Conference Call Transcript

3Q23 Results

Braskem (BRKM5 BZ)

November 9, 2023

Operator:

Good morning and thank you for waiting. Welcome to this conference call to discuss Braskem's 3rd quarter of 2023 results. We have with us today Mr. Roberto Bischoff - CEO of Braskem, Pedro Freitas - CFO of Braskem and Rosana Avolio - Investor Relations, Strategic Planning and Corporate Market Intelligence Director.

This event is being recorded and all participants will be in a listen-only mode during the Company's presentation. After Braskem remarks, there will be a question-and-answer session. At that time further instructions will be given. Should any participant need assistance during this call, please press *0 to reach the operator. This event is also being broadcast live via webcast and may be accessed through Braskem's website at https://www.braskem- ri.com.br, where the presentation will be also available. The selection of slides will be controlled by yourself. The audio will be available shortly after the event is concluded. Those following the presentation via the webcast may post their questions to Braskem via website. They will be answered by the IR team after the conference is finished.

Before proceeding, let me mention that forward-statements are based on the beliefs and assumptions of Braskem management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that macroeconomic conditions, industry conditions and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

Now, I'll turn the conference over to Mrs. Rosana Avolio - Investor Relations, Strategic Planning and Corporate Market Intelligence Director. Mrs. Avolio, please go ahead and begin your presentation.

Rosana Avolio:

Good morning, ladies and gentlemen! Thank you for participating in Braskem's earnings conference call for the third quarter of 2023. Let's start the presentation on slide 3, with the highlights of the period. In the third quarter 2023, Braskem's recurring EBITDA was US$187 million, with a non-cash loss of US$97 million and a cash consumption excluding Alagoas disbursements of US$69 million. I would like to emphasize that the company maintained a robust liquidity position, ending the quarter with a cash position of US$3.4 billion, which is sufficient to cover all of its debts for the next 6 years. This amount is not considering the standby revolving facility of US$1 billion available until 2026. It is worth mentioning that Braskem's debt profile remains very long, with an average term of 12 years, and the net debt remained control at a lower level when compared to the historical levels. Regarding operational highlights, the global accident frequency rate was 8% lower when compared to the previous quarter.

Sales in the Brazil segment increased by 12% in the national market when compared to 2Q23, which represents a higher increase than the Brazilian demand in the period. I also highlight the green ethylene utilization rate, which reached 108% in 3Q23, due the conclusion of the capacity expansion project and the implementation of industrial efficiency projects. On the strategic front, Braskem recently opened an office in Japan, which has a very important consumer market for the company's green pe biopolymer since the start-up of our plant. I also would like to highlight the constitution of Braskem Siam, a joint venture between Braskem and

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November 9, 2023

SCG Chemicals, which will be responsible for the construction project of green ethylene in Thailand. Lastly, the financing of Mexico's import terminal was concluded, and the physical progress was 48% by the end of October. Let's go to the next slide.

The 3Q23 consolidated recurring EBITDA was 34% superior to the previous quarter, totaling US$187 million in the quarter. This increase is given mainly by the higher resins sales volume in Brazil, higher green PE sales, higher PP sales volume in the United States and Europe segment, and; the posting of special regime for the chemical industry tax credits, the REIQ, which returned in the third quarter after the signing of the decree that regulated the program. Let's go to the next slide.

Regarding the results for Brazil segment, the utilization rate in the quarter was of 68%, 4 p.p. inferior to 2Q23, mainly due to unschedule shutdowns at Braskem and some major chemical customers. However, Brazil segment presented a 12% increase in sales volume in the national market, above the demand in the period. The export volume was also higher, explained by better oportunities in the international market. In this regard, recurring EBITDA in Brazil was US$115 million in the third quarter, representing 63% of the company's consolidated recurring EBITDA and 42% higher than the previous quarter. Following to the next slide.

