75$'($1'(19,5210(175(9,(:
'#&46+%.'U X
/LP/L&KLQJ
7KLUG:RUOG1HWZRUNDQG0DUWLQ.KRU6RXWK&HQWUH
$EVWUDFW
5HIRUPVRIWKHLQWHUQDWLRQDOWUDGHUHJLPHUHTXLUHDVLJQLÀFDQWUHGXFWLRQRUUHPRYDORIKDUPIXOVXEVLGLHV
FXUUHQWO\SURYLGHGPDLQO\E\GHYHORSHGFRXQWULHVZKLOHDWWKHVDPHWLPHDOORZLQJVSHFLDOWUHDWPHQWDQG
VDIHJXDUGPHFKDQLVPVIRUGHYHORSLQJFRXQWULHVLQRUGHUWRSURPRWHWKHLUVPDOOKROGHUIDUPHUV·OLYHOLKRRGV
6XFKUHIRUPVFRXSOHGZLWKSROLFLHVLQVXSSRUWRIVXVWDLQDEOHVPDOOVFDOHDJULFXOWXUHLQGHYHORSLQJFRXQ
WULHVZRXOGLPSURYHORFDOSURGXFWLRQIRUHQKDQFLQJIRRGVHFXULW\
7KHUHLVDOVRDQHHGIRUUHJXODWRU\PHDVXUHVDLPHGDWUHRUJDQL]LQJWKHSUHYDLOLQJPDUNHWVWUXFWXUHRIWKH
DJULFXOWXUDOYDOXHFKDLQZKLFKLVGRPLQDWHGE\DIHZPXOWLQDWLRQDOFRUSRUDWLRQVDQGPDUJLQDOL]HVVPDOO
KROGHU IDUPHUV DQG VXVWDLQDEOH SURGXFWLRQ V\VWHPV 3ROLFLHV WKDW LQFUHDVH WKH FKRLFHV RI VPDOOKROGHUV
WRVHOOWKHLUSURGXFWVRQORFDORUJOREDOPDUNHWVDWDGHFHQWSULFHZRXOGFRPSOHPHQWHIIRUWVWRUHFWLI\WKH
LPEDODQFHV
,QDGGLWLRQDVKLIWWRPRUHVXVWDLQDEOHDQGHFRORJLFDODJULFXOWXUDOSUDFWLFHVZRXOGEHQHÀWVPDOOKROGHUIDUP
HUVE\LQFUHDVLQJSURGXFWLYLW\ZKLOHVWUHQJWKHQLQJWKHLUUHVLOLHQFHWRVKRFNVVXFKDVFOLPDWHFKDQJHDQG
UHGXFLQJWKHDGYHUVHLPSDFWVRIFRQYHQWLRQDODJULFXOWXUDOSUDFWLFHVRQWKHHQYLURQPHQWDQGKHDOWK7KH
WUDGHSROLF\IUDPHZRUNVKRXOGWKHUHIRUHVXSSRUWVXFKDVKLIW
$,QWURGXFWLRQ
7KHLQWHUVHFWLRQRILQWHUQDWLRQDOWUDGHDQGDJULFXOWXUH
KDV EHFRPH LQFUHDVLQJO\ LPSRUWDQW DV PRUH DQG
PRUHFRXQWULHVDQGWKHLUIDUPHUVSDUWLFLSDWHLQJOREDO
PDUNHWV 1DWLRQDO WUDGHUHODWHG SROLFLHV VXFK DV
VXEVLGLHV DQG VXSSRUW PHDVXUHV WUDGH UHVWULFWLRQV
DQG WDULIIV KDYH D PDMRU LPSDFW QRW RQO\ RQ QDWLRQDO
DJULFXOWXUDODQGIRRGV\VWHPVEXWDOVRRQDJULFXOWXUDO
SHUIRUPDQFHLQRWKHUFRXQWULHV'XHWRWKHLQFUHDVLQJ
LPSRUWDQFHDQGELQGLQJQDWXUHRIPXOWLODWHUDOUHJLRQDO
DQGELODWHUDO WUDGHDJUHHPHQWVWKHUXOHVHVWDEOLVKHG
WKHUHLQ KDYH VLJQLÀFDQW HIIHFWV RQ QDWLRQDO WUDGH
SROLFLHVDVZHOODVRQWKHVWUXFWXUHDQGQDWXUHRIWKH
JOREDO V\VWHP RI DJULFXOWXUDO WUDGH DQG SURGXFWLRQ
SDWWHUQV 1DWLRQDO WUDGH SROLFLHV DQG LQWHUQDWLRQDO
WUDGHUXOHVFDQWKHUHIRUHKDYHDVLJQLÀFDQWLPSDFWRQ
IRRGVHFXULW\
7KH WUDGH IUDPHZRUN WKDW KDV LQÁXHQFHG WKH
SROLFLHV DQG SUDFWLFHV RI PDQ\ GHYHORSLQJ FRXQWULHV
FRPSULVHV WKH IROORZLQJ ORDQ FRQGLWLRQDOLWLHV RI WKH
LQWHUQDWLRQDO ÀQDQFLDO LQVWLWXWLRQV UXOHV RI WKH :RUOG
7UDGH 2UJDQL]DWLRQ :72 UXOHV LQ ELODWHUDO DQG
UHJLRQDOWUDGHDJUHHPHQWVDVZHOODVXQLODWHUDOSROLF\
PHDVXUHV6RXWK&HQWUH*XLGHGRUREOLJHGE\
WKH UXOHV DQG FRQGLWLRQDOLWLHV ZLWKLQ WKLV IUDPHZRUN
PDQ\GHYHORSLQJFRXQWULHVKDYHVLJQLÀFDQWO\ORZHUHG
WKHLUDJULFXOWXUDOWDULIIVDQGWKHLUGRPHVWLFVXSSRUWIRU
IDUPHUV$WWKHVDPHWLPHOLEHUDOL]DWLRQRIPDUNHWVKDV
LQFUHDVHG SUHVVXUH RQ FRVWV SURPSWLQJ SURGXFHUV
WRZDUGV JUHDWHU VSHFLDOL]DWLRQ ZKLFK RIWHQ UHVXOWV
LQ PRQRFURSSLQJ LQFUHDVHG PHFKDQL]DWLRQ DQG
XWLOL]DWLRQRIFKHPLFDOVOHDGLQJWRKLJKHUGHSHQGHQFH
RQH[WHUQDOLQSXWVDQGHQKDQFHGVFDOHVRISURGXFWLRQ
,QFRQWUDVWGHYHORSHGFRXQWULHVKDYHQRWEHHQVXEMHFW
WR WKH FRQGLWLRQDOLWLHV RI WKH LQWHUQDWLRQDO ÀQDQFLDO
LQVWLWXWLRQV0RUHRYHU:72UXOHVE\DQGODUJHKDYH
DOORZHG WKHP WR PDLQWDLQ WKHLU WUDGLWLRQDO VXSSRUW IRU
GRPHVWLF DJULFXOWXUH WKURXJK D FRPELQDWLRQ RI KLJK
VXEVLGLHV KLJK WDULII SHDNV DQG H[SRUW SURPRWLRQ
$QG LQ WKH IUHH WUDGH DJUHHPHQWV )7$V LQYROYLQJ
GHYHORSHG DQG GHYHORSLQJ FRXQWULHV DJULFXOWXUDO
VXEVLGLHV DUH JHQHUDOO\ RPLWWHG IURP WKH DJHQGD
7KH WUDGH IUDPHZRUN JRYHUQLQJ JOREDO DJULFXOWXUH LV
WKXV DQ DZNZDUG FRPELQDWLRQ RI OLEHUDOL]DWLRQ DQG
SURWHFWLRQLVP:KLOHGHYHORSLQJFRXQWULHVDUHUHTXLUHG
WRXQGHUWDNHJUHDWHUOLEHUDOL]DWLRQGHYHORSHGFRXQWULHV
KDYHEHHQDEOHWRUHWDLQWKHLUSURWHFWLRQLVWSROLFLHV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
$OWKRXJK LQFUHDVHG DJULFXOWXUDO WUDGH FDQ RIIHU
RSSRUWXQLWLHV IRU WKH SRRU WKH EHQHÀWV KDYH EHHQ
XQHYHQO\GLVWULEXWHG*URZLQJHYLGHQFHLQGLFDWHVWKDW
WRGDWHVPDOOVFDOHIDUPHUVDQGUXUDOFRPPXQLWLHVLQ
PDQ\FRXQWULHVKDYHQRWEHQHÀWHGVLJQLÀFDQWO\IURP
DJULFXOWXUDOWUDGHOLEHUDOL]DWLRQ,$$67'LQVWHDG
LWLVWKHODUJHVWDJULFXOWXUDOSURGXFHUVZKRKDYHEHHQ
DEOH WR EHQHÀW PRUH HDVLO\ IURP WKH RSSRUWXQLWLHV
UHVXOWLQJIURPLPSURYHGPDUNHWDFFHVV7KXVRYHUDOO
WKHGLVWULEXWLRQDOHIIHFWVRIWUDGHOLEHUDOL]DWLRQDPRQJ
DQG ZLWKLQ FRXQWULHV KDYH UHVXOWHG LQ WKH SRRUHVW
GHYHORSLQJFRXQWULHVDQGIDUPHUVEHLQJQHWORVHUV
7KHPRVWYXOQHUDEOHJURXSVZKRH[SHULHQFHKXQJHU
DUHWKHVPDOOKROGHUVODQGOHVVODERXUHUVSDVWRUDOLVWV
ÀVKHUIRON IRUHVW GZHOOHUV DQG WKH XUEDQ SRRU $Q\
WUDGH UHJLPH WKDW IDLOV WR EHQHÀW WKHVH JURXSV RU
DIIHFWVWKHPQHJDWLYHO\LVOLNHO\WROHDGWRWKHGHQLDORU
YLRODWLRQRIWKHULJKWWRIRRG'H6FKXWWHUD6XFK
DGHQLDORIDQHVVHQWLDOULJKWXQGHUOLQHVWKHLPSRUWDQFH
RIHQVXULQJDFFHVVRIDOOSHRSOHHVSHFLDOO\WKHSRRU
WRIRRGDVZHOODVWKHQHHGIRUJLYLQJSULRULW\WRIRRG
VHFXULW\LQGHYHORSLQJFRXQWULHV
:KLOH PDQ\ GHYHORSLQJ FRXQWULHV RQFH VRXJKW IRRG
VHOIVXIÀFLHQF\WKLVREMHFWLYHZDVJUDGXDOO\WHPSHUHG
E\DSHUFHSWLRQRIHFRQRPLFHIÀFLHQF\WKDWUHFRJQL]HG
WKHDGYDQWDJHVRILPSRUWLQJIRRGDWFKHDSHUFRVWVR
ORQJ DV WKHUH ZDV VXIÀFLHQW IRUHLJQ H[FKDQJH WR SD\
IRUWKHLPSRUWV$VDUHVXOWORFDOIRRGSURGXFWLRQZDV
QRW JLYHQ KLJK SULRULW\ LQ QDWLRQDO SROLFLHV &KHDSHU
IRRGLPSRUWVWRRNDQLQFUHDVLQJVKDUHRIWKHGRPHVWLF
PDUNHW LQ PDQ\ FRXQWULHV +RZHYHU ZKLOH WKLV JDYH
FRQVXPHUV DFFHVV WR ORZHU SULFHG IRRG WKHUH ZHUH
GUDZEDFNV LQFOXGLQJ D GHFOLQH RU VWDJQDWLRQ LQ
GRPHVWLFIRRGSURGXFWLRQDQGDGYHUVHHIIHFWVRQVPDOO
IDUPHUV· OLYHOLKRRGV DQG UXUDO GHYHORSPHQW ,Q VRPH
FDVHV WKH IRRGV LPSRUWHG IURP GHYHORSHG FRXQWULHV
ZHUHKHDYLO\VXEVLGL]HGZKLOHWKHSRRUHUFRXQWULHVGLG
QRWKDYHWKHUHVRXUFHVWRPDWFKWKHVXEVLGLHV
7KLV VLWXDWLRQ KDV EHHQ H[DFHUEDWHG E\ ULVLQJ ZRUOG
SULFHV RI PDQ\ IRRG LWHPV LQ UHFHQW \HDUV UHVXOWLQJ
LQ PRUH H[SHQVLYH IRRG LPSRUWV DQG LQÁDWLRQ RI
IRRG SULFHV LQ ORFDO PDUNHWV RIWHQ OHDGLQJ WR VRFLDO
LQVWDELOLW\ $ IXUWKHU LQFUHDVH LQ ZRUOG IRRG SULFHV
LQ DQG KDV JLYHQ ULVH WR XQFHUWDLQW\ DQG
LQVHFXULW\ LQ WKH QHW IRRG LPSRUWLQJ FRXQWULHV $V D
UHVXOW VRPH RI WKHVH FRXQWULHV KDYH VKLIWHG WKHLU
IRFXV EDFN WR DFKLHYLQJ JUHDWHU VHOIVXIÀFLHQF\ DQG
LQFUHDVLQJ ORFDO IRRG SURGXFWLRQ DQG WR DGRSWLQJ
WUDGH SROLFLHV LQ VXSSRUW RI WKLV REMHFWLYH ,$$67'
.KRU6RXWK&HQWUH
,WLVQRZLQFUHDVLQJO\UHFRJQL]HGWKDWWKHLPPHGLDWH
QHHG LV WR HQVXUH DYDLODELOLW\ RI IRRG LQ FRXQWULHV
FXUUHQWO\ GHSHQGHQW RQ LPSRUWV +RZHYHU D ORQJ
WHUP VROXWLRQ VKRXOG LQFOXGH ERRVWLQJ ORFDO IRRG
SURGXFWLRQLQGHYHORSLQJFRXQWULHVZKHUHFRQGLWLRQV
DUH VXLWDEOH :KLOH WKHUH DUH PDQ\ IDFWRUV LQYROYHG
LQ LQFUHDVLQJ ORFDO SURGXFWLRQ DQ DSSURSULDWH WUDGH
SROLF\ IUDPHZRUN LV D YHU\ LPSRUWDQW UHTXLUHPHQW
7UDGHSROLF\UHIRUPDLPHGDWFUHDWLQJDIDLUHUJOREDO
WUDGLQJV\VWHPFRXOGPDNHDSRVLWLYHFRQWULEXWLRQWR
IRRGVHFXULW\DQGSRYHUW\DOOHYLDWLRQ
$W WKH VDPH WLPH WKHUH LV D JURZLQJ UHDOL]DWLRQ WKDW
DJULFXOWXUHFDQQRWSURFHHGRQWKHHQHUJ\DQGLQSXW
LQWHQVLYHSDWKVRIWKHSDVWDQGWKDWDSDUDGLJPVKLIW
WRZDUGV VXVWDLQDELOLW\ LV QHHGHG ZKHUH VPDOOVFDOH
IDUPHUVDQGDJURHFRORJLFDOPHWKRGVSURYLGHWKHZD\
IRUZDUG HJ 'H 6FKXWWHU +HUUHQ HW DO ,$$67'5HGXFLQJGHSHQGHQFHRQIRVVLOHQHUJ\
LQSXWV DQG FXWWLQJ GRZQ RQ JUHHQKRXVH JDV *+*
HPLVVLRQVIURPDJULFXOWXUHZLOOUHTXLUHLQFUHDVLQJORFDO
IRRG VHOIVXIÀFLHQF\ DQG SURPRWLQJ OHVV IXHO DQG
SHWURFKHPLFDOLQWHQVLYH PHWKRGV RI SURGXFWLRQ VHH
FRPPHQWE\+HLQEHUJLQWKLVFKDSWHU
7R WKH H[WHQW WKDW WUDGH UXOHV DUH IDLU DQG SURPRWH
VXVWDLQDEOHRUHFRORJLFDODJULFXOWXUHWKH\VKRXOGEH
PDLQWDLQHGDQGSURPRWHG+RZHYHUWKHUHDUHDVSHFWV
RI H[LVWLQJ LQWHUQDWLRQDO DQG UHJLRQDO WUDGH UXOHV WKDW
UXQ FRXQWHU WR WKH SURPRWLRQ RI D WUDGLQJ V\VWHP
VXSSRUWLYHRIVXVWDLQDEOHDJULFXOWXUH,QDGGLWLRQWKH
SUHYDLOLQJPDUNHWVWUXFWXUHZKHUHWKHVXSSO\FKDLQLV
GRPLQDWHGE\DIHZPXOWLQDWLRQDOFRPSDQLHVKDVOHG
WRWKHPDUJLQDOL]DWLRQRIVPDOOIDUPHUVDQGWKHIXUWKHU
HQWUHQFKPHQWRIXQVXVWDLQDEOHDJULFXOWXUDOSUDFWLFHV
7KLVVLWXDWLRQLVH[DFHUEDWHGE\SUHVVXUHRQFRXQWULHV
WRVSHFLDOL]HLQSURGXFLQJFRPPRGLW\FDVKFURSVDQG
XQGHUWDNHODUJHVFDOHIDUPLQJ
7KLV FKDSWHU WKXV DGGUHVVHV IRXU NH\ LQWHUUHODWHG
DUHDVVWUXFWXUDODGMXVWPHQWDQGLPSRUWOLEHUDOL]DWLRQ
WKH LPEDODQFH LQ WUDGH UXOHV JRYHUQLQJ DJULFXOWXUH
WKHLPEDODQFHLQPDUNHWVWUXFWXUHDQGHQYLURQPHQWDO
VXVWDLQDELOLW\ ,W UDLVHV LVVXHV WKDW QHHG WR EH
DGGUHVVHGZLWKDYLHZWRHVWDEOLVKLQJDWUDGHSROLF\
IUDPHZRUN WKDW LV VXSSRUWLYH RI IRRG VHFXULW\ DQG
VXVWDLQDELOLW\
%6WUXFWXUDODGMXVWPHQWDQG
LPSRUWOLEHUDOL]DWLRQ
$Q LPSRUWDQW IDFWRU LQ WKH GHFOLQH RI DJULFXOWXUH LQ
PDQ\ GHYHORSLQJ FRXQWULHV HVSHFLDOO\ LQ $IULFD KDV
75$'($1'(19,5210(175(9,(:
7DEOH,PSRUWVXUJHVRIVHOHFWHGFRPPRGLWLHVDQGWKHLULPSDFWRQORFDOSURGXFWLRQYROXPHYDULRXV\HDUV
&RXQWU\FRPPRGLW\
6HQHJDOWRPDWRSDVWH
%XUNLQD)DVRWRPDWRSDVWH
-DPDLFDYHJHWDEOHRLOV
&KLOHYHJHWDEOHRLOV
+DLWLULFH
+DLWLFKLFNHQPHDW
.HQ\DGDLU\SURGXFWV
%HQLQFKLFNHQPHDW
([WHQWRILQFUHDVH
LQLPSRUWV
WLPHV
WLPHV
WLPHV
WLPHV
WLPHV
WLPHV
WLPHV
WLPHV
3HUFHQWDJHIDOOLQORFDO
SURGXFWLRQ
SHUFHQW
SHUFHQW
SHUFHQW
SHUFHQW
6PDOO
6PDOO
&XWORFDOPLONVDOHV
6WXQWHG
7LPHSHULRGVFRPSDUHG
²²
²²
²²
²²
²²
²²
²
²²
6RXUFH%DVHGRQ)$2DQG$FWLRQ$LG
EHHQ WKH VWUXFWXUDO DGMXVWPHQW SROLFLHV SUHVFULEHG
E\ WKH LQWHUQDWLRQDO ÀQDQFLDO LQVWLWXWLRQV 7KHVH
SROLFHV DIIHFWHG UXUDO SURGXFHUV GLUHFWO\ DV WKH\
OHG WR WKH GLVPDQWOLQJ RI LQVWLWXWLRQV DQG QDWLRQDO
SROLF\ PHDVXUHV WKDW DVVLVWHG IDUPHUV LQFOXGLQJ
WKH UHGXFWLRQ RU UHPRYDO RI VXEVLGLHV DQG FUHGLW
DVVLVWDQFH LQ PDUNHWLQJ DQG IRRG SURFHVVLQJ DQG
DGUDVWLFUHGXFWLRQLQDJULFXOWXUDOWDULIIV'H6FKXWWHU
D.KRU7KHLPSOHPHQWDWLRQRIWKH:72
$JUHHPHQW RQ $JULFXOWXUH DOVR OHG FRXQWULHV WR
OLEHUDOL]HWKHLUDJULFXOWXUDOWUDGHWKHUHE\FRPSRXQGLQJ
WKH HIIHFW RQ DJULFXOWXUDO SURGXFHUV LQ GHYHORSLQJ
FRXQWULHV
6WXGLHVE\WKH)RRGDQG$JULFXOWXUH2UJDQL]DWLRQRI
WKH 8QLWHG 1DWLRQV )$2 KDYH UHYHDOHG WKDW PDQ\
GHYHORSLQJ FRXQWULHV VLJQLÀFDQWO\ OLEHUDOL]HG WKHLU
DJULFXOWXUDOLPSRUWVE\ORZHULQJWDULIIVDVUHTXLUHGE\
WKHFRQGLWLRQDOLWLHVDWWDFKHGWRORDQVH[WHQGHGE\WKH
LQWHUQDWLRQDOÀQDQFLDOLQVWLWXWLRQV$VREVHUYHGE\WKH
)$2
6WUXFWXUDO DGMXVWPHQW SURJUDPPHV LPSOHPHQWHG
RYHUWKHSDVWIHZGHFDGHVKDYHUHVXOWHGLQUDGLFDO
UHIRUPRIWKHDJULFXOWXUDOVHFWRUVRIPDQ\GHYHORSLQJ
FRXQWULHV D SHULRG GXULQJ ZKLFK WKH PDMRULW\ RI
2(&' DJULFXOWXUDO VHFWRUV KDYH FRQWLQXHG WR EH
KHDYLO\SURWHFWHG7KHSURFHVVDGRSWHGKDVLQPDQ\
FDVHVVHYHUHO\GDPDJHGWKHFDSDFLW\RIGHYHORSLQJ
FRXQWULHVWRLQFUHDVHOHYHOVRIDJULFXOWXUDOSURGXFWLRQ
DQGRUSURGXFWLYLW\7KHVHXQLODWHUDOUHIRUPVWHQGWR
KDYH EHHQ UHLQIRUFHG E\ PXOWLODWHUDO DJUHHPHQWV
)$2FLWHGLQ6RXWK&HQWUH
$W SUHVHQW PDQ\ RI WKH SRRU FRXQWULHV WKDW KDG
RULJLQDOO\ORZHUHGWKHLUDSSOLHGWDULIIVXQGHUVWUXFWXUDO
DGMXVWPHQW SROLFLHV LQ WKH V DQG V DUH
QR ORQJHU VR WLJKWO\ ERXQG E\ ORDQ FRQGLWLRQDOLWLHV
+RZHYHUVHYHUDORIWKHVHFRXQWULHVVWLOOPDLQWDLQWKHLU
ORZ DSSOLHG WDULIIV ZKLFK DUH IDU EHORZ WKHLU :72
ERXQGUDWHV6RXWK&HQWUH)RUH[DPSOHPDQ\
$IULFDQ FRXQWULHV KDYH DSSOLHG DJULFXOWXUDO WDULIIV RI
² SHU FHQW FRPSDUHG ZLWK WKHLU ERXQG UDWHV RI
²SHUFHQW:72
$V D UHVXOW D QXPEHU RI FRXQWULHV WKDW ZHUH QHW
H[SRUWHUV RU VHOIVXIÀFLHQW LQ PDQ\ IRRG FURSV KDYH
H[SHULHQFHG D ULVH LQ LPSRUWV ² VRPH RI ZKLFK DUH
KHDYLO\VXEVLGL]HG²DQGDGHFOLQHLQORFDOSURGXFWLRQ
7DEOH KLJKOLJKWV VRPH FDVHV RI LPSRUW VXUJHV
WKH H[WHQW RI WKH VXUJHV DQG WKH LPSDFW RQ ORFDO
SURGXFWLRQ7KHLPSRUWVXUJHV)$2DQG
KDYH OHG WR VXFK ORZ SULFHV RQ GRPHVWLF PDUNHWV
WKDWWKH\KDYHWHQGHGWRGULYHORFDOSURGXFHUVRXWRI
EXVLQHVV WKUHDWHQLQJ WKH DELOLW\ RI WKRVH SURGXFHUV
WR IHHG WKHPVHOYHV DQG WKHLU IDPLOLHV 'H 6FKXWWHU
DDQGF
7KHUHKDYHEHHQPDQ\FDVHVWXGLHVRIWKHLQFLGHQFH
DQG GDPDJLQJ HIIHFWV RI LPSRUW OLEHUDOL]DWLRQ RQ
ORFDOFRPPXQLWLHVDQGUXUDOSURGXFHUVLQGHYHORSLQJ
FRXQWULHV VHH IRU H[DPSOH $FWLRQ $LG )$2
5DPDQ 7KHVH VWXGLHV VKRZ KRZ
IDUPHUV LQYROYHG LQ WKH SURGXFWLRQ RI YDULRXV IRRG
FRPPRGLWLHV HJ VWDSOH FURSV VXFK DV ULFH DQG
ZKHDW DV ZHOO DV RWKHU SURGXFH VXFK DV PLON DQG
RWKHU GDLU\ SURGXFWV YHJHWDEOHV DQG IUXLW SRXOWU\
DQGVXJDUH[SHULHQFHGDIDOOLQLQFRPHVDQGWKUHDWV
WRWKHLUOLYHOLKRRGV DV D UHVXOW RI DQ LQÁX[RI LPSRUWV
ZKLFKXQGHUPLQHGRWKHUZLVHYLDEOHHIÀFLHQWGRPHVWLF
SURGXFWLRQVHHER[IRUDFDVHVWXG\RI*KDQD$V
D UHVXOW WKH GHYHORSPHQW RI WKH DJULFXOWXUDO VHFWRU
LQ GHYHORSLQJ FRXQWULHV DQG WKHUHIRUH DJULFXOWXUH·V
VLJQLÀFDQW SRWHQWLDO JURZWK PXOWLSOLHU IRU WKH ZKROH
HFRQRP\ZDVXQGHUPLQHG$QGWKHHIIHFWVRQKXPDQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
ZHOIDUH QDWLRQDO IRRG SURGXFWLRQ DQG IRRG VHFXULW\
ZHUHVHYHUH
7KHVLWXDWLRQKDVEHHQH[DFHUEDWHGE\KLJKDJULFXO
WXUDOVXEVLGLHVLQGHYHORSHGFRXQWULHVZKLFKHQDEOH
WKHPWRSHQHWUDWHGHYHORSLQJFRXQWULHV·PDUNHWVZLWK
FKHDSH[SRUWVWKHUHE\GLVUXSWLQJORFDOSURGXFWLRQLQ
WKH LPSRUWLQJ FRXQWULHV SUHYHQWLQJ DFFHVV E\ WKRVH
FRXQWULHVWRGHYHORSHGFRXQWU\PDUNHWVDQGRXWFRP
SHWLQJGHYHORSLQJFRXQWULHV·SURGXFWVLQWKLUGPDUNHWV
6RXWK &HQWUH 6HYHUDO VWXGLHV KDYH VKRZQ
WKDW WKH KLJK VXEVLGLHV KDYH DOORZHG PDQ\ DJULFXO
WXUDO SURGXFWV WR EH VROG EHORZ WKH FRVW RI SURGXF
WLRQ VHH DOVR WKH FRPPHQW LQ WKLV FKDSWHU E\ /LOOLV
WRQDQG+DQVHQ.XKQUHJDUGLQJWKHH[WHQWRI8QLWHG
6WDWHV´GXPSLQJµ)RUH[DPSOHDFDOFXODWLRQRIWKH
GXPSLQJPDUJLQVIRU8QLWHG6WDWHVFRPPRGLW\FURSV
IURP WKURXJK VKRZHG WKDW ZKHDW FRUQ
VR\EHDQVULFHDQGFRWWRQZHUHFRQVLVWHQWO\H[SRUWHG
DWZHOOEHORZWKHFRVWRISURGXFWLRQUDQJLQJIURP
SHUFHQWIRUFRUQWRPRUHWKDQSHUFHQWIRUFRWWRQ
$FFRUGLQJ WR WKH 8QLWHG 1DWLRQV 6SHFLDO 5DSSRUWHXU
RQWKHULJKWWRIRRGWKHRSHQLQJXSRIWKHDJULFXOWXUDO
VHFWRU WR FRPSHWLWLRQ E\ ELQGLQJ FRXQWULHV WR ORZ
LPSRUW WDULII UDWHV PD\ WKHUHIRUH FRQVWLWXWH D VHULRXV
WKUHDW WR WKH ULJKW WR IRRG HVSHFLDOO\ LQ WKH OHDVW
GHYHORSHG FRXQWULHV /'&V ZKHUH DJULFXOWXUH
UHPDLQVDIUDJLOHVHFWRU'H6FKXWWHUD7KLVLV
EHFDXVHWKHJUHDWHVWWKUHDWWRIRRGVHFXULW\LVLQWKH
UXUDODUHDVDQGDODUJHUSURSRUWLRQRIWKHSRSXODWLRQV
LQWKHFRXQWULHVWKDWDUHWKHPRVWYXOQHUDEOHGHSHQG
RQDJULFXOWXUHIRUWKHLUOLYHOLKRRGV
%R[7KHLPSDFWRIWUDGHOLEHUDOL]DWLRQLQ*KDQD
7KHSROLFLHVRIIRRGVHOIVXIÀFLHQF\DQGJRYHUQPHQWHQFRXUDJHPHQWRIWKHDJULFXOWXUDOVHFWRULQ*KDQDWKURXJKPDU
NHWLQJFUHGLWDQGVXEVLGLHVIRULQSXWVKHOSHGWRLQFUHDVHIRRGSURGXFWLRQIRUH[DPSOHRIULFHWRPDWRHVDQGSRXOWU\
+RZHYHUWKHVHSROLFLHVZHUHUHYHUVHGVWDUWLQJIURPWKHPLGVDQGHVSHFLDOO\LQWKHV)RUH[DPSOHWKHSULFHRI
IHUWLOL]HULQFUHDVHGIROORZLQJDQHOLPLQDWLRQRIWKHVXEVLG\DQGWKHPDUNHWLQJUROHRIWKH6WDWHZDVSKDVHGRXW,QDGGLWLRQ
WKHPLQLPXPJXDUDQWHHGSULFHVRIULFHDQGZKHDWZHUHDEROLVKHGDVZHUHPDQ\6WDWHDJULFXOWXUDOWUDGLQJHQWHUSULVHV
DQGWKHVHHGDJHQF\UHVSRQVLEOHIRUSURGXFLQJDQGGLVWULEXWLQJVHHGVWRIDUPHUV6XEVLGL]HGFUHGLWZDVDOVRGLVFRQWLQ
XHG$SSOLHGWDULIIVIRUPRVWDJULFXOWXUDOLPSRUWVZHUHUHGXFHGVLJQLÀFDQWO\WRWKHSUHVHQWSHUFHQWHYHQWKRXJKWKH
ERXQGUDWHFRPPLWWHGWRWKH:72E\*KDQDZDVDURXQGSHUFHQW$VDUHVXOWORFDOIDUPHUVZHUHQRORQJHUDEOHWR
FRPSHWHZLWKLPSRUWVWKHSULFHVRIZKLFKZHUHNHSWDUWLÀFLDOO\ORZE\KLJKVXEVLGLHVLQH[SRUWLQJFRXQWULHVHVSHFLDOO\
IRUULFHWRPDWRHVDQGSRXOWU\
5LFHRXWSXWLQWKHVFRXOGPHHWDOOWKHORFDOQHHGVEXWE\LPSRUWVFRQVWLWXWHGSHUFHQWRIGRPHVWLFVXSSO\
5LFHRXWSXWIHOOIURPDQDQQXDODYHUDJHRIWRQVLQ²LQWKHQRUWKHUQUHJLRQWRRQO\WRQVIRUWKH
ZKROHFRXQWU\LQ,QWKH8QLWHG6WDWHVZKLFKSURYLGHGVXEVLGLHVWRLWVIDUPHUVIRUULFHDPRXQWLQJWRELO
OLRQH[SRUWHGWRQVRIULFHWR*KDQD$VWXG\E\WKH8QLWHG6WDWHV*RYHUQPHQWIRXQGWKDWSHUFHQWRI8QLWHG
6WDWHVULFHIDUPVZRXOGQRWKDYHFRYHUHGWKHLUFRVWVZLWKRXWVXEVLGLHV,Q²WKHDYHUDJHFRVWRISURGXFWLRQDQG
PLOOLQJRI8QLWHG6WDWHVZKLWHULFHZDVSHUWRQEXWLWZDVH[SRUWHGIRUMXVWSHUWRQ²DSULFHSHUFHQWEHORZ
SURGXFWLRQFRVW
7RPDWRSURGXFWLRQLQ*KDQDHVSHFLDOO\LQWKHXSSHUHDVWHUQUHJLRQKDGEHHQWKULYLQJXQWLODSULYDWL]DWLRQSURJUDPPHUH
VXOWHGLQWKHVHOOLQJRIIRUFORVXUHRIWRPDWRFDQQLQJIDFWRULHVZKLOHLPSRUWWDULIIVZHUHUHGXFHG7KLVHQDEOHGWKHKHDYLO\
VXEVLGL]HG(8WRPDWRLQGXVWU\WRSHQHWUDWH*KDQDGLVSODFLQJWKHOLYHOLKRRGVRIWRPDWRIDUPHUVDQGLQGXVWU\HPSOR\HHV
7RPDWRSDVWHLPSRUWHGE\*KDQDURVHIURPWRQVLQWRWRQVLQ/RFDOWRPDWRSURGXFWLRQKDV
VWDJQDWHGVLQFH0HDQZKLOHWRPDWREDVHGSURGXFWVIURP(XURSHKDYHPDGHLQURDGVLQWR$IULFDQPDUNHWV,Q
(8DLGIRUSURFHVVHGWRPDWRSURGXFWVZDVĄPLOOLRQDQGWKHUHZHUHPDQ\PRUHPLOOLRQVLQLQGLUHFWDLG
*KDQD·VSRXOWU\VHFWRUEHJDQJURZLQJLQWKHODWHVUHDFKHGLWVSULPHLQWKHODWHVWKHQGHFOLQHGVWHHSO\LQWKH
V7KHGHFOLQHZDVGXHWRWKHZLWKGUDZDORIJRYHUQPHQWVXSSRUWDQGWKHUHGXFWLRQRIWDULIIV3RXOWU\LPSRUWVURVHE\
SHUFHQWEHWZHHQDQGDVLJQLÀFDQWVKDUHRIZKLFKFRQVLVWHGRIKHDYLO\VXEVLGL]HGSRXOWU\IURP(XURSH
,Q(XURSHDQFRXQWULHVSURGXFHGPLOOLRQWRQVRISRXOWU\PHDWDQGPLOOLRQWRQVZHUHH[SRUWHGDWD
YDOXHRIĄPLOOLRQRUDQDYHUDJHRIĄSHUWRQ,WLVHVWLPDWHGWKDWWKHWRWDOVXEVLG\RQH[SRUWHGSRXOWU\HJH[SRUW
UHIXQGVVXEVLGLHVIRUFHUHDOVIHGWRWKHSRXOWU\ZDVĄSHUWRQ%HWZHHQDQG(8IUR]HQFKLFNHQH[SRUWV
WR:HVW$IULFDURVHHLJKWIROGPDLQO\GXHWRLPSRUWOLEHUDOL]DWLRQ,Q*KDQDWKLVDGYHUVHO\DIIHFWHGKDOIDPLOOLRQFKLFNHQ
IDUPHUV,QGRPHVWLFIDUPHUVVXSSOLHGSHUFHQWRI*KDQD·VPDUNHWEXWWKLVVKDUHIHOOWRSHUFHQWLQDV
LPSRUWHGSRXOWU\EHFDPHFKHDSHUWKDQORFDOSRXOWU\
6RXUFHV.KRU
&,PEDODQFHLQWUDGHUXOHV
JRYHUQLQJDJULFXOWXUH
7KH WUDGH UXOHV WKDW XQGHUSLQ WKH JOREDO DJULFXOWXUDO
WUDGHUHJLPHDUHDOVRDVRXUFHRIFRQFHUQ7KH:72·V
$JUHHPHQW RQ $JULFXOWXUH FRQWDLQV UXOHV LQ WKUHH
DUHDV²PDUNHWDFFHVVGRPHVWLFVXSSRUWDQGH[SRUW
VXEVLGLHV ² LQ ZKLFK WKH GHYHORSHG FRXQWULHV ZHUH
H[SHFWHG WR UHGXFH WKHLU SURWHFWLRQ +RZHYHU WKH\
KDYHGRQHYHU\OLWWOHLQWKLVUHJDUG
7KHUHDUHPDQ\ORRSKROHVLQWKHV\VWHPZKLFKDOORZ
WKH GHYHORSHG FRXQWULHV WR FRQWLQXH WR VXEVLGL]H
DQG SURWHFW WKHLU DJULFXOWXUH DW WKH H[SHQVH RI
WKH GHYHORSLQJ FRXQWULHV 7KH DYHUDJH VXSSRUW
WR DJULFXOWXUDO SURGXFHUV LQ WKH PDMRU GHYHORSHG
FRXQWULHV DV D SHUFHQWDJH RI JURVV YDOXH RI IDUP
UHFHLSWVZDVSHUFHQWGXULQJWKHSHULRG²
UHSUHVHQWLQJDOPRVWELOOLRQSHUGD\7KHVHSROLFLHV
FRVWGHYHORSLQJFRXQWULHVDERXWELOOLRQSHU\HDU
D FRVW HTXLYDOHQW WR ÀYH WLPHV WKH UHFHQW OHYHOV RI
RIÀFLDO GHYHORSPHQW DVVLVWDQFH 2'$ WR DJULFXOWXUH
$QGHUVRQDQG9DQGHU0HQVEUXJJKHFLWHGLQ
+RIIPDQQ,WVKRXOGEHSRLQWHGRXWWKDWWKHVH
ÀJXUHVUHIHUH[FOXVLYHO\WRDJULFXOWXUDOVXEVLGLHVDQG
GRQRWLQFOXGHLQGLUHFWVXEVLGLHVIRUHQHUJ\IXHODQG
HOHFWULFLW\XVHGLQDJULFXOWXUH
75$'($1'(19,5210(175(9,(:
FRXQWULHV ZKLFK DGYHUVHO\ DIIHFWV WKHLU PDUNHW
VKDUH LQFRPHV DQG OLYHOLKRRGV 6RXWK &HQWUH
7KH HOLPLQDWLRQ RU VXEVWDQWLDO UHGXFWLRQ RI
ERWKVXEVLGLHVDQGSURWHFWLRQLVPLQLQGXVWULDOL]HG
FRXQWULHV LV WKHUHIRUH LPSRUWDQW SDUWLFXODUO\ IRU
VPDOOVFDOH IDUPLQJ DURXQG WKH ZRUOG ,$$67'
8QGHU WKH :72 WKHUH KDV EHHQ VRPH DSSDUHQW
SURJUHVV LQ WU\LQJ WR DGGUHVV H[SRUW VXEVLGLHV 7KH
:72+RQJ.RQJ0LQLVWHULDO&RQIHUHQFHLQDJUHHG
WKDWDVSDUWRIWKH'RKD5RXQGRIWUDGHQHJRWLDWLRQV
H[SRUWVXEVLGLHVRIWKHGHYHORSHGFRXQWULHVZRXOGEH
HOLPLQDWHGE\WKHHQGRI+RZHYHUWKLVPD\QRW
EHUHDOL]HGLIWKH'RKDQHJRWLDWLRQVDUHQRWFRQFOXGHG
DQGWKHUHKDVQRWEHHQDELQGLQJDJUHHPHQWRQWKHVH
HOHPHQWVDV\HW
7KH VLWXDWLRQ KDV LPSURYHG RQO\ VOLJKWO\ LQ UHFHQW
\HDUV WKH 2UJDQLVDWLRQ IRU (FRQRPLF &RRSHUDWLRQ
DQG 'HYHORSPHQW 2(&' HVWLPDWHV WKDW
WKH VXEVLGLHV JLYHQ WR IDUP SURGXFHUV LQ DOO 2(&'
FRXQWULHVWRWDOOHGELOOLRQLQZKLFKLVSHU
FHQWRIWKHWRWDOYDOXHRIJURVVIDUPUHFHLSWVWKDW\HDU
7KLVLVDERXWWKHVDPHOHYHODVLQDQG7KH
OHYHO RI VXSSRUW LV HYHQ KLJKHU WKDQ WKLV DYHUDJH LQ
VRPHFRXQWULHVLQ²LWZDVSHUFHQWLQWKH
(8SHUFHQWLQ-DSDQSHUFHQWLQ6ZLW]HUODQG
DQGSHUFHQWLQ1RUZD\2(&'7KHOHYHORI
VXSSRUWLVDOVRYHU\KLJKIRUFHUWDLQSURGXFWV6SHFLÀF
VXSSRUW IRU ULFH DPRXQWHG WR SHU FHQW RI WRWDO
SURGXFHUULFHUHFHLSWVLQ²2(&'
2QWKHLVVXHRIGRPHVWLFVXEVLGLHVDPDMRUORRSKROH
LQWKH:72$JUHHPHQWRQ$JULFXOWXUHLVWKDWFRXQWULHV
DUHREOLJHGWRUHGXFHWKHLUERXQGOHYHOVRIGRPHVWLF
VXSSRUWWKDWDUHGHHPHG´WUDGHGLVWRUWLQJµEXWWKHUH
DUHQRFRQVWUDLQWVRQWKHDPRXQWRIVXEVLGLHVGHHPHG
WREHQRQGLVWRUWLQJRUPLQLPDOO\GLVWRUWLQJZKLFKDUH
SODFHGLQWKHVRFDOOHG*UHHQ%R[5HFHQWVWXGLHVKDYH
VKRZQWKDWPDQ\RIWKH*UHHQ%R[VXEVLGLHVDUHDOVR
WUDGHGLVWRUWLQJDVWKH\KDYHVLJQLÀFDQWHIIHFWVRQWKH
PDUNHWDQGRQWUDGH7KHUHIRUHWKHPDMRUVXEVLGL]LQJ
FRXQWULHVFDQUHGXFHWKHLU´WUDGHGLVWRUWLQJVXEVLGLHVµ
ZKLOH FKDQJLQJ WKH W\SHV RI GRPHVWLF VXEVLGLHV
WKH\ JLYH HIIHFWLYHO\ SURYLGLQJ VLPLODU OHYHOV RU HYHQ
LQFUHDVLQJWKHWRWDODPRXQWRIVXEVLGLHV.KRU
8QIRUWXQDWHO\ WKH 'RKD QHJRWLDWLRQV DUH XQOLNHO\ WR
LPSRVH QHZ HIIHFWLYH GLVFLSOLQHV RQ WKH *UHHQ %R[
LWHPVDVWKHGHYHORSHGFRXQWULHVKDYHVXFFHVVIXOO\
LQVLVWHGWKDWWKHUHEHQRQHZUXOHVWKDWZRXOGSODFHD
FDSRQWKH*UHHQ%R[VXEVLGLHV6RXWK&HQWUH
7KHFXUUHQWQHJRWLDWLQJWH[WSURSRVHVVRPHFKDQJHV
WR WKH *UHHQ %R[ EXW WKHVH GR QRW DOWHU WKH EDVLF
HOHPHQWVHVSHFLDOO\DVWKHUHLVQRFDSRQWKH*UHHQ
%R[VXEVLGLHV7KXVWKH\FRXOGLQFUHDVHZLWKRXWOLPLW
LQWKHIXWXUH
7KHUHDUHDWOHDVWWKUHHDGYHUVHHIIHFWVRIGHYHORSHG
FRXQWULHV· VXEVLGLHV RQ IDUPHUV LQ GHYHORSLQJ
FRXQWULHV
L WKH\ DUH XQDEOH WR H[SRUW WR WKH VXEVLGL]LQJ
GHYHORSHGFRXQWULHV·PDUNHWV
LL WKH\ DUH XQDEOH WR FRPSHWH LQ WKLUG PDUNHWV
EHFDXVH WKH GHYHORSHG FRXQWULHV· SURGXFWV DUH
VROGDWDUWLÀFLDOO\ORZSULFHVDQG
LL WKH\ KDYH WR FRPSHWH LQ WKHLU RZQ ORFDO PDUNHWV
ZLWKVXEVLGL]HGSURGXFWVFRPLQJIURPGHYHORSHG
7KH'RKDQHJRWLDWLRQVDUHPDQGDWHGWRVXEVWDQWLDOO\
UHGXFH RWKHU GRPHVWLF VXSSRUW LQ GHYHORSHG
FRXQWULHV+RZHYHUWRGDWHWKHRIIHUVRIWKH8QLWHG
6WDWHV DQG WKH (8 LQGLFDWH WKHLU RYHUDOO WUDGH
GLVWRUWLQJVXSSRUW27'6ZRXOGEHUHGXFHGDWWKH
ERXQGOHYHOEXWQRWDWWKHDSSOLHGOHYHO.KRU
$W SUHVHQW WKH OHYHO RI WKH DFWXDO 27'6 RI WKHVH
WZR HFRQRPLHV LV IDU EHORZ WKH OHYHO RI WKHLU WRWDO
DOORZHGWUDGHGLVWRUWLQJVXSSRUW7KHUHIRUHWKH\FDQ
DIIRUGWRUHGXFHWKHOHYHORIDOORZHGWUDGHGLVWRUWLQJ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
VXSSRUWVLJQLÀFDQWO\EHIRUHWKHFXWUHDFKHVWKHOHYHO
ZKHUHWKHSUHVHQWDFWXDOWUDGHGLVWRUWLQJVXSSRUWLV
DIIHFWHG 6RXWK &HQWUH ,Q RWKHU ZRUGV WKH\
ZRXOG RQO\ FXW ´ZDWHUµ LH WKH GLIIHUHQFH EHWZHHQ
DOORZHG DQG DFWXDO VXEVLGLHV DQG QRW WKHLU DFWXDO
VXEVLGLHV
7KHÀJXUHVLQWKHDJULFXOWXUHQHJRWLDWLQJJURXS&KDLU·V
WH[W ZRXOG QRW UHGXFH WKH DFWXDO SUHVHQW GRPHVWLF
VXSSRUWIRUWKH8QLWHG6WDWHV7KHDOORZDEOH27'6IRU
WKLVFRXQWU\LVWREHFXWE\SHUFHQWLHIURPWKH
SUHVHQWELOOLRQDOORZDEOHOHYHOWRELOOLRQ
7KHSURSRVHGELOOLRQOHYHOLVLQIDFWGRXEOHWKH
HVWLPDWHG DFWXDO 27'6 RI ² ELOOLRQ WKXV
HIIHFWLYHO\ DOORZLQJ WKH 8QLWHG 6WDWH FRQVLGHUDEOH
´ZDWHUµ WR LQFUHDVH IURP WKLV OHYHO 0HDQZKLOH WKH
DOORZDEOH 27'6 IRU WKH (8 LV WR EH FXW E\ SHU
FHQWZKLFKZRXOGUHGXFHWKH(8·VSUHVHQWDOORZDEOH
27'6 RI Ą ELOOLRQ WR Ą ELOOLRQ $FFRUGLQJ WR
RQHHVWLPDWHKRZHYHUWKHDFWXDO27'6LVH[SHFWHG
WR GURS WR Ą ELOOLRQ DW WKH HQG RI WKH &RPPRQ
$JULFXOWXUDO3ROLF\UHIRUPLQ7KXVWKHFXWWKRXJK
LWDSSHDUVWREHODUJHZRXOGDOORZIRU´ZDWHUµYLVjYLV
ZKDWLVSODQQHG
:KLOHWKHUHKDVEHHQDORZHULQJRIWKHDSSOLHG27'6
RIWKH8QLWHG6WDWHVDQGWKH(8LQUHFHQW\HDUVWKLV
KDV EHHQ DFFRPSDQLHG E\ D ULVH LQ WKHLU VXSSRUW WR
*UHHQ %R[ LWHPV $V DFWXDO 27'6 LV FXW VXEVLGLHV
FRXOGEHVKLIWHGWRWKH*UHHQ%R[DQGWKHUHIRUHWRWDO
GRPHVWLF VXSSRUW PD\ QRW GHFOLQH 7KXV WKH FXWV LQ
WKHLUDOORZDEOH27'6PD\DSSHDUODUJHEXWLQIDFWZLOO
QRW UHGXFH DSSOLHG RU SODQQHG UHGXFWLRQV LQ 27'6
DQGPRUHRYHUWKHVHZLOOEHRIIVHWE\DQLQFUHDVHLQ
WKH FDVH RI WKH (8 LQ *UHHQ %R[ VXEVLGLHV 6RXWK
&HQWUH$QREMHFWLYHFRQFOXVLRQZRXOGEHWKDW
WKH 27'6 ÀJXUHV RI SHU FHQW FXW IRU WKH 8QLWHG
6WDWHVDQGSHUFHQWFXWIRUWKH(8DUHQRWDGHTXDWH
DVWKH\GRQRWFRQVWLWXWHHIIHFWLYHDQGVXEVWDQWLYHRU
UHDOFXWV
0HDQZKLOHWKHGHYHORSLQJFRXQWULHVDUHEHLQJDVNHG
WR UHGXFH WKHLU DJULFXOWXUDO WDULIIV IXUWKHU 7KH &KDLU·V
SURSRVDODWWKH'RKDWDONVLVIRUDPD[LPXPSHU
FHQW WDULII FXW E\ GHYHORSLQJ FRXQWULHV ZKLOH WKH
/'&V DUH H[HPSWHG IURP DQ\ WDULII UHGXFWLRQ DQG
VPDOO YXOQHUDEOH HFRQRPLHV ZLOO EH DFFRUGHG PRUH
OHQLHQW WUHDWPHQW +RZHYHU WKH FRPELQDWLRQ RI KLJK
VXEVLGLHV LQ GHYHORSHG FRXQWULHV DQG ORZ DSSOLHG
WDULIIV LQ GHYHORSLQJ FRXQWULHV KDV FDXVHG KLJKO\
IUHTXHQWLPSRUWVXUJHVZKLFKKDYHDGYHUVHO\DIIHFWHG
IDUPHUV·OLYHOLKRRGVDQGLQFRPHV
'XH WR LQFUHDVLQJ FRQFHUQ RYHU WKLV D PDMRULW\ RI
GHYHORSLQJFRXQWU\ PHPEHUV RI WKH :72 ZKLFK
LQFOXGH WKH * WKH $IULFDQ *URXS DQG WKH /'&
JURXSKDYHSURSRVHGWZRQHZLQVWUXPHQWV²6SHFLDO
3URGXFWV63DQGD6SHFLDO6DIHJXDUG0HFKDQLVP
660 ² WR EH LQWURGXFHG LQWR WKH UXOHV RI WKH :72
DV SDUW RI WKH 'RKD QHJRWLDWLRQV 7KH REMHFWLYH RI
ERWK LQVWUXPHQWV LV WR SURPRWH WKH OLYHOLKRRGV RI
VPDOOIDUPHUVIRRGVHFXULW\DQGUXUDOGHYHORSPHQWLQ
GHYHORSLQJFRXQWULHV6XFKSROLF\ÁH[LELOLW\LVFULWLFDOO\
LPSRUWDQWWRDGYDQFHGHYHORSPHQWDQGVXVWDLQDELOLW\
JRDOV ,$$67' DQG ZRXOG VKLHOG GHYHORSLQJ
FRXQWULHV· SURGXFHUV IURP FRPSHWLWLRQ IURP
LQGXVWULDOL]HGFRXQWULHV·IDUPHUV'H6FKXWWHUD
8QGHU WKH 63 FRQFHSW GHYHORSLQJ FRXQWULHV ZRXOG
EH HQWLWOHG WR KDYH QR RU OHVVHU UHGXFWLRQV RI WDULIIV
RQDFHUWDLQSHUFHQWDJHRIWKHLUDJULFXOWXUDOWDULIIOLQHV
DV SDUW RI WKH 'RKD 5RXQG·V DJULFXOWXUH PRGDOLWLHV
8QGHU WKH 660 GHYHORSLQJ FRXQWULHV ZRXOG EH
DOORZHG WR LPSRVH DQ DGGLWLRQDO LQFUHDVH LQ WDULIIV
RQWRSRIERXQGUDWHVLQVLWXDWLRQVRIUHGXFHGLPSRUW
SULFHVRULQFUHDVHGLPSRUWYROXPHVLQRUGHUWRSURWHFW
ORFDOIDUPHUVIURPLPSRUWVXUJHVDQGWRDYRLGSRVVLEOH
GDPDJHWRGRPHVWLFSURGXFWLYHFDSDFLW\
$FFHSWDQFHRIWKHVHWZRLQVWUXPHQWVZDVIRUPDOL]HG
LQ WKH :72·V +RQJ .RQJ 0LQLVWHULDO 'HFODUDWLRQ RI
ZKLFKVWDWHG
0HPEHUVZLOOKDYHWKHÁH[LELOLW\WRVHOIGHVLJQDWHDQ
DSSURSULDWHQXPEHURIWDULIIOLQHVDV6SHFLDO3URGXFWV
JXLGHG E\ LQGLFDWRUV EDVHG RQ WKH FULWHULD RI IRRG
VHFXULW\ OLYHOLKRRG VHFXULW\ DQG UXUDO GHYHORSPHQW
'HYHORSLQJFRXQWU\0HPEHUVZLOODOVRKDYHWKHULJKW
WRKDYHUHFRXUVHWRD6SHFLDO6DIHJXDUG0HFKDQLVP
EDVHG RQ LPSRUW TXDQWLW\ DQG SULFH WULJJHUV ZLWK
SUHFLVHDUUDQJHPHQWVWREHIXUWKHUGHÀQHG
7KH DFFHSWDQFH RI WKHVH WZR FRQFHSWV DQG
LQVWUXPHQWV ZDV D PDMRU VWHS IRUZDUG LQ UHFRJQLWLRQ
E\ WKH :72 RI WKH ULJKW RI GHYHORSLQJFRXQWU\
JRYHUQPHQWV WR WDNH WUDGH PHDVXUHV LQ GHIHQFH RI
WKHLUIDUPHUV·OLYHOLKRRGV
+RZHYHU WKHUH LV FRQVLGHUDEOH RSSRVLWLRQ IURP
VRPH DJULFXOWXUDO FRPPRGLW\H[SRUWLQJ FRXQWULHV
LQFOXGLQJVHYHUDOODUJHGHYHORSLQJFRXQWU\DJULFXOWXUDO
H[SRUWHUV ZKLFK IHDU WKDW WKH XVH RI WKH 660 FRXOG
UHVXOW LQ ORVVHV RI OHJLWLPDWH H[SRUWV +RZHYHU WKH
UHVWULFWLRQV WKH\ KDYH SURSRVHG ZRXOG SUHYHQW WKLV
LQVWUXPHQW IURP ZRUNLQJ LQ DQ HIIHFWLYH DQG VLPSOH
ZD\$VVXFKWKH660HYHQLIHVWDEOLVKHGPD\KDYH
YHU\ OLPLWHG XVH LQ HQDEOLQJ GHYHORSLQJ FRXQWULHV WR
SURWHFWWKHLUIDUPHUVIURPLPSRUWVXUJHV,QDQ\FDVH
WKH 'RKD QHJRWLDWLRQV KDYH KLW DQ LPSDVVH DQG LW LV
XQOLNHO\WKDWWKH660ZLOOEHHVWDEOLVKHGDQ\WLPHVRRQ
,URQLFDOO\ WKHUH LV DOUHDG\ DQ DJULFXOWXUDO VDIHJXDUG
LQ WKH :72 NQRZQ DV WKH VSHFLDO DJULFXOWXUDO
VDIHJXDUG 66* EXW WKH HOLJLELOLW\ FULWHULD KDYH
GLVDGYDQWDJHG PRVW GHYHORSLQJ FRXQWULHV UHVXOWLQJ
LQRQO\GHYHORSLQJFRXQWULHVEHLQJHOLJLEOHWRXVH
WKHVDIHJXDUG7KXVPRVWGHYHORSLQJFRXQWULHVKDYH
QR SURSHU LQVWUXPHQW WR FRXQWHU LPSRUW VXUJHV ,Q
RUGHUWRUHFWLI\WKHLPEDODQFHDQGHQDEOHGHYHORSLQJ
FRXQWULHVWRVDIHJXDUGWKHLUIRRGVHFXULW\DQGIDUPHUV·
OLYHOLKRRGVPRUHFRXQWULHVVKRXOGEHHOLJLEOHWRPDNH
XVHRIWKH66*
,QDGGLWLRQUHJLRQDODQGELODWHUDO)7$VKDYHSUHYHQWHG
GHYHORSLQJFRXQWULHVIURPXVLQJWKHÁH[LELOLWLHVLQWKH
:72 DJUHHPHQWV 'H 6FKXWWHU D 0RUHRYHU
PDQ\ RI WKHVH )7$V UHTXLUH GHYHORSLQJ FRXQWULHV WR
UHGXFH RU HOLPLQDWH WKHLU WDULIIV HYHQ IXUWKHU .KRU
'H 6FKXWWHU E )RU H[DPSOH LQ WKH
(FRQRPLF 3DUWQHUVKLS $JUHHPHQWV EHWZHHQ WKH
$IULFDQ &DUULEEHDQ DQG 3DFLÀF $&3 FRXQWULHV DQG
WKH(8WKH$&3FRXQWULHVDUHDVNHGWRHOLPLQDWHWKHLU
WDULIIVRQSHUFHQWRIWKHLUWDULIIOLQHVLQFOXGLQJIRU
DJULFXOWXUDO SURGXFWV RYHU YDU\LQJ WLPH SHULRGV <HW
WKH UHGXFWLRQ RI DJULFXOWXUDO VXEVLGLHV LV QRW SDUW RI
WKH )7$ DJHQGD 7KXV GHYHORSLQJ FRXQWULHV DUH QRW
DEOH WR JDLQ IURP ZKDW PD\ KDYH EHHQ WKH PRVW
DGYDQWDJHRXVIRUWKHPZKLOHKDYLQJWRHOLPLQDWHWKHLU
DJULFXOWXUDO WDULIIV WR D ODUJHU H[WHQW WKDQ UHTXLUHG RI
WKHPE\WKHLUREOLJDWLRQVDWWKH:726RXWK&HQWUH
',PEDODQFHLQPDUNHWVWUXFWXUHV
,QFUHDVHG WUDGH LQ DJULFXOWXUDO SURGXFWV LPSOLHV
WKDW IRRG SURGXFWLRQ LV UHGLUHFWHG WRZDUGV VHUYLQJ
H[WHUQDOLQVWHDGRIGRPHVWLFPDUNHWV,QDGGLWLRQDV
ODUJHUIDUPHUVDUHPRUHHDVLO\DEOHWRDFFHVVIRUHLJQ
PDUNHWVDQGEHQHÀWIURPVXFKDFFHVVWKHLQFUHDVH
LQDJULFXOWXUDOWUDGHULVNVPDUJLQDOL]LQJVPDOOIDUPHUV
$QG VLQFH PDUNHW SRZHU LV UDUHO\ HTXDOO\ GLVWULEXWHG
DORQJWKHYDOXHFKDLQWKLVHQDEOHVWKHPRUHSRZHUIXO
DFWRUVWRSDVVRQFRVWVDQGULVNVWRWKHZHDNHUDFWRUV
²W\SLFDOO\VPDOOKROGHUIDUPHUV,)$'
$V VXFK WKH UROH RI PXOWLQDWLRQDO FRUSRUDWLRQV
SDUWLFXODUO\FRPPRGLW\WUDGHUVIRRGSURFHVVRUVDQG
JOREDOUHWDLOHUVEHFRPHVPRUHLPSRUWDQW'H6FKXWWHU
D+HUUHQ7KHZRUOGKDVZLWQHVVHGDWUHQG
WRZDUGVDJULEXVLQHVVFRQVROLGDWLRQDQGWKLVWUHQGLV
75$'($1'(19,5210(175(9,(:
VHHQDOODORQJWKHYDOXHFKDLQZLWKDIHZPXOWLQDWLRQDO
FRPSDQLHV SURYLGLQJ WKH PDMRULW\ RI LQSXWV VXFK DV
SHVWLFLGHV VHHGV DQG FURS JHQHWLF WHFKQRORJLHV RU
XQGHUWDNLQJPDUNHWLQJIRRGSURFHVVLQJDQGUHWDLOLQJ
7KLV KDV UHVXOWHG LQ QDWLRQDO UHJLRQDO DQG JOREDO
VXSSO\ FKDLQV WKDW E\SDVV WUDGLWLRQDO PDUNHWV ZKHUH
VPDOOKROGHUVVHOOWRORFDOPDUNHWVDQGWUDGHUV:RUOG
%DQN
7KH ZRUOG VHHG DJURFKHPLFDO DQG ELRWHFKQRORJ\
PDUNHWV DUH GRPLQDWHG E\ D IHZ PHJD FRPSDQLHV
VHH WKH FRPPHQW RI (OHQLWD 'DxR LQ WKLV FKDSWHU
,Q WKH PDUNHW VKDUH RI WKH IRXU ODUJHVW
DJURFKHPLFDO DQG VHHG FRPSDQLHV UHDFKHG SHU
FHQWIRUDJURFKHPLFDOVDQGSHUFHQWIRUVHHGVXS
IURPSHUFHQWDQGSHUFHQWLQUHVSHFWLYHO\
:RUOG %DQN :KHUH QHZ WHFKQRORJLHV
DQG SURGXFWV HJ WUDQVJHQLF VHHGV KDYH EHHQ
GHYHORSHG DQG SURWHFWHG E\ LQWHOOHFWXDO SURSHUW\
ULJKWV ,35V LQGXVWU\ FRQVROLGDWLRQ KDV WDNHQ SODFH
UDSLGO\ 3$11$ 7KH IRXU OHDGLQJ FRPSDQLHV
LQWHUPVRIRZQHUVKLSRIELRWHFKQRORJ\SDWHQWVKDGD
PDUNHWVKDUHRISHUFHQWLQDQGRQHFRPSDQ\
KDGDSHUFHQWVKDUHRIWKHZRUOGZLGHWUDQVJHQLF
VR\EHDQPDUNHW:RUOG%DQN
7KHVH FRPSDQLHV KDYH D YHVWHG LQWHUHVW LQ
PDLQWDLQLQJ D PRQRFXOWXUHIRFXVHG FDUERQ
LQWHQVLYH LQGXVWULDO DSSURDFK WR DJULFXOWXUH ZKLFK
LV GHSHQGHQW RQ H[WHUQDO LQSXWV +RIIPDQQ ,QWHUQDWLRQDOVXSSO\FKDLQVRIWHQGRPLQDWHGE\PDMRU
IRRG SURFHVVRUV DQG UHWDLOHUV DOVR WHQG WR VRXUFH
IURP ODUJHVFDOH PRQRFURS SURGXFWLRQ UDWKHU WKDQ
IURP GLYHUVH PXOWLFURSSLQJ DQG LQWHJUDWHG OLYHVWRFN
DQG FURS IDUPLQJ V\VWHPV 7KLV WUHQG UHLQIRUFHV WKH
PDUJLQDOL]DWLRQ RI VPDOO IDUPHUV DQG RI VXVWDLQDEOH
SURGXFWLRQ V\VWHPV ,Q DGGLWLRQ WR FRPSO\ ZLWK
WKH VWDQGDUGV RI JOREDO UHWDLOHUV PDQ\ IDUPHUV DUH
HQFRXUDJHG WR XVH LPSURYHG YDULHWLHV RI VHHGV
DQG H[WHUQDO LQSXWV RIWHQ VXSSOLHG E\ ROLJRSROLVWLF
FRPSDQLHV ZKLFK IXUWKHU H[DFHUEDWHV GHSHQGHQFH
