition and more to do with a end of the decade and your 30th anni- petrochemicals, and we have a new project auditing the aerospace this respect and we look to the new government to see a resurgence lack of investment in safety by small- and versary? operations of chemical companies. We also offer social, food and in manufacturing. medium-sized companies. Safety was not We hope to continue to be working in part- industry audits, as well as systems certification. AS: We are seeing high expectations for these first few months of a priority during the last 12 years of gov- nership with Suatrans. The future of this the new government; companies here have the opportunity to go ernment and these companies have not yet industry is in bioremediation and is a key What are the critical points in the value chain that require fur- abroad and offer their services globally, for example. It is still too ” seen the importance of investing in this area of focus for us. We also aim for offi- ther control measures and how can Intertek help companies early to make predictions but the picture looks promising. It is a area. cial accreditation for all of our employees; reduce risk in a cost-effective manner? good time to invest in Argentina, not only because of the opportu- training and experience is essential for our AS: Quality is fundamental throughout and we provide indepen- nities but also because of the improved public-private relationship; Do you have any initiatives in place to company and helps us attract more clients. dent reports from raw materials to finished products. In every both sides recognize the need to work together to see growth. For improve the understanding of the im- In the medium term we hope to achieve business deal there always needs to be a control check on product Intertek, we are reinvesting in the company and moving our Rosa- portance of safety among such compa- ISO 2100, ISO 18001 and ISO 1400 cer- quality. Every time there is a change in production or commercial- rio laboratory to an industrial park. Santa Fe is an industry hotspot nies? tifications and will enter our application in ization, a control is required and we define these critical points with and we will continue to invest there, building on our biodiesel, hy- This is one of our additional client services: the near future. ▬ the client. They want to know what is really happening in both their drocarbon and agricultural laboratories. ▬

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DISTRIBUTION AND LOGISTICS

"Argentina needs to focus on increasing infrastructure investments in routes, railways, storage and ports to support our future. With these investments, we will be able to comfortably supply new companies as they increase investment in Argentina."

- Luciano Milito, Commercial Director, Logistica Milo Image: Mesucan EDITORIAL Global Business Reports Global Business Reports EDITORIAL

A unique situation: “ The number of chemical distributors is too high when compared with the size of the Argentine market. There are roughly 130 companies in operation today; this is chemical distribution mainly due to the fact that there are a large number of small- and medium-sized companies in existence and in Argentina companies favour maintaining personal relationships. - Marcelo Knobel, Director, Arubras

Argentina’s chemical distribution market According to international chemical dis- panies in existence and companies favour ized in chemical distribution. “The trans- office in 2007, experienced stalled growth centrated and, even in neighbouring Latin” is highly diversified; around 100 compa- tributor Arubras, which is focused on the maintaining personal relationships,” stated portation market is very fragmented in Ar- and was forced to put some projects on American countries, the situation is vastly nies operate in the market, with multina- Argentine market, small-scale distribution director Marcelo Knobel. gentina. Low barriers to entry are largely standby. different. The new direction in which tionals competing for business alongside firms with fewer than ten trucks comprise A shared history and local knowledge ap- what have caused this fragmentation. Na- With the opening up of the market by the Argentina’s economy is heading should generations-old, family-owned firms. 85% of Argentina’s logistics services: pear to take precedence in an area lacking tional Law 24449 regulates road traffic and new government, however, this situation align it with the rest of the countries in More than a decade of Argentina’s closed “The number of chemical distributors is regulation; generic distribution companies safety, and a chapter in an annex to that is set to change. As multinationals look the Southern Cone and make for much economy prevented full-scale competition too high when compared with the size of have therefore been able to specialise in law regulates the transport of dangerous to establish their global brands in Argen- more predictable operations. “Typically, from taking place and smaller companies the Argentine market. There are roughly the chemical space. Integrated logistics goods,” explained general manager Andres tina, local companies could find them- Brenntag and up to five other companies had the opportunity to develop specializa- 130 companies in operation today; this is provider Mesucan, a family-owned com- Gerschenson. “The provisions contained selves either out of business or swallowed make up 70% to 80% of market volume, tions and embed themselves in regional mainly due to the fact that there are a large pany founded in the 1960s as a general in that law are not very demanding.” up entirely. Combined with the removal while smaller companies survive by tak- 98 markets. number of small- and medium-sized com- transportation business, has since special- This has led to a situation in which a dis- of import restrictions, which artificially ing niche markets,” continued de la Roza. 99 tribution company can transport a truck- enabled many smaller companies to con- “If [Argentina’s openness] continues, the load of hazardous chemicals one day, and tinue operating, the chemical distribution chemical distribution market is likely to innocuous consumer goods the next. The market could look very different in just a see some consolidation.” situation was able to continue largely un- few short years. “We expect the number of abated during the 12-year Kirchner admin- distribution companies to reduce by more istration, with the aim being to promote than half over the next three years, with Local traits Argentine companies over their interna- probably no more than five big distribu- tional rivals. Logistica Milo, a Buenos tion companies holding more than 80% Local players have been able to tailor their Aires-based company that has been around of the market,” explained Knobel. “This product offering to the idiosyncrasies of since 1905, also first established itself as happened under similar conditions in other the Argentine market. The services they a general transportation provider. It only parts of the world such as the United States provide will be difficult for multinational started to specialize in chemical distribu- and Brazil, so it is reasonable to assume it distributors, with their various levels of tion over the last decade and now offers will happen here too.” management, to replicate. Having been catered transportation, warehousing and Brenntag, a global leader in full-line chem- locked out of global exchange markets, tanking services. “Under the previous gov- ical distribution, believes the Argentine producers have struggled to access the cap- ernment, Logistica Milo had a lot of sup- market is now in a state of transition: “Un- ital they require and independent transpor- port, particularly in terms of the awarding til December 2015, the chemical distribu- tation providers such as Henry Hirschen of credit lines which allowed us to upgrade tion market was significantly restricted. (HH) have been able to plug the gap. “The our fleet,” explained general manager Vic- Rather than using our full capabilities, we difficulties that Argentine companies have tor Blanco. were forced to conduct operations on an faced in accessing international financing The company was able to capitalize on the ad-hoc basis and couldn’t move forward,” has made HH’s financing services all the artificial trading conditions created by the said Martin de la Roza, general manager more important,” said the company’s di- previous government to position itself as a at Brenntag Argentina. “We will see more rector, Tomas Hirschen. leader in the market, serving clients such openness in terms of commercial inter- Grupo Simpa, a raw materials distributor as BASF, Sherwin Williams and Carbo- change and international commerce, but for plastics convertors established in 1978, clor. International players, however, expe- will also see an increase in competition as has been able to leverage Argentina’s fi- rienced the previous government’s restric- distributors will be eager to take advantage nancial instability to become the largest tions and promotion of local companies of the ability to import goods.” petrochemical distributor in the country, somewhat differently. Brazil’s MCassab, Internationally, the number of chemical with a 55% share of the plastics distribu- for example, which opened its Argentina distribution providers is much more con- tion market. As petrochemical companies

