December 15, 2023
Kuraray Co., Ltd.
U.S. EVAL Plant Fire Incident Investigation Results
Kuraray Co., Ltd. announces the results of its investigation into the fire incident (hereinafter referred toas the “Incident”) that occurred at the EVAL1 plant of a U.S. subsidiary (Kuraray America, Inc.; hereinafterreferred to as “Kuraray America”) on May 19, 2018 as follows.
1. Purposes of the investigation
This internal investigation (hereinafter referred to as the “Investigation”) was conducted to identify theroot causes of the Incident after straightening out the facts, compile measures to prevent recurrences, andshare these within the Kuraray Group (hereinafter referred to as the “Group”) while at the same time holding
ourselves accountable to our stakeholders.
The relevant U.S. authorities 2 had already completed their investigation, and those authorities havereleased their results and determinations. Settlements have also been reached with all of the plaintiffs on thecivil lawsuit (hereinafter referred to as the “Lawsuit”) that had been brought against Kuraray America related
to this Incident. However, we deemed it necessary to investigate in greater depth from our own perspective.
The subjects of our Investigation include responses to technology and safety management-related matterspointed out by the U.S. authorities to Kuraray America, in addition to internal control and governanceframeworks at Kuraray America and addressing litigation risks that are particular to the U.S.
Many contract personnel were afflicted by this Incident. It took around five years to settle the Lawsuit,with a total settlement of approximately JPY 80 billion. We consider it vital to never let the memory of thisIncident fade and to steadily implement preventive measures based on this Investigation in order to keep any
similar incident from ever occurring again. We will also aim to further strengthen safety and risk management
systems throughout the Group by sharing the results of this Investigation with group companies.
2. Investigation committee and method of investigation
In May 2023, we established the Incident Investigation Committee (hereinafter referred to as the“Committee”) comprised primarily of outside officers (independent officers) with the following fivemembers in order to investigate this Incident objectively.
Chair

Outside Director

Satoshi Tanaka

MemberOutside Director

Jun Hamano

MemberFull-time Member of Audit &Supervisory Board
Outside Member of Audit &Supervisory Board
Outside Member of Audit &Supervisory Board

Kazuhiro Nakayama

MemberMember

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2

Tomomi Yatsu
Kenji Komatsu

EVAL is a registered trademark of Kuraray for an ethylene vinyl alcohol copolymer.
OSHA (Occupational Safety and Health Administration) and CSB (U.S. Chemical Safety and Hazard Investigation Board)1In addition, an investigation team (hereinafter referred to as the “Investigation Team”) was establishedunder the Committee to collect and verify data used in the Investigation. The Investigation Team is comprisedof in-house members who are well-versed in the company’s affairs and have expertise in their respectivefields.
Investigative work by the Investigation Team was performed from the perspectives of technology,
governance, and dealing with litigation. The progress and results were reported to the Committee, whichthen discussed the content of the report from an objective standpoint upon receiving it.
The Committee’s report based on these discussions (the events of this Incident, investigation results,recurrence prevention measures and their implementation status, and future efforts to further strengthen
safety and risk management systems throughout the Group) is shown below.
3. Events of the Incident, investigation results, and recurrence prevention measures and theirimplementation status
3-1. Events of the Incident
At 10:28 am on Saturday, May 19, 2018, a fire occurred in the polymerization process3 area of the second
production line (hereinafter referred to as the “1200 Line”) of the Kuraray America’s EVAL Plant, injuring
23 contract personnel. At the time of the Incident, there was a combined total of 266 employees and contract
personnel inside the plant. As ethylene was being used to raise pressure in the polymerization reactor inpreparation to start up the 1200 Line after shutdown maintenance, the ethylene cooled and condensed due toerroneous manual operations, causing an abnormal temperature drop in the reactor. The reactor was thenheated in response, which caused the ethylene to vaporize as pressure began to increase in the reactor. Since
proper actions were not be taken to lower the abnormally high pressure within the reactor, its safety valve
activated4 and discharged ethylene into the outside air. This ethylene then ignited, and contract personnel
who had been working in the vicinity suffered burns and other injuries from the resulting fire.
3-2. Technology-related investigation results and recurrence prevention measuresa) Investigation method
Based on evidence gathered in discussions with employees who were involved in the Incident, and theresults of analyzing the evidence, we focused on the following three factors in b) below as the main causesthat led to the Incident. We performed various analyses on these to pinpoint the issues underlying them.
b) Investigation results and recurrence prevention measures
1)

