Slide 1

Creating and Executing a Technology Strategy for a Global

Industry

Hal StillmanDirector of Technology

International Copper Association, Ltd.

20 October 2006 hstillman@copper.org

Slide 2

ICA TECHNOLOGYResearch, develop, and commercialize new and improved product and process technologies, and create new uses for copper

Very complex situation

How to start

How to achieve success

Slide 3

Electron structure is origin of many valuable properties

Single electron at fourth energy level is highly mobile; fills only 1 of 32 available positions

Electron has gas-like behavior; moves to transfer charge, collides to transfer vibration (heat)

Easy to create copper ion: copper ions readily penetrate microbes when mobilized in adsorbed water

Other properties arise from cubic crystalline structure: malleability, color, alloying

COPPER PROPERTIES

Slide 4

High electrical conductivity

High thermal conductivity

Range of valuable mechanical properties

Corrosion resistance

Aesthetic qualities

Antimicrobial surface

Essential for life

100% recyclable

Integral to energy efficient design

Integral to technological development

COPPER/ALLOY ADVANTAGES

Slide 5

INDUSTRY VALUE CHAIN

Producers Fabricators

Slide 6

END MARKET APPLICATIONS

ProductAnnual

Use (mt)%

Total Main applications and notesPower cable 2.95 15.4% Utility and industrialBuilding wire 1.40 7.3% Fixed installation in buildingsEquipment wire 1.25 6.5% Energy transmission in equipmentAutomotive Wire 0.70 3.7% Primarily wiring harnessTelecomm cable 1.60 8.4% Utility (50%), Data/voice in buildings (50%)Winding wire 2.10 11.0% Motors, transformersCopper RBS 0.40 2.1% Busbar, power generation/transmission equipmentCopper PSS 1.40 7.3% Electronics (50%), HEX (15%), Architecture (20%), General marketCopper Tube 2.05 10.7% Plumbing (50%) and commercial tube (50%)Alloy RBS 1.80 9.4% Machined brass rod for valves, fasteners, screws, fittings (incl plumbing)Alloy PSS 1.20 6.3% Electrical, electronic, coinage, munitions, builders hardwareOther 2.30 12.0% Forgings (35%), Alloy wire (15%) for zips, fasteners, electronic pins,

Alloy tube (10%) for condensers, Non cable wire rod (35%) for grounding/lightning protection, trolley wire and Al alloys, Powders, Chemicals

TOTAL 19.15 100.0%

60% of copper use is electrical applications

Fabricators End Users

Slide 7

A not-for-profit industry trade association*

39 member companies represent >85% of world copper production

Focus is promoting and developing copper use

Headquarters in New York

27 offices globally with ~200 technical marketing staff

2006 budget $45 million plus $20 million co-funding

ABOUT ICA

Slide 8

ICA MISSION

Advance copper as the material of choice for current markets and new applications given its superior attributes in terms of technical performance, sustainability, essentiality for life, and its contributions to a higher standard of living.

Slide 9

THE UNSTATED MISSION

Do what you can within anti-trust guidelines to assure that there is demand for just a little more copper than the industry can produce

Slide 10

SITUATION IN 2002Very little innovation in the industry

• Copper industry ceding markets to alternative materials

• Little effort to create new applications

Price at bottom of cycle• Rapidly developing economies expected to raise demand • Concern about price volatility

Industry highly fragmented• Strong competition in each stage of value chain

• Producers, fabricators and end-users are not collaborating to provide superior products for consumers

Slide 11

15 million tonnes from mine production

5 million tonnes recycled

Total value in 2002:

• 20 million x $2000 = $40 billion of commodity material

• Low industry profitability

Opportunity for technology development recognized

Avoid repeating experience of automotive radiator market

SITUATION IN 2002

Slide 12

In 1975 copper had 100% of the market and did not believe that situation could be changed

By 2002 market share was less than 10% with loss of >100,000 tonnes

Real reasons for the success of aluminum automotive radiator is not weight but:

• 25-year development effort of the aluminum industry

• Total neglect in that same period on the part of the copper industry

AUTOMOTIVE RADIATORS

Slide 13

1970 75 80 85 90 95 00 05

1

2

3

4Louver fin with flat tube

Louver fin with round tube

Wavy fin

Plain fin

5 mm6 mm

7 mm

8, 9.52 mm

Hea

t tra

nsfe

r e

nhan

cem

ent f

acto

r

Matsushita

1970 75 80 85 90 95 00 05

1

2

3

4

Small diameterwith groove

5 mm6 mm

7 mm

9.52 mm

Smooth tube

Groove tube

LGToyo

Hitachi

Flat tube

trapezodial

triangle

(a) Heat transfer enhancement byhigh performance fin shape

(b) Tube side heat transferenhancement

AIRCON HEAT EXCHANGERS

A similar story about to happen…

Aluminum

Copper

Same performance at half the size

Slide 14

ICA TECHNOLOGY INITIATIVEWith the support of ICA’s Technology Steering Committee, the Director of Technology will:• Create and execute a plan for the development of an

infrastructure for research work and the search for promising technologies or products that would benefit from/or be developed with ICA funded research

• Develop a concept for an external venture capital company to further development and commercialization of promising new products and technologies*

Slide 15

Can not engage in “ordinary business”

Retain not-for-profit status

Anti-trust concern prohibits price discussion

Members are competitors (in many ways)

Slow decision-making

Vocal member opposition to diverting funds to R&D

Wary insider opposition to outsider leading organization in new direction

Must achieve tonnage impact

SOME CONSTRAINTS

Slide 16

BEFORE ICA: INCRAInternational Copper Research Association

• Previous industry research organization

• Operated from 1958 - 1990

459 projects in 32 years spending $90 million

Outstanding technical managers

Bookshelf of detailed project reports• Excellent research quality

No lasting commercial successes

In 1990, industry shut down activity and focused solely on promotion

Slide 17

THE BOOKSHELF

Slide 18

THE CHALLENGE

Re-start some type of technology activity but do a better job than INCRA

What would you do?

Slide 19

LEARNING FROM INCRA FAILURESurprise: many of the same ideas thought to hold promise in 1960 still held promise in 2002

• Great job of spotting opportunities, but spread R&D effort too thinly

• Prematurely stopped work on problems that were worth solving

• Technical breakthroughs needed to achieve market success had not been made

Puzzling: once-a-decade review of new opportunities and commercialization possibilities• What were they thinking?

Slide 20

LEARNING FROM INCRA FAILUREGovernance barrier to getting directly involved in commercialization

• Don’t compete with members

• Put R&D results into the public domain and hope for the best

• Belief that a great research result is sufficient to spark commercialization

• Single product “Product Engineer” insufficient to drive commercialization

Slide 21

CONCLUSION #1Research should hold a persistent focus on real opportunities despite short-term technical setbacks• Multiple attempts should be made to find a solution path

to a promising market opportunity

• Focused efforts should not be constantly diverted by the search for new opportunities

Slide 22

CONCLUSION #2Find a way to connect technology to the market through entrepreneurial business development• An entrepreneur will persist in trying to find a technical

solution to a market opportunity

• Protect intellectual property to capture potential value

• Persistent effort will be needed to find a workable approach for ICA

• Attract potential commercialization partners and supporters

But…organization really not ready to embrace venture capital-like approach to commercialization*

Slide 23

EXECUTION PATHArticulate desired state

When business and technical people think about innovation…copper comes to mind

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EXECUTION PATHForm a Steering Committee that helps prioritize activities and provides political guidance*

Quarterly meetings with briefing book in advance• Dialogue begins where briefing books ends

• Achieve consensus on major processes and concepts

• Take significant directional decisions

Do R&D, but talk about commercialization

Multi-lingual, multi-cultural, multi-level, multi-company team

• Tell your story in pictures

Slide 25

Materials science, metallurgy and

materials processing networks

Government funding initiatives and

networks associated with copper

Application and design engineering

networks relevant to copper

• R&D and academic organizations with a potential contribution to copper technologies

• Understand past/current projects and their relevance to copper

• Leverage ICA funds through their sources of funding

• Expand on current ICA contact base

• Academic, industrial and development organizations that apply copper in commercial applications