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such as Petroken and Petrobras were un- commercial stance attracts the attentions cases unable to bring in technical equip- industry and, like many companies, it has businesses are taking the impetus provided take in Europe or the United States,” ex- willing to supply product on credit, and of global chemical companies; however, ment from abroad. The Federal Public relied on imports for the majority of its by President Macri’s initial reforms to go plained Sanchez. “Celsur Logistica has seeing that its clients were struggling to newcomers to the market may also choose Revenue Administration (AFIP) required business since 2011. “In our Buenos Aires ahead with projects which will provide been working with Ferrosur Roca and obtain favourable financing from banks, to use trusted global names from their ex- companies to justify why they wanted to office, 80% of the business covers imports short-term relief on already strained public Dow Argentina since June 2012 on a cargo Grupo Simpa came up with a solution. isting jurisdictions. “Multinationals are ship in equipment from overseas, with lack to Argentina, which is the main business services. transfer cross-dock station in Abbott. The “Dow Argentina grants its customers up now looking for distributors that can sup- of availability in Argentina being an oft- of foreign trade today as the export market Celsur Logistica was established by a U.S. station itself is 17,000 m2 and enables to seven days to pay after receiving an in- ply a product with the same quality and cited reason. Argentine-Italian EPC firm across the country has dropped off,” said investment fund in 1995 and is now one the transportation of 34,000 tons of poly- voice and our competitors allow between assistance throughout the entire region,” Techint Engineering and Construction be- Aversa. “Imports decreased by 45% during of the top ten logistics companies in Ar- ethylene pellets between Bahia Blanca 30 and 60 days,” said president Adrián claimed Martin Font, general manager at lieves more should be done to manufacture the period of DJAI and we hope that we gentina, with around 40% of its operations and Abbott per month. Celsur Logistica’s Gabriel Schwartz. “Grupo Simpa allows MCassab Argentina. “Clients that operate such goods in Argentina: “In the last few can regain these losses during 2016.” dedicated to chemical and petrochemical trucking service is therefore a necessary between 90 and 180 days and, as a result, in both Brazil and Argentina are happy to years it has been difficult to import equip- With the replacement of DJAI and the companies. Commercial director Hernan alternative.” our financing options have enabled us to have a single company supplying them in ment or materials into Argentina,” said opening up of the market, it is hoped that Sanchez believes improving Argentina’s The lack of alternatives explains why 90% become the largest petrochemical distribu- both countries with the same degree of managing director southern cone Gabriel Argentina’s import/export balance will infrastructure should be a key area of focus of internal chemical distribution in Argen- tor in Argentina.” product quality and assistance.” Rubacha. “For this reason, and in order normalize. Producers will be able to ex- for the new government, but he is realis- tina is carried out by truck. With the high Lack of financing options for end-users to foster local industries, we are working port abroad rather than simply supplying tic about the lengthy timeline needed for volume of trucks making long journeys has also made petrochemical companies to incentivize local companies to improve the domestic market and, with the oppor- real change. Although Argentina’s ports, with hazardous loads on Argentina’s road more cautious in terms of selling their Restoring balance their technologies and provide alternatives tunity to increase the amount and type of currently operating at 50% capacity, will network every day, road safety is clearly products. Distributors have therefore tak- to equipment manufactured abroad.” imported goods, supply chains need to be easily be able to double the volumes they a big issue for manufacturers and distribu- en on intermediary roles, with companies One way in which multinationals might DJAI was the subject of a number of com- optimized. handle, the country’s rail infrastructure re- tors alike. “Two years ago, the distribution such as Grupo Simpa buying raw materials better trust Argentina’s regulations is in plaints from the United States, the Euro- quires investment. playing field saw huge change with the ar- directly from vendors. “The world average the overhaul of its customs requirements. pean Union and Japan, amongst others, Trucking services such as Celsur Logis- rival of a new road safety drive from the for distribution sales as a percentage of Under the previous government, the coun- and was subsequently found to be in viola- Plugging the gap tica have an opportunity to plug the gap United Nations. It realised the issue was total plastics sales is about 20%; in Argen- try was ranked fourth in the world for hav- tion of World Trade Organization rules on while additional funding to improve such a global concern and launched a ten year- tina, it is about 40%,” continued Schwartz. ing the most restrictive measures in place international trade. With Argentina only It is here that companies are taking mat- services is approved. The 700-kilometer plan to improve road safety worldwide by International distributors, however, still regarding international trade. One of these having until the end of December 2015 to ters into their own hands. Although there is journey between Bahia Blanca and Buenos 2020 and, as part of this, ISO 39000 was maintain the advantage in terms of a rec- restrictions was the Advanced Affidavit resolve this issue, it was one of President an awareness that the shelved and delayed Aires currently takes around four days to introduced, which covers global best prac- ognized brand name and trusted working for Imports (DJAI), implemented in 2012. Macri’s first tasks on taking office on -De infrastructure projects of the previous gov- complete by rail, “which is approximately tice for transportation,” explained Diego 100 practices. The Kirchner administration’s Companies were required to submit affida- cember 10th. “Our new government made ernment will now be considered a priority, three times as long as the journey would Folch, commercial manager at Buenos Ai- 101 failure to focus on the chemical segment’s vits for imported goods before completing these amendments on 23 December 2015, role in the economy means international transactions and before the goods could replacing DJAI with SIMI, a new Integral players have not learnt to trust the indus- leave their port of origin, severely restrict- System for Monitoring Exports, which try’s regulations as sufficiently protective. ing the freedoms of Argentina-based firms grants automatic licences for all import- “The multinationals that operate in Argen- to do business. “In the first six months ed products,” outlined Sebastian Aversa, tina and Latin America often demand stan- after the government first implemented country manager for BDP International. dards that are higher than national ones,” the DJAIs, the supply of certain imported BDP International is a third-party lo- said Mesucan’s Gerschenson. chemicals fell and prices naturally rose,” gistics firm headquartered in the United Those local players which have been able explained Hirschen. States and with operations in 270 cities to prove themselves in this regard should As well as impacting on the supply of worldwide. Around 80% of its operations not see any difficulties as Argentina’s new chemicals, EPC providers were in some in Argentina are focused on the chemical

Henry Hirschen Buenos Aires | Argentina | (54 11) 5217 1500 [email protected] | www.hirschen.com.ar

