Responsibility Environment Workplace Community Marketplace Economic Performance
09
Responsible Care and Social Responsibility Report
methanex A Responsible Care速 Company
Methanex Corporation is the world’s largest supplier of methanol. As a Responsible Care® company, we are committed to the safe and environmentally sound management of the chemicals we make and use in accordance with the Codes of Practice established by the Chemistry Industry Association of Canada (formerly the Canadian Chemical Producers’ Association). Wherever we do business, the well-being of our stakeholders is a key priority. Responsible Care (RC) is an integral part of Methanex’s culture. Our Social Responsibility (SR) policies and principles are a natural evolution of this practice and are closely aligned with the company’s core values and business strategy. We believe strongly in collaborating with, and investing in, the communities where our employees live and work. We also take a proactive approach to sustainability and voluntarily look for ways to reduce greenhouse gas emissions at all of our manufacturing plants. As part of our commitment to RC and SR, we report annually to the public and to our stakeholders about our activities related to these initiatives.
Contents President’s Message
1
What is Methanol
2
Who is Methanex
3
Governance
4
About this Report
7
2009 Performance Environment
8
Workplace
14
Community
20
Marketplace
26
Economic Performance
30
Awards
32
Forward-Looking Statements
33
President’s Message Responsibility, reliability, continuous improvement and leadership – these qualities have always defined Methanex’s approach to business. In 2009, these words took on new significance as the cornerstones that allowed us to sustain a healthy financial position and meet ambitious goals in what was arguably one of the most turbulent global economic downturns in history. By building on this solid foundation, we were able to weather the 2009 financial storm through our employees’ diligent efforts to reduce costs, by maintaining sensible financial policies, and by remaining true to our core values and long-term business strategy. Our strong balance sheet allowed us to continue to invest in key value-adding initiatives. With a new project in Egypt scheduled to start up in mid-2010 and plans underway at all our other sites to increase production, we have the potential to double production over the next few years. Success in these initiatives will add important new supply for our customers and generate significant cash flow for our shareholders. Our global environmental performance was a top story throughout 2009. We achieved our goal of zero noncompliance and zero environmental harm incidents for the third consecutive year, reflecting the benefits of our ongoing investment in environmental infrastructure and systems and the fact that our RC and SR values are embedded throughout Methanex’s culture. We also made deeper inroads in managing our emissions and finding ways to use energy more efficiently. For example, our newest plant in Egypt is designed to be among the most energy-efficient methanol plants in the world. We continue to seek opportunities to use supplementary renewable energy sources at our plant sites. One such initiative is the development of our first industrial-scale wind energy park in Chile’s Region of Magallanes. This exciting project represents an opportunity to promote the diversification of energy sources, both for the company and the region. Workplace safety remained a key issue requiring attention in 2009. Despite the introduction of several
new programs that champion best practices, we nonetheless had a disappointing year in employee safety. Unfortunately, disappointment turned to sadness in early 2010 when we learned that two contractors were killed while working at our Egypt joint venture construction site. A thorough investigation was immediately launched to determine the root causes of this terrible accident. We believe it is important to analyze past incidents to identify ways to prevent future occurrences. We are working closely with the main construction contractor on the site to strengthen our performance in this area. I cannot stress enough our commitment to providing a safe workplace and the importance we place on having a culture of safety at all of our sites. In 2009, we saw an expansion of the methanol-for-energy market, and with it, an increased demand for product stewardship related to methanol safe handling. In this report, you will learn more about how our employees across the world are working with local and national governments, industry representatives, energy experts, social leaders and communities to develop and drive methanol-to-energy applications, starting with a focus on ensuring that our product is handled and used safely. Looking ahead, our commitment to RC and SR remains resolute. By working in partnership with our employees and stakeholders, our goal is to create safer workplaces, minimize our environmental footprint and make a difference in the communities where Methanex has a presence. These efforts, in tandem with our strong corporate values and focused business strategy, will continue to guide Methanex as we adapt to the challenges and opportunities that await the company in the new decade.
Bruce Aitken President & Chief Executive Officer
President's Message | Methanex 2009 1
What is Methanol?
Methanol is a clear, colourless liquid petrochemical made up of four parts hydrogen, one part oxygen and one part carbon. Methanex sells much of its product to chemical manufacturers, who turn methanol into other industrial chemicals. These chemicals are then used to manufacture a variety of common household and industrial goods. An essential chemical ingredient, methanol derivatives are found in a surprising number of everyday consumer and industrial products used in and outside the home – from latex paints, plywood sub-flooring, and nylon and polyester found in carpets, to furniture, DVDs and foam pillows. Methanol for Energy With demand for energy stronger than ever, finding new fuels and alternative sources of energy is essential for long-term global energy security and ongoing economic growth. Methanol has emerged in
2 Methanex 2009 | What is Methanol
the world’s energy mix as a viable alternative fuel and energy source, with powerful applications and benefits.
animal fats. Biodiesel can be blended with conventional diesel and used in cars, trucks, buses and farm equipment.
Methanol fuel blending, a process in which methanol is mixed with gasoline or diesel, provides an option for countries to reduce their dependence on imported petroleum products. It is increasingly used to fuel vehicles in China, where many Chinese car companies are working to commercialize methanol-compatible vehicles. Methanol-blended gasoline can also provide higher octane levels and potentially increased efficiency and power. On the environmental side, it can reduce tailpipe emissions that contribute to smog.
Another energy application for methanol is its use in the production of dimethyl ether (DME), a cleanburning gaseous, methanol-based fuel similar to propane that is now used for heating and cooking in many homes in developing nations.
Methanol is also used to produce biodiesel. Biodiesel is a renewable fuel produced by the chemical reaction of methanol and vegetable oils or
How is Methanol Made? Methanol is usually made by reforming natural gas with steam and then putting the resulting synthesis gas mixture through conversion and distillation processes to create pure methanol. The result is a clear liquid hydrocarbon that is water soluble and readily biodegradable.
Who is Methanex Corporation?
Methanex is the world’s largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Headquartered in Vancouver, Canada, Methanex has a global network of operating facilities. We currently operate methanol production sites in Chile, New Zealand and Trinidad and Tobago, with a new project in Egypt due for start-up mid-2010. Regional marketing Seoul offices in Belgium, Chile, Beijing China, Egypt, Korea, Japan, the United Tokyo Shanghai Arab Emirates, the United Kingdom
and the United States enable us to meet the needs of customers around the globe. Our operations are supported by the world’s largest fleet of methanol Billingham ocean tankers, which are managed by Waterfront Shipping Limited, Vancouver a wholly owned subsidiary of Dallas Methanex. These ships support an extensive global methanol supply
chain that provides reliability and security of supply to customers. Methanex also owns a 20 per cent interest in a dimethyl ether (DME) production facility in Zhangjiagang, China. This investment expands our presence in the country and helps Brussels us better understand and meet the growing Cairo demand for methanol-toDubai energy applications in the region. EGYPT (2010)
Hong Kong TRINIDAD AND TOBAGO
Santiago
NEW ZEALAND
CHILE
Billingham Vancouver Beijing Shanghai
Seoul Tokyo
Brussels
Dallas Cairo
Dubai
EGYPT (2010)
Hong Kong TRINIDAD AND TOBAGO
Santiago
NEW ZEALAND
CHILE
Production Facilities Head Office Marketing and Commercial Offices Distribution Terminals and Storage Facilities
Who is Methanex | Methanex 2009 3
Governance
Sound governance is essential to Methanex’s long-term success and critical to the sustainability of our operations. The company’s corporate governance policies ensure there are effective processes and structures in place to provide strong management and clear direction for all of Methanex’s business affairs.
Methanex’s RC/SR policies and programs are based on the Chemistry Industry Association of Canada’s (CIAC) Responsible Care Ethic and Principles for Sustainability and the CIAC Codes of Practice. In 2009, the CIAC changed its name from the Canadian Chemical Producers’ Association to reflect its increased focus on sustainability and product stewardship as well as its expanding membership base, which now represents a broader crosssection of the industry. In tandem with this name change, the CIAC will also be introducing revised Responsible Care Codes of Practice in 2010.
Management and Direction The company’s senior management team and its Board of Directors establish the direction for Methanex’s RC/SR practices. Through the Board’s Responsible Care Committee, policies related to a broad range of RC/SR issues are reviewed and modified accordingly. These include ethics, accountability, governance, business relationships, products and services, community involvement and protection of people and the environment.
