Latin America DEF Market OverviewLatin America DEF Market OverviewSteve CoxNational Sales Manager

What is DEF?A Chemical Being Used in the Petroleum Industry 

32 5% hi h it ( t ti d ) / li it ti f 31 8% t 33 2%• 32.5% high purity urea (automotive grade) w/ limitations of 31.8% to 33.2% • 67.5% deionized water (DI has mineral ions removed making it a strong solvent & aggressive on equipment) • Manufactured, packaged & handled to AUS‐32, ISO 22241 & API Specifications• Weight: 9.08 lbs/gallon• Freezes/Crystallizes at 12° F – not affected by freeze / thaw cycleFreezes/Crystallizes at 12 F  not affected by freeze / thaw cycle• Degrades at constant temperatures around 90° F where free ammonia is released & concentration affected • Will not separate• Corrosive• Crystallizes when it comes into contact with airy• Creep – DEF is 1.8 times more “searching” than water & air is 3 times more than water• All DEF manufactured to the required specifications is the same

What DEF Is NOT?

• NOT a fuel• NOT a diesel fuel additive • NOT a fire hazard• NOT a health hazard• NOT regulated by the EPA

Various DEF Production MethodsVirgin – Hot Urea melt process from Nitrogen Complexes – 13 facilities in North America 

Cl f f d i / N G h i A i U Add P W i h h i• Cleanest, purest form of production – starts w/ Nat Gas, synthesize Ammonia, convert to Urea, Add Pure Water – without having to handle, move or store the raw material

• Large scale batches & production can be done• Most facilities have on‐site ISO certified laboratoriesDissolving PrillDissolving Prill• Can be done almost anywhere (as long as proper water, tank & handling equipment are in place)• High touch process• Not all Urea is the same – only a handful of plants in the US produce the qualified prill requiredDilution of Liquor Concentrate (Between Dissolving & Dilution – 80 facilities in North America)Dilution of Liquor Concentrate (Between Dissolving & Dilution  80 facilities in North America)• Transporting higher concentrations of Urea liquor reduces freight costs• Investments can be relatively costly (i.e. DI‐water) – scalability can be a challenge• High concentration DEF grade Urea liquor is available at only a few plants in North America

Contaminants in DEF & The Result

OTC 5025 Misco

Emission standards timeline: medium and heavy duty vehicles

Euro-V equivalent emission standards are enforced at present in Brazil, Chile and Argentina

Emission standards timeline: medium and heavy-duty vehicles

• There are five countries in Latin America that have imposed emission standards that require the use of DEF by certain vehicle segments and weight classes. These are Brazil, Chile, Argentina, Colombia and Mexico.

• The most advanced countries in terms of emissions legislation are Brazil, Chil d A ti ll ith i i t d d i l t t E V f d

Implementation date of emission standards that require the use of DEF

Country Implementation date

A ti J 18Chile and Argentina, all with emission standards equivalent to Euro V enforced at present (shown below).

• In Mexico and Colombia, DEF consumption is restricted to buses in major urban centres, such as Mexico City and Bogota DC. Equally, there is some DEF consumption by international truck fleets that are required to travel into countries with stricter emissions legislation.

Argentina Jan-18

Brazil Jan-12

Chile Oct-15

Colombia Jan-19

Mexico Jan 18• There is, however, stricter legislation expected to be introduced in Mexico and Colombia, as well as Brazil, that will boost DEF consumption in these countries. Details of this upcoming legislation can be found on the next slide.

Mexico Jan-18

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022EPA 2010 / Euro VIEPA 2004 / Euro IV

New registrations

Mexico

P-8

Euro V

Euro V / US 2004 / US 2007 (PM)

Euro V

Euro IV

P-7

Euro IV/US 2004

P-5

Euro III / US 1998

Euro II / EPA 1996

Euro IVArgentina

Chile

Colombia

Brazil

Source: ICCT, Integer

INTEGER | LATIN AMERICA DEF MARKET OVERVIEW – SEPTEMBER 2017 (PREPARED FOR KLEERBLUE) | PAGE 9

Euro III/US 1998

Euro III/US 1998Ecuador

Peru

Upcoming emission legislation in Latin America

Mexico will have the most stringent emission standards in Latin America if EPA 2010/Euro VI standards are imposed as scheduled in January 2018

Upcoming emission legislation in Latin America

• In the next five years, the most significant developments in emission standards in Latin America are scheduled to occur in Mexico, Colombia and Brazil.