Agency • Distribution Chemicals • Plastics

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res-based Crosslog. “This provided a solution to the problem, as the global standards override local laws.” One way in which Crosslog has attempted to differentiate itself from its competitors is by focusing on environmental safety, Could you tell us about the strategic vi- tween Bahia Blanca and Abbott per month. adding value in a crowded market. This sion that has made this type of growth The train line between the two cities also has included only hiring drivers who have possible? continues onto Buenos Aires. The project completed one month’s intensive training The company is composed of a group of to improve the railway line along the route with the Argentine Federation of Freight educated executives, with specific know- was presented to the previous administra- Carrier Business Entities (FADEEAC), how and global operational standards, tion and was approved so, hopefully, the rather than those who have only passed which makes us an attractive prospect for new government will follow through on the mandated one-week course. “The en- the multinationals. Our growth has come the investment. Currently, the 700 km vironmental issues that arise from trucking from two distinct areas: on a macro level, journey between Bahia Blanca and Buenos are directly linked to road safety. If a truck Argentina promoted the development of Aires takes four days, which is approxi- crashes because the driver is too tired or business between 2004 and 2008, and spe- mately three times as long as the journey inexperienced, the damage to the environ- cific knowledge of how to do things makes would take in Europe or the United States, ment comes from the spillage of cargo,” a big difference. Celsur Logistica also re- for example. Celsur Logistica’s trucking continued Folch. Hernán ceived a capital injection from Swiss in- service is therefore a necessary alternative. Restec, part of the Suatrans group of safety vestors in 2007, focused on the improving providers located across Latin America, Sanchez our information technology systems and As the President of Arlog, how impor- is one of only three companies provid- infrastructure. tant are associations such as Arlog for ing chemical safety services for chemical Between 2006 and 2008, grassroots work the chemical distribution industry in companies in Argentina. This is due to the on the company was carried out, includ- Argentina? fact that there is no obligation for manu- ing a staff restructuring and a reorganiza- Arlog’s objective is to assist the govern- facturers or distributors to have an emer- tion of our client base. Dow Argentina was ment and companies in increasing value in gency response team as part of their opera- also looking for a new logistics model and the logistics sector. We focus on personnel Commercial Director tions – unlike in neighbouring Chile and we implemented this with the company in and provide them with training and work- 103 CELSUR LOGÍSTICA Brazil. “Around 75% of the chemical com- 2010, alongside leading shipping company shops. We also have a relationship with panies in Argentina use Restec’s services; Log-In. Despite the current trend for con- APLA, as the specialists in the chemical companies such as BASF, Dow, Chemours tract logistics, we are focused on being a distribution industry, and have good con- and Petroquimica Cuyo are among our leader in the integrated logistics space. The tacts with the new government. They are 87 clients,” explained president Eduardo majority of our clients are multinational interested in our ideas and projects and, Rosa. “The remaining 25% of the market corporations; 40% of these are chemical or considering we have not had this level has less to do with competition and more petrochemical companies, 35% are auto- of communication with previous govern- to do with a lack of investment in safety motive firms and the remainder operate in ments, we are optimistic for the future. by small- and medium-sized companies. mass consumer industries. Safety was not a priority during the last 12 What investment plans does Celsur Lo- years of government.” What changes can we expect for the logistica have to meet an increase in de- As well as addressing the infrastructure gistics industry in Argentina as a result mand for its services and what are the requirements of Argentina’s industrial sec- of the new government? company’s short-term goals? tor, in order to expand capacity and gener- Could you tell us about the company’s By opening up Argentina to the world We fully support the recent political de- ate efficiencies in the chemical distribution operations in Argentina? in terms of foreign trade, it may lead to velopments incentivising exploration and market, it appears a focus on safety and Celsur Logistica is one of the top ten lo- greater productivity in our supply chains. production in Argentina’s unconventional environmental legislation in this area is gistics companies in Argentina and has In terms of improving the railways and resources. We have also added value with long overdue. The Argentine Association been present in the country for more than ports, they will see change but we need to new services such as product packaging of Logistics Companies (Arlog), of which 15 years. It was established in 1995 by a be patient, as it will not happen in the near and subdivision of loads. For the imme- Celsur Logistica’s Sanchez is also presi- U.S. investment fund to provide the first future. diate future, we plan to increase our pro- dent, works with logistics companies and logistics support services to Walmart. In ductivity while trying to reduce additional government to increase value in the sector. 2006, the company was acquired by a new Could you tell us more about Celsur costs as a result of inflation. Our next in- “The project to improve the railway line investment group, comprising of several Logistica’s joint venture with Ferrosur vestment will be in specific logistics ser- along the route was presented to the previ- Argentinian executives. At that time, the Roca and Dow Argentina? vices, allowing for additional growth be- ous administration and was approved so, company employed around 200 people at Celsur Logistica has been working with tween 2018 and 2020. Finally, our most hopefully, the new government will follow a 40,000 m2 site and generated 22 million Ferrosur Roca and Dow Argentina since important strategic challenge is to double through on the investment,” said Sanchez. pesos in turnover; today, we have almost June 2012 on a cargo transfer cross-dock the amount of product we can transport to “Considering we have not had this level 1,000 employees, more than 120,000 m2 station in Abbott. The station itself is the rest of the players in the chemical val- of communication with previous govern- at our facilities and see an annual turnover 17,000 m2 and enables the transportation ue chain, while maintaining a high level of ments, we are optimistic for the future.” ▬ of 950 million pesos. of 34,000 tons of polyethylene pellets be- service. ▬

