MIDYEAR REVIEWICA: ITS POWER AND VALUE page 2

CONVERSATION WITH OUR PRESIDENT page 3

STRENGTHENING COPPER’S POSITION page 5

CHAMPIONING THE FUTURE page 6

JULY 2014

LEADING THE INDUSTRY ON CRITICAL ISSUES

page 7

ASSETS FOR MEMBERS

page 8

2 MIDYEAR REVIEW | JULY 2014

ICA: ITS POWER AND ITS VALUE

We present a strong, united voice for the world’s copper industry.• Our members represent a majority of the copper value chain

• We partner with more than 500 organizations globally

• We actively work for the industry in nearly 60 countries

We focus our efforts in three areas: Market Access, Market Defense and Market Growth.• We provide the industry with a

license to operate

• We protect market access and develop strategies that drive demand

• We develop new copper markets

• We reposition existing copper applications more favorably versus competitive materials

• We connect copper and the copper industry in a positive way with critical areas of societal concern

Together, we are protecting the long-term viability and growth of the global copper industry.• Our programs create 200,000

incremental tonnes of demand for copper each year

• We deliver a 10x return on investment to our members

Championing a better future for copper.

A CONVERSATION WITH OUR PRESIDENT, JOHN HOLLAND

3 MIDYEAR REVIEW | JULY 2014

CONVERSATION WITH JOHN HOLLAND

In June, the Advisory Committee approved a budget plan that required a fresh look at ICA’s global structure and programs. Can you provide a status update?

Sure. The goal of the exercise, which began in late 2013 and included extensive member input, was to rethink the design of ICA without regard to its present structure and programs; in effect, a clean sheet review of the organization. We were asked to deliver a more streamlined and focused business that would provide a 25 percent dues reduction, which will equal about 10 million USD in annual savings for members when fully implemented.

This dues reduction will be implemented in two-steps:

1. 15 percent effective January 1, 2015

2. 10 percent January 1, 2016

This two-step process allows us to efficiently manage the transition to fewer copper centers and will help fund the one-time costs associated with a smaller organization. It is worth emphasizing that the absence of ICA funding for a national center does not mean that funds will not be provided to carry out prioritized projects in the affected country.

Along with the redesign of our structure, we will narrow the program portfolio and transition from the present strategic plan initiative structure to an emphasis on high-return, replicable programs related to critical market challenges.

Program focus:

1. Influence energy policies and efficiency standards that will positively impact copper-intensive applications (e.g., cables, motors and transformers)

2. Influence wire and cable codes, standards and practices to defend against substitution and increase copper intensity of use

3. Defend non electrical copper in the built environment

4. Increase/defend copper use in heat exchange systems (e.g., HVAC, refrigeration)

In addition to the four program focus areas, we will continue to build upon the Health, Environment and Sustainable Development (HESD) and Regulatory Affairs program that supports market access for copper products as well as assisting members in meeting their chemical management obligations. In the member survey conducted last year we heard loud and clear it is essential that ICA maintain the copper industry’s license to operate. We agree, and there will be no compromise in ensuring we meet this mandate.

Restructuring programs is difficult due to the personal impact on individuals. We will do our best to communicate in a forthright manner with affected staff as we implement the changes required throughout the balance of 2014 and into 2015.

Can you provide an update on the 2014 Key Milestone related to the Power Cable Defense program?

Certainly. As we know, global power-cable use is 3.5 million tonnes of copper a year. We have developed aggressive market defense programs in Europe and China to combat the ongoing substitution threat from aluminum alloy cables. We recognize that substitution remains a major threat and we will do all that we possibly can to focus resources, human and financial, in key markets to protect copper power cable.

Tony Lea has prepared a current update on this effort and that is included in this report.

We were asked to deliver a more streamlined and focused business that would provide a 25 PERCENT DUES REDUCTION, which will equal about 10 million USD in savings for members when fully implemented.

INTERVIEW WITH JOHN HOLLAND

4 MIDYEAR REVIEW | JULY 2014

At the 2013 Advisory Committee meeting, the members approved updating the Life Cycle Inventory (LCI) for copper cathode with delivery of the final report in the latter part of 2015. Can you comment on the status of this Key Milestone?