• In Mexico, the government has passed legislation to mandate all new medium and heavy-duty vehicles to comply with either EPA 2010 or Euro VI from January 2018 onwards. This means skipping the interim Euro V/EPA 2007 standards, y pp g ,imposed at present in Brazil, Chile, and Argentina. This legislation may be subject to delay as Euro-VI grade diesel fuel (<10ppm sulphur) is reported to be limited in its availability nationwide, however no delays have been announced.

• The Colombian Ministry of Environment plans to implement Euro V standards by January 2019. Euro V standards already apply to urban buses used in Bogota, the capital city. The new legislation will apply to all new registrations of medium and heavy-duty vehicles, as well as urban buses in Medellin.

• In March 2017 the Brazilian Environmental Council was reported to be developing P-8 emission standards equivalent• In March 2017, the Brazilian Environmental Council was reported to be developing P-8 emission standards, equivalent to Euro VI, for medium and heavy-duty vehicles. A final proposal for these new standards is expected to be approved in 2018 with a possible implementation date expected in 2022.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022EPA 2010 / Euro VIEPA 2004 / Euro IV

New registrations

Mexico

P-8

Euro V

Euro V / US 2004 / US 2007 (PM)

Euro V

Euro IV

P-7

Euro IV/US 2004

P-5

Euro III / US 1998

Euro II / EPA 1996

Euro IVArgentina

Chile

Colombia

Brazil

Source: ICCT, Integer

INTEGER | LATIN AMERICA DEF MARKET OVERVIEW – SEPTEMBER 2017 (PREPARED FOR KLEERBLUE) | PAGE 10

Euro III/US 1998

Euro III/US 1998Ecuador

Peru

DEF consumption by country 2016 2018

Integer estimates that 80 million gallons of DEF were consumed in Latin America in 2016

DEF consumption by country, 2016-2018

140

Million gallonsof DEF

ArgentinaBrazil

Forecast y-o-y growth in DEF consumption by country

Country

Y-o-y growth in 2017 Y-o-y growth in 2018

Million gallons

%Million gallons

%

100

120

27

10

104

881

Colombia

Argentina

MexicoChile

gallons gallons

Argentina 2.7 +40% 2.6 +28%

Brazil 2.4 +4% 10.4 +16%

Chile 1.6 +26% 1.9 +24%

Colombia 0 2 +18% 0 3 +23%

• Integer forecasts that DEF consumption 60

80

7

5 180

6

68

1

9

12

Colombia 0.2 +18% 0.3 +23%

Mexico 1.6 +35% 0.8 +13%

g pin Latin America will reach 88 million gallons in 2017. The majority, 72%, is expected to be consumed in Brazil.

• The fastest growing DEF markets are in Argentina and Chile each expected to grow by over 20% y-o-y, equivalent to

i t l 2 illi ll

40

20

61 6374

approximately 2 million gallons y-o-y.0

201820172016Source: Integer

INTEGER | LATIN AMERICA DEF MARKET OVERVIEW – SEPTEMBER 2017 (PREPARED FOR KLEERBLUE) | PAGE 11

DEF consumption by country year on year change (2017 2018)

There is double-digit growth y-o-y forecast to occur in all five countries in 2018

DEF consumption by country, year-on-year change (2017-2018)

8073 8

Million gallonsof DEF

2016

60

63.5

73.8

61.1

20172016

2018

40

20

9.4

4.57.96.3

12.1

6.7 6.89.8

6.1

01.2

ArgentinaBrazil

1.7

ColombiaMexico

1.4

Chile

Source: Integer

INTEGER | LATIN AMERICA DEF MARKET OVERVIEW – SEPTEMBER 2017 (PREPARED FOR KLEERBLUE) | PAGE 12

Summary of Ecuador & Peru DEF Programs

Ecuador• Ecuador introduced Euro II standards for heavy duty vehicles, and Euro 1 equivalent regulations for passenger car and light duty vehicles, in 2012. Fuel quality in the country is an impediment to further development of emissions t d d A f l l h t t i 5 000 ith 250 il bl i Q it d Cstandards. Average fuel sulphur content is 5,000 ppm, with 250 ppm available in Quito and Cuenca.

