THE MARTEC GROUP CONFIDENTIAL Legal Statement

The purpose of the information in this presentation is to guide ICA programs and provide members information to make independent business decisions.

Based on primary interviews conducted in the industry and publically available information. The Martec Group in cooperation with MetalsPlus are the sources of the forecasted data in this presentation.

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Antitrust Guidelines

Antitrust Guidelines for Copper Industry Trade Association Meetings

The following guidelines with respect to compliance with antitrust laws of the United States, Japan and European Community1 are intended to govern the conduct of participants in copper industry trade association meetings, both at the meeting itself and in informal discussions before or after the formal meeting.

Price: Competitors should not discuss future prices (including terms of sale) of their products. There is no blanket prohibition against the mention of or reference to current or past prices but limits must be observed. Such references or mentions should occur only when necessary in connection with the development of association programs. For example, reference to a particular price level in comparing the cost of a copper product to a competing product is permitted. Whenever possible, such references should be discussed in advance with legal counsel.

Competitive Information: Competitors should not discuss the market share of a particular copper producer or copper fabricator’s products. Furthermore, nothing should be said at a meeting which could be interpreted as suggesting prearranged market shares for such products or producer production levels. The overall market share of copper products may be discussed with regard to competition with non-copper products and general market acceptance.

New Products: Competitors should not encourage or discourage the introduction of a new product by another competitor or reveal a particular copper company’s plans to change the production rate of an existing product or to introduce a new product. No company should disclose to another company whether it is in a position to make or market a new product. New products may be discussed in a technical manner or from the standpoints of competition with non-copper products and general market acceptance. In addition, proposed methods for and results of field and laboratory testing can be considered.

The Role of Legal Counsel: Legal counsel attends association meetings to advise association staff and other meeting attendees regarding the antitrust laws and to see that none of the matters discussed or materials distributed raise even the appearance of antitrust improprieties. During the course of a meeting, if counsel believes that the discussion is turning to a sensitive or inappropriate subject, counsel will express that belief and request that the attendees return the discussion to a less sensitive area.

A paper entitled ‘Copper Industry Trade Associations and Antritrust Laws’ is available upon request.

10/92, 5/93, 10/10

1. Other foreign competition laws apply to International Copper Association, Ltd. (ICA)’s activities worldwide.

2 THE MARTEC GROUP CONFIDENTIAL

Competitive Analysis of the Appliances Market

Keith Miller Business Director, The Martec Group

London, October 2018

3 THE MARTEC GROUP CONFIDENTIAL Methodology/Interviews

Martec has completed 70 interviews with various key industry respondents: • Leading global Appliance OEMs, Suppliers and other industry experts:  Whirlpool, GE-, BSH, LG, Samsung, , , , Keurig, Indesit, , Vestel, , Vestel, , Elica, Insinkerator, Hoover, SharkNinja, Puppy Vacuums, Puti, Huadi, Rinnai, Gree, Prestige, Venus, Godrej, Rallison, 15 22 Shanghai Highly, Nidec, A.O. Smith, Galanz Motor, 20 Jinda Motor, Media Fans and various others 13

• Across the following key appliances:  , freezers, washers, dryers, /hobs/cooking ranges, , , range hoods, garbage disposals, mixers, hot water heaters, space heaters (non- home HVAC), air purifiers, coffee/tea machines, personal care appliances, etc.  Home HVAC including air conditioners were excluded

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Important Industry Topics

Design/Function Technology Product Other 1.50 2.10 2.16 - - Changing functionality to meet Increasing integration of smart Offering consistent products can Another important- - factor for customer’s needs while keeping technologies will help separate help lead to product and brand manufacturers is keeping the great appliances from good costs low is very important to loyalty. products cost competitive manufacturers. appliances.  Differentiating products   Providing a function that  Companies will need to Increase functionality of another brand or product does introduce new technologies to through innovative designs can appliances while keeping not have can differentiate an compete in the changing help gain the favor of them efficient and low-cost consumers appliance enough for purchase market  Affordability of appliances is  Consumers are looking to save  Innovations may be expensive,  The product is the brand and a big factor in fast paced money without losing but there are ways to make up needs to keep consistent middle-class countries such functionality for the losses quality as China and India − Appliance OEMs trying to  Electrical efficiency is a major  Many product changes today increase functionality while trend with regard to product  Energy Efficiency are directly related to the decreasing cost/price technological improvements image of the product − Failures are a concern with  Technology scored much higher usage of alternative materials in importance in NA (1.44) and  China and India scored (1.13) vs. China & India Design/Functionality higher in importance than ROW