4 Methanex 2009 | Governance
The Senior Vice President of Corporate Resources has overall responsibility for Methanex’s RC/ SR policies and programs, and ensures they align with the Board’s requirements and the company’s business strategy. These programs are directed and managed by the directors of Responsible Care and Government and Public Affairs, who lead the Global Responsible Care Team and the Global Public Policy Team, respectively. Methanex’s RC/SR program is managed through a ‘Plan, Do, Check, Act’ management cycle, both on a global basis through respective global teams and on a regional basis through local management. This management cycle evolves continually and supports the program’s ongoing improvement. Plan: A strategy aligning company goals and CIAC principles and codes of practice is set, and detailed annual tactical plans are established. The actions identified in the tactical plans are assigned to individuals who are graded on their completion. Do: Specific actions from the global and regional tactical plans are to be completed as assigned. Check: Performance of the RC/SR management system is checked both regionally and globally through
the company’s internal and external audit programs. Completion of annual tactical actions is also reviewed during the year through individual performance reviews. Act: Opportunities for improvement identified in the ‘Check’ part of the cycle are developed into actions for immediate attention or for inclusion in the ‘Plan’ stage of the management cycle. The overall ‘Plan, Do, Check, Act’ cycle is maintained by an internal reporting chain through which the function manager reports to a member of senior management who, in turn, informs the Board’s Responsible Care Committee (see chart on page 5).
Code of Business Conduct Methanex’s Code of Business Conduct is designed to provide employees and directors with a set of standards that help avoid wrongdoing and promote honest and ethical behaviour while conducting company business. A confidential toll-free hotline is available to all employees to report any suspected code violations.
Responsible Care and Social Responsibility Organizational Structure Global Responsible Care Team: Members are senior RC representatives from Responsible Care, Manufacturing, Marketing and Logistics, Risk Management and Government and Public Affairs, who act as a collective resource on RC principles, practices and strategy. Global Manufacturing Team: Membership includes senior leadership from the manufacturing plants as well as from the Human Resources, Risk Management and
RC functions. Its primary goal is to promote the world-class operation of Methanex’s manufacturing plants and strong adherence to RC principles. Global Public Policy Team: Membership is drawn from regional senior Public Affairs leadership as well as from corporate Government and Public Affairs, RC, Investor Relations and Marketing & Logistics. This team is responsible for directing the evolution of the company’s global SR and Public Affairs programs. Global Marketing & Logistics Team: Membership includes senior leadership from each of the
company’s Marketing & Logistics regions. Primary responsibilities include delivering customer value, providing efficient logistics services and overseeing adherence to RC ethics, principles and environmental excellence in all of the company’s Marketing & Logistics regions. Global Marketing & Logistics Responsible Care Team: Membership includes RC practitioners from each Marketing & Logistics region as well as the Corporate office. The team develops and manages the annual RC plan for Marketing & Logistics.
Methanex Corporation Committees with a Responsible Care and Social Responsibility Focus Responsible Care Committee of the Board
Senior Management Responsible Care & Public Policy Stewardship Review
SVP Caribbean & Global Manufacturing
Global Manufacturing Team
SVP Corporate Resources
Global Responsible Care Team
Global Public Policy Team
SVP Global Marketing & Logistics
Global Marketing & Logistics Team
Global Marketing & Logistics Responsible Care Team
Governance | Methanex 2009 5
About this Report
As part of our commitment to RC/SR, we report annually to the public about our RC/SR activities around the globe. Methanex has published an annual Responsible Care Report since 1997 and a combined RC/SR Report since 2004. The 2009 RC/SR report covers the period of January 1 to December 31, 2009, and focuses on five key performance areas: environment, workplace, community, marketplace and economic performance. Our reporting approach includes qualitative examples that highlight our
activities in specific performance areas as well as quantitative measures called key performance indicators (KPIs). These KPIs measure the effectiveness of our policies, procedures and systems. They also recognize trends and help us identify issues that require further action.
commitment
Environment
We are a chemical company that produces and emits CO2 as a result of our production process. That being said, we aim to protect the environment by minimizing our use of natural resources and energy, and by reducing waste and harmful emissions. As part of our commitment to RC, we go beyond merely complying with regulations to follow best environmental practices in all aspects of methanol production and distribution. We promote this ethic with our customers, distributors, partners and employees.
Strong Global Environmental Performance In 2009, we achieved our goal of zero non-compliance and zero environmental harm incidents for the third year in a row. We were able to do this by continually investing in environmental infrastructure and management systems and by applying world-class environmental standards to all of our global operations – from our manufacturing plants to our terminals and ships. Environmental Initiatives We constantly seek ways to reduce our environmental footprint. In 2009, we completed a significant upgrade project in Chile to ensure that all effluent at the plant is held and checked before release. We also worked to build the region’s first wind farm, which is projected to have a generation capacity of 2.55 megawatts when it is
completed in late 2010. To learn more about the wind farm, please see “Welcoming the Winds of Change” on page 13. Minimizing Emissions from our Operations Managing carbon dioxide emissions has always been a significant and challenging part of the methanol production process. We strive to minimize emissions from our operations, knowing that this is good for the health of the environment and also sound business practice. Methanex voluntarily participates in greenhouse gas (GHG) emission reduction efforts in countries where we do not have emission reduction obligations. By the end of 2009, we had voluntarily reduced the direct, productionbased carbon dioxide emission intensity at our plants by 35 per cent since 1994 through asset turnover, improvements in plant reliability and emissions management.
Environment | Methanex 2009 9
Total Environmental Incidents Non-Reportables ( Minor ) Reportable Incidents ( Serious ) Permit Exceedances ( Major ) 120 80 60 40 20 0
2005
2006
2007
2008
2009
Minor: A small spill or release that did not meet either regulatory or Methanex spill-reporting criteria. Serious: A spill or release event that required reporting either to a regulatory body, Methanex or both. Major: An event that contravened the limits of the site’s environmental permit or licence.
Serious environmental incidents are at an all-time low and we have not had an incident of environmental non-compliance since 2006. We have increased our focus on reporting in the past two years. This initiative, in conjunction with significant maintenance activity in 2009, has contributed to a large increase in the number of minor environmental incidents reported.
In 2009, we emitted 2,032,599 metric tonnes of carbon dioxide directly from the methanol production process. The emissions intensity rate was 0.57 metric tonnes of carbon dioxide per metric tonne of methanol produced, which represents an increase over the 2008 emissions intensity rate of 0.49. This increase in emissions intensity resulted from the fact that a larger proportion of our 2009 methanol production came from less efficient production locations. Emissions were also largely impacted by planned and unplanned plant maintenance shutdowns in 2009. EMethanex Plant to be Among the Most Energy Efficient in the World One of Methanex’s key strategies is to use energy more efficiently. This includes making operational changes and investments to ensure our plants and facilities run as efficiently as possible – the more efficient the plant, the less carbon dioxide is produced. When it begins production in 2010, our plant in Egypt will be among the most energyefficient methanol plants in the world and, as such, should reduce the overall intensity rate of our GHG emissions. Managing Emissions from Shipping Although many regions of the world do not have regulations governing emissions from shipping, we continually strive to minimize our emissions intensity by improving the utilization rate of bunker fuel wherever our ships travel.
10 Methanex 2009 | Environment
CO2 Emissions vs. Methanol Production
Commentary
COc Emissions (million tonnes) Methanol Production (million tonnes) COc Emission Rate (tonne COc/tonne methanol)
6.0
0.6
5.0
0.5
4.0
0.4
3.0
0.3
2.0
0.2
1.0
0.1
0
2005
2006
2007
2008
2009
For example, over the past number of years, Waterfront Shipping (Waterfront) has tried to ensure that ships travelling back to our plant sites after unloading methanol at port or terminal destinations do not return empty. Since 2002, these ‘backhaul’ trips carrying thirdparty cargoes have contributed to a 15 per cent reduction in the emissions intensity rate per product shipped. During 2009, 462,057 metric tonnes of carbon dioxide were emitted from burning bunker fuel, at an emissions intensity rate of 79 kg of carbon dioxide per tonne of product shipped. This represented an increase over 2008 emissions intensity levels and was due to more ‘ballast time’, or the time that vessels sailed without cargo. This occurrence was a result of the slowdown in global shipping and trade in 2009. As more regions implement emissions regulations, such as requirements that tankers burn cleaner low sulphur diesel fuel instead of bunker fuel within 200 nautical miles of the coastline, Waterfront should realize further emissions reductions in the coming years. A Comprehensive Program for Managing Greenhouse Gases We are currently developing an integrated Greenhouse Gas (GHG) Management Policy and Program that will further support our GHG emissions management. Although still in development, the program encompasses
Waterfront Shipping Historical Emissions
Chemical Consumption for Methanol Production Process
Methanol Cargo (million tonnes) Backhaul Cargo (million tonnes) COc Emission Rate (kg COc/tonne cargo)
6.0
100
5.0
80
4.0
4000
0.8
3000
0.6
2000
0.4
20
1000
0.2
0
0
60
3.0
40
2.0 1.0 0
Chemicals (tonnes) Chemical to Methanol Ratio (kg/tonne)
2005
2006
2007
2008
2009
2005
Waterfront Shipping Historical Emissions includes bunker fuel consumed on our timechartered vessels and excludes Methanex vessels while out on time charter to third parties.