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Could you provide us with an overview of the goods in question leave their port of Martín Sebastian the services BDP can offer its clients and origin. The DJAI was found to be violat- any of the company’s key specializations? ing World Trade Organization rules, which BDP in Argentina has 45 people split be- we were asked to change. Our new govern- de la Roza Aversa tween Buenos Aires and Mendoza. Around ment made these amendments on 23 De- 80% of our operations center on chemical cember 2015, replacing DJAI with SIMI, 3PL solutions, transport and distribution, a new Integral System for Monitoring Ex- with 70% of this dedicated to servicing top ports, which grants automatic licenses for General Manager chemicals accounts needs. The remainder of all imported products. Imports decreased by BRENNTAG ARGENTINA S.A. the business is related to automotive, agri- 45% during the period of DJAI and we hope Country Manager Argentina cultural, retailing and wineries in the Men- that we can regain these losses during 2016, BDP INTERNATIONAL doza region. In Buenos Aires, around 75% which we view as a transition year. I think of the business covers imports to Argentina, we will see a lot of companies return to Ar- which is the main business of foreign trade gentina with their investments. Brenntag began its operations in Argentina in 2000 with the shows great potential in Vaca Muerta, located in the southern prov- today as the export market across the coun- acquisition of Holland Chemical International (HCI). Can you ince of Neuquén, as well as some fields in the north. ACES and con- try has dropped off. We act as a third party What initiatives are in place to secure a identify some key milestones in the development of what is now struction also significantly contribute to sales and profit. Moreover, logistics firm (3PL) for our clients, covering ready supply of skilled personnel to work Brenntag Argentina? Brenntag Argentina anticipates growth for the products it supplies to logistics documentation, transportation and within the chemical sector? In 2008, Brenntag Latin America acquired Inquimex, which strength- the agricultural industry, in particular food and feed, which currently warehousing in Buenos Aires and Mendoza, It is very difficult to find qualified person- ened the company’s presence in the Argentine chemical distribution comprises a small percentage of our sales. and our growth will center on our transpor- nel, but Argentina has had to deal with so market, broadening its product portfolio in polyurethanes, personal tation offering around the country. many crises over the years and that has giv- care, paints and coatings. In 2012, Brenntag acquired Delanta Group, What effect have economic decisions made by the new govern- en us great adaptability. We need to improve which improved the company’s position in the specialty market and ment administration had on the chemical distribution market? Aside from its international reputation, our level of education for future generations elevated the adhesives, coatings, elastomers and sealants (ACES) di- Until December 2015, the chemical distribution market was sig- what makes BDP the distributor of choice and promote the learning of second lan- vision to one of our core business units. The purchase also enhanced nificantly restricted; rather than using our full capabilities, we were for chemical companies in Argentina? guages and the benefits of a university edu- Brenntag’s access to the construction industry and increased our mar- forced to conduct operations on an ad-hoc basis and couldn’t move I believe it is our commitment to our cus- cation. Internally, BDP has implemented a ket coverage in Argentina. Most recently, in 2014, Brenntag Brazil forward. With the removal of some of these import duties and restric- tomers and our differentiated product of- training program to provide regular training 104 acquired a local distributor of specialty solvents, which has an Ar- tions, we will see more openness in terms of commercial interchange fering. We also have a great IT tool: BDP for our employees in IMDG, transport, cus- 105 gentinian subsidiary. Brenntag has grown in Latin America through and international commerce, but will also see an increase in competi- Smart is a superior tool and really popu- toms, FCPA and the environment, among acquisitions, which has resulted in above average growth. tion as distributors will be eager to take advantage of the ability to lar with our customers. I’m not aware of others. In order to succeed, our employees import goods. The industry is now in a state of transition: we are lack- a similar product from our competitors. It need to be prepared as well as their man- Can you describe the strategy that has guided Brenntag’s acquisi- ing foreign investment to mitigate the new government’s currency is not just a track and trace tool, as it also agers. tions in Latin America and Argentina in particular? devaluation, which has seen the peso weaken, at the same time as enables them to follow their invoices and Brenntag’s goal is to be the leading chemical distributor in any mar- experiencing low international oil and gas prices. P&L statements, run key productivity indi- As a new member of CIQyP, how impor- ket in which the company is present. The best method of achieving cator statistics, and work closely with their tant are such associations to distributors? premier status in a market is through continuous organic growth as What can we expect for the future of the petrochemical and data and systems. All the data they need can Being a member of CIQyP is an important well as by acquisitions. In Latin America, however, almost 90% of chemical industries in Argentina? be extracted from it and they can visual- way for us to connect with our customers. distribution companies are local and family-owned; HCI’s regional In the medium- and long-term we see huge potential for Argentina. It ize their operations. For our medium- and This allows us to talk more regularly with presence motivated Brenntag’s purchase of the company. Particular has already attracted new investments downstream; the agrochemical “ Imports decreased by 45% during small-sized customers, our transportation our clients and exchange information. market and country conditions influence each decision we make. industry, for example, is growing and is demanding more chemicals. the period of DJAI and we hope that and customs brokerage services are tailor- Many companies are seeing Argentina as an interesting market with we can regain these losses during made. What are your predictions for the future How successfully has Brenntag been able to incorporate the com- exciting prospects, despite the not insignificant technological, logis- 2016, which we view as a transition of the Argentine chemical industry in the panies it acquires? tics and costings issues which have to be improved in general. Com- year. I think we will see a lot of Could you tell us more about the barriers coming years and for the future of BDP? Integrating the HR, commercial, and financial components of any petitive companies are backwards-integrated with oil and gas produc- companies return to Argentina with to foreign trade, such as customs, permits I believe Argentina will gain more foreign acquired company is challenging. Given the Group’s outstanding tion, as well as derivatives. There is likely to be some consolidation and inspections, and how you can solve investment in both the upstream and down- their investments. M&A track record, Brenntag has excellent M&A experiences both among manufacturers as some smaller plants will not survive Argen- these problems? stream segments, which will have a knock- in Argentina and worldwide. The company has developed a degree tina’s new method of operating. Argentina’s former government placed on effect on surrounding industries. For of M&A expertise that has allowed us to quickly and effectively con- heavy-handed restrictions on foreign trade BDP, our main objectives are to continue solidate businesses. Though acquisitions inevitably require a pruning How is Brenntag in Argentina implementing the company’s 2020 and used these restrictions as bargaining our development and growth. We are ac- process to eliminate overlapping functions, Brenntag Argentina has Vision? ” tools, which meant we had the fourth most tively looking for new customers and plan kept around 80% of the commercial staff of the companies we have Brenntag’s 2020 Vision is composed of the following points: we are restrictions on international trade of any to double the size of our revenue and our bought. the safest chemical distributor, striving for zero accidents and inci- country worldwide. In 2012, the govern- employee numbers in line with the compa- dents; we connect chemistry worldwide by providing the most ef- ment implemented its Advance Affidavits ny's five-year plan. We are also working to What are the main industries that have allowed Brenntag to dou- fective industry channel for our customers and suppliers; we are the for Imports (DJAI), which required com- open two new business corridors: one in the ble its sales in Argentina from 2010 to 2014? global leader in all our chosen markets and industries; we strive to panies to submit an affidavit through the Región de Cuyo (Mendoza) with the Pacific The oil and gas industry now comprises a significant percentage of provide a working environment where the best people want to work; website of the Federal Public Revenue Ad- corridor (Chile, Perú, Ecuador and Colom- Brenntag’s total sales in Argentina and has obviously been a major and we aim to generate sustainable and high returns for our share- ministration (AFIP) before a commercial bia) and a second towards Brazil and Uru- growth driver. The Argentine oil and gas industry is dynamic and holders and all other stakeholders. ▬ transaction could be completed and before guay for the chemicals niche. ▬

