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Fine Chemicals

Fine Chemicals. A New Global Chemicals Leader Emerges. John Nicols, Vice President, Fine Chemicals May 25, 2004. Caution Statement.

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Fine Chemicals

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  1. Fine Chemicals A New Global Chemicals Leader Emerges John Nicols, Vice President, Fine Chemicals May 25, 2004

  2. Caution Statement Some of the information presented in the pages of this presentation constitutes forward-looking comments within the meaning of the Private Securities Litigation Reform Act of 1995. Although Albemarle Corporation believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include, without limitation, the timing of orders received from customers, the gain or loss of significant customers, competition from other manufacturers, changes in demand for the Company’s products, increases in the cost of the product, changes in the market in general, fluctuations in foreign currencies, and significant changes in new product introduction resulting in an increase in capital project requests and approvals leading to capital spending. Such statements also include, but are not limited to, statements about the proposed acquisition by Albemarle Corporation of Akzo Nobel’s refinery catalyst business, including financial and operating results, the parties’ plans, beliefs, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may vary materially from those set forth in the forward-looking statements. The following factors, among others, could affect the consummation of the proposed transaction: execution of a definitive sale and purchase agreement, the advice from Akzo Nobel’s Works Council, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act and the receipt of other competition law clearances. The following factors, among others, could affect the anticipated results: consummation of the financing on terms favorable to the Company, the ability to integrate successfully the acquired business within the expected timeframes or at all, and ongoing operations of the business. Additional factors that could cause Albemarle’s results to differ materially from those described in the forward-looking statements can be found in Albemarle’s Annual Report on Form 10-K for the year ended December 31, 2003.

  3. Albemarle History 1887 - Albemarle Paper Manufacturing Company opens with a handful of employees producing Kraft and blotting paper. 1921 - The antiknock properties of tetraethyl lead (TEL) as a gasoline additive are discovered after a lengthy search by a team of General Motors research chemists. TEL is to be the principal product of Ethyl Corporation for more than 40 years. 1942 - Ethyl Gasoline Corporation changes its name to Ethyl Corporation to characterize a broader interest than just gasoline products. 1962 - Albemarle Paper Manufacturing Company borrows $200 million and purchases Ethyl Corporation (Delaware), a corporation 13 times its size, and Ethyl Corporation (Virginia) is formed. Floyd D. Gottwald becomes Chairman of the Board. 1976 - Ethyl leaves paper manufacturing with the sale of Oxford Paper. Ethyl opens a chemical plant in Feluy, Belgium to make aluminum alkyls. 1996 - Albemarle sells its alpha olefins, polyalphaolefins and synthetic alcohols businesses to Amoco for about $500 million. 1998 - Albemarle energizes M&A effort to grow the company based on longstanding foundation technologies of bromine and organometallic chemistry, supported by exceptional skill in process technology. 1987 - Ethyl acquires Dow Chemical's bromine chemicals business and its Magnolia, Arkansas, plant. 1994 - Ethyl spins off its chemical businesses to create an independent, publicly traded company named Albemarle Corporation

  4. Current Business Segments Polymer Chemicals Fine Chemicals • Flame Retardants • Polyolefin Catalysts • Other Polymer Additives • Pharmaceuticals & Agrichemicals • Fine Chemistry Services • Bromine, Bromine Derivatives and Specialty Aluminas

  5. Albemarle Platform Flame Retardants #1 Producer of bromine-based flame retardants #1 Producer of mineral flame retardants #1 Producer of alkyl-based polyolefin catalysts #1 Producer of metallocene co-catalysts #1 Producer of ibuprofen #1 Producer of alkylated anilines #2 Producer of bromine Catalysts Pharma Ag Performance Chemicals Additives Technology Relationships Innovation Process Development Aluminum Alkyls Bromine

  6. Key Markets • Diversity – Balance Across Markets • Strategic Account Management – Work With Winners • World Market Knowledge – Direct Sales and Other Effective Channels • Portfolio improvements fit focus 35% 46% 19% 2003

  7. Balanced, Technology-Based Portfolio:“Top Tier” Performance – 2004 Post-Acquisition Fine Chemicals – 26% • Bromine Franchise • >$200 million in life sciences • New product pipeline approaching 100 Additives – 37% • Bromine integration • #1 or #2 positions in major flame retardant chemistries • Additives niches • Global scope and reputation Catalysts – 37% • With Akzo Refinery Catalysts Acquisition: • #1 or #2 positions in refinery and metallocene catalysts • History of innovation • Strong customer relationships • Global scope and reputation

  8. Fine Chemicals

  9. Albemarle Fine ChemicalsProduct DiversityStrategic Clusters Ag Actives Pharma Actives (APIs) Fine Chemistry Services Fine Chem Svcs & Int’s Others Alumina Spec’s Industrial Specialties ASA Paper Sizes Zeolites K & Cl2 Derivatives Biocides/Abzol Bromine Chemicals Amines Oilfield Br2 & Derivatives

  10. Fine Chemicals Strategies Deliver Chemistry To Solve Customer Problems ------------------------------------------------------- Widen & Deepen Access Into Key End Markets: Pharma & Ag ------------------------------------------------------- Drive To Actives: Highest Chemistry Value Add Fine Chemistry Services 40% of FC Sales Industrial Specialties 25% of FC Sales StrategicGrowth Manage for Cash Goal: Bromine Chemicals 35% of FC Sales #1 Bromine Company In The World New Strategy Potentials