• Identify possible programs relevant to copper; remove technology roadblocks

• Leverage ICA funding

• Understand linkage between copper and government funding priorities

• Profile types of projects being funded• Create new funding initiatives that involve

copper• Connect individuals in other domains to

appropriate funding sources

Connect to a number of networks within key domains and stimulate thinking about copper-related technology

ICA R&D Stimulus

Motivation

ICA R&D funding

Challenge

ICA Technology PrioritiesManagement

Interconnection of R&D domains

H. StillmanNovember 2002

ICA NETWORK CONCEPT

Slide 26

PROJECT APPROVAL PROCESS

1. Submit R&D proposal/concept 2. Proposal passes screening 3. Conditional approval 4. Investigate and resolve conditions

5. Legal agreements for R&D 6. Proposal passes due diligence 7. Funding authorization 8. Reviews by Steering Committee 9. Proceed with commercialization

Decisions

1

2 4

5

8…

9

Due diligence process for commercial, legal and technical review; applies to all projects but with special emphasis on projects undertaken in collaboration with external firms or organizations in which disclosure of project information to members is limited to protect secrecy and intellectual property rights

X

X

X

X

Periodic review of project by Project Management Team with decisions to continue, change or terminate activities. At least one member is on Team.

(can include members)

3 7

6

Technology Committee

ICA President

Technology Director

Project Management Team

Project Manager

Legal Counsel

Subject Matter Experts

Project Proposer

If proposal exceeds approved technology budget, Advisory Committee approval is required

Non-secret, small, simple project may gain rapid approval

1983 Study for INCRA by the Technology Assessment Group

PROBABILITY / IMPACT MATRIX

OF NEW OR EVOLVING TECHNOLOGIES ON COPPER USAGE

HIGH

MEDIUM

LOW

NONE

LOW

MEDIUM

HIGH

100 HEAT PUMPS COMPUTERS SEMICONDUCTORS FISSION FIBER OPTICS

80 SOLAR POWER POWER ELECTRONICS

TRANSMISSION CABLE

OCEAN TECHNOLOGY

COMBUSTION SYSTEMS

MEDICAL ELECTRONICS

ROBOTICS SUPERCONDUCTIVITY HOME & OFFICE

NETWORKS

BATTERIES PRINTED CIRCUIT BOARDS

AUTOMOTIVE

60

DESALINATION TELECOM ENERGY MANAGEMENT CATV CATALYSIS BIOTECHNOLOGY

40 ELECTRIC VEHICLES

LASERS ELECTROMAGNETIC PROPULSION

20 FUEL CELLS FUSION

0

Positive Negative

Slide 28

*: ICA projects shown in red

+ _

0

HIGH MEDIUM LOW NONE LOW MEDIUM HIGH

- Antimicrobial surfaces- Aquaculture cages

  - Wind power - Power doors - Wireless LANs

- Fission power- Biotechnology - Cu nanomaterials

  - Wireless telecom - Fiberoptic LANs - VOIP

- PEx plumbing systems - Flat panel displays- Al micro-channel HX

- CMR - Deep sea cables- Hybrid automotive

- High efficiency stators

- High bandwidth communications over copper - SSM - Server cooling

- Cu/CNT thermal conductors

- Al solar thermal- Rare earth permanent magnet motors

- Al magnet wire- Automotive wiring alternatives

- Flat tube HX - Cu-plate HX- DGWH - Vehicle batteries?- Desalination? - Dist. energy sys.

- Power quality - Electric ships - RFID tags

- Superconductive cables

- Electroactive polymer actuators

   

- Copper-tube corrosion solutions - CO2 heat pumps

- Fuel cells (Cu- catalyst and desulphurization) - Power electronics- Cu-bulk metallic glasses

- Nuclear waste storage - Cu/CNT electrical conductors

- Polymer conductors?- Polymer HX

   

      - Fusion reactor systems

- Electromagnetic rail propulsion?

