Since our start-up in 1998, NOVA Chemicals has increased annual research and development spending by 55%.
In 2001, we started up our Joffre, Alberta, Advanced SCLAIRTECH plant, which utilizes our proprietary single-site
catalysts for producing SURPASS resins. In addition, we are developing a portfolio of higher-margin, differentiated
styrenic polymers, which are based on enhancements to our existing assets. Our goal is to increase volumes for
these product areas so that by 2005, 30% of our total polymer sales volume will be from higher-margin grades.
— ADVANCED SCLAIRTECH POLYETHYLENE —
In 2003, we sold 600 million pounds of Advanced SCLAIRTECH polyethylene resins. This is up 46% from 2002
when we sold 410 million pounds. More importantly, we are improving our product mix by selling greater volumes
of higher-performing products like SURPASS resins, produced utilizing our proprietary single-site catalysts. Our
goal is to sell 750 million pounds of Advanced SCLAIRTECH polyethylene in 2004.
— STYRENICS HIGH-MARGIN GROWTH —
We prioritize new product development into three levels. The highest-priority products have a senior business
manager, focused technology resources, and dedicated project teams. The 2nd and 3rd level priority products are
managed via the normal streams of commercial and technical business leaders. All priority products will provide our
current customers with enhanced polymer performance attributes, and the ability to run the new resins on their existing
equipment. Each product is expected to increase margins for NOVA Chemicals, while increasing value to our customers.
In the chart below, the size of each bubble is the expected change in margin and volume from 2003 to 2006.
Why do we believe we will be successful?
We have unique technologies, some of which are patented; some have barriers to entry. Some projects will require minor amounts of capital, while others will require no investment. Customers will be able to use the majority of our new and differentiated commodity products in their existing equipment and should enjoy lower operating costs with increased production rates. We are being deliberate with our time and resources. We have dedicated people to develop and market the most promising of our products. The financial impacts are significant — they are full-step changes in margin generation.
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