DQGUHOLDQFHRQFRQYHQWLRQDODJULFXOWXUH'H6FKXWWHU
D
*LYHQ WKHLU LQFUHDVHG PDUNHW SRZHU FRPPRGLW\
EX\HUV DQG ODUJHU UHWDLOHUV ZKLFK GRPLQDWH JOREDO
IRRGFKDLQVLPSRVHWKHLUSULFHVRQSURGXFHUVZKR
DUHLQDQXQIDYRXUDEOHEDUJDLQLQJSRVLWLRQDQGVHW
VWDQGDUGVWKDWPDQ\VPDOOVFDOHIDUPHUVDUHXQDEOH
WRPHHW'H6FKXWWHUD3$11$6PDOO
VFDOHIDUPHUVDUHWKHUHIRUHXQDEOHWRFRPSHWHDQG
DUH UHOHJDWHG WR ORZYDOXH ORFDO PDUNHWV ZKLFK
VWURQJO\ GLVDGYDQWDJH WKHP LQ WKH FRPSHWLWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
IRU ODQG ZDWHU RU RWKHU SURGXFWLYH UHVRXUFHV 'H
6FKXWWHUEDQGE7KLVULVNVSHUSHWXDWLQJ
XQVXVWDLQDEOH DJULFXOWXUDO SUDFWLFHV DV VPDOO
IDUPHUV DUH IXUWKHU PDUJLQDOL]HG )XUWKHUPRUH
GHSHQGHQFH RQ WKLV LQFUHDVLQJO\ FRQFHQWUDWHG
JOREDO IRRG VXSSO\ FKDLQ LQWHQVLÀHV YXOQHUDELOLW\
WR VKRFNV ZKHWKHU IURP H[WUHPH ZHDWKHU HYHQWV
RU H[FHVVLYH ÀQDQFLDO VSHFXODWLRQ LQ DJULFXOWXUDO
PDUNHWV VHH FRPPHQW E\ /LOOLVWRQ DQG +DQVHQ
.XKQLQWKLVFKDSWHU
+RZHYHU PXOWLQDWLRQDO FRUSRUDWLRQV DUH QHLWKHU
VXEMHFWHG WR PXFK GLVFLSOLQH QRU WR REOLJDWLRQV
UHODWLQJWRWKHLUH[HUFLVHRISRZHURQWKHPDUNHWZKLFK
UHVXOWV LQ D FULWLFDO JRYHUQDQFH JDS 'H 6FKXWWHU
D %HFDXVH RI WKLV DQG WKHLU PDUNHW SRVLWLRQV
PRVW RI WKH EHQHÀWV IURP JOREDO IRRG VXSSO\ FKDLQV
DFFUXH WR FRPPRGLW\ EX\HUV IRRG SURFHVVRUV DQG
UHWDLOHUVUDWKHUWKDQWRGHYHORSLQJFRXQWU\SURGXFHUV
'H6FKXWWHUEDQGE
,PSURYLQJ WKH UXUDO SRRU·V PDUNHW SDUWLFLSDWLRQ LV
LPSRUWDQW EHFDXVH LI WKHVH PDUNHWV ZRUN ZHOO DQG
DUHLQFOXVLYHRIVPDOOKROGHUIDUPHUVWKH\FDQSURYLGH
VWURQJ LQFHQWLYHV IRU WKRVH IDUPHUV WR PDNH WKH
QHFHVVDU\LQYHVWPHQWVDQGWDNHWKHUHTXLVLWHULVNVWR
HQKDQFH WKHLU DELOLW\ WR UHVSRQG WR PDUNHW GHPDQG
,)$' LQFOXGLQJ LQYHVWLQJ LQ HFRORJLFDO
DJULFXOWXUHIRUZKLFKWKHUHDUHYDOXDEOHQLFKHPDUNHWV
HJ IRU RUJDQLF SURGXFH DV GLVFXVVHG LQ WKH QH[W
VHFWLRQ0RUHRYHULISRRUUXUDOIDUPHUVZHUHDEOHWR
EHQHÀWIURPWKHLUSDUWLFLSDWLRQLQPDUNHWVWKH\FRXOG
JUDGXDOO\ VDYH DQG DFFXPXODWH DVVHWV LQFUHDVLQJ
QRW RQO\ WKHLU RZQ SURVSHULW\ EXW DOVR WKHLU FDSDFLW\
WR GHDO ZLWK ULVNV DQG VKRFNV ,)$' 7KLV
ZRXOGDOVRHQDEOHWKHPWRGHDOEHWWHUZLWKVRPHRI
WKH FKDOOHQJHV DVVRFLDWHG ZLWK FOLPDWH FKDQJH IRU
H[DPSOH
((QYLURQPHQWDOVXVWDLQDELOLW\
&RQYHQWLRQDO DQG LQWHQVLYH DJULFXOWXUH LV FKDUDFWHU
L]HGE\PHFKDQL]DWLRQDQGWKHXVHRIFKHPLFDOIHUWLOL]
HUVDQGSHVWLFLGHVDVZHOODVDUHOLDQFHRQLUULJDWLRQ
DQGIRVVLOIXHOV7KHVHKDYHFRQWULEXWHGWRFRQVLGHU
DEOH HQYLURQPHQWDO GDPDJH LQFOXGLQJ DFFHOHUDWHG
ORVVRIELRGLYHUVLW\DQGHFRV\VWHPVHUYLFHVVXFKDV
WKRVHQHFHVVDU\IRUWKHSURGXFWLRQRIIRRGDQGZDWHU
RUIRUFRQWUROOLQJGLVHDVHLQFUHDVHG*+*HPLVVLRQV
DV ZHOO DV FRQVLGHUDEOH KHDOWK LPSDFWV ,$$67'
:RUOG%DQN
0RUHRYHU FOLPDWH FKDQJH KDV WKH SRWHQWLDO WR
XQGHUPLQH WKH UHVRXUFH EDVH RQ ZKLFK DJULFXOWXUH
GHSHQGV $JULFXOWXUH KDV WR FRSH ZLWK LQFUHDVHG
FOLPDWHYDULDELOLW\DQGPRUHH[WUHPHZHDWKHUHYHQWV
:KLOH ORFDO PHDQ WHPSHUDWXUH LQFUHDVHV RI ƒ²ƒ&
ZRXOG DIIHFW FURS SURGXFWLYLW\ GLIIHUHQWO\ GHSHQGLQJ
RQ ODWLWXGHV ZLWK WURSLFDO DQG DULG UHJLRQV VXIIHULQJ
PRUH ZDUPLQJ DERYH ƒ& ZRXOG KDYH LQFUHDVLQJO\
QHJDWLYH LPSDFWV LQ DOO UHJLRQV (DVWHUOLQJ HW DO
,QVRPH$IULFDQFRXQWULHV\LHOGVIURPUDLQIHG
DJULFXOWXUH LPSRUWDQW IRU WKH SRRUHVW IDUPHUV FRXOG
EH UHGXFHG E\ XS WR SHU FHQW E\ ,3&&
EZKLFKZRXOGLQFUHDVHWKHQXPEHURISHRSOH
DWULVNRIKXQJHU
+RZHYHU WKH LPSDFWV RI DJULFXOWXUH RQ WKH HQYLURQ
PHQWDQGKXPDQKHDOWKDQGWKHUHODWLRQVKLSEHWZHHQ
DJULFXOWXUHDQGFOLPDWHFKDQJHDUHXVXDOO\LJQRUHGLQ
LQWHUQDWLRQDOWUDGHGLVFXVVLRQVGHVSLWHWKHUHSHUFXV
VLRQVWKHVHFRXOGKDYHRQWKHULJKWWRDGHTXDWHIRRG
'H6FKXWWHUD
$SURJUHVVLYHVZLWFKWRPRUHLQSXWDQGHQHUJ\LQWHQ
VLYHIRUPVRIDJULFXOWXUDOSURGXFWLRQFDQQRWEHDWWULE
XWHG GLUHFWO\ WR WKH LQFUHDVH LQ JOREDO WUDGH LQ DJUL
FXOWXUDOFRPPRGLWLHVEXWWKLVWUHQGKDVEHHQHQFRXU
DJHGE\WKHVSHFLDOL]DWLRQRIFRXQWULHVLQFDVKFURSV
IRUH[SRUW'H6FKXWWHUD,QWHQVLYHODUJHVFDOH
LQGXVWULDO H[SRUWRULHQWHG DJULFXOWXUH KDV LQFUHDVHG
XQGHU WKH WUDGH OLEHUDOL]DWLRQ DJHQGD VHH FRPPHQW
E\/LOOLVWRQDQG+DQVHQ.XKQLQWKLVFKDSWHUZLWKDG
YHUVHFRQVHTXHQFHVVXFKDVWKHORVVRIVRLOQXWULHQWV
DQGZDWHUIURPDJULFXOWXUDOODQGVDQGXQVXVWDLQDEOH
VRLODQGZDWHUPDQDJHPHQW,$$67'
,Q DGGLWLRQ WKH IDLOXUH RI PDUNHWV WR YDOXH DQG LQWHU
QDOL]HHQYLURQPHQWDODQGVRFLDOFRVWVLQWKHSULFHVRI
WUDGHGDJULFXOWXUDOSURGXFWVRUWRSURYLGHLQFHQWLYHV
IRUVXVWDLQDELOLW\KDVDOVRSOD\HGDSDUWLQHQWUHQFK
LQJ XQVXVWDLQDEOH SUDFWLFHV LQ DJULFXOWXUH ,$$67'
,QDSSURSULDWH SULFLQJ DQG VXEVLG\ SROLFLHV
DQGWKHIDLOXUHWRPDQDJHH[WHUQDOLWLHVDOVRKLQGHUWKH
ZLGHVSUHDGDGRSWLRQRIPRUHVXVWDLQDEOHDJULFXOWXUDO
SUDFWLFHV :RUOG %DQN 7KH VLWXDWLRQ LV FRP
SRXQGHGE\SULFHYRODWLOLW\ZKHUHH[WUHPHO\ORZDJUL
FXOWXUDOFRPPRGLW\SULFHVRYHUWKHSDVWWZRGHFDGHV
IROORZHG E\ WKH UHFHQW SULFH KLNHV KDV GLVFRXUDJHG
ORQJWHUP LQYHVWPHQWV LQ PRUH VXVWDLQDEOH HFRORJL
FDODJULFXOWXUHVHHFRPPHQWE\/LOOLVWRQDQG+DQVHQ
.XKQLQWKLVFKDSWHU
*LYHQ WKH JURZLQJ FRQFHUQV DERXW FOLPDWH FKDQJH
DQG WKH LPSHUDWLYH IRU DOOHYLDWLQJ UXUDO SRYHUW\ WKHUH
LVDQXUJHQWQHHGWRPRYHWRZDUGVPRUHVXVWDLQDEOH
HQYLURQPHQWDOO\IULHQGO\DJULFXOWXUDOSUDFWLFHVWKDWDUH
PRUHUHVLOLHQWDQGOHVVLQSXWDQGHQHUJ\LQWHQVLYH'H
6FKXWWHUDDQG7KLVLVHVSHFLDOO\SHUWLQHQW
LQWKHFXUUHQWFRQWH[WRIWKHVFDUFLW\DQGKLJKSULFHVRI
RLOVHHFRPPHQWE\+HLQEHUJLQWKLVFKDSWHU7KHUH
LVLQFUHDVLQJHYLGHQFHWKDWVXVWDLQDEOHRUHFRORJLFDO
DJULFXOWXUH FDQ FRQWULEXWH WR FOLPDWH FKDQJH
DGDSWDWLRQDQGPLWLJDWLRQZKLOHDOVREHLQJSURGXFWLYH
HJ'H6FKXWWHU,7&DQG)L%/1LJJOLHW
DO6FLDODEEDDQG0OOHU/LQGHQODXIDOVR
FRPPHQWE\+HLQEHUJ
$FFRUGLQJ WR WKH 8QLWHG 1DWLRQV 6SHFLDO 5DSSRUWHXU
RQ WKH ULJKW WR IRRG IXWXUH UHJXODWLRQ RI LQWHUQDWLRQDO
WUDGHLQDJULFXOWXUHVKRXOGWDNHLQWRDFFRXQWWKHLPSDFW
RIYDULRXVPRGHVRIDJULFXOWXUDOSURGXFWLRQRQFOLPDWH
FKDQJHWRDOORZFRXQWULHVWRSURYLGHLQFHQWLYHVLQIDYRXU
RI IRUPV RI SURGXFWLRQ VXFK DV RUJDQLF DJULFXOWXUH
DQG DJURHFRORJLFDO SUDFWLFHV ZKLFK UHVSHFW WKH
HQYLURQPHQW ZKLOH DW WKH VDPH WLPH FRQWULEXWLQJ WR
IRRGVHFXULW\7KLVVXSSRUWVWKHFDOOE\WKH,QWHUQDWLRQDO
$VVHVVPHQW RQ $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG
7HFKQRORJ\IRU'HYHORSPHQW,$$67'IRUDSDUDGLJP
VKLIWLQDJULFXOWXUHWRZDUGVDJURHFRORJ\
$PDMRUWDVNLVWRWUDQVIRUPWKHXQLIRUPPRGHORITXLFN
À[ LQGXVWULDO DJULFXOWXUH WKDW LV KLJKO\ GHSHQGHQW RQ
H[WHUQDOLQSXWVLQWRÁH[LEOH´UHJHQHUDWLYHµDJULFXOWXUDO
V\VWHPVWKDWFRQWLQXRXVO\UHFUHDWHWKHUHVRXUFHVWKH\
XVH DQG DFKLHYH KLJKHU SURGXFWLYLW\ DQG SURÀWDELOLW\
RI WKH V\VWHPV EXW QRW QHFHVVDULO\ RI LQGLYLGXDO
SURGXFWV ZLWK PLQLPDO H[WHUQDO LQSXWV LQFOXGLQJ
HQHUJ\ +RIIPDQQ $ PRVDLF RI UHJHQHUDWLYH
V\VWHPVPD\LQFOXGHELRG\QDPLFDJULFXOWXUHRUJDQLF
DJULFXOWXUHDJURHFRORJ\LQWHJUDWHGFURSDQGOLYHVWRFN
IDUPLQJDQGVLPLODUSUDFWLFHV
7KH WUDGH SROLF\ IUDPHZRUN VKRXOG VXSSRUW VXFK D
WUDQVIRUPDWLRQ RI DJULFXOWXUH UDWKHU WKDQ HQFRXUDJH
WKH SUHYDLOLQJ XQVXVWDLQDEOH V\VWHP 0RUHRYHU LI
WKH LPSDFWV RI VWUXFWXUDO DGMXVWPHQW DQG LPSRUW
OLEHUDOL]DWLRQ DQG WKH LPEDODQFHV LQ WUDGH UXOHV DQG
PDUNHW VWUXFWXUH DUH QRW DGGUHVVHG FRXQWULHV DUH
XQOLNHO\ WR PRYH WRZDUGV PRUH VXVWDLQDEOH PRGHV
RI SURGXFWLRQ ,W LV XQOLNHO\ IRU H[DPSOH WKDW ODUJH
IDUPVWKDWUHO\RQVLJQLÀFDQWVXEVLGLHVWREHSURÀWDEOH
ZLOO PDNH D VLJQLÀFDQW VKLIW WR HFRORJLFDO DJULFXOWXUH
SUDFWLFHVXQOHVVWKHUHLVFRPSUHKHQVLYHUHIRUPRIWKH
V\VWHP RI VXEVLGLHV LQFOXGLQJ ORZHULQJ RU UHPRYLQJ
VRPH RI WKH VRFDOOHG ´JUHHQµ VXEVLGLHV WKDW IDOO
LQ WKH *UHHQ %R[ +RIIPDQQ $W WKH VDPH
WLPH IDUPHUV VKRXOG EH JLYHQ DGHTXDWH VXSSRUW IRU
HFRORJLFDODJULFXOWXUHSUDFWLFHV
75$'($1'(19,5210(175(9,(:
+RZHYHU D VXSSRUWLYH WUDGH IUDPHZRUN VKRXOG
DYRLG SURWHFWLRQLVP LQ WKH JXLVH RI HQYLURQPHQWDO
SURWHFWLRQ 6RXWK &HQWUH ,W VKRXOG DOVR
VXSSRUWWKH´JUHHQLQJµRIVXEVLGLHVDQGLQZD\VWKDW
ZLOOJLYHJUHDWHUSROLF\VSDFHWRGHYHORSLQJFRXQWULHV
(QYLURQPHQWDO VWDQGDUGV ODEHOOLQJ DQG RWKHU LVVXHV
ZRXOGDOVRQHHGWREHGHDOWZLWKIURPD´VXVWDLQDEOH
GHYHORSPHQWµ SHUVSHFWLYH 'HYHORSLQJ FRXQWULHV
VKRXOGEHSURYLGHGZLWKUHVRXUFHVDQGWHFKQRORJLHV
IRU XSJUDGLQJ WKHLU H[LVWLQJ HQYLURQPHQWDO
WHFKQRORJLHV DQG VWDQGDUGV ,Q DGGLWLRQ WKH IXOO
DQGHIIHFWLYHSDUWLFLSDWLRQRIGHYHORSLQJFRXQWULHVLQ
VHWWLQJLQWHUQDWLRQDOVWDQGDUGVVKRXOGEHDVVXUHGDV
DOVRWKHFRQFRPLWDQWDVVLVWDQFHSDUWLFXODUO\WRVPDOO
VFDOHIDUPHUVWRFRPSO\ZLWKVXFKVWDQGDUGV
0HDVXUHV VKRXOG DOVR EH WDNHQ WR HQFRXUDJH
RUJDQLF IDUPLQJ ZKLFK LV QRW RQO\ EHQHÀFLDO WR WKH
HQYLURQPHQWEXWDOVRSURYLGHVWUDGHRSSRUWXQLWLHVIRU
VPDOOKROGHU IDUPHUV LQ GHYHORSLQJ FRXQWULHV 1LFKH
PDUNHWVVXFKDVRUJDQLFFDQSURYLGHSULFHSUHPLXPV
DQGRU ORQJWHUP FRQWUDFWV ,)$' 7KH WRWDO
JOREDORUJDQLFPDUNHWZDVZRUWKELOOLRQLQ
KDYLQJ JURZQ E\ SHU FHQW IURP WKH SUHYLRXV \HDU
GHVSLWHWKHHFRQRPLFDQGÀQDQFLDOFULVLV:LOOHUDQG
.LOFKHU*OREDOUHYHQXHVKDYHLQFUHDVHGPRUH
WKDQ WKUHHIROG IURP ELOOLRQ LQ DQG GRXEOH
GLJLWJURZWKUDWHVZHUHREVHUYHGHDFK\HDUH[FHSWLQ
$V WKHUH LV D VLJQLÀFDQW LQFUHDVH LQ FRQVXPHU
GHPDQGIRURUJDQLFIRRGVZRUOGZLGHWKHUHLVDOVRDQ
RSSRUWXQLW\ IRU VPDOO IDUPHUV WR PDUNHW WKHLU VXUSOXV
RUJDQLF SURGXFWV LQ QDWLRQDO UHJLRQDO DQG JOREDO
PDUNHWV 7KXV D FKDQJH LQ FRQVXPHU WDVWHV DQG
GHPDQG WRZDUGV RUJDQLF IRRGV RU PRUH JHQHUDOO\
IRRGVSURGXFHGXVLQJHFRORJLFDODJULFXOWXUHPHWKRGV
FDQPRWLYDWHFKDQJHVLQSURGXFWLRQV\VWHPV$WWKH
VDPH WLPH LW FDQ LQFUHDVH WKH RSSRUWXQLWLHV DQG
PDUNHWV IRU VPDOO IDUPHUV WKHUHE\ LPSURYLQJ WKHLU
OLYHOLKRRGV6RXWK&HQWUH
0DQ\ JRYHUQPHQWV LQ ERWK GHYHORSHG DQG GHYHORSLQJ
FRXQWULHV KDYH DQQRXQFHG SODQV WR LQFUHDVH RUJDQLF
IDUPLQJ SUDFWLFHV +RZHYHU ZKLOH GHYHORSHGFRXQWU\
JRYHUQPHQWV RIIHU VLJQLÀFDQW VXEVLGLHV IRU RUJDQLF
IDUPLQJ VLPLODU ÀQDQFLQJ LV VFDUFH LQ GHYHORSLQJ
FRXQWULHV 0RUH SURDFWLYH PHDVXUHV DUH UHTXLUHG LQ
GHYHORSLQJFRXQWULHVWRSURPRWHRUJDQLFIDUPLQJDQGWR
RYHUFRPHREVWDFOHVWRSURGXFWLRQPDUNHWLQJDQGWUDGH
2QHLVVXHWKDWQHHGVWREHDGGUHVVHGLVWKHGLIÀFXOWLHV
IDFHGE\GHYHORSLQJFRXQWU\SURGXFHUVLQDGKHULQJWR
RUJDQLF VWDQGDUGV 7KLV LV QRW VR PXFK DQ LVVXH DW
WKHQDWLRQDOOHYHOEXWLVDPDMRUSUREOHPIRUSRWHQWLDO
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
H[SRUWHUV ZKR QHHG WR FRPSO\ ZLWK PDQ\ WHFKQLFDO
UHJXODWLRQV VWDQGDUGV DQG FHUWLÀFDWLRQ V\VWHPV $V
81&7$' SRLQWV RXW LW LV LPSRUWDQW WR ÀQG D
EDODQFHEHWZHHQWKHQHHGIRUKDUPRQL]DWLRQIRUWUDGH
DQGIDLUFRPSHWLWLRQDQGWKHQHHGWRWDNHLQWRDFFRXQW
ORFDO DQG UHJLRQDO FRQGLWLRQV DQG UHTXLUHPHQWV 7R
RYHUFRPH WKH FKDOOHQJH RI WKLUGSDUW\ FHUWLÀFDWLRQ
IDFHGE\VPDOOKROGHUIDUPHUVLQGHYHORSLQJFRXQWULHV
ZKLFK LV H[SHQVLYH YDULRXV VFKHPHV KDYH EHHQ
GHYHORSHGVXFKDVSDUWLFLSDWRU\JXDUDQWHHV\VWHPV
DQGJURXSFHUWLÀFDWLRQ7KHVHDOWHUQDWLYHVZKLFKDUH
PRUHDFFHVVLEOHWRVPDOOKROGHUIDUPHUVDQGSURYLGH
WKH TXDOLW\ DVVXUDQFH WKDW FRQVXPHUV QHHG VKRXOG
EHIXUWKHUSURPRWHGDOVRVHHWKHFRPPHQWRI7ZDURJ
LQWKLVFKDSWHU
$ VXSSRUWLYH WUDGH IUDPHZRUN FDQ WKXV DVVLVW LQ
WKH WUDQVLWLRQ WR HFRORJLFDO DJULFXOWXUH DQG RUJDQLF
IDUPLQJ )DUPHUV XVLQJ VXVWDLQDEOH DSSURDFKHV
VKRXOG EH VXSSRUWHG E\ SURDFWLYH 6WDWH LQWHUYHQWLRQ
6RXWK&HQWUHLQFOXGLQJSXEOLFVHFWRUÀQDQFLDO
DQGWHFKQLFDOVXSSRUWDVZHOODVH[WHQVLRQVHUYLFHV
WR LQWURGXFH EHVW SUDFWLFHV LQ HFRORJLFDO DJULFXOWXUH
2WKHU 6WDWHOHG VHUYLFHV FRXOG LQFOXGH HFRORJLFDO
UHKDELOLWDWLRQ SURYLVLRQ RI RUJDQLF VHHGV FUHGLW DQG
PDUNHWLQJ VXSSRUW &RQFXUUHQWO\ WKH GRPHVWLF WDULII
SROLF\ VKRXOG HQDEOH VPDOO IDUPHUV WR ZLWKVWDQG
FRPSHWLWLRQIURPLPSRUWV
)$WUDGHIUDPHZRUNVXSSRUWLYHRIIRRG
VHFXULW\DQGVXVWDLQDELOLW\
$WUDGHIUDPHZRUNWKDWLVVXSSRUWLYHRIIRRGVHFXULW\
DQG VXVWDLQDELOLW\ ZLOO QHHG WR IRFXV RQ VPDOOKROGHU
IDUPHUV LQ GHYHORSLQJ FRXQWULHV DQG HQFRXUDJH
GRPHVWLF SURGXFWLRQ 7KLV FRXOG EH DFKLHYHG
E\ KHOSLQJ VPDOOVFDOH SURGXFHUV LPSURYH WKHLU
SURGXFWLYLW\ SDUWLFXODUO\ WKURXJK HFRORJLFDO PHDQV
DQGVWUHQJWKHQLQJWKHLUDFFHVVWRORFDOPDUNHWVZKLOH
VKLHOGLQJ WKHP IURP WKH QHJDWLYH LPSDFWV RI XQGXO\
VXEVLGL]HGLPSRUWVRIIRRGFRPPRGLWLHV'H6FKXWWHU
D6XSSRUWWRVXVWDLQDEOHVPDOOVFDOHDJULFXOWXUH
HVSHFLDOO\LQWHUPVRIHQVXULQJDFFHVVWRODQGZDWHU
JHQHWLFUHVRXUFHVDQGFUHGLWDQGE\LQYHVWLQJLQDQG
LPSURYLQJDFFHVVWRUXUDOLQIUDVWUXFWXUHLVFULWLFDODV
LV WKH QHHG WR XQWDQJOH ORFDO IRRG HFRQRPLHV IURP
WKHJULSRIVXSSO\FKDLQVGRPLQDWHGE\PXOWLQDWLRQDO
FRUSRUDWLRQV VHH DOVR FRPPHQW E\ /LOOLVWRQ DQG
+DQVHQ.XKQLQWKLVFKDSWHU
,Q RWKHU ZRUGV WKH SOLJKW RI VPDOOVFDOH IDUPHUV LQ
GHYHORSLQJ FRXQWULHV VKRXOG EH DGGUHVVHG WKURXJK
D FRPELQDWLRQ RI SROLFLHV WKDW VXSSRUW HFRORJLFDO
DJULFXOWXUH WKURXJK LQYHVWPHQWV LQ 5' H[WHQVLRQ
VHUYLFHV DQG UXUDO LQIUDVWUXFWXUH VXEVLGLHV DQG
PDUNHWLQJ VXSSRUW DORQJ ZLWK DQ DSSURSULDWH WUDGH
SROLF\ WKDW SURWHFWV IDUPHUV IURP FKHDS LPSRUWV $W
WKHVDPHWLPHUHIRUPRIWKHLQWHUQDWLRQDOWUDGHUHJLPH
VKRXOG LQFOXGH UHTXLULQJ GHYHORSHG FRXQWULHV WR
VXIÀFLHQWO\UHGXFHRUUHPRYHKDUPIXOVXEVLGLHVZKLOH
SURYLGLQJGHYHORSLQJFRXQWULHVZLWKVSHFLDOWUHDWPHQW
DQG VDIHJXDUG PHFKDQLVPV WR SURPRWH WKHLU VPDOO
IDUPHUV·OLYHOLKRRGV.KRU
$W WKH LQWHUQDWLRQDO OHYHO WKLV VKRXOG LQFOXGH WKH
HOLPLQDWLRQ RI VXEVLGLHV IRU DJULFXOWXUDO H[SRUWV
DV DJUHHG LQ WKH :72·V +RQJ .RQJ 0LQLVWHULDO
'HFODUDWLRQDQGIXUWKHUGLVFLSOLQHRQGRPHVWLF
VXSSRUW DQG WKH UHGXFWLRQ RI WUDGH GLVWRUWLRQV
FDXVHGE\WKHODUJHGRPHVWLFVXEVLGLHVSURYLGHGE\
GHYHORSHG FRXQWULHV DV VWDWHG LQ WKH :72·V 'RKD
0LQLVWHULDO'HFODUDWLRQ
$W WKH QDWLRQDO OHYHO GHYHORSLQJ FRXQWULHV VKRXOG
FDOLEUDWHWKHLUGHJUHHRIWUDGHOLEHUDOL]DWLRQVRWKDWLW
LV LQ OLQH ZLWK WKHLU REMHFWLYHV DQG QDWLRQDO UHDOLWLHV
&RXQWULHVWKDWGRQRWKDYHWKHSRWHQWLDORULQWHQWLRQWR
SURGXFHFHUWDLQIRRGVWXIIVPD\KDYHORZRUQRLPSRUW
WDULIIV WR HQDEOH WKHLU SRSXODWLRQV WR REWDLQ LPSRUWHG
IRRG DW WKH ORZHVW FRVW 7KRVH FRXQWULHV WKDW LQWHQG
WR LQFUHDVH IRRG SURGXFWLRQ FDQ WDNH DGYDQWDJH RI
WKH ÁH[LELOLWLHV DOORZHG LQ WKH :72 E\ VHWWLQJ WKHLU
WDULIIV DW WKH DSSURSULDWH OHYHOV LQ RUGHU WR QXUWXUH D
YLDEOH GRPHVWLF IRRG VHFWRU DV ORQJ DV WKH DSSOLHG
WDULIIVGRQRWH[FHHGWKHERXQGUDWHV6RXWK&HQWUH
)XUWKHUPRUH WKRVH GHYHORSLQJ FRXQWULHV ZLWK
DQ H[SRUW LQWHUHVW VKRXOG EH JLYHQ WKH RSSRUWXQLW\
WR H[SDQG WKHLU H[SRUW HDUQLQJV WKURXJK LPSURYHG
PDUNHWDFFHVV
+RZHYHUWKHÁH[LELOLWLHVDYDLODEOHLQ:72DJUHHPHQWV
PD\EHDIIHFWHGLIFRXQWULHVHQWHULQWR)7$VLQZKLFK
WKH\ FRPPLW WR HOLPLQDWH WKHLU WDULIIV IRU D ODUJH
SHUFHQWDJH RI WKHLU SURGXFWV )XUWKHUPRUH DOWKRXJK
/'&VDUHH[HPSWHGIURPUHGXFLQJWKHLUERXQGWDULIIV
LQ WKH 'RKD QHJRWLDWLRQV WKH\ DUH QRW SURYLGHG ZLWK
VLPLODU H[HPSWLRQV RQ WKH EDVLV RI WKHLU /'& VWDWXV
LQ)7$QHJRWLDWLRQV7KXVELODWHUDO)7$VVKRXOGDOORZ
VXIÀFLHQW SROLF\ VSDFH IRU GHYHORSLQJ FRXQWULHV WR
SURPRWHWKHLUDJULFXOWXUDOGHYHORSPHQW
%HVLGHV WKH HVWDEOLVKPHQW RI DQ DSSURSULDWH WDULII
SROLF\ JRYHUQPHQWV FDQ SURYLGH YDULRXV IRUPV
RI HQFRXUDJHPHQW WR ERRVW DJULFXOWXUDO DFWLYLWLHV
LQFOXGLQJ VXEVLGLHV FUHGLW HVWDEOLVKLQJ VHFXULW\ RI
ODQG WHQXUH DQG SURYLVLRQ RI LQSXWV 6RXWK &HQWUH
7KH :72 $JUHHPHQW RQ $JULFXOWXUH VHWV WKH
UXOHVRQWKHH[WHQWRIVXEVLGLHVDOORZHG6LQFHPDQ\
GHYHORSLQJFRXQWULHVSUHYLRXVO\SURYLGHGRQO\OLPLWHG
VXEVLGLHV LI DQ\ PDLQO\ EHFDXVH WKH\ ODFNHG WKH
ÀQDQFLDO UHVRXUFHV WKH\ DUH QRW DOORZHG WR SURYLGH
WKH KLJK OHYHOV RI VXSSRUW JLYHQ E\ GHYHORSHG
FRXQWULHV +RZHYHU WKH $JUHHPHQW RQ $JULFXOWXUH
DOORZVGHYHORSLQJFRXQWU\JRYHUQPHQWVWRSURYLGHD
FHUWDLQ OHYHO RI GH PLQLPLV VXSSRUW HTXLYDOHQW WR SHUFHQWRIWRWDODJULFXOWXUDOYDOXHDVZHOODVWRPDNH
XVH RI WKH FDWHJRU\ RI QRQWUDGHGLVWRUWLQJ VXSSRUW
NQRZQ DV WKH *UHHQ %R[ 7KH GHYHORSLQJ FRXQWULHV
FDQ DYDLO WKHPVHOYHV RI WKHVH ÁH[LELOLWLHV WR SURYLGH
VXEVLGLHV DV WKH\ GHHP DSSURSULDWH HVSHFLDOO\ IRU
HFRORJLFDO DJULFXOWXUH +RZHYHU PDQ\ RI WKHP IDFH
EXGJHWDU\ FRQVWUDLQWV RU VLPSO\ ODFN WKH ÀQDQFLDO
UHVRXUFHVWRGRVR
7KHLQWHUQDWLRQDOWUDGHUHJLPHQHHGVWREHUHIRUPHG
WR EROVWHU HIIRUWV WR SURPRWH HFRORJLFDO DJULFXOWXUH
V\VWHPVZKLFKZRXOGEHQHÀWVPDOOKROGHUIDUPHUVE\
LQFUHDVLQJSURGXFWLYLW\ZKLOHDOVREHLQJPRUHUHVLOLHQW
WR VKRFNV VXFK DV FOLPDWH FKDQJH 6XFK V\VWHPV
ZRXOG DOVR UHGXFH WKH LPSDFWV RI DJULFXOWXUH RQ WKH
HQYLURQPHQW DQG KHDOWK DQG DUH WKHUHIRUH XUJHQWO\
QHHGHG
7KHRSWLRQVIRUDFWLRQGLVFXVVHGEHORZDUHEDVHGRQ
WKHIRXUWKHPHVRIWKLVOHDGDUWLFOH
5HYLHZRIVWUXFWXUDODGMXVWPHQW
UHFRPPHQGDWLRQVDQGDJULFXOWXUDOOLEHUDOL]DWLRQ
SROLFLHV
,Q JHQHUDO WKH QHHG IRU VSHFLDO WUHDWPHQW IRU IRRG
SURGXFWV DOORZLQJ JUDGXDO DQG OHQLHQW OLEHUDOL]DWLRQ
LQVWHDG RI VWHHS WDULII UHGXFWLRQV LV LPSRUWDQW IRU
GHYHORSLQJ FRXQWULHV 7KH\ VKRXOG EH DOORZHG WR
SURYLGHDGHTXDWHVXSSRUWWRWKHLUDJULFXOWXUDOVHFWRUV
DQG WR KDYH UHDOLVWLF WDULII SROLFLHV WR DGYDQFH WKHLU
DJULFXOWXUHHVSHFLDOO\LQYLHZRIWKHSHUVLVWHQWO\KLJK
VXEVLGLHV RI GHYHORSHG FRXQWULHV .KRU 7KH
GHYHORSLQJ FRXQWULHV VKRXOG EH DOORZHG WR FDOLEUDWH
WKHLU DJULFXOWXUDO WDULIIV LQ VXFK D ZD\ DV WR HQVXUH
WKDWWKHLUORFDOSURGXFWVFDQEHFRPSHWLWLYHIDUPHUV·
OLYHOLKRRGV DQG LQFRPHV VXVWDLQDEOH DQG QDWLRQDO
IRRGVHFXULW\DVVXUHG
7KH SROLFLHV RI WKH LQWHUQDWLRQDO ÀQDQFLDO LQVWLWX
WLRQVDQGUHJLRQDOGHYHORSPHQWEDQNVVKRXOGEHUH
YLHZHGDQGUHYLVHGDVVRRQDVSRVVLEOHVRWKDWWKH\
GRQRWFRQWLQXHWRVHUYHDVEDUULHUVWRIRRGVHFXULW\
75$'($1'(19,5210(175(9,(:
DQGDJULFXOWXUDOGHYHORSPHQWLQGHYHORSLQJFRXQWULHV
.KRU $Q LQGHSHQGHQW RQJRLQJ UHYLHZ RI WKH
WUDGHDVSHFWVRIWKHSUHVHQWDQGSURSRVHGFRQGLWLRQ
DOLWLHVRIORDQVLVQHHGHG
/RDQFRQGLWLRQDOLWLHVVKRXOGQRWREOLJHGHYHORSLQJ
FRXQWULHV WR XQGHUWDNH OLEHUDOL]DWLRQ LQ UDWH DQG
VFRSHWKDWLVEH\RQGWKHLUFRSLQJFDSDFLW\RUZKLFK
ZRXOG EH GDPDJLQJ WR WKH OLYHOLKRRGV DQG LQFRPHV
RIWKHLUUXUDOSURGXFHUV7KHDSSURDFKWROLEHUDOL]DWLRQ
LQ GHYHORSLQJ FRXQWULHV VKRXOG EH UHRULHQWHG WR EH
PRUH UHDOLVWLF HVSHFLDOO\ VLQFH GHYHORSHG FRXQWULHV
FRQWLQXH WR PDLQWDLQ KLJK VXEVLGLHV 6RXWK &HQWUH
$W SUHVHQW GHYHORSLQJ FRXQWULHV KDYH ÁH[LELOLWLHV
XQGHU:72UXOHVWRDGMXVWWKHLUDSSOLHGWDULIIVXSZDUGV
WR WKHLU ERXQG UDWHV DQG HYHQ EH\RQG WKH ERXQG
UDWHV LQ FHUWDLQ FLUFXPVWDQFHV /RDQ FRQGLWLRQDOLWLHV
VKRXOG QRW SUHYHQW RU KLQGHU GHYHORSLQJ FRXQWULHV
IURP PDNLQJ XVH RI WKHVH ÁH[LELOLWLHV 6RXWK &HQWUH
7KHUH LV DQ XUJHQW QHHG WR SURYLGH D VSHFLDO
VDIHJXDUG IDFLOLW\ ZKLFK FRXOG EH XVHG VLPSO\ DQG
HIIHFWLYHO\E\GHYHORSLQJFRXQWULHVVRWKDWWKHQHHGHG
LQFUHDVH LQ WDULIIV FDQ EHWWHU SURWHFW WKHLU SURGXFHUV
IURP WKH LPSDFWV RI LPSRUW VXUJHV DV GLVFXVVHG LQ
WKHQH[WVHFWLRQ
5HYHQXHV IURP VXFK WDULIIV FRXOG EH XVHG WR
ÀQDQFHUXUDOGHYHORSPHQWDQGLQIUDVWUXFWXUHVFKHPHV
DLPHG DW EHQHÀWLQJ IDUPHUV 3XEOLF LQYHVWPHQW LQ
VRFLDOSURWHFWLRQIRUQRQIRRGSURGXFLQJKRXVHKROGV
OLYLQJLQSRYHUW\LVDOVRQHHGHG'H6FKXWWHUE
&RPSOHPHQWDU\ SROLFLHV DQG SURJUDPPHV WR
IDFLOLWDWH WUDQVLWLRQV IURP FRQYHQWLRQDO WR VXVWDLQDEOH
DJULFXOWXUHDQGWRVXSSRUWWKHQHWWUDGHORVHUVWKURXJK
SXEOLFLQYHVWPHQWWRVWLPXODWHORQJWHUPJURZWKLQWKH
DJULFXOWXUDO VHFWRU DUH DOVR LPSRUWDQW :RUOG %DQN
5HIRUPLQJWUDGHUXOHVJRYHUQLQJDJULFXOWXUH
$PDMRUFKDOOHQJHDWWKHLQWHUQDWLRQDOOHYHOLVWRPRGLI\
D QXPEHU RI NH\ PDUNHW GLVWRUWLRQV WKDW DFW DV D
GLVLQFHQWLYHWRWKHWUDQVLWLRQWRVXVWDLQDEOHDJULFXOWXUDO
SUDFWLFHV LQ GHYHORSLQJ FRXQWULHV +RIIPDQQ 6XFKGLVWRUWLRQVDULVHIURPWKHVLJQLÀFDQWVXEVLGL]DWLRQ
RIDJULFXOWXUDOSURGXFWLRQLQGHYHORSHGFRXQWULHVDQG
WKHLUH[SRUWRIWKLVRXWSXWWRGHYHORSLQJFRXQWULHV$V
ORQJDVVXFKVXEVLGLHVDUHQRWVLJQLÀFDQWO\DOWHUHGE\
WKHFXUUHQW:72QHJRWLDWLRQVLWLVGLIÀFXOWWRLPDJLQH
KRZ GHYHORSLQJFRXQWU\ SURGXFHUV FRXOG LPSOHPHQW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
DSDUDGLJPVKLIWWRZDUGVHFRORJLFDODJULFXOWXUHRQWKH
PDVVLYH VFDOH QHFHVVDU\ WR KDYH DQ LPSDFW $SDUW
IURPUHDOUHGXFWLRQRIGRPHVWLFVXSSRUWLQGHYHORSHG
FRXQWULHV UHIRUPV VKRXOG LQFOXGH LPSURYHG PDUNHW
DFFHVV IRU GHYHORSLQJFRXQWU\ SURGXFH DQG SROLF\
VSDFH WR VXSSRUW WKH DJULFXOWXUDO VHFWRU DOORZ
H[SDQVLRQ RI ORFDO IRRG SURGXFWLRQ DQG WKH XVH
RI HIIHFWLYH LQVWUXPHQWV WR SURPRWH IRRG VHFXULW\
IDUPHUV· OLYHOLKRRGV DQG UXUDO GHYHORSPHQW 7KLV
QHFHVVLWDWHV D UHFRQVLGHUDWLRQ RI WUDGH UXOHV LQ WKH
:72 DQG LQ YDULRXV )7$V 6RXWK &HQWUH DV
IROORZV
([SRUW VXEVLGLHV LQ GHYHORSHG FRXQWULHV VKRXOG
EHHOLPLQDWHGE\DVDJUHHGLQWKH:72·V+RQJ
.RQJ0LQLVWHULDO'HFODUDWLRQ
7KHUH VKRXOG EH DQ HIIHFWLYH GHHS UHGXFWLRQ RI
GRPHVWLF VXSSRUW LQ DFWXDO OHYHOV DQG QRW MXVW WKH
ERXQG OHYHOV LQ GHYHORSHG FRXQWULHV ZLWK DV IHZ
ORRSKROHV DV SRVVLEOH DQG ZLWK QR RU PLQLPDO ´ER[
VKLIWLQJµ LH VKLIWLQJ RI VXEVLGLHV WRZDUGV WKRVH
GHHPHG WR EH QRQGLVWRUWLQJ RU PLQLPDOO\ GLVWRUWLQJ
ZKLFK DUH QRW VXEMHFW WR DQ\ GLVFLSOLQHV EXW ZKLFK
FRXOGDOVRKDYHVLJQLÀFDQWHIIHFWVRQWKHPDUNHWDQG
RQWUDGH7KLVVKRXOGLQFOXGHUHGXFWLRQVLQWKHDFWXDO
27'6DVZHOODVDQREMHFWLYHUHYLHZRIWKHQDWXUHDQG
HIIHFWV RI YDULRXV VXEVLGLHV QRZ FODVVLÀHG DV *UHHQ
%R[ VXEVLGLHV OHDGLQJ WR VWULFWHU GLVFLSOLQHV DQG
UHGXFWLRQV
'HYHORSLQJFRXQWULHVVKRXOGEHDOORZHGDGHTXDWH
SROLF\VSDFHWRHQDEOHWKHPWRXVHGRPHVWLFVXEVLGLHV
IRUVXSSRUWLQJIDUPHUV·OLYHOLKRRGVDQGIRRGVHFXULW\
7KHVHFRXOGLQFOXGHWKHSURYLVLRQRIORZFRVWFUHGLW
DVVLVWDQFHIRUWKHVXSSO\RILQSXWVVWRUDJHIDFLOLWLHV
URDG DQG WUDQVSRUW LQIUDVWUXFWXUH VWUHQJWKHQLQJ RI
H[WHQVLRQVHUYLFHVPDUNHWLQJIDFLOLWLHVDQGQHWZRUNV
DQGVXSSRUWIRUYDOXHDGGHGSURFHVVLQJRIDJULFXOWXUDO
SURGXFWV 'HYHORSLQJ FRXQWULHV FRXOG H[DPLQH WKH
DYHQXHVDYDLODEOHWRWKHPIRUPDNLQJXVHRIGRPHVWLF
VXEVLGLHV IRU H[DPSOH WKURXJK WKH GH PLQLPLV
VXEVLGLHV DQG LI WKLV LV QRW VXIÀFLHQW WR H[SORUH WKH
SRVVLELOLW\RIXVLQJPRUHVXEVLGLHVLQFOXGLQJWKRVHLQ
WKH*UHHQ%R[
'HYHORSLQJFRXQWULHVVKRXOGKDYHDGHTXDWHSROLF\
VSDFH WR PDNH XVH RI WDULIIV WR SURWHFW WKH LQWHUHVWV
RIWKHLUGRPHVWLFIDUPHUVDQGSURPRWHIRRGVHFXULW\
DQG UXUDO GHYHORSPHQW 7KH\ VKRXOG EH DEOH WR XVH
WKHÁH[LELOLWLHVLQWKH:72UXOHVWRDGMXVWWKHLUDSSOLHG
WDULIIVWRWKHDSSURSULDWHOHYHODVORQJDVWKHVHGRQRW
H[FHHGWKHERXQGOHYHO
7KH:72UXOHVVKRXOGHQDEOHGHYHORSLQJFRXQWULHV
WRSURPRWHIRRGVHFXULW\IDUPHUV·OLYHOLKRRGVDQGUXUDO
GHYHORSPHQWWKURXJKWKHHIIHFWLYHXVHRIWKH63DQG
660LQVWUXPHQWV6RIDURQO\GHYHORSHGFRXQWULHVDQG
DIHZGHYHORSLQJFRXQWULHVDUHDEOHWRPDNHXVHRID
VSHFLDO DJULFXOWXUDO VDIHJXDUG 66* DOO GHYHORSLQJ
FRXQWULHVVKRXOGEHDOORZHGWRPDNHXVHRIWKLVIDFLOLW\
WR SUHYHQW LPSRUW VXUJHV XQWLO D SHUPDQHQW 660 IRU
GHYHORSLQJFRXQWULHVLVHVWDEOLVKHG
7KH GHYHORSLQJ FRXQWULHV· JRDOV RI IRRG VHFXULW\
DQGSURWHFWLRQRIIDUPHUV·OLYHOLKRRGVVKRXOGEHJLYHQ
SULRULW\E\QHJRWLDWRUVRI)7$V7KHSHUFHQWDJHRIJRRGV
LGHQWLÀHGIRUWDULIIHOLPLQDWLRQE\GHYHORSLQJFRXQWULHV
VKRXOG EH DGMXVWHG LI QHFHVVDU\ WR DFFRPPRGDWH
WKHQHHGWRH[FOXGHVHQVLWLYHDJULFXOWXUDOSURGXFWV,Q
WKHOLJKWRIWKHIRRGFULVLVGHYHORSLQJFRXQWULHVWKDW
KDYH VLJQHG RU DUH QHJRWLDWLQJ )7$V VKRXOG HQVXUH
WKDW VXFK DJUHHPHQWV ZLOO SURYLGH HQRXJK SROLF\
VSDFHWRDOORZWKHPWRLPSRVHVXIÀFLHQWO\KLJKWDULIIV
RQ DJULFXOWXUDO LPSRUWV VR WKDW WKH\ FDQ UHEXLOG DQG
VWUHQJWKHQWKHLUDJULFXOWXUHVHFWRUVLQRUGHUWRDFKLHYH
IRRG VHFXULW\ DQG SURPRWH IDUPHUV· OLYHOLKRRGV DQG
UXUDOGHYHORSPHQW
$GGUHVVLQJLPEDODQFHVLQPDUNHWVWUXFWXUH
6WHSVVKRXOGEHWDNHQIRUWKHHVWDEOLVKPHQWRIQDWLRQDO
DQG LQWHUQDWLRQDO UXOHV IRU UHJXODWLQJ WKH DFWLYLWLHV RI
FRPPRGLW\ EX\HUV SURFHVVRUV DQG UHWDLOHUV LQ WKH
JOREDOIRRGVXSSO\FKDLQ6SHFLÀFSROLFLHVWRVXSSRUW
VPDOOKROGHU IDUPHUV SDUWLFXODUO\ ZRPHQ IDUPHUV LQ
JDLQLQJDFFHVVWRPDUNHWVZRXOGDOVREHLPSRUWDQW
7KHDSSOLFDWLRQRIFRPSHWLWLRQODZWRSUHYHQWWKH
FUHDWLRQ PDLQWHQDQFH DQG DEXVH RI EX\HU SRZHU
GRPLQDWLRQ SRVLWLRQV LQ VXSSO\ FKDLQV LV QHFHVVDU\
&RPSHWLWLRQ UHJLPHV VHQVLWLYH WR H[FHVVLYH EX\HU
SRZHU LQ WKH DJULIRRG VHFWRU DQG FRPSHWLWLRQ
PHFKDQLVPV WKDW DOORZ DIIHFWHG VXSSOLHUV WR ORGJH
FRPSODLQWVZLWKRXWIHDURIUHSULVDOE\GRPLQDQWEX\HUV
DUHQHHGHG'H6FKXWWHUE
7KHUH LV D QHHG IRU DQWLWUXVW PHDVXUHV WR EUHDN
XS PRQRSROLHV DQG JOREDO SULFHÀ[LQJ FDUWHOV DQ
LQWHUQDWLRQDO UHYLHZ PHFKDQLVP WR LQYHVWLJDWH DQG
PRQLWRU FRQFHQWUDWLRQ LQ WKH DJULIRRG VHFWRU DQG
LQYHVWLJDWLRQV LQWR WKH EHKDYLRXU RI LQWHUQDWLRQDO
FRUSRUDWLRQVHQJDJHGLQDJULFXOWXUDOWUDGLQJDQGIRRG
UHWDLOLQJ DQG WKHLU LPSDFWV RQ IDUPHUV IDUP ZRUNHUV
FRQVXPHUVDQGYXOQHUDEOHSRSXODWLRQV3$11$
6WDWHV VKRXOG SURDFWLYHO\ DGRSW SXEOLF SROLFLHV
DLPHG DW H[SDQGLQJ WKH FKRLFHV RI VPDOOKROGHUV
WR VHOO WKHLU SURGXFWV RQ ORFDO RU JOREDO PDUNHWV DW
D GHFHQW SULFH E\ VWUHQJWKHQLQJ ORFDO DQG QDWLRQDO
PDUNHWV DQG VXSSRUWLQJ FRQWLQXHG GLYHUVLÀFDWLRQ RI
FKDQQHOV RI WUDGLQJ DQG GLVWULEXWLRQ VXSSRUWLQJ WKH
HVWDEOLVKPHQW RI IDUPHUV· FRRSHUDWLYHV DQG RWKHU
SURGXFHU RUJDQL]DWLRQV HVWDEOLVKLQJ RU GHIHQGLQJ
ÁH[LEOHDQGHIÀFLHQWSURGXFHUPDUNHWLQJERDUGVXQGHU
JRYHUQPHQWDXWKRULW\EXWZLWKWKHVWURQJSDUWLFLSDWLRQ
RI SURGXFHUV LQ WKHLU JRYHUQDQFH XVLQJ WKH SXEOLF
SURFXUHPHQW V\VWHP WR VXSSRUW VPDOO IDUPHUV
DQG SURPRWLQJ DQG VFDOLQJ XS IDLU WUDGH V\VWHPV
LQFOXGLQJE\HQVXULQJDFFHVVWRSURGXFWLYHUHVRXUFHV
LQIUDVWUXFWXUH DQG WHFKQLFDO DVVLVWDQFH 'H 6FKXWWHU
E,)$'3$11$
8QGHUVWDQGLQJ JHQGHUUHODWHG RSSRUWXQLWLHV DQG
ULVNV LQ DJULFXOWXUDO YDOXH FKDLQV DQG PDUNHWV DQG
SURPRWLQJ JHQGHU HTXDOLW\ LQ DFFHVVLQJ HPHUJLQJ
RSSRUWXQLWLHVDUHLPSRUWDQWWRVXSSRUWWKHHPHUJHQFH
RISURSRRUDJULFXOWXUDOPDUNHWV,)$'
$JULFXOWXUDO UHVHDUFK DQG DLG KDYH RIWHQ VHUYHG
SRZHUIXOFRPPHUFLDOLQWHUHVWVLQFOXGLQJPXOWLQDWLRQDO
VHHG DQG IRRG UHWDLOLQJ FRPSDQLHV DW WKH H[SHQVH
RIWKHYDOXHVQHHGVNQRZOHGJHDQGFRQFHUQVRIWKH
YHU\SHRSOHZKRSURYLGHWKHIRRG)DUPHUVDQGRWKHU
FLWL]HQVQHHGWRSOD\DFHQWUDOUROHLQGHÀQLQJVWUDWHJLF
SULRULWLHV IRU DJULFXOWXUDO UHVHDUFK DQG IRRG SROLFLHV
+RIIPDQQVHHDOVR+HUUHQLQFKDSWHUWKUHHRI
WKLV5HYLHZ
$QDJHQGDIRUHQYLURQPHQWDOVXVWDLQDELOLW\
7KH UHJXODWLRQ RI LQWHUQDWLRQDO WUDGH LQ DJULFXOWXUDO
FRPPRGLWLHV VKRXOG WDNH LQWR DFFRXQW WKH LPSDFW
RI YDULRXV PRGHV RI DJULFXOWXUDO SURGXFWLRQ RQ WKH
HQYLURQPHQW DQG FOLPDWH FKDQJH LQ RUGHU WR DOORZ
FRXQWULHVWRSURYLGHLQFHQWLYHVLQIDYRXURIVXVWDLQDEOH
SURGXFWLRQVXFKDVRUJDQLFIDUPLQJRUDJURHFRORJLFDO
SUDFWLFHVERWKRIZKLFKUHVSHFWWKHHQYLURQPHQWDQG
FRQWULEXWHWRIRRGVHFXULW\'H6FKXWWHUD
75$'($1'(19,5210(175(9,(:
VRLO KHDOWK DQG LPSURYHG HQYLURQPHQWDO LPSDFWV $
PDMRUVKLIWLQVXEVLGLHVLVQHHGHGVRWKDWJRYHUQPHQWV
FDQKHOSUHGXFHWKHLQLWLDOFRVWVDQGULVNVWRIDUPHUV
RI WUDQVLWLRQLQJ WRZDUGV PRUH VXVWDLQDEOH IDUPLQJ
SUDFWLFHV +HUUHQ HW DO 6XEVLGLHV VKRXOG EH
FRQÀQHGWRWKRVHHVVHQWLDOIRUIDFLOLWDWLQJWKHWUDQVLWLRQ
WRVXVWDLQDEOHSURGXFWLRQPHWKRGVVXFKDVVXSSRUW
IRUH[WHQVLRQVHUYLFHVDQGUHVHDUFKDQGGHYHORSPHQW
UHZDUGLQJHQYLURQPHQWDOVHUYLFHVHQVXULQJSURWHFWLRQ
DJDLQVWYRODWLOHSULFHVDQGSURYLGLQJVSHFLÀFVXSSRUW
WRVPDOOKROGHUV+RIIPDQQ
)DUPHUV VKRXOG EH JLYHQ DFFHVV WR VXSSRUW
IRU HFRORJLFDO DJULFXOWXUH SUDFWLFHV 'HYHORSLQJ
FRXQWULHV FRXOG FRQVLGHU GHYRWLQJ D ODUJHU VKDUH RI
WKHLU DJULFXOWXUDO EXGJHWV WR SURPRWLQJ HFRORJLFDO
DJULFXOWXUH ZKLFK FDQ ERRVW ERWK VPDOO IDUPHUV·
OLYHOLKRRGV DQG IRRG SURGXFWLRQ ZKLOH SURWHFWLQJ
WKH HQYLURQPHQW DQG FRQVHUYLQJ UHVRXUFHV VXFK DV
VRLO IHUWLOLW\ DQG ZDWHU 7KH VXSSRUW VKRXOG LQFOXGH
H[WHQVLRQVHUYLFHVWRWUDLQIDUPHUVLQWKHEHVWRSWLRQV
DYDLODEOH IRU VXVWDLQDEOH GHYHORSPHQW WHFKQLTXHV
DQG WKH GHYHORSPHQW RI HFRORJLFDO LQIUDVWUXFWXUH
LQFOXGLQJ LPSURYHG ZDWHU VXSSO\ DQG VRLO IHUWLOLW\
)DUPHUV VKRXOG DOVR KDYH DFFHVV WR FUHGLW DQG
PDUNHWLQJVXSSRUW
%RWKGHYHORSLQJDQGGHYHORSHGFRXQWULHVVKRXOG
EHHQFRXUDJHGWRWDNHPHDVXUHVWRIDFLOLWDWHWUDGHLQ
RUJDQLFIRRGVRULJLQDWLQJIURPGHYHORSLQJFRXQWULHV
'HYHORSLQJ FRXQWULHV FRXOG FRQVLGHU WKH IROORZLQJ
PHDVXUHV L LQFUHDVH DZDUHQHVV RI WKH EHQHÀWV RI
RUJDQLFIRRGSURGXFWLRQDQGWUDGLQJRSSRUWXQLWLHVLL
SURPRWHUHVHDUFKDQGGHYHORSPHQWDQGWUDLQLQJLLL
LGHQWLI\ PDUNHWLQJ VWUDWHJLHV DQG SDUWQHUVKLSV ZLWK
JRYHUQPHQW VXSSRUW LY SURYLGH ÀQDQFLDO VXSSRUW
WR RUJDQLF SURGXFHUV DQG Y SURPRWH IDUPHUV·
DVVRFLDWLRQV DQG QRQJRYHUQPHQWDO RUJDQL]DWLRQV
1*2V81&7$'
3HUYHUVH LQFHQWLYHV DQG VXEVLGLHV WKDW SURPRWH
RU HQFRXUDJH WKH XVH RI FKHPLFDO SHVWLFLGHV
DQG IHUWLOL]HUV ZDWHU DQG IXHO RU HQFRXUDJH ODQG
GHJUDGDWLRQ VKRXOG EH DYRLGHG ,$$67' :RUOG %DQN $W WKH VDPH WLPH UHJXODWLRQV
DQG WKHLU LPSOHPHQWDWLRQ DUH QHHGHG WR SURWHFW WKH
HQYLURQPHQWDQGDGGUHVVSROOXWLRQDVLQSXWLQWHQVLYH
DJULFXOWXUH KDV DGYHUVH LPSDFWV RQ WKH HQYLURQPHQW
DQGKXPDQKHDOWK,)$'
,PSRUWLQJ FRXQWULHV FRXOG DOVR LPSOHPHQW
PHDVXUHVWRSURPRWHLPSRUWVRIRUJDQLFIRRGVIURP
GHYHORSLQJ FRXQWULHV E\ SURYLGLQJ LQIRUPDWLRQ RQ
RUJDQLF VWDQGDUGV DQG RQ UHJXODWLRQV DQG PDUNHW
RSSRUWXQLWLHV IRU GHYHORSLQJ FRXQWULHV· H[SRUWHUV
7KH\VKRXOGDOVRIDFLOLWDWHDFFHVVWRWKHLURUJDQLFIRRG
PDUNHWVE\VLPSOLI\LQJUHTXLUHPHQWVDQGSURFHGXUHV
IRULPSRUWLQJSURGXFWVIURPGHYHORSLQJFRXQWULHVDQG
DSSO\LQJWKHFRQFHSWRIHTXLYDOHQFHEHWZHHQQDWLRQDO
RUJDQLFVWDQGDUGV81&7$'
$JULFXOWXUDO VXEVLGLHV QHHG WR EH UHGLUHFWHG WR
HQFRXUDJH GLYHUVLÀHG FURS SURGXFWLRQ IRU ORQJWHUP
%LODWHUDO DQG PXOWLODWHUDO GRQRU DJHQFLHV FRXOG
SURYLGH DSSURSULDWH WHFKQLFDO DVVLVWDQFH IRU WKH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
H[SRUWRIRUJDQLFSURGXFWVIURPGHYHORSLQJFRXQWULHV
0RUH JHQHUDOO\ GHYHORSLQJ FRXQWULHV FRXOG
FRQVLGHUWKHIROORZLQJVWUDWHJLHVWRSURPRWHRUJDQLF
DJULFXOWXUHLRUJDQLFSROLF\DQGDFWLRQSODQVVKRXOG
EHOLQNHGWRWKHRYHUDUFKLQJREMHFWLYHVRIWKHFRXQWU\·V
DJULFXOWXUHSROLFLHVWRPDNHWKHPPXWXDOO\VXSSRUWLYH
DQG WR UHPRYH REVWDFOHV DQG ELDVHV DJDLQVW
RUJDQLF DJULFXOWXUH LL WKH JRYHUQPHQW VKRXOG JLYH
UHFRJQLWLRQDQGHQFRXUDJHPHQWWRWKHRUJDQLFVHFWRU
FORVHO\FRRSHUDWHZLWKWKHVHFWRU·VRUJDQL]DWLRQVDQG
IDUPHUVDQGSOD\DQHQDEOLQJDQGIDFLOLWDWLQJUROHLLL
HVWDEOLVK D SDUWLFLSDWRU\ SURFHVV ZLWK DFWLRQ SODQV
DQGSURMHFWVEDVHGRQRYHUDOOSROLFLHVDQGREMHFWLYHV
81&7$'DQG81(3D
%DUULHUVWRWKHSDUWLFLSDWLRQRIVPDOOIDUPHUVIURP
GHYHORSLQJ FRXQWULHV LQ RUJDQLF PDUNHWV VKRXOG EH
UHPRYHG(IIRUWVWRDGGUHVVLVVXHVVXFKDVGLIÀFXOWLHV
RI PDUNHW DFFHVV ODFN RI PDUNHW LQIUDVWUXFWXUH
SURKLELWLYH WKLUGSDUW\ FHUWLÀFDWLRQ WKH ODFN RI
UHVHDUFK WHFKQLFDO SROLF\ DQG ÀQDQFLDO VXSSRUW
DUH QHHGHG 81&7$' DQG 81(3 D *URZLQJ
GRPHVWLF PDUNHWV DUH DOVR LPSRUWDQW DQG XUEDQ
PDUNHWVFRXOGVWDUWWRSURYLGHVLJQLÀFDQWRSSRUWXQLWLHV
IRUVPDOOKROGHUIDUPHUV,)$'
(IIRUWV VKRXOG EH PDGH WR HQDEOH VPDOOKROGHU
IDUPHUV SDUWLFXODUO\ ZRPHQ IDUPHUV WR DFFHVV
SURGXFWLYH UHVRXUFHV DQG SDUWLFLSDWH LQ DJULFXOWXUDO
GHFLVLRQPDNLQJ VR DV WR IDFLOLWDWH WKHLU LQYHVWPHQW
LQDQGDGRSWLRQRIHFRORJLFDODJULFXOWXUHDSSURDFKHV
75$'($1'(19,5210(175(9,(:
1//'06#4;U 0574+0)
11&'%74+6;#0&08+410/'06#.