5 *NOTE: Based on respondents ranking in order by priority. THE MARTEC GROUP CONFIDENTIAL

High Level Trends

Leading Trends: • Higher efficiency rated appliances • Larger capacity appliances • New product configurations with new/advanced controls

 Both large and small appliances • Cost effective touch UI w/ color graphics and multi-color LEDs • Connectivity / Smart appliance technology • Value engineering / Product diversification / Broader portfolios / Increased functionality • Cost reduction targets / Increase affordability • Unique features across brands and price points

 Materials, finishes, capabilities, extended warranties

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Challenges for Alternative Materials

• Conductivity differences and losses vs. using Copper  Environmental effects in performance over time of alternative materials and issues with creep and electrolysis

• Changes to control algorithms due to electronic properties  Appliance process timing changes due to motor / pump / compressor performance such as torque or heating

• Reduced product / component life span with alternative materials  Impact on brand differentiation, may require or result in more maintenance, service & warranty

• Solve cross-regional procurement issues and procurement complexities  Need to provide reliable and low cost supply globally; 2 – 3 years to put into production and at least 2 – 3 to realize value

• Heating / Material expansion (especially w/ aluminum)  Effects contacts electrical properties & reliability

• Diameters and ability of suppliers in forming effective diameters for windings w/ Al for smaller motors and components  Aluminum and alternatives will increase motor size or will have to accept reduced performance and/or life span  Limited supply of reliable vendors capable to support material change

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Technical Matters that Defend Copper

These are strongholds for Cu due to Difficult to Difficult for appliance OEMs to test performance risks of alternative materials. Will model & test technology (high frequency take time to displace if it even will be displaced. (i.e. Connectivity) equipment) with alternative materials Difficult due to unknown quantity vs. Cu. Significant investment & expertise Very challenging to utilize Al in small geometries CU embedded into required. without sacrificing performance, especially with design significant space restrictions or smaller appliances. (i.e. PCBs, UIs, Wire Harness)

Heat management, motor cycling or recalibrating & Small Component Ongoing problems with alternative programing control systems or error codes due to Geometries materials vs. Cu as alt. materials have issues changes. Must evaluate whole system. with creep, electrolysis over time and soldering issues. May require tradeoffs in Control System Changes life expectancy of appliance.

Connection Reliability Based on history and experience, easier path for Appliance OEMs to design and meet energy efficiency standards and maintaining Meeting Energy Efficiency desired life cycles with using Cu.

Effect on other Change to alternative materials can create issues with another Components component or architecture that needs to be compensated for or Simple balanced out (i.e., noise, vibration, heat management, etc.). Require dampening or mounting changes. Geometrics of Design Size of components will change or changes in architecture (fit in appliance) design are required in order to fit in appliance. Aluminum windings can increase motor size up to 1/3 vs. Cu windings. Challenges over time to OEMs 8 THE MARTEC GROUP CONFIDENTIAL

Growth Opportunities

Leading Areas of Opportunity for Growth: 1. Appliance Connectivity • Plans are to move more volume of appliances (even small appliances) to this space of functionality • Controls and signals involved currently use copper and will be difficult to transition to Al or other alternatives without performance changes  Engineers and designers accustomed to designing with Cu  Design initially with the best materials until there is a strong drive to make transition and create new materials & processes for lower cost • Area is more complex and more difficult to model & test (unless LG and Samsung, other appliance OEMs must invest heavily) 2. Expected appliance growth in China and India • Growing economies & middle-class to purchase new appliance units 3. Finishes / Coatings / Coverings (small and large appliances) • More copper colorant options are expected in the future 4. Alloy blends or Nano materials • Largely an unexplored area in appliance sector • Hybrid materials that are blended on the molecular level (i.e., conductive carbon fibers) • Just being contemplated by Appliance OEMs (two areas where OEMs are focusing on):  Wire harnesses / Displays / Connectivity components  Electric motors 5. Any potential for stricter energy efficiency standards