   

20

Aug 2006

40

100

80

60

Impact of emerging/evolving technologies on copper usage2007-2011

Pro

bab

ilit

y (%

)IMPACT MATRIX

Slide 29

PHE

Pro

bab

ility

of

tech

nic

al s

ucc

ess

Low

erH

ighe

r

Sooner Later

Timing

UltraC

VAE

Cupro-Braze

CAT 6

Internal HX

Deep sea cables

Conform

DGWH

RTPF HX

Low (<10000 tons)

Medium(<50000 tons)

High(> 50000 tons)

2007-2011 Impact

Heat exchange systems

Electrical energy

Antimicrobial

SSM

ISG

GeoSolar

AntiMCMR

Server cooling

CAT 7

Tube corrosion

MEGAFlat tube

Cu BMG

EB

Cu2S PV

GeoSol

Tarnish resistance

Aquaculture Cages

PoE

Mech. alloy

Nanocoat

Fuel/Natural

gas-S

SuperC

PORTFOLIO ASSESSMENT

Kompact

FC catalyst

Slide 30

PROJECT SELECTION PROCESS

…XX Jan 0XDec/Jan

TSC meetings

Discuss Technology Roadmap elements

200X R&D portfolio

Portfolio planning and priority setting

Background research and strategy discussions

Budget allocation and project recommendations

Budget approval and project proposal assessment

Project contracting and initiation

10 year impact matrix of new/evolving technology

Proposed 200Y Technology budget

200X PRC meeting Due diligence and approval processes

Discussions with R&D organizations and ICA Network members

Private conversations with fabricator members to manage potential conflicts of interest

Project proposals from R&D Network

Formal Technology Roadmap document

200Y R&D priorities $/tonne impact Project proposals Approved 200Y Technology budget

Member poll and 200Z R&D priorities

January 200Y April 200Y June 200Y October 200Y January 200Z

tonnes strategic overview budget/timing impact risks

On-going updates

Discussion across ICA Network

April Oct/NovJune/Sept

1.___________

2.___________

3.___________

4.___________

. . . Continuous posting of updated planning documents, project reports and proposals on the ICA intranet

1.___________

2.___________

3.___________

4.___________

risk impact

lesscopper

morecopper

100

0

hy

— st

px

—

probability

$

200Y Technology

Plan

$project

$

Provide breakthrough to interested companies to stimulate market development

10 Gbit/sec

MEGA

Seek non-automotive market opportunities; license to product companies; apply new Cu technology developments

Flat copper HX conduits

Engage tubing companies in development project; quick commercialization if economically viable

Copper motor rotor

Assist foundries and manufacturers; charge access fee; leverage with government funds

Antimicrobial copper/alloy

surfaces

Support with ICA market promotion; push market development in touch surfaces and aircon

Cuprobraze

Continue development to make process more competitive: wider tolerances, more efficient braze coating

* Rationale for ICA role to accelerate commercialization

$2 – 10 million need for technology and market development

Market development best pursued by motivated entrepreneurial company

Likely to attract external capital to grow a company Success would create substantial new copper use

Electronics cooling bus

Fund start-up to demonstrate system; engage industry from the start; possible ownership position through R&D funding

Chemically grafted

coatings

Coating production source available; coating formulation will be available to members; members involved in project

ICA TECHNOLOGY PIPELINE

ICA pre-competitive R&D funds move technologies towards commercialization

Commercialization

Semi-solid metal

forming

Form company to focus solely on Cu alloy SSM; support with market promotion; leverage with government funds

*

New project sources: R&D network ICA network Market intelligence Venture capital network

New projects not shown: Round tube/plate fin all copper aircon HX Plate heat exchangers Lower cost solar thermal systems Thin section extrusion Subsea cables Plumbing tube coating Water heating heat pump

Engage fabricators and industry to produce prototypes; aim for widespread application

New projects starting 2006

Slide 32

EXECUTION PATHSet down principles and socialize them

• Buy-in from 15 companies with inconsistent outlooks

• Initiate member-to-member interactions

• Push the group just beyond lowest common denominator of acceptance

• Assure appropriate level of discomfort

• Give members time for stress relaxation*

Expose to comparable organizations with similar issues

• Visit Gas Technology Institute

• Soybean Board

Slide 33

ICA’s R&D PRINCIPLESFocus on creating new, high tonnage, global applications

Support pre-competitive R&D where ICA funding can make a difference

No internal resources; global R&D network

Involve members and customers in projects

Take active role in technology commercialization

Leverage with external funding

Each is a difficult sell*

Slide 34

EXECUTION PATHBuild personal relationships with member firms, end-users organizations and R&D organizations

