U n i t e d N at i o n s C o n f e r e n c e o n T r a d e A n d D e v e l o p m e n t

UNCTAD
TRADE
TRADE
ANDAND
ENVIRONMENT
ENVIRONMENT
REVIEW
REVIEW
20132013
KEY MESSAGES
• The 2008 food crisis was an important catalyst for realizing the need for a fundamental transformation and questioning
some of the assumptions that had driven food, agricultural and trade policy in recent decades. However, actual results
achieved since 2008 suggest that a paradigm shift has started, but is largely incomplete. Priority remains heavily focused on
increasing industrial agricultural production, mostly under the slogan “growing more food at less cost to the environment”.
The perception that there is a supply-side productivity problem is however questionable. Hunger and malnutrition are mainly
related to lack of purchasing power and/or inability of rural poor to be self-sufficient. Meeting the food security challenges

TRADE AND ENVIRONMENT REVIEW 2013

is thus primarily about empowerment of the poor and their food sovereignty. Furthermore, the current demand trends for
biofuels, concentrate animal feed, excessively meat-based diets and post-harvest food waste are regarded as given, rather
than challenging their rational.
• The fundamental transformation of agriculture may well turn out to be one of the biggest challenges, including for
international security, of the 21st century. Much slower agricultural productivity growth in the future, a quickly rising MAKE AGRICULTURE
MAKE AGRICULTURE
TRULY SUSTAINABLE
TRULY SUSTAINABLE
NOW FORNOW
FOOD
FORSECURITY
FOOD SECURITY
population in the most resource-constrained and climate-change-exposed regions (in particular in sub-Saharan Africa and IN A CHANGING
IN A CHANGING
CLIMATE
CLIMATE
South Asia) and a burgeoning environmental crises of agriculture are the seeds for mounting pressures on food security
and the related access to land and water. This is bound to increase the frequency and severity of riots, caused by food-price EMBARGO
hikes, with concomitant political instability, and international tension, linked to resource conflicts and migratory movements The contents of this Report must not be
of staving populations. quoted or summarized in the print,
broadcast or electronic media before
• The world needs a paradigm shift in agricultural development: from a “green revolution” to an “ecological 18 September 2013, 17:00 hours GMT
intensification” approach. This implies a rapid and significant shift from conventional, monoculture-based and high-
external-input-dependent industrial production towards mosaics of sustainable, regenerative production systems that also
considerably improve the productivity of small-scale farmers. We need to see a move from a linear to a holistic approach in
agricultural management, which recognizes that a farmer is not only a producer of agricultural goods, but also a manager
of an agro-ecological system that provides quite a number of public goods and services (e.g. water, soil, landscape, energy,
biodiversity, and recreation).
• The required transformation is much more profound than simply tweaking the existing industrial agricultural system.
Rather, what is called for is a better understanding of the multi-functionality of agriculture, its pivotal importance for pro-poor
rural development and the significant role it can play in dealing with resource scarcities and in mitigating and adapting to
climate change. However, the sheer scale at which modified production methods would have to be adopted, the significant
governance issues, the power asymmetries’ problems in food input and output markets as well as the current trade rules for
agriculture pose considerable challenges.
• Elements and key achievements of the required transformation of agriculture, elaborated upon by the authors of this
Review, include:
- Increasing soil carbon content and better integration between crop and livestock production, and increased incorporation
(not segregation) of trees (agroforestry) and wild vegetation.
- Reduction of direct and indirect (i.e. through the feed chain) greenhouse-gas emissions of livestock production.
- Reduction of indirect (i.e. changes in land-use-induced) GHG emissions through sustainable peatland, forest and grassland
management.
- Optimization of organic and inorganic fertilizer use, including through closed nutrient cycles in agriculture.
- Reduction of waste throughout the food chains.
- Changing dietary patterns towards climate-friendly food consumption.
- Reform of the international trade regime for food and agricultural products.
• In pursuing a fundamental transformation of agriculture, one should take into account systemic considerations
in particular (i) the need for a holistic understanding of the challenges involved due to inter-linkages between sometimes
competing objectives; (ii) the merits and demerits of single climate-friendly practices versus those of systemic changes (such
as agro-ecology, agro-forestry, organic agriculture); and (iii) the need for a two-track approach that drastically reduces the
UNITED NATIONS

environmental impact of conventional agriculture, on the one hand, and broadens the scope for agro-ecological production
methods, on the other.
 KEY MESSAGES
t

The 2008 food crisis was an important catalyst for realizing the need for a fundamental transformation and questioning
some of the assumptions that had driven food, agricultural and trade policy in recent decades.
)PXFWFS
BDUVBM
SFTVMUT

BDIJFWFE
TJODF

TVHHFTU
UIBU
B
QBSBEJHN
TIJGU
IBT
TUBSUFE
CVU
JT
MBSHFMZ
JODPNQMFUF
1SJPSJUZ
SFNBJOT
IFBWJMZ
GPDVTFE
PO

JODSFBTJOH
JOEVTUSJBM
BHSJDVMUVSBM
QSPEVDUJPO
NPTUMZ
VOEFS
UIF
TMPHBO
iHSPXJOH
NPSF
GPPE
BU
MFTT
DPTU
UP
UIF
FOWJSPONFOUw

5IF
QFSDFQUJPO
UIBU
UIFSF
JT
B
TVQQMZTJEF
QSPEVDUJWJUZ
QSPCMFN
JT
IPXFWFS
RVFTUJPOBCMF
)VOHFS
BOE
NBMOVUSJUJPO
BSF
NBJOMZ

SFMBUFE
UP
MBDL
PG
QVSDIBTJOH
QPXFS
BOEPS
JOBCJMJUZ
PG
SVSBM
QPPS
UP
CF
TFMGTVGýDJFOU
.FFUJOH
UIF
GPPE
TFDVSJUZ
DIBMMFOHFT

JT
UIVT
QSJNBSJMZ
BCPVU
FNQPXFSNFOU
PG
UIF
QPPS
BOE
UIFJS
GPPE
TPWFSFJHOUZ
'VSUIFSNPSF
UIF
DVSSFOU
EFNBOE
USFOET
GPS

CJPGVFMT
DPODFOUSBUF
BOJNBM
GFFE
FYDFTTJWFMZ
NFBUCBTFE
EJFUT
BOE
QPTUIBSWFTU
GPPE
XBTUF
BSF
SFHBSEFE
BT
HJWFO
SBUIFS

UIBO
DIBMMFOHJOH
UIFJS
SBUJPOBM

t

The fundamental transformation of agriculture may well turn out to be one of the biggest challenges, including for
international security, of the 21st century.
.VDI
TMPXFS
BHSJDVMUVSBM
QSPEVDUJWJUZ
HSPXUI
JO
UIF
GVUVSF
B
RVJDLMZ
SJTJOH

QPQVMBUJPO
JO
UIF
NPTU
SFTPVSDFDPOTUSBJOFE
BOE
DMJNBUFDIBOHFFYQPTFE
SFHJPOT
JO
QBSUJDVMBS
JO
TVC4BIBSBO
"GSJDB
BOE

4PVUI
"TJB

BOE
B
CVSHFPOJOH
FOWJSPONFOUBM
DSJTFT
PG

BHSJDVMUVSF
BSF
UIF
TFFET
GPS
NPVOUJOH
QSFTTVSFT
PO
GPPE
TFDVSJUZ

BOE
UIF
SFMBUFE
BDDFTT
UP
MBOE
BOE
XBUFS
5IJT
JT
CPVOE
UP
JODSFBTF
UIF
GSFRVFODZ
BOE
TFWFSJUZ
PG
SJPUT
DBVTFE
CZ
GPPEQSJDF

IJLFT
XJUI
DPODPNJUBOU
QPMJUJDBM
JOTUBCJMJUZ
BOE
JOUFSOBUJPOBM
UFOTJPO
MJOLFE
UP
SFTPVSDF
DPOþJDUT
BOE
NJHSBUPSZ
NPWFNFOUT

PG
TUBWJOH
QPQVMBUJPOT

t

The world needs a paradigm shift in agricultural development: from a “green revolution” to an “ecological
intensification” approach.
5IJT
JNQMJFT
B
SBQJE
BOE
TJHOJýDBOU
TIJGU
GSPN
DPOWFOUJPOBM
NPOPDVMUVSFCBTFE
BOE
IJHI
FYUFSOBMJOQVUEFQFOEFOU
JOEVTUSJBM
QSPEVDUJPO
UPXBSET
NPTBJDT
PG
TVTUBJOBCMF
SFHFOFSBUJWF
QSPEVDUJPO
TZTUFNT
UIBU
BMTP

DPOTJEFSBCMZ
JNQSPWF
UIF
QSPEVDUJWJUZ
PG
TNBMMTDBMF
GBSNFST
8F
OFFE
UP
TFF
B
NPWF
GSPN
B
MJOFBS
UP
B
IPMJTUJD
BQQSPBDI
JO

BHSJDVMUVSBM
NBOBHFNFOU
XIJDI
SFDPHOJ[FT
UIBU
B
GBSNFS
JT
OPU
POMZ
B
QSPEVDFS
PG
BHSJDVMUVSBM
HPPET
CVU
BMTP
B
NBOBHFS

PG
BO
BHSPFDPMPHJDBM
TZTUFN
UIBU
QSPWJEFT
RVJUF
B
OVNCFS
PG
QVCMJD
HPPET
BOE
TFSWJDFT
FH
XBUFS
TPJM
MBOETDBQF
FOFSHZ

CJPEJWFSTJUZ
BOE
SFDSFBUJPO


t

The required transformation is much more profound than simply tweaking the existing industrial agricultural system.

3BUIFS
XIBU
JT
DBMMFE
GPS
JT
B
CFUUFS
VOEFSTUBOEJOH
PG
UIF
NVMUJGVODUJPOBMJUZ
PG
BHSJDVMUVSF
JUT
QJWPUBM
JNQPSUBODF
GPS
QSPQPPS

SVSBM
EFWFMPQNFOU
BOE
UIF
TJHOJýDBOU
SPMF
JU
DBO
QMBZ
JO
EFBMJOH
XJUI
SFTPVSDF
TDBSDJUJFT
BOE
JO
NJUJHBUJOH
BOE
BEBQUJOH
UP

DMJNBUF
DIBOHF
)PXFWFS
UIF
TIFFS
TDBMF
BU
XIJDI
NPEJýFE
QSPEVDUJPO
NFUIPET
XPVME
IBWF
UP
CF
BEPQUFE
UIF
TJHOJýDBOU

HPWFSOBODF
JTTVFT
UIF
QPXFS
BTZNNFUSJFT
QSPCMFNT
JO
GPPE
JOQVU
BOE
PVUQVU
NBSLFUT
BT
XFMM
BT
UIF
DVSSFOU
USBEF
SVMFT
GPS

BHSJDVMUVSF
QPTF
DPOTJEFSBCMF
DIBMMFOHFT




t
Elements and key achievements of the required transformation of agriculture, elaborated upon by the authors of this
Review, include:


*ODSFBTJOH
TPJM
DBSCPO
DPOUFOU
BOE
CFUUFS
JOUFHSBUJPO
CFUXFFO
DSPQ
BOE
MJWFTUPDL
QSPEVDUJPO
BOE
JODSFBTFE
JODPSQPSBUJPO

OPU
TFHSFHBUJPO

PG
USFFT
BHSPGPSFTUSZ

BOE
XJME
WFHFUBUJPO



3FEVDUJPO
PG
EJSFDU
BOE
JOEJSFDU
JF
UISPVHI
UIF
GFFE
DIBJO

HSFFOIPVTFHBT
FNJTTJPOT
PG
MJWFTUPDL
QSPEVDUJPO


3FEVDUJPO
PG
JOEJSFDU
JF
DIBOHFT
JO
MBOEVTFJOEVDFE

()(
FNJTTJPOT
UISPVHI
TVTUBJOBCMF
QFBUMBOE
GPSFTU
BOE
HSBTTMBOE

NBOBHFNFOU

0QUJNJ[BUJPO
PG
PSHBOJD
BOE
JOPSHBOJD
GFSUJMJ[FS
VTF
JODMVEJOH
UISPVHI
DMPTFE
OVUSJFOU
DZDMFT
JO
BHSJDVMUVSF

3FEVDUJPO
PG
XBTUF
UISPVHIPVU
UIF
GPPE
DIBJOT

$IBOHJOH
EJFUBSZ
QBUUFSOT
UPXBSET
DMJNBUFGSJFOEMZ
GPPE
DPOTVNQUJPO

3FGPSN
PG
UIF
JOUFSOBUJPOBM
USBEF
SFHJNF
GPS
GPPE
BOE
BHSJDVMUVSBM
QSPEVDUT


t

In pursuing a fundamental transformation of agriculture, one should take into account systemic considerations

JO
QBSUJDVMBS
J

UIF
OFFE
GPS
B
IPMJTUJD
VOEFSTUBOEJOH
PG
UIF
DIBMMFOHFT
JOWPMWFE
EVF
UP
JOUFSMJOLBHFT
CFUXFFO
TPNFUJNFT

DPNQFUJOH
PCKFDUJWFT
JJ

UIF
NFSJUT
BOE
EFNFSJUT
PG
TJOHMF
DMJNBUFGSJFOEMZ
QSBDUJDFT
WFSTVT
UIPTF
PG
TZTUFNJD
DIBOHFT
TVDI

BT
BHSPFDPMPHZ
BHSPGPSFTUSZ
PSHBOJD
BHSJDVMUVSF

BOE
JJJ

UIF
OFFE
GPS
B
UXPUSBDL
BQQSPBDI
UIBU
ESBTUJDBMMZ
SFEVDFT
UIF

FOWJSPONFOUBM
JNQBDU
PG
DPOWFOUJPOBM
BHSJDVMUVSF
PO
UIF
POF
IBOE
BOE
CSPBEFOT
UIF
TDPQF
GPS
BHSPFDPMPHJDBM
QSPEVDUJPO

NFUIPET
PO
UIF
PUIFS




LL 75$'($1'(19,5210(175(9,(:

1RWH

7KHYLHZVH[SUHVVHGLQWKHDUWLFOHVFRQWDLQHGLQWKLV5HYLHZDUHWKHSHUVRQDOYLHZVRIWKHDXWKRUVDQGGRQRW
QHFHVVDULO\UHÁHFWWKHSRVLWLRQVRIWKHLUUHVSHFWLYHRUJDQL]DWLRQVRULQVWLWXWLRQV7KHUHIRUHWKHYLHZVH[SUHVVHG
LQWKLV5HYLHZVKRXOGEHDWWULEXWHGWRWKHDXWKRUVDQGQRWWRDQ\LQVWLWXWLRQRUWR81&7$'RULWVPHPEHU6WDWHV

$Q\UHIHUHQFHWRDFRPSDQ\DQGLWVDFWLYLWLHVVKRXOGQRWEHFRQVWUXHGDVDQHQGRUVHPHQWE\81&7$'RUE\WKH
DXWKRUVRUWKHLULQVWLWXWLRQVRIWKHFRPSDQ\RULWVDFWLYLWLHV

0DWHULDOLQWKLVSXEOLFDWLRQPD\EHIUHHO\TXRWHGRUUHSULQWHGEXWDFNQRZOHGJHPHQWLVUHTXHVWHGWRJHWKHUZLWK
DUHIHUHQFHWRWKHGRFXPHQWQXPEHU$FRS\RIWKHSXEOLFDWLRQFRQWDLQLQJWKHTXRWDWLRQRUUHSULQWVKRXOGEHVHQW
WRWKH2IÀFHRIWKH'LUHFWRU'LYLVLRQRQ,QWHUQDWLRQDO7UDGHLQ*RRGVDQG6HUYLFHVDQG&RPPRGLWLHV3DODLVGHV
1DWLRQV*HQHYD6ZLW]HUODQG

)RUFRPPHQWVRQWKLVUHYLHZSOHDVHFRQWDFWWUDGHHQYLURQPHQW#XQFWDGRUJ7KLVUHYLHZLVDOVRDYDLODEOHDW
KWWSXQFWDGRUJHQ3DJHV',7&7UDGHDQG(QYLURQPHQW5HYLHZ6HULHVDVS[

81&7$'',7&7('
81,7('1$7,21638%/,&$7,21

,661

&RS\ULJKW‹8QLWHG1DWLRQV
$OOULJKWVUHVHUYHG
)RUHZRUG LLL

)RUHZRUG

1RWORQJDIWHUWKHIRRGSULFHFULVLVKLJKDQGYRODWLOHIRRGSULFHVDUHEDFNLQWKHLQWHUQDWLRQDODJHQGD
FUHDWLQJUHQHZHGFRQFHUQVIRUZRUOGIRRGVHFXULW\2QFHDJDLQGLVFXVVLRQVDUHPRVWO\IRFXVHGRQVXJJHVWLQJ
TXLFNÀ[HVOLQNHGWRVRPHVSHFLÀFFRQWULEXWLQJIDFWRUVVXFKDVIRRGSULFHVSHFXODWLRQRUWKHLQFUHDVLQJXVH
RIELRHQHUJ\,QVXIÀFLHQWDWWHQWLRQLVEHLQJSDLGWRWKHIDFWWKDWWKHLQFUHDVLQJHQHUJ\LQWHQVLW\RIDJULFXOWXUDO
SURGXFWLRQ DQG WKH GLUHFW DQG LQGLUHFW OLQN EHWZHHQ DJULFXOWXUDO DQG IXHO SULFHV ZDV DPRQJ WKH XQGHUO\LQJ
IDFWRUVWKDWWULJJHUHGWKHFULVLVDQGQRZFRQWULEXWHVDJDLQWRWKHFXUUHQWURXQGRIIRRGSULFHHVFDODWLRQ
)XUWKHUPRUH WKH UHFHQW GURXJKW DIIHFWLQJ WKH PDLQ 86 JUDLQ SURGXFWLRQ ]RQHV SXWWLQJ XSZDUG SUHVVXUH RQ
LQWHUQDWLRQDOJUDLQSULFHVLVDQLQFLGHQWQRZLQFUHDVLQJO\IUHTXHQWDQGZLGHVSUHDGZLWKJOREDOZDUPLQJ$VWKLV
5HYLHZKLJKOLJKWVDJULFXOWXUHLVQRWRQO\FKLHÁ\DIIHFWHGE\JOREDOZDUPLQJEXWDOVRRQHRILWVGULYLQJIRUFHV
4XLFNÀ[HVZLOOQRWEHDEOHWRHIIHFWLYHO\GHDOZLWKWKHFRPSOH[LQWHUSOD\EHWZHHQHQHUJ\LQWHQVLW\JUHHQKRXVH
JDVHPLVVLRQVJOREDOZDUPLQJDQGIRRGVHFXULW\QHHGV5DWKHUZKDWLVFDOOHGIRULVDEHWWHUXQGHUVWDQGLQJRI
WKHPXOWLIXQFWLRQDOLW\RIDJULFXOWXUHLWVSLYRWDOLPSRUWDQFHIRUSURSRRUUXUDOGHYHORSPHQWDQGWKHVLJQLÀFDQWUROH
LWFDQSOD\LQGHDOLQJZLWKUHVRXUFHVFDUFLWLHVDQGLQPLWLJDWLQJDQGDGDSWLQJWRFOLPDWHFKDQJH
'HVSLWHVLJQLÀFDQWLQFUHDVHVLQDJULFXOWXUDOSURGXFWLYLW\DQGWKHIDFWWKDWWKHZRUOGFXUUHQWO\DOUHDG\SURGXFHV
VXIÀFLHQWFDORULHVSHUKHDGWRIHHGDJOREDOSRSXODWLRQRIELOOLRQKXQJHUKDVUHPDLQHGDNH\FKDOOHQJH
$URXQGRQHELOOLRQSHRSOHFKURQLFDOO\VXIIHUIURPVWDUYDWLRQDQGDQRWKHUELOOLRQDUHPDOQRXULVKHG6RPHSHU
FHQWRIWKHVHSHRSOHDUHWKHPVHOYHVVPDOOIDUPHUVRUDJULFXOWXUDOODERUHUV7KHUHIRUHKXQJHUDQGPDOQXWULWLRQ
DUHQRWSKHQRPHQDRILQVXIÀFLHQWSK\VLFDOVXSSO\EXWUHVXOWVRISUHYDLOLQJSRYHUW\DQGDERYHDOOSUREOHPVRI
DFFHVVWRIRRG(QDEOLQJWKHVHSHRSOHWREHFRPHIRRGVHOIVXIÀFLHQWRUHDUQDQDSSURSULDWHLQFRPHWKURXJK
DJULFXOWXUHWREX\IRRGQHHGVWRWDNHFHQWHUVWDJHLQIXWXUHDJULFXOWXUDOWUDQVIRUPDWLRQ0LOOHQQLXP'HYHORSPHQW
*RDOQXPEHURQHLVERXQGWREHPLVVHGPDLQO\EHFDXVHDJULFXOWXUHKDVQRWUHFHLYHGWKHDWWHQWLRQLWGHVHUYHV
IRUDFKLHYLQJIRRGVHFXULW\DQGDVDQHQJLQHRIVXVWDLQDEOHHFRQRPLFVRFLDODQGHQYLURQPHQWDOGHYHORSPHQW
LQGHYHORSLQJFRXQWULHV
1RGRXEWWKHIRRGSULFHFULVLVOHGWRDUHYHUVDORIWKHORQJWHUPQHJOHFWRIDJULFXOWXUHDVDYLWDOHFRQRPLF
VHFWRULQGHYHORSLQJFRXQWULHV$OVRWKHGHFOLQLQJWUHQGRISXEOLFIXQGLQJIRUDJULFXOWXUHZDVDUUHVWHGDQGVRPH
QHZ IXQGLQJ KDV UHFHQWO\ EHHQ FRPPLWWHG +RZHYHU WKH LPSOHPHQWDWLRQ RI WKHVH FRPPLWPHQWV ODFNV ZD\
EHKLQGUHTXLUHPHQWV2QHGRHVQHLWKHUVHHWKHQHFHVVDU\OHYHORIXUJHQF\QRUWKHSROLWLFDOZLOOLQJQHVVIURPWKH
LQWHUQDWLRQDOFRPPXQLW\IRUGUDVWLFFKDQJHV3ULRULW\UHPDLQVKHDYLO\IRFXVHGRQLQFUHDVLQJSURGXFWLRQPRVWO\
XQGHUWKHVORJDQ´PRUHZLWKOHVVµ7KHFXUUHQWO\SXUVXHGDSSURDFKLVVWLOOYHU\PXFKELDVHGWRZDUGVH[SDQVLRQ
RI ´VRPHZKDWOHVVSROOXWLQJµ LQGXVWULDO DJULFXOWXUH UDWKHU WKDQ PRUH VXVWDLQDEOH DQG DIIRUGDEOH SURGXFWLRQ
PHWKRGV,WLVVWLOOQRWUHFRJQL]HGWKDWDSDUDGLJPVKLIWLVUHTXLUHGLQSDUWLFXODUDFFHQWXDWHGE\WKHLQFUHDVLQJ
SUHVVXUHVFRPLQJIURPFOLPDWHFKDQJHPLWLJDWLRQDQGDGDSWDWLRQ$VFRUUHFWO\KLJKOLJKWHGLQWKH5HYLHZJOREDO
ZDUPLQJLVDWKUHDWPXOWLSOLHULWFRPSRXQGVVXSSOHPHQWVRUUHLQIRUFHVRWKHUWKUHDWVVRWKDWWKHELRSK\VLFDO
YXOQHUDELOLW\RIDJULFXOWXUHLQFUHDVHVLPSDFWLQJWKHPRVWYXOQHUDEOHSHRSOHLQWKHZRUOG
6ORZLQJDJULFXOWXUDOSURGXFWLYLW\JURZWKLQWKHIXWXUHKLJKSRSXODWLRQJURZWKLQWKHPRVWUHVRXUFHFRQVWUDLQHG
DQGFOLPDWHFKDQJHH[SRVHGUHJLRQVDQGDEXUJHRQLQJHQYLURQPHQWDOFULVHVLQDJULFXOWXUHDUHWKHVHHGVIRU
PRXQWLQJSUHVVXUHVRQIRRGVHFXULW\DQGWKHUHODWHGDFFHVVWRODQGDQGZDWHU7KLVLVERXQGWRLQFUHDVHWKH
VHYHULW\ DQG IUHTXHQF\ RI ULRWV RULJLQDWHG E\ IRRG SULFH LQFUHDVHV ZLWK FRQFRPLWDQW SROLWLFDO LQVWDELOLW\ DQG
LQWHUQDWLRQDOWHQVLRQFDXVHGE\UHVRXUFHFRQÁLFWVDQGPLJUDWRU\PRYHPHQWVRIVWDUYLQJSRSXODWLRQV7KXVWKH
IXQGDPHQWDOWUDQVIRUPDWLRQRIDJULFXOWXUHPD\ZHOOWXUQRXWWREHRQHRIWKHELJJHVWFKDOOHQJHVLQFOXGLQJIRU
LQWHUQDWLRQDOVHFXULW\RIWKHVWFHQWXU\
,QSDUDJUDSKRIWKH5LR'HFODUDWLRQDGRSWHGLQ-XQH+HDGVRI6WDWHUHDIÀUPWKHLU´FRPPLWPHQWV
UHJDUGLQJWKHULJKWRIHYHU\RQHWRKDYHDFFHVVWRVDIHVXIÀFLHQWDQGQXWULWLRXVIRRGFRQVLVWHQWZLWKWKHULJKW
WRDGHTXDWHIRRGDQGWKHIXQGDPHQWDOULJKWRIHYHU\RQHWREHIUHHIURPKXQJHU7KH\DFNQRZOHGJHWKDWIRRG
LY 75$'($1'(19,5210(175(9,(:

VHFXULW\DQGQXWULWLRQKDVEHFRPHDSUHVVLQJJOREDOFKDOOHQJHDQGLQWKLVUHJDUGWKH\IXUWKHUUHDIÀUPWKHLU

FRPPLWPHQWWRHQKDQFLQJIRRGVHFXULW\DQGDFFHVVWRDGHTXDWHVDIHDQGQXWULWLRXVIRRGIRUSUHVHQWDQGIXWXUH
JHQHUDWLRQVµ,WLVKLJKWLPHIRUWKHVHFRPPLWPHQWVWRFRPHWRUHDOLW\EHIRUHWKH0'*V·GHDGOLQHRI
,Q WKLV 7UDGH DQG (QYLURQPHQW 5HYLHZ PRUH WKDQ  LQWHUQDWLRQDO H[SHUWV KDYH FRQWULEXWHG WKHLU YLHZV WR D
FRPSUHKHQVLYH DQDO\VLV RI WKH DERYHRXWOLQHG FKDOOHQJHV DQG WKH PRVW VXLWDEOH VWUDWHJLF DSSURDFKHV IRU
GHDOLQJ KROLVWLFDOO\ ZLWK WKH LQWHUUHODWHG SUREOHPV RI KXQJHU DQG SRYHUW\ FOLPDWH FKDQJH HFRQRPLF VRFLDO
DQGJHQGHULQHTXLW\SRRUKHDOWKDQGQXWULWLRQDQGHQYLURQPHQWDOVXVWDLQDELOLW\7KHDXWKRUVDQGWKH81&7$'
VHFUHWDULDWDUHORRNLQJIRUZDUGWRDQLQVSLULQJGLDORJXHZLWKUHDGHUVRIWKLV5HYLHZRQRQHRIWKHPRVWLQWHUHVWLQJ
DQGFKDOOHQJLQJVXEMHFWVRISUHVHQWGHYHORSPHQWGLVFRXUVH

*HQHYD0DUFK &DUORV3pUH]GHO&DVWLOOR
&KDLUPDQ&RQVRUWLXP%RDUG
*OREDO5HVHDUFK3DUWQHUVKLSIRU
D)RRG6HFXUH)XWXUH&*,$5
&RQWHQWV Y

&RQWHQWV

)RUHZRUG&DUORV3pUH]GHO&DVWLOOR&KDLUPDQ&RQVRUWLXP%RDUG&*,$5LLL
$FNQRZOHGJHPHQWV [L
$FURQ\PVDQGDEEUHYLDWLRQV[LL

&KDSWHU.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
/HDG$UWLFOH$JULFXOWXUHDWWKHFURVVURDGVDVVXULQJIRRGVHFXULW\LQGHYHORSLQJFRXQWULHVXQGHUWKH
FKDOOHQJHVRIJOREDOZDUPLQJ 
8OULFK+RIIPDQQ81&7$'VHFUHWDULDW
$,QWURGXFWLRQ 
%$JULFXOWXUHDNH\GULYHUDQGDPDMRUYLFWLPRIJOREDOZDUPLQJ 
&5HTXLUHGIXQGDPHQWDOWUDQVIRUPDWLRQRIDJULFXOWXUH 
'7KHSDUDGLJPVKLIWKDVVWDUWHGEXWLVODUJHO\LQFRPSOHWH 
&RPPHQWDU\,$JULFXOWXUH$XQLTXHVHFWRULQHFRQRPLFHFRORJLFDODQGVRFLDOWHUPV 
-HDQ)H\GHU$PEDVVDGRU)RUPHU3HUPDQHQW5HSUHVHQWDWLYHRI/X[HPERXUJWRWKH81DQG:72LQ*HQHYD
&RPPHQWDU\,,&RQFHSWXDODQGSUDFWLFDODVSHFWVRIFOLPDWHFKDQJHPLWLJDWLRQWKURXJKDJULFXOWXUH
UHGXFLQJJUHHQKRXVHJDVHPLVVLRQVDQGLQFUHDVLQJVRLOFDUERQVHTXHVWUDWLRQ 
$0OOHUDQG$*DWWLQJHU5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH)L%/6ZLW]HUODQG
&RPPHQWDU\,,,7KHSRWHQWLDORIVXVWDLQDEOHDJULFXOWXUHIRUFOLPDWHFKDQJHDGDSWDWLRQ 
$0OOHUDQG81LJJOL5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH)L%/6ZLW]HUODQG
&RPPHQWDU\,9)RRGFOLPDWHFKDQJHDQGKHDOWK\VRLOV7KHIRUJRWWHQOLQN 
*5$,1
&RPPHQWDU\90LWLJDWLQJFOLPDWHFKDQJHZLWKVRLORUJDQLFPDWWHULQRUJDQLFSURGXFWLRQV\VWHPV 
$QGUH/HX3UHVLGHQW,QWHUQDWLRQDO)HGHUDWLRQRI2UJDQLF$JULFXOWXUDO0RYHPHQWV,)2$0
&RPPHQWDU\9,$JURHFRORJ\$VROXWLRQWRWKHFULVHVRIIRRGV\VWHPVDQGFOLPDWHFKDQJH 
2OLYLHUGH6FKXWWHU816SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRG
&RPPHQWDU\9,,3URPRWLQJUHVLOLHQWDJULFXOWXUHLQVXE6DKDUDQ$IULFDDVDPDMRUSULRULW\LQ
FOLPDWHFKDQJHadaptation 
0DUFXV.DSODQ&KLQZH,IHMLND6SHUDQ]DDQG,PPH6FKRO]*HUPDQ'HYHORSPHQW,QVWLWXWH
&RPPHQWDU\9,,,<LHOGDQG\LHOGTXDOLW\RIPDMRUFHUHDOVXQGHUFOLPDWHFKDQJH 
3HWUD+|J\DQG$QGUHDV)DQJPHLHU8QLYHUVLW\RI+RKHQKHLP,QVWLWXWHIRU/DQGVFDSHDQG3ODQW(FRORJ\
&RPPHQWDU\,;&RPSDUDWLYHDQDO\VLVRIRUJDQLFDQGQRQRUJDQLFIDUPLQJV\VWHPV
DFULWLFDODVVHVVPHQWRIIDUPSURÀWDELOLW\ 
1RpPL1HPHV)$2
&RPPHQWDU\;6WUHQJWKHQLQJUHVLOLHQFHRIIDUPLQJV\VWHPV$SUHUHTXLVLWHIRUVXVWDLQDEOH
DJULFXOWXUDOSURGXFWLRQ 
0LJXHO$$OWLHUL8QLYHUVLW\RI&DOLIRUQLD%HUNHOH\DQG3DUYL].RRKDINDQ)$2
&RPPHQWDU\;,'HPRFUDWL]LQJFRQWURORIDJULFXOWXUHWRPHHWWKHQHHGVRIWKHWZHQW\ÀUVWFHQWXU\ 
0DUFLD,VKLL(LWHPDQ3HVWLFLGH$FWLRQ1HWZRUN1RUWK$PHULFD
&RPPHQWDU\;,,$JULFXOWXUHIRRGDQGHQHUJ\ 
*XQQDU5XQGJUHQ*UROLQN$%&RQVXOWDQF\6ZHGHQ
YL 75$'($1'(19,5210(175(9,(:

&RPPHQWDU\;,,,6XVWDLQDEOHDJULFXOWXUHDQGRIIJULGUHQHZDEOHHQHUJ\ 
0DH:DQ+R,QVWLWXWHRI6FLHQFHLQ6RFLHW\/RQGRQ
&RPPHQWDU\;,96RLO(URVLRQ$WKUHDWWRIRRGVHFXULW\DQGFOLPDWHFKDQJH 
'DYLG3LPHQWHODQG0LFKDHO%XUJHVV&ROOHJHRI$JULFXOWXUHDQG/LIH6FLHQFHV&RUQHOO8QLYHUVLW\
,WKDFD1HZ<RUN
&RPPHQWDU\;9&RPSHWLWLRQIRUZDWHUIRUDJULFXOWXUHWKURXJK 
%UHQW%RHKOHUW,QGXVWULDO(FRQRPLFV,QFDQG.HQQHWK6WU]HSHN0DVVDFKXVHWWV,QVWLWXWHRI7HFKQRORJ\
&RPPHQWDU\;9,7KHLPSDFWRIDJULIRRGVXSSO\FKDLQVRQJUHHQKRXVHJDVHPLVVLRQV
7KHFDVHRIDFRIIHHYDOXHFKDLQEHWZHHQ7DQ]DQLDDQG*HUPDQ\ 
(.UDLQ./LQQHDQG0*DHEOHU*,=*HUPDQ\
&RPPHQWDU\;9,,)RRGZDVWHUHGXFWLRQ$JOREDOLPSHUDWLYH 
-XOLDQ3DUÀWW3ULQFLSDO5HVRXUFH$QDO\VW2DNGHQH+ROOLQV$\OHVEXU\8QLWHG.LQJGRPDQG
0DUN%DUWKHO6SHFLDO$GYLVRU:DVWHDQG5HVRXUFHV$FWLRQ3URJUDPPH%DQEXU\8QLWHG.LQJGRP
&RPPHQWDU\;9,,,7KHUROHRIVXVWDLQDEOHFRQVXPSWLRQLQIRVWHULQJDIXQGDPHQWDO
WUDQVIRUPDWLRQRIDJULFXOWXUH 
/XFLD5HLVFK&RSHQKDJHQ%XVLQHVV6FKRRO'HQPDUN
&RPPHQWDU\;,;)RRGVDIHW\DQGV\VWHPLFFKDQJH/LPLWDWLRQVRIIRRGFRQWUROVIRU
VDIHJXDUGLQJIRRGVDIHW\ 
-XWWD-DNVFKH3ROLF\2IÀFHU)RRG)HGHUDWLRQRI*HUPDQ&RQVXPHU2UJDQLVDWLRQV
5HIHUHQFHV 
1RWHV 

&KDSWHU/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW
/HDG$UWLFOH/LYHVWRFNSURGXFWLRQDQGIRRGVHFXULW\LQDFRQWH[WRIFOLPDWHFKDQJHDQG
HQYLURQPHQWDODQGKHDOWKFKDOOHQJHV 
$QLWD,GHO)HGHUDWLRQRI*HUPDQ6FLHQWLVWVDQG7RELDV5HLFKHUW*HUPDQZDWFK
$(IIHFWVRILQH[SHQVLYHHQHUJ\DQGQLWURJHQIHUWLOL]HUV 
%6XVWDLQDELOLW\UHTXLUHVDQHZGHÀQLWLRQRIWKHWHUPVSURGXFWLYLW\DQGJURZWK 
&7KHUROHRIDJULFXOWXUDODQGWUDGHSROLF\LQWKHLQGXVWULDOL]DWLRQRIDQLPDOSURGXFWLRQ 
'5LVNVDVVRFLDWHGZLWKVHOHFWLYHEUHHGLQJIRUKLJKHUSURGXFWLYLW\ 
(7KHSXVKIRUELRVHFXULW\SRVHVDWKUHDWWRDQLPDODQGFRQVXPHUSURWHFWLRQ 
) 'HIRUHVWDWLRQDQGDQLPDOIHHGSURGXFWLRQ 
**UDVVODQGVDQGUXPLQDQWVDQH[DPSOHRIPLVFRQFHSWLRQVDQGRSSRUWXQLWLHV 
+*UDVVODQGVRIWKHZRUOG 
, *OREDOODQGVFDSHJDUGHQHUV 
- &DWWOHDVLGHDOXVHUVRIIHHG 
&RPPHQWDU\,([FHVVLYHLQGXVWULDOL]DWLRQRIOLYHVWRFNSURGXFWLRQ7KHQHHGIRUDQHZ
DJULFXOWXUDOSDUDGLJP 
)ULHGULFK2VWHQGRUII'HSXW\&KDLUPDQ$JULFXOWXUDO&RPPLWWHHRIWKH*HUPDQ3DUOLDPHQW
&RPPHQWDU\,,:K\LQGXVWULDOOLYHVWRFNIDUPLQJLVXQVXVWDLQDEOH 
-R\FH'·6LOYD&RPSDVVLRQLQ:RUOG)DUPLQJ
&RPPHQWDU\,,,,QWHJUDWHGFURSOLYHVWRFNDQGHQHUJ\PDQDJHPHQW7KHFDVHRIELRJDVLQ
UXUDO(WKLRSLD 
6WDQOH\*ZDYX\D.QRZOHGJH0DQDJHPHQW&RRUGLQDWRU3DUWQHUVKLSIRU
'HYHORSPHQW,QLWLDWLYH7UXVW=LPEDEZH
5HIHUHQFHV 
1RWHV 
&RQWHQWV YLL

&KDSWHU7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV
/HDG$UWLFOH7KHUROHRIUHVHDUFKWHFKQRORJ\DQGH[WHQVLRQVHUYLFHVLQDIXQGDPHQWDO
WUDQVIRUPDWLRQRIDJULFXOWXUH 
+DQV5+HUUHQ3UHVLGHQW0LOOHQQLXP,QVWLWXWH
$,QWURGXFWLRQ 
%$JULFXOWXUDOSURGXFWLRQDQGYDOXHDGGHG 
&/LYHVWRFNSURGXFWLRQQXWULWLRQDQGOLYHOLKRRGV 
'*+*HPLVVLRQV 
((QDEOLQJFRQGLWLRQV 
) 7KHZD\IRUZDUG 
&RPPHQWDU\,(IIHFWLYHH[WHQVLRQVHUYLFHVIRUV\VWHPLFFKDQJH$FKLHYHPHQWVDQGEDUULHUVWR
LPSOHPHQWDWLRQ 
/DXUHQV.OHUN[&RPPXQLFDWLRQDQG,QQRYDWLRQ6WXGLHV:DJHQLQJHQ8QLYHUVLW\7KH1HWKHUODQGV
&RPPHQWDU\,,&RPELQLQJLQGLJHQRXV$IULFDQNQRZOHGJHZLWKPRGHUQNQRZOHGJHV\VWHPVIRU
IRRGVHFXULW\LQFKDQJLQJFOLPDWLFFRQGLWLRQV&KDOOHQJHVDQGSURVSHFWV 
+2.D\DDQG<16HOHWL,.6&HQWUHRI([FHOOHQFH1RUWK:HVW8QLYHUVLW\0PDEDWKR6RXWK$IULFD
&RPPHQWDU\,,,7KHV\PELRVLVEHWZHHQPRGHUQVFLHQFHDQGWUDGLWLRQDONQRZOHGJHIRU
HQKDQFLQJIRRGVHFXULW\DQGFOLPDWHFKDQJHDGDSWDWLRQ 
600EXNX.HQ\D$JULFXOWXUDO5HVHDUFK,QVWLWXWH1DWLRQDO%HHI5HVHDUFK&HQWUHDQG,6.RVJH\
'HSDUWPHQWRI$QLPDO6FLHQFHV(JHUWRQ8QLYHUVLW\1MRUR.HQ\D
&RPPHQWDU\,9$GGUHVVLQJWKHFDXVHVRIODQGGHJUDGDWLRQIRRGDQGQXWULWLRQDOLQVHFXULW\DQG
SRYHUW\$QHZDSSURDFKWRDJULFXOWXUDOLQWHQVLÀFDWLRQLQWKHWURSLFVDQGVXEWURSLFV 
5RJHU5%/HDNH\$JURIRUHVWU\DQG1RYHO&URSV8QLW6FKRRORI0DULQHDQG7URSLFDO%LRORJ\
-DPHV&RRN8QLYHUVLW\&DLUQV$XVWUDOLD
&RPPHQWDU\9$GDSWLQJWRFOLPDWHFKDQJHDQGLPSURYLQJKRXVHKROGIRRGVHFXULW\LQ
$IULFDWKURXJKDJURIRUHVWU\6RPHOHVVRQVIURPWKH6DKHO 
&KULV5HLM)DFLOLWDWRU$IULFDQ5HJUHHQLQJ,QLWLDWLYHV&HQWUHIRU,QWHUQDWLRQDO&RRSHUDWLRQ
)UHH8QLYHUVLW\$PVWHUGDP
&RPPHQWDU\9,*HQHWLFHQJLQHHULQJDQGELRWHFKQRORJ\IRUIRRGVHFXULW\DQGIRU
FOLPDWHFKDQJHPLWLJDWLRQDQGDGDSWDWLRQ3RWHQWLDODQGULVNV 
-DFN$+HLQHPDQQ&HQWUHIRU,QWHJUDWHG5HVHDUFKLQ%LRVDIHW\DQG6FKRRORI
%LRORJLFDO6FLHQFHV8QLYHUVLW\RI&DQWHUEXU\&KULVWFKXUFK1HZ=HDODQG
5HIHUHQFHV 
1RWHV 

&KDSWHU7KH5ROHRI&KDQJHVLQ/DQG8VH
/HDG$UWLFOH.H\LPSOLFDWLRQVRIODQGFRQYHUVLRQVLQDJULFXOWXUH 
+DQV+XUQL7KRPDV%UHX3HWHU0HVVHUOLDQG%ULJLWWH3RUWQHU&HQWUHIRU'HYHORSPHQWDQG
(QYLURQPHQW8QLYHUVLW\RI%HUQ6ZLW]HUODQG
$,QWURGXFWLRQ 
%/DQGFRQYHUVLRQVIRUELRIXHOSURGXFWLRQ 
&/DQGFRQYHUVLRQIRUOLYHVWRFNSURGXFWLRQ 
'&RQYHUVLRQVGXHWRVPDOOVFDOHIDUPLQJDQGUXUDOSRYHUW\ 
(,PSOLFDWLRQVRIODQGFRQYHUVLRQVIRUIRRGVHFXULW\ 
&RPPHQWDU\,/DQGJUDEELQJDQGIXWXUHFRQÁLFWV 
1QLPPR%DVVH\([HFXWLYH'LUHFWRU(QYLURQPHQWDO5LJKWV$FWLRQ&KDLU)ULHQGVRI
WKH(DUWK,QWHUQDWLRQDODQGFRRUGLQDWRU2LOZDWFK,QWHUQDWLRQDO
YLLL 75$'($1'(19,5210(175(9,(:

&RPPHQWDU\,,(YDOXDWLRQRIODQGLQYHVWPHQWGHDOVLQ$IULFD3UHOLPLQDU\ÀQGLQJV 
$QXUDGKD0LWWDO2DNODQG,QVWLWXWH
5HIHUHQFHV 
1RWHV 

&KDSWHU7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU
7UDQVIRUPLQJ*OREDO$JULFXOWXUH
/HDG$UWLFOH7KHLPSRUWDQFHRILQWHUQDWLRQDOWUDGHWUDGHUXOHVDQGPDUNHWVWUXFWXUHV 
/LP/L&KLQJ7KLUG:RUOG1HWZRUNDQG0DUWLQ.KRU6RXWK&HQWUH
$,QWURGXFWLRQ 
%6WUXFWXUDODGMXVWPHQWDQGLPSRUWOLEHUDOL]DWLRQ 
&,PEDODQFHLQWUDGHUXOHVJRYHUQLQJDJULFXOWXUH 
',PEDODQFHLQPDUNHWVWUXFWXUHV 
((QYLURQPHQWDOVXVWDLQDELOLW\ 
) $WUDGHIUDPHZRUNVXSSRUWLYHRIIRRGVHFXULW\DQGVXVWDLQDELOLW\ 
&RPPHQWDU\,(QVXULQJIRRGVHFXULW\DQGHQYLURQPHQWDOUHVLOLHQFH²7KHQHHGIRU
VXSSRUWLYHDJULFXOWXUDOWUDGHUXOHV 
1LNRODL)XFKV1H[XV)RXQGDWLRQDQG8OULFK+RIIPDQQ81&7$'VHFUHWDULDW
&RPPHQWDU\,,)URPGXPSLQJWRYRODWLOLW\7KHOHVVRQVRIWUDGHOLEHUDOL]DWLRQIRUDJULFXOWXUH 
%HQ/LOOLVWRQDQG.DUHQ+DQVHQ.XKQ,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\
&RPPHQWDU\,,,5HWKLQNLQJIRRGVHFXULW\VWUDWHJLHVLQWLPHVRIFOLPDWHFKDQJH7KH
FDVHIRUUHJLRQDOL]DWLRQRIDJULFXOWXUDOWUDGHDQGORFDOPDUNHWV 
&KULVWLQH&KHPQLW]+HLQULFK%|OO)RXQGDWLRQDQG7LOPDQ6DQWDULXV*HUPDQZDWFK
&RPPHQWDU\,9*HWWLQJIDUPHUVRIIWKHWUHDGPLOO$GGUHVVLQJFRQFHQWUDWLRQLQDJULFXOWXUDO
LQSXWVSURFHVVLQJDQGUHWDLOPDUNHWV 
(OHQLWD&'DxR$FWLRQ*URXSRQ(URVLRQ7HFKQRORJ\DQG&RQFHQWUDWLRQ
&RPPHQWDU\96RDULQJRLODQGIRRGSULFHVWKUHDWHQDIIRUGDEOHIRRGVXSSO\ 
5LFKDUG+HLQEHUJ3RVW&DUERQ,QVWLWXWH
&RPPHQWDU\9,$FULWLFDODQDO\VLVRIFRPPRGLW\DQGIRRGSULFHVSHFXODWLRQ 
'LUN0OOHU)LQDQFH(WKLFV
&RPPHQWDU\9,,/HWWKHJRRGSURGXFWVJURZDQGÁRZ 
6RSKLD7ZDURJ81&7$'VHFUHWDULDW
&RPPHQWDU\9,,,&RPPXQLW\VXSSRUWHGRUJDQLFSURGXFWLRQ7KHFDVHRIWKH5HJLRQDO
9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQLQVRXWKHUQ*HUPDQ\ 
&KULVWLDQ+LVV5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQ
&RPPHQWDU\,;7KH6(.(0LQLWLDWLYH$FRUQHUSLOODUIRUWKHFRPPXQLW\ 
+HOP\$ERXOHLVKDQG0DWWKLDV.HLWHO6(.(0(J\SW
5HIHUHQFHV 
1RWHV 

7DEOHV
&KDSWHU
 $JULFXOWXUDOODERXUSURGXFWLYLW\ 
 *UHHQSRWHQWLDORIRUJDQLFDJULFXOWXUHDQGDQDHURELFGLJHVWLRQLQ&KLQD 
 *UHHQSRWHQWLDORI'UHDP)DUP 
 3HUFHQWDJHRIDJULFXOWXUDOZDWHUWKUHDWHQHGLQWKHJHRSROLWLFDOUHJLRQVQLQHVFHQDULRV 
&RQWHQWV L[

&KDSWHU
 &RVWEHQHÀWDQDO\VLVRIELRJDVSODQWVFRPSDUHGZLWKGLIIHUHQWWUDGLWLRQDOVRXUFHVRI
KRXVHKROGHQHUJ\LQ(WKLRSLD 
&KDSWHU
 *UHHQVFHQDULR,PSDFWRIJUHHQLQYHVWPHQWVLQDJULFXOWXUHDPRXQWLQJWRSHUFHQWRI*'3 
 &KDQJHVLQIRRGVHFXULW\LQ$UJHQWLQD 
&KDSWHU
 *OREDOODQGXVHDQGFRYHUW\SHVDQGPDMRUVSDWLDOFKDQJHV 
 *URZWKRIOLYHVWRFNDQGVKDUHVRIGLIIHUHQWOLYHVWRFNE\UHJLRQ² 
 $VVHVVPHQWRIVPDOOVFDOHYHUVXVODUJHVFDOHIDUPLQJDWWKHJOREDOOHYHO 
 6DPSOLQJRIIDUPODQGOHDVHIHHVE\ODQGGHDO 
 6DPSOLQJRIDYHUDJHIDUPODQGSULFHVE\VHOHFWHGFRXQWULHV 
&KDSWHU
 ,PSRUWVXUJHVRIVHOHFWHGFRPPRGLWLHVDQGWKHLULPSDFWRQORFDOSURGXFWLRQYROXPHYDULRXV\HDUV 
 :RUOG·VWRSVHHGFRPSDQLHV 
 :RUOG·VWRSDJURFKHPLFDOFRPSDQLHV 
 :RUOG·VWRSIRRGDQGEHYHUDJHFRPSDQLHV 
 :RUOG·VWRSIRRGUHWDLOHUV 
 .H\VXVWDLQDEOHPDQDJHPHQWFULWHULD 
 2YHUYLHZRINH\LQYHVWPHQWVRI5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQ 

%R[HV
&KDSWHU
 7KHFRQFHSWRIDGDSWDWLRQ 
 'LIÀFXOWLHVLQDQDO\VLQJ\LHOGVIURPFRPSDUDWLYHVWXGLHV 
 3URÀWDELOLW\RIRUJDQLFFRWWRQSURGXFWLRQ 
 ([DPSOHVRIHQYLURQPHQWDOFRVWV 
 3ROLF\RSWLRQVWRVXSSRUWDWUDQVLWLRQWRVXVWDLQDEOHDJULFXOWXUH 
 &RUSRUDWHLQÁXHQFHRYHUSXEOLFSROLF\ 
 5HYROYLQJGRRU 
&KDSWHU
 .H\ÀQGLQJVRIWKH(XURSHDQ1LWURJHQ$VVHVVPHQW 
 5HDVRQVIRUWKHLQVXIÀFLHQWSHUFHSWLRQRIWKHSRWHQWLDORIVXVWDLQDEOHDJULFXOWXUHWR
FRQWULEXWHWRIRRGVHFXULW\DQGVXVWDLQDEOHUXUDOGHYHORSPHQW 
 (UURQHRXVFRQFOXVLRQVRQH[WHQVLYHDQGLQWHQVLYHOLYHVWRFNSURGXFWLRQV\VWHPVGXHWR
LOOGHÀQHGV\VWHPERXQGDULHV 
 7ZHOYHIDUPDQLPDOZHOIDUHFULWHULD 
 7KHÀYHIUHHGRPV 
&KDSWHU
 %URNHULQJWKH6RXWK$PHULFDQ3DSD$QGLQDVXVWDLQDEOHYDOXHFKDLQLQQRYDWLRQQHWZRUN 
 ,QQRYDWLRQEURNHULQJIRULQFOXVLYHGHPDQGGULYHQUHVHDUFKDQGLQQRYDWLRQLQ,QGLD
1DWLRQDO$JULFXOWXUDO,QQRYDWLRQ3URJUDPPH 
&KDSWHU
 7KHLPSDFWRIWUDGHOLEHUDOL]DWLRQLQ*KDQD 
 7KHWUHDGPLOORIH[WHUQDOLQSXWLQWHQVLYHSURGXFWLRQH[SHULHQFHRIDVR\IDUPHULQ$UJHQWLQD 
 6RLOIHUWLOLW\DQGWKHLPSRUWDQFHRIKXPXV 
 $YRLGLQJFRQIXVLRQRQWKHWHUPV´UHJLRQDO´DQG´ORFDOµ 
[ 75$'($1'(19,5210(175(9,(:

)LJXUHV
&KDSWHU
 'HYHORSPHQWRIIRRGDQGIHUWLOL]HUSULFHV² 
 7RS*+*HPLWWLQJFRXQWULHVIURPDJULFXOWXUH 
 /'&*+*HPLVVLRQVE\VHFWRU 
 3URMHFWHGFOLPDWHFKDQJHFDXVHGFKDQJHVLQDJULFXOWXUDOSURGXFWLYLW\E\
LQFRUSRUDWLQJWKHHIIHFWRIFDUERQIHUWLOLVDWLRQ 
 6\VWHPLFHPEHGGLQJRIFOLPDWHIULHQGO\DJULFXOWXUH 
 *KDQDFKLFNHQSURGXFWLRQDQGLPSRUWDWLRQ² 
 +DwWL5LFHSURGXFWLRQDQGLPSRUWV 
 &XVWRPWDULIIVLQWKH(8DQGWKH:HVWHUQ$IULFDQ(FRQRPLFDQG0RQHWDU\8QLRQ8(02$ 
 &RQWULEXWLRQRIWKHJOREDOIRRGSURGXFWLRQV\VWHPWRWRWDO*+*HPLVVLRQV 
/DQGIRUDJULFXOWXUDOXVH² 
&2HPLVVLRQVIURPODQGXVHFKDQJHLQVHOHFWHGGHYHORSLQJUHJLRQV² 
6WUXFWXUHRIWKHJOREDOVHHGLQGXVWU\RYHUWKHSHULRG² 
86$,'IXQGHG$JULFXOWXUDO%LRWHFKQRORJ\6XSSRUW3URMHFW$%633KDVH,,WDUJHWFRXQWULHV
 *(FURSVLQGHYHORSPHQWDQGSURMHFWSDUWQHUV 
'UHDP)DUPDQLQWHJUDWHGIRRGDQGHQHUJ\V\VWHP 
7RWDOSURMHFWHGPXQLFLSDOZDWHUXVHLQ2(&'YHUVXVQRQ2(&'FRXQWULHV² 
:DWHUZLWKGUDZDOVIRUDJULFXOWXUHDVDSHUFHQWDJHRIPHDQDQQXDOUXQRIILQ 
2YHUYLHZRI&2VHTXHVWUDWLRQDQG*+*HPLVVLRQVLQDFURSEDVHGYDOXHFKDLQ 
&DUERQIRRWSULQWDORQJWKHYDOXHFKDLQIRURQHEUHZHGFXSRI7FKLER5DULW\0DFKDUH3ULYDWH&RIIHH 
&DUERQIRRWSULQWLQSUHSDULQJDFXSRIFRIIHH 
2QIDUPHPLVVLRQVE\FDWHJRU\RIIDUPVLQ%DUDJZL.HQ\D 
*URZWKUDWHRIPHDWFRQVXPSWLRQRYHUWKHSDVW\HDUV 
&KDSWHU
 :RUOGIHUWLOL]HUFRQVXPSWLRQ² 
 (8LPSRUWVRIVR\EHDQFDNHDQGVR\EHDQV²WR² 
 $UHDXQGHUVR\FXOWLYDWLRQVHOHFWHGFRXQWULHV² 
 7KHLPSRUWDQFHRIFRZORQJHYLW\WRSURWHFWWKHHQYLURQPHQWWKHFOLPDWHDQGWKHHFRQRP\ 
&KDSWHU
 7KHF\FOHRIODQGGHJUDGDWLRQDQGVRFLDOGHSULYDWLRQ 
 $UHSUHVHQWDWLRQRIWKH\LHOGJDSLQDJULFXOWXUHDQGWKHVWHSVQHHGHGWRFORVHWKHJDS 
 3URFHGXUHVIRUFORVLQJWKH\LHOGJDS 
 ,QFRPHJHQHUDWHGIURPWUHHVDOHVE\YLOODJHQXUVHULHVDVVRFLDWHGZLWKUXUDOUHVRXUFHVFHQWUHVLQ
QRUWKDQGQRUWKZHVWUHJLRQVRI&DPHURRQDIWHUDQG\HDUV 
 'HJUHHVRIFRPPLWPHQWWR*0DJULFXOWXUHHVWLPDWHVIRU 
 &RPSDUDWLYH\LHOGVLQ*0DGRSWLQJDQGQRQDGRSWLQJDJULFXOWXUDOV\VWHPV² 
 )RRGVHFXULW\LQ*0DQGQRQ*0DGRSWLQJFRXQWULHVLQ6RXWK$PHULFDFRPSDUHG² 
&KDSWHU
 $FWXDODQGSRWHQWLDOEHQHÀWVIURPDJULFXOWXUDODFWLYLWLHVDFFRUGLQJWRFXUUHQWDJULFXOWXUDOSRWHQWLDO 
&KDSWHU
 'HYHORSPHQWRIIRRGDQGPDLQDJULFXOWXUDOLQSXWSULFHVWRPLG 
 (YROXWLRQRIIRRGDQGIXHOSULFHV² 
 &RUUHODWLRQEHWZHHQWKHQXPEHURI27&FRQWUDFWVDQGFRPPRGLW\SULFHGHYHORSPHQW² 
 'HYHORSPHQWRIWKHSULFHRIRLO:7,² 
 &RUUHODWLRQEHWZHHQVKDUHDQGFRPPRGLW\SULFHV6HSW²6HSW 
$FNQRZOHGJHPHQWV [L

 (YROXWLRQRISURGXFWLRQDQGFRQVXPSWLRQRIZKHDW 

 7KHFRQFHSWXDOVWUXFWXUHRI5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQ 
 6(.(0·VDFWLYLWLHVEDVHGRQLWVYLVLRQIRU(J\SW 
 7KH6XVWDLQDELOLW\)ORZHU 

$FNQRZOHGJHPHQWV

7KLV7UDGHDQG(QYLURQPHQW5HYLHZZDVHGLWHGDQGFRPSLOHGE\8OULFK+RIIPDQQ6HQLRU7UDGH3ROLF\$GYLVRU
2IÀFHRIWKH'LUHFWRU'LYLVLRQRQ,QWHUQDWLRQDO7UDGHLQ*RRGVDQG6HUYLFHVDQG&RPPRGLWLHV)UDQN*URWKDXV
DVVLVWHG LQ SURRIUHDGLQJ WKH PDQXVFULSW ,W ZDV SUHSDUHG IRU SXEOLVKLQJ E\ 5DIH 'HQW ZLWK DVVLVWDQFH RQ
JUDSKLFVE\6RSKLH&RPEHWWHDQG1DGHJH+DGMHPLDQ7KHPDQXVFULSWZDVODQJXDJHHGLWHGE\3UDYHHQ%KDOOD
[LL 75$'($1'(19,5210(175(9,(:

$FURQ\PVDQGDEEUHYLDWLRQV
$$$6 $PHULFDQ$VVRFLDWLRQIRUWKH$GYDQFHPHQWRI6FLHQFH
$$7) $IULFDQ$JULFXOWXUDO7HFKQRORJ\)RXQGDWLRQ
$E/ $VVRFLDWLRQIRUVXVWDLQDEOHLHPRUHVRFLDOO\DQGHQYLURQPHQWDOO\EHQHÀFLDODJULFXOWXUH
 $UEHLWVJHPHLQVFKDIWElXHUOLFKH/DQGZLUWVFKDIW*HUPDQ\
$%63 $JULFXOWXUDO%LRWHFKQRORJ\6XSSRUW3URMHFW
$&3 $IULFDQ&DULEEHDQDQG3DFLÀFFRXQWULHV
$) DJURIRUHVWU\
$)73V DJURIRUHVWU\WUHHSURGXFWV
$+%), $+DUYHVW%LRWHFK)RXQGDWLRQ,QWHUQDWLRQDO
$.67 DJULFXOWXUDONQRZOHGJHVFLHQFHDQGWHFKQRORJ\
$R$ $JUHHPHQWRQ$JULFXOWXUHRIWKH:72
$5, $IULFDQ5HJUHHQLQJ,QLWLDWLYH
$526 $VLDQ5HJLRQDO2UJDQLF6WDQGDUG
$6$/V DULGDQGVHPLDULGODQGV
$6$5(&$ $VVRFLDWLRQIRU6WUHQJWKHQLQJ$JULFXOWXUDO5HVHDUFKLQ(DVWHUQDQG&HQWUDO$IULFD
$6($1 $VVRFLDWLRQRI6RXWKHDVW$VLDQ1DWLRQV
$632 $VVRFLDWLRQIRUWKH6WXG\RI3HDN2LO *DV8QLWHG6WDWHV
$95'& 7KH:RUG9HJHWDEOH&HQWHU
%$8 EXVLQHVVDVXVXDOVFHQDULR
%I5 )HGHUDO,QVWLWXWHIRU5LVN$VVHVVPHQW*HUPDQ\
ELUU (WKLRSLDQFXUUHQF\
%,6 %DQNIRU,QWHUQDWLRQDO6HWWOHPHQWV
%0(/) *HUPDQ)HGHUDO0LQLVWU\IRU)RRG$JULFXOWXUHDQG)RUHVWVVLQFHNQRZQDVWKH)HGHUDO
 0LQLVWU\IRU)RRG$JULFXOWXUHDQG&RQVXPHU3URWHFWLRQ
%5,& JURXSLQJWKDWUHIHUVWRWKHFRXQWULHV%UD]LOWKH5XVVLDQ)HGHUDWLRQ,QGLDDQG&KLQD
%6( ERYLQHVSRQJLIRUPHQFHSKDORSDWK\PDGFRZGLVHDVH
%6, %ULWLVK6WDQGDUGV,QVWLWXWLRQ
%W EDFLOOXVWKXULQJLHQVLV
%7, %R\FH7KRPSVRQ,QVWLWXWH
%9/ )HGHUDO2IÀFHRI&RQVXPHUDQG)RRG6DIHW\*HUPDQ\
& FDUERQ
& SKRWRV\QWKHWLFSDWKZD\
& FDUERQÀ[DWLRQSKRWRV\QWKHWLFSDWKZD\
&$)7$ &HQWUDO$PHULFD'RPLQLFDQ5HSXEOLF8QLWHG6WDWHV)UHH7UDGH$JUHHPHQW
&$3 &RPPRQ$JULFXOWXUDO3ROLF\
&$5( &RRSHUDWLYHIRU$VVLVWDQFHDQG5HOLHI
&$:0$ FRPSUHKHQVLYHDVVHVVPHQWRIZDWHUPDQDJHPHQWLQDJULFXOWXUH
&%' &RQYHQWLRQRQ%LRORJLFDO'LYHUVLW\
&%27 &KLFDJR%RDUGRI7UDGH
&& FOLPDWHFKDQJH
&&3 &RPPLWWHHRQ&RPPRGLW\3UREOHPV)$2
&&7(& &RUQHOO8QLYHUVLW\&ROOHJHRI$JULFXOWXUHDQG/LIH6FLHQFHV
&'( &HQWUHIRU'HYHORSPHQWDQG(QYLURQPHQW8QLYHUVLW\RI%HUQ6ZLW]HUODQG
&'0 &OHDQ'HYHORSPHQW0HFKDQLVP
&(2 FKLHIH[HFXWLYHRIÀFHU
&(7,0 &HQWUH(XURSH7LHUV0RQGH
&)$5 &OLPDWH)RUHFDVWLQJIRU$JULFXOWXUDO5HVRXUFHVSURMHFW
&)6 &RPPLWWHHRQ:RUOG)RRG6HFXULW\)$2
&)6+/3( +LJK/HYHO3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQWRWKH)$2&RPPLWWHHRQ
 :RUOG)RRG6HFXULW\
&*& &KLQHVHFRQVWUXFWLRQFRPSDQ\RZQHGE\6,123(&
&*,$5 &RQVXOWDWLYH*URXSRQ,QWHUQDWLRQDO$JULFXOWXUDO5HVHDUFK
&+ PHWKDQH
&,) FRVWLQVXUDQFHDQGIUHLJKW
&,)25 &HQWHUIRU,QWHUQDWLRQDO)RUHVWU\5HVHDUFK
&,00<7 ,QWHUQDWLRQDO0DL]HDQG:KHDW,PSURYHPHQW&HQWHU
$FURQ\PVDQGDEEUHYLDWLRQV [LLL

&,3 ,QWHUQDWLRQDO3RWDWR5HVHDUFK&HQWHU
&,5$' $JULFXOWXUDO5HVHDUFKIRU'HYHORSPHQW&HQWUH)UDQFH
&,6 &RPPRQZHDOWKRI,QGHSHQGHQW6WDWHV
&,:) &RPSDVVLRQLQ:RUOG)DUPLQJ
&/,581,, K\GURORJLFPRGHO
&19 FRQYHQWLRQDOV\VWHP
&2 FDUERQGLR[LGH
&2H&2HT FDUERQGLR[LGHHTXLYDOHQW
&25$) :HVWHUQDQG&HQWUDO$IULFDQ&RXQFLOIRU$JULFXOWXUDO5HVHDUFKDQG'HYHORSPHQW
&2526 &RPPRQ2EMHFWLYHVDQG5HTXLUHPHQWVIRU2UJDQLF6\VWHPV
&UDG/ &DSDUR5HQHZDEOH$JULFXOWXUH'HYHORSPHQWV/WG
&5& &KHPLFDO5XEEHU&RPSDQ\3UHVV
&5) &RUQHOO5HVHDUFK)RXQGDWLRQ
&5, &RSHQKDJHQ5HVRXUFH,QVWLWXWH
&5, &OLPDWH5LVN,QGH[
&53 &RQVHUYDWLRQ5HVHUYH3URJUDP
&6' 81&RPPLVVLRQRQ6XVWDLQDEOH'HYHORSPHQW
&6( &RRSHUDWLYHRI6(.(0(PSOR\HHV
&6,52 &RPPRQZHDOWK6FLHQWLÀFDQG,QGXVWULDO5HVHDUFK2UJDQL]DWLRQ
&63 &RQVHUYDWLRQ6WHZDUGVKLS3URJUDP
&87 &RPSRVW8WLOL]DWLRQ7ULDO
'$& 'HYHORSPHQW$VVLVWDQFH&RPPLWWHHRIWKH2(&'
'$3 GLDPPRQLXPSKRVSKDWH
'()5$ 'HSDUWPHQWIRU(QYLURQPHQW)RRGDQG5XUDO$IIDLUV8QLWHG.LQJGRP
',7& 'LYLVLRQRQ,QWHUQDWLRQDO7UDGHLQ*RRGVDQG6HUYLFHVDQG&RPPRGLWLHV81&7$'
'2.WULDOV ELRG\QDPLFELRRUJDQLFFRQYHQWLRQDOFRPSDULVRQ
($&& :RUOG%DQNV(FRQRPLFVRI$GDSWDWLRQWR&OLPDWH&KDQJHDQDO\VLV
($236 (DVW$IULFDQ2UJDQLF3URGXFWV6WDQGDUG
(%'$ (J\SWLDQ%LRG\QDPLF$VVRFLDWLRQ
(& (XURSHDQ&RPPLVVLRQ
(($ (XURSHDQ(QYLURQPHQW$JHQF\
((' &KXUFK'HYHORSPHQW6HUYLFH*HUPDQ\
((65& (WKLRSLDQ(QHUJ\6WXG\DQG5HVHDUFK&HQWHU
()5V HQYLURQPHQWDOÁRZUHTXLUHPHQWV
()6$ (XURSHDQ8QLRQ)RRG6DIHW\$XWKRULW\
(+(& HFROLEDFWHULXP
(- H[DMRXOH
(0%2 (XURSHDQ0ROHFXODU%LRORJ\2UJDQL]DWLRQ
(1$ (XURSHDQ1LWURJHQ$VVHVVPHQW
(5('3& (WKLRSLD5XUDO(QHUJ\'HYHORSPHQW$VVHVVPHQWDQG3URPRWLRQ&HQWHU
(52, HQHUJ\UHWXUQRQHQHUJ\LQYHVWHG
(60$3 (QHUJ\6HFWRU0DQDJHPHQW$VVLVWDQFH3URJUDPPH81'3:RUOG%DQN
(7% (WKLRSLDQELUU
(7&*URXS (URVLRQ7HFKQRORJ\DQG&RQFHQWUDWLRQ*URXS
(8 (XURSHDQ8QLRQ
(XURVWDW (XURSHDQ6WDWLVWLFDO2IÀFH
)$2 )RRGDQG$JULFXOWXUDO2UJDQL]DWLRQRIWKH8QLWHG1DWLRQV
)$267$7 6WDWLVWLFV'LYLVLRQRIWKH)$2
)$5$ )RUXPIRU$JULFXOWXUDO5HVHDUFKLQ$IULFD
)$7 6ZLVV5HVHDUFK,QVWLWXWHIRU$JULFXOWXUHDQG$JULFXOWXUDO(QJLQHHULQJ
)$:& )DUP$QLPDO:HOIDUH&RXQFLO
)$= )UDQNIXUWHU$OOJHPHLQH=HLWXQJDQDWLRQZLGH*HUPDQQHZVSDSHU
)', IRUHLJQGLUHFWLQYHVWPHQW
))6 IDUPHUÀHOGVFKRROV
)L%/ 5HVHDUFK,QVWLWXWHIRU2UJDQLF$JULFXOWXUH6ZLW]HUODQG
),63 )DUP,QSXW6XEVLG\3URJUDP
)2% IUHHRQERDUG
)3,) )RUHLJQ3ROLF\LQ)RFXV
[LY 75$'($1'(19,5210(175(9,(:

)38V IRRGSURGXFWLRQXQLWV
)6& IRRGVXSSO\FKDLQ
)67 IDUPV\VWHPVWULDO
IW IHHW
)7$V IUHHWUDGHDJUHHPHQWV
)92 )RRGDQG9HWHULQDU\2IÀFH(8
* JURXSRIGHYHORSHGFRXQWULHV
*$3 JRRGDJULFXOWXUDOSUDFWLFH
*$77 *HQHUDO$JUHHPHQWRQ7DULIIVDQG7UDGH
*&0V JHQHUDOFLUFXODWLRQPRGHOV
*&0V JOREDOFOLPDWHPRGHOV
*'3 JURVVGRPHVWLFSURGXFW
*( JHQHWLFDOO\HQJLQHHUHGJHQHWLFHQJLQHHULQJ
*($ *UHHQLQJWKH(FRQRP\ZLWK$JULFXOWXUH
*() *OREDO(QYLURQPHQW)DFLOLW\
*(2 *OREDO(QYLURQPHQW2XWORRN81(3SXEOLFDWLRQ
*)5$6 *OREDO)RUXPIRU5XUDO$GYLVRU\6HUYLFHV
*+* JUHHQKRXVHJDVHPLVVLRQV
*,*$ *HUPDQ,QVWLWXWHIRU*OREDODQG$UHD6WXGLHV
*,= *HUPDQ$JHQF\IRU,QWHUQDWLRQDO&RRSHUDWLRQ
*/3 JOREDOODQGSURMHFW
*0 JHQHWLFDOO\PRGLÀHG
*02 JHQHWLFDOO\PRGLÀHGRUJDQLVPV
*20$ *OREDO2UJDQLF0DUNHW$FFHVVSURMHFW)$2,)2$0 81&7$'
*5, *OREDO5HSRUWLQJ,QLWLDWLYH
*52 JROGHQULFHRQOLQH
*W JLJDWRQ
*7= *HUPDQ$JHQF\IRU7HFKQLFDO&RRSHUDWLRQQRZ*,=VHHDERYH
*:3 JOREDOZDUPLQJSRWHQWLDO
KD KHFWDUHV
+J KHFWRJUDPV
+/3( +LJKOHYHO3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQ)$2
+5& +XPDQ5LJKWV&RXQFLO
,$$67' ,QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG7HFKQRORJ\IRU'HYHORSPHQW
,$3 ,QWHUQDWLRQDO$VVRFLDWLRQIRU3DUWQHUVKLSLQ(FRORJ\DQG7UDGH
,$73 ,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\
,&*(% ,QWHUQDWLRQDO&HQWHUIRU*HQHWLF(QJLQHHULQJDQG%LRWHFKQRORJ\
,&5$) ,QWHUQDWLRQDO&HQWUHIRU5HVHDUFKLQ$JURIRUHVWU\
,&5,6$7 ,QWHUQDWLRQDO&URSV5HVHDUFK,QVWLWXWHIRUWKH6HPL$ULG7URSLFV
,&7V LQIRUPDWLRQDQGFRPPXQLFDWLRQWHFKQRORJ\LHV
,&76' ,QWHUQDWLRQDO&HQWUHIRU7UDGHDQG6XVWDLQDEOH'HYHORSPHQW
,($ ,QWHUQDWLRQDO(QHUJ\$JHQF\
,(&$ ,QWHUQDWLRQDO(URVLRQ&RQWURO$VVRFLDWLRQ
,(5 ,QVWLWXWG·(FRQRPLH5XUDOH
,)$' ,QWHUQDWLRQDO)XQGIRU$JULFXOWXUDO'HYHORSPHQW
,I(8 ,QVWLWXWHIRU(QHUJ\DQG(QYLURQPHQW*HUPDQ\
,)2$0 ,QWHUQDWLRQDO)HGHUDWLRQRI2UJDQLF$JULFXOWXUDO0RYHPHQWV
,)35, ,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH
,*%3 ,QWHUQDWLRQDO*HRVSKHUH%LRVSKHUH3URJUDPPH
,,(' ,QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG'HYHORSPHQW
,,7$ ,QWHUQDWLRQDO,QVWLWXWHRI7URSLFDO$JULFXOWXUH
,. LQGLJHQRXVNQRZOHGJH
,.6 LQGLJHQRXVNQRZOHGJHVWXGLHVV\VWHPV
,/& ,QWHUQDWLRQDO/DQG&RDOLWLRQ
,/5, ,QWHUQDWLRQDO/LYHVWRFN5HVHDUFK,QVWLWXWH$IULFDEDVHG
,/8& LQGLUHFWODQGXVHFKDQJHV
,0$3 JOREDO0 $RUJDQL]DWLRQ
,0) ,QWHUQDWLRQDO0RQHWDU\)XQG
 [Y

,1%, &HQWUHIRU,QWHJUDWHG5HVHDUFKLQ%LRVDIHW\
,16$+ ,QVWLWXWGX6DKHO
,3 LQWHOOHFWXDOSURSHUW\
,3&& ,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH
,3*5, ,QWHUQDWLRQDO3ODQW*HQHWLF5HVRXUFHV,QVWLWXWH
,30 LQWHJUDWHGSHVWPDQDJHPHQW
,33& ,QWHJUDWHG3ROOXWLRQDQG&RQWURO(8GLUHFWLYH
,35V LQWHOOHFWXDOSURSHUW\ULJKWV
,5, ,QWHUQDWLRQDO5HVHDUFK,QVWLWXWHIRU&OLPDWH3UHGLFWLRQV
,52&% ,QWHUQDWLRQDO5HTXLUHPHQWVIRU&RQIRUPLW\$VVHVVPHQW%RGLHV
,55, ,QWHUQDWLRQDO5LFH5HVHDUFK,QVWLWXWH
,6$$$ ,QWHUQDWLRQDO6HUYLFHIRUWKH$FTXLVLWLRQRI$JUL%LRWHFK$SSOLFDWLRQV
,6,6 ,QVWLWXWHRI6FLHQFHLQ6RFLHW\
,62 ,QWHUQDWLRQDO2UJDQL]DWLRQIRU6WDQGDUGL]DWLRQ
,62)$5 ,QWHUQDWLRQDO6RFLHW\RI2UJDQLF$JULFXOWXUH5HVHDUFK
,7& ,QWHUQDWLRQDO7UDGH&HQWUHRI81&7$':72
,:0, ,QWHUQDWLRQDO:DWHU0DQDJHPHQW,QVWLWXWH
NFDO NLORFDORULH
.'*&%3 .HQ\D'DLU\*RDWDQG&DSDFLW\%XLOGLQJ3URMHFW
NJV NLORJUDPV
NP FXELFNLORPHWHU
N:K NLORZDWWKRXU
/$3 /LE\D$IULFD,QYHVWPHQW3RUWIROLR
OEVDF SRXQGVSHUDFUH
/'&/'&V OHDVWGHYHORSHGFRXQWU\LHV
/($' /LYHVWRFN(QYLURQPHQWDQG'HYHORSPHQW,QLWLDWLYH
/(' OLJKWHPLWWLQJGLRGH
/(* RUJDQLFOHJXPHV\VWHP
/+6 OHIWKDQGVLGH
//& OLPLWHGOLDELOLW\FRPSDQ\
/7$5 ORQJWHUPDJURHFRORJLFDOUHVHDUFK
/8&&* /DQG8VH&OLPDWH&KDQJH5HSRUWWRWKH:HOVK$VVHPEO\*RYHUQPHQW
0 , PXQLFLSDODQGLQGXVWULDO
0$5 PHDQDQQXDOUXQRII
0'*V 0LOOHQQLXP'HYHORSPHQW*RDOV
0($ 0LOOHQQLXP(FRV\VWHP$VVHVVPHQW
0(1$ 0LGGOH(DVWDQG1RUWK$IULFDUHJLRQ
0- PHJDMRXOHV
PP PLOOLPHWHU
0W PHJDWRQV
1 QLWURJHQLQVRLO
1U UHDFWLYHQLWURJHQ
1 QLWURJHQPROHFXOHRIWZRDWRPV
12 QLWURXVR[LGH
1$)7$ 1RUWK$PHULFDQ)UHH7UDGH$JUHHPHQW
1$,3 1DWLRQDO$JULFXOWXUDO,QQRYDWLRQ3URJUDPPHRIWKH,QGLDQ&RXQFLORI$JULFXOWXUDO5HVHDUFK
1$6 1DWLRQDO$FDGHP\RI6FLHQFHV86
1$6$ 1DWLRQDO$HURQDXWLFVDQG6SDFH$GPLQLVWUDWLRQ
1%3( 1DWLRQDO%LRJDV3URJUDPPH(WKLRSLD
1&$5 1DWLRQDO&HQWHUIRU$WPRVSKHULF5HVHDUFK8QLWHG6WDWHV
1&&5 6ZLVV1DWLRQDO&HQWUHRI&RPSHWHQFHLQ5HVHDUFK
1)$ 1DWLRQDO)RRG$GPLQLVWUDWLRQRI6ZHGHQ
1*2 QRQJRYHUQPHQWDORUJDQL]DWLRQ
1+ DPPRQLXP
113& 1LJHULDQ1DWLRQDO3HWUROHXP&RUSRUDWLRQ
12 QLWULFR[LGH
133 JOREDOWHUUHVWULDOQHWSULPDU\SURGXFWLRQ
139 QHWSUHVHQWYDOXH
[YL 75$'($1'(19,5210(175(9,(:

18( QLWURJHQXVHHIÀFLHQF\
2'$ RIÀFLDOGHYHORSPHQWDVVLVWDQFH
2', 2YHUVHDV'HYHORSPHQW,QVWLWXWH
2($ (QYLURQPHQWDO$VVHVVPHQWRI2JRQLODQG
2(&' 2UJDQL]DWLRQIRU(FRQRPLF&RRSHUDWLRQDQG'HYHORSPHQW
2(&''$& 2(&''HYHORSPHQW$VVLVWDQFH&RPPLWWHH
2*6V RUJDQLFJXDUDQWHHV\VWHPV
2, 2DNODQG,QVWLWXWH
27& RYHUWKHFRXQWHUWUDQVDFWLRQV
27'6 RYHUDOOWUDGHGLVWRUWLQJVXSSRUW
3$11$ 3HVWLFLGH$FWLRQ1HWZRUN1RUWK$PHULFD
3$6 3XEOLF$YDLODEOH6SHFLÀFDWLRQ
3%6 3URJUDPIRU%LRGLYHUVLW\
3&) 3URGXFW&DUERQ)RRWSULQW
3(3 SKRVSKRHQROS\UXYDWH
3*$ SKRVSKRJO\FHUDWH
3*6 SDUWLFLSDWRU\JXDUDQWHHV\VWHP
3,&7,3$3$ ,QWHUQDWLRQDO3RWDWR/DWH%OLJKW7HVWLQJ3URJUDP
SSP SDUWVSHUPLOOLRQ
35$, 3ULQFLSOHVIRU5HVSRQVLEOH$JULFXOWXUDO,QYHVWPHQW
36'$ 3ULYDWH6HFWRU'HYHORSPHQWLQ$JULFXOWXUH
39 SKRWRYROWDLF
3Z& 3ULFHZDWHUKRXVH&RRSHUV
5 ' UHVHDUFKDQGGHYHORSPHQW
5$6)) 5DSLG$OHUW6\VWHPRI)RRGDQG)HHG(8
5('' UHGXFWLRQRIHPLVVLRQVIURPGHIRUHVWDWLRQDQGIRUHVWGHJUDGDWLRQ
5(1 5HQHZDEOH(QHUJ\3ROLF\1HWZRUNIRUWKHVW&HQWXU\
5+6 ULJKWKDQGVLGH
51( *HUPDQ&RXQFLOIRU6XVWDLQDEOH'HYHORSPHQW
56 5R\DO6RFLHW\
56% 5RXQGWDEOHRQ6XVWDLQDEOH%LRIXHOV
5X%3 ULEXORVHELVSKRVSKDWH
59$&6& 5HJLRQDO9DOXHDGGHG&LWL]HQ6KDUHKROGHU&RUSRUDWLRQ
66( 6RXWK6RXWK(DVW
6$1 6XVWDLQDEOH$JULFXOWXUH1HWZRUN
6$1&2 'LUHFWRUDWH*HQHUDOIRU+HDOWKDQG&RQVXPHU$IIDLUV(XURSHDQ&RPPLVVLRQ
6$5 6SHFLDO$GPLQLVWUDWLYH5HJLRQ
6$5' VXVWDLQDEOHDJULFXOWXUHDQGUXUDOGHYHORSPHQW
6&$5 6WDQGLQJ&RPPLWWHHRQ$JULFXOWXUDO5HVHDUFKRIWKH(XURSHDQ&RPPLVVLRQ
6&17 6RPDWLF&HOO1XFOHDU7UDQVIHUFORQLQJ
6&23( 6FLHQWLÀF&RPPLWWHHRQ3UREOHPVRIWKH(QYLURQPHQW
6&25( 6XVWDLQDEOH&RQVXPSWLRQ5HVHDUFK([FKDQJH
6') 6(.(0'HYHORSPHQW)RXQGDWLRQ
6'7 VSHFLDODQGGLIIHUHQWLDOWUHDWPHQW
6(.(0 DQFLHQW(J\SWLDQIRU´YLWDOLW\IURPWKHVXQµ
61135 6RXWKHUQ1DWLRQV1DWLRQDOLWLHVDQG3HRSOHV5HJLRQ
619 1HWKHUODQGV'HYHORSPHQW2UJDQL]DWLRQ
62& VRLORUJDQLFFDUERQ
62)$ 7KH6WDWHRI)RRGDQG$JULFXOWXUH)$2SXEOLFDWLRQ
620 VRLORUJDQLFPDWWHU
63 VSHFLDOSURGXFWV
65(6 6SHFLDO5HSRUWRQ(PLVVLRQV6FHQDULRV,3&&
66$ VXE6DKDUDQ$IULFD
66* VSHFLDODJULFXOWXUDOVDIHJXDUG
660 VSHFLDOVDIHJXDUGPHFKDQLVPV
69& 6FLHQWLÀF9HWHULQDU\&RPPLWWHH(8
W&2HT WRQVRIFDUERQGLR[LGHHTXLYDOHQW
7(' 7UDGH(QYLURQPHQW&OLPDWH&KDQJHDQG'HYHORSPHQW%UDQFKRI81&7$'
 [YLL

7(5 7UDGHDQG(QYLURQPHQW5HYLHZ
WRHV WRQVRIRLOHTXLYDOHQWV
WRQQHV&KD WRQQHVRIFDUERQSHUKHFWDUH
8( 8QLRQHXURSpHQQH
8(02$ :HVWHUQ$IULFDQ(FRQRPLFDQG0RQHWDU\8QLRQ
8. 8QLWHG.LQJGRP
81 8QLWHG1DWLRQV
81'(6$ 81'HSDUWPHQWRI(FRQRPLFDQG6RFLDO$IIDLUV
81&7$' 8QLWHG1DWLRQV&RQIHUHQFHRQ7UDGHDQG'HYHORSPHQW
81'3 8QLWHG1DWLRQV'HYHORSPHQW3URJUDPPH
81(3 8QLWHG1DWLRQV(QYLURQPHQW3URJUDPPH
81(6&2 8QLWHG1DWLRQV(GXFDWLRQDO6FLHQWLÀFDQG&XOWXUDO2UJDQL]DWLRQ
81)&&& 8QLWHG1DWLRQV)UDPHZRUN&RQYHQWLRQRQ&OLPDWH&KDQJH
81*& 8QLWHG1DWLRQV*OREDO&RPSDFW
81,6,67 8QLWHG1DWLRQV,QWHUQDWLRQDO6FLHQWLÀF,QIRUPDWLRQ6\VWHP
811$'$) 8QLWHG1DWLRQV1HZ$JHQGDIRUWKH'HYHORSPHQWRI$IULFD
815,6' 8QLWHG1DWLRQV5HVHDUFK,QVWLWXWHIRU6RFLDO'HYHORSPHQW
8162 8QLWHG1DWLRQV6WDWLVWLFDO2IÀFH
86&56 8QLWHG6WDWHV&RQJUHVVLRQDO5HVHDUFK6HUYLFHV
8686$ 8QLWHG6WDWHVRI$PHULFD
86$,' 86$JHQF\IRU,QWHUQDWLRQDO'HYHORSPHQW
86'$ 8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH
86)'$ 8QLWHG6WDWHV)RRGDQG'UXJ$GPLQLVWUDWLRQ
8: 8QLYHUVLW\RI:LVFRQVLQ
9$0 YHVLFXODUDUEXVFXODUP\FRUUKL]DHIXQJL
9((7& 9ROXPHWULF(WKDQRO([FLVH7D[&UHGLW86
9=%9 )HGHUDWLRQRI*HUPDQ&RQVXPHU2UJDQLVDWLRQV9HUEUDXFKHU]HQWUDOH%XQGHVYHUEDQG
:$5'$ :HVW$IULFD5LFH'HYHORSPHQW$VVRFLDWLRQ
:% :RUOG%DQN
:)3 81:RUOG)RRG3URJUDPPH
:+2 :RUOG+HDOWK2UJDQL]DWLRQ
:02 :RUOG0HWHRURORJLFDO2UJDQL]DWLRQ
:2&$7 :RUOG2YHUYLHZRI&RQVHUYDWLRQ$SSURDFKHVDQG7HFKQRORJLHV
:5$3 :DVWHDQG5HVRXUFHV$FWLRQ3URJUDPPH
:5, :RUOG5HVRXUFHV,QVWLWXWH
:6& :RUOG6KLSSLQJ&RXQFLO
:7, :HVW7H[DV,QWHUPHGLDWHRLOSULFH
:72 :RUOG7UDGH2UJDQL]DWLRQ
:8( ZDWHUXVHHIÀFLHQF\
\U \HDU
[YLLL 75$'($1'(19,5210(175(9,(:

([SODQDWRU\QRWHV

&ODVVLÀFDWLRQE\FRXQWU\RUFRPPRGLW\JURXS
7KHFODVVLÀFDWLRQRIFRXQWULHVLQWKLV5HYLHZKDVEHHQDGRSWHGVROHO\IRUWKHSXUSRVHVRIVWDWLVWLFDORUDQDO\WLFDO
FRQYHQLHQFHDQGGRHVQRWQHFHVVDULO\LPSO\DQ\MXGJHPHQWFRQFHUQLQJWKHVWDJHRIGHYHORSPHQWRIDSDUWLFXODU
FRXQWU\RUDUHD
7KHPDMRUFRXQWU\JURXSLQJVXVHGLQWKLV5HYLHZIROORZWKHFODVVLÀFDWLRQE\WKH8QLWHG1DWLRQV6WDWLVWLFDO2IÀFH
81627KH\DUHGLVWLQJXLVKHGDV
‡ 'HYHORSHGRULQGXVWULDOL]HGFRXQWULHVWKHFRXQWULHVPHPEHUVRIWKH2(&'RWKHUWKDQ0H[LFRWKH5HSXEOLF
RI.RUHDDQG7XUNH\SOXVWKHQHZ(8PHPEHUFRXQWULHVDQG,VUDHO
‡ 7UDQVLWLRQHFRQRPLHVUHIHUVWR6RXWK(DVW(XURSHDQGWKH&RPPRQZHDOWKRI,QGHSHQGHQW6WDWHV&,6
‡ 'HYHORSLQJFRXQWULHVDOOFRXQWULHVWHUULWRULHVRUDUHDVQRWVSHFLÀHGDERYH
7KHWHUPV´FRXQWU\µ´HFRQRP\µUHIHUDVDSSURSULDWHDOVRWRWHUULWRULHVRUDUHDV
5HIHUHQFHVWR´/DWLQ$PHULFDµLQWKHWH[WRUWDEOHVLQFOXGHWKH&DULEEHDQFRXQWULHVXQOHVVRWKHUZLVHLQGLFDWHG
5HIHUHQFHVWR´VXE6DKDUDQ$IULFDµLQWKHWH[WRUWDEOHVGRQRWLQFOXGH6RXWK$IULFDXQOHVVRWKHUZLVHLQGLFDWHG
)RUVWDWLVWLFDOSXUSRVHVUHJLRQDOJURXSLQJVDQGFODVVLÀFDWLRQVE\FRPPRGLW\JURXSXVHGLQWKLV5HYLHZIROORZ
JHQHUDOO\WKRVHHPSOR\HGLQWKH81&7$'+DQGERRNRI6WDWLVWLFV8QLWHG1DWLRQVSXEOLFDWLRQVDOHVQR()
,,'XQOHVVRWKHUZLVHVWDWHG7KHGDWDIRU&KLQDGRQRWLQFOXGHWKRVHIRU+RQJ.RQJ6SHFLDO$GPLQLVWUDWLYH
5HJLRQ+RQJ.RQJ6$50DFDR6SHFLDO$GPLQLVWUDWLYH5HJLRQ0DFDR6$5DQG7DLZDQ3URYLQFHRI&KLQD

2WKHUQRWHV
7KHWHUP´GROODUµUHIHUVWR8QLWHG6WDWHVGROODUVXQOHVVRWKHUZLVHVWDWHG
7KHWHUP´ELOOLRQµVLJQLÀHVPLOOLRQ
7KHWHUP´WRQVµUHIHUVWRPHWULFWRQV
$QQXDOUDWHVRIJURZWKDQGFKDQJHUHIHUWRFRPSRXQGUDWHV
([SRUWVDUHYDOXHG)2%DQGLPSRUWV&,)XQOHVVRWKHUZLVHVSHFLÀHG
8VH RI D GDVK ² EHWZHHQ GDWHV UHSUHVHQWLQJ \HDUV HJ ² VLJQLÀHV WKH IXOO SHULRG LQYROYHG
LQFOXGLQJWKHLQLWLDODQGÀQDO\HDUV
$QREOLTXHVWURNHEHWZHHQWZR\HDUVHJVLJQLÀHVDÀVFDORUFURS\HDU
$GRWLQGLFDWHVWKDWWKHLWHPLVQRWDSSOLFDEOH
7ZRGRWVLQGLFDWHWKDWWKHGDWDDUHQRWDYDLODEOHRUDUHQRWVHSDUDWHO\UHSRUWHG
$GDVKRUD]HURLQGLFDWHVWKDWWKHDPRXQWLVQLORUQHJOLJLEOH
'HFLPDOVDQGSHUFHQWDJHVGRQRWQHFHVVDULO\DGGXSWRWRWDOVEHFDXVHRIURXQGLQJ
 75$'($1'(19,5210(175(9,(:

'#&46+%.'U 
    U 

       
    
 
8OULFK+RIIPDQQ
81&7$'VHFUHWDULDW

$EVWUDFW
7KHSUREOHPVRIFOLPDWHFKDQJHKXQJHUDQGSRYHUW\HFRQRPLFVRFLDODQGJHQGHULQHTXLW\SRRUKHDOWK
DQG QXWULWLRQ DQG HQYLURQPHQWDO VXVWDLQDELOLW\ DUH LQWHUUHODWHG DQG QHHG WR EH VROYHG E\ OHYHUDJLQJ
DJULFXOWXUH·VPXOWLIXQFWLRQDOLW\$JDLQVWWKLVEDFNJURXQGDIXQGDPHQWDOWUDQVIRUPDWLRQWRZDUGVFOLPDWH
IULHQGO\DJULFXOWXUHFRQVLVWLQJRIDPRVDLFRIDJURHFRORJLFDOSURGXFWLRQSUDFWLFHVPXVWEHFRPHWKHQHZ
SDUDGLJPEXWLWVKRXOGQRWFRPSURPLVHRWKHUYHU\LPSRUWDQWGHYHORSPHQWREMHFWLYHV
‡ $GGUHVVLQJWKHHTXLW\FKDOOHQJHQRWDEO\IRRGVHFXULW\DQGIDUPHUOLYHOLKRRGV
‡ (QKDQFLQJVXVWDLQDEOHSURGXFWLYLW\EDVHGRQDQHZV\VWHPLFDOO\GLIIHUHQWGHÀQLWLRQWKDWIRFXVHVRQ
WRWDOIDUPRXWSXWLQVWHDGRISURGXFWLYLW\SHUXQLWRIODERXUDQG
‡ 6WUHQJWKHQLQJUHVLOLHQFHWRUHVRXUFHDQGHQHUJ\VFDUFLW\DQGFOLPDWHFKDQJH

,WLVWKHUHIRUHLPSRUWDQWWRWKLQNLQV\VWHPVUDWKHUWKDQRYHUHPSKDVL]LQJDFOLPDWHIRFXV

$,QWURGXFWLRQ WUDGHRIIVWREHPDGHLQHQKDQFLQJWKHPLWLJDWLRQDQG
DGDSWDWLRQSRWHQWLDORIDJULFXOWXUHDVSDUWDQGSDUFHO
&OLPDWH FKDQJH && KDV WKH SRWHQWLDO WR GDPDJH RI D SURSRRU GHYHORSPHQW DSSURDFK LQ DJULFXOWXUH
LUUHYHUVLEO\ WKH QDWXUDO UHVRXUFH EDVH RQ ZKLFK IXOO\H[SORLWLQJDJULFXOWXUH·VPXOWLIXQFWLRQDOLW\
DJULFXOWXUH GHSHQGV ZLWK JUDYH FRQVHTXHQFHV IRU
IRRG VHFXULW\ && FRXOG DOVR VLJQLÀFDQWO\ FRQVWUDLQ
HFRQRPLFGHYHORSPHQWLQWKRVHGHYHORSLQJFRXQWULHV
%$JULFXOWXUHDNH\GULYHUDQGDPDMRU
WKDW ODUJHO\ UHO\ RQ DJULFXOWXUH IRU PRUH LQIRUPDWLRQ
YLFWLPRIJOREDOZDUPLQJ
VHH /LP /L &KLQJ  7KHUHIRUH PHHWLQJ WKH
GXDO FKDOOHQJH RI DFKLHYLQJ IRRG VHFXULW\ DQG
RWKHU GHYHORSPHQWDO FREHQHÀWV RQ WKH RQH KDQG
DQG PLWLJDWLQJ DQG DGDSWLQJ WR && RQ WKH RWKHU
UHTXLUHVSROLWLFDOFRPPLWPHQWDWWKHKLJKHVWOHYHOIRUD
$V PRVW RI WKH JUHHQKRXVH JDVHV *+* ZLWK
WKH H[FHSWLRQ RI PHWKDQH KDYH D KDOI OLIH RI RYHU D
KXQGUHG \HDUV JOREDO *+* HPLVVLRQV ZLOO KDYH WR
SHDNE\DQGGURSE\SHUFHQWLQWKHSHULRG
WR  WR OLPLW JOREDO ZDUPLQJ WR  GHJUHHV 7KH
IXQGDPHQWDODQGXUJHQWWUDQVIRUPDWLRQRIDJULFXOWXUH &OLPDWH*URXS<HWWRWDO*+*HPLVVLRQV
,Q IDFW WLPH LV JHWWLQJ WKH PRVW LPSRUWDQW VFDUFLW\ IRUDUHHVWLPDWHGWRKDYHLQFUHDVHGE\PRUHWKDQ
IDFWRULQGHDOLQJZLWK&&+RIIPDQQ  SHU FHQW D KLVWRULFDO UHFRUG 7KH *XDUGLDQ 
DQG,($DIROORZHGE\DQHVWLPDWHGLQFUHDVH
7KH 81&7$' 7UDGH DQG (QYLURQPHQW 5HYLHZ  RISHUFHQWLQ$OVRDFFRUGLQJWRHVWLPDWHV
JLYHV DQ RSSRUWXQLW\ WR PRUH WKDQ  H[SHUWV WR RIDQDO\VWVDW3ULFHZDWHUKRXVH&RRSHUV3Z&JOREDO
DQDO\]H YDULRXV VSHFLÀF DVSHFWV RI WKH IXQGDPHQWDO FDUERQ LQWHQVLW\ LH FDUERQ HPLVVLRQV SHU XQLW RI
WUDQVIRUPDWLRQ RI DJULFXOWXUDO SURGXFWLRQ PHWKRGV *'3KDVLQFUHDVHGIRUWKHÀUVWWLPHLQPDQ\\HDUV
DQG V\VWHPV UHTXLUHG IRU GHDOLQJ ZLWK WKH VHULRXV ´,QVWHDG RI PRYLQJ WRR VORZO\ LQ WKH ULJKW GLUHFWLRQ
FKDOOHQJHV HPDQDWLQJ IURP JOREDO ZDUPLQJ DQG WKH ZHDUHQRZPRYLQJLQWKHZURQJGLUHFWLRQµVDLGRQH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

RIWKH3Z&DQDO\VWV,QSULQFLSDOZHIROORZWKH*+* ODWWHU DFFRXQWHG IRU WKUHH TXDUWHUV RI QLWURXV R[LGH

HPLVVLRQVWUHQGVXQGHUWKHZRUVWFDVHVFHQDULRRIWKH DQG PHWKDQH HPLVVLRQV LQ WKH DJULFXOWXUDO VHFWRU
,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH &KDQJH ,3&& 7KHVH HPLVVLRQV DUH PDLQO\ FDXVHG E\ VRPH 
DQGWKH,QWHUQDWLRQDO(QHUJ\$JHQF\,($)LQDQFLDO GHYHORSLQJ FRXQWULHV VHH ÀJXUH  7KH FRXQWULHV
7LPHV LQ ÀJXUH  FDXVH RYHU  SHU FHQW RI DJULFXOWXUDO
$JULFXOWXUDO HPLVVLRQV RI PHWKDQH &+ DQG QLWURXV HPLVVLRQV ZRUOGZLGH $OWKRXJK WKH OHDVW GHYHORSHG
R[LGH 12 ZKLFK DFFRXQW IRU RYHU  SHU FHQW RI FRXQWULHV /'&V DUH QRW D VLJQLÀFDQW FRQWULEXWRU WR
WRWDODJULFXOWXUDO*+*HPLVVLRQVJUHZE\SHUFHQW JOREDODJULFXOWXUDOHPLVVLRQVWKHODWWHUDFFRXQWIRUWKH
LQWKHSHULRG²,3&&DURXJKO\ EXON RI QDWLRQDO *+* HPLVVLRQV DV FDQ EH VHHQ LQ
SURSRUWLRQDWH IRU LQVWDQFH WR WKH LQFUHDVH LQ JOREDO ÀJXUH  LQ /'&V DJULFXOWXUHUHODWHG *+* HPLVVLRQV
FHUHDOV· SURGXFWLRQ YROXPH EXW DERXW WKUHH WLPHV
DV IDVW DV SURGXFWLYLW\ LQFUHDVHG LQ JOREDO FHUHDOV·
SURGXFWLRQ 7KHVH *+* HPLVVLRQV DUH SUHGLFWHG
WR ULVH E\  SHU FHQW E\  LQ UHVSRQVH WR
SRSXODWLRQJURZWKDQGFKDQJLQJGLHWVLQGHYHORSLQJ
FRXQWULHV LQ SDUWLFXODU WRZDUGV JUHDWHU FRQVXPSWLRQ
RI UXPLQDQW PHDWV DQG GDLU\ SURGXFWV DV ZHOO DV
WKH IXUWKHU VSUHDG RI LQGXVWULDO DQG IDFWRU\ IDUPLQJ
SDUWLFXODUO\ LQ GHYHORSLQJ FRXQWULHV ,3&& D
DFFRXQWIRUDERXWSHUFHQWRIWRWDO*+*HPLVVLRQV
*OREDOZDUPLQJLVDWKUHDWPXOWLSOLHULHFRPSRXQGLQJ
VXSSOHPHQWLQJRUUHLQIRUFLQJRWKHUWKUHDWVVRWKDWWKH
ELRSK\VLFDO YXOQHUDELOLW\ RI DJULFXOWXUH LQFUHDVHV
7KH PDLQ LPSDFW RI JOREDO ZDUPLQJ RQ DJULFXOWXUDO
SURGXFWLRQFDQEHVXPPDUL]HGDVIROORZV
‡ +LJKHU WHPSHUDWXUHV DIIHFW SODQW DQLPDO DQG
IDUPHUV·KHDOWKHQKDQFHSHVWVDQGUHGXFHZDWHU
VXSSO\ LQFUHDVLQJ WKH ULVN RI JURZLQJ DULGLW\ DQG
 ,Q RWKHU ZRUGV LQVWHDG RI FXWWLQJ DJULFXOWXUDO
HPLVVLRQVE\VRPHSHUFHQWE\LQUHDOLW\ZH
IROORZH[DFWO\WKHRSSRVLWHWUHQG
$V FDQ EH VHHQ IURP ÀJXUH  WKH UHFHQW DQG IXWXUH
ULVH LQ JOREDO DJULFXOWXUDO *+* HPLVVLRQV LV PDLQO\
RFFXUULQJ LQ GHYHORSLQJ FRXQWULHV ,Q  WKH
ODQGGHJUDGDWLRQ
‡ 0RGLÀHG SUHFLSLWDWLRQ SDWWHUQV ZLOO HQKDQFH ZDWHU
VFDUFLW\ DQG DVVRFLDWHG GURXJKW VWUHVV IRU FURSV
DQGDOWHULUULJDWLRQZDWHUVXSSOLHV7KH\DOVRUHGXFH
WKHSUHGLFWDELOLW\IRUIDUPHUV·SODQQLQJ
‡ 7KH HQKDQFHG IUHTXHQF\ RI ZHDWKHU H[WUHPHV

)LJXUH(VWLPDWHGKLVWRULFDODQGSURMHFWHGQLWURXVR[LGHDQGPHWKDQHHPLVVLRQVLQWKHDJULFXOWXUDOVHFWRURI
GHYHORSLQJDQGGHYHORSHGFRXQWULHV²LQWKRXVDQGW&2HT

1  2 0 DQXUH
1  2 6 RLOV
 1  2 % XUQLQJ
& +  5 LFH
& +  0 DQXUH
 & +  ( QWHULF
& +  % XUQLQJ










             

'HYHORSLQJFRXQWULHV 'HYHORSHGFRXQWULHV

6RXUFH,3&&D
 75$'($1'(19,5210(175(9,(:

)LJXUH7RS*+*HPLWWLQJFRXQWULHVIURPDJULFXOWXUHWRWDODQGSHUFDSLWDHPLVVLRQVLQ&2HTIRUWKH\HDU 

1,200 - -6

Per capita (million metric tons CO2-e/person)

1,000 - -5
Total (million metric tons CO2-e)

800 - -4

600 - -3

400 - -2

200 - -1

0- -0
China
Brazil
EU-27
US
India
Argentina
Indonesia
Russia
Nigeria
Austria
France
Colombia
Thailand

Bangladesh
Pakistan
Myanmar
Mexico
Turkey

Canada
Vietnam
Ethiopia
Venezuela
UK
Germany

DRC
6RXUFH:RUOG5HVRXUFHV,QVWLWXWHTXRWHGLQ0OOHUHWDOD
1RWH &2HPLVVLRQVDUHFRQÀQHGWRIRVVLOIXHOFRPEXVWLRQRQO\

)LJXUH/'&*+*HPLVVLRQVE\VHFWRUSHUFHQWRIWRWDOHPLVVLRQV

0 DQXIDFWXULQJDQG
( OHFWULFLW\DQGKHDW ) XJLWLY HHP LVVLRQV
FRQVWUXFWLRQ
 

7 UDQVSRUWDWLRQ
,QGXVWULDOSURFHVVHV


2 WKHUIXHOFRP EXVWLRQ


: DVWH
 /DQGXVHFKDQJHVDQG
IRUHVWU\
( QHUJ\ 


$ JULFXOWXUH


6RXUFH81&7$'
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

)LJXUH3URMHFWHGFOLPDWHFKDQJHFDXVHGFKDQJHVLQDJULFXOWXUDOSURGXFWLYLW\E\LQFRUSRUDWLQJWKHHIIHFWRI
FDUERQIHUWLOLVDWLRQ

<-25

-25 to -15

-15 to -5

-5 to 0

0 to 5

5 to 15

15 to 25

>25

n.a.

6RXUFH&OLQHDQG<RKH

6RXUFH&OLQHDQG<RKQHWDO

PD\VLJQLÀFDQWO\LQÁXHQFHERWKFURSDQGOLYHVWRFN 7KH DERYHPHQWLRQHG ULVNV DQG VWUHVV IDFWRUV DFW

SURGXFWLRQ ,W PD\ DOVR FRQVLGHUDEO\ LPSDFW RU LQGLYLGXDOO\ EXW ZH ZLOO DOVR VHH LQFUHDVLQJ VWUHVV
GHVWUR\SK\VLFDOLQIUDVWUXFWXUHIRUDJULFXOWXUH FRPELQDWLRQV 7KHUH LV D JUHDW GHDO WKDW LV DV \HW
‡ (QKDQFHG DWPRVSKHULF FRQFHQWUDWLRQV RI &2 XQNQRZQ DERXW KRZ VXFK VWUHVVHV PD\ FRPELQH
PD\ IRU D OLPLWHG SHULRG RI WLPH OHDG WR ¶QDWXUDO· WKHUHIRUHPRUHUHVHDUFKRQWKHLQWHUDFWLRQVEHWZHHQ
FDUERQ IHUWLOL]DWLRQ DQG WKXV D VWLPXOXV WR FURS GLIIHUHQWDELRWLFDQGELRWLFVWUHVVHVLQNH\DJULFXOWXUDO
SURGXFWLYLW\
‡ +LJKHUWHPSHUDWXUHVJRKDQGLQKDQGZLWKKLJKHU
R]RQH FRQFHQWUDWLRQV 2]RQH LV KDUPIXO WR DOO
SODQWV EXW VR\EHDQV ZKHDW RDWV JUHHQ EHDQV
SHSSHUVDQGVRPHW\SHVRIFRWWRQDUHSDUWLFXODUO\
V\VWHPV LV XUJHQWO\ UHTXLUHG )$2 D
)XUWKHUPRUHWHPSHUDWXUHLQFUHDVHVDUHOLNHO\WRKDYH
QRQOLQHDUHIIHFWVRQ\LHOGVDQGIRRGTXDOLW\
&OLPDWHFDODPLWLHVDUHOLNHO\WRKLWWKHSRRUVHJPHQWV
RI WKH SRSXODWLRQ DQG SRRU FRXQWULHV SDUWLFXODUO\
YXOQHUDEOH)$2D
KDUGDVWKHLUDGDSWLYHFDSDFLW\DQGUHVLOLHQFHLVWKH
‡ *OREDO ZDUPLQJ ZLOO DOVR QHJDWLYHO\ LPSDFW WKH
ORZHVW:HOORIIVHJPHQWVRIWKHSRSXODWLRQFDQ¶EX\·
QXWULWLRQDO TXDOLW\ RI VRPH IRRG LQ SDUWLFXODU
IRRGVHFXULW\DWOHDVWLQWKHVKRUWUXQ)$2D
WKH SURWHLQ DQG PLFURQXWULHQWV· FRQWHQW IRU PRUH
LQIRUPDWLRQ VHH WKH FRPPHQW RI +|J\ DQG 7KH LPSDFW RI JOREDO ZDUPLQJ KDV VLJQLÀFDQW
)DQJPHLHULQWKLV&KDSWHU
‡ +LJKHU WHPSHUDWXUHV DUH OLNHO\ WR LQFUHDVH WKH
H[SRVXUH RI SODQWV DQG DQLPDOV WR GLVHDVHV DQG
SHVWV WKXV LQFUHDVLQJ SURGXFWLRQ DQG KDQGOLQJ
ORVVHV
‡ 6HD OHYHO ULVH LV OLNHO\ WR LQÁXHQFH WUDGH LQIUD
FRQVHTXHQFHV IRU DJULFXOWXUDO SURGXFWLRQ DQG WUDGH
RI GHYHORSLQJ FRXQWULHV DV ZHOO DV DQ LQFUHDVHG ULVN
RIKXQJHU3UHOLPLQDU\HVWLPDWHVIRUWKHSHULRGXSWR
 VXJJHVW D GHFOLQH RI VRPH  SHU FHQW RI
DJULFXOWXUDO SURGXFWLYLW\ LQ WKH PRVW FOLPDWHFKDQJH
H[SRVHG GHYHORSLQJFRXQWU\ UHJLRQV  $IULFD 6RXWK
VWUXFWXUH IRU DJULFXOWXUH PD\ LQXQGDWH SURGXFLQJ $VLDDQG&HQWUDO$PHULFDVHHÀJXUH)RUVRPH
DUHDVDQGDOWHUDTXDFXOWXUHSURGXFWLRQFRQGLWLRQV FRXQWULHVLQWKHVHUHJLRQVWRWDODJULFXOWXUDOSURGXFWLRQ
‡ *OREDOZDUPLQJLVQRWXQLIRUPO\SUREOHPDWLF,WZLOO FRXOGGHFOLQHE\XSWRSHUFHQW$FFRUGLQJWR)$2
OHDG WR LPSURYHG FURS SURGXFWLYLW\ LQ SDUWV RI WKH D  ´LQ VRPH ORFDWLRQV D FRPELQDWLRQ RI
WURSLFDOKLJKODQGVDQGH[WHQGFURSSLQJSHULRGVRU WHPSHUDWXUH DQG SUHFLSLWDWLRQ FKDQJHV PLJKW UHVXOW
DOORZ PXOWLSOH KDUYHVWV LQ WHPSHUDWH ]RQHV )$2 LQ FRPSOHWH ORVV RI DJULFXOWXUDO DFWLYLW\ LQ D IHZ
D ORFDWLRQV DJULFXOWXUH PLJKW EHFRPH LPSRVVLEOHµ
 75$'($1'(19,5210(175(9,(:

7KH SRRUHVW IDUPHUV ZLWK OLWWOH VDIHJXDUGV DJDLQVW QRXULVKWKHODQGDQGSHRSOHDQGSURYLGHDQRSSRUWXQLW\

FOLPDWHFDODPLWLHVRIWHQOLYHLQDUHDVSURQHWRQDWXUDO IRU GHFHQW ÀQDQFLDOO\ UHZDUGLQJ DQG JHQGHU HTXDO
GLVDVWHUV 0RUH IUHTXHQW H[WUHPH HYHQWV ZLOO FUHDWH MREV 0HHWLQJ KHDOWK WDUJHWV IURP 0'*  DQG  DUH
ERWKDKXPDQLWDULDQDQGDIRRGFULVLV)$2D
$JULFXOWXUHSURYLGHVHVVHQWLDOQRXULVKPHQWIRUSHRSOH
DQG LV WKH QHFHVVDU\ EDVLV IRU PDQ\ HFRQRPLF
DFWLYLWLHV,QDODUJHQXPEHURIGHYHORSLQJFRXQWULHV
DJULFXOWXUH DFFRXQWV IRU EHWZHHQ  RI *'3
DOVR OLQNHG WR PDMRU FKDQJHV LQ DJULFXOWXUH UHVXOWLQJ
LQDPRUHGLYHUVHVDIHQXWULWLRXVDQGDIIRUGDEOHGLHW
7KHUHIRUHWKHSUREOHPVRIFOLPDWHFKDQJHKXQJHUDQG
SRYHUW\ HFRQRPLF VRFLDO DQG JHQGHU LQHTXLW\ SRRU
KHDOWK DQG QXWULWLRQ DQG HQYLURQPHQWDO VXVWDLQDELOLW\
DUHLQWHUUHODWHGDQGQHHGWREHVROYHGE\OHYHUDJLQJ
DQG SURYLGHV WKH OLYHOLKRRGV IRU DSSUR[LPDWHO\  DJULFXOWXUH·VPXOWLIXQFWLRQDOLW\+HUUHQHWDO
ELOOLRQ SHRSOH LH VRPH  RI JOREDO SRSXODWLRQ
)$2D:KDWLVPRUHDFFRUGLQJWR'H-DQYU\ $JDLQVW WKLV EDFNJURXQG FOLPDWHIULHQGO\ DJULFXOWXUH
DQG 6DGRXOHW  DJULFXOWXUHGULYHQ JURZWK LV
WKUHH WLPHV PRUH OLNHO\ WR UHGXFH SRYHUW\ WKDQ *'3
JURZWKLQRWKHUVHFWRUVRIWKHHFRQRP\
7KHFXUUHQWV\VWHPRILQGXVWULDODJULFXOWXUHSURGXFWLYH
DV LW KDV EHHQ LQ UHFHQW GHFDGHV VWLOO OHDYHV DERXW
 ELOOLRQ SHRSOH XQGHUQRXULVKHG DQG SRYHUW\
VWULFNHQRIZKRPOLYHLQUXUDODUHDV0LOOHQQLXP
PXVW EHFRPH WKH QHZ SDUDGLJP EXW LW VKRXOG QRW
FRPSURPLVH RWKHU YHU\ LPSRUWDQW GHYHORSPHQWDO
REMHFWLYHV
‡ $GGUHVVLQJ WKH HTXLW\ FKDOOHQJH QRWDEO\ IRRG
VHFXULW\DQGIDUPHUOLYHOLKRRGV
‡ (QKDQFLQJ VXVWDLQDEOH SURGXFWLYLW\ EDVHG RQ D
QHZ V\VWHPLFDOO\ GLIIHUHQW GHÀQLWLRQ WKDW IRFXVHV
RQWRWDOIDUPRXWSXWLQVWHDGRISURGXFWLYLW\SHUXQLW
'HYHORSPHQW *RDO 0'* RQH DLPV DW HUDGLFDWLQJ RIODERXU
H[WUHPHKXQJHUDQGSRYHUW\2QHRIWKHPRVWHIIHFWLYH ‡ 6WUHQJWKHQLQJ UHVLOLHQFH WR UHVRXUFH DQG HQHUJ\
ZD\VRIKDOYLQJERWKWKHQXPEHURIKXQJU\DQGSRRU VFDUFLW\DQGFOLPDWHFKDQJHDQG
E\  LV WR WDNH WKH QHFHVVDU\ VWHSV RI WUDQVLWLRQ ‡ 5HÁHFWLQJDQGFDSLWDOL]LQJRQWKHPXOWLIXQFWLRQDOLW\
WRZDUGV PRUH VXVWDLQDEOH IRUPV RI DJULFXOWXUH WKDW RIDJULFXOWXUH

)LJXUH6\VWHPLFHPEHGGLQJRIFOLPDWHIULHQGO\DJULFXOWXUH

22SSRVLWHGLUHFWLRQ
66DPHGLUHFWLRQ
55HLQIRUFQJORRS
%%DODQFLQJORRS

6RXUFH+HUUHQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

,WLVWKHUHIRUHLPSRUWDQWWRWKLQNLQV\VWHPVUDWKHUWKDQ WKURXJK DJURHFRORJ\ DJURIRUHVWU\ RUJDQLF

RYHUHPSKDVL]LQJDFOLPDWHIRFXVVHHÀJXUH DJULFXOWXUH
7KHQHHGIRUDWZRWUDFNDSSURDFK
&5HTXLUHGIXQGDPHQWDOWUDQVIRUPDWLRQ  L UHGXFLQJ HQYLURQPHQWDO LPSDFW RI FRQYHQWLRQDO
RIDJULFXOWXUH DJULFXOWXUHDQG
 LL EURDGHQLQJ VFRSH IRU DQG IXUWKHU GHYHORSLQJ
7R XQGHUVWDQG WKH GLUHFWLRQ DQG VWUXFWXUH RI WKH
DJURHFRORJLFDOSURGXFWLRQPHWKRGV
UHTXLUHG IXQGDPHQWDO WUDQVIRUPDWLRQ LW LV LPSRUWDQW
WR DSSUHFLDWH WKH SDWWHUQV RI WKH WHFKQLFDO FOLPDWH
PLWLJDWLRQ SRWHQWLDO LQ DJULFXOWXUH $FFRUGLQJ WR WKH
'7KHSDUDGLJPVKLIWKDVVWDUWHGEXWLV
IRXUWK DVVHVVPHQW UHSRUW RI ,3&& D  
SHUFHQWRIWKHWHFKQLFDOPLWLJDWLRQSRWHQWLDOLVUHODWHG
WRVRLOFDUERQVHTXHVWUDWLRQDERXWSHUFHQWOLQNHG
WR PLWLJDWLRQ RI PHWKDQH DQG RQO\ DERXW  SHU FHQW
WLHG WR PLWLJDWLRQ RI QLWURXV R[LGH HPLVVLRQV IURP
ODUJHO\LQFRPSOHWH
7KHIRRGFULVLVRIZDVDQLPSRUWDQWFDWDO\VWIRU
UHDOL]LQJ WKH QHHG IRU IXQGDPHQWDO WUDQVIRUPDWLRQ
DQG TXHVWLRQLQJ VRPH RI WKH DVVXPSWLRQV WKDW KDG
GULYHQIRRGDQGDJULFXOWXUDOSROLF\LQUHFHQWGHFDGHV
VRLO FRUUHODWLQJ ZLWK QLWURJHQ IHUWLOL]HU XVH $V WKH 7KH FULVLV OHG WR D UHYHUVDO RI WKH ORQJWHUP QHJOHFW
ZRUOG FXUUHQWO\ IROORZV WKH ZRUVW FDVH VFHQDULR RI RI DJULFXOWXUH DV D YLWDO HFRQRPLF VHFWRU $OVR WKH
*+* HPLVVLRQV SURMHFWHG E\ ,3&& DQG ,($ LH GHFOLQLQJ WUHQG RI SXEOLF IXQGLQJ IRU DJULFXOWXUH ZDV
LPSO\LQJ D JOREDO ZDUPLQJ RI  GHJUHHV &HOVLXV
FOLPDWH UHVLOLHQFH DQG DGDSWDWLRQ LQ FRPELQDWLRQ
ZLWK SURGXFWLYLW\ LQFUHDVHV VKRXOG EH SULRULWL]HG
,Q JHQHUDO *+* HPLVVLRQV IURP DJULFXOWXUH FDQ
EH UHGXFHG E\ FKDQJH RI SURGXFWLRQ V\VWHPV DQG
PDQDJHPHQWSUDFWLFHVWKDWLQPDQ\FDVHVDOVRIRVWHU
DUUHVWHG DQG VRPH QHZ IXQGLQJ VHFXUHG ZKLFK
KRZHYHU LV VWLOO PXFK EHKLQG FRPPLWPHQWV DQG
UHTXLUHPHQWV 6RPH RI WKH DGGLWLRQDO IXQGLQJ LV
QRZPRUHRSHQWRFRXQWU\OHGSURJUDPVZLWKVWURQJ
VWDWH LQYROYHPHQW ,Q WKLV FRQWH[W VRPH RI WKH
DGGLWLRQDO IXQGLQJ JRHV WR LPSRUWDQW DUHDV VXFK DV
SURGXFWLYLW\DQGHQKDQFHUHVLOLHQFH)$2D
$JDLQVW WKLV YHU\ EDFNJURXQG WKH UHTXLUHG
WUDQVIRUPDWLRQ RI DJULFXOWXUH QHHGV WR PHHW WKH
IROORZLQJ REMHFWLYHV DQG DSSURDFKHV ZKLFK DUH
IXUWKHUHODERUDWHGRQE\WKHDXWKRUVRIWKLV5HYLHZ
‡ ,QFUHDVLQJWKHVRLOFDUERQFRQWHQWFRPELQHGZLWK
VPDOOKROGHUVXSSRUWUROHRIZRPHQLQDJULFXOWXUHWKH
HQYLURQPHQWDO FULVLV RI DJULFXOWXUH LQFOXGLQJ FOLPDWH
FKDQJHDQGZHDNQHVVRILQWHUQDWLRQDOPDUNHWV
+RZHYHUZHQHLWKHUVHHWKHQHFHVVDU\OHYHORIXUJHQF\
QRU SROLWLFDO ZLOOLQJQHVV IRU GUDVWLF FKDQJH 3ULRULW\
UHPDLQV KHDYLO\ IRFXVHG RQ LQFUHDVLQJ SURGXFWLRQ
FORVHGQXWULHQWF\FOHVDQGDQLQWHJUDWHGDSSURDFK PRVWO\ XQGHU WKH VORJDQ ´PRUH ZLWK OHVVµ 7KH
WRDJULFXOWXUDOSURGXFWLRQ FXUUHQWO\SXUVXHGDSSURDFKLVVWLOOYHU\PXFKELDVHG
‡ 5HGXFWLRQ RI GLUHFW DQG LQGLUHFW LH WKURXJK WKH WRZDUGV H[SDQVLRQ RI ´VRPHZKDWOHVVSROOXWLQJµ
IHHGFKDLQ*+*HPLVVLRQVRIOLYHVWRFNSURGXFWLRQ LQGXVWULDO DJULFXOWXUH UDWKHU WKDQ PRUH VXVWDLQDEOH
‡ 5HGXFWLRQ RI LQGLUHFW LH FKDQJHV LQ ODQGXVH DQG DIIRUGDEOH SURGXFWLRQ PHWKRGV $OVR WKH PDLQ
LQGXFHGHPLVVLRQVWKURXJKVXVWDLQDEOHSHDWODQG SUREOHPRIKXQJHULVVWLOOQRWDSSUHFLDWHGDFFHVVWR
IRUHVWDQGJUDVVODQGPDQDJHPHQW DIIRUGDEOH IRRG LQ UXUDO DUHDV WKH ODFN RI PHDQV RI
‡ 2SWLPL]DWLRQ RI RUJDQLF DQG LQRUJDQLF IHUWLOL]HU SURGXFWLRQDQGDFFHVVWRUHVRXUFHVIRUVPDOOKROGHUV
XVH LQFOXGLQJ WKURXJK FORVHG QXWULHQW F\FOHV LQ 2QH GRHV VWLOO QRW UHFRJQL]H WKDW D SDUDGLJP VKLIW
DJULFXOWXUH LV UHTXLUHG UHVXOWLQJ IURP L GHHSHQLQJ LQWHJUDWLRQ
‡ 5HGXFWLRQRIZDVWHWKURXJKRXWWKHIRRGFKDLQV RI IRRG HQHUJ\ DQG ÀQDQFLDO PDUNHWV LL UHVRXUFH
‡ &KDQJLQJGLHWDU\SDWWHUQVWRZDUGVFOLPDWHIULHQGO\
IRRGFRQVXPSWLRQ
‡ 5HIRUP RI WKH LQWHUQDWLRQDO WUDGH UHJLPH IRU IRRG
DQGDJULFXOWXUDOSURGXFWV
,Q LPSOHPHQWLQJ WKH DERYHRXWOLQHG HOHPHQWV RI D
IXQGDPHQWDOWUDQVIRUPDWLRQRIDJULFXOWXUHRQHVKRXOG
QRWRYHUORRN
 7KHLQWHUOLQNDJHVEHWZHHQWKHHOHPHQWV
 7KH PHULWV DQG GHPHULWV RI VLQJOH FOLPDWHIULHQGO\
SUDFWLFHV YHUVXV WKRVH RI V\VWHPLF FKDQJHV
FRQVWUDLQWV  SODQHWDU\ ERXQGDULHV DQG LLL WKH
LQFUHDVLQJULVNFDXVHGE\FOLPDWHFKDQJH7KHFXUUHQW
GHPDQGWUHQGVIRUELRIXHOVH[FHVVLYHO\PHDWEDVHG
GLHWV DQG SRVWKDUYHVW IRRG ZDVWH DUH UHJDUGHG DV
JLYHQ UDWKHU WKDQ FKDOOHQJLQJ WKHLU UDWLRQDO 7KHUH LV
DOVR OLWWOH UHFRJQLWLRQ RI WKH SUHYDLOLQJ PDUNHW SRZHU
DV\PPHWULHVLQIRRGLQSXWDQGRXWSXWPDUNHWV)LQDOO\
WKHUHLVWRROLWWOHDQGWRRODWHSURJUHVVRQUHVWULFWLRQV
DQGWKHGHYHORSPHQWRIUHJXODWLRQRQODQGJUDEV
7KHVWLOOXQUHVROYHGUHIRUPDJHQGDLWHPVDUH
 75$'($1'(19,5210(175(9,(:

‡ 5HGXFH IXHOLQWHQVLYH H[WHUQDO LQSXWGHSHQGHQW ‡ 5HIRUP JOREDO DJULFXOWXUDO WUDGH UXOHV JLYLQJ
DJULFXOWXUDO SURGXFWLRQ PHWKRGV WRZDUGV DJUR JUHDWHU SROLF\ VSDFH IRU DVVXULQJ QDWLRQDO IRRG
HFRORJLFDO SUDFWLFHV UHFRJQL]LQJ WKH PXOWL VRYHUHLJQW\ FOLPDWHFKDQJH DGDSWDWLRQUHVLOLHQFH
IXQFWLRQDOLW\RIDJULFXOWXUH UHWKLQN IRFXV RQ LQWHJUDWLQJ VPDOOKROGHUV LQWR
‡ 'LVFRXUDJH LQGXVWULDO OLYHVWRFN SURGXFWLRQ DQG JOREDOVXSSO\FKDLQVVHH&KDSWHU
DVVRFLDWHGPDVVLYHXVHRIFRQFHQWUDWHIHHG ‡ 5HGXFH IRRG SULFH YRODWLOLW\ ZLWKRXW EHGGLQJ
‡ 'LVFRXUDJH H[SDQVLRQ RI ELRIXHO SURGXFWLRQ H[FOXVLYHO\RQKHGJLQJRSWLRQV
GLVFRQWLQXH EOHQGLQJ TXRWDV UHGXFH VXEVLGLHV ,QHVVHQFHDVSRLQWHGRXWE\1DHUVWDGSDUW,,
UHYLVHWUDGHUHVWULFWLRQV S  ´D PRUH UDGLFDO WUDQVIRUPDWLRQ RI DJULFXOWXUH
‡ 5HGXFH ÀQDQFLDO VSHFXODWLRQ LH ÀQDQFLDOL]DWLRQ LV QHHGHG RQH JXLGHG E\ WKH QRWLRQ WKDW HFRORJLFDO
RI IRRG PDUNHWV DQG OLPLW LUUHVSRQVLEOH ODQG FKDQJH LQ DJULFXOWXUH FDQQRW EH SURPRWHG ZLWKRXW
LQYHVWPHQWV VHH WKH FRPPHQWDU\ RI 0OOHU LQ FRPSDUDEOH FKDQJHV LQ WKH VRFLDO SROLWLFDO FXOWXUDO
&KDSWHU DQGHFRQRPLFDUHQDVWKDWDOVRFRQIRUPDJULFXOWXUHµ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
 )4+%7.674'U0+37''%614+0 %101/+%X
%1.1)+%#.#0&1%+#.'4/5
-HDQ)H\GHU
$PEDVVDGRU)RUPHU3HUPDQHQW5HSUHVHQWDWLYHRI/X[HPERXUJWRWKH81DQG:72LQ*HQHYD

$EVWUDFW
0RUHWKDQRQHELOOLRQSHRSOHDUHVXIIHULQJIURPKXQJHUDQGPDOQXWULWLRQ3DUDGR[LFDOO\PRVWRIWKHPDUHLQ
UXUDODUHDVDQGRQO\SHUFHQWDUHLQFLW\VOXPVZKLOHDVPDOOPLQRULW\DUHYLFWLPVRIZDURUFLYLOFRQÁLFW
/RZSULFHVRIIRRGSURGXFWVSURGXFHGE\VPDOOKROGHUIDUPHUVFDQDIIHFWWKHLULQFRPHVDQGFRQWULEXWHWR
SRYHUW\DQGKXQJHU2QO\VWDEOHDQGIDLUSULFHVZLOOJLYHWKHPLQGLVSHQVDEOHEX\LQJSRZHU
$GHTXDWH UHJXODWLRQ RI DJULFXOWXUDO PDUNHWV LV QHHGHG WR VKLHOG VPDOO SURGXFHUV IURP LQWHUQDWLRQDO
FRPSHWLWLRQDQGGXPSLQJRIIRRGLPSRUWV
)DVWGHWHULRUDWLQJHFRV\VWHPVFOLPDWHFKDQJHDQGZDWHUVFDUFLW\VHULRXVO\WKUHDWHQIRRGVHFXULW\7KHVH
FKDOOHQJHVFDQEHVWEHPHWWKURXJKWKHDGRSWLRQRIDJURHFRORJ\RUJDQLFDQGRWKHUVXVWDLQDEOHIDUPLQJ
PHWKRGV

$JULFXOWXUHKDVWREHSXWDWWKHKHDUWRIDQ\SRYHUW\ \HDUV 7KHVH FULVHV KDYH UHYHUVHG WKH IRUPHU WUHQG

UHGXFWLRQ VWUDWHJ\ ,W LV D PXOWLGLPHQVLRQDO VHFWRU
GLUHFWO\ OLQNHG WR WKH ÀJKW DJDLQVW KXQJHU DQG
PDOQXWULWLRQ DQG WR IRRG VHFXULW\ $W WKH VDPH WLPH
LW LV VWURQJO\ LQÁXHQFHG E\ LQWHUQDWLRQDO WUDGH
ÀQDQFH GHYHORSPHQW FRRSHUDWLRQ DQG LQFUHDVLQJO\
LW LV DIIHFWHG E\ FOLPDWH FKDQJH DQG HQYLURQPHQWDO
GHJUDGDWLRQ7KLVGLYHUVLW\RIIXQFWLRQVDQGDFWLYLWLHV
UHTXLUHVWKDWLVVXHVUHODWLQJWRDJULFXOWXUHEHWUHDWHG
LQDKROLVWLFPDQQHUDQGWKDWWKHFKDOOHQJHRISROLF\
FRKHUHQFHEHWDFNOHGERWKDWQDWLRQDODQGLQWHUQDWLRQDO
RI D GHFUHDVLQJ QXPEHU RI SHRSOH VXIIHULQJ IURP
KXQJHU DQG PDOQXWULWLRQ %XW WKH )$2 DOVR VWUHVVHV
WKDWWKLVWUHQGREVHUYHGEHIRUHWKHFULVHVZRXOGQRW
LQIDFWKDYHEHHQVXIÀFLHQWWRDFKLHYHWKHÀUVWRIWKH
0LOOHQQLXP'HYHORSPHQW*RDOV
3DUDGR[LFDOO\ PRVW RI WKH YLFWLPV RI KXQJHU DQG
PDOQXWULWLRQ UHVLGH LQ UXUDO DUHDV $FFRUGLQJ WR WKH
)$2SHUFHQWRIWKHPDUHVPDOOSHDVDQWVSHU
FHQWDUHODQGOHVVSHUFHQWDUHQRPDGLFKHUGVPHQ
RUVPDOOÀVKHUPHQDQGSHUFHQWOLYHLQFLW\VOXPV
OHYHOVIRUPRUHGHWDLOVHH)H\GHU
+XQJHU DQG PDOQXWULWLRQ DUH WKH PDLQ FDXVHV RI
PRUWDOLW\LQWKHZRUOGWRGD\(DFKGD\WKH\NLOODERXW
SHRSOHPRVWO\FKLOGUHQ$VDUHVXOWWKHLUULJKW
WROLIHDQGWKHLUULJKWWRIRRGDUHPRVWÁDJUDQWO\YLRODWHG
2QO\ D VPDOO PLQRULW\ VXIIHU EHFDXVH RI ZDU RU FLYLO
FRQÁLFW$QGZKHUHDVLQWKH(8WKHIDUPLQJSRSXODWLRQ
FRQVWLWXWHVRQO\SHUFHQWRIWKHWRWDOSRSXODWLRQLWLV
DERXWSHUFHQWLQ&KLQDSHUFHQWLQ,QGLDDQG
EHWZHHQ  DQG  SHU FHQW LQ VXE6DKDUDQ $IULFD
7KHLQWHUQDWLRQDOFRPPXQLW\DJUHHGWRZDJHZDURQ )H\GHU
WKLV VFRXUJH RI KXPDQLW\ ZKHQ +HDGV RI 6WDWH DQG 7KLV UXUDO VRFLDO FODVV LV DERYH DOO RIWHQ D YLFWLP RI
*RYHUQPHQW DGRSWHG WKH 0LOOHQQLXP 'HYHORSPHQW PDUJLQDOL]DWLRQ DQG H[FOXVLRQ IURP LWV JRYHUQLQJ
*RDOV 0'*V 7KH ÀUVW JRDO FRPPLWWHG WR KDOYH
E\  WKH SURSRUWLRQ RI WKH ZRUOG·V SRSXODWLRQ
VXIIHULQJ IURP KXQJHU DQG PDOQXWULWLRQ ² VRPH 
PLOOLRQSHRSOH
+RZHYHU\HDUVODWHUPRUHWKDQDELOOLRQSHRSOH²
RQHSHUVRQLQVHYHQ²DUHVWLOOVXIIHULQJIURPKXQJHU
DQGPDOQXWULWLRQ7KLVLVXQGRXEWHGO\RQHRIWKHPRVW
OHWKDO HIIHFWV RI WKH ZRUOG IRRG DQG ÀQDQFLDO FULVHV
WRJHWKHUZLWKWKHHFRQRPLFUHFHVVLRQRIWKHSDVWIHZ
FODVVHVSROLWLFDOHFRQRPLFDQGÀQDQFLDODVZHOODV
IURPWKHXUEDQPLOLHXZKHUHWKHUHLVDFRQFHQWUDWLRQ
RI SRZHU DQG NQRZOHGJH DQG WKHUHIRUH PRQH\
LQFOXGLQJIXQGVIRUGHYHORSPHQW2IWHQWKHXUEDQDQG
UXUDO ZRUOGV DUH VHSDUDWHG E\ D FXOWXUDO DE\VV ZLWK
WKH IRUPHU GLVSOD\LQJ LQGLIIHUHQFH LQFRPSUHKHQVLRQ
DQGFRQWHPSW
+XQGUHGV RI PLOOLRQV RI VPDOO SHDVDQWV PDLQO\
ZRPHQFXOWLYDWHDQDYHUDJHRIEHWZHHQRQHDQGWZR
 75$'($1'(19,5210(175(9,(:

KHFWDUHVRIODQG²DQGRIWHQHYHQOHVV²ZLWKKRHVDQG )LJXUH*KDQDFKLFNHQSURGXFWLRQDQGLPSRUWDWLRQ
PDFKHWHVZKLFKDUHWKHRQO\WRROVDWWKHLUGLVSRVDO 
%\ FRQWUDVW D :HVWHUQ (XURSHDQ IDUPHU SRVVHVVHV
DQ DYHUDJH KROGLQJ RI  KHFWDUHV FXOWLYDWHG ZLWK
LQFUHDVLQJO\ SRZHUIXO WUDFWRUV DQG RWKHU PDFKLQHU\ 80,000 -
DQG HPSOR\V ODUJH TXDQWLWLHV RI SHVWLFLGHV DQG Chicken
70,000 - production
IHUWLOL]HUV7KLVDOVRH[SODLQVWKHKXJHSURGXFWLYLW\JDS
LQ DJULFXOWXUH EHWZHHQ LQGXVWULDOL]HG FRXQWULHV DQG 60,000 - Chicken
imports
D QXPEHU RI HPHUJLQJ FRXQWULHV VXFK DV %UD]LO RQ 50,000 -
WKH RQH KDQG DQG WKH JUHDW PDMRULW\ RI GHYHORSLQJ

Tons
FRXQWULHVRQWKHRWKHU 40,000 -

7KHÀQDQFLDOL]DWLRQRIDJULFXOWXUHLVEHFRPLQJDPDMRU 30,000 -
QHZULVN/DQGJUDEELQJRIWHQOHDGVWRWKHH[SXOVLRQ 20,000 -
RIYXOQHUDEOHUXUDOFRPPXQLWLHV)LQDQFLDOVSHFXODWLRQ
RQIRRGFRPPRGLWLHVFRQWLQXHVWREHDPDMRUFDXVH 10,000 -
RIWKHSULFHVXUJHDQGYRODWLOLW\ZLWQHVVHGRYHUWKHSDVW 0-
IHZ\HDUV81&7$'81&7$'DQG&KDPEHURI 2002 2007
/DERXU 9LHQQD  7KLV LVVXH TXLWH ULJKWO\ KDV
EHHQ DW WKH WRS RI WKH LQWHUQDWLRQDO DJHQGD DQG LQ
*PHHWLQJV
7KH SURGXFWLRQ RI DJURIXHOV WDNHV PRUH DQG PRUH
ODQG DZD\ IURP IRRG SURGXFWLRQ <HW HYHQ WKRXJK
WKHXVHRIWKHVHIXHOVFRQWULEXWHVOLWWOH²LIDWDOO²WR
UHGXFLQJ &2 HPLVVLRQV WKHLU SURGXFWLRQ FRQWLQXHV
WRVRDU
2QH RI WKH PDLQ DQG PRUH VWUXFWXUDO FDXVHV RI WKH
IRRG FULVLV LV GLVLQYHVWPHQW LQ DJULFXOWXUH D VHFWRU
WKDW KDV ORQJ EHHQ QHJOHFWHG 2IÀFLDO GHYHORSPHQW
6RXUFH)$267$7
7KXVWKHGXPSLQJRIIRRGRQWRGHYHORSLQJFRXQWULHV
KDVSHQDOL]HGGRPHVWLFSURGXFHUVZKRDUHIRUFHGWR
VHOO DW UHGXFHG SULFHV WR IHZHU EX\HUV $FFRUGLQJ WR
81&7$'WKHSULFHVRIIRRGSURGXFWVDQGDJULFXOWXUDO
UDZ PDWHULDOV IHOO E\  SHU FHQW DQG  SHU FHQW
UHVSHFWLYHO\ EHWZHHQ  DQG  ,Q  WKH
SULFH RI FRIIHH ZDV RQO\  SHU FHQW RI ZKDW LW KDG
EHHQLQDQGWKDWRIFRWWRQZDVSHUFHQW1XUL
DVVLVWDQFH WR UXUDO DQG DJULFXOWXUDO GHYHORSPHQW SVHHDOVR)$2GÀJXUH%XWZKLOH
GURSSHGIURPSHUFHQWWRSHUFHQWEHWZHHQ SURGXFHUVLQGHYHORSHGFRXQWULHVFDQXVXDOO\FDOORQ
DQG)H\GHU WKHLUJRYHUQPHQWVIRUFRPSHQVDWLRQZKLFKIRUPDQ\
6WUXFWXUDO DGMXVWPHQW SROLFLHV KDYH OHG WR PDVVLYH
WUDGH OLEHUDOL]DWLRQ DQG WKH RSHQLQJ XS RI PDUNHWV
JLYLQJ FRQVXPHUV DFFHVV WR FKHDS LPSRUWHG IRRG
0HDQZKLOH SHDVDQWV KDYH EHHQ HQFRXUDJHG WR
UHSUHVHQWVXSWRSHUFHQWRIWKHLULQFRPHIDUPHUV
LQGHYHORSLQJFRXQWULHVKDYHQRVXFKUHFRXUVHDQG
LQFUHDVLQJO\ DUH XQDEOH WR FRYHU WKHLU FRVWV 7KLV
GXPSLQJRIFKHDSIRRGRQWRGHYHORSLQJFRXQWULHVKDV
UHVXOWHG LQ KXQJHU IRU SHDVDQWV DQG PDLQWDLQV WKHP
FRQFHQWUDWH RQ SURGXFLQJ H[SRUW FURSV +RZHYHU
WKH  IRRG FULVLV KDV UDGLFDOO\ FKDOOHQJHG WKH
UHOHYDQFHRIWKLVGHYHORSPHQWPRGHO
,Q WKH GHYHORSLQJ FRXQWULHV HVSHFLDOO\ WKH /'&·V
LPSRUWVRIFKLFNHQULFHWRPDWRFRQFHQWUDWHDQGPLON
SRZGHU KDYH ULVHQ UDSLGO\ UXLQLQJ ORFDO SURGXFWLRQ
DQG WKH VXUYLYDO FRQGLWLRQV RI WHQV RI PLOOLRQV RI
SHDVDQW IDPLOLHV QRW WR PHQWLRQ WKH ORVV RI MREV LQ
WKHFUDIWDQGLQGXVWULDOVHFWRUVDVWKH\WRRKDYHEHHQ
XQDEOHWRZLWKVWDQGLQWHUQDWLRQDOFRPSHWLWLRQÀJXUH
LQSRYHUW\:LVH$VDUHVXOWRIWKLVGHVSHUDWH
VLWXDWLRQHYHU\\HDUVRPHPLOOLRQSHRSOHOHDYHWKH
UXUDODUHDVLQVHDUFKRIDOWHUQDWLYHOLYHOLKRRGVOHDGLQJ
WRXQFRQWUROOHGXUEDQL]DWLRQ
,Q WKH V +DLWL ZDV YLUWXDOO\ VHOIVXIÀFLHQW LQ
ULFH SURGXFWLRQ ZKLFK LV RQH RI LWV PDLQ VWDSOH
FURSV +RZHYHU DV D FRQVHTXHQFH RI LWV VWUXFWXUDO
DGMXVWPHQWSURJUDPPHWKHFXVWRPVWDULIILQFOXGLQJ
RQULFHLPSRUWHGLQWR+DLWLZDVUHGXFHGIURPSHU
FHQW WR  SHU FHQW PDNLQJ LW WKH PRVW ´OLEHUDOL]HGµ
DQG7KHWUDGHEDODQFHLQIRRGSURGXFWVIRUOHDVW
FRXQWU\LQWKHZRUOG7RGD\OHVVWKDQSHUFHQWRI
GHYHORSHGFRXQWULHVPRYHGIURPDELOOLRQVXUSOXV
LWVULFHQHHGVDUHPHWE\ORFDOSURGXFWLRQÀJXUH
\HDUVDJRWRDGHÀFLWRIELOOLRQLQDQG
ELOOLRQLQ)H\GHU )RU\HDUVLQVHYHUDO8QLWHG1DWLRQVERGLHVLQFOXGLQJ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

)LJXUH+DwWL5LFHSURGXFWLRQDQGLPSRUWV )LJXUH&XVWRPWDULIIVLQWKH(8DQGWKH:HVWHUQ$IULFDQ
 (FRQRPLFDQG0RQHWDU\8QLRQ8(02$

100 -
UE
350,000 - 90 -

300,000 - Rice 80 - UEMOA

production

Customs tariffs (per cent)

250,000 - 70 -
Rice
200,000 - imports 60 -
Tons

Sugar products
50 -

Milk powder
150,000 -
40 -

Cereals
100,000 -

Meat
30 -
50,000 -
20 -
0-
10 -
1980 2004 2009
0-

6RXUFH)$267$7 6RXUFH%HUWKHORW

DV&KDLURI81&7$'·V7UDGHDQG'HYHORSPHQW%RDUG :RUOG%DQNQRZDUJXHVWKLVZRXOGQRWRQO\LQFUHDVH
, KDYH EHHQ GHQRXQFLQJ WKLV QHJDWLYH LPSDFW RQ DJULFXOWXUDOSURGXFWLYLW\EXWDOVRUHGXFHSRYHUW\WKUHH
DJULFXOWXUDO DQG LQGXVWULDO GHYHORSPHQW LQ FRXQWULHV WRIRXUWLPHVPRUHUDSLGO\WKDQLQRWKHUVHFWRUVRIWKH
OLNH +DLWL $W WKH EHJLQQLQJ RI 0DUFK  IRUPHU
8QLWHG 6WDWHV 3UHVLGHQW %LOO &OLQWRQ ZKR LV FXUUHQWO\
WKH 8QLWHG 1DWLRQV 6HFUHWDU\*HQHUDO·V 6SHFLDO
5HSUHVHQWDWLYH IRU +DLWL SXEOLFO\ DFNQRZOHGJHG
EHIRUH D 8QLWHG 6WDWHV 6HQDWH FRPPLWWHH WKDW WKLV
SROLF\ ZKLFK KH VXSSRUWHG DV IRUPHU 8QLWHG 6WDWHV
3UHVLGHQW KDG EHHQ D PLVWDNH +H PDGH D VLPLODU
VWDWHPHQW FRQFHUQLQJ DJULFXOWXUH LQ $IULFD ZKHQ KH
VDLG ´ZH EOHZ LWµ +H ZHQW RQ WR VXJJHVW ZH GUDZ
OHVVRQVIURPWKHVHHUURUVDQGKHOSFRXQWULHVOLNH+DLWL
WR ÀQG WKHLU ZD\ EDFN WR VHOIVXIÀFLHQF\ LQ WKH IRRG
VHFWRU
7KHVROXWLRQVIRUIHHGLQJWKHJURZLQJZRUOGSRSXODWLRQ
DQGRYHUFRPLQJKXQJHUDQGPDOQXWULWLRQDUHFRPSOH[
DQG PXVW WDNH LQWR DFFRXQW WKH GLYHUVLW\ DQG PXOWL
IXQFWLRQDOLW\ RI DJULFXOWXUH WKH VSHFLÀF FRQGLWLRQV RI
HDFKFRXQWU\DVZHOODVFOLPDWHFKDQJHDQGLQFUHDVLQJ
ZDWHU VFDUFLW\ ,Q GHYHORSLQJ WKHLU DJULFXOWXUDO SROLF\
HFRQRP\:RUOG%DQN%XWWKHFRPPLWPHQWV
PDGH DW WKH /·$TXLOD 6XPPLW RI WKH * LQ  WR
UHVHUYHPRUHWKDQELOOLRQRYHUDWKUHH\HDUSHULRG
IRULQYHVWPHQWLQDJULFXOWXUHDUHIDUIURPEHLQJIXOÀOOHG
$ SROLF\ RI IDLU DQG VWDEOH SULFHV LV HVVHQWLDO WR
HQDEOH SHDVDQWV WR HPHUJH IURP SRYHUW\ DQG WR
SURYLGH WKHP ZLWK VXIÀFLHQW EX\LQJ SRZHU 7KLV DOVR
UHTXLUHV DGHTXDWH UHJXODWLRQ RI DJULFXOWXUDO PDUNHWV
VR DV WR VKLHOG YXOQHUDEOH DJULFXOWXUDO SURGXFHUV
DJDLQVW GXPSLQJ DQG SULFH YRODWLOLW\ ,Q SDUWLFXODU
VXFK UHJXODWLRQ VKRXOG SURWHFW DJULFXOWXUDO PDUNHWV
LQ GHYHORSLQJ FRXQWULHV DQG HVSHFLDOO\ LQ WKH /'&V
DQG SURYLGH IRU WKH VHWWLQJ XS RI SURSHUO\ PDQDJHG
PDUNHWLQJ ERDUGV DV ZHOO DV D QHWZRUN RI UHVHUYH
VWRFNV DW QDWLRQDO DQG UHJLRQDO OHYHOV ,W KDV WR EH
QRWHG WKDW D QXPEHU RI LQGXVWULDOL]HG FRXQWULHV DQG
LQSDUWLFXODUWKH(8FRQWLQXHWRDSSO\FXVWRPVWDULIIV
IRUWKHLUPRVWVHQVLWLYHDJULFXOWXUDOSURGXFWVFHUHDOV
JRYHUQPHQWV VKRXOG VHHN WKH DFWLYH SDUWLFLSDWLRQ RI PLON SRZGHU PHDW DQG VXJDU SURGXFWV DW OHYHOV IDU
IDUPHUV·DVVRFLDWLRQV EH\RQGWKRVHDSSOLHGE\PDQ\GHYHORSLQJFRXQWULHV
6LQFH  YDULRXV LQWHUQDWLRQDO FRQIHUHQFHV KDYH
EHHQ VWUHVVLQJ WKH QHHG IRU UHQHZHG LQYHVWPHQW LQ
DJULFXOWXUHLQRUGHUWRUHODXQFKDJULFXOWXUDOSURGXFWLRQ
0RUH QDWLRQDO DQG LQWHUQDWLRQDO IXQGV DUH QHHGHG
WR KHOS LPSURYH UXUDO LQIUDVWUXFWXUHV DQG IDFLOLWDWH
DFFHVV WR LQSXWV FUHGLW DQG NQRZOHGJH $V WKH
DQGLQSDUWLFXODU/'&VÀJXUH
,Q RUGHU WR LQWURGXFH WKHVH FKDQJHV WKH FRQFHUQHG
JRYHUQPHQWV QHHG WR PDNH PD[LPXP XVH RI WKH
ÁH[LELOLW\ EHWZHHQ DSSOLHG DQG ERXQG UDWHV RIIHUHG
XQGHU:72UXOHV7KLVDSSURDFKKDVWREHXQGHUVWRRG
DFFHSWHG DQG HYHQ HQFRXUDJHG E\ DOO FRQFHUQHG

SDUWLHV LQFOXGLQJ WKH :RUOG %DQN DQG WKH ,0) DV
ZHOO DV WKH LQGXVWULDOL]HG FRXQWULHV PLQGIXO RI WKH
FRQGLWLRQVWKDWOHGWRWKHLURZQGHYHORSPHQW6LPLODUO\
ELODWHUDOWUDGHDJUHHPHQWVZLWKWKHVHFRXQWULHVVKRXOG
EHEDVHGRQWKHSULQFLSOHRIQRQUHFLSURFLW\
0DQ\ FRXQWULHV QHHG WR DGGUHVV WKH VHQVLWLYH LVVXH
RI DJUDULDQ UHIRUP LQFOXGLQJ DFFHVV WR ODQG DV D
QHFHVVDU\ SUHFRQGLWLRQ IRU UHODXQFKLQJ DJULFXOWXUH
DQG DFKLHYLQJ D VXEVWDQWLDO UHGXFWLRQ LQ SRYHUW\
IROORZLQJ WKH H[DPSOH RI D QXPEHU RI (DVW $VLDQ
FRXQWULHV 7KH 6WDWH PLJKW JXDUDQWHH WKH SHDVDQWV
DFFHVVWRODQGEXWWKLVGRHVQRWQHFHVVDULO\LQYROYH
JLYLQJRZQHUVKLSULJKWVWRLQGLYLGXDOV
(FRV\VWHPV DUH GHWHULRUDWLQJ DW DQ XQSUHFHGHQWHG
UDWH SDUWLFXODUO\ WKH FOLPDWH ZDWHU ELRGLYHUVLW\ DQG
ÀVKUHVRXUFHV6XGGHQO\SHDVDQWVZRUOGZLGHKDYHWR
UHDOL]HZLWKXQEHOLHYDEOHEUXWDOLW\WKDWWKHFRQGLWLRQV
75$'($1'(19,5210(175(9,(:
LQ ZKLFK WKH\ OLYH DQG ZRUN DUH GHWHULRUDWLQJ IDVW
HURVLRQLVDGYDQFLQJDQGFOLPDWHFKDQJHLVDIIHFWLQJ
FXOWLYDWLRQ FRQGLWLRQV DQG KDUYHVWV $V D UHVXOW
IRRG VHFXULW\ HVSHFLDOO\ IRU WKH PRVW YXOQHUDEOH LV
EHFRPLQJPRUHXQFHUWDLQ7KHGHYHORSLQJFRXQWULHV
DQG DERYH DOO WKH SRRUHVW DQG WKH LVODQG FRXQWULHV
ZKLFKDUHWKHOHDVWUHVSRQVLEOHIRUWKHVHFKDQJHVUXQ
WKHJUHDWHVWULVNV7KHKLJK\LHOGPRGHOLQLQGXVWULDOL]HG
FRXQWULHV LV QRZ EHLQJ FDOOHG LQWR TXHVWLRQ 7KHUH
DUH IRUPLGDEOH FKDOOHQJHV RI DGDSWDWLRQ HVSHFLDOO\
IRU SHDVDQWV DURXQG WKH ZRUOG $QG LW LV EHFRPLQJ
FOHDUWKDWVPDOOVFDOHDJULFXOWXUDOXQLWVDUHEHVWDEOH
WRPHHWWKLVFKDOOHQJHDJURHFRORJ\RUJDQLFIDUPLQJ
DQG VRPH RWKHU VXVWDLQDEOH SURGXFWLRQ PHWKRGV
WKDW DUH UHVSHFWIXO RI QDWXUH VKRZ WKH ZD\ WRZDUGV
SURGXFLQJPRUHDQGEHWWHUTXDOLW\IRRGEXWZLWKOHVV
LQSXWVZKLFKDUHPRVWO\ORFDOO\DYDLODEOHDQGEDVHG
RQFORVHGQXWULHQWF\FOHV
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
 10%'267#.#0&4#%6+%#.52'%651(.+/#6'
*#0)'+6+)#6+10*417)*)4+%7.674'U
'&7%+0)4''0*175'#5 /+55+105#0&
0%4'#5+0)1+.#4$10'37'564#6+10
$0OOHUDQG$*DWWLQJHU
5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH)L%/6ZLW]HUODQG

$EVWUDFW
0LWLJDWLRQLQDJULFXOWXUHQHHGVWREHEDVHGRQWZRSLOODUV
‡ 7HFKQLFDOO\QLWURJHQLQSXWVVKRXOGEHUHGXFHGRUJDQLFIHUWLOL]HUVVKRXOGUHSODFHV\QWKHWLFIHUWLOL]HUV
DQG VWRUDJH ORVVHV VKRXOG EH PLQLPL]HG ,QWHJUDWHG V\VWHPV ZLWK FORVHG HIÀFLHQW QXWULHQW F\FOHV
VKRXOGEHWKHRUGHURIWKHGD\LQWKHIXWXUH
‡ 6RFLDOO\IRRGZDVWDJHVKRXOGEHPLQLPL]HGDQGPHDWFRQVXPSWLRQUHGXFHG

,Q JHQHUDO UHGXFLQJ *+* HPLVVLRQV DQG LQFUHDVLQJ WKH RXWSXW QHHGHG DQG WKH FRUUHVSRQGLQJ *+*
VHTXHVWUDWLRQ LQ DJULFXOWXUH LV QR HDV\ WDVN HLWKHU
FRQFHSWXDOO\RULQSUDFWLFH%XWWKHUHDUHDWOHDVWÀYH
FOHDU H[FHSWLRQV SOXV RQH SRVVLEOH H[FHSWLRQ DW WKH
FRQFHSWXDOOHYHO
)LUVW DYRLGLQJ RSHQ EXUQLQJ RI ELRPDVV UHGXFHV
HPLVVLRQV *LYHQ WKDW RSHQ ELRPDVV EXUQLQJ LV WKH
WKLUGODUJHVWFRQWULEXWRURIGLUHFW*+*HPLVVLRQVIURP
DJULFXOWXUH ² DFFRXQWLQJ IRU PRUH WKDQ  SHU FHQW
HPLVVLRQV*RGIUD\HWDO*LYHQWKHPDJQLWXGH
RIORVVHVDQGZDVWDJHUHGXFLQJWKHPLVHVVHQWLDOLQ
DQ\HIIHFWLYHFOLPDWHPLWLJDWLRQSROLF\IRUDJULFXOWXUH
)RXUWK FRQYHUVLRQ RI SDVWXUHV DQGRU IRUHVWV WR
DJULFXOWXUDO ODQG DQG RI IRUHVWV WR SDVWXUHV QHHGV
WREHUHGXFHGDVWKLVOHDGVWRKLJK&2HPLVVLRQV
RIURXJKO\WKHVDPHRUGHUDVWRWDOGLUHFWDJULFXOWXUDO
*+* HPLVVLRQV 6PLWK HW DO E %HOODUE\ HW
² DIWHU QLWURXV R[LGH HPLWWHG IURP IHUWLOL]HG VRLOV DQG DO  ,QVRIDU DV VXFK ODQGXVH FKDQJH LV GXH
PHWKDQHIURPHQWHULFIHUPHQWDWLRQLQUXPLQDQWVWKHUH WR DQLPDO KXVEDQGU\ DQG IHHGVWXII SURGXFWLRQ IRU
LVDFRQVLGHUDEOHDQGXQGRXEWHGPLWLJDWLRQSRWHQWLDO UXPLQDQWVLGHDOO\WKLVUHGXFWLRQVKRXOGEHFRPELQHG
OLQNHG WR WKLV 6PLWK HW DO E %HOODUE\ HW DO ZLWKUHGXFHGDQLPDOQXPEHUV
,QPRVWLQGXVWULDOL]HGFRXQWULHVRSHQEXUQLQJ
)LQDOO\WKHPLWLJDWLRQSRWHQWLDORIFDUERQVHTXHVWUDWLRQ
RIELRPDVVLVSURKLELWHGEXWLQGHYHORSLQJFRXQWULHV
LQ RSWLPDOO\ PDQDJHG DJULFXOWXUDO VRLOV VKRXOG EH
LWLVVWLOOFRPPRQSUDFWLFH
H[SORLWHG 7KLV SRWHQWLDO LV RI WKH VDPH RUGHU RI
6HFRQG UHGXFLQJ WKH JOREDO QXPEHUV RI UXPLQDQWV PDJQLWXGHDVWRWDODJULFXOWXUDOHPLVVLRQV6PLWKHWDO
ZRXOG GLUHFWO\ UHGXFH WKH FRUUHVSRQGLQJ PHWKDQH D%HOODUE\HWDO6RLOFDUERQORVVHVFDQEH
HPLVVLRQV WKDW DFFRXQW IRU DERXW  SHU FHQW RI UHGXFHG DQG VHTXHVWUDWLRQ LQFUHDVHG E\ DSSOLFDWLRQ
WRWDO GLUHFW *+* HPLVVLRQV IURP DJULFXOWXUH 6PLWK RI RUJDQLF IHUWLOL]HUV PLQLPDO VRLO GLVWXUEDQFH DQG
HW DO E %HOODUE\ HW DO  7KLV LV PDLQO\
DQ LVVXH IRU LQGXVWULDOL]HG OLYHVWRFN V\VWHPV DQG
QRW IRU VPDOOKROGHUV 'XH WR FDUERQ VHTXHVWUDWLRQ
LQ SDVWXUHV SDVWRUDO OLYHVWRFN V\VWHPV FDQ HYHQ EH
FDUERQQHXWUDOLIVWRFNLQJUDWHVDUHDGHTXDWHO\ORZ
7KLUG ² SHU FHQW RI IRRG LV ORVW JOREDOO\ PDLQO\
SODQWLQJOHJXPHOH\VLQFURSURWDWLRQV
&RQFHSWXDOO\ WKHVH ÀYH DVSHFWV DUH XQFRQWHVWHG
EXWUHJUHWWDEO\WKH\DUHWKHRQO\RQHVRIVXFKFODULW\
DQGLPSRUWDQFH$GGUHVVLQJWKHRWKHUPRVWUHOHYDQW
HPLVVLRQ VRXUFHV LQ DJULFXOWXUH HJ QLWURXV R[LGH
HPLVVLRQV IURP VRLOV PHWKDQH IURP ULFH SURGXFWLRQ
DV D UHVXOW RI ZDVWDJH LQ LQGXVWULDOL]HG FRXQWULHV PDQXUHPDQDJHPHQWLVRIWHQKLJKO\FRPSOH[7KHUH
DQG E\ VWRUDJH ORVVHV LQ GHYHORSLQJ FRXQWULHV DUHLQGLFDWLRQVWKDWDFWLRQVDQGVWUDWHJLHVUHODWLQJWR
$YRLGLQJORVVHVDQGZDVWDJHZRXOGWKHUHIRUHUHGXFH HDFK RI WKH VRXUFHV PD\ UHGXFH HPLVVLRQV EXW WKH

KLJK GHJUHH RI FRPSOH[LW\ DQG FRQWH[W GHSHQGHQF\
RI WKH XQGHUO\LQJ SURFHVVHV DQG WKHLU LQWHUDFWLRQV
ZLWK RWKHU SURFHVVHV RIWHQ KLQGHU FOHDU VWDWHPHQWV
)RUH[DPSOHUHGXFHGQLWURJHQLQSXWWHQGVWRUHGXFH
QLWURXV R[LGH HPLVVLRQV EXW FRQVLGHUDWLRQV RI RWKHU
FKDUDFWHULVWLFV RI D ORFDWLRQ DQG FURSSLQJ V\VWHP
VXFK DV WHPSHUDWXUH KXPLGLW\ VRLO W\SH FURSV DQG
IHUWLOL]HU W\SHV PD\ GRPLQDWH RU UHGXFHG ÁRRGLQJ
RI ULFH ÀHOGV FXWV PHWKDQH HPLVVLRQV EXW WHQGV WR
LQFUHDVH QLWURXV R[LGH HPLVVLRQV 1HYHUWKHOHVV
LQGLFDWLRQV DUH VWURQJ HQRXJK WR PHQWLRQ UHGXFHG
QLWURJHQ DSSOLFDWLRQV DV D VL[WK UHDOLVWLF RSWLRQ WKH
ULJKWW\SHSODFHUDWHDQGWLPLQJRIQLWURJHQIHUWLOL]HU
DSSOLFDWLRQV DUH LPSRUWDQW IRU PRUH GHWDLOV VHH
75$'($1'(19,5210(175(9,(:
WKH ÀYH SURSRVDOV RXWOLQHG DERYH DYRLGLQJ EXUQLQJ
UHGXFLQJDQLPDOQXPEHUVDYRLGLQJORVVHVDQGZDVWH
DQG SUHYHQWLQJ GHIRUHVWDWLRQ DQG ODQG FRQYHUVLRQ
0RQLWRULQJ VRLO FDUERQ FKDQJHV FDQ EH PRUH
GHPDQGLQJEXWLWLVIHDVLEOH*LYHQWKHQHFHVVLW\RI
IXQGDPHQWDO FKDQJHV LQ DJULFXOWXUDO SURGXFWLRQ LQ
RUGHUWRLQFUHDVHLWVVXVWDLQDELOLW\WKHVHÀYHDVSHFWV
QHHG WR SOD\ D FHQWUDO UROH LQ DQ\ PLWLJDWLRQ SROLF\
IRU DJULFXOWXUH ,Q DGGLWLRQ UHGXFLQJ QLWURJHQ LQSXWV
VKRXOG EH D NH\ SROLF\ WDUJHW DQG FKDQJHV LQ KRZ
HPLVVLRQV IURP LPSRUWV DQG H[SRUWV DUH DFFRXQWHG
IRUDUHQHHGHGWRHQDEOHXQELDVHGDQGPRUHDFFXUDWH
DVVHVVPHQWVRIFRXQWULHV·HPLVVLRQV
:H GR QRW WRXFK RQ HQIRUFHPHQW KHUH EXW ZKDW
0OOHUHWDOD0OOHUDQG$XEHUW
5HJDUGLQJ HPLVVLRQV IURP HQHUJ\ XVH DJULFXOWXUH
SOD\VDPLQRUUROHIDUPPDFKLQHU\DFFRXQWVIRURQO\
SHUFHQWRIGLUHFWDJULFXOWXUDO*+*HPLVVLRQVZKLOH
HIÀFLHQF\LPSURYHPHQWVLQLUULJDWLRQZRXOGFRQWULEXWH
VRPHZKDW PRUH DV LUULJDWLRQ DFFRXQWV IRU DERXW 
IROORZVDUHVRPHUHPDUNVRQDFWLRQVWKDWQHHGWREH
WDNHQWRPRYHWRZDUGVDPRUHVXVWDLQDEOHDJULFXOWXUDO
V\VWHPDVRXWOLQHGDERYH
)LUVW RSHQ EXUQLQJ RI DJULFXOWXUDO ZDVWH VKRXOG EH
SURKLELWHG DV KDV EHHQ LPSOHPHQWHG VXFFHVVIXOO\
E\ LQGXVWULDOL]HG FRXQWULHV ,QIRUPDWLRQ DQG WUDLQLQJ
SHUFHQWRIHPLVVLRQV%HOODUE\HWDO+RZHYHU
UHGXFWLRQ RI HQHUJ\ XVH DORQJ WKH DJULFXOWXUDO YDOXH
FKDLQ KDV XQGRXEWHG PLWLJDWLRQ SRWHQWLDO 7KHUH DUH
VLJQLÀFDQW HPLVVLRQV IURP WUDQVSRUW SURFHVVLQJ
DQG VWRUDJH DOO RI ZKLFK DUH DWWULEXWHG E\ HPLVVLRQ
DQGLIQHFHVVDU\HYHQVRPHÀQDQFLDOVXSSRUWVKRXOG
DFFRPSDQ\VXFKDEDQ7KLVZLOOSDUWO\LQÁXHQFHZHHG
DQGSHVWPDQDJHPHQWDQGDOWHUVRPHQXWULHQWÁRZV
WKRXJK VRPH DGGLWLRQDO LQYHVWPHQW RU ODERXU FRVWV
PD\ DFFUXH HJ LQ VXJDUFDQH ZLWKRXW SUHKDUYHVW
LQYHQWRULHV WR VHFWRUV RWKHU WKDQ DJULFXOWXUH 7KXV EXUQLQJ 7KH ELRPDVV QRW EXUQHG LV D YDOXDEOH
LQFUHDVLQJHIÀFLHQF\DQGUHGXFLQJWKHDPRXQWRIURDG UHVRXUFH ZKLFK FDQ EH XVHG DV VRXUFH PDWHULDO IRU
DQGDLUWUDQVSRUWZRXOGFRQVLGHUDEO\UHGXFHHPLVVLRQV FRPSRVW RU PXOFK LH DV RUJDQLF IHUWLOL]HU RU IRU
IURPWKHIRRGV\VWHPIRUPRUHLQIRUPDWLRQRQVXSSO\ ELRHQHUJ\SURGXFWLRQ&OHDUO\WKHVHDOWHUQDWLYHXVHV
FKDLQUHODWHG *+* HPLVVLRQV VHH FRPPHQWV E\ QHHG WR EH VXSSRUWHG E\ LQIRUPDWLRQ DQG WUDLQLQJ
5XQGJUHQ.UDLQ/LQQHDQG*DHEOHULQWKLVFKDSWHU
5HJDUGLQJWUDQVSRUWLWLVZRUWKSRLQWLQJRXWWKDWWKHUH
LV VLJQLÀFDQW PLVUHSRUWLQJ RI HPLVVLRQV LQ QDWLRQDO
*+* LQYHQWRULHV DV LPSRUWV DUH QRW DFFRXQWHG IRU
DQGSHUKDSVDOVRE\LQYHVWPHQWVXSSRUW7KHUHPD\
EH VRPH RSWLRQV IRU REWDLQLQJ ÀQDQFLDO DVVLVWDQFH
IURP WKH FDUERQ PDUNHWV HJ UHQHZDEOH HQHUJ\ RU
FRPSRVWLQJ SURMHFWV XQGHU WKH &OHDQ 'HYHORSPHQW
1DWLRQDO ERXQGDULHV DUH WKH EDVLV IRU HPLVVLRQV
DFFRXQWLQJ DQG ´JUH\µ HPEHGGHG HPLVVLRQV LQ
LPSRUWHGSURGXFWLRQLQSXWVDQGFRQVXPSWLRQJRRGV
DUH DGGHG WR WKH EDODQFH RI WKH FRXQWULHV RI RULJLQ
7KLVFRQVLGHUDEO\GLVWRUWVQDWLRQDOHPLVVLRQVIURPWKH
IRRGV\VWHPVRIFRXQWULHVZKHUHLPSRUWVDQGH[SRUWV
SOD\DFUXFLDOUROH
:LWK WKHVH UHPDUNV ZH KRSH WR KDYH RIIHUHG VRPH
RSWLRQV DW WKH FRQFHSWXDO OHYHO $W WKH SUDFWLFDO
OHYHO WKHUH DUH VRPH GLIÀFXOWLHV EXW GLIIHUHQWLDWLQJ
WKUHHSKDVHVKHOSV3UDFWLFDOLPSOHPHQWDWLRQPHDQV
RIIHULQJ LQFHQWLYHV DQG HVWDEOLVKLQJ PRQLWRULQJ DQG
HQIRUFHPHQWPHFKDQLVPV
3URYLGLQJLQFHQWLYHVDQGHQIRUFHPHQWDUHDFKDOOHQJH
LQPDQ\UHVSHFWVEXWPRQLWRULQJLVUHODWLYHO\HDV\IRU
0HFKDQLVPV
6HFRQG UHGXFHG DQLPDO QXPEHUV DQG ODQGXVH
FKDQJH FDQ EH DGGUHVVHG RQ WKH SURGXFHUV· VLGH
WKURXJK RSWLPDO VWRFNLQJ UDWHV HIÀFLHQW JUDVVODQG
PDQDJHPHQW DQG SDVWRUDOLVP IRUHVW SURWHFWLRQ DQG
ODQGXVHOHJLVODWLRQ$QRSWLPDOFRPELQDWLRQRIFURS
IDUPLQJ DQG DQLPDO KXVEDQGU\ SURGXFHV WKH PRVW
HIÀFLHQW QXWULHQW F\FOHV +RZHYHU UHGXFLQJ DQLPDO
QXPEHUV LV XVXDOO\ QRW DQ LVVXH IRU VPDOOKROGHUV
LQ GHYHORSLQJ FRXQWULHV DQG DQLPDO KXVEDQGU\
LV HVVHQWLDO IRU WKHLU IRRG VHFXULW\ $FWLRQV RQ WKH
SURGXFHUV· VLGH ZRXOG LQFOXGH PDNLQJ LQSXWV PRUH
H[SHQVLYH DQG FRUUHVSRQGLQJO\ LQFUHDVLQJ RXWSXW
SULFHVZKLFKWRVRPHH[WHQWZRXOGUHGXFHGHPDQG
2QWKHGHPDQGVLGHLWLVSULPDULO\DQLVVXHRQDJOREDO
VFDOHDQGFRQFHUQVPDLQO\PRUHZHDOWK\FRQVXPHUV
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

ZKRVH LQFUHDVLQJ GHPDQG IRU PHDW DQG GDLU\ RI3DUÀWWDQG%DUWKHOLQWKLVFKDSWHU

SURGXFWVQHHGVWREHGLVFRXUDJHG2QHSRVVLEOHZD\
)RXUWK UHGXFHG QLWURJHQ LQSXWV FDQ EH DFKLHYHG
WRUHGXFHGHPDQGZRXOGEHE\LPSRVLQJD´PHDWWD[µ
WKURXJK UHJXODWLRQ IROORZLQJ WKH H[DPSOH RI WKH
WLHG WR WKH HPLVVLRQV IURP DQLPDOV ,W LV KRZHYHU
VXFFHVVIXO (8 1LWURJHQ 'LUHFWLYH 7D[LQJ LQSXWV LV
TXHVWLRQDEOH ZKHWKHU SULFH LQFUHDVHV FRXOG EH KLJK
DQRWKHU RSWLRQ D KHDY\ FDUERQ WD[ ZRXOG VHUYH D
HQRXJK WR DFKLHYH WKH QHFHVVDU\ UHGXFWLRQV WKHUH
VLPLODUJRDOGXHWRWKHXVHRIIRVVLOIXHOIRUV\QWKHWLF
DOVRQHHGVWREHDGLVFXVVLRQRIFRQVXPHUEHKDYLRXU
IHUWLOL]HU SURGXFWLRQ +RZHYHU QLWURJHQ UHJXODWLRQ
OLIHVW\OHVDQGTXDOLW\RIOLIHDQGKRZWKHVHDUHOLQNHG
VKRXOG JR IXUWKHU WKDQ RQO\ LQSXW UHGXFWLRQ &ORVHG
WRH[FHVVLYHFRQVXPSWLRQDQGPHDWFRQVXPSWLRQLQ
QXWULHQWF\FOHVDQGLQFUHDVHGXVHRIRUJDQLFIHUWLOL]HUV
SDUWLFXODU
VKRXOG EH WKH ÀQDO JRDO DV WKLV ZRXOG DOVR KDYH
7KH WKLUG LVVXH FORVHO\ UHODWHG WR WKH LVVXH RI IRRG KLJKO\EHQHÀFLDOHIIHFWVRQVRLOFDUERQOHYHOVDQGWKH
ZDVWDJH FRQFHUQV FRQVXPHU EHKDYLRXU DQG FRUUHVSRQGLQJPLWLJDWLRQVHHWKHFRPPHQWDU\RI/HX
SHUFHSWLRQVRITXDOLW\IUHVKQHVVDQGQHHGVZKLFKDUH ODWHULQWKLVFKDSWHU
GHFLVLYHLQWKLVUHVSHFW0DNLQJIRRGPRUHH[SHQVLYH 7KLV LV OLQNHG WR HIIRUWV IRU LQFUHDVLQJ VRLO FDUERQ
WKURXJK LQWHUQDOL]DWLRQ RI DOO H[WHUQDO FRVWV ZRXOG
KHOSEXWDVSHFWVRIMXVWLFHQHHGWREHNHSWLQPLQGDV
VLJQLÀFDQWSULFHLQFUHDVHVDIIHFWWKHIUHHGRPRIFKRLFH
RIOHVVZHDOWK\SHRSOHPXFKPRUHWKDQWKDWRIZHDOWK\
SHRSOH 7KXV DJDLQ VXVWDLQDEOH OLIHVW\OHV QHHG WR
EHFRPH D PDMRU FRQVLGHUDWLRQ LQ SROLF\ GLVFXVVLRQV
VHTXHVWUDWLRQ 7R DFKLHYH WKLV WKH QHFHVVDU\ VWHSV
LQFOXGH DEROLVKLQJ VXEVLGLHV IRU V\QWKHWLF IHUWLOL]HUV
DQG VXSSRUWLQJ RUJDQLF IHUWLOL]HUV UHGXFLQJ VRLO
GLVWXUEDQFHLQWLOODJHRSHUDWLRQVDQGSODQWLQJOHJXPH
OH\VLQFURSURWDWLRQV6XSSRUWVKRXOGFRQVLVWRIERWK
LQYHVWPHQW VXSSRUW DQG H[WHQVLRQ VHUYLFHV HJ IRU
IRU D GHWDLOHG GLVFXVVLRQ RI WKHVH DVSHFWV VHH WKH RSWLPDO FRPSRVWLQJ DQG FRPSRVW XVH $GGLWLRQDO
FRPPHQWDU\RI5HLVFKLQWKLVFKDSWHU
7KHRWKHUDVSHFWRIZDVWDJHLVVWRUDJHORVVHVLQPDQ\
GHYHORSLQJFRXQWULHV,QWKHVHFRXQWULHVLQYHVWPHQWLQ
VWRUDJHDQGSURFHVVLQJIDFLOLWLHVDQGLQIRUPDWLRQDQG
WUDLQLQJZRXOGJUHDWO\KHOS7KLVVKRXOGEHRISULPDU\
EHQHÀWV IURP KLJKHU VRLO FDUERQ OHYHOV LQFOXGH
LPSURYHGVRLOVWUXFWXUHVRLOIHUWLOLW\DQGVRLOOLIHZKLFK
FRQWULEXWH WR ZDWHU KROGLQJ DQG UHWHQWLRQ FDSDFLW\
ZLWKFRUUHVSRQGLQJSRVLWLYHHIIHFWVRQFOLPDWHFKDQJH
DGDSWDWLRQ LH LQFUHDVHG UHVLVWDQFH WR GURXJKW DQG
LPSRUWDQFHDVLWZRXOGUHGXFHWKHQHHGHGOHYHODQG
LQWHQVLW\ RI DFWLRQV RQ WKH RWKHU DVSHFWV PHQWLRQHG
KHUH (DFK XQLW ORVV DYRLGHG UHGXFHV SUHVVXUH RQ
SURGXFWLRQ 7KXV LW LV OHVV DERXW DGGLWLRQDO PRQH\
QHHGHGIRUWKHVHPHDVXUHVWKDQDERXWDVKLIWLQIRFXV
RQZKHUHWRFKDQQHOWKHPRQH\WKDWDOUHDG\ÁRZVLQWR
DJULFXOWXUHDQGWKHIRRGV\VWHPVHHWKHFRPPHQWDU\
H[WUHPHZHDWKHUHYHQWV
)LQDOO\HPEHGGHGHPLVVLRQVQHHGWREHPDGHYLVLEOH
1DWLRQDO*+*LQYHQWRULHVVKRXOGEHDPHQGHGWRWDNH
LQWRDFFRXQWLPSRUWVDQGH[SRUWVLQRUGHUWRREWDLQD
IXOODQGPRUHDFFXUDWHSLFWXUHRIQDWLRQDOHPLVVLRQV
DQG QRW RYHUORRN WKH UHVSRQVLELOLWLHV RI FRQVXPHUV
DEURDG
 75$'($1'(19,5210(175(9,(:

1//'06#4; U  *'16'06+#.1(756#+0#$.')4+%7.674'(14
.+/#6'*#0)'&#26#6+10
$0OOHUDQG81LJJOL
5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH)L%/6ZLW]HUODQG

$EVWUDFW
$GDSWDWLRQLQDJULFXOWXUHQHHGVWREHEDVHGRQIRXUSLOODUV
‡ ,QFUHDVLQJVRLOIHUWLOLW\WKLVFDQEHDFKLHYHGE\UHSODFLQJV\QWKHWLFIHUWLOL]HUVZLWKRUJDQLFIHUWLOL]HUV
DQGPRQRFXOWXUHVZLWKGLYHUVHFURSURWDWLRQV
‡ ,QFUHDVLQJELRGLYHUVLW\WKURXJKGLYHUVHPHDVXUHVVXFKDVFURSURWDWLRQVXVHRIORFDOYDULHWLHVFDWFK
FURSVKHGJHVDQGRWKHUODQGVFDSHHOHPHQWV7KLVDSSOLHVWRÀHOGIDUPDQGODQGVFDSHOHYHOV,Q
DGGLWLRQ WKH XVH RI VXVWDLQDEOH DQG HVSHFLDOO\ RUJDQLF FURS SURWHFWLRQ ZLOO IRVWHU ELRGLYHUVLW\ RI
LQVHFWVZHHGVHDUWKZRUPVDQGRWKHURUJDQLVPV
‡ 3URYLGLQJLQIRUPDWLRQDQGH[WHQVLRQVHUYLFHVWRVXSSRUWVXVWDLQDEOHDJULFXOWXUDOSUDFWLFHVDQGRUJDQLF
DJULFXOWXUHDJURHFRORJ\DQGDJURIRUHVWU\
‡ &UHDWLQJDOHYHOSOD\LQJÀHOGIRUVXVWDLQDEOHDJULFXOWXUHDWWKHJOREDOOHYHO7KLVLQYROYHVDEROLVKLQJ
GLVWRUWLQJVXEVLGLHVVXFKDVIRUV\QWKHWLFIHUWLOL]HUVDQGLQWHUQDOL]DWLRQRIH[WHUQDOFRVWV
2UJDQLFDJULFXOWXUHLVDQLGHDOVROXWLRQDVLWUHVSRQGVWRWKHÀUVWWKUHHSLOODUV,QDGGLWLRQJOREDOSROLFLHV
DQGWUDGHDQGFRPSHWLWLRQLVVXHVQHHGVHSDUDWHDWWHQWLRQ

$GDSWLQJDJULFXOWXUHWRFOLPDWHFKDQJHLVXQDYRLGDEOH ‡ &OLPDWHFKDQJHLPSDFWVZLOOYDU\FRQVLGHUDEO\E\
)RUDGDSWDWLRQRQWKHFRQFHSWVHHER[WRVXFFHHG
LWLVQHFHVVDU\IRUIDUPVWRWDNHFRQFUHWHDGDSWDWLRQ
PHDVXUHVEXWDOVRJHQHUDOORQJWHUPVRFLHWDODFWLRQV
DUH QHHGHG 2XU FRPPHQWV KHUH IRFXV PDLQO\ RQ
DGDSWDWLRQPHDVXUHVIRUIDUPV
$QDVSHFWRIWHQQHJOHFWHGLQFXUUHQWGLVFXVVLRQVRQ
DGDSWDWLRQLQDJULFXOWXUHGLVFXVVHGLQGHWDLOLQ0OOHU
UHJLRQVRPHUHJLRQVZLOOEHDIIHFWHGSRVLWLYHO\DQG
RWKHUVQHJDWLYHO\+RZHYHUFKDQJHVLQSURGXFWLRQ
FRQGLWLRQV ZLOO RFFXU HYHU\ZKHUH QHFHVVLWDWLQJ
DGDSWDWLRQ 5HJLRQV EHQHÀWLQJ IURP WKH SRVLWLYH
HIIHFWV RI FOLPDWH FKDQJH VKRXOG EH DEOH WR WDNH
IXOODGYDQWDJHRIWKHLUFKDQJHGFLUFXPVWDQFHV
‡ :DWHU ZLOO EHFRPH D NH\ LVVXH ,Q VRPH UHJLRQV
HWDOLVWKDWDGDSWDWLRQVWUDWHJLHVDOVRQHHGWR
RIIHU IDUPLQJ IDPLOLHV VROXWLRQV RXWVLGH DJULFXOWXUH LI
DJULFXOWXUDOSURGXFWLRQEHFRPHVLPSRVVLEOHIRUWKHP
)RUH[DPSOHGURXJKWUHVLVWDQWYDULHWLHVDQGLPSURYHG
HIÀFLHQF\RIZDWHUXVHZRXOGKHOSDGDSWDWLRQEXWLQ
VRPH FDVHV ZDWHU DYDLODELOLW\ PD\ EHFRPH WRR ORZ
WKHUHZLOOEHLQFUHDVHGZDWHUVFDUFLW\DQGGURXJKW
ZKLOHLQRWKHUVH[WUHPHSUHFLSLWDWLRQZDWHUORJJLQJ
DQGÁRRGLQJZLOOEHFRPHPRUHIUHTXHQW
‡ 3UHVVXUH IURP ZHHGV SHVWV DQG GLVHDVHV ZLOO
LQFUHDVH
‡ ,QFUHDVLQJ QXPEHUV RI H[WUHPH ZHDWKHU HYHQWV
WR FRQWLQXH ZLWK DJULFXOWXUH ,Q VXFK VLWXDWLRQV WKH
NH\TXHVWLRQLVZKHUHDJULFXOWXUDOSURGXFWLRQPD\EH
RSWLPDOO\ ORFDWHG RYHU WKH QH[W IHZ GHFDGHV ZKHUH
LW PD\ EH EHWWHU WR DEDQGRQ LW DQG ZKLFK OLYHOLKRRG
DOWHUQDWLYHVZLOOEHDYDLODEOH
7KHUH DUH ÀYH NH\ LPSDFWV DQG FKDUDFWHULVWLFV RI
FOLPDWH FKDQJH LQ DJULFXOWXUH HJ (DVWHUOLQJ HW DO
 0HHKO HW DO  5RVHQ]ZHLJ DQG 7XELHOOR
HJKHDWZDYHVDQGKHDY\SUHFLSLWDWLRQZLOOSRVH
DIXUWKHUFKDOOHQJHWRDJULFXOWXUDOSURGXFWLRQ
‡ 5LVNV LQ DJULFXOWXUDO SURGXFWLRQ ZLOO LQFUHDVH GXH
SDUWO\WRJUHDWHUFOLPDWHYDULDELOLW\
$GDSWDWLRQLQDJULFXOWXUHQHHGVWRUHGXFHH[SRVXUHWR
WKHVHLPSDFWVDVZHOODVVHQVLWLYLW\DQGYXOQHUDELOLW\WR
WKHP7KLVFDQEHDFKLHYHGE\DGRSWLQJVXVWDLQDEOH
DJULFXOWXUDOSURGXFWLRQV\VWHPVVXFKDVDJURHFRORJ\
 DJURIRUHVWU\ RU RUJDQLF DJULFXOWXUH 0LOHVWDG DQG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

%R[7KHFRQFHSWRIDGDSWDWLRQ

:HXVHWKHWKUHHFRQFHSWVRI´H[SRVXUHµ´VHQVLWLYLW\µDQG´YXOQHUDELOLW\µWRIUDPHDGDSWDWLRQLQDJULFXOWXUH´([SRVXUHµ
GHVFULEHVWKHOLNHOLKRRGWKDWDV\VWHPZLOOH[SHULHQFHFHUWDLQFRQGLWLRQVVXFKDVGURXJKWHJ6PLWDQG:DQGHO
´6HQVLWLYLW\LVWKHGHJUHHWRZKLFKDV\VWHPLVDIIHFWHGHLWKHUDGYHUVHO\RUEHQHÀFLDOO\E\FOLPDWHYDULDELOLW\RUFKDQJHµ
,3&&E´9XOQHUDELOLW\LVWKHGHJUHHWRZKLFKDV\VWHPLVVXVFHSWLEOHWRDQGXQDEOHWRFRSHZLWKDGYHUVHHIIHFWV
RIFOLPDWHFKDQJHµ,3&&E

'DUQKRIHU%RUURQ1LJJOL(O+DJH VKHOWHU DQG IDYRXUDEOH PLFURFOLPDWHV LPSURYLQJ

6FLDODEED DQG 0OOHU/LQGHQODXI  0OOHU HW DO PRLVWXUHPDQDJHPHQWDQGFDSDFLW\WRDGDSWWRKLJK
 WHPSHUDWXUHV
7KHUHDUHPDQ\UHDVRQVZK\VXVWDLQDEOHDJULFXOWXUHLV )LIWK WKH KLJK ELRGLYHUVLW\ RQ VXVWDLQDEO\ PDQDJHG
DV\VWHPZHOOVXLWHGWRDGDSWDWLRQ)LUVWWUDGLWLRQDOO\LW IDUPV HJ RUJDQLF DOVR UHGXFHV WKH ULVN RI WRWDO
XVHVORFDOO\DGDSWHGYDULHWLHVDQGFURSSLQJSUDFWLFHV SURGXFWLRQORVVHVGXHWRFOLPDWHFKDQJHDQGJHQHUDOO\
DQGLWFDQWKHUHIRUHEHWWHUDGMXVWWRORFDOYDULDELOLW\RI LQFUHDVHVWKHUHVLOLHQFHRIDJURHFRV\VWHPV$OWLHULDQG
FOLPDWHFKDQJHLPSDFWV 1LFKROOV  &DPSEHOO HW DO  7KURXJK WKH
FRPELQDWLRQRIFURSDQGOLYHVWRFNSURGXFWLRQDVZHOO
6HFRQGLWFDQUHVSRQGWRLQFUHDVHGZDWHUVWUHVVE\
DV D ODUJHU QXPEHU RI FURSV JURZQ WRWDO HFRQRPLF
PDLQWDLQLQJ DQG LQFUHDVLQJ VRLO RUJDQLF PDWWHU DV
IDLOXUH FDQ EH DYRLGHG $GGLWLRQDOO\ WKH HFRQRPLF
WKLV LQFUHDVHV WKH VRLO·V ZDWHU KROGLQJ DQG UHWHQWLRQ
ULVNVDUHORZHUIRURUJDQLFIDUPVDVWKH\XVHIHZHURII
FDSDFLW\8VLQJRUJDQLFIHUWLOL]HUVVXFKDVFRPSRVW
IDUP LQSXWV DQG FRUUHVSRQGLQJO\ LQFXU ORZHU XSIURQW
DQG DGRSWLQJ GLYHUVH FURS VHTXHQFHV LQ SDUWLFXODU
FRVWV 3ULFH SUHPLXPV IRU LQVWDQFH UHVXOWLQJ IURP
ZLWK OHJXPH OH\V DUH LPSRUWDQW PHDQV RI DFKLHYLQJ
FHUWLÀHGRUJDQLFSURGXFWLRQRIIHUIXUWKHUSRWHQWLDOIRU
WKLV 7KHVH DUH FRUH SUDFWLFHV RI VXVWDLQDEOH
LPSURYLQJ SURGXFHUV· HFRQRPLF VLWXDWLRQV $OO WKHVH
DJULFXOWXUHDQGRIRUJDQLFDJULFXOWXUHLQSDUWLFXODUZLWK
DVSHFWV FRPELQHG SURYLGH LQH[SHQVLYH EXW HIIHFWLYH
LWV VWURQJ IRFXV RQ VRLO IHUWLOLW\ VRLO TXDOLW\ DQG SODQW
ULVN PDQDJHPHQW VWUDWHJLHV LQ SDUWLFXODU LQVXUDQFH
KHDOWK 7KH KLJKHU ELRGLYHUVLW\ LQ RUJDQLF DJULFXOWXUH
DJDLQVWFURSIDLOXUH(O+DJH6FLDODEEDDQG+DWWDP
UHVXOWLQJ IURP DQ RSWLPDO FRPELQDWLRQ RI FURSV ZLWK
GLIIHUHQWQHHGVDOVRFRQWULEXWHVWRRSWLPDOZDWHUDQG
QXWULHQWXVH
7KLUG KLJK ELRGLYHUVLW\ DOVR KHOSV UHGXFH WKH
RFFXUUHQFHDQGVHYHULW\RIZHHGVDQGSHVWRXWEUHDNV
DQG SODQW DQG DQLPDO GLVHDVHV 6PLWK HW DO 
(\KRUQ
$JURHFRORJ\ DJURIRUHVWU\ DQG LQ SDUWLFXODU RUJDQLF
DJULFXOWXUH WKXV UHGXFH YXOQHUDELOLW\ WKURXJK ULVN
UHGXFWLRQ EDVHG RQ GLYHUVLÀFDWLRQ RI OLYHOLKRRG
VWUDWHJLHV FURSSLQJ SDWWHUQV DQG ORZHU LQSXW
FRVWV 7KH IRFXV RQ VRLO IHUWLOLW\ VRLO KHDOWK DQG KLJK
1LJJOL  ,Q DGGLWLRQ FRPSOH[ FURS URWDWLRQV
ELRGLYHUVLW\ UHGXFHV VHQVLWLYLW\ 7KLV LV RI SDUWLFXODU
FRQWULEXWHWRFRQWUROOLQJSHVWVPRUHHIIHFWLYHO\DVWKH\
UHOHYDQFH IRU RSWLPDO ZDWHU PDQDJHPHQW DQG IRU
EUHDNWKHLUOLIHF\FOHV,PSURYHGVRLOIHUWLOLW\DQGSODQW
RSWLPDO VWUDWHJLHV WR FRSH ZLWK SHVWV DQG GLVHDVHV
KHDOWK IXUWKHU UHGXFH YXOQHUDELOLW\ WR SUHVVXUHV IURP
5HGXFLQJH[SRVXUHLVWKHPRVWGLIÀFXOWDVWKLVPHDQV
LQFUHDVHG SHVWV ZHHGV DQG GLVHDVHV $OWLHUL 3RQWL
VKLIWLQJFURSSLQJORFDWLRQVRUDEDQGRQLQJDJULFXOWXUH
DQG1LFKROOV
DOWRJHWKHULQVRPHFLUFXPVWDQFHV
)RXUWK LPSURYHG VRLO TXDOLW\ DQG KLJKHU FRQWHQW RI
+RZ VXFK IXQGDPHQWDO FKDQJHV FDQ EH VXSSRUWHG
RUJDQLF PDWWHU LQ WKH VRLO DOVR UHGXFH YXOQHUDELOLW\
ZKHUH QHFHVVDU\ QHHGV IXUWKHU UHVHDUFK +RZHYHU
WR H[WUHPH HYHQWV VXFK DV GURXJKW ÁRRGLQJ DQG
WKHUHDUHVRPHUHDGLO\DYDLODEOHVWUDWHJLHVWKDWUHGXFH
ZDWHUORJJLQJ DQG HURVLRQ 6LHJULVW HW DO 
YXOQHUDELOLW\DQGVHQVLWLYLW\DVEULHÁ\GHVFULEHGEHORZ
)OLHVVEDFK HW DO  1LJJOL  (O+DJH
6FLDODEED DQG 0OOHU/LQGHQODXI  ,Q DGGLWLRQ
PXOFKLQJ DQG FRYHU FURSV DUH FRPPRQ SUDFWLFHV
LQ VXVWDLQDEOH DJULFXOWXUH EDUH IDOORZV DUH DYRLGHG
DQGHURVLRQLVFRUUHVSRQGLQJO\UHGXFHG/DQGVFDSH
HOHPHQWV VXFK DV KHGJHV RU DJURIRUHVWU\ SURYLGH
)LUVW VRLO IHUWLOLW\ QHHGV WR EH EXLOW XS DQG VRLO
GHJUDGDWLRQ KDOWHG )RU WKLV VXEVLGLHV IRU V\QWKHWLF
IHUWLOL]HUV VKRXOG EH DEDQGRQHG ZKHUH SRVVLEOH
ZLWKRXWFRPSURPLVLQJIRRGVHFXULW\:KHUHWKLVLVDQ
LVVXHFDUHIXOO\GHVLJQHGWUDQVIRUPDWLRQIURPV\QWKHWLF

WR DW OHDVW SDUWO\ RUJDQLF IHUWLOL]HUV UHGHVLJQHG FURS
URWDWLRQV ZLWK OHJXPHV DQG SODQWV ZLWK GLIIHUHQW
URRWLQJ GHSWKV DV ZHOO DV FORVHG QXWULHQW F\FOHV
VKRXOG EH LPSOHPHQWHG 7KH VLPXOWDQHRXV XVH RI
V\QWKHWLFDQGRUJDQLFIHUWLOL]HUVPD\QRWEHDGYLVDEOH
IRU FOLPDWH FKDQJH PLWLJDWLRQ GXH WR WKH UHVXOWLQJ
KLJKHUQLWURXVR[LGHHPLVVLRQV+RZHYHUSDUWLFXODUO\
LQDGHYHORSPHQWFRQWH[WDGDSWDWLRQLQDJULFXOWXUHLV
NH\DQGPLWLJDWLRQPXVWQHYHUFRPSURPLVHRQWKLV
75$'($1'(19,5210(175(9,(:
DUH FUXFLDO IRU VXFFHVVIXO LPSOHPHQWDWLRQ RI WKHVH
DGDSWDWLRQ VWUDWHJLHV 6XVWDLQDEOH DJULFXOWXUDO
SUDFWLFHV DQG RUJDQLF DJULFXOWXUH DV D KROLVWLF
DJULFXOWXUDO SURGXFWLRQ V\VWHP UHO\ RQ WKH SUHVHQFH
RIDFRQVLGHUDEOHERG\RINQRZOHGJH
)RXUWKWREHVXFFHVVIXODGDSWDWLRQVWUDWHJLHVQHHG
WR EH DFFRPSDQLHG E\ SROLF\ DQG WUDGH PHDVXUHV
0DVVLYH WUDGH GLVWRUWLRQV VXFK DV WKH FXUUHQW
VXEVLGLHVIRUFRQYHQWLRQDOSURGXFWLRQHJFRWWRQ LQ
6HFRQG ELRGLYHUVLW\ QHHGV WR EH HQKDQFHG /RFDO
EUHHGLQJ SURJUDPPHV VKRXOG EH HVWDEOLVKHG RU
UHYLWDOL]HG DQG VXSSRUWHG DQG IDUPHUV VKRXOG EH
DEOH WR SURGXFH WKHLU RZQ VHHGV 3UDFWLFHV VXFK DV
DJURIRUHVWU\ DQG ZHOOGHVLJQHG FURS URWDWLRQV QHHG
WREHVXSSRUWHG/DQGVFDSHHOHPHQWVDOVRFRQWULEXWH
WR DGDSWDWLRQ DV WKH\ LPSURYH WKH PLFURFOLPDWH
3D\PHQWVIRUHFRV\VWHPVHUYLFHVFRXOGEHRQHW\SH
RIÀQDQFLDOLQFHQWLYHPHFKDQLVPWRHQFRXUDJHWKHVH
SUDFWLFHV
7KLV OLQNV WR WKH WKLUG SRLQW LQIRUPDWLRQ DQG WUDLQLQJ
WKH 8QLWHG 6WDWHV QHHG WR EH DEROLVKHG 6LPLODUO\
WKHPDUNHWSRZHURIDJULEXVLQHVVFRUSRUDWLRQVLQWKH
VHHG PDUNHWV DQG LQ SODQW SURWHFWLRQ LV D KLQGUDQFH
WKDWQHHGVWREHUHPRYHG
)LQDOO\ DOO H[WHUQDO FRVWV RI DJULFXOWXUDO SURGXFWLRQ
VKRXOG EH UHÁHFWHG LQ WKH SULFH :LWKRXW WKLV
FRQYHQWLRQDO SURGXFWLRQ ZLOO DOZD\V KDYH DQ XQIDLU
FRPSHWLWLYH DGYDQWDJH GXH WR GLVWRUWHG SURGXFWLRQ
FRVWV WKDW GR QRW LQFOXGH DOO WKH HQYLURQPHQWDO DQG
VRFLDOFRVWVRISURGXFWLRQ,IWKRVHH[WHUQDOFRVWVZHUH
WR EH LQFOXGHG LQ FRQYHQWLRQDO SURGXFWLRQ LW ZRXOG
SURYHWREHPRUHFRVWO\WKDQVXVWDLQDEOHDJULFXOWXUH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
11&X.+/#6'*#0)'#0&'#.6*;1+.5U
*'
14)166'0+0-
*5$,1

$EVWUDFW
$JULFXOWXUH LV VWDUWLQJ WR JHW PRUH DWWHQWLRQ LQ LQWHUQDWLRQDO QHJRWLDWLRQV DURXQG FOLPDWH FKDQJH 7KH
FRQVHQVXV LV WKDW LW FRQWULEXWHV ² SHU FHQW RI DOO JOREDO DQWKURSRJHQLF JUHHQKRXVH JDV *+*
HPLVVLRQV PDNLQJ LW RQH RI WKH NH\ GULYHUV RI FOLPDWH FKDQJH %XW ORRNLQJ DW DJULFXOWXUH DORQH LV QRW
HQRXJKLWLVDOVRQHFHVVDU\WRORRNDWWKHODUJHUIRRGV\VWHP%H\RQGWKHHPLVVLRQVWKDWRFFXURQWKH
IDUPWRGD\·VGRPLQDQWLQGXVWULDOIRRGV\VWHPJHQHUDWHV*+*VE\WUDQVSRUWLQJIRRGDURXQGWKHZRUOGE\
GHIRUHVWDWLRQWRPDNHZD\IRUSODQWDWLRQVDQGE\JHQHUDWLQJZDVWH3XOOLQJWRJHWKHUWKHDYDLODEOHGDWDRQ
WKHVHVRXUFHVRIHPLVVLRQVUHYHDOVWKDWWKHJOREDOIRRGV\VWHPLVUHVSRQVLEOHIRUDURXQGKDOIRIDOOJOREDO
*+*V7KXVLWLVWKHIRRGV\VWHPDVDZKROHZKLFKLVDWWKHFHQWUHRIWKHSUREOHPRIFOLPDWHFKDQJH
,IPHDVXUHVDUHWDNHQWRUHVWUXFWXUHDJULFXOWXUHDQGWKHODUJHUIRRGV\VWHPEDVHGRQIRRGVRYHUHLJQW\
VPDOOVFDOHIDUPLQJDJURHFRORJ\DQGORFDOPDUNHWVJOREDO*+*HPLVVLRQVFRXOGEHFXWE\KDOIZLWKLQD
IHZGHFDGHV7KHUHLVQRQHHGIRUFDUERQPDUNHWVRUWHFKQRÀ[HV:KDWLVQHHGHGDUHWKHULJKWSROLFLHV
DQGSURJUDPPHVWKDWEULQJDERXWDVKLIWIURPWKHFXUUHQWLQGXVWULDOIRRGV\VWHPWRDVXVWDLQDEOHHTXLWDEOH
DQGWUXO\SURGXFWLYHRQH

$)RRGDQGFOLPDWHSLHFLQJWKH RI WKLV GHIRUHVWDWLRQ LV WKH H[SDQVLRQ RI LQGXVWULDO

SX]]OHWRJHWKHU SODQWDWLRQVIRUWKHSURGXFWLRQRIFRPPRGLWLHVVXFKDV
VR\VXJDUFDQHRLOSDOPPDL]HDQGUDSHVHHG6LQFH
$FFRUGLQJ WR PRVW VWXGLHV WKH FRQWULEXWLRQ RI  WKH DUHD SODQWHG ZLWK WKHVH ÀYH FRPPRGLW\
DJULFXOWXUDO HPLVVLRQV ² WKH HPLVVLRQV SURGXFHG RQ FURSVJUHZHQRUPRXVO\E\SHUFHQW*5$,1
WKHIDUP²LVEHWZHHQDQGSHUFHQWRIDOOJOREDO
HPLVVLRQV:KDWRIWHQJRHVXQVDLGKRZHYHULVWKDW 7KHVH HPLVVLRQV IURP DJULFXOWXUH DFFRXQW IRU RQO\ D
PRVW RI WKHVH HPLVVLRQV DUH JHQHUDWHG E\ LQGXVWULDO SRUWLRQ RI WKH IRRG V\VWHP·V RYHUDOO FRQWULEXWLRQ WR
IDUPLQJ SUDFWLFHV WKDW UHO\ RQ FKHPLFDO QLWURJHQ
IHUWLOL]HUVKHDY\PDFKLQHU\UXQRQSHWURODQGKLJKO\
FRQFHQWUDWHG LQGXVWULDO OLYHVWRFN RSHUDWLRQV WKDW
SXPSRXWPHWKDQH
7KH GDWD IRU DJULFXOWXUH·V FRQWULEXWLRQ DOVR RIWHQ
QHJOHFW WR WDNH LQWR DFFRXQW WKH FRQWULEXWLRQ RI
ODQGXVH FKDQJHV DQG GHIRUHVWDWLRQ ZKLFK DUH
UHVSRQVLEOHIRUQHDUO\DÀIWKRIJOREDO*+*HPLVVLRQV
FOLPDWHFKDQJH(TXDOO\LPSRUWDQWDUHWKHHPLVVLRQV
FDXVHG DOO DORQJ WKH FKDLQ IURP ZKHQ WKH SURGXFH
OHDYHVWKHIDUPXQWLOLWLVFRQVXPHG
)RRG SURGXFWLRQ LV WKH ZRUOG·V ODUJHVW HFRQRPLF
DFWLYLW\ LQYROYLQJ PRUH WUDQVDFWLRQV DQG HPSOR\LQJ
PRUHSHRSOHE\IDUWKDQDQ\RWKHUVHFWRU7RGD\IRRG
LVSUHSDUHGDQGGLVWULEXWHGXVLQJHQRUPRXVDPRXQWV
RI SURFHVVLQJ SDFNDJLQJ DQG WUDQVSRUWDWLRQ DOO RI
:5, XQGDWHG ,3&&  :RUOGZLGH DJULFXOWXUH ZKLFK JHQHUDWH *+* HPLVVLRQV DOWKRXJK GDWD RQ
LV SXVKLQJ LQWR VDYDQQDKV ZHWODQGV FHUUDGRV DQG VXFK HPLVVLRQV DUH KDUG WR ÀQG 6WXGLHV ORRNLQJ DW
IRUHVWVDQGLVSORXJKLQJKXJHDPRXQWVRIODQG7KH WKH (8 FRQFOXGH WKDW DERXW RQH TXDUWHU RI RYHUDOO
H[SDQVLRQRIWKHDJULFXOWXUDOIURQWLHULVWKHGRPLQDQW WUDQVSRUWDWLRQ LQYROYHV FRPPHUFLDO IRRG WUDQVSRUW
FRQWULEXWRUWRGHIRUHVWDWLRQDFFRXQWLQJIRU²SHU (XURVWDW  6FDWWHUHG ÀJXUHV RQ WUDQVSRUWDWLRQ
FHQW RI JOREDO GHIRUHVWDWLRQ )$2  .DQQLQHQ DYDLODEOH IRU RWKHU FRXQWULHV VXFK DV .HQ\D DQG
HW DO  7KLV PHDQV WKDW VRPH ² SHU FHQW =LPEDEZH LQGLFDWH WKDW WKH SHUFHQWDJH LV HYHQ
RI JOREDO *+* HPLVVLRQV DUH SURGXFHG E\ ODQGXVH KLJKHU LQ QRQLQGXVWULDOL]HG FRXQWULHV ZKHUH ´IRRG
FKDQJH DQG GHIRUHVWDWLRQ IRU DJULFXOWXUH $QG KHUH SURGXFWLRQ DQG GHOLYHU\ DFFRXQWV IRU  RI WKH
WRRWKHJOREDOIRRGV\VWHPDQGWKHLQGXVWULDOPRGHO WRWDO HQHUJ\ ² KXPDQ SOXV DQLPDO SOXV IXHO ² XVHGµ
RI DJULFXOWXUH DUH WKH FKLHI FXOSULWV 7KH PDLQ GULYHU .DUHNH]L DQG /D]DUXV   :LWK WUDQVSRUWDWLRQ
 75$'($1'(19,5210(175(9,(:

)LJXUH&RQWULEXWLRQRIWKHJOREDOIRRGSURGXFWLRQV\VWHPWRWRWDO*+*HPLVVLRQV

2 WKHUQRQIRRGUHODWHG : DVWH
HP LVVLRQV

3 URFHVVLQJWUDQVSRUW
SDFNLQJDQGUHWDLO

/DQGXVHFKDQJHDQG
GHIRUHVWDWLRQ

$ JULFXOWXUDOSURGXFWLRQ


6RXUFH(VWLPDWHVRI*5$,1

DFFRXQWLQJIRUSHUFHQWRIJOREDO*+*HPLVVLRQV SHU FHQW RI WKHP FRPH IURP PDWHULDOV RULJLQDWLQJ LQ
(8GDWDHQDEOHDQHVWLPDWH²DOEHLWDFRQVHUYDWLYHRQH
²IRUWKHFRQWULEXWLRQRIWKHWUDQVSRUWRIIRRGWR*+*
HPLVVLRQV RI DW OHDVW  SHU FHQW 6LPLODUO\ (8 GDWD
GHULYHG IURP VWXGLHV RQ SURFHVVLQJ DQG SDFNDJLQJ
RI IRRG ZLWKLQ WKH (8 VKRZ WKDW WKHVH DFWLYLWLHV
DFFRXQWIRU²SHUFHQWRI*+*HPLVVLRQV%ROOD
DJULFXOWXUH DQG LWV SURFHVVLQJ %RJQHU HW DO 
7KLVPHDQVWKDWWKHGHFRPSRVLWLRQRIRUJDQLFZDVWH
RULJLQDWLQJ LQ IRRG DQG DJULFXOWXUH LV UHVSRQVLEOH IRU
²SHUFHQWRIJOREDO*+*HPLVVLRQV
&RQVLGHULQJ DOO WKHVH IDFWRUV LW ZRXOG DSSHDU WKDW
WKH FXUUHQW JOREDO IRRG V\VWHP SURSHOOHG E\ DQ
DQG 3HQGRORYVND  ZKLOH UHIULJHUDWLRQ RI IRRG
LQFUHDVLQJO\ SRZHUIXO WUDQVQDWLRQDO IRRG LQGXVWU\ LV
DFFRXQWVIRU²SHUFHQWRIWRWDOHPLVVLRQV*DUQHWW UHVSRQVLEOHIRUDURXQGKDOIRIDOODQWKURSRJHQLF*+*
DQG-DFNVRQDQGIRRGUHWDLOIRUDQRWKHUSHU HPLVVLRQV²EHWZHHQDORZRISHUFHQWDQGDKLJK
FHQW7DVVRXHWDO9HQNDW%DNDV
%DVHGRQWKHGDWDIRUWKH(8DQGH[WUDSRODWLQJIURP
WKH VFDUFH ÀJXUHV WKDW H[LVW IRU RWKHU FRXQWULHV ZH
FDQHVWLPDWHFRQVHUYDWLYHO\WKDWDWOHDVW²SHUFHQW
RIHPLVVLRQVUHVXOWIURPIRRGWUDQVSRUW²SHUFHQW
IURP IRRG SURFHVVLQJ DQG SDFNDJLQJ ² SHU FHQW
IURPUHIULJHUDWLRQDQGDQRWKHU²SHUFHQWIURPUHWDLO
7KLVDPRXQWVWRDWRWDOFRQWULEXWLRQRI²SHUFHQW
RIJOREDOHPLVVLRQVIURPDOOWKHVHDFWLYLWLHV
1RW DOO RI ZKDW WKH IRRG V\VWHP SURGXFHV JHWV
FRQVXPHG 7KH LQGXVWULDO IRRG V\VWHP GLVFDUGV XS
WR KDOI RI DOO WKH IRRG WKDW LW SURGXFHV LQ LWV MRXUQH\
IURP IDUPV WR WUDGHUV WR IRRG SURFHVVRUV WR VWRUHV
DQGVXSHUPDUNHWV7KLVLVHQRXJKWRIHHGWKHZRUOG·V
RISHUFHQW
%7XUQLQJWKHIRRGV\VWHPXSVLGHGRZQ
&OHDUO\ ZH ZLOO QRW UHVROYH WKH FOLPDWH FULVLV LI WKH
JOREDO IRRG V\VWHP LV QRW XUJHQWO\ DQG GUDPDWLFDOO\
WUDQVIRUPHG7KHSODFHWRVWDUWLVZLWKWKHVRLO)RRG
SURGXFWLRQ EHJLQV DQG HQGV ZLWK VRLO ,W JURZV RXW
RIWKHVRLODQGHYHQWXDOO\JRHVEDFNLQWRLWWRHQDEOH
PRUH IRRG WR EH SURGXFHG 7KLV LV WKH YHU\ F\FOH RI
OLIH%XWLQUHFHQW\HDUVKXPDQVKDYHLJQRUHGWKLVYLWDO
F\FOHZHKDYHEHHQWDNLQJIURPWKHVRLOZLWKRXWJLYLQJ
EDFN
7KH LQGXVWULDOL]DWLRQ RI DJULFXOWXUH ZKLFK VWDUWHG LQ
KXQJU\ VL[ WLPHV RYHU 6WXDUW  0XFK RI WKLV
ZDVWHURWVRQJDUEDJHKHDSVDQGODQGÀOOVSURGXFLQJ
VXEVWDQWLDO  DPRXQWV RI *+*V 'LIIHUHQW VWXGLHV
LQGLFDWHWKDWEHWZHHQDQGSHUFHQWRIJOREDO
*+* HPLVVLRQV FRPH IURP ZDVWH DQG WKDW RYHU 
(XURSH DQG 1RUWK $PHULFD DQG ZDV ODWHU UHSOLFDWHG
LQWKH*UHHQ5HYROXWLRQWKDWWRRNSODFHLQRWKHUSDUWV
RIWKHZRUOGZDVEDVHGRQWKHDVVXPSWLRQWKDWVRLO
IHUWLOLW\ FRXOG EH PDLQWDLQHG DQG LQFUHDVHG WKURXJK
WKHXVHRIFKHPLFDOIHUWLOL]HUV/LWWOHDWWHQWLRQZDVSDLG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
WRWKHLPSRUWDQFHRIRUJDQLFPDWWHULQWKHVRLO
$ ZLGH UDQJH RI VFLHQWLÀF UHSRUWV LQGLFDWH WKDW
FXOWLYDWHG VRLOV KDYH ORVW  WR  SHU FHQW RI WKHLU
RUJDQLFPDWWHUGXULQJWKHWZHQWLHWKFHQWXU\ZKLOHVRLOV
XQGHUSDVWXUHVDQGSUDLULHVKDYHW\SLFDOO\ORVWXSWR
SHUFHQW:LWKRXWGRXEWWKHVHORVVHVKDYHSURYRNHG
DVHULRXVGHWHULRUDWLRQRIVRLOIHUWLOLW\DQGSURGXFWLYLW\
DV ZHOO DV D KLJKHU ULVN H[SRVXUH WR GURXJKWV DQG
ÁRRGV
7DNLQJ DV D EDVLV VRPH RI WKH PRVW FRQVHUYDWLYH
ÀJXUHVSURYLGHGE\WKHVFLHQWLÀFOLWHUDWXUHWKHJOREDO

FUHDWLQJ D YLUWXRXV F\FOH RI KLJKHU SURGXFWLYLW\ DQG
JUHDWHUDYDLODELOLW\RIRUJDQLFPDWWHU7KHFDSDFLW\RI
VRLOWRKROGZDWHUZRXOGLQFUHDVHZKLFKZRXOGPHDQ
WKDWH[FHVVLYHUDLQIDOOZRXOGOHDGWRIHZHUOHVVLQWHQVH
ÁRRGVDQGGURXJKWV6RLOHURVLRQZRXOGEHFRPHOHVV
RI D SUREOHP DQG VRLO DFLGLW\ DQG DONDOLQLW\ ZRXOG
IDOO SURJUHVVLYHO\ UHGXFLQJ RU HOLPLQDWLQJ WKH WR[LFLW\
WKDWKDVEHFRPHDPDMRUSUREOHPLQWURSLFDODQGDULG
VRLOV $GGLWLRQDOO\ LQFUHDVHG VRLO ELRORJLFDO DFWLYLW\
ZRXOG SURWHFW SODQWV DJDLQVW SHVWV DQG GLVHDVHV
(DFKRQHRIWKHVHHIIHFWVLPSOLHVKLJKHUSURGXFWLYLW\
DQGKHQFHPRUHRUJDQLFPDWWHUDYDLODEOHWRVRLOVWKXV
DFFXPXODWHG ORVV RI VRLO RUJDQLF PDWWHU 620 RYHU
PDNLQJ SRVVLEOH KLJKHU WDUJHWV IRU LQFRUSRUDWLRQ RI
WKH SDVW FHQWXU\ FDQ EH HVWLPDWHG WR EH EHWZHHQ
VRLO RUJDQLF PDWWHU RYHU WKH \HDUV 0RUH IRRG ZRXOG
DQGELOOLRQWRQV1RWDOOWKLVRUJDQLFPDWWHU
EHSURGXFHGLQWKHSURFHVVVHHDOVRWKHFRPPHQWDU\
KDVHQGHGXSLQWKHDLUDV&2VLJQLÀFDQWDPRXQWV
RI/HXRQPLWLJDWLQJFOLPDWHFKDQJHZLWKVRLORUJDQLF
KDYH EHHQ ZDVKHG DZD\ E\ HURVLRQ DQG GHSRVLWHG
DW WKH ERWWRP RI ULYHUV DQG RFHDQV +RZHYHU LW FDQ
EH HVWLPDWHG WKDW DW OHDVW  WR  ELOOLRQ WRQV RI
&2 KDYH EHHQ UHOHDVHG WR WKH DWPRVSKHUH GXH WR
WKHJOREDOGHVWUXFWLRQRIVRLORUJDQLFPDWWHU,QRWKHU
ZRUGVWRSHUFHQWRIWKHFXUUHQWH[FHVVRI&2
LQWKHDWPRVSKHUHUHVXOWVIURPWKHGHVWUXFWLRQRIVRLOV
DQGWKHLURUJDQLFPDWWHU
7KHUHLVVRPHJRRGQHZVKLGGHQLQWKHVHGHYDVWDWLQJ
ÀJXUHV WKH &2 WKDW KDV EHHQ HPLWWHG LQWR WKH
DWPRVSKHUH WKURXJK VRLO GHSOHWLRQ FDQ EH SXW EDFN
LQWRWKHVRLOWKURXJKDFKDQJHLQDJULFXOWXUDOSUDFWLFHV
7KHUHKDVWREHDVKLIWDZD\IURPSUDFWLFHVWKDWGHVWUR\
RUJDQLF PDWWHU WR RQHV WKDW EXLOG XS WKH RUJDQLF
PDWWHULQWKHVRLO:HNQRZWKLVFDQEHGRQH)DUPHUV
DURXQG WKH ZRUOG KDYH EHHQ HQJDJLQJ LQ WKHVH YHU\
PDWWHULQRUJDQLFSURGXFWLRQV\VWHPVLQWKLVFKDSWHU
7KLV VKLIW LQ DJULFXOWXUDO SUDFWLFHV ZRXOG UHTXLUH
EXLOGLQJ RQ WKH VNLOOV DQG H[SHULHQFH RI WKH ZRUOG·V
VPDOO IDUPHUV UDWKHU WKDQ XQGHUPLQLQJ DQG IRUFLQJ
WKHPRIIWKHLUODQGVDVLVQRZWKHFDVH$JOREDOVKLIW
WRZDUGVDQDJULFXOWXUHWKDWEXLOGVXSRUJDQLFPDWWHULQ
WKHVRLOZRXOGDOVRFRQWULEXWHWRUHPRYLQJVRPHRIWKH
RWKHUPDMRUVRXUFHVRI*+*VIURPWKHIRRGV\VWHP
7KHUH DUH WKUHH RWKHU PXWXDOO\ UHLQIRUFLQJ VKLIWV WKDW
QHHGWRWDNHSODFHLQWKHIRRGV\VWHPWRVXSSRUWLWV
RYHUDOOFRQWULEXWLRQWRFOLPDWHFKDQJH7KHÀUVWLVDVKLIW
WRORFDOPDUNHWVDQGVKRUWFLUFXLWVRIIRRGGLVWULEXWLRQ
ZKLFK ZRXOG UHGXFH WUDQVSRUWDWLRQ DQG WKH QHHG IRU
SDFNDJLQJSURFHVVLQJDQGUHIULJHUDWLRQ7KHVHFRQG
LV D UHLQWHJUDWLRQ RI FURS DQG DQLPDO SURGXFWLRQ
SUDFWLFHVIRUJHQHUDWLRQV5HVHDUFKE\*5$,1
KDVVKRZQWKDWLIWKHULJKWSROLFLHVDQGLQFHQWLYHVZHUH
LQSODFHZRUOGZLGHVRLORUJDQLFPDWWHUFRQWHQWVFRXOG
EH UHVWRUHG WR SUHLQGXVWULDO DJULFXOWXUDO OHYHOV ZLWKLQ
DSHULRGRI\HDUVZKLFKLVURXJKO\WKHVDPHWLPH
IUDPHWKDWLQGXVWULDODJULFXOWXUHWRRNWRUHGXFHLW7KH
FRQWLQXLQJ XVH RI WKHVH SUDFWLFHV ZRXOG DOORZ WKH
RIIVHWRI²SHUFHQWRIFXUUHQWJOREDODQQXDO*+*
HPLVVLRQV
7KH QHZ VFHQDULR ZRXOG UHTXLUH D UDGLFDO FKDQJH
LQ DSSURDFK IURP WKH FXUUHQW LQGXVWULDO DJULFXOWXUH
PRGHO,WZRXOGIRFXVRQWKHXVHRIWHFKQLTXHVVXFK
DV GLYHUVLÀHG FURSSLQJ V\VWHPV EHWWHU LQWHJUDWLRQ
EHWZHHQFURSDQGDQLPDOSURGXFWLRQDQGLQFUHDVHG
LQFRUSRUDWLRQ RI WUHHV DQG ZLOG YHJHWDWLRQ 6XFK DQ
LQFUHDVH LQ GLYHUVLW\ ZRXOG LQ WXUQ LQFUHDVH WKH
SURGXFWLRQSRWHQWLDODQGWKHLQFRUSRUDWLRQRIRUJDQLF
PDWWHU ZRXOG SURJUHVVLYHO\ LPSURYH VRLO IHUWLOLW\
ZKLFK ZRXOG DOVR FXW WUDQVSRUWDWLRQ DV ZHOO DV WKH
XVH RI FKHPLFDO IHUWLOL]HUV DQG WKH SURGXFWLRQ RI
PHWKDQH DQG QLWURXV R[LGH HPLVVLRQV JHQHUDWHG E\
LQWHQVLYH PHDW DQG GDLU\ RSHUDWLRQV $QG WKH WKLUG
LV WKH VWRSSLQJ RI ODQG FOHDULQJ DQG GHIRUHVWDWLRQ
ZKLFK ZLOO UHTXLUH JHQXLQH DJUDULDQ UHIRUP DQG D
UHYHUVDORIWKHH[SDQVLRQRIPRQRFXOWXUHSODQWDWLRQV
IRUWKHSURGXFWLRQRIDJURIXHOVDQGDQLPDOIHHG,IWKH
ZRUOGEHFRPHVVHULRXVDERXWXQGHUWDNLQJWKHVHIRXU
VKLIWV LW LV TXLWH SRVVLEOH IRU JOREDO *+* HPLVVLRQV
WR EH FXW E\ KDOI ZLWKLQ D IHZ GHFDGHV DQG LQ WKH
SURFHVVWKLVZRXOGJRDORQJZD\WRZDUGVUHVROYLQJ
WKHRWKHUFULVHVDIIHFWLQJWKHSODQHWVXFKDVSRYHUW\
DQGKXQJHU7KHUHDUHQRWHFKQLFDOKXUGOHVVWDQGLQJ
LQ WKH ZD\ WKH ZRUOG·V IDUPHUV DOUHDG\ SRVVHVV WKH
UHTXLVLWH NQRZOHGJH DQG VNLOOV DQG WKHVH FDQ EH
IXUWKHU GHYHORSHG 7KH RQO\ KXUGOHV DUH SROLWLFDO
ZKLFKLVZKHUHZHQHHGWRIRFXVRXUHIIRUWV
 75$'($1'(19,5210(175(9,(:

1//'06#4;U +6+)#6+0).+/#6'*#0)'9+6*1+.4)#0+%
#66'4+04)#0+%41&7%6+10;56'/5
$QGUH/HX
3UHVLGHQW,QWHUQDWLRQDO)HGHUDWLRQRI2UJDQLF$JULFXOWXUDO0RYHPHQWV,)2$0

$EVWUDFW
3DVW DQG SUHVHQW JOREDO HIIRUWV DLPHG DW UHGXFLQJ FDUERQ GLR[LGH HPLVVLRQV E\ LPSURYLQJ HQHUJ\XVH
HIÀFLHQF\DQGWKHDGRSWLRQRIUHQHZDEOHHQHUJ\VRXUFHVKDYHEHHQXQVXFFHVVIXO,WLVWKHUHIRUHFULWLFDOWR
ORRNDWDOOUHDGLO\DYDLODEOHRSWLRQVWKDWFRXOGVLJQLÀFDQWO\PLWLJDWHUXQDZD\FOLPDWHFKDQJH
6HTXHVWHULQJ&2LQWRWKHVRLOFRXOGEULQJDERXWDVLJQLÀFDQWUHGXFWLRQLQ*+*OHYHOV7KHUHLVVFLHQWLÀF
HYLGHQFH WKDW WKLV FDQ EH DFKLHYHG ZLWK FXUUHQW JRRG RUJDQLF DJULFXOWXUDO SUDFWLFHV DQG WKDW WKH EHVW
RUJDQLFIDUPLQJSUDFWLFHVFDQDFKLHYHHYHQKLJKHUOHYHOVRI&2VHTXHVWUDWLRQ%XLOGLQJXSVRLORUJDQLF
PDWWHULVRQHRIWKHOHDVWFRVWO\FOLPDWHFKDQJHPLWLJDWLRQPHWKRGV
+HOSLQJIDUPHUVDGRSWWKHVHPHWKRGVRQDZLGHVSUHDGEDVLVZRXOGPDNHDVLJQLÀFDQWGLIIHUHQFHWRWKH
OHYHOV RI &2 LQ WKH DWPRVSKHUH DQG LQ WKH ZRUOG·V RFHDQV ,PSRUWDQWO\ WKLV LV QRW EDVHG RQ XQWHVWHG
FRQFHSWVVXFKDVFDUERQFDSWXUHDQGVWRUDJHLWLVEDVHGRQFXUUHQWSUDFWLFHVWKDWFDQEHDGRSWHGE\
RWKHUODQGPDQDJHUV
7KLVFRXOGEHÀQDQFHGWKURXJKFDSDQGWUDGHV\VWHPVWKDWWD[HPLVVLRQV7KHVHWD[HVFRXOGWKHQEHXVHG
WRSD\IDUPHUVIRUWKHLUHFRV\VWHPVHUYLFHVWKDWÀ[WKHDWPRVSKHULF&2LQWKHVRLO6XFKDV\VWHPFRXOG
EHHLWKHUJRYHUQPHQWDGPLQLVWHUHGRUPDUNHWEDVHG

$,QWURGXFWLRQ
7KHZRUOGLVIDLOLQJWRUHGXFH*+*HPLVVLRQVGHVSLWH
FRPPLWPHQWV PDGH XQGHU WKH .\RWR 3URWRFRO
$FFRUGLQJ WR WKH ,QWHUQDWLRQDO (QHUJ\ $JHQF\ ,($
ORVWE\WKHSROOXWLQJLQGXVWULHVPRYLQJWRGHYHORSLQJ
FRXQWULHVDQGLPSRUWLQJ*+*LQWHQVLYHSURGXFWVIURP
WKHUH 7KH QRQ$QQH[  FRXQWULHV QRZ DFFRXQW IRU
WKH PDMRULW\ RI WKH ZRUOG·V *+* HPLVVLRQV FDXVHG
E\H[SDQGLQJLQGXVWULHVGHIRUHVWDWLRQWKHEXUQLQJRI
E HQHUJ\UHODWHG &2 HPLVVLRQV UHDFKHG D VDYDQQDKVDQGWKHORVVRIVRLOFDUERQWKURXJKSRRU
UHFRUGKLJKRIJLJDWRQQHV*WLQ²DSHU
FHQWMXPSIURPWKHSUHYLRXVUHFRUGLQ0RUHRYHU
WKH UHGXFWLRQ LQ HFRQRPLF DFWLYLW\ GXH WR WKH JOREDO
HFRQRPLF DQG ÀQDQFLDO FULVLV KDV QRW UHGXFHG WKH
JURZWKRI*+*HPLVVLRQV
:KLOHWKHÀUVWFRPPLWPHQWSHULRGRIWKH.\RWR3URWRFRO
DJULFXOWXUDOSUDFWLFHV
7KH FXUUHQW VWDWH RI WKH HFRQRPLHV RI GHYHORSHG
FRXQWULHVZLWKWKHLUPDVVLYHGHEWVPHDQVWKDWWKH\
GRQRWKDYHWKHIXQGVWRVKLIWVLJQLÀFDQWO\WRWKHXVH
RIUHQHZDEOHHQHUJLHVDQGLPSURYHHQHUJ\HIÀFLHQF\
LQ WKH VKRUW WHUP )XUWKHUPRUH WKH SROLWLFDO FOLPDWH
DQGLWV&OHDQ'HYHORSPHQW0HFKDQLVP&'0OHGWR
DVPDOOUHGXFWLRQLQHPLVVLRQVE\WKH$QQH[SDUWLHV
WRWKH3URWRFROWKH\IDLOHGWRUHGXFHWKHRYHUDOOUDWH
RI JOREDO *+* HPLVVLRQV 7KH &'0 KDV KDG YHU\
OLWWOHLPSDFWEHFDXVHLWVFRPSOH[UXOHVPDNHLWGLIÀFXOW
WR DFKLHYH HIIHFWLYH SURMHFW UHVXOWV $ PDMRU LVVXH
KDV FKDQJHG VLQFH WKH 8QLWHG 1DWLRQV &OLPDWH
&KDQJH &RQIHUHQFH LQ &RSHQKDJHQ LQ  ZLWK
YHU\IHZJRYHUQPHQWVZLOOLQJWRDFFHSWDVORZGRZQLQ
HFRQRPLFDFWLYLW\WRPHHWHPLVVLRQUHGXFWLRQWDUJHWV
RUWRLQWURGXFHPDMRU*+*UHGXFWLRQVWUDWHJLHV
7KH&DQFXQ&OLPDWH&KDQJH$JUHHPHQWVPHDQWKDW
KDV EHHQ *+* OHDNDJH RU UDWKHU RXWVRXUFLQJ IURP VHTXHVWUDWLRQ KDV WR EH SDUW RI DQ\ VWUDWHJ\ PL[ WR
WKH $QQH[  FRXQWULHV WR GHYHORSLQJ FRXQWULHV $Q\ VWDELOL]H WKH OHYHO RI DWPRVSKHULF &2 81)&&&
VPDOO JDLQV WKDW KDYH EHHQ DFKLHYHG E\ WKH IRUPHU  7KLV JDV DFFRXQWV IRU DURXQG  SHU FHQW RI
LQ UHGXFLQJ *+* HPLVVLRQV KDYH EHHQ PRUH WKDQ DQWKURSRJHQLF*+*V:02
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

%6RLOVDVDFDUERQVLQN RUJDQLF DQG FRQYHQWLRQDO V\VWHPV WKDW XVHG 

6RLOV DUH WKH JUHDWHVW FDUERQ VLQN DIWHU WKH RFHDQV
$FFRUGLQJ WR 3URIHVVRU 5DWWDQ /DO RI 2KLR 6WDWH
8QLYHUVLW\ RYHU  *W RI FDUERQ LV VWRUHG LQ
VRLOV ZRUOGZLGH 7KLV LV FRQVLGHUDEO\ PRUH WKDQ WKH
GDWDVHWV)$2E7KHVHVWXGLHVLQFOXGHGGDWD
IURPJUDVVODQGVDUDEOHFURSVDQGSHUPDQHQWFURSV
LQ VHYHUDO FRQWLQHQWV $ VLPSOH DQDO\VLV RI WKH GDWD
VKRZV WKDW RQ DYHUDJH WKH RUJDQLF V\VWHPV KDG
KLJKHU OHYHOV RI VRLO FDUERQ VHTXHVWUDWLRQ *DWWLQJHU
FRPELQHGWRWDORI*WLQWKHDWPRVSKHUHDQGWKH HWDO
*WLQELRPDVV/DO
$QGUHDV *DWWLQJHU DQG FROOHDJXHV REVHUYHG
7KHDPRXQWRI&2LQWKHRFHDQVLVDOUHDG\FDXVLQJ  ´,Q VRLOV XQGHU RUJDQLF PDQDJHPHQW WKH
D UDQJH RI SUREOHPV SDUWLFXODUO\ IRU VSHFLHV ZLWK
62& >VRLO RUJDQLF FDUERQ@ VWRFNV DYHUDJHG 
FDOFLXP H[RVNHOHWRQV VXFK DV FRUDO 6FLHQWLVWV DUH
WRQQHV&KDLQFRPSDULVRQWRWRQQHV&KD
FRQFHUQHG WKDW WKH LQFUHDVH LQ DFLGLW\ FDXVHG E\
XQGHU QRQRUJDQLF PDQDJHPHQWµ 7KLV PHDQV WKDW
KLJKHUOHYHOVRI&2LVGDPDJLQJWKHVHVSHFLHVDQG
WKHDYHUDJHGLIIHUHQFHEHWZHHQWKHWZRPDQDJHPHQW
WKUHDWHQV WKH IXWXUH RI PDULQH HFRV\VWHPV VXFK DV
V\VWHPVRUJDQLFDQGFRQYHQWLRQDOZDVWRQQHV
WKH *UHDW %DUULHU 5HHI 7KH ZRUOG·V RFHDQV OLNH WKH
RI FDUERQ 8VLQJ WKH DFFHSWHG IRUPXOD WKDW 62& [
DWPRVSKHUH FDQQRW DEVRUE DQ\ PRUH &2 ZLWKRXW
 &2WKLVPHDQVDQDYHUDJHRIPRUHWKDQ
FDXVLQJSRWHQWLDOO\VHULRXVHQYLURQPHQWDOGDPDJHWR
WRQQHVRI&2ZDVVHTXHVWHUHGLQWKHRUJDQLFV\VWHP
PDQ\ DTXDWLF HFRV\VWHPV +RHJK*XOGEHUJ HW DO
FRPSDUHG WR WKH FRQYHQWLRQDO V\VWHP 7KH DYHUDJH

GXUDWLRQ RI PDQDJHPHQW RI DOO LQFOXGHG VWXGLHV ZDV
'HVSLWH WKH IDFW WKDW VRLO LV WKH ODUJHVW UHSRVLWRU\
RI FDUERQ DIWHU WKH RFHDQV DQG KDV WKH SRWHQWLDO WR
VHTXHVWHU PRUH &2 WKDQ ELRPDVV QHLWKHU VRLO QRU
DJULFXOWXUHLVLQFRUSRUDWHGLQDQ\IRUPDODJUHHPHQWRI
WKH8QLWHG1DWLRQV)UDPHZRUN&RQYHQWLRQRQ&OLPDWH
\HDUV*DWWLQJHUHWDO7KLVPHDQVWKDWDQ
DYHUDJH RI  NJV RI &2 ZDV VHTXHVWHUHG SHU
KHFWDUHHYHU\\HDULQWKHRUJDQLFV\VWHPFRPSDUHGWR
WKHFRQYHQWLRQDOV\VWHP
$QRWKHUVWXG\E\WKH8QLWHG.LQJGRP6RLO$VVRFLDWLRQ
&KDQJH81)&&&RUWKH&'0
IRXQG WKDW DYHUDJH RUJDQLF IDUPLQJ SUDFWLFHV
7KLV QHHGV WR EH FKDQJHG EHFDXVH DFFRUGLQJ WR UHPRYHGDERXWNJRI&2SHUKHFWDUHSHU\HDU
WKH )RRG DQG $JULFXOWXUH 2UJDQL]DWLRQ RI WKH 8QLWHG
1DWLRQV ´$JULFXOWXUH QRW RQO\ VXIIHUV WKH LPSDFWV RI
FOLPDWHFKDQJHLWLVDOVRUHVSRQVLEOHIRUSHUFHQWRI
JOREDOJUHHQKRXVHJDVHPLVVLRQV%XWDJULFXOWXUHKDV
WKH SRWHQWLDO WR EH DQ LPSRUWDQW SDUW RI WKH VROXWLRQ
WKURXJK PLWLJDWLRQ ³ UHGXFLQJ DQGRU UHPRYLQJ ³
D VLJQLÀFDQW DPRXQW RI JOREDO HPLVVLRQV 6RPH 
SHUFHQWRIWKLVPLWLJDWLRQSRWHQWLDOFRXOGEHUHDOL]HGLQ
$]HH]7KLVLVFULWLFDOLQIRUPDWLRQDVLWFOHDUO\
VKRZVWKDWRUJDQLFIDUPHUVDUHFXUUHQWO\VHTXHVWHULQJ
VLJQLÀFDQWDPRXQWVRIFDUERQ0RVWLPSRUWDQWO\WKLVLV
QRWEDVHGRQXQWHVWHGFRQFHSWVOLNH´FDUERQFDSWXUH
DQGVWRUDJHµDQG´FOHDQFRDOµLWLVEDVHGRQFXUUHQW
SUDFWLFHVWKDWFDQEHDGRSWHGE\RWKHUIDUPHUV
'3RWHQWLDORIRUJDQLFSUDFWLFHV
GHYHORSLQJFRXQWULHVµ)$2E
%DVHGRQWKHVHÀJXUHVWKHZLGHVSUHDGDGRSWLRQRI
FXUUHQWRUJDQLFSUDFWLFHVJOREDOO\KDVWKHSRWHQWLDOWR
&6RLOFDUERQVHTXHVWUDWLRQWKURXJK VHTXHVWHU*WRI&2ZKLFKLVDURXQGSHUFHQW
DJULFXOWXUDOSUDFWLFHV RIWKHZRUOG·VFXUUHQW*+*HPLVVLRQV
7KHDELOLW\RIVRLOVWRDEVRUEHQRXJK&2LQRUGHUWR
*UDVVODQG KD
VWDELOL]H FXUUHQW DWPRVSKHULF &2 OHYHOV LV D FULWLFDO
$UDEOHFURSV KD
LVVXHDQGWKHUHLVDPDMRUGHEDWHRYHUZKHWKHUWKLV
3HUPDQHQWFURSV KD
FDQEHDFKLHYHGWKURXJKIDUPLQJSUDFWLFHV/DO
7RWDO KD
6DQGHUPDQHWDO
6RXUFH)$2
7ZRLQGHSHQGHQWJOREDOPHWDUHYLHZVKDYHORRNHGDW
2UJDQLF#WRQVSHUKHFWDUH*WRI&2
WKH DYHUDJH DPRXQW RI &2 VHTXHVWHUHG E\ RUJDQLF
$]HH]
IDUPLQJV\VWHPV
$QQXDO*+*HPLVVLRQV *WRIFDUERQGLR[LGH
$ SUHOLPLQDU\ VWXG\ E\ )L%/ SXEOLVKHG E\ )$2   HTXLYDOHQW&2H
FROODWHGSHHUUHYLHZHGFRPSDULVRQWULDOVEHWZHHQ   ,3&&F

(3RWHQWLDOH[LVWVIRUKLJKHUOHYHOVRI&2
VHTXHVWUDWLRQ
$OO GDWD VHWV WKDW XVH DYHUDJLQJ KDYH RXWO\LQJ GDWD
7KHVH DUH H[DPSOHV WKDW DUH VLJQLÀFDQWO\ KLJKHU RU
VLJQLÀFDQWO\ORZHUWKDQWKHDYHUDJH7KH\DUHDOZD\V
ZRUWK H[DPLQLQJ WR ÀQG RXW ZK\ 5HVHDUFK LQWR
WKHP ZLOO DOORZ DQ XQGHUVWDQGLQJ RI ZKLFK SUDFWLFHV
VLJQLÀFDQWO\LQFUHDVHVRLOFDUERQDQGZKLFKGHFUHDVH
RUGRQRWLQFUHDVHLW
7KHUH DUH VHYHUDO H[DPSOHV RI VLJQLÀFDQWO\ KLJKHU
OHYHOV RI FDUERQ VHTXHVWUDWLRQ WKDQ WKH DYHUDJHV
TXRWHG LQ WKH VWXGLHV DERYH 7KH 5RGDOH ,QVWLWXWH LQ
3HQQV\OYDQLD 8QLWHG 6WDWHV KDV EHHQ FRQGXFWLQJ
ORQJUXQQLQJFRPSDULVRQVRIRUJDQLFDQGFRQYHQWLRQDO
FURSSLQJ V\VWHPV IRU RYHU  \HDUV ZKLFK FRQÀUP
75$'($1'(19,5210(175(9,(:
7KXV WKHUH DUH VLJQLÀFDQW EHQHÀWV IURP DGGLQJ
FRPSRVW
)7KHSRWHQWLDOLQGHVHUWFOLPDWHV
6HNHPLVWKHROGHVWELRG\QDPLFIDUPLQ(J\SW,WZDV
IRXQGHGLQE\'U,EUDKLP$ERXOHLVK7KH/RXLV
%RON,QVWLWXWHDQG6RLO 0RUHWZRRUJDQLVDWLRQVEDVHG
LQWKH1HWKHUODQGVKDYHPDGHDVWXG\WRFDOFXODWHVRLO
FDUERQ VHTXHVWUDWLRQ DW 6HNHP 7KHLU UHVXOWV VKRZ
WKDW RQ DYHUDJH 6HNHP·V PDQDJHPHQW SUDFWLFHV
KDYH UHVXOWHG LQ  NJV RI FDUERQ EHLQJ VWRUHG LQ
WKHVRLOSHUKHFWDUHSHU\HDULQWKHÀHOGVWKDWZHUH
\HDUVROG8VLQJWKHDFFHSWHGIRUPXODRI62&[
&2WKLVPHDQVWKDW6HNHPKDVVHTXHVWHUHG
NJRI&2SHUKHFWDUHSHU\HDUIRU\HDUV/XVNHDQG
WKDW RUJDQLF PHWKRGV DUH HIIHFWLYH DW UHPRYLQJ &2 YDQGHU.DPS.RRSPDQVHWDO%DVHG
IURP WKH DWPRVSKHUH DQG À[LQJ LW DV RUJDQLF PDWWHU RQWKHVHÀJXUHVWKHZLGHVSUHDGDGRSWLRQRI6HNHP·V
LQWKHVRLO/D6DOOHDQG+HSSHUO\ZURWH´,Q SUDFWLFHV JOREDOO\ KDV WKH SRWHQWLDO WR VHTXHVWHU 
WKH)67>IDUPV\VWHPVWULDO@RUJDQLFSORWVFDUERQZDV *WRI&2ZKLFKLVDURXQGSHUFHQWRIWKHZRUOG·V
VHTXHVWHUHGLQWRWKHVRLODWWKHUDWHRIOEVDF\HDU FXUUHQW*+*HPLVVLRQVLQWRVRLOVKD[
LQDFURSURWDWLRQXWLOL]LQJUDZPDQXUHDQGDWDUDWHRI NJV JW&2\U
DERXWOEVDF\HDULQDURWDWLRQXVLQJOHJXPHFRYHU
FURSV *7KHSRWHQWLDOLQWURSLFDOFOLPDWHV
'XULQJWKHVUHVXOWVIURPWKH&RPSRVW8WLOL]DWLRQ 5HVHDUFKHUV DW WKH 5R\DO 7KDL 2UJDQLF 3URMHFW QHDU
7ULDO &87 DW 5RGDOH ,QVWLWXWH ² D \HDU VWXG\ &KLDQJ0DLLQ7KDLODQGKDYHPDQDJHGWRLQFUHDVHWKHLU
FRPSDULQJ WKH XVH RI FRPSRVWV PDQXUHV DQG VRLORUJDQLFPDWWHUOHYHOVIURPSHUFHQWWRSHUFHQW
V\QWKHWLF FKHPLFDO IHUWLOL]HU ² VKRZ WKDW WKH XVH RI
FRPSRVWHG PDQXUH ZLWK FURS URWDWLRQV LQ RUJDQLF
V\VWHPV FDQ UHVXOW LQ FDUERQ VHTXHVWUDWLRQ RI XS WR
 OEVDF\HDU %\ FRQWUDVW ÀHOGV XQGHU VWDQGDUG
WLOODJH UHO\LQJ RQ FKHPLFDO IHUWLOL]HUV ORVW DOPRVW 
SRXQGVRIFDUERQSHUDFUHSHU\HDUµ
RYHUDSHULRGRIHLJKW\HDUVSHUVRQDOFRPPXQLFDWLRQ
7KLV PHDQV WKDW  WRQV RI &2KD KDYH EHHQ
VHTXHVWHUHG WKURXJK WKLV SURMHFW ZKLFK HTXDWHV WR
 WRQV RI &2KD\U ,I WKLV ZDV DSSOLHG JOREDOO\ LW
ZRXOGVHTXHVWHU*W&2KD\U²PRUHWKDQGRXEOH
WKHZRUOG·VFXUUHQW*+*HPLVVLRQVKD
&RQYHUWLQJ WKHVH ÀJXUHV LQWR NLORJUDPV RI &2 [WRQVRI&2KD\U *W&2\U
VHTXHVWHUHG SHU KHFWDUH XVLQJ WKH DFFHSWHG
FRQYHUVLRQ UDWH RI  SRXQG SHU DFUH   +'HHSHUFDUERQV\VWHPV
NJKDDQGVRLORUJDQLFFDUERQ[ &2JLYHVWKH
7KHUH LV DQ HPHUJLQJ ERG\ RI VFLHQFH ZKLFK VKRZV
IROORZLQJUHVXOWV
WKDWWKHPRVWVWDEOHIUDFWLRQVRIVRLOFDUERQDUHVWRUHG
‡ 7KH)67OHJXPHEDVHGRUJDQLFSORWVVKRZHGWKDW
GHHSHULQWKHVRLOWKDQPRVWRIWKHFXUUHQWVRLOFDUERQ
FDUERQ ZDV VHTXHVWHUHG LQWR WKH VRLO DW WKH UDWH
PHDVXUHPHQWVXVHGRQIDUPV0RVWVRLOWHVWVWHQGWR
RI DERXW  OEVDF\HDU 7KLV LV HTXLYDOHQW WR D
ZRUNDWDGHSWKRIDURXQGWRFPDVWKLVLVWKH
VHTXHVWUDWLRQUDWHRINJRI&2KD\U
XVXDO URRW ]RQH IRU PDQ\ FURSV 5HVHDUFK LV ÀQGLQJ
‡ 7KH)67PDQXUHGRUJDQLFSORWVVKRZHGWKDWFDUERQ
WKDWDVLJQLÀFDQWDPRXQWRIFDUERQLVVWRUHGDWORZHU
ZDVVHTXHVWHUHGLQWRWKHVRLODWWKHUDWHRIOEV
GHSWKVDQGWKDWWKLVWHQGVWREHYHU\VWDEOH
DF\HDU7KLVLVHTXLYDOHQWWRDVHTXHVWUDWLRQUDWHRI
NJRI&2KD\U 5HVHDUFK E\ 5HWKHPH\HU DQG FROOHDJXHV XVLQJ
‡ 7KH &RPSRVW 8WLOL]DWLRQ 7ULDO VKRZHG WKDW FDUERQ UDGLRFDUERQWHFKQLTXHVWRDQDO\VHYDULRXVVRLOFDUERQ
ZDV VHTXHVWHUHG LQWR WKHVRLO DW WKHUDWH RI IUDFWLRQVLQGLFDWHGDSURJUHVVLYHHQULFKPHQWRIVWDEOH
OEVDF\HDU 7KLV LV HTXLYDOHQW WR D VHTXHVWUDWLRQ RUJDQLFFRPSRXQGVZLWKLQFUHDVLQJVRLOGHSWKWR
UDWHRINJRI&2KD\U FP5HWKHPH\HUHWDO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

5HVHDUFK E\ 3URIHVVRU 5DWWDQ /DO DQG FROOHDJXHV
IURP 2KLR 6WDWH 8QLYHUVLW\ FRPSDUHG FDUERQ OHYHOV
EHWZHHQ QRWLOO DQG FRQYHQWLRQDO WLOODJH ÀHOGV DQG
IRXQG WKDW LQ VRPH FDVHV FDUERQ VWRUDJH ZDV
JUHDWHU LQ FRQYHQWLRQDO WLOODJH ÀHOGV 7KH NH\ LV VRLO
GHSWK 7KH\ FRPSDUHG WKH FDUERQ VWRUDJH EHWZHHQ
QRWLOODQGSORXJKHGÀHOGVZLWKWKHSORXJKGHSWK²WKH
%HHUOLQJ´3ODQWVZLWKWKH&SKRWRV\QWKHWLF
SDWKZD\ GRPLQDWH WRGD\·V WURSLFDO VDYDQQDKV DQG
JUDVVODQGV DQG DFFRXQW IRU VRPH  RI JOREDO
WHUUHVWULDOFDUERQÀ[DWLRQ7KHLUVXFFHVVVWHPVIURPD
SK\VLRORJLFDO &2FRQFHQWUDWLQJ SXPS ZKLFK OHDGV
WRKLJKSKRWRV\QWKHWLFHIÀFLHQF\LQZDUPFOLPDWHVDQG
ORZDWPRVSKHULF&2FRQFHQWUDWLRQVµ
ÀUVWLQFKHVFPRIWKHVRLO²DQGIRXQGWKDWWKH
7KLV NQRZOHGJH LV QRZ EHLQJ DSSOLHG LQ LQQRYDWLYH
FDUERQVWRUDJHZDVJHQHUDOO\PXFKJUHDWHULQQRWLOO
ZD\VVXFKDVKROLVWLFVWRFNPDQDJHPHQWHYHUJUHHQ
ÀHOGVWKDQLQSORZHGÀHOGV:KHQWKH\H[DPLQHG
IDUPLQJ DJURIRUHVWU\ LQ SDVWXUHV DQG SDVWXUH
LQFKHV FP DQG GHHSHU WKH\ IRXQG PRUH FDUERQ
FURSSLQJ
VWRUHG LQ SORXJKHG ÀHOGV WKDQ LQ WKH QRWLOO RQHV
7KH UHVHDUFKHUV FRQFOXGHG WKDW IDUPHUV VKRXOG QRW
PHDVXUH VRLO FDUERQ EDVHG MXVW RQ VXUIDFH GHSWK -3DVWXUHFURSSLQJ
7KH\ UHFRPPHQGHG JRLQJ WR DV PXFK DV  IHHW  3DVWXUH FURSSLQJ ZRUNV RQ WKH SULQFLSOH WKDW
PHWUHEHORZWKHVRLOVXUIDFHWRJHWDPRUHDFFXUDWH DQQXDOV JURZ QDWXUDOO\ WKURXJK SHUHQQLDO SDVWXUHV
DVVHVVPHQW RI VRLO FDUERQ &KULVWRSKHU /DO DQG LQ WKHLU QRUPDO F\FOHV ,W LV QRW WKH SXUSRVH RI WKLV
0LVKUD SDSHU WR H[SODLQ WKH WHFKQLFDO GHWDLOV RI KRZ LW LV
$FFRUGLQJ WR *DWWLQJHU DQG FROOHDJXHV  EHLQJ VXFFHVVIXOO\ LPSOHPHQWHG LQ D ZLGH YDULHW\ RI
UHVHDUFKHUV ZRUNLQJ RQ ORQJWHUP FRPSDULVRQ WULDOV FOLPDWHV DQG VRLO W\SHV DURXQG WKH ZRUOG +RZHYHU
EHWZHHQ RUJDQLF DQG FRQYHQWLRQDO IDUPLQJ V\VWHPV D EULHI RYHUYLHZ KDV EHHQ LQFOXGHG LQ $QQH[  WR
LQ 6ZLW]HUODQG WKH '2. WULDOV IRXQG WKDW ZKHQ
URWDWLRQ SKDVHV LQFOXGHG WZR \HDUV RI GHHSURRWLQJ
JUDVVFORYHUOH\VSHUFHQWRIWKHWRWDO62&VWRFNV
ZHUH GHSRVLWHG EHWZHHQ ² FP VRLO GHSWKV ´,Q
PDQ\ SDUWV RI WKH ZRUOG RUJDQLF IDUPLQJ V\VWHPV
DUHUHO\LQJRQWKHVRLOIHUWLOLW\EXLOGXSRIGHHSURRWLQJ
JUDVVOHJXPH PL[WXUHV DQG RQ WKH LQFRUSRUDWLRQ RI
SODQW UHVLGXHV E\ GHHSGLJJLQJ HDUWKZRUPV PDNLQJ
LW TXLWH OLNHO\ WKDW WKH FXUUHQWO\ DYDLODEOH GDWD VHWV
KHOSXQGHUVWDQGWKHV\VWHP7KHFULWLFDOLVVXHIRUWKH
SXUSRVH RI WKLV SDSHU LV WR SUHVHQW WKH SUHOLPLQDU\
GDWDRQVRLOFDUERQVHTXHVWUDWLRQVRWKDWWKHSRWHQWLDO
RIWKLVV\VWHPFDQEHIXUWKHULQYHVWLJDWHG
5HVHDUFK E\ -RQHV DW :LQRQD WKH SURSHUW\ RI &ROLQ
DQG 1LFN 6HLV LQ 1HZ 6RXWK :DOHV $XVWUDOLD ZKR
XVH D FRPELQDWLRQ RI SDVWXUH FURSSLQJ DQG KROLVWLF
VWRFN PDQDJHPHQW VKRZV WKDW  WKD RI &2
ZDV VHTXHVWHUHG RYHU  \HDUV 7KH VHTXHVWUDWLRQ
XQGHUHVWLPDWHWKH62&VWRFNVLQRUJDQLFDOO\PDQDJHG UDWHIRUWKHODVWWZRRIWKH\HDUVDQG
VRLOV 7KLV LV SDUWLFXODUO\ VLJQLÀFDQW FRQVLGHULQJ WKDW ZDVWRQVRI&2KD\U-RQHV7KLVV\VWHP
LQ GHHSHU VRLO KRUL]RQV 62& VHHPV WR EH PRUH FDQEHDQGLVEHLQJVXFFHVVIXOO\XVHGLQERWKDUDEOH
VWDELOL]HGµ)OLHVVEDFKHWDO DQGSDVWXUHV\VWHPVLQFOXGLQJLQKRUWLFXOWXUH,IWKLV
ZDV DSSOLHG DURXQG WKH ZRUOG LW FRXOG SRWHQWLDOO\
,*UD]LQJV\VWHPV VHTXHVWHU*WRI&2\UKD;
WRQQHV *W
7KHPDMRULW\RIWKHZRUOG·VDJULFXOWXUDOODQGVSHU
FHQW DUH XVHG IRU JUD]LQJ )$2  7KHUH LV DQ
HPHUJLQJ ERG\ RI SXEOLVKHG HYLGHQFH ZKLFK VKRZV
WKDW SDVWXUHV DQG SHUPDQHQW JURXQG FRYHU VZDUGV
LQSHUHQQLDOKRUWLFXOWXUHEXLOGXSVRLORUJDQLFFDUERQ
IDVWHU WKDQ DQ\ RWKHU IDUPLQJ V\VWHP DQG ZLWK
FRUUHFWPDQDJHPHQWWKLVLVVWRUHGGHHSHULQWKHVRLO
7KLV LV VLJQLÀFDQWO\ PRUH WKDQ WKH ZRUOG·V *+*
HPLVVLRQV RI  *W DQG ZRXOG KHOS UHYHUVH FOLPDWH
FKDQJH 7KH LQFUHDVH LQ VRLO FDUERQ ZRXOG DOVR
VLJQLÀFDQWO\ LPSURYH WKH SURGXFWLRQ DQG DGDSWDWLRQ
FDSDFLWLHVRIJOREDOJUD]LQJV\VWHPV
)OLHVVEDFKHWDO6DQGHUPDQHWDO
2QH RI WKH VLJQLÀFDQW UHDVRQV IRU WKLV KDV EHHQ WKH
KLJKHU SURSRUWLRQ RI SODQWV WKDW XVH WKH & SDWKZD\
RISKRWRV\QWKHVLVDVWKLVPDNHVWKHPPRUHHIÀFLHQW
DWFROOHFWLQJ&2IURPWKHDWPRVSKHUHHVSHFLDOO\LQ
ZDUPHUDQGGULHUFOLPDWHV$FFRUGLQJWR2VERUQHDQG
.7KHXUJHQWQHHGIRUPRUHSHHU
UHYLHZHGUHVHDUFK
,W LV QRW WKH LQWHQWLRQ RI WKLV SDSHU WR XVH WKH DERYH
W\SHV RI JHQHULF H[HUFLVHV RI JOREDOO\ H[WUDSRODWLQJ
GDWD DV VFLHQWLÀF SURRI RI ZKDW FDQ EH DFKLHYHG E\
VFDOLQJ XS RUJDQLF V\VWHPV 7KHVH W\SHV RI YHU\
 75$'($1'(19,5210(175(9,(:

VLPSOHDQDO\VHVDUHXVHIXOIRUSURYLGLQJDFRQFHSWXDO DQGPDLQWDLQWKHODELOHIUDFWLRQVDVZHOODVWKHVWDEOH
LGHDRIWKHFRQVLGHUDEOHSRWHQWLDORIRUJDQLFIDUPLQJ IUDFWLRQVRYHUWKHWLPHSHULRGVUHTXLUHGE\WKH&'0
WR UHGXFH *+* HPLVVLRQV RQ D ODQGVFDSH VFDOH /DO
7KH FULWLFDO LVVXH KHUH LV WKDW XUJHQW SHHUUHYLHZHG
UHVHDUFK LV QHHGHG WR XQGHUVWDQG KRZ DQG ZK\
0$GDSWDWLRQ
DQG IRU WKH VFHSWLFV ² LI WKHVH V\VWHPV VHTXHVWHU
VLJQLÀFDQWOHYHOVRI&2DQGWKHQORRNDWKRZWRDSSO\
WKHÀQGLQJVIRUVFDOLQJXSRQDJOREDOOHYHOLQRUGHUWR
DFKLHYHDVLJQLÀFDQWOHYHORI*+*PLWLJDWLRQ
7KHSRWHQWLDORIWKHVHIDUPLQJPHWKRGVLVHQRUPRXV
FRQVLGHULQJ WKDW WKHVH GDWD DUH EDVHG RQ FXUUHQW
SUDFWLFHV
(YHQ LI WKH ZRUOG VWRSSHG SROOXWLQJ WKH SODQHW ZLWK
*+*VLWZRXOGWDNHPDQ\GHFDGHVWRUHYHUVHFOLPDWH
FKDQJH7KLVPHDQVWKDWIDUPHUVKDYHWRDGDSWWRWKH
LQFUHDVLQJ LQWHQVLW\ DQG IUHTXHQF\ RI DGYHUVH DQG
H[WUHPHZHDWKHUHYHQWVVXFKDVGURXJKWVDQGKHDY\
GDPDJLQJ UDLQIDOO ,QGHHG PDQ\ DUHDV RI WKH SODQHW
DUHDOUHDG\H[SHULHQFLQJWKLV$QGHUVRQ6WHHU
/3HUPDQHQFH
2QHRIWKHPDMRUGHEDWHVDURXQGVRLOFDUERQLVEDVHG
RQ KRZ LW FDQ PHHW WKH &'0 \HDU SHUPDQHQFH
UHTXLUHPHQWV
6RLO FDUERQ LV D FRPSOH[ PL[ RI IUDFWLRQV RI YDULRXV
FDUERQFRPSRXQGV7ZRRIWKHVHKXPXVDQGFKDUFRDO