Work has commenced on the 2012 Global Life Cycle Inventory project. A kick-off meeting was held in December 2013, where scope and methods were discussed with participating ICA member companies. Following the meeting, the consultant prepared and circulated initial site surveys, designed to capture necessary information. (Throughout the process individual member data is managed by the consultant to maintain confidentiality.) Information collected included production numbers, scrap usage, locations, technologies, and process flow diagrams for each participating company and location. Unique data collection templates will be created for each site, based on survey responses. This approach will allow for maximum data accuracy and resolution, leading to higher quality results and will facilitate easy integration in the Life Cycle Analysis (LCA) model, thus reducing errors and expediting the modeling timeline.

The data collection is expected to run though the third quarter 2014, with modeling occurring simultaneously through year end. We expect the final report to be presented by the end of 2015.

In sum, the survey collected information from 12 companies and 33 sites, covering 5 continents and over 4 million tonnes of cathode production.

The pace of health and environment regulations seems to be accelerating across the globe as evidenced by Korea’s adoption of REACH regulations to be effective January 1, 2015. Can you comment on how ICA’s HESD program is responding to this accelerating growth in regulation?

The 2014 HESD global budget is $5.5 million, or 9 percent of the total ICA budget. In my discussions with members they acknowledge that it would be extremely difficult, if not impossible, for the copper industry to address this function individually. We are seeing an increase in proposed regulations in all geographies, particularly in key copper use markets in Asia, as noted by the adoption of REACH regulations. The global HESD team operates collaboratively to monitor regulatory activity and to quickly respond to proposed regulations; acutely aware of those which are not based on the most up-to-date science and that would be detrimental to the copper industry.

There is also a trend in some regulatory proposals to follow the precautionary principle versus a risk-based approach. A good example is the present EU focus on the classification of lead as a reproductive toxicant. Classification is not the issue, rather it is the absolute level of lead allowed in products that could have substantial negative impact on the copper industry.

John Schonenberger provides a more complete update on this challenging issue later in this report.

CONVERSATION WITH JOHN HOLLAND

In sum, the survey collected information from:

12 COMPANIES and

33 SITES, covering

5 CONTINENTS and over

4 MILLION TONNES of cathode production.

INTERVIEW WITH JOHN HOLLAND

5 MIDYEAR REVIEW | JULY 2014

Powerful new arguments are being developed to strengthen our position in the 3.5 million tonne copper power-cable market.

Copper power cable faces increasing competition from aluminum wire, in both the utility (primarily) and the industrial sectors. Copper market share, which is currently averaging around 50 percent globally, has, for the last three years, been declining at 1 percent per year, due in part to forceful marketing by Aluminum Alloy Cable (AAC) manufacturers. In the largest market, China with 1.7 million tonnes and 75 percent copper share, the competitive landscape changed dramatically at the beginning of 2014, when, after a year-long analysis, the China Nonferrous Industry Association (CNIA) took a formal leadership position to promote the use of AAC. So now, rather than individual companies, we are facing an equally organized, noncommercial voice with a quasi-governmental background.

In the second largest market, Europe with 0.7 million tonnes, a serious threat increases where aluminum already has a greater market share in the low- and medium-voltage utility sector and is being considered for higher voltage applications.

Our response in both these regions has been immediate and forceful. A more direct competitive stance against aluminum has been implemented to strengthen the existing comparative technical and economic arguments for copper, and to develop new pro-copper arguments:

• Comparative Life Cycle Costing and Life Cycle Assessment for power cable

• End-of-life performance of copper versus aluminum

• Actual technical performance of copper versus aluminum in cable applications

In the specific case of China, and for the first time, analyses showing the broader benefits of copper power cable use to the Chinese economy and society are also being developed.

In both regions, local industry is closely involved in the development and implementation of these defensive programs. In Europe, special recognition must be given to the involvement of key companies from the International Wrought Copper Council (IWCC) who have agreed to both guide and to co-fund the program—the first time the wire rod community has contributed in this way to ICA programs.

These defensive programs are critical for maintaining the position of copper not only in power cable, but also in other equally important wire and cable markets such as building wire and magnet wire—3.5 Mt and 3 Mt respectively. Both of these markets are experiencing aluminum substitution. There is a real danger that without a robust, competitive response from ICA to the threat from aluminum wire in all these sectors, overall long-term global copper demand could be seriously damaged.