2006
2007
2008
2009
0
Chemical Consumption Data shows the consumption of chemicals used for pH control and for water treatment in the production process. 2006 and 2007 results were adjusted based on new engineering estimates.
initiatives to improve the reliability and utilization performance at our plants and shipping networks; to evaluate energy-efficiency improvement projects, renewable energy sources and technology and adopt them where feasible; and to maintain an inventory of our energy consumption and GHG emissions so as to better manage our carbon footprint. Our GHG Management Policy and Program will align with our RC industry ethic and allow us to capitalize on
Other Performance Measures
Commentary
While our absolute chemical consumption is at a minimum, overall intensity (kg chemical consumed per tonne methanol produced) has risen since 2005. This rise is related to an increase in the proportion of production coming from our older plants since 2006. As new highly efficient production comes on-stream in 2010 and as we continue our chemical reduction initiatives, we expect to see this intensity decrease. Overall, our chemical usage intensity has decreased 30 per cent in the past 10 years.
opportunities and mitigate risks related to regional and international climate change policies and regulations. This is particularly relevant for our New Zealand location, which is the first Methanex site to be impacted by national climate change legislation. Based on current legislation, our New Zealand operations will be subject to an emissions trading scheme (ETS) as of July 1, 2010. Consequently, Methanex may begin trading carbon credits to meet its obligations under the ETS.
2005
2006
2007
2008
2009
Total energy use (excluding electricity)
GJ
207,507,000
235,251,100
174,866,469
158,239,191
151,885,462
Total electricity use
MWHr
260,000
241,008
210,751
154,684
170,259
Electricity self-generated – non-renewable
%
58
63
58
42
36
Electricity self-generated – renewable
%
0
0
0
0
0
Electricity purchased – non-renewable
%
30
32
37
49
47
Electricity purchased – renewable
%
12
5
5
9
16
Total freshwater consumed
mD
7,585,000
5,511,010
4,448,292
3,402,579
5,630,082
Ozone-depleting substance emissions
kg
0
0
0
0
0
none
none
none
none
none
none
none
none
none
none
Impact on protected areas (World Heritage sites, etc.) Magnitude and nature of penalties for non-compliance (environment, safety)
USD
Environment | Methanex 2009 11
REGIONAL HIGHLIGHTS
Keeping New Zealand Green One look at New Zealand’s lush green landscapes and it’s easy to understand why the country has such a strong environmental ethic. Methanex New Zealand does its part for the environment by maintaining the grounds that border our facilities in a way that is respectful to the natural environment and aesthetically pleasing to our neighbours. Methanex’s facilities are adjacent to pastured farmland, with local farmers and their animals residing nearby. As part of an ongoing neighbourly arrangement, Methanex allows the farmers to use the pasture outside the plants’ perimeter as additional grazing land for their sheep. This
12 Methanex 2009 | Environment
in turn helps the company maintain the rural integrity of the landscape, keep the grass healthy and save costs. This win-win relationship has been in place for more than 10 years. In 2009, Methanex New Zealand expanded its landscape maintenance program, working with a local architect to develop a new outdoor plan for its recently re-opened Motunui facility. In addition to the architect’s suggestions, the new blueprint incorporates recommendations gleaned through consultation with neighbours and the local hap¯u, a Maori sub-tribe. The plan, which will be implemented during the next five years, focuses on preserving historically and culturally significant native foliage around the Motunui site as well as creating an unobtrusive barrier to separate the facility from the surrounding farmland.
Bernardo Bastres, Archbishop of Magallanes, blesses the foundational stone for the Cabo Negro Wind Energy Park
Bruce Aitken, President & CEO, Methanex and Marcelo Tokman, Chilean Minister of Energy, place a capsule in the Wind Park’s foundational stone. The capsule’s contents represent different regional energy elements
Welcoming the Winds of Change In 2009, Methanex Chile took major steps towards building the first industrial-scale wind energy park in the Region of Magallanes. Parque Eólico Cabo Negro Fase I (Cabo Negro Wind Energy Park – Phase I) represents an investment of US$5.3 million and is Methanex’s first renewable energy project and foray into the carbon trade market. Wind energy has shown great potential as a renewable energy source, offering the company an opportunity to access non-conventional renewable energy for its operations. The energy generated at the wind park – 2.55 megawatts (MW) – will be provided to the internal generation system at the Cabo Negro plant, increasing its capacity from 36 MW to 38.55 MW. In the future, this excess energy could be sold to a third party or delivered to Punta Arena’s electricity grid if permitted by regional regulatory policies. Construction on the park began in December 2009. Marcelo Tokman, Chile’s Energy Minister; Mario Maturana, Magallanes Intendent; and Bruce Aitken, Methanex President and Chief Executive Officer, joined community members at a special ceremony to lay the park’s first foundational stone. Project generators will be installed by mid-2010, with the wind park scheduled for operation by the last quarter of the year.
Did you know? Cabo Negro Wind Energy Park – Phase I is Methanex’s first renewable energy project and foray into the carbon trade market.
Excitement about the project has spread far beyond Methanex’s doors. The wind park received enthusiastic support from the company’s local Community Advisory Panel as well as Punta Arenas residents following a community presentation in September 2009. The presentation was part of Methanex’s application to the United Nations to have the park approved as a Clean Development Mechanism (CDM) under the Kyoto Protocol. Final CDM approval is expected in mid-2010. The Chilean government has recognized Parque Eólico Cabo Negro as one of the country’s most important projects in 2010 and awarded it the Bicentennial Seal, an honour reserved for public initiatives that have a positive impact on the region and the country overall.
What Others Say “Cabo Negro’s principal benefits to the Region of Magallanes have been an increased awareness of the importance of wind power and its viability as an alternative energy and a potential source of new jobs. It has also stimulated a healthier attitude about the care of our planet among young students who, each day, experience first-hand the use of energy made from a clean natural resource.” José Raúl Alvarado Díaz, Principal, Juan Bautista Contardi Public High School and President, Methanex Chile Community Advisory Panel
Environment | Methanex 2009 13
improvement
Workplace
A safe and healthy workplace is essential to creating an environment where our employees can achieve their best. We work to attain this goal by encouraging a corporate culture that is focused on continuous improvement, teamwork, ongoing learning and recognizing success.
Health and Safety We place the highest priority on the health and safety (H&S) of our employees and the contractors who work at our plant sites, terminals and offices. We believe that all injuries are preventable, and we continually strive to improve the H&S management systems at all our locations to attain an injury-free workplace. Drawing on a combination of the Chemistry Industry Association of Canada (CIAC) Codes of Practice, industry best practices and internationally recognized standards, Methanex has developed a comprehensive H&S program that encompasses global policies, internal standards and procedures, and training and education. We also establish yearly global and regional H&S performance targets that are linked to leadership and employee incentive programs. Working to Improve Health and Safety throughout Methanex As this report went to press in early 2010, a tragic event occurred at our Egypt construction site that resulted in the fatality of two contractors. We are deeply saddened by this event and our thoughts go out to the two workers’ families. Immediately following the accident, an investigation was launched with the main construction contractor to determine the root causes of the incident, which involved the workers’ entry into a confined space. The investigation is in progress and when complete, the lessons learned will be shared within Methanex as well as externally.
This terrible accident followed a disappointing year in employee safety. In 2009, we recorded our highest employee recordable injury frequency rate (RIFR) in the past five years. This interrupts a long history of continuous improvement on this key performance indicator. Our teams have carefully analyzed these incidents and taken action to prevent similar occurrences in the future. Despite these setbacks, we achieved some individual successes in 2009. Construction of our plant in Egypt was in full force in 2009, with commercial operation planned for mid-2010. By the end of December 2009, more than 17 million person-hours had been worked at the site, with no lost time injuries and a project recordable injury frequency rate (RIFR) of 0.09. RIFR is the number of recordable injuries per 200,000 hours worked. EMethanex is proud of this 2009 achievement, particularly given the considerable construction activity during the year. This accomplishment was a result of close collaboration with the main construction contractor to integrate RC principles into all aspects of the site’s construction and management. We were also very pleased that in 2009 our New Zealand plant operations reached the milestone of nine years with no employee lost time injuries. In our 2008 report, we discussed our contractor safety performance and the implementation of our Contractor Responsible Care Improvement Plan. In addition to establishing a long-term relationship with a key
Workplace | Methanex 2009 15
Employee Recordable Injury Frequency Rate Methanex Employees SHARE Emp. Group III Average SHARE Emp. Group III 1st Quartile
Contractor Recordable Injury Frequency Rate
The increase in the employee RIFR in 2009 was driven by eight injuries: two resulting in time away from work to recover and six resulting in either medical intervention or restricted work duties to aid recovery. No injuries resulted in lasting disability.