The green ethylene utilization rate was 108%, an increase of 24 p.p. when compared to the previous quarter. It is worth noting that the utilization rates presented are in relation to the capacity installed in each quarter. This increase is based on the conclusion of the green ethylene capacity expansion project in Rio Grande do Sul and the result of the initiatives of industrial efficiency implemented during the scheduled shutdown in 1H23. In this scenario, the green pe sales volume increased 48% in the quarter.

Recently, Braskem opened its first office in Japan. The country has been developing robust public policies for the renewable resins market, with very well-defined strategies, roadmaps and goals. The country has as a national goal to introduce about 2 million tons of biopolymer products in its economy by 2030. Those actions reinforce its position as a country with a relevant and strategic market for Braskem's I'm Green PE. Green PE operations integrate Braskem's corporate strategy to 2030 through its bio-based growth avenue, which I will update you in the next slide.

In the quarter, Braskem SIAM was incorporated, a joint venture between Braskem and SCG Chemicals for conducting the construction project of the green ethylene plant in Thailand. The site will have a production capacity of up to 200 thousand tons of green ethylene. The project is now under pre-detailing of engineering, and the expectation is that the investment decision will be made by the end of 2024. I would like to highlight that the technology adopted, EtE Evergreen, is owned by Braskem and provenient from a partnership with Lummus Technology.

Besides representing Braskem's first industrial footprint in Asia, this project is an important step in our bio-based growth avenue, and it will contribute to the achievement of the commitment of expanding the capacity production of green products to 1 million tons by 2030. Moving on, in the next slide, we will discuss the updates on Alagoas geological event.

Regarding the financial compensation proposals, we already presented more than 99% of the total estimated proposals, which around 97% were accepted and around 93% were already paid. The relocation program continues to make progress, and by the end of the quarter, 99.2% were executed. About closing and monitoring of wells of the sand filling group, 4 wells were concluded; one is waiting for ANM approval, and 4 are in progress. The natural filling group was foi 100% concluded, and the tamponade and monitoring groups still in progress.

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November 9, 2023

The working group continues to make progress according to the schedule established with the authorities. To the next slide, continue the discussion about the Alagoas geological event.

As for the social, urban, and environmental development measures, all the 11 mobility actions are ongoing. Of these 1), 8 already have their executive projects concluded, three 3 are under construction and 1 is planned to begin in the fourth quarter of this year. We are still making progress on the urban integration project and the development of the Flexais, with 11 urban requalification actions implemented from the 23 estimated. Lastly, the environmental plan continues to make progress.

Regarding the provisions made for the geological event in Alagoas, the total amount provisioned was R$14.4 billion, of which were already disbursed R$9.2 billion by the end of September 2023. Therefore, the total amount of provisions registered by the end of the third quarter of 2023 was approximately R$5.6 billion. Note that Braskem cannot eliminate the possibility of any future developments related to the matter or the associated expenses, and any costs to be incurred could differ from our estimates or cumulative amounts. Let's go to the following slide, which we will discuss the United States and Europe highlights.

In the United States and Europe segment, the utilization rate in the third quarter of 2023 was 81%, aligned with the previous quarter and 6 p.p. higher than the third quarter of last year, due to schedule shutdowns in the same period last year. Sales volume also remained in line with the previous quarter and rose 7% when compared to the same quarter of last year due destocking in the period. Recurring EBITDA of the segment totaled US$60 million in the quarter and represented 33% of the company's consolidated recurring EBITDA. Moving on, we will talk about Mexico.

Mexico's utilization rate was 66% in 3Q23, inferior to 2Q23 and 3Q22, due to unscheduled shutdown in the region caused by electrical failure in the national system and by lower ethane availability by Pemex. Despite these challenges, the sales volume remained aligned with the previous quarter due stock optimization in order to supply the clients in the period. The recurring EBITDA of Mexico's segment was US$8 million, representing 4% of the company's consolidated recurring EBITDA. Moving on to the next slide, we will talk about the ethane import terminal in Mexico.