• Visit all ICA members – discuss market dynamics and technology

• Visit key copper users – understand attitude towards copper use

• Visit universities, research institutes, corporate labs – find the leading edge of research

• Stimulate open debate of relevant issues in Technology Steering Committee

Demonstrate competence and discretion to gain credibility

Slide 35

EXECUTION PATHEstablish initial pre-competitive projects

• Mix of new applications and unaddressed needs

• Mine the bookshelf; identify new challenges

• Select high risk, learn-as-you-go projects

• Overcome basic obstacles

• Engage full supply chain

• ICA members have first access to developments*

Deal with major exception: secret project with global automotive OEM

Initiate activities to gain co-funding

Slide 36

COMMMERCIALIZATION CONCEPTSFocus and sustain effort to achieve tonnage impact

Understand potential market impact and possible commercialization route from the start

Build credibility through co-funding

Connect technology with entrepreneurial effort

Prefer technology transfer, licensing or royalty over equity ownership

Equity ownership in business in exceptional cases

Exit ownership position when strategic benefit achieved

Slide 37

TECHNOLOGY DEVELOPMENT PROCESS

Technical capabilities• Properties• Processes

Application knowledge• Industry pain points• Market dynamics

New copper application

Venture creation / entrepreneurial effort

Market/business innovation

Technology feasibilitydemonstration

Merge market and technology insights

Pre-competitive research/development

Commercialization

Member/supply chain participation

Slide 38

ICA’s R&D FOCUSCreate and commercialize application-directed technology breakthroughs in a few high potential technology domains

• Heat exchange systems

• Automotive

• Antimicrobial surfaces

• Renewable energy

• Electrical energy

• Data communications

Slide 39

Condensing demand gas water heater

CO2 heat pump

HEAT EXCHANGE SYSTEMS

Small diameter aircon tubesFlat multichannel tube

Plate heat exchanger

Slide 40

Electromagnetic transmissionIntegrated starter generator

AUTOMOTIVE HYBRIDS

Slide 41

Antimicrobial surfaces Antimicrobial aircon heat exchangers

ANTIMICROBIAL

Slide 42

RENEWABLE ENERGY

GeoSolar systemEmergence BioEnergy

Slide 43

ELECTRICAL ENERGY

Deep sea electrical cable sheathing Copper motor rotor (industrial, appliance and automotive

applications)

Slide 44

DATA COMMUNICATIONS

Data communications beyond 10 Gbps Power over Ethernet

Slide 45

UNIVERSITY RESEARCH

• Wear-resistant mechanically alloyed alumina/copper dispersion

• Silicon carbide reinforced copper for high temperature heat-transfer applications

• Copper-based bulk metallic glass

• Copper sorbents for desulphurization of fuels and natural gas (licensed)

• Copper catalyst for methanol-to-hydrogen conversion

Slide 46

CO-FUNDED R&D CONSORTIA

EcoSea GeoSol

Super Calefont

Slide 47

2006 TECHNOLOGY PROGRAMProposal Code

Proposal Title Location of R&D activities

TEK-1030 Copper motor rotor commercialization US, CN, IN, JPTEK-1014 Antimicrobial copper alloy surfaces for human health US, UK, EU, JP, CN, ZA

TEK-1023 R&D projects from CIMAT call for proposals CL and globalTEK-1003 Flat tube condenser for air conditioning US, UK, EU, JP, CN, ZA