Tomás international figures compared to the mar- see a more competitive marketplace among Hirschen gins of international companies who were chemical distributors, leading high-level working in commodities. margins to normalise. The low turnover we are seeing is the downstream effect of low international oil In 2012, 97% of the products Arubras Director prices on global chemical prices. In the distributed were not from Argentina. Is HENRY HIRSCHEN & CÍA S.A. current climate, we are distributing similar this still true today? volumes as in previous years but have re- Our distribution of locally manufactured duced our invoicing. Local sales for 2015 products has increased marginally to 10- were $25 million and sales in 2016 will be 12% since 2012, due mainly to the fact that approximately $22 million. there has been no new chemical production in recent years due to the lack of both raw What is the chemical distribution envi- materials and energy supply. Arubras’ focus Can you provide some background years, HH has successfully supplied in- In the first six months after the government ronment like in Argentina and how will has therefore remained the same: to distrib- about Henry Hirschen (HH)? creased customer demand for moderniza- first implemented the DJAIs, the supply of this change as a result of the new govern- ute products that are not manufactured lo- Henry Hirschen was founded in 1948 and tion and the development of new products. certain imported chemical products fell, Marcelo ment? cally but are necessary to the industry. is a third-generation family business that In particular, the food, oil and gas, and and prices naturally rose. Eventually, how- The number of chemical distributors is has become one of the leading chemical cosmetics industries have demanded these ever, HH and its peers learned to efficiently too high when compared with the size of Does the current infrastructure backlog distributors in Argentina. The company kinds of modernizations as they closely process the DJAIs and were able to better Knobel the Argentine market. There are roughly in Argentina pose a challenge to distrib- operates independently and is privately follow international standards and global supply customers, which led to the normal- 130 companies in operation today; this is utors? owned. trends in the use of chemicals and new ization of prices. Now that a new govern- mainly due to the fact that there are a large Most of the companies here have not in- HH distributes chemical, plastic, and steel technologies. ment will likely allow more imports, the number of small- and medium-sized com- vested in new distribution infrastructure Director products to the following industries: iron In 2012, HH’s sales revenue was $30 mil- supply of certain products should rise, and ARUBRAS panies in existence and companies favour for around a decade. Old warehouses, some and steel, plastics/polycarbonate, oil and lion; in 2014, it reached about $50 million. prices should fall. maintaining personal relationships. of which are far from the ports, have been 106 gas, water and effluent treatment, clean- Operating costs for these types of busi- retained. The only major terminal for bulk 107 ing products, agrochemicals/veterinary/ Does HH educate clients about products Argentine companies have had little ac- nesses are fairly substantial, particularly as imports into Argentina is the Odfjell Termi- animal feed, functional fluid/lubricants, that are not in high demand? cess to international capital for a num- a result of the changes made by Argentina’s nal. The port of Buenos Aires is similarly paints/dyes/adhesives, leather/textiles, and HH has educated customers in Argentina ber of years. How important have HH’s new government: opening up the market challenging, as well as less cost effective cosmetics/food. Moreover, HH provides a about chemical products that respond to financing services been throughout this and eliminating import restrictions. This for operations. The government lacks mon- wide array of support services such as fi- the trend that aims to replace synthetic time? new economic climate will decrease avail- ey for infrastructure investment and, whilst nancing services, fractionation, and stor- products with natural products in the food The difficulties that Argentine companies able margins and only a few companies will proposals for the development of ports and age, among others. industry. The trend towards more natural have faced in accessing international fi- survive this situation. I would expect many terminals have been made by the private HH offers more than 300 products, im- products is one that HH has seen at inter- nancing has made HH’s financing services mergers, acquisitions and consolidations in sector, none have yet succeeded in securing ported from about 40 countries, and 55 national expositions. all the more important. Though most com- the coming years. investment in Argentina. different chemical producers. HH imports panies around the world have taken ad- With our new government and improving significant amounts of product from- Bra How has HH adapted to the 2012 gov- vantage of cheap financing thanks to low What changes has the new government investor confidence, we hope to see an im- zil, China, and increasingly India (for both ernment decision to restrict imports by interest rates in the United States, Argen- Could you provide us with an overview brought into effect and how have these provement on this situation. In a few years’ food and oil and gas). HH sees itself as the requiring companies to submit import tine companies have not had access to this of Arubras from its founding in 1992 to impacted on the chemical distribution time, I believe one or two multinational largest industrial distributor in Argentina in affidavits known as DJAIs? financing. Nevertheless, HH has provid- the present day? industry? chemical distributors will make large in- terms of value. At first, HH was not sure the extent to ed trusted clients with the financing they Arubras began life as a small family com- The new government eliminated most of vestments in the distribution infrastructure which the DJAIs would curtail imports. need, which is especially important in in- pany and has since grown to become an the import restrictions, such as DJAIs, im- in some of our ports, such as Campana. Can you describe the market trends The government initially pushed com- dustries with low margins and high financ- international chemical distributor, focused port payments, and many export fees. It is We have already seen similar investments since 2012 that have affected Henry panies to export as much as they import, ing needs. on the Argentine market. We bought out a also working hard to obtain an agreement in countries such as Brazil and the United Hirschen? which required a significant amount of gov- former partner in 2002 and merged with with the holders of Argentina’s foreign debt States. The petrochemical industry has been in ernment supervision and inquiries about What is HH’s three-year outlook? competitor Treassure. This union combined to end the country’s position as a financial wait-and-see mode since 2012. Though company sales. Companies that have been HH envisions two major projects for the two complementary product portfolios. The defaulter. This will then make us as a coun- Looking ahead, what can we expect to the market has grown, import restrictions able to quickly adapt to changing import short term. On the one hand, HH will in- company moved into new offices in 2010, try eligible for lower financial loans for see for Arubras in future? have created an artificial market. The new requirements are those that have wielded creasingly focus on the industries where with the aim of growing the company; important infrastructure developments our Argentina is our focus; the way of doing Argentine government will likely liberal- a competitive advantage over competitors. customers are leading the company, espe- however, the challenging political and eco- country needs and, more importantly, the business in different cultures is a tough bar- ize the economy, which will likely include For example, the government previously cially on its commitment to the food indus- nomic situation at the start of the last de- government expects Argentina to gain in- rier to international expansion. We have ex- the easing of import restrictions. It is still decided to reduce import licenses for two try as one of Argentina’s most important cade prevented this. Nevertheless, business creasing amounts of foreign investment as pertise in our home market, we know our uncertain which ones companies may win months. Less competitive peers might have areas of focus. On the other, HH plans to remained profitable because of the higher a result. It is still a work in progress, but customers and we know the relevant sup- or lose once trade opens. found out a month after this kind of an- increase the company’s warehousing ca- margins in existence when restrictions af- we are returning to simpler times in terms pliers. With the right conditions and market Nevertheless, HH has grown thanks to nouncement; HH would react within days pacity once the economy stabilizes and fected product imports. Furthermore, in the of business operations. We are optimistic stability we can easily double or triple our growth in strategic industries. In recent and was able to adapt accordingly. shows growth. ▬ recent past, local margins exceeded normal but it will not be an easy task. We will then revenues. ▬