'5+.+'0%'h*'''&(14722146+8'
)4+%7.674#.4#&'7.'5
1LNRODL)XFKV1H[XV)RXQGDWLRQDQG8OULFK+RIIPDQQ81&7$'VHFUHWDULDW
$EVWUDFW
'HVSLWHVRPHUHFHQWLPSURYHPHQWWKHSUHVVLQJ²DQGWRGDWHXQUHVROYHG²FULVLVRIKXQJHUDQGPDOQXWUL
WLRQDVZHOODVWKHORRPLQJGDQJHUVIURPWKHHQYLURQPHQWDOFULVLVRIDJULFXOWXUHFDOOIRUDPRUHIXQGDPHQWDO
FKDQJHWKDQLVFXUUHQWO\XQGHUZD\%RWKFULVHVDUHDOVRFORVHO\OLQNHGWRWUDGHUXOHV$JULFXOWXUHKDVDOZD\V
EHHQ D VWXPEOLQJ EORF LQ *$77 DQG :72 URXQGV RI WUDGH OLEHUDOL]DWLRQ \HW DJULFXOWXUH·V VSHFLÀFLW\ KDV
QHYHUEHHQVXIÀFLHQWO\UHÁHFWHG5DWKHUDJULFXOWXUHKDVLQFUHDVLQJO\EHHQWUHDWHGOLNHDQ\RWKHULQGXVWULDO
VHFWRUWKDWVKRXOGVWULYHWRHQKDQFHPRVWO\ODERXUSURGXFWLYLW\EDVHGRQVSHFLDOL]DWLRQHFRQRPLHVRI
VFDOHDQGLQGXVWULDOL]DWLRQRISURGXFWLRQPHWKRGV%XWWKLVUXQVFRXQWHUWRWKHQHHGIRUVWUHQJWKHQLQJUXUDO
OLYHOLKRRGVIRRGVHFXULW\DQGVXFKDJULFXOWXUDOSUDFWLFHVZKLFKUHVSHFWWKHSODQHWDU\ERXQGDULHVWKURXJK
HQKDQFLQJWKHUHSURGXFWLYHFDSDFLWLHVWKHODWWHUEHLQJWKHHVVHQFHRIUHDOVXVWDLQDELOLW\%DVHGRQDEHW
WHUXQGHUVWDQGLQJRIWKHVSHFLÀFLW\RIDJULFXOWXUHPRUHUHJLRQDOL]HGORFDOL]HGIRRGSURGXFWLRQQHWZRUNV
VKRXOGEHHQFRXUDJHGE\WUDGHUXOHVZLWKRXWH[FOXGLQJWKHVXSSOHPHQWDU\UROHWUDGHZLOOKDYHWRSOD\7KH
NH\TXHVWLRQLVZKHWKHUVXFKWUDQVIRUPDWLRQFDQEHDFKLHYHGWKURXJKIXOO\H[SORLWLQJH[LVWLQJÁH[LELOLWLHVLQ
:72UXOHVRUZKHWKHUWKLVZLOOUHTXLUHDPRUHIXQGDPHQWDOFKDQJHLQWKHWUDGHWRROER[
$,QWURGXFWLRQ
$IWHU WZHOYH \HDUV LQ WKH WKLUG PLOOHQQLXP LW KDV EH
FRPHHYLGHQWWKDWVHYHUDORIWKH0LOOHQQLXP'HYHORS
PHQW*RDOV0'*VFKLHÁ\DPRQJWKHPWKHDEDWH
PHQWRIKXQJHUZLOOEHYHU\GLIÀFXOWLIQRWLPSRVVLEOH
WRDFKLHYH%HVLGHVKXPDQLW\WRGD\LVFRQVXPLQJDQ
DPRXQWRIUHVRXUFHVHTXLYDOHQWWRWKRVHRIHDUWKV
ZLWK D SURQRXQFHG ZRUVHQLQJ WHQGHQF\ &OLPDWH
FKDQJHKDVEHFRPHDUHDOLW\DQGLWLVKLJKO\XQOLNHO\
WKDW WKH GHJUHHV ZDUPLQJ OLPLW ZKLFK JOREDO JRY
HUQDQFH VHHNV WR PHHW FDQ EH NHSW 7KH SODQHWDU\
ERXQGDULHVIRUQLWURJHQDQGELRGLYHUVLW\KDYHDOUHDG\
EHHQFURVVHGPRVWO\GXHWRLQGXVWULDOL]HGDJULFXOWXUH
%HLWHFRQRPLFFULVHVEHLWV\VWHPLFZHDNQHVVHVEH
LWPLVVLQJSROLWLFDOZLOO²WKHUHDVRQVIRUQRW\HWEHLQJ
DEOHWRUHYHUVHWKLVWUHQGXSWRGDWHPLJKWEHPXOWLSOH
%XWLIZHWDNHRXUVHOYHVDQGRXURZQLQWHQWVOLNHWKH
SOHGJHVIRUIXOÀOOPHQWRIKXPDQULJKWVDQGWKHLPSOH
PHQWDWLRQRIUHFHQWJRYHUQPHQWVXPPLWGHFODUDWLRQV
VHULRXVO\QHZHIIRUWVDQGQHZDSSURDFKHVWRDGGUHVV
WKH JOREDO FKDOOHQJHV VHHP WR EH QHFHVVDU\ 7KLV
FRPPHQWDU\WKLQNLQJRXWRIWKHER[DWWHPSWVWRDQD
O\]HZKDWW\SHRIWUDGHUXOHVLVUHTXLUHGWRHQFRXUDJH
DQG VXSSRUW D GHVLUDEOH PXFKQHHGHG WUDQVIRUPD
WLRQRIWKHIRRGDQGDJULFXOWXUDOVHFWRUDVRXWOLQHGLQ
FKDSWHUVRQHWRIRXURIWKLV5HYLHZ
%:KDWLVDWVWDNH"
,Q WRGD\·V ZRUOG PLOOLRQ SHRSOH VWLOO VXIIHU IURP
KXQJHUDQGPRUHWKDQDELOOLRQIURPPDOQXWULWLRQ'H
VSLWH UHFHQW UHVXUJHQFH RI SXEOLF DQG SULYDWH VHFWRU
DWWHQWLRQ LQ DJULFXOWXUH WKH KXQJHU SUREOHP SHUVLVWV
0RUHRYHUWKHZRUVHQLQJHQYLURQPHQWDOFULVLVRIDJUL
FXOWXUHLVXQOLNHO\WREHFKHFNHGHYHQLIWRGD\·VFRQ
FHSW RI JUHHQ HFRQRP\ PRVWO\ EDVHG RQ WKH SDUD
GLJPRI´SURGXFLQJPRUHZLWKOHVVµLVEHLQJWXUQHG
LQWR SUDFWLFH 7KHUH DUH PDQ\ UHDVRQV IRU KXQJHU
PDOQXWULWLRQ DQG HQYLURQPHQWDO GHJUDGDWLRQ EXW LQ
WHUQDWLRQDOWUDGHLWVUXOHVDQGUHVXOWLQJLQFHQWLYHVSOD\
DQLPSRUWDQWUROHLQWKHZKROHVHWWLQJ,WLVTXHVWLRQ
DEOHZKHWKHUZLWKWKHFXUUHQWO\H[LVWLQJ:72WRROER[
WKHGUDVWLFSUREOHPVDQDO\]HGLQWKLV5HYLHZFDQHI
IHFWLYHO\EHWDFNOHG'HVSLWHVRPHFDOOVIRUFRPSOHWHO\
H[FOXGLQJDJULFXOWXUHIURPWKH:72ZHVHDUFKIRUD
EHWWHU SDWKZD\ LQ D PXOWLODWHUDO EXW DV ZHOO ELODWHUDO
DQG UHJLRQDO WUDGH IUDPHZRUN %XW WKLV WKHQ QHHGV
PDMRUDGMXVWPHQWVLQUHVSHFWWRDJULFXOWXUH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
&7KHEURDGHUFRQWH[W
'ULYHQE\FOLPDWHFKDQJHDQGWKHDVVRFLDWHGPHOWLQJ
RIWKHJODFLHUVLQWKHZDWHUFDVWOHVRIWKHZRUOGPRUH
H[WUHPH ZHDWKHU SDWWHUQV ZLOO RFFXU ZLWK GDPDJLQJ
HIIHFWVWRWKHDOUHDG\PRVWYXOQHUDEOHUHJLRQVLQWKH
GHYHORSLQJ ZRUOG LQ SDUWLFXODU VXE6DKDUDQ $IULFD
DQG6RXWK$VLD7KHVWLOOULVLQJZRUOGSRSXODWLRQZLWK
KLJKHVWUDWHVLQ$IULFDDQG6RXWK$VLDZKHUHKXQJHU
DQG SRYHUW\ SUREOHPV DUH DOUHDG\ WKH PRVW DFXWH
RYHUFRQVXPSWLRQ KLJK IRRG ZDVWH DQG FKDQJLQJ
FRQVXPSWLRQSDWWHUQVWRPRUHPHDWEDVHGGLHWVZLWK
WKH DVVRFLDWHG VSLUDOLQJ H[SDQVLRQ RI FRQFHQWUDWH
IHHGSURGXFWLRQDVZHOODVJURZLQJDPRXQWVRIELR
IXHO SURGXFWLRQ DGG SUHVVXUH RQ WKH DOUHDG\ OLPLWHG
ODQGUHVRXUFHV9RODWLOHÀQDQFLDOPDUNHWVVFDUFLW\RI
UDZ PDWHULDOV DQG WKH FORVHU OLQN EHWZHHQ IRRG DQG
HQHUJ\ SULFHV LQFUHDVH IRRG SULFH YRODWLOLW\ WKURXJK
WKH ÀQDQFLDOL]DWLRQ RI FRPPRGLW\ PDUNHWV %HVLGHV
WKH ORVV RI ODQG IRU WKH DOUHDG\ YXOQHUDEOH WKURXJK
ODQGXVHFKDQJHVDQGµODQGJUDEV´ODQGGHJUDGDWLRQ
DQG ZDWHU VKRUWDJHV FRPSRXQG UHVRXUFH VFDUFLWLHV
/RVVRIELRGLYHUVLW\PLJKWIXUWKHUUHGXFHWKHUHVLOLHQFH
RI WKH DJULFXOWXUDO V\VWHPV $JDLQVW WKLV YHU\ EDFN
JURXQG IRRG VHFXULW\ PLJKW WXUQ IURP DOUHDG\ EHLQJ
WKH ´KLGGHQ GULYHU RI ZRUOG SROLWLFVµ /HVWHU %URZQ
WRWKHPRVWSUHVVLQJLQWHUQDWLRQDOGHYHORSPHQW
DQGVHFXULW\LVVXHRIWKHVWFHQWXU\
'7KHKXQJHUFKDOOHQJH
,I SUHVHQW WUHQGV FRQWLQXH XQDEDWHG IRRG ULRWV DQG
PDVV PLJUDWLRQ DUH OLNHO\ WR EHFRPH PRUH SUR
QRXQFHG LQ WKH IXWXUH ,Q VRPH JRYHUQPHQWV
ZHUHDOUHDG\VKDNHQULVLQJIRRGSULFHVZHUHDPRQJ
WKHFDXVHVIRUWKH´$UDEVSULQJµ7KLVIRRGFULVLVZDV
DQLPSRUWDQWFDWDO\VWIRUUHDOL]LQJWKHQHHGIRUIXQGD
PHQWDO WUDQVIRUPDWLRQ DQG TXHVWLRQLQJ VRPH RI WKH
DVVXPSWLRQV WKDW KDG GULYHQ IRRG DQG DJULFXOWXUDO
SROLF\LQUHFHQWGHFDGHV7KHFULVLVOHGWRDUHYHUVDORI
WKHORQJWHUPQHJOHFWRIDJULFXOWXUHDVDYLWDOHFRQRP
LF VHFWRU $OVR WKH GHFOLQLQJ WUHQG RI SXEOLF IXQGLQJ
IRU DJULFXOWXUH ZDV DUUHVWHG DQG VRPH QHZ IXQGLQJ
VHFXUHG DV SOHGJHG DW WKH /·$TXLOD * VXPPLW LQ
-XO\ZKLFKKRZHYHULVVWLOOPXFKEHKLQGFRPPLW
PHQWVDQGUHDOUHTXLUHPHQWV6RPHRIWKHDGGLWLRQDO
IXQGLQJKDVEHHQJRLQJWRLPSRUWDQWDUHDVVXFKDV
VPDOOKROGHUVXSSRUWUROHRIZRPHQLQDJULFXOWXUHWKH
HQYLURQPHQWDO FULVLV RI DJULFXOWXUH LQFOXGLQJ FOLPDWH
FKDQJHDQGDGGUHVVLQJZHDNQHVVHVRILQWHUQDWLRQDO
PDUNHWV WKURXJK DLG IRU WUDGH WDUJHWLQJ WUDGH LQIUD
VWUXFWXUH LQIRUPDWLRQ ÀQDQFH DQG IDFLOLWDWLRQ <HW
WKHVHPHDVXUHVÀOOJDSVEXWDUHLQVXIÀFLHQWWROHDGWR
WKHPXFKQHHGHGWXUQDURXQG
$OWKRXJK WKHUH LV D EHWWHU XQGHUVWDQGLQJ RI WKH FLU
FXPVWDQFHV DQG D JURZLQJ SROLWLFDO ZLOO IRU FKDQJH
WKHUH LV QR FRQVHQVXV RQ KRZ WR EULQJ DERXW WKH
8WXUQ DQG ZKDW GLUHFWLRQ QHHGV WR EH WDNHQ LQ WKLV
UHJDUG $V WKLQJV VWDQG DW WKH PRPHQW SULRULW\ UH
PDLQVIRFXVHGRQLQFUHDVLQJSURGXFWLRQZKLFKLVVWLOO
YHU\PXFKELDVHGWRZDUGVH[SDQVLRQRI´VRPHZKDW
OHVVSROOXWLQJµ H[WHUQDOLQSXWGHSHQGHQW LQGXVWULDO
DJULFXOWXUH D VRUW RI ¶HFRORJ\ OLJKW· DSSURDFK ZLWK
JRYHUQPHQWVODUJHDJURIRRGDQGDJURFKHPLFDOHQ
WHUSULVHVWHPSWHGWRIROORZWKLVOLQHLQVHDUFKIRU¶MREV
DQGJURZWK·5DWKHUWKHDLPVKRXOGEHWRZDUGVVXV
WDLQDEOHVLWHVSHFLÀFDQGDIIRUGDEOHQRWH[WHUQDOLQ
SXWLQWHQVLYHSURGXFWLRQPHWKRGVWKDWSURYLGHPXOWL
IXQFWLRQDO EHQHÀWV DQG HPSOR\PHQW FUHDWLRQ DV SDUW
RI D FRKHUHQW DQG PRUH KROLVWLF DSSURDFK UHÁHFWLQJ
WKHVSHFLÀFLW\RIDJULFXOWXUH
(5XUDOHFRQRPLHV
$ERXWSHUFHQWRIWKHKXQJU\OLYHLQUXUDODUHDVWKH\
DUHIDPLO\IDUPHUVRUDJULFXOWXUDOODERUHUV1HROLEHUDO
SROLFLHVLHWKH:DVKLQJWRQ&RQVHQVXVVWLOOSUHYDLO
LQJ PDVVLYH VXEVLGLHV IRU DJULFXOWXUH LQ GHYHORSHG
FRXQWULHVDQGIRFXVRIWKHSROLWLFDOHOLWHRQXUEDQDU
HDVLQWKH6RXWKKDYHOHGWRDGLVFULPLQDWRU\WUHDWPHQW
RIUXUDOUHJLRQVLQGHYHORSLQJFRXQWULHV+RZHYHUDF
FRUGLQJWR)$2VPDOOKROGHUIDUPHUVSURYLGHXSWR
SHUFHQWRIWKHIRRGVXSSO\LQ$VLDDQGVXE6DKDUDQ
$IULFD)$27KDWLVZK\VPDOOVFDOHDJULFXOWXUH
QHHGVVSHFLDODWWHQWLRQ,QWHUHVWLQJO\VPDOOVFDOHDJ
ULFXOWXUHLVRIWHQPRUHSURGXFWLYHWKDQODUJHVFDOHLQ
GXVWULDOIDUPLQJVHH&DUOHWWRHWDO)RUDVVXU
LQJIRRGVHFXULW\ERRVWLQJWRWDOIDFWRUUDWKHUWKDQRQO\
ODERXUSURGXFWLYLW\LVDYHU\QHFHVVDU\UHTXLUHPHQW
7KHUH DUH GLIIHUHQW ZD\V RI LQWHQVLÀFDWLRQ WR ERRVW
SURGXFWLYLW\,QGXVWULDOL]DWLRQRIDJULFXOWXUHWKHGHYHO
RSPHQW IRU ZKLFK WKH ´JUHHQ UHYROXWLRQµ LV WKH EHVW
NQRZQV\PERODQGWKHOLEHUDOL]DWLRQDQGJOREDOL]DWLRQ
RIPDUNHWVKDYHXQGRXEWHGO\FRQWULEXWHGWRIRRGVH
FXULW\RIDJURZLQJZRUOGSRSXODWLRQ7RGD\ÀYHELOOLRQ
SHRSOHKDYHHQRXJKWRHDWZKLFKLVDJUHDWVXFFHVV
%XW DW WKH VDPH WLPH WKH VKDUH RI WKH KXQJU\ DQG
PDOQRXULVKHG LQ WRWDO ZRUOG SRSXODWLRQ KDV QRW VLJ
QLÀFDQWO\ GHFOLQHG DQG WKHLU DEVROXWH QXPEHUV KDYH
HYHQ LQFUHDVHG 7KH LQGXVWULDOL]DWLRQ RI DJULFXOWXUH
DQG FRQFRPLWDQW PDUNHW OLEHUDOL]DWLRQ KDYH WKXV QRW
VXFFHHGHGLQRYHUFRPLQJWKHKXQJHUSUREOHP7KDWLV
PDLQO\EHFDXVHKXQJHULVQRWSULPDULO\DVXSSO\UHODW
HGEXWDSRYHUW\OLQNHGLVVXHRIDSSURSULDWHDFFHVV
WR IRRG ERWK LWHPV DUH WKHUHIRUH FRPELQHG LQ 0'*
JRDORQH,QWKLVUHJDUGWKHFXUUHQWV\VWHPUHDFKHV
LWVOLPLWV
$QDOWHUQDWLYHSURGXFWLRQLQWHQVLÀFDWLRQVWUDWHJ\LVWKH
HFRIXQFWLRQDOLQWHQVLÀFDWLRQ DSSURDFK %RPPDUFR
HW DO LQ DJURHFRORJLFDO V\VWHPV DJURHFR
ORJLFDO V\VWHPV DUH PRUH RSHQ HYHQ WR LQSXWV WKDQ
SXUH RUJDQLF IDUPLQJ V\VWHPV WKXV KDYLQJ D KLJKHU
\LHOG SRWHQWLDO VHH $OWLHUL HW DO DQG %UDQFD
HW DO 7KH DLP LV WR ERRVW \LHOGV RI WKH WRWDO
SURGXFWLRQ V\VWHP UDWKHU WKDQ RQO\ VSHFLÀF FURSV
UHO\LQJRQVWUHQJWKHQLQJVLWHVSHFLÀFHFRORJLFDOSUR
GXFWLRQ PHWKRGV WKDW KDUQHVV WKH PXOWLIXQFWLRQDOLW\
RI DJULFXOWXUH DQG VWUHQJWKHQ LWV UHVLOLHQFH 7KHVH
DJURHFRORJLFDO DSSURDFKHV WKURXJK WKH XVH RI OR
FDOUHVRXUFHVVNLOOVDQGLQSXWVÀWZHOOLQWRVWUDWHJLHV
IRU VWUHQJWKHQLQJ UXUDO HFRQRPLHV DQG OLYHOLKRRGV
$OWKRXJK VXFK IRUPV RI DJULFXOWXUH DUH NQRZOHGJH
LQWHQVLYHYLUWXDOO\DOORIWKHVHVNLOOVDQGWHFKQRORJLHV
DUHUHDGLO\DYDLODEOHDPDMRUGLIIHUHQFHWRPRVWRWKHU
VHFWRUV ZKHUH PDQ\ QHZ WHFKQRORJLHV IRU HQKDQF
LQJHQHUJ\PDWHULDOUHVRXUFHHIÀFLHQF\VWLOOKDYHWREH
GHYHORSHG:KDWLVUDWKHUODFNLQJLVDGHTXDWHSXEOLF
VXSSRUWWRHIÀFLHQWH[WHQVLRQVHUYLFHVIRUNQRZOHGJH
GLVVHPLQDWLRQ SXEOLF LQYHVWPHQW LQ DGHTXDWH SK\VL
FDOLQIUDVWUXFWXUHODQGUHIRUPIRUVHFXUHWHQXUHULJKWV
LQFOXGLQJ IRU ZRPHQ DQG DFFHVV WR ÀQDQFLQJ 7KH
DJULFXOWXUDO LQGXVWU\ LV DOUHDG\ DQG LQ WKH IXWXUH ZLOO
HYHQ PRUH VXSSRUW VXFK DSSURDFKHV IRU VSHFLÀF
SURGXFWV DQG SURFHVVLQJ PHWKRGV *RYHUQPHQWV
VKRXOGIROORZWKLVWUHQG
,QFUHDVLQJ SURGXFWLYLW\ PXVW RQ WKH RQH KDQG EH
LQWHJUDWHG LQWR D EURDGHU VRFLDO DQG HQYLURQPHQWDO
IUDPHZRUN RI SURYLGLQJ VXIÀFLHQW UXUDO OLYHOLKRRGV ZLWKUXUDOHFRQRPLHVPRYLQJLQWRWKHIRFXVDQGRQ
WKH RWKHU KDQG JXDUDQWHH WKH UHJHQHUDWLYH FDSDFLW\
DQGHQKDQFHGUHVLOLHQFHRIWKHQDWXUDOUHVRXUFHVDQG
SURGXFWLRQ IDFWRUV FXOPLQDWLQJ LQ SHUPDQHQWO\ KLJK
VRLOIHUWLOLW\
(YHQLILWZDVLQWKHPDUNHWORJLFRIWKHSDVWWRFRQ
FHQWUDWH RQ UHJLRQV DQG DUHDV ZKHUH VXIÀFLHQW SXU
FKDVLQJSRZHUSUHYDLOHGUHYLWDOL]LQJUXUDOHFRQRPLHV
DQGOLIWLQJSHRSOHRXWRISRYHUW\FUHDWHVQHZPDUNHWV
IRUWKHIXWXUH%HVLGHVDWWLPHVRIHYHUKLJKHUSXEOLF
LQGHEWHGQHVVZKLFKPDNHVVRFLDOVDIHW\QHWVÁLPV\
DQGWKLQYLWDOL]HGUXUDOUHJLRQVEHFRPHHVVHQWLDOIRU
WKHYLDELOLW\RIFRPPXQLWLHV)URPDSROLWLFDOSHUVSHF
WLYHUHYLWDOL]HGUXUDOHFRQRPLHVUHGXFHWKHSUHVVXUH
75$'($1'(19,5210(175(9,(:
RQPLJUDWLRQWRXUEDQDUHDVDQGEH\RQGERUGHUVWKXV
SUHYHQWLQJQDWLRQDODQGLQWHUQDWLRQDOSROLWLFDOWHQVLRQV
)7KHKLJKHQYLURQPHQWDOFRVWVRI
WKHFXUUHQWPRGHRIDJULFXOWXUDO
LQGXVWULDOL]DWLRQ
%HVLGHVWKHXQUHVROYHGKXQJHUSUREOHPDJULFXOWXUDO
LQGXVWULDOL]DWLRQ KDV FRPH DW KLJK HQYLURQPHQWDO
FRVWV7RGD\·VFRQYHQWLRQDODJULFXOWXUHEHLQJDYHU\
H[WHUQDOLQSXWGHSHQGHQW SURGXFWLRQ V\VWHP ZLWK D
QHJDWLYH LI QRW UDUHO\ ¶FDWDVWURSKLF· HQHUJ\ EDODQFH
VHHWKHFRPPHQWDU\RI5XQGJUHQLQFKDSWHUGH
VSLWHVRPHLPSURYHPHQWVGLVSURSRUWLRQDWHO\FRQWULE
XWHVWRFOLPDWHFKDQJHSROOXWLRQRIZDWHUODQGGHJ
UDGDWLRQ DQG ELRGLYHUVLW\ ORVV 7KH DOUHDG\ FURVVHG
SODQHWDU\ FDUU\LQJ FDSDFLW\ IRU QLWURJHQ GRHV QRW DO
ORZDQ\XQFULWLFDOIXWXUHLQSXWLQWHQVLÀFDWLRQLQDJULFXO
WXUH$JULFXOWXUHDQGUHODWHGODQGXVHFKDQJHVFDXVH
DWOHDVWRQHWKLUGRIJOREDO*+*HPLVVLRQVLILQGLUHFW
HPLVVLRQVLQSODQWDQGHTXLSPHQWWUDQVSRUWDVZHOO
DV DORQJ WKH IRRG SURFHVVLQJ DQG PDUNHWLQJ FKDLQ
DUH WDNHQ LQWR DFFRXQW DJULFXOWXUH·V FRQWULEXWLRQ WR
FOLPDWHFKDQJHLVZHOORYHUSHUFHQWVHHWKHFRP
PHQWDU\ RI *5$,1 LQ FKDSWHU RQH *+* HPLVVLRQV
RIDJULFXOWXUHDUHVHWWRLQFUHDVHE\SHUFHQWWLOO
ZKHUHDVDGHFOLQHRIWKHVDPHRUGHURIPDJQL
WXGHZRXOGEHUHTXLUHGLQRUGHUQRWWRH[FHHGWKHWZR
GHJUHHJOREDOZDUPLQJJRDO%HVLGHVDKLJKHUWUDGH
LQWHQVLW\PD\IXUWKHUFRQWULEXWHWRFOLPDWHFKDQJHVHH
6FKPLW]HWDODQGUDLVHKHDOWKUHODWHGFRVWV
*7KHFRXQWHUYDLOLQJHIIHFWRIWUDGH
LVOLPLWHG
7KHGDPDJHWRDJULFXOWXUHLVQRWRQO\FRVWO\LWLVDOVR
D VHULRXV HQYLURQPHQWDO KHDOWK DQG OLIH WKUHDW IRU
WKH IXWXUH GHYHORSPHQW RI DOO RI XV &OLPDWH FKDQJH
DQG WKH HQYLURQPHQWDO FULVLV RI DJULFXOWXUH ZKLFK LV
FDXVHGE\WKH´PLQLQJµRIWKHPRVWFULWLFDOUHVRXUFHV
IRUUHJHQHUDWLYHDJULFXOWXUHOLNHVRLORUJDQLFFRQWHQW
ZLOOGUDVWLFDOO\FRQVWUDLQVXSSO\PDLQO\LQDOUHDG\YXO
QHUDEOHUHJLRQV,QWKHRU\WUDGHFDQEULGJHVRPHRI
WKHUHJLRQDOO\DULVLQJVXSSO\JDSVEXWWKHKLJKHUWKH
IUHTXHQF\ DQG VHYHULW\ RI GURXJKWV DQG ÁRRGV WKH
PRUH LQVHFXUH WKH DYDLODELOLW\ DQG DIIRUGDELOLW\ RI
LPSRUWHGIRRG
+4XHVWLRQV
7KLVWDNHVXVWRDQXPEHURITXHVWLRQVUHVXOWLQJIURP
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
6-
5-
4-
3-
2-
6RXUFHV/LPHVUHIHUULQJWR.RWVFKL
IRUWKFRPLQJ
2010 -
2005 -
2000 -
0-
1995 -
Fertilizer Price Index / Food Price Index
(ratio 1970 = 1)
1-
1990 -
$JULFXOWXUH·VUROHIRUGHYHORSPHQWKDVIRUORQJEHHQ
XQGHUYDOXHG DQG KDV RQO\ YHU\ UHFHQWO\ EHHQ UHLQ
YLJRUDWHG,WKDVWKHSRWHQWLDOWROLIWSHRSOHRXWRISRY
HUW\ VHH :RUOG %DQN SURYLGH PDQ\ HFRORJL
FDODQGDPHQLW\VHUYLFHVDQGFRXOGEHWXUQHGIURPD
NH\ VRXUFH RI JOREDO ZDUPLQJ LQWR D VHFWRU WKDW FDQ
VLJQLÀFDQWO\PLWLJDWHLWDQGDGDSWIRRGSURGXFWLRQWR
WKHSHULOVRIFOLPDWHFKDQJHDWYHU\ORZFRVWVUHODWLYH
WR RWKHU VHFWRUV 7R H[SORLW WKLV SRWHQWLDO DJULFXOWXUH
)LJXUH'HYHORSPHQWRIIRRGDQGIHUWLOL]HUSULFHV
WR
1985 -
$JULFXOWXUHKDVEHHQDQGVWLOOLVLQQHDUO\DQ\ELODWHUDO
RUUHJLRQDOQHJRWLDWLRQVDPDMRUREVWDFOHWRIUHHWUDGH
DJUHHPHQWV$JULFXOWXUHVHHPVWREHVSHFLDODQGLQ
GHHGWKHUHDUHJRRGUHDVRQVIRUDJULFXOWXUH·VVSHFLDO
UROH$JULFXOWXUHEHLQJDPDQDJHPHQWV\VWHPIRUKDOI
RIWKHWHUUHVWULDOELRPDVVSURGXFLQJDUHDVDQGEHLQJ
WKHUHIRUH FULWLFDO LQ PDQ\ HQYLURQPHQWDO UHVSHFWV LV
ERXQGWRWKHODQGZKLFKPHDQVLWFDQQRWEHPRYHG
WRPRUHIDYRXUDEOHFRQGLWLRQV,WKDVORQJLQYHVWPHQW
LQWHUYDOVZKHWKHUWRKDYHPLONFRZVRUQRWLV²LQFOXG
LQJ EUHHGLQJ ² IRU H[DPSOH D YHU\ ORQJODVWLQJ GHFL
VLRQZKLFKLVDVZHOOLQÁXHQFHGE\SROLFLHVHJPLON
TXRWDV$JULFXOWXUHLVWKHLWHPIRUIRRGVHFXULW\LWLVD
VWURQJFRPSRQHQWIRUUXUDOGHYHORSPHQWLWLVFORVHO\
OLQNHGWRODQGVFDSHDQGLWVFDUHWRORFDOFOLPDWHHFRO
RJ\ DQG ELRGLYHUVLW\ LW LV PDLQO\ RUJDQL]HG LQ IDPLO\
DQG JHQHUDWLRQDO VWUXFWXUHV DQG LW LV VWURQJO\ EDVHG
RQ ORFDO RU VLWHVSHFLÀF WUDGLWLRQV DQG LGHQWLÀFDWLRQ
SDWWHUQVDIDUPHULVQRWRQO\DSURGXFHURIJRRGVEXW
DOVRDPDQDJHURIDQDJURHFRORJLFDOV\VWHPDQGD
VRFLDOIDEULFVHH%URGKHXUHWDO7KLVLVWUXH
QRWRQO\LQ(XURSHEXWSULQFLSDOO\DVZHOOLQNH\DJUL
FXOWXUDO H[SRUWLQJ FRXQWULHV OLNH $XVWUDOLD DQG %UD]LO
RULQWKH$IULFDQFRXQWU\VLGH%HVLGHVDJULFXOWXUHHP
SOR\VELOOLRQVRISHRSOHLQWKHGHYHORSLQJZRUOG
1980 -
,$JULFXOWXUHLVVSHFLDO
8QIRUWXQDWHO\WKHH[WHUQDOLWLHVSURGXFHGE\LQGXVWULDO
DJULFXOWXUH DUH QRW DQG ZLOO QRW DW OHDVW LQ WKH IRUH
VHHDEOH IXWXUH EH LQWHJUDWHG LQ SURGXFW SULFHV ,Q
IDFWHQKDQFHGH[WHUQDOLQSXWXVHDQGVSHFLDOL]DWLRQ
KDYH PDGH LW KDUGHU WR LQWHUQDOL]H H[WHUQDOLWLHV EH
FDXVHDJULFXOWXUDOLQSXWSULFHG\QDPLFVKDVRXWSDFHG
WKHHYROXWLRQRIIRRGSULFHVVHHÀJXUHWKHKLJKHU
WKHLQSXWSULFHVWKHPRUHXQOLNHO\WKDWWKH\DUHWD[HG
IRUH[DPSOH&RQYHUVHO\UHDOO\VXVWDLQDEOHIRUPVRI
SURGXFWLRQ VXFK DV DJURHFRORJLFDO DSSURDFKHV
V\VWHPLFDOO\ HPERG\ ODUJH SDUWV RI H[WHUQDO FRVWV
EHFDXVH WKHLU SUHYHQWLYH DSSURDFK DYRLGV RU PLQL
PL]HV PRVW H[WHUQDOLWLHV 6XFK SURGXFWLRQ PHWKRGV
JHQHUDWH PDQ\ SXEOLF EHQHÀWV DQG JRRGV VXFK DV
VWUHQJWKHQLQJELRGLYHUVLW\DYRLGLQJJURXQGZDWHUDQG
ULYHU SROOXWLRQ RU UHGXFLQJ *+* HPLVVLRQV WR QDPH
EXW D IHZ <HW QHLWKHU WKH DYRLGHG SXEOLF FRVWV QRU
WKH SXEOLF EHQHÀWV DUH UHFRJQL]HG E\ WKH PDUNHW
ZKLFKHQFRXUDJHVLQFUHDVHGODERXUEXWQRWWRWDOIDF
WRUV\VWHP SURGXFWLYLW\ $V LI WKDW ZKHUH QRW HQRXJK
RUJDQLF SURGXFHUV HVSHFLDOO\ KDYH WR SURYLGH GRFX
PHQWDU\HYLGHQFHLQWKHIRUPRILQVSHFWLRQDXGLWLQJ
DQGFHUWLÀFDWLRQWKDWWKHLUSURGXFWVDUHLQGHHGPHHW
LQJVWULQJHQWVWDQGDUGV0DUNHWORJLFLVWKXVSXWRQLWV
KHDG LQVWHDG RI UHZDUGLQJ WKH PRVW HIÀFLHQW FOHDQ
DQGVXVWDLQDEOHSURGXFWLRQV\VWHPSUHYDLOLQJPDUNHW
UXOHVDZDUGWKH¶SROOXWLQJ·IUHHULGHUV
1975 -
:HZDQWWRH[SORUHWKHVHTXHVWLRQVE\VWDUWLQJIURP
WKH IXQGDPHQWDO REVHUYDWLRQ WKDW DJULFXOWXUH LV VSH
FLDO
QHHGVDVKLIWWRVWUHQJWKHQLWVUHJHQHUDWLYHSRWHQWLDO
7UDGH UXOHV QHHG WR VXSSRUW QRW FRPSURPLVH WKLV
PRYH
1970 -
WKHDERYHPDGHDQDO\VLV
‡ +RZ ELJ LV WKH FKDQFH RI DGGUHVVLQJ WKHVH
SUREOHPVZLWKWRGD\·VWUDGHWRROER[HV"
‡ :LOOLWEHSRVVLEOHDQGVXIÀFLHQWWRWDFNOHWKHKXJH
FKDOOHQJHVE\IXOO\H[SORLWLQJWKHH[LVWLQJÁH[LELOLW\
RSWLRQVDQGPHFKDQLVPVLQWKHFXUUHQWWUDGHUXOHV"
‡ 2ULVDPRUHIXQGDPHQWDOFKDQJHQHHGHGLQRUGHU
WR VROYH WKH VW FHQWXU\ LVVXHV RI KXQJHU UXUDO
SRYHUW\ OLQJHULQJ PDVV PLJUDWLRQ DQG UHTXLUHG
VWUHQJWKHQLQJRIDJULFXOWXUDOUHVLOLHQFH"
)DFHGZLWKWKLVGLOHPPDDQGDVDUHVXOWRIHQKDQFHG
OLEHUDOL]DWLRQ WKH LQFUHDVHG FRPSHWLWLYH SUHVVXUH LQ
WKH SUHYDLOLQJ GLVWRUWHG PDUNHW FRQGLWLRQV KLWV KDUG
SDUWLFXODUO\WKHIDUPVWKDWSURGXFHWKHPRVWFRPPRQ
JRRGVDQGVHUYLFHVZKHWKHULQGHYHORSHGRUGHYHO
RSLQJFRXQWULHV*LYHQWKLVGLOHPPDDQHZDSSURDFK
WRDGGUHVVWKLVLVVXHLVRYHUGXH
$OWKRXJK*$77DQG:72KDYHWUHDWHGDJULFXOWXUHLQD
VSHFLÀFDJUHHPHQWKHUHEHFDXVHRIWKHSROLWLFDOVHQ
VLWLYLW\RIIRRGVHFXULW\DQGDJULFXOWXUH·VFORVHDVVRFLD
WLRQZLWKQDWXUDOUHVRXUFHVDQGWKHKHDOWKDQGVDIHW\RI
SHRSOHHYHQODWHO\WKHVHFWRUSURÀWHGRQO\IURPVRPH
©HQGRISLSHªÁH[LELOLWLHVDQGVSHFLDOVDIHJXDUGVZKLOH
VXEMHFWLQJDJULFXOWXUHWRWKHDFURVVWKHERDUG©LQGXVWU\ª
ORJLFRIOLEHUDOL]DWLRQVHHEHORZ
*UHHQ %R[ PHDVXUHV EHVLGHV EHLQJ PLVXVHG IRU DW
OHDVW LQGLUHFWO\ VXSSRUWLQJ FRQYHQWLRQDO IRUPV RI DJ
ULFXOWXUDO SURGXFWLRQ UHFHQWO\ RI DOO GRPHVWLF DJUL
FXOWXUDO VXSSRUW JUHHQER[ VXEVLGLHV DFFRXQWHG IRU
EHWZHHQ DQG SHU FHQW LQ WKH (8 DQG WKH 86
UHVSHFWLYHO\/XQHQERUJKDYHVRIDUEHHQRQO\
PDUJLQDOO\HIIHFWLYHLQUHGXFLQJSUREOHPDWLFLPSDFWV
$V RXWOLQHG DERYH WKLV JHQHULF LQGXVWU\ELDVHG DS
SURDFK WR DJULFXOWXUH FRQWULEXWHG WR WKH SUHYDLOLQJ
SUREOHPVRIUXUDOSRYHUW\IRRGLQVHFXULW\PDOQXWULWLRQ
DQGHQYLURQPHQWDOGHJUDGDWLRQLQDJULFXOWXUHZHFXU
UHQWO\ REVHUYH <HW WR ERRVW WRWDO IDFWRU DQG V\VWHP
SURGXFWLYLW\UHVRXUFHPDWHULDODQGHQHUJ\HIÀFLHQF\
ZLOO UHTXLUH IXQGDPHQWDO FKDQJHV LQ KRZ ZH JURZ
DQG FRQVXPH IRRG QRWKLQJ OHVV WKDQ D QHZ YLVLRQ
LVQHFHVVDU\RIKRZZHIDUPWDNHEHWWHUFDUHRIWKH
SODQHW·VELRORJLFDOUHVRXUFHVDQGOLYHHTXLWDEO\ZLWKLQ
RXU SODQHWDU\ PHDQV 7KH NH\ TXHVWLRQ LV ZKHWKHU
VXFKIDUUHDFKLQJFKDQJHVFDQEHDFKLHYHGWKURXJK
IXOO\H[SORULQJH[LVWLQJÁH[LELOLWLHVLQWKHFXUUHQWWUDGH
WRROER[ RU LI LW ZLOO QHFHVVLWDWH D GLIIHUHQW GHYHORS
PHQWDQGWUDGHIRFXVDVSDUWRIDIXQGDPHQWDOWUDQV
IRUPDWLRQRIJOREDODJULFXOWXUH
75$'($1'(19,5210(175(9,(:
6RPH IXQGDPHQWDOV KDYH WR EH WDNHQ LQWR DFFRXQW
ZKHQWU\LQJWRDQVZHUWKLVTXHVWLRQ
-$JULFXOWXUH·VGLYHUVLW\LVNH\
1DWXUH GHSHQGV RQ LQWHUDFWLRQ SODQWV ZLWK LQVHFWV
VRLOIHUWLOLW\ZLWKVRLOPLFUREHVHWFDQGWKHUHIRUHRQ
GLYHUVLW\ 'LYHUVLW\ SOD\V D SLYRWDO UROH LQ DJULFXOWXUH
)$26SHFLDOL]DWLRQLQDJULFXOWXUHLVDQLVVXH
EXWDWWKHVDPHWLPHLWPXVWEHLQWHJUDWHGLQDVWUDW
HJ\ RI GLYHUVLÀFDWLRQ 7VFKDUQNH HW DO SRLQW
RXW WKDW LQWHJUDWLRQ VWUDWHJLHV FRPELQLQJ FURS DQG
ZLOGOLIHDUHPRUHVXLWDEOHIRUIRRGVHFXULW\WKDQVHJUH
JDWLRQLHVHSDUDWLQJFURSSURGXFWLRQIURPZLOGOLIHDU
HDVZKLFKLVPDLQO\DGYRFDWHGE\WRGD\·VDJULFXOWXUDO
LQGXVWU\7KLVREVHUYDWLRQVSHDNVIRUDJURHFRORJLFDO
DSSURDFKHVZKLFKIROORZDQLQWHJUDWHGGLYHUVLW\VWUDW
HJ\NHHSLQJDOVRDQH\HRQÁRXULVKLQJZLOGOLIH2QWKH
ODWWHUDUHFHQW(8HVWLPDWHFRQFOXGHVWKDWWKH1DWXUD
QHWZRUN LQ WKH (8 DORQH SURGXFHV HFRV\VWHP
VHUYLFHVZRUWKVRPHELOOLRQ(XURV
6QDSS HW DO LQ D ODUJH ORQJWHUP DQG SDUWO\
SDUWLFLSDWLYHVWXG\LQ0DODZLKDYHIRXQGWKDWFURSGL
YHUVLÀFDWLRQFRXOGVHFXUH\LHOGVZLWKDVWDELOL]LQJHI
IHFWDWKDOIRIWKHIHUWLOL]HUUDWH%HVLGHVGLYHUVLW\LV
DFRUHLWHPIRUUHVLOLHQFHDJDLQVWQDWXUDOVKRFNVEXW
DVZHOODJDLQVWPDUNHWGLVUXSWLRQVHYHUPRUHLPSRU
WDQW LQ WRGD\·V IUDJLOH ZRUOG 0RUHRYHU GLYHUVH QXWUL
HQWDYDLODELOLW\LVDQHVVHQWLDOREMHFWLYHRIVXVWDLQDEOH
IRRGVHFXULW\
6RLOIHUWLOLW\WKHKHDUWRIWUXO\VXVWDLQDEOHUHJHQHUD
WLYHDQGUHVRXUFHHIÀFLHQWDJULFXOWXUHIRUIRRGVHFX
ULW\FDQEHVWEHDVVXUHGE\SRO\FXOWXUHDGHTXDWH
QXWULHQWUHF\FOLQJWKHLQWHJUDWLRQRIFURSDQGOLYHVWRFN
SURGXFWLRQ DQG WKH HIIHFWLYH XVH RI IXQFWLRQDO ELRGL
YHUVLW\ )XWXUH WUDGH UXOHV VKRXOG PLUURU DQG VXSSRUW
WKLVLQWHUSOD\
,Q WKH HQG DQ\ DJULFXOWXUDO PDQDJHPHQW DSSURDFK
%R[7KHWUHDGPLOORIH[WHUQDOLQSXWLQWHQVLYHSURGXFWLRQH[SHULHQFHRIDVR\IDUPHULQ$UJHQWLQD
)DEULFLR&DVWLOORVLVDVR\IDUPHULQWKHVPDOOWRZQRI/DERXOD\HLQ$UJHQWLQD$FFRUGLQJWR0U&DVWLOORVKHFDQQRORQJHU
PDNHDSURÀWRQKLVKDIDUPVSHFLDOL]HGLQVR\SURGXFWLRQIRUH[SRUWGHVWLQHGHLWKHUIRUELRGLHVHORUFRQFHQWUDWH
DQLPDOIHHG6RPHERG\ZLWKDFXUUHQWIDUPVL]HRIKDLVVWLOOSURÀWDEOHEXWLILQSXWSULFHWUHQGVFRQWLQXHRQHPLJKW
QHHGKDLQWKHIXWXUHWRPDNHDSURÀW$FFRUGLQJWR0U&DVWLOORVWKLVZLOOVSHHGXSWKHFRQFHQWUDWLRQRIODQGRZQHU
VKLSVRWKDWWKHODQGZLOOLQFUHDVLQJO\EHRZQHGE\DIHZLQVWLWXWLRQDOLQYHVWRUV
6RXUFH+XLVPDQQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
ZRXOGKDYHWRPHHWWKHIRXUSULQFLSOHVRIVXVWDLQDEOH
DJULFXOWXUHDVPDSSHGRXWLQWKH5HSRUWRIWKH5R\DO
6RFLHW\ WR EH ORQJODVWLQJ UHVLOLHQW DXWDUNLF
DQGSURVSHUE\QRWRYHUH[WUDFWLQJUHVRXUFHV
.7KHFXUUHQWDSSURDFKRIWKH:72
,Q WKH 'RKD 5RXQG QHJRWLDWLRQV WKH PRGDOLWLHV RI
RQ DJULFXOWXUH LQ UHVSHFW WR IRRG VHFXULW\ DUH
PDLQO\PHWE\SURSRVDOVIRUVSHFLDOVDIHJXDUGPHFK
DQLVPV660VSHFLDOSURGXFWV63DQGIHZRWKHU
VSHFLDODQGGLIIHUHQWLDWHGWUHDWPHQW6'7SURYLVLRQV
6LQJOHVWDSOHFURSV´VSHFLDOSURGXFWVµIRUVSHFLÀF
FRXQWULHVFRXOGWKHUHIRUHDWOHDVWIRUFHUWDLQSHULRGV
EHH[FOXGHGIURPWKHOLEHUDOL]DWLRQSURFHVV7KHQH
JRWLDWLRQV RQ WKHVH LVVXHV KDYH EHFRPH YHU\ FRP
SOH[ SHUKDSV WRR FRPSOH[ WR FRQFOXGH WKH URXQG
%HVLGHV 6'7 DV RI WRGD\ LQ WKH :72 UXOHERRN ZLWK
LWV IRFXV RQ VLQJOH FURSV GRHV QRW V\VWHPLFDOO\ WDNH
LQWRDFFRXQWWKHGLYHUVLW\LPSHUDWLYHRIDJULFXOWXUH$
PRUH ORFDOO\ DQG UHJLRQDOO\RULHQWHG WUDGH DSSURDFK
FRXOGKHOSWRVWUHQJWKHQUXUDOHFRQRPLHVZLWKGLYHUVH
SURGXFWLRQ SDWWHUQV ZKLFK ZLOO EH VXSSOHPHQWHG E\
WUDGHIRUVHOOLQJVXUSOXVSURGXFHDQGHQULFKLQJORFDO
VXSSO\:HDUJXHWKDW6'7660DQGWKHVSHFLDODQG
VHQVLWLYH SURGXFW SURYLVLRQV RI WRGD\ DV EHLQJ FRQ
FHQWUDWHGRQFRXQWULHVQRWORFDOUHJLRQVDQGVLQJOH
FURSV RU SURGXFWV PRUHRYHU LQ D OLPLWHG WLPHIUDPH
ZLOOQRWEHVXIÀFLHQWWRPHHWORQJWHUPIRRGVHFXULW\
HQYLURQPHQWDO DQG OLYHOLKRRG QHHGV DV WKH\ DUH QRW
WDUJHWHG LQ WKH HQG WR VWUHQJWKHQ UXUDO HFRQRPLHV
VHHDVZHOO+lEHUOL
7UDGH LQVWHDG RI EHLQJ MXVW D PHWKRG RI PDWFKLQJ
VXSSO\DQGGHPDQG²LQLWVUHFHQWWHUPVSXVKLQJIRU
RSHQPDUNHWVDQGOLEHUDOL]DWLRQ²UHTXLUHVLQWKHORJLF
RI VHHNLQJ DEVROXWH RU FRPSDUDWLYH DGYDQWDJH HYHU
KLJKHU OHYHOV RI VSHFLDOL]DWLRQ LQGXVWULDOL]DWLRQ DQG
VFDOH RI SURGXFWLRQ 7KH UHFHQWO\ RIWHQ KLJKOLJKWHG
JOREDOYDOXHFKDLQFRQFHSWSURQRXQFHVWKLVFRQFHSW
HYHQ IXUWKHU ,W LV QRW E\ FKDQFH WKDW DJULFXOWXUH KDV
EHHQ WKH ELJJHVW VWXPEOLQJ EORF LQ QHDUO\ DOO WUDGH
QHJRWLDWLRQV,WLVQRWRQO\WUDGLWLRQEDVHGUHOXFWDQFH
IRUFKDQJHLQWKHDJULFXOWXUDO VHFWRUWKDWFUHDWHVGLI
ÀFXOWLHVIRUIXUWKHUWUDGHOLEHUDOL]DWLRQLWLVLWVGLYHUVLW\
OLYHOLKRRGDQGLQKHUHQWQRQLQGXVWU\DQGDVVXUDQFHRI
VHOIVXIÀFLHQF\ORJLFWKDWFDXVHVWKLVUHVLVWHQFH
:KLOH WKH SUHDPEOH RI WKH $JUHHPHQW RQ $JULFXOWXUH
$R$ UHFRJQL]HV IRRG VHFXULW\ DV D OHJLWLPDWH FRQ
FHUQWKHDFWXDOSURYLVLRQVRIWKHDJUHHPHQWWUHDWIRRG
VHFXULW\ DV D GHYLDWLRQ IURP WKH SULPDU\ REMHFWLYH RI
DJULFXOWXUDOWUDGHOLEHUDOL]DWLRQ'H6FKXWWHUF
/7KHUHTXLUHGSDUDGLJPVKLIW²EH\RQG
WKHGLFKRWRP\RIOLEHUDOL]DWLRQ
DQGSURWHFWLRQ
:HQHHGWRUHVLVWWKHWHPSWDWLRQRIUHVRUWLQJWRVKRUW
FXWVWKDWFXUHV\PSWRPVUDWKHUWKDQGHDOLQJZLWKURRW
FDXVHV
5HFHQWUHSRUWVOLNHWKH(FRIDLU7UDGH'LDORJXH
,$$67'6&$5)$2*($SRLQW
DWWKHLPSRUWDQFHRIDUHQHZHGUDWKHUWKDQRQO\UH
IRUPHG WUDGH DUFKLWHFWXUH WR SOD\ LWV SURSHU UROH LQ
%R[6RLOIHUWLOLW\DQGWKHLPSRUWDQFHRIKXPXV
%HLWFOLPDWHFKDQJHZLWKPRUHH[WUHPHZHDWKHUSDWWHUQVRYHUXVDJHGHJUDGDWLRQRIODQGORVVRIELRGLYHUVLW\RURYHU
VLPSOLÀFDWLRQWKURXJKVSHFLDOL]DWLRQDJULFXOWXUHQHHGVDWKRURXJKUHJHQHUDWLYHSRWHQWLDOQRWOHDVWIRUHIÀFLHQF\UHDVRQV
DVUHSDLULVDOZD\VPRUHFRVWO\7RJXDUDQWHHDQGVWUHQJWKHQWKHUHJHQHUDWLYHSRWHQWLDOVKRXOGEHDWWKHFHQWHURIDOO
IXWXUHPHDVXUHV2QHNH\HOHPHQWIRUWKHUHJHQHUDWLYHSRWHQWLDOLQPDQ\UHVSHFWVLVKXPXV+LJKKXPXVFRQWHQWFRSHV
ZLWKPDQ\RIWKHHQGDQJHULQJLVVXHVDQGVWUHQJWKHQVWKHUHVLOLHQFHFDSDFLW\RIDOPRVWDOOFURSV,QFUHDVLQJWKHKXPXV
FRQWHQWOHDGVWRD´OLYLQJµVRLO&RPSRVWLQJ²DQGWKLVLVZK\ZHKLJKOLJKWLWKHUHH[SOLFLWO\DVDQH[DPSOH²DQGLWVXVH
IRUHQKDQFLQJWKHKXPXVFRQWHQWRIVRLOVLVDOVRDYHU\HIIHFWLYHDQGFRVWHIÀFLHQWPHWKRGRIFDUERQVHTXHVWUDWLRQ$F
FRUGLQJWR,3&&FVHFWLRQVRLORUJDQLFPDWWHUVHTXHVWUDWLRQDFFRXQWVIRUDOPRVWSHUFHQWRIWKHWHFKQLFDO
FDUERQVHTXHVWUDWLRQSRWHQWLDORIDJULFXOWXUHDQGLVWKXVWKHSLYRWDOFOLPDWHPLWLJDWLRQPHDVXUHLQFRQWUDVWPRUHHIÀFLHQW
DSSOLFDWLRQRIIHUWLOL]HUVUHSUHVHQWVQRWPRUHWKDQVRPHSHUFHQWRIWKHFDUERQVHTXHVWUDWLRQSRWHQWLDO,QWKLVUHVSHFW
DJURHFRORJLFDOSURGXFWLRQPHWKRGVZLWKLQWHUDOLDYDULRXVFRPSRVWWHFKQLTXHVKDYHSURYHQWRVHUYHWKHUHJHQHUDWLYH
DJULFXOWXUDOSRWHQWLDOZKLOHPLWLJDWLQJSRWHQWLDOO\YHU\VLJQLÀFDQWDPRXQWVRI&2VHHWKHFRPPHQWDU\RI/HXLQFKDSWHU
DQG*DWWLQJHUHWDOIRUDPRUHHODERUDWHDQDO\VLV$JURHFRORJLFDODSSURDFKHVDUHDOVRPRUHGLYHUVHDSSURDFK
HV7UDGHUXOHVVKRXOGIDFLOLWDWHDQGVXSSRUWVXFKSURGXFWLRQPHWKRGVDQGDOVRUHVSHFWORFDODQGUHJLRQDOGLYHUVLW\DQG
SUHIHUHQFHUHTXLUHPHQWV
LPSURYLQJIRRGVHFXULW\IDUPHUVZHOIDUHDQGHQYLURQ
PHQWDOLVVXHV7KLVQHHGIRUDQHZDSSURDFKWRWKH
WUDGH DUFKLWHFWXUH ZH PHDQ VKRXOG JR EH\RQG WKH
WUDGLWLRQDOGLFKRWRP\RIOLEHUDOL]DWLRQDQGSURWHFWLRQ
D7KHSUREOHPVZLWKWKHFXUUHQWLQWHUQDWLRQDOUXOHV
UHODWLQJWRDJULFXOWXUDOWUDGH
7KHSUREOHPVZLWKWKHFXUUHQWLQWHUQDWLRQDOWUDGHUXOHV
UHODWLQJ WR DJULFXOWXUH DUH WKUHHIROG L WKH\ VWLOO DO
ORZXQIDLUFRQGLWLRQVKLJKVXEVLGLHVSDUWO\VKLIWHGWR
WKH JUHHQ ER[ LQ WKH 1RUWK LL D WRR HDUO\ SXVK IRU
RSHQ PDUNHWV LQ WKH 6RXWK DOWKRXJK WKH 1RUWK NHSW
LWVERUGHUVFORVHGWLOOWKHVHFWRUZDVVXIÀFLHQWO\FRP
SHWLWLYHDQGLLLIROORZLQJWKHDEVROXWHDQGFRPSDUD
WLYHDGYDQWDJHDSSURDFKIRULQGXVWULDOVHFWRUVIRVWHU
VSHFLDOL]DWLRQHFRQRPLHVRIVFDOHDQGFORVHO\UHODWHG
LQGXVWULDOL]DWLRQRIDJULFXOWXUHZLWKDOOLWVQHJDWLYHLP
SDFWV
:KHUHDV:72GLVFLSOLQHVIRUWKHÀUVWWZRLVVXHVXQ
IDLU FRQGLWLRQV DUH FXUUHQWO\ MXVW WRR ZHDN DQG FDQ
EH ¶ÁH[LELOL]HG· RU E\SDVVHG E\ UHJLRQDO IUHH WUDGH
DJUHHPHQWVDQGELODWHUDOVWKHWKLUGLVVXH²WKHLQKHU
HQW WUHQG WR VSHFLDOL]DWLRQ DQG LQGXVWULDOL]DWLRQ ² LV
PRUH IXQGDPHQWDO 7KH LQFHQWLYHV RQ VSHFLDOL]DWLRQ
LQGXVWULDOL]DWLRQDQGHFRQRPLHVRIVFDOHUXQWKHULVNRI
MHRSDUGL]LQJORQJWHUPRYHUDOODJULFXOWXUDOSURGXFWLYLW\
JURZWKDQGWKHUHVLOLHQFHRIDJULFXOWXUDOSURGXFWLRQ
E$EDVLFSUHFRQGLWLRQ%DODQFHEHWZHHQWKH
SDUDGLJPVRIIRRGVRYHUHLJQW\DQGOLEHUDOL]DWLRQ
,W EHFRPHV PRUH DQG PRUH YLVLEOH WKDW SURVSHULW\
FRQYHQWLRQDOO\PHDVXUHGLQ*'3LVQRWWKHVDPHDV
ZHOIDUH RU ZHOO EHLQJ :HOIDUH HVSHFLDOO\ LQ UHODWLRQ
WRIRRGDOVRUHODWHVWRKHDOWKWUXVWDQGLGHQWLÀFDWLRQ
3HRSOHORRNIRUVXFKLWHPVPRUHVWURQJO\WRGD\7KHUH
LV JUHDWHU FRQVXPHU DWWHQWLRQ WR FUHGHQFH YDOXHV
OLNHDQLPDOZHOIDUHORFDORULJLQRISURGXFWVDQGKRZ
IRRGVDIHW\LVDVVXUHG3HRSOHOLYHXSWRYDOXHVOLNH
VHOIGHWHUPLQDWLRQ DQG VRYHUHLJQW\ DV ZHOO LQ UDLVLQJ
WKHLUYRLFHSROLWLFDOO\EXWHVSHFLDOO\LQUHVSHFWWRIRRG
75$'($1'(19,5210(175(9,(:
7KHUHIRUH´)RRG6RYHUHLJQW\µFDPHXSDVDWHUPWR
H[SUHVVWKLVDWWLWXGH
%\ KDYLQJ IXOO UHVSHFW IRU WKLV DWWLWXGH IRRG VRYHU
HLJQW\ XQOHVV LQWHJUDWHG LQ DQ RYHUDOO IUDPHZRUN
PLJKWOHDGWRWRRIUDJPHQWHGRUJDQL]DWLRQDOSDWWHUQV
LQ WHUPV RI GLIIHULQJ UHJXODWLRQV PDNLQJ WUDGH H[
FKDQJHEHWZHHQUHJLRQVZKLFKZLOOVWLOOEHQHFHVVDU\
DQG EHQHÀFLDO WRR FRPSOLFDWHG DQG DW ODVW FRVWO\
7KHUHIRUHDEDODQFHGDSSURDFKEHWZHHQOLEHUDOL]DWLRQ
DQGIRRGVRYHUHLJQW\LVUHTXLUHG
/LEHUDOL]DWLRQ RU IRRG VRYHUHLJQW\ DJDLQVW WKLV EDFN
JURXQG LV QRW DQ HLWKHURU TXHVWLRQ EXW RQH RI EHW
WHU V\QHUJL]LQJ WKH EHQHÀWV RI ERWK DSSURDFKHV :H
VHH WKLV V\QHUJ\ LQ D JUHDWHU HPSKDVLV RQ UHJLRQDO
L]HGORFDOL]HG VHH ER[ EHORZ IRRG SURGXFWLRQ
QHWZRUNV DLPHG DW VWUHQJWKHQLQJ VLWHVSHFLÀF HFR
ORJLFDO DSSURDFKHV WKDW SURYLGH PXOWLIXQFWLRQDO DQG
UXUDOOLYHOLKRRGEHQHÀWVZKLOHQRWH[FOXGLQJWUDGHZH
HPSKDVL]H WKDW ZH GRQ·W DGYRFDWH VHOI VXIÀFLHQF\
DW KRXVHKROG OHYHO SURGXFWLRQ VKRXOG EH PDUNHW
RULHQWHG E\ OHDYLQJ QRW PDUNHWDEOH JRRGV IRU VHOI
FRQVXPSWLRQ6XFKDSSURDFK²ORFDOO\DGDSWHGPR
VDLFSURGXFWLRQSDWWHUQVWKDWLQWHJUDWHJOREDOPDUNHW
FRQFHUQV²ZDVWHUPHGE\WKH0LOOHQQLXP(FRV\VWHP
$VVHVVPHQW 0($ ´JORFDOL]DWLRQ´ ZKLFK ZH WKLQN
VKRXOGEHJLYHQPRUHDWWHQWLRQWRGD\
%DVHGRQWKHDERYHZHZRXOGVHHWKHIROORZLQJJXLG
LQJSULQFLSOHVIRUIXWXUHDJULFXOWXUDOWUDGH
F*XLGLQJSULQFLSOHVIRUDJULFXOWXUDOWUDGH
L 7KHSUHHPLQHQFHRIRYHUDOOODQGXVH
*LYHQ WKDW DJULFXOWXUDO ODQG LV VFDUFH WR IHHG ELOOLRQSHRSOHHYHU\SDWFKRIVXLWDEOHODQGLVQHHGHG
IRU FXOWLYDWLRQ $JULFXOWXUDO SURGXFWLRQ FDQQRW RQO\
FRQFHQWUDWH RQ PRVW IDYRXUHG UHJLRQV DV WKH
FRPPRQWUDGHWKHRU\ZRXOGVXJJHVW$OODYDLODEOH
ODQG KDV WR EH XVHG ² VR HYHU\ UHJLRQ KDV WR EH
SURGXFWLYH DQG OHVVHU IDYRXUHG UHJLRQV KDYH WR
FRQWULEXWHWKHLUVKDUH6RVXERSWLPXPXVHKDVWR
EHLQWHJUDWHGLQWRWKHRYHUDOOIRRGVXSSO\VWUDWHJ\
%R[$YRLGLQJFRQIXVLRQRQWKHWHUPV´UHJLRQDO´DQG´ORFDOµ
7KHHPSKDVLVRQWKHSURPRWLRQRIUHJLRQDOL]HGRU¶ORFDOL]HG·IRRGSURGXFWLRQGRHVQRWVXJJHVWDQDQWLJOREDOL]DWLRQQRU
DSURVHOIVXIÀFLHQF\GULYH5DWKHUZHDUHFRQYLQFHGWKDWSURGXFLQJIRUFXVWRPHUVLQUHJLRQDOORFDOPDUNHWVDQGXVLQJ
VXUSOXVSURGXFHIRUKRPHFRQVXPSWLRQDQGWUDGHLVDPRUHVXVWDLQDEOHPRGHRISURGXFWLRQIURPDUHSURGXFWLYHDQJOH
7KHWHUPV¶UHJLRQDO·RU¶ORFDO·GHQRWHDQRYHUVHHDEOHJHRJUDSKLFDOUHJLRQOLNHDGLVWULFWFRXQW\RUSURYLQFHWKDWPLJKW
H[WHQGDFURVVERUGHUV,QWKHIROORZLQJZHXVHWKHWHUP´UHJLRQDOORFDOµWRFODULI\WKDWZHGRQ·WPHDQWKHYLOODJHOHYHOEXW
UDWKHUDFRXQW\RUSURYLQFLDOOHYHO
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
LL 7KHSUHHPLQHQFHRIGLYHUVLW\
$VRXWOLQHGDERYHGLYHUVLW\LVDNH\FRPSRQHQWRI
DJULFXOWXUH7KHVSHFLDOL]DWLRQSRWHQWLDOLVWKHUHIRUH
OLPLWHG'XHWRGLYHUVLW\UHTXLUHPHQWVUHJLRQVFDQ
QRWFRQFHQWUDWHVROHO\RQRQHFURS$PLQLPXPRI
GLYHUVLW\UHTXLUHVDPL[RISURGXFWVFURSURWDWLRQ
ZKHUHQRWHYHU\FURSFDQKDYHDFRPSDUDWLYHDG
YDQWDJH 'LYHUVH SURGXFWLRQ SDWWHUQV EXIIHU SULFH
KLNHVDQGJXDUDQW\DPRUHVWDEOHSURÀW$QGGLYHU
VLW\ LV D QXWULWLRQDO UHTXLUHPHQW WRR /DVW EXW QRW
OHDVWGLYHUVLW\LVLPSHUDWLYHIRULPSURYLQJWKHIXWXUH
UHVLOLHQFHRIDJULFXOWXUHWRFOLPDWHFKDQJH7KXVLW
PDNHVVHQVHWRSULPDULO\RULHQWGLYHUVHSURGXFWLRQ
SDWWHUQVWRZDUGVORFDOGHPDQG
LLL7KHSUHHPLQHQFHRIUHJLRQDOORFDOIRRGSURGXFWLRQ
5HJLRQDOORFDO IRRG SURGXFWLRQ DQG FRQVXPSWLRQ
LVEHLQJLGHQWLÀHGDVDQHZPHJDWUHQG5HJLRQDO
ORFDOSURGXFWLRQKDVEHQHÀWVRQHQYLURQPHQWDODQG
VRFLDO JURXQGV 2Q WKH VRFLDO VLGH PRUH UHJLRQ
DOO\ORFDOO\RULHQWHGPDUNHWUHODWLRQVSURPLVHPRUH
GHFHQW MREV LQ UXUDO DUHDV QRW RQO\ LQ DJULFXOWXUH
EXW LQ UXUDO VXSSRUW VHUYLFHV DV LW FUHDWHV D UXUDO
HFRQRP\7KHHQYLURQPHQWDOEHQHÀWVRIDUHJLRQDO
ORFDOIRFXVDUHSULPDULO\LQGLYHUVHSURGXFWLRQSDW
WHUQVZKLFK²WKURXJKPRUHPRVDLFOLNHVWUXFWXUHV
² VHUYH ELRGLYHUVLW\ LVVXHV EHWWHU LQFUHDVH FORVH
QXWULHQW F\FOHV WHQG WR UHGXFH H[WHUQDO LQSXW XVH
DQGVWUHQJWKHQUHVLOLHQFHRIWKHSURGXFWLRQDQGWKH
HFRV\VWHPDWODUJH
0RUHRYHU WKHUH LV JURZLQJ SUHIHUHQFH RI SHRSOH
IRUUHJLRQDOORFDOSURGXFWLRQGXHWRWUXVWDQGLGHQ
WLÀFDWLRQ3HRSOHZDQWWRKDYHDFORVHUHODWLRQVKLS
ZLWKWKHLUIRRGDQGIRRGSURGXFHUV%HVLGHVIUHVK
QHVV LV RI JURZLQJ YDOXH 6XFK IRRG LV EHVW SUR
GXFHG UHJLRQDOO\ORFDOO\ DQG LPSRUWV FRPSOHPHQW
LQ WHUPV RI DGGLWLRQ DQG VXSSOHPHQWDWLRQ DYDLO
DELOLW\ VHDVRQDOLW\ DQG FXOWXUDO GLYHUVLW\ 7UDGHG
JRRGVVKRXOGDOVREHUHVRUWHGWRLQFDVHVZKHUH
ORFDO SURGXFWV ZRXOG KDYH D GLVWLQFW QHJDWLYH HQ
YLURQPHQWDORUVRFLDOLPSDFWVXFKDVJUHHQKRXVH
SURGXFWLRQ LQ ZLQWHU LQWHQVLYH LUULJDWLRQ RU ORQJ
WHUPFROGVWRUDJH7KLVLVDIXQGDPHQWDOO\GLIIHUHQW
DSSURDFKWRWKHFRPSDUDWLYHDGYDQWDJHIUHHWUDGH
PRGHOWKDWFRQFHQWUDWHVVSHFLDOL]HGSURGXFWLRQLQ
WKH PRVW IDYRXUDEOH SURGXFWLRQ VLWHV OHDYLQJ WKH
GLVWULEXWLRQWRJOREDOWUDGH
0RUHRYHU IRRG VDIHW\ LVVXHV SOD\ DQ LPSRUWDQW
SDUWLQWKLVUHJDUG7KHUHFHQWKRUVHPHDWVFDQGDO
LQ(XURSHKDVPDGHYLVLEOHKRZYXOQHUDEOHODUJH
FDVFDGHGYDOXHFKDLQVLQIRRGSURGXFWLRQDUH1RW
WKHOHDVWDJDLQVWWKLVEDFNJURXQGIRRGLQGXVWULHV