TEK-1028 Viscous alloy extrusion processing USTEK-1033 GeoSolar system (Green Home) JP, USTEK-1001 Development of R&D networkTEK-1017 Round tube/plate fin antibacterial evaporator CNTEK-1024 Copper plate heat exchanger CNTEK-1029 Condensing demand gas water heater (DGWH) CNTEK-1026 Tube corrosion research US & more locationsTEK-1018 Single-step production of multiport sections UKTEK-1034 China R&D opportunity identification CNTEK-1021 Deep-sea electrical power cables NOTEK-1019 Internal heat exchanger for CO2 aircon system JPTEK-1022 Siemens collaboration DEMDP-0490 Air-Conditioning & Refrigeration consortium USMDP-2737 JCDA's Roadmap to future copper applications JPTEK-1009 Industrial design for new copper applicationsTEK-1007 Electromagnetic automotive transmission (MEGA) ConfidentialTEK-1020 Copper SSM USMDP-0750 Technology Program managementTOTALS

Slide 48

CURRENT SITUATIONActive for ~4 years

ICA funding: ~$12 M cumulative

External funding attracted: ~$12 M cumulative

Estimating 2006-2010 impact of 200,000 tonnes ($1.6 billion)

Major growth opportunities coming from Technology

Global R&D Network established (140 active researchers in 2006)

Commercializing R&D results

Slide 49

                                                                                                                                                                                  

_________________________________________________

SYSTEM ARCH. FRAMEWORK

Source – Ed Crawley, MIT, ESD34.J

Slide 50

Example Project

Copper Alloy Fish Cages

Slide 51

BEYOND R & DTraditional CTO management roles:

• R = Research (market and technical)

• D = Development (leadership)

• E = Engineering

Additional disciplines required at CTO level• C = Connect (partner selection, contracts, IP, value sharing

and motivation matching)

• M = Commercialization (funding, business development)

New opportunities and innovations arise from making creative connections and moving to market

Slide 52

Copper alloy enclosures for the cultivation of marine organisms in their natural habitats

Needed in ChileSalmon

TECHNOLOGY TRANSFER

Proven in JapanYellow tail

Slide 53

AQUACULTURE CAGESFish cages made of copper alloys

• Resist fouling

• Have low corrosion rates

• Resist attack by marine mammals

• May prevent growth of infectious bacteria

• Are recyclable at end of life

Reduce operating costs

Slide 54

1976 INCRA PROJECT

Slide 55

RATIONALE IN 1976Farmed fish production doubled 1970-1975

Production at 4.5 million kg/year; 10% of global fish supply

US alone is $800 million retail industry

Growth should continue• Open ocean fish stocks declining due to pollution and over-fishing

• Western countries more health conscious and eating more fish

• Price of fish rising making farming potentially more profitable

Slide 56

RATIONALE IN 1976Fast growth has been in low labor cost countries with traditional practices

Slow growth in technologically intensive countries• Little scientific research focused on making aquaculture a profitable

venture

• Large companies not willing to take the risks involved in investing in large-scale aquaculture businesses

INCRA’s floating copper-nickel fish cage could accelerate growth of aquaculture

• More cost-effective technology

• Focus on luxury crops such as salmon, trout and oysters

Slide 57

ADVANTAGES OF Cu-Ni CAGESNo biofouling

• Avoid the costs, fish stress and nuisance of net changes

• Healthy fish - maintain level of oxygen and water-borne nutrients

• 5% blockage after 18 months of submersion vs 75% blockage for nylon net with copper antifouling coating

More fish per cage

Avoid predator attacks

Reduced labor costs

Slide 58

CAGE CONSTRUCTIONExpanded 90/10 copper-nickel sheet

• 76% open area

• Proven anti-fouling

Rigid modules with fiberglass frames

• 1 x 3 meter panels

Assembly into different shapes as needed

Floats covered with 90/10 copper nickel

Slide 59

WHY EXPANDED METALMany material forms considered

• Wire mesh (welded and woven)

• Fine braided wire woven into netting

• Perforated sheet

Expanded metal selected because it gave lowest cost cage

• $26.23/m3

Slide 60

WHAT WENT WRONG?Expanded metal rigid cages cost effective but not the right choice for the application

• Flexibility important

• Some biofouling caught in corners of expanded metal

• Not easily scaleable to large enough volume

Industry grew faster than expected and needed proven, risk-free technology

Cost analysis based on 10-year cage life and no end-of-life value

No entrepreneurial drive

Slide 61

EXPERIENCE IN JAPAN

Slide 62

JAPANESE TECHNOLOGYNetting material provided by SAMBO (Japanese subsidiary of Mitsubishi Materials)