Adrían Gabriel Martin Font & Schwartz Miguel De Cecco GRUPO SIMPA

MF: General Manager MDC: Business Manager MF MCASSAB ARGENTINA Can you provide us with an overview of Grupo Simpa and its 30 and 60 days, Grupo Simpa allows between 90 and 180 days. This operations within the Argentine chemical industry? kind of financing has always been important in the Argentine petro- Which area contributes most to the Argentine branch’s revenue? Grupo Simpa began in 1978 when my father bought its predecessor, chemical industry as, throughout the country’s history, banks have In 2014, 50% of the revenue of MCassab’s Argentina branch came then known as Sociedad Importadora de Materias Primas America- come and gone; in recent years for example, international banks have Why did MCassab decide to enter Argentina in 2007? from life sciences, 30% from animal technology or feed, and 20% nas. At that time, few petrochemical companies existed in Argentina deserted the country. Our consistent financing options have created a In 2007, MCassab’s shareholders decided that the company’s three from industrial chemicals. Yet MCassab’s goal is for each of these and the Argentine economy was opening up to imports. Grupo Simpa relationship of trust between Grupo Simpa and our customers. business units of the chemical distribution division would do well in three areas to contribute a third of the Argentine branch’s revenue. now has one division that imports and sells machines, motorcycles, Petrochemical producers are especially risk-conscious in Argentina. Argentina. In 2008, MCassab opened the company’s Argentina branch MCassab aims to have a diversified set of revenue sources to manage and other recreational vehicles; and another division that distributes The world average for distribution sales as a percentage of total plas- and made its first sale in September 2008 after developing the neces- the risk associated with an eventual downturn in one of the industries raw materials for plastic converters. tics sales is about 20%; in Argentina, it is about 40%. Petrochemical sary logistics and support, and after making the necessary government that the company serves. The plastics division grosses about $4 billion pesos per year, with the producers prefer to sell their products to Grupo Simpa rather than registrations for the food and feed industries. MCassab has seen very fast growth in life sciences, which includes company’s overall revenue hitting the $5 billion pesos mark. Grupo directly to end-users because it is less risky. The company’s shareholders determined that Latin America has good food, pharmaceuticals, and cosmetics. Moreover, the company fore- Simpa’s revenue has been growing at approximately 25% per year business potential and that penetrating the Argentine market as the sees great opportunities in industrial chemicals and in feed. MCassab for the last 20 years, placing Grupo Simpa among the 150 highest- In December 2015, the Macri administration lifted currency con- company’s second market in Latin America outside of Brazil made foresees growth opportunities in these two industries especially as the 108 earning companies in Argentina. trols, with the aim of liberalizing Argentina’s trade policy. How logical sense. Though the Brazilian and Argentine markets are differ- new government is likely to implement more business-friendly regula- 109 will these changing macroeconomic variables affect the plastics ent in scale, they have similar end-markets. Around 2007, the focus tions and as the oil and gas industry continues to develop. With respect Could you tell us more about Grupo Simpa’s plastics division? industry? of MCassab’s distribution business in Brazil was the feed industry, to the oil and gas industry, MCassab is confident that it can supply In 1978, the plastics division of Grupo Simpa sold around 1,000 The lifting of currency controls initially led to an increase in the pe- which is also an important industry in Argentina given the importance chemicals to oil and gas fields with a more integrated approach. The tons per month; in 2015, this had reached about 17,000 tons per so-dollar exchange rate from $9.80 pesos per dollar to about $13, or of its food industry. The strategy for MCassab’s chemical distribution company anticipates to especially supply chemicals for the production month. The company distributes the products of Argentina’s main a devaluation of about 35%. The devaluation of the peso will cause division was to recreate the division’s Brazilian success in Argentina. of natural gas. petrochemical companies: polyethylene (PE) from Dow Argentina, plastics prices to increase 35%, but increased plastics imports will homopolymer polypropylene (PP) from Petroquímica Ensenada cause prices to decrease by around 15%. As a result, plastics prices What kind of growth has MCassab’s Argentina branch experi- What challenges does MCassab face in Argentina? (Petroken), copolymer PP from Petroquímica Cuyo (Petrocuyo), and should only increase by 20% in 2016. enced since 2008? Though the company aims to grow within life sciences, feed, and in- polystyrene from Petrobras. In fact, the first product we distributed At the same time, companies have been exiting their positions in MCassab has grown significantly and swiftly since its first sale in dustrial chemicals, MCassab remains vigilant about how the new gov- were from Monsanto’s polystyrene plant, which was eventually ac- pesos by buying inventory in anticipation of the peso’s devaluation. 2008, having now reached millions of dollars in revenue in seven ernment may change economic and commercial policies. Two issues quired by Petrobras. We are also the main Argentine distributor for In particular, the anticipation of the peso’s devaluation has led to years. This growth has been possible thanks to the company’s profes- that significantly affect MCassab’s business are the dollar exchange Styrolution, formerly a joint venture between INEOS and BASF and companies stockpiling plastics products. sional and technical staff, and thanks to the 85-year old relationship rate and imports, and MCassab will pay close attention to how the next the largest producer of ABS/SAN (Acrylonitrile Butadiene Styrene/ that MCassab has with its suppliers. Moreover, MCassab is known for government addresses these two issues. These two issues are impor- Styrene-acrylonitrile resin), which Argentina imports. Grupo Simpa How will more petrochemical imports affect the growth of Gru- the quality of its service and assistance among suppliers and end-users. tant to MCassab because they determine whether MCassab’s clients is now the largest petrochemical distributor in Argentina, with a 55% po Simpa’s plastics division? MCassab’s goal in Argentina is to become one of the top five chemical will invest and in what. share of the plastics distribution market. Since the Argentine government began to restrict imports in 2012, distributors in Argentina. For example, stronger import restrictions in the last two years have large customers were forced to look to local petrochemical produc- stalled MCassab’s growth and have forced the company to put some What market conditions in Argentina have allowed Grupo Sim- ers to compensate for the supply of products that they would nor- How important is the Argentina branch to MCassab’s interna- projects on standby. MCassab cannot import certain products on the pa to control most of the country’s petrochemical distribution mally obtain from foreign producers. In turn, petrochemical produc- tional strategy? scale that it could be importing. sales? ers have prioritized supplying a set of large customers rather than MCassab’s Argentina branch is the biggest branch outside of Brazil Simpa’s ability to control most of the petrochemical distribution supplying distributors. and is the first one to copy the company’s distribution division model What are MCassab’s expectations for the company’s Argentina market in Argentina relates to the country’s financial instability. In Now Argentina’s trade policy will liberalize, these large companies in Brazil. The Argentine branch complements the Brazilian branch branch? recent years, Argentine converters have had virtually no access to will return to their traditional suppliers, many of which are based well as clients that operate in both Brazil and Argentina are happy to By 2017, MCassab plans to increase its revenue by 50%. Moreover, international capital and local banks are loath to grant loans of ad- in Brazil. As a result, Dow, Petroken, Petrocuyo, and Petrobras will have a single company supplying them in both countries with the same within the next three years, MCassab expects to be one of the top five equate sizes and maturity periods. At the same time, Argentine pet- have a surplus of products that they will sell to Grupo Simpa. With degree of product quality and assistance. Some clients are also asking chemical distributors in Argentina, and potentially the region. MCass- rochemical producers are unwilling to assume the risk of supplying an increased stockpile, we will target our platform of petrochemi- MCassab to expand beyond Brazil and Argentina in Latin America ab is optimistic about the success of the Argentine branch but also products on credit. As a result, our financing options have enabled us cal customers, which is the largest in Argentina. This could increase given the increased interest in regional suppliers that began two or of the Argentine economy. With the new presidential administration, to become the largest petrochemical distributor in Argentina. For ex- our petrochemical distribution to 60%. To accompany the expected three years ago. Multinationals are now looking for distributors that MCassab expects to see the implementation of more business-friendly ample, while Dow Argentina grant their customers up to seven days growth, we will invest $15 million to build a new 32,000-square- can supply a product with the same quality and assistance throughout reforms. And if the Argentine economy grows, MCassab will grow to pay after receiving an invoice and our competitors allow between meter warehouse in San Fernando, Buenos Aires Province. ▬ the entire region. with it. ▬