Methanex Contractor SHARE Emp. Group III Average SHARE Emp. Group III 1st Quartile
1.0
2.1
0.8
1.8 1.5
0.6
1.2
0.4
0.9 0.6
0.2
0.3
0 2005
2006
2007
2008
2009
0 2005
2006
2007
2008
2009
The recordable injury frequency rate (RIFR) is the number of recordable injuries per 200,000 hours worked. Recordable injuries are incidents that require medical attention, or that result in restricted work or lost time. SHARE (Safety and Health Analysis, Recognition and Exchange) is a database compiled by the Chemistry Industry Association of Canada (CIAC). Methanex benchmarks against the average and first quartile Group III member companies of the CIAC whose employees collectively work more than one million hours per year.
The 2009 contractor RIFR was driven by 12 injuries: two resulting in time away from work to recover and 10 resulting in either medical intervention or restricted work duties to aid recovery. No injuries resulted in lasting disability.
maintenance contractor, aspects of this plan included improvements to our contractor selection, training, supervision and performance assessment processes. The result of this initiative was a small improvement from the contractor RIFR in 2009. While we are on the right track, we will continue to strive for larger improvements in this area in the future. In 2010, we will move into the second phase of this initiative with a focus on auditing the improved regional contractor management systems and establishing a global contractor management guideline that can be applied at all of our locations. With the changes started in 2009 and the expanded initiative in 2010, we are optimistic that we will make further progress on our longer-term trend of improving employee and contractor safety.
Employee Practices
In 2009, we also implemented the Human Factors pilot project in New Zealand to enhance our existing behavioural safety program and strengthen our ability to analyze incidents. This program has proved to be very successful, and we plan to introduce it at our other manufacturing sites over the next two years. To learn more about the Human Factors project, please see “Using Human Factors to Improve Safety” on page 18.
Supporting Employee Development and Professional Growth
16 Methanex 2009 | Workplace
Commentary
We strive to integrate our corporate values of integrity, trust, respect and professionalism into all aspects of our human resource practices. This became even more important during the economic turmoil of 2009 as we sought to maintain a balance between short-term priorities, such as cost and cash management, and executing the company’s long-term business strategy. In keeping with Methanex’s culture and values, we provided employees with regular updates that addressed the implications of the current economic environment. Methanex’s President and Chief Executive Officer Bruce Aitken also visited all of our major sites, where he led information sessions with employees.
The training and professional development opportunities that Methanex provides our more than 800 staff members reflect our commitment to ongoing employee development. While some training activities in 2009 were deferred due to cost-cutting measures in response to the recession, we maintained our core development and HR programs. We also sustained modest pay increases and maintained incentive programs. This combination of employee practices, hiring processes, professional development and training opportunities contributed to high employee retention levels. We are proud to be an employer of choice in the communities where we operate.
Employee Health & Safety (H&S) Incidents Minor
Contractor Health & Safety (H&S) Incidents
Serious & Major
Minor
150
200
120
160
90
120
60
80
30
40
0
The increasing number of employee and contractor minor incidents possibly indicates a weakness in, or lack of communication on, our safety program. We have responded by forming the Global Occupational Health and Safety Team to focus on this issue and also introduced or enhanced a number of safety-related programs. We recognize we may need to do more as we go forward.
Serious & Major
0 2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
Minor Incident: Any H&S incident (including near-misses) not resulting in a reportable injury. Serious Incident: An injury that requires restricted work (light duty) or medical attention (medical aid). Major Incident: A lost time injury or more serious injury.
We are dedicated to creating an environment of ongoing professional growth. An integral element of this approach is the performance optimization process. Employees set goals and establish their own development plan at the beginning of the year and then meet with their manager for two mid-year reviews to discuss their progress. The year finishes with a year-end assessment that measures achievement based on goals and behaviours. The outcomes of the performance optimization process are tied to employee compensation. In 2009, we developed a career portal for employees on our intranet in response to a need identified in our
Commentary
2008 Employee Engagement Survey. This tool enables employees to conduct self-assessment exercises, explore career opportunities within Methanex and create their own development plans. The portal also offers coaching support for managers. Although we made the difficult choice to defer our scheduled formal leadership development activities in 2009 (due to cost-cutting measures related to the recession), we supported managers and employees in defining opportunities to acquire and practice new skills through structured job tasks, project assignments and volunteer initiatives.
Length of Employee Service
Employee Gender
Employees by Region
14 % 23 % 15% 19 % 13% 6% 8 % 2%
73 % 27%
22% 20% 18% 15% 15% 4% 3% 3%
< 1 year 1–2 years 3–5 years 6–10 years 11–15 years 16–20 years 21–25 years ≥ 26 years
Male Female
Employee Generations
12 51% 36% 1% %
Millennial (1981 or after) Generation X (1966–1980) Boomers (1946–1965) Mature (1945 or prior)
Trinidad and Tobago Chile Canada New Zealand Egypt United States Asia Pacific Europe
Note: Employees’ average length of service is eight years. * Increase in our 1–2 year hires reflects growth in our Egypt project.
Workplace | Methanex 2009 17
Helping Employees in Chile in a Time of Transition The ongoing limited supply of natural gas in Chile has reduced the production capacity of our operations in the country, requiring us to lower our costs and restructure our organization in 2009. Throughout this situation, we were transparent and open with employees and ultimately made the difficult decision to lay off 37 staff members from our Punta Arenas site and the Santiago office. The decision was timed to minimize disruption to the employees’ families, and those leaving the company received a full compensation package, including health and educational benefits. We also offered professional support services to help affected employees make a successful transition to their future endeavours. Growing in Egypt With preparations in full swing for the planned start-up of our Egypt plant in mid-2010, we have needed to attract and recruit employees from the country’s very competitive labour market. Our commitment to developing our staff and creating a respectful, positive and rewarding work environment has helped EMethanex stand out as an employer of choice in Egypt. The majority of our HR programs and policies are now in place in Egypt, including health, welfare and retirement savings programs. Local staff also participate in our global performance management and compensation processes and employees have access to our global Employee Share Purchase Plan. Along with our competitive compensation program, our use of best recruitment and hiring practices has enabled us to hire well-qualified staff for a wide range of positions. We are also implementing a number of programs to develop the skills of our employees in Egypt. In 2009, we delivered 9,200 person-hours of local training in accident prevention and analysis, rescue training and vendor management.
What Others Say “Methanex has developed and pioneered a contractor management strategy within the petrochemical sector in Trinidad. In conjunction with Neal & Massy Wood Group, the company has successfully delivered two years of no lost time injuries on the Trinidad site, setting a positive example within the industry. Through its actions, Methanex has encouraged our company and other contractors on the plant site to raise the bar where Responsible Care is concerned.” Ray Stoute, Contract Manager, Neal & Massy Wood Group Limited, Maintenance Contractor on the Methanex Trinidad plant site
18 Methanex 2009 | Workplace
regional highlights
Responsible Care: A Team Effort in Trinidad “Be aware and be empowered” is the new philosophy driving Responsible Care (RC) at Methanex Trinidad. Championed by the site’s Joint Responsible Care Committee (JRCC), this proactive approach is behind the team’s vision to get employees and contractors more actively engaged in the RC process. Since its introduction in 2007, the JRCC has fostered a ripple of positive changes across the site by addressing RC concerns and issues, and through its promotion of best practices. In 2009, an expanded committee was formed to take RC to a new level. Originally comprised of employees from the Manufacturing and Responsible Care departments, the new multi-disciplinary team includes representatives from a broad cross-section of functions. The goal is to integrate RC thinking into all aspects of the organization in an effort to cultivate a generative RC culture across the site. One of the challenges that had faced the Trinidad site was the timely resolution of reported issues. Conditions identified during monthly JRCC inspections were not always handled quickly enough, leading to a backlog of jobs. A dedicated team of maintenance contractors has since been appointed to complete all pending actions from past inspections, with action items addressed in priority. In 2009, the JRCC also initiated a number of workshops for employees and contractors, such as the “Positive Safety Stand Up” town hall meeting. Held twice during the year, this initiative brought these two groups together to learn and test their knowledge of RC through role-playing scenarios. By reinforcing people’s positive actions, the objective is to see RC become both an intuitive practice and a responsibility that is readily shared by all personnel on the Trinidad site.
Using Human Factors to Improve Safety In 2009, Methanex New Zealand piloted Human Factors, a new workplace initiative that links strongly with safety, reliability and RC. Human Factors is built on the premise that, as humans, we all have lapses and make mistakes. The program looks at the interactions between people and other elements of a given system, and attempts to understand how specific factors – environment, culture, job and human characteristics – influence workplace behaviour, health and safety.