LQFUHDVLQJO\WHQGWRVRXUFHORFDOO\3ROLWLFVVKRXOG
IROORZVXLWLQDGMXVWLQJFRQFHUQHGSROLFLHV
LY7KHSUHHPLQHQFHRQVSHFLDOWLHV
([SRUW LQ UHODWLRQ WR IRRG VKRXOG EH IRFXVHG RQ
VSHFLDOWLHV ZKHUH WKH YDOXH DGGHG LV KLJK DQG
VXUSOXV SURGXFH $JULFXOWXUDO VSHFLDOWLHV PLUURU
QHFHVVDULO\ WKH RULJLQ ² DQG RULJLQDOLW\ ² RI WKH
UHJLRQDVZHOODVFRPSDUDWLYHSK\VLFDODQGFOLPDWLF
DGYDQWDJHV 7KH WUDGH V\VWHP QHHGV WR IDFLOLWDWH
DQGVXSSOHPHQWVXFKDSSURDFKHVDQGVWUXFWXUHV
UDWKHUWKDQZKHHOLQJWKHEDWRQRIPDVVSURGXFWLRQ
DQGWKH´LQGXVWULDOL]DWLRQµORJLF
Y 7UDGHDVDFRPSOHPHQW
7UDGH LV D GULYHU IRU SURVSHULW\ 'LVUHJDUGLQJ
SHUYHUVHVXEVLGLHVWUDGHGULYHVFRVWVGRZQZKLFK
PDNHVIRRGPRUHDIIRUGDEOHDQGDFFHVVLEOH7UDGH
DOVR FRQWULEXWHV WR FXOWXUDO GLYHUVLW\ RI IRRG $W
WKH VDPH WLPH K\SHUOLEHUDOL]HG WUDGH FRQFHSWV
ÀQG WKHLU OLPLWV ZKHQ LW FRPHV WR WRR QDUURZ
VSHFLDOL]DWLRQPRQRFURSSLQJKLJKPDUNHWSRZHU
FRQFHQWUDWLRQ DQG HURVLRQ RI ORFDO DQG UHJLRQDO
LGHQWLWLHVDQGFXOWXUHV7UDGHLQIRRGVKRXOGQRWRU
QRWSULPDULO\UHSODFHORFDOL]HGVXSSO\EXWUDWKHU
FRPSOHPHQWLW
,I WKHVH SUHFRQGLWLRQV ZHUH PHW IRRG VHFXULW\ DQG
WKH HQYLURQPHQWDO FULVLV RI DJULFXOWXUH FRXOG EH DG
GUHVVHGLQDSURDFWLYHDQGFRQVWUXFWLYHPDQQHU
G7KHQHZWUDGHIRUPXOD
$V D JXLGLQJ SULQFLSOH IRU IXWXUH WUDGH LQ DJULFXOWXUDO
JRRGV ZH VXJJHVW WKH IRUPXOD ´5HJLRQDO LV ÀUVW
FKRLFHµ RU WR UHDG LW GLIIHUHQWO\ ´DV PXFK UHJLRQDO
L]HGORFDOL]HGIRRGSURGXFWLRQDVSRVVLEOHDVPXFK
WUDGHGIRRGDVQHFHVVDU\µ
)RU WKH WLPH EHLQJ DV H[WHUQDOLWLHV DUH PDLQO\ QRW
LQWHUQDOL]HG FDUERQ WD[HV DUH WKH UDUH H[FHSWLRQ
UDWKHU WKDQ WKH UXOH DQG FDUERQRIIVHW PDUNHWV DUH
ODUJHO\G\VIXQFWLRQDO²DOORIZKLFKIDFWRUVWKDWZRXOG
SULRULWL]H UHJLRQDOORFDO SURGXFWLRQ WKURXJK ¶ORJLFDO·
PDUNHW PHFKDQLVPV ² UHJLRQDOORFDO SUHIHUHQFHV
OLNH ´EX\ ORFDOµ VFKHPHV VKRXOG EH UHVSHFWHG E\
WUDGHUXOHV
6\VWHPDWLF FRQFHQWUDWLRQ RQ JOREDOL]HG IRRG VXSSO\
LV SDUWO\ XQGHUPLQLQJ WKH HQGHDYRXU RI HVWDEOLVKLQJ
UHJLRQDOO\ORFDOO\ DSSURSULDWH DQG WUXO\ VXVWDLQDEOH
SURGXFWLRQDQGFRQVXPSWLRQSDWWHUQVLIWKHUHLVWRR
PXFKH[SRUWRULHQWDWLRQDQGWKHUHIRUHVSHFLDOL]DWLRQ
WKHUHDUHWRRPDQ\LPSRUWVXUJHVWRRPXFKIRFXVRQ
MXVWHFRQRPLFHIÀFLHQF\DQGWRROLWWOHKHHGSDLGWRWKH
PXOWLIXQFWLRQDOLW\UHSURGXFWLYHDQGUHVLOLHQFHFDSDF
LW\RIDJULFXOWXUH+RZVHDQG7HLWHO
,W PDNHV D GLIIHUHQFH ZKHWKHU HQKDQFHG UHJLRQDOO\
ORFDOO\IRFXVHGSURGXFWLRQDQGFRQVXPSWLRQKDSSHQ
PRUH E\ FKDQFH ² WKURXJK KLJKHU SULFHG FRQVXPHU
SUHIHUHQFHV²GHVSLWHDJHQHUDOH[SRUWRULHQWDWLRQRU
ZKHWKHUWKHUHJLRQDOORFDOIRFXVLVSDUWRIDVWUDWHJ\
DQGDQ\VXUSOXVLVWUDGHGDZD\LQDQRUJDQL]HGPDQ
QHU,WZRXOGEHDWDVNIRUWUDGHSROLFLHVWRVKDSHDG
HTXDWHQRUPDWLYHUXOHVWKDWFUHDWHWKHULJKWLQFHQWLYH
VWUXFWXUHLQWKLVUHJDUG.DUDSLQDUDQG+lEHUOL
DGYRFDWH D ´UDLQERZ UHYROXWLRQµ LQVWHDG RI ´MXVWµ D
JUHHQ UHYROXWLRQ LQ WKLV UHVSHFW ZKHUH WDLORU PDGH
DSSURDFKHVWRHDFKVSHFLÀFORFDOLW\DUHWDFNOHGLQD
EURDGLQFOXVLYHDSSURDFK
$JDLQVWWKHEDFNJURXQGRIWKHVHSULQFLSOHVZKDWFDQ
EHDFKLHYHGZLWKWKHFXUUHQWWUDGHUXOHWRROER["
07KHFXUUHQWWUDGHWRROER[LQUHJDUGWR
UHJLRQDOORFDOIRRGVXSSO\
6RPH RI WKH DSSOLHG :72 UXOHV LQFOXGH D UDQJH RI
SROLF\PHDVXUHVWKDWDUHRIVRPHVXSSRUWWRUHJLRQDO
ORFDOIRRGSURGXFWLRQ
‡ 7KHSURYLVLRQVRQWKH´JUHHQER[µLQ$QQH[,,RIWKH
$R$
‡ 7KH XVH RI WKH GH PLQLPLV SURYLVLRQ RQ WUDGH
GLVWRUWLQJ VXSSRUW XS WR SHU FHQW RI WKH WRWDO
YDOXHRIDJULFXOWXUDOSURGXFWLRQDQGSHUFHQWRI
WKH YDOXH RI DQ\ VSHFLÀF FURS LQ D JLYHQ \HDU IRU
PRVWGHYHORSLQJFRXQWULHV
‡ UHJLRQDOFRQWHQWUHTXLUHPHQWVDQG
‡ JHRJUDSKLFDO LQGLFDWLRQV WR EH H[WHQGHG WR IRRG
LWHPV
%XWWKHVHUXOHVKDYHDQRYHUDOOOLPLWHGHIIHFWRQIRVWHU
LQJUHJLRQDOORFDOIRRGSURGXFWLRQDQGFRQVXPSWLRQ
7KHDFKLHYHPHQWRIIRRGVHFXULW\LVEDVLFDOO\WUHDWHG
E\WKHH[LVWLQJ:72UXOHVDVJURXQGVIRUH[FHSWLRQIRU
D YHU\ OLPLWHG UDQJH RI WUDGH OLEHUDOL]DWLRQ PHDVXUHV
'H6FKXWWHUF
$V SRLQWHG RXW LQ WKH OHDG DUWLFOH RI WKLV FKDSWHU E\
/LP/L&KLQJDQG0DUWLQ.KRUWKHUHLVVWLOOTXLWHVRPH
URRPIRULPSURYHPHQWLQIXOO\H[SORLWLQJH[LVWLQJÁH[
LELOLWLHVRQ6'7660DQG63DVZHOODVWKHJUHHQER[
WR DFKLHYH D EHWWHU OHYHO RI IRRG VHFXULW\ 1R GRXEW
WKLVWUDFNVKRXOGEHIROORZHG<HWZLWKWKHEHQHÀWRI
KLQGVLJKWLWVHHPVWREHIDUPRUHFRPSOH[IRULQWHU
HVWHGJRYHUQPHQWVWRWXUQFRQFHSWLQWRDFWLRQLQWKLV
UHJDUG
75$'($1'(19,5210(175(9,(:
)LUVW WR EH HIIHFWLYH VXFK DSSURDFK UHTXLUHV D
FOHDU ZLOOLQJQHVV DQG VWUDWHJ\ E\ FRQFHUQHG JRY
HUQPHQWV'XHWRWKHQHROLEHUDOSROLFLHVRIWKHODVW
GHFDGHVDQGWKHFXUUHQWÀQDQFLDOFULVLVVWDWHVKDYH
EHHQ ZHDNHQHG LQ WKHLU UHJXODWRU\ DQG ÀQDQFLDO
FDSDFLW\ WR GHYLVH VXFK VWUDWHJLHV 6HFRQG SUR
DFWLYHO\H[SORLWLQJWKHÁH[LELOLWLHVLQWKHH[LVWLQJ:72
WRROER[ DOVR UHTXLUHV D OHYHO RI FRRSHUDWLRQ DQG
WROHUDQFHE\RWKHU:72PHPEHUFRXQWULHV
7KH¶MREVDQGJURZWK·GHSHQGHQF\RIVWDWHVDQGWKH
LQWHUHVW RI FRPPHUFLDO SUHVVXUH JURXSV WKDW SURÀW
IURPWKHVWDWXVTXRZKRKDYHFRQWULEXWHGWRVKDSLQJ
DQGEXLOGLQJXSFXUUHQWQHROLEHUDOPDUNHWVWUXFWXUHV
PD\VWDQGDJDLQVWWKHUHTXLUHGOHYHORIFRRSHUDWLRQ
DQG WROHUDQFH 7KLUG LQ SDUWLFXODU GHYHORSLQJ FRXQ
WULHVHUURQWKHVLGHRIFDXWLRQQRWWRYLRODWH:72FRP
PLWPHQWV7KHLUJRYHUQPHQWVDUHWKXVQRWYHU\OLNHO\
WRODXQFKSROLFLHVWKDWIXOO\H[SORLWWKHÁH[LELOLWLHVLQWKH
:72DJUHHPHQWVZLWKRXWVWURQJDVVXUDQFHDQGFRQ
ÀGHQFH WKDW WKHVH LQLWLDWLYHV PLJKW QRW QHJDWLYHO\ DI
IHFWWKLUGSDUWLHV·FRPPHUFLDOLQWHUHVWVDQGOHDYHWKHP
H[SRVHGWRSRWHQWLDOOLWLJDWLRQ'H6FKXWWHUF
)RXUWK H[LVWLQJ ÁH[LELOLWLHV FDQ EH OLPLWHG RU PDGH
GLIÀFXOWWRH[SORLWE\UHJLRQDORUELODWHUDOWUDGHDJUHH
PHQWVWKDWFUHDWH:72SOXVGLVFLSOLQHV
$OOLQDOOWKHH[LVWLQJÁH[LELOLWLHVLQ:72UXOHVDUHQRW
VXIÀFLHQWDQGDUHXQOLNHO\WREHIXOO\H[SORLWHG
1$OUHDG\H[LVWLQJUHJLRQDOORFDO
IRRGDSSURDFKHV
,QWKHOLJKWRIWKHJURZLQJFRQFHUQRIFLWL]HQVRQZKHUH
WKHLU IRRG FRPHV IURP PDQ\ UHWDLO EXVLQHVVHV DO
UHDG\ RIIHU JURZLQJ QXPEHUV RI UHJLRQDO SURGXFWV
5HJDUGLQJDKLJKHUOHYHORIIRRGVRYHUHLJQW\DQGWKH
JURZLQJUROHRIFLYLOVRFLHW\LQWKLVUHVSHFWVRPHFRQ
WRXUV RI UHJLRQDO IRRG SROLF\ FRXQFLOV RU ORFDOL]HG
UHJLRQDO IRRG QHWZRUNV DUH DOUHDG\ YLVLEOH 7KHVH
UHJLRQDOL]HGORFDOL]HGIRRGQHWZRUNVPDNHGHFLVLRQV
RQ WKHLU IRRG DV LW DOUHDG\ KDSSHQV WRGD\ ZKHQ UH
JLRQVFDOOWKHPVHOYHV´*02IUHHUHJLRQ´IRUH[DPSOH
RWKHUV PLJKW RSW IRU *02V 7KH %UD]LOLDQ FLW\ %HOR
+RUL]RQWHLVDJRRGH[DPSOHRQKRZDUHJLRQDOOR
FDO VWUXFWXUHG SDWWHUQ KDV RYHUFRPH WKH IRRG VHFX
ULW\SUREOHPLQDYHU\VKRUWWLPH%HOR+RUL]RQWHWKHQ
EHFDPHWKHEOXHSULQWIRUWKH´IRPH]HURµSURJUDPPH
ZKLFKQHDUO\HUDGLFDWHGKXQJHULQ%UD]LO
7UDGH UXOHV ZRXOG KDYH WR WROHUDWH DQG SXEOLF DQG
SULYDWHSURFXUHPHQWZRXOGKDYHWRDFFHSWVXFKV\V
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
WHPVRISUHIHUHQFHVIRUUHJLRQDOORFDOSURGXFH:KHUH
SHRSOHGHFLGHFRQVFLRXVO\DERXWWKHLUIRRGDQGQXWUL
WLRQWKLVVKRXOGQRWEHRYHUUXOHGE\DQ\SDUWLFXODUO\
PHUFDQWLOLVWGRFWULQH
22XWORRN
7KHUHDUHPDQ\UHDVRQVZK\WKHVLWXDWLRQRIIRRGVH
FXULW\DQGWKHHQYLURQPHQWDOFULVLVRIDJULFXOWXUHLVXQ
VDWLVIDFWRU\WRGD\,IZHVHULRXVO\ZDQWWRDFKLHYHIRRG
VHFXULW\SUDFWLFHHTXDOLW\DQGSURWHFWWKHSODQHWKDY
LQJDOUHDG\FURVVHGVRPHSODQHWDU\ERXQGDULHVWKH
FXUUHQWV\VWHPQHHGVDGMXVWPHQW)RUWKHIXWXUHZH
KDYHWRWKLQNRXWRIWKHER[7RUHVSHFWWKHSULQFLSDO
UHJLRQDOORFDOQDWXUHRIDJULFXOWXUHDQGDGMXVWUHODWHG
SROLFLHV FRXOG EH RQH RI WKH ÀUVW VWHSV :KDW LV UH
TXLUHGLVDVWUHQJWKHQLQJRIUHJLRQDODQGVLWHVSHFLÀF
KROLVWLF DSSURDFKHV WKDW SURYLGH GLYHUVH EHQHÀWV DV
SDUW RI PRUH ORFDOL]HG IRRG SURGXFWLRQ QHWZRUNV ,W
VKRXOGKRZHYHUEHHPSKDVL]HGLQWKLVUHJDUGWKDWLW
LV QRW RXU LQWHQWLRQ WR FUHDWH QHZ SURWHFWLRQLVW PHD
VXUHV 5DWKHU ZH ZDQW WR DGYRFDWH D PRUH UHDVRQ
DEOH IRRGPDUNHW DSSURDFK ZKLFK KDUQHVVHV WKH
SRWHQWLDO RI UHDOO\ VXVWDLQDEOH DJULFXOWXUDO SURGXFWLRQ
WR L HQKDQFH VXVWDLQDEOH SURGXFWLYLW\ RI WKH ZKROH
SURGXFWLRQ V\VWHP QRW RQO\ LQGLYLGXDO SURGXFWV LL
DVVXUHIRRGVHFXULW\DQGUXUDOOLYHOLKRRGVLLLUHÁHFW
DQGFDSLWDOL]HRQWKHGLYHUVLW\RIDJULFXOWXUHWRDVVXUH
LWV UHSURGXFWLYH FDSDFLW\ LY VWUHQJWKHQ IXQFWLRQDO
ELRGLYHUVLW\ DQG Y EXLOG XS UHVLOLHQFH WR UHVRXUFH
FRQVWUDLQWV DQG FOLPDWH FKDQJH DV ZHOO DV LPSURYH
DJULFXOWXUH·VFOLPDWHPLWLJDWLRQSRWHQWLDO
75$'($1'(19,5210(175(9,(:
1//'06#4;U 41/7/2+0)611.#6+.+6;U*''551051(
4#&'+$'4#.+<#6+10(14)4+%7.674'
%HQ/LOOLVWRQDQG.DUHQ+DQVHQ.XKQ,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\
$EVWUDFW
7KHZHDNHQLQJRIDJULFXOWXUDOÀQDQFLDODQGWUDGHUXOHVKDVFRQWULEXWHGVLJQLÀFDQWO\WRLQFUHDVHGYRODWLO
LW\ DQG FRUSRUDWH FRQFHQWUDWLRQ LQ DJULFXOWXUDO PDUNHWV 7KLV LQFUHDVHG YRODWLOLW\ LV KDUPIXO WR ORQJWHUP
LQYHVWPHQWVWRSURWHFWWKHHQYLURQPHQWDQGEXLOGFOLPDWHUHVLOLHQFHLQDJULFXOWXUH3XEOLFLQYHVWPHQWDQG
UHJXODWLRQLVQHHGHGWRHQVXUHVWDEOHIRRGVXSSOLHVDQGIDLUSULFHVDQGWRIDFLOLWDWHDVKLIWWRVXVWDLQDEOH
DJULFXOWXUDOSUDFWLFHV
0XFK RI WKH LQWHUQDWLRQDO GHEDWH RQ WUDGH DQG DJUL
FXOWXUH IURP WKH IRXQGLQJ RI WKH :RUOG 7UDGH 2UJD
QL]DWLRQ:72WRWKHUHFHQWULVHRIDJULFXOWXUDOFRP
PRGLW\SULFHVKDVIRFXVHGRQWKHGDPDJLQJHIIHFWV
RI DJULFXOWXUDO GXPSLQJ LH H[SRUWLQJ DW EHORZ FRVW
RISURGXFWLRQE\DJULEXVLQHVVFRUSRUDWLRQVEDVHGLQ
WKH(8DQGWKH8QLWHG6WDWHV6LQFHDVDUHVXOW
RIWKHJOREDOIRRGSULFHFULVLVWKLVIRFXVKDVVKLIWHG
WR FRQFHUQV DERXW SULFH YRODWLOLW\ %XW ERWK GXPSLQJ
DQG YRODWLOLW\ DUH V\PSWRPV RI WKH VDPH EDG SROLF\
GHFLVLRQV D ZHDNHQLQJ RI JRYHUQPHQW RYHUVLJKW LQ
VHWWLQJ DQG LPSOHPHQWLQJ DJULFXOWXUDO ÀQDQFLDO DQG
WUDGHUXOHV:KLOHWKLVDSSURDFKKDVEHHQDERRQWR
DJULEXVLQHVVFRPSDQLHVRSHUDWLQJDURXQGWKHJOREH
LW KDV EHHQ GDPDJLQJ WR IDUPHUV DQG WKRVH VWUXJ
JOLQJZLWKIRRGLQVHFXULW\(TXDOO\LPSRUWDQWWKLVHUD
RIYRODWLOLW\WKUHDWHQVWRRYHUZKHOPHIIRUWVWRWUDQVLWLRQ
WRPRUHUHVLOLHQWHFRORJLFDOO\IULHQGO\DJULFXOWXUDOSUR
GXFWLRQWKDWLVHVVHQWLDOLQWKHSUHVHQWFRQWH[WRIFOL
PDWHFKDQJH7KHLQWHUQDWLRQDOGHEDWHQHHGVWRVKLIW
RQFH DJDLQ WR D IRFXV RQ WKH ULJKW NLQGV RI UXOHV WR
UHEXLOG UHVLOLHQW IRRG V\VWHPV 6XEVWDQWLYH VWUXFWXUDO
UHIRUPV RI DJULFXOWXUDO ÀQDQFLDO DQG WUDGH SROLFLHV
ZRXOGEHDPDMRUVWHSIRUZDUG
$/LEHUDOL]LQJWUDGHDQGLQFUHDVLQJ
IRRGLQVHFXULW\
7KH OLEHUDOL]DWLRQ RI WUDGH UXOHV JUHDWO\ DFFHOHUDWHG
LQZLWKWKHSDVVDJHRIWKH1RUWK$PHULFDQ)UHH
7UDGH $JUHHPHQW 1$)7$ ZKLFK VHW WKH VWDQGDUG
IRU VXEVHTXHQW ELODWHUDO DQG UHJLRQDO WUDGH
DJUHHPHQWVLQYROYLQJWKH8QLWHG6WDWHVVXFKDVWKH
&HQWUDO $PHULFD'RPLQLFDQ 5HSXEOLF8QLWHG 6WDWHV
)UHH7UDGH$JUHHPHQW&$)7$DQGWKRVHQHJRWLDWHG
EHWZHHQ 0H[LFR DQG RWKHU WUDGLQJ SDUWQHUV ,W DOVR
LQÁXHQFHG WKH QDWXUH RI WUDGH GHDOV SXUVXHG E\ WKH
(8 6KRUWO\ DIWHU WKH SDVVDJH RI 1$)7$ WKH :72
FDPHLQWREHLQJLQDQGYDULRXV:72DJUHHPHQWV
SDUWLFXODUO\ WKH $JUHHPHQW RQ $JULFXOWXUH LQGXFHG
WKH IXUWKHU RSHQLQJ XS RI PDUNHWV LQ GHYHORSLQJ
FRXQWULHV7KHVHELODWHUDODQGPXOWLODWHUDODJUHHPHQWV
OLPLWHGWKHSROLF\RSWLRQVDYDLODEOHWRWKHVHFRXQWULHV
WRSURWHFWWKHLUIDUPHUVIURPGXPSHGLPSRUWVDQGWR
VXSSRUWWKHLUIDUPHUVLQERRVWLQJIRRGSURGXFWLRQ7KLV
ZDYHRIDJUHHPHQWVWROLEHUDOL]HWUDGHDQGGHUHJXODWH
FDSLWDO PRYHPHQWV RSHQHG GHYHORSLQJ HFRQRPLHV
WR IRUHLJQ FRUSRUDWH LQYHVWPHQW WKDW IRFXVHG RQ
H[SDQGLQJ ODUJHVFDOH LQGXVWULDO IRRG SURGXFWLRQ IRU
H[SRUW$VDUHVXOWRIWKHVHFKDQJHVPDQ\FRXQWULHV
WKDWKDGSUHYLRXVO\SURGXFHGPRVWRIWKHLURZQIRRG
EHFDPHGHSHQGHQWRQLPSRUWV$GUDPDWLFH[DPSOH
LVWKDWRI+DLWLZKLFKSURGXFHGSHUFHQWRILWVULFH
UHTXLUHPHQWVLQWKHVEXWQRZIROORZLQJGHFDGHV
RIGHUHJXODWLRQDQGOLEHUDOL]DWLRQLPSRUWVSHUFHQW
RILWVULFH*XHUHxD
'XULQJWKH:72·VÀUVWGHFDGHRIH[LVWHQFHGXPSLQJ
E\ PXOWLQDWLRQDO DJULEXVLQHVV FRPSDQLHV ZDV ERWK
ZLGHVSUHDG DQG KLJKO\ GHVWUXFWLYH 7KH ,QVWLWXWH IRU
$JULFXOWXUH DQG 7UDGH 3ROLF\ ,$73 FDOFXODWHG
GXPSLQJPDUJLQVIRU8QLWHG6WDWHVFRPPRGLW\FURSV
GXULQJ WKH SHULRG ² DQG IRXQG WKDW ZKHDW
FRUQ VR\EHDQV ULFH DQG FRWWRQ ZHUH FRQVLVWHQWO\
H[SRUWHGDWZHOOEHORZWKHFRVWRISURGXFWLRQUDQJLQJ
IURP SHU FHQW IRU FRUQ WR PRUH WKDQ SHU FHQW
IRUFRWWRQ$VXEVHTXHQWVWXG\E\:LVHDOVR
IRXQG WKDW GXPSLQJ RI 8QLWHG 6WDWHV FRPPRGLW\
FURSVDQGPHDWRQ0H[LFRZDVFRPPRQSODFHGXULQJ
WKHSHULRG²
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
:KLOHWUDGHOLEHUDOL]DWLRQRUIUHHWUDGHZDVWRXWHGDV
DZD\WRLPSURYHIRRGVHFXULW\LWKDVXQTXHVWLRQDEO\
IDLOHG 0XUSK\ )ORRGV RI GXPSHG LPSRUWV
HVSHFLDOO\ GXULQJ WKH KDUYHVW FDQ EH GHYDVWDWLQJ
IRU GHYHORSLQJFRXQWU\ IDUPHUV DQG WKH\ LQFUHDVH
GHSHQGHQFH RQ IRRG LPSRUWV $GGLWLRQDOO\ WUDGH
UXOHV KDYH IDFLOLWDWHG WKH IXUWKHU FRQFHQWUDWLRQ RI
JOREDO IRRG VXSSO\ LQ ODUJH SULYDWH ÀUPV WKHUHE\
GLVHPSRZHULQJQRWRQO\IDUPHUVDQGFRQVXPHUVEXW
HYHQJRYHUQPHQWV'HSHQGHQFHRQWKLVLQFUHDVLQJO\
FRQFHQWUDWHG JOREDO IRRG VXSSO\ FKDLQ GRPLQDWHG
E\ SULYDWH SOD\HUV LQFUHDVHV LPSRUWLQJ FRXQWULHV·
YXOQHUDELOLW\WRVKRFNVZKHWKHUIURPH[WUHPHZHDWKHU
HYHQWVRUH[FHVVLYHÀQDQFLDOVSHFXODWLRQLQDJULFXOWXUDO
FRPPRGLW\ PDUNHWV 0RUHRYHU WKH VKLIW WRZDUGV D
JUHDWHU UROH IRU WKH SULYDWH VHFWRU LQ PDQDJLQJ WKH
JOREDO IRRG VXSSO\ KDV FRLQFLGHG ZLWK ULVLQJ JOREDO
UDWHVRIKXQJHU²IURPPLOOLRQZRUOGZLGHLQ²
WRPLOOLRQLQ)$2
%8QLWHG6WDWHVDJULFXOWXUDO
SROLF\)UHHGRPWRIDLO
:RUNLQJ LQ WDQGHP ZLWK HIIRUWV WR IXUWKHU OLEHUDOL]H
WUDGH8QLWHG6WDWHVIDUPSROLF\KDVUHWUHDWHGIURPLWV
WUDGLWLRQDOUROHLQPDQDJLQJDJULFXOWXUDOPDUNHWV2YHU
WKHSDVWKDOIFHQWXU\WKHFRXQWU\·VDJULFXOWXUDOSROLF\
KDV VKLIWHG IURP D V\VWHP RI VXSSO\ PDQDJHPHQW
WKDW KHOSHG PRGHUDWH SULFHV IRU ERWK IDUPHUV DQG
FRQVXPHUV WR D V\VWHP PRUH GHSHQGHQW RQ VR
FDOOHG IUHHPDUNHW IRUFHV 7KLV WUDQVLWLRQ FXOPLQDWHG
LQ WKH )DUP %LOO NQRZQ DV )UHHGRP WR )DUP
ZKLFKUHPRYHGWKHODVWYHVWLJHVRIVXSSO\DQGSULFH
PDQDJHPHQW H[FHSW IRU VXJDU RVWHQVLEO\ WR DOORZ
IDUPHUV WR UHVSRQG WR PDUNHW SULFHV DQG H[SRUW WR
QHZ PDUNHWV RYHUVHDV %XW DV IDUPHUV H[SDQGHG
SURGXFWLRQ ZLWK QR VXSSO\ PDQDJHPHQW DJULFXOWXUDO
FRPPRGLW\SULFHVFROODSVHG7KHIROORZLQJGHFDGHRI
ORZSULFHV²RIWHQEHORZWKHFRVWRISURGXFWLRQ²QRW
RQO\OHGWRLQFUHDVHGGXPSLQJRQH[SRUWPDUNHWVEXW
DOVRVSXUUHGWKH8QLWHG6WDWHV&RQJUHVVWRDWWHPSWWR
FRPSHQVDWHIRULWVSROLF\IDLOXUHE\DSSURYLQJDVHULHV
RI HPHUJHQF\ VXEVLG\ SD\PHQWV DQG XOWLPDWHO\
PDNLQJWKRVHSD\PHQWVSHUPDQHQWLQWKH)DUP
%LOO
'XULQJ WKLV GHFDGH RI ORZ SULFHV DQG LQFUHDVHG
GXPSLQJ 8QLWHG 6WDWHV IDUP VXEVLG\ SD\PHQWV
VRDUHGSHDNLQJLQDQGDQGDJDLQLQ
%XWVLQFHSD\PHQWVWRGRPHVWLFIDUPHUVKDYH
VWHDGLO\ GURSSHG DV FRPPRGLW\ SULFHV KDYH ULVHQ
+LJKHUFRPPRGLW\SULFHVKDYHQRWQHFHVVDULO\PHDQW
KLJKHU SURÀWV IRU IDUPHUV &RVWV RI LQSXWV LQFOXGLQJ
VHHGVDQGIHUWLOL]HUKDYHDOVRGUDPDWLFDOO\LQFUHDVHG
UHGXFLQJ WKH SRWHQWLDO SURÀWV RI VPDOO DQG PHGLXP
VL]HGIDUPHUVLQWKH8QLWHG6WDWHV:LVH86'$
7KHFRVWSULFHVTXHH]HDFFHOHUDWHGWKHWUHQG
LQ 8QLWHG 6WDWHV DJULFXOWXUH DZD\ IURP VPDOO DQG
PHGLXPVL]HGIDUPVWRYHU\ODUJHIDUPVWKDWZHUHDEOH
WR VSUHDG FRVWV RYHU ODUJHU ODQG DUHDV 7KHVH ODUJH
IDUPVZHUHDOVRWKHEHQHÀFLDULHVRIDERXWSHUFHQW
RIFRPPRGLW\SURJUDPPHVXEVLGLHV$VDUHVXOWRYHU
WKHSDVW\HDUVWKHQXPEHURIVPDOOFRPPHUFLDOO\
YLDEOH IDUPV ZLWK VDOHV RI EHWZHHQ DQG
KDVIDOOHQE\SHUFHQWDQGWKDWRIYHU\
ODUJH IDUPV ZLWK VDOHV RI PRUH WKDQ PLOOLRQ KDV
LQFUHDVHG E\ SHU FHQW +RSSH 0DF'RQDOG DQG
.RUE$OVRGXULQJWKLVSHULRGWKHSHUFHQWDJH
RI 8QLWHG 6WDWHV DJULFXOWXUDO SURGXFWLRQ FRQWUROOHG
E\WKHWRSIRXUÀUPVLQDJLYHQVHFWRUKDVLQFUHDVHG
VXEVWDQWLDOO\ )RU H[DPSOH LQ EHHI SDFNLQJ LW URVH
IURP SHU FHQW LQ WR SHU FHQW LQ +HQGULFNVRQDQG+HIIHUQDQ
(8 VXEVLGLHV WR DJULFXOWXUH XQGHU WKH &RPPRQ
$JULFXOWXUDO 3ROLF\ &$3 DUH QRZ ODUJHO\ GHFRXSOHG
XQFRQQHFWHG WR SURGXFWLRQ RU SULFHV PDNLQJ WKHP
´PLQLPDOO\ WUDGHGLVWRUWLQJµ WR WKH :72 :KLOH WKH
WUXH H[WHQW RI WKH GHFRXSOLQJ GHSHQGV RQ KRZ WKH
VXEVLGLHVDUHPHDVXUHGWRWDO(8VXEVLGLHVKDYHQRW
YDULHG DV GUDPDWLFDOO\ DV WKRVH RI WKH 8QLWHG 6WDWHV
RYHUWKHSDVWIHZ\HDUV%HUWKHORW:KLOHWKH
&$3GLIIHUVVXEVWDQWLYHO\IURPWKH8QLWHG6WDWHV)DUP
%LOO WKH XQGHUO\LQJ FKDOOHQJH LV WKH VDPH ² KRZ WR
UHGLUHFWVXSSRUWDZD\IURPODUJHVFDOHSURGXFWLRQIRU
H[SRUWWRZDUGVSURJUDPPHVWKDWFDQSURYLGHJUHDWHU
IRRG VHFXULW\ UXUDO OLYHOLKRRGV DQG D WUDQVLWLRQ WR
VXVWDLQDEOH DJULFXOWXUH 7KH FXUUHQW FRPSOH[ V\VWHP
RI VXSSRUW HQDEOHV DJULEXVLQHVVHV WR H[SORLW WKH
V\VWHPWRWKHGHWULPHQWRIIDUPHUVLQERWKGHYHORSLQJ
DQGGHYHORSHGFRXQWULHV
&)LQDQFLDOPDUNHWGHUHJXODWLRQ
+RZÀQDQFLDOPDUNHWVDQGFRPPRGLW\IXWXUHVPDUNHWV
DUH UHJXODWHG LV DQRWKHU IDFWRU WKDW VWURQJO\ DIIHFWV
DJULFXOWXUDOSURGXFWLRQ$VHULHVRIODZVSDVVHGE\WKH
8QLWHG6WDWHV&RQJUHVVEHJLQQLQJLQWKHHDUO\V
DQG FXOPLQDWLQJ LQ VXFFHHGHG LQ RSHQLQJ XS
FRPPRGLW\IXWXUHVPDUNHWVWRDÁRRGRIQHZVSHFXOD
WLYHPRQH\,Q+DQN3DXOVRQ7UHDVXU\6HFUHWDU\
LQWKH*HRUJH:%XVK$GPLQLVWUDWLRQDQGWKHQFKLHI
H[HFXWLYH RIÀFHU RI *ROGPDQ 6DFKV VXFFHVVIXOO\
OREELHGIRUDQH[HPSWLRQIURPWKHUXOHWKDWLQYHVWPHQW
EDQNV PDLQWDLQ ODUJH HQRXJK FXUUHQF\ UHVHUYHV WR
FRYHU WKHLU XQVXFFHVVIXO WUDGHV 7KH UXOH H[HPSWLRQ
IUHHGELOOLRQVRIGROODUVWKDW*ROGPDQ6DFKVDQGIRXU
RWKHUEDQNVXVHGIRUKLJKULVNLQYHVWPHQWVLQFOXGLQJ
FRPPRGLW\LQGH[IXQGEHWV,$73&RPPRGLW\
LQGH[ IXQGV ZKLFK GHDO LQ DJULFXOWXUH HQHUJ\ DQG
PHWDOV H[SORLWHG WKHVH QHZ ORRSKROHV DQG ÁRRGHG
FRPPRGLW\ PDUNHWV ZLWK PRQH\ EHWWLQJ WKHUHE\ WR
GULYHXSSULFHVUHJDUGOHVVRIWKHPDUNHWIXQGDPHQWDOV
RIVXSSO\DQGGHPDQG)RUH[DPSOHLQ0DUFK
WKH XQUHJXODWHG ELJJHVW SOD\HUV 0RUJDQ 6WDQOH\
DQG *ROGPDQ 6DFKV RZQHG ELOOLRQ EXVKHOV RI
&KLFDJR%RDUGRI7UDGHFRUQIXWXUHVFRQWUDFWVZKLOH
DOOFRUQSURGXFHUVDQGSURFHVVRUVKDGWKHPHDQVWR
KHGJH RQO\ PLOOLRQ EXVKHOV DJDLQVW SULFH VZLQJV
7KHVH XQUHJXODWHG IXQGV FRQWUROOHG SHU FHQW RI
DOO8QLWHG6WDWHVDJULFXOWXUDOIXWXUHVFRQWUDFWVGXULQJ
WKH SHULRG ² 6XSSDQ 0RVW RI WKLV
H[FHVVLYHVSHFXODWLYHDFWLYLW\WDNHVSODFHLQRYHUWKH
FRXQWHUWUDGLQJZKLFKLVWUDGHGRIIH[FKDQJHDQGLV
QRWVXEMHFWWRWUDGHGDWDUHSRUWLQJUHTXLUHPHQWVRUWR
PDUJLQFROODWHUDODQGRWKHUUHTXLUHPHQWVRIUHJXODWHG
H[FKDQJHV:KHQWKHVH:DOO6WUHHWIXQGVVROGRIIWKHLU
FRQWUDFWVLQPLGSULFHVWXPEOHG2YHUOHYHUDJHG
ÀQDQFLDOÀUPVZLWKRXWUHVHUYHVWRFRYHUORVVHVZHUH
LQVROYHQW FRXQWHUSDUWLHV WR WKHVH ULVN EHWV XQWLO WKH\
ZHUHUHFDSLWDOL]HGE\WKH8QLWHG6WDWHV&RQJUHVVDQG
WD[SD\HUV 7RGD\ WKHVH VDPH ÀQDQFLDO VSHFXODWRUV
FRQWLQXH WR GHVWDELOL]H FRPPRGLW\ PDUNHWV LQ WKH
8QLWHG6WDWHVDQGHOVHZKHUHVHHDOVRWKHFRPPHQW
RI0OOHULQWKLVFKDSWHU
7KH UROH RI H[FHVVLYH VSHFXODWLRQ RQ LQWHUQDWLRQDO
DJULFXOWXUH PDUNHWV KDV EHHQ ZHOO GRFXPHQWHG
E\ D KRVW RI LQWHUQDWLRQDO DJHQFLHV DQG UHVHDUFK
LQVWLWXWLRQV LQFOXGLQJ PRVW UHFHQWO\ 81&7$'
7KH 81&7$' UHSRUW WKURXJK DQ DQDO\VLV RI
GDWD DV ZHOO DV H[WHQVLYH LQWHUYLHZV ZLWK ÀQDQFLDO
WUDGHUV GHVFULEHV WKH QHZ IRUFHV RI ÀQDQFLDOL]DWLRQ
LQ FRPPRGLW\ PDUNHWV EHJLQQLQJ LQ DQG WKHLU
FRQWULEXWLRQ WR VWHDGLO\ ULVLQJ SULFHV DQG LQFUHDVLQJ
YRODWLOLW\
)LQDOO\ LW LV LPSRVVLEOH WR RYHUVWDWH WKH HQRUPRXV
FRVWVRIÀQDQFLDOPDUNHWGHUHJXODWLRQWRJRYHUQPHQW
EXGJHWV DURXQG WKH ZRUOG $JULFXOWXUH KDV QRW EHHQ
VSDUHG E\ WKH JOREDO ÀQDQFLDO FROODSVH DV OHVV DQG
OHVV PRQH\ LV QRZ DYDLODEOH IRU IRRG DLG DQG IRU
LQYHVWPHQWV IRU LQFUHDVLQJ SURGXFWLRQ LQ GHYHORSLQJ
FRXQWULHV IRU SURPRWLQJ VXVWDLQDEOH DJULFXOWXUH DQG
IRUDJULFXOWXUDODGDSWDWLRQWRFOLPDWHFKDQJHDPRQJ
PDQ\RWKHUQHHGV
75$'($1'(19,5210(175(9,(:
',QYHVWPHQWVLQHFRORJLFDODJULFXOWXUH
XQGHUPLQHGE\YRODWLOLW\
([WUHPHO\ ORZ DJULFXOWXUDO FRPPRGLW\ SULFHV RYHU
WKH SDVW WZR GHFDGHV IROORZHG E\ UHFHQW VSLNHV LQ
SULFHV GLVFRXUDJH ORQJWHUP LQYHVWPHQWV LQ PRUH
VXVWDLQDEOH HFRORJLFDO DJULFXOWXUH WKDW ZLOO EHQHÀW
WKH HQYLURQPHQW ZDWHU TXDOLW\ DQG TXDQWLW\ DQG WKH
FOLPDWH:KHQSULFHVDUHORZIDUPHUVVWUXJJOHWRPDNH
D OLYLQJ DQG IRFXV DOPRVW H[FOXVLYHO\ RQ LQFUHDVLQJ
SURGXFWLRQWRPDNHXSIRUWKHORZSULFHV:KHQSULFHV
VKRRW XS RU DUH SURMHFWHG WR LQFUHDVH JRYHUQPHQWV
DQGDFDGHPLFVRIWHQDGYLVHIDUPHUVWRGHYRWHHYHQ
PRUH ODQG WR SURGXFWLRQ RIWHQ LQ HQYLURQPHQWDOO\
VHQVLWLYH DUHDV 7KLV WHQVLRQ EHWZHHQ WKH XVXDOO\
IXWLOHHIIRUWVWRUHVSRQGWRSULFHVDQGLQYHVWPHQWVIRU
ORQJWHUP HQYLURQPHQWDO VXVWDLQDELOLW\ LV HYLGHQW LQ
UHFHQW FKDOOHQJHV IDFLQJ 8QLWHG 6WDWHV FRQVHUYDWLRQ
SURJUDPPHV VSHFLÀFDOO\ WKH &RQVHUYDWLRQ 5HVHUYH
3URJUDP &53 DQG WKH &RQVHUYDWLRQ 6WHZDUGVKLS
3URJUDP&63
7KH &RQVHUYDWLRQ 5HVHUYH 3URJUDP LV SDUW RI WKH
)DUP %LOO WKDW SD\V IDUPHUV WR VHW DVLGH DQG SURWHFW
PDUJLQDO IDUPODQG IURP DJULFXOWXUDO SURGXFWLRQ &53
ODQG LV FULWLFDO WR VORZLQJ GRZQ VRLO HURVLRQ DQG
SURWHFWLQJ ZLOGOLIH DQG ZDWHUZD\V ,QGHHG LW KDV
SURWHFWHG WHQV RI PLOOLRQV RI DFUHV RYHU WKH \HDUV
%XW WKLV SRSXODU SURJUDPPH KDV VHHQ D VLJQLÀFDQW
GHFOLQH LQ SDUWLFLSDWLRQ DV IDUPHUV KDYH WDNHQ RYHU
PRUHODQGIRUSURGXFWLRQLQDQDWWHPSWWREHQHÀWIURP
ULVLQJFRPPRGLW\SULFHV)URP2FWREHUWR-XO\
PLOOLRQ DFUHV RI &53 ODQG ZHQW EDFN LQWR
IDUPSURGXFWLRQ&RZDQ
7KH &RQVHUYDWLRQ 6WHZDUGVKLS 3URJUDP LV WKH
FRXQWU\·V ODUJHVW FRQVHUYDWLRQ SURJUDPPH FRYHULQJ
PLOOLRQDFUHVQDWLRQZLGHDQGLWLVDFFHVVLEOHWRDOO
IDUPHUVUHJDUGOHVVRIVL]HRUW\SHRIFURSSURGXFWLRQ
,W UHZDUGV IDUPHUV EDVHG RQ WKHLU FRQVHUYDWLRQ
SUDFWLFHV WKDW SURWHFW WKH VRLO ZDWHU DLU DQG QDWXUDO
UHVRXUFHV ,Q SDVW )DUP %LOOV WKH &63 ZDV ZRHIXOO\
XQGHUIXQGHG 7KH )DUP %LOO WRRN D PDMRU VWHS
IRUZDUGE\DOORZLQJDQHVWLPDWHGPLOOLRQDFUHVWR
EH HOLJLEOH IRU &63·V PXOWL\HDU FRQWUDFWV HDFK \HDU
'HVSLWH WKLV IXQGLQJ LQFUHDVH RQO\ SHU FHQW RI
HOLJLEOHIDUPHUVFRXOGSDUWLFLSDWHLQWKHSURJUDPPHLQ
DQGEHFDXVHRIDODFNRIIXQGVDFFRUGLQJ
WRWKH8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH86'$
$QGWKHSURJUDPPHLVOLNHO\WRIDFHFXWEDFNV XQGHU
FXUUHQW HIIRUWV WR UHGXFH JRYHUQPHQW GHEW $ EXGJHWELOOSDVVHGE\WKH+RXVHRI5HSUHVHQWDWLYHV
LQ-XQHZRXOGFXWRYHUELOOLRQLQFRQVHUYDWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
VSHQGLQJLQFOXGLQJPLOOLRQGLUHFWO\IURPWKH&63
FXUUHQWO\IXQGHGDWELOOLRQD\HDUDQGSRWHQWLDOO\
IRUFH WKH 86'$ WR EUHDN FRQWUDFWV ZLWK IDUPHUV WKDW
ZHUHVLJQHGHDUOLHUWKLV\HDU,WLVXQFOHDUH[DFWO\KRZ
PXFKIXQGLQJIRUFRQVHUYDWLRQSURJUDPPHVZLOOEHFXW
DVSDUWRIWKHUHFHQWGHEWFHLOLQJELOOSDVVHGLQ$XJXVW
$OWKRXJKVRPHFRQVHUYDWLRQSURJUDPPHVLQWKH
8QLWHG6WDWHV)DUP%LOOVXSSRUWSUDFWLFHVWKDWZLOOERWK
UHGXFHFDUERQHPLVVLRQVDQGLQFUHDVHDGDSWDWLRQWR
FOLPDWH FKDQJH WKH ELOO GRHV QRW H[SOLFLWO\ DGGUHVV
FOLPDWH FKDQJH 'HVSLWH WKH ODFN RI FRPSUHKHQVLYH
FOLPDWHFKDQJHOHJLVODWLRQWKH2EDPD$GPLQLVWUDWLRQ
DQG WKH 86'$ KDYH VWURQJO\ VXSSRUWHG WUHDWLQJ
DJULFXOWXUH ODUJHO\ DV D VRXUFH RI FDUERQ HPLVVLRQ
RIIVHW FUHGLWV IRU SROOXWHUV SDUWLFLSDWLQJ LQ D FDUERQ
PDUNHW7KLVSHUVSHFWLYHRQDJULFXOWXUH·VSODFHZLWKLQ
FOLPDWH SROLF\ LV UHÁHFWHG LQ D -XQH 86'$
DQQRXQFHPHQW RI JUDQWV IRU SURMHFWV JHDUHG DOPRVW
HQWLUHO\WRPHDVXULQJ*+*HPLVVLRQUHGXFWLRQVDQG
KRZWKRVHUHGXFWLRQVFRXOGEHFRQYHUWHGLQWRRIIVHW
FUHGLWV IRU D FDUERQ PDUNHW 86'$ 7KHUH
DUH QR JRYHUQPHQW SODQV RU VLJQLÀFDQW UHVRXUFHV
IRFXVHG RQ KHOSLQJ DJULFXOWXUH LQ WKH 8QLWHG 6WDWHV
WR WUDQVLWLRQ WRZDUGV PRUH FOLPDWHUHVLOLHQW SUDFWLFHV
DQGSURGXFWLRQ
7KHH[SHFWHGFXWVLQFRQVHUYDWLRQSURJUDPPHVLQWKH
8QLWHG6WDWHVDQGWKHGHQLDOE\&RQJUHVVRIFOLPDWH
FKDQJHDVDPDMRUGHVWDELOL]LQJIDFWRULQDJULFXOWXUDO
SURGXFWLRQ DUH LQ FRQWUDVW ZLWK (XURSH·V FOLPDWH
FKDQJH RULHQWDWLRQ ZLWKLQ LWV &RPPRQ $JULFXOWXUDO
3ROLF\7KDWFOLPDWHFKDQJHLVKDSSHQLQJDQGPXVWEH
DGGUHVVHG LQ DJULFXOWXUH SROLF\ LV XQGHUVWRRG ZLWKLQ
WKH &$3 ,Q 0D\ WKH (XURSHDQ 3DUOLDPHQW·V
$JULFXOWXUH&RPPLWWHHDJUHHGWRPDLQWDLQIXQGLQJIRU
DJULFXOWXUHDQGWRLQFUHDVHLWVHPSKDVLVRQSURGXFLQJ
HQRXJKIRRGZKLOHLPSURYLQJHQYLURQPHQWDOSUDFWLFHV
,Q DGGLWLRQ WR LQFUHDVLQJ LQFHQWLYHV IRU VXVWDLQDEOH
SURGXFWLRQ WKH (8 ZLOO PRUH GLUHFWO\ OLQN SD\PHQWV
WR´JUHHQLQJPHDVXUHVµWKDWUHGXFH*+*HPLVVLRQV
(XU$FWLY
()URPYRODWLOLW\WRVXVWDLQDELOLW\
7KH VHHGV RI FXUUHQW SULFH DQG VXSSO\ YRODWLOLW\ LQ
DJULFXOWXUDO PDUNHWV ZHUH SODQWHG VHYHUDO GHFDGHV
DJR WKURXJK D VHULHV RI SROLF\ GHFLVLRQV WKDW
KDYH JUDGXDOO\ VWUHQJWKHQHG WKH KROG RI ODUJH
DJULEXVLQHVVHVRYHUPDUNHWVDQGGLVHPSRZHUHGERWK
IDUPHUVDQGFRXQWULHVVWUXJJOLQJZLWKIRRGLQVHFXULW\
7R KHOS DGGUHVV WKH HQRUPRXV FKDOOHQJHV UHODWHG
WR IRRG LQVHFXULW\ DQG HQYLURQPHQWDO DQG FOLPDWH
GHJUDGDWLRQLQWKHFRPLQJ\HDUVPDUNHWUHIRUPVDUH
QHHGHG WR PDNH DJULFXOWXUH PRUH HFRQRPLFDOO\ DQG
HQYLURQPHQWDOO\ VXVWDLQDEOH 7KH LVVXH LV QRW RQO\
UHODWHG WR WUDGH LW DOVR LQYROYHV GLVHQWDQJOLQJ ORFDO
IRRG HFRQRPLHV IURP WKH JULSV RI YXOQHUDEOH VXSSO\
FKDLQV GRPLQDWHG E\ WUDQVQDWLRQDO FRUSRUDWLRQV
,W LV QRW RQO\ DERXW ZKHWKHU VXEVLGLHV DUH ULJKW RU
ZURQJ EXW UDWKHU KRZ EHVW WR LQYHVW SXEOLF PRQH\
DQGHVWDEOLVKUHJXODWRU\RYHUVLJKWWRFUHDWHWKHULJKW
IRRG V\VWHP $ QHZ VHW RI YDOXHV PXVW EH LQMHFWHG
LQWRSROLF\PDNLQJWKDWJLYHVSULRULW\WRIRRGVHFXULW\
IDUPHUV·OLYHOLKRRGVHQYLURQPHQWDOVXVWDLQDELOLW\DQG
UHVLOLHQFHDQGGHPRFUDWLFGHFLVLRQPDNLQJ
7KH IROORZLQJ DUH VRPH LQLWLDO VWHSV WKDW VKRXOG EH
WDNHQ
‡ $UHDVVHVVPHQWRIWUDGHUXOHVWRHQDEOHGHYHORSLQJ
FRXQWULHV WR SURWHFW DQG VXSSRUW VHFWRUV YLWDO WR
WKHLUIRRGVHFXULW\DQGUXUDOOLYHOLKRRGV
‡Ã6XSSRUWIRUWKHHVWDEOLVKPHQWRIIRRGUHVHUYHVDV
D WRRO WR PLWLJDWH SULFH DQG VXSSO\ YRODWLOLW\ DQG
VWUHQJWKHQIRRGVHFXULW\ZKHQGRPHVWLFSURGXFWLRQ
IDLOV
‡ 3UHYHQWLRQRIH[FHVVLYHVSHFXODWLRQLQFRPPRGLW\
PDUNHWVWKURXJKWKHHVWDEOLVKPHQWRIFRPPRGLW\
VSHFLÀFSRVLWLRQOLPLWVDQGLQFUHDVHGWUDQVSDUHQF\
LQRYHUWKHFRXQWHUWUDGLQJ
‡ *UHDWHU LQYHVWPHQW LQ DJURHFRORJLFDO IDUPLQJ
SUDFWLFHV DV RXWOLQHG LQ WKH UHSRUWV RI WKH
,QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH
6FLHQFHDQG7HFKQRORJ\IRU'HYHORSPHQW,$$67'
WR VWUHQJWKHQ ERWK IRRG VHFXULW\ DQG
UHVLOLHQFH WR FOLPDWH FKDQJH ZLWK DQ HPSKDVLV
RQ VXSSRUWLQJ VPDOOVFDOH IDUPHUV SDUWLFXODUO\
ZRPHQ
‡ 5HIRUP RI QDWLRQDO IDUP SROLFLHV SDUWLFXODUO\ WKH
8QLWHG 6WDWHV )DUP %LOO DQG WKH (8·V &RPPRQ
$JULFXOWXUDO 3ROLF\ WR HOLPLQDWH GXPSLQJ
HQFRXUDJH HQYLURQPHQWDO VXVWDLQDELOLW\ DQG
SUHYHQW ROLJRSROLVWLF FRQWURO RI PDUNHW SULFHV DQG
SUDFWLFHV
75$'($1'(19,5210(175(9,(:
1//'06#4;U'6*+0-+0)
11&'%74+6;64#6')+'5+0+/'51(
.+/#6'*#0)'U*'#5'(14')+10#.+<#6+101(
)4+%7.674#.4#&'#0&1%#.#4-'65
&KULVWLQH&KHPQLW]+HLQULFK%|OO)RXQGDWLRQDQG
7LOPDQ6DQWDULXV*HUPDQZDWFK
$EVWUDFW
$VXVWDLQDEOHWUDQVIRUPDWLRQRIVPDOOIDUPV\VWHPVLQGHYHORSLQJFRXQWULHVZLOORQO\VXFFHHGLILWLVLQWH
JUDWHGLQWRRYHUDOODJULFXOWXUDODQGIRRGGHYHORSPHQWVWUDWHJLHV,VVXHVFRQFHUQLQJWKHDJULFXOWXUDOWUDGLQJ
V\VWHPDVRQHRIWKHPDMRUGULYHUVRIWKHH[LVWLQJIRRGSURGXFWLRQV\VWHPQHHGWREHOLQNHGWRWKHGHEDWH
RQDJULFXOWXUH·VFRQWULEXWLRQWRDGDSWDWLRQDQGFOLPDWHFKDQJHPLWLJDWLRQ6LQFHWUDGHOLEHUDOL]DWLRQDQGH[
SRUWRULHQWDWLRQWHQGWRXQGHUPLQHDGDSWLYHVWUDWHJLHVDQGHQFRXUDJHLQSXWLQWHQVLYH´FOLPDWHXQIULHQGO\µ
IDUPLQJWKHVXVWDLQDEOHWUDQVIRUPDWLRQRIWKHDJULFXOWXUDOVHFWRUUHTXLUHVDIXQGDPHQWDOUHWKLQNLQJRIFXU
UHQWWUDGHSROLFLHV
7KH SULQFLSOH RI ´HFRQRPLF VXEVLGLDULW\µ RIIHUV JXLGDQFH IRU WKLV WUDQVIRUPDWLRQ 6DFKV DQG 6DQWDULXV
,WLPSOLHVWKDWHFRQRPLFH[FKDQJHVLQWKHIRRGV\VWHPVKRXOGEHFDUULHGRXWSUHIHUDEO\DWWKHORFDO
DQGQDWLRQDOOHYHOVZKLOHH[FKDQJHVDWWKHFRQWLQHQWDORUJOREDOOHYHOVKRXOGKDYHRQO\DFRPSOHPHQWDU\
IXQFWLRQ
,QPDQ\GHYHORSLQJFRXQWULHVDJULFXOWXUHLVWKHPDLQ
VRXUFHRIUXUDOOLYHOLKRRGVDQGWKHIRUHPRVWSURYLGHU
RI HPSOR\PHQW 0RUH WKDQ RQH WKLUG RI WKH ZRUOG·V
SRSXODWLRQGHULYHWKHLUOLYHOLKRRGVIURPODQGJURZLQJ
IRRGIRUWKHLUIDPLOLHVDQGIRUORFDOPDUNHWV²SULPDULO\
VWDSOHV JURZQ PDLQO\ RQ VPDOO ODQG KROGLQJV 7KXV
VPDOOIDUPV\VWHPVGHIDFWRUHPDLQWKHEDFNERQHRI
IRRGVHFXULW\LQGHYHORSLQJFRXQWULHVHYHQWRGD\
+RZHYHU UXUDO SRYHUW\ DQG UXUDO KXQJHU DUH
ZLGHVSUHDGDQGWKHPDMRULW\RIDOOSRRUDQGKXQJU\
SHRSOH ZRUOGZLGH OLYH LQ UXUDO DUHDV ,)$' 7R DGGUHVV WKLV VLWXDWLRQ JRYHUQPHQWV QHHG WR
UHWKLQN FXUUHQW IRRG VHFXULW\ VWUDWHJLHV 6LQFH WKH
V SROLFLHV FRQFHUQLQJ IRRG VHFXULW\ KDYH EHHQ
LQFUHDVLQJO\WUDGHRULHQWHG'XHWRORZZRUOGPDUNHW
SULFHV FKHDS LPSRUWV RI IRRG SURGXFWV KDYH EHHQ
IDYRXUHGRYHUQDWLRQDOSURGXFWLRQIRUDFKLHYLQJIRRG
VHFXULW\0RUHRYHULWKDVEHHQDFRPPRQEHOLHIWKDW
RYHUDOOHFRQRPLFJURZWKZRXOGDXWRPDWLFDOO\OHDGWR
WKH DOOHYLDWLRQ RI KXQJHU )$2 DQG WKDW WKH
LQWHJUDWLRQRIVPDOODQGPHGLXPIDUPHUVLQWRH[SRUW
RULHQWHG JOREDO YDOXH FKDLQV ZRXOG KHOS UHGXFH
SRYHUW\DQGKXQJHULQGHYHORSLQJFRXQWULHV
<HWORRNLQJDWVPDOOSURGXFHUVDQGWKHIRRGVHFXULW\
VLWXDWLRQ LQ YDULRXV GHYHORSLQJ FRXQWULHV WRGD\
RYHUDOO WKLV VWUDWHJ\ KDV QRW GHOLYHUHG 2Q WKH
FRQWUDU\ IRRG LQVHFXULW\ DQG SRYHUW\ LQ UXUDO DUHDV
KDYH LQFUHDVHG LQ UHFHQW \HDUV )$2 6PDOO
SURGXFHUV KDYH IDFHG PXOWLSOH FULVHV DPRQJ WKHP
KLJK SULFH YRODWLOLW\ WKH HFRQRPLF GRZQWXUQ GXH WR
WKHJOREDOÀQDQFLDODQGHFRQRPLFFULVLVDQGZHDWKHU
H[WUHPHVGXHWRFOLPDWHFKDQJH²DOORIZKLFKKDYH
H[DFHUEDWHGHDFKRWKHU)DQDQG+HDG\6LQFH
VPDOOSURGXFHUVRIWHQKDYHOLPLWHGDGDSWLYHFDSDFLW\
DQGUHVLOLHQFHWRDGHTXDWHO\UHDFWWRH[WHUQDOVKRFNV
WKH OHYHO RI XQFHUWDLQW\ LQ SDUWLFXODU WKUHDWHQV WKHLU
HFRQRPLF VLWXDWLRQ $OO VLJQV SRLQW WR WKLV OHYHO RI
XQFHUWDLQW\ LQFUHDVLQJ DV D UHVXOW RI D ZRUVHQLQJ RI
DQWKURSRJHQLF FOLPDWH FKDQJH LQ WKH FRPLQJ \HDUV
DQGGHFDGHV
7KHUHIRUH LW LV QHFHVVDU\ WR UHWKLQN FXUUHQW IRRG
VHFXULW\ VWUDWHJLHV LQFOXGLQJ WKH UROH DQG V\VWHP
RI DJULFXOWXUDO WUDGH LQ WKH OLJKW RI JOREDO ZDUPLQJ
)RRGVHFXULW\VWUDWHJLHVQRZKDYHWRFRSHZLWKWKUHH
FKDOOHQJHV
LDJULFXOWXUDO SURGXFWLRQ LV EHFRPLQJ LQFUHDVLQJO\
DIIHFWHGE\FKDQJLQJFOLPDWLFFRQGLWLRQV
LLLQ SDUDOOHO DJULFXOWXUH PDUNHWV DUH EHLQJ
GHVWDELOL]HGE\FOLPDWLFLPSDFWVDQG
LLLDWWKHVDPHWLPHDJULFXOWXUHKDVWRFRQWULEXWHWR
PLWLJDWLQJ FOLPDWH FKDQJH DQG PXVW DXJPHQW LWV
FDUERQ VLQN FDSDFLWLHV UDWKHU WKDQ UHPDLQLQJ D
PDMRUVRXUFHRIJUHHQKRXVHJDVHPLVVLRQV*LYHQ
WKHVHFKDOOHQJHVIRRGVHFXULW\VWUDWHJLHVWKDWUHO\
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
RQWUDGHDQGWKDWSXVKIRUWKHIXUWKHULQWHJUDWLRQRI
GHYHORSLQJ FRXQWULHV· IRRG SURGXFWLRQ V\VWHPV LQ
WKHJOREDOPDUNHWDUHQRWDSSURSULDWH
,QWKLVSDSHUZHÀUVWDQDO\VHKRZWKHSUHVHQWV\VWHP
RI JOREDOL]HG DJULFXOWXUDO SURGXFWLRQ DQG PDUNHWLQJ
H[DFHUEDWHVDQWKURSRJHQLFFOLPDWHFKDQJHDQGZK\
VPDOOSURGXFHUVWKDWDUHLQWHJUDWHGLQWRJOREDOYDOXH
FKDLQVDUHSDUWLFXODUO\DWULVNGXHWRFOLPDWHFKDQJH
:HWKHQGLVFXVVKRZWKHFXUUHQWSDWWHUQRIDJULFXOWXUDO
WUDGHDQGSURGXFWLRQVKRXOGEHPRGLÀHGLQRUGHUWR
VWRS WKH YLFLRXV FLUFOH RI LQFUHDVHG WUDGHRULHQWDWLRQ
H[DFHUEDWLQJFOLPDWHFKDQJHDQGLQFUHDVHGFOLPDWH
FKDQJH HQGDQJHULQJ VPDOO IDUPHUV· IRRG VHFXULW\
)LQDOO\ ZH SUHVHQW SROLFLHV IRU D UHJLRQDOL]DWLRQ
RI DJULFXOWXUDO WUDGH ÁRZV DQG WKH LQWHJUDWLRQ RI
VPDOOKROGHUVLQORFDODQGUHJLRQDOPDUNHWV
$7KHJOREDODJULFXOWXUDOWUDGLQJV\VWHP
LVFRQWULEXWLQJWRFOLPDWHFKDQJH«
+XPDQV KDYH H[FKDQJHG DJULFXOWXUDO SURGXFWV HYHU
VLQFHWKH\VWDUWHGIDUPLQJ7KHPDLQSXUSRVHRIWKRVH
WUDGHÁRZVZDVWRVXSSOHPHQWWKHGLHWZLWKSURGXFWV
WKDWFRXOGRQO\EHJURZQLQRWKHUFOLPDWLF]RQHVDQG
JHRJUDSKLFDOVHWWLQJV:LWKWUDGHOLEHUDOL]DWLRQWUDGH
LQDJULFXOWXUHVWDUWHGWRVHUYHDQDGGLWLRQDOSXUSRVH
WR DGYDQFH HFRQRPLF HIÀFLHQF\ WKURXJK LQFUHDVHG
FRPSHWLWLRQDPRQJSURGXFHUVZRUOGZLGH$JULFXOWXUDO
SURGXFWLRQFDQUHVSRQGWRLQFUHDVHGFRPSHWLWLRQLQD
QXPEHURIZD\VWZRRIZKLFKLQSDUWLFXODUFDQKDYH
QHJDWLYH LPSDFWV RQ FOLPDWH QDPHO\ DQ H[SDQVLRQ
RI WKH DUHD XQGHU FXOWLYDWLRQ DQG VSHFLDOL]DWLRQ DQG
LQWHQVLÀFDWLRQRISURGXFWLRQSURFHVVHV
7KH H[SDQVLRQ RI DJULFXOWXUH LV WKH PDLQ UHDVRQ IRU
WKHFOHDULQJRISULPDU\IRUHVWVDQGIRUWKHFRQYHUVLRQ
RI QDWXUDO SUDLULHV WR ODQG IRU JURZLQJ FURSV RU IRU
OLYHVWRFNJUD]LQJ,WLVDOVRUHVSRQVLEOHIRUWKHGUDLQLQJ
RIZHWODQGVIRULUULJDWLRQDQGFXOWLYDWLRQ&%'
7RGD\FKDQJHVLQODQGXVHLQDJULFXOWXUHDQGIRUHVWU\
DV ZHOO DV HPLVVLRQV IURP IDUPLQJ DQG OLYHVWRFN
FRQWULEXWH RYHU SHU FHQW WR JOREDO DQWKURSRJHQLF
*+* HPLVVLRQV UHOHDVLQJ LQ SDUWLFXODU PHWKDQH
QLWURXVR[LGHDQGWRDOHVVHUH[WHQWFDUERQGLR[LGH
,3&& D VHH DOVR WKH FRPPHQW RI *5$,1 LQ
FKDSWHURIWKLV5HYLHZ7KHFRQYHUVLRQRIWURSLFDO
IRUHVWV DQG VDYDQQDKV LQWR DJULFXOWXUDO ODQG LV
SDUWLFXODUO\ HPLVVLRQLQWHQVLYH SULPDULO\ GXH WR WKH
EXUQLQJRIWKHELRPDVVRULJLQDOO\H[LVWLQJRQWKHODQG
DQG WR WKH UHOHDVH RI RUJDQLF FDUERQ VWRUHG LQ VRLOV
6WHIIHQHWDO
%HVLGHV WKH FRQYHUVLRQ RI ODQG IRU DJULFXOWXUH
LQFUHDVHG VSHFLDOL]DWLRQ DQG LQWHQVLÀFDWLRQ RI
SURGXFWLRQ ZKLFK HQDEOHV IDUPHUV WR SDUWLFLSDWH LQ
JOREDO PDUNHWV JHQHUDOO\ HQWDLOV WKH JUHDWHU XVH RI
SHVWLFLGHV IHUWLOL]HUV ZDWHU DQG IXHO +XJH DPRXQWV
RI *+*V DUH HPLWWHG WKURXJK WKH SURGXFWLRQ DQG
XVH RI H[WHUQDO LQSXWV VXFK DV DJURFKHPLFDOV IDUP
PDFKLQHU\DQGSXPSHGLUULJDWLRQ,QWKH8QLWHG6WDWHV
IRUH[DPSOHIDUPLQSXWVDFFRXQWIRUPRUHWKDQSHU
FHQW RI WKH WRWDO GLUHFW DQG LQGLUHFW HQHUJ\ XVHG LQ
DJULFXOWXUH 6DXQGHUV /LNHZLVH GRZQVWUHDP
HPLVVLRQVLQFUHDVHDVWKHSURFHVVLQJSDFNDJLQJDQG
UHWDLOLQJRIIRRGLWHPVWKDWDUHH[SRUWHGEHFRPHPRUH
HQHUJ\LQWHQVLYH