Terminal Quimica Puerto Mexico is a company created by Braskem Idesa in partnership with Advario, concluding the process of financing obtaining in the amount of US$408 million. This is a syndicated project finance loan, which involves 6 financial entities, with a maturity of 5 years and usual guarantees for this kind of transaction. Considering this financing, the capital structure of the project will be 30% equity and 70% debt from all resources invested throughout the project. The ethane import terminal integrates Braskem's global strategy for 2030 through the traditional business growth avenue and will permit the supply up to 80 thousand ethane barrels per day to Braskem Idesa, around 120% of its current need and should start its operations by the second half of 2024. The physical progress of the construction was of 48% by the end of October. Moving on to the next slide.

Regarding consolidated cash flow, Braskem presented a positive variation in working capital of R$1.3 billion due working capital optimization in the quarter. This positive effect was offset by operational and strategic investments carried out in the period, interest payments, and the payment of income tax and social contribution due in the quarter, which led to cash consumption of R$329 million in the period. Adding the payments related to the geological

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November 9, 2023

event in Alagoas, cash consumption in the period totaled around R$1.4 billion in. To the next slide, please.

Braskem maintained a very long debt profile, with an average payment term of 12 years and an average weighted cost of exchange variation +6.2%. I also highlight that 2/3 (two-thirds) of the company's debt is concentrated in 2030 onwards. Braskem's cash position is sufficient to cover its obligations for the next 6 years, without considering the international stand-by credit facility of US$1.0 billion which is available for the company until 2026. It is important to highlight that Braskem continues na investment grade company by S&P e Fitch rating agencies. Moving on, the next slide shows the corporate credit and leverage metrics.

By the end of the quarter, Braskem's corporate leverage was 12.2x due to the lower EBITDA in the last twelve months. The indebtness level remains stable, aligned with the previous quarter, and lower when compared to the quarterly average of the last six years. Braskem continues to present solid credit metrics and a healthy and comfortable level of liquidity. Let's go to the next slide, please.

Petrochemical spreads in the international market continued to be pressured during the period as a result of historically low levels of global demand, combined with the entry into operation of new capacities and consequently the greater supply of products on the market. However, the path of some spreads during the quarter was ascendant between July and September, as for polyethylene, mainly due to the increase in the price of petrochemical resins in the international market as a result of the increase in the price of brent and naphtha following the OPEC production cut announcements, which impacted the cost of production for marginal producers. The expectation is that 2024 present a gradual recovery in petrochemical spreads in the international market, according to the sector's main external consultants, guiding the industry's profitability from a down cycle to an average cycle over the next few years. Let's go to the next slide.

Regarding Brazil segment, we expect a reduction in the ethylene production levels in the 4Q23 due to the maintenance shutdown in the petrochemical complex in Bahia. On the sales front, we expect a reduction in the resins sales volume due the seasonality of the period, and reduction in main chemicals sales volume, due a lower ethylene utilization rate. Spreads may grow considering the increase in the resins and main chemical prices in the international market.

For the United States and Europe segment, the utilization rate may remain stable. The sales volume may be lower in the quarter, and spreads may remain stable. Lastly, for Mexico, we expect an increase in the production. Sales volume may remain stable, given inventories recomposing, and the spreads may increase due higher prices of pe in the international market. Moving on to the next slide, please.

We will comment on the updates of the initiatives with impact on the company's EBITDA and cash generation. Starting with initiatives that impact the company's revenue, a series of commercial initiatives were developed with the aim of optimizing global commercial management and maximizing synergies between commercial areas. An example of a delivery on this front is the optimization of the company's sales mix. Moving on to initiatives impacting fixed and variable costs, the company has been implementing several actions. In addition to a transversal target of reducing fixed costs in the company, which is on track, we are also working on the asset management strategy globally, which resulted in the hibernation of 1 PP line at the Marcus Hook plant, in the United States, in renegotiation of contracts with suppliers

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and optimization of the company's logistics costs. On the working capital front, the company has been working with several efficiency initiatives for the integrated planning cycle, which is generating results through the optimization of its operational and financial cycle.

