“It is extraordinary that we can now transform green energy into products and supply this into the market, supporting our customers to also reduce their overall emissions.”

Juan Pablo Ceballos

CEO, PETROQUIMICA RIO TERCERO (PR3)

August 18, 2023

How has PR3 consolidated its presence across its three business lines?

PR3 has started a transformation journey, with a vision to bring complete solutions across our three commercial business units: the Foam business, including toluene diisocyanate (TDI) and other polyurethane (PU) related products; Water Treatment, with polyaluminium chloride (PAC) and sodium hypochlorite; and Industrial Solutions, as producers of caustic soda and hydrochloric acid. Within the Foam business, in particular, PR3 is already a leader in flexible foams, but we have now also made significant strides within the rigid foam market. At the end of 2022, we finalized a significant investment to develop TDI for rigid foams, now sold already in Argentina by PR3. We continue to diversify our portfolio to grow beyond TDI, but also other foam-related products like polyols and additives. Clients prefer to centralize their purchases to a reliable one-stop shop for all their flexible and rigid foam requirements. Moving forward, we will continue to consolidate our presence in the other two business units. In the chloralkali market, the buoyant lithium industry in Argentina presents us with a terrific growth opportunity, the chloralkali products are used in the production of lithium hydroxide for battery cathodes. This is a very promising growth pillar, and we want to make sure to tap into its potential early on.

PR3 is preparing its first Sustainability Report. What will be its focus?

By the end of 2023, we will publish our first sustainability report. The rationale behind putting together this document was based on the principle that we must first understand our own footprint and what we can do better in-house to be able to then work together, with the industry and other stakeholders, to develop a country-wide approach to circularity, especially around the recycling of TDI mattresses. The report will serve as a diagnosis of how we can do better as a company. We think this is a building block toward developing an ecosystem for foam recycling in the region. As leaders in the foam business in Argentina, PR3 is well-positioned to lead and add the first bricks to that discussion. PR3’s Sustainability Report (2023) will be a transparent assessment of our community practices, carbon emission initiatives, and forward ambitions. Together with this report, we have also finished building our sustainability team, formalizing our approach to sustainability for the long term.

PR3 has also signed a power purchase agreement (PPA) with YPF this year. Why is this important?

This year, we signed a PPA with YPF Luz to supply 30% of our energy needs from renewables, namely solar energy. What is interesting is that energy is not only a form of electricity for us but also a raw material, since we use energy supplied by YPF within our chloralkali business to produce chlorine and caustic soda. Therefore, the agreement with YPF Luz is also impacting the direct carbon makeup of our products, besides the indirect carbon related to powering the plant. It is extraordinary that we can now transform green energy into products and supply this into the market, supporting our customers to also reduce their overall emissions. We are very proud of this achievement.

What are some of the intrinsic challenges of being a chemical player in Argentina?

Argentina is a country with unique characteristics and a very particular economy that has been mired in crisis over the past few years. Not different from our peers in the country, PR3 has learned to push ahead and grow, going from strength to strength, despite the challenges. In one sense, I believe Argentina breeds very resilient businesses and businesspeople, which I find quite incredible. The upcoming general elections in October 2023 are creating some uncertainty because it is unclear who the next government will be and what they may do. However, regardless of the next winner, I believe the economy is bound to become more open. The lack of dollars in the central reserve has tightened the economy, and the next leader will need to reopen Argentina to foreign investors. As a business, we think healthy competition will make us better, more competitive, and we are preparing for that.

Is PR3 looking to grow in the international markets?

Currently, our sales have been mostly going to the domestic market, exporting only the surplus capacity to Brazil. However, the supply of nitric acid, which is the raw material we use for TDI, has been curtailed due to turnarounds for revamping at Fabricaciones Militares, our supplier; now that the upgrades have been made and the plant is back at capacity, we can ramp up the production of TDI, as well as other products, with the opportunity to export excess capacity to international markets. By October 2023, we should be able to resume exports.

Do you have a final message?

PR3 will continue to strengthen its position across our three business units and become recognized as leaders not just in Argentina, but across the region. We have a highly committed team that goes above and beyond to provide the best quality service. PR3 is in the middle of a transformation, and transformations require patience. But I have full faith that we will achieve our ambitions.

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