Elkem

Environmental & Social Information • Oct 13, 2021

Global climate roadmap: Reducing our emissions & growing our supplies to the green transition

13 October 2021

We are Elkem

Advanced material solutions shaping a better and more sustainable future

Silicones Silicon Products Carbon Solutions

Elkem: Part of the solution

Elkem aims to be a part of the solution to combat climate change. Our mission is to provide advanced material solutions shaping a better and more sustainable future. We have a clear corporate strategy to strengthen our competitive positions through specialisation and growth. With this climate roadmap, we further detail our ambitions to reduce our emissions towards net zero – while growing the business.

Elkem endorses the aim of the Paris agreement of limiting global warming to well below two degrees and we will contribute by reducing our emissions. Elkem has a good starting point, with 83% of our electricity already coming from renewables. We aim to reduce our global fossil CO² emissions by 28% from 2020-31 while growing the business. This implies reducing our average product carbon footprint by 39%. Our long-term goal is net zero by 2050.

We expect sustainability to drive increasing demand for the advanced materials with low carbon footprint that Elkem provides, including silicones, silicon and carbon solutions. These are essential for greener solutions like electric vehicles, renewable energy and better buildings. We aim to grow our business 5-10% per year and grow our supplies to the green transition.

What happens to the materials we produce after they leave our plants also matters to the climate. That is why we also step up on circular economy, to enable more recycling – both within our value chain and with our customers.

Environment, Social & Governance (ESG) issues are increasingly important for our stakeholders. We are proud to perform well on ESG ratings like CDP's A list on climate. Our performance on this roadmap, however, should be measured on how we deliver on reducing our emissions while growing our supplies to the green transition.

Helge Aasen CEO (interim)

2020 renewable electricity 83%

CO² emissions by 2050

Yearly revenue growth target

5-10%

reductions by 2031

UN SDGs

UN Global Compact

Elkem is a signatory to the UN Global Compact

We are committed to developing our business in line with the UN Sustainable Development Goals

Avg. product footprint (fossil CO² scope 1-3)

Our climate ambitions

Elkem has a strong position to contribute on climate and continuous improvement is in our DNA

Our solutions are essential for a more sustainable future

We are recognised as a climate leader

Elkem provides advanced materials essential to the green transition: Silicon metal included on EU 2020 list of critical raw materials

Elkem was recognised by CDP for climate transparency and actions, ranking among top 5% of all companies rated in 2020

Founded on renewable energy

Elkem was founded to create value from hydropower in Norway. We have since expanded to other hydropower producers, incl. Canada, Iceland, Malaysia & Paraguay

Our climate ambitions

Elkem is committed to reduce emissions and contribute in line with Paris agreement aim of well below 2°C warming

Enabling circular economies

Enabling more circular activities in our operations, products and markets

• By 2031: Reducing absolute emissions* by 28% from 2020-2031 while growing the business – delivering 39% improvement in product footprint** • By 2050: Achieving fully carbon neutral production (zero fossil emissions) globally

• Grow supplies of advanced materials to green markets such as better buildings, electric vehicles • Build new business in green markets such as battery materials, biomass and energy recovery

• and renewable energy

• Increase recycling in our own operations Increase recycling with our customers • Develop the eco-design of innovative products

We aim to contribute to a better climate through three key levers:

Supplying to the transition

Providing the advanced material solutions required to enable the green transition

2

Reducing our emissions

Achieving fully climate neutral production throughout our value chain

Our climate actions

Our climate actions We address the full range of emissions

Elkem's global fossil CO² emissions* in 2020 (mt):

Scope 1

• Direct emissions from production facilities
• CO² from biomass exempt (seen as carbon neutral)

Scope 2

▪ Indirect emissions from purchased electricity, steam, heat and cooling.

Scope 3

• Emissions across the value chain for products produced: related to upstream activities ("to Gate") and downstream activities ("after Gate")
• "After Gate" not included in Elkem reported carbon footprint (product level), but part of total reported emissions

Scope 1: Fossil CO² by value chain

Scope 1: Fossil CO² by region – smelters

Insight: ~70% from our supply chain Insight: Potential for circular economy

* 0.5 mt from bio-based sources not included as these are considered climate neutral Elkem will reduce fossil CO² emissions in line with the Paris agreement: We will contribute to limiting longterm temperature increase to well below 2°C.

By 2031:

• Reducing absolute emissions* by 28% from 2020-2031
• Delivering 39% improvement in product footprint**

By 2050:

▪ Achieving fully carbon neutral production (zero fossil emissions) globally

Our climate actions

Changing to biomass as reduction material

Increasing share of bio-based materials from wood waste as reduction material in our smelters

Low-carbon supply chain

Actively pursue long-term sourcing of renewable-based silicon metal as well as emission-free logistics

Exploring potential of more CCS at smelters

Elkem's actions: Reducing our emissions 1

Exploring both Carbon Capture & Utilisation (CCU) and Carbon Capture & Storage (CCS) at our smelters

Shifting to renewable power also in China

Future decarbonisation of China's power mix will support Elkem's low carbon transition

* Total global fossil CO2 emissions, scope 1 and 2 ** Main products average fossil CO2 emissions, scope 1-3

Our climate actions | Reducing our emissions Changing to biomass as reduction material

Elkem has a pronounced goal for using 20 % biological materials in the mix of reduction materials in the production of silicon and ferrosilicon alloys in Norway within 2021 and 50 % within 2030. We reached the 20 % goal in 2018, and now work to reach our 2030 milestone.