Regarding Capex allocation, the company estimates capex for the year 2023 22% lower than last year's capex, and its achievement is on track. This is due to improving work in the budgeting and project prioritization process. The company is also working on reassessing its scheduled shutdown strategy. It is worth highlighting that efficiency initiatives in capex allocation do not impact the security of the company's assets or operations. Finally, the company continues to map and evaluate opportunities to make monetization of adjacent assets, such as credit rights, taxes to be recovered, and other assets, as well as evaluating structures to make this monetization feasible. The company reinforces its commitment to continue identifying and implementing opportunities to improve its results and generate value

for its shareholders. Let's go to the next slide, please.

Finally, I would like to invite everyone to participate in our Braskem Day. It will be a great

opportunity to understand better the company's diverse businesses, its levers, and Braskem's

value creation strategy. The event will be fully virtual and will take place on November 27th. We will forward the invitation with more details soon to all participants in this call and all subscribed to our mailing list.

That concludes today's presentation of Braskem's results for the third quarter of 2023. Thank you everyone for your attention. And let's move on to the questions and answers session.

Operator

Thank you. We will now begin the Q&A session for analysts and investors. To ask a question please press *1 and to remove your question from the queue, press *2.

Our first question comes from Pedro Soares from BTG Pactual.

Pedro Soares - BTG Pactual

Good morning, Roberto, Rosana, good morning, everyone. I have a question with regard to the discussion that Rosana brought about monetizing assets near the end of her remarks, and with regard to the Company's leveraging levels and structures, does it also make sense for us to discuss or to consider the Company's operating assets, the relevant ones that you could share with us?

I'd also like to ask about the hibernation in the Markus Hook plant in the United States, and if there are any discussions or points you can make in that regard that would be very grateful for me, thank you.

Pedro Freitas - CFO

Hi, Pedro, and good morning, everyone. Now with regard to assets, we always evaluate the asset portfolio as a whole. And I'd like to make a comment with regard to the Marcos Hook plant. That hibernation is largely a result of the fact that there was insufficient raw materials for that line to be operating. The plant has two lines and they were running under load, under capacity, and so we made a decision based on the fact that it would not be worthwhile to keep that line operational. That's why it was paused. As soon as more inputs are available, once again that production line will come back, and it will be fully productive. So this is a recurring line of thinking that we have at Braskem and it's always something that we are considering.

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Braskem (BRKM5 BZ)

November 9, 2023

Now when we think about monetizing assets and leveraging levels as you mentioned, we have core assets and noncore assets for each operation, and from time to time we assess our noncore assets. Now specifically the noncore assets that we have, they have depreciated considerably, so there is a very important amount of the investigation that needs to be made about the capital there, and when we decide to move forward with some kind of monetization for noncore asset, it is because we looked at the capital and the impact. So we do analyze that from time to time, and if there is ever a more pressing need we could monetize those assets, if there is a physical burden, but we've decided not to do that because we are not in that kind of scenario right now.

Now for core assets that would be a little bit more difficult. Braskem over the past 20 years has been consolidating and establishing itself with the focus on the product. So when we look at our product portfolio, our geography and asset portfolios, we do not look at industrial assets and say 'oh, this is not core for the Company'.

Now obviously, in a scenario that is different from the one in which we currently find ourselves, where you have significant growth of net debt, because we look at net debt considerably; and we are actually at a lower level of net debt than we traditionally have been - but if a scenario occurs where we have very much net debt, then we could consider that. But I would say that we are not currently in that kind of scenario.

