EP Minerals 2007 Distributor Training

Diatomaceous Earth Opportunities in the Biodiesel Industry

Kim Walsh and Gary Smith

Confidential and proprietary information 2007 EPM, LLC

Agenda
Biodiesel Market Review Benefits of DE Filtration in Biodiesel
Quality Standards Pretreatment Wet and Dry Purification Processes Competitive Advantages/ Disadvantages Magnesol and Cellulose

Growth Strategy

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Global Market Opportunity

Biodiesel is a natural fit for countries where diesel fuel makes up a larger percentage of on the road fuel
Europe China India Brazil

Today Europe accounts for 90% of global production and consumption

Has not used DE traditionally due to high quality feedstocks

US is current fastest growing market followed closely by Malaysia Brazil expected to outpace US by 2015
Confidential and proprietary information 2007 EPM, LLC

European Biodiesel Market

Biodiesel is 2% of total on the road fuel
Goal is 6% by 2010
Country Germany France Italy UK Austria Poland Czech Rep Spain Portugal Slovakia Denmark Greece Belgium Netherlands Sweden Slovenia Romania Lithuania Latvia Bulgaria Ireland 2006 Production by tons 2662 743 447 192 123 116 107 99 91 82 80 42 25 18 13 11 10 10 7 4 4 2007 Capacity (as of July 27, 07) 4361 780 1366 657 326 250 203 508 246 99 90 440 335 115 212 17 81 42 20 65 6 8

Market is Growing Legislation is increasing the content of diesel from 5 to 10%

Single Feedstock Market: Primarily Rapeseed (Canola) EN quality spec written around it

New challenge/ opportunity is tightened supply and reduced feedstock quality

Source: EBB

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US & Canada Biodiesel Market Review

Driven by tax incentive in 2005 Comprises 0.5% of on the road fuel
2015 goal Biodiesel will comprise 5% of on road diesel fuel in the US

2015 Goal: 1.85 billion gallons/year

$13M/yr potential 100% DE

Biodiesel tax incentive

2008 projections total market potential of $3.0M for DE Canada

Market is behind due to limited tax incentives
Alberta is leading the way (increased tax incentives)

Produces significant amounts of Canola

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Trends in the Industry

Trends Larger plants More multinational involvement Multi-feedstock capability Many will be greater than 20 MGY Feedstock availability may put smaller producers out of business Shift towards multiple Biodiesel Plants in Construction (June 7, 2007) feedstocks DE is best here! Consolidation expected Increased emphasis on quality BQ 9000 certification ASTM D6751-06b 25 states
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What is the DE Opportunity?

EP Minerals is a proven supplier
History has shown that a typical 30 MGY plant will use a little less than 300 tons/year Some Current Plants using EP Diatomaceous Earth
Plant Western Iowa Coop (REG) /Wall Lake, IA Western Iowa Coop (REG) / Ralston, IA Mid America Bio Diesel Soy-Mor (REG) /Glenville, MN Cargill / Iowa Falls, IA Tri City / Keokuk, IA TOTAL MGY 30 12 30 30 36 7 145 Est. Tons 290 120 290 290 350 70 1410 Start-up Date June 6, 2007 June 26, 2004 November 1, 2006 February 1, 2006 June 1, 2006 November 6, 2006

Many biodiesel plants prefer to work with distributors for local stock, less than truckload quantities.
The distributor relationship is valued
Confidential and proprietary information 2007 EPM, LLC

Agenda
Biodiesel Market Review Benefits of DE Filtration in Biodiesel
Quality Standards
Pretreatment Wet and Dry Purification Processes Competitive Advantages/ Disadvantages Magnesol and Cellulose

Growth Strategy

Confidential and proprietary information 2007 EPM, LLC

DE Filtration Solves the Quality Challenges

Can be utilized to improve purity in both wet and dry processes to meet ASTM/EN guidelines
Pressure Filters Filter Presses

Also used in pretreatment to improve the quality of the feedstock prior to the Transesterfication process

Prevent Your Customers Filter From Looking Like This!

Fuel filter coated with glycerin

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Quality Standards
Specification Cetane No. Acid Value Methanol Ester Content Monoglyceride Diglyceride Triglyceride Free Glycol Total Glycerol Iodine Value Linolenic Acid ME Unsat. Esters > C (x4) Phosphurus Ca & Mg combined Na & K combined % mass % mass Ppm Ppm ppm 10 max 5 max 5 max Mg KOH/g % mass % mass % mass % mass % mass % mass % mass 0.02 max 0.24 max Unit ASTM D6751-06b 47 min 0.5 max EN 14214:2003 51 min 0.5 max 0.20 max 96.5 min 0.8 max 0.2 max 0.2 max 0.02 max .25 max 120 max 12 max 1 max 10 max 5 max 5 max