Joint Responsible Care Committee Lead Mark Boosooboy (left) and Alex Andersen (right) inspect a methanol storage tank at Methanex Trinidad’s Titan Plant
Jayne Francis, Methanex New Zealand’s Director, Corporate Resources (left) discusses the Human Factors program with Gary Rielly (centre) and Erin Roche (right)
The pilot program, designed to create a safer workplace, was implemented at the New Zealand site in four phases. To begin, the first phase involved measuring the maturity level of our safety culture to provide a baseline and identify positive features and areas for improvement. In phase two, the behavioural strengths and weaknesses identified in phase one were used to help develop health and safety behaviour standards at the manager, supervisor and workforce levels. Phase three involved a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the site’s existing behavioural observation program. In the final phase, a number of people were trained in Human Factors Analysis Tools to supplement TapRoot, a process that provides a root cause analysis of incident investigations. This training provided a better understanding of how human factors influence work accidents, which will help staff develop corrective actions to prevent reoccurrence. The pilot was deemed a success on several fronts. It gave staff a baseline from which to measure future safety improvement, and helped people articulate those behaviours needed for top safety performance. Given the positive results of the New Zealand pilot, Human Factors will be extended to Methanex’s other manufacturing sites in Chile and Trinidad over the next two years. A review is presently underway to determine which Human Factor elements are relevant for the company’s non-manufacturing locations.
A variety of upgrades to the Marinex have greatly improved living and working conditions for the vessel’s crew
Improving Living Conditions on the High Seas Living and working on the high seas can translate to challenging employment conditions. The physically demanding work environment on ships often leads to considerable crew turnover, making crew retention a major issue for the shipping industry. Waterfront Shipping Limited (Waterfront), a wholly owned subsidiary of Methanex, is a marine transportation company that specializes in the transport of bulk chemicals, such as methanol and clean petroleum products. In 2009, Waterfront introduced a series of upgrades to the Marinex, one of the ships in its fleet, to enhance onboard safety and living conditions. Waterfront owns 50 per cent of this vessel and has been working with the vessel’s other owners to ensure the ship’s conditions are in line with our RC standards. To improve safety, US$2 million was invested in the installation of a nitrogen plant onboard the vessel. Although this is not required by regulation, it is a significant safety enhancement. The system reduces the risk of an explosion in the cargo tanks that store methanol and other products by removing oxygen from the tanks. It also helps with the tank cleaning process and, as a result, minimizes the number of times crew must enter the tanks for cleaning purposes by up to 15 per cent. The upgrades have also positively impacted living conditions. New exercise equipment and a basketball court have been added, and crew now enjoy new furniture and improved amenities in common areas and cabins. These improvements have helped Waterfront attract and retain experienced staff, while the crew benefit from safer and more comfortable living conditions. Plans are now underway to implement these upgrades on Waterfront’s other vessels.
Workplace | Methanex 2009 19
Community
support
We are privileged to operate in a diverse range of communities around the world. Wherever we do business, we aim to create and support programs that contribute to the meaningful and sustainable well-being of the community as a whole. This can only happen in an atmosphere of trust, respect and transparency.
Our Policies Support Community Engagement Effective and meaningful community engagement comes from understanding a community’s concerns and needs. Methanex’s SR Policy supports our commitment to open, honest, proactive relationships in the communities where we have a significant presence; to be accountable and responsive to the public; to have effective processes to identify and respond to community concerns; and to inform the community of risks associated with our operations. Our RC Policy further commits us to recognize and respond to community concerns about the manufacture, storage, handling, transportation and disposal of our products, and to promptly provide information concerning any potential health or environmental hazard to the appropriate authorities, employees and all stakeholders. Creating Open Channels for Dialogue We communicate with members of local communities in a variety of ways. First and foremost, local Community Advisory Panels (CAPs), which are established at all of our manufacturing locations, act as a forum for frank discussion of issues that concern both Methanex and our neighbours. CAPs comprise a cross-section of independent community representatives and provide an effective way for our organization and fence-line communities to communicate in an open, respectful and transparent way. In Chile, for example, our CAP includes members who represent education, the environment, business, the local university, Chile’s national energy authority Empresa Nacional del Petróleo (ENAP), a youth institute and the Red Cross. In 2009, CAP members in Chile were given presentations within the community about our wind energy project.
In New Zealand, two members of our CAP participate on the local RC Council, reporting back to the CAP about RC issues and initiatives. New Zealand CAP members have also played an important role in our RC re-verification process (last carried out in 2008) and consulted with auditors throughout the process. As a way of strengthening relationships with neighbouring communities, our CAP in Trinidad hosts and organizes workshops on specific topics identified as important by the local community. The group has facilitated seminars for high school students on selfesteem and career guidance, and for adults on personal safety awareness, anger management and first aid. In addition to our CAPs, staff in all our manufacturing locations also regularly host plant tours and site visits, and actively participate in speaking engagements, neighbourhood surveys and local community events as part of our ongoing Community Dialogue Program.
What Others Say “Methanex New Zealand is a worthy Responsible Care company that takes full responsibility for its health, safety, environmental and education policies by working with local groups, such as volunteer emergency crews and first responders, around the safe handling of methanol. Another pleasing aspect is that safer work methods have been implemented in local engineering industries as a result of the company’s practices.” Dave Allerton, Member, Methanex New Zealand Community Advisory Panel
Community | Methanex 2009 21
Spending by SR Focus Area
Who Benefits: Individuals
41% 8 % 34 % 17%
32 37 69
Partnering with employees Responsible Care community outreach Education Other
Note: We take both a qualitative and a quantitative approach to evaluating the success of our community investment initiatives. In 2009, we measured the number of organizations and individuals that have benefited from our programs.
Community Investment Employee-run Social Responsibility Committees at most locations identify and develop community investment strategies that are aligned with our business objectives and that reflect the specific needs of each community. Our SR investments target the following areas:
»» Partnering with employees through a matching grants program to encourage employee volunteerism and contributions to community fundraising initiatives; »» Financial assistance for local community health and safety and environmental initiatives related to Responsible Care; and »» Regional educational development through the support of education projects and scholarship programs.
Our community investments include financial contributions and in-kind gifts as well as countless hours of volunteer time that our employees generously donate to local community projects.
Scholarships Internships Total Individuals
Who Benefits: Organizations by SR Focus Area
60 43 36 75 214
Partnering with employees Responsible Care community outreach Education Other Total Organizations
REGIONAL HIGHLIGHTS
Taking Education Global Since 2007, Vancouver’s Social Responsibility Committee (SRC) has funded a full two-year scholarship to the prestigious Lester B. Pearson United World College of the Pacific on Vancouver Island, Canada. The SRC rotates the scholarship among Methanex’s global locations and in 2009 the prize was designated for a student from Damietta, Egypt, where the company’s EMethanex plant is located. Potential candidates were recruited through advertising in the region’s main newspaper. More than 40 students expressed interest, with 22 eventually competing for the prize. Following an initial 90-minute exam that tested candidates’ scholastic aptitude and proficiency in English, the top 10 students were invited to participate in faceto-face interviews. Three finalists were then shortlisted, with the scholarship ultimately awarded to Mr. Hossam Hashish. Hossam is a 16-year-old student from Faraskour, just outside Damietta, who dreams of becoming a petroleum engineer. He began his studies at Pearson College in the fall of 2009. The Lester B. Pearson United World College is named after a former Canadian prime minister and is part of the United World College (UWC) network. Each year, the College welcomes 200 students selected from around the world, all of whom attend on full scholarship. The goal of UWC is to use education as a catalyst for uniting people, nations and cultures for a peaceful and sustainable future.
22 Methanex 2009 | Community
Louise McMahon, Manager, Public Affairs in Methanex’s Vancouver office, welcomes the company’s 2009 Lester B. Pearson scholarship recipient Hossam Hashish from Damietta, Egypt
Paul Schiodtz, SVP, Methanex Latin America joins Chile’s Ministers of Energy and Mining and other officials at a regional energy conference in Magallanes
Investing Energy in Community Dialogue In recent decades energy supply has become a critical issue for many parts of the world, and the Region of Magallanes in Chile is no exception. In June 2009, public concern about the region’s gas shortage escalated after Empresa Nacional del Petróleo (ENAP), the country’s national energy authority, increased gas tariffs for large local consumers. As an important contributor to the Magallanes region’s economic and social development, Methanex Chile is committed to working with the government and community partners to find solutions to the energy challenge. To encourage dialogue, the company, ENAP and the regional government organized a conference for all stakeholders about the future of the region’s energy supply, marking the first time that all interested parties met to collectively discuss these issues. Held in September 2009 in Punta Arenas, the event proved to be a productive forum for both information sharing and candid discourse. Chile’s ministers of Mining and Energy, regional deputies and senators joined regional business representatives, journalists, energy experts and social leaders for a frank discussion about the shortage of gas reserves and the need for energy diversification. To date, the Magallenes region has relied largely on natural gas for its energy supply. With industry experts stressing the need for alternate renewable energy sources, conference participants explored possible options, such
Participants at a regional energy conference in Magallanes listen to discussions on the future of the region’s energy supply
as wind and coal. During our presentation, Methanex demonstrated that, as a key gas customer in southern Chile, its ongoing natural gas requirements serve as a major incentive for foreign investment in regional gas exploration. Much progress has been made with respect to new oil and gas exploration in southern Chile over the past two years due, in large part, to the financial and other support provided by Methanex. New gas discovered ultimately benefits the broader region as well as Methanex’s operations. Please refer to our 2009 Annual Report for more information. Methanex will continue to work with stakeholders to sustain dialogue about how to best balance the region’s energy needs and its economic development.