So to summarize, asset monetization is something that we do investigate while managing the Company's assets. The noncore ones that we do identify have a fiscal limit that does not explain or justify monetization at the moment, and for core assets that would be something that we would look at in a different kind of scenario, not the one we're at right now. If that does come to pass, then we could investigate that monetization.

Pedro Soares - BTG Pactual

Thank you, thank you, Pedro, that was very clear. I would just like to ask a follow-up. Would it make sense for us to imagine that in terms of short-term priority, let's say, to protect the Company's cash flow and the results that we forecast that would be a little bit lower, this would be the result of a lower Capex for next year? Even the Company is working Capex, they are likely to be at lower levels than traditionally. So the guiding Capex is a is a maintenance Capex, right?

Pedro Freitas - CFO

Yes, yes, and I would go back to slide 18 in Rosana's remarks, which have the results for this year. For the next year, we continue to emphasize and to reinforce those measures. In the commercial efforts, we continue to seek more profitable market conditions that will increase our value, and I think that something that should bring some benefits for next year, especially considering the full year, the closed year, we have the green ethane, ethylene sorry, and this is going to bring some positive results; and also we have adjustments to various business lines.

The fixed costs for next year, we have to find a fixed target for next year to reduce beyond inflation changes. So for 2024, the number we're currently working on the budget, but it's going to be 2 to 5% lower than the number for this year. So we're going to absorb inflation and additionally reduce the cost. This could mean an additional 100 million USD perhaps just in the reduction alone. Now if we consider inflation, it's more than that.

And working capital continues to be a large and primary focus of ours. There are some short- term decisions we make, but then there are some structural decisions as well that we are also analyzing, and we will start to see some benefits of these structural changes that we have been making in managing our working capital.

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November 9, 2023

Capex for next year. There's a positive aspect next year, which is there is not going to be a general pause next year. So we are moving to make it so that next year's Capex is under 500 million USD. We are still trying to reach a number that is significantly and materially lower than what we have today. We have, we have the terminal next year as well. So that's something we're looking at separately.

And we're also looking for other opportunities to monetize assets, some other assets that we own. So we remain working on all of these efforts, and when we look at the projections, again, we don't see a situation that would lead us to have to make any more expressive conversions.

Pedro Soares - BTG Pactual

That was very clear. Thank you, Pedro.

Operator

Our next question comes from Gabriel Barra from Citibank.

Gabriel Barra - Citibank

Hello Pedro and Rosanna, thank you for taking our questions. Can you hear me?

Pedro Freitas - CFO

Yes, we can.

Gabriel Barra - Citibank

OK. I have two points I'd like to explore a little bit more, the first is with regard to the recent news. I think we it was mentioned two to three calls ago. I know it's difficult to talk about offers, and there has been discussion, I know, but could you please explain a little bit more about the details of the Tag along and perhaps the, with regard to the shareholders' agreement? I'm wondering about the controlling structure. Is there any light you could shed on that? It would be interesting to start thinking about potential future M&A's in this context.

And the second question is about Alagoas. There was that relevant fact that the Company has been discussing the relationship between the Company and the State that has been making moves in Alagoas, and there are some points to be discussed there. So could you please give us a few thoughts about the scope of this? This item, this call? Thank you.

Pedro Freitas - CFO

Alright, Gabriel, ok. Well, Adnoc the information that we have is reflected in the relevant fact that we published this morning, and the tag along is going to respect all legislations and the structure that is already in place. Now what you asked about whether Novonor will continue to have a minority position and whether or not that triggers a tag along clause, well, strictly speaking tag along clauses pertain to changes in control. So if the owner stops being a controller, then that would be triggered - but we don't yet know how this structure could be organized or how it should be organized or enacted even.

So I think at the end of the day, it really is going to depend on how these different aspects are actually implemented. So I'm sorry, I can't be of more help to brainstorm really, because we ourselves need more clarity about Novonor's movement and the consequences thereof, and whether or not there's going to be a tag log - but it's, at the end of the day it's about, it is

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November 9, 2023

triggered when there is a change in control, so that's when the check along clauses (inaudible 35:17).