Abnormal rise in pressure in the polymerization reactor due to erroneous manual operation- Erroneous manual operations led to an abnormal rise in pressure in the polymerization reactor, andthe proper actions were also not subsequently taken in response. Since this Incident occurred, we
have finished switching to safety apparatus designed not to rely on human actions, establishingstandards for operational tasks, and taking measures to address unclear work instructions and tocompensate for insufficient understanding among operators (visualizing condition inside thepolymerization reactor on a control computer, etc.). To keep safety management systems from

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Refer to Addendum 1 (Plant Layout)
Refer to Addendum 2 (Polymerization Reactor Flow Chart)2losing their substance, we also bolstered involvement of Corporate HSE (Health, Safety,Environment)—the organization managing occupational safety at Kuraray America—in safety
activities at the company’s plants and are engaged in activities to improve communication witheach plant.
2)

Insufficient risk assessment for the positioning of the discharge port in the safety valve- Risks in the direction that the safety valve discharges into the outside air had not been identified,
and there had not been enough assessment of ignition risks after safety valve activation, nor had
enough relevant measures been taken. After the Incident, we changed the position of the discharge
port to a safer one that is unlikely to cause human harm.

3)

Lax enforcement of restrictions on work-related permissions including for fire-using operations
and access by unrelated personnel during high-risk startup operations- Schedule management (planning, coordination, notification) and risk management between
departments for regular maintenance were insufficient. As a result, large numbers of contract
personnel continued performing work such as construction and repairs that had been planned as
regular maintenance. Insufficient skill sets of the plant manager and other managers wereconsidered to be one reason for this, so after the Incident, we have been working to strengthen theorganization by putting personnel with seasoned knowledge of production technology into theroles of president and business heads at Kuraray America.
- Restrictions on access by personnel other than those related to startup operations, and standards
for evacuation warnings when problems occur at the plant had not been documented clearly. Inresponse, we began establishing additional rules and enacting them after the Incident.

3-3. Governance-related investigation results and recurrence prevention measuresa) Investigation results
At plants in Japan, systems had already been in place for supervision and support from those outside ofproduction departments, including from head office and managers of each business site. However, at thetime of the Incident, the Kuraray America’s EVAL Plant was operating under an autonomous security anddisaster prevention system in which nearly all operations-related decisions are directed by the plant manager.
Therefore, there was a strong element of decisions being made by the plant manager on a personal level,
resulting in a governance system that was easily influenced by the demands of the local business.
b) Recurrence prevention measures
Based on this reflection, we have been working to strengthen their safety governance system since theIncident. Kuraray America was launched in 2008 through the integration of a trading company (in New York),and an EVAL manufacturing and sales company and SEPTON5 manufacturing and sales company (both inHouston, Texas). Corporate HSE was established, and its staff was increased in the context setting up theback-office functions in conjunction with this integration, but its activities were mainly focused on
Responsible Care certification and regulatory compliance. Since this Incident, we have also assigned
dedicated persons in charge of safety management for production processes (Process Safety Management,
hereinafter referred to as “PSM”) to Corporate HSE for PSM and occupational safety in production processes

5SEPTON is a registered trademark of Kuraray for hydrogenated styrenic thermoplastic elastomers.

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at all Kuraray America plants, and we are working to establish common guidelines and arrange standards
that should be met for all Kuraray America plants. Additionally, we are working to strengthen the following
points for the safety governance system of Kuraray America as a whole.
1) Bolster the corporate support structure by reassigning technical personnel and assigning more ofthem2) Improve employee safety awareness and risk prediction capabilities
3) Produce thorough documentation of safety systems4) Clarify the hiring requirements for plant executives: Fields of experience, years of experience,
qualifications, external courses taken, etc.
3-4. Investigation results and recurrence prevention measures related to dealing with litigationa) Investigation results
There were 34 lawsuits from 164 plaintiffs brought against Kuraray America concerning this Incident.
Considering these lawsuits were all related to the same case, we sought to make the court proceedings more
efficient and quicker through a court procedure before the trial by a jury, but some of the lawsuits took aroundfive years to settle, and the amount needed to pay off the settlements was approximately JPY 80 billion (ofwhich approximately JPY 10 billion was covered by insurance). Not only did the discovery, depositions, andevaluations and analyses of documentary evidence pertaining to these 164 plaintiffs require vast amounts oftime and resources, but plaintiffs also had little incentive to reach a quick settlement for reasons including:- Not being able to individually verify the details of the harm suffered by the plaintiffs when theIncident occurred- Verdicts in Texas injury cases were climbing into high dollar amounts- Court procedures were suspended due to the COVID-19 pandemic, etc.
These factors complicated the handling of litigation for the Lawsuit and extended the duration of timeneeded to reach settlements, while also leading to more expensive settlements.
b) Recurrence prevention measures
Reasons for the extended duration of time in dealing with the Lawsuit and more expensive settlements
include many unavoidable external factors. However, considering what was described in a) above, we aretaking the following measures to mitigate the risk of future litigation and damages from the perspectives ofinsurance strategy, comprehending the damage when an incident occurs, and dealing with litigation risk
particular to the U.S.
1) Increase the maximum limit of the comprehensive general liability insurance commonly applicablethroughout the Group and have Kuraray America introduce an owner-controlled insurance
program (OCIP6)
2) Install additional surveillance cameras around the perimeter of plants and at entrances at Kuraray
America, introduce a strict access control system, and implement processes to get testimony from
related personnel at the sites3) Education about litigation risks particular to the U.S. (particularly information management andcommunication designed on the assumption of the discovery process)

