Ethanol Business

1. Raw Material Preparation: Each type of raw material requires a different preparation process, as follows:
       (a) Molasses: Molasses is diluted with water to achieve appropriate concentration. Acid is then added to remove impurities, such as organic salts, before the solution is sent to the fermentation process.
       (b) Cassavas: Cassava chips are cleaned to remove contaminants such as metal and dirt. The cleaned cassava chips are ground and mixed with water to produce a starch slurry, which is then hydrolyzed into sugar using enzymes before being sent to the fermentation process.
2. Fermentation : The prepared solution from the first stage is transferred to fermentation tanks, where yeast is added to convert sugar into alcohol.
3. Distillation : The fermented mash from the second stage is fed into a distillation column to separate impurities and water, producing alcohol with approximately 96 percent purity, which is the maximum concentration achievable through the conventional fermentation process. The remaining water of 4 percent is removed in the final stage.
4. Dehydration : The dehydration process removes the remaining water from the distillation stage to produce fuel-grade ethanol with a purity of 99.5 percent. Alcohol vapor passes through two dehydration units containing zeolite molecular sieves, which absorb the remaining water from the alcohol. The dehydrated ethanol is then condensed and cooled before being stored for distribution.

Ethanol Pricing Policy
     The Committee on Energy Policy Administration (“CEPA”) has approved the use of a reference ethanol price based on a comparison of the lowest price between the ethanol price reported by producers to the Excise Department and the ethanol price reported by fuel traders under Section 7 of the Fuel Trade Act B.E. 2543 (2000) to the Energy Policy and Planning Office (“EPPO”). This policy has been effective since December 2015. In addition, TAE adopts a cost-plus-margin pricing policy, whereby the selling price is determined based on production costs plus an appropriate gross margin. In addition to considering the reference ethanol price announced by the EPPO, TAE also takes into account other relevant factors in determining the selling price of fuel ethanol, such as raw material costs, market demand and supply conditions, and the overall competitive environment, both in domestic and international markets.

Ethanol Sales and Distribution Channels
     According to the regulations of the Excise Department, ethanol used as fuel must first be converted into denatured ethanol by blending ethanol with gasoline or gasohol at a ratio of 0.5 percent to 99.5 percent ethanol by volume. The denatured ethanol is then sold to oil traders under Section 7 of the Fuel Trade Act B.E. 2543 (2000). The oil trading companies subsequently blend the denatured ethanol with gasoline in different proportions to produce gasohol fuels, namely E10, E20, and E85. In most cases, customers are responsible for the transportation of the ethanol purchased. In some cases, the seller arranges transportation and delivers the ethanol to the customers’ storage facility. Ethanol sales are primarily conducted on a credit term basis, with customers being large oil companies with stable financial status, thereby minimizing the risk of potential non-payment by customers.

Competitive Strategy
     Priority is given to service excellence, product quality control, and ensuring timely product delivery as key strategies to build customer confidence. These strategies enable the Company to maintain strong relationships with customers and retain a significant share of the market.

Ethanol Industrial Trend
     Average ethanol consumption in 2025 was approximately 3.46 million liters per day, comparable to the level recorded in 2024. This was due to the slowdown in economic conditions, together with the lack of clear policy direction regarding the promotion of E20 gasohol as the base gasoline fuel.

Demand for Ethanol-for-Fuel

Source: Department of Alternative Energy Development and Efficiency, Ministry of Energy

Gasohol Industry Trend
     Since ethanol used as fuel is blended with gasoline in specific proportions to produce gasohol fuels, namely E10, E20, and E85, the domestic demand for ethanol is directly driven by gasohol consumption. In 2025, domestic gasohol consumption increased by approximately 0.37 million liters per day, or an increase of 1.2 percent compared with 2024.

Competitive Trend
     In 2025, there are 28 operating ethanol production plants in Thailand, representing a total capacity of approximately 7,020,000 liters per day.

Market Share of Ethanol Business

Remarks:
(1) TAE had a market share of 7.88 percent in 2025, an increase of 1.92 percent compared with 2024.
(2) Source: Department of Alternative Energy Development and Efficiency, Ministry of Energy

FUTURE INVESTMENT PROJECTS
     The Company has established a business plan and investment strategy in line with diversification strategy guidelines. However, all development and investment decisions are subject to prudent and careful consideration, ensuring an appropriate diversification of risks to support the Company’s long-term growth with quality, stability, and sustainability. Additionally, the Company places great importance on corporate governance, social responsibility, and environmental sustainability in its business operations. Currently, the Company’s core business is the coal business, with two existing coal mining concessions in Indonesia and an additional third coal mining concession acquired in 2021. The concession periods for these three coal mines extend for more than 10 years, with substantial reserves of high-quality coal, ensuring good revenue and income continuously for a long time into the future. However, the global trend has increasingly shifted from fossil fuels, including oil, natural gas, and coal, which are considered major contributors to greenhouse gas emissions and global warming. As a result, there have been attempts to reduce and replace fossil fuels with renewable energy. Despite this transition, fossil fuels remain the primary energy sources and there are still a lot of limitations for switching to alternative energy or renewable energy for the main energy sources. During this transitional period, fossil fuels, including coal, continue to be necessary for electricity generation and industrial processes, particularly given the growing energy demand in Asia, even though global coal demand is expected to gradually decline in the future. Nonetheless, the Company, with its expertise in the coal business, continues to seek additional investment opportunities in coal concessions in Indonesia to offset the depletion of existing reserves due to continuous coal production and distribution. Furthermore, the Company is also considering investment opportunities in other mineral mining projects to diversify its portfolio.

     The Company recognizes the challenges of climate change and places importance on the effective utilization of resources prioritizing environmental responsibility. It is committed to developing sustainable strategies with the goal of achieving carbon neutrality in the near future. The Company has established a plan to create balances in its investments by focusing on future investments in clean and renewable energy businesses, which are environmentally friendly. Accordingly, the Company is actively exploring new business opportunities and investment channels to drive the next phase of growth, or a New S-Curve, by trying to think outside the box from traditional energy business model and adopting a more innovative and creative perspective to develop new non-coal businesses, both in Thailand and overseas, despite not yet having direct expertise in such sectors. The Company is considering various investment approaches, including business takeovers, mergers and acquisitions, and joint venture partnerships, with the objective of finding opportunities or channels for investments in the other businesses to supplement revenue and income from the Company’s existing coal and ethanol businesses, ensuring long-term growth with stability, quality, and sustainability, in line with its established guidelines and objectives.

ETHANOL BUSINESS ACTIVITIES
Thai Agro Energy Public Co., Ltd. (“TAE”), a subsidiary registered in Thailand in which Lanna Resources Public Company Limited directly holds 51 percent of the paid-up capital, engages in the production and distribution of ethanol (99.5%) for fuel use. TAE operates two ethanol production lines located in Dan Chang District, Suphan Buri Province. Production Line No. 1 has a production capacity of 150,000 liters per day, while Production Line No. 2 has a production capacity of 200,000 liters per day, a total production capacity of 350,000 liters per day. The plants utilize molasses and cassava as the main raw materials. Both ethanol production lines have been granted investment promotion privileges under the Investment Promotion Act B.E. 2520. Ethanol is a clean fuel used for blending with gasoline at 10 percent, 20 percent, and 85 percent, producing gasohol known as E10, E20, and E85, which can be used in general automobiles. The ordinary shares of TAE have been listed on the Stock Exchange of Thailand (SET) since June 5, 2014.