Now there's something else that I think is important, we definitely should reflect on this. At the moment this is a non-binding offer, and I think that if there is a binding offer that is made, then we will know in more details how this is going to work out.

Now with regard to Alagoas, we have an initiative, a lawsuit that the State of Alagoas moved against Braskem asking for, essentially for reparations. So the main topics there are firstly assets that belong to the State of Alagoas that were located in that region and that were in one way or another lost or have become unusable. These assets are already accounted for in our provisions, and we agree this is a reparation that must be paid. This amount has been provisioned and this is actually, has been sent to the Court already. So we do believe that the reparations should be paid in that, in that purview.

There's another element there, which is the concept of lost profits from taxes, lost taxes. There was the ICMS tax that was claimed to be lost profits by the State Government, and we do not agree with that claim. We do not agree with the State Government in that aspect.

So the State Government has filed a suit. There was an initial court decision saying that these causes are owed and Braskem was mandated to reimburse the State Government, including for the loss of potential tax revenue. Now we have appealed that case, that lawsuit, and we are going to remain alert. And I mean, I'm not a lawyer and I don't know enough about Brazilian legislation to really give you a qualified answer, but we are positive that this topic does merit a lot of investigation by the judiciary.

And we can't create a, we can't create a precedent that is founded on incorrect assumptions, and this would be, this would be bad for Brazil as a whole, not just for ourselves. In short, we are discussing with the judiciary and with the State of Alagoas about how that's going to proceed moving forward. So that to summarize, we do agree about the properties and we do not agree about the taxes, and this is going to be discussed in Court.

Gabriel Barra - Citibank

Thank you.

Operator

Our next question comes from Milene Carvalho from JP Morgan.

Milene Carvalho - JP Morgan

Hello, everyone, good morning. Thank you very much for this space for questions. I have two questions on my slide, the first in fact is a follow up on the previous question related to Alagoas. I think you did not disclose the amount involved. We read some articles in the press and in the topics that you've raised about the damages and loss of profit, which would be the amount that is requested by the Government, State Government?

My second question is related to the outlook for 4Q. You exceeded your expectations. I think we've had many challenging quarters for the chemical industry and when we look at the starting point, especially related to Brazil, whose contribution is the most important one, so we see the level of capacity, and for 4Q we have the stoppage at Bahia facilities, and we are not going to have the destocking effect that we had in the previous quarter. How do you see these operational pathways for 4Q in terms of recovery? Thank you.

Pedro Freitas - CFO

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Braskem (BRKM5 BZ)

November 9, 2023

Hello Milene, thank you for your questions. With regard to the State Government's lawsuit, those numbers have been posted. The value is 1.4 billion BRL. What has been provisioned? Now I don't have the exact number, but it's somewhere between 2 and 300 million BRL. So that portion has been provisioned already and the total value is 1.4 billion.

With regard to 4Q, we have the, we have expectations and forecasts that will, that point to improvements. But with the pause in Bahia, as you mentioned, production volume should remain at a lower level. Now it's important to note that even with a lower production level we are not today, we are not being limited in our sales volume by production volumes. If we had more demand from the market, we would be selling more, and the research we've done corroborates that if there is demand from the market.

And especially in Brazil, this is stronger than in other markets. There is a large volume of products that suffer from seasonality and we've currently wrapped 3Q, so our expectation, our forecast is that there should be a drop in sales in Brazil, but a recovery in our results, a compensation effect. We are currently, today is November 9th, so we have not yet closed the month of October. But talking to the sales department and internal departments, we have seen that October it was apparently a good month for us.

So that combines with something else that we see in Braskem today. There are a few business lines that of ours that are very resilient. We have solvents, fuels, we have a number of different business lines that don't really, don't really vary very much, they don't oscillate in volume. So today they do have a relevant weight in our numbers. So we see stronger resilience within that lower level and a recovery especially in PE and PP, where we obviously have more room for recovery when the market recovers.