number of warehouses to undertake the lo- As an integrated logistics company Alfredo Milito, gistics of not just storing divided packages, mostly focused on the chemical industry, but also moving ISO tanks with spreader Mesucan is subject to the fluctuations beams. The company now also divides and of that industry. Is Mesucan’s special- Luciano Milito & drums chemicals. ization a business risk or a competitive In short, Mesucan has truly become an in- advantage? Victor Blanco tegrated logistics company specialized in Mesucan has taken the conscious decision chemicals and petrochemicals that provides of becoming a logistics operator special- solutions for transport, warehousing, divi- ized in chemicals. Though that focus may sion, and other services. come with a risk, it is outweighed by the AM: President In 2014, logistics services related to the benefit of being one of Argentina’s only LM: Commercial Director storage and transportation of specialty, fine, integrated logistics companies focused VB: General Manager and commodity chemicals accounted for on chemicals. The transportation market LOGISTICA MILO 70% of Mesucan’s revenue. In addition to is very fragmented in Argentina. Family- Dow, other important clients have included owned companies with one to five trucks Ashland, Solenis, BASF, and Brenntag. constitute about 85% of Argentina’s trans- Could you provide us with an overview of Logistica Milo from portation and logistics companies. Low its foundation in 1905 to the present day? Andrés What explains the timing of Mesucan’s barriers to entry are largely what have AM: Logistica Milo began as a pure-play transportation company; addition of new logistics services? caused this fragmentation. National Law in the very beginning we used horses, getting our first trucks in Mesucan’s clients have always been the 24449 regulates road traffic and safety, and 1936. We moved to our current facilities in 2008 as a result of our Gerschenson company’s motor for change. The top- a chapter in an annex to that law regulates increasing work with the chemical industry. The company now has notch companies with which Mesucan the transport of dangerous goods. However, a fleet of around 40 trucks and 70 trailers. Working with a range of works have always pushed the company the provisions contained in that law are not for more services and more security. The very demanding. petrochemical companies, we offer transportation, specialist ware- How will the chemical environment change as a result of the General Manager multinationals that operate in Argentina Mesucan now boasts the expertise, certi- housing services, isotank rentals, with one of our major services new government administration? MESUCAN being heating-controlled storage. In terms of new activities for the VB: Under the previous government Logistica Milo had a lot of and Latin America often demand standards fications, management system, and infra- 110 company, we are in the process of adapting this facility into a fiscal support, particularly in terms of the awarding of credit lines, which that are higher than national ones. Espe- structure that allows the company to serve 111 depot, which will improve our abilities to handle international cargo allowed us to upgrade our fleet and facilities. Safety in transport is cially since 2012, Mesucan has sought to the chemical industry better than most lo- for imports and exports services. paramount for us and we need a high quality fleet to provide this. create a mid-term plan for the company, gistics companies. With the new government we are looking forward to a new and which includes the professionalization of What sets Logistica Milo apart from its competitors and how bright future as we expect the opening of the market to attract many the company’s management. Though I am a What are Mesucan’s plans for the short- has innovation enabled you to better serve your customers? more petrochemical companies to Argentina, for whom Logistica member of the founding family, Mesucan’s term? VB: We pride ourselves on working together, side by side, with our Milo can provide distribution and logistics services. We also expect management system is now more complex In addition to Mesucan’s flagship chemical customers to solve their needs and come up with a range of special- exports to increase heavily with the lift of controls in exchange rates and boasts more professionals. division, the company added an agrochemi- ist solutions that are rare among our competitors. Certain chemicals, brought about by the new government. cal division in 2015. Mesucan anticipates such as toluene diisocyanate, for example, require heated storage. How would you describe the company’s that agrochemicals will be one of the main To improve this service further, we invested in a boiler with a tem- With the recent change in government and increasing invest- performance since 2010, and what has growth drivers of the Argentine economy, perature-controlled program that enables us to heat products within ment in unconventional hydrocarbons resources, what is the influenced that performance? especially as the new government is ex- our isotanks without adversely impacting on the structure of the outlook for the Argentine chemical industry in the future? In 2010, Mesucan employed about 20 peo- pected to liberalize its trade policy. In chemicals. Another unique service we offer is the ability to transfer LM: We see a bright future for Argentina. The country has huge po- Can you provide some background to ple and revenue reached about $20 million 2015, Mesucan invested $40 million pesos product between different tank sizes at our sites, for example from tential, not only in exploring and developing our natural resources, Mesucan’s history? pesos; in 2015, the company employed 42 in a new warehouse to store agrochemicals. isotanks to IBC or drums. This allows our customers to distribute but also the human resources aspect. Argentina therefore needs to Mesucan was founded in the 1960s as a people and revenue reached about $70 mil- The company also obtained certification their supplies more efficiently throughout the country using our fleet focus on increasing infrastructure investments in rodads, railways, family-owned, general transportation com- lion pesos. Thus, taking into account infla- from the Cámara de Sanidad Agropecuaria of smaller trucks, rather than one large one. storage and ports to support this future. Logistica Milo has imple- pany. The company used to transport gen- tion, the company has about doubled in size y Fertilizantes, or the Argentine industry LM: We are also always looking to provide our customers with add- mented a yearly investment package to constantly improve our in- eral merchandise to and from the Port of from 2010 to 2015. Throughout this period chamber for agrochemicals. ed-value solutions and adapt to new market trends. Some of our cus- frastructure, giving us an edge on our competitors while also al- Buenos Aires. In 1975, Mesucan gained of growth, the Argentine government pur- Mesucan also bought a new property of tomers produce a number of waste products, such as crude glycerin, lowing us to provide excellent service to our customers. With these Dow Argentina as a client, which paved sued an economic model based on high about 30,000 meters in Zárate near the a by-product of the growing biofuels market. We collect this waste investments, we will be able to comfortably supply new companies the way for the company to serve the pet- consumption and local production. In par- Zárate petrochemical center. Moreover, product and are looking to export it to China. Our main focus is to as they increase investment in Argentina. rochemical industry more broadly. To this ticular, some of the chemicals that Mesucan Mesucan is discussing with clients about work with our customers, identify their needs and supply specialist VB: Argentina is always an opportunity for chemical investments. day, Dow remains Mesucan’s main client. handles are commodities used in personal opening warehouses near Añelo, Bahía services when they require them. The petrochemical industry in par- Low international oil prices have delayed activity in the first half of In 1997, the company added storage to its care, cleaning, the automotive industry, Blanca, and Comodoro Rivadavia. ticular has struggled with transportation over the last ten years and the year, but I have no doubt that with a more clear knowledge of transportation services by acquiring its first construction, and other industries that saw These investments are driven by Mesucan’s Logistica Milo has grown in the market to mitigate these issues. At the situation in the United States and China, the second half of the warehouse to store goods defined as dan- a significant amount of growth in recent expectation that two drivers of the Argen- present, 90% of our business concerns chemical companies, such as year will regain momentum. Logistica Milo has invested in its fleet gerous by the International Maritime Dan- years. Though this growth may not be re- tine economy will be the energy and agro- YPF, BASF, Sherwin Williams and Petroquimica Rio Tercero, with and facilities over the past decade in preparation for this scenario gerous Goods code, which include products flected in the sluggishness of recent GDP chemical sectors. ▬ the remaining 10% of our business covering activities related to the and is now ready to support new products from global chemical that are flammable, toxic, corrosive, etc. growth, Mesucan has clearly seen a higher chemical industry. companies. ▬ Throughout the 2000s, Mesucan acquired a demand for its services.

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CONCLUSION: FINAL THOUGHTS, CREDITS AND INDEX

"Investors should recall the first-mover advantage. Those that take the risk in heavily investing in an opportunity before others are those that later reap significant profit. Now is the time to invest in Argentina’s petrochemical industry."

- Ignacio Millan, President, IPA Image: Odfjell FINAL THOUGHTS Global Business Reports Global Business Reports FINAL THOUGHTS

“Latin America is a developing region with a large market of more than 680 million people; these economies continue to grow despite their economic and political issues. We believe new investments in the region will take place in countries with abundant, “We need to look ahead over the next two decades: in around ten years we will see readily available, competitively priced feedstock. An added bonus for Argentina is the Argentina become self-sufficient in terms of hydrocarbons, which will positively new government: the country is slowly developing a political environment conducive impact the petrochemical industry. We then need to focus on exporting – Argentina to attracting foreign direct investment.” currently only exports around 0.8 million tons of product per year - but this does not make economic sense today.”