Giving Back to Communities The projects may be different and the scale smaller, but the motivation behind the SR initiatives at Methanex’s regional Marketing and Logistics (M&L) offices is the same as those at our larger manufacturing plants: to contribute to the communities where our employees live and work. For Methanex Brussels, what started as a small SR project blossomed into a year-long partnership with Les Coccinelles, a neighbourhood school for children with severe speech disorders. The local Social Responsibility Committee initially sponsored the installation of a new
Community | Methanex 2009 23
Members of Methanex Brussels’ volunteer painting team with Les Coccinelles School Director Frederic Robert (second from right)
Methanex China volunteers spend the day with Nesbitt Centre students
fire alarm system, but upon witnessing the school’s other needs, employees worked with Les Coccinelles staff to give the gym a facelift by painting its walls and adding colourful curtains. It has become tradition for Methanex Europe employees to sponsor an annual walk/run to raise money for their charity of choice. On May 17, 2009, Methanex United Kingdom employees in Teeside put on their walking shoes for the Unicorn Centre, a state-of-the-art riding facility for riders with disabilities. On the same day, Methanex Brussels employees took part in a walk/run in support of L’Arche de Marie, an association that organizes day programs for young adults with mental disabilities. Collectively, employees covered nearly 600 kilometres. Methanex Hong Kong joined 65 other local business organizations in May 2009 to support the region’s first Employee Volunteer Week. Employees spent a day volunteering at the Nesbitt Centre, which provides a safe environment for disabled young adults to learn skills that foster independence. During the remainder of the year, staff were involved in other initiatives that reflect the Hong Kong office’s SR goals, including an aid project for at-risk families in Tin Shui Wai; a walkathon in Mai Po in support of the World Wildlife Fund; and a mentoring project for the Sunrise Foundation in Shanghai, for which employees sponsor and mentor high school students from low-income families.
24 Methanex 2009 | Community
A Contardi School student in Chile learns about ways to reduce energy consumption
The North American M&L group in Dallas also focused its 2009 SR efforts on employee participation in community and charity activities. Donations to every organization were accompanied by a donation of personal volunteer time by at least one employee. Employees supported projects spanning a variety of worthy causes, including the Susan G. Komen 3-Day Walk/Run for the Cure, a national event dedicated to breast cancer research, and Camp Summit, which provides a residential camping experience for youth and adults with developmental and physical disabilities.
Energy Efficiency 101: Supporting Environmental Education in Chile’s Schools Methanex Chile is always on the lookout for new social responsibility projects in the Region of Magallanes that align with its focus on energy conservation and education. In 2009, the organization found a perfect match: an innovative school program at Contardi School in Punta Arenas that weaves environmental education into the daily learning experience. Methanex has signed a co-operative agreement with the public school to support its environmental and energy-efficiency certification process. The certification, which is overseen by Chile’s national environmental agency, involves various physical and infrastructure requirements that enable Contardi to meet specific sustainability criteria.
Bruce Aitken, President & CEO, Methanex; Paul Schiodtz, SVP, Methanex Latin America; and Roger Neumann, VP Manufacturing, listen to Contardi School students’ presentation on energy efficiency
Peter Tait, Methanex’s Senior Global Reliability Engineer (far right) with the Methanex project team at the University of Canterbury
The unique two-year project is the first of its kind in Magallanes and incorporates environmental education directly into the school curriculum. Students are exposed to the fundamentals of environmentalism and energy efficiency as early as kindergarten, studying a variety of conservation topics throughout elementary and high school.
invaluable to both the students and Methanex. Budding engineers get hands-on experience working with clearly defined metallurgy-related challenges. Methanex benefits from the students’ work, which often solves complex problems.
As an enthusiastic supporter, Methanex provides ongoing technical and environmental expertise and leads sustainability presentations at the school. Beginning in 2010, students will be invited to visit the Methanex site, where they can tour the facility, chat with employees and see energy-efficiency solutions in action.
University Research with Far-Reaching Benefits Methanex New Zealand has become a robust laboratory for metallurgical research. The company has developed a strong alliance with the mechanical engineering department at the University of Canterbury in Christchurch, working with faculty and students to identify opportunities to find solutions for real-life methanol manufacturing challenges.
Methanex’s relationship with the University of Canterbury began as an SR initiative in 1994, when the company sponsored final-year undergraduates to take on manufacturing-related problems as course projects. Since then, the program has evolved to include PhD students and a strong research focus. Some Methanexdriven research projects have resulted in new absolute measurement methods that, with the support of the university, are influencing the development of new international standards. The university is now recognized as a centre of excellence for high temperature metallurgy, attracting top students and the attention of other international industry players.
As the longest-standing industry sponsor for the university program, Methanex has played an integral role in shaping the department’s focus on high temperature metallurgy. The university’s program has become
Community | Methanex 2009 25
stewardship
Marketplace
A commitment to RC is a commitment to the responsible and safe management of methanol throughout its entire product life cycle. Product stewardship takes on increasing importance as emerging uses of methanol in energy applications are bringing methanol products to everyday consumers in many regions of the world.
Focusing on the Complete Journey of our Product… Product stewardship demands a complete-journey approach – from production to product load, through transportation to delivery. It also requires working closely with our partners each step of the way to ensure RC practices are implemented at the right place and the right time to safeguard people and the environment. By maintaining the highest safety standards – and by focusing on education and outreach – we can minimize risk to our employees, customers and suppliers, as well as the environment and communities through which methanol is transported, delivered, stored and used. …by ship Waterfront Shipping (Waterfront), our shipping subsidiary, offers a customized safety training program for in-vessel crews on methanol safe handling and nitrogen awareness. An average of 400 crew members participate in the program each year. To learn more about Waterfront’s health and safety efforts in 2009, please see “Improving Living Conditions on the High Seas” on page 19. …at terminals Since 1997, we have worked closely with customers and terminal operators, encouraging them to adopt international best standards and to raise the benchmark for safety and environmental excellence in all regions. By the end of 2009, more than two-thirds of all the terminals or customer-owned product reception facilities (product loading/unloading points) that Methanex uses globally had completed an audit based on global industry standards, including those protocols of the Chemical Distribution Institute and the Oil Companies International Marine Forum.
…by rail Our North America Railcar Responsible Care Management Plan focuses on eliminating loss-of-product incidents (spills or leakages that are not due to railcar accidents). External recognition is an excellent indication of our success: in 2008 and 2009 our program earned five different awards for operational, safety and environmental excellence. See the Awards section on page 32 for more information on our North American successes in 2009. …and by road All regions work closely with distributors and their road carrier fleets to promote safe product transportation and distribution. For example, in 2009, we partnered with our Chile distributor to run a successful pilot program to understand the actual on-road performance of its carriers’ truck drivers. In China, we held logistics-focused methanol safety seminars for downstream users in southern and eastern China, where our distributor and customers’ manufacturing, distribution and sales networks rely heavily on both truck and river barge transport. In Europe, we invited customers to a seminar discussing road safety initiatives and route assessments.
What Others Say “In today’s difficult and challenging economic times, the men and women of Methanex have remained focused in their dedication to safety. CN recognizes that Methanex puts safety at the forefront of its business model. Like Methanex, we are gratified to be an integral part of the industry’s commitment to safety and Responsible Care.” Todd Nuelle, Director of Sales, CN – North America’s Railroad In 2009, CN awarded Methanex its Safe Handling Silver Award for transporting more than 5,000 railcar shipments on CN lines in 2008 with only a single non-accidental release. Marketplace | Methanex 2009 27
Sharing Best Practices in Product Stewardship
Community Outreach
We believe it is important to take our Responsible Care message into the field. In 2009, we hosted approximately 40 sessions on Responsible Care and methanol safety worldwide for various stakeholders, including traditional methanol use customers, biodiesel and dimethyl ether (DME) energy application customers, logistics providers and carriers, terminal workers, surveyors, local communities and emergency responders. In 2009, more than 750 participants attended these customized sessions.