DEFENDING CRITICAL COPPER MARKETS FROM ALUMINUM SUBSTITUTION

STRENGTHENING COPPER’S POSITION

Powerful new arguments ARE BEING DEVELOPED to strengthen our position in the 3.5 million tonne copper power-cable market.

6 MIDYEAR REVIEW | JULY 2014

ICA has launched a partnership that aims to reduce 2030 global electricity consumption by ten-percent and CO2 emissions equivalent to removing half of the world’s cars from the road.

ICA has partnered with three organizations —U.N. Environment Program (UNEP), U.N. Development Program (UNDP) and Collaborative Labeling and Appliance Standards Program (CLASP)—to launch an initiative focused on global market transformations in appliances and industrial equipment.

The initiative was born from the UN’s Sustainable Energy For All (SE4ALL), which has three stated goals to reach by 2030:

• Universal access to modern energy services (1.3 billion people today do not have access to electricity)

• Doubling the share of renewables in the global energy mix

• Doubling the rate of improvement in energy efficiency

The partnership’s goals are possible through mandatory Minimum Energy Performance Standards (MEPS). The initiative will focus primarily on the developing world as MEPS are absent in a vast majority of non-OECD (The Organization for Economic Co-operation and Development) countries.

The initiative covers six product areas: motors, distribution transformers, air conditioners, refrigerators, lighting and information technology. By 2030 these will account for 60 percent of global electricity consumption.

The main source of funding is targeted through the Global Environment Facility (GEF), which is a four-year cycle funded by developed-world countries to advance the developing world. An application for $25 million in GEF funding has been submitted and a decision is expected by November 2014.

At the referenced SE4ALL event, the CEO of the GEF formally announced the approval of $1.4 million in start-up funding from the current GEF5 cycle.

ICA is leading the fundraising efforts on behalf of the public-private partnership (PPP). In addition to the GEF, funds are sought from

leading manufacturers, financial institutions, governments, foundations, etc. The total funding sought over the next five years is $100 – 150 million.

This initiative was presented to the ICA Advisory Committee in New York on 05 June 14. A presentation will be made to the ICA Board in London on 20 October 14.

This initiative will benefit ICA’s members in three ways:

• Tonnage benefit: The five-year (2016 - 2020) cumulative tonnage impact is estimated at up to 350kt, which would make this initiative the largest tonnage program in ICA’s program portfolio. (Tonnage impact is limited to motors, transformers and aircon, the three areas with the greatest potential impact for copper and where ICA will focus its efforts in the implementation phase.)

• Image benefit: ICA’s members will be able to communicate to their own external audiences that they are aligned with a global initiative committed to reducing global electricity consumption by 10 percent, and lowering CO

2 emissions equivalent to the emissions of 500 million cars.

• External funding benefit: The four founding partners will lead the implementation of this initiative and any funding from the GEF (and other funding partners) will go towards implementation efforts.

The initiative represents a culmination of more than a dozen years of credibility building in the area of sustainable energy. ICA is viewed as a reliable partner that has successfully collaborated with NGOs and UN organizations in the past which is an important consideration in this PPP.

In conclusion, this initiative offers ICA’s members its highest tonnage opportunity to date, strong messages and significant external funding.

ENERGY-EFFICIENCY PROJECT PROVIDES ICA’S MEMBERS WITH MULTIPLE BENEFITS

CHAMPIONING A BETTER FUTURE FOR COPPER

An application for $25 million in GEF funding has been submitted and a DECISION IS EXPECTED by November 2014.

At a global SE4ALL meeting at UN headquarters in early June, this initiative was recognized as the highest impact opportunity for energy efficiency in appliances. During the event Steve Kukoda, ICA’s Vice President, introduced the partnership to an audience of several hundred people. His speech can be viewed here:

ICA’s Steve Kukoda Discusses Energy

Efficiency

ICA’s Steve Kukoda shares his final

comments at the U.N.