1*UHDWHUUHVLOLHQFHLQDGYHUVH
FRQGLWLRQV
3XEOLVKHGVWXGLHVVKRZWKDWRUJDQLFIDUPLQJV\VWHPV
ZRXOG EH PRUH UHVLOLHQW WR WKH SUHGLFWHG ZHDWKHU
H[WUHPHV DQG FRXOG SURGXFH KLJKHU \LHOGV WKDQ
FKDUDUHYHU\VWDEOHUHVHDUFKVKRZVWKDWWKH\FDQ FRQYHQWLRQDO IDUPLQJ V\VWHPV LQ VXFK FRQGLWLRQV
ODVWIRUWKRXVDQGVRI\HDUVLQWKHVRLO2WKHUIUDFWLRQV 'ULQNZDWHU :DJRQHU DQG 6DUUDQWRQLR  :HOVK
DUH OHVV VWDEOH ODELOH DQG FDQ EH HDVLO\ YRODWLOL]HG 3LPHQWHOHWDOVHHDOVRWKHFRPPHQWRI
LQWR &2 6RLO FDUERQ WHQGV WR YRODWLOL]H LQWR &2 LQ 1HPHV LQ WKLV FKDSWHU )RU LQVWDQFH WKH :LVFRQVLQ
PRVWFRQYHQWLRQDOIDUPLQJV\VWHPV+RZHYHUFRUUHFW ,QWHJUDWHG&URSSLQJ6\VWHPV7ULDOVIRXQGWKDWRUJDQLF
PDQDJHPHQW V\VWHPV FDQ FRQWLQXRXVO\ LQFUHDVH \LHOGV ZHUH KLJKHU LQ GURXJKW \HDUV DQG WKH VDPH
ERWKWKHVWDEOHDQGODELOHIUDFWLRQVWKURXJKDQXPEHU DV FRQYHQWLRQDO LQ QRUPDO ZHDWKHU \HDUV 3RVQHU
RI DSSURDFKHV VHYHUDO RI ZKLFK DUH GLVFXVVHG ODWHU
LQWKLVSDSHU
7KHUHVHDUFKFRQGXFWHGE\-RQHVDW:LQRQDVKRZHG
WKDW WKH PDMRULW\ RI WKH QHZO\ LQFUHDVHG VRLO FDUERQ
ZDVLQWKHVWDEOHIUDFWLRQV6KHUHSRUWHGWKDWSHU
FHQWRIWKHQHZO\VHTXHVWHUHGFDUERQZDVLQWKHQRQ
%DOGRFNDQG+HGWFNH
6LPLODUO\ WKH 5RGDOH )67 VKRZHG WKDW WKH RUJDQLF
V\VWHPV SURGXFHG PRUH FRUQ WKDQ WKH FRQYHQWLRQDO
V\VWHP LQ GURXJKW \HDUV 7KH DYHUDJH FRUQ \LHOGV
GXULQJWKHGURXJKW\HDUVZHUH²SHUFHQWKLJKHU
LQWKHWZRRUJDQLFV\VWHPV7KH\LHOGVZHUHDQG
ODELOH KXPLF IUDFWLRQ RI WKH VRLO DQG WKLV UHQGHUHG
NJSHUKDLQWKHRUJDQLFDQLPDODQGWKHRUJDQLF
LW LQWR KLJKO\ VWDEOH ORQJ FKDLQ IRUPV +HU UHVHDUFK
OHJXPH V\VWHPV UHVSHFWLYHO\ FRPSDUHG ZLWK 
IRXQGWKDWWKHFDUERQOHYHOVLQWKHFPLQFUHPHQW
NJSHUKDLQWKHFRQYHQWLRQDOV\VWHP3LPHQWHOHWDO
ZHUHIURPWKHUHFHQWGHFRPSRVLWLRQRIRUJDQLFPDWWHU
7KHUHVHDUFKHUVDWWULEXWHGWKHKLJKHU\LHOGVLQ
DQGIRUPHGVKRUWFKDLQXQVWDEOHFDUERQ7KHFDUERQ
WKHGU\\HDUVWRWKHDELOLW\RIWKHVRLOVRQRUJDQLFIDUPV
EHORZFPZDVFRPSRVHGRIWKHKXPLFVRLOIUDFWLRQ
WR EHWWHU DEVRUE UDLQIDOO 7KLV LV GXH WR WKH KLJKHU
DQGZDVKLJKO\VWDEOH-RQHV-RQHV·VUHVHDUFK
OHYHOVRIRUJDQLFFDUERQLQWKRVHVRLOVZKLFKPDNHV
LVFRQVLVWHQWZLWKWKHÀQGLQJVRI&KULVWRSKHU/DODQG
WKHPPRUHIULDEOHDQGEHWWHUDEOHWRVWRUHDQGFDSWXUH
0LVKUDDQG5HWKHPH\HUHWDO
UDLQZDWHUZKLFKFDQWKHQEHXVHGIRUFURSV/D6DOOH
/RQJWHUP UHVHDUFK FRQGXFWHG IRU PRUH WKDQ 
\HDUV DW WKH 5RWKDPVWHG 5HVHDUFK 6WDWLRQ LQ WKH
8QLWHG.LQJGRPDQGWKH8QLYHUVLW\RI,OOLQRLV0RUURZ
3ORWV LQ WKH 8QLWHG 6WDWHV VKRZHG WKDW WKH WRWDO VRLO
FDUERQOHYHOVFRXOGVWHDGLO\LQFUHDVHDQGWKHQUHDFK
DQHZVWDEOHHTXLOLEULXPLQIDUPLQJV\VWHPVWKDWXVH
RUJDQLF PDWWHU LQSXWV 7KLV PHDQV WKDW JRRG VRLO
DQG+HSSHUO\
2,PSURYHGHIÀFLHQF\RIZDWHUXVH
5HVHDUFKDOVRVKRZVWKDWRUJDQLFV\VWHPVXVHZDWHU
PRUHHIÀFLHQWO\GXHWREHWWHUVRLOVWUXFWXUHDQGKLJKHU
OHYHOVRIKXPXVDQGRWKHURUJDQLFPDWWHUFRPSRXQGV
RUJDQLF PDWWHU PDQDJHPHQW V\VWHPV FDQ LQFUHDVH /RWWHU6HLGHODQG/LHEKDUW3LPHQWHOHWDO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

/RWWHUDQGFROOHDJXHVFROOHFWHGGDWDIRURYHU\HDUV \HDUV LQ 'HQPDUN &KULVWHQVHQ   RYHU 

GXULQJWKH5RGDOH)677KHLUUHVHDUFKVKRZHGWKDWWKH \HDUV LQ *HUPDQ\ .RUVFKHQV  0XOOHU  
RUJDQLFPDQXUHV\VWHPDQGRUJDQLFOHJXPHV\VWHP RYHU\HDUVDW5RWKDPVWHG8.-HQNLQVRQ
/(* WUHDWPHQWV LPSURYH WKH VRLOV· ZDWHUKROGLQJ DQGRYHU\HDUVLQ6ZHGHQ:LWWHUHWDO
FDSDFLW\LQÀOWUDWLRQUDWHDQGZDWHUFDSWXUHHIÀFLHQF\ 7KH GDWD IURP 0RUURZ SORWV LQ ,OOLQRLV LQGLFDWHG WKDW
7KH /(* PDL]H VRLOV DYHUDJHG D  SHU FHQW KLJKHU PDQXUHG SORWV FRQWDLQHG 0JKDï PRUH 62&
ZDWHUFRQWHQWWKDQFRQYHQWLRQDOV\VWHP&19VRLOVDW WKDQ XQPDQXUHG FRQWURO $QGHUVRQ HW DO  ,Q
WKHVDPHFURSVWDJHDQGSHUFHQWKLJKHUWKDQ&19 +XQJDU\$UHQGV &DVWKREVHUYHGDQLQFUHDVH
VRLOV LQ VR\EHDQ SORWV /RWWHU 6HLGHO DQG /LHEKDUW LQ62&FRQFHQWUDWLRQE\²E\PDQXULQJ6PLWK
 HW DO  HVWLPDWHG WKDW DSSOLFDWLRQ RI PDQXUH DW
7KHPRUHSRURXVVWUXFWXUHRIRUJDQLFDOO\WUHDWHGVRLO WKH UDWH RI 0JKDï WR FURSODQG LQ (XURSH ZRXOG
DOORZVUDLQZDWHUWRTXLFNO\SHQHWUDWHWKHVRLOUHVXOWLQJ LQFUHDVH WKH 62& SRRO E\  RYHU  \HDUV ,Q
LQ OHVV ZDWHU ORVV IURP UXQRII DQG KLJKHU OHYHOV RI
ZDWHU FDSWXUH 7KLV ZDV SDUWLFXODUO\ HYLGHQW GXULQJ
WKH WZR GD\V RI WRUUHQWLDO GRZQSRXUV IURP KXUULFDQH
)OR\GLQ6HSWHPEHUZKHQWKHRUJDQLFV\VWHPV
FDSWXUHGDURXQGGRXEOHWKHDPRXQWRIZDWHUDVWKH
FRQYHQWLRQDO V\VWHPV /RWWHU 6HLGHO DQG /LHEKDUW
1RUZD\ 8KOHQ  DQG 8KOHQ  7YHLWQHV 
UHSRUWHGWKDWPDQXUHDSSOLFDWLRQZRXOGLQFUHDVH62&
VHTXHVWUDWLRQDWWKHUDWHRI².JKDï\UïRYHU
²\HDUSHULRGµ
5&RPSRVWV·PXOWLSOHEHQHÀWV

3&ULWLFDOGLIIHUHQFHVEHWZHHQRUJDQLF
DQGFRQYHQWLRQDOIDUPLQJ
2UJDQLF IDUPLQJ KDV D UDQJH RI SUDFWLFHV WKDW DUH
UHJDUGHG DV HVVHQWLDO IRU DOORZLQJ WKH V\VWHP WR EH
&RPSRVWLQJ ZDV SLRQHHUHG E\ WKH RUJDQLF IDUPLQJ
PRYHPHQW WKURXJK WKH ZRUN RI 6LU $OEHUW +RZDUG LQ
WKH V DQG V DQG WKHQ VWURQJO\ SURPRWHG
E\ -HURPH 5RGDOH LQ KLV QXPHURXV SXEOLFDWLRQV
HVSHFLDOO\ LQ 2UJDQLF )DUPLQJ DQG *DUGHQLQJ WKDW
KDYHEHHQZLGHO\VWXGLHGDURXQGWKHZRUOGIRUPRUH
FHUWLÀHGDVRUJDQLF0RVWRIWKHVHSUDFWLFHVDUHHDVLO\ LQIRUPDWLRQVHHZZZURGDOHLQVWLWXWHRUJ
WUDQVIHUUDEOH WR RWKHU IDUPLQJ V\VWHPV DQG PDQ\ RI 7KHUHLVDQLQFUHDVLQJERG\RIHYLGHQFHWKDWFRPSRVWV
WKHP DUH QRZ EHLQJ DGRSWHG XQGHU WKH HPHUJLQJ DUHVXSHULRUWRUDZPDQXUHVLQLQFUHDVLQJWKHOHYHORI
WHUP´FOLPDWHVPDUWµDJULFXOWXUH)$2F
47KHDGGLWLRQRIRUJDQLFPDWWHU
7KH WHUP RUJDQLF IDUPLQJ LV GHULYHG IURP WKH IDFW
WKDWRUJDQLFIDUPLQJV\VWHPVLPSURYHVRLOKHDOWKDQG
VRLORUJDQLFPDWWHU7KH5RGDOH,QVWLWXWHVWXGLHVKDYH
GHPRQVWUDWHGWKDWJRRGRUJDQLFSUDFWLFHVXVLQJUDZ
PDQXUHV DQG FRYHU FURSV FDQ VHTXHVWHU  NJ
RI &2KD\U DQG WKDW ZKHQ FRPSRVW LV DGGHG WKLV
LQFUHDVHV WR  NJ RI &2KD\U /D6DOOH DQG
+HSSHUO\
IHUWLOLW\WKURXJKWKHUHF\FOLQJRIRUJDQLFPDWWHU7KHUH
LV D YHU\ VWURQJ ERG\ RI HYLGHQFH ZKLFK VKRZV WKDW
WKH DGGLWLRQ RI RUJDQLF PDWWHU LPSURYHV VRLO RUJDQLF 6$YRLGHGHPLVVLRQV
FDUERQ 62& OHYHOV DQG WKLV LV PRUH HIIHFWLYH WKDQ &XUUHQWO\ PRVW RI WKH IRRG DQG RWKHU SURGXFWV IURP
V\QWKHWLF ZDWHU VROXEOH IHUWLOL]HUV /DO  IDUPV DUH H[SRUWHG IURP WKH IDUP DQG VHQW WR FLWLHV
SURYLGHVDQH[WHQVLYHOLVWIURPWKHVFLHQWLÀFOLWHUDWXUH 7KH GLVSRVDO RI WKH RUJDQLF UHVLGXHV LQ ODQGÀOOV LV
WKDWGHPRQVWUDWHVWKLV UHVSRQVLEOH IRU PHWKDQH HPLVVLRQV 0HWKDQH LV D
´$SSOLFDWLRQ RI PDQXUHV DQG RWKHU RUJDQLF VLJQLÀFDQW*+*&RUUHFWFRPSRVWLQJDQGELRGLJHVWHU
DPHQGPHQWV LV DQRWKHU LPSRUWDQW VWUDWHJ\ RI 62& PHWKRGV DUH QRZ UHFRJQL]HG DV HIIHFWLYH ZD\V RI
VHTXHVWUDWLRQ 6HYHUDO ORQJWHUP H[SHULPHQWV LQ DYRLGLQJVXFKHPLVVLRQVIRUPRUHLQIRUPDWLRQRQWKH
(XURSHKDYHVKRZQWKDWWKHUDWHRI62&VHTXHVWUDWLRQ VFLHQFHRIVRLOPHWKDQHDQGVRLORUJDQLFPDWWHUVHH
LV JUHDWHU ZLWK DSSOLFDWLRQ RI RUJDQLF PDQXUHV WKDQ $QQH[5HVHDUFKE\)L%/VKRZVWKDWPRUH*+*V
ZLWK FKHPLFDO IHUWLOL]HUV -HQNLQVRQ  :LWWHU HW FDQEHDYRLGHGE\WKHVHPHWKRGVWKDQE\PRVWRWKHU
DO  &KULVWHQVHQ  .RUVFKHQV  0XOOHU IDUPLQJSUDFWLFHV*DWWLQJHUHWDO)RUH[DPSOH
 6PLWK HW DO  ,QFUHDVH LQ WKH 62& SRRO WKH FRPSRVW SURMHFW DW 6HNHP LQ (J\SW KDV RIIVHW
LQ WKH ² FP GHSWK E\ ORQJWHUP XVH RI PDQXUH PHWKDQHHPLVVLRQVVLQFH-DQXDU\%\XVLQJWKH
FRPSDUHG WR FKHPLFDO IHUWLOL]HUV ZDV  RYHU  FRUUHFW FRPSRVWLQJ PHWKRGV IRU RUJDQLF PDWHULDOV
 75$'($1'(19,5210(175(9,(:

WKHSURMHFWZDVDEOHWRUHGXFHPHWKDQHHPLVVLRQVE\ LQ FURSSLQJ V\VWHPV (YHU\ FHUWLÀHG RUJDQLF IDUP

WRQQHVRI&2H+HOP\$ERXOHLVKSHUVRQDO QHHGV WR KDYH D PDQDJHPHQW SODQ WKDW RXWOLQHV LWV
FRPPXQLFDWLRQ
&RPSRVWLQJ WKH RUJDQLF ZDVWHV LQ FLWLHV DQG
WUDQVSRUWLQJWKHPWRWKHIDUPEULQJVPXOWLSOHEHQHÀWV
LQFORVLQJWKHQXWULHQWF\FOHE\UHWXUQLQJWKHQXWULHQWV
WKDW DUH H[SRUWHG IURP WKH IDUP DYRLGLQJ PHWKDQH
HPLVVLRQV DQG LQFUHDVLQJ WKH UDWH RI VRLO FDUERQ
FURS DQG VWRFN URWDWLRQ V\VWHPV /DO 
FLWHVWKHVFLHQWLÀFOLWHUDWXUHWRLQGLFDWHWKDWWKLVGRHV
PDNHDGLIIHUHQFH
´6RLOV XQGHU GLYHUVH FURSSLQJ V\VWHPV JHQHUDOO\ KDYH
D KLJKHU 62& SRRO WKDQ WKRVH XQGHU PRQRFXOWXUH
'LFN HW DO  %X\DQRVNL HW DO  'ULQNZDWHU
VHTXHVWUDWLRQ HWDO%X\DQRVNL :DJQHU(OLPLQDWLRQRI
VXPPHU IDOORZ LV DQRWKHU RSWLRQ IRU PLQLPL]LQJ ORVVHV
76\QWKHWLFQLWURJHQIHUWLOL]HUVGHJUDGH RI WKH 62& SRRO 'HOJDGR HW DO  5DVPXVVHQ HW
VRLOFDUERQ DO  *URZLQJ D ZLQWHU FRYHU FURS HQKDQFHV VRLO
TXDOLW\ WKURXJK 62& VHTXHVWUDWLRQ ,Q WKH 8. )XOOHQ
2QH RI WKH PDLQ UHDVRQV IRU WKH GLIIHUHQFHV LQ VRLO $XHUVZDOGUHSRUWHGWKDWJUDVVOH\VVHWDVLGH
FDUERQEHWZHHQRUJDQLFDQGFRQYHQWLRQDOV\VWHPVLV LQFUHDVHG 62& FRQFHQWUDWLRQ E\  SHU \HDU IRU
WKDWDVUHVHDUFKVKRZVWKHUHLVDGLUHFWOLQNEHWZHHQ
WKHDSSOLFDWLRQRIV\QWKHWLFQLWURJHQRXVIHUWLOL]HUVDQG
DGHFOLQHLQVRLOFDUERQ
6FLHQWLVWV DW WKH 8QLYHUVLW\ RI ,OOLQRLV DQDO\VHG WKH
UHVXOWVRID\HDUDJULFXOWXUDOWULDODQGIRXQGWKDWWKH
DSSOLFDWLRQRIV\QWKHWLFQLWURJHQIHUWLOL]HUKDGUHVXOWHG
\HDUV,Q$XVWUDOLD*UDFH 2DGHVREVHUYHG
WKDW WKH 62& SRRO LQ WKH ² FP OD\HU LQFUHDVHG
OLQHDUO\ZLWKLQFUHDVHLQIUHTXHQF\RISDVWXUHLQWKHFURS
URWDWLRQF\FOH,QFRPSDULVRQZLWKFRQWLQXRXVFURSSLQJ
LQFRUSRUDWLRQ RI FRYHU FURSV LQ WKH URWDWLRQ F\FOH
HQKDQFHG 62& FRQFHQWUDWLRQ LQ WKH VXUIDFH OD\HU E\
LQDOOWKHFDUERQUHVLGXHVIURPWKHFURSGLVDSSHDULQJ LQ6ZHGHQ1LOVVRQLQ7KH1HWKHUODQGV
DV ZHOO DV DQ DYHUDJH ORVV RI DURXQG  NJ RI 9DQ'LMNDQGLQWKH8.-RKQVWRQRYHU
VRLOFDUERQSHUKHFWDUH7KLVLVDURXQGNJRI >D@²\HDUSHULRG6LPLODUUHVXOWVZHUHUHSRUWHGE\
&2SHUKHFWDUHRYHUDQGDERYHWKHPDQ\WKRXVDQGV /DOHWDOIRUWKH86FURSODQGµ
RI NLORJUDPV RI FURS UHVLGXH WKDW LV FRQYHUWHG LQWR
&2 HYHU\ \HDU .KDQ HW DO  0XOYDQH\ .KDQ
9(URVLRQDQGVRLOORVV
DQG(OOVZRUWK7KHUHVHDUFKHUVIRXQGWKDWWKH
KLJKHU WKH DSSOLFDWLRQ RI V\QWKHWLF QLWURJHQ IHUWLOL]HU 7KHKLJKHVWSHUFHQWDJHRIVRLOFDUERQLVFRQWDLQHGLQ
WKHJUHDWHUZDVWKHDPRXQWRIVRLOFDUERQORVWDV&2 WKH ÀUVW  FP RI VRLO +DQGUHN  +DQGUHN DQG
7KLVLVRQHRIWKHPDMRUUHDVRQVZK\WKHUHLVDGHFOLQH %ODFN6WHYHQVRQ6RLOORVVDQGHURVLRQ
LQVRLOFDUERQLQFRQYHQWLRQDODJULFXOWXUDOV\VWHPVDQG IURP IDUPLQJ V\VWHPV LV D OHDGLQJ FRQFHUQ DURXQG
LWVLQFUHDVHLQRUJDQLFV\VWHPV WKHZRUOG0LOOHQQLXP(FRV\VWHP$VVHVVPHQW
,$$67' D ,W LV D PDMRU FDXVH RI ORVV RI VRLO
2QWKHRWKHUKDQGWKHUHLVDJRRGERG\RIUHVHDUFK
FDUERQVLQFHWKHKLJKHVWOHYHOVRIVRLORUJDQLFPDWWHU
ZKLFK VKRZV WKDW XVLQJ OHJXPHV DQG FDUERQEDVHG
DUHLQWKHWRSOD\HURIWKHVRLO
VRXUFHVVXFKDVFRPSRVWLQFUHDVHVWKHOHYHOVRIVRLO
RUJDQLFFDUERQ/D6DOOHDQG+HSSHUO\
5HVHDUFKHUV IURP 1RUWK $PHULFD DQG (XURSH KDYH
DOVR VKRZQ WKDW RUJDQLF V\VWHPV DUH PRUH HIÀFLHQW
LQXVLQJQLWURJHQWKDQFRQYHQWLRQDOIDUPLQJV\VWHPV
6LJQLÀFDQWO\ EHFDXVH RI WKLV HIÀFLHQF\ YHU\ OLWWOH
&RPSDULVRQVWXGLHVKDYHVKRZQWKDWRUJDQLFV\VWHPV
GHPRQVWUDWHOHVVVRLOORVVGXHWREHWWHUVRLOKHDOWKDQG
DUHWKHUHIRUHDEOHWRPDLQWDLQJUHDWHUVRLOSURGXFWLYLW\
WKDQ FRQYHQWLRQDO IDUPLQJ V\VWHPV 5HJDQROG (OOLRWW
DQG8QJHU5HJDQROGHWDO0DGHUHWDO
QLWURJHQOHDYHVWKHIDUPVDV*+*VRUDVQLWUDWHWKDW 3LPHQWHOHWDO5HJDQROG(OOLRWWDQG8QJHU
SROOXWHV DTXDWLF V\VWHPV 'ULQNZDWHU :DJRQHU DQG FRPSDUHG WKH HIIHFWV RI RUJDQLF DQG FRQYHQWLRQDO
6DUUDQWRQLR0DGHUHWDO
8'LYHUVHFURSSLQJV\VWHPV
$QRWKHU FULWLFDO DVSHFW RI RUJDQLF SURGXFWLRQ LV WKH
XVH RI GLYHUVH FURSSLQJ V\VWHPV &HUWLÀHG RUJDQLF
IDUPLQJRQSDUWLFXODUSURSHUWLHVRIWKHVDPHVRLORYHU
D ORQJ SHULRG DQG IRXQG ´WKH RUJDQLFDOO\IDUPHG
VRLO KDG VLJQLÀFDQWO\ KLJKHU RUJDQLF PDWWHU FRQWHQW
WKLFNHU WRSVRLO GHSWK KLJKHU SRO\VDFFKDULGH FRQWHQW
ORZHU PRGXOXV RI UXSWXUH DQG OHVV VRLO HURVLRQ WKDQ
WKHFRQYHQWLRQDOO\IDUPHGVRLOµ5HJDQROGHWDO
SURGXFWLRQV\VWHPVSURKLELWFRQWLQXRXVPRQRFXOWXUHV 
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

&ULWLFVRIRUJDQLFV\VWHPVSRLQWWRFRQYHQWLRQDOQRWLOO SHULRGWRQVRI&2DWSHUWRQ KD\U

SURGXFWLRQ V\VWHPV DV VXSHULRU WR RUJDQLF V\VWHPV
%DVHGRQWKHUHVXOWVRIWKH5R\DO7KDL2UJDQLF3URMHFW
EHFDXVHWKHODWWHUXVHWLOODJH7RRXUNQRZOHGJHWKHUH
7KDLIDUPHUVFRXOGHDUQSHUKHFWDUHSHU\HDUIRU
LVRQO\RQHSXEOLVKHGVWXG\FRPSDULQJFRQYHQWLRQDO
HLJKW\HDUVZKLFKDPRXQWVWRSHUKHFWDUHIRU
QRWLOO ZLWK RUJDQLF WLOODJH V\VWHPV 7KH UHVHDUFKHUV
WKDW WLPH SHULRG  WRQV RI &2 DW  SHU WRQ 
IRXQGWKDWWKHRUJDQLFV\VWHPKDGEHWWHUVRLOTXDOLW\
KD\U
$FFRUGLQJ WR 7HDVGDOH &RIIPDQ DQG 0DQJXP
 ´ WKH 25 >RUJDQLF@ V\VWHP LPSURYHG ,I IDUPHUV DGRSWHG V\VWHPV VLPLODU WR WKH &ROLQ DQG
VRLO SURGXFWLYLW\ VLJQLÀFDQWO\ DV PHDVXUHG E\ FRUQ 1LFN6HLVSDVWXUHFURSSLQJPHWKRGVXVHGDW:LQRQD
\LHOGVLQWKHXQLIRUPLW\WULDOKLJKHUOHYHOVRIVRLO&DQG WKH\FRXOGHDUQSHUKHFWDUHSHU\HDUIRU\HDUV
1ZHUHDFKLHYHGGHVSLWHWKHXVHRIWLOODJHFKLVHOSORZ ZKLFKWRWDOVSHUKHFWDUHRYHUWKDWSHULRG
DQG GLVN IRU LQFRUSRUDWLQJ PDQXUH DQG RI FXOWLYDWLRQ WRQVRI&2DWSHUWRQ KD\U
ORZUHVLGXHVZHHSFXOWLYDWRUIRUZHHGFRQWURO2XU
UHVXOWV VXJJHVW WKDW V\VWHPV WKDW LQFRUSRUDWH KLJK
DPRXQWV RI RUJDQLF LQSXWV IURP PDQXUH DQG FRYHU
FURSV FDQ LPSURYH VRLOV PRUH WKDQ FRQYHQWLRQDO QR
WLOODJHV\VWHPVGHVSLWHUHOLDQFHRQDPLQLPXPOHYHORI
7KHPRVWSUDFWLFDOZD\WRHQVXUHVPDOOKROGHUIDUPHUV
UHFHLYH IXQGLQJ LV IRU WKHP WR EH RUJDQL]HG LQWR
JURXSV 7KH RUJDQLF VHFWRU DOUHDG\ GRHV WKLV ZLWK
YDULRXV JURXS FHUWLÀFDWLRQ VFKHPHV VXFK DV WKLUG
SDUW\ V\VWHPV DQG SDUWLFLSDWRU\ JXDUDQWHH V\VWHPV
WLOODJHµ 3*6 ,W ZRXOG EH UHODWLYHO\ VLPSOH WR LQFOXGH D VRLO
7KHODWHVWLPSURYHPHQWLQRUJDQLFORZQRWLOOV\VWHPV FDUERQPHDVXUHPHQWV\VWHPLQFXUUHQWRUJDQLFDXGLW
GHYHORSHG E\ WKH 5RGDOH ,QVWLWXWH VKRZV WKDW WKHVH V\VWHPV 6XFK V\VWHPV FRXOG EH JURZHU FRQWUROOHG
V\VWHPV FDQ GHOLYHU KLJK \LHOGV DV ZHOO DV H[FHOOHQW DQGGHVLJQHGWRHQVXUHIDLUQHVVDQGWUDQVSDUHQF\VR
HQYLURQPHQWDORXWFRPHV5RGDOH0R\HU
:6RLOFDUERQVHTXHVWUDWLRQFDQKHOS
DOOHYLDWHSRYHUW\
7KH DJUHHPHQWV RI WKH 81)&&& FRQIHUHQFH LQ
&DQFXQSURSRVHGWKDWKXQGUHGVRIELOOLRQVRIGROODUV
VKRXOGEHXVHGIRUIXQGLQJFOLPDWHFKDQJHPLWLJDWLRQ
DFWLYLWLHV )$2 EHOLHYHV WKDW  SHU FHQW RI WKH
SRWHQWLDOEHQHÀWVIURPDJULFXOWXUDOPLWLJDWLRQFRXOGJR
WKDWWKHIXQGVUHDFKWKHIDUPHUVDQGWKHLUFRPPXQLWLHV
UDWKHUWKDQEHQHÀWLQJWKHPRQH\PDUNHWWUDGHUV
,PSOHPHQWHGSURSHUO\WKHVHVFKHPHVFRXOGEHVHHQ
DV VRFLDO MXVWLFH V\VWHPV ZKHUH WKH &2SROOXWLQJ
LQGXVWULHV ZRXOG EH SD\LQJ PDQ\ RI WKH SRRUHVW
SHRSOHRQWKHSODQHWIRUWKHLUHFRV\VWHPVHUYLFHVRI
VHTXHVWHULQJ *+*V )RU H[DPSOH  ELOOLRQ KHFWDUHV
DW  SHU KHFWDUH KDV WKH SRWHQWLDO WR UHGLVWULEXWH
 ELOOLRQ IURP &2SROOXWLQJ LQGXVWULHV WR UXUDO
FRPPXQLWLHV$VLJQLÀFDQWSURSRUWLRQRIWKLVFRXOGJR
WRIDUPHUVLQGHYHORSLQJFRXQWULHV)$2F
6FKHPHV WKDW SD\ IDUPHUV IRU VHTXHVWHULQJ FDUERQ
LQWR WKH VRLO FRXOG KHOS DOOHYLDWH UXUDO SRYHUW\ DQG
SURYLGH D VWURQJ ÀQDQFLDO LQFHQWLYH WR DGRSW JRRG
IDUPLQJSUDFWLFHVLIWKH\DUHGRQHIDLUO\DQGSURSHUO\
$W DQ DYHUDJH RI  WRQV RI &2 SHU KHFWDUH DW 
SHU WRQ IDUPHUV FRXOG HDUQ  SHU KHFWDUH SHU
\HDU:KLOHWKLVPD\QRWVHHPOLNHPXFKIRUPDQ\RI
WKH ZRUOG·V IDUPHUV ZRUNLQJ RQ RQO\ D IHZ KHFWDUHV
DQG HDUQLQJ OHVV WKDQ  D \HDU DQ H[WUD  LV
H[WUHPHO\ YDOXDEOH 2Q D FRPPXQLW\ VFDOH LW ZRXOG
PHDQPDQ\WKRXVDQGVRIGROODUVJRLQJLQWRYLOODJHV
ZKLFKZRXOGEHVSHQWLQWKHORFDOFRPPXQLW\FUHDWLQJ
WKH PXOWLSOLHU HIIHFW RI DGGHG EHQHÀWV 9HU\ FULWLFDOO\
LIWKLVLVORRNHGDWRYHUWKHORQJWHUPWKHVHDPRXQWV
FDQ EHFRPH YHU\ ZRUWKZKLOH WR WKH IDUPHUV $V DQ
H[DPSOH 6HNHP KDV VHTXHVWHUHG  NJV RI &2
SHUKHFWDUHSHU\HDUIRU\HDUV$WDWRQWKLVLV
ZRUWK D WRWDO RI  SHU KHFWDUH IRU WKH WRWDO WLPH
WRVPDOOKROGHUVLQGHYHORSLQJFRXQWULHV)$2F
:HOOGHVLJQHG VRLO FDUERQ VFKHPHV WKDW LQFOXGH VRLO
FDUERQ VHTXHVWUDWLRQ KDYH WKH SRWHQWLDO WR UHGXFH
*+*HPLVVLRQVLQWKHDWPRVSKHUHDVZHOODVDOOHYLDWH
UXUDOSRYHUW\LQGHYHORSLQJFRXQWULHVDQGWKH\ZRXOG
SURYLGHDVXEVWDQWLDOÀQDQFLDOLQFHQWLYHWRDGRSWJRRG
IDUPLQJSUDFWLFHV
7KH\ FRXOG EH ÀQDQFHG WKURXJK JRYHUQPHQW
DGPLQLVWHUHGFDSDQGWUDGHV\VWHPV7KHVHV\VWHPV
SXWDFDSRQWKHWRWDODPRXQWRIHPLVVLRQVDQGE\
WD[LQJHPLVVLRQVWKDWDUHDERYHWKHWDUJHWVWKH\IRUFH
WKH HPLWWHUV WR UHDFK WKHLU WDUJHWV WKURXJK HQHUJ\
HIÀFLHQF\ WKH DGRSWLRQ RI UHQHZDEOH HQHUJ\ RU E\
RWKHURIIVHWV7KHFDSFRXOGEHSURJUHVVLYHO\ORZHUHG
WKHUHE\ IRUFLQJ WKH LQGXVWULHV WR FRQWLQXRXVO\ ÀQG
ZD\V WR UHGXFH HPLVVLRQV 7KHVH WD[HV FRXOG WKHQ
EHXVHGWRSD\IDUPHUVIRUWKHLUHFRV\VWHPVHUYLFHV
RIVWULSSLQJWKH&2RXWRIWKHDWPRVSKHUHDQGÀ[LQJ
 75$'($1'(19,5210(175(9,(:

LW LQ WKH VRLO 7KH VFKHPHV FRXOG EH JRYHUQPHQW
DGPLQLVWHUHGRUPDUNHWEDVHG
7KHUH KDYH EHHQ PDQ\ FRQFHUQV H[SUHVVHG DERXW
PDUNHWEDVHG V\VWHPV HVSHFLDOO\ WKRVH WKDW ZDQW
WR GHYHORS FRPSOH[ ÀQDQFLDO LQVWUXPHQWV DV WKH
WUDGLQJ EDVLV IRU FDUERQ 7KH FROODSVH RI WKH SULFH
IRUFDUERQLQPDUNHWEDVHGV\VWHPVDVZHOODVVRPH
VFKHPHVZKHUHPRVWRIWKHSULFHKDVJRQHWRZDUGV
DGPLQLVWHULQJ WKH VFKHPH UDWKHU WKDQ SD\LQJ WKH
ODQG KROGHUV VKRZ WKDW WKHUH DUH PDMRU SUREOHPV
ZLWK WKHVH VFKHPHV ,W LV LPSRUWDQW WKDW PRVW RI
WKH IXQGV JR WR WKH IDUPHUV UDWKHU WKDQ WR VFKHPH
DGPLQLVWUDWRUV EURNHUV FDUERQ WUDGHUV DQG RWKHU
LQWHUPHGLDULHV 7KHVH H[SHULHQFHV VKRZ WKH UHDO
QHHGIRUDGHTXDWHJRYHUQPHQWUHJXODWLRQUDWKHUWKDQ
DOORZLQJXQUHJXODWHGFDUERQPDUNHWV
7KHVLJQLÀFDQWUHGXFWLRQLQWKHSULFHRIFDUERQLQ
LQWKHJRYHUQPHQWDGPLQLVWHUHG(XURSHDQ8QLRQ
VFKHPH VKRZV WKH QHHG IRU D UHDOLVWLF JRYHUQPHQW
PDQGDWHG ÁRRU SULFH IRU FDUERQ WR HQVXUH WKDW
ODQGKROGHUV DUH DGHTXDWHO\ FRPSHQVDWHG IRU WKHLU
VHUYLFHVRIVHTXHVWHULQJ&2DQGQRWVXEMHFWHGWRWKH
YDJDULHVRIPDUNHWSULFHÁXFWXDWLRQV
2QHFULWLFDOLVVXHFRQFHUQVRZQHUVKLSRIWKHFDUERQ
7KH FDUERQ VKRXOG EHORQJ WR WKH IDUPHUODQGKROGHU
DQG WKH SD\PHQW VKRXOG EH IRU WKH VHUYLFH RI
VHTXHVWHULQJ LW RXW RI WKH DWPRVSKHUH DQG VWRULQJ LW
LQWKHVRLO7KHSD\PHQWLVQRWIRUWKHFDUERQDVWKLV
FDQQRWDQGVKRXOGQRWEHVHSDUDWHGIURPWKHVRLO
*LYHQ WKH FXUUHQW WUHQGV RI JOREDO *+* HPLVVLRQV
DQG WKH ZRUVW FDVH VFHQDULR ZH VHHP WR IROORZ IRU
JOREDOZDUPLQJLWLVFULWLFDOWKDWVRLOFDUERQLVLQFOXGHG
LQWKH81)&&&SURFHVVHVDQGYHU\LPSRUWDQWO\WKDW
WKHUH DUH PHFKDQLVPV WR ÀQDQFLDOO\ UHZDUG IDUPHUV
ZKR HQJDJH LQ SURYHQ SUDFWLFHV VXFK DV RUJDQLF
DJULFXOWXUHWKDWVHTXHVWHU&2LQWRWKHVRLO

$QQH[WR&RPPHQWDU\9 WKH FURSSHG DUHDV &URSSLQJ PHWKRGV XVHG LQ WKH

SDVWUHTXLUHWKDWDOOYHJHWDWLRQLVNLOOHGSULRUWRVRZLQJ
3DVWXUHFURSSLQJ²DQQXDOVLQD WKHFURSDQGZKLOHWKHFURSLVJURZLQJµ
SHUHQQLDOV\VWHP
´)URPDIDUPHFRQRPLFSRLQWRIYLHZWKHSRWHQWLDOIRU
3DVWXUHFURSSLQJLVZKHUHWKHDQQXDOFURSLVSODQWHG JRRG SURÀW LV H[FHOOHQW EHFDXVH WKH FRVW RI JURZLQJ
LQ D SHUHQQLDO SDVWXUH LQVWHDG RI LQ D SORJKHG ÀHOG FURSV LQ WKLV PDQQHU LV D IUDFWLRQ RI FRQYHQWLRQDO
7KLV ZDV ÀUVW GHYHORSHG E\ &ROLQ 6HLV LQ $XVWUDOLD FURSSLQJ7KHDGGHGEHQHÀWLQDPL[HGIDUPVLWXDWLRQ
7KH SULQFLSOH LV EDVHG RQ D VRXQG HFRORJLFDO IDFW LVWKDWXSWRVL[PRQWKVH[WUDJUD]LQJLVDFKLHYHGZLWK
QDPHO\WKDWDQQXDOSODQWVJURZLQSHUHQQLDOV\VWHPV
7KH NH\ LV WR DGDSW WKLV SULQFLSOH WR WKH DSSURSULDWH
PDQDJHPHQWV\VWHPIRUWKHVSHFLÀFFDVKFURSVDQG
FOLPDWH
,Q &ROLQ·V V\VWHP WKH SDVWXUH LV ÀUVW JUD]HG XVLQJ
KROLVWLF PDQDJHPHQW WR HQVXUH WKDW LW LV YHU\ VKRUW
7KLVDGGVRUJDQLFPDWWHULQWKHIRUPRIPDQXUHFXW
JUDVV DQG VKHG URRWV DQG VLJQLÀFDQWO\ UHGXFHV WKH
FRPSHWLWLRQ IURP WKH SDVWXUH ZKHQ WKH FDVK FURS LV
VHHGHGDQGJHUPLQDWHV7KHFURSLVGLUHFWO\SODQWHG
LQWKHSDVWXUH
$FFRUGLQJ WKH &ROLQ 6HLV ´,W ZDV DOVR OHDUQW WKDW
VRZLQJ D FURS LQ WKLV PDQQHU VWLPXODWHG SHUHQQLDO
JUDVVVHHGOLQJVWRJURZLQQXPEHUVDQGGLYHUVLW\JLYLQJ
FRQVLGHUDEO\PRUHWRQHVKHFWDUHRISODQWJURZWK7KLV
SURGXFHVPRUHVWRFNIHHGDIWHUWKHFURSLVKDUYHVWHG
DQGWRWDOO\HOLPLQDWHVWKHQHHGWRUHVRZSDVWXUHVLQWR
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

WKLV PHWKRG FRPSDUHG ZLWK WKH ORVV RI JUD]LQJ GXH

WR JURXQG SUHSDUDWLRQ DQG ZHHG FRQWURO UHTXLUHG LQ
WUDGLWLRQDO FURSSLQJ PHWKRGV $V D JHQHUDO UXOH DQ
XQGHUOLQLQJ SULQFLSOH RI WKH VXFFHVV RI WKLV PHWKRG
LV ¶2QH KXQGUHG SHUFHQW JURXQG FRYHU RQH KXQGUHG
SHUFHQWRIWKHWLPH¶µ
´«D  +D FURS RI (FKLGQD RDWV WKDW ZDV VRZQ DQG
KDUYHVWHGLQRQ«´:LQRQDµ7KLVFURS·V\LHOGZDV
WRQQH+DEDJVDFUH7KLV\LHOGLVDWOHDVWHTXDO
WR WKH GLVWULFW DYHUDJH ZKHUH IXOO JURXQG GLVWXUEDQFH
FURSSLQJ PHWKRGV ZHUH XVHGµ 7KLV SURÀW GRHV QRW
LQFOXGH WKH YDOXH RI WKH H[WUD JUD]LQJ 2Q :LQRQD LW LV
EHWZHHQ>DQG@KDEHFDXVHWKHSDVWXUHLVJUD]HG
XSWRWKHSRLQWRIVRZLQJ:KHQXVLQJWUDGLWLRQDOFURSSLQJ
SUDFWLFHV ZKHUH JURXQG SUHSDUDWLRQ DQG ZHHG FRQWURO
PHWKRGVDUHXWLOLVHGIRUSHULRGVRIXSWRIRXUWRVL[PRQWKV
&RPSDULVRQRIVRLOEHWZHHQ
EHIRUH WKH FURS LV VRZQ WKHQ QR TXDOLW\ JUD]LQJ FDQ EH
DFKLHYHG :LQRQDDQGQHLJKERXU

´2WKHU EHQHÀWV DUH PRUH GLIÀFXOW WR TXDQWLI\ 7KHVH DUH
WKH YDVW LPSURYHPHQW LQ SHUHQQLDO SODQW QXPEHUV DQG
GLYHUVLW\ RI WKH SDVWXUH IROORZLQJ WKH FURS 7KLV PHDQV
WKDWWKHUHLVQRQHHGWRUHVRZSDVWXUHVZKLFKFDQFRVW
LQ H[FHVV RI  SHU KHFWDUH DQG FRQVLGHUDEO\ PRUH
VKRXOGFRQWUDFWRUVEHXVHGIRUSDVWXUHHVWDEOLVKPHQWµ
,Q WKLV SDLUHG VLWH FRPSDULVRQ SDUHQW PDWHULDO
VORSHDVSHFWUDLQIDOODQGIDUPLQJHQWHUSULVHVDUH
WKHVDPH/HYHOVRIVRLOFDUERQLQERWKSDGGRFNV
ZHUHRULJLQDOO\WKHVDPH
/+6²FPVRLOSURÀOHIURPDSDGGRFNLQZKLFK
JURXQGFRYHUKDVEHHQDFWLYHO\PDQDJHGFURSSHG
DQGJUD]HGWRHQKDQFHSKRWRV\QWKHWLFFDSDFLW\
,QGHSHQGHQW VWXGLHV DW :LQRQD RQ SDVWXUH FURSSLQJ 5+6 ² FP VRLO SURÀOH IURP D FRQYHQWLRQDOO\
E\ >WKH@ 'HSDUWPHQWRI/DQGDQG:DWHUKDYHIRXQGWKDW PDQDJHG QHLJKERXULQJ SDGGRFN  PHWUHV
SDVWXUHFURSSLQJLVPRUHSURÀWDEOHWKDQFRQYHQWLRQDO WKURXJKWKHIHQFHWKDWKDVEHHQVHWVWRFNHGDQG
DJULFXOWXUH >DQG@ WKLV LV FRXSOHG ZLWK JUHDW HQYLURQPHQW KDVDORQJKLVWRU\RISKRVSKDWHDSSOLFDWLRQ
EHQHÀWV WKDW ZLOO LPSURYH WKH VRLO DQG UHJHQHUDWH RXU
ODQGVFDSHVµ 1RWHV
L7KHFDUERQOHYHOVLQWKH²FPLQFUHPHQWDUH
YHU\ VLPLODU 7KLV VXUIDFH FDUERQ UHVXOWV IURP WKH
%XLOGLQJVRLOIHUWLOLW\ZLWKRXW GHFRPSRVLWLRQ RI RUJDQLF PDWWHU OHDYHV URRWV
V\QWKHWLFIHUWLOL]HUV PDQXUH HWF IRUPLQJ VKRUWFKDLQ XQVWDEOH ¶ODELOH·
FDUERQ
&KULVWLQH -RQHV KDV FRQGXFWHG UHVHDUFK DW &ROLQ LL7KHFDUERQEHORZFPLQWKH/+6SURÀOHKDV
6LHV·VSURSHUW\ZKLFKVKRZVWKDWLQWKHODVW\HDUV UDSLGO\LQFRUSRUDWHGLQWRWKHKXPLFQRQODELOHVRLO
WKDRI&2ZDVVHTXHVWHUHG IUDFWLRQ /RQJFKDLQ QRQODELOH FDUERQ LV KLJKO\
‡ 7KHVHTXHVWUDWLRQUDWHLQWKHODVWWZR\HDUV² VWDEOH
 KDV EHHQ  WRQV RI &2 SHU KHFWDUH SHU -RQHV
\HDU
 75$'($1'(19,5210(175(9,(:

‡ 7KLVLQFUHDVHRFFXUUHGGXULQJWKHZRUVWGURXJKWLQ SHUFHQWERURQSHUFHQWPRO\EGHQXP
UHFRUGHG$XVWUDOLDQKLVWRU\ SHUFHQWFREDOWSHUFHQWDQGVHOHQLXPSHU
‡ 7KHIROORZLQJLQFUHDVHVLQVRLOPLQHUDOIHUWLOLW\KDYH FHQW-RQHV
RFFXUUHG LQ  \HDUV ZLWK RQO\ WKH DGGLWLRQ RI D )RUPRUHLQIRUPDWLRQRQ
VPDOO DPRXQW RI SKRVSKRUXV FDOFLXP  SHU ‡ 3DVWXUH FURSSLQJ VHH KWWSZZZZLQRQDQHWDX
FHQWPDJQHVLXPSHUFHQWSRWDVVLXPSHU IDUPLQJKWPO
FHQW VXOSKXU  SHU FHQW SKRVSKRUXV  SHU ‡ +ROLVWLFPDQDJHPHQWVHH
FHQW]LQFSHUFHQWLURQSHUFHQWFRSSHU KWWSKROLVWLFPDQDJHPHQWRUJ

$QQH[WR&RPPHQWDU\9 LQFUHDVHVWKH+HOOHEUDQGDQG+HUSSLFKVWXGLHVVKRZ
WKDWWKHLQFUHDVHLQWHPSHUDWXUHZLOOGULYHXSWKHUDWH
0HWKDQH6RLOPDQDJHPHQWFDQ RIELRORJLFDOGHJUDGDWLRQRIPHWKDQHE\PHWK\ORWURSLF
UHGXFHDWPRVSKHULFPHWKDQH EDFWHULD DQG RWKHU PHWKDQRWURSKLF PLFURRUJDQLVPV
7KLV H[SODLQV ZK\ KLVWRULFDO DWPRVSKHULF PHWKDQH
7KHVFLHQFHRQVRLOPHWKDQHDQGVRLORUJDQLFPDWWHULV OHYHOV KDYH EHHQ UHODWLYHO\ VWDEOH DQG DOVR ZK\
VWLOOLQLWVLQIDQF\ZLWKPDQ\XQDQVZHUHGTXHVWLRQVGXH QDWXUDOO\SURGXFHGPHWKDQHOHYHOVPD\QRWLQFUHDVH
WRWKHODFNRIUHVHDUFK+RZHYHUDUHFHQWPHWDVWXG\ DVWKHFOLPDWHJHWVZDUPHU
E\YDQ*URHQLJHQ2VHQEHUJDQG+XQJDWHKDV
VKRZQWKDWPHWKDQHRXWSXWIURPWKHVRLOZLOOLQFUHDVH
DVWKHFOLPDWHZDUPVZKLFKUDLVHVFRQFHUQVWKDWWKH
SHUFHQWDJHVRI*+*VWKDWDUHVHTXHVWHUHGLQIRUHVWU\
V\VWHPVDUHRYHUHVWLPDWHG
7KH PHWKDQH PRGHO XVHG E\ YDQ *URHQLJHQ HW DO
PHDVXUHG ZKDW ZDV YRODWLOL]HG EXW QRW WKH DPRXQW
RI WKH PHWKDQH WKDW ZDV ELRGHJUDGHG LQ WKH VRLO
0HWKDQH LV SURGXFHG DQG GHJUDGHG DV D QDWXUDO
F\FOH LQ QDWXUH DQG PRVW RI WKLV GHJUDGDWLRQ WDNHV
SODFHLQELRORJLFDOO\DFWLYHVRLOVDQGLQWKHRFHDQVE\
PHWKDQRWURSKLFPLFUREHV
+LVWRULFDOO\DSDUWIURPDIHZH[FHSWLRQDOHYHQWVGXULQJ
JHRORJLFDO WLPH SHULRGV WKH DPRXQW RI PHWKDQH LQ
WKHDWPRVSKHUHIURPWKHHQRUPRXVKHUGVRIJUD]LQJ
DQLPDOVRQWKHSUDLULHVVDYDQQDKVDQGVWHSSHVDQG
IURP WKH GHFD\ RI RUJDQLF PDWWHU LQ WKH YDVW IRUHVWV
DQGZHWODQGVRIWKHSODQHWZDVUHODWLYHO\VWDEOHXQWLO
KXPDQDFWLYLWLHVRYHUWKHODVW\HDUVGLVUXSWHGWKH
QDWXUDOF\FOHVRIPHWKDQHSURGXFWLRQDQGGHJUDGDWLRQ
0DQ\ VWXGLHV RI PHWKDQH SURGXFWLRQ RQO\ FDOFXODWH
WKHPHWKDQHSURGXFHGE\WKHV\VWHPVDVDRQHZD\
RXWSXW LQWR WKH DWPRVSKHUH 7KLV FDQ EH FRUUHFW IRU
VRPH SURGXFWLRQ V\VWHPV VXFK DV FRQÀQHG DQLPDO
IHHGORWVDQGJDUEDJHVHQWWRODQGÀOOKRZHYHULWLVQRW
FRUUHFW IRU PRVW QDWXUDO SURGXFWLRQV V\VWHPV VXFK
DV DQLPDO JUD]LQJ RQ JUDVVODQGV FURS SURGXFWLRQ
RQ ELRORJLFDOO\ DFWLYH VRLOV RUFKDUGV DQG IRUHVWV DV
WKHVHV\VWHPVDUHEDVHGRQF\FOHVWKDWDOVRGHJUDGH
PHWKDQH 7KLV RYHUVLJKW RI WKH DPRXQW RI PHWKDQH
WKDWFDQEHELRGHJUDGHGE\WKHVRLORUWKHRFHDQVLVD
PDMRUÁDZWKDWQHHGVWREHUHFWLÀHG
8QWLO WKH GHFD\ F\FOHV DUH SURSHUO\ LGHQWLÀHG
PHDVXUHG DQG PRGHOOHG WKH DPRXQWV RI PHWKDQH
WKDW DUH HPLWWHG E\ V\VWHPV DUH QRW DQ DFFXUDWH
PHDVXUH RI PHWKDQH·V FRQWULEXWLRQ WR WRWDO *+*V
8QGHUVWDQGLQJ WKHVH F\FOHV DQG WKH ELRORJLFDO
FRQGLWLRQV QHHGHG WR ELRGHJUDGH PHWKDQH ZLOO JLYH
VFLHQWLVWV DQG ODQGKROGHUV D PDMRU WRRO WR PDQDJH
RQHRIWKHPRVWLPSRUWDQW*+*V
+HLPDQQ0XUDWHWDO
7KHQHHGIRUJRRGVRLOPDQDJHPHQWSUDFWLFHV
6WXGLHV E\ +HOOHEUDQG DQG +HUSSLFK  DQG
/HYLQHHWDOVKRZHGWKDWDVLJQLÀFDQWDPRXQW
RIPHWKDQHLVELRGHJUDGHGLQVRLOVDQGWKDWWKLVKDV
EHHQXQGHUHVWLPDWHGGXHWRDODFNRIUHVHDUFK:KLOH
WKH YDQ *URHQLJHQ HW DO VWXG\ VKRZV DQ LQFUHDVH
LQ PHWKDQH RXWSXW IURP VRLOV ZKHQ WKH WHPSHUDWXUH
$VWXG\E\)XX0LQJ.DLHWDOVXJJHVWVWKDW
WKH UHFHQW UHGXFWLRQV LQ PHWKDQH RXWSXW DUH GXH WR
FKDQJHV LQ IDUPLQJ SUDFWLFHV 7KLV VWXG\ DGGV WR
WKHGDWDVKRZLQJWKDWWKHUHLVJRRGHYLGHQFHRIWKH
SRWHQWLDO WR UHGXFH WKH DPRXQW RI PHWKDQH LQ WKH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

DWPRVSKHUH WKURXJK WKH IROORZLQJ VRLO PDQDJHPHQW PDMRULW\RIWKHQHZO\LQFUHDVHGVRLOFDUERQZDVLQ

SUDFWLFHVDVGHVFULEHGEHORZ WKHVWDEOHIUDFWLRQVRIWKHQHZO\VHTXHVWHUHG
 $YRLGLQJDQDHURELFVRLOFRQGLWLRQV0HWKDQHIRUPV FDUERQZDVLQWKHQRQODELOHKXPLFIUDFWLRQRIWKH
LQDQDHURELFFRQGLWLRQVVXFKDVULFHSDGGLHV1HZ VRLOUHQGHULQJLWKLJKO\VWDEOH
PHWKRGVVXFKDVWKHV\VWHPRIULFHLQWHQVLÀFDWLRQ  3URPRWLQJ ELRORJLFDOO\ DFWLYH VRLOV ZLWK KLJK OHYHOV
65, XVH PRUH IUHTXHQW VKRUWHU ZDWHULQJ RI PHWKDQRWKURSLF PLFUREHV 7KH UHVHDUFK E\
F\FOHV WKDW DYRLG DQDHURELF FRQGLWLRQV WKHUHE\
VLJQLÀFDQWO\UHGXFLQJPHWKDQHSURGXFWLRQ
 2SHQ ZHOODHUDWHG VRLOV 2UJDQLF PDWWHU FDQ
YRODWLOL]H LQWR &2 PHWKDQH DQG RWKHU JDVHV LQ
IDUPLQJ V\VWHPV +RZHYHU FRUUHFW PDQDJHPHQW
V\VWHPVFDQFRQWLQXRXVO\LQFUHDVHWKHSURSRUWLRQ
RI WKH QRQYRODWLOH FRPSRXQGV DQG IRUP VWDEOH
IUDFWLRQV RI VRLO RUJDQLF PDWWHU 7KH UHVHDUFK
FRQGXFWHG E\ -RQHV DW :LQRQD VKRZHG WKDW WKH
/HYLQHHWDOIRXQGWKDWWKHNH\WRPHWKDQH
GHJUDGDWLRQ LV ODQG PDQDJHPHQW SUDFWLFHV WKDW
DFKLHYH KLJK OHYHOV RI GLYHUVLW\ RI PHWKDQRWKURSLF
PLFUREHV
5HVHDUFK QHHGV WR EH FRQGXFWHG LQWR DOO RI WKHVH
DUHDV WR DFFXUDWHO\ HVWDEOLVK WKH EHVW SUDFWLFHV
7KLVPXVWEHEDVHGRQFULWHULDWKDWDUHPHDVXUDEOH
UHSOLFDEOHDQGHDVLO\DGRSWHGE\ODQGPDQDJHUV
 75$'($1'(19,5210(175(9,(:

1//'06#4; U 
 )41'%1.1);U1.76+10616*'4+5'51(
11&
;56'/5#0&.+/#6'*#0)'
2OLYLHUGH6FKXWWHU
816SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRG

$EVWUDFW
7KH IRRG SULFH KLNHV RI  DQG ² ZHUH SDUWO\ WKH UHVXOW RI ZHDWKHUUHODWHG HYHQWV OLQNHG WR
FOLPDWH FKDQJH DQG SDUWO\ GXH WR WKH GHSHQGHQFH RI IRRG SURGXFWLRQ RQ IRVVLO HQHUJLHV WKDW FDXVHG
D PHUJHU EHWZHHQ IRRG DQG HQHUJ\ PDUNHWV RQ WKLV LVVXH VHH DOVR WKH FRPPHQW E\ 5XQGJUHQ LQ WKLV
FKDSWHUDVZHOODVWKHÀQDQFLDOL]DWLRQRIIRRGPDUNHWV7KHFXUUHQWHIIRUWVWRUHLQYHVWLQDJULFXOWXUHVKRXOG
WDNHLQWRDFFRXQWWKHQHHGWRLPSURYHWKHUHVLOLHQFHRIIRRGV\VWHPVVRDVWRUHGXFHWKHLUYXOQHUDELOLW\
WRH[WUHPHZHDWKHUHYHQWVDQGWRWKHLQFUHDVLQJO\YRODWLOHSULFHVRIQRQUHQHZDEOHIRVVLOHQHUJLHV7KLV
DUWLFOHH[SORUHVKRZDJURHFRORJ\XQGHUVWRRGDVWKHDSSOLFDWLRQRIWKHVFLHQFHRIHFRORJ\WRDJULFXOWXUDO
V\VWHPVFDQUHVXOWLQPRGHVRISURGXFWLRQWKDWDUHQRWRQO\PRUHUHVLOLHQWEXWDOVRERWKKLJKO\SURGXFWLYH
DQGVXVWDLQDEOHHQDEOLQJWKHPWRFRQWULEXWHWRWKHDOOHYLDWLRQRIUXUDOSRYHUW\DQGWKXVWRWKHUHDOL]DWLRQ
RIWKHULJKWWRIRRG

$5HLQYHVWLQJLQDJULFXOWXUH DQG FRQVHUYLQJ HFRV\VWHPV 7KLV ZRXOG DOVR VORZ

7KH IRRG SULFH VSLNHV RI  DQG ²
SURPSWHG JRYHUQPHQWV WR VWDUW UHLQYHVWLQJ LQ
DJULFXOWXUHDVHFWRUWKDWKDVEHHQQHJOHFWHGLQPDQ\
GHYHORSLQJFRXQWULHVIRUWKHSDVW\HDUV+RZHYHU
LQYHVWPHQWV WKDW LQFUHDVH IRRG SURGXFWLRQ ZLOO QRW
PDNH VLJQLÀFDQW SURJUHVV LQ FRPEDWLQJ KXQJHU DQG
PDOQXWULWLRQLIWKH\GRQRWOHDGWRKLJKHULQFRPHVDQG
WKH WUHQG WRZDUGV LQFUHDVLQJ XUEDQL]DWLRQ LQ WKH
FRXQWULHVFRQFHUQHGZKLFKLVSODFLQJVWUHVVRQWKHLU
SXEOLFVHUYLFHV0RUHRYHULWZRXOGFRQWULEXWHWRUXUDO
GHYHORSPHQW DQG SUHVHUYH WKH DELOLW\ RI VXFFHHGLQJ
JHQHUDWLRQV WR PHHW WKHLU RZQ QHHGV ,Q DGGLWLRQ
WKHUHVXOWLQJKLJKHULQFRPHVLQWKHUXUDODUHDVZRXOG
FRQWULEXWH WR WKH JURZWK RI RWKHU VHFWRUV RI WKH
HFRQRP\E\VWLPXODWLQJGHPDQGIRUQRQDJULFXOWXUDO
LPSURYHG OLYHOLKRRGV IRU WKH SRRUHVW ² SDUWLFXODUO\
VPDOOVFDOH IDUPHUV LQ GHYHORSLQJ FRXQWULHV $QG
VKRUWWHUP JDLQV ZLOO EH RIIVHW E\ ORQJWHUP ORVVHV LI
WKH\ FDXVH IXUWKHU GHJUDGDWLRQ RI HFRV\VWHPV WKXV
WKUHDWHQLQJ WKH DELOLW\ WR PDLQWDLQ FXUUHQW OHYHOV RI
SURGXFWLRQ LQ WKH IXWXUH 7KH TXHVWLRQ WKHUHIRUH LV
QRWVLPSO\KRZPXFKEXWDOVRKRZWKHLQYHVWPHQWV
DUH PDGH 3RXULQJ PRQH\ LQWR DJULFXOWXUH ZLOO QRW
EH VXIÀFLHQW WKH LPSHUDWLYH WRGD\ LV WR WDNH VWHSV
WKDW IDFLOLWDWH WKH WUDQVLWLRQ WRZDUGV D ORZFDUERQ
UHVRXUFHFRQVHUYLQJ W\SH RI DJULFXOWXUH WKDW EHQHÀWV
WKHSRRUHVWIDUPHUV
$JURHFRORJ\ FDQ SOD\ D FHQWUDO UROH LQ DFKLHYLQJ
WKLV JRDO 'H 6FKXWWHU D 'H 6FKXWWHU DQG
SURGXFWV$GHOPDQ
%7KHGLDJQRVLV
6LQFH WKH JOREDO IRRG FULVHV PRVW RI WKH IRFXV KDV
EHHQRQLQFUHDVLQJRYHUDOOSURGXFWLRQXVLQJPHWKRGV
FRQVLVWHQWZLWKFODVVLF*UHHQ5HYROXWLRQDSSURDFKHV
7KH FULVHV KDYH EHHQ DWWULEXWHG WR D PLVPDWFK
EHWZHHQ VXSSO\ DQG GHPDQG UHÁHFWLQJ D JDS
EHWZHHQ VORZHU SURGXFWLYLW\ JURZWK DQG LQFUHDVLQJ
QHHGV $ ZLGHO\ FLWHG HVWLPDWH LV WKDW WDNLQJ LQWR
DFFRXQW GHPRJUDSKLF JURZWK DV ZHOO DV FKDQJHV
LQ WKH FRPSRVLWLRQ RI GLHWV DQG FRQVXPSWLRQ OHYHOV
DVVRFLDWHG ZLWK JURZLQJ XUEDQL]DWLRQ DQG KLJKHU
KRXVHKROGLQFRPHVWKHRYHUDOOLQFUHDVHLQDJULFXOWXUDO
9DQORTXHUHQ  ,W LV SRVVLEOH WR VLJQLÀFDQWO\
SURGXFWLRQVKRXOGUHDFKSHUFHQWE\%XUQH\
LPSURYH DJULFXOWXUDO SURGXFWLYLW\ ZKHUH LW KDV EHHQ
HWDO
ODJJLQJ EHKLQG DQG WKXV WR LQFUHDVH SURGXFWLRQ
ZKHUH LW QHHGV PRVW WR EH LQFUHDVHG LH SULPDULO\ +RZHYHUDSDUWIURPWKHIDFWWKDWWKLVHVWLPDWHWDNHV
LQ SRRU IRRGGHÀFLHQW FRXQWULHV ZKLOH DW WKH VDPH WKH FXUUHQW GHPDQG FXUYHV DV JLYHQ DQG GRHV QRW
WLPHLPSURYLQJWKHOLYHOLKRRGVRIVPDOOKROGHUIDUPHUV FRQVLGHU WKH OHDNDJHV DQG ZDVWH LQ WKH FXUUHQW
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

IRRGV\VWHPV81(3WKHIRFXVRQLQFUHDVLQJ SURFHVV RI IDEULFDWLQJ QLWURJHQEDVHG IHUWLOL]HUV

SURGXFWLRQ PD\ QRW DGHTXDWHO\ FRQVLGHU WKH IDFW DFFRXQWLQJ IRU DQRWKHU  SHU FHQW $OOHQ HW DO
WKDW KXQJHU WRGD\ LV QRW VR PXFK D FRQVHTXHQFH 0HLQKDXVHQHWDO
RI VWRFNV EHLQJ WRR ORZ RU WR JOREDO VXSSOLHV EHLQJ
$JURHFRORJ\ LV LQFUHDVLQJO\ VHHQ DV RQH ZD\ WR
XQDEOH WR PHHW GHPDQG UDWKHU LW LV GXH WR SRYHUW\
DGGUHVV WKHVH FRQVLGHUDEOH FKDOOHQJHV $ ZLGH
,W LV WKHLU ODFN RI SXUFKDVLQJ SRZHU WKDW PDNHV LW
UDQJHRIH[SHUWVZLWKLQWKHVFLHQWLÀFFRPPXQLW\DQG
GLIÀFXOW IRU WKH SRRUHVW VHJPHQWV RI WKH SRSXODWLRQ
LQWHUQDWLRQDODJHQFLHVVXFKDVWKH)$2DQG%LRYHUVLW\
LQFOXGLQJPDUJLQDOVPDOOVFDOHIDUPHUVZKRDUHRIWHQ
,QWHUQDWLRQDODQG81(3YLHZLWDVDZD\
QHWIRRG EX\HUV WR ZLWKVWDQG HFRQRPLF VKRFNV
WR LPSURYH WKH UHVLOLHQFH DQG VXVWDLQDELOLW\ RI IRRG
VXFK DV WKRVH WKDW UHVXOW IURP VXGGHQ LQFUHDVHV LQ
V\VWHPV ,$$67' D :H]HO HW DO D ,W LV
WKHSULFHVRIEDVLFIRRGFRPPRGLWLHV,QFUHDVLQJWKH
DOVRJDLQLQJJURXQGLQFRXQWULHVDVGLYHUVHDV%UD]LO
LQFRPHV RI WKH SRRUHVW LV WKHUHIRUH WKH EHVW ZD\ WR
)UDQFH*HUPDQ\DQGWKH8QLWHG6WDWHV:H]HOHWDO
FRPEDW KXQJHU ,QYHVWPHQW LQ DJULFXOWXUH LV QHHGHG
EXW LW VKRXOG QRW RQO\ IRVWHU SURGXFWLRQ WR PHHW
JURZLQJQHHGVLWVKRXOGDOVRUHGXFHUXUDOSRYHUW\E\
ERRVWLQJWKHLQFRPHVRIVPDOOVFDOHIDUPHUV2QO\E\
VXSSRUWLQJVPDOOSURGXFHUVZLOOLWEHSRVVLEOHWRKHOS
EUHDN WKH YLFLRXV F\FOH WKDW OHDGV IURP UXUDO SRYHUW\
WR WKH H[SDQVLRQ RI XUEDQ VOXPV LQ ZKLFK SRYHUW\

&$JURHFRORJ\PLPLFNLQJQDWXUH
$JURHFRORJ\ KDV EHHQ GHÀQHG DV WKH ´DSSOLFDWLRQ
RI HFRORJLFDO VFLHQFH WR WKH VWXG\ GHVLJQ DQG
PDQDJHPHQW RI VXVWDLQDEOH DJURHFRV\VWHPVµ
EUHHGVPRUHSRYHUW\ $OWLHUL  *OLHVVPDQ  ,W VHHNV WR LPSURYH
,Q DGGLWLRQ DJULFXOWXUH PXVW QRW FRPSURPLVH RQ LWV DJULFXOWXUDO V\VWHPV E\ PLPLFNLQJ RU DXJPHQWLQJ
DELOLW\WRVDWLVI\IXWXUHQHHGV7KHORVVRIELRGLYHUVLW\ QDWXUDOSURFHVVHVWKXVHQKDQFLQJEHQHÀFLDOELRORJLFDO
(VTXLQDV$OFi]DU  6ZDQVRQ  WKH LQWHUDFWLRQVDQGV\QHUJLHVDPRQJWKHFRPSRQHQWVRI
XQVXVWDLQDEOHXVHRIZDWHUDVZHOODVWKHGHJUDGDWLRQ
DQG SROOXWLRQ RI VRLOV DQG ZDWHU XQGHUPLQH WKH
FRQWLQXLQJ DELOLW\ RI WKH HDUWK·V QDWXUDO UHVRXUFHV WR
VXSSRUWDJULFXOWXUH&OLPDWHFKDQJHZKLFKWUDQVODWHV
LQWRPRUHIUHTXHQWDQGH[WUHPHZHDWKHUHYHQWVVXFK
DVGURXJKWVDQGÁRRGVDQGOHVVSUHGLFWDEOHUDLQIDOO
LV DOUHDG\ VHYHUHO\ DIIHFWLQJ WKH DELOLW\ RI FHUWDLQ
UHJLRQV DQG FRPPXQLWLHV WR IHHG WKHPVHOYHV DQG
LW LV GHVWDELOL]LQJ PDUNHWV 7KH FKDQJH LQ DYHUDJH
WHPSHUDWXUHV LV WKUHDWHQLQJ WKH DELOLW\ RI HQWLUH
UHJLRQVSDUWLFXODUO\WKRVHZKHUHUDLQIHGDJULFXOWXUHLV
SUDFWLFHGWRPDLQWDLQWKHLUH[LVWLQJOHYHOVRIDJULFXOWXUDO
DJURELRGLYHUVLW\ $OWLHUL  &RPPRQ SULQFLSOHV
RI DJURHFRORJ\ LQFOXGH UHF\FOLQJ QXWULHQWV DQG
HQHUJ\ RQ IDUPV UDWKHU WKDQ DXJPHQWLQJ QXWULHQWV
ZLWK H[WHUQDO LQSXWV LQWHJUDWLQJ FURSV DQG OLYHVWRFN
GLYHUVLI\LQJ VSHFLHV DQG JHQHWLF UHVRXUFHV LQ WKH
DJURHFRV\VWHPVRYHUWLPHDQGVSDFHIURPWKHÀHOG
WR ODQGVFDSH OHYHOV DQG LPSURYLQJ LQWHUDFWLRQV DQG
SURGXFWLYLW\WKURXJKRXWWKHDJULFXOWXUDOV\VWHPUDWKHU
WKDQ IRFXVLQJ RQ LQGLYLGXDO VSHFLHV $JURHFRORJ\ LV
KLJKO\ NQRZOHGJHLQWHQVLYH EDVHG RQ WHFKQLTXHV
WKDWDUHQRWGHOLYHUHGWRSGRZQEXWGHYHORSHGRQWKH
EDVLV RI IDUPHUV· NQRZOHGJH DQG H[SHULPHQWDWLRQ
SURGXFWLRQ 6WHUQ  ,3&& E /HVV IUHVK ,WVSUDFWLFHVUHTXLUHGLYHUVLI\LQJWKHWDVNVRQWKHIDUP
ZDWHUZLOOEHDYDLODEOHIRUDJULFXOWXUDOSURGXFWLRQDQG DQGOLQNLQJWKHPWRWKHGLYHUVLW\RIVSHFLHVLQFOXGLQJ
WKHULVHLQVHDOHYHOVLVDOUHDG\FDXVLQJWKHVDOLQL]DWLRQ
RIZDWHULQFHUWDLQFRDVWDODUHDVUHQGHULQJWKDWZDWHU
XQVXLWDEOHIRULUULJDWLRQSXUSRVHV
DQLPDOVWKDWLQWHUDFWDWÀHOGOHYHO
$ YDULHW\ RI WHFKQLTXHV KDYH EHHQ GHYHORSHG DQG
VXFFHVVIXOO\WHVWHGLQDUDQJHRIUHJLRQVWKDWDUHEDVHG
$V LV ZHOO NQRZQ FXUUHQW DJULFXOWXUDO SUDFWLFHV DUH RQ WKLV DSSURDFK 3UHWW\  ,QWHJUDWHG QXWULHQW
H[DFHUEDWLQJ WKLV VLWXDWLRQ LQ D QXPEHU RI ZD\V )RU PDQDJHPHQWUHFRQFLOHVWKHQHHGWRÀ[QLWURJHQLQWKH
LQVWDQFH GHIRUHVWDWLRQ WR HQDEOH WKH H[SDQVLRQ RI VRLO E\ LPSRUWLQJ LQRUJDQLF DQG RUJDQLF VRXUFHV RI
FXOWLYDWHGDUHDVUHSUHVHQWVDPDMRUVRXUFHRIFDUERQ QXWULHQWVDQGUHGXFLQJQXWULHQWORVVHVWKURXJKHURVLRQ
GLR[LGH&2HPLVVLRQVDFFRXQWLQJIRUSHUFHQWRI FRQWURO 7KXV LW DOVR EXLOGV XS VRLO RUJDQLF PDWWHU
WRWDODQWKURSRJHQLF*+*HPLVVLRQVZKLOHPHWKDQH ZKLFKHQKDQFHV VRLO IHUWLOLW\DQGFDQ ELQG VLJQLÀFDQW
&+HPLVVLRQVUHVXOWIURPULFHSDGGLHVDQGOLYHVWRFN DPRXQWV RI FDUERQ LQ WKH VRLO VHH FRPPHQWDU\
GLJHVWLRQDFFRXQWLQJIRUSHUFHQWRIHPLVVLRQV RI /HX RQ WKLV LVVXH LQ WKLV FKDSWHU $JURIRUHVWU\
$QRWKHU*+*HPLVVLRQLVQLWURXVR[LGH12ZKLFK LQFRUSRUDWHV PXOWLIXQFWLRQDO WUHHV LQWR DJULFXOWXUDO
LV SURGXFHG LQ SDUWLFXODU WKURXJK WKH +DEHU%RVFK V\VWHPV :DWHU KDUYHVWLQJ LQ GU\ODQG DUHDV HQDEOHV

WKHFXOWLYDWLRQRIIRUPHUO\DEDQGRQHGDQGGHJUDGHG
ODQGVDQGLPSURYHVWKHZDWHUSURGXFWLYLW\RIFURSV
7KHLQWHJUDWLRQRIOLYHVWRFNLQWRIDUPLQJV\VWHPVVXFK
DVGDLU\FDWWOHSLJVDQGSRXOWU\LQFOXGLQJXVLQJ]HUR
JUD]LQJ FXW DQG FDUU\ SUDFWLFHV SURYLGHV D VRXUFH
RI SURWHLQ WR IDPLOLHV ZKLOH DOVR IHUWLOL]LQJ VRLOV 7KH
75$'($1'(19,5210(175(9,(:
UHGXFHV WKH GHSHQGHQFH RI IDUPHUV RQ DFFHVV WR
H[WHUQDO LQSXWV ² DQG WKXV RQ VXEVLGLHV ² DQG RQ
ORFDO UHWDLOHUV RI IHUWLOL]HUV RU SHVWLFLGHV DV ZHOO DV
RQ ORFDO PRQH\OHQGHUV 'LYHUVLÀHG IDUPLQJ V\VWHPV
SURGXFHWKHLURZQIHUWLOL]HUVDQGSHVWFRQWUROV\VWHPV
WKXV UHGXFLQJ WKH QHHG IRU SHVWLFLGHV 'H 6FKXWWHU
LQFRUSRUDWLRQ RI ÀVK VKULPSV DQG RWKHU DTXDWLF
UHVRXUFHVLQWRIDUPV\VWHPVVXFKDVLQWRLUULJDWHGULFH
ÀHOGVDQGÀVKSRQGVSURYLGHVVLPLODUEHQHÀWV7KHVH
DSSURDFKHVLQYROYHWKHPDLQWHQDQFHRULQWURGXFWLRQRI
DJULFXOWXUDOELRGLYHUVLW\DVDUHVXOWRIWKHLQWHJUDWLRQRI
 7KH ORFDO DYDLODELOLW\ RI DGDSWHG VHHGV
SODQWLQJ PDWHULDOV DQG OLYHVWRFN EUHHGV DOVR RIIHUV
PXOWLSOH DGYDQWDJHV ERWK IRU WKH IDUPHU DQG IRU
HQVXULQJWKHVXSSO\RIWKHUHTXLUHGGLYHUVLW\RIVXFK
PDWHULDOVIRUPDMRUFURSVVXFKDVPDL]HULFHPLOOHW
GLYHUVHFURSVOLYHVWRFNDJURIRUHVWU\ÀVKSROOLQDWRUV
LQVHFWVVRLOELRWDDQGRWKHUFRPSRQHQWV
6XFK UHVRXUFHFRQVHUYLQJ ORZH[WHUQDOLQSXW
WHFKQLTXHV KDYH D KXJH \HW VWLOO ODUJHO\ XQWDSSHG
SRWHQWLDO WR DGGUHVV WKH FRPELQHG FKDOOHQJHV RI
SURGXFWLRQFRPEDWLQJUXUDOSRYHUW\DQGFRQWULEXWLQJ
WR UXUDO GHYHORSPHQW ZKLOH DOVR SUHVHUYLQJ
HFRV\VWHPVDQGPLWLJDWLQJFOLPDWHFKDQJH
$JURHFRORJ\DVDUHVSRQVHWRVXSSO\FRQVWUDLQWV
$JURHFRORJLFDO WHFKQLTXHV KDYH D SURYHQ SRWHQWLDO
VRUJKXP SRWDWR DQG FDVVDYD 'H 6FKXWWHU D
7KLV LV SDUWLFXODUO\ EHQHÀFLDO WR VPDOOVFDOH IDUPHUV
²HVSHFLDOO\ZRPHQ²ZKRKDYHORZRUQRDFFHVVWR
FUHGLW DQG DOVR ODFN FDSLWDO DQG DFFHVV WR IHUWLOL]HU
GLVWULEXWLRQ V\VWHPV SDUWLFXODUO\ VLQFH WKH SULYDWH
VHFWRU LV XQOLNHO\ WR LQYHVW LQ WKH PRVW UHPRWH DUHDV
ZKHUHFRPPXQLFDWLRQURXWHVDUHSRRUDQGZKHUHIHZ
HFRQRPLHVRIVFDOHFDQEHDFKLHYHG
$JURHFRORJ\·VFRQWULEXWLRQWRUXUDOGHYHORSPHQW
DQGWRRWKHUVHFWRUVRIWKHHFRQRP\
WR VLJQLÀFDQWO\ LPSURYH \LHOGV 3UHWW\ HW DO  $JURHFRORJ\ FRQWULEXWHV WR UXUDO GHYHORSPHQW
FRPSDUHG WKH LPSDFWV RI  UHFHQW VXVWDLQDEOH EHFDXVH LW LV UHODWLYHO\ ODERXULQWHQVLYH DQG LV PRVW
DJULFXOWXUH SURMHFWV LQ  GHYHORSLQJ FRXQWULHV HIIHFWLYHO\SUDFWLFHGRQUHODWLYHO\VPDOOSORWVRIODQG
FRYHULQJPLOOLRQKDUHSUHVHQWLQJSHUFHQWRIWKHLU 7KH LQLWLDO SHULRG LV SDUWLFXODUO\ ODERXULQWHQVLYH
FXOWLYDWHG DUHD 7KH\ IRXQG WKDW WKH LQWHUYHQWLRQV EHFDXVHRIWKHFRPSOH[LW\RIWKHWDVNVRIPDQDJLQJ
LQFUHDVHG FURS SURGXFWLYLW\ RQ  PLOOLRQ IDUPV E\ GLIIHUHQW SODQWV DQG DQLPDOV RQ WKH IDUP DQG RI
DQ DYHUDJH RI  SHU FHQW ZKLOH DOVR LPSURYLQJ WKH UHF\FOLQJWKHZDVWHSURGXFHGEXWWKLVKLJKHUODERXU
VXSSO\ RI FULWLFDO HQYLURQPHQWDO VHUYLFHV $ ODUJH LQWHQVLW\ RI DJURHFRORJ\ GLPLQLVKHV VLJQLÀFDQWO\ LQ
VFDOHVWXG\E\)RUHVLJKWDRQ*OREDO)RRGDQG
)DUPLQJ )XWXUHV FRPPLVVLRQHG E\ WKH *RYHUQPHQW
RIWKH8QLWHG.LQJGRPZKLFKUHYLHZHGSURMHFWVLQ
$IULFDQFRXQWULHVZKHUHVXVWDLQDEOHLQWHQVLÀFDWLRQ
ZDV GHYHORSHG GXULQJ WKH V UHDFKHG VLPLODU
FRQFOXVLRQV
7KHSRWHQWLDORIDJURHFRORJ\WRLQFUHDVHWKH
LQFRPHVRIVPDOOVFDOHIDUPHUV
2QH DGYDQWDJH RI DJURHFRORJ\ LV LWV UHOLDQFH RQ
ORFDOO\ SURGXFHG LQSXWV 0DQ\ $IULFDQ VRLOV DUH
QXWULHQWSRRU DQG KHDYLO\ GHJUDGHG DQG WKHUHIRUH
QHHGUHSOHQLVKPHQW$GGLQJQXWULHQWVWRWKHVRLOFDQ
EH GRQH E\ DSSO\LQJ QRW RQO\ PLQHUDO IHUWLOL]HUV EXW
DOVROLYHVWRFNPDQXUHRUE\JURZLQJJUHHQPDQXUHV
)DUPHUV FDQ DOVR HVWDEOLVK ZKDW KDV EHHQ FDOOHG D
´IHUWLOL]HU IDFWRU\ LQ WKH ÀHOGVµ E\ SODQWLQJ WUHHV WKDW
WDNHQLWURJHQRXWRIWKHDLUDQG´À[µLWLQWKHLUOHDYHV
ZKLFK DUH VXEVHTXHQWO\ LQFRUSRUDWHG LQWR WKH VRLO
WKHORQJHUWHUP$MD\LHWDO$QGDOWKRXJKLW
LVVHHQE\PDQ\DVDOLDELOLW\RIVXVWDLQDEOHIDUPLQJ
HVSHFLDOO\ZKHUHJRYHUQPHQWVJLYHSULRULW\WRODERXU
VDYLQJ PHDVXUHV WKH FUHDWLRQ RI HPSOR\PHQW LQ
WKH UXUDO DUHDV LQ GHYHORSLQJ FRXQWULHV PD\ LQ IDFW
FRQVWLWXWHDQDGYDQWDJHLIOLQNHGWRSURGXFWLYLW\JDLQV
,QGHHG LW FRXOG SUHVHQW DQ HQRUPRXV DGYDQWDJH LQ
WKH FRQWH[W RI PDVVLYH XQGHUHPSOR\PHQW DQG KLJK
GHPRJUDSKLFJURZWKLQPDQ\GHYHORSLQJFRXQWULHV,W
ZRXOGDOVRUHVSRQGWRWKHXUJHQWQHHGWRVORZGRZQ
UXUDOXUEDQ PLJUDWLRQ DV DFWLYLWLHV LQ WKH VHUYLFHV
VHFWRULQWKHXUEDQDUHDVDSSHDUXQDEOHWRDEVRUEWKH
H[FHVVODERXU*URZWKLQDJULFXOWXUHFDQEHHVSHFLDOO\
EHQHÀFLDO WR RWKHU VHFWRUV RI WKH HFRQRP\ LI LW LV
EURDGEDVHG DQG LQFUHDVHV WKH LQFRPHV RI D ODUJH
QXPEHU RI IDUPLQJ KRXVHKROGV UDWKHU WKDQ OHDGLQJ
WRDIXUWKHUFRQFHQWUDWLRQRILQFRPHVLQWKHKDQGVRI
D IHZ UHODWLYHO\ ODUJH ODQGRZQHUV ZKR UHO\ RQ ODUJH
VFDOH KHDYLO\ PHFKDQL]HG SODQWDWLRQV $GHOPDQ
:RUOG $JURIRUHVWU\ &HQWUH  $JURHFRORJ\ 
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

$JURHFRORJ\·VFRQWULEXWLRQWRLPSURYLQJQXWULWLRQ UHRULHQWDWLRQZLOOGHSHQGRQWKHDELOLW\WROHDUQIDVWHU
IURP UHFHQW LQQRYDWLRQV DQG WR GLVVHPLQDWH ZKDW
7KHDSSURDFKHVHVSRXVHGE\WKH*UHHQ5HYROXWLRQLQ
ZRUNV PRUH ZLGHO\ *RYHUQPHQWV KDYH D NH\ UROH
WKHSDVWIRFXVHGSULPDULO\RQERRVWLQJWKHSURGXFWLRQ
WR SOD\ LQ WKLV UHJDUG (QFRXUDJLQJ D VKLIW WRZDUGV
RIFHUHDOFURSV²ULFHZKHDWDQGPDL]H²LQRUGHUWR
VXVWDLQDEOHDJULFXOWXUHLPSOLHVWUDQVLWLRQFRVWVVLQFH
SUHYHQW IDPLQHV +RZHYHU WKHVH FURSV DUH PDLQO\
IDUPHUV PXVW OHDUQ QHZ WHFKQLTXHV DQG UHYLWDOL]H
D VRXUFH RI FDUERK\GUDWHV DQG FRQWDLQ UHODWLYHO\
WUDGLWLRQDODQGORFDONQRZOHGJHPRYLQJDZD\IURPWKH
IHZ SURWHLQV DQG WKH RWKHU QXWULHQWV HVVHQWLDO IRU
FXUUHQW V\VWHPV WKDW DUH ERWK PRUH VSHFLDOL]HG DQG
DGHTXDWHGLHWV<HWRIWKHRYHUSODQWVSHFLHV
OHVV DGDSWLYH DQG KDYH D ORZHU LQQRYDWLRQ FDSDFLW\
DYDLODEOH WR KXPDQV WKHVH WKUHH FURSV VXSSO\ WKH
3UHWW\  ,Q RUGHU WR VXFFHHG LQ LPSOHPHQWLQJ
EXON RI RXU SURWHLQ DQG HQHUJ\ QHHGV WRGD\ )ULVRQ
VXFK D WUDQVLWLRQ WKH VSUHDG RI DJURHFRORJ\ VKRXOG
HW DO  7KH VKLIW IURP GLYHUVLÀHG FURSSLQJ
EHGLUHFWHGDWWKHIDUPHUVWKHPVHOYHVZKRZLOOEHLWV
V\VWHPVWRVLPSOLÀHGFHUHDOEDVHGV\VWHPVKDVWKXV
PDLQ EHQHÀFLDULHV 7KXV IDUPHUWRIDUPHU OHDUQLQJ LQ
FRQWULEXWHG WR PLFURQXWULHQW PDOQXWULWLRQ LQ PDQ\
IDUPHU ÀHOG VFKRROV RU WKURXJK IDUPHUV· PRYHPHQWV
GHYHORSLQJ FRXQWULHV 'HPPHQW HW DO  $V D
VKRXOG EH HQFRXUDJHG DV LQ WKH &DPSHVLQRD
UHVXOWQXWULWLRQLVWVQRZLQFUHDVLQJO\LQVLVWRQWKHQHHG
&DPSHVLQRPRYHPHQWLQ&HQWUDO$PHULFDDQG&XED
IRUPRUHYDULHGDJURHFRV\VWHPVLQRUGHUWRHQVXUHD
'HJUDQGH HW DO  +ROW*LPpQH]  5RVVHW
PRUHGLYHUVLÀHGQXWULHQWRXWSXWIURPIDUPLQJV\VWHPV
HWDO
$OORZD\'H&OHUFNHWDO7KHGLYHUVLW\RI
VSHFLHVRQIDUPVPDQDJHGIROORZLQJDJURHFRORJLFDO $QLPSURYHGGLVVHPLQDWLRQRINQRZOHGJHE\KRUL]RQWDO
SULQFLSOHVDVZHOODVLQXUEDQRUSHULXUEDQDJULFXOWXUH IDUPHUWRIDUPHU PHDQV WUDQVIRUPV WKH QDWXUH RI
LVDQLPSRUWDQWDVVHWLQWKLVUHJDUG NQRZOHGJH LWVHOI ZKLFK EHFRPHV WKH SURGXFW RI D
QHWZRUN:DUQHUDQG.LUVFKHQPDQQ,WVKRXOG
$JURHFRORJ\DQGFOLPDWHFKDQJH HQFRXUDJH IDUPHUV SDUWLFXODUO\ VPDOOVFDOH IDUPHUV
OLYLQJ LQ WKH PRVW UHPRWH DUHDV DQG WKRVH HNLQJ RXW
$JURHFRORJ\ FDQ VXSSRUW WKH SURYLVLRQ RI D QXPEHU
D OLYLQJ IURP WKH PRVW PDUJLQDO VRLOV WR ZRUN ZLWK
RI VHUYLFHV WR HFRV\VWHPV LQFOXGLQJ E\ SURYLGLQJ D
H[SHUWV WRZDUGV D FRFRQVWUXFWLRQ RI NQRZOHGJH
KDELWDW IRU ZLOG SODQWV VXSSRUWLQJ JHQHWLF GLYHUVLW\
HQVXULQJ WKDW DGYDQFHV DQG LQQRYDWLYH VROXWLRQV ZLOO
DQG SROOLQDWLRQ DQG ZDWHU VXSSO\ DQG UHJXODWLRQ ,W
EHQHÀW WKHP DV D PDWWHU RI SULRULW\ UDWKHU WKDQ RQO\
DOVR VWUHQJWKHQV UHVLOLHQFH WR FOLPDWH FKDQJH ZKLFK
LV FDXVLQJ PRUH H[WUHPH ZHDWKHUUHODWHG HYHQWV
5HVLOLHQFHLVVWUHQJWKHQHGE\WKHXVHDQGSURPRWLRQ
RIDJULFXOWXUDOELRGLYHUVLW\DWHFRV\VWHPIDUPV\VWHP
DQGÀHOGOHYHOVPDGHSRVVLEOHE\PDQ\DJURHFRORJLFDO
DSSURDFKHV 3ODWIRUP IRU $JURELRGLYHUVLW\ 5HVHDUFK
EHQHÀWLQJWKHEHWWHURIISURGXFHUV8SKRIID
7KLV LV NH\ WR WKH UHDOL]DWLRQ RI WKH ULJKW WR IRRG
)LUVW LW HQDEOHV SXEOLF DXWKRULWLHV WR EHQHÀW IURP
WKH H[SHULHQFHV DQG LQVLJKWV RI WKH IDUPHUV 5DWKHU
WKDQ WUHDWLQJ VPDOOKROGHU IDUPHUV DV EHQHÀFLDULHV
$JURHFRORJ\DOVRSXWVDJULFXOWXUHRQWKHSDWK RI DLG WKH\ VKRXOG EH VHHQ DV H[SHUWV ZKR KDYH
RI VXVWDLQDELOLW\ E\ GHOLQNLQJ IRRG SURGXFWLRQ IURP D NQRZOHGJH WKDW LV FRPSOHPHQWDU\ WR IRUPDOL]HG
UHOLDQFH RQ IRVVLO HQHUJ\ RLO DQG JDV ,Q DGGLWLRQ
LW FRQWULEXWHV WR PLWLJDWLQJ FOLPDWH FKDQJH ERWK
E\ LQFUHDVLQJ FDUERQ VLQNV LQ VRLO RUJDQLF PDWWHU
DQG DERYHJURXQG ELRPDVV DQG E\ UHGXFLQJ &2
DQG RWKHU *+* HPLVVLRQV WKURXJK ORZHU GLUHFW DQG
LQGLUHFWHQHUJ\XVH
'6FDOLQJXSDJURHFRORJ\
7KHUH LV D FOHDU DQG XUJHQW QHHG IRU D UHRULHQWDWLRQ
RIDJULFXOWXUDOGHYHORSPHQWWRZDUGVV\VWHPVWKDWXVH
IHZHU H[WHUQDO LQSXWV OLQNHG WR IRVVLO HQHUJLHV DQG
LQVWHDGXVHSODQWVWUHHVDQGDQLPDOVLQFRPELQDWLRQ
PLPLFNLQJ QDWXUH LQVWHDG RI LQGXVWULDO SURFHVVHV
H[SHUWLVH 6HFRQG SDUWLFLSDWLRQ FDQ HQVXUH WKDW
SROLFLHVDQGSURJUDPPHVDUHWUXO\UHVSRQVLYHWRWKH
QHHGV RI YXOQHUDEOH JURXSV DV WKRVH JURXSV ZLOO
TXHVWLRQ SURMHFWV WKDW IDLO WR LPSURYH WKHLU VLWXDWLRQ
7KLUGSDUWLFLSDWLRQHPSRZHUVWKHSRRU²DYLWDOVWHS
WRZDUGVSRYHUW\DOOHYLDWLRQEHFDXVHODFNRISRZHULV
D VRXUFH RI SRYHUW\ DV PDUJLQDO FRPPXQLWLHV RIWHQ
UHFHLYHOHVVVXSSRUWWKDQWKHJURXSVWKDWKDYHEHWWHU
FRQQHFWLRQV ZLWK JRYHUQPHQW 0RUHRYHU SRYHUW\
H[DFHUEDWHV WKLV ODFN RI SRZHU FUHDWLQJ D YLFLRXV
FLUFOHRIIXUWKHUGLVHPSRZHUPHQW)RXUWKSROLFLHVWKDW
DUHFRGHVLJQHGZLWKIDUPHUVKDYHJUHDWHUOHJLWLPDF\
DQG WKXV IDYRXU EHWWHU SODQQLQJ RI LQYHVWPHQW DQG
SURGXFWLRQDQGEHWWHUXSWDNHE\RWKHUIDUPHUV)$2
DW WKH ÀHOG OHYHO +RZHYHU WKH VXFFHVV RI VXFK D DQG,,('3DUWLFLSDWLRQRIIRRGLQVHFXUHJURXSV
 75$'($1'(19,5210(175(9,(:

LQ WKH SROLFLHV WKDW DIIHFW WKHP VKRXOG EHFRPH D

FUXFLDOHOHPHQWRIDOOIRRGVHFXULW\SROLFLHVIURPSROLF\
GHVLJQWRWKHDVVHVVPHQWRIUHVXOWVWRWKHGHFLVLRQRQ
UHVHDUFKSULRULWLHV,QGHHGLPSURYLQJWKHVLWXDWLRQRI
PLOOLRQVRIIRRGLQVHFXUHVPDOOKROGHUIDUPHUVFDQQRW
EHGRQHZLWKRXWWKHP
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
 41/16+0)'5+.+'06)4+%7.674'+07$g
#*#4#0(4+%##5##,144+14+6;+0.+/#6'g
*#0)'&#26#6+10
0DUFXV.DSODQ&KLQZH,IHMLND6SHUDQ]DDQG,PPH6FKRO]
*HUPDQ'HYHORSPHQW,QVWLWXWH/ Deutsches Institut für Entwicklungspolitik (DIE)

$EVWUDFW
‡ 3ROLFLHVWRSURPRWHDGDSWDWLRQWRFOLPDWHFKDQJHLQVXE6DKDUDQ$IULFDZKLOHDOVRKHOSLQJWRDOOHYLDWH
SRYHUW\ZLOOUHTXLUHPXOWLSOHLQYHVWPHQWVLQUXUDODUHDVWRUDLVHDJULFXOWXUDOSURGXFWLYLW\DQGLPSURYH
HFRQRPLFLQIUDVWUXFWXUHDQGVRFLDOVHUYLFHVDVSULRULWLHV
‡ ,QFUHDVHG LQYHVWPHQW LQ DJULFXOWXUH VKRXOG WDNH LQWR DFFRXQW LWV PXOWLSOH VRFLDO HFRQRPLF DQG
HQYLURQPHQWDO IXQFWLRQV LQ RUGHU WR DFKLHYH SRYHUW\ UHGXFWLRQ DQG IRRG VHFXULW\ DQG LPSURYH WKH
UHVLOLHQFHRIUXUDOOLYHOLKRRGVWRPXOWLSOHVKRFNVLQFOXGLQJFOLPDWHFKDQJH
‡ 6FHQDULRV RI WKH ORFDO LPSDFWV RI FOLPDWH FKDQJH VKRXOG LQFOXGH H[WUHPH ZHDWKHU DQG FOLPDWH
FRQGLWLRQV LH ZLWK UHJDUG WR WHPSHUDWXUH RU YDULDELOLW\ RI UDLQIDOO LQ RUGHU WR EH SUHSDUHG IRU WKH
HIIHFWVRIGDQJHURXVFOLPDWHFKDQJHLHPRUHIUHTXHQWDQGLQWHQVLYHGURXJKWVDQGÁRRGVWKDWLQ
WKHZRUVWFDVHFRXOGIRUFHORFDOSRSXODWLRQVWRSHUPDQHQWO\PRYHRXWRIDIIHFWHGDUHDV

$&KDOOHQJHVIDFLQJDJULFXOWXUHLQVXE EXWDOVRWRWDNHDEURDGHUYLHZDQGDLPWRLQFUHDVHWKH
6DKDUDQ$IULFD RYHUDOOUHVLOLHQFHRIUXUDOSHRSOHDQGWKHLUOLYHOLKRRGV

$JULFXOWXUDO SURGXFWLRQ LQ VXE6DKDUDQ $IULFD 66$ 0RVWSRRUSHRSOHLQGHYHORSLQJFRXQWULHVOLYHLQUXUDO

DQG WKHUHIRUH DOVR OLYHOLKRRGV WKDW GHSHQG RQ
DJULFXOWXUH ZLOO EH VHYHUHO\ DIIHFWHG E\ WKH LPSDFWV
RI FOLPDWH FKDQJH 'HSHQGLQJ RQ WKHLU JHRJUDSKLFDO
ORFDWLRQ YDULRXV VXEUHJLRQV DUH OLNHO\ WR H[SHULHQFH
HLWKHU OHVV RU PRUH UDLQIDOO ULVLQJ WHPSHUDWXUHV DQG
D KLJKHU QXPEHU DQG LQWHQVLW\ RI H[WUHPH ZHDWKHU
HYHQWV *HQHUDOO\ \LHOGV ZLOO GHFOLQH DOWKRXJK
WROHUDQFH RI GLIIHUHQW FURSV WR WHPSHUDWXUH FKDQJHV
DQG ZDWHU DYDLODELOLW\ ZLOO YDU\ FRQVLGHUDEO\ /REHOO HW
DUHDV7KH:RUOG%DQNPDQ\RIZKRPGHSHQG
RQ DJULFXOWXUDO DFWLYLWLHV IRU WZR SXUSRVHV ÀUVW WR
HQVXUHIRRGVHFXULW\IRUWKHLUIDPLOLHVDQGVHFRQGIRU
LQFRPHJHQHUDWLRQDVDJULFXOWXUHLVRIWHQWKHLUPDLQRU
HYHQRQO\HFRQRPLFDFWLYLW\%RWKDVSHFWVDOVRKDYH
LPSOLFDWLRQV IRU RWKHU QRQIDUP UXUDO KRXVHKROGV
HLWKHUWKURXJKWKHGHJUHHRIDYDLODELOLW\RIIRRGZKLFK
FDQFDXVHÁXFWXDWLRQVLQORFDOSULFHVRUDVDQLQGLUHFW
VRXUFHRIHPSOR\PHQW
DO/LXHWDO:KLOHWKHPDMRUWUHQGVDUH ,QPDQ\UXUDODUHDVRI66$DJULFXOWXUHIDFHVYDULRXV
FOHDUFRQVLGHUDEOHXQFHUWDLQWLHVUHPDLQ0OOHU
)RUH[DPSOHIRUDQXPEHURIDUHDVLQ:HVWHUQ$IULFD
VRPH JOREDO FLUFXODWLRQ PRGHOV H[SHFW LQFUHDVHV LQ
SUHFLSLWDWLRQ ZKLOH RWKHUV SURMHFW OHVV UDLQIDOO IRU WKH
FRPLQJ GHFDGHV 'HVSLWH WKLV XQFHUWDLQW\ DJULFXOWXUH
WKURXJKRXW$IULFDIDFHVDVHULRXVULVNRIH[SHULHQFLQJ
QHJDWLYH LPSDFWV IURP FOLPDWH FKDQJH 0OOHU HW DO
ZHOONQRZQFKDOOHQJHVZKLFKFRQVWUDLQWKHVRFLDODQG
HFRQRPLFGHYHORSPHQWRIWKHVHFWRUDQGRIWKHSHRSOH
ZKRGHSHQGRQLW7KHIXQGDPHQWDOFRQVWUDLQWVLQFOXGH
LQVHFXUHDFFHVVRIORFDOSURGXFHUVWRODQGXQVNLOOHG
DJULFXOWXUDO PDQSRZHU IRU LQQRYDWLYH DJULFXOWXUDO
SURGXFWLRQ V\VWHPV OLPLWHG DFFHVV WR DJULFXOWXUDO
LQSXWV DV ZHOO DV OLPLWHG NQRZOHGJH RI KRZ WKH
E8QGHUVXFKFLUFXPVWDQFHVLWZLOOEHSDUWLFXODUO\ ORFDO FOLPDWH HJ KRPRJHQHRXV UDLQIDOO ]RQHV WKDW
FKDOOHQJLQJ IRU SRRU IDUPHUV WR SUHSDUH IRU WKH H[WHQGRYHUYLOODJHVLVFKDQJLQJDQGLVH[SHFWHGWR
XSFRPLQJ FKDQJHV ,W LV WKHUHIRUH DGYLVDEOH WR IRFXV FKDQJHLQWKHIXWXUH7KHVHFRQVWUDLQWVUHVXOWLQORZHU
QRWRQO\RQGLUHFWPHDVXUHVWRVXSSRUWDGDSWDWLRQRI SURGXFWLYLW\%UXLQVPD5RVHJUDQWHWDO
DJULFXOWXUDODFWLYLWLHVWRWKHLPSDFWVRIFOLPDWHFKDQJH DQG WKH SUHYDOHQFH RI XQVXVWDLQDEOH DJULFXOWXUDO
 75$'($1'(19,5210(175(9,(:

SUDFWLFHV ZLWK QHJDWLYH HFRORJLFDO LPSDFWV :DWHU OHYHO,QDGGLWLRQWKHVKDUHRIWKHDJULFXOWXUDOVHFWRULQ

VWUHVV DQG VFDUFLW\ DUH LQFUHDVLQJ ZKLOH ELRGLYHUVLW\ RIÀFLDOGHYHORSPHQWDVVLVWDQFH2'$GHFOLQHGIURP
LV GHFOLQLQJ 6RLO GHJUDGDWLRQ DQG GHFOLQLQJ IHUWLOLW\  SHU FHQW LQ  WR  SHU FHQW LQ  :RUOG
WKURXJKIRUH[DPSOHLQDSSURSULDWHVRLOPDQDJHPHQW %DQN7RGD\WKHLPSRUWDQFHRIDJULFXOWXUHIRU
DQG ORZ LQSXWV FUHDWH VHULRXV SUREOHPV IRU HFRQRPLFJURZWKKDVJHQHUDOO\EHHQUHFRJQL]HGDQG
FXUUHQW DQG IXWXUH DJULFXOWXUDO SURGXFWLYLW\ LQ PDQ\ QDWLRQDOUHJLRQDODQGLQWHUQDWLRQDORUJDQL]DWLRQVDUH
SDUWV RI 66$ 0F,QW\UH HW DO D 9OHN /H DQG PDNLQJ JUHDWHU HIIRUWV WR VXSSRUW LWV GHYHORSPHQW
7DPHQH  )XUWKHUPRUH ORZRXWSXW DJULFXOWXUH &KDOOLQRU HW DO  +D]HOO HW DO  ,Q WKHLU
QHFHVVLWDWHVWKHXVHRIPRUHODQGWRPDLQWDLQLWVOHYHO 0DSXWR 'HFODUDWLRQ RI  PHPEHU FRXQWULHV RI
RI SURGXFWLRQ ZKLFK LV ZK\ DJULFXOWXUH LV WKH PDLQ WKH $IULFDQ 8QLRQ FDOOHG XSRQ $IULFDQ JRYHUQPHQWV
GULYHURIGHIRUHVWDWLRQLQQHDUO\DOOGHYHORSLQJFRXQWULHV WRLQFUHDVHLQYHVWPHQWLQWKHDJULFXOWXUDOVHFWRUWRDW
6FKHUU DQG 6WKDSLW  6XFK ODQGXVH FKDQJHV
IRUIRRGSURGXFWLRQFDXVH&2HPLVVLRQVWKURXJKWKH
UHOHDVH RI FDUERQ IURP DERYHJURXQG ELRPDVV DQG
JUD]LQJ OLYHVWRFN UHGXFHG FDUERQ VHTXHVWUDWLRQ LQ
VRLOVDQGXQVXVWDLQDEOHDJULFXOWXUDOSUDFWLFHV6FKHUU
OHDVWSHUFHQWRIWKHLUQDWLRQDOEXGJHWV+RZHYHU
PRVW $IULFDQ FRXQWULHV DUH VWLOO IDU IURP UHDFKLQJ
WKLVWDUJHW0RUHRYHUHYHQWKRXJKWKHVHFWRULVQRZ
UHFHLYLQJPRUHDWWHQWLRQRZLQJWRWKHORQJSHULRGRI
QHJOHFWWKHPDQ\FKDOOHQJHVDKHDGZLOOEHGLIÀFXOWWR
DQG 6WKDSLW  $V D UHVXOW ODQGXVH FKDQJHV RYHUFRPH
LQFOXGLQJ GHIRUHVWDWLRQ DFFRXQW IRU DERXW  SHU )XUWKHUPRUHPRVWSXEOLFWUDQVIHUVDUHODUJHO\DLPHG
FHQWRIWRWDODQWKURSRJHQLF*+*HPLVVLRQV6PLWKHW DW PLWLJDWLQJ FOLPDWH FKDQJH UDWKHU WKDQ VXSSRUWLQJ
DOEZKLOHELRPDVVEXUQLQJDQGWKHFRQYHUVLRQ DGDSWDWLRQ WR LWV LPSDFWV  SHU FHQW RI GHGLFDWHG
RI ZHWODQGV FRQWULEXWH WR PHWKDQH &+ HPLVVLRQV PXOWLDQGELODWHUDOIXQGVZHUHDSSURYHGIRUPLWLJDWLRQ
DQGWKHDSSOLFDWLRQRIIHUWLOL]HUVUHVXOWVLQQLWURXVR[LGH SURMHFWVSHUFHQWLIDFWLYLWLHVIRUUHGXFLQJHPLVVLRQV
HPLVVLRQV81)&&& IURP GHIRUHVWDWLRQ DQG IRUHVW GHJUDGDWLRQ 5(''
7RGD\QHZJOREDOSDWWHUQVFUHDWHDGGLWLRQDOFKDOOHQJHV DUH LQFOXGHG DQG RQO\  SHU FHQW IRU DGDSWDWLRQ
WKDW IXUWKHU DJJUDYDWH WKHVH NQRZQ FRQVWUDLQWV RQ SURMHFWV %LODWHUDO 2'$ VKRZV D VOLJKWO\ GLIIHUHQW
D SURGXFWLYH DQG VXVWDLQDEOH DJULFXOWXUDO VHFWRU LQ SDWWHUQZLWKSHUFHQWDSSURYHGIRUPLWLJDWLRQDQG
66$,QDGGLWLRQWRHFRQRPLFWUHQGVVXFKDVJUHDWHU
LQWHUQDWLRQDO FRPSHWLWLRQ IRU ODQG IRU YDULRXV XVHV
ÁXFWXDWLQJ IRRG SULFHV KLJKHU HQHUJ\ SULFHV DQG
LQWHUQDWLRQDOWUDGHSROLFLHVFOLPDWHFKDQJHVHULRXVO\
WKUHDWHQVWKHSURGXFWLYLW\RIWKHDJULFXOWXUDOVHFWRUDQG
LWVFRQWULEXWLRQWRHFRQRPLFDQGVRFLDOGHYHORSPHQW
7KHSRRUHUSHRSOHZKRGHSHQGGLUHFWO\RQHFRV\VWHP
 SHU FHQW IRU DGDSWDWLRQ 81(3  0RUHRYHU
PRVWDFWLYLWLHVDQGIXQGVIRFXVRQUHGXFLQJHPLVVLRQV
DQGLQFUHDVLQJHIÀFLHQF\LQWKHHQHUJ\DQGWUDQVSRUW
VHFWRUVZKLOHDGDSWDWLRQDQGPLWLJDWLRQLQDJULFXOWXUH
DUHVWLOOXQGHUIXQGHG/RRNLQJDWELODWHUDO2'$DJDLQ
DJULFXOWXUH UHFHLYHG RQO\  SHU FHQW RI DOO IXQGV
GHGLFDWHG WR PLWLJDWLRQ FRPSDUHG ZLWK  SHU FHQW
VHUYLFHV IRU WKHLU OLYHOLKRRGV DUH WKH PRVW YXOQHUDEOH
WR SHUPDQHQW FKDQJHV LQ WHPSHUDWXUH DQG ZDWHU
DYDLODELOLW\ DV ZHOO DV WR DQ RYHUDOO KLJKHU YDULDELOLW\
LQ FOLPDWLF SDWWHUQV 7KH\ QRW RQO\ KDYH OHVV DFFHVV
WR YDULRXV W\SHV RI UHVRXUFHV EXW WKH\ DOVR KDYH
IHZHU RSSRUWXQLWLHV IRU GLYHUVLI\LQJ WKHLU OLYHOLKRRGV
WRLQFOXGHRWKHULQFRPHJHQHUDWLQJDFWLYLWLHVLQRUGHU
WRUHGXFHWKHLUGHSHQGHQFHRQDJULFXOWXUHDQGRWKHU
HFRV\VWHPVHUYLFHV
2QH RI WKH PDLQ UHDVRQV IRU WKH SRRU VLWXDWLRQ DQG
WKH KLJK YXOQHUDELOLW\ RI IDUPHUV DQG DJULFXOWXUH LQ
66$ LV WKH ORQJWHUP QHJOHFW RI WKLV VHFWRU E\ ERWK
QDWLRQDO JRYHUQPHQWV DQG WKH LQWHUQDWLRQDO GRQRU
FRPPXQLW\ VWDUWLQJ LQ WKH V 3XEOLF VSHQGLQJ
IRUDGDSWDWLRQDFWLYLWLHVLQ81(3
%2SWLRQVIRUPXOWLIXQFWLRQDODJULFXOWXUH
DQGUHVLOLHQWOLYHOLKRRGV
7KH YDULRXV FRQVWUDLQWV RQ $IULFDQ DJULFXOWXUH DV
RXWOLQHG DERYH FDOO IRU PXOWLIXQFWLRQDO DSSURDFKHV
WKDWLQFUHDVHWKHUHVLOLHQFHRIDJULFXOWXUDOV\VWHPVDQG
OLYHOLKRRGV WR WKH LPSDFWV RI H[WHUQDO GLVWXUEDQFHV
LQFOXGLQJ FOLPDWH FKDQJH 6XFK DJULFXOWXUDO
PDQDJHPHQWVKRXOGDLPWRFRQWULEXWHWRIRRGVHFXULW\
DQGWRVXSSRUWHFRQRPLFDQGVRFLDOGHYHORSPHQWIRU
DOO VWDNHKROGHUV ZKLOH DW WKH VDPH WLPH PLQLPL]LQJ
QHJDWLYHLPSDFWVRQHFRV\VWHPV7DNLQJLQWRDFFRXQW
WKHODUJHFRQWULEXWLRQRIWKHDJULFXOWXUDOVHFWRUWRJOREDO
RQ IDUPLQJ DFFRXQWV IRU RQO\  SHU FHQW RI WRWDO JUHHQKRXVHJDV*+*HPLVVLRQVDFRPSUHKHQVLYH
JRYHUQPHQW VSHQGLQJ LQ 66$ :RUOG %DQN  DSSURDFK VKRXOG DOVR VWULYH WR DYRLG PDQDJHPHQW
DQGWKHDJULFXOWXUDOVHFWRULVWD[HGDWDUHODWLYHO\KLJK SUDFWLFHV WKDW LQFUHDVH HPLVVLRQV ,QGHHG WKHUH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

DUH YDULRXV DSSURDFKHV WKDW PD\ HYHQ FRQWULEXWH WR
UHGXFLQJDJULFXOWXUDO*+*HPLVVLRQVLILPSOHPHQWHG
SURSHUO\
'XH WR WKH FXUUHQWO\ ORZ SURGXFWLYLW\ RI DJULFXOWXUH
LQ 66$ WKHUH LV D ODUJH SRWHQWLDO IRU LPSURYHPHQWV
WRZDUGV UHVLOLHQW DQG PXOWLIXQFWLRQDO SUDFWLFHV
0RVW RI WKHVH VXVWDLQDEOH PDQDJHPHQW SUDFWLFHV
 +RZHYHU LQ PDQ\ UHJLRQV LQ 66$ ORZLQSXW
V\VWHPVSUHYDLOVRPHRIZKLFKFDQEHUHJDUGHGDV
RUJDQLFV\VWHPVDVWKH\XVHIHZLIDQ\H[WHUQDOLQSXWV
WKDW DUH HLWKHU QRW DFFHVVLEOH RU DUH WRR H[SHQVLYH
,Q VXFK V\VWHPV D FRPSOHWH VKLIW WR LQWHJUDWHG DQG
DGHTXDWHO\ PDQDJHG V\VWHPV PD\ LQFUHDVH \LHOGV
%DGJOH\ HW DO  3UHWW\  81(381&7$'
 )RU D PRUH GHWDLOHG GLVFXVVLRQ RI WKH
ZHUH DOUHDG\ ZHOO NQRZQ EHIRUH WKH LPSDFWV RI
SURGXFWLYLW\DQGSURÀWDELOLW\RIRUJDQLFDJULFXOWXUHVHH
FOLPDWH FKDQJH LQFUHDVHG WKH XUJHQF\ RI WKHLU
WKHFRPPHQWDU\RI1HPHVLQWKLVFKDSWHU
LPSOHPHQWDWLRQ ,Q WKHLU PRVW FRPSUHKHQVLYH IRUP
LQWHJUDWHGDSSURDFKHVDOVRWDNHLQWRDFFRXQWLPSDFWV 7KH$IULFDQFRQWLQHQWVWLOOIDFHVWKHKLJKHVWSRSXODWLRQ
RI DJULFXOWXUDO DQG ODQGXVH PDQDJHPHQW RQ ORFDO JURZWK UDWHV LQ WKH ZRUOG )$2  %LQVZDQJHU
OLYHOLKRRGVVRFLDOHTXLW\DQGLQFOXVLRQDQGDUHSDUW 0NKL]H  7KLV DORQJ ZLWK FXUUHQW GHÀFLHQFLHV
RI ZLGHU LQWHJUDWHG QDWXUDO UHVRXUFHV PDQDJHPHQW LQ IRRG VHFXULW\ DQG SRVVLEOH IXWXUH FKDQJHV LQ
,$$67'E,QWHJUDWHGV\VWHPVGRQRWUHTXLUH
D VLQJOH VWULFWO\ GHÀQHG WHFKQRORJ\ UDWKHU WKH\
UHTXLUH D VHW RI YDU\LQJ SUDFWLFHV DGDSWHG WR ORFDO
ELRSK\VLFDODQGVRFLRHFRQRPLFFRQGLWLRQV$OOWKHVH
DSSURDFKHVKDYHRQHIHDWXUHLQFRPPRQWKH\VHHN
WRGHSHQGOHVVRQH[WHUQDOLQSXWV,QVWHDGWKH\UDWKHU
PDQDJH WKH FRPSOH[ G\QDPLFV DQG LQWHUDFWLRQV
GLHWV UHLQIRUFHV WKH XUJHQF\ WR LQFUHDVH DJULFXOWXUDO
SURGXFWLRQ :KHWKHU WKLV REMHFWLYH VKRXOG EH PDLQO\
SXUVXHGE\HLWKHULQWHQVLI\LQJSURGXFWLRQRQH[LVWLQJ
DJULFXOWXUDO ODQG RU E\ H[SDQGLQJ DJULFXOWXUDO ODQG
WR SUHYLRXVO\ XQXVHG DUHDV LV FXUUHQWO\ DQ LVVXH RI
GHEDWH(YHQLQDODQGULFKFRQWLQHQWVXFKDV$IULFD
WKHDPRXQWRIODQGVXLWDEOHIRUDJULFXOWXUDOSXUSRVHV
EHWZHHQ GLIIHUHQW FRPSRQHQWV RI DJURHFRV\VWHPV LVGHFOLQLQJUDSLGO\ÀJXUHDQGWKHFRQYHUVLRQRI
DQG DGMRLQLQJ HFRV\VWHPV E\ PLPLFNLQJ QDWXUH RWKHU ODQG XVHV SDUWLFXODUO\ IRUHVWV IRU DJULFXOWXUDO
DQG E\ UHO\LQJ RQ WHFKQRORJLHV DQG LQSXWV WKDW DUH SXUSRVHVSURGXFHVDGGLWLRQDO&2HPLVVLRQVÀJXUH
DYDLODEOH ZLWKLQ WKH V\VWHP 'H 6FKXWWHU   0RUHRYHU ODQG FRQYHUVLRQ PD\ MHRSDUGL]H
%XFNDQG6FKHUU,QWHJUDWHGV\VWHPVVXSSRUW WKH OLYHOLKRRGV RI SHRSOH ZKR JHQHUDWH HFRV\VWHP
DGDSWDWLRQ WR FOLPDWH FKDQJH E\ VWUHQJWKHQLQJ WKH VHUYLFHV IURP WKH IRUPHU ODQG XVHV IRU D PRUH
UHVLOLHQFHRIWKHDJURHFRV\VWHPWRDQ\GLVWXUEDQFHV HODERUDWHGLVFXVVLRQVHHWKHFRPPHQWVRI3LPHQWHO
E\ LQFUHDVLQJ WKH GHJUHH RI GLYHUVLÀFDWLRQ DQG
LPSURYLQJWKHSURYLVLRQRIHQYLURQPHQWDOVHUYLFHV$W
WKH VDPH WLPH WKHLU ORZ XVH RI IHUWLOL]HUV DQG RWKHU
H[WHUQDO LQSXWV FDQ UHGXFH DGYHUVH LPSDFWV RQ
HFRV\VWHPFRPSRQHQWVDQGUHVXOWLQORZHUHPLVVLRQV
IURPWKHSURGXFWLRQDQGWUDQVSRUWSURFHVV,QVWHDGRI
UHO\LQJRQODUJHTXDQWLWLHVRIH[WHUQDOPDWHULDOLQSXWV
IDUPHUV· NQRZOHGJH LV WKH PDMRU UHVRXUFH DQG NH\
WR WKH DSSURSULDWH DSSOLFDWLRQ RI LQSXWV DQG WR WKH
VXFFHVVIXO LPSOHPHQWDWLRQ RI QHZ PDQDJHPHQW
SUDFWLFHV
,W LV VWLOO XQFHUWDLQ ZKHWKHU PXOWLIXQFWLRQDO DQG LQWH
DQG*5$,1LQWKLVFKDSWHU
,QWHQVLÀFDWLRQ RQ WKH RWKHU KDQG PD\ HLWKHU EH
LPSOHPHQWHG WKURXJK LQWHJUDWHG DJURHFRORJLFDO
DSSURDFKHV DV RXWOLQHG DERYH RU WKURXJK ODUJHU
VFDOH FRQYHQWLRQDO DJULFXOWXUH ZKLFK PD\ LQFUHDVH
SUHVVXUH RQ QDWXUDO UHVRXUFHV DQG ZKLFK DOVR UXQV
WKHULVNRIOHDYLQJVPDOOKROGHUVEHKLQG7KHSURFHVV
RILQWHQVLI\LQJSURGXFWLRQRQH[LVWLQJDJULFXOWXUDOODQG
QHHGV LPSURYHPHQWV LQ DJULFXOWXUDO PDQDJHPHQW
DQGRUDGGLWLRQDOLQSXWVSDUWLFXODUO\HLWKHUPLQHUDORU
RUJDQLF IHUWLOL]HUV +RZHYHU LQWHQVLI\LQJ SURGXFWLRQ
UHTXLUHVDFFHVVWRWKHVHLQSXWVZKLFKFXUUHQWO\UHPDLQ
JUDWHG PDQDJHPHQW SUDFWLFHV FDQ HQVXUH IRRG
VHFXULW\ DQG ZKHWKHU WKH\ DUH FRPSHWLWLYH ZLWK
FRQYHQWLRQDO KLJKLQSXW DJULFXOWXUDO V\VWHPV ZLWK
UHJDUG WR SURGXFWLYLW\ :KLOH WKHVH DVSHFWV DUH VWLOO
WKH VXEMHFW RI RQJRLQJ GLVFXVVLRQV %DGJOH\ HW DO
 &RQQRU  *LDQHVVL  3LPHQWHOHWDO
XQDIIRUGDEOHWRORFDOIDUPHUVDQGWRNQRZOHGJHDQG
LQIRUPDWLRQ LQ RUGHU WR LPSOHPHQW QHZ PDQDJHPHQW
SUDFWLFHVLQDQDSSURSULDWHZD\2WKHUZLVHDGGLWLRQDO
LQSXWVPD\UHVXOWLQKLJKHUHPLVVLRQVRIQLWURXVR[LGH
DQGFDUERQGLR[LGH
+RZHYHU HYHQ LI JRYHUQPHQWV DQG WKH LQWHUQDWLRQDO
 WKHUH LV VRPH HYLGHQFH WKDW FRPSDUHG ZLWK FRPPXQLW\ ZHUH WR SD\ JUHDWHU DWWHQWLRQ WR WKH
KLJK\LHOGLQJV\VWHPVLQGHYHORSHGFRXQWULHVRUJDQLF DJULFXOWXUDO VHFWRU LW LV OLNHO\ WKDW LQ VRPH DUHDV
DJULFXOWXUHDQGRWKHUW\SHVRILQWHJUDWHGDSSURDFKHV DJULFXOWXUH ZLOO EHFRPH H[WUHPHO\ GLIÀFXOW RU ZLOO
UHVXOW LQ ORZHU \LHOGV %DGJOH\ HW DO  &RQQRU QR ORQJHU EH YLDEOH GXH WR FOLPDWH FKDQJH DQG
 75$'($1'(19,5210(175(9,(:

)LJXUH/DQGIRUDJULFXOWXUDOXVH²KDSHUFDSLWD

4.0 -

Sub-Saharan Africa
3.5 -

North Africa
3.0 -
Hectares per capita

2.5 -

North America
2.0 -

1.5 -
World

1.0 -

0.5 - Asia

0.0 -
1960 -

1970 -

1980 -

1990 -

2000 -

2010 -
6RXUFH%DVHGRQ)$267$7

)LJXUH&2HPLVVLRQVIURPODQGXVHFKDQJHLQVHOHFWHGGHYHORSLQJUHJLRQV²

1,000 -

800 -
CO2 emmissions (TgCy-1)

600 - Latin America

400 - S and SE Asia

Tropical Africa
200 -

0-

-200 -
1850 -
1860 -
1870 -
1880 -
1890 -
1900 -
1910 -
1920 -
1930 -
1940 -
1950 -
1960 -
1970 -
1980 -
1990 -
2000 -
2010 -

6RXUFH*OREDO&DUERQ3URMHFW

HQYLURQPHQWDOGHJUDGDWLRQHJ)LVFKHUHWDO FDQ RIWHQ JHQHUDWH KLJKHU LQFRPHV WKDQ DJULFXOWXUDO

,Q WKRVH LQVWDQFHV DGDSWDWLRQ VWUDWHJLHV VKRXOG EH DFWLYLWLHV 7KLV VXSSOHPHQWDU\ LQFRPH FDQ DJDLQ
DGRSWHG WKDW DLP WR GLYHUVLI\ WKH OLYHOLKRRGV RI UXUDO EH XVHG IRU DGGLWLRQDO LQYHVWPHQWV LQ DJULFXOWXUDO
KRXVHKROGV 'LYHUVLÀFDWLRQ LQ IDUPLQJ UHODWHV WR ULVN DFWLYLWLHV ZKLFK LQ WXUQ FRXOG LQFUHDVH LQFRPH
VSUHDGLQJWKURXJKYDULRXVDJULFXOWXUDOSUDFWLFHVVXFK
JHQHUDWLRQ IURP IDUPLQJ (OOLV DQG )UHHPDQ 
DV DJURIRUHVWU\ RU PL[HG FURSOLYHVWRFN V\VWHPV
2WKHU DVSHFWV VXFK DV LPSURYHPHQW RI HGXFDWLRQ
WKDW UHO\ RQ D ODUJHU QXPEHU RI GLIIHUHQW FURSV DQG
RU OLYHVWRFN SURGXFWV WR UHGXFH WKH WKUHDW RI FURS LQUXUDODUHDV-D\QH0DWKHUDQG0JKHQ\LRU
IDLOXUH LQ FDVH RI XQIDYRXUDEOH FOLPDWLF FRQGLWLRQV EHWWHULQIUDVWUXFWXUHPD\DOVRFRQWULEXWHWRLQFUHDVLQJ
,QFRPHGLYHUVLÀFDWLRQLQWRQRQIDUPDFWLYLWLHVUHGXFHV WKHUHVLOLHQFHRIUXUDOOLYHOLKRRGVZLWKRXWEHLQJGLUHFWO\
WKH GLUHFW GHSHQGHQFH RQ HFRV\VWHP VHUYLFHV DQG UHODWHGWRDJULFXOWXUH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

&,QFUHDVLQJWKHUHVLOLHQFHRIDJULFXOWXUDO ODQG LQYHVWPHQW DQG QHHG WR DQDO\VH L ZKHWKHU

V\VWHPV DQG KRZ PXFK DQ LQYHVWPHQW LQ ODQG KLQGHUV ORFDO
SHRSOH·VDFFHVVWRUHVRXUFHVWKDWWKH\DOUHDG\XVHRU
'RPHVWLF DQG H[WHUQDO LQWHUYHQWLRQV WR GHYHORS DQG DUHOLNHO\WRXVHLQWKHIXWXUHDVDQDGDSWDWLRQRSWLRQ
VWUHQJWKHQ DJULFXOWXUH ZLOO KDYH WR RYHUFRPH WKH
IXQGDPHQWDOFRQVWUDLQWVRQDJULFXOWXUDOGHYHORSPHQW
LQ 66$ VXFK DV ODFN RI DFFHVV WR ODQG DJULFXOWXUDO
LQSXWV DV ZHOO DV NQRZOHGJH DQG LQIRUPDWLRQ QRWHG
DERYH ,I WKHVH FRQVWUDLQWV DUH QRW DGGUHVVHG
DGDSWDWLRQ WR FOLPDWH FKDQJH ZLOO RQO\ EH GHDOLQJ
ZLWK WKH V\PSWRPV RI ORZ DGDSWLYH FDSDFLW\ KLJK
DQG LL KRZ PXFK WKH LQYHVWPHQW LV FRQWULEXWLQJ WR
HPSOR\PHQWDQGKXPDQFDSDFLW\EXLOGLQJ,QYHVWPHQW
LPSDFW DVVHVVPHQWV VKRXOG EH FDUULHG RXW E\ DQ
DJULFXOWXUDO VHFWRU FRRUGLQDWLRQ XQLW WKDW LQFOXGHV
WKH ÀQDQFH DQG MXVWLFH PLQLVWULHV DQG WKH DFWLYLWLHV
RI WKHVH XQLWV VKRXOG EH LQIRUPHG E\ LQIRUPDWLRQ
JDWKHUHG E\ GRPHVWLF DQG LQWHUQDWLRQDO QRQ
YXOQHUDELOLW\ DQG ORZ UHVLOLHQFH 7KH FRQVWUDLQWV DUH
MHRSDUGL]LQJDJULFXOWXUDOSURGXFWLRQDWDWLPHZKHQWKH
LPSDFWVRIFOLPDWHFKDQJHFDQDOUHDG\EHREVHUYHG
7KXVWKHUHLVQRWLPHOHIWWRDOORZDVHTXHQFHRIÀUVW
DGGUHVVLQJWKHIXQGDPHQWDOLVVXHVEHIRUHUHVSRQGLQJ
WRFOLPDWHFKDQJH5DWKHUDOOFXUUHQWFKDOOHQJHVKDYH
WR EH WDFNOHG WKURXJK DQ LQWHJUDWHG HIIRUW WRJHWKHU
ZLWKDSSURSULDWHPHDVXUHVWRVXSSRUWDGDSWDWLRQDQG
LQFUHDVHWKHRYHUDOOUHVLOLHQFHRIDJULFXOWXUDOV\VWHPV
DQGUXUDOOLYHOLKRRGV
6SHFLÀF RSWLRQV IRU GRPHVWLF DFWLRQ DQG H[WHUQDO
VXSSRUWIRUWKRVHDFWLRQVDUHGLVFXVVHGEHORZ
3URYLGLQJDFFHVVWRODQG
3URSHU ODQG UHIRUP ODQG UHJLVWUDWLRQ DQG VHFXUH
ODQGWHQXUH ULJKWV IRU ZRPHQ DQG PHQ QHHG WR EH
JXDUDQWHHG WR HQDEOH LQYHVWPHQW LQ VXVWDLQDEOH
IDUPLQJSUDFWLFHVWKHEHQHÀWVRIZKLFKRIWHQDFFUXH
RQO\ LQ WKH ORQJ WHUP 5HFHQWO\ LQFUHDVHG IRUHLJQ
GLUHFWLQYHVWPHQWLQODQGKDVUHFHLYHGPXFKDWWHQWLRQ
LQ$IULFDDVLWFRQWULEXWHV²DWOHDVWLQVRPHFRXQWULHV
² WR FRPSURPLVLQJ WUDGLWLRQDO ODQG XVH ULJKWV IRU D
PRUHHODERUDWHDQDO\VLVVHHWKHFRPPHQWRI0LWWDOLQ
JRYHUQPHQWDORUJDQL]DWLRQV1*2VZKHQPRQLWRULQJ
VXFKLQYHVWPHQWV:KLOHIRUHLJQLQYHVWPHQWLVQRWWKH
RQO\IDFWRUKLQGHULQJDFFHVVWRODQGVXFKLQYHVWPHQW
VKRXOG QHYHUWKHOHVV EH DVVHVVHG XUJHQWO\ DV LW
PLJKWIXUWKHUKDPSHUDFFHVVWRODQGIRUVPDOOKROGHU
IDUPHUVDQGRWKHUYXOQHUDEOHDFWRUV7KLVLVEHFDXVH
WKHFRPSHWLWLRQIRUODQGLVEHWZHHQDFWRUVRIXQHTXDO
SRZHU&RXQWULHVVXFKDV.HQ\DDUHDOUHDG\IRFXVLQJ
RQ KRZ WR LPSURYH DFFHVV WR ODQG WKURXJK D QHZ
FRQVWLWXWLRQWKDWHQVXUHVHTXDODFFHVVWRODQGE\PHQ
DQGZRPHQ,QDGGLWLRQSRSXODWLRQSUHVVXUHDQGWKH
HQVXLQJ ODQG IUDJPHQWDWLRQ FRXOG EH DGGUHVVHG E\
VWUDWHJLFDOO\ GHYHORSLQJ WKH VNLOOV RI SRSXODWLRQV WR
DOORZWKHPWRPRYHRXWRIDJULFXOWXUH
(QVXULQJVNLOOHGDJULFXOWXUDOPDQSRZHUIRU
LQQRYDWLYHDJULFXOWXUDOSURGXFWLRQV\VWHPV
&XUUHQWO\ORZSURGXFWLYLW\OHYHOVRIDJULFXOWXUHLQ66$
DOUHDG\ LQGLFDWH WKDW VNLOO GHÀFLWV DQG FKDQJHV LQ
QDWXUDO SDUDPHWHUV ZLOO UHQGHU DJHORQJ LQGLJHQRXV
NQRZOHGJH EXLOW IURP RQH JHQHUDWLRQ WR DQRWKHU
LQDGHTXDWH)DUPHUVQHHGNQRZOHGJHDQGLQIRUPDWLRQ
RQ QHZ FOLPDWLF SDUDPHWHUV LQ RUGHU WR LPSOHPHQW
FKDSWHU)RUWKHVHUHDVRQVLQWHUQDWLRQDOJXLGHOLQHV LQQRYDWLYH SURGXFWLRQ V\VWHPV WKDW DUH PRUH
IRU PDQDJLQJ WKH LPSDFWV RQ ORFDO ODQG WHQXUH RI UHVLOLHQW DQG DW WKH VDPH WLPH PRUH SURGXFWLYH 7KH
ODUJH IRUHLJQ LQYHVWPHQWV LQ ODQG DUH QHHGHG 7KH GLVVHPLQDWLRQ RI H[LVWLQJ LQGLJHQRXV SUDFWLFHV IURP
UHFHQW VXFFHVVIXO FRQFOXVLRQ RI LQWHUJRYHUQPHQWDO RWKHUFOLPDWLFUHJLRQVFRXOGDOVRIDFLOLWDWHDGDSWDWLRQ
QHJRWLDWLRQV RQ 9ROXQWDU\ *XLGHOLQHV RQ WKH WR QHZ FOLPDWLF SDUDPHWHUV $GDSWDWLRQ ZLOO QHHG WR
5HVSRQVLEOH*RYHUQDQFHRI7HQXUHRI/DQG)LVKHULHV EH RULHQWHG WRZDUGV PDNLQJ PRUH HIIHFWLYH XVH RI
DQG )RUHVWV )$2  OHG E\ WKH &RPPLWWHH RQ WKH QDWXUDO HQGRZPHQWV RI IDUPV 7KLV LQFOXGHV IRU
:RUOG)RRG6HFXULW\&)6DQGWKHUHSRUWRIWKH+LJK H[DPSOH HQKDQFLQJ VRLO IHUWLOLW\ E\ EXLOGLQJ XS VRLO
/HYHO3DQHORI([SHUWVRIWKH&)6)$2FPDUNV RUJDQLF PDWWHU WKURXJK UHF\FOLQJ RI ELRPDVV DQG
D VWDUWLQJ SRLQW ,W LV YLWDO WKDW QDWLRQDO JRYHUQPHQWV FRPSRVWLQJ ZKLFK ZLOO VLJQLÀFDQWO\ LPSURYH VRLO
IROORZ WKHVH JXLGHOLQHV UHYLHZ WKHLU ODQG ODZV DQG UHVLOLHQFH DQG LWV ZDWHU UHWHQWLRQ FDSDFLW\ ,W DOVR
LQFRUSRUDWH FKHFNV DQG EDODQFHV WR HQVXUH WKDW WKH LQFOXGHV WKH XVH RI ELRPDVV DQG RUJDQLF ZDVWH IRU
LQYHVWPHQWVLPSURYHUXUDOGHYHORSPHQWDUHSURSRRU
DQGGRQRWMHRSDUGL]HDGDSWLYHFDSDFLWLHV
,QYHVWPHQW LPSDFW DVVHVVPHQWV DUH DQRWKHU KHOSIXO
LQVWUXPHQW 7KH\ VKRXOG EH FDUULHG RXW SULRU WR D
RIIJULGHQHUJ\JHQHUDWLRQ
7KHQHHGIRULQQRYDWLRQRIIHUVRSSRUWXQLWLHVIRUSXEOLF
SULYDWHSDUWQHUVKLSVLQDGDSWDWLRQWRFOLPDWHFKDQJH
DVWKHIROORZLQJWZRH[DPSOHVVKRZ)LUVWLQQRYDWLYH
 75$'($1'(19,5210(175(9,(:

LQIRUPDWLRQ DQG FRPPXQLFDWLRQ WHFKQRORJLHV ,&7V DV FURSVSHFLÀF VHUYLFHV IRU PRUH LQIRUPDWLRQ VHH
VXFK DV VKRUW PHVVDJH VHUYLFHV RQ PRELOH SKRQHV WKH FRPPHQW RI .OHUN[ LQ FKDSWHU  RI WKLV 5HYLHZ
606DUHFXUUHQWO\EHLQJXVHGLQ66$WRGLVVHPLQDWH )LQDOO\ VWXGLHV RQ WKH DGRSWLRQ RI FRQVHUYDWLRQ
PDUNHW LQIRUPDWLRQ DQG WUDQVIHU PRQH\ $NHU DQG DJULFXOWXUDOSUDFWLFHVVKRZWKDWSDUWQHUVKLSVEHWZHHQ
0ELWL  -DFN DQG 6XUL  &RPPXQLFDWLRQ
HQWHUSULVHV LQ FROODERUDWLRQ ZLWK XQLYHUVLWLHV
H[WHQVLRQ VHUYLFHV 1*2V DQG RWKHU SDUWQHUV FRXOG
GHYHORS LQIRUPDWLRQ VHUYLFHV WR ZKLFK IDUPHUV
FRXOG VXEVFULEH 0RVW KRXVHKROGV LQ UXUDO DUHDV LQ
GHYHORSLQJ FRXQWULHV KDYH PRELOH WHOHSKRQHV DQG
E\ LPSURYLQJ FRYHUDJH RI WKH QHWZRUN LQIRUPDWLRQ
FRXOGEHGLVVHPLQDWHGWRORFDOSURGXFHUVDWOLWWOHFRVW
RUH[LVWLQJLQIRUPDWLRQVHUYLFHVFRXOGEHH[WHQGHGWR
LQFOXGHLQQRYDWLRQUHODWHGLVVXHV
UHVHDUFKJRYHUQPHQWH[WHQVLRQVHUYLFHVDQGSULYDWH
FRPSDQLHV DUH FUXFLDO IRU LQFUHDVLQJ IDUPHUV·
SURGXFWLYLW\
,PSURYLQJDFFHVVWRLQSXWV
9DULRXV FURS UHVHDUFK LQVWLWXWLRQV KDYH DOUHDG\
GHYHORSHG LPSURYHG FURS YDULHWLHV WKDW ZRXOG
UHVSRQG WR PRVW RI WKH LPSDFWV RI FOLPDWH FKDQJH
LQ $IULFD HJ WROHUDQFH WR GURXJKW DQG KLJKHU
WHPSHUDWXUHV HDUO\ PDWXULW\ KLJKHU \LHOGV KLJKHU
6HFRQG VXFFHVVIXO LQQRYDWLRQ ZLOO LQFUHDVLQJO\ SURWHLQFRQWHQWDQGSHVWUHVLVWDQFHLQWKHVKRUWWHUP
GHSHQG RQ IDFLOLWDWLQJ RQIDUP OHDUQLQJ DPRQJ
IDUPHUV7KLVFDQEHVXSSRUWHGE\IDUPHUÀHOGVFKRROV
DQG QHZ IRUPV RI KDQGVRQ FROODERUDWLRQ EHWZHHQ
IDUPHUV H[WHQVLRQ ZRUNHUV DQG UHVHDUFKHUV VHH
DOVR WKH FRPPHQWV RI .OHUN[ DV ZHOO DV 0EXNX DQG
,&5,6$7  +RZHYHU LPSURYHG FURS YDULHWLHV
DUH RI QR XVH LI WKH IDUPHUV FDQQRW DFFHVV WKHP
GXH WR ODFN RI LQIRUPDWLRQ DQG UHTXLUHG DGGLWLRQDO
LQSXWV RU EHFDXVH WKH\ FDQQRW DIIRUG WKHP $FFHVV
WR LQIRUPDWLRQ DERXW WKHVH QHZ YDULHWLHV FDQ EH
.RVJH\ LQ &KDSWHU  RI WKLV 5HYLHZ ,Q WKH FDVH RI
FDVK FURSV SULYDWH FRUSRUDWLRQV DUH DOVR SURPRWLQJ
WKH GHYHORSPHQW DQG GLVVHPLQDWLRQ RI VXVWDLQDEOH
DJULFXOWXUDOSUDFWLFHVLQRUGHUWRUHVSRQGWRFRQVXPHU
GHPDQG DQG WR VWDELOL]H WKH VXSSO\ RI DJULFXOWXUDO
LQSXWV 2QH H[DPSOH LV 8QLOHYHU ZKLFK DLPV DW
VXVWDLQDEOH VRXUFLQJ IRU DOO SURGXFWV E\  DQG
FKRVH WHD IDUPLQJ LQ .HQ\D DV D SLRQHHULQJ DFWLYLW\
6PDOOKROGHUV DQG WKH .HQ\DQ H[WHQVLRQ VHUYLFH
DUH PDMRU SDUWLFLSDQWV LQ WKLV SURJUDPPH DQG ORFDO
SURGXFWLRQDQGGLVVHPLQDWLRQRIQHZNQRZOHGJHLVD
NH\PHFKDQLVP
([WHQVLRQVHUYLFHVDUHFUXFLDOIRULPSURYLQJDJULFXOWXU
DOSURGXFWLYLW\DQGIRULQFUHDVLQJWKHUHVLOLHQFHRIWKLV
VHFWRUWRFOLPDWHFKDQJH,QFRXQWULHVVXFKDV.HQ\D
DQG 0DODZL HQWHUSULVLQJ IDUPHUV DUH QRZ DFTXLULQJ
WKHLQIRUPDWLRQDQGNQRZOHGJHWKH\QHHGWRPDLQWDLQ
DQG VXVWDLQ WKHLU SURGXFWLRQ WKHPVHOYHV ,IHMLND
LPSURYHG E\ XVLQJ FRPPXQLFDWLRQ DQG H[WHQVLRQ
VHUYLFHV DV GLVFXVVHG DERYH )XUWKHU RSSRUWXQLWLHV
OLH LQ GHYHORSLQJ LQGLJHQRXV VHHG HQWHUSULVHV DQG
SDUWQHUVKLSV ZLWK QDWLRQDO DJHQFLHV IRU UDSLG IDUPHU
SDUWLFLSDWRU\YDULHWDOWHVWLQJDQGUHOHDVHDQGWKURXJK
WKH SURYLVLRQ RI LQIRUPDWLRQ WR IDUPHUV H[WHQVLRQ
RIÀFHUVDQG1*2JURXSVDERXWQHZYDULHWLHV7KHVH
OHDUQLQJ H[SHULHQFHV DUH DOVR LPSRUWDQW IRU WHVWLQJ
QHZ YDULHWLHV LQ WKH ÀHOG DQG IRU DQDO\VLQJ SUDFWLFDO
UHDVRQV ZK\ WKHUH PLJKW EH UHGXFHG DFFHSWDQFH
,PSURYLQJ WKH SROLF\ HQYLURQPHQW IRU GLVVHPLQDWLQJ
VHHGV DFURVV ERUGHUV LV DOVR D VWUDWHJ\ IROORZHG E\
UHVHDUFK LQVWLWXWLRQV WR HQVXUH WKDW LPSURYHG VHHGV
UHDFK WKH IDUPHUV +DUPRQL]DWLRQ RI UHJLRQDO VHHG
UHJXODWLRQVLQ$IULFDLVH[SHFWHGWRLPSURYHWKHUDWHV
RIUHOHDVHRIQHZYDULHWLHVORZHUWKHFRVWVLQGHDOLQJ
ZLWKUHJXODWRU\DXWKRULWLHVLQFUHDVHWUDGHLQLPSURYHG
VHHG YDULHWLHV DQG XOWLPDWHO\ WKHLU DGRSWLRQ E\
IDUPHUV0LQRWHWDO
6SHUDQ]D+RZHYHULQDGGLWLRQORFDOSURGXFHUV
FRXOGEHWUDLQHGDVH[WHQVLRQRIÀFHUVUHFRJQL]HGE\ )DUPHUVDOVRKDYHOLPLWHGNQRZOHGJHRIDQGDFFHVVWR
WKHJRYHUQPHQWLQRUGHUWRRIIHUH[WHQVLRQVHUYLFHVWR WKHVHQHZFURSWHFKQRORJLHV.LMLPD:$5'$
RWKHUIDUPHUVZKRODFNWKLVFDSDFLW\7KLVFRXOGKHOS
WRDGGUHVVPDQ\VKRUWFRPLQJVRIFXUUHQWJRYHUQPHQW
H[WHQVLRQ VHUYLFHV VXFK DV WKH OLPLWHG IXQGLQJ DQG
WKHIUHTXHQWWUDQVIHUVRIH[WHQVLRQRIÀFHUVIURPRQH
ORFDWLRQ WR DQRWKHU ZKLFK SUHYHQW WKH GHYHORSPHQW
RI DQ HFRORJLFDO DQG VRFLRHFRQRPLF PHPRU\ WKDW
PLJKW XQGHUSLQ WKH FRQVROLGDWLRQ RI GHYHORSPHQW
LQWHUYHQWLRQV )RUPDOO\ WUDLQHG H[WHQVLRQ RIÀFHUV
FRXOGWKHQIRFXVRQPRUHVSHFLDOL]HGVHUYLFHVVXFK
,&5,6$7&,00<7,,7$7RDGGUHVV
WKHVH VKRUWFRPLQJV JRYHUQPHQWV FDQ ÀQDQFLDOO\
VXSSRUW ORFDO VHHG EUHHGLQJ FRPSDQLHV DQG
GLVWULEXWHIUHHWULDOVWRIDUPHUVRQDSURPRWLRQDOEDVLV
DIWHU ZKLFK WKH\ ZRXOG KDYH WR SD\ IRU VXEVHTXHQW
VXSSOLHV0LFURFUHGLWIRULQQRYDWLYHIDUPLQJZLOODOVREH
QHFHVVDU\WRKHOSRYHUFRPHWKHKLJKXSIURQWFRVWVRI
QHZPDQDJHPHQWSUDFWLFHVUHTXLUHGIRUFRQVHUYDWLRQ
IDUPLQJDQGRWKHULQWHJUDWHGDSSURDFKHV)RUDQLQLWLDO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

WUDQVLWLRQSHULRGJRYHUQPHQWVXEVLGLHVPD\DOVREH FKDQJH UHTXLUHV D VHFWRUDO DSSURDFK UDWKHU WKDQ D

ZDUUDQWHGDVLQ0DODZLZKHUHD)DUP,QSXW6XEVLG\ QDUURZ IRFXV RQ WKH SURGXFWLYLW\ RI FURSV OLYHVWRFN
3URJUDP ),63 KDV EHHQ VKRZQ WR LQFUHDVH PDL]H DQG ÀVKHULHV 6XFK DQ DSSURDFK ZRXOG DFFRXQW IRU
DQGOHJXPHSURGXFWLRQ&KLEZDQDHWDODQG WKH LQWHUOLQNDJHV EHWZHHQ YDULRXV ODQG XVHV ZLWK
KDV EHHQ GHVFULEHG DV D VPDUW VXEVLG\ +RZHYHU WKH JRDO RI DFKLHYLQJ PXOWLSOH JRDOV LQFOXGLQJ WKH
&KLEZDQD  HW DO  DOVR KLJKOLJKW WKH GLIÀFXOW\
RIVXFKLQWHUYHQWLRQVUHDFKLQJWKHSRRUDV´WKHPRVW
YXOQHUDEOHSHRSOHLQWKH0DODZLDQFRPPXQLWLHVZHUH
QRWWKHPDLQUHFLSLHQWVRI),63FRXSRQVµHYHQZKHQ
LQWHQGHG DV WKH WDUJHW JURXSV 7KH LQSXW VXEVLGLHV
LQLWLDOO\ OHG WR D JUHDWHU VSHFLDOL]DWLRQ LQ PDL]H DQG
WRUHGXFHGFURSGLYHUVLÀFDWLRQDQGDOORFDWLRQRIODQG
WR OHJXPH FURSV GXH WR D ODFN RI OHJXPH VHHGV LQ
WKHPDUNHW7KH),63ODWHUOHGWRLQFUHDVHGPDL]HDQG
SURWHFWLRQRIORFDOOLYHOLKRRGVFRQVHUYDWLRQRIZDWHU
IRUHVWV DQG ELRGLYHUVLW\ LPSURYLQJ IRRG VHFXULW\ DV
ZHOODVFRQWULEXWLQJWRUHQHZDEOHHQHUJ\SURGXFWLRQ
,QWHJUDWHG ZDWHU UHVRXUFH PDQDJHPHQW ZLOO EH
SLYRWDO IRU HQVXULQJ ZDWHU DYDLODELOLW\ IRU HFRQRPLF
VRFLDO DQG HQYLURQPHQWDO XVHV XQGHU FRQGLWLRQV RI
FOLPDWHFKDQJH7KLVLVHYHQPRUHXUJHQWDVWKHVKLIW
WRZDUGVUHQHZDEOHHQHUJ\WHFKQRORJLHVZLOOLQFUHDVH
FRPSHWLWLRQ IRU ZDWHU UHVRXUFHV K\GURSRZHU YHUVXV
OHJXPHFURSSURGXFWLRQZKHQIDUPHUVZHUHSURYLGHG LUULJDWLRQ DQG IRU ODQG IRU IRRG FURSV ELRIXHOV
ZLWK ERWK LPSURYHG PDL]H DQG OHJXPH VHHGV OLYHVWRFN IRUHVWV DQG ELRGLYHUVLW\ SURWHFWLRQ DQG LW
&KLEZDQDHWDOWKXVDUJXHWKDWZKLOHWKH),63
FRQWULEXWHG WR 0DODZLDQ IRRG VHFXULW\ LW QHHGV WR
EH DGDSWHG WR PDNH LW OHVV SURQH WR WKH XQLQWHQGHG
HIIHFWV RI FRQFHQWUDWLQJ SURGXFWLRQ RQ RQH FURS
UHODWLYHWRWKHRWKHUVLQSDUWLFXODUZLWKUHJDUGWRKLJK
LQSXWSULFHV
,PSURYLQJNQRZOHGJHDERXWORFDOFOLPDWHFKDQJHV
.QRZLQJ KRZ WKH ORFDO FOLPDWH LV FKDQJLQJ DQG
LV H[SHFWHG WR FKDQJH LQ WKH IXWXUH DV ZHOO DV WKH
DVVRFLDWHG ULVNV LV FUXFLDO IRU SULRULWL]LQJ DGDSWDWLRQ
VWUDWHJLHV DQG D VKLIW WRZDUGV JUHDWHU UHVLOLHQFH)RU
H[DPSOH 6DIDULFRP IURP .HQ\D ZKR UHYROXWLRQL]HG
PD\DOVRH[DFHUEDWHH[LVWLQJORFDOFRQÁLFWVRYHUODQG
WHQXUHULJKWV
0DQ\ DSSURDFKHV WKDW JHQHUDWH DGDSWDWLRQ EHQHÀWV
DQGLQFUHDVHUHVLOLHQFHDOVRUHGXFH*+*HPLVVLRQV
DQGWKHUHIRUHSUHVHQWDQRSSRUWXQLW\IRUDQHYHQPRUH
FRPSUHKHQVLYH PDLQVWUHDPLQJ HIIRUW WKDW LQFOXGHV
PLWLJDWLRQDVSHFWV7KHUHIRUHQHZSROLF\FRRUGLQDWLRQ
PHFKDQLVPV QHHG WR EH HVWDEOLVKHG RU LPSURYHG DW
ORFDOQDWLRQDOUHJLRQDODQGJOREDOOHYHOV,QWHJUDWLQJ
FOLPDWHUHOHYDQW LQIRUPDWLRQ LQWR H[LVWLQJ QDWLRQDO
DJULFXOWXUDOSURJUDPPHVPD\FRQWULEXWHWRUDLVLQJWKH
DZDUHQHVVRIGHFLVLRQPDNHUVWRWKHULVNVFRQIURQWLQJ
WKHLU GHYHORSPHQW LQWHUYHQWLRQV $W WKH ORFDO OHYHO D
ODQGVFDSH DSSURDFK FRXOG EH DGRSWHG WDNLQJ LQWR
PRQH\ WUDQVIHU LQ .HQ\D SURPRWHG DFFHVV WR
DFFRXQWWKHLQWHUOLQNDJHVEHWZHHQZDWHUIRUHVWVDQG
LQIRUPDWLRQ LQ UXUDO .HQ\D WKURXJK 6DIDULFRP
DJULFXOWXUDOODQGVDQGWKHIDFWWKDWLQPRVWFDVHVWKH
)RXQGDWLRQ /LIHOLQH UDGLR VHWV ZKLFK VHUYH DV D
VDPHORFDOSURGXFHUVZKRSURGXFHIRRGDOVRPDQDJH
SODWIRUP IRU UDGLR VHUYLFH EURDGFDVWV E\ WKH .HQ\D
DQGXVHZDWHUUHVRXUFHVDQGWKHIRUHVWV
0HWHRURORJLFDO 'HSDUWPHQW 6DIDULFRP )RXQGDWLRQ
 'HYHORSPHQW FRRSHUDWLRQ VKRXOG EH DZDUH
RI VXFK LQQRYDWLYH SURMHFWV DQG SURJUDPPHV DQG
DSSURDFKSULYDWHFRPSDQLHVWRH[SORUHSDUWQHUVKLSV
IRU WKHLU DGDSWDWLRQ DQG IXUWKHU GHYHORSPHQW
$QRWKHU VWHS LV WR V\VWHPDWLFDOO\ LQWHJUDWH FOLPDWH
UHOHYDQWLQIRUPDWLRQLQWRH[LVWLQJQDWLRQDODJULFXOWXUDO
SURJUDPPHV LQ RUGHU WR UDLVH WKH DZDUHQHVV RI
GHFLVLRQPDNHUV DERXW WKH ULVNV WKHLU GHYHORSPHQW
LQWHUYHQWLRQV PLJKW HQFRXQWHU 7KLV ZLOO DOUHDG\ KHOS
WR LQWHJUDWH FOLPDWH FKDQJH DGDSWDWLRQ LQWR SROLFLHV
DQG SURJUDPPHV EHIRUH WKHLU LPSOHPHQWDWLRQ DW WKH
ORFDOOHYHO
2QH LPSRUWDQW REMHFWLYH RI FRRUGLQDWHG DQG
LQWHJUDWHGVHFWRUDOSROLFLHVDWQDWLRQDODQGORFDOOHYHOV
LV WR LQFUHDVH WKH LQFHQWLYHV IRU PRUH VXVWDLQDEOH
DJULFXOWXUDO SURGXFWLRQ V\VWHPV DW WKH IDUP OHYHO
6XFKSURGXFWLRQV\VWHPVZRXOGUHGXFHSUHVVXUHRQ
QDWXUDOUHVRXUFHVVXFKDVVRLOVDQGZDWHUDQGZRXOG
FRQWULEXWH WR LPSURYLQJ WKH SURYLVLRQ RI HFRV\VWHP
VHUYLFHV ZKLFK DUH HVVHQWLDO IRU DJULFXOWXUDO
SURGXFWLRQDQGSURGXFWLYLW\,QWKLVUHJDUGVXSSRUWLQJ
WKH DFFXPXODWLRQ RI VRLO RUJDQLF PDWWHU DQG WKXV
LQFUHDVLQJ VRLO IHUWLOLW\ LV RQH RI WKH PRVW LPSRUWDQW
H[DPSOHVRIZKDWLVQHHGHGDQGDPDMRUFKDOOHQJHLQ
66$IRUDPRUHHODERUDWHDQDO\VLVRQWKLVLVVXHVHH
$GRSWLQJDVHFWRUDODSSURDFKWRDGDSWDWLRQ WKHFRPPHQWDU\RI/HXLQWKLVFKDSWHU

$JULFXOWXUHLVVWLOOWKHPDMRUGULYHURIUXUDOHFRQRPLHVLQ
GHYHORSLQJFRXQWULHVLQFUHDVLQJUHVLOLHQFHWRFOLPDWH
 75$'($1'(19,5210(175(9,(:

1//'06#4; U 
 +'.&#0&+'.&7#.+6;1(#,14'4'#.5
0&'4.+/#6'*#0)'
3HWUD+|J\DQG$QGUHDV)DQJPHLHU
8QLYHUVLW\RI+RKHQKHLP,QVWLWXWHIRU/DQGVFDSHDQG3ODQW(FRORJ\

$EVWUDFW
$WPRVSKHULF&2HQULFKPHQWPD\SURYLGHWKHEHQHÀWVRIKLJKHU\LHOGVEXWFRQFRPLWDQWO\LWFRXOGZRUVHQ
FHUHDO TXDOLW\ LQ WHUPV RI SURWHLQ DPLQR DFLG DQG PLQHUDO FRQWHQW &XUUHQWO\ DOPRVW KDOI RI WKH ZRUOG·V
KXPDQSRSXODWLRQDOUHDG\VXIIHUVIURPPLFURQXWULHQWGHÀFLHQFLHVDQGWKLVJOREDOKHDOWKSUREOHPZLOOIXUWKHU
GHWHULRUDWHDVDUHVXOWRI&2HQULFKPHQW2QWKHRWKHUKDQGDQLQFUHDVHLQWHPSHUDWXUHDQGFKDQJLQJ
SUHFLSLWDWLRQSDWWHUQVPD\UHGXFH\LHOGZKLOHKDYLQJDSRVLWLYHHIIHFWRQQXWULWLYHYDOXHDQGSURFHVVLQJ

$OWKRXJKVHYHUDOGHYHORSPHQWVLQDJULFXOWXUHVXFKDV HQKDQFLQJWKHSURGXFWLYLW\RIDJULFXOWXUDOHFRV\VWHPV
EUHHGLQJDQGPDQDJHPHQWSUDFWLFHVKDYHLQFUHDVHG XQGHUFOLPDWHFKDQJH1HLWKHUKDVWKHUHEHHQPXFK
\LHOG SURGXFWLYLW\ DQG DYDLODELOLW\ RI FHUHDOEDVHG UHVHDUFK WKDW DGGUHVVHV WKH LVVXH RI YXOQHUDELOLW\ WR
IRRGV RYHU WKH SDVW  \HDUV PRUH WKDQ RQH ELOOLRQ FOLPDWHFKDQJHRIRWKHUDVSHFWVRIIRRGV\VWHPVVXFK
SHRSOHZRUOGZLGHDUHDWULVNRIIRRGLQVHFXULW\WRGD\ DV\LHOGTXDOLW\5LFKDUGVRQHWDO
)$2 E )RRG LQVHFXULW\ DULVHV ZKHQ SHRSOH
GR QRW KDYH DFFHVV WR VXIÀFLHQW DQG QXWULWLRXV IRRG
WR PHHW WKHLU GLHWDU\ QHHGV $Q DGHTXDWH LQWDNH RI
FDORULHVGRHVQRWDXWRPDWLFDOO\HQVXUHWKDWWKHQHHG
IRUPLFURQXWULHQWVKDVEHHQPHW,QWKHIXWXUHFOLPDWH
FKDQJHPD\UHSUHVHQWDQDGGLWLRQDOO\XQSUHFHGHQWHG
WKUHDW WR JOREDO IRRG VHFXULW\ HVSHFLDOO\ IRU SHRSOH
LQ GHYHORSLQJ FRXQWULHV ZKR GHSHQG KHDYLO\ RQ
DJULFXOWXUHIRUWKHLUOLYHOLKRRGV
7KHPDLQGULYLQJIRUFHEHKLQGFOLPDWHFKDQJHLVWKH
$'LUHFWHIIHFWVRIDWPRVSKHULF&2
HQULFKPHQW
$WPRVSKHULF&2LVWKHSULPDU\VRXUFHRIFDUERQIRU
FHUHDOVZKLFKLVWDNHQXSE\WKHOHDIWKURXJKVWRPDWD
&HUHDOV PXVW DEVRUE OLJKW WR HQDEOH SKRWRV\QWKHVLV
WR FRQYHUW &2 LQWR RUJDQLF FRPSRXQGV VXFK DV
FDUERK\GUDWHVDQGDPLQRDFLGV:DWHUDQGQXWULHQWV
DUHXVXDOO\DFTXLUHGIURPWKHVRLODQGWRJHWKHUZLWK
UHOHDVHRIJUHHQKRXVHJDVHV*+*VVXFKDVFDUERQ SKRWRV\QWKDWHDUHXVHGWRFUHDWHQHZSODQWWLVVXHV
GLR[LGH&2GXHWRKXPDQDFWLYLWLHV$QGWKLVLVOLNHO\ &2 HIIHFWV GLIIHU DFFRUGLQJ WR WKH SKRWRV\QWKHWLF
WRLQFUHDVHRYHUWKHQH[WIHZGHFDGHV,3&&G SDWKZD\ (OHYDWHG &2 DIIHFWV & FHUHDOV E\
%\FRQVHUYDWLYHHVWLPDWHVWKHFXUUHQWFRQFHQWUDWLRQRI LPSURYLQJ QLWURJHQ XVH HIÀFLHQF\ 18( DQG ZDWHU
DWPRVSKHULF&2RIDERXWSDUWVSHUPLOOLRQSSP
ZLOOLQFUHDVHWRQHDUO\SSPE\LQGHHGLW
LVLQFUHDVLQJIDVWHUWKDQH[SHFWHG$PLGUDSLGO\ULVLQJ
IRRG GHPDQG JOREDO DWPRVSKHULF &2 HQULFKPHQW
ZLOODIIHFWDJURHFRV\VWHPVERWKGLUHFWO\DQGLQGLUHFWO\
UHVXOWLQJ LQ FKDQJHV LQ \LHOG RI PDMRU FHUHDOV EXW
SRWHQWLDOO\DIIHFWLQJ\LHOGTXDOLW\WUDLWVDVZHOO$VFHU
HDOVVXSSO\WKHEXONRIFDORULHVIRUPDQ\SRSXODWLRQV
LQ WKH GHYHORSLQJ ZRUOG ZKLOH DOVR FRQVWLWXWLQJ WKH
SULPDU\ VRXUFH RI ERWK SURWHLQ DQG PLFURQXWULHQWV
FOLPDWH FKDQJH LV VHW WR H[DFHUEDWH PDQ\ RI WKH
XVHHIÀFLHQF\:8(ZKLOH&FHUHDOVDUHDIIHFWHG
H[FOXVLYHO\ YLD LPSDFWV RQ :8( 0DMRU FHUHDOV WKDW
KDYH WKH & SKRWRV\WKHWLF SDWKZD\ LQFOXGH ZKHDW
EDUOH\DQGULFHZKLOHPDL]HVRUJKXPDQGVXJDUFDQH
DUH&VSHFLHV,Q&FHUHDOVHOHYDWHG&2LVH[SHFWHG
WR KDYH SRVLWLYH SK\VLRORJLFDO HIIHFWV E\ VWLPXODWLQJ
SKRWRV\QWKHVLV PDLQO\ E\ HQKDQFLQJ &2 À[DWLRQ
RI WKH FKORURSODVW HQ]\PH 5XELV&2 DQG LQGXFLQJ
VWRPDWDO FORVXUH $V D FRQVHTXHQFH HOHYDWHG &2
UHVXOWVLQVKLIWVLQELRPDVVDOORFDWLRQDQGKLJKHU\LHOG
SURGXFWLRQ WKH VRFDOOHG ´&2 IHUWLOL]DWLRQ HIIHFWµ
SUREOHPV ZKLFK GHYHORSLQJ FRXQWULHV DOUHDG\ KDYH UHIHUUHG WR E\ 3ULWFKDUG DQG $PWKRU  *LYHQ
WR GHDO ZLWK &XUUHQWO\ WKHUH KDV EHHQ VXUSULVLQJO\ DGHTXDWHZDWHUWKHHIIHFWRI&2HQULFKPHQWRQ\LHOG
OLWWOH UHVHDUFK VSHFLÀFDOO\ JHDUHG WR PDLQWDLQLQJ RU SHUIRUPDQFH LV KLJKHU IRU & FHUHDOV ² SHU
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

FHQWSSP&2+DUWÀHOGHWDOWKDQIRU& NHSWLQPLQGWKDWHVSHFLDOO\LQGHYHORSLQJFRXQWULHV

FURSV  SHU FHQW SSP &2 +DUWÀHOG HW DO WKH DYDLODELOLW\ RI QLWURJHQ LQ DJULFXOWXUH LV RIWHQ
 EHFDXVH & SKRWRV\QWKHVLV LV QRW VDWXUDWHG
XQGHUDPELHQW&2OHYHOV
2Q WKH RWKHU KDQG ERWK & DQG & FHUHDOV PLJKW
EHQHÀW IURP HOHYDWHG &2 XQGHU GURXJKW VWUHVV GXH
WR LPSURYHPHQWV LQ ZDWHU XVH HIÀFLHQF\ +RZHYHU
LQVXIÀFLHQWWRDFKLHYHDGHTXDWHFURS\LHOGVDQGWKLV
LV RQH RI WKH FDXVHV RI PDOQXWULWLRQ 0RUHRYHU &2
LQGXFHG DOWHUDWLRQV LQ WKH FRPSRVLWLRQ RI SURWHLQV
DQGDPLQRDFLGVPD\DOVRDIIHFWWKHQXWULWLYHYDOXHRI
JUDLQVDQGSURFHVVLQJTXDOLW\VXFKDVEUHDGPDNLQJ
+|J\ DQG )DQJPHLHU  +|J\ HW DO  ,Q
WKHSRVLWLYH\LHOGUHVSRQVHWRHOHYDWHG&2KDVRIWHQ
DGGLWLRQ VXEWOH LPEDODQFHV LQ PDFUR DQG PLFUR
EHHQGXHWRPRUHJUDLQVUDWKHUWKDQODUJHUJUDLQV,Q
HOHPHQWSURSHUWLHVPD\RFFXUXQGHU&2HQULFKPHQW
DGGLWLRQ WR WKHVH HIIHFWV RQ WKH TXDQWLW\ LW DSSHDUV
UHVXOWLQJ LQ KLJKHU ULVN RI ´KLGGHQ KXQJHUµ DQG
WKDW&2HQULFKPHQWDOVRDIIHFWVWKHQXWULWLRQDOTXDOLW\
PDOQXWULWLRQ/RODG]H
RI & FHUHDOV .LPEDOO .RED\DVKL DQG %LQGL 
,Q PDQ\ LQVWDQFHV WKH H[WUD FDUERQ LV FRQYHUWHG ,QULFHFRQFHQWUDWLRQVRILURQDQG]LQF²LPSRUWDQWIRU
LQWR FDUERK\GUDWHV VXFK DV VWDUFK &RQVLVWHQWO\ KXPDQQXWULWLRQ²ZHUHVHHQWREHORZHUXQGHUHOHYDWHG
WKH DP\ORVH FRQWHQW RI ULFH JUDLQV ZKLFK LV DPDMRU &26HQHZHHUDDQG&RQUR\6LPLODUO\+|J\HW
GHWHUPLQDQWRIFRRNLQJTXDOLW\KDVEHHQREVHUYHGWR DOUHSRUWHGDGHFUHDVHLQLURQLQZKHDWJUDLQV
LQFUHDVHXQGHU&2HQULFKPHQW&RQUR\HWDO
UHVXOWLQJLQPRUHÀUPQHVVRIFRRNHGULFHJUDLQV
$ QHJDWLYH LQWHUDFWLRQ EHWZHHQ QLWURJHQ VWDWXV LQ
SODQWV DQG JUDLQ TXDOLW\ KDV EHHQ REVHUYHG LQ &
FHUHDOV PDGH ZRUVH E\ &2 HQULFKPHQW GXH WR
XQGHU&2HQULFKPHQW7KHVHÀQGLQJVDUHYLWDOIRUWKH
LPSRUWDQWWDVNRIWDFNOLQJPLFURQXWULHQWGHÀFLHQFLHVRI
LURQ]LQFFRSSHULRGLQHDQGVHOHQLXPDVWKHPDMRU
JUDLQFURSVDUHDFULWLFDOVRXUFHRIWKHVHQXWULHQWVIRU
PDQ\ SRSXODWLRQV DURXQG WKH ZRUOG &DXOÀHOG DQG
%ODFN6WROW]IXVHWDO&XUUHQWO\DOPRVW
FKDQJHVLQOHDIQLWURJHQPHWDEROLVP6XFKFKDQJHV
KDOI RI WKH KXPDQ SRSXODWLRQ DOUHDG\ VXIIHUV IURP
DUHODUJHO\WKHUHVXOWRIVPDOOHUSDUWLWLRQLQJRIQLWURJHQ
PLFURQXWULHQW GHÀFLHQFLHV DQG WKLV JOREDO KHDOWK
LQ SKRWRV\QWKHWLF SURFHVVHV .LPEDOO HW DO 
$VVPDOOJUDLQHGFHUHDOVVXFKDVEDUOH\ZKHDWDQG
ULFHPD\UHPRELOL]HXSWRSHUFHQWRIWKHQLWURJHQ
IURPWKHYHJHWDWLYHSODQWSDUWVGXULQJJUDLQÀOOLQJOHVV
QLWURJHQ LQYHVWPHQW LQ WKH SODQW XQGHU HOHYDWHG &2
FRXOGEHWKHSULPDU\FDXVHRIUHGXFWLRQLQJUDLQSURWHLQ
SUREOHPZLOOZRUVHQXQGHU&2HQULFKPHQW
5HFHQWO\ LW KDV EHHQ UHSRUWHG WKDW WKH QLWURJHQ
QXWULWLRQDO VWDWXV RI FHUHDOV DSSHDUV WR EH FULWLFDO
DV WKH WUDQVSRUWLQJ RI LURQ IURP WKH UKL]RSKHUH LQWR
JUDLQV LV GHSHQGHQW RQ YDULRXV SURWHLQV DQG RWKHU
FRQFHQWUDWLRQ$OWKRXJKLWLVNQRZQWKDWQLWURJHQLVD
NH\UHJXODWRURISODQWUHVSRQVHVWR&2WKHFKDQJHV
LQ QLWURJHQ PHWDEROLVP DUH QRW ZHOO XQGHUVWRRG DW
D ELRFKHPLFDO OHYHO +RZHYHU WKH QXWULWLRQDO YDOXH
RI WKHVH WKUHH FHUHDOV PD\ GHWHULRUDWH GXH WR &2
LQGXFHGGHFUHDVHVLQJUDLQSURWHLQFRQFHQWUDWLRQE\
QLWURJHQRXVFRPSRQHQWV&DNPDNHWDO&2
HQULFKPHQWFDQKDYHWKHHIIHFWRIUHGXFLQJWKHJUDLQ
LURQ FRQFHQWUDWLRQ E\ ZRUVHQLQJ WKH JUDLQ SURWHLQ
FRQFHQWUDWLRQ DQG WKHUHE\ WKH VLQN VWUHQJWK RI WKH
JUDLQIRULURQ
&2LQGXFHG LPSDFWV RQ \LHOG TXDOLW\ RI FHUHDOV
²SHUFHQW7DXE0LOOHUDQG$OOHQZLWK
DUH FXUUHQWO\ QRW ZHOO XQGHUVWRRG DQG WKH DYDLODEOH
VHULRXVFRQVHTXHQFHVIRUPRVWDSSOLFDWLRQVLQWHUPV
LQIRUPDWLRQLVVWLOOLQFRQVLVWHQW'D0DWWDHWDO
RI SURFHVVLQJ VXFK DV EUHDGPDNLQJ $V HOHYDWHG
0RUHWWL HW DO  1HYHUWKHOHVV LW VHHPV WKDW
&2 LQKLELWV QLWUDWH DVVLPLODWLRQ LQ & FHUHDOV LW ZLOO
PDFURDQGPLFURQXWULHQWPDQDJHPHQWLVQHFHVVDU\
EH FULWLFDO IRU IDUPHUV WR FDUHIXOO\ PDQDJH QLWURJHQ
IRUPDLQWDLQLQJJUDLQTXDOLW\XQGHU&2HQULFKPHQW,Q
IHUWLOL]DWLRQ LQ RUGHU WR SUHYHQW ORVV RI JUDLQ SURWHLQ
DGGLWLRQLQQRYDWLRQVLQWKHSURFHVVLQJRIVWDSOHFURSV
%ORRPHWDO
DQGFKDQJHVLQSHRSOH·VGLHWVZLOOEHQHHGHGLQDKLJK
,GVRDQG,GVRRQWKHRWKHUKDQGKDYHDUJXHG
WKDWDQ\HIIHFWVRI&2HQULFKPHQWRQSURWHLQFRQWHQW
LQFHUHDOVFRXOGEHDPHOLRUDWHGE\LQFUHDVHGXVHRI
QLWURJHQIHUWLOL]HU,WLVDSSDUHQWWKDWJUHDWHUDWWHQWLRQ
ZLOO KDYH WR EH JLYHQ WR QLWURJHQ PDQDJHPHQW LQ
FHUHDOV XQGHU &2 HQULFKPHQW LQ RUGHU WR LQFUHDVH
SURGXFWLRQHIÀFLHQF\DQGWRPDLQWDLQERWK\LHOGVDQG
&2 ZRUOG 7KH HIIHFWV RI &2 LQ WHUPV RI UHGXFLQJ
WKHQXWULWLRQDOYDOXHRIFHUHDOVZRXOGSULPDULO\LPSDFW
RQSRSXODWLRQVLQSRRUHUFRXQWULHVZKRDUHOHVVDEOH
WRFRPSHQVDWHE\HDWLQJPRUHIRRGDQGPRUHYDULHG
GLHWV RU SRVVLEO\ WDNLQJ QXWULWLRQDO VXSSOHPHQWV 7R
PHHW WKH LQFUHDVLQJ GHPDQG IRU KHDOWK\ IRRG DQG
ZLWK WKH ZRUOG·V SRSXODWLRQ SUHGLFWHG WR LQFUHDVH WR
SURWHLQFRQFHQWUDWLRQVLQJUDLQV+RZHYHULWVKRXOGEH ELOOLRQE\8QLWHG1DWLRQVLWZLOOEH
 75$'($1'(19,5210(175(9,(:

QHFHVVDU\ WR LQFUHDVH FURS SURGXFWLRQ 7KH XVH RI RQ FHUHDO SURGXFWLRQ )ORUDO VWHULOLW\ FDXVHG E\
FHUHDOVWKDWFDQUHVSRQGHIIHFWLYHO\WR&2HQULFKPHQW HOHYDWHGWHPSHUDWXUHPD\ORZHUVLQNGHPDQGVIRU
ZKLOHPDLQWDLQLQJKLJKTXDOLW\WUDLWVPD\EHDSRZHUIXO FDUERK\GUDWHVDQGWKXVKLQGHUWKHWUDQVORFDWLRQRI
RSWLRQWRUHVSRQGWRWKHVHLQFUHDVHGUHTXLUHPHQWV
,QFRQFOXVLRQHOHYDWHGDWPRVSKHULF&2FRQFHQWUDWLRQ
ZLOOKDYHDGLUHFWHIIHFWRQPDMRU&FHUHDOVUHVXOWLQJ
LQ KLJKHU JUDLQ \LHOGV +RZHYHU DW WKH VDPH WLPH
PDQ\TXDOLWDWLYHFRPSRXQGVDVVRFLDWHGZLWKFHUHDOV
DVIRRGFURSVZLOOEHDGYHUVHO\DIIHFWHGLQWKHIXWXUH
QRWDEO\ GHFOLQHV LQ SURWHLQV DPLQR DFLGV DQG
PLQHUDOVVXFKDVLURQDQG]LQF$VPHQWLRQHGHDUOLHU
WKHVH HIIHFWV KDYH EHHQ REVHUYHG LQ JUDLQV XQGHU
&2HQULFKPHQWUHVXOWLQJLQDKLJKHUULVNRI´KLGGHQ
KXQJHUµ DQG PDOQXWULWLRQ HVSHFLDOO\ LQ GHYHORSLQJ
FRXQWULHV
SKRWRV\QWKDWHVIURPVKRRWVRXUFHWRJUDLQVLQN
UHVXOWLQJ LQ DQ DFFXPXODWLRQ RI GU\ PDWWHU LQ WKH
VKRRW HYHQ DIWHU ÁRZHULQJ 2Q WKH RWKHU KDQG WKH
JUDLQVL]HRIFHUHDOVUHPDLQVUHODWLYHO\FRQVWDQWDQG
GHFOLQHV RQO\ VORZO\ ZLWK LQFUHDVLQJ WHPSHUDWXUHV
XQWLOWKHSROOLQDWLRQIDLOXUHSRLQW
%HVLGHV \LHOG SDUDPHWHUV JUDLQ TXDOLW\ WUDLWV RI
WKH FURSV SURGXFHG DUH DOVR KLJKO\ YXOQHUDEOH
WR WHPSHUDWXUH 7HPSHUDWXUHV XS WR WKH VSHFLHV
GHSHQGHQWRSWLPXPDFFHOHUDWHWKHUDWHRIPDWXUDWLRQ
FDXVLQJ LQFUHDVHV LQ SURWHLQ FRQWHQW DFFRPSDQLHG
E\FKDQJHVLQJUDLQSURWHLQFRPSRVLWLRQDQGGRXJK
TXDOLW\ FKDUDFWHULVWLFV VXFK DV GRXJK VWUHQJWK
%,QGLUHFWHIIHFWVRIULVLQJWHPSHUDWXUHV
DQGFKDQJHVLQSUHFLSLWDWLRQSDWWHUQV
,QGLUHFW LPSDFWV RI DWPRVSKHULF &2 HQULFKPHQW RQ
DJULFXOWXUDO HFRV\VWHPV PD\ RFFXU GXH WR JOREDO
ZDUPLQJ*OREDOWHPSHUDWXUHVDUHOLNHO\WRLQFUHDVHE\
DWOHDVWƒ&EHIRUHWKHHQGRIWKLVFHQWXU\0RUHRYHU
JOREDOZDUPLQJLVOLNHO\WRLQFUHDVHWKHIUHTXHQF\RI
KHDWVWUHVVHSLVRGHV,WLVZHOONQRZQWKDWDJULFXOWXUDO
SURGXFWLYLW\ LV VHQVLWLYH WR WHPSHUDWXUH GXULQJ WKH
JURZLQJ VHDVRQ $V PDQ\ FURSV DUH QHDU WKHLU
PD[LPXP WHPSHUDWXUH WROHUDQFH LQ $IULFD $VLD DQG
&RUEHOOLQLHWDO$FFHOHUDWHGVHQHVFHQFHOHDGV
WRQLWURJHQUHPRELOL]DWLRQIURPYHJHWDWLYHSODQWSDUWV
DQG DPLQR DFLGV GHULYHG IURP SURWHLQ GHJUDGDWLRQ
FRPSHQVDWH IRU WKH WHPSHUDWXUHLQGXFHG GHFUHDVH
LQJUDLQÀOOLQJWLPHDQGWKHQLWURJHQVKRUWDJHGXHWR
UHGXFWLRQRIQLWURJHQXSWDNHIURPVRLOE\FHUHDOURRWV
$JDLQWKHWLPLQJRIVWUHVVRFFXUUHQFHLVDQLPSRUWDQW
IDFWRU LQ GHWHUPLQLQJ WKH HIIHFW RQ JUDLQ SURWHLQ
FRQFHQWUDWLRQ,QULFHKLJKWHPSHUDWXUHVGXULQJJUDLQ
ÀOOLQJ ZHUH REVHUYHG WR LQFUHDVH WKH DFFXPXODWLRQ
RI DOO FODVVHV RI VWRUDJH SURWHLQV DW WKH HDUO\ ÀOOLQJ
VWDJH ZKHUHDV WKH\ UHGXFHG WKH DFFXPXODWLRQ RI
/DWLQ$PHULFD\LHOGVDUHOLNHO\WRIDOOVKDUSO\ZLWKHYHQ
VPDOO LQFUHDVHV LQ WHPSHUDWXUH 7KXV GHYHORSLQJ
FRXQWULHV ZKLFK IDFH UDSLG SRSXODWLRQ JURZWK DUH DW
D SDUWLFXODUO\ KLJK ULVN RI IRRG VKRUWDJHV FDXVHG E\
WHPSHUDWXUH LQFUHDVHV 6HYHUDOO VWXGLHV FRQÀUP WKDW
D ƒ& ULVH LQ WHPSHUDWXUH FRUUHVSRQGV WR D URXJKO\
 SHU FHQW UHGXFWLRQ LQ \LHOG RI PDMRU FHUHDOV VXFK
SURODPLQVDWPDWXUDWLRQ/LQHWDO,QFRQWUDVW
FDUERK\GUDWH V\QWKHVLV LQ JUDLQV GHSHQGV SULPDULO\
RQFRQFXUUHQWFDUERQÀ[DWLRQGXULQJJUDLQÀOOLQJWKXV
JUDLQ VWDUFK GHFOLQHG GXH WR VKRUWHQHG GXUDWLRQ RI
VWDUFK DFFXPXODWLRQ RU GXH WR WKH LQKLELWLRQ RI NH\
HQ]\PHVLQYROYHGLQVWDUFKV\QWKHVLV
&KDQJHVLQSUHFLSLWDWLRQERWKDPRXQWDQGIUHTXHQF\
DVZKHDWULFHDQGPDL]HGXHWRDVKRUWHQLQJRIWKH
FDQDOVRKDYHGHYDVWDWLQJLPSDFWVRQDJULFXOWXUHZLWK
JUDLQÀOOGXUDWLRQ%DWWLVWLDQG1D\ORU/REHOOHW
JUDYH FRQVHTXHQFHV IRU KXPDQ QXWULWLRQ DQG JOREDO
DO
7KH UHVSRQVH RI FHUHDOV WR WHPSHUDWXUH FKDQJH
KDV EHHQ REVHUYHG WR EH QRQOLQHDU EHFDXVH RI
WKH LQWHUDFWLRQ RI ZDWHU DQG KHDW VWUHVV /REHOO
KHDOWK 6LQFH ZDWHU VWDWXV LV LPSRUWDQW IRU PLQHUDO
PRELOL]DWLRQZDWHUGHÀFLHQF\PD\UHGXFHWKHXSWDNH
RI LURQ ]LQF DQG FRSSHU IURP WKH VRLO UHVXOWLQJ LQ
GHFUHDVHGFRQFHQWUDWLRQVRIWKHVHPLQHUDOVLQFHUHDO
 0RUHRYHU FHUHDOV UHVSRQG GLIIHUHQWO\ WR
WHPSHUDWXUH GXULQJ WKHLU OLIH F\FOH ZLWK D KLJKHU
WHPSHUDWXUH RSWLPXP GXULQJ WKHLU YHJHWDWLYH
GHYHORSPHQW FRPSDUHG ZLWK WKH SHULRG RI
UHSURGXFWLYH GHYHORSPHQW 7KH SROOLQDWLRQ SKDVH
RI GHYHORSPHQW LQ SDUWLFXODU LV RQH RI WKH PRVW
VHQVLWLYH WR HSLVRGLF WHPSHUDWXUH LQFUHDVH DQG
JUDLQV VXFK DV PDL]H 2NWHP  0LFURQXWULHQW
PDOQXWULWLRQKDVHQRUPRXVVRFLRHFRQRPLFLPSDFWV
VXFK DV LQFUHDVHG PRUWDOLW\ DQG PRUELGLW\ LPSDLUHG
JURZWKGHYHORSPHQWDQGOHDUQLQJFDSDFLW\LQLQIDQWV
DQG FKLOGUHQ DV ZHOO DV ORVV RI ZRUNLQJ FDSDELOLWLHV
RI DGXOWV 7KLV LQ WXUQ XQGHUPLQHV HFRQRPLF JURZWK
DQG SHUSHWXDWHV SRYHUW\ :RUOG %DQN  :+2
WHPSHUDWXUH H[WUHPHV GXULQJ WKH UHSURGXFWLYH  &OLPDWH FKDQJH LV H[SHFWHG WR DOWHU WKH
VWDJH FDQ SURGXFH VRPH RI WKH JUHDWHVW LPSDFWV WLPLQJ DQG TXDQWLW\ RI ZDWHU DYDLODEOH IRU DJULFXOWXUH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

ZKLOH LQFUHDVLQJ WKH QHHGV RI FURSV IRU ZDWHU DV ZLOOOLNHO\GLIIHUVXEVWDQWLDOO\DPRQJLQGLYLGXDOFXOWLYDUV
WHPSHUDWXUHVULVH DQGVSHFLHVXQGHUYDU\LQJUHJLRQDOFOLPDWLFFRQGLWLRQV
$V KLJK &2 FRQFHQWUDWLRQV FDXVH DOWHUDWLRQV LQ
7RGD\ PDQ\ IDUPHUV DURXQG WKH ZRUOG DUH
HYDSRWUDQVSLUDWLRQWKLVPD\DOVRUHVXOWLQIHHGEDFNRQ
DOUHDG\ H[SHULHQFLQJ OHVV SUHGLFWDEOH UDLQIDOO DQG
ZDWHUPDJDJHPHQWDQGGURXJKWV:DWHUFRQVHUYDWLRQ
WHPSHUDWXUHV DV ZHOO DV H[WUHPH ZHDWKHU HYHQWV
PD\DOORZH[WHQVLRQRIWKHJURZWKSHULRGZKHQZDWHULV
$V GLIIHUHQW FXOWLYDUV UHVSRQG GLIIHUHQWO\ WR FOLPDWLF
OLPLWHG/HVVLQIRUPDWLRQLVDYDLODEOHRQWKHLQWHUDFWLYH
IDFWRUVDQGXQFHUWDLQWLHVH[LVWDERXWIXWXUHFRQGLWLRQV
HIIHFWV RI FOLPDWH YDULDELOLW\ DQG &2 HQULFKPHQW RQ
IRUFHUHDOSURGXFWLRQQHZYDULHWLHVRIFXOWLYDUVQHHG
WREHGHYHORSHGZLWKWUDLWVVXFKDVKHDWDQGGURXJKW
UHVLVWDQFH
2YHUDOOLWFDQEHFRQFOXGHGWKDWLQGLUHFWLPSDFWVGXH
WRDWPRVSKHULF&2HQULFKPHQWVXFKDVWHPSHUDWXUH
LQFUHDVHVDQGFKDQJHVLQSUHFLSLWDWLRQSDWWHUQVPD\
UHGXFHWKHJUDLQ\LHOGRIPDMRUFHUHDOV2QWKHRWKHU
KDQGSURWHLQFRQFHQWUDWLRQPD\LQFUHDVHXQGHUULVLQJ
WHPSHUDWXUHV UHVXOWLQJ LQ D KLJKHU QXWULWLYH YDOXH RI
JUDLQV+RZHYHUGHFUHDVHVLQDFFXPXODWLRQRIVWDUFK
DQGPLQHUDOVVXFKDVLURQ]LQFDQGFRSSHULQPDMRU
FHUHDOV PD\ DIIHFW WKH QXWULWLRQDO TXDOLW\ RI WKH HQG
SURGXFWDQGIRRGVHFXULW\DVZHOODVWKHXVHRIWKRVH
FHUHDOVIRUSURFHVVLQJLQWKHIXWXUH
&2XWORRN
&2LQGXFHG HIIHFWV RQ JUDLQ \LHOG DQG FURS TXDOLW\
WKH HIÀFLHQF\ RI UHVRXUFH XVH HJ ZDWHU QXWULHQWV
DQGLWVFRQVHTXHQFHVIRU\LHOGTXDQWLW\DQGTXDOLW\RI
PDMRUFHUHDOV+LJKHUWHPSHUDWXUHVDQGYDULDWLRQVLQ
SUHFLSLWDWLRQ PLJKW UHGXFH WKH SRVLWLYH &2LQGXFHG
LPSDFWVRQFHUHDOSHUIRUPDQFH
:LWKUHJDUGWRWKHDYDLODELOLW\RIDGHTXDWHIRRGVXSSO\
LQWKHIXWXUHDPDMRUWDVNLVWKHUHIRUHWRLGHQWLI\WKH
LPSDFWVRIFOLPDWHFKDQJHRQ\LHOGTXDOLW\LQWHUPVRI
QXWULWLYHYDOXHDQGHQGXVHSURFHVVLQJ$GDSWDWLRQRI
FHUHDO SURGXFWLRQ DQG SURFHVVLQJ WR DQ LQFUHDVLQJO\
YDULDEOH FOLPDWH LV WKXV RI WKH XWPRVW LPSRUWDQFH
SDUWLFXODUO\LQGHYHORSLQJFRXQWULHVWRHQVXUHQRWRQO\
VXIÀFLHQW VXSSOLHV RI FHUHDOV EXW DOVR WKHLU QXWULWLYH
TXDOLW\,QRUGHUWRDVVXUHIRRGVHFXULW\LQWKHIXWXUH
LW LV YLWDOO\ LPSRUWDQW WR XQGHUVWDQG WKH FRPSOH[
UHODWLRQVKLSVEHWZHHQJOREDOHQYLURQPHQWDOFKDQJHV
IDUPLQJSUDFWLFHVGLHWDQGKXPDQKHDOWK
 75$'($1'(19,5210(175(9,(:

1//'06#4; U 
 1/2#4#6+8'0#.;5+51(4)#0+%#0&
10g4)#0+%
#4/+0);56'/5U4+6+%#.
55'55/'061(
#4/41(+6#$+.+6;
1RpPL1HPHV
)$2

$EVWUDFW
$QDQDO\VLVRIRYHUHFRQRPLFVWXGLHVGHPRQVWUDWHVWKDWLQWKHPDMRULW\RIFDVHVRUJDQLFV\VWHPVDUH
PRUHSURÀWDEOHWKDQQRQRUJDQLFV\VWHPV+LJKHUPDUNHWSULFHVDQGSUHPLXPVRUORZHUSURGXFWLRQFRVWV
RUDFRPELQDWLRQRIWKHWZRJHQHUDOO\UHVXOWLQKLJKHUUHODWLYHSURÀWVIURPRUJDQLFDJULFXOWXUHLQGHYHORSHG
FRXQWULHV7KHVDPHFRQFOXVLRQFDQEHGUDZQIURPVWXGLHVLQGHYHORSLQJFRXQWULHVEXWWKHUHKLJKHU\LHOGV
FRPELQHGZLWKKLJKSUHPLXPVDUHWKHXQGHUO\LQJFDXVHVRIWKHLUUHODWLYHO\JUHDWHUSURÀWDELOLW\

2UJDQLF DJULFXOWXUH KDV WULJJHUHG D FRQWURYHUVLDO WR FRQFHQWUDWH RQ GHYHORSHG FRXQWULHV PDLQO\ WKH
GHEDWHRYHUWKHSDVWIHZGHFDGHVODUJHO\EHFDXVHLW 8QLWHG6WDWHVDQGRQFHUWDLQFDVKFURSVHJFRUQ
H[SRVHVWKHWUXHFRVWVDQGGDUNHUVLGHVRIFKHPLFDO VR\ ZKHDW )RU WKH SXUSRVH RI WKLV DQDO\VLV RQO\
LQWHQVLYH LQGXVWULDO IDUPLQJ V\VWHPV 7KHUH LV QRZ D VWXGLHVXVLQJGDWDIURPFHUWLÀHGRUJDQLFIDUPVZHUH
VWURQJERG\RIHYLGHQFHWRSURYHWKDWRUJDQLFIDUPLQJ FRQVLGHUHG FRYHULQJ D PLQLPXP SHULRG RI WKUHH
LV PRUH HQYLURQPHQWDOO\ IULHQGO\ SRWHQWLDO EHQHÀWV
DULVHIURPIRUH[DPSOHLPSURYHGVRLOIHUWLOLW\RUJDQLF
PDWWHU FRQWHQW DQG ELRORJLFDO DFWLYLW\ EHWWHU VRLO
VWUXFWXUH DQG OHVV VXVFHSWLELOLW\ WR HURVLRQ UHGXFHG
SROOXWLRQ IURP QXWULHQW OHDFKLQJ DQG SHVWLFLGHV DQG
LPSURYHG SODQW DQG DQLPDO ELRGLYHUVLW\ .DVSHUF]\N
\HDUVIRUGHYHORSHGFRXQWULHVDIWHUFRQYHUVLRQDQG
XQGHUWDNHQDIWHU'XHWRWKHODFNRIORQJWHUP
HFRQRPLF VWXGLHV LQ GHYHORSLQJ FRXQWULHV VWXGLHV
FRYHULQJ RQH DQG WZR \HDUV ZHUH LQFOXGHG IURP
WKHVH FRXQWULHV 6WXGLHV WKDW HYDOXDWHG \LHOGV DQG
FHUWDLQ SURGXFWLRQ FRVWV EXW QRW SURÀWV ZHUH QRW
DQG .QLFNHO  +RZHYHU LW LV QRW FOHDU ZKHWKHU
RUJDQLF DJULFXOWXUH FRXOG EH HFRQRPLFDOO\ DWWUDFWLYH
HQRXJKWRWULJJHULWVZLGHVSUHDGDGRSWLRQ,IRUJDQLF
IDUPLQJ RIIHUV EHWWHU HQYLURQPHQWDO TXDOLW\ DQG
KHDOWKLHU IRRGV EXW QRW VXIÀFLHQW HFRQRPLF UHWXUQV
WR WKH PDMRULW\ RI IDUPHUV LW ZLOO REYLRXVO\ UHPDLQ D
OX[XU\ IRUP RI IRRG SURGXFWLRQ YLDEOH IRU RQO\ D YHU\
VPDOO IUDFWLRQ RI IDUPHUV +RZHYHU WKH FRQWLQXHG
JURZWK RI RUJDQLFDOO\ PDQDJHG ODQGV ZRUOGZLGH
HVSHFLDOO\LQGHYHORSLQJFRXQWULHVGRHVQRWVXSSRUW
WKLVK\SRWKHVLV
$&RPSDULQJWKHHFRQRPLFVRIRUJDQLF
YHUVXVQRQRUJDQLFIDUPLQJ
FRQVLGHUHG
6HYHUDO IDFWRUV FRPSOLFDWH WKH WDVN RI FRPSDULQJ
HFRQRPLF VWXGLHV DFURVV VSDFH DQG WLPH VXFK
DV GLIIHUHQW FRVWV RI OLYLQJ DQG SXUFKDVLQJ SRZHU
GLIIHUHQW LQWHUSUHWDWLRQV RI ODERXU FRVWV DQG WKH
FKDQJLQJ HFRQRPLF DQG SROLWLFDO HQYLURQPHQW
0RUHRYHU PHWKRGRORJLFDO FKRLFH WKH WLPH SHULRG
DQDO\VHGDQGWKHVHOHFWLRQSURFHGXUHIRUFRPSDUDEOH
FRQYHQWLRQDO IDUPV KDYH D FRQVLGHUDEOH EHDULQJ
RQ SURÀWDELOLW\ 6LPLODUO\ WKH H[WHQW RI WKH HFRQRPLF
DVVHVVPHQW FDQ YDU\ DFURVV VWXGLHV ZLWK VRPH
VWXGLHV IRFXVLQJ PHUHO\ RQ WKH IDUP OHYHO ZKLOH
RWKHUVEURDGHQWKHSLFWXUHWRWKHOHYHORIVRFLHW\DQG
WKLV FDQ OHDG WR GLIIHUHQW RXWFRPHV 'HSHQGLQJ RQ
WKLV FKRLFH RSSRUWXQLW\ FRVWV DQG H[WHUQDOLWLHV DUH
7KHUH DUH ZHOO RYHU  VWXGLHV WKDW FRPSDUH WKH HLWKHU LQFOXGHG VRFLHW\ OHYHO RU DV LQ PRVW FDVHV
UHODWLYH SURÀWDELOLW\ RI RUJDQLF YHUVXV QRQRUJDQLF
DJULFXOWXUH +RZHYHU WKHUH DUH IHZHU ORQJWHUP
FRPSDUDWLYH VWXGLHV WKDW DQDO\VH WKH GHYHORSPHQW
RI SURÀWV IURP HDFK RI WKHVH V\VWHPV 5HJUHWWDEO\
WKHJHRJUDSKLFDOGLVWULEXWLRQRIWKHVHVWXGLHVWHQGV
H[FOXGHG IDUP OHYHO :KHQ ORRNLQJ DW SURÀWDELOLW\
VWXGLHVDFRUUHFWLQWHUSUHWDWLRQRIWKHGDWDLVFUXFLDO
RYHUDOO FRPSDULVRQV FDQQRW EH PDGH IRU H[DPSOH
EHWZHHQFDVHVWXGLHVDQGÀHOGH[SHULPHQWVEHWZHHQ
GHYHORSHG DQG GHYHORSLQJFRXQWU\ UHVXOWV DQG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

EHWZHHQ VWXGLHV ZLWK D YHU\ JRRG GDWD EDVH DQG UHQGHUHGDOORUJDQLFV\VWHPVPRUHSURÀWDEOH

VWXGLHVEDVHGRQIDUPHUV·RSLQLRQV
%<LHOGV
(YLGHQFH IURP WKH PRUH WKDQ  VWXGLHV DQDO\VHG
6HYHUDORIWKH8QLWHG6WDWHVVWXGLHVLQYHVWLJDWHGGULHU
DUHDVDVZHOODQGIRXQGKLJKHU\LHOGVLQWKHRUJDQLF
V\VWHPV6WDQKLOO'LHEHO:LOOLDPVDQG/OHZHO\Q
'REEVDQG6PROLN+DQVRQ/LFKWHQEHUJ
DQG 3HWHUV  3LPHQWHO HW DO  VXJJHVWLQJ
VKRZHGWKDW\LHOGVLQZHOOHVWDEOLVKHGRUJDQLFIDUPV
WKDW WKRVH V\VWHPV DUH PRUH UHVLVWDQW WR GURXJKW
LQ GHYHORSHG FRXQWULHV DUH XVXDOO\ ORZHU WKDQ WKRVH
6LPLODUO\VWXGLHVLQGHYHORSLQJFRXQWULHVVKRZHGWKDW
IURP FRQYHQWLRQDO IDUPV WR YDU\LQJ GHJUHHV 0RVW
RUJDQLF\LHOGVZHUHJHQHUDOO\KLJKHUXQGHUQRUPDORU
(XURSHDQ VWXGLHV LQFOXGLQJ WKRVH RI RUJDQLF FHUHDO
IDYRXUDEOH FRQGLWLRQV ,)$'  5DM HW DO 
YHJHWDEOH DQG PL[HG IDUPLQJ V\VWHPV VKRZHG
*LEERQ DQG %ROZLJ  6HWERRQVDUQJ <HXQJ
WKDW WKH\ SURGXFHG VRPHZKDW ORZHU \LHOGV %0(/)
DQG &DL  DQG VLJQLÀFDQWO\ KLJKHU XQGHU OHVV
² )$7  2IIHUPDQQ DQG 1LHEHUJ
IDYRUDEOH FRQGLWLRQV 0HQGR]D  2YHUDOO WKH
ZKHUHDVPLON\LHOGVPRVWRIWHQVKRZHGVLPLODU
PDMRULW\RIHFRQRPLFVWXGLHVLQGHYHORSLQJFRXQWULHV
UHVXOWV ZKHQ PHDVXUHG LQ OLWUHV SHU FRZ <RXQLH HW
VKRZHG KLJKHU \LHOGV IURP RUJDQLF SURGXFWLRQ
DO)$72IIHUPDQQDQG1LHEHUJ
2QWKHRWKHUKDQGWKHPDMRULW\RIORQJWHUPVWXGLHV
LQYROYLQJ VR\FRUQ URWDWLRQ LQ WKH 8QLWHG 6WDWHV
VKRZHG WKDW RUJDQLF \LHOGV RQ DYHUDJH ZHUH QRW
VLJQLÀFDQWO\GLIIHUHQW&KDVHDQG'XII\+DQVRQ
/LFKWHQEHUJ DQG 3HWHUV  'ULQNZDWHU :DJRQHU
DQG6DUUDQWRQLR'HODWHHWDO3LPHQWHOHW
ZKHUHDV QRW RQH VWXG\ RQ GHYHORSHG FRXQWULHV
VKRZHG KLJKHU \LHOGV IURP RUJDQLF FRPSDUHG ZLWK
FRQYHQWLRQDO
:KHQ FRQYHUWLQJ WR RUJDQLF DJULFXOWXUH D SDUDGLJP
VKLIW PXVW WDNH SODFH IURP WKH KLJK H[WHUQDO LQSXW
SDFNDJHV IRU WUHDWLQJ SUREOHPV WR WKH XVH RI
DO'HVSLWHORZHUVR\\LHOGVIURPRUJDQLFIDUPV SUHYHQWLYH PDQDJHPHQW DQG LQWHQVLYH NQRZOHGJH
LQVRPHRWKHU8QLWHG6WDWHVVWXGLHV0DKRQH\HWDO LQSXWV<LHOGVDUHQRWDFKDUDFWHULVWLFRIDSURGXFWLRQ
 &KDVH  0F%ULGH DQG *UHHQH  V\VWHP SHU VH WKH\ GHSHQG YHU\ PXFK RQ IDUP
KLJKSUHPLXPV0F%ULGHDQG*UHHQHRUORZHU PDQDJHPHQW $OWKRXJK RUJDQLF SURGXFH JHQHUDOO\
SURGXFWLRQFRVWV0DKRQH\HWDO&KDVH \LHOGVOHVV\LHOGORVVHVFDQEHPLWLJDWHGWRDFHUWDLQ

%R['LIÀFXOWLHVLQDQDO\VLQJ\LHOGVIURPFRPSDUDWLYHVWXGLHV

‡ 2EMHFWRIFRPSDULVRQFRPPRGLW\RUZKROHIDUPEDVHG6RPHDXWKRUVRQO\ORRNDW\LHOGVRIRQHRUWZRFDVK

FURSVVHSDUDWHO\&KDVHDQG'XII\'REEVDQG6PROLNVWXGLHVIURPGHYHORSLQJFRXQWULHVZKHUHDV
RWKHUVDOVRHYDOXDWHDYHUDJH\LHOGVRIWKHZKROHURWDWLRQ+DQVRQHWDO&KDVHDQGRILQWHUFURSV(\
KRUQ5DPDNULVKQDQDQG0lGHU7KHODWWHULVPRUHUHOHYDQWDOWKRXJKPRUHFRPSOH[IRUREWDLQLQJPHDQLQJIXO
UHVXOWV
‡ 8QLWRIFRPSDULVRQSHUKDRUSURGXFW6RPHVWXGLHVHYDOXDWHFRZ\LHOGSHUKHFWDUHZKLFKLVXVXDOO\ORZHULQ
RUJDQLFGXHWRORZHUVWRFNLQJGHQVLWLHVZKHUHDVRWKHUVHYDOXDWHFRZ\LHOGSHUDQLPDOZKLFKRIWHQSURYLGHVVLPLODU
UHVXOWVDQGWKLVPDNHVFRPSDULVRQVGLIÀFXOW
‡ 'LIIHUHQWYDULHWLHV9DULHWLHVEUHGIRULQWHQVLYHH[WHUQDOLQSXWFRQGLWLRQVDUHVHOGRPVXLWDEOHIRUORZH[WHUQDOLQSXW
V\VWHPV2UJDQLFV\VWHPVHVSHFLDOO\LQGHYHORSLQJFRXQWULHVRIWHQXVHORFDOEUHHGVDQGYDULHWLHVZKLFKKDYHORZHU
\LHOGVEXWZKLFKDUHPRUHDGDSWHGWRORZH[WHUQDOLQSXWFRQGLWLRQVLQWKDWWKH\UHTXLUHOHVVQXWULHQWVDQGZDWHULQSXWV
RUKDYHKLJKHUSHVWGLVHDVHUHVLVWDQFH+RZHYHUDXWKRUVJHQHUDOO\GRQRWVSHFLI\WKDWGLIIHUHQFHVLQ\LHOGVPD\EH
GXHWRGLIIHUHQWYDULHWLHV
‡ 'LIIHUHQWJURZWKSHULRGV8VLQJGLIIHUHQWYDULHWLHVDOVRLQÁXHQFHVWKHHFRQRPLFVRIWKHZKROHURWDWLRQV\VWHPIRU
H[DPSOHPDQ\RUJDQLFIDUPHUVLQ,QGLDXVHGHVLFRWWRQZKLFKLVDZKROHVHDVRQFURSWKXVDIWHUKDUYHVWIDUPHUV
FDQQRWJURZDQ\WKLQJHOVHLQWKHURWDWLRQ0RVWFRQYHQWLRQDOIDUPHUVJURZK\EULGYDULHWLHVXQGHULUULJDWLRQLQWKH
VWXGLHVDQDO\VHGZKLFKHQDEOHVWKHFXOWLYDWLRQRIWZRRUWKUHHFURSVSHU\HDU-DFNVRQ
‡ 0DQDJHULDOEDFNJURXQG7KHLQWHQVLW\RISUHYLRXVO\PDQDJHGFRQYHQWLRQDOIDUPVLVDVLJQLÀFDQWIDFWRUFRQWULEXWLQJ
WRWKH\LHOGGHFUHDVHVGXULQJDQGDIWHUFRQYHUVLRQWRRUJDQLF<HWRIWHQWKHEDFNJURXQGRIRUJDQLFIDUPVLVQRWFOHDU
IURPWKHVWXGLHVHYHQWKRXJKLWLQÁXHQFHVWKHFRPSDUDWLYHEDVHOLQH
 75$'($1'(19,5210(175(9,(:

H[WHQWE\SURSHUVRLOPDQDJHPHQWVKDGHWUHHVVXFK LQ PRVW VWXGLHV RI GHYHORSLQJ FRXQWULHV $QRWKHU

DV LQ FRIIHH FXOWLYDWLRQ WLPHO\ UHPRYDO RI GLVHDVHG DSSURDFKXVHGE\:\QHQIRULQVWDQFHFRXQWV
SODQWV DQG D KHDOWK\ EDODQFH EHWZHHQ SHVWV DQG KLUHG ODERXU DV D YDULDEOH FRVW DQG IDPLO\ ODERXU DV
QDWXUDO HQHPLHV DV ELRORJLFDO FRQWUROV 9DQ GHU DÀ[HGFRVW9HU\RIWHQLQGHYHORSLQJFRXQWULHVRQO\
9RVVHQ  1HYHUWKHOHVV DOWKRXJK DQ LPSRUWDQW FDVK FRVWV DUH LQFOXGHG DQG QRQFDVK FRVWV HJ
HOHPHQWRISURÀWDELOLW\\LHOGVDORQHGRQRWQHFHVVDULO\
LQGLFDWHSURÀWDELOLW\
&3URGXFWLRQFRVWV
,QIDUPHFRQRPLFVWKHUHLVQRDEVROXWHGHÀQLWLRQRI
ZKDW KDV WR EH FRQVLGHUHG DV YDULDEOH FRVWV RU DV
À[HG FRVWV LW GHSHQGV RQ WKH DLP RI WKH UHVHDUFK
6RPHVWXGLHVFRQVLGHURQO\YDULDEOHFRVWVWRFDOFXODWH
RZQ ODERXU DQG VHHGV DUH H[FOXGHG 5HJDUGOHVV RI
ZKHWKHU ODERXU FRVWV DUH WUHDWHG XQGHU À[HG DQGRU
YDULDEOHFRVWVWKHPRVWLPSRUWDQWDVSHFWLVWKDWWKH\
DUHWUHDWHGFRQVLVWHQWO\ZLWKLQWKHFDVHVWXG\DQGDUH
QRWRYHUORRNHG
)URP WKH DQDO\VLV RI VWXGLHV LW IROORZV WKDW HYHQ
LI WKH GLIIHUHQW FRVW HOHPHQWV ZHUH VWDQGDUGL]HG
YDULDWLRQVDPRQJSURGXFWLRQFRVWVZRXOGRFFXUGXH
JURVVPDUJLQV<RXQLH+DPLOWRQDQG1HYLVRQ WRWKHXQLTXHFKDUDFWHURIWKHRSHUDWLRQVDQGIDFWRUV
ZKHUHDV RWKHUV LQFOXGH À[HG FRVWV :\QHQ  EH\RQG WKH FRQWURO RI WKH IDUPHUV IRU H[DPSOH
*LEERQ DQG %ROZLJ  DQG \HW RWKHUV GR QRW PDFKLQHU\FRVWVGHSHQGDOVRRQDJHVL]HDQGXVH
GLIIHUHQWLDWH EHWZHHQ WKH WZR W\SHV RI FRVWV 2OVRQ LUULJDWLRQ FRVWV DUH VXEMHFW WR YDULDWLRQV LQ UDLQIDOO
DQG0DKRQH\'HODWHHWDO%\GHÀQLWLRQ
À[HGFRVWVDUHSDUWRIWKHWRWDOIDUPFRVWVWKDWGRQRW
YDU\ VLJQLÀFDQWO\ ZLWK WKH YROXPH RI RXWSXW DQG FDQ
RQO\ EH FKDQJHG LQ WKH ORQJ UXQ ZKHUHDV YDULDEOH
FRVWV DUH WKRVH WKDW YDU\ GLUHFWO\ ZLWK WKH YROXPH
RI RXWSXW 7KH GLIIHUHQWLDWLRQ EHWZHHQ YDULDEOH DQG
À[HG FRVWV LV RQO\ LPSRUWDQW ZKHQ JURVV PDUJLQV
DUH FDOFXODWHG DV À[HG FRVWV DUH QRW DFFRXQWHG IRU
WHPSHUDWXUH DQG HIÀFLHQF\ RI LUULJDWLRQ V\VWHPV
DQG ODERXU FRVWV GHSHQG RQ ZDJH UDWHV ZRUNLQJ
FRQGLWLRQV DQG HIÀFLHQF\ RI WKH ZRUNHUV 7KLV EHLQJ
VDLGSURGXFWLRQFRVWVWHQGWREHORZHULQHVWDEOLVKHG
RUJDQLF V\VWHPV HJ +HOPHUV /DQJHPHLHU DQG
$WZRRG  +DQVRQ /LFKWHQEHUJ DQG 3HWHUV
2OVRQDQG0DKRQH\'HODWHHWDO
0HQGR]D  (\KRUQ 5DPDNULVKQDQ DQG 0lGHU
LQ WKRVH PDUJLQV +RZHYHU À[HG FRVWV DUH FUXFLDO
IRU IDUPSURÀWDELOLW\'XULQJFRQYHUVLRQIRU LQVWDQFH
VHYHUDOVXEVWDQWLDOLQYHVWPHQWVKDYHWREHPDGHHJ
QHZ DQLPDOIULHQGO\ KRXVLQJ V\VWHP QHZ RUFKDUG
 ,Q PRVW RI WKH(XURSHDQ VWXGLHV DQDO\VHG E\
2IIHUPDQQDQG1LHEHUJLQWRWDOFRVWVLQFXUUHG
E\RUJDQLFIDUPVZHUHRQDYHUDJHVOLJKWO\ORZHUWKDQ
WKRVH LQFXUUHG E\ FRPSDUDEOH FRQYHQWLRQDO IDUPV
YDULHWLHVWKDWFDQEHWWHUZLWKVWDQGELRSK\VLFDOVWUHVV
:KLOHYDULDEOHFRVWVZHUHJHQHUDOO\VLJQLÀFDQWO\ORZHU
WKDW DUH RIWHQ FRXQWHG DV À[HG FRVWV DQG IRU PDQ\
² SHU FHQW LQ WKH RUJDQLF V\VWHPV WKHLU À[HG
IDUPHUVWKHVHFRVWVDUHWKHGHWHUPLQLQJIDFWRUDVWR
FRVWVZHUHXSWRSHUFHQWKLJKHUWKDQWKRVHRIWKH
ZKHWKHU FRQYHUWLQJ WR RUJDQLF PD\ EH SURÀWDEOH RU
FRQYHQWLRQDOUHIHUHQFHJURXSLQVHYHUDOFRXQWULHV7KH
QRW (YHQ WKRXJK PRVW VWXGLHV PDNH WKH GLVWLQFWLRQ
IHZFDVHVZLWKVLJQLÀFDQWO\KLJKHUSURGXFWLRQFRVWVLQ
EHWZHHQWKHWZRW\SHVRIFRVWVWKH\PD\QRWVSHFLI\
RUJDQLF IDUPV ZHUH WKH RQHV IRFXVLQJ RQ YHJHWDEOH
ZKLFKFRVWVDUHFRYHUHGE\HDFKRIWKHP0HQWLRQLQJ
PHUHO\ YDULDEOH DQG À[HG FRVWV GRHV QRW DOORZ IRU SURGXFWLRQRUWKRVHLQGHYHORSLQJFRXQWULHV
WKH DSSUHFLDWLRQ RI WKH YDULDEOHV XVHG DQG WKXV IRU $OO DQDO\VHG VWXGLHV UHOLHG RQ UHODWLYHO\ FKHDS LQSXW
SURSHUFRPSDULVRQV FRVWV EDVHG RQ FKHDS IRVVLO IXHO WKDW KDYH EHHQ
$Q HYHQ PRUH FRPSOLFDWHG LVVXH LV WKH LQFOXVLRQ RI YDU\LQJ WUHPHQGRXVO\ RYHU WKH SDVW IHZ \HDUV
ODERXU FRVWV VRPH FRPSDULVRQV RPLW ODERXU FRVWV ,QSXW FRVWV DUH ERXQG WR LQFUHDVH LQ WKH ORQJ UXQ
IURPWKHWRWDOFDOFXODWLRQRIQHWUHYHQXHVHJ+DQVRQ JOREDO QLWURJHQ IHUWLOL]HU SULFHV VXUJHG E\  SHU
/LFKWHQEHUJ DQG 3HWHUV  'HODWH HW DO  FHQW GXULQJ WKH ÀUVW TXDUWHU RI  DQG IRVVLOIXHO
ZKLOHPRVWLQFOXGHKLUHGODERXULQWKHYDULDEOHFRVWV EDVHG DJULFXOWXUDO LQSXWV D VXEVWDQWLDO SURSRUWLRQ
:\QHQ  (\KRUQ 5DPDNULVKQDQ DQG 0lGHU RISURGXFWLRQFRVWVZLOOVRRQHURUODWHUVXEVWDQWLDOO\
 *LEERQ DQG %ROZLJ  &KDVH  DIIHFWIDUPLQJV\VWHPVWKDWUHO\RQWKHLQWHQVLYHXVH
VRPH FRXQW KLUHG ODERXU FRVWV DV À[HG FRVWV WKXV RI V\QWKHWLF IHUWLOL]HUV DQG SHVWLFLGHV ,Q WKH FDVH RI
RPLWWLQJ WKHP IURP JURVV PDUJLQ UHVXOWV )$7  RUJDQLFDJULFXOWXUHRLOEDVHGLQSXWVQHJDWLYHO\DIIHFW
%0(/)DQG\HWRWKHUVFRXQWIDPLO\ODERXUDV SURGXFWLRQ FRVWV ZKHUH SODVWLF PXOFK LV XVHG DQG
DQ RSSRUWXQLW\ FRVW RU OHDYH WKLV RXW FRPSOHWHO\ DV PRUHJHQHUDOO\ZKHQWKHV\VWHPLVPHFKDQL]HG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

'2YHUDOOSURÀWDELOLW\
2YHUVWXGLHVZHUHDQDO\VHGLQWHUPVRIWKHLUUHVHDUFK
RQ IDUP SURÀWDELOLW\ DQG DOWKRXJK PHWKRGRORJLFDO
GLIIHUHQFHV SUHYHQWHG XV IURP FRPSDULQJ WKHP
V\VWHPDWLFDOO\WKHVLPLODULWLHVEHWZHHQWKHVWXGLHVIURP
FRQFOXVLRQFDQEHGUDZQIURPVWXGLHVLQGHYHORSLQJ
FRXQWULHVEXWWKHUHKLJKHU\LHOGVFRPELQHGZLWKKLJK
SUHPLXPV VHHPHG WR EH WKH XQGHUO\LQJ UHDVRQV IRU
KLJKHUUHODWLYHSURÀWDELOLW\
(VWDEOLVKLQJ RUJDQLF PDUNHWV IRU VWDSOH FURSV HJ
PDQ\FRXQWULHVDQGFRQWH[WVDOORZHGXVWRGUDZVRPH
JHQHUDO FRQFOXVLRQV 3URÀWDELOLW\ FHUWDLQO\ GHSHQGV
RQWKHFKRLFHRIFURSZKLFKRIFRXUVHLVGHWHUPLQHG
SDUWO\ E\ HQYLURQPHQWDO FRQGLWLRQV DQG SDUWO\ E\
WKH GHPDQG IRU SURGXFWV DQG E\ WKH DYDLODELOLW\ RI
JRYHUQPHQWSURJUDPPHVWKDWVXSSRUWWKHFXOWLYDWLRQ
RUJDQLF VR\EHDQV ZKHDW FKLOOLHV WKDW DUH SDUW RI
D URWDWLRQ RIIHUV FRQVLGHUDEOH SRWHQWLDO WR IXUWKHU
LPSURYHWKHSURÀWDELOLW\RIRUJDQLFIDUPVLQGHYHORSLQJ
FRXQWULHV,IWKHVHFURSVFRXOGEHVROGDWDSUHPLXP
SULFH WKH UHYHQXHV RI RUJDQLF IDUPV ZRXOG IXUWKHU
LQFUHDVH,QGHYHORSHGFRXQWULHVDIXUWKHUUHGXFWLRQ
RISDUWLFXODUFURSV$FRPSDULVRQRIUHODWLYHSURÀWDELOLW\ LQSURGXFWLRQFRVWVHQHUJ\IXHOIHHGDQGWKHXVHRI
GHSHQGV ODUJHO\ RQ WKH NLQG RI FRPSDULVRQ JURXS
VHOHFWHG7KXVIDUPVL]HIDUPW\SHDQGORFDWLRQDUH
LPSRUWDQW IDFWRUV LQ VHOHFWLQJ WKH VXLWDEOH FDQGLGDWH
IDUPVIRUFRPSDULVRQ3ULFHSUHPLXPVDOVRVHHPWR
EHDFUXFLDOIDFWRUFRQWULEXWLQJWRWKHJRRGHFRQRPLF
SHUIRUPDQFHRIRUJDQLFV\VWHPVDQGLQPRVWFDVHV
WKH\PDNHRUJDQLFIDUPVPRUHSURÀWDEOH+RZHYHUDW
OHDVWDGR]HQVWXGLHVVKRZHGWKDWSULFHSUHPLXPVDUH
QRWDOZD\VQHFHVVDU\IRURUJDQLFV\VWHPVWREHPRUH
SURÀWDEOHWKDQFRQYHQWLRQDOV\VWHPV,IKLJKHUSULFHV
DUH QRW DYDLODEOH WR FRPSHQVDWH IRU SRVVLEOH ORVVHV
RI RUJDQLF \LHOGV ÀQDQFLDO SURÀWDELOLW\ ZLOO GHSHQG
HQWLUHO\RQDFKLHYLQJFRVWUHGXFWLRQV
2YHUDOO WKH FRPSLOHG GDWD VXJJHVW WKDW RUJDQLF
DJULFXOWXUH LV HFRQRPLFDOO\ PRUH SURÀWDEOH QHW
UHWXUQV WDNLQJ WRWDO FRVWV LQWR DFFRXQW PRVW RIWHQ
SURYHG WR EH KLJKHU LQ RUJDQLF V\VWHPV 7KHUH ZHUH
ZLGH YDULDWLRQV DPRQJ \LHOGV DQG SURGXFWLRQ FRVWV
EXW HLWKHU KLJKHU PDUNHW SULFHV DQG SUHPLXPV RU
ORZHU SURGXFWLRQ FRVWV RU D FRPELQDWLRQ RI WKHVH
WZR JHQHUDOO\ UHVXOWHG LQ KLJKHU UHODWLYH SURÀWV IURP
RUJDQLFDJULFXOWXUHLQGHYHORSHGFRXQWULHV7KHVDPH
%R[3URÀWDELOLW\RIRUJDQLFFRWWRQSURGXFWLRQ
$Q,QGR6ZLVVUHVHDUFKWHDPFRPSDUHGDJURQRPLFGDWDRIRUJDQLFDQGFRQYHQWLRQDOIDUPVRYHUWZR\HDUV(\
EHWWHUYDULHWLHVHJLQWHUPVRIUHVLVWDQFHDQG\LHOG
FRXOGUHVXOWLQDQLQFUHDVHLQWKHUHODWLYHSURÀWDELOLW\RI
RUJDQLFIDUPV
(7KHQHHGIRUIDLUHFRQRPLF
FRPSDULVRQV
2UJDQLFV\VWHPVDUHJHQHUDOO\PRUHSURÀWDEOHGHVSLWH
XQIDLU FRPSHWLWLRQ LQ WKH PDUNHWSODFH GXH WR FXUUHQW
JRYHUQPHQW VXEVLG\ VFKHPHV IRU FRQYHQWLRQDO
SURGXFWLRQ XQHTXDO DYDLODELOLW\ RI UHVHDUFK DQG
H[WHQVLRQVHUYLFHVDQGWKHIDLOXUHRIPDUNHWSULFHVRI
FRQYHQWLRQDOIRRGVWRFDSWXUHWKHUHDOHQYLURQPHQWDO
VRFLDO DQG KHDOWK H[WHUQDOLWLHV ([LVWLQJ HFRQRPLF
FRPSDULVRQV DUH WKHUHIRUH KHDYLO\ ELDVHG LQ IDYRXU
RI FRQYHQWLRQDO IDUPLQJ 7KHUH LV DQ XUJHQW QHHG
WR GLUHFW PXFK PRUH UHVHDUFK DQG LQYHVWPHQWV LQWR
H[WHQVLRQVHUYLFHVWRVXSSRUWRUJDQLFDJULFXOWXUHDQG
VKLIWWKHEXONRISXEOLFVXSSRUWIURPSROOXWLQJDFWLYLWLHV
WR VXVWDLQDEOH SUDFWLFHV WR JLYH DQ HTXDO IRRWLQJ WR
RUJDQLF IDUPLQJ V\VWHPV ,Q DGGLWLRQ FRPSDUDWLYH
VWXGLHV QHHG WR WDNH LQWR DFFRXQW WKH GLIIHUHQFHV
LQ H[WHUQDO FRVWV DQG EHQHÀWV VR DV WR FDSWXUH WKH
KRUQ5DPDNULVKQDQDQG0lGHUDQGFDPHWRWKHFRQFOXVLRQWKDWRUJDQLFIDUPLQJRIFRWWRQZDVPRUHSURÀWDEOH
YDULDEOHSURGXFWLRQFRVWVZHUH²SHUFHQWORZHUDQGFRVWVRILQSXWVZHUHSHUFHQWORZHU\HW\LHOGVZHUH²SHU
FHQWKLJKHULQWKHWZR\HDUVDQGDVDUHVXOWJURVVPDUJLQVIRUFRWWRQZHUHSHUFHQWKLJKHU$OWKRXJKWKHUHZDV
QRSULFHSUHPLXPIRUWKHFURSVJURZQLQURWDWLRQZLWKFRWWRQRUJDQLFIDUPVHDUQHG²SHUFHQWKLJKHULQFRPHVWKDQ
FRQYHQWLRQDOIDUPV
,QDQ,QGLDQVXUYH\RIRUJDQLFFRWWRQIDUPHUVSHUFHQWRIUHVSRQGHQWVVDZWKHLUDJULFXOWXUDOLQFRPHLQFUHDVHE\
SHUFHQWRQDYHUDJHDIWHUDGRSWLQJRUJDQLFDJULFXOWXUDOSUDFWLFHVZKLFKPRVWRIWKHPDWWULEXWHGPDLQO\WRUHGXFHG
FRVWVRISURGXFWLRQDQGKLJKHUVDOHVSULFHV0DF'RQDOG6LPLODUO\LQWKH,QGLDQVWDWHRI$QGKUD3UDGHVK5DMHW
DOIRXQGWKDWJURZLQJRUJDQLFFRWWRQZDVPXFKPRUHSURÀWDEOHWKDQJURZLQJFRQYHQWLRQDOFRWWRQLQFRPHZDV
SHUDFUHRQRUJDQLFFRPSDUHGZLWKSHUDFUHRQFRQYHQWLRQDOIDUPV,QFRQFOXVLRQDOOVWXGLHVIRXQGRUJDQLF
FRWWRQIDUPLQJWREHPRUHSURÀWDEOHWKDQFRQYHQWLRQDO
 75$'($1'(19,5210(175(9,(:

%R[([DPSOHVRIHQYLURQPHQWDOFRVWV

$VWXG\E\3UHWW\HWDOHVWLPDWHGWKHDQQXDOH[WHUQDOFRVWVRIDJULFXOWXUHLQWKH8QLWHG.LQJGRPLQDW…

ELOOLRQELOOLRQHTXLYDOHQWWR…KDKDRIDUDEOHDQGSHUPDQHQWSDVWXUH7KLVZDVSHUFHQWRIWKHDYHU
DJHQHWIDUPLQFRPHIRU6LJQLÀFDQWFRVWVDURVHIURPWKHFRQWDPLQDWLRQRIGULQNLQJZDWHUZLWKSHVWLFLGHVQLWUDWH
DQGSKRVSKDWHIURPGDPDJHWRZLOGOLIHKDELWDWVKHGJHURZVIURP*+*HPLVVLRQVIURPVRLOHURVLRQDQGRUJDQLFFDU
ERQORVVHVIURPIRRGSRLVRQLQJDQGIURP%6($QRWKHUVWXG\ZKLFKFDOFXODWHGWKHH[WHUQDOFRVWVRIDJULFXOWXUHLQWKH
8QLWHG6WDWHVLQFOXGLQJGDPDJHWRZDWHUVRXUFHVWRVRLODQGDLUWRZLOGOLIHDQGHFRV\VWHPELRGLYHUVLW\DQGWRKXPDQ
KHDOWKHVWLPDWHGWKHFRVWVWRUDQJHEHWZHHQELOOLRQDQGELOOLRQDQQXDOO\RU²KDRIFURSODQG7HJW
PHLHUDQG'XII\7KHVHVWXGLHVRQO\HVWLPDWHGH[WHUQDOLWLHVWKDWJDYHULVHWRÀQDQFLDOFRVWVWKXVWKH\DUHOLNHO\WR
KDYHXQGHUHVWLPDWHGWKHWRWDOQHJDWLYHLPSDFWVDULVLQJIURPWKHLQWHQVLYHXVHRIDJURFKHPLFDOV

UHDODQGPXOWLSOHSURÀWVRIWKHUHVSHFWLYHV\VWHPVRI
DJULFXOWXUH
*RYHUQPHQWVXSSRUW
1DWLRQDO RU UHJLRQDO DJULFXOWXUDO SURJUDPPHV DQG
VXEVLGLHV DUH PRVWO\ JHDUHG WRZDUGV VXSSRUWLQJ
ODUJHVFDOH DJULFXOWXUH WKDW PDNHV LQWHQVLYH XVH RI
FKHPLFDO LQSXWV ZKLFK DUWLÀFLDOO\ ORZHUV WKH SULFH RI
5HVHDUFKDQGH[WHQVLRQ
7KH DFKLHYHPHQWV RI FRQYHQWLRQDO IDUPLQJ V\VWHPV
DUH EDVHG RQ VHYHUDO GHFDGHV RI LQWHQVLYH UHVHDUFK
DQG VXSSRUW ZKHUHDV RUJDQLF UHVHDUFK LV VWLOO LQ LWV
LQIDQF\&RQYHQWLRQDOIDUPHUVRIWHQKDYHEHWWHUDFFHVV
WRLQIRUPDWLRQIURPH[WHQVLRQVHUYLFHVDQGXQLYHUVLW\
UHVHDUFKHUV2UJDQLFIDUPHUVRQWKHRWKHUKDQGQHHG
PRUHWLPHDQGJUHDWHUPDQDJHULDOHIIRUWVDQGVNLOOVWR
FRQYHQWLRQDO SURGXFWV 3DLQWHU  FRPSDUHG QHW
UHWXUQVRIRUJDQLFDQGFRQYHQWLRQDOIDUPVDWWKHHQG
RIWKHVDQGIRXQGWKDWWKHDYHUDJHJRYHUQPHQWDO
VXEVLG\ SHU KHFWDUH ZDV  SHU FHQW KLJKHU IRU
FRQYHQWLRQDO SURGXFWLRQ 5HVHDUFKHUV LQ WKH V
DOVRIRXQGWKDWFRQYHQWLRQDOV\VWHPVEHQHÀWHGPRUH
DFTXLUHWKHQHFHVVDU\NQRZOHGJHRQVXFKPDWWHUVDV
RUJDQLFSUDFWLFHVSULFHVDQGPDUNHWLQJRSSRUWXQLWLHV
%RWK\LHOGOHYHOVDQGJURVVPDUJLQVRIURWDWLRQFURSV
ZRXOG SUREDEO\ LQFUHDVH LI H[WHQVLRQ VHUYLFHV DOVR
SURYLGHG WUDLQLQJ DQG DGYLFH RQ PDQDJLQJ WKHVH
FURSV RUJDQLFDOO\ (\KRUQ 5DPDNULVKQDQ DQG
IURPJRYHUQPHQWVXEVLGLHVWKDQRUJDQLFRQHV'LHEHO 0lGHU  7KXV FRPSDULVRQV RI \LHOG DQG IDUP
:LOOLDPV DQG /OHZHO\Q  6PROLN 'REEV DQG HFRQRPLFVEHWZHHQFRQYHQWLRQDODQGRUJDQLFFDQEH
5LFNHUO,IVXEVLGLHVZHUHH[SDQGHGWRVXSSRUW
ORQJWHUPDVSHFWVRIDJULFXOWXUDOSURGXFWLYLW\VXFKDV
VRLOEXLOGLQJJUDVVDQGOHJXPHFURSVWKHSURÀWDELOLW\
RIRUJDQLFIDUPLQJZRXOGEHHYHQKLJKHU
:KLOH RUJDQLF IDUPV LQ (XURSH UHFHLYH FRQVLGHUDEOH
VXSSRUW IURP WKH (8·V DJULHQYLURQPHQWDO SURJ
UDPPHVWKHGHVLJQRIWKHÀUVWSLOODURIWKH&RPPRQ
FRQVLGHUHGXQIDLUDVORQJDVWKHODWWHUGRQRWEHQHÀW
IURP VLPLODU UHVHDUFK DQG H[WHQVLRQ VHUYLFH VXSSRUW
WKDWDUHGLUHFWHGWRFRQYHQWLRQDODJULFXOWXUH
([WHUQDOLWLHV
7KH SURÀWDELOLW\ RI D IDUPLQJ V\VWHP PXVW EDODQFH
HFRQRPLF FRVWV DJDLQVW HQYLURQPHQWDO VRFLDO DQG
$JULFXOWXUDO 3ROLF\ &$3 SXW RUJDQLF IDUPLQJ DW D
GLVDGYDQWDJH LQ WKH SDVW 7KH  &$3 UHIRUP
FKDQJHGWKLVVLWXDWLRQSDUWLFXODUO\E\GHFRXSOLQJGLUHFW
SD\PHQWV +RZHYHU WKH UHVXOWV RI D VXUYH\ VKRZHG
WKDWRQO\SHUFHQWRIRUJDQLFIDUPHUVWKRXJKWWKDW
GHFRXSOLQJKDGKDGDSRVLWLYHLPSDFWRQWKHLUSURÀWV
KHDOWK FRVWV DV WKHVH FRVWV KDYH GHOD\HG LPSDFWV
DQG LQGLUHFW HIIHFWV RQ IDUP HFRQRPLFV $W SUHVHQW
FRPSDUDWLYH HFRQRPLF VWXGLHV RI WKH WZR IDUPLQJ
V\VWHPV RQO\ FRQVLGHU GLUHFW HFRQRPLF LQSXWV DQG
RXWSXWV LQ WKH HTXDWLRQ DQG EURDGO\ RYHUORRN WKH
HQYLURQPHQWDO VRFLDO DQG KHDOWK FRVWV $FFRXQWLQJ
6DQGHUV 2IIHUPDQQ DQG 1LHEHUJ  7KHUH LV
IRU H[WHUQDOLWLHV VXFK DV FRVWV DVVRFLDWHG ZLWK UXQ
PXFKGHEDWHRQZKHWKHUWKHFXUUHQWOHYHOVRIRUJDQLF
RII VSLOOV GHSOHWLRQ RI QDWXUDO UHVRXUFHV DQG KHDOWK
VXSSRUWDUHDSSURSULDWH1HYHUWKHOHVVLWLVFOHDUWKDW
FRVWV WR IDUPHUV H[SRVHG WR SHVWLFLGHV DUH ODFNLQJ
D VKDUS UHGLUHFWLRQ RI SXEOLF VXSSRUW IURP SROOXWLQJ
<HW JHQHUDOO\ RUJDQLF GHOLYHUV PRUH SXEOLF JRRGV
DFWLYLWLHV WR VXVWDLQDEOH SUDFWLFHV LV QHFHVVDU\ ERWK
VXFKDVHQYLURQPHQWDODQGKHDOWKEHQHÀWV7DNLQJWKH
LQ GHYHORSHG DQG GHYHORSLQJ FRXQWULHV 6XEVLGLHV
GLIIHUHQFHVLQH[WHUQDOFRVWVDQGEHQHÀWVLQWRDFFRXQW
VKRXOGHQFRXUDJHSRVLWLYHH[WHUQDOLWLHVZKLOHDGYLVRU\
ZRXOGJLYHDPRUHDFFXUDWHSURÀWDELOLW\SLFWXUHRIWKH
DQG LQVWLWXWLRQDO PHFKDQLVPV OHJDO PHDVXUHV DQG
GLIIHUHQWV\VWHPV
HFRQRPLF LQVWUXPHQWV VKRXOG FRUUHFW QHJDWLYH
H[WHUQDOLWLHV ,Q WKHVH FRPSOHWHO\ GLVWRUWHG PDUNHWV WKDW IDLO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

WR SURYLGH D OHYHO SOD\LQJ ÀHOG EHWZHHQ RUJDQLF FRXOGEHTXDQWLÀHGLQHFRQRPLFWHUPVHJSROOXWLRQ

DQG FRQYHQWLRQDO DJULFXOWXUH VXEVLGLHV DUH RQH
ZD\ RI KHOSLQJ RUJDQLF IDUPHUV WR FRQWLQXH ZLWK
HQYLURQPHQWDOO\ IULHQGO\ IDUPLQJ SUDFWLFHV 3ULFH
VXSSRUWV FRXOG WDNH WKH IRUP RI FRPSHQVDWLRQ WKDW
UHZDUGV IDUPHUV IRU WKH HFRV\VWHP DQG VRFLHWDO
DEDWHPHQW FRVWV DQG WKXV FRXOG EH WDNHQ LQWR
DFFRXQW LQ FRPSDUDWLYH VWXGLHV 7KLV ZRXOG PHDQ
D UHGLUHFWLRQ RI HFRQRPLF WKLQNLQJ ZKLFK ZRXOG
EHWWHU UHÁHFW WKH WUXH FRVW RI IDUPLQJ SUDFWLFHV DQG
KRSHIXOO\OHDGWRWKHUHIRUPXODWLRQRISROLFLHVVRWKDW
VHUYLFHV HJ ODQGVFDSH WKH\ DUH SHUIRUPLQJ IRU WKH\QRORQJHUVXSSRUWSROOXWLQJDFWLYLWLHVEXWLQVWHDG
WKHFRPPRQJRRG%RWKH[WHUQDOFRVWVDQGEHQHÀWV FRUUHFWQHJDWLYHH[WHUQDOLWLHVDVIDUDVSRVVLEOH
 75$'($1'(19,5210(175(9,(:

1//'06#4;U 64'0)6*'0+0)'5+.+'0%'1(
#4/+0);56'/5U
4'4'37+5+6'(14756#+0#$.')4+%7.674#.
41&7%6+10
0LJXHO$$OWLHUL8QLYHUVLW\RI&DOLIRUQLD%HUNHOH\DQG
3DUYL].RRKDINDQ)$2

$EVWUDFW
7UDGLWLRQDOIDUPLQJV\VWHPVKDYHHQDEOHGIDUPHUVWRJHQHUDWHVXVWDLQHG\LHOGVWRPHHWWKHLUVXEVLVWHQFH
QHHGVLQWKHFRQWH[WRIFOLPDWLFYDULDELOLW\3DUWRIWKLVSHUIRUPDQFHLVOLQNHGWRWKHKLJKOHYHOVRIDJURELRGLYHU
VLW\H[KLELWHGE\WUDGLWLRQDODJURHFRV\VWHPV6WUDWHJLHVWRHQKDQFHGLYHUVLW\LQDJURHFRV\VWHPVLQFOXGH
VXSSRUWWRIDPLO\DJULFXOWXUHDQGWRVPDOOKROGHUVDQGG\QDPLFFRQVHUYDWLRQRIJOREDOO\LPSRUWDQWDJULFXOWXUDO
KHULWDJH V\VWHPV 'LYHUVLÀFDWLRQ LV WKHUHIRUH DQ LPSRUWDQW IDUP VWUDWHJ\ IRU PDQDJLQJ SURGXFWLRQ ULVN
LQ IDUPLQJ V\VWHPV 6WUDWHJLHV WR UHVWRUH GLYHUVLW\ LQ PRGHUQ IDUPLQJ V\VWHPV LQFOXGH SURPRWLQJ VHHG
GLYHUVLW\FURSURWDWLRQVFRYHUFURSVLQWHUFURSSLQJDQGFURSOLYHVWRFNPL[LQJ'LYHUVLÀHGIDUPLQJV\VWHPV
PDQDJHGZLWKPRGHUQHTXLSPHQWDOORZFRPSOHPHQWDU\LQWHUDFWLRQVWKDWERRVW\LHOGVZLWKORZLQSXWVWKXV
LQFUHDVLQJSURÀWVDQGJLYHQWKHGLYHUVLW\RIFURSVPLQLPL]LQJSURGXFWLRQULVNV

7RGD\ D PDMRU FKDOOHQJH IDFLQJ KXPDQLW\ LV KRZ
WR DFKLHYH D VXVWDLQDEOH DJULFXOWXUH WKDW SURYLGHV
VXIÀFLHQW IRRG DQG HFRV\VWHP VHUYLFHV IRU SUHVHQW
DQG IXWXUH JHQHUDWLRQV LQ DQ HUD RI FOLPDWH FKDQJH
ULVLQJ IXHO FRVWV VRFLDO WHQVLRQV FDXVHG E\ IRRG
SULFH KLNHV ÀQDQFLDO LQVWDELOLW\ DQG DFFHOHUDWLQJ
HQYLURQPHQWDO GHJUDGDWLRQ 7KH FKDOOHQJH LV
FRPSRXQGHG E\ WKH IDFW WKDW WKH PDMRULW\ RI WKH
 0RVW VFLHQWLVWV DJUHH WKDW D EDVLF DWWULEXWH
RI DJULFXOWXUDO VXVWDLQDELOLW\ LV WKH PDLQWHQDQFH RI
DJURHFRV\VWHP GLYHUVLW\ LQ WKH IRUP RI VSDWLDO DQG
WHPSRUDO DUUDQJHPHQWV RI FURSV WUHHV DQLPDOV DQG
DVVRFLDWHG ELRWD ,QFUHDVLQJO\ UHVHDUFK VXJJHVWV
WKDW DJURHFRV\VWHP SHUIRUPDQFH DQG VWDELOLW\ LV
ODUJHO\ GHSHQGHQW RQ WKH OHYHO RI SODQW DQG DQLPDO
ELRGLYHUVLW\SUHVHQWLQWKHV\VWHPDQGLWVVXUURXQGLQJ
ZRUOG·V DUDEOH ODQG LV XQGHU ´PRGHUQµ PRQRFXOWXUH
V\VWHPV RI PDL]H VR\EHDQ ULFH FRWWRQ DQG RWKHUV
ZKLFK GXH WR WKHLU HFRORJLFDO KRPRJHQHLW\ DUH
SDUWLFXODUO\ YXOQHUDEOH WR FOLPDWH FKDQJH DV ZHOO DV
ELRWLFVWUHVVHV/LWWOHKDVEHHQGRQHWRHQKDQFHWKH
DGDSWDELOLW\RILQGXVWULDODJURHFRV\VWHPVWRFKDQJLQJ
SDWWHUQV RI SUHFLSLWDWLRQ WHPSHUDWXUHV DQG H[WUHPH
HQYLURQPHQW $OWLHUL DQG 1LFKROOV  %LRGLYHUVLW\
SHUIRUPV D YDULHW\ RI HFRORJLFDO VHUYLFHV EH\RQG
WKH SURGXFWLRQ RI IRRG LQFOXGLQJ UHF\FOLQJ RI
QXWULHQWV UHJXODWLRQ RI PLFURFOLPDWH DQG RI ORFDO
K\GURORJLFDO SURFHVVHV VXSSUHVVLRQ RI XQGHVLUDEOH
RUJDQLVPV DQG GHWR[LÀFDWLRQ RI QR[LRXV FKHPLFDOV
%HFDXVH ELRGLYHUVLW\PHGLDWHG UHQHZDO SURFHVVHV
ZHDWKHU HYHQWV 5RVHQ]ZHLJ DQG +LOOHO  7KLV
UHDOL]DWLRQ KDV OHG PDQ\ H[SHUWV WR VXJJHVWWKDWWKH
XVH RI HFRORJLFDOO\ EDVHG PDQDJHPHQW VWUDWHJLHV
PD\ UHSUHVHQW D UREXVW PHDQV RI LQFUHDVLQJ WKH
SURGXFWLYLW\VXVWDLQDELOLW\DQGUHVLOLHQFHRIDJULFXOWXUDO
SURGXFWLRQ ZKLOH UHGXFLQJ LWV XQGHVLUDEOH VRFLR
HQYLURQPHQWDO LPSDFWV $OWLHUL  GH 6FKXWWHU
DQG HFRORJLFDO VHUYLFHV DUH ODUJHO\ ELRORJLFDO WKHLU
FRQWLQXHGIXQFWLRQLQJGHSHQGVXSRQWKHPDLQWHQDQFH
RIELRORJLFDOLQWHJULW\DQGGLYHUVLW\LQDJURHFRV\VWHPV
,Q JHQHUDO QDWXUDO HFRV\VWHPV DSSHDU WR EH PRUH
VWDEOH DQG OHVV VXEMHFW WR ÁXFWXDWLRQV LQ \LHOG DQG
LQ WKH SRSXODWLRQV RI RUJDQLVPV PDNLQJ XS WKH
FRPPXQLW\ (FRV\VWHPV ZLWK KLJKHU GLYHUVLW\ DUH
E
2EVHUYDWLRQV RI DJULFXOWXUDO SHUIRUPDQFH DIWHU
H[WUHPHFOLPDWLFHYHQWVGXULQJWKHSDVWWZRGHFDGHV
KDYH UHYHDOHG WKDW UHVLOLHQFH WR WKRVH HYHQWV LV
FORVHO\OLQNHGWRWKHOHYHORIRQIDUPELRGLYHUVLW\/LQ
PRUHVWDEOHEHFDXVHWKH\H[KLELWJUHDWHUUHVLVWDQFH
RUWKHDELOLW\WRDYRLGRUZLWKVWDQGGLVWXUEDQFHVDQG
JUHDWHU UHVLOLHQFH RU WKH DELOLW\ WR UHFRYHU IROORZLQJ
GLVWXUEDQFHV
%LRGLYHUVLW\ HQKDQFHV HFRV\VWHP IXQFWLRQV EHFDXVH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

WKRVH FRPSRQHQWV WKDW DSSHDU UHGXQGDQW DW RQH
SRLQW LQ WLPH PD\ EHFRPH LPSRUWDQW ZKHQ VRPH
HQYLURQPHQWDO FKDQJH RFFXUV :KDW LV LPSRUWDQW
LV WKDW ZKHQ HQYLURQPHQWDO FKDQJH RFFXUV WKH
UHGXQGDQFLHV RI WKH V\VWHP HQDEOH FRQWLQXHG
HFRV\VWHP IXQFWLRQLQJ DQG SURYLVLRQLQJ RI VHUYLFHV
DUH FRQWLQXLQJ WR SUDFWLFH UHVRXUFHFRQVHUYLQJ
IDUPLQJ 6XFK WUDGLWLRQDO V\VWHPV DUH WHVWDPHQW
WR WKH UHPDUNDEOH UHVLOLHQFH RI DJURHFRV\VWHPV WR
FRQWLQXRXV HQYLURQPHQWDO DQG HFRQRPLF FKDQJH
ZKLFK GHVSLWH FKDQJHV FRQWLQXH WR FRQWULEXWH
VXEVWDQWLDOO\ WR DJURELRGLYHUVLW\ FRQVHUYDWLRQ DQG
9DQGHUPHHUHWDO IRRG VHFXULW\ DW ORFDO UHJLRQDO DQG QDWLRQDO OHYHOV
7UDGLWLRQDO IDUPLQJ V\VWHPV ZKLFK VWLOO SHUVLVW LQ
PDQ\ GHYHORSLQJ FRXQWULHV RIIHU D ZLGH DUUD\ RI
PDQDJHPHQW RSWLRQV DQG GHVLJQV WKDW HQKDQFH
IXQFWLRQDOELRGLYHUVLW\LQFURSÀHOGVDQGFRQVHTXHQWO\
VXSSRUW WKH UHVLOLHQFH RI DJURHFRV\VWHPV 8SKRII
1HWWLQJ
+RZHYHUFOLPDWHFKDQJHFDQSRVHVHULRXVSUREOHPV
IRU WKH PDMRULW\ RI WKH  PLOOLRQ RI WKH ZRUOG·V
SRRUHVWZKROLYHLQDUHDVRIWHQORFDWHGLQDULGRUVHPL
DULG]RQHVDQGLQHFRORJLFDOO\YXOQHUDEOHPRXQWDLQV
E 7ROHGR DQG %DUUHUD%DVVDOV  7KH DQG KLOOV &RQZD\  ,Q PDQ\ FRXQWULHV PRUH
P\ULDGRIWUDGLWLRQDOV\VWHPVDUHDJOREDOO\LPSRUWDQW DQGPRUHSHRSOHSDUWLFXODUO\WKRVHDWORZHULQFRPH
LQJHQLRXV DJULFXOWXUDO KHULWDJH ZKLFK UHÁHFWV WKH OHYHOV DUH QRZ IRUFHG WR OLYH LQ PDUJLQDO DUHDV LH
YDOXH RI WKH GLYHUVLW\ RI DJULFXOWXUDO V\VWHPV WKDW
DUH DGDSWHG WR GLIIHUHQW HQYLURQPHQWV 7KH\ WHOO
D IDVFLQDWLQJ VWRU\ RI WKH DELOLW\ DQG LQJHQXLW\ RI
KXPDQV WR DGMXVW DQG DGDSW WR WKH YDJDULHV RI D
FKDQJLQJ SK\VLFDO DQG PDWHULDO HQYLURQPHQW IURP
JHQHUDWLRQWRJHQHUDWLRQ:KHWKHUUHFRJQL]HGRUQRW
E\WKHVFLHQWLÀFFRPPXQLW\WKLVDQFHVWUDONQRZOHGJH
FRQVWLWXWHV WKH IRXQGDWLRQ IRU DFWXDO DQG IXWXUH
DJULFXOWXUDO LQQRYDWLRQV DQG WHFKQRORJLHV 7KH QHZ
PRGHOV RI DJULFXOWXUH WKDW KXPDQLW\ ZLOO QHHG LQ WKH
LPPHGLDWHIXWXUHVKRXOGLQFOXGHIRUPVRIIDUPLQJWKDW
DUH PRUH HFRORJLFDO ELRGLYHUVH ORFDO VXVWDLQDEOH
DQG VRFLDOO\ MXVW 7KHUHIRUH WKH\ ZLOO QHFHVVDULO\
KDYH WR EH URRWHG LQ WKH HFRORJLFDO UDWLRQDOH RI
WUDGLWLRQDO VPDOOVFDOH DJULFXOWXUH ZKLFK UHSUHVHQWV
ORQJHVWDEOLVKHG VXFFHVVIXO DQG DGDSWLYH IRUPV RI
ÁRRGSODLQVH[SRVHGKLOOVLGHVDULGRUVHPLDULGODQGV
ZKHUH WKH\ DUH DW ULVN IURP WKH QHJDWLYH LPSDFWV RI
FOLPDWHYDULDELOLW\(YHQPLQRUFKDQJHVLQFOLPDWHFDQ
KDYHGLVDVWURXVLPSDFWVRQWKHOLYHVDQGOLYHOLKRRGV
RI WKHVH YXOQHUDEOH JURXSV 7KH LPSOLFDWLRQV IRU
IRRG VHFXULW\ FRXOG EH YHU\ SURIRXQG HVSHFLDOO\
IRU VXEVLVWHQFH IDUPHUV OLYLQJ LQ UHPRWH DQG IUDJLOH
HQYLURQPHQWVWKDWDUHOLNHO\WRSURGXFHYHU\ORZ\LHOGV
7KHVHIDUPHUVGHSHQGRQFURSVWKDWFRXOGEHEDGO\
DIIHFWHG VXFK DV PDL]H EHDQV SRWDWRHV DQG ULFH
'HVSLWH WKH VHULRXV LPSOLFDWLRQV RI SUHGLFWLRQV GDWD
UHSUHVHQW RQO\ D EURDG EUXVK DSSUR[LPDWLRQ RI WKH
HIIHFWVRIFOLPDWHFKDQJHRQVPDOOVFDOHDJULFXOWXUH,Q
PDQ\FDVHVWKRVHGDWDLJQRUHWKHDGDSWLYHFDSDFLW\
RI VPDOO IDUPHUV ZKR XVH VHYHUDO DJURHFRORJLFDO
VWUDWHJLHV DQG VRFLDOO\ PHGLDWHG VROLGDULW\ QHWZRUNV
DJULFXOWXUH.RRKDINDQDQG$OWLHUL WR FRSH ZLWK DQG HYHQ SUHSDUH IRU H[WUHPH FOLPDWLF
$6PDOOIDUPVDVPRGHOVRIUHVLOLHQFH
,Q FRQWLQXRXVO\ FRSLQJ ZLWK H[WUHPH ZHDWKHU HYHQWV
DQG FOLPDWLF YDULDELOLW\ WKURXJK FHQWXULHV IDUPHUV
OLYLQJLQKDUVKHQYLURQPHQWVLQ$IULFD$VLDDQG/DWLQ
$PHULFD KDYH GHYHORSHG DQGRU LQKHULWHG FRPSOH[
IDUPLQJV\VWHPVPDQDJHGLQLQJHQLRXVZD\V7KHVH
KDYH DOORZHG VPDOO IDUPLQJ IDPLOLHV WR PHHW WKHLU
VXEVLVWHQFH QHHGV LQ WKH PLGVW RI HQYLURQPHQWDO
YDULDELOLW\ ZLWKRXW GHSHQGLQJ PXFK RQ PRGHUQ
YDULDELOLW\$OWLHULDQG.RRKDINDQ
7KUHHVWXGLHVDVVHVVLQJDJULFXOWXUDOSHUIRUPDQFHDIWHU
H[WUHPHFOLPDWLFHYHQWVUHYHDOWKHFORVHOLQNEHWZHHQ
HQKDQFHGDJURELRGLYHUVLW\DQGUHVLOLHQFHWRH[WUHPH
ZHDWKHU HYHQWV $ VXUYH\ FRQGXFWHG LQ &HQWUDO
$PHULFDQKLOOVLGHVDIWHU+XUULFDQH0LWFKVKRZHGWKDW
IDUPHUVHQJDJHGLQGLYHUVLÀFDWLRQSUDFWLFHVVXFKDV
FRYHUFURSVLQWHUFURSSLQJDQGDJURIRUHVWU\VXIIHUHG
OHVV GDPDJH WKDQ WKHLU QHLJKERXUV ZKR SUDFWLFHG
FRQYHQWLRQDO PRQRFXOWXUH 7KH VXUYH\ VSHDUKHDGHG
DJULFXOWXUDO WHFKQRORJLHV 'HQHYDQ  7KH
FRQWLQXHG H[LVWHQFH RI PLOOLRQV RI KHFWDUHV XQGHU
WUDGLWLRQDO IDUPLQJ LV OLYLQJ SURRI RI D VXFFHVVIXO
LQGLJHQRXV DJULFXOWXUDO VWUDWHJ\ ZKLFK LV D WULEXWH
WR WKH ´FUHDWLYLW\µ RI VPDOO IDUPHUV WKURXJKRXW WKH
E\ WKH &DPSHVLQR D &DPSHVLQR PRYHPHQW
PRELOL]HG  IDUPHUWHFKQLFLDQ WHDPV WR FDUU\
RXW SDLUHG REVHUYDWLRQV RI VSHFLÀF DJURHFRORJLFDO
LQGLFDWRUV RQ  QHLJKERXULQJ VXVWDLQDEOH
DQG FRQYHQWLRQDO IDUPV 7KH VWXG\ VSDQQHG 
GHYHORSLQJZRUOG:LONHQ7RGD\ZHOOLQWRWKH FRPPXQLWLHV DQG  GHSDUWPHQWV LQ *XDWHPDOD
ÀUVW GHFDGH RI WKH WZHQW\ÀUVW FHQWXU\ PLOOLRQV RI +RQGXUDV DQG 1LFDUDJXD ,W IRXQG WKDW SORWV ZKHUH
VPDOOKROGHUV IDPLO\ IDUPHUV DQG LQGLJHQRXV SHRSOH IDUPHUV DGRSWHG VXVWDLQDEOH IDUPLQJ SUDFWLFHV KDG
 75$'($1'(19,5210(175(9,(:

WRSHUFHQWPRUHWRSVRLOJUHDWHUVRLOPRLVWXUH HJ 5RVHQ]ZHLJ DQG +LOOHO  WKH VHDUFK IRU

DQGOHVVHURVLRQDQGH[SHULHQFHGVPDOOHUHFRQRPLF SUDFWLFDO VWHSV WR EUHDN WKH PRQRFXOWXUH QDWXUH RI
ORVVHV WKDQ WKHLU FRQYHQWLRQDO QHLJKERXUV +ROW PRGHUQ DJURHFRV\VWHPV DQG WKXV UHGXFH WKHLU
*LPpQH]  6LPLODUO\ LQ 6RWRQXVFR &KLDSDV HFRORJLFDO YXOQHUDELOLW\ LV LPSHUDWLYH $V WUDGLWLRQDO
FRIIHH V\VWHPV H[KLELWLQJ KLJK OHYHOV RI YHJHWDWLRQ IDUPHUV KDYH GHPRQVWUDWHG ZLWK IDUPLQJ V\VWHPV
FRPSOH[LW\ DQG SODQW GLYHUVLW\ VXIIHUHG OHVV GDPDJH WKDW VWRRG WKH WHVW RI WLPH UHVWRULQJ DJULFXOWXUDO
IURP +XUULFDQH 6WDQ WKDQ PRUH VLPSOLÀHG FRIIHH ELRGLYHUVLW\ DW WKH ÀHOG DQG ODQGVFDSH OHYHO LV NH\
V\VWHPV3KLOSRWWHWDO$QGLQ&XEDGD\V
DIWHU+XUULFDQH,NHKLWWKHFRXQWU\LQUHVHDUFKHUV
FRQGXFWLQJDIDUPVXUYH\LQWKHSURYLQFHVRI+ROJXLQ
DQG/DV7XQDVIRXQGWKDWGLYHUVLÀHGIDUPVH[KLELWHG
ORVVHV RI  SHU FHQW FRPSDUHG WR  RU  SHU
FHQW LQ QHLJKERXULQJ PRQRFXOWXUH IDUPV /LNHZLVH
DJURHFRORJLFDOO\ PDQDJHG IDUPV VKRZHG D IDVWHU
UHFRYHU\RISURGXFWLYLW\²SHUFHQWGD\VDIWHU
WR HQKDQFLQJ UHVLOLHQFH *UHDWHU GLYHUVLW\ RI VSHFLHV
LV SUREDEO\ QHHGHG WR UHGXFH WHPSRUDO YDULDELOLW\ RI
HFRV\VWHP SURFHVVHV LQ FKDQJLQJ HQYLURQPHQWV
7KH PRVW REYLRXV DGYDQWDJH RI GLYHUVLÀFDWLRQ LV
UHGXFHG ULVN RI WRWDO FURS IDLOXUH GXH WR LQYDVLRQV RI
XQZDQWHGVSHFLHVDQGRUFOLPDWLFYDULDELOLW\DVODUJHU
QXPEHUV RI VSHFLHV UHGXFH WHPSRUDO YDULDELOLW\ LQ
HFRV\VWHP SURFHVVHV LQ FKDQJLQJ HQYLURQPHQWV
WKHKXUULFDQHWKDQPRQRFXOWXUHIDUPV5RVVHWHWDO /RUHDXHWDO6WXGLHVFRQGXFWHGLQJUDVVODQG
$OOWKUHHVWXGLHVHPSKDVL]HWKHLPSRUWDQFHRI
HQKDQFLQJ SODQW GLYHUVLW\ DQG FRPSOH[LW\ LQ IDUPLQJ
V\VWHPV WR UHGXFH YXOQHUDELOLW\ WR H[WUHPH FOLPDWLF
HYHQWV 6LQFH PDQ\ SHDVDQWV FRPPRQO\ PDQDJH
SRO\FXOWXUHV DQGRU DJURIRUHVWU\ V\VWHPV WKHLU
NQRZOHGJHDQGSUDFWLFHVFRXOGSURYLGHDNH\VRXUFH
V\VWHPV VXJJHVW WKDW WKHUH DUH QR VLPSOH OLQNV
EHWZHHQ VSHFLHV GLYHUVLW\ DQG HFRV\VWHP VWDELOLW\
([SHULPHQWV FRQGXFWHG LQ JUDVVODQG SORWV FRQFOXGH
WKDWIXQFWLRQDOO\GLIIHUHQWUROHVUHSUHVHQWHGE\SODQWV
DUHDWOHDVWDVLPSRUWDQWDVWKHWRWDOQXPEHURIVSHFLHV
LQGHWHUPLQLQJSURFHVVHVDQGVHUYLFHVLQHFRV\VWHPV
RI LQIRUPDWLRQ RQ DGDSWLYH FDSDFLW\ FHQWUHG RQ WKH
VHOHFWLYH H[SHULPHQWDO DQG UHVLOLHQW FDSDELOLWLHV RI
WKRVHIDUPHUVLQGHDOLQJZLWKFOLPDWLFFKDQJH
*LYHQ WKH UHVLOLHQFH RI GLYHUVLÀHG VPDOO IDUPLQJ
V\VWHPV XQGHUVWDQGLQJ WKH DJURHFRORJLFDO IHDWXUHV
RI WUDGLWLRQDO DJURHFRV\VWHPV LV DQ XUJHQW PDWWHU
DV WKLV FDQ VHUYH DV WKH IRXQGDWLRQ IRU WKH GHVLJQ
RI DJULFXOWXUDO V\VWHPV WKDW DUH UHVLOLHQW WR FOLPDWH
7LOPDQHWDOD7KLVODWHVWÀQGLQJKDVSUDFWLFDO
LPSOLFDWLRQV IRU DJURHFRV\VWHP PDQDJHPHQW ,I LW
LV HDVLHU WR PLPLF VSHFLÀF HFRV\VWHP SURFHVVHV
UDWKHUWKDQDWWHPSWLQJWRGXSOLFDWHDOOWKHFRPSOH[LW\
RI QDWXUH WKHQ WKH IRFXV VKRXOG EH SODFHG RQ
LQFRUSRUDWLQJDSDUWLFXODUELRGLYHUVLW\FRPSRQHQWWKDW
SOD\VDVSHFLÀFUROHVXFKDVSODQWVWKDWÀ[QLWURJHQ
SURYLGHFRYHUIRUVRLOSURWHFWLRQRUKDUERXUUHVRXUFHV
IRUQDWXUDOHQHPLHVRILQVHFWSHVWV
FKDQJH$OWLHULDQG.RRKDINDQ
%5HVWRULQJDJURELRGLYHUVLW\LQPRGHUQ
DJURHFRV\VWHPV
6LQFH WKH PRGHUQL]DWLRQ RI DJULFXOWXUH IDUPHUV
&RQWHPSRUDU\QRWLRQVRIPRGHUQPHFKDQL]HGIDUPLQJ
HPSKDVL]H WKH QHFHVVLW\ RI PRQRFXOWXUHV 7KHUH LV
OLWWOHTXHVWLRQKRZHYHUWKDWJLYHQVXIÀFLHQWPRWLYDWLRQ
DSSURSULDWH WHFKQRORJ\ FRXOG EH GHYHORSHG WR
PHFKDQL]H PXOWLSOH FURSSLQJ V\VWHPV +RUZLWK
DQG UHVHDUFKHUV KDYH EHHQ IDFHG ZLWK D PDMRU  6LPSOHU GLYHUVLÀFDWLRQ VFKHPHV EDVHG RQ 
RU  SODQW VSHFLHV PD\ EH PRUH DPHQDEOH WR ODUJH
HFRORJLFDOGLOHPPDDULVLQJIURPWKHKRPRJHQL]DWLRQ
VFDOH IDUPHUV DQG FDQ EH PDQDJHG XVLQJ PRGHUQ
RI DJULFXOWXUDO V\VWHPV QDPHO\ WKH LQFUHDVHG
HTXLSPHQW 2QH VXFK VFKHPH LV VWULS LQWHUFURSSLQJ
YXOQHUDELOLW\RIFURSVWRSHVWVDQGGLVHDVHVDQGQRZ
ZKLFKLQYROYHVWKHSURGXFWLRQRIPRUHWKDQRQHFURSLQ
WR FOLPDWLF YDULDELOLW\ %RWK WKHVH SKHQRPHQD FDQ
VWULSVWKDWDUHQDUURZHQRXJKIRUWKHFURSVWRLQWHUDFW
EH GHYDVWDWLQJ LQ JHQHWLFDOO\ XQLIRUP ODUJHVFDOH
\HW ZLGH HQRXJK WR SHUPLW LQGHSHQGHQW FXOWLYDWLRQ
PRQRFXOWXUH FRQGLWLRQV 0RQRFXOWXUHV PD\ RIIHU
$JURQRPLFDOO\ EHQHÀFLDO VWULS LQWHUFURSSLQJ V\VWHPV
VKRUWWHUP HFRQRPLF DGYDQWDJHV WR IDUPHUV EXW LQ
KDYHXVXDOO\LQFOXGHGFRUQRUVRUJKXPZKLFKUHDGLO\
WKH ORQJ WHUP WKH\ GR QRW UHSUHVHQW DQ HFRORJLFDO
UHVSRQGWRKLJKHUOLJKWLQWHQVLWLHV)UDQFLVHWDO
RSWLPXP 5DWKHU WKH GUDVWLF QDUURZLQJ RI FXOWLYDWHG
6WXGLHV ZLWK FRUQ DQG VR\EHDQ VWULSV  WR  URZV
SODQWGLYHUVLW\KDVSXWWKHZRUOG·VIRRGSURGXFWLRQLQ
ZLGHGHPRQVWUDWHGLQFUHDVHGFRUQ\LHOGVWRSHU
JUHDWHUSHULO3HUIHFWR9DQGHUPHHUDQG:ULJKW
FHQWKLJKHUDQGGHFUHDVHGVR\EHDQ\LHOGVWR
*LYHQ WKH QHZ FOLPDWH FKDQJH VFHQDULRV SUHGLFWHG SHUFHQWORZHUDVVWULSVJRWQDUURZHU$OWHUQDWLQJFRUQ
RYHU WKH QH[W WZR GHFDGHV RU VR E\ VRPH VFLHQWLVWV DQGDOIDOIDVWULSVSURYLGHGJUHDWHUJURVVUHWXUQVWKDQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

VLQJOHFURSV6WULSVRIIWDSSUR[LPDWHO\PHWHUV UHJURZVLJQLÀFDQWO\DQGWKHFOLSSLQJVIRUPDQLQVLWX

ZLGWKZHUHWKHPRVWDGYDQWDJHRXVZLWKVXEVWDQWLDOO\ PXOFKWKURXJKZKLFKYHJHWDEOHVFDQEHWUDQVSODQWHG
KLJKHUHFRQRPLFUHWXUQVWKDQWKHVLQJOHFURSV:HVW ZLWK QR RU PLQLPDO WLOODJH 7KH PXOFK KLQGHUV ZHHG
DQG *ULIÀWK  7KLV DGYDQWDJH LV FULWLFDO IRU VHHGJHUPLQDWLRQDQGVHHGOLQJHPHUJHQFHRIWHQIRU
IDUPHUVZKRKDYHGHEWWRDVVHWUDWLRVRISHUFHQW VHYHUDOZHHNV$VWKH\GHFRPSRVHPDQ\FRYHUFURS
RUKLJKHURIGHEWIRUHYHU\RIDVVHWV6XFK UHVLGXHV FDQ UHOHDVH DOOHORSDWKLF FRPSRXQGV WKDW
DOHYHOKDVDOUHDG\EHHQUHDFKHGE\PRUHWKDQ²
SHUFHQWRIIDUPHUVLQWKHPLGZHVWHUQ8QLWHG6WDWHV
ZKR GHVSHUDWHO\ QHHG WR FXW FRVWV RI SURGXFWLRQ E\
DGRSWLQJGLYHUVLÀFDWLRQVWUDWHJLHV
/HJXPHV LQWHUFURSSHG ZLWK FHUHDOV LV D NH\
GLYHUVLÀFDWLRQ VWUDWHJ\ QRW RQO\ EHFDXVH RI WKHLU
SURYLVLRQ RI QLWURJHQ EXW DOVR EHFDXVH WKH PL[WXUHV
HQKDQFH VRLO FRYHU VPRWKHU ZHHGV DQG LQFUHDVH
PD\VXSSUHVVZHHGJURZWK0R\HUE\PHDQV
RISK\WRWR[LFVXEVWDQFHVWKDWDUHSDVVLYHO\OLEHUDWHG
WKURXJK GHFRPSRVLWLRQ RI SODQW UHVLGXHV 7KHUH DUH
VHYHUDOJUHHQPDQXUHVSHFLHVWKDWKDYHDSK\WRWR[LF
HIIHFWZKLFKLVXVXDOO\VXIÀFLHQWWRGHOD\WKHRQVHWRI
ZHHGJURZWKXQWLODIWHUWKHFURS·VPLQLPXPZHHGIUHH
SHULRG 7KLV PDNHV SRVWSODQW FXOWLYDWLRQ KHUELFLGHV
RUKDQGZHHGLQJXQQHFHVVDU\\HWH[KLELWVDFFHSWDEOH
FURS\LHOGV7RPDWRHVDQGVRPHODWHVSULQJEUDVVLFD
QXWULHQWVHJSRWDVVLXPFDOFLXPDQGPDJQHVLXPLQ
SODQWLQJV SHUIRUP HVSHFLDOO\ ZHOO DQG VRPH ODUJH
WKHVRLOWKURXJKWKHDGGLWLRQRIELRPDVVDQGUHVLGXHV
VHHGHG FURSV VXFK DV PDL]H DQG EHDQV FDQ EH
WRWKHVRLO6XFKLQWHUFURSSLQJV\VWHPVDOVRLQFUHDVH
VXFFHVVIXOO\ GLUHFWVRZQ LQWR FRYHU FURS UHVLGXHV
VRLO PLFURELDO GLYHUVLW\ VXFK DV YHVLFXODU DUEXVFXODU
1RW RQO\ FDQ FRYHU FURSV SODQWHG LQ QRWLOO ÀHOGV À[
P\FRUUKL]DH9$0IXQJLZKLFKIDFLOLWDWHSKRVSKRURXV
QLWURJHQ LQ WKH VKRUW WHUP WKH\ FDQ DOVR UHGXFH VRLO
WUDQVIHUWRWKHFURSV0DFKDGR,QWKHFDVHRI
DGYHUVH ZHDWKHU FRQGLWLRQV VXFK DV D GHOD\ LQ WKH
RQVHW RI UDLQV DQGRU IDLOXUH RI UDLQV IRU D IHZ GD\V
ZHHNVRUGXULQJWKHFURSSLQJSHULRGDQLQWHUFURSSLQJ
V\VWHPSURYLGHVWKHDGYDQWDJHWKDWDWOHDVWRQHFURS
ZLOO VXUYLYH WR JLYH HFRQRPLF \LHOGV WKHUHE\ VHUYLQJ
DV WKH QHFHVVDU\ LQVXUDQFH DJDLQVW XQSUHGLFWDEOH
ZHDWKHU 3RO\FXOWXUHV H[KLELW JUHDWHU \LHOG VWDELOLW\
DQG ORZHU SURGXFWLYLW\ GHFOLQHV GXULQJ D GURXJKW
WKDQ PRQRFXOWXUHV 7KLV ZDV ZHOO GHPRQVWUDWHG E\
HURVLRQDQGPLWLJDWHWKHHIIHFWVRIGURXJKWLQWKHORQJ
WHUP DV WKH PXOFK FRQVHUYHV VRLO PRLVWXUH &RYHU
FURSV EXLOG YHUWLFDO VRLO VWUXFWXUH DV WKH\ SURPRWH
GHHSPDFURSRUHVLQWKHVRLOZKLFKDOORZPRUHZDWHU
WR SHQHWUDWH GXULQJ WKH ZLQWHU PRQWKV DQG WKXV
LPSURYHVRLOZDWHUVWRUDJH
&&RQFOXVLRQV
7KHUH LV JHQHUDO DJUHHPHQW DW WKH LQWHUQDWLRQDO OHYHO
1DWDUDMDQDQG:LOOH\ZKRH[DPLQHGWKHHIIHFWV RQ WKH XUJHQW QHHG WR SURPRWH D QHZ DJULFXOWXUDO
RI GURXJKW RQ SRO\FXOWXUHV E\ PDQLSXODWLQJ ZDWHU SURGXFWLRQ SDUDGLJP LQ RUGHU WR HQVXUH WKH
VWUHVV RQ LQWHUFURSV RI VRUJKXP 6RUJKXP ELFRORU SURGXFWLRQRIDEXQGDQWKHDOWK\DQGDIIRUGDEOHIRRG
DQGSHDQXW$UDFKLVVSSPLOOHW3DQLFXPVSSDQG
SHDQXW DQG VRUJKXP DQG PLOOHW $OO WKH LQWHUFURSV
FRQVLVWHQWO\ SURYLGHG JUHDWHU \LHOGV DW ÀYH OHYHOV RI
PRLVWXUHDYDLODELOLW\UDQJLQJIURPWRPPRI
ZDWHUDSSOLHGRYHUWKHFURSSLQJVHDVRQ,QWHUHVWLQJO\
IRU DQ LQFUHDVLQJ KXPDQ SRSXODWLRQ 7KLV FKDOOHQJH
ZLOOQHHGWREHPHWZLWKDVKULQNLQJDUDEOHODQGEDVH
ZLWKOHVVDQGPRUHH[SHQVLYHSHWUROHXPLQFUHDVLQJO\
OLPLWHGVXSSOLHVRIZDWHUDQGQLWURJHQDQGDWDWLPH
RI UDSLGO\ FKDQJLQJ FOLPDWH VRFLDO WHQVLRQV DQG
WKHUDWHRIRYHU\LHOGLQJDFWXDOO\LQFUHDVHGZLWKZDWHU
VWUHVVVXFKWKDWWKHUHODWLYHGLIIHUHQFHVLQSURGXFWLYLW\
EHWZHHQ PRQRFXOWXUHV DQG SRO\FXOWXUHV EHFDPH
PRUHDFFHQWXDWHGDVVWUHVVLQFUHDVHG
1RWLOOURZFURSSURGXFWLRQLVDOVRSURPLVLQJJLYHQLWV
VRLOFRQVHUYDWLRQDQGLPSURYHPHQWSRWHQWLDOEXWLWLV
KLJKO\ GHSHQGHQW RQ KHUELFLGHV +RZHYHU WKHUH DUH
VRPHRUJDQLFIDUPHUVZKRSUDFWLFHLWZLWKRXWV\QWKHWLF
KHUELFLGHV$EUHDNWKURXJKRFFXUUHGZLWKWKHGLVFRYHU\
WKDWFHUWDLQZLQWHUDQQXDOFRYHUFURSVQRWDEO\FHUHDO
U\H DQG KDLU\ YHWFK FDQ EH NLOOHG E\ PRZLQJ DW D
VXIÀFLHQWO\ODWHVWDJHLQWKHLUGHYHORSPHQWDQGFXWWLQJ
FORVH WR WKH JURXQG 7KHVH SODQWV JHQHUDOO\ GR QRW
HFRQRPLF XQFHUWDLQW\ ,$$67' D 7KH RQO\
DJULFXOWXUDOV\VWHPWKDWZLOOEHDEOHWRFRSHZLWKIXWXUH
FKDOOHQJHVLVRQHWKDWZLOOH[KLELWKLJKOHYHOVRIGLYHUVLW\
DQGUHVLOLHQFHZKLOHGHOLYHULQJUHDVRQDEOH\LHOGVDQG
HFRV\VWHPVHUYLFHV0DQ\WUDGLWLRQDOIDUPLQJV\VWHPV
VWLOO SUHYDOHQW LQ GHYHORSLQJ FRXQWULHV FDQ VHUYH DV
PRGHOVRIVXVWDLQDELOLW\DQGUHVLOLHQFH
5HVLOLHQFHLQDJULFXOWXUDOV\VWHPVLVDIXQFWLRQRIWKH
OHYHO RI GLYHUVLW\ ZLWKLQ WKH DJULFXOWXUDO HFRV\VWHP ,W
LV WKHUHIRUH HVVHQWLDO WKDW VWUDWHJLHV IRU DQ DGDSWLYH
UHVSRQVH WR FOLPDWH FKDQJH IRFXV RQ EUHDNLQJ
DZD\ IURP WKH PRQRFXOWXUH QDWXUH RI PRGHUQ
DJURHFRV\VWHPV6PDOOFKDQJHVLQWKHPDQDJHPHQW

RI LQGXVWULDO V\VWHPV VXFK DV LQWHUFURSSLQJ DQGRU
XVH RI URWDWLRQDO FRYHU FURSSLQJ LQ QRWLOO V\VWHPV
FDQ VXEVWDQWLDOO\ HQKDQFH WKH DGDSWLYH FDSDFLW\
RI FURSSLQJ V\VWHPV :HDWKHU H[WUHPHV LQFOXGLQJ
ORFDOGURXJKWDQGÁRRGLQJDUHSUHGLFWHGWREHFRPH
PRUH FRPPRQ DV D UHVXOW RI UDSLG FOLPDWH FKDQJH
75$'($1'(19,5210(175(9,(:
(QYLURQPHQWDOO\ UHVSRQVLEOH ZDWHU PDQDJHPHQW ZLOO
WKHUHIRUH KDYH WR EH D FULWLFDO SDUW RI VXVWDLQDEOH
DJULFXOWXUH LQ WKH IXWXUH $JURHFRORJLFDO VWUDWHJLHV
IRUFRQVHUYLQJZDWHULQFOXGHFKRRVLQJZDWHUHIÀFLHQW
FURSVUHVRXUFHFRQVHUYLQJFURSURWDWLRQVHQKDQFLQJ
VRLORUJDQLFPDWWHUDQGLQWHUFURSSLQJV\VWHPV
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
 '/1%4#6+<+0)10641.1()4+%7.674'61''6
6*'''&51(6*'9'06;g(+456'0674;
0DUFLD,VKLL(LWHPDQ
3HVWLFLGH$FWLRQ1HWZRUN1RUWK$PHULFD

$EVWUDFW
3RZHUIXOFRPPHUFLDOLQWHUHVWVDQGODFNRISROLWLFDOUHVROYHKDPSHUWKHHVWDEOLVKPHQWDQGLPSOHPHQWDWLRQ
RISROLFLHVWRDGYDQFHVXVWDLQDEOHDQGHTXLWDEOHGHYHORSPHQW7RDFFRPSOLVKWKHGHHSVHDWHGFKDQJH
UHTXLUHG WR RYHUFRPH WKHVH LPSHGLPHQWV GHFLVLYH DQG FRRUGLQDWHG DFWLRQ DPRQJ SXEOLF DQG SULYDWH
VHFWRUDFWRUVDQGFLYLOVRFLHW\LVQHHGHG3ULRULWLHVIRUDFWLRQVKRXOGLQFOXGH
‡ &XUWDLOLQJ FRUSRUDWH FRQFHQWUDWLRQ LQ WKH IRRG V\VWHP DQG LQFUHDVLQJ PDUNHW DFFHVV DQG
FRPSHWLWLYHQHVVRIVPDOODQGPHGLXPVFDOHIDUPHUVWRLPSURYHIRRGDQGOLYHOLKRRGVHFXULW\
‡ 5HGXFLQJWKHXQGXHLQÁXHQFHRIODUJHWUDQVQDWLRQDOFRUSRUDWLRQVRYHUSXEOLFSROLF\UHVHDUFKDQG
WUDGHDJHQGDVDQG
‡ 6WUHQJWKHQLQJ WKH UROH RI FLYLO VRFLHW\ ² LQFOXGLQJ IDUPHUV· RUJDQL]DWLRQV ² LQ GHVLJQLQJ DQG
LPSOHPHQWLQJSROLFLHVDQGLQJXLGLQJSDUWQHUVKLSVGHGLFDWHGWRSXEOLFLQWHUHVWRXWFRPHV

3ROLFLHV DQG SUDFWLFHV WKDW PHHW JOREDO IRRG QHHGV $&RQVWUDLQWVRQWKHWUDQVIRUPDWLRQRI

VXVWDLQDEO\DQGHTXLWDEO\DQGVXSSRUWDVKLIWWRZDUGV DJULFXOWXUH
HFRORJLFDOIDUPLQJV\VWHPVFDQFRQVHUYHELRGLYHUVLW\
ZDWHUDQGHQHUJ\DQGUHGXFHJUHHQKRXVHJDV*+* 0DUNHWIDLOXUHVDQGWKHQHHGIRUIXOOFRVW
HPLVVLRQV ,$$67' D DQG E 'H 6FKXWWHU DFFRXQWLQJ
 81(3  3ROLF\ RSWLRQV WR GULYH WKLV
$ IXQGDPHQWDO IDLOXUH RI JOREDO PDUNHWV WRGD\ LV WKH
WUDQVIRUPDWLRQ RI DJULFXOWXUH KDYH EHHQ GHVFULEHG
ODFNRISULFHVLJQDOVWKDWLQFRUSRUDWHWKHIXOODUUD\RI
E\ WKH 8QLWHG 1DWLRQVVSRQVRUHG ,QWHUQDWLRQDO
KHDOWK HQHUJ\ DQG HQYLURQPHQWDO FRVWV DVVRFLDWHG
$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG
ZLWK DJULFXOWXUH &RQVHTXHQWO\ SROLF\PDNHUV EDVH
7HFKQRORJ\IRU'HYHORSPHQW,$$67'DDQGE
WKHLUGHFLVLRQVRQLQDFFXUDWHIRUHFDVWVRIWKHSRWHQWLDO
ER[$/LNHZLVHWKHHFRQRPLFYLDELOLW\HQYLURQPHQWDO
XUJHQF\DQGKXPDQULJKWVLPSHUDWLYHRILPSOHPHQWLQJ
VXFKDWUDQVIRUPDWLRQKDYHEHHQZHOOHVWDEOLVKHG'H
6FKXWWHU  81&7$'81(3  )$2 F
DQG DFWXDO FRVWV )XOO FRVW DFFRXQWLQJ PHDVXUHV
VXFK DV QDWLRQDO ´JUHHQ DFFRXQWVµ RU ´WRWDO PDWHULDO
ÁRZ HVWLPDWHVµ DUH JRRG HFRQRPLF SUDFWLFHV WKDW
PRUH DFFXUDWHO\ UHÁHFW WKH WUXH FRVWV RI IRRG DQG
81(3
'HVSLWH WKH DYDLODELOLW\ RI UREXVW SROLF\ RSWLRQV
SRZHUIXO FRPPHUFLDO LQWHUHVWV ZHDN RU FDSWXUHG
SXEOLFVHFWRUDFWRUVDQGODFNRISROLWLFDOZLOOFRQWLQXH
WR KDPSHU WKH HVWDEOLVKPHQW DQG PHDQLQJIXO
LPSOHPHQWDWLRQ RI WKHVH SURJUHVVLYH RSWLRQV 7KH
DJULFXOWXUDO LQGXVWULHV DQG FDQ FRQVHTXHQWO\ EHWWHU
LQIRUP SROLF\ GHFLVLRQV 6ZHGHQ IRU H[DPSOH
HVWDEOLVKHG D QDWLRQDO SROLF\ WR WUDQVLWLRQ WRZDUGV
RUJDQLF IDUPLQJ EDVHG ODUJHO\ RQ WKH ÀQGLQJV RI D
IXOOFRVWDQDO\VLVRIWKHFOLPDWHUHODWHGHQHUJ\ZDWHU
HQYLURQPHQWDO DQG RWKHU HFRV\VWHP VHUYLFH FRVWV
FRQVWUDLQWV ² RXWOLQHG EHORZ ² DUH V\VWHPLF D IHZ
VXSHUÀFLDOFKDQJHVZLOOQRWPDNHDVLJQLÀFDQWHQRXJK
GLIIHUHQFH WR DFKLHYH FRQFUHWH RXWFRPHV 5DWKHU
KLJKO\WDUJHWHGDQGVWUDWHJLFLQWHUYHQWLRQVDUHQHHGHG
WKDWWDFNOHWKHFRUHRIWKHSUREOHPDQGGHPRFUDWL]H
FRQWURORYHUDJULFXOWXUH
HPEHGGHGLQLWV´IRRGVKHGµ-RKDQVVRQ
&RUSRUDWHFRQFHQWUDWLRQLQIRRGDQGDJULFXOWXUH
,Q 1RUWK $PHULFD JURZLQJ PDUNHW FRQFHQWUDWLRQ
LQ PXOWLSOH DJULFXOWXUDO DFWLYLWLHV FRXSOHG ZLWK
VXFFHVVLYH URXQGV RI GHUHJXODWLRQ KDYH OHG WR
 75$'($1'(19,5210(175(9,(:

%R[3ROLF\RSWLRQVWRVXSSRUWDWUDQVLWLRQWRVXVWDLQDEOHDJULFXOWXUH

$VLGHQWLÀHGE\WKH,$$67'DDQGESURPLVLQJSROLF\RSWLRQVWRDGYDQFHVXVWDLQDEOHDQGHTXLWDEOHGHYHORSPHQW

JRDOVLQFOXGH
‡ 6WUHQJWKHQLQJWKHVPDOOVFDOHIDUPVHFWRULQSDUWLFXODUIDUPHUV·ZRPHQ·VLQGLJHQRXVDQGRWKHUFRPPXQLW\EDVHG
RUJDQL]DWLRQVDQGLQFUHDVLQJSXEOLFLQYHVWPHQWLQUXUDODUHDV
‡ %XLOGLQJORFDODQGQDWLRQDOFDSDFLW\LQELRGLYHUVHHFRORJLFDOO\UHVLOLHQWIDUPLQJWRFRSHZLWKLQFUHDVLQJHQYLURQPHQWDO
VWUHVVHV
‡ ,QFUHDVLQJORFDOSDUWLFLSDWLRQDQGOHDGHUVKLSLQDJULFXOWXUDOUHVHDUFKGLUHFWLRQVHWWLQJSROLF\IRUPDWLRQDQGGHFLVLRQ
PDNLQJSURFHVVHV
‡ 5HYLWDOL]LQJ ORFDO DQG UHJLRQDO UXUDO HFRQRPLHV DQG IRRG V\VWHPV DQG PRUH FORVHO\ UHJXODWLQJ JOREDOL]HG IRRG
V\VWHPVWRHQVXUHJRRGSXEOLFRXWFRPHV
‡ 0RELOL]LQJSXEOLFDQGSULYDWHVHFWRULQYHVWPHQWVDQGSURYLGLQJPDUNHWEDVHGLQFHQWLYHVWRDGYDQFHHTXLWDEOHDQG
VXVWDLQDEOHGHYHORSPHQWJRDOV
‡ (VWDEOLVKLQJHTXLWDEOHUHJLRQDODQGJOREDOWUDGHDUUDQJHPHQWVWRVXSSRUWGHYHORSLQJFRXQWULHV·IRRGDQGOLYHOLKRRG
VHFXULW\JRDOVDQGUHYLVLQJRZQHUVKLSODZVWRHQVXUHSRRUDQGRUYXOQHUDEOHFRPPXQLWLHV·HTXLWDEOHXVHDFFHVVWR
DQGFRQWURORYHUODQGZDWHUVHHGVDQGJHUPSODVPDQG
‡ (VWDEOLVKLQJQHZWUDQVSDUHQWGHPRFUDWLFDOO\JRYHUQHGLQVWLWXWLRQDODUUDQJHPHQWVWRDFFRPSOLVKWKHVHJRDOV
6RXUFH,$$67'DDQGEVHHDOVR,VKLL(LWHPDQDQG+RIIPDQQ

XQSUHFHGHQWHG OHYHOV RI FRUSRUDWH FRQWURO RI WKH RIWUDQVQDWLRQDODJULEXVLQHVVHVKDYHJDLQHGJURZLQJ

UHJLRQ·V IRRG DQG DJULFXOWXUDO V\VWHP +HQGULFNVRQ LQÁXHQFHRYHUWKHSURGXFWLRQDQGGLVWULEXWLRQRIIRRG
HW DO  $V WKHVH FRUSRUDWLRQV KDYH H[WHQGHG ERWK GRPHVWLFDOO\ DQG LQWHUQDWLRQDOO\ +HQGULFNVRQ
WKHLURSHUDWLRQVLQWR/DWLQ$PHULFD$VLDDQG(DVWHUQ HWDO+XEEDUG'H6FKXWWHUFVHH
(XURSH WKHLU JOREDO LQÁXHQFH KDV H[SDQGHG ZLWK DOVRÀJXUHEHORZ7KLVLQWXUQKDVHQDEOHGWKHP
DGYHUVH FRQVHTXHQFHV IRU VPDOOVFDOH IDUPHUV
WRH[HUWVLJQLÀFDQWSROLWLFDOLQÁXHQFHRYHUSXEOLFSROLF\
DURXQGWKHZRUOG0F,QW\UHHWDODE7KH
DQGUHVHDUFK
UHVXOW KDV EHHQ D GUDPDWLF UHGXFWLRQ LQ FRPSHWLWLRQ
DQG IDLU DFFHVV WR PDUNHWV IRU VPDOO DQG PHGLXP
&RUSRUDWHLQÁXHQFHRYHUSXEOLFSROLF\
VFDOH SURGXFHUV ODERXU LQGHSHQGHQW UHWDLOHUV DQG
FRQVXPHUV$VFRQVROLGDWLRQKDVLQFUHDVHGDKDQGIXO $JULEXVLQHVVHV VSHQG ELOOLRQV RI GROODUV OREE\LQJ

%R[&RUSRUDWHLQÁXHQFHRYHUSXEOLFSROLF\

7UDQVQDWLRQDOFRUSRUDWLRQVH[HUFLVHVLJQLÀFDQWLQÁXHQFHRYHUWKHIRUPDWLRQRIQDWLRQDODQGLQWHUQDWLRQDOSXEOLFSROLF\
%HORZDUHVRPHLOOXVWUDWLYHH[DPSOHV
‡ 6RRQDIWHUIRUHVWÀUHVLQWKH5XVVLDQ)HGHUDWLRQGHYDVWDWHGLWVZKHDWFURSVLQWKHPXOWLQDWLRQDOJUDLQWUDGHU
*OHQFRUH VSHFXODWLQJ RQ D SURÀWDEOH VSLNH LQ ZKHDW SULFHV XUJHG WKH 5XVVLDQ )HGHUDWLRQ WR EDQ ZKHDW H[SRUWV
WKHUHE\SURYRNLQJWKHGHVLUHGSULFHVXUJHWKDWKDGJOREDOUHSHUFXVVLRQV3DWHO
‡ ,Q%UD]LOD&RQJUHVVLRQDOELOOFRDXWKRUHGE\DODZ\HUIRUWKH&RXQFLOIRU%LRWHFKQRORJ\,QIRUPDWLRQOLQNHGWR
0RQVDQWR%$6)%D\HU&DUJLOO'XSRQWDQGRWKHUVSURSRVHGUHSHDORID%LRVDIHW\/DZSURKLELWLRQRQ´JHQHWLFXVH
UHVWULFWLRQWHFKQRORJLHVµDOVRNQRZQDV´WHUPLQDWRUWHFKQRORJLHVµ&DPDUJR
‡ 0RQVDQWRDQGLWVDIÀOLDWHVOREELHG,QGRQHVLDQOHJLVODWRUVLQWKHVWRVXSSRUWJHQHWLFDOO\HQJLQHHUHG*(FURSV
,QWKHÀUPZDVÀQHGPLOOLRQE\WKH8QLWHG6WDWHV'HSDUWPHQWRI-XVWLFHIRUYLRODWLQJWKH)RUHLJQ&RUUXSW
3UDFWLFHV$FWE\EULELQJDVHQLRU,QGRQHVLDQ(QYLURQPHQW0LQLVWU\RIÀFLDO%LUFKDOO
‡ &KHPLFDOFRPSDQLHVFRPPRQO\VLWRQSDQHOVDQGFRPPLWWHHVWKDWDGYLVHUHJXODWRUV)RUH[DPSOHDUHSUHVHQWDWLYH
IURP'RZ&KHPLFDOLVVHUYLQJRQWKH(QGRFULQH'LVUXSWRU6FUHHQLQJDQG7HVWLQJ$GYLVRU\&RPPLWWHHRIWKH8QLWHG
6WDWHV(QYLURQPHQWDO3URWHFWLRQ$JHQF\
‡ ,Q0DOD\VLDEDQQHGWKHKLJKO\WR[LFFKHPLFDOKHUELFLGH3DUDTXDW,WVPDQXIDFWXUHU6\QJHQWDMRLQHG0DOD\
VLD·VLQÁXHQWLDOSDOPRLOLQGXVWU\LQSUHVVXULQJWKH*RYHUQPHQWWRUHYHUVHWKHEDQZKLFKLWGLGLQ0DOD\VLD·V
3HVWLFLGH%RDUGVXEVHTXHQWO\UXOHGWKDW3DUDTXDWXVHFRXOGFRQWLQXHSHQGLQJUHVXOWVIURPDVWXG\RQDOWHUQDWLYHV
7KHVWXG\KDVQRWEHHQUHOHDVHGDQG3DUDTXDWFRQWLQXHVWREHXVHG:DWWV
)LJXUH6WUXFWXUHRIWKHJOREDOVHHGLQGXVWU\RYHUWKHSHULRG²

ChinaSeed

Nidera
CNDK Paragon
FTSementes
Seed Industry Structure
AdvantaCanola NideraSemillas Nunhems
Monsoy Western DeltaPineLand (1995) RioColorado
Peotec SeedEx CottonSeedIntl
Petoseed Bruinsma Genecorp
1996 - 2008
Gustafson
(1995) (1994) (1994) Nunza
Carnia ISG RelianceGenetics LeenDeMos (1986)
SyngentaGlobalCottonDivision PGS
Barham Calgene AgrEvoCotton
Hungnong DeRuiter Agracetus AssocFarmersDelinting Roussel
Seminis Hoechst Proagro
Horticeres -Uclaf

Asgrow Marmot CaliforniaPlantingCotton Bayer Granja4Irmaos

Schering
ChoongAng Agroceres
RoyalSluis EIDParryRallis GeneXSorghum
Ciagro GermainsCotton Aventis AgrEvo
(1995) Stoneville
Holdens
CDMMandiyu HelenaCotton SementesRibeiral
InterstateCanola
Monsanto
HollandCottonseed MitlaPesquisa
Renessen Cargill eldSeedDelinting PlanTecBiotech
Ayala PBIC Terrazawa Sunseeds
Ecogen
Poloni
DeKalbAyala SementesFartura
Cargill Intl.SeedDivision
DeKalb RhonePoulenc (1995)
(1995) JacobHartz
CustomFarmSeed
Unilever (1995) HybriTechEurope

Paras Sensako
CottonStates
RhoBio
HybriTech PauEuralis CPBTwyford
Daehnfeldt (1995) Wensman
EmergentGenetics
AgriProWheat
Agroeste AlyParticipacoes Biogemma KWS LochowPetkus
AgReliant (1967)
Indusem LimagrainCanada
CornStatesIntl
Mahendra Mahyco FirstLine
CarlSperling ProducersHybrids
AustralianGrainTech Clause
CornStatesHybrid
SementesAgroceres Hazera
WilsonSeeds
Diener Kyowa Swaghat
MidwestSeedGenetics ChannelBio GoldCountry
Kruger Avesthagen Cenex
CornBelt Limagrain
Crows Trisler AdvantaEUVegetable ABIAlfalfa
MoweaquaSeeds -Vilmorin Hytest
TrelaySeeds YuanLongping CenexHarvest
SpecialtyHybrids
BioSeeds Agriliance
NCPlusHybrids
ASI FieldersChoice Land HarvestStates
StewartSeeds Innoseeds O'Lakes
CeeKay HarrisMoran SOYGENETICS
iCORN
HeartlandHybrids Westhove
Fontanelle
VandenBerg
CampbellSeed REA FarmlandIndustries

NebraskaIrrigated
LewisHybrids BoCa
Thurston ExSeed SvalofWeibull SpecialtyGrains
Sieben HubnerSeed
HeritageSeeds FFRCoop
StoneSeeds Jung
BASF
Hawkeye CropDesign
CooperativeBusinessIntl
Bunge NickersonVerneuil

EridaniaBeghinSay/ Hybrinova
Koipe
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH

ProteinTech. Int./ Triumph

Goldsmith Gutwein Verdia
InterstatePayco Solae
ConradFafard DairylandSeed
SPS Sudwestsaat
Garst PSAGenetics
KoipesolAgrosemAgra AdvantaNACornSoybeans BiogeneticaDeMilho
ResourceSeeds Brodbeck AdvancedAgriTraits
AgriPro HibridosColorado
CibaGeigy NorthrupKing UnitedAgriseeds Dow
Fischer IllinoisFoundation
DiaEngei DuPont Mycogen DuoMaize
Maisadour Novartis Syngenta CargillNorthAmerica
AWB Agromen MTI
Agritrading Sandoz LongReach DoisMarcos Morgan DinamilhoCarol
EmpresaBrasileira
BioPlantResearch
Zimmerman SturdyGrow RenzeHybrids
AstraZeneca GoldenHarvest Phytogen
Sunseeds OptimumQualityGrains
Pioneer
Zeneca Astra ZeraimGedera
Mogen
CurrySeed
Sanbei JGBoswell Seed Companies
ShandongDenghaiPioneer

DunhuangPioneer Pharmaceutical/Chemical Companies

GreenLeafGenetics
Denghai Dunhuang
Other Companies
Full Ownership
Phil Howard, Assistant Professor, Michigan State University
Size proportional to global seed market share Partial Ownership
http://www.msu.edu/~howardp

6RXUFH5HSURGXFHGZLWKWKHNLQGSHUPLVVLRQRI+RZDUGIURPKWWSZZZPVXHGXaKRZDUGSVHHGLQGXVWU\KWPO
1RWH&RQVROLGDWLRQKDVLQFUHDVHGLQWKHLQWHUQDWLRQDOVHHGLQGXVWU\LQUHFHQWGHFDGHV7KHFKDUWGHSLFWVUHODWLRQVKLSVEHWZHHQPDMRUVHHGFRPSDQLHVDQG
WKHLUVXEVLGLDULHVLQDIWHU\HDUVRIFRQVROLGDWLRQ7KHODUJHVWÀUPVDUHUHSUHVHQWHGDVFLUFOHVZLWKWKHVL]HSURSRUWLRQDOWRWKHLUVKDUHLQWKH


JOREDOFRPPHUFLDOVHHGPDUNHW
 75$'($1'(19,5210(175(9,(:

%R[5HYROYLQJGRRU
&RUSRUDWHH[HFXWLYHVIURPPDMRUDJULEXVLQHVVHVDSSRLQWHGWRSXEOLFDJHQFLHVKDYHIUHTXHQWO\SDUWLFLSDWHGLQWKHGUDIW
LQJRIUHJXODWRU\UXOHVWKDWDUHIDYRXUDEOHWRWKHLULQGXVWU\·VLQWHUHVWVD%HORZDUHVRPHH[DPSOHVIURPYDULRXVUHSRUWV
‡ $%UD]LOLDQDWWRUQH\UHSUHVHQWHG0RQVDQWRDQGLWV%UD]LOLDQVXEVLGLDU\0RQVR\LQYDULRXVFRXUWFDVHVEHWZHHQ
DQG0RYLQJWRJRYHUQPHQWVHUYLFHLQKHFRRUGLQDWHGWKHKLJKOHYHOLQWHUPLQLVWHULDOZRUNLQJJURXSWKDW
HVWDEOLVKHGWKHGHFUHHWRLPSOHPHQW%UD]LO·VSUR*(%LRVDIHW\/DZ7KHODZ²DSSODXGHGE\0RQVDQWRE²HVWDEOLVKHG
D 1DWLRQDO %LRVDIHW\ &RXQFLO RQ ZKLFK WKH IRUPHU 0RQVDQWR DWWRUQH\ VHUYHG DV H[HFXWLYH VHFUHWDU\ IURP  WR

‡ $6\QJHQWDOREE\LVWWKDWUHSUHVHQWHGWKHELRWHFKFRPSDQ\DWDQ(8KHDULQJLQKDGSUHYLRXVO\ZRUNHGIRUWKH
(XURSHDQ8QLRQ)RRG6DIHW\$XWKRULW\()6$ZKHUHVKHKDGGHYHORSHG*(JXLGDQFHGRFXPHQWV+HUPRYHYLR
ODWHGWKH()6$·VUHTXLUHGWZR\HDUZDLWLQJSHULRG7KHOREE\LVWLVFXUUHQWO\6\QJHQWD·V+HDGRI%LRWHFK5HJXODWRU\
$IIDLUVIRU(XURSH$IULFDDQGWKH0LGGOH(DVW7HVWELRWHFKDQG63,QWHUQDWLRQDO
‡ $ODZ\HUIRU0RQVDQWRPRYHGWRWKH8QLWHG6WDWHV)RRGDQG'UXJ$GPLQLVWUDWLRQ)'$DQGWKH8QLWHG6WDWHV'H
SDUWPHQWRI$JULFXOWXUH86'$LQWKHVGXULQJZKLFKWLPHKHDSSURYHG0RQVDQWR·VFRQWURYHUVLDO*(ERYLQH
JURZWKKRUPRQHDQGGHYHORSHGSURDJULFXOWXUDOELRWHFKQRORJ\SROLFLHVEDVHGRQWKHFRQFHSWRI´VXEVWDQWLDOHTXLYD
OHQFHµ+HUHWXUQHGWR0RQVDQWRDVYLFHSUHVLGHQWIRUSXEOLFSROLF\LQEHIRUHUHMRLQLQJWKH)'$LQ1HVWOH
86)'$
‡ $IRUPHUFRUSRUDWHFRXQVHOIRUWKHSHVWLFLGHDQGELRWHFKQRORJ\FRPSDQ\'X3RQWZDVDSSRLQWHGLQ-DQXDU\WR
VHUYHDVJHQHUDOFRXQVHOIRUWKH86'$6RRQDIWHUWKH86'$SURSRVHGDGUDPDWLFUHGXFWLRQLQDJHQF\UHVSRQVLELOLW\
IRUUHJXODWLQJ*(FURSV$WZR\HDUSLORWSURJUDPODXQFKHGLQ$SULOQRZDOORZVELRWHFKQRORJ\ÀUPVWRFRQGXFW
HQYLURQPHQWDOUHYLHZVRIWKHLURZQ*(SURGXFWVDVSDUWRIWKH8QLWHG6WDWHV·UHJXODWRU\SURFHVVF,Q1RYHPEHU
86'$DQQRXQFHGDGGLWLRQDOSODQVWRVWUHDPOLQHLWV*(UHJXODWRU\DSSURYDOSURFHVVLQRUGHUWR´UHGXFHWKHOHQJWKRI
WKHSHWLWLRQSURFHVVµG
1RWH D  6HH DOVR &HQWHU IRU 5HVSRQVLYH 3ROLWLFV  $JULEXVLQHVV OREE\LQJ DW ZZZRSHQVHFUHWVRUJOREE\
LQGXVSKS"LG $ \HDU DQG5HYROYLQJGRRUDWZZZRSHQVHFUHWVRUJUHYROYLQJLQGH[SKS
E6HH0RQVDQWR0RQVDQWRHQFRXUDJHGE\HQDFWPHQWRI%UD]LOLDQELRVDIHW\ODZ1HZVUHOHDVH0DUFK
DWKWWSPRQVDQWRPHGLDURRPFRPLQGH[SKS"V  LWHP 
F 86'$  6ROLFLWDWLRQ RI /HWWHUV RI ,QWHUHVW WR 3DUWLFLSDWH LQ 1DWLRQDO (QYLURQPHQWDO 3ROLF\ $FW 3LORW
3URMHFW$QLPDODQG3ODQW+HDOWK,QVSHFWLRQ6HUYLFH>'RFNHW1R$3+,6²²@)HGHUDO5HJLVWHU9RO
1R7KXUVGD\$SULO1RWLFHV²:DVKLQJWRQ'&86'$·VSLORWSURJUDPPHLV
GHVFULEHGDWZZZDSKLVXVGDJRYELRWHFKQRORJ\QHSDBSLORWVKWPO
G86'$·V1RYHPEHUSODQVWRVSHHGXSWKH*(DSSURYDOSURFHVVDUHGHVFULEHGDWZZZDSKLVXVGD
JRYQHZVURRPJHBSHWLWLRQBSURFHVVVKWPO 7KH FROODERUDWLRQ EHWZHHQ 0RQVDQWR DQG 86'$ LQ
SUHSDUDWLRQRIHQYLURQPHQWDOUHYLHZVRI0RQVDQWR·V*(SURGXFWVLVDQDO\VHGDWZZZWUXWKRXWRUJXQGHU
LQGXVWU\SUHVVXUHXVGDZRUNVVSHHGDSSURYDOPRQVDQWRVJHQHWLFDOO\HQJLQHHUHGFURSV
*RYHUQPHQWGRFXPHQWVREWDLQHGXQGHUD)UHHGRPRI,QIRUPDWLRQ$FWUHTXHVWDUHDYDLODEOHDWZZZWUXWK
RXWRUJZK\PRQVDQWRDOZD\VZLQV

SXEOLF DJHQFLHV DQG RIÀFLDOV LQ ERWK QDWLRQDO DQG IDUPHUVWRLQYHVWLQORQJHUWHUPUHVRXUFHFRQVHUYLQJ

LQWHUQDWLRQDOSROLF\PDNLQJDUHQDVDQGKDYHLQPDQ\ VWUDWHJLHVDQGPHHWOLYHOLKRRGDQGIRRGVHFXULW\JRDOV
LQVWDQFHVLQÁXHQFHGSROLF\GHFLVLRQVWRWKHLUEHQHÀW DWKRXVHKROGDQGQDWLRQDOOHYHOV7KHODFNRIQDWLRQDO
ER[HVDQG7KLVLQÁXHQFHZHDNHQVJRYHUQPHQW ODZVWRVHFXUHVPDOOVFDOHIDUPHUV·WHQXUHDQGDFFHVV
FRPPLWPHQW WR PRUH VWULFWO\ UHJXODWH FRPPHUFLDO WRSURGXFWLYHUHVRXUFHVHJVHHGVJHUPSODVPODQG
DFWRUV UHPRYH SHUYHUVH LQFHQWLYHV WKDW IDYRXU ZDWHUXQGHUPLQHVHIIRUWVWRSURPRWHDFRQYHUVLRQWR
FRUSRUDWHSURÀWRYHUSXEOLFLQWHUHVWUHYLVHRZQHUVKLS VXVWDLQDEOH SUDFWLFHV ,QVWHDG LQWHOOHFWXDO SURSHUW\
ODZV DQG UHVWRUH SXEOLF DFFHVV WR DQG FRQWURO RYHU ,3ODZVKDYHSULYDWL]HGWKRVHUHVRXUFHVWUDQVIHUULQJ
SURGXFWLYHUHVRXUFHVWKDWKDYHEHHQSULYDWL]HG
/HJDOLPSHGLPHQWVWRVXVWDLQDEOHDJULFXOWXUDO
UHVHDUFKDQGSUDFWLFH
6HFXULW\RIWHQXUHDQGDFFHVVWRODQGDUHYLWDOWRHQDEOH
RZQHUVKLSWRFRPPHUFLDOLQWHUHVWV,$$67'D
,3 ODZV DUH DOVR GULYLQJ DJULFXOWXUDO UHVHDUFK LQ
VXSSRUW RI SULYDWH VHFWRU JRDOV DVVRFLDWHG ZLWK
SURGXFWGHYHORSPHQWUDWKHUWKDQHFRORJLFDOUHVLOLHQFH
RUSRYHUW\UHGXFWLRQ7KH%D\K'ROH$FWRIIRU
)LJXUH86$,'IXQGHG$JULFXOWXUDO%LRWHFKQRORJ\6XSSRUW3URMHFW$%633KDVH,,WDUJHWFRXQWULHV*(FURSVLQGHYHORSPHQWDQGSURMHFWSDUWQHUV .H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH

6RXUFH3HVWLFLGH$FWLRQ1HWZRUN1RUWK$PHULFD*UDSKLFGHYHORSHGE\$0XQLPXVIURPSURMHFWLQIRUPDWLRQ



SURYLGHGDWKWWSZZZDEVSFRUQHOOHGX

H[DPSOHUDGLFDOO\DOWHUHGWKHSROLWLFDODQGHFRQRPLF
ODQGVFDSH RI SXEOLF VHFWRU UHVHDUFK LQ WKH 8QLWHG
6WDWHV PDQGDWLQJ SDWHQWV RQ UHVHDUFK RXWFRPHV
:KHQ XQLYHUVLWLHV DVVLJQ H[FOXVLYH OLFHQVLQJ ULJKWV
WR FRUSRUDWLRQV FRUH UHVHDUFK EHQHÀWV DUH UHPRYHG
IURPWKHSXEOLFGRPDLQ
75$'($1'(19,5210(175(9,(:
FRXQWU\DLGDQGWUDGHDJHQFLHVDOOSOD\HGDIRUPDWLYH
UROHLQHVWDEOLVKLQJWKH´*UHHQ5HYROXWLRQµPRGHODV
RQH WR EH UHSOLFDWHG DQG HPXODWHG DW WKH H[SHQVH
RIDOWHUQDWLYHPRGHOVWKDWHPSKDVL]HGPRUHKROLVWLF
HFRORJLFDODQGIDUPHUOHGDSSURDFKHV%URRNVHWDO
 'UH\IXV HW DO  &XOODWKHU  %URRNV
6FLHQWLVWV LQ GHYHORSLQJ FRXQWULHV DUH HQFRXUDJHG
E\ LQFHQWLYHV DQG WHFKQLFDO VXSSRUW IURP XQLYHUVLW\
SDWHQW RIÀFHV WR XQGHUWDNH UHVHDUFK WKDW LV OLNHO\ WR
HDUQ UR\DOW\ UHYHQXHV IRU WKH XQLYHUVLW\ DV REVHUYHG
DQG
7KH SHUVLVWHQFH RI WKHVH ELDVHV WRGD\ LV UHÁHFWHG
LQ WKH QXPEHU RI VWUDWHJLF LQLWLDWLYHV RI PDMRU
LQWHUQDWLRQDO GRQRUV WKDW VHHN WR SURPRWH KLJK
LQ 8JDQGD /RXZDDUV HW DO  ,QFUHDVLQJO\
XQLYHUVLWLHVDUHUHGLUHFWLQJWKHLUUHVHDUFKWRPHHWWKH
VKRUWWHUPÀQDQFLDOJRDOVRIVSRQVRULQJFRUSRUDWLRQV
UDWKHUWKDQEURDGHUSXEOLFLQWHUHVWJRDOVDVUHÁHFWHG
LQWKHHPHUJHQFHRID´XQLYHUVLW\LQGXVWULDOFRPSOH[µ
H[WHUQDOLQSXW FRPPHUFLDO RU LQGXVWULDO DJULFXOWXUH
HYHQ DPRQJ VPDOOVFDOH IDUPHUV GHVSLWH HYLGHQFH
WKDW UHYHDOV WKH GDPDJLQJ HIIHFWV RI WKLV DSSURDFK
DQG WKH QHHG WR VWUHQJWKHQ VLWHVSHFLÀF HFRORJLFDO
DSSURDFKHV WKDW SURYLGH PXOWLIXQFWLRQDO EHQHÀWV
3UHVVDQG:DVKEXUQ:DVKEXUQ
6FLHQWLVWV· DELOLW\ WR FRQGXFW LQGHSHQGHQW
DVVHVVPHQWVRISDWHQWHG*(VHHGVLVDOVRLPSHGHG
E\,3UXOHVWKDWUHTXLUHWKHPWRÀUVWVHFXUHDSSURYDOIRU
WKHLUUHVHDUFKSODQIURPWKHSDWHQWKROGHU+XEEDUG
)RU H[DPSOH HPSKDVLV RQ LQFUHDVLQJ SURGXFWLYLW\
WKURXJKWKHUHVHDUFKGHYHORSPHQWDQGH[SRUWRIQHZ
SURGXFWV DQG ELRWHFKQRORJLHV XQGHUSLQV WKH 8QLWHG
6WDWHV )HHG WKH )XWXUH ,QLWLDWLYH WKH $JULFXOWXUDO
%LRWHFKQRORJ\ 6XSSRUW 3URJUDP RI WKH 8QLWHG
6WDWHV $JHQF\ IRU ,QWHUQDWLRQDO 'HYHORSPHQW  WKH
,QGHHGLQLQDOHWWHUWRWKH8QLWHG6WDWHV
DJULFXOWXUH SURJUDPPH RI WKH ZRUOG·V ODUJHVW SULYDWH
(QYLURQPHQWDO 3URWHFWLRQ $JHQF\ RYHU WZR GR]HQ
IRXQGDWLRQ %LOO DQG 0HOLQGD *DWHV )RXQGDWLRQ
XQLYHUVLW\VFLHQWLVWVFRPSODLQHGRIWKHVWLÁLQJHIIHFWV
 DQG WKH &RQVXOWDWLYH *URXS RQ ,QWHUQDWLRQDO
RI ,3 ODZV RQ LQGHSHQGHQW UHVHDUFK DQG LQQRYDWLRQ
$JULFXOWXUDO5HVHDUFK(GZDUGV%URRNV
3ROODFN
DQG)HHGWKH)XWXUH7XFNH\0DQ\
&RUSRUDWH RZQHUVKLS RI ERWK SURGXFWLYH UHVRXUFHV RIWKHVHGHYHORSPHQWLQLWLDWLYHVDUHFORVHO\LQWHUZRYHQ
DQG ,3 KDV FRQVWUDLQHG DJULFXOWXUDO WUDQVIRUPDWLRQ DQGVKDUHWKHVDPHFRUSRUDWHSDUWQHUVÀJXUH,Q
LQ RWKHU ZD\V DV ZHOO %UHQQDQ HW DO  3UD\ VXFKFDVHVELODWHUDODQGPXOWLODWHUDOGHYHORSPHQWDLG
2HKPNHDQG1DVHHP7KHVHRZQHUVKLSUXOHV SURYLGHVDQHIIHFWLYHYHKLFOHIRUPDUNHWHQWU\
KDYH FRQWULEXWHG WR WKH HURVLRQ RI JHQHWLF GLYHUVLW\
ORFDO NQRZOHGJH VRFLDO HTXLW\ DQG IRRG VRYHUHLJQW\ *OREDOWUDGHGULYHURUFRQVWUDLQW"
'UH\IXVHWDO
)LQDOO\WKHODFNRIDGHTXDWHDQWLWUXVWDQGFRPSHWLWLRQ
ODZV DW QDWLRQDO DQG LQWHUQDWLRQDO OHYHOV DQG ZHDN
MXGLFLDO V\VWHPV WKDW DUH XQDEOH WR SURSHUO\ HQIRUFH
H[LVWLQJ ODZV KDYH VXSSRUWHG WKH XQSUHFHGHQWHG
SDFHRIFRUSRUDWHFRQVROLGDWLRQDQGDGYHUVHHIIHFWV
*OREDOWUDGHKDVVLJQLÀFDQWSRWHQWLDOWRVXSSRUWUREXVW
QDWLRQDODQGUHJLRQDOHFRQRPLHVDQGGULYHDWUDQVLWLRQ
WRZDUGV HFRORJLFDO DJULFXOWXUH +RZHYHU WUDGH
OLEHUDOL]DWLRQ WKDW KDV RSHQHG GHYHORSLQJFRXQWU\
PDUNHWV WR LQWHUQDWLRQDO FRPSHWLWLRQ WRR TXLFNO\ RU
WRR H[WHQVLYHO\ KDV XQGHUPLQHG WKH UXUDO VHFWRU DQG
RQ IDPLO\ IDUPLQJ RYHU WKH SDVW WZR GHFDGHV 'H GHJUDGHG WKH HQYLURQPHQW ,$$67' D DQG E
6FKXWWHUE+HQGULFNVRQHWDO
,QVWLWXWLRQDOELDVHV
%LDVZLWKLQLQVWLWXWLRQDODUUDQJHPHQWV²VKDSHGE\SUH
$VDUHVXOWGHYHORSLQJFRXQWULHVKDYHEHHQOHIWZLWK
GLPLQLVKHG FDSDFLW\ IRU IRRG SURGXFWLRQ PDNLQJ
WKHPPRUHYXOQHUDEOHWRLQWHUQDWLRQDOIRRGSULFHDQG
VXSSO\YRODWLOLW\DQGUHGXFLQJWKHLUIRRGDQGOLYHOLKRRG
DQDO\WLF DVVXPSWLRQV SURIHVVLRQDO LQHUWLD DQG ´SDWK
GHSHQGHQF\µ DQG XSKHOG E\ JHRSROLWLFDO FRQFHUQV
DQG WKH LQÁXHQFH RI YHVWHG LQWHUHVWV ² FDQ VWURQJO\
SULYLOHJHRQHGHYHORSPHQWPRGHORYHURWKHUV'UH\IXV
VHFXULW\.KRU
$ IXQGDPHQWDO UHIRUP RI JOREDO WUDGH UXOHV WRZDUGV
IDLU DQG HFRORJLFDO DJULFXOWXUH KDV EHHQ SURSRVHG
DQG GHVFULEHG E\ D QXPEHU RI H[SHUWV HJ ,]DF HW
HWDO,QWKHFDVHRIDJULFXOWXUHSROLWLFDOO\DQG DODOVRVHH.KRUDQG/LPLQFKDSWHURIWKLV
HFRQRPLFDOO\ GRPLQDQW DFWRUV VXFK DV WKH :RUOG 5HYLHZ<HWSURJUHVVWRZDUGVHVWDEOLVKLQJDQHZDQG
%DQNLQWHUQDWLRQDOUHVHDUFKFHQWUHVDQGGHYHORSHG IDLUWUDGHUHJLPHUHPDLQVFRQVWUDLQHGE\WKHLQÁXHQFH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

RIDIHZSRZHUIXOFRXQWULHVDQGFRPPHUFLDOLQWHUHVWV XQIDLU EXVLQHVV SUDFWLFHV DFURVV WKH JOREDO IRRG

RSHUDWLQJ LQ JOREDO SROLF\ DUHQDV VXFK DV WKH :RUOG SURGXFWLRQDQGVXSSO\FKDLQDQGFXUWDLOGRPLQDQW
7UDGH2UJDQL]DWLRQ:72$QWLGHPRFUDWLFSURFHVVHV EX\HUSRZHUZKLFKWKUHDWHQVVPDOOVFDOHIDUPHUV·
DQGDV\PPHWULFDOSRZHUUHODWLRQVKLSVZLWKLQWKH:72 IRRG DQG OLYHOLKRRG VHFXULW\ VHH 'H 6FKXWWHU
SUHYHQW FLYLO VRFLHW\ DQG JRYHUQPHQWV RI GHYHORSLQJ F
FRXQWULHV IURP VHFXULQJ UHIRUP RI WKH JOREDO WUDGH ‡ (VWDEOLVK DQG HQIRUFH VWURQJ FRGHV RI FRQGXFW
UHJLPH UHFRPPHQGHG E\ IRU H[DPSOH WKH ,$$67' WR JRYHUQ SULYDWHSXEOLF SDUWQHUVKLSV DQG SXEOLF
DQG 81&7$' .KRU  DQG  6RXWK &HQWUH SROLF\PDNLQJ SURFHVVHV LQ RUGHU WR PLQLPL]H

%&XUWDLOLQJFRQFHQWUDWLRQRISRZHUDQG
H[FHVVRILQÁXHQFHLQWKHJOREDOL]HG
V\VWHP
7KH GHPRFUDWL]LQJ RI LQVWLWXWLRQV WKDW VKDSH JOREDO
IRRG DQG DJULFXOWXUH UHTXLUHV ERWK FRXUDJH DQG
VXVWDLQHGHQJDJHPHQWE\YLVLRQDU\SROLWLFDOOHDGHUV
UHVHDUFKHUV SULYDWH VHFWRU DFWRUV DQG DOO VHFWRUV
RI FLYLO VRFLHW\ 7KH SDUWLFLSDWLRQ RI DOO VWDNHKROGHUV
SDUWLFXODUO\KLVWRULFDOO\PDUJLQDOL]HGUXUDOFRPPXQLWLHV
LQGHYHORSLQJFRXQWULHVDVHTXDOSDUWQHUV²DQGQRW
VLPSO\DVVWHSSLQJVWRQHVLQD´FRQVXOWDWLYHµSURFHVV
² LV DQ HVVHQWLDO LQJUHGLHQW IRU UHYLWDOL]LQJ ORFDO DQG
UHJLRQDOIRRGV\VWHPVGULYLQJLQQRYDWLRQWKDWPHHWV
JOREDOIRRGDQGOLYHOLKRRGQHHGVDQGEXLOGLQJUREXVW
ORFDOHFRQRPLHV
$SURJUHVVLYHDSSURDFKWRRYHUFRPLQJWKHLQVWLWXWLRQDO
DQGPDUNHWSRZHUFRQVWUDLQWVLGHQWLÀHGDERYHVKRXOG
LQFOXGHFRPPLWPHQWWR
‡ 8QGHUWDNHDIXOOFRVWDQDO\VLVRIQDWLRQDODQGJOREDO
IRRGDQGDJULFXOWXUDOV\VWHPV
‡ 3URYLGH LQVWLWXWLRQDO VXSSRUW IRU VPDOOVFDOH
IDUPHUVDQGZRPHQ·VDQGZRUNHUV·RUJDQL]DWLRQV
WKDWVWUHQJWKHQVWKHLUQHJRWLDWLQJSRZHULQPDUNHWV
GRPLQDWHGE\WUDQVQDWLRQDOEX\HUV WUDQVIRUPLQJUHJLRQDOIRRGDQGDJULFXOWXUDOV\VWHPV
‡ 6WUHQJWKHQ DQG EURDGHQ WKH VFRSH RI QDWLRQDO
DQG LQWHUQDWLRQDO FRPSHWLWLRQ SROLFLHV WR UHYHUVH
SRWHQWLDO FRQÁLFWV RI LQWHUHVW ZKLFK XQIDLUO\ RU
LQDSSURSULDWHO\EHQHÀWSULYDWHVHFWRUDFWRUV
‡ (VWDEOLVK DQ LQWHUQDWLRQDO UHYLHZ PHFKDQLVP WR
LQYHVWLJDWH DJULIRRG VHFWRU FRQFHQWUDWLRQ DQWL
FRPSHWLWLYHSUDFWLFHVDQGLPSDFWVDFURVVQDWLRQDO
ERUGHUVGHYHORSVWDQGDUGVRIFRUSRUDWHEHKDYLRXU
DQGUHFRPPHQGSROLF\RSWLRQV
‡ 5HYLVH,3DQGRWKHURZQHUVKLSUXOHVDQGLQFHQWLYHV
LQ RUGHU WR UHRULHQW SXEOLF SROLF\ DQG UHVHDUFK
WRZDUGV HTXLWDEOH DQG VXVWDLQDEOH GHYHORSPHQW
JRDOV
‡ (VWDEOLVK PHDQV RI SUHYHQWLQJ FRQÁLFW RI LQWHUHVW
LQ SDUWQHUVKLSV LQYHVWPHQWV DQG SROLF\PDNLQJ
SURFHVVHV
‡ %XLOG GHYHORSLQJ FRXQWULHV· FDSDFLWLHV IRU WUDGH
DQDO\VLVDQGQHJRWLDWLRQOHDGLQJWRPRUHHTXLWDEOH
WUDGH UXOHV 6WUDWHJLF LPSDFW DVVHVVPHQWV FRXOG
SURYLGH XVHIXO HPSLULFDO HYLGHQFH RI WKH VRFLDO
HQYLURQPHQWDODQGHFRQRPLFWUDGHRIIVRIYDULRXV
WUDGHLQVWUXPHQWV
‡ 5HVWUDLQ ÀQDQFLDO VSHFXODWLRQ RYHU IRRG
FRPPRGLWLHV WKDW GLVWRUWV PDUNHWV DQG SULFH
VLJQDOVDQG
‡ (VWDEOLVK DQG VWUHQJWKHQ GHPRFUDWLF GHFLVLRQ
PDNLQJ SURFHVVHV DQG LQFUHDVH FLYLO VRFLHW\
SDUWLFLSDWLRQ LQ SROLF\PDNLQJ SURFHVVHV 7KH
VXFFHVVRIWKH7DPLO1DGX:RPHQ·V&ROOHFWLYHLQ
E\VXSSRUWLQJUXUDOZRPHQDVFRGHFLVLRQPDNHUV
LQWKHFRPPXQLW\DQGLQSROLWLFDORIÀFHLVLQVWUXFWLYH
WUHQGVLQIDUPDQGDJULEXVLQHVVFRQFHQWUDWLRQHQG LQWKLVUHVSHFW,$73
 75$'($1'(19,5210(175(9,(:

1//'06#4; U )4+%7.674'X
11&#0& 0'4);
*XQQDU5XQGJUHQ
*UROLQN$%&RQVXOWDQF\6ZHGHQ

$EVWUDFW
,QDZRUOGZLWKDUDSLGO\LQFUHDVLQJKXPDQSRSXODWLRQDQGWKHVLPXOWDQHRXVGHSOHWLRQRIQDWXUDOUHVRXUFHV
WKHLQGXVWULDOORJLFRIUHSODFLQJKXPDQODERXUZLWKRLODQGRWKHUQDWXUDOUHVRXUFHVPDNHVOHVVDQGOHVV
VHQVH,QFUHDVLQJHQHUJ\SULFHVZLOOUHYHUVHVRPHRIWKHGHYHORSPHQWVWKDWZHUHPDGHSRVVLEOHE\FKHDS
IRVVLO IXHO 7KLV SRVHV D FKDOOHQJH IRU VRFLHW\ EXW DOVR DQ RSSRUWXQLW\ WR VWHHU WRZDUGV D SDWK RI WUXH
VXVWDLQDELOLW\LQFOXGLQJWKHDGRSWLRQRIPRUHVXVWDLQDEOHDJULFXOWXUDOPHWKRGVVXFKDVRUJDQLFIDUPLQJ
DQG PRUH ORFDOL]HG IRRG SURGXFWLRQ QHWZRUNV 7KDW WKRVH FKDQJHV ZLOO DOVR VHUYH WR PLWLJDWH FOLPDWH
FKDQJHLVDQRWKHUVWURQJDUJXPHQWLQIDYRXURIVXFKDVKLIW

$,QWURGXFWLRQ WKHIRRGFRQVXPSWLRQRISHRSOH7KDWUHSUHVHQW
$ FRPELQDWLRQ RI FKHDS IRVVLO IXHO DQG PDUNHW
RULHQWDWLRQOHGWRWKHLQGXVWULDOL]DWLRQRIIDUPLQJ:KLOH
ODERXU SURGXFWLYLW\ LQ DJULFXOWXUH KDV VN\URFNHWHG
HQHUJ\ SURGXFWLYLW\ KDV SOXPPHWHG 7KH ZLQQHUV
WKH´HQHUJ\VODYHVµLQWKHIRUPRIIRVVLOIXHOZRUNLQJ
IRU KLP RU KHU $QRWKHU ZD\ RI ORRNLQJ DW LW IURP DQ
HFRQRPLFSHUVSHFWLYHLVWKDWDEDUUHORIRLOUHSUHVHQWV
WKH HQHUJ\ RI  KRXUV RI KXPDQ WRLO LH 
SHUVRQV ZRUNLQJ IRU D \HDU XQGHU QRUPDO ODERXU
KDYHEHHQDJULEXVLQHVVHVDQGWKHORVHUVKDYHEHHQ VWDQGDUGV(YHQZLWKDQRLOSULFHRIVHYHUDOKXQGUHG
VPDOOIDUPVHVSHFLDOO\LQGHYHORSLQJFRXQWULHV:LWK GROODUV SHU EDUUHO WKLV LV YHU\ FKHDS FRPSDUHG ZLWK
LQFUHDVLQJ VKRUWDJHV RI IRVVLOIXHOEDVHG HQHUJ\ KXPDQODERXU5XQGJUHQ
DQG QDWXUDO UHVRXUFHV DQG WKH UDSLG JURZWK RI
WKH ZRUOG·V SRSXODWLRQ ZH QHHG WR IXQGDPHQWDOO\ $FFRUGLQJWRWKH)$2PHJDMRXOHV0-
WUDQVIRUP DJULFXOWXUH LQWR D QHW HQHUJ\ SURGXFHU DV
LW ZDV WKURXJKRXW KLVWRU\ 7KH VLPSOH HTXDWLRQ KDV
DOZD\V EHHQ WKDW LW LV QHFHVVDU\ WR JHW VXEVWDQWLDOO\
PRUH HQHUJ\ RXW RI WKH IRRG WKDQ LV SXW LQWR LWV
RI IRVVLO HQHUJ\ FRUUHVSRQGLQJ WR RQH EDUUHO RI RLO
LV XVHG WR SURGXFH RQH WRQ RI PDL]H LQ LQGXVWULDO
IDUPLQJ ZKLOH IRU WKH SURGXFWLRQ RI PDL]H XVLQJ
WUDGLWLRQDOPHWKRGVLQ0H[LFRIRUH[DPSOHRQO\
0- FRUUHVSRQGLQJ WR  OLWUHV RI RLO LV XVHG 7KLV
SURGXFWLRQ$VORQJDVHQHUJ\LQSXWLVKXPDQODERXU
FDOFXODWLRQ LQFOXGHV HQHUJ\ IRU V\QWKHWLF IHUWLOL]HUV
LWLVDQLURQODZWKDWFDQRQO\EHVNLSSHGIRUVKRUWHU
LUULJDWLRQ DQG PDFKLQHU\ EXW QRW WKH HQHUJ\ XVHG
SHULRGV$JULFXOWXUDOZRUNHUVVKRXOGQRWRQO\EHDEOH
IRU PDNLQJ PDFKLQHU\ WUDQVSRUWLQJ SURGXFWV WR DQG
WR IHHG WKHPVHOYHV EXW DOVR RWKHU IDPLO\ PHPEHUV
IURPWKHIDUPDQGIRUFRQVWUXFWLRQRIIDUPEXLOGLQJV
ZKR DUH WRR \RXQJ WRR ROG RU WRR VLFN WR ZRUN DV
,QPRGHUQULFHIDUPLQJWKHHQHUJ\UHWXUQRQHQHUJ\
ZHOO DV D IHZ RWKHUV WKDW VXSSO\ VHUYLFHV )LQDOO\ LQ
LQYHVWHG(52,LVOHVVWKDQLHWKHUHLVPRUHHQHUJ\
DOPRVWDOOVRFLHWLHVWKHUHKDYHEHHQUXOHUVZKRKDYH
FRQVXPHG WKDQ SURGXFHG DQG LQ PRGHUQ PDL]H
DSSURSULDWHGDODUJHSURSRUWLRQRIWKHSURGXFWLRQ
IDUPLQJ LW LV VOLJKWO\ PRUH WKDQ  ZKLOH WUDGLWLRQDO
SURGXFWLRQRIULFHDQGPDL]HJLYHVDUHWXUQRIWR
%ELOOLRQHQHUJ\VODYHV WLPHVRQHQHUJ\XVHG)$2
7RKDYHDQLGHDRIKRZLPSRUWDQWWKHGHSOR\PHQWRI 7KHWRWDOHQHUJ\KDUYHVWHGSHUKHFWDUHFDQLQFUHDVH
H[WHUQDO HQHUJ\ VRXUFHV KDV EHHQ IRU RXU PRGHUQ VXEVWDQWLDOO\ ZLWK LQFUHDVHG XVH RI DQFLOODU\ HQHUJ\
VRFLHWLHVRQHFDQFRQWUDVWWKHHQHUJ\HPEHGGHGLQ ZKLFK FDQ WDNH WKH IRUP RI EHWWHU DQG WLPHOLHU
KXPDQ ODERXU ZLWK WKH H[WHUQDO HQHUJ\ VRXUFHV WKDW VRLO SUHSDUDWLRQ LUULJDWLRQ DQG WKH DSSOLFDWLRQ RI
DUHH[SORLWHG$URXJKFDOFXODWLRQVKRZVWKDWWKH FKHPLFDOIHUWLOL]HUVWKDWDUHYHU\HQHUJ\GHPDQGLQJ
WRQVRIRLOHTXLYDOHQWVWRHVRIHQHUJ\XVHGDQQXDOO\ WRQDPHDIHZ7KHUDWLREHWZHHQHQHUJ\UHWXUQDQG
E\ WKH DYHUDJH $PHULFDQ FRPSDUHG ZLWK  WRHV HQHUJ\ LQSXW LH HIÀFLHQF\ LQ XVH RI HQHUJ\ VHHPV
XVHG E\ WKH DYHUDJH 6HQHJDOHVH FRUUHVSRQGV WR WREHIDLUO\FRQVWDQWXSWRDFHUWDLQOHYHODIWHUZKLFK
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

LWGHWHULRUDWHVUDSLGO\,QGXVWULDOIDUPLQJV\VWHPVKDYH DJULFXOWXUDOODERXUIRUFHZDVUHGXFHGWRKDOIEHWZHHQ
ORQJ SDVVHG WKLV OHYHO +DUYHVWHG HQHUJ\ SHU ODERXU  DQG  HQHUJ\ XVH WULSOHG %D\OLVV6PLWK
XQLW LQFUHDVHV GUDPDWLFDOO\ ZLWK LQFUHDVHG LQSXW RI  ,Q WKH 8QLWHG 6WDWHV HQHUJ\ XVH IHOO IURP WKH
HQHUJ\ E\ D IDFWRU RI EHWZHHQ  DQG  DOORZLQJ PLGVWRWKHPLGVDVDUHVSRQVHWRKLJKHURLO
WKHPRVWDGYDQFHGDJULFXOWXUDOV\VWHPVWRKDYHRQH SULFHVEXWLWVWDELOL]HGWKHUHDIWHU+HQGULFNVRQ
IDUPHU IRU PRUH WKDQ  SHUVRQV %D\OLVV6PLWK +RZHYHUORRNLQJDWWKHHQWLUHIRRGFKDLQHQHUJ\XVH
 KDV FRQVWDQWO\ LQFUHDVHG 8VH RI HQHUJ\ DORQJ WKH
IRRGFKDLQIRUIRRGSXUFKDVHVE\RUIRUKRXVHKROGVLQ
&:K\RLODQGJUDLQSULFHVPRYHLQ WKH8QLWHG6WDWHVLQFUHDVHGEHWZHHQDQG
WDQGHP DW PRUH WKDQ VL[ WLPHV WKH UDWH RI LQFUHDVH LQ WRWDO
GRPHVWLFHQHUJ\XVH$VDVKDUHRIWKHQDWLRQDOHQHUJ\
)DUPLQJXVHVHQHUJ\LQPDQ\GLIIHUHQWIRUPVGLHVHO EXGJHWIRRGUHODWHGHQHUJ\XVHJUHZIURPSHU
IRU WUDFWRUV DQG SXPSV DQG HOHFWULFLW\ IRU SXPSV FHQWLQWRSHUFHQWLQ86&56
IDQVDQGLQGRRUPDFKLQHU\VXFKDVPLONLQJPDFKLQHV
)HUWLOL]HUV DFFRXQW IRU D ODUJH SURSRUWLRQ RI HQHUJ\
XVH(QHUJ\UHSUHVHQWVSHUFHQWRIWKHSURGXFWLRQ
FRVWV RI QLWURJHQ IHUWLOL]HUV  SHU FHQW RI WKRVH RI
SKRVSKRUXV IHUWLOL]HUV DQG  SHU FHQW RI WKRVH RI
SRWDVVLXP IHUWLOL]HUV $FFRUGLQJ WR WKH 8QLWHG 6WDWHV
VHHDOVRWKHFRPPHQWRI*5$,1LQWKLVFKDSWHU,Q
SUHLQGXVWULDODQGVHPLLQGXVWULDODJULFXOWXUDOV\VWHPV
PRVW RI WKH IRRG LV VROG HDWHQ DQG SUHSDUHG FORVH
WRZKHUHLWLVSURGXFHGEXWPRGHUQIRRGFKDLQVDUH
KLJKO\ FHQWUDOL]HG DQG JOREDOL]HG ,Q LQGXVWULDOL]HG
FRXQWULHV EHWZHHQ  DQG  WLPHV PRUH HQHUJ\ LV
&RQJUHVVLRQDO 5HVHDUFK 6HUYLFHV 86 &56  XVHGLQWKHIRRGV\VWHPWKDQLVFRQWDLQHGLQWKHIRRG
HQHUJ\FRVWVLQWKH8QLWHG6WDWHVUHSUHVHQWEHWZHHQ
SHUFHQWDQGSHUFHQWRIWKHSURGXFWLRQFRVWV
RI ZKHDW PDL]H DQG FRWWRQ DQG  SHU FHQW RI
WKRVH RI VR\EHDQV 7KHVH ÀJXUHV GR QRW LQFOXGH
HPEHGGHG HQHUJ\ FRVWV LQ LWHPV VXFK DV EXLOGLQJV
DQG PDFKLQHU\ ZKLFK PHDQV WKDW WKH DFWXDO VKDUH
RI HQHUJ\ FRVWV LV VXEVWDQWLDOO\ KLJKHU ,Q $UJHQWLQD
HQHUJ\FRVWVZHUHFDOFXODWHGDVDFFRXQWLQJIRUSHU
FHQWRIWKHSURGXFWLRQFRVWVRIJUDLQLQ%DOW]HU
ZHHDW+HQGULFNVRQ
$ODUJHSURSRUWLRQRIWKHHQHUJ\LQWKHIRRGV\VWHPLV
XVHGE\FRQVXPHUVIRUEX\LQJVWRULQJDQGSUHSDULQJ
IRRG )RU H[DPSOH LQ 6ZHGHQ LQ  RI WKH WRWDO
HQHUJ\XVHLQWKHIRRGFKDLQDJULFXOWXUDOSURGXFWLRQ
DFFRXQWHGIRU²SHUFHQWSURFHVVLQJIRU²
SHUFHQWGLVWULEXWLRQDQGUHWDLOIRU²SHUFHQWDQG
FRQVXPSWLRQIRU²SHUFHQW$QRWKHU²SHUFHQW
+DQVHQ DQG /LQG  :KHQ HQHUJ\ SULFHV ULVH
DJULFXOWXUDOFRPPRGLW\SULFHVIROORZVXLWDVZDVVHHQ
LQWKHIRRGDQGRLOSULFHKLNHVLQ²+LJKHU
HQHUJ\ SULFHV LQÁXHQFH IRRG SULFHV LQ IRXU GLIIHUHQW
ZD\V
RIWKHWRWDOHQHUJ\LVFRQVXPHGE\PXFKGLVFXVVHG
WUDQVSRUW SDUWLFXODUO\ LQ WKH ÀQDO VWUHWFK WR WKH SRLQW
RISXUFKDVHE\WKHFRQVXPHU)RULQVWDQFHDSHUVRQ
GULYLQJDFDUDGLVWDQFHRIÀYHNLORPHWUHVIRUVKRSSLQJ
XVHV D ORW PRUH HQHUJ\ SHU IRRG XQLW WKDQ D VKLS
L %\PDNLQJIRRGSURGXFWLRQPRUHH[SHQVLYH WUDQVSRUWLQJPHDWRUVR\IURPDQRWKHUFRQWLQHQW$OVR
LL %\PDNLQJWKHSURGXFWLRQRIFURSVIRUELRIXHOPRUH LQVRPHGHYHORSLQJFRXQWULHVFRQVXPSWLRQWDNHVWKH
UHPXQHUDWLYHDQGWKHUHIRUHUHGXFLQJWKHSURGXFWLRQ OLRQ·VVKDUHRIHQHUJ\XVHIRUIRRGLQWKLVFDVHPDLQO\
RIIRRGWKHUHE\OHDGLQJWRKLJKHUIRRGSULFHV IURP FRRNLQJ RYHU DQ RSHQ ÀUH 7KH HQHUJ\ XVHG
LLL,QFUHDVLQJWUDQVSRUWDWLRQFRVWVZKLFKKDYHDGLUHFW E\ WKLV WUDGLWLRQDO PHWKRG RI FRRNLQJ LV HTXLYDOHQW
LPSDFWRQIRRGSULFHV WR DERXW  N:K SHU FDSLWD FRUUHVSRQGLQJ WR
LY5HGXFLQJ FRPSHWLWLRQ LQ WKH IRRG VHFWRU LH VOLJKWO\ PRUH WKDQ D FXELF PHWUHRI ÀUHZRRGZKLFK
LQFUHDVHG WUDQVSRUWDWLRQ FRVWV DOOHYLDWH WKH LV VRPHZKHUHEHWZHHQKDOI DQG RQHWKLUG RIZKDW LV
SUHVVXUH RI JOREDO FRPSHWLWLRQ 5XQGJUHQ XVHGSHUFDSLWDIRUFRRNLQJLQ6ZHGHQRUWKH8QLWHG
 6WDWHV 8KOLQ  &RRNLQJ UHSUHVHQWV PRUH WKDQ
D ÀIWK RI WKH WRWDO HQHUJ\ FRQVXPSWLRQ LQ $IULFD DQG
$VLD DQG LQ VRPH FRXQWULHV LW UHSUHVHQWV XS WR RU
',WWDNHVPRUHHQHUJ\WRHDWWKDQWRIDUP RYHU  SHU FHQW RI KRXVHKROG HQHUJ\ FRQVXPSWLRQ
7KH LQFUHDVH RI HQHUJ\ XVH LQ DJULFXOWXUH ZDV ,($  &RRNLQJ FRQVXPHV PRUH HQHUJ\ WKDQ
SDUWLFXODUO\ UDSLG GXULQJ WKH SHULRG EHWZHHQ WKH WKHIRRGFRQWDLQV7KXVZKLOHIDUPLQJLQGHYHORSLQJ
6HFRQG :RUOG :DU DQG WKH ÀUVW RLO SULFH VKRFN LQ FRXQWULHV DQG WUDGLWLRQDO V\VWHPV LV HQHUJ\ HIÀFLHQW
)RUH[DPSOHLQWKH8QLWHG.LQJGRPZKLOHWKH FRRNLQJLVQRW
 75$'($1'(19,5210(175(9,(:

7DEOH$JULFXOWXUDOODERXUSURGXFWLYLW\SHUSHUVRQ\HDU

² ² $JULFXOWXUH

DVDVKDUHRI*'3
/RZLQFRPHFRXQWULHV   
0LGGOHLQFRPHFRXQWULHV   
+LJKLQFRPHFRXQWULHV   
)UDQFH   
8QLWHG.LQJGRP   
8QLWHG6WDWHV   
%UD]LO   
,QGLD   
&KLQD   
0DODZL   
6RXUFH:RUOG%DQN

,QDZRUOGZLWKDUDSLGO\LQFUHDVLQJKXPDQSRSXODWLRQ
DQGWKHVLPXOWDQHRXVGHSOHWLRQRIQDWXUDOUHVRXUFHV
WKH LQGXVWULDO ORJLF RI UHSODFLQJ KXPDQ ODERXU ZLWK
RLO DQG RWKHU QDWXUDO UHVRXUFHV PDNHV OHVV DQG OHVV
VHQVH ,QFUHDVLQJ HQHUJ\ SULFHV ZLOO UHYHUVH VRPH
RI WKH GHYHORSPHQWV WKDW ZHUH PDGH SRVVLEOH E\
IDUPHUVLQWKHZRUOG7KHLUWUDGLWLRQDOPRGHVRIIDUPLQJ
DUH EXLOW RQ D UDWKHU KLJK GHJUHH RI DXWRQRP\ DQG
WKHVH UHJHQHUDWH PRVW RI WKH QHHGHG UHVRXUFHV
VXFK DV ODERXU FDSLWDO VRLO IHUWLOLW\ DQG SHVW FRQWURO
ZLWKLQWKHIDUPLQJV\VWHP%\QDWXUHSHDVDQWVUHVLVW
FRPPHUFLDOL]DWLRQEHFDXVHWKH\ZLVKWRPLQLPL]HULVN
FKHDSIRVVLOIXHO7KLVSRVHVDFKDOOHQJHIRUVRFLHW\ DQGGHSHQGHQFH9DQGHU3ORHJ,IWKH\ZHUH
EXW DOVR DQ RSSRUWXQLW\ WR VWHHU WRZDUGV D SDWK RI WR EH FRHUFHG LQWR FRPPHUFLDOL]LQJ WKHLU SURGXFWLRQ
WUXH VXVWDLQDELOLW\ LQFOXGLQJ WKH DGRSWLRQ RI PRUH PRVWRIWKHPZRXOGVLPSO\QRWVXUYLYHLQWKHVWUXJJOH
VXVWDLQDEOH DJULFXOWXUDO PHWKRGV VXFK DV RUJDQLF IRU´PRGHUQL]DWLRQµDQGLIWKH\VXUYLYHGWKHUHZRXOG
IDUPLQJDQGPRUHORFDOL]HGIRRGSURGXFWLRQQHWZRUNV EH HQRUPRXV RYHUSURGXFWLRQ (XURSHDQ IDUPV
7KDWWKRVHFKDQJHVZLOODOVRVHUYHWRPLWLJDWHFOLPDWH H[SHULHQFHG GLIÀFXOWLHV FRSLQJ ZLWK FRPSHWLWLRQ IURP
FKDQJHLVDQRWKHUVWURQJDUJXPHQWLQIDYRXURIVXFKD 1RUWK $PHULFD HVSHFLDOO\ DIWHU WKH LQWURGXFWLRQ RI
VKLIWLQWKLVUHJDUGDOVRVHHWKHOHDGDUWLFOHRIFKDSWHU VWHDPVKLS WUDQVSRUW 7KH UHVSRQVH ZDV WR LQWURGXFH
DQGWKHFRPPHQWRI/HX
7KHGHVLUHGREMHFWLYHVKRXOGQRWEHWRDEROLVKWKHXVH
RIH[WHUQDOHQHUJ\DQGUHO\VROHO\RQPDQXDOODERXU
UDWKHU LW VKRXOG EH DERXW ÀQGLQJ D QHZ EDODQFH
WKDW ZRUNV RQ D JOREDO VFDOH DQG LV VXVWDLQDEOH
SURWHFWLRQLVW PHDVXUHV HYHQ WKRXJK WKH\ IDFHG
PXFK OHVV FRPSHWLWLYH SUHVVXUH WKDQ WRGD\·V SRRU
IDUPHUVLQGHYHORSLQJFRXQWULHV,QDGGLWLRQEHFDXVH
RI SURGXFWLYLW\ JDLQV LQ GHYHORSHG FRXQWULHV JOREDO
DJULFXOWXUDOFRPPRGLW\SULFHVIHOOE\DERXWSHUFHQW
5HQHZDEOHHQHUJ\VXFKDVELRHQHUJ\ZLQGPLOOVDQG GXULQJ WKH SHULRG ² 'RUZDUG HW DO 
ZDWHUPLOOVKDYHEHHQXVHGLQIDUPLQJIRUWKRXVDQGV 2YHUWKHSDVWIHZGHFDGHVDVSURGXFWLYLW\DQGHQHUJ\
RI\HDUV7KHVHFRXOGEHLPSURYHGDQGPRUHZLGHO\ XVHE\WKHSRRUHVWIDUPHUVKDYHUHPDLQHGPXFKWKH
DGRSWHGDQGVRODUHQHUJ\DQGELRJDVFRXOGDOVREH VDPHWKHSURGXFWLYLW\JDSKDVZLGHQHGERWKUHODWLYHO\
DGGHGWRWKHPL[,WLVQRWOLNHO\WKDWUHQHZDEOHHQHUJ\
ZLOO DOORZ VXFK ZDVWHIXO V\VWHPV DV H[LVW WRGD\ )RU
H[DPSOHYHU\FKHDSHQHUJ\PDNHVLWSURÀWDEOHWRXVH
WKDW HQHUJ\ WR ELQG DWPRVSKHULF QLWURJHQ LQVWHDG RI
XVLQJQDWXUDOQLWURJHQÀ[DWLRQ
DQGLQDEVROXWHQXPEHUVWDEOH$VDUHVXOWLWLVFOHDU
WKDWVPDOOKROGHUIDUPHUVLQGHYHORSLQJFRXQWULHVKDYH
EHHQORVLQJRXW$WFXUUHQWSULFHVLWZRXOGUHTXLUHRQH
OLIHWLPHRIODERXUE\DIDUPHURQDQRQPHFKDQL]HG
IDUPWRDFTXLUHDSDLURIR[HQDQGVPDOODQLPDOGUDZQ
HTXLSPHQW DQG WHQ JHQHUDWLRQV RI ODERXU WR EX\ D
(8QHTXDOHQHUJ\DFFHVVDQGXQHTXDO VPDOOWUDFWRU0D]R\HUDQG5RXGDUW
WHUPVRIWUDGH ,W LV HQWLUHO\ XQUHDOLVWLF WR EHOLHYH WKDW VPDOOKROGHU
&RPPHUFLDOL]DWLRQ LV SURPRWHG DV WKH UHFLSH IRU IDUPHUV LQ GHYHORSLQJ FRXQWULHV ZLWK WKHLU OLPLWHG
GHYHORSPHQW IRU WKH DOPRVW KDOI D ELOOLRQ VPDOOKROGHU UHVRXUFHV ZRXOG EH DEOH WR FRPSHWH LQ ZRUOG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
PDUNHWV IRU VWDSOH IRRGV ZKHUH HQHUJ\ DFFHVV LV
WKH PDLQ IDFWRU RI FRPSHWLWLYH DGYDQWDJH ,Q UHDOLW\
DQ LQFUHDVLQJ QXPEHU RI GHYHORSLQJ FRXQWULHV DUH
EHFRPLQJ QHW IRRG LPSRUWHUV &KHDS HQHUJ\ PD\
KDYHEHHQFRQVLGHUHGDZD\RXWRIWKLVVLWXDWLRQEXW
WKLVKDVQRWEHHQWKHFDVH,QGHHGLWLVFKHDSHQHUJ\
WKDWKDVNHSWGRZQWKHSULFHVRIDJULFXOWXUDOSURGXFWV
DQGWKHUHE\WKHPDUNHWYDOXHRIVPDOOKROGHUIDUPHUV·
ODERXUWRDGROODUSHUGD\$QGLWLVFKHDSHQHUJ\WKDW
KDVDOORZHGLQFRPHJDSVWRZLGHQWRXQSUHFHGHQWHG
OHYHOVEHFDXVHWKHULFKSURGXFHUVKDYHDOZD\VEHHQ
DEOH WR XVH PRUH FKHDS HQHUJ\ WKDQ WKH SRRU 7KXV

OHVVJOREDOFRPSHWLWLRQDQGKLJKHUIRRGSULFHV6XFKD
GHYHORSPHQWZKLOHSDLQIXOIRUPDQ\VRFLHWLHVDQGIRU
QHWIRRGLPSRUWHUVLQWKHVKRUWUXQZLOOQHYHUWKHOHVV
EH EHWWHU IRU WKH VPDOOKROGHU IDUPHUV LQ GHYHORSLQJ
FRXQWULHV LQ WKH ORQJ UXQ EHFDXVH LW ZLOO HQFRXUDJH
HQHUJ\HIÀFLHQWORZH[WHUQDOLQSXWGHSHQGHQWFORVHG
ORRSUHJHQHUDWLYHIRUPVRIDJULFXOWXUHZLWKDJUHDWHU
IRFXVRQUHJLRQDOPDUNHWV3ROLF\PDNHUVVKRXOGVHL]H
WKLVRSSRUWXQLW\WRSURPRWHDSDUDGLJPVKLIWWRZDUGV
WKLVIRUPRIDJULFXOWXUHLQVWHDGRISURPRWLQJFRQWLQXHG
RU LQFUHDVHG GHSHQGHQFH RI DJULFXOWXUH RQ H[WHUQDO
LQSXWVHJIHUWLOL]HUVJHQHWLFDOO\PRGLÀHGRUJDQLVPV
WKHJDSEHWZHHQWKRVHUHO\LQJRQWKHLURZQODERXUDQG DQG FUHGLWV DQG FRQWLQXHG JOREDO FRPSHWLWLRQ LQ D
WKRVHUHO\LQJRQWKHXVHRIIRVVLOIXHOKDVLQFUHDVHG PDUNHWZKHUHWKHELJSOD\HUVKDYHXQOLPLWHGDFFHVV
(QHUJ\VFDUFLW\DQGULVLQJHQHUJ\SULFHVZLOOUHVXOWLQ WRFKHDSHQHUJ\
 75$'($1'(19,5210(175(9,(:

1//'06#4; U 
 756#+0#$.')4+%7.674'#0&((g4+&
'0'9#$.' 0'4);
0DH:DQ+R
,QVWLWXWHRI6FLHQFHLQ6RFLHW\/RQGRQ

$EVWUDFW
6PDOOLQWHJUDWHGIDUPVZLWKRIIJULGUHQHZDEOHHQHUJ\PD\EHWKHSHUIHFWVROXWLRQWRWKHIRRGDQGÀQDQFLDO
FULVHVZKLOHPLWLJDWLQJDQGDGDSWLQJWRFOLPDWHFKDQJH

$)RRGFULVLVJOREDOHFRQRPLFLQVWDELOLW\ WKH XQGHUO\LQJ FDXVHV ,I ZH FDQQRW SURGXFH KLJKHU

DQGSROLWLFDOXQUHVW
6RDULQJIRRGSULFHVZHUHDPDMRUWULJJHUIRUWKHULRWV
WKDWGHVWDELOL]HG1RUWK$IULFDDQG:HVW$VLDDQGKDYH
VLQFHVSUHDGWRPDQ\RWKHU$IULFDQFRXQWULHV+DUYH\
FURS\LHOGVZLWKOHVVZDWHUDQGFRQVHUYHIHUWLOHVRLOV
PDQ\DJULFXOWXUDODUHDVZLOOFHDVHWREHYLDEOH«,IZH
FDQQRWPRYHDWZDUWLPHVSHHGWRVWDELOL]HWKHFOLPDWH
ZHPD\QRWEHDEOHWRDYRLGUXQDZD\IRRGSULFHV«
7KHWLPHWRDFWLVQRZ²EHIRUHWKHIRRGFULVLVRI
+RG7KH)$2)RRG3ULFH,QGH[KLWDQDOO
WLPHKLJKLQ)HEUXDU\DQGUHDFKHGSRLQWV
LQ1RYHPEHUVRPHSRLQWVORZHUWKDQDWLWV
SHDNEXWSRLQWVKLJKHUWKDQWKHDYHUDJHIRU
7KLV KDV EHHQ KDSSHQLQJ DV WKH JOREDO HFRQRP\ LV
EHFRPHVWKHQHZQRUPDOµ
%7KHLPSRUWDQFHRIVPDOOIDPLO\IDUPV
7KHUH LV DQ HPHUJLQJ VFLHQWLÀF FRQVHQVXV WKDW
VWLOO VWDJJHULQJ IURP WKH  ÀQDQFLDO DQG IRRG D VKLIW WR VPDOOVFDOH VXVWDLQDEOH DJULFXOWXUH DQG
FULVLVZLWKSXEOLFGHEWH[SDQGLQJDQGXQHPSOR\PHQW ORFDOL]HG IRRG V\VWHPV ZLOO DGGUHVV PRVW LI QRW DOO
VN\KLJK)LOJHU RI WKH XQGHUO\LQJ FDXVHV RI GHWHULRUDWLQJ DJULFXOWXUDO
/HVWHU %URZQ  YHWHUDQ ZRUOGZDWFKHU QRWHV SURGXFWLYLW\DVZHOODVWKHFRQVHUYDWLRQRIQDWXUDOVRLO
WKDW IRRG KDV TXLFNO\ EHFRPH WKH KLGGHQ GULYHU RI DQGZDWHUUHVRXUFHVZKLOHVDYLQJWKHFOLPDWH+RHW
ZRUOG SROLWLFV DQG IRRG FULVHV DUH JRLQJ WR EHFRPH DO  ,$$67' XQGDWHG +RIIPDQQ  'H
LQFUHDVLQJO\ FRPPRQ +H VD\V ´6FDUFLW\ LV WKH QHZ
QRUPµ7KHZRUOGLVIDFLQJJURZLQJGHPDQGIRUIRRG
DVSRSXODWLRQLQFUHDVHV\HWIRRGFURSVDQGODQGDUH
EHLQJGLYHUWHGWRSURGXFHELRIXHOV,QWKH8QLWHG
6WDWHVDORQHWXUQHGPLOOLRQWRQVRILWVPLOOLRQ
WRQVRIFRUQKDUYHVWLQWRHWKDQRO$WWKHVDPHWLPHWKH
ZRUOG·VDELOLW\WRSURGXFHIRRGLVGLPLQLVKLQJ$TXLIHUV
DUHUXQQLQJGU\LQWKHPDMRUIRRGSURGXFLQJFRXQWULHV
6FKXWWHU
6PDOOIDPLO\IDUPLQJLVWKHGRPLQDQWIRUPRIDJULFXOWXUH
LQWKHZRUOGHVSHFLDOO\LQWKHGHYHORSLQJFRXQWULHVRI
$IULFDDQG$VLD$SSUR[LPDWHO\ELOOLRQSHRSOHOLYHLQ
UXUDODUHDVLQGHYHORSLQJFRXQWULHVZKLFKDOVRLQFOXGH
SHUFHQWRIWKHSRRU$URXQGELOOLRQSHRSOHDUH
LQYROYHGLQDJULFXOWXUHDVIDUPHUVRUZRUNHUVDQGDW
OHDVWSHUFHQWRIIDUPVLQWKHPDMRULW\RI$VLDQDQG
ZKHUH KDOI RI WKH ZRUOG·V SRSXODWLRQ OLYHV 7KHUH LV $IULFDQFRXQWULHVDUHKDRUVPDOOHU4XDQ$V
ZLGHVSUHDGVRLOHURVLRQDQGGHVHUWLÀFDWLRQDQGJOREDO +RIIPDQQSRLQWVRXW0LOOHQQLXP'HYHORSPHQW
ZDUPLQJDQGZHDWKHUH[WUHPHVDUHDOUHDG\UHGXFLQJ
FURS \LHOGV 3HQJ HW DO  /REHOO 6FKOHQNHU DQG
&RVW5REHUWV  -RQHV  6FLHQFH 'DLO\
*RDO 0'*  DLPV DW HUDGLFDWLQJ H[WUHPH KXQJHU
DQG SRYHUW\ DQG RQH RI WKH PRVW HIIHFWLYH ZD\V RI
KDOYLQJERWKWKHQXPEHURIKXQJU\DQGSRRUE\
 KLWWLQJ WKH PRVW YXOQHUDEOH SHRSOH LQ VXE
LV WR PDNH WKH WUDQVLWLRQ WRZDUGV PRUH VXVWDLQDEOH
6DKDUDQ$IULFDDQG6RXWK$VLDWKHKDUGHVW
IRUPVRIDJULFXOWXUH´WKDWQRXULVKWKHODQGDQGSHRSOH
%URZQ  ZDUQV ´:H DUH QRZ VR FORVH WR WKH DQG SURYLGH DQ RSSRUWXQLW\ IRU GHFHQW ÀQDQFLDOO\
HGJH WKDW D EUHDNGRZQ LQ WKH IRRG V\VWHP FRXOG UHZDUGLQJDQGJHQGHUHTXDOMREVµ$WWKHVDPHWLPH
FRPHDWDQ\WLPHµ+HDGGV´$WLVVXHQRZLVZKHWKHU WKLV ZRXOG KHOS PHHW WKH KHDOWK WDUJHWV RI 0'*V 
WKHZRUOGFDQJREH\RQGIRFXVLQJRQWKHV\PSWRPV DQGLQSURYLGLQJDPRUHGLYHUVHVDIHQXWULWLRXVDQG
RIWKHGHWHULRUDWLQJIRRGVLWXDWLRQDQGLQVWHDGDWWDFN DIIRUGDEOHGLHWVHHDOVR+RHWDO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

6PDOOIDUPVJHQHUDOO\SURGXFHPRUHSHUKHFWDUHWKDQ
ODUJH RQHV VR PXFK VR WKDW HFRQRPLVWV KDYH ORQJ
REVHUYHG DQG GHEDWHG WKLV DSSDUHQWO\ SDUDGR[LFDO
LQYHUVHUHODWLRQVKLSEHWZHHQIDUPVL]HDQGSURGXFWLYLW\
WKHZRUOGDQGLI6RXWK$IULFDLVH[FOXGHGRQO\SHU
FHQWKDYHVXFKDFFHVV
7KHUH LV D FORVH FRUUHODWLRQ EHWZHHQ LQFRPH OHYHOV
DQGDFFHVVWRPRGHUQHQHUJ\&RXQWULHVZLWKDODUJH
4XDQ  6PDOO IDUPV DUH  WR  WLPHV DV
SURSRUWLRQRIWKHSRSXODWLRQOLYLQJRQDQLQFRPHRIOHVV
SURGXFWLYH DQG PXFK PRUH SURÀWDEOH DQG QRW MXVW
WKDQSHUGD\WHQGWRKDYHORZHOHFWULÀFDWLRQUDWHV
LQ GHYHORSLQJ FRXQWULHV 5RVVHW   7KH 8QLWHG
DQG D KLJK SHUFHQWDJH RI WKH SRSXODWLRQ WKDW UHOLHV
6WDWHV $JULFXOWXUDO &HQVXV RI  IRXQG D VKDUS
RQWUDGLWLRQDOELRPDVV7KH:RUOG+HDOWK2UJDQL]DWLRQ
GHFOLQH LQ QHW LQFRPH IURP DFUH WR DFUH
:+2  HVWLPDWHV WKDW  PLOOLRQ SHRSOH GLH
DV IDUP VL]H LQFUHDVHG IURP  DFUHV WR  DFUHV
SUHPDWXUHO\ HDFK \HDU IURP KRXVHKROG DLU SROOXWLRQ
5RVVHW6PDOOIDUPVDUHDOVRDVVRFLDWHGZLWK
GXH WR LQHIÀFLHQW ELRPDVV FRPEXVWLRQ D VLJQLÀFDQW
´LQWHQVLYH XVH RI KRXVHKROG DQG FRPPXQLW\ ODERXU
SURSRUWLRQEHLQJ\RXQJFKLOGUHQ7KLVLVJUHDWHUWKDQ
KLJKOHYHOVRIPRWLYDWLRQDQGPXFKORZHUVXSHUYLVLRQ
SUHPDWXUHGHDWKVIURPPDODULDRUWXEHUFXORVLV
DQGWUDQVDFWLRQFRVWVµ4XDQZKLFKPD\ZHOO
H[SODLQ WKHLU HFRQRPLF DGYDQWDJHV EXW QRW WKHLU 6PDOODJURHFRORJLFDOIDUPVDUHLGHDOO\VHUYHGE\QHZ
DFWXDOSURGXFWLYLW\7KHVHIDUPVDUHKLJKO\SURGXFWLYH UHQHZDEOHHQHUJLHVWKDWFDQEHJHQHUDWHGDQGXVHG
EHFDXVH WKH\ DUH W\SLFDOO\ ELRGLYHUVH V\VWHPV WKDW RQVLWHDQGLQRIIJULGVLWXDWLRQVPRVWRIWHQIRXQGLQ
LQWHJUDWHPXOWLSOHFURSVDQGOLYHVWRFNZKLFKHQDEOHV GHYHORSLQJFRXQWULHV+RHWDO+RD7KH
WKHP WR PD[LPL]H V\QHUJHWLF UHODWLRQVKLSV ZKLOH UHQHZDEOH HQHUJLHV JHQHUDWHG FDQ DOVR VHUYH ORFDO
PLQLPL]LQJ ZDVWHV DV WKH\ WXUQ ZDVWHV VXFK DV EXVLQHVVHV VWLPXODWH ORFDO HFRQRPLHV DQG FUHDWH
IDUP\DUGPDQXUHLQWRIHUWLOL]HU,QHIIHFWWKH\HPERG\ QXPHURXVHPSOR\PHQWRSSRUWXQLWLHV
WKH FLUFXODU HFRQRP\ RI QDWXUH +R HW DO 
ZKHUHLQHQHUJ\DQGQXWULHQWVDUHUHF\FOHGZLWKLQWKH
HFRV\VWHP IRU PD[LPXP SURGXFWLYLW\ DQG FDUERQ
'2IIJULGUHQHZDEOHSRZHUV\VWHPVDUH
VHTXHVWUDWLRQ ERWK DERYH DQG EHORZ JURXQG VHH
HQWHULQJWKHPDLQVWUHDPZRUOGZLGH
IRU H[DPSOH +R  IRU D GHWDLOHG GHVFULSWLRQ RI :LWKLQ WKH SDVW IHZ \HDUV RIIJULG SRZHU V\VWHPV
WKLV ´WKHUPRG\QDPLFV RI RUJDQLVPV DQG VXVWDLQDEOH KDYH HQWHUHG WKH PDLQVWUHDP GULYHQ E\ WKH UHDG\
V\VWHPVµ
&7KHLPSRUWDQFHRIUHQHZDEOHHQHUJ\
7RVXEVWDQWLDOO\LPSURYHOLYLQJVWDQGDUGVVXVWDLQDEOH
IDUPLQJ LV QRW HQRXJK DFFHVV WR PRGHUQ HQHUJ\
LV DOVR FUXFLDO ,QGHHG ODFN RI DFFHVV WR PRGHUQ
HQHUJ\ LV JHQHUDOO\ UHFRJQL]HG DV WKH ELJJHVW
REVWDFOH WR VXVWDLQDEOH GHYHORSPHQW $FFRUGLQJ WR
DYDLODELOLW\RIUHQHZDEOHHQHUJ\RSWLRQVWKDWFDQFRVW
OHVVWKDQJULGFRQQHFWLRQV
$ 8QLWHG .LQJGRP FRPSDQ\ (QHUJ\ 6ROXWLRQV
DGYHUWLVHV RQ LWV ZHEVLWH WKDW KRPHV LQ (XURSH
LQFOXGLQJ WKH 8QLWHG .LQJGRP ´DUH ORRNLQJ DW WKH
SRWHQWLDO EHQHÀWV RI VXSSO\LQJ VRPH LI QRW DOO WKHLU
GRPHVWLF SRZHU UHTXLUHPHQW IURP RIIJULG VRXUFHVµ
7KLV FRXOG EH IRU D YDULHW\ RI UHDVRQV VXFK DV
WKH ,QWHUQDWLRQDO (QHUJ\ $JHQF\ ,($  ´/DFN FRQQHFWLRQ WR WKH JULG EHLQJ WRR H[SHQVLYH DQG WKH
RI DFFHVV WR PRGHUQ HQHUJ\ VHUYLFHV LV D VHULRXV GHVLUH WR UHGXFH HQHUJ\ ELOOV SURWHFWLRQ IURP SRZHU
KLQGUDQFHWRHFRQRPLFDQGVRFLDOGHYHORSPHQWDQG FXWVDQGUHGXFWLRQRI*+*HPLVVLRQV6RODUSDQHOV
PXVWEHRYHUFRPHLIWKH810LOOHQQLXP'HYHORSPHQW ZLQG WXUELQHV DQG VPDOO JHQHUDWRUV DUH VXLWDEOH IRU
*RDOV 0'*V DUH WR EH DFKLHYHGµ 7KLV YLHZ LV PRVWKRPHVDQGDV\VWHPZLWKDEDWWHU\FRQQHFWHG
HFKRHG E\ WKH $FDGHP\ RI 6FLHQFH RI 6RXWK $IULFD WRDEDWWHU\FKDUJHULQYHUWHULVWKHPRVWFRQYHQLHQW
 ZKLFK VWDWHV ´$FFHVV WR PRGHUQ HQHUJ\ ([DPSOHV RI VPDOOVFDOH RIIJULG HQHUJ\ SURYLVLRQ
VHUYLFHV GHÀQHG DV HOHFWULFLW\ DQG FOHDQ FRRNLQJ EDVHGRQUHQHZDEOHVFDQEHIRXQGDFURVV6FRWODQG
IXHOVLVFHQWUDOWRDFRXQWU\·VGHYHORSPHQWµ &RPPXQLW\ (QHUJ\ 6FRWODQG  VXFK DV LQ
:RUOGZLGHELOOLRQSHRSOHODFNDFFHVVWRHOHFWULFLW\ UHPRWH IHUU\ ZDLWLQJ URRPV RQ WKH :HVWHUQ ,OHV DQG
SHUFHQWRIZKRPOLYHLQUXUDODUHDVDQGELOOLRQ WKH &KDUOHV ,QJOLV &ODUN 0HPRULDO KXW RQ %HQ 1HYLV
SHRSOHVWLOOUHO\RQWUDGLWLRQDOELRPDVVIXHOVIRUFRRNLQJ WKDW XVHV VPDOO ZLQG WXUELQHV 3KRWRYROWDLF 39
DQGKHDWLQJ,($7KHJUHDWHVWFKDOOHQJHLVLQ LQVWDOODWLRQV LQWHJUDWHG ZLWK EDWWHULHV DUH RIWHQ XVHG
VXE6DKDUDQ $IULFD ZKHUH RQO\  SHU FHQW RI WKH ZKHUHRQO\DVPDOODPRXQWRISRZHULVUHTXLUHGDVIRU
SRSXODWLRQKDVDFFHVVWRHOHFWULFLW\WKHORZHVWOHYHOLQ OLJKWLQJPDLQWDLQLQJSRZHUIRUPRQLWRULQJHTXLSPHQW
 75$'($1'(19,5210(175(9,(:

RUPDLQWDLQLQJZDWHUWUHDWPHQWIDFLOLWLHV+RZHYHULWLV JURZLQJ UHQHZDEOH HQHUJ\ RUJDQL]DWLRQV WKURXJK

LQGHYHORSLQJFRXQWULHVWKDWRIIJULGUHQHZDEOHHQHUJ\ D V\VWHP RI PLFURÀQDQFLQJ WUDLQLQJ RI WHFKQLFLDQV
LV UDSLGO\ JDLQLQJ JURXQG ,Q WKHVH FRXQWULHV SRZHU PDLQO\ ZRPHQ IRU LQVWDOODWLRQ PDLQWHQDQFH DQG
UHTXLUHPHQWVDUHJHQHUDOO\ORZDQGHOHFWURQLFOLJKWLQJ UHSDLUDQGSURYLVLRQRIVHUYLFHVLQFOXGLQJEX\EDFN
DQG WHOHFRPPXQLFDWLRQ HTXLSPHQW DUH LPSURYLQJ ,WUXQVWHFKQRORJ\FHQWUHVIRUWUDLQLQJWKURXJKRXWWKH
UDSLGO\ ZLWK ORZ SRZHU UHTXLUHPHQWV DQG UHOLDEOH FRXQWU\VHH+RDIRUGHWDLOV$WWKHHQGRI0D\
SHUIRUPDQFH DQG UHTXLULQJ OLWWOH RU QR PDLQWHQDQFH  *UDPHHQ 6KDNWL KDG LQVWDOOHG  VRODU
+R D 7KUHH H[DPSOHV RI ODUJHVFDOH RII KRPH V\VWHPV  ELRJDV SODQWV DQG 
JULG UHQHZDEOH HQHUJ\ XVH ZLWK YDU\LQJ GHJUHHV RI LPSURYHG FRRNLQJ VWRYHV ,W KDG DOVR WUDLQHG D WRWDO
VXFFHVVDUHWKH*UDPHHQ6KDNWLLQ%DQJODGHVK+R RI  WHFKQLFLDQV LQ  WHFKQRORJ\ FHQWUHV
D /LJKWLQJ $IULFD +R E DQG %LRJDV IRU QDWLRQZLGHFRYHULQJDOOWKHGLVWULFWV,WVEHQHÀFLDULHV
&KLQD·V6RFLDOLVW&RXQWU\VLGH+RF DUH  YLOODJHV ZLWK D WRWDO RI DERXW  PLOOLRQ
*UDPHHQ6KDNWLLVDQRQSURÀWRUJDQL]DWLRQIRXQGHG
LQ  WR SURPRWH GHYHORS DQG VXSSO\ UHQHZDEOH
HQHUJ\WRWKHUXUDOSRRURI%DQJODGHVK,WVWDUWHGE\
WUDLQLQJ ´EDUHIRRW ZRPHQ HQJLQHHUVµ IRU LQVWDOOLQJ
PDLQWDLQLQJ DQG UHSDLULQJ VRODU SDQHOV OLJKWV
WHOHSKRQHFKDUJLQJEDWWHULHVDQGRWKHUDFFHVVRULHV,W
KDVQRZEHFRPHRQHRIWKHZRUOG·VODUJHVWDQGIDVWHVW
SHRSOH *UDPHHQ 6KDNWL  :KDW EHJDQ DV D
JUDVVURRWV HQGHDYRXU WR SURYLGH VRODU OLJKW IRU WKH
UXUDOSRSXODWLRQKDVQRZDWWUDFWHGWKHEDFNLQJRIWKH
:RUOG%DQN
/LJKWLQJ $IULFD LV QRZ D MRLQW :RUOG %DQN DQG
,QWHUQDWLRQDO )LQDQFH &RUSRUDWLRQ SURJUDPPH WKDW
DLPV WR KHOS GHYHORS FRPPHUFLDO RIIJULG OLJKWLQJ

)LJXUH'UHDP)DUPDQLQWHJUDWHGIRRGDQGHQHUJ\V\VWHP

&DUERQFUHGLWV 6PDOOZLQGWXUELQHV 6XQ

7KHUPRHOFWULF &RPELQHGKHDWDQGSRZHUJHQHUDWLRQ 6RODUSDQHOV 6XUSOXVHOHFWULFLW\

ZDVWHKHDW &RPELQHGKHDWDQGSRZHUJHQHUDWLRQV\VWHP FUHGLWV
KDUYHVWLQJ  )RRGSURFHVVLQJ
FRROLQJ 0HWKDQHSXULILFDWLRQDQGFRPSUHVVLRQIRUPRELOHXVHV 6DYLQJVRQ
&RQQHFWLRQWRSRZHUJULG 0LFURK\GURHOHFWULF IXHOELOOV

([SHULPHQWVLQQHZ &DUER
WHFKQRORJLHV %LRJDV FDSWXUH %LRGLHVHO

:DVWH
5HVWDXUDQW /DWULQH ZDWHU $OJDHEDVLQV &KLFNHQV
%LRJDVGLJHVWHU 'XFNV 5DLQZDWHU
3XULILHGZDWHU *HHVH KDUYHVWLQJ
0HDW 0DQXUHFURSVUHVLGXHV
GDLU\ IRRGUHPDLQVSDSHUHWF &RQVHUYDWRU\
SURGXFH XVHGZDWHU )LVK $TXDFXOWXUH
%LRJDVGLJHVWHU KDUYHVWV :DUPZDWHUILVKSRQGV
)LVKSRQGV :DWHUFRQVHUYDWLRQ
0XVKURRP 3RXOWU\
&RZV KDUYHVWV KDUYHVWV
6KHHS 5LFKIHUWLOLVHU $TXDFXOWXUH
3LJV 9HJHWDEOHV 3XUHZDWHU
*RDWV 0XVKURRPV &RPSRVW :RUPV )ORZHUV
)HUWLJDWLRQ
&URS IRRG +HDOWK
UHVLGXHV EHQHILWV
'LYHUVHFURSV :RRGODQGV
6DYLQJVRQIHUWLOLVHUV
*UDVVSDVWXUH 2UFKDUGV SHVWLFLGHV
&URSKDUYHVWV $QDO\WLFDOODE

&DUERQFUHGLWV

6RXUFH+RHWDO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

7DEOH*UHHQSRWHQWLDORIRUJDQLFDJULFXOWXUHDQGDQDHURELFGLJHVWLRQLQ&KLQD

&2HVDYLQJV QDWLRQDO (QHUJ\VDYLQJV QDWLRQDO

0W (-
2UJDQLFDJULFXOWXUH
1IHUWLOL]HUVVDYLQJ    
12SUHYHQWHG  
&DUERQVHTXHVWUDWLRQ  
7RWDOIRURUJDQLFDJULFXOWXUH    
$QDHURELFGLJHVWLRQ
/LYHVWRFNPDQXUH*+*VDYLQJ  
0HWKDQHSURGXFHG    
+XPXVPDQXUHPHWKDQH    
6WUDZPHWKDQH    
7RWDOIRUDQDHURELFGLJHVWLRQ    
7RWDORYHUDOO    

6RXUFH+RE
1RWH0W PHJDWRQV(- ([DMRXOH

7DEOH*UHHQSRWHQWLDORI'UHDP)DUP

&2HVDYLQJV QDWLRQDO (QHUJ\VDYLQJV QDWLRQDO

0W (-
2UJDQLFDJULFXOWXUH    
$QDHURELFGLJHVWLRQ    
(QHU\VDYLQJVORFDOJHQ    
7RWDO    

6RXUFH+RE

PDUNHWV LQ VXE6DKDUDQ $IULFD DV SDUW RI WKH :RUOG GRPHVWLF VDQLWDWLRQ DQG RIIJULG HQHUJ\ DQG WR
%DQN *URXS·V ZLGHU HIIRUWV WR LPSURYH DFFHVV WR PRGHUQL]H DJULFXOWXUH IRU GHWDLOV VHH +R F
HQHUJ\  ,W DLPV WR SURYLGH VDIH DIIRUGDEOH DQG
PRGHUQRIIJULGOLJKWLQJWRPLOOLRQSHRSOHLQ$IULFD
E\  DQG WR  PLOOLRQ E\  7KH PDUNHW IRU
RIIJULG OLJKWLQJ SURGXFWV LV SURMHFWHG WR JURZ DW 
WRSHUFHQWDQQXDOO\,QDORQHVDOHVRIVRODU
SRUWDEOH ODQWHUQV WKDW KDG SDVVHG /LJKWLQJ $IULFD·V
TXDOLW\ FRQWURO WHVWV JUHZ E\  SHU FHQW LQ $IULFD
/L DQG +R  $Q DQDHURELF GLJHVWHU SURGXFLQJ
ELRJDV LV W\SLFDOO\ FRPELQHG ZLWK D JUHHQKRXVH IRU
JURZLQJ YHJHWDEOHV DQG RWKHU FURSV DORQJ ZLWK D
SLJVW\VRWKDWSLJDQGKXPDQPDQXUHFDQEHGLJHVWHG
ZKLOH&2JHQHUDWHGE\WKHSLJVERRVWVSODQWJURZWK
LQWKHJUHHQKRXVH7KHELRJDVSURGXFHGW\SLFDOO\
SHU FHQW RI PHWKDQH DQG  SHU FHQW RI &2 DORQJ
UHVXOWLQJLQPRUHWKDQSHRSOHKDYLQJDFFHVV ZLWK WUDFHV RI RWKHU JDVHV FDQ EH XVHG DV FRRNLQJ
WRFOHDQHUVDIHUUHOLDEOHOLJKWLQJDQGLPSURYHGHQHUJ\ IXHO DQG WR JHQHUDWH HOHFWULFLW\ ZKLOH WKH UHVLGXH
VHH+REIRUGHWDLOV SURYLGHV D ULFK IHUWLOL]HU IRU FURSV ,W LV DQ H[DPSOH
,Q &KLQD SURYLVLRQ RI ELRJDV LV DQ LPSRUWDQW SDUW RI RI WKH FLUFXODU HFRQRP\ WKDW KDV VHUYHG &KLQHVH
WKH FRXQWU\·V 1HZ 6RFLDOLVW &RXQWU\VLGH SURJUDPPH SHDVDQWV ZHOO LQ WUDGLWLRQDO &KLQHVH DJULFXOWXUH +R
ODXQFKHGLQWRLPSURYHWKHZHOIDUHRIWKRVHOLYLQJ  0RUH HODERUDWH PRGHOV LQFOXGH RUFKDUGV
RXWVLGH ERRPLQJ FLWLHV ZKLFK LQFOXGH WKH FRXQWU\·V DQGVRODUSDQHOV$FFRUGLQJWRDUHFHQWVXUYH\IURP
 PLOOLRQ PLJUDQW ZRUNHUV DQG UXUDO SRRU &KLQD LV &KLQD·V 0LQLVWU\ RI $JULFXOWXUH :DQJ  
RQH RI WKH ÀUVW FRXQWULHV LQ WKH ZRUOG WR XVH ELRJDV PLOOLRQKRXVHKROGELRJDVWDQNVKDGEHHQLQVWDOOHGE\
WHFKQRORJ\ DQG LW KDV EHHQ UHYLYHG LQ VXFFHVVLYH WKHHQGRIWKURXJKELRJDVSURMHFWV7KLV
FDPSDLJQV E\ WKH SUHVHQW JRYHUQPHQW WR SURYLGH H[SRQHQWLDOJURZWKSKDVHWKDWVWDUWHGDURXQGLV

VHWWRFRQWLQXHDORQJZLWKPHGLXPDQGELJGLJHVWHUV
IRUFRPPXQLW\DQGLQGXVWULDOXVH$QDHURELFGLJHVWLRQ
RIRUJDQLFZDVWHVLVDNH\RIIJULGUHQHZDEOHHQHUJ\
WHFKQRORJ\ IRU D WUXO\ JUHHQ FLUFXODU HFRQRP\ WKDW
FRXOGPDNHDUHDOGLIIHUHQFHIRULPSURYLQJWKHOLYHVRI
WKHUXUDOSRRU
(,QWHJUDWLQJVXVWDLQDEOHIDUPLQJDQG
UHQHZDEOHHQHUJLHVLQDFLUFXODU
HFRQRP\
$PRGHOWKDWH[SOLFLWO\LQWHJUDWHVVXVWDLQDEOHIDUPLQJ
DQG UHQHZDEOH HQHUJLHV LV 'UHDP )DUP  ZKLFK
RSWLPL]HV WKH VXVWDLQDEOH XVH RI UHVRXUFHV DQG
PLQLPL]HV ZDVWH LQ DFFRUGDQFH ZLWK WKH FLUFXODU
HFRQRP\ SULQFLSOHV ÀJXUH  VHH DOVR +R HW DO
75$'($1'(19,5210(175(9,(:
HQHUJ\DQGQXWULHQWVIRUDJULFXOWXUH
6RPH SUHOLPLQDU\ HVWLPDWHV EDVHG RQ GDWD DQG
VWDWLVWLFVPDGHDYDLODEOHE\WKH&KLQHVH*RYHUQPHQW
DQG DFDGHPLFV RQ WKH HQHUJ\ DQG FDUERQ VDYLQJV
LQYROYHGDUHSUHVHQWHGLQWDEOHVDQG
$V FDQ EH VHHQ IURP WDEOH  WKH FRPELQDWLRQ RI
RUJDQLF DJULFXOWXUH DQG DQDHURELF GLJHVWLRQ KDV WKH
SRWHQWLDO WR PLWLJDWH DW OHDVW  SHU FHQW RI QDWLRQDO
*+* HPLVVLRQV DQG VDYH  SHU FHQW RI HQHUJ\
FRQVXPSWLRQ LQ &KLQD ,I 'UHDP )DUP  ZHUH WR EH
DSSOLHGWKURXJKRXWWKHFRXQWU\&KLQDZRXOGPLWLJDWH
 SHU FHQW RI LWV *+* HPLVVLRQV DQG VDYH  SHU
FHQWRIHQHUJ\FRQVXPSWLRQRQO\FRXQWLQJDQDHURELF
GLJHVWLRQ EDVLFDOO\ DV D UHVXOW RI HIÀFLHQF\ VDYLQJV
IURPXVLQJ´ZDVWHµKHDWLQFRPELQHGKHDWDQGSRZHU
JHQHUDWLRQ DQG DYRLGLQJ ORVV IURP ORQJ GLVWDQFH
 ,W LV SDWWHUQHG RQ D GHVLJQ GHYHORSHG E\
WUDQVPLVVLRQ RI HOHFWULFLW\ $ FRQVHUYDWLYH DOORZDQFH
HQYLURQPHQWDO HQJLQHHU *HRUJH &KDQ DQG WKH G\NH
RISHUFHQWHIÀFLHQF\VDYLQJRXWRIDPD[LPXPRI
SRQG V\VWHP RI WKH 3HDUO 5LYHU 'HOWD WKDW &KLQHVH
DERXWSHUFHQWJLYHVWKHQHWFDUERQDQGHQHUJ\
SHDVDQWVKDYHSHUIHFWHGRYHUWKRXVDQGVRI\HDUV²D
VDYLQJVVKRZQLQWDEOH$JDLQWKLVLVIURPDQDHURELF
V\VWHPVRSURGXFWLYHWKDWLWVXSSRUWHGSHRSOHSHU
GLJHVWLRQRQO\7KHVDYLQJVFRXOGEHIDUJUHDWHULIORZ
KHFWDUHLQLWVKH\GD\+R
,QWKHGLDJUDPDJUH\EDFNJURXQGZLWKGRWWHGERUGHUV
LVIRUHQHUJ\JUHHQIRUDJULFXOWXUDOSURGXFHJUH\WH[W
IRU ZDWHU FRQVHUYDWLRQ DQG ÁRRG FRQWURO DQG EODFN
LVIRUZDVWHLQWKHRUGLQDU\VHQVHRIWKHZRUGZKLFK
VRRQJHWVFRQYHUWHGLQWRIRRGDQGHQHUJ\UHVRXUFHV
$ URXQGHG UHFWDQJOH LV IRU HGXFDWLRQ DQG UHVHDUFK
LQWRQHZVFLHQFHDQGWHFKQRORJLHV
7KLV LGHDO 'UHDP )DUP LV FRPSOHWH ZLWK ODERUDWRU\
IDFLOLWLHVIRUHGXFDWLRQDVZHOODVDUHVWDXUDQWWRWDNH
DGYDQWDJH RI DOO WKH IUHVK SURGXFH ,W LV D SHUIHFW
VHWWLQJ IRU GHYHORSLQJ FRWWDJH LQGXVWULHV VXFK DV
IRRG SUHVHUYDWLRQ SURFHVVLQJ ZLQH DQG FKHHVH
PDNLQJDQGEUHDGPDNLQJQRWWRPHQWLRQHOHFWURQLF
ZRUNVKRSV EDWWHU\ FKDUJLQJ DQG UHWDLOLQJ RI
UHQHZDEOHHQHUJ\FRPSRQHQWVDQGHOHFWURQLFGHYLFHV
7KHV\QHUJLHVEHWZHHQDJULFXOWXUHDQGLQGXVWULHVDUH
REYLRXVHVSHFLDOO\LQWKHFDVHRIIRRGLQGXVWULHVDV
WKH\DUHFORVHWRWKHVRXUFHRISURGXFWLRQ0RUHRYHU
WKHRUJDQLFZDVWHVIURPWKHVHLQGXVWULHVFDQJRULJKW
EDFN LQWR DQDHURELF GLJHVWLRQ WR EH FRQYHUWHG LQWR
SRZHU FRQVXPLQJ /(' OLJKWLQJ DQG RWKHU HOHFWURQLF
GHYLFHV ZHUH WR UHSODFH FRQYHQWLRQDO KLJK SRZHU
FRQVXPLQJPRGHOV
:LWKWKHDGGLWLRQRIVRODUZLQGRUPLFURK\GURHOHFWULF
DVDSSURSULDWHDQGEDWWHULHVWRVWRUHDQGPDLQWDLQD
VWHDG\SRZHUVXSSO\VXFKIDUPVFRXOGFRPSHQVDWH
LQ WKH EHVW FDVH VFHQDULR IRU WKH FDUERQ HPLVVLRQV
DQGHQHUJ\FRQVXPSWLRQRIWKHHQWLUHFRXQWU\6XUSOXV
HQHUJ\IURPWKHIDUPFRXOGEHXVHGWRVXSSO\KRPHV
DQG EXVLQHVVHV LQ WKH YLFLQLW\ WKURXJK D PLQLJULG
WKDW FRXOG HYHQWXDOO\ OLQN XS WR WKH QDWLRQDO JULG LI
QHFHVVDU\RUGHVLUDEOH7KLVFRXOGEHDPRGHOIRUWKH
QDWXUDOHYROXWLRQRIFRQQHFWLYLW\DQGSRZHUVKDULQJ$W
WKHYHU\OHDVWVXFKLQWHJUDWHGIRRGDQGHQHUJ\IDUPV
ZRXOG FRQWULEXWH WR IRRG VHFXULW\ ZKLOH SOD\LQJ WKHLU
SDUWDORQJZLWKRWKHUVHFWRUVRIWKHFLUFXODUHFRQRP\
LQ FXWWLQJ WKHLU RZQ FDUERQ IRRWSULQW )XUWKHUPRUH
VXFK VPDOOVFDOH DJURHFRORJLFDO IDUPLQJ DQG ORFDO
UHQHZDEOHSRZHUJHQHUDWLRQDUHPXFKPRUHUHVLVWDQW
DQG UHVLOLHQW WR ZHDWKHU H[WUHPHV DQG LQGHHG WR
HDUWKTXDNHVDQGVDERWDJH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
 1+. 415+10U*4'#661
11&'%74+6;#0&
.+/#6'*#0)'
'DYLG3LPHQWHODQG0LFKDHO%XUJHVV
&ROOHJHRI$JULFXOWXUHDQG/LIH6FLHQFHV&RUQHOO8QLYHUVLW\,WKDFD1HZ<RUN

$EVWUDFW
6RLOLVWKHPRVWYDOXDEOHUHVRXUFHIRUZRUOGIRRGSURGXFWLRQ+XPDQVZRUOGZLGHREWDLQPRUHWKDQ
SHUFHQWRIWKHLUIRRGFDORULHVIURPODQGDQGOHVVWKDQSHUFHQWIURPWKHRFHDQVDQGRWKHUDTXDWLF
HFRV\VWHPV(DFK\HDUDERXWPLOOLRQKHFWDUHVKDRUDERXWSHUFHQWRIFURSODQGDUHORVWGXHWR
VRLOHURVLRQWKXVUHGXFLQJWKHFURSODQGDYDLODEOHIRUZRUOGIRRGSURGXFWLRQ7KLVORVVLVDVHULRXVSUREOHP
EHFDXVHDVWKH:RUOG+HDOWK2UJDQL]DWLRQDQGWKH)RRGDQG$JULFXOWXUH2UJDQL]DWLRQRIWKH8QLWHG1DWLRQV
UHSRUWDWSUHVHQWSHUFHQWRIWKHZRUOGSRSXODWLRQLHELOOLRQSHRSOHLVPDOQRXULVKHG0HDQZKLOH
JOREDOZDUPLQJLVZRUVHQLQJDQGFDQEHWUDFHGEDFNWRDQRWLQVLJQLÀFDQWH[WHQWWRLQFUHDVHGVRLOHURVLRQ
IRVVLOIXHOXVHDQGWKHFOHDULQJRIIRUHVWVZRUOGZLGH

$,QWURGXFWLRQ RI QDWXUDO DJULFXOWXUDO DQG IRUHVW HFRV\VWHPV ,Q

7KH ORVV RI VRLO IURP ODQG VXUIDFHV E\ HURVLRQ LV
ZLGHVSUHDGDQGUHGXFHVWKHSURGXFWLYLW\RIDOOQDWXUDO
HFRV\VWHPVDVZHOODVWKDWRIDJULFXOWXUDOIRUHVWDQG
SDVWXUHHFRV\VWHPV/DODQG6WHZDUW3LPHQWHO
DGGLWLRQWKHLPSRUWDQWGLYHUVLW\RISODQWVDQLPDOVDQG
PLFUREHVLVUHGXFHG
,QWKLVSDSHUWKHGLYHUVHIDFWRUVWKDWFDXVHVRLOHURVLRQ
DUH DVVHVVHG DQG WKH H[WHQW RI GDPDJH DVVRFLDWHG
HW DO  7URHK +REEV DQG 'RQDKXH 
&RQFXUUHQWO\ ZLWK WKH HVFDODWLQJ KXPDQ SRSXODWLRQ
VRLO HURVLRQ ZDWHU DYDLODELOLW\ IRVVLO HQHUJ\ XVH
DQG FOLPDWH FKDQJH DUH HPHUJLQJ DV WKH SULPH
HQYLURQPHQWDOSUREOHPVWKURXJKRXWWKHZRUOG
&XUUHQWO\SHUFHQWRIWKHZRUOGSRSXODWLRQLH
ZLWKVXFKHURVLRQLVDQDO\VHGZLWKHPSKDVLVRQWKH
LPSDFWWKLVPD\KDYHRQIXWXUHKXPDQIRRGVHFXULW\
DQGFOLPDWHFKDQJH
%&DXVHVRIHURVLRQ
(URVLRQ RFFXUV ZKHQ VRLO LV OHIW H[SRVHG WR UDLQ RU
ELOOLRQ SHRSOH LV PDOQRXULVKHG :+2  )$2 ZLQG HQHUJ\ )RU H[DPSOH DERXW  PP RI UDLQ
E 7KLV LV WKH ODUJHVW QXPEHU RI PDOQRXULVKHG
SHRSOHHYHULQKLVWRU\:LWKWKHZRUOGSRSXODWLRQQRZ
DWELOOLRQDQGH[SHFWHGWRUHDFKELOOLRQE\
PRUHIRRGVXSSOLHVZLOOEHQHHGHG&RQVLGHULQJWKDW
DW SUHVHQW PRUH WKDQ  SHU FHQW RI KXPDQ IRRG
IDOOLQJRQRQHKHFWDUHKDRIODQGLQ1HZ<RUN6WDWH
SURYLGHV WKH HQHUJ\ HTXLYDOHQW RI  NFDO SHU
\HDU 7KLV LV DERXW WKH HTXLYDOHQW RI WKH HQHUJ\ LQ 
OLWUHVRIJDVROLQH5DLQGURSVKLWWLQJVRLOORRVHQLWDQG
HYHQ LI WKHUH LV D JUDGLHQW RI RQO\  SHU FHQW LW ZLOO
FDORULHVFRPHVIURPWKHODQG)$2FZKLOHOHVV FDXVHWKHVRLOWRÁRZGRZQKLOO7KLVVRFDOOHGVKHHW
WKDQSHUFHQWGHULYHVIURPWKHRFHDQVDQGRWKHU HURVLRQLVWKHGRPLQDQWW\SHRIHURVLRQ7URHK+REEV
DTXDWLF HFRV\VWHPV PDLQWDLQLQJ DQG DXJPHQWLQJ
WKH ZRUOG·V IRRG VXSSO\ EDVLFDOO\ GHSHQGV RQ WKH
SURGXFWLYLW\DQGTXDOLW\RIDOOVRLOV
+XPDQLQGXFHG VRLO HURVLRQ DQG WKH DVVRFLDWHG
GHWHULRUDWLRQ LQ VRLO TXDOLW\ RYHU PDQ\ \HDUV KDYH
UHVXOWHG LQ WKH ORVV RI YDOXDEOH VRLOV DQG UHGXFHG
SURGXFWLYLW\ RI WKH ODQG ZLWK VRPH FURSODQG EHLQJ
DEDQGRQHG HDFK\HDU3LPHQWHOHWDO<RXQJ
DQG 'RQRKXH  7KH LPSDFW RI VRLO HURVLRQ LV
LQWHQVLÀHGRQDOOVORSLQJODQGZKHUHPRUHWKDQKDOIRI
WKHVXUIDFHVRLOLVFDUULHGDZD\DVWKHZDWHUVSODVKHV
GRZQKLOOLQWRYDOOH\VDQGVWUHDPV
:LQGHQHUJ\DOVRKDVFRQVLGHUDEOHSRZHUWRGLVORGJH
VXUIDFH VRLO SDUWLFOHV DQG WUDQVSRUW WKHP RYHU ORQJ
GLVWDQFHV $ GUDPDWLF H[DPSOH RI WKLV ZDV WKH ZLQG
HURVLRQLQ.DQVDVGXULQJWKHUHODWLYHO\GU\DQGZLQG\
 3LPHQWHO  &OHDUO\ ZKHQ VRLO HURVLRQ ZLQWHURI²'XULQJMXVWWKLVRQHZLQWHUSHULRG
GLPLQLVKHV VRLO TXDOLW\ LW UHGXFHV WKH SURGXFWLYLW\ DSSUR[LPDWHO\WRQVKDRIVRLOZHUHHURGHGIURPWKLV
 75$'($1'(19,5210(175(9,(:

YDOXDEOH FURSODQG :LQG HQHUJ\ LV VXIÀFLHQWO\VWURQJ RIDGMDFHQWPRYLQJZDWHU,QFUHDVHGVRLOORVVRFFXUV

WR SURSHO VRLO SDUWLFOHV WKRXVDQGV RI NLORPHWUHV DV RQ VWHHS VORSHV ZLWK JUDGLHQWV RI  SHU FHQW RU
LOOXVWUDWHG E\ 1$6$·V UHSRUW RI D FORXG RI VRLO EHLQJ
EORZQ IURP WKH $IULFDQ FRQWLQHQW WR WKH 6RXWK DQG
1RUWK$PHULFDQFRQWLQHQWV
7KHUROHRIYHJHWDWLYHFRYHU
/DQGDUHDVFRYHUHGE\SODQWELRPDVVOLYLQJRUGHDG
DUH PRUH UHVLVWDQW DQG H[SHULHQFH UHODWLYHO\ OLWWOH
VRLO HURVLRQ EHFDXVH UDLQGURS DQG ZLQG HQHUJ\ DUH
GLVVLSDWHGE\WKHELRPDVVOD\HUDQGWKHWRSVRLOLVKHOG
PRUH ZKHQ D VWUHDP FXWV WKURXJK DGMDFHQW ODQG
EXWHYHQRQUHODWLYHO\ÁDWODQGZLWKRQO\DSHUFHQW
JUDGLHQWVWUHDPEDQNVDUHHURGHGGXULQJKHDY\UDLQV
DQGÁRRGLQJ
&$VVHVVLQJVRLOHURVLRQ
,W LV HVWLPDWHG WKDW DSSUR[LPDWHO\  ELOOLRQ WRQV
RI IHUWLOH VRLOV ZRUOGZLGH DUH ORVW IURP DJULFXOWXUDO
V\VWHPVHDFK\HDU0\HUVZKHUHDVUHODWLYHO\
WRJHWKHU E\ WKH ELRPDVV )RU H[DPSOH LQ 8WDK DQG
OLWWOH HURVLRQ RFFXUV LQ QDWXUDO HFRV\VWHPV 6RLO
0RQWDQDLWZDVIRXQGWKDWDVWKHDPRXQWRIJURXQG
VFLHQWLVWV /DO DQG 6WHZDUW  DQG :HQ 
FRYHU GHFUHDVHG IURP  SHU FHQW WR OHVV WKDQ 
SHUFHQWHURVLRQUDWHVLQFUHDVHGDSSUR[LPDWHO\ UHSRUWWKDWDQQXDOO\ELOOLRQWRQVRIVRLODUHORVWLQ
IROG7ULPEHODQG0HQGHO,QIRUHVWHGDUHDVD ,QGLDDQGELOOLRQWRQVLQ&KLQD&RQVLGHULQJWKHVH
PLQLPXPRISHUFHQWRIIRUHVWFRYHULVQHFHVVDU\ WZRFRXQWULHVWRJHWKHURFFXS\RQO\SHUFHQWRIWKH
WRSUHYHQWVHULRXVVRLOHURVLRQDQGODQGVOLGHV8QLWHG ZRUOG·V WRWDO ODQG DUHD WKH HVWLPDWHG  ELOOLRQ WRQV
6WDWHV)RUHVW&RQVHUYDWLRQ$FW7KHUHIRUHWKH RIVRLOORVWHDFK\HDUZRUOGZLGHLVFRQVHUYDWLYH7KH
H[WHQVLYHUHPRYDORIIRUHVWVIRUFURSVDQGSDVWXUHLV DPRXQW RI VRLO ORVW DQQXDOO\ LQ WKH 8QLWHG 6WDWHV LV
IROORZHGE\LQWHQVLYHVRLOHURVLRQ HVWLPDWHGWREHDERXWELOOLRQWRQV1$6

/RVV RI YHJHWDWLRQ WKDW SURYLGHV VRLO FRYHU LV 6RLOHURVLRQRQFURSODQGZRUOGZLGH

HVSHFLDOO\ZLGHVSUHDGLQGHYHORSLQJFRXQWULHVZKHUH
&XUUHQWO\DERXWSHUFHQWRIWKHZRUOG·VDJULFXOWXUDO
SRSXODWLRQV DUH ODUJH DQG DJULFXOWXUDO SUDFWLFHV DUH
RIWHQ LQDGHTXDWH WR SURWHFW WRSVRLOV ,Q DGGLWLRQ ODQG VXIIHUV PRGHUDWH WR VHYHUH HURVLRQ ZKLOH 
FRRNLQJ DQG KHDWLQJ LQ WKHVH FRXQWULHV IUHTXHQWO\ SHU FHQW H[SHULHQFHV VOLJKW HURVLRQ 6SHWK 
GHSHQGRQWKHXVHRIFURSUHVLGXHVIRUIXHO3LPHQWHO :RUOGZLGHHURVLRQRQFURSODQGDYHUDJHVDERXWW
DQG3LPHQWHO)RUH[DPSOHDERXWSHUFHQWRI KD\UDQGUDQJHVIURPWRWKD\U3LPHQWHOHW
FURSUHVLGXHVLQ&KLQDDQGSHUFHQWLQ%DQJODGHVK DO$VDUHVXOWRIVRLOHURVLRQRYHUWKHSDVW
DUH UHPRYHG URXWLQHO\ IURP WKH ODQG DQG EXUQHG DV \HDUVDERXWSHUFHQWRIWKHZRUOG·VFURSODQGKDV
IXHO:HQ,QDUHDVZKHUHIXHOZRRGDQGRWKHU EHFRPH XQSURGXFWLYH DQG PXFK RI WKDW KDV EHHQ
ELRPDVV DUH VFDUFH HYHQ WKH URRWV RI JUDVVHV DQG DEDQGRQHGIRUFURSXVH.HQGDOODQG3LPHQWHO
VKUXEV DUH FROOHFWHG DQG EXUQHG -XR DQG 7KXURZ :5,
 $OO WKHVH SUDFWLFHV OHDYH WKH VRLO EDUUHQ DQG :RUOGZLGHWKHQHDUO\ELOOLRQKDRIODQGQRZXQGHU
IXOO\H[SRVHGWRWKHIRUFHVRIUDLQDQGZLQGHURVLRQ FXOWLYDWLRQIRUFURSSURGXFWLRQDUHDOPRVWHTXDOLQDUHD
2WKHUVRLOGLVWXUEDQFHV
:KLOH DJULFXOWXUH DFFRXQWV IRU DERXW  SHU FHQW RI
VRLOHURVLRQZRUOGZLGHVXFKHURVLRQRFFXUVZKHQHYHU
KXPDQV UHPRYH YHJHWDWLYH FRYHU /DO DQG 6WHZDUW
WRWKHDPRXQWRIFURSODQGELOOLRQKDWKDWKDVEHHQ
DEDQGRQHG E\ KXPDQV VLQFH IDUPLQJ EHJDQ 6XFK
DEDQGRQHGODQGRQFHELRORJLFDOO\DQGHFRQRPLFDOO\
SURGXFWLYH QRZ SURGXFHV OLWWOH ELRPDVV EXW DOVR LW
KDVORVWWKHFRQVLGHUDEOHGLYHUVLW\RISODQWVDQLPDOV
 &RQVWUXFWLRQ RI URDGV SDUNLQJ ORWV DQG DQG PLFUREHV LW RQFH VXSSRUWHG +H\ZRRG 
EXLOGLQJV LV DQ H[DPSOH RI WKLV SUREOHP +RZHYHU 3LPHQWHO HW DO  0RUHRYHU EHFDXVH RI WKH
DOWKRXJK WKH UDWH RI HURVLRQ IURP FRQVWUXFWLRQ VLWHV GHFOLQH LQ ELRPDVV LQ VRPH DJULFXOWXUDO SURGXFWLRQ
PD\EHH[FHHGLQJO\KLJKLWODVWVIRUDUHODWLYHO\EULHI OHVV FDUERQ LV WDNHQ XS DQG VHTXHVWHUHG VHH WKH
SHULRGDIWHUZKLFKRQFHWKHODQGVXUIDFHLVVHHGHG FRPPHQWDU\RI*5$,1LQWKLVFKDSWHU
WRJUDVVRUFRYHUHGZLWKRWKHUYHJHWDWLRQWKHHURVLRQ
(DFK \HDU DQ HVWLPDWHG  PLOOLRQ KD RI FURSODQG
GHFOLQHV,(&$
ZRUOGZLGH DUH DEDQGRQHG GXH WR WKHLU ODFN RI
1DWXUDO HFRV\VWHPV DOVR VXIIHU ORVVHV IURP HURVLRQ SURGXFWLYLW\ FDXVHG E\ VRLO HURVLRQ )DHWK DQG
7KLVLVHVSHFLDOO\HYLGHQWDORQJVWUHDPEDQNVZKHUH &URVVRQ/RVVHVIURPVRLOHURVLRQDUHKLJKHVW
HURVLRQWDNHVSODFHQDWXUDOO\IURPWKHSRZHUIXODFWLRQ LQ WKH DJURHFRV\VWHPV RI $VLD $IULFD DQG 6RXWK
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

$PHULFDDYHUDJLQJWRWKD\U3LPHQWHO
,Q GHYHORSLQJ FRXQWULHV VRLO HURVLRQ LV SDUWLFXODUO\
VHYHUH RQ VPDOO IDUPV WKDW DUH RIWHQ ORFDWHG RQ
PDUJLQDO ODQGV ZKHUH WKH VRLO TXDOLW\ LV SRRU DQG
WKH WRSRJUDSK\ IUHTXHQWO\ VWHHS ,Q DGGLWLRQ WKH
UDLQGURS DQG ZLQG HQHUJ\ EXW DOVR FRYHU WKH VRLO
XQGHU WKH WUHHV ZKLFK IXUWKHU SURWHFWV LW +RZHYHU
WKH VLWXDWLRQ FKDQJHV GUDPDWLFDOO\ ZKHQ IRUHVWV DUH
FOHDUHG IRU FURS SURGXFWLRQ RU ZKHQ SDVWXUHV DUH
GHYHORSHG IRU OLYHVWRFN SURGXFWLRQ 6RXWKJDWH DQG
SRRU IDUPHUV WHQG WR UDLVH URZ FURSV VXFK DV FRUQ :KLWDNHU
DQG EHDQV ZKLFK DUH KLJKO\ VXVFHSWLEOH WR HURVLRQ
EHFDXVH WKH FURS YHJHWDWLRQ GRHV QRW FRYHU WKH '(IIHFWVRIVRLOHURVLRQ
HQWLUHWLOOHGVRLOVXUIDFH6WRQHDQG0RRUH)RU
H[DPSOHLQWKH6LHUUDUHJLRQRI(FXDGRUDERXWSHU
FHQWRIWKHFURSODQGKDVEHHQDEDQGRQHGEHFDXVHRI
WKH GHYDVWDWLRQ FDXVHG E\ UDLQIDOO DQG ZLQG HURVLRQ
DQG LQDSSURSULDWH DJULFXOWXUDO SUDFWLFHV 6RXWKJDWH
:DWHUDYDLODELOLW\
:DWHU LV D PDMRU OLPLWLQJ IDFWRU RI FURS SURGXFWLYLW\
LQ DOO WHUUHVWULDO HFRV\VWHPV EHFDXVH DOO YHJHWDWLRQ
DQG:KLWDNHU6LPLODUSUREOHPVDUHHYLGHQWLQ
WKH $PD]RQLDQ UHJLRQ RI 6RXWK $PHULFD ZKHUH YDVW
IRUHVWHG DUHDV KDYH EHHQ FOHDUHG IRU FXOWLYDWLRQ RI
VXJDUFDQH DQG RWKHU FURSV DV ZHOO DV IRU OLYHVWRFN
UHTXLUHV HQRUPRXV TXDQWLWLHV RI ZDWHU IRU LWV JURZWK
DQG IRU WKH SURGXFWLRQ RI IUXLW )RU H[DPSOH  KD RI
FRUQZLOOWUDQVSLUHDERXWPLOOLRQOLWUHVRIZDWHUGXULQJ
WKHJURZLQJVHDVRQRIDERXWWKUHHPRQWKV3LPHQWHO
SURGXFWLRQ
(URVLRQUDWHVRQSDVWXUHVDQGUDQJHODQGV
,QWKH8QLWHG6WDWHVLQFRQWUDVWWRWKHDYHUDJHVRLOORVV
RIWKD\UIURPFURSODQGSDVWXUHVORVHVRLODWWKH
HWDODQGORVHDQDGGLWLRQDOPLOOLRQOLWUHVRI
ZDWHU E\ HYDSRUDWLRQ IURP WKH VRLO 'XULQJ HURVLRQ
E\ UDLQIDOO WKH DPRXQW RI ZDWHU UXQRII VLJQLÀFDQWO\
LQFUHDVHV ZLWK OHVV ZDWHU HQWHULQJ WKH VRLO DQG
WKHUHIRUHOHVVZDWHUDYDLODEOHWRVXSSRUWWKHJURZLQJ
YHJHWDWLRQ2QDYHUDJHDFRUQFURSRINJUHTXLUHV
UDWHRIDERXWWKD\U1$6+RZHYHUHURVLRQ
UDWHV RQ SDVWXUHV LQWHQVLI\ ZKHUHYHU RYHUJUD]LQJ LV
DOORZHGWRRFFXU(YHQLQWKH8QLWHG6WDWHVDERXW
SHU FHQW RI QRQ)HGHUDO ODQGV UHTXLUH FRQVHUYDWLRQ
WUHDWPHQWV WR UHGXFH JUD]LQJ SUHVVXUH -RKQVRQ
DERXW  OLWUHV RI ZDWHU IRU SURGXFWLRQ ZKLOH ULFH
UHTXLUHVDERXWOLWUHV
1XWULHQWORVV
(URGHG VRLO FDUULHV DZD\ YLWDO SODQW QXWULHQWV VXFK
0RUHWKDQKDOIRIDOOUDQJHODQGVLQWKHFRXQWU\
DV QLWURJHQ SKRVSKRUXV SRWDVVLXP DQG FDOFLXP
²ERWKQRQ)HGHUDODQG)HGHUDO²DUHRYHUJUD]HGDQG
7\SLFDOO\ HURGHG VRLO FRQWDLQV DERXW WKUHH WLPHV
KDYH EHFRPH VXEMHFW WR KLJK HURVLRQ UDWHV %DLOH\
PRUH QXWULHQWV WKDQ WKRVH OHIW LQ WKH UHPDLQLQJ VRLO

/DQJGDOH HW DO  2QH WRQ RI IHUWLOH WRSVRLO RU
$OWKRXJK HURVLRQ UDWHV RQ FURSODQG LQ WKH 8QLWHG HURGHGIHUWLOHVRLOFRQWDLQVDQDYHUDJHRIWRNJRI
6WDWHVKDYHGHFUHDVHGGXULQJWKHSDVWWZRGHFDGHV QLWURJHQWRNJRISKRVSKRUXVDQGWRNJRI
WKRVHRQSDVWXUHVDQGUDQJHODQGVUHPDLQKLJKWKD SRWDVVLXP ZKHUHDV WKH WRSVRLO RQ HURGHG ODQG KDV
\U1$6,QGHHGKLJKHURVLRQUDWHVDUHW\SLFDO DQDYHUDJHQLWURJHQFRQWHQWRIRQO\WRNJSHU
RQPRVWRIWKHZRUOG·VSDVWXUHVDQGUDQJHODQGV:5, WRQ/DQJGDOHHWDO
 ,Q PDQ\ GHYHORSLQJ FRXQWULHV KHDY\ JUD]LQJ
7R FRPSHQVDWH IRU WKH QXWULHQW ORVVHV LQÁLFWHG RQ
E\ FDWWOH VKHHS DQG JRDWV KDV UHPRYHG PRVW RI
FURS SURGXFWLRQ ODUJH TXDQWLWLHV RI IHUWLOL]HUV DUH
WKHYHJHWDWLYHFRYHUH[SRVLQJWKHVRLOWRVHYHUHVRLO
RIWHQ DSSOLHG 7URHK HW DO  SRLQW RXW WKDW WKH
HURVLRQ ,Q $IULFD DERXW  SHU FHQW RI WKH SDVWXUH
ORVWVRLOQXWULHQWVFRVWDJULFXOWXUHLQWKH8QLWHG6WDWHV
DQG UDQJHODQG LV VHULRXVO\ HURGHG DQG GHJUDGHG
VHYHUDO ELOOLRQV RI GROODUV DQQXDOO\ ,I WKH VRLO EDVH LV
811$'$)7KHSULPHFDXVHVRIWKLVH[SRVHG
VRLODUHRYHUJUD]LQJDQGWKHUHPRYDORIFURSUHVLGXHV
IRUXVHDVFRRNLQJIXHO
6RLOHURVLRQLQIRUHVWODQG
,Q VWDEOH IRUHVW HFRV\VWHPV ZKHUH VRLO LV SURWHFWHG
E\YHJHWDWLRQHURVLRQUDWHVDUHUHODWLYHO\ORZUDQJLQJ
UHODWLYHO\GHHSDERXWPPDQGLIRQO\²WRQV
RI VRLO LV ORVW SHU KHFWDUH SHU \HDU WKH ORVW QXWULHQWV
FDQ EH UHSODFHG ZLWK WKH DSSOLFDWLRQ RI FRPPHUFLDO
IHUWLOL]HUV DQGRU OLYHVWRFN PDQXUH +RZHYHU VXFK D
UHSODFHPHQWVWUDWHJ\LVH[SHQVLYHIRUIDUPHUVDQGWKH
FRXQWU\ DQG XVXDOO\ LV QRW DIIRUGDEOH E\ WKH SRRUHU
IDUPHUV1RWRQO\DUHWKHIHUWLOL]HULQSXWVGHSHQGHQWRQ
IURP RQO\  WR  WKD\U 5RRVH  7UHH IRVVLOHQHUJ\EXWDOVRWKHFKHPLFDOVFDQKDUPKXPDQ
OHDYHVDQGEUDQFKHVQRWRQO\LQWHUFHSWDQGGLPLQLVK KHDOWKDQGSROOXWHWKHHQYLURQPHQW1$6

6RLORUJDQLFPDWWHU
6RLORUJDQLFPDWWHULVDYDOXDEOHUHVRXUFHEHFDXVHLW
IDFLOLWDWHVWKHIRUPDWLRQRIVRLODJJUHJDWHVDQGWKHUHE\
75$'($1'(19,5210(175(9,(:
UHODWHGGLUHFWO\WRWKHDPRXQWRIOLYLQJDQGQRQOLYLQJ
RUJDQLF PDWWHU SUHVHQW LQ WKDW HFRV\VWHP :ULJKW
 +H\ZRRG  /D]DURII  :DOVK DQG
5RZH  :DUGOH HW DO  7KHUHIRUH E\
LQFUHDVHV VRLO SRURVLW\ 7KH LPSURYHG VRLO VWUXFWXUH
GLPLQLVKLQJ VRLO RUJDQLF PDWWHU DQG VRLO TXDOLW\
LQ WXUQ IDFLOLWDWHV ZDWHU LQÀOWUDWLRQ DQG XOWLPDWHO\ WKH
HURVLRQUHGXFHVWKHRYHUDOOELRPDVVDQGSURGXFWLYLW\
RYHUDOOSURGXFWLYLW\RIWKHVRLO/DQJGDOHHWDO
ZKLFK XOWLPDWHO\ KDV D SURIRXQGO\ DGYHUVH HIIHFW RQ
,Q DGGLWLRQ RUJDQLF PDWWHU DLGV FDWLRQ H[FKDQJH
WKHGLYHUVLW\RISODQWVDQLPDOVDQGPLFUREHVSUHVHQW
HQKDQFHV SODQW URRW JURZWK DQG VWLPXODWHV DQ
LQ WKH HFRV\VWHP 1XPHURXV SRVLWLYH DVVRFLDWLRQV
LQFUHDVH LQ LPSRUWDQW VRLO PLFUREHV :DUGOH HW DO
KDYHEHHQHVWDEOLVKHGEHWZHHQELRPDVVDEXQGDQFH
:KHQWKHOD\HURIRUJDQLFPDWWHULVGHSOHWHG
DQG VSHFLHV GLYHUVLW\ (OWRQ  2GXP 
WKH SURGXFWLYLW\ RI WKH HFRV\VWHP DV PHDVXUHG E\
6XJGHQ DQG 5DQGV  9HJHWDWLRQ LV WKH PDLQ
SODQWELRPDVVGHFOLQHVERWKEHFDXVHRIWKHGHJUDGHG
FRPSRQHQWRIHFRV\VWHPELRPDVVDQGSURYLGHVWKH
VRLOVWUXFWXUHDQGWKHGHSOHWLRQRIQXWULHQWVFRQWDLQHG
YLWDOUHVRXUFHVUHTXLUHGERWKE\DQLPDOVDQGPLFUREHV
LQWKHRUJDQLFPDWWHU,QDGGLWLRQWRORZ\LHOGVWKHWRWDO
IRUWKHLUVXUYLYDO
ELRPDVV RI WKH ELRWD DQG WKH RYHUDOO ELRGLYHUVLW\ RI
WKRVHHFRV\VWHPVDUHVXEVWDQWLDOO\UHGXFHG/D]DURII $ORQJ ZLWK SODQWV DQG DQLPDOV PLFUREHV DUH D
:DOVKDQG5RZH YLWDO FRPSRQHQW RI WKH VRLO DQG FRQVWLWXWH D ODUJH
SHUFHQWDJH RI WKH VRLO ELRPDVV 2QH FXELF PHWUH RI
)HUWLOH VRLOV W\SLFDOO\ FRQWDLQ  WRQVKD RI RUJDQLF
VRLO PD\ VXSSRUW DERXW  DUWKURSRGV 
PDWWHU LH ² SHU FHQW RI WKHLU WRWDO VRLO ZHLJKW
HDUWKZRUPVSOXVELOOLRQVRIPLFUREHV/HHDQG)RVWHU
3LPHQWHOHWDOZKLFKKDVDERXWSHUFHQWRI
QLWURJHQDQG²SHUFHQWRISKRVSKRUXV%HFDXVH
PRVW RI WKH VRLO RUJDQLF PDWWHU LV IRXQG FORVH WR
WKH VRLO VXUIDFH DV GHFD\LQJ OHDYHV DQG VWHPV LW LV
VLJQLÀFDQWO\UHGXFHGE\HURVLRQ%RWKZLQGDQGZDWHU
HURVLRQ VHOHFWLYHO\ UHPRYH WKH ÀQH RUJDQLF SDUWLFOHV
3LPHQWHOHWDO$KHFWDUHRISURGXFWLYH
VRLO PD\ KDYH D ELRPDVV RI LQYHUWHEUDWHV DQG
PLFUREHV ZHLJKLQJ XS WR  NJKD ,Q DGGLWLRQ
VRLO EDFWHULD DQG IXQJL DGG  WR  VSHFLHV
WKHUHE\ FRQWULEXWLQJ VLJQLÀFDQWO\ WR ELRGLYHUVLW\
HVSHFLDOO\ LQ PRLVW RUJDQLF VRLOV +H\ZRRG 
LQ WKH VRLO OHDYLQJ EHKLQG ODUJH VRLO SDUWLFOHV DQG
VWRQHV 6HYHUDO VWXGLHV KDYH GHPRQVWUDWHG WKDW WKH
VRLOUHPRYHGE\HLWKHUZDWHURUZLQGHURVLRQLVWR
 WLPHV ULFKHU LQ RUJDQLF PDWWHU WKDQ WKH UHPDLQLQJ
VRLOV UHVXOWLQJ LQ ORZHU FURS \LHOG )RU H[DPSOH WKH
3LPHQWHOHWDO
(URVLRQ UDWHV WKDW DUH  WR  WLPHV DERYH WKH
VXVWDLQDELOLW\ UDWH RU VRLO IRUPDWLRQ UDWHV RI ²
WRQKD\U UHGXFH WKH GLYHUVLW\ DQG DEXQGDQFH RI
UHGXFWLRQRIVRLORUJDQLFPDWWHUUDQJLQJIURPWR VRLO RUJDQLVPV 3LPHQWHO HW DO  ,Q FRQWUDVW
SHUFHQWZDVIRXQGWRORZHUWKHFURS\LHOGSRWHQWLDOIRU DJULFXOWXUDO SUDFWLFHV WKDW FRQWURO HURVLRQ DQG
JUDLQE\SHUFHQW/LEHUW PDLQWDLQ DGHTXDWH VRLO RUJDQLF PDWWHU IDYRXU WKH
SUROLIHUDWLRQRIVRLOELRWD5HLG3LPHQWHOHWDO
&ROOHFWLYHO\ DQG LQGHSHQGHQWO\ WKH GLYHUVH LPSDFWV  7KH DSSOLFDWLRQ RI RUJDQLF PDWWHU RU PDQXUH
RI HURVLRQ UHGXFH FURS ELRPDVV ERWK EHFDXVH RI DOVR HQKDQFHV ELRGLYHUVLW\ LQ WKH VRLO 3LPHQWHO HW
GHJUDGHGVRLOVWUXFWXUHDQGQXWULHQWGHSOHWLRQ DO  6SHFLHV GLYHUVLW\ RI PDFURIDXQD PRVWO\
DUWKURSRGV LQFUHDVHG  SHU FHQW ZKHQ RUJDQLF
6RLOGHSWK PDWWHU RU PDQXUH ZDV DSSOLHG WR H[SHULPHQWDO
*URZLQJ SODQWV UHTXLUH VRLOV RI DGHTXDWH GHSWK LQ ZKHDW SORWV LQ WKH IRUPHU 6RYLHW 8QLRQ %RKDF DQG
ZKLFK WR H[WHQG WKHLU URRWV 9DULRXV VRLO ELRWD VXFK 3RNDU]KHYVN\  6LPLODUO\ VSHFLHV GLYHUVLW\ RI
DV HDUWKZRUPV DOVR UHTXLUH D VXLWDEOH VRLO GHSWK PDFURIDXQD PRVWO\ DUWKURSRGV PRUH WKDQ GRXEOHG
3LPHQWHOHWDO:DUGOHHWDO7KXVZKHQ ZKHQRUJDQLFPDQXUHZDVDGGHGWRJUDVVODQGSORWVLQ
HURVLRQUHGXFHVVRLOGHSWKVXEVWDQWLDOO\IURPFP -DSDQDQGLQFUHDVHGIROGLQ+XQJDULDQIDUPODQG
WR OHVV WKDQ  FP WKHUH LV PLQLPDO VSDFH IRU SODQW
URRWV VR WKDW SODQW JURZWK ZLOO EH VWXQWHG DQG \LHOG
UHGXFHG
%LRPDVVDQGELRGLYHUVLW\
7KH ELRORJLFDO GLYHUVLW\ H[LVWLQJ LQ DQ\ HFRV\VWHP LV
2ODK=VXSRVDQG+HOPHF]L
7KHUHODWLRQVKLSEHWZHHQELRPDVVDQGELRGLYHUVLW\ZDV
FRQÀUPHG LQ ÀHOG H[SHULPHQWV ZLWK FROODUGV LQ ZKLFK
DUWKURSRGVSHFLHVGLYHUVLW\URVHIRXUIROGLQH[SHULPHQWDO
SORWV ZLWK WKH KLJKHVW FROODUG ELRPDVV FRPSDUHG ZLWK
WKDWLQFRQWUROFROODUGSORWV5HSRUWVVXJJHVWWKDWZKHQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

WKHELRPDVVLQFUHDVHGWKUHHIROGWKHQXPEHURIVSHFLHV  WRQV RI FDUERQ WR WKH DWPRVSKHUH $ IHHGEDFN

LQFUHDVHG IROG ,Q D VWXG\ RI ELUG SRSXODWLRQV D PHFKDQLVPH[LVWVZKHUHLQLQFUHDVHGJOREDOZDUPLQJ
VWURQJ FRUUHODWLRQ EHWZHHQ SODQW ELRPDVV SURGXFWLYLW\ LQWHQVLÀHVUDLQIDOOZKLFKLQWXUQLQFUHDVHVHURVLRQDQG
DQGELUGVSHFLHVGLYHUVLW\ZDVUHSRUWHGZKHQDIROG FRQWLQXHVWKHF\FOH/DO
LQFUHDVHLQSODQWELRPDVV\LHOGHGDIROGLQFUHDVHLQ
ELUGGLYHUVLW\:ULJKW *OREDOFOLPDWHFKDQJH

6RLO ELRWD SHUIRUP PDQ\ EHQHÀFLDO DFWLYLWLHV WKDW ([WHQVLYHEXUQLQJRIIRVVLOIXHOVDQGIRUHVWVDSSHDUVWR

LPSURYH VRLO TXDOLW\ DQG XOWLPDWHO\ LWV SURGXFWLYLW\ EHLQFUHDVLQJWKHOHYHORI&2DQGRWKHUJUHHQKRXVH
:LWW6XJGHQ6WRQHDQG$VK3LPHQWHO JDVHV *+*V LQ WKH DWPRVSKHUH ZKLFK UDLVHV
HW DO  )RU H[DPSOH VRLO ELRWD UHF\FOH EDVLF VHYHUDO HWKLFDO LVVXHV DQG FKRLFHV &OHDUO\ WKHUH LV
QXWULHQWVUHTXLUHGE\SODQWVIRUWKHLUJURZWK3LPHQWHO DQ XUJHQW QHHG WR UHGXFH IRVVLO IXHO FRQVXPSWLRQ
HWDO,QDGGLWLRQWKHWXQQHOLQJDQGEXUURZLQJ
DFWLYLWLHVRIHDUWKZRUPVDQGRWKHUVRLOELRWDHQKDQFH
FURSSURGXFWLYLW\E\LQFUHDVLQJZDWHULQÀOWUDWLRQ:LWW
DQG GHIRUHVWDWLRQ WR VORZ GRZQ WKH UDWH RI JOREDO
FOLPDWHFKDQJH5HGXFLQJIRVVLOIXHOFRQVXPSWLRQZLOO
DOVR FRQVHUYH IRUHVWV DQG FRQWUROOLQJ GHIRUHVWDWLRQ
KDV RWKHU EHQHÀWV LQFOXGLQJ FRQVHUYLQJ ELRORJLFDO
(DUWKZRUPVIRULQVWDQFHPD\FRQVWUXFWXSWR
WXQQHORSHQLQJVSHUVTXDUHPHWUHZKLFKHQDEOH
WKH ZDWHU WR LQÀOWUDWH UDSLGO\ LQWR WKH VRLO 2WKHU VRLO
ELRWDDOVRFRQWULEXWHWRVRLOIRUPDWLRQDQGSURGXFWLYLW\
E\PL[LQJWKHVRLOFRPSRQHQWVHQKDQFLQJDJJUHJDWH
VWDELOLW\ DQG SUHYHQWLQJ VRLO FUXVWLQJ 7KLV FKXUQLQJ
DQG PL[LQJ RI WKH XSSHU VRLO UHGLVWULEXWHV QXWULHQWV
DHUDWHV WKH VRLO H[SRVHV LW WR WKH FOLPDWH IRU VRLO
IRUPDWLRQDQGLQFUHDVHVLQÀOWUDWLRQUDWHVWKXVPDNLQJ
VRLOFRQGLWLRQVIDYRXUDEOHIRULQFUHDVHGVRLOIRUPDWLRQ
DQG SODQW SURGXFWLYLW\ (DUWKZRUPV EULQJ IURP 
WR  WKD\U RI VRLO IURP XQGHUJURXQG WR WKH VRLO
VXUIDFHZKLOHVRPHLQVHFWVVXFKDVDQWVPD\EULQJ
DVPXFKDVWKD\URIVRLOWRWKHVXUIDFH/RFNDE\
GLYHUVLW\
$ ODUJH QXPEHU RI PHWHRURORJLVWV DQG SK\VLFDO
VFLHQWLVWV HVWLPDWH WKDW WKH FRQWLQXHG LQFUHDVH LQ
&2 DQG RWKHU *+*V ZLOO ZDUP WKH HDUWK IURP 
GHJUHHV &HOVLXV WR  GHJUHHV &HOVLXV E\ WKH HQG
RIWKLVFHQWXU\7KHSUHFLVHUDWHH[WHQWDQGUHJLRQDO
YDULDWLRQVDUHGLIÀFXOWWRSUHGLFWEXWQHJDWLYHLPSDFWV
DUHJHQHUDOO\SURMHFWHGHVSHFLDOO\RQFURSSURGXFWLRQ
$GGLWLRQDO QHJDWLYH LPSDFWV RQ VRPH FURSV FRXOG
UHVXOW IURP DOWHUDWLRQV LQ WKH R]RQH OD\HU 7KXV WKH
RYHUDOOFKDQJHVLQWHPSHUDWXUHPRLVWXUH&2LQVHFW
SHVWV SODQW SDWKRJHQV DQG ZHHGV DVVRFLDWHG ZLWK
JOREDO FOLPDWH FKDQJH DUH SURMHFWHG WR UHGXFH IRRG
DQG $GDPV  6QDLOV DUH UHSRUWHG WR KHOS WKH
IRUPDWLRQRIWKD\URIVRLO
6RLOVHGLPHQWV
7KH ORQJUDQJH WUDQVSRUW RI GXVW E\ ZLQG KDV
LPSOLFDWLRQV IRU KXPDQ KHDOWK ZRUOGZLGH *ULIÀQ
SURGXFWLRQZRUOGZLGH3LPHQWHO7KHH[WHQWRI
DOWHUDWLRQVRIFURS\LHOGVZLOOGHSHQGRQVSHFLÀFFURSV
DQG WKHLU SDUWLFXODU HQYLURQPHQWDO UHTXLUHPHQWV
+RSHIXOO\ LPSOHPHQWDWLRQ RI LPSURYHG DJULFXOWXUDO
WHFKQRORJLHV FRXOG SDUWLDOO\ RIIVHW VRPH RI WKLV
GHFUHDVHLQ\LHOGV,QDGGLWLRQSURGXFWLYHDJULFXOWXUH
DQG DQ LQFUHDVH LQ VRLO FDUERQ FRXOG KHOS PLWLJDWH
.HOORJJDQG6KLQQUHSRUWWKDWDERXWKXPDQ FOLPDWH FKDQJH DOVR VHH WKH FRPPHQWDU\ RI /HX LQ
LQIHFWLRXV GLVHDVHFDUU\LQJ RUJDQLVPV VXFK DV
DQWKUD[ DQG WXEHUFXORVLV DUH HDVLO\ WUDQVSRUWHG E\
WKHZLQGLQVRLOSDUWLFOHV
6RLO HURVLRQ DOVR FRQWULEXWHV WR JOREDO ZDUPLQJ
WKLVFKDSWHU
,Q$IULFDWKHSURMHFWHGULVHLQUDLQIDOODVVRFLDWHGZLWK
JOREDOFOLPDWHFKDQJHFRXOGKHOSLPSURYHFURS\LHOGV
WR VRPH H[WHQW EXW LW ZLOO QRW HQWLUHO\ VROYH $IULFD·V
EHFDXVH FDUERQ GLR[LGH &2 LV DGGHG WR WKH IRRGVKRUWDJHVJLYHQWKHUDSLGUDWHRILQFUHDVHRILWV
DWPRVSKHUHZKHQHQRUPRXVDPRXQWVRIELRPDVVDUH SRSXODWLRQ:DWHUVKRUWDJHVDUHSURMHFWHGWRSHUVLVW
H[SRVHG DQG R[LGL]HG 3KLOOLSV DQG +HOPHF]L  DQGSHVWVDUHH[SHFWHGWRFRQWLQXHWRUHVXOWLQVHULRXV
/DO  :DOVK DQG 5RZH  2QH KHFWDUH RI FURSORVVHV3LPHQWHO7KHVHIDFWRUVDVZHOODV
VRLOPD\FRQWDLQDERXWWRQVRIRUJDQLFPDWWHURU VHULRXV HFRQRPLF DQG SROLWLFDO SUREOHPV LPSO\ WKDW
ELRPDVV ZKLFK LI HURGHG ZRXOG FRQWULEXWH DERXW IRRGSURGXFWLRQLQ$IULFDLVOLNHO\WRUHPDLQVORZ
 75$'($1'(19,5210(175(9,(:

1//'06#4;U 
 1/2'6+6+10(14#6'4(14)4+%7.674'
6*417)*FNINIG
%UHQW%RHKOHUW,QGXVWULDO(FRQRPLFV,QFDQG
.HQQHWK6WU]HSHN0DVVDFKXVHWWV,QVWLWXWHRI7HFKQRORJ\

$EVWUDFW
2ZLQJWRULVLQJSRSXODWLRQVLQFUHDVLQJSHUFDSLWDZDWHUXVHHQYLURQPHQWDOÁRZUHTXLUHPHQWVDQGFOLPDWH
FKDQJHRXUUHVXOWVVXJJHVWWKDWE\WKHUHZLOOEHVLJQLÀFDQWWKUHDWVWRZDWHUDYDLODELOLW\IRUDJULFXOWXUH
LQPDQ\UHJLRQVRIWKHZRUOG,IULVLQJDJULFXOWXUDOGHPDQGVDQGWKHIXOOVSHFWUXPRIFOLPDWHFKDQJHHIIHFWV
DUHWDNHQLQWRDFFRXQWWKUHDWVWRZDWHUDYDLODELOLW\ZLOOEHFRQVLGHUDEO\PRUHSURQRXQFHG,WLVWKHUHIRUH
OLNHO\WKDWXQOHVVEURDGFKDQJHVDUHPDGHWRWKHZD\HQYLURQPHQWDODQGZDWHUUHVRXUFHVDUHJRYHUQHG
FRQÁLFWVRYHUZDWHUIRUDJULFXOWXUHZLOOLQFUHDVHPDUNHGO\E\WKHPLGGOHRIWKHWZHQW\ÀUVWFHQWXU\&KDQJHV
LQJRYHUQDQFHPD\LQFOXGHUHIRUPLQJWKHSROLFLHVDQGLQVWLWXWLRQVWKDWPDQDJHDQGDOORFDWHZDWHULPSURYLQJ
DFFHVVWRZDWHULQWKHSRRUHVWUHJLRQVRIWKHZRUOGHQKDQFLQJHFRV\VWHPVHUYLFHVUHFRJQL]LQJZDWHUDV
DQHFRQRPLFJRRGLQRUGHUWRSURPRWHHIÀFLHQF\RIXVHLPSURYLQJUDLQIHGDQGLUULJDWLRQLQIUDVWUXFWXUHWR
LQFUHDVH´FURSSHUGURSµDQGPDNLQJDJULFXOWXUHPRUHUHVLOLHQWWRFKDQJHVLQFOLPDWH,QWKHOLJKWRIWKHVH
WKUHDWVWRZDWHUIRUDJULFXOWXUHDQGWKHUHIRUHWRJOREDOIRRGDYDLODELOLW\LWLVLPSRUWDQW²DQGXUJHQW²WKDW
ZDWHUSODQQLQJHIIRUWVEHFRRUGLQDWHGDQGLQWHJUDWHGDFURVVVHFWRUVSDUWLFXODUO\LQWKHPRVWYXOQHUDEOH
UHJLRQV

*OREDOO\NPRIZDWHUDUHZLWKGUDZQHDFK\HDU )LJXUH7RWDOSURMHFWHGPXQLFLSDOZDWHUXVHLQ2(&'
WR LUULJDWH FURSV UHSUHVHQWLQJ RYHU WZR WKLUGV RI DOO YHUVXVQRQ2(&'FRXQWULHV²
ZLWKGUDZDOV E\ SHRSOH $V ZDWHU VFDUFLW\ LQWHQVLÀHV
DQGPDQ\RIWKHZRUOG·VULYHUEDVLQVDSSURDFKFORVXUH
600 -
LHDOOZDWHUVXSSOLHVKDYHEHHQSXWWRXVHIRUDWOHDVW
500 - non-OECD
SDUWRIWKH\HDUZDWHULVLQFUHDVLQJO\WUDQVIHUUHGRXW
RI DJULFXOWXUH WR SURYLGH IRU RWKHU GHPDQGV VXFK 400 -
Billion m3

DV HQHUJ\ JHQHUDWLRQ RU JURZLQJ XUEDQ SRSXODWLRQV 300 -

*LYHQ WKDW DW FXUUHQW SRSXODWLRQ OHYHOV WKH IRRG 200 - OECD
V\VWHP LV DOUHDG\ ZDWHUVWUHVVHG DQG JOREDO ZDWHU
100 -
UHVRXUFHV DUH XQGHU FRQVLGHUDEOH SUHVVXUH WKLV
0-
ZLOO RQO\ LQWHQVLI\ DV SRSXODWLRQV LQFUHDVH IXUWKHU
2000 -

2010 -

2020 -

2030 -

2040 -

2050 -

$GGLWLRQDOO\DQGSHUKDSVHYHQPRUHSUREOHPDWLFDOO\
ULVLQJ LQFRPHV LQ GHYHORSLQJ FRXQWULHV DUH FDXVLQJ
GLHWV WR VKLIW WR PRUH ZDWHULQWHQVLYH DJULFXOWXUDO
SURGXFWVWKDWUHTXLUHJUHDWHUOHYHOVRIZDWHUVHUYLFH
IRUH[DPSOHIURPFRPPXQLW\VWDQGSLSHVWRSOXPELQJ
V\VWHPV7RJHWKHUWKHVHVKLIWVDUHUDSLGO\LQFUHDVLQJ
SHU FDSLWD ZDWHU GHPDQG LQ GHYHORSLQJ FRXQWULHV
)LJXUHSUHVHQWVWKHVHSURMHFWHGZDWHUXVHWUHQGV
IRU 2(&' DQG QRQ2(&' FRXQWULHV WKURXJK 
,PSRUWDQWO\ ZDWHU XVH LV SURMHFWHG WR PRUH WKDQ
GRXEOH LQ WKH PXQLFLSDO VHFWRU ZLWKLQ QRQ2(&'
6RXUFH+XJKHV&KLQRZVN\DQG6WU]HSHN
1RWH6TXDUHVZLWKVROLGOLQHVQRQ2(&'
GLDPRQGVZLWKVROLGOLQHV2(&'
6LPXOWDQHRXVO\ WR PHHW KLJKHU IRRG GHPDQGV IRU
JURZLQJ SRSXODWLRQV DJULFXOWXUH LV H[SDQGLQJ WR
QHZ UHJLRQV DQG EHFRPLQJ PRUH SURGXFWLYH ZKLFK
UDSLGO\ LQFUHDVHV WKH GHPDQG IRU ZDWHU $V D UHVXOW
JURXQGZDWHU VXSSOLHV RQ ZKLFK PXFK RI DJULFXOWXUH
UHOLHV DUH GHFOLQLQJ JOREDOO\ .RQLNRZ DQG .HQG\
FRXQWULHV ZKHUH DJULFXOWXUH WHQGV WR EH WKH PRVW  $W WKH VDPH WLPH HQHUJ\ FRQVXPSWLRQ DQG
YXOQHUDEOHWRFOLPDWHFKDQJH RWKHU LQGXVWULDO DFWLYLWLHV LQ PDQ\ FRXQWULHV DUH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

FRQWLQXLQJ WR LQFUHDVH FDXVLQJ LQGXVWULDO ZDWHU ZLOODIIHFWWKHDPRXQWRIZDWHUDYDLODEOHIRUDJULFXOWXUH

FRQVXPSWLRQWRULVH3HUKDSVPRVWLPSRUWDQWO\²DQG ZH PRGHO WKH SRVVLEOH LPSOLFDWLRQV IRU DJULFXOWXUDO
PRVW RYHUORRNHG ² HQYLURQPHQWDO ÁRZ UHTXLUHPHQWV ZDWHUDYDLODELOLW\WKURXJKXQGHUFOLPDWHFKDQJH
()5V DUH LQFUHDVLQJO\ EHLQJ UHFRJQL]HG DV D 6SHFLÀFDOO\ IRU D QXPEHU RI JHRSROLWLFDO UHJLRQV
FUXFLDO HOHPHQW RI D IXQFWLRQLQJ ULSDULDQ HFRV\VWHP FRXQWULHVDQGXQGHUWKUHHFOLPDWHFKDQJHVFHQDULRV
DQG DFFRUGLQJO\ DUH SURJUHVVLYHO\ EHLQJ LQVWDWHG ZH HVWLPDWH WKH IUDFWLRQ RI FXUUHQW DJULFXOWXUDO
DV SDUW RI HQYLURQPHQWDO PDQDJHPHQW )DONHQPDUN ZLWKGUDZDOVWKDWZRXOGEHWKUHDWHQHGDVVXPLQJWKDW
DQG5RFNVWU|P6PDNKWLQ$V()5VDUH ()5V DQG LQFUHDVHG PXQLFLSDO DQG LQGXVWULDO 0 ,
HVWDEOLVKHG UHPDLQLQJ ZDWHU IRU DJULFXOWXUH ZLOO EH GHPDQGV FDXVH WRWDO EDVLQ ZLWKGUDZDOV WR H[FHHG
IXUWKHUGLPLQLVKHG,QDGGLWLRQWRWKHJURZLQJGHPDQG PHDQDQQXDOUXQRII0$5LQWKHEDVLQ
RQ ZDWHU UHVRXUFHV FOLPDWH FKDQJH ZLOO VLJQLÀFDQWO\
:HFRQVLGHUDWRWDORIWKUHHFOLPDWHFKDQJHDQGWKUHH
DIIHFWWKHWLPLQJGLVWULEXWLRQDQGPDJQLWXGHRIZDWHU
GHPDQGVFHQDULRV2QWKHGHPDQGVLGHZHFRQVLGHU
DYDLODELOLW\ $UQHOO  0LOO\ 'XQQH DQG 9HFFKLD
WKHHIIHFWVRI0 ,GHPDQGVDORQH()5VDORQH
 ,3&&  :KHUH VKLIWV LQ ZDWHU DYDLODELOLW\
DQG  0 , DQG ()5 GHPDQGV WRJHWKHU 0 ,
UHGXFH UHJLRQDO ZDWHU VXSSOLHV DJULFXOWXUH ZLOO EH
GHPDQGSURMHFWLRQVWRDUHWDNHQIURP:RUOG%DQN
IXUWKHUWKUHDWHQHG
SURMHFWLRQVIRUFRXQWULHV+XJKHV&KLQRZVN\DQG
,Q WKLV SDSHU ZH FRQVLGHU WKH IUDFWLRQ RI FXUUHQW 6WU]HSHN()5VDUHDVVXPHGWREHWKHEDVLQ
ZLWKGUDZDOV IURP VXUIDFH ZDWHU V\VWHPV IRU ÁRZV QHFHVVDU\ WR PDLQWDLQ ULSDULDQ HFRV\VWHPV LQ
DJULFXOWXUHWKDWPD\EHWKUHDWHQHGGXHWRLQFUHDVLQJ ´IDLUµ FRQGLWLRQ IRU GHWDLOV VHH 6PDNKWLQ 5HYHQJD
ZDWHU GHPDQGV LQ RWKHU VHFWRUV OLPLWV LPSRVHG RQ DQG'|OO)RUWKHFOLPDWHFKDQJHDQDO\VLVZH
ZLWKGUDZDOV WR PHHW ()5V DQG D UDQJH RI SRWHQWLDO HYDOXDWHDEDVHOLQHLHQRFOLPDWHFKDQJHVFHQDULR
FOLPDWHFKDQJHHIIHFWV:HFRPPHQWRQWKHUHODWLYH DQGWZRFOLPDWHFKDQJHVFHQDULRVEDVHGRQWKHUDQJH
LPSRUWDQFHRIHDFKFRPSHWLQJSUHVVXUHDQGLGHQWLI\ RI DYDLODEOH JHQHUDO FLUFXODWLRQ PRGHOV *&0V :H
JHRJUDSKLF ´KRWVSRWVµ ZKHUH ZDWHU IRU DJULFXOWXUH IROORZWKH:RUOG%DQN·V(FRQRPLFVRI$GDSWDWLRQWR
FRXOGEHVXEVWDQWLDOO\UHGXFHG &OLPDWH&KDQJH($&&DQDO\VLV:RUOG%DQN
DQGPRGHOWKHFOLPDWHFKDQJHVFHQDULRVXQGHUWKH$
65(6HPLVVLRQVVFHQDULRVHH,3&&XVLQJWKH
$0HWKRGVPRGHOOHGWKUHDWVWRZDWHU JOREDO FOLPDWH PRGHOV *&0V RI WKH 8QLWHG 6WDWHV·
IRUDJULFXOWXUH 1DWLRQDO &HQWHU IRU $WPRVSKHULF 5HVHDUFK 1&$5
&RQVLGHULQJWKHGHPDQGDQGVXSSO\VLGHIDFWRUVWKDW DQG RI WKH &RPPRQZHDOWK 6FLHQWLÀF DQG ,QGXVWULDO

)LJXUH:DWHUZLWKGUDZDOVIRUDJULFXOWXUHDVDSHUFHQWDJHRIPHDQDQQXDOUXQRII0$5LQ

6RXUFH$XWKRUV·FDOFXODWLRQV
 75$'($1'(19,5210(175(9,(:

5HVHDUFK2UJDQLVDWLRQRI$XVWUDOLDZKLFKWKH:RUOG IRU  HFRQRPLF UHJLRQV RI WKH ZRUOG ZH LQWHUVHFW
%DQNFRQVLGHUVWRUHSUHVHQWJHQHUDOO\ZHWWHUDQGGULHU WKH  ULYHU EDVLQV ZLWK WKHVH HFRQRPLF UHJLRQV WR
FOLPDWH PRGHOV UHVSHFWLYHO\ ,Q WRWDO ZH FRQVLGHU IRUPIRRGSURGXFWLRQXQLWV)38VVHH6WU]HSHN
QLQHVFHQDULRVHDFKZLWKDGLIIHUHQWFOLPDWHGHPDQG DQG 0F&OXVNH\  DQG 5RVHJUDQW HW DO D
FRPELQDWLRQDQGWKHQFRPSDUHHDFKWRWKH\HDU DQG E ZKLFK IRUP WKH JHRJUDSKLF XQLW RI RXU
EDVHOLQH DQDO\VLV )RU HDFK )38 RXU EDVHOLQH GDWD LQFOXGH
7R PRGHO FKDQJHV LQ 0$5 ZH XVH WKH &/,581 ,, FXUUHQW0$5YDOXHVDJULFXOWXUDOZLWKGUDZDOVDQG
K\GURORJLF PRGHO 6WU]HSHN HW DO IRUWKFRPLQJ 0 ,ZLWKGUDZDOV,QURXJKO\SHUFHQWRI
ZKLFKLVWKHODWHVWPRGHOLQWKH´.DF]PDUHNVFKRROµ ZRUOGZLGH0$5ZDVZLWKGUDZQIRUDJULFXOWXUHDQG
RI K\GURORJLF PRGHOV <DWHV  GHYHORSHG SHUFHQWZDVZLWKGUDZQIRU0 ,XVHÀJXUH
VSHFLÀFDOO\ IRU DQDO\VLQJ WKH LPSDFW RI FOLPDWH
FKDQJH RQ UXQRII DQG H[WUHPH HYHQWV RQ DQ DQQXDO
%)LQGLQJVWKUHDWVWRZDWHU
EDVLV &/,581 ,, PRGHOV UXQRII LQ  ZRUOG ULYHU
IRUDJULFXOWXUH
EDVLQV ZLWK FOLPDWH LQSXWV DQG VRLO FKDUDFWHULVWLFV
DYHUDJHG RYHU HDFK ULYHU EDVLQ %HFDXVH GDWD RQ :HÀQGWKDW()5VDQGLQFUHDVHG0 ,ZDWHUGHPDQGV
 DJULFXOWXUDO DQG 0 , ZLWKGUDZDOV DUH DYDLODEOH WRJHWKHU ZLOO FDXVH DQ  SHU FHQW UHGXFWLRQ LQ WKH

7DEOH3HUFHQWDJHRIDJULFXOWXUDOZDWHUWKUHDWHQHGLQWKHJHRSROLWLFDOUHJLRQVQLQHVFHQDULRVD

1&$5ZHW
1RFOLPDWHFKDQJH &6,52GU\FOLPDWHFKDQJH
FOLPDWHFKDQJH
$JULFXOWXUDO
0 , 0 ,
ZLWKGUDZDOV 0 ,
5HJLRQFRXQWU\ 0 ,  0 ,  0 ,
 ()5V ()5V ()5V DQG
 DQG  DQG 
ELOOLRQP    ()5V
 ()5V  ()5V 

 
:RUOG          
(XURSH          
(XURSHDQ8QLRQ          
1RUWK:HVWHUQ
(XURSH          
8QLWHG.LQJGRP          
)RUPHU6RYLHW8QLRQ          
$IULFD          
6XE6DKDUDQ$IULFD          
1LOH5LYHU%DVLQ          
1RUWK$PHULFD          
$VLD          
&KLQD          
,QGLD          
/DWLQ$PHULFDDQG
WKH&DULEEHDQ          
%UD]LO          
2FHDQLD          
1RWHD$JULFXOWXUDOZDWHUDYDLODELOLW\LQ1RUWK$PHULFDLQFUHDVHVE\SHUFHQWXQGHUWKH0 ,VFHQDULRV
7KLVRFFXUVEHFDXVH0 ,DQGDJULFXOWXUDOZLWKGUDZDOVLQ1RUWK$PHULFDH[FHHG0$5LQWKH
&RORUDGRDQG5LR*UDQGHEDVLQVEXW0 ,GHFOLQHVLQ$VDUHVXOWDGGLWLRQDOZDWHULVPDGH
DYDLODEOHWRWKHVHFRQVWUDLQHGEDVLQV
()5VHQYLURQPHQWDOÁRZUHTXLUHPHQWV
0 ,PXQLFLSDODQGLQGXVWULDOGHPDQG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
DYDLODELOLW\ RI ZRUOGZLGH ZDWHU IRU DJULFXOWXUH E\
 0HHWLQJ ()5V ZKLFK FDQ QHFHVVLWDWH PRUH
WKDQ  SHU FHQW RI WKH PHDQ DQQXDO UXQRII LQ D
EDVLQ GHSHQGLQJ RQ LWV K\GURJUDSK SUHVHQWV WKH
VLQJOH ELJJHVW WKUHDW WR WKH DYDLODELOLW\ RI ZDWHU IRU
DJULFXOWXUH 1H[W DUH LQFUHDVHV LQ 0 , GHPDQGV
ZKLFK DUH SURMHFWHG WR JURZ XSZDUGV RI  SHU
FHQW E\  LQ GHYHORSLQJ FRXQWULHV ZLWK UDSLGO\
LQFUHDVLQJ SRSXODWLRQV DQG LQFRPHV 7KH FRPELQHG
HIIHFWRIWKHVHKLJKHUGHPDQGVFRXOGEHGUDPDWLFLQ
VHYHUDOKRWVSRWVZKLFKLQFOXGHQRUWKHUQ$IULFD&KLQD
,QGLDSDUWVRI(XURSHWKHZHVWHUQ8QLWHG6WDWHVDQG
HDVWHUQ$XVWUDOLDDPRQJRWKHUV7KHVHDUHDVWHQGWR
EHDOUHDG\ZDWHUVWUHVVHGGXHWRORZZDWHUVXSSOLHV
FXUUHQW ODUJHVFDOH DJULFXOWXUDO RU 0 , GHPDQGV RU
ERWK
7DEOHGLVSOD\VWKHIUDFWLRQRIDJULFXOWXUDOZDWHU
ZLWKGUDZDOVWKDWPD\EHWKUHDWHQHGE\LQFUHDVLQJ0 ,
GHPDQGV DQG ()5V XQGHU WKH WZR FOLPDWH FKDQJH
VFHQDULRV 8QGHU WKH QR FOLPDWH FKDQJH VFHQDULR
RXUPRGHOVLQGLFDWHWKDWLQFUHDVHVLQ0 ,GHPDQGV
()5V DQG FRPELQHG 0 , GHPDQGV DQG ()5V ZLOO
UHTXLUH  SHU FHQW  SHU FHQW DQG  SHU FHQW
UHVSHFWLYHO\ RI ZRUOGZLGH DJULFXOWXUDO ZDWHU LQ 
%\YROXPHDJULFXOWXUDOZDWHULQ$VLDDFFRXQWVIRURYHU
WZRWKLUGVRIWKHJOREDOWRWDORIWKUHDWHQHGDJULFXOWXUDO

ZDWHU E\ YROXPH 0RGHOOLQJ UHVXOWV LQGLFDWH WKDW
LQFUHDVHV LQ ()5V DQG 0 , GHPDQG WRJHWKHU ZLOO
WKUHDWHQ QHDUO\  SHU FHQW RI DJULFXOWXUDO ZDWHU LQ
FRXQWULHV RI WKH (XURSHDQ 8QLRQ DQG WKH IRUPHU
6RYLHW8QLRQ,QVXE6DKDUDQ$IULFDUDSLGO\ULVLQJ0 ,
GHPDQGVDOVRWKUHDWHQZDWHUIRUDJULFXOWXUH
&OLPDWH FKDQJH ZLOO DIIHFW WKH VSDWLDO DQG WHPSRUDO
GLVWULEXWLRQ RI UXQRII DQG WKXV FKDQJH DYDLODELOLW\
IURPWKHVXSSO\VLGH%DVHGRQZHWDQGGU\FOLPDWH
VFHQDULRVZHÀQGWKDWZDWHUDYDLODELOLW\IRUDJULFXOWXUH
ZLOOLQFUHDVHLQ1RUWK$PHULFDDQG$VLDDQGGHFUHDVH
LQ $IULFD DQG /DWLQ $PHULFD DQG WKH &DULEEHDQ ,Q
(XURSHZDWHUDYDLODELOLW\ZLOOLQFUHDVHXQGHUWKHZHW
PRGHO DQG GHFUHDVH XQGHU WKH GU\ PRGHO 2YHUDOO
WKHVH UHVXOWV VXJJHVW WKDW E\  DOWKRXJK WKH
HIIHFWV RI FOLPDWH FKDQJH RQ DQQXDO DJULFXOWXUDO
ZDWHU DYDLODELOLW\ ZLOO EH VLJQLÀFDQW WKH HIIHFWV RI
JURZLQJ0 ,GHPDQGVDQG()5VPD\EHHYHQPRUH
SURQRXQFHG ,PSRUWDQWO\ WKHVH FOLPDWH FKDQJH
UHVXOWV FRQVLGHU FKDQJHV LQ 0$5 RQO\ DQG WKXV GR
QRW DFFRXQW IRU SRWHQWLDO FKDQJHV LQ VHDVRQDO ZDWHU
DYDLODELOLW\ LQFUHDVHV LQ FURS ZDWHU GHPDQG FDXVHG
E\ KLJKHU WHPSHUDWXUHV FKDQJHV LQ WKH IUHTXHQF\
DQGVHYHULW\RIH[WUHPHHYHQWVFKDQJHVLQ\LHOGIURP
VWRUDJH UHVHUYRLUV DQG D YDULHW\ RI RWKHU LPSRUWDQW
FOLPDWHFKDQJHHIIHFWV
 75$'($1'(19,5210(175(9,(:

1//'06#4; U  *' /2#%61()4+(11&722.;*#+0510

4''0*175'#5 /+55+105U*'#5'1(#
1((''#.7'*#+0$'69''0#0<#0+##0&
'4/#0;
(.UDLQ./LQQHDQG0*DHEOHU
*,=*HUPDQ\

$EVWUDFW
$JULFXOWXUHLVDPDMRUVRXUFHRIJUHHQKRXVHJDV*+*HPLVVLRQVDQGWKXVFRQWULEXWHVVLJQLÀFDQWO\WR
FOLPDWHFKDQJH$WWKHVDPHWLPHLWKDVKXJHSRWHQWLDOWRUHGXFHHPLVVLRQVDQGFRXOGHYHQFRQWULEXWHWR
FDSWXULQJVHTXHVWHULQJFDUERQGLR[LGH&2IURPWKHDWPRVSKHUHWKURXJKWKHFXOWLYDWLRQRIWUHHFURSV
,WLVGLIÀFXOWWRDVVHVVZKHUHWRPDNHHIIHFWLYHFKDQJHVZLWKRXWNQRZLQJIDFWVRQHPLVVLRQVRXUFHVDQG
TXDQWLWLHV²\RXFDQRQO\PDQDJHZKDW\RXFDQPHDVXUH7KHUHIRUHPHWKRGVWRHVWLPDWHVHTXHVWUDWLRQ
DQG HPLVVLRQV DUH FXUUHQWO\ EHLQJ GHYHORSHG DQG WKHLU UHVXOWV LQGLFDWHG LQ ´SURGXFW FDUERQ IRRWSULQWVµ
LH*+*HPLVVLRQVSHUXQLWRISURGXFW:KLOHPHWKRGVYDU\ZLGHO\WKH\VHHPWRFRQYHUJHDURXQGWKH
HPHUJLQJ,62VWDQGDUG
7KHUHDUHRQO\DIHZSUDFWLFDOH[DPSOHVRIFDUERQIRRWSULQWHVWLPDWHVDORQJHQWLUHDJULIRRGFKDLQVEXW
WKH\ VHUYH DV YDOXDEOH FDVH VWXGLHV IURP ZKLFK WR GUDZ VRPH FRQFOXVLRQV )LUVWO\ &2 VHTXHVWUDWLRQ
HVWLPDWLRQV KDYH JHQHUDOO\ EHHQ H[FOXGHG IURP WKH HTXDWLRQ ZKLFK GLVFULPLQDWHV DJDLQVW WUHH FURS
DJULFXOWXUDO SURGXFWLRQ V\VWHPV 6HFRQGO\ HPLVVLRQV IURP SULPDU\ SURGXFWLRQ KDYH XVXDOO\ EHHQ ZHOO
UHÁHFWHG 7KLUGO\ UHVXOWV IURP SURFHVVLQJ DQG WUDQVSRUW KDYH WHQGHG WR EH VPDOOHU WKDQ ZDV DVVXPHG
SULRUWRWKHDQDO\VHV)LQDOO\*+*HPLVVLRQVLQFRQQHFWLRQZLWKIRRGSUHSDUDWLRQHVSHFLDOO\IRUOLIHVW\OH
DQGFRQYHQLHQFHIRRGVWHQGWREHPXFKKLJKHUWKDQZDVDVVXPHGEHIRUHWKHVWXGLHVZHUHXQGHUWDNHQ
&XUUHQW*+*DFFRXQWLQJV\VWHPVGLIIHUFRQVLGHUDEO\LQLPSRUWDQWDVSHFWVVXFKDVLQWHUPVRIZKHWKHU
WKH\LQFOXGHRURPLWVHTXHVWUDWLRQ,IDSSURSULDWHPLWLJDWLRQVWUDWHJLHVDUHWREHGHYHORSHGKDUPRQL]HG
PHWKRGV DUH QHHGHG WKDW VKRXOG PRUH DFFXUDWHO\ SRUWUD\ WKH RYHUDOO SLFWXUH DQG DSDUW IURP WKH PDLQ
VRXUFHVRIHPLVVLRQVDOVRUHSRUWDGHTXDWHO\RQVHTXHVWUDWLRQ

$,QWURGXFWLRQ
7KH TXHVWLRQ RI KRZ WR FRSH ZLWK FOLPDWH FKDQJH
DQG UHGXFH *+* HPLVVLRQV LV FXUUHQWO\ KLJK RQ WKH
LQWHUQDWLRQDODJHQGD6LQFHDJULFXOWXUHLVFRQVLGHUHG
RQHRIWKHNH\VHFWRUVFRQWULEXWLQJWRVXFKHPLVVLRQV
LWLVQHFHVVDU\WRFRQVLGHUZD\VDQGPHDQVE\ZKLFK
DJULFXOWXUDO SUDFWLFHV FRXOG ORZHU HPLVVLRQV RU HYHQ
RI SHUHQQLDOV LH WUHH FURSV 7KHVH SODQWV VWRUH D
ODUJH SURSRUWLRQ RI WKH FDSWXUHG &2 DV FDUERQ LQ
WKHLU VWDQGLQJ DQG URRW ELRPDVV DQG HYHQ LQ WKHLU
OHDYHV DQG IUXLW EXW WKH ODWWHU DUH XVXDOO\ TXLFNO\
FRQVXPHGRUGLVSRVHGRIWKHUHE\UHWXUQLQJWKH&2
WR WKH DWPRVSKHUH +RZHYHU WKH RYHUDOO EDODQFH RI
&2VWRUHGLQELRPDVVDQGRYHUVHYHUDO\HDUVPD\
EHTXLWHVXEVWDQWLDODQGZRUWKFRQVLGHULQJLQWHUPVRI
FDSWXUH WKHP HJ WKURXJK VHTXHVWUDWLRQ /RZHULQJ
HPLVVLRQVLVSRVVLEOHE\UHGXFLQJYDULRXVDJULFXOWXUDO
LQSXWVZKLOHPDLQWDLQLQJRXWSXWDWWKHVDPHOHYHO7KLV
LVJHQHUDOO\XQGHUVWRRGDVLQFUHDVLQJWKHHIÀFLHQF\RI
DSURFHVV$VHFRQGLQWHUYHQWLRQLVWRUHPRYH*+*V
IURPWKHDWPRVSKHUHE\IRUH[DPSOH´VHTXHVWUDWLRQµ
ZKLFKFDSWXUHV&2LQELRPDVVIURPWKHDWPRVSKHUH
7KLV LV DQ RSWLRQ SDUWLFXODUO\ VXLWHG WR WKH FXOWLYDWLRQ
FOLPDWHFKDQJHPLWLJDWLRQ
7KHJHQHULF*+*IRRWSULQWRIDWUHHFURS
YDOXHFKDLQ
:KHQORRNLQJJHQHULFDOO\DWDWUHHFURSEDVHGYDOXH
FKDLQ ² IURP LQSXW VXSSO\ WR SULPDU\ SURGXFWLRQ
WUDQVSRUW SURFHVVLQJ WUDGH UHWDLO DQG FRQVXPSWLRQ
² WKHUH DUH PDQ\ VWDJHV LQYROYLQJ *+* HPLVVLRQV
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

)LJXUH2YHUYLHZRI&2VHTXHVWUDWLRQDQG*+*HPLVVLRQVLQDFURSEDVHGYDOXHFKDLQ

6RXUFH$GDSWHGIURP.UDLQHWDO

XVXDOO\ FDOFXODWHG LQ &2 HTXLYDOHQWV ² &2H DQG ‡ )LQDOO\ HPLVVLRQV UHVXOWLQJ IURP HQHUJ\
RQHORFDWLRQZKHUHVHTXHVWUDWLRQWDNHVSODFHÀJXUH FRQVXPSWLRQLQIRRGSUHSDUDWLRQDWWKHKRXVHKROG
 OHYHO
7KH OLJKW SDUWV RI WKH IRRWSULQWV LQ WKH DERYH ÀJXUH ,QRUGHUWREHDEOHWRGHFLGHZKHUHWRUHGXFHHPLVVLRQV
GHQRWH WKDW &2 LV VHTXHVWHUHG ZKLOH WKH UHGGDUN ZLWKLQDYDOXHFKDLQLWLVQHFHVVDU\WRGHWHUPLQHKRZ
SDUWV UHSUHVHQW HPLVVLRQV 7KH VL]H RI WKH IRRWSULQW
LQGLFDWHV WKH YROXPH RI HPLWWHG RU FDSWXUHG &2H
XVXDOO\H[SUHVVHGLQWRQVRI&2HSHURXWSXWXQLW,Q
WKHDERYHH[DPSOHLWLVDVVXPHGWKDWPRUH&2HLV
FDSWXUHGWKDQHPLWWHGGXULQJWKHSULPDU\SURGXFWLRQ
SURFHVV ZKHUHDV KLJK DPRXQWV RI HPLVVLRQV RFFXU
ZKHQ WKH SURGXFW LV SUHSDUHG IRU FRQVXPSWLRQ
DQG FRQVXPHG ,Q EHWZHHQ WKHUH DUH HPLVVLRQV
FRQQHFWHGZLWKWKHRWKHUVWDJHVRIWKHYDOXHFKDLQ
,QWKHIROORZLQJWKHYDULRXVVWDJHVIURPLQSXWVXSSO\
WRFRQVXPSWLRQDUHGLVFXVVHGEULHÁ\
0DLQHPLVVLRQKRWVSRWV QRQH RI WKH VWDQGDUGV DUH SURGXFWVSHFLÀF DQG ZLOO
‡ /DQGXVH FKDQJH HVSHFLDOO\ ZKHQ SULPDU\ IRUHVW
PXFK*+*LVEHLQJHPLWWHGRUVHTXHVWHUHGDWHDFK
VWDJH RI WKH YDOXH FKDLQ DV D EDVLV IRU LGHQWLI\LQJ
WKH KRWVSRWV ² \RX FDQ RQO\ PDQDJH ZKDW \RX FDQ
PHDVXUH )RU WKLV FXUUHQWO\ WKHUH DUH PRUH WKDQ 
LQLWLDWLYHV ZRUNLQJ RQ YDULRXV IRRWSULQWLQJ PHWKRGV
DQGVWDQGDUGVVXFKDV,62WKH*UHHQKRXVH
*DV 3URWRFRO 3URGXFW $FFRXQWLQJ DQG 5HSRUWLQJ
6WDQGDUGDQG3$6+RZHYHUVRIDUWKHUHLVQR
VLQJOH FRPPRQ FDOFXODWLRQ PHWKRG DOWKRXJK WKHUH
VHHPVWREHFRQYHUJHQFHDURXQGWKHHPHUJLQJ,62
VWDQGDUGZKLFKDSSHDUHGDVGUDIWLQ%XW
VWLOOQHHGWREHEURNHQGRZQWRVHFWRUSURGXFWJURXS
LVFRQYHUWHGLQWRODQGIRUDQQXDOFURSSURGXFWLRQ VSHFLÀFUXOHV$QRWKHUPDMRUWDVNVWLOOWREHWDFNOHGLV
‡ $SSOLFDWLRQ RI DJURFKHPLFDOV HVSHFLDOO\ QLWURJHQ WRGHYHORSDPHWKRGWKDWUHÁHFWVWKHDFWXDOVLWXDWLRQ
IHUWLOL]HU SURGXFHG WKURXJK DQ LQWHQVLYH HQHUJ\ RQ WKH IDUP VXIÀFLHQWO\ DFFXUDWHO\ ZKLOH UHPDLQLQJ
FRQVXPLQJ LQGXVWULDO SURFHVV DQG QLWURJHQ ÀHOG UHDVRQDEOHZLWKUHVSHFWWRHIIRUWVDQGFRVWV
HPLVVLRQVLQWKHIRUPRIQLWURXVR[LGH
‡ )RVVLO IXHO DQG HQHUJ\FRQVXPLQJ SURFHVVHV %6RPHH[SHULHQFHVZLWKFDUERQ
GXULQJ ODQG SUHSDUDWLRQ FURS PDLQWHQDQFH IRRWSULQWLQJLQDJULFXOWXUDO
KDUYHVWLQJDQGFRQVHUYLQJRIKDUYHVWV
YDOXHFKDLQV
‡ (PLVVLRQVIURPZDVWHZDWHUPHWKDQH
‡ )RVVLOIXHODQGHQHUJ\FRQVXPLQJSURFHVVHVVXFK 6R IDU IRU DJULFXOWXUH WKHUH DUH RQO\ YHU\ IHZ FDVHV
DV LQGXVWULDO SURFHVVLQJ DQG LQWHUQDO GRPHVWLF SXEOLVKHGWKDWVSDQDQHQWLUHYDOXHFKDLQ2QHVXFK
DQGWUDQVQDWLRQDOWUDQVSRUWDWLRQ H[DPSOHLVH[DPLQHGEHORZLQPRUHGHWDLO
 75$'($1'(19,5210(175(9,(:

)LJXUH&DUERQIRRWSULQWDORQJWKHYDOXHFKDLQIRURQHEUHZHGFXSRI7FKLER5DULW\0DFKDUH3ULYDWH&RIIHH

6RXUFH$GDSWHGIURP7FKLER*PE+3&)3LORW3URMHFW*HUPDQ\

8QGHU WKH 3URGXFW &DUERQ )RRWSULQW 3&) SURMHFW
*HUPDQ\ YDULRXV FRPPRGLWLHV ZHUH H[DPLQHG ZLWK
UHVSHFWWRWKHLU*+*HPLVVLRQVRQHRIWKHPEHLQJD
UDULW\FRIIHHIURP0DFKDUHIDUPLQWKH8QLWHG5HSXEOLF
RI 7DQ]DQLD 7KH DVVHVVPHQWV ZHUH EDVHG RQ ,62
 DQG 3$6  D SLRQHHULQJ PHWKRG
WKH ÀJXUHV IRU HPLVVLRQV GXULQJ SULPDU\ SURGXFWLRQ
ZRXOGKDYHEHHQVLJQLÀFDQWO\ORZHU)RUH[DPSOHWKH
HPLVVLRQ EDODQFH IRU WKH .HQ\DQ %DUDJZL )DUPHUV·
&RRSHUDWLYH6RFLHW\LQÀJXUHVKRZVWKDWWRWDO*+*
HPLVVLRQVDWSURGXFWLRQVWDJHZHUHHYHQQHJDWLYH
7KH LGHQWLÀFDWLRQ RI FRQVXPSWLRQ DV D KRWVSRW
GHYHORSHGE\WKH%ULWLVK6WDQGDUGV,QVWLWXWLRQ%6,WR
DVVHVV*+*HPLVVLRQVLQWKHOLIHF\FOHVRIJRRGVDQG
VHUYLFHV
$OOHPLVVLRQVPHDVXUHGLQÀJXUHZHUHFDOFXODWHG
ZLWKUHIHUHQFHWRRQHEUHZHGFXSRIFRIIHHFRQWDLQLQJ
 PO RI ZDWHU DQG  J RI FRIIHH ,W VKRZV WKDW WKH
PDMRU HPLVVLRQV RFFXU GXULQJ SULPDU\ SURGXFWLRQ
DSDUW IURP SULPDU\ SURGXFWLRQ EHFRPHV HYHQ
PRUHLQWHUHVWLQJZKHQORRNLQJDWWKHYDULRXVZD\VRI
SUHSDULQJFRIIHH
&RIIHHLVXVXDOO\SUHSDUHGIRUFRQVXPSWLRQLQGLIIHUHQW
ZD\V DQG WKHVH FDQ KDYH YHU\ GLIIHUHQW FDUERQ
IRRWSULQWVDVÀJXUHVKRZV7KHVWXG\DVVXPHGD
 SHU FHQW IROORZHG E\ FRQVXPSWLRQ  PL[RISUHSDUDWLRQPHWKRGVZLWKDQDYHUDJHRI
SHUFHQW6XUSULVLQJO\HPLVVLRQVIURPURDVWLQJ JRI&2HSHUFXS7KHQRUPDOÀOWHUGULSPHWKRGKDV
SHUFHQWDQGHYHQIURPLQWHUQDWLRQDOWUDQVSRUW D IRRWSULQW RI RQO\  J RI &2 ZKLOH D PRGHUQ
SHU FHQW ZHUH UDWKHU ORZ 7KH VWXG\ PHQWLRQV WKDW
0DFKDUHIDUPLVDQROGFRIIHHIDUPDQGWKDWFKDQJHV
LQODQGXVHZHUHQRWFRQVLGHUHG1RUPDOO\HPLVVLRQV
IURPODQGXVHFKDQJHVDUHWDNHQLQWRDFFRXQWLIWKH\
KDYH WDNHQ SODFH ZLWKLQ WKH ODVW  \HDUV LH DIWHU
DXWRPDWLF FRIIHH PDFKLQH ² ZKLFK QHHGV D ORW RI
HQHUJ\WRSUHVVWKHZDWHUYDSRXUWKURXJKWKHFRIIHH
SRZGHU ² HPLWV DQ HQRUPRXV TXDQWLW\ RI  J
RI &2H ,I DOO WKH 0DFKDUH FRIIHH ZRXOG KDYH EHHQ
SUHSDUHG XVLQJ RQO\ DXWRPDWLF FRIIHH PDFKLQHV
 0RVW RI WKH HPLVVLRQV ZHUH UHODWHG WR WKH WKLV ZRXOG KDYH FKDQJHG WKH WRWDO FDUERQ IRRWSULQW
DSSOLFDWLRQRIDJURFKHPLFDOV+RZHYHURQHLPSRUWDQW RIWKHYDOXHFKDLQWRJRI&2H²
IDFWRU QDPHO\ WKH VHTXHVWUDWLRQ RI &2 WKURXJK WKH   ZLWK WKH FRIIHH PDFKLQH DFFRXQWLQJ IRU
FRIIHHSODQWVVKDGHWUHHVRURWKHUWUHHVLQWKHFRIIHH FORVH WR  SHU FHQW RI DOO *+* HPLVVLRQV RI WKH
ÀHOGZDVRPLWWHG,IWKDWKDGEHHQWDNHQLQWRDFFRXQW YDOXHFKDLQ/RRNLQJEH\RQGWKHVHÀJXUHVLWPXVWEH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
)LJXUH&DUERQIRRWSULQWLQSUHSDULQJDFXSRIFRIIHH
Carbon footprint in the use phase
Mix of preparation methods 17.90
Automatic coffee machine
Filter drip 10.04
French press 10.04
0 10 20
6RXUFH$GDSWHGIURP7FKLER*PE+3&)3LORW3URMHFW*HUPDQ\
UHFRJQL]HGWKDWEHFDXVHWKHVHHPLVVLRQVDULVHIURP
HQHUJ\ FRQVXPSWLRQ WKH DVVXPHG HOHFWULFLW\ PL[ LV
DQRWKHULPSRUWDQWIDFWRULQWKHFDOFXODWLRQV,IFDUERQ
QHXWUDO HOHFWULFLW\ ZHUH WR EH XVHG LW ZRXOG UHGXFH
RU HYHQ QHXWUDOL]H WKH FDUERQ HPLVVLRQV IURP VXFK
SURFHVVHV
7KLVGHPRQVWUDWHVYHU\LPSUHVVLYHO\KRZRXUPRGHUQ
OLIHVW\OH KDV EHFRPH D SULPDU\ VRXUFH RI *+*
HPLVVLRQV ,W VKRZV WKDW FKDQJHV DUH QHHGHG QRW

60.27
30 40 50 60 70
g CO2 e / cup of coffee
DJULFXOWXUDO WUHH FURSV" 7KHUH DUH YHU\ GLIIHUHQW
VLWXDWLRQVDQGWKXVGDWDYDU\DORW$PDQJRWUHHFDQ
EHJURZQZLWKDKXJHFDQRS\²DVLVRIWHQWKHFDVHLQ
VPDOOKROGHUIDUPV²DQGFDQWKHUHIRUHEHYHU\VLPLODU
WR D IRUHVW WUHH RU LW FDQ EH NHSW VKRUW DQG SUXQHG
DV LQ LQWHQVLYH RUFKDUG V\VWHPV )ROORZLQJ D UHYLHZ
RI D QXPEHU RI UHSRUWV D JHQHUDO FRQFOXVLRQ LV WKDW
WKHDPRXQWRI&2FDSWXUHGLQELRPDVVLVURXJKO\LQ
WKH RUGHU RI D IDFWRU RI  IURP DQQXDO FURSV ²
RQO\LQSULPDU\SURGXFWLRQEXWDOVRLQFRQVXPSWLRQ WRQVRI&2KDWRRUFKDUGWUHHV²WRQVRI&2
,W DOVR VKRZV ZKHUH ZH DV FRQVXPHUV FDQ PDNH D
GLIIHUHQFHGRZHUHDOO\QHHGWRGULQNFRIIHHSUHSDUHG
E\ DQ DXWRPDWLF FRIIHH PDFKLQH" $QG FDQ LQYHQWLYH
FRPSDQLHVQRWSURGXFHFRIIHHPDFKLQHVWKDWUHTXLUH
IDUOHVVHQHUJ\"$WWKHVDPHWLPHJRYHUQPHQWVDQG
SROLF\PDNHUV FRXOG GLUHFW WKH HQHUJ\ VHFWRU LQWR
SURYLGLQJPRUHFDUERQQHXWUDOHOHFWULFLW\7KHSRLQWLV
WKDW WKH IDFWV QHHG WR EH HVWDEOLVKHG VR WKDW EHWWHU
DOWHUQDWLYHV FDQ EH LGHQWLÀHG DQG HIIHFWLYH FKDQJHV
KDDQGIRUHVWV²WRQVRI&2KD7KXVLIWUHH
FURSVLQWKHH[LVWLQJIDUPLQJV\VWHPVZHUHLQFUHDVHG
DV PXFK DV SRVVLEOH RYHU PLOOLRQV RI KHFWDUHV WKLV
ZRXOGVXUHO\FRQVLGHUDEO\LQFUHDVHELRPDVVDQGWKXV
VHTXHVWHUHG&2 DFFXPXODWLRQ7KH)$2([$FWWRRO
IRUDVVHVVLQJ&2HHPLVVLRQVDORQJWKHOLIHF\FOHRI
D FRPPRGLW\ WDNHV DFFRXQW RI VHTXHVWHUHG FDUERQ
E\WUHHVDQGKDVEHHQHPSOR\HGVXFFHVVIXOO\E\*,=
LQFDVKHZWUHHFURSV\VWHPVLQ%XUNLQD)DVR7LQORW
PDGH
&5HGXFLQJWKHFDUERQIRRWSULQWE\
LQFUHDVLQJWUHHFURSELRPDVVDQG
FKDQJLQJFURSSLQJV\VWHPV
,W LV XQIRUWXQDWH WKDW PRVW RI WKH FDUERQ IRRWSULQW
DVVHVVPHQW PHWKRGV RPLW RU GR QRW FRQVLGHU
ELRPDVV FUHDWLRQ DQG WKXV VHTXHVWUDWLRQ WKURXJK
WUHH FURS V\VWHPV 7KH XQGHUO\LQJ DUJXPHQW JRHV
 /DQGXVH SODQQLQJ DQG DJULFXOWXUDO VWUDWHJLHV
VKRXOGPDNHXVHRIVXFKDWRRODVLWKHOSVGHWHUPLQH
WKHULJKWVWUDWHJLHVDQGLQFHQWLYHV
,W VKRXOG DOVR EH QRWHG WKDW RQFH D WUHH GLHV DQG
GHFD\V WKLV GRHV QRW DXWRPDWLFDOO\ PHDQ WKDW DOO
WKHFDUERQJRHVEDFNLQWRWKHDWPRVSKHUH7KHVRLO
XVXDOO\KDUERXUVVLJQLÀFDQWDPRXQWVRIFDUERQDQG
DSDUW IURP HPLWWLQJ *+* LW LV DOVR DEOH WR ELQG DQG
VWRUH FDUERQ )URP RXU RZQ H[SHULHQFH LQ .HQ\D
WKDW RQ WKH RQH KDQG WKH DPRXQW RI WUHHV LQ VXFK
V\VWHPVLVXVXDOO\VPDOODQGWKDWRQWKHRWKHUKDQG
WKH\ZLOOVRRQHURUODWHUEHFXWDQGUHWXUQWKHLUVWRUHG
*+*WRWKHDWPRVSKHUH
)LUVW RI DOO KRZ PXFK &2 FDQ EH FDSWXUHG LQ
.UDLQHWDOVRLOVZLWKDGHSWKRIFP²FP
FRQWDLQDURXQGWRQVRI&2KD²RIWHQXSWR 
WLPHVPRUHWKDQWKHWUHHELRPDVV7KXVIDUPLQJDQG
FURSSLQJV\VWHPVDVZHOODVWKHLUZD\VDQGPHWKRGV
RIFXOWLYDWLRQGLIIHUZLGHO\ZLWKUHVSHFWWRWKHLUDELOLW\
WR VHTXHVWHU DQG VWRUH RU HPLW &2 )RU H[DPSOH
 75$'($1'(19,5210(175(9,(:

)LJXUH2QIDUPHPLVVLRQVE\FDWHJRU\RIIDUPVLQ%DUDJZL.HQ\DNJRI&2HSHUNJRIFRIIHHFKHUU\

1.5 -

1.0 -
Carbon
0.5 - stock Total
change emissions
0-
Fertilizer Fertilizer Pesticides Crop
Kg. of CO2-e

-0.5 - production induced residue

emissions management
-1.0 -

-1.5 -

-2.0 - Weighted average

Average
-2.5 -

-3.0 -

6RXUFH/LQQHHWDO

V\VWHPVLQYROYLQJ]HURRUPLQLPXPWLOODJHHPLWPXFK YROXPHZDVNJRI&2HNJRIFRIIHHFKHUULHV
OHVV&2WKDQSORXJKLQJE\WUDFWRURUKRH (PLVVLRQV IURP IHUWLOL]HU SURGXFWLRQ DQG LQGXFHG
HPLVVLRQVIURPIHUWLOL]HUXVHDORQJZLWKFURSUHVLGXH
$UHFHQWVWXG\5LN[RRUWFRQGXFWHGZLWKLQWKH
PDQDJHPHQW ZHUH WKH SULPDU\ HPLVVLRQ VRXUFHV
IUDPHZRUNRID*,=SXEOLFSULYDWHSDUWQHUVKLSSURMHFW
² HPLVVLRQ KRWVSRWV &DUERQ VHTXHVWUDWLRQ IURP
RQ &OLPDWH &KDQJH $GDSWDWLRQ DQG 0LWLJDWLRQ
DERYH JURXQG ELRPDVV DQG PDQDJHPHQW SUDFWLFHV
VKRZHG WKDW D FRIIHH FXOWLYDWLRQ V\VWHP DGKHULQJ
VXFK DV LQFRUSRUDWLRQ RI UHVLGXHV FRPSRVW DQG
WR D VXVWDLQDELOLW\ VWDQGDUG VXFK DV WKH 6XVWDLQDEOH
PDQXUH DFFRXQWHG IRU WKH PRVW VLJQLÀFDQW FDUERQ
$JULFXOWXUH 1HWZRUN 6$1 VWDQGDUG HPLWV OHVV
&2H WKDQ RQH WKDW XVHV FRQYHQWLRQDO PHWKRGV
,Q DQRWKHU VWXG\ ZLWKLQ WKLV IUDPHZRUN FRQGXFWHG
WKURXJK WKH GHYHORSPHQW SDUWQHUVKLS EHWZHHQ *,=
DQG 6DQJDQD &RPPRGLWLHV /WG LQ .HQ\D  FRIIHH
IDUPVDW%DUDJZL)DUPHUV·&RRSHUDWLYH6RFLHW\ZHUH
VDPSOHG LQ 'HFHPEHU  WR GHWHUPLQH HPLVVLRQV
DQGVHTXHVWHUHGDPRXQWVRI&2HZLWKWKHKHOSRIWKH
VWRFNFKDQJHVLQWKHV\VWHPZKLFKODUJHO\RIIVHWWKH
HPLVVLRQV
'&RQFOXVLRQV
&XUUHQW*+*DFFRXQWLQJV\VWHPVGLIIHUFRQVLGHUDEO\
LQLPSRUWDQWDVSHFWVVXFKDVLQWHUPVRIZKHWKHUWKH\
LQFOXGHRURPLWVHTXHVWUDWLRQ,IDSSURSULDWHPLWLJDWLRQ
&RRO)DUP7RRO/LQQHHWDO,WIRXQGWKDWRQ VWUDWHJLHVDUHWREHGHYHORSHGKDUPRQL]HGPHWKRGV
IDUPQHWHPLVVLRQVZHUHRQDYHUDJHNJRI&2H DUH QHHGHG WKDW VKRXOG PRUH DFFXUDWHO\ SRUWUD\ WKH
SHU NJ RI FRIIHH FKHUULHV ÀJXUH  7KH ZHLJKWHG RYHUDOO SLFWXUH DQG DSDUW IURP WKH PDLQ VRXUFHV RI
DYHUDJH DFFRUGLQJ WR HDFK IDUP·V SURGXFWLRQ HPLVVLRQVDOVRUHSRUWDGHTXDWHO\RQVHTXHVWUDWLRQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U 
11&#56''&7%6+10U.1$#. /2'4#6+8'
-XOLDQ3DUÀWW3ULQFLSDO5HVRXUFH$QDO\VW2DNGHQH+ROOLQV$\OHVEXU\8QLWHG.LQJGRPDQG
0DUN%DUWKHO6SHFLDO$GYLVRU:DVWHDQG5HVRXUFHV$FWLRQ3URJUDPPH%DQEXU\8QLWHG.LQJGRP

$EVWUDFW
‡ )RRGZDVWHLVDQLVVXHRILPSRUWDQFHWRJOREDOIRRGVHFXULW\DQGJRRGHQYLURQPHQWDOJRYHUQDQFH
<HWWKHUHLVLQVXIÀFLHQWUHOLDEOHGDWDIURPZKLFKWRHVWLPDWHWKHSURSRUWLRQRIJOREDOIRRGSURGXFWLRQ
WKDWLVZDVWHG
‡ $YRLGDEOH ORVVHV DUH UHJDUGHG DV JOREDOO\ VLJQLÀFDQW DQG WKHUHIRUH FRQVWLWXWH D PDMRU VRFLDO DQG
HQYLURQPHQWDOEXUGHQ+RZHYHUOHVVWKDQSHUFHQWRIDOOIXQGLQJIRUDJULFXOWXUDOUHVHDUFKLVDOORFDWHG
WRSRVWKDUYHVWV\VWHPV.DGHU
7KHUHDUHWKUHHSDUWLFXODUUHDVRQVZK\WKLVLVVXHQHHGVWREHDGGUHVVHGZLWKXUJHQF\
‡ 6RPHHVWLPDWHVVXJJHVWWKDWZDVWHFRXOGDFFRXQWIRUEHWZHHQDWKLUG)$2HDQGRQHKDOI
/XQGTYLVWGH)UDLWXUHDQG0ROGHQRIDOOFXUUHQWIRRGSURGXFWLRQ5HGXFWLRQRISRVWKDUYHVW
ZDVWH LQ GHYHORSLQJ FRXQWULHV DQG FRQVXPHU ZDVWH LQ KLJKLQFRPH FRXQWULHV DSSHDU WR RIIHU WKH
JUHDWHVWSRWHQWLDOVRFLDODQGHQYLURQPHQWDOJDLQV
‡ 7KHDEVROXWHTXDQWLW\RIIRRGZDVWHDOWKRXJKODUJHO\XQTXDQWLÀHGZLOOLQHYLWDEO\JURZRYHUWKHFRPLQJ
GHFDGHV DV SURGXFWLRQ LQFUHDVHV WR PHHW IXWXUH GHPDQG DQG DV LQFRPHV ULVH DPRQJVW JURZLQJ
SRSXODWLRQVLQQHZPHJDFLWLHVQRWDEO\LQWKH%5,&FRXQWULHVLH%UD]LOWKH5XVVLDQ)HGHUDWLRQ,QGLD
DQG&KLQDDQGDVGLHWVEHFRPHPRUHGLYHUVLÀHGDZD\IURPVWDUFK\VWDSOHIRRGVWRZDUGVIUHVKIUXLW
DQGYHJHWDEOHVGDLU\PHDWDQGÀVK
‡ 5HGXFWLRQRIIRRGZDVWHZRXOGFRQWULEXWHWRZLGHUSROLF\DJHQGDVWKDWDUHFULWLFDOWRWKHIXWXUHQDPHO\
LQFUHDVLQJSURGXFWLRQUHGXFLQJIRRGLQVHFXULW\DQGIRRGSULFHLQFUHDVHVLPSURYLQJVXVWDLQDELOLW\RI
WKHJOREDOIRRGVXSSO\FKDLQ)6&UHGXFLQJSUHVVXUHVRQODQGXVHDQGIUHVKZDWHUUHVRXUFHVDQG
UHGXFLQJJUHHQKRXVHJDVHV

$UHFHQWUHYLHZRIJOREDOIRRGZDVWHDQGSRWHQWLDOIRU &XUUHQWO\  SHU FHQW RI JOREDO JUDLQ LV IHG WR FDWWOH
ZDVWHUHGXFWLRQFDUULHGRXWE\WKHDXWKRUVRIWKLVDUWLFOH 81(3
IRUWKH*RYHUQPHQWRIWKH8QLWHG.LQJGRP·V)RUHVLJKW
7KHWHUP´SRVWKDUYHVWORVVµLVRIWHQXVHGWRGHVFULEH
3URJUDPPH7KH)XWXUHRI)RRGDQG)DUPLQJ)RUHVLJKW
ORVVHV EHWZHHQ KDUYHVW DQG WKH RQZDUG VXSSO\ RI
D SURYLGHV DQ RYHUYLHZ RI WKH FKDOOHQJHV DQG
SRVVLEOHVROXWLRQVIRUGHYHORSLQJFRXQWULHV
$:KDWFRXQWVDVIRRGZDVWH"
'LIIHUHQWZD\VRIGHÀQLQJIRRGZDVWHUHÁHFWGLIIHUHQW
UHVHDUFK REMHFWLYHV )URP D KXPDQ IRRG VXSSO\
SHUVSHFWLYH LW FDQ EH GHÀQHG DV HGLEOH PDWHULDO
LQWHQGHG IRU KXPDQ FRQVXPSWLRQ WKDW LV GLVFDUGHG
ORVW GHJUDGHG RU FRQVXPHG E\ SHVWV IURP KDUYHVW
SURGXFHWRPDUNHWVDQGHTXDWHVEURDGO\ZLWKZDVWH
LQ WKH )6& 7KH ODWWHU WHUP LV JHQHUDOO\ DSSOLHG WR
SRVWKDUYHVW SURFHVVLQJ GLVWULEXWLRQ DQG UHWDLOLQJ LQ
KLJKLQFRPHFRXQWULHVDQGLQFUHDVLQJO\LQHPHUJLQJ
HFRQRPLHV7KH)6&WKHUHIRUHHQFRPSDVVHVDZLGH
UDQJH RI DFWLYLWLHV WKDW LQFOXGH SURFHVVLQJ VWRUDJH
WUDQVSRUW DQG GLVWULEXWLRQ PDQXIDFWXULQJ ZKROHVDOH
DQG UHWDLO )XUWKHU XSVWUHDP WKHUH DUH IDFWRUV DW WKH
LQLWLDO ´SUHKDUYHVWµ VWDJHV WKDW DOVR FRQWULEXWH WR
WR FRQVXPHU )$2  )URP D JOREDO UHVRXUFH ORVVHV )RU H[DPSOH WKH FDSWXUH DQG GLVFDUGLQJ RI
HIÀFLHQF\ SHUVSHFWLYH WKH GHÀQLWLRQ PLJKW EH ÀVK VWRFNV EHIRUH WKH\ DUH ODQGHG XVXDOO\ UHVXOWLQJ
H[WHQGHGWR LQFOXGH IRRG ÀW IRU KXPDQ FRQVXPSWLRQ LQ WKHLU GHPLVH 6XFK ÀVK E\FDWFK UHSUHVHQWV D
EXW LQWHQWLRQDOO\ XVHG DV DQLPDO IHHG 6WXDUW  VLJQLÀFDQWSURSRUWLRQRIÀVKFDXJKWLQJOREDOÀVKHULHV
 75$'($1'(19,5210(175(9,(:

)$2  7KH SDUDOOHO VLWXDWLRQ LQ DJULFXOWXUDO QDWXUH DUH KLJKHU WKDQ WKRVH RI FHUHDOV DQG YDU\
V\VWHPV LQYROYHV ORVVHV WKDW RFFXU ZKHQ FURSV DUH FRQVLGHUDEO\E\UHJLRQDQGE\FRPPRGLW\W\SH'DWD
QRW KDUYHVWHG EXW DUH SORXJKHG EDFN LQWR WKH VRLO DYDLODEOH IURP ORZLQFRPH FRXQWULHV IRU D OLPLWHG
6XFKIURQWHQGORVVHVDUHE\WKHLUYHU\QDWXUHGLIÀFXOW UDQJHRIIUHVKIUXLWDQGYHJHWDEOHVVXJJHVWORVVHVRI
WRPHDVXUHDFFXUDWHO\
/RVVHV DW WKH FRQVXPHU VWDJH LQYROYH D FRPSOH[LW\
RI KXPDQ DFWLYLWLHV DQG SURFHVVHV DQG HQFRPSDVV
RYHUSHUFHQW)$2H$OWKRXJKLWKDVEHHQ
VXJJHVWHG WKDW SRVWKDUYHVW ORVVHV DUH VRPHWLPHV
RYHUHVWLPDWHG 3DUÀWW %DUWKHO DQG 0DFQDXJKWRQ
 WKLV SDUWO\ UHODWHV WR WKH GLIÀFXOW\ RI GHULYLQJ
IRRG ZDVWHG LQ WKH KRPH DV D UHVXOW RI SXUFKDVLQJ
´W\SLFDOµ ORVV HVWLPDWHV IRU D FURS DQG UHJLRQ ZKHQ
EHKDYLRXU IRRG VWRUDJH PHDO SODQQLQJ DQG
WKHOLPLWHGGDWDIURPÀHOGPHDVXUHPHQWVPD\UHODWHWR
SUHSDUDWLRQ RYHUSRUWLRQLQJ DQG QRW XVLQJ OHIWRYHUV
VSHFLÀFORFDOUHVHDUFKREMHFWLYHVDQGH[WUHPHYDOXHV
DQG RXW RI KRPH ZLWKLQ WKH IRRG KRVSLWDOLW\ VHFWRU
PD\ PLVWDNHQO\ EH H[WUDSRODWHG WR HVWLPDWH ORVVHV
VXFKDVSODWHVFUDSLQJVDQGNLWFKHQZDVWH
IURPDQHQWLUHFRXQWU\RUUHJLRQ7\OHU+RGJHV
7KH EHVW HQYLURQPHQWDO DQG VRFLRHFRQRPLF
RXWFRPHVFRQFHUQLQJIRRGZDVWHOLHLQLWVSUHYHQWLRQ
EXWIDLOLQJWKDWRSWLRQVIRUUHFRYHULQJYDOXHIURPIRRG
ZDVWH QHHG WR EH FRQVLGHUHG 7KHVH RSWLRQV PD\
LQFOXGHVXSSO\RIIHHGVWRFNWRORZHUJUDGHPDUNHWVIRU
KXPDQFRQVXPSWLRQRUGLYHUVLRQLQWRDQLPDOIHHGRU
LQWRQXWULHQWDQGHQHUJ\UHFRYHU\RSWLRQVDQDHURELF
%X]E\ DQG %HQQHWW  ([WHQGHG IRRG VXSSO\
FKDLQV LQ GHYHORSLQJ FRXQWULHV WKDW SURYLGH IRRG IRU
JURZLQJXUEDQSRSXODWLRQVDUHOLNHO\WRLQYROYHPDQ\
LQWHUPHGLDULHV EHWZHHQ JURZHUV DQG FRQVXPHUV
ZKLFK PD\ OLPLW WKH SRWHQWLDO IRU JURZHUV WR UHFHLYH
KLJKHUSULFHVIRUTXDOLW\SURGXFHRUHYHQWRXQGHUVWDQG
ZKDWVRUWVRISURGXFHWKHPDUNHWUHTXLUHV7KHODFNRI
GLJHVWLRQ DQG FRPSRVWLQJ 7KHVH URXWHV DUH VWLOO
FRQVLGHUHG ´IRRG ZDVWHµ DV WKH UHVXOWLQJ EHQHÀWV
DUHVPDOOFRPSDUHGZLWKWKHYDOXHRIWKHRULJLQDOIRRG
SURGXFWDQGWKHHQYLURQPHQWDOVDYLQJVDUHJHQHUDOO\
PRGHVW YLVjYLV WKH FXPXODWLYH HQYLURQPHQWDO
LPSDFWV DVVRFLDWHG ZLWK WKH DJULFXOWXUDO DQG )6&
VWDJHVRIWKHIRRGSURGXFWOLIHF\FOHV
SULFHGLIIHUHQWLDOVDQGDJUHHGTXDOLW\FULWHULDEHWZHHQ
GLIIHUHQW SOD\HUV LQ WKH PDUNHW UHGXFHV WKH LQFHQWLYH
IRUVPDOOSURGXFHUVWRJUDGHSURGXFHRUWRLQYHVWLQ
VXLWDEOHVWRUDJHLQIUDVWUXFWXUHDQGWUDQVLWSDFNDJLQJ
,QWHUYHQWLRQV ZLWKLQ WKHVH V\VWHPV WHQG WR IRFXV
RQ LPSURYLQJ WHFKQLFDO FDSDFLW\ WR UHGXFH ORVVHV
LQFUHDVH HIÀFLHQF\ DQG UHGXFH WKH ODERXU LQWHQVLW\
RI WKH WHFKQRORJLHV WKDW DUH XVHG )RUHVLJKW F
+RGJHV %X]E\ DQG %HQQHWW  $WWHPSWV WR
%3RVWKDUYHVWORVVHVLQWKHIRRG UHGXFHSRVWKDUYHVWORVVHVQHHGWRWDNHLQWRDFFRXQW
VXSSO\FKDLQ FXOWXUDO DQG ÀQDQFLDO LPSOLFDWLRQV RI DQ\ LQQRYDWLRQV
,QPDQ\GHYHORSLQJFRXQWULHVDJULFXOWXUHUHPDLQVWKH LQ SRVWKDUYHVW WHFKQRORJLHV ,Q \HDUV ZLWK IRRG
GRPLQDQWHFRQRPLFVHFWRU)$2F\HWPRVWRI
WKH UXUDO SRRU UHO\ RQ VKRUW IRRG VXSSO\ FKDLQV ZLWK
OLPLWHG SRVWKDUYHVW LQIUDVWUXFWXUH DQG WHFKQRORJLHV
ZKLFK FRQWULEXWH WR VXEVWDQWLDO SRVWKDUYHVW ORVVHV
&HUHDOV WKH PRVW VWXGLHG IRRG FRPPRGLW\ JURXS LQ
UHODWLRQ WR SRVWKDUYHVW ORVVHV 3DUÀWW %DUWKHO DQG
VXUSOXVHV WKH SULFHV UHFHLYHG IRU JRRGV WHQG WR EH
ORZ2QHRSWLRQWKHUHIRUHLVWRVWRUHJUDLQVXUSOXVHV
IRU OHDQ \HDUV EXW VXLWDEOH VWRUDJH IDFLOLWLHV PD\ EH
ODFNLQJ RU H[SHQVLYH ,QYHVWPHQW DQG HQJLQHHULQJ
VNLOOV DUH QHHGHG WR SURYLGH VROXWLRQV ,QGHHG WKHUH
DUHPDQ\H[DPSOHVRIUHODWLYHO\VLPSOHWHFKQRORJLHV
0DFQDXJKWRQ  W\SLFDOO\ LQFXU  SHU FHQW ZKLFKFDQSURYLGHHIIHFWLYHVROXWLRQVDQGGUDPDWLFDOO\
ORVVHV EHWZHHQ SRVWKDUYHVW DQG SURFHVVLQJ VWDJHV UHGXFHORVVHV8QLWHG1DWLRQV
LQ GHYHORSLQJ FRXQWULHV 7KH FRPSDUDEOH GDWD IRU /RRNLQJ WR WKH IXWXUH WKH SUHGLFWHG LQFUHDVH LQ WKH
LQGXVWULDOL]HGFRXQWULHVVXJJHVWVLPLODUSURSRUWLRQDWH JOREDOXUEDQSRSXODWLRQIURPSHUFHQWLQWKHSDVW
ORVVHV EXW WKHVH DUH DVVRFLDWHG ZLWK WKH FRQVXPHU IHZ \HDUV WR  SHU FHQW LQ  ZKLFK LV H[SHFWHG
VWDJH )$2 H 3RVWKDUYHVW ORVVHV UHVXOW IURP WR EH FRQFHQWUDWHG LQ ORZLQFRPH DQG HPHUJLQJ
VSLOODJH SRRU VHSDUDWLRQ DQG GU\LQJ FRQWDPLQDWLRQ HFRQRPLHV LV OLNHO\ WR OHDG WR DQ H[WHQVLRQ RI
DQGFRQVXPSWLRQE\URGHQWVDQGLQVHFWVDQGIXQJDO )6&V DQG FRQVHTXHQWO\ LQFUHDVH SRVWKDUYHVW IRRG
DQGEDFWHULDOGLVHDVHV$WDPRUHIXQGDPHQWDOOHYHO ORVVHVVLJQLÀFDQWO\8QLWHG1DWLRQV+RZHYHU
SRRUFKRLFHRIFURSLQUHODWLRQWRFOLPDWLFFRQGLWLRQV LQIUDVWUXFWXUDO LPSURYHPHQWV SDUWLFXODUO\ GU\ DQG
DQG LQDGHTXDWH LQSXWV LQ DJULFXOWXUH DUH RIWHQ FROGVWRUDJH IDFLOLWLHV SDFN KRXVHV URDGV SRUWV
XQGHUO\LQJ IDFWRUV FRQWULEXWLQJ WR ORVV )RUHVLJKW WHOHFRPPXQLFDWLRQV DQG SRZHU VXSSOLHV KDYH WKH
E7KHORVVHVRISHULVKDEOHFURSVE\WKHLUYHU\ SRWHQWLDO WR FRXQWHUDFW VXFK GHYHORSPHQWV ,Q VRPH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

%5,& FRXQWULHV SXEOLF VHFWRU LQYHVWPHQW LV EHLQJ FRXQWULHV )RU LQVWDQFH WKH FRPELQHG HIIHFWV RI
FRQVLGHUHGIRUDFFHOHUDWLQJWKLVSURFHVV)RUH[DPSOH FRQWUDFWXDO SHQDOWLHV IRU QRQGHOLYHU\ RI RUGHU
LQ,QGLDWKH*RYHUQPHQWLVGLVFXVVLQJDQ´HYHUJUHHQ YROXPHVUHVLGXDOVKHOIOLIHSURGXFWWDNHEDFNFODXVHV
UHYROXWLRQµZKLFKZLOOLQYROYHWKHGHYHORSPHQWRIIRRG DQGSRRUGHPDQGIRUHFDVWLQJZHUHHVWLPDWHGWRGULYH
SURFHVVLQJXQLWV)RUHVLJKWF XSRYHUSURGXFWLRQDQGKLJKHUOHYHOVRIZDVWDJHE\
&(PHUJLQJHFRQRPLHVDQGKLJK
LQFRPHFRXQWULHV
,Q HPHUJLQJ HFRQRPLHV DQG KLJKLQFRPH FRXQWULHV
)6&VLQYROYHFORVHUOLQNVEHWZHHQJURZHUVVXSSOLHUV
SURFHVVRUVGLVWULEXWLRQV\VWHPVDQGPDUNHWVWKHUHE\
HQVXULQJJUHDWHUHFRQRPLHVRIVFDOHFRPSHWLWLYHQHVV
DQG HIÀFLHQF\ 'HYHORSPHQW RI PRUH LQGXVWULDOL]HG
SHUFHQWLQWKH8QLWHG.LQJGRP)6&'HIUD
')RRGZDVWHE\FRQVXPHUVLQORZ
LQFRPHFRXQWULHV
7RGDWHWKHUHDUHOLWWOHSXEOLVKHGUREXVWGDWDRQWKH
VFDOHRIFRQVXPHUIRRGZDVWHLQORZLQFRPHFRXQWULHV
DQG HPHUJLQJ HFRQRPLHV +RZHYHU D FRQFOXVLRQ
IURP D UHFHQW ZRUNVKRS RQ JOREDO IRRG ZDVWH
)6&VFRXOGDOVRIRVWHUJURZWKLQWKHIRRGSURFHVVLQJ
VHFWRU,QPHGLXPDQGKLJKLQFRPHFRXQWULHVLWKDV
RIWHQ EHHQ DUJXHG WKDW WKH FHQWUDOL]HG SURFHVVLQJ
RI IRRG OHDGV WR EHWWHU UHVRXUFH HIÀFLHQF\ DQG OHVV
ZDVWH RYHUDOO +RZHYHU UHVHDUFK RQ FRQVXPHU IRRG
SUHYHQWLRQ )RUHVLJKW F ZDV WKDW RYHUDOO WKH
VFDOHRIFRQVXPHUZDVWHDSSHDUVWREHORZHULQWKHVH
FRXQWULHV EXW LQ VRPH RI WKH HPHUJLQJ HFRQRPLHV
SDUWLFXODUO\ %UD]LO DQG XUEDQ &KLQD LW VHHPV WR EH
DSSURDFKLQJ WKDW RI WKH 2(&' FRXQWULHV ,Q PXFK
ZDVWHVXJJHVWVWKDWWKLVLVQRWWKHFDVH:5$3
FRQVXPHUV ZDVWH VLJQLÀFDQW TXDQWLWLHV RI IRRG
WKXV SRWHQWLDOO\ QHJDWLQJ WKH EHQHÀWV RI FHQWUDOL]HG
IRRG SURFHVVLQJ )XUWKHU ORVVHV DUH DVVRFLDWHG ZLWK
FRVPHWLFTXDOLW\VWDQGDUGVDSSOLHGE\UHWDLOHUVWRIUHVK
IUXLWDQGYHJHWDEOHVZKLFKFDQUHGXFHWKHYROXPHRI
PDUNHWDEOHDQGHGLEOHIRRGUHDFKLQJFRQVXPHUV7KLV
WUHQG LV LQFUHDVLQJO\ EHLQJ FRXQWHUEDODQFHG E\ WKH
JURZLQJ LQÁXHQFH RI UHWDLOHUV DQG PDQXIDFWXUHUV LQ
DJULFXOWXUDO GHYHORSPHQW JURXSV FURS VXVWDLQDELOLW\
JURXSV DQG VXVWDLQDEOH DJULFXOWXUH LQLWLDWLYHV DOO RI
ZKLFK DUH EULQJLQJ DERXW LPSURYHPHQWV LQ JURZLQJ
SUDFWLFHV DQG IXUWKHU UHGXFWLRQV LQ SRVWKDUYHVW
ORVVHV
,Q HPHUJLQJ HFRQRPLHV VXSHUPDUNHWV DUH WKH
PDLQ YHKLFOH IRU SURYLGLQJ GLYHUVLÀHG GLHWV IRU WKH
H[SDQGLQJ PLGGOH FODVVHV DQG WKH XUEDQ SRRU
7KHVH GHYHORSPHQWV DUH DOPRVW HQWLUHO\ GHSHQGHQW
RQ IRUHLJQ GLUHFW LQYHVWPHQW DQG VKRZ KLJK JURZWK
UDWHV LQ (DVWHUQ (XURSH SDUWV RI $VLD DQG /DWLQ
SRRUHU FRPPXQLWLHV WKHUH LV W\SLFDOO\ D ZLGHU UDQJH
RI RXWOHWV IRU GLVFDUGHG IRRG DQG WKHVH FXOWXUHV
FRPPRQO\DUUDQJHIRUWKHPRVWKXQJU\DQGGHVWLWXWH
SHRSOHWRREWDLQOHIWRYHUIRRGVFUDSV7KHQHWORVVWR
KXPDQ FRQVXPSWLRQ FDQ WKHUHIRUH EH ORZHU DOEHLW
ZLWKKLJKHUVDIHW\ULVNVSDUWLFXODUO\LIWKHZDWHUXVHG
IRUIRRGSUHSDUDWLRQLVLQVDQLWDU\
(&RQFOXVLRQVORZLQFRPHFRXQWULHV
VKRZWKHJUHDWHVWSRWHQWLDOIRUIRRG
ZDVWHUHGXFWLRQ
$VLJQLÀFDQWUHGXFWLRQLQJOREDOIRRGZDVWHLVDQLP
SRUWDQW VWHS WRZDUGV VHFXULQJ IRRG IRU WKH JURZLQJ
JOREDOSRSXODWLRQZKLFKLVHVWLPDWHGWRH[FHHGQLQH
ELOOLRQ SHRSOH E\  7KH SRWHQWLDO WR PHHW WKH
UHVXOWLQJLQFUHDVHLQGHPDQGFDQQRWEHPHWWKURXJK
IXUWKHU SURGXFWLYLW\ JDLQV DORQH RU E\ H[WHQGLQJ WKH
DUHDRIODQGIRUDJULFXOWXUDOSURGXFWLRQ,WLVWKHUHIRUH
HVVHQWLDOWRREWDLQPRUHIURPJOREDOIRRGSURGXFWLRQ
E\ZDVWLQJOHVV7KLVZLOOUHTXLUHDFWLRQRQPDQ\IURQWV
$PHULFD 5HDUGRQ 7LPPHU DQG %HUGHJXp 
DFURVVKLJKLQFRPHDQGORZHULQFRPHFRXQWULHVDOLNH
7KH QDWXUH DQG SDFH RI WKHVH GHYHORSPHQWV DUH
LQÁXHQFHG E\ WKH H[WHQW WR ZKLFK UHWDLOHUV E\SDVV
H[LVWLQJPDUNHWVDQGWUDGLWLRQDOZKROHVDOHUVWRVHFXUH
SURGXFHRIWKHUHTXLUHGVWDQGDUGDQGYROXPH0DQ\
RIWKHIDFWRUVWKDWPD\LQFUHDVHZDVWHLGHQWLÀHGLQWKH
)6&VRIHPHUJLQJHFRQRPLHVDUHVLPLODUWRWKRVHLQ
KLJKLQFRPH FRXQWULHV VXFK DV SD\PHQW WHUPV WKDW
GLVFRXUDJHVPDOOJURZHUVDQGV\VWHPVIRUGHPDQG
IRUHFDVWLQJ RUGHU SODQQLQJ DQG UHSOHQLVKPHQW WKDW
VRPHWLPHV OHDG WR RYHUSURGXFWLRQ +RZHYHU WKHUH
DUH OHVVRQV WKDW PLJKW EH OHDUQW IURP LQGXVWULDOL]HG
7KH)RUHVLJKW5HYLHZ)RUHVLJKWGLGHQWLÀHGWKH
PDLQDFWLRQVQHHGHGLQRUGHUWREULQJWKHPD[LPXP
EHQHÀW WR GHYHORSLQJ FRXQWULHV 7KHVH DUH EULHÁ\
GLVFXVVHGEHORZ
*UHDWHU LQYHVWPHQW LQ VWRUDJH SDFNDJLQJ DQG
WUDQVSRUW LQIUDVWUXFWXUH LQ ORZLQFRPH FRXQWULHV E\
QDWLRQDO JRYHUQPHQWV DQG WKH GRQRU FRPPXQLW\
5HODWLYHO\ ORZFRVW LQWHUYHQWLRQV WKDW FRXOG DFKLHYH
VL]HDEOH IRRG ZDVWH UHGXFWLRQ LQFOXGH EDVLF
SDFNDJLQJIRUWUDQVSRUWRIIUHVKSURGXFHLQQRYDWLRQ
 75$'($1'(19,5210(175(9,(:
LQORZWHFKQRORJ\VWRUDJHWRUHGXFHJUDLQORVVHVRQ
VPDOO IDUPV DQG VLPSOH FRRO FKDLQ RSWLRQV WKDW DUH
QRWIXHOLQWHQVLYH7KHVHLQYHVWPHQWVFRXOGSRWHQWLDOO\
LQFUHDVHWKHLQFRPHRISDUWLFLSDQWVLQWKHIRRGFKDLQ
LQFOXGLQJJURZHUVSDUWLFXODUO\LIWKH\HQDEOHDFFHVVWR
PRUHUHPXQHUDWLYHPDUNHWV,QDGGLWLRQWKHHYLGHQFH
VKRZV WKDW GRPHVWLF RU LQWHUQDWLRQDO PDUNHWV DQG
HIIHFWLYH ORFDO SROLFLHV DLPHG DW XSJUDGLQJ DFWLYLWLHV
DQGIRRGVWDQGDUGVDUHFUXFLDOWRDFKLHYLQJVXFFHVV
DQG FURS LQVXUDQFH IRU ORFDO FRPPXQLWLHV DQG D
VRFLDOVDIHW\QHWDVZHOODVIRRGDLGIURPORFDOUDWKHU
WKDQ LQWHUQDWLRQDO VRXUFHV 6XFK PHDVXUHV KHOS
WR UHGXFH SRVWKDUYHVW ORVVHV DV WKH\ HQFRXUDJH
LQYHVWPHQW LQ SRVWKDUYHVW LQIUDVWUXFWXUH DQG UHGXFH
SULFHÁXFWXDWLRQV
(QFRXUDJH WUDLQLQJ LQ WKH VFLHQFHV UHOHYDQW WR IRRG
VWRUDJH DQG GLVWULEXWLRQ LQ ORZLQFRPH FRXQWULHV
WKURXJK GHGLFDWHG SURJUDPPHV DQG EXUVDU\
)$2.DGHU
VFKHPHV 7KLV VKRXOG LQFOXGH WKH WUDLQLQJ RI SHRSOH
&RQQHFWLQJ VPDOOKROGHU JURZHUV LQ ORZLQFRPH WRVXSSRUWWKHSODQQLQJDQGPDLQWHQDQFHRIWKHPRUH
FRXQWULHV WR XUEDQUHJLRQDO DQG LQWHUQDWLRQDO IRRG DGYDQFHGSRVWKDUYHVWDQG)6&WHFKQRORJLHVQHHGHG
FKDLQV WKURXJK EHWWHU LQIUDVWUXFWXUH DQG SRVVLEO\ WRIHHGJURZLQJXUEDQSRSXODWLRQV
OLQNHG DOVR ZLWK YDULRXV IRUPV RI HWKLFDO WUDGLQJ
'HYHORSPHQW RI D JOREDO EHQFKPDUNLQJ QHWZRUN WR
6XEVWDQWLDO LQYHVWPHQW LQ LQIUDVWUXFWXUH LV QHHGHG
HVWLPDWH IRRG ORVVHV ZLWK SULRULW\ JLYHQ WR HPHUJLQJ
WR UHGXFH SRVWKDUYHVW ORVVHV DQG WR SURYLGH
HFRQRPLHV 0XFK RI WKH GDWD DYDLODEOH RQ ORVVHV
VPDOOKROGHU IDUPHUV ZLWK EHWWHU DFFHVV WR PDUNHWV
KDYHQRWEHHQFROOHFWHGV\VWHPDWLFDOO\DQGWKHUHDUH
ZLWK ORZHU WUDQVDFWLRQ FRVWV DQG EHWWHU UHWXUQV 7KH
IHZXSWRGDWHGLUHFWÀHOGPHDVXUHPHQWV,ISURJUHVV
XVHRIFRPPXQLFDWLRQWHFKQRORJLHVPRELOHSKRQHV
LVWREHPDGHWRZDUGVDJOREDOEHQFKPDUNIRUIRRG
LQ SDUWLFXODU IRU LPSURYLQJ PDUNHW LQIRUPDWLRQ DQG
ZDVWH PRUH HPSLULFDOO\ EDVHG ORVV HVWLPDWHV DUH
DFFHVV WR RWKHU LPSRUWDQW VHUYLFHV HJ ZHDWKHU
QHFHVVDU\6XFKDQXQGHUWDNLQJZRXOGUHTXLUHVWURQJ
IRUHFDVWV ORFDOO\ DSSURSULDWH FURS YDULHWLHV JRRG
OHDGHUVKLSLQLQWHUQDWLRQDODJHQFLHVZLWKDQLQWHUHVWLQ
DJULFXOWXUDO SUDFWLFHV ZRXOG HQDEOH SURGXFHUV
IRRGVHFXULW\DQGGHYHORSPHQWLVVXHV*LYHQWKHZLGH
WR PDNH EHWWHU SODQWLQJ KDUYHVWLQJ DQG VXSSO\
YDULDELOLW\ RI )6&V LW ZRXOG EH XQUHDOLVWLF WR JDWKHU
GHFLVLRQV PHHW PDUNHW UHTXLUHPHQWV DQG DYRLG RU
GDWDIURPDUHSUHVHQWDWLYHVDPSOHRIWKHJOREDO)6&V
DW OHDVW UHGXFH VHDVRQDO JOXWV DQG KLJKHU ZDVWDJH
$ PRUH WDUJHWHG DSSURDFK KDV JUHDWHU FKDQFH RI
UDWHV)RUHVLJKWF
7DUJHWLQJRIDLGEXGJHWVWRHQFRXUDJHVPDOOJURZHUV
WR SURGXFH LPSURYHG TXDOLW\ SURGXFH IRU ORFDO
DQG UHJLRQDO PDUNHWV LQ D VLPLODU ZD\ WR WKH 8QLWHG
1DWLRQV :RUOG )RRG 3URJUDPPH·V 3XUFKDVH IRU
3URJUHVV LQLWLDWLYH ZKLFK LQFOXGHV WKH SURYLVLRQ RI
JXDUDQWHHGFRQWUDFWVDJULFXOWXUDOH[WHQVLRQVHUYLFHV
VXFFHVVZLWKSULRULW\DVVLJQHGWRWKRVHV\VWHPVOLNHO\
WRH[SHULHQFHKLJKHUZDVWDJHUDWHVDQGIRFXVLQJRQ
WKH PRVW FULWLFDO )6& VWDJHV VXFK DV IURP IDUPV WR
GLVWULEXWLRQ FHQWUHV IRU IUHVK SURGXFH LQ HPHUJLQJ
HFRQRPLHV6HOHFWHGVXSSO\FKDLQVHJPHQWVVKRXOG
EHPRQLWRUHGWRHVWDEOLVKKRZFKDQJHVLQWHFKQRORJ\
DQGLQIUDVWUXFWXUHKDYHLQÁXHQFHGORVVHV
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1//'06#4; U  *'1.'1(756#+0#$.'1057/26+10+0