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Quality Standards
Specification Density @ 15C Viscosity @ 40C Distillation Flashpoint CFPP Cloud Point Sulfur CCCR 100% Carbon Residue Sulfated Ash Water Water & Sediment Total Contamination Cu Corrosion Oxidative Stability Unit G/cm3 Mm2/s %@C C C C ppm % mass % mass % mass ppm ppm ppm 3 hr/50C HRs @110C 3 max 3 hr min 500 max 24 max 1 max 6 hr/min 0.02 max Report 15 max 0.05 max 0.30 max 0.02 max 500 max 10 max 1.9-6.0 90; 360 130 min 120 min By country ASTM D6751-06b EN 14214:2003 0.86-0.90 3.5-5.0

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ASTM vs. EN Standards

EN 14214 is more stringent and designed around Rapeseed feedstock, it is feedstock specific Nothing you do to soy could make it meet the standards due to the innate characteristics of the oil
Rapeseed is a high quality feedstock

DE Filtration has not been needed as a result European Market is growing and feedstock supply also a concern to meet legislative requirements EN 14214 specification will likely be modified for use with other feedstocks ASTM is feedstock neutral It is expected to become more stringent, but will maintain its feedstock neutrality

Confidential and proprietary information 2007 EPM, LLC

Biodiesel Production Overview Simplified

Catalyst

Methanol

Methanol recovery

Pretreatment

Clean Feedstock

Transesterfication

Contaminated methyl ester

Glycercin

3 basic processes
Pretreatment
If feedstock quality is not high
High Purity Biodiesel to storage Purification

Transesterfication
Conversion of glycerides to methyl ester

Purification
In order to meet specification Recycle methanol
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Pretreatment
DE is used to filter out the adsorbent (silica or clay) Trysil Presorb (BASF) Select 350 (OilDri) The adsorbents are not competing products but complementary The adsorbents are typically used in conjunction with physical refining of the feedstock to remove remaining Free Fatty Acid (FFA) and Phosphate (P) Ideal quality of feedstock <0.1% FFA < 0.05 ppm water < 10 ppm P
Confidential and proprietary information 2007 EPM, LLC

Why Pretreat?

Free Fatty Acid (FFA) FFA is converted into soap Emulsifies methyl ester making separations difficult Requires more catalyst cost Reduces yield Glycerin will contain more MONG (matter organic not glycerin) Water Converts catalyst into caustic Saponifies the oil-reduces yield Increases MONG Phosphorus Reduces glycerol quality Emulsifier Increased Phosphate content in waste water higher disposal costs

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Wet Purification Water Washing

Pretreatment
Silica adsorbent

DE Precoat Filter

Catalyst

Methanol

Methanol recovery

Pretreated Feedstock Provides the ultimate in purity Ability to remove solids down to less than 1 micron (sterols) Allows you to meet quality requirements Cold Filter (50 60 F) Removal of particles down to 0.7 micron
High Purity Biodiesel to storage

Clean Feedstock

Transesterfication

Contaminated methyl ester

Glycercin

Bodyfeed DE (0.3-0.5%)

Water wash

Dryer

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DE Precoat Filter

Dry Purification Dry Wash

Pretreatment
Silica adsorbent

DE Precoat Filter

Catalyst

Methanol

Methanol recovery

Pretreated Feedstock

Clean Feedstock

Transesterfication

Contaminated methyl ester

Glycercin

Removal of particles down to 0.7 micron

High Purity Biodiesel to storage

Adsorbent Purification Bodyfeed DE (0.3-0.5%)

DE Filtration can be used after the dry wash process to polish and remove fine particulates.

Spent cake
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DE Precoat Filter

Why does DE Precoat Filtration Work so Well in Biodiesel?

Feedstock

Celatom FW-14
Feedstock

Slurry Tank

It is mechanical filtration not chemical removal

Not affected by high levels of impurities

FW -14 can remove particles down to 0.7 micron Filtration is performed cooled to promote precipitation of contaminants (glycerol) in methyl ester solution Particulates as small as 0.7 microns are filtered out Glycerol Sterol glucosides
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Pros & Cons of Purification Methods

Water wash with DE vs.