- Rina Quijada, Senior Director Latin America Chemicals, - Enrique Grotz, IHS Markit Partner and Oil & Gas Leader, EY

“We believe the fertilizer industry will experience a great deal of change in the next ten years and we will need to be in close proximity with the farmers to learn about “Many products will be going off patent in 2017, which will lead to a natural increase their response to our products. We could see a complete turnaround in the Argentine in the size of the market. There are also no blockbuster products in the pipelines of the agricultural model in the next two to three years as we encourage farmers to take care big R&D companies. The key issue is market access and only those companies with of the soil and adopt environmentally friendly measures.” access to consumers will survive, so we are likely to see more consolidation within the industry.”

- Jorge Bassi, President, - Fernando Lespiau, Fertilizar Commercial Director, UPL Argentina

114 115

“The challenge with developing unconventional resources is finding ways of making “The impact of the shale boom in the United States had a profound impact on its production more economic. You cannot achieve this with a single technology; rather petrochemical industry, but imagine the impact that such a boom would have in you need to find the right combination. YPF wants to be a company that leads the Argentina, where the ratio of resources to economic output and population is much development of the country’s capabilities by developing the technologies locally rather larger. Even if Argentina underachieves, the impact could still be massive.” than importing them, which would in turn reduce costs.”

- Gastón Remy, - Santiago Sacerdote, President, General Manager, Dow Argentina YPF Tecnología S.A. (Y-TEC)

“A particular area of interest for the future will be oleochemicals. Companies in “With today’s abundance of crude oils and particularly with shale oils, if a plant can palm-oil rich countries, such as Malaysia, are buying companies in Europe. The main process effectively without having slowdowns or accelerated degradation of assets, oleochemical we have in Argentina is biodiesel, but I believe we could develop some we can see a significant impact on the bottom line. This applies to products as well; if other interesting businesses from oleochemicals, such as propylene glycol.” a company is flexible enough to produce a variety of products that can serve different markets, their facility is a real asset.” - Diego Garcia Touza, Director, - Marcelo Carugo, Reagens Varteco Director Global Refining, Emerson Process Management

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports Global Business Reports ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Industry Explorations COMPANY INDEX Global Business Reports Global Business Reports COMPANY INDEX

COMPANY INDEX COMPANY INDEX

E&P page(s) CASAFE 56, 57, 58, 61, 63, 64, 69, 70, 72, 78 GENERAL Chemotecnica 60, 62, 67 AAICI 10 CIAFA 57, 60, 61, 65, 69, 70, 72, 79 APLA 3, 7, 11, 12, 15, 16, 83, 103 CropLife 56, 57, 63 CIQYP 14, 23, 24, 52, 105 Fertilizar 59, 74, 114 IPA 9, 13, 18, 24, 26, 29, 47, 48, 83, 113 Gleba 56, 58, 73 Grupo los Grobo 60, 69 PETROCHEMICALS InsuAgro 60, 75 Braskem 11, 19, 26, 28, 36, 37, 86 Monsanto 14, 17, 56, 60, 108 Carboclor 34, 42, 83 Nova 17, 62, 68 Chevron 25 Nufarm 56, 60, 72 Compañía Mega 24, 39 Profertil 6, 13, 17, 24, 34, 59, 62, 85 CONICET 12, 27, 45 Reopen 60, 79 Dow 10, 21, 24, 26, 27, 28, 32, 33, 34, 36, 39, 41, 56, 60, 78, 79, 82, 84, 94, 100, 101, 102, 103, 108, 111, 115 Rizobacter 56, 60, 71, 78 ExxonMobil 40, 85 ROTAM 56, 78 ICIS 20, 24, 48 Syngenta 17, 56, 62, 67, 71, 78 Meranol 17, 48, 50 UPL 60, 61, 76, 115 Petrobras 24, 27, 34, 39, 41, 100, 108 Petroken 25, 26, 34, 37, 100, 108 SERVICES AND TECHNOLOGY Petronas 25 AESA 62, 84 Petroquimica Cuyo 25, 26, 34, 37, 94, 102, 108 Air Liquide 81, 87 116 Refinor 25, 44 Bolland 83, 87, 88 117 Shell Argentina 16 Emerson Process Management 91 YPF 13, 15, 18, 20, 22, 24, 25, 26, 27, 28, 29, 32, 34, 36, 37, 39, 45, 59, 74, 82, 84, 87, 90, 92, 110, 114 EY 19, 25 YPFB 25 General Electric 87, 92 Y-Tec 12, 27, 45, 49, 114 IHS Markit 20, 23, 29, 31, 114 Intertek 95 SPECIALITY CHEMICALS Odebrecht 83, 86 Arquimia 48 Odfjell 87, 90, 107, 114 BASF 37, 48, 67, 79, 94, 99,102, 108, 110 Restec 94, 102 DuPont 49, 51, 61, 71, 74 Siemens 87, 93 Faisan 48 Techint 82, 85, 100 INCAPE 49 Lanxess 48, 53 DISTRIBUTION & LOGISTICS Plaquimet 49, 52 Arubras 98, 107 Reagens Varteco 49, 52, 115 BDP International 100, 105 Brenntag 99, 104, 110 AGROCHEMICALS Celsur Logistica 101, 103 Aapresid 58, 61, 62, 66, 74, 76 Crosslog 102 Agrofina 56, 60, 61, 69 Grupo Simpa 99, 100, 108 Agroservicios Pampeanos 9, 74 Henry Hirschen 99, 106 Arysta LifeScience 60, 61, 70, 75 Logistica Milo 97, 99, 110 Brometan 62, 77 MCassab 99, 100, 109 Bunge 34, 59 Mesucan 96, 98, 100, 100

This list contains those companies interviewed during the course of research for this publication and as such represents only a limited selection of the companies operating in the This list contains those companies interviewed during the course of research for this publication and as such represents only a limited selection of the companies operating in the chemical industry of Argentina. It should not be considered a comprehensive guide. GBR holds an exclusive and extensive database for Argentina and the wider region. chemical industry of Argentina. It should not be considered a comprehensive guide. GBR holds an exclusive and extensive database for Argentina and the wider region. For further information on database access packages, please contact [email protected] or call +44 20 7812 4511. For further information on database access packages, please contact [email protected] or call +44 20 7812 4511.

EDITORIAL AND MANAGEMENT TEAM

Senior Project Director: Alice Pascoletti ([email protected]) Project Director: Laura Brangwin ([email protected]) Industry Analyst: Harriet Bailey Project Coordinator: Katherina Prügel Researcher: Francis Lister

Executive Editor: Mungo Smith ([email protected]) General Manager: Katya Koryakovtseva ([email protected]) Graphic Designer: Designa ([email protected])

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THANK YOU 118

We would also like to sincerely thank the government bodies, associations, chambers and institutes that took time to share their insights into the market.

Our partner, the Latin American Petrochemical and Chemical Association (APLA)

Argentina Investment and Trade Promotion Agency (AAICI) www.aaici.com.ar

La Cámara de La Industria Química y Petroquímica (CIQYP) www.ciqyp.org.ar

El Instituto Petroquímico Argentino (IPA) www.ipa.org.ar

Cámara de Sanidad Agropecuaria y Fertilizantes (CASAFE) www.casafe.org

Cámara de la Industria Argentina de Fertilizantes y Agroquímicos (CIAFA) www.ciafa.org.ar

Aapresid www.aapresid.org.ar

CropLife Latin America www.croplifela.org

Industry Explorations ARGENTINA PETROCHEMICALS AND CHEMICALS 2016 Global Business Reports