Second generation material

Unique alloy: low corrosion, antifouling, high strength, abrasion resistant

Chemical composition (wt. %)

• 64 Cu, 35 Zn, 0.6 Sn, 0.3 Ni

Formed into woven wire net

200 current net installations

Slide 63

JAPANESE TECHNOLOGYCage design, construction and installation by Ashimori

12m x 12m x 10m deep

Slide 64

JAPANESE TECHNOLOGY

UR30 net after 4 years in Japan UR30 net after 5 months in Chile

Nylon net after 5 months in Chile

Slide 65

REAL BENEFITS IN JAPANNO maintenance or net changes over 4 years

• No cleaning costs

• No cost for disposal of biofouling on nylon nets

• No net change costs

• No loss of fish due to stress of net changes

NO antibiotics – NO disease

NO parasites – NO fresh water immersion

NO predator perimeter net required

Slide 66

REAL BENEFITS IN JAPANLower environmental copper release

• Constant low level release (about 30% of nylon nets coated with copper-based paint)

50% more fish per cage

10-15% faster fish growth

More profit at lower cost

A clean technology• Higher consumer acceptance

• Lower environmental impact

• More profitable

Slide 67

A HAPPY FISH FARMER

Slide 68

AN OPPORTUNITY FOR CHILETransfer of Japanese technology to Chilean industry

• Woven brass alloy cage well suited to salmon culture

• All production, from metal mining to installed cage, by Chilean companies

Cage leasing to overcome high initial cost

CleanTech approach• Reduced environmental impact from salmon production

• Complete metal recyling at end of cage life

• Strong economic benefits

• Much better than copper antifouling coatings!!!

Slide 69

ECOSEA PARTICIPANTSICA – initiation, organization, research and funding

Intesal – Chilean salmon industry research institute

Universidad de Concepcion – research assistance

Mitsubishi Materials – copper alloys for fish cages

Codelco – project management

Ashimori – fish cage fabrication and installation expertise

Madeco – production of copper alloy wire in Chile

Rivet – wire weaving for fish cages in Chile

Aqua Cards – fish cage fabrication and installation in Chile

Various salmon farms in Chile

Slide 70

COPPER ALLOY SALMON CAGESResist fouling

• More oxygen equals faster growth

• Higher conversion factor

• Allow more fish per cage

Resist attack by marine mammals

Reduce operational complexity• Avoid net changes

• Avoid the need for antibiotics

Lower environmental impact• Lower low copper ion release

• No liquid or solid wastes

• Are recyclable at end of life

Slide 71

2006 SUCCESS FACTORS

Technical capabilities• Properties• Processes

Application knowledge• Industry pain points• Market dynamics

New copper application

Venture creation / entrepreneurial effort

Market/business innovation

Technology feasibilitydemonstration

Merge market and technology insights

Pre-competitive research/development

Commercialization

Member/supply chain participation

Technical capabilities• Properties• Processes

Application knowledge• Industry pain points• Market dynamics

New copper application

Venture creation / entrepreneurial effort

Market/business innovation

Technology feasibilitydemonstration

Merge market and technology insights

Pre-competitive research/development

CommercializationMerge market and technology insights

Pre-competitive research/development

Commercialization

Member/supply chain participation

Better alloy material in better form

Deeper understanding of industry needs

Technology proven in use; needs adaptation

Leasing business model to lower capital cost

Technology transfer to local industry

Business consortium with government co-funding

Slide 72

SUMMARY Identify and develop network of relationships

Define a vision, processes, and gain buy-in

Find opportunities worth pursuing

Devote the effort needed to succeed

Plan for commercialization early in the process

Combine technological advances with business model innovation

Gain leverage from partners

Encourage entrepreneurial efforts

Systems thinking essential

Slide 73

Creating and Executing a Technology Strategy for a Global

Industry

Hal StillmanDirector of Technology

International Copper Association, Ltd.

20 October 2006 hstillman@copper.org