OCIP (Owner Controlled Insurance Program): An insurance program in which an “owner” is insured in place of a contract business
operator for liability of contract business operator and workers’ compensation for industrial accidents.
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4. Further strengthening the safety management and risk management systems of the Group overall
In addition to recurrence prevention measures already implemented at Kuraray America, through thefollowing measures we are also striving to further strengthen the safety management and risk management
systems of the Group overall based on the results of this Investigation.
4-1. Technology-related initiatives
From the standpoint of “three M’s” (man-related measures, machine-related measures, and managementrelated measures), we are considering horizontally rolling out the following measures throughout the Group.
1) Man-related measures- Education and training to improve capabilities at determining causes and identifying risks- Bolster our safety management system through the involvement of occupational safety
management organizations that are independent from the production departments of overseas plants
2) Machine-related measures- Checking and adjusting the position and direction of the discharge ports in safety valves at otherplants- Establish plant access management and standards for evacuation warnings when problems occur- Automate and improve the reliability of highly important emergency operations and safety
apparatus
3) Management-related measures- Make organizational and HR-related improvements for proper operation at overseas plants- Improve employee engagement- Introduce KPIs to track safety circumstances- Review appropriate number of employees at overseas plants
4-2. Governance-related initiatives
We are currently building a safety auditing program directed by our Environment and Industrial Safety
Management Center to monitor the state of overall safety governance from an objective perspective. Throughthis Investigation, we learned that listening to comments directly from worksites is important to improving
employee commitment and engagement. For that reason, we are considering further strengthening ourauditing program by involving Group employees with extensive experience and advanced communication
skills to its ranks. We will also horizontally roll out what we learned through our investigations to improve
the safety governance of the Group overall, while also utilizing these lessons in building the safety system
for a new EVAL plant currently under consideration.
4-3. Initiatives for dealing with litigation
Going forward, we will consider the horizontal rollouts of initiatives mentioned in 3-4 b), while alsobuilding systems to respond to emergencies swiftly and accurately by enlisting the proper law firms,
particularly where plants of our U.S. companies are located.

5Addendum 1 (Plant Layout): Location where the Incident occurred is indicated by the red circle

6Addendum 2: (Polymerization Reactor Flow Chart)(1) As pressure rose in the polymerization reactor due to ethylene, refrigerant was made to flow through thecooler which is an accessory to the reactor. As a result, the ethylene condensed and was subsequently
supplied to the reactor.
(2) The temperature inside the reactor decreased when the condensed ethylene was supplied to it.
(3) Operators began to heat the polymerization reactor jacket (supplying steam) as a reaction to the decrease intemperature.
(4) Heating of the polymerization reactor jacket caused the ethylene liquid to vaporize, and pressure in thereactor began to rise.
(5) Operators released the pressure control valve (PCV) in an attempt to reduce pressure in the reactor(ethylene released through the PCV was released into exhaust gas combustion apparatus), but they
hesitated to release the PCV even more to lower the pressure because they had been warned by anoperation guide to limit the amount of ethylene released through the PCV.
(6) Before activating the emergency open valve (EOV) to reduce pressure in the reactor, pressure within thereactor reached the setting value for the pressure safety valve (PSV) causing it to activate. Ethylene wasthen discharged into the outside air from the PSV discharge port.

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