7 MIDYEAR REVIEW | JULY 2014

LEADING THE INDUSTRY ON CRITICAL ISSUES

Recognised as a neurotoxin, lead has been extensively assessed and is regulated through a broad mix of restrictions and limit values. As examples, lead levels in EU drinking water are capped at 10 micrograms (µg) per litre and the EU directives on end-of-life vehicles and on electrical and electronic devices either ban, or restrict lead, although there are specific time-limited exemptions up to 4 percent.

New scientific evidence, supported by the International Lead Association, shows that children’s IQs can be affected by lead in blood concentrations above 10 ug/dl. This has resulted in the European Chemicals Agency proposing to classify lead metal (powders and massives) as a Category 1 Reprotoxicant and to accompany this with a Specific Concentration Limit (SCL) of 0.03 percent. This means that any mixture, alloy, slag or scrap, which contains Pb metal > 0.03 percent, will need to be classified and labeled accordingly. In the future, it is expected that this limit will be extended to metal compounds and thus will impact concentrates and smelting process intermediates.

Either for technical performance reasons, or as a natural impurity, lead is present in many of our industry’s products. Within the EU, 80 percent of the 2.4 million tonne/year copper and alloy scrap supply has a lead metal content > 0.03 percent, the 3.5 million tonnes of EU smelter slags contain lead and lead compounds in the combined range of 0.02 - 0.65 percent and around two-thirds of the more than 174 copper alloys, listed in the CEN standards, representing an annual EU market demand of around 1.4 million tonnes, have lead metal levels between 0.05 and 3.5 percent.

Under the umbrella of Eurometaux (the official advocacy voice of the nonferrous metals industry in Europe), the European Copper Institute (ECI) has submitted extensive scientific materials via the EU’s mandatory public consultation process. It has also provided a 24-page socio-economic analysis estimating a copper business impact of $ >1 billion/year. Semi-fabricated product costs would increase, through the use of more expensive substitutes, and product environmental footprints would become less competitive due to the need to recycle end-of-life copper-alloy products back through smelting and refining, versus simple remelting. Both of these could result in increased substitution.

Through several face-to-face meetings, ECI, its association partners and member representatives have expressed strongly their concerns to the European Commission and Member States. Our advocacy position is to support the proposed classification, but to delay the adoption of the 0.03 percent limit, pending broader scientific analysis and debate on the validity of the SCL methodology for metals. We also believe that the current science, which addresses issues such as migration and bio-elution data, supports separate classifications for compounds, powders and massives.

The regulatory decision process will be concluding during the summer months. ECI is preparing business arguments for a final round of high-level advocacy by industry leaders toward their national authorities.

EUROPEAN UNION PROPOSAL TO CLASSIFY LEAD METAL PRESENTS A SIGNIFICANT BUSINESS RISK FOR THE GLOBAL COPPER INDUSTRY

Through several face-to-face meetings, ECI, its association partners and member representatives HAVE EXPRESSED STRONGLY THEIR CONCERNS to the European Commission and Member States.

8 MIDYEAR REVIEW | JULY 2014

ASSETS FOR MEMBERS

COPPER BENEFITS VIDEOAll you need to know in less than 2 minutes.

Copper offers vast benefits, but our most relevant and compelling message lies in copper’s ability to support a more sustainable future.

Members are welcome to promote this video focusing on the societal benefits of copper on their websites and when meeting with their stakeholders.

Continued engagement and collaboration are essential. We welcome your feedback. Please contact us.

© 2014 International Copper Association, Ltd.

Copper Alliance™ is a trademark of International

Copper Association, Ltd. All Rights Reserved.

2014 ANNUAL MEETING—SAVE THE DATESMeeting dates: 17 – 20 October at the Hyatt Churchill, London

Program Review Committee Dinner ................................................. Thurs. 16 Oct

Program Review Committee Meeting .................................................. Fri., 17 Oct

Advisory Committee .................................................................... Fri., 17 Oct

Board of Directors Dinner .............................................................. Sun., 19 Oct

Executive Committee ................................................................. Mon., 20 Oct

Board of Directors Meeting .......................................................... Mon., 20 Oct

2013 Annual Report

2013 Annual Report

With a view to sharpen the focus of ICA, what it does for its members, and its value to the industry as a whole, this report is more concise and content is limited to significant accomplishments.

Annual Report repository: 1981-present.

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