$W WKH VDPH WLPH JURZLQJ FRPSHWLWLRQ LV OLNHO\ WR
XQGHUFXWOHVVLQWHQVLYHIDUPLQJSUDFWLFHVWKDWVXVWDLQ
D EURDG YDULHW\ RI FURSV KHGJHV WUHHV DQG FXOWXUDO
ODQGVFDSHV DQG WKXV WKUHDWHQV VPDOOVFDOH VLWH
RULHQWHG LQWHJUDWHG IDUPLQJ V\VWHPV SDUWLFXODUO\
LQ GHYHORSLQJ FRXQWULHV &%' )RU LQVWDQFH
ZLWKDQLPDOVPRYLQJIURPSDVWXUHVWRLQWHQVLYHIHHG
ORW SURGXFWLRQ DQG WKH QXPEHU RI FDWWOH SLJV DQG
SRXOWU\ VWHDGLO\ LQFUHDVLQJ WR PHHW JURZLQJ PHDW
EDVHG GLHWV PRUH PHWKDQH LV UHOHDVHG IURP HQWHULF
IHUPHQWDWLRQDQGDQLPDOZDVWHLQFRQWUDVWJUDVVIHG
DQLPDOV HPLW OHVV PHWKDQH WKDQ OLYHVWRFN WKDW LV IHG
RQ D KLJK SURWHLQ GLHW 6DXQGHUV .RWVFKL DQG
0OOHU6lPDQQVHHDOVRWKHOHDGDUWLFOHRI,GHO
DQG5HLFKHUWLQFKDSWHURIWKLV5HYLHZ
,Q DGGLWLRQ WR WKH LPSDFWV RI FOLPDWH FKDQJH IURP
WKH LQWHQVLÀFDWLRQ DQG H[SDQVLRQ RI DJULFXOWXUDO
SURGXFWLRQIRUH[SRUWWKHRYHUDOOYROXPHRIWUDQVSRUW
LQFUHDVHVDVWUDGHJURZV$YHUDJHGLVWDQFHVRIIRRG
VKLSPHQWVDUHVHWWRLQFUHDVHHYHQPRUHDVIUHVKIUXLW
UHDFK (XURSH IURP ,QGLD IRU LQVWDQFH DQG VR\EHDQ
VKLSPHQWV IURP %UD]LO WR &KLQD ULVH +RZHYHU WKH
H[SORVLRQRIIRRGPLOHVLVWKH$FKLOOHV·KHHORIJOREDO
YDOXH FKDLQV LQ DJULFXOWXUH PDNLQJ WKHP YXOQHUDEOH
WRVWHHSULVHVLQRLOSULFHDQGWKHLPSDFWVRIFOLPDWH
FKDQJH
%«ZKLOHFOLPDWHFKDQJHLVHQGDQJHULQJ
VPDOOSURGXFHUV
1RWZLWKVWDQGLQJ WKHVH HQYLURQPHQWDO FKDOOHQJHV
DQG D JURZLQJ DZDUHQHVV RI FOLPDWHFKDQJHUHODWHG
LVVXHVHIIRUWVWRLQWHJUDWHVPDOODQGPHGLXPSURGXFHUV
LQWRJOREDOYDOXHFKDLQVFRQWLQXHXQDEDWHG0DUNHWLQJ
FKDLQV DUH EHLQJ LPSURYHG DQG VPDOO SURGXFHUV DUH
EHLQJ HQFRXUDJHG DQG DVVLVWHG LQ FRPSO\LQJ ZLWK
LQWHUQDWLRQDOSULYDWHDQGSXEOLFIRRGTXDOLW\DQGVDIHW\
VWDQGDUGV VHH IRU H[DPSOH +XPSKUH\ DQG
3LQJDOL .KZDMD DQG 0HLMHU 6PDOO SURGXFHUV
LQJOREDOYDOXHFKDLQVKDYHDOZD\VIDFHGFHUWDLQULVNV
EHFDXVHXVXDOO\WKH\DUHWKHOHDVWSRZHUIXODQGPRVW
YXOQHUDEOHSOD\HUVLQWKHFKDLQDQGEHFDXVHWKH\DUH
SULFHWDNHUVIRUERWKWKHLUSURGXFWLRQLQSXWVDQGWKHLU
RXWSXW 0RUHRYHU WKH\ DUH RIWHQ FRQIURQWHG ZLWK D
IUDJLOHEDODQFHEHWZHHQDSURGXFWLRQIRUWKHPDUNHW
DQG WKXV LQFRPH JHQHUDWLRQ E SURGXFWLRQ IRU WKHLU
RZQFRQVXPSWLRQDQGFKRXVHKROGH[SHQGLWXUHIRU
IRRG +RZHYHU WKHVH WKUHH DVSHFWV DUH LQFUHDVLQJO\
DIIHFWHG E\ FKDQJLQJ WHPSHUDWXUHV PRUH IUHTXHQW
ZHDWKHU H[WUHPHV VXFK DV GURXJKWV RU KHDY\ UDLQV
DQG JURZLQJ LQVWDELOLW\ RI HFRV\VWHP VHUYLFHV 7KXV
FOLPDWH FKDQJH KDV EHFRPH DQ LPSRUWDQW IDFWRU LQ
GHVWDELOL]LQJWKHIUDJLOHIRRGVHFXULW\VLWXDWLRQRIVPDOO
SURGXFHUVLQJOREDOYDOXHFKDLQV
/RRNLQJ DW VPDOOKROGHUV· SURGXFWLRQ IRU WKH PDUNHW
SDUWLFLSDWLRQ LQ JOREDO YDOXH FKDLQV RIWHQ GHPDQGV
VSHFLDOL]DWLRQLQDIHZFDVKFURSVDQGDQLQWHQVLÀFDWLRQ
RISURGXFWLRQ$VDFRQVHTXHQFHPDQ\IDUPHUVKDYH
JLYHQ XS PRUH GLYHUVLÀHG SURGXFWLRQ V\VWHPV VXFK
DVPL[HGFURSSLQJ+RZHYHUPL[HGFURSSLQJLVPXFK
EHWWHU VXLWHG WR FRSLQJ ZLWK WKH LPSDFWV RI FOLPDWH
FKDQJH ,Q FRQWUDVW LI ZHDWKHU H[WUHPHV RU QHZO\
LQWURGXFHGSDUDVLWHVKLWWKHIHZFDVKFURSVJURZQLQ
VSHFLDOL]HGIDUPVSURGXFHUVULVNDWRWDOORVVRIWKHLU
KDUYHVW)XUWKHUPRUHDVVSHFLDOL]DWLRQLVDWRGGVZLWK
VXVWDLQDEOHODQGDQGZDWHUPDQDJHPHQWLWGHFUHDVHV
UDWKHU WKDQ EXLOGV XS VRLO IHUWLOLW\ $QG D SRRU VRLO
VWUXFWXUHULVNVHURVLRQDQGUHGXFHVWKHVRLO·VDELOLW\WR
FDSWXUHZDWHUDQGVWRUHFDUERQ7KLVWRRZHDNHQVWKH
DELOLW\RIWKHSURGXFWLRQV\VWHPWRFRSHZLWKH[WUHPH
GURXJKWV RU KHDY\ UDLQV 7KXV VXVWDLQDEOH VRLO DQG
ZDWHUPDQDJHPHQWDUHXQGLVSXWHGO\DPRQJWKHPRVW
LPSRUWDQWHOHPHQWVIRUDJULFXOWXUDODGDSWDWLRQDQGIRU
WKHUHVLOLHQFHRIVPDOOSURGXFHUV
$VVSHFLDOL]HGVPDOOKROGHUVPXVWUHO\RQEX\LQJWKHLU
RZQ IRRG IURP WKH PDUNHW WKH\ ULVN EHLQJ KLW WZLFH
E\ WKH LPSDFWV RI FOLPDWH FKDQJH $Q LQFUHDVLQJO\
YRODWLOH DQG IUDJLOH JOREDO IRRG SURGXFWLRQ V\VWHP
GXH WR FOLPDWH FKDQJH PHDQV WKDW VPDOO SURGXFHUV
IDFH D KLJKHU ULVN QRW RQO\ RI SURGXFWLRQ ORVVHV EXW
DOVR RI VKDUSO\ LQFUHDVLQJ IRRG SULFHV 7KH YRODWLOLW\
RI IRRG SULFHV KDV LQFUHDVHG WUHPHQGRXVO\ RYHU WKH
SDVWIHZ\HDUVLQSDUWGXHWRKDUYHVWORVVHVUHVXOWLQJ
IURP FOLPDWH FKDQJH <HW VHYHUDO VWXGLHV VKRZ WKDW
KLJK SULFHV RQ ZRUOG PDUNHWV DUH VHOGRP SDVVHG
RQ WR EHQHÀW VPDOO SURGXFHUV UDWKHU WKH\ DUH RIWHQ
75$'($1'(19,5210(175(9,(:
WUDQVIHUUHG GLUHFWO\ WR FRQVXPHU SULFHV VHH IRU
H[DPSOH-KDDQG+|IÁHUDQG2FKLHQJ
7KXV VPDOO SURGXFHUV IDFH WKH SURVSHFW RI KDYLQJ
WR VSHQG PRUH PRQH\ WR EX\ WKHLU IRRG ZKLOH WKHLU
LQFRPHVHLWKHUIDOORUUHPDLQVWDJQDQW
&5HWKLQNLQJWKHHFRQRPLFVRIGHYHORSLQJ
FRXQWULHV·IRRGV\VWHPV
2YHU WKH FRXUVH RI WKH SDVW IHZ GHFDGHV YDULRXV
FRQFHSWV DQG VWUDWHJLHV KDYH EHHQ GHYHORSHG WKDW
ERWKUHFRQFLOHDJULFXOWXUHZLWKHFRORJLFDOF\FOHVDQGDW
WKHVDPHWLPHJLYHVPDOOSURGXFHUVJUHDWHUHFRQRPLF
VWDELOLW\ DQG UHVLOLHQFH ([DPSOHV RI VXFK VWUDWHJLHV
LQFOXGHUHVRXUFHFRQVHUYLQJDJULFXOWXUHDJURHFRORJ\
DQGRUJDQLFDJULFXOWXUHVHHIRUH[DPSOH$OWLHULDQG
YRQ GHU :HLG 3UHWW\ DQG 3UHWW\ HW DO
7KH )$2 KDV UHFHQWO\ FDOOHG IRU D VLJQLÀFDQW
WUDQVIRUPDWLRQ RI WKH DJULFXOWXUDO VHFWRU LQ RUGHU WR
PHHW FOLPDWH FKDQJH DQG IRRG VHFXULW\ FKDOOHQJHV
7KH )$2·V FRQFHSW RI ´FOLPDWH VPDUWµ DJULFXOWXUH
DLPV WR VXVWDLQDEO\ LQFUHDVH SURGXFWLYLW\ HQKDQFH
UHVLOLHQFH DGDSWLYH FDSDFLW\ DQG UHGXFH *+*V
PLWLJDWLRQDQGWKXVFRQWULEXWHWRWKHDFKLHYHPHQWRI
QDWLRQDO IRRG VHFXULW\ DQG GHYHORSPHQW JRDOV )$2
+RZHYHU WKHVH VWUDWHJLHV PDUN RQO\ WKH EHJLQQLQJ
RI D VXVWDLQDEOH UHIRUP RI WKH IRRG V\VWHP $V WKH\
QHJOHFW WR WDNH WUDGH DQG HFRQRPLF FRQGLWLRQV LQWR
DFFRXQWWKH\ULVNVXFFXPELQJWRKLJKSULFHYRODWLOLW\
LPSRUWVXUJHVDQGXQUHJXODWHGFRPSHWLWLRQDVZHOODV
WR WKH RYHUZKHOPLQJ SRZHU RI IRRG FRPSDQLHV HJ
SURFHVVRUV UHWDLOHUV DQG GLVWULEXWRUV LQ WKH JOREDO
WUDGHDUHQD,QFUHDVLQJO\WKLVLVRFFXUULQJHYHQLQWKH
QHZO\JOREDOL]HGPDUNHWIRURUJDQLFSURGXFH$VORQJ
DVPDUNHWLQFHQWLYHVUHPDLQXQFKDQJHGLQYHVWPHQWV
LQEXVLQHVVDVXVXDOSUDFWLFHVZLOOFRQWLQXH
$VXVWDLQDEOHWUDQVIRUPDWLRQRIVPDOOIDUPV\VWHPVLQ
GHYHORSLQJFRXQWULHVZLOORQO\VXFFHHGLILWLVLQWHJUDWHG
LQWR RYHUDOO DJULFXOWXUDO DQG IRRG GHYHORSPHQW
VWUDWHJLHV,VVXHVFRQFHUQLQJWKHDJULFXOWXUDOWUDGLQJ
V\VWHP DV RQH RI WKH PDMRU GULYHUV RI WKH H[LVWLQJ
IRRG SURGXFWLRQ V\VWHP QHHG WR EH OLQNHG WR WKH
GHEDWHRQDJULFXOWXUH·VFRQWULEXWLRQWRDGDSWDWLRQDQG
FOLPDWH FKDQJH PLWLJDWLRQ 6LQFH WUDGH OLEHUDOL]DWLRQ
DQG H[SRUW RULHQWDWLRQ WHQG WR XQGHUPLQH DGDSWLYH
VWUDWHJLHV DQG HQFRXUDJH LQSXWLQWHQVLYH ´FOLPDWH
XQIULHQGO\µ IDUPLQJ WKH VXVWDLQDEOH WUDQVIRUPDWLRQ
RI WKH DJULFXOWXUDO VHFWRU UHTXLUHV D IXQGDPHQWDO
UHWKLQNLQJRIFXUUHQWWUDGHSROLFLHV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
7KH SULQFLSOH RI ´HFRQRPLF VXEVLGLDULW\µ RIIHUV
JXLGDQFH IRU WKLV WUDQVIRUPDWLRQ 6DFKV DQG
6DQWDULXV,WLPSOLHVWKDWHFRQRPLFH[FKDQJHV
LQ WKH IRRG V\VWHP VKRXOG EH FDUULHG RXW SUHIHUDEO\
DW WKH ORFDO DQG QDWLRQDO OHYHOV ZKLOH H[FKDQJHV DW
WKH FRQWLQHQWDO RU JOREDO OHYHO VKRXOG KDYH RQO\ D
FRPSOHPHQWDU\ IXQFWLRQ (FRQRPLF VXEVLGLDULW\
DLPV DW ORFDOL]LQJ HFRQRPLF DFWLYLWLHV ZKHQHYHU
SRVVLEOH DQG UHDVRQDEOH DQG LV FRPPLWWHG WR
VKRUWHUUDWKHUWKDQORQJHUFRPPRGLW\FKDLQV,QVWHDG
RI HQGDQJHULQJ VPDOO SURGXFHUV WKURXJK YRODWLOH
ZRUOG PDUNHW SULFHV DQG PDNLQJ WKHP WKH KXEV
IRU WKH H[WUDFWLRQ RI FDSLWDO JRRGV DQG UHVRXUFHV
WKH UHJLRQDOL]DWLRQ RI WUDGH ÁRZV FRXOG VHUYH DV D
FDWDO\VWWRVSXUVXVWDLQDEOHGHYHORSPHQWDWWKHORFDO
OHYHO ,W ZLOO EH VXFFHVVIXO SDUWLFXODUO\ LI SURGXFWLRQ
LQYROYHV IRUZDUG DQG EDFNZDUG OLQNDJHV ZLWK RWKHU
VHFWRUVRIWKHORFDOHFRQRP\VXFKDVZLWKORFDOLQSXW
SURYLGHUV SURFHVVRUV DQG WUDGLWLRQDO UHWDLO RXWOHWV
,I VPDOOKROGHU DJULFXOWXUH LV ZHOO LQWHJUDWHG LQWR WKH
ORFDO HFRQRP\ DQG UXUDO QRQIDUP HPSOR\PHQW LQ
WKH SURGXFWLRQ RI RIIIDUP JRRGV DQG VHUYLFHV LV
VWLPXODWHG WKH UHJLRQDOL]DWLRQ RI WUDGH ÁRZV ZLOO
FRQWULEXWH VLJQLÀFDQWO\ WR SRYHUW\ DOOHYLDWLRQ DQG WR
RYHUDOOHFRQRPLFGHYHORSPHQWVHHDOVR)$2
'3ROLFLHVWRSURPRWHVXVWDLQDEOHORFDO
IRRGV\VWHPV
,Q RUGHU WR ODXQFK D WUDQVLWLRQ WRZDUGV D UH
UHJLRQDOL]DWLRQ RI WUDGH ÁRZV DQG WR IRVWHU VKRUW
SURGXFWLRQ FKDLQV SROLF\ FKDQJHV DUH UHTXLUHG DW
VXEQDWLRQDO QDWLRQDO DQG LQWHUQDWLRQDO OHYHOV $W WKH
QDWLRQDO OHYHO ÀUVW DQG IRUHPRVW JRYHUQPHQWV QHHG
WR HQVXUH WKDW WKH\ DUH DOORZHG VXIÀFLHQW SROLF\
VSDFHYLVjYLVH[LVWLQJELODWHUDODQGPXOWLODWHUDOWUDGH
REOLJDWLRQV 7KLV LQFOXGHV DOORZLQJ JRYHUQPHQWV
DGHTXDWHVSDFHWRVWDELOL]HGRPHVWLFIRRGSULFHVDQG
SURWHFW VPDOO IDUPHUV IURP H[FHVVLYH SULFH YRODWLOLW\
&RXQWULHVDOVRQHHGWREHDEOHWRLPSOHPHQWSROLFLHV
DQG PHDVXUHV WKDW FKDUW WKHLU RZQ GHÀQHG SDWKV WR
VXVWDLQDEOH DJULFXOWXUH DQG IRRG V\VWHPV VHH WKLV
FKDSWHU·VOHDGDUWLFOHE\/LDQG.KRU3ROLF\VSDFHQRW
RQO\LPSOLHVKDYLQJPRUHÁH[LELOLW\LQWKHXVHRIWDULIIV
TXRWDV DQG RWKHU ERUGHU FRQWURO PHDVXUHV LW DOVR
LPSOLHVIUHHGRPIURPFRQVWUDLQWVLPSRVHGE\ELODWHUDO
DQG PXOWLODWHUDO DJUHHPHQWV RQ GRPHVWLF UHJXODWRU\
FRPSHWHQFH RU RQ LQYHVWPHQWV ZKLFK LQÁXHQFH WKH
DJULFXOWXUDOVHFWRU·VSURGXFWLRQVWUXFWXUH
7KH PDLQ WDVN DW WKH VXEQDWLRQDO OHYHO LV WR HQDEOH
VPDOO IDUPHUV WR UHJDLQ ORQJWHUP DFFHVV WR WKHLU
GRPHVWLFDQGORFDOPDUNHWV)LUVWDQGIRUHPRVWWKLV
LQFOXGHVSROLFLHVWKDWJREH\RQGWUDGHZKLFKSURWHFW
WKH ODQG ULJKWV RI FRPPXQLWLHV DQG WKHLU DFFHVV WR
EDVLF QDWXUDO UHVRXUFHV DQG HVSHFLDOO\ WKRVH WKDW
VWUHQJWKHQ ZRPHQ·V ULJKWV DQG ODQG HQWLWOHPHQWV
3ROLFLHV VKRXOG SURPRWH D GHFHQWUDOL]HG UXUDO
LQIUDVWUXFWXUHWRIRVWHUORFDOPDUNHWLQJDQGHQVXUHWKDW
UXUDO DQG XUEDQ DUHDV DUH VXIÀFLHQWO\ FRQQHFWHG VR
WKDWWKHKLQWHUODQGVEHFRPHWKHPDLQVXSSOLHUVRIIRRG
IRUWRZQVDQGFLWLHV0RVWLPSRUWDQWO\VPDOOIDUPHUV
VKRXOGEHVXSSRUWHGLQDFKLHYLQJD´FULWLFDOHFRQRPLF
PDVVµWKURXJKDVVRFLDWLYHIRUPVRIHFRQRPLFDFWLYLW\
VXFKDVFRRSHUDWLYHIRUPVRISURGXFWLRQVWRULQJDQG
PDUNHWLQJ 'HYHORSLQJFRXQWU\ JRYHUQPHQWV DV ZHOO
DV LQWHUQDWLRQDO GRQRUV VKRXOG SURYLGH LQVWLWXWLRQDO
DQG ÀQDQFLDO VXSSRUW LQFOXGLQJ SXEOLF ÀQDQFHV IRU
PLFURFUHGLW DQG ORDQ SURJUDPPHV WR IRVWHU VXFK
DVVRFLDWLRQV
)XUWKHUPRUH D UDQJH RI SROLFLHV WKDW KDYH SURYHG
YLDEOHLQWKHSDVWFRXOGDFFHOHUDWHWKHWUDQVLWLRQIURP
FRQYHQWLRQDO WR PRUH VXVWDLQDEOH IDUPLQJ SUDFWLFHV
)RULQVWDQFHSHQDOL]LQJSROOXWHUVZLWKWD[HVDQGOHYLHV
ZLOOLQGXFHWKHPWRUHGXFHWKHLUHPLVVLRQV6XEVLGLHV
IRU IHUWLOL]HUV DQG SHVWLFLGHV VKRXOG EH DEROLVKHG
DQG WD[HV RQ IHUWLOL]HUV DQG RWKHU LQGXVWULDO IDUP
LQSXWVLPSRVHGRULQFUHDVHGVRDVWRDFFHOHUDWHWKH
WUDQVLWLRQWRZDUGVIDUPLQJSUDFWLFHVWKDWFXOWLYDWHRQ
IDUP QXWULHQW F\FOHV ,Q DGGLWLRQ JRYHUQPHQWV FRXOG
IRVWHU WKH GHYHORSPHQW RI VXVWDLQDEOH DJULFXOWXUDO
SURFHVV DQG SURGXFWLRQ VWDQGDUGV LQFOXGLQJ
VWDQGDUG PRQLWRULQJ DQG YHULÀFDWLRQ VFKHPHV 7KH
LPSOHPHQWDWLRQRIVXFKVFKHPHVFRXOGEHVXSSRUWHG
E\ ORZLQWHUHVW ORDQV IRU LQYHVWLQJ LQ VXVWDLQDEOH
IDUPLQJ SUDFWLFHV 7KRVH ORDQV FRXOG EH RIIHUHG E\
FRPPXQLWLHVQDWLRQDOJRYHUQPHQWVDQGLQWHUQDWLRQDO
GRQRUV ,I IDUPHUV· WUDLQLQJ DQG ÀHOG VFKRROV IRU
VXVWDLQDEOH IDUPLQJ SUDFWLFHV DUH VXSSRUWHG DQG LI
WKHFDSDFLWLHVRIORFDO1*2VDUHVFDOHGXSWKLVZLOO
FDWDO\VHIXUWKHUDFWLYLWLHVLQWKHIDUPLQJFRPPXQLWLHV
DQG JHQHUDWH ORFDO RZQHUVKLS LQ WKH SURFHVV /DVW
EXW QRW OHDVW FRPPXQLFDWLRQ VWUDWHJLHV WKDW SURYLGH
EHWWHULQIRUPDWLRQWRWKHSXEOLFFRXOGSURPRWHDVKLIW
LQ FRQVXPSWLRQ SDWWHUQV WRZDUGV PRUH VXVWDLQDEOH
DQGORFDOO\SURGXFHGIRRGLWHPV
7KHWUDQVLWLRQWRZDUGVPRUHVXVWDLQDEOHIRRGV\VWHPV
FDQEHIXUWKHUDGYDQFHGWKURXJKDVHWRISROLFLHVDW
YDULRXVPXOWLODWHUDOIRUXPV,QSDUWLFXODUSROLFLHVWKDW
PDNH ORQJGLVWDQFH WUDQVSRUWDWLRQ PRUH H[SHQVLYH
FRXOGFRQWULEXWHVLJQLÀFDQWO\WRWKHUHUHJLRQDOL]DWLRQ
RISURGXFWLRQFKDLQV6LQFHDJULFXOWXUDO WUDGHLVYHU\
WUDQVSRUWLQWHQVLYH WKH H[SDQVLRQ RI JOREDO PDUNHWV
DQG YDOXH FKDLQV ZRXOG QRW KDYH EHHQ SURÀWDEOH
LI IUHLJKW FRVWV KDG EHHQ KLJK ,Q SDUWLFXODU IRUHLJQ
SURGXFWV FDQ FRPSHWH LQ GRPHVWLF PDUNHWV HJ
%UD]LOLDQFKLFNHQOHJVFRPSHWLQJZLWKORFDOSRXOWU\LQ
:HVW$IULFDRQO\LIWUDQVSRUWFRVWVDUHORZRWKHUZLVH
WKH ORZHU PDUJLQDO SURGXFWLRQ FRVWV DEURDG ZRXOG
VRRQ EH QHJDWHG E\ KLJKHU WUDQVSRUW FRVWV 2YHU
DQGDERYHWKHULVLQJRLOSULFHVWKDWFDQEHH[SHFWHG
75$'($1'(19,5210(175(9,(:
LQWKHIDFHRIWKHJOREDOSHDNRLOVFHQDULRPHDVXUHV
WRLQWHUQDOL]HHQYLURQPHQWDOFRVWVLQWUDQVSRUWSULFHV
VKRXOGEHSXUVXHG)RULQVWDQFHWKHLQFOXVLRQRIDLU
WUDIÀF LQ WKH (XURSHDQ (PLVVLRQV 7UDGLQJ 6FKHPH
LV D ÀUVW VWHS LQ WKLV GLUHFWLRQ $GGLWLRQDO PHDVXUHV
FRXOGEHDGYDQFHGWKURXJKQHJRWLDWLRQVDWWKH8QLWHG
1DWLRQV )UDPHZRUN &RQYHQWLRQ RQ &OLPDWH &KDQJH
WKH ,QWHUQDWLRQDO &LYLO $YLDWLRQ 2UJDQL]DWLRQ DQG WKH
:RUOG0DULWLPH2UJDQL]DWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
1//'06#4;U'66+0)
#4/'451((6*'4'#&/+..U&&4'55+0)
10%'064#6+10+0)4+%7.674#.02765X41%'55+0)
#0&'6#+.#4-'65
(OHQLWD&'DxR
$FWLRQ*URXSRQ(URVLRQ7HFKQRORJ\DQG&RQFHQWUDWLRQ
$EVWUDFW
$V FRUSRUDWLRQV EHFRPH ELJJHU DQG IHZHU DW ERWK HQGV RI WKH DJULFXOWXUDO YDOXH FKDLQ IDUPHUV DUH
VDQGZLFKHG EHWZHHQ WKH VSLUDOOLQJ FRVWV RI DJULFXOWXUDO LQSXWV GLFWDWHG E\ WKH VHHG DQG DJURFKHPLFDO
FRPSDQLHVDQGWKHHYHULQFUHDVLQJSUHVVXUHVRQWKHSULFHVRIWKHLUSURGXFHLPSRVHGE\PHJDSURFHVVRUV
DQGPHJDUHWDLOHUVWKDWJREEOHXSDYDLODEOHVXSSO\LQWKHPDUNHW7KLVKDVJUDYHDGYHUVHLPSDFWVRQWKH
ORFDOHFRQRPLHVDQGRQWKHOLYHOLKRRGVRIIDUPHUVRQORFDOIRRGVHFXULW\DQGFRPPXQLW\UHVLOLHQFHDQG
RQELRGLYHUVLW\DQGWKHHQYLURQPHQW
7KH GRPLQDQW PDUNHW VWUXFWXUH DQG SROLF\ DSSURDFK
RI WKH SUHYDLOLQJ PRGHO RI LQGXVWULDO DJULFXOWXUH KDYH
UHVXOWHGLQFRQFHQWUDWLRQDQGFRQWUROE\DKDQGIXORI
JLDQWFRUSRUDWLRQVRYHUDJULFXOWXUDOLQSXWVSURFHVVLQJ
DQG UHWDLO PDUNHWV 7KLV DOORZV WKHP WR GLFWDWH WKH
SULFHV RI ERWK LQSXWV DQG SURGXFH 2OLJRSROLHV
XSVWUHDP DQG GRZQVWUHDP RI WKH DJULFXOWXUDO
PDUNHW SRVH VHULRXV WKUHDWV WR ZRUOG IRRG VHFXULW\
DJJUDYDWH FOLPDWH FKDQJH LPSHULO WKH OLYHOLKRRGV
RI PLOOLRQV RI SHRSOH DQG FRPPXQLWLHV WKDW GHSHQG
RQ DJULFXOWXUH DQG JUHDWO\ UHGXFH WKHLU UHVLOLHQFH
WR HQYLURQPHQWDO DQG KXPDQLQGXFHG VKRFNV 7KH
SDUDGLJPRIDFFXPXODWLRQXQGHUO\LQJWKLVDJULFXOWXUDO
PRGHO EUHHGV LQFRPH GLVSDULW\ DQG KLJKO\ VNHZHG
SRZHU UHODWLRQV 7KH UHVXOWLQJ VRFLDO LQHTXLW\ DQG
HQYLURQPHQWDOGHJUDGDWLRQHIIHFWLYHO\FDQFHOVRXWWKH
VXSSRVHGEHQHÀWVIURPKLJKHUSURGXFWLYLW\DQGPRUH
HIÀFLHQWSURGXFWLRQV\VWHPV
7DEOH:RUOG·VWRSVHHGFRPSDQLHV
7DEOH:RUOG·VWRSDJURFKHPLFDOFRPSDQLHV
&RPSDQLHVE\UDQNLQJ
0RQVDQWR8QLWHG6WDWHV
'X3RQW3LRQHHU8QLWHG6WDWHV
6\QJHQWD6ZLW]HUODQG
*URXSH/LPDJUDLQ)UDQFH
/DQG2·/DNHV:LQÀHOG6ROXWLRQV
8QLWHG6WDWHV
.:6$**HUPDQ\
%D\HU&URS6FLHQFH*HUPDQ\
'RZ$JUR6FLHQFHV8QLWHG6WDWHV
6DNDWD-DSDQ
'/)7ULIROLXP$6'HQPDUN
7RWDOVDOHVDQGPDUNHWVKDUHV
RIWKHWRS
6HHGVDOHV 0DUNHWVKDUH
PLOOLRQ
SHUFHQW
6RXUFH(7&*URXSFRPSDQLHV·UHSRUWLQJFXUUHQFLHV
KDYHEHHQFRQYHUWHGWR86GROODUVXVLQJ
KLVWRULFDODYHUDJHH[FKDQJHUDWHV
$&RUSRUDWHFRQFHQWUDWLRQLQDJULFXOWXUDO
LQSXWVSURFHVVLQJDQGUHWDLOLQJ
$ERXWSHUFHQWRIWKHWRWDOJOREDOFRPPHUFLDOPDUNHW
IRUVHHGVHVWLPDWHGDWELOOLRQZDVFRQWUROOHGE\
WKH WRS FRPSDQLHV LQ (7& *URXS E
-XVW WKUHH FRPSDQLHV FRQWUROOHG SHU FHQW RI WKDW
&RPSDQLHVE\UDQNLQJ
$JURFKHPLFDO 0DUNHW
VDOHV
VKDUH
PLOOLRQ
SHUFHQW
6\QJHQWD6ZLW]HUODQG
%D\HU&URS6FLHQFH*HUPDQ\
%$6)*HUPDQ\
0RQVDQWR8QLWHG6WDWHV
'RZ$JUR6FLHQFHV8QLWHG6WDWHV
'X3RQW8QLWHG6WDWHV
6XPLWRPR&KHPLFDO-DSDQ
1XIDUP$XVWUDOLD
0DNKWHVKLP$JDQ,QGXVWULHV,VUDHO
$U\VWD/LIH6FLHQFH-DSDQ
7RWDOVDOHVDQGPDUNHWVKDUHVRI
WRS
6RXUFH(7&*URXSFRPSDQLHV·UHSRUWLQJFXUUHQFLHV
KDYHEHHQFRQYHUWHGWR86GROODUVXVLQJ
KLVWRULFDODYHUDJHH[FKDQJHUDWHV
WRWDOPDUNHWZLWK0RQVDQWR²WKHZRUOG·VODUJHVWVHHG
FRPSDQ\ DQG IRXUWK ODUJHVW SHVWLFLGH FRPSDQ\ ²
DFFRXQWLQJIRUSHUFHQWRIWKHZRUOG·VFRPPHUFLDO
VHHGPDUNHWWDEOH
7KH FRPPHUFLDO VHHG VHFWRU ZKLFK VXSSOLHV DQ
HVWLPDWHGSHUFHQWRIWKHWRWDOVHHGUHTXLUHPHQWV
JOREDOO\ LV LQH[WULFDEO\ OLQNHG WR WKH DJURFKHPLFDO
PDUNHW2IWKHWRSVL[DJURFKHPLFDOFRPSDQLHVÀYHDUH
DPRQJWKHZRUOG·VODUJHVWVHHGFRPSDQLHV1HDUO\
SHUFHQWRIWKHZRUOGPDUNHWIRUDJULFXOWXUDOFKHPLFDOV
LQHVWLPDWHGDWELOOLRQZDVFRQWUROOHGE\WKH
WRSSHVWLFLGHFRPSDQLHV8.)RRG*URXS
(7&*URXSE7KHWRSVL[FRPSDQLHVZKLFKVHOO
SURSULHWDU\IRUPXODVDFFRXQWHGIRURYHUSHUFHQW
RIWKHJOREDODJURFKHPLFDOPDUNHWWDEOH
,QWHOOHFWXDOSURSHUW\ULJKWV,35VVXFKDVSDWHQWVWUDGH
VHFUHWVDQGSODQWYDULHW\SURWHFWLRQDUHNH\WRSURWHFWLQJ
WKHEXVLQHVVLQWHUHVWVRIJLDQWFRUSRUDWLRQVE\DOORZLQJ
WKHPPRQRSRO\FRQWURORYHUWKHLUSURSULHWDU\SURGXFWV
DQG SURFHVVHV +HLQHPDQQ ,$$67' &RPSDQLHVXVHSDWHQWVWRHGJHRXWFRPSHWLWRUVDQG
LPSHGH IXUWKHU LQQRYDWLRQ RQ SURSULHWDU\ SURGXFWV
DQG SURFHVVHV ZKLFK FRXOG RWKHUZLVH EH DGRSWHG RU
LPSURYHG RQ E\ RWKHUV $QWLFLSDWLQJ WKH GHYDVWDWLQJ
HIIHFWV RI FOLPDWH FKDQJH RQ DJULFXOWXUH JLDQW
FRPSDQLHV KDYH VWDUWHG WR SRVLWLRQ WKHLU FRPPHUFLDO
LQWHUHVWV LQ WKH GHYHORSPHQW RI VRFDOOHG ´FOLPDWH
7DEOH:RUOG·VWRSIRRGDQGEHYHUDJH
FRPSDQLHV
&RPSDQLHVE\UDQNLQJ
)RRGDQG 7RWDO 0DUNHWVKDUH
EHYHUDJH VDOHV SHUFHQWDV
VDOHV
SHUFHQWDJH
PLOOLRQ RIVKDUHRI
PLOOLRQ
WRS
1HVWOp6ZLW]HUODQG
3HSVL&R8QLWHG6WDWHV
.UDIW8QLWHG6WDWHV
$%,Q%HY%HOJLXP
$'08QLWHG6WDWHV
&RFD&ROD8QLWHG6WDWHV
0DUV,QF8QLWHG6WDWHV
8QLOHYHU7KH1HWKHUODQGV
7\VRQ)RRGV8QLWHG
6WDWHV
&DUJLOO8QLWHG6WDWHV
7RWDOVDOHVDQGPDUNHW
VKDUHVRIWKHWRS
6RXUFH/HDWKHUKHDG)RRG5HVHDUFKFLWHGLQ(7&
*URXSE
75$'($1'(19,5210(175(9,(:
UHDG\µRU´FOLPDWHVPDUWµFURSV%HWZHHQ-XQH
DQG -XQH WKH ZRUOG·V VL[ ODUJHVW VHHG DQG
DJURFKHPLFDO FRPSDQLHV ÀOHG SDWHQW DSSOLFDWLRQV RQ
WUDLWV DQG JHQHV WKDW GHYHORSHG FURS UHVLVWDQFH WR
DELRWLF VWUHVVHV VXFK DV GURXJKW SHVWV DQG VDOLQLW\
(7&*URXSD7KH´SDWHQWJUDEµFRUUHVSRQGVWR
SDWHQWIDPLOLHVLQYROYLQJSDWHQWGRFXPHQWV
ZRUOGZLGH (YHQ LQ WKH IDFH RI WKH FOLPDWH FULVLV WKH
SURÀWPRWLYHUHLJQVVXSUHPHDPRQJFRUSRUDWHSOD\HUV
LQWKHVHHGDQGDJURFKHPLFDOLQGXVWULHV
2OLJRSROLVWLF WUHQGV DOVR UHYHUEHUDWH GRZQ WKH
DJULFXOWXUDOYDOXHFKDLQSDUWLFXODUO\LQWKHSURFHVVLQJ
DQGUHWDLOLQJVHFWRUV,QWKHODUJHVWIRRGDQG
EHYHUDJHFRPSDQLHVDFFRXQWHGIRUPRUHWKDQSHU
FHQWRIWKHWRWDOUHYHQXHRIWKLVVHFWRU/HDWKHUKHDG
)RRGFLWHGLQ(7&*URXSE7KHWKUHHODUJHVW
FRPSDQLHV ² 1HVWOp 3HSVL&R DQG .UDIW ² WRJHWKHU
FRQWUROSHUFHQWRIWKHUHYHQXHVJHQHUDWHGE\WKH
ZRUOG·VWRSÀUPVDQGSHUFHQWRIWKHUHYHQXHV
JHQHUDWHGE\WKHWRSÀUPVLQWKHIRRGSURFHVVLQJ
VHFWRULELGWDEOH
,Q WKH UHWDLO PDUNHW WKH ZRUOG·V ELJJHVW UHWDLO
FRPSDQLHV KDG FRPELQHG VDOHV RI ELOOLRQ LQ
DFFRXQWLQJIRUSHUFHQWRIWKHWRWDOUHYHQXHV
HDUQHG E\ WKH WRS JURFHU\ UHWDLO ÀUPV YDOXHG DW
WULOOLRQ3ODQHW5HWDLOFLWHGLQ(7&*URXSE
7KH FRPELQHG VKDUH RI WKH WRS WKUHH VXSHUPDUNHW
7DEOH:RUOG·VWRSIRRGUHWDLOHUV
&RPSDQLHVE\UDQNLQJ
:DOPDUW8QLWHG6WDWHV
&DUUHIRXU)UDQFH
6FKZDU]*URXS
*HUPDQ\
7HVFR8QLWHG.LQJGRP
$OGL*HUPDQ\
.URJHU8QLWHG6WDWHV
$(21-DSDQ
(GHND*HUPDQ\
5HZH*URXS*HUPDQ\
$KROG8QLWHG
.LQJGRP
7RWDO7RS
*URFHU\
0DUNHW
1RRI
VDOHV
VKDUHDV FRXQWULHVRI
SHUFHQWDJH RSHUDWLRQ
PLOOLRQ RIVKDUHRI
WRS
6RXUFH3ODQHW5HWDLODWKWWSZZZSODQHWUHWDLOQHW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
FKDLQV ² :DOPDUW &DUUHIRXU DQG 6FKZDU] *URXS ²
DFFRXQWHGIRUSHUFHQWRIWKHWRWDOUHYHQXHVRIWKH
WRSFRPSDQLHVLQWKDWVHFWRULQWDEOH
$VWKHSXUFKDVLQJSRZHURIFRQVXPHUVLQHPHUJLQJ
HFRQRPLHV JDLQV VWUHQJWK DQG WKH PDUNHWV LQ PDQ\
GHYHORSHG FRXQWULHV VWDJQDWH WKH ZRUOG·V ODUJHVW
SURFHVVRUVDQGUHWDLOHUVDUHUDSLGO\PRYLQJLQWRWKRVH
HFRQRPLHV,QSDUWLFXODULQ%UD]LO&KLQD,QGLDDQGWKH
5XVVLDQ)HGHUDWLRQZKHUHGHPDQGLVH[SDQGLQJDQG
HYHQRXWSDFLQJWKDWLQLQGXVWULDOL]HGFRXQWULHV*LDQW
VXSHUPDUNHWVDUHVFUDPEOLQJWRHVWDEOLVKRSHUDWLRQV
IRUJLQJ MRLQW YHQWXUHV ZLWK PDMRU ORFDO UHWDLOHUV DQG
VZDSSLQJ DVVHWV DPRQJ WKHP WR HQVXUH PDUNHW
GRPLQDQFH,QPHUJHUVDQGDFTXLVLWLRQVLQWKH
IRRGDQGEHYHUDJHVHFWRUZHUHYDOXHGDWELOOLRQ
,0$3
)DUPHUVDQGROLJRSROLHVLQWKHDJULFXOWXUDO
YDOXHFKDLQ
$V FRUSRUDWLRQV EHFRPH ELJJHU DQG IHZHU DW ERWK
HQGV RI WKH DJULFXOWXUDO YDOXH FKDLQ IDUPHUV DUH
VDQGZLFKHGEHWZHHQWKHVSLUDOOLQJFRVWVRIDJULFXOWXUDO
LQSXWVGLFWDWHGE\WKHVHHGDQGDJURFKHPLFDOJLDQWV
DQG WKH HYHULQFUHDVLQJ SUHVVXUHV RQ WKH SULFHV RI
WKHLU SURGXFH LPSRVHG E\ PHJDSURFHVVRUV DQG
PHJDUHWDLOHUV WKDW JREEOH XS DYDLODEOH VXSSO\ LQ
WKH PDUNHW 7KLV KDV JUDYH DGYHUVH LPSDFWV RQ WKH
ORFDOHFRQRPLHVDQGRQWKHOLYHOLKRRGVRIIDUPHUVRQ
ORFDOIRRGVHFXULW\DQGFRPPXQLW\UHVLOLHQFHDQGRQ
ELRGLYHUVLW\DQGWKHHQYLURQPHQW
+LJKLQSXWFRVWVDQGORZSURGXFWSULFHV
:KLOHWKHFRPPHUFLDOVHHGVHFWRUPD\UHSUHVHQWRQO\
DERXW SHU FHQW RI WKH WRWDO VHHG UHTXLUHPHQWV RI
IDUPHUVZRUOGZLGHWKHROLJRSRO\HQMR\HGE\WKHODUJH
VHHGDQGDJURFKHPLFDOFRPSDQLHVHQDEOHVWKHPWR
ZLHOGLPPHQVHFRQWURORYHUDJULFXOWXUDOLQSXWVLQJHQ
HUDO7KLVLVEHFDXVHFRPPHUFLDOVHHGVDUHRIWHQGH
YHORSHGE\WKHVDPHFRPSDQLHVWKDWVHOOSHVWLFLGHV
DQGDUHPDUNHWHGLQWDQGHPZLWKDJULFXOWXUDOFKHPL
FDOV WKDW DUH SURPRWHG WR SURWHFW FURSV IURP SHVWV
DQG GLVHDVHV DQG WR \LHOG KLJKHU DQG EHWWHU TXDOLW\
SURGXFH)XUWKHUPRUHDVDUHVXOWRIPDVVLYHSURPR
WLRQ DQG JRYHUQPHQW VXSSRUW RI DJURFKHPLFDOV IRU
´FURS SURWHFWLRQµ HYHQ IDUPHUV ZKR GHSHQG RQ WUD
GLWLRQDOVKDULQJDQGH[FKDQJHRIVHHGVKDYHEHFRPH
FRQVXPHUVRISHVWLFLGHVKHUELFLGHVDQGIXQJLFLGHV
7KHDJURFKHPLFDOPDUNHWLVGRPLQDWHGE\JLDQWSHV
WLFLGH FRPSDQLHV WKDW KDYH WKH SRZHU WR GLFWDWH WKH
SULFHV DQG VXSSO\ RI WKHLU SURGXFWV JOREDOO\ DW OHDVW
VRORQJDVWKHOLIHVSDQRIWKHSDWHQWVJUDQWHGWRWKHP
XVXDOO\\HDUV
,Q WKH SURFHVVLQJ DQG UHWDLOLQJ VHFWRUV FRPSDQLHV
FODLP WR SURFXUH WKHLU SURGXFWV DQG UDZ PDWHULDOV
ORFDOO\ WKURXJK VXFK VFKHPHV DV FRQWUDFW JURZLQJ
DQG ORFDO SDUWQHUVKLSV 1HVWOp IRU H[DPSOH ERDVWV
RILQQRYDWLYHSDUWQHUVKLSVZLWKORFDOPLONSURGXFHUV
LQ3DNLVWDQWRVXSSO\LWVH[SDQGHGRSHUDWLRQVLQWKH
FRXQWU\)DUPLQJ)LUVW:DOPDUW·VDQQXDO
UHSRUWSURMHFWVWKDWLWVVWRUHVZLOOEX\IURPRYHURQH
PLOOLRQ&KLQHVHIDUPHUVLQZKLFKZRXOGIXUWKHU
ERRVW WKH PHJDUHWDLOHU·V VWDQGLQJ DV &KLQD·V VL[WK
ODUJHVW H[SRUW PDUNHW (OOLRW FLWHG LQ (7&
*URXS E 6XFK SUDFWLFHV FODLP WR LQFUHDVH
IDUPHUV· LQFRPHV EXW SURFHVVLQJ DQG UHWDLOLQJ
FRPSDQLHV VXFK DV :DOPDUW H[HUW ´QHYHUHQGLQJ
GRZQZDUG SUHVVXUH RQ LWV VXSSOLHUV WR SURYLGH LW
ZLWK LQFUHDVLQJO\ ORZHU SULFHV WKDW VLPSO\ DUHQ·W
VXVWDLQDEOHµ 'RQQHOO\ FLWHG LQ (7& *URXS
E
'LVHPSRZHULQJIDUPHUV
&RQWUDFWIDUPLQJRUFRPPHUFLDOJURZLQJDUUDQJHPHQWV
E\ SURFHVVLQJ DQG UHWDLOLQJ FRPSDQLHV LQ PDQ\
GHYHORSLQJ FRXQWULHV RIWHQ UHTXLUH IDUPHUV WR XVH D
SDFNDJH RI FRPPHUFLDO VHHGV V\QWKHWLF IHUWLOL]HUV
DQG DJURFKHPLFDOV DQG WR DGRSW VSHFLÀF IDUPLQJ
SUDFWLFHV WR FRPSO\ ZLWK VWULFW PDUNHW UHTXLUHPHQWV
IRU XQLIRUPLW\ ZKLFK DUH JXDUDQWHHG E\ FRPSO\LQJ
ZLWKVWULFWSURFHVVHVDQGSURGXFWLRQVWDQGDUGVVXFK
DV*OREDO*$3DWSULFHVODUJHO\GLFWDWHGE\WKHRIWHQ
H[FOXVLYHEX\HU:KLOHGRFXPHQWHGFDVHVVKRZWKDW
FRQWUDFW IDUPLQJ JHQHUDOO\ LQFUHDVHV LQFRPH DQG
LPSURYHV WHFKQLFDO FDSDELOLWLHV RI PLGGOHLQFRPH
IDUPHUVVPDOOVFDOHIDUPHUVIDFHDSRZHULPEDODQFH
VRFLDO GLIIHUHQWLDWLRQ ULVNV RI FRQWUDFW YLRODWLRQV DQG
DQXQVXVWDLQDEOHHQYLURQPHQWUHVXOWLQJIURPWKHXVH
RIDJURFKHPLFDOVDQGXQLIRUPYDULHWLHVLQWKHLUVPDOO
ODQGKROGLQJV0LQRW
6RPH SROLFLHV RI JRYHUQPHQWV DQG SULYDWH EDQNLQJ
LQVWLWXWLRQV DOVR H[SOLFLWO\ RU LPSOLFLWO\ SURPRWH
DQG VXSSRUW WKH XVH RI FRPPHUFLDO VHHGV DQG
FKHPLFDO LQSXWV VXFK DV SURYLGLQJ FURS LQVXUDQFH
DQG SURGXFWLRQ ORDQV RQO\ WR XVHUV RI SDFNDJHV
RI DJULFXOWXUDO LQSXWV ,$$67' *UHHQSHDFH
6XFK SROLFLHV GHWHU IDUPHUV IURP DGRSWLQJ
HFRIXQFWLRQDO IDUPLQJ V\VWHPV WKXV HIIHFWLYHO\
OLPLWLQJ WKH SRVVLELOLWLHV IRU WKHP WR H[HUFLVH WKHLU
ULJKWVWRPDNHGHFLVLRQVRQWKHLUIDUPV
0RQRFURSSLQJDQGXQLIRUPLW\
,Q GHYHORSLQJ FRXQWULHV WKH YDVW PDMRULW\ RI IDUPHUV
DUHVWLOOVRXUFLQJWKHLUVHHGVWKURXJKWUDGLWLRQDOVDYLQJ
UHXVLQJ VKDULQJ DQG H[FKDQJH SUDFWLFHV +RZHYHU
JLDQWVHHGFRPSDQLHVDUHVWHDGLO\H[SDQGLQJWRWKHVH
SRWHQWLDOO\OXFUDWLYHPDUNHWVWRVHOOFRPPHUFLDOVHHGV
RIWHQDLGHGE\JRYHUQPHQWVLQWKHLUHIIRUWVWRLQFUHDVH
FRPPRGLW\ H[SRUWV ,QGHHG VRPH JRYHUQPHQWV
DUH DFWLYHO\ SURPRWLQJ DQG HYHQ VXSSRUWLQJ WKH XVH
RI FRPPHUFLDO VHHGV WRXWHG E\ WKH FRUSRUDWLRQV
IRU LQFUHDVLQJ SURGXFWLYLW\ 0DVVLYH SURPRWLRQ
RI FRPPHUFLDO VHHGV EUHHGV PRQRFURSSLQJ DQG
XQLIRUPLW\WKHUHE\SXVKLQJRXWWUDGLWLRQDOIRRGFURSV
DQGORFDOYDULHWLHV%DUNHU
7KHKLJKO\PHFKDQL]HGEXONSURFHVVLQJRIIRRGDQG
IHHGSURGXFWVE\SURFHVVRUVDOVRUHTXLUHVXQLIRUPLW\
LQ WHUPV RI IHDWXUHV DQG TXDOLWLHV RI UDZ PDWHULDOV
VRXUFHG IURP IDUPHUV 5HWDLOHUV OLNHZLVH LPSRVH RQ
IDUPHUVXSSOLHUV XQLIRUP TXDOLW\ UHTXLUHPHQWV RQ
VWDQGDUGYDULHWLHVWRFDWHUWRFRQVXPHUGHPDQGVDQG
WR IDFLOLWDWH EXON KDQGOLQJ SDFNDJLQJ VWRUDJH DQG
UHWDLOGLVSOD\
7KUHDWVWRORFDOIRRGVHFXULW\DQGOLYHOLKRRGV
6XFK SUHVVXUH WR SURGXFH IRU WKH PDUNHW FDQ KDYH
DGYHUVHLPSDFWVRQORFDOIRRGVHFXULW\%DUNHU
8WYLNOLQJVIRQGHW 6PDOOVFDOH IDUPHUV FDXJKW
XS LQ FRQWUDFW IDUPLQJ DQG FRPPHUFLDO JURZLQJ
DUUDQJHPHQWV RIWHQ HQG XS ZLWK QR ODQG WR FXOWLYDWH
WKHLU KRXVHKROGV· IRRG UHTXLUHPHQWV DQG PDQ\ ORVH
WKHLU ODQGV LQ FDVHV RI FURS IDLOXUHV 0LQRW (YHQ WKRVH ZKR JURZ IRRG FURSV VRPHWLPHV HQG
XSVHOOLQJDOOWKHLUSURGXFWVDQGEX\LQJFKHDSHUDQG
ORZHU TXDOLW\ IRRG IRU WKHLU RZQ FRQVXPSWLRQ LQ WKH
ORFDOPDUNHW
7KH H[SDQVLRQ RI PHJDUHWDLO FRPSDQLHV LQ PDQ\
GHYHORSLQJFRXQWULHVZKHUHWKHUHWDLOLQGXVWU\LQFOXGLQJ
WKH VRFDOOHG XQGHUJURXQG HFRQRP\ OHG PDLQO\ E\
ZRPHQ HQWUHSUHQHXUV FRQVWLWXWHV D PDMRU VHFWRU LQ
WKH QDWLRQDO HFRQRP\ SRVHV D VHULRXV WKUHDW WR ORFDO
OLYHOLKRRGV ,Q ,QGLD IRU H[DPSOH UHWDLO LV WKH VHFRQG
ODUJHVWHPSOR\HUDIWHUWKHDJULFXOWXUDOVHFWRUHPSOR\LQJ
VRPH PLOOLRQ SHRSOH $UQROG\ DQG 1DLU
*KDVZDOOD FLWHG LQ (7& *URXS E ZKRVH
MREV DQG OLYHOLKRRGV DUH WKUHDWHQHG E\ WKH HQWU\ RI
WUDQVQDWLRQDOPHJDUHWDLOFKDLQVRQWKHGRPHVWLFVFHQH
3UHYDLOLQJSUDFWLFHVLQWKHDJULFXOWXUDOLQSXWSURFHVV
LQJDQGUHWDLOLQGXVWULHVDOVRUDLVHVHULRXVHWKLFDOTXHV
WLRQVDERXWJOREDOIRRGVHFXULW\'HFDGHVRIEUHHGLQJ
75$'($1'(19,5210(175(9,(:
IRUKLJKHU\LHOGVDQGLQGXVWULDOIDUPLQJSUDFWLFHVKDYH
UHVXOWHGLQWKHGHFOLQHRIHVVHQWLDOQXWULHQWVDQGPLQ
HUDOV LQ WKH IRRG VXSSO\ -RQHV FLWHG LQ (7&
*URXS&RQVXPHUVDQGUHWDLOHUVLQGHYHORSHG
FRXQWULHV ZDVWH DOPRVW DV PXFK IRRG DQQXDOO\ PLOOLRQWRQVDVWKHHQWLUHQHWIRRGSURGXFWLRQRIVXE
6DKDUDQ$IULFDPLOOLRQWRQV(7&*URXS
5HGXFLQJIDUPHUV·UHVLOLHQFHDQGFDSDFLW\WR
DGDSWWRWKHDGYHUVHLPSDFWVRIFOLPDWHFKDQJH
0RQRFURSSLQJ DQG XQLIRUPLW\ DGYHUVHO\ DIIHFW
IDUPHUV· FDSDFLW\ WR UHVSRQG WR HQYLURQPHQWDO DQG
KXPDQLQGXFHG VWUHVVHV VLQFH FURS DQG YDULHWDO
GLYHUVLW\ LQ IDUPV DUH WKH IDUPHUV· EHVW LQVXUDQFH
DJDLQVW WKHDGYHUVHHIIHFWV RI FOLPDWLF FKDQJH ,35V
RQ VHHGV LPSHGH IDUPHUV· ULJKWV WR VDYH UHXVH
VKDUH DQG H[FKDQJH VHHGV DQG WKH\ UHGXFH WKH
FDSDFLW\RIFRPPXQLWLHVIRURQIDUPLQQRYDWLRQVDQG
GHYHORSPHQWRIORFDOO\DGDSWHGYDULHWLHVWKDWUHVSRQG
WRQHZHQYLURQPHQWDOFKDOOHQJHV+HLQHPDQQ
$JULFXOWXUHIRUHTXLW\DQGZHOOEHLQJ
$JULFXOWXUH IRU GHYHORSPHQW KDV EHHQ VR WUDJLFDOO\
QDUURZHGGRZQWRLQFUHDVLQJSURGXFWLYLW\LQRUGHUWR
ERRVWHFRQRPLFGHYHORSPHQWE\UDLVLQJ *'3WKDW LW
KDVQRWUHDOO\WUDQVODWHGLQWREHQHÀWVIRUWKHPDMRULW\
RIIDUPHUVZKRDUHVWLOOPLUHGLQSRYHUW\7KHFXUUHQW
LQGXVWULDODJULFXOWXUHPRGHOEUHHGVROLJRSROLHVDFURVV
WKHDJULFXOWXUDOYDOXHFKDLQDQGLVLQFRPSDWLEOHZLWKDQ
HFRIXQFWLRQDODJULFXOWXUDOV\VWHP7KHFXUUHQWV\VWHP
DFFXPXODWHVSURÀWVIRUDIHZDWLPPHDVXUDEOHFRVWVWR
WKHHQYLURQPHQWDQGVRFLHW\$VKLIWWRHQYLURQPHQWDOO\
VXVWDLQDEOHVRFLDOO\HTXLWDEOHDQGHFRQRPLFDOO\YLDEOH
DJULFXOWXUH ZLOO UHTXLUH D IXQGDPHQWDO WUDQVIRUPDWLRQ
RIWKHGRPLQDQWDJULFXOWXUDOV\VWHPDQGGHYHORSPHQW
PRGHOWRRQHWKDWSURPRWHVHTXLW\DQGWKHZHOOEHLQJ
RISHRSOHDQGWKHSODQHWDVH[SOLFLWJRDOV
(QDEOLQJVXVWDLQDEOHHFRQRPLHV
$JULFXOWXUHDVWKHEDFNERQHRIWKHHFRQRP\LQPRVW
GHYHORSLQJ FRXQWULHV VKRXOG VXSSRUW DQG SURPRWH
UXUDOOLYHOLKRRGV7KURXJKVWUDWHJLFSXEOLFLQYHVWPHQWV
DVZHOODVSROLFLHVDQGVXSSRUWSURJUDPPHVWKDWKDYH
DQ LQKHUHQW ELDV WR XSOLIW VPDOOKROGHUV DQG VXSSRUW
HFRIXQFWLRQDOIDUPLQJSUDFWLFHVSURGXFWLYHDFWLYLWLHV
RQ DQG RIIIDUP KDYH WKH SRWHQWLDO WR FUHDWH MREV
DQG OLYHOLKRRGV LQ UXUDO DUHDV 7KLV FRXOG HIIHFWLYHO\
DUUHVWWKHFRQWLQXLQJWLGHRIPLJUDWLRQWRFLWLHVDQGLWV
DVVRFLDWHG QHJDWLYH VRFLDO HFRQRPLF DQG SROLWLFDO
FRQVHTXHQFHV ,$$67' *UHHQSHDFH 7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
8WYLNOLQJVIRQGHW
$V D FRPSOHPHQW WR LQWHUYHQWLRQV DW WKH ORFDO DQG
QDWLRQDOOHYHOVWUDGHSUDFWLFHVWKDWEUHHGROLJRSROLHV
DQGLQKLELWFRPSHWLWLRQQHHGWREHFXUEHGDWWKHJOREDO
OHYHO 7KLV UHTXLUHV VWULFWHU UHJXODWLRQ RI FRUSRUDWH
SUDFWLFHV DQWLWUXVW DFWLRQV DQG D PRUDWRULXP RQ
PHUJHUV DQG DFTXLVLWLRQV %DUNHU 8. )RRG
*URXS ,35V DQG WHFKQRORJLFDO ´DGYDQFHVµ
HJK\EULGL]DWLRQJHQHWLFHQJLQHHULQJDQGWHUPLQDWRU
WHFKQRORJ\ ZKLFK LQKHUHQWO\ SURKLELWV VKDULQJ UHXVH
DQG VDYLQJ RI VHHGV DPRQJ IDUPHUV WKDW SURPRWH
PRQRSRO\ FRQWURO RYHU SURGXFWV DQG LPSHGH
LQQRYDWLRQV E\ VPDOOHU SOD\HUV VKRXOG EH UHYLHZHG
DQG FRUUHFWHG 6XEVLGLHV WKDW EHQHÀW RQO\ WKH ELJ
SOD\HUV LQ WKH DJULFXOWXUDO VHFWRU VKRXOG EH SKDVHG
RXW DQG SROLFLHV WKDW H[HUW SUHVVXUH RQ IDUPHUV WR
DGRSWFRPPHUFLDODJULFXOWXUDOLQSXWVUHYHUVHG
&RQVHUYLQJGLYHUVLW\
/RQJWHUPVXVWDLQDELOLW\LQDJULFXOWXUHFDQRQO\EHUHDOL]HG
ZKHQ VXSSRUWHG E\ KHDOWK\ HFRORJLFDO DQG ELRORJLFDOO\
GLYHUVHHFRV\VWHPV&URSDQGYDULHWDOGLYHUVLW\DUHWKH
VPDOOKROGHUIDUPHUV·EHVWLQVXUDQFHDJDLQVWFURSIDLOXUHV
DJURHFRORJLFDO VWUHVVHV DQG FOLPDWH FKDQJH +R
,$$67'8.)RRG*URXS'LYHUVLW\
QXUWXUHGRQIDUPE\IDUPHUVSURYLGHVDZHDOWKRIKHDOWK\
DQGVXVWDLQDEOHSURGXFWVWKDWFDQFDWHUWRWKHGHPDQGV
RIFRQVXPHUVZKRDUHEHFRPLQJLQFUHDVLQJO\DZDUHRI
HQYLURQPHQWDO KHDOWK DQG IRRG LVVXHV 2QIDUP DQG
LQVLWX FRQVHUYDWLRQ RI DJULFXOWXUDO ELRGLYHUVLW\ VKRXOG
EH SURPRWHG DQG VXSSRUWHG E\ SURYLGLQJ DSSURSULDWH
LQFHQWLYHVDQGUHFRJQLWLRQWRIDUPHUVDQGFRPPXQLWLHV
,QDGGLWLRQWKHULJKWVDQGDFFHVVRIFRPPXQLWLHVWRWKHVH
UHVRXUFHV QHHG WR EH SURWHFWHG IURP PLVDSSURSULDWLRQ
DQGELRSLUDF\
(PSRZHULQJVPDOOKROGHUV
*RYHUQPHQWV FDQ SOD\ D NH\ UROH LQ LQFUHDVLQJ WKH
TXDOLW\DQGTXDQWLW\RISXEOLFLQYHVWPHQWLQDJULFXOWXUH
DQG PDNLQJ SURGXFW PDUNHWV ZRUN EHWWHU IRU
VPDOOKROGHUV:RUOG%DQN7KHSHUIRUPDQFHRI
VPDOOVFDOHSURGXFHURUJDQL]DWLRQVDQGVPDOOKROGHUV
SUDFWLFLQJDJURHFRORJLFDOIDUPLQJFDQEHHQKDQFHG
E\ EXLOGLQJ WKHLU FDSDELOLWLHV IDFLOLWDWLQJ WKHLU DFFHVV
WR ÀQDQFLDO VHUYLFHV LPSURYLQJ SULFH LQFHQWLYHV DQG
UHGXFLQJ WKHLU H[SRVXUH WR XQLQVXUHG ULVNV ,$$67'
:RUOG%DQN
%H\RQGHFRQRPLFHPSRZHUPHQWVRPHIXQGDPHQWDO
VWHSV WRZDUGV HPSRZHULQJ VPDOOKROGHUV LQFOXGH
SURWHFWLQJ WKHLU WHQXUH ULJKWV RYHU ODQG LPSURYLQJ
WKHLUDFFHVVWRSURGXFWLYHUHVRXUFHVLQFUHDVLQJWKHLU
SROLWLFDO YRLFH DQG HQDEOLQJ WKHLU DFWLYH SDUWLFLSDWLRQ
LQGHFLVLRQPDNLQJ:RUOG%DQN,$$67'
8. )RRG *URXS 3URYLGLQJ DFFHVV WR EDVLF
VHUYLFHV DQG VRFLDO SURWHFWLRQ VXFK DV HGXFDWLRQ
KHDOWKQXWULWLRQVRFLDOZHOIDUHDQGLQIUDVWUXFWXUHDUH
DOVR HVVHQWLDO IRU IDUPHU HPSRZHUPHQW :)3 DQG
)$2
3URPRWLQJIRRGVRYHUHLJQW\DQGWKHULJKWWRIRRG
*OREDO DQG QDWLRQDO IRRG VHFXULW\ FDQ EH VXVWDLQHG
RQO\ LI ORFDO IRRG VHFXULW\ LV DVVXUHG ERWK LQ
FRPPXQLWLHV WKDW SURGXFH IRRG DQG LQ XUEDQ DUHDV
WKDW GHSHQG RQ WKH IRUPHU IRU WKHLU IRRG VXSSO\
)RRG VRYHUHLJQW\ ² WKH ULJKW RI VRYHUHLJQ 6WDWHV
DQG FRPPXQLWLHV WR GHPRFUDWLFDOO\ GHWHUPLQH WKHLU
RZQDJULFXOWXUDODQGIRRGSROLFLHV²VKRXOGEHJLQDW
WKH ORFDO OHYHO ZLWK FRPPXQLWLHV WDNLQJ FHQWUH VWDJH
,$$67' *UHHQSHDFH 8WYLNOLQJVIRQGHW
8.)RRG*URXS)RRGVRYHUHLJQW\JRHV
EH\RQGIRRGVHOIVXIÀFLHQF\LWLQFRUSRUDWHVDJUDULDQ
UHIRUPV ORFDO PDUNHWV ELRGLYHUVLW\ DXWRQRP\ IURP
H[WHUQDO SUHVVXUHV FRRSHUDWLRQ DQG DOO DVSHFWV RI
ORFDOIRRGSURGXFWLRQ,$$67'
*RYHUQPHQWV DQG WKH LQWHUQDWLRQDO FRPPXQLW\ QHHG
WR UHVSHFW DQG HQVXUH WKH ULJKW RI HYHU\ SHUVRQ WR
DGHTXDWHIRRGDVDIXQGDPHQWDOFRPSRQHQWRIVXV
WDLQDEOHVROXWLRQVWRIRRGFKDOOHQJHV:)3DQG)$2
8WYLNOLQJVIRQGHW 5HVSHFWLQJ IDUPHUV·
ULJKWVWRDJULFXOWXUDOJHQHWLFUHVRXUFHVLVDQHVVHQWLDO
FRPSRQHQWRISURPRWLQJWKHULJKWWRIRRG
6XSSRUWLQJDJURHFRORJLFDOIDUPLQJ
7KH YLDELOLW\ DQG EHQHÀWV RI DJURHFRORJLFDO IDUPLQJ
V\VWHPV KDYH EHHQ ZHOO HVWDEOLVKHG LQ QXPHURXV
VWXGLHV7KHUHLVQRZDQHHGWRUHGLUHFWUHVHDUFKDQG
LQYHVWPHQWVDWWKHQDWLRQDODQGLQWHUQDWLRQDOOHYHOVLQ
RUGHU WR LQFUHDVH SURGXFWLYLW\ LQ DQ HQYLURQPHQWDOO\
VXVWDLQDEOHDQGVRFLDOO\HTXLWDEOHPDQQHU+R
*UHHQSHDFH8.)RRG*URXS8WYLNOLQJV
IRQGHW 1DWLRQDO VXSSRUW SURJUDPPHV DQG
DJULFXOWXUDOHGXFDWLRQFXUULFXODQHHGWREHUHVKDSHG
DQG GHFLVLRQPDNHUV LPSOHPHQWHUV DQG H[WHQVLRQ
VHUYLFH SURYLGHUV UHRULHQWHG WRZDUGV UHVSHFWLQJ DQG
VXSSRUWLQJWKHFHQWUDOUROHRIVPDOOKROGHUIDUPHUVDQG
SHDVDQWV LQ DJULFXOWXUDO GHYHORSPHQW WKURXJK DJUR
HFRORJLFDOIDUPLQJ,$$67'
75$'($1'(19,5210(175(9,(:
1//'06#4;U 1#4+0)+.#0&
11&4+%'5*4'#6'0
((14&#$.'