We are committed to nurturing an open, honest and proactive dialogue on product stewardship with members of the communities where we operate. This involves having processes in place to identify and respond to community concerns and to inform the community of any risks associated with moving methanol from our plants to our customers.
Methanex staff also spoke at seminars and conferences organized by government agencies, universities and the various methanol and methanol fuels industries and associations to promote RC and to communicate the need for action and commitment to responsible industry development. For example, over the last two years, the Chile Marketing & Logistics team visited all of the biodiesel sites in Latin America to which Methanex provides methanol. In Brazil alone, the team visited eight leading biodiesel plants to share best practices on methanol safety with more than 180 personnel. In 2009, Methanex Chile presented a session on methanol safety and RC at the annual meeting of Brazil’s National Association of Formaldehyde Producers, addressing more than 200 representatives of leading companies in the resin market. As a result of the session’s positive reception, we were subsequently invited to present a similar session for the first biodiesel congress in Brazil organized by the country’s National Petroleum Agency.
Regulatory and Legislative Implications Methanex has long been involved in helping to inform regulatory and government policy-makers on the health and safety implications of methanol and its many derivatives. For example, the United States Environmental Protection Agency (EPA) is presently evaluating the carcinogenicity classification of methanol and formaldehyde as part of a standard review of chemicals under its Integrated Risk Information System (IRIS). Methanol is currently unclassified under IRIS; formaldehyde, which is now classified as “Likely to Be Carcinogenic to Humans,” is under review. The EPA’s final report regarding the health effects of methanol is expected in the second quarter of 2011; the completion date for the formaldehyde review is unknown at this time. For a more detailed discussion of this topic, please refer to the Management’s Discussion and Analysis section of our 2009 Annual Report.
28 Methanex 2009 | Marketplace
One example of our efforts in this area in 2009 was a community roundtable we held in Teeside, UK, where we lease two terminals for storage of our product. We hosted an emergency response and community dialogue session to share best practices in incident prevention and response management that was attended by customers as well as representatives from the ambulance, fire department, police and emergency planning office.
REGIONAL HIGHLIGHTS
Educating about Responsible Care in Latin America Every year, Methanex Chile aims to enhance RC practices and product stewardship in Chile by conducting RC education initiatives for people who handle our product at all points in the supply chain. In 2009, we turned our focus to chemistry faculties at Chile’s universities, where our goal was to share RC concepts with the students who may likely be future employees of the country’s petrochemical companies. Methanex invited other chemical companies to participate in the project as a way of presenting a more comprehensive picture of Chile’s chemical industry and extending RC to a wider range of chemical products. Methanex targeted students in their final year at Pontificia Universidad Católica de Chile (Pontifical Catholic University of Chile), one of the country’s most prestigious universities. In June, we held lectures about RC and the safe handling of methanol, which was particularly helpful for students handling chemicals in their laboratories. Later in the year, Methanex, in partnership with SGS Chile, a certifier company, and Oxiquim, a distributor, made special RC presentations to university staff who work in high-risk chemical environments. The team is presently preparing additional RC lectures for Pontifical Catholic University, which in 2010 will be part of a mandatory course for students in the faculty of chemistry. The goal is to extend this initiative to other universities and to continue to work with ASIQUIM, Chile’s chemical industry association, to get other chemical companies on board.
University lab and maintenance personnel Staff of Chile’s Universidad Católica’s School of Chemistry from the Universidad Católica’s chemistry visit a local chemical plant as part of Methanex’s and department attend training session on the safe Asiquim’s efforts to promote Responsible Care handling of methanol and other chemicals
Turning the Spotlight on Responsible Care in Chile’s Chemical Industry Chile’s chemical industry association, ASIQUIM, oversees the interests and needs of more than 110 of the country’s chemical companies. As the country’s biggest chemical company, Methanex plays a key role in the association and has often taken on additional responsibilities. The company has held the president’s chair of ASIQUIM’s Responsible Care (RC) Committee since 2008, and has used this leadership role to put RC in the industry spotlight. In 2009, one of the RC Committee’s first orders of business was to develop and implement a plan to increase Chilean chemical companies’ commitment and dedication to RC. To this end, ASIQUIM introduced important modifications to the RC Letter of Agreement signed by all chemical company members, such as adoption of the new RC principles for sustainability endorsed by the Chemistry Industry Association of Canada. New standards to improve the safety evaluation process for trucks transporting hazardous materials were also recommended. In addition, certification under the RC verification system is now mandatory for all ASIQUIM member companies. Since 2002, ASIQUIM representatives have verified 54 facilities under the RC certification, which has involved more than 90 site visits to members’ plants and locations. To top off a very active year, in October 2009, the RC Committee organized an RC seminar to discuss industry best practices. The event drew more than 60 representatives from different companies, who had a chance to hear international experts, chat with industry leaders and compare notes with colleagues in an informal business setting.
(Left to right) Mr. Shen Fei, Vice President, China Chemical News and Peter Ho, Director, Methanex China at China Chemical News’ Symposium in Yantai, Shandong Province
Sharing Responsible Care Practices in China Methanex China worked closely with Chinese government agencies, industry colleagues and professional associations in 2009 on diverse product stewardship activities to share our expertise about methanol safe handling and RC best practices. To ensure government officials were kept informed about the company’s business in China, Methanex arranged high-level meetings between relevant government agencies and industry experts. Senior Methanex staff had an opportunity to discuss our long-term plans for Methanex China and our corporate commitment to RC practices with representatives from the Provincial and National Development Reform Commissions, Ministry of Environmental Protection, and Ministry of Commerce, among others. These meetings also provided insight into how our strategy aligns with the government’s industry development plan. In 2009, Methanex representatives were invited to present several conference keynote addresses about the responsible development of the methanol fuel industry, helping to solidify our reputation as an industry expert and champion of RC in China. Highlights included presentations at symposiums organized by China Chemical News and the China Association of Alcohol and Clean Ether Fuel & Automobiles. Senior staff also served on the Advisory Board of the Association of International Chemical Manufacturers. In celebration of the 60th anniversary of the People’s Republic of China, Methanex was honoured by the Development Research Centre of the State Council as one of the 100 outstanding foreign companies in China.
Marketplace | Methanex 2009 29
Economic Performance
sustainability
Methanex’s business growth and financial performance are essential to its continued sustainability. Creating long-term value for our shareholders is a key focus for the company.
2009 was a challenge for Methanex but we maintained a focus on implementing our long-term strategy. At the beginning of 2009, the economic and financial crisis severely slowed global economic activity. Methanol demand and pricing declined sharply, and our earnings for 2009 were significantly lower than in prior years. As the year progressed, world economies returned to some degree of normality, and conditions in the methanol industry steadily improved. By the end of the year, methanol demand recovered to pre-recession levels and pricing also increased substantially from the depressed levels seen earlier in the year. The growing use of methanol in energy applications continued to be a bright spot for the industry, as demand for these applications grew at high rates again in 2009, despite the global recession.
2009 Financial Highlights (US$ millions, except where noted) Operations
Our competitively positioned assets generated positive cash flow from operations in every quarter, even with the global economy going through one of the weakest periods in recent memory. Our strong balance sheet also enabled us to continue investing in key value-adding initiatives. With a new project in Egypt scheduled to start up this year, and plans at all our other sites to increase production, we have the potential to double production over the next few years by spending modest amounts of capital. Success in these initiatives will add important new supply for our customers, while generating significant cash flow for our shareholders. For a full account of Methanex’s 2009 financial performance, please see the 2009 Methanex Annual Report posted in the Investor Relations section of our website at www.methanex.com/investor.
2009
2008
2007
2006
2005
1,198
2,314
2,266
2,108
1,658
Net income
1
169
373
482
164
Income before unusual items (after-tax) 1
1
169
373
456
222
Revenue
Cash flows from operating activities
1,2
Adjusted EBITDA 1
Diluted Per Share Amounts (US$ per share) Net income Income before unusual items (after-tax) 1
Financial Position
Cash and cash equivalents Total assets Long-term debt, including current portion Debt to capitalization3 Net debt to capitalization4 Other Information
Average realized price (US$ per tonne) 5 Total sales volume (000s tonnes) Sales of Methanex-produced methanol (000s tonnes)
129
235
491
622
328
142
330
649
799
450
0.01 0.01
1.78 1.78
3.65 3.65
4.40 4.17
1.39 1.88
170
328
488
355
159
2,923
2,799
2,862
2,453
2,105
914
782
597
487
501
40% 35%
36% 25%
30% 7%
29% 10%
35% 26%
225
424
375
328
254
5,948 3,764
6,054 3,363
6,612 4,569
6,995 5,310
7,052 5,341
1 Adjusted EBITDA, cash flows from operating activities, income before unusual items (after-tax) and diluted income before unusual items (after-tax) per share are non-GAAP measures. Refer to page 43 in our 2009 Annual Report for a reconciliation of these amounts to the most directly comparable GAAP measures. 2 The term “cash flows from operating activities” in this document refers to cash flows from operating activities before changes in non-cash working capital. 3 Defined as total debt divided by the total of shareholders’ equity and total debt. 4 Defined as total debt less cash and cash equivalents divided by the total of shareholders’ equity and total debt less cash and cash equivalents. 5 Average realized price is calculated as revenue, net of commissions earned, divided by the total sales volumes of produced and purchased methanol. » For additional highlights and additional information about Methanex, refer to our 2009 Factbook available at www.methanex.com.
