Methanex - Investment Opportunity Methanol Global Leader Leading market share, competitive assets, strong balance sheet Positive Industry Outlook Healthy demand growth outlook, limited new supply Strong Cash Flow Generation &…
Industry Overview 59 million tonnes annual global demand1 Top producers account for half of global sales Methanex is the global leader 15% global market share2 Presence in all major regions Methanex posted methanol prices are a…
Methanol End Uses Energy & MTO Traditional Uses (60% of Demand) (40% of Demand; High Growth) Formaldehyde Acetic Acid Fuel Blending DME (di-methyl-ether) Wood Industry, Pharmaceuticals, Automotive Fleece, Adhesives, Paints MTBE…
Methanol Usage.. By Derivative By Region Source: Methanex year ended December 31, 2014 6 6
Industry Review Strong Demand Growth Projected 8.0% CAGR, led by energy applications* 2004 2014 CAGR: Energy: 12.3%* 2015 2018 CAGR: (000s tonnes) Energy: 11.1%* Total: 6.3% 90,000 Total: 8.0% 80,000 70,000 60,000 50,000…
Demand / Supply Balance Demand expected to outpace new capacity over next several years* A number of projects under discussion, but limited committed capital Supply gap will be filled through a combination of new China supply and…
Methanol-to-Energy Methanol is primarily made from natural gas High priced oil versus natural gas creates substitution incentive Methanol is a liquid fuel and oil substitute Source: Historical annual data and forecast from IHS…
Methanol Industry Cost Curve China, Russia Exports, Germany, India, E. Europe Eq. Guinea, Indonesia, Iran, Malaysia, Methanex Plants, Oman, Qatar, Saudi, Trinidad (MHTL), Venezuela, USA Source: Methanex Steep cost…
Methanol to Olefins (MTO) Natural Gas Coal Ethylene Petroleum Residues Oxides (EO) Synthesis High Purity MEG Gas Ethylene Production Acrylic Acid (AA) Methanol to Methanol Olefins Production ACN High Purity Propylene…
Significant MTO demand growth potential Estimated Methanol Capacity Number of Plants Start-up (KMT) Completed 6 6,770 H1 2015 5 3,900 H2 2015 4 6,400 H1 2016 1 2,000 Total 16 18,470 6 merchant plants today, potential methanol…
Methanol Affordability into Olefins (MTO) MTO plants are not able to switch to Naptha as feedstock Many producers are integrated downstream beyond ethylene and propylene (polyethylene, monoethylene glycol, etc.) Methanol…
Di-Methyl Ether (DME) DME can be blended directly with LPG (propane) up to approximately 20% DME demand is approximately 4 million tonnes per year. Much of the methanol being consumed as a raw material for DME comes from consumers…
Methanol as a Fuel Methanol has attractive features as a transportation fuel: Liquid fuel can be blended with gasoline and ethanol in todays vehicles at minimal incremental costs High octane fuel which reduces emissions when blended…
Fuel demand expected to continue growth Local Methanol Implemented Province Gasoline Standards Since Gansu M15 & M30 2009 Guizhou M15 2010 Hebei M15 & M30 2010 Heilongjiang M15 2005 Jiangsu M45 2009 Liaoning M15 2006 Shaanxi…
Methanol affordability as a fuel Methanol a highly affordable gasoline substitute in China Most fuel blending in China is at low percentages and sold based on volume China (Nanjing) Wholesale Gasoline Price: 2.58/gallon*…
MTG & MTA emerging opportunity Methanol-to-Gasoline (MTG) and MTG MeOH MeOH No. Location Demand Start-up Producers Supply Methanol-to-Aromatics (MTA) are (KMT) emerging methanol demand 1 Jincheng Jincheng, 300 Q4 2009…
Methanol / DME as a Fuel Outside China Europe is blending methanol into fuel today (up to 3% blending permitted) Australia - Coogee demonstration project targeting limited launch of methanol blends in early 2015 Israel - M15 demo…
Methanol as a Marine Fuel Regulations Driving Change 40 MMTPA methanol equivalent market Stena Ferry Lines converting to methanol Global Emission Control Areas (ECAs) N. Europe and N. America introducing tighter ship…