11&722.;
5LFKDUG+HLQEHUJ
3RVW&DUERQ,QVWLWXWH
$EVWUDFW
7KHFXUUHQWJOREDOIRRGV\VWHPLVKLJKO\IXHODQGWUDQVSRUWGHSHQGHQW)XHOVZLOODOPRVWFHUWDLQO\EHFRPH
OHVV DIIRUGDEOH LQ WKH QHDU DQG PHGLXP WHUP PDNLQJ WKH FXUUHQW KLJKO\ IXHOGHSHQGHQW DJULFXOWXUDO
SURGXFWLRQV\VWHPOHVVVHFXUHDQGIRRGOHVVDIIRUGDEOH,WLVWKHUHIRUHQHFHVVDU\WRSURPRWHIRRGVHOI
VXIÀFLHQF\DQGUHGXFHWKHQHHGIRUIXHOLQSXWVWRWKHIRRGV\VWHPDWDOOOHYHOV
7KH FRQQHFWLRQ EHWZHHQ IRRG DQG RLO LV V\VWHPLF
DQGWKHSULFHVRIERWKIRRGDQGIXHOKDYHULVHQDQG
IDOOHQ PRUH RU OHVV LQ WDQGHP LQ UHFHQW \HDUV ÀJXUH
0RGHUQDJULFXOWXUHXVHVRLOSURGXFWVWRIXHOIDUP
PDFKLQHU\WRWUDQVSRUWRWKHULQSXWVWRWKHIDUPDQG
WRWUDQVSRUWIDUPRXWSXWWRWKHXOWLPDWHFRQVXPHU2LO
LVRIWHQDOVRXVHGDVLQSXWLQDJULFXOWXUDOFKHPLFDOV
2LOSULFHLQFUHDVHVWKHUHIRUHSXWSUHVVXUHRQDOOWKHVH
DVSHFWVRIFRPPHUFLDOIRRGV\VWHPV
7KXV WKHUH LV FRQFHUQ WKDW KLJK DQG YRODWLOH SULFHV
RI FUXGH RLO PD\ FDXVH IRRG SULFHV WR FRQWLQXH WR
LQFUHDVH%ORRPEHUJ
0RUHRYHU DV RLO SULFHV ULVH VR GRHV GHPDQG IRU
ELRIXHOVZKLFKDUHWKHRQO\QRQIRVVLOOLTXLGIXHOVDEOH
WRUHSODFHSHWUROHXPSURGXFWVLQH[LVWLQJFRPEXVWLRQ
HQJLQHV DQG PRWRU YHKLFOHV %XW ELRIXHOV DUH RIWHQ
PDGH IURP FRUQ DQG RWKHU DJULFXOWXUDO SURGXFWV $V
225 -
- 225
200 -
- 200
175 -
- 175
150 -
- 150
125 -
- 125
FAO food index
100 -
- 100
75 -
- 75
Price of oil
2010 -
2009 -
2008 -
2007 -
2006 -
2005 -
2004 -
-0
2003 -
0-
2002 -
- 25
2001 -
- 50
25 -
2000 -
50 -
6RXUFHV86(QHUJ\,QIRUPDWLRQ$GPLQLVWUDWLRQ
DQG)$2VWDW
US dollars per barrell
UN FAO food index
)LJXUH(YROXWLRQRIIRRGDQGIXHOSULFHVWR
GHPDQG IRU WKHVH DOWHUQDWLYH IXHOV LQFUHDVHV FURS
SULFHV DUH IRUFHG XSZDUGV PDNLQJ IRRG HYHQ OHVV
DIIRUGDEOH
([SRUWOHG DJULFXOWXUDO VWUDWHJLHV DOVR LQFUHDVH WKH
ZRUOG·V YXOQHUDELOLW\ WR KLJK RLO SULFHV 0RVW GRQRU
DJHQFLHV KDYH HQFRXUDJHG WKH OHVV LQGXVWULDOL]HG
FRXQWULHV WR IRFXV RQ WKH SURGXFWLRQ RI FDVK FURSV
DW WKH H[SHQVH RI VWDSOHV IRU ORFDO FRQVXPSWLRQ $V
D UHVXOW SHRSOH LQ WKHVH FRXQWULHV DUH IRUFHG WR UHO\
LQFUHDVLQJO\ RQ LPSRUWV RI RIWHQ VXEVLGL]HG FHUHDOV
RU WKRVH IXQGHG E\ IRRG DLG SURJUDPPHV +RZHYHU
ULVLQJ WUDQVSRUW FRVWV FRQWULEXWH WR ULVLQJ SULFHV RI
IRRGLPSRUWVPDNLQJWKHPHYHUOHVVDIIRUGDEOH)XHO
FRVWVUHSUHVHQWDVPXFKDVWRSHUFHQWRIWRWDO
VKLSRSHUDWLQJFRVWV)URPHDUO\WRPLG
DV IXHO SULFHV VRDUHG WKH FRVW RI VKLSSLQJ IRRG DLG
FOLPEHGE\DERXWSHUWRQ²DQHDUO\SHUFHQW
LQFUHDVH DFFRUGLQJ WR WKH 8QLWHG 6WDWHV $JHQF\ IRU
,QWHUQDWLRQDO'HYHORSPHQW*DUEHU
0HDQZKLOHPDQ\SRRUIDUPHUVZKRFDQQRWDIIRUGPD
FKLQHU\IXHOVDQGFRPPHUFLDOIDUPLQSXWVÀQGWKHP
VHOYHVDWDGLVDGYDQWDJHLQWKHJOREDOIRRGHFRQRP\
&RPSRXQGLQJWKLVDUHDJULFXOWXUDOSROLFLHVLQLQGXVWUL
DOL]HGIRRGH[SRUWLQJFRXQWULHVWKDWVXEVLGL]HGRPHV
WLF SURGXFHUV DQG GXPS VXUSOXVHV RQWR GHYHORSLQJ
FRXQWULHVWKXVDGGLQJWRWKHHFRQRPLFGLVDGYDQWDJ
HVRIWKHVPDOOKROGHUIDUPHUVLQWKRVHFRXQWULHV$VD
UHVXOWPLOOLRQVRIWKRVHIDUPHUVDUHEHLQJGULYHQRXW
RI EXVLQHVV DQQXDOO\ $W WKH VDPH WLPH GHYHORSLQJ
FRXQWULHV DUH JLYLQJ LQFUHDVLQJ SULRULW\ WR SURGXFWLRQ
IRUH[SRUWGHVSLWHDEXUJHRQLQJODQGOHVVSRRUXUEDQ
FODVVZKRVHLPPHGLDWHDQFHVWRUVZHUHVXEVLVWHQFH
IDUPHUVWKDWLVFKURQLFDOO\PDOQRXULVKHGDQGKXQJU\
6RDULQJIRRGDQGIXHOSULFHVKDYHDGLVSURSRUWLRQDWH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
LPSDFWRQGHYHORSLQJFRXQWULHVDQGRQSRRUSHRSOH
LQGHYHORSHGFRXQWULHV$PHULFDQVZKRRQDYHUDJH
VSHQGOHVVWKDQRQHWHQWKRIWKHLULQFRPHRQIRRGDUH
DEOHWRDEVRUEWKHKLJKHUIRRGSULFHVPRUHHDVLO\WKDQ
WKHZRUOG·VSRRUHVWELOOLRQSHRSOHZKRVSHQGWR
SHUFHQWRIWKHLULQFRPHRQIRRG
:K\DUHRLOSULFHVVRKLJK"6SHFXODWLYHLQYHVWPHQWLQ
FRPPRGLWLHVSOD\VDUROHWKRXJKWKHUHLVDSHUVXDVLYH
FDVHWREHPDGHWKDWRLOSULFHVZRXOGEHULVLQJHYHQ
LI RLO IXWXUHV VSHFXODWLRQ ZHUH HQWLUHO\ FXUWDLOHG 7KH
RLO LQGXVWU\ LV FKDQJLQJ DQG UDSLGO\ $V -HUHP\
*LOEHUW IRUPHU FKLHI SHWUROHXP HQJLQHHU IRU %3 KDV
SXWLW´7KHFXUUHQWÀHOGVZHDUHFKDVLQJZH·YHNQRZQ
DERXWIRUDORQJWLPHLQPDQ\FDVHVEXWWKH\ZHUHWRR
FRPSOH[WRRIUDFWXUHGWRRGLIÀFXOWWRFKDVH1RZRXU
WHFKQRORJ\DQGXQGHUVWDQGLQJ>DUH@EHWWHUZKLFKLVD
JRRG WKLQJ EHFDXVH WKHVH GLIÀFXOW ÀHOGV DUH DOO WKDW
ZHKDYHOHIWµ*LOEHUW
7KH WUHQGV LQ WKH RLO LQGXVWU\ DUH FOHDU DQG
XQGLVSXWHG H[SORUDWLRQ DQG SURGXFWLRQ DUH
EHFRPLQJPRUHFRVWO\DQGDUHJLYLQJULVHWRJUHDWHU
HQYLURQPHQWDOULVNVZKLOHFRPSHWLWLRQIRUDFFHVVWR
QHZ SURVSHFWLYH UHJLRQV LV JHQHUDWLQJ LQFUHDVLQJ
JHRSROLWLFDOWHQVLRQV$FFRUGLQJWRWKH,QWHUQDWLRQDO
(QHUJ\$JHQF\,($DWKHUDWHRIZRUOGFUXGH
RLO SURGXFWLRQ UHDFKHG LWV SHDN LQ 7KH ,0)
KDV MRLQHG D FKRUXV RI HQHUJ\ LQGXVWU\ DQDO\VWV LQ
FRQFOXGLQJWKDWVFDUFLW\DQGKLJKSULFHVDUHKHUHWR
VWD\,0)DQG
$ FROODSVH LQ GHPDQG IRU RLO UHVXOWLQJ IURP VKDUSO\
GHFOLQLQJ JOREDO HFRQRPLF DFWLYLW\ FRXOG FDXVH RLO
SULFHVWRIDOODVKDSSHQHGLQODWH,QGHHGWKLVLV
IDLUO\SUREDEOH%XWZKLOHLWZRXOGPDNHRLOFKHDSHULW
ZRXOGQRWPDNHIXHOPRUHDIIRUGDEOHWRPRVWSHRSOH
,W LV WKHRUHWLFDOO\ SRVVLEOH IRU WKH ZRUOG WR FXUE RLO
GHPDQG WKURXJK SROLFLHV WKDW OLPLW FRQVXPSWLRQ
DQG LW LV DOVR FRQFHLYDEOH WKDW VRPH XQH[SHFWHG
WHFKQRORJLFDO EUHDNWKURXJK FRXOG UDSLGO\ UHVXOW LQ D
FKHDS HIIHFWLYH DOWHUQDWLYH WR SHWUROHXP +RZHYHU
WKHVHODWWHUWZRGHYHORSPHQWVDUHUDWKHULPSUREDEOH
7KXVWKHUHLVQROLNHO\VFHQDULRLQZKLFKWKHVHUYLFHV
SURYLGHGE\RLOZLOOEHFRPHPRUHDIIRUGDEOHZLWKLQWKH
FRQWH[WRIDVWDEOHJOREDOHFRQRP\DWDQ\WLPHLQWKH
IRUHVHHDEOHIXWXUH
:KLOH ZHDOWK\ FRQVXPHUV DUH DEOH WR DEVRUE
LQFUHPHQWDO LQFUHDVHV LQ IRRG SULFHV D VXGGHQ
LQWHUUXSWLRQLQWKHDYDLODELOLW\RIIXHOGXHWRJHRSROLWLFDO
HYHQWV RU D VLJQLÀFDQW JUDGXDO FXUWDLOPHQW RI IRVVLO
IXHO SURGXFWLRQ GXH WR WKH FRQWLQXLQJ GHSOHWLRQ
RI ZRUOG K\GURFDUERQ UHVHUYHV FRXOG OHDG WR D
EUHDNGRZQ RI WKH IRRG V\VWHP DW HYHU\ OHYHO IURP
IDUPHUWRSURFHVVRUWRGLVWULEXWRUWRUHWDLOHUDQGÀQDOO\
WRFRQVXPHU
7RVXPPDUL]HKLJKRLOSULFHVFRQWULEXWHWRVRDULQJIRRG
SULFHV2XUPRGHUQJOREDOIRRGV\VWHPLVKLJKO\RLO
GHSHQGHQWEXWSHWUROHXPLVEHFRPLQJOHVVDQGOHVV
DIIRUGDEOH([WUHPHZHDWKHUHYHQWVDOVRFRQWULEXWHWR
KLJKIRRGSULFHVDQGWRWKHH[WHQWWKDWVXFKHYHQWV
UHVXOW IURP DQWKURSRJHQLF JOREDO ZDUPLQJ WKH\ DUH
DOVRXOWLPDWHO\IXHOUHODWHG7KXVWKHUHLVQRVROXWLRQWR
WKHZRUOG·VZRUVHQLQJIRRGFULVLVZLWKLQFXUUHQWHQHUJ\
DQGDJULFXOWXUDOV\VWHPV
:KDWLVQHHGHGLVDPDMRUUHGHVLJQLQJRIERWKIRRGDQG
HQHUJ\V\VWHPV7KHJRDORIPDQDJHUVRIWKHJOREDO
IRRG V\VWHP VKRXOG EH WR UHGXFH LWV GHSHQGHQFH
RQ IRVVLO HQHUJ\ LQSXWV ZKLOH DOVR UHGXFLQJ *+*
HPLVVLRQV IURP ODQGXVH DFWLYLWLHV $FKLHYLQJ WKLV
JRDOZLOOUHTXLUHLQFUHDVLQJORFDOIRRGVHOIVXIÀFLHQF\
DQGSURPRWLQJOHVVIXHODQGSHWURFKHPLFDOLQWHQVLYH
PHWKRGVRISURGXFWLRQ
*LYHQWKHGHJUHHWRZKLFKWKHPRGHUQIRRGV\VWHPKDV
EHFRPH GHSHQGHQW RQ IRVVLO IXHOV PDQ\ SURSRVDOV
IRUGHOLQNLQJIRRGDQGIRVVLOIXHOVPD\VHHPUDGLFDO
+RZHYHUHIIRUWVWRWKLVHQGPXVWEHMXGJHGQRWE\WKH
GHJUHHWRZKLFKWKH\VXSSRUWWKHH[LVWLQJLPSHUDWLYHV
RIWKHJOREDOIRRGV\VWHPEXWE\WKHLUDELOLW\WRVROYH
WKH IXQGDPHQWDO FKDOOHQJH WKDW IDFHV XV WKH QHHG
WR IHHG D JOREDO SRSXODWLRQ RI VHYHQ ELOOLRQ DQG
FRXQWLQJZLWKDGLPLQLVKLQJVXSSO\RIIXHOVDYDLODEOH
WR IHUWLOL]H SORXJK DQG LUULJDWH ÀHOGV DQG WR KDUYHVW
DQG WUDQVSRUW FURSV )DUPHUV QHHG WR UHGXFH WKHLU
GHSHQGHQFHRQIRVVLOIXHOVLQRUGHUWREXLOGUHVLOLHQFH
DJDLQVWIXWXUHUHVRXUFHVFDUFLW\DQGSULFHYRODWLOLW\
,QJHQHUDOIDUPHUVFDQQRORQJHUDVVXPHWKDWSURGXFWV
GHULYHGIURPSHWUROHXPDQGQDWXUDOJDVFKLHÁ\GLHVHO
JDVROLQHV\QWKHWLFIHUWLOL]HUVDQGV\QWKHWLFSHVWLFLGHV
ZLOO UHPDLQ DIIRUGDEOH LQ WKH IXWXUH DQG WKH\ VKRXOG
WKHUHIRUH FKDQJH WKHLU EXVLQHVV SODQV DFFRUGLQJO\
:KLOH PDQ\ DSSURDFKHV FRXOG EH H[SORUHG ZKLFK
LQ DQ\ FDVH ZRXOG GHSHQG RQ VSHFLÀF JHRJUDSKLF
ORFDWLRQVWKHQHFHVVDU\RXWOLQHVRIDJHQHUDOWUDQVLWLRQ
VWUDWHJ\DUHDOUHDG\FOHDUDVGLVFXVVHGEHORZ
‡ )DUPHUVVKRXOGPRYHWRZDUGVUHJHQHUDWLYHIHUWLOLW\
V\VWHPVWKDWEXLOGKXPXVDQGVHTXHVWHUFDUERQLQ
VRLOV WKXV FRQWULEXWLQJ WR VROYLQJ FOLPDWH FKDQJH
UDWKHUWKDQH[DFHUEDWLQJLW
‡ )DUPHUV VKRXOG UHGXFH WKHLU XVH RI SHVWLFLGHV LQ
IDYRXURILQWHJUDWHGSHVWPDQDJHPHQWV\VWHPVWKDW
‡
‡
‡
‡
75$'($1'(19,5210(175(9,(:
UHO\ SULPDULO\ RQ ELRORJLFDO FXOWXUDO DQG SK\VLFDO
FRQWUROV
0RUH RI WKH UHQHZDEOH HQHUJ\ WKDW ZLOO SRZHU
IDUPLQJ DFWLYLWLHV FDQ DQG PXVW EH JHQHUDWHG RQ
IDUPV:LQGDQGELRPDVVSURGXFWLRQLQSDUWLFXODU
FDQSURYLGHIDUPHUVZLWKDGGHGLQFRPHZKLOHDOVR
SRZHULQJIDUPRSHUDWLRQV
&RXQWULHVDQGUHJLRQVVKRXOGWDNHSURDFWLYHVWHSV
WR UHGXFH WKH HQHUJ\ QHHGHG WR WUDQVSRUW IRRG
E\ UHRUJDQL]LQJ WKHLU IRRG SURGXFWLRQ V\VWHPV
7KLV ZLOO HQWDLO VXSSRUW IRU ORFDO SURGXFHUV DQG
IRU ORFDO QHWZRUNV WKDW EULQJ SURGXFHUV DQG
FRQVXPHUV FORVHU WRJHWKHU 0RUH HIÀFLHQW PRGHV
RI WUDQVSRUWDWLRQ VXFK DV VKLSV DQG WUDLQV PXVW
UHSODFH OHVV HIÀFLHQW PRGHV VXFK DV WUXFNV DQG
SODQHV
7KH HQG RI WKH IRVVLO IXHO HUD VKRXOG DOVR EH
UHÁHFWHG LQ FKDQJHV LQ GLHWDU\ DQG FRQVXPSWLRQ
SDWWHUQV DPRQJ WKH JHQHUDO SRSXODWLRQ ZLWK D
SUHIHUHQFHIRUIRRGVWKDWDUHJURZQORFDOO\WKDWDUH
LQVHDVRQDQGWKDWXQGHUJROHVVSURFHVVLQJ$OVR
DVKLIWDZD\IURPHQHUJ\DQGPHDWLQWHQVLYHGLHWV
VKRXOGEHHQFRXUDJHG
:LWK OHVV IXHO DYDLODEOH WR SRZHU DJULFXOWXUDO
PDFKLQHU\WKHZRUOGZLOOQHHGPDQ\PRUHIDUPHUV
%XW IRU IDUPHUV WR VXFFHHG FXUUHQW DJULFXOWXUDO
SROLFLHV WKDW IDYRXU ODUJHUVFDOH SURGXFWLRQ DQG
SURGXFWLRQIRUH[SRUWZLOOQHHGWRFKDQJHLQIDYRXU
RI VXSSRUW WR VPDOOVFDOH VXEVLVWHQFH IDUPLQJ
JDUGHQLQJ DQG DJULFXOWXUDO FRRSHUDWLYHV 6XFK
SROLFLHVVKRXOGEHIRUPXODWHGDQGSXWLQSODFHERWK
E\ LQWHUQDWLRQDO LQVWLWXWLRQV VXFK DV WKH )$2 DQG
WKH:RUOG%DQNDQGDOVRE\QDWLRQDODQGUHJLRQDO
JRYHUQPHQWV
,I VXFK D WUDQVLWLRQ LV XQGHUWDNHQ SURDFWLYHO\ DQG
LQWHOOLJHQWO\WKHUHFRXOGEHPDQ\DGGLWLRQDOEHQHÀWV
ZLWKPRUHHPSOR\PHQWLQIDUPLQJPRUHHQYLURQPHQWDO
SURWHFWLRQ OHVV VRLO HURVLRQ D UHYLWDOL]DWLRQ RI UXUDO
FXOWXUHDQGVLJQLÀFDQWLPSURYHPHQWVLQSXEOLFKHDOWK
6RPH RI WKLV WUDQVIRUPDWLRQ ZLOO LQHYLWDEO\ EH GULYHQ
E\ PDUNHW IRUFHV OHG E\ WKH ULVLQJ SULFH RI IRVVLO
IXHOV +RZHYHU ZLWKRXW SODQQLQJ WKH WUDQVLWLRQ PD\
SURYH GHVWUXFWLYH VLQFH PDUNHW IRUFHV DFWLQJ DORQH
FRXOG EDQNUXSW IDUPHUV ZKLOH OHDYLQJ FRQVXPHUV
ZLWK IHZ LI DQ\ RSWLRQV IRU VHFXULQJ IRRG VXSSOLHV
5HPRYLQJ IRVVLO IXHOV IURP WKH IRRG V\VWHP WRR
TXLFNO\EHIRUHDOWHUQDWLYHV\VWHPVDUHLQSODFHZRXOG
EHFDWDVWURSKLF7KXVWKHWUDQVLWLRQSURFHVVUHTXLUHV
FDUHIXOFRQVLGHUDWLRQDQGSODQQLQJ
7KHUH DUH UHDVRQV IRU KRSH $ UHFHQW UHSRUW RQ
$IULFDQ DJULFXOWXUH E\ 81&7$' DQG 81(3 E
VXJJHVWV WKDW RUJDQLF VPDOOVFDOH IDUPLQJ FDQ
GHOLYHUWKHDPRXQWRILQFUHDVHG\LHOGVWKRXJKWWREH
SRVVLEOHRQO\WKURXJKLQGXVWULDOIDUPLQJDQGZLWKRXW
WKH HQYLURQPHQWDO DQG VRFLDO GDPDJHV FDXVHG E\
WKH ODWWHU 5HFHQW UHVHDUFK E\ %DGJOH\ HW DO DOVR FRQFOXGHV WKDW RUJDQLF DQG ORZLQSXW PHWKRGV
FDQ LQFUHDVH \LHOGV LQ GHYHORSLQJ FRXQWULHV ZKLOH
PDLQWDLQLQJ\LHOGVLQLQGXVWULDOL]HGFRXQWULHV
*HQHUDOO\ VPDOOHU IDUPV KDYH JUHDWHU ELRGLYHUVLW\
+ROH HW DO SODFH JUHDWHU HPSKDVLV RQ VRLO
EXLOGLQJ'·6RX]DDQG,NHUGDQGGLVSOD\JUHDWHU
ODQGXVHHIÀFLHQF\WKDQODUJHIDUPV5RVVHW
1HYHUWKHOHVV GHVSLWH WKHVH SURPLVLQJ WUHQGV DQG
ÀQGLQJVLWLVD[LRPDWLFWKDWQRIRRGV\VWHPWLHGWRWKH
HDUWK·VÀQLWHVRLODQGZDWHUUHVRXUFHVFDQVXSSRUWDQ
HYHUH[SDQGLQJ DQG HYHU PRUH UHVRXUFHGHPDQGLQJ
SRSXODWLRQ 7KH SUXGHQW SDWK WRZDUGV UHIRUPLQJ WKH
JOREDO IRRG V\VWHP PXVW WKHUHIRUH FRRUGLQDWH DJUL
FXOWXUDO SROLF\ ZLWK DSSURSULDWH SRSXODWLRQ HGXFD
WLRQ HFRQRPLF WUDQVSRUW DQG HQHUJ\ SROLFLHV 7KH
WUDQVLWLRQ WR D SRVWSHWUROHXP IRRG V\VWHP ZLOO QHHG
WREHFRPSUHKHQVLYH,QLWVVFDOHDQGUHTXLUHGVSHHG
LW SURPLVHV WR EH RQH RI WKH JUHDWHVW FKDOOHQJHV LQ
KXPDQ KLVWRU\ %XW WKH FKDOOHQJH ZLOO RQO\ JURZ WKH
ORQJHULWLVSRVWSRQHG
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
1//'06#4;U 4+6+%#.0#.;5+51(1//1&+6;#0&
11&4+%'2'%7.#6+10
'LUN0OOHU
)LQDQFH(WKLFV/WG
$EVWUDFW
7KHUH LV DQ XUJHQW QHHG IRU SROLF\PDNHUV WR ÀQG ZD\V RI NHHSLQJ ÀQDQFLDO LQYHVWRUV RXW RI FRPPRGLW\
PDUNHWV ,QYHVWPHQW IXQGV VKRXOG EH PRELOL]HG DQG HQFRXUDJHG WR LQYHVW LQ SURGXFWLRQ DQG UHVHDUFK
DQG GHYHORSPHQW UDWKHU WKDQ YLUWXDOO\ RU SK\VLFDOO\ KRDUGLQJ FRPPRGLW\ VWRFNV IRU PHUHO\ VSHFXODWLYH
SXUSRVHVWKXVNHHSLQJWKHPDZD\IURPUHDOHFRQRPLFDFWLYLW\7KHUHLVQRHFRQRPLFMXVWLÀFDWLRQIRUVXFK
VLSKRQLQJDZD\RISURGXFWLRQIDFWRUV
$7KHH[WHQWRIVSHFXODWLRQ
8QWLO WKH WXUQ RI WKH FHQWXU\ WKHUH ZDV YHU\ OLWWOH
VSHFXODWLRQDQGÀQDQFLDOLQYHVWPHQWLQIRRGDWEHVW
YHU\ IHZ VSHFLDOL]HG WUDGHUV DQG ÀQDQFLDO DQDO\VWV
ZHUHDFWLYHLQWKLVDUHD+RZHYHUWKLVKDVGUDPDWLFDOO\
FKDQJHG LQ UHFHQW \HDUV 'XULQJ WKH SHULRG ²
DORQH LQYHVWPHQW LQ WKH WZR ELJJHVW JOREDO
FRPPRGLW\ LQGH[ IXQGV VKRW XS IURP WR ELOOLRQ²DVSHFWDFXODUJURZWKRISHUFHQW
2ULJLQDOO\ FRPPRGLW\ H[FKDQJHV DW ZKLFK IRU
LQVWDQFH ZKHDW IXWXUHV FRQWUDFWV DUH WUDGHG SOD\HG
DFRQVWUXFWLYHUROHIRU´UHDOµDJULFXOWXUH)DUPHUVZHUH
DEOHWRVHOOWKHLUSURGXFWLRQWRWKHPLOOHUDWWKH´IXWXUHµ
SULFH TXRWHG RQ WKH FRPPRGLW\ H[FKDQJH ZHOO LQ
DGYDQFH RI WKH KDUYHVWLQJ GDWH ,Q WKLV ZD\ ERWK
VLGHVFRXOGEHWWHUSODQWKHLUEXVLQHVVEHFDXVHWKH\
NQHZ DW ZKDW SULFH WKH SURGXFW ZRXOG EH VROG DQG
WKH IDUPHUV ZHUH QR ORQJHU H[SRVHG WR IXUWKHU SULFH
ÁXFWXDWLRQV7KXVFRPPRGLW\H[FKDQJHVSURYLGHGULVN
PDQDJHPHQWRUUDWKHUULVNUHGXFWLRQVHUYLFHV6LQFH
DERXWWKHLQWHUQDWLRQDOÀQDQFHOREE\SHUVXDGHG
UHJXODWRUV WR UHOD[ RU OLIW UHVWULFWLRQV RQ FRPPRGLW\
IXWXUHV WUDGLQJ ZKLFK EDQNV DQG LQYHVWPHQW IXQG
PDQDJHUV YLHZHG DV D OXFUDWLYH EXVLQHVV +RZHYHU
WKLVHYHQWXDOO\OHGWRDSHUYHUVHPDUNHWVLWXDWLRQ7KH
IDFW WKDW VSHFXODWRUV DW FRPPRGLW\ H[FKDQJHV RQO\
QHHGWRKDYHDIUDFWLRQRIWKHLUFRQWUDFWVEDFNHGE\
SURSHUUHDOIXQGVWKHVRFDOOHGPDUJLQUHVXOWVLQDQ
DUWLÀFLDOLQFUHDVHLQLQYHVWPHQWVWKURXJKFUHGLW
7KH &KLFDJR %RDUG RI 7UDGH &%27 ([FKDQJH
9ROXPH5HSRUWRI0D\UHSRUWHGWUDGLQJRIVRPH
PLOOLRQIXWXUHVDQGRSWLRQVFRQWUDFWVLQWKDWPRQWK
:LWKDVLQJOHFRQWUDFWDERXWWRQVRIZKHDW
EXVKHOV DW NJ ZHUH WUDGHG UHVXOWLQJ LQ D WRWDO
WUDGLQJYROXPHRIPLOOLRQWRQVRIZKHDWDWDYDOXH
RIDERXWELOOLRQDQGWKDWDWMXVWRQHFRPPRGLW\
H[FKDQJH LQ &KLFDJR %\ ZD\ RI FRPSDULVRQ WKLV
WUDGLQJ YROXPH LV HTXLYDOHQW WR VRPH SHU FHQW RI
WKHWRWDOJOREDOZKHDWSURGXFWLRQRI
%HVLGHV ´IRUPDOµ WUDGLQJ RSHUDWLRQV DW FRPPRGLW\
H[FKDQJHV PDQ\ GHDOV DUH PDGH GLUHFWO\ EHWZHHQ
ÀQDQFLDO PDUNHW SDUWLFLSDQWV RXWVLGH WKH RIÀFLDO
H[FKDQJHV YLD WHOHSKRQH RU YLD VRFDOOHG ´GDUN
SRROVµDVRYHUWKHFRXQWHU27&WUDQVDFWLRQV7KH
VXSHUYLVRU\DXWKRULWLHVJHWYHU\OLWWOHLQIRUPDWLRQRQWKH
QDWXUHDQGYROXPHRIVXFKGHDOV7KLVLVV\PSWRPDWLF
DQGDFRQWULEXWRU\FDXVHRIWKHFXUUHQWÀQDQFLDOFULVLV
VLQFHSROLF\PDNHUVDQGUHJXODWRUVDUHQRWDZDUHRIWKH
ULVN H[SRVXUH DQG ZKDW FRQVHTXHQFHV DQG GRPLQR
HIIHFWVWKHGHIDXOWRIRQHPDUNHWSDUWLFLSDQWPD\KDYH
RQWKHVWDELOLW\RUIUDJLOLW\RIWKHÀQDQFLDOV\VWHPWKH\
GRQRWKDYHVROLGLQIRUPDWLRQRQWKHEDVLVRIZKLFKWR
PDNH LQIRUPHG DQG UHDVRQDEOH GHFLVLRQV 7KLV DOVR
DSSOLHVWRWKHFRPPRGLW\WUDGLQJPDUNHW
$FFRUGLQJ WR WKH %DQN IRU ,QWHUQDWLRQDO 6HWWOHPHQWV
%,6 WKH WRWDO YROXPH RI 27& WUDQVDFWLRQV LQ DPRXQWHG WR WULOOLRQ 7KLV DPRXQW LV HTXLYDOHQW
WRWLPHVWKHVL]HRIWKHZRUOG·V*'3HVWLPDWHGDW
DURXQGWULOOLRQWKDW\HDU7KHODUJHVWVKDUHRI27&
WUDQVDFWLRQV FRQFHUQHG LQWHUHVWUHODWHG GHDOV EXW
FRPPRGLW\WUDQVDFWLRQVZHUHHVWLPDWHGWRDPRXQWWR
DERXWWULOOLRQ²DOPRVWWKHHTXLYDOHQWRI*HUPDQ\·V
*'3
%,PSDFWRQFRPPRGLW\SULFHV
3ULFHYRODWLOLW\LQFHUWDLQFRPPRGLW\PDUNHWVLQFOXGLQJ
IRU VRPH JUDLQV KDV VLJQLÀFDQWO\ LQFUHDVHG WKRXJK
LW LV YHU\ GLIÀFXOW WR GHWHUPLQH WR ZKDW H[WHQW WKLV LV
75$'($1'(19,5210(175(9,(:
)LJXUH&RUUHODWLRQEHWZHHQWKHQXPEHURI27&FRQWUDFWVDQGFRPPRGLW\SULFHGHYHORSPHQW²
OTC contracts ($ bn)
- 12,000
7,053
6, 399
- 10,000
- 8,000
- 6,000
3,101
Nov. 2009 -
Sep. 2009 -
- 4,000
Jul. 2009 -
May 2009 -
Mar. 2009 -
Nov. 2008 -
Jul. 2008 -
Sep. 2008 -
May 2008 -
Mar. 2008 -
Jan. 2008 -
Nov. 2007 -
Jul. 2007 -
Sep. 2007 -
May 2007 -
Mar. 2007 -
Jan. 2007 -
Nov. 2006 -
Sep. 2006 -
Jul. 2006 -
May 2006 -
80 -
Jan. 2006 -
100 -
Jan. 2009 -
3,392
5,038
120 -
5,853
140 -
7,758
160 -
12,389
Primary commodity price index
Mar. 2006 -
Commodity price index
180 -
Sales value of OTC contracts in $ bn
- 14,000
200 -
- 2,000
6RXUFH*KRVK
GXHWRWKHHIIHFWRIHVFDODWLQJVSHFXODWLRQRQVSHFLÀF
FRPPRGLW\SULFHV:KHUHDVLQWKHGLVWDQWSDVWSULFHV
YDULHG RQO\ PDUJLQDOO\ WRGD\ D GRXEOLQJ RI SULFHV
RUDGURSRISHUFHQWRUPRUHLVQRORQJHUDUDUH
RFFXUUHQFH7KLVOHYHORIH[WUHPHYRODWLOLW\FDQKDUGO\
EHH[SODLQHGE\PDUNHWIXQGDPHQWDOVDORQH$UHFHQW
VWXG\E\/DJL%DU<DPDQG%HUWUDQGDWWULEXWHV
IRRG SULFH YRODWLOLW\ ODUJHO\ WR VSHFXODWLRQ DQG WR D
OHVVHUH[WHQWWRWKHH[SDQVLRQRIELRIXHOSURGXFWLRQ
$QLOOXVWUDWLYHH[DPSOHRIVSHFXODWLYHDFWLYLWLHVFDQEH
VHHQ LQ WKH KLVWRU\ RI RLO SULFHV VSHFLÀFDOO\ RI :HVW
7H[DV ,QWHUPHGLDWH :7, RYHU WKH SDVW ÀYH \HDUV
ÀJXUH)URPWKHOHYHORISHUEDUUHODWWKHHQG
RIWKHSULFHVKRWXSWRRYHUSHUEDUUHOLH
E\ VRPH SHU FHQW RQO\ WR IDOO VKDUSO\ VKRUWO\
WKHUHDIWHUE\RYHUSHUFHQWWRVRPHSHUEDUUHO
:LWKRXW GRXEW WKH HFRQRPLF FULVLV RI ²
GDPSHQHG RLO GHPDQG EXW XQOLNHO\ E\ DV PXFK DV
SHUFHQW/LNHZLVHLWLVKLJKO\XQOLNHO\WKDWGHPDQG
LQWKHWZRSUHFHGLQJ\HDUVURVHE\SHUFHQW$QG
WKHUH ZDV QR VKRUWDJH RI VXSSO\ WKDW PLJKW KDYH
MXVWLÀHGVXFKDQDEHUUDWLRQ
'XULQJ WKH ORQJ SKDVH RI ULVLQJ FRPPRGLW\ SULFHV
PRVWO\ IURP RQZDUGV PDQ\ DUJXPHQWV ZHUH
DGYDQFHG WR H[SODLQ WKH LQFUHDVH LQFOXGLQJ ULVLQJ
GHPDQG LQ UDSLGO\ LQGXVWULDOL]LQJ FRXQWULHV DQG WKH
SROLWLFDOLQVHFXULW\LQVHYHUDOSURGXFLQJUHJLRQVVXFK
DV,UDT$OWKRXJKWKHJOREDOHFRQRPLFFULVLVLQ²
GDPSHQHGRLOGHPDQGWKHIXQGDPHQWDOIDFWRUV
SHUVLVWHGVRWKDWLWLVXQOLNHO\WKDWWKRVHIDFWRUVFDXVHG
RLOSULFHVWRHDVHE\DVPXFKDVSHUFHQW5DWKHU
LWZDVWKHFRQVLGHUDEOHVSHFXODWLRQLQWKHPDUNHWWKDW
GURYHWKRVHSULFHVWKLVDSSOLHGERWKWRWKHLUXSZDUG
DQGGRZQZDUGPRYHPHQWV
,Q WKH FRXUVH RI WKH VHFRQG KDOI RI QXPHURXV
VSHFXODWRUV ZHUH KDUG KLW E\ WKH GUDPDWLF
GHYHORSPHQWVLQWKHZRUOG·VÀQDQFLDOPDUNHWVDQGWKH
UHVXOWLQJORVVLQWKHIDFHYDOXHRIERQGVDQGVKDUHV
6SHFXODWRUVZHUHREOLJHGWROLTXLGDWHORDQVIRUZKLFK
WKH\ QR ORQJHU KDG VXIÀFLHQW FRYHU $V D UHVXOW DQ\
SRVLWLRQVRQWKHPDMRUSOD\HUV·ERRNVWKDWVWLOOKDGDQ\
YDOXHDQGFRXOGEHVROGHDVLO\WRJHQHUDWHOLTXLGLW\LQD
FUDVKLQJHQYLURQPHQWLQFOXGLQJDVLJQLÀFDQWYROXPH
RI IRUZDUG FRQWUDFWV RQ FRPPRGLWLHV ZHUH VROG
ZKLFK OHG WR D FRQVLGHUDEOH HDVLQJ RI FRPPRGLW\
SULFHV 2WKHU DFWRUV ZKR DOVR KDG VPDOO FROODWHUDO
RQIRUZDUGFRQWUDFWVJRWLQWRWURXEOHEHFDXVHIDOOLQJ
)LJXUH'HYHORSPHQWRIWKHSULFH
RIRLO:7,²
160 140 120 100 80 60 40 20 01.01.2008
01.01.2010
6RXUFHKWWSZZZÀQDQ]HQQHW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
)LJXUH&RUUHODWLRQEHWZHHQVKDUHDQGFRPPRGLW\SULFHV'RZ-RQHV,QGXVWULDO$YHUDJHYHUVXV'RZ-RQHV8%6
&RPPRGLW\,QGH[6HSW²6HSW
160 140 120 -
Percentage
Dow Jones Industrial Average
100 80 60 Dow Jones UBS Commodity Index
40 20 2008
2009
2010
2011
6RXUFHKWWSZZZWUDGHVLJQDORQOLQHGH
FRUQSULFHVKDGHDWHQLQWRWKHLUFROODWHUDO7KH\WRRKDG
WR VHOO WKHLU SRVLWLRQV LQ RUGHU WR PHHW WKHLU SD\PHQW
REOLJDWLRQV 7KLV DYDODQFKH RI VHOOLQJ FRQWLQXHG DQG
FDXVHGDPDVVLYHSULFHGHFOLQHGURSSLQJEHORZWKH
OHYHORIGHSDUWXUHEHIRUHWKHSULFHULVHHYHQWKRXJKDOO
´PDUNHWIXQGDPHQWDOVµWKDWVKRXOGKDYHGULYHQSULFHV
XS VWLOO SHUVLVWHG 1HLWKHU SURGXFHUV QRU FRQVXPHUV
RI FRPPRGLWLHV FDQ DGMXVW WKHLU OHYHO RI SURGXFWLRQ
DQG FRQVXPSWLRQ WR VXFK H[WUHPH DQG TXLFN SULFH
PRYHPHQWV 7KH HUUDWLF SULFH EHKDYLRXU WKHUHIRUH
EHFRPHVDVHULRXVSUREOHP
$SDUW IURP KLJKHU SULFH YRODWLOLW\ DQ XQXVXDOO\ KLJK
FRUUHODWLRQ VHH ÀJXUH KDV DOVR UHFHQWO\ EHHQ
REVHUYHG LQ WKH SULFH PRYHPHQWV RI DSSDUHQWO\
HFRQRPLFDOO\ VHSDUDWH PDUNHWV VXFK DV IRU VKDUHV
DQG FRPPRGLWLHV ,Q WKHRU\ WKDW VKRXOG PDNH OLWWOH
VHQVHDVWKHLUUDWLRQDOHVDQGIXQGDPHQWDOVDUHYHU\
GLIIHUHQW ,QGHHG KLJK FRPPRGLW\ SULFHV VKRXOG
GDPSHQ SURÀW H[SHFWDWLRQV RI FRPSDQLHV 7KH
UHDVRQ IRU WKLV FRUUHODWLRQ LV WKDW XQWLO D IHZ \HDUV
DJR FRPPRGLW\ PDUNHW GHYHORSPHQWV ZHUH FKLHÁ\
D IXQFWLRQ RI SK\VLFDO VXSSO\ DQG GHPDQG DQG
KDG OLWWOH WR GR ZLWK GHYHORSPHQWV LQ WKH ÀQDQFLDO
PDUNHWV +RZHYHU WKH LQFUHDVLQJ VWDQGDUGL]DWLRQ
DQG VLPSOLÀFDWLRQ RI FRPPRGLW\ H[FKDQJH WUDGLQJ
OHG WR ÀQDQFLDO LQYHVWRUV EHFRPLQJ LQFUHDVLQJO\
DWWUDFWHG WR DOWHUQDWLYH IRUPV RI LQYHVWPHQW WKDW GLG
QRWIROORZWKHWUHQGRIFRQYHQWLRQDOÀQDQFLDOPDUNHWV
VR DV WR VSUHDG WKHLU ULVN 3DUDGR[LFDOO\ WKLV UXQ RQ
FRPPRGLW\ H[FKDQJH FRQWUDFWV XOWLPDWHO\ OHG WR D
QHXWUDOL]DWLRQ RI WKH YHU\ EHQHÀW WKH\ RIIHUHG $W WKH
VDPH WLPH GHYHORSPHQWV RQ FRPPRGLW\ PDUNHWV
KDYH FRQYHUJHG ZLWK WKRVH RQ LQWHUQDWLRQDO ÀQDQFLDO
PDUNHWV FRQWUDU\ WR ZKDW VKRXOG RFFXU JLYHQ WKDW
LW LV PDUNHW IXQGDPHQWV VXFK DV KDUYHVW YROXPH RU
H[WUHPH ZHDWKHU HYHQWV WKDW QRUPDOO\ VKRXOG KDYH
WKHPDMRULPSDFWRQFRPPRGLW\SULFHV
&7KHUROHRIVSHFXODWRUV
7KH DERYH DQDO\VLV VKRZV WKDW VXSSO\ DQG GHPDQG
EHWZHHQ SURGXFHUV DQG FRQVXPHUV DUH QR ORQJHU
WKH H[FOXVLYH GHWHUPLQDQWV RI FRPPRGLW\ SULFHV
WKH GULYLQJ IRUFHV DQG LQWHUHVWV RI ÀQDQFLDO PDUNHWV
DUH DOVR LQFUHDVLQJO\ LQÁXHQFLQJ WKRVH SULFHV 7KLV
PDNHVFRPPRGLW\SULFHVGHSHQGHQWRQLQWHUQDWLRQDO
PRQHWDU\SROLF\DQGWKHFDSLWDOVWRFNVLWXDWLRQRIODUJH
EDQNV 6XFK D GHYHORSPHQW LV KLJKO\ SUREOHPDWLF
EHFDXVHHYHU\ORFDOÀQDQFLDOFULVLVFDQHDVLO\WULJJHU
D JOREDO HFRQRPLF RQH DV ZLWQHVVHG RYHU WKH SDVW
WKUHH\HDUV
)RUWKHPDMRULW\RIÀQDQFLDODFWRUVZKHWKHUWKH\DUH
EDQNV RU LQYHVWPHQW IXQGV WKH RYHUULGLQJ LQWHUHVW LV
WR PDNH PRQH\ IURP FRPPRGLW\ SULFH YRODWLOLW\ DQG
QRW WKH DFTXLVLWLRQ RI UHDO JRRGV 7KH\ EX\ IRUZDUG
FRQWUDFWVRQWKHGHOLYHU\RIFRPPRGLWLHVLQWKHIXWXUH
DWDQDOUHDG\SUHGHWHUPLQHGSULFH6KRUWO\EHIRUHVXFK
FRQWUDFWVEHFRPHGXHWKH\FRQFOXGHRWKHUFRQWUDFWV
WR HYHQ RXW WKHLU ÀQDQFLDO SRVLWLRQV ZLWKRXW KDYLQJ
HYHUPRYHGDNLORJUDPRIPHWDORUDEXVKHORIJUDLQ,I
WKHLUEHWWXUQVRXWWREHVXFFHVVIXOWKH\PDNHVRPH
PRQH\RWKHUZLVHWKH\LQFXUDORVV,WLVHVWLPDWHGWKDW
75$'($1'(19,5210(175(9,(:
)LJXUH(YROXWLRQRISURGXFWLRQDQGFRQVXPSWLRQRIZKHDWWRQV
750
700
650
600
550
500
World Production
450
World Consumption
400
Linear
Linear
350
Polynimial
300
Polynimial
250
200
1970
1975
1980
1985
1990
1995
2000
2005
2010
6RXUFH8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH3URGXFWLRQ6XSSO\DQG'LVWULEXWLRQGDWDEDVH
KWWSZZZIDVXVGDJRYSVGRQOLQH
FXUUHQWO\ RQO\ DERXW SHU FHQW RI IXWXUHV FRQWUDFWV
OHDG WR D UHDO SK\VLFDO GHOLYHU\ RI FRPPRGLWLHV WKH
UHVWDUHOLTXLGDWHGEHIRUHGHOLYHU\<HWFRQWUDU\WRZKDW
ZRXOGEHDVVXPHGWKLVOLTXLGDWLRQGRHVQRWWULJJHUD
SULFHGHFOLQHEHFDXVHWKHUHVXOWLQJIUHHGLQYHVWPHQW
FDSLWDO LV LPPHGLDWHO\ UHLQYHVWHG LQ QHZ FRQWUDFWV ²
WKHVRFDOOHG´UROORYHUµRIFRQWUDFWV
&DSLWDOLQYHVWHGLQWKLVZD\WHQGVWRVWD\LQFRPPRGLW\
IXWXUHV PDUNHWV LQ WKH PHGLXP WHUP ZKLFK OHDGV WR
SULFH EXEEOHV WKDW LQ WXUQ DWWUDFW PRUH VSHFXODWLYH
LQYHVWPHQW 7KLV LV ZKDW KDSSHQHG LQ WKH SHULRG
² DQG DJDLQ LQ WKH VXEVHTXHQW WZR \HDUV
,I WKH PDUNHW WKXV DWWUDFWV PRUH DQG PRUH PRQH\
YLD FRPPRGLW\ LQGH[ IXQGV RU VLPLODU YHKLFOHV WKLV
DFFHOHUDWHVSULFHGHYHORSPHQWV7KXVWKHLQFUHDVLQJ
SDUWLFLSDWLRQ RI ÀQDQFLDO LQYHVWRUV LQ FRPPRGLW\
PDUNHWV IRU VSHFXODWLYH SXUSRVHV GULYHV XS IXWXUHV
SULFHV DQG LQGH[ IXQGV MXVW DV ZLWK VKDUHV RQ WKH
VWRFNH[FKDQJHEHFDXVHIRUHDFKEX\HUWKHUHH[LVWV
DVHOOHU
7KHLQYHVWPHQWIXQGVPDQDJHUDOVRVHOOVFRPPRGLW\
LQYHVWPHQWV LI WKH SULFH SHUVLVWHQWO\ GHFOLQHV RU LI
LQYHVWRUV SXOO WKHLU PRQH\ RXW RI WKH IXQGV DQG
WKXVUHLQIRUFHVWKHGHFOLQLQJSULFHWUHQG1RLQYHVWRU
VSHFXODWRU RU IXQG PDQDJHU EX\V DQ DJULFXOWXUDO
FRPPRGLW\ DW WLPHV RI EXPSHU KDUYHVWV RU ORZ
GHPDQGUDWKHUWKH\DUHDWWUDFWHGE\KDUYHVWIDLOXUHV
DQG H[WUHPH GHPDQG VLWXDWLRQV 7KLV LV ZK\ ERWK
VSHFXODWRUV DQG ÀQDQFLDO LQYHVWRUV UHLQIRUFH HUUDWLF
SULFH ÁXFWXDWLRQV 7KHLU UROH LQ SULFH IRUPDWLRQ IRU
IRRG PXVW WKHUHIRUH EH YLHZHG ZLWK FRQVLGHUDEOH
VFHSWLFLVPDQGFRQFHUQ
,Q WKH FDVH RI ZKHDW WKH HFRQRPLF GDWD SURYLGH D
UDWKHUVROLGSLFWXUH²SURGXFWLRQKDVDOZD\VNHSWSDFH
ZLWK GHPDQG ÀJXUH ,W LV WKHUHIRUH SDUDGR[LFDO
WKDWLQUHFHQW\HDUVWKHSULFHRIZKHDWKDVEHHQYHU\
YRODWLOH
6LQFH HDUO\ ODUJH ÀQDQFLDO LQYHVWRUV KDYH
LQYHVWHG LQ FRPPRGLWLHV E\ DFTXLULQJ WKH VWRFNV
RI HQWLUH ZDUHKRXVHV DQG VLQFH WKHVH DUH DFTXLUHG
GLUHFWO\IURPWKHSURGXFHUVWKH\GRQRWIHDWXUHLQWKH
UHDO HFRQRP\ 7KLV SURYRNHV SURGXFWLRQ VKRUWDJHV
DQG SULFH ERRPV ZLWK WKH VLPSOH REMHFWLYH RI SURÀW
PD[LPL]DWLRQ E\ WKH LQWHUQDWLRQDO ÀQDQFLDO VHFWRU
ZKLFK LV GHWULPHQWDO WR WKH UHDO HFRQRP\ DQG WR
VRFLHW\DWODUJH
7KHUHLVQRUHDOQHHGIRUWKHDJURIRRGLQGXVWU\RUWKH
HFRQRP\WRJLYHÀQDQFLDOLQYHVWRUVYLUWXDORUSK\VLFDO
EDJV RI ZKHDW RU RWKHU VFDUFH FRPPRGLWLHV IRU
GLYHUVLI\LQJ WKHLU ÀQDQFLDO SRUWIROLR DQG WKXV FUHDWLQJ
DUWLÀFLDO GHPDQG 7KH ZRUOG PDUNHW IRU IRRG DQG
RWKHU FRPPRGLWLHV LV DOUHDG\ XQGHU KHDY\ GHPDQG
SUHVVXUHZKLFKWKHIRRGDQGFRPPRGLW\VHFWRUKDV
PDQDJHGWRNHHSLQFKHFNE\H[SDQGLQJSURGXFWLRQ
+RZHYHU LI WKHUH LV DGGLWLRQDO DQG XQQHFHVVDU\
GHPDQGSUHVVXUHIURPÀQDQFLDOLQYHVWRUVWKLVIUDJLOH
PDUNHWHTXLOLEULXPZLOOEHMHRSDUGL]HG
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
1//'06#4;U '66*'11&41&7%65419#0&
.19
6RSKLD7ZDURJ
81&7$'VHFUHWDULDW
$EVWUDFW
5HGXFLQJWHFKQLFDOEDUULHUVWRWUDGHLQRUJDQLFDJULFXOWXUDOSURGXFWVWKURXJKKDUPRQL]DWLRQDQGHTXLYDOHQF\
RIRUJDQLFVWDQGDUGVDQGFRQIRUPLW\DVVHVVPHQWV\VWHPVLVRIPDMRULPSRUWDQFHIRULQFUHDVLQJRUJDQLF
PDUNHWV ERRVWLQJ WUDGH LQ RUJDQLF SURGXFWV DQG UHGXFLQJ WUDQVDFWLRQ FRVWV 7KLV ZRXOG SURPRWH WKH
PXFKQHHGHGJOREDOVKLIWWRZDUGVVXVWDLQDEOHDQGHFRORJLFDOIRRGDQGDJULFXOWXUDOV\VWHPV
7KH GULYH IRU KLJK SURGXFWLYLW\ DQG SURÀWDELOLW\
WKURXJK DJURLQGXVWULDO PRGHOV KDV FUHDWHG VHULRXV
HQYLURQPHQWDO DQG VRFLDO SUREOHPV 7KXV EXVLQHVV
DV XVXDO LV QRW DQ RSWLRQ 7KH ZRUOG QHHGV WR
XQGHUJRDIXQGDPHQWDOVKLIWWRZDUGVVXVWDLQDEOHDQG
HFRORJLFDO DJULFXOWXUDO DQG IRRG V\VWHPV 7KLV KDV
EHHQKLJKOLJKWHGE\DQLQFUHDVLQJQXPEHURI8QLWHG
1DWLRQVVWXGLHVLQFOXGLQJDUHSRUWE\WKH,QWHUQDWLRQDO
$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG
7HFKQRORJ\ IRU 'HYHORSPHQW ,$$67' PDQ\
81&7$'UHSRUWVLQFOXGLQJLWV7UDGHDQG(QYLURQPHQW
5HYLHZ DQG 81(3·V *UHHQ (FRQRP\
5HSRUW 81(3 DQG UHSRUWV E\ WKH +LJK /HYHO
3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQ+/3(
DQGWKH8QLWHG1DWLRQV6SHFLDO5DSSRUWHXURQ
WKH5LJKWWR)RRG+XPDQ5LJKWV&RXQFLO
:LWKLQ WKH EURDG VFRSH RI HQYLURQPHQWDOO\ IULHQGO\
DJULFXOWXUHRUJDQLFDJULFXOWXUHSOD\VDYHU\LPSRUWDQW
UROHEHLQJLQPDQ\ZD\VWKHJROGVWDQGDUGOHDGLQJ
WKH ZD\ ,W LV DOVR FOHDUO\ GHÀQHG DQG WKHUHIRUH
YHULÀDEOH7KHUHDUHVWDQGDUGVIRURUJDQLFSURGXFWLRQ
DQG SURFHVVLQJ ZKLFK FDQ EH XVHG ERWK WR JXLGH
RSHUDWRUV DQG WR DVVHVV LI D V\VWHP LV RUJDQLF RU
QRW 6XFK FODULW\ HQDEOHV SURGXFHUV WR FODLP ZLWK
VXIÀFLHQWEDFNLQJWKDWWKHLUSURGXFWVDUHRUJDQLFDQG
WR EH HFRQRPLFDOO\ UHZDUGHG IRU WKHLU VXVWDLQDEOH
SURGXFWLRQ SUDFWLFHV VLQFH RUJDQLF SURGXFWV FDQ
JHQHUDOO\ EH VROG DW KLJKHU SULFHV DQG DUH LQ KLJK
GHPDQG
2UJDQLF JXDUDQWHH V\VWHPV 2*6V DUH VHW XS WR
JXDUDQWHH WR FRQVXPHUV WKDW SURGXFWV KDYH EHHQ
SURGXFHGLQDFFRUGDQFHZLWKRUJDQLFSULQFLSOHVDQG
SUDFWLFHV7KHPDLQFRPSRQHQWVRIDQ2*6DUH
‡ $SURGXFWLRQDQGSURFHVVLQJVWDQGDUGDQG
‡ $FRQIRUPLW\DVVHVVPHQWV\VWHPWRHQVXUHWKDWWKH
VWDQGDUGLVEHLQJIROORZHG
7KHUHDUHGLIIHUHQWRSWLRQVIRUFRQIRUPLW\DVVHVVPHQW
6HOIFODLP UHODWLRQVKLSV EDVHG RQ SHUVRQDO WUXVW
SDUWLFLSDWRU\ JXDUDQWHH V\VWHPV DQG WKLUGSDUW\
FHUWLÀFDWLRQ FDQ DOO ZRUN ZHOO DW ORFDO DQG QDWLRQDO
OHYHOV )RU H[FKDQJHV DFURVV GLVWDQFHV LQFOXGLQJ
UHJLRQDO RU LQWHUQDWLRQDO WUDGH XVXDOO\ WKLUGSDUW\
FHUWLÀFDWLRQLVQHHGHG,QFRXQWULHVWKDWUHJXODWHWKHLU
PDUNHWV DQG FHUWLÀFDWLRQ V\VWHPV WKHUH LV JHQHUDOO\
DQ DGGLWLRQDO OD\HU WKDW RI DFFUHGLWDWLRQ VXSHUYLVLRQ
RUDSSURYDORIFHUWLÀFDWLRQERGLHV7KHRUJDQLFSULYDWH
VHFWRUV\VWHPDOVRRIIHUVWKLVDGGLWLRQDOOD\HURIJOREDO
RUJDQLF JXDUDQWHH WKURXJK WKH ,QWHUQDWLRQDO 2UJDQLF
$FFUHGLWDWLRQ6HUYLFH
,Q UHFHQW GHFDGHV WKHUH KDV EHHQ D SUROLIHUDWLRQ RI
SXEOLF DQG SULYDWH 2*6V ZRUOGZLGH 2IWHQ WKHVH
V\VWHPV DUH LVODQGV SURGXFWV VROG DV RUJDQLF
PXVWFRPSO\SHUFHQWZLWKDOOWKHGHWDLOVRIDQ\
SDUWLFXODU V\VWHP DQG HDFK 2*6 KDV XVXDOO\ EHHQ
VHW XS ZLWK ORFDO RU QDWLRQDO FLUFXPVWDQFHV LQ PLQG
/LWWOH WKRXJKW KDV EHHQ JLYHQ WR WKH EHQHÀWV RI WKH
ÁRZ RI SURGXFWV DFURVV V\VWHPV SDUWLFXODUO\ LQZDUG
ÁRZV 6PDOO GHWDLOV RU GLIIHUHQFHV LQ 2*6 ² DW WKH
OHYHOV RI VWDQGDUGV FHUWLÀFDWLRQ RU DFFUHGLWDWLRQ
DSSURYDO²FDQEHFRPHELJEDUULHUVWRWUDGH7KLVODFN
RIKDUPRQL]DWLRQDQGHTXLYDOHQF\DFURVVV\VWHPVLV
DPDMRUKLQGUDQFHWRWKHGHYHORSPHQWRIWKHRUJDQLF
VHFWRU
7KLV FRPHV DW D KLJK SULFH )DUPHUV VWUXJJOH
WR GHPRQVWUDWH WKDW WKH\ PHHW DOO WKH UXOHV DQG
UHTXLUHPHQWV LQ DOO WKH GLIIHUHQW PDUNHWV ZKHUH
WKH\ ZLVK WR VHOO ZKLFK FRXOG HYHQ EH WZR GLIIHUHQW
VWRUHV RQ WKH VDPH VWUHHW 6LPLODUO\ SURFHVVRUV DQG
WUDGHUV VWUXJJOH WR VRXUFH DFFHSWDEO\ FHUWLÀHG ÀQDO
SURGXFWV DQG LQJUHGLHQWV IRU SURFHVVHG SURGXFWV
$QG FHUWLÀFDWLRQ ERGLHV SD\ KLJK FRVWV IRU PXOWLSOH
DFFUHGLWDWLRQV 0RUHRYHU GHDOLQJ ZLWK 2*6 GLYHUWV
UHVRXUFHV IURP PRUH FRUH DFWLYLWLHV VXFK DV
SURGXFWLRQ$WWKHVDPHWLPHFRQVXPHUVSD\KLJKHU
SULFHV DQG KDYH IHZHU RUJDQLF SURGXFWV WR FKRRVH
IURP )LQDOO\ DV JURZWK LQ RUJDQLF DJULFXOWXUH LV
KLQGHUHG LQ WKHVH ZD\V WKH HQYLURQPHQW EHFRPHV
PRUH GHJUDGHG GXH WR WKH VSUHDG RI QRQRUJDQLF
HQYLURQPHQWDOO\GDPDJLQJIRUPVRIDJULFXOWXUH
$,PSRUWDQFHRIRUJDQLFWUDGH
7KH ZRUOG QHHGV VWURQJ YLEUDQW ORFDO IRRG V\VWHPV
ZLWK ORFDO PDUNHWV DQG ORFDO UHODWLRQVKLSV 7KHVH
VKRXOG EH DFWLYHO\ VXSSRUWHG E\ ORFDO FRQVXPHUV
UHWDLOHUV DQG JRYHUQPHQWV DOLNH 7KHUH LV D ZKROH
DUUD\RIDFWLRQVWKDWQHHGWREHXQGHUWDNHQLQFOXGLQJ
GHYHORSPHQWRIORFDODQGUHJLRQDOLQIUDVWUXFWXUHVXFK
DVURDGVDQGPDUNHWVSURYLVLRQRIPLVVLQJVHUYLFHV
VXFKDVFUHGLWWRVPDOOKROGHUIDUPHUVVXSSRUWIRUWKH
FRQVHUYDWLRQDQGH[FKDQJHRIORFDOVHHGVEUHHGVDQG
UHODWHG WUDGLWLRQDO NQRZOHGJH SDUWLFLSDWRU\ UHVHDUFK
LQ SDUWQHUVKLS ZLWK ORFDO RSHUDWRUV DQG LQ UHVSRQVH
WRORFDOQHHGVH[WHQVLRQVHUYLFHVWRVXSSRUWRUJDQLF
SURGXFWLRQ DQG VXSSRUW WR VPDOOKROGHU IDUPHUV WR
RUJDQL]HLQWRJURXSV81&7$'81(3D
7UDGHLQRUJDQLFSURGXFWVFDQDOVRSOD\DQLPSRUWDQW
FRPSOHPHQWDU\ UROH 2UJDQLF SURGXFWV FXUUHQWO\
DFFRXQWIRUDYHU\VPDOOVKDUHRIRYHUDOOVDOHVRIIRRG
DQGDJULFXOWXUDOSURGXFWV7KHUHLVJUHDWSRWHQWLDOIRU
WKLV VKDUH WR LQFUHDVH 2YHU WKH SDVW IHZ GHFDGHV
WKHELJJHVWFRQVWUDLQWRQJURZWKLQRUJDQLFVDOHVKDV
EHHQWKHVKRUWDJHRIDFRQVLVWHQWVXSSO\
0RVW RSHUDWRUV DQG JRYHUQPHQWV UHDGLO\ ZHOFRPH
RSSRUWXQLWLHVWRH[SRUWRUJDQLFSURGXFHDVLWSURYLGHV
VRXUFHV RI LQFRPH DQG ZD\V WR VWLPXODWH GRPHVWLF
SURGXFWLRQ+RZHYHUZKDWLVRIWHQRYHUORRNHGLVWKH
LPSRUWDQW UROH WKDW LPSRUWV HJ RI IUHVK SURGXFH
SURFHVVHG SURGXFWV RU LQJUHGLHQWV IRU SURFHVVLQJ
FDQ SOD\ LQ H[SDQGLQJ GRPHVWLF RUJDQLF PDUNHWV
7KHODUJHUWKHUDQJHRIRUJDQLFSURGXFWVRQRIIHUWKH
JUHDWHU LV FRQVXPHU LQWHUHVW $V WKH PDUNHWV JURZ
WKHKLJKWUDQVDFWLRQFRVWVDQGORJLVWLFDOLQHIÀFLHQFLHV
DUH UHGXFHG DV TXDQWLWLHV LQFUHDVH NQRZOHGJH DQG
H[SHULHQFHDUHJDLQHGVKRUWDQGORQJVXSSO\FKDLQV
DUH GHYHORSHG DQG PDLQWDLQHG DQG WUXVW LV EXLOW
DORQJ WKH VXSSO\ FKDLQ WKURXJK VWDEOH UHODWLRQVKLSV
,Q JHQHUDO WKH RYHUDOO EHQHÀWV IURP LQFUHDVLQJ WKH
VL]HRIWKHRUJDQLFPDUNHWE\DWWUDFWLQJQHZRUJDQLF
FRQVXPHUVZLOORXWZHLJKWKHSRVVLEOHGLVDGYDQWDJHV
VRPHGRPHVWLFSURGXFHUVIHDULQWHUPVRIFRPSHWLWLRQ
LQWKHLUKRPHPDUNHWV6LQFHFRQVXPHUVRIRUJDQLF
75$'($1'(19,5210(175(9,(:
SURGXFWV ZLOO VWLOO JHQHUDOO\ SUHIHU ORFDO SURGXFWV
GRPHVWLF RUJDQLF RSHUDWRUV FDQ EHQHÀW IURP WKLV E\
PDUNHWLQJWKHLUSURGXFWVDV
‡ QDWLRQDO WKURXJK D QDWLRQDO ODEHO VXFK DV WKH
QDWLRQDOÁDJDQGRU
‡ ORFDO WKURXJK GLUHFW VDOHV RU E\ VLJQV RQ ORFDO
SURGXFWVDWSRLQWRIÀQDOVDOH
7KHVH ORFDO RU QDWLRQDO ODEHOV PD\ HYHQ DWWUDFW QHZ
FRQVXPHUV RI RUJDQLF ZKR DUH LQWHUHVWHG LQ EX\LQJ
ORFDOSURGXFWV,QDGGLWLRQLQJUHGLHQWVIRUSURFHVVHG
SURGXFWVRIWHQKDYHWREHVRXUFHGIURPPDQ\GLIIHUHQW
FRXQWULHVZKLFKPHDQVWKDWLPSRUWVDUHQHFHVVDU\IRU
GHYHORSLQJWKHRUJDQLFSURFHVVHGSURGXFWVLQGXVWU\
ZKLFKLVRQHRIWKHPRVWUDSLGO\JURZLQJVHJPHQWVRI
WKHRUJDQLFPDUNHW
2SHQQHVV WR WUDGH LQ RUJDQLF SURGXFWV DOVR VKRZV
VROLGDULW\ZLWKWKHUHVWRIWKHRUJDQLFZRUOGHVSHFLDOO\
ZLWKRUJDQLFSURGXFHUVIURPGHYHORSLQJFRXQWULHV,Q
PRVWRIWKHVHFRXQWULHVWKHGRPHVWLFRUJDQLFPDUNHWV
DUH SDUWLFXODUO\ VPDOO 7KHUHIRUH RUJDQLF H[SRUWV
FDQ EH DQ LPSRUWDQW SXOO IDFWRU IRU WKH GHYHORSPHQW
RI VXVWDLQDEOH DJULFXOWXUDO SUDFWLFHV DQG LPSURYHG
OLYHOLKRRGVIRUWKHZRUOG·VSRRU2QVPDOOKROGHUIDUPV
LQ GHYHORSLQJ FRXQWULHV RIWHQ RQH RU WZR SURGXFWV
DUHH[SRUWHGEXWGR]HQVRIRWKHUSURGXFWVDUHEHLQJ
SURGXFHGLQDQRUJDQLFPDQQHUDQGVROGORFDOO\7KLV
LPSURYHV IRRG VHFXULW\81&7$'81(3 E DQG
WKHKHDOWKRIORFDOSRSXODWLRQV
,Q JHQHUDO RUJDQLF WUDGH DFWV DV DQ LPSRUWDQW
VWLPXOXVWRRUJDQLFSURGXFWLRQDQGVDOHV+RZHYHULWV
SRWHQWLDOLVOLPLWHGE\WHFKQLFDOEDUULHUVWRWUDGHGXHWR
GLIIHUHQFHV LQ 2*6V &RQVHTXHQWO\ LW SURGXFHV WKH
RGG VLWXDWLRQ WKDW FRQYHQWLRQDO SURGXFWV FDQ FURVV
ERUGHUVPRUHHDVLO\WKDQRUJDQLFSURGXFWV7KLVRQO\
VHUYHV WR H[DFHUEDWH DQRWKHU PRUH IXQGDPHQWDO WLOW
DJDLQVWRUJDQLFSURGXFWVLQWKHPDUNHW·VSOD\LQJÀHOG
$W SUHVHQW DSDUW IURP IDLUWUDGH SURGXFWV RUJDQLF
SURGXFWV DUH WKH RQO\ JRRGV WKDW KDYH LQWHUQDOL]HG
VRPHHQYLURQPHQWDOFRVWVLQWKHLUSULFHV,QFRQWUDVW
WKH FRQVLGHUDEOH GDPDJH WR WKH HQYLURQPHQW
KHDOWKDQGRWKHUHFRQRPLFVHFWRUVFDXVHGE\DJUR
LQGXVWULDODJULFXOWXUHLVQRWDWDOOUHÁHFWHGLQWKHSULFHV
RIFRQYHQWLRQDOIRRGDQGDJULFXOWXUDOSURGXFWV7KHVH
FRVWVWRVRFLHW\DQGWRWKHSODQHWDUHYHU\KLJKEXW
DUH SDLG E\ VRFLHW\ LQ WHUPV RI KLJKHU KHDOWK FRVWV
HQYLURQPHQWDOFOHDQXSDQGMREORVVHVLQÀVKHULHVWKDW
DUHDIIHFWHGE\DJURFKHPLFDOUXQRIIWRFLWHDIHZFRVWV
)RU H[DPSOH WKH ÀUVW HYHU SDQ(XURSHDQ 1LWURJHQ
$VVHVVPHQW SHUIRUPHG D FRVW²EHQHÀW DQDO\VLV RI
QLWURJHQ IHUWLOL]HU XVH LQ (XURSH ZKLFK UHYHDOHG
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
WKDW WKH RYHUDOO HQYLURQPHQWDO FRVWV ´HVWLPDWHG DW
Ą²Ą ELOOLRQ SHU \HDU DW FXUUHQW UDWHV RXWZHLJK
WKH GLUHFW HFRQRPLF EHQHÀWV RI UHDFWLYH QLWURJHQ LQ
DJULFXOWXUH7KHKLJKHVWVRFLHWDOFRVWVDUHDVVRFLDWHG
ZLWK ORVV RI DLU TXDOLW\ DQG ZDWHU TXDOLW\ OLQNHG WR
LPSDFWV RQ HFRV\VWHPV DQG HVSHFLDOO\ RQ KXPDQ
KHDOWKµ6XWWRQHWDO+RZHYHUWKHVHFRVWVDUH
QRWUHÁHFWHGLQWKHSULFHVRIWKHIRRGDQGDJULFXOWXUDO
SURGXFWVSURGXFHGZLWKKHDY\LQSXWVRIWKHV\QWKHWLF
QLWURJHQ IHUWLOL]HUV 7KH ORQJWHUP VROXWLRQ WR WKLV
SUREOHP FOHDUO\ VKRXOG EH WR FKDQJH WKH XQGHUO\LQJ
LQFHQWLYH VWUXFWXUHV VR WKDW QHJDWLYH H[WHUQDOLWLHV
DUH GXO\ UHÁHFWHG LQ WKH SULFHV RI DOO DJULFXOWXUDO
SURGXFWV$WWKHYHU\OHDVWJRYHUQPHQWVVKRXOGVWRS
VXEVLGL]LQJWKHVHKDUPIXOLQSXWV7KLVFRXOGXOWLPDWHO\
UHVXOWLQRUJDQLFSURGXFWLRQEHFRPLQJWKHQRUPZLWK
2*6VQRORQJHUQHHGHG,QWKHPHDQWLPHKRZHYHULW
LVLPSRUWDQWWRUHGXFHWKHWHFKQLFDOEDUULHUVWRWUDGH
FDXVHG E\ GLIIHUHQFHV LQ 2*6V VR WKDW WKH RUJDQLF
DJULFXOWXUHVHFWRUFDQJURZ7KHPDLQWRROVIRUWKLVDUH
KDUPRQL]DWLRQDQGHTXLYDOHQFH
%)DFLOLWDWLQJRUJDQLFWUDGHWKURXJK
KDUPRQL]DWLRQDQGHTXLYDOHQFH
(TXLYDOHQF\VKRXOGEHWKHEDVLVIRULQWHUQDWLRQDOWUDGH
LQRUJDQLFSURGXFWVVXSSOHPHQWHGE\KDUPRQL]DWLRQ
ZKHUH GHVLUHG DQG DSSOLFDEOH 1DWLRQDO RUJDQLF
VWDQGDUGV DQG UHJXODWLRQV VKRXOG EH LQ OLQH ZLWK
LQWHUQDWLRQDO RUJDQLF VWDQGDUGV DQG DOVR YHU\
LPSRUWDQWO\WDNHLQWRDFFRXQWQDWLRQDODJURHFRORJLFDO
VRFLRHFRQRPLF
DQG
FXOWXUDO
SHUVSHFWLYHV
,QWHUQDWLRQDOWUDGHVKRXOGEHEDVHGRQPXWXDOUHVSHFW
IRUWKLVSROLF\VSDFH
&RXQWULHV DQG SULYDWH VHFWRU VWDQGDUG VHWWHUV
VKRXOG QRW IRUFH WKH UHVW RI WKH ZRUOG WR FRPSO\ LQ
D SUHVFULSWLYH PDQQHU ZLWK HYHU\ VLQJOH GHWDLOHG
VSHFLÀFDWLRQ LQ WKHLU 2*6V ZKLFK PLJKW QRW ÀW ZHOO
LQWKHRWKHUV·FRQWH[WV5DWKHUWKHZD\IRUZDUGLVWR
H[SHFW WKH EHVW ZKLOH DW WKH VDPH WLPH HPEUDFLQJ
GLYHUVLW\ &RXQWULHV DQG SULYDWH 2*6V VKRXOG DOORZ
LPSRUWV RI RUJDQLF SURGXFWV WKDW DUH SURGXFHG DQG
JXDUDQWHHG LQ D PDQQHU HTXLYDOHQW QRW LGHQWLFDO WR
WKHLURZQ
)RURYHUDGHFDGH81&7$')$2DQGWKH,QWHUQDWLRQDO
)HGHUDWLRQ RI 2UJDQLF $JULFXOWXUH 0RYHPHQWV
,)2$0 WKURXJK WKHLU MRLQW ,QWHUQDWLRQDO 7DVN )RUFH
RQ +DUPRQL]DWLRQ DQG (TXLYDOHQFH LQ 2UJDQLF
$JULFXOWXUH²KDYHZRUNHGWRJHWKHUDORQJ
ZLWKDKRVWRINH\SXEOLFDQGSULYDWHVHFWRUDFWRUVWR
GHYHORS WKH IROORZLQJ WRROV WR IRVWHU WUDGH EDVHG RQ
HTXLYDOHQF\
‡ )RU FRQIRUPLW\ DVVHVVPHQW WKH ,QWHUQDWLRQDO
5HTXLUHPHQWV IRU &RQIRUPLW\ $VVHVVPHQW %RGLHV