Economic Performance | Methanex 2009 31
Awards
In 2009, Methanex was honoured with numerous awards in recognition of our commitment and contribution to Responsible Care and Social Responsibility. Here are some of the highlights.
North America
Chile Chilean Government Bicentennial Seal
Methanex Chile’s Wind Energy Project was awarded the Bicentennial Seal, which is reserved for the most important public initiatives and projects that will positively impact the country and its regions in 2010.
American Commercial Lines (ACL) Marine Environmental Stewardship Award
Methanex received this award for our commitment to environmental protection in 2008, during which we shipped more than two billion gallons of methanol on ACL barges. ACL is a leader in marine transportation.
Rosalino Fuentes Silva Award 2009
Methanex Chile was honoured by the National Superintendency of Social Security for its impeccable safety record. The award is given annually to companies in Chile that consistently exhibit exceptional safety performance.
CSX Transportation Chemical Safety Excellence Award
SOFOFA (Federation of Chilean Industry) Social Responsibility Award
The SOFOFA award is presented annually to a company that demonstrates a history of social responsibility, robust business performance and stellar community relations. This award is testimony to the company’s long-standing commitment to integrate and partner with local communities in Chile.
Awarded annually, this accolade recognizes a company’s dedication to the safe maintenance and monitoring of railcars, and its rigorous training of loading personnel. To be eligible, a company must have made at least 600 shipments in 2008 on CSX Transportation rail without any nonaccidental releases during the entire year.
Burlington Northern Santa Fe Product Stewardship Award 2008
This award is presented to companies that successfully transported a minimum of 500 loaded tank cars of hazardous materials during the previous year, with zero non-accidental releases during the entire transportation cycle.
Tucapel Gonzalez Garcia Prize 2009
Methanex Chile received this award in the Large Enterprise category (more than 100 workers) from the Chilean government for its leadership in integrating risk prevention in the production process.
2008 Canadian National (CN) Safe Handling Silver Award
CN’s award recognizes customers who transported more than 5,000 railcar shipments on CN lines in 2008 with only a single non-accidental release.
Chemical Industry Association of Canada (CIAC) Award for Excellence in Safety 2009
Methanex’s Canadian operations were recognized for our continued excellence in safety. The award is given to CIAC member organizations for outstanding safety performance over a five-year period.
New Zealand Responsible Care Practitioner of the Year 2009
Gary Rielly, Responsible Care Team Leader, was recognized by the New Zealand Chemical Industry Council for his outstanding leadership to enhance the Council’s global Responsible Care initiatives.
Trinidad Corporate Social Responsibility (CSR) Leadership Award 2009
32 Methanex 2009 | Awards
Methanex Trinidad received the ‘Recognizing the Value of People’ Award from the South Trinidad Chamber of Industry and Commerce in recognition of its significant emphasis on internal social responsibility. Employees’ opinions were used as the measure for an independent third-party survey.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS This document contains forward-looking statements with respect to us and the chemical industry. Statements that include the words “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements. More particularly and without limitation, any statements regarding the following are forward-looking statements: • expected demand and prices for methanol and its derivates (both traditional derivatives and energy applications), • anticipated production from, and production rates of, our plants as well as expected efficiencies from newer plants versus older plants, • expected levels of natural gas supply to our plants, • anticipated results of natural gas exploration in southern Chile, • anticipated start-up date of, and cost to complete, our methanol project in Egypt as well as the commercial viability of, success of, or ability to execute future projects, including our new wind energy park in Chile, • the Company’s expected health and safety performance (including our ability to minimize risk to our employees and contractors and the communities in which we operate) and expectations regarding future environmental compliance and incidents,
• availability of committed credit facilities and other financing and the renewal of committed credit facilities and other financing upon the expiry thereof, • global and regional economic activity (including industrial production levels), • absence of a material negative impact from major natural disasters, global warming or global pandemics, • absence of a material negative impact from changes in laws, regulations or standards, including laws, regulations and standards related to health, safety and or the environment, and • performance of contractual obligations by customers, suppliers and other third parties. However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including without limitation: • conditions in the methanol and other industries, including fluctuations in the supply, demand and price of methanol and its derivatives, including demand for methanol for energy uses,
• ability to reduce CO2 emissions and/or emission intensity in the future,
• significant decrease in energy prices (including prices for natural gas and coal feedstocks),
• expected impact of regulatory actions, including legislation related to CO2 emissions in New Zealand and elsewhere,
• the success of natural gas exploration and development activities in southern Chile, New Zealand and Canada,
• financial strength and ability to meet future financial commitments,
• availability of future natural gas supply on commercially acceptable terms in Chile, Trinidad, New Zealand and Egypt,
• expected cash flows or earning capability and expected distributions to shareholders, • expected global or regional economic activity (including industrial production levels) and expectations regarding recovery from the current uncertain economic environment, and • expected actions of governments, gas suppliers, courts, tribunals and other third parties. We believe that we have a reasonable basis for making such forwardlooking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments, as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following: • supply of, demand for, and price of methanol, methanol derivatives, natural gas, oil and oil derivatives, • production rates of our facilities in accordance with plan, • success of natural gas exploration in southern Chile and New Zealand and availability of future natural gas supply on commercially acceptable terms in Chile, Trinidad, New Zealand and Egypt, • receipt or issuance of third-party consents or approvals, including without limitation, governmental approvals related to natural gas exploration rights or the establishment of new fuel-blending standards, • operating costs, including natural gas feedstock and logistics costs, capital costs, tax rates, cash flows, foreign exchange rates and interest rates, in accordance with plan, • completion date and cost of our methanol project in Egypt, as well as our ability to complete other capital projects on time and on budget, • our ability to achieve continuous improvement in our performance in the areas of health, safety and environment,
• the timing of the start-up and the cost to complete our new methanol project in Egypt, • the ability to successfully carry out corporate initiatives and strategies, • unexpected technical issues with our production facilities, • human error by our employees or contractors, • actions of competitors and suppliers, • actions of governments and governmental authorities, including implementation of policies or other measures by the Chinese government, the United States government or other governments that could impact demand for methanol or its derivatives, • changes in laws or regulations, • import or export restrictions, anti-dumping measures, increases in duties, taxes and government royalties and other actions by governments that may adversely affect our operations, • worldwide economic conditions and conditions in the global financial markets, and • other risks described in our 2009 Management’s Discussion and Analysis In addition to the foregoing risk factors, the current uncertain economic environment has added additional risks and uncertainties, including changes in capital markets and corresponding effects on the Company’s investments, our ability to access existing or future credit, and defaults by customers, suppliers or insurers. Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one’s own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forwardlooking statements except as required by applicable securities laws.
Forward-Looking Statements | Methanex 2009 33
Methanex Corporation 1800 Waterfront Centre 200 Burrard Street Vancouver, BC Canada V6C 3M1 General Inquiries 1 800 661 8851 (Toll-Free in North America) + 1 604 661 2600 (Phone) + 1 604 661 2676 (Fax) www.methanex.com
Regional Contacts If you have questions or comments about this report or our Responsible Care and Social Responsibility activities, please contact us:
Asia Pacific Deanna Li Senior Responsible Care Advisor Hong Kong, China + 852 2918 8326
Europe Gil Dehogne Co-ordinator, Responsible Care & ISO Brussels, Belgium + 32 2 352 06 85
Caribbean Deborah Samaru Manager, Public Affairs Point Lisas, Trinidad and Tobago + 1 868 679 4400
Middle East Riham Reda Manager, Public Affairs Cairo, Egypt + 202 235 94511
North America Louise McMahon Manager, Public Affairs Vancouver, Canada + 1 604 661 2600 South America Amparo Cornejo Manager, Government & Public Affairs Santiago, Chile + 56 2 37 44052
New Zealand Zaneta Ewashko Manager, Public Affairs Motunui, New Zealand + 64 6 754 9700
Responsible Care is a registered trademark of the Chemical Industry Association of Canada, used under license by Methanex.
Printed in Canada on FSC-certified paper. By printing on FSC-certified paper, Methanex is supporting responsible forest management. Design: Signals Design Group Inc, Vancouver, BC Printing: Metropolitan Fine Printers, Vancouver, BC