Methanex Production Capacity Annual Chile USA (Geismar) Year Production Built Capacity (000 tonnes) Chile I, IV 1988 / 2005 1,720 Chile II, III 1996 / 1999 Geismar, Louisiana 2014-16 2,000 New Zealand Trinidad Egypt (50%) 2011…
Geismar Project Update Geismar 1 Achieved first methanol in January, 2015 Geismar 2 Start up targeted for late Q1 2016 Attractive project attributes: 10-year natural gas contract with Chesapeake to supply one plant 11-year gas…
Chile Potential Sources of Upside First prize: two-plant operation in Chile, supported by Ongoing unconventional gas exploration and development in Chile Argentina tolling arrangement Argentina shale gas (EIA estimates over 500 tcf in…
Impressive Financial Results Average Modified ROCE of 15% from 2005-2014 7.00 Adjusted EPS 50% 6.00 Modified ROCE Modified ROCE Adjusted EPS 40% 5.00 4.00 30% 3.00 20% 2.00 10% 1.00 0.00 0% 2005 2006 2007 2008…
Valuation Considerations Methanex is trading at a discount to replacement cost Capacity millions of tonnes 1 incl. Growth Trinidad 2.0 Chile 0.4 USA (Geismar) 2.0 New Zealand 2.4 Canada (Medicine Hat) 0.6 Egypt 0.6 Total 8.0 .…
Valuation Considerations Modest valuation relative to strong cash generation capability 1 (millions of tonnes) With Growth Upside Initiatives Potential Current Operating Capacity 7.0 7.0 Geismar 2 1.0 1.0 Chile Incremental…
Q4-14 Liquidity & Capex Outlook Strong financial position to execute growth opportunities Estimated Capital Expenditures 1 Debt & Liquidity at end of Q4-14 (US millions) (US millions) Total Debt 2 1,528 Geismar 350 Liquidity 2…
Returning Cash to Shareholders Meaningful, sustainable and growing dividend Quarterly dividend of 0.25 per share, yield 2%1 8.6 million share normal course issuer bid (10% of public float) expiring May 5, 2015 4.8 million shares…
Summary Positive industry dynamics Growth led by methanol energy applications, MTO Global leader with competitive assets Solid franchise value that is difficult to replicate Global marketing, supply chain and shipping network Strong…
Q&A 3131
Appendix 3232
Methanol is.. Primarily produced from natural gas Natural Gas syngas Reforming 900oC CO CO2 H2 Steam [& Oxygen] Compression Cooling crude chemical grade Synthesis Distillation CH3OH CH3OH H2O APPENDIX 3333
Methanol Consumers Concentrated consumer base 30% of global demand from top 20 consumers Main consumers are large, global chemical companies: Celanese, BP, Momentive, Skyford, Sabic, BASF, etc. Methanex supplies primarily…
Methanex Cost Structure Natural gas Fixed Manufacturing and Long-term gas contracts have fixed base price G&A costs and variable component linked to the price of methanol Primarily people costs (approx. 1100 employees) Reduces…
Carbon Recycling International - Renewable Methanol in Iceland CRIs GO Plant in Svartsengi, Iceland Worlds greenest methanol technology captures carbon dioxide from industrial emissions and converts it into Renewable Methanol Sales…
Renewable Methanol Methanol and DME is produced from fossil fuels and renewables LNG = Liquefied Natural Gas; DME = Di-Methyl Ether; OBATE = On Board Alcohol to Ether (i.e. methanol converted to DME on board ships) APPENDIX 3737
Methanex Global Supply Chain APPENDIX 3838
Operating Rates in China China has operated at 50% based on nameplate capacity; however, market is tighter than it appears and effective operating rate is 73% (source: MMSA) Many plants are not operational due to various factors…
Management Alignment Executive shareholding requirements: CEO - 5 times salary in Methanex shares or share units Senior executives (5 members) 3 times salary Other senior management (50 employees) 1 times salary Short-term…
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