• To reach this goal Elkem will develop a new industrial process for bio-based materials tailor-made for silicon and ferrosilicon production processes.
• All Elkem smelters have developed CO2 road-maps for 2031, estimating the feasibility of increasing bio-share for each plant.
• Verification of furnace operations with large volumes of agglomerated biomass from potential long-term suppliers is ongoing

50% biomass in 2030

>20% biomass in 2021

Our climate actions | Reducing our emissions Xinghuo expansion: Improving on environment and financials

• Elkem Xinghuo is the largest silicones plant in China
• China is the world's fastest-growing silicones market
• Investing NOK 3.8 billion in strategic expansion

Elkem Xinghuo – strategic expansion of a state of the art facility

Better buildings

All the known technological solutions for the green transition require advanced materials: Silicones, silicon and carbon solutions are critical enablers.

• Elkem aims to continue growing our supplies of advanced materials to global markets by 5-10% per year
• 19% of our products are already EU classified as having positive environmental impact – we expect this to grow
• Elkem products already contribute to >1 million EVs around the world, representing 1 in 7 EVs sold globally
• Silicones can on average help save 9x the amount of emissions required in production*
• Elkem produces silicon using 83% renewable electricity, with an aim towards CO² neutrality

Our climate actions

Elkem's actions: Supplying the transition 2

Our products contribute to optimising material use (i.e. reducing the need for cement) and protecting buildings

Renewable energy

Silicones are used in 90% of solar panels and silicone lubricants are essential to wind turbines

Digital communications

We put the «silicon» in Silicon Valley: Providing key materials that drive the digital revolution

Electric vehicles

EVs require 4x more silicone solutions compared to internal combustion engine vehicles

▪ https://automotive.silicones.elkem.com/siliconeessentials/infographic-where-silicones-car

Silicone is used as heat flow management and thermal insulation of the battery pack.

Elkem products are found in batteries as active anode materials; synthetic graphite, silicon/graphite composites and silicon for battery production.

Silicone is used in battery module protection, as foam below the battery pack.

used

Silicone is used as heat flow management and thermal insulation of the battery pack.

Silicone is used in high speed/voltage charging cable.

Silicones' coating and sealing for airbags.

In the manufacturing process, silicone-based release agents are used to get the tire out of its mold and to protect the bladder.

Silicone can be sprayed or coated on dry fabric, or soaked into fabric. It can also be calendared and applied to material in very thin sheets.

Silicon and ferrosilicon is input in production of aluminium and steel for structural parts, body, hood, trunk, doors and engine bloc.

Silicon for ceramic brake discs.

Gaskets, hoses, cable coating and seals are made with silicones because they help to resist the extreme temperatures, and it increases their durability and stability.

4x more

silicone products in EVs compared to ICEVs

15%

anode graphite in battery cell

Silicone is used in Insulated Gate Bipolar Transistor's (IGBT) for power electronics, for example in an EV engine.

Silicon and ferrosilicon is used in electric steels in EV motors.

Silicon is used to coat IR reflective auto glass.

Silicon is used in the brazing flux for aluminium heat exchanger, evaporator and condenser.

Silicon is used in semiconductor devices and in protective compounds in automotive electronics.

Our climate actions | Supplying the transition Enabling the electric mobility revolution for cleaner transport

~50%

annual growth expected for EVs

Our climate actions | Supplying the transition Vianode: Advanced battery materials

Established by Elkem – a new company dedicated to strategic growth opportunities for advanced battery materials

• Aiming to become a leading provider of anode materials' solutions to the fast growing battery industry with production of synthetic graphite
• Reducing emissions by ~94% to near zero and making better battery materials with:
• ➢ Highly innovative clean processing technology and renewable power mix
• ➢ Advancing research on silicon-graphite composites for higher energy density
• ➢ Collaborative efforts to develop effective and efficient battery materials recycling

▪ Small size industrial equipment

Pilot (Kristiansand, Norway) ✓

▪ Industrial scale equipment

Industrial pilot (Kristiansand, Norway) ✓

Fast-track and large-scale plant (Herøya, Norway)

▪ Modular design for rapid expansion

Vianode: Empowering a greener life!

Our climate actions

Elkem's actions: Enabling circularity

Elkem is working closely with customers and researchers across all the four R's of a circular economy: Reduce, Reuse, Recycle and Renewable.

• Reduce: Develop the eco-design of innovative products by developing lighter and high-performance materials or using low-energy processes
• Reuse: Rubber formulators provide reprocessing solutions to Elkem customers globally..
• Recycle: In our operations, by using recycled raw materials, by collecting raw material dust to reintroduce them and also by valuing by-products (i.e. Microsilica). With customers, by joining forces to collect end-of-life products to recycle them chemically or mechanically.
• Renewable: Using more biosourced raw materials, such as C13-15 Alkane derived through fermentation and hydrogenation of sustainably sourced sugarcane.

Chemical recycling

Elkem is part of REPOS, a project to recover and recycle silicones in all physical forms: Reducing footprint up to 65%

Eco-design

80% of of a product's environmental impact is determined at the design stage. Eco-design reduces the amount of material and energy used.

Reprocessing

«Mix&Fix» centres set up to analyse customer samples and see if they are reusable or can be reprocessed

Eco-forward silicones

We develop personal care products with sustainable and eco-friendly raw materials – like PURESIL™ ORG 01

Our climate asks

Just as our stakeholders depend on Elkem to succeed on climate, we in Elkem depends on our stakeholders

We need attractive framework conditions

We need customer demand for greener solutions

To succeed, we require attractive framework conditions – including access to competitive and sustainable electricity and biomass

We need world-class competence and innovation

We need talent and expertise to drive R&D and innovation providing new green solutions for the future

We invite all of our customers to work together with Elkem in both improving current solutions and developing new

Delivering your potential

Delivering your potential