  11. Fine Chemicals Rotation Successfully Managing The Rejuvenation Of Our Fine Chemicals Portfolio 6 6 Revenue $MM 10 (16) Other Ag 24 (35) FCS Atofina Fine Chem 26 Zeolites 495 Bromine 480 2003 2004E

  12. Profit Growth In Fine Chemicals

  13. CAGR = 7.5% World-Class Bromine Position Other14% FlameRetardants 40% Bromine-Industry Usage - 2002 USGS/Mining Engineering June 2003 Albemarle holds strong positions in each of the key areas of the world’s bromine-using industries. Pharma3% WaterTreatment7% Ag12% Albemarle Bromine Production Oilfield 24% Albemarle’s production capturing market growth with premier, low cost domestic reserves and augmented by new production on the Dead Sea through joint venture Jordan Bromine Company

  14. 2003 AtoFina BFC Acquired 1980 Saytech Acquired 1987 Dow Br’s Acquired 1993 Thann Acquired 1999 Ato & Ferro BrFRs Acquired 2000 #1 BrFR In World 2002 JBC Startup World-Class Bromine Position Resource Managed In Fine Chemicals Market Managed Goal: Long Time In Motion Keep Building Momentum Bromine Specialties Pharma Int’s #1 Bromine Company In The World High Volume Bromides MeBr Related Products Br F R EDB For TEL – Ethyl Beginnings 14

  15. Continue To Build & Drive The World’s Lowest Cost Global Bromine Sourcing Network • Maximize Value While Ensuring #1 or #2 Share In All Significant Br Consuming Uses • Lead In Developing New Applications For High Value Br Specialties • Secure Advantage From Technologies Borrowing Bromides Business Strategies

  16. Albemarle’s Fine Chemistry Services Area Of Major Strategic Change 2001 3 Pharma Products 3 Ag Products Leading BFC’s In EU 1 cGMP Facility Several New Prod’s In Pipeline 2003 Historic Pharma/Ag/BFC Products Increasing Pressures On IBP / NPX Leading US Custom Mfr 3 Research Facilities (2 US, 1 EU) 2 cGMP Facilities 7 Flexible Multi-Product Sites 80+ New Prod’s In Pipeline Globally Leading Capabilities Capabilities Products Stepping Up in ’04: • Higher Utilizations • Outsourcing Pharma • New ALB Products Flexible Plants’ Utilization Up Profit Up $4 MM in ’03 v. ’02 Success w/ Specialty API’s Profit Up $2 MM in ’03 v. ’02

  17. Fine Chemistry Services Model Customer Needs & Opportunities Fine Chemistry Services & Intermediates 40% 45% Ag ALB Intermediates Custom Mfr Contract Research Pharma ALB Intermediates Custom Mfr Contract Research 15% Industrial Specialties Personal Care Photo Chems Flavors / Fragrances Etc. ALB Actives (APIs) Ibuprofen, Naproxen ALB Actives Methyl Bromide

  18. Fine Chemistry Services Successes 27 15 13 13 13 4 Patent Protected Pre-Clinical Generic Phase I Phase II Phase III Development Momentum 85 products in pipeline

  19. Fine Chemistry Services:Build Synergistically Customer Needs & Opportunities Gain More Market Access Fine Chemistry Services & Intermediates Other Market Servicing Capability Other Market Servicing Capability Ag ALB Intermediates Custom Mfr Contract Research Pharma ALB Intermediates Custom Mfr Contract Research Industrial Specialties Further Downstream in Market to Higher Chemistry Value Further Downstream in Market to Higher Chemistry Value

  20. Fine Chemicals Strategies Deliver Chemistry To Solve Customer Problems ------------------------------------------------------- Widen & Deepen Access Into Key End Markets: Pharma & Ag ------------------------------------------------------- Drive To Actives: Highest Chemistry Value Add Fine Chemistry Services 40% of FC Sales Industrial Specialties 25% of FC Sales Strategic Growth Manage for Cash Goal: Bromine Chemicals 35% of FC Sales #1 Bromine Company In The World New Strategy Potentials

  21. Fine Chemicals: Conclusion • Strong Accountable Team • Mitigating Near-Term Exceptional Situations • Successfully Managing Portfolio Rejuvenation • Strong Positions Driving Our Strategic Successes • Global Bromine Leadership – Tightening Supply Environment • Broad Fine Chemistry Service Business Capabilities: • Developed, Entrenched Service Model Satisfying Our Targeted Client Base • Leverages Corporate Chemistry / Process Development Foundation Strength • Drives Us Into Attractive Pharma / Ag Markets For Chemistry / Innovation • One Of Relatively Few Worldwide With Pharma / Ag Revenues > $200 MM • Sound Strategies Drive Improved Returns & Sustain Growth • Disciplined Corporate Cost Focus – Improving Return on Assets • Targeting Bolt-On Acquisitions, But Not Essential To Long Term Fine Chemicals Success

  22. Fine Chemicals A New Global Chemicals Leader Emerges John Nicols, Vice President, Fine Chemicals May 25, 2004

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