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Oven/Stove/Range/Hobs Overview – Large Appliance Example

Copper as % of Common Copper Avg. Copper per Cu Alt. all materials in a Components /Stove/Range Oven/Stove/Range motor windings Fan motor windings

Induction Coils 0.8kg <2% 0.9 Ovens/Stoves/ 4.2 people per Induction cols (in process Ranges/Hobs per Oven/Stove/Range/ to copper-clad / Contact Points & PCB for Household (total) Hobs (total) aluminum) controls Piping (typically Power Cord/Wiring aluminum, some copper)

Oven/Stove/Range/Hobs Sold per Household Global Units per Year (in millions)

175 150 125 .12 Regional .09 100 .09 75 Country ROW 50 25 .05 .01 - 2015 2016 2017 2018(F) 2022(F) North America Europe China India ROW

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Global Large and Small Appliance Sales: Year over Year 2012 – 2022(F)

Large & Small Appliances

3000 3,000

2,461 2,405 2500 2,350 2,500 2,289 2,228 2,166 2,100 2,042 Total CAGR 2012-2017 3.2% 1,997 1,928 2000 1,852 2,000 Total CAGR 2017-2022 2.6% Total CAGR 2012-2022 2.9%

1500 1,500 Large Appliances CAGR 2012-2017 2.7% Large Appliances CAGR 2017-2022 2.8% Large Appliances CAGR 2012-2022 2.8 In Millions of Units of Millions In % 1000 1,000 Small Appliances CAGR 2012-2017 3.4% Small Appliances CAGR 2017-2022 2.5% 500 500 Small Appliances CAGR 2012-2022 3.0%

0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Small Appliances Large Appliances TOTAL

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Small Appliances Sold by Region: 2012 – 2022(F) Small Appliances

Small Appliances Total CAGR 2012-2017 3.4% Total CAGR 2017-2022 2.5% 700 Total CAGR 2012-2022 3.0%

600 North America CAGR 2012-2017 1.1

% 500 North America CAGR 2017-2022 1.5% North America CAGR 2012-2022 1.3% 400 Europe CAGR 2012-2017 1.3% 300 Europe CAGR 2017-2022 1.0% Europe CAGR 2012-2022 1.1% In Millions of Units of Millions In 200

Bulk of unit volume 100 China CAGR 2012-2017 8.2% growth coming China CAGR 2017-2022 3.7% from China & India 0 China CAGR 2012-2022 6.0% due to growing economies and India CAGR 2012-2017 7.8% middle class North America Europe China India ROW India CAGR 2017-2022 7.4% growth. India CAGR 2012-2022 7.6%

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Large Appliances Sold by Region: 2012 – 2022(F) Large Appliances

Large Appliances Total CAGR 2012-2017 2.5% Total CAGR 2017-2022 2.8% 250 Total CAGR 2012-2022 2.6%

North America CAGR 2012-2017 3.4 200 % North America CAGR 2017-2022 1.4% North America CAGR 2012-2022 2.4% 150 Europe CAGR 2012-2017 1.3% Europe CAGR 2017-2022 1.4% 100

Europe CAGR 2012-2022 1.1% In Millions of Units of Millions In

Bulk of unit volume 50 China CAGR 2012-2017 4.8% growth coming China CAGR 2017-2022 4.4% from China & India China CAGR 2012-2022 4.6% due to growing 0 economies and 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 India CAGR 2012-2017 9.4% middle class North America Europe China India ROW India CAGR 2017-2022 8.6% growth. India CAGR 2012-2022 9.0%

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Copper Use (kt Cu) – Motors Electric Motors • Motors represent approximately 25% of overall Cu usage • Growth in copper usage has been slower for North America & 500 Europe due to further movement of manufacturing to China 500 469 Global CAGR 2012-2017 2.0% • China has experienced the most growth at 4% annually driven by 452 Global CAGR 2017-2022 450 unit volume production growth 436 450 3.6% 419 Global CAGR 2012-2022 405 2.8% 385 393 117 400 374 378 111 400 356 357 107 102 North America CAGR 2012-2017 1.5% 99 350 96 350 North America CAGR 2017-2022 2.8% 95 241 100 96 233 North America CAGR 2012-2022 225 2.1% 300 100 98 216 300 208 196 201 182 188 Europe CAGR 2012-2017 0.4% 250 170 250