,52&%DUHSHUIRUPDQFHUHTXLUHPHQWVIRURUJDQLF
FHUWLÀHUV DGDSWHG IURP ,62 ZKLFK IDFLOLWDWH
UHFRJQLWLRQDFURVVV\VWHPV
‡ )RU SURGXFWLRQ DQG SURFHVVLQJ VWDQGDUGV WKH
(TXLWRROLVDJXLGHWRDVVHVVLQJGLIIHULQJVWDQGDUGV
LQDVWUXFWXUHGDQGWUDQVSDUHQWPDQQHU
8QGHUDVXFFHVVRUMRLQWLQLWLDWLYHWKH*OREDO2UJDQLF
0DUNHW$FFHVV*20$SURMHFWWKH(TXLWRROKDVEHHQ
HQKDQFHGWKURXJKWKHGHYHORSPHQWRIWKH&RPPRQ
2EMHFWLYHV DQG 5HTXLUHPHQWV IRU 2UJDQLF 6\VWHPV
&2526 &2526 KHOSV JRYHUQPHQWV DQG RWKHU
RUJDQLF VWDQGDUG VHWWHUV WR LGHQWLI\ WKH XQGHUO\LQJ
REMHFWLYHV WKHLU RUJDQLF SURGXFWLRQ DQG SURFHVVLQJ
V\VWHPV DLP WR DFKLHYH DQG WKHQ WR HYDOXDWH RWKHU
VWDQGDUGVWRVHHLIRQWKHZKROHWKH\DFKLHYHWKRVH
REMHFWLYHV LQ D VLPLODU RU GLIIHUHQW EXW HTXDOO\ YDOLG
PDQQHU ,)2$0 WKH LQWHUQDWLRQDO SULYDWH VHFWRU
VWDQGDUG VHWWLQJ ERG\ LV XVLQJ &2526 WR GHYHORS
WKH ,)2$0 IDPLO\ RI VWDQGDUGV ² WKRVH ZKLFK KDYH
EHHQDVVHVVHGDQGIRXQGWREHRYHUDOOHTXLYDOHQWWR
&2526
7KH SXEOLF DQG SULYDWH VHFWRUV VKRXOG PDNH IXOO XVH
RIWKHVHWRROV6SHFLÀFDOO\IRUWKHSXUSRVHRIWUDGHLQ
RUJDQLFSURGXFWVDQGSDUWLFXODUO\DVUHJDUGVLPSRUWV
RI RUJDQLF SURGXFWV IURP RWKHU V\VWHPV SXEOLF DQG
SULYDWH VHFWRU DFWRUV LQYROYHG LQ UHJXODWLQJ RUJDQLF
JXDUDQWHHV\VWHPVVKRXOG
)RUSURGXFWLRQDQGSURFHVVLQJVWDQGDUGV
‡ 8VH &2526 DQG WKH (TXLWRRO WR HYDOXDWH RWKHU
SURGXFWLRQDQGSURFHVVLQJVWDQGDUGVWRGHWHUPLQH
LI FRPSOLDQFH ZLWK WKRVH VWDQGDUGV ZRXOG DV D
ZKROH DFKLHYH WKH PRVW LPSRUWDQW XQGHUO\LQJ
REMHFWLYHVRIRUJDQLFSURGXFWLRQV\VWHPV
)RUFRQIRUPLW\DVVHVVPHQWV\VWHPV
‡ %XLOG WUXVW DPRQJ DFFUHGLWRUV DQG VXSHUYLVLQJ
ERGLHV LQFOXGLQJ JRYHUQPHQWV WR PXWXDOO\
UHFRJQL]H DFFUHGLWDWLRQDSSURYDO V\VWHPV RI
FHUWLÀFDWLRQERGLHVDQGRWKHUPHDQVRIFRQIRUPLW\
DVVHVVPHQW
‡ 8VH ,52&% WR HYDOXDWH WKH SHUIRUPDQFH
UHTXLUHPHQWVIRUFHUWLÀFDWLRQERGLHV
7KH ODQGVFDSH RI LQWHUQDWLRQDO WUDGH LQ RUJDQLF
SURGXFWV LV FXUUHQWO\ FKDQJLQJ 0DQ\ UHJLRQV DUH
XQGHUJRLQJ UHJLRQDO KDUPRQL]DWLRQ RI SDUWV RU DOO
RIWKHLU2*6V)RUPDQ\\HDUVWKH(8KDGWKHRQO\
KDUPRQL]HGV\VWHPDOWKRXJKWKHGHYHORSPHQWRIWKH
1DWLRQDO2UJDQLF3URJUDPLQWKH8QLWHG6WDWHVFRXOG
DOVREHFRQVLGHUHGDVRUWRILQWHUQDOKDUPRQL]DWLRQRI
DZHERISULYDWHDQG6WDWH2*6V6LQFHZLWKWKH
VXSSRUWRI,)2$0)$281&7$'DQG81(3YDULRXV
GHYHORSLQJFRXQWU\ UHJLRQV KDYH DOVR HQJDJHG LQ
UHJLRQDOFRRSHUDWLRQDQGKDUPRQL]DWLRQ
‡ ,Q (DVW $IULFD WKH (DVW $IULFDQ 2UJDQLF 3URGXFWV
6WDQGDUG ($236 ZDV GHYHORSHG WKURXJK D
UHJLRQDOSXEOLFSULYDWHVHFWRUFRQVXOWDWLYHSURFHVV
LQ ² DQG DGRSWHG DV WKH (DVW $IULFDQ
&RPPXQLW\VWDQGDUGLQ
‡ 7KH3DFLÀF,VODQGVIROORZHGWKLVPRGHOWRGHYHORS
WKHLURZQUHJLRQDOVWDQGDUGZKLFKWKH\DGRSWHGLQ
‡ 7KH&HQWUDO$PHULFDQFRXQWULHVSOXVWKH'RPLQLFDQ
5HSXEOLF DUH FXUUHQWO\ ÀQDOL]LQJ IXOO KDUPRQL]DWLRQ
RI WKHLU RUJDQLF UHJXODWLRQV UHODWLQJ WR VWDQGDUGV
SOXVFRQIRUPLW\DVVHVVPHQWDVSHFWV
‡ 3XEOLF DQG SULYDWH VHFWRU DFWRUV IURP 6RXWK
(DVW DQG 6RXWK(DVW $VLDQ FRXQWULHV KDYH EHHQ
FRRSHUDWLQJ VLQFH WR GHYHORS WKH $VLDQ
5HJLRQDO 2UJDQLF 6WDQGDUG $526 WKH GUDIW RI
ZKLFKZDVÀQDOL]HGLQ)HEUXDU\
7KHVH HIIRUWV DW KDUPRQL]DWLRQ FDQ ERWK H[SDQG WKH
UHJLRQDO PDUNHWV DQG GHYHORS D VHQVH RI FRPPRQ
UHJLRQDOLGHQWLW\ZLWKSRVLWLYHVSLOORYHUHIIHFWVLQWHUPV
RI6RXWK6RXWKFRRSHUDWLRQLQDQXPEHURIDUHDV
5HJXODWLRQV FRQFHUQLQJ RUJDQLF LPSRUWV QHHG WR EH
XSGDWHG WR UHÁHFW WKLV VKLIWLQJ ODQGVFDSH DQG DOORZ
IRU UHFRJQLWLRQ RI UHJLRQDO RUJDQLF VWDQGDUGV 7KLV
75$'($1'(19,5210(175(9,(:
ZRXOGLQYROYHVHSDUDWLQJHTXLYDOHQF\GHWHUPLQDWLRQV
RIVWDQGDUGVDQGRIFRQIRUPLW\DVVHVVPHQWV\VWHPV
&XUUHQWO\WKLVLVQRWWKHFDVH)RUH[DPSOHXQGHUWKH
(8 LPSRUW DSSURYDO V\VWHP WKHUH LV QR DYHQXH IRU
WKH (DVW $IULFDQ &RPPXQLW\ WR VXEPLW WKH ($236
IRU DSSURYDO EHFDXVH D FRPPRQ RUJDQLF FRQIRUPLW\
DVVHVVPHQW V\VWHP FRPSULVLQJ DFFUHGLWRUV DQG
VXSHUYLVLRQRIFHUWLÀFDWLRQKDVQRW\HWEHHQGHYHORSHG
7KXV WKH UHJLRQ GRHV QRW ÀW LQWR WKH FDWHJRU\ RI D
WKLUGFRXQWU\OLVW
)RU UHJXODWLRQV WKDW PDLQWDLQ OLVWV RI DSSURYHG
FHUWLÀFDWLRQERGLHVVXFKDVLQWKH(8DQGWKH8QLWHG
6WDWHV FHUWLÀFDWLRQ ERGLHV VKRXOG EH DOORZHG WR
FHUWLI\ WR GLIIHUHQW VWDQGDUGV LQ GLIIHUHQW UHJLRQV )RU
H[DPSOH D (XURSHDQ FHUWLÀFDWLRQ ERG\ RSHUDWLQJ LQ
(XURSHDQGLQ(DVW$IULFDVKRXOGEHDEOHWRXVHWKH
(8 VWDQGDUG IRU RSHUDWRUV LQ (XURSH DQG WKH (DVW
$IULFDQ 2UJDQLF 3URGXFWV 6WDQGDUG IRU RSHUDWRUV LQ
(DVW$IULFD
&$ODQGPDUNLQIDFLOLWDWLQJRUJDQLFWUDGH
,Q &DQDGD DQG WKH 8QLWHG 6WDWHV VLJQHG DQ
HTXLYDOHQF\ DJUHHPHQW ZLWK IXOO V\VWHP UHFRJQLWLRQ
LQFOXGLQJ IRU LPSRUWV &HUWLÀFDWLRQ ERGLHV DURXQG
WKH ZRUOG QHHG RQO\ REWDLQ RQH DFFUHGLWDWLRQ DQG
RSHUDWRUV RQO\ RQH FHUWLÀFDWLRQ WR DFFHVV ERWK
PDUNHWV7KLVHTXLYDOHQF\DJUHHPHQWWKXVSURPRWHV
RUJDQLFWUDGHFUHDWLRQZLWKRXWWUDGHGLYHUVLRQZKLFK
PD\ RFFXU XQGHU PRUH H[FOXVLRQDU\ DJUHHPHQWV ,W
WKXVVKDUHVWKHEHQHÀWVZLWKWKHUHVWRIWKHZRUOG,W
LVDEHVWSUDFWLFHWREHHPXODWHGDQGKRSHIXOO\DOVR
UHSOLFDWHGPXOWLODWHUDOO\ZRUOGZLGH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
1//'06#4;U 1//70+6;g722146'&4)#0+%41&7%6+10U
*'#5'1(6*'')+10#.#.7'g#&&'&+6+<'0
*#4'*1.&'414214#6+10+0176*'40'4/#0;
&KULVWLDQ+LVV
5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQ
$EVWUDFW
7KH5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQVXSSRUWV
‡ 7KHFUHDWLRQDQGVXVWDLQDEOHRSHUDWLRQRIVPDOODQGPHGLXPVL]HGHQWHUSULVHVLQWKHORFDOSURGXFWLRQ
SURFHVVLQJ DQG PDUNHWLQJ RI RUJDQLF IRRG WKURXJK D GHGLFDWHG LQYHVWPHQW VWUDWHJ\ WKDW DVVXUHV WKH
HFRQRPLF LQGHSHQGHQFH RI HQWHUSULVHV WKURXJK VKDUHKROGHU SDUWLFLSDWLRQ RI LQWHUHVWHG FLWL]HQV DQG
FRQVXPHUVRIWKHUHJLRQDQGFROODERUDWLRQLQH[LVWLQJFOXVWHUV
‡ 7KH JDWKHULQJ DQG HYDOXDWLRQ RI GDWD RQ QRQPRQHWDU\ EHQHÀWV RU VHUYLFHV JHQHUDWHG E\ VXSSRUWHG
IDUPHUVDQGHQWHUSULVHVRQWKHEDVLVRIVRFLDOHFRQRPLFDQGHFRORJLFDOLQGLFDWRUV
7KH 5HJLRQDO 9DOXHDGGHG &LWL]HQ 6KDUHKROGHU
&RUSRUDWLRQ 59$&6& LQ WKH UHJLRQ RI )UHLEXUJ LQ
VRXWKHUQ *HUPDQ\ LV DQ LQQRYDWLYH HQWHUSULVH LQ
WKH DUHD RI VRFLDOHFRORJLFDO LQYHVWPHQW ,W DLPV DW
DFTXLULQJ DJULFXOWXUDO HQWHUSULVHV LQ WKH UHJLRQ RI
)UHLEXUJZLWKFDVKLQYHVWPHQWVIURPORFDOFRQVXPHUV
DQG FLWL]HQV ZKR WDNH DQ DFWLYH LQWHUHVW LQ WKH
VXVWDLQDEOH GHYHORSPHQW RI RUJDQLF DJULFXOWXUH DQG
WKHSURYLVLRQRIVDIHDQGJRRGTXDOLW\IRRGIURPWKH
UHJLRQ 7KH IXQGV UDLVHG DUH XVHG E\ 59$&6& WR
DFTXLUHRUSDUWLFLSDWHLQSURGXFWLRQIDFLOLWLHVWKDWDUH
WKHQ OHDVHG WR LQWHUHVWHG 59$&6& PHPEHU IDUPHUV
RU HQWUHSUHQHXUV DFFRUGLQJ WR FULWHULD VHW E\ WKH
59$&6&
$FTXLVLWLRQV FRQFHUQ WKH SURGXFWLRQ SURFHVVLQJ
DQGGLVWULEXWLRQRIRUJDQLFSURGXFHLQFOXGLQJVHHGV
IDUPV HQHUJ\ JHQHUDWLRQ IHUWLOL]HU SURGXFWLRQ
UHVWDXUDQWV DQG KRWHOV DV ZHOO DV UHWDLO RXWOHWV $V
D FLWL]HQ FRUSRUDWLRQ LW DLPV WR DWWUDFW SULYDWH DQG
LQVWLWXWLRQDOLQYHVWRUVZKRSURYLGHVPDOODQGPHGLXP
VL]HG HQWHUSULVHV ZLWK D VROLG FDSLWDO EDVH DLPHG DW
EXLOGLQJDQGFRQVROLGDWLQJVRXQGUHJLRQDOO\IRFXVHG
HFRQRPLFVWUXFWXUHV
$$VVXULQJVXVWDLQDEOHPDQDJHPHQWDQG
DSSURSULDWHUHWXUQRQLQYHVWPHQW
7KH SUHVVXUH RI VHFXULQJ VXIÀFLHQW FDSLWDO UHWXUQV
KDV D PDMRU EHDULQJ RQ DJULFXOWXUDO SURGXFWLRQ DQG
WKHUHIRUH RQ WKH OLYHV RI IDUPHUV DQG DJULFXOWXUDO
SURGXFHUV 6SHFLDOL]DWLRQ PHFKDQL]DWLRQ DQG
HFRQRPLHV RI VFDOH WHQG WR EHFRPH WKH O\QFKSLQ
HYHQIRURUJDQLFSURGXFWLRQDWHQWHUSULVHOHYHO
+RZHYHU WKH RULHQWDWLRQ RI DJULFXOWXUH EDVHG RQO\
RQ UHWXUQGULYHQ FULWHULD LPSOLHV ORVVHV RQ WKH VRFLR
HFRORJLFDO VLGH EHFDXVH PDQSRZHU LV UHSODFHG
E\ WHFKQRORJ\ RU ORZLQFRPH VHDVRQDO ODERXU
7KLV FKDQJHV WKH FXOWXUDO ODQGVFDSH $ IXUWKHU
FRQVHTXHQFH RI WKLV GHYHORSPHQW LV WKDW WHFKQLFDOO\
GLVDGYDQWDJHG UHJLRQV EHFRPH PRUH PDUJLQDOL]HG
RYHU WLPH 7KH VDPH DSSOLHV WR VHFWRUV WKDW DUH
OHVV OXFUDWLYH VXFK DV GDLU\ IDUPLQJ VPDOOVFDOH
DJULFXOWXUHLQJHQHUDORUEUHHGLQJRIQHZUHJLRQDOO\
FXOWLYDWHGSODQWYDULHWLHV)URPDQDJULFXOWXUDOSRLQWRI
YLHZLWPDNHVPRUHVHQVHWRKDYHDQLQWHUFRQQHFWHG
DQGPXOWLIXQFWLRQDOPDQDJHPHQWDSSURDFK
<HW LQ RUGHU WR VXUYLYH FRPSHWLWLYH PDUNHW SUHVVXUH
D VLJQLÀFDQW VKDUH RI WKH FRVWV RI FRQYHQWLRQDO
DJULFXOWXUDOSURGXFHUVEHFRPHVH[WHUQDOL]HG$JDLQVW
WKLVEDFNJURXQGWKHSUHYDLOLQJFDSLWDOUHWXUQFRQFHSW
QHHGV WR EH FDOOHG LQWR TXHVWLRQ 2QH WKHUHIRUH
ZRQGHUV ZKHWKHU WKH FUHDWLRQ RI VSHFLÀF VRFLR
HFRORJLFDO YDOXHV GRHV QRW DOVR UHSUHVHQW D NLQG RI
´QHW\LHOGµ
59$&6&VKDUHKROGHUVREWDLQWZRW\SHVRIUHWXUQVRQ
WKH FDSLWDO WKH\ LQYHVW D PRQHWDU\ DQG D TXDOLWDWLYH
RQH 7KH RUJDQL]DWLRQ·V DQQXDO EXVLQHVV UHSRUW LQ
DGGLWLRQWRSURYLGLQJLQIRUPDWLRQRQWKHQHWPRQHWDU\
\LHOG RI LWV LQYHVWPHQWV DOVR WDNHV LQWR DFFRXQW WKH
75$'($1'(19,5210(175(9,(:
7DEOH.H\VXVWDLQDEOHPDQDJHPHQWFULWHULD
6WDIÀQJ
6WUXFWXUHRIHPSOR\PHQW
/HYHORIZDJHV
)OXFWXDWLRQ
4XDOLW\RIMREIXQFWLRQV
(FRORJLFDOFULWHULD
6RLOIHUWLOLW\
%LRGLYHUVLW\
'HYHORSPHQWRIRUJDQLFFXOWLYDWLRQDUHD
5HVRXUFHFRQVXPSWLRQ
,PSOHPHQWDWLRQRI(8'LUHFWLYHRQ
2UJDQLF$JULFXOWXUH
VRFLDODQGHFRORJLFDOHIIHFWVRI59$&6&DFWLYLWLHVE\
SURYLGLQJ LQIRUPDWLRQ RQ WKH FUHDWLRQ RI YDOXH RWKHU
WKDQRQO\PDWHULDOYDOXH7KHIDFWWKDWHYHU\HFRQRPLF
SURFHVVKDVDSRVLWLYHDQGQHJDWLYHLPSDFWRQYDOXH
FUHDWLRQIRUWKHHFRQRP\LVEH\RQGGRXEW7KHUHIRUH
IRUHDFK59$&6&VKDUHERWKWKHPLFURDQGPDFUR
HFRQRPLF UHYHQXHV DUH UHSRUWHG 7KH FDWHJRULHV RI
VXVWDLQDEOH PDQDJHPHQW LQFOXGH WKH YDULDEOHV LQ
7DEOH
%1HZRSSRUWXQLWLHVWKURXJK
UHJLRQDOQHWZRUNV
7KURXJK WKH HQJDJHPHQW RI WKH 59$&6& LQ DUHDV
EH\RQG RQO\ DJULFXOWXUDO SURGXFWLRQ OHVV OXFUDWLYH
RSHUDWLRQV DQG HQWLWLHV FDQ EH VXSSRUWHG RU
VWUHQJWKHQHG /LNHZLVH FURVVOLQNLQJ HQDEOHV WKH
59$&6& WR FKDQQHO FDSLWDO IURP XUEDQ FHQWUHV LQWR
UXUDODUHDV
&)DUPVXFFHVVLRQ
)RU \HDUV WKH QXPEHU RI SHRSOH WDNLQJ RYHU WKHLU
IDPLO\ IDUPV KDV EHHQ FRQVWDQWO\ GHFOLQLQJ 2Q WKH
RWKHUKDQGWKHUHDUHPDQ\ZHOOWUDLQHGIDUPHUVDQG
JDUGHQHUV ZKR FDQQRW DFTXLUH WKHLU RZQ IDUPV GXH
WRWKHKLJKFDSLWDOUHTXLUHPHQWV:LWKWKHLQVWUXPHQWV
DQGLQWHUPHGLDWLRQSURYLGHGE\WKH59$&6&DIDUP
FDQ EH DFTXLUHG E\ DQ LQWHUHVWHG IDUPHU LI WKHUH LV
(FRQRPLFYDULDEOHV
'LVWULEXWLRQRIYDOXHFUHDWLRQ
9DOXHFUHDWLRQIRUWKHUHJLRQ
5HJLRQDOHQJDJHPHQW
'LDORJXHZLWKLQWKHYDOXHFUHDWLRQFKDLQ
QR IDPLO\ VXFFHVVRU LQWHUHVWHG LQ UXQQLQJ LW WKXV
IDFLOLWDWLQJFRQWLQXLW\RISURGXFWLRQDQGWKHUREXVWQHVV
RIWKHUHJLRQDOQHWZRUN
'&RPPXQLW\DQGFRQVXPHUSDUWLFLSDWLRQ
DQGGLDORJXH
7KH WHUP ´FLWL]HQ VKDUHKROGHU FRUSRUDWLRQµ ZDV
LQWHQWLRQDOO\ XVHG IRU 59$&6& ,W GHQRWHV WKDW
ZLWK WKH DFTXLVLWLRQ RI VKDUHV LQWHUHVWHG FLWL]HQV
DQG FRQVXPHUV IURP WKH UHJLRQ DURXQG WKH FLW\ RI
)UHLEXUJ EHFRPH SDUWLDO RZQHUV RI WKH ODQG DQG
DVVHWV RI 59$&6& 7KH\ WDNH DQ DFWLYH LQWHUHVW
LQ WKH VXVWDLQDEOH PDQDJHPHQW RI WKH QHWZRUN
WKH PDQDJHPHQW RI WKH VRLO DQG FRQVHUYDWLRQ
RI WKH HQYLURQPHQW DV ZHOO DV LQ LPSURYLQJ UXUDO
OLYHOLKRRGV7KHSULQFLSOHVRIWKH59$&6&HQYLVDJH
DSHUPDQHQWGLDORJXHEHWZHHQWKHVKDUHKROGHUVDQG
WKHRSHUDWRUVWHQDQWVRIWKHLQGLYLGXDOHQWLWLHVRQWKH
PRVWGHVLUDEOHGLUHFWLRQRIWKHLUDFWLYLWLHVDQGUHODWHG
SURGXFWLRQPHWKRGV
(5HJLRQDOYHUVXVJOREDOPDUNHW
RULHQWDWLRQ
7KHEXVLQHVVPRGHORI59$&6&KDVDFOHDUUHJLRQDO
IRFXV 9DOXH FUHDWLRQ UHPDLQV ZLWKLQ WKH UHJLRQ DQG
FDSLWDO LV VRXJKW IURP FLWL]HQV ZLWKLQ WKH UHJLRQ ZKR
WDNH DQ DFWLYH LQWHUHVW LQ VXVWDLQDEOH DJULFXOWXUH LWV
)LJXUH7KHFRQFHSWXDOVWUXFWXUHRI59$&6&
59$&6&
&LWL]HQVFRQVXPHUVDV
VKDUHKROGHUV
$JULFXOWXUH
3URFHVVLQJ
7UDGHDQGPDUNHWLQJ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
PXOWLIXQFWLRQDOLW\²LQFOXGLQJWKHFRQVHUYDWLRQRIORFDO
ELRGLYHUVLW\ DQG WKH HQYLURQPHQW ² DQG WKH FUHDWLRQ
RI UXUDO OLYHOLKRRGV 7KLV PRGHO RIIHUV D QXPEHU RI
HFRQRPLFHQYLURQPHQWDODQGVRFLDOEHQHÀWV
(FRQRPLFEHQHÀWV
‡ 1R RQHVLGHG VSHFLDOL]DWLRQ RI SURGXFWLRQ WKH
QHWZRUNLQJ DQG FRQVXOWDWLYH DSSURDFK DV ZHOO
DV WKH SULQFLSDOV RI RUJDQLF DJULFXOWXUH SUHYHQW
ORSVLGHGVSHFLDOL]DWLRQ
‡ /HVV SUHVVXUH WR UHGXFH FRVWV DQG LQFUHDVH WKH
VFDOHRISURGXFWLRQ
‡ 3ULRULW\ JLYHQ WR TXDOLW\ RYHU HFRQRPLHV RI VFDOH
WKURXJKDFWLYHVXSSRUWWRVPDOOKROGHUIDUPHUVDQG
VPDOOVFDOHSURFHVVLQJDQGPDUNHWLQJFRPSDQLHV
‡ 0XWXDO VXSSRUW ZLWKLQ WKH QHWZRUN WKURXJK
FRXQVHOOLQJDQGVXSSRUWRISDUWQHUFRPSDQLHV
‡ 1R GHSHQGHQFH RQ VSHFLÀF PDUNHWLQJ V\VWHPV
DQGPDUNHWLQJSDUWQHUV
‡ 0DLQWDLQLQJ PDQDJHULDO VRYHUHLJQW\ WKURXJK
VKDUHKROGHULQYROYHPHQWDVWKHUHLVQRGHSHQGHQFH
RQH[WHUQDOÀQDQFLDODJHQFLHV
‡ &RQWULEXWLRQWRUXUDOGHYHORSPHQWDQGVXVWDLQDEOH
OLYHOLKRRGVWKURXJKWKHFUHDWLRQRIQHZFRPSDQLHV
DQGIDUPVDQG
‡ 0RELOL]DWLRQRIFDSLWDOIURPZLWKLQWKHUHJLRQ
(QYLURQPHQWDOEHQHÀWV
‡ 6KRUWWUDQVSRUWGLVWDQFHV
‡ 6PDOO SURGXFLQJ XQLWV WKDW UHVSHFW WKH PXOWL
IXQFWLRQDOLW\RIDJULFXOWXUH
‡ 3URPRWLRQ RI RUJDQLF DJULFXOWXUH DQG VXVWDLQDEOH
SURFHVVLQJDQGPDUNHWLQJPHWKRGVZLWKUHVXOWLQJ
LPSURYHPHQWV LQ VRLO IHUWLOLW\ DQG ELRGLYHUVLW\ DQG
FRQWULEXWLRQWRFOLPDWHFKDQJHPLWLJDWLRQDQG
‡ 'LUHFW FRQWULEXWLRQ RI FRQVXPHUV WR WUDQVIRUPLQJ
7DEOH2YHUYLHZRINH\LQYHVWPHQWVRI59$&6&
3URMHFW
'DLU\IDUP*URRV
0DUNHWJDUGHQ)HOGPDQQ
5HDOHVWDWHLQYHVWPHQWV
&URSDUHDKD
1DWXUDOIRRGZKROHVDOHFRPSDQ\%RGDQ/WG
)RRGUHWDLORXWOHW5LHVHOIHOG/WG+
2UJDQLF&DWHULQJ0RFHOOLQ
)UXLWJDUGHQ-RHO6LHJHO
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH
59$&6&5HDO(VWDWH
59$&6&RUJDQLFPDUNHWRXWOHW%LR0DUNW*PE+%UHLVDFK
59$&6&5HDO(VWDWH
,QYHVWHGFDSLWDO
$SSURYHGLQYHVWPHQWSURMHFWV
$JULFXOWXUDOPDFKLQHU\
&RQVWUXFWLRQRIIDUPKRXVH
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH
7RWDO
3ODQQHGSURMHFWV
3URFHVVLQJIDFLOLW\IRUGULHGIUXLWDQGYHJHWDEOHV
0DUNHWJDUGHQLQ'RQDXHVFKLQJHQQHZHQWHUSULVH
,QFUHDVLQJWKHQXPEHURIRXWOHWVIRU59$&6&RUJDQLFPDUNHWRXWOHW
%LRPDUNHWLQWKHFLW\RI)UHLEXUJDQGLQDGMDFHQWDUHDV
)UXLWJDUGHQFUHDWLRQRIQHZHQWHUSULVH
2UJDQLFFKLFNHQIDUPFUHDWLRQRIQHZHQWHUSULVH
9HJHWDEOHSURFHVVLQJIDFLOLW\FUHDWLRQRIQHZHQWHUSULVH
&DVKUHVHUYHIRUODQGDFTXLVLWLRQ
5HTXLUHGFDSLWDO
1DWXUHRILQYHVWPHQW
3XUFKDVHDQGOHDVH
3XUFKDVHDQGOHDVH
3XUFKDVHDQGOHDVH
3XUFKDVHDQGOHDVH
6LOHQWSDUWQHU
6KDUHKROGHU
6LOHQWSDUWQHU
6LOHQWSDUWQHU
6KDUHKROGHU
/RDQ
6KDUHKROGHU
6KDUHKROGHU
/RDQ
,QYHVWHGFDSLWDOĄ
3XUFKDVH
/RDQ
,QFUHDVHRIVKDUHV
/RDQ
3XUFKDVHRIVXLWDEOHEXLOGLQJ
3DUWLDORZQHUVKLS
,QFUHDVHRIVKDUHKROGLQJ
3DUWLDORZQHUVKLS
3DUWLDORZQHUVKLS
3DUWLDORZQHUVKLS
75$'($1'(19,5210(175(9,(:
DJULFXOWXUDO SUDFWLFHV WR PRUH HQYLURQPHQWDOO\
IULHQGO\RQHV
6RFLDOEHQHÀWV
‡ %HWWHUZRUNLQJDQGVRFLDOFRQGLWLRQV
‡ *UHDWHUUHFRJQLWLRQRIWKHIDUPLQJSURIHVVLRQ
‡ ,QFUHDVHG DWWUDFWLYHQHVV RI DJULFXOWXUH IRU \RXQJ
SHRSOHDQGWKHORFDOFRPPXQLW\DQG
‡ $VVLVWDQFH WR \RXQJ SHRSOH IRU FUHDWLQJ
DJULEXVLQHVVHV
)59$&6&JRYHUQDQFHERGLHVDQG
FXUUHQWFDSLWDO
$Q59$&6&VKDUHFXUUHQWO\FRVWVĄDQGWDNHVWKH
IRUPRIDUHJLVWHUHGVKDUHZLWKUHVWULFWHGWUDQVIHUDELOLW\
VRWKDWLWFDQQRWEHVROGZLWKRXWWKHH[SOLFLWFRQVHQW
RIWKHRWKHUVKDUHKROGHUV&XUUHQWO\WKH59$&6&KDV
VKDUHKROGHUVDQGDFDSLWDOVWRFNRIĄPLOOLRQ
7KH FXUUHQW FDSLWDO LV LQYHVWHG LQ WKH IDUPV DQG
HQWHUSULVHVDVVKRZQLQ7DEOH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
1//'06#4;U*'0+6+#6+8'U140'4+..#4
(146*'1//70+6;
+HOP\$ERXOHLVKDQG
0DWWKLDV.HLWHO6(.(0
$EVWUDFW
7KHJUHDWFKDOOHQJHVFRQIURQWLQJRXUZRUOGWRGD\²IRRGLQVHFXULW\FOLPDWHFKDQJHDQGSRYHUW\²DUHORQJ
WHUPSUREOHPVPDLQO\FDXVHGE\XQVXVWDLQDEOHHFRQRPLFSUDFWLFHV7KHVHFRPPRQHFRQRPLFSUDFWLFHV
KDYH WR EH WUDQVIRUPHG LQWR VXVWDLQDEOH RQHV SUHIHUDEO\ LQ D KROLVWLF ZD\ 7KH 6(.(0 ,QLWLDWLYH KDV
DGRSWHGWKLVDSSURDFKVLQFHLWVLQFHSWLRQLQ,WVKROLVWLFEXVLQHVVPRGHOQRWRQO\IROORZVHFRQRPLF
SULQFLSOHV EXW DOVR DWWHPSWV WR LQWHJUDWH HFRORJLFDO VRFLHWDO DQG FXOWXUDO GLPHQVLRQV ,W WKHUHE\ PHHWV
PDUNHW GHPDQGV DQG FRPSOLHV ZLWK VWDQGDUG HFRQRPLF SURFHGXUHV SURWHFWV WKH HQYLURQPHQW DQG
SURPRWHVFOLPDWHFKDQJHDGDSWDWLRQDQGPLWLJDWLRQJXDUDQWHHVHWKLFDOVWDQGDUGVDQGKXPDQULJKWVDQG
SURPRWHVWKHKXPDQGHYHORSPHQWRILWVHPSOR\HHVVXSSOLHUVDQGWKHVXUURXQGLQJFRPPXQLWLHV
2FWREHU ² WKLV GDWH ZLOO JR GRZQ LQ KLVWRU\
DV WKH GD\ ZKHQ WKH ZRUOG SRSXODWLRQ H[FHHGHG ELOOLRQ SHRSOH 2QH PDMRU FRQFHUQ UHYROYLQJ DURXQG
WKLVODQGPDUNLVKRZWRSURYLGHHQRXJKIRRGIRUWKH
ZRUOG·VJURZLQJSRSXODWLRQZKHQDOUHDG\DURXQGRQH
ELOOLRQ SHRSOH ZRUOGZLGH DUH VXIIHULQJ IURP KXQJHU
,Q DGGLWLRQ FOLPDWH FKDQJH WKUHDWHQV KXQGUHGV RI
WKRXVDQGV RI IDUPHUV ZLWK XQSUHGLFWDEOH ZHDWKHU
HYHQWVDQGVKLIWVLQVHDVRQVZKLFKLQWXUQH[DFHUEDWH
IRRGLQVHFXULW\
(J\SW UHÁHFWV WKLV JOREDO SLFWXUH LWV SRSXODWLRQ LV
JURZLQJ E\ DURXQG SHU FHQW DQQXDOO\ ZKLOH WKH
1LOH 'HOWD WKH PRVW IHUWLOH DQG WKHUHIRUH WKH PRVW
LPSRUWDQWODQGVWULSIRU(J\SW·VGRPHVWLFDJULFXOWXUDO
SURGXFWLRQLVWKUHDWHQHGE\ULVLQJVHDOHYHOV$OUHDG\
WRGD\ VDOLQL]DWLRQ RI JURXQGZDWHU FRQVWLWXWHV D
SUREOHPWKDWZLOOPRVWOLNHO\ZRUVHQLQWKHIXWXUH
%XVLQHVVDVXVXDO DSSURDFKHV VWUXJJOH WR GHOLYHU
VROXWLRQV ZKLOH FOLPDWH FKDQJH LV ZRUVHQLQJ DQG
D ELOOLRQ SHRSOH VWLOO VXIIHU IURP KXQJHU $W WKH VDPH
WLPH ELJ DJULEXVLQHVV FRUSRUDWLRQV LQFUHDVH WKHLU
SURÀWVWKURXJKTXHVWLRQDEOHDSSURDFKHVVXFKDVWKH
XVHRIJHQHWLFDOO\PRGLÀHGVHHGVRUYDVWPRQRFXOWXUH
ÀHOGV7KHVXFFHVVRI6(.(0VKRZVWKDWHFRORJLFDO
IDUPLQJFDQDGDSWEHWWHUWRFOLPDWHFKDQJHDQGKDV
WKHSRWHQWLDOWRIHHGWKHZRUOGLILWLVDGRSWHGZLGHO\
RYHUWKHQH[W\HDUV
'HVSLWH WKHLU VKRUWFRPLQJV EXVLQHVVHV DUH FUXFLDO
WR WDFNOLQJ WKH LVVXHV UHODWHG WR IRRG LQVHFXULW\ DQG
FOLPDWH FKDQJH +RZHYHU WR EH HIIHFWLYH WKRVH
EXVLQHVVHV QHHG WR HQVXUH WKDW WKH VXUURXQGLQJ
FRPPXQLWLHV ZKLFK DUH XVXDOO\ WKHLU VXSSOLHUV
SDUWLFLSDWHLQWDFNOLQJWKHFKDOOHQJHVDQGEHQHÀWIURP
WKH EXVLQHVVHV 2QO\ LI WKHVH SHRSOH DUH LQFOXGHG
LQ WKH SURFHVV DQG EHQHÀW IURP WKH EXVLQHVVHV FDQ
VXVWDLQDEOH VROXWLRQV IRU IRRG VHFXULW\ DQG FOLPDWH
FKDQJHEHIRXQG
7KH 6(.(0 ,QLWLDWLYH IROORZV VXFK D FRPPXQLW\
EDVHGDSSURDFK6(.(0ZDVIRXQGHGZLWKWKHLGHD
RI SURPRWLQJ VXVWDLQDEOH GHYHORSPHQW EHQHÀWLQJ
WKH ORFDO FRPPXQLW\ DQG WKH HQYLURQPHQW LQ WKH
VXUURXQGLQJYLOODJHV
$9LVLRQDQGPLVVLRQRI6(.(0
7KH6(.(0,QLWLDWLYHZDVHVWDEOLVKHGE\'U,EUDKLP
$ERXOHLVKRYHU\HDUVDJRDERXWNPQRUWKHDVW
RI&DLURLQUXUDO(J\SW2QUHWXUQLQJWR(J\SWDIWHU
\HDUV RI VWXG\ DQG ZRUN LQ $XVWULD KH QRWLFHG KRZ
(J\SW·V VRFLRHFRQRPLF IDEULF KDG GHWHULRUDWHG +LV
UHVSRQVH WR WKLV ZDV WR GHYHORS WKH IROORZLQJ YLVLRQ
IRUKLVFRXQWU\
´6XVWDLQDEOH GHYHORSPHQW WRZDUGV D IXWXUH ZKHUH
HYHU\ KXPDQ EHLQJ FDQ XQIROG KLV RU KHU LQGLYLGXDO
SRWHQWLDO ZKHUH PDQNLQG LV OLYLQJ WRJHWKHU LQ VRFLDO
IRUPVUHÁHFWLQJKXPDQGLJQLW\DQGZKHUHDOOHFRQRPLF
DFWLYLW\ LV FRQGXFWHG LQ DFFRUGDQFH ZLWK HFRORJLFDO
DQGHWKLFDOSULQFLSOHVµ
75$'($1'(19,5210(175(9,(:
)LJXUH6(.(0·VDFWLYLWLHVEDVHGRQLWVYLVLRQIRU(J\SW
Cultural
Life
• The SEKEM Development Foundation
(SDF) operates a broad range of educational institutions, provides health services
and supports the cultural and artistic
development of SEKEM employees and
members of the surrounding communities
• To spread knowledge about biodynamic
agriculture, SEKEM established the Egyptian Biodynamic Association (EBDA)
• SEKEM established the Helipolis Academy
for Sustainable Development to foster
research and development
Economic
Life
• The core business of the SEKEM group are
land reclamation, organic farming, phytopharmaceutical and textile production
• The SEKEM companies include the largest
producer of organic tea and the largest
producer of organic herbs in the Middle
East
• SEKEM companies are compliant with 14
international standars and certificates
(Demeter, Fairtrade, ISO, etc.)
• The SEKEM group has implemented a
comprehensive management system,
integrating the four dimensions of sustainable development and annually reports on
progress and achievements
Social
Life
• SEKEM engages with all of it’s stakeholders
in a holistic and transparent way
• In 2010, the SEKEM Companies and
Foundation employed 1 856 and 271
people respectively
• SEKEM actively endorses the UN Global
Compact principles and promotes human
rights together with the Cooperative of
SEKEM Employees (CSE)
• SEKEM was awarded by UniFern to provide
all its female employees with equal opportunities
• SEKEM is at the forefront of national
and international initiatives for
sustainable development
Ecology
• SEKEM cultivates 1 628 feddan (ca 684 ha) of
farmland and its suppliers from the EBDA
cultivate more than 7 200 feddan (ca 3 000 ha)
• Roughly 30 percent of raw materials used in
processing come from SEKEM firms
• SEKEM constantly monitors and improves
the efficiency of water usage and energy
consumption
• One of the major priorities of SEKEM is
caring about the fertility of soil and the
biodiversity of plants and the related
ecosystem
• Animal husbandry at SEKEM includes cattle,
chickens, bees and pigeons, all living according to Demeter standards
6RXUFH5HSURGXFHGIURP6(.(0
7KLVYLVLRQLQWHJUDWHVHFRORJ\ZLWKHFRQRPLFVRFLHWDO
DQG FXOWXUDO OLIH DQG LV WKH JXLGLQJ SULQFLSOH RI DOO
6(.(0DFWLYLWLHVDVVKRZQLQÀJXUH
%,PSOHPHQWLQJ6(.(0·VYLVLRQ
(VWDEOLVKLQJELRG\QDPLFDJULFXOWXUHDVD
FRPSHWLWLYHVROXWLRQWRWKHHQYLURQPHQWDOVRFLDO
DQGIRRGVHFXULW\FKDOOHQJHVRIWKHWZHQW\ÀUVW
FHQWXU\
6(.(0·VEXVLQHVVPRGHOLVEDVHGRQWKHFRQFHSWRI
´ELRG\QDPLF DJULFXOWXUHµ D VSHFLÀF IRUP RI RUJDQLF
DJULFXOWXUH WKDW YLHZV WKH IDUP DV ´D VHOIFRQWDLQHG
VHOIVXVWDLQLQJ HFRV\VWHP UHVSRQVLEOH IRU FUHDWLQJ
DQGPDLQWDLQLQJLWVLQGLYLGXDOKHDOWKDQGYLWDOLW\ZLWKRXW
DQ\H[WHUQDORUXQQDWXUDODGGLWLRQV>«@6RLOSODQWV
DQLPDOVDQGKXPDQVWRJHWKHUFUHDWHWKLVLPDJHRID
KROLVWLFOLYLQJRUJDQLVPµ
:LWK WKLV IRUP RI DJULFXOWXUH \LHOGV LQ WUDGLWLRQDO
IDUPLQJ V\VWHPV LQ GHYHORSLQJ FRXQWULHV DQG LQ
UHJLRQVZKHUHVRLOVDUHGHJUDGHGFDQEHLQFUHDVHGE\
XSWRSHUFHQW6FLDODEED,Q(J\SWZKHUH
GHVHUWODQGRQZKLFK6(.(0VWDUWHGLWVRSHUDWLRQVLV
WKHPRVWGHJUDGHGIRUPRIVRLOSRVVLEOH6(.(0KDV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
VLJQLÀFDQWO\ FRQWULEXWHG WR WKH DYDLODELOLW\ RI KHDOWK\
DQG DIIRUGDEOH IRRG WKURXJK WKLV IRUP RI RUJDQLF
DJULFXOWXUH ,QGHHG LW LV D SLRQHHU LQ ELRG\QDPLF
DJULFXOWXUH LQ WKH 0(1$ 0LGGOH (DVW DQG 1RUWK
$IULFDUHJLRQDQGLQHVWDEOLVKLQJWKHRUJDQLFPDUNHW
LQ(J\SW
7RGD\WKHRUJDQL]DWLRQDQGLWVELRG\QDPLFVXSSOLHUV
RZQ RYHU DFUHV RI IDUPODQG RI ZKLFK DFUHV DUH FXOWLYDWHG 7R VSUHDG NQRZOHGJH DERXW
ELRG\QDPLFDJULFXOWXUH6(.(0DFWLYHO\VXSSRUWVWKH
(J\SWLDQ%LRG\QDPLF$VVRFLDWLRQ(%'$ZKLFKRIIHUV
WUDLQLQJ RQ WKH DSSOLFDWLRQ RI ELRG\QDPLF PHWKRGV
&XUUHQWO\WKHUHDUHDERXWIDUPVXQGHUWKH(%'$
$ERXW SHU FHQW RI WKH RYHUDOO DJULFXOWXUDO ODQG LQ
(J\SWKDVEHHQFRQYHUWHGWRRUJDQLFDJULFXOWXUH
6XSSRUWLQJLQGLYLGXDOGHYHORSPHQWWKURXJK
KROLVWLFHGXFDWLRQDQGPHGLFDOFDUH
7R SURPRWH KXPDQ GHYHORSPHQW WKH 6(.(0
'HYHORSPHQW )RXQGDWLRQ 6') ZDV IRXQGHG LQ
XQGHU LWV SUHYLRXV QDPH $VVRFLDWLRQ IRU
&XOWXUDO 'HYHORSPHQW LQ (J\SW ,W VXSSRUWV DQG
RSHUDWHV D EURDG UDQJH RI HGXFDWLRQDO VRFLDO DQG
FXOWXUDO LQVWLWXWLRQV 7KHUH LV D NLQGHUJDUWHQ YDULRXV
SURJUDPPHV IRU VRFLDOO\ GLVDGYDQWDJHG FKLOGUHQ
VFKRROV DQG D YRFDWLRQDO WUDLQLQJ FHQWUH ZKLFK
WRJHWKHU HGXFDWH DERXW FKLOGUHQ DQG VWXGHQWV
7KH6')SURYLGHVKHDOWKVHUYLFHVWKURXJKDPHGLFDO
FHQWUH ZKLFK VHUYHV SHRSOH LQ VXUURXQGLQJ
YLOODJHV ,W DOVR VXSSRUWV FXOWXUDO DQG DUWLVWLF
GHYHORSPHQW $OO RI WKHVH SURJUDPPHV FUHDWH MREV
SURYLGHEHWWHUOHDUQLQJRSSRUWXQLWLHVDQGKHDOWKFDUH
IRUWKHSHRSOHLQWKHVXUURXQGLQJYLOODJHVDQGHQDEOH
WKHVRFLHWDOLQFOXVLRQRIFKLOGUHQZLWKVSHFLDOQHHGV
WKXVFRQWULEXWLQJWRWKHDOOHYLDWLRQRISRYHUW\ÀJKWLQJ
VRFLDOH[FOXVLRQDQGLPSURYLQJOLWHUDF\,WDOVRHQVXUHV
WKH LQWHJUDWLRQ RI 6(.(0 ZLWKLQ WKH ZLGHU VRFLDO
FRPPXQLW\RIWKHUHJLRQDQGWKHUHE\FRQWULEXWHVWR
FXOWXUDO XQGHUVWDQGLQJ EHWZHHQ WKH ORFDO SRSXODWLRQ
DQG WKH 6(.(0 VWDII ZKR PLJKW KDYH D GLIIHUHQW
EDFNJURXQG
&UHDWLQJZRUNSODFHVWKDWUHVSHFWKXPDQGLJQLW\
DQGVXSSRUWHPSOR\HHGHYHORSPHQW
7KH6(.(0*URXSFRQVLVWVRIHLJKWFRPSDQLHVWZR
RIWKHPSURFHVVWKHUDZPDWHULDOVJURZQRQLWVÀHOGV
/LEUDDQG6(.(0IRU/DQG5HFODPDWLRQZKLOH/RWXV
SURFHVVHV KHUEV DQG VSLFHV ,6,6 SURGXFHV KLJK
TXDOLW\ RUJDQLF IRRGVWXIIV 1DWXUH7(; PDQXIDFWXUHV
WH[WLOHV DQG $726 3KDUPD PDQXIDFWXUHV SK\WR
SKDUPDFHXWLFDOV7KHVHSURGXFWVDUHGLVWULEXWHGDQG
VROGRQWKHGRPHVWLFSHUFHQWDQGLQWHUQDWLRQDO
PDUNHWVSHUFHQW7KHHLJKWKFRPSDQ\LV(O0L]DQ
ZKLFKRIIHUVJUDIWLQJDQGSODQWFXOWLYDWLRQVHUYLFHVIRU
IUXLWDQGYHJHWDEOHJURZHUV
7KH6(.(0*URXSRIFRPSDQLHVWKHUHIRUHIRUPVDQ
LQWHJUDWHG YDOXH FKDLQ DV DOO FRPSDQLHV DUH FORVHO\
LQWHUOLQNHG,QWKHVHFRPSDQLHVHPSOR\HGRYHU
SHRSOHPRVWO\KLUHGIURPDPRQJWKHVXUURXQG
LQJ ORFDO FRPPXQLWLHV 7KH\ RIIHU KHDOWK LQVXUDQFH
DQGSHQVLRQVFKHPHV²ZKLFKSURPRWHVRFLDOVHFX
ULW\²DQGHTXDORSSRUWXQLWLHVWKURXJKWUDLQLQJSDUWLF
XODUO\WRDGYDQFHWKHSURIHVVLRQDOHTXDOLW\RIZRPHQ
LQWKHZRUNSODFHSURPRWHGWKURXJKWKHSURMHFW´2QH
%XVLQHVV &RPPXQLW\« HTXDO RSSRUWXQLW\µ ZKLFK
ZDVVWDUWHGLQ7KH&RGHRI&RQGXFWRI6(.(0
LV EDVHG RQ LWV YLVLRQ IRU VXVWDLQDEOH GHYHORSPHQW
ZKLFK LV GHSLFWHG WKURXJK WKH 6XVWDLQDELOLW\ )ORZHU
ÀJXUH DQG IXUWKHU UHÀQHG XVLQJ WKH SULQFLSOHV RI
WKH8QLWHG1DWLRQV*OREDO&RPSDFW81*&DQGWKH
UHOHYDQWFRQYHQWLRQVRIWKH8QLWHG1DWLRQVDQGWKH,Q
WHUQDWLRQDO/DERXU2UJDQL]DWLRQ
%XLOGLQJEXVLQHVVPRGHOVLQDFFRUGDQFHZLWK
HFRORJLFDODQGHWKLFDOSULQFLSOHV
(FRORJLFDO DQG HWKLFDO SULQFLSOHV VKRXOG JR EH\RQG
ODERXU ULJKWV DQG RUJDQLF DJULFXOWXUH 7KH\ VKRXOG
UXQ WKURXJK WKH HQWLUH EXVLQHVV PRGHO VWDUWLQJ ZLWK
UHVRXUFH HIÀFLHQF\ DZDUHQHVV UDLVLQJ ZLWKLQ DQG
EH\RQGWKHFRPSDQ\DQGHGXFDWLQJDQGH[FKDQJLQJ
YLHZVZLWKRWKHUVDERXWWKHP7KURXJKLWVHGXFDWLRQ
WUDLQLQJ DQG FRQVXOWDQF\ 6(.(0 VHHNV WR FUHDWH
FDSDFLW\ LQ RUGHU WR VFDOH XS VXFFHVVIXO DQG
VXVWDLQDEOHEXVLQHVVPRGHOV7KHVHDUHSURYLGHGE\
WKH6XVWDLQDEOH'HYHORSPHQW&HQWHURIWKH+HOLRSROLV
$FDGHP\ WKH 6(.(0 VFKRROV DQG WKURXJK WKH
SROLF\ ZRUN RI 6(.(0·V PDQDJHPHQW $GGLWLRQDOO\
6(.(0 KDV GHYHORSHG FORVH WLHV ZLWK GLIIHUHQW
EXVLQHVVHV WKURXJKRXW WKH ZRUOG ZKLFK IROORZ WKH
VDPHHFRORJLFDODQGHWKLFDOSULQFLSOHV7KHVHWLHVJR
EH\RQG QRUPDO EXVLQHVV UHODWLRQVKLSV ,Q WKH
,QWHUQDWLRQDO $VVRFLDWLRQ IRU 3DUWQHUVKLS LQ (FRORJ\
DQG 7UDGH ,$3 ZDV IRUPHG ZKLFK GHYHORSHG WKH
6XVWDLQDELOLW\ )ORZHU ÀJXUH WKDW VHUYHV DV WKH
FRQFHSWXDO IUDPHZRUN IRU SHUIRUPDQFH PRQLWRULQJ
DQGHYDOXDWLRQ7KH6(.(0*URXSKDVLPSOHPHQWHG
WKLVFRPSUHKHQVLYHPDQDJHPHQWV\VWHPLQWHJUDWLQJ
WKH IRXU GLPHQVLRQV RI VXVWDLQDEOH GHYHORSPHQW
HFRORJ\ HFRQRP\ VRFLHW\ FXOWXUH DQG SURYLGHV
DQQXDOUHSRUWVRQSURJUHVVDQGDFKLHYHPHQWVUHODWLQJ
75$'($1'(19,5210(175(9,(:
)LJXUH7KH6XVWDLQDELOLW\)ORZHU
6RXUFH6(.(0
WRWKH)ORZHU
,QQRYDWLQJIRUVXVWDLQDEOHGHYHORSPHQWWKURXJK
UHVHDUFKLQQDWXUDODQGVRFLDOVFLHQFHV
6XVWDLQDEOHEXVLQHVVHVQHHGWREHLQQRYDWLYHLQRUGHU
WRUHPDLQVXVWDLQDEOHDQGFRPSHWLWLYH7KH+HOLRSROLV
$FDGHP\ IRU 6XVWDLQDEOH 'HYHORSPHQW HVWDEOLVKHG
E\WKH6')DLPVDWLPSURYLQJWKHFDSDFLW\WRFRQGXFW
SXEOLVKDQGGLVVHPLQDWHUHOHYDQWVRFLDODQGVFLHQWLÀF
UHVHDUFK LQ WKH DUHDV RI PHGLFLQH SKDUPDFHXWLFDOV
UHQHZDEOH HQHUJ\ ELRG\QDPLF DJULFXOWXUH DUWV DQG
VRFLDO VFLHQFHV 2QH DPRQJ PDQ\ VXFK VFLHQWLÀF
VHUYLFHVLVWKHEUHHGLQJRISUHGDWRUVWKDWVHUYHDVD
IRUPRIELRORJLFDOSHVWFRQWURO
,QFRUSRUDWHG ZLWKLQ WKH +HOLRSROLV $FDGHP\ DUH
VHYHUDOODERUDWRULHVDQGWKH6XVWDLQDEOH'HYHORSPHQW
&HQWHUZKLFKLVWKHIRFDOSRLQWIRUDOOLVVXHVUHYROYLQJ
DURXQG VXVWDLQDEOH GHYHORSPHQW ZKLOH (O 0L]DQ
SURYLGHV KHDOWK\ SURÀWDEOH LQGRRU DQG RXWGRRU
JUDIWHGVHHGOLQJVWR(J\SW·VYHJHWDEOHSURGXFHUVDQG
WR6(.(0IRU/DQG5HFODPDWLRQ
$GYRFDF\IRUDKROLVWLFDSSURDFKWR
VXVWDLQDEOHGHYHORSPHQW
,WUHTXLUHVPRUHWKDQMXVWDIHZVXVWDLQDEOHEXVLQHVVHV
WRFRQWULEXWHWRIRRGVHFXULW\DQGWRFOLPDWHFKDQJH
PLWLJDWLRQDQGDGDSWDWLRQ7KHSROLF\HQJDJHPHQWRI
WKH 6(.(0 PDQDJHPHQW IRFXVHV RQ WKLV DVSHFW ,Q
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
DGGLWLRQ6(.(0LVVHHNLQJWRLQVWLWXWLRQDOL]HLWVHIIRUWV
WKURXJK WKH +HOLRSROLV 8QLYHUVLW\ IRU 6XVWDLQDEOH
'HYHORSPHQW ² WKH ÀUVW QRQSURÀW XQLYHUVLW\ LQ WKH
UHJLRQ 7KH XQLYHUVLW\ VHHNV WR HGXFDWH WKH \RXWK
ERWKLQ(J\SWDQGWKRVHFRPLQJIURPDEURDGRQWKH
FRQFHSWRIVXVWDLQDELOLW\DQGLWVIXUWKHUDSSOLFDWLRQVLQ
DOOWKHGLIIHUHQWVHFWRUVRIWKHHFRQRP\5HVSRQGLQJ
WR WKH FKDOOHQJHV RI WKH WZHQW\ÀUVW FHQWXU\ VXFK
DV FOLPDWH FKDQJH UHVRXUFH VFDUFLW\ D JURZLQJ
SRSXODWLRQDQGH[WUHPHSRYHUW\+HOLRSROLV8QLYHUVLW\
ZDV HVWDEOLVKHG WR GULYH UHVHDUFK DQG GHOLYHU
LQQRYDWLYH ÀQGLQJV WKDW FRXOG SURYLGH VXVWDLQDEOH
VROXWLRQVIRUVRPHRIWKHPDMRUSUREOHPVFRQIURQWLQJ
(J\SWLDQVRFLHW\
&&RQFUHWHVXVWDLQDELOLW\HIIHFWVDQG
JDLQVLQWHUPVRIHFRQRPLFVRFLDODQG
HQYLURQPHQWDOLPSDFWV
7KHDFWLYLWLHVRI6(.(0KDYHKDGVXEVWDQWLDOSRVLWLYH
LPSDFWVRQWKHFRPPXQLW\QDWXUHDQGEXVLQHVVHV7KH
FRPPXQLW\KDVSURÀWHGVLJQLÀFDQWO\IURPWKHFXOWXUDO
DFWLYLWLHV RI WKH 6(.(0 'HYHORSPHQW )RXQGDWLRQ
ZKLFK LV PDLQO\ IXQGHG WKURXJK WKH 6(.(0 *URXS
2YHU VWXGHQWV LQ LWV VFKRRO DQG WKH YRFDWLRQDO
WUDLQLQJ FHQWUH SURÀW HYHU\ \HDU IURP WKH HGXFDWLRQ
WKH\UHFHLYH7KHVFKRROVDUHRSHQWRHYHU\RQHDQG
DUHDFFUHGLWHGE\WKH*RYHUQPHQW7KHGXDOV\VWHP
RI WKH YRFDWLRQDO WUDLQLQJ FHQWUH RIIHULQJ SUDFWLFDO
H[SHULHQFH LQ WKH ZRUNVKRSV DV ZHOO DV WKHRUHWLFDO
FRXUVHV LV D KXJH VXFFHVV DQG LWV JUDGXDWHV DUH
LQ JUHDW GHPDQG $GGLWLRQDOO\ WKH PHGLFDO FHQWUH
SURYLGHV KHDOWKFDUH VHUYLFHV WR RYHU SHRSOH
LQ WKH VXUURXQGLQJ YLOODJHV DQG WR HPSOR\HHV RI WKH
6(.(0FRPSDQLHV2WKHUIDFLOLWLHVVXFKDVFRQFHUWV
DQGDUWFRXUVHVSURPRWHWKHLQGLYLGXDOGHYHORSPHQW
RIWKHSDUWLFLSDQWV
:LWKUHJDUGWRWKHHQYLURQPHQW6(.(0KDVFUHDWHG
D QHZ ELRWRSH E\ WXUQLQJ GHVHUW ODQG LQWR IHUWLOH
DQG OLYLQJ VRLOV WKURXJK FRPSRVW DQG ELRG\QDPLF
DJULFXOWXUDOPHWKRGV7KHVRLO·VZDWHUKROGLQJFDSDFLW\
KDVEHHQLQFUHDVHGDQGWKHUHE\ZDWHUFRQVXPSWLRQ
UHGXFHG 1HZ WHFKQRORJLHV VXFK DV VXEVXUIDFH
LUULJDWLRQKDYHIXUWKHUFRQWULEXWHGWRFXWWLQJGRZQRQ
ZDWHU FRQVXPSWLRQ 6(.(0·V PDLQ IDUP VLWH VHUYHV
DVDKDELWDWIRUPRUHWKDQVSHFLHVRIELUGV²ERWK
PLJUDWLQJDQGORFDO²PRUHWKDQYDULHWLHVRIWUHHV
DQG VKUXEV DQG D EURDG UDQJH RI VPDOO DQLPDOV
VXFK DV KHGJHKRJV OL]DUGV VQDNHV DQG IR[HV
)XUWKHUPRUH RYHU WKH \HDUV RYHU RQH PLOOLRQ WRQV
RI &2HTXLYDOHQWV KDYH EHHQ VHTXHVWHUHG LQ WKH
VRLO ZKLFK VKRZV WKH JUHDW SRWHQWLDO RI DJULFXOWXUH
WR PLWLJDWH FOLPDWH FKDQJH 7KH SRVLWLYH HIIHFWV RI
WKHLQWURGXFWLRQRIRUJDQLFDJULFXOWXUHLQWRWKHUHJLRQ
DUH PDQLIROG DQG LQYDOXDEOH IRU WKH HQYLURQPHQW
)RU H[DPSOH 6(.(0 KDV VXFFHHGHG QRW RQO\ LQ
UHIUDLQLQJ IURP SHVWLFLGH XVH LQ LWV RZQ RSHUDWLRQV
EXWPRUHEURDGO\FXWWLQJFKHPLFDOXVHE\PRUHWKDQ
SHU FHQW RQ (J\SWLDQ FRWWRQ IDUPV 7R UHSODFH
FKHPLFDOV 6(.(0 XVHV SKHURPRQH WUDSV DQG
FXOWLYDWHVPLFURRUJDQLVPVWKDWVHUYHDVQDWXUDOIRUPV
RISHVWFRQWURO$VDUHVXOWWKHDYHUDJH\LHOGRIUDZ
FRWWRQKDVLQFUHDVHGE\DOPRVWSHUFHQWZKLOHWKH
FRWWRQ·VHODVWLFLW\DQGRYHUDOOTXDOLW\LVVXSHULRUWRWKDW
RI FRQYHQWLRQDOO\ JURZQ FRWWRQ :KLOH 6(.(0 LV QRW
JURZLQJFRWWRQRQLWVIDUPVDQ\PRUHLWVWLOOEHQHÀWV
IURP LWV IRUPHU HQJDJHPHQW WKURXJK WKH LQFUHDVHG
FRWWRQTXDOLW\IURPLWVVXSSOLHUV
,Q WHUPV RI HFRQRPLFV WKH 6(.(0 *URXS KDV
DFKLHYHGDQDQQXDOJURZWKUDWHRIDERXWSHUFHQW
RYHUWKHSDVWIHZ\HDUV,WVKROLVWLFDSSURDFKDQGLWV
VRFLDODQGFXOWXUDODFWLYLWLHVKDYHVWUHQJWKHQHGVRFLDO
FRKHVLRQ ZLWKLQ 6(.(0 ZKLFK ZDV HYLGHQW LQ WKH
DIWHUPDWKRIWKH(J\SWLDQXSULVLQJZKHQVRPH6(.(0
HPSOR\HHV HYHQ YROXQWHHUHG WR SURWHFW WKH 6(.(0
SUHPLVHVDWQLJKW
'/HVVRQVWREHOHDUQHG
6(.(0VHHVLWVHOIDVSDUWRIDFXOWXUDOVRFLHW\LQZKLFK
LWVHFRQRPLFDFWLYLWLHV²PHDQLQJEXVLQHVVUHYHQXHV²
SOD\DQLPSRUWDQWSDUWEXWQRWWKHPDMRUUROH5DWKHU
WKH ÀQDQFLDO DVSHFW LV FRQVLGHUHG WR EH RQO\ RQH RI
PDQ\RWKHUDVSHFWVVXFKDVSURPRWLQJHGXFDWLRQDQG
WKH DUWV FXOWLYDWLQJ ODQG DQG SURYLGLQJ KHDOWK FDUH
2YHU\HDUVRIH[SHULHQFHKDYHSURYHGWKDWKXPDQ
GHYHORSPHQWLVFUXFLDOIRUVXVWDLQDEOHIDUPLQJ3HRSOH
KDYHWREHDWWKHFHQWUHRIVXFKHIIRUWVWKHPRUHDQ
LQVWLWXWLRQ FDUHV IRU WKH SHRSOH HJ WKURXJK EHWWHU
HPSOR\PHQW FRQGLWLRQV HTXDO WUHDWPHQW HGXFDWLRQ
PHGLFDO FDUH LQVXUDQFH DQG SHQVLRQ VFKHPHV WKH
PRUH WKH SHRSOH ZLOO FDUH IRU WKH RUJDQL]DWLRQ DQG
HYHU\WKLQJYLWDOIRULWVEXVLQHVV
+RZHYHU RUJDQLF IDUPLQJ LV QRW HQRXJK RUJDQLF
IDUPV GR QRW QHFHVVDULO\ HPSOR\ IRU H[DPSOH
VXVWDLQDEOH HQHUJ\ PDQDJHPHQW V\VWHPV 6RPH
RUJDQLF IDUPHUV PLJKW HYHQ FXOWLYDWH WKHLU ODQG
ZLWK PRQRFXOWXUHV WKHUHE\ QHJOHFWLQJ ELRGLYHUVLW\
DQG WKH EHQHÀWV RI DJULFXOWXUDO PHWKRGV VXFK
DV DJURIRUHVWU\ :HOO DZDUH RI WKLV 6(.(0
DSSOLHV ELRG\QDPLF DJULFXOWXUH DSSURDFKHV RU
DJURHFRORJLFDO IDUPLQJ ZKLFK JRHV EH\RQG WKH
XVXDO RUJDQLF VWDQGDUGV 7KLV VKRXOG EH D JXLGLQJ
SULQFLSOH IRU PDQDJHPHQW LQ RUGHU WR HIIHFWLYHO\
HPEHGWKHVHHFRORJLFDODQGHWKLFDOSULQFLSOHVZLWKLQ
WKH FRUSRUDWH FXOWXUH 6(.(0 LV FXUUHQWO\ VHHNLQJ
WR GHYHORS DQG VWDQGDUGL]H JHQHULF JXLGHOLQHV IRU
WKH 6XVWDLQDELOLW\ )ORZHU DV ZHOO DV WR LQWHJUDWH
WKH JXLGHOLQHV DQG SHUIRUPDQFH LQGLFDWRUV LQWR DQ
75$'($1'(19,5210(175(9,(:
DVVHVVPHQW VRIWZDUH 7KURXJK WKLV QHZ SODWIRUP
DJULFXOWXUDO SURGXFHUV WUDGHUV EUDQG RZQHUV
DQG RWKHU VWDNHKROGHUV ZLOO EH DEOH WR DVVHVV
FRQWLQXRXVO\LPSURYHDQGMRLQWO\FRPPXQLFDWHWKHLU
VXVWDLQDELOLW\SHUIRUPDQFH7KH6XVWDLQDELOLW\)ORZHU
JXLGHOLQHVDUHEDVHGRQWKHVXVWDLQDELOLW\UHSRUWLQJ
VWDQGDUGVRIWKH*OREDO5HSRUWLQJ,QLWLDWLYH*5,EXW
DUHDGMXVWHGWRWKHQHHGVRIWKHDJULFXOWXUDOVHFWRU
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
5HIHUHQFHV
$FWLRQ$LG,PSDFWRILPSRUWVXUJHVRQGHYHORSLQJFRXQWULHV-RKDQQHVEXUJ$FWLRQ$LG,QWHUQDWLRQDO
$OWLHUL $ DQG YRQ GHU :HLG - 3URVSHFWV IRU DJURHFRORJLFDOO\ EDVHG QDWXUDOUHVRXUFH PDQDJHPHQW IRU ORZ
LQFRPHIDUPHUVLQWKHVWFHQWXU\$YDLODEOHDWKWWSDJURHFRRUJIDWDOKDUYHVWDUWLFOHVDJURHFRBUHVRXUFHBPJPW
KWPO
$OWLHUL0$)XQHV0RQ]RWH)5DQG3HWHUVHQ3$JURHFRORJLFDOO\HIÀFLHQWDJULFXOWXUDOV\VWHPVIRUVPDOOKROGHU
IDUPHUV FRQWULEXWLRQV WR IRRG VRYHUHLJQW\ ,Q $JURQRP\ IRU 6XVWDLQDEOH 'HYHORSPHQW ,QVWLWXW 1DWLRQDO GH OD
5HFKHUFKH$JURQRPLTXH,15$$YDLODEOHDWZZZDJURHFRRUJVRFODSGIV$OWLHUL)XQHV3HWHUVHQ3DOHQFLDSGI
$]HH]*6RLOFDUERQDQGRUJDQLFIDUPLQJ6RLO$VVRFLDWLRQ/RQGRQ
%DGJOH\ & 0RJKWDGHU - 4XLQWHUR ( =DNHP ( &KDSSHOO 0- $YLOpV9i]TXH] . 6DPXORQ $ DQG 3HUIHFWR , 2UJDQLFDJULFXOWXUHDQGWKHJOREDOIRRGVXSSO\5HQHZDEOH$JULFXOWXUHDQG)RRG6\VWHPV²
%DUNHU'7KHULVHDQGSUHGLFWDEOHIDOORIJOREDOL]HGLQGXVWULDODJULFXOWXUH6DQ)UDQFLVFR,QWHUQDWLRQDO)RUXP
RQ*OREDOL]DWLRQ
%HUWKHORW-7KHOHVVRQVWRGUDZIRUWKH&$3IURPWKHKXJHSUHGRPLQDQFHRIFRQWUDF\FOLFDODLGVLQWKH86
6ROLGDULWp$YDLODEOHDWKWWSVROLGDULWHDVVRIU3DSHUV
%ORRPEHUJ)RRG3ULFHVPD\H[WHQGJDLQVRQYRODWLOHRLOFRVWV)$2VD\V$YDLODEOHDWZZZEORRPEHUJFRP
DSSVQHZV"SLG VLG DG2HR/PLENV0D\
%RPPDUFR 5 .OHLMQ ' DQG 3RWWV 6 (FRORJLFDO LQWHQVLÀFDWLRQ KDUQHVVLQJ HFRV\VWHP VHUYLFHV IRU IRRG
VHFXULW\ 7UHQGV LQ (FRORJ\ DQG (YROXWLRQ $YDLODEOH DW ZZZFHOOFRPWUHQGVHFRORJ\HYROXWLRQDEVWUDFW6
;
%UDQFD * /LSSHU / 0F&DUWK\ 1 DQG -ROHMROH 0& )RRG VHFXULW\ FOLPDWH FKDQJH DQG VXVWDLQDEOH ODQG
PDQDJHPHQW$UHYLHZ$JURQRP\IRU6XVWDLQDEOH'HYHORSPHQW)HEUXDU\$YDLODEOHDWKWWSOLQNVSULQJHUFRP
FRQWHQWSGI)V
%URGHXU-&RODV%'HO&RQW&'RXPELD6-DFTXRW03DUHQW*5pJLPEDOG*5RX['9LFWRU0DQG:LOVRQ'
/HJDODQDO\VLV,PSURYLQJWKHFRKHUHQFHRILQWHUQDWLRQDOVWDQGDUGV5HFRJQL]LQJDJULFXOWXUHDQGIRRGVSHFLÀW\WR
UHVSHFWKXPDQULJKWV7KRPVRQ5HXWHUV&DQDGD
%URZQ / 7KH QHZ JHRSROLWLFV RI IRRG )RUHLJQ 3ROLF\ -XQH $YDLODEOH DW ZZZIRUHLJQSROLF\FRP
DUWLFOHVWKHBQHZBJHRSROLWLFVBRIBIRRG"SDJH %UQWUXS0%UDQGL&)XFKV1$JULFXOWXUHLV6SHFLDO&RQFOXVLRQV'UDZQIURPWKH'HDWK7KURHVRIWKH'RKD
5RXQGIRUD'HYHORSPHQWIULHQGO\$JULFXOWXUDO7UDGH3ROLF\',(%ULHÀQJ3DSHU%RQQ
&DUOHWWR&6DYDVWDQR6DQG=H]]D$)DFWRU$UWHIDFW"7KH,PSDFWRI0HDVXUHPHQW(UURUVRQWKH)DUPV6L]H
3URGXFWLYLW\5HODWLRQVKLS3ROLF\5HVHDUFK:RUNLQJ3DSHU7KH:RUOG%DQN:DVKLQJWRQ'&$YDLODEOHDW
KWWSHOLEUDU\ZRUOGEDQNRUJGRFVHUYHUGRZQORDGSGI"H[SLUHV LG LGDFFQDPH JXHVWFKH
FNVXP $)'&''%&$%&&)
&%''RPHVWLFVXSSRUWPHDVXUHVDQGWKHLUHIIHFWVRQDJULFXOWXUDOELRORJLFDOGLYHUVLW\1RWHE\WKH([HFXWLYH
6HFUHWDU\&23²)HEUXDU\
&KHQ5XL$QDO\VLVRQ´QHZIXQGDPHQWVµDQGUDQJHRIRLOSULFHWUHQG/RQGRQ:RUOG(QHUJ\&RXQFLO
&RZDQ7&RQVHUYDWLRQ5HVHUYH3URJUDP6WDWXVDQGFXUUHQWLVVXHV:DVKLQJWRQ'&&RQJUHVVLRQDO5HVHDUFK
6HUYLFH$YDLODEOHDWKWWSZZZFQLHRUJQOHFUVUHSRUWV2FW56SGI6HSWHPEHU
'·6RX]D * DQG ,NHUG - 6PDOO IDUPV DQG VXVWDLQDEOH GHYHORSPHQW ,V VPDOO PRUH VXVWDLQDEOH" -RXUQDO RI
$JULFXOWXUDODQG$SSOLHG(FRQRPLFV²
'H6FKXWWHU2D5HSRUWRIWKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$GGHQGXP0LVVLRQWRWKH:RUOG7UDGH