• We understand that certain local authorities have taken steps to renew their public bus fleets with Euro III vehicles, however the lack of low sulphur fuel prevents the introduction of SCR equipped vehicles. As such we do not believe DEF consumption of any notable scale is likely in the medium term to 2020.

Peru• Euro IV standards were introduced in 2016, requiring diesel with a sulphur content of 50 ppm or less. We understand that 50 ppm fuel is available in Lima and other major urban centres, with sulphur limits introduced in 2012, however a lack of nationwide supply has meant that regulations have not been enforced. A project to upgrade domestic refinery capacity was not finalised and it is difficult to see comprehensive coverage of low sulphur diesel indomestic refinery capacity was not finalised and it is difficult to see comprehensive coverage of low sulphur diesel in the medium term to 2020.• Therefore we understand there is no DEF consumption of any notable scale in Peru, now and over the next few years.

For both co ntries e nderstand E ro III or US 1998 are c rrentl req ired

INTEGER | LATIN AMERICA DEF MARKET OVERVIEW – SEPTEMBER 2017 (PREPARED FOR KLEERBLUE) | PAGE 13

For both countries, we understand Euro III or US 1998 are currently required.

DEF Distributor Storage Tank & Pumping Solutions

• Bulk Poly Storage Tanks – Inside or OutsideOutside 

• 2 Wheel Portable Transfer Carts• 4 x 4 Portable Transfer Skids – Gas 

Pump/Electric Pump with Gas Generator/Hydraulic Pump  

• Tote(s) or Horizontal/Elliptical Poly Tanks for Transporting

• High Speed Transload Carts or Platforms

Drum & Tote Dispensing Equipment

• Gravity Dispensing Kits• Hand Pump Kits• 4 Wheel Portable Cart• Air & Electric Drum/Tote Pump Packages• Tote Bottom & Top Manifold Packages 

Tote Pumps & Hose Reels

1025 Gallon Poly Horizontal Tank w/ Tote Pump Supplying Remote Hose Reel @ Nearby Mandoor Access

330 Gallon IBC Tote w/ Tote Pump SupplyingRemote Hose Reel @ Nearby Access Door

330 Gallon IBC Tote w/ Tote Pump SupplyingCustom Mounted Hose Reel

330 Gal Tote w/ Submersible Pump

Supplying Remote Hose Reel – Manifolded to 2 Other TotesSupplying Remote DEF Dispensers

Installed in Tote Enclosure

Supplying Retail DEF Dispenser Supplying Top Mounted Hose Reel

Basic & Commercial DispensersWarm or Cold Climates – Inside or Outside

Electronic Dispensers – Fleet or RetailWarm or Cold Climates – Inside or Outside

Regal RetailRegal Fleet APEX Fleet APEX Retail

Fleet or Retail Dispensers Mounted On Mini‐Bulk Tanks

Regal Fleet – Island Oriented on 400 Gallon Mini‐Bulk

Warm Climate

Regal Retail – Island Oriented on 1000 Gallon Mini‐Bulk

Warm Climate

APEX  Fleet – Lane Oriented on 1000 Gallon Mini‐BulkWarm or Cold Climate

APEX Retail – Island Oriented on 400 Gallon Mini‐Bulk

Warm Climate

Single & Dual Tote Enclosures Insulated, Heated & Ventilated

Poly Tank SolutionsSupplying Nearby or Remote DEF Dispensers

Portable Tank & Dispensing Systems (PTDS)

50 or 100 Gallon Units 230 Gallon Unit

Larger Storage & Dispensing Solutions

7100 Gal Cabinet2000/2600 Gal Deluxe Cabinet 2000/2600 Gal Ultra Cabinet

Bulk Poly Tanks – up to 16,500 GallonsBare or Insulated/Heated 

7100 Gal Cabinet2000/2600 Gal Deluxe Cabinet 2000/2600 Gal Ultra Cabinet

Steve CoxNational Sales Manager

Cell (812) 228‐6966 or (800) 320‐2122,x5scox@separationbydesign.comwww kleerbluesolutions comwww.kleerbluesolutions.com