164 Europe CAGR 2017-2022 2.0% In kilotonnes In 200 200 Europe CAGR 2012-2022 1.2%

150 150 China CAGR 2012-2017 4.2% China CAGR 2017-2022 3.7% 100 44 100 China CAGR 2012-2022 4.0 38 39 41 % 34 34 34 34 35 36 33 50 46 47 49 50 43 40 41 43 44 44 44 45 India CAGR 2012-2017 0.7% 19 0 16 15 16 16 17 17 17 17 18 19 0 India CAGR 2017-2022 4.5% 2012 2013 2014 2015 2016 2017 2018(F) 2019(F) 2020(F) 2021(F) 2022(F) India CAGR 2012-2022 2.6% North America European Union India China ROW TOTAL *NOTE: Based on production.

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Copper Use (kt Cu) – Equipment Wire Equipment Wire

• Equipment wire represents ~35% of total Cu usage 800 • Copper usage in equipment wiring has been decreasing 800 in North America due to shifts in manufacturing • Growth in India is expected to slow down from a high of Global CAGR 2012-2017 2.4% nearly 7% while China is expected to increase growth to 673 Global CAGR 2017-2022 3.4% 700 653 700 >4% per year over the next 5 years 632 Global CAGR 2012-2022 2.9% 612 590 600 568 600 543 553 188 533 183 North America CAGR 2012-2017 -1.6% 515 178

504 174 North America CAGR 2017-2022 -0.9% 500 169 500 163 161 North America CAGR 2012-2022 -1.2% 160 161 308 157 157 285 297 273 400 260 400 248 Europe CAGR 2012-2017 2.2% 233 240 In kilotonnes In 226 Europe CAGR 2017-2022 2.2% 209 218 300 300 Europe CAGR 2012-2022 2.2%

200 200 China CAGR 2012-2017 3.5% China CAGR 2017-2022 51 53 4.4% 40 42 45 47 49 31 32 35 37 China CAGR 2012-2022 4.0% 100 86 88 90 92 94 96 100 77 78 81 82 83

31 India CAGR 2012-2017 0 31 31 30 30 29 28 28 28 27 27 0 6.7% India CAGR 2017-2022 8 2012 2013 2014 2015 2016 2017 2018(F) 2019(F) 2020(F) 2021(F) 2022(F) 4. % India CAGR 2012-2022 5.7% North America European Union India China ROW TOTAL *NOTE: Based on production. 15 THE MARTEC GROUP CONFIDENTIAL

Total Copper Use (kt Cu) Total Copper

• Overall, the total amount of copper used globally in 2000 appliance products is expected to project at around 1,881 2,000 1,827 Global CAGR 2012-2017 2.0% 3% growth annually over the next 5 years 1,773 1800 1,720 1,800 Global CAGR 2017-2022 3.1% 1,667 Global CAGR 2012-2022 1,582 1,614 2.5% 1,530 1,552 520 1600 1,484 506 1,600 1,465 491 477 North America CAGR 2012-2017 -0.7% 1400 463 1,400 443 449 447 North America CAGR 2017-2022 0.5% 454 926 449 895 452 864 North America CAGR 2012-2022 -0.1% 1200 832 1,200 801 750 770 721 1000 697 1,000 Europe CAGR 2012-2017 1.4% 643 665

Europe CAGR 2017-2022 1.0% In kilotonnes In 800 800 Europe CAGR 2012-2022 1.2%

600 600 China CAGR 2012-2017 3.7% China CAGR 2017-2022 400 400 3.8% 127 133 139 96 98 102 104 107 111 116 122 China CAGR 2012-2022 3.7% 200 183 182 187 190 192 196 198 200 202 203 206 200 India CAGR 2012-2017 3.0% 91 90 90 90 90 88 89 89 89 90 90 0 0 India CAGR 2017-2022 4.6% 2012 2013 2014 2015 2016 2017 2018(F) 2019(F) 2020(F) 2021(F) 2022(F) India CAGR 2012-2022 3.8% North America European Union India China ROW TOTAL *NOTE: Based on production. 16