2UJDQL]DWLRQ-XQH$+5&$GG+XPDQ5LJKWV&RXQFLO*HQHYD
'H6FKXWWHU2E5HSRUWRIWKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$JULEXVLQHVVDQGWKHULJKWWRIRRG$
+5&+XPDQ5LJKWV&RXQFLO*HQHYD
'H6FKXWWHU25HSRUWVXEPLWWHGE\WKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$+5'+XPDQ5LJKWV
&RXQFLO*HQHYD
75$'($1'(19,5210(175(9,(:
'H6FKXWWHU2D$JURHFRORJ\DQGWKH5LJKWWR)RRG5HSRUWE\WKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRGWR
WKH8QLWHG1DWLRQV
'H6FKXWWHU2E7KH&RPPRQ$JULFXOWXUDO3ROLF\WRZDUGV7KHUROHRIWKH(XURSHDQ8QLRQLQVXSSRUWLQJ
WKHUHDOL]DWLRQRIWKHULJKWWRIRRG&RPPHQWVDQGUHFRPPHQGDWLRQVE\WKH8QLWHG1DWLRQV6SHFLDO5DSSRUWHXURQ
WKHULJKWWRIRRG-XQH
'H6FKXWWHU2F7KH:RUOG7UDGH2UJDQL]DWLRQDQGWKH3RVW*OREDO)RRG&ULVLV$JHQGD3XWWLQJIRRGVHFXULW\
ÀUVWLQWKHLQWHUQDWLRQDOWUDGHV\VWHP%ULHÀQJ1RWHE\WKH816SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRG*HQHYD
1RYHPEHU$YDLODEOHDWZZZRKFKURUJ'RFXPHQWV,VVXHV)RRGBEULHÀQJBQRWHBBHQ3')
(DVWHUOLQJ :( $JJDUZDO 3. %DWLPD 3 %UDQGHU .0 (UGD / +RZGHQ 60 .LULOHQNR $ 0RUWRQ - 6RXVVDQD -)
6FKPLGKXEHU-DQG7XELHOOR)1)RRGÀEUHDQGIRUHVWSURGXFWV,Q3DUU\0/&DQ]LDQL2)3DOXWLNRI-3YDQ
GHU/LQGHQ3-DQG+DQVRQ&(HGV&OLPDWH&KDQJH,PSDFWV$GDSWDWLRQDQG9XOQHUDELOLW\&RQWULEXWLRQRI
:RUNLQJ*URXS,,WRWKH)RXUWK$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH
&DPEULGJH8QLYHUVLW\3UHVV²
(7&*URXS:KRZLOOIHHGXV"4XHVWLRQVIRUWKHIRRGDQGFOLPDWHFULVHV&RPPXQLTXH1R1RYHPEHU
(7&*URXSD&DSWXULQJFOLPDWHJHQHV$SULO
(7&*URXSE:KRZLOOFRQWUROWKHJUHHQHFRQRP\"&RPPXQLTXH2FWREHU
(XU$FWLY(8ODZPDNHUVEDFN&$3EXGJHWVWDWXVTXR$YDLODEOHDWZZZHXUDFWLYFRPHQFDSHXODZPDNHUV
EDFNFDSEXGJHWVWDWXVTXRQHZV0D\
(XURSHDQ&RPPLVVLRQ7KHHFRQRPLFEHQHÀWVRIWKH1DWXUD1HWZRUNV$YDLODEOHDWKWWSHFHXURSDHX
HQYLURQPHQWQDWXUHQDWXUDÀQDQFLQJGRFV(19B/5B)LQDOSGI
(XURSHDQ(QYLURQPHQW$JHQF\5RDGXVHUFKDUJHVIRUKHDY\JRRGVYHKLFOHV$YDLODEOHDWZZZHHDHXURSDHX
SXEOLFDWLRQVURDGXVHUFKDUJHVIRUYHKLFOHV
)DQ6DQG+HDGH\'5HÁHFWLRQVRQWKHJOREDOIRRGFULVLV+RZGLGLWKDSSHQ"+RZKDVLWKXUW"$QGKRZFDQ
ZHSUHYHQWWKHQH[WRQH",)35,5HVHDUFK0RQRJUDSK,)35,:DVKLQJWRQ'&
)$26RPHWUDGHSROLF\LVVXHVUHODWLQJWRWUHQGVLQDJULFXOWXUHLPSRUWVLQWKHFRQWH[WRIIRRGVHFXULW\&RPPLWWHH
RQ&RPPRGLW\3UREOHPV&&35RPH
)$2%LRORJLFDOGLYHUVLW\LVIXQGDPHQWDOWRDJULFXOWXUHDQGIRRGSURGXFWLRQ5RPH$YDLODEOHDWZZZIDRRUJ
GRFUHS\HKWP
)$2 7RZDUGV DSSURSULDWH DJULFXOWXUDO WUDGH SROLF\ IRU ORZLQFRPH GHYHORSLQJ FRXQWULHV )$2 7UDGH 3ROLF\
7HFKQLFDO1RWHV1R5RPH
)$2,PSRUWVXUJHV:KDWLVWKHLUIUHTXHQF\DQGZKLFKDUHWKHFRXQWULHVDQGFRPPRGLWLHVPRVWDIIHFWHG")$2
%ULHIVRQ,PSRUW6XUJHV²,VVXHV1R5RPH
)$2+XQJHURQWKHULVH%ULHÀQJSDSHU6HSWHPEHU5RPH
)$27KH6WDWHRI$JULFXOWXUDO&RPPRGLW\0DUNHWVLQ+LJKIRRGSULFHVDQGWKHIRRGFULVLV²H[SHULHQFHV
DQGOHVVRQVOHDUQHG5RPH$YDLODEOHDWZZZIDRRUJGRFUHSLHLHKWP
)$2´&OLPDWH6PDUWµ$JULFXOWXUH²3ROLFLHV3UDFWLFHVDQG)LQDQFLQJIRU)RRG6HFXULW\$GDSWDWLRQDQG0LWLJDWLRQ
5RPH
)$27KH6WDWHRI)RRG,QVHFXULW\LQWKH:RUOG5RPH$YDLODEOHDWKWWSZZZIDRRUJKXQJHUHQ
)$26PDOOKROGHUVDQG)DPLO\)DUPHUV)DFWVKHHWRI)$2IRUWKH5LR&RQIHUHQFH5RPH$YDLODEOHDWZZZ
IDRRUJÀOHDGPLQWHPSODWHVQUVXVWDLQDELOLW\BSDWKZD\VGRFV)DFWVKHHWB60$//+2/'(56SGI
)DUPLQJ )LUVW 3DUWQHUVKLS WR WUDLQ IHPDOH GDLU\ IDUPHUV LQ 3DNLVWDQ $YDLODEOH DW KWWSZZZIDUPLQJÀUVW
RUJSDUWQHUVKLSWRWUDLQIHPDOHGDLU\IDUPHUVLQSDNLVWDQ-XQH
*DUEHU.)XHOFRVWVFXWGHHSO\LQWRIRRGDLG861HZVDQG:RUOG5HSRUWV-XO\$YDLODEOHDWZZZXVQHZV
FRPQHZVDUWLFOHVIXHOFRVWVFXWGHHSO\LQWRIRRGDLG
*DWWLQJHU$0OOHU$+DHQLD06NLQQHUD&)OLHVVEDFK$%XFKPDQQ10lGHU36WRO]H06PLWK3(O+DJH6FLDODEED
1 DQG 1LJJOL 8 (QKDQFHG WRS VRLO FDUERQ VWRFNV XQGHU RUJDQLF IDUPLQJ 3URFHHGLQJV RI WKH 1DWLRQDO
$FDGHP\RI6FLHQFHRIWKH8QLWHG6WDWHVRI$PHULFD9RO1R²$YDLODEOHDWZZZSQDVRUJ
FRQWHQWHDUO\IXOOSGIKWPO
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
*KRVK-&RPPRGLW\VSHFXODWLRQDQGWKHIRRGFULVLV1HZ'HOKL3DSHUSUHSDUHGIRUWKH:RUOG'HYHORSPHQW
0RYHPHQW 2FWREHU $YDLODEOH DW ZZZZGPRUJXNIRRGVSHFXODWLRQFRPPRGLW\VSHFXODWLRQDQGIRRGFULVLV
SURIMD\DWLJKRVK
*LOEHUW-1RZHFDQ·W8QFHUWDLQW\WHFKQRORJ\DQGULVN/HFWXUHDWWKH$63286$&RQIHUHQFH:DVKLQJWRQ
'&2FWREHUFLWHGLQ5LFKDUG+HLQEHUJ57KH(QGRI*URZWK*DEULROD,VODQG%&1HZ6RFLHW\
3XEOLVKHUV
*UHHQSHDFH,QWHUQDWLRQDO$JULFXOWXUHDWDFURVVURDGV)RRGIRUVXUYLYDO$PVWHUGDP
*XHUHxD$+DYLQJ+XQJHU6WLOO3RVVLEOH"2[IDP%ULHÀQJSDSHU2[IDP,QWHUQDWLRQDO6HSWHPEHU
+DOEHUJ1*OREDO'HYHORSPHQWRI2UJDQLF$JULFXOWXUH&KDOOHQJHVDQG3URVSHFWV/RQGRQ&$%,3XEOLVKLQJ
+lEHUOL & )RRG 6HFXULW\ DQG :72 5XOHV ,Q .DUDSLQDU % +lEHUOL & (G )RRG &ULVHV DQG WKH :72
&DPEULGJH8QLYHUVLW\3UHVV
+HLQHPDQQ-$+RSHQRWK\SH7KHIXWXUHRIDJULFXOWXUHJXLGHGE\WKH,$$67'3HQDQJ7KLUG:RUOG1HWZRUN
+HQGULFNVRQ 0 DQG +HIIHUQDQ : &RQFHQWUDWLRQ LQ DJULFXOWXUDO PDUNHWV )DFWVKHHW 6DLQW /RXLV 0LVVRXUL
'HSDUWPHQWRI5XUDO6RFLRORJ\8QLYHUVLW\RI0LVVRXUL$SULO
+HLQULFK%|OO)RXQGDWLRQ0,6(5(256ORZ7UDGH6RXQG)DUPLQJ(FRIDLU7UDGH'LDORJXH
+HUUHQ+5HWDO$JULFXOWXUH,QYHVWLQJLQQDWXUDOFDSLWDO,Q81(37RZDUGVD*UHHQ(FRQRP\3DWKZD\VWR
6XVWDLQDEOH'HYHORSPHQWDQG3RYHUW\(UDGLFDWLRQ*HQHYD²
+LQH52UJDQLF$JULFXOWXUHDQG)RRG6HFXULW\LQ$IULFD81(381&7$'&DSDFLW\%XLOGLQJ7DVN)RUFHRQ7UDGH
(QYLURQPHQWDQG'HYHORSPHQW*HQHYD81&7$'
+/3( 3ULFH YRODWLOLW\ DQG IRRG VHFXULW\ $ UHSRUW E\ WKH +LJK /HYHO 3DQHO RI ([SHUWV RQ )RRG 6HFXULW\ DQG
1XWULWLRQRIWKH&RPPLWWHHRQ:RUOG)RRG6HFXULW\5RPH
+R0DH:DQHWDO)RRGIXWXUHVQRZ/RQGRQDQG3HQDQJ,QVWLWXWHRI6FLHQFHDQG6RFLHW\DQG7KLUG:RUOG
1HWZRUN
+|IÁHU+DQG2FKLHQJ%+LJKFRPPRGLW\SULFHV²:KRJHWVWKHPRQH\"$FDVHVWXG\RQWKHLPSDFWRIKLJK
IRRGDQGIDFWRUSULFHVRQ.HQ\DQIDUPHUV%HUOLQ+HLQULFK%RHOO)RXQGDWLRQ
+RIIPDQQ8$VVXULQJIRRGVHFXULW\LQGHYHORSLQJFRXQWULHVXQGHUWKHFKDOOHQJHVRIFOLPDWHFKDQJH.H\WUDGH
DQG GHYHORSPHQW LVVXHV RI D IXQGDPHQWDO WUDQVIRUPDWLRQ RI DJULFXOWXUH 81&7$' 'LVFXVVLRQ 3DSHU 1R 81&7$'*HQHYD$YDLODEOHDWKWWSXQFWDGRUJHQ'RFVRVJGSBHQSGI
+ROH ' 3HUNLQV $ :LOVRQ - $OH[DQGHU , *ULFH 3 DQG (YDQV $ 'RHV RUJDQLF IDUPLQJ EHQHÀW ELRGLYHUVLW\"
%LRORJLFDO&RQVHUYDWLRQ²
+RSSH 5$ 0DF'RQDOG -0 DQG .RUE 3 6PDOO IDUPV LQ WKH 8QLWHG 6WDWHV 3HUVLVWHQFH XQGHU SUHVVXUH
:DVKLQJWRQ'&86'$(FRQRPLF5HVHDUFK6HUYLFH)HEUXDU\
+RZVH5DQG7HLWHO=*%H\RQGWKH'LYLGH²7KH&RYHQDQWRQ(FRQRPLF6RFLDODQG&XOWXUDO5LJKWVDQGWKH
:RUOG7UDGH2UJDQL]DWLRQ)ULHGULFK(EHUW)RXQGDWLQ*HQHYD
+XLVPDQQ:6FKZDU]EXFK::)'XQNOH*HVFKlIWHLP=HLFKHQGHV3DQGD6KDPLQJWKH::)GXELRXVGHDOV
LQWKHQDPHRIWKHSDQGD*WHUVORKHU9HUODJVKDXV5DQGRP+RXVH3XEOLVKLQJ*URXS0XQLFK
+XPDQ5LJKWV&RXQFLO$JURHFRORJ\DQGWKHULJKWWRIRRG5HSRUWVXEPLWWHGE\WKH6SHFLDO5DSSRUWHXURQWKH
ULJKWWRIRRG2OLYLHUGH6FKXWWHUDWWKHWKVHVVLRQRIWKH8QLWHG1DWLRQV+XPDQ5LJKWV&RXQFLO0DUFK$
+5&$YDLODEOHDWZZZVUIRRGRUJ
+XPSKUH\-6KDSLQJYDOXHFKDLQVIRUGHYHORSPHQWJOREDOYDOXHFKDLQVLQDJULEXVLQHVV(VFKERUQ*7=
,$$67',QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG7HFKQRORJ\IRU'HYHORSPHQW*OREDO
5HSRUW-RKDQQHVEXUJ$YDLODEOHDWZZZDJDVVHVVPHQWRUJ
,$$67'$JULFXOWXUHDWD&URVVURDGV:DVKLQJWRQ'&,VODQG3UHVV
,$73,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\:72$JUHHPHQWRQ$JULFXOWXUH$GHFDGHRIGXPSLQJ8QLWHG
6WDWHVGXPSLQJRQDJULFXOWXUDOPDUNHWV$YDLODEOHDWKWWSZZZLDWSRUJÀOHVBBSGI
,$73&RPPRGLWLHVPDUNHWVSHFXODWLRQ$YDLODEOHDWKWWSZZZLDWSRUJÀOHVBBSGI1RYHPEHU
75$'($1'(19,5210(175(9,(:
,($D([HFXWLYHVXPPDU\,Q:RUOG(QHUJ\2XWORRN3DULV2(&',($
,($E.H\JUDSKV:RUOGRLOSURGXFWLRQE\W\SHLQWKHQHZSROLFLHVVFHQDULR,Q:RUOG(QHUJ\2XWORRN
$YDLODEOHDWZZZZRUOGHQHUJ\RXWORRNRUJGRFVZHRNH\BJUDSKVSGI
,)$'5XUDO3RYHUW\5HSRUW²1HZUHDOLWLHV1HZ&KDOOHQJHV1HZ2SSRUWXQLWLHVIRU7RPRUURZ·V*HQHUDWLRQ
5RPH
,)2$0D'HÀQLWLRQRIRUJDQLFDJULFXOWXUH5DWLÀHGE\WKH,)2$0*HQHUDO$VVHPEO\LQ-XQH$YDLODEOHDW
ZZZLIRDPRUJJURZLQJBRUJDQLFGHÀQLWLRQVGRDLQGH[KWPO
,)2$0E'HÀQLWLRQRI3DUWLFLSDWRU\*XDUDQWHH6\VWHPV(VWDEOLVKHGE\3*67DVN)RUFHLQ-XQH$YDLODEOH
DWZZZLIRDPRUJDERXWBLIRDPVWDQGDUGVSJVKWPO
,0$3 )RRG %HYHUDJH ,QGXVWU\ *OREDO 5HSRUW $YDLODEOH DW ZZZLPDSFRPLPDSPHGLDUHVRXUFHV
,0$3B)RRGBB%HYHUDJHB5HSRUWB:(%B$'$&$)SGI
,0),0)6HHV2LO3ULFHV6WD\LQJ+LJK:DVKLQJWRQ'&$YDLODEOHDWKWWSZZZLPIRUJH[WHUQDOSXEVIWVXUYH\
VR5(6$KWP$SULO
,0),PSDFWRI+LJK)RRGDQG)XHO3ULFHVRQ'HYHORSLQJ&RXQWULHV³)UHTXHQWO\$VNHG4XHVWLRQV$YDLODEOHDW
KWWSZZZLPIRUJH[WHUQDOQSH[UIDTIISIDTVKWP
,15$/·,167,7871$7,21$/'(/$5(&+(5&+($*52120,48(6XVWDLQDEOH)RRG6\VWHPV&KDOOHQJHV
6WDWH RI WKH $UW DQG 4XHVWLRQV IRU 5HVHDUFK 3UHVHQWDWLRQ DW WKH (XURSHDQ &RPPLVVLRQ KHDULQJZRUNVKRS RQ
VXVWDLQDEOHIRRGHQWLWOHG)HHGLQJWKHSODQHWVXVWDLQDEO\IURPIRUHVLJKWWREHWWHULQWHJUDWHGSROLFLHV%UXVVHOV
1RYHPEHU$YDLODEOHDWKWWSHFHXURSDHXDJULFXOWXUHHYHQWVIRRGVXVWDLQDELOW\HVQRXIBHQSGI
,QWHU$FDGHP\ &RXQFLO 5HDOL]LQJ WKH SURPLVH RI $IULFDQ DJULFXOWXUH $PVWHUGDP $YDLODEOH DW ZZZ
LQWHUDFDGHP\FRXQFLOQHW&065HSRUWV$IULFDQ$JULFXOWXUHDVS[
,QWHUDJHQF\5HSRUWWRWKH0H[LFDQ*3UHVLGHQF\6XVWDLQDEOHDJULFXOWXUDOSURGXFWLYLW\JURZWKDQGEULGJLQJ
WKHJDSIRUVPDOOIDPLO\IDUPV5HSRUWSUHSDUHGIRUWKH*E\%LRGLYHUVLW\,QWHUQDWLRQDO&*,$5)$2,)$',)35,
,,&$2(&'81&7$'81+/7)RQ*OREDO)RRG6HFXULW\:)3:RUOG%DQNDQG:72$YDLODEOHDWZZZIDRRUJ
ÀOHDGPLQWHPSODWHVHVD3DSHUVBDQGBGRFXPHQWV*BDJULFXOWXUDOBSURGXFWLYLW\BGUDIWBUHSRUWB3XEOLFDWLRQSGI
,3&&D&OLPDWH&KDQJH7KH3K\VLFDO6FLHQFH%DVLV6RORPRQ64LQ'0DQQLQJ00DUTXLV0$YHU\W
.% 7LJQRU 0 DQG 0LOOHU +/ HGV &RQWULEXWLRQ RI :RUNLQJ *URXS , WR WKH )RXUWK $VVHVVPHQW 5HSRUW RI WKH
,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJHDQG1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
,3&&E6XPPDU\IRUSROLF\PDNHUV,Q3DUU\0/&DQ]LDQL2)3DOXWLNRI-3YDQGHU/LQGHQ3-DQG+DQVRQ&(
HGV&OLPDWH&KDQJH,PSDFWV$GDSWDWLRQDQG9XOQHUDELOLW\&RQWULEXWLRQRI:RUNLQJ*URXS,,WRWKH)RXUWK
$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
²
,3&& F ,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH &KDQJH &OLPDWH &KDQJH 0LWLJDWLRQ RI &OLPDWH &KDQJH
:RUNLQJ*URXS,,,5HSRUWRIWKH)RXUWK$VVHVVPHQW5HSRUWRI,3&&$YDLODEOHDWZZZLSFFFKSXEOLFDWLRQVBDQGB
GDWDDUZJHQFRQWHQWVKWPO
,VPDLO)$.5HIRUPLQJWKH:RUOG7UDGH2UJDQL]DWLRQ:RUOG(FRQRPLFV9RO1R$YDLODEOHDWZZZ
JWGIRUXPRUJGRZQORDG:RUOG(FRQRPLFV)DL]HO,VPDLOUHIRUPLQJWKH:72SGI
,VPDLO)$.7RZDUGVDQDOWHUQDWLYHQDUUDWLYHIRUWKHPXOWLODWHUDOWUDGLQJV\VWHP6RXWK9LHZV1R*HQHYD
$YDLODEOH DW ZZZVRXWKFHQWUHRUJLQGH[SKS"RSWLRQ FRPBFRQWHQWYLHZ DUWLFOHLG $WRZDUGVDQ
DOWHUQDWLYHQDUUDWLYHIRUWKHPXOWLODWHUDOWUDGLQJV\VWHPQRYHPEHUFDWLG $VRXWKYLHZV,WHP
LG ODQJ HV
,7&DQG)L%/5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH2UJDQLFIDUPLQJDQGFOLPDWHFKDQJH*HQHYD,7&
-KD%,QGLD·VGDLU\VHFWRULQWKHHPHUJLQJWUDGHRUGHU'HOKL,QVWLWXWHRI(FRQRPLF*URZWK'HOKL8QLYHUVLW\
-RKQVWRQ , 6XVWDLQDELOLW\ XQGHU 6FUXWLQ\ 5HDO YDOXHV DQG WKHLU UROH LQ SURPRWLQJ WKH QHZ HFRQRPLFV RI
JURZWK 7KH &OXE RI 5RPH 'LVFXVVLRQ 3DSHU 1R $YDLODEOH DW ZZZFOXERIURPHRUJFPVZSFRQWHQW
XSORDGV&R5'LVFXVVLRQ3DSHU6HULHV,DQ-RKQVRQSGI
-RUGDQ52UJDQLF$JULFXOWXUH²$*XLGHWR&OLPDWH&KDQJHDQG)RRG6HFXULW\%RQQ,)2$0
.DUDSLQDU%+lEHUOL&&RQFOXVLRQDQGSROLF\UHFRPPHQGDWLRQV,Q.DUDSLQDU%+lEHUOL&(G)RRG&ULVHV
DQGWKH:72&DPEULGJH8QLYHUVLW\3UHVV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
.KRU 0 7KHLPSDFWRIWUDGHOLEHUDOL]DWLRQRQDJULFXOWXUHLQGHYHORSLQJFRXQWULHV7KHH[SHULHQFHRI*KDQD
3HQDQJ7KLUG:RUOG1HWZRUN
.KRU 0 7KH IRRG FULVLV FOLPDWH FKDQJH DQG WKH LPSRUWDQFH RI VXVWDLQDEOH DJULFXOWXUH (QYLURQPHQW 'HYHORSPHQW6HULHV3HQDQJ7KLUG:RUOG1HWZRUN3DSHUSUHVHQWHGDWWKH+LJK/HYHO&RQIHUHQFHRQ:RUOG
)RRG6HFXULW\7KH&KDOOHQJHVRI&OLPDWH&KDQJHDQG%LRHQHUJ\5RPH²-XQH
.KRU0&KDOOHQJHVRIWKHJUHHQHFRQRP\FRQFHSWDQGSROLFLHVLQWKHFRQWH[WRIVXVWDLQDEOHGHYHORSPHQW
SRYHUW\ DQG HTXLW\ ,Q 8QLWHG 1DWLRQV 'LYLVLRQ IRU 6XVWDLQDEOH 'HYHORSPHQW 81'(6$ 81(3 DQG 81&7$'
7KH7UDQVLWLRQWRD*UHHQ(FRQRP\%HQHÀWV&KDOOHQJHVDQG5LVNVIURPD6XVWDLQDEOH'HYHORSPHQW3HUVSHFWLYH
5HSRUWE\D3DQHORI([SHUWVWRWKH6HFRQG3UHSDUDWRU\&RPPLWWHH0HHWLQJIRUWKH8QLWHG1DWLRQV&RQIHUHQFHRQ
6XVWDLQDEOH'HYHORSPHQW1HZ<RUNDQG*HQHYD
.RWVFKL-IRUWKFRPLQJ0LQHUDOIHUWLOL]HUVDQGWKHSHUVSHFWLYHRIWURSLFDOVPDOOKROGLQJV3DSHUIRUWKH+HLQULFK%RHOO
)RXQGDWLRQDQG::)*HUPDQ\%HUOLQ
.RWVFKL-DQG0OOHU6lPDQQ.7KHUROHRIRUJDQLFDJULFXOWXUHLQPLWLJDWLQJFOLPDWHFKDQJH$VFRSLQJVWXG\
%RQQ,QWHUQDWLRQDO)HGHUDWLRQRI2UJDQLF$JULFXOWXUH0RYHPHQWV
/DJL0%DU<DP<DQG%HUWUDQG.=7KHIRRGFULVHV$TXDQWLWDWLYHPRGHORIIRRGSULFHVLQFOXGLQJVSHFXODWRUV
DQGHWKDQROFRQYHUVLRQ&DPEULGJH0$1HZ(QJODQG&RPSOH[6\VWHPV,QVWLWXWH$YDLODEOHDWKWWSDU[LYRUJ
36BFDFKHDU[LYSGIYSGI
/LPHV 7 3ULPDU\ FRPPRGLW\ SULFHV DQG JOREDO IRRG VHFXULW\ :K\ IDUPHUV VWLOO VWUXJJOH ZKHQ IRRG SULFHV
ULVH*UHHQ+RXVH'RUVHW8QLWHG.LQJGRP$YDLODEOHDWZZZJUHHQKRXVHWKLQNWDQNRUJÀOHVJUHHQKRXVHKRPH
)RRGBVPDOOHUSGI
/RWWHU':7KHSHUIRUPDQFHRIRUJDQLFDQGFRQYHQWLRQDOFURSSLQJV\VWHPVLQDQH[WUHPHFOLPDWH\HDU$PHULFDQ
-RXUQDORI$OWHUQDWLYH$JULFXOWXUH$YDLODEOHDWKWWSGRQORWWHUQHWORWWHUBDMDDBDUWLFOHSGI
/XQHQERUJ36PDOOVFDOHIDUPLQJDQGUXUDOOLYHOLKRRGV3UHVHQWDWLRQDWWKH81&7$'VHPLQDURQWKHLPSRUWDQFH
RIVPDOOVFDOHDQGIDPLO\IDUPLQJIRUIRRGVHFXULW\*HQHYD)HEUXDU\
0D\HW07KHQHZJUHHQUHYROXWLRQLQ$IULFD7URMDQKRUVHIRU*02V",Q1RUVWDG$HG$IULFD&DQ)HHG,WVHOI
2VOR7KH'HYHORSPHQW)XQG
0LQRW1&RQWUDFWIDUPLQJLQGHYHORSLQJFRXQWULHV3DWWHUQVLPSDFWDQGSROLF\LPSOLFDWLRQV,WKDFD1<&RUQHOO
8QLYHUVLW\
0XUSK\6)UHHWUDGHLQDJULFXOWXUH$EDGLGHDZKRVHWLPHLVGRQH0RQWKO\5HYLHZ-XO\$XJXVW$YDLODEOH
DWKWWSPRQWKO\UHYLHZRUJIUHHWUDGHLQDJULFXOWXUHDEDGLGHDZKRVHWLPHLVGRQH
1DVVDU $ 5RQGULJXH]$OFDOD 0 / &RVWD & DQG 1RJXHLUD 6 $JULFXOWXUDO VXEVLGLHV LQ WKH :72 JUHHQ ER[
2SSRUWXQLWLHVDQGFKDOOHQJHVIRUGHYHORSLQJFRXQWULHV,Q0HOpQGH]2UWL]5%HOOPDQQ&DQG+HSEXUQ-HGV
$JULFXOWXUDO6XEVLGLHVLQWKH:72*UHHQ%R[(QVXULQJ&RKHUHQFHZLWK6XVWDLQDEOH'HYHORSPHQW*RDOVSS
&DPEULGJH8QLYHUVLW\3UHVV&DPEULGJH
1HWKHUODQGV(QYLURQPHQWDO5HVHDUFK$JHQF\DQG6WRFNKROP5HVLOLHQFH&HQWHU*HWWLQJLQWRWKH5LJKW/DQH
IRU $ 3ULPHU IRU (8 'HEDWH 1HWKHUODQGV (QYLURQPHQWDO $VVHVVPHQW $JHQF\ %LOWKRYHQ'HQ +DDJ DQG
6WRFNKROP
1LJJOL8)OLH‰EDFK$+HSSHUO\3DQG6FLDODEED1/RZJUHHQKRXVHJDVDJULFXOWXUH0LWLJDWLRQDQGDGDSWDWLRQ
SRWHQWLDORIVXVWDLQDEOHIDUPLQJV\VWHPV5HY5RPH)$2$SULO
2(&'$JULFXOWXUDOSROLFLHVLQ2(&'FRXQWLHV0RQLWRULQJDQGHYDOXDWLRQ3DULV
2(&'$JULFXOWXUDOSROLFLHVLQ2(&'FRXQWULHV$WDJODQFH3DULV
3$11$3HVWLFLGH$FWLRQ1HWZRUN1RUWK$PHULFD6FLHQWLVWVVXSSRUWIDUPHUVUHJDLQLQJFRQWURORIDJULFXOWXUH
)LQGLQJV IURP WKH 81OHG ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG 7HFKQRORJ\ IRU
'HYHORSPHQW6DQ)UDQFLVFR
3LQJDOL3.KZDMD<DQG0HLMHU0&RPPHUFLDOL]LQJVPDOOIDUPV5HGXFLQJWUDQVDFWLRQFRVWV,Q,)35,DQG2',
7KH)XWXUHRI6PDOO)DUPV3URFHHGLQJVRID5HVHDUFK:RUNVKRSLQ:\H²-XQH
3UHWW\-DQG+LQH55HGXFLQJ)RRG3RYHUW\ZLWK6XVWDLQDEOH$JULFXOWXUH$6XPPDU\RI1HZ(YLGHQFH6$)(
:RUOG7KH3RWHQWLDORI6XVWDLQDEOH$JULFXOWXUHWR)HHGWKH:RUOG5HVHDUFK3URMHFW8QLYHUVLW\RI(VVH[$YDLODEOH
DWZZZHVVH[DFXNFHVRFFDVLRQDOSDSHUV6$)(),1$/3DJHVSGI
75$'($1'(19,5210(175(9,(:
3UHWW\-15HJHQHUDWLQJ$JULFXOWXUH3ROLFLHVDQG3UDFWLFHIRU6XVWDLQDELOLW\DQG6HOI5HOLDQFH/RQGRQ-RVHSK
+HQU\3UHVV
3UHWW\-11REOH$'%RVVLR''L[RQ-+LQH5(3HQQLQJGH9ULHV):7DQG0RUVRQ-,/5HVRXUFHFRQVHUYLQJ
DJULFXOWXUHLQFUHDVHV\LHOGVLQGHYHORSLQJFRXQWULHV(QYLURQPHQWDO6FLHQFHDQG7HFKQRORJ\²
5DPDQ0(IIHFWVRIDJULFXOWXUDOOLEHUDOLVDWLRQ([SHULHQFHVRIUXUDOSURGXFHUVLQGHYHORSLQJFRXQWULHV7:1
7UDGHDQG'HYHORSPHQW6HULHV3HQDQJ7KLUG:RUOG1HWZRUN
5RVVHW 30 7KH PXOWLSOH IXQFWLRQV DQG EHQHÀWV RI VPDOO IDUP DJULFXOWXUH 3DSHU SUHVHQWHG DW WKH )$2
1HWKHUODQGVFRQIHUHQFHRQ&XOWLYDWLQJ2XU)XWXUHV0DDVWULFKW²6HSWHPEHU
5XQGJUHQ * *DUGHQ (DUWK )URP KXQWHU DQG JDWKHUHU WR JOREDO FDSLWDOLVP DQG WKHUHDIWHU 5HJHQHUDWLRQ
8SSVDOD6ZHGHQ$YDLODEOHDWKWWSJDUGHQHDUWKEORJVSRWFK
6DFKV:DQG6DQWDULXV76ORZ7UDGH²6RXQG)DUPLQJ$0XOWLODWHUDO)UDPHZRUNIRU6XVWDLQDEOH0DUNHWVLQ
$JULFXOWXUH%HUOLQ$DFKHQ+HLQULFK%|OO6WLIWXQJ0LVHUHRU
6DXQGHUV3,QGXVWULDODJULFXOWXUHDQGJOREDOZDUPLQJ(XURSHDQ3DUOLDPHQW%ULHÀQJ2FWREHU$YDLODEOHDW
KWWSZZZLQGVSRUJ,$*:SKS
6&$5²(XURSHDQ&RPPLVVLRQ6WDQGLQJ&RPPLWWHHRQ$JULFXOWXUDO5HVHDUFK6XVWDLQDEOHIRRGFRQVXPSWLRQ
DQGSURGXFWLRQLQDUHVRXUFHFRQVWUDLQHGZRUOG7KHUG6&$5)RUHVHLJKW([HUFLVH$YDLODEOHDWKWWSHFHXURSD
HXUHVHDUFKDJULFXOWXUHVFDUSGIVFDUBIHJBÀQDOBUHSRUWBBBSGI
6FKPLW] & %LHZDOGD $ /RW]H&DPSHQD + 3RSSD $ 'LHWULFKD - 3 %RGLUVN\D % .UDXVH 0 DQG :HLQGO , 7UDGLQJ PRUH IRRG ,PSOLFDWLRQV IRU ODQG XVH JUHHQKRXVH JDV HPLVVLRQV DQG WKH IRRG V\VWHP *OREDO
(QYLURQPHQWDO&KDQJH9RO,VVXH3DJHV²$YDLODEOHDWZZZVFLHQFHGLUHFWFRPVFLHQFHDUWLFOHSLL
6
6FKZHL]HU%DXHU,VVXHRI-DQXDU\$YDLODEOHDWKWWSVFKZHL]HUEDXHUFKDUWLNHOB
6FLDODEED1(O+DJH2UJDQLFDJULFXOWXUHDQGIRRGVHFXULW\5RPH)$20D\
6FLDODEED 1( DQG 0OOHU/LQGHQODXI 0 2UJDQLF DJULFXOWXUH DQG FOLPDWH FKDQJH 5HQHZDEOH $JULFXOWXUH DQG
)RRG6\VWHPV²
6(.(0 5HSRUW RQ 6XVWDLQDEOH 'HYHORSPHQW $YDLODEOH DW ZZZVHNHPFRPVLWHVGHIDXOWÀOHVÀOHV
6(.(05HSRUWRQ6XVWDLQDEOH'HYHORSPHQWBHQSGI
6HXIHUW95DPDQNXWW\1DQG)ROH\-$&RPSDULQJWKH\LHOGVRIRUJDQLFDQGFRQYHQWLRQDODJULFXOWXUH1DWXUH
$YDLODEOHDWZZZQDWXUHFRPQDWXUHMRXUQDOYQDEVQDWXUHKWPO
6KLYD 9 1RW VR JUHHQ UHYROXWLRQ /HVVRQV IURP ,QGLD ,Q 1RUVWDG $ HG $IULFD &DQ )HHG ,WVHOI 2VOR 7KH
'HYHORSPHQW)XQG
6QDSS66%ODFNLHE0-*LOEHUWF5$%H]QHU.HUUG5DQG.DQ\DPD3KLULH*<%LRGLYHUVLW\FDQVXSSRUWD
JUHHQHUUHYROXWLRQLQ$IULFD3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFHVRIWKH8QLWHG6WDWHVRI$PHULFD
31$6$YDLODEOHDWZZZSQDVRUJFRQWHQWIXOO
6RXWK&HQWUH3DSHUVSUHSDUHGIRUWKH)$2LQLWLDWLYH*UHHQLQJWKH(FRQRP\ZLWK$JULFXOWXUHGUDIW*HQHYD
6WHIIHQ:6DQGHUVRQ$7\VRQ3'-lJHU-0DWVRQ3$0RRUH%,,,2OGÀHOG)5LFK¤DUGVRQ.6FKHOOQKXEHU+-7XUQHU
%/DQG:DVVRQ5-*OREDO&KDQJHDQGWKH(DUWK6\VWHP$3ODQHWXQGHU3UHVVXUH%HUOLQ+HLGHOEHUJDQG
1HZ<RUN6SULQJHU9HUODJ
6XSSDQ6$EHWWHUIXWXUHIRUIRRGDQGHQHUJ\5HIRUPLQJFRPPRGLW\IXWXUHVPDUNHWV/RQGRQ,$73$YDLODEOH
DWKWWSZZZLDWSRUJÀOHVBBSGI-XQH
6XWWRQ 0$ +RZDUG &0 (ULVPDQ -: %LOOHQ * %OHHNHU $ *UHQQIHOW 3 YDQ *ULQVUHQ + DQG *UL]HWWL % 7KH
(XURSHDQ 1LWURJHQ $VVHVVPHQW &DPEULGJH 8QLYHUVLW\ 3UHVV &DPEULGJH 8. $YDLODEOH DW ZZZQLQHHVIRUJ
(1$%RRN
6ZDQVRQ77KH(FRQRPLFVRI(QYLURQPHQWDO'HJUDGDWLRQ³7UDJHG\IRUWKH&RPPRQV"&KHOWHQKDP(GZDUG
(OJDUDQG81(3
7KH5R\DO6RFLHW\5HDSLQJWKH%HQHÀWV6FLHQFHDQGWKHVXVWDLQDEOHLQWHQVLÀFDWLRQRIJOREDODJULFXOWXUH/RQGRQ
$YDLODEOH DW KWWSUR\DOVRFLHW\RUJXSORDGHG)LOHV5R\DOB6RFLHW\B&RQWHQWSROLF\SXEOLFDWLRQV
SGI
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
7KRPSVRQ&%$IULFD*UHHQUHYROXWLRQRUUDLQERZHYROXWLRQ")RUHLJQ3ROLF\LQ)RFXV-XO\$YDLODEOHDWKWWS
ZZZISLIRUJISLIW[W
7VFKDUQNH7&ORXJK<:DQJHU7&-DFNVRQ/0RW]NH,3HUIHFWR,9DQGHUPHHU-DQG:KLWEUHDG$*OREDO
)RRG6HFXULW\%LRGLYHUVLW\&RQVHUYDWLRQDQGWKH)XWXUHRI$JULFXOWXUDO,QWHQVLÀFDWLRQ%LRORJLFDO&RQVHUYDWLRQ
²$YDLODEOHDWKWWS[D\LPJFRPNTJURXSVQDPHB7VFKDUQWNHB*OREDOI
RRGVHFXULW\ELRGLYHUVLW\FRQVHUYDWLRQDQGWKHIXWXUHB%LRO&RQVSGI
7ZDURJ62UJDQLFDJULFXOWXUH$WUDGHDQGVXVWDLQDEOHGHYHORSPHQWRSSRUWXQLW\IRUGHYHORSLQJFRXQWULHV,Q
81&7$'7UDGHDQG(QYLURQPHQW5HYLHZ1HZ<RUNDQG*HQHYD8QLWHG1DWLRQV
8.)RRG*URXS6HFXULQJIXWXUHIRRG7RZDUGVHFRORJLFDOIRRGSURYLVLRQ8.)RRG*URXSEULHÀQJ/RQGRQ
81&7$'7UDGLQJ2SSRUWXQLWLHVIRU2UJDQLF)RRG3URGXFWVIURP'HYHORSLQJ&RXQWULHV6WUHQJWKHQLQJ5HVHDUFK
DQG3ROLF\0DNLQJ&DSDFLW\RQ7UDGHDQG(QYLURQPHQWLQ'HYHORSLQJ&RXQWULHV1HZ<RUNDQG*HQHYD
81&7$' 7UDGH DQG (QYLURQPHQW 5HYLHZ 1HZ <RUN DQG *HQHYD 8QLWHG 1DWLRQV $YDLODEOH DW ZZZ
XQFWDGRUJHQGRFVGLWFWHGBHQSGI
81&7$'7UDGHDQG(QYLURQPHQW5HYLHZ3URPRWLQJ3ROHVRI&OHDQ*URZWKWR)RVWHUWKH7UDQVLWLRQWR
D0RUH6XVWDLQDEOH(FRQRP\81&7$'',7&7('1HZ<RUNDQG*HQHYD8QLWHG1DWLRQV
81&7$'3ULFH)RUPDWLRQLQ)LQDQFLDOL]HG&RPPRGLW\0DUNHWV*HQHYD$YDLODEOHDWKWWSZZZXQFWDGRUJ
HQGRFVJGVBHQSGI-XQH
81&7$'81(3D%HVWSUDFWLFHVIRURUJDQLFSROLF\:KDWGHYHORSLQJFRXQWU\JRYHUQPHQWVFDQGRWRSURPRWHWKH
RUJDQLFDJULFXOWXUHVHFWRU81(381&7$'&DSDFLW\%XLOGLQJ7DVN)RUFHRQ7UDGH(QYLURQPHQWDQG'HYHORSPHQW
1HZ<RUNDQG*HQHYD$YDLODEOHDWZZZXQFWDGRUJWUDGHBHQY
81&7$'81(3 E 2UJDQLF $JULFXOWXUH DQG )RRG 6HFXULW\ LQ $IULFD 5HSRUW RI WKH 81(381&7$' &DSDFLW\
%XLOGLQJ7DVN)RUFHRQ7UDGH(QYLURQPHQWDQG'HYHORSPHQW&%7)*HQHYD$YDLODEOHDWKWWSDUFKLYHXQFWDG
RUJWUDGHBHQYGRFXPHQWV38%/,DVS
81(37RZDUGVD*UHHQ(FRQRP\3DWKZD\VWR6XVWDLQDEOH'HYHORSPHQWDQG3RYHUW\(UDGLFDWLRQ$YDLODEOHDW
ZZZXQHSRUJJUHHQHFRQRP\
815,6' 7KH VRFLDO DQG HFRQRPLF LPSOLFDWLRQV RI ODUJHVFDOH LQWURGXFWLRQ RI QHZ YDULHWLHV RI IRRG JUDLQ
6XPPDU\RIFRQFOXVLRQRIDJOREDOUHVHDUFKSURMHFW5HSRUW1R*HQHYD
86'$)DUPLQFRPHDQGFRVWV)DUPVHFWRULQFRPHIRUHFDVW1RYHPEHU(FRQRPLF5HVHDUFK6HUYLFH
2QOLQH%ULHÀQJ5RRP$YDLODEOHDWKWWSZZZHUVXVGDJRY%ULHÀQJ)DUP,QFRPHQDWLRQDOHVWLPDWHVKWP
86'$86'$IXQGVSURMHFWVWRUHGXFHJUHHQKRXVHJDVHPLVVLRQVLQVWDWHV$YDLODEOHDWKWWSZZZQUFV
XVGDJRYQHZVUHOHDVHVFLJBJKJBKWPO-XQH
8WYLNOLQJVIRQGHW$9LDEOH)RRG)XWXUH3DUWV,DQG,,2VOR7KH'HYHORSPHQW)XQG8WYLNOLQJVIRQGHW
:)3:RUOG)RRG3URJUDPPHDQG)$27KH6WDWHRI)RRG,QVHFXULW\LQWKH:RUOG5RPH
:LOOHU + DQG .LOFKHU / HGV 7KH :RUOG RI 2UJDQLF $JULFXOWXUH 6WDWLVWLFV DQG (PHUJLQJ 7UHQGV %RQQ
,)2$0DQG)ULFN)L%/
:LVH7$JULFXOWXUHGXPSLQJXQGHU1$)7$%RVWRQ0$*OREDO'HYHORSPHQWDQG(QYLURQPHQW,QVWLWXWH7XIWV
8QLYHUVLW\$YDLODEOHDWKWWSZZZDVHWXIWVHGXJGDHSROLF\BUHVHDUFK$J1$)7$KWPO
:LVH7%RRPIRUZKRP"%RVWRQ0$*OREDO'HYHORSPHQWDQG(QYLURQPHQW,QVWLWXWH7XIWV8QLYHUVLW\$YDLODEOH
DWKWWSZZZDVHWXIWVHGXJGDHSROLF\BUHVHDUFK)DUP,QFRPHKWPO0DUFK
:RUOG%DQN:RUOG'HYHORSPHQW5HSRUW$JULFXOWXUHIRU'HYHORSPHQW:DVKLQJWRQ'&$YDLODEOHDWKWWS
ZHEZRUOGEDQNRUJ:%6,7((;7(51$/(;7'(&(;75(6($5&+(;7:'56FRQWHQW0'.aSDJH3
.aSL3.aWKH6LWH3.KWPO
:RUOG%DQN27XUQ'RZQWKH+HDW:K\D2ZDUPHUZRUOGPXVWEHDYRLGHG$5HSRUWIRUWKH:RUOG%DQN
E\WKH3RWVGDP,QVWLWXWHIRU&OLPDWH,PSDFW5HVHDUFKDQG&OLPDWH$QDO\WLFV:DVKLQJWRQ1RYHPEHU$YDLODEOH
DW KWWSFOLPDWHFKDQJHZRUOGEDQNRUJVLWHVGHIDXOWÀOHV7XUQB'RZQBWKHBKHDWB:K\BDBBGHJUHHBFHQWULJUDGHB
ZDUPHUBZRUOGBPXVWBEHBDYRLGHGSGI
:72:RUOG7DULII3URÀOHV*HQHYD
75$'($1'(19,5210(175(9,(:
1RWHV
0DQ\GHYHORSLQJFRXQWULHVKDYHDGRSWHGDGHIHQVLYHVWDQFHLQUHODWLRQWRWKHOLEHUDOL]DWLRQRIWUDGHLQDJULFXOWXUH
+RZHYHUWKHGHYHORSLQJFRXQWULHVZLWKPRUHHIÀFLHQWDJULFXOWXUDOVHFWRUVZKLFKZRXOGEHQHÀWIURPKLJKHUHDUQLQJV
IURPWKHLUH[SRUWVLIWKHUHZHUHIHZHUUHVWULFWLRQVRQWKHLUPDUNHWDFFHVVHVSHFLDOO\WRGHYHORSHGFRXQWULHVKDYH
QRZEHHQDWWKHIRUHIURQWRIDWWHPSWVWROLEHUDOL]HJOREDODJULFXOWXUDOWUDGHWKURXJKWKH'RKDQHJRWLDWLRQV7KHUH
LVWHQVLRQEHWZHHQWKHVHFRXQWULHVDQGWKHPDMRULW\RIGHYHORSHGFRXQWULHVWKDWKDYHWULHGWRUHWDLQWKHLUVL]HDEOH
DJULFXOWXUDOVXSSRUWDQGUHODWLYHO\KLJKWDULIIVDVZHOODVEHWZHHQWKHPDQGWKRVHGHYHORSLQJFRXQWULHVWKDWDUH
VHHNLQJWRGHIHQGWKHLUVPDOOIDUPHUV·OLYHOLKRRGVIURPLPSRUWVXUJHV7KHDJULFXOWXUDOO\HIÀFLHQWFRXQWULHVKDYH
EHHQ DGYRFDWLQJ UHVWULFWLRQV RQ WKH XVH RI WKH 660 IRU GHYHORSLQJ FRXQWULHV WR DYRLG LPSRUW VXUJHV RQ WKH
JURXQGVWKDWWKHLURZQIDUPHUVZRXOGEHDIIHFWHGE\LPSRUWUHVWULFWLRQV6RXWK&HQWUH
7KH DXWKRUV ZRXOG OLNH WR WKDQN WKH IROORZLQJ SHHU UHYLHZHUV IRU WKHLU FRPPHQWV RQ HDUOLHU YHUVLRQV RI WKLV
FRPPHQWDU\ .OHPHQV YDQ GH 6DQG 2OLYLHU GH 6FKXWWHU *XQQDU 5XQGJUHQ +DQV +HUUHQ 0DUN +DOOH 1DGLD
(O+DJH6FLDODEED3HWHU/XQHQERUJ6WHSKDQ$OEUHFKW6RSKLD0XUSK\/LP/L&KLQJ)UDQ]7KHR*RWWZDOGDQG
7KRPDV%UDXQVFKZHLJ
)RUPRUHLQIRUPDWLRQVHHKWWSDZVDVVHWVSDQGDRUJGRZQORDGVOSUBBVXPPDU\BERRNOHWBÀQDOSGI
7KH:RUOG%DQNKDVMXVWSXEOLVKHGDÀUVWVWXG\SUHSDUHGE\WKH3RWVGDP,QVWLWXWHIRU&OLPDWH,PSDFW5HVHDUFK
DQG&OLPDWH$QDO\WLFVH[DPLQLQJWKHVSHFLÀFLPSOLFDWLRQVRIDJOREDOZDUPLQJRIGHJUHHVE\WKHHQGRIWKLV
FHQWXU\:RUOG%DQN
)RUPRUHLQIRUPDWLRQVHHWKH&OXERI5RPHGLVFXVVLRQSDSHUE\-RKQVWRQ
6HH KWWSZZZIDRRUJQHZVVWRU\HQLWHP XVLQJ D QHZ HVWLPDWLRQ PHWKRGRORJ\ ,Q SUHYLRXV \HDUV
EDVHG RQ WKH SUHYLRXV PHWKRGRORJ\ RI HVWLPDWLRQ FORVH WR RQH ELOOLRQ KXQJU\ ZHUH UHSRUWHG 7KH QHZ UHSRUW
HPSKDVL]HVWKDWFRQFHQWUDWLRQRQH[SRUWFURSVGRHVRIWHQQRWZRUNLQUHVSHFWWRIRRGVHFXULW\
)RUPRUHLQIRUPDWLRQVHH,QWHUDJHQF\5HSRUWWRWKH0H[LFDQ*3UHVLGHQF\
)RUDPRUHHODERUDWHFULWLTXHVHH+RIIPDQQ
%UQWUXSHWDO
7RGD\WKHDYHUDJH\LHOGVRIRUJDQLFV\VWHPVDUHHVWLPDWHGWREHDERXWSHUFHQWRIWKRVHRIFRQYHQWLRQDOV\VWHPV
6HXIHUWHWDO$JURHFRORJLFDOV\VWHPVDUHPRUHRSHQWRLQSXWVDQGFDQWKHUHIRUHEHPRUHSURGXFWLYHVHH
6QDSSIRRWQRWH
6HH IRU H[DPSOH %D\HU SURGXFLQJ ELRORJLFDO UHPHGLHV KWWSZZZSUHVVHED\HUGHED\QHZVED\QHZVQVILG
%D\HU&URSBVFLHQFHDFTXLUHVB*HUPDQ\EDVHGELRFRQWUROFRPSDQ\3URSK\WDB*PE+"RSHQ
7KHSUHVHUYDWLRQRIWKH´UHJHQHUDWLYHFDSDFLW\RIDJULFXOWXUHµZDVDWWKHYHU\URRWRIWKHFRQFHSWRI´VXVWDLQDELOLW\µ
ZKLFKZDVÀUVWFRLQHGDVDSULQFLSOHLQ*HUPDQIRUHVWU\E\&DUOYRQ&DUORZLW]PRUHWKDQ\HDUVDJR
$UHFHQW(8VXUYH\HVWLPDWHVWKHKHDOWKFRVWVRIURDGWUDQVSRUWDORQHWREHELOOLRQ(XURDQQXDOO\LQ(XURSH
(XURSHDQ(QYLURQPHQW$JHQF\7KHWUDQVSRUWRIDJULFXOWXUDOJRRGVDQGIRRGVWXIIVDFFRXQWVIRUDERXW
SHUFHQWRIWRWDOWUDQVSRUW,15$
,QDXWXPQWKH8NUDLQHIRULQVWDQFHDQQRXQFHGQHZH[SRUWUHVWULFWLRQVIRUZKHDW
,Q(J\SWIRUH[DPSOHZKHUHPRVWIRRGLVLPSRUWHGGXHWRFXUUHQF\H[FKDQJHUDWHVIRRGKDVUHFHQWO\EHFRPH
PRUHDQGPRUHFRVWO\6FKZHL]HU%DXHU
2IWKHGHYHORSLQJZRUOG·VELOOLRQSHRSOHVRPHELOOLRQOLYHLQUXUDODUHDVPRUHWKDQSHUFHQWRIKXPDQLW\
2IWKHVHUXUDOLQKDELWDQWVDQHVWLPDWHGELOOLRQDUHLQKRXVHKROGVLQYROYHGLQDJULFXOWXUHDQGELOOLRQDUHLQ
VPDOOKROGHUKRXVHKROGV$JULFXOWXUHSURYLGHVWKHOLYHOLKRRGIRUDSSUR[LPDWHO\ELOOLRQSHRSOH:RUOG%DQN
DQG81(3
7KHDWWHPSWRIWKH(XURSHDQ&RPPLVVLRQWRVNLSYDOXHDGGHGWD[UHGXFWLRQIRUXQVXVWDLQDEOHSURGXFWLRQLVDW
OHDVWDSURPLVLQJVWHSLQWKHULJKWGLUHFWLRQVHH$JUDU,QIR-XO\$XJXVW+DPEXUJ*HUPDQ\
6LQFH WKH V JOREDO SHU FDSLWD FHUHDO SURGXFWLRQ LQFUHDVHG E\ URXJKO\ D WKLUG &RQYHUVHO\ JOREDO XVH RI
QLWURJHQDQGSKRVSKRUXVIHUWLOL]HUVVRDUHGE\DQGWLPHVJOREDOSHVWLFLGHVXVHH[SDQGHGE\WLPHVDQG
ZDWHUFRQVXPSWLRQIRULUULJDWLRQGRXEOHG,$$67'
$VDSWO\SXWE\5XQGJUHQ´KRZZHGHÀQH¶HIÀFLHQF\SURGXFWLYLW\DQGUHODWHGWHFKQRORJ\·ZLOOGHWHUPLQHWKH
REMHFWLYLW\RIRXUGLVFRXUVHRQZKDWZHXQGHUVWDQGE\¶PRGHUQDJULFXOWXUH·3DUDGR[LFDOO\ZHFXUUHQWO\FRQVLGHU
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
SURGXFWLRQPHWKRGVDV¶PRGHUQ·WKDWDUHDPRQJWKHPRVWSROOXWDQWPRVWUHVRXUFHVTXDQGHULQJPRVWHQHUJ\
LQWHQVLYHDQGPRVWGHSHQGHQWRQVXEVLGLHVµ
7KHUG(86&$5)RUHVLJKW([HUFLVHWDONVDERXWDµUDGLFDOFKDQJHLQIRRGSURGXFWLRQDQGFRQVXPSWLRQ´ZKLFKLV
QHFHVVDU\6&$5
6HHDOVR1HWKHUODQGV(QYLURQPHQWDO5HVHDUFK$JHQF\DQG6WRFNKROP5HVLOLHQFH&HQWHU
(XURSHDQ&RPPLVVLRQ
1DWXUDLVWKHFHQWUHSLHFHRI(8QDWXUHDQGELRGLYHUVLW\SROLF\,WLVDQ(8ZLGHQHWZRUNRIQDWXUHSURWHFWLRQ
DUHDVHVWDEOLVKHGXQGHUWKH+DELWDWV'LUHFWLYH7KHDLPRIWKHQHWZRUNLVWRDVVXUHWKHORQJWHUPVXUYLYDORI
(XURSH·VPRVWYDOXDEOHDQGWKUHDWHQHGVSHFLHVDQGKDELWDWV,WLVFRPSULVHGRI6SHFLDO$UHDVRI&RQVHUYDWLRQ
GHVLJQDWHGE\0HPEHU6WDWHVXQGHUWKH+DELWDWV'LUHFWLYHDQGDOVRLQFRUSRUDWHV6SHFLDO3URWHFWLRQ$UHDVZKLFK
WKH\GHVLJQDWHXQGHUWKH%LUGV'LUHFWLYH1DWXUDLVQRWDV\VWHPRIVWULFWQDWXUHUHVHUYHVZKHUHDOO
KXPDQDFWLYLWLHVDUHH[FOXGHG:KHUHDVWKHQHWZRUNZLOOFHUWDLQO\LQFOXGHQDWXUHUHVHUYHVPRVWRIWKHODQGLVOLNHO\
WRFRQWLQXHWREHSULYDWHO\RZQHGDQGWKHHPSKDVLVLVRQHQVXULQJWKDWIXWXUHPDQDJHPHQWLVVXVWDLQDEOHERWK
HFRORJLFDOO\ DQG HFRQRPLFDOO\ 7KH HVWDEOLVKPHQW RI WKLV QHWZRUN RI SURWHFWHG DUHDV DOVR IXOÀOV D &RPPXQLW\
REOLJDWLRQXQGHUWKH81&RQYHQWLRQRQ%LRORJLFDO'LYHUVLW\1DWXUDSURWHFWVDURXQGSHUFHQWRIODQGLQWKH
(8FRXQWULHV)RUPRUHLQIRUPDWLRQVHHKWWSHFHXURSDHXHQYLURQPHQWQDWXUHQDWXUD
7KLV WHQ\HDU SDUWO\ SDUWLFLSDWLYH VWXG\ LQ 0DODZL D FRXQWU\ WKDW WHPSRUDULO\ XVHG D SHU FHQW VXEVLG\ IRU
IHUWLOL]HUVDQGEHWWHUVHHGVWRERRVWPDL]H\LHOGVFRPSDUHGPRQRFXOWXUHPDL]HZLWKOHJXPHGLYHUVLÀHGPDL]HWKDW
LQFOXGHGDQQXDODQGVHPLSHUHQQLDO63JURZWKKDELWVLQWHPSRUDODQGVSDWLDOFRPELQDWLRQVLQFOXGLQJURWDWLRQ
63URWDWLRQLQWHUFURSDQG63LQWHUFURSV\VWHPV0RGHVWIHUWLOL]HULQWHQVLÀFDWLRQGRXEOHGJUDLQ\LHOGFRPSDUHG
ZLWK PRQRFXOWXUH PDL]H %LRGLYHUVLW\ LPSURYHG HFRV\VWHP IXQFWLRQ IXUWKHU 63 URWDWLRQ V\VWHPV DW KDOIIHUWLOL]HU
UDWHVSURGXFHGHTXLYDOHQWTXDQWLWLHVRIJUDLQRQDPRUHVWDEOHEDVLV\LHOGYDULDELOLW\UHGXFHGIURPWR
FRPSDUHG ZLWK PRQRFXOWXUH $FURVV VLWHV SURÀWDELOLW\ DQG IDUPHU SUHIHUHQFH PDWFKHG 63 URWDWLRQV SURYLGHG
WZRIROGVXSHULRUUHWXUQVZKHUHDVGLYHUVLÀFDWLRQRIPDL]HZLWKDQQXDOOHJXPHVSURYLGHGPRUHPRGHVWUHWXUQV7KH
VWXG\WKXVSURYLGHVHYLGHQFHWKDWLQ$IULFDFURSGLYHUVLÀFDWLRQFDQEHHIIHFWLYHDWDFRXQWU\ZLGHVFDOHDQGWKDW
VKUXEE\JUDLQOHJXPHVFDQHQKDQFHHQYLURQPHQWDODQGIRRGVHFXULW\
$UHFHQW(XURSHDQ1LWURJHQ$VVHVVPHQWSUHSDUHGLQWKHFRQWH[WRIWKHWK(85HVHDUFK)UDPHZRUN3URJUDPPH
IRXQGWKDWWKHFRVWVRIQLWURJHQXVHLQDJULFXOWXUHLQ(8FRXQWULHVPLJKWEHVLJQLÀFDQWO\KLJKHUWKDQLWVEHQHÀWV
6XWWRQHWDO
7KHREMHFWLYHRIWKH660LVWRDGGUHVVVLWXDWLRQVRIDVHULRXVGHFOLQHLQQDWLRQDOSULFHVEHFDXVHRIVXUJHVRIFKHDS
LPSRUWV 7KHUHIRUH WKH 660 GRHV QRW WDUJHW XSZDUG VZLQJV LQ SULFHV ZKLFK LV WKH FXUUHQW FKDOOHQJH IRU PRVW
FRXQWULHV
)RUH[DPSOH´7KHJRYHUQDQFHDQGUHJXODWLRQRIWUDGHWKHUHVLOLHQFHRIIRRGH[FKDQJHSDWWHUQVZLOOWKHUHIRUH
EHDWWKHKHDUWRIIXWXUHIRRGV\VWHPVDQGIRRGVHFXULW\HYHQLQDVFHQDULRZKHUHPD[LPXPUHJLRQDOIRRGVHOI
VXIÀFLHQF\LVVRXJKW,QQRYDWLRQLQUHJXODWLRQV\VWHPVRIJOREDODJULFXOWXUDOWUDGHLVWKHUHIRUHFUXFLDOEXWDWWKH
VDPHWLPHLVDWWKHKHDUWRIYHU\LPSRUWDQWFRQWURYHUVLHVLQWKHÀHOGRIHFRQRPLFVµ7KH6&$5UHSRUWUGHGLWLRQ
6HHWKHGLIIHUHQWIRRGVDIHW\DSSURDFKHVLQWKH86DQGWKH(8,QWKH86IRULQVWDQFHFOHDQLQJRIEHHIFDUFDVVHV
EHIRUHGLVWULEXWLRQDVDQHQGRIWKHSLSHDSSURDFKZLWKODFWLFDFLGRUEURLOHUVZLWKFKORULQHLVSUDFWLFHGZKHUHDV
WKH(8LVKDYLQJDVWULFWK\JLHQHUHJLPH¶IURPIDUPWRIRUN·ORRNLQJIRUKDUPIXOPLFUREHVOLNHVDOPRQHOODQRWWR
DSSHDULQDQ\SURGXFWDWDQ\VWHSRIWKHYDOXHFKDLQ7KHVHDUHGLIIHUHQWFXOWXUHVZKLFKFRXOG²WKH(XURSHDQ
PRGHOEHLQJPRUHFRVWO\²VWURQJO\EHDIIHFWHGLIIUHHWUDGHDJUHHPHQWVFRPHLQWRIRUFH7KHVHFXOWXUDOGLIIHUHQFHV
FDQQRWRQO\EHPDWFKHGE\VFLHQWLÀFMXVWLÀFDWLRQDVLWLVWKHFDVHXQGHUFXUUHQW:72UXOHV
:KHQLQWKH0LOOHQQLXP(FRV\VWHPV$VVHVVPHQWZLWKVRPHH[SHUWVLQYROYHGWKHODUJHVWHYHUJOREDO
DVVHVVPHQW ZDV FRQFOXGHG IRXU VFHQDULRVGHYHORSPHQW SDWKV ZHUH SUHVHQWHG WKH JOREDO RUFKHVWUDWLRQ WKH
RUGHUWKURXJKVWUHQJWKWKHDGDSWLQJPRVDLFDQGWKHWHFKQRJDUGHQVFHQDULR7KHPRRGRIWKHFRQFOXVLRQZDV
WKDWWKHDXWKRUVZRXOGLIDVNHGRSWIRUWKHJOREDORUFKHVWUDWLRQVFHQDULR1RZVHYHQ\HDUVDQGPDQ\VXPPLWV
DQGWKHHFRQRPLFFULVLVRIODWHUDWOHDVWIRUDJULFXOWXUHDQGIRRGVHFXULW\ZHZRXOGPRUHRSWIRUWKHDGDSWLQJ
PRVDLFVFHQDULR,WORRNVIRUUHJLRQDOVROXWLRQVE\KDYLQJWKHJOREDOLVVXHVLQPLQG,QWKH0($DVVHVVPHQWWKLV
DSSURDFKZDVFDOOHG´*ORFDOL]DWLRQ´IRUPRUHLQIRUPDWLRQVHHZZZPDZHERUJHQLQGH[DVS[
([SHULHQFHRIRUJDQLFSURGXFWLRQV\VWHPVLQ(DVW$IULFDIRULQVWDQFHVKRZWKDWRIWKHGLYHUVHEDVNHWRISURGXFHG
LWHPVDWIDUPOHYHORQO\IHZDUHGHVWLQHGIRUPDUNHWLQJEH\RQGWKHORFDOUHJLRQDOOHYHOLQFOXGLQJIRUH[SRUW7KLV
FRQFHUQVLWHPVVXFKDVVSLFHVYHJHWDEOHVÁRZHUVQXWVURRWVRUIUXLWV)RUPRUHLQIRUPDWLRQVHH81(381&7$'
E
75$'($1'(19,5210(175(9,(:
6HHLQWHUDOLDZZZOHEHQVPLWWHOSUD[LVGHKDQGHOHQWVFKHLGHUPHJDWUHQGUHJLRQDOLWDHWKWPO
$WWKH:RUOG(FRQRPLF)RUXP*UDFLDQRGD6LOYD'LUHFWRU*HQHUDORI)$2VDLGLQUHVSHFWWRIRRGVHFXULW\´7R
VWLPXODWHORFDOPDUNHWVLVDNH\LVVXH´ZZZZHIRUXPRUJYLGHRVHQVXULQJIRRGVHFXULW\DQQXDOPHHWLQJ
'DFLDQ&LRORV(8&RPPLVVLRQHUIRU$JULFXOWXUHDQG5XUDO'HYHORSPHQWKLJKOLJKWHGLQDVSHHFKRQ/RFDO)DUPLQJ
DQG6KRUW6XSSO\&KDLQV(QKDQFLQJWKH/RFDO'LPHQVLRQRIWKH&RPPRQ$JULFXOWXUDO3ROLF\´RQ$SULOWKH
LPSRUWDQFHRIVKRUWVXSSO\FKDLQVDQGWKHUHODWHGFRQVXPHUSUHIHUHQFHVZKLFKWKH(XURSHDQ&RPPLVVLRQZDQWV
WRVXSSRUWKWWSHXURSDHXUDSLGSUHVVUHOHDVHB63((&+BHQKWP
6HH1HVWOpVDSSURDFKWRVRXUFHORFDOO\ZKHQHYHUSRVVLEOHDQGWRVWUHQJWKHQUXUDOGHYHORSPHQWZZZQHVWOHFRP
FVYUXUDOGHYHORSPHQW
,QWHUHVWLQJO\VSHFLDOWLHVDUHRIWHQWKHQRQLQGXVWULDOPRUHDUWLVDQDOSURGXFWVOLNH6ZLVVFKHHVHEDVHGRQJUDVV
DQGKD\QRWVLODJHIHHG:LWKWRQV6ZLW]HUODQGH[SRUWVRQHWKLUGRILWVFKHHVHSURGXFWLRQ
1RW´IRRGPXVWWUDYHOµDV3DVFDO/DP\FODLPHGLQ)HEUXDU\LQ*HQHYDDWWKHFRQIHUHQFHRIWKH´(FRQRPLVWµ
RQ)HHGLQJWKH:RUOG²WKHELOOLRQGROODUTXHVWLRQ
,WVKRXOGQRWJRZLWKRXWFRPPHQWDWWKLVMXQFWXUHWKDWDJULFXOWXUHLVQRWWKHRQO\VHFWRUWKDWUHTXLUHVDPRUHORFDO
UHJLRQDOIRFXVIDFHGZLWKQHZHQYLURQPHQWDODQGHFRQRPLFFKDOOHQJHVWKDQSUDFWLFHVLQWKHODVWIHZGHFDGHV
7KHPXFKUHTXLUHGGUDVWLFFKDQJHVLQWKHHQHUJ\PL[WRZDUGVUHQHZDEOHVRXUFHVDUHERXQGWRJRLQWDQGHPZLWK
DPXFKKLJKHUIRFXVRQORFDOUHJLRQDOSURGXFWLRQZKLFKPDWFKHVORFDOUHJLRQDOFRQVXPSWLRQDQGWKXVDYRLGV
WUDQVPLVVLRQDQGFRQYHUVLRQORVVHV¶'LVWDQW·VRXUFHVRIHQHUJ\VXSSO\ZLOOVWLOOEHUHTXLUHGWRPDWFKORFDOUHJLRQDO
SURGXFWLRQFRQVXPSWLRQJDSV
6HHDOVRWKHGLVFXVVLRQDQGVXJJHVWLRQVLQ'H6FKXWWHUF
(VWLPDWHVVXJJHVWWKDWVRPHSHUFHQWRIWRWDOVXSSRUWGHYHORSLQJFRXQWULHVKDYHSURYLGHGWRWKHLUDJULFXOWXUDO
VHFWRULQUHFHQW\HDUVLVOLQNHGWRJUHHQER[PHDVXUHV1DVVDUHWDO$VWKH$R$GRHVQRWVHWDQ\VSHQGLQJ
OLPLWV RQ WKH JUHHQ ER[ GHYHORSLQJ FRXQWULHV· ÁH[LELOLW\ LQ SURDFWLYHO\ XVLQJ LW LV WKHQ D IXQFWLRQ RI EXGJHWDU\
FDSDFLW\RUFRQVWUDLQWV7KHH[LVWLQJVHWRIJUHHQER[PHDVXUHVODUJHO\UHÁHFWVWKHSROLFLHVRIGHYHORSHGFRXQWULHV
LQSODFHGXULQJWKH8UXJXD\5RXQGQHJRWLDWLRQV7KHER[WKXVQHHGVWREHWWHUUHÁHFWLQWHUHVWVLQSURWHFWLQJIRRG
VHFXULW\UXUDOOLYHOLKRRGVDQGUHVLOLHQFH
,QPDQ\UHVWDXUDQWVLQ:HVWHUQ(XURSHWKHRULJLQRIWKHPHDWKDVWREHRULVEHLQJDQQRXQFHGWKHVHGD\VWREXLOG
FRQVXPHUFRQÀGHQFH
6HHZZZIDUPDQGIRRGSURMHFWRUJ
6HHZZZWHUUDPDGUHRUJSDJLQHUHWHFRPXQLWDODVVR
6HHZZZZRUOGIXWXUHFRXQFLORUJIXWXUHBSROLF\BDZDUGBVKRUWOLVWKWPO
6HH86'$EULHÀQJDWKWWSZZZHUVXVGDJRY%ULHÀQJ)DUP3ROLF\JRYSD\KWP
+RZHYHU%HUWKHORWDUJXHVWKDWWKH8QLWHG6WDWHV9((7&WD[FUHGLWVIRUHWKDQROSURGXFWLRQVKRXOGEHFRXQWHGDV
VXEVLGLHVWRDJULFXOWXUHZKLFKZRXOGUDLVHWKHWRWDOVXSSRUWWRDJULFXOWXUHSURYLGHGE\WKH8QLWHG6WDWHV,WVKRXOG
EHQRWHGWKRXJKWKDWWKH9((7&WD[FUHGLWVDUHVFKHGXOHGWRHQGLQ
+RXVH$JULFXOWXUH$SSURSULDWLRQV%LOODPHQGHG-XQH6HHKWWSUHSXEOLFDQVDSSURSULDWLRQVKRXVHJRY
8SORDGHG)LOHVB)<BB$JULFXOWXUHB&RQIHUHQFHB6XPPDU\SGI
6FKZDU]*URXSRZQVWKH/LGODQG.DXÁDQGVXSHUPDUNHWFKDLQV
:RUOG6KLSSLQJ&RXQFLO5HFRUGIXHOSULFHVSODFHVWUHVVRQRFHDQVKLSSLQJDWZZZZRUOGVKLSSLQJRUJSGI:6&B
IXHOBVWDWHPHQWBÀQDOSGI0D\
)RUPRUHLQIRUPDWLRQVHHKWWSQHZVRUIDWVWRULHV
$FFRUGLQJ WR )$2VWDW DQG WKH &%27 ([FKDQJH 9ROXPH 5HSRUW RI 0D\ VHH ZZZFPHJURXSFRP
ZUDSSHGSDJHVZHEBPRQWKO\BUHSRUW:HEB9ROXPHB5HSRUWB&%27SGI
/DJLHWDOKDYHDOVRUHYLHZHGWKHLPSRUWDQFHRINH\PDUNHWIXQGDPHQWVDVH[SODQDWRU\IDFWRUVIRUIRRGSULFHKLNHV
LQSDUWLFXODUDZHDWKHUSDUWLFXODUO\GURXJKWVLQ$XVWUDOLDELQFUHDVLQJGHPDQGIRUPHDWLQWKHGHYHORSLQJZRUOG
HVSHFLDOO\LQ&KLQDDQG,QGLDFFXUUHQF\H[FKDQJHUDWHVDQGGOLQNDJHEHWZHHQRLODQGIRRGSULFHVWKURXJK
KLJKHUSURGXFWLRQDQGWUDQVSRUWDWLRQFRVWV7KHDXWKRUVIRXQGQRVLJQLÀFDQWFRUUHODWLRQLQWKLVUHJDUG
,QWKDWYROXPHVHHSDUWLFXODUO\7ZDURJIRUDQRYHUYLHZRIRUJDQLFDJULFXOWXUHDVDWUDGHDQGVXVWDLQDEOHGHYHORSPHQW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH
RSSRUWXQLW\
$FFRUGLQJWRWKHGHÀQLWLRQE\,)2$0D´RUJDQLFDJULFXOWXUHLVDSURGXFWLRQV\VWHPWKDWVXVWDLQVWKHKHDOWK
RI VRLOV HFRV\VWHPV DQG SHRSOH ,W UHOLHV RQ HFRORJLFDO SURFHVVHV ELRGLYHUVLW\ DQG F\FOHV DGDSWHG WR ORFDO
FRQGLWLRQVUDWKHUWKDQWKHXVHRILQSXWVZLWKDGYHUVHHIIHFWV2UJDQLFDJULFXOWXUHFRPELQHVWUDGLWLRQLQQRYDWLRQ
DQG VFLHQFH WR EHQHÀW WKH VKDUHG HQYLURQPHQW DQG SURPRWH IDLU UHODWLRQVKLSV DQG D JRRG TXDOLW\ RI OLIH IRU DOO
LQYROYHGµ1RWHWKDWRUJDQLFDJULFXOWXUHGRHVQRWE\GHÀQLWLRQKDYHWREHFHUWLÀHGFHUWLÀFDWLRQLVVLPSO\RQHZD\
WRJXDUDQWHHWKHRUJDQLFLQWHJULW\RIDSURGXFWIRUFRQVXPHUV
7KHVH DUH ORFDOO\ EDVHG TXDOLW\ DVVXUDQFH V\VWHPV WKDW FHUWLI\ SURGXFHUV EDVHG RQ WKH DFWLYH SDUWLFLSDWLRQ RI
VWDNHKROGHUVDQGEXLOWRQDIRXQGDWLRQRIWUXVWVRFLDOQHWZRUNVDQGNQRZOHGJHH[FKDQJH,)2$0E
7KLVLVQRWWRDUJXHIRUFRPSOHWHOLEHUDOL]DWLRQRIDJULFXOWXUDOPDUNHWV3DUWLFXODUO\LQSRRUHUGHYHORSLQJFRXQWULHV
ZKHUHDJULFXOWXUDOVXSSRUWVWUXFWXUHVKDYHEHHQGLVPDQWOHGHJLQPDQ\$IULFDQFRXQWULHVLWLVGLIÀFXOWIRUORFDO
SURGXFHUVWRFRPSHWHZLWKLPSRUWVHVSHFLDOO\ZKHQWKRVHLPSRUWHGSURGXFWVKDYHEHHQVXEVLGL]HGRURWKHUZLVH
SXEOLFO\VXSSRUWHGLQWKHLUFRXQWULHVRIRULJLQ(YHQLQGHYHORSHGHFRQRPLHVVRPHLQGLYLGXDOIDUPHUVPD\VWUXJJOH
WRFRPSHWH
6(.(0LQDQFLHQW(J\SWLDQPHDQV´YLWDOLW\IURPWKHVXQµ
7KLV LVVXH LV GLVFXVVHG H[WHQVLYHO\ LQ WKH OLWHUDWXUH 6HH IRU H[DPSOH 815,6' 6ZDQVRQ ,QWHU
$FDGHP\&RXQFLO7KRPSVRQ6KLYDDQG0D\HW
7KLVFRQWHQWLRQLVVXSSRUWHGE\QXPHURXVVWXGLHVVXFKDVWKRVHE\3UHWW\DQG+LQH/RWWHU%DGJOH\
HW DO +DOEHUJ 6FLDODEED +LQH -RUGDQ $]HH] ,$$67' DQG 'H
6FKXWWHUD81&7$'81(3E
6HH'HPHWHU86$%LRG\QDPLF$JULFXOWXUH²$WD*ODQFHDWKWWSGHPHWHUXVDRUJGRZQORDGV'HPHWHU
$W$*ODQFHSGI