Pros Lower treatment cost: $3-4/1000 gallons of BioDiesel Cons Increased water usage not true in a well designed plant More energy needed for drying proper design minimizes this Pros

Dry Wash
Cons Treatment cost of 10$50/1000 gallons of BioDiesel significanlty affected by process upset Purity heavily affected by ethanol removal efficiency More complex process, doesnt handle variability well Hydraulic challenges in the adsorption vessels Often requires filtration after adsorption to eliminate particulate bleedthrough of fine particles

Can uses less water

Removes particulates down to 0.7 micron Improved Purity

No energy needed for drying

Natural filter (Green) Versatile-handles multiple feedstocks and less likely to be affected by upset Proven technology, used on many 30 MGY plants
Confidential and proprietary information 2007 EPM, LLC

Little history on plants greater than 5 MGY

Comparison of DE & Magnesol

Water Wash DE
Pros Lower treatment cost: $34/1000 gallons of BioDiesel Cons Increased water usage

vs.
Pros Uses less water

Magnesol
Cons Treatment cost of 10$50/1000 gallons of BioDiesel significanlty affected by upset Purity heavily affected by ethanol removal efficiency Composed of synthetic magnesium silicatecontrolled contaminant (D6751) Comprises purity Often requires filtration after adsorption More complex process, doesnt handle variability well

Removes particulates down to 0.7 micron Improved Purity Sterol Glucosides Removed ADM Study Natural filter (Green)

Spent cake

Uses less energy

Crystalline Silica

Inexpensive compared to Magnesol on a price/lb basis as well Versatile-handles multiple feedstocks and less likely to be affected by upset
Confidential and proprietary information 2007 EPM, LLC

Comparison of DE & Cellulose

DE
Pros Longer Cycle timesimproved throughput Lower price Cons

vs.
Pros Spent cake disposal

Cellulose
Cons Shorter cycle times Higher price Incineration of spent cake Adsorbs soaps and free fatty acids

Doesnt adsorb soap and free fatty acids

Cellulose can be used as a precoat or bodyfeed in wet processes to replace DE or to be used in conjunction with DE ADM plant recently had challenges and switched to DE Based on current knowledge and experience DE works better than cellulose Environmental issues would be the primary driver to use cellulose

Confidential and proprietary information 2007 EPM, LLC

Agenda
Biodiesel Market Review Benefits of DE Filtration in Biodiesel
Quality Standards Pretreatment Wet and Dry Purification Processes Competitive Advantages/ Disadvantages Magnesol and Cellulose

Growth Strategy

Confidential and proprietary information 2007 EPM, LLC

Promotion Strategy
Value Proposition: Cold Filtration with Diatomaceous Earth economically removes glycerol's and sterol glucosides to improve the cloud point and meet quality standards.
Purity and Quality is a number one concern for the industry capitalize on it! Promote the purity DE filtration provides in both the purification and pretreatment process

The market is being challenged by recent fuel prices and increasing feedstock costs to produce as economically as possible.
Precoat filtration with the water wash process is the most economic choice

Develop relationships with both end-users and engineering and equipment firms If they are not going to use Wet process, share the Magnesol paper with them about the need to use DE after filtration to create a cake and prevent bleed through
Bleed through causes problems with purity as seen with cold flow May also cause them to fail ASTM D 6751-06a requirements

Find out if pretreatment will be required (feedstock dependent), if so promote DE to filter the contaminant laden adsorbents out of the feedstock
Confidential and proprietary information 2007 EPM, LLC

Promotion-Contd Proven Supplier

Provide many BioDiesel customers with more than 200 MGY of combined capacity in North America
Pretreatment Purification

All customers are producing BioDiesel which meets ASTM D6751 with the water wash and DE filtration All customers are BQ 9000 certified EP Minerals has a long history of providing filtration solutions, not just media, to the complementary industries such as edible oil
Superior Technical and Customer Service

Confidential and proprietary information 2007 EPM, LLC

PURIFIDE 200 The Ideal Biodiesel Grade

Grade Permeability (millidarcies) Particle Size Removal (micron) 0.7 Color Wet Bulk Density (lbs/ft3) pH

PURIFIDE 1100-1700 200

White

19

9.5

New brand name formerly sold as FW-14 PURIFIDE will allow your customers to maximize throughput while maintaining product purity to meet ASTM/EN specifications

PURIFIDE

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Developing BioDiesel Targets in 2007

Get up to date information on where the plants are today and what is in construction at: http://www.biodieselmagazine.com/plant-list.jsp?country=USA&view=construction

Action: Find similar list for Europe and Asia Utilize EBB and other resources to find engineering and equipment company contacts

Confidential and proprietary information 2007 EPM, LLC

Summary
Market Opportunity is significant and growing Promote the benefits of DE filtration with end-users, engineering firms, design-build-operate and transfer firms and equipment providers Focus on PURIFIDE and the water wash process Cost effective and product meets purity standards If your customer insists on a dry process Sell DE as polish filter to insure fine particulate Magnesol or other is removed to meet ASTM guidelines Sell cellulose if crystalline silica is an issue Determine pretreatment needs Partnership to grow both our organizations!

Confidential and proprietary information 2007 EPM, LLC

Thank You!

Confidential and proprietary information 2007 EPM, LLC