So just to recap, I think for 4Q we do in fact foresee a lower volume of sales, but better spreads; and for the next year think we still have a low cycle in our sights for the coming year, but - I think this isn't in the presentation - but with regard to our spreads in 2024, we will remain at a lower level with lower spreads, but they may possibly improve compared to 2023 - and the recovery is also going to come around the end of 2024, perhaps 25. That's when we will see more of a recovery moving forward in a high level. By 2026, perhaps.

Milene Carvalho - JP Morgan

Ok, thank you very much.

Operator

Our next question comes from Tasso Vasconcelos from UBS.

Tasso Vasconcellos - UBS

Hello, Roberto, Pedro and Rosanna. Thanks for taking my question. I have a question that's actually a follow up to the tag along discussion. I think it's very clear that conceptually when the tag along clause would be triggered, when there's a change of control, but what about the converse element, the opposite of that? When would the tag along not be triggered? So to add on, what is Novonor's controlling structure at Braskem like today? And is it possible for this acquisition to come from a holding and so that would impede any kind of controlling change, right? So when would the tagalong not be triggered? That's my question.

Pedro Freitas - CFO

Hi, Tasso. Now about the controlling structure, it is indirect control. So Novonor has a company in the Novonor Group, it's called NSP Investments, and NSP is a company that holds

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November 9, 2023

Braskem's shares. So it is indirect control from Novonor SA.

And about the tag along clause, I'm going to ask Rosana to go into more detail because she has studied this in more detail. I think she can give you a more objective answer.

Rosana Avolio - DRI

Hi, Tasso, how are you? Thank you for the question. Here we are working with a scenario which has a lot of uncertainties as well. All discussions for those interested in acquiring the company does not involve Braskem, but only the shareholders. So we are only considering the possibilities, but I'm going to see what the rules say. If there is a changing of control, the controller, and if there's a change in the controlling equity, there is a tag along for the ON shareholders.

I would like to remind you that Braskem is level one and if I can see their level one rules, so I would have to apply the extent of ordinary shares, and if there is something additional, I will have to make regulations. Why do I say that? Because in our corporate documents, we say if it would be Petrobras (incomprehensible 47:49) this position, the tag along will not be triggered. So I look at the rules, so it's 80% of those who hold ordinary shares. So if this structure is one, B or C, in fact we cannot even have a position, because at the end of the day it depends on other elements, because this is not a discussion in which we take part, but whether the shareholders.

Tasso Vasconcellos - UBS

That was very clear. Thank you everybody.

Operator

Our next question comes from André Vidal from XP investments.

André Vidal - XP investimentos

Good morning, Rosanna, Roberto and Pedro. I have a couple of questions here. First is, could you please go into a bit more detail about how you foresee the supply of ethane? And specifically over the coming year?

And my next question is could you please go into a bit more detail about how you see the aspect of the spreads in the market? You recently just now mentioned that you think the spreads are going to be a little tighter, but what kind of triggers should we be on the lookout for to see when the market is going to turn around? Have you seen any indicators in that regard? It would be nice for us to have an advance notice.

Pedro Freitas - CFO

Well, thank you, André. Now with regard to Pemex, we have a contractual agreement, 30,000 barrels/day, which is approximately 35% of Braskem's capacity, and any additional capacity that Braskem produces and does not consume internally. So that works out to giving us access to important volume. Pemex has been producing a considerable volume in production. That volume has fallen, but what I've been hearing from specialists in Mexico is that there is a very slight growth in the offer of domestic ethane in Mexico. Historically, Pemex has been consuming 20 to 30,000 barrels/day, but there's a lot of volatility in that internal consumption. There are times when they don't consume anything, and other times they consume more. So there's a lot of variants there.

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Braskem SA published this content on 17 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2023 20:25:00 UTC.