156'4+0)#
70&#/'06#.4#05(14/#6+101(
)4+%7.674'
/XFLD5HLVFK
&RSHQKDJHQ%XVLQHVV6FKRRO'HQPDUN

$EVWUDFW
‡ 0DMRUFKDQJHVLQIRRGEHKDYLRXUWRZDUGVPRUHVXVWDLQDEOHFRQVXPSWLRQV\VWHPVPXVWKDSSHQLQ
SDUWLFXODULQWKHLQGXVWULDOL]HGFRXQWULHV
‡ .H\LVVXHVRIFRQFHUQDUHH[FHVVLYHPHDWDQGGDLU\VXJDUDQGIDWFRQVXPSWLRQLQ´PRGHUQGLHWVµ
RYHUFRQVXPSWLRQLQVRPHSDUWVRIWKHZRUOGDQGXQGHUFRQVXPSWLRQLQRWKHUVDVZHOODVIRRGZDVWH
‡ ,QRUGHUWRIRVWHUVXVWDLQDEOHIRRGFRQVXPSWLRQLWLVQHFHVVDU\WRFRRUGLQDWHSROLFLHVUHODWLQJWRIRRG
WKHHQYLURQPHQWKHDOWKDQGVRFLDOFRKHVLRQ

$'HÀQLWLRQRIVXVWDLQDEOHIRRG WKHLU SURGXFWLRQ DQG SURFHVVLQJ ZKLOH UHGXFLQJ

FRQVXPSWLRQ HQHUJ\ FRQVXPSWLRQ DQG LPSURYLQJ WKH ZLGHU
HQYLURQPHQW
7KH2VOR5RXQGWDEOHRQ6XVWDLQDEOH3URGXFWLRQDQG
‡ 0HHW WKH KLJKHVW VWDQGDUGV RI DQLPDO KHDOWK
&RQVXPSWLRQ KDV GHÀQHG VXVWDLQDEOH FRQVXPSWLRQ
DQG ZHOIDUH FRPSDWLEOH ZLWK WKH SURGXFWLRQ RI
LQ JHQHUDO DV ´WKH XVH RI JRRGV DQG VHUYLFHV WKDW
DIIRUGDEOHIRRGIRUDOOVHFWRUVRIVRFLHW\DQG
UHVSRQG WR EDVLF QHHGV DQG EULQJ D EHWWHU TXDOLW\
‡ 6XSSRUWUXUDOHFRQRPLHVDQGWKHGLYHUVLW\RIUXUDO
RIOLIHZKLOHPLQLPL]LQJWKHXVHRIQDWXUDOUHVRXUFHV
FXOWXUHVLQSDUWLFXODUWKURXJKDQHPSKDVLVRQORFDO
WR[LFPDWHULDOVDQGHPLVVLRQVRIZDVWHDQGSROOXWDQWV
SURGXFWVWKDWNHHSIRRGPLOHVWRDPLQLPXP
RYHUWKHOLIHF\FOHVRDVQRWWRMHRSDUGL]HWKHQHHGV
RI IXWXUH JHQHUDWLRQVµ 1RUZHJLDQ 0LQLVWU\ RI WKH 'HÀQLWLRQVIURPDVRFLDOVFLHQFHSHUVSHFWLYHKLJKOLJKW
(QYLURQPHQW  $V UHJDUGV FRQVXPSWLRQ LQ WKH WKHLPSRUWDQFHRIWKHVRFLRFXOWXUDOGLPHQVLRQ²WKH
IRRGGRPDLQWKHUHLVQREURDGO\DFFHSWHGGHÀQLWLRQ QHFHVVDU\´ÀWµRIIRRGSDWWHUQVZLWKSHRSOH·VHYHU\GD\
WR GDWH EXW VHYHUDO DWWHPSWV WR FODULI\ DQG VKDUSHQ OLYHV²IRUGHYHORSLQJHIIHFWLYHSROLFLHVHJ+D\QHW
WKH FRQFHSW KDYH EHHQ PDGH 'HÀQLWLRQV GLIIHU DO  +HUH IRRG FRQVXPSWLRQ LV FRQVLGHUHG
GHSHQGLQJ RQ WKH WKHPDWLF IRFXV ² HQYLURQPHQW VXVWDLQDEOHRQO\LILW
DQG FOLPDWH SXEOLF KHDOWK DQG OLIH RSSRUWXQLWLHV ‡ ,VHQYLURQPHQWDOO\VRXQGZLWKUHJDUGWRZDWHUVRLO
PDOQXWULWLRQ DQG FULWLFDO DFFHVV WR IRRG 6WLOO D FRUH FOLPDWH ELRGLYHUVLW\ DYRLGDQFH RI XQQHFHVVDU\
VHW RI FULWHULD FDQ EH GLVWLOOHG 3HUKDSV WKH PRVW ULVNV
HQFRPSDVVLQJ DSSURDFK KDV EHHQ LQWURGXFHG E\ ‡ ,VKHDOWKSURPRWLQJ
WKH 6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ  RI
WKH8QLWHG.LQJGRP7KHFRPPLVVLRQFRQVLGHUVIRRG
DQGGULQNVVXVWDLQDEOHLIWKH\
‡ $UH VDIH KHDOWK\ DQG QXWULWLRXV IRU FRQVXPHUV LQ
SODFHV VXFK DV VKRSV UHVWDXUDQWV VFKRROV DQG
KRVSLWDOV
‡ &DQPHHWWKHQHHGVRIOHVVZHOORIISHRSOH
‡ 3URYLGHDYLDEOHOLYHOLKRRGIRUIDUPHUVSURFHVVRUV
DQG UHWDLOHUV ZKRVH HPSOR\HHV HQMR\ D VDIH DQG
K\JLHQLF ZRUNLQJ HQYLURQPHQW ZKHWKHU QDWLRQDOO\
RUDEURDG
‡ 5HVSHFW ELRSK\VLFDO DQG HQYLURQPHQWDO OLPLWV LQ
‡ $OORZVIRUVRFLRFXOWXUDOGLYHUVLW\DQG
‡ ,VDSSOLFDEOHLQHYHU\GD\OLIHVW\OHV
)URP D ZRUOGZLGH SHUVSHFWLYH WKH TXHVWLRQ RI IDLU
GLVWULEXWLRQ DQG DFFHVV WR KHDOWK\ DQG VDIH IRRG ²
GLVFXVVHGXQGHUWKHNH\WHUP´IRRGVHFXULW\µ²FRPHV
WR WKH IRUH $FKLHYLQJ VXVWDLQDEOH FRQVXPSWLRQ
RI IRRG UHTXLUHV FRQIURQWLQJ SUREOHPV RI ERWK
XQGHUFRQVXPSWLRQDQGRYHUFRQVXPSWLRQ$VUHJDUGV
WKHIRUPHUELOOLRQSHRSOHH[LVWRQLQFRPHVRID
GD\RUOHVVDQGRYHUPLOOLRQSHRSOHDUHKXQJU\RU
VWDUYLQJ<HWWKHSUREOHPRIIRRGVHFXULW\JRHVEH\RQG
 75$'($1'(19,5210(175(9,(:

)LJXUH*URZWKUDWHRIPHDWFRQVXPSWLRQRYHUWKHSDVW\HDUVNJSHUVRQ\U

6RXUFH&RPSDVVLRQLQ:RUOG)DUPLQJ7UXVWEDVHGRQGDWDIURP)$2VWDW

WKDWRIKXQJHUDQGDFFHVVLWDOVRFRYHUVWKHSUREOHP $V UHJDUGV WKH ODWWHU FRQVXPHUV· SHUFHSWLRQ RI

RI´KLGGHQKXQJHUµLHGHÀFLWVLQYLWDOPLFURQXWULHQWV
ZKLFK DFFRUGLQJ WR D :+2 HVWLPDWH DIIHFWV DERXW
ELOOLRQSHRSOHZRUOGZLGH$WWKHVDPHWLPHWKHUHLV
DZRUOGZLGHLQFUHDVHLQWKHQXPEHURISHRSOHZKRDUH
RYHUZHLJKWRUREHVHERWKLQGHYHORSLQJDQGDIÁXHQW
LQGXVWULDOFRXQWULHV
:KLOHWKHHQYLURQPHQWDOLPSDFWVRIIRRGFRQVXPSWLRQ
DQG SURGXFWLRQ KDYH EHHQ GHEDWHG VLQFH WKHV
IRRG VDIHW\ LV FORXGHG E\ XQKHDOWK\ IRRG DGGLWLYHV
WR[LF UHVLGXHV DQG RWKHU E\SURGXFWV DV ZHOO DV
SRWHQWLDO ULVNV IURP JHQHWLFDOO\ PRGLÀHG DQG QDQR
WHFKQRORJLFDOO\ HQKDQFHG IRRGV 7KLV SURYLGHV D
PDMRULPSHWXVIRUWKHJURZWKRIRUJDQLFIRRGVDOHV
%DVHG RQ D EURDG XQGHUVWDQGLQJ RI VXVWDLQDEOH
FRQVXPSWLRQ DV UHÁHFWHG LQ WKH GHÀQLWLRQV FLWHG
DERYH ZH GHÀQH VXVWDLQDEOH IRRG FRQVXPSWLRQ
²ZLWKDIRFXVRQJUHHQKRXVHJDV*+*HPLVVLRQV DV D FKRLFH RI IRRG ZKLFK LV EHQHÀFLDO DQG OLIH
² WKH FRQQHFWLRQV EHWZHHQ FOLPDWHHQYLURQPHQW HQKDQFLQJ IRU LQGLYLGXDOV VRFLHW\ DQG WKH SODQHW
DQG KHDOWK KDYH RQO\ UHFHQWO\ EHFRPH D FRQFHUQ +RZHYHU VXVWDLQDEOH IRRG FRQVXPSWLRQ LQ VXFK D
LQ SROLWLFDO GRFXPHQWV HJ +HDOWK &RXQFLO RI WKH FRPSUHKHQVLYHVHQVHLVVHOGRPFRQVLGHUHGLQSROLF\
1HWKHUODQGV  $FFRUGLQJ WR WKLV DSSURDFK D
V\VWHPVSHUVSHFWLYHRIVXVWDLQDEOHIRRGFRQVXPSWLRQ
VHHPVWRUHSODFHWKHWUDGLWLRQDO´VLORSHUVSHFWLYHµRI
VHSDUDWHVXVWDLQDELOLW\GLPHQVLRQVSURPLQHQWLQPDQ\
QDWLRQDOSROLFLHV,QWKH(XURSHDQ&RPPLVVLRQ
OLVWHGWKHIROORZLQJFULWHULDIRUGLHWVWREHFRQVLGHUHG
DVKDYLQJD´KHDOWKYDOXHµ
PDNLQJ 7KH IROORZLQJ VHFWLRQ LOOXVWUDWHV ZK\ PDMRU
FKDQJHVLQIRRGEHKDYLRXUWRZDUGVPRUHVXVWDLQDEOH
FRQVXPSWLRQV\VWHPVPXVWWDNHSODFHSDUWLFXODUO\LQ
LQGXVWULDOL]HGFRXQWULHV
%0DLQSUREOHPDWLFWUHQGVDQG
‡ 1XWULHQWDQGHQHUJ\FRQWHQWQXWULWLRQDOYDOXH
QHHGHGFKDQJHV
‡ 1DWXUDOIRRGSURSHUWLHV´DHVWKHWLFJXVWDWRU\µDQG *LYHQWKHJURZLQJZRUOGSRSXODWLRQDQGGHPRJUDSKLF
´GLJHVWLYHµ FKDQJH SUREOHPV DUH SUHGLFWHG WR EHFRPH PRUH
‡ (FRORJLFDO QDWXUH RI IRRG SURGXFWLRQ VXVWDLQDEOH VHULRXV LQ WKH IXWXUH IRU H[DPSOH DJULFXOWXUDO
DJULFXOWXUH SURGXFWLRQPXVWIDFHWKHLPSDFWVRIFOLPDWHFKDQJH
‡ +HDOWKDQGWR[LFRORJLFDOFULWHULDIRRGVDIHW\ FRQÁLFWV RYHU ODQG XVH DUH SUHGLFWHG WR LQFUHDVH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

DQG KHDOWK DQG VRFLDO FRVWV ² ERWK DW WKH LQGLYLGXDO
DQG VRFLDO OHYHO ² ZLOO ULVH EHFDXVH RI IRRGUHODWHG
KHDOWK WKUHDWV $ NH\ HWKLFDO LVVXH LV HQVXULQJ IRRG
VHFXULW\ IRU WKH ZRUOGV· JURZLQJ SRSXODWLRQ ² D JRDO
WKDW ZLOO QRW HDVLO\ EH DFKLHYHG ,Q PDQ\ GHYHORSLQJ
FRXQWULHV VKRUWDJH RI GULQNLQJ ZDWHU ZLOO DOVR EH D
SDWWHUQV KRXVHKROG GHFLVLRQPDNLQJ LQÁXHQFH
IRRG FRQVXPSWLRQ 3ULFH LQ SDUWLFXODU LV D PDMRU
GHWHUPLQDQW)RRGSUHIHUHQFHVDOVRGLIIHUVLJQLÀFDQWO\
E\ KRXVHKROGVSHFLÀF FKDUDFWHULVWLFV VXFK DV DJH
LQFRPHHGXFDWLRQIDPLO\W\SHDQGVWDWXVLQWKHODERXU
IRUFH DV ZHOO DV QDWLRQDOLW\ (XURSHDQ &RPPLVVLRQ
PDMRUSUREOHP7RPHHWWKHQHHGVRIDJURZLQJZRUOG  5HVHDUFKHUV KDYH WKHUHIRUH PDGH DQ HIIRUW
SRSXODWLRQ DQG WKH LQFUHDVLQJ GHPDQG IRU PHDW LQ WR FOXVWHU FRQVXPHUV LQWR JURXSV WKDW UHSUHVHQW
GHYHORSLQJ FRXQWULHV SDUWLFXODUO\ LQ &KLQD DQG ,QGLD GLIIHUHQW´QXWULWLRQVW\OHVµRU´IRRGVW\OHVµVRWKDWWKH\
ÀJXUH  WKHUH ZRXOG KDYH WR EH DQ H[SRQHQWLDO FDQEHWDUJHWHGZLWKPHVVDJHVDERXW´SURSHUIRRGµ
JURZWKLQODQGXVHIRUDJULFXOWXUHZKLOHDWWKHVDPH 0LFKDHOLVDQG/RUHN)ULHGOHWDO6FKXOW]
WLPH WKH PRVW SURGXFWLYH FHUHDO SURGXFLQJ DUHDV LQ DQG6WLH‰
&KLQD ,QGLD DQG 1RUWK $PHULFD ZLOO EH DSSURDFKLQJ
7KH IROORZLQJ REVHUYDEOH GHYHORSPHQWV DQG WUHQGV
WKHLUELRSK\VLFDOOLPLWV7HPSHOPDQ
LQ IRRG FRQVXPSWLRQ LQ PDQ\ 2(&' DQG PRVW (8
7KH UHDVRQV IRU WKLV XQVXVWDLQDEOH GHYHORSPHQW FRXQWULHV DUH SUREOHPDWLF ZLWK UHJDUG WR VXVWDLQDEOH
SDWWHUQLQFOXGHWKHLQGXVWULDOL]DWLRQDQGJOREDOL]DWLRQ IRRGFRQVXPSWLRQ5HLVFK6FKROODQG(EHUOH
RI DJULFXOWXUH DQG IRRG SURFHVVLQJ FRQVXPSWLRQ ‡ &KDQJHV LQ GLHW 3DUWLFXODUO\ LQ 2(&' DQG
SDWWHUQVWKDWDUHVKLIWLQJWRZDUGVPRUHPHDWDQGGDLU\ (8 FRXQWULHV WKHUH LV D WUHQG WRZDUGV KLJKHU
LQGLHWVPRGHUQIRRGVW\OHVDQDEXQGDQFHRIIRRGRQ FRQVXPSWLRQRIPHDWHVSHFLDOO\SRUNDQGSRXOWU\
WKHRQHKDQGDQGDODFNRIIRRGVHFXULW\RQWKHRWKHU FKHHVH DQG ERWWOHG GULQNV DQG D GHFOLQLQJ
DQGWKHFRQWLQXRXVO\JURZLQJJDSEHWZHHQULFKDQG FRQVXPSWLRQ RI PLON DQG SRWDWRHV 2(&' 
SRRURQERWKDZRUOGZLGHVFDOHDQGZLWKLQLQGLYLGXDO
VRFLHWLHV 7KHVH IDFWRUV DUH WKH UHVXOW RI QDWLRQDO
DQG LQWHUQDWLRQDO SROLFLHV DQG UHJXODWLRQV EXVLQHVV
SUDFWLFHVDQGSDUWLFXODUYDOXHV7KHPDLQSUREOHPDWLF
WUHQGVDQGQHHGHGFKDQJHVDUHGLVFXVVHGEHORZ
(XURSHDQ(QYLURQPHQW$JHQF\
‡ :HDNHQLQJ RI QXWULWLRQDO FRPSHWHQFLHV GHVSLWH
LQFUHDVLQJ NQRZOHGJH RI KHDOWK\ QXWULWLRQ
&RPSHWHQFLHV LQ QXWULWLRQ DQG KRPH HFRQRPLFV
LH FRRNLQJ DQG IRRG VWRULQJ DQG ÀQDQFLDO
FRPSHWHQFLHV KDYH GHFOLQHG $W WKH VDPH WLPH
,Q LQGXVWULDOL]HG FRXQWULHV WKHUH LV D ZLGH UDQJH RI
NQRZOHGJH RI KHDOWK\ IRRGV DQG KHDOWK\ QXWULWLRQ
DYDLODEOHIRRGSURGXFWV%HFDXVHPRVWIRRGSURGXFWV
KDVLQFUHDVHG
DUH DYDLODEOH DW DIIRUGDEOH SULFHV \HDU URXQG IRRG
‡ $GHFOLQHLQWLPHVSHQWRQQXWULWLRQ7LPHVSHQWRQ
VHDVRQDOLW\KDVORVWLWVPHDQLQJ%HVLGHVDQDEXQGDQW
IRRGSXUFKDVLQJDQGFRRNLQJDVZHOODVRQHDWLQJ
FKRLFH RI KHDOWK\ IUXLW DQG YHJHWDEOHV WKURXJKRXW
KDV GHFUHDVHG VLJQLÀFDQWO\ RYHU WKH SDVW IHZ
WKH \HDU FRQVXPHUV LQ PRVW (8 FRXQWULHV EHQHÀW
\HDUV,QJHQHUDOKRZHYHUZRPHQVWLOOVSHQGPRUH
IURP FRPSDUDWLYHO\ ORZ SULFHV DQG FRQVLGHUDEOH
WLPH WKDQ PHQ RQ IRRG SXUFKDVLQJ DQG FRRNLQJ
FRQYHQLHQFH ZKLFK KDYH DFFRPSDQLHG FKDQJHV LQ
+DPHUPHVK
IRRGSURGXFWLRQDQGJOREDOL]DWLRQ$PDMRUGUDZEDFN
‡ $ GHFOLQH LQ UHODWLYH FRQVXPHU VSHQGLQJ RQ IRRG
LQ WKLV SURJUHVV KRZHYHU LV WKDW FRQVXPHUV KDYH
$OWKRXJKDEVROXWHKRXVHKROGH[SHQGLWXUHVRQIRRG
EHFRPHLQFUHDVLQJO\HVWUDQJHGIURPWKHSURGXFWLRQRI
LQFUHDVHGGXULQJWKHVLQPDQ\(8FRXQWULHV
WKHLUIRRGVWXIIVDQGGHVSLWHWKHUHFHQWUHFXUUHQFHRI
WKH DYHUDJH VKDUH RI H[SHQGLWXUH RQ IRRG LQ WRWDO
LQWHUHVWLQUHJLRQDOIRRGVDQGQHZWUHQGVVXFKDVVORZ
KRXVHKROG H[SHQGLWXUH LQ (XURSHDQ KRXVHKROGV
IRRG DQG RUJDQLF SURGXFH FRQVXPHU NQRZOHGJH RI
KDVGHFOLQHGVWHDGLO\ZLWKULVLQJLQFRPHV0LFKDHOLV
VHDVRQDOLW\RUUHJLRQDOVXSSO\KDVEHHQORVWVHHIRU
DQG /RUHN  (XURSHDQ (QYLURQPHQW $JHQF\
H[DPSOH 7LVFKQHU DQG .MDHUQHV  %OD\3DOPHU
)RUPDQ\FRQVXPHUVSULFHLVWKHGRPLQDQW

FULWHULRQ LQ IRRG SXUFKDVH IROORZHG E\ TXDOLW\
$W WKH OHYHO RI WKH LQGLYLGXDO IRRG KDELWV DQG IUHVKQHVVORQJVKHOIOLIHDQGWDVWH
SUHIHUHQFHVDUHVKDSHGE\FXOWXUDOWUDGLWLRQVQRUPV ‡ $Q LQFUHDVH LQ FRQYHQLHQFH UHDG\PDGH DQG IDVW
IDVKLRQ DQG SK\VLRORJLFDO QHHGV DV ZHOO DV E\ IRRGVDQG RXWRIKRPH FRQVXPSWLRQ,QDGGLWLRQ
SHUVRQDO H[SHULHQFH ZLWK DQG H[SRVXUH WR VSHFLÀF WRDWHQGHQF\WRZDUGVFRQVXPLQJKLJKO\SURFHVVHG
IRRGVDQGWKHLUVXSSO\LHDYDLODELOLW\DQGDFFHVVLELOLW\ IRRGVIDVWDQGFRQYHQLHQFHIRRGFRQVXPSWLRQRI
RIIRRGVWXIIV6XFKSUHIHUHQFHVDQGWDVWHVWRJHWKHU UHDG\PDGH PHDOV LV FRQWLQXLQJ WR ULVH ZLWKLQ WKH
ZLWK ÀQDQFHV WLPH DQG RWKHU FRQVWUDLQWV HJ ZRUN (8 576  2XWRIKRPH FRQVXPSWLRQ DOVR
 75$'($1'(19,5210(175(9,(:

DFFRXQWV IRU D VLJQLÀFDQW DQG JURZLQJ SURSRUWLRQ VXSHUDQGK\SHUPDUNHWVRIIHU

RI (XURSHDQ IRRG LQWDNH IRU H[DPSOH LQ  ‡ ,QFUHDVLQJ IRRG ZDVWH 7RGD\ ODUJH TXDQWLWLHV RI
RQH IRXUWK RI PHDOV DQG VQDFNV ZHUH HDWHQ RXW IRRG DUH ZDVWHG SDUWLFXODUO\ E\ IRRG UHWDLO ÀUPV
0LFKDHOLVDQG/RUHN DQG FRQVXPHUV )RU LQVWDQFH DFFRUGLQJ WR RQH
‡ ,QFUHDVLQJ GLHWUHODWHG XQFHUWDLQW\ RQ WKH SDUW RI UHFHQW VWXG\ KRXVHKROGV LQ WKH 8QLWHG .LQJGRP
FRQVXPHUV$GHFDGHRIIRRGVFDUHVWRJHWKHUZLWK ZDVWHRQHWKLUGRIWKHIRRGWKH\EX\SHUFHQWRI
GLIIHULQJ H[SHUW HYDOXDWLRQV RI ULVN FRQWUDGLFWRU\ ZKLFKFRXOGKDYHEHHQHDWHQLILWKDGEHHQEHWWHU
DQG VKRUWOLYHG QXWULWLRQUHODWHG LQIRUPDWLRQ LQ WKH PDQDJHG
PHGLDDJUHDWHUYDULHW\RIDYDLODEOHIRRGVWXIIVDQG
0XFK KRSH LV SLQQHG RQ WKH LQFUHDVLQJ FRQVXPHU
WKHJOREDOL]DWLRQDQGGLVWDQFLQJRIIRRGSURGXFWLRQ
LQWHUHVWLQRUJDQLFDQGIDLUWUDGHIRRGV7KHPDUNHWV
KDYH SURGXFHG JURZLQJ FRQVXPHU XQFHUWDLQW\
IRU RUJDQLFDOO\ JURZQ SURGXFWV DQG IRU IDLU WUDGHG
DERXW IRRG %HUJPDQQ  ,QGHHG UDWKHU
IRRGSURGXFWVKDYHJURZQVWHDGLO\.ULHU:LOOHU
WKDQKHOSLQJFRQVXPHUVQDYLJDWHWKHYDVWDUUD\RI
<XVVHÀ0HQ]OHUDQG6RUHQVVHQ1HYHUWKHOHVV
LQIRUPDWLRQDERXWIRRGWKHPXOWLWXGHRIIRRGODEHOV
WKH PDUNHW VKDUH UHPDLQV ORZ ZLWK RUJDQLF IRRG
KDV OHG WR FRQVXPHU FRQIXVLRQ DQG LQIRUPDWLRQ
DFFRXQWLQJIRU²SHUFHQW:LOOHU<XVVHÀ0HQ]OHU
RYHUORDG WKDW SUHYHQWV WKHP IURP TXLFNO\ ÀQGLQJ
DQG6RUHQVHQDQGIDLUWUDGHGIRRGIRUOHVVWKDQ
UHOHYDQW NH\ LQIRUPDWLRQ 'HUE\ DQG /HY\ 
SHUFHQWRIWKHWRWDOIRRGPDUNHW.ULHU$OVR
+DZNHV$VDUHVXOWUHEXLOGLQJFRQVXPHU
WXUQRYHULVVWDJQDWLQJLQPDQ\PDUNHWVEHFDXVHRID
WUXVW LQ WKH LQIRUPDWLRQ DERXW IRRG SURYLGHG E\
IDOOLQWKHSULFHVRIQRQRUJDQLFIRRGVDQGDQLQFUHDVH
ERWKWKH6WDWHDQGWKHPDUNHWLVDPDMRUFKDOOHQJH
LQSULFHFRPSHWLWLRQ
.MDHUQHV+DUYH\DQG:DUGH
‡ 3UREOHPV RI RYHUZHLJKW DQG REHVLW\ LQ VSLWH RI
LQFUHDVLQJKHDOWKDZDUHQHVV,QPRVWLQGXVWULDOL]HG &7RZDUGVDSROLF\RIVXVWDLQDEOH
FRXQWULHV WKH ZHDOWK RI DYDLODEOH IRRG FRPELQHG IRRGFRQVXPSWLRQ
ZLWK LQFUHDVLQJO\ VHGHQWDU\ OLIHVW\OHV DQG PRGHUQ
2QWKHGHPDQGVLGHQDWLRQDOJRYHUQPHQWVJHQHUDOO\
GLHWV LV OHDGLQJ WR ULVLQJ REHVLW\ OHYHOV ,Q WKHVH
SOD\ D UHODWLYHO\ ZHDN UROH 7R GDWH WKH PDLQ GULYHU
FRXQWULHVWKHULVHLQDGLSRVLW\LHIDWVWRULQJERG\
EHKLQGUHJXODWRU\FRPPDQGDQGFRQWUROLQVWUXPHQWV
WLVVXH LV RFFXUULQJ SDUWLFXODUO\ DPRQJ FKLOGUHQ
UHODWLQJ WR IRRG FRQVXPSWLRQ DQG SURGXFWLRQ LV
DQG WHHQDJHUV EXW LV DOVR HYLGHQW DPRQJ ORZHU
WKH QHHG WR UHVSRQG WR DFXWH WKUHDWV WR WKH OLIH DQG
VRFLRHFRQRPLF JURXSV :+2  5HLVFK DQG
KHDOWK RI FLWL]HQV ,W LV RQO\ IRU WKH SDVW IHZ \HDUV
*ZR]G],QGHYHORSLQJFRXQWULHVREHVLW\LV
WKDW JRYHUQPHQW FRQFHUQV DERXW IRRG LQWDNH KDYH
PRVWO\ D SUREOHP DPRQJ WKH ZHOORII :LWNRZVNL
EURDGHQHG WR FRQVLGHU HYHU\GD\ GLHW DQG KHDOWK

LVVXHV 7KHVH FRQFHUQV HVSHFLDOO\ DV WKH\ UHODWH WR
‡ &RPSOH[LW\ RI IRRG FKRLFHV 7KH DERYH
REHVLW\DQGLWVKHDOWKLPSDFWVDUHVORZO\UHVXOWLQJLQ
GHYHORSPHQWVLQIRRGVXSSO\KDYHJUHDWO\LQFUHDVHG
SROLF\DFWLRQVEXWPRVWRIWKHVHPHDVXUHVDUHRQO\
WKH FRPSOH[LW\ RI IRRG FKRLFH WKH PRUH RSWLRQV
GHVLJQHG WR SURYLGH LQIRUPDWLRQ DQG UDUHO\ WDNH WKH
DQG QRYHOWLHV RQ RIIHU WKH PRUH FRPSOLFDWHG LW
IRUP RI UHJXODWLRQ &RPPDQG DQG FRQWURO LV XVXDOO\
EHFRPHVWRÀQGWKHULJKWLQIRUPDWLRQDQGWKHPRUH
DSSOLHGLQFDVHVWKDWFDQEHOHIWQHLWKHUWRYROXQWDU\
FRPSOH[ WKH GHFLVLRQPDNLQJ SURFHVV $OWKRXJK
DJUHHPHQWV QRU WR WKH PDUNHW EHFDXVH RI WKH KLJK
LQIRUPDWLRQEURNHUV²IURPWHVWLQJRUJDQL]DWLRQVWR
ULVNVLQYROYHGRUEHFDXVHRIWLPHSUHVVXUHDQGGRXEWV
IRRGPDJD]LQHVWR:HE6ORZ)RRGFRPPXQLWLHV
DERXW WKH HIIHFWLYHQHVV RI YROXQWDU\ DJUHHPHQWV
²PD\EHDEOHWRUHGXFHVXFKFRPSOH[LW\IRUDIHZ
7KXVUHJXODWLRQFRQFHQWUDWHVRQIRRGVDIHW\LVVXHV
SHRSOH PDQ\ FRQVXPHUV UHPDLQ RYHUZKHOPHG
DQGDLPVWRSURWHFWFRQVXPHUV·KHDOWKWKHLUOLYHVHJ
DQGSUHIHUWRVWLFNWRWKHLUKDELWXDOFKRLFHV0LFN
VWDQGDUGV RI K\JLHQH DQG WKHLU HFRQRPLF LQWHUHVWV
%URQLDUF]\NDQG+DLGW7KHVXFFHVVRIIRRG
HJFRPSHWLWLRQSROLFLHV
GLVFRXQWHUV VXFK DV 7UDGHU -RH·V LQ WKH 8QLWHG
6WDWHVZKLFKRIIHUVDYHU\QDUURZIRRGDVVRUWPHQW :LWK UHJDUG WR VXVWDLQDELOLW\ LQ WKH IRRG VHFWRU
LV GXH WR DQ DWWUDFWLYH PL[ RI IHZ FKRLFHV DQG JRYHUQPHQWV DQG WKHLU DGPLQLVWUDWLRQV JHQHUDOO\
KHQFH ORZ VHDUFK FRVWV DQG WKHLU SURYLVLRQ RI EHFRPH LQYROYHG RQO\ DV RUJDQL]HUV RI SXEOLF
VWDQGDUGTXDOLW\RUJDQLFSURGXFWVVROGDWIDLUDQG FHUWLÀFDWLRQVWDQGDUGL]DWLRQDQGLQVSHFWLRQVFKHPHV
ORZSULFHV7KLVLVLQFRQWUDVWZLWKZKDWHVWDEOLVKHG 2QH H[DPSOH RI WKLV UROH LV HYLGHQW LQ WKH 6WDWHUXQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

ODEHOOLQJ RI RUJDQLF DQG UHJLRQDO IRRGV REVHUYDEOH 7KH DFKLHYHPHQW RI EHKDYLRXUDO FKDQJH LQ IDYRXU
LQ DERXW KDOI RI DOO (8 FRXQWULHV 2UJDQLF (XURSH RI PRUH VXVWDLQDEOH IRRG FRQVXPSWLRQ LV D ORQJ
 6XFK ODEHOV FRQVWLWXWH DQ LPSRUWDQW WRRO IRU WHUP JRDO WKDW UHTXLUHV FRQVWDQW DQG FRQWLQXLQJ
UDLVLQJ FRQVXPHU DZDUHQHVV DERXW WKH KHDOWK DQG HIIRUWVRIDOOWKHDFWRUVLQYROYHG%DUULHUVDUHHYLGHQW
HQYLURQPHQWDODVSHFWVRIWKHLUIRRGDQGIRUIDFLOLWDWLQJ DW WKH LQVWLWXWLRQDO LQIRUPDWLRQDO LQIUDVWUXFWXUDO LH
LQIRUPHGGHFLVLRQPDNLQJ WKH DYDLODELOLW\ DIIRUGDELOLW\ DQG DFFHVVLELOLW\ RI D
VXVWDLQDEOHVXSSO\DQGSHUVRQDOOHYHOV*RYHUQPHQW
$QRWKHU UHODWLYHO\ UHFHQW DSSURDFK WR SURPRWLQJ
VXSSRUW IRU VXVWDLQDEOH IRRG HQWUHSUHQHXUV DQG
VXVWDLQDEOH IRRG FRQVXPSWLRQ LV VHOIUHJXODWLRQ LQ
FRPPXQLW\EDVHG IRRG LQLWLDWLYHV FRXOG KHOS PDNH
WKH IRUP RI SXEOLF SURFXUHPHQW RI VXVWDLQDEOH IRRG
WKHVXVWDLQDEOHFKRLFHHDVLHUDQGPRUHDIIRUGDEOH
RUJXLGHOLQHVIRUSURFXUHPHQWIRUSXEOLFLQVLWXWLRQV
VXFK DV NLQGHUJDUWHQV DQG VFKRROV VWDII FDQWHHQV
LQWKHSXEOLFVHFWRUSULVRQVDQGKRVSLWDOV+RZHYHU
H[DPSOHVIURPYDULRXV(8PHPEHU6WDWHV²HVSHFLDOO\
WKH8QLWHG.LQJGRPDQG6ZHGHQ²GHPRQVWUDWHWKDW
VXFK VHOIUHJXODWLRQ UHTXLUHV WLPH DQG HIIRUW DQG
VHHPV WR EH HIIHFWLYH DQG LPSURYH WKH TXDOLW\ RI
WKH IRRG VHUYHG RQO\ ZKHQ WKH LQLWLDWLYHV DUH FORVHO\
$ VXEVWDQWLDO EDUULHU WR HIIHFWLYH FRQVXPHU
LQIRUPDWLRQ DQG HGXFDWLRQ LV WKH GLVWXUELQJ IDFW
WKDW VFLHQWLÀF HYLGHQFH LV QRW FRQFOXVLYH DQG WKDW
VRPH UHFRPPHQGDWLRQV WR FRQVXPHUV VXFK DV
WKH UHFRPPHQGDWLRQ WKDW RUJDQLF RU ORFDO SURGXFWV
VKRXOG DOZD\V EH SUHIHUUHG WR FRQYHQWLRQDO RU
LPSRUWHG SURGXFWV PLJKW QRW EH ZHOOIRXQGHG
PRQLWRUHG E\ WKH JRYHUQPHQWV 6XVWDLQ  $ ´2UJDQLFµ DQG ´ORFDOµ DUH WZR SLOODUV RI VXVWDLQDEOH
UHFHQWUHSRUWFRQFOXGHVXQDPELJLRXVO\WKDW´WKHRQO\ IRRGFRQVXPSWLRQWKDWKDYHUHFHQWO\EHHQFKDOOHQJHG
ZD\WRDFKLHYHDUDGLFDOLPSURYHPHQWLQSXEOLFVHFWRU E\VFLHQWLÀFUHSRUWVHJ5HLQKDUGWHWDO
IRRG²IRUH[DPSOHLQRXUVFKRROVKRVSLWDOVDQGFDUH $YDLODEOH UHVHDUFK JHQHUDOO\ DJUHHV RQ WKH LVVXHV
KRPHV ² LV IRU JRYHUQPHQW WR LQWURGXFH D QHZ ODZ JLYLQJ ULVH WR WKH ODFN RI VXVWDLQDELOLW\ RI WKH FXUUHQW
ZKLFK VHWV KLJK DQG ULVLQJ VWDQGDUGV IRU WKH IRRG IRRG GRPDLQ 5HLVFK 6FKROO DQG (EHUOH  WKH
VHUYHGµ6XVWDLQ GLVWDQFHEHWZHHQIRRGFRQVXPHUVDQGSURGXFHUVLQ
0DUNHWEDVHG LQVWUXPHQWV WDUJHWLQJ KRXVHKROGV DQG PLOHVDVZHOODVPLQGVWKHVLJQLÀFDQWORVVRIELRPDVV
LQGLYLGXDOV VHHP WR EH OHVV SUHYDOHQW LQ WKH IRRG IURPWKHÀHOGWRWKHWDEOHLQFOXGLQJJHQHUDWHGZDVWH
GRPDLQWKRXJKWKH\DUHDSSOLHGXSVWUHDPLQWKHIRRG DQGWKHKLJKOHYHORIFRQVXPSWLRQRIDQLPDOSURGXFWV
VXSSO\FKDLQHJVXEVLGLHVWRRUJDQLFIDUPHUV9HU\
UHFHQWO\LQLWLDWLYHVKDYHEHHQODXQFKHGWRWD[FHUWDLQ
IRRG W\SHV VXFK DV ´MXQN IRRGµ LQ +XQJDU\ RU WKHLU
LQJUHGLHQWVVXFKDVDWD[RQVSHFLÀFW\SHVRIIDWLQ
'HQPDUN
7KHGRPLQDQWSROLF\LQVWUXPHQWLQWKHIRRGGRPDLQLV
DQLQIRUPDWLRQEDVHGDQGHGXFDWLYHIRFXVRQUDLVLQJ
DZDUHQHVV 7KLV LV RIWHQ DFFRPSDQLHG E\ YROXQWDU\
LQVWUXPHQWV RI VHOIFRPPLWPHQW FRRSHUDWLRQ DQG
QHWZRUNLQJ :KLOH HIIRUWV WR HGXFDWH FRQVXPHUV
HVSHFLDOO\\RXQJFRQVXPHUVLQJURZLQJSURFHVVLQJ
FRRNLQJ DQG VWRULQJ IRRG DUH GHFOLQLQJ LQ PRVW
VRFLHWLHV ² GXH WR WKH LQFUHDVH LQ RXWRIKRPH
DQG UHDG\PDGH IRRG FRQVXPSWLRQ DQG LQ RWKHU
SULRULWLHVLQIRUPDOVFKRROFXUULFXOD²WKHUHDUHVRPH
RQJRLQJ HIIRUWV WR GHYHORS ´IRRG OLWHUDF\µ DPRQJ
\RXQJ FRQVXPHUV ZLWK UHJDUG WR FKRRVLQJ DQG
LQWKHIRUPRIPHDWDQGGDLU\SURGXFWV&RQVHTXHQWO\
WKHVHDUHWKHFULWLFDODVSHFWVRIQRQVXVWDLQDELOLW\WKDW
JRYHUQPHQWVQHHGWRDGGUHVVDVDSULRULW\
'HVSLWHWKHJURZLQJDWWHQWLRQSDLGWRIRRGLVVXHVDW
WKHSROLF\OHYHODSSURDFKHVWKDWLQWHJUDWHWKHGLIIHUHQW
VXVWDLQDELOLW\LVVXHVLQWRFRKHUHQWSROLF\DSSURDFKHV
RUDFWLRQSODQV²RUDWOHDVWLQWRSROLF\WRROVWKDWGR
QRW FRQWUDGLFW HDFK RWKHU ² DUH KDUG WR ÀQG 7KH
VDPH LV WUXH IRU H[SOLFLW VWUDWHJLHV IRU VXVWDLQDEOH
FRQVXPSWLRQ 3ROLFLHV UHODWLQJ WR QXWULWLRQ DQG IRRG
WKH HQYLURQPHQW KHDOWK DQG VRFLDO FRKHVLRQ DUH
VHOGRP FRRUGLQDWHG )XUWKHUPRUH H[SOLFLW SROLFLHV
IRUVXVWDLQDEOHFRQVXPSWLRQLQJHQHUDODQGIRUIRRG
FRQVXPSWLRQ LQ SDUWLFXODU DUH UDUH 3ROLF\ WRROV DUH
XVXDOO\GHVLJQHGRQHGLPHQVLRQDOO\IRUVSHFLÀFSROLF\
GRPDLQV DQG DGRSWHG SROLF\ WRROV SULPDULO\ WDUJHW
LQGLYLGXDOFRQVXPHUV
SUHSDULQJKHDOWK\HJPRUHIUXLWDQGYHJHWDEOHVDQG $V D UHVXOW RI WKH FXUUHQW SRZHU VWUXFWXUH LQ WKH
VXVWDLQDEOHLHRUJDQLFUHJLRQDOIDLUWUDGHIRRG$V (XURSHDQ IRRG GRPDLQ ZKLFK LV FKDUDFWHUL]HG E\
RQH HOHPHQW RI D QDWLRQDO IRRG VWUDWHJ\ )UDQFH KDV D GRPLQDQW KLJKO\ FRQFHQWUDWHG SRZHUIXO UHWDLO
UHFHQWO\VWDUWHGWRV\VWHPDWLFDOO\WUDLQWKHVHQVRU\DQG LQGXVWU\ JRYHUQPHQWV WHQG WR OLPLW WKHPVHOYHV WR D
WDVWHFRPSHWHQFHVRIVFKRROFKLOGUHQ PDUJLQDO UROH DQG WR QRQLQYDVLYH LQVWUXPHQWV VXFK

DV FRQVXPHU LQIRUPDWLRQ DQG HGXFDWLRQ $QRWKHU
UHDVRQIRUWKHUHOXFWDQFHWRLPSOHPHQWVWULFWQDWLRQDO
IRRGSROLFLHVLVWKDWVXVWDLQDELOLW\JRDOVDQGSROLFLHV
ULVNFRQÁLFWLQJZLWK(XURSHDQODZV)RULQVWDQFHWKH
(8 KDV UHFHQWO\ UHTXHVWHG WKDW 6ZHGHQ ZLWKGUDZV
75$'($1'(19,5210(175(9,(:
HFRQRPLF OLYLQJ DQG ZRUNLQJ FRQGLWLRQV RI WKRVH
ZRUNLQJ DORQJ WKH IRRG FKDLQ UHVSHFW IRU DQLPDOV
VXSSRUWIRUUXUDOHFRQRPLHVDQGFXOWXUDODVSHFWV
$QRWKHU LVVXH LV UHÁHFWHG LQ UHFHQW GLVFXVVLRQV LQ
DFDGHPLF FLUFOHV WKDW KDV QRW \HW UHFHLYHG VXIÀFLHQW
LWV1DWLRQDO)RRG$GPLQLVWUDWLRQ·V1)$SURSRVDOWR
WKH(8RQJXLGHOLQHVIRUFOLPDWHIULHQGO\IRRGFKRLFHV
EHFDXVHWKH\PD\FRQÁLFWZLWK(XURSHDQWUDGHJRDOV
7KH(8&RPPLVVLRQIRXQGWKDWWKHUHFRPPHQGDWLRQ
WR HDW PRUH ORFDOO\ SURGXFHG IRRG FRQWUDYHQHV WKH
(8·VSULQFLSOHVRIIUHHPRYHPHQWRIJRRGV
*RYHUQPHQWV DOVR VWUXJJOH WR XQGHUVWDQG WKH
GHÀQLWLRQ RI VXVWDLQDEOH IRRG DQG VXVWDLQDEOH GLHWV
DQGWKH\RIWHQKDYHQRUHDOYLVLRQDERXWWKHSRVVLEOH
DWWHQWLRQ IURP SROLF\PDNHUV VHOIVXIÀFLHQF\ RI
FRXQWULHV LQ WHUPV RI IRRG VXSSOLHV DQG WKH XQHYHQ
LPSDFWV RI IRRG SURGXFWLRQ RQ WKH VRLO 7KLV LV D
UDWKHU FRPSOH[ LVVXH ZKLFK LV PDGH DOO WKH PRUH
FKDOOHQJLQJ E\ :72 UXOHV DQG (8 SROLFLHV WKDW
SURPRWH LQWHUQDWLRQDO WUDGH DERYH DOO HOVH +RZHYHU
LW LV DQ DUHD WKDW QHHGV WR EH FDUHIXOO\ DQDO\VHG IRU
DPRUHHODERUDWHGLVFXVVLRQVHHWKHOHDGDUWLFOHDQG
WKHFRPPHQWDU\RI&KHPQLW]DQG6DQWDULXVLQFKDSWHU
IRUPV WKDW VXVWDLQDEOH IRRG V\VWHPV PLJKW WDNH $V
D VWDUWLQJ SRLQW DQ XQGHUVWDQGLQJ RI WKH GLIIHUHQFH
EHWZHHQ VXVWDLQDEOH IRRG DQG VXVWDLQDEOH GLHW
VHHPV WR EH FUXFLDO )RU LQVWDQFH RQH FDQ HDW YHU\
KHDOWK\VXVWDLQDEO\SURGXFHGIRRGEXWVLPSO\HDWWRR
PXFKRUWRROLWWOHRILW$OWHUQDWLYHO\IRRGFRXOGFRPH
IURP VXVWDLQDEOH IDUPLQJ EXW LW FRXOG VWLOO EH KLJKO\
RIWKLV5HYLHZ
7KH DERYHRXWOLQHG UHTXLUHPHQWV DSSHDU WR EH
UHOHYDQWIRUEXLOGLQJDIUDPHZRUNIRUVXVWDLQDEOHIRRG
FRQVXPSWLRQ DQG SURGXFWLRQ VKRUWWHUP DFWLRQ RQ
WKHDJUHHGSUREOHPVDQGPHGLXPWHUPVSHFLÀFDWLRQ
RI KRZ WR UHGHVLJQ IRRG V\VWHPV 5HLVFK /RUHN
SURFHVVHGDQGRYHUSDFNDJHG+HQFHDSULRULW\IRU DQG %LHW]  $ SDUDOOHO GHEDWH RQ D ´(XURSHDQ
JRYHUQPHQWVVKRXOGEHWRGHYHORSLQWHJUDWHGFURVV IRRG PRGHOµ DQG LWV FRPPRQ YDOXHV IRU H[DPSOH
VHFWRUDOSRSXODWLRQZLGHIRRGSROLFLHVRQVXFKLVVXHV DV UHJDUGV JHQHWLFDOO\ PRGLÀHG RUJDQLVPV DQG
DVDJULFXOWXUHDQGIRRGVXSSO\DYDLODELOLW\DQGDFFHVV QDQRWHFKQRORJLHVLVDOVRQHFHVVDU\6XFKDGHEDWH
WRIRRGSK\VLFDODFWLYLW\ZHOIDUHDQGVRFLDOEHQHÀWV VKRXOG LQFOXGH WKH SRVVLELOLW\ RI D ´JUHHQ HFRQRP\µ
ÀVFDO SROLFLHV DQLPDO ZHOIDUH DQG LQIRUPDWLRQ DQG VWUDWHJ\IRUWKHIRRGVHFWRU
VRFLDO PDUNHWLQJ 5REHUWVRQ /REVWHLQ DQG .QDL +RZHYHU GHYHORSLQJ VXFK LQWHJUDWLYH VWUDWHJLHV
 DQG LGHQWLI\LQJ WKH PRVW VXVWDLQDEOH ZD\ WR HQVXUH
$UHYLHZRIFXUUHQW(XURSHDQVXVWDLQDEOHGHYHORSPHQW WKH QXWULWLRQ RI WKH ZRUOG·V FXUUHQW DQG IXWXUH
VWUDWHJLHV DQG DFWLRQ SODQV KLJKOLJKWV WKH IROORZLQJ SRSXODWLRQVUHTXLUHVIXUWKHUUHVHDUFK0RUHUHVHDUFK
PDMRUJRDOVUHJDUGLQJVXVWDLQDEOHIRRGFRQVXPSWLRQ LVDOVRQHHGHGRQZD\VWRDFKLHYHVXVWDLQDEOHIRRG
LQRUGHURISULRULW\
‡ /RZHULQJREHVLW\OHYHOVDQGLQFUHDVLQJKHDOWK
‡ ,QFUHDVLQJ RUJDQLF IRRG FRQVXPSWLRQ DQG
SURGXFWLRQ
‡ 5HGXFLQJ*+*HPLVVLRQVDQG
‡ 5HGXFLQJIRRGZDVWH
$VVXVWDLQDEOHGHYHORSPHQWVWUDWHJLHVDUHDUHVXOWRI
VRFLHWDOGHEDWHVLQWKHYDULRXVFRXQWULHVWKH\UHÁHFW
PDLQVWUHDPWKLQNLQJDERXWWKHDUHDVLQZKLFKSROLF\
LQVWUXPHQWVDUHDSSURSULDWHDQGQHFHVVDU\+RZHYHU
WKHVHH[SOLFLWJRDOVQHJOHFWRWKHUUHOHYDQWDVSHFWVRI
IRRGDQGGULQNVXVWDLQDELOLW\WKHVRFLDODQGHFRQRPLF
GLPHQVLRQV LQ ERWK WKH JOREDO DQG ORFDO VHQVH
7KH 8QLWHG .LQJGRP·V 6XVWDLQDEOH 'HYHORSPHQW
FRQVXPSWLRQSDWWHUQV7KHRYHUZKHOPLQJYLHZLQWKH
VFLHQWLÀFOLWHUDWXUHLVWKDWWKHPRVWHIIHFWLYHZD\VIRU
DIÁXHQWVRFLHWLHVWRUHGXFHWKHHQYLURQPHQWDOLPSDFW
RIWKHLUGLHWVDUHWRFXWGRZQRQWKHDPRXQWRIPHDW
DQG GDLU\ SURGXFWV FRQVXPHG HVSHFLDOO\ EHHI EX\
RUJDQLFVHDVRQDODQGORFDOO\DYDLODEOHIRRGSURGXFWV
DQGDYRLGSURGXFWVWUDQVSRUWHGE\DHURSODQH
2YHUDQGDERYHWKHVHFRQFHUQVJRYHUQPHQWVVKRXOG
GHYHORSFURVVVHFWRUDOSRSXODWLRQZLGHSROLFLHVRQD
YDULHW\RILVVXHVLQFOXGLQJWKRVHUHODWLQJWRDJULFXOWXUH
DQG IRRG VXSSO\ DYDLODELOLW\ RI DQG DFFHVV WR IRRG
SK\VLFDO DFWLYLW\ ZHOIDUH DQG VRFLDO EHQHÀWV VRXQG
HQYLURQPHQWDO SURGXFWLRQ DQG FRQVXPSWLRQ ÀVFDO
SROLFLHV WKH UROH RI LQGLYLGXDO FRQVXPHU GHFLVLRQ
&RPPLVVLRQ  HPSKDVL]HV WKH QHHG WR PRYH PDNLQJ SXEOLF SURFXUHPHQW DQG SXEOLF SURYLVLRQ
EH\RQG UHÁHFWLRQV RQ ´VDIH KHDOWK\ DQG QXWULWLRXV RI IRRG %DVHG RQ WKHVH SROLFLHV JRYHUQPHQWV
IRRGµWRLQFOXGHFRQVLGHUDWLRQRI´WKHQHHGVRIWKHOHVV VKRXOG GHYHORS DFWLRQ SODQV RQ VXVWDLQDEOH IRRG
ZHOO RIIµ 7KDW LV LW LV QHFHVVDU\ WR FRQVLGHU GHFHQW FRQVXPSWLRQ
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
&XUUHQWIRRGFRQVXPSWLRQSDWWHUQVQRWRQO\WKUHDWHQ
WKHTXDOLW\RIOLIHRILQGLYLGXDOVWKH\DOVRKDYHQHJDWLYH
HQYLURQPHQWDO VRFLDO DQG HFRQRPLF LPSDFWV
3ROLFLHV DQG SURJUDPPHV WR FRXQWHUDFW WKHVH
LPSDFWV DUH FRPSOLFDWHG EHFDXVH RI WKH PXOWLSOH
LQWHUGHSHQGHQFLHV EHWZHHQ WKH DFWRUV DQG LVVXHV
LQYROYHGLQWKHIRRGV\VWHP:KLOHXVHIXODQGXVHDEOH
FRQVXPHU LQIRUPDWLRQ RQ WKH FRQVHTXHQFHV RI IRRG
FRQVXPSWLRQ HDUO\ FRQVXPHU HGXFDWLRQ DQG FDVH
EDVHG FRQVXPHU DGYLFH FDQ HPSRZHU FRQVXPHUV

EHWWHU NQRZOHGJH ZLOO QRW DXWRPDWLFDOO\ FKDQJH
SUHIHUHQFHV DQG EHKDYLRXU 5DWKHU DYDLODELOLW\
DIIRUGDELOLW\DQGVRFLDODWWUDFWLRQRIVXVWDLQDEOHIRRG
FKRLFHVDVZHOODVHDV\DFFHVVWRWKHPVHHPWREH
WKHNH\OHYHUVWRIRVWHUVXVWDLQDEOHIRRGFRQVXPSWLRQ
E\ LQGLYLGXDO FRQVXPHUV ´0DNLQJ WKH VXVWDLQDEOH
FKRLFH WKH HDV\ FKRLFHµ SURPRWLQJ KHDOWK\ IRRGV
UHWKLQNLQJ PHQXV LQ FDQWHHQV DQG VLPSOLI\LQJ IRRG
ODEHOOLQJ DUH ZRUWKZKLOH SROLF\ LQLWLDWLYHV WR H[SORUH
NHHSLQJ LQ PLQG WKH GLYHUVLW\ RI VRFLDO VHWWLQJV DQG
ZHOFRPLQJFXOWXUDOGLYHUVLW\LQIRRGFRQVXPSWLRQ
 75$'($1'(19,5210(175(9,(:

1//'06#4; U
11&#('6;#0&;56'/+%*#0)'U+/+6#6+105
1(
11&10641.5(14#(')7#4&+0)
11&#('6;
-XWWD-DNVFKH3ROLF\2IÀFHU)RRG
)HGHUDWLRQRI*HUPDQ&RQVXPHU2UJDQLVDWLRQV9HUEUDXFKHU]HQWUDOH%XQGHVYHUEDQG9=%9

$EVWUDFW
,QFUHDVLQJJOREDOL]DWLRQKDVDFFHOHUDWHGWKHLQGXVWULDOL]DWLRQRIDJULFXOWXUDOSUDFWLFHVDQGFRVWSUHVVXUHV
DPRQJSURGXFHUV7KLVKDVOHGWRODUJHUVFDOHVRISURGXFWLRQRIDYHU\OLPLWHGQXPEHURIFRPPHUFLDOO\
OXFUDWLYH DJULFXOWXUDO JRRGV LQ D GHFUHDVLQJ QXPEHU RI SURGXFWLRQ XQLWV ZLWK VHYHUDO XQUHVROYHG IRRG
VDIHW\ULVNVWKDWDUHGLIÀFXOWWRPDQDJH
,QWKHDEVHQFHRIHIIHFWLYHUHJXODWLRQSURGXFWLRQVWDQGDUGVLQJOREDOL]HGPDUNHWVZLOOIROORZD´UDFHWRWKH
ERWWRPµZLWKWKHUHVXOWWKDWLQWHUPVRIHQYLURQPHQWDOVRFLDODQGHWKLFDOFULWHULDWKHFKHDSHVWDQGORZHVW
VWDQGDUGVPLJKWEHDSSOLHG
$OWKRXJK WKHUH DUH FRPSUHKHQVLYH FRQWURO PHFKDQLVPV WR HQVXUH IRRG VDIHW\ WKH\ DUH LQVXIÀFLHQW WR
JXDUDQWHH IRRG VDIHW\ IRU DOO LQWHUQDWLRQDOO\ WUDGHG SURGXFWV :KDW LV ODFNLQJ LV D SURDFWLYH SUHYHQWLYH
DSSURDFK
7KHFXUUHQWDSSURDFKHVWRDVVXULQJIRRGVDIHW\DUHFRPSOLFDWHGDQGH[SHQVLYHHVSHFLDOO\IRUVPDOOVFDOH
SURGXFHUVDQGLQWKHHQGSURGXFHUVDQGFRQVXPHUVSD\WKHDGGLWLRQDOFRVWV7KHQRWLRQWKDWPRUHFRQWUROV
DUH VXIÀFLHQW WR JXDUDQWHH DGHTXDWH IRRG VDIHW\ KDV SURYHG ZURQJ DGGLWLRQDO FRQWUROV KDYH QRW EHHQ
DEOHWRKDOWRUUHYHUVHWKHWUHQGRILQFUHDVLQJFRQWDPLQDQWVLQIRRGSURGXFWVDQGJUHDWHUHQYLURQPHQWDO
SROOXWLRQ$V\VWHPLFFKDQJHWRZDUGVORZULVNVXVWDLQDEOHSURGXFWLRQWHFKQLTXHVZLOOHDVHWKHSUREOHPV
RIIRRGVDIHW\DQGPD\DOVRLPSURYHWKHOHYHORIWUXVWRIFRQVXPHUVLQDJULFXOWXUDOSURGXFWV

$&KDQJHVLQFRQVXPSWLRQKDELWVLQD IRRG VHFWRU LV KLJKO\ GHSHQGHQW RQ IHHG LPSRUWV

JOREDOL]HGZRUOG ZKLFKHQDEOHLWWREHWKHZRUOG·VELJJHVWH[SRUWHURI
IRRGSURGXFWV
&RQVXPHUV LQ WKH (XURSHDQ 8QLRQ (8 DUH DEOH WR
FRQVXPHIRRGVIURPDOORYHUWKHZRUOGGXULQJYLUWXDOO\ $FFRUGLQJ WR HVWLPDWHV RI D *HUPDQ JURXS RI
DQ\ VHDVRQ RI WKH \HDU 7KLV LV SRVVLEOH EHFDXVH DVVRFLDWLRQVFRRUGLQDWHGE\WKH$UEHLWVJHPHLQVFKDIW
RI ZRUOG WUDGH ZKLFK KDV EHFRPH PRUH DQG PRUH ElXHUOLFKH /DQGZLUWVFKDIW $E/ DQG WKH (XUR1DWXU
LQWHUFRQQHFWHGLQWKHJOREDOL]DWLRQSURFHVVRIWKHSDVW 6WLIWXQJ   ´WKH (8·V QHHG IRU DJULFXOWXUDO
IHZGHFDGHV%XWJOREDOL]DWLRQLVSDUWO\EOLQGWRPDQ\ ODQGV RXWVLGH RI WKH &RPPXQLW\ LQFOXGLQJ
VRFLDO DQG HQYLURQPHQWDO LPSDFWV RI SURGXFWLRQ VRPH  PLOOLRQ KHFWDUHV IRU WKH SURGXFWLRQ RI
EHFDXVH RI FRVW SUHVVXUHV DQG UHVXOWLQJ VFDOH
UHTXLUHPHQWV
5DFHWRWKHERWWRPWDNHVSODFHEHFDXVHJRRGVRFLDO
DQGHQYLURQPHQWDOFRQGLWLRQVOHDGWRKLJKHUFRVWV,I
WKHUH LV QR WUDQVSDUHQF\ IRU FRQVXPHUV RU QR RWKHU
OLPLWDWLRQ ´D UDFH WR WKH ERWWRP´ LV JRLQJ WR EH WKH
RYHUZKHOPLQJPRGHOIRULQYHVWPHQW
)RU H[DPSOH :HVWHUQ GHPDQG IRU LPSRUWHG DQLPDO
IHHG GULYHV WKH SURGXFWLRQ RI VR\EHDQV FRUQ DQG
ZKHDW RYHUVHDV DQG OHDGV WR QRQVLWHVSHFLÀF
SURGXFWLRQ VFKHPHV 7KH (XURSHDQ DJULFXOWXUDO DQG
LPSRUWHG VR\ DQG SURWHLQ IHHGV LV HVWLPDWHG
WR EH LQ WKH RUGHU RI  PLOOLRQ KHFWDUHV ² WKLV LV
WZLFH WKH XWLOL]HG DJULFXOWXUDO DUHD RI *HUPDQ\µ
7KH UHODWLRQVKLS EHWZHHQ IHHG OLYHVWRFN DQG DQLPDO
PDQXUHKDVEHHQQHJOHFWHGZLWKQHJDWLYHHIIHFWVRQ
WKH HQYLURQPHQW JURXQG ZDWHU RFHDQV ELRGLYHUVLW\
DQLPDOZHOIDUHDQGSXEOLFKHDOWK/LYHVWRFNSURGXFWLRQ
QRZ QHHGV WR EH UHOLQNHG WR ORFDOO\ DYDLODEOH
DJULFXOWXUDO ODQG DQG GHOLQNHG IURP EHLQJ D GLUHFW
FRPSHWLWRURIKXPDQIRRGVXSSO\
$QRWKHU WUHQG FRQFHUQV WKH GHJOREDOL]DWLRQ RI IRRG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

FKDLQV,QDVXUYH\RIFRQVXPHUVZKLFKDVNHGWKHP LQ DJULFXOWXUDO SURGXFWLRQ V\VWHPV QRW HQRXJK LV

WRZKDWH[WHQWWKH\ZHUHFRQFHUQHGDERXWIRRGVDIHW\ EHLQJ GRQH WR SUHYHQW WKHP 7KLV OHDGV WR QHJDWLYH
LQJOREDOVXSSO\FKDLQVSHUFHQWUHSOLHGWKDWWKH\ DQG XQVXVWDLQDEOH LQWHUGHSHQGHQFLHV EHWZHHQ
ZHUHYHU\FRQFHUQHGZKLOHSHUFHQWUHVSRQGHGWKDW DJULFXOWXUDOSURGXFWLRQDQGSXEOLFKHDOWKDVLOOXVWUDWHG
WKH\ZHUHVRPHZKDWZRUULHG(XURSHDQ&RPPLVVLRQ E\WKHH[DPSOHRIDQWLELRWLFUHVLVWDQFH7KH(XURSHDQ

7KHUH LV JURZLQJ FRQVXPHU SUHIHUHQFH IRU UHJLRQDO
SURGXFWV RYHU SURGXFWV IURP YHU\ GLVWDQW FRXQWULHV
)RRG 6DIHW\ $XWKRULW\ ()6$ HYDOXDWHG WKH SXEOLF
KHDOWK ULVN RI EDFWHULDO VWUDLQV UHVLVWDQW WR FHUWDLQ
DQWLPLFURELDOV LQ IRRG DQG IRRGSURGXFLQJ DQLPDOV
,W GUHZ WKH FRQFOXVLRQ WKDW WKH XVH RI DQWLPLFURELDOV
RIRULJLQ$FFRUGLQJWRDVXUYH\E\1HVWOpWKH
LQ IRRGSURGXFLQJ DQLPDOV ZDV D ULVN IDFWRU IRU WKH
DWWUDFWLYHQHVV RI UHJLRQDO SURGXFWV KDV H[FHHGHG
VSUHDG RI WKRVH EDFWHULDO VWUDLQV DQG IRU SXEOLF
WKDW RI RUJDQLF IDUPLQJ  SHU FHQW RI UHVSRQGHQWV
KHDOWK$VDUHVXOWRIWKLVVWXG\H[SHUWVUHFRPPHQGHG
FODLPHGWKH\ERXJKWUHJLRQDOIRRGDQGRIWKHVH
LPSRVLQJ UHVWULFWLRQV DQG EDQQLQJ FHUWDLQ DQWLELRWLFV
SHU FHQW UHSRUWHG EX\LQJ UHJLRQDO IRRG RQ D UHJXODU
EDVLV ZKHUHDV  SHU FHQW UHSRUWHG EX\LQJ LW IURP
WLPH WR WLPH 7KH PRWLYDWLRQV IRU VXFK FRQVXPHU
SUHIHUHQFHDUHWKHLUEHOLHIWKDWWKHVHSURGXFWVDUHRI
EHWWHU TXDOLW\ WKH\ IHHO PRUH VHFXUH ZKHQ NQRZLQJ
DERXW WKH RULJLQ RI WKH SURGXFWV DQG WKHLU GHVLUH WR
SURPRWH VXVWDLQDELOLW\ DQG WKH ORFDO HFRQRP\ 7KLV
()6$  7KH H[SHUWV DOVR FRQFOXGHG WKDW WKH
H[WHQVLYHLQWUD(8WUDGHLQDQLPDOVZDVDQDGGLWLRQDO
ULVNIDFWRUIRUDQWLELRWLFUHVLVWDQFH
7KHUHQHHGVWREHJUHDWHUDWWHQWLRQWRFRPEDWLQJDQG
DYRLGLQJ JOREDO HSLGHPLFV ² VRFDOOHG SDQGHPLFV
PDQ\RIZKLFKDUH]RRQRVHVLHGLVHDVHVZKLFKFDQ
LVDOVRZK\FRQVXPHUVOLNHWRVHHWKHSODFHRIRULJLQ EHWUDQVPLWWHGIURPDQLPDOVWRKXPDQV$SDSHUE\
PDUNHGFOHDUO\RQIRRGSURGXFWV WKH (XURSHDQ &RPPLVVLRQ·V 'LUHFWRUDWH *HQHUDO IRU
7KH SDVW IHZ GHFDGHV KDYH ZLWQHVVHG D PDVVLYH
FKDQJH LQ SURGXFWLRQ DV ZHOO DV LQ SURFHVVLQJ DQG
FRQVXPSWLRQ KDELWV .QRZOHGJH RQ KRZ WR SUHSDUH
IRRG KDV EHHQ ORVW DQG FRQYHQLHQFH IRRGV DQG
HDWLQJRXWDVDUHVXOWRIWLPHSUHVVXUHKDYHEHFRPH
LQFUHDVLQJO\ SRSXODU &RVWV RI IRRG SDFNDJLQJ RIWHQ
H[FHHGWKHFRVWVRIWKHIRRGVWKHPVHOYHV
%6XVWDLQDEOHDJULFXOWXUH
2IWHQ IRRG VDIHW\ PHDVXUHV VXFK DV LQVSHFWLRQ RI
IRRG DQG UHFDOOV RI WDLQWHG IRRG WDNH SODFH DW WKH
HQG RI WKH IRRG FKDLQ :KLOH WKHVH PHDVXUHV DUH
LQGLVSHQVDEOHPRUHLPSRUWDQWVKRXOGEHSUHYHQWLRQ
ERWK IRU UHGXFLQJ UHODWHG WUDQVDFWLRQ FRVWV DQG IRU
JDLQLQJ WKH WUXVW RI FRQVXPHUV 3UHYHQWLRQ LQ WKH
FRQWH[W RI IRRG VDIHW\ PHDQV VWDUWLQJ DW WKH LQLWLDO
VWDJHVRISURGXFWLRQORRNLQJLQWRWKHXVHRIUHVRXUFHV
+HDOWKDQG&RQVXPHU$IIDLUV6$1&2GHÀQHV
SUHYHQWLRQ DV FRQVLVWLQJ RI PHDVXUHV WR GHFUHDVH
RFFXUUHQFH DQG WUDQVPLVVLRQ RI DQLPDO GLVHDVHV E\
IDUPLQJDQGIRRGFKDLQSUDFWLFHVDQGDQLPDOWUDQVSRUW
LQRUGHUWRHQVXUHDKLJKOHYHORIDQLPDOKHDOWKSXEOLF
KHDOWK DQG IRRG VDIHW\ 7KLV LQFOXGHV OLPLWLQJ WKH
LQFLGHQFHRI]RRQRVHVLQKXPDQVDQGRWKHUELRORJLFDO
ULVNV6$1&2HVWLPDWHVWKDWWKHFRVWIRUDYDFFLQDWLRQ
EDQNDW(8OHYHOPDLQWDLQLQJRQO\WKHYDFFLQHVIRUIRRW
DQGPRXWKGLVHDVHLVDERXWĄPLOOLRQSHU\HDU7KH
WRWDOYDOXHRIWKHDQWLJHQVWRUHGLQDYDFFLQHEDQNLV
HVWLPDWHGDWĄPLOOLRQIURPRQZDUGVDQGWKH
VWRFNKDVWREHUHQHZHGHYHU\ÀYH\HDUV$FFRUGLQJ
WRWKH6$1&2VWXG\WKHPDLQWRROVDQGLQVWUXPHQWVRI
SUHYHQWLRQDUHPRQLWRULQJDQGVXUYHLOODQFHLQPHPEHU
6WDWHV DQG ELRVDIHW\ PHDVXUHV VXFK DV GLVLQIHFWLRQ
VHJUHJDWLRQ DQG FOHDQLQJ )RU D FULWLFDO GLVFXVVLRQ
RIELRVDIHW\VHH,GHODQG5HLFKHUWLQFKDSWHURIWKLV
DQGWKHPRGHRIDJULFXOWXUDOSURGXFWLRQ,WLVQRZZHOO
NQRZQWKDWLQWHQVLYHXVHRIIRVVLOIXHOVLQDJULFXOWXUH
ZLOO QRW EH VXVWDLQDEOH LQ WKH IXWXUH QHLWKHU ZLOO WKH
XVH RI RWKHU UHVRXUFHV VXFK DV SKRVSKDWH DQG
SKRVSKRURXV %XW V\VWHPDWLF FKDQJH LV QHFHVVDU\
QRW RQO\ EHFDXVH RI WKH HYHQWXDO VFDUFLW\ RI WKHVH
H[WHUQDO LQSXWV EXW DOVR EHFDXVH RI SUREOHPV ZLWK
DVVXULQJ IRRG VDIHW\ LQ KLJKO\ LQWHQVLYH FRQYHQWLRQDO
DJULFXOWXUDOSURGXFWLRQV\VWHPV
,W LV FOHDU WKDW ZKLOH HIIRUWV DUH EHLQJ PDGH WR
FRPEDW DQLPDO GLVHDVHV DQG SURGXFW FRQWDPLQDWLRQ
5HYLHZ ,Q WKH HYHQW RI DQ DQLPDO GLVHDVH EUHDNLQJ
RXW SUHYHQWLRQ DQG FRQWURO VWUDWHJLHV LQFOXGH LPSRUW
UHVWULFWLRQVVXFKDVOHJLVODWLRQDQGFRQWURORIDQLPDO
PRYHPHQWV DFURVV QDWLRQDO ERUGHUV +RZHYHU ZKDW
LV PLVVLQJ LV D GLVFXVVLRQ RI WKH OLPLWV RI DQLPDO
WUDQVSRUW DQG WKH GHQVLW\ RI DQLPDO SURGXFWLRQ WR
DYRLGRXWEUHDNVDQGWRPDLQWDLQSURGXFWLRQDWDOHYHO
FRPPHQVXUDWHZLWKUHJLRQDOPDUNHWUHTXLUHPHQWVDQG
HQYLURQPHQWDOFDUU\LQJFDSDFLW\
)LUVW RI DOO ZH QHHG D FRQFHSW IRU VXVWDLQDEOH
DJULFXOWXUDO SURGXFWLRQ DQG QRW RQO\ IRU (XURSH
 75$'($1'(19,5210(175(9,(:

7KLV KDV WR EH GHÀQHG DFFRUGLQJ WR VLWHVSHFLÀF &)RRGFRQWURO

FRQGLWLRQV 5HVHDUFKHUV KDYH GHÀQHG FULWLFDO
´SODQHWDU\ ERXQGDULHVµ WR HQVXUH KXPDQ VDIHW\ 7KH RXWEUHDN RI WKH %6( FULVLV VRPH  \HDUV DJR
WKH WUDQVJUHVVLQJ RI ZKLFK FRXOG EH FDWDVWURSKLF FUHDWHGDPDVVLYHFULVLVRIFRQÀGHQFHZKLFKSURPSW
5RFNVWU|P HW DO  1LQH RI WKH ERXQGDULHV HG WKH &RPPLVVLRQ RI WKH (XURSHDQ &RPPXQLWLHV
LGHQWLÀHG DUH FOLPDWH FKDQJH VWUDWRVSKHULF R]RQH
ODQGXVHFKDQJHIUHVKZDWHUXVHELRORJLFDOGLYHUVLW\
RFHDQ DFLGLÀFDWLRQ QLWURJHQ DQG SKRVSKRUXV
HPLVVLRQVLQWRWRWKHELRVSKHUHDQGRFHDQVDHURVRO
ORDGLQJ DQG FKHPLFDO SROOXWLRQ $FFRUGLQJ WR D
 WR XQGHUWDNH D VWXG\ WKDW UHVXOWHG LQ WKH VR
FDOOHG :KLWH 3DSHU RQ )RRG 6DIHW\ ,W ZDV DQG VWLOO
LV WKH FUXFLDO VWUDWHJLF GRFXPHQW IRU IRRG VDIHW\ LQ
WKH (8 :H DW WKH )HGHUDWLRQ RI *HUPDQ &RQVXPHU
2UJDQLVDWLRQV ZRQGHUHG ZKHWKHU WKDW VWUDWHJ\ KDV
UHSRUW E\ 5RFNVWU|P HW DO  WKUHH RI WKH QLQH
ERXQGDULHV KDYH DOUHDG\ EHHQ WUDQVJUHVVHG DOO RI
WKHPFRQQHFWHGZLWKDJULFXOWXUDOSURGXFWLRQ
7KH *HUPDQ &RXQFLO IRU 6XVWDLQDEOH 'HYHORSPHQW
EHHQ VXFFHVVIXO ,V WKH SULQFLSOH RI WUDFHDELOLW\ IXOO\
RSHUDWLRQDO VR WKDW ZH EHFRPH DZDUH RI H[LVWLQJ
ULVNV DV HDUO\ DV SRVVLEOH" 'R RQO\ VDIH JOREDOO\
WUDGHGJRRGVUHDFKRXUSODWHV",VWKHSUHFDXWLRQDU\
SULQFLSOH RI WKH (8 UHJXODWLRQ RQ IRRG VDIHW\ EHLQJ
 UHFRPPHQGV WKDW WKH RUJDQLF IDUPLQJ
FRQFHSW EH PDGH WKH JROG VWDQGDUG IRU DJULFXOWXUDO
SURGXFWLRQWREHXVHGDVDJXLGHOLQHWKRXJKLWQHHGV
WREHFRQWLQXRXVO\GHYHORSHG'XVVHOGRUSDQG6DXWHU
LPSOHPHQWHG" $QG ZK\ GR FRQVXPHUV VWLOO KDYH
GLVWUXVWLQWKHSUHFDXWLRQDU\SULQFLSOHDVDSSOLHG"
$FFRUGLQJ WR D (XUREDURPHWHU VXUYH\ RQ ULVN
SHUFHSWLRQ LQ WKH (8 (XURSHDQ &RPPLVVLRQ
 DOVR QRWH WKDW ORZH[WHUQDOLQSXW DJULFXOWXUDO
  SHU FHQW RI WKRVH VXUYH\HG EHOLHYHG WKDW
SUDFWLFHV LQ GHYHORSLQJ FRXQWULHV KDYH UHVXOWHG LQ
WKH SUREDELOLW\ RI HDWLQJ IRRGV ZKLFK KDYH QHJDWLYH
KLJKHU \LHOGV RQ DYHUDJH   KLJKHU UHODWLYH WR
FRQYHQWLRQDO SURGXFWLRQ V\VWHPV 7KH\ DVVXPH WKDW
H[WHUQDO LQSXWV RIWHQ DUH QRW DYDLODEOH WR IDUPHUV
LQ GHYHORSLQJ FRXQWULHV WKDW WKH XVH RI PLQHUDO
IHUWLOL]HUV RQ JURXQGV ZLWK ORZ UHWHQWLRQ RI QXWULHQWV
UHGXFHV\LHOGVDQGWKDWKLJK\LHOGLQJYDULHWLHVDUHQRW
DSSURSULDWHIRUVLWHVZLWKVXERSWLPDOFRQGLWLRQV
2UJDQLF IDUPLQJ LV UHJDUGHG DV VLWHVSHFLÀF DQG
VXVWDLQDEOHEHFDXVHRILWVFLUFXODUÁRZRILQSXWV$V
GHPDQG IRU RUJDQLF SURGXFWV LV KLJKHU WKDQ VXSSO\
LQ*HUPDQ\WKHUHLVXSZDUGSUHVVXUHRQSULFHVDQG
PRUHDQGPRUHRUJDQLFSURGXFWVDUHEHLQJLPSRUWHG
7KXV JURZLQJ RUJDQLF IRRGV IRU H[SRUW FRXOG ZHOO
EH DQ RSWLRQ IRU VPDOOVFDOH SURGXFHUV DV QRWHG
E\ DQ HYDOXDWLRQ RI &KXUFK 'HYHORSPHQW 6HUYLFH
HIIHFWV RQ KHDOWK ZDV YHU\ KLJK DQG  SHU FHQW
EHOLHYHGWKDWLWZDVIDLUO\SUREDEOH7KHUHZHUHVLPLODU
GDWD IRU *HUPDQ\ )XUWKHUPRUH PDQ\ FRQVXPHUV
DUH VWLOO DVNLQJ IRU D V\VWHPLF FKDQJH LQ DJULFXOWXUDO
SURGXFWLRQPHWKRGV7KH(XUREDURPHWHUVXUYH\DOVR
UHYHDOV WKDW SHRSOH DUH LQFUHDVLQJO\ ZRUULHG DERXW
FKHPLFDO UHVLGXHV IURP SHVWLFLGHV LQ IUXLW YHJHWDEOH
DQG FHUHDOV ZLWK DQ DYHUDJH RI  SHU FHQW RI
UHVSRQGHQWVLQWKH(8H[SUHVVLQJVXFKFRQFHUQV
SHUFHQWLQ*UHHFHSHUFHQWLQ)UDQFHDQGSHU
FHQW LQ *HUPDQ\ &RQFHUQLQJ WKH XVH RI DQWLELRWLFV
RU KRUPRQHV LQ PHDW DQ DYHUDJH RI  SHU FHQW RI
UHVSRQGHQWV WKURXJKRXW (XURSH UHSRUWHG EHLQJ YHU\
ZRUULHG  SHU FHQW LQ &\SUXV DQG  SHU FHQW LQ
WKH 1HWKHUODQGV 7KH (8 DYHUDJH IRU UHVSRQGHQWV
(YDQJHOLVFKHU(QWZLFNOXQJVGLHQVWDQG%UHDGIRUWKH H[SUHVVLQJ FRQFHUQ DERXW WKH FORQLQJ RI DQLPDOV
:RUOG%URWIUGLH:HOW+RZHYHUPDUNHWVLQ
WKLV VHJPHQW DUH GHYHORSLQJ QHDUO\ DORQJ WKH VDPH
OLQHV DV FRQYHQWLRQDO PDUNHWV UHVXOWLQJ LQ XQIDLU
FRPSHWLWLRQ EHWZHHQ SURGXFHUV ZLWKLQ WKH (8 DQG
WKRVHDEURDG
0DQ\ZHOOLQIRUPHGFRQVXPHUVDUHDSSDOOHGDWWKHZD\
*HUPDQIDUPLQJV\VWHPVRSHUDWH6RPHDJULFXOWXUHLQ
(XURSHPD\QHYHUEHHFRQRPLFDOZLWKRXWVXEVLGLHV
3XEOLFPRQH\VKRXOGQRWEHVSHQWIRUSUHVHUYLQJWKLV
NLQG RI DJULFXOWXUH 6XEVLGLHV VKRXOG EH VSHQW IRU D
V\VWHPRIDJULFXOWXUDOSURGXFWLRQWKDWLVÀWDQGYLDEOH
IRUWKHIXWXUHLQDPDQQHUWKDWLVDGDSWHGWRWKHVRLOV
DQGOLYLQJFRQGLWLRQVRIDQLPDOVDQGSHRSOH7KHUHLV
DQXUJHQWQHHGIRUFKDQJHWRSURWHFWSXEOLFJRRGV
IRU IRRG SURGXFWV ZDV  SHU FHQW DQG  SHU FHQW
ZHUHFRQFHUQHGDERXWSROOXWDQWVVXFKDVPHUFXU\LQ
ÀVK DQG GLR[LQV LQ SRUN )RUW\WZR SHU FHQW RI WKRVH
VXUYH\HGGLGQRWEHOLHYHWKDWWKHSXEOLFDXWKRULWLHVLQ
WKH(8YLHZHGWKHKHDOWKRIFLWL]HQVDVPRUHLPSRUWDQW
WKDQ WKH SURÀWV RI SURGXFHUV DQG PRUH WKDQ  SHU
FHQW IHOW WKDW SXEOLF DXWKRULWLHV VKRXOG GR PRUH WR
HQVXUHWKDWIRRGLVKHDOWK\DQGLQIRUPSHRSOHDERXW
KHDOWK\GLHWVDQGOLIHVW\OHV
7KH:KLWH3DSHURQ)RRG6DIHW\PDNHVPDQXIDFWXUHUV
LPSRUWHUV FDUULHUV DQG UHWDLOHUV UHVSRQVLEOH IRU WKH
IRRG VDIHW\ RI SURGXFWV 7KH\ KDYH WR HQVXUH DQG
GRFXPHQW WKH VDIHW\ RI WKHLU JRRGV $GGLWLRQDOO\ D
V\VWHPRIIRRGFRQWUROVLVEHLQJLPSOHPHQWHGWKURXJK
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

RIÀFLDOPRQLWRULQJRIIRRGDQGYHWHULQDU\PDWWHUV7KH 7KH JURZLQJ PDUNHW IRU HQULFKHG IRRG HJ

FRPSHWHQW DXWKRULWLHV WU\ WR GHWHFW SUREOHPV ZLWK FRQWDLQLQJ YLWDPLQV DQG PLQHUDOV SUHVHQWV IRRG
IRRGVDIHW\DVHDUO\DVSRVVLEOHDQGWDNHDSSURSULDWH VDIHW\ ULVNV EHFDXVH RI WKH ULVN RI RYHUFRQVXPSWLRQ
PHDVXUHV7KH)HGHUDO2IÀFHRI&RQVXPHUDQG)RRG RI WKRVH DGGLWLYHV $QRWKHU SUREOHP DULVHV IURP
6DIHW\ %9/ LQ *HUPDQ\ WULHG WR GHYHORS HPHUJLQJ SKDUPDFHXWLFDOO\ DFWLYH VXEVWDQFHV QRW DSSURYHG LQ
ULVN LGHQWLÀFDWLRQ V\VWHPV %XW LW LV QRW FOHDU KRZ (XURSHDQGVROGDVIRRGRQWKH,QWHUQHW
HIIHFWLYH WKHVH FDQ EH 2QH RI WKH REOLJDWLRQV RI
,PSRUWHG SURGXFWV DUH VWLOO ODUJHO\ D ´EODFN ER[µ LQ
EXVLQHVVHV LV WR WUDFH WKH RULJLQ RI SURGXFWV ZKHQ
WKHVHQVHWKDWODERUDWRULHVLQ(XURSHDUHRQO\DEOHWR
WKH\DUHREVHUYHGWRSRVHDKHDOWKKD]DUGDQGKHOS
ÀQGUHVLGXHVWKH\DUHORRNLQJIRU:LWKRXWLQIRUPDWLRQ
UHPRYHWKRVHSURGXFWVIURPWKHPDUNHWDVTXLFNO\DV
DERXWWKHDJULFXOWXUDOSURGXFWLRQPHWKRGVDQGUHODWHG
SRVVLEOH7KHLGHDLVWRWUDFHWKHFRPSOHWHIRRGDQG
LQSXWVIRULQVWDQFHWKHXVHRIYHWHULQDU\GUXJVLQDQLPDO
IHHGSURGXFWLRQFKDLQIURPWKHVRXUFHRISURGXFWLRQ
WRWKHUHWDLOHU
'/LPLWVRIIRRGVDIHW\
)RRG VDIHW\ LV FORVHO\ OLQNHG WR TXHVWLRQV RI DQLPDO
DQG SODQW KHDOWK DQG DQLPDO ZHOIDUH ,Q WKH (8 WKH
KXVEDQGU\WKRVHODERUDWRULHVDUHXQOLNHO\WRÀQGWKH
UHVLGXHV 7KH FRQWURO V\VWHP LQ WKH (8 QHHGV WR EH
FRQWLQXRXVO\ LPSURYHG ,Q FRQWUDVW ZLWK WKH LQGXVWU\
WKHDXWKRULWLHVDUHQRWVXIÀFLHQWO\LQWHUFRQQHFWHGDQG
DUH DOZD\V RQH VWHS EHKLQG QHZ WHFKQRORJLHV QHZ
DFWLYHSKDUPDFHXWLFDOLQJUHGLHQWVDQGQHZSURGXFWV
)RRG DQG 9HWHULQDU\ 2IÀFH )92 LV UHVSRQVLEOH IRU WKDWSRVHQHZULVNV)URPQRWLÀFDWLRQVDERXWXQVDIH
YHULI\LQJ FRPSOLDQFH ZLWK (8 VWDQGDUGV FRQFHUQLQJ IRRGV LQ WKH (8·V 5DSLG $OHUW 6\VWHP RI )RRG
WKHVH WKUHH DUHDV $FFRUGLQJ WR 6$1&2  LW DQG )HHG 5$6)) LW LV HYLGHQW WKDW IRRG DQG IHHG
FDUULHV RXW  LQVSHFWLRQV DQQXDOO\ RI ZKLFK RQH SURGXFWV LPSRUWHG LQWR WKH (8 DUH QRW DXWRPDWLFDOO\
WKLUGDUHXQGHUWDNHQLQGHYHORSLQJFRXQWULHV7KH)92 VDIH 3DWKRJHQLF PLFURRUJDQLVPV DOOHUJHQV
ORRNV DW WKH OHJDO IUDPHZRUN DQG ZKHWKHU UHJXODWRU\
PHDVXUHVDUHLQSODFHWRHQVXUHWKDWSURGXFHUVDSSO\
WKH VWDQGDUGV VWLSXODWHG DQG HQIRUFH WKHP ,W DOVR
FKHFNV WKH ZRUN RI WKH FRPSHWHQW DXWKRULWLHV DQG
WKHLUVXUYHLOODQFHDQGFRQWUROPHDVXUHVHJZKHWKHU
WKH\ KDYH DGHTXDWH IDFLOLWLHV VXFK DV ODERUDWRULHV
JHQHWLFDOO\ PRGLÀHG RUJDQLVPV *02V P\FRWR[LQV
DQGUHVLGXHVLQIRRGUHOHDVHGIURPSDFNDJLQJDUHWKH
SULQFLSDO FDXVHV RI XQVDIH IRRGV )RRG VDIHW\ DQG
IRRGTXDOLW\UHTXLUHJOREDOHIIRUWVE\WKHLQGXVWU\DQG
WKHRIÀFLDOUHJXODWRU\DQGFRQWUROOLQJDXWKRULWLHV)LYH
SHUFHQWRIIRRGVWXIIFRQVXPHGLQWKH(8RULJLQDWHV
LQGHSHQGHQFHRIZRUNLQIRUPDWLRQSROLF\FHUWLÀFDWLRQ IURP WKLUG FRXQWULHV 6$1&2  7KH TXHVWLRQ
SUDFWLFHVFRQWUROV\VWHPVDQGUHFRUGV,WDOVRORRNV
DW SURGXFWLRQ HVWDEOLVKPHQWV KDQGOLQJ DQG VWRUDJH
VLWHVDQGODERUDWRULHV
$FFRUGLQJ WR 6$1&2 ZH NQRZ IURP WKH ZRUN RI
)92 WKDW WKH PDLQ IRRG VDIHW\ SUREOHPV FRQFHUQ
WKHUHIRUHDULVHVDVWRKRZDJOREDODOHUWV\VWHPFRXOG
EH RUJDQL]HG DQG ZKHWKHU WKH (XURSHDQ V\VWHP LV
VXLWDEOH IRU RWKHU FRXQWULHV SDUWLFXODUO\ GHYHORSLQJ
FRXQWULHV
-RKQ 'DOOL WKH IRUPHU &RPPLVVLRQHU IRU +HDOWK DQG
WKH IROORZLQJ DUHDV WKH OHJDO DQG DGPLQLVWUDWLYH &RQVXPHU 3ROLF\   QRWHG WKDW ´PRUH WKDQ
LQIUDVWUXFWXUH D ODFN RI XQGHUVWDQGLQJ RI FRQWURO VL[W\FRXQWULHVRXWVLGHWKH(8ZHUHFRQQHFWHGWRWKH
V\VWHPUHTXLUHPHQWVHVSHFLDOO\RI(8UHTXLUHPHQWV 5$6)):LQGRZDQHZRQOLQHSODWIRUPZKLFKDOORZ>V@
LQDGHTXDWH FRQWURO DQG HQIRUFHPHQW PHFKDQLVPV WKHP WR GRZQORDG 5$6)) QRWLÀFDWLRQV WKDW PLJKW
DQG ODFN RI RU LQDGHTXDWH IDFLOLWLHV IRU FRQWURO DQG FRQFHUQ WKHP 7KH &RPPLVVLRQ ZRXOG FRQWLQXH LWV
FHUWLÀFDWLRQSXUSRVHV6$1&2$OWKRXJKWKHUH
LVQRGRXEWWKDWWKHUHLVJUHDWHUFRRSHUDWLRQEHWZHHQ
WKHFRPSHWHQWRXWKRULWLHVLQWKHGLIIHUHQWFRXQWULHVLQ
WHFKQLFDODVVLVWDQFHDQGFDSDFLW\EXLOGLQJZLWKUHJDUG
WR(XURSHDQIRRGVDIHW\WKHUHDUHSUREOHPVVXFKDV
LQDGHTXDWH LQIUDVWUXFWXUH LQ H[SRUWLQJ FRXQWULHV ,Q
DGGLWLRQWRWKDWVRPHRIÀFLDOIRRGDQGIHHGDXWKRULWLHV
UHÁHFWPRUHWKHLQWHUHVWVRIWKHEXVLQHVVFRPPXQLW\
WKDQFRQVXPHULQWHUHVWV)RRGVDIHW\LVDOVRLQGDQJHU
EHFDXVH RI D JURZLQJ DPRXQW RI XQVDIH SURGXFWV
HIIRUWV WR VXSSRUW WKRVH FRXQWULHV LQ VHWWLQJ XS WKHLU
DOHUW V\VWHPV WKURXJK WKH %HWWHU 7UDLQLQJ IRU 6DIHU
)RRG SURJUDPPH WR HQDEOH WKHP WR WDFNOH IRRG
VDIHW\LQFLGHQWVWKDWJUDGXDOO\EHFRPHPRUHJOREDOLQ
QDWXUHµ&RRSHUDWLRQEHWZHHQFRXQWULHVDQGEHWZHHQ
SXEOLF KHDOWK DQG IRRG VDIHW\ DXWKRULWLHV LV HVVHQWLDO
WR PDQDJH KD]DUGV LQ IRRG 7KLV KDV EHHQ VWDUNO\
LOOXVWUDWHG E\ WKH FDVH RI (+(& 2 + D GHDGO\
(FROL EDFWHULXP VWUDLQ FDXVHG E\ FRQWDPLQDWHG
VSURXWV WKDW NLOOHG DW OHDVW  SHRSOH DQG FDXVHG D
VXFKDVGLHWDU\VXSSOHPHQWVRIIHUHGYLDWKH,QWHUQHW PDMRUIRRGFULVLVLQ*HUPDQ\LQ
 75$'($1'(19,5210(175(9,(:

(,QWHUQDWLRQDOIRRGVWDQGDUGV RI 8QLWHG 6WDWHV DQG (XURSHDQ VWDQGDUGV ZRXOG LQ

PRVW LQVWDQFHV KDYH QHJDWLYH HIIHFWV DV LOOXVWUDWHG
&ROOHFWLYH VWDQGDUGV VXFK DV *OREDO*$3 6DIH E\WKHH[DPSOHRIFKORULQDWHGSRXOWU\
4XDOLW\)RRG4XDOLW\DQG6DIHW\RU/DEHO5RXJHIRU
PRUH LQIRUPDWLRQ VHH *XHQWKHU DQG :LOO  DUH
LQFUHDVLQJO\VHUYLQJDVTXDOLW\DVVXUDQFHVFKHPHVIRU
FRUSRUDWLRQV LQYROYHG LQ WKH JOREDO IRRG FKDLQ 7KH\
VHUYHDVDJXDUDQWHHIRUVWDEOHIRRGTXDOLW\LQDZRUOG
RIKRUL]RQWDOO\DQGYHUWLFDOO\LQWHJUDWHGSURGXFHUV
$V FRQVXPHU RUJDQL]DWLRQV VKRZ LQ UHFHQW PDUNHW
VXUYH\V SURFHVVHG IRRG LV FRQVLGHUDEO\ PRUH
H[SHQVLYHDQGYHU\RIWHQHQULFKHGZLWKXQQHFHVVDU\
IRRG DGGLWLYHV WKDW SRVH WKH ULVN RI RYHUGRVDJH
0DQ\RIWKHVHSURFHVVHGIRRGSURGXFWVDOVRFRQWDLQ
DURPDV DGGLWLYHV IRU FRQVHUYDWLRQ DQGRU WDVWH
HQKDQFLQJVXEVWDQFHVDLPHGDWNHHSLQJWKHPIUHVK
DSSHDOLQJ DQG QRQSHULVKDEOH ZKLOH EHLQJ VKLSSHG
ZRUOGZLGH,QWKLVUHVSHFWSURGXFWVRIELJFRPSDQLHV
HYHU\ZKHUHLQWKHZRUOGDGKHUHWRWKHVDPHVWDQGDUGV
+RZHYHUWKHZD\IRRGVWDQGDUGVDUHVHWDQGZKRVHWV
WKHPLVQRWWUDQVSDUHQWWRFRQVXPHUV,QGHHGPDQ\
FRQVXPHUV UHDOL]H WKDW WKHLU XQGHUVWDQGLQJ RI IRRG
VDIHW\DQGWKHLUHWKLFDOFRQFHUQVDUHQRWDXWRPDWLFDOO\
EHLQJ FRQVLGHUHG LQ WKH LQWHUQDWLRQDO PDUNHW DQG
WKDWVWDQGDUGVRIWHQZRUNDJDLQVWFRQVXPHULQWHUHVWV
)(TXLYDOHQFHRISURGXFWLRQDQGRITXDOLW\
PDQDJHPHQWLQVWUXPHQWV
&RQVXPHUV PD\ GLVFULPLQDWH DJDLQVW SURGXFWV
IURP GHYHORSLQJ FRXQWULHV LI WKH VWDQGDUGV RI WKRVH
FRXQWULHVDUHQRWDFFHSWHGDVHTXLYDOHQWWR(XURSHDQ
VWDQGDUGV (TXLYDOHQFH LQ WKLV FRQWH[W GRHV QRW
PHDQ WKDW SURGXFWV VKRXOG EH SURGXFHG XVLQJ WKH
VDPHSURFHVVHVEXWLQDFRPSDUDEOHZD\3URGXFWV
SURFHVVLQJWHFKQLTXHVDQGZD\VRIFRQIRUPLQJZLWK
IRRGVDIHW\UHTXLUHPHQWVPD\GLIIHU
$OWKRXJK WKHUH LV D FRPSUHKHQVLYH VHW RI FRQWURO
LQVWUXPHQWVIRUIRRGVDIHW\LWZLOOQRWEHVXIÀFLHQWWR
VDIHJXDUG IRRG VDIHW\ IRU DOO LQWHUQDWLRQDOO\ WUDGHG
SURGXFWV,QVXPDV\VWHPDWLFDSSURDFKWRZDUGVWKH
FRQWUROV\VWHPLVPLVVLQJ,QVWHDGRIKDUPRQL]LQJWKH
HOHPHQWV RI VWDQGDUGV WKHLU QXPEHU LV VWLOO JURZLQJ
0DQ\UHTXLUHPHQWVDQGVWDQGDUGVRIIRRGVDIHW\KDYH
EHHQLQWURGXFHGE\PXOWLQDWLRQDODJULEXVLQHVVWRWKHLU
DGYDQWDJHEXWUDUHO\LQFRRSHUDWLRQZLWKWKHIDUPHUV
0KOHLE  )RU LQVWDQFH WKHUH DUH FRQÁLFWV
EHWZHHQFRQVXPHUVLQWKH(8DQGH[SRUWLQJEXVLQHVV
LQ WKH 8QLWHG 6WDWHV RYHU *02V FKORULQDWHG SRXOWU\
DQG KRUPRQHV LQ PHDW DQG GDLU\ SURGXFWLRQ 7KH
PDMRULW\RI(XURSHDQFRQVXPHUVDUHZDU\RISURGXFWV
RI FORQHG DQLPDOV RU JHQHWLFDOO\ PRGLÀHG ÀVK EXW
FRPPHUFLDO SUHVVXUH JURXSV RIWHQ WU\ WR LQÁXHQFH
SXEOLFGHEDWHDQGVHQWLPHQWRQWKLVLVVXH
ZKR KDYH WR PDQDJH WKH UHTXLUHPHQWV (TXLYDOHQFH
RISURGXFWLRQDQGRITXDOLW\PDQDJHPHQWLQVWUXPHQWV
VKRXOGEHMXGJHGE\ERGLHVWKDWDUHLQGHSHQGHQWRI
LQGXVWU\DQGLQDFFRUGDQFHZLWKFRQVXPHUGHPDQG
*&RQFOXVLRQV
,QFUHDVLQJ JOREDOL]DWLRQ KDV DFFHOHUDWHG WKH
LQGXVWULDOL]DWLRQ RI DJULFXOWXUDO SUDFWLFHV DQG FRVW
$FFRUGLQJ WR 7DQ]PDQQ  WKH &KXUFK
'HYHORSPHQW 6HUYLFH DQG %UHDG IRU WKH :RUOG ZDQW
IRRGVWDQGDUGVWREHQHJRWLDWHGDWWKHPXOWLQDWLRQDO
OHYHO%XWWKHVROXWLRQLVQRWWKDWVWDQGDUGVVKRXOGEH
ORZHUHGWRDOHYHOWKDWZRXOGHQDEOHFRPSOLDQFHE\DOO
SURGXFHUV &RQVXPHUV· GHVLUH IRU IRRG VDIHW\ YDULHV
GHSHQGLQJRQWKHFXOWXUDOEDFNJURXQGRIWKHFRXQWU\
ZKHUHSURGXFWVDUHFRQVXPHG,IWKH)HGHUDO,QVWLWXWH
SUHVVXUHV DPRQJ SURGXFHUV 7KLV KDV OHG WR ODUJHU
VFDOHV RI SURGXFWLRQ RI KRPRJHQHRXV DJULFXOWXUDO
JRRGV LQ D GHFUHDVLQJ QXPEHU RI SURGXFWLRQ XQLWV
ZLWK VHYHUDO XQUHVROYHG IRRGVDIHW\ ULVNV WKDW DUH
GLIÀFXOWWRPDQDJH
0DQ\ IRRG VDIHW\ LVVXHV DUH UHODWHG WR GLVHDVHV RI
SODQWVDQGDQLPDOVDQGWRWKHXVHRIH[WHUQDOLQSXWV
IRU 5LVN $VVHVVPHQW %I5 LQ *HUPDQ\ IRU LQVWDQFH
GHÀQHV WKH OLPLW YDOXHV IRU UHVLGXHV WKHVH UHIHU WR
WKH PLQLPDO TXDOLW\ SURGXFHUV KDYH WR FRPSO\ ZLWK
7KLV LV ZK\ WKHUH ZLOO DOZD\V EH D FRQÁLFW EHWZHHQ
WKH LQWHUHVWV RI FRQVXPHUV LQ GHYHORSHG FRXQWULHV
DQG SURGXFHUV LQ GHYHORSLQJ FRXQWULHV +RUWRQ DQG
VXFK DV DJURFKHPLFDOV DQG DQWLELRWLFV ,QWHQVLÀHG
DJULFXOWXUDO SURGXFWLRQ KDV D QHJDWLYH LPSDFW RQ
SXEOLFKHDOWKDQGZHOOEHLQJDQGWKDWSURFHVVVHHPV
WRKDYHUHDFKHGLWVOLPLWV%HFDXVHRIWKHSUHVVXUHV
RI FRPSHWLWLRQ SURGXFHUV DUH FRQVWDQWO\ VHHNLQJ WR
UHGXFHWKHLUSURGXFWLRQFRVWV7KLVPHDQVWKDWLQWKH
:ULJKW  KDYH VKRZQ WKDW GHYHORSLQJ FRXQWULHV DEVHQFHRIHIIHFWLYHUHJXODWLRQSURGXFWLRQVWDQGDUGV
ZRXOG VWDQG WR EHQHÀW LI WKH 8QLWHG 6WDWHV DQG ZLOOIROORZD´UDFHWRWKHERWWRPµZLWKWKHUHVXOWWKDWLQ
(XURSH DGRSWHG WKH VDPH VWDQGDUGV %XW IURP WKH WHUPVRIHQYLURQPHQWDOVRFLDODQGHWKLFDOFULWHULDWKH
SHUVSHFWLYH RI (XURSHDQ FRQVXPHUV KDUPRQL]DWLRQ FKHDSHVWDQGORZHVWVWDQGDUGVPLJKWEHDSSOLHG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH
$OWKRXJK WKHUH DUH FRPSUHKHQVLYH FRQWURO PHFKDQ
LVPV WR HQVXUH IRRG VDIHW\ WKH\ DUH LQVXIÀFLHQW WR
JXDUDQWHH IRRG VDIHW\ IRU DOO LQWHUQDWLRQDOO\ WUDGHG
SURGXFWV :KDW LV ODFNLQJ LV D SURDFWLYH SUHYHQWLYH
DSSURDFK ,QVWHDG RI GLIIHUHQW VDIHW\ VWDQGDUGV
DQG UHTXLUHPHQWV EHLQJ KDUPRQL]HG WKH QXPEHU
RI GLYHUJHQW UHTXLUHPHQWV LV VWLOO JURZLQJ 0DQ\
VWDQGDUGV DQG UHTXLUHPHQWV KDYH EHHQ LQWURGXFHG
WRWKHDGYDQWDJHRIPXOWLQDWLRQDODJULEXVLQHVVHVEXW
RIWHQQRWLQFRRSHUDWLRQZLWKWKHIDUPHUVZKRKDYHWR
FRQIRUPZLWKWKRVHUHTXLUHPHQWV
&RQWUROV WR VDIHJXDUG (XURSHDQ IRRG VDIHW\ KDYH
FHUWDLQOLPLWDWLRQV7KHFXUUHQWDSSURDFKHVWRDVVXULQJ
IRRGVDIHW\DUHFRPSOLFDWHGDQGH[SHQVLYHHVSHFLDOO\
IRUVPDOOVFDOHSURGXFHUVDQGLQWKHHQGSURGXFHUV
DQGFRQVXPHUVSD\WKHDGGLWLRQDOFRVWV7KHQRWLRQ
WKDWPRUHFRQWUROVDUHVXIÀFLHQWWRJXDUDQWHHDGHTXDWH
IRRG VDIHW\ KDV SURYHG ZURQJ DGGLWLRQDO FRQWUROV
KDYH QRW EHHQ DEOH WR KDOW RU UHYHUVH WKH WUHQG RI

LQFUHDVLQJFRQWDPLQDQWVLQIRRGSURGXFWVDQGJUHDWHU
HQYLURQPHQWDO SROOXWLRQ $ V\VWHPLF FKDQJH WRZDUGV
ORZULVNVXVWDLQDEOHSURGXFWLRQWHFKQLTXHVZLOOHDVH
WKHSUREOHPVRIIRRGVDIHW\UHODWHGWRWKHSURGXFWLRQ
DQGSURFHVVLQJRIIRRG,WPD\DOVRLPSURYHWKHOHYHO
RIWUXVWRIFRQVXPHUVLQDJULFXOWXUDOSURGXFWV
7KH IRRG LQGXVWU\ VKRXOG KHOS LPSURYH WKH EDVLV
IRU KHDOWK\ QXWULWLRQ E\ HQVXULQJ WKH TXDOLW\ RI UDZ
PDWHULDOVDQGLQSXWVLQSURFHVVHGIRRG7KHLQGXVWU\
VKRXOGDOVRHQVXUHWKDWSURGXFWLRQLVHQYLURQPHQWDOO\
IULHQGO\DQGDSSOLHGWRWKHORFDWLRQVZKHUHSURGXFWLRQ
WDNHVSODFH
*RYHUQPHQWV QHHG WR FRRSHUDWH QDWLRQDOO\ DQG
LQWHUQDWLRQDOO\ WR LQFRUSRUDWH WKH SUHYHQWLRQ RI ULVN
IDFWRUV LQWR RWKHU SROLF\PDNLQJ DUHDV 0HDVXUHV
UHODWLQJWRDUHDVVXFKDVIRRGVHFXULW\DQGIRRGVDIHW\
IRRG SURGXFWLRQ DJULFXOWXUH KHDOWK HQYLURQPHQW
WUDGH WD[DWLRQ HGXFDWLRQ DQG XUEDQ GHYHORSPHQW
QHHG WR EH FRKHUHQW DQG VKRXOG DGKHUH WR WKH
SUHFDXWLRQDU\SULQFLSOH
 75$'($1'(19,5210(175(9,(:

5HIHUHQFHV
$FDGHP\RI6FLHQFHRI6RXWK$IULFD7XUQLQJVFLHQFHRQ,PSURYLQJDFFHVVWRHQHUJ\LQVXE6DKDUDQ$IULFDQ
6L[WKDQQXDOPHHWLQJRIWKH$IULFDQ6FLHQFH$FDGHP\'HYHORSPHQW,QLWLDWLYH²1RYHPEHU$YDLODEOHDWKWWS
ZZZQDWLRQDODFDGHPLHVRUJDVDGLB&RQIHUHQFH3')V7XUQLQJ6FLHQFH2QSGI
$GHOPDQ,%H\RQGH[SRUWOHGJURZWK:RUOG'HYHORSPHQW²
$MD\L&2$NLQQLIHVL).6LOHVKL*DQG.DQMLSLWH:/DERXULQSXWVDQGÀQDQFLDOSURÀWDELOLW\RIFRQYHQWLRQDODQG
DJURIRUHVWU\EDVHGVRLOIHUWLOLW\PDQDJHPHQWSUDFWLFHVLQ=DPELD$JUHNRQ6HSWHPEHU²
$NHU-&DQG0ELWL,00RELOHSKRQHVDQGHFRQRPLFGHYHORSPHQWLQ$IULFD&*':RUNLQJ3DSHU&HQWHUIRU
*OREDO'HYHORSPHQW:DVKLQJWRQ'&$YDLODEOHDWKWWSZZZPHPSRZHUPHQWRUJZSFRQWHQWXSORDGV
0RELOH3KRQHVDQG(FRQRPLF'HYHORSPHQWLQ$IULFDSGI
$OOHQ0)UDPH'-+XQWLQJIRUG&-RQHV&'-DVRQ$/RZH-$0HLQVKDXVHQ0DQG0HLQVKDXVHQ1:DUPLQJ
FDXVHGE\FXPXODWLYHFDUERQHPLVVLRQVWRZDUGVWKHWULOOLRQWKWRQQH1DWXUH²
$OORZD\%-HG0LFURQXWULHQW'HÀFLHQFLHVLQ*OREDO&URS3URGXFWLRQ1HZ<RUNDQG+HLGHOEHUJ6SULQJHU9HUODJ
$OWLHUL0$DQG1LFKROOV&$JURHFRORJ\DQGWKHVHDUFKIRUDWUXO\VXVWDLQDEOHDJULFXOWXUH%HUNHOH\&$8QLYHUVLW\
RI&DOLIRUQLD
$OWLHUL 0$ 3RQWL / DQG 1LFKROOV &  (QKDQFHG SHVW PDQDJHPHQW WKURXJK VRLO KHDOWK WRZDUG D EHORZJURXQG
KDELWDWPDQDJHPHQWVWUDWHJ\%LRG\QDPLFV6XPPHU²
$OWLHUL 0$  $JURHFRORJ\ 7KH 6FLHQFH RI 6XVWDLQDEOH $JULFXOWXUH 6HFRQG HGLWLRQ %RXOGHU &2 :HVWYLHZ
3UHVV
$OWLHUL0$$JURHFRORJ\WKHVFLHQFHRIQDWXUDOUHVRXUFHPDQDJHPHQWIRUSRRUIDUPHUVLQPDUJLQDOHQYLURQPHQWV
$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW²
$OWLHUL0$DQG.RRKDINDQ3(QGXULQJIDUPV&OLPDWHFKDQJHVPDOOKROGHUVDQGWUDGLWLRQDOIDUPLQJFRPPXQLWLHV
(QYLURQPHQWDQG'HYHORSPHQW6HULHV3HQDQJ7KLUG:RUOG1HWZRUN
$OWLHUL0$DQG1LFKROOV&%LRGLYHUVLW\DQG3HVW0DQDJHPHQWLQ$JURHFRV\VWHPV6HFRQGHGLWLRQ%RFD5DWRQ
)/&5&3UHVV
$QGHUVRQ,)RRWDQG0RXWK'LVHDVH$5HYLHZDQG/HVVRQV/HDUQHG/RQGRQ
$QGHUVRQ6+*DQW]HU&-DQG%URZQ-5&6RLOSK\VLFDOSURSHUWLHVDIWHU\HDUVRIFRQWLQXRXVFXOWLYDWLRQ
-RLQW6RLO:DWHU&RQVHUYDWLRQ
$QGHUVRQ,$JULFXOWXUDOGHYHORSPHQWIRRGVHFXULW\DQGFOLPDWHFKDQJH,QWHUVHFWLQJDWDJOREDOFURVVURDGV
$YDLODEOHDWKWWSZHEZRUOGEDQNRUJ:%6,7((;7(51$/723,&6(;76'1(7FRQWHQW0'.aSDJH
3.aSL3.aWKH6LWH3.KWPO
$UEHLWVJHPHLQVFKDIW ElXHUOLFKH /DQGZLUWVFKDIW $E/ (XUR1DWXU 6WLIWXQJ  &RQVLVWHQW 5HIRUP RI WKH (8
$JULFXOWXUDO 3ROLF\ 1RZ 3DSHU MRLQWO\ SURGXFHG E\ DVVRFLDWLRQV HQJDJHG LQ HQYLURQPHQWDO SURWHFWLRQ QDWXUH
FRQVHUYDWLRQ DJULFXOWXUH GHYHORSPHQW SROLF\ FRQVXPHU DIIDLUV DQG DQLPDO ZHOIDUH 5KHLQEDFK+DPP -XQH
$YDLODEOH DW KWWSZZZGLHEHVVHUHDJUDUSROLWLNGHXSORDGVW[BJDSGRF*HUPDQB3ODWIRUP3DSHUB(8*$3
HQJOBSGI
$UHQGV7DQG&DVWK37KHFRPSDUDWLYHHIIHFWRIHTXLYDOHQWDPRXQWVRI13.DSSOLHGLQIDUP\DUGPDQXUHRULQ
IHUWLOL]HUVDVDIXQFWLRQRIVRLOSURSHUWLHV$JURNPDV7DODMWDQ
$UQHOO1&OLPDWHFKDQJHDQGZDWHUUHVRXUFHVLQ%ULWDLQ&OLPDWH&KDQJH²
$]HH]*6RLOFDUERQDQGRUJDQLFIDUPLQJ%ULVWRO6RLO$VVRFLDWLRQKWWSZZZVRLODVVRFLDWLRQRUJ:K\RUJDQLF
&OLPDWHIULHQGO\IRRGDQGIDUPLQJ6RLOFDUERQWDELG'HIDXOWDVS[
%DGJOH\ & 0RJKWDGHU - 4XLQWHUR ( =DNHP ( &KDSSHOO 0- $YLOpV9i]TXH] . 6DPXORQ $ 3HUIHFWR , 
2UJDQLFDJULFXOWXUHDQGWKHJOREDOIRRGVXSSO\5HQHZDEOH$JULFXOWXUHDQG)RRG6\VWHPV²
%DLOH\$:0DQDJLQJ&DQDGLDQUDQJHODQGVDVDVXVWDLQDEOHUHVRXUFH3ROLF\,VVXHVUDQJHODQGVLQDVXVWDLQDEOH
ELRVSKHUH,Q3URFHHGLQJVRIWKH)LIWK,QWHUQDWLRQDO5DQJHODQG&RQJUHVVYROXPH²
%DNDV,)RRGDQGJUHHQKRXVHJDV*+*HPLVVLRQV&RSHQKDJHQ5HVRXUFH,QVWLWXWH&5,$YDLODEOHDWKWWS
ZZZVFSNQRZOHGJHHXVLWHVGHIDXOWÀOHV.8B)RRGB*+*BHPLVVLRQVSGI
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

%DOW]HU.+DQVHQ+/LQG.0$QRWHRQWKHFDXVHVDQGFRQVHTXHQFHVRIWKHUDSLGO\LQFUHDVLQJLQWHUQDWLRQDO

IRRGSULFHV&RSHQKDJHQ,QVWLWXWHRI)RRGDQG5HVRXUFH(FRQRPLFV8QLYHUVLW\RI&RSHQKDJHQ
%DWWLVWL '6 DQG 1D\ORU 5/  +LVWRULFDO ZDUQLQJV RI IXWXUH IRRG LQVHFXULW\ ZLWK XQSUHFHGHQWHG VHDVRQDO KHDW
6FLHQFH²
%D\OLVV6PLWK737KH(FRORJ\RI$JULFXOWXUDO6\VWHPV&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
%HOODUE\-)RHUHLG%+DVWLQJV$DQG6PLWK3&RRO)DUPLQJ&OLPDWHLPSDFWVRIDJULFXOWXUHDQGPLWLJDWLRQ
SRWHQWLDO $PVWHUGDP *UHHQSHDFH ,QWHUQDWLRQDO $YDLODEOH DW KWWSZZZJUHHQSHDFHRUJLQWHUQDWLRQDO*OREDO
LQWHUQDWLRQDOSODQHWUHSRUWFRROIDUPLQJIXOOUHSRUWSGI
%HUJPDQQ.'HDOLQJZLWK&RQVXPHU8QFHUWDLQW\3XEOLF5HODWLRQVLQWKH)RRG6HFWRU+HLGHOEHUJ6SULQJHU
%HUWKHORW-3RXUXQPRGqOHDJULFROHGDQVOHVSD\VGX6XG0RQGH'LSORPDWLTXH1RYHPEHU
%LOO 0HOLQGD*DWHV)RXQGDWLRQ$JULFXOWXUDOGHYHORSPHQWVWUDWHJ\RYHUYLHZ6HDWWOH$YDLODEOHDWKWWSZZZ
JDWHVIRXQGDWLRQRUJ
%LQVZDQJHU0NKL]H+3&KDOOHQJHVDQG2SSRUWXQLWLHVIRU$IULFDQ$JULFXOWXUHDQG)RRG6HFXULW\+LJK)RRG
3ULFHV&OLPDWH&KDQJH3RSXODWLRQ*URZWKDQG+,9$,'63DSHUSUHVHQWHGDWWKH)$2([SHUW0HHWLQJRQ+RZ
WRIHHGWKH:RUOGLQ5RPH
%LUFKDOO-0RQVDQWRDJUHHVWRPFURSEULEHSHQDOW\)LQDQFLDO7LPHV-DQXDU\$YDLODEOHDWKWWSZZZ
IWFRPLQWOFPVVGDFGEGIHFKWPOD[]]7]8,-UI/
%OD\3DOPHU$)RRG)HDUV)URP,QGXVWULDOWR6XVWDLQDEOH)RRG6\VWHPV$OGHUVKRW$VKJDWH
%ORRP$-%XUJHU0$VHQVLR-65DQG&RXVLQV$%&DUERQGLR[LGHHQULFKPHQWLQKLELWVQLWUDWHDVVLPLODWLRQLQ
$UDELGRSVLVDQGZKHDW6FLHQFH²
%0(/)²$JUDUEHULFKW%XQGHVPLQLVWHULXPIU(UQlKUXQJ/DQGXQG)RUVWZLUWVFKDIW%RQQ
%0(/)  $JUDUEHULFKWH GHU %XQGHVUHJLHUXQJ %RQQ %XQGHVPLQLVWHULXP IU (UQlKUXQJ /DQGZLUWVFKDIW XQG
)RUVWHQ&LWHGE\3DGHO6DQG=HUJHU8(FRQRPLFVRIRUJDQLFIDUPLQJLQ*HUPDQ\,Q/DPSNLQ1DQG3DGHO6
HGV7KH(FRQRPLFVRI2UJDQLF)DUPLQJ$Q,QWHUQDWLRQDO3HUVSHFWLYH:DOOLQJIRUG&$%,QWHUQDWLRQDO
%RJQHU-3LSDWWL5+DVKLPRWR6'LD]&0DUHFNRYD.'LD]/.MHOGVHQ30RQQL6)DDLM$*DR4=KDQJ7$KPHG
0$ 6XWDPLKDUGMD 570 DQG *UHJRU\ 5  0LWLJDWLRQ RI JOREDO JUHHQKRXVH JDV HPLVVLRQV IURP ZDVWH
&RQFOXVLRQVDQGVWUDWHJLHVIURPWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH)RXUWK$VVHVVPHQW5HSRUWRI
:RUNLQJ*URXS,,,0LWLJDWLRQ$YDLODEOHDWKWWSZPUVDJHSXEFRPFRQWHQWVKRUW"UVV  VVRXUFH PIF
%RKDF-DQG3RNDU]KHYVN\$(IIHFWRIPDQXUHDQG13.RQVRLOPDFURIDXQDLQFKHUQR]HPVRLO,Q6]HJL-HG
6RLO %LRORJ\ DQG &RQVHUYDWLRQ RI %LRVSKHUH 3URFHHGLQJV RI WKH WK ,QWHUQDWLRQDO 6\PSRVLXP ² %XGDSHVW
$NDGHPLDL.LDGR
%ROOD9DQG3HQGRORYVND9'ULYLQJIRUFHVEHKLQG(8JUHHQKRXVHJDVHPLVVLRQVRYHUWKHGHFDGH
6WDWLVWLFVLQIRFXV$YDLODEOHDWKWWSWLQ\XUOFRPEKHVRJ
%RUURQ6%XLOGLQJUHVLOLHQFHIRUDQXQSUHGLFWDEOHIXWXUH+RZRUJDQLFDJULFXOWXUHFDQKHOSIDUPHUVDGDSWWR
FOLPDWHFKDQJH5RPH)$2
%UHQQDQ03UD\&1DVHHP$DQG2HKPNH-$QLQQRYDWLRQPDUNHWDSSURDFKWRDQDO\]LQJLPSDFWVRIPHUJHUV
DQGDFTXLVLWLRQVLQWKHSODQWELRWHFKQRORJ\LQGXVWU\$J%LR)RUXP²
%URRNV65LFH%LRIRUWLÀFDWLRQ/HVVRQVIRU*OREDO6FLHQFHDQG'HYHORSPHQW/RQGRQ(DUWKVFDQ
%URRNV6,VLQWHUQDWLRQDODJULFXOWXUDOUHVHDUFKDJOREDOSXEOLFJRRG"7KHFDVHRIULFHELRIRUWLÀFDWLRQ-RXUQDORI
3HDVDQW6WXGLHV²$YDLODEOHDWKWWSG[GRLRUJ
%URRNV6/HDFK0/XFDV+DQG0LOOVWRQH(6LOYHUEXOOHWVJUDQGFKDOOHQJHVDQGWKHQHZSKLODQWKURS\67(36
:RUNLQJ3DSHU67(36&HQWUH%ULJKWRQ
%URZQ /  7KH QHZ JHRSROLWLFV RI IRRG )RUHLJQ 3ROLF\  -XQH $YDLODEOH DW KWWSZZZIRUHLJQSROLF\FRP
DUWLFOHVWKHBQHZBJHRSROLWLFVBRIBIRRG"SDJH 
%UXLQVPD-7KH5HVRXUFH2XWORRNWR%\KRZPXFKGR/DQG:DWHUDQG&URS<LHOGV1HHGWR,QFUHDVHE\
"3DSHUSUHVHQWHGDWWKH)$2([SHUW0HHWLQJRQ+RZWR)HHGWKH:RUOGLQ5RPH
%XFN/(DQG6FKHUU6-0RYLQJHFRDJULFXOWXUHLQWRWKHPDLQVWUHDP,Q:RUOGZDWFK,QVWLWXWH6WDWHRIWKH:RUOG
 75$'($1'(19,5210(175(9,(:

,QQRYDWLRQVWKDW1RXULVKWKH3ODQHW:DVKLQJWRQ'&::1RUWRQ &RPSDQ\²
%XUQH\-$'DYLV6-DQG/REHOO'%*UHHQKRXVHJDVPLWLJDWLRQE\DJULFXOWXUDOLQWHQVLÀFDWLRQ3URFHHGLQJVRI
WKH1DWLRQDO$FDGHP\RI6FLHQFHV²
%X\DQRVNL+$DQG:DJQHU*+&DUERQF\FOLQJLQFXOWLYDWHGODQGDQGLWVJOREDOVLJQLÀFDQFH*OREDO&KDQJH
%LRO
%X\DQRVNL +$ %URZQ -5 :DJQHU *+  6DQKRUQ ÀHOG (IIHFWV RI  \HDUV RI FURSSLQJ RQ VRLO SDUDPHWHUV
LQÁXHQFLQJ FURS SURGXFWLYLW\ ,Q 6RLO RUJDQLF PDWWHU LQ WHPSHUDWH HFRV\VWHPV LQ 1RUWK $PHULFD HGV 3DXO ($
3DXVWLDQ((OOLRW7&ROH&9-SS%RFD5DWRQ)/&5&3UHVV
&DNPDN,3IHLIIHU:+DQG0F&ODIIHUW\%%LRIRUWLÀFDWLRQRIGXUXPZKHDWZLWK]LQFDQGLURQ&HUHDO&KHPLVWU\
²
&DPDUJR53URMHWRGHOtGHUGRJRYHUQRpUHGLJLGRSRUOREE\&RQJUHVVRHP)RFR'HFHPEHU$YDLODEOHDW
KWWSFRQJUHVVRHPIRFRXROFRPEUQRWLFLDVPDQFKHWHVDQWHULRUHVSURMHWRGHOLGHUGRJRYHUQRHUHGLJLGRSRU
OREE\
&DPSEHOO$.DSRV96FKDUOHPDQQ-3:%XEE3&KHQHU\$&RDG/'LFNVRQ%'RVZDOG1.KDQ06,.HUVKDZ
)DQG5DVKLG05HYLHZRIWKHOLWHUDWXUHRQWKHOLQNVEHWZHHQELRGLYHUVLW\DQGFOLPDWHFKDQJH,PSDFWV
DGDSWDWLRQDQGPLWLJDWLRQ7HFKQLFDO6HULHV1R0RQWUHDO6HFUHWDULDWRIWKH&RQYHQWLRQRQ%LRORJLFDO'LYHUVLW\
&DXOÀHOG /( DQG %ODFN 5(  =LQF GHÀFLHQF\ ,Q 0 (]]DWL HW DO HGV &RPSDUDWLYH 4XDQWLÀFDWLRQ RI +HDOWK
5LVNV*OREDODQG5HJLRQDO%XUGHQRI'LVHDVH$WWULEXWDEOHWR6HOHFWHG0DMRU5LVN)DFWRUV*HQHYD:RUOG+HDOWK
2UJDQL]DWLRQ²
&KDOOLQRU$:KHHOHU7*DUIRUWK&&UDXIXUG3.DVVDP$$VVHVVLQJWKHYXOQHUDELOLW\RIIRRGFURSV\VWHPVLQ
$IULFDWRFOLPDWHFKDQJH&OLPDWLF&KDQJH²
&KDVH&3ULFLQJIRUSURÀW$PHV,$,RZD6WDWH8QLYHUVLW\$YDLODEOHDWKWWSZZZH[WHQVLRQLDVWDWHHGXDJGP
ZKROHIDUPKWPOFKWPO
&KDVH&$DQG'XII\0'$QHFRQRPLFDQDO\VLVRIWKH1DVKXDWLOODJHVWXG\²-RXUQDORI3URGXFWLRQ
$JULFXOWXUH²
&KLEZDQD&)LVKHU0DQG6KLYHO\*&URSODQG$OORFDWLRQ(IIHFWVRI$JULFXOWXUDO,QSXW6XEVLGLHVLQ0DODZL
:RUOG'HYHORSPHQW
&KULVWHQVHQ%77KH$VNRYORQJWHUPH[SHULPHQWVRQDQLPDOPDQXUHDQGPLQHUDOIHUWLOL]HUV,Q(YDOXDWLRQRI
VRLORUJDQLFPDWWHUVPRGHOVXVLQJH[LVWLQJGDWDVHWVHGV3RZOVRQ'66PLWK3DQG6PLWK-81$72$6,
+HLGHOEHUJ*HUPDQ\6SULQJHU
&KULVWRSKHU6)/DO50LVKUD8/RQJWHUPQRWLOOHIIHFWVRQFDUERQVHTXHVWUDWLRQLQWKH0LGZHVWHUQ866RLO
6FLHQFH6RFLHW\RI$PHULFD-RXUQDO
&KXUFK'HYHORSPHQW6HUYLFH(YDQJHOLVFKHU(QWZLFNOXQJVGLHQVW(('DQG%UHDGIRUWKH:RUOG%URWIUGLH:HOW
/REE\EULHI/HEHQVPLWWHOVWDQGDUGVXQGGLH5HIRUPGHU(8$JUDUSROLWLN$YDLODEOHDWKWWSZZZHHGGH
À[ÀOHVGRFB$NWXHOOBB*$3B/REE\%ULHIHSGI
&,00<7  ,,7$  '70$ 3URMHFW SODWIRUP -DQXDU\  $SULO  $YDLODEOH DW KWWSGWPDFLPP\WRUJLQGH[SKS
FRPSRQHQWGRFPDQGRFBGRZQORDGGWPDSURMHFWSODWIRUPMDQXDU\DSULO
&OLQH :  *OREDO ZDUPLQJ DQG DJULFXOWXUH ,PSDFW HVWLPDWHV E\ FRXQWU\ &HQWUH IRU *OREDO 'HYHORSPHQW
:DVKLQJWRQ'&$YDLODEOHDWZZZFJGHYRUJFRQWHQWSXEOLFDWLRQVGHWDLO
&RPPXQLW\ (QHUJ\ 6FRWODQG  &RPPXQLW\ 5HQHZDEOH (QHUJ\ 7RRONLW $YDLODEOH DW KWWSZZZ
FRPPXQLW\HQHUJ\VFRWODQGRUJXNFRPPXQLW\UHQHZDEOHHQHUJ\WRRONLWDVS
&RPSDVVLRQLQ:RUOG)DUPLQJ7UXVW5HGXFLQJPHDWFRQVXPSWLRQ²WKHFDVHIRUXUJHQWUHIRUP3HWHUVÀHOG
8QLWHG.LQJGRP$YDLODEOHDWZZZFLZIRUJXNLQFOXGHVGRFXPHQWVFPBGRFVJJOREDOBEHQHÀWVBVXPPDU\
SGI
&RQQRU'-2UJDQLFDJULFXOWXUHFDQQRWIHHGWKHZRUOG)LHOG&URSV5HVHDUFK²
&RQUR\ -3 6HQHZHHUD 6 %DVUD $6 5RJHUV * DQG 1LVVHQ:RROOHU %  ,QÁXHQFH RI ULVLQJ DWPRVSKHULF &2
FRQFHQWUDWLRQV DQG WHPSHUDWXUH RQ JURZWK \LHOG DQG JUDLQ TXDOLW\ RI FHUHDO FURSV $XVWUDOLDQ -RXUQDO RI 3ODQW
3K\VLRORJ\²
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

&RQZD\*57KH'RXEO\*UHHQ5HYROXWLRQ/RQGRQ3HQJXLQ

&RUEHOOLQL00D]]D/&LDIÀ0/DÀDQGUD'DQG%RUJKL%(IIHFWRIKHDWVKRFNGXULQJJUDLQÀOOLQJRQSURWHLQ
FRPSRVLWLRQDQGWHFKQRORJLFDOTXDOLW\RIZKHDWV(XSK\WLFD
&XOODWKHU17KH+XQJU\:RUOG$PHULFD·V&ROG:DU%DWWOHDJDLQVW3RYHUW\LQ$VLD&DPEULGJH0$DQG/RQGRQ
+DUYDUG8QLYHUVLW\3UHVV
'DOOL-)RUHZRUG,Q$QQXDO5HSRUW5DSLG$OHUW6\VWHPIRU)RRGDQG)HHG5$6))%UXVVHOV(XURSHDQ
8QLRQ$YDLODEOHDWKWWSHFHXURSDHXIRRGIRRGUDSLGDOHUWGRFVUHSRUWBHQSGI
'D0DWWD)0*UDQGLV$$UHQTXH%&DQG%XFNHULGJH06,PSDFWVRIFOLPDWHFKDQJHVRQFURSSK\VLRORJ\DQG
IRRGTXDOLW\)RRG5HVHDUFK,QWHUQDWLRQDO²
'H6FKXWWHU2%XLOGLQJ5HVLOLHQFH$+XPDQ5LJKWV)UDPHZRUNIRU:RUOG)RRGDQG1XWULWLRQ6HFXULW\5HSRUWRI
WKH6SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRGWRWKH8QLWHG1DWLRQV+XPDQ5LJKWV&RXQFLO$+5&*HQHYD
6HSWHPEHU$YDLODEOHDWKWWSZZZVUIRRGRUJLPDJHVVWRULHVSGIRIÀFLDOUHSRUWVRUDKUFÀQDOHQJSGI
'H6FKXWWHU2D6HHG3ROLFLHVDQGWKH5LJKWWR)RRG(QKDQFLQJ$JURELRGLYHUVLW\5HZDUGLQJ,QQRYDWLRQ5HSRUW
RIWKH816SHFLDO5DSSRUWHXURQWKHULJKWWRIRRGWRWKH*HQHUDO$VVHPEO\GRFXPHQWQR$2FWREHU1HZ
<RUN8QLWHG1DWLRQV
'H6FKXWWHU2E$JULEXVLQHVVDQGWKH5LJKWWR)RRG5HSRUWRIWKH6SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRGWR
WKH8QLWHG1DWLRQV+XPDQ5LJKWV&RXQFLO$+5&*HQHYD'HFHPEHU$YDLODEOHDWKWWSZZZVUIRRG
RUJ
'H6FKXWWHU2D$JURHFRORJ\DQGWKH5LJKWWR)RRG5HSRUWRIWKH8QLWHG1DWLRQV6SHFLDO5DSSRUWHXURQWKH
5LJKWWR)RRGWRWKH+XPDQ5LJKWV&RXQFLO'RFXPHQWQR$+5&'HFHPEHU1HZ<RUN8QLWHG1DWLRQV
'H 6FKXWWHU 2 E 5HSRUW VXEPLWWHG E\ WKH 6SHFLDO 5DSSRUWHXU RQ WKH ULJKW WR IRRG 8QLWHG 1DWLRQV *HQHUDO
$VVHPEO\+XPDQ5LJKWV&RXQFLO6L[WHHQWKVHVVLRQ$JHQGDLWHP$+5&
'H6FKXWWHU2F$GGUHVVLQJFRQFHQWUDWLRQLQIRRGVXSSO\FKDLQV%ULHÀQJQRWH8QLWHG1DWLRQV+XPDQ5LJKWV
&RXQFLO*HQHYD'HFHPEHU$YDLODEOHDWKWWSZZZVUIRRGRUJLPDJHVVWRULHVSGIRWKHUGRFXPHQWVB
EULHÀQJQRWHBHQSGI
'H6FKXWWHU2$JURHFRORJ\DQGWKH5LJKWWR)RRG5HSRUWSUHVHQWHGDWWKH6L[WHHQWK6HVVLRQRIWKH8QLWHG
1DWLRQV +XPDQ 5LJKWV &RXQFLO $JHQGD LWHP $+5& *HQHYD  'HFHPEHU $YDLODEOH DW KWWSZZZ
VUIRRGRUJLPDJHVVWRULHVSGIRIÀFLDOUHSRUWVBDKUFBDJURHFRORJ\BHQSGI
'H6FKXWWHU2DQG9DQORTXHUHQ*7KHQHZ*UHHQ5HYROXWLRQ+RZWZHQW\ÀUVWFHQWXU\VFLHQFHFDQIHHGWKH
ZRUOG7KH6ROXWLRQV-RXUQDO9RO,VVXH$YDLODEOHDWZZZWKHVROXWLRQVMRXUQDORUJ
'H&OHUFN)$-)DQ]R-3DOP&DQG5HPDQV5(FRORJLFDODSSURDFKHVWRKXPDQQXWULWLRQ)RRGDQG1XWULWLRQ
%XOOHWLQVXSSO6²6
'HIUD5HSRUWRIWKH)RRG,QGXVWU\6XVWDLQDELOLW\6WUDWHJ\·V&KDPSLRQV·*URXSRQ:DVWH/RQGRQ'HSDUWPHQW
IRU (QYLURQPHQW )RRG DQG 5XUDO $IIDLUV $YDLODEOH DW KWWSDUFKLYHGHIUDJRYXNIRRGIDUPSROLF\IRRGLQGXVWU\
GRFXPHQWVUHSRUWZDVWHPD\SGI
'HJUDQGH $ .DQPHJQH - 7FKRXQGMHX = 0SHFN 0/ 6DGR 7 DQG 7VREHQJ $  0HFKDQLVPV IRU VFDOLQJXS
WUHH GRPHVWLFDWLRQ +RZ JUDVVURRWV RUJDQLVDWLRQV EHFRPH DJHQWV RI FKDQJH 1DLUREL ,QWHUQDWLRQDO &HQWUH IRU
5HVHDUFKLQ$JURIRUHVWU\,&5$)
'H -DQYU\ $ DQG 6DGRXOHW (  $JULFXOWXUDO JURZWK DQG SRYHUW\ UHGXFWLRQ $GGLWLRQDO HYLGHQFH :RUOG %DQN
5HVHDUFK2EVHUYHU9RO1R:DVKLQJWRQ'&$YDLODEOHDWKWWSHFRQSDSHUVUHSHFRUJDUWLFOHRXSZEUREV
YBDBD\BDBDLBDBDSBDKWP
'HODWH.'XII\0&KDVH&+ROVWH$)ULHGULFK+DQG:DQWDWH1$QHFRQRPLFFRPSDULVRQRIRUJDQLFDQG
FRQYHQWLRQDOJUDLQFURSVLQDORQJWHUPDJURHFRORJLFDOUHVHDUFK/7$5VLWHLQ,RZD$PHULFDQ-RXUQDORI$OWHUQDWLYH
$JULFXOWXUH²
'HOJDGR-$6SDUNV57)ROOHW5)6KDUNRII-/5LJJHQEDFK558VHRIZLQWHUFRYHUFURSVWRFRQVHUYHVRLODQG
ZDWHUTXDOLW\LQWKH6DQ/RLV9DOOH\RI6RXWK&HQWUDO&RORUDGR,Q(URVLRQLPSDFWRQVRLOTXDOLW\HG/DO5SS
%RFD5DWRQ)/&5&
'HPPHQW0:<RXQJ00DQG6HQVHQLJ5/3URYLGLQJPLFURQXWULHQWVWKURXJKIRRGEDVHGVROXWLRQV$NH\WR
KXPDQDQGQDWLRQDOGHYHORSPHQW-RXUQDORI1XWULWLRQ²
 75$'($1'(19,5210(175(9,(:

'HQHYDQ:03UHKLVWRULFDJULFXOWXUDOPHWKRGVDVPRGHOVIRUVXVWDLQDELOLW\$GYDQFHG3ODQW3DWKRORJ\²

'HUE\%0DQG/HY\$6'RIRRGODEHOVZRUN",Q%OXP31DQG*XQGODFK*7HGV+DQGERRNRI0DUNHWLQJDQG
6RFLHW\7KRXVDQG2DNV6DJH²
'LFN:$9DQ'RUHQ-U'07ULSOHWW-U&%+HQU\-(,QÁXHQFHRIORQJWHUPWLOODJHDQGURWDWLRQFRPELQDWLRQVRQ
FURS\LHOGVDQGVHOHFWHGVRLOSDUDPHWHUV5HVXOWVREWDLQHGIRUD0ROOLF2FKUDTXDOIVRLO2$5'&5HV%XOO
:RRVWHU2+
'LHEHO3/:LOOLDPV-5DQG/OHZHO\Q59$QHFRQRPLFFRPSDULVRQRIFRQYHQWLRQDODQGDOWHUQDWLYHFURSSLQJ
V\VWHPVIRUDUHSUHVHQWDWLYHQRUWKHDVW.DQVDVIDUP5HYLHZRI$JULFXOWXUDO(FRQRPLFV²
'REEV7/DQG6PROLN-'3URGXFWLYLW\DQGSURÀWDELOLW\RIFRQYHQWLRQDODQGDOWHUQDWLYHIDUPLQJV\VWHPV$ORQJ
WHUPRQIDUPSDLUHGFRPSDULVRQ-RXUQDORI6XVWDLQDEOH$JULFXOWXUH²
'RUZDUG$.\GG-0RUULVRQ-DQG8UH\,$SROLF\DJHQGDIRUSURSRRUDJULFXOWXUDOJURZWK,PSHULDO&ROOHJHDW
:\H$YDLODEOHDWKWWSZZZVDUSQRUJ]DZVVGDJULFXOWXUHSROLF\BDJHQGD3ROLF\B$JHQGDBORQJSGI
'UH\IXV)3OHQFRYLFK&3HWLW0$NFD+'RJKHLP6,VKLL(LWHPDQ0-LJJLQV-.LHUV7DQG.LQJDPNRQR5
+LVWRULFDO DQDO\VLV RI WKH HIIHFWLYHQHVV RI $.67 V\VWHPV LQ SURPRWLQJ LQQRYDWLRQ ,Q 0F,QW\UH % HW DO HGV
*OREDO 5HSRUW :DVKLQJWRQ '& ,$$67' $YDLODEOH DW KWWSZZZDJDVVHVVPHQWRUJLQGH[FIP"3DJH ,$$67'
5HSRUWV ,WHP,' 
'ULQNZDWHU/(:DJRQHU3DQG6DUUDQWRQLR0/HJXPHEDVHGFURSSLQJV\VWHPVKDYHUHGXFHGFDUERQDQG
QLWURJHQORVVHV1DWXUH²
'ULQNZDWHU/(:DJRQHU3DQG6DUUDQWRQLR0/HJXPHEDVHGFURSSLQJV\VWHPVKDYHUHGXFHGFDUERQDQG
QLWURJHQORVVHV1DWXUH²
'XVVHOGRUS0DQG6DXWHU$)RUVFKXQJ]XU/|VXQJGHV:HOWHUQlKUXQJVSUREOHPV²$QVDW]SXQNWH6WUDWHJLHQ
8PVHW]XQJ %UR IU 7HFKQLNIROJHQ$EVFKlW]XQJ EHLP 'HXWVFKHQ %XQGHVWDJ (QGEHULFKW ]XP 7$3URMHNW
$UEHLWVEHULFKW1U)HEUXDU\
(DVWHUOLQJ :( $JJDUZDO 3. %DWLPD 3 %UDQGHU .0 (UGD / +RZGHQ 60 .LULOHQNR $ 0RUWRQ - 6RXVVDQD -)
6FKPLGKXEHU-DQG7XELHOOR)1)RRGÀEUHDQGIRUHVWSURGXFWV,Q,3&&3DUU\0/HWDOHGV&OLPDWH
&KDQJH,PSDFWV$GDSWDWLRQDQG9XOQHUDELOLW\&RQWULEXWLRQRI:RUNLQJ*URXS,,WRWKH)RXUWK$VVHVVPHQW
5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV²
(GZDUGV0-XVWDQRWKHUHPSHURU"7KHP\WKVDQGUHDOLWLHVRISKLODQWKURFDSLWDOLVP1HZ<RUN'HPRVDQG7KH
<RXQJ)RXQGDWLRQ
()6$  ()6$ HYDOXDWHV WKH SXEOLF KHDOWK ULVN RI EDFWHULDO VWUDLQV UHVLVWDQW WR FHUWDLQ DQWLPLFURELDOV LQ IRRG
DQG IRRGSURGXFLQJ DQLPDOV 3UHVV UHOHDVH  $XJXVW  $YDLODEOH DW KWWSZZZHIVDHXURSDHXHQSUHVV
QHZVDKWP
(O+DJH6FLDODEED1+DWWDP&HGV2UJDQLF$JULFXOWXUH(QYLURQPHQWDQG)RRG6HFXULW\5RPH)$2$YDLODEOH
DWZZZIDRRUJGRFUHS\H\HKWP
(O+DJH6FLDODEED10OOHU/LQGHQODXI02UJDQLFDJULFXOWXUHDQGFOLPDWHFKDQJH5HQHZDEOH$JULFXOWXUHDQG
)RRG6\VWHPV²
(OOLV)DQG)UHHPDQ+$5XUDO/LYHOLKRRGVDQG3RYHUW\5HGXFWLRQ6WUDWHJLHVLQ)RXU$IULFDQ&RXQWULHV-RXUQDO
RI'HYHORSPHQW6WXGLHV²
(OWRQ&6$QLPDO(FRORJ\/RQGRQ6LGJZLFNDQG-DFNVRQ
(VTXLQDV$OFi]DU -  3URWHFWLRQ RI FURS JHQHWLF GLYHUVLW\ IRU IRRG VHFXULW\ 3ROLWLFDO HWKLFDO DQG WHFKQLFDO
FKDOOHQJHV1DWXUH'HFHPEHU²
(XURSHDQ&RPPLVVLRQ:KLWH3DSHURQ)RRG6DIHW\%UXVVHOV-DQXDU\'RFXPHQW&20ÀQDO
$YDLODEOHDWKWWSHFHXURSDHXGJVKHDOWKBFRQVXPHUOLEUDU\SXESXEBHQSGI
(XURSHDQ&RPPLVVLRQ6SHFLDO(XUREDURPHWHU+HDOWKDQG)RRG%UXVVHOV
(XURSHDQ &RPPLVVLRQ  (XUREDURPHWHU 6XUYH\ 5HSRUW RQ 5LVN 3HUFHSWLRQ LQ WKH (8 (XUREDURPHWHU 6SHFLDO
%UXVVHOV
(XURSHDQ (QYLURQPHQW $JHQF\  +RXVHKROG FRQVXPSWLRQ DQG WKH HQYLURQPHQW (($ 5HSRUW 1R 
&RSHQKDJHQ$YDLODEOHDWKWWSZZZHHDHXURSDHXSXEOLFDWLRQVHHDBUHSRUWBBDWBGRZQORDGÀOH
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

(XURVWDW)URPIDUPWRIRUNDVWDWLVWLFDOMRXUQH\DORQJWKH(8·VIRRGFKDLQ,VVXHQXPEHU$YDLODEOHDW

KWWSWLQ\XUOFRPWFKPDQGKWWSWLQ\XUOFRPNMVF
(\KRUQ)2UJDQLF)DUPLQJIRU6XVWDLQDEOH/LYHOLKRRGVLQ'HYHORSLQJ&RXQWULHV"7KH&DVHRI&RWWRQLQ,QGLD
=ULFK YGI+RFKVFKXOYHUODJ $YDLODEOH DW KWWSZZZYGIHWK]FKORDG$OO)UDPHVDVS"VKRZ$UW'HWDLO  6HH
DOVR(\KRUQ$VVHVVLQJWKHSRWHQWLDORIRUJDQLFIDUPLQJIRUVXVWDLQDEOHOLYHOLKRRGVLQGHYHORSLQJFRXQWULHVWKH
FDVHRIFRWWRQLQ,QGLD$YDLODEOHDWKWWSZZZ]EXQLEHFKGRZQORDGHOGLVVH\KRUQBISGI
(\KRUQ ) 5DPDNULVKQDQ 0 DQG 0lGHU 3  7KH YLDELOLW\ RI FRWWRQEDVHG RUJDQLF IDUPLQJ V\VWHPV LQ ,QGLD
,QWHUQDWLRQDO-RXUQDORI$JULFXOWXUDO6XVWDLQDELOLW\²
)DHWK3DQG&URVVRQ3%XLOGLQJWKHFDVHIRUVXVWDLQDEOHDJULFXOWXUH(QYLURQPHQW²
)DONHQPDUN0DQG5RFNVWU|P-7KHQHZEOXHDQGJUHHQZDWHUSDUDGLJP%UHDNLQJQHZJURXQGIRUZDWHU
UHVRXUFHVSODQQLQJDQGPDQDJHPHQW-RXUQDORI:DWHU5HVRXUFHV3ODQQLQJDQG0DQDJHPHQW0D\-XQH²

)$2)RRGORVVSUHYHQWLRQLQSHULVKDEOHFURSV)$2$JULFXOWXUDO6HUYLFH%XOOHWLQ)$26WDWLVWLFV'LYLVLRQ5RPH
)$2&KDSWHUVDQG,Q)$2)XWXUH(QHUJ\5HTXLUHPHQWVIRU$IULFD·V$JULFXOWXUH3UHSDUHGIRUWKH$IULFDQ
(QHUJ\ 3URJUDPPH RI WKH $IULFDQ 'HYHORSPHQW %DQN 5RPH )$2 $YDLODEOH DW KWWSZZZIDRRUJGRFUHS
9(YHKWP&RQWHQWV
)$27KH(QHUJ\DQG$JULFXOWXUH1H[XV5RPH
)$20LQLVWHULDO5RXQG7DEOHRQWKH5ROHRI:DWHUDQG,QIUDVWUXFWXUHLQ(QVXULQJ6XVWDLQDEOH)RRG6HFXULW\
5RPH1RYHPEHU²'HFHPEHU$YDLODEOHDWZZZIDRRUJ'2&5(30((7,1*-(+70
)$2'LVFDUGVLQWKHZRUOG·VPDULQHÀVKHULHV²DQXSGDWH)$2)LVKHULHVWHFKQLFDOSDSHU5RPH$YDLODEOH
DWZZZIDRRUJGRFUHS\H\HKWP
)$2:RUOG$JULFXOWXUH7RZDUGV,QWHULPUHSRUW5RPH
)$27KH6WDWHRI)RRGDQG$JULFXOWXUH5RPH
)$2$GYLVRU\&RPPLWWHHRQ3DSHUDQG:RRG3URGXFWV)RUW\1LQWK6HVVLRQ%DNXEXQJ6RXWK$IULFD-XQH
)$2D(QDEOLQJDJULFXOWXUHWRFRQWULEXWHWRFOLPDWHFKDQJHPLWLJDWLRQ6XEPLVVLRQE\)$2WR81)&&&5RPH
$YDLODEOHDWKWWSXQIFFFLQWUHVRXUFHGRFVVPVQLJRSGI
)$2 E 7KH 6WDWH RI )RRG ,QVHFXULW\ LQ WKH :RUOG (FRQRPLF &ULVLV ,PSDFWV DQG /HVVRQV /HDUQHG 5RPH
$YDLODEOHDWKWWSZZZIDRRUJGRFUHSLHLHKWP
)$2 F 6WDWLVWLFDO <HDUERRN  5RPH $YDLODEOH DW ZZZIDRRUJHFRQRPLFWKHVWDWLVWLFVGLYLVLRQHVV
SXEOLFDWLRQVVWXGLHVVWDWLVWLFDO\HDUERRNIDRVWDWLVWLFDO\HDUERRNHQ
)$2  <HDUERRN  5RPH $YDLODEOH DW KWWSZZZIDRRUJHFRQRPLFHVVHVVSXEOLFDWLRQVHVV\HDUERRN
HVV\HDUERRN\HDUERRNUHRXUFHVHQ
)$2D+LJKOHYHO3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQWRWKH&RPPLWWHHRQ:RUOG)RRG6HFXULW\
3ULFH9RODWLOLW\DQG)RRG6HFXULW\5RPH$YDLODEOHDWZZZIDRRUJÀOHDGPLQXVHUBXSORDGKOSHKOSHBGRFXPHQWV
+/3(SULFHYRODWLOLW\DQGIRRGVHFXULW\UHSRUW-XO\SGI
)$2E2UJDQLFDJULFXOWXUHDQGFOLPDWHFKDQJHPLWLJDWLRQ$UHSRUWRIWKH5RXQG7DEOHRQ2UJDQLF$JULFXOWXUH
DQG&OLPDWH&KDQJH'HFHPEHU5RPH,WDO\
)$2F/DQGWHQXUHDQG,QWHUQDWLRQDO,QYHVWPHQWVLQ$JULFXOWXUH$UHSRUWE\WKH+LJK/HYHO3DQHORI([SHUWVRQ
)RRG6HFXULW\DQG1XWULWLRQRIWKH&RPPLWWHHRQ:RUOG)RRG6HFXULW\5RPH)$26WDW5RPHKWWSIDRVWDWIDRRUJ
)$2 G 7KH 6WDWH RI )RRG DQG $JULFXOWXUH  5RPH $YDLODEOH DW ZZZIDRRUJGRFUHSLH
LHSGI
)$2 H *OREDO )RRG /RVVHV DQG )RRG :DVWH 5RPH $YDLODEOH DW ZZZIDRRUJÀOHDGPLQXVHUBXSORDGDJV
SXEOLFDWLRQV*)/BZHESGI
)$2 D )RRG VHFXULW\ DQG FOLPDWH FKDQJH 5HSRUW RI WKH +LJKOHYHO 3DQHO RI ([SHUWV RQ )RRG 6HFXULW\ DQG
1XWULWLRQWRWKH&RPPLWWHHRQ:RUOG)RRG6HFXULW\5HSRUW1R5RPH-XQH$YDLODEOHDWZZZIDRRUJ
)$2E&OLPDWHVPDUWDJULFXOWXUHIRUGHYHORSPHQW$YDLODEOHDWKWWSZZZIDRRUJFOLPDWHFKDQJHFOLPDWHVPDUW
HQ
 75$'($1'(19,5210(175(9,(:

)$2F&OLPDWH6PDUW$JULFXOWXUH5RPH$YDLODEOHDWKWWSZZZIDRRUJFOLPDWHFKDQJHFOLPDWHVPDUWHQ

)$2DQG%LRYHUVLW\,QWHUQDWLRQDO6XVWDLQDEOHDJULFXOWXUHDQGUXUDOGHYHORSPHQW6$5'3ROLF\%ULHI5RPH
)$2DQG,,(',QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG'HYHORSPHQW7KHULJKWWRIRRGDQGDFFHVVWRQDWXUDO
UHVRXUFHV8VLQJKXPDQULJKWVDUJXPHQWVDQGPHFKDQLVPVWRLPSURYHUHVRXUFHDFFHVVIRUWKHUXUDOSRRU5LJKW
WR)RRG6WXG\)$25RPH
)$7%HULFKWEHUELRORJLVFKEHZLUWVFKDIWHWH%HWULHEH(LGJ)RUVFKXQJVDQVWDOWIU%HWULHEVZLUWVFKDIWXQG
/DQGWHFKQLN 7lQLNRQ 6ZLW]HUODQG &LWHG E\ 0KOHEDFK , DQG 0KOHEDFK - (FRQRPLFV RI RUJDQLF IDUPLQJ LQ
6ZLW]HUODQG,Q/DPSNLQ1+DQG3DGHO6HGV7KH(FRQRPLFVRI2UJDQLF)DUPLQJ$Q,QWHUQDWLRQDO3HUVSHFWLYH
:DOOLQJIRUG&$%,QWHUQDWLRQDO
)$7  %HULFKW EHU ELRORJLVFK EHZLUWVFKDIWHWH %HWULHEH  (UJHEQLVVH GHU =HQWUDOHQ $XVZHUWXQJ YRQ
%XFKKDOWXQJVGDWHQ7lQLNRQ(LGJHQ|VVLVFKH)RUVFKXQJVDQVWDOWIU$JUDUZLUWVFKDIWXQG/DQGWHFKQLN
)HHGWKH)XWXUH*XLGH$YDLODEOHDWZZZIHHGWKHIXWXUHJRY
)H\GHU-0RUGVKXQJHU²:HUSURÀWLHUWYRP(OHQGGHUDUPHQ/lQGHU"+XQJHUNLOOV:KRSURÀWVIURPWKHPLVHU\
RISRRUFRXQWULHV")UDQNIXUW:HVWHQG$OVRLQ)UHQFK/D)DLPWXHO·+DUPDWWDQ
)LOJHU6*OREDOÀQDQFLDOFULVLVYHUVXV,VKLVWRU\DERXWWRUHSHDWLWVHOI"-XQH$YDLODEOHDWKWWS
ZZZJOREDOHFRQRPLFFULVLVFRPEORJDUFKLYHVWDJÀQDQFLDOFULVLV
)LQDQFLDO7LPHV6SHFLDOUHSRUWRQPDQDJLQJFOLPDWHFKDQJH/RQGRQ1RYHPEHU$YDLODEOHDWZZZIWFRP
FOLPDWHFKDQJH
)LVFKHU*6KDK07XELHOOR)1YDQ9HOKXL]HQ+6RFLRHFRQRPLFDQGFOLPDWHFKDQJHLPSDFWVRQDJULFXOWXUH
$QLQWHJUDWHGDVVHVVPHQW²3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO6RFLHW\%²
)OLHVVEDFK $ ,PKRI ' %UXQQHU 7 DQG :WKULFK &  7LHIHQYHUWHLOXQJ XQG ]HLWOLFKH '\QDPLN GHU PLNURELHOOHQ
%LRPDVVHLQELRORJLVFKXQGNRQYHQWLRQHOOEHZLUWVFKDIWHWHQ%|GHQ5HJLR%DVLOLHQVLV²
)OLHVVEDFK$2EHUKRO]HU+5*XQVW/DQG0lGHU36RLORUJDQLFPDWWHUDQGELRORJLFDOVRLOTXDOLW\LQGLFDWRUV
DIWHU\HDUVRIRUJDQLFDQGFRQYHQWLRQDOIDUPLQJ$JULFXOWXUH(FRV\VWHPV (QYLURQPHQW²
)RUHVLJKW D 7KH )XWXUH RI )RRG DQG )DUPLQJ )LQDO SURMHFW UHSRUW /RQGRQ *RYHUQPHQW 2IÀFH IRU 6FLHQFH
$YDLODEOH DW ZZZELVJRYXNDVVHWVELVSDUWQHUVIRUHVLJKWGRFVIRRGDQGIDUPLQJIXWXUHRIIRRGDQG
IDUPLQJUHSRUWSGI
)RUHVLJKWE6FLHQFH5HYLHZ65*OREDO)RRG:DVWH5HGXFWLRQ3ULRULWLHVIRUD:RUOGLQ7UDQVLWLRQ$YDLODEOH
DW ZZZELVJRYXNIRUHVLJKWRXUZRUNSURMHFWVSXEOLVKHGSURMHFWVJOREDOIRRGDQGIDUPLQJIXWXUHVaPHGLD
%,63DUWQHUV)RUHVLJKWGRFVIRRGDQGIDUPLQJVFLHQFHVUJOREDOIRRGZDVWHUHGXFWLRQSULRULWLHVDVK[
)RUHVLJKWF([SHUW)RUXPRQWKH5HGXFWLRQRI)RRG:DVWH8.6FLHQFHDQG,QQRYDWLRQ1HWZRUNDQG)RUHVLJKW
/RQGRQ²)HEUXDU\$YDLODEOHDWZZZELVJRYXNDVVHWVELVSDUWQHUVIRUHVLJKWGRFVIRRGDQGIDUPLQJ
ZRUNVKRSVZH[SHUWIRUXPUHGXFWLRQRIIRRGZDVWHSGI
)RUHVLJKWG7KH)XWXUHRI)RRGDQG)DUPLQJ6\QWKHVLV5HSRUW&5HGXFLQJZDVWH$YDLODEOHDWZZZELVJRY
XNDVVHWVELVSDUWQHUVIRUHVLJKWGRFVIRRGDQGIDUPLQJV\QWKHVLVFUHGXFLQJZDVWHSGI
)UDQFLV&$-RQHV$&URRNVWRQ.:LWWOHU.DQG*RRGPDQ66WULSFURSSLQJFRUQDQGJUDLQOHJXPHV$UHYLHZ
$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH²
)ULHGO%+DPPHU0-lJHU-/RUHN62PDQQ,DQG3DFN$68)275236XVWDLQDEOH)RRG&RQVXPSWLRQ
7UHQGVDQG2SSRUWXQLWLHV)LQDOUHSRUW\HDU9LHQQD$XVWULDQ$FDGHP\RI6FLHQFHV3UHVV
)ULVRQ($6PLWK,)-RKQV7&KHUIDV-(\]DJXLUUH3%$JULFXOWXUDOELRGLYHUVLW\QXWULWLRQDQGKHDOWK0DNLQJD
GLIIHUHQFHWRKXQJHUDQGQXWULWLRQLQWKHGHYHORSLQJZRUOG)RRGDQG1XWULWLRQ%XOOHWLQ²
)XOOHQ0$DQG$Y.(IIHFWVRIJUDVVOH\VHWDVLGHRQUXQRIIHURVLRQDQGRUJDQLFPDWWHUOHYHOVLQVDQG\VRLOLQ
(DVW6KURSVKLUH8.6RLO7LOO5HV
)XX0LQJ.DL7\OHU6&5DQGHUVRQ-7DQG%ODNH'55HGXFHGPHWKDQHJURZWKUDWHH[SODLQHGE\GHFUHDVHG
1RUWKHUQ+HPLVSKHUHPLFURELDOVRXUFHV1DWXUH²
*DUQHWW7DQG-DFNVRQ7)URVW%LWWHQ$QH[SORUDWLRQRIUHIULJHUDWLRQGHSHQGHQFHLQWKH8.IRRGFKDLQDQGLWV
LPSOLFDWLRQVIRUFOLPDWHSROLF\3DSHUSUHVHQWHGDWWKHWK(XURSHDQ5RXQG7DEOHRQ6XVWDLQDEOH&RQVXPSWLRQ
DQG3URGXFWLRQ%DVHO-XQH)RRG&OLPDWH5HVHDUFK1HWZRUN&HQWUHIRU(QYLURQPHQWDO6WUDWHJ\8QLYHUVLW\RI
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

6XUUH\ $YDLODEOH DW ZZZIFUQRUJXNUHVHDUFKOLEUDU\UHIULJHUDWLRQJHQHUDOIURVWELWWHQUHIULJHUDWLRQGHSHQGHQFH

XNIRRGFKDLQ
*DWWLQJHU$0OOHU$+lQL02HKHQ%6WRO]H0DQG1LJJOL86RLOFDUERQVHTXHVWUDWLRQRIRUJDQLFFURSDQG
OLYHVWRFN V\VWHPV DQG SRWHQWLDO IRU DFFUHGLWDWLRQ E\ FDUERQ PDUNHWV ,Q )$2 2UJDQLF $JULFXOWXUH DQG &OLPDWH
&KDQJH0LWLJDWLRQ$UHSRUWRIWKH5RXQG7DEOHRQ2UJDQLF$JULFXOWXUHDQG&OLPDWH&KDQJH5RPH'HFHPEHU
²
*HUPDQ$FDGHP\RI6FLHQFHV/HRSROGLQD6WDWHPHQW%LRHQHUJ\&KDQFHVDQG/LPLWV%HUOLQ$YDLODEOHDW
ZZZOHRSROGLQDRUJXSORDGVW[BOHRSXEOLFDWLRQB6WHOOXQJQDKPHB%LRHQHUJLHB/$<BHQBÀQDOSGI
*HUPDQ &RXQFLO IRU 6XVWDLQDEOH 'HYHORSPHQW  5DW IU 1DFKKDOWLJH (QWZLFNOXQJ 51( *ROG6WDQGDUG
gNRODQGEDX )U HLQH QDFKKDOWLJH *HVWDOWXQJ GHU $JUDUZHQGH (PSIHKOXQJHQ GHV 5DWHV IU 1DFKKDOWLJH
(QWZLFNOXQJYRP-XOL7H[WH1U
*LDQHVVL /  7KH SRWHQWLDO IRU RUJDQLF DJULFXOWXUH WR IHHG WKH ZRUOG LV EHLQJ RYHUVROG 2XWORRNV RQ 3HVW
0DQDJHPHQW²
*LEERQ3DQG%ROZLJ67KHHFRQRPLFVRIFHUWLÀHGRUJDQLFIDUPLQJLQWURSLFDO$IULFD$SUHOLPLQDU\DVVHVVPHQW
',,6:RUNLQJ3DSHUQR'DQLVK,QVWLWXWHIRU,QWHUQDWLRQDO6WXGLHV&RSHQKDJHQ
*LRYDQQXFFL'6FKHUU61LHUHQEHUJ'+HGHEUDQG&6KDSLUR-0LOGHU-DQG:KHHOHU.)RRGDQGDJULFXOWXUH
7KHIXWXUHRIVXVWDLQDELOLW\6WXG\IRUWKH81'HSDUWPHQWRI(FRQRPLFDQG6RFLDO$IIDLUV81'(6$XQGHUWKH
SURMHFW6XVWDLQDEOH'HYHORSPHQWLQWKHVW&HQWXU\1HZ<RUN$YDLODEOHDWZZZXQRUJHVDGVGGVGBVGVWB
SGIDJULFXOWXUHBDQGBIRRGBWKHBIXWXUHBRIBVXVWDLQDELOLW\BZHESGI
*OHLFN3+%DVLFZDWHUUHTXLUHPHQWVIRUKXPDQDFWLYLWLHV0HHWLQJEDVLFQHHGV:DWHU,QWHUQDWLRQDO²
*OLHVVPDQ6$JURHFRORJ\7KH(FRORJ\RI6XVWDLQDEOH)RRG6\VWHPV%RFD5DWRQ)/&5&3UHVV
*OREDO&DUERQ3URMHFW&DUERQ%XGJHW$YDLODEOHDWKWWSZZZJOREDOFDUERQSURMHFWRUJFDUERQEXGJHW
*RGIUD\ + %HGGLQJWRQ - &UXWH , +DGGDG / /DZUHQFH ' 0XLU - 3UHWW\ - 5RELQVRQ 6 7KRPDV 6 DQG 7RXOPLQ &
)RRGVHFXULW\7KHFKDOOHQJHRIIHHGLQJELOOLRQSHRSOH6FLHQFH
*UDFH 3 DQG 2DGHV -0  /RQJWHUP ÀHOG WULDOV LQ $XVWUDOLD ,Q /RQJWHUP H[SHULPHQWV LQ DJULFXOWXUDO DQG
HFRORJLFDOVFLHQFHVHGV/HLJK5$DQG-RKQVWRQ$(SS:DOOLQJIRUG8.&$%,QWHUQDWLRQDO
*5$,1(DUWKPDWWHUV7DFNOLQJWKHFOLPDWHFULVLVIURPWKHJURXQGXS6HHGOLQJ2FWREHU$YDLODEOHDWKWWS
ZZZJUDLQRUJH
*5$,1*OREDODJULEXVLQHVV7ZRGHFDGHVRISOXQGHU6HHGOLQJ-XO\$YDLODEOHDWKWWSZZZJUDLQRUJDUWLFOH
HQWULHVJOREDODJULEXVLQHVVWZRGHFDGHVRISOXQGHU
*UDPHHQ6KDNWL3URJUDPVDWDJODQFH0D\$YDLODEOHDWKWWSJVKDNWLRUJLQGH[SKS"RSWLRQ FRPBFRQWHQW
YLHZ FDWHJRU\ OD\RXW EORJ LG  ,WHPLG 
*ULIÀQ':.HOORJJ&$DQG6KLQQ($'XVWLQWKHZLQG/RQJUDQJHWUDQVSRUWRIGXVWLQWKHDWPRVSKHUHDQGLWV
LPSOLFDWLRQVIRUJOREDOSXEOLFDQGHFRV\VWHPKHDOWK*OREDO&KDQJH +XPDQ+HDOWK²
*XHQWKHU'DQG:LOO0)RRG4XDOLW\DQG6DIHW\6WDQGDUGVDV5HTXLUHGE\(8/DZDQGWKH3ULYDWH,QGXVWU\
$3UDFWLWLRQHUV·5HIHUHQFH%RRN6HFRQGHGLWLRQ(VFKERUQ*7=$YDLODEOHDWZZZJW]GHGRNXPHQWHELE
SGI
+DPHUPHVK'67LPHWRHDW+RXVHKROGSURGXFWLRQXQGHULQFUHDVLQJLQFRPHLQHTXDOLW\$PHULFDQ-RXUQDORI
$JULFXOWXUDO(FRQRPLFV²$PHULFDQ$JULFXOWXUDO(FRQRPLFV$VVRFLDWLRQ
+DQGUHN.2UJDQLF0DWWHUDQG6RLOV0HOERXUQH&6,523XEOLVKLQJUHSULQWHG
+DQGUHN.DQG%ODFN1*URZLQJ0HGLDIRU2UQDPHQWDO3ODQWVDQG7XUI6\GQH\816:3UHVV
+DQVRQ-/LFKWHQEHUJ(DQG3HWHUV6(2UJDQLFYHUVXVFRQYHQWLRQDOJUDLQSURGXFWLRQLQWKHPLG$WODQWLF$Q
HFRQRPLFDQGIDUPLQJV\VWHPRYHUYLHZ$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH²
+DUWÀHOG-/%RRWH.-.LPEDOO%$=LVND/$,]DXUUDOGH5&2UW'7KRPVRQ$0DQG:ROIH':&OLPDWHLPSDFWV
RQDJULFXOWXUH,PSOLFDWLRQVIRUFURSSURGXFWLRQ$JURQRP\-RXUQDO²
+DUYH\))DLOXUHWRDFWRQFURSVKRUWDJHVIXHOOLQJSROLWLFDOLQVWDELOLW\H[SHUWVZDUQ7KH*XDUGLDQ)HEUXDU\
$YDLODEOHDWKWWSZZZJXDUGLDQFRXNHQYLURQPHQWIHEFURSVKRUWDJHVSROLWLFDOLQVWDELOLW\
 75$'($1'(19,5210(175(9,(:

+DZNHV &  1XWULWLRQ /DEHOV DQG +HDOWK &ODLPV 7KH *OREDO 5HJXODWRU\ (QYLURQPHQW *HQHYD :RUOG +HDOWK
2UJDQL]DWLRQ
+D\Q'(EHUOH86WLH‰,DQG+QHFNH.(UQlKUXQJLP$OOWDJ,Q(EHUOH8HWDOHGV(UQlKUXQJVZHQGH(LQH
+HUDXVIRUGHUXQJIU3ROLWLN8QWHUQHKPHQXQG*HVHOOVFKDIW0XQLFK2HNRP²
+D]HOO33RXOWRQ&:LJJLQV6'RUZDUG$7KHIXWXUHRIVPDOOIDUPVIRUSRYHUW\UHGXFWLRQDQGJURZWK
'LVFXVVLRQ3DSHU1R,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH:DVKLQJWRQ'&
+HDOWK&RXQFLORIWKH1HWKHUODQGV*XLGHOLQHVIRUD+HDOWK\'LHW7KH(FRORJLFDO3HUVSHFWLYH3XEOLFDWLRQQR
(7KH+DJXH
+HLPDQQ0$WPRVSKHULFVFLHQFH(QLJPDRIWKHUHFHQWPHWKDQHEXGJHW1DWXUH
+HOOHEUDQG+-DQG+HUSSLFK:0HWKDQHGHJUDGDWLRQLQVRLOV,QÁXHQFHRISODQWVDQGIHUWLOLVDWLRQ-DKUHVWDJXQJ
GHU*HVHOOVFKDIWIUgNRORJLH$QQXDO6HVVLRQRIWKH(FRORJLFDO6RFLHW\.LHO6HSWHPEHU3RVWHU3RWVGDP
,QVWLWXWHRI$JULFXOWXUDO(QJLQHHULQJ
+HOPHUV*$/DQJHPHLHU05DQG$WZRRG-$QHFRQRPLFDQDO\VLVRIDOWHUQDWLYHFURSSLQJV\VWHPVIRUHDVW
FHQWUDO1HEUDVND$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH
+HQGULFNVRQ-(QHUJ\XVHLQWKH86IRRGV\VWHP$VXPPDU\RIH[LVWLQJUHVHDUFKDQGDQDO\VLV0DGLVRQ:,
&HQWHUIRU,QWHJUDWHG$JULFXOWXUDO6\VWHPV8QLYHUVLW\RI:LVFRQVLQ
+HQGULFNVRQ00LHOH0%XUW5&KDWDZD\-&RWWHU-'DUF\9ULOORQ%'HEDLOOHXO**UXQG\$+LQJD.-RKQVRQ%5
.DKLOXRWR+/XWPDQ30DGGHQ8DQG1DYUiWLORYi0&KDQJHVLQDJULFXOWXUHDQGIRRGSURGXFWLRQLQ1$(
VLQFH,Q0F,QW\UHHWDOHGV1RUWK$PHULFDDQG(XURSH5HJLRQDO5HSRUW:DVKLQJWRQ'&,$$67'
+HUUHQ+55LR:KDWDUHWKHRSWLRQVZKHQ´EXVLQHVVDVXVXDOµLVQRWDQRSWLRQ"3UHVHQWDWLRQDWWKH%LR)DFK
ZRUNVKRSRQ5LRDQGWKH*UHHQ(FRQRP\²3XWWLQJ2UJDQLF)RRG )DUPLQJ&HQWUH6WDJH1XUHPEHUJ
)HEUXDU\
+HUUHQ+5%LQQV31DMDP$.KDQV+DOEHUJ1&LP/L&KLQJ7UH\HU6/DO5$WDSDWWX6.RGLWXZDNNX'7DPR
01HXHQVFKZDQGHU3)HUQDQGH]0%DVVL$.DVVDP$'H)UDLWXUH&.LQJDPNRQR53HUIHFWR<.KDQ
=581(3*UHHQ(FRQRP\5HSRUW$JULFXOWXUH1DLUREL$YDLODEOHDWZZZXQHSRUJJUHHQHFRQRP\
+H\ZRRG9+*OREDO%LRGLYHUVLW\$VVHVVPHQW&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
+R0:&LUFXODUHFRQRP\RIWKHG\NHSRQGV\VWHP6FLHQFHLQ6RFLHW\²
+R0:7KH5DLQERZDQGWKH:RUPWKH3K\VLFVRI2UJDQLVPV7KLUGHGLWLRQ6LQJDSRUHDQG/RQGRQ:RUOG
6FLHQWLÀF$YDLODEOHDWKWWSZZZLVLVRUJXNUQEZZUPSKS
+R0:D*UHHQJURZWKIRUGHYHORSLQJQDWLRQV6FLHQFHLQ6RFLHW\²
+R 0: E 6XVWDLQDEOH DJULFXOWXUH HVVHQWLDO IRU JUHHQ FLUFXODU HFRQRP\ ,6,6 OHFWXUH DW WKH 7HQ2QH
&RQIHUHQFH %UDGIRUG 8QLYHUVLW\  1RYHPEHU² 'HFHPEHU  $YDLODEOH DW KWWSZZZLVLVRUJXN
VXVWDLQDEOH$JULFXOWXUH(VVHQWLDO*UHHQ&LUFXODU(FRQRP\SKS
+R0:D*UDPHHQ6KDNWLIRUUHQHZDEOHHQHUJLHV6FLHQFHLQ6RFLHW\²
+R0:E/LJKWLQJ$IULFD6FLHQFHLQ6RFLHW\²
+R0:F%LRJDVIRU&KLQD·V1HZ6RFLDOLVWFRXQWU\VLGH6FLHQFHLQ6RFLHW\²
+R0:G7KHQHZSROLWLFVRIIRRGVFDUFLW\6FLHQFHLQ6RFLHW\$YDLODEOHDWZZZLVLVRUJXN7KHB1HZB
3ROLWLFVBRIB)RRGB6FDUFLW\SKS
+R0:%XUFKHU6DQG/LP/&HWDO)RRGIXWXUHVQRZ RUJDQLF VXVWDLQDEOH IRVVLOIXHOIUHH,6,67:15HSRUW
/RQGRQDQG3HQDQJ$YDLODEOHDWZZZLVLVRUJXNIRRG)XWXUHVSKS
+R 0: &KHUU\ % %XUFKHU 6 DQG 6DXQGHUV 37  *UHHQ HQHUJLHV  UHQHZDEOHV E\  /RQGRQ DQG
3HQDQJ,6,67:1$YDLODEOHDWKWWSZZZLVLVRUJXN*UHHQ(QHUJLHVSKS
+RGJHV5-%X]E\-&DQG%HQQHWW%3RVWKDUYHVWORVVHVDQGZDVWHLQGHYHORSHGDQGOHVVGHYHORSHGFRXQWULHV
2SSRUWXQLWLHVWRLPSURYHUHVRXUFHXVH-RXUQDORI$JULFXOWXUDO6FLHQFH6$YDLODEOHDWZZZELVJRY
XNDVVHWVELVSDUWQHUVIRUHVLJKWGRFVIRRGDQGIDUPLQJVFLHQFHVUSRVWKDUYHVWORVVHVDQGZDVWHSGI
+RHJK*XOGEHUJ20XPE\3-+RRWHQ$-6WHQHFN56*UHHQÀHOG3*RPH](+DUYHOO('6DOH3)(GZDUGV$-
&DOGHLUD..QRZOWRQ1(DNLQ&0,JOHVLDV3ULHWR50XWKLJD1%UDGEXU\5+'XEL$DQG+DW]LRORV0(
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

&RUDOUHHIVXQGHUUDSLGFOLPDWHFKDQJHDQGRFHDQDFLGLÀFDWLRQ6FLHQFH²
+RIIPDQQ8$VVXULQJIRRGVHFXULW\LQGHYHORSLQJFRXQWULHVXQGHUWKHFKDOOHQJHVRIFOLPDWHFKDQJH.H\WUDGH
DQG GHYHORSPHQW LVVXHV RI D IXQGDPHQWDO WUDQVIRUPDWLRQ RI DJULFXOWXUH 81&7$' 'LVFXVVLRQ 3DSHU 1R 
*HQHYD0DUFK$YDLODEOHDWZZZXQFWDGRUJHQ'RFVRVJGSBHQSGI
+|J\ 3 DQG )DQJPHLHU $  (IIHFWV RI HOHYDWHG DWPRVSKHULF &2 RQ JUDLQ TXDOLW\ RI ZKHDW -RXUQDO RI &HUHDO
6FLHQFH²
+|J\3:LHVHU+.|KOHU36FKZDGRUI.%UHXHU-)UDQ]DULQJ-0XQWLIHULQJ5DQG)DQJPHLHU$(IIHFWVRI
HOHYDWHG&2RQJUDLQ\LHOGDQGTXDOLW\RIZKHDW5HVXOWVIURPDWKUHH\HDU)$&(H[SHULPHQW3ODQW%LRORJ\
²
+ROW*LPpQH](0HDVXULQJIDUPHUV·DJURHFRORJLFDOUHVLVWDQFHDIWHU+XUULFDQH0LWFKLQ1LFDUDJXD$FDVHVWXG\
LQSDUWLFLSDWRU\VXVWDLQDEOHODQGPDQDJHPHQWLPSDFWPRQLWRULQJ$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW
²
+ROW*LPpQH] (  &DPSHVLQR D &DPSHVLQR 9RLFHV IURP /DWLQ $PHULFD·V )DUPHU WR )DUPHU 0RYHPHQW IRU
6XVWDLQDEOH$JULFXOWXUH2DNODQG)RRG)LUVW%RRNV
+RUWRQ /5 DQG :ULJKW (  5HFRQFLOLQJ IRRG VDIHW\ ZLWK LPSRUW IDFLOLWDWLRQ REMHFWLYHV +HOSLQJ GHYHORSLQJ
FRXQWU\SURGXFHUVPHHW86DQG(8)RRGUHTXLUHPHQWVWKURXJKWUDQVDWODQWLFFRRSHUDWLRQ3RVLWLRQSDSHURIWKH
,QWHUQDWLRQDO )RRG DQG $JULFXOWXUDO 7UDGH 3ROLF\ &RXQFLO 6WDQGDUG 6HULHV -XQH :DVKLQJWRQ '& $YDLODEOH DW
KWWSZZZDJULWUDGHRUJ3XEOLFDWLRQVGRFXPHQWV,3&6WDQGDUGV3RVLWLRQ3DSHUSGI
+RUZLWK%$UROHIRULQWHUFURSSLQJLQPRGHUQDJULFXOWXUH%LR6FLHQFH²
+RZDUG3+9LVXDOL]LQJFRQVROLGDWLRQLQWKHJOREDOVHHGLQGXVWU\²6XVWDLQDELOLW\'HFHPEHU
$YDLODEOHDWKWWSZZZPGSLFRP
+XEEDUG.2XWRIKDQG)DUPHUVIDFHWKHFRQVHTXHQFHVRIDFRQVROLGDWHGVHHGLQGXVWU\)DUPHUWR)DUPHU
&DPSDLJQ$YDLODEOHDWKWWSIDUPHUWRIDUPHUFDPSDLJQFRP
+XJKHV*&KLQRZVN\3DQG6WU]HSHN.7KHFRVWVRIDGDSWDWLRQWRFOLPDWHFKDQJHIRUZDWHULQIUDVWUXFWXUHLQ
2(&'FRXQWULHV8WLOLWLHV3ROLF\²
,$$67' D ,QWHUQDWLRQDO DVVHVVPHQW RI DJULFXOWXUDO NQRZOHGJH VFLHQFH DQG WHFKQRORJ\ IRU GHYHORSPHQW
:DVKLQJWRQ'&,VODQG3UHVV$FFHVVLEOHDWZZZDJDVVHVVPHQWRUJ
,$$67'E6XPPDU\IRUGHFLVLRQPDNHUV:DVKLQJWRQ'&$YDLODEOHDWZZZDJDVVHVVPHQWRUJ
,$$67' XQGDWHG :KDW LV WKH ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH  7HFKQRORJ\" $
FRPSLODWLRQIURPLWVSOHQDU\GHFLVLRQVDQGRIÀFLDOGRFXPHQWV$YDLODEOHDWKWWSZZZDJDVVHVVPHQWZDWFKRUJ
GRFV,$$67'BRQBWKUHHBSDJHVSGI
,$73,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\:RPHQDWWKHFHQWHURIFOLPDWHIULHQGO\DSSURDFKHVWRDJULFXOWXUH
DQG ZDWHU 0LQQHDSROLV $YDLODEOH DW KWWSZZZLDWSRUJGRFXPHQWVZRPHQDWWKHFHQWHURIFOLPDWHIULHQGO\
DSSURDFKHVWRDJULFXOWXUHDQGZDWHUXVH
,&5,6$7,QWHUQDWLRQDO&URSV5HVHDUFK,QVWLWXWHIRUWKH6HPL$ULG7URSLFV&OLPDWHFKDQJHDGDSWDWLRQ0RYLQJ
IRUZDUG ZLWK KRSH IRU WKH ´SRRUHVW RI WKH SRRUµ LQ WKH VHPLDULG WURSLFV $YDLODEOH DW KWWSXQIFFFLQWÀOHV
DGDSWDWLRQVEVWDBDJHQGDBLWHPBDGDSWDWLRQDSSOLFDWLRQSGILFULVDWBPD\SGI
,GVR6%DQG,GVR.((IIHFWVRIDWPRVSKHULF&2HQULFKPHQWRQSODQWFRQVWLWXHQWVUHODWHGWRDQLPDODQGKXPDQ
KHDOWK(QYLURQPHQWDODQG([SHULPHQWDO%RWDQ\²
,($:RUOG(QHUJ\2XWORRN3DULV2(&',($
,($(QHUJ\3RYHUW\+RZWRPDNH0RGHUQ(QHUJ\$FFHVV8QLYHUVDO6SHFLDOHDUO\H[FHUSWRIWKH:RUOG(QHUJ\
2XWORRNIRUWKH8QLWHG1DWLRQV*HQHUDO$VVHPEO\RQWKH0LOOHQQLXP'HYHORSPHQW*RDOV3DULV

,($ D ,QWHUQDWLRQDO (QHUJ\ $JHQF\ &2 HPLVVLRQV IURP IXHO FRPEXVWLRQ +LJKOLJKWV  (GLWLRQ 3DULV
$YDLODEOHDWZZZLHDRUJFRKLJKOLJKWV
,($ E 3URVSHFW RI OLPLWLQJ WKH JOREDO LQFUHDVH LQ WHPSHUDWXUH WR ž& JHWWLQJ EOHDNHU 3UHVV UHOHDVH  0D\
$YDLODEOHDWZZZLHDRUJQHZVURRPDQGHYHQWVQHZVPD\QDPHHQKWPO
,(&$(URVLRQ&RQWURO²$*OREDO3HUVSHFWLYH3URFHHGLQJVRI&RQIHUHQFH;;,,,QWHUQDWLRQDO(URVLRQ&RQWURO
$VVRFLDWLRQ6WHDPERDW6SULQJV&2²)HEUXDU\
 75$'($1'(19,5210(175(9,(:

,)$'7KHDGRSWLRQRIRUJDQLFDJULFXOWXUHDPRQJVPDOOIDUPHUVLQ/DWLQ$PHULFDDQGWKH&DUULEEHDQ5HSRUW

QR5RPH
,IHMLND6SHUDQ]D&5HVLOLHQW$GDSWDWLRQWR&OLPDWH&KDQJHLQ$IULFDQ$JULFXOWXUH',(6WXGLHV'HXWVFKHV
,QVWLWXWIU(QWZLFNOXQJVSROLWLN%RQQ
,3&&&RQVHTXHQFHVRIODQGXVHFKDQJH,Q&OLPDWH&KDQJH:RUNLQJ*URXS,$YDLODEOHDWKWWS
WLQ\XUOFRPOGX[T\
,3&&D,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH5HSRUWRI:RUNLQJ*URXS,,,WRWKHWK$VVHVVPHQW5HSRUW
&OLPDWH&KDQJH0LWLJDWLRQRI&OLPDWH&KDQJH&DPEULGJH8QLWHG.LQJGRP$YDLODEOHDWZZZLSFFFK
LSFFUHSRUWVDUZJKWP
,3&&E*ORVVDU\,Q,3&&3DUU\0/HWDOHGV&OLPDWH&KDQJH,PSDFWV$GDSWDWLRQDQG9XOQHUDELOLW\
&RQWULEXWLRQ RI :RUNLQJ *URXS ,, WR WKH )RXUWK $VVHVVPHQW 5HSRUW RI WKH ,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH
&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
,3&& F &OLPDWH &KDQJH  6\QWKHVLV 5HSRUW &RQWULEXWLRQ RI :RUNLQJ *URXSV , ,, DQG ,,, WR WKH )RXUWK
$VVHVVPHQW 5HSRUW RI WKH ,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH &KDQJH 3DFKDXUL 5. DQG 5HLVLQJHU $ HGV
$YDLODEOHDWKWWSZZZLSFFFKSXEOLFDWLRQVBDQGBGDWDDUV\UHQFRQWHQWVKWPO
,3&& G &OLPDWH &KDQJH  7KH 3K\VLFDO 6FLHQFH %DVLV &RQWULEXWLRQ RI :RUNLQJ *URXS , WR WKH )RXUWK
$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
,3&&&OLPDWHFKDQJHDQGZDWHU7HFKQLFDOSDSHU%DWHV%&HWDOHGV*HQHYD,3&&6HFUHWDULDW
,3&&,3&&VSHFLDOUHSRUWRQHPLVVLRQVVFHQDULRV$URDGPDSWRWKH65(6VFHQDULRV$YDLODEOHDWKWWS
ZZZLSFFFKLSFFUHSRUWVVUHVHPLVVLRQKWP
,VKLL(LWHPDQ0)RRG6RYHUHLJQW\DQGWKH,QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG
7HFKQRORJ\ IRU 'HYHORSPHQW ,Q 3DWHO 5 HG *UDVVURRWV 9RLFHV 6SHFLDO 6HFWLRQ )RRG VRYHUHLJQW\ -RXUQDO RI
3HDVDQW6WXGLHV-XO\²
,:0,,QWHUQDWLRQDO:DWHU0DQDJHPHQW,QVWLWXWH:DWHUIRU)RRG:DWHUIRU/LIH$YDLODEOHDWKWWSZZZLZPL
FJLDURUJDVVHVVPHQW3XEOLFDWLRQVERRNVKWP
,]DF $0  (JHO\QJ + )HUUHLUD * 'XWKLH ' +XEHUW % DQG /RXZDDUV 1  2SWLRQV IRU HQDEOLQJ SROLFLHV DQG
UHJXODWRU\ HQYLURQPHQWV ,Q 0F,QW\UH HW DO HGV $JULFXOWXUH DW D &URVVURDGV *OREDO 5HSRUW :DVKLQJWRQ '&
,$$67'$YDLODEOHDWZZZDJDVVHVVPHQWRUJ
-DFN : DQG 6XUL 7  0RELOH 0RQH\ 7KH (FRQRPLFV RI 03(6$ $YDLODEOH DW KWWSZZZJHRUJHWRZQHGX
IDFXOW\ZJMSDSHUV-DFNB6XUL(FRQRPLFVRI03(6$SGI
-DFNVRQ*-2UJDQLF&RWWRQ)DUPLQJLQ.XWFK*XMDUDW,QGLD2XWORRNVRQ3HVW0DQDJHPHQW)HEUXDU\
-D\QH760DWKHU'DQG0JKHQ\L(3ULQFLSDOFKDOOHQJHVFRQIURQWLQJVPDOOKROGHUDJULFXOWXUHLQVXE6DKDUDQ
$IULFD:RUOG'HYHORSPHQW²
-HQNLQVRQ '6  7KH WXUQRYHU RI RUJDQLF FDUERQ DQG QLWURJHQ LQ VRLO 3KLORVRSKLFDO 7UDQVDFWLRQV RI WKH 5R\DO
6RFLHW\%%LRORJLFDO6FLHQFHV
-RKDQVVRQ67KH6ZHGLVKIRRGVKHG5HLPDJLQLQJRXUVXSSRUWDUHD,Q)DUQZRUWK&-LJJLQV-DQG7KRPDV
(9HGV&UHDWLQJ)RRG)XWXUHV7UDGH(WKLFVDQGWKH(QYLURQPHQW$OGHUVKRW*RZHU²
-RKQVRQ3:$JULFXOWXUH)RRGDQG'UXJ$GPLQLVWUDWLRQ5XUDO'HYHORSPHQW:DVKLQJWRQ'&*RYHUQPHQW
3ULQWLQJ2IÀFH
-RKQVWRQ$(7KHHIIHFWVRIOH\DQGDUDEOHFURSSLQJV\VWHPVRQWKHDPRXQWRIRUJDQLFPDWWHULQWKH5RWKDPVWHDG
DQG:REXUQOH\DUDEOHH[SHULPHQWV5RWKDPVWHDG5HSRUWIRU3DUWSS
-RQHV&(&DUERQWKDWFRXQWV6RLO&DUERQ&RDOLWLRQ$YDLODEOHDWKWWSVRLOFDUERQFRDOLWLRQRUJÀOHV-21(6
&DUERQWKDWFRXQWV0DUSGI
-RQHV 1  &OLPDWH FKDQJH FXUEV FURSV 1DWXUH 1HZV  0D\ $YDLODEOH DW KWWSZZZQDWXUHFRP
QHZVIXOOQHZVKWPO
-XR$65DQG7KXURZ7/6XVWDLQDEOHWHFKQRORJLHVIRUXVHDQGFRQVHUYDWLRQRI6WHHSODQGV%XOOHWLQ)RRG
)HUWLOL]HU7HFKQRORJ\&HQWHUIRUWKH$VLDQDQG3DFLÀF5HJLRQ7DLSHL$YDLODEOHDWZZZIIWFDJQHWRUJOLEUDU\SKS
"IXQF YLHZ LG  W\SHBLG 
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

.DGHU$$$SHUVSHFWLYHRQSRVWKDUYHVWKRUWLFXOWXUH+RUWLFXOWXUDO6FLHQFH²

.DGHU$$,QFUHDVLQJIRRGDYDLODELOLW\E\UHGXFLQJSRVWKDUYHVWORVVHVRIIUHVKSURGXFH$FWD+RUWLFXOWXUDH
²
.DQQLQHQ0HWDO'RWUHHVJURZRQPRQH\")RUHVW3HUVSHFWLYH-DNDUWD&HQWHUIRU,QWHUQDWLRQDO)RUHVWU\
5HVHDUFK&,)25
.DUHNH]L6DQG/D]DUXV0)XWXUH(QHUJ\5HTXLUHPHQWVIRU$IULFD·V$JULFXOWXUH&KDSWHUVDQG$YDLODEOH
DWKWWSZZZIDRRUJGRFUHS9(YHKWP&RQWHQWV
.DVSHUF]\N1DQG.QLFNHO.(QYLURQPHQWDOLPSDFWVRIRUJDQLFIDUPLQJ,Q.ULVWLDQVHQ35HJDQROG-DQG7DML
$HGV2UJDQLF$JULFXOWXUH$*OREDO3HUVSHFWLYH&ROOLQJZRRG&6,52²$YDLODEOHDWKWWSZZZSXEOLVK
FVLURDXSLGKWP
.HDQH-3DJH6.HUJQD$DQG.HQQDQ-&OLPDWHFKDQJHDQGGHYHORSLQJFRXQWU\DJULFXOWXUHDQRYHUYLHZRI
H[SHFWHGLPSDFWVDGDSWDWLRQDQGPLWLJDWLRQFKDOOHQJHVDQGIXQGLQJUHTXLUHPHQWV,&76',QWHUQDWLRQDO)RRG 
$JULFXOWXUDO7UDGH3ROLF\&RXQFLO,VVXH%ULHI1R$YDLODEOHDWZZZLFWVGRUJ
.HQGDOO+:DQG3LPHQWHO'&RQVWUDLQWVRQWKHH[SDQVLRQRIWKHJOREDOIRRGVXSSO\$PELR²
.KDQ6$0XOYDQH\5/(OOVZRUWK75DQG%RDVW&:7KHP\WKRIQLWURJHQIHUWLOL]DWLRQIRUVRLOFDUERQVHTXHVWUDWLRQ
-RXUQDORI(QYLURQPHQWDO4XDOLW\2FWREHU²
.KRU 0 7KHLPSDFWRIWUDGHOLEHUDOL]DWLRQRQDJULFXOWXUHLQGHYHORSLQJFRXQWULHV7KHH[SHULHQFHRI*KDQD
3HQDQJ7KLUG:RUOG1HWZRUN
.KRU 0  7KH IRRG FULVLV FOLPDWH FKDQJH DQG WKH LPSRUWDQFH RI VXVWDLQDEOH DJULFXOWXUH (QYLURQPHQW 
'HYHORSPHQW6HULHV3HQDQJ7KLUG:RUOG1HWZRUN3DSHUSUHVHQWHGDWWKH+LJK/HYHO&RQIHUHQFHRQ:RUOG
)RRG6HFXULW\7KH&KDOOHQJHVRI&OLPDWH&KDQJHDQG%LRHQHUJ\5RPH²-XQH
.LMLPD<1HZWHFKQRORJ\DQGHPHUJHQFHRIPDUNHWV(YLGHQFHIURP1(5,&$ULFHLQ8JDQGD$YDLODEOHDW
KWWSZZZFVDHR[DFXNFRQIHUHQFHV('L$SDSHUV.LMLPDSGI
.LPEDOO%$.RED\DVKL.DQG%LQGL05HVSRQVHVRIDJULFXOWXUDOFURSVWRIUHHDLU&2HQULFKPHQW$GYDQFHVLQ
$JURQRP\²
.LPEDOO %$ 0RUULV &) 3LQWHU -U 3- :DOO *: +XQVDNHU '- $GDPVHQ )- /D0RUWH 5/ /HDYLWW 6: 7KRPSVRQ 7/
0DWWKLDV$'DQG%URRNV7-(OHYDWHG&2GURXJKWDQGVRLOQLWURJHQHIIHFWVRQZKHDWJUDLQTXDOLW\1HZ
3K\WRORJLVW²
.M UQHV8+DUYH\0DQG:DUGH$7UXVWLQ)RRG$&RPSDUDWLYHDQG,QVWLWXWLRQDO$QDO\VLV1HZ<RUN3DOJUDYH
.RQLNRZ/)DQG.HQG\(*URXQGZDWHUGHSOHWLRQ$JOREDOSUREOHP+\GURJHRORJ\-RXUQDO²
.RRKDINDQ3DQG$OWLHUL0$*OREDOO\LPSRUWDQWDJULFXOWXUDOKHULWDJHV\VWHPV$OHJDF\IRUWKHIXWXUH5RPH
)$2
.RRSPDQV&-%RV00DQG/XVNH%5HVLOLHQFHWRDFKDQJLQJFOLPDWH&DUERQVWRFNVLQWZRRUJDQLFIDUPLQJ
V\VWHPV LQ $IULFD ,Q 1HXKRII ' +DOEHUJ 1 5DVPXVVHQ , +HUPDQVHQ / 6VHN\HZD & DQG 0RN 6RKQ 6 HGV
2UJDQLF LV /LIH ² .QRZOHGJH IRU 7RPRUURZ 3URFHHGLQJV RI WKH 7KLUG 6FLHQWLÀF &RQIHUHQFH RI WKH ,QWHUQDWLRQDO
6RFLHW\RI2UJDQLF$JULFXOWXUH5HVHDUFK,62)$56HSWHPEHU²2FWREHU9RO6RFLR(FRQRP\/LYHVWRFN
)RRG4XDOLW\$JURHFRORJ\DQG.QRZOHGJH'LVVHPLQDWLRQ1DP\DQJMX5HSRI.RUHD²
.RUFKHQV0DQG0OOHU$7KHVWDWLFH[SHULPHQW%DG/DXFKVW*HUPDQ\,Q(YDOXDWLRQRIVRLORUJDQLFPDWWHU
PRGHOVXVLQJH[LVWLQJGDWDVHWVHGV3RZOVRQ'66PLWK3DQG6PLWK-81$72$6,+HLGHOEHUJ
*HUPDQ\6SULQJHU
.UDLQ ( 0DYUDNLV ( 0RKDPXG 0 :DQMRKL 3 DQG ,QJZH $  &OLPDWH &KDQJH DQG GLYHUVLÀFDWLRQ RI FRIIHH
SURGXFWLRQ3URVSHFWVRIFXOWLYDWLQJSDVVLRQIUXLWDVDQDOWHUQDWLYHWRFRIIHHLQ.HQ\D1DLUREL3URPRWLRQRI3ULYDWH
6HFWRU'HYHORSPHQWLQ$JULFXOWXUH36'$'HXWVFKH*HVHOOVFKDIWIU,QWHUQDWLRQDOH=XVDPPHQDUEHLW*,=
.UDLQ(1J·HQGR0'LHW]-1GHJZD'11MHUX-DQG&KHJH3&OLPDWHFKDQJHLQYDOXHFKDLQGHYHORSPHQW
&RQFHSWXDO LGHDV EDVHG RQ H[SHULHQFHV ZLWK WKH WHD SDVVLRQ IUXLW DQG HQHUJ\ VDYLQJ VWRYHV YDOXH FKDLQV LQ
.HQ\D1DLUREL3URPRWLRQRI3ULYDWH6HFWRU'HYHORSPHQWLQ$JULFXOWXUH36'$*HUPDQ7HFKQLFDO&RRSHUDWLRQ
$JHQF\*7=
.ULHU-0)DLU7UDGHLQ(XURSH%UXVVHOV(XURSHDQ3DUOLDPHQW$YDLODEOHDWKWWSIDLUWUDGHQHWVLWHVQHZV
)DLU7UDGHLQ(XURSHSGI
 75$'($1'(19,5210(175(9,(:

/DO52QHDQVZHUIRUFOHDQHUDLUZDWHU%HWWHUDJULFXOWXUDOSUDFWLFHV2KLR6WDWH5HVHDUFK1HZV$YDLODEOH

DWKWWSUHVHDUFKQHZVRVXHGXDUFKLYHVHTXHVWKWP
/DO5&DUERQVHTXHVWUDWLRQ3KLORVRSKLFDO7UDQVFULSWLRQVRIWKH5R\DO6RFLHW\%²%LRORJLFDO6FLHQFHV
)HEUXDU\²
/DO56HTXHVWUDWLRQRIDWPRVSKHULF&2LQJOREDOFDUERQSRROV(QHUJ\DQG(QYLURQPHQWDO6FLHQFH²
/DO 5 .LPEOH -0 )ROOHWW 5) &ROH &9  7KH SRWHQWLDO RI 86 FURSODQG WR VHTXHVWHU FDUERQ DQG PLWLJDWH WKH
JUHHQKRXVHHIIHFW&KHOVHD0,$QQ$UERU3UHVV
/DO5DQG6WHZDUW%$6RLO'HJUDGDWLRQ1HZ<RUN6SULQJHU
/DQJGDOH*::HVW/7%UXFH550LOOHU:3DQG7KRPDV$:5HVWRUDWLRQRIHURGHGVRLOZLWKFRQVHUYDWLRQ
WLOODJH6RLO7HFKQRORJ\²
/D6DOOH 7- DQG +HSSHUO\ 3  5HJHQHUDWLYH RUJDQLF IDUPLQJ $ VROXWLRQ WR JOREDO ZDUPLQJ .XW]WRZQ 3$ 7KH
5RGDOH,QVWLWXWH
/D]DURII&%LRGLYHUVLW\JLYHVFDUERQVLQNVDERRVW(QYLURQPHQW1HZV6HUYLFH$SULO
/HH.(DQG)RVWHU5&6RLOIDXQDDQGVRLOVWUXFWXUH$XVWUDOLDQ-RXUQDORI6RLO5HVHDUFK²
/HJJ:DQG+XDQJ+&OLPDWHFKDQJHDQGDJULFXOWXUH2(&'2EVHUYHUQR0DUFK7UDGHDQG$JULFXOWXUH
'LUHFWRUDWH2(&'3DULV$YDLODEOHDWKWWSWLQ\XUOFRPXKIN
/HYLQH8<7HDO7.5REHUWVRQ*3DQG6FKPLGW70$JULFXOWXUH·VLPSDFWRQPLFURELDOGLYHUVLW\DQGDVVRFLDWHG
ÁX[HVRIFDUERQGLR[LGHDQGPHWKDQH,60(-RXUQDO²
/L.0DQG+R0:%LRJDV&KLQD6FLHQFHLQ6RFLHW\²
/LEHUW%7KH(QYLURQPHQWDO+HULWDJHRI6RYLHW$JULFXOWXUH2[IRUG&$%,QWHUQDWLRQDO
/LP/L&KLQJ&OLPDWHFKDQJHLPSOLFDWLRQVIRUDJULFXOWXUHLQ6XE6DKDUDQ$IULFD)$2,QVWLWXWHIRU6XVWDLQDEOH
'HYHORSPHQW7KLUG:RUOG1HWZRUNUHVHDUFKSDSHU5RPH$YDLODEOHDWZZZIDRRUJ
/LQ%%5HVLOLHQFHLQDJULFXOWXUHWKURXJKFURSGLYHUVLÀFDWLRQDGDSWLYHPDQDJHPHQWIRUHQYLURQPHQWDOFKDQJH
%LR6FLHQFH²
/LQ&-/L&</LQ6.<DQJ)++XDQJ--/LX<+/XU+6,QÁXHQFHRIKLJKWHPSHUDWXUHGXULQJJUDLQÀOOLQJRQ
WKHDFFXPXODWLRQRIVWRUDJHSURWHLQVDQGJUDLQTXDOLW\LQULFH2U\]DVDWLYD/-RXUQDORI$JULFXOWXUDODQG)RRG
&KHPLVWU\²$YDLODEOHDWKWWSSXEVDFVRUJGRLDEVMIM
/LQQH . $UFKHU - 6FKPLGW * DQG .XKUW &  &OLPDWH &KDQJH $GDSWDWLRQ DQG 0LWLJDWLRQ LQ WKH .HQ\DQ &RIIHH
6HFWRU *XLGH ERRN &OLPDWH 0RGXOH 6DQJDQD 333 'HXWVFKH *HVHOOVFKDIW IU ,QWHUQDWLRQDOH =XVDPPHQDUEHLW
*,=(FRP$JURLQGXVWULDO*URXS$YDLODEOHDWKWWSZZZFFRIIHHDVVRFLDWLRQRUJLQGH[SKS"LG 
/LX-)ULW]6YDQ:HVHQEHHN&)$)XFKV0<RX/2EHUVWHLQHU0<DQJ+$VSDWLDOO\H[SOLFLWDVVHVVPHQWRI
FXUUHQWDQGIXWXUHKRWVSRWVRIKXQJHULQVXE6DKDUDQ$IULFDLQWKHFRQWH[WRIJOREDOFKDQJH*OREDODQG3ODQHWDU\
&KDQJH²
/REHOO'%&KDQJHVLQGLXUQDOWHPSHUDWXUHDQGQDWLRQDOFHUHDO\LHOGV$JULFXOWXUDODQG)RUHVW0HWHRURORJ\²
/REHOO '% /REHOO % %XUNH 0% 7HEDOGL & 0DVWUDQGUHD 0' )DOFRQ :3 DQG 1D\ORU 5/  3ULRULWL]LQJ FOLPDWH
FKDQJHDGDSWDWLRQQHHGVIRUIRRGVHFXULW\LQ6FLHQFH²
/REHOO'%6FKOHQNHU:DQG&RVW5REHUWV-&OLPDWHWUHQGVDQGJOREDOFURSSURGXFWLRQVLQFH6FLHQFH
²$YDLODEOHDWKWWSZZZVFLHQFHPDJRUJFRQWHQW
/RFNDE\ %* DQG $GDPV -&  3HGRWXUEDWLRQ RI D IRUHVW VRLO E\ ÀUH DQWV -RXUQDO RI  6RLO 6FLHQFH 6RFLHW\ RI
$PHULFD²
/RODG]H ,  5LVLQJ DWPRVSKHULF &2 DQG KXPDQ QXWULWLRQ 7RZDUG JOREDOO\ LPEDODQFHG SODQW VWRLFKLRPHWU\"
7UHQGVLQ(FRORJ\ (YROXWLRQ²
/RUHDX01DHHP6,QFKDXVWL3%HQJWVVRQ-*ULPH-3+HFWRU$+RRSHU'8+XVWRQ0$5DIIDHOOL'6FKPLG%
7LOPDQ'DQG:DUGOH'$%LRGLYHUVLW\DQGHFRV\VWHPIXQFWLRQLQJ&XUUHQWNQRZOHGJHDQGIXWXUHFKDOOHQJHV
6FLHQFH²
/RWWHU ': 6HLGHO 5 DQG /LHEKDUW :  7KH SHUIRUPDQFH RI RUJDQLF DQG FRQYHQWLRQDO FURSSLQJ V\VWHPV LQ DQ
H[WUHPHFOLPDWH\HDU$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH²
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

/RXZDDUV17ULSS5(DWRQ'+HQVRQ$SROORQLR9+X50HQGR]D00XKKXNX)3DO6DQG:HNXQGDK-
,PSDFWVRIVWUHQJWKHQHGLQWHOOHFWXDOSURSHUW\ULJKWVUHJLPHVRQWKHSODQWEUHHGLQJLQGXVWU\LQGHYHORSLQJFRXQWULHV
$V\QWKHVLVRIÀYHFDVHVWXGLHV:DJHQLQJHQ&HQWUHIRU*HQHWLF5HVRXUFHV
/XQGTYLVW-GH)UDLWXUH&DQG0ROGHQ'6DYLQJZDWHU)URPÀHOGWRIRUN²&XUELQJORVVHVDQGZDVWDJHLQ
WKHIRRGFKDLQ6,:,3ROLF\%ULHI6WRFNKROP6WRFNKROP,QWHUQDWLRQDO:DWHU,QVWLWXWH$YDLODEOHDWZZZVLZLRUJ
GRFXPHQWV5HVRXUFHV3ROLF\B%ULHIV3%B)URPB)LOHGBWRB)RUNBSGI
/XVNH%DQGYDQGHU.DPS-&DUERQVHTXHVWUDWLRQSRWHQWLDORIUHFODLPHGGHVHUWVRLOVLQ(J\SW'ULHEHUJHQ
7KH1HWKHUODQGV6RLODQG0RUH,QWHUQDWLRQDODQGWKH+HOLRSROLV$FDGHP\DQGWKH/RXLV%RON,QVWLWXWH'HSDUWPHQW
RI$JULFXOWXUH
0DF'RQDOG 0  $JULLPSDFW DVVHVVPHQW ² ,, 0RUH IURP WKH FRWWRQ ÀHOGV $JURFHO ,QGXVWULHV /WG -DQXDU\
$YDLODEOH DW KWWSZZZWUDLGFUDIWFRXN2QH6WRS&06&RUH&UDZOHU5HVRXUFH6HUYHUDVS["UHVRXUFH ($'
)'%)$&&&(' PRGH OLQN JXLG DHIGIEHHEIEHFIG
0DFKDGR6'RHVLQWHUFURSSLQJKDYHDUROHLQPRGHUQDJULFXOWXUH"-RXUQDORI6RLODQG:DWHU&RQVHUYDWLRQ
$$²$
0DGHU3)OLH‰EDFK$'XERLV'*XQVW/)ULHG3DQG1LJJOL86RLOIHUWLOLW\DQGELRGLYHUVLW\LQRUJDQLFIDUPLQJ
6FLHQFH
0DKRQH\32OVRQ.'3RUWHU0+XJJLQV'53HULOOR&$DQG&URRNVWRQ5.3URÀWDELOLW\RIRUJDQLFFURSSLQJ
V\VWHPVLQVRXWKZHVWHUQ0LQQHVRWD-RXUQDORI5HQHZDEOH$JULFXOWXUHDQG)RRG6\VWHPV²
0D]R\HU0DQG5RXGDUW/$+LVWRU\RI:RUOG$JULFXOWXUH)URPWKH1HROLWKLF$JHWRWKH&XUUHQW&ULVLV7UDQVODWLRQ
E\-DPHV+0HPEUH]/RQGRQ(DUWKVFDQ
0F%ULGH:'DQG*UHHQH&57KHSURÀWDELOLW\RIRUJDQLFVR\EHDQSURGXFWLRQ5HQHZDEOH$JULFXOWXUHDQG)RRG
6\VWHPV²
0F,QW\UH % +HUUHQ +5 :DNKXQJX - :DWVRQ 57 D $JULFXOWXUH DW D &URVVURDGV 6XE6DKDUDQ $IULFD
9RO 9 :DVKLQJWRQ '& ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG 7HFKQRORJ\ IRU
'HYHORSPHQW
0F,QW\UH%+HUUHQ+5:DNKXQJX-DQG:DWVRQ57E1RUWK$PHULFDDQG(XURSH5HJLRQDO5HSRUW9RO,9RI
$JULFXOWXUHDWD&URVVURDGV,$$67',VODQG3UHVV:DVKLQJWRQ'&$YDLODEOHDWZZZDJDVVHVVPHQWRUJ
0HHKO*$6WRFNHU7)&ROOLQV:')ULHGOLQJVWHLQ3*D\H$7*UHJRU\-0.LWRK$.QXWWL50XUSK\-01RGD$5DSHU
6&%:DWWHUVRQ,*:HDYHU$-DQG=KDR=&*OREDOFOLPDWHSURMHFWLRQV,Q,3&&6RORPRQ6HWDOHGV
&OLPDWH &KDQJH 7KH3K\VLFDO6FLHQFH%DVLV&RQWULEXWLRQRI:RUNLQJ*URXS,WRWKH)RXUWK$VVHVVPHQW
5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJHDQG1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
0HLQKDXVHQ00HLQVKDXVHQ1+DUH:5DSHU6&%)ULHOHU..QXWWL.)UDPH'-DQG$OOHQ05*UHHQKRXVH
JDVHPLVVLRQWDUJHWVIRUOLPLWLQJJOREDOZDUPLQJWRƒ&1DWXUH²
0HQGR]D7&&RPSDUDWLYHSURGXFWLYLW\SURÀWDELOLW\DQGHQHUJ\XVHLQRUJDQLF/(,6$DQGFRQYHQWLRQDOULFH
SURGXFWLRQ LQ WKH 3KLOLSSLQHV 3DSHU SUHVHQWHG DW WKH WK :RUOG &RQJUHVV ,)2$0 9LFWRULD &DQDGD ²
$XJXVW
0LFKDHOLV / DQG /RUHN 6  &RQVXPSWLRQ DQG WKH (QYLURQPHQW LQ (XURSH 7UHQGV DQG )XWXUHV &RSHQKDJHQ
'DQLVK(3$
0LFN'*%URQLDUF]\N0DQG+DLGW-&KRRVHFKRRVHFKRRVHFKRRVHFKRRVHFKRRVHFKRRVH(PHUJLQJ
DQGSURVSHFWLYHUHVHDUFKRQWKHGHOHWHULRXVHIIHFWVRIOLYLQJLQFRQVXPHUK\SHUFKRLFH-RXUQDORI%XVLQHVV(WKLFV
²
0LOHVWDG5DQG'DUQKRIHU,%XLOGLQJIDUPUHVLOLHQFHWKHSURVSHFWVDQGFKDOOHQJHVRIRUJDQLFIDUPLQJ-RXUQDO
RI6XVWDLQDEOH$JULFXOWXUH²
0LOOHQQLXP (FRV\VWHP $VVHVVPHQW  (FRV\VWHPV DQG +XPDQ :HOOEHLQJ 6\QWKHVLV :DVKLQJWRQ '& ,VODQG
3UHVV²
0LOO\3&''XQQH.$DQG9HFFKLD$9*OREDOSDWWHUQRIWUHQGVLQVWUHDPÁRZDQGZDWHUDYDLODELOLW\LQDFKDQJLQJ
FOLPDWH1DWXUH²
0LQRW 1 6PDOH 0 (LFKHU & -D\QH 7 .OLQJ - +RUQD ' DQG 0\HUV 5  6HHG GHYHORSPHQW SURJUDPV LQ
VXE6DKDUDQ$IULFD$UHYLHZRIH[SHULHQFHV$YDLODEOHDWKWWSZZZDHFPVXHGXIVUHVSRQVHVMD\QHBP\HUVB
 75$'($1'(19,5210(175(9,(:

DIULFDQBVHHGBUHYLHZSGI
0RUHWWL &/ 0DWWRV /0 &DOER $* DQG 6DUJHQW 6$  &OLPDWH FKDQJHV DQG SRWHQWLDO LPSDFWV RQ SRVWKDUYHVW
TXDOLW\RIIUXLWDQGYHJHWDEOHFURSV$UHYLHZ)RRG5HVHDUFK,QWHUQDWLRQDO²
0R\HU-2UJDQLF1R7LOO)DUPLQJ(PPDXV3$5RGDOH3UHVV
0R\HU-2UJDQLF1RWLOO)DUPLQJ$FUHV86$$XVWLQ7;
0KOHLE )  /HEHQVPLWWHOVLFKHUKHLW XQG 3UR]HVVTXDOLWlW YRQ /HEHQVPLWWHOQ LQ (XURSD  :DV VLQG XQVHUH
$QVSUFKH":LHN|QQHQVLHJHVLFKHUWZHUGHQ"$YDLODEOHDWKWWSZZZY]EYGHPHGLDSLFVOHEHQVPLWWHOVLFKHUKHLWB
HXURSDBGRVVLHUBLJZBSGI
0OOHU $ DQG $XEHUW &  7KH SRWHQWLDO RI RUJDQLF DJULFXOWXUH WR PLWLJDWH WKH LPSDFW RI DJULFXOWXUH RQ JOREDO
ZDUPLQJ$UHYLHZ,Q3HQYHUQ6HG2UJDQLF)DUPLQJ3URWRW\SHIRU6XVWDLQDEOH$JULFXOWXUHV"%HUOLQ6SULQJHU
IRUWKFRPLQJ
0OOHU$-DZWXVFK-DQG*DWWLQJHU$D0LWLJDWLQJJUHHQKRXVHJDVHVLQDJULFXOWXUH$FKDOOHQJHDQGRSSRUWXQLW\
IRUDJULFXOWXUDOSROLFLHV6WXG\RI)L%/IRU$FW$OOLDQFH%UHDGIRU$OO&KUXFKRI6ZHGHQDQG'DQ&KXUFK$LG6WXWWJDUW
$YDLODEOHDWZZZEURWIXHUGLHZHOWGHGRZQORDGVIDFKLQIRUPDWLRQHQJUHHQKRXVHJDVHVSGI
0OOHU $ 2VPDQ(ODVKD % DQG $QGUHDVHQ /  7KH SRWHQWLDO RI RUJDQLF DJULFXOWXUH IRU FRQWULEXWLQJ WR FOLPDWH
FKDQJH DGDSWDWLRQ ,Q +DOEHUJ 1 DQG 0OOHU $ HGV 2UJDQLF $JULFXOWXUH IRU 6XVWDLQDEOH /LYHOLKRRGV /RQGRQ
5RXWOHGJH
0OOHU&&OLPDWHFKDQJHLPSDFWRQVXE6DKDUDQ$IULFD$QRYHUYLHZDQGDQDO\VLVRIVFHQDULRVDQGPRGHOV
'LVFXVVLRQSDSHU'HXWVFKHV,QVWLWXWIU(QWZLFNOXQJVSROLWLN%RQQ
0OOHU&&UDPHU:+DUH://RW]H&DPSHQ+E&OLPDWHFKDQJHULVNVIRU$IULFDQDJULFXOWXUH31$6
²
0XOYDQH\5/.KDQ6$DQG(OOVZRUWK756\QWKHWLFQLWURJHQIHUWLOL]HUVGHSOHWHVRLOQLWURJHQ$JOREDOGLOHPPD
IRUVXVWDLQDEOHFHUHDOSURGXFWLRQ-RXUQDORI(QYLURQPHQWDO4XDOLW\²
0XUDW $ 9HUKXOVW .5 6DOW]PDQ (6  %DWWOH 02 0RQW]ND 6$  %ODNH '5  7DQJ 4 DQG  3UDWKHU 0-  5HFHQW
GHFUHDVHVLQIRVVLOIXHOHPLVVLRQVRIHWKDQHDQGPHWKDQHGHULYHGIURPÀUQDLU1DWXUH²
0XUSK\ 6 DQG :LVH 7 $  5HVROYLQJ WKH IRRG FULVLV $VVHVVLQJ JOREDO SROLF\ UHIRUPV VLQFH  *OREDO
'HYHORSPHQWDQG(QYLURQPHQW,QVWLWXWHDW7XIWV8QLYHUVLW\DQG,QVWLWXWHIRU$JULFXOWXUHDQG7UDGH3ROLF\$YDLODEOH
DWKWWSLDWSRUJÀOHVBBB5HVROYLQJ)RRG&ULVLVB60B7:SGI
0\HUV1*DLD$Q$WODVRI3ODQHW0DQDJHPHQW*DUGHQ&LW\1<$QFKRU'RXEOHGD\
1DHUVWDG $  $ YLDEOH IRRG IXWXUH SDUW , DQG ,, 7KH 'HYHORSPHQW )XQG 1RUZD\ 2VOR $YDLODEOH DW KWWS
ZZZXWYLNOXQJVIRQGHWQRÀOHVXIGRFXPHQWV$B9LDEOHB)RRGB)XWXUHBXSGDWHGBZHESGI DQG KWWSZZZ
XWYLNOXQJVIRQGHWQRÀOHVXIGRFXPHQWV5DSSRUWHU$9LDEOHB)RRGB)XWXUHBSDUWBHQBZHESGI
1$6 1DWLRQDO $FDGHP\ RI 6FLHQFHV  )URQWLHUV LQ $JULFXOWXUDO 5HVHDUFK )RRG +HDOWK (QYLURQPHQW DQG
&RPPXQLWLHV:DVKLQJWRQ'&
1DWDUDMDQ0DQG:LOOH\5:7KHHIIHFWVRIZDWHUVWUHVVRQ\LHOGDGYDQWDJHVRILQWHUFURSSLQJV\VWHPV)LHOG
&URSV5HVHDUFK²
1HVWOp'LH1HVWOp6WXGLH²6RLVVW'HXWVFKODQG:DQGHOGHV$OOWDJV:DQGHOGHU(UQlKUXQJ$YDLODEOH
DWKWWSZZZQHVWOHGH8QWHUQHKPHQ1HVWOH6WXGLH1HVWOH6WXGLH3DJHVGHIDXOWDVS[
1HVWOH 0  )RRG 3ROLWLFV +RZ WKH )RRG ,QGXVWU\ ,QÁXHQFHV 1XWULWLRQ DQG +HDOWK %HUNHOH\ /RV $QJHOHV DQG
/RQGRQ8QLYHUVLW\RI&DOLIRUQLD3UHVV
1HWWLQJ50F&6PDOOKROGHUV+RXVHKROGHUV)DUP)DPLOLHVDQGWKH(FRORJ\RI,QWHQVLYH6XVWDLQDEOH$JULFXOWXUH
3DOR$OWR&$6WDQIRUG8QLYHUVLW\3UHVV
1LJJOL 8  2UJDQLF DJULFXOWXUH $ SURGXFWLYH PHDQV RI ORZFDUERQ DQG KLJK ELRGLYHUVLW\ IRRG SURGXFWLRQ ,Q
81&7$'7UDGHDQG(QYLURQPHQW5HYLHZ*HQHYD81&7$'²
1LOVVRQ /*  'DWD RI \LHOG DQG VRLO DQDO\VLV LQ WKH ORQJWHUP VRLO IHUWLOLW\ H[SHULPHQWV -5 6ZHG $FDG $JU
)RUHVWU\VXSSO
1RUZHJLDQ0LQLVWU\RIWKH(QYLURQPHQW2VOR5RXQGWDEOHRQ6XVWDLQDEOH3URGXFWLRQDQG&RQVXPSWLRQ$YDLODEOH
DWKWWSZZZLLVGFDFRQVXPHRVORKWPO
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

1XUL$218'URLWVSRXUWRXVRXORLGXSOXVIRUW"*HQHYD&HQWUH(XURSH²7LHUV0RQGH&(7,0

2GXP(3)XQGDPHQWDOVRI(FRORJ\1HZ<RUN6DXQGHUV
2(&'  +RXVHKROG IRRG FRQVXPSWLRQ 7UHQGV HQYLURQPHQWDO LPSDFWV DQG SROLF\ UHVSRQVHV 3DULV 2(&'
$YDLODEOH DW ZZZRHFGRUJRIÀFLDOGRFXPHQWVGLVSOD\GRFXPHQWSGI"FRWH (19(32&:31(3
),1$/ GRFODQJXDJH HQ
2HUNH (&  &URS ORVVHV WR SHVWV -RXUQDO RI $JULFXOWXUDO 6FLHQFH 9RO  ,VVXH  )HEUXDU\ SS 
$YDLODEOHDWKWWSMRXUQDOVFDPEULGJHRUJDFWLRQGLVSOD\$EVWUDFW"IURP3DJH RQOLQH DLG 
2IIHUPDQQ)DQG1LHEHUJ+(FRQRPLFSHUIRUPDQFHRIRUJDQLFIDUPVLQ(XURSH,Q2UJDQLF)DUPLQJLQ(XURSH
(FRQRPLFVDQG3ROLF\9RO6WXWWJDUW8QLYHUVLW\RI+RKHQKHLP
2NWHP$(IIHFWRIZDWHUVKRUWDJHRQ\LHOGDQGSURWHLQDQGPLQHUDOFRPSRVLWLRQVRIGULSLUULJDWHGVZHHWFRUQLQ
VXVWDLQDEOHDJULFXOWXUDOV\VWHPV$JULFXOWXUDO:DWHU0DQDJHPHQW²
2ODK=VXSRV$DQG+HOPHF]L%7KHHIIHFWRIVRLOFRQGLWLRQHUVRQVRLOPLFURRUJDQLVPV,Q6]HJL-HG6RLO
%LRORJ\DQG&RQVHUYDWLRQRIWKH%LRVSKHUH3URFHHGLQJVRIWKHWK,QWHUQDWLRQDO6\PSRVLXP%XGDSHVW$NDGHPLDL
.LDGR²
2OVRQ .' DQG 0DKRQH\ 35  /RQJWHUP FURSSLQJ VWXGLHV DW WKH 8QLYHUVLW\ RI 0LQQHVRWD 7KH YDULDEOH LQSXW
FURSSLQJPDQDJHPHQWV\VWHPVWXG\:DVKLQJWRQ'&8QLWHG6WDWHV'HSWRI$JULFXOWXUH(FRQRPLF5HVHDUFK
6HUYLFH
2UJDQLF(XURSH&RXQWU\UHSRUWV$YDLODEOHDWKWWSZZZRUJDQLFHXURSHQHWFRXQWU\BUHSRUWVGHIDXOWDVS
2VERUQH&3%HHUOLQJ'-1DWXUH·VJUHHQUHYROXWLRQWKHUHPDUNDEOHHYROXWLRQDU\ULVHRI&SODQWV3KLORVRSKLFDO
7UDQVDFWLRQVRIWKH5R\DO6RFLHW\%%LRORJLFDO6FLHQFHV²
3DLQWHU.'RHVVXVWDLQDEOHIDUPLQJSD\"$FDVHVWXG\-RXUQDORI6XVWDLQDEOH$JULFXOWXUH²
3DUÀWW-%DUWKHO0DQG0DFQDXJKWRQ6)RRGZDVWHZLWKLQIRRGVXSSO\FKDLQV4XDQWLÀFDWLRQDQGSRWHQWLDOIRU
FKDQJHWR3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO6RFLHW\%²$YDLODEOHDWZZZELVJRYXN
DVVHWVELVSDUWQHUVIRUHVLJKWGRFVIRRGDQGIDUPLQJGULYHUVGUIRRGZDVWHZLWKLQVXSSO\FKDLQVSGI
3DWHO5$W*OHQFRUH·VSLQQDFOHRIFDSLWDOLVPHYHQKXQJHULVDFRPPRGLW\7KH*XDUGLDQ0D\$YDLODEOHDW
KWWSZZZJXDUGLDQFRXNFRPPHQWLVIUHHPD\JOHQFRUHKXQJHFRPPRGLW\IRRGSULFHV
3HQJ6+XDQJ-6KHHK\-(/D]$D5&9LVSHUDV50=KRQJ;&HQWHQR*6.KXVK*6DQG&DVVPDQ.*
5LFH\LHOGVGHFOLQHZLWKKLJKHUQLJKWWHPSHUDWXUHVIURPJOREDOZDUPLQJ3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI
6FLHQFHV²
3HUIHFWR,9DQGHUPHHU-DQG:ULJKW$1DWXUH·V0DWUL[/LQNLQJ$JULFXOWXUH&RQVHUYDWLRQDQG)RRG6RYHUHLJQW\
/RQGRQ(DUWKVFDQ
3KLOOLSV$DQG+HOPHF]L%7KHHIIHFWRIVRLOFRQGLWLRQHUVRQVRLOPLFURRUJDQLVPV,Q6]HJL-HG6RLO%LRORJ\
DQG&RQVHUYDWLRQRIWKH%LRVSKHUH3URFHHGLQJVRIWKHWK,QWHUQDWLRQDO6\PSRVLXP%XGDSHVW$NDGHPLDL.LDGR
²
3KLOSRWW 60 /LQ %% -KD 6 DQG %ULQHV 6-  $ PXOWLVFDOH DVVHVVPHQW RI KXUULFDQH LPSDFWV RQ DJULFXOWXUDO
ODQGVFDSHVEDVHGRQODQGXVHDQGWRSRJUDSKLFIHDWXUHV$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW²
3LPHQWHO '  6RLO HURVLRQ D IRRG DQG HQYLURQPHQWDO WKUHDW (QYLURQPHQW 'HYHORSPHQW DQG 6XVWDLQDELOLW\ 
²
3LPHQWHO'*OREDO&OLPDWH&KDQJH,WV,PSOLFDWLRQVRQ)RRGDQGWKH(QYLURQPHQW5DFKHO&DUVRQ&RXQFLO,QF
6LOYHU6SULQJ0'
3LPHQWHO'DQG3LPHQWHO0)RRG(QHUJ\DQG6RFLHW\%RFD5DWRQ)/7D\ORUDQG)UDQFLV
3LPHQWHO'%HUJHU%)LOLEHUWR'1HZWRQ0:ROIH%.DUDELQDNLV%&ODUN63RRQ($EEHWW(DQG1DQGDJRSDO6
:DWHUUHVRXUFHV$JULFXOWXUDODQGHQYLURQPHQWDOLVVXHV%LRVFLHQFH²
3LPHQWHO'+DUYH\&5HVRVXGDUPR36LQFODLU..XUW]'0F1DLU0&ULVW66SULW]/)LWWRQ/6DIIRXUL5DQG%ODLU5
(QYLURQPHQWDODQGHFRQRPLFFRVWVRIVRLOHURVLRQDQGFRQVHUYDWLRQEHQHÀWV6FLHQFH²
3LPHQWHO'+HSSHUO\3+DQVRQ-'RXGV'DQG6HLGHO5(QYLURQPHQWDOHQHUJHWLFDQGHFRQRPLFFRPSDULVRQV
RIRUJDQLFDQGFRQYHQWLRQDOIDUPLQJV\VWHPV%LRVFLHQFH²
 75$'($1'(19,5210(175(9,(:

3LPHQWHO'+XDQJ;&RUGRYD$DQG3LPHQWHO0,PSDFWRISRSXODWLRQJURZWKRQIRRGVXSSOLHVDQGHQYLURQPHQW

3RSXODWLRQDQG(QYLURQPHQW²
3LPHQWHO'3HWURYD75LOH\0-DFTXHW-1J9+RQLJPDQ-DQG9DOHUR(&RQVHUYDWLRQRIELRORJLFDOGLYHUVLW\LQ
DJULFXOWXUDOIRUHVWU\DQGPDULQHV\VWHPV,Q%XUN$5HG)RFXVRQ(FRORJ\5HVHDUFK1HZ<RUN1RYD6FLHQFH
3XEOLVKHUV²$OVRLQ6FKZDUW]-HG)RFXVRQ%LRGLYHUVLW\5HVHDUFK1HZ<RUN1RYD6FLHQFH
3XEOLVKHUV²
3LPHQWHO'7RUW0'·$QQD/.UDZLF$%HUJHU-5RVVPDQ-0XJR)'RRQ16KULEHUJ0+RZDUG(/HH6DQG7DOERW
-(FRORJ\RILQFUHDVLQJGLVHDVH%LRVFLHQFH2FWREHU$YDLODEOHDWKWWSGLHRIIRUJSDJHKWP
3ODWIRUPIRU$JURELRGLYHUVLW\5HVHDUFK7KHXVHRIDJURELRGLYHUVLW\E\LQGLJHQRXVDQGWUDGLWLRQDODJULFXOWXUDO
FRPPXQLWLHVLQDGDSWLQJWRFOLPDWHFKDQJH6\QWKHVLVSDSHU&OLPDWH&KDQJHSURMHFW%LRYHUVLW\,QWHUQDWLRQDODQG
WKH&KULVWHQVHQ)XQG
3ROODFN $  &URS VFLHQWLVWV VD\ ELRWHFKQRORJ\ VHHG FRPSDQLHV DUH WKZDUWLQJ UHVHDUFK 1HZ <RUN 7LPHV 
)HEUXDU\$YDLODEOHDWKWWSZZZQ\WLPHVFRPEXVLQHVVFURSKWPO"BU 
3RVQHU -/ %DOGRFN -2 DQG +HGWFNH -/  2UJDQLF DQG FRQYHQWLRQDO SURGXFWLRQ V\VWHPV LQ WKH :LVFRQVLQ
LQWHJUDWHGFURSSLQJV\VWHPV7ULDOV²$JURQRP\-RXUQDO9ROXPHLVVXHSS
3RVWHO6/:DWHUIRUIRRGSURGXFWLRQ:LOOWKHUHEHHQRXJKLQ"%LR6FLHQFH²
3UD\&2HKPNH-DQG1DVHHP$,QQRYDWLRQDQGG\QDPLFHIÀFLHQF\LQSODQWELRWHFKQRORJ\$QLQWURGXFWLRQWR
WKHUHVHDUFKDEOHLVVXHV$J%LR)RUXP²
3UHVV(DQG:DVKEXUQ-7KHNHSWXQLYHUVLW\7KH$WODQWLF0RQWKO\0DUFK$YDLODEOHDWKWWSZZZWKHDWODQWLF
FRPGRFXQLYHUVLW\IRUSURÀW
3UHWW\-$JULFXOWXUDOVXVWDLQDELOLW\&RQFHSWVSULQFLSOHVDQGHYLGHQFH3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO
6RFLHW\%%LRORJLFDO6FLHQFHV²
3UHWW\ - %UHWW & *HH ' +LQH 5( 0DVRQ &) 0RULVRQ -,/ 5DYHQ + 5D\PHQW 0' DQG YDQ GHU %LMO *  $Q
DVVHVVPHQWRIWKHWRWDOH[WHUQDOFRVWVRI8.DJULFXOWXUH$JULFXOWXUDO6\VWHPV²
3UHWW\-11REOH$'%RVVLR''L[RQ-+LQH5(3HQQLQJGH9ULHV):7DQG0RULVRQ-,/5HVRXUFHFRQVHUYLQJ
DJULFXOWXUHLQFUHDVHV\LHOGVLQGHYHORSLQJFRXQWULHV(QYLURQPHQWDO6FLHQFHDQG7HFKQRORJ\ï
3ULWFKDUG6*DQG$PWKRU-6&URSVDQG(QYLURQPHQWDO&KDQJH1HZ<RUN)RRG3URGXFWLRQ3UHVV
4XDQ-$IXWXUHIRUVPDOOVFDOHIDUPLQJ6FLHQFH5HYLHZ65)RUHVLJKW3URMHFWRQ*OREDO)RRGDQG)DUPLQJ
)XWXUHV*RYHUQPHQW2IÀFHIRU6FLHQFH)RUHVLJKW
5DM'$6ULGKDU.$PEDWLSXGL$/DQWLQJ+DQG%UHQFKDQGUDQ6&DVHVWXG\RQRUJDQLFYHUVXVFRQYHQWLRQDO
FRWWRQLQ.DULPQDJDU$QGKUD3UDGHVK,QGLD6HFRQG,QWHUQDWLRQDO6\PSRVLXPRQ%LRORJLFDO&RQWURORI$UWKURSRGV
DYDLODEOHDWKWWSZZZEXJZRRGRUJDUWKURSRGYROFSGI
5DVPXVVHQ3($OEUHFKHW6/6PLOH\5:6RLO&DQG1FKDQJHVXQGHUWLOODJHDQGFURSSLQJV\VWHPVLQVHPLDULG
3DFLÀF1RUWKZHVWDJULFXOWXUH6RLO7LOO5HV
5HDUGRQ77LPPHU & DQG %HUGHJXp -  6XSHUPDUNHW H[SDQVLRQ LQ /DWLQ $PHULFD DQG $VLD :DVKLQJWRQ '&
8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH
5HJDQROG -3 (OOLRWW / DQG 8QJHU <  /RQJWHUP HIIHFWV RI RUJDQLF DQG FRQYHQWLRQDO IDUPLQJ RQ VRLO HURVLRQ
1DWXUH1RYHPEHU²
5HJDQROG-3*ORYHU-'$QGUHZV3.DQG+LQPDQ+56XVWDLQDELOLW\RIWKUHHDSSOHSURGXFWLRQV\VWHPV1DWXUH
²
5HLG:65HJLRQDOHIIHFWVRIVRLOHURVLRQRQFURSSURGXFWLYLW\QRUWKHDVW,Q)ROOHWW5)DQG6WHZDUW%$HGV6RLO
(URVLRQDQG&URS3URGXFWLYLW\0DGLVRQ:,$PHULFDQ6RFLHW\RI$JURQRP\²
5HLQKDUGW * *lUWQHU 6 0QFK - DQG +lIHOH 6  gNRORJLVFKH 2SWLPLHUXQJ UHJLRQDO HU]HXJWHU /HEHQVPLWWHO
(QHUJLHXQG.OLPDELODQ]HQ+HLGHOEHUJ,QVWLWXWIU(QHUJLHXQG8PZHOW,I(8
5HLVFK/$DQG*ZR]G]:&KXEE\FKHHNVDQGFOLPDWHFKDQJH&KLOGKRRGREHVLW\DVDVXVWDLQDEOHGHYHORSPHQW
LVVXH,QWHUQDWLRQDO-RXUQDORI&RQVXPHU6WXGLHV²
5HLVFK/$/RUHN6DQG%LHW]63ROLF\LQVWUXPHQWVIRUVXVWDLQDEOHIRRGFRQVXPSWLRQ&25386'LVFXVVLRQ3DSHU
)XQGHGE\WKH(XURSHDQ&RPPLVVLRQ)3_3URMHFW1R$YDLODEOHDWKWWSZZZVFSNQRZOHGJHHX
VLWHVGHIDXOWÀOHV)RRGB3ROLF\B3DSHUSGI
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

5HLVFK/$6FKROO*DQG(EHUOH86XVWDLQDEOHIRRGFRQVXPSWLRQ&25386'LVFXVVLRQ3DSHU)XQGHGE\WKH

(XURSHDQ&RPPLVVLRQ)3_3URMHFW1R$YDLODEOHDWKWWSZZZVFSNQRZOHGJHHXVLWHVGHIDXOWÀOHV
)RRGB'LVFXVVLRQB3DSHUBSGI
5HWKHPH\HU-.UDPHU&*OHL[QHU*-RKQ%<DPDVKLWD7)OHVVD+$QGHUVHQ11DGHDX0DQG*URRWHV3
7UDQVIRUPDWLRQRIRUJDQLFPDWWHULQDJULFXOWXUDOVRLOV5DGLRFDUERQFRQFHQWUDWLRQYHUVXVVRLOGHSWK*HRGHUPD
²
5LFKDUGVRQ.6WHIIHQ:6FKHOOQKXEHU+-$OFDPR-%DUNHU7.DPPHQ'0/HHPDQV5/LYHUPDQ'0XQDVLQJKH0
2VPDQ(ODVKD%6WHUQ1DQG:DHYHU26\QWKHVLV5HSRUW²&OLPDWH&KDQJH*OREDO5LVNV&KDOOHQJHV
DQG'HFLVLRQV,QWHUQDWLRQDO6FLHQWLÀF&RQJUHVVRQ&OLPDWH&KDQJH&RSHQKDJHQ²0DUFK
5LN[RRUWY+&DUERQIRRWSULQWLQJ,Q*,=HG&OLPDWH0RGXOH6DQJDQD333.RPSHWHQ]IHOG$JUDUKDQGHOXQG
6WDQGDUGV'HXWVFKH*HVHOOVFKDIWIU7HFKQLVFKH=XVDPPHQDUEHLW*,=-XQH
5REHUWVRQ $ /REVWHLQ 7 DQG .QDL &  2EHVLW\ DQG VRFLRHFRQRPLF JURXSV LQ (XURSH (YLGHQFH UHYLHZ DQG
LPSOLFDWLRQV IRU DFWLRQ 6$1&2&1875,7,21 )XQGHG E\ WKH (XURSHDQ &RPPLVVLRQ %UXVVHOV
(XURSHDQ &RPPLVVLRQ $YDLODEOH DW KWWSHFHXURSDHXKHDOWKSKBGHWHUPLQDQWVOLIHBVW\OHQXWULWLRQGRFXPHQWV
HYBUHSBHQSGI
5RFNVWU|P-6WHIIHQ:1RRQH.3HUVVRQc6WXDUW,,,&KDSLQ)/DPELQ(/HQWRQ76FKHIIHU0)RONH&6FKHOOQKXEHU
+-1\NYLVW%GH:LW&+XJKHV7YDQGHU/HHXZ65RGKH+6|UOLQ66Q\GHU3&RVWDQ]D56YHGLQ8)DONHQPDUN
0.DUOEHUJ/&RUHOO5:)DEU\9-+DQVHQ-:DONHU%/LYHUPDQ'5LFKDUGVRQ.&UXW]HQ3DQG)ROH\-
3ODQHWDU\ERXQGDULHV([SORULQJWKHVDIHRSHUDWLQJVSDFHIRUKXPDQLW\(FRORJ\DQG6RFLHW\$YDLODEOH
DWKWWSZZZHFRORJ\DQGVRFLHW\RUJYROLVVDUW
5RGDOH,QVWLWXWH)DUP6\VWHPV7ULDO.XW]WRZQ3$
5RGDOH,QVWLWXWH1RWLOOUHYROXWLRQ.XW]WRZQ3$$YDLODEOHDWKWWSZZZURGDOHLQVWLWXWHRUJQRWLOOBUHYROXWLRQ
5RRVH(6RLODQGZDWHUFRQVHUYDWLRQOHVVRQVIURPVWHHSVORSHIDUPLQJLQ)UHQFKVSHDNLQJFRXQWULHVRI$IULFD
,Q0ROGHQKDXHU:&DQG+XGVRQ1HGV&RQVHUYDWLRQ)DUPLQJRQ6WHHS/DQGV6FKHUW]$QNHQ\,RZD6RLODQG
:DWHU&RQVHUYDWLRQ6RFLHW\DQG:RUOG$VVRFLDWLRQRI6RLODQG:DWHU&RQVHUYDWLRQ²
5RVHJUDQW0:3DLVQHU060HLMHU6:LWFRYHU-*OREDO)RRG2XWORRN7UHQGV$OWHUQDWLYHVDQG&KRLFHV
:DVKLQJWRQ'&,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH
5RVHJUDQW 0: 5LQJOHU & 0VDQJL 6 6XOVHU 7 =KX 7 DQG &OLQH 6 D ,QWHUQDWLRQDO PRGHO IRU SROLF\ DQDO\VLV
RI DJULFXOWXUDO FRPPRGLWLHV DQG WUDGH ,03$&7 0RGHO GHVFULSWLRQ ,Q ,)35,  ,QWHUQDWLRQDO )RRG 3ROLF\
5HVHDUFK,QVWLWXWH5HSRUW:DVKLQJWRQ'&
5RVHJUDQW0:5LQJOHU&DQG=KX7E:DWHUIRUDJULFXOWXUH0DLQWDLQLQJIRRGVHFXULW\XQGHUJURZLQJVFDUFLW\
$QQXDO5HYLHZRI(QYLURQPHQWDQG5HVRXUFHV²
5RVHQ]ZHLJ&DQG+LOOHO'&OLPDWH&KDQJHDQGWKH*OREDO+DUYHVW,PSDFWVRI(O1LQRDQG2WKHU2VFLOODWLRQV
RQ$JURHFRV\VWHPV1HZ<RUN2[IRUG8QLYHUVLW\3UHVV
5RVHQ]ZHLJ & DQG 7XELHOOR )  $GDSWDWLRQ DQG PLWLJDWLRQ VWUDWHJLHV LQ DJULFXOWXUH $Q DQDO\VLV RI SRWHQWLDO
V\QHUJLHV0LWLJDWLRQDQG$GDSWDWLRQ6WUDWHJLHVWR*OREDO&KDQJH²
5RVVHW 30  7KH 0XOWLSOH )XQFWLRQV DQG %HQHÀWV RI 6PDOO )DUP $JULFXOWXUH LQ WKH &RQWH[W RI *OREDO 7UDGH
1HJRWLDWLRQV3ROLF\%ULHI)RRG)LUVW6HSWHPEHU
5RVVHW 30  7KH 0XOWLSOH )XQFWLRQV DQG %HQHÀWV RI 6PDOO )DUP $JULFXOWXUH LQ WKH &RQWH[W RI *OREDO 7UDGH
1HJRWLDWLRQV/RQGRQ7KRXVDQG2DNV&$DQG1HZ'HOKL:RUOG)RRG3URJUDPPH7KH6RFLHW\IRU,QWHUQDWLRQDO
'HYHORSPHQWDQG6$*(3XEOLFDWLRQV
5RVVHW306RVD%0-DLPH$05DQGÉYLOD/R]DQR'57KH&DPSHVLQRWR&DPSHVLQRDJURHFRORJ\PRYHPHQW
RI$1$3LQ&XED6RFLDOSURFHVVPHWKRGRORJ\LQWKHFRQVWUXFWLRQRIVXVWDLQDEOHSHDVDQWDJULFXOWXUHDQGIRRG
VRYHUHLJQW\-RXUQDORI3HDVDQW6WXGLHV²
576 5HVRXUFH /WG  :HVWHUQ (XURSH UHDG\ PHDOV  :ROYHUKDPSWRQ 576 5HVRXUFH /WG 7KH &UHDWLYH
,QGXVWULHV&HQWUH$YDLODEOHDWKWWSZZZUHDG\PHDOVLQIRFRPUHSRUWV:HVWHUQ(XURSH5HDG\0HDOVSGI
5XQGJUHQ**DUGHQ(DUWK)URPKXQWHUDQGJDWKHUHUWRFDSLWDOLVPDQGWKHUHDIWHU5HJHQHUDWLRQ8SSVDOD6ZHGHQ
6DIDULFRP )RXQGDWLRQ  6DIDULFRP )RXQGDWLRQ /LIHOLQH UDGLR SURMHFW XQYHLOHG $YDLODEOH DW KWWSZZZ
OLIHOLQHHQHUJ\RUJGRFXPHQWV6DIDULFRPB)RXQGDWLRQBSGI
 75$'($1'(19,5210(175(9,(:

6$1&2)RRGDQGYHWHULQDU\RIÀFHFRQWUROVLQGHYHORSLQJFRXQWULHV1RYHPEHU$YDLODEOHDWKWWSZZZEYO

EXQGGH6KDUHG'RFV'RZQORDGVB%XQGHVDPW9HUDQVWDOWXQJHQV\PSRVLXPBBYRUWUDJB)UDQN$QGULHVVHQB
)92SGI"BBEORE SXEOLFDWLRQ)LOH Y 
6$1&23ROLF\LPSDFWLQWKH&RPPRQ$JULFXOWXUH3ROLF\&DVHVWXG\RIDQLPDOKHDOWK6$1&2:RUNLQJSDSHU
SUHVHQWHGDWWKHPHHWLQJRIWKH:RUNLQJ*URXSRQWKH$VVHVVPHQWRI6$1&23ROLF\,PSDFWRQWKH&RPPRQ
$JULFXOWXUH3ROLF\RIWKH$GYLVRU\*URXSRQWKH)RRG&KDLQ$QLPDODQG3ODQW+HDOWK)HEUXDU\
6DQGHUPDQ - )DUTXKDUVRQ 5 DQG %DOGRFN -$  6RLO FDUERQ VHTXHVWUDWLRQ SRWHQWLDO $ UHYLHZ IRU $XVWUDOLDQ
DJULFXOWXUH$UHSRUWSUHSDUHGIRUWKH'HSDUWPHQWRI&OLPDWH&KDQJHDQG(QHUJ\(IÀFLHQF\&6,52$YDLODEOHDW
KWWSZZZFVLURDXÀOHVÀOHVSZLYSGI
6DQGHUV - 2IIHUPDQQ ) DQG 1LHEHUJ +  ,PSDFW RI WKH &$3 UHIRUP RQ RUJDQLF IDUPLQJ LQ *HUPDQ\ 3DSHU
SUHSDUHGIRUWKHWK($$(6HPLQDURQWKH&$3DIWHUWKH)LVFKOHU5HIRUP1DWLRQDO,PSOHPHQWDWLRQV,PSDFW
$VVHVVPHQWDQGWKH$JHQGDIRU)XWXUH5HIRUPVLQ9LWHUER,WDO\²1RYHPEHU
6FKHUU 6- DQG 6WKDSLW 6  0LWLJDWLQJ FOLPDWH FKDQJH WKURXJK IRRG DQG ODQG XVH :RUOGZDWFK 5HSRUW 
:DVKLQJWRQ'&:RUOGZDWFK,QVWLWXWH
6FKXOW] , DQG 6WLH‰ ,  /LQNLQJ VXVWDLQDEOH FRQVXPSWLRQ WR HYHU\GD\ OLIH D VRFLRHFRORJLFDO DSSURDFK WR
FRQVXPSWLRQ UHVHDUFK ,Q 7XNNHU $ &KDUWHU 0 DQG 9H]]ROL & HGV 6\VWHP ,QQRYDWLRQ IRU 6XVWDLQDELOLW\ 9RO 
3HUVSHFWLYHVRQ5DGLFDO&KDQJHVWR6XVWDLQDEOH&RQVXPSWLRQDQG3URGXFWLRQ6KHIÀHOG*UHHQOHDI3XEOLVKLQJ
²
6FLHQFH'DLO\6WXG\PDSVJOREDO¶KRWVSRWV·RIFOLPDWHLQGXFHGIRRGLQVHFXULW\-XQH$YDLODEOHDWKWWSZZZ
VFLHQFHGDLO\FRPUHOHDVHVKWP
6HQHZHHUD6DQG&RQUR\-3*URZWKJUDLQ\LHOGDQGTXDOLW\RIULFH2U\]DVDWLYD/LQUHVSRQVHWRHOHYDWHG&2
DQGSKRVSKRUXVQXWULWLRQ6RLO6FLHQFHDQG3ODQW1XWULWLRQ²
6HWERRQVDUQJ6/HXQJ36DQG&DL-&RQWUDFWIDUPLQJDQGSRYHUW\UHGXFWLRQ7KHFDVHRIRUJDQLFULFHFRQWUDFW
IDUPLQJLQ7KDLODQG$'%,QVWLWXWHGLVFXVVLRQSDSHUQR7RN\R$VLDQ'HYHORSPHQW%DQN,QVWLWXWH
6LHJULVW66WDXE'3ÀIIQHU/DQG0lGHU3'RHVRUJDQLFDJULFXOWXUHUHGXFHVRLOHURGLELOLW\"7KHUHVXOWVRID
ORQJWHUPÀHOGVWXG\RQORHVVLQ6ZLW]HUODQG$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW²
6PDNKWLQ9%DVLQFORVXUHDQGHQYLURQPHQWDOÁRZUHTXLUHPHQWV:DWHU5HVRXUFHV'HYHORSPHQW²

6PDNKWLQ 9 5HYHQJD & DQG '|OO 3  $ 3LORW *OREDO $VVHVVPHQW RI (QYLURQPHQWDO :DWHU 5HTXLUHPHQWV DQG
6FDUFLW\:DWHU,QWHUQDWLRQDO²
6PLW%DQG:DQGHO-$GDSWDWLRQDGDSWLYHFDSDFLW\DQGYXOQHUDELOLW\*OREDO(QYLURQPHQWDO&KDQJH²

6PLWK ' 3RZOVRQ 6'6 *OHQGLQLQJ 0- 6PLWK -8  3RWHQWLDO IRU FDUERQ VHTXHVWUDWLRQ LQ (XURSHDQ VRLOV
SUHOLPLQDU\HVWLPDWHVIRUÀYHVFHQDULRVXVLQJUHVXOWVIURPORQJWHUPH[SHULPHQWV*OREDO&KDQJH%LRORJ\
6PLWK-:ROIH0:RRGZDUG/3HDUFH%DQG/DPSNLQ12UJDQLFIDUPLQJDQGELRGLYHUVLW\$UHYLHZRIWKH
OLWHUDWXUH$EHU\VWZ\WK2UJDQLF&HQWUH:DOHV
6PLWK30DUWLQR'&DL=*ZDU\'-DQ]HQ+.XPDU30F&DUO%2JOH62·0DUD)5LFH&6FKROHV%6LURWHQNR2
+RZGHQ00F$OOLVWHU73DQ*5RPDQHQNRY96FKQHLGHU8DQG7RZSUD\RRQ6D3ROLF\DQG7HFKQRORJLFDO
&RQVWUDLQWVWR,PSOHPHQWDWLRQRI*UHHQKRXVH*DV0LWLJDWLRQ2SWLRQVLQ$JULFXOWXUH$JULFXOWXUH(FRV\VWHPVDQG
(QYLURQPHQW²$YDLODEOHDWZZZHOVHYLHUFRPORDFDWHDJUHH
6PLWK30DUWLQR'&DL=*ZDU\'-DQ]HQ+.XPDU30F&DUO%2JOH62·0DUD)5LFH&6FKROHV%DQG6LURWHQNR
2E$JULFXOWXUH,Q,3&&&OLPDWH&KDQJH0LWLJDWLRQ&RQWULEXWLRQRI:RUNLQJ*URXS,,,WRWKH)RXUWK
$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
6PROLN -' 'REEV7/ DQG 5LFNHUO '+  7KH UHODWLYH VXVWDLQDELOLW\ RI DOWHUQDWLYH FRQYHQWLRQDO DQG UHGXFHGWLOO
IDUPLQJV\VWHPV$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH²
6RXWK&HQWUH$WUDGHIUDPHZRUNVXSSRUWLYHRIDWUDQVLWLRQWRZDUGVDJUHHQHFRQRP\LQWKHIRRGDQGDJULFXOWXUH
VHFWRURIGHYHORSLQJFRXQWULHV3DSHUSUHSDUHGIRUWKH)$2IRUWKFRPLQJ*HQHYD
6RXWKJDWH ' DQG :KLWDNHU 0  3URPRWLQJ UHVRXUFH GHJUDGDWLRQ LQ /DWLQ $PHULFD 7URSLFDO GHIRUHVWDWLRQ VRLO
HURVLRQ DQG FRDVWDO HFRV\VWHP GLVWXUEDQFH LQ (FXDGRU (FRQRPLF 'HYHORSPHQW DQG &XOWXUDO &KDQJH 
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

²
63,QWHUQDWLRQDO([SODQDWLRQGHPDQGHGRYHUOREE\LQJE\ELRWHFKÀUP63,QWHUQDWLRQDO5RWWHUGDP-DQXDU\
$YDLODEOH DW KWWSLQWHUQDWLRQDOVSQOEHULFKWH[SODQDWLRQBGHPDQGHGBRYHUBOREE\LQJBE\BELRWHFKB
ÀUPKWPO
6SHWK-*7RZDUGVDQ(IIHFWLYHDQG2SHUDWLRQDO,QWHUQDWLRQDO&RQYHQWLRQRQ'HVHUWLÀFDWLRQ3DSHUSUHSDUHGIRU
WKH,QWHUQDWLRQDO&RQYHQWLRQRQ'HVHUWLÀFDWLRQ,QWHUQDWLRQDO1HJRWLDWLQJ&RPPLWWHH8QLWHG1DWLRQV1HZ<RUN
6WDQKLOO*7KHFRPSDUDWLYHSURGXFWLYLW\RIRUJDQLFDJULFXOWXUH$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW
²
6WDYHU&*XKDUD\)0RQWHUURVR'DQG0XVFKOHU5*'HVLJQLQJSHVWVXSSUHVVLYHPXOWLVWUDWDSHUHQQLDOFURS
V\VWHPV6KDGHJURZQFRIIHHLQ&HQWUDO$PHULFD$JURIRUHVWU\6\VWHPV²
6WHHU $  $JULFXOWXUH IRRG VHFXULW\ DQG FOLPDWH FKDQJH $ WULSOH ZLQ" $YDLODEOH DW KWWSZHEZRUOGEDQNRUJ
:%6,7((;7(51$/1(:6FRQWHQW0'.aSDJH3.aSL3.aWKH6LWH3.KWPO
6WHUQ17KH(FRQRPLFVRI&OLPDWH&KDQJH7KH6WHUQ5HYLHZ&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
6WHYHQVRQ-+XPXVFKHPLVWU\,Q6RLO&KHPLVWU\1HZ<RUN-RKQ:LOH\ 6RQV,QF
6WROW]IXV5-0XOODQ\/DQG%ODFN5(,URQGHÀFLHQF\DQHPLD,Q0(]]DWLHWDOHGV&RPSDUDWLYH4XDQWLÀFDWLRQ
RI+HDOWK5LVNV*OREDODQG5HJLRQDO%XUGHQRI'LVHDVH$WWULEXWDEOHWR6HOHFWHG0DMRU5LVN)DFWRUV*HQHYD:RUOG
+HDOWK2UJDQL]DWLRQ
6WRQH 53 DQG 0RRUH 1  &RQWURO RI 6RLO (URVLRQ )DFWVKHHW 2QWDULR 0LQLVWU\ RI  $JULFXOWXUH )RRG DQG 5XUDO
$IIDLUV
6WU]HSHN.DQG0F&OXVNH\$7KHLPSDFWRIFOLPDWHFKDQJHRQUHJLRQDOZDWHUUHVRXUFHVDQGDJULFXOWXUHLQ
$IULFD:DVKLQJWRQ'&:RUOG%DQN'HYHORSPHQW5HVHDUFK*URXS
6WU]HSHN.%DODML55DMDUDP+DQG6WU]HSHN-$ZDWHUEDODQFHPRGHOIRUFOLPDWHLPSDFWDQDO\VLVRIUXQRIIZLWK
HPSKDVLVRQH[WUHPHHYHQWVIRUWKFRPLQJ
6WXDUW7:DVWH8QFRYHULQJWKH*OREDO)RRG6FDQGDO1HZ<RUN::1RUWRQDQG&R,QF$YDLODEOHDWKWWS
WLQ\XUOFRPPG[F
6XJGHQ$0DQG5DQGV*)7KHHFRORJ\RIWHPSHUDWHDQGFHUHDOÀHOGV7UHQGVLQ(FRORJ\DQG(YROXWLRQ
²
6XJGHQ$06WRQH5DQG$VK&(FRORJ\LQWKHXQGHUZRUOG6FLHQFH
6XVWDLQ<HWPRUHKRVSLWDOIRRGIDLOXUH*RRG)RRGIRU2XU0RQH\FDPSDLJQ$YDLODEOHDWKWWSZZZVXVWDLQZHE
RUJSGI*))20B+RVSLWDOB)RRGB6HFRQGB5HSRUWSGI
6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ  6XVWDLQDELOLW\ LPSOLFDWLRQV RI WKH /LWWOH 5HG 7UDFWRU 6FKHPH 5HSRUW
/RQGRQ
6XVWDLQDEOH'HYHORSPHQW&RPPLVVLRQ*UHHQKHDOWK\DQGIDLU5HSRUW/RQGRQ
6ZDQVRQ7*OREDO$FWLRQIRU%LRGLYHUVLW\/RQGRQ-DPHV -DPHV6FLHQFH3XEOLVKHUV2ULJLQDOO\SXEOLVKHGLQ
(DUWKVFDQ3XEOLFDWLRQV/RQGRQ
7DQ]PDQQ 6  /HEHQVPLWWHOVWDQGDUGV GLVNULPLQLHUHQ .OHLQEDXHUQ LQ 'LH $JUDUSROLWLN HQGHW QLFKW DQ
(XURSDV *UHQ]HQ 'LH (8 $JUDUUHIRUP XQG LKUH LQWHUQDWLRQDOH 9HUDQWZRUWXQJ (LQ 'RVVLHU YRP (YDQJHOLVFKHQ
(QWZLFNOXQJVGLHQVWXQG´%URWIUGLH:HOWµ,Q=XVDPPHQDUEHLWPLWGHU5HGDNWLRQ:HOW6LFKWHQ²
7DVVRX 6$ *H < +DGDZH\ $ 0DUULRWW '  (QHUJ\ FRQVXPSWLRQ DQG FRQVHUYDWLRQ LQ IRRG UHWDLOLQJ $SSOLHG
7KHUPDO(QJLQHHULQJ²
7DXE'50LOOHU%DQG$OOHQ+(IIHFWVRIHOHYDWHG&2RQWKHSURWHLQFRQFHQWUDWLRQRIIRRGFURSV$PHWD
DQDO\VLV*OREDO&KDQJH%LRORJ\²
7FKLER *PE+  3&) SLORW SURMHFW *HUPDQ\ &DVH VWXG\ RI 7FKLER 3ULYDW .DIIHH 5DULW\ 0DFKDUH +DPEXUJ
1RYHPEHU
7HDVGDOH-5&RIIPDQ&%DQG0DQJXP5:3RWHQWLDOORQJWHUPEHQHÀWVRIQRWLOODJHDQGRUJDQLFFURSSLQJ
V\VWHPVIRUJUDLQSURGXFWLRQDQGVRLOLPSURYHPHQW$JURQRP\-RXUQDO6HSW²2FW
7HJWPHLHU(0DQG'XII\0([WHUQDOFRVWVRIDJULFXOWXUDOSURGXFWLRQLQWKH8QLWHG6WDWHV,QWHUQDWLRQDO-RXUQDO
 75$'($1'(19,5210(175(9,(:

RI$JULFXOWXUDO6XVWDLQDELOLW\²
7HPSHOPDQ (  3URGXFW VHUYLFH V\VWHPV IRU QHHG DUHD IRRG $Q RYHUYLHZ LQ 1HZ %XVLQHVV IRU 2OG (XURSH
7LVFKQHU8DQG7XNNHU$HGLWRUV*UHHQOHDI3XEOLVKLQJ/WG6KHIÀHOG8QLWHG.LQJGRP
7HVWELRWHFK,QVWLWXWH IRU ,QGHSHQGHQW ,PSDFW $VVHVVPHQW LQ %LRWHFKQRORJ\  /HDGLQJ (XURSHDQ )RRG 6DIHW\
$XWKRULW\ VWDII PHPEHU PRYHV LQWR LQGXVWU\ 0XQLFK  1RYHPEHU $YDLODEOH DW KWWSZZZWHVWELRWHFKRUJHQ
QRGH
7HVWELRWHFK,QVWLWXWHIRU,QGHSHQGHQW,PSDFW$VVHVVPHQWLQ%LRWHFKQRORJ\()6$·VUHYROYLQJGRRUWRELRWHFK
LQGXVWU\XQDFFHSWDEOH0XQLFK0DUFK$YDLODEOHDWKWWSZZZWHVWELRWHFKRUJHQQRGH
7KH&OLPDWH*URXS%UHDNLQJWKHFOLPDWHGHDGORFN$JOREDOGHDOIRURXUORZFDUERQIXWXUH5HSRUWVXEPLWWHG
WR WKH * +RNNDLGR 7R\DNR 6XPPLW /RQGRQ $YDLDODEOH DW ZZZ KWWSZZZWKHFOLPDWHJURXSRUJZKDWZHGR
SURJUDPV%UHDNLQJWKH&OLPDWH'HDGORFN
7KH*XDUGLDQ/RQGRQ0D\$YDLODEOHDWZZZJXDUGLDQFRXN
7LOPDQ')DUJLRQH-:ROII%'·$QWRQLR&'REVRQ$+RZDUWK56FKLQGOHU'6FKOHVLQJHU:+6LPEHUORII'DQG
6ZDFNKDPHU')RUHFDVWLQJDJULFXOWXUDOO\GULYHQJOREDOHQYLURQPHQWDOFKDQJH6FLHQFH²
7LOPDQ ' 5HLFK 3% .QRSV - :HGLQ ' 0LHONH 7 DQG /HKPDQ &  'LYHUVLW\ DQG SURGXFWLYLW\ LQ D ORQJWHUP
JUDVVODQGH[SHULPHQW6FLHQFH²
7LQORW0,QWpJUDWLRQGHÀOLqUHVjODPLWLJDWLRQDXFKDQJHPHQWFOLPDWLTXH&DVGHODÀOLqUHDQDFDUGHDX%XUNLQD
)DVR0LVVLRQUHSRUW*,=)$25RPH
7LUDGR5DQG&RWWHU-(FRORJLFDOIDUPLQJGURXJKWUHVLVWDQWDJULFXOWXUH*UHHQSHDFH5HVHDUFK/DERUDWRULHV
8QLYHUVLW\ RI ([HWHU 8QLWHG .LQJGRP $YDLODEOH DW ZZZJUHHQSHDFHRUJLQWHUQDWLRQDOHQSXEOLFDWLRQVUHSRUWV
(FRORJLFDOIDUPLQJ'URXJKWUHVLVWDQWDJULFXOWXUH
7LVFKQHU 8 DQG .MDHUQHV 8  6XVWDLQDEOH FRQVXPSWLRQ DQG SURGXFWLRQ LQ WKH DJULFXOWXUH DQG IRRG GRPDLQ
,Q/DKORX6DQG(PPHUW6HGV6&25(3URFHHGLQJV6&3&DVHVLQWKH)LHOGRI)RRG0RELOLW\DQG+RXVLQJ
:RUNVKRSRIWKH6XVWDLQDEOH&RQVXPSWLRQ5HVHDUFK([FKDQJH6&25(1HWZRUN3DULV-XQH²
$YDLODEOHDWKWWSZZZVFRUHQHWZRUNRUJÀOHVB3URFHHGLQJVBZRUVKRSSGI
7ROHGR 90 DQG %DUUHUD%DVVDOV 1  /D 0HPRULD %LRFXOWXUDO /D ,PSRUWDQFLD (FRORJLD GH ODV 6DELGXULDV
7UDGLFLRQDOHV%DUFHORQD,&$5,$(GLWRULDO
7ULPEHO6:DQG0HQGHO$&7KHFRZDVDJHRPRUSKLFDJHQW$FULWLFDODUWLFOH*HRPRUSKRORJ\
7URHK)5+REEV$+DQG'RQDKXH5/6RLODQG:DWHU&RQVHUYDWLRQ8SSHU6DGGOH5LYHU1-3UHQWLFH+DOO
7VFKDUQWNH7&ORXJK<:DQJHU7&-DFNVRQ/0RW]NH,3HUIHFWR,9DQGHUPHHU-DQG:KLWEUHDG$*OREDO
IRRGVHFXULW\ELRGLYHUVLW\FRQVHUYDWLRQDQGWKHIXWXUHRIDJULFXOWXUDOLQWHQVLÀFDWLRQ%LRORJLFDO&RQVHUYDWLRQ9RO
,VVXH-XO\SS²$YDLODEOHDWZZZVFLHQFHGLUHFWFRPVFLHQFHDUWLFOHSLL6
7XFNH\ %  6WDUYLQJ $IULFD·V IXWXUH" )RUHLJQ 3ROLF\ LQ )RFXV  $XJXVW :DVKLQJWRQ '& ,QVWLWXWH IRU 3ROLF\
6WXGLHV$YDLODEOHDWKWWSZZZISLIRUJDUWLFOHVVWDUYLQJBDIULFDVBIXWXUH
7\OHU360LVFRQFHSWLRQRI)RRG/RVVHV7RN\R8QLWHG1DWLRQV8QLYHUVLW\3UHVV
8KOLQ+((QHUJLÁ|GHQLOLYVPHGHOVNHGMDQ(QHUJ\ÁRZLQWKHIRRGFKDLQ6WRFNKROP1DWXUYnUGVYHUNHW
8KOHQ*/RQJWHUPHIIHFWVRIORQJWHUPFURSURWDWLRQIHUWLOL]HUVPDQXUHVVWUDZDQGFURSURWDWLRQRQWRWDO&LQ
VRLO$FWD$JU6FDQG
8KOHQ*DQG7UHLWQHV6(IIHFWVRIORQJWHUPFURSURWDWLRQIHUWLOL]HUVIDUPPDQXUHDQGVWUDZRQVRLOSURGXFWLYLW\
1RU-$JU6FL
81'(6$:RUOG3RSXODWLRQ3URVSHFWV5HYLVLRQ$YDLODEOHDWKWWSHVDXQRUJXQSGZSSXQSSSDQHOB
SRSXODWLRQKWP
81&7$'  7UDGH DQG 'HYHORSPHQW 5HSRUW  5HVSRQGLQJ WR WKH *OREDO &ULVLV &OLPDWH &KDQJH
0LWLJDWLRQ DQG 'HYHORSPHQW 1HZ <RUN DQG *HQHYD $YDLODEOH DW ZZZXQFWDGRUJ7HPSODWHV:HE)O\HU
DVS"LQW,WHP,'  ODQJ 
81&7$'/HDVW'HYHORSHG&RXQWULHV5HSRUW7RZDUGVD1HZ,QWHUQDWLRQDO'HYHORSPHQW$UFKLWHFWXUHIRU
/'&V*HQHYD$YDLODEOHDWZZZXQFWDGRUJ7HPSODWHV3DJHDVS"LQW,WHP,'  ODQJ 
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

81&7$' DQG &KDPEHU RI /DERXU 9LHQQD  3ULFH IRUPDWLRQ LQ ÀQDQFLDOL]HG FRPPRGLW\ PDUNHWV 7KH UROH RI
LQIRUPDWLRQ*HQHYD$YDLODEOHDWZZZXQFWDGRUJHQGRFVJGVBHQSGI
81(3$JURHFRORJ\DQGWKH6HDUFKIRUD7UXO\6XVWDLQDEOH$JULFXOWXUH0H[LFR
81(37KH(QYLURQPHQWDO)RRG&ULVLV7KH(QYLURQPHQW·V5ROHLQ$YHUWLQJ)XWXUH)RRG&ULVHV1DLUREL$YDLODEOH
DWZZZXQHSRUJSGI)RRG&ULVLVBORUHVSGI
81(3  %LODWHUDO )LQDQFH ,QVWLWXWLRQV DQG &OLPDWH &KDQJH $ 0DSSLQJ RI  &OLPDWH )LQDQFLDO )ORZV WR
'HYHORSLQJ&RXQWULHV$YDLODEOHDWKWWSZZZXQHSRUJSGIGWLH%LODWHUDO)LQDQFH,QVWLWXWLRQV&&SGI
81(37RZDUGVD*UHHQ(FRQRP\3DWKZD\VWR6XVWDLQDEOH'HYHORSPHQWDQG3RYHUW\(UDGLFDWLRQ²$6\QWKHVLV
IRU3ROLF\0DNHUV$YDLODEOHDWZZZXQHSRUJJUHHQHFRQRP\
81(381&7$'2UJDQLF$JULFXOWXUHDQG)RRG6HFXULW\LQ$IULFD81(381&7$'&DSDFLW\EXLOGLQJ7DVN)RUFH
RQ7UDGH(QYLURQPHQWDQG'HYHORSPHQW*HQHYD$YDLODEOHDWZZZXQFDWGRUJWUDGHBHQY
81)&&&&KDOOHQJHVDQGRSSRUWXQLWLHVIRUPLWLJDWLRQLQWKHDJULFXOWXUDOVHFWRU%RQQ
81)&&&7KH&DQFXQ$JUHHPHQWV$Q$VVHVVPHQWE\WKH([HFXWLYH6HFUHWDU\RIWKH8QLWHG1DWLRQV)UDPHZRUN
&RQYHQWLRQRQ&OLPDWH&KDQJH$YDLODEOHDWKWWSFDQFXQXQIFFFLQW
8QLWHG 1DWLRQV  5HGXFLQJ SRVWKDUYHVW ORVVHV WR LPSURYH IRRG VHFXULW\ 7LPRU /HVWH 3URMHFWV IXQGHG E\
WKH 8QLWHG 1DWLRQV 7UXVW )XQG IRU +XPDQ 6HFXULW\ 8QLWHG 1DWLRQV $YDLODEOH DW RFKDRQOLQHXQRUJ7UXVW)XQG
3URMHFW3URÀOHV5HGXFLQJSRVWKDUYHVWORVVHVWDELGODQJXDJHHQ86'HIDXOWDVS[
8QLWHG1DWLRQV:RUOG8UEDQL]DWLRQ3URVSHFWV7KH5HYLVLRQ3RSXODWLRQ'DWDEDVH1HZ<RUN8QLWHG1DWLRQV
3RSXODWLRQ'LYLVLRQ
8QLWHG1DWLRQV:RUOG3RSXODWLRQ3URVSHFWV7KH5HYLVLRQ'HSDUWPHQWRI(FRQRPLFDQG6RFLDO$IIDLUV
3RSXODWLRQ'LYLVLRQ$YDLODEOHDWKWWSHVDXQRUJXQSGZSSLQGH[KWP
8QLWHG6WDWHV)RUHVW&RQVHUYDWLRQ$FW5LSDULDQIRUHVWEXIIHUSDQHO%D\$UHDUHJXODWRU\SURJUDPV$YDLODEOH
DWKWWSZZZULSDULDQEXIIHUVXPGHGXPDQXDOVUHJXODWRU\KWPO
811$'$)8QLWHG1DWLRQV1HZ$JHQGDIRUWKH'HYHORSPHQWRI$IULFD811$'$)PLGWHUPUHYLHZ)RFXVRQ
NH\VHFWRUV²(QYLURQPHQW$IULFD5HFRYHU\
8SKRII1D,QVWLWXWLRQDOFKDQJHDQGSROLF\UHIRUPV,Q8SKRII1HG$JURHFRORJLFDO,QQRYDWLRQV,QFUHDVLQJ
)RRG3URGXFWLRQZLWK3DUWLFLSDWRU\'HYHORSPHQW/RQGRQ(DUWKVFDQ3XEOLFDWLRQV
8SKRII1E$JURHFRORJLFDO,QQRYDWLRQV,QFUHDVLQJ)RRG3URGXFWLRQZLWK3DUWLFLSDWRU\'HYHORSPHQW/RQGRQ
(DUWKVFDQ
86 &56  (QHUJ\ XVH LQ DJULFXOWXUH %DFNJURXQG DQG LVVXHV :DVKLQJWRQ '& 8QLWHG 6WDWHV &RQJUHVVLRQDO
5HVHDUFK6HUYLFHV1RYHPEHU
86)'$  0HHW0LFKDHO 5 7D\ORU -' 'HSXW\&RPPLVVLRQHUIRU )RRGV 86 )RRG DQG 'UXJ $GPLQLVWUDWLRQ
:DVKLQJWRQ'&$YDLODEOHDWZZZIGDJRY$ERXW)'$&HQWHUV2IÀFHV2IÀFHRI)RRGVXFPKWP
9DQGHU3ORHJ-'7KH1HZ3HDVDQWULHV6WUXJJOHVIRU$XWRQRP\DQG6XVWDLQDELOLW\LQWKH(UDRI(PSLUHDQG
*OREDOL]DWLRQ/RQGRQDQG6WHUOLQJ9$(DUWKVFDQ
9DQGHU9RVVHQ+$06WDWHRIWKHDUWRIGHYHORSLQJGXUDEOHUHVLVWDQFHWRELRWURSKLFSDWKRJHQVLQFURSSODQWV
VXFKDVFRIIHHOHDIUXVW,Q=DPEROLP/=DPEROLP(0DQG9iU]HD903HGV'XUDEOH5HVLVWDQFHWR&RIIHH/HDI
5XVW9LVFRQGHGR5LR%UDQFR%UD]LO6XSUHPD*UiÀFDH(GLWRUD²
9DQ 'LMN  6XUYH\ RI 'XWFK VRLO RUJDQLF UHVHDUFK ZLWK UHJDUG WR KXPLÀFDWLRQ DQG GHJUDGDWLRQ UDWHV LQ DUDEOH
ODQG,Q8VHVHPLQDURQODQGGHJUDGDWLRQHGV%RHOV'''DYLV%-RKQVWRQ$(SS5RWWHUGDP7KH
1HWKHUODQGV%DONHPD
9DQ*URHQLJHQ.2VHQEHUJ&DQG+XQJDWH%,QFUHDVHGVRLOHPLVVLRQVRISRWHQWJUHHQKRXVHJDVHVXQGHU
LQFUHDVHGDWPRVSKHULF&21DWXUH²
9DQGHUPHHU - YDQ 1RRUGZLMN 0 $QGHUVRQ - 2QJ & DQG 3HUIHFWR ,  *OREDO FKDQJH DQG PXOWLVSHFLHV
DJURHFRV\VWHPV&RQFHSWVDQGLVVXHV$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW²
9HQNDW.7KHFOLPDWHFKDQJHLPSDFWRI86IRRGZDVWHXSGDWHG&OHDQ0HWULFV7HFKQLFDO%ULHI&OHDQ0HWULFV
&RUS$YDLODEOHDWZZZFOHDQPHWULFVFRPSDJHV&OLPDWH&KDQJH,PSDFWRI86)RRG:DVWHSGI
 75$'($1'(19,5210(175(9,(:

9OHN3/*/H4%DQG7DPHQH//DQG'HFOLQHLQ/DQGULFK$IULFD$&UHHSLQJ'LVDVWHULQWKH0DNLQJ5RPH

&*,$56FLHQFH&RXQFLO6HFUHWDULDW
9|U|VPDUW\ &- *UHHQ 3 6DOLVEXU\ - DQG /DPPHUV 5%  *OREDO ZDWHU UHVRXUFHV 9XOQHUDELOLW\ IURP FOLPDWH
FKDQJHDQGSRSXODWLRQJURZWK6FLHQFH²
:DOVK.1DQG5RZH06%LRGLYHUVLW\LQFUHDVHVHFRV\VWHPV·DELOLW\WRDEVRUE&2DQGQLWURJHQ%URRNKDYHQ
1DWLRQDO/DERUDWRU\$YDLODEOHDWKWWSZZZEQOJRYEQOZHESXEDISUEQOSUKWP
:DQJ)3UHVHQWVWDWXVRIUXUDOELRJDVGHYHORSPHQWLQ&KLQD&HQWHUIRU(QHUJ\DQG(QYLURQPHQWDO3URWHFWLRQ
0LQLVWU\RI$JULFXOWXUH&KLQD$YDLODEOHDWKWWSZZZHQSZXUQO15UGRQO\UHV%)))'&
$':DQJ([SHULHQFHVRI+RXVHKROG%LRJDV8VHLQ&KLQDSG
:$5'$ $IULFD 5LFH &HQWHU  1(5,&$ WKH QHZ ULFH IRU $IULFD $ FRPSHQGLXP &RWRQRX $IULFD 5LFH &HQWHU
:$5'$ 5RPH )$2 7RN\R 6DVDNDZD $IULFD $VVRFLDWLRQ $YDLODEOH DW KWWSZZZZDUGDRUJSXEOLFDWLRQV
QHULFDFRPS1HULFD&RPSHGLXPSGI
:DUGOH'$%DUGJHWW5'.OLURQRPRV-16HWDOD+YDQGHU3XWWHQ:+DQG:DOO'+(FRORJLFDOOLQNDJHVEHWZHHQ
DERYHJURXQGDQGEHORZJURXQGELRWD6FLHQFH²
:DUQHU .' DQG .LUVFKHQPDQQ )  $JURHFRORJ\ LQ $FWLRQ ([WHQGLQJ $OWHUQDWLYH $JULFXOWXUH WKURXJK 6RFLDO
1HWZRUNV&DPEULGJH0$0,73UHVV
:DVKEXUQ-8QLYHUVLW\,QF7KH&RUSRUDWH&RUUXSWLRQRI$PHULFDQ+LJKHU(GXFDWLRQ1HZ<RUN%DVLF%RRNV
:DWWV03DUDTXDWPRQRJUDSK3HQDQJ3HVWLFLGH$FWLRQ1HWZRUN$VLDDQGWKH3DFLÀF$YDLODEOHDWKWWSZZZ
SDQDSQHWVLWHVGHIDXOWÀOHVPRQRJUDSKBSDUDTXDWSGI
:HOVK 5  7KH HFRQRPLFV RI RUJDQLF JUDLQ DQG VR\EHDQ SURGXFWLRQ LQ WKH PLGZHVWHUQ 8QLWHG 6WDWHV 3ROLF\
6WXGLHV5HSRUW1R+HQU\$:DOODFH,QVWLWXWHIRU$OWHUQDWLYH$JULFXOWXUH*UHHQEHOW0$
:HQ'6RLOHURVLRQDQGFRQVHUYDWLRQLQ&KLQD,Q3LPHQWHO'HG6RLO(URVLRQDQG&RQVHUYDWLRQ1HZ<RUN
&DPEULGJH8QLYHUVLW\3UHVV²
:HQ'$JULFXOWXUHLQ&KLQD:DWHUDQGHQHUJ\UHVRXUFHV,Q7VR77XDQ)DQG)DXVW0HGV$JULFXOWXUHLQ
&KLQD%HOWVYLOOH0','($/6²$YDLODEOHDWKWWSFRQVHUYDQF\XPQHGXKDQGOH
:HVW7'DQG*ULIÀWK'5(IIHFWRIVWULSLQWHUFURSSLQJFRUQDQGVR\EHDQRQ\LHOGDQGSURÀW-RXUQDORI3URGXFWLRQ
$JULFXOWXUH²
:H]HO$DQG6ROGDW9$TXDQWLWDWLYHDQGTXDOLWDWLYHKLVWRULFDODQDO\VLVRIWKHVFLHQWLÀFGLVFLSOLQHRIDJURHFRORJ\
,QWHUQDWLRQDO-RXUQDORI$JULFXOWXUDO6XVWDLQDELOLW\²
:H]HO$%HOORQ6'RUp7)UDQFLV&9DOORG'DQG'DYLG&$JURHFRORJ\DVDVFLHQFHDPRYHPHQWDQGD
SUDFWLFH$UHYLHZ$JURQRP\IRU6XVWDLQDEOH'HYHORSPHQW²
:+2  1XWULWLRQ IRU +HDOWK DQG 'HYHORSPHQW $ *OREDO $JHQGD IRU &RPEDWLQJ  0DOQXWULWLRQ 3URJUHVV UHSRUW
*HQHYD
:+27KH:RUOG+HDOWK5HSRUW5HGXFLQJ5LVNV3URPRWLQJ+HDOWK\/LIH*HQHYD
:+2)XHOIRU/LIH+RXVHKROG(QHUJ\DQG+HDOWK*HQHYD:RUOG+HDOWK2UJDQL]DWLRQ
:+2,QGRRUDLUSROOXWLRQDQGKHDOWK)DFWVKHHW1ƒ6HSWHPEHU$YDLODEOHDWZZZZKRLQWPHGLDFHQWUH
IDFWVKHHWVIVHQ
:LONHQ*&*RRG)DUPHUV7UDGLWLRQDO$JULFXOWXUDO5HVRXUFH0DQDJHPHQWLQ0H[LFRDQG*XDWHPDOD%HUNHOH\
&$8QLYHUVLW\RI&DOLIRUQLD3UHVV
:LOOHU+<XVVHÀ0HQ]OHU0DQG6RUHQVHQ1HGV7KH:RUOGRI2UJDQLF$JULFXOWXUH6WDWLVWLFVDQG(PHUJLQJ
7UHQGV%RQQ,QWHUQDWLRQDO)HGHUDWLRQRI2UJDQLF$JULFXOWXUH0RYHPHQWV,)2$0H9
:LQWHU 7& +DUYH\ - )UDQNH 2/ DQG $OOH\ :0  *URXQG ZDWHU DQG VXUIDFH ZDWHU $ VLQJOH UHVRXUFH 86*6
&LUFXODU8QLWHG6WDWHV*HRORJLFDO6XUYH\
:LVH7$7KHWUXHFRVWRIFKHDSIRRG7KHJOREDOLVDWLRQRIWKHIRRGPDUNHWKDVPDGHIRRGFKHDSEXWZKRLV
EHQHÀWLQJ"5HVXUJHQFH1R0DUFK$SULO
:LWNRZVNL7+)RRGPDUNHWLQJDQGREHVLW\LQGHYHORSLQJFRXQWULHV$QDO\VLVHWKLFVDQGSXEOLFSROLF\-RXUQDO
RI0DFURPDUNHWLQJ²
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

:LWW%8VLQJVRLOIDXQDWRLPSURYHVRLOKHDOWK8QLYHUVLW\RI0LQQHVRWDGLJLWDO&RQVHUYDQF\$YDLODEOHDWKWWS

FRQVHUYDQF\XPQHGXELWVWUHDP:LWWSGI
:LWWHU(0RUWHQVVRQ$0*DUFLD)96L]HRIWKHPLFURELDOPDVVLQDORQJWHUPÀHOGH[SHULPPHQWDVHIIHFWHGE\
GLIIHUHQW1IHUWLOL]HUV6RLO%LRORJ\%LRFKHPLVWU\
:02:RUOG0HWHRURORJLFDO2UJDQL]DWLRQSUHVVUHOHDVH1RRQWKHJOREDOFOLPDWHLQ&DQFXQ*HQHYD
'HFHPEHU$YDLODEOHDWZZZZPRLQWSDJHVPHGLDFHQWUHSUHVVBUHOHDVHVSUBBHQKWPO
:027KHVWDWHRIJUHHQKRXVHJDVHVLQWKHDWPRVSKHUHEDVHGRQJOREDOREVHUYDWLRQVWKURXJK:02
*UHHQKRXVH*DV%XOOHWLQ1R1RYHPEHU*HQHYD:RUOG0HWHRURORJLFDO2UJDQL]DWLRQ$YDLODEOHDWKWWS
ZZZZPRLQWSDJHVSURJDUHSJDZJKJGRFXPHQWV*+*EXOOHWLQBBHQSGI
:RUOG $JURIRUHVWU\ &HQWUH  &UHDWLQJ DQ HYHUJUHHQ DJULFXOWXUH LQ $IULFD IRU IRRG VHFXULW\ DQG HQYLURQPHQWDO
UHVLOLHQFH1DLUREL
:RUOG%DQN5HSRVLWLWLRQLQJQXWULWLRQDVFHQWUDOWRGHYHORSPHQW$VWUDWHJ\IRUODUJHVFDOHDFWLRQ:DVKLQJWRQ
'&
:RUOG %DQN  :RUOG 'HYHORSPHQW 5HSRUW  $JULFXOWXUH IRU 'HYHORSPHQW :DVKLQJWRQ '& $YDLODEOH DW
KWWSZHEZRUOGEDQNRUJ:%6,7((;7(51$/(;7'(&(;75(6($5&+(;7:'56FRQWHQW0'.aS
DJH3.aSL3.aWKH6LWH3.KWPO
:RUOG %DQN  (FRQRPLFV RI DGDSWDWLRQ WR FOLPDWH FKDQJH ($&& $YDLODEOH DW KWWSEHWDZRUOGEDQNRUJ
FRQWHQWHFRQRPLFVDGDSWDWLRQFOLPDWHFKDQJHVWXG\KRPHSDJH
:+2  7KH (XURSHDQ +HDOWK 5HSRUW  $YDLODEOH DW KWWSZZZHXURZKRLQWBBGDWDDVVHWVSGIB
ÀOH(SGI
:5$3+RXVHKROGIRRGDQGGULQNZDVWHLQWKH8.%DQEXU\:DVWHDQG5HVRXUFHV$FWLRQ3URJUDPPH$YDLODEOH
DWZZZZUDSRUJXNUHWDLOBVXSSO\BFKDLQUHVHDUFKBWRROVUHVHDUFKUHSRUWBKRXVHKROGKWPO
:5,XQGDWHG:RUOG*+*HPLVVLRQVÁRZFKDUWDWKWWSWLQ\XUOFRPIPHEH
:5,:RUOG5HVRXUFHV,QVWLWXWH:RUOG5HVRXUFHV1HZ<RUN2[IRUG8QLYHUVLW\3UHVV
:ULJKW '+  +XPDQ LPSDFWV RQ HQHUJ\ ÁRZ WKURXJK QDWXUDO HFRV\VWHPV DQG UHSOLFDWLRQV IRU VSHFLHV
HQGDQJHUPHQW$PELR²
:\QHQ(7KHHFRQRPLFVRIRUJDQLFFHUHDOOLYHVWRFNIDUPLQJLQ$XVWUDOLDUHYLVLWHG,Q3URFHHGLQJVRIWKH5,5'&
,QDXJXUDO&RQIHUHQFHRQ2UJDQLF$JULFXOWXUH6\GQH\²$XJXVW
<DWHV '  :DW%DO $Q LQWHJUDWHG ZDWHU EDODQFH PRGHO IRU FOLPDWH LPSDFW DVVHVVPHQW RI ULYHU EDVLQ UXQRII
,QWHUQDWLRQDO-RXUQDORI:DWHU5HVRXUFHV'HYHORSPHQW²
<RKH *: /DVFR 5' $KPDG 4. $UQHOO 1: &RKHQ 6- +RSH & -DQHWRV $& 3HUH] 57  3HUVSHFWLYHV RQ
FOLPDWHFKDQJHDQGVXVWDLQDELOLW\&OLPDWHFKDQJH,PSDFWV$GDSWDWLRQDQG9XOQHUDELOLW\&RQWULEXWLRQRI
:RUNLQJ*URXS,,WRWKH)RXUWK$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH
8QLYHUVLW\ 3UHVV &DPEULGJH 8QLWHG .LQJGRP  $YDLODEOH DW ZZZLSFFFKSGIDVVHVVPHQWUHSRUWDU
ZJDUZJFKDSWHUSGI
<RXQJ$/DQG5HVRXUFHV1RZDQGIRUWKH)XWXUH&DPEULGJH&DPEULGJH
<RXQLH'+DPLOWRQ0DQG1HYLVRQ,6HQVRU\DWWULEXWHVRIRUJDQLFDQGFRQYHQWLRQDOEHHI$QLPDO3URGXFWLRQ
²
 75$'($1'(19,5210(175(9,(:

1RWHV
 )RRGVHFXULW\LVJHQHUDOO\GHÀQHGDVFRQVLVWLQJRIIRXUSLOODUVLDYDLODELOLW\LHWKHVXSSO\VLGHRIIRRGVHFXULW\
UHVXOWLQJIURPSURGXFWLRQVWRFNVDQGWUDGHLLDFFHVVLQÁXHQFHGE\LQFRPHPDUNHWVDQGSULFHVLLLXWLOL]DWLRQ
UHODWHGWRGLHWVIRRGSUHSDUDWLRQDQGFRQVHUYDWLRQSUDFWLFHVDQGLYVWDELOLW\LHSHULRGLFVKRUWIDOOVÁXFWXDWLRQ
RIVXSSO\)RUPRUHLQIRUPDWLRQVHHLQWHUDOLD)$2D
 2QWKHEDVLVRIFXUUHQWWUHQGVFDUERQHPLVVLRQVZLOONHHSJURZLQJE\DERXWSHUFHQWSHUDQQXPDQGDWWKLVUDWH
ZLOOUHDFKWKHUHPDLQLQJHPLVVLRQOLPLWRIJLJDWRQVWRNHHSJOREDOZDUPLQJEHORZGHJUHHVZLWKLQQRPRUH
WKDQ\HDUVZZZUROOLQJVWRQHFRPSROLWLFVQHZVJOREDOZDUPLQJVWHUULI\LQJQHZPDWK
 )RUPRUHLQIRUPDWLRQVHHLELG
 $FFRUGLQJ WR )DWLK %LURO WKH ,($·V FKLHI HFRQRPLVW WKH FXUUHQW WUHQGV DUH SHUIHFWO\ LQ OLQH ZLWK D WHPSHUDWXUH
LQFUHDVHRIDERXWGHJUHHVODWHUWKLVFHQWXU\,ELG
 *OREDO FHUHDO SURGXFWLRQ YROXPH JUHZ E\  SHU FHQW DQG FHUHDO \LHOGV LQFUHDVHG E\  SHU FHQW LQ WKH SHULRG
WRDXWKRU·VFDOFXODWLRQEDVHGRQ)$267$7
 )RUPRUHLQIRUPDWLRQVHH.HDQHHWDO
 ,W LV RIWHQ RYHUORRNHG WKDW SURGXFWLYLW\ RI RXWGRRU ZRUNHUV LV ERXQG WR FRQVLGHUDEO\ GHFOLQH EHFDXVH RI JOREDO
ZDUPLQJ,Q,QGLDIRULQVWDQFHLWLVHVWLPDWHGWKDWSURGXFWLYLW\RIRXWGRRUZRUNHUVKDVDOUHDG\GURSSHGE\SHU
FHQWVLQFHWKHHDUO\VDQGWKDWDQRWKHUGHJUHHVWHPSHUDWXUHLQFUHDVHPLJKWUHVXOWLQDQDGGLWLRQDOUHGXFWLRQ
RISHUFHQW5XQGJUHQ
 )RUDQRYHUYLHZRIUHFHQWVLJQLÀFDQWFOLPDWHDQRPDOLHVVHH7LUDGRDQG&RWWHU²
 7KH UHFHQW FDWDVWURSKLF ÁRRGV LQ 3DNLVWDQ DQG WKH PDVVLYH IRUHVW DQG SHDWVRLO ÀUHV LQ 5XVVLD DUH EXW WZR
LOOXVWUDWLYHH[DPSOHVRIWKHLPSDFWWKDWFDQEHH[SHFWHG$VWKHFDVHRI3DNLVWDQGHPRQVWUDWHVERWKWKHFRXQWU\
DQGWKHLQWHUQDWLRQDOFRPPXQLW\DUHSRRUO\SUHSDUHGWRHIIHFWLYHO\FRSHZLWKVXFKH[WUHPHV$SDUWIURPWKHGLUH
FRQVHTXHQFHVIRUIXWXUHDJULFXOWXUDOSURGXFWLRQWKHUHLVDOVRWKHULVNRIVHULRXVGHVWDELOL]DWLRQRIVRFLHW\DQGWKH
SROLWLFDOV\VWHP(VWLPDWHVRIWKHÁRRGFDXVHGHFRQRPLFGDPDJHDUHDVKLJKDVSHUFHQWRI3DNLVWDQ·V*'3
,WLVHVWLPDWHGWKDWHOHYDWHGDWPRVSKHULF&2FRQFHQWUDWLRQDORQHPD\LQFUHDVHFURS\LHOGVE\VRPH²SHU
FHQW&URSVWKDWWHQGWREHQHÀWIURPWKHHIIHFWRIFDUERQIHUWLOL]DWLRQLQFOXGHULFHZKHDWVR\EHDQVÀQHJUDLQV
OHJXPHV DQG PRVW WUHHV %HQHÀWV IRU RWKHU FURSV LQFOXGLQJ PDL]H PLOOHW VRUJKXP DQG VXJDUFDQH DUH PRUH
OLPLWHG+RZHYHUWKHVHHVWLPDWHVQHHGWREHFRQVLGHUHGZLWKXWPRVWFDUHDVRWKHUFKDQJHVVXFKDVGLVWULEXWLRQ
RI SUHFLSLWDWLRQ HOHYDWLRQ RI DWPRVSKHULF 2 FRQFHQWUDWLRQ HQKDQFHG GHPDQG IRU QLWURJHQ DQG LQFUHDVHV LQ
WHPSHUDWXUHFDQPDNHWKH\LHOGLQFUHDVHVKLJKO\XQFHUWDLQ6PLWKHWDOD6HHDOVRWKHFRPPHQWRI
+|J\DQG)DQJPHLHULQWKLV&KDSWHU
7KH TXDOLW\ RI IRRG LV GHWHUPLQHG E\ WKUHH HOHPHQWV L FDORULHV LH WKH HQHUJ\ FRQWHQW LL SURWHLQV DQG LLL
PLFURQXWULHQWV
)UXLW DQG YHJHWDEOHV DUH YHU\ YDOXDEOH IRU GHDOLQJ ZLWK PLFURQXWULHQW GHÀFLHQFLHV WKH YDOXH RI JOREDO WUDGH LQ
YHJHWDEOHVIRULQVWDQFHH[FHHGVWKDWRIFHUHDOV<HWWKHUHLVLQVXIÀFLHQWNQRZOHGJHDQGUHVHDUFKRQWKHHIIHFWV
RIFOLPDWHFKDQJHRQIUXLWDQGYHJHWDEOH\LHOGVDQGTXDOLW\)$2D
,WLVHVWLPDWHGWKDWFXUUHQWO\DERXWSHUFHQWRIWKHSRWHQWLDOJOREDOFURS\LHOGLVGHVWUR\HGE\SDWKRJHQVDQG
SHVWV2HUNH
5HVLOLHQFHLVWKHFDSDFLW\WRDEVRUERUFRSHZLWKVKRFNVDQGVWUHVVHV$GDSWLYHFDSDFLW\LVGHÀQHGE\RYHUODSSLQJ
UHVRXUFHVDQGDELOLWLHVWKDWFDQEHHPSOR\HGWRUHVSRQGWRDQGFUHDWHFKDQJHV1DHUVWDGSDUWLLS
:KDW PDNHV WKH VLWXDWLRQ LQ $IULFD 6RXWK $VLD DQG &HQWUDO $PHULFD SDUWLFXODUO\ SUHFDULRXV LV WKH IDFW WKDW WKH
SRSXODWLRQRI$IULFDLVSURMHFWHGWRGRXEOHLQWKHSHULRGWKDWRI6RXWK$VLDDQG&HQWUDO$PHULFDWR
LQFUHDVHE\PRUHRUVRPHZKDWOHVVWKDQSHUFHQW81'(6$
&OLPDWHFKDQJHLVDOUHDG\FOHDUO\YLVLEOH$FFRUGLQJWRWKH:RUOG0HWHRURORJLFDO2UJDQL]DWLRQWKHGHFDGHIURP
WRKDGDJOREDOWHPSHUDWXUHWKDWZDV&DERYHWKHDYHUDJHWKHKLJKHVWYDOXHHYHU
UHFRUGHGIRUD\HDUSHULRG:DUPLQJZDVHVSHFLDOO\VWURQJLQ$IULFDSDUWVRI$VLDDQGWKH$UFWLF&HQWUDO$VLD
DQG *UHHQODQG$UFWLF &DQDGD :02  $FFRUGLQJ WR WKH JOREDO &OLPDWH 5LVN ,QGH[ &5, GHYHORSHG E\
*HUPDQZDWFKDQG0XQLFK5H1DW&DW6(59,&(WKHPRVWFOLPDWHULVNH[SRVHGFRXQWULHVLQWKHSHULRG
 ZHUH %DQJODGHVK 0\DQPDU +RQGXUDV 1LFDUDJXD 9LHW 1DP +DLWL 3KLOLSSLQHV 'RPLQLFDQ 5HSXEOLF
0RQJROLDDQG7DMLNLVWDQWKH&5,UHÁHFWVERWKUHODWLYHDQGDEVROXWHFOLPDWHLPSDFWSHUFRXQWU\IRUPRUHLQIRVHH
ZZZJHUPDQZDWFKRUJNOLPDFULKWP
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

,WLVHVWLPDWHGWKDWDOUHDG\E\FRQWLQXLQJSRSXODWLRQJURZWKDQGFXUUHQWDJULFXOWXUDOSUDFWLFHVZLOOMDFNXS
WKHQXPEHURIFRXQWULHVWKDWVXIIHUIURPDQDFXWHVFDUFLW\RIHLWKHUJRRGFURSODQGRUIUHVKZDWHUIURPDWWKH
PRPHQWWRVRPHZLWKDWRWDOSRSXODWLRQRIELOOLRQ:DWHUVFDUFLW\PD\EHRQHRIWKHPRVWSRZHUIXOFURS\LHOG
UHGXFHUVLQWKHFRPLQJGHFDGHV*LRYDQQXFFLHWDO
7KH HFRQRPLF VLJQLÀFDQFH RI DJULFXOWXUH LQ GHYHORSLQJ FRXQWULHV LV XVXDOO\ XQGHUHVWLPDWHG ZKHQ OLPLWLQJ LW WR
DJULFXOWXUH·VFRQWULEXWLRQWR*'3EHFDXVHODUJHSDUWVRIDJULFXOWXUDOSURGXFWLRQDUHLQIRUPDODQGQRWSDUWRIWKH
PRQHWDU\HFRQRP\
,WLVDOVRZRUWKQRWLQJWKDWIRUWKHÀUVWWLPHLQKLVWRU\WKHUHDUHDVPDQ\RYHUZHLJKWSHRSOHDVXQGHUQRXULVKHG
7KHFRQVHTXHQFHVRIWKHHPHUJLQJGLHWDU\KDELWVDUHRQDGLVDVWURXVWUDMHFWRU\IRUKXPDQDQGHFRV\VWHPKHDOWK
7KHUHIRUHRQHDOVRQHHGVWRWDUJHWWKHTXDOLW\RIQXWULWLRQUDWKHUWKDQVLPSO\´PRUHSURGXFWLRQµ*LRYDQQXFFLHW
DOLYDQGYL
$FFRUGLQJWR)$26XE6DKDUDQ$IULFDKDVWKHKLJKHVWVKDUHRIXQGHUQRXULVKHGSHRSOHVRPHSHUFHQWLQ
ZKHUHDVWKH$VLD3DFLÀFUHJLRQKDVWKHPRVWXQGHUQRXULVKHGSHRSOHDERXWPLOOLRQ7ZRWKLUGVRIWKHZRUOG·V
XQGHUQRXULVKHGOLYHLQMXVWFRXQWULHV%DQJODGHVK&KLQDWKH'HPRFUDWLF5HSXEOLFRI&RQJR(WKLRSLD,QGLD
,QGRQHVLDDQG3DNLVWDQFLWHGLQ*LRYDQQXFFLHWDO
$V KLJKOLJKWHG E\ 'H 6FKXWWHU DQG 9DQORTXHUHQ  ´ODUJH PHFKDQL]HG PRQRFURSSLQJ RSHUDWLRQV
DUHPRUHFRPSHWLWLYHWKDQVPDOOIDUPV«EXWFRPSHWLWLYHQHVVDQGSURGXFWLYLW\DUHGLIIHUHQWWKLQJV%LJIDUPV
RXWSHUIRUPVPDOOIDUPVDFFRUGLQJWRRQO\RQHPHDVXUHRIHFRQRPLFHIÀFLHQF\SURGXFWLYLW\SHUXQLWRIODERXUµ
$FFRUGLQJWR7VFKDUQWNHHWDO´LWLVZHOOHVWDEOLVKHGWKDWVPDOODQGGLYHUVLÀHGIDUPVUDWKHUWKDQODUJH
PRQRFXOWXUHVVKRZJUHDWHUSURGXFWLYLW\SHUDUHDDSKHQRPHQRQUHIHUUHGWRDVWKH¶SDUDGR[RIWKHVFDOH·RUWKH
¶LQYHUVHIDUPVL]HSURGXFWLYLW\UHODWLRQVKLS·µ
6HHDOVR,$$67'D
$VHPSKDVL]HGE\1DHUVWDGSDUW,,S´VRLORUJDQLFPDWWHUDVKXPXVFDQRQO\EHSURGXFHGE\WKH
GLYHUVLW\RIOLIHWKDWH[LVWVLQVRLOVLWFDQQRWEHKXPDQPDGH:KHQWKHVRLORUJDQLFPDWWHUUHF\FOLQJDQGIHUWLOLW\
VHUYLFHLVLPSDLUHGDOOOLIHRQHDUWKLVWKUHDWHQHGDVDOOOLIHLVHLWKHUGLUHFWO\RULQGLUHFWO\UHOLDQWRQSODQWVDQGWKHLU
SURGXFWVLQFOXGLQJWKHVXSSO\RIIRRGHQHUJ\QXWULHQWVFRQVWUXFWLRQPDWHULDOVDQGJHQHWLFUHVRXUFHVµ
,QFUHDVLQJ VRLO RUJDQLF PDWWHU E\ JRRG PDQDJHPHQW SUDFWLFHV LV JHQHUDOO\ V\QHUJLVWLF EHFDXVH LW FDSWXUHV
DWPRVSKHULF&2LQFUHDVHVVRLOIHUWLOLW\DQGLPSURYHVWKHVRLOVWUXFWXUHIRUPRUHUHVLOLHQFHDQGEHWWHUDGDSWDWLRQ
WRFOLPDWHFKDQJH)$2D
7KLVVHFWLRQGUDZVRQÀQGLQJVRI0XUSK\DQG:LVH
 2QH UHVSRQVH ZDV WKH YROXQWDU\ 3ULQFLSOHV IRU 5HVSRQVLEOH $JULFXOWXUDO ,QYHVWPHQW 35$, GHYHORSHG E\ WKH
VHFUHWDULDWVQRWWKHPHPEHUFRXQWULHVRIWKH:RUOG%DQN)$2DQG81&7$'ZKLFKKDYHEHHQZLGHO\FULWLFL]HG
DVIDUWRRZHDN0XUSK\DQG:LVH,Q0D\WKH)$2·V&RPPLWWHHRQ:RUOG)RRG6HFXULW\&)6
HQGRUVHG 7KH 9ROXQWDU\ *XLGHOLQHV RQ WKH 5HVSRQVLEOH *RYHUQDQFH RI 7HQXUH RI /DQG )LVKHULHV DQG )RUHVWV
LQ WKH &RQWH[W RI 1DWLRQDO )RRG 6HFXULW\ ZKLFK RXWOLQH SULQFLSOHV DQG SUDFWLFHV WKDW JRYHUQPHQWV FDQ UHIHU WR
ZKHQPDNLQJODZVDQGDGPLQLVWHULQJODQGÀVKHULHVDQGIRUHVWVULJKWV7KHJXLGHOLQHVDUHEDVHGRQDQLQFOXVLYH
FRQVXOWDWLRQSURFHVVVWDUWHGE\)$2LQDQGWKHQÀQDOL]HGWKURXJK&)6OHGLQWHUJRYHUQPHQWDOQHJRWLDWLRQV
WKDW LQFOXGHG SDUWLFLSDWLRQ RI JRYHUQPHQW RIÀFLDOV FLYLO VRFLHW\ RUJDQL]DWLRQV SULYDWH VHFWRU UHSUHVHQWDWLYHV
LQWHUQDWLRQDORUJDQL]DWLRQVDQGDFDGHPLFV7KHDLPRIWKHJXLGHOLQHVLVWRSURPRWHIRRGVHFXULW\DQGVXVWDLQDEOH
GHYHORSPHQWE\LPSURYLQJVHFXUHDFFHVVWRODQGÀVKHULHVDQGIRUHVWVDQGSURWHFWLQJWKHULJKWVRIPLOOLRQVRI
RIWHQYHU\SRRUSHRSOH:KLOHWKHJXLGHOLQHVDFNQRZOHGJHWKDWUHVSRQVLEOHLQYHVWPHQWVE\WKHSXEOLFDQGSULYDWH
VHFWRUVDUHHVVHQWLDOIRULPSURYLQJIRRGVHFXULW\WKH\DOVRUHFRPPHQGWKDWVDIHJXDUGVEHSXWLQSODFHWRSURWHFW
WHQXUHULJKWVRIORFDOSHRSOHIURPULVNVWKDWFRXOGDULVHIURP ODUJHVFDOHODQGDFTXLVLWLRQVDQGDOVRWRSURWHFW
KXPDQULJKWVOLYHOLKRRGVIRRGVHFXULW\DQGWKHHQYLURQPHQWIRUPRUHLQIRUPDWLRQVHHKWWSZZZIDRRUJQHZV
VWRU\HQLWHPLFRGH $V WKH JXLGHOLQHV ZHUH RQO\ DGRSWHG LQ PLG LW LV DV \HW WRR HDUO\ WR MXGJH
ZKHWKHUWKH\ZLOOKDYHDUHDOLPSDFWRQHIIHFWLYHO\JRYHUQLQJH[LVWLQJDQGQHZIRUHLJQODQGDFTXLVLWLRQV
)RUDQHODERUDWHGLVFXVVLRQVHH1DHUVWDG
)RUDUHFHQWLQGHSWKUHYLHZVHH*HUPDQ1DWLRQDO$FDGHP\RI6FLHQFHV/HRSROGLQD
)RUDQHODERUDWHGLVFXVVLRQVHH)$2D
7KH,3&&DVXJJHVWV²SHUFHQWWKH2(&'VXJJHVWVSHUFHQW/HJJDQG+XDQJDQGWKH
:RUOG5HVRXUFHV,QVWLWXWH:5,XQGDWHGVXJJHVWVSHUFHQW
 )LJXUHVXVHGIRUWKHFDOFXODWLRQVZHUHDDQDYHUDJHORVVRI²NJRI620PRIDUDEOHODQGDQG²NJRI
 75$'($1'(19,5210(175(9,(:

620PRIDJULFXOWXUDOODQGXQGHUSUDLULHVDQGQRWFXOWLYDWHGEDQDYHUDJHVRLOGHSWKRIFPZLWKDQDYHUDJH
VRLO GHQVLW\ RI  JUFP F  PLOOLRQ KD RI DJULFXOWXUDO ODQG ZRUOGZLGH DQG  PLOOLRQ KD RI DUDEOH ODQG
)$267$7DQGGDUDWLRRINJRI&2IRUHDFKNJRIGHVWUR\HG620
 7KLVFRQFOXVLRQLVEDVHGRQWKHDVVXPSWLRQWKDWRUJDQLFPDWWHUZRXOGEHLQFRUSRUDWHGDWDJOREDODQQXDODYHUDJH
UDWHRIWRWRQVSHUKHFWDUHRIDJULFXOWXUDOODQG)RUPRUHGHWDLOHGFDOFXODWLRQVVHH*5$,1WDEOH
 $JURHFRORJLFDOUHVHDUFKFRPELQHVPRGHUQVFLHQFHZLWKORFDONQRZOHGJH,Q&HQWUDO$PHULFDIRULQVWDQFHWKH
FRIIHHJURYHVWKDWJURZXQGHUKLJKFDQRS\WUHHVZHUHLPSURYHGE\LGHQWLI\LQJWKHRSWLPDOVKDGHFRQGLWLRQVIRU
PLQLPL]LQJ WKH HQWLUH SHVW FRPSOH[ DQG PD[LPL]LQJ WKH EHQHÀFLDO PLFURÁRUD DQG IDXQD ZKLFK LPSURYHG \LHOG
DQGFRIIHHTXDOLW\6XFKJRRGSUDFWLFHVDUHGHYHORSHGWKURXJKDWULDODQGHUURUSURFHVVE\FRIIHHJURZHUVEXW
LGHQWLI\LQJ FRQGLWLRQV IRU VXFFHVV LQ RUGHU WR SURPRWH WKHLU GLVVHPLQDWLRQ PD\ EHQHÀW IURP WKH NQRZOHGJH RI
H[SHUWV6WDYHUHWDO
 7KHSHUFHQWÀJXUHUHODWHVWRWKHUHOLDEOH\LHOGFRPSDULVRQVIURPSURMHFWVEXWWKHUHVXOWVZHUHZLGH
UDQJLQJZLWKSHUFHQWRIWKHSURMHFWVUHSRUWLQJDSHUFHQWLQFUHDVHRUPRUH
 +RZHYHULWVKRXOGEHSRLQWHGRXWWKDWQRWDOOWKHVHSURMHFWVFRPSO\IXOO\ZLWKWKHSULQFLSOHVRIDJURHFRORJ\
 5HVHDUFKRQDJURIRUHVWU\LQ=DPELDGRHVQRWVXSSRUW´WKHSRSXODUQRWLRQWKDWDJURIRUHVWU\SUDFWLFHVDUHPRUH
ODERXULQWHQVLYHµ$MD\LHWDO
 6HHZZZFOLPDWHIXQGVXSGDWHRUJ
 $FFRUGLQJWRWKH,3&&DQDWPRVSKHULF&2FRQFHQWUDWLRQRISSPZLOOOHDGWRDƒ&ULVHLQJOREDODYHUDJH
WHPSHUDWXUHV
 &LVDPHWDEROLFSDWKZD\IRUFDUERQÀ[DWLRQLQSKRWRV\QWKHVLVFRQYHUWLQJ&2DQGULEXORVHELVSKRVSKDWH5X%3
LQWRWZRFDUERQPROHFXOHVRISKRVSKRJO\FHUDWH3*$
 &LVDPHWDEROLFSDWKZD\IRUFDUERQÀ[DWLRQLQSKRWRV\QWKHVLVZKLFKÀ[HV&2WRSKRVSKRHQROS\UXYDWH3(3
DQGFRQYHUWVLWLQWRWKHFDUERQLQWHUPHGLDWHPDODWH
 7KHZKROHSDSHUFDQEHGRZQORDGHGDWIWSIWSIDRRUJGRFUHSIDRDNHDNHSGI
 6WDWHPHQWVE\)HHGWKH)XWXUHRIÀFLDOVDUHUHYHDOLQJWKH\UHIHUWRWKH´GLVFRYHU\DQGGHOLYHU\µRI´EUHDNWKURXJKµ
WHFKQRORJLHV IUHTXHQWO\ PHQWLRQLQJ ELRWHFKQRORJ\ UDWKHU WKDQ DJURHFRORJLFDO DSSURDFKHV 6HH VWDWHPHQWV
E\ 86'$ 6HFUHWDU\ 7RP 9LOVDFN DWKWWSZZZDPHULFDJRYVWGHYHORSHQJOLVK0D\
DNOOHQQRFFPHKWPO 86$,' 'LUHFWRU 5DMLY 6KDK DW KWWSZZZXVDLGJRYSUHVVUHOHDVHV
SUKWPO DQG 0RQVDQWR &RUSRUDWLRQ DW KWWSZZZDPHULFDJRYVWGHYHORSHQJOLVK-XO\
FSDWDUXNKWPO GLVWLG XFV 6HH DOVR *DWHV )RXQGDWLRQ DW KWWSZZZJDWHVIRXQGDWLRQRUJ
DJULFXOWXUDOGHYHORSPHQW3DJHVZK\ZHIXQGUHVHDUFKLQFURSELRWHFKQRORJ\DVS[
 7KLV86$,'SURJUDPPHSDUWQHUVZLWKELRWHFKQRORJ\LQGXVWU\OHDGHUVVXFKDV0RQVDQWR0D\FRDQG%D\HU)RU
GHWDLOVVHHKWWSZZZDEVSFRUQHOOHGX
 $WRHLVDFRPPRQXQLWRIHQHUJ\ZKLFKH[SUHVVHVWKHDPRXQWRIHQHUJ\UHOHDVHGZKHQDWRQRIRLOLVEXUQWWRH
*- 0:K *FDO
 :DWHUSXPSLQJFRQVXPHVFRQVLGHUDEOHHQHUJ\
 6R\EHDQVFDQEHJURZQZLWKRXWQLWURJHQIHUWLOL]HUVDVWKH\KDYHQDWXUDOQLWURJHQÀ[DWLRQSURSHUWLHVZKLFKLVWKH
PDLQUHDVRQIRUWKHLUORZHUHQHUJ\GHPDQG
 :KLOHWKHUHZHUHDOVRRWKHUIDFWRUVGULYLQJWKHLQFUHDVHLQIRRGSULFHVVXFKDVWKHGLYHUVLRQRIVRPHFURSVIRUWKH
SURGXFWLRQRIELRIXHOVLQFUHDVHGPHDWFRQVXPSWLRQDQGVSHFXODWLRQWKHKLJKHURLOSULFHZDVGRXEWOHVVDPDMRU
GULYHU
7KHLQWURGXFWLRQRIHQHUJ\VDYLQJVWRYHVRUWKHXVHRIRWKHUIXHOVWKDWDUHHDVLHUWRUHJXODWHVKRXOGEHDSULRULW\QRW
RQO\IRUWKHFRQVHUYDWLRQRIIRUHVWVDQGVDYLQJRIHQHUJ\EXWDOVREHFDXVHWKHWUDGLWLRQDOVWRYHVHPLWFRQVLGHUDEOH
LQGRRUVRRWDQGVPRNHZKLFKDUHDKHDOWKKD]DUGDQGRQHRIWKHELJJHVWNLOOHUV%HWZHHQPLOOLRQ:+2
DQGPLOOLRQ3LPHQWHOHWDOSHRSOHGLHIURPWKHVHHPLVVLRQVHYHU\\HDU
$VVXPLQJWKDWWKHIDUPHUVFDQVDYHWKHLUHQWLUHVXUSOXVZKLFKLVKLJKO\XQOLNHO\
 6HHKWWSZZZIDRRUJZRUOGIRRGVLWXDWLRQZIVKRPHIRRGSULFHVLQGH[HQ
 6HH2IIJULGV\VWHPVDWZZZHQHUJ\VROXWLRQVFRXNRIIJULG
.H\'HYHORSPHQW&KDOOHQJHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH 

 6HH/LJKWLQJ$IULFD&DWDO\]LQJPDUNHWVIRUPRGHUQOLJKWLQJDWZZZOLJKWLQJDIULFDRUJ
 6HHKWWSHDUWKREVHUYDWRU\QDVDJRY)HDWXUHV'XVW
 7KLVSDSHUGUDZVKHDYLO\IURPDDUWLFOHE\WKHDXWKRUVHQWLWOHG&RPSHWLWLRQIRU:DWHUIRUWKH)RRG6\VWHP
SXEOLVKHGLQ3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO6RFLHW\%LRORJLFDO6FLHQFHV²
 $ WKRURXJK GLVFXVVLRQ RI WKHVH DQG RWKHU VROXWLRQV LV SURYLGHG LQ VHYHUDO FRPSUHKHQVLYH UHSRUWV HJ ,:0,

 7KH UHODWLRQVKLS EHWZHHQ SRSXODWLRQ ZDWHU DQG IRRG SURGXFWLRQ KDV EHHQ H[SORUHG LQ GHSWK E\ D QXPEHU RI
DXWKRUVVHHIRUH[DPSOH*OHLFN3LPHQWHOHWDO3RVWHO9|U|VPDUW\HWDO7LOPDQHWDO
DQG,:0,
 1RWHWKDWWKLVSDSHUGRHVQRWFRQVLGHUWKUHDWVWRDJULFXOWXUDOZLWKGUDZDOVIURPJURXQGZDWHUUHVRXUFHVWKDWDUHQRW
GLUHFWO\OLQNHGWRVXUIDFHZDWHUV\VWHPVDVWKHVHUHVRXUFHVDUHXQOLNHO\WRVHUYHDVDYLDEOHVXEVWLWXWHIRUVXUIDFH
ZDWHULQIXWXUH\HDUV,QPDQ\UHJLRQVRIWKHZRUOGJURXQGZDWHUUHVHUYHVKDYHGHFOLQHGWRWKHSRLQWZKHUHZHOO
\LHOGV KDYH IDOOHQ GUDPDWLFDOO\ ODQG KDV VXEVLGHG DQG DTXLIHU VDOLQL]DWLRQ KDV RFFXUUHG .RQLNRZ DQG .HQG\
  $V WKH JOREDO GHPDQG IRU JURXQGZDWHU FRQWLQXHV WR LQFUHDVH JURXQGZDWHU WDEOHV DQG ZHOO \LHOGV ZLOO
GHFOLQHPRUHUDSLGO\UHGXFLQJVXUIDFHZDWHUUXQRIIDQGIRUFLQJWKRVHWKDWUHO\RQJURXQGZDWHUUHVRXUFHVWRVHHN
QHZVRXUFHV%RWKZLOOKDYHQHJDWLYHHIIHFWVRQWKHDYDLODELOLW\RIZDWHUIRUDJULFXOWXUH
 ,Q WKLV SDSHU RXU IRFDO ´JHRSROLWLFDO UHJLRQVµ DUH (XURSH $IULFD 1RUWK $PHULFD $VLD /DWLQ $PHULFD DQG WKH
&DULEEHDQDQG2FHDQLD:LWKLQ(XURSHZHDOVRIRFXVRQWKH(XURSHDQ8QLRQQRUWKZHVWHUQ(XURSHWKH8QLWHG
.LQJGRPDQGWKHIRUPHU6RYLHW8QLRQ6XE6DKDUDQ$IULFDDQGWKH1LOH5LYHUEDVLQDUHUHSRUWHGIRU$IULFDDQGLQ
$VLDZHUHSRUWÀQGLQJVIRU&KLQDDQG,QGLD)LQDOO\ZHLGHQWLI\LPSDFWVRQ%UD]LO
 )ROORZLQJ:LQWHUHWDOZHDVVXPHWKDWUHJLRQDOJURXQGZDWHUZLWKGUDZDOVGHSOHWHULYHUEDVLQUXQRIIDQG
WKHUHIRUHLPSOLFLWO\FRQVLGHUVXEVXUIDFHZDWHULQRXUPRGHOOLQJH[HUFLVH,WPXVWEHQRWHGWKDWWKLVDQDO\VLVPD\
XQGHUHVWLPDWHWKUHDWVWRDJULFXOWXUHIRUWZRUHDVRQVLZHPDNHWKHVHFRPSDULVRQVUHODWLYHWRFXUUHQWDJULFXOWXUDO
GHPDQGVUDWKHUWKDQWKHH[SHFWHGKLJKHUGHPDQGVRIDQGLLZHGRQRWFRQVLGHUWKHHIIHFWVRIGURXJKW
RU LQFUHDVHG H[WUHPH HYHQWV 2Q WKH RWKHU KDQG WKH DQDO\VLV PD\ RYHUHVWLPDWH WKUHDWV EHFDXVH ZH PRGHO
ZLWKGUDZDOVUDWKHUWKDQFRQVXPSWLYHXVHDQGWKXVGRQRWDFFRXQWIRUUHXVHRIUHWXUQÁRZV
 0HDVXUHPHQWVZHUHWDNHQLQSORWVRISDVVLRQIUXLWLQPL[HGFURSSLQJV\VWHPVLQHDFKRIWZRGLIIHUHQWDUHDVRI
WKH&HQWUDODQG:HVWHUQ3URYLQFHVRI.HQ\D
 )RUIXUWKHULQIRUPDWLRQVHHZZZFFRIIHHDVVRFLDWLRQRUJRXUVHUYLFHVZRUNRQFOLPDWHFKDQJHKWPO
 6HHZZZJURZLQJIRUWKHIXWXUHFRPFRQWHQW&RRO)DUP7RRO
 )RUDPRUHGHWDLOHGGLVFXVVLRQRIWKHGHYHORSPHQWRIIRRGVXSSO\FKDLQVLQORZLQFRPHFRXQWULHVDQGHPHUJLQJ
HFRQRPLHVVHH3DUÀWW%DUWKHODQG0DFQDXJKWRQ
 6HHZZZZISRUJSXUFKDVHSURJUHVV
,QVRPH(8FRXQWULHVHJ*HUPDQ\DEVROXWHH[SHQGLWXUHRQIRRGKDVUHPDLQHGFRQVWDQWVLQFHWKHV
6HHIRUH[DPSOHZZZQHZHFRQRPLFVRUJSXEOLFDWLRQVLQFRQYHQLHQWVDQGZLFK
 )XUWKHU LQIRUPDWLRQ DERXW WKH 3ODWIRUP·V YLHZV LQ (QJOLVK VHH ZZZGLHEHVVHUHDJUDUSROLWLNGH(QJOLVK
GRFXPHQWVKWPO
 6HHDOVRZZZHIVDHXURSDHXHQWRSLFVWRSLFDPUKWP"ZWUO 
 7KH6$1&2VWXG\FLWHG$QGHUVRQ
 6HH DOVR 6WRFNKROP 5HVLOLHQFH &HQWUH 6WRFNKROP 8QLYHUVLW\ 7LSSLQJ WRZDUGV WKH XQNQRZQ DW ZZZ
VWRFNKROPUHVLOLHQFHRUJSODQHWDU\ERXQGDULHV
 5HJXODWLRQ(&1ROD\LQJGRZQWKHJHQHUDOSULQFLSOHVDQGUHTXLUHPHQWVRIIRRGODZHVWDEOLVKLQJWKH
(XURSHDQ)RRG6DIHW\$XWKRULW\DQGOD\LQJGRZQSURFHGXUHVLQPDWWHUVRIIRRGVDIHW\KWWSHFHXURSDHXGJV
KHDOWKBFRQVXPHUOLEUDU\SXESXEBHQSGI
 $UWLFOHRI5HJXODWLRQ(&´IRUPDOO\HVWDEOLVKHVWKHSUHFDXWLRQDU\3ULQFLSOHDVDQRSWLRQRSHQWRULVN
PDQDJHUV ZKHQ GHFLVLRQV KDYH WR EH PDGH WR SURWHFW KHDOWK EXW VFLHQWLÀF LQIRUPDWLRQ FRQFHUQLQJ WKH ULVN LV
LQFRQFOXVLYH RU LQFRPSOHWH LQ VRPH ZD\µ 6HH KWWSHFHXURSDHXIRRGIRRGIRRGODZSUHFDXWLRQDU\LQGH[B
HQKWPKWWSHXUOH[HXURSDHX/H[8UL6HUY/H[8UL6HUYGR"XUL &20),1(13')
 )RUPRUHGHWDLOVVHH*XHQWKHUDQG:LOO
 75$'($1'(19,5210(175(9,(:

'#&46+%.'U    

  
 
   X
     
$QLWD,GHO)HGHUDWLRQRI*HUPDQ6FLHQWLVWVDQG7RELDV5HLFKHUW*HUPDQZDWFK

$EVWUDFW
7RRSWLPL]HWKHLQWHUUHODWLRQVKLSEHWZHHQWKHJOREDOFOLPDWHDQGFDWWOHDQGPD[LPL]HWKHODWWHU·VFRQWULEX
WLRQWRJOREDOIRRGVHFXULW\WKHIROORZLQJVWHSVQHHGWREHWDNHQ
‡ 0RUHUHVHDUFKRQJUDVVODQGPDQDJHPHQWDLPHGDWRSWLPL]LQJLWVFDSDFLW\WRVHUYHDVDFDUERQVLQN
‡ 0RUHVXSSRUWIRUJUD]LQJ
‡ /DQGXVHFKDQJHVKRXOGEHEURXJKWXQGHUVWULFWFRQWUROLQFOXGLQJWKDWUHODWHGWRLPSRUWHGDQLPDO
IHHG
‡ /LYHVWRFNSURGXFWLRQVKRXOGKDYHDVWURQJHUOLQNWRWKHUHJLRQDOIHHGEDVH

3UHYDLOLQJ WUHQGV WRZDUGV IXUWKHU LQGXVWULDOL]DWLRQ RI EXW ´WR FRQFOXGH WKDW D YHJDQ DJULFXOWXUDO DQG IRRG
DJULFXOWXUHDORQJZLWKODQGOHVVODUJHVFDOHOLYHVWRFN V\VWHP ZRXOG EH WKH SUHIHUDEOH VROXWLRQ LV IDU WRR
SURGXFWLRQ DUH OLNHO\ WR FRQWULEXWH WR DQ LQFUHDVH LQ VLPSOLVWLFµ *DUQHW  )DLUOLH  '·6LOYD DQG
JUHHQKRXVH JDV *+* HPLVVLRQV E\ PRUH WKDQ D :HEVWHU
WKLUGWLOO$FFRUGLQJWRWKHWK,3&&$VVHVVPHQW
2YHU WKH SDVW IHZ GHFDGHV IHHGLQJ V\VWHPV KDYH
5HSRUW ´:LWKRXW DGGLWLRQDO SROLFLHV DJULFXOWXUDO
WXUQHG PRUH DQG PRUH IURP EHLQJ ORFDOUHJLRQDO WR
12 >QLWURXV R[LGH@ DQG &+ >PHWKDQH@ HPLVVLRQV
JOREDOWKHEDVLFVRXUFHRIIRGGHULVOHVVDQGOHVVWKH
DUH SURMHFWHG WR LQFUHDVH E\  DQG 
IDUP LWVHOI 7KH UHVXOWLQJ SUREOHP RI H[SDQVLRQ DQG
UHVSHFWLYHO\ WR  WKXV LQFUHDVLQJ PRUH UDSLGO\
WKDQ WKH  LQFUHDVH RI QRQ&2 *+* REVHUYHG LQWHQVLÀFDWLRQ RI OLYHVWRFN SURGXFWLRQ LV DVVRFLDWHG
IURPWRµ,3&&
7KHUH LV D WHQGHQF\ WR LJQRUH WKH QHHG WR UHGXFH
PHDW FRQVXPSWLRQ DV ZHOO DV WR LPSOHPHQW D OHJDO
IUDPHZRUN IRU VXVWDLQDEOH SURGXFWLRQ PHWKRGV WR
DGGUHVV WKHLU PHGLXP DQG ORQJWHUP HIIHFWV RQ
FOLPDWH HQYLURQPHQW DQG DQLPDO ZHOIDUH ,QGXVWULDO
OLYHVWRFNSURGXFWLRQVKRXOGEHFXUEHGVRWKDWWKHWRWDO
VWRFNRIUDLVHGDQLPDOVVXFKDVFDWWOHSLJVFKLFNHQV
DQGVKHHSLVUHGXFHGDQGWKHFRQVXPSWLRQRIDQLPDO
IHHG VKRXOG EH FRPPHQVXUDWH ZLWK VXVWDLQDEOH
ORFDO SURGXFWLRQ SRWHQWLDO 5HGXFHG FRQVXPSWLRQ RI
DQLPDO SURGXFWV LV D SDUWLFXODU FKDOOHQJH IRU WKRVH
FRXQWULHV ZKHUH DQLPDO SURWHLQ FRQVXPSWLRQ LV KLJK
²UHSUHVHQWLQJDIDOVHPRGHORILPDJLQDU\SURVSHULW\
7KH IDFW WKDW DQ LQFUHDVLQJ QXPEHU RI SHRSOH DUH
EHFRPLQJYHJDQVPD\KHOSLQWHUPVRIWKHUHGXFHG
ZLWK WKH VKLIW IURP D IHHG V\VWHP EDVHG RQ JUDVV
DQG SODQW UHPDLQV WR RQH EDVHG PDLQO\ RQ FURSV
HYHQ IRU UXPLQDQWV +RZHYHU WKH PDMRU LVVXH LV QRW
ZKHWKHU OLYHVWRFN LV WKH ZRUOG·V ODUJHVW XVHU RI ODQG
EXW UDWKHU KRZ WKH ODQG DQG OLYHVWRFN DUH PDQDJHG
:KLOH VXVWDLQDEOH DQG DQLPDOIULHQGO\ V\VWHPV DUH
FKDUDFWHUL]HG E\ DUHDVVSDFH IRU RXWGRRU NHHSLQJ
DQGJUD]LQJLQGXVWULDODQLPDOUHDULQJLVFKDUDFWHUL]HG
DV ODQGOHVV 7KXV WKH GDWD LQGLFDWLQJ OLYHVWRFN DV
WKH ZRUOG·V ODUJHVW XVHU RI ODQG DUH DYHUDJH YDOXHV
WKDW DOVR LQFOXGH D UHOHYDQW SDUW RI VXVWDLQDEO\ XVHG
JUDVVODQGV
7KH LQWHQVLÀFDWLRQ RI OLYHVWRFN V\VWHPV DQG
HVSHFLDOO\IHHGLQJV\VWHPVKDVJRQHKDQGLQKDQG
ZLWK PRUH VSHFLDOL]DWLRQ DQG UDWLRQDOL]DWLRQ WKHUHE\
FUHDWLQJ OLYHVWRFN V\VWHPV WKDW DUH LQFUHDVLQJO\
GHPDQG IRU DQLPDO SURWHLQ DQG HQHUJ\ULFK IRRG GHSHQGHQW RQ HQHUJ\ LQSXW DQG IRUHLJQ IRGGHU
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW
VRXUFHV7KHJURZLQJGHPDQGIRUVXFKIHHGKDVOHG
WRDKXJHGHPDQGIRUODQGZKLFKLVDFUXFLDOIDFWRU
 OHDGLQJ WR ODQGJUDEELQJ DQG ODQG FRQYHUVLRQ
LQFOXGLQJ WKH GHIRUHVWDWLRQ RI UDLQIRUHVWV 2QO\ OLWWOH
E\ OLWWOH LV D ZLGHU SXEOLF UHDOL]LQJ LQ WKH FRQWH[W RI
ODQGJUDEELQJWKDWWKHUHLVDKXJHGHPDQGIRUODQG
LQWKH6RXWKUHVXOWLQJPDLQO\IURPGHPDQGIRUDQLPDO
IHHGLQWKH1RUWK,QDUHFHQWVWXG\YRQ:LW]NHDQG

UHVLGXHV DV DQLPDO IHHG WKDW FDQQRW EH GLUHFWO\
XVHGIRUKXPDQFRQVXPSWLRQDQG
‡ 8VH PDQXUH DV IHUWLOL]HU RQ JUDVVODQGV DQG
FURSODQGV
7KLV UHTXLUHV D PRYH IURP WKH H[LVWLQJ RQHVLGHG
RULHQWDWLRQ DQG VHOHFWLRQ DLPHG DW PD[LPXP
SHUIRUPDQFH RI ERWK FURSV DQG OLYHVWRFN WRZDUGV D
PRUHKROLVWLFYLHZWKDWSURPRWHVLQWHUDFWLRQVDQGWKH
1ROHSSD  HVWLPDWH WKDW LQ RUGHU WR SURGXFH
SURGXFWLYLW\ RI WKH V\VWHP DV D ZKROH )XUWKHUPRUH
WKRVH DJULFXOWXUDO SURGXFWV WKDW ZHUH LPSRUWHG E\
LW LV LPSHUDWLYH WR UHGXFH WKH HQYLURQPHQWDO KHDOWK
WKH (XURSHDQ 8QLRQ (8 LQ   PLOOLRQ
DQG FOLPDWHUHODWHG LPSDFWV IURP WKH PDVVLYH XVH
KHFWDUHVKDRIDUDEOHODQGZHUHXVHGLQRWKHUSDUWV
RIV\QWKHWLFQLWURJHQIHUWLOL]HUVDQGSURPRWHWKHXVH
RIWKHZRUOG7KH(8RQWKHRWKHUKDQGXVHGRQO\
RI DQLPDO H[FUHPHQW DV QDWXUDO IHUWLOL]HU 'LVFDUGLQJ
PLOOLRQKDIRUSURGXFWVLWH[SRUWHGGXULQJWKDWSHULRG
WKHODWWHUDQGGHÀQLQJLWDVZDVWHFRQVWLWXWHVDKXJH
$VDUHVXOWWKH(8LPSRUWV´YLUWXDOODQGµLQWKHRUGHU
ORVVRIQXWULHQWVDQGPLQHUDOVVLPLODUWRSRVWKDUYHVW
RI  PLOOLRQ KD 7KLV UHSUHVHQWV D WKLUG RI WKH 
ORVVHVRIIRRG
PLOOLRQKDXVHGLQWKH(8DVDUDEOHODQG7KHVLQJOH
ELJJHVW IDFWRU WKDW FRQWULEXWHV WR WKLV LPEDODQFH LV 7KH VXVWDLQDEOH SURGXFWLRQ RI IRRG RI DQLPDO RULJLQ
WKH LPSRUW RI VR\ ZKLFK XVHV  PLOOLRQ KD RXWVLGH UHTXLUHV WKH GHYHORSPHQW RI FRRSHUDWLRQ RQ D
WKH (8 PDLQO\ LQ /DWLQ $PHULFD VHH EHORZ 7KLV UHJLRQDOOHYHODVZHOODVFRRSHUDWLRQEHWZHHQVPDOO
VSDWLDOVHSDUDWLRQRILQGXVWULDOOLYHVWRFNV\VWHPVIURP DQG PHGLXPVL]HG IDUPV DQG SDVWRUDOLVWV 7KHUH
IHHGFURSSURGXFWLRQLVFOHDUO\OLQNHGZLWKOHVVULJLG LV D VLJQLÀFDQW XQWDSSHG SRWHQWLDO IRU VXVWDLQDEOH
HQYLURQPHQWDOUHJXODWLRQV1D\ORUHWDO JUDVVODQG DQG UXPLQDQW PDQDJHPHQW LQFOXGLQJ
WKHLU XVH E\ SDVWRUDOLVWV 7KH LPSRUWDQFH RI ZRUNLQJ
*UHDWHUVWDQGDUGL]DWLRQDQGVSHFLDOL]DWLRQLQLQGXVWULDO
DQLPDOV KDV DOVR EHHQ XQGHUHVWLPDWHG <HW WKH\ DUH
DJULFXOWXUHLVFORVHO\UHODWHGWRWKHGHOLQNLQJRIFURS
SDUWLFXODUO\ XVHIXO LQ WKH FRQWH[W RI SHDN RLO ZKLFK
DQG OLYHVWRFN SURGXFWLRQ 7KLV VHSDUDWLRQ FDXVHV
OHDGVWRKLJKHUFRVWVRIPHFKDQL]DWLRQ+RZHYHUWKHLU
KLJKHUHQHUJ\DQGIHUWLOL]HUFRQVXPSWLRQZKLFKZKLOH
HIIHFWLYHXWLOL]DWLRQQHHGVWREHRSWLPL]HGDWWKHORFDO
LQFUHDVLQJ WKH VFDOH RI SURGXFWLRQ DQG \LHOGV ERWK
OHYHOLQSDUWLFXODUDVUHJDUGVIHHGVHOHFWLRQULJKWRI
RI FURSV DQG OLYHVWRFN JLYHV ULVH WR HQRUPRXV ULVNV
SDVVDJH DQG WKH IXQFWLRQDOLW\ RI PRVWO\ LQDGHTXDWH
VXFKDVSHVWLQIHVWDWLRQDQGGLVHDVHV7KHSUHYDLOLQJ
HTXLSPHQW
V\VWHP RI LQGXVWULDO OLYHVWRFN SURGXFWLRQ ZLWK LWV
VSHFLÀF EUHHGLQJ IHHGLQJ DQG JHQHUDO KXVEDQGU\
SUDFWLFHV OHDGV WR HYHU ODUJHU QXPEHUV RI DQLPDOV $(IIHFWVRILQH[SHQVLYHHQHUJ\DQG
EHLQJ VXEMHFWHG WR HQRUPRXV DQG LUUHVSRQVLEOH QLWURJHQIHUWLOL]HUV
SHUIRUPDQFHDQGUHDULQJVWUHVV
7KH DYDLODELOLW\ RI FKHDS IRVVLO IXHO KDV GULYHQ WKH
,UUHVSHFWLYH RI WKH DQLPDO SURWHFWLRQ DVSHFW WKH H[SDQVLRQRIDQLPDOIRRGSURGXFWLRQLHWKHPDVWRI
FRQFHSW RI ´ELRVHFXULW\µ LQ OLYHVWRFN SURGXFWLRQ FDQ FDWWOH SLJV DQG FKLFNHQV DV ZHOO DV WKH SURGXFWLRQ
EHFRQVLGHUHGDIDLOXUH7KLVLVEHFDXVHWKHDWWHPSWWR RIPLONDQGHJJVVHHWKHFRPPHQWVRI5XQGJUHQLQ
WUHDWORZLPPXQLW\DQGWKHLQFUHDVLQJWKUHDWRILQIHFWLRQ
E\DQHYHULQFUHDVLQJXVHRIGUXJVDQGGLVLQIHFWDQWV
JLYHV ULVH WR UHVLVWDQFH SUREOHPV WKH LQHYLWDEOH
VHOHFWLRQRIGDQJHURXVPLFUREHVDQGDODUPLQJOHYHOV
RIUHVLGXHVLQZDWHUVRLOIRRGDQGDQLPDOIHHG
$VXVWDLQDEOHDSSURDFKUHTXLUHVDGUDVWLFUHGXFWLRQRI
LQGXVWULDODQLPDOIHHGSURGXFWLRQDQGDFRQFRPLWDQW
GHFOLQHLQWKHSURGXFWLRQRIDQLPDOSURGXFWV,QVWHDG
RI UHSODFLQJ WKH SURGXFWLRQ RI KXPDQ IRRG E\
DQLPDO IHHG DQLPDO DQG FURS SURGXFWLRQ VKRXOG EH
UHLQWHJUDWHGLQRUGHUWR DQG LQWHQVLÀFDWLRQ RI DQLPDO SURGXFWLRQ +LJKHU
‡ 8VHWKHQXWULHQWVFRQWDLQHGLQJUDVVDQGKDUYHVWLQJ
FKDSWHUDQG+HLQEHUJLQFKDSWHURIWKLV5HYLHZ
7KLV FRQFHUQV WKH SURGXFWLRQ SURFHVVLQJ DQG
WUDQVSRUWDWLRQ RI DQLPDO SURGXFWV DV ZHOO DV SODQW
DQG HTXLSPHQW 7KH HFRORJLFDO FOLPDWLF DQG VRFLR
HFRQRPLF SUREOHPV UHVXOWLQJ IURP LQWHQVLYH DQLPDO
KXVEDQGU\ DQG WKH UHODWHG DQLPDO ZHOIDUH YLRODWLRQV
DQDO\VHG LQ WKLV DUWLFOH DUH ODUJHO\ WKH UHVXOW RI WKH
DPSOHDYDLODELOLW\RILQH[SHQVLYHHQHUJ\
(QHUJ\IRUWKHSURGXFWLRQRIFKHDSV\QWKHWLFQLWURJHQ
IHUWLOL]HULVWKHPDLQFRQWULEXWLQJIDFWRULQWKHH[SDQVLRQ
QLWURJHQIHUWLOL]HUXVHEHFRPHVWKHOHDGLQJGULYHURIWKH
 75$'($1'(19,5210(175(9,(:

LQFUHDVHVLQDJULFXOWXUDOSURGXFWLRQLQJHQHUDO,WVXVH PRVWRIWKHDYDLODEOHVWXGLHVDUHRIOLPLWHGDQDO\WLFDO
KDVLQFUHDVHGHLJKWIROGLQWKHSDVW\HDUVÀJXUH YDOXHDQGDUHKDUGO\FRPSDUDEOH
ZKLOHJOREDOFHUHDOSURGXFWLRQKDVVFDUFHO\GRXEOHG
$VPRQRFXOWXUHVIRUDQLPDOIHHGFRYHUDOPRVWSHU
7KHVWLOOLQFUHDVLQJDPRXQWRIV\QWKHWLF1IHUWLOL]HUXVH
FHQWRIWKHJOREDOFURSODQGDQGDQLPDOIHHGDEVRUEV
LVQRWRQO\RXWRIVFDOHEXWLVFRPSHQVDEOHE\RUJDQLF
YLUWXDOO\ KDOI RI JOREDO FHUHDO SURGXFWLRQ OLYHVWRFN LV
PHWKRGVDVDQLPDOIHUWLOL]HUDQGFRPSRVWDVZHOODV
WKH PDLQ GULYHU RI FOLPDWH FKDQJH IURP DJULFXOWXUH
OHJXPHVLQFURSURWDWLRQ7KHLQFUHDVHLQV\QWKHWLF1
,Q RWKHU ZRUGV WKH VXVWDLQDELOLW\ RU LQWHQVLW\ RI
IHUWLOL]HUXVHWKURXJKLWVGLUHFWDQGLQGLUHFWHIIHFWVLV
IHHGLQJV\VWHPVLVNH\WRWKH*+*EDODQFHRIJLYHQ
UHVSRQVLEOHIRUWKHELJJHVWFRQWULEXWLRQRIDJULFXOWXUH
DJULFXOWXUDO V\VWHPV 6FKXO]H HW DO  6FKXO]H
WR FOLPDWH FKDQJH ,Q WKH SURGXFWLRQ RI V\QWKHWLF
QLWURJHQIHUWLOL]HUWKURXJKWKH+DEHU%RVFKSURFHVV HW DO EHOLHYH WKDW WKH GDPDJH FDXVHG E\ 12 DV
VRPHWRQVRIFDUERQGLR[LGH&2DUHUHOHDVHGSHU FDOFXODWHGE\WKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH
WRQRIDPPRQLD+HOOHEUDQGDQG6FKRO]DQG &KDQJH ,3&& LV DQ XQGHUHVWLPDWLRQ DQG VXJJHVW
²SHUFHQWRIWKHQLWURJHQIHUWLOL]HUDSSOLHGWRWKHVRLO GRXEOLQJWKHGDPDJHIDFWRUDWWKHYHU\OHDVW
LVUHOHDVHGDVQLWURXVR[LGH12ZKLFKKDVDJOREDO 7KH KLJK HQHUJ\ DQG IHUWLOL]HU LQSXWV LQ LQWHQVLYH
ZDUPLQJSRWHQWLDOWLPHVKLJKHUWKDQWKDWRI&2 OLYHVWRFNSURGXFWLRQKDYHWKHIROORZLQJLPSDFWVDSDUW
6RPHDPPRQLD1+LVDOVRUHOHDVHG6XWWRQHWDO IURPWKHGLUHFWDQGLQGLUHFWLPSDFWVRQFOLPDWH
VHHEHORZ
2YHU WKH SDVW IHZ \HDUV OLYHVWRFN V\VWHPV KDYH
EHHQLGHQWLÀHGDVWKHPDLQFRQWULEXWRUWRDJULFXOWXUDO
*+* HPLVVLRQV 2QH FULWLFDO DVSHFW LV WKH LQFUHDVH
LQ WKH WRWDO QXPEHU RI OLYHVWRFN +RZHYHU WKH H[WHQW
RI *+*V HPLWWHG GHSHQGV RQ WKH JLYHQ DJULFXOWXUDO
V\VWHP7KHV\VWHPERXQGDULHVDUHNH\GHWHUPLQDQWV
RI WKH UHVXOWLQJ GDWD FRQFHUQLQJ WKH *+* EDODQFH
7KHUHIRUH WUDQVSDUHQF\ UHJDUGLQJ WKHVH V\VWHP
ERXQGDULHV LV D QHFHVVDU\ FRQGLWLRQ IRU FRPSDULQJ
WKHUHVXOWVRIGLIIHUHQWVWXGLHV6LQFHWKHVHERXQGDULHV
DUHRIWHQHLWKHUQRWFOHDUO\GHÀQHGRUVHWLQDGHTXDWHO\
‡ 7KH HFRQRPLHV RI VFDOH DVVRFLDWHG ZLWK WKH QRQ
LQWHUQDOL]DWLRQ RI HFRORJLFDO VRFLDO KHDOWK DQG
FOLPDWH FRVWV DOORZ FKHDS PDVV SURGXFWLRQ RI
DQLPDOIHHGEDVHGRQPRQRFURSSLQJZLWKRXWFURS
URWDWLRQ
‡ 7KH ZRUOGZLGH DYDLODELOLW\ RI LQH[SHQVLYH
FRQFHQWUDWH IHHG DOORZV WKH UDPSDQW H[SDQVLRQ
RI WKH QXPEHU RI DQLPDOV LQGHSHQGHQW IURP WKH
ORFDOO\DYDLODEOHDQLPDOIHHGVXSSO\
‡ 6\QWKHWLF IHUWLOL]HUV DQG SHVWLFLGHV VXEVWLWXWH IRU
FURS URWDWLRQ LQFOXGLQJ WKH JUHHQ IHUWLOL]HUV DQG
OHJXPHV UHTXLUHG IRU QLWURJHQ HQULFKPHQW RI WKH

)LJXUH:RUOGIHUWLOL]HUFRQVXPSWLRQ²

10 -

9-
All fertilizers (1961=31.2 Mt)
8-

7-
Ratio (1961=1)

6-
Nitrogenous fertilizers (1961=11.6 Mt)
5-

4-

3-

2-

1-
1960 -

1970 -

1980 -

1990 -

2000 -

2010 -

6RXUFH 5R\DO6RFLHW\FLWLQJ)$2)HUWLOL]HU

/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

VRLO$VDUHVXOWWKHIDUP·VLQWHUQDOVXSSO\RIDQLPDO EHHQ IRFXVLQJ RQ KRZ WR XVH V\QWKHWLF QLWURJHQ

IHHGLVGUDVWLFDOO\UHGXFHG IHUWLOL]HUVPRUHHIÀFLHQWO\'XHWRWKHFRQWDPLQDWLRQRI
:LWK PRXQWLQJ QXPEHUV RI OLYHVWRFN WKH YROXPH RI WKH H[FUHPHQWV ZLWK DQLPDODGPLQLVWHUHG GUXJV DQG
DQLPDOH[FUHPHQWVIDHFHVDQGXULQHGUDVWLFDOO\VRDUV
0RVWRIWKHSURWHLQVIHGWROLYHVWRFNLQWKH(8RULJLQDWH
IURPFRXQWULHVLQ6RXWK$PHULFDEXWWKHH[FUHPHQWV
DUH SURGXFHG LQ (XURSHDQ FRXQWULHV $W WKH VDPH
WLPH KRZHYHU H[FUHPHQWV ORVH WKHLU LPSRUWDQFH DV
QDWXUDO IHUWLOL]HUV EHFDXVH RI WKH KLJK XVH RI PLQHUDO
IHUWLOL]HUV RQ WKH ÀHOGV )RU GHFDGHV UHVHDUFK KDV
%R[.H\ÀQGLQJVRIWKH(XURSHDQ1LWURJHQ$VVHVVPHQW
GLVLQIHFWDQWV WKH\ SRVH D KXJH GLVSRVDO SUREOHP
$V H[FUHPHQWV DUH XVHG OHVV DQG OHVV DV QDWXUDO
IHUWLOL]HUVUHODWHGVNLOOVGLPLQLVKDQGUHVHDUFKRQWKLV
VXEMHFWLVQRORQJHUGRQH$FRPPRQZD\RIJHWWLQJ
ULG RI VOXUU\ LV WR GXPS LW RQ SDVWXUH ODQGV ² RIWHQ
DVDNLQGRIZDVWHGLVSRVDO²ZKLFKJUHDWO\UHGXFHV
SDVWXUHTXDOLW\

7KH(XURSHDQ1LWURJHQ$VVHVVPHQW(1$LPSOHPHQWHGLQWKHWK(85HVHDUFK)UDPHZRUN3URJUDPPHIRFXVHVRQ

WKHLPSOLFDWLRQVRIWKHPRXQWLQJXVHRIQLWURJHQIHUWLOL]HUVLQDJULFXOWXUH6XWWRQHWDO7KHDXWKRUVRIWKH$VVHVV
PHQWUHYLHZHGWKHGLUHFWFRQQHFWLRQEHWZHHQLQH[SHQVLYHHQHUJ\DQGWKHSURGXFWLRQRIV\QWKHWLFQLWURJHQIHUWLOL]HU7KH
$VVHVVPHQWUHFRPPHQGVPRUHUHVHDUFKRQWKHLQWHUSOD\EHWZHHQWKHFDUERQDQGQLWURJHQF\FOHVDQGWKHLULPSDFWRQ
VRLOIHUWLOLW\FOLPDWHDQGWKHHFRV\VWHP
,QWKHWHFKQLFDOVXPPDU\RIWKH$VVHVVPHQW6XWWRQDQG%LOOHQ;;;9HPSKDVL]HWKDW´WKHGHOLEHUDWHSURGXFWLRQ
DQGUHOHDVHRI1U>UHDFWLYHQLWURJHQ@LQWKH+DEHU%RVFKSURFHVVFDQEHFRQVLGHUHGDVSHUKDSVWKHJUHDWHVWVLQJOH
H[SHULPHQWLQJOREDOJHRHQJLQHHULQJWKDWKXPDQVKDYHHYHUPDGH«:KDWZDVQRWDQWLFLSDWHGZDVWKDWWKLVH[SHUL
PHQWZRXOGOHDGWRD¶QLWURJHQLQKHULWDQFH·RIXQLQWHQGHGFRQVHTXHQFHVZLWK1UOHDNLQJLQWRWKHHQYLURQPHQWLQPXOWLSOH
IRUPVFDXVLQJDQHYHQODUJHUQXPEHURIHQYLURQPHQWDOHIIHFWVµ
7KH$VVHVVPHQWIRFXVHVRQ´ÀYHNH\VRFLHWDOWKUHDWVµIURPH[FHVVQLWURJHQXVHLQWHUPVRILWVLPSDFWRQZDWHUTXDOLW\
DLUTXDOLW\JUHHQKRXVHEDODQFHHFRV\VWHPVDQGELRGLYHUVLW\7KHDXWKRUVVWDWHWKDW´WKHXQGHUVWDQGLQJRI1F\FOLQJKDV
XQGHUJRQHDSDUDGLJPVKLIWVLQFH8QWLOWKHQWKHSHUFHSWLRQZDVWKDW1UPLQHUDOL]DWLRQLVWKHOLPLWLQJVWHS
LQ1F\FOLQJSODQWVRQO\WDNHXSLQRUJDQLF1UDQGSODQWVFRPSHWHSRRUO\IRU1UDJDLQVWPLFUREHVDQGXVH
RQO\WKH1UZKLFKLV¶OHIWRYHU·E\PLFUREHV6LQFHWKHQVWXGLHVKDYHVKRZQWKDWSODQWVFRPSHWHHIIHFWLYHO\IRU1UZLWK
PLFURRUJDQLVPVDQGWDNHXSRUJDQLF1LQDEURDGUDQJHRIHFRV\VWHPVµ6XWWRQDQG%LOOHQ;;;9,,7KHDXWKRUV
DOVRSRLQWRXWWKDWWLOOWKHLPSUHVVLRQWKDWSODQWVRQO\WDNHXSLQRUJDQLF1UGHPRQVWUDWHVKRZLQGXVWULDOL]DWLRQRI
DJULFXOWXUHKDVLQÁXHQFHGUHVHDUFKDQGH[WHQVLRQVHUYLFHVLQDRQHVLGHGZD\DQGKDVHURGHGWKHLPSRUWDQFHRIUHODWHG
ORFDOIDUPLQJNQRZOHGJH
7KHDXWKRUVKLJKOLJKWKRZOLWWOHWKDW´SDUDGLJPVKLIWµKDVEHHQWDNHQLQWRDFFRXQWLQDGYLVRU\DQGFRXQVHOOLQJVHUYLFHV
7KH\QRWH´,QFHUHDOIDUPLQJWKHXVHRIRQO\PLQHUDO1UIHUWLOL]HUVLQVWHDGRIDQLPDOPDQXUHVRUFRPSRVWVDVZHOODV
WKHVLPSOLÀFDWLRQRIWKHFURSURWDWLRQVFKHPHWKDWWKLVKDGPDGHSRVVLEOHKDVLQVRPHFDVHVUHVXOWHGLQDGHFOLQHRI
VRLORUJDQLFPDWWHU,QWKHORQJWHUPWKLVSUDFWLFHRIXVLQJRQO\PLQHUDOIHUWLOL]HUKDVGHFUHDVHGWKHEXIIHUFDSDFLW\RIWKH
VRLOWRZDUGVLQRUJDQLF1LQSXWVWKXVLQFUHDVLQJLWVSURSHQVLW\WR1OHDFKLQJµ7KH\DGGWKDW´QLWURJHQHQULFKHGWHUUHVWLDO
HFRV\VWHPVORVHVLJQLÀFDQWDPRXQWVRI1YLDQLWUDWHOHDFKLQJDQGJDVHRXVHPLVVLRQV112121+WRWKHHQYLURQ
PHQW(VWLPDWHVRIGHQLWULÀFDWLRQWR1UHPDLQKLJKO\XQFHUWDLQGXHWRGLIÀFXOWLHVLQPHDVXUHPHQWDQGDKLJKGHJUHHRI
WHPSRUDODQGVSDWLDOYDULDELOLW\7KHUHUHPDLQVXEVWDQWLDOXQFHUWDLQWLHVLQWKHDYHUDJHIUDFWLRQRI1UDSSOLHGWRÀHOGVWKDW
LVHPLWWHGDV12UDQJLQJIURPWRRIIHUWLOL]HU1DSSOLHGXVLQJERWWRPXSDQGWRSGRZQHVWLPDWHVUHVSHF
WLYHO\µ$QGUHJDUGLQJDPPRQLDFWKHDXWKRUVFRQFOXGH´)XUWKHUUHVHDUFKLVQHHGHGWREHWWHUXQGHUVWDQGWKHUHODWLYH
FRQWULEXWLRQRIGLUHFWDQGLQGLUHFW12HPLVVLRQVµ6XWWRQDQG%LOOHQ;;;9,,,
+RZ LQHIIHFWLYH HQIRUFHPHQW DQG LPSOHPHQWDWLRQRIH[LVWLQJQLWURJHQDQG UHODWHG(8GLUHFWLYHVDKDYHEHHQEHFRPHV
DSSDUHQWLQWKHDXWKRUV·VXPPDU\´(XURSH(8LVDKRWVSRWLQWKLVVHQVHSURGXFLQJRIJOREDODQWKURSRJHQLF
1UHYHQWKRXJKLWVVXUIDFHFRYHUVOHVVWKDQRIWKHWRWDOZRUOGFRQWLQHQWDODUHDµ6XWWRQDQG%LOOHQ;;;97KH
DXWKRUVDOVRFULWLFL]HWKHORZSURFXUHPHQWFRVWV´WKHORZSULFHRI1UIHUWLOLVHUFRPELQHGZLWKLWVFOHDUEHQHÀWVWR
DJULFXOWXUDOSURGXFWLRQGRHVQRWSURYLGHDVWURQJLQFHQWLYHIRUIDUPHUVWRXVHOHVVWKDQWKHSULYDWHHFRQRPLFRSWLPXPµ
6XWWRQDQG%LOOHQ;;;9,
6RXUFH6XWWRQHWDO
1RWH D )RU LQVWDQFH 1LWUDWHV 'LUHFWLYH :DWHU )UDPHZRUN 'LUHFWLYH *URXQGZDWHU 'LUHFWLYH $PELHQW $LU 4XDOLW\
'LUHFWLYH 1DWLRQDO (PLVVLRQV &HLOLQJV 'LUHFWLYH 8UEDQ :DVWH :DWHU 7UHDWPHQW 'LUHFWLYH 0DULQH 6WUDWHJ\
)UDPHZRUN'LUHFWLYH,QWHJUDWHG3ROOXWLRQDQG&RQWURO,33&DQG+DELWDWV'LUHFWLYH
 75$'($1'(19,5210(175(9,(:

7KURXJK HFRQRPLHV RI VFDOH IDUPV ZKHUH OLYHVWRFN QRW WDNHQ LQWR DFFRXQW DQG UHODWHG FRVWV UHPDLQ
SURGXFWLRQLVVWLOOEDVHGRQIDUPJHQHUDWHGIHHGFRPH H[WHUQDOL]HG $FFRUGLQJ WR WKH (XURSHDQ 1LWURJHQ
XQGHULQFUHDVLQJHFRQRPLFSUHVVXUH,QGXVWULDOPHJD $VVHVVPHQW 6XWWRQ HW DO  WKH WRWDO FRVWV RI
IDUPVRUIDUPVWKDWDUHPXFKODUJHUWKDQWKHUHJLRQDO QLWURJHQSROOXWLRQRIZDWHUWKHDWPRVSKHUHDQGRWKHU
DYHUDJHGULYHWKLVWUHQGVHHDOVRWKHFRPPHQWDU\RI LPSDFWV RQ HFRV\VWHPV DQG FOLPDWH FKDQJH DUH
2VWHQGRUIILQWKLVFKDSWHU HVWLPDWHGWREHEHWZHHQĄELOOLRQDQGĄELOOLRQ
SHUDQQXPLHĄ²ĄSHUSHUVRQSHU\HDUZKLFK
LVPRUHWKDQWZLFHWKHPRQHWDU\EHQHÀWVGHULYHGIURP
%6XVWDLQDELOLW\UHTXLUHVDQHZGHÀQLWLRQ
QLWURJHQLQDJULFXOWXUH
RIWKHWHUPVSURGXFWLYLW\DQGJURZWK
%HWZHHQDQGWKHQXPEHURIDQLPDOVUHDUHG
7KH FRQYHQWLRQDO DSSURDFK WR DJULFXOWXUDO JURZWK
IRU PHDW DQG GDLU\ SURGXFWLRQ LQFUHDVHG UDSLGO\
DLPVDWLQFUHDVLQJFURS\LHOGVSHUKHFWDUHWDNLQJLQWR
$FFRUGLQJWRWKH)$2)$267$7LQDWRWDO
DFFRXQWWKHFRVWVRISURFXUHGLQSXWVVXFKDVHQHUJ\
DPRXQWRIELOOLRQKHDGVRIFDWWOHDQGEXIIDORZHUH
IHUWLOL]HUSHVWLFLGHVDQGODERXU7KLVFDOFXODWLRQIDLOVWR
UHDUHGJOREDOO\²WKHQXPEHUGRXEOHGGXULQJWKHODVW
FRQVLGHUQRWRQO\WKHH[WHUQDOL]HGFRVWVGDPDJHWR
\HDUV'XULQJWKHVDPHSHULRGWKHQXPEHURISLJV
VRLO ZDWHU ERGLHV DQG DLU SROOXWLRQ WKURXJK UHVLGXHV
PRUH WKDQ GRXEOHG IURP  PLOOLRQ WR  PLOOLRQ
DQGFRQWDPLQDWLRQDVZHOODVWKHVRFLDOLPSOLFDWLRQV
7KHQXPEHURIFKLFNHQVJUHZWKHPRVWGUDPDWLFDOO\
EXWDOVRWKHGHFOLQHLQVRLOIHUWLOLW\WKURXJKVRLOHURVLRQ
DOPRVW ÀYHIROG IURP  ELOOLRQ WR  ELOOLRQ 6LQFH
FRPSDFWLRQDQGQLWULÀFDWLRQ²DGHYHORSPHQWWKDWKDV
QRW RQO\ WKH QXPEHU RI DQLPDOV LQFUHDVHG EXW DOVR
QRW\HWEHHQIXOO\DSSUHFLDWHGEHFDXVHRIWKHDPSOH
WKHDYHUDJHZHLJKWSHUDQLPDOPHDWSURGXFWLRQURVH
DYDLODELOLW\RIFKHDSV\QWKHWLFIHUWLOL]HUV7URHK+REEV
DW DQ HYHQ IDVWHU UDWH EHHI SURGXFWLRQ PRUH WKDQ
DQG 'RQDKXH  )RU H[DPSOH IDUPHUV LQ WKH
GRXEOHGWRELOOLRQWRQVLQSRUNSURGXFWLRQ
8QLWHG6WDWHVDSSO\IHUWLOL]HUVZRUWKDERXWELOOLRQ
TXDGUXSOHG WR  ELOOLRQ WRQV DQG FKLFNHQ PHDW
DQQXDOO\WRRIIVHWWKHHIIHFWVRIVRLOQXWULHQWORVVGXHWR
SURGXFWLRQLQFUHDVHGWHQIROGWRELOOLRQWRQV7KLV
VRLOHURVLRQ7URHKHWDO
UDSLGH[SDQVLRQRIJOREDOPHDWSURGXFWLRQZDVRQO\
7KHUHLVDGHSORUDEOHSUREOHPRISHUFHSWLRQEHFDXVH SRVVLEOH EHFDXVH WKH IHHG VXSSO\ IRU WKH DQLPDOV
HIIRUWVWRVWUHQJWKHQLQWHQVLYHDJULFXOWXUDOSURGXFWLRQ LQFUHDVHG DW D VLPLODUO\ GUDPDWLF UDWH 7KH (8 LV D
DQG LQFUHDVH \LHOGV WKURXJK HQKDQFHG XVH RI SULPHH[DPSOHLQWKLVUHVSHFW,WVLPSRUWVRIVR\EHDQ
V\QWKHWLF IHUWLOL]HUV JLYH WKH ZURQJ LPSUHVVLRQ WKDW FDNH ² D FUXFLDO VRXUFH RI SURWHLQ LQ LQWHQVLYH DQG
WKH SURGXFWLRQ RI DQLPDO IHHG LV QRW LQ FRPSHWLWLRQ LQGXVWULDO DQLPDO SURGXFWLRQ ² URVH WHQIROG EHWZHHQ
ZLWK IRRG SURGXFWLRQ 7KH QHJDWLYH LPSDFWV RI WKH DQGDQGQRZVWDQGVDWDOPRVWELOOLRQ
HQKDQFHG XVH RI V\QWKHWLF QLWURJHQ IHUWLOL]HUV DUH WRQVSHU\HDUÀJXUH7KHIRFXVRQFDNHLVEHFDXVH

)LJXUH(8LPSRUWVRIVR\EHDQFDNHDQGVR\EHDQV²WR²PLOOLRQVRIWRQV

50 000-
Millions of tons

40 000-
Soybeans (cake weight)
30 000-

20 000-
Cake of soy
10 000-

0-
1961-1965 -

1966-1970 -

1971-1975 -

1976-1980 -

1981-1985 -

1986-1990 -

1991-1995 -

1996-2000 -

2001-2005 -

2006-2008 -

6RXUFH$XWKRUV·FDOFXODWLRQVEDVHGRQ)$267$7
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

)LJXUH$UHDXQGHUVR\FXOWLYDWLRQVHOHFWHGFRXQWULHV²PLOOLRQVRIKHFWDUHV




86$
 % UD]LO
0LOOLRQVRIKHFWDUHV

 $ UJHQWLQD
,QGLD
 & KLQD
 3 DUDJXD\
& DQDGD



       

6RXUFH$XWKRUV·FDOFXODWLRQVEDVHGRQ)$267$7

RQO\WKLVLVXVHGDVDQLPDOIHHGZKLOHVR\EHDQRLOLV SD\PHQWV EDVHG RQ WKH DUHD SODQWHG ZLWK FHUWDLQ

XVHG IRU KXPDQ FRQVXPSWLRQ LQGXVWULDO DQG HQHUJ\
XVH
&7KHUROHRIDJULFXOWXUDODQGWUDGH
SROLF\LQWKHLQGXVWULDOL]DWLRQRIDQLPDO
SURGXFWLRQ
$Q LPSRUWDQW GULYHU RI WKLV GHYHORSPHQW KDV EHHQ
FURSV VRPH VXSSRUW IRU RLOVHHG SURGXFWLRQ FRXOG
EHSURYLGHG+RZHYHUWKH%ODLU+RXVH$JUHHPHQWD
ELODWHUDODJUHHPHQWEHWZHHQWKH(XURSHDQ&RPPXQLW\
DQG WKH 8QLWHG 6WDWHV ZKLFK SDYHG WKH ZD\ IRU WKH
:72 $JUHHPHQW RQ $JULFXOWXUH SODFHG D OLPLW RQ
WKH DUHD SODQWHG ZLWK RLOVHHGV LQ WKH (8 WKDW FRXOG
EHQHÀWIURPSD\PHQWV$VDUHVXOWWKH(8·VLPSRUWV
RIVR\EHDQVDQGVR\EHDQFDNHZKLFKKDGUHPDLQHG
WKH (8·V &RPPRQ $JULFXOWXUDO 3ROLF\ &$3 DQG
LWV OLQN WR WUDGH SROLF\ 8QWLO WKH HDUO\ V WKH (8
JXDUDQWHHGSULFHVIRUOLYHVWRFNSURGXFWV²HVSHFLDOO\
EHHI DQG GDLU\ SURGXFWV ² WKDW ZHUH VLJQLÀFDQWO\
KLJKHU WKDQ ZRUOG PDUNHW SULFHV 7KLV SURYLGHG DQ
DW URXJKO\ D FRQVWDQW OHYHO LQ WKH V VWDUWHG WR
LQFUHDVH LQ WKH V 7KH %6( FULVLV LQ ²
JDYHDQDGGLWLRQDOERRVWWR(8VR\LPSRUWV,QWKHVH
\HDUV DORQH WKH (8·V VR\ LPSRUWV MXPSHG IURP
 PLOOLRQ WRQV WR  PLOOLRQ WRQV )$267$7 DQG
HIIHFWLYH LQFHQWLYH IRU (XURSHDQ IDUPHUV WR LQFUHDVH
SURGXFWLRQ $W WKH VDPH WLPH WKH &$3 LQWHUYHQHG
LQ WKH PDUNHWV IRU IHHGVWRFN :KLOH KLJK SULFHV IRU
FHUHDOV LQ WKH (8 ZHUH DOVR JXDUDQWHHG WKHUH ZDV
QRVXSSRUWIRURLOVHHGVDQGWKHLUSURGXFWV²RLOVDQG
DXWKRUV·FDOFXODWLRQV
7KH (8·V ULVLQJ LPSRUW GHPDQG ZDV PDLQO\ PHW E\
6RXWK$PHULFDHVSHFLDOO\$UJHQWLQDDQG%UD]LOZKHUH
WKHDUHDSODQWHGZLWKVR\URVHIURPMXVWRYHUPLOOLRQ
FDNHV 7KLV VLWXDWLRQ LV DOVR UHÁHFWHG LQ WKH (8·V KD LQ ERWK FRXQWULHV FRPELQHG LQ  WR RYHU 
DJULFXOWXUDOWUDGHSROLF\ZKLOHOLYHVWRFNSURGXFWVDQG PLOOLRQKDLQÀJXUH7KLVWULJJHUHGWKHPDVVLYH
FHUHDOVZHUHDQGJHQHUDOO\VWLOODUHSURWHFWHGE\KLJK GHIRUHVWDWLRQ RI WKH WURSLFDO UDLQIRUHVWV LQ %UD]LO DQG
WDULIIVRLOVHHGVDQGWKHLUSURGXFWVKDYHH[SHULHQFHG WKH FRQYHUVLRQ RI JUDVVODQGV FHUUDGR LQ %UD]LO DQG
QR RU RQO\ YHU\ ORZ WDULIIV 7KHVH WDULIIV ZHUH À[HG SDPSDVLQ$UJHQWLQDWRFURSODQG
PXOWLODWHUDOO\LQWKH*HQHUDO$JUHHPHQWRQ7DULIIVDQG ,W LV HVWLPDWHG WKDW WKH ODQGXVH FKDQJHV GLUHFWO\
7UDGH *$77 WKH SUHGHFHVVRU RI WKH :RUOG 7UDGH UHODWHGWRWKHH[SDQGHGVR\SURGXFWLRQLQ$UJHQWLQD
2UJDQL]DWLRQ:72 %UD]LO DQG 3DUDJXD\ ZHUH UHVSRQVLEOH IRU RQ
,Q WKH V WKH (8 DWWHPSWHG UHODWLYHO\ DYHUDJH RYHU  PLOOLRQ WRQV RI &2HTXLYDOHQW
VXFFHVVIXOO\WRVXSSRUWRLOVHHGSURGXFWLRQZLWKRWKHU &2HHPLVVLRQVDQQXDOO\EHWZHHQDQG
SROLF\ LQVWUXPHQWV VXFK DV SURGXFWLRQ SUHPLXPV 5HLFKHUW DQG 5HLFKDUGW  7KLV DPRXQWV WR
+RZHYHUWKHVHZHUHIRXQGWRUXQFRXQWHUWRLWV*$77 DERXW  SHU FHQW RI WKH WRWDO *+* HPLVVLRQV RI
FRPPLWPHQWV :LWK WKH VKLIW IURP SULFH VXSSRUW WR WKHVHFRXQWULHV
 75$'($1'(19,5210(175(9,(:

7KHUDSLGH[SDQVLRQRIIHHGLQSDUWLFXODUHQDEOHGWKH RI VR\EHDQV DQG VR\EHDQ FDNH DORQJ ZLWK D ZHOO

(8 QRW RQO\ WR PHHW LWV ULVLQJ GHPDQG IRU PHDW DQG GHYHORSHGLQIUDVWUXFWXUHDQGDPDWXUHIRRGLQGXVWU\
GDLU\SURGXFWVEXWDOVRWREHFRPHDQHWH[SRUWHURI
EHHIGDLU\SURGXFWVDQGSRUN6LQFHWKHJXDUDQWHHG
GRPHVWLF SULFHV ZHUH XVXDOO\ VLJQLÀFDQWO\ KLJKHU
WKDQZRUOGPDUNHWSULFHVH[SRUWVZHUHRQO\SRVVLEOH
WKURXJK ´UHIXQGVµ IRU H[SRUWHUV ZKLFK FRYHUHG WKH
GLIIHUHQFH EHWZHHQ WKH LQWHUQDO DQG H[WHUQDO SULFHV
7KHVH ´H[SRUW VXEVLGLHVµ WXUQHG RXW WR EH D PDMRU
LVVXHRIFRQÁLFWLQLQWHUQDWLRQDOWUDGH7KHVLJQLÀFDQW
(XURSHDQ H[SRUWV RI DQLPDO SURGXFWV DV ZHOO DV
KDYHEHFRPHWKHPDLQSRUNDQGFKLFNHQSURGXFLQJ
UHJLRQV LQ WKH (8 7KLV KDV EHHQ SDUWO\ VXSSRUWHG
E\ &$3UHODWHG LQYHVWPHQW DVVLVWDQFH WKURXJK
VXEVLGL]HGLQWHUHVWUDWHV
,Q VXP WKH LQWHQVLW\ RI OLYHVWRFN SURGXFWLRQ LV
GHFLVLYHO\GHWHUPLQHGE\WKHLQWHQVLW\RIDQLPDOIHHG
ZKLFK LQ WXUQ LV FRUUHODWHG ZLWK WKH HQKDQFHG XVH
RI HQHUJ\ DQG V\QWKHWLF IHUWLOL]HUV IRU WKH SURGXFWLRQ
RI WKDW IHHG 7KLV LV ZK\ D FRPSDUDWLYH DQDO\VLV RI
ZKHDW DQG VXJDU JDYH WKH ZURQJ LPSUHVVLRQ WKDW
WKH (8 ZDV SURGXFLQJ RYHUDOO DJULFXOWXUDO VXUSOXVHV
7KH IDFW WKDW WKLV ZDV RQO\ SRVVLEOH EHFDXVH RI WKH
HYHULQFUHDVLQJ LPSRUWV RI DQLPDO IHHG ZDV ODUJHO\
QHJOHFWHGLQWKHSXEOLFGHEDWH
&RQVHTXHQWO\ WKH UHIRUPV RI WKH &$3 LQ WKH HDUO\
V IRFXVHG RQ FXWWLQJ GRZQ VXUSOXV SURGXFWLRQ
E\UHGXFLQJJXDUDQWHHGSULFHVIRUFHUHDOVDQGEHHI
WKH HFRORJLFDO DQG FOLPDWH EDODQFH RI OLYHVWRFN
SURGXFWLRQ UHTXLUHV GDWD RQ ZKHUH DQG KRZ WKH
DQLPDOIHHGZDVSURGXFHG,QWKLVUHJDUGWKHODQG
XVHFKDQJHVUHTXLUHGIRULQWHQVLYHDQGPRQRFXOWXUH
EDVHG IHHG SURGXFWLRQ DUH D SDUWLFXODU VRXUFH RI
FRQFHUQ ZLWK UHJDUG WR WKHLU VRFLDO HFRORJLFDO DQG
FOLPDWHLPSDFWV
7KH GHSHQGHQFH RQ IRUHLJQ IRGGHU VRXUFHV LV
DQG LQLWLDOO\ WR D PXFK OHVVHU H[WHQW IRU PLON 7KH
LQFRPH ORVVHV ZHUH SDUWO\ FRPSHQVDWHG E\ VSHFLÀF
DUHDSD\PHQWVWRIDUPHUV2QHFRQGLWLRQIRUUHFHLYLQJ
WKRVH SD\PHQWV ZDV WKDW D FHUWDLQ SURSRUWLRQ RI
DUDEOH ODQG ZRXOG KDYH WR EH NHSW LGOH ² WKH PRVW
GLUHFWLQVWUXPHQWIRUDGGUHVVLQJWKH´RYHUSURGXFWLRQµ
SUREOHP 7KH DPRXQW RI ODQG WR EH ´VHW DVLGHµ ZDV
À[HG E\ WKH (8 RQ DQ DQQXDO EDVLV GHSHQGLQJ RQ
PDUNHWFRQGLWLRQV2QDYHUDJHLWZDVDURXQGSHU
FHQW RI WKH FURSODQG $V D UHVXOW H[SRUWV RI FHUHDOV
RQO\ RQH RXWFRPH RI WKH IXQGDPHQWDO FKDQJH LQ
DJULFXOWXUDO OLYHVWRFN V\VWHPV $QRWKHU PDLQ GULYHU
RI LQGXVWULDO DJULFXOWXUH LV WKDW IRRG UHWDLOHUV DUH
GHPDQGLQJ LQFUHDVLQJO\ VWDQGDUGL]HG SURGXFWV LQ
WHUPVRITXDQWLWLHVVL]HVDQGIDWWHQLQJSHULRGV6LQFH
WKH V VWDQGDUGL]DWLRQ E\ DQG IRU LQGXVWULDOL]HG
PHDW DQG GDLU\ SURGXFWLRQ V\VWHPV KDV UHVXOWHG LQ
WKHUHSODFHPHQWRIZLOGDQGFXOWXUHGELRGLYHUVLW\ULFK
ODQG E\ PRQRWRQRXV ODQGVFDSHV $V D UHVXOW ZLOG
ELRGLYHUVLW\VXIIHUVDVUHÁHFWHGLQWKHGHFUHDVHLQZLOG
DQG EHHI IHOO VLJQLÀFDQWO\ DQG ZKLOH WKH (8 UHPDLQV
D QHW H[SRUWHU RI ZKHDW LW LV QRZ D QHW LPSRUWHU RI
EHHI DQG VXJDU $W WKH VDPH WLPH QHW H[SRUWV RI
SRUN PRUH WKDQ GRXEOHG IURP DURXQG  WRQV
DQQXDOO\LQWKHODWHVWRDURXQGRQHPLOOLRQWRQV
DQQXDOO\ LQ UHFHQW \HDUV 7KH ÀJXUH IRU  ZDV DV
EHHVLQPDQ\DUHDVVXIÀFLHQWSROOLQDWRUVDUHODFNLQJ
EXWWHUÁLHV DQG KHGJHV IRU H[DPSOH 7KH ORVV RI
EUHHGVDQGWKHORZUHJXODUXWLOL]DWLRQRIWKHUHPDLQLQJ
RQHVOHDGWRWKHORVVRIWUDGLWLRQDONQRZOHGJH
7KH PDQ\ \HDUV RI 6WDWH VXSSRUW IRU SHUIRUPDQFH
WHVWLQJ DQG HVWLPDWLRQ RI EUHHGLQJ YDOXHV DLPHG
KLJKDVPLOOLRQWRQV)$267$77KHH[SDQVLRQRI
XQLTXHO\ DW DFKLHYLQJ PRUH ÀQDQFLDO \LHOG SHU XQLW
SRUNSURGXFWLRQDQGH[SRUWVZDVOHVVGLUHFWO\OLQNHG
UDQFRQWUDU\WRWKHJRDOVUHODWLQJWR´JHQHWLFGLYHUVLW\µ
WR DJULFXOWXUDO SROLF\ LQVWUXPHQWV DQG PRUH D UHVXOW
DVHPERGLHGLQWKH&RQYHQWLRQRQ%LRORJLFDO'LYHUVLW\
RIWKHLQFUHDVLQJLQGXVWULDOL]DWLRQRIDQLPDOSURGXFWLRQ
&%',2H:HWDO7KH&%'LVEDVHGXSRQWKUHH
GLVFXVVHGHDUOLHU
SLOODUV WKDW UHSUHVHQW WKH DLPV RI LQWHUQDWLRQDO SROLF\
6LQFH WKH DQLPDOV DUH VHSDUDWHG IURP WKHLU QDWXUDO LQ IXWXUH GHYHORSPHQW L FRQVHUYDWLRQ RI ELRORJLFDO
HQYLURQPHQW DQG IHHG FDQ EH VRXUFHG JOREDOO\ GLYHUVLW\ LL IDLU DQG HTXLWDEOH DFFHVV DQG EHQHÀW
WKH VXLWDELOLW\ RI D FHUWDLQ DUHD IRU DQLPDO DQG IHHG
SURGXFWLRQ LV OHVV LPSRUWDQW WKDQ WKH LQIUDVWUXFWXUH
IRU WUDQVSRUWLQJ DQG SURFHVVLQJ IHHG DQG DQLPDOV
7KHDQLPDOEUHHGVDQGWKHEDUQVIRULQGXVWULDODQLPDO
SURGXFWLRQKDYHDOVREHFRPHJOREDOO\VWDQGDUGL]HG
$V D UHVXOW QRUWKHUQ )UDQFH QRUWKHUQ *HUPDQ\
'HQPDUNDQGWKH1HWKHUODQGVZLWKWKHLUSUR[LPLW\WR
5RWWHUGDP DV WKH ODUJHVW SRUW IRU UHFHLYLQJ LPSRUWV
VKDULQJRIELRORJLFDOGLYHUVLW\DQGLLLWKHVXVWDLQDEOH
XVH RI DQLPDO DQG SODQW JHQHWLF UHVRXUFHV DQG WKHLU
KDELWDWV$VZLOGOLIHDQGZLOGSODQWVQHHGWKHLUVSHFLÀF
HQYLURQPHQWVKDELWDWV SODQWV DQG OLYHVWRFN EUHHGV
QHHGD´FXOWXUHGKDELWDWµRIZKLFKWKH\DUHDSDUWDQG
WKXV LQÁXHQFH DQG DUH LQÁXHQFHG E\ WKDW KDELWDW ,I
WKH JHQHWLF UHVRXUFHV RI DQLPDOV DQG SODQWV DUH QRW
XVHGWKH\GLVDSSHDUDVSDUWRIWKHZKROHV\VWHPDQG
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW
FDQ QR ORQJHU SOD\ WKHLU SDUW LQ WKHLU V\VWHP $JUR
ELRGLYHUVLW\VKRXOGEHXVHGLQDZD\WKDWGHYHORSVLW
IXUWKHUUDWKHUWKDQEHLQJ´XQGHUXWLOL]HGµDVDWSUHVHQW
DQGWKHUHIRUHULVNLQJGLVDSSHDUDQFH
'5LVNVDVVRFLDWHGZLWKVHOHFWLYH
EUHHGLQJIRUKLJKHUSURGXFWLYLW\
$OWKRXJK VHOHFWLRQ LV DLPHG DW KLJK SHUIRUPDQFH
LQ ERWK DQLPDO DQG FURS EUHHGLQJ WKHUH LV D PDMRU
GLVWLQFWLRQEHWZHHQWKHWZR$FHUWDLQDQGLQFUHDVLQJ
SURSRUWLRQ RI FURSV VXFK DV YHJHWDEOHV DUH JURZQ
LQ JUHHQKRXVHV RU XQGHU SODVWLF IRLO IRU FRPPHUFLDO
SXUSRVHV+RZHYHUWKHYDVWPDMRULW\RIFURSVDUHVWLOO
SODQWHGLQWKHRSHQDQGDUHH[SRVHGWRWKHYDJDULHV

EUHG IRU PD[LPL]LQJ PLON SURGXFWLRQ *HQHUDOO\ KLJK
H[WHUQDO LQSXW V\VWHPV DLP DW PLQLPL]LQJ WKH HQHUJ\
ORVVHVRIDQLPDOERGLHVFDXVHGE\SK\VLFDOPRYHPHQW
DQGDGDSWDWLRQWRFKDQJHVLQWHPSHUDWXUHDQGIHHG
7KLV RVWHQVLEO\ UHGXFHV WKH HQHUJ\ FRQVXPSWLRQ
RI ERG\ IXQFWLRQV DQG PD[LPL]HV WKH SURGXFWLRQ
RI DQLPDO SURGXFWV 7KHVH FRQVLVWHQWO\ UHVWULFWLYH
FRQGLWLRQV DUH D PDMRU IDFWRU WKDW FRQWULEXWHV WR WKH
EUHHGLQJ RI XQLIRUP DQLPDOV DQG WKHLU VHOHFWLRQ IRU
KLJKSHUIRUPDQFH
$VDUHVXOWWKHÁH[LEOHDGDSWLYHFDSDFLW\RIDQLPDOV
WR FKDQJLQJ DQG GLYHUJHQW SURGXFWLRQ FRQGLWLRQV
KDV EHHQ UHSODFHG E\ LQÁH[LEOH VWDWLF DQG ORFDWLRQ
VSHFLÀF EHKDYLRXU $Q H[WUHPH H[DPSOH LV WKH XVH
RI VWDQGDUGL]HG FDJHV IRU K\EULG KHQV ZKHWKHU LQ
RI WKH ZHDWKHU XQOLNH DQLPDOV 6LQFH WKH V
&DOLIRUQLD +RQJ .RQJ 1RUZD\ RU 2PDQ 7KH OLJKW
DQLPDO SURGXFWLRQ E\ LQFUHDVLQJO\ UHO\LQJ RQ DQLPDO
DQG WHPSHUDWXUH LQ WKH VKHGV ZKHUH WKH FDJHV DUH
IHHGDQGWKHLULPSRUWVV\QWKHWLFJURZWKKRUPRQHV
NHSW DORQJ ZLWK WKH FRQFHQWUDWHG IHHG DQG OLPLWHG
YLWDPLQV DPLQR DFLGV DQG PLQHUDO VXSSOHPHQWV
SK\VLFDO PRYHPHQW DUH DOO GHVLJQHG WR HQVXUH
KDV EHFRPH OHVV GHSHQGHQW RQ ORFDWLRQ ,GHO DQG
PD[LPXP DQG VWDQGDUGL]HG HJJ SURGXFWLRQ
3HWVFKRZ  $ JURZLQJ QXPEHU RI FKLFNHQV
SLJVDQGLQFUHDVLQJO\FDWWOHDUHUDLVHGLQDZD\WKDW
FRPSOHWHO\ VKLHOGV WKHP IURP WKH HIIHFWV RI WKH VXQ
DQGWKHZHDWKHU
%UHHGLQJ LQFUHDVLQJO\ RYHUEXUGHQV DQLPDOV WKDW
KDYH EHHQ VHOHFWHG WR PD[LPL]H WKHLU SURGXFWLRQ
)RU H[DPSOH KHQV WKDW DUH EUHG WR PD[LPL]H HJJ
SURGXFWLRQ JHQHUDWH DERXW  HJJV SHU DQQXP
FKLFNHQV VHOHFWHG IRU PHDW SURGXFWLRQ UHDFK WKHLU
VODXJKWHUZHLJKWDIWHUOHVVWKDQÀYHZHHNVRILQWHQVLYH
UDLVLQJ \RXQJ SLJV OHVV WKDQ VL[ PRQWKV ROG DUH
VODXJKWHUHGZKHQWKH\UHDFKDERXWNJDQGVRPH
*HQHUDOO\ WKH DGDSWDWLRQ LV DFKLHYHG DW WKH FRVW RI
DGDSWLYH FDSDFLW\ WKH DQLPDOV KDYH IHZ UHVHUYHV WR
UHVSRQG WR FKDQJLQJ HQYLURQPHQWDO FRQGLWLRQV VXFK
DV YDULDWLRQV LQ WHPSHUDWXUH IHHG RU VWUHVV IURP
WUDQVSRUW 'HVSLWH WKLV EHLQJ FRPPRQ NQRZOHGJH
WKLVVWUHVVIURPEUHHGLQJLVGHDOWZLWKQRWE\FKDQJHV
LQ EUHHGLQJ SUDFWLFHV LQFOXGLQJ EUHHGLQJ JRDOV EXW
RQO\ E\ FKDQJLQJ WKH UDLVLQJ PHWKRGV FKLFNHQV·
EHDNVDQGSLJV·WDLOVDUHWULPPHGDQGWKHDQLPDOVDUH
RIWHQKHOGLQVWUHVVUHGXFLQJGLPPHGOLJKWLQRUGHUWR
UHGXFHWKHH[WHQWDQGFRQVHTXHQFHVRIFDQQLEDOLVP
DPRQJWKHDQLPDOVWKDWUHVXOWVIURPHQKDQFHGVWUHVV
FRZVDUHEUHGWRPD[LPL]HPLONSURGXFWLRQGHOLYHULQJ &RPSDVVLRQ LQ :RUOG )DUPLQJ D ,Q DGGLWLRQ
RYHU  OLWUHV GXULQJ RQH ODFWDWLRQ SHULRG DORQH DQWLELRWLFV DUH LQFUHDVLQJO\ XVHG WR WUHDW WKH JUHDWHU
PRVWRIWKHPGRQRWJHWROGHUWKDQÀYH\HDUVEHFDXVH LQFLGHQFH RI LOOQHVV DPRQJ DQLPDOV UHVXOWLQJ IURP
RIWKHVHH[FHVVLYHSHUIRUPDQFHUHTXLUHPHQWV0DQ\ KLJKSHUIRUPDQFHEUHHGLQJ
RIWKHVHDQLPDOVVXIIHUIURP´RFFXSDWLRQDOµGLVHDVHV
7KH GHYHORSPHQW RI D VROLG LPPXQH V\VWHP LQ
VXFK DV LQÁDPPDWLRQ RI WKH IDOORSLDQ WXEHV LQ KHQV
DQLPDOVZKLFKLVVRLPSRUWDQWIRURSHQDLUUHDULQJRI
XGGHU LQÁDPPDWLRQ RI FRZV RU SUREOHPV ZLWK MRLQWV
DQLPDOVUHFHLYHVOLWWOHDWWHQWLRQXQGHUVXFKFRQGLWLRQV
LQSLJVKHQVDQGFDWWOHFDXVHGE\H[FHVVLYHO\UDSLG
%HVLGHVWKHJUHDWHUVXVFHSWLELOLW\WRLOOQHVVLQDQLPDOV
ZHLJKW JDLQ VHH DOVR WKH FRPPHQWDU\ RQ DQLPDO
WKH WDUJHWHG VHOHFWLRQ IRU PD[LPXP SHUIRUPDQFH
ZHOIDUHLVVXHVRI'·6LOYDLQWKLVFKDSWHU
7KH WHQHW WKDW ´SHUIRUPDQFH LV DQ H[SUHVVLRQ RI
JRRGKHDOWKµLVQRORQJHUYDOLG,QGHHGIRUFLQJWKHLU
HQKDQFHG SHUIRUPDQFH FDXVHV DQLPDO VWUHVV DQG
UDLVHVRWKHUDQLPDOSURWHFWLRQDQGZHOIDUHLVVXHV$V
WKHSHUIRUPDQFHRIIHPDOHDQLPDOVGLUHFWO\FRUUHODWHV
ZLWK WKH WDUJHWHG VHOHFWLRQ LQ EUHHGLQJ IDWWHQLQJ
SHUIRUPDQFHGHFOLQHVDQGZLWKLWWKHSHUIRUPDQFHRI
´EXUQRXWµLQSRXOWU\SLJVDQGFDWWOHIRUPDVWUHVXOWLQJ PDOHDQLPDOV)RUH[DPSOHWKHIDWWHQLQJRIEURWKHUV
LQDVKRUWOLIHVSDQGDLU\DQGUHTXLULQJWKHIUHTXHQW RIHJJSURGXFLQJKHQVLVFRQVLGHUHGXQHFRQRPLFDO
DGPLQLVWHULQJ RI GUXJV VXFK DV DQWLELRWLFV DQG $V D UHVXOW LQ WKH (8 PRUH WKDQ  PLOOLRQ PDOH
DQDOJHVLFV ,Q DGGLWLRQ KRUPRQHV DUH EHLQJ ZLGHO\ FKLFNHQVDUHNLOOHGHDFK\HDUDVVRRQDVWKH\KDWFK
XVHGWRRYHUFRPHIHUWLOLW\SUREOHPVRIFRZVWKDWDUH 6LPLODUO\ LQ WKH 8QLWHG .LQJGRP IRU LQVWDQFH PDOH
 75$'($1'(19,5210(175(9,(:

FDOYHVRIEUHHGVWKDWDUHVHOHFWHGIRUPD[LPL]LQJPLON (7KHSXVKIRUELRVHFXULW\SRVHVDWKUHDW
SHUIRUPDQFH DUH NLOOHG ² VRPH  HDFK \HDU WRDQLPDODQGFRQVXPHUSURWHFWLRQ
:HHNV
,JQRULQJ WKH DQLPDO KHDOWK DQG ZHOIDUH LVVXHV
DVVRFLDWHGZLWKWKLVGHYHORSPHQWJHQHWLFHQJLQHHULQJ
KDV EHHQ XVHG IRU GHFDGHV WR PD[LPL]H DQLPDO
SHUIRUPDQFH $QG LQ VSLWH RI H[WHQVLYH SXEOLF DQG
SULYDWH UHVHDUFK RQ JHQHWLF PDQLSXODWLRQ RYHU WKH
SDVW  \HDUV XQWLO WRGD\ QR WUDQVJHQLF DQLPDOV DUH
XVHG IRU FRPPHUFLDO DJULFXOWXUH SXUSRVHV RZLQJ WR
VLJQLÀFDQW ELRORJLFDO DQG WHFKQLFDO SUREOHPV 7KHQ
2YHUWKHSDVWIHZGHFDGHVWKHLPPXQHV\VWHPKDV
LQFUHDVLQJO\ EHHQ SHUFHLYHG DV D PHUH SURWHFWLRQ
V\VWHP SULPDULO\ DJDLQVW EDFWHULD UDWKHU WKDQ DV
DQ LQWHUIDFH EHWZHHQ WKH ZRUOGV RI PLFUR DQG
PDFURRUJDQLVPV $V D UHVXOW WZR IDFWV KDYH EHHQ
RYHUORRNHGEDFWHULDDUHDQLQGLVSHQVDEOHFRPSRQHQW
RI RXU LPPXQH V\VWHP DQG EDFWHULD KDYH H[LVWHG
PXFKORQJHURQRXUSODQHWWKDQKXPDQVVRWKDWRXU
GHYHORSPHQW RYHU PLOOLRQV RI \HDUV KDV EHHQ PRUH
 DQG  $V HDUO\ DV WKH PLGV VRPH ZLWKUDWKHUWKDQDJDLQVWEDFWHULD
UHVHDUFKHUV HQYLVDJHG WKH WHFKQRORJ\OLQNHG IDLOXUH
6LQFHWKHLPPXQHV\VWHPOLQNVXVWRRXUHQYLURQPHQW
RI WUDQVJHQLF PDQLSXODWLRQ 7KLV IDLOXUH EHFDPH WKH
UHDFWLQJ WR HDFK SDWKRJHQLF SUREOHP E\ HQKDQFLQJ
HQJLQH IRU FORQLQJ UHVHDUFK 7KH REMHFWLYH ZDV WR
FORQH WUDQVJHQLF LQGLYLGXDOV LQ WKRVH H[FHSWLRQDO
FDVHVZKHUHWKH\KDGGHVLUDEOHSURSHUWLHVDQGQRRU
IHZ XQLQWHQGHG SUREOHPV <HW FORQLQJ WRR KDV EHHQ
UHODWLYHO\XQVXFFHVVIXOLQWKHSDVW\HDUVZLWKWKH
UDUHVXFFHVVHVGXHPDLQO\WRFRLQFLGHQFH
2QO\DIHZYLDEOHDQLPDOVKDYHEHHQSURGXFHGXVLQJ
WKH´'ROO\PHWKRGµ$FFRUGLQJWRWKH(XURSHDQ)RRG
VWHULOLW\E\DWWHPSWLQJWRHUDGLFDWHDOOPLFURRUJDQLVPV
SRVHVDULVNWRRXUIXWXUHGHYHORSPHQW7KXVWKHEHOLHI
WKDW WKLV VWUDWHJ\ HQKDQFHV VHFXULW\ ² DOVR FDOOHG
ELRVHFXULW\²LVDIDOODF\,WPD\ZRUNLQVRPHLQGLYLGXDO
FDVHV EXW LW LQFUHDVHV WKH LQKHUHQW ULVNV DQG PD\
FRPSRXQGIXWXUHSUREOHPV,QSDUWLFXODUWKHUHJXODU
DQGH[WHQVLYHXVHRIDQWLELRWLFVDQGGLVLQIHFWDQWVIRU
KXPDQ DQG DQLPDO KHDOWK XQDYRLGDEO\ OHDGV WR WKH
6DIHW\$XWKRULW\()6$´7KHRYHUDOOVXFFHVV
UDWH RI WKH FORQLQJ SURFHGXUH LV VWLOO ORZ DQG GLIIHUV
JUHDWO\ EHWZHHQ VSHFLHV 7KH RYHUDOO VXFFHVV UDWH
H[SUHVVHGDVWKHSHUFHQWDJHRIYLDEOHRIIVSULQJERUQ
IURPWUDQVIHUUHGHPEU\RFORQHVUDQJHVDSSUR[LPDWHO\
IURP  WR   GHSHQGLQJ RQ WKH VSHFLHVµ 2I WKH
VXUYLYLQJ FORQHG DQLPDOV ´'ROO\µ UHPDLQHG D XQLTXH
VSHFLPHQ7KHKRSHWKDWZKROHVWDEOHVFRXOGEHÀOOHG
ZLWK DQLPDOV FORQHG IURP RQH LQGLYLGXDO LQ RUGHU WR
DFKLHYHDQLGHQWLFDOIDWWHQLQJUHVXOWZLWKDVWDQGDUGDQG
HFRQRPLFDOIHHGLQJDQGWUHDWPHQWUHJLPH²DKRSHRI
XQOLPLWHG PDVV LQGXVWULDO SURGXFWLRQ ² KDV UHPDLQHG
D GLVWDQW GUHDP ,Q DQ\ FDVH VDPHQHVV LQ WHUPV RI
GHVLUDEOHIDWWHQLQJDQGRWKHUSHUIRUPDQFHVZRXOGOHDG
WRJUHDWHUYXOQHUDELOLW\WRVLFNQHVVDQGFRQWDJLRQ
$OUHDG\WKHFXUUHQWSUDFWLFHRIWKHXVHRIRQO\DIHZ
FRPPHUFLDO DQLPDO UDFHV DQG K\EULGV IRU LQGXVWULDO
OLYHVWRFN SURGXFWLRQ LV OHDGLQJ WR D ORVV RI JHQHWLF
GLYHUVLW\ DQG FDUULHV WKH ULVN WKDW DQLPDOV DUH PRUH
YXOQHUDEOH WR LQIHFWLRXV GLVHDVHV DQG SHVWV 7KLV
LQWHUUHODWLRQVKLS KDV EHHQ DQDO\VHG DW OHQJWK E\ DQ
LQWHUQDWLRQDO WHDP RI UHVHDUFKHUV 0XLU *DQH DQG
HPHUJHQFHRISDWKRJHQVZLWKKLJKHUUHVLVWDQFHDQG
LQIHFWLRQSRWHQWLDO
%\ ZD\ RI LOOXVWUDWLRQ WKH EDFWHULXP 3VHXGRPRQDV
DHUXJLQRVD ZKLFK LV UHVLVWDQW WR PDQ\ DQWLELRWLFV
FDQ VXUYLYH GLVLQIHFWDQWV DQG HYHQ WKULYHV RQ
K\JLHQH SURGXFWV 6XFK H[WUHPHV KDYH EHHQ NQRZQ
IRU GHFDGHV DV ´KRVSLWDO JHUPVµ EHFDXVH WKH\
KDYH PXVKURRPHG LQ KRVSLWDOV 7KH SULQFLSOH LV
WKH VDPH WKH XQLQWHQWLRQDO VHOHFWLRQ RI PRUH DQG
PRUH GDQJHURXV JHUPV 7KH PRUH UHVLVWDQW D JHUP
DOUHDG\LVWRWUHDWPHQWZLWKDQWLELRWLFVWKHJUHDWHUWKH
OLNHOLKRRGWKDWLWZLOOVXUYLYHWKHQH[WZDYHRIWUHDWPHQW
ZLWKDQWLELRWLFVDQGGLVLQIHFWDQWV
$JDLQVW WKLV EDFNJURXQG ´ELRVHFXULW\µ WKURXJK
UHSHDWHG XVH RI QHZ DQWLELRWLFV DQG GLVLQIHFWDQWV
LV QRW RQO\ QR VROXWLRQ EXW LQ WKH ORQJ WHUP LW LV
DOVR KLJKO\ ULVN\ +XPDQV DQG DQLPDOV QHHG WKH
FRQWDFW ZLWK PLFURRUJDQLVPV IRU VWUHQJWKHQLQJ
WKHLU LPPXQH V\VWHP LQ SDUWLFXODU DW WKH MXYHQLOH
VWDJH 7KXV RVWHQVLEOH ´ELRVHFXULW\µ LQ LQWHQVLYH
OLYHVWRFN SURGXFWLRQ LV D SUREOHP LQ WKDW LW KDPSHUV
WKHGHYHORSPHQWRIDKHDOWK\LPPXQHV\VWHPDQGLW
=KDQJ:LWKUHJDUGWRFKLFNHQVIRUH[DPSOH VWUHQJWKHQVWKHUHVLVWDQFHRIJHUPVDQGSDWKRJHQV
WKHÀQGLQJVFRQÀUPWKDWDOPRVWDOODQLPDOVUDLVHGIRU PDNLQJ LW LQFUHDVLQJO\ GLIÀFXOW IRU WKH FKHPLFDO DQG
SRXOWU\PHDWVRPHELOOLRQZRUOGZLGHDUHEDVHGRQ SKDUPDFHXWLFDOLQGXVWU\WRFRQWDLQWKRVHJHUPVDQG
RQO\WKUHHUDFHVDQG KHQVUDLVHGIRU PD[LPXPHJJ SDWKRJHQV 7KH HYROXWLRQDU\ G\QDPLFV RI JHUPV
SURGXFWLRQVWHPIURPRQO\RQHUDFH DOORZV WKHP WR TXLFNO\ DGMXVW WR QHZ DQWLELRWLFV RU
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

%R[5HDVRQVIRUWKHLQVXIÀFLHQWSHUFHSWLRQRIWKHSRWHQWLDORIVXVWDLQDEOHDJULFXOWXUHWRFRQWULEXWHWRIRRGVHFXULW\
DQGVXVWDLQDEOHUXUDOGHYHORSPHQW

‡ 7KHGHVWUXFWLRQZDVWHDQGFRQWDPLQDWLRQRIUHVRXUFHVDVVRFLDWHGZLWKWKHLQGXVWULDOL]DWLRQRIDJULFXOWXUHKDYHFUH
DWHGDPLVFRQFHSWLRQWKDWDJULFXOWXUHDOZD\VDQGJHQHUDOO\SRVHVDSUREOHP7KXVLWSURYHVWREHH[WUHPHO\GLIÀFXOW
WRSHUFHLYHWKHSRWHQWLDOIRUVXVWDLQDEOHDJULFXOWXUDOGHYHORSPHQWLQJUDVVODQGOLYHVWRFNDQGFURSODQGPDQDJHPHQW
‡ )RUGHFDGHVPRUHDQGPRUHLQWHQVLÀHGDJULFXOWXUDOSUDFWLFHVKDYHGDPDJHGWKHHQYLURQPHQW7KXVRQHRIWKHPDLQ
REMHFWLYHVRIQDWXUHSURWHFWLRQKDVEHHQVHHQDVWDNLQJODQGDZD\IURPDQ\NLQGRIDJULFXOWXUDOSURGXFWLRQ7KLVKDV
LQGLUHFWO\DQGXQZLWWLQJO\OHGWRPRUH´FROODWHUDOGDPDJHµE\FUHDWLQJJUHDWHUSUHVVXUHIRUIXUWKHULQWHQVLI\LQJSURGXF
WLRQRQWKHUHPDLQLQJDJULFXOWXUDOODQG,WKDVEHHQEDVHGRQWKHSHUFHSWLRQWKDWWKHPRUHLQWHQVLYHO\H[LVWLQJODQGLV
XVHGWKHJUHDWHUZLOOEHWKHDYDLODEOHDUHDIRUQDWXUHFRQVHUYDWLRQ,WRYHUORRNVWKHIDFWWKDWLWLVLQGXVWULDODJULFXOWXUH
WKDWKDVH[HUWHGSUHVVXUHRQUHVRXUFHVDQGODQGXVHDQGOHGWRZLGHVSUHDGFRQWDPLQDWLRQRIODQGLQJHQHUDO
‡ 7KHDYDLODELOLW\RIDPSOHUHODWLYHO\LQH[SHQVLYHHQHUJ\DQGV\QWKHWLFIHUWLOL]HUVKDVGLVWUDFWHGDWWHQWLRQIURPWKHLP
SRUWDQFHRIVRLOIHUWLOLW\DVWKHPRVWEDVLFDQGSUHFLRXVUHVRXUFHRIDJULFXOWXUHDQGLWVORVVWKURXJKHURVLRQ5HODWHG
WRWKDWWKHSRWHQWLDORIVXVWDLQDEOHJUDVVODQGPDQDJHPHQWDQGSDVWRUDOLVPIRUJOREDOIRRGVHFXULW\VRLODQGFOLPDWH
SURWHFWLRQ KDV EHHQ DQG VWLOO LV XQGHUHVWLPDWHG DQG WKHUHIRUH WKH ORQJWHUP GDQJHUV RI FRQYHUWLQJ SHUPDQHQW
JUDVVODQGWRRWKHUXVHVDUHRYHUORRNHG
‡ 7KHLQKHUHQWJURZWKDQGSURGXFWLYLW\SUHVVXUHRILQGXVWULDODJULFXOWXUHKDVGHYDVWDWLQJLPSDFWVRQRXUHQYLURQPHQW
DQGZHOOEHLQJDQGWKXVYLRODWHVWKHWKLUGSLOODURIWKH&%'LHWKHVXVWDLQDEOHXVHRIDQLPDODQGSODQWJHQHWLFUH
VRXUFHVDQGWKHLUKDELWDWV
‡ $Q\DWWHPSWDWPD[LPL]LQJVLQJOHFURS\LHOGVLVLUUHFRQFLODEOHZLWKWKHRSWLPL]DWLRQRIHFRORJLFDOVHUYLFHV<HWSXEOLF
DQGSULYDWHVXSSRUWWRVHHGVFXOWLYDWLRQSODQWSURWHFWLRQDQGIHUWLOL]DWLRQIRFXVHQWLUHO\RQVXFKD\LHOGPD[LPL]LQJ
VWUDWHJ\&RQYHUVHO\WKHPHDQVIRUH[SORULQJDQGVWXG\LQJWKHHFRV\VWHPLFSRWHQWLDORIDJULFXOWXUHDQGVSHFLÀFSUR
GXFWLRQV\VWHPVRUPHWKRGVLQGLIIHUHQWODQGVFDSHVKDYHEHHQZRHIXOO\LQDGHTXDWH
‡ 7KHHFRQRPLFLQWHUHVWVRIGLIIHUHQWHFRQRPLFDFWRUVWKDWGHULYHVLJQLÀFDQWSURÀWVIURPWKHLQGXVWULDOL]DWLRQRIDJUL
FXOWXUHLQFOXGLQJWKHXVHRIFKHPLFDOLQSXWVDUHRQHRIWKHPDLQUHDVRQVIRUWKHODFNRILPSOHPHQWDWLRQRIWKHNH\
UHFRPPHQGDWLRQV RI WKH ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG 7HFKQRORJ\ ,$$67'
QDPHO\WKHSUHYHQWLRQRIVRFLDOHQYLURQPHQWDODQGFOLPDWHGDPDJHLQWHUQDOL]DWLRQRIHQYLURQPHQWDOH[WHUQDOLWLHV
DQGDQDO\VLVDQGIXUWKHUGHYHORSPHQWRIWKHPXOWLIXQFWLRQDOLW\RIHFRV\VWHPV0F,QW\UHHWDO
DQWLYLUDOGUXJV7KLVRIWHQKDSSHQVPXFKIDVWHUWKDQ
WKHWLPHUHTXLUHGE\UHVHDUFKWHDPVWRGHYHORSQHZ
DQGHIIHFWLYHPHGLFLQHV
7KHUH VKRXOG QHYHU KDYH EHHQ D FRPSHWLWLYH UDFH
EHWZHHQ FKHPLFDO WUHDWPHQWV DQG PLFURRUJDQLVPV
DV WKH ODWWHU KDYH HYROYHG RYHU D SHULRG RI DERXW
 ELOOLRQ \HDUV 2QO\ H[FHSWLRQDOO\ DJJUHVVLYH DQG
UHVLVWDQWFDVHVDUHSHUFHLYHGE\WKHJHQHUDOSXEOLFDV
DUHDOGDQJHUEXWHYHQWKRVHFDVHVKDYHEHFRPHPRUH
IUHTXHQWRYHUWLPH(YHQVRWKHJHQHUDOWHQGHQF\DQG
WKHIDWDOO\ODWHQWGDQJHUDUHEHLQJLJQRUHG
)'HIRUHVWDWLRQDQGDQLPDOIHHG
SURGXFWLRQ
%R[  OLVWV VRPH H[SODQDWRU\ IDFWRUV IRU WKH ODFN RI
FRQYHUWHGWRODQGIRUSDVWXUH,QUHDOLW\KRZHYHUWKH
FXWWLQJRIIRUHVWVLVRIWHQWULJJHUHGE\DVHTXHQFHRI
LQFRPHJHQHUDWLQJF\FOHVRIZKLFKSDVWXUHIRUFDWWOH
LV RQH &RQWUDU\ WR SUDLULHV DQG SDPSDV WKH VRLOV
RI WURSLFDO UDLQIRUHVWV KDYH D ORZHU FRQWHQW RI JUDVV
VHHGV DQG DUH OHVV IHUWLOH EHFDXVH RI WKH ZDVKLQJ
RXWRIQXWULHQWV7KLVLVZK\GHIRUHVWHGDUHDVWHQGWR
EHXVHGVRPHWLPHVRQO\WHPSRUDULO\DVSDVWXUHDQG
WKHUHDIWHUIRUJURZLQJFURSVIRUIRGGHUSURGXFWLRQDQG
LQFUHDVLQJO\ IRU ELRIXHO SURGXFWLRQ 7KH H[SDQVLRQ
RIDJURIXHOSURGXFWLRQDQGUHODWHGODQGJUDEELQJRIIHU
WKHRSSRUWXQLW\WRUDLVHWKHSXEOLF·VDZDUHQHVVRIWKH
HFRORJLFDO DQG VRFLDO FRQVHTXHQFHV RI DQLPDO IHHG
SURGXFWLRQRQIRUPHUIRUHVWDQGSDVWXUHODQG
7KURXJKWKHSUHVVLQJRIVR\DERXWSHUFHQWRIRLO
FDQEHJHQHUDWHGLQYROXPHWHUPVDQGSHUFHQWLV
DZDUHQHVV RI WKH SRWHQWLDO RI VXVWDLQDEOH JUDVVODQG OHIW RYHU DV FDNH EUXLVHG JUDLQ )XWXUH GLVFXVVLRQV
PDQDJHPHQWZLWKUXPLQDQWVIRUDFKLHYLQJIRRGVHFXUL RQ VR\ FXOWLYDWLRQ VKRXOG LQFOXGH DQ XQGHUVWDQGLQJ
W\DQGVXVWDLQDEOHGHYHORSPHQW7KHUHLVDZLGHVSUHDG RI WKLV FRPPHUFLDOO\ DWWUDFWLYH GXDO FKDUDFWHU RI
EHOLHIWKDWUDLQIRUHVWVDUHEHLQJGHVWUR\HGRQO\WREH VR\EHDQVUHODWLYHWRRWKHUOHJXPLQRXVFURSVVXFKDV
 75$'($1'(19,5210(175(9,(:

UDSH VHHGV $SDUW IURP DWWUDFWLYH SULFHV LQ GLIIHUHQW EHWZHHQ FDWWOH UDLVLQJ DQG YHKLFXODU WUDIÀF FDWWOH
PDUNHWVLWLVDOVROLNHO\WKDWGHPDQGLQWKHWKUHHPDUNHW WHQG WR IDUH EDGO\ $V DQ DSSDUHQWO\ ORJLFDO UHVXOW RI
VHJPHQWV²VR\FDNHIRUDQLPDOIHHGDQGVR\RLOIRU VXFK FRPSDULVRQV HYHQ PRUH LQWHQVLYH OLYHVWRFN
YHJHWDEOHRLODQGELRGLHVHO²ZLOOLQFUHDVHIXUWKHUDQG SURGXFWLRQ LV EHLQJ DGYRFDWHG LQ SDUWLFXODU WKDW RI
WKXV SURYLGH SURGXFHUV DQG PLOOLQJ FRPSDQLHV ZLWK
JUHDWHUÁH[LELOLW\0RUHRYHUVR\FDNHIRUDQLPDOIHHG
SURYLGHV DSSUR[LPDWHO\ WKH VDPH LQFRPH DV WKH 
SHUFHQWVKDUHRIWKHVR\RLOXVHGDVYHJHWDEOHRLODQG
ELRGLHVHO
$V LV WKH FDVH IRU SHUPDQHQW JUDVVODQG LQ PRVWO\
FKLFNHQV DQG SLJV :UJHU  %XW WKLV QHJOHFWV
WRWDNHDFFRXQWRIFDUERQDQGQLWURJHQF\FOHVDQGLQ
SDUWLFXODUWKHSRVLWLYHHIIHFWVRIVXVWDLQDEOHJUDVVODQG
PDQDJHPHQWIRUWKHFOLPDWHDVDZKROH7KHUHODWHG
LPSRUWDQFHRIJUDVVODQGLVEDVHGRQWKHYDVWDUHDLW
FRYHUVDFFRXQWLQJIRUSHUFHQWRIWKHJOREDOODQG
VXUIDFH6XVWDLQDEOHSDVWXUHPDQDJHPHQWHQKDQFHV
QRQUDLQIRUHVWV WRR WKH ODUJHVW VKDUH RI WKH VWRUHG
VRLOIHUWLOLW\OLQNHGWRFDUERQULFKKXPXVDQGWKHUHE\
FDUERQFDQEHIRXQGLQWKHVRLO%HFDXVHRIWKHYLVLEOH
 WRQ RI KXPXV UHPRYHV  WRQV RI &2 IURP WKH
DERYHJURXQGELRPDVVLWLVJHQHUDOO\SHUFHLYHGWKDW
DWPRVSKHUH DV HDFK WRQ RI KXPXV FRQWDLQV PRUH
IRUHVWV DUH PRUH LPSRUWDQW IRU FDUERQ VWRUDJH WKDQ
WKDQNJRIFDUERQ$SURPLQHQWH[DPSOHLQWKLV
JUDVVODQGV ZKHQ LQ IDFW JUDVVODQGV DUH JOREDOO\
UHJDUG LV JUD]LQJ ZKLFK DOORZHG SUDLULH VRLOV RYHU
DV LPSRUWDQW ,Q DGGLWLRQ WKHUH DUH WZR GLVWLQFWLRQV
PLOOHQQLDWRUHDFKDGHSWKRIVHYHUDOPHWUHV
EHWZHHQ JUDVVODQGV DQG IRUHVWV XQOLNH SHUPDQHQW
JUDVVODQGV WKH VWRUDJH RI FDUERQ LQ IRUHVWV LV
:K\GRFRZVJHQHUDWHPHWKDQHZKLFKKDVDJOREDO
VXEMHFW WR VDWXUDWLRQ DQG LQ FRQWUDVW WR SHUPDQHQW
ZDUPLQJSRWHQWLDOWLPHVKLJKHUWKDQ&2"
JUDVVODQGV FRPPHUFLDOO\ XVHG IRUHVWV ZLOO LQ WKH
ORQJ WHUP DOZD\V EH KDUYHVWHG DQG ODUJH SDUWV RI &RZVFDQRQO\GLJHVWJUDVVWKURXJKWKHV\PELRVLVRI
WKHFDUERQVWRUHGLQWKHELRPDVVRIWKHVRLOVZLOOHQG
XSEHLQJUHOHDVHGLQWRWKHDWPRVSKHUH,QVWHDGVRLOV
XQGHUJUD]HGSDVWXUHVDUHDOZD\VFRYHUHG
**UDVVODQGVDQGUXPLQDQWVDQH[DPSOH
RIPLVFRQFHSWLRQVDQGRSSRUWXQLWLHV
&DWWOH UHDULQJ LV DQ LOOXVWUDWLYH H[DPSOH RI KRZ QRQ
WUDQVSDUHQWDQGLOORJLFDOV\VWHPERXQGDULHVFDQOHDG
WRZURQJFRQFOXVLRQVLQFOXGLQJWKHPLVFRQFHSWLRQRI
WKHFRZEHLQJDPDMRUFRQWULEXWRUWRFOLPDWHFKDQJH
)LUVW WKHUH LV WKH LVVXH RI DQ H[FHVVLYHO\ JHQHULF
DQDO\VLV RI DQLPDO KXVEDQGU\ ZKLFK GRHV QRW
GLVWLQJXLVK EHWZHHQ GLIIHUHQW SURGXFWLRQ V\VWHPV
,QVWHDGRIDFRPSDUDWLYHDQDO\VLVRIGDWDRIUHVRXUFH
HIÀFLHQW VXVWDLQDEOH SURGXFWLRQ RQ WKH RQH KDQG
DQG HQHUJ\LQWHQVLYH LQGXVWULDO SURGXFWLRQ RQ WKH
RWKHU YHU\ RIWHQ DYHUDJH YDOXHV DUH XVHG 6HFRQG
WKH DQDO\VLV LV PRVWO\ FRQÀQHG WR RQO\ RQH *+* ²
PHWKDQH²DQGH[FOXGHV12HPLVVLRQVPDLQO\FDXVHG
E\WKHXVHRIV\QWKHWLFQLWURJHQIHUWLOL]HUVIRULQWHQVLYH
SURGXFWLRQRIDQLPDOIHHG7KLUGDVRXQGDVVHVVPHQW
RI WKH HIIHFWV RI DJULFXOWXUDO SURGXFWLRQ RQ FOLPDWH
UHTXLUHV WDNLQJ LQWR DFFRXQW QRW RQO\ HPLVVLRQV EXW
DOVR F\FOHV DV VXVWDLQDEOH DJULFXOWXUH DQG IRUHVWU\
ELOOLRQV RI PLFURRUJDQLVPV LQ WKHLU UXPHQ SDXQFK
3DUW RI WKHVH PLFURRUJDQLVPV FDQ GHFRPSRVH
FHOOXORVH DQG OLJQLQ LQ JUDVV DQG WKXV PDNH WKH
QXWULHQWV FRQWDLQHG WKHUHLQ DYDLODEOH WR WKH FRZV
,Q WKH FRXUVH RI WKLV GLJHVWLRQ SURFHVV PHWKDQH LV
JHQHUDWHG E\ PLFURRUJDQLVPV $QG MXVW DV KXPDQV
H[KDOH &2 FRZV H[KDOH ERWK &2 DQG PHWKDQH
7KURXJKWKLVV\PELRVLVUXPLQDQWVVXFKDVFRZVGR
QRWFRPSHWHZLWKKXPDQEHLQJVIRUIRRG²DQDELOLW\
LQHYLWDEO\OLQNHGWRPHWKDQHSURGXFWLRQ
7KHH[FOXVLYHIRFXVRQPHWKDQHIURPFRZVLVVKRUW
VLJKWHG LI WKH DQDO\VLV LV FRQÀQHG WR HPLVVLRQV
DQG WKHLU SRWHQWLDO QHJDWLYH HIIHFWV 6RPH GDWD
IURP (XURSH LOOXVWUDWHV WKLV FUXFLDO SRLQW ,W LV 12
DQG QRW PHWKDQH WKDW FRQVWLWXWHV WKH ODUJHVW WKUHDW
WR FOLPDWH LQ WKH FRQWH[W RI OLYHVWRFN SURGXFWLRQ
/LYHVWRFN SURGXFWLRQ LV UHVSRQVLEOH IRU  SHU FHQW
RIDOO12HPLVVLRQVDQGSHUFHQWRIDOODPPRQLD
HPLVVLRQVLQSDUWLFXODUGXHWRLQWHQVLYHIHUWLOL]HUXVH
IRUWKHSURGXFWLRQRIDQLPDOIHHG:KHUHDVPHWKDQH
KDVDJOREDOZDUPLQJSRWHQWLDOWLPHVKLJKHUWKDQ
&2 WKH JOREDO ZDUPLQJ SRWHQWLDO RI 12 LV 
WLPHVKLJKHUWKDQWKDWRI&2,WLVDVVXPHGWKDWRQ
DYHUDJH²SHUFHQWRIFRQVXPHGQLWURJHQIHUWLOL]HUV
DUH FRQYHUWHG LQWR 12 6XWWRQ DQG %LOOHQ 
DUH WKH RQO\ HFRQRPLF DFWLYLWLHV ZLWK WKH SRWHQWLDO WR 6FKXO]HHWDO
SURYLGHQDWXUDOVLQNIXQFWLRQVFDUERQVHTXHVWUDWLRQ
$JDLQVW WKLV EDFNJURXQG EHVLGHV LWV DGYHUVH
+RZHYHU UHJDUGLQJ WKH UHOHYDQFH IRU FOLPDWH HFRORJLFDO LPSDFWV LQWHQVLYH IHHGLQJ RI OLYHVWRFN LQ
LQ WKH UHODWLYHO\ FRPPRQ HPLVVLRQ FRPSDULVRQV WKHFRQWH[WRIJOREDOKXQJHUDQGZDUPLQJKDVWKUHH
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

%R[(UURQHRXVFRQFOXVLRQVRQH[WHQVLYHDQGLQWHQVLYHOLYHVWRFNSURGXFWLRQV\VWHPVGXHWRLOOGHÀQHG
V\VWHPERXQGDULHV

,QRUGHUWRJLYHDVWURQJHULPSHWXVWRVXVWDLQDEOHSURGXFWLRQLQDJULFXOWXUDOSROLF\UHVHDUFKDQGH[WHQVLRQLQWKHIXWXUHLW
LVLPSHUDWLYHWRREMHFWLYHO\HYDOXDWHWKHGLIIHUHQWDJUDULDQV\VWHPV7RGDWHVXIÀFLHQWFRPSDUDWLYHVWXGLHVDUHODFNLQJ,Q
DGGLWLRQWKHUHDUHVLJQLÀFDQWGHÀFLHQFLHVLQWHUPVRIWKHFRPSDUDELOLW\RIGDWDDQGWKHODFNRIWUDQVSDUHQF\FRQFHUQLQJ
WKHVSHFLÀFV\VWHPERXQGDULHV7KLVRIWHQOHDGVWRGDWDQRWEHLQJFRUUHFWO\DVVLJQHGZKLFKULVNVOHDGLQJWRHUURQHRXV
FRQFOXVLRQV$SURPLQHQWH[DPSOHLQWKLVUHJDUGLVWKHVWXG\E\6WHLQIHOGHWDOZKLFKGRHVQRWGLVWLQJXLVKEH
WZHHQH[WHQVLYHDQGLQWHQVLYHSURGXFWLRQV\VWHPV,QWKDWVWXG\RQO\RQHWDEOHRQPDMRUÁX[HVRIFDUERQDVVRFLDWHGZLWK
LQWHQVLYHDQGH[WHQVLYHOLYHVWRFNSURGXFWLRQV\VWHPV$VQHUDQG$UFKHUWDEOHDWWHPSWVWRSURYLGHDVHSD
UDWHDFFRXQWRIFDUERQÁX[HVIRUHDFKV\VWHP%XWWKDWWDEOHKDVQXPHURXVDQDO\WLFDOSUREOHPVDQGJRHVVRIDUDVWR
VXJJHVWWKDWH[WHQVLYHOLYHVWRFNV\VWHPVZRXOGKDYHVLJQLÀFDQWO\KLJKHUQHJDWLYHFOLPDWHHIIHFWVWKDQLQWHQVLYHV\VWHPV
,PSRUWDQWFDUERQVWUHDPVXQGHULQWHQVLYHDQGH[WHQVLYHOLYHVWRFNSURGXFWLRQV\VWHPV

&DWHJRU\ ([WHQVLYH ,QWHQVLYH

&2HPLVVLRQVIURPSURGXFWLRQ *W *W
1LWURJHQIHUWLOL]HUVIRUDQLPDOIHHGFURSSURGXFWLRQ 
)XHOIRUWUDQVSRUWRIIHHGWRSURGXFWLRQIDFLOLW\ 
)XHOIRUWUDQVSRUWRIDQLPDOVLQWKHSURGXFWLRQIDFLOLW\  
3ORXJHGFURSODQG 
8QSORXJKHGFURSODQG 
3URFHVVLQJRIDQLPDOV 
)XHOIRUWUDQVSRUWRXWVLGHWKHSURGXFWLRQIDFLOLW\  
(FRORJLFDOO\UHODWHG&2HPLVVLRQV
'HVHUWLÀFDWLRQ 
'HIRUHVWDWLRQLQWKHWURSLFV 
6SUHDGLQJRIEXVK\DUHDV 
0HWKDQHHPLVVLRQVRIOLYHVWRFN
'LJHVWLRQRIUXPLQDQWV  
/LTXLGDQGVROLGPDQXUH  

7RWDO&2HPLVVLRQV  
7RWDOPHWKDQHHPLVVLRQV  
7RWDO*+*HPLVVLRQVLQ&2HTXLYDOHQW 
6RXUFH$VQHUDQG$UFKHUWDEOH
)LUVWDQGIRUHPRVWLWLVVXUSULVLQJWKDWWKHVXPRIHPLVVLRQVIURPH[WHQVLYHOLYHVWRFNSURGXFWLRQV\VWHPVLVHVWLPDWHGWR
EHJLJDWRQQHV*WDQGWKXVLVKLJKHUWKDQWKHVXPRIHPLVVLRQVRIWKHLQGLYLGXDOLWHPV$QH[SODQDWLRQIRUWKLVLVQRW
SURYLGHG(VWLPDWHVIRUWRWDOHPLVVLRQVIURPLQWHQVLYHSURGXFWLRQDUHQRWSURYLGHGDWDOO
2XUFULWLFLVPUHJDUGLQJWKLVDFFRXQWLQJDSSURDFKFRQFHUQVLQSDUWLFXODUWKHDVVLJQPHQWPHWKRGRORJ\
‡ (PLVVLRQVFDXVHGE\GHIRUHVWDWLRQDUHHQWLUHO\DFFRUGHGWRJUDVVODQGPDQDJHPHQWLHWRH[WHQVLYHPDQDJHPHQW
PHWKRGV+RZHYHULQUHDOLW\SDVWXUHXVDJHLVRIWHQRQO\DQLQWHULPXVHRIWKHFRQYHUVLRQRIODQGWKDWLVHYHQWXDOO\
FKDQJHG WR FURSODQG QXWULHQWSRRU VRLOV RI WURSLFDO IRUHVWV DUH FRQYHUWHG WR FURSODQG UHO\LQJ RQ H[WHUQDO IHUWLOL]HU
LQSXWV7KHIDFWWKDWVR\FXOWLYDWLRQLVUHVSRQVLEOHIRUVRPHSHUFHQWRIGHIRUHVWDWLRQLVPHQWLRQHGLQWKHVWXG\·V
WH[WEXWWKHWDEOHDFFRUGVWKHVHHPLVVLRQVHQWLUHO\WRH[WHQVLYHSURGXFWLRQV\VWHPVHYHQWKRXJKVR\PHDODVDQLPDO
IHHGLVDFHQWUDOFRPSRQHQWRILQWHQVLYHSURGXFWLRQV\VWHPV
‡ $OWKRXJKDÀJXUHIRU&2HPLVVLRQVUHODWHGWRIHUWLOL]HUSURGXFWLRQIRUDQLPDOIHHGSURGXFWLRQLVSURYLGHGDQGLVUH
ODWHGWRLQWHQVLYHOLYHVWRFNSURGXFWLRQ12HPLVVLRQVDUHQRWDFFRXQWHGIRU$IRRWQRWHH[SODLQVWKDWWKRVHHPLVVLRQV
DUHH[FOXGHGEHFDXVHWKH\DUHGHDOWZLWKLQDQRWKHUFKDSWHU$OWKRXJKWKHLPSRUWDQFHRI12HPLVVLRQVLQLQWHQVLYH
V\VWHPVLVLQGHHGKLJKOLJKWHGLQWKDWRWKHUFKDSWHULWVLPSDFWRQFOLPDWHLVQRWTXDQWLÀHG
 75$'($1'(19,5210(175(9,(:

%R[FRQWLQXHG

‡ (PLVVLRQVFDXVHGE\ODQGGHJUDGDWLRQDUHRQO\FDOFXODWHGIRUH[WHQVLYHV\VWHPVZKHUHDVODQGGHJUDGDWLRQUHVXOWLQJ
IURPLQWHQVLYHDQLPDOIHHGSURGXFWLRQUHPDLQVXQDFFRXQWHGIRU
‡ 0HWKDQHHPLVVLRQVOLQNHGWRIDHFHVJHQHUDWLRQDUHFRQVLGHUHGWREHRIWKHVDPHPDJQLWXGHLQH[WHQVLYHDQGLQWHQ
VLYHV\VWHPVDOWKRXJKPHWKDQHLVQRWJHQHUDWHGLQPDQXUHXQGHUWKHDHURELFFRQGLWLRQVRIH[WHQVLYHSDVWXULQJ
$V D UHVXOW HYHQWKLV DQDO\VLV ZKLFK SXUSRUWV WRSURYLGHDQRYHUYLHZRIWKHDYDLODEOHVFLHQWLÀFNQRZOHGJHUHJDUGLQJ
LQWHQVLYHYHUVXVH[WHQVLYHSURGXFWLRQV\VWHPVFRQWDLQVVRPHVHULRXVPHWKRGRORJLFDOVKRUWFRPLQJV,WLVDSSDUHQWWKDW
WKHFRPSDUDWLYHDQDO\VLVXQGHUHVWLPDWHVWKHQHJDWLYHHQYLURQPHQWDODQGFOLPDWHLPSDFWVRILQWHQVLYHSURGXFWLRQV\V
WHPVDQGRYHUHVWLPDWHVWKRVHRIH[WHQVLYHSURGXFWLRQV\VWHPV7KLVUHQGHUVWKHUHVXOWVDQGWKHSROLF\UHFRPPHQGDWLRQV
VFLHQWLÀFDOO\TXHVWLRQDEOHD
1RWHD)RUDPRUHHODERUDWHFULWLTXHVHH,GHODQG

DGGLWLRQDODGYHUVHHIIHFWV JUDVVODQGV 6XWWL 5H\QROGV DQG %DWHOOR 
‡ /LYHVWRFN DUH FRPSHWLQJ ZLWK KXPDQV IRU IRRG
1RUPDOO\OLYHVWRFNSDUWLFXODUO\FDWWOHVKRXOGGHULYH
WKHLUIHHGIURPDJULFXOWXUDOODQGRUVRLOVWKDWFDQQRW
EHXVHGIRUGLUHFWIRRGSURGXFWLRQIRUKXPDQV2Q
WKH FRQWUDU\ FDWWOH FDQ JHQHUDWH PLON DQG PHDW
IURP JUDVV DQG WKH\ FDQ DOVR SURYLGH SURGXFWLYH
SRZHU
‡ 7KHLQWHQVLYHSURGXFWLRQRIDQLPDOIHHGKDVGLUHFW
DQGLQGLUHFWLPSDFWVRQFOLPDWHWKURXJK
*UDVVODQGV LQ VHPLDULG ]RQHV FRQWDLQ JUHHQ JUDVV
RQO\IRUDVKRUWSHULRGDIWHUWKHUDLQ\VHDVRQZKLFKLV
RWKHUZLVH FKDUDFWHULVWLF RI WKH UDLQLQWHQVLYH UHJLRQV
RIWKHZRUOG&OLPDWHH[SHUWVRIWKH*UDVVODQG&DUERQ
:RUNLQJ*URXSVWXGLHGWKHLPSRUWDQFHRIJUDVVODQGV
DV FDUERQ VLQNV DQG SXEOLVKHG FRXQWU\VSHFLÀF
LQIRUPDWLRQ RQ JUDVVODQG HFRV\VWHPV *UDVVODQG
FRYHUV D WRWDO DUHD RI  PLOOLRQ NP LH DERXW
 SHU FHQW RI WKH WRWDO ODQG VXUIDFH RI RXU SODQHW
 1LWURXV R[LGH DPPRQLD DQG &2 HPLVVLRQV :KLWH 0XUUD\ DQG 5RKZHGHU  $FFRUGLQJ WR
FDXVHGE\V\QWKHWLFQLWURJHQIHUWLOL]HUV WKH)$2JUDVVODQGDFFRXQWVIRUDERXWWKUHHTXDUWHUV
 ,QFUHDVHGPHWKDQHHPLVVLRQVOLQNHGWRWKHKXJH RIWKHELOOLRQKDRIDJULFXOWXUDOO\XVHGODQG(YHQ
VFDOH RI LQGXVWULDO OLYHVWRFN SURGXFWLRQ DQG WKH VR NQRZOHGJH DERXW LWV VSHFLÀF SURSHUWLHV IRU HDFK
H[FHVVLYHXVHRIXQQDWXUDOFRQFHQWUDWHIHHG FOLPDWLF ]RQH LV VXUSULVLQJO\ OLPLWHG $V D UHVXOW WKH
 ([FHVVLYH JHQHUDWLRQ RI DQLPDO H[FUHPHQWV SRWHQWLDOVRIJUDVVODQGVDUHJURVVO\XQGHUHVWLPDWHG
UHODWHGWRODUJHVFDOHSURGXFWLRQDQGXQQDWXUDO DQG DUH QRW SDUW RI WKH GHEDWH RQ WKH IXWXUH RI RXU
IHHGLQJ SODQHW7KLVFRXOGDQGVKRXOGFKDQJH
 +LJKHU JDV HPLVVLRQV WKURXJK WKH PL[LQJ RI
XULQHDQGIDHFHVFDXVHGE\DODFNRISDVWXULQJ 7KH JLDQW JUDVVODQGV RI WKH ZRUOG VWRUH LQ WKHLU VRLO
WKDWZRXOGDOORZQDWXUDOVHJUHJDWLRQ PRUH WKDQ D WKLUG RI WKH JOREDO FDUERQ VWRFN ,Q
‡ 7KH LQFUHDVHG XVH RI FRQFHQWUDWH IHHG GLVSODFHV VDYDQQDK VRLOV LW LV HVWLPDWHG WKDW PRUH WKDQ 
WKH FRQVXPSWLRQ RI JUDVV DQG WKHUHE\ UHPRYHV SHU FHQW RI WKH ELRPDVV FDQ EH IRXQG LQ WKH URRWV
WKHIROORZLQJSRVLWLYHHIIHFWVRISDVWXUHRQFOLPDWH 5HLFKKROI  *UDFH HW DO  +RZHYHU DV
 7KHSHUPDQHQWDQGGHQVHJUDVVFRYHUSURWHFWV JUDVVODQGVUHFHLYHOLWWOHDWWHQWLRQLWLVKLJKO\OLNHO\WKDW
VRLOVDQGSUHYHQWVWKHLUHURVLRQ WKHLU HFRORJLFDO DJULFXOWXUDO DQG FOLPDWH SRWHQWLDOV
 6XVWDLQDEOH SDVWXUH DQG JUDVVODQG DUH QRW IXOO\ SHUFHLYHG 7KH SORXJKLQJ RI JUDVVODQG
PDQDJHPHQW SURPRWHV WKH ELRORJLFDO DFWLYLW\ FDXVHVKXJHORVVHVRIFDUERQDQGELRPDVVFRQWDLQHG
SKRWRV\QWKHVLV RI JUDVV DQG LWV URRWV ,Q LQWKHVRLO²LQPDQ\UHJLRQVXSWRDWKLUGRIWKHVWRUHG
DGGLWLRQ PLFURRUJDQLVPV SDUWLFXODUO\ ZRUPV
FRQYHUW ELRPDVV LQWR KXPXV ZKLFK FRQWDLQV
RYHUSHUFHQWRIFDUERQ
DPRXQW*XRDQG*LIIRUG3RHSODXHWDO
6RIDUWKHLQFUHDVLQJGHPDQGIRUSURWHLQDQGHQHUJ\
ULFKDQLPDOIHHGIRULQGXVWULDOOLYHVWRFNSURGXFWLRQKDV
EHHQ RQH RI WKH PDLQ IDFWRUV EHKLQG WKH UHPRYDO RI
WURSLFDO UDLQIRUHVWV DQG WKH FRQYHUVLRQ RI JUDVVODQG
+*UDVVODQGVRIWKHZRUOG WR FURSODQG 'RQ HW DO  $GGLWLRQDOO\ WKH
,QWKH)RRGDQG$JULFXOWXUH2UJDQL]DWLRQRIWKH ULVLQJFRQVXPSWLRQRIELRIXHOVLVWDNLQJLWVWROO0DQ\
8QLWHG1DWLRQV)$2SXEOLVKHGDVXUYH\RIZRUOGZLGH PRQRFXOWXUHV QRW RQO\ GHVWUR\ HFRV\VWHPV EXW DUH
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

DOVRTXHVWLRQDEOHIURPDQHQHUJ\SRLQWRIYLHZLIRQH PRQRFXOWXUHV VXFK DV VR\ PDL]H RU FHUHDOV KDYH

GHGXFWV WKH HQHUJ\ LQSXW IRU WKHLU SURGXFWLRQ IURP EHHQFXOWLYDWHGIRUGHFDGHV+RZHYHUWKHEHWWHUWKH
WKH HQHUJ\ RXWSXW SDUWLFXODUO\ GXH WR WKH H[SDQGLQJ VLWXDWLRQ LQ VRPH SUHIHUHQWLDO ORFDWLRQV WKH ORZHU LV
SURGXFWLRQ RI ERWK FRQFHQWUDWH IHHG DQG ELRIXHOV
6XVWDLQDEO\ XVHG JUDVVODQG FDQ JHQHUDWH D KLJKHU
YROXPHRIXVDEOHHQHUJ\SHUXQLWRIODQGWKDQHWKDQRO
IURP PDL]H $W WKH VDPH WLPH LW FDQ PDNH D KLJKHU
FRQWULEXWLRQ WR WKH UHGXFWLRQ RI *+* HPLVVLRQV DQG
LQFUHDVH VRLO IHUWLOLW\ 7ULDOV LQ WKH 8QLWHG 6WDWHV KDYH
VKRZQWKDW\LHOGVIURPSHUPDQHQWJUDVVODQGVRYHUD
GHFDGHVXUSDVVHGWKRVHRIPRQRFXOWXUHVE\SHU
WKHSHUFHSWLRQRIH[LVWLQJSUREOHPV,QRUGHUWRVKRZ
WKDWVRLOTXDOLW\DQGIHUWLOLW\DUHVXIIHULQJIURPLQGXVWULDO
VRLOPDQDJHPHQWV\VWHPVWKHKXPXVFRQWHQWRIVRLOV
QHHGVWREHUHJXODUO\PRQLWRUHGDQGGRFXPHQWHG
-&DWWOHDVLGHDOXVHUVRIIHHG
7DNLQJ DFFRXQW RI FDUERQ DQG QLWURJHQ F\FOHV QRW
FHQW7LOPDQ+LOODQG/HKPDQ
,*OREDOODQGVFDSHJDUGHQHUV
,Q JUDVVODQGV URRWV SOD\ D FUXFLDO UROH LQ KXPXV
JHQHUDWLRQ 6LPSO\ SXW WKH URRWV RI WRGD\ DUH WKH
KXPXVRIWRPRUURZ:KHUHDVFURSVRQO\JURZGXULQJ
WKHLUYHJHWDWLRQSHULRGXQWLOWKH\DUHKDUYHVWHGJUDVV
LQ SHUPDQHQW JUDVVODQG IRUPV PRUH DQG PRUH URRW
ELRPDVV YLUWXDOO\ RQ D SHUPDQHQW EDVLV DV ORQJ DV
GD\OLJKW DQG D PLQLPXP RI KXPLGLW\ DUH DYDLODEOH
DQG WHPSHUDWXUHV DUH VWLOO VOLJKWO\ DERYH ]HUR 7KH
IRUPDWLRQ RI URRWV GLUHFWO\ GHSHQGV RQ WKH UK\WKP
RIWKHSDVWXULQJ9HU\LPSRUWDQWLQWKLVUHJDUGLVWKDW
JUDVVODQG VKRXOG KDYH FRQVWUXFWLYH SDXVHV GXULQJ
SDVWXULQJ VR WKDW JUDVV SODQWV FDQ UHFRYHU DQG
REWDLQ EHVLGHV ZDWHU DQG &2 VXIÀFLHQW RUJDQLF
RQO\ OHDGV WR D GLIIHUHQW DVVHVVPHQW RI WKH LPSDFWV
RI DJULFXOWXUH RQ FOLPDWH LW DOVR SURYLGHV D GLIIHUHQW
SHUVSHFWLYH RI DQLPDO KXVEDQGU\ SDUWLFXODUO\ WKDW RI
UXPLQDQWV ,JQRUDQFH ZLWK UHJDUG WR WKH SRWHQWLDO RI
JUDVVODQGVDULVHVIURPWKHPLVFRQFHSWLRQWKDWFDWWOH
DUHSRRUIHHGXVHUVZKLFKVLQFHWKHHQGRIWKHV
KDVDOVREHHQWDXJKWWRVWXGHQWV,QWKLVUHJDUGFDWWOH
DQGRWKHUUXPLQDQWVDUHQRWFRQWH[WXDOL]HGDVDQLPDOV
WKDW GHYHORSHG LQ FRHYROXWLRQ ZLWK JUDVVODQGV RYHU
WKRXVDQG RI \HDUV XVLQJ JUDVV DQG KD\ DV IRGGHU
WKDW ZLWKRXW DGGLWLRQDO ODERXU ZDV WXUQHG LQWR PHDW
DQG PLON ,QVWHDG WKHVH UXPLQDQWV DUH DVVHVVHG LQ
WHUPV RI WKHLU HIÀFLHQF\ LQ GLJHVWLQJ FHUHDOV PDL]H
DQGVR\
7KH IDFW WKDW FDWWOH FRQVXPH RQ DYHUDJH  NJ RU
PRUHRIFHUHDOVSHUNLORJUDPRIEHHIDÀJXUHZKLFK
QLWURJHQ DQG RWKHU QXWULHQWV IURP WKH H[FUHPHQWV RI
JUD]LQJ DQLPDOV 7KHUHDIWHU VRODU HQHUJ\ WKURXJK
SKRWRV\QWKHVLV GULYHV WKH JURZWK RI QHZ JUDVV DQG
DGGLWLRQDOURRWELRPDVV
$Q LOOXVWUDWLYH H[DPSOH IRU VXFK D QDWXUDO SURFHVV ²
LQFOXGLQJUHJHQHUDWLYHSHULRGV²FDQEHIRXQGLQWKH
ELJJHVWDQQXDOPLJUDWLRQRIDQLPDOVRQRXUSODQHWWKH
PLJUDWLRQRIWKHKXJHKHUGVRIJQXVLQ$IULFD6DIDULV
WKHUHRIIHUDUHWURVSHFWLYHYLHZRIQDWXUH·VKLVWRU\DV
DOORWKHUJUDVVODQGVVDYDQQDKVHPHUJHGIURPWKHFR
HYROXWLRQRIJUDVVSODQWVDQGJUD]LQJDQLPDOV+XJH
KHUGV RI ELVRQ DQG DXURFKV DQFHVWRUV RI WRGD\·V
H[FHHGV WKH LQWDNH RI SLJV DQG FKLFNHQV LV D
UHVXOW RI D IDXOW\ V\VWHP QRW IDXOW\ DQLPDOV ,W GRHV
QRW WDNH LQWR FRQVLGHUDWLRQ WKHLU QHJDWLYH LPSDFW RQ
UHVRXUFH FRQVXPSWLRQ EHFDXVH RI LQDSSURSULDWH
V\VWHPERXQGDULHV7KHZLGHVSUHDGDVVXPSWLRQWKDW
RQHFRZZKLFKSURGXFHVVRPHOLWUHVRIPLON
DQQXDOO\ZRXOGEHEHWWHUIRUWKHHFRV\VWHPDQGWKH
FOLPDWHWKDQWZRDQLPDOVSURYLGLQJOLWUHVHDFKLV
TXHVWLRQDEOHEHFDXVH
 7KH KLJKHU WKH SURGXFWLRQ SHUIRUPDQFH RI FRZV
SHUGD\RUSHU\HDUWKHPRUHLQWHQVLYHWKHUHTXLUHG
IHHGLQJ SUDFWLFHV ,W LV RQO\ SRVVLEOH WR DFKLHYH
D SURGXFWLRQ RI PRUH WKDQ  OLWHUV RI PLON
GRPHVWLF FDWWOH FRQWULEXWHG WR WKH GHYHORSPHQW RI
VRLOV LQ (XUDVLD DOWKRXJK WKH\ KDYH GLVDSSHDUHG
IURP WKH FROOHFWLYH PHPRU\ RI KXPDQ VHWWOHUV ,Q
FRQWUDVWPDQ\$PHULFDQVWRGD\VWLOOUHFDOOVWRULHVRI
WKHLU DQFHVWRUV DERXW WKH KXJH KHUGV RI ELVRQ 7KH
QXPEHURIELVRQWKDWSRSXODWHGWKHSUDLULHVRI1RUWK
$PHULFDLQWKHHDUO\GHFDGHVRIWKHQLQHWHHQWKFHQWXU\
LV HVWLPDWHG WR KDYH EHHQ DERXW  PLOOLRQ DQLPDOV
7RGD\ 1RUWK $PHULFDQ VRLOV VXIIHU IURP DQ DYHUDJH
KXPXV ORVV RI PRUH WKDQ  SHU FHQW 7KLV DOVR
DSSOLHVWRSUDLULHVRLOVVHYHUDOPHWUHVWKLFNRQZKLFK
SHU FRZ SHU DQQXP WKURXJK JUHDWHU LQWHQVLW\ RI
IHHGLQJ EDVHG RQ FRQFHQWUDWH IHHG 6XFK IHHG LQ
WXUQLVSURGXFHGDVDUHVXOWRIYHU\KLJKLQSXWVRI
ELRORJLFDO DQG IRVVLO UHVRXUFHV LQYROYLQJ KLJKHU
HPLVVLRQVRI&2DQG12
 1RQKLJKSHUIRUPDQFHFDWWOHFDQVDWLVI\WKHLUHQWLUH
GHPDQGIRUIHHGE\FRQVXPLQJURXJKDJHZLWKRXW
DQ\H[WHUQDOIRGGHUVXSSO\
 6XVWDLQDEO\XVHGSDVWXUHVFDQFRQWULEXWHWRKXPXV
DFFXPXODWLRQDQGWKXVKHOSWRUHGXFHDWPRVSKHULF
&2WKURXJKFDUERQÀ[DWLRQ

 1HDUO\ DOO FRZV ZLWK DQ DQQXDO PLON SURGXFWLRQ
RI  OLWHUV KDYH D ORQJHU WKDQ DYHUDJH OLIH
VSDQ &RQYHUVHO\ PRVW FRZV ZLWK DQ DQQXDO PLON
SHUIRUPDQFH RI  OLWHUV KDYH D VKRUWHU WKDQ
DYHUDJH OLIH VSDQ 7KH KLJKHU WKH PLON SURGXFWLRQ
RI WKH DQLPDO SHU GD\ RU SHU \HDU WKH KLJKHU WKH
75$'($1'(19,5210(175(9,(:
IHHGLQJDQGHPLWV*+*V)RUDGDLU\FRZ\RXQJHU
WKDQ  \HDUV D VXEVWLWXWH DQLPDO ZLOO KDYH WR EH
UHDUHGGXULQJKDOIRIWKHOLIHWLPHRIWKHFRZWREH
UHSODFHG 7KXV DQ\ SURGXFWLYLW\ FDOFXODWLRQ RI D
GDLU\FRZVKRXOGQRWEHFRQÀQHGWRLWVDQQXDOPLON
EXWVKRXOGDOVRWDNHLQWRDFFRXQWLWVSHUIRUPDQFH
ULVN RI LWV YXOQHUDELOLW\ WR GLVHDVHV DQG EXUQRXW
7KLV LV WKH UHDVRQ ZK\ WKH DYHUDJH OLIH VSDQ RI D
FRZ LQ *HUPDQ\ IRU LQVWDQFH KDV IDOOHQ WR OHVV
WKDQÀYH\HDUV%XUQRXWLQIHUWLOLW\DQGPDVWLWLVKDYH
EHFRPH ´RFFXSDWLRQDO GLVHDVHVµ RI GDLU\ FRZV
UHVXOWLQJ LQ WKHLU EHLQJ VODXJKWHUHG SUHPDWXUHO\
DQGVWDWLVWLFDOO\WKH\SURGXFHRQO\FDOYHV
)LJXUH7KHLPSRUWDQFHRIFRZORQJHYLW\WRSURWHFWWKH
HQYLURQPHQWWKHFOLPDWHDQGWKHHFRQRP\
120 -
100 -
Cow to be
80 - replaced
Months
RYHULWVOLIHWLPH,GHO
 ,Q WKH SHUIRUPDQFH EDODQFH DOO WRR RIWHQ RQO\
GDWDIRUSURGXFHGPLONDUHSURYLGHGZKLFKGRQRW
UHSUHVHQWWKHYROXPHRIPDUNHWDEOHPLON3UHVVXUHV
IRU LQFUHDVLQJ GDLU\ SURGXFWLRQ UHVXOW LQ D FHUWDLQ
VKDUH RI PLON RULJLQDWLQJ IURP GLVHDVHG FRZV
ZKLFKFDQQRWEHVROGEHFDXVHWKHFRZVDUHEHLQJ
WUHDWHGZLWKDQWLELRWLFV
 7RDUULYHDWDFRUUHFWFDOFXODWLRQRIWKHSURGXFWLYLW\
DQGWKHLPSDFWRQFOLPDWHRIDGDLU\FRZLWVRZQ
EHHISURGXFWLRQDQGWKDWRILWVSURJHQ\DOVRKDYHWR
EHWDNHQLQWRDFFRXQW'DLU\DQGEHHISHUIRUPDQFH
DUH QRUPDOO\ QHJDWLYHO\ FRUUHODWHG ² WKH KLJKHU
WKH GDLU\ SURGXFWLRQ RI D FRZ EUHHG WKH ORZHU
LWV PHDW RXWSXW LQ SDUWLFXODU WKDW RI WKH VRQV DQG
EURWKHUV&RPSDULQJDSURGXFWLRQV\VWHPZLWKDQ

60 - Substitute DYHUDJH PLON SURGXFWLRQ RI  OLWUHV UHODWLYH WR

cow RQH SURGXFLQJ  OLWUHV SHU \HDU 5RVHQEHUJHU
40 -
DQG 5XW]PRVHU  QRWH WKDW WKH ODWWHU VKRZV
20 - VLJQLÀFDQWO\ KLJKHU HPLVVLRQV RI PHWKDQH 
0- SHUFHQWKLJKHUQLWURJHQSHUFHQWKLJKHUDQG
Cow
 ,Q DGGLWLRQ WR WKH OLIH VSDQ RI WKH FRZ WR EH
UHSODFHG IRGGHU DQG DGGLWLRQDO ODERXU DV ZHOO DV
*+*HPLVVLRQVE\WKHVXEVWLWXWHFRZQHHGWREH
WDNHQLQWRDFFRXQW)LJXUHVKRZVWKDWLUUHVSHFWLYH
RI WKH DJH RI WKH FRZ GHVWLQHG IRU VODXJKWHU WKH
DJHRIWKHVXEVWLWXWHFRZLVDOZD\VWKHVDPH7KH
ODWWHU LV DERXW  PRQWKV ROG  PRQWKV DW WKH
WLPH RI LQVHPLQDWLRQ SOXV QLQH PRQWKV JHVWDWLRQ
7KHUHSODFHPHQWUDWHRIDSURGXFWLRQXQLWLQGLFDWHV
WKH SHUFHQWDJH RI FRZV WKDW ZLOO KDYH WR EH
UHSODFHG DQQXDOO\ WR NHHS WKH GDLU\ SURGXFWLRQ
UDWH XQFKDQJHG ,Q SURGXFWLRQ XQLWV ZLWK D YHU\
KLJKGDLU\SHUIRUPDQFHWKHUHSODFHPHQWUDWHRIWHQ
H[FHHGV  SHU FHQW 7KDW LV ZK\ ORQJHYLW\ OHDGV
WRORZHUUHSODFHPHQWUDWHV+LJKUHSODFHPHQWUDWHV
WKXVLPSO\WKDWLQDGGLWLRQWRWKHGLUHFWHFRORJLFDO
HIIHFWV RI GDLU\ FRZV WKH HFRORJLFDO DQG FOLPDWH
LPSDFWVRIWKHVXEVWLWXWHFRZVKDYHWREHWDNHQLQWR
FRQVLGHUDWLRQLQHYDOXDWLQJWKHLUGDLU\SHUIRUPDQFH
7KHHDUOLHUDGDLU\FRZKDVWREHVODXJKWHUHGWKH
ORQJHULVWKHSHULRGWKDWDVXEVWLWXWHDQLPDOQHHGV
SKRVSKRURXVSHUFHQWKLJKHU
7KH LQGXVWULDOL]HG DJULFXOWXUDO SURGXFWLRQ V\VWHP
H[FOXGHV OLYHVWRFN IURP JUDVVODQGV DQG LQFUHDVHV
WKH LQSXW RI SURWHLQULFK FRQFHQWUDWH IHHG GHULYHG
IURP PDL]H VR\ DQG FHUHDOV UHVXOWLQJ LQ D VLWXDWLRQ
ZKHUH FRZV DQG KXPDQV FRPSHWH IRU IRRG ,Q WKH
FRQWH[WRIVXFKLQWHQVLYHIHHGLQJV\VWHPVUXPLQDQWV
FRQIXVLQJO\ DUH FRQVLGHUHG LQHIÀFLHQW IRGGHU
FRQVXPHUVUHODWLYHWRSLJVDQGFKLFNHQV,QWHUPVRI
IHHGFRQVXPSWLRQDQGRXWSXWRQHFRZGRHVWKHUHIRUH
QRWHTXDODQRWKHU
&DWWOH VKHHS DQG EXIIDORHV KDYH WKH ZRQGHUIXO
FDSDFLW\ WR GLJHVW SDVWXUH IRUDJH LQ V\PELRVLV ZLWK
PLFURRUJDQLVPVLQWKHUXPHQDQGWXUQLWLQWRPLONDQG
PHDW,QWKLVVHQVHFDWWOHDUHLGHDOIRGGHUFRQVXPHUV
DQG DUH WKHUHIRUH SUHGHVWLQHG IRU JUD]LQJ LQ WKRVH
DUHDV WKDW DUH VXLWDEOH DV SDVWXUHV RU JUDVVODQGV
,Q DGGLWLRQ WKH\ FDQ XVH JUDVV UHVXOWLQJ IURP JUHHQ
IHUWLOL]DWLRQWKURXJKVXVWDLQDEOHFURSURWDWLRQLQRUGHU
WR SURGXFH PLON PHDW DQG ODERXU $FFRUGLQJO\ LW LV
RQO\DWÀUVWJODQFHWKDWPLONDQGPHDWIURPLQWHQVLYH
SURGXFWLRQ DSSHDU WR EH FKHDS 7KH WUXH FRVWV RI
LQWHQVLYHDQLPDOIHHGSURGXFWLRQDUHUHÁHFWHGLQWHUPV
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

RILGDPDJHWRWKHHFRV\VWHPDQGWKHFOLPDWHLL ,WLVWUXHWKDWFDWWOHHPLWPHWKDQHEXWWKH\DQGRWKHU

UHGXFWLRQ RI ELRORJLFDO GLYHUVLW\ LLL WKH FRQYHUVLRQ UXPLQDQWVDUHLQGLVSHQVDEOHIRUJOREDOIRRGVHFXULW\
RI SHUPDQHQW JUDVVODQG DQG FRQYHUWHG UDLQIRUHVWV 8QGHUVXVWDLQDEOHSDVWXUHFRQGLWLRQVFDWWOHSURGXFH
LQFOXGLQJ WKH &2 WKXV UHOHDVHG IURP WKHLU FDUERQ PLON DQG PHDW IURP JUDVV DQG IRUDJH DQG WKHUHE\
ULFK VRLOV LY RLO FRQVXPSWLRQ IRU WKH SURGXFWLRQ RI PDNHDVLJQLÀFDQWFRQWULEXWLRQWRWKHSUHVHUYDWLRQRI
V\QWKHWLF QLWURJHQ IHUWLOL]HUV DQG DJURFKHPLFDOV Y VRLO IHUWLOLW\ DQG WR FOLPDWH FKDQJH PLWLJDWLRQ 7KLV LV
12HPLVVLRQVFDXVHGE\H[FHVVLYHXVHRIV\QWKHWLF ZK\QRWRQO\GRFRZVKDYHWREHUHKDELOLWDWHGEXWWKH
IHUWLOL]HUV YL WKH QLWULÀFDWLRQ RI VRLOV DQG ZDWHU FRUUHFWDJULFXOWXUDOV\VWHPQHHGVWREHDGRSWHG7KH
FRXUVHV DQG YLL HQKDQFHG DPPRQLD ORDG LQ WKH GHFLVLRQZKHWKHUZHZLOOSURWHFWRUGHVWUR\WKHFOLPDWH
DWPRVSKHUH WKURXJKWKHZD\ZHFKRRVHWRUHDUFDWWOHLVXSWRXV
 75$'($1'(19,5210(175(9,(:

1//'06#4; U :%'55+8' 0&7564+#.+<#6+101(+8'561%-

41&7%6+10U*'''&(14#'9)4+%7.674#.
#4#&+)/
)ULHGULFK2VWHQGRUII
'HSXW\&KDLUPDQ$JULFXOWXUDO&RPPLWWHHRIWKH*HUPDQ3DUOLDPHQW

$EVWUDFW
7KHH[FHVVLYHLQGXVWULDOL]DWLRQRIFKLFNHQDQGSRUNSURGXFWLRQLVDJODULQJH[DPSOHRIWKHLQGXVWULDOPRGHO
RIDJULFXOWXUHZKLFKKDVWXUQHGDJULFXOWXUHLQWRDPDMRUFOLPDWHHQYLURQPHQWDOVRFLDODQGDQLPDOZHOIDUH
KD]DUG,QRUGHUWRUHGUHVVWKLVVLWXDWLRQSROLFLHVVKRXOGDGRSWDSRVWLQGXVWULDOSDUDGLJPIRUDJULFXOWXUH
ZKLFKVXSSRUWVPXOWLIXQFWLRQDOIDUPVLQVWHDGRIDJULFXOWXUDOIDFWRULHV7KLVVKRXOGLQFOXGHWKHDSSOLFDWLRQ
RIWKHIRUHUXQQHUDQGWKHSROOXWHUSD\VSULQFLSOHWRÀQDQFLDOLQFHQWLYHVVFKHPHVWKHWLJKWHQLQJRIUHJXODWRU\
ODZVEHWWHUPDUNHWVWHZDUGVKLSDQGSUHIHUHQFHIRUWUDQVSDUHQF\DQGIDUPHUDQGFRQVXPHUSDUWLFLSDWLRQ
LQSROLF\PDNLQJ

7UHDWLQJ D IDUP DV D IDFWRU\ WKDW XVHV LQSXWV VXFK KROGVDURXQGSHUFHQWRIWKHQDWLRQDOPDUNHWVKDUH

DV SHVWLFLGHV IHHG IHUWLOL]HUV DQG IXHO WR SURGXFH LQFKLFNHQSURGXFWLRQDQGDFFRXQWVIRUSHUFHQWRI
RXWSXWVVXFKDVFRUQFKLFNHQDQGSRUNKDVEHFRPH FKLFNHQ EUHHGLQJ )$=  )LFKWHO  DV ZHOO
WKH GRPLQDWLQJ SULQFLSOH RI WRGD\·V DJULFXOWXUH DVSHUFHQWRIWKHZRUOGPDUNHWLQSRXOWU\YDFFLQH
ZKLFK LV H[SRVHG WR WKH GULYHUV DQG SUHVVXUHV RI
JOREDOL]DWLRQ $OWKRXJK WKLV PRGHO RI LQGXVWULDOL]HG
DJULFXOWXUHSURGXFHVLPSUHVVLYHHFRQRPLHVRIVFDOH
LWLVKLJKO\SUREOHPDWLFRZLQJWRLWVGHWULPHQWDOLPSDFW
RQFOLPDWHWKHHQYLURQPHQWKXPDQKHDOWKDQGDQLPDO
ZHOIDUH SDUWLFXODUO\ DV WKH DVVRFLDWHG FRVWV UHPDLQ
H[WHUQDOL]HG
7KH YHUWLFDOO\ LQWHJUDWHG DQG JHRJUDSKLFDOO\
FRQFHQWUDWHG FKLFNHQ LQGXVWU\ KDV EHHQ WKH LFRQLF
H[DPSOH RI LQGXVWULDOL]HG DJULFXOWXUH IRU GHFDGHV
%HWZHHQ  DQG  FKLFNHQ SURGXFWLRQ
ZRUOGZLGHJUHZIURPWRPLOOLRQWRQVDQGSRUN
SURGXFWLRQLQFUHDVHGIURPWRPLOOLRQWRQV
SURGXFWLRQ:LQWHUV
7KH SUREOHP ZLWK LQGXVWULDOL]HG DJULFXOWXUH LV WKDW LW
FUHDWHV PDVVLYH HQYLURQPHQWDO DQG VRFLDO FROODWHUDO
GDPDJH ,QGXVWULDO FKLFNHQ DQG SRUN SURGXFWLRQ
LV SDUW RI JOREDOO\ LQWHJUDWHG SURGXFWLRQ FKDLQV
7KH\ ODUJHO\ GHSHQG RQ LPSRUWHG IHHGVWXII PDLQO\
VR\EHDQV IURP 6RXWK $PHULFD RIWHQ JURZQ RQ ODQG
IRUPHUO\ RFFXSLHG E\ UDLQIRUHVWV DQG SODQWHG DV
PRQRFXOWXUHVZLWKKLJKIHUWLOL]HUDQGSHVWLFLGHLQSXWV
7KH VR\EHDQV DUH WKHQ VKLSSHG RYHU WKRXVDQGV
RI PLOHV EHIRUH WKH\ UHDFK WKH FKLFNHQ DQG SRUN
IDFWRULHV ZKLFK DUH FRQFHQWUDWHG DURXQG KDUERXUV
DQG DORQJ KLJKZD\V ,Q WKHVH IDFWRULHV FKLFNHQV RI
)$26WDW
7KLV LQFUHDVH LQ SURGXFWLRQ RFFXUUHG LQ SDUDOOHO ZLWK
WKH PDVVLYH LQGXVWULDOL]DWLRQ DQG FRQFHQWUDWLRQ RI
SURGXFWLRQVWUXFWXUHV$WWKHEHJLQQLQJRIWKLVFHQWXU\
YHU\IHZEUHHGVDUHIDWWHQHGZLWKLQIRXUWRVL[ZHHNV
RIWHQXQGHULQKXPDQHOLYLQJFRQGLWLRQV
7KH ZRUOGZLGH GLVWULEXWLRQ RI IUR]HQ FKLFNHQ SDUWV
ZKRVH SURGXFWLRQ EHQHÀWV WR D ODUJH H[WHQW IURP
DURXQGSHUFHQWRISRXOWU\SURGXFWLRQZDVFRQWUROOHG VLJQLÀFDQW GLUHFW DQG LQGLUHFW VXEVLGLHV FDQ KDYH
E\ LQGXVWULDO FRPSDQLHV )$2  ,Q WKH PDMRU
SRXOWU\ SURGXFLQJ FRXQWULHV D IHZ SOD\HUV GRPLQDWH
WKHPDUNHWVVXFKDV7\VRQLQWKH8QLWHG6WDWHVZKLFK
KROGV  SHU FHQW RI WKH QDWLRQDO PDUNHW VKDUH DQG
SURFHVVHV  PLOOLRQ FKLFNHQV SHU ZHHN 5RKVWRIIH
GHYDVWDWLQJ LPSDFWV RQ PDQ\ ORFDO PDUNHWV LQ
GHYHORSLQJFRXQWULHVDVLOOXVWUDWHGE\WKHH[DPSOHRI
(XURSHDQFKLFNHQSDUWVH[SRUWHGWR:HVW$IULFD
,QGXVWULDOL]DWLRQKDVWXUQHGDJULFXOWXUHXSVLGHGRZQ
WKHVRXUFHRIIRRGKDVEHFRPHDUHDVRQIRUKXQJHU
NRPSDNWRUWKH3+:*URXSLQ*HUPDQ\ZKLFK LQ PDQ\ UHJLRQV RI WKH ZRUOG DQG WKH PDLQ VRXUFH
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

RI ELRGLYHUVLW\ KDV EHFRPH RQH RI LWV JUHDWHVW %)LQDQFLDOLQFHQWLYHVUHYHUVLQJUXOHV

WKUHDWV $W WKH VDPH WLPH ZKDW XVHG WR EH D *+* DQGH[FHSWLRQV
VLQN KDV EHFRPH D PDMRU SROOXWHU $FFRUGLQJ WR WKH
)$2 D WKH PDMRU VRXUFHV RI *+* HPLVVLRQV
UHODWHG PDLQO\ WR SRUN DQG FKLFNHQ SURGXFWLRQ DUH
WKHSURGXFWLRQRIQLWURJHQIHUWLOL]HUIRUIHHGFURSV
5XOHV DQG H[FHSWLRQV UHODWLQJ WR FXUUHQW SXEOLF
VXSSRUWVFKHPHVIRUDJULFXOWXUHVKRXOGEHUHYHUVHG
6XVWDLQDEOH IDUPLQJ SUDFWLFHV VKRXOG EHFRPH WKH
UXOH DQG LQGXVWULDO IDUPLQJ WUHDWHG DQG UHJXODWHG
PLOOLRQWRQVRI&2IRUWKHPDLQSURGXFLQJFRXQWULHV
DV WKH H[FHSWLRQ WR WKLV UXOH $JULFXOWXUDO SROLFLHV
RQIDUP IRVVLO IXHO FRQVXPSWLRQ  PLOOLRQ WRQV RI
VKRXOG DSSO\ WKH IRUHUXQQHU DQG WKH SROOXWHUSD\V
&2SHU\HDUOLYHVWRFNUHODWHGODQGXVHFKDQJHV
SULQFLSOHV 7KH IRUHUXQQHU SULQFLSOH ZKLFK VHWV WKH
ELOOLRQWRQVRI&2SHU\HDUDQGPHWKDQHHPLVVLRQV
EHVW VXVWDLQDEOH SUDFWLFHV DYDLODEOH LQ D UHJLRQ RU
PRUHWKDQPLOOLRQWRQVSHU\HDU
7KHTXHVWLRQWKHQLVKRZFDQDJULFXOWXUDOSURGXFWLRQ
EH UHRUJDQL]HG VR WKDW LW EHFRPHV D VROXWLRQ UDWKHU
WKDQ D SUREOHP" )LYH EDVLF SULQFLSOHV WR UHIRUP
DJULFXOWXUDOSROLFLHVDUHSURSRVHGKHUH
$$QHZDJULFXOWXUDOSDUDGLJP
$OWKRXJKLQGXVWULDODJULFXOWXUHLVVWLOOZLGHO\SURPRWHG
E\ FXUUHQW DJULFXOWXUDO SROLFLHV WKHUH DUH JURZLQJ
FDOOV IRU FKDQJH -DFTXHV 'LRXI IRUPHU 'LUHFWRU
*HQHUDORIWKH)$2VWDWHG´7KHSUHVHQWSDUDGLJPRI
LQWHQVLYHFURSSURGXFWLRQFDQQRWPHHWWKHFKDOOHQJHV
SURGXFWLRQVHFWRUDVDUHIHUHQFHIRUIDUPLQJV\VWHPV
VKRXOG EH PDLQVWUHDPHG 3XEOLF IDUP SD\PHQWV
VKRXOG PRYH IURP D ´ORJLF RI FRPSHQVDWLRQµ WR D
´ORJLFRILQYHVWPHQWLQEHVWSUDFWLFHVµ´3XEOLFPRQH\
IRUSXEOLFJRRGVµVKRXOGEHFRPHWKHGULYLQJSULQFLSOH
IRUÀQDQFLDOVXSSRUWWRDJULFXOWXUH
7KHSROOXWHUSD\VSULQFLSOHRQWKHRWKHUKDQGREOLJHV
IDUP LQGXVWULHV WKDW XVH XQVXVWDLQDEOH SUDFWLFHV WR
FRPSHQVDWHVRFLHW\IRUWKHLUQHJDWLYHLPSDFWVRQWKH
HQYLURQPHQWDQGRQSXEOLFKHDOWK7KLVSULQFLSOHQHHGV
WR UHSODFH WKH SUDFWLFH RI FRPSHQVDWLQJ IDUPHUV IRU
QRWSROOXWLQJWKHHQYLURQPHQW
RIWKHQHZPLOOHQQLXPµ)$2,IWKLVLVWUXHIRU
DJULFXOWXUHDVDZKROHZKDWZHQHHGLVDQHZSRVW
LQGXVWULDOSDUDGLJPIRUDJULFXOWXUH
7KHSUREOHPZLWKIDFWRU\IDUPLQJOLHVÀUVWRIDOOLQLWV
IXQGDPHQWDO PLVFRQFHSWLRQ RI DJULFXOWXUH )DUPV
VKRXOGQRWEHIDFWRULHV²WKH\VKRXOGQRWEHSODFHVRI
ODUJHVFDOH SURGXFWLRQ KDOOV LQVWHDG WKH\ VKRXOG EH
KLJKO\ LQWHJUDWHG OLYLQJ V\VWHPV ZKHUH HYHU\ SDUW RI
WKH V\VWHP SOD\V D FUXFLDO UROH LQ WKH IXQFWLRQLQJ RI
WKHV\VWHPDVDZKROH$WUDGLWLRQDOIDUPLVEDVHGRQ
LWV LQWHUQDO UHVRXUFHV UDWKHU WKDQ RQ H[WHUQDO LQSXWV
,WV PDLQ VRXUFH RI HQHUJ\ LV VRODU DQG QRW IRVVLO
7KH DQLPDOV RI WKH IDUP SURGXFH ² EHVLGHV RUJDQLF
&7LJKWHQLQJUHJXODWRU\ODZ
1RUPDOO\ LQGXVWULDO IDUPLQJ LV XQGHUWDNHQ ZLWKLQ
WKH UXOH RI ODZ HYHQ WKRXJK LW PD\ EH WKUHDWHQLQJ
WR KHDOWK WKH HQYLURQPHQW DQG DQLPDO ZHOIDUH
7KHUHIRUH UHJXODWRU\ ODZV VKRXOG EH WLJKWHQHG
LQ RUGHU WR SUHYHQW QHJDWLYH H[WHUQDOLWLHV DQG WKH
DELOLW\ RI LQGXVWULDO DJULFXOWXUH WR JDLQ FRPSDUDWLYH
DGYDQWDJHV E\ LPSRVLQJ H[WHUQDO FRVWV RQ VRFLHW\
7LJKWHQHGUHJXODWRU\ODZVVKRXOGEHLQWHUQDWLRQDOL]HG
VR DV WR DOORZ EHWWHU ODZ HQIRUFHPHQW DQG SUHYHQW
WKH WUDQVIHU RI DJULFXOWXUDO IDFWRULHV WR FRXQWULHV ZLWK
ZHDNHUOHJLVODWLRQ$OVRKHDOWKHQYLURQPHQWDOVRFLDO
IHUWLOL]HUV²IRRGPLONHJJVPHDWEDVHGRQSURGXFWV DQGDQLPDOZHOIDUHVWDQGDUGVIRUDJULFXOWXUDOSURGXFWV
WKDWKXPDQVFDQQRWFRQVXPHDQGGLJHVWHJJUDVV VKRXOGEHPRUHHIIHFWLYHO\KDUPRQL]HGLQWHUQDWLRQDOO\
ÀEUHDQGRUJDQLFZDVWH
%\ LJQRULQJ WKH LQWHJUDWHG QDWXUH RI WKH IDUP
LQGXVWULDOL]DWLRQ KDV WXUQHG DJULFXOWXUH LQWR D PDMRU
HQYLURQPHQWDO VRFLDO KHDOWK DQG DQLPDO ZHOIDUH
KD]DUG$JULFXOWXUDOSROLFLHVVKRXOGWKHUHIRUHQRORQJHU
IROORZ WKH LQGXVWULDO PRGHO RI DJULFXOWXUH 5DWKHU WKH
IDUP PRGHO VKRXOG EHFRPH WKH QHZ SDUDGLJP IRU
DJULFXOWXUDO SROLFLHV 7KLV FRQFHSW RI D IDUP LV QRW D
EOXHSULQWEXWLWFDQWHDFKXVKRZWRWDFNOHWKHJUHDW
FKDOOHQJHVWRDJULFXOWXUHRIRXUWLPHVXFKDVFOLPDWH
FKDQJHELRGLYHUVLW\HQHUJ\ZDWHUDQGIRRGVHFXULW\
WKDQLVFXUUHQWO\WKHFDVH
'%HWWHUPDUNHWVWHZDUGVKLS
$JULFXOWXUDO SROLFLHV VKRXOG HVWDEOLVK QHZ IRUPV RI
PDUNHW RUJDQL]DWLRQ ZKLFK VXSSRUW IDUPHUV DQG
FRQVXPHUV LQ UHJDLQLQJ RZQHUVKLS RI WKHLU UHJLRQDO
DQG ORFDO PDUNHWV )DUPHUV VKRXOG EH VXSSRUWHG LQ
HVWDEOLVKLQJ SURGXFHU RUJDQL]DWLRQV WKDW VWUHQJWKHQ
WKHLUEDUJDLQLQJSRZHUDQGHQDEOHWKHPWRJHDUIRRG
SURGXFWV WR PRUH UHJLRQDOL]HG DQG ORFDO PDUNHWV
6XFK DQ DSSURDFK VKRXOG DOVR LQYROYH D FKDQJH RI

UHJXODWLRQV UHODWLQJ WR FRPSHWLWLRQ LQ RUGHU WR VWRS
WKHDEXVHRIEX\HUSRZHUE\ROLJRSROLVWLFSURFHVVLQJ
DQG UHWDLOLQJ FRPSDQLHV DQG UHYHUVH WKH FXUUHQW
FRQFHQWUDWLRQLQWKHIRRGFKDLQ
(7UDQVSDUHQF\DQGSDUWLFLSDWLRQ
7UDQVSDUHQF\ VKRXOG EHFRPH D NH\ SULQFLSOH RI
DJULFXOWXUDO SROLF\ ,QIRUPDWLRQ DERXW WKH UHDOLW\ RI
DJULFXOWXUDOSURGXFWLRQWKHVRFLDOVLWXDWLRQRIIDUPHUV
75$'($1'(19,5210(175(9,(:
VKRXOG QR ORQJHU HPHUJH IURP WRSGRZQ SROLFLHV
LPSOHPHQWHG LQ FORVHGGRRU IDFWRULHV ,QVWHDG
IDUPHUVDQGFRQVXPHUVVKRXOGSOD\DQDFWLYHSDUWLQ
SROLF\PDNLQJ ([DPSOHV IURP WKH FXUUHQW UHIRUP RI
WKH(8&RPPRQ$JULFXOWXUDO3ROLF\VKRZWKHGHPDQG
IRUDQGVXFFHVVRISDUWLFLSDWRU\SROLF\DSSURDFKHV
$JULFXOWXUDO UHVHDUFK VKRXOG DOVR EHFRPH PRUH
SDUWLFLSDWLYH DQG LQFOXVLYH DV VWUHVVHG E\ WKH
,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO 6FLHQFH
DQG 7HFKQRORJ\ IRU 'HYHORSPHQW ,$$67' $IWHU D
DQG IDUP ZRUNHUV WKH HQYLURQPHQWDO LPSOLFDWLRQV RI
SHULRGRIDOPRVWH[FOXVLYHÀQDQFLQJRIELRWHFKQRORJ\
SURGXFWLRQ SURFHVVHV DQG WKH OLYLQJ FRQGLWLRQV RI
DQG JHQHWLF HQJLQHHULQJ SXEOLF VXSSRUW VKRXOG EH
DQLPDOVVKRXOGQRWEHKLGGHQDQ\PRUHEHKLQGIDFWRU\
UHGLUHFWHGWRZDUGVLQWHJUDWHGUHVHDUFKWKDWHPEUDFHV
GRRUVDQGOREE\EURFKXUHVLWPXVWEHPDGHSXEOLF
IDUPHUV· ORFDO NQRZOHGJH RI EHVW SUDFWLFHV DV ZHOO
7KH ÀUVW ELJ DJULFXOWXUHUHODWHG FULVHV RI WKH WZHQW\
DV WKH NQRZOHGJH RI VFLHQWLVWV IURP WKH YDULRXV
ÀUVWFHQWXU\LQ(XURSH²%6(DQGWKHIRRWDQGPRXWK
GLVFLSOLQHV FRQFHUQHG ,QYHVWPHQWV LQ SDUWLFLSDWRU\
RXWEUHDNLQ²UHVXOWHGLQFDOOVIRUDIXQGDPHQWDO
UHVHDUFK VFKHPHV VKRXOG VSHFLÀFDOO\ IRFXV RQ WKH
FKDQJH LQ DJULFXOWXUH $V D FRQVHTXHQFH *HUPDQ\
QHZFKDOOHQJHVVXSSRUWLQJPRGHUQORZLQSXWRUJDQLF
LPSOHPHQWHGDQ´DJULFXOWXUDOWXUQDURXQGµDWWKHFRUH
DQG VRODUEDVHG SURGXFWLRQ VPDOOVFDOH IDUPLQJ
RI ZKLFK ZDV FRQVXPHU LQYROYHPHQW DQG JUHDWHU
HQKDQFHPHQW RI RQIDUP ELRGLYHUVLW\ LPSURYHG
WUDQVSDUHQF\LQDJULFXOWXUH
JUDVVODQG PDQDJHPHQW DQG FURS GLYHUVLÀFDWLRQ WR
7KH GHYHORSPHQW RI D QHZ DJULFXOWXUDO PRGHO UHGXFHYXOQHUDELOLW\
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

1//'06#4; U*; 0&7564+#.+8'561%-

#4/+0)
505756#+0#$.'
-R\FH'·6LOYD
&RPSDVVLRQLQ:RUOG)DUPLQJ

%XWIRUWKHVDNHRIVRPHOLWWOHPRXWKIXORIÁHVKZHGHSULYHDVRXORIWKHVXQDQGOLJKWDQGRIWKDWSUR
SRUWLRQRIOLIHDQGWLPHLWKDGEHHQERUQLQWRWKHZRUOGWRHQMR\3OXWDUFK

$EVWUDFW
‡ )DUPDQLPDOVDUHVHQWLHQWEHLQJVZKRVHZHOOEHLQJQHHGVWREHSURWHFWHG
‡ ,QGXVWULDOIDUPLQJNHHSVDQLPDOVLQLVRODWLRQRUFURZGHGWRJHWKHULQWRWDOO\XQQDWXUDOFRQGLWLRQV
‡ $QLPDOVKDYHEHHQVHOHFWLYHO\EUHGIRUWKHLUPHDWRUKLJKPLON\LHOGZLWKGHYDVWDWLQJLPSDFWVRQWKHLU
KHDOWKDQGZHOIDUH
‡ ,QGXVWULDOOLYHVWRFNIDUPLQJXVHVKXJHDPRXQWVRIJUDLQDQGVR\WRIHHGWKHDQLPDOVLQDZRUOGZKHUH
PDQ\JRKXQJU\

2YHU PLOOHQQLD ZH KXPDQV KDYH GHYHORSHG 5HPRYLQJDQLPDOVIURPWKHODQGKDVOHGWRXQQDWXUDO

VRSKLVWLFDWHG IRUPV RI VKHOWHU IRU RXUVHOYHV IURP
UXGLPHQWDU\KXWVWRDLUFRQGLWLRQHGKRXVHV:HPD\
ZHOOKDYHEHFRPHOHVVKDUG\LQWKHSURFHVVEXWDORW
PRUHFRPIRUWDEOHDQGZHDWKHUSURRIHG
1RQKXPDQFUHDWXUHVKDYHXVHGWKHQDWXUDOVKHOWHURI
V\VWHPV RI LQGRRU DQLPDO FRQÀQHPHQW HLWKHU
LQGLYLGXDOO\ RU LQ KXJH QXPEHUV LQ YDVW VKHGV 7KLV
KDVEURNHQXSWKHVRFLDOERQGVZKLFKDUHVRYLWDOWR
DQLPDO ZHOOEHLQJ ,VRODWHG DQLPDOV VXFK DV FDOYHV
LQ QDUURZ YHDO FUDWHV RU SUHJQDQW VRZV LQ HYHQ
ZRRGODQGVDQGHDUWKEXUURZVRUEXLOWWKHLURZQPRUH
VRSKLVWLFDWHGKRXVLQJVXFKDVELUGDQGSLJQHVWVRU
EHHKLYHV EXW WKH\ KDYH DOZD\V UHPDLQHG LQ FRQWDFW
ZLWK WKH ODQG ZLWK WUHHV YHJHWDWLRQ DQG ZDWHU DQG
HQMR\HGWKHIUHHGRPRIWKHVNLHV3HUKDSVWKHKXPDQ
VXEVWLWXWH IRU WKLV LV WKH JDUGHQ RU \DUG DWWDFKHG WR
QDUURZHUVRZVWDOOVJHVWDWLRQFUDWHVVXIIHUQRWRQO\
IURP SK\VLFDO GLVFRPIRUW EXW IURP SV\FKRORJLFDO
GHSULYDWLRQ 7KLV FDQ EH REVHUYHG LQ WKHLU WHQGHQF\
WRGHYHORSVWHUHRW\SLFEHKDYLRXUVLPLODUWRWKHOLRQLQ
D ]RR FDJH 6RZV NHSW LQ WKHVH QDUURZ FUDWHV PD\
VSHQGXSWRSHUFHQWRIWKHLUDFWLYHWLPHZLWKVXFK
WKH KRXVH RU RXU DWWHPSWV WR ´JR IRU D ZDONµ LQ WKH VWHUHRW\SLFEHKDYLRXU-HQVHQ/DUJHUQXPEHUV
FRXQWU\VLGHRUVZLPLQWKHVHD
:KLOH D KXJH SURSRUWLRQ RI WKH HDUWK·V SRSXODWLRQ
PDNHWKHLUOLYLQJIURPIDUPLQJWKHODQGRIWHQLQFOXGLQJ
EUHHGLQJ RU WHQGLQJ WR VRPH IDUP DQLPDOV WKH
FRQÀQHPHQWRIYDVWQXPEHUVRIDQLPDOVLQLQGXVWULDO
IDUPVLVDUHODWLYHO\QHZH[SHULHQFHIRUERWKIDUPHUV
DQG DQLPDOV 7KLV H[SHULPHQW LQ WKH LQGXVWULDOL]DWLRQ
RI OLYHVWRFN IDUPLQJ KDV SURYHG D GLVDVWHU IRU WKH
ZHOOEHLQJRIWKHDQLPDOVSURYLGHGVKRUWOLYHGJDLQV
IRU DJULEXVLQHVV LQWHUHVWV OHG WR WKH GHYDVWDWLRQ RI
SUHFLRXV HFRV\VWHPV DQG JHQHUDWHG KXJH DPRXQWV
RIWR[LFJDVHVDQGRWKHUKDUPIXOZDVWHV,WPD\DOVR
EH D FRQWULEXWRU\ IDFWRU WR WKH JURZLQJ HSLGHPLF RI
REHVLW\ DQG WKH VFDQGDORXV JURZWK LQ QXPEHUV RI
PDOQRXULVKHGSHRSOH
RIDQLPDOVFURZGHGWRJHWKHUFDQEHFRPHDJJUHVVLYH
ÀQGLQJQRWKLQJWRGRDOOGD\DQGQRHVFDSHIURPWKHLU
SHQPDWHVRIWHQUHVXOWLQJLQLQMXU\
6FLHQFHWRGD\FRQÀUPVZKDWPRVWRIXVNQRZWKURXJK
FRPPRQ VHQVH WKDW DQLPDOV DUH LQWHOOLJHQW VHQWLHQW
EHLQJV FDSDEOH RI D UDQJH RI HPRWLRQDO VWDWHV DQG
FDSDFLWLHV:HQRORQJHUKDUNEDFNWR'HVFDUWHVZKR
EHOLHYHGWKDWDVFUHDPLQJGRJEHLQJGLVVHFWHGDOLYH
ZDV H[KLELWLQJ D SXUHO\ PHFKDQLFDO UHDFWLRQ 'DUZLQ
KLPVHOI UHFRJQL]HG WKDW DQLPDOV ZHUH FDSDEOH RI
PDQ\ HPRWLRQV VLPLODU WR KXPDQV ZKHQ KH VWDWHG
´:H KDYH VHHQ WKDW WKH VHQVHV DQG LQWXLWLRQV WKH
YDULRXVHPRWLRQVDQGIDFXOWLHVVXFKDVORYHPHPRU\
DWWHQWLRQDQGFXULRVLW\LPLWDWLRQUHDVRQHWFRIZKLFK
PDQ ERDVWV PD\ EH IRXQG LQ DQ LQFLSLHQW RU HYHQ
 75$'($1'(19,5210(175(9,(:

VRPHWLPHV D ZHOO GHYHORSHG FRQGLWLRQ LQ WKH ORZHU QHXURWLFLVPLQFUDWHGVRZV69&$WKHQH7UXVW

DQLPDOVµ 'DUZLQ  6DGO\ 'DUZLQ·V ZLVGRP LQ
WKLVUHVSHFWOD\IRUJRWWHQIRUGHFDGHV
3LJV FDQ RSHUDWH FRPSXWHU FKDOOHQJHV ZLWK PRUH
DELOLW\ WKDQ GRJV ² EXW WKDW RQO\ SURYHV WKDW VRPH
HOHPHQW RI SLJV· LQWHOOLJHQFH LV QRW XQOLNH RXU RZQ
3LJV DUH RI FRXUVH XQLTXHO\ LQWHOOLJHQW DW EHLQJ
SLJV 7KH FRQFUHWH DQG VODWWHG ÁRRU RI WKH DYHUDJH
SLJ IDFWRU\ IDUP IUXVWUDWHV WKH QDWXUDO H[SORUDWRU\ RU
URRWLQJ EHKDYLRXU RI SLJV ZKR OLNH WR VSHQG  SHU
FHQWRIWKHLUGD\OLJKWKRXUVLQVXFKEHKDYLRXU6WROED
 RU GLVWUHVVHG EHKDYLRXU LQ FRZV GHSULYHG RI
WKHLUFDOYHV
$SDUWIURPNHHSLQJWKHVHDQLPDOVWKURXJKRXWWKHLUOLYHV
LQWRWDOO\XQQDWXUDOVRFLDOJURXSLQJVDQGFRQGLWLRQVRI
GHSULYDWLRQ LQGXVWULDO IDUPLQJ KDV LQÁLFWHG DQRWKHU
VFDQGDORXV WHFKQRORJ\ XSRQ WKHVH FUHDWXUHV ,W KDV
WDNHQ VHOHFWLYH EUHHGLQJ WR D ZKROH QHZ OHYHO RI
VRSKLVWLFDWLRQZLWKGLVDVWURXVLPSDFWVRQWKHGD\WR
GD\OLYHVRIWKHDQLPDOV)RUH[DPSOHWKHUHDUHWKUHH
JOREDOFRPSDQLHVQRZUHVSRQVLEOHIRUWKHEUHHGVRI
DQG:RRG*XVK7KHPHWDOEDUVVXUURXQGLQJ FKLFNHQVEUHGIRUPHDWEURLOHUFKLFNHQVVROGZLGHO\
DQG LPPRELOL]LQJ WKH SUHJQDQW VRZ FDQ UHGXFH KHU ZRUOGZLGH7KRVHFKLFNHQVQRZJURZVRIDVWWKDWWKH\
WR GHVSHUDWH GHVSRQGHQF\ 69&  RU IUDQWLF UHDFKVODXJKWHUZHLJKWLQÀYHRUVL[ZHHNV²KDOIWKH
VWHUHRW\SLFUHSHWLWLYHEHKDYLRXUVXFKDVFKHZLQJRQ WLPHLWWRRN\HDUVDJR%UHGIRUPRUHEUHDVWPXVFOH
WKHEDUV%URRPHWDO
/D\LQJ KHQV NHSW IURP SXEHUW\ LQ D FURZGHG FDJH
ZLWK RIWHQ OHVV ÁRRU VSDFH WKDQ D VKHHW RI W\SLQJ
SDSHUFDQSURGXFHHJJVIRUDURXQGD\HDUDQGFRXOG
PHDWWKH\WHQGWRWLSIRUZDUGDQGXQDEOHWRVXSSRUW
WKHLUKHDY\ERGLHVKDYHEHFRPHSURQHWRDSSDOOLQJO\
SDLQIXOOHJSUREOHPV$UHVHDUFKWHDPVSRQVRUHGE\
WKH *RYHUQPHQW RI WKH 8QLWHG .LQJGRP IRXQG WKDW
SHUFHQWRIFKLFNHQVZHUHSDLQIXOO\ODPHIRUGD\V
FDUU\RQIRUORQJHU%XWE\WKHWLPHWKHVH´VSHQWµKHQV EHIRUHWKH\ZHQWWRVODXJKWHU.QRZOHVHWDO
UHDFK WKH VODXJKWHU KRXVH RQH VXUYH\ VKRZHG WKDW -RKQ:HEVWHU(PHULWXV3URIHVVRUDW%ULVWRO8QLYHUVLW\
SHUFHQWKDYHEURNHQERQHV*UHJRU\HWDO DQG IRUPHU KHDG RI WKH 9HWHULQDU\ 6FKRRO REVHUYHG
3URGXFLQJ HQRXJK FDOFLXP WR SURYLGH WKH VKHOOV IRU WKDW ´DSSUR[LPDWHO\ RQH TXDUWHU RI KHDY\ VWUDLQV RI
WKHHJJVVKHOD\VHDFK\HDUFRXSOHGZLWKODFN EURLOHU FKLFNHQ DQG WXUNH\V DUH LQ FKURQLF SDLQ IRU
RIH[HUFLVHIURPEHLQJFDJHGUHQGHUWKHKHQ·VERQHV
IUDJLOH DQG EULWWOH ,Q DGGLWLRQ WKH FDJH SUHYHQWV WKH
KHQIURPFDUU\LQJRXWWKHUHJXODUVHTXHQFHRIDFWLYLWLHV
VKH ZRXOG GR LQ D QDWXUDO HQYLURQPHQW ² SHFNLQJ
DW WKH JURXQG IRU IRRG VWUHWFKLQJ DQG ÁDSSLQJ KHU
ZLQJVGXVWEDWKLQJWRFOHDQKHUIHDWKHUVÁ\LQJXSWR
DSSUR[LPDWHO\RQHWKLUGRIWKHLUOLYHVµ:HEVWHU
'DLU\ FRZV VXFK DV WKH XELTXLWRXV EODFNDQGZKLWH
+ROVWHLQV KDYH EHHQ EUHG WR SURGXFH VR PXFK PLON
WKDWWKH\DUHPHWDEROLFDOO\EHLQJSXVKHGWRWKHOLPLW
QRZSURGXFLQJXSWRRUHYHQPRUHWKDQOLWUHV
DSHUFKDWQLJKWDZD\IURPSUHGDWRUVDQGOD\LQJKHU
HJJVLQDVHFOXGHGQHVW7KXVWKHFDJHVFRQVWLWXWHD
FRPELQDWLRQRISK\VLRORJLFDODQGPHQWDOGHSULYDWLRQ
0RUHDQGPRUHDQLPDOVSDUWLFXODUO\SLJVDQGSRXOWU\
EXW DOVR FDWWOH DUH EHLQJ NHSW LQ LQGXVWULDO IDUPV
WKURXJKRXWWKHZRUOG7KH)$2UHSRUWVWKDWLQGXVWULDO
D \HDU PDQ\ WLPHV PRUH WKDQ FDOYHV ZRXOG KDYH
GUXQNIURPWKHLUPRWKHUV7KH\DUHSURQHWRVXIIHULQJ
IURPKLJKUDWHVRISDLQIXOFRQGLWLRQVOLNHPDVWLWLVDQG
ODPHQHVV DVVRFLDWHG ZLWK WKHLU EUHHGLQJ IHHGLQJ
DQGKRXVLQJFRQGLWLRQV&RZVWKDWDUHNHSWLQ]HUR
JUD]LQJLQGRRUV\VWHPVDUHDWKLJKHUULVNRIPDVWLWLV
ODPHQHVVPHWULWLVNHWRVLVWHDWWUDPSGLIÀFXOWELUWKV
DQLPDOSURGXFWLRQV\VWHPVDUHLQFUHDVLQJDWVL[WLPHV DQG VRPH EDFWHULDO LQIHFWLRQV ()6$  $JDLQ
WKH UDWH RI WUDGLWLRQDO PL[HG IDUPLQJ V\VWHPV )$2 WKHFRPELQDWLRQRIEUHHGLQJIRUSURGXFWLYLW\DQGWKH
E$URXQGSHUFHQWRIIDUPDQLPDOVDUHQRZ WRWDOO\ XQQDWXUDO HQYLURQPHQWV KDV SURYHG KLJKO\
NHSW LQ WKHVH V\VWHPV SHUPDQHQWO\ KRXVHG RXW RI LQMXULRXVWRWKHDQLPDOV· ZHOIDUH<HWVRPHJRVR IDU
VLJKWDQGVDGO\RXWRIPLQG$QGWKHJOREDOEXUGHQ DV WR DGYRFDWH NHHSLQJ GDLU\ FRZV LQ VHDOHG XQLWV
RIIDUPDQLPDOVXIIHULQJLVRQO\OLNHO\WRLQFUHDVH /8&&*VRWKDWWKHLUPHWKDQHHPLVVLRQVFDQ
EH´VFUXEEHGµDQGSXWWRJRRGXVH6XFKDP\RSLF
7KLVLVQRWDFRQÁLFWEHWZHHQVFLHQWLÀFSURJUHVVDQG
UHFRPPHQGDWLRQ ZKLFK GLUHFWO\ DIIHFWV WKH OLYHV RI
KXPDQ HPSDWK\ ZLWK DQLPDOV 7KH VFLHQWLÀF GRVVLHU
WKH DQLPDOV WKHPVHOYHV VKRXOG VXUHO\ EH VXEMHFW WR
RQ WKH VXIIHULQJ FDXVHG WR DQLPDOV LQ LQGXVWULDO
DQ DVVHVVPHQW RI LWV HIIHFWV RQ DQLPDO KHDOWK DQG
IDUPLQJV\VWHPVLVFRQVWDQWO\JURZLQJ1HZUHVHDUFK
ZHOIDUH
VKRZV WKH FDSDFLW\ RI FKLFNHQV ² DQG ÀVK ² WR IHHO
SDLQ 'DQEXU\ HW DO  6QHGGRQ %UDLWKZDLWH 6R ZKHUH GR WKH EHVW VROXWLRQV OLH" 3HUKDSV WKH
DQG *HQWOH  2WKHU UHVHDUFK VKRZV VWDWHV RI DQVZHUV WR WKHVH SUREOHPV RI WR[LF HPLVVLRQV IURP
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW
IDFWRU\IDUPVRYHUH[SORLWDWLRQRIWKHHDUWK·VUHVRXUFHV
UXUDOSRYHUW\XUEDQREHVLW\DQGSRRUDQLPDOZHOIDUH
FDQEHIRXQGLQDSSO\LQJDPL[WXUHRIJRRGVFLHQFH
FRPPRQVHQVHDQGFRPSDVVLRQWRSURGXFHJHQXLQH
ZLQZLQVLWXDWLRQV
,WLVQRZZHOONQRZQWKDWSHUPDQHQWSDVWXUHFDQDFW
DV D FDUERQ VLQN 5HFHQW UHVHDUFK FRPSDULQJ WKH
HQYLURQPHQWDOLPSDFWVRIIRXUGLIIHUHQWNLQGVRIGDLU\
IDUPV IRXQG WKDW D ZHOOPDQDJHG GDLU\ KHUG NHSW
RXWGRRUV\HDUURXQGOHIWDFDUERQIRRWSULQWSHUFHQW
VPDOOHUWKDQWKDWRIDKLJKSURGXFWLRQGDLU\KHUGNHSW
LQ SHUPDQHQWKRXVLQJ ,QDGGLWLRQ DYHUDJHQHWIDUP
JUHHQKRXVHJDVHPLVVLRQVGHFOLQHGE\DERXWSHU
FHQW E\ NHHSLQJ WKH KHUG RXWGRRUV \HDUURXQG DQG
FXWDPPRQLDHPLVVLRQVE\DURXQGSHUFHQW5RW]

FDVHRIWXUNH\VQRORQJHUDEOHWRPDWHQDWXUDOO\GXH
WR WKHLU ZHLJKW $QLPDOV VKRXOG QRW EH EUHG LQ ZD\V
WKDWWKHLURZQSK\VLRORJ\EHFRPHVWKHLUZRUVWHQHP\
DV LV WKH FDVH ZLWK EURLOHU FKLFNHQV ,I KHQV VWUHWFK
WKHLUZLQJVDQGÁDSWKHPWKH\VKRXOGKDYHVSDFHWR
GR VR ,I SLJV VSHQG PRVW RI WKHLU WLPH URRWLQJ ZLWK
WKHLU KLJKO\ VHQVLWLYH VQRXWV WKH\ VKRXOG QHYHU EH
NHSW RQ IXOO\ VODWWHG ÁRRUV ZKHUH VXFK EHKDYLRXU LV
LPSRVVLEOH,IWKHDQLPDOVDUHNHSWLQGRRUVWKH\PXVW
EH SURYLGHG ZLWK D GHHSO\ HQULFKHG HQYLURQPHQW
ZKLFKSURYLGHVFRPIRUWDEOHEHGGLQJPDWHULDOSOHQW\
RI VSDFH DQG RSSRUWXQLWLHV IRU QDWXUDO EHKDYLRXU WR
ÁRXULVK
$QLPDOV· ERGLHV VKRXOG QRW EH PXWLODWHG WKURXJK
SUDFWLFHV VXFK DV GRFNLQJ SLJV· WDLOV LQ RUGHU WR
HWDO$VUXPLQDQWDQLPDOVWKHVHFRZVFRXOG
SXUVXHWKHLUQDWXUDOJUD]LQJEHKDYLRXUDQGDOWKRXJK
WKHLUSURGXFWLYLW\ZDVORZHULQWHUPVRIOLWUHVSURGXFHG
WKHLUPLONZDVKLJKHULQSURWHLQDQGIDWFRQWHQW7KXV
WKH QXWULWLRQDO RXWSXW IURP LQGRRU DQG RXWGRRU FRZV
ZDVVLPLODU
7R DFKLHYH KLJK ZHOIDUH VWDQGDUGV WKH QHHGV RI WKH
DQLPDOVWKHPVHOYHVVKRXOGEHFRQVLGHUHG,ISRXOWU\
VXFKDVFKLFNHQVWXUNH\VDQGGXFNVKDYHZLQJVZLWK
ZKLFK WR Á\ WKH\ VKRXOG QRW EH EUHG WR EHFRPH VR
KHDY\WKDWWKH\DUHQRORQJHUDEOHWRÁ\DQGLQWKH
%R[7ZHOYH)DUP$QLPDO:HOIDUH&ULWHULD
NHHSWKHPLQIDFWRU\IDUPFRQGLWLRQV$QLPDOVVKRXOG
EH IHG ZLWK DV QHDU D QDWXUDO GLHW DV SRVVLEOH DQG
QRW EH GHSULYHG RI QRUPDO TXDQWLWLHV RI IRRG DV LV
WKHFDVHZLWKWKHEUHHGHUELUGVRIWKHEURLOHUYDULHW\
7KH\ VKRXOG QRW EH GHSULYHG RI QHFHVVDU\ QXWULHQWV
DVKDSSHQVZLWKFDOYHVWKDWDUHIHGDORZLURQOLTXLG
GLHWWRSURGXFH´ZKLWHµYHDOQRUVKRXOGWKH\EHIRUFH
IHGIRUJRXUPHWSXUSRVHVVXFKDVIRUWKHSURGXFWLRQ
RI IRLH JUDV 0RUHRYHU DQLPDOV VKRXOG EH SURYLGHG
ZLWK WKH FRPSDQ\ RI WKHLU RZQ NLQG LQ QXPEHUV DV
FORVHDVSRVVLEOHWRQDWXUDOFRQGLWLRQV,VRODWLRQDQG
RYHUFURZGLQJVKRXOGQRWEHDOORZHG

6RFLHW\LVSURJUHVVLYHO\UHFRJQL]LQJDQLPDOV·FDSDFLWLHVDQGQHHGV7KH/LVERQ7UHDW\RIWKH(XURSHDQ8QLRQ(8LQ
FOXGHVDQDUWLFOHZKLFKUHFRJQL]HVWKDWDQLPDOVDUH´VHQWLHQWEHLQJVµDQGUHTXLUHVPHPEHU6WDWHVWRSURWHFWWKHLUZHOIDUH
(8)URPWKH(8WRVRPHVWDWHVLQWKH8QLWHG6WDWHVWR1HZ=HDODQGDQG$XVWUDOLDWKHUHDUHPRYHVWRSKDVHRXW
DQGEDQVRPHRIWKHPRUHH[WUHPHFRQÀQHPHQWV\VWHPVDVVRFLDWHGZLWKLQGXVWULDOIDUPLQJ
7KH(XURSHDQ&RPPLVVLRQVSRQVRUHG:HOIDUH4XDOLW\UHVHDUFKSURMHFWHVWDEOLVKHGDOLVWRIWZHOYHIDUPDQLPDOZHOIDUH
FULWHULD7KHVHDUH
‡ $QLPDOVVKRXOGQRWVXIIHUIURPSURORQJHGKXQJHU
‡ $QLPDOVVKRXOGQRWVXIIHUIURPSURORQJHGWKLUVW
‡ $QLPDOVVKRXOGKDYHFRPIRUWDURXQGUHVWLQJ
‡ $QLPDOVVKRXOGKDYHWKHUPDOFRPIRUW
‡ $QLPDOVVKRXOGKDYHHQRXJKVSDFHWRPRYHDURXQGIUHHO\
‡ $QLPDOVVKRXOGEHIUHHRISK\VLFDOLQMXULHV
‡ $QLPDOVVKRXOGEHIUHHRIGLVHDVH
‡ $QLPDOVVKRXOGQRWVXIIHUSDLQIURPLQDSSURSULDWHPDQDJHPHQWRUKDQGOLQJ
‡ $QLPDOVVKRXOGEHDEOHWRH[SUHVVQRUPDOQRQKDUPIXOEHKDYLRXUV
‡ $QLPDOVVKRXOGEHDEOHWRH[SUHVVRWKHUVSHFLHVVSHFLÀFQRUPDOEHKDYLRXUV
‡ $QLPDOVVKRXOGEHKDQGOHGZHOOLQDOOVLWXDWLRQV
‡ 3RVLWLYHHPRWLRQVVKRXOGEHSURPRWHGDQGQHJDWLYHHPRWLRQVVXFKDVIHDUGLVWUHVVIUXVWUDWLRQDQGDSDWK\VKRXOG
EHDYRLGHG
6RXUFHZZZDQLPDOZHOIDUHSODWIRUPHX
 75$'($1'(19,5210(175(9,(:

%R[7KH)LYH)UHHGRPV

)UHHGRPIURPKXQJHUDQGWKLUVW²E\UHDG\DFFHVVWRIUHVKZDWHUDQGDGLHWWRPDLQWDLQIXOOKHDOWKDQGYLJRXU
)UHHGRPIURPGLVFRPIRUW²E\SURYLGLQJDQDSSURSULDWHHQYLURQPHQWLQFOXGLQJVKHOWHUDQGDFRPIRUWDEOHUHVWLQJ
DUHD
)UHHGRPIURPSDLQLQMXU\RUGLVHDVH²E\SUHYHQWLRQRUUDSLGGLDJQRVLVDQGWUHDWPHQW
)UHHGRPWRH[SUHVVQRUPDOEHKDYLRXU²E\SURYLGLQJVXIÀFLHQWVSDFHSURSHUIDFLOLWLHVDQGFRPSDQ\RIWKHDQLPDO·V
RZQNLQG
)UHHGRPIURPIHDUDQGGLVWUHVV²E\HQVXULQJFRQGLWLRQVDQGWUHDWPHQWZKLFKDYRLGPHQWDOVXIIHULQJ
6RXUFHZZZIDZFRUJXNIUHHGRPVKWP

,W LV YLWDO WKDW WKRVH LQ FKDUJH RI WKH DQLPDOV DUH QRW
RQO\ WUDLQHG EXW DUH DOVR FRPSDVVLRQDWH +RZHYHU
JRRG PDQDJHPHQW LV QHYHU DQ H[FXVH IRU NHHSLQJ
DQLPDOVLQDSRRUHQYLURQPHQWLQWKHÀUVWSODFH:HOO
PDQDJHG LQGXVWULDO SLJ IDUPV DUH VWLOO GHWULPHQWDO WR
DQLPDOZHOOEHLQJHYHQLIWKHLUPDQDJHUVGRWKHLUEHVW
FRPSHWH 7KH PHVVDJH WR FRQVXPHUV ZKR FDQ
DIIRUGPHDWHYHU\GD\LVWRUHGXFHWKHLUFRQVXPSWLRQ
DQG ZKHQ WKH\ EX\ PHDW WR VSHQG D OLWWOH PRUH
² EXW OHVV IUHTXHQWO\ ² RQ SXUFKDVLQJ RQO\ DQLPDO
IULHQGO\ HQYLURQPHQWDOO\ IULHQGO\ SURGXFWV $ UHSRUW
FRPPLVVLRQHGE\&RPSDVVLRQLQ:RUOG)DUPLQJDQG
WRPLWLJDWHWKHKDUPIXOLPSDFWV
9DULRXV PHWKRGV WR HQVXUH JRRG DQLPDO ZHOIDUH
VWDQGDUGV KDYH EHHQ GHYHORSHG VXFK DV WKH
PXFK DGPLUHG )LYH )UHHGRPV DQG WKH 7ZHOYH )DUP
$QLPDO :HOIDUH &ULWHULD GHYHORSHG IRU WKH (XURSHDQ
&RPPLVVLRQ·V :HOIDUH 4XDOLW\ SURMHFW VHH ER[HV 
)ULHQGV RI WKH (DUWK 8QLWHG .LQJGRP VKRZV WKDW LW
ZLOOEHSRVVLEOHWRIHHGWKHZRUOGSRSXODWLRQLQ
XVLQJ D FRPELQDWLRQ RI PL[HG IDUPLQJ DQG RUJDQLF
PHWKRGV DORQJ ZLWK JRRG DQLPDO ZHOIDUH V\VWHPV
EXW RQO\ LI JOREDOO\ FRQVXPHUV RI ODUJH TXDQWLWLHV
RI DQLPDO SURGXFWV FXW EDFN RQ WKHLU FRQVXPSWLRQ
&RPSDVVLRQ LQ :RUOG )DUPLQJ DQG )ULHQGV RI WKH
DQG
,W LV QRW MXVW IDUPHUV RU DJULEXVLQHVV FRPSDQLHV
WKDW QHHG WR DFW WR DFKLHYH DQLPDOIULHQGO\ IDUPLQJ
,I FRQVXPHUV FRQWLQXH WR FDOO IRU ´FKHDS PHDWµ WKH
IDFWRU\ IDUPV ZLOO FRQWLQXH 7KH LURQ\ LV WKDW VXFK
IDUPV DUH LQ IDFW FRVWO\ WR WKH HQYLURQPHQW WR WKH
DQLPDOV DQG WR VPDOOVFDOH IDUPHUV ZKR FDQQRW
(DUWKE
*HQXLQHZLQZLQVDUHSRVVLEOH,WLVXSWRLQGLYLGXDOV
JRYHUQPHQWV OHQGLQJ EDQNV DQG JOREDO DJULFXOWXUDO
DQG IRRG LQVWLWXWLRQV WR PDNH HWKLFDO FKRLFHV DQG
GULYHSROLFLHVDQGSUDFWLFHVLQWKHULJKWGLUHFWLRQ7KH
HDUWKWKHDQLPDOVDQGRXUIHOORZKXPDQVQHHGVXFK
DFRPPLWPHQW
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

1//'06#4; U 06')4#6'&412X+8'561%-#0& 0'4);

#0#)'/'06U*'#5'1(+1)#5+074#.
6*+12+#
6WDQOH\*ZDYX\D
.QRZOHGJH0DQDJHPHQW&RRUGLQDWRU3DUWQHUVKLSIRU'HYHORSPHQW,QLWLDWLYH7UXVW=LPEDEZH

$EVWUDFW
‡ %LRJDVWHFKQRORJ\HQKDQFHVV\QHUJLHVLQFURSOLYHVWRFNDQGHQHUJ\V\VWHPVEHFDXVHWKHE\SURG
XFWRIIHUPHQWDWLRQVOXUU\IURPVDYHGGXQJLVXVHGDVIHUWLOL]HUDQGWKHVDYHGFURSUHVLGXHVDUHXVHG
DVDQLPDOIHHG
‡ /DERXURWKHUZLVHXVHGIRUFROOHFWLQJÀUHZRRGDQGGXQJFDQEHGLUHFWHGWRZDUGVHFRQRPLFDOO\SUR
GXFWLYHDFWLYLWLHVVXFKDVDJULFXOWXUH
‡ ,QFUHDVHGDJULFXOWXUDOSURGXFWLYLW\DQGRURYHUDOOLQFRPHLPSURYHWKHDWWUDFWLYHQHVVRIELRJDVDVD
ODERXUVDYLQJWHFKQRORJ\VRWKDWDSRVLWLYHV\QHUJ\HIIHFWOLPLWHGWRKRXVHKROGVFROOHFWLQJWKHLURZQ
HQHUJ\ VRXUFHV DQG LQ WKH DEVHQFH RI D VXEVLG\ EHWZHHQ HFRQRPLF GHYHORSPHQW DQG LPSURYHG
HQHUJ\XWLOL]DWLRQFDQEHUHDOL]HG

$,QWURGXFWLRQDQGEDFNJURXQG ZRUOGZLGHZKLFKLVKLJKHUWKDQGHDWKVIURPPDODULD
DQG DOPRVW KDOI RI DOO +,9$,'6 GHDWKV WKH PDMRULW\
%LRPDVVFRQVLVWLQJRIÀUHZRRGFKDUFRDOGXQJDQG RI ZKLFK RFFXU LQ VXE6DKDUDQ $IULFD ,($ 
FURSUHVLGXHVUHPDLQVWKHPDLQVRXUFHRIHQHUJ\LQ $OWKRXJKÀUHZRRGUHPDLQVWKHPDLQELRPDVVHQHUJ\
VXE6DKDUDQ$IULFD'DYLGVRQDQG6RNRQD ,Q
(WKLRSLDIRULQVWDQFHELRPDVVVXSSOLHVRYHUSHU
FHQW RI WKH WRWDO QDWLRQDO HQHUJ\ GHPDQG DQG UXUDO
KRXVHKROGV DUH DOPRVW HQWLUHO\ GHSHQGHQW RQ WKLV
VRXUFH IRU WKHLU HQHUJ\ QHHGV 7KH PDLQ VRXUFHV RI
VRXUFH LW LV EHFRPLQJ VFDUFH LQ WKH UXUDO DUHDV RI
(WKLRSLDDQGKRXVHKROGVDUHLQFUHDVLQJO\XVLQJGXQJ
DQG FURS UHVLGXHV LQVWHDG 7KH JURZLQJ VFDUFLW\ RI
ÀUHZRRGLVOHDGLQJWRUHGXFHGDJULFXOWXUDOSURGXFWLRQ
DVKRXVHKROGVDOORFDWHODERXUDZD\IURPDJULFXOWXUH
HQHUJ\DUHZRRG\ELRPDVVSHUFHQWGXQJSHU DV PRUH DJULFXOWXUDO ODQG LV DOORFDWHG WR ÀUHZRRG
FHQWFURSUHVLGXHVSHUFHQWDQGSHWUROHXPSHU SURGXFWLRQ DQG DV KRXVHKROGV XVH PRUH GXQJ DQG
FHQW+RXVHKROGVDFFRXQWIRUSHUFHQWRIQDWLRQDO FURS UHVLGXHV IRU IXHO UDWKHU WKDQ IRU IHUWLOL]HU DQG
HQHUJ\FRQVXPSWLRQZKLOHUXUDOKRXVHKROGVDFFRXQW DQLPDO IHHG UHVSHFWLYHO\ &RRNH .|KOLQ DQG +\GH
IRU  SHU FHQW RI WKH QDWLRQDO HQHUJ\ FRQVXPSWLRQ 6FDUFLW\RIÀUHZRRGDOVRSODFHVDQLQFUHDVLQJ
GHULYHGPDLQO\IURPELRPDVVHQHUJ\VRXUFHV(VWKHWH EXUGHQ RQ ZRPHQ DQG FKLOGUHQ ZKR DUH LWV PDLQ
6RQGHUDQG+HHGJH FROOHFWRUV
7KH ZLGHVSUHDG XVH RI ELRPDVV HQHUJ\ VRXUFHV %LRJDVZKLFKRIIHUVRQHWHFKQLFDOO\SRVVLEOHHQHUJ\
KDV EHHQ IRXQG WR EH ODUJHO\ LQHIÀFLHQW DGYHUVHO\ DOWHUQDWLYHIRUUXUDODUHDVFDQKHOSPLWLJDWHVRPHRI
DIIHFWLQJ WKH HQYLURQPHQW KXPDQ KHDOWK DQG IRRG WKH FRQVHTXHQFHV RI DQ RYHUUHOLDQFH RQ ELRPDVV
VHFXULW\ 'HZHHV  'DQJ  ,($  HQHUJ\ DQG LV JDLQLQJ SRSXODULW\ LQ $IULFD 81(6&2
(QYLURQPHQWDOSUREOHPVDULVHIURPGHIRUHVWDWLRQODQG DQG 7DWD (QHUJ\ 5HVHDUFK ,QVWLWXWH  :LWK WKH
GHJUDGDWLRQDQGDLUSROOXWLRQWKDWOHDGWRJUHHQKRXVH SRWHQWLDOWRVHUYHXSWRPLOOLRQIDPLO\XQLWVELRJDV
JDV*+*HPLVVLRQV$QQXDOGHDWKVIURPLQGRRUDLU WHFKQRORJ\KDVEHHQSURPRWHGVLQFHLQRUGHUWR
SROOXWLRQ UHVXOWLQJ IURP WKH XVH RI ELRPDVVVRXUFHG KHOSRYHUFRPHWKHLQFUHDVLQJHQHUJ\FULVLVLQ(WKLRSLD
HQHUJ\ KDYH EHHQ HVWLPDWHG DW DURXQG  PLOOLRQ (60$3  +RZHYHU VWXGLHV LQGLFDWH WKDW
 75$'($1'(19,5210(175(9,(:

FRPPXQLW\ GLJHVWHUV DUH SURQH WR IDLOXUH FRPSDUHG ZKHQ PRUH FURS UHVLGXHV DUH DYDLODEOH 'XQJ
ZLWKLQGLYLGXDOIDPLO\XQLWV$IHDVLELOLW\VWXG\FDUULHG FROOHFWLRQ LV PRUH SURPLQHQW GXULQJ WKH GU\ VHDVRQ
RXWE\(VWKHWH6RQGHUDQG+HHGJHUHYHDOHG ZKHQLWLVHDVLHUWRSURFHVV,WLVWKHQVWRUHGIRUXVH
WKDW RI WKH  WR  GRPHVWLF SODQWV LQ (WKLRSLD GXULQJWKHZHWVHDVRQ
DERXWSHUFHQWKDGVWRSSHGIXQFWLRQLQJGXHWRD
UDQJH RI SUREOHPV LQFOXGLQJ ZDWHU VKRUWDJH GXQJ
&$QDO\VLVRIWKHSRWHQWLDORI
VKRUWDJHWHFKQLFDOSUREOHPVDEDQGRQPHQWDQGORVV
RI LQWHUHVW 'HVSLWH SDVW IDLOXUHV WKHUH LV UHQHZHG
ELRJDVHQHUJ\
LQWHUHVW LQ ELRJDV HQHUJ\ LQ (WKLRSLD ,Q  WKH $ FRVWEHQHÀW DQDO\VLV RI  P DQG  P ELRJDV
1DWLRQDO%LRJDV3URJUDPPH(WKLRSLD1%3(LQLWLDWHG SODQWVSURPRWHGE\WKH1%3(ZDVFRQGXFWHG:KLOH
D PXOWLVWDNHKROGHUGULYHQ SURJUDPPH WR GHYHORS WKH  P SODQW LV WKH PRVW FRPPRQ WKH  P SODQW
D YLDEOH DQG VXVWDLQDEOH FRPPHUFLDO ELRJDV VHFWRU LV DSSURSULDWH XQGHU FRQGLWLRQV ZKHUH OLYHVWRFN
(WKLRSLD 5XUDO (QHUJ\ 'HYHORSPHQW DQG 3URPRWLRQ QXPEHUV DUH ORZ )RU TXDOLI\LQJ KRXVHKROGV 1%3(
&HQWHU DQG 619 (WKLRSLD  ,QLWLDOO\ IDPLO\ VL]H UHFRPPHQGVDOLYHVWRFNKROGLQJRIDWOHDVWIRXUFDWWOH
ELRJDVSODQWVUDQJLQJIURPPWRPDUHEHLQJ IRU WKH  P ELRJDV SODQW DQG VL[ FDWWOH IRU WKH  P
FRQVWUXFWHG LQ VHOHFWHG UHJLRQV RI 7LJUD\ $PKDUD ELRJDVSODQW$PRQJWKHVXUYH\HGKRXVHKROGVDERXW
2URPLD DQG 6RXWKHUQ 1DWLRQV 1DWLRQDOLWLHV DQG  SHU FHQW TXDOLÀHG IRU WKH  P ELRJDV SODQW DQG
3HRSOHV5HJLRQ61135
$ VXUYH\ RI  UDQGRPO\ VHOHFWHG KRXVHKROGV LQ
WKH 'DOH DQG $UVL 1HJHOH GLVWULFWV RI (WKLRSLD ZDV
FRQGXFWHG EHWZHHQ $SULO DQG 0D\  WR DVVHVV
DERXWSHUFHQWIRUWKHPSODQW,QYHVWPHQWFRVWV
XVHGLQWKLVVWXG\ZHUHEDVHGRQGDWDSURYLGHGE\WKH
1%3(EDVHGRQSULFHVSUHYDLOLQJLQ0DUFK7KH
WRWDOFRVWVRILQYHVWLQJLQDELRJDVSODQWDPRXQWHGWR
WKH HFRQRPLFV RI ÀUHZRRG DQG GXQJ XVH LQ UXUDO (WKLRSLDQELUU(7%IRUDPSODQWDQG
(WKLRSLD WR LPSURYH XQGHUVWDQGLQJ RI KRXVHKROG (7%IRUDPSODQW7KH1%3(SD\VD
HQHUJ\ XVH SDWWHUQV DQG DQDO\VH WKH SRWHQWLDO RI VXEVLG\ RI  (7%  SHUSODQW UHJDUGOHVV RI
ELRJDV WHFKQRORJ\ DV D SRVVLEOH DOWHUQDWLYH VR DV VL]H7KHUHPDLQLQJFRVWVIRUHDFKRIWKRVHSODQWVDUH
WR LQFUHDVH WKH FKDQFHV RI VXFFHVV LQ SURPRWLQJ ERUQHE\WKHIDUPHUV7KHFRVWVRIRSHUDWLQJWKHSODQW
FOHDQHU HQHUJ\ VRXUFHV 6FKODJ DQG =X]DUWH 
7KHÀQGLQJVRIWKHVWXG\DUHSUHVHQWHGEULHÁ\LQWKH
QH[WVHFWLRQIROORZHGE\VRPHRILWVFRQFOXVLRQVDQG
UHFRPPHQGDWLRQV
%5HVHDUFKÀQGLQJVIURPKRXVHKROG
VXUYH\VDQGFRVWEHQHÀWDQDO\VLV
$JULFXOWXUDO SURGXFWLRQ V\VWHPV LQ WKH VXUYH\HG
DUHDV DUH PDLQO\ VPDOOVFDOH DQG VXEVLVWHQFH
RULHQWHG JHDUHG WR OLYHVWRFN DQG FURS SURGXFWLRQ
7KHPDLQO\UDLQIHGFURSSURGXFWLRQKDVWZRVHDVRQV
DOVR LQFOXGHG WKH RSSRUWXQLW\ FRVWV RI WLPH XVHG LQ
FROOHFWLQJGXQJDQGWKHFRVWVRIZDWHUQHHGHGWRIHHG
WKHELRJDVSODQW
7KH  P DQG  P ELRJDV SODQWV KDYH WKH SRWHQWLDO
WRUHSODFHXSWRNJDQGNJUHVSHFWLYHO\
RI ÀUHZRRG SHU \HDU ZKHQ RSHUDWLQJ DW IXOO FDSDFLW\
DQG WKH\ FDQ VDYH XS WR  NJ DQG  NJ RI
GXQJUHVSHFWLYHO\SHU\HDU+RZHYHUWKHSRWHQWLDOWR
UHSODFHÀUHZRRGZLWKELRJDVZDVDVVXPHGWREHRQO\
 SHU FHQW DV WKH FXUUHQW VHWXS GRHV QRW VXSSRUW
,QMHUDEDNLQJZKLFKDFFRXQWVIRUXSWRSHUFHQW
RIUXUDOKRXVHKROGV·WRWDOHQHUJ\XVH((65&
WKH PDLQ VHDVRQ 0HKHU EHJLQQLQJ LQ $SULO0D\
2EWDLQHG ELRJDV ZDV YDOXHG LQ WHUPV RI UHSODFHG
ZLWK KDUYHVWV LQ 1RYHPEHU'HFHPEHU DQG D VKRUWHU
ÀUHZRRGDQGGXQJ
VHDVRQ %HOJ IURP )HEUXDU\ WR -XQH 7KH OLYHVWRFN
DQG FURS SURGXFWLRQ V\VWHPV DUH KLJKO\ LQWHJUDWHG 7RFDSWXUHWKHEHQHÀWVIRUGLIIHUHQWKRXVHKROGW\SHV
FURS UHVLGXHV DUH VWRUHG DV DQLPDO IHHG ZKLOH GXQJ LQ WHUPV RI HQHUJ\ PDQDJHPHQW D FRVWEHQHÀW
LVDQLPSRUWDQWVRXUFHRIIHUWLOL]HU+RXVHKROGVLQWKH DQDO\VLVZDVSHUIRUPHGXVLQJWKUHHVFHQDULRVLIRU
VXUYH\HGDUHDVXVHDFRPELQDWLRQRIHQHUJ\VRXUFHV KRXVHKROGVWKDWLQYHVWLQELRJDVWRUHSODFHSXUFKDVHG
WKURXJKRXW WKH \HDU )LUHZRRG LV WKH ODUJHVW VRXUFH
RIHQHUJ\ZLWKWKHKLJKHVWDPRXQWEHLQJXVHGLQWKH
WKLUGTXDUWHURIHDFK\HDU2WKHUFRRNLQJIXHOVFRQVLVW
PDLQO\RIGXQJDQGFURSUHVLGXHVEXWDOVRNHURVHQH
FKDUFRDO DQG HOHFWULFLW\ 8VH RI FURS UHVLGXH LV KLJK
DWKDUYHVWWLPHZKLFKUXQVIURP2FWREHUWR-DQXDU\
ÀUHZRRGRULLWRUHSODFHFROOHFWHGÀUHZRRGDQGLLL
IRU KRXVHKROGV WKDW XVH GXQJ DV DQ HQHUJ\ VRXUFH
LQ DGGLWLRQ WR FROOHFWHG ÀUHZRRG $OO WKUHH VFHQDULRV
DVVXPHG WKDW GXQJ DQG VOXUU\ ZRXOG EH XVHG DV
IHUWLOL]HU)RUFROOHFWHGHQHUJ\VRXUFHVZLWKQRPDUNHW
YDOXH WKH PDUJLQDO SURGXFWLYLW\ RI IHPDOH ODERXU LQ
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

IDUP SURGXFWLRQ ZDV XVHG 'XQJ FDUULHV DGGLWLRQDO SHU FHQW RI FRVWV DQG EHQHÀWV UHVSHFWLYHO\ 7KHVH
YDOXHIRULWVIHUWLOL]HUFRQWHQW$FFRUGLQJWRODERUDWRU\ UHVXOWVDUHKLJKO\VHQVLWLYHWRFKDQJHVLQWLPHVDYLQJV
WHVWV FRQGXFWHG RQ GXQJ VDPSOHV WDNHQ  NJ RI H[SHQGLWXUH OHYHOV DQG SULFH RI UHSODFHG IXHO LQ DOO
GLDPPRQLXP SKRVSKDWH '$3 LV HTXLYDOHQW WR WKUHHKRXVHKROGVFHQDULRV7KHVHIDFWRUVDUHFUXFLDO
DSSUR[LPDWHO\NJRIGU\PDQXUH$FFRUGLQJWRWKH DV WKH\ DUH OLNHO\ WR GHWHUPLQH DQWLFLSDWHG EHQHÀWV
VXUYH\ÀQGLQJV'$3KDVDQDYHUDJHIDUPJDWHSULFH DQG SHUFHLYHG RSSRUWXQLW\ FRVWV RI FDSLWDO ZKLFK
SXUFKDVH SULFH SOXV WUDQVSRUW FRVWV RI  (7% LQÁXHQFH KRXVHKROGV· GHFLVLRQ RQ ZKHWKHU WR LQYHVW
 SHU NLORJUDP 7KLV WUDQVODWHV LQWR  (7% LQELRJDV:LWKRXWWKHVXEVLG\JLYHQWRIDUPHUVE\WKH
SHUNLORJUDPRIGXQJ&RPELQLQJFROOHFWLRQFRVWVDQG 1%3( LQYHVWLQJ LQ WKH ELRJDV SODQW LV YHU\ ULVN\ IRU
IHUWLOL]HURSSRUWXQLW\FRVWVGXQJKDVDVKDGRZSULFH KRXVHKROGVWKDWFROOHFWWKHLURZQÀUHZRRG
RI(7%SHUNLORJUDPDQG(7%
SHUJLJDMRXOHZKHQXVHGDVDQHQHUJ\VRXUFH
'&RQFOXVLRQVDQGUHFRPPHQGDWLRQV
7KHVXUYH\IRXQGUDWHVRIUHWXUQRQFDSLWDOLQYHVWHGLQ
ELRJDVSODQWVWREHDERYHSHUFHQWWDEOHZKLFK
VKRZHG WKDW DGRSWLQJ ELRJDV WHFKQRORJ\ LV PRUH
EHQHÀFLDO IRU KRXVHKROGV WKDW SXUFKDVH DOO RI WKHLU
ÀUHZRRG 7KLV IDFWRU DOVR PDNHV ELRJDV DWWUDFWLYH
WR WKLV VHJPHQW RI UXUDO KRXVHKROGV DV EHQHÀWV DUH
ÀQDQFLDOO\ UHFRYHUHG WKURXJK VDYLQJV RQ ÀUHZRRG
SXUFKDVH+RXVHKROGVWKDWXVHGXQJIRUFRPEXVWLRQ
VWDQG WR EHQHÀW PRUH KLJKHU QHW SUHVHQW YDOXH
%LRJDV WHFKQRORJ\ SUHVHQWV DQ RSSRUWXQLW\ WR
HQKDQFH V\QHUJLHV LQ FURS OLYHVWRFN DQG HQHUJ\
V\VWHPV LQ UXUDO (WKLRSLD 7KH E\SURGXFW RI WKH
IHUPHQWDWLRQ²VOXUU\²UHWDLQVWKHQXWULHQWFRQWHQWWKDW
LV RWKHUZLVH ORVW WKURXJK GLUHFW FRPEXVWLRQ RI GXQJ
IRU HQHUJ\ &URS UHVLGXHV WKDW PLJKW RWKHUZLVH EH
XVHGIRUHQHUJ\DUHVDYHGIRUDQLPDOIHHG+RZHYHU
ORZ VKDGRZ SULFHV RI HQHUJ\ VRXUFHV FROOHFWHG E\
139 WKDQ WKRVH FROOHFWLQJ ÀUHZRRG E\ DGRSWLQJ KRXVHKROGV PHDQ WKDW ELRJDV LV XQDEOH WR FRPSHWH
ELRJDV WHFKQRORJ\ 8QGHU DOO WKUHH VFHQDULRV GXQJ XQOHVV KHDYLO\ VXEVLGL]HG 7KH SUHVHQW VXEVLG\
DQG VOXUU\ XVHG DV IHUWLOL]HU DFFRXQWHG IRU RYHU  VFKHPH PDNHV ELRJDV DQ DWWUDFWLYH RSWLRQ EXW WKLV

7DEOH&RVWEHQHÀWDQDO\VLVRIELRJDVSODQWVFRPSDUHGZLWKGLIIHUHQWWUDGLWLRQDOVRXUFHVRIKRXVHKROGHQHUJ\LQ
(WKLRSLD(WKLRSLDQELUU 

3XUFKDVLQJÀUHZRRG &ROOHFWLQJÀUHZRRG &ROOHFWLQJGXQJ

P P P P P P
&RVWV
,QYHVWPHQWFRVWV      
0DLQWHQDQFHFRVWV      
:DWHUFRVWV      
'XQJYDOXH      
7RWDOFRVWV      
%HQHÀWV
%LRJDVYDOXH      
/LJKWLQJHQHUJ\VDYHG      
7LPHVDYHG      
6OXUU\YDOXH      
7RWDOEHQHÀWV      

1HWSUHVHQWYDOXH      
,QWHUQDOUDWHRIUHWXUQ
SHUFHQW      
6RXUFH6XUYH\GDWDDQG619
1RWH
Ą (7% (7%DZHLJKWHGDYHUDJH$SULO
 'LVFRXQWUDWHSHULRGRIXVHRIELRJDVSODQW\HDUV

ZRXOGQRWEHWKHFDVHLIVXEVLGLHVZHUHUHPRYHG
)URP WKH FRVWEHQHÀW DVVHVVPHQW RI ELRJDV SODQWV
LQYHVWLQJKRXVHKROGVVWDQGWREHQHÀWPDLQO\WKURXJK
WKH XVH RI VOXUU\ DV D IHUWLOL]HU DV ZHOO DV WKURXJK
FRVW VDYLQJV RQ HQHUJ\ XVH IRU WUDGLWLRQDO FRRNLQJ
DQG OLJKWLQJ DQG WKH DVVRFLDWHG ODERXU VDYLQJV
&RQVHTXHQWO\SURÀWDELOLW\GHSHQGVODUJHO\RQWKHXVH
RI VOXUU\ DV D IHUWLOL]HU DQG RQ WKH SULFH RI UHSODFHG
HQHUJ\VRXUFHV7KXVSURPRWLRQRIGXQJDQGVOXUU\
LV YLWDO IRU WKH VXFFHVV RI WKH ELRJDV SURJUDPPH LQ
(WKLRSLDDQGIRULPSURYLQJDJULFXOWXUDOSURGXFWLRQIRU
IRRGVHFXULW\$V\QHUJ\WREHIXUWKHUH[SORLWHGLVWKH
ODERXUVDYLQJ HIIHFW RI ELRJDV FRPSDUHG ZLWK ZRRG
75$'($1'(19,5210(175(9,(:
RU GXQJ FROOHFWLRQ 7KXV WKH PRUH LQFHQWLYHV WKHUH
DUH WR VZLWFK WR VXVWDLQDEOH HQHUJ\ VRXUFHV VXFK
DV ELRJDV WKH JUHDWHU ZLOO EH WKH SURÀWDELOLW\ DQG
LPSURYHPHQWRIODERXUSURGXFWLYLW\LQDJULFXOWXUHDQG
RWKHUVHFWRUV
7KHHFRQRPLFDWWUDFWLYHQHVVRIELRJDVSODQWVZRXOG
EH FRQVLGHUDEO\ LPSURYHG LI VXLWDEOH ELRJDV
LQMHUD VWRYHV ZHUH GHYHORSHG IRU XVH E\ LQYHVWLQJ
KRXVHKROGV 7KHVH VWRYHV KDYH WKH SRWHQWLDO WR
HQKDQFHWKHXVHRIELRJDVSODQWVWKHUHE\LQFUHDVLQJ
WKH EHQHÀWV DFFUXLQJ WR KRXVHKROGV &KHDSHU
DOWHUQDWLYHV WR ELRJDV SODQWV DQG LPSURYHPHQWV LQ
WKH WHFKQRORJ\ UHPDLQ DQ RSWLRQ LQ FDWHULQJ WR SRRU
KRXVHKROGV
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

5HIHUHQFHV

$VQHU*DQG$UFKHU6/LYHVWRFNDQGWKHJOREDOFDUERQF\FOH,Q/LYHVWRFNLQDFKDQJLQJODQGVFDSH/RQGRQ

6WHLQIHOG+HWDOHGV²
$WKHQH7UXVW'RHVFORVHFRQÀQHPHQWFDXVHGLVWUHVVLQVRZV"$UHYLHZRIWKHVFLHQWLÀFHYLGHQFH3UHSDUHGE\
WKH6FRWWLVK)DUP%XLOGLQJV,QYHVWLJDWLRQ8QLW$EHUGHHQ6FRWODQG
%ODVEDOJ7/&KDQJHVLQFRQVXPSWLRQRIRPHJDDQGRPHJDIDWW\DFLGVLQWKH8QLWHG6WDWHVGXULQJWKHWK
FHQWXU\$PHULFDQ-RXUQDORI&OLQLFDO1XWULWLRQ²
%URRP'00HQGO07DQG=DQHOOD$-$FRPSDULVRQRIWKHZHOIDUHRIVRZVLQGLIIHUHQWKRXVLQJFRQGLWLRQV
$QLPDO6FLHQFH
&RPSDVVLRQLQ:RUOG)DUPLQJDQG)ULHQGVRIWKH(DUWKD&RPSDVVLRQLQ:RUOG)DUPLQJ:HOIDUH
RISLJVLQWKH(XURSHDQ8QLRQ7KHXUJHQWQHHGIRUUHIRUPRIH[LVWLQJOHJLVODWLRQDQGHIIHFWLYHHQIRUFHPHQW
$YDLODEOH DW ZZZFLZIRUJXNLQFOXGHVGRFXPHQWVFPBGRFVZZHOIDUHBRIBSLJVBLQBWKHBHXURSHDQB
XQLRQBSGI
&RPSDVVLRQ LQ :RUOG )DUPLQJ DQG )ULHQGV RI WKH (DUWK E (DWLQJ WKH 3ODQHW )HHGLQJ DQG IXHOOLQJ WKH ZRUOG
VXVWDLQDEO\IDLUO\DQGKXPDQHO\$YDLODEOHDWFLZIRUJHDWLQJWKHSODQHW
&RRNH3.|KOLQ*DQG+\GH:))XHOZRRGIRUHVWVDQGFRPPXQLW\PDQDJHPHQW(YLGHQFHIURPKRXVHKROG
VWXGLHV(QYLURQPHQWDQG'HYHORSPHQW(FRQRPLFV²
'·6LOYD-DQG:HEVWHU-7KH0HDW&ULVLV/RQGRQDQG:DVKLQJWRQ(DUWKVFDQ
'DQEXU\7&:HHNV&$:DWHUPDQ3HDUVRQ$(.HVWLQ6&DQG&KDPEHUV-36HOIVHOHFWLRQRIWKHDQDOJHVLF
GUXJFDUSURIHQE\ODPHEURLOHUFKLFNHQV9HWHULQDU\5HFRUG²
'DQJ+)XHOVXEVWLWXWLRQLQVXE6DKDUDQ$IULFD(QYLURQPHQWDO0DQDJHPHQW²
'DUZLQ&7KH'HVFHQWRI0DQDQG6HOHFWLRQLQ5HODWLRQWR6H[3ULQFHWRQ1-3ULQFHWRQ8QLYHUVLW\3UHVV
'DYLGVRQ2DQG6RNRQD<(QHUJ\DQGVXVWDLQDEOHGHYHORSPHQW.H\LVVXHVIRU$IULFD,Q81(33URFHHGLQJVRI
WKH+LJK/HYHO5HJLRQDO0HHWLQJRQ(QHUJ\DQG6XVWDLQDEOH'HYHORSPHQWIRUWKH1LQWK6HVVLRQRIWKH&RPPLVVLRQ
RQ6XVWDLQDEOH'HYHORSPHQW1DLUREL²-DQXDU\
'HZHHV3$7KHZRRGIXHOFULVLVUHFRQVLGHUHG2EVHUYDWLRQVRQWKHG\QDPLFVRIDEXQGDQFHDQGVFDUFLW\:RUOG
'HYHORSPHQW²
'RQ$2VERUQH%HWDO/DQGXVHFKDQJHWRELRHQHUJ\SURGXFWLRQLQ(XURSH,PSOLFDWLRQVIRUWKHJUHHQKRXVH
JDVEDODQFHDQGVRLOFDUERQ*OREDO&KDQJH%LRORJ\GRLM[$YDLODEOHDWKWWS
RQOLQHOLEUDU\ZLOH\FRPGRLM[DEVWUDFWODVWFDOOPDUFK
'RQ$6FKXPDFKHU-DQG$)UHLEDXHU,PSDFWRIWURSLFDOODQGXVHFKDQFHRQVRLORUJDQLFFDUERQVWRFNV²D
PHWDDQDO\VLV*OREDO&KDQJH%LRORJ\9ROLVVXHSS
((65&  7LJUDL HQHUJ\ UHVRXUFHV DQG KRXVHKROG HQHUJ\ FRQVXPSWLRQ 3DSHU SUHVHQWHG DW WKH (QHUJ\
6\PSRVLXP0HNHOOH8QLYHUVLW\(WKLRSLD²$SULO
()6$6FLHQWLÀFRSLQLRQRIWKH3DQHORQ$QLPDO+HDOWKDQG:HOIDUHRQDUHTXHVWIURP(XURSHDQ&RPPLVVLRQRQ
ZHOIDUHRIGDLU\FRZV7KH()6$-RXUQDO²
(VWKHWH*6RQGHU.DQG+HHGJH55HSRUWRQWKHIHDVLELOLW\VWXG\RIDQDWLRQDOSURJUDPPHIRUGRPHVWLFELRJDV
LQ(WKLRSLD1HWKHUODQGV'HYHORSPHQW2UJDQLVDWLRQ619(WKLRSLD
(60$3(WKLRSLDHQHUJ\DVVHVVPHQW5HSRUW1R-RLQW81'3:RUOG%DQN(QHUJ\6HFWRU0DQDJHPHQW
$VVLVWDQFH3URJUDPPH:DVKLQJWRQ'&
(WKLRSLD 5XUDO (QHUJ\ 'HYHORSPHQW DQG 3URPRWLRQ &HQWHU (5('3& DQG 619 (WKLRSLD  1DWLRQDO %LRJDV
3URJUDPPH(WKLRSLD3URJUDPPHLPSOHPHQWDWLRQGRFXPHQW
(8&RQVROLGDWHG9HUVLRQRIWKH7UHDW\RQWKH)XQFWLRQLQJRIWKH(XURSHDQ8QLRQ2IÀFLDO-RXUQDORIWKH(XURSHDQ
8QLRQ&$YDLODEOHDWKWWSHXUOH[HXURSDHX/H[8UL6HUY/H[8UL6HUYGR"XUL 2-&H
Q3')
 75$'($1'(19,5210(175(9,(:

(XURSHDQ)RRG6DIHW\$XWKRULW\()6$'5$)76FLHQWLÀF2SLQLRQRQ)RRG6DIHW\$QLPDO+HDOWKDQG:HOIDUH

DQG(QYLURQPHQWDO,PSDFWRI$QLPDOVGHULYHGIURP&ORQLQJE\6RPDWLF&HOO1XFOHDU7UDQVIHU6&17DQGWKHLU
2IIVSULQJDQG3URGXFWV2EWDLQHGIURPWKRVH$QLPDOV%UXVVHOVS
)DLUOLH60HDW$%HQLJQ([WUDYDJDQFH+DPSVKLUH3HUPDQHQW3XEOLFDWLRQV
)$2:RUOG$JULFXOWXUH7RZDUGV5RPH
)$2D/LYHVWRFN·V/RQJ6KDGRZ(QYLURQPHQWDO,VVXHVDQG2SWLRQV5RPH
)$2E3URWHFWLQJ$QLPDO*HQHWLF'LYHUVLW\IRU)RRGDQG$JULFXOWXUH7LPHIRU$FWLRQ$QLPDO*HQHWLF5HVRXUFHV
*URXS)$25RPH$YDLODEOHDWZZZIDRRUJDJPDJD]LQHSGIDQJUSGI
)$2*UDVVODQGV(QDEOLQJWKHLUSRWHQWLDOWRFRQWULEXWHWRJUHHQKRXVHJDVPLWLJDWLRQ5RPH
)$2)RUHZRUG,Q)$26DYHDQG*URZ$3ROLF\0DNHUV*XLGHWRWKH6XVWDLQDEOH,QWHQVLÀFDWLRQRI6PDOOKROGHU
&URS3URGXFWLRQ5RPH
)$26WDW5RPH)$2
)$=)UDQNIXUWHU$OOJHPHLQH=HLWXQJ/HEHQVPLWWHOSUHLVH*HÁJHOYRQ:LHVHQKRIVROOWHXUHUZHUGHQ)UDQNIXUW
DP0DLQWK)HEUXDU\
)LFKWHO.:RGLH)UKVWFNVHLHULKUHQ8UVSUXQJKDEHQ+DPEXUJHU$EHQGEODWW+DPEXUJVW1RYHPEHU
*DUQHW 7  /LYHVWRFN DQG FOLPDWH FKDQJH ,Q '·6LOYD - DQG :HEVWHU - HGV 7KH 0HDW &ULVLV /RQGRQ DQG
:DVKLQJWRQ'&(DUWKVFDQ²
*UDFH-6DQ-RVH-0HLU30LUDQGD+DQG0RQWHV53URGXFWLYLW\DQGFDUERQÁX[HVRIWURSLFDOVDYDQQDV
-RXUQDORI%LRJHRJUDSK\²
*UHJRU\1*:LONLQV/-(OHSHUXPD6'%DOODQW\QH$-DQG2YHUÀHOG1'%URNHQERQHVLQGRPHVWLFIRZOV(IIHFW
RIKXVEDQGU\V\VWHPDQGVWXQQLQJPHWKRGLQHQGRIOD\KHQV%ULWLVK3RXOWU\6FLHQFH²
*XR/DQG*LIIRUG56RLOFDUERQVWRFNVDQGODQGXVHFKDQJH$PHWDDQDO\VLV*OREDO&KDQJH%LRORJ\
2[IRUG²
+HOOHEUDQG +- DQG 9 6FKRO]  /DFKJDVHPLVVLRQHQ XQG 7UHLEKDXVELODQ] QDFKZDFKVHQGHU 5RKVWRIIH ZZZ
DWESRWVGDPGH+DXSWVHLWHGHXWVFK,QVWLWXW$EWHLOXQJHQ$EW0LWDUEHLWHUMKHOOHEUDQGMKHOOHEUDQGSXEOLNDW12
'3*SGI
,GHO$6LHQFHRGHU)LFWLRQ"-DKUH.ORQIRUVFKXQJDQ7LHUHQ/DQGZLUWVFKDIW'HU.ULWLVFKH$JUDUEHULFKW
+DPP$JUDUEQGQLV(GSS
,GHO$'LH.XKLVWNHLQ.OLPD.LOOHU:LHGLH$JUDULQGXVWULHGLH(UGHYHUZVWHWXQGZDVZLUGDJHJHQWXQN|QQHQ
0DUEXUJ0HWURSROLV9HUODJ$UHYLVHGDQGHQODUJHG(QJOLVKWUDQVODWLRQRIWKHERRN´7KHFRZLVQRWDFOLPDWHNLOOHU
+RZWKHDJULFXOWXUDOLQGXVWU\GHVWUR\VWKHHDUWKDQGZKDWZHFDQGRDJDLQVWLWµLVLQSUHSDUDWLRQ
,GHO $  .OLPDVFKW]HU DXI GHU :HLGH 7LHUKDOWXQJ .OLPD (UQlKUXQJ XQG OlQGOLFKH (QWZLFNOXQJ FOLPDWH
SURWHFWRUV RQ SDVWXUH DQLPDO KXVEDQGU\ FOLPDWH QXWULWLRQ DQG UXUDO GHYHORSPHQW 6WXG\ IRU *HUPDQZDWFK
DQG $UEHLWVJHPHLQVFKDIW ElXHUOLFKH /DQGZLUWVFKDIW FRPPLVVLRQHG SURMHFW ´-HW]W KDQGHOQ .OLPD XQG
HQWZLFNOXQJVIUHXQGOLFKH$JUDUSROLWLNµ
,GHO$DQG3HWVFKRZ8'DVJOREDOH+XKQWKHJOREDOKHQ,Q5HVVRXUFHQNRQÁLNWH9HUHLQLJXQJ]XU.ULWLNGHU
SROLWLVFKHQgNRQRPLHH90QVWHU352./$=HLWVFKULIWIUNULWLVFKH6R]LDOZLUWVFKDIW
,($(QHUJ\IRUFRRNLQJLQGHYHORSLQJFRXQWULHV,Q,($:RUOG(QHUJ\2XWORRN²
,2H:2HNR,QVWLWXWH96FKZHLVIXUWK6WLIWXQJ)8%HUOLQ/DQGHVDQVWDOWIU*UR‰VFKXW]JHELHWH(GV3HWVFKRZ
8$JURELRGLYHUVLWlWHQWZLFNHOQ+DQGOXQJVVWUDWHJLHQIUHLQHQDFKKDOWLJH7LHUXQG3ÁDQ]HQ]XFKW(QGEHULFKW%HUOLQ
,3&&²VHH0HW]HWDO$YDLODEOHDWZZZLSFFFKSXEOLFDWLRQVBDQGBGDWDDUZJHQFRQWHQWVKWPO
-HQVHQ3)L[HULQJHQVHIIHFWSDVLQVXJJRUVEHWHHQGH²HQHWRORJLVNVWXGLH,QVWLWXWLRQHQIRUKXVGMXUVK\JLHQ
PHGKRYVODJDUVNRODQ5HSRUW8SSVDOD/DQWEUXNVXQLYHUVLWHW
.LQJ)+)DUPHUVRI)RUW\&HQWXULHV2U3HUPDQHQW$JULFXOWXUHLQ&KLQD.RUHDDQG-DSDQ0LQHROD1<'RYHU
3XEOLFDWLRQV,QF$YDLODEOHDWKWWSZZZJXWHQEHUJRUJHERRNV
.QRZOHV7*.HVWLQ6&+DVODP60%URZQ61*UHHQ/(%XWWHUZRUWK$3RSH6-3IHLIIHU'DQG1LFRO&-/HJ
GLVRUGHUVLQEURLOHUFKLFNHQV3UHYDOHQFHULVNIDFWRUVDQGSUHYHQWLRQ3ORV2QHH
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

/8&&*  /DQG 8VH &OLPDWH &KDQJH 5HSRUW WR WKH :HOVK $VVHPEO\ *RYHUQPHQW $YDLODEOH DW KWWSWLQ\XUO
FRPW[EEPZ
0F,QW\UH%+HUUHQ+:DNKXQJX-DQG%:DWVRQ(GV,QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH
6FLHQFHDQG7HFKQRORJ\IRU'HYHORSPHQW,$$67'$JULFXOWXUHDWD&URVVURDGV:DVKLQJWRQ$YDLODEOHDWZZZ
DJDVVHVVPHQWRUJ
0HW]%'DYLGVRQ25HWDOHGV&RQWULEXWLRQRI:RUNLQJ*URXS,,,WRWKH)RXUWK$VVHVVPHQW5HSRUWRIWKH
,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH &KDQJH ,3&& &DPEULGJH ZZZLSFFFKSXEOLFDWLRQVBDQGBGDWDDUZJ
HQFRQWHQWVKWPO
0XLU:*DQH.6DQG=KDQJ<*HQRPHZLGHDVVHVVPHQWRIZRUOGZLGHFKLFNHQ613JHQHWLFGLYHUVLW\LQGLFDWHV
VLJQLÀFDQWDEVHQFHRIUDUHDOOHOHVLQFRPPHUFLDOEUHHGV3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFH
1RYHPEHU²
1D\ORU56WHLQIHOG+)DOFRQ:HWDO/RVLQJWKH/LQNV%HWZHHQ/LYHVWRFNDQG/DQG6FLHQFHYRO

1NRQ\D ( *HUEHU 1 %DXPJDUWQHU 3 YRQ %UDXQ - 'H 3LQWR $ *UDZ 9 .DWR ( .ORRV - DQG :DOWHU 7  7KH
HFRQRPLFVRIGHVHUWLÀFDWLRQODQGGHJUDGDWLRQDQGGURXJKW7RZDUGDQLQWHJUDWHGJOREDODVVHVVPHQW:DVKLQJWRQ
'&,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH
3DXO+(UQVWLQJ$6HPLQR6*XUD6DQG/RUFK$$JULFXOWXUHDQG&OLPDWH&KDQJH5HDO3UREOHPV)DOVH
6ROXWLRQV5HSRUWSXEOLVKHGIRUWKHWK&RQIHUHQFHRIWKH3DUWLHVRIWKH81)&&&LQ&RSHQKDJHQ'HFHPEHU
 $YDLODEOH DW ZZZHFRQH[XVLQIRVLWHVHFRQH[XVÀOHV$JULFXOWXUHBFOLPDWHBFKDQJHBFRSHQKDJHQB
SGI
3RHSODX&'RQ$HWDO7HPSRUDOG\QDPLFVRIVRLORUJDQLFFDUERQDIWHUODQGXVHFKDQJHLQWKHWHPSHUDWH]RQH
²FDUERQUHVSRQVHIXQFWLRQVDVDPRGHODSSURDFK*OREDO&KDQJH%LRORJ\9ROXPH,VVXHSS²
-XO\
5HLFKHUW DQG 5HLFKDUGW  6DXPDJHQ XQG 5HJHQZDOG %HUOLQ DQG %RQQ )RUXP 8PZHOW XQG (QWZLFNOXQJ XQG
*HUPDQZDWFK
5HLFKKROI-+'HU7DQ]XPGDVJROGHQH.DOE%HUOLQ'HUgNRNRORQLDOLVPXV(XURSDV²
5RKVWRIIHNRPSDNW7\VRQ)RRGV²)OHLVFKLQJUR‰HP6WLO,VVXH1UQEHUJ
5RVHQEHUJHU(DQG.5XW]PRVHUgNRORJLVFKH)ROJHZLUNXQJHQGHU=XFKWDXIK|KHUH0LOFKOHLVWXQJHQ*UXEHU
,QIRSS
5RW] &$ 6RGHU .- 6NLQQHU 5+ 'HOO &- .OHLQPDQ 3- 6FKPLGW -3 DQG %U\DQW 5%  *UD]LQJ FDQ UHGXFH WKH
HQYLURQPHQWDOLPSDFWRIGDLU\SURGXFWLRQV\VWHPV3ODQW0DQDJHPHQW1HWZRUN,QWHUQDWLRQDO6W3DXO01$YDLODEOH
DWZZZSODQWPDQDJHPHQWQHWZRUNRUJVXEIJUHVHDUFKLPSDFW
5R\DO 6RFLHW\  5HDSLQJ WKH EHQHÀWV 6FLHQFH DQG VXVWDLQDEOH LQWHQVLÀFDWLRQ RI JOREDO DJULFXOWXUH 56 3ROLF\
GRFXPHQW/RQGRQ
6FKODJ1DQG=X]DUWH)0DUNHWEDUULHUVWRFOHDQFRRNLQJIXHOVLQVXE6DKDUDQ$IULFD$UHYLHZRIWKHOLWHUDWXUH
6WRFNKROP6WRFNKROP(QYLURQPHQW,QVWLWXWH
6FKXO]H('/X\VVDHUW6&LDLV3)UHLEDXHU$-DQVVHQV,,PSRUWDQFHRIPHWKDQHDQGQLWURXVR[LGHIRU(XURSH¶V
WHUUHVWULDOJUHHQKRXVHJDVEDODQFH1DWXUH*HRVFLHQFH²
6QHGGRQ /8 %UDLWKZDLWH %$ DQG *HQWOH 0-  'R ÀVKHV KDYH QRFLFHSWRUV" (YLGHQFH IRU WKH HYROXWLRQ RI D
YHUWHEUDWH VHQVRU\ V\VWHP 3URFHHGLQJV RI WKH 5R\DO 6RFLHW\ /RQGRQ %LRORJLFDO 6FLHQFHV  ²
$YDLODEOHDWKWWSUVSEUR\DOVRFLHW\SXEOLVKLQJRUJFRQWHQWIXOOSGI
6197KH3RWHQWLDORI6PDOO6FDOH%LRJDV'LJHVWHUVWR$OOHYLDWH3RYHUW\DQG,PSURYH/RQJ7HUP6XVWDLQDELOLW\
RI (FRV\VWHP 6HUYLFHV LQ 6XE6DKDUDQ $IULFD $YDLODEOH DW KWWSZZZDEGQDFXNVXVWDLQDEOHLQWHUQDWLRQDO
GHYHORSPHQWXSORDGVILOHV)LQDOB5HSRUWBB3RWHQWLDOBRIB6PDOO6FDOHB%LRJDVB'LJHVWHUVBLQB6XE6DKDUDQB
$IULFD%'SGI
6WHLQIHOG+0RRQH\+$6FKQHLGHU)DQG1HYLOOH/(HGV/LYHVWRFNLQD&KDQJLQJ/DQGVFDSH9RODQG
&RPPLVVLRQHGE\&,5$')$2/($',/5,6&23(DQGWKH:RRGV,QVWLWXWH:DVKLQJWRQ'&,VODQG3UHVV
6WROED$DQG:RRG*XVK'*07KHEHKDYLRXURISLJVLQDVHPLQDWXUDOHQYLURQPHQW$QLPDO3URGXFWLRQ
²
 75$'($1'(19,5210(175(9,(:

6XWWL-05H\QROGV6*DQG%DWHOOR&HGV*UDVVODQGVRIWKH:RUOG5RPH)$2

6XWWRQ 0$ DQG %LOOHQ *  7HFKQLFDO VXPPDU\ ,Q 6XWWRQ 0$ +RZDUG &0 (ULVPDQ -: %LOOHQ * %OHHNHU $
*UHQQIHZOW3YDQ*ULQVYHQ+DQG*UL]HWWL%HGV7KH(XURSHDQ1LWURJHQ$VVHVVPHQW6RXUFHV(IIHFWVDQG3ROLF\
3HUVSHFWLYHV&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV;;;9,,,
6XWWRQ0$+RZDUG&0(ULVPDQ-:%LOOHQ*%OHHNHU$*UHQQIHZOW3YDQ*ULQVYHQ+DQG*UL]HWWL%HGV
7KH(XURSHDQ1LWURJHQ$VVHVVPHQW6RXUFHV(IIHFWVDQG3ROLF\3HUVSHFWLYHV&DPEULGJH&DPEULGJH8QLYHUVLW\
3UHVV
69&  7KH ZHOIDUH RI LQWHQVLYHO\ NHSW SLJV %UXVVHOV 6FLHQWLÀF 9HWHULQDU\ &RPPLWWHH $YDLODEOH DW KWWS
HFHXURSDHXIRRGIVVFROGFRPPRXWBHQKWPO
7KHQ&K-RLQWLQSXWRI7HVWELRWHFKDQG)ULHQGVRIWKH(DUWK(XURSHLQSXWRQIRRGGHULYHGIURPJHQHWLFDOO\
HQJLQHHUHGDQLPDOV0XQLFKDQG%UXVVHOV)ULHQGVRIWKH(DUWK(XURSHDQG7HVW%LRWHFKKWWSZZZWHVWELRWHFK
GHQRGH
7KHQ&K2SHQOHWWHUDERXW(8·VDVVHVVPHQWRI*0DQLPDOV%UXVVHOVDQG0XQLFK(XURJURXSIRUDQLPDOV
)ULHQGVRIWKH(DUWK(XURSH,)2$0(8*URXS7HVW%LRWHFK
7LOPDQ'+LOO-DQG/HKPDQ&&DUERQQHJDWLYHELRIXHOVIURPORZLQSXWKLJKELRGLYHUVLW\JUDVVODQGELRPDVV
6FLHQFH²
7URHK)5+REEV-$DQG'RQDKXH5/7LOODJHSUDFWLFHVIRUFRQVHUYDWLRQ,Q7URHK)5+REEV-$DQG'RQDKXH
5/HGV6RLODQG:DWHU&RQVHUYDWLRQQGHGLWLRQ(QJOHZRRG&OLIIV1-3UHQWLFH+DOO
81(6&2 DQG 7DWD (QHUJ\ 5HVHDUFK ,QVWLWXWH  &RQVROLGDWLRQ RI LQIRUPDWLRQ $ UHYLHZ RI WKH OLWHUDWXUH RQ
SURPRWLRQRIELRJDVV\VWHPV,Q*HQHUDO,QIRUPDWLRQ3URJUDPPHDQG81,6,673DULV
YRQ:LW]NH+DQG1ROHSSD6(8DJULFXOWXUDOSURGXFWLRQDQGWUDGH&DQPRUHHIÀFLHQF\SUHYHQWLQFUHDVLQJ
¶ODQGJUDEELQJ·RXWVLGHRI(XURSH"5HVHDUFKUHSRUW%HUOLQ+XPEROGW8QLYHUVLWlW]X%HUOLQDQGDJULSRO
:HEVWHU-$QLPDO:HOIDUH$&RRO(\H7RZDUGV(GHQ2[IRUG%ODFNZHOO6FLHQFH
:HHNV&8.FDOIWUDQVSRUWDQGYHDOUHDULQJ&RPSDVVLRQLQZRUOGIDUPLQJ/RQGRQKWWSZZZFLZIRUJXN
LQFOXGHVGRFXPHQWVFPBGRFVXXNBFDOIBWUDQVSRUWBDQGBYHDOBUHDULQJSGI
:KLWH 5 0XUUD\ 6 DQG 5RKZHGHU 0  3LORW DQDO\VLV RI JOREDO HFRV\VWHPV *UDVVODQG (FRV\VWHPV :5,
:DVKLQJWRQ*UDFH-6DQ-RVH-0HLU30LUDQGD+DQG50RQWHV3URGXFWLYLW\DQGFDUERQÁX[HVRI
WURSLFDOVDYDQQDV-RXUQDORI%LRJHRJUDSK\
:LQWHUV+&3+:LQ&X[KDYHQHQWZLFNHOWVLFKSRVLWLY$UWLFOHLQ&X[KDYHQHU1DFKULFKWHQ)HEUXDU\&X[KDYHQ
:UJHU7'DV5OSVHQGHU5LQGHUWKHEHOFKLQJRIFDWWOH'HU6SLHJHO+DPEXUJ
/LYHVWRFN3URGXFWLRQ$&OLPDWH&KDQJHDQG)RRG6HFXULW\+RW6SRW 

1RWHV

 $QLPDOVXIIHULQJDQGZHOIDUHDUHGLUHFWO\DIIHFWHGE\LQGXVWULDOOLYHVWRFNSURGXFWLRQ)RUPRUHLQIRUPDWLRQVHHWKH
FRPPHQWRI-R\FH'·6LOYDLQWKLVFKDSWHUVHHDOVR'·6LOYDDQG:HEVWHU
 ,WLVEH\RQGWKHVFRSHRIWKLVDUWLFOHWRDQDO\VHWKHGDPDJLQJHIIHFWVRIOHJDODQGLOOHJDOGLVSRVDORIGDQJHURXV
VXEVWDQFHVLQDQLPDOIHHGIRULQGXVWULDOOLYHVWRFNSURGXFWLRQDQGWKHXVHRIFRQWDPLQDWHGVOXGJHDVIHUWLOL]HURQ
FURSODQG
 7KLVDUWLFOHGRHVQRWGLVFXVVWKHQRQUHF\FOLQJRIKXPDQIDHFHVLQVRLOIRUDGLVFXVVLRQRIWKLVLVVXHVHH.LQJ

 %\ZD\RILOOXVWUDWLRQDIWHULWVDFFHVVLRQWRWKH(85RPDQLDUHVWULFWHGWKHIUHHPRYHPHQWRIKRUVHRUFRZGUDZQ
WUDQVSRUWLQIDYRXURIPRWRUL]HGWUDQVSRUW
 ´,QH[SHQVLYHµRU´FKHDSµKHUHPHDQVWKDWDFRQVLGHUDEOHSURSRUWLRQRIWKHFRVWVRISURGXFWLRQUHPDLQH[WHUQDOL]HG
LQSULFHV
 7KLVSURFHVVXVHGIRUWKHLQGXVWULDOSURGXFWLRQRIDPPRQLDLQYROYHVWKHQLWURJHQÀ[DWLRQUHDFWLRQRIQLWURJHQJDV
DQGK\GURJHQJDVRYHUDQHQULFKHGLURQRUUXWKHQLXPFDWDO\VW
 $PPRQLDLVQRWFDWHJRUL]HGDVD*+*WKDWKDVDGLUHFWLPSDFWRQWKHFOLPDWHVXFKDV&212DQG&+EXWLW
GRHVKDYHDUHOHYDQWLQGLUHFWLPSDFWWKURXJKLWVHIIHFWRQWKHDWPRVSKHUH
 )RU VRPH \HDUV PRQRFXOWXUHV IRU DJURHQHUJ\ SURGXFWLRQ DUH LQFUHDVLQJ WKH DPRXQW RI 12 HPLWWHG IURP
DJULFXOWXUHIRUDPRUHHODERUDWHDQDO\VLVVHH+XUQLHWDOLQFKDSWHURIWKLV5HYLHZ
 %HVLGHVWKHJHQHUDOXVHRIDQLPDOH[FUHPHQWVWKLVDOVRFRQFHUQVWKHVHSDUDWHXVHRIXULQHDQGIDHFHV1RUPDOO\
WKHVHSDUDWLRQLVGRQHWKURXJKSDVWXULQJWKHQDWXUDOVHSDUDWLRQIRUPDPPDOVSUHYHQWVWKHPRGLÀFDWLRQRIWKH
QLWURJHQFRPSRXQGVLQWKHXULQHWKURXJKWKHEDFWHULDFRQWDLQHGLQWKHIDHFHV
 &DOFXODWHGXVLQJWKH&OLPDWH$QDO\VLV,QGLFDWRUV·7RRORIWKH:RUOG5HVRXUFHV,QVWLWXWHDWKWWSFDLWZULRUJ
 7KHIDFWWKDWDQLPDOEUHHGLQJLVPRUHDGYDQFHGWKDQFURSEUHHGLQJGRHVQRWUHÁHFWDKLJKHUOHYHORIWHFKQRORJLFDO
LQQRYDWLRQ %\ ZD\ RI LOOXVWUDWLRQ WKH FRPPHUFLDOL]DWLRQ RI VRPH WUDQVJHQLF FURSV LV IDU PRUH GHYHORSHG WKDQ
WUDQVJHQLFDQLPDOV
 ,QWKHFORQHGVKHHS´'ROO\µZDVERUQDIWHUWKRXVDQGVRIDWWHPSWVZLWKHPEU\RV'ROO\ZDVWKHÀUVWPDPPDO
WKDWZDVFUHDWHGE\DQGVXUYLYHGWKHWHFKQRORJ\RIVRPDWLFFHOOQXFOHXVWUDQVIHU6&17$OWKRXJKDUPHGZLWKD
SDWHQWWKH´'ROO\µPHWKRGLVDVDOORWKHUJHQHWLFDQGFORQLQJPHWKRGVQRWDEOXHSULQWWRJHWLGHQWLFDOFRSLHV
 ,QGHHGWKHKXPDQPLFURELDOUHODWLRQVKLSLVH[WUHPHO\FORVH$PDVVLYHDPRXQWRIEDFWHULDH[LVWRQDQGLQ
KXPDQV²DQXPEHUWLPHVKLJKHUWKDQWKHELOOLRQFHOOVLQDKXPDQERG\
 $JDLQVWWKLVEDFNJURXQGELRIXHOFHUWLÀFDWHVWKDWFRQÀUPWKDWWKHIHHGVWRFNZDVQRWSURGXFHGRQFURSODQGGHULYHG
IURPGHIRUHVWDWLRQDUHRQO\XVHIXOLIWKHWLPHVSDQEHIRUHFRQYHUVLRQLVZHOOGHÀQHG
 )RU PRUH LQIRUPDWLRQ VHH IRU LQVWDQFH ZZZLQGH[PXQGLFRPFRPPRGLWLHV"FRPPRGLW\ VR\EHDQRLO DQG
)DLUOLH,PEDODQFHVLQWKHSDWWHUQVRIIDWW\DFLGVWKURXJKWKHUHMHFWLRQRUUHSODFHPHQWRIRWKHURLOVE\FKHDSHU
VR\RLODUHQRWIXUWKHUHODERUDWHGKHUH)RUPRUHLQIRUPDWLRQLQWKLVUHJDUGVHH%ODVEDOJ
 )RUDPRUHHODERUDWHDQDO\VLVVHH,GHO
 WRI&WRI2 WRI&2
 7KHUHLVDFUXFLDOLQWHUSOD\EHWZHHQJUDVVODQGDQGUXPLQDQWPDQDJHPHQWDVPHQWLRQHGDERYHSHUFHQWRI
DOOODQGLVJUDVVODQGDQGSHUHQQLDOJUDVVLVYHU\HIIHFWLYHIRUFDUERQVHTXHVWUDWLRQ:KLOVWIRUHVWVH[SDQGWKHLU
ELRPDVVYROXPHE\RQO\DERXWSHUFHQWSHU\HDUVDYDQQDKVFDQUHSURGXFHSHUFHQWRIWKHLUYROXPH,GHO
3DXOHWDO
 2QWKH&2DVVLPLODWLRQSRWHQWLDORIJUDVVODQGVVHH)$2
 1RWDFFRXQWHGIRUDUHSHUPDQHQWLFHFRYHUHGVXUIDFHVRI*UHHQODQGDQGWKH$QWDUFWLFZKHUHWKHUHLVQRJUDVVODQG
\HW,Q(XURSHJUDVVODQGFRYHUVDERXWDTXDUWHURIWKHWRWDOODQGVXUIDFH
 ,QWHUDOLDFDUERQVLQNIXQFWLRQSURWHFWLRQIRUHURVLRQSURWHLQDQGHQHUJ\VRXUFHVRXUFHRILQFRPHIRUDERXWRQH
WHQWKRIWKHZRUOGSRSXODWLRQ
 75$'($1'(19,5210(175(9,(:

 $VK\EULGSLJVDQGFKLFNHQVDUHIHGZLWKFRQFHQWUDWHVLQLQWHQVLYHSURGXFWLRQV\VWHPVJUDVVIHGODQGUDFHVRI
UDUHSLJVJHHVHFKLFNHQVDQGRWKHUVFDQQRWFRPSHWHDJDLQVWWKHPVRWKDWWKH\HQGXSRQWKHOLVWRIVSHFLHVWKDW
DUHWKUHDWHQHGZLWKH[WLQFWLRQIRUPRUHLQIRUPDWLRQVHH)$27KH6WDWHRIWKHZRUOG·VDQLPDOJHQHWLFUHVRXUFHV
IRUIRRGDQGDJULFXOWXUHZZZIDRRUJGRFUHSDHDHKWP
 7KLVHIIHFWLVDORJLFDOFRQVHTXHQFHRIWKHLQFUHDVHRIWKHVH[VSHFLÀFSHUIRUPDQFHRIIHPDOHDQLPDOV7KHIRFXV
RQERRVWLQJGDLU\SHUIRUPDQFHLVDWWKHH[SHQVHRIWKHHQHUJ\EHLQJXVHGIRUPHDWJHQHUDWLRQ%DVHGRQWKHVDPH
ORJLFWKHEURWKHUVRIK\EULGOD\LQJKHQVJDLQZHLJKWYHU\VORZO\
 ,QWKH8QLWHG.LQJGRPGXHWRXQVDWLVIDFWRU\IDWWHQLQJSHUIRUPDQFHDODUJHSHUFHQWDJHRIPDOHFDOYHVRIKLJK
SHUIRUPDQFHGDLU\FRZVLH+ROVWHLQ)ULHVLDQ-HUVH\DUHEHLQJNLOOHGHYHU\\HDULPPHGLDWHO\DIWHUWKH\DUHERUQ
:HHNV
 ,QMHUDLVDWKLQÁDWDQGVSRQJ\EUHDGPDGHIURPWHIIÁRXUZLWKDGLDPHWHURIDERXWFPDQGLVDQLPSRUWDQWSDUW
RIWKHWUDGLWLRQDOGLHWLQ(WKLRSLD,WLVWUDGLWLRQDOO\SUHSDUHGRQDÁDWFOD\SDQRIPDWFKLQJGLDPHWHU
 75$'($1'(19,5210(175(9,(:

'#&46+%.'U    
  X 
      
 

 
 
+DQV5+HUUHQ
3UHVLGHQW0LOOHQQLXP,QVWLWXWH

$EVWUDFW
7KHPDLQFKDOOHQJHVFRQIURQWLQJVXVWDLQDEOHDJULFXOWXUDONQRZOHGJHVFLHQFHDQGWHFKQRORJ\$.67GH
YHORSPHQWUHODWHWRDFKLHYLQJDWUDQVLWLRQIURPWKHFRQYHQWLRQDOLQGXVWULDODJULFXOWXUHPRGHOZLWKLWVKLJK
H[WHUQDOLQSXWVDQGYHVWHGLQWHUHVWVRIWKHPDLQSOD\HUVLQVXSSO\LQJDJULFXOWXUDOLQSXWVRXWSXWSURFHVVLQJ
DQGPDUNHWLQJ7KLVUHTXLUHVSROLWLFDOZLOORQWKHSDUWRISROLF\PDNHUVWRLPSOHPHQWWKHQHZFRXUVHRIDF
WLRQVXJJHVWHGE\VHYHUDOVSHFLDOL]HGLQVWLWXWLRQVLQFOXGLQJWKH,$$67'81&7$'81(381'(6$DQG
WKH+LJK/HYHO3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQDVZHOODVE\WKHUHFHQW)$22(&'([SHUW
0HHWLQJRQ*UHHQLQJWKH(FRQRP\ZLWK$JULFXOWXUHKHOGLQ6HSWHPEHU7KHUHLVDPSOHHYLGHQFHLQ
WKHVHUHSRUWVWRMXVWLI\QHZLQYHVWPHQWVLQ$.67IRUVXVWDLQDEOHDJULFXOWXUH3UHVVXUHDWWKHSROLF\OHYHOLV
JURZLQJGXHWRWKHVHULHVRIIRRGFULVHVERWKZLWKUHVSHFWWRVKRUWDJHVDQGSULFHLQFUHDVHVH[SHULHQFHG
RYHUWKHSDVWIHZ\HDUV7KHWHQGHQF\UHPDLQVVWURQJWRFRQWLQXHZLWKEXVLQHVVDVXVXDOZKLFKDLPVDW
TXLFNÀ[HVDQGTXLFNUHVXOWV,IWKHUHSHWLWLRQRIWKHIRRGFULVHVWKDWDUHEHFRPLQJPRUHIUHTXHQWLVDQ\
LQGLFDWLRQWKHQWKHVHTXLFNÀ[HVZLOOUXQWKHLUFRXUVHIDVWZLWKHQRUPRXVQHJDWLYHVRFLDOHQYLURQPHQWDO
DQGHFRQRPLFFRQVHTXHQFHV
7KHFDVHIRUDFKDQJHLQSDUDGLJPLVZHOOGRFXPHQWHG0HUHO\ÀQHWXQLQJWKHSUHVHQWV\VWHPVRUUHGHÀQ
LQJWKHVWDWXVTXRZLWKQHZWHUPVVXFKDV´VXVWDLQDEOHFURSSURGXFWLRQLQWHQVLÀFDWLRQµRU´FOLPDWHVPDUW
DJULFXOWXUHµDPRQJRWKHUVZLOOQRWEULQJDERXWWKHSDUDGLJPVKLIWQHHGHG7RVWRSWKH´PLQLQJµRIQDWXUDO
FDSLWDODQGLQSDUWLFXODUWRGUDVWLFDOO\UHGXFH*+*HPLVVLRQVIURPDJULFXOWXUHDQGPDNHLWPRUHFOLPDWH
UHVLOLHQWUHTXLUHVDJHQXLQHIXQGDPHQWDOWUDQVIRUPDWLRQEDFNHGE\DGGLWLRQDOUHVHDUFK$JURHFRORJ\KDV
WKHSURSHUIRXQGDWLRQVWRVXSSRUWWKHQHHGHGWUDQVLWLRQIURPZKHUHZHDUHWRGD\WRZKHUHZHQHHGWREH
E\ZLWKDOORXUDJULFXOWXUHZKHWKHULWLVVPDOORUODUJHVFDOHERWKDWWKHORFDODQGJOREDOOHYHOV$JUL
FXOWXUHDQGIDUPHUVQHHGWREHDPRQJWKHNH\FRQVLGHUDWLRQVRISROLF\PDNHUVDVSHRSOHPD\VXIIHUIURP
ÀQDQFLDOFULVLVEXWWKH\FDQQRWVXUYLYHZLWKRXWIRRGDQGZDWHU
$JULFXOWXUHVKRXOGEHWRSRIWKHDJHQGDLQWKHGHEDWHRQVXVWDLQDEOHGHYHORSPHQWDQGWKHJUHHQHFRQRP\
IROORZLQJWKH5LRFRQIHUHQFH,WLVRQO\LIDJULFXOWXUHLQLWVPXOWLIXQFWLRQDOUROHWDNHVFHQWUHVWDJHWKDW
WKHRWKHUDVSHFWVRIVXVWDLQDEOHGHYHORSPHQWZLOOIDOOLQWRSODFH7KHFKDOOHQJHIRU$.67LVSRVHGDQGWKH
VROXWLRQVIRUDQHZDJULFXOWXUDOSDUDGLJPSUHVHQWHG,WLVQRZXSWRSROLF\PDNHUVWRVZLQJLQWRDFWLRQ7KH
WLPHIRUPRUHUHSRUWVDQGGHEDWHVRQWKHPHULWVRIWKLVRUWKDWWHFKQRORJ\KDVSDVVHGZHRZHLWWRIXWXUH
JHQHUDWLRQVWRDFWQRZDQGGHFLVLYHO\WRVDIHJXDUGRXUFOLPDWHE\EXLOGLQJUHVLOLHQFHDQGPXOWLIXQFWLRQDO
LW\LQWRRXUIRRGV\VWHPVWRFRSHZLWKWKHLQHYLWDEOHFKDQJHV7KHVHDUHWKH\DUGVWLFNVDJDLQVWZKLFKZH
ZLOOKDYHWRPHDVXUHSURJUHVVWRZDUGVVXVWDLQDEOHDJULFXOWXUH7KH$.67SROLFLHVRIWRPRUURZZLOOQHHGWR
DGGUHVVWKHVHFKDOOHQJHVDQGGHYHORSWKHQHHGHGVFLHQFHWRROVDQGFULWHULDWRLPSOHPHQWWKHWUDQVLWLRQ
DQGPHDVXUHSURJUHVV
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV
$,QWURGXFWLRQ
7KHUHLVDQLPSHUDWLYHQHHGIRUDIXQGDPHQWDOFKDQJH
LQWKHZD\WKHZRUOGJURZVSURFHVVHVDQGFRQVXPHV
LWVIRRG$VVWDWHGLQWKH5HSRUWRIWKH,QWHUQDWLRQDO
$VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH

LQWHUFRQQHFWHGZRUOGLQWHUPVRIWUDGHDQGNQRZOHGJH
H[FKDQJH,WVKRXOGEHQRWHGWKDWZKLOHRYHUDOO5 '
LQ DJULFXOWXUH KDV GLPLQLVKHG LQ LPSRUWDQFH RYHU WKH
SDVWWZRGHFDGHVIRUHLJQDLGLVQRZRQWKHULVHDJDLQ
DVDUHVSRQVHWRVHYHUDOIRRGFULVHVDOWKRXJKPRVWO\
LQ WKH IRUP RI TXLFN À[HV VXFK DV WKH SURYLVLRQ RI
DQG 7HFKQRORJ\ IRU 'HYHORSPHQW ,$$67' 
VHHGVSHVWLFLGHVDQGIHUWLOL]HUV)RUHLJQDLGFRQWLQXHV
´%XVLQHVVDVXVXDOLVQRWDQRSWLRQµ:KDWLVPHDQW
WR FRPPDQG ODUJH LQYHVWPHQWV PRVWO\ FRQWUROOHG
E\WKLVLVWKDWLQRUGHUWRWUDQVIRUPDJULFXOWXUHDQGWKH
DQGGHFLGHGE\GHYHORSHGFRXQWULHVZKLFKVWLOOWHQG
EURDGHUIRRGV\VWHPDJULFXOWXUDONQRZOHGJHVFLHQFH
WR FRQVLGHU WKHLU DJULFXOWXUH DV WKH ´UROHµ PRGHO IRU
DQGWHFKQRORJ\$.67QHHGWREHUHFDVWWRDGGUHVV
GHYHORSLQJ FRXQWULHV 8QIRUWXQDWHO\ WKHUH UHPDLQV
WKHSDVWXQVROYHGSUHVHQWDQGIXWXUHFKDOOHQJHVRI
D WHQGHQF\ WR LQFUHDVH VKRUWWHUP LQYHVWPHQWV LQ
IRRG DQG QXWULWLRQ VHFXULW\ SRYHUW\ DQG KXQJHU DQG
TXLFNÀ[HVPRVWO\DIWHUPDMRUFDWDVWURSKHVDQGIRRG
SUHVHUYHUXUDOOLYHOLKRRGVKHDOWKDQGWKHHQYLURQPHQW
HPHUJHQFLHV6XFKDFWLRQVDOWKRXJKQHHGHGLQRUGHU
7KH SURFHVV WKDW OHG WR WKH ,$$67' DOVR NQRZQ DV
WRDOOHYLDWHVKRUWWHUPKXPDQLWDULDQSUREOHPVVHOGRP
WKH $J $VVHVVPHQW DQG LWV LPSOHPHQWDWLRQ ZDV
WDFNOHWKHURRWRIWKHSHUHQQLDOKXQJHUSUREOHPDQG
XQLTXHLQWKHVHQVHWKDWLWLQFOXGHGDOOVWDNHKROGHUV
PHUHO\SURYLGHDEULGJHWRWKHQH[WHPHUJHQF\7KLV
IURP SURGXFHUV WR FRQVXPHUV DV ZHOO DV LQSXW
IRUPRIDLGLVFOHDUO\LQDGHTXDWHIRUVROYLQJWKHFDXVHV
VXSSOLHUVDQGSURFHVVRUV7KHSURFHVVZDVGHFLGHG
RIWKHUHSHDWHGKXQJHUDQGSRYHUW\SUREOHPVWKHUHLV
DW WKH 8QLWHG 1DWLRQV :RUOG 6XPPLW RQ 6XVWDLQDEOH
DQHHGWRUHWKLQNWKHRYHUDOODSSURDFKWRIRRGVHFXULW\
'HYHORSPHQW LQ -RKDQQHVEXUJ LQ  XQGHU D
MRLQW LQLWLDWLYH RI WKH :RUOG %DQN DQG WKH )RRG DQG 7KH ,$$67'  DQG 81&7$' +RIIPDQQ 
$JULFXOWXUH2UJDQL]DWLRQRIWKH8QLWHG1DWLRQV)$2 DV ZHOO DV WKH +LJK /HYHO 3DQHO RI ([SHUWV RQ )RRG
DQGZDVVXSSRUWHGE\WKH8QLWHG1DWLRQV(QYLURQPHQW 6HFXULW\ DQG 1XWULWLRQ WR WKH )$2 &RPPLWWHH RQ
3URJUDPPH81(3WKH8QLWHG1DWLRQV'HYHORSPHQW :RUOG )RRG 6HFXULW\ &)6+/3(  JLYH D YHU\
3URJUDPPH81'3WKH8QLWHG1DWLRQV(GXFDWLRQDO JRRG DFFRXQW RI WKH PDJQLWXGH RI SDVW LQYHVWPHQWV
6FLHQWLÀF DQG &XOWXUDO 2UJDQL]DWLRQ 81(6&2 WKH LQDJULFXOWXUDO5 'DWQDWLRQDODQGUHJLRQDOOHYHOVDV
:RUOG +HDOWK 2UJDQL]DWLRQ :+2 DQG WKH *OREDO ZHOODVWKHLUVRXUFHVERWKSXEOLFLHE\PXOWLODWHUDO
(QYLURQPHQW )DFLOLW\ *() 7KLV LQWHUJRYHUQPHQWDO DQG PHPEHU 6WDWHV RI WKH 'HYHORSPHQW $VVLVWDQFH
VXSSRUWJDYHWKH,$$67'WKHEURDGEDVHQHHGHGWR
VHW WKH VWDJH IRU FKDQJLQJ WKH FRXUVH RI DJULFXOWXUH
WKURXJK D UHFDVWLQJ RI WKH $.67 RU DW OHDVW LW ZDV
WKRXJKW VR JLYHQ WKDW WKH UHSRUW ZDV XOWLPDWHO\ DOVR
HQGRUVHG E\  FRXQWULHV DQG ZHOFRPHG E\ DQ
DGGLWLRQDOWKUHH
6LQFHIHZ$.67SROLFLHVDWWKHQDWLRQDOUHJLRQDO
&RPPLWWHH '$& RI WKH 2(&' DQG SULYDWH 7KHUH
ZDV D VOLJKW GHFOLQH RI VXFK LQYHVWPHQWV XQWLO 
DIWHU ZKLFK WKH\ VWDUWHG VKRZLQJ VLJQV RI UHFRYHU\
ZKHQ GHYHORSLQJFRXQWU\ JRYHUQPHQWV EHJDQ
LQFUHDVLQJWKHLUVSHQGLQJRQDJULFXOWXUHDQG'$&DQG
PXOWLODWHUDO DLG DJHQFLHV DOVR LQFUHDVHG WKH DPRXQW
DOORFDWHGWRDJULFXOWXUHERWKLQWRWDOYROXPHDQGDVD
RU LQWHUQDWLRQDO OHYHOV KDYH DFWXDOO\ FKDQJHG 0RUH VKDUHRIRIÀFLDOGHYHORSPHQWDVVLVWDQFH2'$81
UHSRUWV KDYH EHHQ ZULWWHQ PRVWO\ RQO\ WR GLOXWH WKH '(6$
VWURQJ NH\ PHVVDJHV RI WKH ,$$67' UHJDUGLQJ WKH )URP WKH GDWD SURYLGHG LQ WKHVH UHSRUWV LW LV
FHQWUDOLW\ RI VPDOOKROGHU IDUPHUV ZKR SUDFWLFH KLJKO\ FOHDU WKDW WKHUH LV D VHULRXV DQG XUJHQW QHHG WR
GLYHUVH IRUPV RI FXOWLYDWLRQ WKH LQDSSURSULDWHQHVV DFFHOHUDWH WKH PRGHVW XSZDUG WUHQG LQ DJULFXOWXUDO
RI DQ XQGXH UHOLDQFH RQ ELRWHFKQRORJ\ DQG JHQHWLF LQYHVWPHQWV$VVWDWHGLQWKH,$$67'UHSRUW
HQJLQHHULQJ WR VROYH WKH PDLQ SUREOHPV RI RXU WKHUH LV DOVR D QHHG WR UHFWLI\ WKH LPEDODQFH LQ WKH
DJULFXOWXUDODQGIRRGV\VWHPVDVZHOODVWKHQHHGWR VRXUFHVRIIXQGLQJE\VXEVWDQWLDOO\LQFUHDVLQJSXEOLF
DOORZFRXQWULHVWRFKRRVHWKHLURZQDJULFXOWXUDOWUDGH VXSSRUWWR$.67ERWKLQGHYHORSHGDQGGHYHORSLQJ
UHVHDUFK DQG GHYHORSPHQW 5 ' SROLFLHV WKDW VXLW
WKHLUVSHFLÀFFRQGLWLRQVDQGQHHGV
,Q  WKH ,$$67' DOUHDG\ REVHUYHG WKDW ZKDW
KDSSHQV ZLWK $.67 DQG DJULFXOWXUH LQ JHQHUDO LQ
GHYHORSHG FRXQWULHV VWURQJO\ DIIHFWV ZKDW KDSSHQV
LQ GHYHORSLQJ FRXQWULHV EHFDXVH RI WKH KLJKO\
FRXQWULHVVLQFHWKHUHVHDUFKLVVXSSRVHGWRGHOLYHU
FRPPRQ SXEOLF JRRGV 7KLV ZRXOG KHOS FRXQWHUDFW
WKH WUHQG LQ SULYDWH LQYHVWPHQWV ZKLFK HPSKDVL]HV
D QDUURZ DSSURDFK WKDW WHQGV WR IRFXV ODUJHO\
RQ SURPRWLQJ SODQW EUHHGLQJ ELRWHFKQRORJ\ DQG
JHQHWLF HQJLQHHULQJ DV VROXWLRQV WR WKH SUREOHPV
 75$'($1'(19,5210(175(9,(:

RI FOLPDWH FKDQJH DGDSWDWLRQ DQG PLWLJDWLRQ IRRG 7KHVKLIWLQ$.67LQYHVWPHQWVDWLQWHUQDWLRQDOUHJLRQDO

VHFXULW\ KXQJHU DQG SRYHUW\ UXUDO OLYHOLKRRGV DQG DQGQDWLRQDOOHYHOVWKHUHIRUHQHHGVXUJHQWO\WRDGGUHVV
WKHDVVRFLDWHGKHDOWKDQGHQYLURQPHQWDOSUREOHPV WKHVHIXQGDPHQWDOLVVXHVDVVXJJHVWHGERWKE\WKH
+RZHYHU WKH FRPSOH[LW\ RI WKH DJULFXOWXUDO DQG
ZLGHU IRRG V\VWHPV XUJHQWO\ UHTXLUHV DQ XSJUDGLQJ
DQG FKDQJH RI FRXUVH DZD\ IURP WKH UHGXFWLRQLVW
DSSURDFKWRSUREOHPVROYLQJ7KHIDUPRUHVRFLDOO\
HQYLURQPHQWDOO\ DQG XOWLPDWHO\ HFRQRPLFDOO\
UHZDUGLQJ URXWH RI LQYHVWLQJ LQ VPDOOKROGHU DQG
IDPLO\UXQDJURHFRORJLFDOIDUPLQJV\VWHPVGRHVQRW
UHFHLYHWKHDWWHQWLRQLWGHVHUYHV
7KHIXQGDPHQWDOLVVXHLQDJULFXOWXUHWRGD\LVQRWWKDW
WKHUHLVWRROLWWOHIRRGSURGXFHGDIWHUDOOZHSURGXFH
DQ DYHUDJH RI  NFDO SHU SHUVRQGD\ ² URXJKO\
GRXEOH WKH DPRXQW QHHGHG IRU KHDOWK\ QXWULWLRQ $
QXPEHURILVVXHVOLQNHGWRWKLVRYHUSURGXFWLRQQHHG
WREHDGGUHVVHGWKURXJKQHZ$.67SROLFLHV FDXVHGE\(O1LxRDQGOD1LxD
‡ 2QO\DIHZFRPPRGLWLHVPDNHXSWKHEXONRIJOREDO
IRRG SURGXFWLRQ ZKLFK GRHV QRW VDWLVI\ WKH QHHG
IRUPRUHGLYHUVHDQGORFDOL]HGSURGXFWLRQRITXDOLW\
DQGDIIRUGDEOHIRRG QHZ DJULFXOWXUDO DQG IRRG V\VWHP DORQJ WKH OLQHV RI
‡ 7KH H[FHVV IRRG LV SURGXFHG PRVWO\ LQ
LQGXVWULDOL]HG FRXQWULHV ZLWK VRPH GHYHORSLQJ
,$$67'DQGPRUHUHFHQWO\E\81(3
,Q  PHPEHU 6WDWHV RI WKH $IULFDQ 8QLRQ
FRPPLWWHG WR VSHQG  SHU FHQW RI WKHLU QDWLRQDO
EXGJHWV RQ DJULFXOWXUDO GHYHORSPHQW 6R IDU RQO\ D
KDQGIXORIWKHPDUHPHHWLQJWKLVODXGDEOHWDUJHW7KDW
GHFLVLRQ ZDV PDGH EDVHG RQ WKH UHFRJQLWLRQ WKDW
LW LV LQ HDFK FRXQWU\·V EHVW LQWHUHVW WR KDYH D VWURQJ
DJULFXOWXUDO VHFWRU EDFNHG E\ D ZHOOGHYHORSHG
UHVHDUFKDQGH[WHQVLRQFDSDFLW\7KHODWHVWIRRGFULVLV
LQWKH+RUQRI$IULFDPD\\HWJLYHPRUHFUHGHQFHWR
WKH QHHG IRU XUJHQW DFWLRQ LQ SDUWLFXODU WR GHYHORS
VXVWDLQDEOH VROXWLRQV WR WKH LQFUHDVLQJ LPSDFWV RI
FOLPDWHFKDQJHLQGXFHG SKHQRPHQD VXFK DV WKRVH
7KH 8QLWHG 1DWLRQV &RQIHUHQFH RQ 6XVWDLQDEOH
'HYHORSPHQW ² 5LR ² KHOG LQ -XQH  ZDV
DQRWKHU JRRG RSSRUWXQLW\ WR VWURQJO\ FRPPLW WR D
D PXOWLIXQFWLRQDO DJULFXOWXUDO V\VWHP DV GHÀQHG LQ
WKH,$$67'UHSRUW$V+RIIPDQQDQG*5$,1LOOXVWUDWH
FRXQWU\H[FHSWLRQVVXFKDV,QGLDZLWKWKHKHOSRI LQ FKDSWHU  RI WKLV 5HYLHZ DJULFXOWXUH LV VWURQJO\
SULFH DQG WUDGHGLVWRUWLQJ VXEVLGLHV DQG DW JUHDW LPSOLFDWHG DV SDUW RI WKH FOLPDWHFKDQJH SUREOHP ,W
VRFLDOFRVWV PXVWWKHUHIRUHDOVREHSDUWRIWKHVROXWLRQ(QRUPRXV
‡ 7KH H[FHVV IRRG LV SURGXFHG DOVR DW JUHDW KHDOWK SUREOHPV KDYH DULVHQ IURP ´PRGHUQ GLHWVµ
HQYLURQPHQWDOFRVWVFRQWULEXWLQJEHWZHHQDQG RI KLJKO\ SURFHVVHG DQG FKHPLFDOODFHG IRRGVWXIIV
 SHU FHQW RI WKH WRWDO JUHHQKRXVH JDV *+* QRW WR PHQWLRQ WKH HFRORJLFDO LPSDFWV RI H[LVWLQJ
HPLVVLRQV WKDW DUH SDUWO\ UHVSRQVLEOH IRU FOLPDWH FRQYHQWLRQDO IRRG SURGXFWLRQ V\VWHPV WKDW RYHUXVH
FKDQJHVHHWKHFRPPHQWRI*5$,1LQFKDSWHURI ZDWHU IHUWLOL]HUV DQG RWKHU IRVVLOIXHOEDVHG LQSXWV
WKLV5HYLHZ DQG DUH WKHUHIRUH E\ GHÀQLWLRQ XQVXVWDLQDEOH
‡ $QLPDO IHHG SURGXFWLRQ SDUWLFXODUO\ FHUHDOV IRU )XUWKHUPRUH WKH VRFDOOHG FRQYHQWLRQDOLQGXVWULDO
UXPLQDQWV KDV D QHJDWLYH LPSDFW RQ DQLPDO DJULFXOWXUH LV VXSSRUWHG E\ SHUYHUVH VXEVLGLHV LQ
DQG FRQVXPHU KHDOWK GXH WR PHDW TXDOLW\ DQG GHYHORSHG FRXQWULHV WKDW UHLQIRUFH XQVXVWDLQDEOH
DQWLELRWLF DQG KRUPRQH UHVLGXHV DQG RQ WKH
HQYLURQPHQW WKURXJK FDUERQ F\FOHV ZKHQ IHHG LV
WUDQVSRUWHG DURXQG WKH ZRUOG 7KHUH LV DOVR WKH
HQYLURQPHQWDO SUREOHP RI DQLPDO IDFWRULHV ZKLFK
QHHGVWREHRYHUFRPHDORQJZLWKDQHPSKDVLVRQ
DQLPDOZHOIDUHFOLPDWHFKDQJHDQGKXPDQKHDOWK
FRQVLGHUDWLRQV
‡ &RQVXPSWLRQ RI ELRIXHOV LQ WKH IRUP RI FHUHDOV
DQG YHJHWDEOH RLOV VKRXOG EH UHDVVHVVHG DQG
SROLFLHV UHYLVHG WR UHYHUVH WKH VWURQJ JURZWK RI
VXFKFRQVXPSWLRQZKLFKLVFOHDUO\XQVXVWDLQDEOH
%HVLGHVVRPHREVHUYHUVKDYHIRXQGQRHYLGHQFH
RIDGGHGEHQHÀWVRIELRIXHOVLQWHUPVRIORZHU*+*
HPLVVLRQVEXWWKH\GRDIIHFWIRRGSULFHVQHJDWLYHO\
SUDFWLFHV RQ WKH RQH KDQG DQG RYHUFRQVXPSWLRQ
DQG ZDVWH RQ WKH RWKHU ,Q GHYHORSLQJ FRXQWULHV
IDUPHUV WU\LQJ WR FRPSHWH ZLWK WKHVH VXEVLGL]HG
SURGXFWV DUH IRUFHG WR FXW FRUQHUV DQG H[SORLW
WKHLU QDWXUDO UHVRXUFHV 'XH WR SRRU LQYHVWPHQW
LQ DJULFXOWXUH WKHVH IDUPHUV VXIIHU IURP D ODFN RI
NQRZOHGJH H[FKDQJH DQG LQVXIÀFLHQW RU D FRPSOHWH
DEVHQFH RI LQYHVWPHQW FDSDFLW\ WR LQQRYDWH DQG
SXUFKDVHPLVFHOODQHRXVLQSXWVLQFOXGLQJLQIRUPDWLRQ
DQG HTXLSPHQW 0RUHRYHU WKH\ GR QRW EHQHÀW IURP
LQVXUDQFH VFKHPHV $JULFXOWXUH HYHU\ZKHUH LV D
UDWKHU ULVN\ EXVLQHVV ZKLFK QHHGV WR EH EDFNHG E\
LQVXUDQFHVFKHPHVWRDVVXUHIDUPHUVWKHLUVXUYLYDOLQ
EDG\HDUVZKLFKDUHEHFRPLQJPRUHUHJXODUHYHQWV
&)6+/3(/DJLHWDO DVFOLPDWHFKDQJHLPSDFWVLQFUHDVH
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

7KH WUDQVLWLRQ IURP DQ HQHUJ\LQWHQVLYH IRUP RI FKDOOHQJHVWKDWOLHDKHDGZKLOHSURYLGLQJWKHQHHGHG

DJULFXOWXUHEHLWE\LPSRUWLQJWKHLQSXWVRUSURGXFLQJ IRRG DQG QXWULWLRQ VHFXULW\ IRU WKH SURMHFWHG  ELOOLRQ
WKHP ORFDOO\ WR D V\VWHP WKDW EXLOGV SURGXFWLYH SHRSOH E\  81(3  VRXJKW WR H[DPLQH
HFRV\VWHP VHUYLFHV WR VXVWDLQ PXOWLIXQFWLRQDO KRZ JUHHQ LQYHVWPHQWV ZRXOG KHOS DFKLHYH JUHDWHU
VXVWDLQDEOH UHVLOLHQW YLDEOH DQG HTXLWDEOH DJULFXOWXUH HFRQRPLF HQYLURQPHQWDO DQG VRFLDO VXVWDLQDELOLW\
UHTXLUHV PDMRU QHZ LQYHVWPHQWV LQ LQVWLWXWLRQV DQG )ROORZLQJWKH6WHUQ5HYLHZ·VUHFRPPHQGDWLRQV
LQIUDVWUXFWXUH 7KLV LQHYLWDEO\ UHTXLUHV WKH FUHDWLRQ RI WR LQYHVW DQ H[WUD  RU  SHU FHQW RI JURVV GRPHVWLF
QHZUHVHDUFKFHQWUHVDQGLQLWLDWLYHVZKLFKVKRXOGEH SURGXFW *'3 LQ D JUHHQ HFRQRP\ WZR VFHQDULRV
GHGLFDWHGWRUHVHDUFKHGXFDWLRQDQGH[WHQVLRQXQGHU ZHUH LGHQWLÀHG XVLQJ WKH 0LOOHQQLXP ,QVWLWXWH·V 7
DIXOO\SDUWLFLSDWRU\V\VWHPWKDWZLOODOVRIDYRXUZRPHQ V\VWHP G\QDPLFV PRGHO LQ ZKLFK WKH VXJJHVWHG
DQG FRYHU HFRV\VWHP VHUYLFHV RUJDQLF IDUPLQJ DGGLWLRQDOLQYHVWPHQWVLQJUHHQDJULFXOWXUHZRXOGEH
DJURHFRORJ\DQGDJURIRUHVWU\7KHXOWLPDWHDLPRIWKRVH XQGHUWDNHQ JOREDOO\ ,Q WKH ÀUVW VFHQDULR * DQ
FHQWUHVDQGLQLWLDWLYHVVKRXOGEHWKHWUDQVIRUPDWLRQRI DGGLWLRQDOSHUFHQWRI*'3ZRXOGEHLQYHVWHGLQ
WKH SUHVHQW DJULFXOWXUDO UHVHDUFK V\VWHP DW QDWLRQDO JUHHQ DJULFXOWXUH DQQXDOO\ HTXDO WR  ELOOLRQ ² LQ
UHJLRQDODQGLQWHUQDWLRQDOOHYHOVWRFDWHUWRWKHQHHGV FRQVWDQW  GROODUV EHWZHHQ  DQG  ,Q
RI D QHZ DJULFXOWXUDO SDUDGLJP VHH WKH FRPPHQWV WKH VHFRQG VFHQDULR *  SHU FHQW ZRXOG EH
RI5HLMLQWKLVFKDSWHUDQGRI$OWLHULDQG.RRKDINDQLQ LQYHVWHGLQJUHHQDJULFXOWXUHDQQXDOO\HTXDOWR
FKDSWHURIWKLV5HYLHZ7HFKQRORJLFDODQGVFLHQWLÀF ELOOLRQ GXULQJ WKH VDPH SHULRG 7KHVH DGGLWLRQDO
LQQRYDWLRQV VKRXOG UHVSRQG WR WKH QHHGV LGHQWLÀHG LQYHVWPHQWVZRXOGEHXQGHUWDNHQLQHTXDORQHIRXUWK
E\ WKH HQGXVHUV WR PHHW WKH JRDOV RI PXOWLIXQFWLRQDO PHDVXUHVLQWKHIROORZLQJIRXUDFWLYLWLHVDORQJWKHOLQHV
DJULFXOWXUHLQVWHDGRIGULYLQJWKRVHQHHGV VXJJHVWHGE\WKH,$$67'

&RQWUDU\ WR PDQ\ SUHFRQFHSWLRQV DJURHFRORJ\ LV ‡ 3URPRWLQJ VXVWDLQDEOH DJULFXOWXUDO PDQDJHPHQW
QRW WKH ORZSURGXFWLYLW\ V\VWHP RI RXU DQFHVWRUV SUDFWLFHV LH HQYLURQPHQWDOO\ VRXQG SUDFWLFHV
UDWKHU LW LV D PRGHUQ NQRZOHGJHEDVHG VFLHQFH
DQG WHFKQRORJ\HPSRZHUHG IRRG ÀEUH DQG IRGGHU
SURGXFWLRQV\VWHPDQGLWLVWKHRQO\RQHFDSDEOHRI
DVVXULQJIRRGVHFXULW\LQWKHPHGLXPDQGORQJWHUP
VHHDOVRWKHFRPPHQWRI1HPHVRQWKHSURGXFWLYLW\
VXFKDVQRORZWLOODJHDQGRUJDQLFDJULFXOWXUH
‡ 0LQLPL]LQJSUHKDUYHVWORVVHVWKURXJKWUDLQLQJDQG
SHVWFRQWURODFWLYLWLHV
‡ 'HYHORSLQJ RU LPSURYLQJ IRRG SURFHVVLQJ IRU
WKH SUHYHQWLRQ RI SRVWKDUYHVW ORVVHV DQG EHWWHU
DQG SURÀWDELOLW\ RI RUJDQLF DJULFXOWXUH LQ FKDSWHU  VWRUDJHHVSHFLDOO\LQUXUDODUHDV
7KH PHUJLQJ RI NQRZOHGJH ZLWK WHFKQRORJ\ DQG ‡ 6XSSRUWLQJ UHVHDUFK DQG GHYHORSPHQW LQ
VFLHQFHWRFUHDWHLQQRYDWLRQVWKDWDGGUHVVWKHEURDG DJURQRP\ SKRWRV\QWKHVLV HIÀFLHQF\ VRLO ELRORJ\
UDQJH RI LVVXHV LQ D V\VWHPLF PDQQHU LQ FRQWUDVW WR
WKHUHGXFWLRQLVWDSSURDFKWKDWSURPRWHVELRWHFKDQG
JHQHWLF HQJLQHHULQJ LQGXVWULHV QHHGV WR EH VWURQJO\
SURPRWHG WKURXJK SXEOLF VHFWRU LQYHVWPHQWV $UHDV
WKDW UHTXLUH VSHFLDO DQG LQFUHDVHG DWWHQWLRQ DUH VRLO
VFLHQFHVIRUWKHUHVWRUDWLRQEXLOGLQJDQGPDLQWHQDQFH
RI VRLO IHUWLOLW\ ZLWKRXW WKH PDVVLYH LQSXW RI V\QWKHWLF
DQGIHUWLOLW\WRFORVHWKH\LHOGJDSDGDSWDWLRQWR
FOLPDWHFKDQJHWKURXJKELRORJLFDOSURFHVVHVDQG
QHZ FURSV DQG IRU HIÀFLHQF\ LPSURYHPHQWV LQ
HQHUJ\DQGZDWHUXVH
,WVKRXOGEHQRWHGWKDW5 'LPSOLHVWKHSDUWLFLSDWLRQ
LQ UHVHDUFK DQG NQRZOHGJH GLVVHPLQDWLRQ RI WKH
GLIIHUHQWVWDNHKROGHUVLQSDUWLFXODUIDUPHUV²ZKRDUH
IHUWLOL]HUV WKH GHYHORSPHQW RI PL[HG FURSSLQJ DQG
DQLPDO KXVEDQGU\ V\VWHPV ZLWKLQ URWDWLRQ SDWWHUQV
WKDW IDYRXU KHDOWK\ SODQW JURZWK ÀUVW OLQH RI GHIHQVH
IRU SHVW DQG GLVHDVH FRQWURO DQG WKH SURGXFWLRQ RI
TXDOLW\ SODQW DQG DQLPDO SURGXFWV WKDW LPSURYH WKH
KHDOWK RI FRQVXPHUV DQG WKH HQYLURQPHQW $.67V
WKDW IXOÀO WKHVH FULWHULD DUH KROLVWLF LQ QDWXUH WDNH D
ODQGVFDSH RU ULYHUEDVLQ YLHZ DQG HPSKDVL]H WKH
VXVWDLQDEOH XWLOL]DWLRQ RI ELRGLYHUVLW\ ZDWHU VRLO DQG
HQHUJ\ZLWKLQWKHDJURHFRV\VWHPV
,Q DQ HIIRUW WR HYDOXDWH WKH IHDVLELOLW\ RI VXVWDLQDEOH
RIWHQZRPHQ²LQGHYHORSLQJFRXQWULHV81(3
VKRZV WKDW LQYHVWPHQWV LQ VXVWDLQDEOH DJULFXOWXUH
FDQPHHWWKHQHHGIRUIRRGVHFXULW\LQWKHORQJWHUP
ZKLOHUHGXFLQJDJULFXOWXUH·VFDUERQIRRWSULQWWKHUHE\
PDNLQJ LW SDUW RI WKH FOLPDWH FKDQJH VROXWLRQ 7KH
PRGHOOLQJUHVXOWVVXPPDUL]HGLQWDEOHDUHLQOLQHZLWK
WKHH[SHFWDWLRQVRIDQHZDJULFXOWXUDOSDUDGLJPDQG
WKH ÀQGLQJV RI PDQ\ RUJDQLF DQG DJURHFRORJ\ FDVH
VWXGLHV 7KH\ VKRZ WKDW QRW RQO\ IRRG VHFXULW\ EXW
DOVRHQYLURQPHQWDODQGVRFLDOJRDOVFDQEHDFKLHYHG
ZLWKDVXVWDLQDEOHDQGUHVLOLHQWDJULFXOWXUDOV\VWHP
´JUHHQµ DJULFXOWXUH WR GHDO ZLWK WKH SUREOHPV DQG ,Q WDEOH  WKH ´JUHHQ VFHQDULRµ * LV FRPSDUHG
 75$'($1'(19,5210(175(9,(:

7DEOH*UHHQVFHQDULR,PSDFWRIJUHHQLQYHVWPHQWVLQDJULFXOWXUHDPRXQWLQJWRSHUFHQWRI*'3

<HDU   

6FHQDULR %DVH\HDU *UHHQ %$8D *UHHQ %$8D
$JULFXOWXUDOSURGXFWLRQELOOLRQ\U     
&URSVELOOLRQ\U     
/LYHVWRFNELOOLRQ\U     
)LVKHULHVELOOLRQ\U     
(PSOR\PHQWPLOOLRQV     
6RLOTXDOLW\'PQO     
$JULFXOWXUHZDWHUXVH.0\U     
+DUYHVWHGODQGELOOLRQVRIKD     
'HIRUHVWDWLRQPLOOLRQVRIKD\U     
&DORULHVSHUFDSLWDGD\NFDO     
DYDLODEOHIRUVXSSO\
&DORULHVSHUFDSLWDGD\NFDO     
DYDLODEOHIRUKRXVHKROGFRQVXPSWLRQ
6RXUFH 81(3
1RWHD%$8 EXVLQHVVDVXVXDOVFHQDULR

ZLWK D ´EXVLQHVVDVXVXDOµ %$8 VFHQDULR ZKHUH
WKHVDPHDPRXQWRIDGGLWLRQDOLQYHVWPHQWHTXDOOLQJ
 SHU FHQW RI *'3\HDU LV PDGH LQ FRQYHQWLRQDO
DQG WUDGLWLRQDO DJULFXOWXUH RYHU D \HDU SHULRG
7KH UHVXOWV DUH LPSUHVVLYH DQG DOWKRXJK WKHVH DUH
FRPSLOHG RQ D JOREDO VFDOH WKH EDVLF SULQFLSOHV
DOVR DSSO\ WR WKH LQYHVWPHQWV PDGH WR IDFLOLWDWH WKH
WUDQVLWLRQ WRZDUGV PXOWLIXQFWLRQDO DQG VXVWDLQDEOH
DJULFXOWXUH WKDW DGRSWV WUDGLWLRQDO DQG ORZLQSXW
WHFKQLTXHVDVFXUUHQWO\SUDFWLFHGLQPRVWGHYHORSLQJ
FRXQWULHVE\VPDOOVFDOHIDUPHUVDVZHOODVE\VRPH
ODUJHUVFDOHRSHUDWLRQV2YHUDOOWKHVHLQYHVWPHQWVZLOO
OHDG WR LPSURYHG VRLO TXDOLW\ LQFUHDVHG DJULFXOWXUDO
\LHOG DQG UHGXFHG ODQG DQG ZDWHU UHTXLUHPHQWV
7KH\ZLOODOVRLQFUHDVH*'3JURZWKDQGHPSOR\PHQW
LPSURYH QXWULWLRQ DQG UHGXFH HQHUJ\ FRQVXPSWLRQ
YDOXHDGGHGWKHUHZRXOGEHQRLQFUHDVHLQWKHDUHD
KDUYHVWHGZKLOHGHIRUHVWDWLRQUDWHVZRXOGEHKDOYHG
DQG ZDWHUHIÀFLHQF\ LQFUHDVHG E\ RQH WKLUG 7KLV
VXJJHVWV SRVLWLYH V\QHUJLHV EHWZHHQ LQYHVWPHQWV LQ
HFRORJLFDODJULFXOWXUHDQGIRUHVWPDQDJHPHQW
&/LYHVWRFNSURGXFWLRQQXWULWLRQDQG
OLYHOLKRRGV
$GGLWLRQDO LQYHVWPHQWV LQ JUHHQ DJULFXOWXUH ZRXOG
DOVR OHDG WR LQFUHDVHG OHYHOV RI OLYHVWRFN SURGXFWLRQ
DQGUXUDOOLYHOLKRRGVDQGLPSURYHGQXWULWLRQDOVWDWXV
6XFK LQYHVWPHQWV DUH SURMHFWHG WR OHDG WR JURZWK
LQ HPSOR\PHQW RI DERXW  SHU FHQW FRPSDUHG ZLWK
FXUUHQWOHYHOVDQGWRDQLQFUHDVHRIDERXWSHUFHQW
FRPSDUHGZLWKWKH%$8VFHQDULR7KHPRGHOOLQJDOVR
DQGFDUERQGLR[LGH&2HPLVVLRQV
%$JULFXOWXUDOSURGXFWLRQDQG
YDOXHDGGHG
,QWKHJUHHQVFHQDULRWRWDODJULFXOWXUDOSURGXFWLRQLH
VXJJHVWVWKDWLQYHVWPHQWVLQJUHHQDJULFXOWXUHFRXOG
FUHDWHPLOOLRQDGGLWLRQDOMREVFRPSDUHGZLWK%$8
RYHU WKH QH[W  \HDUV 7KH DGGLWLRQDO LQYHVWPHQWV
LQ JUHHQ DJULFXOWXUH FRXOG DOVR OHDG WR LPSURYHG
QXWULWLRQDVDUHVXOWRIHQKDQFHGSURGXFWLRQPHWKRGV
DJULFXOWXUDOSURGXFWVOLYHVWRFNÀVKHULHVDQGIRUHVWU\
ZRXOG LQFUHDVH VLJQLÀFDQWO\ FRPSDUHG ZLWK WKH %$8
VFHQDULR7KLVFKDQJHZRXOGEHGULYHQE\LQFUHDVHG
FURSSURGXFWLRQWKDWZRXOGEHFDSDEOHRIPHHWLQJWKH
QHHGVRIDJURZLQJSRSXODWLRQSURMHFWHGWRUHDFKRYHU
ELOOLRQE\6LPLODUO\YDOXHDGGHGLQDJULFXOWXUDO
SURGXFWLRQZRXOGLQFUHDVHE\PRUHWKDQSHUFHQW
FRPSDUHGZLWKWKH%$8VFHQDULR,WLVLPSRUWDQWWRQRWH
WKDWGHVSLWHDQLQFUHDVHLQDJULFXOWXUDOSURGXFWLRQDQG
0HDWSURGXFWLRQZRXOGLQFUHDVHE\SHUFHQWGXH
WR DGGLWLRQDO LQYHVWPHQWV EHWZHHQ  DQG 
ZKLOH ÀVK SURGXFWLRQ ZRXOG EH  SHU FHQW EHORZ
OHYHOVDQG\HWSHUFHQWKLJKHUWKDQWKH%$8
VFHQDULR E\  0RVW RI WKHVH LQFUHDVHV ZRXOG
EH WKH UHVXOW RI JUHDWHU RXWOD\V IRU RUJDQLF IHUWLOL]HUV
LQVWHDG RI FKHPLFDO IHUWLOL]HUV DQG UHGXFHG ORVVHV
EHFDXVH RI EHWWHU SHVW PDQDJHPHQW DQG ELRORJLFDO
FRQWURO
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

'*+*HPLVVLRQV ‡ *UHHQLQJ DJULFXOWXUH DQG IRRG GLVWULEXWLRQ ZLOO

UHVXOWLQPRUHFDORULHVSHUSHUVRQGD\PRUHMREV
7RWDO &2 HPLVVLRQV LQ WKH DJULFXOWXUDO VHFWRU DUH DQG EXVLQHVV RSSRUWXQLWLHV ² HVSHFLDOO\ LQ UXUDO
SURMHFWHGWRLQFUHDVHE\SHUFHQWUHODWLYHWR DUHDV ² DQG JUHDWHU PDUNHW DFFHVV RSSRUWXQLWLHV
EXWZLOOEHSHUFHQWEHORZ%$8:KLOHHQHUJ\UHODWHG HVSHFLDOO\IRUGHYHORSLQJFRXQWULHV
HPLVVLRQV PRVWO\ IURP IRVVLO IXHOV DUH SURMHFWHG WR
JURZLWLVZRUWKQRWLQJWKDWHPLVVLRQVIURPFKHPLFDO
IHUWLOL]HUXVHGHIRUHVWDWLRQDQGKDUYHVWHGODQGZRXOG
GHFOLQHUHODWLYHWR%$8:KHQDFFRXQWLQJIRUFDUERQ
VHTXHVWUDWLRQLQWKHVRLOIURPHFRORJLFDOSUDFWLFHVDQG
IRUV\QHUJLHVZLWKLQWHUYHQWLRQVLQWKHIRUHVWU\VHFWRU
QHW *+* HPLVVLRQV ZRXOG GHFOLQH FRQVLGHUDEO\
7KHVH UHGXFWLRQV ZRXOG QRW EH VXIÀFLHQW KRZHYHU
DQG ZRXOG QHHG WR EH VXEVWDQWLDOO\ VWHSSHG XS WR
PDNH DJULFXOWXUH *+*QHXWUDO 'HSHQGLQJ RQ KRZ
WKH *+* HPLVVLRQV DUH FDOFXODWHG DW SURGXFWLRQ
RU IRRG V\VWHP OHYHO WKH UHGXFWLRQ ZRXOG KDYH WR
EH EHWZHHQ  DQG  SHU FHQW RI WKH HPLVVLRQV
UHVXOWLQJIURPSUHVHQWGD\DJULFXOWXUDOSUDFWLFHVMXVW
:KLOHHDFKRIWKHSURSRVHGPHDVXUHVZLOOFRQWULEXWH
WRWKHVKLIWWRZDUGVDJUHHQHUDJULFXOWXUDOVHFWRUWKH
FRPELQDWLRQRIDOOWKHVHLQWHUUHODWHGDFWLRQVZLOO\LHOG
DGGLWLRQDOSRVLWLYHV\QHUJLHV)RULQVWDQFHLQYHVWPHQW
LQPRUHVXVWDLQDEOHIDUPLQJSUDFWLFHVZLOOOHDGWRVRLO
FRQVHUYDWLRQZKLFKZRXOGLQFUHDVHDJULFXOWXUDO\LHOG
LQWKHPHGLXPWRORQJHUWHUP7KLVZRXOGDOORZPRUH
ODQGIRUUHIRUHVWDWLRQZKLFKLQWXUQZRXOGUHGXFHODQG
GHJUDGDWLRQDQGLPSURYHVRLOTXDOLW\
/RRNLQJ DW WKH NH\ LVVXH RI UHVLOLHQFH QHHGHG LQ WKH
\HDUV DKHDG WR GHDO ZLWK WKH FKDOOHQJHV RI FOLPDWH
FKDQJHLQSDUWLFXODULQGHYHORSLQJFRXQWULHVWKDWZLOO
EH DIIHFWHG PXFK PRUH WKDQ GHYHORSHG FRXQWULHV
WR VWD\ DW  SDUWV SHU PLOOLRQ SSP RI &2 7KLV LQYHVWPHQWLQ$.67ZLOOQHHGWREHZHOODERYHWKHOHYHO
E\DQ\PHDVXUHLVVWLOOWRRKLJKDQGULVNVFRQWLQXLQJ LQGLFDWHGLQWKH6WHUQ5HYLHZJLYHQWKDWWKHUHLVWKH
WR H[SRVH HFRV\VWHPV WR LUUHYHUVLEOH GDPDJHV QHHGWRDOORZIRUDFDWFKXSSHULRGRIDWOHDVW\HDUVWR
,W LV WKHUHIRUH QHFHVVDU\ WR WDNH D PXFK PRUH EROG DGDSWWKHUHVHDUFKV\VWHPVXQLYHUVLWLHVQDWLRQDODQG
DSSURDFKWRWUDQVLWLRQLQJWRZDUGVRUJDQLFDQGVLPLODU UHJLRQDOWRWKHQHHGVRIVPDOOVFDOHIDUPHUVZKRDUH
DJULFXOWXUDOSUDFWLFHVWKDWDUHDEOHWRDEVRUEWKUHHWR SUDFWLFLQJVXVWDLQDEOHDJULFXOWXUH$OVRWKHHQRUPRXV
IRXUWLPHVDVPXFK&2DVFRQYHQWLRQDODQGLQGXVWULDO GLYHUVLW\LQPRVWWURSLFDODQGVXEWURSLFDODJULFXOWXUDO
SUDFWLFHV EHIRUH VDWXUDWLRQ RFFXUV ZLWKLQ VRPH  V\VWHPVDGGVWRWKHQHHGIRUGHFHQWUDOL]DWLRQRIWKH
\HDUV,$$67'
$JULFXOWXUH WKHUHIRUH XQGRXEWHGO\ UHSUHVHQWV WKH
ORZHVWKDQJLQJIUXLWIRUFOLPDWHFKDQJHPLWLJDWLRQE\
VLPSO\GRLQJZKDWZHDOUHDG\NQRZKRZWRGRDQGDW
OLWWOHFRVWVIRUWKHWUDQVLWLRQ,QDGGLWLRQWKHWUDQVLWLRQ
ZRXOGEHDFFRPSDQLHGE\DQXPEHURIZLQGIDOOVIURP
D VXEVWDQWLDO UHGXFWLRQ LQ KHDOWKFDUH FRVWV GXH WR
KHDOWKLHUHDWLQJDQGOLYLQJKDELWVWRDGUDVWLFUHGXFWLRQ
RI HFRV\VWHP VHUYLFH FRVWV DQG VXEVWDQWLDO VDYLQJV
IURPVWRSSLQJSHUYHUVHVXEVLGLHV7KXVDWUDQVLWLRQWR
RUJDQLFDJURHFRORJLFDO IDUPLQJ SUDFWLFHV VKRXOG EH
WKHDEVROXWHSULRULW\ZKHQLQYHVWLQJLQ$.67DQGQHZ
DJULFXOWXUDOSUDFWLFHV
2YHUDOO FRPELQLQJ WKHVH UHVXOWV ZLWK UHVHDUFK IURP
RWKHUVRXUFHVSUHVHQWVWKHIROORZLQJUHVXOWV IRU PDLQWDLQLQJ WKH UXUDO DUHDV DV OLYHO\ LQWHUHVWLQJ
‡ 5HWXUQVRQLQYHVWPHQWVLQ´EURZQµDJULFXOWXUHZLOO
FRQWLQXH WR GHFUHDVH LQ WKH ORQJ UXQ PDLQO\ GXH
WRLQFUHDVLQJFRVWVRILQSXWVHVSHFLDOO\ZDWHUDQG
UHVHDUFKDQGWKHDFFRPSDQ\LQJPHDVXUHVVXFKDV
NQRZOHGJHDQGLQIRUPDWLRQGLVVHPLQDWLRQ
((QDEOLQJFRQGLWLRQV
'HVSLWH WKH FOHDU ORJLF DQG HFRQRPLF UDWLRQDOH IRU
PRYLQJPRUHUDSLGO\WRZDUGVVXVWDLQDEOHDJULFXOWXUH
WKH WUDQVLWLRQ ZLOO UHTXLUH D VXSSRUWLYH SROLF\
HQYLURQPHQW DQG HQDEOLQJ FRQGLWLRQV WKDW FRXOG
KHOS OHYHO WKH SOD\LQJ ÀHOG EHWZHHQ FRQYHQWLRQDO
DQG VXVWDLQDEOH DJULFXOWXUDO SUDFWLFHV ,Q SDUWLFXODU
ODUJH LQYHVWPHQWV LQ UXUDO LQIUDVWUXFWXUH LQFOXGLQJ
URDGVSRZHULQWHUQHWDFFHVVDFFHVVWRKHDOWKFDUH
DQGTXDOLW\VFKRROLQJDVZHOODVLQYHVWPHQWVLQQRQ
IDUPLQJ EXW DJULFXOWXUHUHODWHG MREV DUH HVVHQWLDO
DQG UHZDUGLQJ SODFHV VR DV WR NHHS WKH \RXWK IURP
PLJUDWLQJWRWKHHYHUJURZLQJXUEDQVOXPV
HQHUJ\DQGVWDJQDWLQJGHFUHDVLQJ\LHOGV
‡ 7KH FRVWV RI QHJDWLYH H[WHUQDOLWLHV RI ´EURZQµ
DJULFXOWXUH ZLOO FRQWLQXH WR LQFUHDVH JUDGXDOO\
LQLWLDOO\ QHXWUDOL]LQJ DQG HYHQWXDOO\ H[FHHGLQJ DQ\
HFRQRPLFDQGGHYHORSPHQWJDLQV
)7KHZD\IRUZDUG
,PSOHPHQWDWLRQ RI WKH NH\ ÀQGLQJV DQG RSWLRQV IRU
DFWLRQRIWKH,$$67'UHSRUWZLOOPDNHDJULFXOWXUHSDUW
RI WKH FOLPDWHFKDQJH VROXWLRQ ,W ZLOO DOVR DVVXUH
VXVWDLQDEOHTXDOLW\DQGTXDQWLW\RIIRRGSURGXFWLRQWR

QRXULVKWKHJURZLQJDQGPRUHGHPDQGLQJSRSXODWLRQ
ZKLOH VXSSRUWLQJ VWURQJ UXUDO GHYHORSPHQW LQ
DJULFXOWXUHUHODWHGMREV
7KHJURXQGEUHDNLQJÀQGLQJVRIWKH,$$67'SURFHVV
QHHGWREHLQWHUQDOL]HGDQGWUDQVODWHGLQWRSODQVWKDW
FDQ EH LPSOHPHQWHG E\ WKH UHOHYDQW JRYHUQPHQW
DJHQFLHVUHVSRQVLEOHIRU$.67DVZHOODVE\QDWLRQDO
DQG LQWHUQDWLRQDO GHYHORSPHQW DJHQFLHV DQG QRQ
75$'($1'(19,5210(175(9,(:
WKH DVVRFLDWHG QHJDWLYH VRFLDO DQG HQYLURQPHQWDO
LPSDFWV )RU HYHU\  SHU FHQW LQFUHDVH LQ IDUP
\LHOGV WKHUH KDV EHHQ D  SHU FHQW UHGXFWLRQ RI
SRYHUW\LQ$IULFDDQGPRUHWKDQSHUFHQWLQ$VLD
$QLQFUHDVHLQRYHUDOO*'3GHULYHGIURPDQLQFUHDVH
LQ DJULFXOWXUDO ODERXU SURGXFWLYLW\ LV RQ DYHUDJH
WLPHVPRUHHIIHFWLYHLQUDLVLQJWKHLQFRPHVRI
WKH SRRUHVW TXLQWLOH LQ GHYHORSLQJ FRXQWULHV WKDQ
DQ HTXLYDOHQW LQFUHDVH LQ *'3 GHULYHG IURP DQ
JRYHUQPHQWDO RUJDQL]DWLRQV 1*2V 7KH ,$$67'
LQFUHDVH LQ QRQDJULFXOWXUDO ODERXU SURGXFWLYLW\
UHSRUWQHHGVWREHVHHQDVWKHEDVLVIRUDFWLRQDQG
(YLGHQFH VXJJHVWV WKDW WKH DSSOLFDWLRQ RI JUHHQ
IRU GHYHORSLQJ D JHQXLQH PXOWLIXQFWLRQDO DJULFXOWXUDO
IDUPLQJSUDFWLFHVKDVLQFUHDVHG\LHOGVE\²
V\VWHP 1HZ DVVHVVPHQWV QHHG WR EH GRQH DW WKH
SHUFHQWHVSHFLDOO\RQVPDOOIDUPV
JOREDO DQG UHJLRQDO OHYHOV WR XSGDWH WKH RULJLQDO
‡ $ WUDQVLWLRQ WR DJURHFRORJ\ SURYLGHV VLJQLÀFDQW
UHSRUWFRPSOHPHQWJDSVDQGWDNHLQWRDFFRXQWQHZ
HQYLURQPHQWDO EHQHÀWV $JURHFRORJ\EDVHG IRRG
VRFLDO HQYLURQPHQWDO DQG HFRQRPLF GHYHORSPHQWV
SURGXFWLRQKDVWKHSRWHQWLDOWRUHEXLOGQDWXUDOFDSL
$VVHVVPHQWVDOVRQHHGWREHFRQGXFWHGDWQDWLRQDO
WDOE\UHVWRULQJDQGPDLQWDLQLQJVRLOIHUWLOLW\UHGXFLQJ
OHYHOV DV UHFRPPHQGHG E\ WKH ,$$67'  DV
VRLOHURVLRQDQGLQRUJDQLFDJURFKHPLFDOSROOXWLRQ
DJULFXOWXUDO SROLFLHV DUH YHU\ PXFK D QDWLRQDO LVVXH
LQFUHDVLQJ ZDWHU XVH HIÀFLHQF\ GHFUHDVLQJ
DQG DOVR EHFDXVH DJULFXOWXUH LV KLJKO\ ORFDO $
GHIRUHVWDWLRQELRGLYHUVLW\ORVVDQGRWKHUODQGXVH
UHYLHZ RI WKH UHSRUWV RQ DJULFXOWXUH WKDW KDYH EHHQ
LPSDFWV DQG VLJQLÀFDQWO\ UHGXFLQJ DJULFXOWXUDO
SXEOLVKHG VLQFH WKH UHOHDVH RI WKH ,$$67' UHSRUW
*+*HPLVVLRQV,PSRUWDQWO\JUHHQDJULFXOWXUHKDV
VHULHV $JULFXOWXUH DW D &URVVURDGV LQ  KDYH
WKH SRWHQWLDO WR WUDQVIRUP DJULFXOWXUH IURP EHLQJ
DGGHGOLWWOHH[FHSWFRQIXVLRQWRWKHFDOOIRUDFKDQJH
D PDMRU HPLWWHU RI *+*V WR RQH WKDW LV QHW *+*
LQ SDUDGLJP DQG WR WKH DVVHUWLRQ WKDW EXVLQHVV DV
QHXWUDO²DQGSRVVLEO\SURYLGHVHYHQD*+*VLQN
XVXDOLVQRORQJHUDQRSWLRQ7KHIXQGVDQGYDOXDEOH
²ZKLOHUHGXFLQJGHIRUHVWDWLRQDQGIUHVKZDWHUXVH
H[SHUW WLPH VSHQW RQ UHZULWLQJ DQG PRUH RIWHQ
E\SHUFHQWDQGSHUFHQWUHVSHFWLYHO\
WKDQ QRW GLOXWLQJ WKH VWURQJ RULJLQDO PHVVDJH IRU D
‡ $JURHFRORJLFDO IRRG SURGXFWLRQ KDV WKH SRWHQWLDO
WUDQVLWLRQWRPXOWLIXQFWLRQDODJULFXOWXUHDORQJWKHOLQHV
WREHDQHWMREFUHDWRUDQGWHQGVWRHPSOR\PRUH
RIDJURHFRORJ\IRUH[DPSOHFRXOGKDYHEHHQEHWWHU
SHRSOH SHU XQLW RI DJULFXOWXUDO SURGXFWLRQ WKDQ
XVHGWRVWDUWLPSOHPHQWLQJLWLQVWHDG
FRQYHQWLRQDO DJULFXOWXUH $GGLWLRQDOO\ IDFLOLWLHV
7KH PDLQ H[SHFWHG RXWSXWV IURP LPSOHPHQWLQJ WKH IRU HQVXULQJ IRRG VDIHW\ DQG KLJKHU TXDOLW\ RI
,$$67' RSWLRQV IRU DFWLRQ DW UHVHDUFK GHYHORSPHQW IRRG SURFHVVLQJ LQ UXUDO DUHDV FRXOG FUHDWH QHZ
DQG H[WHQVLRQ SROLF\ OHYHO DV LQ WKH JUHHQ VFHQDULR KLJKTXDOLW\ MREV LQ WKH IRRG SURGXFWLRQ FKDLQ
ZKLFK WKH 0LOOHQQLXP ,QVWLWXWH GHYHORSHG IRU 81(3 7KHWZRVFHQDULRV*DQG*FRQFHLYHGE\WKH
PD\EHVXPPDUL]HGDVIROORZV
‡ *UHHQ DJULFXOWXUH LV FDSDEOH RI QRXULVKLQJ D
JURZLQJ DQG PRUH GHPDQGLQJ ZRUOG SRSXODWLRQ
DW KLJKHU QXWULWLRQDO OHYHOV $Q LQFUHDVH LQ IRRG
HQHUJ\ FRQVXPSWLRQ IURP WRGD\·V  NFDO
SHU SHUVRQGD\ WR DURXQG  NFDO E\  LV
SRVVLEOH ZLWK WKH XVH RI NQRZOHGJH VFLHQFH DQG
WHFKQRORJ\LQVXSSRUWRIDJURHFRORJ\,WLVSRVVLEOH
WRJDLQVLJQLÀFDQWQXWULWLRQDOLPSURYHPHQWVIURPDQ
LQFUHDVHLQTXDQWLW\DQGGLYHUVLW\RIIRRGHVSHFLDOO\
0LOOHQQLXP ,QVWLWXWH VXJJHVW WKDW LQYHVWPHQWV LQ
HFRORJLFDO DJULFXOWXUH FRXOG FUHDWH  PLOOLRQ DQG
 PLOOLRQ DGGLWLRQDO MREV UHVSHFWLYHO\ FRPSDUHG
ZLWKWKH%$8VFHQDULRRYHUWKHQH[W\HDUV
‡ $WUDQVLWLRQWRDJURHFRORJLFDOIDUPLQJSUDFWLFHVZLOO
UHTXLUHDGGLWLRQDOLQYHVWPHQWV7KHDJJUHJDWHJOREDO
FRVW RI WKH LQYHVWPHQWV DQG SROLF\ LQWHUYHQWLRQV
UHTXLUHGIRUDWUDQVLWLRQWRZDUGVJUHHQDJULFXOWXUHLV
HVWLPDWHGWRDYHUDJHEHWZHHQDQGELOOLRQ
SHUDQQXPRYHUWKHSHULRGWRIRUWKH
QRQFHUHDO SURGXFWV 3XEOLF SULYDWH DQG FLYLO RU  SHU FHQW *'3 VFHQDULRV UHVSHFWLYHO\ DQG LW
VRFLHW\ LQLWLDWLYHV IRU LPSURYLQJ IRRG VHFXULW\ DQG ZLOO SURYLGH VLJQLÀFDQW DQFLOODU\ EHQHÀWV WR RWKHU
VRFLDOHTXLW\ZLOOEHQHHGHGWRHQDEOHDQHIÀFLHQW HFRQRPLF VHFWRUV DQG WKH HQYLURQPHQW ,W VKRXOG
WUDQVLWLRQDWWKHIDUPOHYHODQGWRDVVXUHDVXIÀFLHQW EH QRWHG WKDW FRPSDUHG ZLWK WKH SUHVHQW OHYHO RI
TXDOLW\RIQXWULWLRQIRUDOOGXULQJWKLVSHULRG SHUYHUVH VXEVLGLHV WR LQGXVWULDO DJULFXOWXUH RI
‡ $JURHFRORJ\ FDQ VLJQLÀFDQWO\ UHGXFH SRYHUW\ DQG PRUHWKDQELOOLRQSHUDQQXPWKHLQYHVWPHQW
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV
VXJJHVWHG E\ WKH 6WHUQ 5HYLHZ LV YHU\ PRGHVW ²
WRR PRGHVW LQ IDFW WR DFKLHYH WKH QHHGHG OHYHOV
RI *+* PLWLJDWLRQ DQG UHDOL]H WKH IXOO SRWHQWLDO RI
HQYLURQPHQWDOVHUYLFHV
 6XVWDLQDEOH DJULFXOWXUH UHTXLUHV LQYHVWPHQWV LQ
UHVHDUFK DQG FDSDFLW\EXLOGLQJ LQ WKH IROORZLQJ
NH\DUHDVVRLOIHUWLOLW\PDQDJHPHQWPRUHHIÀFLHQW
DQG VXVWDLQDEOH ZDWHU XVH FURS DQG OLYHVWRFN
GLYHUVLÀFDWLRQ DQG SODQW DQG DQLPDO KHDOWK
PDQDJHPHQWDVZHOODVSUHDQGSRVWKDUYHVWORVV
UHGXFWLRQ ,W DOVR UHTXLUHV VXEVWDQWLDO LQYHVWPHQWV
LQ DSSURSULDWH OHYHOV RI PHFKDQL]DWLRQ EXLOGLQJ
XSVWUHDP DQG GRZQVWUHDP VXSSO\ FKDLQV IRU
EXVLQHVVHVDQGWUDGHUHGXFWLRQRIIRRGSURFHVVLQJ
ZDVWH VXSSRUWLQJ DQG LPSOHPHQWLQJ FDSDFLW\
EXLOGLQJ HIIRUWV VXFK DV IDUPHU ÀHOG VFKRROV
LQFOXGLQJ H[SDQGLQJ DQG HTXLSSLQJ DJULFXOWXUDO

‡ 6XVWDLQDEOH DJULFXOWXUH DOVR UHTXLUHV QDWLRQDO
DQG LQWHUQDWLRQDO SROLF\ LQQRYDWLRQV LQFOXGLQJ
LQ LQWHUQDWLRQDO WUDGH SROLF\ 6XFK SROLF\
FKDQJHV VKRXOG IRFXV SDUWLFXODUO\ RQ UHIRUPLQJ
´HQYLURQPHQWDOO\KDUPIXOµVXEVLGLHVWKDWDUWLÀFLDOO\
ORZHUFRVWVRIDJULFXOWXUDOLQSXWVDQGSURPRWHWKHLU
H[FHVVLYH XVH 3ROLF\ PHDVXUHV DUH QHHGHG WKDW
UHZDUG IDUPHUV IRU SRVLWLYH H[WHUQDOLWLHV VXFK DV
UHGXFLQJ IRVVLOIXHOEDVHG DJULFXOWXUDO LQSXWV DQG
LPSOHPHQWLQJ RWKHU VXVWDLQDEOHJUHHQ DJULFXOWXUDO
SUDFWLFHV&KDQJHVLQWUDGHSROLFLHVWKDWLQFUHDVH
DFFHVV RI DJULFXOWXUDO H[SRUWV RULJLQDWLQJ LQ
GHYHORSLQJ FRXQWULHV WR PDUNHWV LQ KLJKLQFRPH
FRXQWULHVDUHDOVRQHFHVVDU\DORQJZLWKUHIRUPVRI
WUDGHGLVWRUWLQJ SURGXFWLRQ DQG H[SRUW VXEVLGLHV
7KHVH ZLOO IDFLOLWDWH JUHDWHU SDUWLFLSDWLRQ E\
VPDOOKROGHU IDUPHUV FRRSHUDWLYHV DQG ORFDO
H[WHQVLRQ VHUYLFHV ZLWK PRGHUQ ,&7 WRROV DQG
IDFLOLWDWLQJLPSURYHGPDUNHWDFFHVVIRUVPDOOKROGHU
IDUPHUVDQGFRRSHUDWLYHV
 1RW XQOLNH DJULFXOWXUDO PRGHUQL]DWLRQ VXVWDLQDEOH
DJULFXOWXUH UHTXLUHV LQVWLWXWLRQDO VWUHQJWKHQLQJ
LQFOXGLQJ UHIRUP RI ODQG ULJKWV JRRG JRYHUQDQFH
DQG LQIUDVWUXFWXUH GHYHORSPHQW VXFK DV URDGV
HOHFWULÀFDWLRQDQGLQWHUQHWDFFHVVLQUXUDODUHDVLQ
IRRGSURFHVVLQJ HQWHUSULVHV LQ IRRG SURGXFWLRQ
YDOXH FKDLQV *RYHUQPHQWV ZLOO DOVR QHHG WR
FRQVLGHU VXSSRUWLQJ WKHLU IDUPHUV E\ PHDQV RI
SUL]H VWDELOL]DWLRQ IXQGV ,Q DGGLWLRQ WKH\ VKRXOG
FRQVLGHUVHWWLQJXSVWUDWHJLFUHVHUYHVWRFRSHZLWK
XQH[SHFWHG HYHQWV DQG PRUH DQG PRUH OLNHO\
H[WUHPHZHDWKHUHYHQWVVXFKDVGURXJKWV ÁRRGV
DQG VWRUPV UHVXOWLQJ IURP FOLPDWH FKDQJH IRU D
GHYHORSLQJ FRXQWULHV ,$$67'  7KHVH FDQ PRUH GHWDLOHG GLVFXVVLRQ VHH FKDSWHU  RI WKLV
EHVXPPHGXSDVHQDEOLQJFRQGLWLRQV 5HYLHZ
 75$'($1'(19,5210(175(9,(:

1//'06#4; U (('%6+8' :6'05+10'48+%'5(14;56'/+%*#0)'U

%*+'8'/'065#0&#44+'4561 /2.'/'06#6+10
/DXUHQV.OHUN[
&RPPXQLFDWLRQDQG,QQRYDWLRQ6WXGLHV:DJHQLQJHQ8QLYHUVLW\:DJHQLQJHQ7KH1HWKHUODQGV

$EVWUDFW
7KHUROHRIH[WHQVLRQVHUYLFHVKDVZLGHQHGEH\RQGVLPSO\GLVVHPLQDWLRQRILQIRUPDWLRQDQGQRZLQFOXGHV
WKH EURNHULQJ DQG IDFLOLWDWLRQ RI PXOWLVWDNHKROGHU LQQRYDWLRQ QHWZRUNV 7KLV H[SDQGHG UROH QHHGV WR EH
IXUWKHUGHYHORSHGLQWHUPVRIERRVWLQJWKHLUFDSDFLWLHVDQGUHFRJQL]HGDVFDWDO\WLFWRV\VWHPLFFKDQJH

$,QWURGXFWLRQ
,Q WKH OLJKW RI WKH FKDOOHQJHV IDFLQJ WKH FXUUHQW
DJULFXOWXUDO VHFWRU LQQRYDWLRQ LV FUXFLDO WR DFKLHYLQJ
D V\VWHPLF VKLIW IURP FRQYHQWLRQDO LQGXVWULDO
PRQRFXOWXUHEDVHG SURGXFWLRQ V\VWHPV WKDW DUH
%&KDQJLQJGHÀQLWLRQVDQG
UROHVRIH[WHQVLRQ
,QPDQ\FRXQWULHVDGYLFHWRIDUPHUVLVSURYLGHGQRW
MXVW E\ D VLQJOH SXEOLF H[WHQVLRQ VHUYLFH EXW UDWKHU
E\VHYHUDOH[WHQVLRQVHUYLFHVDOVRLQFUHDVLQJO\FDOOHG
KLJKO\ GHSHQGHQW RQ H[WHUQDO LQSXWV WRZDUGV PRUH ´DGYLVRU\ VHUYLFHVµ ZKLFK FRQVLVW RI D SOHWKRUD RI
VXVWDLQDEOH SURGXFWLRQ V\VWHPV WKDW ERWK LPSURYH SXEOLF SULYDWH DQG 1*2EDVHG DGYLVHUV 5LYHUD
WKH SURGXFWLYLW\ RI VPDOOVFDOH IDUPHUV DQG IDFLOLWDWH
VHOIVXVWDLQHG ORFDO UXUDO GHYHORSPHQW 7KLV UHTXLUHV
V\VWHPZLGH DGDSWDWLRQV LQ ERWK SURGXFWLRQ DQG
FRQVXPSWLRQ V\VWHPV DV ZHOO DV D UHRUGHULQJ RI
WKH YDOXH FKDLQ 0DQ\ FRXQWULHV DUH DWWHPSWLQJ WR
UHIRUP WKHLU DJULFXOWXUDO LQQRYDWLRQ VXSSRUW V\VWHPV
ZLWK WKH DLP RI GHYHORSLQJ ÁH[LEOH DQG UHVSRQVLYH
FDSDFLWLHV WR DFKLHYH WKLV V\VWHPLF FKDQJH &HQWUDO
WR WKLV UHIRUP LV WKH VKLIW IURP D OLQHDU DSSURDFK
DQG 6XODLPDQ  7KLV LPSOLHV WKDW H[WHQVLRQ
V\VWHPV WRGD\ FDQ EH YHU\ EURDGO\ GHÀQHG DV
´V\VWHPVWKDWVKRXOGIDFLOLWDWHWKHDFFHVVRIIDUPHUV
WKHLU RUJDQL]DWLRQV DQG RWKHU PDUNHW DFWRUV WR
NQRZOHGJH LQIRUPDWLRQ DQG WHFKQRORJLHV IDFLOLWDWH
WKHLULQWHUDFWLRQZLWKSDUWQHUVLQUHVHDUFKHGXFDWLRQ
DJULEXVLQHVV DQG RWKHU UHOHYDQW LQVWLWXWLRQV
DQG DVVLVW WKHP WR GHYHORS WKHLU RZQ WHFKQLFDO
RUJDQL]DWLRQDODQGPDQDJHPHQWVNLOOVDQGSUDFWLFHVµ
WR LQQRYDWLRQ LQ ZKLFK SXEOLF VHFWRU DJULFXOWXUDO &KULVWRSORV   7KH UROH RI H[WHQVLRQ LQ UXUDO
UHVHDUFKDQGH[WHQVLRQGHOLYHUVQHZWHFKQRORJ\LQD DUHDVKDVWKXVH[SDQGHGWRLQFOXGHVHUYLFHVWKDWJR
SLSHOLQHFRQÀJXUDWLRQLHWKURXJKDOLQHDUÁRZIURP EH\RQG DJULFXOWXUH DQG PD\ LQFOXGH WKH IROORZLQJ
UHVHDUFK YLD H[WHQVLRQ WR IDUPHUV WR D V\VWHPLF &KULVWRSORV
DSSURDFKLQZKLFKLQQRYDWLRQLVWKHUHVXOWRIDSURFHVV
‡ 'LVVHPLQDWLRQ RI LQIRUPDWLRQ DERXW WHFKQRORJLHV
RI QHWZRUNLQJ LQWHUDFWLYH OHDUQLQJ DQG QHJRWLDWLRQ
QHZUHVHDUFKPDUNHWVLQSXWDQGÀQDQFLDOVHUYLFHV
DPRQJ D KHWHURJHQHRXV VHW RI SXEOLF SULYDWH DQG
DVZHOODVFOLPDWHDQGZHDWKHU
FLYLOVRFLHW\DFWRUV:RUOG%DQN,$$67'
6XFKDQDSSURDFKUHFRJQL]HVWKDWV\VWHPLFFKDQJH
LQDJULFXOWXUHEH\RQGQHZWHFKQLFDOSUDFWLFHVUHTXLUHV
LQVWLWXWLRQDO FKDQJH LQYROYLQJ DOWHUQDWLYH ZD\V RI
RUJDQL]LQJ IRU H[DPSOH PDUNHWV ODERXU ODQG WHQXUH
DQGGLVWULEXWLRQRIEHQHÀWV
7KLVSDSHUGLVFXVVHVWKHFKDQJLQJUROHRIH[WHQVLRQ
VHUYLFHV LQ VXFK DQ LQQRYDWLRQ V\VWHP DLPHG DW
FRQWULEXWLQJ WR D V\VWHPLF FKDQJH LQ DJULFXOWXUDO
SURGXFWLRQV\VWHPV
‡ 7UDLQLQJDQGDGYLFHIRULQGLYLGXDOIDUPHUVJURXSV
RIIDUPHUVIDUPHURUJDQL]DWLRQVFRRSHUDWLYHVDQG
RWKHUDJULEXVLQHVVHVDORQJWKHPDUNHWFKDLQ
‡ 7HVWLQJ DQG SUDFWLFDO DGDSWDWLRQ RI QHZ RQIDUP
WHFKQRORJLHVDQGSUDFWLFHV
‡ 'HYHORSPHQW RI EXVLQHVV PDQDJHPHQW VNLOOV
DPRQJ VPDOOKROGHU IDUPHUV DQG RWKHU ORFDO
HQWUHSUHQHXUV
‡ )DFLOLWDWLQJ OLQNDJHV DPRQJ PDUNHW DFWRUV HJ
IRU ÀQDQFLDO DQG QRQÀQDQFLDO LQSXWV SURFHVVLQJ
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

%R[%URNHULQJWKH6RXWK$PHULFDQ3DSD$QGLQDVXVWDLQDEOHYDOXHFKDLQLQQRYDWLRQQHWZRUN

7KH,QWHUQDWLRQDO3RWDWR&HQWUH&,3LQ3HUXVHUYHVDVDQLQQRYDWLRQEURNHUWKURXJKWKH3DSD$QGLQDQHWZRUNLQWKHFRQ

WH[WRIYDOXHFKDLQLQQRYDWLRQVZKLFKOLQNIDUPHUVWRPDUNHWVLQ%ROLYLD(FXDGRUDQG3HUXIRUGHWDLOVVHH'HYDX[HWDO
DQG%\DSSO\LQJDVRFDOOHGSDUWLFLSDWRU\PDUNHWFKDLQDSSURDFKUHOHYDQWPDUNHWFKDLQDFWRUVDUHEURXJKW
WRJHWKHUWRGLVFXVVSRVVLEOHLQQRYDWLRQVDQGWUXVWKDVEHHQEXLOWDPRQJVWRUJDQL]DWLRQVDVGLYHUVHDVDJULFXOWXUDOUH
VHDUFKRUJDQL]DWLRQV1*2VIDUPHUJURXSVDQGWUDGHUVZKLFKLQWKHSDVWKDGQRWJHQHUDOO\LQWHUDFWHG7KHVHDFWRUV
DUHEURXJKWWRJHWKHURQVWDNHKROGHUSODWIRUPVERWKDWWKHORFDOOHYHODPRQJVWSRWDWRSURYLGHUVORFDODXWKRULWLHVDQGD
UDQJHRIVHUYLFHSURYLGHUVHJLQSXWVDQGDOVRDWWKHPDUNHWFKDLQOHYHOLQFOXGLQJWUDGHUVSURFHVVRUVVXSHUPDUNHWV
UHVHDUFKHUVDQGH[WHQVLRQDJHQWV$VDUHVXOWQHZSURGXFWVKDYHEHHQFUHDWHGZLWKJUHDWHUYDOXHDGGHGIRUVPDOOIDUP
HUV)RUH[DPSOHSRWDWRFKLSVPDGHIURPLQGLJHQRXVSRWDWRYDULHWLHVSURGXFHGE\VPDOOKROGHUVDUHPDUNHWHGLQ3HUX
XQGHUWKH/D\·VODEHOZKLFKLVRZQHGE\WKHPXOWLQDWLRQDOFRUSRUDWLRQ3HSVLFR7KLHOHHWDO

DQGWUDGLQJLQFOXGLQJEURNHULQJFROODERUDWLRQDQG
SURPRWLQJOHDUQLQJDPRQJWKHP
‡ /LQNLQJ VPDOOKROGHU IDUPHUV UXUDO HQWUHSUHQHXUV
DQGRWKHUPHPEHUVRIWKHDJULFXOWXUDOFRPPXQLW\
ZLWKLQVWLWXWLRQVWKDWRIIHUWUDLQLQJDQGHGXFDWLRQLQ
ÀHOGVUHOHYDQWWRWKHDJULFXOWXUDOVHFWRU
‡ )DFLOLWDWLQJ OLQNDJHV EHWZHHQ IDUPHUV WKHLU
RUJDQL]DWLRQVDQGWKHSXEOLFVHFWRU
&7KHUROHRIH[WHQVLRQDVV\VWHPLF
´LQQRYDWLRQEURNHUVµ
7KH DERYH GHVFULSWLRQ RI WKH H[SDQGHG UROH RI
H[WHQVLRQVHUYLFHVPDNHVLWFOHDUWKDWWRHQKDQFHPXOWL
VWDNHKROGHULQWHUDFWLRQIRUV\VWHPLFFKDQJHH[WHQVLRQ
VHUYLFHVQHHGWRSURYLGHPRUHWKDQRQO\RQHRQRQH
WHFKQLFDO DGYLFH DQG WUDLQLQJ DOWKRXJK WKLV UHPDLQV
‡ 6XSSRUWLQJ LQVWLWXWLRQDO GHYHORSPHQW SURFHVVHV DQLPSRUWDQWDQGHVVHQWLDOIXQFWLRQRIH[WHQVLRQWKH\
DQG VRFLDO LQVWLWXWLRQDO DQG RUJDQL]DWLRQDO DOVRQHHGWRVHUYHDVLQQRYDWLRQEURNHUVLQLQQRYDWLRQ
LQQRYDWLRQV V\VWHPV.OHUN[+DOODQG/HHXZLVHQKDQFLQJ
WKH IRUPDWLRQ RI PXOWLVWDNHKROGHU OHDUQLQJ DQG
‡ 6XSSRUWLQJWKHGHYHORSPHQWRILQIRUPDODQGIRUPDO
LQQRYDWLRQQHWZRUNVDQGDFWLQJDVIDFLOLWDWRUVRIWKRVH
IDUPHURUJDQL]DWLRQVDQGUXUDO\RXWKRUJDQL]DWLRQV
QHWZRUNV6XFKLQQRYDWLRQEURNHUVSHUIRUPWKUHHFRUH
DQGKHOSLQJWKHPWRDUWLFXODWHWKHLUGHPDQGV
IXQFWLRQV
‡ 6XSSRUWIRULPSOHPHQWLQJJRYHUQPHQWSROLFLHVDQG
‡ $UWLFXODWLQJGHPDQGDUWLFXODWLQJLQQRYDWLRQQHHGV
SURJUDPPHV WKURXJK LQIRUPDWLRQ DZDUHQHVV DQG
DQG YLVLRQV DV ZHOO DV FRUUHVSRQGLQJ GHPDQGV
DGYLFH RQ WHFKQRORJLFDO RSWLRQV LQFOXGLQJ ODQG
LQ WHUPV RI WHFKQRORJ\ NQRZOHGJH IXQGLQJ DQG
VWHZDUGVKLSIRRGVDIHW\DQGDQLPDOZHOIDUH
SROLF\ DFKLHYHG WKURXJK SUREOHP GLDJQRVLV DQG
‡ &RQWULEXWLQJ WR WKH GHYHORSPHQW RI PRUH
IRUHVLJKWH[HUFLVHV
DSSURSULDWHSROLFLHVDQGSURJUDPPHVE\IDFLOLWDWLQJ
‡ 6XSSRUWLQJ WKH FUHDWLRQ RI QHWZRUNV IDFLOLWDWLQJ
IHHGEDFNIURPIDUPHUVDQGORFDOHQWUHSUHQHXUV
OLQNDJHV DPRQJVW UHOHYDQW DFWRUV LH VFDQQLQJ
‡ ,QFUHDVLQJ DZDUHQHVV RI QHZ RSSRUWXQLWLHV IRU
VFRSLQJ ÀOWHULQJ DQG PDWFKPDNLQJ RI SRVVLEOH
FHUWLÀFDWLRQ RI ¶¶JUHHQ·· IDLU WUDGH DQG RWKHU
FRRSHUDWLRQSDUWQHUV
SURGXFWLRQPHWKRGV
‡ 8QGHUWDNLQJ LQQRYDWLRQ SURFHVV PDQDJHPHQW
‡ )DFLOLWDWLQJ DFFHVV WR QRQH[WHQVLRQ JRYHUQPHQW
HQKDQFLQJ FRQYHUJHQFH RI JRDOV DQG LQWHUHVWV
VXSSRUW VXFK DV ZHDWKHUUHODWHG LQVXUDQFH
DQG PXWXDO XQGHUVWDQGLQJ LQ PXOWLVWDNHKROGHU
SK\WRVDQLWDU\ DQG FHUWLÀFDWLRQ VHUYLFHV DQG
QHWZRUNV FRPSULVLQJ DFWRUV ZLWK GLIIHUHQW
VXEVLG\ SURJUDPPHV LQFOXGLQJ SD\PHQW WR
LQVWLWXWLRQDO UHIHUHQFH IUDPHV UHODWHG WR QRUPV
IDUPHUV IRU HQYLURQPHQWDO VHUYLFHV DQG RWKHU
YDOXHVDQGLQFHQWLYHDQGUHZDUGV\VWHPV
VFKHPHVUHODWHGWRFDUERQFUHGLWV
‡ )DFLOLWDWLQJ DFFHVV WR FUHGLW IURP UXUDO ÀQDQFH 7KHUHDUHVHYHUDOH[DPSOHVRIWKHXVHIXOQHVVRIWKLV
LQVWLWXWLRQVIRUIDUPHUVDQGORFDOHQWUHSUHQHXUV LQQRYDWLRQ EURNHU UROH LQ GHYHORSLQJ FRXQWULHV IRU
‡ 3URYLGLQJQXWULWLRQHGXFDWLRQ DFKLHYLQJ WKH QHHGHG VLPXOWDQHRXV DGDSWDWLRQV DW
‡ 0HGLDWLQJLQFRQÁLFWVRYHUQDWXUDOUHVRXUFHV VHYHUDOOHYHOVLQSURGXFWLRQV\VWHPVDQGYDOXHFKDLQV
‡ 3URYLGLQJOHJDODQGÀVFDODGYLFH VHHER[HVDQG
 75$'($1'(19,5210(175(9,(:

%R[,QQRYDWLRQEURNHULQJIRULQFOXVLYHGHPDQGGULYHQUHVHDUFKDQGLQQRYDWLRQLQ,QGLD
1DWLRQDO$JULFXOWXUDO,QQRYDWLRQ3URJUDPPH

7RPDNHUHVHDUFKPRUHGHPDQGGULYHQDQGVXSSRUWLYHRIIDUPHUV·LQQRYDWLRQSURFHVVHVWKH1DWLRQDO$JULFXOWXUDO,Q
QRYDWLRQ3URJUDPPH1$,3RIWKH,QGLDQ&RXQFLORI$JULFXOWXUDO5HVHDUFKIRFXVHVRQHVWDEOLVKLQJFRQVRUWLDRISXEOLF
UHVHDUFKRUJDQL]DWLRQVLQSDUWQHUVKLSZLWKIDUPHUV·JURXSVWKHSULYDWHVHFWRUFLYLOVRFLHW\RUJDQL]DWLRQVDQGRWKHUVWDNH
KROGHUV DURXQG DJULFXOWXUDO GHYHORSPHQW WKHPHV :LWKLQ 1$,3·V OD\HUHG DQG GHFHQWUDOL]HG JRYHUQDQFH VWUXFWXUH WKH
3URMHFW,PSOHPHQWDWLRQ8QLWLVUHVSRQVLEOHIRUFRRUGLQDWLQJDQGIDFLOLWDWLQJLPSOHPHQWDWLRQZKLOHFRQVRUWLXPLPSOHPHQ
WDWLRQFRPPLWWHHVFRRUGLQDWHWKHUHVHDUFKFRQVRUWLD,QRWKHUZRUGVWKH1$,3DLPVWRFRQQHFWUHVHDUFKPRUHHIIHFWLYHO\
ZLWKLQQRYDWLRQSUDFWLFHV,WSHUIRUPVWKLVWDVNE\XVLQJWHFKQRORJ\IRUHFDVWLQJWRKHOSGHYHORSDYLVLRQRIZKDWFDQEH
DFKLHYHGEULQJLQJDFWRUVWRJHWKHUDQGRUJDQL]LQJPXOWLVWDNHKROGHUSULRULW\VHWWLQJH[HUFLVHVDQGRSHUDWLQJDVDQDJHQW
RIFKDQJHLQWKHSROLF\DQGLQVWLWXWLRQDOHQYLURQPHQWWRHQDEOHLQQRYDWLRQ(VWDEOLVKLQJWKLVNLQGRIHQDEOLQJHQYLURQPHQW
UHTXLUHVFKDQJHVLQIXQGLQJV\VWHPVLQFHQWLYHVVNLOOVDQGDQRUJDQL]DWLRQDOFXOWXUHWRPDNHUHVHDUFKPRUHUHFHSWLYH
WR GHPDQGGULYHQ SDUWLFLSDWRU\ DSSURDFKHV WKDW DUH JHQGHUVHQVLWLYH DQG HQFRPSDVV ZKROH VHFWRUV IDUPHUV RWKHU
UXUDOHQWUHSUHQHXUVLQSXWVXSSO\DQGDJULSURFHVVLQJLQGXVWULHVWUDGHUVDQGUHWDLOHUV$GGLWLRQDOUHTXLUHPHQWVDUHWKH
GHYHORSPHQWRIEXVLQHVVSODQQLQJVNLOOVVXSSRUWIRULQFXEDWRURUJDQL]DWLRQVIRUWUDQVIRUPLQJLQQRYDWLYHUHVHDUFKLGHDV
LQWRVRXQGFRPPHUFLDOYHQWXUHVDQGWKHXVHRI,&7V\VWHPVWRPDQDJHNQRZOHGJHHQKDQFHLQIRUPDWLRQVKDULQJDQG
PDWFKWKHGHPDQGIRULQIRUPDWLRQWRLWVVXSSO\
6RXUFHZZZQDLSLFDURUJLQ

',QQRYDWLYHH[WHQVLRQDSSURDFKHVDW DGYDQWDJH RI EHLQJ PRUH FRVWHIIHFWLYH WKDQ IDUPHU

WKHIDUPOHYHO
7KHVH LQQRYDWLRQ EURNHUV W\SLFDOO\ WDUJHW D YDULHW\
RI VWDNHKROGHUV IRU DFKLHYLQJ V\VWHPLF FKDQJH DQG
RIWHQ DFW DW UHJLRQDO QDWLRQDO DQG VHFWRUDO OHYHOV
7KH\PD\DOVRWDUJHWUHODWLYHO\VPDOOJURXSVRIPRUH
LQQRYDWLYH DQG HQWUHSUHQHXULDO IDUPHUV ,Q DGGLWLRQ
LQQRYDWLYH H[WHQVLRQ PRGDOLWLHV DQG PHWKRGV KDYH
WRIDUPHU H[WHQVLRQ DQG FDQ VRPHWLPHV KDYH D
VWURQJHUOHDUQLQJLPSDFWEHFDXVHWKH\RIIHUDEHWWHU
PHDQVRIH[SODLQLQJXQGHUO\LQJELRORJLFDORUSK\VLFDO
SURFHVVHV )XUWKHUPRUH IDUPHUOHG YLGHRV FDQ
YDORUL]HDQGEXLOGRQIDUPHUV·NQRZOHGJHDQGH[SODLQ
LQQRYDWLRQ LQ WKHLU RZQ ODQJXDJH 7KH $IULFD 5LFH
&HQWHULQ&{WHG·,YRLUHKDVIDFLOLWDWHGWKHGHYHORSPHQW
DQGWUDQVODWLRQRIULFHYLGHRV9DQ0HOH:DQYRHNH
EHHQ GHYHORSHG WR VXSSRUW V\VWHPLF FKDQJH DW WKH DQG =RVVRX  ZKLFK KDYH EHHQ WUDQVODWHG LQWR
IDUP OHYHO DQG WKH VFDOLQJ XS RI LQQRYDWLRQV WKDW  $IULFDQ ODQJXDJHV 2SHQ DLU YLGHR VKRZV KDYH
IDFLOLWDWH VXFK FKDQJH 7KUHH SURPLVLQJ DSSURDFKHV HQKDQFHGOHDUQLQJH[SHULPHQWDWLRQFRQÀGHQFHWUXVW
DUH IDUPHU ÀHOG VFKRROV ))6 WKH XVH RI YLGHR DQGJURXSFRKHVLRQDPRQJUXUDOSHRSOH7KHIDUPHU
PHGLDWHG OHDUQLQJ DQG WKH XVH RI LQIRUPDWLRQ DQG OHGOHDUQLQJYLGHRVLHQDEOHXQVXSHUYLVHGOHDUQLQJ
FRPPXQLFDWLRQ WHFKQRORJLHV ,&7V DQG PRELOH LL IRVWHU ORFDO FUHDWLYLW\ DQG H[SHULPHQWDWLRQ LLL
SKRQHV IDFLOLWDWH LQVWLWXWLRQDO LQQRYDWLRQV DQG LY LPSURYH
VRFLDOLQFOXVLRQRIWKHSRRUWKH\RXWKDQGZRPHQ
))6 DUH D SDUWLFLSDWRU\ PHWKRG RI VXVWDLQDEOH
WHFKQRORJ\ GHYHORSPHQW EDVHG RQ DGXOW HGXFDWLRQ )ROORZLQJWKHUDSLGVSUHDGRIWKH,QWHUQHWDQGPRELOH
SULQFLSOHVVXFKDVH[SHULHQWLDOOHDUQLQJ'DYLV SKRQHV LQ PDQ\ GHYHORSLQJ FRXQWULHV D UDQJH RI
DQG D IRUP RI IDUPHUWRIDUPHU H[WHQVLRQ *URXSV RI ,&7VVXFKDVLQIRUPDWLRQNLRVNVDQGWHOHFHQWUHVDQG
IDUPHUVPHHWLQDQLQIRUPDOVHWWLQJRQWKHLUIDUPVZLWK PRELOHSKRQHEDVHG ´LQIRPHGLDULHVµ KDYH HPHUJHG
DIDFLOLWDWRUVXFKDVDQH[WHQVLRQZRUNHU7KH))6LV
DQ LQWHUDFWLYH WUDLQLQJ PHWKRG WR HQDEOH IDUPHUV WR
EHFRPH WHFKQLFDO H[SHUWV RQ WKHLU IDUPLQJ V\VWHPV
DQG IDUPHUV DUH KHOSHG WR GLDJQRVH SUREOHPV ÀQG
VROXWLRQVFRQGXFWH[SHULPHQWVDQGGLVVHPLQDWHZKDW
WKH\KDYHOHDUQHGWRRWKHUIDUPHUV
%DOODQW\QHZKLFKHQDEOHVPDOOKROGHUIDUPHUV
WR DFFHVV IRU H[DPSOH UHOHYDQW VRXUFHV RI PDUNHW
LQIRUPDWLRQLQSXWSULFHVDQGDQLPDOKHDOWKLQIRUPDWLRQ
$QH[DPSOHRISRVLWLYHFKDQJHLQDQLPDOKHDOWKFDUH
V\VWHPV LV )$50$IULFD DQ 1*2 ZRUNLQJ LQ .HQ\D
ZKLFK GHYHORSHG D GHFHQWUDOL]HG DQLPDO KHDOWK
FDUH V\VWHP LQ LWV .HQ\D 'DLU\ *RDW DQG &DSDFLW\
3DUWLFLSDWRU\ RU IDUPHUOHG YLGHR SUHVHQWDWLRQV DUH D %XLOGLQJ 3URMHFW .'*&%3 .LWKXND 0XWHPL DQG
SRZHUIXOWRROWKDWFDQVLJQLÀFDQWO\LQFUHDVHWKHLPSDFW 0RKDPHG  7KH .'*&%3 V\VWHP ZRUNV ZLWK
RIJRRGSUDFWLFHVDQGUHVHDUFK9DQ0HOH9DQ FRPPXQLW\DQLPDOKHDOWKZRUNHUVZKREX\GUXJNLWV
0HOH :DQYRHNH DQG =RVVRX  7KH\ RIIHU WKH DQGPRELOHSKRQHVDWDVXEVLGL]HGSULFH7KHSURMHFW
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

DOVR LQVWDOOV FRPPXQLW\ SKRQHV DW YHWHULQDU\ VKRSV EURNHUUROHDVFHQWUDOWRWKHLUFRUHEXVLQHVVRUWKH\

SRZHUHG E\ VRODU SDQHOV DQG EDWWHULHV LQ YLOODJHV GRQRWJLYHWKHIUHHGRPWRH[HFXWHWKHLQQRYDWLRQ
WKDWODFNHOHFWULFLW\7KHSKRQHV\VWHPDOORZVDQLPDO EURNHUUROHZLWKLQWKHLUPDQGDWH7KXVWKHUHDUHVWLOO
KHDOWKZRUNHUVWRVKDUHLQIRUPDWLRQDQGXSGDWHVDQG FRQVWUDLQWVLQWHUPVRIPLQGVHWDQGFDSDFLW\ZKLFK
FRQGXFW UHIHUUDOV DQG LW UHVXOWV LQ ORZHU WUDQVDFWLRQ
FRVWVZKLFKHQKDQFHVWKHHIÀFLHQF\RIDQLPDOKHDOWK
FDUHSURYLVLRQ
‡ )XQGLQJ IXQGLQJ DJHQFLHV VXFK DV GRQRUV DQG
(%DUULHUVWRLPSOHPHQWDWLRQRIHIIHFWLYH
H[WHQVLRQVHUYLFHVIRUV\VWHPLFFKDQJH
,PSOHPHQWDWLRQ RI DQ LQQRYDWLRQ EURNHU UROH IRU
H[WHQVLRQVHUYLFHVDQGWKHXVHRIH[WHQVLRQPHWKRGV
VXFK DV ))6 DQG SDUWLFLSDWRU\ YLGHRV ZKLOH NH\ WR
DFKLHYLQJV\VWHPLFFKDQJHDUHQRWZLWKRXWFKDOOHQJHV
QHHG WR EH RYHUFRPH E\ UHWUDLQLQJ H[WHQVLRQ
SURYLGHUVDQGUHWRROLQJRUUHLQYHQWLQJH[WHQVLRQLQ
RUGHUWRSOD\WKHUROHRILQQRYDWLRQEURNHU+RZHYHU
WKLVZLOOQRWEHDQHDV\SURFHVV
JRYHUQPHQWV VKRXOG UHFRJQL]H WKH LPSRUWDQFH
RI WKH EURNHULQJ DQG IDFLOLWDWLQJ UROH RI H[WHQVLRQ
7KHVH DUH W\SLFDOO\ DFWLYLWLHV ZLWK ´VRIW LPSDFWVµ
ZKLFKDUHQRWHDV\WRFDSWXUHLQWKHKDUGLQGLFDWRUV
QHHGHG WR VKRZ HIIHFWLYHQHVV DQG KHQFH WKHUH
PD\EHDUHOXFWDQFHWRIXQGVXFKDFWLYLWLHV.OHUN[
DQGEDUULHUV7KHVHUHODWHWRFDSDFLW\DQGIXQGLQJ +DOO DQG /HHXZLV  'HYHORSLQJ DGHTXDWH
PHDVXUHPHQWV RI WKH ´LQWDQJLEOHVµ WKDW PDWWHU
‡ &DSDFLW\ ZKLOH H[WHQVLRQ VHUYLFHV DUH XUJHG WR IRU VWLPXODWLQJ LQQRYDWLRQ DQG V\VWHPLF FKDQJH
GHYHORSLQWRIDFLOLWDWLQJRUJDQL]DWLRQVWKDWFRQQHFW LV WKHUHIRUH D PDMRU FRQFHUQ *)5$6  ,W LV
IDUPHUV ZLWK GLIIHUHQW VHWV RI VHUYLFH SURYLGHUV ZRUWKQRWLQJWKDWUHFHQWVWXGLHVHJ'DYLVHWDO
PDQ\VWLOODGKHUHWRDOLQHDUWUDQVIHURIWHFKQRORJ\ )ULLVV+DQVHQDQG'XYHVNRJ<RUREH
SDUDGLJP5LYHUDDQG6XODLPDQ([WHQVLRQ -U 5HMHVXV DQG +DPPLJ  KDYH IRXQG
RUJDQL]DWLRQV HLWKHU GR QRW VHH WKH LQQRYDWLRQ SRVLWLYHLPSDFWVRIPHWKRGVVXFKDV))6
 75$'($1'(19,5210(175(9,(:

1//'06#4; U1/$+0+0) 0&+)'0175(4+%#0019.'&)'9+6*

1&'40019.'&)';56'/5(14
11&'%74+6;+0
*#0)+0).+/#6+%10&+6+105U
*#..'0)'5#0&4152'%65
+2.D\DDQG<16HOHWL
,.6&HQWUHRI([FHOOHQFH1RUWK:HVW8QLYHUVLW\0PDEDWKR6RXWK$IULFD

$EVWUDFW
,PSURYLQJWKHXVHRILQGLJHQRXVNQRZOHGJHV\VWHPV,.6WKURXJKWKHLUHIIHFWLYHFRPELQDWLRQZLWKPRG
HUQNQRZOHGJHDQGWHFKQRORJ\V\VWHPVLVDQLPSRUWDQWLVVXHLQSDUWLFXODUIRU$IULFD0RGHUQWHFKQRORJ\
V\VWHPVRIWHQWHQGWRPDUJLQDOL]H$IULFDQ,.6DQGDUHWKXVQRWVXVWDLQDEOH$Q\LQWHUIDFHEHWZHHQWKHWZR
ZLOORQO\EHUHOHYDQWLILQGLJHQRXVDJULFXOWXUDOSUDFWLFHVDUHDSSOLHGWRDJULFXOWXUHLQ$IULFDLQDZD\WKDWHQ
DEOHV$IULFDQIDUPHUVWREHFRPHNQRZOHGJHFUHDWRUVDQGUHFRJQL]HV,.6DVDQLPSRUWDQWVRXUFHRINQRZO
HGJH7RHQDEOHWKHH[FKDQJHRILQIRUPDWLRQEHWZHHQWKHWZRNQRZOHGJHV\VWHPVSDUWLFLSDWRU\PHDVXUHV
VKRXOGEHWDNHQWRFDSWXUHDQGFRQVHUYH$IULFDQ,.6DQGGLVVHPLQDWHLWDPRQJDJULFXOWXUDOUHVHDUFKHUV
DQGH[WHQVLRQZRUNHUVHQVXULQJWKDWERWKV\VWHPVRINQRZOHGJHDUHUHOHYDQWLQORFDOVHWWLQJV

$,QWURGXFWLRQ
$IULFDQ FRPPXQLWLHV OLYLQJ LQ GLIIHUHQW HFRORJLFDO
FRQGLWLRQV KDYH GHYHORSHG WKHLU RZQ ORFDO RU
LQGLJHQRXV NQRZOHGJH DQG WHFKQRORJLFDO V\VWHPV
RYHU WKH \HDUV WR HQVXUH IRRG VHFXULW\ LQ FKDQJLQJ
%,QGLJHQRXV$IULFDQDJULFXOWXUDO
NQRZOHGJHDQGWHFKQRORJLFDO
V\VWHPVIRUIRRGVHFXULW\
$UFKDHRORJLFDOÀQGLQJVLQYDULRXVSDUWVRI$IULFDVKRZ
WKDW DJULFXOWXUH VWDUWHG VHYHUDO PLOOHQQLD EHIRUH WKH
FOLPDWLF FRQGLWLRQV .D]LQJD  :HUQHU  &KULVWLDQ HUD ,W KDV EHHQ IRXQG WKDW WKH JURZLQJ RI
GHÀQHVLQGLJHQRXVNQRZOHGJHV\VWHPVDVERGLHVRI GRPHVWLFZKHDWEDUOH\LQWKHZHVWHUQGHVHUWRI(J\SW
NQRZOHGJH VNLOOV DQG EHOLHIV JHQHUDWHG ORFDOO\ DQG GDWHVDVIDUEDFNDVDURXQG%&DQGWKHUHLV
WUDGLWLRQDOO\ WUDQVPLWWHG RUDOO\ IURP RQH JHQHUDWLRQ HYLGHQFH RI DQLPDO KXVEDQGU\ VKHHSJRDWV GDWLQJ
WR WKH RWKHU :+2  KDV GHÀQHG IRRG VHFXULW\ EDFNWRDURXQG%&$IULFDQIRRGWHFKQRORJLHV
DVH[LVWLQJZKHQDOOSHRSOHDWDOOWLPHVKDYHDFFHVV KDYHQRWRQO\ZLWKVWRRGWKHWHVWRIWLPHEXWKDYHDOVR
WR VXIÀFLHQW VDIH QXWULWLRXV IRRG WR PDLQWDLQ D VSUHDGDFURVVWKHJOREHDGDSWLQJWRDQGPLWLJDWLQJ
KHDOWK\ DQG DFWLYH OLIH 6HID  VWDWHV WKDW IRU FOLPDWHFKDQJH6HID6RPHRIWKHLQGLJHQRXV
WKHLUVXUYLYDOPRUHWKDQSHUFHQWRIWKHSHRSOHLQ $IULFDQ DJULFXOWXUDO NQRZOHGJH DQG WHFKQRORJLFDO
$IULFDHVSHFLDOO\LQWKHUXUDODUHDVGHSHQGRQ,.6IRU V\VWHPVDUHHQXPHUDWHGDQGGLVFXVVHGEHORZ
IRRG VHFXULW\ KHDOWK QDWXUDO UHVRXUFH PDQDJHPHQW
FRQÁLFWUHVROXWLRQDQGQDWXUDOGLVDVWHUPDQDJHPHQW
LQFOXGLQJ DGDSWDWLRQ WR DQG PLWLJDWLRQ RI WKH HIIHFWV
RI FOLPDWH FKDQJH VXFK DV GURXJKW DQG ÁRRGV
7KHVH ORFDO NQRZOHGJH V\VWHPV DUH DIIRUGDEOH
FXOWXUDOO\DFFHSWDEOHDQGKHQFHVXVWDLQDEOH7KURXJK
DQ H[DPLQDWLRQ RI VHFRQGDU\ VRXUFHV WKLV SDSHU
L 0L[HG RU PXOWLSOH FURSSLQJ 7KLV LV WKH JURZLQJ
RI WZR RU PRUH FURSV VLPXOWDQHRXVO\ RQ WKH VDPH
SLHFHRIODQG7KHFRQFHSWEHKLQGWKLVV\VWHPLVWKDW
SODQWLQJ PXOWLSOH FURSV KDV YDULRXV DGYDQWDJHV IRU
KRXVHKROG DQG FRPPXQLW\ IRRG VHFXULW\ LQFOXGLQJ
SUHYHQWLQJ WKH ORVV RI VRLO QXWULHQWV UHGXFLQJ
ZHHGV DQG LQVHFW SHVWV LQFUHDVLQJ UHVLVWDQFH WR
SURYLGHVH[DPSOHVRI,.6LQDJULFXOWXUHDQGGLVFXVVHV FOLPDWHH[WUHPHVZHWGU\KRWFROGUHGXFLQJSODQW
WKHSURVSHFWVDQGFKDOOHQJHVRILQWHUIDFLQJ,.6ZLWK GLVHDVHV LQFUHDVLQJ RYHUDOO SURGXFWLYLW\ DQG XVLQJ
PRGHUQ NQRZOHGJH DQG WHFKQRORJLFDO V\VWHPV WR VFDUFHUHVRXUFHVWRWKHIXOOHVWH[WHQW,WDOVRSURYLGHV
HQKDQFHIRRGVHFXULW\LQFKDQJLQJFOLPDWLFFRQGLWLRQV LQVXUDQFH DJDLQVW FURS IDLOXUH GXH WR DEQRUPDO
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

ZHDWKHU FRQGLWLRQV 7KHUH DUH GLIIHUHQW YDULDQWV RI
LQWHUFURSSLQJ V\VWHPV SUDFWLFHG LQ $IULFD 7KHVH
LQFOXGH PL[HG LQWHUFURSSLQJ URZ LQWHUFURSSLQJ DQG
UHOD\LQWHUFURSSLQJ0L[HGLQWHUFURSSLQJZKHUHE\WKH
FRPSRQHQWFURSVDUHWRWDOO\PL[HGLQWKHÀHOGLVWKH
EDVLFIRUPXVHGLQPRVW$IULFDQFRXQWULHV$QH[DPS
LLL 6HOHFWLRQ RI VSHFLÀF FURSV DQG DJULFXOWXUDO
SUDFWLFHVVXLWHGWRSDUWLFXODUFOLPDWLFDQGHFRORJLFDO
FRQGLWLRQV ,Q DULG DQG VHPLDULG DUHDV QRPDGLF
SDVWRUDOLVWV SUDFWLFH H[WHQVLYH JUD]LQJ DQG FXOWLYDW
RUVJURZGURXJKWUHVLVWDQWFURSVVXFKDVPLOOHWDQG
VRUJKXP VKRUWF\FOH FRZSHDV SKDVHROXV EHDQV
OHRIDFRPPRQSUDFWLFHLQWKHFRDVWDODUHDVRI(DVW DQG JURXQGQXWV &DUSHQWHU  ,Q KXPLG DQG
$IULFD .HQ\D DQG WKH 8QLWHG 5HSXEOLF RI 7DQ]DQLD
LV PL[HG JURZLQJ RI SHUHQQLDOV VXFK DV FDVKHZV
FRFRQXWVDQGPDQJRHV2WKHUFRPELQDWLRQVLQFOXGH
FDVVDYD PL[HG ZLWK EDQDQDV PDL]H PL[HG ZLWK
OHJXPHVVRUJKXPZLWKSLJHRQSHDVDQGFRWWRQZLWK
VXEKXPLGFRQGLWLRQVIDUPHUVJURZIRRGFURSVVXFK
DV PLOOHW VRUJKXP PDL]H JURXQGQXWV FDVVDYD
FRZSHDV VZHHW SRWDWRHV UDLQIHG ULFH VR\EHDQV
EDQDQDVDQG\DPV
LY7KHLPSRUWDQFHRILQGLJHQRXV$IULFDQSRVWKDUYHVW
FRZSHDV
WHFKQRORJLHVIRUWKHSUHVHUYDWLRQRISHULVKDEOHIRRG
LL 6KLIWLQJURWDWLRQDO IDUPLQJ =DUE  GHÀQHV FURSV VXFK DV URRW FURSV HJ FDVVDYD \DPV DQG
URWDWLRQDO IDUPLQJ DV WKH FXOWXUDO DQG SK\VLFDO VZHHWSRWDWRHVJURZQPDLQO\LQWKHKXPLGDQGVXE
LQWHJUDWLRQ RI IRUHVW DQG DJULFXOWXUH ZKLFK VWUHVVHV KXPLG WURSLFV FDQQRW EH RYHUHPSKDVL]HG JLYHQ
WKHFRQQHFWLRQEHWZHHQWKHDJULFXOWXUDOV\VWHPDQG WKDW PXFK RI WKH IRRG KDUYHVW SURGXFHG LQ $IULFDQ
WKHHFRV\VWHP:KHQWKHÀHOGVDUHIDOORZWKH\DOORZ FRXQWULHVLVORVWWRVSRLODJHDQGLQIHVWDWLRQV.DZHVD
WKH UHJHQHUDWLRQ RI WKH VRLO DQG ODQG DQG WKLV LV
IROORZHGE\DQRWKHUF\FOHRIIDUPLQJ7KHIDOORZSHULRG
SURPRWHVULFKQXWULHQWVWRFUHDWHDFRQWLQXLQJV\VWHP
RI DJULFXOWXUH 7KH F\FOH DLGV WKH UHJHQHUDWLRQ RI
IDXQDDQGÁRUDWKHUHE\FRQVHUYLQJORFDOELRGLYHUVLW\
 7UDGLWLRQDO $IULFDQ VRFLHWLHV WKDW KDYH EHHQ
ODUJHO\GHSHQGHQWRQWKHVHVWDSOHVKDYHGHYHORSHG
YDULRXV ORFDO VWRUDJH DQG SURFHVVLQJ WHFKQLTXHV
IRU WKHP RYHU WKH \HDUV $FFRUGLQJ WR .DZHVD WKH
FXOWXUDOKLVWRULFDO HYROXWLRQ RI WKHVH VRFLHWLHV LQ
6DPXHO  HODERUDWHV WKH DGYDQWDJHV RI WKLV
V\VWHPEDVHGRQKLVH[SHULHQFHVLQWKH&RQJRDQG
&DPHURRQ7KHORFDOFRPPXQLWLHVWKHUHZHUHDEOHWR
FXOWLYDWHDZLGHYDULHW\RISODQWVSHFLHVGXHWRDWR
\HDUSHULRGRIIDOORZ$FFRUGLQJWRKLVREVHUYDWLRQ
WKHURWDWLRQDOIDUPLQJV\VWHPDVDQLQGLJHQRXVIRRG
VHFXULW\VWUDWHJ\ZDVQRWDVWDQGDORQHV\VWHPEXW
ZDV FRPELQHG ZLWK RWKHU V\VWHPV VXFK DV NLWFKHQ
JDUGHQVDQLPDOKXVEDQGU\KXQWLQJDQGJDWKHULQJ
+RZHYHU WKH FXUUHQW GLVFRXUVH RQ WKH FKDOOHQJHV
UHODWLRQ WR WKHLU IRRG SODQWV KDV LQ JHQHUDO PDGH
WKHPVWURQJO\HFRFHQWULFLQWKHLUWKLQNLQJLQFRQWUDVW
WR WKH WHFKQRFHQWULF DSSURDFK SUHYDLOLQJ LQ WKH
:HVWHUQ ZRUOG 7KH GLIIHUHQW VWDSOHV DUH DGDSWHG WR
SDUWLFXODUHFRV\VWHPVDQGWKHFURSVKDUYHVWHGQHHG
GLIIHUHQWDSSURDFKHVLQWKHSRVWKDUYHVWWHFKQRORJLHV
)RULQVWDQFHFDVVDYDKDVKLJKO\SHULVKDEOHURRWVWKDW
FDQEHVWRUHGIRURQO\DIHZGD\V7RRYHUFRPHWKLV
FRQVWUDLQW VRPH $IULFDQ VRFLHWLHV KDYH GHYHORSHG
LQGLJHQRXVWHFKQLTXHVWKDWKDYHEHHQVXEVWDQWLDOO\
LPSURYHG E\ UHFHQW UHVHDUFK IRU VWRULQJ WKH URRWV
RI FOLPDWH FKDQJH KDV FUHDWHG SUHMXGLFH DJDLQVW
IRU VXEVWDQWLDO SHULRGV %DNU  0RVW FDVVDYD
URWDWLRQDO IDUPLQJ &$5(  3HRSOH WHQG WR
FRQVXPLQJ FXOWXUHV DOVR SURFHVV WKH URRWV XVLQJ D
EODPHGHIRUHVWDWLRQIRUHVWÀUHVDQGVODVKDQGEXUQ
YDULHW\RIVRDNLQJGU\LQJRUIHUPHQWDWLRQWHFKQLTXHV
SUDFWLFHVDVVRPHRIWKHFDXVHVRIFDUERQHPLVVLRQV
WRSURGXFHVWDEOHGULHGSURGXFWVLQZKLFKWKHOHYHORI
7KLV FULWLFLVP LV UHIXWHG E\ $QGHUVRQ  XVLQJ
WKHWR[LFF\DQLGHLVVXEVWDQWLDOO\UHGXFHG
KLV REVHUYDWLRQV RI URWDWLRQDO IDUPLQJ LQ HDVWHUQ
1LJHULD +H LQGLFDWHV WKDW WKH IDOORZ V\VWHP RIIHUV Y 5HDULQJ RI GURXJKWUHVLVWDQW DQLPDOV VXFK DV
RSSRUWXQLWLHV IRU DGDSWDWLRQ RI IDUPLQJ WR FOLPDWH
FKDQJH$FFRUGLQJWRKLVVWXG\WKHVKLIWLQJFXOWLYDWRUV
QXUWXUHWKHIRUHVWVHYHQGXULQJWKHFXOWLYDWLRQSKDVH
,IIDOORZSHULRGVDUHORQJHQRXJKURWDWLRQDOIDUPLQJ
LV D VWDEOH V\VWHP WKDW PDLQWDLQV VRLO IHUWLOLW\ DQG
FDQWKHUHIRUHEHH[SHFWHGWREHFDUERQQHXWUDO7KH
ELRPDVVDFFXPXODWLRQLQURWDWLRQDOIDUPLQJLVORZHVW
JRDWV VKHHS DQG FRZV 3KHSKH  GLVFXVVHV
WKH DGYDQWDJHV RI NHHSLQJ VDYDQQDK JRDWV LQ WKH
DULG DQG VHPLDULG FOLPDWH RI 6RXWKHUQ $IULFD 7KH\
DUHKDUG\DQGDGDSWDEOHZLWKDQDWXUDOUHVLVWDQFHWR
WLFNERUQH GLVHDVHV VXFK DV KHDUWZDWHU DQG RWKHU
H[WHUQDO SDUDVLWHV DQG UHTXLUH PLQLPXP KDQGOLQJ
DQGFDUH7KH\DUHDOVRKHDWDQGGURXJKWUHVLVWDQW
DIWHU WZR F\FOHV HDFK ODVWLQJ DW OHDVW VL[ \HDUV DQGHDVLO\HQGXUHFROGDQGUDLQZKLOHWKHLUSLJPHQWHG
KLJKHVW DIWHU RQH RU IRXU F\FOHV DQG LQWHUPHGLDWH VNLQ SURYLGHV SURWHFWLRQ IURP VWURQJ XOWUDYLROHW
DIWHUVL[WRWHQF\FOHV UD\V 7KH\ KDYH UHODWLYHO\ VLPSOH DQG ORZ QXWULWLRQDO

UHTXLUHPHQWVDQGFDQVXUYLYHDQGUHSURGXFHZKHUH
RWKHUVPDOOVWRFNEUHHGVFDQQRWH[LVW7KHVDYDQQDK
JRDWVIHWFKDKLJKHUQHWSURÀWEHFDXVHRIORZHULQSXW
FRVWV 7KH\ EUHHG \HDU URXQG H[KLELW HDUO\ VH[XDO
PDWXULW\DQGKDYHORQJUHSURGXFWLYHOLYHV,QDGGLWLRQ
UDQJH SHUIRUPDQFH WULDOV KDYH VKRZQ WKDW WKH\ DUH
UHVLVWDQWWRPRXWKDQGKRRISUREOHPV
75$'($1'(19,5210(175(9,(:
&&RPELQLQJLQGLJHQRXV$IULFDQ
NQRZOHGJHZLWKPRGHUQ
NQRZOHGJHDQGWHFKQRORJLHV
3URVSHFWVDQGFKDOOHQJHV
:LWKRYHUSODQWVSHFLHVDQGRYHUHWKQLF
JURXSV $IULFD KDV ERWK WKH FXOWXUDO DQG LQGLJHQRXV
SODQW GLYHUVLW\ QHHGHG WR LQYLJRUDWH LWV DJULFXOWXUDO
YL $IULFDQ LQGLJHQRXV FRPPXQLWLHV KDYH ULFK HFRQRP\DQGHQVXUHLWVIRRGVHFXULW\XQGHUFKDQJLQJ
NQRZOHGJH RI QDWXUDO GLVDVWHU PDQDJHPHQW DV FOLPDWLF FRQGLWLRQV 81'3  3HRSOH LQ WKH
LOOXVWUDWHGE\3LWVR)RUH[DPSOHWKH%DWVZDQD UHJLRQXVHFORVHWRLQGLJHQRXVSODQWVIRUIRRG
=XOXDQGRWKHUHWKQLFJURXSVLQ6RXWKHUQ$IULFDKDYH LQFOXGLQJ IUXLW FHUHDOV OHJXPHV OHDI\ YHJHWDEOHV
XVHGWKHEHKDYLRXURIYDULRXVDQLPDOVELUGVSODQWV DERXW  GLIIHUHQW NLQGV WXEHUV DQG URRWV DQG
DQG LQVHFWV DV HDUO\ ZDUQLQJ LQGLFDWRUV RI QDWXUDO PDQ\ QRQIRRGV VXFK DV JXPV DQG DGGLWLYHV 7KH
GLVDVWHUVVXFKDVGURXJKWÁRRGVDQGIDPLQH KLJKFXOWXUDOGLYHUVLW\LVOLQNHGWRYHUVDWLOHLQGLJHQRXV
NQRZOHGJH DQG UHODWHG SUDFWLFHV LQFOXGLQJ D
YLL,QKHUVWXG\RILQGLJHQRXVIRRGVHFXULW\V\VWHPV
YDULHW\ RI IRRG SURFHVVLQJ WHFKQLTXHV DQG UHFLSHV
LQ HDVWHUQ =DPELD 0DWLNH  ORRNV DW WKH UROH
SOD\HG E\ WUDGLWLRQDO JUDQDULHV DV D SRVWKDUYHVW
VWUDWHJ\ WR HQVXUH IRRG VHFXULW\ 7KH WUDGLWLRQDO
JUDQDU\LVWKHSRRUPDQ·VIRRGVWRUHEXLOWXVLQJORFDO
PDWHULDOVNQRZOHGJHDQGVNLOOVWRVWRUHDQGSUHVHUYH
VHHGV DQG IRRG FURSV VXFK DV PDL]H PLOOHW DQG
VRUJKXP GULHG EHDQV DQG FDVVDYD IRU IXWXUH XVH
DQGSODQWLQJ7KHJUDQDULHVDUHEXLOWRQHOHYDWLRQVWR
SURWHFWWKHJUDLQVIURPPRLVWXUHLQVHFWVDQGURGHQWV
+RZHYHU LQ VSLWH RI WKLV JUHDW SRWHQWLDO LQGLJHQRXV
NQRZOHGJH KDV QRW EHHQ HIIHFWLYHO\ XVHG WR UHGXFH
FXUUHQW ZLGHVSUHDG PDOQXWULWLRQ DQG SRYHUW\ 7KH
W\SHV RI LQGLJHQRXV IRRGV FRQVXPHG E\ PRVW
$IULFDQ FRPPXQLWLHV HVSHFLDOO\ LQ WKH UXUDO DUHDV
DQGWKHPHWKRGVRIKDQGOLQJSURFHVVLQJPDUNHWLQJ
GLVWULEXWLRQDQGXWLOL]DWLRQDUHGHHSO\URRWHGLQWUDGLWLRQ
DQGH[SHULHQFHOHDGLQJWRWKHGHYHORSPHQWRIYDULRXV
LQGLJHQRXV IRRG WHFKQRORJLHV 7KHVH WHFKQRORJLHV
YLLL7UDGLWLRQDOJRYHUQDQFHKDVSOD\HGDQLPSRUWDQW DUHEDVHGRQORFDONQRZOHGJHH[SHULHQFHDUWFXOWXUH
UROH LQ IRRG VHFXULW\ DFFRUGLQJ WR D VWXG\ E\ DQGEHOLHIV\VWHPVDQGKDYHEHHQGLVWLOOHGIURPORFDO
'LVDWVDJDH)RUH[DPSOHWKHVWXG\REVHUYHG H[SHULHQFHVRYHUFHQWXULHV7KH\DIIHFWWKHHFRQRPLF
DQGVRFLDOOLYHVRIWKHRSHUDWRUVDUHVLPSOHODERXU
WKDW DPRQJ WKH =XOX DQG ;KRVD SHRSOH LQ 6RXWK
LQWHQVLYH DQG SUHGRPLQDQWO\ KRPHEDVHG DQG
$IULFD ORFDO FKLHIV PDLQWDLQHG FRPPXQLW\ JUDQDULHV
FRQWUROOHG E\ ZRPHQ +RZHYHU WKH\ DUH DOVR WLPH
WRSURWHFWWKHLUSHRSOHIURPVWDUYDWLRQGXULQJQDWXUDO
FRQVXPLQJZLWKSRRURUQRTXDOLW\FRQWURO
GLVDVWHUVVXFKDVIDPLQHVÁRRGVDQGGURXJKW
0DWLNHSURYLGHVH[DPSOHVRIEHVWSUDFWLFHVLQ
L[ 2EVHUYLQJ QDWXUH WR SUHGLFW ZHDWKHU 1JDQ\L
FRPELQLQJ LQGLJHQRXV DQG PRGHUQ WHFKQRORJLHV LQ
UDLQPDNHUVLQWKH/XK\DFRPPXQLW\RIZHVWHUQ.HQ\D
HDVWHUQ=DPELDVXFKDVORFDOIDUPHUVXVLQJPRGHUQ
KDYH EHHQ SUHGLFWLQJ WKH ZHDWKHU IRU JHQHUDWLRQV
VSUD\HUV WR WUHDW WKHLU IDUPV ZLWK RUJDQLF IHUWLOL]HUV
XVLQJFKDQJHVLQQDWXUHWRJXLGHWKHLUDGYLFHRQKRZ
DQG SHVWLFLGHV OLTXLG WHD ,Q WKH 8QLWHG 5HSXEOLF
WKHFRPPXQLW\VKRXOGWLPHLWVIDUPLQJ2JDOOR RI7DQ]DQLDDQGLQRWKHUSDUWVRI$IULFDLQFUHDVLQJO\
+RZHYHU WKH HUUDWLF ZHDWKHU SDWWHUQV FDXVHG E\ LQGLJHQRXV VHDVRQDO IRRGV DUH EHLQJ VWRUHG LQ
FOLPDWHFKDQJHPHDQWKDWWKHVHUDLQPDNHUVFDQQR PRGHUQ IRRG VWRUDJH DQG SUHVHUYDWLRQ IDFLOLWLHV
ORQJHUXVHQDWXUDOVLJQVVXFKDVREVHUYLQJZKHQWUHHV LQFOXGLQJGULHUVDQGIULGJHVWRSURORQJWKHLUVKHOIOLIH
VKHG WKHLU OHDYHV RU WKH EHKDYLRXU RI DQWV WR PDNH
WKHLUSUHGLFWLRQV0RUHRYHUWKH\GRQRWKDYHDFFHVV
WR WKH WHFKQRORJLHV DYDLODEOH WR PHWHRURORJLVWV $
MRLQWSURMHFWE\WKH8QLWHG.LQJGRPDQG&DQDGDOLQNV
WKHUDLQPDNHUVZLWKJRYHUQPHQWPHWHRURORJLVWV7KH
WZR JURXSV JHW WRJHWKHU HDFK VHDVRQ DQG SURGXFH
D IRUHFDVW ZKLFK LV GLVVHPLQDWHG XVLQJ D YDULHW\ RI
PHWKRGVVXLWHGWRFRPPXQLWLHVZKHUHPDQ\SHRSOH
DUHLOOLWHUDWH
.DZHVD+RZHYHU.DZHVDDUJXHVWKDWZKLOH
WKHLQWHUIDFHEHWZHHQ$IULFDQLQGLJHQRXVNQRZOHGJH
DQG PRGHUQ NQRZOHGJH V\VWHPV LV LPSRUWDQW WR
HQKDQFH IRRG VHFXULW\ DQG SURPRWH FOLPDWH FKDQJH
DGDSWDWLRQ DQG PLWLJDWLRQ LQ WKH FRQWH[W RI $IULFDQ
LQGLJHQRXVNQRZOHGJHV\VWHPVIRRGSURGXFWLRQDQG
FRQVXPSWLRQ DUH PXFK PRUH WKDQ MXVW HFRQRPLF RU
QXWULWLRQDO DFWLYLWLHV 7KH SURFHVVHV DQG SUDFWLFHV
LQYROYHGWDNHSODFHZLWKLQVSHFLÀFVRFLDOFXOWXUDODQG
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV
SROLWLFDO FRQWH[WV ZKLFK DUH QRW DOZD\V XQGHUVWRRG
E\ VFKRODUV UHVHDUFKHUV DQG SROLF\PDNHUV WUDLQHG
LQ:HVWHUQHQYLURQPHQWVDQGSHUVSHFWLYHV7KLVKDV
OHG WR WKH IDLOXUH RI PDQ\ GHYHORSPHQW SURMHFWV WKDW
DLPHGWRLPSURYHWKHHIÀFLHQF\RI$IULFDQLQGLJHQRXV
IRRGWHFKQRORJLHV)RUH[DPSOHWKH*UHHQ5HYROXWLRQ
GHPRQVWUDWHG WKH FRQVHTXHQFHV RI ´RXWVLGHUµ
NQRZOHGJH LW JHQHUDOO\ VXFFHHGHG LQ SODFHV ZKHUH
WKH WHFKQRORJ\ ZDV GHYHORSHG DQG IDLOHG LQ WKRVH
SODFHV ZKHUH ORFDO IDUPHUV· QHHGV YDOXHV DQG

ZK\LWLVEHLQJLQFUHDVLQJO\LQFOXGHGLQWKHDJHQGDVRI
UHVHDUFKDQGGHYHORSPHQWLQVWLWXWLRQV7KHUHQHHGVWR
EHD´GHFRQVWUXFWLYHµSURFHVVLQWKH´UHFRQVWUXFWLRQµ
RIDQDOWHUQDWLYHVFLHQFHDSSOLFDEOHWRDJULFXOWXUH,Q
RUGHU WR DFKLHYH MXVW DQG VXVWDLQDEOH DJULFXOWXUH IRU
IRRGVHFXULW\XQGHUFKDQJLQJFOLPDWLFFRQGLWLRQVLWLV
QHFHVVDU\ WR UHFRJQL]H WKDW NQRZOHGJH KDV PXOWLSOH
VRXUFHV LQFOXGLQJ ,.6 ,Q D VWXG\ WKDW PDSSHG DQG
DXGLWHG LQGLJHQRXV DJULFXOWXUDO NQRZOHGJH LQ WKH
8DVLQ *LVKX DQG .HL\R GLVWULFWV LQ WKH 5LIW 9DOOH\
FRQVWUDLQWVGLIIHUHGIURPWKRVHZKHUHWKHWHFKQRORJ\ 3URYLQFH .HQ\D .LSODQJ· DW DQG 5RWLFK 
ZDVGHYHORSHG*ODHVHU
,QFUHDVLQJO\ D JURZLQJ QXPEHU RI $IULFDQ VFLHQWLVWV
DQG SROLF\PDNHUV DUH EHFRPLQJ DZDUH WKDW ,.6
FDQ PDNH D VLJQLÀFDQW FRQWULEXWLRQ WR HQKDQFLQJ
IRRG VHFXULW\ DQG VXVWDLQDEOH GHYHORSPHQW )ORUD
KDYH VXJJHVWHG PHDVXUHV IRU LPSURYLQJ WKH
FDSWXULQJ SUHVHUYLQJ DQG GLVVHPLQDWLQJ RI $IULFDQ
LQGLJHQRXV NQRZOHGJH WR DJULFXOWXUDO UHVHDUFKHUV
H[WHQVLRQ ZRUNHUV DQG IDUPHUV 7KLV VKRXOG
IDFLOLWDWH WKH H[FKDQJH RI LQIRUPDWLRQ EHWZHHQ
LQGLJHQRXV NQRZOHGJH SUDFWLWLRQHUV DQG DJULFXOWXUDO
 6XFK NQRZOHGJH LV UHOHYDQW WR WKH PRGHUQ
H[WHQVLRQ VHUYLFHV SURPRWH FXOWXUDO DFFHSWDELOLW\ RI
VFLHQWLÀF ZRUOG IRU D QXPEHU RI UHDVRQV LQFOXGLQJ
GHYHORSPHQW SURMHFWV DQG SURJUDPPHV LQFUHDVH
IRU WKH SURWHFWLRQ RI ELRGLYHUVLW\ DQG WKH LQWHOOHFWXDO
DJULFXOWXUDO SURGXFWLYLW\ DQG IRRG VHFXULW\ SURPRWH
SURSHUW\ RI WKH LQGLJHQRXV NQRZOHGJH KROGHUV ,.6
ORFDO DJULFXOWXUDO FRQWHQW LQ PRGHUQ WHFKQRORJLFDO
FRXOG EH XVHG DV WKH EDVLV IRU WKH FRQVWUXFWLRQ RI
DSSOLFDWLRQV DQG FUHDWH FRPPXQLW\EDVHG LQFRPH
D WUXO\ DOWHUQDWLYH DJULFXOWXUH IRU IRRG VHFXULW\ DQG
HDUQLQJRSSRUWXQLWLHVIRUORFDOIDUPHUV
VXVWDLQDEOHFRPPXQLW\OLYHOLKRRGVLQ$IULFDZKLFKLV
 75$'($1'(19,5210(175(9,(:

1//'06#4; U  *';/$+15+5'69''01&'40%+'0%'
#0&4#&+6+10#.019.'&)'(14 0*#0%+0)

11&'%74+6;#0&.+/#6'*#0)'
&#26#6+10
600EXNX
.HQ\D$JULFXOWXUDO5HVHDUFK,QVWLWXWH1DWLRQDO%HHI5HVHDUFK&HQWUHDQG,6.RVJH\'HSDUWPHQWRI$QLPDO
6FLHQFHV(JHUWRQ8QLYHUVLW\1MRUR.HQ\D

$EVWUDFW
7KLV FRPPHQW GHPRQVWUDWHV WKH ULFKQHVV RI LQGLJHQRXV NQRZOHGJH ,. DQG WKH GLYHUVLW\ RI ,.UHODWHG
LQGLFDWRUVIRUPRQLWRULQJFOLPDWHYDULDELOLW\DQGFKDQJH$OWKRXJKWKHLQGLFDWRUVZHUHQRWFRPSDUHGZLWK
VHDVRQDO IRUHFDVWV LVVXHG E\ WKH UHVSHFWLYH IRUPDO LQVWLWXWLRQV LW LV HYLGHQW WKDW WKLV ULFK NQRZOHGJH LV
\HWWREHIXOO\KDUQHVVHGDQGFRPELQHGZLWKPRGHUQVFLHQFH.QRZOHGJHVKDULQJDPRQJVFLHQWLVWVDQG
SDVWRUDOLVWVFRPELQHGZLWKFDSDFLW\EXLOGLQJLVQHFHVVDU\IRULPSURYLQJWKHTXDOLW\RIFOLPDWHIRUHFDVWV
DQGHQDEOLQJSDVWRUDOLVWVDQGH[WHQVLRQDJHQWVWRLQWHUSUHWWKHSUREDELOLVWLFFOLPDWHLQIRUPDWLRQLQRUGHUWR
JHQHUDWH´EHVWEHWµRQIDUPSUDFWLFHVIRUWKHYDULRXVVHDVRQV7KLVZLOOHYHQWXDOO\FRQWULEXWHWRLQFUHDVHG
IRRGDQGQXWULWLRQVHFXULW\LQGHYHORSLQJFRXQWULHV
&OLPDWHFKDQJHDQGYDULDELOLW\DUHLVVXHVRIJUHDWFRQFHUQJOREDOO\DQGDUHPRUHSURQRXQFHGLQGHYHORS
LQJ FRXQWULHV WKDW IDFH PDQ\ GHYHORSPHQW FKDOOHQJHV &XUUHQW UHSRUWV LQGLFDWH WKDW WKH ZRUOG·V FOLPDWH
LVFKDQJLQJDWXQSUHFHGHQWHGUDWHVDIIHFWLQJHFRV\VWHPIXQFWLRQVDQGSURFHVVHVELRGLYHUVLW\DQGWKH
KXPDQSRSXODWLRQ7KHUHIRUHWKHUHLVDQHHGWRGHYHORSDOOLQFOXVLYHUREXVWVWUDWHJLHVIRUFOLPDWHFKDQJH
PLWLJDWLRQDQGDGDSWDWLRQWRWKHFKDQJLQJHQYLURQPHQWDOFRQGLWLRQV0RGHUQWHFKQRORJLHVKDYHSOD\HGDQ
LPSRUWDQWUROHLQWKHVXVWDLQDEOHPDQDJHPHQWRIQDWXUDOUHVRXUFHVLQWKHSDVWEXWZLWKWKHOLNHOLKRRGRI
IXUWKHUFKDQJHVRFFXUULQJPRGHUQVFLHQFHDORQHFDQQRWFRQVHUYHQDWXUHRUPLWLJDWHWKHHIIHFWVRIDQG
IDFLOLWDWHDGDSWDWLRQWRFOLPDWHFKDQJHWRHQKDQFHIRRGVHFXULW\7RDFKLHYHWKLVLWZLOOEHQHFHVVDU\WR
LQWHJUDWHWUDGLWLRQDONQRZOHGJHDQGLQVWLWXWLRQVZLWKPRGHUQVFLHQFH7KLVFRPPHQWDU\SURYLGHVH[DPSOHV
IURP.HQ\D²DFRXQWU\LQVXE6DKDUDQ$IULFDWKDWKDVHQRUPRXVELRGLYHUVLW\²WRVKRZWKHSRWHQWLDORI
WUDGLWLRQDO NQRZOHGJH IRU SURPRWLQJ FRQVHUYDWLRQ RI ELRORJLFDO GLYHUVLW\ DQG FOLPDWH FKDQJH PLWLJDWLRQ
*HQHUDOOHVVRQVDUHDOVRGUDZQIURPRWKHUDUHDVLQ$IULFDRQWKHXVHRIWUDGLWLRQDONQRZOHGJHSUDFWLFHV
DQGLQVWLWXWLRQVLQGHVLJQLQJUHVSRQVHVWRFOLPDWHFKDQJH

$,QWURGXFWLRQ 7KH )RXUWK $VVHVVPHQW 5HSRUW RI WKH ,QWHUJRYHUQ

PHQWDO 3DQHO RQ &OLPDWH &KDQJH ,3&& 
6WUDWHJLHV RI PLWLJDWLRQ DQG DGDSWDWLRQ WR FKDQJLQJ
LQGLFDWHV WKDW WKH H[DFW QDWXUH RI FKDQJHV LQ
HQYLURQPHQWDO FRQGLWLRQV KDYH EHHQ HPSKDVL]HG
FOLPDWH UHPDLQV XQFHUWDLQ EXW WKH OLNHOLHVW VFHQ
LQ QXPHURXV GLVFXVVLRQV DW D QXPEHU RI IRUXPV
DULR LV LQFUHDVHG YDULDELOLW\ SDUWLFXODUO\ DW WKH
LQFOXGLQJ WKH 8QLWHG 1DWLRQV )UDPHZRUN &RQYHQWLRQ
H[WUHPHV 7KHUHIRUH DSSURDFKHV IRU PLWLJDWLQJ WKH
RQ &OLPDWH &KDQJH &RQIHUHQFHV )RU WKH PDMRULW\
DFFRPSDQ\LQJ GLUHFW DQG FROODWHUDO HIIHFWV QHHG WR
RI FRPPXQLWLHV WKURXJKRXW WKH ZRUOG WKDW GLUHFWO\
EHGLVFXVVHGE\LQGLJHQRXVFRPPXQLWLHVVFLHQWLVWV
XWLOL]H QDWXUDO UHVRXUFHV IRU WKHLU OLYHOLKRRGV WKH
GHYHORSPHQWSDUWQHUVDQGWKHSROLWLFDOFODVV
H[SHFWHG FKDQJHV LQ FOLPDWH GXULQJ WKLV FHQWXU\
SUHVHQW VLJQLÀFDQW WKUHDWV RI GLVWXUEDQFHV 7KRPDV 7KHUHDUHSRWHQWLDOV\QHUJLHVIURPFRPELQLQJ,.ZLWK
HW DO  HVSHFLDOO\ ZKHUH FKDQJHV PD\ EH HPHUJLQJ DQG QHZ SDWWHUQV LQ VFLHQFH WR SURGXFH
XQSUHFHGHQWHGDQGSHUYDVLYH&RRSHUHWDO RSWLPXP NQRZOHGJH ,. XVXDOO\ EXLOGV RQ KROLVWLF
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

SLFWXUHV RI WKH HQYLURQPHQW E\ FRQVLGHULQJ D ODUJH &RQVHTXHQWO\LWLVXVHIXOWRGRFXPHQWDQGFRPSDUH

QXPEHU RI YDULDEOHV TXDOLWDWLYHO\ ZKLOH VFLHQFH WKHVH H[SHULHQFHV DFURVV DJURHFRORJLFDO ]RQHV
WHQGVWRFRQFHQWUDWHRQDVPDOOQXPEHURIYDULDEOHV DQG OLYHOLKRRG JURXSV ZLWK D YLHZ WR GUDZLQJ VRPH
TXDQWLWDWLYHO\5HFHQWVWXGLHVE\$EHGLDQG%DGUDJKHK OHVVRQV DQG UHFRPPHQGDWLRQV RQ KRZ LQGLJHQRXV
LQGLFDWHWKDW,.LVDYDOXDEOHVRXUFHRISUDFWLFHV IRUHFDVWLQJ PD\ EH VWUHQJWKHQHG WR VXSSRUW DGDSW
DQGDWLPHWHVWHGWRROWKDWZRXOGEHXVHIXOWRKDUQHVV DWLRQLQGLIIHUHQWVHWWLQJV
IRU VXVWDLQDEOH GHYHORSPHQW DQG IRU LPSURYLQJ IRRG
VHFXULW\,WLVEHFRPLQJFUXFLDOO\LPSRUWDQWWRUHFRJQL]H &,QGLJHQRXVNQRZOHGJHDQGGURXJKW
WKH OLPLWV RI RXU VFLHQWLÀF NQRZOHGJH %URZQ 
DQGWRUHYLHZRXUXQGHUVWDQGLQJRIZKDWXQFHUWDLQW\
DQG YDULDELOLW\ LPSOLHV DV ZHOO DV WR H[DPLQH KRZ
LQGLJHQRXV FRPPXQLWLHV OLYH WKHLU HYHU\GD\ OLYHV
7KLV FRPPHQWDU\ SURYLGHV H[DPSOHV IURP .HQ\D
PRQLWRULQJDFDVHRI.HQ\DQ
DJURSDVWRUDOLVP
$JURSDVWRUDO SURGXFWLRQ V\VWHPV KDYH EHHQ FODVV
LÀHGEDVHGRQDQXPEHURIFULWHULD2WWHDQG&KLORQGD
DQGGUDZVJHQHUDOOHVVRQVIURPRWKHUDUHDVLQ$IULFD
DERXWWKHXVHRIWUDGLWLRQDONQRZOHGJHSUDFWLFHVDQG
LQVWLWXWLRQVLQGHVLJQLQJUHVSRQVHVWRFOLPDWHFKDQJH
DQGYDULDELOLW\
%&RQJUXHQFHRILQGLJHQRXVDQG
VFLHQWLÀFNQRZOHGJHV\VWHPVLQ
FOLPDWHSUHGLFWLRQ
7KHUROHRIFOLPDWHDQGZHDWKHULQIRUPDWLRQLQKHOSLQJ
WKHIDUPLQJFRPPXQLW\WRPDNHFULWLFDOGHFLVLRQVIRU
DGDSWDWLRQ WR FOLPDWH FKDQJH DQG YDULDELOLW\ FDQQRW
 3DVWRUDOLVWV DQG DJURSDVWRUDOLVWV XVXDOO\
GHULYH,.EDVHGIRUHFDVWVMXVWEHIRUHWKHEHJLQQLQJRI
WKH IDUPLQJ VHDVRQ ,Q QRUWKHUQ .HQ\D WKH 5HQGLOOH
SDVWRUDOLVWV XWLOL]H D QXPEHU RI LQGLFDWRUV IURP ORFDO
ZHDWKHU UDQJLQJ IURP WHPSHUDWXUH KXPLGLW\ DQG
ZLQGFRQGLWLRQVWRWKHSUHVHQFHRUDEVHQFHRIFHUWDLQ
W\SHVRIFORXGVUDLQIDOOSDWWHUQVDQGDPRXQWV7KHVH
ZHDWKHU LQGLFDWRUV DUH DOVR XVHG LQ IRUPDO FOLPDWH
PRQLWRULQJ
$GGLWLRQDOO\ZKHQSUHGLFWLQJSURORQJHGGURXJKWWKH
5HQGLOOH SDVWRUDOLVWV REVHUYH WKH ÁRUD DQG IDXQD IRU
DQ\XQXVXDOEHKDYLRXUVXFKDVQRLVHVRIFHUWDLQELUGV
EH RYHUHPSKDVL]HG )DUPEDVHG GHFLVLRQPDNLQJ
LQ GHYHORSLQJ FRXQWULHV UHOLHV WR D ODUJH H[WHQW RQ
LQGLJHQRXV ZHDWKHU IRUHFDVWV SDUWO\ EHFDXVH RI
WKH DEVHQFH RI IRUPDO FOLPDWH LQIRUPDWLRQ V\VWHPV
LQ VRPH GHYHORSLQJ FRXQWULHV ,Q RWKHU FRXQWULHV
WKHDSSHDUDQFHRIVSDUURZZHDYHUVJUHHQELUGEHHV
PLJUDWLQJ OLYHVWRFN VSHFLHV ORRNLQJ HPDFLDWHG HYHQ
ZKHQWKHUHLVSOHQW\RISDVWXUHWKHLQYDVLRQRIFHUWDLQ
DQWV WKH PDNLQJ RI QRLVH E\ FULFNHWV DW QLJKW DQG
XQXVXDOÁRZHULQJRIFHUWDLQWUHHVHJ/RQFKRFDUSXV
ZKHUH PHWHRURORJLFDO VHUYLFHV DUH GHYHORSHG
WKHUHH[LVWVHYHUDOFKDOOHQJHVLQFRPPXQLFDWLQJWKLV
LQIRUPDWLRQ WR YXOQHUDEOH FRPPXQLWLHV %XW RYHUDOO
LW KDV EHHQ REVHUYHG WKDW WKH DFFXUDF\ RI PRGHUQ
PHWHRURORJLFDOSUHGLFWLRQVDQG,.EDVHGIRUHFDVWVLV
VSVWHULOH$VWURORJLFDOFRQVWHOODWLRQVOLNHWKHSRVLWLRQ
RIWKHVXQDQGPRRQDUHDOVRREVHUYHGLQJUHDWGHWDLO
E\ WKH 5HQGLOOH DQG *DEUD SDVWRUDOLVWV ,QWHUHVWLQJO\
DQXPEHURIWKHVHLQGLFDWRUVKDYHDOVREHHQXVHGIRU
GURXJKWPRQLWRULQJLQRWKHUFRPPXQLWLHVVXFKDVWKH
IDLUO\FRPSDUDEOH2UORYHHWDO .DPED DJURSDVWRUDOLVWV RI .HQ\D 6SHUDQ]D HW DO
7UDGLWLRQDOO\ IDUPHUV KDYH EHHQ XVLQJ WKHLU RZQ
NQRZOHGJH WR SUHGLFW UDLQIDOO ² NQRZOHGJH WKDW KDV
HYROYHG WKURXJK REVHUYDWLRQV DQG H[SHULHQFH RYHU
VHYHUDOGHFDGHVDQGSDVVHGRQIURPRQHJHQHUDWLRQ
WR WKH RWKHU ,Q ZHDWKHU IRUHFDVWLQJ WKH\ KDYH EHHQ

7KHUH DUH KRZHYHU VRPH GLVVHQWLQJ RSLQLRQV
RYHU WKH HIIHFWLYHQHVV RI LQGLFDWRUV XVHG E\ WKH
FRPPXQLWLHV DFURVV FRXQWULHV DQG WKH ZRUOG DQG
IXUWKHU VWXGLHV DUH QHFHVVDU\ WR EHWWHU FDSWXUH WKH
XVLQJ D VHW RI LQGLFDWRUV DQG KDYH GHYHORSHG D
UHOLDELOLW\ IDFWRU IRU HDFK RI WKHP +RZHYHU LW LV
RQO\ ZKHQ ,. LV XVHG FKDOOHQJHG DQG DGDSWHG WR
FKDQJLQJ FRQWH[WV WKDW LW ZLOO FRQWULEXWH WR FOLPDWH
FKDQJHDGDSWDWLRQ'HVSLWHWKHLQFUHDVLQJLQWHUHVWLQ
WKH XVH RI ,. VFHSWLFLVP WRZDUGV LW SHUVLVWV ZKLFK
OLPLWVLWVVSUHDGWRPDQDJHPHQWSUDFWLFHDQGVFLHQFH
*LOFKULVW 0DOORU\ DQG 0HUNHO  2UORYH HW DO
QDWXUHRIWKHLQGLFDWRUV/XVHQRHWDOVXJJHVW
WKDWLQGLJHQRXVPHWKRGVIRUFOLPDWHIRUHFDVWLQJFRXOG
RIIHULQVLJKWVWRLPSURYHWKHYDOXHRIPRGHUQVHDVRQDO
IRUHFDVWV IRU SDVWRUDOLVWV LQ (DVW $IULFD 7KH\ DUJXH
WKDW LQGLJHQRXV IRUHFDVWLQJ PHWKRGV DUH QHHGV
GULYHQIRFXVRQWKHORFDOLW\DQGWLPLQJRIUDLQVDQG
DUH ´FRPPXQLFDWHG LQ ORFDO ODQJXDJHV DQG W\SLFDOO\
E\ H[SHUWV· NQRZQ DQG WUXVWHG E\ SDVWRUDOLVWVµ ,Q
 FRQWUDVW LQ %XUNLQD )DVR 5RQFROL HW DO  DQG
 75$'($1'(19,5210(175(9,(:

/HVRWKR=LHUYRJHODQG'RZQLQJWKHUHLVOHVV
XVHRIORFDOIRUHFDVWLQJNQRZOHGJHZKLFKLVDWWULEXWHG
WR LQFUHDVHG FOLPDWH YDULDELOLW\ OHDGLQJ WR OHVV
FRQVLVWHQF\ EHWZHHQ LQGLFDWRUV DQG RXWFRPHV GXH
WR WKH FKDQJLQJ VRFLDO HQYLURQPHQW &RQVHTXHQWO\
IDUPHUV LQ WKHVH FRXQWULHV KDYH DOVR EHHQ VKRZLQJ
LQWHUHVW LQ KRZ WKH\ PLJKW EH DEOH WR XVH VHDVRQDO
PHWHRURORJLFDO IRUHFDVWV WR PDNH FULWLFDO IDUPLQJ
GHFLVLRQV
'HYHORSHG FRXQWULHV KDYH WHQGHG WR UHMHFW WKH ,.
RI ORFDO FRPPXQLWLHV DV SULPLWLYH QRQTXDQWLWDWLYH
HPSOR\LQJ QRQFRQYHQWLRQDO PHWKRGV DQG
XQOLNHO\WREHDIIHFWHGLQWKHVDPHZD\GXULQJSHULRGV
RI GURXJKW $GGLWLRQDOO\ PDQ\ KRXVHKROGV NHHS
DQLPDOVHOVHZKHUHZLWKUHODWLYHVDQGIULHQGVWRJXDUG
DJDLQVW ORVVHV WKURXJK GLVHDVH UDLGV RU GURXJKW
6XFKDQLPDOVDOZD\VFRPHLQKDQG\DIWHUDGLVDVWHU
DVWKHSDVWRUDOLVWIDPLOLHVDUHDEOHWRUHVWRFNTXLFNO\
DQG FDUU\ RQ ZLWK WKHLU OLYHV &RPPXQDO RZQHUVKLS
DQGPDQDJHPHQWRIQDWXUDOUHVRXUFHVDUHFHQWUDOWR
SDVWRUDOLVP LQ QRUWKHUQ .HQ\D EHFDXVH WKH\ HQVXUH
WKDWOLYHVWRFNNHHSHUVPRYHIUHHO\DVWKH\VHDUFKIRU
ZDWHU DQG SDVWXUHV LQ GLIIHUHQW ORFDWLRQV DW GLIIHUHQW
WLPHVRIWKH\HDU
XQVFLHQWLÀF+RZHYHUPRUHUHFHQWO\,.V\VWHPVKDYH
DWWUDFWHG WKH DWWHQWLRQ RI PDQ\ REVHUYHUV LQ ERWK
GHYHORSHG DQG GHYHORSLQJ FRXQWULHV 3UDFWLWLRQHUV
DUH VWDUWLQJ WR UHDOL]H WKH LPSRUWDQFH RI UHFRJQL]LQJ
DQG ZRUNLQJ ZLWK ,. ZKLFK EXLOGV RQ JHQHUDWLRQV RI
H[SHULHQFHWREHVWVXSSRUWWKHDGDSWLYHFDSDFLW\DQG
VWUDWHJLHVRIUXUDOFRPPXQLWLHV6SHUDQ]DHWDO
1\RQJ$GHVLQDDQG2VPDQ(ODVKDREVHUYHG
WKDW WKH SHRSOH RI WKH $IULFDQ 6DKHO SUDFWLFH ]HUR
WLOODJHPXOFKLQJIDOORZLQJDJURIRUHVWU\DQGRUJDQLF
IDUPLQJ ² SUDFWLFHV WKDW FUHDWH FDUERQ VLQNV 7KH\
UHSRUW WKDW ,. KDV EHHQ XVHG LQ ZHDWKHU IRUHFDVWLQJ
DQGYXOQHUDELOLW\DVVHVVPHQWDQGIRULPSOHPHQWDWLRQ
RI DGDSWDWLRQ VWUDWHJLHV VXFK DV FRQVHUYDWLRQ RI
2UORYHHWDO ELRGLYHUVLW\ XVH RI HPHUJHQF\ IRGGHU LQ WLPHV RI
GURXJKW PXOWLVSHFLHV FRPSRVLWLRQ RI KHUGV DQG
PRELOLW\
'$GDSWDWLRQVWUDWHJLHV
7KH XQSUHGLFWDEOH QDWXUH RI UDQJHODQGV IRUFHV
/DUJHSURSRUWLRQVRISDVWRUDOUDQJHODQGVLQDULGDQG
WKH SDVWRUDOLVWV WR HPEDUN RQ VWUDWHJLHV WR WDNH
VHPLDULG ODQGV $6$/V KDYH EHHQ V\VWHPDWLFDOO\
DGYDQWDJH RI WKH JRRG \HDUV )RU LQVWDQFH WKH\
GHJUDGHG RYHU WLPH ZKLOH DEVROXWH QXPEHUV RI
RIWHQ VWRFN PRUH SURGXFWLYH IHPDOHV LQ WKHLU KHUGV
OLYHVWRFN KDYH LQFUHDVHG DQG DUH QRZ WKUHDWHQLQJ
WRHQVXUHWKDWDQLPDOVORVWDUHHDVLO\UHSODFHGZKHQ
WKHKHDOWKRI $6$/ KDELWDW WKURXJK RYHUJUD]LQJDQG
FOLPDWLFFRQGLWLRQVLPSURYHLHZKHQJUDVVDQGZDWHU
VXEVHTXHQWO\ VRLO HURVLRQ 0JDQJD HW DO 
EHFRPH DEXQGDQW $OVR WKH\ NHHS D ODUJH QXPEHU
&RQVHTXHQWO\PRVWRIWKH$6$/VDUHFXUUHQWO\XQDEOH
RIDQLPDOVZKLFKLVRQHRIWKHSDUDPRXQWDVSHFWVRI
WR VXSSRUW JURZWK RI QDWXUDO YHJHWDWLRQ EHVLGHV
SDVWRUDOLVPWKDWJHQHUDOO\LVQRWZHOOXQGHUVWRRGDQG
GLPLQLVKLQJ WKH FDUERQ VLQN 7KLV UDLVHV GRXEWV
WKDW RIWHQ OHDGV RXWVLGHUV WR FDOO IRU GHVWRFNLQJ WR
DERXW WKH VXVWDLQDELOLW\ RI SDVWRUDOLVP DV D PHDQV
OHYHOVLQOLQHZLWKFDUU\LQJFDSDFLW\
RI OLYHOLKRRG ,Q WKH $6$/V RI QRUWKHUQ .HQ\D WKH
PDLQ IDFWRU LQÁXHQFLQJ WKH SURGXFWLYLW\ RI OLYHVWRFN 2XWVLGHREVHUYHUVDOVRWHQGWRRYHUORRNWKHIDFWWKDW
ZKLFK LV WKH SUHGRPLQDQW HFRQRPLF DFWLYLW\ LV IHHG WKH ZD\ DQLPDOV DUH JUD]HG PD\ EH PRUH LPSRUWDQW
DYDLODELOLW\ 3HDFRFN DQG 6KHUPDQ  <HW WKHUH
DUHIHZDOWHUQDWLYHVWROLYHVWRFNPRELOLW\DVDQHIÀFLHQW
DGDSWLYH PDQDJHPHQW VWUDWHJ\ WR RYHUFRPH IHHG
GHÀFLWV
7KHSDVWRUDOLVWJURXSVLQ.HQ\DKDYHGHYHORSHGIDLUO\
HIIHFWLYH FRSLQJ VWUDWHJLHV LQ UHVSRQVH WR GURXJKW
HYHQWV DLPHG DW PLQLPL]LQJ ORVVHV RU IDFLOLWDWLQJ
UHFRYHU\DIWHUGURXJKW7KHSUDFWLFHRINHHSLQJPL[HG
KHUGVRIJUD]HUVDQGEURZVHUVQRWRQO\HQVXUHVWKDW
WKHDQLPDOVPDNHXVHRIWKHGLIIHUHQWUHVRXUFHVHJ
WKDQ WKH QXPEHUV FRQVLGHULQJ WKH PRELOH QDWXUH RI
SDVWRUDOLVWV 8QIRUWXQDWHO\ PDQ\ RI WKHVH VWUDWHJLHV
WKDW KDYH VHUYHG GURXJKWDIIHFWHG FRPPXQLWLHV
ZHOOLQWKHSDVWPD\EHFRPHLQDGHTXDWHLQWKHOLJKW
RI WKH PRUH IUHTXHQW RFFXUUHQFH RI GURXJKWV DQG
XQSUHFHGHQWHGZHDWKHUH[WUHPHVLQUHFHQW\HDUV
:LWK GZLQGOLQJ QDWXUDO UHVRXUFHV HVSHFLDOO\ SDVWXUH
DQG ZDWHU WKHUH LV OLWWOH WKH SDVWRUDOLVWV FDQ GR WR
DFFHVV VXFK UHVRXUFHV ,W LV LPSRUWDQW WKDW H[WHUQDO
SOD\HUV ZRUN ZLWK WKHVH SDVWRUDOLVWV WR LGHQWLI\ ZD\V
JUDVVHVDQGVKUXEVEXWLWLVDOVRDULVNPDQDJHPHQW RIFUHDWLQJDFFHVVWRWKRVHUHVRXUFHV)RULQVWDQFH
VWUDWHJ\ DV WKH GLIIHUHQW JURXSV RI DQLPDOV DUH IDUPHUV FRXOG EH HQFRXUDJHG WR SODQW SDVWXUHV WKDW
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

FDQEHVROGWRSDVWRUDOLVWVDWVXEVLGL]HGUDWHVVRWKDW
WKHSDVWRUDOLVWVZRXOGQRWKDYHWRJUD]HWKHLUDQLPDOV
LQFXOWLYDWHG]RQHVZKLFKRIWHQJLYHVULVHWRFRQÁLFWV
ZLWKFURSIDUPHUVDWSUHVHQW
 75$'($1'(19,5210(175(9,(:

1//'06#4; U&&4'55+0)6*'#75'51(#0&')4#&#6+10X

11&#0&764+6+10#. 05'%74+6;#0&18'46;U
'92241#%*61)4+%7.674#. 06'05+(+%#6+10+0
6*'412+%5#0&7$6412+%5
5RJHU5%/HDNH\
$JURIRUHVWU\DQG1RYHO&URSV8QLW6FKRRORI0DULQHDQG7URSLFDO%LRORJ\-DPHV&RRN8QLYHUVLW\
&DLUQV$XVWUDOLD

$EVWUDFW
7KHVKRUWDJHRIQHZODQGIRUDJULFXOWXUHDQGWKHSRYHUW\RIVPDOOKROGHUIDUPHUVLQWKHWURSLFVDUHVHULRXV
FRQVWUDLQWVRQWKHH[SDQVLRQRIPRGHUQLQWHQVLYHDJULFXOWXUHWRRYHUFRPHWKHIRRGFULVLV&RQVHTXHQWO\
WKHUH LV DQ XUJHQW QHHG IRU ERWK WKH UHKDELOLWDWLRQ RI GHJUDGHG IDUPODQG DQG IRU WKH UHDOL]DWLRQ RI QHZ
LQFRPHJHQHUDWLQJRSSRUWXQLWLHV
7KLVFRPPHQWDU\SUHVHQWVDWULHGDQGWHVWHGDZDUGZLQQLQJ(TXDWRU3UL]HWKUHHSRLQWDFWLRQSODQXVLQJ
ELRORJLFDOQLWURJHQÀ[DWLRQDQGD´QHZZDYHµRIFURSGRPHVWLFDWLRQIRFXVLQJRQPDUNHWDEOHDQGKLJKO\
QXWULWLRXVWUDGLWLRQDOIRRGV,IZLGHO\DGRSWHGWKLVSDFNDJHFRXOGÀOOWKH\LHOGJDSRIFURSVVXFKDVPDL]H
WKHUHE\ SURPRWLQJ QHZ OLYHVWRFN HQWHUSULVHV DQG VDWLVI\LQJ JOREDO IRRG GHPDQG WR  ,W FRXOG DOVR
FUHDWHQHZEXVLQHVVDQGHPSOR\PHQWRSSRUWXQLWLHVLQGLYHUVLÀHGORFDOUXUDOHFRQRPLHVDQGSHUKDSVKHOS
H[SDQGDJULEXVLQHVVHV

7KH *UHHQ 5HYROXWLRQ HQDEOHG D FRQVLGHUDEOH $QVZHUVWRWKHVHTXHVWLRQVIDOOLQWRWZRPDLQFDPSV

LQFUHDVHLQWKHSURGXFWLYLW\RIFRQYHQWLRQDOKLJKLQSXW
DJULFXOWXUH WKHUHE\ VDYLQJ PLOOLRQV RI SHRSOH IURP
VWDUYDWLRQ+RZHYHUWKLVDFKLHYHPHQWFDPHDWDKLJK
FRVWWRWKHHQYLURQPHQWDVDUHVXOWRIODQGFRQYHUVLRQ
WKURXJK GHIRUHVWDWLRQ ODQG GHJUDGDWLRQ DQG WKH
RYHUH[SORLWDWLRQ RI QDWXUDO UHVRXUFHV HVSHFLDOO\ VRLO
DQG ZDWHU 0RUHRYHU VXFK KLJKLQSXW DJULFXOWXUH LV
QRZDOVRUHFRJQL]HGDVEHLQJDPDMRUFRQWULEXWRUWR
FOLPDWH FKDQJH )XUWKHUPRUH GHVSLWH WKH LPSURYHG
SURGXFWLYLW\RIPDMRUIRRGVWDSOHVWKHUHDUHVWLOOELOOLRQV
RI SHRSOH VXIIHULQJ IURP SRYHUW\ PDOQXWULWLRQ DQG
KXQJHU &RQVHTXHQWO\ WKHUH KDYH EHHQ PDQ\ FDOOV
IRUDQHZDSSURDFKWRIRRGSURGXFWLRQHVSHFLDOO\LQ
WKHUHDUHVRPHZKREHOLHYHWKDWWKHRQO\ZD\IRUZDUGLV
E\LQWHQVLI\LQJWKHKLJKHQHUJ\LQSXW*UHHQ5HYROXWLRQ
PRGHO LQYROYLQJ IXUWKHU SURGXFWLYLW\ LPSURYHPHQWV
WKURXJK UHVHDUFK DQG EUHDNWKURXJKV LQ FURS DQG
OLYHVWRFNJHQHWLFVRWKHUVWKLQNWKDWPRUHHFRORJLFDOO\
EDVHGDSSURDFKHVLQYROYLQJORZLQSXWDJULFXOWXUHDUH
WKHZD\IRUZDUG7RFRQVLGHUWKHPHULWVRIWKHVHWZR
FRQWUDVWLQJDQGKLJKO\SRODUL]HGYLHZVZHORRNDWWKH
HQYLURQPHQWDODQGVRFLRHFRQRPLFSUREOHPVDULVLQJ
IURP ODQG FRQYHUVLRQ WR DJULFXOWXUH DQG RIIHU VRPH
VROXWLRQV
&XUUHQW ODQGXVH SUDFWLFHV LQ WKH WURSLFV KDYH OHG
WR GHIRUHVWDWLRQ RYHUJUD]LQJ DQG RYHUH[SORLWDWLRQ
WKH WURSLFV DQG VXEWURSLFV ZKHUH WKH SUREOHPV DQG
LVVXHV DUH WKH PRVW XUJHQW DQG SUHYDOHQW 7KH NH\
LVVXHV WR EH DGGUHVVHG DUH ODQG UHKDELOLWDWLRQ IRRG
DQG QXWULWLRQDO VHFXULW\ DQG LQFRPH JHQHUDWLRQ ² DOO
ZLWKLQVXVWDLQDEOHODQGXVHSUDFWLFHV7KHRYHUULGLQJ
TXHVWLRQV DUH +RZ FDQ WKH ODQG EH XVHG WR IHHG D
JURZLQJSRSXODWLRQZLWKRXWIXUWKHUGDPDJHWRWKHORFDO
RI VRLOV DQG ZDWHU UHVRXUFHV ÀJXUH  FDXVLQJ D
FDVFDGHRIQHJDWLYHLPSDFWVODQGGHJUDGDWLRQORVV
RI VRLO IHUWLOLW\ ORVV RI ELRGLYHUVLW\ WKH EUHDNGRZQ RI
DJURHFRV\VWHP IXQFWLRQV GHFOLQLQJ \LHOGV KXQJHU
DQGPDOQXWULWLRQDQGGHFOLQLQJOLYHOLKRRGV$VVRFLDWHG
ZLWKWKHVHDUHUHGXFHGDFFHVVWRWUDGLWLRQDOZLOGIRRGV
ORVV RI LQFRPH DQG WKH LQFUHDVHG QHHG IRU FRVWO\
DQGJOREDOHQYLURQPHQW"+RZFDQIRRGDQGQXWULWLRQDO RIWHQXQDIIRUGDEOHDJULFXOWXUDOLQSXWV7KHUHVSRQVH
VHFXULW\EHDFKLHYHGRQDGHFOLQLQJDUHDRIDYDLODEOH RI SURSRQHQWV RI LQWHQVLYH KLJKLQSXW LQGXVWULDO
ODQG"$QGKRZFDQWKHODQGEHXVHGWRHQKDQFHWKH IDUPLQJ LV WR UHGRXEOH HIIRUWV WR LQFUHDVH WKH \LHOG
OLYHOLKRRGVDQGLQFRPHVRIWKHUXUDOSRRU" RI VWDSOH IRRG FURSV E\ HQKDQFLQJ WKHLU FDSDFLW\ WR
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

)LJXUH7KHF\FOHRIODQGGHJUDGDWLRQDQGVRFLDOGHSULYDWLRQ

External factors (e.g. entrepreneurs)

Desire for security and wealth

Deforestation Overfishing Overgrazing Regulated by

social organizations
at national and
Unsustainable use international level
of soils and water

Ecosystem degradation
and soil erosion

Breakdown of nutrient
cycling and loss of
Loss of biodiversity soil fertility/structure

Loss of income
from food crops Breakdown of ecosystem function
and wildlife
Increased use of
agrichemicals
Loss of crop yields

Increased Pollution of
costs waterways,
Hunger and
malnutrition aquifers and wetland
Increased
vulnerability to HIV/AIDS
Increased
health risks

Other external factors

(e.g. war and disasters) Declining livelihoods,
leading to poverty and social deprivation
Regulated by social organizations at the
community level

6RXUFH$GDSWHGIURP/HDNH\HWDO

ZLWKVWDQGELRWLFDQGDELRWLFVWUHVV7KLVDSSURDFKIDLOV SURYLGH DGHTXDWH FDORULHV IRU VXUYLYDO EXW WKH\ ODFN

WRUHFRJQL]HWKUHHLPSRUWDQWSRLQWVLVLQFHIDUPHUV
DUH IDLOLQJ WR JURZ VWDSOH IRRGV DQ\ZKHUH QHDU WKHLU
H[LVWLQJELRORJLFDOSRWHQWLDOUHVXOWLQJLQZKDWLVFDOOHG
WKH ´\LHOG JDSµ ² WKH GLIIHUHQFH EHWZHHQ SRWHQWLDO
\LHOGSHUKHFWDUHDQGDFWXDO\LHOGDFKLHYHGE\IDUPHUV
WKHSURWHLQVDQGPLFURQXWULHQWVQHFHVVDU\IRUKHDOWK\
OLYLQJQRWWRPHQWLRQWKHVHQVRU\SOHDVXUHVSURYLGHG
E\ WUDGLWLRQDO DQG KLJKO\ QXWULWLRXV IRRGV ZKLFK
XVHGWREHJDWKHUHGIURPWKHIRUHVW,QDGGLWLRQWKH
ZLGHVSUHDGFOHDUDQFHRIIRUHVWVIURPWKHODQGVFDSH
ÀJXUH  LQFUHDVLQJ WKH ELRORJLFDO SRWHQWLDO ZLOO QRW HVSHFLDOO\IURPKLOOVLGHVH[SRVHVVRLOVWRHURVLRQDQG
KHOSLLSRRUVPDOOKROGHUIDUPHUVORFNHGLQDSRYHUW\ LQFUHDVHVUXQRIIUHVXOWLQJLQODQGVOLGHVDQGÁRRGLQJ
WUDS FDQQRW DIIRUG WR EX\ WKH UHTXLVLWH IHUWLOL]HUV DQG WKDW GHVWUR\ SURSHUW\ DQG OHDG WR WKH GHDWK RI ODUJH
SHVWLFLGHV HYHQ LI WKH\ KDG DGHTXDWH DFFHVV WR QXPEHUVRISHRSOH/RVVRISHUHQQLDOYHJHWDWLRQDOVR
WKHPWKDWZRXOGDOORZWKHPWRSUDFWLFHPRQRFXOWXUH FRQWULEXWHVWRFOLPDWHFKDQJH
DJULFXOWXUH DQG LLL WKH RYHUULGLQJ GRPLQDQFH RI 7KHUHIRUH DQ DOWHUQDWLYH DSSURDFK WR DJULFXOWXUDO
VWDUFK\ IRRG VWDSOHV LQ PRGHUQ DJULFXOWXUH PD\ LQWHQVLÀFDWLRQ LV UHTXLUHG ,QGHHG VHYHUDO UHFHQW
 75$'($1'(19,5210(175(9,(:

)LJXUH$UHSUHVHQWDWLRQRIWKH\LHOGJDSLQDJULFXOWXUHDQGWKHVWHSVQHHGHGWRFORVHWKHJDS

Actual yield Biological yield potential

Filling the gap - Step 1 Filling the gap - Step 2+3
10

8
Crop yield (tons/ha)

Steps 2+3
6
Yield Gap
4
Step 1
2

0
Weeks 2 6 10 14
Weeks

UHYLHZV RI DJULFXOWXUH ,$$67'  5R\DO 6RFLHW\ LQWHJUDWH DSSURSULDWH OHJXPH VSHFLHV ZLWKLQ IDUPLQJ
DQGRILVVXHVUHODWLQJWRWKHUROHRIDJULFXOWXUH V\VWHPV 3UREDEO\ WKH PRVW HIIHFWLYH DQG HDVLHVW WR
LQ WKH JOREDO HQYLURQPHQW HJ +DVVDQ 6FKROHV DGRSWDUHKLJKGHQVLW\LPSURYHGIDOORZVZLWKVSHFLHV
DQG $VK  81(3  &$:0$  KDYH VXFKDV6HVEDQLDVHVEDQDQG7HSKURVLDYRJHOLLRUUHOD\
VXJJHVWHGWKDW´EXVLQHVVDVXVXDOµLVQRORQJHUWKH FURSSLQJZLWK*OLULFLGLDVHSLXP&RRSHUHWDO
DSSURSULDWH RSWLRQGXHWRWKHVFDOHRIWKHSUREOHPV %XUHVK DQG &RRSHU  &XOWLYDWLQJ OHJXPLQRXV
DQG WKH FRQVWUDLQWV IDFLQJ SRRU IDUPHUV :H QHHG FURSVVXFKDVEHDQVDQGSHDQXWVFDQDOVRFRQWULEXWH
WR JR EDFN WR EDVLFV DQG ORRN DW WKH F\FOH RI ODQG WR WKLV SURFHVV 7RJHWKHU WKH OHJXPHV FDQ LQFUHDVH
GHJUDGDWLRQDQGVRFLDOGHSULYDWLRQÀJXUH&OHDUO\
D IRFXV RQ FURS \LHOG LV LPSRUWDQW EXW UDWKHU
WKDQ WU\LQJ WR LQFUHDVH \LHOG SRWHQWLDO ZH QHHG WR
IRFXV RQ FORVLQJ WKH \LHOG JDS ,Q WKH ZRUVW FDVHV
IDUPHUV JURZLQJ PDL]H DUH DFKLHYLQJ RQO\ ² WRQ
SHU KHFWDUH ZKHQ WKH SRWHQWLDO LV DURXQG  WRQV
SHU KHFWDUH ,Q WKLV VLWXDWLRQ FORVLQJ WKH JDS FRXOG
LQFUHDVHIRRGSURGXFWLRQE\WRIROGEXWHYHQLI
LWZHUHLQFUHDVHGE\RQO\WRIROGRQDYHUDJHWKLV
ZRXOGEHZHOORYHUWKHSHUFHQWLQFUHDVHWKDWPLJKW
EHUHTXLUHGWRIHHGWKHELOOLRQSHRSOHSUHGLFWHGWR
VRLOQLWURJHQWRDOHYHOWKDWZLOOSURGXFHPDL]H\LHOGV
RI²WRQVSHUKHFWDUHZLWKLQ²\HDUV7KLVZRXOG
KHOS QDUURZ WKH \LHOG JDS DQG JUHDWO\ LQFUHDVH IRRG
VHFXULW\ +RZHYHU LW ZRXOG QRW DGGUHVV WKH SUREOHP
RIWKHORZOHYHOVRIRWKHUVRLOQXWULHQWVZKLFKPHDQV
WKDW WKH FRPSOHWH FORVXUH RI WKH \LHOG JDS ZRXOG
UHTXLUH DQRWKHU DSSURDFK LQYROYLQJ WKH SURYLVLRQ
RI LQRUJDQLF QXWULHQWV VXFK DV URFN SKRVSKDWH RU
FKHPLFDOIHUWLOL]HUVZKLFKKDYHWREHSXUFKDVHG7KLV
QHFHVVLWDWHVLQFRPHJHQHUDWLRQ
+RZHYHU EHIRUH DGGUHVVLQJ WKH QHHG IRU LQFRPH LW
SRSXODWHWKHZRUOGE\DFFRUGLQJWR,)35,
7KH SULPDU\ FDXVH RI WKH \LHOG JDS LV SRRU FURS
KXVEDQGU\ ZKLFK KDV D QXPEHU RI DGYHUVH HIIHFWV
LQFOXGLQJ ORVV RI VRLO IHUWLOLW\ DQG DJURHFRV\VWHP
IXQFWLRQV VXFK DV WKH F\FOLQJ RI QXWULHQWV FDUERQ
LVQHFHVVDU\WRÀQGZD\VRIUHVWRULQJDJURHFRV\VWHP
IXQFWLRQ 7KH OHJXPHV ZLOO VWDUW WKLV SURFHVV )RU
H[DPSOHRQHRIWKHPRUHGDPDJLQJZHHGVRIFHUHDO
FURSV VXFK DV PDL]H PLOOHW DQG VRUJKXP LV 6WULJD
KHUPRQWKLFD ,W LV D URRW SDUDVLWH RQ WKHVH FHUHDOV
DQG ZDWHU LPSHGLQJ WKH RSHUDWLRQ RI OLIH F\FOHV
DQG IRRG ZHEV WKDW PDLQWDLQ WKH QDWXUDO EDODQFH
EHWZHHQ RUJDQLVPV DQG UHGXFLQJ SROOLQDWLRQ DQG
VHHGGLVSHUVDO7\SLFDOO\UHGXFHGVRLOQLWURJHQLVWKH
PDMRU FRQVWUDLQW RQ FURS JURZWK LQ GHJUDGHG VRLOV
7KLV FDQ EH UHVWRUHG E\ KDUQHVVLQJ WKH FDSDFLW\ RI
DQGLWVVHHGVJHUPLQDWHLQUHVSRQVHWRURRWH[XGDWHV
IURP WKH \RXQJ FHUHDO SODQWV ,QWHUHVWLQJO\ KRZHYHU
VLQFH 6HVEDQLD VHVEDQ DQG WKH IRGGHU OHJXPHV
'HVPRQLXP LQWRUWXP DQG ' XQFLQDWXP DOVR WULJJHU
6WULJD JHUPLQDWLRQ WKH\ FDQ EH XVHG WR SURPRWH
VXLFLGHJHUPLQDWLRQLQWKHDEVHQFHRIWKHFHUHDOKRVWV
FHUWDLQ OHJXPHV WR À[ DWPRVSKHULF QLWURJHQ LQ URRW .KDQ HW DO  'HVPRGLXP VSS DOVR DFWV DV D
QRGXOHV FRORQL]HG E\ V\PELRWLF EDFWHULD 5KL]RELXP UHSHOOHQWWRLQVHFWSHVWVRIFHUHDOVVXFKDVWKHVWHP
VSS1XPHURXVWHFKQLTXHVKDYHEHHQGHYHORSHGWR ERUHUV %XVVHROD IXVFD DQG &KLOR SDUWHOOXV /LNHZLVH
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

)LJXUH3URFHGXUHVIRUFORVLQJWKH\LHOGJDS

External factors (e.g. entrepreneurs)

Desire for security and wealth

Deforestation Overfishing Overgrazing Regulated by

social organizations
at national and
Unsustainable use international level
of soils and water

Ecosystem degradation
and soil erosion
Breakdown of nutrient
cycling and loss of
soil fertility/structure
Loss of bio diversity

Loss of income DIVERSIFY STEP 1

from food crops Breakdown of ecosystem function
and wildlife
Increased use of
agrichemicals
Loss of crop yields

STEPs Focus of AF
2+3
Increased Pollution of
costs waterways,
Hunger and
malnutrition aquifers and wetland
Increased
vulnerability to HIV/AIDS
GENERATE INCOME Increased
health risks

Other external factors

(e.g. war and disasters) Declining livelihoods,
leading to poverty and social deprivation
Regulated by social organizations at the
community level

VLPSOH DJURHFRORJLFDO EHQHÀWV FDQ EH DWWDLQHG E\ FURSVVXFKDVFRIIHHFRFRDDQGUXEEHUZKLFKLQWKH

SODQWLQJ1DSLHUJUDVV3HQQLVHWXPSXUSXUHXPDVDQ SDVW ZHUH HLWKHU JURZQ DV ODUJHVFDOH PRQRFXOWXUDO
LQWHUFURS RU DURXQG VPDOO ÀHOGV DV WKH\ DWWUDFW WKH SODQWDWLRQV RU DV D WZR VSHFLHV PL[ VXFK DV FRFRD
SHVWVDZD\IURPWKHFURSV.KDQHWDO XQGHU WKH VKDGH RI FRFRQXWV RU *OLULFLGLXP VHSLXP
,QFUHDVLQJO\KRZHYHUWKH\DUHEHFRPLQJVPDOOKROGHU
7KHWZRLQWHUYHQWLRQVGHVFULEHGDERYHFDQWKHUHIRUH
FURSV JURZQ LQ PXFK PRUH GLYHUVH VSHFLHV PL[LQJ
EH XVHG WR UHVWRUH VRLO IHUWLOLW\ DQG LQLWLDWH DQ
VXFK DV EDQDQDV ZLWK IUXLWV WUHHV OLNH PDQJR
DJURHFRORJLFDO VXFFHVVLRQ WKHUHE\ UHKDELOLWDWLQJ
DYRFDGR DQG ORFDO LQGLJHQRXV WUHHV WKDW SURGXFH
IDUPODQGDQGUHYHUVLQJVRPHRIWKHODQGGHJUDGDWLRQ
PDUNHWDEOHSURGXFWV/HDNH\DQG7FKRXQGMHX
SURFHVVHV7KLVPD\EHFRQVLGHUHGDVWKHÀUVWVWHS
7KLVSUDFWLFHLVZHOOGHYHORSHGLQ/DWLQ$PHULFDDQG
WRZDUGVFORVLQJWKH\LHOGJDSÀJXUH
$VLD DQG LV EHFRPLQJ ZLGHO\ UHFRJQL]HG DV D ZD\
7KHQH[WVWHSWRDIXOO\IXQFWLRQDODQGPRUHSURGXFWLYH WR UHVWRUH WKH ELRGLYHUVLW\ QRUPDOO\ IRXQG LQ QDWXUDO
DJURHFRV\VWHPLQYROYHVWKHLQWHJUDWLRQRIWUHHVZLWKLQ IRUHVWV 6FKURWK HW DO  &ORXJK HW DO 
WKHIDUPLQJV\VWHPV6RPHWUHHVDUHRIFRXUVHFDVK &HUWDLQO\ WKH UHSODFHPHQW RI VKDGH WUHHV ZLWK WUHHV
 75$'($1'(19,5210(175(9,(:

DFKLHYHV VHYHUDO LPSRUWDQW RXWFRPHV ,W SURWHFWV

VORSLQJODQGIURPHURVLRQLPSURYHVZDWHULQÀOWUDWLRQ
LQWR WKH VRLO VHTXHVWHUV FDUERQ DQG VR PLWLJDWHV
FOLPDWH FKDQJH JHQHUDWHV LQFRPH HQKDQFHV
ELRGLYHUVLW\ DQG SURPRWHV DJURHFRV\VWHP IXQFWLRQV
,QRWKHUZRUGVLWSHUIRUPVDOOWKHIXQFWLRQVWKDWODUJH
VFDOH PRQRFXOWXUHV IDLO WR GR DQG WKH OLYHOLKRRGV RI
WKHIDUPHUVDUHIDUEHWWHUWKDQWKRVHORFNHGLQSRYHUW\
GXH WR JURZLQJ D IDLOHG PDL]H FURS LQ $IULFD IRU
LQVWDQFH7KLVDSSURDFKWRDJULFXOWXUHDFKLHYHVKLJK
FURS\LHOGVWKDWDUHFORVHWRWKHELRORJLFDOSRWHQWLDORI
WKHEHVWDQGPRVWIHUWLOHODQGDQGLWJHQHUDWHVLQFRPH
IURPWUHHFURSVRQWKHPRUHPDUJLQDOODQGFUHDWLQJD
ODQGXVHPRVDLFZLWKPDQ\HQYLURQPHQWDOO\EHQHÀFLDO
,QWHQVLYHULFHFXOWLYDWLRQLQWKHYDOOH\ERWWRPZLWKKLOOVLGHV
SODQWHGZLWKGLYHUVHFRPPHUFLDOO\LPSRUWDQWWUHHVIRULQFRPH
JHQHUDWLRQDQGHQYLURQPHQWDOEHQHÀWV,QGRQHVLDDORQHKDV
LPSDFWV SKRWRJUDSK IURP 9LHWQDP ,PSRUWDQWO\
WKHUH LV DOVR VRPH HYLGHQFH WKDW FRPSOH[ SHUHQQLDO
YHJHWDWLRQVXFKDVDQDWXUDOIRUHVWRUDQDJURIRUHVW
LVEHWWHUWKDQDKHUEDFHRXVFURSDWUHF\FOLQJPRLVWXUH
WRWKHDWPRVSKHUHWKDWFDQEHDGYHFWHGGRZQZLQGWR
IDOODVUDLQ7KXVDJURIRUHVWVDUHOLNHO\WREHEHQHÀFLDO
WRUDLQIHGDJULFXOWXUHLQGU\DQGGURXJKWSURQHDUHDV
RIWKHZRUOG
,Q D IXUWKHU LQLWLDWLYH RYHU WKH SDVW  \HDUV DJUR
IRUHVWHUVKDYHVRXJKWWRWDNHWKLVVWUDWHJ\WRDKLJKHU
OHYHOE\VWDUWLQJWRGRPHVWLFDWHVRPHRIWKHYHU\ZLGH
UDQJH RI WUHH VSHFLHV ZKLFK KDYH EHHQ WKH VRXUFH
RI ORFDOO\ LPSRUWDQW IRRG DQG QRQIRRG SURGXFWV
WUDGLWLRQDOO\ JDWKHUHG IURP WKH IRUHVW /HDNH\ HW DO
DERXWWKUHHPLOOLRQKHFWDUHVRIWKHVH´DJURIRUHVWVµ /HDNH\HWDO7KHDSSURDFKKDVEHHQWR
DSSO\ZHOONQRZQKRUWLFXOWXUDOWHFKQLTXHVRIYHJHWDWLYH
SURSDJDWLRQ IRU FXOWLYDU GHYHORSPHQW /HDNH\ 
WKDWDOVRSURGXFHXVHIXODQGPDUNHWDEOHSURGXFWVLVD /HDNH\ DQG $NLQQLIHVL  8QFRQYHQWLRQDOO\
JRRGVWUDWHJ\IRUIDUPHUVWRHQDEOHWKHPWRPD[LPL]H WKLV KDV EHHQ LPSOHPHQWHG DW WKH YLOODJH OHYHO DV D
RXWSXWIURPWKHODQGDQGPLQLPL]HWKHULVNVDVVRFLDWHG
ZLWKH[FHVVLYHUHOLDQFHRQDVLQJOHFURSVSHFLHV
7KHUH KDV DOVR EHHQ DQRWKHU VLOHQW IDUPHUOHG
UHYROXWLRQLQWKHWURSLFVHVSHFLDOO\LQ6RXWK(DVW$VLD
,Q,QGRQHVLDLQSDUWLFXODUPDQ\IDUPHUVZKRXVHGWR
SUDFWLFHVKLIWLQJDJULFXOWXUHKDYHUHSODFHGWKHQDWXUDO
IDOORZZLWKDFRPPHUFLDOIDOORZDJURIRUHVWEDVHGRQ
WUHHFURSV7KH\JURZULFHLQWKHYDOOH\ÁRRUVDQGSODQW
D ZLGH UDQJH RI XVHIXO DQG FRPPHUFLDOO\ LPSRUWDQW
WUHH VSHFLHV DPRQJ WKH RWKHU IRRG FURSV ZKLFK
WKH\ KDYH SODQWHG RQ WKH YDOOH\ VORSHV 0LFKRQ DQG
GH )RUHVWD  7KHVH WUHHV EHFRPH SURGXFWLYH
VXFFHVVLYHO\ LQ ODWHU \HDUV FUHDWLQJ D FRQWLQXRXV
VXSSO\ RI PDUNHWDEOH SURGXFH HJ FLQQDPRQ WXQJ
QXW GDPDU GXNX DQG UXEEHU IRU VHYHUDO GHFDGHV $PXOWLIXQFWLRQDODJULFXOWXUHODQGVFDSHLQ9LHW1DPZLWK
RIWHQ HQGLQJ LQ D WLPEHU FURS 7KLV GLYHUVLÀFDWLRQ RI PDQ\LQFRPHJHQHUDWLQJWUHHEDVHGSURGXFWLRQV\VWHPVRQ
KLOOVLGHVVXUURXQGLQJDQDUHDRILQWHQVLYHIRRGSURGXFWLRQRQ
WKH IDUPLQJ V\VWHP ZLWK SHUHQQLDO FURSV WKHUHIRUH WKHPRVWIHUWLOHVRLOV
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

)LJXUH,QFRPHJHQHUDWHGIURPWUHHVDOHVE\YLOODJHQXUVHULHVDVVRFLDWHGZLWKUXUDOUHVRXUFHVFHQWUHVLQQRUWKDQG
QRUWKZHVWUHJLRQVRI&DPHURRQDIWHUDQG\HDUVGROODUV

30.000

2 Years
25.000
5 Years
10 Years
20.000
Income US$

US$ 28.350
15.000

US$ 16.000
10.000

5.000
US$ 145

6RXUFH%DVHGRQ$VDDKHWDO

SDUWLFLSDWRU\ SURFHVV ZLWK ORFDO FRPPXQLWLHV UDWKHU ZLWKLQOHVVWKDQÀYH\HDUVÀJXUHDQGWKHIDUPHUV

WKDQ RQ D UHVHDUFK VWDWLRQ /HDNH\ 6FKUHFNHQEHUJ DUH UHSRUWLQJ PDQ\ RWKHU ZD\V LQ ZKLFK WKH SURMHFW
DQG7FKRXQGMHX7FKRXQGMHXHWDO$VDDK KDV DOVR LPSURYHG WKHLU OLYHV $VDDK HW DO 
HW DO  7KLV SDUWLFLSDWRU\ DSSURDFK KDV EHHQ
LPSOHPHQWHGWRHQVXUHWKDWWKHIDUPHUVDUHWKHLQVWDQW
EHQHÀFLDULHVRIWKHGRPHVWLFDWLRQDQGWKDWWKH\DUH
HPSRZHUHG E\ WKH GHYHORSPHQW RI WKHLU LQGLJHQRXV
DQGORFDONQRZOHGJH%HFDXVHZLOGSRSXODWLRQVRIWUHH
VSHFLHVFRQWDLQWRIROGYDULDWLRQVRIDOPRVWDQ\
3HUKDSV WKH PRVW VLJQLÀFDQW RXWFRPH KDV EHHQ WKH
IDFWWKDW\RXQJPHQDQGZRPHQLQWKHVHFRPPXQLWLHV
QRZVHHDIXWXUHIRUWKHPVHOYHVE\UHPDLQLQJZLWKLQ
WKH FRPPXQLW\ UDWKHU WKDQ PLJUDWLQJ WR ORFDO WRZQV
,Q DGGLWLRQ WKH SURFHVVLQJ DQG YDOXH DGGLWLRQ RI
SURGXFH IURP GRPHVWLFDWHG WUHHV DQG RWKHU FURSV
WUDLWRIFRPPHUFLDOLQWHUHVW/HDNH\HWDOWKHUH
LVFRQVLGHUDEOHSRWHQWLDOIRUVXEVWDQWLDOLPSURYHPHQWV
LQ FKDUDFWHULVWLFV VXFK DV IUXLWQXW VL]H TXDOLW\ DQG
FKHPLFDO FRQWHQW 7KLV PHDQV WKDW QHZ KLJKO\
SURGXFWLYHFXOWLYDUV\LHOGLQJJRRGTXDOLW\SURGXFHDQG
WKHSURGXFWXQLIRUPLW\UHTXLUHGE\PDUNHWVDUHHDVLO\
REWDLQDEOH )XUWKHUPRUH EHFDXVH WKH PXOWLSOLFDWLRQ
KDYHEHHQIRXQGWRSURYLGHRIIIDUPHPSOR\PHQWDQG
WRVWLPXODWHORFDOHQWHUSULVHDQGWUDGH
+LVWRULFDOO\ FURS GRPHVWLFDWLRQ KDV EHHQ LPSOLFDWHG
LQ WKH ULVH RI FLYLOL]DWLRQV WKDW KDYH EHFRPH VHWWOHG
SROLWLFDOO\FHQWUDOL]HGVRFLDOO\VWUDWLÀHGHFRQRPLFDOO\
FRPSOH[ DQG WHFKQRORJLFDOO\ LQQRYDWLYH VRFLHWLHV
SURFHVV LV LPSOHPHQWHG E\ YHJHWDWLYH SURSDJDWLRQ
EDVHG RQ PDWXUH WLVVXHV ZLWK WKH FDSDFLW\ WR ÁRZHU
DQG IUXLW WKH ORQJ XQSURGXFWLYH SHULRG XVXDOO\
DVVRFLDWHGZLWKWUHHFURSVLVFLUFXPYHQWHGDQGWUHHV
EHFRPHSURGXFWLYHLQ²\HDUV
3URRI RI FRQFHSW KDV UHFHQWO\ EHHQ GHPRQVWUDWHG
E\ WKH LPSOHPHQWDWLRQ RI D SDUWLFLSDWRU\ WUHH
'LDPRQG  $V WKH ÀUVW ZDYH RI FURS
GRPHVWLFDWLRQ SULPDULO\ EHQHÀWHG WKH LQGXVWULDO
FRXQWULHV RI WKH QRUWKHUQ ODWLWXGHV LW VHHPV WKDW WKH
WLPHLVQRZULSHIRUDVHFRQGZDYHRIGRPHVWLFDWLRQ
WR IDYRXU WURSLFDO DQG VXEWURSLFDO FRXQWULHV ZKLFK
ZRXOG HQKDQFH VRFLDO HTXLW\ DQG HQYLURQPHQWDO
UHKDELOLWDWLRQ ZRUOGZLGH /HDNH\  /HDNH\ DQG
$VDDKIRUWKFRPLQJ
GRPHVWLFDWLRQ SURMHFW LQ &DPHURRQ 7FKRXQGMHX HW
DO   $VDDK HW DO  ,Q  \HDUV WKH 7KHFUHDWLRQRIQHZFDVKFURSVIURPWKHGRPHVWLFDWLRQ
SURMHFWJUHZIURPIRXUYLOODJHVDQGDVPDOOQXPEHURI RIWUDGLWLRQDOO\LPSRUWDQWKLJKO\QXWULWLRXVDQGXVHIXO
IDUPHUV WR RYHU  YLOODJHV ZLWK  IDUPHUV 7KH VSHFLHVPD\EHFRQVLGHUHGWKHVHFRQGVWHSWRZDUGV
ÁRZ RI EHQHÀWV VXFK DV LQFRPH JHQHUDWLRQ VWDUWHG FORVLQJWKH\LHOGJDSEHFDXVHWKH\FDQJHQHUDWHWKH
 75$'($1'(19,5210(175(9,(:

LQFRPH QHHGHG IRU WKH SXUFKDVH RI IHUWLOL]HUV DQG WKDWWKHSURGXFHUVUHPDLQLQWKHYDOXHFKDLQ

RWKHU DJULFXOWXUDO LQSXWV ÀJXUH  7KH WUHHV FDQ EH
XVHG WR HQULFK DQG LPSURYH WKH IDUPLQJ V\VWHPV
ZKHWKHUE\SURYLGLQJVKDGHIRUFRPPRGLW\FURSVRU
$QRWKHU DVSHFW WKDW GHVHUYHV DWWHQWLRQ LV WKH
LPSRUWDQFH RI OLYHVWRFN LQ DJULFXOWXUH 7KH 
SURMHFWLRQVRIWKH,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK
E\IRUPLQJDJURIRUHVWVRQKLOOVLGHVRUFKDUGVÀHOGDQG
IDUPERXQGDULHVIRGGHUEDQNVRUZRRGORWV+RZHYHU
IDUPHUVKDYHPDQ\RWKHUFRPSHWLQJGHPDQGVIRUWKHLU
PRQH\ LQFOXGLQJ IRU ORFDO FHUHPRQLHV KHDOWK FDUH
FKLOGUHQ·V HGXFDWLRQ IDUP LQIUDVWUXFWXUH DQG PDUNHW
WUDQVSRUW&RQVHTXHQWO\WKHWKLUGVWHSWRFORVLQJWKH
\LHOG JDS LV WR IXUWKHU H[SDQG WKH FRPPHUFLDOL]DWLRQ
RI WKHVH QHZ WUHH FURSV WKXV FUHDWLQJ EXVLQHVV
RSSRUWXQLWLHVDQGHPSOR\PHQW
0RVW RI WKH WUDGLWLRQDOO\ LPSRUWDQW SURGXFWV IURP
WURSLFDO IRUHVWV KDYH EHHQ PDUNHWHG ORFDOO\ IRU
FHQWXULHV 2YHU WKH SDVW GHFDGH DQ LQFUHDVLQJ
QXPEHURIWKHVHKDYHEHHQSURFHVVHGDVQHZIRRGV
DQGIRUXVHLQPHGLFLQDOQXWUDFHXWLFDODQGFRVPHWLF
SURGXFWV EDVHG RQ WKH IUXLWV QXWV JXPV UHVLQV
DQG ÀEUHV 6RPH RI WKHVH KDYH HQWHUHG UHJLRQDO
DQG LQWHUQDWLRQDO PDUNHWV +RZHYHU WKH PDUNHWLQJ
DQG WUDGH RI FRPPRGLWLHV IURP WURSLFDO SURGXFHUV
,QVWLWXWH,)35,VXJJHVWWKDWSHUFHQWPRUHJUDLQ
SURGXFWLRQZLOOEHQHHGHGDQGWKDWPRUHPHDWZLOOEH
FRQVXPHG E\ WKH ZRUOG·V SRSXODWLRQ $V PHQWLRQHG
HDUOLHU JUDLQ SURGXFWLRQ FRXOG EH JUHDWO\ LQFUHDVHG
E\FORVLQJWKH\LHOGJDS5HFHQWGHYHORSPHQWVKDYH
DOVR GHPRQVWUDWHG WKDW IRGGHU WUHHV FDQ EH XVHG
WR LQFUHDVH WKH SURGXFWLYLW\ RI FDWWOH DQG JRDWV 7KH
LQWHJUDWLRQ RI IRGGHU WUHHV DQG OLYHVWRFN LQWR D IDUP
LVRQHRIWKHHOHPHQWVRIGLYHUVLÀFDWLRQWKDWFRXOGEH
SDUWRIVWHS
$QRWKHU UHFHQW GHYHORSPHQW KDV EHHQ WKH
HVWDEOLVKPHQWRISXEOLFSULYDWHSDUWQHUVKLSVEHWZHHQ
PXOWLQDWLRQDO FRPSDQLHV QDWLRQDO DQG LQWHUQDWLRQDO
UHVHDUFK WHDPV DQG ORFDO SURGXFHU FRPPXQLWLHV WR
SURPRWHDQGSURGXFHQHZSURGXFWVIRULQWHUQDWLRQDO
WUDGH ([DPSOHV LQFOXGH 'DLPOHU $* LQ %UD]LO ZKLFK
LV PDQXIDFWXULQJ FRPSRQHQWV IRU WKH PRWRU LQGXVWU\
EDVHG RQ SURGXFWV IURP DJURIRUHVWU\ V\VWHPV
KDYH RIWHQ EHHQ H[SORLWDWLYH $V D UHVXOW ZLWK WKH SURGXFHGE\ORFDOFRPPXQLWLHV3DQLNDVZHOO
HPHUJHQFHRIWKLVQHZWUDGHWKHUHKDVEHHQDSDUDOOHO DV8QLOHYHUSOFWKDWLVGHYHORSLQJDQHZRLOFURSIRU
LQLWLDWLYH WR HQVXUH WKDW WKH SURGXFHUV UHFHLYH D IDLU PDUJDULQHSURGXFWLRQZLWKFRPPXQLWLHVLQ*KDQDDQG
SULFHVHHIRUH[DPSOHWKH)DLU7UDGH)RXQGDWLRQDW WKH8QLWHG5HSXEOLFRI7DQ]DQLDXVLQJNHUQHORLOIURP
ZZZIDLUWUDGHRUJXN ,Q DGGLWLRQ ZD\V KDYH EHHQ $OODQEODFNLDVSS-DPQDGDVVHWDO
VRXJKW WR GHYHORS PDUNHWLQJ SDUWQHUVKLSV DLPHG DW $OO RI WKHVH GHYHORSPHQWV RIIHU D QHZ DSSURDFK WR
WKH SURSRRU FRPPHUFLDOL]DWLRQ RI WKH WUDGLWLRQDOO\ DJULFXOWXUHGHOLYHUHGE\DJURIRUHVWU\SUDFWLFHV/HDNH\
LPSRUWDQW SURGXFWV GHULYHG IURP LQGLJHQRXV WUHHV  ZKLFK LV PRUH VXVWDLQDEOH ² HQYLURQPHQWDOO\
/RPEDUGDQG/HDNH\7KHVHSDUWQHUVKLSVZRUN
WRGHYHORSWKHSURGXFWVWRDPDUNHWDEOHVWDQGDUGDQG
HVWDEOLVK VWURQJ DQG YLDEOH WUDGH DVVRFLDWLRQV WKDW
DUH IRUZDUG WKLQNLQJ DQG PDUNHW RULHQWHG 7KURXJK
WKHVHSDUWQHUVKLSVLWLVSRVVLEOHWRHVWDEOLVKORQJWHUP
VRFLDOO\DQGHFRQRPLFDOO\²WKDQFXUUHQWFRQYHQWLRQDO
DSSURDFKHV 7KLV PRGHO FRQIRUPV WR WKH FRQFHSWV
RI PXOWLIXQFWLRQDO DJULFXOWXUH SURPRWHG E\ WKH
,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH
6FLHQFH DQG 7HFKQRORJ\ IRU 'HYHORSPHQW ,$$67'
UHODWLRQVKLSV DQG VXSSO\ DJUHHPHQWV ZKLFK HQVXUH ZKLFKZDVUDWLÀHGE\RYHUFRXQWULHVLQ
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

1//'06#4;U&#26+0)61.+/#6'*#0)'#0& /2418+0)
175'*1.&
11&'%74+6;+0(4+%#*417)*
)41(14'564;U1/''55105
41/6*'#*'.
&KULV5HLM
)DFLOLWDWRU$IULFDQ5HJUHHQLQJ,QLWLDWLYHV&HQWUHIRU,QWHUQDWLRQDO&RRSHUDWLRQ)UHH8QLYHUVLW\$PVWHUGDP

$EVWUDFW
7KHIXWXUHRIIDUPLQJLQ$IULFD·VGU\ODQGVDQGVXEKXPLGUHJLRQVZLOOODUJHO\GHSHQGRQWKHVXFFHVVRIDOO
VWDNHKROGHUVLQGHYHORSLQJDJURIRUHVWU\V\VWHPVWKDWDUHPDQDJHGE\IDUPHUVSURGXFHPXOWLSOHLPSDFWV
DQGGRQRWOHDGWRUHFXUUHQWFRVWVIRUJRYHUQPHQWV$VDSWO\SXWE\DIDUPHUIURP7LJUD\´7UHHVDUHRXU
EDFNERQHµ:DWHUV%D\HUDQG*HEUH0LFKDHO
0DQ\VPDOODQGELJJHUUHJUHHQLQJVXFFHVVHVFDQEHIRXQGLQ$IULFD·VGU\ODQGV7KHVHFDQEHXVHGDV
VWDUWLQJSRLQWVIRUVFDOLQJXS6FDOLQJXSFDQEHDFKLHYHGE\EXLOGLQJDJUDVVURRWVRUJDQL]DWLRQEXWLWLV
YLWDOWRGHYHORSQDWLRQDOSROLFLHVDQGOHJLVODWLRQFRQFHUQLQJODQGDQGWUHHWHQXUHZKLFKZRXOGLQGXFHPLO
OLRQVRIVPDOOVFDOHIDUPHUVLQ$IULFDWRLQYHVWLQQDWXUDOUHVRXUFHVLQJHQHUDODQGLQWUHHVLQSDUWLFXODU7KH
GHYHORSPHQWRIDJURIRUHVWU\V\VWHPVLQ1LJHUIRULQVWDQFHWRRNRIIDVVRRQDVIDUPHUVEHJDQSHUFHLYLQJ
DQH[FOXVLYHULJKWWRWKHLURQIDUPWUHHV,QSDUWVRI0DOLWKHSURFHVVEHJDQLQDIWHUDFKDQJHLQWKH
IRUHVWU\ODZDQGDIWHUIDUPHUVZHUHLQIRUPHGDERXWWKHFKDQJH
'LIIHUHQWIRUPVRIUHJUHHQLQJLQ$IULFDUHTXLUHDPL[RILQYHVWPHQWVFKDQJHVLQSROLFLHVDQGOHJLVODWLRQWKH
EXLOGLQJRIVRFLDOFDSLWDODQGRIDPRYHPHQWLQVXSSRUWRIUHJUHHQLQJDVZHOODVDFWLRQRULHQWHGUHVHDUFK
WRTXDQWLI\PXOWLSOHLPSDFWV7KLVZLOOPDNHLWSRVVLEOHWRKHOSIDUPHUVDGDSWWRFOLPDWHFKDQJHZKLOHLP
SURYLQJKRXVHKROGIRRGVHFXULW\DQGDOOHYLDWLQJUXUDOSRYHUW\+RZHYHUWKHUHLVVWLOORQHPDMRUREVWDFOH
YHU\UDSLGSRSXODWLRQJURZWK)RULQVWDQFHWKHDQQXDOGHPRJUDSKLFJURZWKUDWHVLQ1LJHUDQG0DOLDUHLQ
WKHRUGHURISHUFHQWZKLFKPHDQVWKDWWKHLUSRSXODWLRQVZLOOGRXEOHLQOHVVWKDQ\HDUV(YHQLILW
ZHUHWHFKQLFDOO\SRVVLEOHWRIHHGDUDSLGO\JURZLQJSRSXODWLRQLWZLOOEHKDUGWRFUHDWHEHWWHUOLYHOLKRRGRS
SRUWXQLWLHVIRUPRVWRIWKH\RXQJSHRSOH

$7KHPDFURFRQWH[W
0DFUR FRQGLWLRQV LQ WKH 6DKHO DQG LQ RWKHU GU\ODQGV
LQ $IULFD VHHP FKDOOHQJLQJ RYHU WKH QH[W GHFDGHV
7HPSHUDWXUHV DUH H[SHFWHG WR LQFUHDVH DQG FURS
\LHOGV WR UHPDLQ VWDEOH DW EHVW EXW PRVW OLNHO\ WKH\
ZLOOGHFOLQHGXHWRGHSOHWLRQRIVRLOIHUWLOLW\OHYHOVDQG
PRUH HUUDWLF UDLQIDOO ZKLOH WKH SRSXODWLRQ LV VHW WR
%'HYHORSLQJQHZDJURIRUHVWU\SDUNODQGV
WRLQWHQVLI\DJULFXOWXUH
)DUPHUV DQG SDVWRUDOLVWV LQ WKH 6DKHO QHHGHG VRPH
\HDUVWRDGDSWWRWKHORZHUUDLQIDOO5HFHQWVWXGLHVRQ
ORQJWHUP WUHQGV LQ DJULFXOWXUH DQG WKH HQYLURQPHQW
LQ WKH UHJLRQ VKRZ VRPH VXUSULVLQJ WUHQGV 5HLM
7DSSDQ DQG %HOHPYLUH  %RWRQL DQG 5HLM
GRXEOH7KH6DKHOKDVIDFHGVLPLODUFKDOOHQJHVLQWKH
SDVWDQGKDVEHHQDEOHWRFRSHZLWKVXFKFKDQJHV
$WWKHHQGRIWKHVDQGWKHHDUO\VUDLQIDOO
VXGGHQO\ GHFOLQHG E\ DERXW  SHU FHQW FDXVLQJ
ZLGHVSUHDGKXQJHUDQGKDUGVKLS$QGPDQ\UHVHDUFK
UHSRUWV DQDO\VLQJ DJULFXOWXUH DQG WKH HQYLURQPHQW LQ
WKH 6DKHO LQ WKH V ZHUH YHU\ SHVVLPLVWLF HJ
 5HLM 7DSSDQ DQG 6PDOH  7KH ÀUVW LV
WKDW IDUPHUV LQ VHYHUDO GHQVHO\ SRSXODWHG UHJLRQV
RI 1LJHU KDYH EHHQ SURWHFWLQJ DQG PDQDJLQJ RQ
IDUP QDWXUDO UHJHQHUDWLRQ RI WUHHV DQG EXVKHV 7KLV
SURFHVV ZKLFK EHJDQ DURXQG  KDV OHG WR RQ
IDUP UHJUHHQLQJ RQ DERXW  PLOOLRQ KHFWDUHV ² WKH
ODUJHVW VFDOH RI HQYLURQPHQWDO WUDQVIRUPDWLRQ LQ WKH
0DUFKDO  5D\QDXW  7KH\ XVHG WHUPV 6DKHODQGSRVVLEO\LQ$IULFD7KLVRQIDUPSURWHFWLRQ
VXFKDVIDLOXUHDQGEUHDNGRZQWRGHVFULEHWUHQGVLQ DQGPDQDJHPHQWRIXVHIXOWUHHVVXFKDV)DLGKHUELD
DJULFXOWXUH DOELGD D QLWURJHQÀ[LQJ VSHFLHV WKDW LPSURYHV VRLO
 75$'($1'(19,5210(175(9,(:

‡ 7KH WUHHV KHOS LQFUHDVH DJJUHJDWH DJULFXOWXUDO

SURGXFWLRQ DQG WKXV FRQWULEXWH WR UHGXFLQJ UXUDO
SRYHUW\
7KLVRQIDUPUHJUHHQLQJKDVRFFXUUHGRQO\LQUHJLRQV
ZLWKKLJKSRSXODWLRQGHQVLWLHVDQGVDQG\VRLOVZKLFK
LV QRW VXUSULVLQJ DV LQFUHDVLQJ SRSXODWLRQ LQGXFHV
IDUPHUV WR LQWHQVLI\ DJULFXOWXUH )RU IDUPHUV SURWHF
WLRQ DQG PDQDJHPHQW RI ZRRG\ VSHFLHV WKDW VSRQ
WDQHRXVO\UHJHQHUDWHRQIDUPLVWKHOHDVWFRVWO\IRUP
RIDJULFXOWXUDOLQWHQVLÀFDWLRQDVLWGRHVQRWUHTXLUHWKH
SURFXUHPHQWRIH[WHUQDOLQSXWVWKHRQO\LQYHVWPHQWLV
WKDWRIWKHLUODERXUZKLOHYLOODJHLQVWLWXWLRQVDUHUHVSRQ
VLEOHIRUWKHQHZWUHHVWRFNFDSLWDODVVHWV,WVKRXOG
<RXQJKLJKGHQVLW\DJURIRUHVWU\SDUNODQGLQWKHVRXWKHUQ EH HPSKDVL]HG WKDW WKLV UHJUHHQLQJ RFFXUV PDLQO\
=LQGHUUHJLRQ1LJHU7KHSDUNODQGLVGRPLQDWHGE\
)DLGKHUELDDOELGD RQIDUP,QUHJLRQVZLWKORZSRSXODWLRQGHQVLWLHVWKH
YHJHWDWLRQ FRQWLQXHV WR GHJUDGH DQG WKH UHPDLQLQJ
IHUWLOLW\DQGSURYLGHVIRGGHUIRUOLYHVWRFN3LOLRVWLJPD SDWFKHVRIQDWXUDOYHJHWDWLRQWHQGWREHHQFURDFKHG
UHWLFXODWXP IRU IRGGHU &RPEUHWXP JOXWLQRVXP IRU XSRQDQGGHWHULRUDWH
ÀUHZRRG$GDQVRQLDGLJLWDWDIRUOHDYHVDQGIUXLWWKDW 0DQ\ H[DPSOHV RI IDUPHUPDQDJHG UHJUHHQLQJ FDQ
SURYLGH KLJKTXDOLW\ QXWULWLRQ *XLHUD VHQHJDOHQVLV EHIRXQGLQRWKHU6DKHOFRXQWULHVDVZHOO)RULQVWDQFH
IRU IRGGHU KDV HQDEOHG WKH IHHGLQJ RI DERXW 
PLOOLRQ SHRSOH 7KH DQQXDO SURGXFWLRQ YDOXH RI WKH
QHZWUHHVLVLQWKHRUGHURIDWOHDVWĄPLOOLRQDOORI
ZKLFKJRHVWRIDUPHUVQRWQHFHVVDULO\LQWKHIRUPRI
FDVKEXWLQWKHIRUPRISURGXFH
7KH GHYHORSPHQW RI QHZ DJURIRUHVWU\ V\VWHPV KDV
KDGWKHIROORZLQJLPSDFWV
‡ 7UHHVUHGXFHZLQGVSHHGDQGIDUPHUVLQGHQVHO\
SRSXODWHG SDUWV RI 1LJHU QRZ SODQW FURSV RQFH
LQVWHDG RI  RU  WLPHV DV WKH\ GLG  \HDUV DJR
ZKHQWKHFURSVZHUHFRYHUHGE\VDQGRUGHVWUR\HG
E\VDQGEODVW
‡ 7KH VKDGH RI WKH WUHHV UHGXFHV WHPSHUDWXUH DQG
KHQFHHYDSRUDWLRQ
‡ $QXPEHURIZRRG\VSHFLHVSURGXFHIRGGHU
‡ 2WKHU VSHFLHV À[ QLWURJHQ DQG FRQWULEXWH WR VRLO
IHUWLOLW\ )RU LQVWDQFH GHSHQGLQJ RQ WKHLU DJH D
JRRGVWDQGRI)DLGKHUELDDOELGDÀ[HVXSWRNJ
RIQLWURJHQSHUKHFWDUH
‡ 6RPH WUHHV SURGXFH IUXLW DQG OHDYHV ZLWK KLJK
YLWDPLQFRQWHQWIRUKXPDQFRQVXPSWLRQ
‡ 7KH\DOVRFRQWULEXWHWRELRGLYHUVLW\
‡ 7UHHV PLWLJDWH FOLPDWH FKDQJH E\ VHTXHVWHULQJ
FDUERQ
‡ 7KH\ KHOS DGDSW WR FOLPDWH FKDQJH E\ UHGXFLQJ
ZLQGVSHHGVDQGWHPSHUDWXUHV
‡ 7KH WUHHV LPSURYH KRXVHKROG IRRG VHFXULW\
EHFDXVHWKH\FUHDWHPRUHFRPSOH[DQGSURGXFWLYH
IDUPLQJV\VWHPVWKDWDUHPRUHUHVLOLHQWWRGURXJKW
(YHQLIFURSVIDLOWUHHVSURGXFH
LWZDVUHFHQWO\GLVFRYHUHGWKDWIDUPHUVLQ0DOL·V6HQR
3ODLQV SURWHFW DQG PDQDJH QDWXUDO UHJHQHUDWLRQ RQ
DERXWKDZKHUH²SHUFHQWRIWKHWUHHV
DUH\RXQJHUWKDQ\HDUV$VHOVHZKHUHWKLVUHJLRQ
KDG D JRRG WUHH FRYHU LQ WKH V DQG V EXW
GXHWRGURXJKWVLQWKHVDQGVPXFKRIWKH
YHJHWDWLRQZDVGHVWUR\HGIRUÀHOGFXOWLYDWLRQ7KLVOHG
WR ODUJHVFDOH ZLQG DQG ZDWHU HURVLRQ DQG GHFOLQLQJ
FURS\LHOGV,QWKHVHFRQGKDOIRIWKHVDQGWKH
V IDUPHUV JRYHUQPHQWV DQG GRQRUV EHJDQ WR
UHDFWWRWKHFULVLVE\VXSSRUWLQJWKHSODQWLQJRIRQIDUP
WUHHVLQDJURZLQJQXPEHURIUHJLRQV&RQVHTXHQWO\
WKH QXPEHU RI VXFK WUHHV KDV EHHQ LQFUHDVLQJ LQ D
QXPEHURIUHJLRQVWKRXJKQRWHYHU\ZKHUH
6RPHREVHUYHUVDUJXHWKDWWKLVSURFHVVRIUHJUHHQLQJ
FDQEHDWWULEXWHGWRDQLQFUHDVHLQUDLQIDOOLQWKH6DKHO
VLQFHWKHPLGV+RZHYHUDFRPSDULVRQRIWUHH
GHQVLWLHV LQ VRXWKHUQ 1LJHU DQG QRUWKHUQ 1LJHULD
ZKLFK KDYH VLPLODU VRLOV DQG SRSXODWLRQ GHQVLWLHV
UHYHDOVWKDWRQIDUPWUHHGHQVLWLHVLQQRUWKHUQ1LJHULD
DUHPXFKORZHUWKDQLQVRXWKHUQ1LJHUGHVSLWHWKHIDFW
WKDWWKHIRUPHUKDVKLJKHUUDLQIDOO5DLQIDOOLVLPSRUWDQW
IRUUHJUHHQLQJEXWLWVHHPVWKDWKXPDQPDQDJHPHQW
LVDPRUHLPSRUWDQWGHWHUPLQLQJIDFWRUWKDQUDLQIDOO
&:DWHUKDUYHVWLQJWHFKQLTXHVWR
UHKDELOLWDWHGHJUDGHGODQG
)DUPHUV LQ WKH 6DKHO KDYH QRW RQO\ GHYHORSHG QHZ
DJURIRUHVWU\ V\VWHPV WKH\ KDYH DOVR XVHG VLPSOH
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV
ZDWHU KDUYHVWLQJ WHFKQLTXHV WR UHKDELOLWDWH VWURQJO\
GHJUDGHG ODQG ,Q WKH HDUO\ V WKH QRUWKHUQ SDUW
RI WKH FHQWUDO SODWHDX RI %XUNLQD )DVR ZDV D NLQG
RI ODERUDWRU\ IRU WHVWLQJ GLIIHUHQW ZDWHU KDUYHVWLQJ
WHFKQLTXHVVXFKDVLPSURYHGWUDGLWLRQDOSODQWLQJSLWV

UHJLRQ WR OHDUQ DERXW VRLO IHUWLOLW\ PDQDJHPHQW SUDF
WLFHV
7KH TXHVWLRQ LV XQGHU ZKDW FRQGLWLRQV FDQ D UDSLG
H[SDQVLRQ RI IDUPHUPDQDJHG UHJUHHQLQJ EH
H[SHFWHG" %DVHG RQ H[SHULHQFHV LQ 1LJHU DQG 0DOL
DOVRNQRZQDV]DwDQGFRQWRXUVWRQHEXQGVZKLFK
UDSLG H[SDQVLRQ FDQ EH FDWDO\VHG LI WKH IROORZLQJ
VORZGRZQUDLQIDOOUXQRIIDQGLQGXFHLWWRLQÀOWUDWHLQWR
FRQGLWLRQVH[LVWLKLJKSRSXODWLRQGHQVLW\EHFDXVH
WKH VRLO $V D UHVXOW PRUH ZDWHU EHFRPHV DYDLODEOH
WKLV LQGXFHV UHVRXUFH XVHUV WR LQWHQVLI\ DJULFXOWXUH
IRUSODQWJURZWKDQGVRPHZDWHUKHOSVUHFKDUJHORFDO
LLVDQG\VRLOVDVWKHVHFDQHDVLO\EHSHQHWUDWHGE\
JURXQGZDWHU OHYHOV 7UHH GHQVLWLHV DQG WKH GLYHUVLW\
URRWVLLLFXUUHQWORZRQIDUPWUHHGHQVLWLHVDQGLY
RI ZRRG\ VSHFLHV RQ UHKDELOLWDWHG ODQG DUH XVXDOO\
HQDEOLQJSROLFLHVDQGOHJLVODWLRQ)DUPHUVZLOOEHPRUH
KLJKHUWKDQRQDGMDFHQWODQG7KLVLVEHFDXVHZKHUH
OLNHO\WRLQYHVWLQWUHHVLIWKH\DUHJLYHQFOHDURZQHUVKLS
IDUPHUV LQYHVW LQ ZDWHU KDUYHVWLQJ WHFKQLTXHV WKH\
ULJKWV WR WKHLU WUHHV ,Q  DOO WUHHV LQ 1LJHU ZHUH
DOPRVW DOZD\V DOVR LQYHVW LQ LPSURYHG VRLO IHUWLOLW\
RZQHG E\ WKH 6WDWH EXW LQ  WKH SHUFHSWLRQ RI
PDQDJHPHQW 7KH PDQXUH RU FRPSRVW WKH\ XVH
IDUPHUV LV WKDW WKH\ KDYH RZQHUVKLS RI WKHLU RQIDUP
FRQWDLQV VHHGV RI WUHHV DQG EXVKHV RQ ZKLFK WKHLU
WUHHV ,W LV YLWDO WKDW VXFK SHUFHSWLRQV DUH VXSSRUWHG
OLYHVWRFN EURZVH ,I IDUPHUV GHFLGH WR SURWHFW DQG
E\IRUHVWU\ODZV
PDQDJHWKH\RXQJWUHHVZKLFKHPHUJHWRJHWKHUZLWK
WKHLUFURSVWKH\FUHDWHDQHZDJURIRUHVWU\V\VWHPLQ
WKHSURFHVV7KHVFDOHRIODQGUHKDELOLWDWLRQLQ1LJHU (5HJUHHQLQJLQWKH+RUQRI$IULFD
DQG%XUNLQD)DVRVLQFHWKHHQGRIWKHVLVLQWKH .HQ\DLVWKHRQO\FRXQWU\LQ$IULFDDQGSRVVLEO\LQWKH
RUGHURIKD/DQGWKDWXVHGWREHEDUUHQDQG
GHJUDGHG KDV EHFRPH SURGXFWLYH &URS \LHOGV YDU\
IURPDIHZKXQGUHGNJKDLQ\HDUVRISRRUUDLQIDOOWR
XSWR²WRQVKDLQ\HDUVRIQRUPDORUJRRGUDLQIDOO
7KH\LHOGOHYHOVDUHQRWRQO\GHWHUPLQHGE\UDLQIDOOEXW
ZRUOGLQZKLFKWKHQHZFRQVWLWXWLRQREOLJHVIDUPHUV
WR JURZ WUHHV RQ  SHU FHQW RI WKHLU ODQG 5HOHYDQW
PLQLVWULHVDUHFXUUHQWO\GLVFXVVLQJKRZWKLVFRXOGEH
LPSOHPHQWHG 0DQ\ IDUPHUV LQ WKH IHUWLOH KLJKODQGV
DOUHDG\ KDYH  SHU FHQW RI WKHLU ODQG XQGHU WUHHV
DOVR E\ WKH TXDQWLW\ DQG TXDOLW\ RI RUJDQLF IHUWLOL]HUV
XVHG+DUGO\DQ\LQRUJDQLFIHUWLOL]HUVDUHXVHG/DQG
UHKDELOLWDWLRQ RQ WKH FHQWUDO SODWHDX RI %XUNLQD )DVR
IHHGVDQDGGLWLRQDOSHRSOH
'7KHUROHRIH[WHUQDOLQWHUYHQWLRQVDQG
WKHSRWHQWLDOIRUVFDOLQJXSIDUPHU
PDQDJHGUHJUHHQLQJ
*UHYLOOHDUREXVWDEXWWKLVLVQRWWKHFDVHLQ.HQ\D·V
DULG DQG VHPLDULG ODQGV 7UHH SODQWLQJ LQ GU\ODQGV
DFURVV $IULFD WHQGV WR KDYH D GLVPDO WUDFN UHFRUG
ZLWK VXUYLYDO UDWHV XVXDOO\ UDQJLQJ EHWZHHQ RQO\ 
DQG  SHU FHQW 7KH SURWHFWLRQ DQG PDQDJHPHQW
RIRQIDUPQDWXUDOUHJHQHUDWLRQLQGU\ODQGVLQFOXGLQJ
LQ.HQ\D·VGU\ODQGVZLOOKHOSLQFUHDVHWKHQXPEHURI
RQIDUPWUHHV

([WHUQDO LQWHUYHQWLRQV KDYH KHOSHG FDWDO\VH SURF (YHQ FDVXDO REVHUYHUV WUDYHOOLQJ WR 7LJUD\ (WKLRSLD
HVVHVRIUHJUHHQLQJDVLQWKH0DUDGL5HJLRQLQ1L ZLOO EH VWUXFN E\ WKH VFDOH RI QDWXUDO UHJHQHUDWLRQ LQ
JHULQDURXQGE\7RQ\5LQDXGRZKRZRUNHGIRU SDUWV RI WKLV UHJLRQ ,W LV QRW HDV\ WR ÀQG GDWD DERXW
DQ 1*2 FDOOHG 6HUYLQJ,Q0LVVLRQ 7RXJLDQL *XHUR WKH VFDOH RI UHJUHHQLQJ EXW LW FRYHUV DW OHDVW RQH
DQG5LQDXGR2WKHU1*2VDVZHOODVDQ,)$'
IXQGHG SURMHFW KDYH DOVR VXSSRUWHG WKH VSUHDGLQJ
RIIDUPHUPDQDJHGUHJUHHQLQJDQGRWKHUEHVWSUDF
WLFHV LQ QDWXUDO UHVRXUFH PDQDJHPHQW E\ RUJDQL]LQJ
IDUPHUWRIDUPHUVWXG\YLVLWV'XULQJWKHVHYLVLWVIDUP
PLOOLRQKHFWDUHV0RVWRIWKHUHJUHHQLQJKDVRFFXUUHG
LQ ZKDW DUH XVXDOO\ FDOOHG HQFORVXUHV ZKLFK DUH
GHJUDGHGODQGVVHWDVLGHIRUUHKDELOLWDWLRQ$QXPEHU
RIDFWLYLWLHVDUHFRPELQHGLQWKHVHHQFORVXUHVZDWHU
KDUYHVWLQJWHFKQLTXHVWRJHWPRUHZDWHULQWRWKHVRLO
HUVPHQDQGZRPHQZLWKH[SHULHQFHLQVSHFLÀFUH
JUHHQLQJWHFKQLTXHVDUHJLYHQDQRSSRUWXQLW\WRGLV
FXVV WKHVH ZLWK RWKHU IDUPHUV ZRUNLQJ XQGHU VLPLODU
DJURHFRORJLFDOFRQGLWLRQV)RULQVWDQFHIDUPHUVIURP
%XUNLQD)DVRKDYHYLVLWHGWKHODUJHVFDOHRQIDUPUH
JUHHQLQJLQ0DOL·V6HQR3ODLQVDQGIDUPHUVIURPWKH
6HQR3ODLQVKDYHYLVLWHGIDUPHUVLQ%XUNLQD·V<DWHQJD
QDWXUDO UHJHQHUDWLRQ DQG VRPH HQULFKPHQW SODQWLQJ
XVXDOO\ZLWKH[RWLFVSHFLHV)RULQVWDQFHLQWKHYDOOH\
RI$EUDKD$WVEDKDVXFKDFWLYLWLHVOHGWRDQLQFUHDVH
LQZDWHUOHYHOVLQWKHYDOOH\ZKLFKHQDEOHGWKHGLJJLQJ
RI VHYHUDO KXQGUHG VKDOORZ ZHOOV ,Q  HYHQ
ZKHQ UDLQIDOO ZDV YHU\ ORZ DQG FHUHDO FRSV IDLOHG
PDQ\ IDPLOLHV PDQDJHG WR FRSH EHWWHU ZLWK GURXJKW
 75$'($1'(19,5210(175(9,(:

$QHQFORVXUHDQGQDWXUDOUHJHQHUDWLRQLQWKH7LJUD\UHJLRQ $GHQVHVWDQGRI\RXQJ&RPEUHWXPJOXWLQRVXPWUHHV
(WKLRSLD RQ0DOL·V6HQR3ODLQVDQQXDOO\SURGXFHVWRQVRIOLWWHUSHU
EHFDXVH WKH\ ZHUH DEOH WR LUULJDWH IUXLW WUHHV DV ZHOO
DV WKH YHJHWDEOH JDUGHQV DURXQG WKH ZHOOV :KDW
KDV EHHQ DFKLHYHGLQ SDUWV RI 7LJUD\ VLQFH WKHHDUO\
V XQGHU DGYHUVH FRQGLWLRQV LV DQRWKHU RI WKRVH
UHJUHHQLQJVXFFHVVHVLQ$IULFD·VGU\ODQGVWKDWKDYH
ODUJHO\JRQHXQQRWLFHG
)$*UHHQ5HYROXWLRQLQ$IULFDRUDQRWKHU
KHFWDUH0DUFK
OLPLWHG ÀQDQFLDO UHVRXUFHV EXW ZDQW WR LQWHQVLI\ WKHLU
DJULFXOWXUDO SURGXFWLRQ KDYH RQH PDMRU ORZFRVW
RSWLRQ ZKLFK LV WR LQFUHDVH WKH QXPEHU RI WUHHV
6RPHGU\ODQGVLQ$IULFDVWLOOVXIIHUIURPWKHOHJDF\RI
VXEVLGL]HG PHFKDQL]DWLRQ RI WKH V DQG V
ZKLFKVWLPXODWHGWKHUHPRYDORIRQIDUPWUHHV(YHQ
WRGD\PHFKDQL]DWLRQDQGODUJHVFDOHIDUPVWHQGWREH
UHJDUGHGE\PDQ\SROLF\PDNHUVDVWKHZD\IRUZDUG
GHVSLWHWKHFRQVLGHUDEOHGDPDJHLWRIWHQGRHVWRWKH
NLQGRIJUHHQUHYROXWLRQ" VRLOVDVLOOXVWUDWHGE\WKHSLFWXUHEHORZ
7KHFXUUHQWWKLQNLQJDERXWD*UHHQ5HYROXWLRQLQ$I
ULFDLQYROYHVLQFUHDVLQJWKHXVHRIFKHPLFDOIHUWLOL]HUV
DQGLPSURYHGVHHGVH[SDQVLRQRILUULJDWLRQPHFKD
QL]DWLRQDQGLPSURYLQJPDUNHWDFFHVV+RZHYHUWKH
FRVWVRIFKHPLFDOIHUWLOL]HUVDUHKLJKDQGWKHLUXVHLQ
GU\ODQGVLVQRWDOZD\VHIÀFLHQWDVWKHVRLO·VFRQWHQWRI
RUJDQLFPDWWHULVORZ7KHFKDOOHQJHLVWRÀUVWLQFUHDVH
WKHRUJDQLFPDWWHUDQGWKHPRVWHIÀFLHQWZD\RIGR
LQJ VR LV LQ PDQ\ FDVHV E\ LQFUHDVLQJ WKH QXPEHU
RIRQIDUPWUHHV7UHHVFDQSURGXFHVLJQLÀFDQWTXDQ
WLWLHV RI OLWWHU ZKLFK KHOSV PDLQWDLQ RU LPSURYH VRLO
RUJDQLF PDWWHU FRQWHQW DV LOOXVWUDWHG E\ WKH SLFWXUH
DERYH)DUPHUVSUXQHWKHWUHHVHDUO\LQWKHUDLQ\VHD
VRQZKLFKVXSSOLHVÀUHZRRGIRUFRRNLQJDQGUHGXFHV
FRPSHWLWLRQ ZLWK FURSV 0RUHRYHU WKH WUHHV SURYLGH
GLVSHUVHG VKDGH WR WKH FURSV ZKLFK SURWHFWV WKHP
$ODUJHPHFKDQL]HGFRPPHUFLDOIDUPLQ(WKLRSLD·V5LIW9DOOH\
SDUW RI WKH GD\ DJDLQVW WKH VXQ )DUPHUV OHDYH WKH FORVHWRWKHWRZQRI+DZDVVZLWKDWUDFWRUSORXJKLQJWKH
SUXQHGEUDQFKHVRQWKHODQGXQWLOWKHOHDYHVDUHVXI ODQGWRSULJKW7KHODQGGRHVQRWKDYHDVLQJOHWUHHRQLWWR
SURWHFWLWDJDLQVWWKHVXQDQGZLQG7KLVÀHOGORVHVWRQVRI
ÀFLHQWO\GU\DIWHUZKLFKWKHEUDQFKHVDUHFROOHFWHGIRU WRSVRLOHYHU\\HDUGXHWRZLQGDQGZDWHUHURVLRQ
ÀUHZRRGZKLOHWKHOHDYHVDUHOHIWEHKLQGRQWKHODQG
)DUPHUV ZKR KDYH PDQDJHG WR LQFUHDVH WKH VRLO·V
FRQWHQW RI RUJDQLF PDWWHU ZRXOG EHQHÀW JUHDWO\ IURP
VPDOOGRVHVRILQRUJDQLFQLWURJHQ1IHUWLOL]HU6PDOO
VFDOH IDUPHUV LQ $IULFD DQG HOVHZKHUH ZKR KDYH
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

1//'06#4; U'0'6+% 0)+0''4+0)#0&+16'%*01.1);(14

11&
'%74+6;#0&(14.+/#6'*#0)'+6+)#6+10#0&
&#26#6+10U16'06+#.#0&+5-5
-DFN$+HLQHPDQQ
&HQWUHIRU,QWHJUDWHG5HVHDUFKLQ%LRVDIHW\,1%,DQG6FKRRORI%LRORJLFDO6FLHQFHV8QLYHUVLW\RI&DQWHUEXU\
&KULVWFKXUFK1HZ=HDODQG

$EVWUDFW
:RUOGKXQJHULVDPXOWLIDFHWHGSUREOHPWKDWFDQQRWEHVROYHGE\WHFKQRORJLFDOFKDQJHVDORQH
,QGXVWULDODJULFXOWXUHLVXQVXVWDLQDEOHDQGWHFKQRORJLFDODGMXVWPHQWVEDVHGRQJHQHWLFHQJLQHHULQJKDYH
QRWEHHQDEOHWRDFKLHYHWKHUHOHYDQW0LOOHQQLXP'HYHORSPHQW*RDOVLQVWHDGWKH\KDYHLQWURGXFHGSURG
XFWV WKDW UHVWULFW IDUPHUEDVHG LQQRYDWLRQ LQ VLWX FRQVHUYDWLRQ DQG DFFHVV WR WKH EHVW ORFDOO\ DGDSWHG
JHUPSODVP
$OWHUQDWLYHDJULFXOWXUDOPRGHOVVXFKDVDJURHFRORJ\GHPRQVWUDWHSRWHQWLDOWRUHGXFHSRYHUW\LQFUHDVH
IRRGVHFXULW\DQGUHGXFHDJULFXOWXUH·VHQYLURQPHQWDOIRRWSULQWEHFDXVHWKH\LQFUHDVHDJURHFRV\VWHPUHVLO
LHQFHORZHUH[WHUQDOLQSXWVERRVWIDUPHUV·LQFRPHVDQGDUHEDVHGRQWHFKQRORJLHVWKDWIRUWKHPRVWSDUW
FDQEHXQGHUVWRRGLPSOHPHQWHGDQGIXUWKHUPRGLÀHGE\SRRUDQGVXEVLVWHQFHIDUPHUV

*OREDO IRRG SURGXFWLRQ LV LQFUHDVLQJ IDVWHU WKDQ RI EDODQFHG GLHWV LQ DUHDV ZKHUH KXQJHU DQG
GHPDQG ,$$67'  $VLGH IURP SULFH VSLNHV LQ PDOQXWULWLRQDUHHQGHPLF1RUG
 DQG  IRRG SULFHV KDYH EHHQ DW RQH
7KHFRVWRIIRRGDQGWKHHQYLURQPHQWDOFRVWRIIRRG
KXQGUHG\HDUORZV1HOOHPDQQHWDO'HVSLWH
SURGXFWLRQ FRXOG EH GUDPDWLFDOO\ UHGXFHG MXVW E\
WKLVELOOLRQVRISHRSOHDUHPDOQRXULVKHGDQGDELOOLRQ
FXWWLQJ IRRG ZDVWH $FFRUGLQJ WR 1HOOHPDQQ HW DO
DUH VWDUYLQJ +RIIPDQQ  .KDQ DQG +DQMUD
  ´>'@HYHORSLQJ DOWHUQDWLYHV WR WKH XVH RI

&XUUHQWDJULFXOWXUDOSUDFWLFHVLQFOXGLQJWKHKDUYHVWLQJ
RI QDWXUDO UHVRXUFHV VXFK DV RFHDQ ÀVKHULHV DUH
KDYLQJ HQRUPRXV DQG XQVXVWDLQDEOH HQYLURQPHQWDO
FHUHDOLQDQLPDOIHHGVXFKDVE\UHF\FOLQJZDVWHDQG
XVLQJÀVKGLVFDUGVFRXOGVXVWDLQWKHHQHUJ\GHPDQG
IRU WKH HQWLUH SURMHFWHG SRSXODWLRQ JURZWK RI RYHU 
ELOOLRQSHRSOHµE\6RPHRIWKLVZDVWHIURPIDUP
LPSDFWV.KDQDQG+DQMUD5LYHUD)HUUH WRIRUNFRXOGEHUHGXFHGE\WHFKQRORJLFDODGYDQFHV
$QG LQFUHDVHG DJULFXOWXUDO SURGXFWLRQ LV SXWWLQJ DVZHOODVE\FXWWLQJFRQVXPHUUHMHFWLRQEHIRUHDQG
SUHVVXUH RQ HYHUVKULQNLQJ HFRV\VWHP VHUYLFHV DIWHU SXUFKDVH EXW PRVWO\ LW FRXOG EH RYHUFRPH E\
'DLO\HWDO,$$67'7KHVHVHUYLFHVDUH D FKDQJH LQ VRFLDO SROLF\ DQG DWWLWXGHV HVSHFLDOO\
QHHGHGWRPDLQWDLQWKHSURGXFWLYLW\RIODQGDVZHOODV DPRQJ FRQVXPHUV LQ GHYHORSHG FRXQWULHV ZKR
IUHVKDQGVDOWZDWHUXVHGWRSURGXFHIRRG0($ ZDVWH XS WR  WLPHV WKH DPRXQW RI IRRG ZDVWHG LQ
7LOPDQHWDO7KHXQIRUWXQDWHIHHGEDFNF\FOHLV GHYHORSLQJFRXQWULHV*XVWDYVVRQHWDO
WKDWDVDJULFXOWXUHH[SDQGVLQWRHYHUPRUHPDUJLQDOO\
SURGXFWLYHHFRV\VWHPVLWVLPSDFWRQFOLPDWHFKDQJH 'HPDQG IRU IRRG DORQH LV QRW WKH RQO\ FDXVH RI
JURZV1HOOHPDQQHWDO DJULFXOWXUH·VJURZLQJIRRWSULQW0DQ\FRXQWULHVHYHQ
WKRVH H[SHULHQFLQJ IDPLQH UHO\ RQ WKH H[SRUW RI
IRRG WR JHQHUDWH LQFRPH 9DQGHUPHHU DQG 3HIHFWR
$+XQJHULVDFKRLFH  ,Q UHFHQW GHFDGHV ODUJHVFDOH FRQYHUVLRQV
7KH FXUUHQW IDLOXUHV WR IHHG WKH ZRUOG DUH QRW GXH RI WKH DJURHFRV\VWHP LQ VRPH FRXQWULHV KDYH EHHQ
WR OLPLWDWLRQV RI WHFKQRORJ\ EXW WR VRFLDO FKRLFHV FRUUHODWHGZLWKDQLQFUHDVHLQIRRGLQVHFXULW\PRWLYDWHG
+HLQHPDQQ,$$67'.LHUVHWDO E\WKHSXVKWRSURGXFHPRUHH[SRUWFRPPRGLWLHVDW
,PSRUWDQWO\ WKHVH FKRLFHV XQGHUPLQH WKH DYDLODELOLW\ WKH H[SHQVH RI IRRGV RI KLJKHU QXWULWLRQDO YDOXH IRU
 75$'($1'(19,5210(175(9,(:

7DEOH&KDQJHVLQIRRGVHFXULW\LQ$UJHQWLQD
)RRGVXSSO\IRUKXPDQ ² ² ² ² ²WR ²WR ²WR
FRQVXPSWLRQ  D E F ² ² ²
SHUSHUVRQGD\ G G G
'LHWDU\HQHUJ\VXSSO\NFDO       
7RWDOSURWHLQLQWDNHJUDPV       
$QLPDOSURWHLQJUDPV       
)DWJUDPV       
6RXUFH%DVHGRQGDWDIURP)$267$7
1RWHVD3HULRGRIÀUVWLQWURGXFWLRQRIFRPPHUFLDO*0SODQWVLQGXVWU\ÀJXUHVUHSRUWPLOOLRQKHFWDUHVRI*0
FURSVZHUHEHLQJFXOWLYDWHGLQ,6$$$%ULHI1R
E
$FFRUGLQJWRLQGXVWU\ÀJXUHVGXULQJWKLVSHULRGPLOOLRQKHFWDUHVRI*0FURSVZHUHEHLQJ
FXOWLYDWHG,6$$$%ULHI1R
F
$FFRUGLQJWRLQGXVWU\ÀJXUHVGXULQJWKLVSHULRGPLOOLRQKHFWDUHVRI*0FURSVZHUHEHLQJ
FXOWLYDWHG,6$$$%ULHI1R
G
$QQXDOUDWHRIFKDQJH²QRWWRWDOFKDQJHRYHUWKHSHULRG

GRPHVWLF FRQVXPSWLRQ 3HQJXH  DQG WDEOH  WUDGLWLRQDOLVWDSSURDFKHVDUHGXHPRUHWRWKHQHJOHFW

DERYH RIIDUPHUVWKDQWRIDUPHUVSUHIHUULQJWRXVHWKHP3RRU
DQGVXEVLVWHQFHIDUPHUVDUHFKDOOHQJHGE\DODFNRI
1HZ RU LPSURYHG WHFKQRORJLHV FRXOG KHOS IHHG WKH
DGHTXDWHH[WHQVLRQDQGFRPPXQLW\VXSSRUWVHUYLFHV
ZRUOG +HLQHPDQQ  ,$$67'  %HIRUH
WKDWGLVVHPLQDWHNQRZOHGJHDIIRUGDEOHÀQDQFLQJDQG
FRQVLGHULQJZKLFKWHFKQRORJLFDODSSURDFKHVDUHEHVW
DFFHVVWRPDUNHWVIRUWKHVDOHRIVXUSOXVSURGXFWLRQ
IRUUHGXFLQJWKHHIIHFWVRIFOLPDWHFKDQJHRQDJULFXOWXUH
DQG PLWLJDWLQJ DJULFXOWXUH·V FRQWULEXWLRQ WR IDFWRUV $QRWKHUIRUPRI´EXVLQHVVDVXVXDOµLVWKHLQWHQVLYH
FDXVLQJFOLPDWHFKDQJHVXFKDVJUHHQKRXVHJDVHV
LW ZLOO EH HVVHQWLDO WR GHWHUPLQH ZKLFK SUREOHPV DUH
EHVWVROYHGE\WHFKQRORJLFDOWRROVDQGZKLFKFDQEH
VROYHGE\FKDQJHVLQWKHVRFLRHFRQRPLFDQGVRFLR
SROLWLFDOVWDWXVTXR7KLVZLOOHQWDLOFRQVLGHULQJVRPH
SDLQIXOTXHVWLRQVDERXWWKHFDXVHVRIWKHSUREOHPV
&RQVSLFXRXVO\IHZDUHOLNHO\WRKDYHEHHQFDXVHGE\
XVHRIH[WHUQDOLQSXWVLQDJULFXOWXUHDQGHVSHFLDOO\
VXSSRUW WR PDVVLYH PRQRFXOWXUHV ERWK RI ZKLFK
DUH FRQFHQWUDWHG LQ GHYHORSHG FRXQWULHV DQG VRPH
UDSLGO\ LQGXVWULDOL]LQJ GHYHORSLQJ FRXQWULHV 8QOLNH
XQVXVWDLQDEOHWUDGLWLRQDODSSURDFKHVLQSXWLQWHQVLYH
DJULFXOWXUH ² ORRVHO\ UHIHUUHG WR DV FRQYHQWLRQDO RU
LQGXVWULDODJULFXOWXUH²KDVEHHQSURPRWHGE\SROLF\
DODFNRIWHFKQRORJ\1DWXUH GHFLVLRQV7KHSROLFLHVDQGWHFKQRORJLHVDVVRFLDWHG
ZLWKLQGXVWULDODJULFXOWXUHLQYROYHDVKLIWLQLQQRYDWLRQ
UHVRXUFHV IURP SXEOLF FRQWURO WR WKH SULYDWH VHFWRU
%&KRRVLQJDPRQJWHFKQRORJLFDOSDWKVWR
SURSRRUFOLPDWHUHVLOLHQWDJULFXOWXUH
7KHULJKWWHFKQRORJ\GHOLYHUHGLQWKHULJKWZD\VKRXOG
EHDEOHWRKHOSUHYHUVHDJULFXOWXUH·VDGYHUVHLPSDFW
RQ FOLPDWH FKDQJH DQG XOWLPDWHO\ FRQWULEXWH WR
,$$67'  6SLHOPDQ  DV D UHVXOW RI WKH
SULYDWHVHFWRULQYHVWLQJPRUHWKDQWKHSXEOLFVHFWRULQ
UHVHDUFKDQGGHYHORSPHQW3ULYDWHLQYHVWPHQWIXUWKHU
OHYHUDJHVPXFKRIZKDWUHPDLQVRISXEOLFLQYHVWPHQW
WKURXJK JRYHUQPHQW SROLFLHV WKDW SURPRWH FR
IRRG VHFXULW\ +HLQHPDQQ  6FLDODEED D IXQGLQJE\WKHSULYDWHVHFWRUWKHSXUVXLWRILQWHOOHFWXDO
2WKHUZLVH SURSRVHG WHFKQRORJLFDO VROXWLRQV WR SURSHUW\ ,3 E\ SXEOLF VHFWRU LQVWLWXWLRQV HJ
WKHVH SUREOHPV ZLOO QRW EH VXVWDLQDEOH PDNH WKHLU XQLYHUVLWLHV DQG DJULFXOWXUH DJHQFLHV DQG SXEOLF
IDLU FRQWULEXWLRQ WR WKH 0LOOHQQLXP 'HYHORSPHQW VHFWRUOLFHQVLQJRI,3IURPWKHSULYDWHVHFWRU,$$67'
*RDOV RU KHOS GLVWULEXWH WKH EHQHÀWV PRUH HTXLWDEO\  9DQORTXHUHQ DQG %DUHW  ,QGXVWULDO
DPRQJWKHSHRSOHVRIWKHZRUOG$VFRQFLVHO\VWDWHG DJULFXOWXUHDOVRUHFHLYHVODUJHSXEOLFVXEVLGLHVGLUHFW
E\ WKH 'LUHFWRU RI WKH ,QWHUQDWLRQDO $VVHVVPHQW RI DQG LQGLUHFW LQ GHYHORSHG HFRQRPLHV ZKLFK VWLÁH
$JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG 7HFKQRORJ\ IRU SURGXFHUVDQGPDUNHWVLQGHYHORSLQJFRXQWULHVDQG
'HYHORSPHQW,$$67'´EXVLQHVVDVXVXDOLVQRWDQ IXUWKHUXQGHUPLQHWKHDELOLW\RISRRUDQGVXEVLVWHQFH
RSWLRQµ2QHIRUPRI´EXVLQHVVDVXVXDOµLVWKHKLJKO\ IDUPHUV WR LQWHQVLI\ SURGXFWLRQ DQG UHGXFH WKHLU
GDPDJLQJWUDGLWLRQDODJULFXOWXUDOSUDFWLFH'DPDJLQJ HQYLURQPHQWDOIRRWSULQW.LHUVHWDO6SLHOPDQ
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

 )XUWKHUPRUH LQGXVWULDO DJULFXOWXUH KDV QHLW %UD]LO &DQDGD 3DUDJXD\ WKH 8QLWHG 6WDWHV DQG
KHU SURGXFHG D VXVWDLQDEOH KLJKO\ SURGXFWLYH
DJURHFRV\VWHP QRU FXUEHG DJULFXOWXUH·V LPSDFW RQ
FOLPDWHFKDQJH
2I WKH PDQ\ ELRWHFKQRORJ\ RSWLRQV DYDLODEOH IRU
WHVWLQJRULPSOHPHQWLQJSHUKDSVWKHRQHWKDWUHFHLYHV
8UXJXD\ÀJXUHDQGEHFDXVHRIWKHPRVWFRPPRQ
FRPPHUFLDOL]HG *0 WUDLWV KHUELFLGH WROHUDQFH
DQG LQVHFWLFLGH SURGXFWLRQ +HUELFLGH WROHUDQFH LQ
SDUWLFXODU OHQGV LWVHOI WR PHFKDQL]HG GHOLYHU\ RI DQ
LQVHSDUDEOH FRWHFKQRORJ\ D FKHPLFDO IRU ZHHG
PDQDJHPHQW 7KLV ZHHGFRQWURO VWUDWHJ\ UHTXLUHV
WKHPRVWDWWHQWLRQLVJHQHWLFHQJLQHHULQJ*(IRUWKH
ODUJH WUDFWV RI PRQRFXOWXUH WR DYRLG KHUELFLGH GULIW
SURGXFWLRQRIJHQHWLFDOO\PRGLÀHGRUJDQLVPV*02V
RQWR QHLJKERXULQJ RU RWKHU DJULFXOWXUDO ODQG )LQDOO\
² SODQWV DQLPDOV DQG PLFUREHV ,$$67' 
EHFDXVH RI WKH UHODWLYHO\ VPDOO QXPEHU RI FRXQWULHV
$V FXUUHQWO\ DSSOLHG *( KDV FRPH WR V\PEROL]H
WKDWKDYHDGRSWHG*0FURSVDQGWKHIHZFRPSDQLHV
DJULFXOWXUDO SURGXFWLRQ V\VWHPV WKDW PDNH LQWHQVLYH
WKDW KDYH FRPPHUFLDOL]HG LW LQGLYLGXDO FRXQWU\ DQG
XVH RI H[WHUQDO LQSXWV DQG SURPRWH PRQRFXOWXUHV
FRPSDQ\VSHFLÀF SROLFLHV DQG EXVLQHVV SODQV KDYH
5LYHUD)HUUH  7KLV LV EHFDXVH RI WKH W\SHV
KDG DQ LPSRUWDQW LQÁXHQFH RQ WKH DGRSWLRQ RI WKLV
RI FRPPHUFLDOL]HG *0 SURGXFWV WKDW DUH WKH PRVW
ELRWHFKQRORJ\
FRPPRQLHVR\EHDQVPDL]HUDSHVHHGDQGFRWWRQ
EHFDXVHRIWKHSDUWLFXODUO\ODUJHDJURHFRV\VWHPVWKDW 7KDW VRPH RI WKH ODUJHVW DJULFXOWXUDO FRXQWULHV LQ
KDYH DGRSWHG *0 FURSV PDLQO\ WKRVH LQ $UJHQWLQD WKHZRUOGKDYHDGRSWHG*0YHUVLRQVRIDIHZFURSV

)LJXUH'HJUHHVRIFRPPLWPHQWWR*0DJULFXOWXUHHVWLPDWHVIRU

&DQDGD 3RUWXJDO )UDQFH 6SDLQ 6ORYDNLD

    

8QLWHG6WDWHV &KLQD
 

0H[LFR ,QGLD
 

&RORPELD 3KLOLSSLQHV
 

&KLOH $XVWUDOLD
 

$UJHQWLQD 3DUDJXD\ 8UXJXD\ %UD]LO 6RXWK$IULFD

    

6RXUFHV5HSURGXFHGIURP+HLQHPDQQ
1RWH2QO\WZRFRXQWULHVLQWKHZRUOGKDYHFRQYHUWHGWKHPDMRULW\RIWKHLUDJULFXOWXUDOV\VWHPVWR*0
FURSSLQJEODFNER[HV$FFRUGLQJWRLQGXVWU\ÀJXUHV$UJHQWLQDDQG3DUDJXD\DUHWUXH´PHJD
FRXQWULHVµRI*0FURSV-DPHV7KHPDMRULW\RIWKHWRS*0SURGXFLQJFRXQWULHVFRPPLW
OHVVWKDQ²SHUFHQWRIWKHLUDJULFXOWXUDOSURGXFWLRQWR*0ZKLWHER[HVZLWKVROLGOLQHVLQGLFDWH
DERYHSHUFHQW(YHQWKHZRUOG·VODUJHVWSURGXFHUWKH8QLWHG6WDWHVFRPPLWVQRPRUHWKDQDERXW
DWKLUGRILWVFURSSLQJFDSDFLW\WR*0JUH\ER[HVIRUFRXQWULHVKDYLQJPRUHWKDQSHUFHQW
 75$'($1'(19,5210(175(9,(:

)LJXUH&RPSDUDWLYH\LHOGVLQ*0DGRSWLQJDQGQRQDGRSWLQJDJULFXOWXUDOV\VWHPV²

3.0 - - 100

2.5 - - 80
Ratio of yield (Hg/Ha)

Percentage of GM
2.0 - - 60 United States maize

United States rapeseed

1.5 - - 40 Canada rapeseed

1.0 - - 20 Western Europe/ Canada rapeseed productivity

Western Europe/ United States rapeseed productivity

0.5 - -0
1995 -
-
1997 -
-
1999 -
-
2001 -
-
2003 -
-
2005 -
-
2009 -
Western Europe/ United States maize productivity

6RXUFHV)$267$7IRUUDWLRRI\LHOGDQG*02&RPSDVVIRUSHUFHQWDJHRI*0PDL]HDQGUDSHVHHG
DFFHVVHG0D\
1RWH/HIWD[LVLVWKHUDWLRRI\LHOGLQKHFWRJUDPV+JSHUKHFWDUH+DIRUWZRFURSVUDSHVHHGWRSDQG
PDL]HERWWRPDQGWKUHHSURGXFHUV:HVWHUQ(XURSH&DQDGDDQGWKH8QLWHG6WDWHV5LJKWD[LV
UHSUHVHQWVWKHSURSRUWLRQRI*0E\FURSW\SHLQWKH1RUWK$PHULFDQDJULFXOWXUDOV\VWHPV

VKRXOGQRWEHWDNHQDVHYLGHQFHWKDW*(KDVGHOLYHUHG 8QIRUWXQDWHO\WKHVHEHQHÀWVDUHERWKFRQWHVWHGDQG
VXVWDLQDEO\ DQG UHOLDEO\ JUHDWHU \LHOGV &RQWUDVWLQJ GHWHUPLQLVWLFDOO\ XQVXVWDLQDEOH +HLQHPDQQ 
1RUWK $PHULFDQ DQG :HVWHUQ (XURSHDQ SURGXFWLRQ 7KH SUHGLFWDEOH SDWWHUQ DQG TXDQWLW\ RI JO\SKRVDWH
RI PDL]H DQG UDSHVHHG LV LQVWUXFWLYH LQ WKLV UHJDUG KHUELFLGH XVH LQ *0 DJULFXOWXUH KDV FDXVHG WKH
EHFDXVH WKH\ ERWK KDYH KLJKLQSXW KLJKSURGXFWLRQ HYROXWLRQ RI UHVLVWDQFH LQ ZHHGV RQ D VFDOH QHYHU
DJURHFRV\VWHPV ,Q &DQDGD IRU H[DPSOH UDSHVHHG H[SHULHQFHGLQWKHGHFDGHVRIJO\SKRVDWHXVHSULRUWR
FDQRODDQGLQWKH8QLWHG6WDWHVPDL]HDUHDOPRVW *0FURSVOHDGLQJWRDUHWXUQWRWLOOLQJDQGWKHXVHRI
H[FOXVLYHO\ SURGXFHG IURP *0 SODQWV &ROOHFWLYHO\ RWKHUKHUELFLGHVIRUZHHGFRQWURO*DLQHVHWDO
:HVWHUQ (XURSH KDV VKXQQHG WKH FXOWLYDWLRQ RI *0 3RZOHV6HUYLFH0HDQZKLOHWKHXQLTXH
PDL]H DQG UDSHVHHG ÀJXUH  <HW PDL]H \LHOGV DUH SDWWHUQ RI XVH RI JO\SKRVDWH RQ *0 VR\EHDQV KDV
YHU\VLPLODULQWKHWZRDJURHFRV\VWHPVDQG:HVWHUQ UHGXFHG LQ VLWX QLWURJHQ À[DWLRQ E\ FKHODWLQJ QLFNHO
(XURSH·VUDSHVHHG\LHOGVDUHDERXWGRXEOHWKRVHRI D UHTXLUHG FRIDFWRU IRU HQ]\PDWLF DFWLYLWLHV LQ WKH
1RUWK$PHULFD7KLVWUHQGKDVQRWFKDQJHGVLQFHWKH PLFURELDOV\PELRQWV=RELROHHWDODQGUHGXFHG
DGRSWLRQRI*0SODQWVLQ1RUWK$PHULFD QRUPDOLURQXSWDNHDQGVWRUDJHLQVR\EHDQV%HOODORXL
HWDO*O\SKRVDWHRQKHUELFLGHWROHUDQWSODQWV
%URDGO\VSHDNLQJFRXQWULHVPDNLQJDVXEVWDQWLDOVKLIW
DOVRUHGXFHVURRWELRPDVVHORQJDWLRQDQGODWHUDOURRW
WR*0FURSVDUHLQDJURXSZKHUHIRRGVHFXULW\KDV
IRUPDWLRQ%RWWHWDO6\VWHPLFGLVWULEXWLRQ RI
HLWKHUVKRZQQRLPSURYHPHQWHJ8QLWHG6WDWHVRU
JO\SKRVDWH WKURXJKRXW WKH SODQW LV DVVRFLDWHG ZLWK
ZKHUH LW LV GHFOLQLQJ HJ $UJHQWLQD ÀJXUH  DQG
LQFUHDVHG VXVFHSWLELOLW\ WR FRORQL]DWLRQ E\ GLVHDVH
+HLQHPDQQ
FDXVLQJ IXQJL .UHPHU 0HDQV DQG .LP 
7KHVHHIIHFWVIXUWKHUUHGXFHWKHVXVWDLQDELOLW\RI*0
&+RZVRPHELRWHFKQRORJLHVDUHIDLOLQJ DSSURDFKHV/LNHZLVHUHSODFLQJFRPSOHPHQWDU\DQG
GLYHUVHSHVWFRQWUROSUDFWLFHVVXFKDVLQWHJUDWHGSHVW
$UJXDEO\ VRPH *0 SURGXFWV KDYH ORZHUHG WKH
PDQDJHPHQW0DQFLQLHWDODQGWKHMXGLFLRXV
RYHUDOO LPSDFW RI LQGXVWULDO DJULFXOWXUH )RU H[DPSOH
XVHRIQDWXUDOVRXUFHVRI%WLQVHFWLFLGHVDVLQRUJDQLF
WKHXVHRIJO\SKRVDWHEDVHGKHUELFLGHVRQ*0FURSV
DJULFXOWXUH DORQJ ZLWK WKH PDVV SODQWLQJ RI *0 %W
KDV UHGXFHG WKH QHHG IRU WLOOLQJ DV D ZHHG FRQWURO
FURSVLVFDXVLQJWKHDSSHDUDQFHRIVHFRQGDU\SHVWV
VWUDWHJ\3HQJXH6HUYLFH6LPLODUO\WKH
/XHWDO=KDR+RDQG$]DGL
XVHRI*0LQVHFWLFLGHSODQWVRIWHQFDOOHG%WSODQWV
SDUWLFXODUO\ FRWWRQ KDV UHGXFHG WKH XVH RI H[WHUQDO 0RUHRYHU ZKDWHYHU WKH FRPSDUDWLYH EHQHÀWV
FKHPLFDOLQVHFWLFLGHV RI *( PD\ EH WKH\ DUH ODUJHO\ ORVW ZKHQ *(
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

)LJXUH)RRGVHFXULW\LQ*0DQGQRQ*0DGRSWLQJFRXQWULHVLQ6RXWK$PHULFDFRPSDUHG
²NFDOSHUVRQGD\

)RRGVHFXULW\LQQRQ*0DGRSWLQJ6RXWK$PHULFDQFRXQWULHV
3 200 -

3 000 - Chile

2 800 -
kcal/person/day

Columbia
2 600 - Venezuela

2 400 - Peru

2 200 -
Bolivia
2 000 -
1992 -

1997 -

2002 -

2007 -

)RRGVHFXULW\LQ*0DGRSWLQJ6RXWK$PHULFDQFRXQWULHV
3 400 - - 0.7
Proportion of arable farmland under GM crops

3 200 - - 0.6

3 000 - - 0.5
Argentina (kcal)
Paraguay
kcal/person/ day

2 800 - - 0.4 (proportion of GM)

Brazil (kcal) Argentina
(proportion of GM)
2 600 - Paraguay (kcal) - 0.3 Uruguay
(proportion of GM)
Brazil
2 400 - - 0.2 (proportion of GM)
Uruguay (kcal)

2 200 - - 0.1

2 000 - - 0.0
1992 -

1997 -

2002 -

2007 -

6RXUFHV)$26WDW
1RWH$FROOHFWLRQRI6RXWK$PHULFDQFRXQWULHVWKDWKDYHQRWDGRSWHG*0EDVHGDJULFXOWXUDOV\VWHPV
VKRZVLPLODULPSURYHPHQWVLQIRRGVHFXULW\WRSSDQHO&RXQWULHVZLWKYDU\LQJSURSRUWLRQVRI*0
ULJKWD[LVERWWRPSDQHOVKRZPL[HGUHVXOWV7KRVHZLWKUDSLGDGRSWLRQRIJUHDWHUDPRXQWVRI*0LQ
WKHLUDJULFXOWXUHDUHPRUHSURQHWRLQFUHDVHGLQVHFXULW\OHYHOVPHDVXUHGLQNFDOOHIWD[LV
 75$'($1'(19,5210(175(9,(:

LQGXVWULDO DJULFXOWXUH LV FRPSDUHG ZLWK DOWHUQDWLYH RQ IRRG SURGXFWLRQ 7KLV KDV GULYHQ WKH VHDUFK IRU
ELRWHFKQRORJLHVVXFKDVDJURHFRORJLFDOWHFKQRORJLHV SODQWVWKDWPDLQWDLQRULPSURYH\LHOGXQGHUFRQGLWLRQV
3LPHQWHOHWDO3UHWW\/DQGFRQYHUWHGWR RI ZDWHU GHSULYDWLRQ 'HVSLWH PDQ\ DWWHPSWV WR
DJULFXOWXUH IURP RWKHU XVHV JXLGHG E\ DJURHFRORJ\ GDWHWKHUHDUHQRFRPPHUFLDOO\DYDLODEOH*0SODQWV
UHTXLUHV WLPH WR FRQGLWLRQ DQG EULQJ WR IXOO SRWHQWLDO ZLWK WUDLWV WKDW UHGXFH WKH HIIHFWV RI DELRWLF VWUHVV
%DGJOH\ HW DO  3LPHQWHO HW DO  2QFH +HLQHPDQQ7KHFORVHVWVRIDULVDYDULHW\RI
WKLV KDV EHHQ DFKLHYHG DJURHFRORJLFDO DSSURDFKHV ´GURXJKWWROHUDQWµPDL]HFDOOHG021ZKLFK
KDYH EHHQ REVHUYHG WR JHQHUDWH KLJKHU \LHOGV WKDQ LVXQGHUUHJXODWRU\FRQVLGHUDWLRQLQVRPHFRXQWULHV
LQGXVWULDODJULFXOWXUHDVVKRZQLQVHYHUDOFRPSLODWLRQV $FFRUGLQJ WR WKH GHYHORSHU·V GDWD WKH *0 PDL]H
DQGPHWDDQDO\VHVDWFRXQWU\FRQWLQHQWDODQGJOREDO KDG D PDUJLQDOO\ S VWDWLVWLFDOO\ VLJQLÀFDQW
OHYHOV %DGJOH\ HW DO  8SKRII  3ODQWV
JURZQ RQ DJURHFRORJLFDO IDUPV DUH PRUH UHVLOLHQW
WR VWUHVV WKDQ WKRVH JURZQ E\ PHDQV RI LQGXVWULDO
DJULFXOWXUH /RWWHU 6HLGHO DQG /LHEKDUGW 
LQFUHDVHLQ\LHOGLQRQO\RQHRIIRXUÀHOGWHVWVZKLFK
LVXQFRQYLQFLQJIRUWKHJHQHUDOH[SHFWDWLRQWKDWWKH
YDULHW\LVKLJKHU\LHOGLQJXQGHUVWUHVV7KHGHYHORSHU
FODLPVWKDW´WKHPDMRUFRPSRQHQWFRQWULEXWLQJWRWKH
3LPHQWHO HW DO  $JURHFRORJLFDO IDUPV UHTXLUH
LPSURYHG \LHOG RI 021  XQGHU ZDWHUOLPLWHG
IDUOHVVIRVVLOIXHOGHULYHGHQHUJ\DQGVHTXHVWHUPRUH
FRQGLWLRQV LV WKH LQFUHDVHG QXPEHU RI NHUQHOV SHU
FDUERQ 3LPHQWHO HW DO  6FLDODEED E ,Q
HDUµ0RQVDQWRUDWKHUWKDQFODLPLQJWKDW
DGGLWLRQWKHDGRSWLRQRIDJURHFRORJLFDODSSURDFKHV
WKH YDULHW\ SURGXFHV PRUH XVDEOH ELRPDVV 7KH
FRQWULEXWHV WR VXVWDLQDEOH VRFLHWLHV E\ UHGXFLQJ
GHYHORSHUFDOOVWKLVWUDLWDFKDQJHLQ´\LHOGSRWHQWLDOµ
SRYHUW\ DQG LPSURYLQJ IRRG VHFXULW\ 6FLDODEED
UDWKHUWKDQDQLQFUHDVHLQ\LHOG
D81(3DQG81&7$'
$IWHU DSSUR[LPDWHO\  \HDUV RI FRPPHUFLDOL]DWLRQ 'URXJKW WROHUDQFH KDV ORQJ EHHQ D JRDO RI
DQG SUHFRPPHUFLDO *( UHVHDUFK DQG GHYHORSPHQW FRQYHQWLRQDO EUHHGLQJ DQG FXUUHQW K\EULGV DOUHDG\
LW KDV QRW PDGH D VXEVWDQWLDO FRQWULEXWLRQ WR H[KLELW VRPH WROHUDQFH 0RQVDQWR  ZLWK
VXVWDLQDEOH DJULFXOWXUH 7KH ,$$67'  ZDV LPSURYHPHQWVRQWKLVEDVHOLQHH[SHFWHG$FFRUGLQJ
WKHUHIRUH MXVWLÀHG LQ TXHVWLRQLQJ ZKHWKHU *( FRXOG WR WKH :RUOG %DQN  WKH ´,QWHUQDWLRQDO
GHOLYHU RQ 0LOOHQQLXP 'HYHORSPHQW *RDOV RU UHGXFH
DJULFXOWXUH·VFRQWULEXWLRQWRFOLPDWHFKDQJH+RZHYHU
KDG WKH LQFHQWLYHV IRU GHOLYHULQJ *0 SURGXFWV
EHHQ GLIIHUHQW DQG WKH JRDOV RI SXEOLF DQG SULYDWH
LQQRYDWLRQQRWEHHQVRWKRURXJKO\LQWHUWZLQHGLQWKLV
0DL]H DQG :KHDW ,PSURYHPHQW &HQWHU &,00<7
DIWHU PRUH WKDQ  \HDUV RI UHVHDUFK WR SURGXFH
GURXJKWWROHUDQW PDL]H YDULHWLHV DQG K\EULGV LV
QRZ VHHLQJ UHVXOWV LQ HDVWHUQ DQG VRXWKHUQ $IULFD
(YDOXDWHG DJDLQVW H[LVWLQJ K\EULGV WKH QHZ RQHV
ELRWHFKQRORJ\9DQORTXHUHQDQG%DUHWZRXOG
*( KDYH SURGXFHG GLIIHUHQW UHVXOWV" ,Q RWKHU ZRUGV
KDV *( IDLOHG EHFDXVH RI SROLF\ GHFLVLRQV DQG LWV
SDUWLFXODUKLVWRU\RIFRPPHUFLDOL]DWLRQRUEHFDXVHWKH
WHFKQRORJ\LWVHOIKDVEHHQLQDSSURSULDWH"
':K\VRPHELRWHFKQRORJLHV
FRXOGVXFFHHG
$JDLQ FRPSDULVRQV ZLWK DOWHUQDWLYH ELRWHFKQRORJLHV
PD\EHLQVWUXFWLYHIRUUHVSRQGLQJWRWKHVHTXHVWLRQV
\LHOG  SHUFHQW PRUH RQ DYHUDJH XQGHU GURXJKW
FRQGLWLRQV 6LPLODUO\ UHFHQW HYLGHQFH SRLQWV WR
VLJQLÀFDQW\LHOGJDLQVLQEUHHGLQJZKHDWIRUGURXJKW
DQGKHDWVWUHVVHGHQYLURQPHQWVµ
$JURHFRORJLFDO DSSURDFKHV IXUWKHU UHGXFH WKH QHHG
IRU LQWHQVLYH EUHHGLQJ RU *( WR SURGXFH GURXJKW
WROHUDQW YDULHWLHV ,QFUHDVLQJ WKH RUJDQLF PDWWHU LQ
VRLOXVLQJFRYHUFURSVDQGLQWHUVSHUVLQJIDOORZ\HDUV
VLJQLÀFDQWO\ LQFUHDVHV ODWHQW VRLO PRLVWXUH PDNLQJ
DJURHFRORJLFDO IDUPV IDU PRUH UHVLOLHQW WR GURXJKW
7KH WZR ELRWHFKQRORJLHV EHLQJ FRQWUDVWHG ZLWK *(
KHUH DUH FRQYHQWLRQDO EUHHGLQJ ZLWK RU ZLWKRXW
PDUNHUDVVLVWHG VHOHFWLRQ DQG DJURHFRORJ\ 7KH
WUDLWV FRQVLGHUHG DUH GURXJKW WROHUDQFH DQG QXWULHQW
HQKDQFHPHQW
'URXJKWWROHUDQFH
$JULFXOWXUH PDNHV WUHPHQGRXV GHPDQGV RQ
UHODWHG VWUHVV +HLQHPDQQ  :DWHU SHUFRODWLQJ
WKURXJK WKH VRLOV LQ DJURHFRORJLFDO WHVW SORWV KDV
EHHQ UHSRUWHG WR EH EHWZHHQ  SHU FHQW DQG PRUH
WKDQ  SHU FHQW KLJKHU WKDQ LQ FRQYHQWLRQDO SORWV
XQGHU GURXJKW FRQGLWLRQV DQG KDV GHPRQVWUDWHG
FRPPHQVXUDWH LQFUHDVHV LQ \LHOGV FRPSDUHG ZLWK
PDWFKHG FRQYHQWLRQDO PDQDJHPHQW /RWWHU 6HLGHO
DQG/LHEKDUGW3LPHQWHOHWDO6FLDODEED
JURXQGZDWHUDQGZDWHUVKRUWDJHVDUHDJOREDOGUDJ D
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

1XWULHQWHQKDQFHPHQW :+27KHVHSURWUDFWHGQHJRWLDWLRQVZHUH

UHFHQWO\ UHVROYHG ZLWK DQ DJUHHPHQW WKDW H[HPSWHG
0LFURQXWULHQW GHÀFLHQFLHV FRQWULEXWH VLJQLÀFDQWO\
VSHFLÀHGFRXQWULHVIURPKDYLQJWRSD\UR\DOW\IHHVIRU
WR PDOQXWULWLRQ 6FLDODEED D ZKLFK LV ZK\
JURZLQJWKLVYDULHW\RI*0ULFHSURYLGHGWKDWWKHULFH
GHYHORSLQJ SODQWV WKDW DUH HQULFKHG ZLWK PLFURQXWUL
ZDVQRWH[SRUWHG*52RQOLQH*LYHQWKHGLIÀFXOWLHV
HQWV KDV EHHQ D ORQJWHUP JRDO ,W LV WKHUHIRUH
LQ FRQWDLQLQJ WUDQVJHQHV LQFOXGLQJ WKRVH LQ ULFH
SDUWLFXODUO\ XQIRUWXQDWH WKDW WKH ODUJHVW JURXS
9HUPLMWKLVKXPDQLWDULDQOLFHQFHPD\WUDQVIHU
RI FRPPHUFLDOL]HG *0 SODQWV WKRVH WROHUDQW WR
OLDELOLW\IRUJHQHÁRZDQGSRWHQWLDOSDWHQWLQIULQJHPHQW
JO\SKRVDWH KHUELFLGHV DUH DOVR OHVV DEOH WR WDNH XS
WRWKHIDUPHUDQGWKHDGRSWLQJFRXQWU\+HLQHPDQQ
VRPHLPSRUWDQWPLFURQXWULHQWVIURPWKHVRLO%HOODORXL
 1RQ*0 YDULHWLHV DQG DJURHFRORJLFDO
HWDO%RWWHWDO,PSRUWDQWO\VSUD\GULIWDW
WHFKQRORJLHVDUHXVXDOO\SURWHFWHGE\OHVVUHVWULFWLYH
QRQOHWKDOFRQFHQWUDWLRQVKDVDVLPLODUHIIHFWRQQRQ
,3 LQVWUXPHQWV DQG DV SURFHVV LQQRYDWLRQV DUH QRW
*0FURSV%HOODORXLHWDO%HFDXVHJO\SKRVDWH
SURQH WR DFFLGHQWDO DQG XQDYRLGDEOH HVFDSH LQ WKH
FDQEHXVHGPXOWLSOHWLPHVGXULQJWKHJURZLQJVHDVRQ
ZD\WKDWVHHGVDQGSROOHQDUHWKLVOLDELOLW\ZRXOGQRW
RQ KHUELFLGH WROHUDQW *0 SODQWV QRQ*0 FURSV DUH EHLQFXUUHGWKURXJKWKHLUXVH
QRZURXWLQHO\H[SRVHGWRVSUD\GULIW
$WWHQWLRQKDVEHHQGUDZQWRWKHGHYHORSPHQWRI*0 (&RQFOXVLRQV
ULFHWKDWSURGXFHV‰FDURWHQHZKLFKFDQEHFRQYHUWHG
E\KXPDQVWRYLWDPLQ$+HLQHPDQQ6FKXEHUW 7HFKQRORJLFDO VROXWLRQV DUH UDUHO\ VXVWDLQDEOH LI WKH\
 +RZHYHU KLJK PLFURQXWULHQW YDULHWLHV DUH QRW GR QRW UHFWLI\ WKH FDXVH RI WKH SUREOHP 5HJDUGOHVV
XQLTXHWR*(IRULQVWDQFHPDL]HOLQHVWKDWSURGXFH RIWKHDELOLW\RILQGXVWULDODJULFXOWXUHWRSURGXFHIRRG
QHDUO\ IRXU WLPHV WKH DPRXQW RI ‰FDURWHQH  —J VXUSOXVHV LQ SUHYLRXV GHFDGHV 5LYHUD)HUUH 
Jï RI VHFRQG JHQHUDWLRQ *0 ULFH YDULHWLHV  —J IXWXUH WHFKQRORJLHV PXVW SURGXFH VXVWDLQDEOH VROXW
Jï KDYH EHHQ GHYHORSHG WKURXJK FRQYHQWLRQDO LRQVDQGEHXVHIXOWRWKRVHZKRDUHQRZPDOQRXULVKHG
EUHHGLQJ<DQHWDO7KLVLVPHQWLRQHGQRWWR
GLVSDUDJH WKH WHFKQLFDO DFKLHYHPHQW RI LQWURGXFLQJ
WKH ELRV\QWKHWLF SDWKZD\ IRU ‰FDURWHQH LQWR ULFH
EXW WR HPSKDVL]H WKH LPSRUWDQFH RI SURWHFWLQJ FURS
JHQHWLF GLYHUVLW\ DQG LWV RQJRLQJ SRWHQWLDO WR EH
$VVWDWHGE\8SKRII´7KHPRVWGLUHFWZD\
WRUHGXFHSRYHUW\LVWRUDLVHWKHSURGXFWLYLW\RIWKRVH
IDFWRUVRISURGXFWLRQFRQWUROOHGE\WKHSRRUÀUVWRIDOO
WKHLUODERUEXWDOVRWKHLUNQRZOHGJHDQGVNLOOVDQGIRU
PDQ\ WKRXJK QRW DOO VPDOO DUHDV RI ODQG ,QFUHDVHG
WDSSHGIRUXVHLQEDODQFHGGLHWV=DPLU
&RPELQHG VWXGLHV KDYH IRXQG WKDW EDODQFHG GLHWV
DUH PRUH DFFHVVLEOH WR SRRU DQG VXEVLVWHQFH
IDUPHUV XVLQJ DJURHFRORJLFDO UDWKHU WKDQ LQGXVWULDO
IDUPLQJ DSSURDFKHV 7KLV LV EHFDXVH RI WKH XVH RI
PXOWLFURSSLQJDQGWKHLQWHJUDWLRQRIOLYHVWRFNUHDULQJ
DQG WKH KLJKHU PLFURQXWULHQW FRQWHQW RI WKH SODQWV
WKH\ JURZ DQG EHFDXVH WKHVH IDUPHUV WHQG WR HDUQ
PRUH ZKLFK DOORZV WKHP WR SXUFKDVH RWKHU IRRGV
IDFWRU SURGXFWLYLW\ RI ODQG ODERU FDSLWDO DQG ZDWHU
FDQKDYHVHFRQGRUGHUEHQHÀWVIRUWKHSRRUXUEDQDV
ZHOODVUXUDOE\ORZHULQJWKHSULFHRIIRRGDQGRWKHU
WKLQJVRQZKLFKWKHSRRUVSHQGPRVWRIWKHLUPHDJHU
LQFRPHVµ 7KH H[SRUW RI WKH LQGXVWULDO PRGHO RI
DJULFXOWXUHDQGLWVDVVRFLDWHG*(EDVHGWHFKQRORJLHV
WKDW DUH HPEHGGHG LQ SDUWLFXODUO\ H[FOXVLRQDU\ ,3
LQVWUXPHQWVVXFKDVSDWHQWVWRIRRGSRRUFRXQWULHV
VKRZV OLWWOH SURPLVH RI DGGUHVVLQJ WKH QHHGV RI WKH
KXQJU\SRRU,$$67'3UD\DQG1DVHHP
6FLDODEEDD81(3DQG81&7$'
3URSRQHQWVRI‰FDURWHQHHQULFKHG*0ULFHDUJXHWKDW
VDIHW\UHJXODWLRQVKDYHEHHQWKHSULPDU\KLQGUDQFHWR
WKH WUDQVIHU RI WKLV SURGXFW WR SRRU DQG VXEVLVWHQFH
IDUPHUVLQVRFLHWLHVWKDWVXIIHUIURPVLJQLÀFDQWYLWDPLQ
:+2:RUOG%DQN
)RUWXQDWHO\RWKHUWHFKQRORJLHVVKRZSURPLVHERWK
IRULQFUHDVLQJ\LHOGLQ\LHOGOLPLWHGDJURHFRV\VWHPV
DQGIRUSURPRWLQJZKDWWKHSUHVHQWV\VWHPKDVQRW
EHHQDEOHWRDFKLHYHQDPHO\VXVWDLQDEOHVRFLHWLHV
$ GHÀFLHQF\ 'XERFN  +RZHYHU PDOQXWULWLRQ LQ SRRU FRXQWULHV 5LYHUD)HUUH  81(3 DQG
LVFDXVHGE\WKHODFNRIDEDODQFHGGLHWUDWKHUWKDQ
WKH ODFN RI DFFHVV WR *0 FURSV 0RUHRYHU WKHVH
FRPPHQWDWRUV QHJOHFW WR WDNH LQWR DFFRXQW WKH
HVWLPDWHGSDWHQWVDQGSDWHQWKROGHUVWKDWKDG
WRDJUHHWRWKHXVHRIWKHLULQWHOOHFWXDOSURSHUW\SULRU
WRUHOHDVHRIWKH*0ULFH*UDIIHWDO6SLHOPDQ
81&7$'7KLVLVREWDLQHGZKHQWHFKQRORJLHV
UHGXFHH[WHUQDOLQSXWVDQGRQIDUPFRVWVRIVHHGV
LQFRUSRUDWHPXOWLFURSSLQJDQGOLYHVWRFNIRUEDODQFHG
GLHWVSURPRWHRQJRLQJIDUPHULQQRYDWLRQXQGHUDQ
DSSURSULDWH,3ULJKWVIUDPHZRUNDQGDUHSURGXFHG
E\ D SXEOLF VHFWRU WKDW RIIHUV WKH DSSURSULDWH
 75$'($1'(19,5210(175(9,(:

LQFHQWLYHV +HLQHPDQQ  9DQORTXHUHQ DQG WR EH OHDUQW EHIRUH GHFLGLQJ RQ D WHFKQRORJLFDO
%DUHW
&OLPDWHFKDQJHKDVEHHQUDSLGEXWQRWXQSUHGLFWDEOH
LQGHHG LWV RFFXUUHQFH KDV RIWHQ EHHQ SUHGLFWHG
HYHQLIWKHPHVVDJHKDVEHHQUHVLVWHGIRUGHFDGHV
/LNHZLVH D IDPLOLDU PHVVDJH IRU GHFDGHV KDV EHHQ
WKDWDJULFXOWXUHLVPDNLQJXQVXVWDLQDEOHGHPDQGVRQ
HFRV\VWHP UHVRXUFHV ZRUOGZLGH DQG LV FRQWULEXWLQJ
WRFOLPDWHFKDQJH2QHRIWKHPRVWLPSRUWDQWOHVVRQV
SDWKZD\WRUHGXFHDJULFXOWXUH·VDSSHWLWHIRUUHVRXUFHV
DQGLWVIRRWSULQWRQWKHFOLPDWHLVWKDWHDUO\ZDUQLQJRI
GHOHWHULRXVEXWDYRLGDEOHRXWFRPHVQHHGWREHWDNHQ
VHULRXVO\UDWKHUWKDQLJQRUHGDVLQWKHSDVW,IZHDOORZ
WKHVDPHYRLFHVWREHGURZQHGRXWDJDLQZHZLOOIDLO
WRSURWHFWWKRVHZKRZLOOVXIIHUWKHPRVWIURPFOLPDWH
FKDQJH DQG LWV GDPDJLQJ HIIHFWV RQ DJULFXOWXUDO
SURGXFWLRQ
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

5HIHUHQFHV
$EHGL0DQG%DGUDJKHK$,PSRUWDQFHRILQGLJHQRXVNQRZOHGJHLQUXUDODUHDV/LIH6FLHQFH-RXUQDO²
$QGHUVRQ$6KLIWLQJFXOWLYDWLRQDQGGHIRUHVWDWLRQ([SHULHQFHVIURP(DVWHUQ1LJHULD:RUOG'HYHORSPHQW
²
$VDDK(.7FKRXQGMHX=/HDNH\55%7DNRXVWLQJ%1MRQJ-DQG(GDQJ,7UHHVDJURIRUHVWU\DQGPXOWLIXQFWLRQDO
DJULFXOWXUHLQ&DPHURRQ,QWHUQDWLRQDO-RXUQDORI$JULFXOWXUDO6XVWDLQDELOLW\²
%DGJOH\ & 0RJKWDGHU - 4XLQWHUR ( =DNHP ( &KDSSHOO 0- $YLOpV9i]TXH] . 6DPXORQ $ DQG 3HUIHFWR , 
2UJDQLFDJULFXOWXUHDQGWKHJOREDOIRRGVXSSO\5HQHZDEOH$JULFXOWXUHDQG)RRG6\VWHPV²
%DNU5&DVVDYDGU\LQJ,EDGDQ&DVVDYD,QIRUPDWLRQ&HQWUH
%DOODQW\QH3$FFHVVLQJVKDULQJDQGFRPPXQLFDWLQJDJULFXOWXUDOLQIRUPDWLRQIRUGHYHORSPHQW(PHUJLQJWUHQGV
DQGLVVXHV,QIRUPDWLRQ'HYHORSPHQW²
%HOODORXL15HGG\.1=DEORWRZLF]50$EEDV+.DQG$EHO&$(IIHFWVRIJO\SKRVDWHDSSOLFDWLRQRQVHHG
LURQDQGURRWIHUULF,,,UHGXFWDVHLQVR\EHDQFXOWLYDUV-RXUQDORI$JULFXOWXUDODQG)RRG&KHPLVWU\²
%RWRQL(DQG5HLM&6LOHQWWUDQVIRUPDWLRQRIHQYLURQPHQWDQGSURGXFWLRQV\VWHPVLQWKH6DKHO,PSDFWVRISXEOLF
DQGSULYDWHLQYHVWPHQWVLQQDWXUDOUHVRXUFHPDQDJHPHQW2XDJDGRXJRX&,/66DQG)UHH8QLYHUVLW\$PVWHUGDP
%RWW67HVIDPDULDP7&DQGDQ+&DNPDN,5|PKHOG9DQG1HXPDQQ**O\SKRVDWHLQGXFHGLPSDLUPHQW
RISODQWJURZWKDQGPLFURQXWULHQWVWDWXVLQJO\SKRVDWHUHVLVWDQWVR\EHDQ*O\FLQHPD[/3ODQWDQG6RLO
²
%URZQ-'.QRZOHGJHXQFHUWDLQW\DQGSK\VLFDOJHRJUDSK\7RZDUGVWKHGHYHORSPHQWRIPHWKRGRORJLHVIRU
TXHVWLRQLQJEHOLHI7UDQVDFWLRQVRIWKH,QVWLWXWHRI%ULWLVK*HRJUDSKHUV²
%XUHVK5-DQG&RRSHU3-07KHVFLHQFHDQGSUDFWLFHRIVKRUWWHUPIDOORZV$JURIRUHVWU\6\VWHPV²
&$5(5HYLHZRIIDUPHUSHUVSHFWLYHVDQGDVVHVVPHQWRIVPDOOKROGHUIRUHVWU\V\VWHPVLQUHODWLRQWRUHIRUHVWDWLRQ
LQ&HQWUDO$IULFD1HZ<RUN:RUOG)RRG3URJUDPPH
&DUSHQWHU 3%  (FRQRPLF DQG (FRORJLFDO $QDO\VLV RI (QYLURQPHQWDO ,PSDFWV LQ VXE6DKDUDQ $IULFD /RQGRQ
(DUWKVFDQ3XEOLFDWLRQV/WG
&$:0$  :DWHU IRU )RRG :DWHU IRU /LIH $ &RPSUHKHQVLYH $VVHVVPHQW RI :DWHU 0DQDJHPHQW LQ $JULFXOWXUH
0ROGHQ'HG/RQGRQ(DUWKVFDQ
&)6+/3(3ULFH9RODWLOLW\DQG)RRG6HFXULW\WDEOHVDQG$YDLODEOHDWKWWSZZZIDRRUJÀOHDGPLQXVHUB
XSORDGKOSHKOSHBGRFXPHQWV+/3(SULFHYRODWLOLW\DQGIRRGVHFXULW\UHSRUW-XO\SGI
&KULVWRSORV,0RELOL]LQJWKHSRWHQWLDORIUXUDODQGDJULFXWXUDOH[WHQVLRQ5RPHDQG/LQGDX)$2DQG*OREDO
)RUXPIRU5XUDO$GYLVRU\6HUYLFHV
&ORXJK<%DUNPDQQ--XKUEDQGW-.HVVOHU0:DQJHU7&$QVKDU\$%XFKRUL'&LFX]]D''DUUDV.3XWUDP''
(UDVPL63LWRSDQJ56FKPLGW&6FKXO]H&+6HLGHO'6WHIIDQ'HZHQWHU,6WHQFKO\.9LGDO6:HLVW0:LHOJRVV
$&DQG7VFKDUQWNH7&RPELQLQJKLJKELRGLYHUVLW\ZLWKKLJK\LHOGVLQWURSLFDODJURIRUHVWV3URFHHGLQJVRI
WKH1DWLRQDO$FDGHP\RI6FLHQFHV²
&RRSHU3-/HDNH\55%5DR05DQG5H\QROGV/$JURIRUHVWU\DQGWKHPLWLJDWLRQRIODQGGHJUDGDWLRQLQWKH
KXPLGDQGVXEKXPLGWURSLFVRI$IULFD([SHULPHQWDO$JULFXOWXUH²
&RRSHU 3-0 'LPHV - 5DR .3& 6KDSLUR % 6KLIHUDZ % DQG 7ZRPOR 6  &RSLQJ EHWWHU ZLWK FXUUHQW FOLPDWLF
YDULDELOLW\LQWKHUDLQIHGIDUPLQJV\VWHPVRIVXE6DKDUDQ$IULFD$QHVVHQWLDOÀUVWVWHSLQDGDSWLQJWRIXWXUHFOLPDWH
FKDQJH"$JULFXOWXUH(FRV\VWHPVDQG(QYLURQPHQW²
'DLO\ * 'DVJXSWD 3 %ROLQ % &URVVRQ 3 GX *XHUQ\ - (KUOLFK 3 )RONH & -DQVVRQ $0 -DQVVRQ %2 .DXWVN\ 1
.LQ]LJ$/HYLQ60lOHU.*3LQVWUXS$QGHUVHQ36LQLVFDOFR'DQG:DONHU%)RRGSURGXFWLRQSRSXODWLRQ
JURZWKDQGWKHHQYLURQPHQW6FLHQFH²
'DYLV.([WHQVLRQLQVXE6DKDUDQ$IULFD2YHUYLHZDQGDVVHVVPHQWRISDVWDQGFXUUHQWPRGHOVDQGIXWXUH
SURVSHFWV-RXUQDORI,QWHUQDWLRQDO$JULFXOWXUDODQG([WHQVLRQ(GXFDWLRQ²
'DYLV.1NRQ\D(.DWR(0HNRQQHQ'$2GHQGR00LLUR5DQG1NXED-,PSDFWRIIDUPHUÀHOGVFKRROVRQ
DJULFXOWXUDOSURGXFWLYLW\DQGSRYHUW\LQ(DVW$IULFD:RUOG'HYHORSPHQW
 75$'($1'(19,5210(175(9,(:

'HYDX[$+RUWRQ'9HODVFR&7KLHOH*/RSH]*%HUQHW75HLQRVR,DQG2UGLQROD0&ROOHFWLYHDFWLRQIRU

PDUNHWFKDLQLQQRYDWLRQLQWKH$QGHV)RRG3ROLF\²
'HYDX[$$QGUDGH3LHGUD-+RUWRQ'2UGLQROD07KLHOH*7KRPDQQ$DQG9HODVFR&%URNHULQJLQQRYDWLRQ
IRUVXVWDLQDEOHGHYHORSPHQW7KH3DSD$QGLQDFDVH,/$&:RUNLQJ3DSHU,QVWLWXWLRQDO/HDUQLQJDQG&KDQJH
,QLWLDWLYH5RPH
'LDPRQG-*XQV*HUPVDQG6WHHO7KH)DWHVRI+XPDQ6RFLHWLHV/RQGRQ::1RUWRQ &R
'LVDWVDJDH67UDGLWLRQDOIRRGVHFXULW\V\VWHPVLQ6RXWKHUQ$IULFDQUXUDOKRXVHKROGV0DÀNHQJ6RXWK$IULFD
,QGLJHQRXV.QRZOHGJH6\VWHPV3URJUDPPH1RUWK:HVW8QLYHUVLW\8QSXEOLVKHG
'XERFN$&URSFRQXQGUXP1XWULWLRQ5HYLHZV²
)ORUD&%5HFRQVWUXFWLQJDJULFXOWXUH7KHFDVHIRUORFDONQRZOHGJH5XUDO6RFLRORJ\²
)ULLV+DQVHQ(DQG'XYHVNRJ'7KHHPSRZHUPHQWURXWHWRZHOOEHLQJ$QDQDO\VLVRIIDUPHUÀHOGVFKRROVLQ
(DVW$IULFD:RUOG'HYHORSPHQW
*DLQHV 7$ =KDQJ : :DQJ ' %XNXQ % &KLVKROP 67 6KDQHU '/ 1LVVHQ 6- 3DW]ROGW :/ 7UDQHO 3- &XOSHSSHU
$6*UH\7/:HEVWHU709HQFLOO:.6DPPRQV5'-LDQJ-3UHVWRQ&/HDFK-(DQG:HVWUD3*HQH
DPSOLÀFDWLRQ FRQIHUV JO\SKRVDWH UHVLVWDQFH LQ $PDUDQWKXV SDOPHUL 3URFHHGLQJV RI WKH 1DWLRQDO $FDGHPLHV RI
6FLHQFH²
*)5$6*OREDO)RUXPIRU5XUDO$GYLVRU\6HUYLFHV*XLGHWRH[WHQVLRQHYDOXDWLRQ/LQGDX
*LOFKULVW*0DOORU\0DQG0HUNHO)&DQORFDOHFRORJLFDONQRZOHGJHFRQWULEXWHWRZLOGOLIHPDQDJHPHQW"&DVH
VWXGLHVRIPLJUDWRU\ELUGV(FRORJ\DQG6RFLHW\²
*ODHVHU%7KH*UHHQ5HYROXWLRQ5HYLVLWHG&ULWLTXHDQG$OWHUQDWLYHV/RQGRQ$OOHQ 8QZLQ
*UDII *' &XOOHQ 6( %UDGIRUG .- =LOEHUPDQ ' DQG %HQQHWW $%  7KH SXEOLF²SULYDWH VWUXFWXUH RI LQWHOOHFWXDO
SURSHUW\RZQHUVKLSLQDJULFXOWXUDOELRWHFKQRORJ\1DWXUH%LRWHFKQRORJ\²
*52RQOLQHSRVWLQJGDWH,QWHOOHFWXDOSURSHUW\UHODWHGLVVXHV$YDLODEOHDWKWWSZZZJROGHQULFHRUJ&RQWHQW+RZ
KRZB,3KWPO
*XVWDYVVRQ - &HGHUEHUJ & 6RQHVVRQ 8 YDQ 2WWHUGLMN 5 DQG 0H\EHFN $  *OREDO )RRG /RVVHV DQG )RRG
:DVWH([WHQW&DXVHVDQG3UHYHQWLRQ5RPH)$2
+DVVDQ56FKROHV5DQG$VK1HGV(FRV\VWHPVDQG+XPDQ:HOO%HLQJ9RO&XUUHQW6WDWHDQG7UHQGV
:DVKLQJWRQ'&,VODQG3UHVVIRU0LOOHQQLXP(FRV\VWHP$VVHVVPHQW
+HLQHPDQQ-$$W\SRORJ\RIWKHHIIHFWVRIWUDQVJHQHÁRZRQWKHFRQVHUYDWLRQDQGVXVWDLQDEOHXVHRIJHQHWLF
UHVRXUFHV%VSU5RPH)$2
+HLQHPDQQ-$'HVHUWJUDLQ7KH(FRORJLVW²
+HLQHPDQQ-$+RSHQRW+\SH7KHIXWXUHRIDJULFXOWXUHJXLGHGE\WKH,QWHUQDWLRQDO$VVHVVPHQWRI$JULFXOWXUDO
.QRZOHGJH6FLHQFHDQG7HFKQRORJ\IRU'HYHORSPHQW3HQDQJ7KLUG:RUOG1HWZRUN
+RIIPDQQ 8  $VVXULQJ )RRG 6HFXULW\ LQ 'HYHORSLQJ &RXQWULHV XQGHU WKH &KDOOHQJHV RI &OLPDWH &KDQJH .H\
7UDGHDQG'HYHORSPHQW,VVXHVRID)XQGDPHQWDO7UDQVIRUPDWLRQRI$JULFXOWXUH81&7$''LVFXVVLRQSDSHU
81&7$'26*'3*HQHYD$YDLODEOHDWKWWSZZZXQFWDGRUJHQ'RFVRVJGSBHQSGI
,$$67'  $JULFXOWXUH DW D &URVVURDGV ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG
7HFKQRORJ\IRU'HYHORSPHQW*OREDOUHSRUW:DVKLQJWRQ'&$YDLODEOHDWZZZDJDVVHVVPHQWRUJ
,)35,3UHVVUHOHDVHRQNH\QRWHOHFWXUHE\'U0DUN5RVHJUDQWWR$J(FRQRPLF)RUXP6W/RXLV020D\
,3&&  &OLPDWH &KDQJH  7KH 3K\VLFDO 6FLHQFH %DVLV &RQWULEXWLRQ RI :RUNLQJ *URXS , WR WKH )RXUWK
$VVHVVPHQW5HSRUWRIWKH,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
-DPHV&([HFXWLYHVXPPDU\RIWKHJOREDOVWDWXVRIFRPPHUFLDOL]HGELRWHFK*0FURSV,6$$$%ULHI1R
0DQLOD1DLURELDQG1HZ<RUN,QWHUQDWLRQDO6HUYLFHIRUWKH$FTXLVLWLRQRI$JULELRWHFK$SSOLFDWLRQV$YDLODEOHDW
KWWSZZZLVDDDRUJ
-DPQDGDVV5'DZVRQ,.$QHJEHK3$VDDK($WDQJDQD$&RUGHLUR1-+HQGULFN[++HQQHK6.DGX&$&.DWWDK
&0LVEDK00XFKXJL$0XQMXJD00ZDXUD/1GDQJDODVL+-6LULWR1MDX&1\DPH6.2IRUL'3HSUDK7
5XVVHOO-5XWDWLQD)6DZH&6FKPLGW/7FKRXQGMHX=DQG6LPRQV$-$OODQEODFNLDDQHZWUHHFURSLQ
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

$IULFD IRU WKH JOREDO IRRG LQGXVWU\ 0DUNHW GHYHORSPHQW VPDOOKROGHU FXOWLYDWLRQ DQG ELRGLYHUVLW\ PDQDJHPHQW
)RUHVWV7UHHVDQG/LYHOLKRRGV²
.DZHVD%7KH6WDWXVRI3RVWKDUYHVW7HFKQRORJLHVLQ$IULFD'DUHV6DODDP,'68QLYHUVLW\RI'DUHV6DODDP
8QSXEOLVKHG
.D]LQJD$2$IULFDQIDUPHUV·NQRZOHGJHDQGUHODWLRQWRVFLHQFH,Q/RUL$HG)DUPHU)LUVW)DUPHU,QQRYDWLRQ
DQG$JULFXOWXUDO5HVHDUFK1HZ<RUN,733XEOLFDWLRQV²
.KDQ6DQG+DQMUD0$)RRWSULQWVRIZDWHUDQGHQHUJ\LQSXWVLQIRRGSURGXFWLRQ*OREDOSHUVSHFWLYHV)RRG
3ROLF\²
.KDQ =5 +DVVDQDOL $ 2YHUKROW : .KDPLV 70 +RRSHU $0 3LFNHWW -$ :DGKDPV /- DQG :RRGFRFN &0 
&RQWURORIZLWFKZHHG6WULJDKHUPRQWKLFDE\LQWHUFURSSLQJZLWK'HVPRGLXPVSSDQGWKHPHFKDQLVPGHÀQHGDV
DOOHORSDWKLF-RXUQDORI&KHPLFDO(FRORJ\²
.KDQ=50LGHJD&$2+DVVDQDOL$3LFNHWW-$:DGKDPV/-DQG:DQMR\D$0DQDJHPHQWRIZLWFKZHHG6WULJD
KHUPRQWKLFD DQG VWHPERUHUV LQ VRUJKXP 6RUJKXP ELFRORU WKURXJK LQWHUFURSSLQJ ZLWK JUHHQOHDI GHVPRGLXP
'HVPRGLXPLQWRUWXP,QWHUQDWLRQDO-RXUQDORI3HVW0DQDJHPHQW²
.LHUV (7 /HDNH\ 55% ,]DF $0 +HLQHPDQQ -$ 5RVHQWKDO ( 1DWKDQ ' DQG -LJJLQV -  $JULFXOWXUH DW D
FURVVURDGV6FLHQFH²
.LSODQJ·DW-1DQG5RWLFK'&0DSSLQJDQGDXGLWLQJRIDJULFXOWXUDOLQGLJHQRXVNQRZOHGJHLQ8DVLQ*LVKXDQG
.HL\R'LVWULFWVLQ5LIW9DOOH\3URYLQFH.HQ\D3DSHUSUHVHQWHGDWWKH:RUOG&RQIHUHQFHRQ$JULFXOWXUDO,QIRUPDWLRQ
7RN\R8QLYHUVLW\RI$JULFXOWXUH7RN\R²$XJXVW
.LWKXND-0XWHPL-DQG0RKDPHG$+.HHSLQJXSZLWKWHFKQRORJ\7KHXVHRIPRELOHWHOHSKRQ\LQGHOLYHULQJ
FRPPXQLW\EDVHGGHFHQWUDOLVHGDQLPDOKHDOWKVHUYLFHVLQ0ZLQJLDQG.LWXLGLVWULFWV.HQ\D)$50$IULFD:RUNLQJ
3DSHU/RQGRQ)$50$IULFD
.OHUN[ / +DOO $ DQG /HHXZLV &  6WUHQJWKHQLQJ DJULFXOWXUDO LQQRYDWLRQ FDSDFLW\ $UH LQQRYDWLRQ EURNHUV WKH
DQVZHU",QWHUQDWLRQDO-RXUQDORI$JULFXOWXUDO5HVRXUFHV*RYHUQDQFHDQG(FRORJ\²
.UHPHU5-0HDQV1(DQG.LP6*O\SKRVDWHDIIHFWVVR\EHDQURRWH[XGDWLRQDQGUKL]RVSKHUHPLFURRUJDQLVPV
,QWHUQDWLRQDO-RXUQDORI(QYLURQPHQWDO$QDO\WLFDO&KHPLVWU\²
/DJL0%DU<DP<%HUWUDQG.=DQG%DU<DP<7KHIRRGFULVLV$TXDQWLWDWLYHPRGHORIIRRGSULFHVLQFOXGLQJ
VSHFXODWRUVDQGHWKDQROFRQYHUVLRQ&DPEULGJH0$1HZ(QJODQG&RPSOH[6\VWHPV,QVWLWXWH$YDLODEOHDWKWWS
QHFVLHGXUHVHDUFKVRFLDOIRRGBSULFHVSGI6HSWHPEHU
/HDNH\55%3K\VLRORJ\RIYHJHWDWLYHUHSURGXFWLRQ,Q%XUOH\-(YDQV-DQG<RXQJTXLVW-$HGV(QF\FORSDHGLD
RI)RUHVW6FLHQFHV/RQGRQ$FDGHPLF3UHVV²
/HDNH\55%$JURIRUHVWU\DGHOLYHU\PHFKDQLVPIRUPXOWLIXQFWLRQDODJULFXOWXUH,Q.HOOLPRUH/5HG+DQGERRN
RQ $JURIRUHVWU\ 0DQDJHPHQW 3UDFWLFHV DQG (QYLURQPHQWDO ,PSDFW (QYLURQPHQWDO 6FLHQFH (QJLQHHULQJ DQG
7HFKQRORJ\6HULHV8+DXSSDXJH1<1RYD6FLHQFH3XEOLVKHUV²
/HDNH\55%3DUWLFLSDWRU\GRPHVWLFDWLRQRILQGLJHQRXVIUXLWDQGQXWWUHHV1HZFURSVIRUVXVWDLQDEOHDJULFXOWXUH
LQ GHYHORSLQJ FRXQWULHV ,Q %LRGLYHUVLW\ LQ $JULFXOWXUH 'RPHVWLFDWLRQ (YROXWLRQ DQG 6XVWDLQDELOLW\ &DPEULGJH
&DPEULGJH8QLYHUVLW\3UHVV
/HDNH\55%DQG$NLQQLIHVL).7RZDUGVDGRPHVWLFDWLRQVWUDWHJ\IRULQGLJHQRXVIUXLWWUHHVLQWKHWURSLFV,Q
$NLQQLIHVL)./HDNH\55%$MD\L2&6LOHVKL*7FKRXQGMHX=0DWDNDOD3DQG.ZHVLJD)HGV,QGLJHQRXV)UXLW
7UHHVLQWKH7URSLFV'RPHVWLFDWLRQ8WLOL]DWLRQDQG&RPPHUFLDOL]DWLRQ:DOOLQJIRUG&$%,QWHUQDWLRQDO²
/HDNH\55%DQG$VDDK(.IRUWKFRPLQJ8QGHUXWLOLVHGVSHFLHVDVWKHEDFNERQHRIPXOWLIXQFWLRQDODJULFXOWXUH²7KH
QH[WZDYHRIFURSGRPHVWLFDWLRQ$FWD+RUWLFXOWXUDH
/HDNH\55%DQG7FKRXQGMHX='LYHUVLÀFDWLRQRIWUHHFURSV'RPHVWLFDWLRQRIFRPSDQLRQFURSVIRUSRYHUW\
UHGXFWLRQDQGHQYLURQPHQWDOVHUYLFHV([SHULPHQWDO$JULFXOWXUH²
/HDNH\ 55% &RUQHOLXV -3 3DJH 7 7FKRXQGMHX = :HEHU -& DQG -DPQDGDVV 5  7UHH GRPHVWLFDWLRQ LQ
DJURIRUHVWU\ 3URJUHVV LQ WKH VHFRQG GHFDGH ,Q 1DLU 3. DQG *DUULW\ ' HGV $JURIRUHVWU\ ² 7KH :D\ )RUZDUG
'RUGUHFKW1HWKHUODQGV6SULQJHU
/HDNH\55%6FKUHFNHQEHUJ.DQG7FKRXQGMHX=7KHSDUWLFLSDWRU\GRPHVWLFDWLRQRI:HVW$IULFDQLQGLJHQRXV
IUXLWV,QWHUQDWLRQDO)RUHVWU\5HYLHZ²
 75$'($1'(19,5210(175(9,(:

/HDNH\ 55% 7FKRXQGMHX = 6FKUHFNHQEHUJ . 6KDFNOHWRQ 6 DQG 6KDFNOHWRQ &  $JURIRUHVWU\ WUHH SURGXFWV
$)73V7DUJHWLQJSRYHUW\UHGXFWLRQDQGHQKDQFHGOLYHOLKRRGV,QWHUQDWLRQDO-RXUQDORI$JULFXOWXUDO6XVWDLQDELOLW\
²
/RPEDUG&DQG/HDNH\55%3URWHFWLQJWKHULJKWVRIIDUPHUVDQGFRPPXQLWLHVZKLOHVHFXULQJORQJWHUPPDUNHW
DFFHVVIRUSURGXFHUVRIQRQWLPEHUIRUHVWSURGXFWV([SHULHQFHLQ6RXWKHUQ$IULFD)RUHVWV7UHHVDQG/LYHOLKRRGV
²
/RWWHU':6HLGHO5DQG/LHEKDUGW:7KHSHUIRUPDQFHRIRUJDQLFDQGFRQYHQWLRQDOFURSSLQJV\VWHPVLQDQ
H[WUHPHFOLPDWH\HDU$PHULFDQ-RXUQDORI$OWHUQDWLYH$JULFXOWXUH²
/X < :X . -LDQJ < ;LD % /L 3 )HQJ + :\FNKX\V.$* DQG *XR <  0LULG EXJ RXWEUHDNV LQ PXOWLSOH FURSV
FRUUHODWHGZLWKZLGHVFDOHDGRSWLRQRI%WFRWWRQLQ&KLQD6FLHQFH²
/XVHQR:.0F3HDN-*%DUUHWW&%/LWWOH3'DQG*HEUX*$VVHVVLQJWKHYDOXHRIFOLPDWHIRUHFDVWLQIRUPDWLRQ
IRUSDVWRUDOLVWV(YLGHQFHIURPVRXWKHUQ(WKLRSLDDQGQRUWKHUQ.HQ\D:RUOG'HYHORSPHQW²
0DQFLQL ) 7HUPRUVKXL]HQ $- -LJJLQV -/6 DQG YDQ %UXJJHQ $+&  ,QFUHDVLQJ WKH HQYLURQPHQWDO DQG VRFLDO
VXVWDLQDELOLW\RIFRWWRQIDUPLQJWKURXJKIDUPHUHGXFDWLRQLQ$QGKUD3UDGHVK,QGLD$JULFXOWXUDO6\VWHPV²
0DUFKDO-</DGpURXWHG·XQV\VWqPHYLYULHUDX%XUNLQDDJULFXOWXUHH[WHQVLYHHWEDLVVHGHSURGXFWLRQ(WXGHV
5XUDOHV²
0DWLNH (  ,QGLJHQRXV FDVVDYD SRVWKDUYHVW WHFKQRORJLHV LQ HDVWHUQ =DPELD 0$ GLVVHUWDWLRQ XQSXEOLVKHG
'HSDUWPHQWRI6RFLRORJ\1RUWK:HVW8QLYHUVLW\0DÀNHQJ6RXWK$IULFD
0($(FRV\VWHPVDQGKXPDQZHOOEHLQJ6\QWKHVLV,Q0LOOHQQLXP(FRV\VWHP$VVHVVPHQW:DVKLQJWRQ'&
,VODQG3UHVV
0JDQJD.=1\DQJLWR000XVLPED1.51\DULNL'00ZDQJRPEH$:(ND\D:10XLUX:0&ODYHO')UDQFLV-
.DXIPDQQ5DQG9HUKDJHQ-7KHFKDOOHQJHVRIUHKDELOLWDWLQJGHQXGHGSDWFKHVRIDVHPLDULGHQYLURQPHQW
LQ.HQ\D$IULFDQ-RXUQDORI(QYLURQPHQWDO6FLHQFHDQG7HFKQRORJ\²
0LFKRQ*DQGGH)RUHVWD+$JURIRUHVWV,QFRUSRUDWLQJDIRUHVWYLVLRQLQDJURIRUHVWU\,Q%XFN/(/DVVRLH
-3DQG)HUQDQGH](&0HGV$JURIRUHVWU\LQ6XVWDLQDEOH$JULFXOWXUDO6\VWHPV1HZ<RUN&5&3UHVVDQG/HZLV
3XEOLVKHUV²
0RQVDQWR3HWLWLRQIRUWKHGHWHUPLQDWLRQRIQRQUHJXODWHGVWDWXVIRU021&58
1DWXUH(GLWRULDO+RZWRIHHGDKXQJU\ZRUOG1DWXUH²
1HOOHPDQQ&0DF'HYHWWH00DQGHUV7(LFNKRXW%6YLKXV%3ULQV$*DQG.DOWHQERUQ%37KH(QYLURQPHQWDO
)RRG &ULVLV 7KH (QYLURQPPHQW·V 5ROH LQ $YHUWLQJ )XWXUH )RRG &ULVHV 1DLUREL 8QLWHG 1DWLRQV (QYLURQPHQW
3URJUDPPH
1RUG0)RRGLQVHFXULW\OHVVSUHYDOHQWLQ&DQDGDWKDQLQWKH8QLWHG6WDWHV$PEHU:DYHV:DVKLQJWRQ'&
8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH
1\RQJ$$GHVLQD)DQG2VPDQ(ODVKD%7KHYDOXHRILQGLJHQRXVNQRZOHGJHLQFOLPDWHFKDQJHPLWLJDWLRQDQG
DGDSWDWLRQVWUDWHJLHVLQWKH$IULFDQ6DKHO0LWLJDWLRQDQG$GDSWDWLRQ6WUDWHJLHVWR*OREDO&KDQJH²
2JDOOR/7KHPDUULDJHRIVFLHQFHDQGUDLQPDNHUVDPRQJWKH/XK\D.HQ\D$JULFXOWXUHDQG(QYLURQPHQW
)RRG 6HFXULW\ $YDLODEOH DW ZZZVFLGHYQHWHQDJULFXOWXUHDQGHQYLURQPHQWWURSLFDOF\FORQHVIHDWXUHVWKH
PDUULDJHRIVFLHQFHDQGUDLQPDNHUVKWPO
2UORYH%5RQFROL&.DEXJR0DQG0DMXJX$,QGLJHQRXVFOLPDWHNQRZOHGJHLQVRXWKHUQ8JDQGD7KHPXOWLSOH
FRPSRQHQWVRIDG\QDPLFUHJLRQDOV\VWHP&OLPDWH&KDQJH²
2WWH-DQG&KLORQGD3&ODVVLÀFDWLRQRIFDWWOHDQGVPDOOUXPLQDQWSURGXFWLRQV\VWHPVLQVXE6DKDUDQ$IULFD
2XWORRNRQ$JULFXOWXUH²
3DQLN)7KHXVHRIELRGLYHUVLW\DQGLPSOLFDWLRQVIRULQGXVWULDOSURGXFWLRQ,Q/HLKQHU'(DQG0LWVFKHLQ7$HGV
$7KLUG0LOOHQQLXPIRU+XPDQLW\"7KH6HDUFKIRU3DWKVRI6XVWDLQDEOH'HYHORSPHQW)UDQNIXUW3HWHU/DQJ²
3HDFRFN & DQG 6KHUPDQ '0  6XVWDLQDEOH JRDW SURGXFWLRQ 6RPH JOREDO SHUVSHFWLYHV 6PDOO 5XPLQDQW
5HVHDUFK²
3HQJXH:$7UDQVJHQLFFURSVLQ$UJHQWLQDWKHHFRORJLFDODQGVRFLDOGHEW%XOOHWLQRI6FLHQFH7HFKQRORJ\ 
6RFLHW\²
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

3KHSKH 6  7KH LQGLJHQRXV JRDW EUHHGV RI 6RXWKHUQ $IULFD 0DÀNHQJ 6RXWK $IULFD 1RUWK:HVW 8QLYHUVLW\
8QSXEOLVKHG
3LPHQWHO'+HSSHUO\3+DQVRQ-'RXGV'DQG6HLGHO5(QYLURQPHQWDOHQHUJHWLFDQGHFRQRPLFFRPSDULVRQV
RIRUJDQLFDQGFRQYHQWLRQDOIDUPLQJV\VWHPV%LR6FLHQFH²
3LWVR6)8VHRILQGLJHQRXVNQRZOHGJHLQQDWXUDOGLVDVWHUPDQDJHPHQWDPRQJWKH%DWVZDQD0$GLVVHUWDWLRQ
XQSXEOLVKHG'HSDUWPHQWRI6RFLRORJ\1RUWK:HVW8QLYHUVLW\0DÀNHQJ6RXWK$IULFD
3RZOHV 6%  (YROYHG JO\SKRVDWHUHVLVWDQW ZHHGV DURXQG WKH ZRUOG /HVVRQV WR EH OHDUQW 3HVW 0DQDJHPHQW
6FLHQFH²
3UD\&(DQG1DVHHP$6XSSO\LQJFURSELRWHFKQRORJ\WRWKHSRRU2SSRUWXQLWLHVDQGFRQVWUDLQWV-RXUQDORI
'HYHORSPHQW6WXGLHV²
3UHWW\ -  7KH UDSLG HPHUJHQFH RI JHQHWLF PRGLÀFDWLRQ LQ ZRUOG DJULFXOWXUH &RQWHVWHG ULVNV DQG EHQHÀWV
(QYLURQPHQWDO&RQVHUYDWLRQ²
5D\QDXW&/·DJULFXOWXUHQLJpULHQQHHWODFULVHDX6DKHO3ROLWLTXHDIULFDLQH²
5HLM&7DSSDQ*DQG%HOHPYLUp$&KDQJLQJODQGPDQDJHPHQWSUDFWLFHVDQGYHJHWDWLRQLQWKH&HQWUDO3ODWHDX
RI%XUNLQD)DVR²-RXUQDORI$ULG(QYLURQPHQWV²
5HLM&7DSSDQ*DQG6PDOH0$JULFXOWXUDOWUDQVIRUPDWLRQLQWKH6DKHO$QRWKHUNLQGRI´*UHHQ5HYROXWLRQµ
,)35,'LVFXVVLRQ3DSHUQR$YDLODEOHDWZZZLISULRUJPLOOLRQVIHG
5LYHUD:DQG6XODLPDQ59([WHQVLRQ2EMHFWRIUHIRUPHQJLQHIRULQQRYDWLRQ2XWORRNRQ$JULFXOWXUH
²
5LYHUD)HUUH0*7KHIXWXUHRIDJULFXOWXUH(0%25HSRUWV²
5LYHUD)HUUH0*5HVSRQVH(0%25HSRUWV²
5RQFROL & .LUVKHQ 3 ,QJUDP . DQG )OLWFURIW ,  2SSRUWXQLWLHV DQG FRQVWUDLQWV WR XVLQJ VHDVRQDO SUHFLSLWDWLRQ
IRUHFDVWLQJWRLPSURYHDJULFXOWXUDOSURGXFWLRQV\VWHPVDQGOLYHOLKRRGVHFXULW\LQWKH6DKHO6XGDQ5HJLRQ$FDVH
VWXG\RI%XUNLQD)DVR&)$5³3KDVH,5,)RUXPRQ&OLPDWH3UHGLFWLRQV$JULFXOWXUHDQG'HYHORSPHQW²
$SULO1HZ<RUN
5R\DO6RFLHW\5HDSLQJWKH%HQHÀWV6FLHQFHDQGWKH6XVWDLQDEOH,QWHQVLÀFDWLRQRI*OREDO$JULFXOWXUH/RQGRQ
5XQGJUHQ *  *DUGHQ (DUWK )URP KXQWHU DQG JDWKHUHU WR FDSLWDOLVP ² DQG WKHUHDIWHU IRUWKFRPLQJ ERRN
WUDQVODWLRQIURPRULJLQDOYHUVLRQSXEOLVKHGE\*LGOXQGVLQ6ZHGLVK$SULO
6DPXHO37KHHIÀFDF\RIURWDWLRQDOIDUPLQJLQ&HQWUDO$IULFD&DVHVIURPWKH&RQJRDQG&DPHURRQ.LQVKDVD
8QLYHUVLW\RI.LQVKDVD8QSXEOLVKHG
6FKURWK*GD)RQVHFD*$%+DUYH\&$*DVFRQ&9DVFRQHORV+/DQG,]DF$01HGV$JURIRUHVWU\DQG
%LRGLYHUVLW\&RQVHUYDWLRQLQ7URSLFDO/DQGVFDSHV:DVKLQJWRQ'&,VODQG3UHVV
6FKXEHUW'7KHSUREOHPZLWKQXWULWLRQDOO\HQKDQFHGSODQWV-RXUQDORI0HGLFLQDO)RRG
6FLDODEED1(+D2UJDQLF$JULFXOWXUHDQG)RRG6HFXULW\5RPH)$2
6FLDODEED1(+E2UJDQLFDJULFXOWXUHDQGIRRGVHFXULW\LQ$IULFD,Q1 UVWDG$HG$IULFD&DQ)HHG,WVHOI
2VOR$L7$6HGLW²
6HID3,QGLJHQRXV.QRZOHGJHLQ*OREDO&RQWH[WV7RURQWR8QLYHUVLW\RI7RURQWR3UHVV
6HUYLFH5)$JURZLQJWKUHDWGRZQRQWKHIDUP6FLHQFH²
6SHUDQ]D &, .LWHPH % $PEHQMH 3 :LHVPDQQ 8 DQG 0DNDOL 6  ,QGLJHQRXV NQRZOHGJH UHODWHG WR FOLPDWH
YDULDELOLW\ DQG FKDQJH ,QVLJKWV IURP GURXJKWV LQ VHPLDULG DUHDV RI IRUPHU 0DNXHQL 'LVWULFW .HQ\D &OLPDWH
&KDQJH²
6SLHOPDQ'-3URSRRUDJULFXOWXUDOELRWHFKQRORJ\&DQWKHLQWHUQDWLRQDOUHVHDUFKV\VWHPGHOLYHUWKHJRRGV"
)RRG3ROLF\²
6WHUQ 1  7KH (FRQRPLFV RI &OLPDWH &KDQJH ² 7KH 6WHUQ 5HYLHZ &DPEULGJH &DPEULGJH 8QLYHUVLW\ 3UHVV
$YDLODEOH DW KWWSZHEDUFKLYHQDWLRQDODUFKLYHVJRYXN DQG KWWSZZZKPWUHDVXU\JRYXNVWHUQUHYLHZBLQGH[
KWP
 75$'($1'(19,5210(175(9,(:

7FKRXQGMHX=$VDDK($QHJEHK32'HJUDQGH$0ELOH3)DFKHX[&7VREHQJ$$WDQJDQD$5DQG1JR0SHFN0/
3XWWLQJSDUWLFLSDWRU\GRPHVWLFDWLRQLQWRSUDFWLFHLQ:HVWDQG&HQWUDO$IULFD)RUHVWV7UHHVDQG/LYHOLKRRGV
²
7FKRXQGMHX='HJUDQGH$/HDNH\55%6LPRQV$-1LPLQR*.HPDMRX($VDDK()DFKHX[&0ELOH30ERVVR&
6DGR7DQG7VREHQJ$,PSDFWRISDUWLFLSDWRU\WUHHGRPHVWLFDWLRQRQIDUPHUOLYHOLKRRGVLQ:HVWDQG&HQWUDO
$IULFD)RUHVWV7UHHVDQG/LYHOLKRRGV²
7KLHOH*'HYDX[$5HLQRVR,3LFR)0RQWHVGHRFD)3XPLVDFR09HODVFR&)ORUHV3(VSUHOOD57KRPDQQ$DQG
0DQULTXH.0XOWLVWDNHKROGHUSODWIRUPVIRULQQRYDWLRQDQGFRRUGLQDWLRQPDUNHWFKDLQV4XLWR,QWHUQDWLRQDO
3RWDWR&HQWUH8QSXEOLVKHGZRUNLQJSDSHU
7KRPDV '6* 7Z\PDQ & 2VEDKU + DQG +HZLWVRQ %  $GDSWDWLRQ WR FOLPDWH FKDQJH DQG YDULDELOLW\ )DUPHU
UHVSRQVHVWRLQWUDVHDVRQDOSUHFLSLWDWLRQWUHQGVLQ6RXWK$IULFD&OLPDWLF&KDQJH²
7LOPDQ'&DVVPDQ.*0DWVRQ3$1D\ORU5DQG3RODVN\6$JULFXOWXUDOVXVWDLQDELOLW\DQGLQWHQVLYHSURGXFWLRQ
SUDFWLFHV1DWXUH²
7RXJLDQL $ *XHUR & DQG 5LQDXGR 7  &RPPXQLW\ PRELOLVDWLRQ IRU LPSURYHG OLYHOLKRRGV WKURXJK WUHH FURS
PDQDJHPHQWLQ1LJHU*HR-RXUQDO9ROXPH1XPEHU$YDLODEOHDWZZZVSULQJHUOLQNFRPFRQWHQW
\SYT
81'(6$:RUOG(FRQRPLFDQG6RFLDO6XUYH\7KH*UHDW*UHHQ7HFKQRORJLFDO7UDQIRUPDWLRQ(
5HY67(6$8QLWHG1DWLRQV1HZ<RUN$YDLODEOHDWKWWSZZZXQRUJHQGHYHORSPHQWGHVDSROLF\ZHVV
ZHVVBFXUUHQWZHVVSGI
81'3&RQVHUYLQJ,QGLJHQRXV.QRZOHGJH,QWHJUDWLQJ1HZ6\VWHPVRI,QWHJUDWLRQ1HZ<RUN
81(3*OREDO(QYLURQPHQWDO2XWORRN3DVW3UHVHQWDQG)XWXUH3HUVSHFWLYHV1DLUREL
81(3$JULFXOWXUH,Q81(37RZDUGVD*UHHQ(FRQRP\3DWKZD\VWR6XVWDLQDEOH'HYHORSPHQWDQG3RYHUW\
(UDGLFDWLRQ  $ 6\QWKHVLV IRU 3ROLF\ 0DNHUV $YDLODEOH DW KWWSZZZXQHSRUJJUHHQHFRQRP\3RUWDOV
GRFXPHQWVJHU*(5BB$JULFXOWXUHSGI
81(3 DQG 81&7$'  2UJDQLF $JULFXOWXUH DQG )RRG 6HFXULW\ LQ $IULFD 81&7$'',7&7(' 81(3
81&7$'&DSDFLW\EXLOGLQJ7DVN)RUFHRQ7UDGH(QYLURQPHQWDQG'HYHORSPHQW*HQHYD
8SKRII 1  $JURHFRORJLFDO DOWHUQDWLYHV &DSLWDOLVLQJ RQ H[LVWLQJ JHQHWLF SRWHQWLDOV -RXUQDO RI 'HYHORSPHQW
6WXGLHV²
YDQ0HOH30XOWLSOHDSSURDFKHVWRHQKDQFHFRPPXQLFDWLRQEHWZHHQULFHIDUPHUVUXUDOVHUYLFHSURYLGHUVDQG
VFLHQWLVWV2XWORRNVRQ3HVW0DQDJHPHQW
YDQ0HOH3:DQYRHNH-DQG=RVVRX((QKDQFLQJUXUDOOHDUQLQJOLQNDJHVDQGLQVWLWXWLRQV7KHULFHYLGHRVLQ
$IULFD'HYHORSPHQWLQ3UDFWLFH²
9DQGHUPHHU - DQG 3HUIHFWR ,  7KH DJULFXOWXUDO PDWUL[ DQG D IXWXUH SDUDGLJP IRU FRQVHUYDWLRQ &RQVHUYDWLRQ
%LRORJ\²
9DQORTXHUHQ*DQG%DUHW39+RZDJULFXOWXUDOUHVHDUFKV\VWHPVVKDSHDWHFKQRORJLFDOUHJLPHWKDWGHYHORSV
JHQHWLFHQJLQHHULQJEXWORFNVRXWDJURHFRORJLFDOLQQRYDWLRQV5HVHDUFK3ROLF\²
9HUPLM3/LEHUW\/LQNULFHUDLVHVVSHFWHURIWLJKWHQHGUHJXODWLRQV1DWXUH%LRWHFKQRORJ\²
:DWHUV%D\HU$DQG*HEUH0LFKDHO<7UHHVDUHRXUEDFNERQH,QWHJUDWLQJHQYLURQPHQWDQGORFDOGHYHORSPHQW
LQ 7LJUD\ 5HJLRQ RI (WKLRSLD ,,(' ,VVXHV 3DSHU QR  /RQGRQ ,QWHUQDWLRQDO ,QVWLWXWH IRU (QYLURQPHQW DQG
'HYHORSPHQW
:HUQHU3,QGLJHQRXVNQRZOHGJHIRUGHYHORSPHQW$IUDPHZRUNIRUDFWLRQ0DVHUX&HQWUHIRU5HVRXUFHDQG
(QYLURQPHQWDO6WXGLHV1DWLRQDO8QLYHUVLW\RI/HVRWKR
:+2$FKLHYLQJKRXVHKROGIRRGDQGQXWULWLRQVHFXULW\LQVRFLHWLHVLQWUDQVLWLRQ*HQHYD
:+20RGHUQIRRGELRWHFKQRORJ\KXPDQKHDOWKDQGGHYHORSPHQW$QHYLGHQFHEDVHGVWXG\*HQHYD
:RUOG %DQN  (QKDQFLQJ DJULFXOWXUDO LQQRYDWLRQ +RZ WR JR EH\RQG WKH VWUHQJKWKHQLQJ RI UHVHDUFK V\VWHPV
:DVKLQJWRQ'&
:RUOG%DQN:RUOG'HYHORSPHQW5HSRUW$JULFXOWXUHIRU'HYHORSPHQW:DVKLQJWRQ'&
7KH5ROHRI5HVHDUFKDQG7HFKQRORJ\DQG([WHQVLRQ6HUYLFHV 

<DQ - .DQGLDQLV &% +DUMHV &( %DL / .LP (+ <DQJ ;0 6NLQQHU '- )X = 0LWFKHOO 6 /L 4 )HUQDQGH] 0*6
=DKDULHYD0%DEX5)X<3DODFLRV1/L-'HOOD3HQQD'%UXWQHOO7%XFNOHU(6:DUEXUWRQ0/DQG5RFKHIRUG7
5DUHJHQHWLFYDULDWLRQDW=HDPD\VFUW5%LQFUHDVHV>EHWD@FDURWHQHLQPDL]HJUDLQ1DWXUH*HQHWLFV
²
<RUREH-U-05HMHVXV50DQG+DPPLJ0',QVHFWLFLGHXVHLPSDFWVRILQWHJUDWHGSHVWPDQDJHPHQW,30
IDUPHUÀHOGVFKRROV(YLGHQFHIURPRQLRQIDUPHUVLQWKH3KLOLSSLQHV$JULFXOWXUDO6\VWHPV²
=DPLU'3ODQWEUHHGHUVJREDFNWRQDWXUH1DWXUH*HQHWLFV²
=DUE-6PDOOKROGLQJXS6XVWDLQDEOHIDUPLQJLQGXVWU\RYHUYLHZ(FRORJLVW
=KDR -+ +R 3 DQG $]DGL +  %HQHÀWV RI %W FRWWRQ FRXQWHUEDODQFHG E\ VHFRQGDU\ SHVWV" 3HUFHSWLRQV RI
HFRORJLFDOFKDQJHLQ&KLQD(QYLURQPHQWDOPRQLWRULQJDQGDVVHVVPHQW²
=LHUYRJHO*DQG'RZQLQJ7(6WDNHKROGHUQHWZRUNV,PSURYLQJVHDVRQDOFOLPDWHIRUHFDVWV&OLPDWH&KDQJH
²
=RELROH/+62OLYHLUD56-U.UHPHU5-&RQVWDQWLQ-<DPDGD7&DVWUR&2OLYHLUD)$DQG2OLYHLUD$-U(IIHFW
RIJO\SKRVDWHRQV\PELRWLF1À[DWLRQ)$DQGQLFNHOFRQFHQWUDWLRQLQJO\SKRVDWHUHVLVWDQWVR\EHDQV$SSOLHG
6RLO(FRORJ\²
 75$'($1'(19,5210(175(9,(:

1RWHV
 $VDSWO\VWDWHGE\5XQGJUHQ´+RZZHGLVFXVV¶HIÀFLHQF\·RU¶SURGXFWLYLW\·DQG¶WHFKQRORJ\·KDVVWURQJ
ELDVHV FOHDUO\ YLVLEOH LQ DJULFXOWXUH ZKHUH WKH V\VWHPV WKDW ZDVWH PRVW SROOXWH PRVW DQG XVH PXFK H[WHUQDO
HQHUJ\DUHWKRVHWKDWDUHFRQVLGHUHG¶PRGHUQ·¶HIÀFLHQW·DQG¶SURGXFWLYH·7KHIXQFWLRQRIWHFKQRORJ\WRSXWRWKHU
SHRSOHV·UHVRXUFHVLQWKHVHUYLFHRIWKHDOUHDG\ZHDOWK\DQGWRFRQVWDQWO\LQFUHDVHWKHJDSLVREVFXUHGE\RXU
P\WKVDERXW¶SURJUHVV·µ
 6XVWDLQDEOH RU JUHHQ DJULFXOWXUH UHIHUV WR WKH LQFUHDVLQJ XVH RI IDUPLQJ SUDFWLFHV DQG WHFKQRORJLHV WKDW
VLPXOWDQHRXVO\LUHVWRUHPDLQWDLQDQGLQFUHDVHIDUPSURGXFWLYLW\DQGSURÀWDELOLW\ZKLOHHQVXULQJWKHSURYLVLRQ
RI IRRG RQ D VXVWDLQDEOH EDVLV LL UHGXFH QHJDWLYH H[WHUQDOLWLHV DQG JUDGXDOO\ OHDG WR SRVLWLYH RQHV DQG LLL
UHEXLOGHFRORJLFDOUHVRXUFHVLHVRLOZDWHUDLUDQGELRGLYHUVLW\´QDWXUDOFDSLWDOµDVVHWVE\UHGXFLQJSROOXWLRQDQG
XVLQJUHVRXUFHVPRUHHIÀFLHQWO\*UHHQDJULFXOWXUHLVH[HPSOLÀHGE\DGLYHUVHORFDOO\DGDSWDEOHVHWRIDJULFXOWXUDO
WHFKQLTXHV SUDFWLFHV DQG PDUNHW EUDQGLQJ FHUWLÀFDWLRQV ([DPSOHV RI WKHVH LQFOXGH RUJDQLF DJULFXOWXUH DQG
DJURHFRORJ\UHIHUUHGWRSUHIHUHQWLDOO\LQWKLVDUWLFOHDVDQDSSURDFKWRDJULFXOWXUHEDVHGRQWKHSULQFLSOHVDQG
VFLHQFHRIHFRORJ\IRUPHHWLQJSHRSOH·VQHHGIRUIRRGZKLFKJLYHVHTXDODWWHQWLRQWRWKHJRDOVRIVXVWDLQDELOLW\
UHVLOLHQFH DQG HTXLW\ ² DQG QRW RQO\ WR SURGXFWLRQ ² ZKLFK UHSUHVHQWV PRUH DFFXUDWHO\ WKH WUDQVLWLRQ JRDOV WR
PXOWLIXQFWLRQDODJULFXOWXUHPRGLÀHGIURP81(37KHSULQFLSOHVXQGHUO\LQJVXVWDLQDEOHRU´JUHHQIDUPLQJ
SUDFWLFHVDQGWHFKQRORJLHVµLQFOXGHLUHVWRULQJDQGHQKDQFLQJVRLOIHUWLOLW\WKURXJKWKHLQFUHDVHGXVHRIQDWXUDOO\
DQG VXVWDLQDEO\ SURGXFHG QXWULHQW LQSXWV GLYHUVLÀHG FURS URWDWLRQV DQG OLYHVWRFN DQG FURS LQWHJUDWLRQ LL
UHGXFLQJ VRLO HURVLRQ DQG LPSURYLQJ WKH HIÀFLHQF\ RI ZDWHU XVH E\ DSSO\LQJ PLQLPXP WLOODJH DQG FRYHU FURS
FXOWLYDWLRQWHFKQLTXHVLLLUHGXFLQJWKHXVHRIFKHPLFDOSHVWLFLGHVDQGKHUELFLGHVE\LPSOHPHQWLQJLQWHJUDWHG
ELRORJLFDOSHVWDQGZHHGPDQDJHPHQWSUDFWLFHVDQGLYUHGXFLQJIRRGVSRLODJHDQGORVVE\LPSURYLQJSRVW
KDUYHVWVWRUDJHDQGSURFHVVLQJIDFLOLWLHVPRGLÀHGIURP81(3
 7KHDXWKRUVWKDQN(JHUWRQ8QLYHUVLW\1MRUR.HQ\DWKH.HQ\D$JULFXOWXUDO5HVHDUFK,QVWLWXWH1DLUREL.HQ\D
WKH,QVWLWXWHRI$QLPDO3URGXFWLRQLQWKH7URSLFVDQG6XEWURSLFV6HFWLRQRI$QLPDO%UHHGLQJDQG+XVEDQGU\DQG
WKH)RRG6HFXULW\&HQWHU+RKHQKHLP8QLYHUVLW\6WXWWJDUW*HUPDQ\IRUSURYLGLQJIDFLOLWLHVWRXQGHUWDNHWKHVWXG\
WKDWIRUPHGWKHEDVLVIRUWKLVFRPPHQWDU\7KLVSDSHUZDVZULWWHQZKHQRQHRIWKHDXWKRUVZDVD9LVLWLQJ3URIHVVRU
DW+RKHQKHLP8QLYHUVLW\
 )RUDQH[DPSOHRI0DOL·V6HQR3ODLQVHH$5,XSGDWHQRDWZZZDIULFDUHJUHHQLQJEORJVSRWFRP
 7KHORZHURQIDUPWUHHGHQVLWLHVLQQRUWKHUQ1LJHULDPD\EHGXHWRGLIIHUHQFHVLQWUHHRZQHUVKLS
 3HUVRQDOFRPPXQLFDWLRQZLWKIRUHVWHUVDFURVVWKH6DKHO
 7KLVPDNHVLWKDUGWRH[SODLQZK\JRYHUQPHQWVDQGGRQRUDJHQFLHVDWOHDVWXQWLOUHFHQWO\VWXEERUQO\FRQWLQXHGWR
VXSSRUWDQGSURPRWHWUHHSODQWLQJ,WLVPRUHUDWLRQDOWRSURPRWHQDWXUDOUHJHQHUDWLRQDQGWRSODQWRQO\WKRVHWUHH
VSHFLHVWKDWGRQRWUHJHQHUDWHVSRQWDQHRXVO\EXWZKLFKUHVRXUFHXVHUVZRXOGOLNHWRKDYHRQWKHLUÀHOGV
 7KHDXWKRUZLVKHVWRWKDQN-DVRQ7\OLDQDNLV*LOHV(ULF6pUDOLQLDQG%ULJLWWD.XUHQEDFKIRUFRPPHQWVRQHDUOLHU
GUDIWVRIWKLVSDSHU
 6HHZZZDJDVVHVVPHQWRUJGRFV1$(BSUHVVBUHOHDVHBÀQDOGRF
 75$'($1'(19,5210(175(9,(:

'#&46+%.'U 
    
   
 
+DQV+XUQL7KRPDV%UHX3HWHU0HVVHUOLDQG%ULJLWWH3RUWQHU
&HQWUHIRU'HYHORSPHQWDQG(QYLURQPHQW8QLYHUVLW\RI%HUQ

$EVWUDFW
/DQGFRQYHUVLRQVLQDJULFXOWXUHDUHLPSRUWDQWIRUIRRGVHFXULW\LQGHYHORSLQJFRXQWULHVDWWKHSUHVHQWWLPH
DQGDUHOLNHO\WRLQFUHDVHHYHQPRUHLQWKHIXWXUH
‡ ,QUHODWLRQWRRYHUDOOODQGXVHODQGFRQYHUVLRQVWDNHSODFHDZLWKLQDJULFXOWXUDOODQGIURPPHDGRZV
RUSDVWXUHVWRFURSODQGDQGWRODQGIRUSURGXFLQJDQLPDOIHHGRUELRIXHOIHHGVWRFNDQGEWRDJULFXO
WXUDOODQGIURPRWKHUODQGXVHW\SHVVXFKDVIURPIRUHVWVGU\ODQGVDQGZHWODQGDUHDV7KHG\QDPLFV
RIWKHVHSURFHVVHVDUHHVWLPDWHGWREHLQWKHUDQJHRIWRSHUFHQWRIWKHJOREDOODQGDUHD
VXJJHVWLQJWKDW²PLOOLRQKHFWDUHVRIODQGDUHFRQYHUWHGDQQXDOO\
‡ 7KHHIIHFWVRIODQGFRQYHUVLRQVRQVPDOOVFDOHIDUPLQJFDQEHERWKSRVLWLYHDQGQHJDWLYH)DUPHUV
FRQYHUWQHZODQGIRULPSURYLQJWKHLUOLYHOLKRRGVEXWWKH\DUHQHJDWLYHO\DIIHFWHGE\ODQGGHJUDGDWLRQ
DQGWKHLQWUXVLRQRIEXLOWXSDUHDVLQWRDJULFXOWXUDOODQG6WUDWHJLHVVKRXOGIRFXVRQPHGLXPWRORZ
SRWHQWLDODUHDVLQVXSSRUWRIVPDOOVFDOHIDUPHUVDQGSDVWRUDOLVWVWRKHOSWKHPVXVWDLQDEO\LQFUHDVH
WKHLUDJULFXOWXUDOSURGXFWLRQ
‡ /DQGFRQYHUVLRQWRELRIXHOIHHGVWRFNSURGXFWLRQFDQSURYLGHDPRGHUDWHDGGLWLRQDOLQFRPHDOWKRXJK
IDUPHUVDUHOLNHO\WREHQHJDWLYHO\DIIHFWHGE\DVVRFLDWHGODQGORVVHV2QDJOREDOOHYHOKRZHYHUHI
IRUWV WR DFKLHYH HFRQRPLHV RI VFDOH GHQVLW\ DQG PRUH LQWHQVLYH SURGXFWLRQ RI ELRIXHO IHHGVWRFN
DORQJZLWKRWKHUODQGGHDOVPD\WKUHDWHQIRRGVHFXULW\7RGD\·VSROLF\LQFHQWLYHVGLVSURSRUWLRQDWHO\
IDYRXUODUJHVFDOHELRIXHOIHHGVWRFNSURGXFWLRQPRVWO\IRUH[SRUWPDUNHWV,QQRYDWLYHDUUDQJHPHQWV
DUHQHHGHGWRHQVXUHWKDWODQGFRQYHUVLRQVWRELRIXHOIHHGVWRFNSURGXFWLRQDUHPDGHLQDUHVSRQ
VLEOHPDQQHUDQGWKDWVPDOOVFDOHIDUPLQJLQFOXGLQJPL[HGFURSOLYHVWRFNDQGSDVWRUDOV\VWHPVFDQ
EHLQWHJUDWHGLQWRJOREDODJULFXOWXUH
‡ /DQGSULFHVDQGVSHFXODWLRQDUHOLNHO\WRLQFUHDVHRQFHODQGLVFRQYHUWHGWRPRUHHFRQRPLFDOO\LQWH
JUDWHGPRGHVRISURGXFWLRQZKLOHVXEVLVWHQFHRULHQWHGVPDOOVFDOHIDUPLQJZLOOUHPDLQXQDWWUDFWLYH
DQGWKXVZLOOIXUWKHUORVHRXWDJDLQVWPRUHSRZHUIXODFWRUVLIQDWLRQDODQGLQWHUQDWLRQDOSROLFLHVGRQRW
LPSOHPHQWFRXQWHUVWUDWHJLHV
‡ 2YHUDOOWKHLPSDFWVRIODQGFRQYHUVLRQVRQFOLPDWHDUHOLNHO\WREHQHJDWLYH:KLOHVPDOOVFDOHIDUP
LQJDQGOLYHVWRFNUHDULQJDUHRIWHQFOLPDWHQHXWUDOGHIRUHVWDWLRQUHPDLQVH[WUHPHO\KDUPIXOWKHODUJH
VFDOHUHDULQJRIUXPLQDQWOLYHVWRFNKDVQHJDWLYHLPSDFWVRQJUHHQKRXVHJDVHVDQGVRIDUOLWWOHLV
NQRZQDERXWWKHRYHUDOOLPSDFWVRIELRIXHOIHHGVWRFNSURGXFWLRQRQFOLPDWH

$,QWURGXFWLRQ $JULFXOWXUDO H[SDQVLRQ LQWR IRUHVW ODQGV LV WKH PRVW

WKUHDWHQLQJ JOREDO FKDQJH SURFHVV 'HIRUHVWDWLRQ LV
/DQG FRYHU DQG ODQG XVH DUH FRQVWDQWO\ FKDQJLQJ OLNHO\WRFRQWLQXHLQWKHQHDUIXWXUH$OOQRQSURWHFWHG
ERWK ZLWKLQ DQG RXWVLGH WKH DJULFXOWXUDO VHFWRUWDEOH IRUHVW DUHDV DUH WKUHDWHQHG E\ RYHUH[WUDFWLRQ RI
7DEOHVKRZVWKDWRQO\DIHZRIWKHJOREDOO\GRPL WLPEHU GHIRUHVWDWLRQ DQG ODQGXVH FRQYHUVLRQV WR
QDQWODQGXVHDQGFRYHUV\VWHPVDUHVWDEOHLQWHUPV IRUHVW SODQWDWLRQV JUD]LQJ ODQG RU FURSODQG 7KLV
RI WKHLU ODQG DUHD $ ODUJHU QXPEHU RI V\VWHPV DUH SURFHVV LV HVWLPDWHG WR DOUHDG\ FRQWULEXWH DERXW 
H[SDQGLQJ LWDOLFV DW WKH H[SHQVH RI RWKHUV WKDW DUH SHUFHQWWRJOREDOJUHHQKRXVHJDV*+*HPLVVLRQV
GHFUHDVLQJEROG ² D FRQVLGHUDEOH DPRXQW WKDW FRXOG EH DYRLGHG $OO
7KH5ROHRI&KDQJHVLQ/DQG8VH 

DJULFXOWXUDO DFWLYLWLHV WRJHWKHU DFFRXQW IRU DQRWKHU H[DPSOH IURP LQWHQVLYH SDVWXUH ODQG WR FURSODQG
 SHU FHQW RI *+* HPLVVLRQV DPRXQWLQJ WR DQ $GGLWLRQDO FURSODQG LV FUHDWHG PDLQO\ DV D UHVXOW
HVWLPDWHGWRWDORISHUFHQWRI*+*V,3&&
0RUH UHFHQWO\ FURSODQGV IRU ELRIXHO SURGXFWLRQ
KDYH DOVR VWDUWHG WR H[SDQG LQWR IRUHVW ODQGV
DQG ZRRGODQGV ZKLOH ODQG OHDVHV DQG VDOHV WR
WUDQVQDWLRQDO FRUSRUDWLRQV DUH D IXUWKHU PDMRU FDXVH
RIWKLVH[SDQVLRQ
RI SRSXODWLRQ SUHVVXUH EXW DOVR IRU LQGXVWULDOL]HG
IDUPLQJVXFKDVODUJHVFDOHIDUPVRUWUHHSODQWDWLRQV
LQUHFHQWO\GHIRUHVWHGDUHDV
6LQFH  DERXW  SHU FHQW RI WKH JOREDO ODQG
VXUIDFHKDVEHHQFRQYHUWHGIURPFURSODQGDQGGU\ODQG
IRU IRRG DQG IHHG WR FURSODQG IRU ELRIXHO SURGXFWLRQ
$JULFXOWXUDOH[SDQVLRQLQWRGU\ODQGDUHDVLVDSURFHVV
RIWHQ GULYHQ E\ WKH VSUHDG RI VPDOOVFDOH IDUPLQJ
LQWROHVVVXLWDEOHFXOWLYDWLRQDUHDV$WWKHVDPHWLPH
ELRIXHO SURGXFWLRQ FRQWLQXHV WR VSUHDG LQWR QRQ
DJULFXOWXUDOGU\ODQGVHJVDYDQQDKEXVKVKUXEDQG
LH ELRGLHVHO HWKDQRO +HUH DJDLQ WUDQVQDWLRQDO
ODQGOHDVHVDQGVDOHVDOWKRXJKQRW\HWLPSRUWDQWLQ
TXDQWLWDWLYH WHUPV DUH QHYHUWKHOHVV DQ LQGLFDWRU RI
FXUUHQWDQGIXWXUHWUHQGV+RZHYHUELRIXHOSURGXFWLRQ
DQG ODQG OHDVHV VWLOO DFFRXQW IRU D UHODWLYHO\ VPDOO
VFUXEODQGV+HUHWRRWUDQVQDWLRQDOODQGOHDVHVDQG SURSRUWLRQRIFXOWLYDWHGODQGFRPSDUHGZLWKWKDWEHLQJ
VDOHVDUHVLJQLÀFDQWDOWKRXJKWKH\UHSUHVHQWDUHFHQW XVHG IRU WKH SURGXFWLRQ RI DQLPDO IHHG HJ PDL]H
WUHQG,/& FHUHDOV DQG VR\EHDQV $ERXW  SHU FHQW RI JOREDO
FHUHDO SURGXFWLRQ LV XVHG IRU DQLPDO IHHG 7RJHWKHU
/DQGXVH FKDQJHV RQ DJULFXOWXUDO ODQG KRZHYHU ZLWK SDVWXULQJ WKUHH TXDUWHUV RI DOO DJULFXOWXUDO ODQG
PXVW DOVR EH FRQVLGHUHG DV WKHLU LPSOLFDWLRQV PD\ LVWKXVEHLQJXVHGWRJHQHUDWHDQLPDOSURGXFWVHJ
EHDVJUHDWDVWKHH[SDQVLRQRIDJULFXOWXUHLQWRDUHDV PLONPHDWDQGHJJVZKLOHRQO\RQHTXDUWHULVXVHG
GHYRWHG WR RWKHU W\SHV RI ODQG XVH DQG ODQG FRYHU IRUSURGXFLQJQRQPHDWDQGQRQGDLU\SURGXFWVVXFK
&RQYHUVLRQVPD\WDNHSODFHRQDJULFXOWXUDOODQGIRU DVFHUHDOVYHJHWDEOHVWXEHUFURSVDQGRWKHUSODQWV

7DEOH*OREDOODQGXVHDQGFRYHUW\SHVDQGPDMRUVSDWLDOFKDQJHV
SHUFHQWDJHDQGPLOOLRQKHFWDUHV

/DQGXVHDQGRUFRYHU 6KDUH
 6XUIDFH
PLOOLRQVRIKD &KDQJHVLQODQGXVH
$JULFXOWXUDOODQG   2QHWKLUGRIWKHODQGLVGHJUDGHG
&URSODQG   *DLQVIURPIRUHVWVDQGPHDGRZV
,QWHQVLYHSDVWXUHV   /RVVWRFURSODQGDQGDQLPDOIHHG
$QLPDOIHHGSURGXFWLRQ   *DLQVIURPFURSODQGDQGSDVWXUHV
$JURIRUHVWU\   0RVWO\VWDEOHODQGXVHV\VWHP
%DGODQGV   6OLJKWLQFUHDVHIURPFURSODQGDQGSDVWXUHV
%LRIXHOSURGXFWLRQ   *DLQVIURPIRUHVWVDQGSDVWXUHODQG
)RUHVWODQG   /DUJHVWVSDWLDODUHDORVVHVREVHUYHG
'HJUDGHGIRUHVWV   0RVWFRQYHUWHGODQGXVHW\SHSDUWO\JUD]HG
'HQVHIRUHVWV   0RVWWKUHDWHQHGODQGFRYHUW\SH
3URWHFWHGIRUHVWV   6WDEOHIRUHVWDUHDV
'U\ODQG   /DUJHVWSURWHFWHGDUHDVUHDOL]HG
'HVHUWVDQGWXQGUD   6WDEOHODQGFRYHUSDUWO\JUD]HG
3URWHFWHGGU\ODQGV   /RVVHVWRELRIXHODQGODQGFRQYHUVLRQVSDUWO\JUD]HG
6KUXEODQGVJUD]HG   7KUHDWHQHGE\FOLPDWHFKDQJHDQGODQGORVVHVWRELRIXHOV
DQGRWKHUFRQYHUVLRQV
%XLOWXSDUHDV   5DSLGXUEDQH[SDQVLRQLQWRDJULFXOWXUDOODQGVDQGGU\ODQGV
:HWDUHDV   :DWHUVXUIDFHVDQGZHWODQGV
*OREDOODQGVXUIDFH   *OREDOODQGDUHDH[FO*UHHQODQGDQG$QWDUFWLFD

6RXUFH%DVHGRQ)$267$7ZLWKDXWKRUV·HVWLPDWHVIRUVXEFDWHJRULHVDQGEUHDNGRZQV

1RWH%ROGIRQWVLQGLFDWHJHQHUDOORVVHVRIDSDUWLFXODUW\SHQRUPDOIRQWVLQGLFDWHVWDEOHVLWXDWLRQVDQGLWDOLFV
LQGLFDWHJHQHUDOJDLQVLQVXUIDFHDUHD
 75$'($1'(19,5210(175(9,(:

3DUWRIWKHJHQHUDOJDLQLQFXOWLYDWHGODQGLVFRQYHUWHG RQO\IRUWKHELOOLRQSHRSOHHQJDJHGLQVPDOOVFDOH
WR JUD]LQJ ODQG VRPH RI ZKLFK KDV WXUQHG LQWR
EDGODQGV GXH WR H[WUHPH ODQG GHJUDGDWLRQ DQG VRLO
GHSOHWLRQ 7KH SUHVVXUH EHLQJ H[HUWHG RQ FURSODQGV
KDV LQFUHDVHG QRW RQO\ IRU WKH SURGXFWLRQ RI KXPDQ
IRRGDQGDQLPDOIHHGEXWDOVRIRUWKHSURGXFWLRQRI
IDUPLQJ,($EXWDOVRIRUPRVWSHRSOHOLYLQJLQ
WRZQV$WWKHVDPHWLPHWKHSRWHQWLDOIRUOLTXLGELRIXHO
SURGXFWLRQ LV JUHDWHVW RQ FURSODQG LQ WKH JOREDO
6RXWK ZKHUH ODQG DQG ODERXU DUH DYDLODEOH DW ORZHU
FRVWV WKDQ LQ WKH JOREDO 1RUWK +D]HOO DQG 3DFKDXUL
ÀEUH HJ FRWWRQ VLVDO DQG PRUH UHFHQWO\ ELRIXHOV )DUJLRQHHWDO6PHHWVHWDO
IHHGVWRFNWUHHSODQWDWLRQVELRGLHVHODQGHWKDQRO
/DVWEXWQRWOHDVWDQRWKHUH[WUHPHO\LPSRUWDQWVSDWLDO
WUHQGLVXUEDQH[SDQVLRQLQWRDJULFXOWXUDODQGGU\ODQG
DUHDV 2Q D JOREDO OHYHO DQ HVWLPDWHG  SHUFHQWRI
WKHODQGVXUIDFHLVFXUUHQWO\EHLQJXVHGIRUXUEDQDQG
&XUUHQWSURGXFWLRQDQGXVHRIOLTXLGELRIXHOVZKLFKDUH
QRZFRPSHWLQJIRUODQGZLWKDJULFXOWXUDOFRPPRGLWLHV
VXFK DV IRRG WDNHV SODFH PDLQO\ LQ LQGXVWULDOL]HG
DQGHPHUJLQJHFRQRPLHVEXWSURGXFWLRQLVDOVRRQ
WKHULVHLQGHYHORSLQJFRXQWULHV62)$+/3(
LQIUDVWUXFWXUH FRQVWUXFWLRQ 7KLV WUHQG LV FRQWLQXLQJ D 2QO\ DERXW  SHU FHQW RI WKH JOREDO ODQG
XQDEDWHG DV LW FORVHO\ FRUUHODWHV ZLWK HFRQRPLF VXUIDFHLVEHLQJXVHGWRSURGXFHOLTXLGELRIXHOVVHH
JURZWKLHJURZWKRIJURVVGRPHVWLFSURGXFW*'3 WDEOH(WKDQROLVSURGXFHGPDLQO\LQ%UD]LO&DQDGD
)RUH[DPSOHLQ*HUPDQ\WKHVKDUHRIEXLOWXSDUHDV &KLQD)UDQFHDQGWKH8QLWHG6WDWHV*HUPDQ\OHDGV
KDVUHDFKHGSHUFHQWRIWKHWRWDOODQGDUHD+XUQL LQELRGLHVHOSURGXFWLRQIROORZHGE\%UD]LO$UJHQWLQD
HWDO )UDQFH DQG WKH 8QLWHG 6WDWHV 5(1  
%LRGLHVHO H[SRUWHUV LQ GHYHORSLQJ FRXQWULHV DUH UDUH
7KH PDLQ TXHVWLRQV WKDW HPHUJH IURP WDEOH  LQ ZLWKRQO\0DOD\VLDDQG7KDLODQGH[SHFWHGWREHFRPH
UHODWLRQWRODQGFRQYHUVLRQVLQDJULFXOWXUHDUH VLJQLÀFDQW SOD\HUV LQ WKH QHDU IXWXUH EHVLGHV %UD]LO
‡ :KDW LV WKH PDJQLWXGH RI ODQG FRQYHUVLRQV LQ DQG$UJHQWLQD7KHPDMRUIHHGVWRFNXVHGIRUHWKDQRO
UHODWLRQWRRYHUDOOODQGXVH" LV PDL]H DQG VXJDUFDQH ZKLOH IRU ELRGLHVHO LW LV RLO
‡ :KDWDUHWKHHIIHFWVRQVPDOOVFDOHIDUPLQJDQGRQ SDOPDQGVR\EHDQ2(&'DQG)$2
IRRGVHFXULW\ERWKORFDOO\DQGJOREDOO\"
‡ :KDWDUHWKHLPSOLFDWLRQVIRUODQGSULFHVUHVXOWLQJ %UD]LOWKH(XURSHDQ8QLRQ(8DQGWKH8QLWHG6WDWHV
IURPVSHFXODWLRQDQGODQGJUDEELQJ" DUHWKHPDLQXVHUVRIOLTXLGELRIXHOVZKLOH&KLQDDQG
‡ :KDWDUHWKHLPSOLFDWLRQVIRUFOLPDWHFKDQJH"
,Q WKH IROORZLQJ VHFWLRQV WKLV DUWLFOH GLVFXVVHV WKUHH
LPSRUWDQW SURFHVVHV LQ JUHDWHU GHWDLO WKH UHFHQW
HPHUJHQFHRIELRIXHOVWKHFRQVHTXHQFHVRIFKDQJLQJ
FRQVXPSWLRQ SDWWHUQV DQG DQLPDO SURGXFWLRQ
V\VWHPV DQG WKH LPSDFWV RI ODQG FRQYHUVLRQV RQ
VPDOOVFDOHIDUPLQJ7KHVHDFWLYLWLHVFXUUHQWO\HPSOR\
RYHU  ELOOLRQ SHRSOH RU  SHU FHQW RI WKH ZRUOG
,QGLDDUHHPHUJLQJXVHUV,($D0RVWELRIXHOLV
XVHGIRUURDGWUDQVSRUWDQGDOLPLWHGDPRXQWLVXVHG
LQ WKH PDULQH WUDQVSRUW VHFWRU DQG PRVW UHFHQWO\ LQ
DYLDWLRQ 7KH VKDUH RI ELRIXHOV FRQWULEXWLQJ WR JOREDO
ÀQDO HQHUJ\ FRQVXPSWLRQ LV VWLOO ORZ DW  SHU FHQW
LQEXWSURGXFWLRQLVLQFUHDVLQJUDSLGO\,Q
DERXWELOOLRQOLWUHVRIHWKDQRODQGDWOHDVWELOOLRQ
OLWUHVRIELRGLHVHOZHUHSURGXFHG(WKDQROSURGXFWLRQ
JUHZÀYHIROGEHWZHHQDQGDQGELRGLHVHO
SRSXODWLRQLQYROYLQJZRPHQPHQDQGFKLOGUHQYRQ LQFUHDVHGPRUHWKDQWZHQW\IROG5(1
%UDXQ1RRWKHUVHFWRULQWKHJOREDOHFRQRP\
HPSOR\VDFRPSDUDEOHQXPEHURISHUVRQV
%/DQGFRQYHUVLRQVIRUELRIXHOSURGXFWLRQ
7RGD\ELRIXHOVSURYLGHDERXWSHUFHQWRIWKHIXHO
XVHGLQJOREDOWUDQVSRUWDWLRQ7KLVVKDUHLVH[SHFWHG
WR ULVH WR EHWZHHQ  DQG  SHU FHQW LQ  DQG
XSWRSHUFHQWLQ5(1,($
,PSRUWDQFH RI ELRIXHO SURGXFWLRQ 7KHUH KDV DOZD\V
EHHQ D FORVH OLQN EHWZHHQ DJULFXOWXUH DQG HQHUJ\
DVODQGWKDWLVEHLQJZRUNHGUHTXLUHVHQHUJ\LQSXWV
ZKLOH DJULFXOWXUH FDQ DOVR SURGXFH HQHUJ\ DV DQ
RXWSXW 7UDGLWLRQDOO\ DJURHQHUJ\ LV SURGXFHG LQ WKH
,($E*OREDOHWKDQRODQGELRGLHVHOSURGXFWLRQ
DUH SURMHFWHG WR LQFUHDVH RYHU WKH QH[W GHFDGH WR
 ELOOLRQ OLWUHV DQG  ELOOLRQ OLWUHV UHVSHFWLYHO\
DQG SURMHFWHG XVH LV H[SHFWHG WR EH JUHDWHU WKDQ
SURMHFWHGSURGXFWLRQLQWKH(8DQGWKH8QLWHG6WDWHV
IRUP RI IXHOZRRG FKDUFRDO DQG DQLPDO GXQJ 7KHVH 2(&'DQG)$2$WSHUFHQWWKHYROXPHRI
IRUPVDUHVWLOOZLGHO\XVHGLQGHYHORSLQJFRXQWULHVDQG ELRIXHOV LQ FXUUHQW LQWHUQDWLRQDO WUDGH LV UDWKHU VPDOO
FRQWLQXHWREHWKHPRVWLPSRUWDQWHQHUJ\VRXUFHQRW ,($EXWDVSURMHFWHGGHPDQGDQGXVHZLOOQRW
7KH5ROHRI&KDQJHVLQ/DQG8VH 

EHDWWKHVDPHORFDWLRQVWKLVVKDUHZLOODOVRLQFUHDVH XVHG IRU ELRIXHO FURSV ,($  /DPELQ DQG

DVZLOOSUHVVXUHRQODQGELRIXHOIHHGVWRFNDQGRWKHU 0H\IURLGWHVWLPDWHWKDWLQDSSUR[LPDWHO\
VRXUFHV RI HQHUJ\ IURP ELRPDVV $W WKH VDPH WLPH PLOOLRQKHFWDUHVZHUHDOUHDG\EHLQJXVHGIRUVXFK
GHPDQG IRU DOWHUQDWLYH IRUPV RI HQHUJ\ SURGXFWLRQ FURSV DQG WKH\ SURMHFW DQ DQQXDO LQFUHDVH RI 
LV DOVR H[SHFWHG WR LQFUHDVH &RWXOD )LQQHJDQ DQG WR  PLOOLRQ KHFWDUHV EDVHG RQ WKH FXUUHQW SROLF\
0DFTXHHQ HQYLURQPHQW ZLWK ODQG UHTXLUHPHQWV IRU VXFK FURSV
LQDPRXQWLQJWRWRPLOOLRQKHFWDUHV7KH
&XUUHQWWUHQGV$QXPEHURISROLFLHVLQERWKGHYHORSHG ,($EHVWLPDWHVRISHUFHQWRIODQGIRUWKRVH
DQG GHYHORSLQJ FRXQWULHV VXSSRUW WKH PDVVLYH FURSVLQZRXOGWUDQVODWHLQWREHWZHHQDQG
LQFUHDVHLQELRIXHOSURGXFWLRQEDVHGRQPRWLYDWLRQV
VXFKDVFOLPDWHFKDQJHPLWLJDWLRQLQFUHDVLQJHQHUJ\
VHFXULW\ DQG IXUWKHULQJ UXUDO GHYHORSPHQW 7KHVH
SROLFLHVZKLFKLQFOXGHWD[H[HPSWLRQVEOHQGLQJDQG
FRQVXPSWLRQPDQGDWHVDQGVXEVLGLHVDUHEHOLHYHG
WR EH WKH PDLQ GULYHUV RI WKH JOREDO SURGXFWLRQ RI
PLOOLRQKHFWDUHV0XUSK\HWDO,ISURGXFHG
RQ FURSODQG RQO\ WKLV ZRXOG DPRXQW WR ² SHU
FHQWRIWKDWODQGXVHFDWHJRU\ZKLFKZRXOGVHYHUHO\
WKUHDWHQIRRGSURGXFWLRQ7KHFXUUHQWODQGFRQYHUVLRQ
OHYHO WR FURS SURGXFWLRQ IRU ELRIXHOV LV HVWLPDWHG WR
EHOHVVWKDQSHUFHQWRIWKHJOREDOODQGDUHDOHVV
ELRIXHOV )$22(&'  '()5$  +/3( WKDQPLOOLRQKDDVLQGLFDWHGLQWDEOH
D)RUH[DPSOHRYHUDOOJRYHUQPHQWVXSSRUWIRU
ELRIXHOVDPRXQWHGWR²ELOOLRQLQ2(&'FRXQWULHV 0RVW ODQG FRQYHUVLRQV IRU ELRIXHO SURGXFWLRQ DUH
LQ6WHHQEOLN7KLVZDVPRUHWKDQWRWDODLG EHOLHYHGWREHWDNLQJSODFHDWWKHH[SHQVHRIIRUHVWV
FRPPLWPHQWVWRDJULFXOWXUHDQGWRVHFWRUVUHODWHGWR DQGSDVWXUHV0HOLOORHWDO)LVFKHUHWDO
IRRGVHFXULW\ZKLFKDPRXQWHGWRDSSUR[LPDWHO\ +DYOLN HW DO  /DPELQ DQG 0H\IURLGW 
ELOOLRQ LQ ² 2(&''$&  ,Q  6WXGLHV RI WKH SDOP RLO LQGXVWU\ LQ 6RXWK $VLD IRU
JRYHUQPHQWVXSSRUWIRUELRIXHOVLQWKH8QLWHG6WDWHV H[DPSOH VKRZ WKDW IURP  WR  FORVH WR 
DQGWKH(8DORQHDPRXQWHGWRELOOLRQ,($D
$WSUHVHQWGLUHFWJRYHUQPHQWVXSSRUWWRWKHELRIXHO
VHFWRULVGHFOLQLQJZKLOHGHYHORSPHQWDQGFRPPHUFLDO
SHUFHQWRIRLOSDOPH[SDQVLRQZDVDWWKHH[SHQVHRI
IRUHVWV ZLWK VWURQJ QHJDWLYH LPSDFWV RQ ELRGLYHUVLW\
DQG FDUERQ VWRFNV .RK DQG :LOFRYH  .RK
HW DO  7KH PDJQLWXGH RI ODQG DFTXLVLWLRQV
EDQNV SHQVLRQ IXQGV DQG SULYDWH HTXLW\ IXQGV DUH
DQG FRQYHUVLRQV IRU ELRIXHO SURGXFWLRQ LV H[WUHPHO\
LQYHVWLQJ ODUJHU VXPV 5(1  2,  YDQ
GLIÀFXOWWRDVVHVVDVWKHUHLVDODFNRILQIRUPDWLRQRQ
*HOGHUDQG*HUPDQ$WWKHVDPHWLPHDOOLDQFHV
WKH ORFDWLRQV RI ELRIXHO FURS SODQWDWLRQV DQG ELRIXHO
EHWZHHQ JRYHUQPHQWV DQG PXOWLQDWLRQDO EXVLQHVV
IHHGVWRFNRULJLQV7KHIDFWWKDWPDQ\FURSVXVHGIRU
OREELHV KDYH SURPRWHG ELRIXHO GHYHORSPHQW LQ ERWK
ELRIXHOVVXFKDVPDL]HRURLOSDOPFDQKDYHPXOWLSOH
GHYHORSHG DQG GHYHORSLQJ FRXQWULHV )UDQFR HW DO
XVHV IXUWKHU FRPSOLFDWHV DWWHPSWV WR HVWLPDWH
 OHDGLQJ WR WKH HPHUJHQFH RI PDQ\ SOD\HUV
VHHNLQJWRSURGXFHDQGLQYHVWLQELRIXHOSURGXFWLRQ
7KH LQYHVWPHQW ODQGVFDSH LQ DJULFXOWXUH DQG ELRIXHO
SURGXFWLRQ WRGD\ LV YHU\ GLYHUVH 'LUHFW SOD\HUV
VXFK DV WUDGLWLRQDO DJULFXOWXUDO FRPSDQLHV DLPLQJ WR
WKH H[WHQW RI ELRIXHO SURGXFWLRQ )XUWKHUPRUH WKH
PDJQLWXGHRILQGLUHFWFKDQJHVDGGVWRWKHSUREOHP
DVLWLVRIWHQGLIÀFXOWWRHVWDEOLVKGLUHFWFDXVDOLW\DQG
WKH LQLWLDO SXUSRVH RI ODQG FRQYHUVLRQV PLJKW QRW
DOZD\V EH FOHDU &KDOPHUV HW DO  *DR HW DO
SURGXFHFURSVRQWKHODQGKDYHEHHQFRPSOHPHQWHG *DZHODQG/XGZLJ
E\ LQGLUHFW SOD\HUV ZRUNLQJ RQ WKH JOREDO VWRFN
H[FKDQJHVZKRWUHDWODQGDVDVSHFXODWLYHFRPPRGLW\ ,PSDFWVRQFDUERQ'LUHFWODQGXVHFKDQJHVVHHPWR
+/3( E ,QYHVWRUV DUH IRUHLJQ GRPHVWLF KDYH D UHODWLYHO\ VPDOO LPSDFW RQ FDUERQ HPLVVLRQV
RU IURP WKH GLDVSRUD EXW WKHLU LPSRUWDQFH YDULHV ZKHUHDV LQGLUHFW ODQGXVH FKDQJHV FRXOG FUHDWH D
JOREDOO\LQ%UD]LOIRUH[DPSOHVXJDUFDQHSURGXFWLRQ ODUJH FDUERQ GHEW )DUJLRQH HW DO  0HOLOOR HW
LVSUHGRPLQDQWO\ÀQDQFHGE\GRPHVWLFHQWUHSUHQHXUV DO/DSRODHWDO%RZ\HU1LWURXV
DQGWKHJRYHUQPHQWZKLOHLQWKH8QLWHG5HSXEOLFRI R[LGH HPLVVLRQV IURP LQFUHDVHG XVH RI IHUWLOL]HUV ZLOO
7DQ]DQLDGRPHVWLFEDQNVSOD\DQLPSRUWDQWUROHYDQ FRQWULEXWHPRUHWRJOREDOZDUPLQJWKDQVXFKFDUERQ
*HOGHUDQG*HUPDQ ORVVHV0HOLOORHWDO=DKHWDOVWXGLHG
HQYLURQPHQWDOFRVWVIURPÀHOGWRWDQNDQGIRXQGWKDW
,Q  DSSUR[LPDWHO\  SHU FHQW RI JOREDO DUDEOH DOWKRXJKPRVWELRIXHOVRXUFHVUHGXFH*+*VE\PRUH
ODQG LH DSSUR[LPDWHO\  PLOOLRQ KHFWDUHV ZDV WKDQ  SHU FHQW FRPSDUHG ZLWK FRQYHQWLRQDO IXHO
 75$'($1'(19,5210(175(9,(:

WKHPDMRURQHVVXFKDV8QLWHG6WDWHVFRUQ%UD]LOLDQ
VXJDUFDQH DQG 0DOD\VLDQ SDOP RLO KDYH JUHDWHU
DJJUHJDWHHQYLURQPHQWDOFRVWVWKDQIRVVLOIXHO
1HJDWLYH LPSDFWV RQ QDWXUDO UHVRXUFHV %LRIXHOV DUH
HLWKHUFRPSHWLWLYHRUFDXVHDGGLWLRQDOODQGGHJUDGDW
LRQ%HVLGHVVRLODQGODQGDPRQJWKHPRVWFRQWHVWHG
UHVRXUFHVLVZDWHUDVWKHFXOWLYDWLRQRIVRPHELRIXHO
IHHGVWRFNVXFKDVVXJDUFDQHOHDGVWRLQFUHDVHGZDWHU
ZLWKGUDZDOVDQGWRVRFLDODQGHQYLURQPHQWDOSUREOHPV
IURP ÀHOG WR ZDWHUVKHG SDUWLFXODUO\ ZKHUH ZDWHU LV
DOUHDG\VFDUFHGH)UDLWXUH*LRUGDQRDQG<RQJVRQJ
6HSWHPEHU)$22(&'DPRQJRWKHUV
FDOOHG XSRQ WKH &RPPLWWHH RQ :RUOG )RRG 6HFXULW\
WR´GHPDQGRIJRYHUQPHQWVWKHDEROLWLRQRIEOHQGLQJ
WDUJHWVIRUELRIXHOVDQGWKHUHPRYDORIVXEVLGLHVDQG
WDULIIVRQELRIXHOSURGXFWLRQDQGSURFHVVLQJµ
3ROLF\PDNHUVKDYHSURPRWHGELRIXHOVDVDPHDQVWR
IRVWHU UXUDO GHYHORSPHQW EDVHG RQ WKH H[SHFWDWLRQ
WKDW WKHLU SURGXFWLRQ ZLOO LQYROYH WKH SDUWLFLSDWLRQ
RI VPDOOKROGHUV LQ RXWJURZHU VFKHPHV DQG FUHDWH
HPSOR\PHQW 7KLV VWUDWHJ\ VHHPV WR EH VXFFHVVIXO
ZKHUHDQDOUHDG\HVWDEOLVKHGELRIXHOLQGXVWU\H[LVWV
/LDR  81(3 E $GGLWLRQDOO\ IHUWLOL]HU DQG DOWKRXJKPXFKGHSHQGVRQSROLFLHVORFDODXWKRULWLHV
SHVWLFLGH XVH LQ FXOWLYDWLRQ LQDSSURSULDWH IDUPLQJ DQG VPDOOKROGHU FRRSHUDWLYHV *HUPDQ HW DO 
SUDFWLFHVDQGXQWUHDWHGZDWHUIURPSURFHVVLQJSODQWV 5LVW)HLQWUHQLHDQG/HYDQW,QHPHUJLQJELRIXHO
FDQOHDGWRODQGGHJUDGDWLRQDQGLQFUHDVHGULVNVIRU LQGXVWULHV KRZHYHU VPDOOKROGHUV GR QRW EHQHÀW
ORFDOSRSXODWLRQV*HUPDQHWDO UDWKHU WKH\ EHDU PXFK RI WKH ULVN RI DQ XQVHWWOHG
LQGXVWU\ 9HUPHXOHQ 6XOOH DQG )DXYHDXG 
0XFK RI WKH ODQG SURPRWHG IRU ODUJHVFDOH ELRIXHO
SURGXFWLRQ LV GHFODUHG DV ´PDUJLQDOµ RU ´XQXVHGµ
EXWLWLVIUHTXHQWO\XVHGDVFRPPRQODQGE\YLOODJHUV
RU SDVWRUDOLVWV ,QFUHDVHG LQYHVWPHQW FRXOG SURYLGH
RSSRUWXQLWLHV IRU ORFDO OLYHOLKRRGV DQG QDWLRQDO
*HUPDQHWDO
,QWKHFXUUHQWHFRQRPLFFRQWH[WHVWDEOLVKLQJELRIXHO
SURGXFWLRQLVFRPSHWLWLYHZKHUHHFRQRPLHVRIVFDOH
DUH UHDOL]HG DQG WKLV LV XVXDOO\ WKH FDVH ZKHUH
HFRQRPLHV9HUPHXOHQDQG&RWXODEXWLWPD\ ODUJHVFDOH SODQWDWLRQV DUH FRPELQHG ZLWK LQGXVWULDO
DOVRUHVXOWLQGLVSRVVHVVLRQRIODQGUHVWULFWHGDFFHVV SURFHVVLQJ %XW ODUJHVFDOH SURGXFWLRQ PHDQV WKDW
WR QDWXUDO UHVRXUFHV DQG FRQÁLFWV DPRQJ UHVRXUFH VPDOOVFDOH SURGXFHUV PD\ EH H[FOXGHG VR WKDW
XVHUV VHH IRU H[DPSOH 6XOOH DQG 1HOVRQ  LQVWHDGRIFUHDWLQJHPSOR\PHQWRSSRUWXQLWLHVODERXU
%XUJHUVHWDO)LQGODWHUDQG.DQGOLNDU LVVDYHG/LDQGLQHTXLWLHVLQFUHDVH7KHUHIRUH
WKH TXHVWLRQ LV ZKHWKHU LW LV IHDVLEOH WR SURPRWH
,PSDFWV RQ ODQG SULFHV ,QLWLDO IHDUV WKDW LQFUHDVHG LQQRYDWLYHEXVLQHVVPRGHOVWKDWZRXOGEULGJHODUJH
LQYHVWPHQW PD\ UHVXOW LQ KLJKHU ODQG SULFHV )$2 VFDOH DQG VPDOOVFDOH SURGXFWLRQ WKURXJK SROLF\
KDYHEHHQUHSODFHGE\HYLGHQFHWKDWPXFKRI LQVWUXPHQWV DLPHG DW VWHHULQJ WKLV GHYHORSPHQW LQ
WKH ODQG LV REWDLQHG DW SULFHV EHORZ LWV DFWXDO YDOXH RUGHU WR DFKLHYH HFRQRPLHV RI VFDOH SDUWLFXODUO\ IRU
2,  ,QYHVWRUV DFTXLUH YDVW DUHDV RI ODQG LQ IHHGVWRFNSURFHVVLQJDQGFUHDWLQJPDUNHWDFFHVVIRU
PDQ\GHYHORSLQJFRXQWULHVEHFDXVHLWLVJLYHQDOPRVW VPDOOKROGHUV 'XIH\  $UQGW HW DO  0DOLN
IRUIUHH/L/DQGGHDOVRIWHQODFNWUDQVSDUHQF\ HW DO  9HUPHXOHQ 6XOOH DQG )DXYHDXG 
DQG ZKHUH ORFDO SHRSOH DUH LQYROYHG LQ ELRIXHO *PQGHUDQG3RUWQHU
SURGXFWLRQ HPSOR\PHQW FRQWUDFWV DUH RIWHQ YDJXH
2,&RWXOD 7KHUHLVDFRQVHQVXVWKDWWKHSURYLVLRQRIHQHUJ\IURP
DJULFXOWXUHLVQHHGHGLQPDQ\SODFHVWRPHHWGHPDQG
,PSDFWV RQ IRRG PDUNHWV 5HFHQW JURZWK LQ ELRIXHO SDUWLFXODUO\ LQ WKH UXUDO 6RXWK 3URFHVVHG IRUPV RI
SURGXFWLRQDQGSURFHVVLQJZDVWKHPDMRUGULYHURIWKH ELRHQHUJ\VXFKDVELRIXHOVFDQEHDQRSSRUWXQLW\EXW
IRRGSULFHKLNHLQ62)$+/3(D
,QFUHDVHG FRPSHWLWLRQ IRU DQG UHVWULFWHG DFFHVV WR
QDWXUDO UHVRXUFHV DV ZHOO KLJKHU DQG YRODWLOH IRRG
SULFHV FDQ OHDG WR UHGXFWLRQV LQ FDORULH LQWDNH DQG
WR LQFUHDVHG OHYHOV RI PDOQXWULWLRQ 0RUHRYHU WKH\
GLVSURSRUWLRQDWHO\ DIIHFW WKH PRVW YXOQHUDEOH JURXSV
WKLV HQHUJ\ VKRXOG QRW EH SURGXFHG DW WKH H[SHQVH
RIIRRGWKHHQYLURQPHQWRUWKHSRRUZKLFKLVPRVWO\
WKH FDVH ZKHQ SURGXFHG RQ ODUJHVFDOH SODQWDWLRQV
WKDWSURGXFHIHHGVWRFNIRUH[SRUWLQVWHDGRIIRUORFDO
FRQVXPSWLRQ :KLOH PDQ\ FRXQWULHV KDYH SROLFLHV LQ
SODFHWRVWHHUGHYHORSPHQWWKH\VWLOOODFNHQIRUFHPHQW
5RVHJUDQWHWDO7RFRXQWHUDFWJURZLQJIRRG 6FKRQHYHOGHWDO
LQVHFXULW\ GXH WR ELRIXHO SURGXFWLRQ D UHFHQW +/3(
UHSRUW D DQG WKH )$22(&' ([SHUW 0HHWLQJ 7KHUHLVFRQVLGHUDEOHXQFHUWDLQW\DERXWKRZSUHVHQW
RQ *UHHQLQJ WKH (FRQRP\ ZLWK $JULFXOWXUH KHOG LQ ODZ RU YROXQWDU\ FHUWLÀFDWLRQ VFKHPHV VXFK DV WKH
7KH5ROHRI&KDQJHVLQ/DQG8VH 

5RXQGWDEOH RQ 6XVWDLQDEOH %LRIXHOV 56%  SRWHQWLDOIRUUHGXFLQJWKHYXOQHUDELOLW\RIWKHLURZQHUV

FRXOG EH HIIHFWLYHO\ LPSOHPHQWHG *RYHUQPHQWV DQGH[SDQGLQJOLYHOLKRRGRSSRUWXQLWLHV5DQGROSKHW
XUJHQWO\ QHHG WR UHPRYH PDQGDWRU\ WDUJHWV DQG DO
ELRIXHO VXEVLGLHV WKDW VWLPXODWH ODUJHVFDOH ELRIXHO
IHHGVWRFN SURGXFWLRQ 7KH\ VKRXOG DOVR HQVXUH WKDW
PXFKQHHGHG LQYHVWPHQWV LQ DJULFXOWXUH DUH PDGH
LQ D UHVSRQVLEOH ZD\ WKDW VPDOOKROGHUV KDYH ULJKWV
WR VHFXUH DFFHVV WR ODQG DQG QDWXUDO UHVRXUFHV
DQG ZKHUH WKH\ DUH LQYROYHG LQ ODUJHVFDOH HQHUJ\
DJULEXVLQHVVWKH\VKRXOGEHRIIHUHGGHFHQWZRUNLQJ
FRQGLWLRQV
,WLVHVWLPDWHGE\&*,$5WKDWFXUUHQWO\WZRWKLUGV
RIWKHZRUOG·VGRPHVWLFDQLPDOVVXFKDVUXPLQDQWV
DUH NHSW LQ GHYHORSLQJ FRXQWULHV ZKHUH RYHU  SHU
FHQW DUH RZQHG E\ UXUDO VPDOOKROGHUV %\  WKH
SURGXFWLRQRIPHDWDQGHJJVLQGHYHORSLQJFRXQWULHV
KDG VXUSDVVHG WKDW LQ GHYHORSHG FRXQWULHV DQG WKH
SURGXFWLRQ JDS IRU PLON ZDV DOPRVW FORVHG )$2
&/DQGFRQYHUVLRQIRUOLYHVWRFNSURGXFWLRQ
/LYHVWRFN SURGXFWLRQ DQG DQLPDO VRXUFH IRRG KDYH
SOD\HGDFULWLFDOUROHLQKXPDQGHYHORSPHQW5DQGROSK
D7KHZRUOG·VOLYHVWRFNSRSXODWLRQH[SHULHQFHG
DQ XQSUHFHGHQWHG RYHUDOO LQFUHDVH RI  SHU FHQW
EHWZHHQ  DQG  IRU WKH IRXU PDMRU DQLPDO
FDWHJRULHV RI FDWWOH VKHHS DQG JRDWV SLJV DQG
FKLFNHQ ,Q  WRWDO VWRFNV LQ WKHVH FDWHJRULHV
DPRXQWHG WR DOPRVW  ELOOLRQ DQLPDOV  ELOOLRQ
HW DO  DQG KDYH UHJDLQHG SURPLQHQFH LQ FDWWOHSHUFHQWELOOLRQVKHHSDQGJRDWV
WKH UHFHQW GHEDWH RQ WKH IRRG FULVLV $FFRUGLQJ WR SHU FHQW  PLOOLRQ SLJV  SHU FHQW DQG 
HVWLPDWHV E\ WKH )$2 D WKH OLYHVWRFN VHFWRU ELOOLRQFKLFNHQSHUFHQW$VWDEOHVKRZVWKH
DFFRXQWV IRU  SHU FHQW RI DJULFXOWXUDO *'3 DQG LQFUHDVH LQ OLYHVWRFN KDV EHHQ PRVW SURQRXQFHG LQ
SDUWLDOO\HPSOR\VELOOLRQSHRSOH7KHVHFWRULVRI
SDUWLFXODU LPSRUWDQFH WR WKH HFRQRP\ LQ GHYHORSLQJ
FRXQWULHV ZKHUH LW FRQWULEXWHV XS WR  SHU FHQW RI
DJULFXOWXUDO *'3 DQG VHUYHV DV D PDMRU VRXUFH RI
OLYHOLKRRG IRU DERXW  PLOOLRQ UXUDO SRRU &*,$5
$IULFDDQG$VLDZKHUHDVWKHVWDWLVWLFVVKRZGHFOLQLQJ
OLYHVWRFNKROGLQJVLQ(XURSHDQGDPRGHUDWHLQFUHDVH
LQ$PHULFDDQG2FHDQLD
7KH WUHQG RI LQFUHDVLQJ OLYHVWRFN SRSXODWLRQV
%HVLGHVLWVHFRQRPLFLPSRUWDQFHWRDJULFXOWXUH ZRUOGZLGH VHHPV WR EH FRQWLQXLQJ LQ OLQH ZLWK DQ
LQJHQHUDOOLYHVWRFNDUHDPDMRUDVVHWSDUWLFXODUO\LQ H[SHFWHG GRXEOLQJ RI PHDW FRQVXPSWLRQ E\ 
SDVWRUDO DQG DJURSDVWRUDO V\VWHPV )$2 D FRPSDUHG ZLWK WKH SUHVHQW UDWH RI FRQVXPSWLRQ
IXOÀOOLQJ YDULRXV IXQFWLRQV LQ UXUDO KRXVHKROGV DQG 1DUGRQH HW DO  7KLV ZLOO UHVXOW LQ DQQXDO
FRPPXQLWLHV,QDGGLWLRQWREHLQJDQLPSRUWDQWVRXUFH JOREDOPHDWSURGXFWLRQRIPLOOLRQWRQVDQGDPLON
RI IRRG DQG LQFRPH OLYHVWRFN RIIHU FRQVLGHUDEOH RXWSXW RI  PLOOLRQ WRQV )$2 D +RZHYHU

7DEOH*URZWKRIOLYHVWRFNDQGVKDUHVRIGLIIHUHQWOLYHVWRFNE\UHJLRQ²SHUFHQW

$PHULFD $VLD $IULFD (XURSH 2FHDQLD :RUOG

,QFUHDVHLQFDWWOH      
,QFUHDVHLQVKHHSDQGJRDWV      
,QFUHDVHLQSLJV      
,QFUHDVHFKLFNHQV      
6KDUHRIFDWWOH      
6KDUHRIVKHHSDQGJRDWV      
6KDUHRISLJV      
6KDUHRIFKLFNHQ      
7RWDOVKDUHRIOLYHVWRFN      
7RWDOLQFUHDVH      
,QFUHDVHLQKXPDQSRSXODWLRQ²      

6RXUFH)$267$7
 75$'($1'(19,5210(175(9,(:

LW LV H[SHFWHG WKDW JURZWK UDWHV RI PHDW SURGXFWLRQ D OHVV SRVLWLYH RU HYHQ D QHJDWLYH FRUUHODWLRQ IRU
ZLOO GHFUHDVH ZKHUHDV WKRVH RI PLON ZLOO FRQWLQXH WR FRXQWULHV ZLWK KLJKHU *'3 SHU FDSLWD %HVLGHV WKH
ULVHUDSLGO\DVLQFUHDVHGGHPDQGIRUGDLU\SURGXFWV LPSRUWDQWUROHRILQFRPHOHYHOVXUEDQL]DWLRQSOD\VD
LQ GHYHORSLQJ FRXQWULHV DSSHDUV WR EH FRQWLQXLQJ FRQVLGHUDEOH UROH LQ ERRVWLQJ FRQVXPSWLRQ RI PHDW
XQDEDWHG)$2D DQGPLONSURGXFWVDVDUHVXOWRISHRSOHDGGLQJYDULHW\
WR WKHLU GLHW 'HOJDGR  'LHWDU\ WUHQGV FDQ EH
$V D UHVXOW RI LQFUHDVLQJ GHPDQG IRU OLYHVWRFN VXPPDUL]HGLQWHUPVRIGHFUHDVLQJLQWDNHRIIUXLWDQG
SURGXFWVDQGWKHUDSLGJURZWKLQOLYHVWRFNSURGXFWLRQ YHJHWDEOHVDQGLQFUHDVLQJLQWDNHRIPHDWVXJDUVDOW
OLYHVWRFN V\VWHPV KDYH H[SHULHQFHG SURIRXQG DQG SUHFRRNHG DQG FRQYHQLHQFH IRRGV 3RSNLQ
FKDQJHV ,$$67'  +RZHYHU QRW DOO OLYHVWRFN :+2)$2FLWHGLQ,$$67'6RFLR
V\VWHPVKDYHEHHQHTXDOO\DIIHFWHGDQGFKDOOHQJHG FXOWXUDOIDFWRUVVXFKDVWUDGLWLRQVDQGUHOLJLRXVEHOLHIV
E\FKDQJLQJFRQGLWLRQVDQGULVNVIURPWKHHIIHFWVRI DOVR KDYH D PDMRU LQÁXHQFH RQ WKH FRQVXPSWLRQ RI
FOLPDWHFKDQJHWKDWFDQDIIHFWWKHIRRGV\VWHP*RG OLYHVWRFN SURGXFWV ZKLOH QDWXUDO HQGRZPHQW KDYLQJ
IUD\ HW DO  ,QGXVWULDO OLYHVWRFN V\VWHPVDUHRQ DGLUHFWLPSDFWRQSURGXFWLRQSRWHQWLDO2QHH[DPSOH
WKHULVHZRUOGZLGHDQGDUHLQGLVSHQVDEOHIRUPHHWLQJ RI VRFLRFXOWXUDO GLIIHUHQWLDWLRQ LV 6RXWK $VLD ZKHUH
WKH JOREDO GHPDQG IRU OLYHVWRFN SURGXFWV 7KHVH PHDWFRQVXPSWLRQLVORZHUWKDQH[SHFWDWLRQVEDVHG
LQWHQVLYH V\VWHPV DUH KRZHYHU EHLQJ LQFUHDVLQJO\ RQ LQFRPH OHYHOV )$2 D )XUWKHU GULYHUV RI
FRQIURQWHG ZLWK HQYLURQPHQWDO UHVWULFWLRQV DQG ULVLQJ OLYHVWRFN SURGXFWLRQ WKDW DIIHFW FRQVXPSWLRQ DQG
IHHG SULFHV 6HUp HW DO  0L[HG FURSOLYHVWRFN SULFHVDUHUHODWHGWRWKHGHYHORSPHQWRIPDUNHWVDQG
V\VWHPVZKHUHFURSVDQGDQLPDOVDUHLQWHJUDWHGRQ WR LPSURYHPHQWV LQ WUDQVSRUW DQG WUDGH +DZNHV
WKH VDPH IDUP ,$$67'  ZLOO FRQWLQXH WR EH 
FULWLFDO WR IXWXUH IRRG VHFXULW\ DV D ODUJH SURSRUWLRQ
RI WKH JOREDO SRSXODWLRQ GHSHQGV RQ WKHVH V\VWHPV %HWZHHQDQGPHDWSURGXFWLRQLQGHYHORS
IRULWVOLYHOLKRRG7KRUQWRQHWDO,WLVH[SHFWHG
WKDWIDUPHUVLQWKHVHV\VWHPVZLOOIXUWKHUGLYHUVLI\DQG
LQWHQVLI\WKHLUSURGXFWLRQLQWKHIDFHRIWKHFKDOOHQJHV
SRVHG E\ LQFUHDVLQJ FRPSHWLWLRQ IRU ODQG DQG ULVLQJ
FRVWVRILQSXWVDVZHOODVDFFHVVWRVHUYLFHV6HUpHWDO
HGFRXQWULHVLQFUHDVHGE\RQO\SHUFHQWZKHUHDV
LW DOPRVW TXDGUXSOHG LQ GHYHORSLQJ FRXQWULHV ,W ZDV
PDLQO\WKH(DVWDQG6RXWK$VLDQFRXQWULHV&KLQDDQG
%UD]LOWKDWDFFRXQWHGIRUWKLVLQFUHDVH&KLQDVKRZHG
WKH ELJJHVW JURZWK LQ PHDW SURGXFWLRQ GXULQJ WKLV
3DVWRUDOV\VWHPVDUHFRQIURQWHGZLWKGLIIHUHQW SHULRGSHUFHQWDQGWRGD\DFFRXQWVIRUDOPRVW
GHYHORSPHQWVDQGUHVXOWLQJDGDSWDWLRQUHTXLUHPHQWV  SHU FHQW RI WKH PHDW SURGXFHG LQ GHYHORSLQJ
2QWKHRQHKDQGLQVXLWDEOHDUHDVLPSURYHPHQWVLQ FRXQWULHVRUSHUFHQWRIWKHWRWDOZRUOGSURGXFWLRQ
SDVWXUHV DQG DGDSWHG PDQDJHPHQW V\VWHPV FRXOG )$2 D ,QGLD RQ WKH RWKHU KDQG VKRZHG
LQFUHDVH WKH HFRQRPLF YLDELOLW\ RI OLYHVWRFN UHDULQJ LPSUHVVLYHJURZWKRIPLONSURGXFWLRQDFFRXQWLQJIRU
+RZHYHURQWKHRWKHUKDQGSDVWRUDOV\VWHPVZLOODOVR SHUFHQWRIWKHZRUOG·VPLONVXSSO\EXWLWUHPDLQVD
KDYHWRFRSHZLWKWKHJURZLQJHQFURDFKPHQWRIFURS UDWKHUVPDOOSURGXFHURIPHDWLQUHODWLRQWRLWVVL]HDQG
SURGXFWLRQ 6HUp HW DO  DFFHOHUDWLQJ SDVWXUH SRSXODWLRQ)$2D
GHJUDGDWLRQDQGLQFUHDVLQJO\GLIÀFXOWDFFHVVWRIHHG
DQGZDWHUUHVRXUFHV7KRUQWRQ $QQXDO PHDW FRQVXPSWLRQ SHU FDSLWD ZRUOGZLGH LV
SURMHFWHGWRLQFUHDVHVKDUSO\E\SHUFHQWIURP
'ULYHUV RI FKDQJH LQ WKH OLYHVWRFN VHFWRU ,W LV ² IURP  NJ WR RYHU  NJ LQ  )$2 E
FRPPRQO\ DVVXPHG WKDW WKH PDMRU GULYHUV RI WKH $FFRUGLQJ WR %RXZPDQ HW DO  DQG %UXLQVPD
REVHUYHGLQFUHDVHLQSURGXFWLRQDQGFRQVXPSWLRQRI  WKH JUHDWHVW LQFUHDVH LQ PHDW FRQVXPSWLRQ
OLYHVWRFN SURGXFWV DUH UHODWHG WR WKH JURZLQJ JOREDO LV H[SHFWHG WR RFFXU LQ GHYHORSLQJ FRXQWULHV 
SRSXODWLRQ DQG WR GLHWDU\ FKDQJHV DV D UHVXOW RI SHU FHQW DQG WUDQVLWLRQ HFRQRPLHV  SHU FHQW ,Q
ULVLQJ LQFRPHV DPRQJ D FRQVLGHUDEOH SURSRUWLRQ RI LQGXVWULDOL]HG FRXQWULHV D PRGHUDWH LQFUHDVH RI 
WKHZRUOG·VSRSXODWLRQ1HOOHPDQQHWDO)$2 SHU FHQW UHSUHVHQWLQJ DQ DQQXDO PHDW FRQVXPSWLRQ
D +RZHYHU SRSXODWLRQ JURZWK LV RQO\ RQH RI RIURXJKO\NJSHUSHUVRQLVIRUHFDVW*LYHQWKDW
PDQ\IDFWRUVDQGDUJXDEO\QRWWKHPRVWSURPLQHQW WKH FRQYHUVLRQ UDWH RI SODQW WR DQLPDO PDWWHU LV RQO\
WDEOH$VWXG\E\)$2DVKRZHGDSRVLWLYH DERXW  SHU FHQW *RGIUD\ HW DO  D IXUWKHU
FRUUHODWLRQEHWZHHQLQFUHDVHGLQFRPHVDQGOLYHVWRFN LQFUHDVH LQ PHDW FRQVXPSWLRQ ZLOO QHFHVVDULO\ DOWHU
FRQVXPSWLRQ LQ FRXQWULHV ZLWK ORZHU LQFRPHV EXW WKH UDWLR RI IRRG DQG IHHG SURGXFWLRQ DQG ZLOO KDYH
7KH5ROHRI&KDQJHVLQ/DQG8VH
PDMRULPSOLFDWLRQVIRUWKHSULFHVRIVWDSOHIRRGVDQG
ODQGFRQYHUVLRQV
/LYHVWRFN SURGXFWLRQ DQG ODQG FRQYHUVLRQ ,W LV
HVWLPDWHG WKDW DERXW  SHU FHQW RI WKH JOREDO ODQG

RI DERXW  SHU FHQW IRU WKH SHULRG ² ,Q
WKH HYHQW WKDW JUD]LQJ V\VWHPV DUH QRW H[SDQGHG
EXW OLYHVWRFN SURGXFWLRQ LV LQWHQVLÀHG WR PHHW WKH
DQWLFLSDWHGGHPDQGIRUOLYHVWRFNSURGXFWVFURSODQG
IRUDQLPDOIHHGSURGXFWLRQZRXOGKDYHWRLQFUHDVHE\
DUHDLVXVHGIRUOLYHVWRFNJUD]LQJPDLQO\DVSDVWRUDO PLOOLRQKD/DPELQDQG0H\IURLGW
V\VWHPVDQGWRDPXFKOHVVHUH[WHQWDVPL[HGFURS
OLYHVWRFNV\VWHPV'HOJDGRHWDO)$2D 7KH REVHUYHG JURZWK LQ JOREDO OLYHVWRFN GHPDQG
8QOLNH LQGXVWULDO OLYHVWRFN SURGXFWLRQ V\VWHPV WKHVH DQGKRZLWWUDQVODWHVLQWKHIXWXUHLQWRDOORFDWHGODQG
V\VWHPV GR QRW UHO\ RQ H[WHUQDO LQSXWV RI IHUWLOL]HUV DUHDZLOOODUJHO\GHSHQGRQLQWHUQDWLRQDOLQYHVWPHQWV
SHVWLFLGHV LUULJDWLRQ DQG IHHG )RGGHU SURGXFWLRQ LQ DJULFXOWXUDO ODQG SDUWLFXODUO\ LQ GHYHORSLQJ DQG
LV RIWHQ DEVHQW LQ H[WHQVLYH SDVWRUDO V\VWHPV RU LV WUDQVLWLRQ HFRQRPLHV +/3( E $FFRUGLQJ WR
OLPLWHG WR VKRUWHU SHULRGV RI FRPSOHPHQWDU\ IHHGLQJ GDWD IRU  IURP WKH ,QWHUQDWLRQDO /DQG &RDOLWLRQ
HJZLQWHUIRGGHURUWRIHHGSURGXFWVGHULYHGIURP
GHFHQWUDOL]HGDQGQRQLQGXVWULDOL]HGIRRGSURFHVVLQJ
,QRUGHUWRIHHGWKHFXUUHQWJOREDOOLYHVWRFNSRSXODWLRQ
DERXWSHUFHQWRIWRWDODUDEOHODQGLVXVHGIRUIHHG
,/&  SHU FHQW RI UHJLVWHUHG ODUJHVFDOH ODQG
DFTXLVLWLRQV ZHUH UHODWHG WR JUD]LQJ JURXQGV RU
DQLPDO IHHG SURGXFWLRQ 7KH ,/& HVWLPDWHV WKH WRWDO
DUDEOH ODQG DQG SDVWXUH DUHD XVHG RU DOORFDWHG WR
LQWHUQDWLRQDO ODQG LQYHVWRUV IRU OLYHVWRFN WR EH 
FURSSURGXFWLRQ)$2DHVWLPDWHVWKDW´OLYHVWRFN
SURGXFWLRQ DFFRXQWV IRU  RI DOO DJULFXOWXUDO ODQG
DQG  RI WKH ODQG VXUIDFH RI WKH SODQHWµ 'HVSLWH
WKHRYHUDOOVWURQJLQFUHDVHLQWKHOLYHVWRFNSRSXODWLRQ
EHWZHHQ  DQG  WKH DUHD XQGHU SDVWXUH
PLOOLRQ KD ,QYHVWPHQWV GLUHFWO\ UHODWHG WR OLYHVWRFN
SURGXFWLRQDUHWKXVDYHU\SURPLQHQWGULYHURIODUJH
VFDOH ODQG DFTXLVLWLRQV JLYHQ WKDW DERXW  PLOOLRQ
KD RI ODQG ZRUOGZLGH DUH HVWLPDWHG WR KDYH EHHQ
OHDVHGRUVROGRUDUHXQGHUQHJRWLDWLRQLQWKHSHULRG
ZRUOGZLGHLQFUHDVHGE\RQO\E\SHUFHQWZKLOHWKH EHWZHHQDQG$QVHHXZHWDO
DUHDXQGHUFURSVLQFUHDVHGE\SHUFHQW)$26WDW
7KHZRUOGIRUHVWDUHDGHFOLQHGEHWZHHQ /LYHVWRFNSURGXFWLRQDQG HQYLURQPHQWDO LPSOLFDWLRQV
DQG  E\  SHU FHQW RU E\ DOPRVW  PLOOLRQ 7RGD\ PRUH WKDQ KDOI RI WKH HDUWK·V ODQG VXUIDFH LV
KD:RUOG%DQN²ODUJHUWKDQWKHDUHDRI3HUX XVHG IRU DJULFXOWXUH DQG HVWLPDWHV VXJJHVW WKDW 
7KHVH ÀJXUHV LPSO\ WKDW WKH DEVROXWH ODQG DUHD DQG SHUFHQWRIWKLVLVPRGHUDWHO\GHJUDGHGZKLOHDQRWKHU
WKH VKDUH RI DUDEOH ODQG XVHG IRU IHHG SURGXFWLRQ  SHU FHQW LV KLJKO\ GHJUDGHG UHVXOWLQJ LQ D JOREDO
DQGJUD]LQJDUHVWLOOJURZLQJDWWKHH[SHQVHRIIRUHVW UHGXFWLRQ LQ FURS \LHOG RI  SHU FHQW %UHX HW DO
ODQGV7KH)$2EUHSRUWVWKDWJUD]LQJODQGLVD 2OGHPDQ:RRG6HEDVWLDQDQG6FKHUU
NH\GULYHURIGHIRUHVWDWLRQSDUWLFXODUO\LQWKH$PD]RQ  ,Q DGGLWLRQ LW LV HVWLPDWHG WKDW DERXW  SHU
%DVLQZKHUHSHUFHQWRIWKHFOHDUHGIRUHVWVLVXVHG FHQWRUPLOOLRQKDRIWKHZRUOG·VJUD]LQJODQGDQG
DVSDVWXUHDQGIRUIHHGFURSV$OWKRXJKPRVWRIWKH  SHU FHQW RI UDQJHODQGV ORFDWHG LQ GU\ODQG DUHDV
ZRUOG·VIHHGFURSSURGXFWLRQVWLOOWDNHVSODFHLQ2(&' KDYH EHHQ GHJUDGHG DV UHVXOW RI RYHUJUD]LQJ VLQFH
FRXQWULHVLQWKHUHFHQWSDVWLWKDVEHHQREVHUYHGWKDW 'HOJDGRHWDO2YHUJUD]LQJLVDIXQFWLRQ
GLIIHUHQWGHYHORSLQJFRXQWULHVLQ6RXWK$PHULFD)$2 RIJUD]LQJDQGUHFRYHU\WLPHWKHQXPEHURIJUD]LQJ
DEXWLQFUHDVLQJO\LQ$IULFDDVZHOODUHUDSLGO\
H[SDQGLQJ WKHLU SURGXFWLRQ RI IHHG FURSV QRWDEO\
PDL]HDQGVR\EHDQ
%DVHGRQWKHGHYHORSPHQWVFHQDULRVLQ)$2·VUHSRUW
:RUOG $JULFXOWXUH 7RZDUGV  %UXLQVPD
DQLPDOVDQGQDWXUDOUHVRXUFHEXIIHULQJFDSDFLW\7KH
HIIHFWVRIRYHUJUD]LQJLQFOXGHDUHGXFWLRQLQVRLOFRYHU
FRPSDFWLRQOHDGLQJWRUHGXFHGZDWHULQÀOWUDWLRQDQG
ZDWHU DQG ZLQGLQGXFHG VRLO HURVLRQ $W WKH VDPH
WLPH RYHUJUD]LQJ FDQ DOWHU WKH FRPSRVLWLRQ RI WKH
YHJHWDWLRQ ZLWK SDODWDEOH SHUHQQLDO VSHFLHV EHLQJ
 DQG :LUVHQLXV $]DU DQG %HUQGHV  UHSODFHGE\OHVVSDODWDEOHSODQWVGXHWRWKHLUUHGXFHG
FDOFXODWH DQ LQFUHDVH RI  PLOOLRQ KD LQ WKH WRWDO DELOLW\ WR FRPSHWH /LQLJHU HW DO  'U\ODQGV
DJULFXOWXUDO DUHD E\  RU  SHU FHQW PRUH WKDQ DQGPRXQWDLQDUHDVDUHSDUWLFXODUO\DIIHFWHGE\VXFK
WRGD\ /DPELQ DQG 0H\IURLGW  SUHVHQW D KLJK RYHUJUD]LQJ DV LQ PDQ\ FDVHV OLYHVWRFN LV WKH PDLQ
HVWLPDWHIRUDQLQFUHDVHLQWKHDUHDXQGHUSHUPDQHQW DVVHW RI WKH SHRSOH OLYLQJ LQ WKHVH RIWHQ PDUJLQDO
SDVWXUHRIPLOOLRQKDE\ZKLFKZRXOGEHLQ DUHDV)$2E'HOJDGRHWDO5HGXFWLRQ
OLQHZLWKPRVWODQGXVHPRGHOVWKDWSURMHFWDQLQFUHDVH RI RYHUJUD]LQJ DQG EHWWHU SDVWXUH SURGXFWLYLW\ FDQ

EHDFKLHYHGE\LQVWLWXWLRQDODQGUHJXODWRU\PHDVXUHV
UHODWLQJ WR DFFHVV DQG XVH RI FRPPRQO\ SRROHG
UHVRXUFHVE\EHWWHUSDVWXUHPDQDJHPHQWSUDFWLFHV
DQG E\ LPSURYLQJ OLYHVWRFN TXDOLW\ DQG SURGXFWLYLW\
%HVLGHV FKDOOHQJHV UHODWHG WR RYHUJUD]LQJ WKH
OLYHVWRFN VHFWRU DQG WKH GLIIHUHQW VHJPHQWV RI WKH
SURGXFWLRQ FKDLQ DOVR KDYH D FRQVLGHUDEOH HIIHFW
RQ ZDWHU XVH ZDWHU TXDOLW\ DQG K\GURORJ\ DQG
75$'($1'(19,5210(175(9,(:
PDUJLQDOL]LQJ VPDOOKROGHUV DQG WKHLU PXOWLIXQFWLRQDO
DJULFXOWXUDO V\VWHPV WKHUHE\ DIIHFWLQJ WKH IRRG
VHFXULW\RIWKHZRUOG·VSRRUSDUWLFXODUO\LQGHYHORSLQJ
DQGWUDQVLWLRQHFRQRPLHV$VHFRQGDUHDRIFRQFHUQ
UHODWHVWRWKHULVNRIOLYHVWRFNLQGXFHGHQYLURQPHQWDO
GHJUDGDWLRQ LPSHGLQJ HFRV\VWHP VHUYLFHV 7KLUG
XQFRQWUROOHG IXUWKHU GHYHORSPHQW RI OLYHVWRFN SRVHV
D PDMRU WKUHDW WR KXPDQ KHDOWK JLYHQ WKDW ]RRQRWLF
HFRV\VWHPV (VWLPDWHV E\ WKH )$2 D LQGLFDWH
WKDW DFWLYLWLHV UHODWHG WR WKH OLYHVWRFN VHFWRU DFFRXQW
IRU PRUH WKDQ  SHU FHQW RI  JOREDO ZDWHU XVH ZKLOH
IHHGSURGXFWLRQDFFRXQWVIRUDQRWKHUSHUFHQW
%HVLGHVLWVGLUHFWHIIHFWVRQWKHQDWXUDOUHVRXUFHEDVH
WKH OLYHVWRFN VHFWRU LV D PDMRU IDFWRU FRQWULEXWLQJ WR
FOLPDWH FKDQJH ,W LV HVWLPDWHG WKDW OLYHVWRFNUHODWHG
DFWLYLWLHVDUHUHVSRQVLEOHIRUSHUFHQWRIWKHZRUOG·V
*+* HPLVVLRQV RU DERXW  SHU FHQW RI WKH RYHUDOO
HPLVVLRQV IURP DJULFXOWXUDO DFWLYLWLHV 6WHLQIHOG HW
GLVHDVHV WUDQVPLWWHG EHWZHHQ DQLPDOV DQG KXPDQV
DFFRXQWIRUSHUFHQWRIDOOKXPDQSDWKRJHQV
,QRUGHUIRUWKHOLYHVWRFNVHFWRUWRDGGUHVVWKHDERYH
FKDOOHQJHV DQG FRQWULEXWH WR JOREDO GHYHORSPHQW LW
PXVW EHFRPH DQ LQWHJUDO SDUW RI JOREDO DJULFXOWXUH
PHHWLQJ VRFLDO HFRORJLFDO DQG HFRQRPLF
UHTXLUHPHQWVVLPXOWDQHRXVO\7RDFKLHYHWKLVDOOWKUHH
OLYHVWRFN SURGXFWLRQ V\VWHPV EHORZ ZLOO KDYH WR EH
FDUHIXOO\DGDSWHGDQGIXUWKHUGHYHORSHG7KHNH\WR
VXFKDGHYHORSPHQWLVIRULQYHVWPHQWVLQWKHOLYHVWRFN
DO  *UHHQKRXVH JDVHV LQ WKH OLYHVWRFNVHFWRU VHFWRUWREHPDGHQRWRQO\LQLQGXVWULDOSURGXFWLRQ
DULVH HLWKHU GLUHFWO\ WKURXJK HQWHULF IHUPHQWDWLRQ V\VWHPVEXWDOVRLQPL[HGOLYHVWRFNFURSV\VWHPV
DQG PDQXUH RU LQGLUHFWO\ DQG DORQJ WKH IRRG FKDLQ DQGLQSDVWRUDOV\VWHPV(FRQRPLFDOO\YLDEOHDQG
ODQGXVH FKDQJH IHHG SURGXFWLRQ SURFHVVLQJ DQG VRFLDOO\DFFHSWDEOHLQYHVWPHQWVZLOOQHHGWRDGGUHVV
WUDQVSRUW /LYHVWRFN UHDULQJ LV UHVSRQVLEOH IRU  SHU LQFUHDVHGSURGXFWLYLW\HQYLURQPHQWDOFRQFHUQVDQG
FHQW RI FDUERQ GLR[LGH &2 HPLVVLRQV ZKLFK DUH WKHFRPSHWLQJODQGUHVRXUFHGHPDQGVRIFURSDQGOL
UHOHDVHG ZKHQ IRUHVWV DQG RWKHU QDWXUDO YHJHWDWLRQ YHVWRFNSURGXFWLRQV\VWHPV7RDFKLHYHWKLVHQDEOLQJ
DUHUHSODFHGE\SDVWXUHDQGIHHGFURSV6WHLQIHOGHW LQVWLWXWLRQDO DQG SROLF\ IUDPHZRUNV DQG FRRSHUDWLRQ
DOHVWLPDWHWKDWSHUFHQWRIOLYHVWRFNUHODWHG
FDUERQ HPLVVLRQV DUH GXH WR GHIRUHVWDWLRQ  SHU
FHQWDUHIURPHQWHULFIHUPHQWDWLRQDQGSHUFHQW
IURPPDQXUH$VLPLODUDPRXQWRI&2LVUHOHDVHGE\
WKH RQIDUP XVH RI IRVVLO IXHO E\ WKH PDQXIDFWXULQJ
RI FKHPLFDO IHUWLOL]HUV E\ WUDQVSRUW DQG E\ OLYHVWRFN
SURGXFW SURFHVVLQJ 7KH OLYHVWRFN VHFWRU LV DOVR
UHVSRQVLEOH IRU HPLVVLRQV RI RWKHU *+*V LQFOXGLQJ
 SHU FHQW RI KXPDQLQGXFHG PHWKDQH ZKLFK KDV
DW GLIIHUHQW OHYHOV DUH QHHGHG ,Q RUGHU WR PDNH
OLYHVWRFN V\VWHPV D SDUW RI VXVWDLQDEOH DJULFXOWXUH
LQWHUQDWLRQDO FRRSHUDWLRQ ZLOO EH QHFHVVDU\ DV ZHOO
DVFRRUGLQDWHGDFWLRQDWWKHUHJLRQDODQGORFDOOHYHOV
WR DFKLHYH FKDQJHV LQ WKH ZD\ OLYHVWRFN SURGXFWV
DUH SURGXFHG DQG FRQVXPHG 7KLV WUDQVIRUPDWLRQ
ZLOO GHPDQG DFWLRQ IURP DOO DFWRUV LQ OLYHVWRFN DQG
DJULFXOWXUH V\VWHPV LQFOXGLQJ SURGXFHUV LQYHVWRUV
SURFXUHUV GHFLVLRQPDNHUV UHVHDUFKHUV DQG QRW
WLPHVWKHJOREDOZDUPLQJSRWHQWLDO*:3RI&2 OHDVW RI DOO IURP FRQVXPHUV IRU PRUH LQIRUPDWLRQ
SHUFHQWRIDQWKURSRJHQLFQLWURXVR[LGHZLWK VHHWKHOHDGDUWLFOHRI,GHODQG5HLFKHUWLQFKDSWHU
WLPHVWKH*:3RI&2DQGSHUFHQWRIDPPRQLD RIWKLV5HYLHZ
ZKLFKLVDPDMRUFDXVHRIDFLGUDLQ)$2D)$2
D6WHLQIHOGHWDO
,PSOLFDWLRQVIRUWKHGHYHORSPHQWRIWKHOLYHVWRFNVHFWRU
7KHOLYHVWRFNVHFWRUSOD\VDQLPSRUWDQWUROHLQJOREDO
'&RQYHUVLRQVGXHWRVPDOOVFDOHIDUPLQJ
DQGUXUDOSRYHUW\
,QWKHFRPLQJGHFDGHVJOREDODJULFXOWXUHIDFHVWKUHH
HFRQRPLFGHYHORSPHQWDQGLQWKHOLYHOLKRRGVRIDERXW PDMRU FKDOOHQJHV L SURGXFLQJ DSSUR[LPDWHO\ 
ELOOLRQSHUVRQVGLUHFWO\LQYROYHGLQWKHDJULFXOWXUDO SHU FHQW PRUH IRRG IRU D SURMHFWHG SRSXODWLRQ RI 
VHFWRU ,Q SDUWLFXODU WKH VHFWRU LQ FRPELQDWLRQ ZLWK ELOOLRQSHRSOHE\)$2ELLGHDOLQJZLWK
RWKHUDJULFXOWXUDODFWLYLWLHVSURYLGHVRSSRUWXQLWLHVIRU D YDULHW\ RI LQFUHDVLQJ ULVNV DQG VKRFNV LQFOXGLQJ
SRYHUW\ UHGXFWLRQ DQG JUHDWHU IRRG VHFXULW\ IRU WKH FOLPDWHFKDQJHDQGFRPPRGLW\SULFHYRODWLOLW\DQGLLL
JURZLQJ ZRUOG SRSXODWLRQ +RZHYHU UDSLG FKDQJHV HQVXULQJ DQG HQKDQFLQJ WKH SURYLVLRQ RI HFRV\VWHP
LQ WKLV IDVWJURZLQJ VHFWRU DOVR VXEVWDQWLDOO\ ULVN VHUYLFHV VXFK DV FOLPDWH FKDQJH PLWLJDWLRQ DQG
7KH5ROHRI&KDQJHVLQ/DQG8VH 

ZDWHUUHJXODWLRQ7KHVHFKDOOHQJHVPRVWSURPLQHQWO\ /LQLQJHU  )DUPLQJ V\VWHPV KDYH HYROYHG

FRQFHUQ VPDOOVFDOH IDUPLQJ ZKLFK SURYLGHV D WKURXJK DGDSWDWLRQ WR YDULRXV QDWXUDO FRQGLWLRQV
OLYHOLKRRGIRUDERXWELOOLRQSHRSOHOLYLQJPRVWO\LQ 6RPHV\VWHPVIRFXVRQFURSSLQJRWKHUVRQOLYHVWRFN
ORZLQFRPHFRXQWULHVRIWKHJOREDO6RXWKYRQ%UDXQ UHDULQJDQGVWLOORWKHUVRQDFRPELQDWLRQRIERWK,Q
 7KHVH ZRPHQ PHQ DQG FKLOGUHQ DFFRXQW IRU $IULFDDQG$VLDDYHUDJHIDUPVL]HLVKDDQGJUDLQ
DERXWSHUFHQWRIWKHJOREDODJULFXOWXUDOSRSXODWLRQ \LHOGV PD\ YDU\ IURP  WR  WRQV SHU KHFWDUH LQ
DQG FXUUHQWO\ FXOWLYDWH DSSUR[LPDWHO\  SHU FHQW RI D ORZSRWHQWLDO PDQXDO WUDGLWLRQDO DQG VPDOOVFDOH
WKH ZRUOG·V DJULFXOWXUDO ODQG SURYLGLQJ DQ HVWLPDWHG V\VWHP )DUPV LQ GHYHORSLQJ FRXQWULHV DUH WHQGLQJ
SHUFHQWRIJOREDOFHUHDOSURGXFWLRQWDEOHDQG WR EHFRPH VPDOOHU ZKLOH IDUPV LQ PLGGOH WR KLJK
DERXWKDOIRIWRWDOIRRGSURGXFWLRQ,$$67' LQFRPH FRXQWULHV DUH EHFRPLQJ ODUJHU YRQ %UDXQ

&KDQJLQJ DJULFXOWXUDO SUDFWLFHV KDYH HQDEOHG ZRUOG
JUDLQ KDUYHVWV WR GRXEOH LQ WKH SDVW IRXU GHFDGHV 2I WKH  ELOOLRQ SHRSOH OLYLQJ LQ H[WUHPH SRYHUW\
ODUJHO\ GXH WR SURGXFWLRQ JDLQV UHVXOWLQJ IURP GHÀQHG DV WKRVH OLYLQJ RQ OHVV WKDQ GD\ LQ
*UHHQ 5HYROXWLRQ WHFKQRORJLHV LQFOXGLQJ KLJK DSSUR[LPDWHO\ELOOLRQLHDURXQGSHUFHQW
\LHOGLQJ FXOWLYDUV FKHPLFDO IHUWLOL]HUV DQG SHVWLFLGHV OLYHGLQUXUDODUHDV,)$'6LJQLÀFDQWSURJUHVV
PHFKDQL]DWLRQ DQG LUULJDWLRQ )ROH\ HW DO  <HW LQSRYHUW\DOOHYLDWLRQKDVEHHQDFKLHYHGLQ(DVW$VLD
WKH PDMRULW\ RI VPDOOVFDOH IDUPLQJ FRQWLQXHV WR EH ZKHUHWRGD\WKHLQFLGHQFHRIUXUDOSRYHUW\EDVHGRQ
FKDUDFWHUL]HG E\ ORZ ODERXU SURGXFWLYLW\ DQG ORZ WR WKH GD\ OLQH LV DURXQG  SHU FHQW ,Q 6RXWK
PRGHUDWH ODQG SURGXFWLYLW\ 6XE6DKDUDQ $IULFD DQG $VLD DQG VXE6DKDUDQ $IULFD ² SHU FHQW RI WKH
/DWLQ$PHULFDKDYHH[SHULHQFHGWKHOHDVWDJULFXOWXUDO SRSXODWLRQ VWLOO VXIIHUV IURP H[WUHPH SRYHUW\ ZKLOH
GHYHORSPHQW EXW PD\ KDYH WKH ODUJHVW SRWHQWLDO IRU ² SHU FHQW RI WKH UXUDO SRSXODWLRQ OLYHV RQ OHVV
LPSURYHPHQWLQWKHFRPLQJGHFDGHV
6PDOOVFDOH IDUPLQJ LQYROYHV JURZLQJ FURSV WR EH
XVHG DW OHDVW LQ SDUW E\ LQGLYLGXDO KRXVHKROGV 6XFK
IDUPLQJLVDVLJQLÀFDQWVRXUFHRIOLYHOLKRRGDQGVRPH
RI WKH FURSV DUH VROG LQ ORFDO RU QDWLRQDO PDUNHWV
WKDQ GD\ ,)$'  7KXV VPDOOVFDOH IDUPLQJ
DQGUXUDOSRYHUW\DUHLQWULQVLFDOO\OLQNHG
:KLOH WKHUH DUH KRXVHKROGV WKDW OLYH LQ SHUVLVWHQW
SRYHUW\ UHODWLYHO\ ODUJH SURSRUWLRQV RI SHRSOH
FRQWLQXRXVO\PRYHLQDQGRXWRISRYHUW\VRPHWLPHVLQ

7DEOH $VVHVVPHQWRIVPDOOVFDOHYHUVXVODUJHVFDOHIDUPLQJDWWKHJOREDOOHYHO

6PDOOVFDOH /DUJHVFDOH
7RWDO
PHWDEROLF PHFKDQL]HG
/DQGXQGHUFXOWLYDWLRQPLOOLRQKDD E  
3HUFHQWDJH   
3HRSOHLQDJULFXOWXUHPLOOLRQ E  
3HUFHQWDJHRISHRSOHLQDJULFXOWXUH   
1XPEHURIIDUPVPLOOLRQ  D 
3HUFHQWDJHRIVPDOODQGODUJHVFDOHIDUPV   
&XOWLYDWHGDUHDSHUIDUPKD F F F
3HUFHQWDJHRIODQGXQGHUFHUHDOSURGXFWLRQ   
$YHUDJHFHUHDO\LHOGVWRQVKD F F F
$QQXDOFHUHDOSURGXFWLRQPLOOLRQWRQV E  
3HUFHQWDJHFXOWLYDWHGRQVPDOODQGODUJHVFDOHIDUPV   
6RXUFHV(VWLPDWLRQVLQQRUPDOIRQWE\WKH&HQWUHIRU'HYHORSPHQWDQG(QYLURQPHQWEDVHGRQDYDLODEOHGDWD
LQEROGIURPESXEOLFVRXUFHV)$2:%,$$67'DQGF9RQ%UDXQ
1RWHV D &XOWLYDWHGODQGLVFRPSRVHGRIPRVWRIWKHFURSODQGSOXVSDUWVRIDQLPDOIHHGSURGXFWLRQODQGDV
ZHOODVVRPHDJURIRUHVWU\DQGELRIXHODUHDVVHHDOVRWDEOH

DPDWWHURI\HDUV+RXVHKROGVIDOOLQWRSRYHUW\SULPDULO\
DVDUHVXOWRIDODFNRIUHVLOLHQFHWRULVNVDQGVKRFNV
$SDUW IURP LPSRUWDQW DVSHFWV LQFOXGLQJ SROLWLFDO
RU VRFLDO FRQÁLFWV LOO KHDOWK DQG XQIRUHVHHQ VRFLDO
H[SHQVHV PDQ\ ULVNV UHODWH WR IDUPLQJ SUDFWLFHV
ORVVRIDFFHVVWRODQGDQGQDWXUDOUHVRXUFHVPDUNHW
G\QDPLFV DQG SULFH YRODWLOLW\ SRRU KDUYHVWV GXH
WR HQYLURQPHQWDO ULVNV DQG FOLPDWH YDULDELOLW\ DQG
ZHDNHQHG LQVWLWXWLRQDO HQYLURQPHQWV &RQYHUVHO\
KRXVHKROGVFDQHVFDSHIURPSRYHUW\ZKHQWKH\KDYH
VHFXUHGDFFHVVWRODQGHGXFDWLRQDQGRZQHUVKLSRI
SK\VLFDO DVVHWV )XUWKHUPRUH RSSRUWXQLWLHV VXFK DV
PDUNHWV LQIUDVWUXFWXUH DQG HQDEOLQJ LQVWLWXWLRQV SOD\
75$'($1'(19,5210(175(9,(:
SKLF WUHQGV DORQH SURYLGH DQ LQFRPSOHWH EDVLV :H
QHHGWRGUDZDPRUHGLIIHUHQWLDWHGSLFWXUHLQVSDFHDQG
WLPH DQG XQGHUVWDQG KRZ WKH UHODWLRQVKLS EHWZHHQ
SRSXODWLRQJURZWKDQGODQGFRQYHUVLRQLVPHGLDWHGE\
RWKHUIDFWRUVVXFKDVHQYLURQPHQWDOFRQGLWLRQVODQG
VHWWOHPHQW SROLFLHV DQG PDUNHW IRUFHV $JULFXOWXUDO
ODQG KDV VWHDGLO\ JURZQ E\  SHU FHQW SHU DQQXP
GXULQJ WKH SDVW WZR GHFDGHV <HW PRVW RI WKLV PXVW
EHDWWULEXWHGWRWKHH[WHQVLRQRISHUPDQHQWSDVWXUH
ZKLOHFURSODQGKDVUHPDLQHGIDLUO\VWDWLF7KHUHKDYH
EHHQLPSRUWDQWUHJLRQDOGLIIHUHQFHVZLWKDGHFUHDVH
RIFURSODQGLQ(XURSHWKDWLVRIIVHWE\ODUJHJDLQVLQ
$IULFDDQG/DWLQ$PHULFD$WWKHVDPHWLPHLUULJDWHG
DNH\UROH,)$' DUHDVKDYHVKRZQDSURJUHVVLYHEXWVORZLQJJURZWK
,Q FRQFOXVLRQ WKH VWDWXV RI VPDOOVFDOH IDUPLQJ
LV LQWULQVLFDOO\ OLQNHG WR D FRPSOH[ LQWHUSOD\ RI
GHWHUPLQDQWV UHODWLQJ WR D VSHFLÀF ORFDO FRQWH[W EXW
LW LV DOVR GULYHQ E\ GHYHORSPHQWV DW QDWLRQDO DQG
JOREDOOHYHOV$PRQJWKHVHWKHFRPSHWLQJGHPDQGV
IRUIRRGIHHGÀEUHDQGIXHODUHWKHPRVWSURPLQHQW
IDFWRUV WKDW LQWHQVLI\ SUHVVXUHV RQ ODQG 7KHVH VR
FDOOHG ´WHOHFRQQHFWLRQVµ RI ODQGXVH FKDQJH ZKHUH
SURGXFWLRQDQGFRQVXPSWLRQRIODQGEDVHGSURGXFWV
DUH LQFUHDVLQJO\ GLVWDQW DQG UDQJH DFURVV YDU\LQJ
VSDWLDO VFDOHV UHSUHVHQW D PDMRU FKDOOHQJH IRU
GHYLVLQJIXWXUHVWUDWHJLHVIRUVXVWDLQDEOHVPDOOVFDOH
UDWHGXULQJWKDWSHULRG:RRGHWDO7KHUHIRUH
LWPD\EHDVVXPHGWKDWVPDOOVFDOHIDUPLQJFXUUHQWO\
SOD\V D SURPLQHQW UROH LQ ODQG FRQYHUVLRQV LQ $IULFD
DQG WR D FHUWDLQ H[WHQW LQ /DWLQ $PHULFD DOWKRXJK
SDVWXUH H[WHQVLRQ UHODWHG WR FRPPHUFLDO IDUPLQJ LV
SUREDEO\ PRUH LPSRUWDQW ,Q $VLD WKH UROH RI VPDOO
VFDOHIDUPLQJLQODQGFRQYHUVLRQLVOHVVVLJQLÀFDQW
,Q UHJLRQV DIIHFWHG E\ VPDOOVFDOH ODQG FRQYHUVLRQV
LW DSSHDUV WKDW UDSLG DJULFXOWXUDO H[SDQVLRQ DQG
LQWHQVLÀFDWLRQ PDLQO\ RFFXUV DW WKH IULQJHV RI KLJK
SRWHQWLDO DUHDV ZKHUH WKH QDWXUDO SRWHQWLDO LV
SHUFHLYHGWREHXQGHUXWLOL]HG2QWKHRQHKDQGWKLV
IDUPLQJ*/3
/DQGFRQYHUVLRQVWKURXJKVPDOOVFDOHIDUPLQJ7RGD\
QHDUO\ KDOI RI WKH JOREDO ODQG VXUIDFH LV GHYRWHG WR
DJULFXOWXUDO DFWLYLWLHV 2OGHPDQ  )ROH\ HW DO
FRQFHUQV IRUHVW HGJHV DQG VWHHS PRXQWDLQ VORSHV
RQ WKH RWKHU KDQG WKHVH DUHDV RI UDSLG DJULFXOWXUDO
H[SDQVLRQ DUH PDLQO\ LQ VHPLDULG DUHDV ZLWK JRRG
VRLOVDQGWKHSRWHQWLDOIRUKLJKSURGXFWLYLW\LIZDWHUFDQ
EHSURYLGHG
7KLVVSUHDGRIDJULFXOWXUDOODQGIRUDJURZLQJ
ZRUOG SRSXODWLRQ UHSUHVHQWV SHUKDSV WKH PRVW
SURPLQHQW IHDWXUH RI JOREDO FKDQJH 7KH FRPLQJ
GHFDGHVZLOOZLWQHVVIXUWKHUVLJQLÀFDQWGHPRJUDSKLF
FKDQJHVZLWKWKHUXUDOSRSXODWLRQH[SHFWHGWRSHDN
EHWZHHQDQGIROORZHGE\DGHFOLQHDQGWKH
GHYHORSLQJ ZRUOG·V XUEDQ SRSXODWLRQ ZLOO RXWQXPEHU
WKH UXUDO SRSXODWLRQ ,Q 6RXWK(DVW $VLD WKH UXUDO
SRSXODWLRQLVDOUHDG\GHFUHDVLQJLQ1RUWK$IULFD:HVW
$VLDDQGLQ6RXWKDQG&HQWUDO$VLDQXPEHUVPD\VWDUW
$FFRUGLQJWR&KRPLW]DSSUR[LPDWHO\PLOOLRQ
SHRSOHOLYHLQUHPRWHWURSLFDOIRUHVWVDQGDERXW
PLOOLRQUXUDOSHRSOHOLYHLQRUQHDUWURSLFDOIRUHVWVDQG
VDYDQQDKV7KHIRUHVWVSURYLGHDOLYHOLKRRGIRUWKHVH
SHRSOHDVWKH\RIIHUODQGIRUIDUPLQJPDLQO\WKURXJK
VKLIWLQJ FXOWLYDWLRQ EXW WKH\ DUH DOVR DQ LPSRUWDQW
VRXUFH RI IRRG LQFRPH IXHO DQG PHGLFLQHV 6XFK
ODQGXVH SUDFWLFHV KDYH FDXVHG D ² PLOOLRQ
KDQHWORVVRIIRUHVWVRYHUWKHSDVW\HDUV81(3
WR GHFOLQH DURXQG  DQG LQ VXE6DKDUDQ $IULFD E+RZHYHUPXFKHYLGHQFHVKRZVWKDWLQUHFHQW
DURXQG,)$'1HYHUWKHOHVVSRYHUW\ZLOO
UHPDLQODUJHO\DUXUDOSUREOHP$Q\VWUDWHJ\IRUUXUDO
GHYHORSPHQWDQGSRYHUW\DOOHYLDWLRQZLOOWKXVKDYHWR
FRQVLGHUWKDWWKHPDMRULW\RIWKHZRUOG·VSRRUZLOOOLYH
LQUXUDODUHDVIRUPDQ\GHFDGHVWRFRPH
WLPHVFRPPHUFLDODJULFXOWXUHDQGRWKHUDFWLYLWLHVVXFK
DVURDGDQGXUEDQFRQVWUXFWLRQVUDWKHUWKDQVKLIWLQJ
FXOWLYDWRUV DQG VXEVLVWHQFH IDUPHUV KDYH EHHQ WKH
PDLQ GULYHUV RI GHIRUHVWDWLRQ 'H)ULHV HW DO 
*HLVWDQG/DPELQ0HUW]HWDO5XGHOHW
DO
,QWU\LQJWRXQGHUVWDQGWKHVLJQLÀFDQFHRIVPDOOVFDOH
IDUPLQJIRUPRUHUHFHQWODQGFRQYHUVLRQVGHPRJUD 'U\ODQGVDVHFRQGKRWVSRWRIVPDOOVFDOHDJULFXOWXUDO
7KH5ROHRI&KDQJHVLQ/DQG8VH 

)LJXUH$FWXDODQGSRWHQWLDOEHQHÀWVIURPDJULFXOWXUDODFWLYLWLHVDFFRUGLQJWRFXUUHQWDJULFXOWXUDOSRWHQWLDO

Main focus for multi-functional agricultural landscapes

High 1 Actual production benefits

2 Actual environmental
benefits at the farm level
3 Potential production benefits
3 4 Potential environmental
benefits at the farm level
5 Potential environmental
benefits at the agricultural
landscape
1
Benefits

2
Low

Negative
High Medium Low None

Agricultural potential

1RWH6KDGHGDUHDVKRZVWKHPDLQIRFXVRQSURPRWLQJPXOWLIXQFWLRQDODJULFXOWXUDOODQGVFDSHV
6RXUFH$XWKRUV

H[SDQVLRQFRYHUDSSUR[LPDWHO\SHUFHQWSHUFHQWRI IDUPLQJ WKH FRQYHUVLRQV UHODWHG WR VXFK SUHVVXUHV

WKHJOREDOODQGVXUIDFHDQGWKH\DUHKRPHWRPRUHWKDQ DQGWKHUHVXOWLQJHFRQRPLFVRFLDODQGHQYLURQPHQWDO
ELOOLRQSHRSOHSHUFHQWRIZKRPOLYHLQGHYHORSLQJ LPSDFWVIURPWKHORFDOWRWKHJOREDOOHYHO
FRXQWULHV 81(3 E 2YHUDOO DSSUR[LPDWHO\ 
SHU FHQW RI JOREDO WHUUHVWULDO QHW SULPDU\ SURGXFWLRQ 7KHUH LV D JURZLQJ FRQVHQVXV WKDW VXVWDLQDEOH
133 LV ORVW HDFK \HDU GXH WR GU\ODQG GHJUDGDWLRQ DJULFXOWXUDO LQWHQVLÀFDWLRQ LQ VPDOOVFDOH IDUPLQJ
RUEHWZHHQDQGSHUFHQWRIWKHSRWHQWLDO133LQ PXVW DGGUHVV WKH V\VWHPLF LQWHUDFWLRQV EHWZHHQ
GU\ODQGV =LND DQG (UE  $PRQJ YDULRXV RWKHU
WULJJHUVVXFKDVXUEDQL]DWLRQGHVHUWLÀFDWLRQZLOGÀUH
DQGRYHUJUD]LQJWKHWUDQVIRUPDWLRQRIJUDVVODQGVWR
FURSODQGVDQGLQDGHTXDWHFXOWLYDWLRQSUDFWLFHVSOD\D
NH\UROHLQVXFKGHJUDGDWLRQ SURFHVVHV ,QDGGLWLRQ
WKHH[SDQVLRQRIODUJHDQGVPDOOVFDOHDJULFXOWXUHLV
SXVKLQJSDVWRUDOLVWVLQWRPRUHPDUJLQDODUHDVWKHUHE\
IRUFLQJ WKHP LQWR YLFLRXV FLUFOHV RI LPSRYHULVKPHQW
DQGGHVHUWLÀFDWLRQ
DJULFXOWXUDO SURGXFWLYLW\ HQYLURQPHQWDO VHUYLFH
SURYLVLRQDQGWKHLPSURYHPHQWRIKXPDQZHOOEHLQJ
$ GLYHUVLW\ RI DJULFXOWXUDO DQG ODQGXVH SUDFWLFHV
FRPELQHG LQ PXOWLIXQFWLRQDO DJULFXOWXUDO ODQGVFDSHV
LV OLNHO\ WR DFKLHYH WKH EHVW VHW RI RXWFRPHV :KLOH
DJULFXOWXUDO LQWHQVLÀFDWLRQ ZLOO FRQWLQXH WR SOD\ DQ
LPSRUWDQW UROH LQ IXWXUH JOREDO IRRG SURGXFWLRQ
FRQWH[WVSHFLÀF DSSURDFKHV DUH DOVR QHHGHG LQ
RUGHU WR DFKLHYH VXVWDLQDEOH ODQG XVH EDVHG RQ
ELRSK\VLFDODVZHOODVVRFLRHFRQRPLFFRQVLGHUDWLRQV
7RZDUGV IXWXUH VWUDWHJLHV 6PDOOVFDOH IDUPLQJ
LQ PXOWLIXQFWLRQDO DJULFXOWXUDO ODQGVFDSHV 6PDOO
VFDOH IDUPLQJ PXVW EH DW WKH FHQWUH RI DQ\ VWUDWHJ\
WKDW SXUVXHV WKH JRDO RI IHHGLQJ D JURZLQJ ZRUOG
SRSXODWLRQZKLOHDGGUHVVLQJUXUDOSRYHUW\LQDFRQWH[W
RILQFUHDVLQJHQYLURQPHQWDOGHJUDGDWLRQDQGFOLPDWH
FKDQJH,WVKRXOGEXLOGRQDWKRURXJKXQGHUVWDQGLQJRI
WKHPDQLIROGDQGFKDQJLQJSUHVVXUHVRQVPDOOVFDOH
'H)ULHVDQG5RVHQ]ZHLJ0RUHRYHUKRWVSRW
DUHDVRIDJULFXOWXUDOH[SDQVLRQRQWKHIULQJHVRIKLJK
SRWHQWLDO DUHDV VKRXOG EHFRPH WKH PDLQ IRFXV IRU
VXFKPXOWLIXQFWLRQDODJULFXOWXUDOODQGVFDSHV)LJXUH
VFKHPDWLFDOO\SUHVHQWVWKHFRUHHOHPHQWVRIVXFKDQ
DSSURDFK
,Q )LJXUH  WRWDO SURGXFWLRQ DQG HQYLURQPHQWDO

EHQHÀWVDUHGHSLFWHGDORQJDJUDGLHQWRIGHFUHDVLQJ
DJULFXOWXUDO SRWHQWLDO 7KLV VWLSXODWHV WKDW IURP KLJK
SRWHQWLDODUHDV²RIWHQGRPLQDWHGE\LQWHQVLÀHGDQG
ODUJHVFDOH DJULFXOWXUH ² WKH SURGXFWLRQ EHQHÀWV
GHFUHDVH UDSLGO\ WRZDUGV PRUH PDUJLQDO DUHDV
GRPLQDWHG E\ VPDOOVFDOH DQG RIWHQ VXEVLVWHQFH
75$'($1'(19,5210(175(9,(:
(,PSOLFDWLRQVRIODQGFRQYHUVLRQVIRU
IRRGVHFXULW\
,PSOLFDWLRQVRIJOREDODQGORFDOFKDQJH*OREDOIRRG
VHFXULW\ LV SULPDULO\ GHSHQGHQW RQ WKH SURGXFWLRQ
RI IRRG LQ DJULFXOWXUH LQFOXGLQJ IRRG SURGXFWV IURP
IDUPLQJ FXUYH  0HDQZKLOH WKH KLJKHVW SRWHQWLDO IRUHVWVDQGÀVKHULHVEXWDOVRRQWKHGLVWULEXWLRQDQG
IRU DGGLWLRQDO SURGXFWLRQ EHQHÀWV FDQ EH ORFDWHG LQ DYDLODELOLW\ RI IRRG IRU FRQVXPHUV DQG VXEVLVWHQFH
PHGLXP WR ORZHU DJULFXOWXUDO SRWHQWLDO DUHDV FXUYH IDUPHUV DQG ÀQDOO\ RQ WKH DPRXQW RI IRRG VWRUHG
 +HQFH WKHVH DUHDV PLJKW RIIHU WKH EHVW UHWXUQV DW KRXVHKROG FRPPXQLW\ HQWHUSULVH QDWLRQDO DQG
RQ LQYHVWPHQWV IRU SURGXFWLYLW\ LQFUHDVH ,Q WHUPV RI LQWHUQDWLRQDO OHYHOV )RRG SURGXFWLRQ ZLOO GHSHQG RQ
DFWXDO HQYLURQPHQWDO EHQHÀWV FXUYH  DVVHVVPHQW
LVPRUHGLIÀFXOWEXWJHQHUDOO\WKH\ZRXOGDSSHDUWREH
UDWKHUQHJDWLYHERWKLQKLJKDQGORZSRWHQWLDODUHDV
FRPSULVLQJ ODUJH DV ZHOO DV VPDOOVFDOH IDUPLQJ
+RZHYHU WKH SRWHQWLDO HQYLURQPHQWDO EHQHÀWV
LQFUHDVHVOLJKWO\IURPKLJKWRORZHUSRWHQWLDODUHDVDW
KRZ PXFK ODQG LV DOORFDWHG WR RWKHU XVHV VXFK DV
IHHGÀEUHRUDOOIRUPVRIIXHOKRZPXFKLQFUHDVHLQ
SURGXFWLRQ LV SRVVLEOH SDUWLFXODUO\ IURP VPDOOVFDOH
IDUPLQJDQGRQWKHH[WHQWRIFKDQJHLQFRQVXPSWLRQ
SDWWHUQV WR DQLPDO SURWHLQ /DVW EXW QRW OHDVW IRRG
SURGXFWLRQ LV GHSHQGHQW RQ WKH DYDLODELOLW\ RI LQSXWV
WKHIDUPOHYHOFXUYHDQGVLJQLÀFDQWHQYLURQPHQWDO VXFK DV VHHGV ODQG ZDWHU QDWXUDO DQG LQGXVWULDO
EHQHÀWVFDQEHH[SHFWHGDWWKHDJULFXOWXUDOODQGVFDSH IHUWLOL]HUV DQG LQ SDUWLFXODU RQ WKH HIIHFWV RI FOLPDWH
OHYHOV FXUYH  :KLOH ODUJHVFDOH HQWHUSULVHV FRYHU
ZKROH ODQGVFDSHV VPDOOVFDOH HQWHUSULVHV DOORZ IRU
PXOWLSOH XVH DUHDV LQEHWZHHQ WKHUHE\ LQFUHDVLQJ
HQYLURQPHQWDO VHUYLFHV DQG RIIVHWWLQJ WUDGHRIIV RI
PRUHLQWHQVLYHFRPSRQHQWV
,Q VXPPDU\ VWUDWHJLHV IRU VXVWDLQDEOH LQWHQVLÀFDWLRQ
RI VPDOOVFDOH IDUPLQJ VKRXOG IRFXV RQ GHYHORSLQJ
DJULFXOWXUDO ODQGVFDSHV LQ DUHDV ZLWK PHGLXP WR
ORZ SRWHQWLDO IRU DJULFXOWXUH 7KHUH WKH KLJKHVW
DGGLWLRQDO SURGXFWLRQ SRWHQWLDOV FDQ EH WDSSHG
ZKLOH HQYLURQPHQWDO EHQHÀWV FDQ EH LQFUHDVHG
VLJQLÀFDQWO\ 6XFK VWUDWHJLHV LQ RUGHU WR OHDSIURJ
DJULFXOWXUDO GHYHORSPHQW IRU LPSURYHG ZHOOEHLQJ
ZLWKRXW FRPSURPLVLQJ HQYLURQPHQWDO KHDOWK ZLOO
UHTXLUH LQYHVWPHQWV RQ D JOREDO VFDOH DV ZHOO DV
DQ HQDEOLQJ SROLF\ DQG LQVWLWXWLRQDO HQYLURQPHQW
)RU WKLV SXUSRVH WKH RQJRLQJ UHYDOXDWLRQ RI UXUDO
DUHDV IRU HFRV\VWHP VHUYLFH SURYLVLRQ EH\RQG WKH
HFRQRPLFDOO\ SURGXFWLYH IXQFWLRQ RI ODQG UHSUHVHQWV
DQ RSSRUWXQLW\ WKDW VKRXOG EH KDUQHVVHG 8QGHU WKH
JXLGDQFHRIVWUHQJWKHQHGSXEOLFLQVWLWXWLRQVIURPWKH
ORFDO WR WKH JOREDO OHYHO PXOWLIXQFWLRQDO VPDOOVFDOH
DJULFXOWXUH DQG SDVWRUDOLVP VKRXOG IHDWXUH DW WKH
WRS RI UXUDO GHYHORSPHQW DJHQGDV .H\ GRPDLQV RI
LQWHUYHQWLRQ UHODWH WR OHJDO DQG LQVWLWXWLRQDO VHFXULW\
RI ODQG DQG QDWXUDO UHVRXUFHV DJULFXOWXUDO H[WHQVLRQ
DQG FDSDFLW\ GHYHORSPHQW LQQRYDWLYH PHFKDQLVPV
WKDW UHZDUG HFRV\VWHP VHUYLFH SURYLVLRQV LPSURYHG
HFRQRPLFJRYHUQDQFHDQGDUHJXODWHGLQWHJUDWLRQLQWR
DJULFXOWXUDOPDUNHWVDVZHOODVSROLWLFDOHPSRZHUPHQW
RIODUJHO\PDUJLQDOL]HGVHJPHQWVRIUXUDOSRSXODWLRQV
FKDQJH RQ DJULFXOWXUDO SURGXFWLRQ LQ WKH QHDU DQG
GLVWDQWIXWXUH
,Q VPDOOVFDOH IDUPLQJ IRRG VHFXULW\ ZLOO GHSHQG RQ
WKHH[WHQWRIIXUWKHUSUHVVXUHVH[HUWHGRQIDUPVL]HV
WKHH[WHQWRIVRLOGHJUDGDWLRQWKDWRFFXUVWKHGHJUHH
RI SUHVVXUH RQ ODQG WKH VSUHDG RI ZDWHU VFDUFLW\
WKH H[WHQW WR ZKLFK VPDOO IDUP SURGXFWLYLW\ FDQ EH
HQKDQFHG ZLWK LQSXWV DQG UHVHDUFK DQG ZKHWKHU
PDUNHWDFFHVVFDQEHIDFLOLWDWHG,QVXPWKHUHDUHD
QXPEHURILQWULQVLFGULYHUVRIUXUDOSRYHUW\WKDWQHHGWR
EHDGGUHVVHGDVDSULRULW\
,PSURYHPHQW RI IRRG VHFXULW\ IURP ORFDO WR JOREDO
OHYHOV 7KH IROORZLQJ  PHDVXUHV FRXOG KHOS VPDOO
VFDOHIDUPHUVWRFRQWULEXWHWRIRRGVHFXULW\
 5HJXODWLQJ ODQG FRQYHUVLRQV SUHYHQWLQJ ODQG
FRQYHUVLRQVRQODQGXVHGE\VPDOOVFDOHIDUPHUV
DQG SDVWRUDOLVWV ZLOO VHFXUH WKHLU OLYHOLKRRGV DV
ORQJDVWKH\KDYHQRDOWHUQDWLYHV
 (QVXULQJ ODQG WHQXUH H[WHUQDO LQYHVWPHQWV LQ
ODQGTXDOLW\ZLOOEHFRPHDWWUDFWLYHIRUVPDOOVFDOH
IDUPHUVZKHQWKHLUODQGLVVHFXUHGHYHQLIWKHVH
DUHQRWGLUHFWO\EHQHÀFLDOIRUSURGXFWLRQEXWUDWKHU
IRUPDLQWDLQLQJHFRV\VWHPVHUYLFHV7HQXUHQHHGV
WREHJXDUDQWHHGE\6WDWHVZLWKWKHVXSSRUWRIWKH
LQWHUQDWLRQDOFRPPXQLW\
 ,PSURYLQJ PDUNHW DFFHVV PDUNHW FKDLQV VKRXOG
EH GHYHORSHG IRU VPDOOVFDOH IDUP SURGXFWV
LQFOXGLQJIRUWKHSUHSURFHVVLQJDQGODEHOOLQJRI
SURGXFWVIRUVWRUDJHDQGHDVLHUWUDQVSRUWWKHUHE\
PDNLQJSURGXFWVPRUHFRPSHWLWLYH
7KH5ROHRI&KDQJHVLQ/DQG8VH
 'HYHORSLQJJHQGHUHTXLW\HTXDOULJKWVIRUIHPDOH
IDUPHUV DUH VHOGRP JXDUDQWHHG LQ VPDOOVFDOH
IDUPLQJ \HW ZRPHQ DUH RIWHQ WKH PDLQ DFWRUV
RQ WKH IDUP DQG WKHLU HPSRZHUPHQW ERWK
HFRQRPLFDOO\ DQG LQ GHFLVLRQPDNLQJ ZRXOG
FRQWULEXWHWRLPSURYHGOLYHOLKRRGV
 5DLVLQJIDUPSURGXFWLYLW\SURGXFWLRQSHUKHFWDUH
RQ VPDOOVFDOH IDUPV FRXOG EH GRXEOHG LQ WKH
FRPLQJ  \HDUV ZLWK RQO\ PRGHUDWH LQSXWV
LPSURYHG VHHGV DQG EUHHGV EHWWHU IDUP
LPSOHPHQWVDQGUHVHDUFKFHQWUHGRQVPDOOVFDOH
IDUPLQJ
 ,QFUHDVLQJ IDUP VL]H $UUHVWLQJ D IXUWKHU GHFOLQH
LQODQGVL]HSHUVPDOOVFDOHIDUPDQGPDLQWDLQLQJ
RUHYHQLQFUHDVLQJIDUPSORWVZRXOGEHEHQHÀFLDO
IRU PRGHUDWH PHFKDQL]DWLRQ DQG PRGHUQL]DWLRQ
HYHQLQVPDOOVFDOHIDUPLQJ
 3URPRWLQJ VXVWDLQDEOH ODQG PDQDJHPHQW
5HYHUVLQJ IXUWKHU GHJUDGDWLRQ RI ODQG RQ VPDOO
VFDOHIDUPVZRXOGHQVXUHLQFUHDVHGSURGXFWLYLW\
DQGJHQHUDWHRWKHUHFRV\VWHPVHUYLFHVIURPVRLO
ZDWHUDQGELRGLYHUVLW\
 5HPRYLQJ VXEVLGLHV VXEVLGLHV IRU DJULFXOWXUDO
SURGXFWVSDUWLFXODUO\LQGHYHORSHGFRXQWULHVDQG
WUDQVLWLRQHFRQRPLHVVKRXOGEHUHPRYHGDVWKH\
FUHDWH SULFH GLVWRUWLRQV DQG DIIHFW LQWHUQDWLRQDO
FRPPRGLW\PDUNHWV

 ,QWHUQDOL]LQJ WUDQVDFWLRQ FRVWV LQFRUSRUDWLQJ
WUDQVDFWLRQ FRVWV LQ IRRG DQG IHHG SULFHV
LQFOXGLQJ JOREDO WD[DWLRQ RQ IRVVLO IXHOV ZRXOG
HQDEOH HTXDO DFFHVV WR PDUNHWV IRU ODUJH DQG
VPDOOVFDOHIDUPLQJDOLNH
$QWLFLSDWLQJ FOLPDWH FKDQJH WKHUH LV QHHG IRU D
EHWWHUXQGHUVWDQGLQJRIWKHLPSOLFDWLRQVRIFOLPDWH
FKDQJH DQG DSSURSULDWH PHDVXUHV WR EH WDNHQ
DJDLQVW LW WKURXJK UHVHDUFK HDUO\ ZDUQLQJ DQG
HDUO\DFWLRQ
,PSOLFDWLRQVRIODQGFRQYHUVLRQV6PDOOVFDOHIDUPLQJ
LVWKHPRVWYXOQHUDEOHWRIRRGLQVHFXULW\DQGLWLVOLNHO\
WR EH YHU\ VWURQJO\ DIIHFWHG E\ ODQG FRQYHUVLRQV
SDUWLFXODUO\IURPFURSODQGWROLYHVWRFNSURGXFWLRQDV
DUHVXOWRIFKDQJLQJFRQVXPSWLRQSDWWHUQV$Q\OLNHO\
EDQVRQWKHH[WHQVLRQRIFURSODQGLQWRSDVWXUHVDQG
IRUHVWV ZLOO SODFH LQFUHDVLQJ DQG DGGLWLRQDO SUHVVXUH
RQ IDUP VL]HV DOWKRXJK WKH QXPEHU RI IDUPV PLJKW
GHFUHDVHLQWKHFRPLQJGHFDGHV%LRIXHOSURGXFWLRQ
DQG FKDQJHV LQ OLYHVWRFN SURGXFWLRQ DUH DGGLWLRQDO
IDFWRUV WKDW ZLOO KDYH D SRWHQWLDOO\ JURZLQJ LQÁXHQFH
RQVPDOOVFDOHIDUPLQJSURYLGHGFXUUHQWSROLFLHVDUH
PDLQWDLQHGRUHQKDQFHG+RZHYHUWKLVODWWHUSUHVVXUH
DOVR FRQFHUQV RWKHU ODQG XVH DQG FRYHU W\SHV DV
ELRIXHO ZLOO DIIHFW QRW RQO\ FURSODQG EXW ELRGLYHUVLW\
DQG QDWXUDO UHVRXUFHV LQ RWKHU ODQGXVH V\VWHPV DV
ZHOO

 75$'($1'(19,5210(175(9,(:

1//'06#4; T#0&4#$$+0)#0&

7674'10(.+%65
1QLPPR%DVVH\
([HFXWLYH'LUHFWRU(QYLURQPHQWDO5LJKWV$FWLRQ&KDLU)ULHQGVRIWKH(DUWK,QWHUQDWLRQDODQGFRRUGLQDWRU
2LOZDWFK,QWHUQDWLRQDO

$EVWUDFW
2QWKHJURXQGVRIHTXLW\DQGHWKLFVLWLVQHFHVVDU\WRKDOWWKHXQVXVWDLQDEOHSOXQGHURUXVHRIUHVRXUFHV
WRWKHH[WHQWWKDWWKH\DUHSHUPDQHQWO\ORVWWRIXWXUHJHQHUDWLRQV/DQGJUDEELQJDPDQLIHVWDWLRQRIJUHHG
VKRZVDWUHQGRISHRSOHOLYLQJDVLIWKHUHZHUHQRWRPRUURZ,WLVFOHDUO\QRWVLPSO\DGHVLUHWRUHVSRQGWR
IRRGGHÀFLWVVRPHZKHUHEXWDSOR\WRFRQWUROWKHIRRGV\VWHPVRIWKHZRUOGDQGVXEMHFWSHRSOHWRWKH
YDJDULHVRIVSHFXODWLRQ

7KH ZHE RI JOREDO FULVHV FXUUHQWO\ FRQIRXQGLQJ IRUJUDEELQJZKLOHPDUJLQDOL]LQJWKHSHRSOHZKRRZQ

WKH ZRUOG KDV KDG GHHS LPSDFWV RQ YXOQHUDEOH XQGHUVWDQGDQGXVHWKRVHODQGV
FRPPXQLWLHV LQ GHYHORSLQJ FRXQWULHV $V WKH ZRUOG
OXUFKHVIURPRQHFULVLVWRDQRWKHUELGVWRÀQGVROXWLRQV 7KH8QLWHG1DWLRQVHVWLPDWHVWKDW$IULFDKDVDWOHDVW
KDYHEHHQPHUHO\FRPSRXQGLQJUDWKHUWKDQUHVROYLQJ  PLOOLRQ KHFWDUHV KD RI PDUJLQDO XQXVHG DQG
WKHFULVHV)RUH[DPSOHZLWKUHJDUGWRWKHIRVVLOIXHO XQGHUXVHG ODQG DQG WKDW WKH 'HPRFUDWLF 5HSXEOLF
GULYHQ FOLPDWH FULVLV VRPH VDZ DJURIXHO SURGXFWLRQ RIWKH&RQJRLVEHOLHYHGWRKDYHDURXQGPLOOLRQ
DQGXVHDVDNH\VROXWLRQ+RZHYHUDJURIXHOVFDQQRW
UHSODFHIRVVLOIXHOVEHFDXVHWKHUHLVVLPSO\QRWHQRXJK
DUDEOHODQGWRFXOWLYDWHWKHDPRXQWRIFURSVQHHGHGWR
PHHW WKH YRUDFLRXV DSSHWLWH RI FRPEXVWLRQ HQJLQHV
LQFDUVDQGPDFKLQHU\0RUHRYHUDJURIXHOVUHWDLQWKH
IRVVLO IXHO SURGXFWLRQ WUDQVSRUWDWLRQ DQG XWLOL]DWLRQ
KHFWDUHV '\QHV  +RZHYHU WKH FODVVLÀFDWLRQ
RIODQGDVEHLQJPDUJLQDORUQRWFDQEHFRQWHQWLRXV
HVSHFLDOO\ LI LW IDLOV WR FRQVLGHU ORFDO NQRZOHGJH DQG
WHFKQRORJLHV
7KH IRRG FULVLV KDV DOVR WULJJHUHG WKH VHDUFK IRU
ODQG E\ VSHFXODWRUV DQG RWKHUV ZKR VHH ODQGV LQ
SDUDGLJPHJUHÀQHULHVSLSHOLQHVWKXVFDXVLQJWKH
$IULFDDVVXLWDEOHDQGDYDLODEOHIRUSXUFKDVHIRUFURS
ZRUOGWRLPDJLQHWKHUHLVDFKDQJHZKHQLQIDFWLWLV
SURGXFWLRQDLPHGDWH[SRUWRXWRI$IULFD7KLVVHHPV
EXVLQHVVDVXVXDO
OLNH WKH FRORQLDO FDVKFURSSLQJ V\VWHP UHWXUQLQJ
LQ D GLIIHUHQW JXLVH ,QWHUHVWLQJO\ QRW DOO FDVHV KDYH
0RUHRYHUWKHFRQYHUVLRQRIODQGIURPWKHFXOWLYDWLRQRI
FRQFHUQHG ODQG JUDEEHUV IURP RXWVLGH $IULFD 7KHUH
FURSVIRUIRRGWRFURSVIRUDJURIXHOVKDVKDGDQLPSDFW
KDYH EHHQ LQVWDQFHV RI $IULFDQV JUDEELQJ ODQGV LQ
RQIRRGVXSSO\6RPHDUJXHWKDWDJURIXHOSURGXFWLRQ
RWKHU$IULFDQFRXQWULHVDQGRWKHUVSOD\LQJWKHUROHRI
UXQVSDUDOOHOWRWKDWRIIRRGSURGXFWLRQDQGWKDWRQH
PLGGOHPDQWRIDFLOLWDWHWKHODQGJUDEVDVUHYHDOHGLQD
GRHVQRWLPSDFWWKHRWKHU&RQVLGHULQJWKDWWKHVDPH
ZRUNIRUFHLVHQJDJHGLQERWKSURFHVVHVLWLVHYLGHQW
WKDWWKHWZRFDQQRWEHGHOLQNHGDQGQHLWKHUFDQODQG
XSWDNH ² WKH\ DUH DOO LQWHUUHODWHG 6RPH SURPRWHUV
RI ELRIXHOV FODLP WKDW WKH\ GR QRW XVH IRRG FURSV
UHSRUWE\*5$,1IRUH[DPSOH7KHFDVHRIWKH
/LE\DQ$UDE-DPDKLUL\D·VLQFXUVLRQLQWR0DOLLVZRUWK\
RIQRWHLQWKLVUHJDUG$PXOWLPLOOLRQGROODUQDWLRQDOULFH
LQLWLDWLYH DQQRXQFHG E\ WKH *RYHUQPHQW RI 0DOL ZDV
LQWHQGHGWRKHOSORFDOIDUPHUVSURGXFHPRUHVRWKDW
DQGWKDWWKHLUFURSVVXFKDVMDWURSKDDUHJURZQRQ
PDUJLQDO ODQGV 7KH MDWURSKD SODQW DQG WKH FODLPV
DURXQG LW KDYH DOVR UDLVHG QHZ LVVXHV LQFOXGLQJ
WKDW ODQGV FRQVLGHUHG PDUJLQDO PLJKW DSSHDU VR WR
SHUVRQVZKRQHLWKHUOLYHLQWKHORFDOLW\QRUXQGHUVWDQG
WKHG\QDPLFVRIORFDOODQGXVHV\VWHPV7KHPDUJLQDO
ODQG DUJXPHQW LV DOVR VHHQ DV D SOR\ XVHG E\
SROLF\PDNHUVDQGVSHFXODWRUVWRPDUNRXWVXFKODQGV
WKH FRXQWU\ ZRXOG QR ORQJHU EH GHSHQGHQW RQ ULFH
LPSRUWV
+RZHYHUWKH*RYHUQPHQWKDQGHGRYHUDQHQRUPRXV
WUDFW RI SULPH ULFH ODQG WR D /LE\DQ LQYHVWPHQW IXQG
DQG VRPH &KLQHVH FRPSDQLHV ,Q DGGLWLRQ LQ 
0DOL·V3UHVLGHQW$PDGRX7RXPDQL7RXUpRIIHUHGXS
WRKDWRWKH/LE\DQ$UDE-DPDKLUL\DDVSDUW
7KH5ROHRI&KDQJHVLQ/DQG8VH 

RI D ODUJHU LQIUDVWUXFWXUH LQYHVWPHQW SURMHFW IRU WKH %)RRGFULVLVODQGJUDEVDQGWKH

DUHDWKDWLQFOXGHGWKHHQODUJHPHQWRIDFDQDODQGWKH ´QHZFRORQL]DWLRQµ
LPSURYHPHQWRIDURDG7KLVZDVZLWKLQWKHIUDPHZRUN
RI WKH /LE\D $IULFD ,QYHVWPHQW 3RUWIROLR /$3 7KH 7KH IRRG FULVLV RI ² ZDV FKDUDFWHUL]HG E\
DUUDQJHPHQWVKRZHGWKDWWKHLQIUDVWUXFWXUHSURYLVLRQ VRPHDQDO\VWVDVDVLOHQWWVXQDPL(FRQRPLVW
WKDW KLW WKH GHYHORSLQJ ZRUOG +RZHYHU WKHUH ZDV
ZDVFRQWUDFWHGWR&*&D&KLQHVHFRPSDQ\RZQHG
QRWKLQJVLOHQWDERXWLWWKHXSKHDYDOKDGEHHQEXLOGLQJ
E\ &KLQD·V ELJ RLO FRUSRUDWLRQ 6,123(& ZKLOH DQ
XS RYHU WLPH DQG WKH UXPEOHV ZHUH DXGLEOH DQG WKH
XQQDPHG &KLQHVH ÀUP ZDV FRQWUDFWHG WR VXSSO\
ZDYHVYLVLEOH$VQRWHGE\DUHFHQWUHSRUW&LVVRNKR
&KLQHVHK\EULGULFHVHHGV7KH*5$,1UHSRUWUHYHDOHG
WKDWDOWKRXJKWKHSURMHFWFODLPHGWRSURGXFHULFHIRU
0DOLWKHUHZDV´SOHQW\RIUHDVRQWRVXVSHFWWKDWWKH
UHDOPRWLYDWLRQLVWRH[SRUWULFHWR/LE\Dµ
$3DWKVWRODQGJUDEV
$ODQGJUDEGHDOWKDWZRXOGKDYHVZDOORZHGXSKDOI
RIWKHDUDEOHODQGLQ0DGDJDVFDUZDVDERUWHG,QWKDW
GHDO'DHZRRDFRPSDQ\IURPWKH5HSXEOLFRI.RUHD
ZDVWROHDVHPLOOLRQKDRIDUDEOHODQGRQWKDWLVODQG
6WDWHIRUWKHFXOWLYDWLRQRIFRUQDQGRLOSDOPIRUH[SRUW
EDFNWRLWVKRPHFRXQWU\7KHRLOSDOPVHHGVDVZHOO
DVFRUQZHUHWREHLPSRUWHGIURP/DWLQ$PHULFD7KH
REMHFWLYH RI WKH VFKHPH ZDV WR ERRVW WKH 5HSXEOLF
RI.RUHD·VIRRGVHFXULW\E\SURYLGLQJLWZLWKXSWR
PLOOLRQ WRQV RI FRUQ SHU \HDU UHSUHVHQWLQJ KDOI RI LWV
FRUQLPSRUWV+RQJ-RQJ:DQDPDQDJHUDW'DHZRR
ZDVTXRWHGDVVD\LQJ´:HZDQWWRSODQWFRUQWKHUH
WRHQVXUHRXUIRRGVHFXULW\)RRGFDQEHDZHDSRQLQ
WKLVZRUOG:HFDQHLWKHUH[SRUWWKHKDUYHVWVWRRWKHU
FRXQWULHVRUVKLSWKHPEDFNWR.RUHDLQFDVHRIDIRRG
FULVLVµ7KHSURWHVWVWKDWHQVXHGDIWHUWKHUHYHODWLRQRI
WKHGHDOOHGWRLWVFDQFHOODWLRQDQGWKHSROLWLFDOIDOORXW
VDZWKHXQVHDWLQJRIWKHSUHVLGHQWRIWKHFRXQWU\
$FWLRQVHOVHZKHUHDOVRKDYHWKHSRWHQWLDOWRLQWHQVLI\
ODQG JUDEV LQ $IULFD )RU H[DPSOH WKH PRYH E\ WKH
*RYHUQPHQW RI ,QGRQHVLD WR LPSRVH D WZR\HDU
PRUDWRULXP RQ QHZ SDOP RLO SODQWDWLRQV LQ RUGHU
WR SURWHFW LWV UHPDLQLQJ UDLQIRUHVWV KDV SURPSWHG
DJULEXVLQHVV JLDQWV VXFK DV 6LPH 'DUE\ WR VZLWFK
WKHLU H[SDQVLRQ SODQV WR &DPHURRQ *KDQD DQG
/LEHULD7KLVUXVKLQWR$IULFDLVVHWWRFDXVHPDVVLYH
GHIRUHVWDWLRQ DQG ORVV RI IDUPODQG RI WKH ORFDO
HW DO  GHYHORSLQJ FRXQWULHV KDYH VXIIHUHG IRU
VRPH GHFDGHV IURP VZLIW FKDQJHV LQ WKH SULFHV RI
WKHLUFRPPRGLW\H[SRUWVRQZKLFKPRVWRIWKHPUHO\
KHDYLO\IRUWKHLUH[SRUWHDUQLQJVDQGWKLVSUREOHPKDV
EHHQ FRPSRXQGHG E\ ULVLQJ SULFH YRODWLOLW\ LQ IRRG
LPSRUWV IURP WKH JOREDO PDUNHWV 7KHLU SURSRVHG
VROXWLRQV LQFOXGH VKLHOGLQJ WKHLU YXOQHUDEOH PDUNHWV
IURPSULFHYRODWLOLW\E\SURPRWLQJWKHSURGXFWLRQDQG
FRQVXPSWLRQRIZKDWWKH\WHUP´QRQWUDGHGµFURSV
7KHIRRGFULVLVFRPELQHGZLWKWKHÀQDQFLDOFULVLVKDYH
SURPSWHGVSHFXODWRUVWRIRFXVRQLQYHVWLQJLQODQGIRU
WKHFXOWLYDWLRQRIFURSVIRUHQHUJ\DQGRUIRUIRRG7KLV
UXVKIRUODQGLQFRXQWULHVLQ$IULFD6RXWK(DVW$VLDDQG
/DWLQ$PHULFDE\RWKHUFRXQWULHVDQGFRUSRUDWLRQVKDV
OHGWRDWURFLRXVODQGJUDEV7KHVFDOHDQGSXUSRVHRI
WKHODQGJUDEVDPRXQWWRQRWKLQJVKRUWRID´QHZZDYH
RIFRORQL]DWLRQµ7KHFURSVFXOWLYDWHGLQWKHJUDEEHG
ODQGV DUH QRW LQWHQGHG WR IHHG ORFDO SRSXODWLRQV
LQVWHDGWKH\DUHPDLQO\SURGXFHGIRUH[SRUWEDFNWR
WKHKRPHFRXQWULHVRIWKH´LQYHVWRUVµDVH[HPSOLÀHG
E\WKHODQGJUDEGHDOLQYROYLQJ'DHZRRFLWHGDERYH
$QRWKHUH[DPSOHRIDQDWWHPSWHGODQGJUDEGHDOZDV
LQ6RXWK6XGDQZKHUHRQH´SDUDPRXQWFKLHIµVLJQHG
RII  KD RI FRPPXQLW\ ODQG ZLWK D SRVVLELOLW\
RIFHGLQJDIXUWKHUKDWRD'DOODVEDVHGÀUP
LQ7KURXJKWKHGHDOWKHÀUPZDVVHWWRHQMR\D
\HDUOHDVHRIWKHODQGDWDSULQFHO\VXPRI
7KHWHUPVRIWKHOHDVHRIIHUHGWKHFRPSDQ\IXOOULJKWV
WR H[SORLW DOO QDWXUDO UHVRXUFHV LQ WKH OHDVHG ODQG
LQFOXGLQJWKHULJKWWR
‡ 'HYHORS SURGXFH DQG H[SORLW WLPEHUIRUHVW
UHVRXUFHV LQFOXGLQJ ZLWKRXW OLPLWDWLRQ WKH
KDUYHVWLQJRIFXUUHQWWUHHJURZWKWKHSODQWLQJDQG
FRPPXQLWLHV /HYLWW  ZKLFK DUH VXUH FRQÁLFW
WULJJHUSRLQWV7KHLPSOLFDWLRQRIWKLVVKLIWLVLQVWUXFWLYH
ZKLOHWKH,QGRQHVLDQSODQLVZHOOLQWHQWLRQHGLWLVFOHDU
WKDW UHJXODWLRQV OLPLWHG WR RQH FRXQWU\ ZLOO VLPSO\
FDXVHLQYHVWRUVDQGVSHFXODWRUVWRVKLIWWKHLUDFWLYLWLHV
HOVHZKHUH ZKHUH UHJXODWLRQV PD\ EH OD[ RU QRQ
KDUYHVWLQJRIKDUGZRRGWUHHVDQGWKHGHYHORSPHQW
RIZRRGEDVHGLQGXVWULHV
‡ 7UDGHDQGSURÀWIURPDQ\UHVXOWLQJFDUERQFUHGLWV
IURPWLPEHURQWKHOHDVHGODQG
‡ (QJDJH LQ DJULFXOWXUDO DFWLYLWLHV LQFOXGLQJ WKH
FXOWLYDWLRQRIELRIXHOFURSVHJMDWURSKDSODQWVDQG
H[LVWHQW SDOPRLOWUHHV
 75$'($1'(19,5210(175(9,(:

‡ ([SORUH GHYHORS PLQH SURGXFH DQGRU H[SORLW H[WUDFWLRQ DFWLYLWLHV RI 6KHOO 3HWUROHXP 'HYHORSPHQW
SHWUROHXP QDWXUDO JDV DQG RWKHU K\GURFDUERQ &RPSDQ\6KHOODQGWKH1LJHULDQ1DWLRQDO3HWUROHXP
UHVRXUFHV IRU ERWK ORFDO DQG H[SRUW PDUNHWV DV
ZHOODVRWKHUPLQHUDOVDQGDOVRHQJDJHLQSRZHU
JHQHUDWLRQDFWLYLWLHVRQWKHOHDVHGODQG
‡ 6XEOHDVH DQ\ SRUWLRQ RU DOO RI WKH OHDVHG ODQG RU
VXEOLFHQVHDQ\ULJKWWRXQGHUWDNHDFWLYLWLHVRQWKH
&RUSRUDWLRQ 113& 6KHOO ZDV H[SHOOHG IROORZLQJ
PDVV SHDFHIXO XSULVLQJV LQ  6LQFH WKHQ WKHUH
KDYHEHHQDWWHPSWVWRUHRSHQWKHRLOZHOOVLQ2JRQL
EXW ZLWKRXW VXFFHVV 3RVVLEO\ DV D VWHS WRZDUGV
HQVXULQJDUHWXUQRIWKHRLOJLDQWLQWRWKHWHUULWRU\WKH
OHDVHGODQGWRWKLUGSDUWLHV 8QLWHG1DWLRQV(QYLURQPHQW3URJUDPPH81(3ZDV
+RZHYHU UHVLVWDQFH WR WKLV GHDO E\ WKH SHRSOH FRPPLVVLRQHGWRDVVHVVWKHHQYLURQPHQWDOVLWXDWLRQ
VXSSRUWHGE\VROLGDULW\DFWLRQVIURPJURXSVVXFKDV RI2JRQLODQG
WKH2DNODQG,QVWLWXWHVXFFHHGHGLQGHIHDWLQJWKHGHDO
7KH 81(3 DVVHVVPHQW D SUHVHQWHG WR
2,
7KLV H[DPSOH RI D ODQGJUDE GHDO WKRXJK IRLOHG
VKRZV WKH PDLQ DWWUDFWLRQV IRU VSHFXODWRUV 7KHVH
LQFOXGH WKH SRVVLELOLW\ WR H[SORLW VXUIDFH UHVRXUFHV
VXFKDVWLPEHUDQGVXEVRLOUHVRXUFHVVXFKDVRLOJDV
DQG VROLG PLQHUDOV 7KH VSHFXODWRUV DLP WR HQJDJH
LQ FRPSUHKHQVLYH H[SORLWDWLRQ RI WKHLU JUDEEHG ODQG
LQ DOO ZD\V SRVVLEOH 7KLV LV ZK\ LQ WKLV FDVH WKH\
HYHQ ODLG FODLP WR WKH FDUERQ VWRFN LQ WKH WUHHV RQ
WKH ODQG :LWK QHZ W\SHV RI FDUERQ VLQNV EHLQJ
3UHVLGHQW *RRGOXFN -RQDWKDQ RQ  $XJXVW 
VKRZHG K\GURFDUERQ SROOXWLRQ LQ VXUIDFH ZDWHU
WKURXJKRXWWKHFUHHNVRI2JRQLODQGDQGXSWRFP
LQ WKH JURXQGZDWHU WKDW IHHGV GULQNLQJ ZHOOV DW 
VLWHVLQFOXGLQJDVHULRXVFDVHLQ1LVLVLRNHQ2JDOHLQ
(OHPH 5LYHUV 6WDWH 6RLOV ZHUH IRXQG WR KDYH EHHQ
SROOXWHGZLWKK\GURFDUERQVXSWRDGHSWKRIPHWUHV
LQREVHUYHGVLWHVZKLOHEHQ]HQHDNQRZQFDQFHU
FDXVLQJFKHPLFDOZDVIRXQGWREHSUHVHQWLQGULQNLQJ
ZDWHU DW D OHYHO  WLPHV DERYH WKH OHYHO GHHPHG
´FRPPRGLÀHGµ LW LV FRQFHLYDEOH WKDW ODQG JUDEEHUV DFFHSWDEOHE\WKH:RUOG+HDOWK2UJDQL]DWLRQ:+2
ZLOO VHHN WR REWDLQ FDUERQ FUHGLWV IURP VRLO FDUERQ 7KHUHSRUWDOVRGRFXPHQWHGWKDWÀVKHULHVKDYHEHHQ
VHTXHVWUDWLRQ $UJXDEO\ WKLV ZDYH RI ODQG JUDEV LV GHVWUR\HG DQG WKDW ZHWODQGV DURXQG 2JRQLODQG DUH
PRUH REMHFWLRQDEOH WKDQ FRORQLDOLVP $OWKRXJK WKLV KLJKO\GHJUDGHGRUIDFLQJGHJUDGDWLRQ(QYLURQPHQWDO
ODQGJUDE GHDO IHOO WKURXJK WKHUH DUH RWKHUV MXVW DV
REQR[LRXVWKDWKDYHQRWEHHQVWRSSHG
6RPHWLPHVODQGJUDEVPD\SDVVXQQRWLFHGDVZLWK
WKH UHFHQW GHFLVLRQ E\ D PLQLQJ FRPSDQ\ $IULFDQ
%DUULFN *ROG LQ WKH 8QLWHG 5HSXEOLF RI 7DQ]DQLD
WR HUHFW D NLORPHWUH FRQFUHWH IHQFH DURXQG LWV
PLQLQJFRQFHVVLRQRVWHQVLEO\WRNHHSYLOODJHUVIURP
5LJKWV$FWLRQ7KHVHLPSDFWVFRPELQHGKDYH
OHGWRDQLUUHSDUDEOHORVVRIOLYHOLKRRGVDQGZLOOWDNH
 \HDUV WR UHPHGLDWH 3ROOXWLRQ DSSHDUV WR KDYH
PDGHDSHUPDQHQWJUDERQ2JRQLODQGV
:KLOHWKH*RYHUQPHQWRI1LJHULDDQG6KHOOGLWKHURYHU
ZKDW WR GR DERXW WKH GHVWUR\HG 2JRQL HQYLURQPHQW
WKHUH DUH SHUVLVWHQW HIIRUWV E\ ERWK JRYHUQPHQW DQG
VQHDNLQJLQWRVWHDOJROG5HXWHUV&RPSOHWLRQ
RI LWV VRFDOOHG VHFXULW\ IHQFH LQ  ZLOO VXJJHVW
WKDW LWV JUDEELQJ RI WKH WHUULWRU\ LV LQ SHUSHWXLW\ DQG
ZLWK WKLV VWURNH RI JHQLXV WKH FRPSDQ\ LV SRVVLEO\
GHSULYLQJ WKH FLWL]HQV RI DFFHVV WR SDUWV RI WKH ODQG
RQZKLFKWKH\FRXOGVWLOOHNHDOLYLQJZLWKRXWLQWHUIHULQJ
ZLWKWKHPLQLQJDFWLYLWLHVRIWKHFRPSDQ\(TXDOO\WKH
FRPPXQLWLHVDUHGHSULYHGRIDFFHVVWRWKHEHDXW\RI
WKH QDWXUDO ODQGVFDSH DOWKRXJK WKH UHOHQWOHVV FODZV
RIPLQLQJPDFKLQHULHVPD\KDYHDOUHDG\VFDUUHGLW
&&RQÁLFWVDQGUHVLVWDQFH
&RQÁLFWV DQG UHVLVWDQFH RYHU ODQG JUDEV DUH DOVR
LQFUHDVLQJ LQ WKH 2JRQL ODQG RI 1LJHULD 7KH SHRSOH
RI WKLV UHJLRQ DUH NQRZQ IRU WKHLU HSLF EDWWOHV
DJDLQVW GHJUDGDWLRQ RI WKHLU WHUULWRU\ WKURXJK WKH RLO
SULYDWHHQWLWLHVWRIXUWKHUJUDEPDVVLYHWUDFWVRIZKDW
LV OHIW RI ODQG LQ WKH WHUULWRU\ IRU EDQDQD DQG RWKHU
SODQWDWLRQV2QHFRPSDQ\LVFDQYDVVLQJWKHLGHDRI
SURGXFLQJ ZKDW LW HXSKHPLVWLFDOO\ FDOOV ´2JRQL RLOVµ
IURPMDWURSKD%HFDXVHRIWKHKLJKO\VHQVLWL]HGVWDWH
RIWKH2JRQLSHRSOHWKHUHLVGHWHUPLQHGUHVLVWDQFH
DQGWKLVLVFOHDUO\QRWDODQGJUDEEHUV·KDYHQ
'&RQFOXVLRQ
7KHSXVKE\WUDQVQDWLRQDOFRUSRUDWLRQVIRUODQGWRJURZ
FURSV IRU H[SRUW DQG ELRIXHOV LQ DGGLWLRQ WR VXSSO\
WKHLU QHHG IRU SXOS DQG SDSHU LV FRPSRXQGHG
E\ WKH DSSHWLWH RI HPHUJLQJ HFRQRPLHV VXFK DV
%UD]LO&KLQDDQG,QGLDIRULQFUHDVLQJDPRXQWVRIRWKHU
QDWXUDO UHVRXUFHV LQFOXGLQJ ZDWHU DQG PLQHUDOV )RU
H[DPSOHLWLVVDLGWKDWWKH*RYHUQPHQWRI0R]DPELTXH
7KH5ROHRI&KDQJHVLQ/DQG8VH 

LVDOORFDWLQJVTXDUHNLORPHWUHVRIODQGSHU WRWKHH[WHQWWKDWWKH\DUHSHUPDQHQWO\ORVWWRIXWXUH

FHQWRIWKHFRXQWU\LQIRXURILWVSURYLQFHV²1DPSXOD JHQHUDWLRQV/DQGJUDEELQJDPDQLIHVWDWLRQRIJUHHG
1LDVVD=DPEH]LDDQG&DER'HOJDGR²WR%UD]LOLDQ VKRZV D WUHQG RI SHRSOH OLYLQJ DV LI WKHUH ZHUH QR
IDUPHUV IRU FRPPHUFLDO VR\ FXOWLYDWLRQ WR VXSSO\ WKH WRPRUURZ,WLVFOHDUO\QRWVLPSO\DGHVLUHWRUHVSRQG
HYHUH[SDQGLQJ&KLQHVHPDUNHW1KDQWXPER
7KH LVVXHV UDLVHG E\ ODQG JUDEV DUH LQGHHG GLYHUVH
DQGVHYHUH
/DQG JUDE LV D UHDO PHQDFH LQ D ZRUOG ULGGHQ
ZLWK FULVHV :DWVRQ D OHDGLQJ ÀJXUH LQ VHWWLQJ XS
WKH ,QWHUJRYHUQPHQWDO 3ODWIRUP RQ %LRGLYHUVLW\
DQG (FRV\VWHP 6HUYLFHV VXJJHVWV WKDW JOREDO
HFRV\VWHPV IDFH VHYHUH WKUHDWV IURP ÀYH NH\
WRIRRGGHÀFLWVVRPHZKHUHEXWDSOR\WRFRQWUROWKH
IRRGV\VWHPVRIWKHZRUOGDQGVXEMHFWSHRSOHWRWKH
YDJDULHVRIVSHFXODWLRQ
/DQG JUDEELQJ LV DQ XQVXVWDLQDEOH SDWK DQG QHHGV
WR EH UHLJQHG LQ 2QO\ D JOREDO H[DPLQDWLRQ DQG D
JOREDO UHJXODWRU\ IUDPHZRUN ZLOO EH DEOH WR VWHP WKH
ÁRRG$SDUWIURPUHJXODWLQJWKLVVFRXUJHWKHUHLVDOVR
WKHQHHGWRVHFXUHODQGULJKWVDQGHQVXUHWKDWWKRVH
GULYHUV ODQG FRQYHUVLRQ VXFK DV GHIRUHVWDWLRQ ULJKWVDUHUHVSHFWHGHVSHFLDOO\LQWKHPRUHYXOQHUDEOH
RYHUH[SORLWDWLRQVXFKDVRYHUÀVKLQJWKHLQWURGXFWLRQ UHJLRQVDQGFRXQWULHVZKHUHVXFKODZVGRQRWH[LVW
RIH[RWLFVSHFLHVSROOXWLRQDQGFOLPDWHFKDQJHFLWHG 7KHZRUOGFDQQRWDIIRUGQHZIRUPVRIFRQÁLFWDULVLQJ
E\0F&DUWK\ IURP ODQG JUDEELQJ 0RUH DQG PRUH SHRSOH DUH
EHLQJGLVSODFHGE\ODQGJUDEVOLYHOLKRRGVDUHEHLQJ
2QWKHJURXQGVRIHTXLW\DQGHWKLFVLWLVQHFHVVDU\ GHVWUR\HG DQG KXQJHU LV EHLQJ LPSRUWHG ZKLOH IRRG
WRKDOWWKHXQVXVWDLQDEOHSOXQGHURUXVHRIUHVRXUFHV SURGXFWVDUHH[SRUWHG


 75$'($1'(19,5210(175(9,(:

1//'06#4; T 8#.7#6+101(#0& 08'56/'06'#.5+0

(4+%#U4'.+/+0#4;
+0&+0)5
$QXUDGKD0LWWDO
2DNODQG,QVWLWXWH

$EVWUDFW
7KH2DNODQG,QVWLWXWH·VDQDO\VLVRQODQGLQYHVWPHQWGHDOVKDVLGHQWLÀHGWKUHHPDMRUODFXQDHZKLFKSRLQW
WRWKHQHHGIRU
‡ EHWWHUGDWDRQDQGDEHWWHUXQGHUVWDQGLQJRIWKHFRQFHSWRI´ODQGDYDLODELOLW\µ
‡ DEHWWHUXQGHUVWDQGLQJRIWKHODQGGHDOVLHWKHLUQDWXUHDQGWKHLULPSOLFDWLRQVIRUGHYHORSLQJFRXQ
WULHVDQGIRUIRRGLQVHFXUHSRSXODWLRQVDQG
‡ DGGUHVVLQJWKHLVVXHRIODQGULJKWV
,QVWHDGRIXVLQJPDUJLQDORULQIHUWLOHODQGDVLVRIWHQFODLPHGPRVWGHDOVLGHQWLÀHGDUHDFWXDOO\WDNLQJSODFH
LQWKHYLFLQLW\RIZDWHUUHVRXUFHVWKDWRIIHULUULJDWLRQSRWHQWLDORUQHDURWKHULQIUDVWUXFWXUHUDLOZD\VURDGVRU
RQIHUWLOHVRLOV0DMRU$IULFDQULYHUVVXFKDVWKH1LOHWKH=DPEH]LDQGWKH1LJHUDUHWDSSHGE\WKHVHODQG
JUDEGHDOVZKLFKJLYHWKHLQYHVWRUVFRQWUROQRWRQO\RIWKHODQGEXWDOVRRIZDWHU
'HVSLWHZLGHVSUHDGFODLPVWKH2DNODQG,QVWLWXWH·VÀHOGUHVHDUFKDQGDQDO\VLVRIWKHODQGGHDOVLQVHYHQ
$IULFDQFRXQWULHVKDVIRXQGWKDWWKHLUSURPLVHVRIHFRQRPLFGHYHORSPHQWWKURXJKWKHLULQYHVWPHQWVLQODQG
DQG DJULFXOWXUH DUH RIWHQ RYHUVWDWHG /DUJHVFDOH ODQG LQYHVWPHQW PD\ LPSURYH VRPH PDFURHFRQRPLF
LQGLFDWRUVRIGHYHORSPHQWEXWLWPD\DOVRUHVXOWLQFRQVLGHUDEOHHQYLURQPHQWDODQGVRFLDOFRVWVWRWKHKRVW
FRXQWU\DQGORVVRIOLYHOLKRRGVRUORVWHFRQRPLFRSSRUWXQLWLHVIRULWVFLWL]HQV

/DQG LQYHVWPHQWV ² WKH SXUFKDVH RU OHDVH RI YDVW
WUDFWVRIODQGIURPPRVWO\SRRUGHYHORSLQJFRXQWULHV
E\ ZHDOWKLHU IRRGLQVHFXUH FRXQWULHV DQG SULYDWH
LQYHVWRUV IRU WKH SURGXFWLRQ DQG H[SRUW RI IRRG DQG
DJURIXHO FURSV ² KDYH JURZQ LQWR DQ LQWHUQDWLRQDO
WKDW $IULFDQ FRXQWULHV DUH WKHUHIRUH EHQHÀFLDULHV LQ
VXFK GHDOV +RZHYHU FXUUHQWO\ OLWWOH LV XQGHUVWRRG
RI WKH OHJDO VRFLDO DQG HFRQRPLF LPSOLFDWLRQV
RI WKH ODQG GHDOV LQYROYLQJ )', 7KH DXWKRUV RI D
FRPSUHKHQVLYH UHVHDUFK RQ ODQG JUDEV )$2,)$'
SKHQRPHQRQ $FFRUGLQJ WR WKH :RUOG %DQN LQ ,,('  UHFRJQL]HG WKDW WKHLU UHSRUW KDG ´RQO\
 DORQH QHDUO\  PLOOLRQ KHFWDUHV RI IHUWLOH ODQG VWDUWHG WR VFUDWFK WKH VXUIDFH RI D YHU\ FRPSOH[ VHW
WKURXJKRXWWKHZRUOGLHDOPRVWSHUFHQWRIJOREDO RI LVVXHVµ 7KH 2DNODQG ,QVWLWXWH·V RZQ DQDO\VLV KDV
FURSODQG ZHUH DFTXLUHG E\ LQYHVWRUV RIWHQ DW LGHQWLÀHG WKUHH PDMRU ODFXQDH ZKLFK SRLQW WR WKH
JLYHDZD\SULFHV2YHUSHUFHQWRIWKHVHODQGGHDOV QHHGIRULEHWWHUGDWDRQDQGDEHWWHUXQGHUVWDQGLQJ
ZHUHLQ$IULFD RI WKH FRQFHSW RI ´ODQG DYDLODELOLW\µ LL D EHWWHU
XQGHUVWDQGLQJRIWKHODQGGHDOVLHWKHLUQDWXUHDQG
,QWHUQDWLRQDO DLG DJHQFLHV DQG PXOWLODWHUDO OHQGLQJ WKHLU LPSOLFDWLRQV IRU GHYHORSLQJ FRXQWULHV DQG IRU
LQVWLWXWLRQV KDYH FRPPRQO\ VXSSRUWHG IRUHLJQ GLUHFW IRRGLQVHFXUH SRSXODWLRQV DQG LLL DGGUHVVLQJ WKH
LQYHVWPHQW )', DV D ZD\ WR HUDGLFDWH KXQJHU DQG
SRYHUW\ 0DQ\ RI WKHP VXJJHVW WKDW )', FDQ KHOS
GHYHORSLQJ FRXQWULHV E\ JHQHUDWLQJ LQFRPH DQG
HPSOR\PHQWDQGHQDEOLQJWKHWUDQVIHURIWHFKQRORJ\
DQG NQRZKRZ ,Q DGGLWLRQ LW LV EHOLHYHG WR SURPRWH
WKH GHYHORSPHQW RI SURFHVVLQJ DQG HFRQRPLF DQG
VRFLDO LQIUDVWUXFWXUH LQ ´KRVWµ FRXQWULHV 7KLV LPSOLHV
LVVXHRIODQGULJKWV
*LYHQ WKH SDUDPRXQW LPSRUWDQFH RI DGGUHVVLQJ WKLV
NQRZOHGJH JDS WKH VFDOH DQG UDWH DW ZKLFK WKHVH
ODQGGHDOVDUHKDSSHQLQJDQGWKHFRPSOHWHODFNRI
WUDQVSDUHQF\VXUURXQGLQJWKHPWKH2DNODQG,QVWLWXWH
LQLWLDWHG D UHVHDUFK SURMHFW HQWLWOHG 8QGHUVWDQGLQJ
7KH5ROHRI&KDQJHVLQ/DQG8VH 

/DQG,QYHVWPHQW'HDOVLQ$IULFDLQZKLFKVWXGLHG 8QLWHG5HSXEOLFRI7DQ]DQLD0DMRULQYHVWRUVLQ6LHUUD
VHYHQ FRXQWULHV (WKLRSLD 0DOL 0R]DPELTXH 6LHUUD /HRQH LQFOXGH $GGD[ %LRHQHUJ\ RI 6ZLW]HUODQG DQG
/HRQH6RXWK6XGDQWKH8QLWHG5HSXEOLFRI7DQ]DQLD 4XLIHO ,QWHUQDWLRQDO +ROGLQJV RI 3RUWXJDO $QG 6LHUUD
DQG =DPELD ,Q -XQH  WKH ,QVWLWXWH UHOHDVHG D /HRQH $JULFXOWXUH LV DFWXDOO\ D VXEVLGLDU\ RI &UDGO
SDSHUZKLFKKLJKOLJKWVVRPHRIWKHPDLQÀQGLQJVRI
LWV ÀUVW SKDVH RI UHVHDUFK RQ ODQG LQYHVWPHQW GHDOV
LQ$IULFD
$:KRDUHWKHLQYHVWRUV"
1HZV FRYHUDJH KDV WHQGHG WR HPSKDVL]H WKH UROH
WKDW FRXQWULHV VXFK DV &KLQD DQG WKH *XOI 6WDWHV
KDYHSOD\HGLQWKHDFFHOHUDWLRQRIODQGDFTXLVLWLRQVLQ
$IULFD+RZHYHUWKH2DNODQG,QVWLWXWH·VLQYHVWLJDWLRQ
LQYROYLQJRYHUGHDOVLQWKHVHYHQ$IULFDQFRXQWULHV
FRYHUHG UHYHDOHG D PDMRU UROH SOD\HG DOVR E\
:HVWHUQ ÀUPV ZHDOWK\ 8QLWHG 6WDWHV DQG (XURSHDQ
LQGLYLGXDOV DQG LQYHVWPHQW IXQGV ZLWK WLHV WR PDMRU
EDQNVVXFKDV*ROGPDQ6DFKVDQG-30RUJDQ2WKHU
LQYHVWRUVLQFOXGHDOWHUQDWLYHLQYHVWPHQWÀUPVVXFKDV
/RQGRQEDVHG (PHUJHQW $VVHW 0DQDJHPHQW WKDW
VHHNVWRDWWUDFWVSHFXODWRUVLQFOXGLQJXQLYHUVLWLHVLQ
WKH 8QLWHG 6WDWHV VXFK DV +DUYDUG DQG 9DQGHUELOW
ZLWK WKH SURPLVH RI JDLQLQJ DFFHVV WR DJULFXOWXUDO
ODQG WKDW ZLOO \LHOG KLJK ÀQDQFLDO UHWXUQV IRU WKHLU
HQGRZPHQWV $QRWKHU H[DPSOH FRQFHUQV VHYHUDO
7H[DVEDVHGLQWHUHVWVWKDWDUHDVVRFLDWHGZLWKDPDMRU
KDGHDOLQ6RXWK6XGDQZKLFKLQYROYHV.LQ\HWL
'HYHORSPHQW //& ² DQ $XVWLQ 7H[DVEDVHG ´JOREDO
EXVLQHVV GHYHORSPHQW SDUWQHUVKLS DQG KROGLQJ
FRPSDQ\µ PDQDJHG E\ +RZDUG (XJHQH 'RXJODV
D IRUPHU 8QLWHG 6WDWHV $PEDVVDGRU DW /DUJH DQG
&RRUGLQDWRUIRU5HIXJHH$IIDLUV
$ NH\ SOD\HU LQ WKH ODUJHVW ODQG GHDO LQ WKH 8QLWHG
5HSXEOLFRI7DQ]DQLDLV,RZDDJULEXVLQHVVHQWUHSUHQ
HXU%UXFH5DVWHWWHUZKRFRQFXUUHQWO\VHUYHVDV&(2
RI 3KDURV $J FRIRXQGHU DQG 0DQDJLQJ 'LUHFWRU RI
$JUL6RO(QHUJ\DQG&(2RI6XPPLW)DUPVDQGLVDQ
LPSRUWDQWGRQRUWR,RZD6WDWH8QLYHUVLW\5DVWHWWHUZDV
UHFHQWO\ DSSRLQWHG WR WKH ,RZD %RDUG RI 5HJHQWV E\
7HUU\%UDQVWDG,RZD·V*RYHUQRU,RZD6WDWH8QLYHUVLW\
KDVSURYLGHG´SULYDWHµUHVHDUFKVHUYLFHVWKDWEHQHÀW
5DVWHWWHU·V LQYHVWPHQWV LQ WKH 8QLWHG 5HSXEOLF RI
7DQ]DQLD
&$3$525HQHZDEOH$JULFXOWXUH'HYHORSPHQWV/WG
EDVHGLQWKH8QLWHG.LQJGRP
%$UHLQYHVWRUVEX\LQJXQXVHG
DYDLODEOHODQG"
7KH 2DNODQG ,QVWLWXWH·V UHVHDUFK IRXQG VHYHUDO
FDVHV ZKHUH VPDOO IDUPHUV YLHZHG DV ´VTXDWWHUVµ
KDYH EHHQ IRUFLEO\ UHPRYHG IURP WKHLU DQFHVWUDO
ODQGV ZLWK QR FRPSHQVDWLRQ LQ RUGHU WR PDNH URRP
IRU WKH FXOWLYDWLRQ RI H[SRUW FRPPRGLWLHV LQFOXGLQJ
ELRIXHOVDQGFXWÁRZHUV,Q(WKLRSLDIRUH[DPSOHWKH
YLOODJL]DWLRQ SURFHVV RI QHDUO\  LQGLJHQRXV
SHRSOHLVWDNLQJSODFHLQWKHYHU\VDPHDUHDVWDUJHWHG
IRU ODQG LQYHVWPHQW E\ ODUJHVFDOH LQYHVWRUV 3HRSOH
ZKR DUH EHLQJ IRUFHG RII WKHLU DQFHVWUDO ODQGV DUH
DIUDLG WR RSSRVH GLVSODFHPHQW IRU IHDU RI WKHLU OLYHV
DQG WKUHDWV RI LPSULVRQPHQW LQ D FRXQWU\ ZKHUH
SROLWLFDO YLROHQFH DQG KXPDQ ULJKWV YLRODWLRQV DUH
FRPPRQ
,Q 6DPDQD 'XJX LQ 0DOL LQ  ZKHQ EXOOGR]HUV
PRYHG LQ WR FOHDU WKH ODQG PHQ ZRPHQ DQG \RXWK
IURPWKHFRPPXQLW\ZKRSURWHVWHGWKHFXWWLQJRIWKHLU
WUHHVZHUHPHWE\SROLFHIRUFHDQGZHUHEHDWHQDQG
DUUHVWHG $QG LQ WKH 8QLWHG 5HSXEOLF RI 7DQ]DQLD
WKH PHPRUDQGXP RI XQGHUVWDQGLQJ EHWZHHQ
$JUL6RO (QHUJ\ IURP WKH 8QLWHG 6WDWHV DQG WKH ORFDO
JRYHUQPHQW VWLSXODWHV LQ LWV ÀUVW DUWLFOH WKDW WKH WZR
PDLQ ORFDWLRQV ² .DWXPED DQG 0LVKDPR ² IRU WKH
FRPSDQ\·V SURMHFW DUH UHIXJHH VHWWOHPHQWV WKDW ZLOO
KDYHWREHFORVHGEHIRUHWKHSURMHFWFDQVWDUW<HWWKH
UHIXJHHVOLYLQJWKHUHKDGÁHG%XUXQGLLQ
DQGKDYHEHHQIDUPLQJWKLVODQGIRU\HDUV
2YHUDOO ZKHQ IDUPHUV DUH QRW VLPSO\ UHPRYHG IURP
WKHLU ODQG WKH ODQG OHDVHG WR LQYHVWRUV LQ $IULFD LV
HLWKHU IDOORZ ODQG RU IRUHVWV JHQHUDOO\ XVHG E\ WKH
ORFDO SRSXODWLRQ IRU D ZLGH UDQJH RI SXUSRVHV HJ
FROOHFWLRQ RI WLPEHU ZLOG IRRG ÀUHZRRG PHGLFLQDO
SODQWV FRQVHUYDWLRQ RI ZDWHUVKHGV DQG SURWHFWLRQ
DJDLQVWHURVLRQ,QVWHDGRIXVLQJPDUJLQDORULQIHUWLOH
0DQ\(XURSHDQFRPSDQLHVDUHDOVRLQYROYHGLQODQG ODQG DV LV RIWHQ FODLPHG PRVW GHDOV LGHQWLÀHG DUH
GHDOVLQ$IULFDQFRXQWULHVRIWHQZLWKVXSSRUWSURYLGHG DFWXDOO\WDNLQJSODFHLQWKHYLFLQLW\RIZDWHUUHVRXUFHV
E\ WKHLU JRYHUQPHQWV DQG HPEDVVLHV LQ WKRVH WKDWRIIHULUULJDWLRQSRWHQWLDORUQHDURWKHULQIUDVWUXFWXUH
FRXQWULHV )RU LQVWDQFH 6ZHGLVK DQG *HUPDQ ÀUPV UDLOZD\V URDGV RU RQ IHUWLOH VRLOV 0DMRU $IULFDQ
KDYHVWURQJLQWHUHVWVLQWKHSURGXFWLRQRIELRIXHOVLQWKH ULYHUV VXFK DV WKH 1LOH WKH =DPEH]L DQG WKH 1LJHU

DUHWDSSHGE\WKHVHODQGJUDEGHDOVZKLFKJLYHWKH
LQYHVWRUVFRQWUROQRWRQO\RIWKHODQGEXWDOVRRIZDWHU
&'RHVIRUHLJQLQYHVWPHQWLQODQGOHDGWR
HFRQRPLFGHYHORSPHQW"
7KH EHOLHI WKDW ODUJHVFDOH ODQG LQYHVWPHQW LQ $IULFD
ZLOOUHVXOWLQPXFKQHHGHGHFRQRPLFGHYHORSPHQWLV
VWURQJO\ SURPRWHG E\ IRUHLJQ LQYHVWRUV JRYHUQPHQW
RIÀFLDOVDQGLQWHUQDWLRQDOLQVWLWXWLRQV$VDUHVXOWPDQ\
$IULFDQ JRYHUQPHQWV IHUYHQWO\ HQFRXUDJH IRUHLJQ
LQYHVWPHQW LQ DJULFXOWXUDO ODQG DQG RIIHU ZKDW VRPH
KDYHFDOOHG´PRXWKZDWHULQJµLQFHQWLYHVWRLQYHVWRUV
2IÀFLDOV WUXVW WKDW ODQG GHDOV ZLOO VSXU JURZWK ZLWK
LQFRPLQJFDSLWDODVVLVWZLWKLQIUDVWUXFWXUHDQGFUHDWH
HPSOR\PHQWIRUORFDOSHRSOH2QWKHLUSDUWLQYHVWRUV
UHLQIRUFHWKHVHLGHDVZLWKEROGSURPLVHVRIHFRQRPLF
GHYHORSPHQW ´PRGHUQL]DWLRQµ DQG QXPHURXV MREV
75$'($1'(19,5210(175(9,(:
UHDVRQVIRUWKLVDVGLVFXVVHGEHORZ
',QYHVWRULQFHQWLYHVUHVXOWLQJLQ
IRUJRQHSXEOLFUHYHQXHV
$IULFDQ JRYHUQPHQWV DUH RIIHULQJ D ZLGH UDQJH RI
LQFHQWLYHVWRDWWUDFWIRUHLJQLQYHVWPHQW7KHVHLQFOXGH
ÀVFDO LQFHQWLYHV VXFK DV GXW\ H[HPSWLRQV IXOO RU
SDUWLDOWD[KROLGD\VDQGRUUHGXFWLRQVLQWKHWD[UDWH
IRU VSHFLÀF W\SHV RI DFWLYLWLHV DV ZHOO DV QRQÀVFDO
LQFHQWLYHVLQFOXGLQJDOORZLQJH[SDWULDWHHPSOR\PHQW
DQG UHPLWWDQFH RI SURÀWV DQG RWKHU EHQHÀWV IRU
IRUHLJQ SHUVRQQHO 7KH IRUHJRQH SXEOLF UHYHQXHV
DV D UHVXOW RI LQYHVWRU LQFHQWLYHV FDQ VHYHUHO\
XQGHUPLQH D FRXQWU\·V WD[ EDVH ,PSRUW GXWLHV IRU
H[DPSOH UHSUHVHQW DSSUR[LPDWHO\  SHU FHQW RI
WRWDOJRYHUQPHQWUHYHQXHLQ0R]DPELTXHDQGSHU
FHQW LQ 6LHUUD /HRQH 7KH  WD[ H[HPSWLRQV
LQ WKH 8QLWHG 5HSXEOLF RI 7DQ]DQLD DPRXQWHG WR 
'HVSLWH ZLGHVSUHDG FODLPV WKH 2DNODQG ,QVWLWXWH·V ELOOLRQ 7DQ]DQLDQ VKLOOLQJV  PLOOLRQ ² PRUH WKDQ
ÀHOG UHVHDUFK DQG DQDO\VLV RI WKH ODQG GHDOV LQ WKH
VHYHQ FRXQWULHV KDV IRXQG WKDW WKHLU SURPLVHV RI
HFRQRPLF GHYHORSPHQW WKURXJK WKHLU LQYHVWPHQWV LQ
ODQGDQGDJULFXOWXUHDUHRIWHQRYHUVWDWHG/DUJHVFDOH
ODQGLQYHVWPHQWPD\LPSURYHVRPHPDFURHFRQRPLF
LQGLFDWRUV RI GHYHORSPHQW EXW LW PD\ DOVR UHVXOW LQ
FRQVLGHUDEOH HQYLURQPHQWDO DQG VRFLDO FRVWV WR WKH
KRVWFRXQWU\DQGORVVRIOLYHOLKRRGVRUORVWHFRQRPLF
RSSRUWXQLWLHV IRU LWV FLWL]HQV $Q DQDO\VLV RI YDULRXV
HFRQRPLFLVVXHVUHODWHGWRIRUHLJQLQYHVWPHQWLQODQG
GHPRQVWUDWHV WKDW WKH RSSRUWXQLWLHV IRU HFRQRPLF
KDOI WKH  WULOOLRQ 7DQ]DQLDQ VKLOOLQJV  PLOOLRQ
WKH*RYHUQPHQWSODQQHGWRERUURZIURPFRPPHUFLDO
VRXUFHV IRU LQIUDVWUXFWXUH ÀQDQFLQJ LQ  +DG
LWEHHQFROOHFWHGLWZRXOGKDYHSURYLGHGSHUFHQW
PRUH UHVRXUFHV IRU HGXFDWLRQ RU  SHU FHQW PRUH
UHVRXUFHVIRUKHDOWKLQ
(/RZODQGSULFHVDQGUHQWDOIHHV
,Q $IULFD ODQG LV UHDGLO\ RIIHUHG LQ WKH IRUP RI KXJH
WUDFWVDWH[WUHPHO\ORZSULFHVRUOHDVHUDWHVFRPSDUHG
GHYHORSPHQW DUH LQ IDFW OLPLWHG 7KHUH DUH VHYHUDO ZLWKWKRVHLQRWKHUFRQWLQHQWVWDEOHVDQG

7DEOH6DPSOLQJRIIDUPODQGOHDVHIHHVE\ODQGGHDO

/RFDWLRQ 'HDO 3ULFHKD\U /HDVHWHUPV

(WKLRSLD 6DXGL6WDU )UHHODQGUHQW KD\HDUOHDVH
0DOL 0DOLE\D )UHHODQGUHQW KD\HDUOHDVH
D
(WKLRSLD .DUXWXUL  KD\HDUOHDVH
6XGDQ 1LOH7UDGLQJDQG'HYHORSPHQW  KDDW\HDUOHDVH
6LHUUD/HRQH 6LHUUD/HRQH$JULFXOWXUH  KD\HDUOHDVH
6LHUUD/HRQH 4XLIHO$JULEXVLQHVV6//LPLWHG  KD\HDUOHDVH

6RXUFH%DVHGRQ2DNODQG,QVWLWXWHÀHOGUHVHDUFK2FWREHU-XQH
1RWHVD.DUXWXULLQLWLDOO\OHDVHGODQGIRUMXVWKDELUUKDEXWLQVXEVHTXHQWQHJRWLDWLRQVZLWKWKHIHGHUDO
*RYHUQPHQWWKDWSULFHZDVUDLVHGWRKDELUUKD
7KH5ROHRI&KDQJHVLQ/DQG8VH 

7DEOH6DPSOLQJRIDYHUDJHIDUPODQGSULFHVE\VHOHF WKH VHFWRU KDV JUHDW SRWHQWLDO DV D GULYHU RI WKHLU
WHGFRXQWULHV HFRQRPLF GHYHORSPHQW DQG MRE FUHDWLRQ $FWLYLWLHV
VXFK DV VWRUDJH WR UHGXFH SRVWKDUYHVW ORVVHV DQG
/RFDWLRQ $YHUDJHSULFHKD\U WR JHW WKH EHVW IURP PDUNHW RSSRUWXQLWLHV DV ZHOO
DV LQYHVWPHQWV LQ YDOXHDGGHG SURGXFWLRQ VXFK DV
1HZ=HDODQGGDLU\ 
SURFHVVLQJ VHHP SDUWLFXODUO\ UHOHYDQW WR PDNH WKH
8QLWHG.LQJGRPDYHUDJH  PRVWRIWKHWUHPHQGRXVSRWHQWLDORI$IULFDQDJULFXOWXUH
²DOOODQGW\SHV
,PSURYLQJVPDOOKROGHUSURGXFWLYLW\DQGSURGXFWLRQLV
8QLWHG6WDWHVGU\ODQG  DOVRHVVHQWLDOIRUDVHFWRUODUJHO\GHSHQGHQWRQIDPLO\
LQFRUQEHOW
IDUPV
3RODQG ²
%UD]LO0DWR*URVVRGU\ <HW WKH PDMRULW\ RI ODQG GHDOV LQYHVWLJDWHG E\ WKH
ODQG 
2DNODQG,QVWLWXWHRIIHUEDVLFZDJHODERXUHPSOR\PHQW
$UJHQWLQD&HQWUDO PRVWO\ORZSD\LQJSRVLWLRQVZKLFKSUHVHQWDQXPEHU
SURYLQFHV ²
6RXUFH7KH.QLJKW)UDQN)DUPODQG,QGH[
/RZSULFHVDUHFHUWDLQO\DWWUDFWLYHWRIRUHLJQLQYHVWRUV
$FFRUGLQJ WR 6XVDQ 3D\QH &KLHI ([HFXWLYH 2IÀFHU
RI GLVDGYDQWDJHV 2IWHQ LW LV XQFOHDU KRZ PDQ\
MREV ZLOO EH FUHDWHG RU ZKHWKHU WKRVH MREV ZLOO
RIIHU IDLU FRPSHQVDWLRQ IRU ORFDO IDUPHUV· ORVW ODQGV
DQG OLYHOLKRRGV )XUWKHUPRUH PRGHUQ DJULFXOWXUDO
VFKHPHV DUH KLJKO\ PHFKDQL]HG DQG SURYLGH
UHODWLYHO\ IHZ RIWHQ VKRUWWHUP VHDVRQDO MREV 7KHUH
&(2 RI (PHUJHQW $VVHW 0DQDJHPHQW ´,Q 6RXWK
$IULFD DQG 6XE 6DKDUDQ $IULFD WKH FRVW RI DJULODQG
DUDEOH JRRG DJULODQG WKDW ZH·UH EX\LQJ LV RQH
VHYHQWKRIWKHSULFHRIVLPLODUODQGLQ$UJHQWLQD%UD]LO
DQG $PHULFD 7KDW DORQH LV DQ DUELWUDJH RSSRUWXQLW\
:HFRXOGEHPRURQLFDQGQRWJURZDQ\WKLQJDQGZH
WKLQNZHZLOOPDNHPRQH\RYHUWKHQH[WGHFDGHµVHH
LVQRLQGLFDWLRQWKDWLQYHVWRUVDUHVHHNLQJWRPD[LPL]H
ORFDO HPSOR\PHQW RU WKDW JRYHUQPHQWV DUH JLYLQJ
SULRULW\WRMREFUHDWLRQ2QWKHFRQWUDU\LQYHVWRUVRIWHQ
ÀQG VFDODEOH PHFKDQL]HG DJULFXOWXUH WR EH PRUH
PDQDJHDEOH DQG JRYHUQPHQWV OXUH WKHVH LQYHVWRUV
E\ SODFLQJ IHZ RU QR OLPLWV RQ H[SDWULDWH ZRUNHUV ,W
DSSHDUV WKHUHIRUH WKDW ORIW\ HPSOR\PHQW FODLPV
KWWSZZZRDNODQGLQVWLWXWHRUJHPHUJHQWYLGHR
7KH EHQHÀWV IURP WKH LQYHVWPHQWV IRU WKH KRVW
FRXQWULHVDUHXQGHUPLQHGE\WKHVHORZSULFHV3D\QH
DOOXGHVWRWKHIDFWWKDWEHFDXVHRIORZODQGSULFHVLWLV
SHUKDSVLQWKHLQYHVWRU·VEHVWLQWHUHVWWRVLWRQWKHODQG
DQGSURÀWIURPDUELWUDJHEHWZHHQORZODQGDFTXLVLWLRQ
SULFHVFRPSDUHGZLWKWKHLUVDOHVYDOXHVDVWKHPDUNHW
LPSURYHV:KLOHVXFKVSHFXODWLRQRIWHQHQWDLOVKLJKHU
ULVN UHWXUQV RQ VSHFXODWLYH LQYHVWPHQWV LQ $IULFDQ
IDUPODQG KDYH EHHQ UHSRUWHG WR UHDFK  SHU FHQW
,QGHHG PDQ\ RI WKH ODQG GHDOV LQYHVWLJDWHG E\ WKH
2DNODQG ,QVWLWXWH DUH QRW \HW RSHUDWLRQDO LQGLFDWLQJ
WKDWWKHLQYHVWPHQWVPD\KDYHEHHQPDGHVROHO\IRU
PDGHE\LQYHVWRUVJHQHUDOO\DUHQRWVXEVWDQWLDWHGE\
DFWXDO MRE FUHDWLRQ RU E\ MREV WKDW EULQJ VLJQLÀFDQW
GHYHORSPHQW EHQHÀWV ,QGHHG HYLGHQFH VKRZV WKDW
ODUJHVFDOH DJULFXOWXUDO LQYHVWPHQWV SURYLGH PLQLPDO
EHQHÀWV WR ORFDO FRPPXQLWLHV DQG WKLV VKRXOG EH
WDNHQLQWRFRQVLGHUDWLRQE\GHYHORSPHQWSUDFWLWLRQHUV
DQG SROLF\PDNHUV ZKHQ HYDOXDWLQJ WKH OHJLWLPDF\
RI ´UHVSRQVLEOHµ DJURLQYHVWPHQW 7R WUXO\ VSXU MRE
FUHDWLRQ KRVW JRYHUQPHQWV ZRXOG QHHG WR HVWDEOLVK
LQYHVWPHQWDJUHHPHQWVWKDWFRQWULEXWHWRUDWKHUWKDQ
GHWUDFWIURPORFDOOLYHOLKRRGRSWLRQV
2DNODQG ,QVWLWXWH·V HYLGHQFH LV VXSSRUWHG E\ RWKHU
ÀQGLQJV LQFOXGLQJ D VWXG\ E\ WKH :RUOG %DQN
VSHFXODWLYHUDWKHUWKDQSURGXFWLYHSXUSRVHV
)'RHVIRUHLJQLQYHVWPHQWLQDJULFXOWXUH
OHDGWRMREFUHDWLRQ"
7KH SURPLVH RI MRE FUHDWLRQ LV RIWHQ WKH DUJXPHQW
SUHVHQWHGE\LQYHVWRUVJRYHUQPHQWVDQGLQWHUQDWLRQDO
LQVWLWXWLRQV WR FRQYLQFH ORFDO FRPPXQLWLHV RI WKH
EHQHÀWVRIIRUHLJQLQYHVWPHQWLQDJULFXOWXUH%HFDXVH
RIWKHODUJHUROHDJULFXOWXUHSOD\VLQ$IULFDQHFRQRPLHV
 ZKLFK IRXQG VFDQW HYLGHQFH WKDW IRUHLJQ
ODQG LQYHVWPHQW ZDV FUHDWLQJ PDQ\ ORFDO MREV 7KH
UHTXLUHPHQWV IRU ODERXU YDU\ JUHDWO\ DPRQJ FURSV
DQG SURGXFWLRQ V\VWHPV VXFK WKDW FURS FKRLFH DQG
RUJDQL]DWLRQ RI SURGXFWLRQ ZLOO KDYH IDUUHDFKLQJ
LPSDFWVRQWKHSRWHQWLDOIRUDJULFXOWXUDOLQYHVWPHQWWR
FUHDWHHPSOR\PHQW$KDPDL]HSODQWDWLRQLQ
WKH'HPRFUDWLF5HSXEOLFRIWKH&RQJRIRUH[DPSOH
FUHDWHGRQO\MREVSHUKHFWDUHZKLOHDVXJDUFDQH
SODQWDWLRQ JHQHUDWHG  MREV SHU KHFWDUH 7KH
 75$'($1'(19,5210(175(9,(:

:RUOG %DQN UHSRUW IRXQG MRE FUHDWLRQ LQ (WKLRSLD WR UHVHDUFK LQ 0DOL FRXOG VXVWDLQ FRQVHUYDWLYHO\
EH VLPLODUO\ OLPLWHG ZLWK DQ DYHUDJH RI  MREV IDUPIDPLOLHV²ZHOORYHUKDOIDPLOOLRQSHRSOH
KDLQFDVHVZKHUHÀJXUHVZHUHSURYLGHG7KHUHSRUW  ,QVWHDG WKDW ODQG LV QRZ FRQFHQWUDWHG LQ
QRWHG ´7KH SDWFK\ GDWD WKDW DUH DYDLODEOH VXJJHVW WKHKDQGVRILQYHVWRUVZKRDUHSODQQLQJWRHPSOR\
WKDWLQYHVWPHQWVFUHDWHIDUIHZHUMREVWKDQH[SHFWHGµ RQO\DIHZWKRXVDQGSODQWDWLRQZRUNHUV
&RPSDULQJ WKHVH ÀJXUHV ZLWK WKH ODERXU LQWHQVLW\ RI
IDPLO\ IDUPV VPDOOKROGHU VR\EHDQ SURGXFWLRQ IRU
H[DPSOH FUHDWHV  MREVKD ² QHDUO\ HLJKW WLPHV *'RHVLQYHVWPHQWLPSURYH
PRUH MREV WKDQ WKH  MREVKD FUHDWHG E\ ODUJH IRRGVHFXULW\"
VFDOHVR\EHDQSURGXFWLRQ 0RVWRIWKHFRXQWULHVWDUJHWHGE\LQYHVWRUVVXIIHUIURP
IRRG LQVHFXULW\ 7KRXJK WKH IRRG VHFXULW\ DUJXPHQW
$OVR DFFRUGLQJ WR WKH :RUOG %DQN ZDJH ODERXU
LV RIWHQ SXW IRUZDUG E\ JRYHUQPHQWV DQG LQYHVWRUV
LQFRPHLVWRWLPHVORZHUWKDQWKHLQFRPHRIWKH
LQ VXSSRUW RI ODUJHVFDOH DJULFXOWXUDO LQYHVWPHQWV
DYHUDJHVPDOOKROGHU0RUHRYHUDVPHQWLRQHGHDUOLHU
2DNODQG ,QVWLWXWH·V UHVHDUFK ÀQGV OLWWOH DVVXUDQFH
PRVWDJULFXOWXUDOZDJHODERXUSRVLWLRQVDUHVHDVRQDO
WKDWWKRVHLQYHVWPHQWVKDYHLPSURYHGIRRGVHFXULW\
7KXV WKH LPSUHVVLYH QXPEHU RI SRVLWLRQV .DUXWXUL
,Q PDQ\ FDVHV ORFDO IRRG IDUPV DUH VROG LQ RUGHU WR
FODLPVLWZLOOFUHDWH²DVPDQ\DVWR²LQ
PDNHURRPIRUWKHFXOWLYDWLRQRIH[SRUWFRPPRGLWLHV
(WKLRSLDLVPLVOHDGLQJLQWHUPVRIDFWXDOHPSOR\PHQW
LQFOXGLQJ FURSV IRU ELRIXHOV DQG FXW ÁRZHUV 0DQ\
FUHDWLRQIRUORFDOGHYHORSPHQW
RI WKH ODQG OHDVHV LGHQWLÀHG DUH IRU WKH SURGXFWLRQ
RI DJURIXHOV ,Q 0DOL KDOI RI WKH LQYHVWRUV ZLWK ODUJH
$ ODUJH ERG\ RI UHVHDUFK VXSSRUWV WKH QRWLRQ WKDW
ODQG KROGLQJV LQ WKH 2IÀFH GX 1LJHU LQWHQG WR JURZ
VPDOO IDUPV DUH PRUH SURGXFWLYH ELRGLYHUVH DQG
FURSV IRU DJURIXHOV VXFK DV VXJDUFDQH MDWURSKD RU
VXVWDLQDEOH WKDQ ODUJH LQGXVWULDOVW\OH SODQWDWLRQV
RWKHU ROHDJLQRXV FURSV 6LPLODUO\ LQ 0R]DPELTXH
)XUWKHUPRUH LQ WHUPV RI ORFDO SHRSOHV· ZHOOEHLQJ
PRVW RI WKH LQYHVWPHQWV DUH LQ WKH WLPEHU LQGXVWU\
VPDOOVFDOH DJULFXOWXUH RIIHUV D QXPEHU RI EHQHÀWV
DQGDJURIXHOVUDWKHUWKDQLQIRRGFURSV)RRGFURSV
,Q WKH ÀUVW SODFH WKH SURGXFWLRQ RI JRRGV E\ VPDOO
UHSUHVHQWHG RQO\  KD RI WKH  KD WKDW
IDUPV LV UHODWLYHO\ OHVV FDSLWDOLQWHQVLYH PHDQLQJ
ZHUH DSSURYHG IRU DJULFXOWXUDO LQYHVWPHQWV EHWZHHQ
WKDW PRUH ODERXU LV XVHG WR SURGXFH HDFK XQLW RI
DQG
WKHJRRGWKDQWKDWE\ODUJHIDUPV7KLVLPSOLHVWKDW
VPDOOIDUPVHPSOR\UHODWLYHO\PRUHODERXULQFOXGLQJ
UXUDOXQVNLOOHGODERXUWKDQGRODUJHIDUPVDQGWKXV
SURYLGH PRUH JDLQIXO OLYHOLKRRG RSWLRQV IRU ORFDOV
6HFRQGO\ VPDOO IDUPV KDYH KLJKHU RXWSXW SHU ODQG
XQLW EHFDXVH WKH\ XWLOL]H WKHLU ODQG PRUH HIÀFLHQWO\
JURZLQJ PXOWLSOH FURSV DQG WKHUHE\ LPSURYH ORFDO
IRRGVHFXULW\6PDOOIDUPVDOVRDUHPRUHSURGXFWLYH
EHFDXVH RI WKHLU UHODWLYHO\ KLJK FRQFHQWUDWLRQ RI
ODERXU SHU KHFWDUH FRPSDUHG ZLWK ODUJHU IDUPV
$GGLWLRQDOO\ EHFDXVH WKH KRXVHKROG SURYLGHV PRVW
RI WKH ZRUNIRUFH WKH FRVWV RI VXSHUYLVLRQ DUH ORZ
VLQFHKRXVHKROGODERXULVJHQHUDOO\VHOIVXSHUYLVLQJ
LQHIIRUWDQGGLOLJHQFH
+$UHSODQWDWLRQVPRUHSURGXFWLYHDQG
SURÀWDEOHWKDQVPDOOVFDOHIDUPV"
$QRWKHUDUJXPHQWSXWIRUZDUGLQIDYRXURIODUJHIDUPV
LVWKDWWKH\DUHVXSSRVHGO\PRUHSURGXFWLYH+RZHYHU
KHUHWRRWKH2DNODQG,QVWLWXWH·VLQYHVWLJDWLRQVFRQÀUP
WKH H[LVWHQFH RI D ODUJH ERG\ RI SUHYLRXV UHVHDUFK
ZKLFKVKRZVWKDWLQPDQ\LQVWDQFHVVPDOOIDUPVDUH
PRUH SURGXFWLYH WKDQ ODUJH SODQWDWLRQV ,Q 0DOL IRU
H[DPSOHZKHUHWKHV\VWHPRIULFHLQWHQVLÀFDWLRQKDV
EHHQ DGRSWHG DORQJ WKH 1LJHU 5LYHU QHDU 7LPEXNWX
IDUPHUV KDYH EHHQ DEOH WR DWWDLQ \LHOGV RI  WR 
/DVWO\ VLQFH VPDOO IDUPV XWLOL]H UHODWLYHO\ PRUH
ODERXUSHUODQGXQLWWKH\GLVWULEXWHDUHODWLYHO\ODUJHU
SURSRUWLRQ RI WKHLU SURÀWV UHYHQXHV DQG RXWSXW WR
WKHLUODERXUHUV7KHDYHUDJHIDUPVL]HIRUFURSEDVHG
IDUPLQJ LQ 0DOL LV MXVW  KD DQG RQH WKLUG RI WKH
IDUPKRXVHKROGVFXOWLYDWHOHVVWKDQKD7R
SXWWKLVLQSHUVSHFWLYHWKHDUHDFRYHUHGE\WKHUHFHQW
ODUJH ODQG GHDOV LGHQWLÀHG E\ 2DNODQG ,QVWLWXWH·V
WRQVKD\U RU DQ DYHUDJH RI  WRQVKD\U ZKLFK LV
PRUH WKDQ WZLFH WKH FRQYHQWLRQDO LUULJDWHG ULFH \LHOG
LQWKHDUHDDQGPRUHWKDQWKHIRUHFDVWVRIWKH0RXOLQ
0RGHUQHGX0DOLRQHRIWKHPDMRULQYHVWRUVLQODUJH
VFDOHULFHSURGXFWLRQ7KHVPDOOVFDOHYLOODJHEDVHG
LUULJDWLRQ VFKHPHV LQYROYH SORWV RI MXVW  KD RI
ODQGVKDUHGE\DVPDQ\DVIDUPHUVWKXVHDFK
KRXVHKROGKDVDFFHVVWRRQO\RQHWKLUGRIDKHFWDUH
<HWIURPWKDWSLHFHRIODQGWKH\DUHDEOHWRHDUQ
7KH5ROHRI&KDQJHVLQ/DQG8VH
² PRUH WKDQ GRXEOH WKH DYHUDJH DQQXDO SHU FDSLWD
LQFRPHRI
,IWKHULFHLQWHQVLÀFDWLRQVFKHPHZHUHWREHUHSOLFDWHG
VXFFHVVIXOO\ LQ WKH 2IÀFH GX 1LJHU  KD RI
VXFK VPDOOVFDOH LUULJDWLRQ VFKHPHV FRXOG SURYLGH
OLYHOLKRRGV IRU  IDUPHUV DQG GUDPDWLFDOO\
LQFUHDVHULFHSURGXFWLRQDQGUHYHQXHV

FUXFLDOIRURYHUFRPLQJWKHFXUUHQWFULVLVRIZRUOGKXQ
JHULQWKHFRQWH[WRIFOLPDWHFKDQJHDQGIRUSURYLGLQJ
OLYHOLKRRGV WR IDUPHUV ZKLOH HQDEOLQJ GHYHORSLQJ
FRXQWULHVWRPHHWWKH0LOOHQQLXP'HYHORSPHQW*RDOV
+RZHYHU WKH ,QVWLWXWH·V UHVHDUFK DOVR VKRZV WKDW
LQYHVWPHQWLQDJULFXOWXUHGRHVQRWQHFHVVDULO\WUDQVODWH
LQWRIRRGVHFXULW\RUOLYHOLKRRGVIRUVPDOOKROGHUIDUPHUV
ZKRIRUPWKHEXONRIWKHZRUOG·VSRRU$VSRLQWHGRXW
,3ODFLQJVXVWDLQDEOHDJULFXOWXUDO
GHYHORSPHQWLQWKHSURSHUFRQWH[W
5HVHDUFK FRQGXFWHG E\ WKH 2DNODQG ,QVWLWXWH
GHPRQVWUDWHVWKDWDUHQHZHGIRFXVRQDJULFXOWXUHLV
E\2OLYLHU'H6FKXWWHU8QLWHG1DWLRQV6SHFLDO
5DSSRUWHXURQWKH5LJKWWR)RRGWKHLVVXHLVQRWRQH
RIPHUHO\LQFUHDVLQJEXGJHWDOORFDWLRQVWRDJULFXOWXUH
EXWUDWKHU´WKDWRIFKRRVLQJIURPGLIIHUHQWPRGHOVRI
DJULFXOWXUDO GHYHORSPHQW ZKLFK PD\ KDYH GLIIHUHQW
LPSDFWVDQGEHQHÀWYDULRXVJURXSVGLIIHUHQWO\µ
 75$'($1'(19,5210(175(9,(:

5HIHUHQFHV
$QJHZ::LO\/$&RWXOD/DQG7D\ORU0)LQGLQJVRIWKHJOREDOFRPPHUFLDOSUHVVXUHVRQODQGUHVHDUFKSURMHFW
3DSHUFRPPLVVLRQHGE\,,('&,5$'DQG,QWHUQDWLRQDO/DQG&RDOLWLRQ5RPH$YDLODEOHDWKWWSZZZFLUDOIU
$QVHHXZ:%RFKH0%UHX7*LJHU0/D\-0HVVHUOL31ROWH.7UDQVQDWLRQDO/DQG'HDOVIRU$JULFXOWXUHLQWKH
*OREDO6RXWK5HSRUWIRUWKH/DQG0DWUL[3DUWQHUVKLS&'(&,5$'*,*$*,=,/&%HUQ0RQWSHOOLHU+DPEXUJ
$YDLODEOHDWZZZFLUDGIU
$UQGW&%HQÀFD57DUS)7KXUORZ-8DLHQH5%LRIXHOVSRYHUW\DQGJURZWK$FRPSXWDEOHJHQHUDOHTXLOLEULXP
DQDO\VLV RI 0R]DPELTXH  ,23 &RQI 6HU (DUWK (QYLURQ 6FL   KWWSLRSVFLHQFHLRSRUJ

%RXZPDQ $) 9DQ GHU +RHN .: (LFNKRXW % 6RHQDULR ,  ([SORULQJ FKDQJHV LQ ZRUOG UXPLQDQW SURGXFWLRQ
V\VWHPV$JULFXOWXUDO6\VWHPV²
%RZ\HU &  $QWLFLSDWHG LQGLUHFW ODQG XVH FKDQJH DVVRFLDWHG ZLWK H[SDQGHG XVH RI ELRIXHOV DQG ELROLTXLGV
LQ WKH (8 ² $Q $QDO\VLV RI WKH 1DWLRQDO 5HQHZDEOH (QHUJ\ $FWLRQ 3ODQV 6WXG\ E\ WKH ,QVWLWXWH IRU (XURSHDQ
(QYLURQPHQWDO 3ROLF\ 1RYHPEHU $YDLODEOH DW  KWWSZZZLHHSHXQHZVWKHLQGLUHFWODQGXVHFKDQJH
LPSDFWRIELRIXHOVLHHSODXQFKHVDQDO\VLVRIHXQDWLRQVSURMHFWHG
%UHX 7 3RUWQHU % +HUZHJ . 0HVVHUOL 3 :ROIJUDPP % +XUQL +  6XVWDLQDEOH ODQG PDQDJHPHQW DQG JOREDO
FKDQJH)DFWRUVDIIHFWLQJODQGXVHUV·HIIRUWVWRVXVWDLQWKHSURGXFWLYHXVHRIQDWXUDOUHVRXUFHV,Q:LHVPDQQ8
+XUQL+HGV5HVHDUFKIRU'HYHORSPHQW²$6\QWKHVLVRI1&&51RUWK6RXWK5HVHDUFK>ZRUNLQJWLWOH@
9RO3HUVSHFWLYHVRIWKH6ZLVV1DWLRQDO&HQWUHRI&RPSHWHQFHLQ5HVHDUFK1&&51RUWK6RXWK8QLYHUVLW\RI
%HUQ%HUQ*HRJUDSKLFD%HUQHQVLD
%UXLQVPD-(:RUOG$JULFXOWXUH7RZDUGV$Q)$23HUVSHFWLYH/RQGRQ(DUWKVFDQ3XEOLFDWLRQV/WG
%XUJHUV 3 5L]NL 3DQGX 3HUPDQD 7UDQ 1DP 7X  )XHOOLQJ FRQÁLFWV 2YHUFRPLQJ DV\PPHWU\ EHWZHHQ JOREDO
LQWHUHVWVLQ9LHWQDPDQG,QGRQHVLD'HYHORSPHQW²
&*,$55HVHDUFK ,PSDFW$UHDVRI5HVHDUFK/LYHVWRFN:DVKLQJWRQ'&$YDLODEOHDWKWWSZZZFJLDURUJ
LPSDFWUHVHDUFKOLYHVWRFNKWPO
&KDOPHUV-.XQHQ()RUG6+DUULV1.DG\]HZVNL%LRIXHOVDQGLQGLUHFWODQGXVHFKDQJH:LQURFN,QWHUQDWLRQDO
&KRPLW].0$WORJJHUKHDGV"$JULFXOWXUDOH[SDQVLRQSRYHUW\UHGXFWLRQDQGHQYLURQPHQWLQWKHWURSLFDOIRUHVWV
:DVKLQJWRQ'&:RUOG%DQN
&LVVRNKR0/LQHV71LVVDQNH0DQG6PLWK$)RRGVHFXULW\ÀQDQFHDQGLQWHUQDWLRQDOWUDGH+RZWRSURWHFW
GHYHORSLQJFRXQWULHVIURPYRODWLOHJOREDOPDUNHWV3DULV9HEOHQ,QVWLWXWHIRU(FRQRPLF5HIRUPV
&RWXOD//DQGGHDOVLQ$IULFD:KDWLVLQWKHFRQWUDFWV"/RQGRQ,QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG
'HYHORSPHQW
&RWXOD/)LQQHJDQ/DQG0DFTXHHQ'%LRPDVVHQHUJ\$QRWKHUGULYHURIODQGDFTXLVLWLRQV"7KHJOREDOODQG
UXVK,,('EULHÀQJ/RQGRQ,QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG'HYHORSPHQW
'H )UDLWXUH &K *LRUGDQR 0 DQG <RQJVRQJ /LDR  %LRIXHOV DQG LPSOLFDWLRQV IRU DJULFXOWXUDO ZDWHU XVH %OXH
LPSDFWVRIJUHHQHQHUJ\:DWHU3ROLF\²
'H6FKXWWHU2&RQWULEXWLRQRIWKH6SHFLDO5DSSRUWHXURQWKH5LJKWWR)RRGWKVHVVLRQRIWKH81&RPPLVVLRQ
RQ6XVWDLQDEOH'HYHORSPHQW1HZ<RUN0D\$YDLODEOHDWZZZXQRUJHVDGVGUHVRXUFHVUHVBSGIVFVG
VXEPLVVLRQBRIBWKHB6SHFLDOB5DSSRUWHXUSGI
'()5$7KHDJULFXOWXUDOSULFHVSLNHV&DXVHVDQGSROLF\LPSOLFDWLRQV$QQH[,Q'()5$7KH5ROH
RI'HPDQGIRU%LRIXHOLQWKH$JULFXOWXUDO&RPPRGLW\3ULFH6SLNHVRI/RQGRQ$YDLODEOHDWKWWSDUFKLYH
GHIUDJRYXNIRRGIDUPIRRGSGIDJSULFHSGI
'H)ULHV 5 DQG 5RVHQ]ZHLJ &  7RZDUG D ZKROHODQGVFDSH DSSURDFK IRU VXVWDLQDEOH ODQG XVH LQ WKH WURSLFV
3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFHV²
'H)ULHV565XGHO78ULDUWH0+DQVHQ0'HIRUHVWDWLRQGULYHQE\XUEDQSRSXODWLRQJURZWKDQGDJULFXOWXUDO
WUDGHLQWKHWZHQW\ÀUVWFHQWXU\1DWXUH*HRVFLHQFH$GYDQFHDQRQOLQHSXEOLFDWLRQ
'HOJDGR&/5LVLQJFRQVXPSWLRQRIPHDWDQGPLONLQGHYHORSLQJFRXQWULHVKDVFUHDWHGDQHZIRRGUHYROXWLRQ7KH
-RXUQDORI1XWULWLRQ6²6$YDLODEOHDWKWWSMQQXWULWLRQRUJFRQWHQW6IXOOSGIKWPO
7KH5ROHRI&KDQJHVLQ/DQG8VH 

'HOJDGR&/5RVHJUDQW06WHLQIHOG+(KXL6&RXUERLV&/LYHVWRFNWR7KH1H[W)RRG5HYROXWLRQ)RRG

$JULFXOWXUHDQGWKH(QYLURQPHQW'LVFXVVLRQ3DSHU:DVKLQJWRQ'&5RPH1DLUREL,QWHUQDWLRQDO)RRG3ROLF\
5HVHDUFK,QVWLWXWH)$2DQG,QWHUQDWLRQDO/LYHVWRFN5HVHDUFK,QVWLWXWH
'XIH\ $  ,QWHUQDWLRQDO WUDGH LQ ELRIXHOV *RRG IRU GHYHORSPHQW" $QG JRRG IRU HQYLURQPHQW" ,,(' %ULHÀQJ
/RQGRQ,QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG'HYHORSPHQW
'\QHV0*URZLQJXS$YDLODEOHDWKWWSZZZDIULFDLQYHVWRUFRPDUWLFOHDVS"LG 
(FRQRPLVW7KHVLOHQWWVXQDPL²$SULO$YDLODEOHDWZZZHFRQRPLVWFRPQRGH
(QYLURQPHQWDO 5LJKWV $FWLRQ  81(3 5HSRUW (5$ VHHNV  EQ IRU 1LJHU 'HOWD $YDLODEOH DW KWWSZZZ
HUDFWLRQRUJPHGLDSUHVVUHOHDVHVXQHSUHSRUWHUDVHHNVEQIRUQLJHUGHOWD
)$2D/LYHVWRFN·V/RQJ6KDGRZ(QYLURQPHQWDO,VVXHVDQG2SWLRQV5RPH$YDLODEOHDWIWSIWSIDRRUJGRFUHS
IDRDHDHSGI
)$2E:RUOG$JULFXOWXUH7RZDUGV,QWHULP5HSRUW5RPH
)$2&OLPDWHFKDQJHELRIXHOVDQGODQG,QIRUPDWLRQVKHHW5RPH
)$2D7KH6WDWHRI)RRGDQG$JULFXOWXUH/LYHVWRFNLQWKH%DODQFH5RPH
)$2E+RZWRIHHGWKHZRUOGLQ"&RQIHUHQFHV\QWKHVLVUHSRUW5RPH,WDO\
)$2DQG2(&'$JULFXOWXUDO2XWORRN+LJKOLJKWV5RPHDQG3DULV$YDLODEOHDWZZZIDRRUJHVHVF
HQKLJKOLJKWBBSKWPO
)$2DQG2(&'*UHHQLQJWKH(FRQRP\ZLWK$JULFXOWXUH*($5HSRUWRIWKH)$22(&'([SHUW0HHWLQJ3DULV
²6HSWHPEHU$YDLODEOHDWKWWSZZZIDRRUJULRIDRULRJHDHQ
)$2,)$',,('/DQG*UDERU'HYHORSPHQW2SSRUWXQLW\"$JULFXOWXUDOLQYHVWPHQWDQGLQWHUQDWLRQDOODQGGHDOV
LQ$IULFD5RPH
)$26WDW5HVRXUFHV/DQG5RPH$YDLODEOHDWKWWSIDRVWDWIDRRUJVLWHGHIDXOWDVS[
)$26WDW  /LYH $QLPDOV 3URGXFWLRQ 5RPH $YDLODEOH DW KWWSIDRVWDWIDRRUJVLWHGHIDXOWDVS[DQFRU
DFFHVVHG6HSWHPEHU
)DUJLRQH-+LOO-7LOPDQ'3RODVN\6+DZWKRUQH3/DQGFOHDULQJDQGWKHELRIXHOFDUERQGHEW6FLHQFH9RO
$YDLODEOHDWKWWSSGIXVDLGJRYSGIBGRFV31$'3SGI
)LQGODWHU.0DQG.DQGOLNDU0/DQGXVHDQGVHFRQGJHQHUDWLRQELRIXHOIHHGVWRFNV7KHXQFRQVLGHUHGLPSDFWV
RI-DWURSKDELRGLHVHOLQ5DMDVWKDQ,QGLD(QHUJ\3ROLF\²
)LVFKHU * +\]VQ\LN ( 3ULHOHU 6 6KDK 0 YDQ 9HOWKXL]HQ +  %LRIXHOV DQG IRRG VHFXULW\ ,PSOLFDWLRQV RI DQ
DFFHOHUDWHGELRIXHOVSURGXFWLRQ9LHQQD7KH23(&)XQGIRU,QWHUQDWLRQDO'HYHORSPHQW
)ROH\-$'H)ULHV5$VQHU*3%DUIRUG&%RQDQ*&DUSHQWHU65&KDSLQ)6&RH07'DLO\*&*LEEV+.+HONRZVNL
-++ROORZD\7+RZDUG($.XFKDULN&-0RQIUHGD&3DW]-$3UHQWLFH,&5DPDQNXWW\1DQG6Q\GHU3.
*OREDOFRQVHTXHQFHVRIODQGXVH6FLHQFH²
)UDQFR-/HYLGRZ/)LJ'*ROGIDUE/+|QLFNH00HQGRQoD0/$VVXPSWLRQVLQWKH(XURSHDQ8QLRQELRIXHOV
SROLF\ )ULFWLRQV ZLWK H[SHULHQFHV LQ *HUPDQ\ %UD]LO DQG 0R]DPELTXH 7KH -RXUQDO RI 3HDVDQW 6WXGLHV 
²
*DR < 6NXWVFK 0 'ULJR 5 3DFKHFR 3 0DVHUD 2  $VVHVVLQJ GHIRUHVWDWLRQ IURP ELRIXHOV 0HWKRGRORJLFDO
FKDOOHQJHV$SSOLHG*HRJUDSK\²
*DZHO(DQG/XGZLJ*7KH,/8&GLOHPPD+RZWRGHDOZLWKLQGLUHFWODQGXVHFKDQJHVZKHQJRYHUQLQJHQHUJ\
FURSV"/DQG8VH3ROLF\²
*HLVW+-DQG/DPELQ()3UR[LPDWHFDXVHVDQGXQGHUO\LQJGULYLQJIRUFHVRIWURSLFDOGHIRUHVWDWLRQ%LRVFLHQFH
²
*HUPDQ / 6FKRQHYHOG * 6NXWFK 0 $QGULDQL 5 2ELG]LQVNL . 3DFKHFR 3 ZLWK .RPDUXGLQ + $QGULDQWR $ /LPD 0
'D\DQJ1RUZDQD$$%7KHVRFLDODQGHQYLURQPHQWDOLPSDFWVRIELRIXHOIHHGVWRFNH[SDQVLRQ$V\QWKHVLV
RI FDVH VWXGLHV IURP $VLD $IULFD DQG /DWLQ $PHULFD ,QIREULHI   %RJRU %DUDW &HQWUH IRU ,QWHUQDWLRQDO )RUHVWU\
5HVHDUFK
*/36FLHQFH3ODQDQG,PSOHPHQWDWLRQ6WUDWHJ\,*%35HSRUW,*%36HFUHWDULDW6WRFNKROP$YDLODEOHDW
 75$'($1'(19,5210(175(9,(:

ZZZLJESQHWSXEOLFDWLRQVUHSRUWVDQGVFLHQFHSODQVUHSRUWVDQGVFLHQFHSODQVUHSRUWQREDHGEI
DKWPO
*PQGHU6DQG3RUWQHU%%LRIXHOVDQGGHYHORSLQJFRXQWULHV,Q=DK5%LQGHU&%ULQJH]X65HLQKDUG-
6FKPLG$6FKW]+)XWXUH3HUVSHFWLYHVRIQG*HQHUDWLRQ%LRIXHOV%HUQ&HQWUHIRU7HFKQRORJ\$VVHVVPHQW
*RGIUD\+&-%HGGLQJWRQ-5&UXWH,5+DGGDG//DZUHQFH'0XLU-)3UHWW\-5RELQVRQ67KRPDV607RXOPLQ&
)RRGVHFXULW\7KHFKDOOHQJHRIIHHGLQJELOOLRQSHRSOH6FLHQFH²
*5$,15LFHODQGJUDEVXQGHUPLQHIRRGVRYHUHLJQW\LQ$IULFD$JDLQVWWKHJUDLQ$YDLODEOHDWZZZJUDLQRUJ
DWJ
+DYOLN36FKQHLGHU8$6FKPLG(%|WWFKHU+)ULW]66NDOVNì5$RNL.'H&DUD6.LQGHUPDQQ*.UD[QHU)/HGXF
6 0F&DOOXP , 0RVQLHU $ 6DXHU 7 2EHUVWHLQHU 0  *OREDO ODQGXVH LPSOLFDWLRQV RI ÀUVW DQG VHFRQG
JHQHUDWLRQELRIXHOWDUJHWV(QHUJ\3ROLF\9RO,VVXH
+DZNHV &  8QHYHQ GLHWDU\ GHYHORSPHQW OLQNLQJ WKH SROLFLHV DQG SURFHVVHV RI JOREDOLVDWLRQ ZLWK WKH
QXWULWLRQ WUDQVLWLRQ REHVLW\ DQG GLHWUHODWHG FKURQLF GLVHDVHV *OREDO +HDOWK   $YDLODEOH DW KWWSZZZ
JOREDOL]DWLRQDQGKHDOWKFRPFRQWHQW
+D]HOO3DQG3DFKDXUL5.HGV%LRHQHUJ\DQGDJULFXOWXUH3URPLVHDQGFKDOOHQJHV)RFXV:DVKLQJWRQ
'&,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH
+/3(D3ULFHYRODWLOLW\DQGIRRGVHFXULW\5HSRUWE\WKH+LJK/HYHO3DQHORI([SHUWVRQ)RRG6HFXULW\DQG
1XWULWLRQ5RPH&RPPLWWHHRQ:RUOG)RRG6HFXULW\
+/3(E/DQGWHQXUHDQGLQWHUQDWLRQDOLQYHVWPHQWVLQDJULFXOWXUH5HSRUWE\WKH+LJK/HYHO3DQHORI([SHUWVRQ
)RRG6HFXULW\DQG1XWULWLRQ5RPH&RPPLWWHHRQ:RUOG)RRG6HFXULW\
+XUQL + ZLWK DQ LQWHUQDWLRQDO JURXS RI FRQWULEXWRUV  3UHFLRXV HDUWK )URP VRLO DQG ZDWHU FRQVHUYDWLRQ WR
VXVWDLQDEOHODQGPDQDJHPHQW%HUQ,QWHUQDWLRQDO6RLO&RQVHUYDWLRQ2UJDQLVDWLRQDQG&HQWUHIRU'HYHORSPHQW
DQG(QYLURQPHQW,6%1SS
,$$67'  *OREDO 5HSRUW  ,QWHUQDWLRQDO DVVHVVPHQW RI DJULFXOWXUDO NQRZOHGJH VFLHQFH DQG WHFKQRORJ\ IRU
GHYHORSPHQW,$$67'*OREDOUHSRUW,VODQG3UHVV$YDLODEOHDWZZZDJDVVHVVHPHQWRUJ
,($:RUOG(QHUJ\2XWORRN3DULV
,($:RUOG(QHUJ\2XWORRN3DULV
,($D:RUOG(QHUJ\2XWORRN3DULV
,($E(QHUJ\7HFKQRORJ\3HUVSHFWLYHV6FHQDULRVDQG6WUDWHJLHVWR([HFXWLYH6XPPDU\3DULV$YDLODEOH
DWKWWSZZZLHDRUJWHFKQRHWSHWS(QJOLVKSGI
,)$'5XUDO3RYHUW\5HSRUW5RPH
,/&6HFXULQJODQGDFFHVVIRUWKHSRRULQWLPHVRILQWHQVLÀHGQDWXUDOUHVRXUFHVFRPSHWLWLRQ5RPH,QWHUQDWLRQDO
/DQG&RDOLWLRQ
,3&&&OLPDWH&KDQJH6\QWKHVLV5HSRUW*HQHYD,QWHUQDWLRQDO3DQHORQ&OLPDWH&KDQJH
.RK/3DQG:LOFRYH'6,VRLOSDOPDJULFXOWXUHUHDOO\GHVWUR\LQJWURSLFDOELRGLYHUVLW\"&RQVHUYDWLRQ/HWWHUV
²
.RK/30LHWWLQHQ-/LHZ6&*KD]RXO-5HPRWHO\VHQVHGHYLGHQFHRIWURSLFDOSHDWODQGFRQYHUVLRQWRRLOSDOP
3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFHVRIWKH8QLWHG6WDWHVRI$PHULFD
/DPELQ()DQG0H\IURLGW3*OREDOODQGXVHFKDQJHHFRQRPLFJOREDOL]DWLRQDQGWKHORRPLQJODQGVFDUFLW\
3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFHVRIWKH8QLWHG6WDWHVRI$PHULFD²
/DSROD'06FKDOGDFK5$OFDPR-%RQGHDX$.RFK-.RHONLQJ&3ULHVV-$,QGLUHFWODQGXVHFKDQJHVFDQ
RYHUFRPHFDUERQVDYLQJVIURPELRIXHOVLQ%UD]LO3URFHHGLQJVRIWKH1DWLRQDO$FDGHP\RI6FLHQFHVRIWKH8QLWHG
6WDWHVRI$PHULFD²
/HYLWW 7  3DOP RLO JLDQWV WDUJHW $IULFD LQ ¶ODQG JUDE· IROORZLQJ ,QGRQHVLD GHIRUHVWDWLRQ EDQ 7KH (FRORJLVW 
0DUFK $YDLODEOH DW KWWSZZZWKHHFRORJLVWRUJ1HZVQHZVBDQDO\VLVSDOPBRLOBJLDQWVBWDUJHWBDIULFDBLQB
ODQGBJUDEBIROORZLQJBLQGRQHVLDBGHIRUHVWDWLRQBEDQKWPO
/L70&HQWHULQJODERULQWKHODQGJUDEGHEDWH7KH-RXUQDORI3HDVDQW6WXGLHV²
7KH5ROHRI&KDQJHVLQ/DQG8VH 

/LQLJHU+30HNGDVFKL6WXGHU5+DXHUW&*XUWQHU06XVWDLQDEOH/DQG0DQDJHPHQWLQ3UDFWLFH*XLGHOLQHV

DQG%HVW3UDFWLFHVIRUVXE6DKDUDQ$IULFD%HUQDQG5RPH7HUU$IULFD:RUOG2YHUYLHZRI&RQVHUYDWLRQ$SSURDFKHV
DQG7HFKQRORJLHV:2&$7DQG)$2
/LQLQJHU .  6PDOOVFDOH IDUPLQJ DQG VKLIWLQJ FXOWLYDWLRQ ,Q 8QLRQ RI &RQFHUQHG 6FLHQWLVWV 7KH 5RRW RI
WKH 3UREOHP :KDW LV 'ULYLQJ 7URSLFDO 'HIRUHVWDWLRQ 7RGD\" &DPEULGJH 0$ $YDLODEOH DW ZZZXFVXVDRUJ
ZKDWVGULYLQJGHIRUHVWDWLRQ
0DOLN 86 $KPHG 0 6RPELOOD 0$ &XHQR 6/  %LRIXHOV SURGXFWLRQ IRU VPDOOKROGHU SURGXFHUV LQ WKH *UHDWHU
0HNRQJVXEUHJLRQ$SSOLHG(QHUJ\²
0F&DUWK\0:K\SURWHFWLQJWKHZRUOG·VZLOGOLIHLVJRRGIRURXUZDOOHWV1HZERG\DLPVWRSURPRWHHFRQRPLF
DV ZHOO DV HWKLFDO VLGH RI ELRGLYHUVLW\ 7KH 2EVHUYHU  2FWREHU $YDLODEOH DW KWWSZZZLQGHSHQGHQWFRXN
HQYLURQPHQWQDWXUHZK\SURWHFWLQJWKHZRUOGVZLOGOLIHLVJRRGIRURXUZDOOHWVKWPO
0HOLOOR-05HLOO\-0.LFNOLJKHU':*XUJHUO$&&URQLQ7:3DOWVHY6)HO]HU%6;LDRGRQJ:DQJ6RNRORY$36FKORVVHU
&$,QGLUHFWHPLVVLRQVIURPELRIXHOV+RZLPSRUWDQW"6FLHQFH²VFLHQFH
0HUW] 2 6 /HLV] $ +HLQLPDQQ . 5HUNDVHP : 'UHVVOHU 3 9 &X 9 . &KL ' 6FKPLGW9RJW & - &ROIHU 0
(SSUHFKW3DGRFK&'HPRJUDSK\RIVZLGGHQFXOWLYDWRUVLQ6RXWKHDVW$VLD+XPDQ(FRORJ\²
0XUSK\5:RRGV-%ODFN00F0DQXV0*OREDOGHYHORSPHQWVLQWKHFRPSHWLWLRQIRUODQGIURPELRIXHOV)RRG
3ROLF\²
1DUGRQH$5RQFKL%/DFHWHUD15DQLHUL06%HUQDEXFFL8(IIHFWVRIFOLPDWHFKDQJHVRQDQLPDOSURGXFWLRQ
DQGVXVWDLQDELOLW\RIOLYHVWRFNV\VWHPV/LYHVWRFN6FLHQFH²²
1HOOHPDQQ&0DF'HYHWWH00DQGHUV7(LFNKRXW%6YLKXV%3ULQV$*.DOWHQERUQ%37KH(QYLURQPHQWDO
)RRG&ULVLV7KH(QYLURQPHQW·V5ROHLQ$YHUWLQJ)XWXUH)RRG&ULVHV$8QLWHG1DWLRQV(QYLURQPHQW3URJUDPPH
81(35DSLG5HVSRQVH$VVHVVPHQW1DLUREL81(3
1KDQWXPER,&OLPDWHFRQYHUVDWLRQV5(''LQ0R]DPELTXH$QHZRSSRUWXQLW\IRUODQGJUDEEHUV"$YDLODEOH
DWKWWSZZZLLHGRUJEORJVUHGGPR]DPELTXHQHZRSSRUWXQLW\IRUODQGJUDEEHUV6HSWHPEHU
2DNODQG,QVWLWXWH8QGHUVWDQGLQJODQGLQYHVWPHQWGHDOVLQ$IULFD1LOH7UDGLQJDQG'HYHORSPHQW,QFLQ6RXWK
6XGDQ/DQG'HDO%ULHI2DNODQG&$
2(&'DQG)$2$JULFXOWXUDO2XWORRN3DULVDQG5RPH
2(&''$&0HDVXULQJDLGWRDJULFXOWXUH3DULV$YDLODEOHDWKWWSZZZRHFGRUJGDWDRHFG
SGIDFFHVVHG2FWREHU
2,  0LV,QYHVWPHQW LQ DJULFXOWXUH 7KH UROH RI WKH ,QWHUQDWLRQDO )LQDQFH &RUSRUDWLRQ LQ WKH JOREDO ODQG JUDE
2DNODQG&$2DNODQG,QVWLWXWH
2OGHPDQ/57KHJOREDOH[WHQWRIVRLOGHJUDGDWLRQ,Q*UHHQODQG'-DQG6]DEROFV,HGV6RLO5HVLOLHQFHDQG
6XVWDLQDEOH/DQG8VH:DOOLQJIRUG&7&HQWUHIRU$JULFXOWXUDO%LRVFLHQFH,QWHUQDWLRQDO²
3RSNLQ%07KHQXWULWLRQWUDQVLWLRQDQGLWVKHDOWKLPSOLFDWLRQVLQORZHULQFRPHFRXQWULHV3XEOLF+HDOWK1XWULWLRQ
²
5DQGROSK7)6FKHOOLQJ(*UDFH'1LFKROVRQ&)/HUR\-/&ROH'&'HPPHQW0:2PRUH$=LQVVWDJ-5XHO0
,QYLWHGUHYLHZ5ROHRIOLYHVWRFNLQKXPDQQXWULWLRQDQGKHDOWKIRUSRYHUW\UHGXFWLRQLQGHYHORSLQJFRXQWULHV
-RXUQDO$QLPDO6FLHQFH²
5(15HQHZDEOHV*OREDO6WDWXV5HSRUW3DULV5HQHZDEOH(QHUJ\3ROLF\1HWZRUNIRUWKHVW&HQWXU\
6HFUHWDULDW
5HXWHUV  %DUULFN EXLOGV ZDOO WR SUHYHQW JROG WKHIW DW 7DQ]DQLD PLQH $YDLODEOH DW KWWSZZZPLQHZHEFRP
PLQHZHEYLHZPLQHZHEHQSDJH"RLG  VQ 'HWDLO SLG 2FWREHU
5LVW/)HLQWUHQLH/DQG/HYDQW37KHOLYHOLKRRGLPSDFWVRIRLOSDOP6PDOOKROGHUVLQ,QGRQHVLD%LRGLYHUVLW\DQG
&RQVHUYDWLRQ²
5RVHJUDQW0=KX70VDQJL66XOVHU7*OREDOVFHQDULRVIRUELRIXHOV,PSDFWVDQGLPSOLFDWLRQV5HYLHZRI
$JULFXOWXUDO(FRQRPLFV²
56%7KH5RXQGWDEOHRQ6XVWDLQDEOH%LRIXHOV$YDLODEOHDWKWWSUVEHSÁFK
 75$'($1'(19,5210(175(9,(:

5XGHO 7. )OHVFKHU . %DWHV ' %DSWLVWD 6 +ROPJUHQ 3  7URSLFDO GHIRUHVWDWLRQ OLWHUDWXUH JHRJUDSKLFDO DQG
KLVWRULFDOSDWWHUQV8QDV\OYD
6FKRQHYHOG**HUPDQ/$QGUDGH5&KLQ0&DURNR:5RPHUR+HUQiQGH]27KHUROHRIQDWLRQDOJRYHUQDQFH
V\VWHPV LQ ELRIXHO GHYHORSPHQW $ FRPSDUDWLYH DQDO\VLV RI OHVVRQV OHDUQHG ,QIREULHI  %RJRU &HQWUH IRU
,QWHUQDWLRQDO)RUHVWU\5HVHDUFK
6HUp&YDQGHU=LMSS$3HUVOH\*5HJH('\QDPLFVRIOLYHVWRFNSURGXFWLRQV\VWHPVGULYHUVRIFKDQJHDQG
SURVSHFWVIRUDQLPDOJHQHWLFUHVRXUFHV$QLPDO*HQHWLF5HVRXUFHV,QIRUPDWLRQ²
6PHHWV(0:)DDLM$3&/HZDQGRZVNL,07XUNHQEXU:&$ERWWRPXSDVVHVVPHQWDQGUHYLHZRIJOREDOELR
HQHUJ\SRWHQWLDOVWR3URJUHVVLQ(QHUJ\DQG&RPEXVWLRQ6FLHQFH²
62)$%LRIXHOV3URVSHFWVULVNVDQGRSSRUWXQLWLHV7KH6WDWHRI)RRGDQG$JULFXOWXUH62)$5RPH)$2IWS
IWSIDRRUJGRFUHSIDRLHLHSGI
6WHHQEOLN5%LRIXHOV²$WZKDWFRVW"*RYHUQPHQWVXSSRUWIRUHWKDQRODQGELRGLHVHOLQVHOHFWHG2(&'FRXQWULHV
$V\QWKHVLVRIUHSRUWVDGGUHVVLQJVXEVLGLHVIRUELRIXHOVLQ$XVWUDOLD&DQDGDWKH(XURSHDQ8QLRQ6ZLW]HUODQGDQG
WKH8QLWHG6WDWHV*HQHYD7KH*OREDO6XEVLGLHV,QLWLDWLYHRIWKH,QWHUQDWLRQDO,QVWLWXWHIRU6XVWDLQDEOH'HYHORSPHQW
6WHLQIHOG+0RRQH\+$6FKQHLGHU)1HYLOOH/(/LYHVWRFNLQD&KDQJLQJ/DQGVFDSH'ULYHUV&RQVHTXHQFHV
DQG5HVSRQVHV:DVKLQJWRQ'&,VODQG3UHVV$YDLODEOHDWKWWSZZZIDRRUJGRFUHSDPHDPHSGI
6XOOH(DQG1HOVRQ)%LRIXHOVODQGDFFHVVDQGUXUDOOLYHOLKRRGVLQ7DQ]DQLD/RQGRQ,QWHUQDWLRQDO,QVWLWXWHIRU
(QYLURQPHQWDQG'HYHORSPHQW
7KRUQWRQ3./LYHVWRFNSURGXFWLRQ5HFHQWWUHQGVDQGIXWXUHSURVSHFWV3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO
6RFLHW\²
7KRUQWRQ 3.  YDQ GH 6WHHJ - 1RWHQEDHUW $ +HUUHUR 0  7KH LPSDFWV RI FOLPDWH FKDQJH RQ OLYHVWRFN DQG
OLYHVWRFN V\VWHPV LQ GHYHORSLQJ FRXQWULHV $ UHYLHZ RI ZKDW ZH NQRZ DQG ZKDW ZH QHHG WR NQRZ $JULFXOWXUDO
6\VWHPV²
81(3*OREDOHQYLURQPHQWRXWORRNHQYLURQPHQWIRUGHYHORSPHQW*(281(3(DUWKSULQW
81(3D(QYLURQPHQWDO$VVHVVPHQWRI2JRQLODQG$YDLODEOHDWKWWSSRVWFRQÁLFWXQHSFKSXEOLFDWLRQV2($
81(3B2($SGI
81(3E7KH%LRHQHUJ\DQG:DWHU1H[XV3DULV)UHLEXUJ'DUPVWDGWDQG%HUOLQ8QLWHG1DWLRQV(QYLURQPHQW
3URJUDPPH2HNR,QVWLWXWDQG,($%LRHQHUJ\7DVN
9DQ*HOGHU-:DQG*HUPDQ/%LRIXHOÀQDQFH*OREDOWUHQGVLQELRIXHOÀQDQFHLQIRUHVWULFKFRXQWULHVRI$VLD
$IULFD DQG /DWLQ $PHULFD DQG LPSOLFDWLRQV IRU JRYHUQDQFH ,QIREULHI  %RJRU %DUDW &HQWUH IRU ,QWHUQDWLRQDO
)RUHVWU\5HVHDUFK
9HUPHXOHQ6DQG&RWXOD/2YHUWKHKHDGVRIORFDOSHRSOH&RQVXOWDWLRQFRQVHQWDQGUHFRPSHQVHLQODUJH
VFDOHODQGGHDOVIRUELRIXHOVSURMHFWVLQ$IULFD7KH-RXUQDORI3HDVDQW6WXGLHV²
9HUPHXOHQ66XOOH(DQG)DXYHDXG6%LRIXHOVLQ$IULFD*URZLQJVPDOOVFDOHRSSRUWXQLWLHV%ULHÀQJEXVLQHVV
PRGHOVIRUVXVWDLQDEOHGHYHORSPHQW/RQGRQ,QWHUQDWLRQDO,QVWLWXWHIRU(QYLURQPHQWDQG'HYHORSPHQW
9RQ%UDXQ-6PDOOVFDOHIDUPHUVLQOLEHUDOLVHGWUDGHHQYLURQPHQW3URFHHGLQJVRIWKHVHPLQDURQVPDOOVFDOH
IDUPHUVLQOLEHUDOLVHGWUDGHHQYLURQPHQW+DLNNRRUJDQL]HGE\WKH8QLYHUVLW\RI+HOVLQNL2FWREHU²
:+2 DQG )$2  'LHW QXWULWLRQ DQG WKH SUHYHQWLRQ RI FKURQLF GLVHDVHV 5HSRUW RI WKH MRLQW :+2)$2 H[SHUW
FRQVXOWDWLRQ:+27HFKQLFDO5HSRUW6HULHV1R756*HQHYD
:LUVHQLXV6$]DU&DQG%HUQGHV*+RZPXFKODQGLVQHHGHGIRUJOREDOIRRGSURGXFWLRQXQGHUVFHQDULRVRI
GLHWDU\FKDQJHVDQGOLYHVWRFNSURGXFWLYLW\LQFUHDVHVLQ"$JULFXOWXUDO6\VWHPV²
:RRG66HEDVWLDQ.DQG6FKHUU6-3LORWDQDO\VLVRIJOREDOHFRV\VWHPV$JURHFRV\VWHPV:DVKLQJWRQ'&
,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWHDQG:RUOG5HVRXUFHV,QVWLWXWH
:RUOG%DQN5LVLQJJOREDOLQWHUHVWLQIDUPODQG&DQLW\LHOGVXVWDLQDEOHDQGHTXLWDEOHEHQHÀWV":DVKLQJWRQ'&
:RUOG %DQN  )RUHVW DUHD VT NP GDWD :DVKLQJWRQ '& $YDLODEOH DW KWWSGDWDZRUOGEDQNRUJLQGLFDWRU
$*/1')567.FRXQWULHV"GLVSOD\ GHIDXOWDFFHVVHG6HSWHPEHU
=DK5%|QL+*DXFK0+LVFKLHU5/HKPDQQ0:lJHU3gNRELODQ]YRQ(QHUJLHSURGXNWHQgNRORJLVFKH
%HZHUWXQJYRQ%LRWUHLEVWRIIHQ6W*DOOHQ(PSD
7KH5ROHRI&KDQJHVLQ/DQG8VH 

=LND0DQG(UE.+7KHJOREDOORVVRIQHWSULPDU\SURGXFWLRQUHVXOWLQJIURPKXPDQLQGXFHGVRLOGHJUDGDWLRQLQ

GU\ODQGV(FRORJLFDO(FRQRPLFV²

1RWHV
 7KHDXWKRUVJUDWHIXOO\DFNQRZOHGJHWKHVXSSRUWSURYLGHGE\WKH8QLYHUVLW\RI%HUQ&HQWUHIRU'HYHORSPHQWDQG
(QYLURQPHQWDQGWKH'HSDUWPHQWRI,QWHJUDWLYH*HRJUDSK\WKURXJKWKH6SHFLDO5HVHDUFK3URMHFWRIWKH1DWLRQDO
&HQWUHRI&RPSHWHQFHLQ5HVHDUFK1&&51RUWK6RXWKLQWKHSUHSDUDWLRQRIWKLVDUWLFOH
 /DQGXVHFKDQJHVDUHFDWHJRUL]HGDVGLUHFWDQGLQGLUHFWFKDQJHV'LUHFWFKDQJHVRFFXUZKHQELRIXHOIHHGVWRFN
VXFKDVVR\EHDQIRUELRGLHVHOGLVSODFHVDQH[LVWLQJODQGXVHV\VWHPVXFKDVJUD]LQJODQGIRUFDWWOH7KLVLQWXUQ
PD\OHDGWRDFKDQJHLQDQRWKHUDUHDIRUH[DPSOHIURPIRUHVWWRJUD]LQJODQGZKLFKLVWKHQNQRZQDVDQLQGLUHFW
FKDQJH
 6HH+RSHIRU0DGDJDVFDUDWKWWSIDQDQWHQDQDZRUGSUHVVFRPWKHWUXWKDERXWODQGJUDE
 )RU PRUH LQIRUPDWLRQ DERXW WKLV UHVHDUFK SURMHFW VHH KWWSPHGLDRDNODQGLQVWLWXWHRUJVSHFLDOLQYHVWLJDWLRQ
XQGHUVWDQGLQJODQGLQYHVWPHQWGHDOVDIULFD
 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

$,QWURGXFWLRQ
7KHLQWHUVHFWLRQRILQWHUQDWLRQDOWUDGHDQGDJULFXOWXUH
KDV EHFRPH LQFUHDVLQJO\ LPSRUWDQW DV PRUH DQG
PRUHFRXQWULHVDQGWKHLUIDUPHUVSDUWLFLSDWHLQJOREDO
PDUNHWV  1DWLRQDO WUDGHUHODWHG SROLFLHV VXFK DV
VXEVLGLHV DQG VXSSRUW PHDVXUHV WUDGH UHVWULFWLRQV
DQG WDULIIV KDYH D PDMRU LPSDFW QRW RQO\ RQ QDWLRQDO
DJULFXOWXUDODQGIRRGV\VWHPVEXWDOVRRQDJULFXOWXUDO
PHDVXUHV6RXWK&HQWUH*XLGHGRUREOLJHGE\
WKH UXOHV DQG FRQGLWLRQDOLWLHV ZLWKLQ WKLV IUDPHZRUN
PDQ\GHYHORSLQJFRXQWULHVKDYHVLJQLÀFDQWO\ORZHUHG
WKHLUDJULFXOWXUDOWDULIIVDQGWKHLUGRPHVWLFVXSSRUWIRU
IDUPHUV$WWKHVDPHWLPHOLEHUDOL]DWLRQRIPDUNHWVKDV
LQFUHDVHG SUHVVXUH RQ FRVWV SURPSWLQJ SURGXFHUV
WRZDUGV JUHDWHU VSHFLDOL]DWLRQ ZKLFK RIWHQ UHVXOWV
LQ PRQRFURSSLQJ LQFUHDVHG PHFKDQL]DWLRQ DQG
XWLOL]DWLRQRIFKHPLFDOVOHDGLQJWRKLJKHUGHSHQGHQFH
SHUIRUPDQFHLQRWKHUFRXQWULHV'XHWRWKHLQFUHDVLQJ RQH[WHUQDOLQSXWVDQGHQKDQFHGVFDOHVRISURGXFWLRQ
LPSRUWDQFHDQGELQGLQJQDWXUHRIPXOWLODWHUDOUHJLRQDO
DQGELODWHUDO WUDGHDJUHHPHQWVWKHUXOHVHVWDEOLVKHG ,QFRQWUDVWGHYHORSHGFRXQWULHVKDYHQRWEHHQVXEMHFW
WR WKH FRQGLWLRQDOLWLHV RI WKH LQWHUQDWLRQDO ÀQDQFLDO
WKHUHLQ KDYH VLJQLÀFDQW HIIHFWV RQ QDWLRQDO WUDGH
LQVWLWXWLRQV0RUHRYHU:72UXOHVE\DQGODUJHKDYH
SROLFLHVDVZHOODVRQWKHVWUXFWXUHDQGQDWXUHRIWKH
DOORZHG WKHP WR PDLQWDLQ WKHLU WUDGLWLRQDO VXSSRUW IRU
JOREDO V\VWHP RI DJULFXOWXUDO WUDGH DQG SURGXFWLRQ
GRPHVWLF DJULFXOWXUH WKURXJK D FRPELQDWLRQ RI KLJK
SDWWHUQV 1DWLRQDO WUDGH SROLFLHV DQG LQWHUQDWLRQDO
VXEVLGLHV KLJK WDULII SHDNV DQG H[SRUW SURPRWLRQ
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
$QG LQ WKH IUHH WUDGH DJUHHPHQWV )7$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
7UDGH 2UJDQL]DWLRQ :72 UXOHV LQ ELODWHUDO DQG WRXQGHUWDNHJUHDWHUOLEHUDOL]DWLRQGHYHORSHGFRXQWULHV
UHJLRQDOWUDGHDJUHHPHQWVDVZHOODVXQLODWHUDOSROLF\ KDYHEHHQDEOHWRUHWDLQWKHLUSURWHFWLRQLVWSROLFLHV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

$OWKRXJK LQFUHDVHG DJULFXOWXUDO WUDGH FDQ RIIHU ,WLVQRZLQFUHDVLQJO\UHFRJQL]HGWKDWWKHLPPHGLDWH

RSSRUWXQLWLHV IRU WKH SRRU WKH EHQHÀWV KDYH EHHQ QHHG LV WR HQVXUH DYDLODELOLW\ RI IRRG LQ FRXQWULHV
XQHYHQO\GLVWULEXWHG*URZLQJHYLGHQFHLQGLFDWHVWKDW FXUUHQWO\ GHSHQGHQW RQ LPSRUWV +RZHYHU D ORQJ
WRGDWHVPDOOVFDOHIDUPHUVDQGUXUDOFRPPXQLWLHVLQ WHUP VROXWLRQ VKRXOG LQFOXGH ERRVWLQJ ORFDO IRRG
PDQ\FRXQWULHVKDYHQRWEHQHÀWHGVLJQLÀFDQWO\IURP SURGXFWLRQLQGHYHORSLQJFRXQWULHVZKHUHFRQGLWLRQV
DJULFXOWXUDOWUDGHOLEHUDOL]DWLRQ,$$67'LQVWHDG
LWLVWKHODUJHVWDJULFXOWXUDOSURGXFHUVZKRKDYHEHHQ
DEOH WR EHQHÀW PRUH HDVLO\ IURP WKH RSSRUWXQLWLHV
UHVXOWLQJIURPLPSURYHGPDUNHWDFFHVV7KXVRYHUDOO
WKHGLVWULEXWLRQDOHIIHFWVRIWUDGHOLEHUDOL]DWLRQDPRQJ
DQG ZLWKLQ FRXQWULHV KDYH UHVXOWHG LQ WKH SRRUHVW
GHYHORSLQJFRXQWULHVDQGIDUPHUVEHLQJQHWORVHUV
7KHPRVWYXOQHUDEOHJURXSVZKRH[SHULHQFHKXQJHU
DUHWKHVPDOOKROGHUVODQGOHVVODERXUHUVSDVWRUDOLVWV
ÀVKHUIRON IRUHVW GZHOOHUV DQG WKH XUEDQ SRRU $Q\
WUDGH UHJLPH WKDW IDLOV WR EHQHÀW WKHVH JURXSV RU
DIIHFWVWKHPQHJDWLYHO\LVOLNHO\WROHDGWRWKHGHQLDORU
DUH VXLWDEOH :KLOH WKHUH DUH PDQ\ IDFWRUV LQYROYHG
LQ LQFUHDVLQJ ORFDO SURGXFWLRQ DQ DSSURSULDWH WUDGH
SROLF\ IUDPHZRUN LV D YHU\ LPSRUWDQW UHTXLUHPHQW
7UDGHSROLF\UHIRUPDLPHGDWFUHDWLQJDIDLUHUJOREDO
WUDGLQJV\VWHPFRXOGPDNHDSRVLWLYHFRQWULEXWLRQWR
IRRGVHFXULW\DQGSRYHUW\DOOHYLDWLRQ
$W WKH VDPH WLPH WKHUH LV D JURZLQJ UHDOL]DWLRQ WKDW
DJULFXOWXUHFDQQRWSURFHHGRQWKHHQHUJ\DQGLQSXW
LQWHQVLYHSDWKVRIWKHSDVWDQGWKDWDSDUDGLJPVKLIW
WRZDUGV VXVWDLQDELOLW\ LV QHHGHG ZKHUH VPDOOVFDOH
IDUPHUVDQGDJURHFRORJLFDOPHWKRGVSURYLGHWKHZD\
IRUZDUG HJ 'H 6FKXWWHU  +HUUHQ HW DO 
YLRODWLRQRIWKHULJKWWRIRRG'H6FKXWWHUD6XFK ,$$67'5HGXFLQJGHSHQGHQFHRQIRVVLOHQHUJ\
DGHQLDORIDQHVVHQWLDOULJKWXQGHUOLQHVWKHLPSRUWDQFH LQSXWV DQG FXWWLQJ GRZQ RQ JUHHQKRXVH JDV *+*
RIHQVXULQJDFFHVVRIDOOSHRSOHHVSHFLDOO\WKHSRRU HPLVVLRQVIURPDJULFXOWXUHZLOOUHTXLUHLQFUHDVLQJORFDO
WRIRRGDVZHOODVWKHQHHGIRUJLYLQJSULRULW\WRIRRG IRRG VHOIVXIÀFLHQF\ DQG SURPRWLQJ OHVV IXHO DQG
VHFXULW\LQGHYHORSLQJFRXQWULHV SHWURFKHPLFDOLQWHQVLYH PHWKRGV RI SURGXFWLRQ VHH
: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'
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
.KRU6RXWK&HQWUH PDQ\ GHYHORSLQJ FRXQWULHV HVSHFLDOO\ LQ $IULFD KDV
 75$'($1'(19,5210(175(9,(:

7DEOH,PSRUWVXUJHVRIVHOHFWHGFRPPRGLWLHVDQGWKHLULPSDFWRQORFDOSURGXFWLRQYROXPHYDULRXV\HDUV

&RXQWU\FRPPRGLW\ ([WHQWRILQFUHDVH 3HUFHQWDJHIDOOLQORFDO 7LPHSHULRGVFRPSDUHG

LQLPSRUWV SURGXFWLRQ
6HQHJDOWRPDWRSDVWH WLPHV SHUFHQW ²²
%XUNLQD)DVRWRPDWRSDVWH WLPHV SHUFHQW ²²
-DPDLFDYHJHWDEOHRLOV WLPHV SHUFHQW ²²
&KLOHYHJHWDEOHRLOV WLPHV SHUFHQW ²²
+DLWLULFH WLPHV 6PDOO ²²
+DLWLFKLFNHQPHDW WLPHV 6PDOO ²²
.HQ\DGDLU\SURGXFWV WLPHV &XWORFDOPLONVDOHV ²
%HQLQFKLFNHQPHDW WLPHV 6WXQWHG ²²
6RXUFH%DVHGRQ)$2DQG$FWLRQ$LG

EHHQ WKH VWUXFWXUDO DGMXVWPHQW SROLFLHV SUHVFULEHG +RZHYHUVHYHUDORIWKHVHFRXQWULHVVWLOOPDLQWDLQWKHLU

E\ WKH LQWHUQDWLRQDO ÀQDQFLDO LQVWLWXWLRQV 7KHVH ORZ DSSOLHG WDULIIV ZKLFK DUH IDU EHORZ WKHLU :72
SROLFHV DIIHFWHG UXUDO SURGXFHUV GLUHFWO\ DV WKH\ ERXQGUDWHV6RXWK&HQWUH)RUH[DPSOHPDQ\
OHG WR WKH GLVPDQWOLQJ RI LQVWLWXWLRQV DQG QDWLRQDO $IULFDQ FRXQWULHV KDYH DSSOLHG DJULFXOWXUDO WDULIIV RI
SROLF\ PHDVXUHV WKDW DVVLVWHG IDUPHUV LQFOXGLQJ ² SHU FHQW FRPSDUHG ZLWK WKHLU ERXQG UDWHV RI
WKH UHGXFWLRQ RU UHPRYDO RI VXEVLGLHV DQG FUHGLW
DVVLVWDQFH LQ PDUNHWLQJ DQG IRRG SURFHVVLQJ DQG
DGUDVWLFUHGXFWLRQLQDJULFXOWXUDOWDULIIV'H6FKXWWHU
²SHUFHQW:72
$V D UHVXOW D QXPEHU RI FRXQWULHV WKDW ZHUH QHW
H[SRUWHUV RU VHOIVXIÀFLHQW LQ PDQ\ IRRG FURSV KDYH
D.KRU7KHLPSOHPHQWDWLRQRIWKH:72
H[SHULHQFHG D ULVH LQ LPSRUWV ² VRPH RI ZKLFK DUH
$JUHHPHQW RQ $JULFXOWXUH DOVR OHG FRXQWULHV WR
KHDYLO\VXEVLGL]HG²DQGDGHFOLQHLQORFDOSURGXFWLRQ
OLEHUDOL]HWKHLUDJULFXOWXUDOWUDGHWKHUHE\FRPSRXQGLQJ
7DEOH  KLJKOLJKWV VRPH FDVHV RI LPSRUW VXUJHV
WKH HIIHFW RQ DJULFXOWXUDO SURGXFHUV LQ GHYHORSLQJ
WKH H[WHQW RI WKH VXUJHV DQG WKH LPSDFW RQ ORFDO
FRXQWULHV
SURGXFWLRQ7KHLPSRUWVXUJHV)$2DQG
6WXGLHVE\WKH)RRGDQG$JULFXOWXUH2UJDQL]DWLRQRI KDYH OHG WR VXFK ORZ SULFHV RQ GRPHVWLF PDUNHWV
WKH 8QLWHG 1DWLRQV )$2 KDYH UHYHDOHG WKDW PDQ\ WKDWWKH\KDYHWHQGHGWRGULYHORFDOSURGXFHUVRXWRI
GHYHORSLQJ FRXQWULHV VLJQLÀFDQWO\ OLEHUDOL]HG WKHLU EXVLQHVV WKUHDWHQLQJ WKH DELOLW\ RI WKRVH SURGXFHUV
DJULFXOWXUDOLPSRUWVE\ORZHULQJWDULIIVDVUHTXLUHGE\ WR IHHG WKHPVHOYHV DQG WKHLU IDPLOLHV 'H 6FKXWWHU
WKHFRQGLWLRQDOLWLHVDWWDFKHGWRORDQVH[WHQGHGE\WKH DDQGF
LQWHUQDWLRQDOÀQDQFLDOLQVWLWXWLRQV$VREVHUYHGE\WKH
7KHUHKDYHEHHQPDQ\FDVHVWXGLHVRIWKHLQFLGHQFH
)$2
DQG GDPDJLQJ HIIHFWV RI LPSRUW OLEHUDOL]DWLRQ RQ
6WUXFWXUDO DGMXVWPHQW SURJUDPPHV LPSOHPHQWHG
ORFDOFRPPXQLWLHVDQGUXUDOSURGXFHUVLQGHYHORSLQJ
RYHUWKHSDVWIHZGHFDGHVKDYHUHVXOWHGLQUDGLFDO
FRXQWULHV VHH IRU H[DPSOH $FWLRQ $LG  )$2
UHIRUPRIWKHDJULFXOWXUDOVHFWRUVRIPDQ\GHYHORSLQJ
 5DPDQ  7KHVH VWXGLHV VKRZ KRZ
FRXQWULHV D SHULRG GXULQJ ZKLFK WKH PDMRULW\ RI
IDUPHUV LQYROYHG LQ WKH SURGXFWLRQ RI YDULRXV IRRG
2(&' DJULFXOWXUDO VHFWRUV KDYH FRQWLQXHG WR EH
FRPPRGLWLHV HJ VWDSOH FURSV VXFK DV ULFH DQG
KHDYLO\SURWHFWHG7KHSURFHVVDGRSWHGKDVLQPDQ\
ZKHDW DV ZHOO DV RWKHU SURGXFH VXFK DV PLON DQG
FDVHVVHYHUHO\GDPDJHGWKHFDSDFLW\RIGHYHORSLQJ
RWKHU GDLU\ SURGXFWV YHJHWDEOHV DQG IUXLW SRXOWU\
FRXQWULHVWRLQFUHDVHOHYHOVRIDJULFXOWXUDOSURGXFWLRQ
DQGVXJDUH[SHULHQFHGDIDOOLQLQFRPHVDQGWKUHDWV
DQGRUSURGXFWLYLW\7KHVHXQLODWHUDOUHIRUPVWHQGWR
WRWKHLUOLYHOLKRRGV DV D UHVXOW RI DQ LQÁX[RI LPSRUWV
KDYH EHHQ UHLQIRUFHG E\ PXOWLODWHUDO DJUHHPHQWV
ZKLFKXQGHUPLQHGRWKHUZLVHYLDEOHHIÀFLHQWGRPHVWLF
)$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
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

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
6RXWK &HQWUH  6HYHUDO VWXGLHV KDYH VKRZQ
WKDW WKH KLJK VXEVLGLHV KDYH DOORZHG PDQ\ DJULFXO GHYHORSHG FRXQWULHV /'&V ZKHUH DJULFXOWXUH
WXUDO SURGXFWV WR EH VROG EHORZ WKH FRVW RI SURGXF UHPDLQVDIUDJLOHVHFWRU'H6FKXWWHUD7KLVLV
WLRQ VHH DOVR WKH FRPPHQW LQ WKLV FKDSWHU E\ /LOOLV EHFDXVHWKHJUHDWHVWWKUHDWWRIRRGVHFXULW\LVLQWKH
WRQDQG+DQVHQ.XKQUHJDUGLQJWKHH[WHQWRI8QLWHG UXUDODUHDVDQGDODUJHUSURSRUWLRQRIWKHSRSXODWLRQV
6WDWHV´GXPSLQJµ)RUH[DPSOHDFDOFXODWLRQRIWKH LQWKHFRXQWULHVWKDWDUHWKHPRVWYXOQHUDEOHGHSHQG
GXPSLQJPDUJLQVIRU8QLWHG6WDWHVFRPPRGLW\FURSV RQDJULFXOWXUHIRUWKHLUOLYHOLKRRGV

%R[7KHLPSDFWRIWUDGHOLEHUDOL]DWLRQLQ*KDQD

7KHSROLFLHVRIIRRGVHOIVXIÀFLHQF\DQGJRYHUQPHQWHQFRXUDJHPHQWRIWKHDJULFXOWXUDOVHFWRULQ*KDQDWKURXJKPDU
NHWLQJFUHGLWDQGVXEVLGLHVIRULQSXWVKHOSHGWRLQFUHDVHIRRGSURGXFWLRQIRUH[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\
5LFHRXWSXWIHOOIURPDQDQQXDODYHUDJHRIWRQVLQ²LQWKHQRUWKHUQUHJLRQWRRQO\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$IULFDURVHHLJKWIROGPDLQO\GXHWRLPSRUWOLEHUDOL]DWLRQ,Q*KDQDWKLVDGYHUVHO\DIIHFWHGKDOIDPLOOLRQFKLFNHQ
IDUPHUV,QGRPHVWLFIDUPHUVVXSSOLHGSHUFHQWRI*KDQD·VPDUNHWEXWWKLVVKDUHIHOOWRSHUFHQWLQDV
LPSRUWHGSRXOWU\EHFDPHFKHDSHUWKDQORFDOSRXOWU\
6RXUFHV.KRU
 75$'($1'(19,5210(175(9,(:

&,PEDODQFHLQWUDGHUXOHV FRXQWULHV ZKLFK DGYHUVHO\ DIIHFWV WKHLU PDUNHW

JRYHUQLQJDJULFXOWXUH VKDUH LQFRPHV DQG OLYHOLKRRGV 6RXWK &HQWUH
 7KH HOLPLQDWLRQ RU VXEVWDQWLDO UHGXFWLRQ RI
7KH WUDGH UXOHV WKDW XQGHUSLQ WKH JOREDO DJULFXOWXUDO ERWKVXEVLGLHVDQGSURWHFWLRQLVPLQLQGXVWULDOL]HG
WUDGHUHJLPHDUHDOVRDVRXUFHRIFRQFHUQ7KH:72·V FRXQWULHV LV WKHUHIRUH LPSRUWDQW SDUWLFXODUO\ IRU
$JUHHPHQW RQ $JULFXOWXUH FRQWDLQV UXOHV LQ WKUHH VPDOOVFDOH IDUPLQJ DURXQG WKH ZRUOG ,$$67'
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

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
2QWKHLVVXHRIGRPHVWLFVXEVLGLHVDPDMRUORRSKROH
LQWKH:72$JUHHPHQWRQ$JULFXOWXUHLVWKDWFRXQWULHV
DUHREOLJHGWRUHGXFHWKHLUERXQGOHYHOVRIGRPHVWLF
RIÀFLDO GHYHORSPHQW DVVLVWDQFH 2'$ WR DJULFXOWXUH VXSSRUWWKDWDUHGHHPHG´WUDGHGLVWRUWLQJµEXWWKHUH
$QGHUVRQDQG9DQGHU0HQVEUXJJKHFLWHGLQ DUHQRFRQVWUDLQWVRQWKHDPRXQWRIVXEVLGLHVGHHPHG
WREHQRQGLVWRUWLQJRUPLQLPDOO\GLVWRUWLQJZKLFKDUH
+RIIPDQQ,WVKRXOGEHSRLQWHGRXWWKDWWKHVH
SODFHGLQWKHVRFDOOHG*UHHQ%R[5HFHQWVWXGLHVKDYH
ÀJXUHVUHIHUH[FOXVLYHO\WRDJULFXOWXUDOVXEVLGLHVDQG
VKRZQWKDWPDQ\RIWKH*UHHQ%R[VXEVLGLHVDUHDOVR
GRQRWLQFOXGHLQGLUHFWVXEVLGLHVIRUHQHUJ\IXHODQG
WUDGHGLVWRUWLQJDVWKH\KDYHVLJQLÀFDQWHIIHFWVRQWKH
HOHFWULFLW\XVHGLQDJULFXOWXUH
PDUNHWDQGRQWUDGH7KHUHIRUHWKHPDMRUVXEVLGL]LQJ
7KH VLWXDWLRQ KDV LPSURYHG RQO\ VOLJKWO\ LQ UHFHQW FRXQWULHVFDQUHGXFHWKHLU´WUDGHGLVWRUWLQJVXEVLGLHVµ
\HDUV WKH 2UJDQLVDWLRQ IRU (FRQRPLF &RRSHUDWLRQ ZKLOH FKDQJLQJ WKH W\SHV RI GRPHVWLF VXEVLGLHV
DQG 'HYHORSPHQW 2(&'  HVWLPDWHV WKDW WKH\ JLYH HIIHFWLYHO\ SURYLGLQJ VLPLODU OHYHOV RU HYHQ
WKH VXEVLGLHV JLYHQ WR IDUP SURGXFHUV LQ DOO 2(&'
FRXQWULHVWRWDOOHGELOOLRQLQZKLFKLVSHU
FHQWRIWKHWRWDOYDOXHRIJURVVIDUPUHFHLSWVWKDW\HDU
7KLVLVDERXWWKHVDPHOHYHODVLQDQG7KH
OHYHO RI VXSSRUW LV HYHQ KLJKHU WKDQ WKLV DYHUDJH LQ
LQFUHDVLQJWKHWRWDODPRXQWRIVXEVLGLHV.KRU
8QIRUWXQDWHO\ WKH 'RKD QHJRWLDWLRQV DUH XQOLNHO\ WR
LPSRVH QHZ HIIHFWLYH GLVFLSOLQHV RQ WKH *UHHQ %R[
LWHPVDVWKHGHYHORSHGFRXQWULHVKDYHVXFFHVVIXOO\
LQVLVWHGWKDWWKHUHEHQRQHZUXOHVWKDWZRXOGSODFHD
VRPHFRXQWULHVLQ²LWZDVSHUFHQWLQWKH FDSRQWKH*UHHQ%R[VXEVLGLHV6RXWK&HQWUH
(8SHUFHQWLQ-DSDQSHUFHQWLQ6ZLW]HUODQG 7KHFXUUHQWQHJRWLDWLQJWH[WSURSRVHVVRPHFKDQJHV
DQGSHUFHQWLQ1RUZD\2(&'7KHOHYHORI WR WKH *UHHQ %R[ EXW WKHVH GR QRW DOWHU WKH EDVLF
VXSSRUWLVDOVRYHU\KLJKIRUFHUWDLQSURGXFWV6SHFLÀF HOHPHQWVHVSHFLDOO\DVWKHUHLVQRFDSRQWKH*UHHQ
VXSSRUW IRU ULFH DPRXQWHG WR  SHU FHQW RI WRWDO %R[VXEVLGLHV7KXVWKH\FRXOGLQFUHDVHZLWKRXWOLPLW
SURGXFHUULFHUHFHLSWVLQ²2(&' LQWKHIXWXUH
7KHUHDUHDWOHDVWWKUHHDGYHUVHHIIHFWVRIGHYHORSHG 7KH'RKDQHJRWLDWLRQVDUHPDQGDWHGWRVXEVWDQWLDOO\
FRXQWULHV· VXEVLGLHV RQ IDUPHUV LQ GHYHORSLQJ UHGXFH RWKHU GRPHVWLF VXSSRUW LQ GHYHORSHG
FRXQWULHV FRXQWULHV+RZHYHUWRGDWHWKHRIIHUVRIWKH8QLWHG
L WKH\ DUH XQDEOH WR H[SRUW WR WKH VXEVLGL]LQJ 6WDWHV DQG WKH (8 LQGLFDWH WKHLU RYHUDOO WUDGH
GHYHORSHGFRXQWULHV·PDUNHWV GLVWRUWLQJVXSSRUW27'6ZRXOGEHUHGXFHGDWWKH
LL WKH\ DUH XQDEOH WR FRPSHWH LQ WKLUG PDUNHWV ERXQGOHYHOEXWQRWDWWKHDSSOLHGOHYHO.KRU
EHFDXVH WKH GHYHORSHG FRXQWULHV· SURGXFWV DUH $W SUHVHQW WKH OHYHO RI WKH DFWXDO 27'6 RI WKHVH
VROGDWDUWLÀFLDOO\ORZSULFHVDQG WZR HFRQRPLHV LV IDU EHORZ WKH OHYHO RI WKHLU WRWDO
LL WKH\ KDYH WR FRPSHWH LQ WKHLU RZQ ORFDO PDUNHWV DOORZHGWUDGHGLVWRUWLQJVXSSRUW7KHUHIRUHWKH\FDQ
ZLWKVXEVLGL]HGSURGXFWVFRPLQJIURPGHYHORSHG DIIRUGWRUHGXFHWKHOHYHORIDOORZHGWUDGHGLVWRUWLQJ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

VXSSRUWVLJQLÀFDQWO\EHIRUHWKHFXWUHDFKHVWKHOHYHO 'XH WR LQFUHDVLQJ FRQFHUQ RYHU WKLV D PDMRULW\ RI

ZKHUHWKHSUHVHQWDFWXDOWUDGHGLVWRUWLQJVXSSRUWLV GHYHORSLQJFRXQWU\ PHPEHUV RI WKH :72 ZKLFK
DIIHFWHG 6RXWK &HQWUH  ,Q RWKHU ZRUGV WKH\ LQFOXGH WKH * WKH $IULFDQ *URXS DQG WKH /'&
ZRXOG RQO\ FXW ´ZDWHUµ LH WKH GLIIHUHQFH EHWZHHQ JURXSKDYHSURSRVHGWZRQHZLQVWUXPHQWV²6SHFLDO
DOORZHG DQG DFWXDO VXEVLGLHV DQG QRW WKHLU DFWXDO 3URGXFWV63DQGD6SHFLDO6DIHJXDUG0HFKDQLVP
VXEVLGLHV 660 ² WR EH LQWURGXFHG LQWR WKH UXOHV RI WKH :72
DV SDUW RI WKH 'RKD QHJRWLDWLRQV 7KH REMHFWLYH RI
7KHÀJXUHVLQWKHDJULFXOWXUHQHJRWLDWLQJJURXS&KDLU·V
ERWK LQVWUXPHQWV LV WR SURPRWH WKH OLYHOLKRRGV RI
WH[W ZRXOG QRW UHGXFH WKH DFWXDO SUHVHQW GRPHVWLF
VPDOOIDUPHUVIRRGVHFXULW\DQGUXUDOGHYHORSPHQWLQ
VXSSRUWIRUWKH8QLWHG6WDWHV7KHDOORZDEOH27'6IRU
GHYHORSLQJFRXQWULHV6XFKSROLF\ÁH[LELOLW\LVFULWLFDOO\
WKLVFRXQWU\LVWREHFXWE\SHUFHQWLHIURPWKH
LPSRUWDQWWRDGYDQFHGHYHORSPHQWDQGVXVWDLQDELOLW\
SUHVHQWELOOLRQDOORZDEOHOHYHOWRELOOLRQ
JRDOV ,$$67'  DQG ZRXOG VKLHOG GHYHORSLQJ
7KHSURSRVHGELOOLRQOHYHOLVLQIDFWGRXEOHWKH
FRXQWULHV· SURGXFHUV IURP FRPSHWLWLRQ IURP
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
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
WKH FDVH RI WKH (8 LQ *UHHQ %R[ VXEVLGLHV 6RXWK WRKDYHUHFRXUVHWRD6SHFLDO6DIHJXDUG0HFKDQLVP
&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
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
75$'($1'(19,5210(175(9,(:
VHHQDOODORQJWKHYDOXHFKDLQZLWKDIHZPXOWLQDWLRQDO
FRPSDQLHV SURYLGLQJ WKH PDMRULW\ RI LQSXWV VXFK DV
SHVWLFLGHV VHHGV DQG FURS JHQHWLF WHFKQRORJLHV RU
XQGHUWDNLQJPDUNHWLQJIRRGSURFHVVLQJDQGUHWDLOLQJ
7KLV KDV UHVXOWHG LQ QDWLRQDO UHJLRQDO DQG JOREDO
VXSSO\ FKDLQV WKDW E\SDVV WUDGLWLRQDO PDUNHWV ZKHUH
VDIHJXDUG 66* EXW WKH HOLJLELOLW\ FULWHULD KDYH
VPDOOKROGHUVVHOOWRORFDOPDUNHWVDQGWUDGHUV:RUOG
GLVDGYDQWDJHG PRVW GHYHORSLQJ FRXQWULHV UHVXOWLQJ
%DQN
LQRQO\GHYHORSLQJFRXQWULHVEHLQJHOLJLEOHWRXVH
WKHVDIHJXDUG7KXVPRVWGHYHORSLQJFRXQWULHVKDYH 7KH ZRUOG VHHG DJURFKHPLFDO DQG ELRWHFKQRORJ\
QR SURSHU LQVWUXPHQW WR FRXQWHU LPSRUW VXUJHV ,Q PDUNHWV DUH GRPLQDWHG E\ D IHZ PHJD FRPSDQLHV
RUGHUWRUHFWLI\WKHLPEDODQFHDQGHQDEOHGHYHORSLQJ
FRXQWULHVWRVDIHJXDUGWKHLUIRRGVHFXULW\DQGIDUPHUV·
OLYHOLKRRGVPRUHFRXQWULHVVKRXOGEHHOLJLEOHWRPDNH
XVHRIWKH66*
,QDGGLWLRQUHJLRQDODQGELODWHUDO)7$VKDYHSUHYHQWHG
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
GHYHORSLQJFRXQWULHVIURPXVLQJWKHÁH[LELOLWLHVLQWKH
DQG SURGXFWV HJ WUDQVJHQLF VHHGV KDYH EHHQ
:72 DJUHHPHQWV 'H 6FKXWWHU D 0RUHRYHU
GHYHORSHG DQG SURWHFWHG E\ LQWHOOHFWXDO SURSHUW\
PDQ\ RI WKHVH )7$V UHTXLUH GHYHORSLQJ FRXQWULHV WR
ULJKWV ,35V LQGXVWU\ FRQVROLGDWLRQ KDV WDNHQ SODFH
UHGXFH RU HOLPLQDWH WKHLU WDULIIV HYHQ IXUWKHU .KRU
UDSLGO\ 3$11$  7KH IRXU OHDGLQJ FRPSDQLHV
 'H 6FKXWWHU E )RU H[DPSOH LQ WKH
LQWHUPVRIRZQHUVKLSRIELRWHFKQRORJ\SDWHQWVKDGD
(FRQRPLF 3DUWQHUVKLS $JUHHPHQWV EHWZHHQ WKH
PDUNHWVKDUHRISHUFHQWLQDQGRQHFRPSDQ\
$IULFDQ &DUULEEHDQ DQG 3DFLÀF $&3 FRXQWULHV DQG
KDGDSHUFHQWVKDUHRIWKHZRUOGZLGHWUDQVJHQLF
WKH(8WKH$&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
VR\EHDQPDUNHW:RUOG%DQN
7KHVH FRPSDQLHV KDYH D YHVWHG LQWHUHVW LQ
PDLQWDLQLQJ D PRQRFXOWXUHIRFXVHG FDUERQ
LQWHQVLYH LQGXVWULDO DSSURDFK WR DJULFXOWXUH ZKLFK
DEOH WR JDLQ IURP ZKDW PD\ KDYH EHHQ WKH PRVW LV GHSHQGHQW RQ H[WHUQDO LQSXWV +RIIPDQQ 
DGYDQWDJHRXVIRUWKHPZKLOHKDYLQJWRHOLPLQDWHWKHLU ,QWHUQDWLRQDOVXSSO\FKDLQVRIWHQGRPLQDWHGE\PDMRU
DJULFXOWXUDO WDULIIV WR D ODUJHU H[WHQW WKDQ UHTXLUHG RI IRRG SURFHVVRUV DQG UHWDLOHUV DOVR WHQG WR VRXUFH
WKHPE\WKHLUREOLJDWLRQVDWWKH:726RXWK&HQWUH IURP ODUJHVFDOH PRQRFURS SURGXFWLRQ UDWKHU WKDQ

',PEDODQFHLQPDUNHWVWUXFWXUHV
,QFUHDVHG WUDGH LQ DJULFXOWXUDO SURGXFWV LPSOLHV
WKDW IRRG SURGXFWLRQ LV UHGLUHFWHG WRZDUGV VHUYLQJ
H[WHUQDOLQVWHDGRIGRPHVWLFPDUNHWV,QDGGLWLRQDV
ODUJHUIDUPHUVDUHPRUHHDVLO\DEOHWRDFFHVVIRUHLJQ
PDUNHWVDQGEHQHÀWIURPVXFKDFFHVVWKHLQFUHDVH
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
LQDJULFXOWXUDOWUDGHULVNVPDUJLQDOL]LQJVPDOOIDUPHUV D
$QG VLQFH PDUNHW SRZHU LV UDUHO\ HTXDOO\ GLVWULEXWHG
*LYHQ WKHLU LQFUHDVHG PDUNHW SRZHU FRPPRGLW\
DORQJWKHYDOXHFKDLQWKLVHQDEOHVWKHPRUHSRZHUIXO
EX\HUV DQG ODUJHU UHWDLOHUV ZKLFK GRPLQDWH JOREDO
DFWRUVWRSDVVRQFRVWVDQGULVNVWRWKHZHDNHUDFWRUV
IRRGFKDLQVLPSRVHWKHLUSULFHVRQSURGXFHUVZKR
²W\SLFDOO\VPDOOKROGHUIDUPHUV,)$'
DUHLQDQXQIDYRXUDEOHEDUJDLQLQJSRVLWLRQDQGVHW
$V VXFK WKH UROH RI PXOWLQDWLRQDO FRUSRUDWLRQV VWDQGDUGVWKDWPDQ\VPDOOVFDOHIDUPHUVDUHXQDEOH
SDUWLFXODUO\FRPPRGLW\WUDGHUVIRRGSURFHVVRUVDQG WRPHHW'H6FKXWWHUD3$11$6PDOO
JOREDOUHWDLOHUVEHFRPHVPRUHLPSRUWDQW'H6FKXWWHU VFDOHIDUPHUVDUHWKHUHIRUHXQDEOHWRFRPSHWHDQG
D+HUUHQ7KHZRUOGKDVZLWQHVVHGDWUHQG DUH UHOHJDWHG WR ORZYDOXH ORFDO PDUNHWV ZKLFK
WRZDUGVDJULEXVLQHVVFRQVROLGDWLRQDQGWKLVWUHQGLV VWURQJO\ GLVDGYDQWDJH WKHP LQ WKH FRPSHWLWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

IRU ODQG ZDWHU RU RWKHU SURGXFWLYH UHVRXUFHV 'H XQGHUPLQH WKH UHVRXUFH EDVH RQ ZKLFK DJULFXOWXUH
6FKXWWHUEDQGE7KLVULVNVSHUSHWXDWLQJ
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
GHSHQGV $JULFXOWXUH KDV WR FRSH ZLWK LQFUHDVHG
FOLPDWHYDULDELOLW\DQGPRUHH[WUHPHZHDWKHUHYHQWV
:KLOH ORFDO PHDQ WHPSHUDWXUH LQFUHDVHV RI ƒ²ƒ&
ZRXOG DIIHFW FURS SURGXFWLYLW\ GLIIHUHQWO\ GHSHQGLQJ
RQ ODWLWXGHV ZLWK WURSLFDO DQG DULG UHJLRQV VXIIHULQJ
PRUH ZDUPLQJ DERYH ƒ& ZRXOG KDYH LQFUHDVLQJO\
QHJDWLYH LPSDFWV LQ DOO UHJLRQV (DVWHUOLQJ HW DO
PDUNHWV VHH FRPPHQW E\ /LOOLVWRQ DQG +DQVHQ ,QVRPH$IULFDQFRXQWULHV\LHOGVIURPUDLQIHG
.XKQLQWKLVFKDSWHU DJULFXOWXUH LPSRUWDQW IRU WKH SRRUHVW IDUPHUV FRXOG
+RZHYHU PXOWLQDWLRQDO FRUSRUDWLRQV DUH QHLWKHU EH UHGXFHG E\ XS WR  SHU FHQW E\  ,3&&
VXEMHFWHG WR PXFK GLVFLSOLQH QRU WR REOLJDWLRQV EZKLFKZRXOGLQFUHDVHWKHQXPEHURISHRSOH
UHODWLQJWRWKHLUH[HUFLVHRISRZHURQWKHPDUNHWZKLFK DWULVNRIKXQJHU
UHVXOWV LQ D FULWLFDO JRYHUQDQFH JDS 'H 6FKXWWHU +RZHYHU WKH LPSDFWV RI DJULFXOWXUH RQ WKH HQYLURQ
D %HFDXVH RI WKLV DQG WKHLU PDUNHW SRVLWLRQV PHQWDQGKXPDQKHDOWKDQGWKHUHODWLRQVKLSEHWZHHQ
PRVW RI WKH EHQHÀWV IURP JOREDO IRRG VXSSO\ FKDLQV DJULFXOWXUHDQGFOLPDWHFKDQJHDUHXVXDOO\LJQRUHGLQ
DFFUXH WR FRPPRGLW\ EX\HUV IRRG SURFHVVRUV DQG LQWHUQDWLRQDOWUDGHGLVFXVVLRQVGHVSLWHWKHUHSHUFXV
UHWDLOHUVUDWKHUWKDQWRGHYHORSLQJFRXQWU\SURGXFHUV VLRQVWKHVHFRXOGKDYHRQWKHULJKWWRDGHTXDWHIRRG
'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
'H6FKXWWHUD
$SURJUHVVLYHVZLWFKWRPRUHLQSXWDQGHQHUJ\LQWHQ
VLYHIRUPVRIDJULFXOWXUDOSURGXFWLRQFDQQRWEHDWWULE
XWHG GLUHFWO\ WR WKH LQFUHDVH LQ JOREDO WUDGH LQ DJUL
FXOWXUDOFRPPRGLWLHVEXWWKLVWUHQGKDVEHHQHQFRXU
DJHGE\WKHVSHFLDOL]DWLRQRIFRXQWULHVLQFDVKFURSV
HQKDQFH WKHLU DELOLW\ WR UHVSRQG WR PDUNHW GHPDQG IRUH[SRUW'H6FKXWWHUD,QWHQVLYHODUJHVFDOH
,)$'  LQFOXGLQJ LQYHVWLQJ LQ HFRORJLFDO LQGXVWULDO H[SRUWRULHQWHG DJULFXOWXUH KDV LQFUHDVHG
DJULFXOWXUHIRUZKLFKWKHUHDUHYDOXDEOHQLFKHPDUNHWV XQGHU WKH WUDGH OLEHUDOL]DWLRQ DJHQGD VHH FRPPHQW
HJ IRU RUJDQLF SURGXFH DV GLVFXVVHG LQ WKH QH[W E\/LOOLVWRQDQG+DQVHQ.XKQLQWKLVFKDSWHUZLWKDG
VHFWLRQ0RUHRYHULISRRUUXUDOIDUPHUVZHUHDEOHWR YHUVHFRQVHTXHQFHVVXFKDVWKHORVVRIVRLOQXWULHQWV
EHQHÀWIURPWKHLUSDUWLFLSDWLRQLQPDUNHWVWKH\FRXOG DQGZDWHUIURPDJULFXOWXUDOODQGVDQGXQVXVWDLQDEOH
JUDGXDOO\ VDYH DQG DFFXPXODWH DVVHWV LQFUHDVLQJ VRLODQGZDWHUPDQDJHPHQW,$$67'
QRW RQO\ WKHLU RZQ SURVSHULW\ EXW DOVR WKHLU FDSDFLW\
WR GHDO ZLWK ULVNV DQG VKRFNV ,)$'  7KLV
ZRXOGDOVRHQDEOHWKHPWRGHDOEHWWHUZLWKVRPHRI
WKH FKDOOHQJHV DVVRFLDWHG ZLWK FOLPDWH FKDQJH IRU
H[DPSOH
,Q DGGLWLRQ WKH IDLOXUH RI PDUNHWV WR YDOXH DQG LQWHU
QDOL]HHQYLURQPHQWDODQGVRFLDOFRVWVLQWKHSULFHVRI
WUDGHGDJULFXOWXUDOSURGXFWVRUWRSURYLGHLQFHQWLYHV
IRUVXVWDLQDELOLW\KDVDOVRSOD\HGDSDUWLQHQWUHQFK
LQJ XQVXVWDLQDEOH SUDFWLFHV LQ DJULFXOWXUH ,$$67'
 ,QDSSURSULDWH SULFLQJ DQG VXEVLG\ SROLFLHV
((QYLURQPHQWDOVXVWDLQDELOLW\ DQGWKHIDLOXUHWRPDQDJHH[WHUQDOLWLHVDOVRKLQGHUWKH
&RQYHQWLRQDO DQG LQWHQVLYH DJULFXOWXUH LV FKDUDFWHU ZLGHVSUHDGDGRSWLRQRIPRUHVXVWDLQDEOHDJULFXOWXUDO
L]HGE\PHFKDQL]DWLRQDQGWKHXVHRIFKHPLFDOIHUWLOL]
HUVDQGSHVWLFLGHVDVZHOODVDUHOLDQFHRQLUULJDWLRQ
DQGIRVVLOIXHOV7KHVHKDYHFRQWULEXWHGWRFRQVLGHU
DEOH HQYLURQPHQWDO GDPDJH LQFOXGLQJ DFFHOHUDWHG
ORVVRIELRGLYHUVLW\DQGHFRV\VWHPVHUYLFHVVXFKDV
WKRVHQHFHVVDU\IRUWKHSURGXFWLRQRIIRRGDQGZDWHU
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
RUIRUFRQWUROOLQJGLVHDVHLQFUHDVHG*+*HPLVVLRQV .XKQLQWKLVFKDSWHU
DV ZHOO DV FRQVLGHUDEOH KHDOWK LPSDFWV ,$$67'
*LYHQ WKH JURZLQJ FRQFHUQV DERXW FOLPDWH FKDQJH
:RUOG%DQN
DQG WKH LPSHUDWLYH IRU DOOHYLDWLQJ UXUDO SRYHUW\ WKHUH
0RUHRYHU FOLPDWH FKDQJH KDV WKH SRWHQWLDO WR LVDQXUJHQWQHHGWRPRYHWRZDUGVPRUHVXVWDLQDEOH
 75$'($1'(19,5210(175(9,(:

HQYLURQPHQWDOO\IULHQGO\DJULFXOWXUDOSUDFWLFHVWKDWDUH +RZHYHU D VXSSRUWLYH WUDGH IUDPHZRUN VKRXOG

PRUHUHVLOLHQWDQGOHVVLQSXWDQGHQHUJ\LQWHQVLYH'H DYRLG SURWHFWLRQLVP LQ WKH JXLVH RI HQYLURQPHQWDO
6FKXWWHUDDQG7KLVLVHVSHFLDOO\SHUWLQHQW SURWHFWLRQ 6RXWK &HQWUH  ,W VKRXOG DOVR
LQWKHFXUUHQWFRQWH[WRIWKHVFDUFLW\DQGKLJKSULFHVRI VXSSRUWWKH´JUHHQLQJµRIVXEVLGLHVDQGLQZD\VWKDW
RLOVHHFRPPHQWE\+HLQEHUJLQWKLVFKDSWHU7KHUH
LVLQFUHDVLQJHYLGHQFHWKDWVXVWDLQDEOHRUHFRORJLFDO
DJULFXOWXUH FDQ FRQWULEXWH WR FOLPDWH FKDQJH
DGDSWDWLRQDQGPLWLJDWLRQZKLOHDOVREHLQJSURGXFWLYH
HJ'H6FKXWWHU,7&DQG)L%/1LJJOLHW
DO6FLDODEEDDQG0OOHU/LQGHQODXIDOVR
ZLOOJLYHJUHDWHUSROLF\VSDFHWRGHYHORSLQJFRXQWULHV
(QYLURQPHQWDO VWDQGDUGV ODEHOOLQJ DQG RWKHU LVVXHV
ZRXOGDOVRQHHGWREHGHDOWZLWKIURPD´VXVWDLQDEOH
GHYHORSPHQWµ SHUVSHFWLYH 'HYHORSLQJ FRXQWULHV
VKRXOGEHSURYLGHGZLWKUHVRXUFHVDQGWHFKQRORJLHV
IRU XSJUDGLQJ WKHLU H[LVWLQJ HQYLURQPHQWDO
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
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
$VVHVVPHQW RQ $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG DQGRU ORQJWHUP FRQWUDFWV ,)$'  7KH WRWDO
7HFKQRORJ\IRU'HYHORSPHQW,$$67'IRUDSDUDGLJP JOREDORUJDQLFPDUNHWZDVZRUWKELOOLRQLQ
VKLIWLQDJULFXOWXUHWRZDUGVDJURHFRORJ\ KDYLQJ JURZQ E\  SHU FHQW IURP WKH SUHYLRXV \HDU
GHVSLWHWKHHFRQRPLFDQGÀQDQFLDOFULVLV:LOOHUDQG
$PDMRUWDVNLVWRWUDQVIRUPWKHXQLIRUPPRGHORITXLFN
.LOFKHU*OREDOUHYHQXHVKDYHLQFUHDVHGPRUH
À[ LQGXVWULDO DJULFXOWXUH WKDW LV KLJKO\ GHSHQGHQW RQ
WKDQ WKUHHIROG IURP  ELOOLRQ LQ  DQG GRXEOH
H[WHUQDOLQSXWVLQWRÁH[LEOH´UHJHQHUDWLYHµDJULFXOWXUDO
GLJLWJURZWKUDWHVZHUHREVHUYHGHDFK\HDUH[FHSWLQ
V\VWHPVWKDWFRQWLQXRXVO\UHFUHDWHWKHUHVRXUFHVWKH\
 $V WKHUH LV D VLJQLÀFDQW LQFUHDVH LQ FRQVXPHU
XVH DQG DFKLHYH KLJKHU SURGXFWLYLW\ DQG SURÀWDELOLW\
GHPDQGIRURUJDQLFIRRGVZRUOGZLGHWKHUHLVDOVRDQ
RI WKH V\VWHPV EXW QRW QHFHVVDULO\ RI LQGLYLGXDO
RSSRUWXQLW\ IRU VPDOO IDUPHUV WR PDUNHW WKHLU VXUSOXV
SURGXFWV ZLWK PLQLPDO H[WHUQDO LQSXWV LQFOXGLQJ
RUJDQLF SURGXFWV LQ QDWLRQDO UHJLRQDO DQG JOREDO
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
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
WKH SUHYDLOLQJ XQVXVWDLQDEOH V\VWHP 0RUHRYHU LI OLYHOLKRRGV6RXWK&HQWUH
WKH LPSDFWV RI VWUXFWXUDO DGMXVWPHQW DQG LPSRUW
0DQ\ JRYHUQPHQWV LQ ERWK GHYHORSHG DQG GHYHORSLQJ
OLEHUDOL]DWLRQ DQG WKH LPEDODQFHV LQ WUDGH UXOHV DQG
FRXQWULHV KDYH DQQRXQFHG SODQV WR LQFUHDVH RUJDQLF
PDUNHW VWUXFWXUH DUH QRW DGGUHVVHG FRXQWULHV DUH
IDUPLQJ SUDFWLFHV +RZHYHU ZKLOH GHYHORSHGFRXQWU\
XQOLNHO\ WR PRYH WRZDUGV PRUH VXVWDLQDEOH PRGHV
JRYHUQPHQWV RIIHU VLJQLÀFDQW VXEVLGLHV IRU RUJDQLF
RI SURGXFWLRQ ,W LV XQOLNHO\ IRU H[DPSOH WKDW ODUJH
IDUPLQJ VLPLODU ÀQDQFLQJ LV VFDUFH LQ GHYHORSLQJ
IDUPVWKDWUHO\RQVLJQLÀFDQWVXEVLGLHVWREHSURÀWDEOH
FRXQWULHV 0RUH SURDFWLYH PHDVXUHV DUH UHTXLUHG LQ
ZLOO PDNH D VLJQLÀFDQW VKLIW WR HFRORJLFDO DJULFXOWXUH
GHYHORSLQJFRXQWULHVWRSURPRWHRUJDQLFIDUPLQJDQGWR
SUDFWLFHVXQOHVVWKHUHLVFRPSUHKHQVLYHUHIRUPRIWKH
RYHUFRPHREVWDFOHVWRSURGXFWLRQPDUNHWLQJDQGWUDGH
V\VWHP RI VXEVLGLHV LQFOXGLQJ ORZHULQJ RU UHPRYLQJ
VRPH RI WKH VRFDOOHG ´JUHHQµ VXEVLGLHV WKDW IDOO 2QHLVVXHWKDWQHHGVWREHDGGUHVVHGLVWKHGLIÀFXOWLHV
LQ WKH *UHHQ %R[ +RIIPDQQ  $W WKH VDPH IDFHGE\GHYHORSLQJFRXQWU\SURGXFHUVLQDGKHULQJWR
WLPH IDUPHUV VKRXOG EH JLYHQ DGHTXDWH VXSSRUW IRU RUJDQLF VWDQGDUGV 7KLV LV QRW VR PXFK DQ LVVXH DW
HFRORJLFDODJULFXOWXUHSUDFWLFHV WKHQDWLRQDOOHYHOEXWLVDPDMRUSUREOHPIRUSRWHQWLDO
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

H[SRUWHUV ZKR QHHG WR FRPSO\ ZLWK PDQ\ WHFKQLFDO D FRPELQDWLRQ RI SROLFLHV WKDW VXSSRUW HFRORJLFDO
UHJXODWLRQV VWDQGDUGV DQG FHUWLÀFDWLRQ V\VWHPV $V DJULFXOWXUH WKURXJK LQYHVWPHQWV LQ 5 ' H[WHQVLRQ
81&7$'  SRLQWV RXW LW LV LPSRUWDQW WR ÀQG D VHUYLFHV DQG UXUDO LQIUDVWUXFWXUH VXEVLGLHV DQG
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
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
DQGJURXSFHUWLÀFDWLRQ7KHVHDOWHUQDWLYHVZKLFKDUH IDUPHUV·OLYHOLKRRGV.KRU
PRUHDFFHVVLEOHWRVPDOOKROGHUIDUPHUVDQGSURYLGH
$W WKH LQWHUQDWLRQDO OHYHO WKLV VKRXOG LQFOXGH WKH
WKH TXDOLW\ DVVXUDQFH WKDW FRQVXPHUV QHHG VKRXOG
HOLPLQDWLRQ RI VXEVLGLHV IRU DJULFXOWXUDO H[SRUWV
EHIXUWKHUSURPRWHGDOVRVHHWKHFRPPHQWRI7ZDURJ
DV DJUHHG LQ WKH :72·V +RQJ .RQJ 0LQLVWHULDO
LQWKLVFKDSWHU
'HFODUDWLRQDQGIXUWKHUGLVFLSOLQHRQGRPHVWLF
$ VXSSRUWLYH WUDGH IUDPHZRUN FDQ WKXV DVVLVW LQ VXSSRUW DQG WKH UHGXFWLRQ RI WUDGH GLVWRUWLRQV
WKH WUDQVLWLRQ WR HFRORJLFDO DJULFXOWXUH DQG RUJDQLF FDXVHGE\WKHODUJHGRPHVWLFVXEVLGLHVSURYLGHGE\
IDUPLQJ )DUPHUV XVLQJ VXVWDLQDEOH DSSURDFKHV GHYHORSHG FRXQWULHV DV VWDWHG LQ WKH :72·V 'RKD
VKRXOG EH VXSSRUWHG E\ SURDFWLYH 6WDWH LQWHUYHQWLRQ 0LQLVWHULDO'HFODUDWLRQ
6RXWK&HQWUHLQFOXGLQJSXEOLFVHFWRUÀQDQFLDO
$W WKH QDWLRQDO OHYHO GHYHORSLQJ FRXQWULHV VKRXOG
DQGWHFKQLFDOVXSSRUWDVZHOODVH[WHQVLRQVHUYLFHV
FDOLEUDWHWKHLUGHJUHHRIWUDGHOLEHUDOL]DWLRQVRWKDWLW
WR LQWURGXFH EHVW SUDFWLFHV LQ HFRORJLFDO DJULFXOWXUH
LV LQ OLQH ZLWK WKHLU REMHFWLYHV DQG QDWLRQDO UHDOLWLHV
2WKHU 6WDWHOHG VHUYLFHV FRXOG LQFOXGH HFRORJLFDO
&RXQWULHVWKDWGRQRWKDYHWKHSRWHQWLDORULQWHQWLRQWR
UHKDELOLWDWLRQ SURYLVLRQ RI RUJDQLF VHHGV FUHGLW DQG
SURGXFHFHUWDLQIRRGVWXIIVPD\KDYHORZRUQRLPSRUW
PDUNHWLQJ VXSSRUW &RQFXUUHQWO\ WKH GRPHVWLF WDULII
WDULIIV WR HQDEOH WKHLU SRSXODWLRQV WR REWDLQ LPSRUWHG
SROLF\ VKRXOG HQDEOH VPDOO IDUPHUV WR ZLWKVWDQG
IRRG DW WKH ORZHVW FRVW 7KRVH FRXQWULHV WKDW LQWHQG
FRPSHWLWLRQIURPLPSRUWV
WR LQFUHDVH IRRG SURGXFWLRQ FDQ WDNH DGYDQWDJH RI
WKH ÁH[LELOLWLHV DOORZHG LQ WKH :72 E\ VHWWLQJ WKHLU
)$WUDGHIUDPHZRUNVXSSRUWLYHRIIRRG WDULIIV DW WKH DSSURSULDWH OHYHOV LQ RUGHU WR QXUWXUH D
VHFXULW\DQGVXVWDLQDELOLW\ YLDEOH GRPHVWLF IRRG VHFWRU DV ORQJ DV WKH DSSOLHG
WDULIIVGRQRWH[FHHGWKHERXQGUDWHV6RXWK&HQWUH
$WUDGHIUDPHZRUNWKDWLVVXSSRUWLYHRIIRRGVHFXULW\
DQG VXVWDLQDELOLW\ ZLOO QHHG WR IRFXV RQ VPDOOKROGHU
IDUPHUV LQ GHYHORSLQJ FRXQWULHV DQG HQFRXUDJH
GRPHVWLF SURGXFWLRQ 7KLV FRXOG EH DFKLHYHG
E\ KHOSLQJ VPDOOVFDOH SURGXFHUV LPSURYH WKHLU
SURGXFWLYLW\ SDUWLFXODUO\ WKURXJK HFRORJLFDO PHDQV
DQGVWUHQJWKHQLQJWKHLUDFFHVVWRORFDOPDUNHWVZKLOH
VKLHOGLQJ WKHP IURP WKH QHJDWLYH LPSDFWV RI XQGXO\
VXEVLGL]HGLPSRUWVRIIRRGFRPPRGLWLHV'H6FKXWWHU
 )XUWKHUPRUH WKRVH GHYHORSLQJ FRXQWULHV ZLWK
DQ H[SRUW LQWHUHVW VKRXOG EH JLYHQ WKH RSSRUWXQLW\
WR H[SDQG WKHLU H[SRUW HDUQLQJV WKURXJK LPSURYHG
PDUNHWDFFHVV
+RZHYHUWKHÁH[LELOLWLHVDYDLODEOHLQ:72DJUHHPHQWV
PD\EHDIIHFWHGLIFRXQWULHVHQWHULQWR)7$VLQZKLFK
WKH\ FRPPLW WR HOLPLQDWH WKHLU WDULIIV IRU D ODUJH
SHUFHQWDJH RI WKHLU SURGXFWV )XUWKHUPRUH DOWKRXJK
D6XSSRUWWRVXVWDLQDEOHVPDOOVFDOHDJULFXOWXUH
HVSHFLDOO\LQWHUPVRIHQVXULQJDFFHVVWRODQGZDWHU
JHQHWLFUHVRXUFHVDQGFUHGLWDQGE\LQYHVWLQJLQDQG
LPSURYLQJDFFHVVWRUXUDOLQIUDVWUXFWXUHLVFULWLFDODV
LV WKH QHHG WR XQWDQJOH ORFDO IRRG HFRQRPLHV IURP
WKHJULSRIVXSSO\FKDLQVGRPLQDWHGE\PXOWLQDWLRQDO
FRUSRUDWLRQV VHH DOVR FRPPHQW E\ /LOOLVWRQ DQG
/'&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
+DQVHQ.XKQLQWKLVFKDSWHU
SROLF\ JRYHUQPHQWV FDQ SURYLGH YDULRXV IRUPV
,Q RWKHU ZRUGV WKH SOLJKW RI VPDOOVFDOH IDUPHUV LQ RI HQFRXUDJHPHQW WR ERRVW DJULFXOWXUDO DFWLYLWLHV
GHYHORSLQJ FRXQWULHV VKRXOG EH DGGUHVVHG WKURXJK LQFOXGLQJ VXEVLGLHV FUHGLW HVWDEOLVKLQJ VHFXULW\ RI
 75$'($1'(19,5210(175(9,(:

ODQG WHQXUH DQG SURYLVLRQ RI LQSXWV 6RXWK &HQWUH DQGDJULFXOWXUDOGHYHORSPHQWLQGHYHORSLQJFRXQWULHV

 7KH :72 $JUHHPHQW RQ $JULFXOWXUH VHWV WKH .KRU  $Q LQGHSHQGHQW RQJRLQJ UHYLHZ RI WKH
UXOHVRQWKHH[WHQWRIVXEVLGLHVDOORZHG6LQFHPDQ\ WUDGHDVSHFWVRIWKHSUHVHQWDQGSURSRVHGFRQGLWLRQ
GHYHORSLQJFRXQWULHVSUHYLRXVO\SURYLGHGRQO\OLPLWHG DOLWLHVRIORDQVLVQHHGHG
VXEVLGLHV LI DQ\ PDLQO\ EHFDXVH WKH\ ODFNHG WKH
/RDQFRQGLWLRQDOLWLHVVKRXOGQRWREOLJHGHYHORSLQJ
ÀQDQFLDO UHVRXUFHV WKH\ DUH QRW DOORZHG WR SURYLGH
FRXQWULHV WR XQGHUWDNH OLEHUDOL]DWLRQ LQ UDWH DQG
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
VFRSHWKDWLVEH\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
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
 $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
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
 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
7KHRSWLRQVIRUDFWLRQGLVFXVVHGEHORZDUHEDVHGRQ
WKHIRXUWKHPHVRIWKLVOHDGDUWLFOH  5HYHQXHV IURP VXFK WDULIIV FRXOG EH XVHG WR
ÀQDQFHUXUDOGHYHORSPHQWDQGLQIUDVWUXFWXUHVFKHPHV
5HYLHZRIVWUXFWXUDODGMXVWPHQW DLPHG DW EHQHÀWLQJ IDUPHUV 3XEOLF LQYHVWPHQW LQ
UHFRPPHQGDWLRQVDQGDJULFXOWXUDOOLEHUDOL]DWLRQ VRFLDOSURWHFWLRQIRUQRQIRRGSURGXFLQJKRXVHKROGV
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
OLYLQJLQSRYHUW\LVDOVRQHHGHG'H6FKXWWHUE
&RPSOHPHQWDU\ SROLFLHV DQG SURJUDPPHV WR
IDFLOLWDWH WUDQVLWLRQV IURP FRQYHQWLRQDO WR VXVWDLQDEOH
DJULFXOWXUHDQGWRVXSSRUWWKHQHWWUDGHORVHUVWKURXJK
SXEOLFLQYHVWPHQWWRVWLPXODWHORQJWHUPJURZWKLQWKH
DJULFXOWXUDO VHFWRU DUH DOVR LPSRUWDQW :RUOG %DQN
SURYLGHDGHTXDWHVXSSRUWWRWKHLUDJULFXOWXUDOVHFWRUV 
DQG WR KDYH UHDOLVWLF WDULII SROLFLHV WR DGYDQFH WKHLU
DJULFXOWXUHHVSHFLDOO\LQYLHZRIWKHSHUVLVWHQWO\KLJK 5HIRUPLQJWUDGHUXOHVJRYHUQLQJDJULFXOWXUH
VXEVLGLHV RI GHYHORSHG FRXQWULHV .KRU  7KH
$PDMRUFKDOOHQJHDWWKHLQWHUQDWLRQDOOHYHOLVWRPRGLI\
GHYHORSLQJ FRXQWULHV VKRXOG EH DOORZHG WR FDOLEUDWH
D QXPEHU RI NH\ PDUNHW GLVWRUWLRQV WKDW DFW DV D
WKHLU DJULFXOWXUDO WDULIIV LQ VXFK D ZD\ DV WR HQVXUH
GLVLQFHQWLYHWRWKHWUDQVLWLRQWRVXVWDLQDEOHDJULFXOWXUDO
WKDWWKHLUORFDOSURGXFWVFDQEHFRPSHWLWLYHIDUPHUV·
SUDFWLFHV LQ GHYHORSLQJ FRXQWULHV +RIIPDQQ 
OLYHOLKRRGV DQG LQFRPHV VXVWDLQDEOH DQG QDWLRQDO
6XFKGLVWRUWLRQVDULVHIURPWKHVLJQLÀFDQWVXEVLGL]DWLRQ
IRRGVHFXULW\DVVXUHG
RIDJULFXOWXUDOSURGXFWLRQLQGHYHORSHGFRXQWULHVDQG
 7KH SROLFLHV RI WKH LQWHUQDWLRQDO ÀQDQFLDO LQVWLWX WKHLUH[SRUWRIWKLVRXWSXWWRGHYHORSLQJFRXQWULHV$V
WLRQVDQGUHJLRQDOGHYHORSPHQWEDQNVVKRXOGEHUH ORQJDVVXFKVXEVLGLHVDUHQRWVLJQLÀFDQWO\DOWHUHGE\
YLHZHGDQGUHYLVHGDVVRRQDVSRVVLEOHVRWKDWWKH\ WKHFXUUHQW:72QHJRWLDWLRQVLWLVGLIÀFXOWWRLPDJLQH
GRQRWFRQWLQXHWRVHUYHDVEDUULHUVWRIRRGVHFXULW\ KRZ GHYHORSLQJFRXQWU\ SURGXFHUV FRXOG LPSOHPHQW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

DSDUDGLJPVKLIWWRZDUGVHFRORJLFDODJULFXOWXUHRQWKH
PDVVLYH VFDOH QHFHVVDU\ WR KDYH DQ LPSDFW $SDUW
IURPUHDOUHGXFWLRQRIGRPHVWLFVXSSRUWLQGHYHORSHG
FRXQWULHV UHIRUPV VKRXOG LQFOXGH LPSURYHG PDUNHW
DFFHVV IRU GHYHORSLQJFRXQWU\ SURGXFH DQG SROLF\
7KH:72UXOHVVKRXOGHQDEOHGHYHORSLQJFRXQWULHV
WRSURPRWHIRRGVHFXULW\IDUPHUV·OLYHOLKRRGVDQGUXUDO
GHYHORSPHQWWKURXJKWKHHIIHFWLYHXVHRIWKH63DQG
660LQVWUXPHQWV6RIDURQO\GHYHORSHGFRXQWULHVDQG
DIHZGHYHORSLQJFRXQWULHVDUHDEOHWRPDNHXVHRID
VSDFH WR VXSSRUW WKH DJULFXOWXUDO VHFWRU DOORZ
H[SDQVLRQ RI ORFDO IRRG SURGXFWLRQ DQG WKH XVH
RI HIIHFWLYH LQVWUXPHQWV WR SURPRWH IRRG VHFXULW\
IDUPHUV· OLYHOLKRRGV DQG UXUDO GHYHORSPHQW 7KLV
QHFHVVLWDWHV D UHFRQVLGHUDWLRQ RI WUDGH UXOHV LQ WKH
VSHFLDO DJULFXOWXUDO VDIHJXDUG 66* DOO GHYHORSLQJ
FRXQWULHVVKRXOGEHDOORZHGWRPDNHXVHRIWKLVIDFLOLW\
WR SUHYHQW LPSRUW VXUJHV XQWLO D SHUPDQHQW 660 IRU
GHYHORSLQJFRXQWULHVLVHVWDEOLVKHG
 7KH GHYHORSLQJ FRXQWULHV· JRDOV RI IRRG VHFXULW\
:72 DQG LQ YDULRXV )7$V 6RXWK &HQWUH  DV
DQGSURWHFWLRQRIIDUPHUV·OLYHOLKRRGVVKRXOGEHJLYHQ
IROORZV SULRULW\E\QHJRWLDWRUVRI)7$V7KHSHUFHQWDJHRIJRRGV
 ([SRUW VXEVLGLHV LQ GHYHORSHG FRXQWULHV VKRXOG LGHQWLÀHGIRUWDULIIHOLPLQDWLRQE\GHYHORSLQJFRXQWULHV
EHHOLPLQDWHGE\DVDJUHHGLQWKH:72·V+RQJ VKRXOG EH DGMXVWHG LI QHFHVVDU\ WR DFFRPPRGDWH
.RQJ0LQLVWHULDO'HFODUDWLRQ WKHQHHGWRH[FOXGHVHQVLWLYHDJULFXOWXUDOSURGXFWV,Q
WKHOLJKWRIWKHIRRGFULVLVGHYHORSLQJFRXQWULHVWKDW
 7KHUH VKRXOG EH DQ HIIHFWLYH GHHS UHGXFWLRQ RI
KDYH VLJQHG RU DUH QHJRWLDWLQJ )7$V VKRXOG HQVXUH
GRPHVWLF VXSSRUW LQ DFWXDO OHYHOV DQG QRW MXVW WKH
WKDW VXFK DJUHHPHQWV ZLOO SURYLGH HQRXJK SROLF\
ERXQG OHYHOV LQ GHYHORSHG FRXQWULHV ZLWK DV IHZ
VSDFHWRDOORZWKHPWRLPSRVHVXIÀFLHQWO\KLJKWDULIIV
ORRSKROHV DV SRVVLEOH DQG ZLWK QR RU PLQLPDO ´ER[
RQ DJULFXOWXUDO LPSRUWV VR WKDW WKH\ FDQ UHEXLOG DQG
VKLIWLQJµ LH VKLIWLQJ RI VXEVLGLHV WRZDUGV WKRVH
VWUHQJWKHQWKHLUDJULFXOWXUHVHFWRUVLQRUGHUWRDFKLHYH
GHHPHG WR EH QRQGLVWRUWLQJ RU PLQLPDOO\ GLVWRUWLQJ
IRRG VHFXULW\ DQG SURPRWH IDUPHUV· OLYHOLKRRGV DQG
ZKLFK DUH QRW VXEMHFW WR DQ\ GLVFLSOLQHV EXW ZKLFK
UXUDOGHYHORSPHQW
FRXOGDOVRKDYHVLJQLÀFDQWHIIHFWVRQWKHPDUNHWDQG
RQWUDGH7KLVVKRXOGLQFOXGHUHGXFWLRQVLQWKHDFWXDO
27'6DVZHOODVDQREMHFWLYHUHYLHZRIWKHQDWXUHDQG
HIIHFWV RI YDULRXV VXEVLGLHV QRZ FODVVLÀHG DV *UHHQ
%R[ VXEVLGLHV OHDGLQJ WR VWULFWHU GLVFLSOLQHV DQG
UHGXFWLRQV
$GGUHVVLQJLPEDODQFHVLQPDUNHWVWUXFWXUH
6WHSVVKRXOGEHWDNHQIRUWKHHVWDEOLVKPHQWRIQDWLRQDO
DQG LQWHUQDWLRQDO UXOHV IRU UHJXODWLQJ WKH DFWLYLWLHV RI
FRPPRGLW\ EX\HUV SURFHVVRUV DQG UHWDLOHUV LQ WKH
JOREDOIRRGVXSSO\FKDLQ6SHFLÀFSROLFLHVWRVXSSRUW
'HYHORSLQJFRXQWULHVVKRXOGEHDOORZHGDGHTXDWH VPDOOKROGHU IDUPHUV SDUWLFXODUO\ ZRPHQ IDUPHUV LQ
SROLF\VSDFHWRHQDEOHWKHPWRXVHGRPHVWLFVXEVLGLHV JDLQLQJDFFHVVWRPDUNHWVZRXOGDOVREHLPSRUWDQW
IRUVXSSRUWLQJIDUPHUV·OLYHOLKRRGVDQGIRRGVHFXULW\
7KHVHFRXOGLQFOXGHWKHSURYLVLRQRIORZFRVWFUHGLW
DVVLVWDQFHIRUWKHVXSSO\RILQSXWVVWRUDJHIDFLOLWLHV
URDG DQG WUDQVSRUW LQIUDVWUXFWXUH VWUHQJWKHQLQJ RI
H[WHQVLRQVHUYLFHVPDUNHWLQJIDFLOLWLHVDQGQHWZRUNV
DQGVXSSRUWIRUYDOXHDGGHGSURFHVVLQJRIDJULFXOWXUDO
SURGXFWV 'HYHORSLQJ FRXQWULHV FRXOG H[DPLQH WKH
DYHQXHVDYDLODEOHWRWKHPIRUPDNLQJXVHRIGRPHVWLF
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
VXEVLGLHV IRU H[DPSOH WKURXJK WKH GH PLQLPLV
VXEVLGLHV DQG LI WKLV LV QRW VXIÀFLHQW WR H[SORUH WKH  7KHUH LV D QHHG IRU DQWLWUXVW PHDVXUHV WR EUHDN
SRVVLELOLW\RIXVLQJPRUHVXEVLGLHVLQFOXGLQJWKRVHLQ XS PRQRSROLHV DQG JOREDO SULFHÀ[LQJ FDUWHOV DQ
WKH*UHHQ%R[ LQWHUQDWLRQDO UHYLHZ PHFKDQLVP WR LQYHVWLJDWH DQG
PRQLWRU FRQFHQWUDWLRQ LQ WKH DJULIRRG VHFWRU DQG
'HYHORSLQJFRXQWULHVVKRXOGKDYHDGHTXDWHSROLF\
LQYHVWLJDWLRQV LQWR WKH EHKDYLRXU RI LQWHUQDWLRQDO
VSDFH WR PDNH XVH RI WDULIIV WR SURWHFW WKH LQWHUHVWV
FRUSRUDWLRQVHQJDJHGLQDJULFXOWXUDOWUDGLQJDQGIRRG
RIWKHLUGRPHVWLFIDUPHUVDQGSURPRWHIRRGVHFXULW\
UHWDLOLQJ DQG WKHLU LPSDFWV RQ IDUPHUV IDUP ZRUNHUV
DQG UXUDO GHYHORSPHQW 7KH\ VKRXOG EH DEOH WR XVH
FRQVXPHUVDQGYXOQHUDEOHSRSXODWLRQV3$11$
WKHÁH[LELOLWLHVLQWKH:72UXOHVWRDGMXVWWKHLUDSSOLHG
WDULIIVWRWKHDSSURSULDWHOHYHODVORQJDVWKHVHGRQRW  6WDWHV VKRXOG SURDFWLYHO\ DGRSW SXEOLF SROLFLHV
H[FHHGWKHERXQGOHYHO DLPHG DW H[SDQGLQJ WKH FKRLFHV RI VPDOOKROGHUV
 75$'($1'(19,5210(175(9,(:

WR VHOO WKHLU SURGXFWV RQ ORFDO RU JOREDO PDUNHWV DW VRLO KHDOWK DQG LPSURYHG HQYLURQPHQWDO LPSDFWV $
D GHFHQW SULFH E\ VWUHQJWKHQLQJ ORFDO DQG QDWLRQDO PDMRUVKLIWLQVXEVLGLHVLVQHHGHGVRWKDWJRYHUQPHQWV
PDUNHWV DQG VXSSRUWLQJ FRQWLQXHG GLYHUVLÀFDWLRQ RI FDQKHOSUHGXFHWKHLQLWLDOFRVWVDQGULVNVWRIDUPHUV
FKDQQHOV RI WUDGLQJ DQG GLVWULEXWLRQ VXSSRUWLQJ WKH RI WUDQVLWLRQLQJ WRZDUGV PRUH VXVWDLQDEOH IDUPLQJ
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
SUDFWLFHV +HUUHQ HW DO  6XEVLGLHV VKRXOG EH
FRQÀQHGWRWKRVHHVVHQWLDOIRUIDFLOLWDWLQJWKHWUDQVLWLRQ
WRVXVWDLQDEOHSURGXFWLRQPHWKRGVVXFKDVVXSSRUW
IRUH[WHQVLRQVHUYLFHVDQGUHVHDUFKDQGGHYHORSPHQW
UHZDUGLQJHQYLURQPHQWDOVHUYLFHVHQVXULQJSURWHFWLRQ
DJDLQVWYRODWLOHSULFHVDQGSURYLGLQJVSHFLÀFVXSSRUW
DQG SURPRWLQJ DQG VFDOLQJ XS IDLU WUDGH V\VWHPV WRVPDOOKROGHUV+RIIPDQQ
LQFOXGLQJE\HQVXULQJDFFHVVWRSURGXFWLYHUHVRXUFHV
 )DUPHUV VKRXOG EH JLYHQ DFFHVV WR VXSSRUW
LQIUDVWUXFWXUH DQG WHFKQLFDO DVVLVWDQFH 'H 6FKXWWHU
IRU HFRORJLFDO DJULFXOWXUH SUDFWLFHV 'HYHORSLQJ
E,)$'3$11$
FRXQWULHV FRXOG FRQVLGHU GHYRWLQJ D ODUJHU VKDUH RI
 8QGHUVWDQGLQJ JHQGHUUHODWHG RSSRUWXQLWLHV DQG WKHLU DJULFXOWXUDO EXGJHWV WR SURPRWLQJ HFRORJLFDO
ULVNV LQ DJULFXOWXUDO YDOXH FKDLQV DQG PDUNHWV DQG DJULFXOWXUH ZKLFK FDQ ERRVW ERWK VPDOO IDUPHUV·
SURPRWLQJ JHQGHU HTXDOLW\ LQ DFFHVVLQJ HPHUJLQJ OLYHOLKRRGV DQG IRRG SURGXFWLRQ ZKLOH SURWHFWLQJ
RSSRUWXQLWLHVDUHLPSRUWDQWWRVXSSRUWWKHHPHUJHQFH WKH HQYLURQPHQW DQG FRQVHUYLQJ UHVRXUFHV VXFK DV
RISURSRRUDJULFXOWXUDOPDUNHWV,)$' VRLO IHUWLOLW\ DQG ZDWHU 7KH VXSSRUW VKRXOG LQFOXGH
 $JULFXOWXUDO UHVHDUFK DQG DLG KDYH RIWHQ VHUYHG
SRZHUIXOFRPPHUFLDOLQWHUHVWVLQFOXGLQJPXOWLQDWLRQDO
VHHG DQG IRRG UHWDLOLQJ FRPSDQLHV DW WKH H[SHQVH
RIWKHYDOXHVQHHGVNQRZOHGJHDQGFRQFHUQVRIWKH
YHU\SHRSOHZKRSURYLGHWKHIRRG)DUPHUVDQGRWKHU
FLWL]HQVQHHGWRSOD\DFHQWUDOUROHLQGHÀQLQJVWUDWHJLF
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
SULRULWLHV IRU DJULFXOWXUDO UHVHDUFK DQG IRRG SROLFLHV %RWKGHYHORSLQJDQGGHYHORSHGFRXQWULHVVKRXOG
+RIIPDQQVHHDOVR+HUUHQLQFKDSWHUWKUHHRI EHHQFRXUDJHGWRWDNHPHDVXUHVWRIDFLOLWDWHWUDGHLQ
WKLV5HYLHZ RUJDQLFIRRGVRULJLQDWLQJIURPGHYHORSLQJFRXQWULHV
'HYHORSLQJ FRXQWULHV FRXOG FRQVLGHU WKH IROORZLQJ
$QDJHQGDIRUHQYLURQPHQWDOVXVWDLQDELOLW\ PHDVXUHV L LQFUHDVH DZDUHQHVV RI WKH EHQHÀWV RI
7KH UHJXODWLRQ RI LQWHUQDWLRQDO WUDGH LQ DJULFXOWXUDO RUJDQLFIRRGSURGXFWLRQDQGWUDGLQJRSSRUWXQLWLHVLL
FRPPRGLWLHV VKRXOG WDNH LQWR DFFRXQW WKH LPSDFW SURPRWHUHVHDUFKDQGGHYHORSPHQWDQGWUDLQLQJLLL
RI YDULRXV PRGHV RI DJULFXOWXUDO SURGXFWLRQ RQ WKH LGHQWLI\ PDUNHWLQJ VWUDWHJLHV DQG SDUWQHUVKLSV ZLWK
HQYLURQPHQW DQG FOLPDWH FKDQJH LQ RUGHU WR DOORZ JRYHUQPHQW VXSSRUW LY SURYLGH ÀQDQFLDO VXSSRUW
FRXQWULHVWRSURYLGHLQFHQWLYHVLQIDYRXURIVXVWDLQDEOH WR RUJDQLF SURGXFHUV DQG Y SURPRWH IDUPHUV·
SURGXFWLRQVXFKDVRUJDQLFIDUPLQJRUDJURHFRORJLFDO DVVRFLDWLRQV DQG QRQJRYHUQPHQWDO RUJDQL]DWLRQV
SUDFWLFHVERWKRIZKLFKUHVSHFWWKHHQYLURQPHQWDQG 1*2V81&7$'
FRQWULEXWHWRIRRGVHFXULW\'H6FKXWWHUD  ,PSRUWLQJ FRXQWULHV FRXOG DOVR LPSOHPHQW
 3HUYHUVH LQFHQWLYHV DQG VXEVLGLHV WKDW SURPRWH PHDVXUHVWRSURPRWHLPSRUWVRIRUJDQLFIRRGVIURP
RU HQFRXUDJH WKH XVH RI FKHPLFDO SHVWLFLGHV GHYHORSLQJ FRXQWULHV E\ SURYLGLQJ LQIRUPDWLRQ RQ
DQG IHUWLOL]HUV ZDWHU DQG IXHO RU HQFRXUDJH ODQG RUJDQLF VWDQGDUGV DQG RQ UHJXODWLRQV DQG PDUNHW
GHJUDGDWLRQ VKRXOG EH DYRLGHG ,$$67'  RSSRUWXQLWLHV IRU GHYHORSLQJ FRXQWULHV· H[SRUWHUV
:RUOG %DQN  $W WKH VDPH WLPH UHJXODWLRQV 7KH\VKRXOGDOVRIDFLOLWDWHDFFHVVWRWKHLURUJDQLFIRRG
DQG WKHLU LPSOHPHQWDWLRQ DUH QHHGHG WR SURWHFW WKH PDUNHWVE\VLPSOLI\LQJUHTXLUHPHQWVDQGSURFHGXUHV
HQYLURQPHQWDQGDGGUHVVSROOXWLRQDVLQSXWLQWHQVLYH IRULPSRUWLQJSURGXFWVIURPGHYHORSLQJFRXQWULHVDQG
DJULFXOWXUH KDV DGYHUVH LPSDFWV RQ WKH HQYLURQPHQW DSSO\LQJWKHFRQFHSWRIHTXLYDOHQFHEHWZHHQQDWLRQDO
DQGKXPDQKHDOWK,)$' RUJDQLFVWDQGDUGV81&7$'
 $JULFXOWXUDO VXEVLGLHV QHHG WR EH UHGLUHFWHG WR  %LODWHUDO DQG PXOWLODWHUDO GRQRU DJHQFLHV FRXOG
HQFRXUDJH GLYHUVLÀHG FURS SURGXFWLRQ IRU ORQJWHUP SURYLGH DSSURSULDWH WHFKQLFDO DVVLVWDQFH IRU WKH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

H[SRUWRIRUJDQLFSURGXFWVIURPGHYHORSLQJFRXQWULHV %DUULHUVWRWKHSDUWLFLSDWLRQRIVPDOOIDUPHUVIURP
GHYHORSLQJ FRXQWULHV LQ RUJDQLF PDUNHWV VKRXOG EH
 0RUH JHQHUDOO\ GHYHORSLQJ FRXQWULHV FRXOG
UHPRYHG(IIRUWVWRDGGUHVVLVVXHVVXFKDVGLIÀFXOWLHV
FRQVLGHUWKHIROORZLQJVWUDWHJLHVWRSURPRWHRUJDQLF
RI PDUNHW DFFHVV ODFN RI PDUNHW LQIUDVWUXFWXUH
DJULFXOWXUHLRUJDQLFSROLF\DQGDFWLRQSODQVVKRXOG SURKLELWLYH WKLUGSDUW\ FHUWLÀFDWLRQ WKH ODFN RI
EHOLQNHGWRWKHRYHUDUFKLQJREMHFWLYHVRIWKHFRXQWU\·V UHVHDUFK WHFKQLFDO SROLF\ DQG ÀQDQFLDO VXSSRUW
DJULFXOWXUHSROLFLHVWRPDNHWKHPPXWXDOO\VXSSRUWLYH DUH QHHGHG 81&7$' DQG 81(3 D *URZLQJ
DQG WR UHPRYH REVWDFOHV DQG ELDVHV DJDLQVW GRPHVWLF PDUNHWV DUH DOVR LPSRUWDQW DQG XUEDQ
RUJDQLF DJULFXOWXUH LL WKH JRYHUQPHQW VKRXOG JLYH PDUNHWVFRXOGVWDUWWRSURYLGHVLJQLÀFDQWRSSRUWXQLWLHV
UHFRJQLWLRQDQGHQFRXUDJHPHQWWRWKHRUJDQLFVHFWRU IRUVPDOOKROGHUIDUPHUV,)$'
FORVHO\FRRSHUDWHZLWKWKHVHFWRU·VRUJDQL]DWLRQVDQG  (IIRUWV VKRXOG EH PDGH WR HQDEOH VPDOOKROGHU
IDUPHUVDQGSOD\DQHQDEOLQJDQGIDFLOLWDWLQJUROHLLL IDUPHUV SDUWLFXODUO\ ZRPHQ IDUPHUV WR DFFHVV
HVWDEOLVK D SDUWLFLSDWRU\ SURFHVV ZLWK DFWLRQ SODQV SURGXFWLYH UHVRXUFHV DQG SDUWLFLSDWH LQ DJULFXOWXUDO
DQGSURMHFWVEDVHGRQRYHUDOOSROLFLHVDQGREMHFWLYHV GHFLVLRQPDNLQJ VR DV WR IDFLOLWDWH WKHLU LQYHVWPHQW
81&7$'DQG81(3D LQDQGDGRSWLRQRIHFRORJLFDODJULFXOWXUHDSSURDFKHV
 75$'($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\ODERXUSURGXFWLYLW\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
WLRQRIWKHIRRGDQGDJULFXOWXUDOVHFWRUDVRXWOLQHGLQ
FKDSWHUVRQHWRIRXURIWKLV5HYLHZ
%:KDWLVDWVWDNH"
PHQW*RDOV0'*VFKLHÁ\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\
,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
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
GLJPRI´SURGXFLQJPRUHZLWKOHVVµLVEHLQJWXUQHG
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

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
DQG SRYHUW\ SUREOHPV DUH DOUHDG\ WKH PRVW DFXWH YHU\PXFKELDVHGWRZDUGVH[SDQVLRQRI´VRPHZKDW
RYHUFRQVXPSWLRQ KLJK IRRG ZDVWH DQG FKDQJLQJ OHVVSROOXWLQJµ H[WHUQDOLQSXWGHSHQGHQW LQGXVWULDO
FRQVXPSWLRQSDWWHUQVWRPRUHPHDWEDVHGGLHWVZLWK
WKH DVVRFLDWHG VSLUDOLQJ H[SDQVLRQ RI FRQFHQWUDWH
IHHGSURGXFWLRQDVZHOODVJURZLQJDPRXQWVRIELR
IXHO SURGXFWLRQ DGG SUHVVXUH RQ WKH DOUHDG\ OLPLWHG
ODQGUHVRXUFHV9RODWLOHÀQDQFLDOPDUNHWVVFDUFLW\RI
DJULFXOWXUH D VRUW RI ¶HFRORJ\ OLJKW· DSSURDFK ZLWK
JRYHUQPHQWVODUJHDJURIRRGDQGDJURFKHPLFDOHQ
WHUSULVHVWHPSWHGWRIROORZWKLVOLQHLQVHDUFKIRU¶MREV
DQGJURZWK·5DWKHUWKHDLPVKRXOGEHWRZDUGVVXV
WDLQDEOHVLWHVSHFLÀFDQGDIIRUGDEOHQRWH[WHUQDOLQ
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
SXWLQWHQVLYHSURGXFWLRQPHWKRGVWKDWSURYLGHPXOWL
IXQFWLRQDO EHQHÀWV DQG HPSOR\PHQW FUHDWLRQ DV SDUW
RI D FRKHUHQW DQG PRUH KROLVWLF DSSURDFK UHÁHFWLQJ
WKHVSHFLÀFLW\RIDJULFXOWXUH
(5XUDOHFRQRPLHV
$ERXWSHUFHQWRIWKHKXQJU\OLYHLQUXUDODUHDVWKH\
JURXQG IRRG VHFXULW\ PLJKW WXUQ IURP DOUHDG\ EHLQJ DUHIDPLO\IDUPHUVRUDJULFXOWXUDOODERUHUV1HROLEHUDO
WKH ´KLGGHQ GULYHU RI ZRUOG SROLWLFVµ /HVWHU %URZQ SROLFLHVLHWKH:DVKLQJWRQ&RQVHQVXVVWLOOSUHYDLO
WRWKHPRVWSUHVVLQJLQWHUQDWLRQDOGHYHORSPHQW
DQGVHFXULW\LVVXHRIWKHVWFHQWXU\
'7KHKXQJHUFKDOOHQJH
,I SUHVHQW WUHQGV FRQWLQXH XQDEDWHG IRRG ULRWV DQG
LQJ PDVVLYH VXEVLGLHV IRU DJULFXOWXUH LQ GHYHORSHG
FRXQWULHVDQGIRFXVRIWKHSROLWLFDOHOLWHRQXUEDQDU
HDVLQWKH6RXWKKDYHOHGWRDGLVFULPLQDWRU\WUHDWPHQW
RIUXUDOUHJLRQVLQGHYHORSLQJFRXQWULHV+RZHYHUDF
FRUGLQJWR)$2VPDOOKROGHUIDUPHUVSURYLGHXSWR
SHUFHQWRIWKHIRRGVXSSO\LQ$VLDDQGVXE6DKDUDQ
PDVV PLJUDWLRQ DUH OLNHO\ WR EHFRPH PRUH SUR $IULFD)$27KDWLVZK\VPDOOVFDOHDJULFXOWXUH
QRXQFHG LQ WKH IXWXUH ,Q  VRPH JRYHUQPHQWV QHHGVVSHFLDODWWHQWLRQ,QWHUHVWLQJO\VPDOOVFDOHDJ
ZHUHDOUHDG\VKDNHQULVLQJIRRGSULFHVZHUHDPRQJ ULFXOWXUHLVRIWHQPRUHSURGXFWLYHWKDQODUJHVFDOHLQ
WKHFDXVHVIRUWKH´$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
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
 75$'($1'(19,5210(175(9,(:

PDLQO\EHFDXVHKXQJHULVQRWSULPDULO\DVXSSO\UHODW RQPLJUDWLRQWRXUEDQDUHDVDQGEH\RQGERUGHUVWKXV
HGEXWDSRYHUW\OLQNHGLVVXHRIDSSURSULDWHDFFHVV SUHYHQWLQJQDWLRQDODQGLQWHUQDWLRQDOSROLWLFDOWHQVLRQV
WR IRRG ERWK LWHPV DUH WKHUHIRUH FRPELQHG LQ 0'*
JRDORQH,QWKLVUHJDUGWKHFXUUHQWV\VWHPUHDFKHV
)7KHKLJKHQYLURQPHQWDOFRVWVRI
LWVOLPLWV
WKHFXUUHQWPRGHRIDJULFXOWXUDO
$QDOWHUQDWLYHSURGXFWLRQLQWHQVLÀFDWLRQVWUDWHJ\LVWKH LQGXVWULDOL]DWLRQ
HFRIXQFWLRQDOLQWHQVLÀFDWLRQ DSSURDFK %RPPDUFR
%HVLGHVWKHXQUHVROYHGKXQJHUSUREOHPDJULFXOWXUDO
HW DO  LQ DJURHFRORJLFDO V\VWHPV DJURHFR
LQGXVWULDOL]DWLRQ KDV FRPH DW KLJK HQYLURQPHQWDO
ORJLFDO V\VWHPV DUH PRUH RSHQ HYHQ WR LQSXWV WKDQ
FRVWV7RGD\·VFRQYHQWLRQDODJULFXOWXUHEHLQJDYHU\
SXUH RUJDQLF IDUPLQJ V\VWHPV WKXV KDYLQJ D KLJKHU
H[WHUQDOLQSXWGHSHQGHQW SURGXFWLRQ V\VWHP ZLWK D
\LHOG SRWHQWLDO VHH $OWLHUL HW DO  DQG %UDQFD
QHJDWLYH LI QRW UDUHO\ ¶FDWDVWURSKLF· HQHUJ\ EDODQFH
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
$OWKRXJK VXFK IRUPV RI DJULFXOWXUH DUH NQRZOHGJH
LQWHQVLYHYLUWXDOO\DOORIWKHVHVNLOOVDQGWHFKQRORJLHV
DUHUHDGLO\DYDLODEOHDPDMRUGLIIHUHQFHWRPRVWRWKHU
VHFWRUV ZKHUH PDQ\ QHZ WHFKQRORJLHV IRU HQKDQF
LQJHQHUJ\PDWHULDOUHVRXUFHHIÀFLHQF\VWLOOKDYHWREH
VHHWKHFRPPHQWDU\RI5XQGJUHQLQFKDSWHUGH
VSLWHVRPHLPSURYHPHQWVGLVSURSRUWLRQDWHO\FRQWULE
XWHVWRFOLPDWHFKDQJHSROOXWLRQRIZDWHUODQGGHJ
UDGDWLRQ DQG ELRGLYHUVLW\ ORVV 7KH DOUHDG\ FURVVHG
SODQHWDU\ FDUU\LQJ FDSDFLW\ IRU QLWURJHQ GRHV QRW DO
ORZDQ\XQFULWLFDOIXWXUHLQSXWLQWHQVLÀFDWLRQLQDJULFXO
WXUH$JULFXOWXUHDQGUHODWHGODQGXVHFKDQJHVFDXVH
DWOHDVWRQHWKLUGRIJOREDO*+*HPLVVLRQVLILQGLUHFW
HPLVVLRQVLQSODQWDQGHTXLSPHQWWUDQVSRUWDVZHOO
DV DORQJ WKH IRRG SURFHVVLQJ DQG PDUNHWLQJ FKDLQ
DUH WDNHQ LQWR DFFRXQW DJULFXOWXUH·V FRQWULEXWLRQ WR
FOLPDWHFKDQJHLVZHOORYHUSHUFHQWVHHWKHFRP
GHYHORSHG:KDWLVUDWKHUODFNLQJLVDGHTXDWHSXEOLF PHQWDU\ RI *5$,1 LQ FKDSWHU RQH *+* HPLVVLRQV
VXSSRUWWRHIÀFLHQWH[WHQVLRQVHUYLFHVIRUNQRZOHGJH RIDJULFXOWXUHDUHVHWWRLQFUHDVHE\SHUFHQWWLOO
GLVVHPLQDWLRQ SXEOLF LQYHVWPHQW LQ DGHTXDWH SK\VL ZKHUHDVDGHFOLQHRIWKHVDPHRUGHURIPDJQL
FDOLQIUDVWUXFWXUHODQGUHIRUPIRUVHFXUHWHQXUHULJKWV WXGHZRXOGEHUHTXLUHGLQRUGHUQRWWRH[FHHGWKHWZR
LQFOXGLQJ IRU ZRPHQ DQG DFFHVV WR ÀQDQFLQJ 7KH GHJUHHJOREDOZDUPLQJJRDO%HVLGHVDKLJKHUWUDGH
DJULFXOWXUDO LQGXVWU\ LV DOUHDG\ DQG LQ WKH IXWXUH ZLOO LQWHQVLW\PD\IXUWKHUFRQWULEXWHWRFOLPDWHFKDQJHVHH
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
6FKPLW]HWDODQGUDLVHKHDOWKUHODWHGFRVWV
*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 

WKHDERYHPDGHDQDO\VLV QHHGVDVKLIWWRVWUHQJWKHQLWVUHJHQHUDWLYHSRWHQWLDO
‡ +RZ ELJ LV WKH FKDQFH RI DGGUHVVLQJ WKHVH 7UDGH UXOHV QHHG WR VXSSRUW QRW FRPSURPLVH WKLV
SUREOHPVZLWKWRGD\·VWUDGHWRROER[HV" PRYH
‡ :LOOLWEHSRVVLEOHDQGVXIÀFLHQWWRWDFNOHWKHKXJH
8QIRUWXQDWHO\WKHH[WHUQDOLWLHVSURGXFHGE\LQGXVWULDO
FKDOOHQJHVE\IXOO\H[SORLWLQJWKHH[LVWLQJÁH[LELOLW\
DJULFXOWXUH DUH QRW DQG ZLOO QRW DW OHDVW LQ WKH IRUH
RSWLRQVDQGPHFKDQLVPVLQWKHFXUUHQWWUDGHUXOHV"
VHHDEOH IXWXUH EH LQWHJUDWHG LQ SURGXFW SULFHV ,Q
‡ 2ULVDPRUHIXQGDPHQWDOFKDQJHQHHGHGLQRUGHU
IDFWHQKDQFHGH[WHUQDOLQSXWXVHDQGVSHFLDOL]DWLRQ
WR VROYH WKH VW FHQWXU\ LVVXHV RI KXQJHU UXUDO
SRYHUW\ OLQJHULQJ PDVV PLJUDWLRQ DQG UHTXLUHG KDYH PDGH LW KDUGHU WR LQWHUQDOL]H H[WHUQDOLWLHV EH
VWUHQJWKHQLQJRIDJULFXOWXUDOUHVLOLHQFH" FDXVHDJULFXOWXUDOLQSXWSULFHG\QDPLFVKDVRXWSDFHG
WKHHYROXWLRQRIIRRGSULFHVVHHÀJXUHWKHKLJKHU
:HZDQWWRH[SORUHWKHVHTXHVWLRQVE\VWDUWLQJIURP WKHLQSXWSULFHVWKHPRUHXQOLNHO\WKDWWKH\DUHWD[HG
WKH IXQGDPHQWDO REVHUYDWLRQ WKDW DJULFXOWXUH LV VSH
FLDO
,$JULFXOWXUHLVVSHFLDO
$JULFXOWXUHKDVEHHQDQGVWLOOLVLQQHDUO\DQ\ELODWHUDO
RUUHJLRQDOQHJRWLDWLRQVDPDMRUREVWDFOHWRIUHHWUDGH
DJUHHPHQWV$JULFXOWXUHVHHPVWREHVSHFLDODQGLQ
GHHGWKHUHDUHJRRGUHDVRQVIRUDJULFXOWXUH·VVSHFLDO
UROH$JULFXOWXUHEHLQJDPDQDJHPHQWV\VWHPIRUKDOI
RIWKHWHUUHVWULDOELRPDVVSURGXFLQJDUHDVDQGEHLQJ
WKHUHIRUH FULWLFDO LQ PDQ\ HQYLURQPHQWDO UHVSHFWV LV
ERXQGWRWKHODQGZKLFKPHDQVLWFDQQRWEHPRYHG
WRPRUHIDYRXUDEOHFRQGLWLRQV,WKDVORQJLQYHVWPHQW
LQWHUYDOVZKHWKHUWRKDYHPLONFRZVRUQRWLV²LQFOXG
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
LQJ EUHHGLQJ ² IRU H[DPSOH D YHU\ ORQJODVWLQJ GHFL DQGFHUWLÀFDWLRQWKDWWKHLUSURGXFWVDUHLQGHHGPHHW
VLRQZKLFKLVDVZHOOLQÁXHQFHGE\SROLFLHVHJPLON LQJVWULQJHQWVWDQGDUGV0DUNHWORJLFLVWKXVSXWRQLWV
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
KHDG LQVWHDG RI UHZDUGLQJ WKH PRVW HIÀFLHQW FOHDQ
DQGVXVWDLQDEOHSURGXFWLRQV\VWHPSUHYDLOLQJPDUNHW
UXOHVDZDUGWKH¶SROOXWLQJ·IUHHULGHUV
)LJXUH'HYHORSPHQWRIIRRGDQGIHUWLOL]HUSULFHV
WR
VRFLDOIDEULFVHH%URGKHXUHWDO7KLVLVWUXH 6-

QRWRQO\LQ(XURSHEXWSULQFLSDOO\DVZHOOLQNH\DJUL
5-
FXOWXUDO H[SRUWLQJ FRXQWULHV OLNH $XVWUDOLD DQG %UD]LO
RULQWKH$IULFDQFRXQWU\VLGH%HVLGHVDJULFXOWXUHHP 4-

SOR\VELOOLRQVRISHRSOHLQWKHGHYHORSLQJZRUOG 3-

$JULFXOWXUH·VUROHIRUGHYHORSPHQWKDVIRUORQJEHHQ 2-

XQGHUYDOXHG DQG KDV RQO\ YHU\ UHFHQWO\ EHHQ UHLQ 1-

Fertilizer Price Index / Food Price Index
(ratio 1970 = 1)
YLJRUDWHG,WKDVWKHSRWHQWLDOWROLIWSHRSOHRXWRISRY
0-
1970 -

1975 -

1980 -

1985 -

1990 -

1995 -

2000 -

2005 -

2010 -

HUW\ VHH :RUOG %DQN  SURYLGH PDQ\ HFRORJL

FDODQGDPHQLW\VHUYLFHVDQGFRXOGEHWXUQHGIURPD
NH\ VRXUFH RI JOREDO ZDUPLQJ LQWR D VHFWRU WKDW FDQ
6RXUFHV/LPHVUHIHUULQJWR.RWVFKL
VLJQLÀFDQWO\PLWLJDWHLWDQGDGDSWIRRGSURGXFWLRQWR
IRUWKFRPLQJ
WKHSHULOVRIFOLPDWHFKDQJHDWYHU\ORZFRVWVUHODWLYH
WR RWKHU VHFWRUV 7R H[SORLW WKLV SRWHQWLDO DJULFXOWXUH
 75$'($1'(19,5210(175(9,(:

)DFHGZLWKWKLVGLOHPPDDQGDVDUHVXOWRIHQKDQFHG 6RPH IXQGDPHQWDOV KDYH WR EH WDNHQ LQWR DFFRXQW

OLEHUDOL]DWLRQ WKH LQFUHDVHG FRPSHWLWLYH SUHVVXUH LQ ZKHQWU\LQJWRDQVZHUWKLVTXHVWLRQ
WKH SUHYDLOLQJ GLVWRUWHG PDUNHW FRQGLWLRQV KLWV KDUG
SDUWLFXODUO\WKHIDUPVWKDWSURGXFHWKHPRVWFRPPRQ
-$JULFXOWXUH·VGLYHUVLW\LVNH\
JRRGVDQGVHUYLFHVZKHWKHULQGHYHORSHGRUGHYHO
RSLQJFRXQWULHV*LYHQWKLVGLOHPPDDQHZDSSURDFK 1DWXUH GHSHQGV RQ LQWHUDFWLRQ SODQWV ZLWK LQVHFWV
WRDGGUHVVWKLVLVVXHLVRYHUGXH VRLOIHUWLOLW\ZLWKVRLOPLFUREHVHWFDQGWKHUHIRUHRQ
GLYHUVLW\ 'LYHUVLW\ SOD\V D SLYRWDO UROH LQ DJULFXOWXUH
$OWKRXJK*$77DQG:72KDYHWUHDWHGDJULFXOWXUHLQD
)$26SHFLDOL]DWLRQLQDJULFXOWXUHLVDQLVVXH
VSHFLÀFDJUHHPHQWKHUHEHFDXVHRIWKHSROLWLFDOVHQ
EXWDWWKHVDPHWLPHLWPXVWEHLQWHJUDWHGLQDVWUDW
VLWLYLW\RIIRRGVHFXULW\DQGDJULFXOWXUH·VFORVHDVVRFLD
HJ\ RI GLYHUVLÀFDWLRQ 7VFKDUQNH HW DO  SRLQW
WLRQZLWKQDWXUDOUHVRXUFHVDQGWKHKHDOWKDQGVDIHW\RI
RXW WKDW LQWHJUDWLRQ VWUDWHJLHV FRPELQLQJ FURS DQG
SHRSOHHYHQODWHO\WKHVHFWRUSURÀWHGRQO\IURPVRPH
ZLOGOLIHDUHPRUHVXLWDEOHIRUIRRGVHFXULW\WKDQVHJUH
©HQGRISLSHªÁH[LELOLWLHVDQGVSHFLDOVDIHJXDUGVZKLOH
JDWLRQLHVHSDUDWLQJFURSSURGXFWLRQIURPZLOGOLIHDU
VXEMHFWLQJDJULFXOWXUHWRWKHDFURVVWKHERDUG©LQGXVWU\ª
HDVZKLFKLVPDLQO\DGYRFDWHGE\WRGD\·VDJULFXOWXUDO
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
LQGXVWU\7KLVREVHUYDWLRQVSHDNVIRUDJURHFRORJLFDO
DSSURDFKHVZKLFKIROORZDQLQWHJUDWHGGLYHUVLW\VWUDW
HJ\NHHSLQJDOVRDQH\HRQÁRXULVKLQJZLOGOLIH2QWKH
ODWWHUDUHFHQW(8HVWLPDWHFRQFOXGHVWKDWWKH1DWXUD
 QHWZRUN LQ WKH (8 DORQH SURGXFHV HFRV\VWHP
VHUYLFHVZRUWKVRPHELOOLRQ(XURV
UHVSHFWLYHO\/XQHQERUJKDYHVRIDUEHHQRQO\
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
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
WLYHDQGUHVRXUFHHIÀFLHQWDJULFXOWXUHIRUIRRGVHFX
SODQHW·VELRORJLFDOUHVRXUFHVDQGOLYHHTXLWDEO\ZLWKLQ
ULW\FDQEHVWEHDVVXUHGE\SRO\FXOWXUHDGHTXDWH
RXU SODQHWDU\ PHDQV 7KH NH\ TXHVWLRQ LV ZKHWKHU
QXWULHQWUHF\FOLQJWKHLQWHJUDWLRQRIFURSDQGOLYHVWRFN
VXFKIDUUHDFKLQJFKDQJHVFDQEHDFKLHYHGWKURXJK
SURGXFWLRQ DQG WKH HIIHFWLYH XVH RI IXQFWLRQDO ELRGL
IXOO\H[SORULQJH[LVWLQJÁH[LELOLWLHVLQWKHFXUUHQWWUDGH
YHUVLW\ )XWXUH WUDGH UXOHV VKRXOG PLUURU DQG VXSSRUW
WRROER[ RU LI LW ZLOO QHFHVVLWDWH D GLIIHUHQW GHYHORS
WKLVLQWHUSOD\
PHQWDQGWUDGHIRFXVDVSDUWRIDIXQGDPHQWDOWUDQV
IRUPDWLRQRIJOREDODJULFXOWXUH ,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
DQLPDOIHHG6RPHERG\ZLWKDFXUUHQWIDUPVL]HRIKDLVVWLOOSURÀWDEOHEXWLILQSXWSULFHWUHQGVFRQWLQXHRQHPLJKW
QHHGKDLQWKHIXWXUHWRPDNHDSURÀW$FFRUGLQJWR0U&DVWLOORVWKLVZLOOVSHHGXSWKHFRQFHQWUDWLRQRIODQGRZQHU
VKLSVRWKDWWKHODQGZLOOLQFUHDVLQJO\EHRZQHGE\DIHZLQVWLWXWLRQDOLQYHVWRUV
6RXUFH+XLVPDQQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

ZRXOGKDYHWRPHHWWKHIRXUSULQFLSOHVRIVXVWDLQDEOH 7UDGH LQVWHDG RI EHLQJ MXVW D PHWKRG RI PDWFKLQJ

DJULFXOWXUHDVPDSSHGRXWLQWKH5HSRUWRIWKH5R\DO VXSSO\DQGGHPDQG²LQLWVUHFHQWWHUPVSXVKLQJIRU
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
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
DQLVPV660VSHFLDOSURGXFWV63DQGIHZRWKHU IRUFKDQJHLQWKHDJULFXOWXUDO VHFWRUWKDWFUHDWHVGLI
VSHFLDODQGGLIIHUHQWLDWHGWUHDWPHQW6'7SURYLVLRQV ÀFXOWLHVIRUIXUWKHUWUDGHOLEHUDOL]DWLRQLWLVLWVGLYHUVLW\
6LQJOHVWDSOHFURSV´VSHFLDOSURGXFWVµIRUVSHFLÀF OLYHOLKRRGDQGLQKHUHQWQRQLQGXVWU\DQGDVVXUDQFHRI
FRXQWULHVFRXOGWKHUHIRUHDWOHDVWIRUFHUWDLQSHULRGV VHOIVXIÀFLHQF\ORJLFWKDWFDXVHVWKLVUHVLVWHQFH
EHH[FOXGHGIURPWKHOLEHUDOL]DWLRQSURFHVV7KHQH
JRWLDWLRQV RQ WKHVH LVVXHV KDYH EHFRPH YHU\ FRP :KLOH WKH SUHDPEOH RI WKH $JUHHPHQW RQ $JULFXOWXUH
SOH[ SHUKDSV WRR FRPSOH[ WR FRQFOXGH WKH URXQG $R$ UHFRJQL]HV IRRG VHFXULW\ DV D OHJLWLPDWH FRQ
%HVLGHV 6'7 DV RI WRGD\ LQ WKH :72 UXOHERRN ZLWK FHUQWKHDFWXDOSURYLVLRQVRIWKHDJUHHPHQWWUHDWIRRG
LWV IRFXV RQ VLQJOH FURSV GRHV QRW V\VWHPLFDOO\ WDNH VHFXULW\ DV D GHYLDWLRQ IURP WKH SULPDU\ REMHFWLYH RI
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
DJULFXOWXUDOWUDGHOLEHUDOL]DWLRQ'H6FKXWWHUF
/7KHUHTXLUHGSDUDGLJPVKLIW²EH\RQG
WKHGLFKRWRP\RIOLEHUDOL]DWLRQ
DQGSURWHFWLRQ
:HQHHGWRUHVLVWWKHWHPSWDWLRQRIUHVRUWLQJWRVKRUW
FXWVWKDWFXUHV\PSWRPVUDWKHUWKDQGHDOLQJZLWKURRW
FHQWUDWHGRQFRXQWULHVQRWORFDOUHJLRQVDQGVLQJOH
FDXVHV
FURSV RU SURGXFWV PRUHRYHU LQ D OLPLWHG WLPHIUDPH
ZLOOQRWEHVXIÀFLHQWWRPHHWORQJWHUPIRRGVHFXULW\ 5HFHQWUHSRUWVOLNHWKH(FRIDLU7UDGH'LDORJXH
HQYLURQPHQWDO DQG OLYHOLKRRG QHHGV DV WKH\ DUH QRW ,$$67'6&$5)$2*($SRLQW
WDUJHWHG LQ WKH HQG WR VWUHQJWKHQ UXUDO HFRQRPLHV DWWKHLPSRUWDQFHRIDUHQHZHGUDWKHUWKDQRQO\UH
VHHDVZHOO+lEHUOL IRUPHG WUDGH DUFKLWHFWXUH WR SOD\ LWV SURSHU UROH LQ

%R[6RLOIHUWLOLW\DQGWKHLPSRUWDQFHRIKXPXV

%HLWFOLPDWHFKDQJHZLWKPRUHH[WUHPHZHDWKHUSDWWHUQVRYHUXVDJHGHJUDGDWLRQRIODQGORVVRIELRGLYHUVLW\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&&FVHFWLRQVRLORUJDQLFPDWWHUVHTXHVWUDWLRQDFFRXQWVIRUDOPRVWSHUFHQWRIWKHWHFKQLFDO
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
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
D7KHSUREOHPVZLWKWKHFXUUHQWLQWHUQDWLRQDOUXOHV
LQ WHUPV RI GLIIHULQJ UHJXODWLRQV PDNLQJ WUDGH H[
UHODWLQJWRDJULFXOWXUDOWUDGH
FKDQJHEHWZHHQUHJLRQVZKLFKZLOOVWLOOEHQHFHVVDU\
7KHSUREOHPVZLWKWKHFXUUHQWLQWHUQDWLRQDOWUDGHUXOHV DQG EHQHÀFLDO WRR FRPSOLFDWHG DQG DW ODVW FRVWO\
UHODWLQJ WR DJULFXOWXUH DUH WKUHHIROG L WKH\ VWLOO DO 7KHUHIRUHDEDODQFHGDSSURDFKEHWZHHQOLEHUDOL]DWLRQ
ORZXQIDLUFRQGLWLRQVKLJKVXEVLGLHVSDUWO\VKLIWHGWR DQGIRRGVRYHUHLJQW\LVUHTXLUHG
WKH JUHHQ ER[ LQ WKH 1RUWK LL D WRR HDUO\ SXVK IRU
/LEHUDOL]DWLRQ RU IRRG VRYHUHLJQW\ DJDLQVW WKLV EDFN
RSHQ PDUNHWV LQ WKH 6RXWK DOWKRXJK WKH 1RUWK NHSW
JURXQG LV QRW DQ HLWKHURU TXHVWLRQ EXW RQH RI EHW
LWVERUGHUVFORVHGWLOOWKHVHFWRUZDVVXIÀFLHQWO\FRP
WHU V\QHUJL]LQJ WKH EHQHÀWV RI ERWK DSSURDFKHV :H
SHWLWLYHDQGLLLIROORZLQJWKHDEVROXWHDQGFRPSDUD VHH WKLV V\QHUJ\ LQ D JUHDWHU HPSKDVLV RQ UHJLRQDO
WLYHDGYDQWDJHDSSURDFKIRULQGXVWULDOVHFWRUVIRVWHU
VSHFLDOL]DWLRQHFRQRPLHVRIVFDOHDQGFORVHO\UHODWHG
LQGXVWULDOL]DWLRQRIDJULFXOWXUHZLWKDOOLWVQHJDWLYHLP
SDFWV
:KHUHDV:72GLVFLSOLQHVIRUWKHÀUVWWZRLVVXHVXQ
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\
IDLU FRQGLWLRQV DUH FXUUHQWO\ MXVW WRR ZHDN DQG FDQ DW KRXVHKROG OHYHO SURGXFWLRQ VKRXOG EH PDUNHW
EH ¶ÁH[LELOL]HG· RU E\SDVVHG E\ UHJLRQDO IUHH WUDGH RULHQWHG E\ OHDYLQJ QRW PDUNHWDEOH JRRGV IRU VHOI
DJUHHPHQWVDQGELODWHUDOVWKHWKLUGLVVXH²WKHLQKHU FRQVXPSWLRQ6XFKDSSURDFK²ORFDOO\DGDSWHGPR
HQW WUHQG WR VSHFLDOL]DWLRQ DQG LQGXVWULDOL]DWLRQ ² LV VDLFSURGXFWLRQSDWWHUQVWKDWLQWHJUDWHJOREDOPDUNHW
PRUH IXQGDPHQWDO 7KH LQFHQWLYHV RQ VSHFLDOL]DWLRQ FRQFHUQV²ZDVWHUPHGE\WKH0LOOHQQLXP(FRV\VWHP
LQGXVWULDOL]DWLRQDQGHFRQRPLHVRIVFDOHUXQWKHULVNRI $VVHVVPHQW 0($ ´JORFDOL]DWLRQ´ ZKLFK ZH WKLQN
MHRSDUGL]LQJORQJWHUPRYHUDOODJULFXOWXUDOSURGXFWLYLW\ VKRXOGEHJLYHQPRUHDWWHQWLRQWRGD\
JURZWKDQGWKHUHVLOLHQFHRIDJULFXOWXUDOSURGXFWLRQ %DVHGRQWKHDERYHZHZRXOGVHHWKHIROORZLQJJXLG
LQJSULQFLSOHVIRUIXWXUHDJULFXOWXUDOWUDGH
E$EDVLFSUHFRQGLWLRQ%DODQFHEHWZHHQWKH
SDUDGLJPVRIIRRGVRYHUHLJQW\DQGOLEHUDOL]DWLRQ F*XLGLQJSULQFLSOHVIRUDJULFXOWXUDOWUDGH
,W EHFRPHV PRUH DQG PRUH YLVLEOH WKDW SURVSHULW\ L 7KHSUHHPLQHQFHRIRYHUDOOODQGXVH
FRQYHQWLRQDOO\PHDVXUHGLQ*'3LVQRWWKHVDPHDV
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
 *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
VXUSOXVSURGXFHIRUKRPHFRQVXPSWLRQDQGWUDGHLVDPRUHVXVWDLQDEOHPRGHRISURGXFWLRQIURPDUHSURGXFWLYHDQJOH
7KHWHUPV¶UHJLRQDO·RU¶ORFDO·GHQRWHDQRYHUVHHDEOHJHRJUDSKLFDOUHJLRQOLNHDGLVWULFWFRXQW\RUSURYLQFHWKDWPLJKW
H[WHQGDFURVVERUGHUV,QWKHIROORZLQJZHXVHWKHWHUP´UHJLRQDOORFDOµWRFODULI\WKDWZHGRQ·WPHDQWKHYLOODJHOHYHOEXW
UDWKHUDFRXQW\RUSURYLQFLDOOHYHO
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

LL 7KHSUHHPLQHQFHRIGLYHUVLW\ LQFUHDVLQJO\WHQGWRVRXUFHORFDOO\3ROLWLFVVKRXOG
 $VRXWOLQHGDERYHGLYHUVLW\LVDNH\FRPSRQHQWRI IROORZVXLWLQDGMXVWLQJFRQFHUQHGSROLFLHV
DJULFXOWXUH7KHVSHFLDOL]DWLRQSRWHQWLDOLVWKHUHIRUH LY7KHSUHHPLQHQFHRQVSHFLDOWLHV
OLPLWHG'XHWRGLYHUVLW\UHTXLUHPHQWVUHJLRQVFDQ  ([SRUW LQ UHODWLRQ WR IRRG VKRXOG EH IRFXVHG RQ
QRWFRQFHQWUDWHVROHO\RQRQHFURS$PLQLPXPRI VSHFLDOWLHV ZKHUH WKH YDOXH DGGHG LV KLJK DQG
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
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
SDWWHUQVWRZDUGVORFDOGHPDQG
 7UDGH LV D GULYHU IRU SURVSHULW\ 'LVUHJDUGLQJ
LLL7KHSUHHPLQHQFHRIUHJLRQDOORFDOIRRGSURGXFWLRQ SHUYHUVHVXEVLGLHVWUDGHGULYHVFRVWVGRZQZKLFK
 5HJLRQDOORFDO IRRG SURGXFWLRQ DQG FRQVXPSWLRQ PDNHVIRRGPRUHDIIRUGDEOHDQGDFFHVVLEOH7UDGH
LVEHLQJLGHQWLÀHGDVDQHZPHJDWUHQG5HJLRQDO DOVR FRQWULEXWHV WR FXOWXUDO GLYHUVLW\ RI IRRG $W
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
WKH VDPH WLPH K\SHUOLEHUDOL]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
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
G7KHQHZWUDGHIRUPXOD
$V D JXLGLQJ SULQFLSOH IRU IXWXUH WUDGH LQ DJULFXOWXUDO
JRRGV ZH VXJJHVW WKH IRUPXOD ´5HJLRQDO LV ÀUVW
FKRLFHµ RU WR UHDG LW GLIIHUHQWO\ ´DV PXFK UHJLRQDO
L]HGORFDOL]HGIRRGSURGXFWLRQDVSRVVLEOHDVPXFK
WUDGHGIRRGDVQHFHVVDU\µ
)RU WKH WLPH EHLQJ DV H[WHUQDOLWLHV DUH PDLQO\ QRW
LQWHUQDOL]HG FDUERQ WD[HV DUH WKH UDUH H[FHSWLRQ
UDWKHU WKDQ WKH UXOH DQG FDUERQRIIVHW PDUNHWV DUH
ODUJHO\G\VIXQFWLRQDO²DOORIZKLFKIDFWRUVWKDWZRXOG
SULRULWL]H UHJLRQDOORFDO SURGXFWLRQ WKURXJK ¶ORJLFDO·
PDUNHW PHFKDQLVPV ² UHJLRQDOORFDO SUHIHUHQFHV
OLNH ´EX\ ORFDOµ VFKHPHV VKRXOG EH UHVSHFWHG E\
WUDGHUXOHV
6\VWHPDWLF FRQFHQWUDWLRQ RQ JOREDOL]HG IRRG VXSSO\
GLVWULEXWLRQWRJOREDOWUDGH
 0RUHRYHU IRRG VDIHW\ LVVXHV SOD\ DQ LPSRUWDQW
SDUWLQWKLVUHJDUG7KHUHFHQWKRUVHPHDWVFDQGDO
LQ(XURSHKDVPDGHYLVLEOHKRZYXOQHUDEOHODUJH
FDVFDGHGYDOXHFKDLQVLQIRRGSURGXFWLRQDUH1RW
WKHOHDVWDJDLQVWWKLVEDFNJURXQGIRRGLQGXVWULHV
LV SDUWO\ XQGHUPLQLQJ WKH HQGHDYRXU RI HVWDEOLVKLQJ
UHJLRQDOO\ORFDOO\ DSSURSULDWH DQG WUXO\ VXVWDLQDEOH
SURGXFWLRQDQGFRQVXPSWLRQSDWWHUQVLIWKHUHLVWRR
PXFKH[SRUWRULHQWDWLRQDQGWKHUHIRUHVSHFLDOL]DWLRQ
WKHUHDUHWRRPDQ\LPSRUWVXUJHVWRRPXFKIRFXVRQ
MXVWHFRQRPLFHIÀFLHQF\DQGWRROLWWOHKHHGSDLGWRWKH
 75$'($1'(19,5210(175(9,(:

PXOWLIXQFWLRQDOLW\UHSURGXFWLYHDQGUHVLOLHQFHFDSDF )LUVW WR EH HIIHFWLYH VXFK DSSURDFK UHTXLUHV D

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
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
VWUXFWXUHLQWKLVUHJDUG.DUDSLQDUDQG+lEHUOL LQWHUHVW RI FRPPHUFLDO SUHVVXUH JURXSV WKDW SURÀW
DGYRFDWH D ´UDLQERZ UHYROXWLRQµ LQVWHDG RI ´MXVWµ D
IURPWKHVWDWXVTXRZKRKDYHFRQWULEXWHGWRVKDSLQJ
JUHHQ UHYROXWLRQ LQ WKLV UHVSHFW ZKHUH WDLORU PDGH
DSSURDFKHVWRHDFKVSHFLÀFORFDOLW\DUHWDFNOHGLQD
EURDGLQFOXVLYHDSSURDFK
$JDLQVWWKHEDFNJURXQGRIWKHVHSULQFLSOHVZKDWFDQ
EHDFKLHYHGZLWKWKHFXUUHQWWUDGHUXOHWRROER["
07KHFXUUHQWWUDGHWRROER[LQUHJDUGWR
UHJLRQDOORFDOIRRGVXSSO\
DQGEXLOGLQJXSFXUUHQWQHROLEHUDOPDUNHWVWUXFWXUHV
PD\VWDQGDJDLQVWWKHUHTXLUHGOHYHORIFRRSHUDWLRQ
DQG WROHUDQFH 7KLUG LQ SDUWLFXODU GHYHORSLQJ FRXQ
WULHVHUURQWKHVLGHRIFDXWLRQQRWWRYLRODWH:72FRP
PLWPHQWV7KHLUJRYHUQPHQWVDUHWKXVQRWYHU\OLNHO\
WRODXQFKSROLFLHVWKDWIXOO\H[SORLWWKHÁH[LELOLWLHVLQWKH
:72DJUHHPHQWVZLWKRXWVWURQJDVVXUDQFHDQGFRQ
ÀGHQFH WKDW WKHVH LQLWLDWLYHV PLJKW QRW QHJDWLYHO\ DI
IHFWWKLUGSDUWLHV·FRPPHUFLDOLQWHUHVWVDQGOHDYHWKHP
6RPH RI WKH DSSOLHG :72 UXOHV LQFOXGH D UDQJH RI
SROLF\PHDVXUHVWKDWDUHRIVRPHVXSSRUWWRUHJLRQDO
ORFDOIRRGSURGXFWLRQ
‡ 7KHSURYLVLRQVRQWKH´JUHHQER[µLQ$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
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
PRVWGHYHORSLQJFRXQWULHV IRRGDSSURDFKHV
‡ UHJLRQDOFRQWHQWUHTXLUHPHQWVDQG
‡ JHRJUDSKLFDO LQGLFDWLRQV WR EH H[WHQGHG WR IRRG ,QWKHOLJKWRIWKHJURZLQJFRQFHUQRIFLWL]HQVRQZKHUH
LWHPV
%XWWKHVHUXOHVKDYHDQRYHUDOOOLPLWHGHIIHFWRQIRVWHU
LQJUHJLRQDOORFDOIRRGSURGXFWLRQDQGFRQVXPSWLRQ
7KHDFKLHYHPHQWRIIRRGVHFXULW\LVEDVLFDOO\WUHDWHG
E\WKHH[LVWLQJ:72UXOHVDVJURXQGVIRUH[FHSWLRQIRU
D YHU\ OLPLWHG UDQJH RI WUDGH OLEHUDOL]DWLRQ PHDVXUHV
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
'H6FKXWWHUF RQ WKHLU IRRG DV LW DOUHDG\ KDSSHQV WRGD\ ZKHQ UH
JLRQVFDOOWKHPVHOYHV´*02IUHHUHJLRQ´IRUH[DPSOH
$V SRLQWHG RXW LQ WKH OHDG DUWLFOH RI WKLV FKDSWHU E\
RWKHUV PLJKW RSW IRU *02V 7KH %UD]LOLDQ FLW\ %HOR
/LP/L&KLQJDQG0DUWLQ.KRUWKHUHLVVWLOOTXLWHVRPH
+RUL]RQWHLVDJRRGH[DPSOHRQKRZDUHJLRQDOOR
URRPIRULPSURYHPHQWLQIXOO\H[SORLWLQJH[LVWLQJÁH[
FDO VWUXFWXUHG SDWWHUQ KDV RYHUFRPH WKH IRRG VHFX
LELOLWLHVRQ6'7660DQG63DVZHOODVWKHJUHHQER[
ULW\SUREOHPLQDYHU\VKRUWWLPH%HOR+RUL]RQWHWKHQ
WR DFKLHYH D EHWWHU OHYHO RI IRRG VHFXULW\ 1R GRXEW
EHFDPHWKHEOXHSULQWIRUWKH´IRPH]HURµSURJUDPPH
WKLVWUDFNVKRXOGEHIROORZHG<HWZLWKWKHEHQHÀWRI
ZKLFKQHDUO\HUDGLFDWHGKXQJHULQ%UD]LO
KLQGVLJKWLWVHHPVWREHIDUPRUHFRPSOH[IRULQWHU
HVWHGJRYHUQPHQWVWRWXUQFRQFHSWLQWRDFWLRQLQWKLV 7UDGH UXOHV ZRXOG KDYH WR WROHUDWH DQG SXEOLF DQG
UHJDUG SULYDWHSURFXUHPHQWZRXOGKDYHWRDFFHSWVXFKV\V
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

WHPVRISUHIHUHQFHVIRUUHJLRQDOORFDOSURGXFH:KHUH
SHRSOHGHFLGHFRQVFLRXVO\DERXWWKHLUIRRGDQGQXWUL
WLRQWKLVVKRXOGQRWEHRYHUUXOHGE\DQ\SDUWLFXODUO\
PHUFDQWLOLVWGRFWULQH
22XWORRN
7KHUHDUHPDQ\UHDVRQVZK\WKHVLWXDWLRQRIIRRGVH
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
FXULW\DQGWKHHQYLURQPHQWDOFULVLVRIDJULFXOWXUHLVXQ WR L HQKDQFH VXVWDLQDEOH SURGXFWLYLW\ RI WKH ZKROH
VDWLVIDFWRU\WRGD\,IZHVHULRXVO\ZDQWWRDFKLHYHIRRG SURGXFWLRQ V\VWHP QRW RQO\ LQGLYLGXDO SURGXFWV LL
VHFXULW\SUDFWLFHHTXDOLW\DQGSURWHFWWKHSODQHWKDY DVVXUHIRRGVHFXULW\DQGUXUDOOLYHOLKRRGVLLLUHÁHFW
LQJDOUHDG\FURVVHGVRPHSODQHWDU\ERXQGDULHVWKH DQGFDSLWDOL]HRQWKHGLYHUVLW\RIDJULFXOWXUHWRDVVXUH
FXUUHQWV\VWHPQHHGVDGMXVWPHQW)RUWKHIXWXUHZH LWV UHSURGXFWLYH FDSDFLW\ LY VWUHQJWKHQ IXQFWLRQDO
KDYHWRWKLQNRXWRIWKHER[7RUHVSHFWWKHSULQFLSDO ELRGLYHUVLW\ DQG Y EXLOG XS UHVLOLHQFH WR UHVRXUFH
UHJLRQDOORFDOQDWXUHRIDJULFXOWXUHDQGDGMXVWUHODWHG FRQVWUDLQWV DQG FOLPDWH FKDQJH DV ZHOO DV LPSURYH
SROLFLHV FRXOG EH RQH RI WKH ÀUVW VWHSV :KDW LV UH 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 EHWZHHQ 0H[LFR DQG RWKHU WUDGLQJ SDUWQHUV ,W DOVR
FXOWXUH IURP WKH IRXQGLQJ RI WKH :RUOG 7UDGH 2UJD LQÁXHQFHG WKH QDWXUH RI WUDGH GHDOV SXUVXHG E\ WKH
QL]DWLRQ:72WRWKHUHFHQWULVHRIDJULFXOWXUDOFRP (8 6KRUWO\ DIWHU WKH SDVVDJH RI 1$)7$ WKH :72
PRGLW\SULFHVKDVIRFXVHGRQWKHGDPDJLQJHIIHFWV FDPHLQWREHLQJLQDQGYDULRXV:72DJUHHPHQWV
RI DJULFXOWXUDO GXPSLQJ LH H[SRUWLQJ DW EHORZ FRVW SDUWLFXODUO\ WKH $JUHHPHQW RQ $JULFXOWXUH LQGXFHG
RISURGXFWLRQE\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
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
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
RILWVULFH*XHUHxD
'XULQJWKH:72·VÀUVWGHFDGHRIH[LVWHQFHGXPSLQJ
E\ PXOWLQDWLRQDO DJULEXVLQHVV FRPSDQLHV ZDV ERWK
ZLGHVSUHDG DQG KLJKO\ GHVWUXFWLYH 7KH ,QVWLWXWH IRU
$/LEHUDOL]LQJWUDGHDQGLQFUHDVLQJ
IRRGLQVHFXULW\
7KH OLEHUDOL]DWLRQ RI WUDGH UXOHV JUHDWO\ DFFHOHUDWHG
LQZLWKWKHSDVVDJHRIWKH1RUWK$PHULFDQ)UHH
$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
7UDGH $JUHHPHQW 1$)7$ ZKLFK VHW WKH VWDQGDUG IURP  SHU FHQW IRU FRUQ WR PRUH WKDQ  SHU FHQW
IRU VXEVHTXHQW ELODWHUDO DQG UHJLRQDO WUDGH IRUFRWWRQ$VXEVHTXHQWVWXG\E\:LVHDOVR
DJUHHPHQWVLQYROYLQJWKH8QLWHG6WDWHVVXFKDVWKH IRXQG WKDW GXPSLQJ RI 8QLWHG 6WDWHV FRPPRGLW\
&HQWUDO $PHULFD'RPLQLFDQ 5HSXEOLF8QLWHG 6WDWHV FURSVDQGPHDWRQ0H[LFRZDVFRPPRQSODFHGXULQJ
)UHH7UDGH$JUHHPHQW&$)7$DQGWKRVHQHJRWLDWHG WKHSHULRG²
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

:KLOHWUDGHOLEHUDOL]DWLRQRUIUHHWUDGHZDVWRXWHGDV KLJKHU SURÀWV IRU IDUPHUV &RVWV RI LQSXWV LQFOXGLQJ

DZD\WRLPSURYHIRRGVHFXULW\LWKDVXQTXHVWLRQDEO\ VHHGVDQGIHUWLOL]HUKDYHDOVRGUDPDWLFDOO\LQFUHDVHG
IDLOHG 0XUSK\  )ORRGV RI GXPSHG LPSRUWV UHGXFLQJ WKH SRWHQWLDO SURÀWV RI VPDOO DQG PHGLXP
HVSHFLDOO\ GXULQJ WKH KDUYHVW FDQ EH GHYDVWDWLQJ VL]HGIDUPHUVLQWKH8QLWHG6WDWHV:LVH86'$
IRU GHYHORSLQJFRXQWU\ IDUPHUV DQG WKH\ LQFUHDVH
GHSHQGHQFH RQ IRRG LPSRUWV $GGLWLRQDOO\ WUDGH
UXOHV KDYH IDFLOLWDWHG WKH IXUWKHU FRQFHQWUDWLRQ RI
JOREDO IRRG VXSSO\ LQ ODUJH SULYDWH ÀUPV WKHUHE\
GLVHPSRZHULQJQRWRQO\IDUPHUVDQGFRQVXPHUVEXW
HYHQJRYHUQPHQWV'HSHQGHQFHRQWKLVLQFUHDVLQJO\
FRQFHQWUDWHG JOREDO IRRG VXSSO\ FKDLQ GRPLQDWHG
E\ SULYDWH SOD\HUV LQFUHDVHV LPSRUWLQJ FRXQWULHV·
7KHFRVWSULFHVTXHH]HDFFHOHUDWHGWKHWUHQG
LQ 8QLWHG 6WDWHV DJULFXOWXUH DZD\ IURP VPDOO DQG
PHGLXPVL]HGIDUPVWRYHU\ODUJHIDUPVWKDWZHUHDEOH
WR VSUHDG FRVWV RYHU ODUJHU ODQG DUHDV 7KHVH ODUJH
IDUPVZHUHDOVRWKHEHQHÀFLDULHVRIDERXWSHUFHQW
RIFRPPRGLW\SURJUDPPHVXEVLGLHV$VDUHVXOWRYHU
WKHSDVW\HDUVWKHQXPEHURIVPDOOFRPPHUFLDOO\
YLDEOH IDUPV ZLWK VDOHV RI EHWZHHQ  DQG
YXOQHUDELOLW\WRVKRFNVZKHWKHUIURPH[WUHPHZHDWKHU KDVIDOOHQE\SHUFHQWDQGWKDWRIYHU\
HYHQWVRUH[FHVVLYHÀQDQFLDOVSHFXODWLRQLQDJULFXOWXUDO ODUJH IDUPV ZLWK VDOHV RI PRUH WKDQ  PLOOLRQ KDV
FRPPRGLW\ PDUNHWV 0RUHRYHU WKH VKLIW WRZDUGV D LQFUHDVHG E\  SHU FHQW +RSSH 0DF'RQDOG DQG
JUHDWHU UROH IRU WKH SULYDWH VHFWRU LQ PDQDJLQJ WKH .RUE$OVRGXULQJWKLVSHULRGWKHSHUFHQWDJH
JOREDO IRRG VXSSO\ KDV FRLQFLGHG ZLWK ULVLQJ JOREDO RI 8QLWHG 6WDWHV DJULFXOWXUDO SURGXFWLRQ FRQWUROOHG
UDWHVRIKXQJHU²IURPPLOOLRQZRUOGZLGHLQ² E\WKHWRSIRXUÀUPVLQDJLYHQVHFWRUKDVLQFUHDVHG
WRPLOOLRQLQ)$2 VXEVWDQWLDOO\ )RU H[DPSOH LQ EHHI SDFNLQJ LW URVH
IURP  SHU FHQW LQ  WR  SHU FHQW LQ 
%8QLWHG6WDWHVDJULFXOWXUDO +HQGULFNVRQDQG+HIIHUQDQ
SROLF\)UHHGRPWRIDLO (8 VXEVLGLHV WR DJULFXOWXUH XQGHU WKH &RPPRQ
$JULFXOWXUDO 3ROLF\ &$3 DUH QRZ ODUJHO\ GHFRXSOHG
:RUNLQJ LQ WDQGHP ZLWK HIIRUWV WR IXUWKHU OLEHUDOL]H
XQFRQQHFWHG WR SURGXFWLRQ RU SULFHV PDNLQJ WKHP
WUDGH8QLWHG6WDWHVIDUPSROLF\KDVUHWUHDWHGIURPLWV
´PLQLPDOO\ WUDGHGLVWRUWLQJµ WR WKH :72 :KLOH WKH
WUDGLWLRQDOUROHLQPDQDJLQJDJULFXOWXUDOPDUNHWV2YHU
WUXH H[WHQW RI WKH GHFRXSOLQJ GHSHQGV RQ KRZ WKH
WKHSDVWKDOIFHQWXU\WKHFRXQWU\·VDJULFXOWXUDOSROLF\
VXEVLGLHVDUHPHDVXUHGWRWDO(8VXEVLGLHVKDYHQRW
KDV VKLIWHG IURP D V\VWHP RI VXSSO\ PDQDJHPHQW
YDULHG DV GUDPDWLFDOO\ DV WKRVH RI WKH 8QLWHG 6WDWHV
WKDW KHOSHG PRGHUDWH SULFHV IRU ERWK IDUPHUV DQG
RYHUWKHSDVWIHZ\HDUV%HUWKHORW:KLOHWKH
FRQVXPHUV WR D V\VWHP PRUH GHSHQGHQW RQ VR
&$3GLIIHUVVXEVWDQWLYHO\IURPWKH8QLWHG6WDWHV)DUP
FDOOHG IUHHPDUNHW IRUFHV 7KLV WUDQVLWLRQ FXOPLQDWHG
%LOO WKH XQGHUO\LQJ FKDOOHQJH LV WKH VDPH ² KRZ WR
LQ WKH  )DUP %LOO NQRZQ DV )UHHGRP WR )DUP
UHGLUHFWVXSSRUWDZD\IURPODUJHVFDOHSURGXFWLRQIRU
ZKLFKUHPRYHGWKHODVWYHVWLJHVRIVXSSO\DQGSULFH
H[SRUWWRZDUGVSURJUDPPHVWKDWFDQSURYLGHJUHDWHU
PDQDJHPHQW H[FHSW IRU VXJDU RVWHQVLEO\ WR DOORZ
IRRG VHFXULW\ UXUDO OLYHOLKRRGV DQG D WUDQVLWLRQ WR
IDUPHUV WR UHVSRQG WR PDUNHW SULFHV DQG H[SRUW WR
VXVWDLQDEOH DJULFXOWXUH 7KH FXUUHQW FRPSOH[ V\VWHP
QHZ PDUNHWV RYHUVHDV %XW DV IDUPHUV H[SDQGHG
RI VXSSRUW HQDEOHV DJULEXVLQHVVHV WR H[SORLW WKH
SURGXFWLRQ ZLWK QR VXSSO\ PDQDJHPHQW DJULFXOWXUDO
V\VWHPWRWKHGHWULPHQWRIIDUPHUVLQERWKGHYHORSLQJ
FRPPRGLW\SULFHVFROODSVHG7KHIROORZLQJGHFDGHRI
DQGGHYHORSHGFRXQWULHV
ORZSULFHV²RIWHQEHORZWKHFRVWRISURGXFWLRQ²QRW
RQO\OHGWRLQFUHDVHGGXPSLQJRQH[SRUWPDUNHWVEXW
DOVRVSXUUHGWKH8QLWHG6WDWHV&RQJUHVVWRDWWHPSWWR &)LQDQFLDOPDUNHWGHUHJXODWLRQ
FRPSHQVDWHIRULWVSROLF\IDLOXUHE\DSSURYLQJDVHULHV
+RZÀQDQFLDOPDUNHWVDQGFRPPRGLW\IXWXUHVPDUNHWV
RI HPHUJHQF\ VXEVLG\ SD\PHQWV DQG XOWLPDWHO\
DUH UHJXODWHG LV DQRWKHU IDFWRU WKDW VWURQJO\ DIIHFWV
PDNLQJWKRVHSD\PHQWVSHUPDQHQWLQWKH)DUP
DJULFXOWXUDOSURGXFWLRQ$VHULHVRIODZVSDVVHGE\WKH
%LOO
8QLWHG6WDWHV&RQJUHVVEHJLQQLQJLQWKHHDUO\V
'XULQJ WKLV GHFDGH RI ORZ SULFHV DQG LQFUHDVHG DQG FXOPLQDWLQJ LQ  VXFFHHGHG LQ RSHQLQJ XS
GXPSLQJ 8QLWHG 6WDWHV IDUP VXEVLG\ SD\PHQWV FRPPRGLW\IXWXUHVPDUNHWVWRDÁRRGRIQHZVSHFXOD
VRDUHGSHDNLQJLQDQGDQGDJDLQLQ WLYHPRQH\,Q+DQN3DXOVRQ7UHDVXU\6HFUHWDU\
%XWVLQFHSD\PHQWVWRGRPHVWLFIDUPHUVKDYH LQWKH*HRUJH:%XVK$GPLQLVWUDWLRQDQGWKHQFKLHI
VWHDGLO\ GURSSHG DV FRPPRGLW\ SULFHV KDYH ULVHQ H[HFXWLYH RIÀFHU RI *ROGPDQ 6DFKV VXFFHVVIXOO\
+LJKHUFRPPRGLW\SULFHVKDYHQRWQHFHVVDULO\PHDQW OREELHGIRUDQH[HPSWLRQIURPWKHUXOHWKDWLQYHVWPHQW
 75$'($1'(19,5210(175(9,(:

EDQNV PDLQWDLQ ODUJH HQRXJK FXUUHQF\ UHVHUYHV WR ',QYHVWPHQWVLQHFRORJLFDODJULFXOWXUH

FRYHU WKHLU XQVXFFHVVIXO WUDGHV 7KH UXOH H[HPSWLRQ XQGHUPLQHGE\YRODWLOLW\
IUHHGELOOLRQVRIGROODUVWKDW*ROGPDQ6DFKVDQGIRXU
RWKHUEDQNVXVHGIRUKLJKULVNLQYHVWPHQWVLQFOXGLQJ ([WUHPHO\ ORZ DJULFXOWXUDO FRPPRGLW\ SULFHV RYHU
FRPPRGLW\LQGH[IXQGEHWV,$73&RPPRGLW\ WKH SDVW WZR GHFDGHV IROORZHG E\ UHFHQW VSLNHV LQ
LQGH[ IXQGV ZKLFK GHDO LQ DJULFXOWXUH HQHUJ\ DQG SULFHV GLVFRXUDJH ORQJWHUP LQYHVWPHQWV LQ PRUH
VXVWDLQDEOH HFRORJLFDO DJULFXOWXUH WKDW ZLOO EHQHÀW
PHWDOV H[SORLWHG WKHVH QHZ ORRSKROHV DQG ÁRRGHG
WKH HQYLURQPHQW ZDWHU TXDOLW\ DQG TXDQWLW\ DQG WKH
FRPPRGLW\ PDUNHWV ZLWK PRQH\ EHWWLQJ WKHUHE\ WR
FOLPDWH:KHQSULFHVDUHORZIDUPHUVVWUXJJOHWRPDNH
GULYHXSSULFHVUHJDUGOHVVRIWKHPDUNHWIXQGDPHQWDOV
D OLYLQJ DQG IRFXV DOPRVW H[FOXVLYHO\ RQ LQFUHDVLQJ
RIVXSSO\DQGGHPDQG)RUH[DPSOHLQ0DUFK
SURGXFWLRQWRPDNHXSIRUWKHORZSULFHV:KHQSULFHV
WKH XQUHJXODWHG ELJJHVW SOD\HUV 0RUJDQ 6WDQOH\
VKRRW XS RU DUH SURMHFWHG WR LQFUHDVH JRYHUQPHQWV
DQG *ROGPDQ 6DFKV RZQHG  ELOOLRQ EXVKHOV RI
DQGDFDGHPLFVRIWHQDGYLVHIDUPHUVWRGHYRWHHYHQ
&KLFDJR%RDUGRI7UDGHFRUQIXWXUHVFRQWUDFWVZKLOH
PRUH ODQG WR SURGXFWLRQ RIWHQ LQ HQYLURQPHQWDOO\
DOOFRUQSURGXFHUVDQGSURFHVVRUVKDGWKHPHDQVWR
VHQVLWLYH DUHDV 7KLV WHQVLRQ EHWZHHQ WKH XVXDOO\
KHGJH RQO\  PLOOLRQ EXVKHOV DJDLQVW SULFH VZLQJV
IXWLOHHIIRUWVWRUHVSRQGWRSULFHVDQGLQYHVWPHQWVIRU
7KHVH XQUHJXODWHG IXQGV FRQWUROOHG  SHU FHQW RI
ORQJWHUP HQYLURQPHQWDO VXVWDLQDELOLW\ LV HYLGHQW LQ
DOO8QLWHG6WDWHVDJULFXOWXUDOIXWXUHVFRQWUDFWVGXULQJ
UHFHQW FKDOOHQJHV IDFLQJ 8QLWHG 6WDWHV FRQVHUYDWLRQ
WKH SHULRG ² 6XSSDQ  0RVW RI WKLV
SURJUDPPHV VSHFLÀFDOO\ WKH &RQVHUYDWLRQ 5HVHUYH
H[FHVVLYHVSHFXODWLYHDFWLYLW\WDNHVSODFHLQRYHUWKH
3URJUDP &53 DQG WKH &RQVHUYDWLRQ 6WHZDUGVKLS
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
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
RI0OOHULQWKLVFKDSWHU ULVLQJFRPPRGLW\SULFHV)URP2FWREHUWR-XO\
  PLOOLRQ DFUHV RI &53 ODQG ZHQW EDFN LQWR
7KH UROH RI H[FHVVLYH VSHFXODWLRQ RQ LQWHUQDWLRQDO IDUPSURGXFWLRQ&RZDQ
DJULFXOWXUH PDUNHWV KDV EHHQ ZHOO GRFXPHQWHG
E\ D KRVW RI LQWHUQDWLRQDO DJHQFLHV DQG UHVHDUFK 7KH &RQVHUYDWLRQ 6WHZDUGVKLS 3URJUDP LV WKH
LQVWLWXWLRQV LQFOXGLQJ PRVW UHFHQWO\ 81&7$' FRXQWU\·V ODUJHVW FRQVHUYDWLRQ SURJUDPPH FRYHULQJ
 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 $JULFXOWXUH KDV QRW EHHQ
VSDUHG E\ WKH JOREDO ÀQDQFLDO FROODSVH DV OHVV DQG
PLOOLRQDFUHVQDWLRQZLGHDQGLWLVDFFHVVLEOHWRDOO
IDUPHUVUHJDUGOHVVRIVL]HRUW\SHRIFURSSURGXFWLRQ
,W UHZDUGV IDUPHUV EDVHG RQ WKHLU FRQVHUYDWLRQ
SUDFWLFHV WKDW SURWHFW WKH VRLO ZDWHU DLU DQG QDWXUDO
UHVRXUFHV ,Q SDVW )DUP %LOOV WKH &63 ZDV ZRHIXOO\
XQGHUIXQGHG 7KH  )DUP %LOO WRRN D PDMRU VWHS
IRUZDUGE\DOORZLQJDQHVWLPDWHGPLOOLRQDFUHVWR
EH HOLJLEOH IRU &63·V PXOWL\HDU FRQWUDFWV HDFK \HDU
'HVSLWH WKLV IXQGLQJ LQFUHDVH RQO\  SHU FHQW RI
HOLJLEOHIDUPHUVFRXOGSDUWLFLSDWHLQWKHSURJUDPPHLQ
DQGEHFDXVHRIDODFNRIIXQGVDFFRUGLQJ
OHVV PRQH\ LV QRZ DYDLODEOH IRU IRRG DLG DQG IRU
LQYHVWPHQWV IRU LQFUHDVLQJ SURGXFWLRQ LQ GHYHORSLQJ
FRXQWULHV IRU SURPRWLQJ VXVWDLQDEOH DJULFXOWXUH DQG
IRUDJULFXOWXUDODGDSWDWLRQWRFOLPDWHFKDQJHDPRQJ
PDQ\RWKHUQHHGV
WRWKH8QLWHG6WDWHV'HSDUWPHQWRI$JULFXOWXUH86'$
$QGWKHSURJUDPPHLVOLNHO\WRIDFHFXWEDFNV XQGHU
FXUUHQW HIIRUWV WR UHGXFH JRYHUQPHQW GHEW $ 
EXGJHWELOOSDVVHGE\WKH+RXVHRI5HSUHVHQWDWLYHV
LQ-XQHZRXOGFXWRYHUELOOLRQLQFRQVHUYDWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

VSHQGLQJLQFOXGLQJPLOOLRQGLUHFWO\IURPWKH&63 DJR WKURXJK D VHULHV RI SROLF\ GHFLVLRQV WKDW

FXUUHQWO\IXQGHGDWELOOLRQD\HDUDQGSRWHQWLDOO\
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
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
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
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'
HQRXJKIRRGZKLOHLPSURYLQJHQYLURQPHQWDOSUDFWLFHV  WR VWUHQJWKHQ ERWK IRRG VHFXULW\ DQG
,Q DGGLWLRQ WR LQFUHDVLQJ LQFHQWLYHV IRU VXVWDLQDEOH UHVLOLHQFH WR FOLPDWH FKDQJH ZLWK DQ HPSKDVLV
SURGXFWLRQ WKH (8 ZLOO PRUH GLUHFWO\ OLQN SD\PHQWV RQ VXSSRUWLQJ VPDOOVFDOH IDUPHUV SDUWLFXODUO\
WR´JUHHQLQJPHDVXUHVµWKDWUHGXFH*+*HPLVVLRQV ZRPHQ
(XU$FWLY
()URPYRODWLOLW\WRVXVWDLQDELOLW\
7KH VHHGV RI FXUUHQW SULFH DQG VXSSO\ YRODWLOLW\ LQ
DJULFXOWXUDO PDUNHWV ZHUH SODQWHG VHYHUDO GHFDGHV
‡ 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 KDYH LQFUHDVHG LQ UHFHQW \HDUV )$2  6PDOO

VRXUFHRIUXUDOOLYHOLKRRGVDQGWKHIRUHPRVWSURYLGHU SURGXFHUV KDYH IDFHG PXOWLSOH FULVHV DPRQJ WKHP
RI HPSOR\PHQW 0RUH WKDQ RQH WKLUG RI WKH ZRUOG·V KLJK SULFH YRODWLOLW\ WKH HFRQRPLF GRZQWXUQ GXH WR
SRSXODWLRQGHULYHWKHLUOLYHOLKRRGVIURPODQGJURZLQJ WKHJOREDOÀQDQFLDODQGHFRQRPLFFULVLVDQGZHDWKHU
IRRGIRUWKHLUIDPLOLHVDQGIRUORFDOPDUNHWV²SULPDULO\ H[WUHPHVGXHWRFOLPDWHFKDQJH²DOORIZKLFKKDYH
VWDSOHV JURZQ PDLQO\ RQ VPDOO ODQG KROGLQJV 7KXV
VPDOOIDUPV\VWHPVGHIDFWRUHPDLQWKHEDFNERQHRI
IRRGVHFXULW\LQGHYHORSLQJFRXQWULHVHYHQWRGD\
+RZHYHU UXUDO SRYHUW\ DQG UXUDO KXQJHU DUH
ZLGHVSUHDGDQGWKHPDMRULW\RIDOOSRRUDQGKXQJU\
H[DFHUEDWHGHDFKRWKHU)DQDQG+HDG\6LQFH
VPDOOSURGXFHUVRIWHQKDYHOLPLWHGDGDSWLYHFDSDFLW\
DQGUHVLOLHQFHWRDGHTXDWHO\UHDFWWRH[WHUQDOVKRFNV
WKH OHYHO RI XQFHUWDLQW\ LQ SDUWLFXODU WKUHDWHQV WKHLU
HFRQRPLF VLWXDWLRQ $OO VLJQV SRLQW WR WKLV OHYHO RI
SHRSOH ZRUOGZLGH OLYH LQ UXUDO DUHDV ,)$' 
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
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
RYHUDOOHFRQRPLFJURZWKZRXOGDXWRPDWLFDOO\OHDGWR LDJULFXOWXUDO SURGXFWLRQ LV EHFRPLQJ LQFUHDVLQJO\
WKH DOOHYLDWLRQ RI KXQJHU )$2  DQG WKDW WKH DIIHFWHGE\FKDQJLQJFOLPDWLFFRQGLWLRQV
LQWHJUDWLRQRIVPDOODQGPHGLXPIDUPHUVLQWRH[SRUW LLLQ SDUDOOHO DJULFXOWXUH PDUNHWV DUH EHLQJ
RULHQWHG JOREDO YDOXH FKDLQV ZRXOG KHOS UHGXFH GHVWDELOL]HGE\FOLPDWLFLPSDFWVDQG
SRYHUW\DQGKXQJHULQGHYHORSLQJFRXQWULHV
LLLDWWKHVDPHWLPHDJULFXOWXUHKDVWRFRQWULEXWHWR
<HWORRNLQJDWVPDOOSURGXFHUVDQGWKHIRRGVHFXULW\ PLWLJDWLQJ FOLPDWH FKDQJH DQG PXVW DXJPHQW LWV
VLWXDWLRQ LQ YDULRXV GHYHORSLQJ FRXQWULHV WRGD\ FDUERQ VLQN FDSDFLWLHV UDWKHU WKDQ UHPDLQLQJ D
RYHUDOO WKLV VWUDWHJ\ KDV QRW GHOLYHUHG 2Q WKH PDMRUVRXUFHRIJUHHQKRXVHJDVHPLVVLRQV*LYHQ
FRQWUDU\ IRRG LQVHFXULW\ DQG SRYHUW\ LQ UXUDO DUHDV WKHVHFKDOOHQJHVIRRGVHFXULW\VWUDWHJLHVWKDWUHO\
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

RQWUDGHDQGWKDWSXVKIRUWKHIXUWKHULQWHJUDWLRQRI %HVLGHV WKH FRQYHUVLRQ RI ODQG IRU DJULFXOWXUH

GHYHORSLQJ FRXQWULHV· IRRG SURGXFWLRQ V\VWHPV LQ LQFUHDVHG VSHFLDOL]DWLRQ DQG LQWHQVLÀFDWLRQ RI
WKHJOREDOPDUNHWDUHQRWDSSURSULDWH SURGXFWLRQ ZKLFK HQDEOHV IDUPHUV WR SDUWLFLSDWH LQ
JOREDO PDUNHWV JHQHUDOO\ HQWDLOV WKH JUHDWHU XVH RI
,QWKLVSDSHUZHÀUVWDQDO\VHKRZWKHSUHVHQWV\VWHP
SHVWLFLGHV IHUWLOL]HUV ZDWHU DQG IXHO +XJH DPRXQWV
RI JOREDOL]HG DJULFXOWXUDO SURGXFWLRQ DQG PDUNHWLQJ
RI *+*V DUH HPLWWHG WKURXJK WKH SURGXFWLRQ DQG
H[DFHUEDWHVDQWKURSRJHQLFFOLPDWHFKDQJHDQGZK\
XVH RI H[WHUQDO LQSXWV VXFK DV DJURFKHPLFDOV IDUP
VPDOOSURGXFHUVWKDWDUHLQWHJUDWHGLQWRJOREDOYDOXH
PDFKLQHU\DQGSXPSHGLUULJDWLRQ,QWKH8QLWHG6WDWHV
FKDLQVDUHSDUWLFXODUO\DWULVNGXHWRFOLPDWHFKDQJH
IRUH[DPSOHIDUPLQSXWVDFFRXQWIRUPRUHWKDQSHU
:HWKHQGLVFXVVKRZWKHFXUUHQWSDWWHUQRIDJULFXOWXUDO
FHQW RI WKH WRWDO GLUHFW DQG LQGLUHFW HQHUJ\ XVHG LQ
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«
DJULFXOWXUH 6DXQGHUV  /LNHZLVH GRZQVWUHDP
HPLVVLRQVLQFUHDVHDVWKHSURFHVVLQJSDFNDJLQJDQG
UHWDLOLQJRIIRRGLWHPVWKDWDUHH[SRUWHGEHFRPHPRUH
HQHUJ\LQWHQVLYH
$W WKH VDPH WLPH JURZLQJ FRPSHWLWLRQ LV OLNHO\ WR
XQGHUFXWOHVVLQWHQVLYHIDUPLQJSUDFWLFHVWKDWVXVWDLQ
D EURDG YDULHW\ RI FURSV KHGJHV WUHHV DQG FXOWXUDO
ODQGVFDSHV DQG WKXV WKUHDWHQV VPDOOVFDOH VLWH
RULHQWHG LQWHJUDWHG IDUPLQJ V\VWHPV SDUWLFXODUO\
+XPDQV KDYH H[FKDQJHG DJULFXOWXUDO SURGXFWV HYHU
VLQFHWKH\VWDUWHGIDUPLQJ7KHPDLQSXUSRVHRIWKRVH
WUDGHÁRZVZDVWRVXSSOHPHQWWKHGLHWZLWKSURGXFWV
WKDWFRXOGRQO\EHJURZQLQRWKHUFOLPDWLF]RQHVDQG
JHRJUDSKLFDOVHWWLQJV:LWKWUDGHOLEHUDOL]DWLRQWUDGH
LQDJULFXOWXUHVWDUWHGWRVHUYHDQDGGLWLRQDOSXUSRVH
WR DGYDQFH HFRQRPLF HIÀFLHQF\ WKURXJK LQFUHDVHG
FRPSHWLWLRQDPRQJSURGXFHUVZRUOGZLGH$JULFXOWXUDO
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
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
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
RIZHWODQGVIRULUULJDWLRQDQGFXOWLYDWLRQ&%' YDOXH FKDLQV LQ DJULFXOWXUH PDNLQJ WKHP YXOQHUDEOH
7RGD\FKDQJHVLQODQGXVHLQDJULFXOWXUHDQGIRUHVWU\ WRVWHHSULVHVLQRLOSULFHDQGWKHLPSDFWVRIFOLPDWH
DV ZHOO DV HPLVVLRQV IURP IDUPLQJ DQG OLYHVWRFN FKDQJH
FRQWULEXWH RYHU  SHU FHQW WR JOREDO DQWKURSRJHQLF
*+* HPLVVLRQV UHOHDVLQJ LQ SDUWLFXODU PHWKDQH
QLWURXVR[LGHDQGWRDOHVVHUH[WHQWFDUERQGLR[LGH
%«ZKLOHFOLPDWHFKDQJHLVHQGDQJHULQJ
,3&& D VHH DOVR WKH FRPPHQW RI *5$,1 LQ
VPDOOSURGXFHUV
FKDSWHURIWKLV5HYLHZ7KHFRQYHUVLRQRIWURSLFDO
IRUHVWV DQG VDYDQQDKV LQWR DJULFXOWXUDO ODQG LV
SDUWLFXODUO\ HPLVVLRQLQWHQVLYH SULPDULO\ GXH WR WKH
EXUQLQJRIWKHELRPDVVRULJLQDOO\H[LVWLQJRQWKHODQG
DQG WR WKH UHOHDVH RI RUJDQLF FDUERQ VWRUHG LQ VRLOV
1RWZLWKVWDQGLQJ WKHVH HQYLURQPHQWDO FKDOOHQJHV
DQG D JURZLQJ DZDUHQHVV RI FOLPDWHFKDQJHUHODWHG
LVVXHVHIIRUWVWRLQWHJUDWHVPDOODQGPHGLXPSURGXFHUV
LQWRJOREDOYDOXHFKDLQVFRQWLQXHXQDEDWHG0DUNHWLQJ
FKDLQV DUH EHLQJ LPSURYHG DQG VPDOO SURGXFHUV DUH
6WHIIHQHWDO EHLQJ HQFRXUDJHG DQG DVVLVWHG LQ FRPSO\LQJ ZLWK
 75$'($1'(19,5210(175(9,(:

LQWHUQDWLRQDOSULYDWHDQGSXEOLFIRRGTXDOLW\DQGVDIHW\ WUDQVIHUUHG GLUHFWO\ WR FRQVXPHU SULFHV VHH IRU

VWDQGDUGV VHH IRU H[DPSOH +XPSKUH\  DQG H[DPSOH-KDDQG+|IÁHUDQG2FKLHQJ
3LQJDOL .KZDMD  DQG 0HLMHU  6PDOO SURGXFHUV
LQJOREDOYDOXHFKDLQVKDYHDOZD\VIDFHGFHUWDLQULVNV
EHFDXVHXVXDOO\WKH\DUHWKHOHDVWSRZHUIXODQGPRVW
YXOQHUDEOHSOD\HUVLQWKHFKDLQDQGEHFDXVHWKH\DUH
SULFHWDNHUVIRUERWKWKHLUSURGXFWLRQLQSXWVDQGWKHLU
RXWSXW 0RUHRYHU WKH\ DUH RIWHQ FRQIURQWHG ZLWK D
7KXV VPDOO SURGXFHUV IDFH WKH SURVSHFW RI KDYLQJ
WR VSHQG PRUH PRQH\ WR EX\ WKHLU IRRG ZKLOH WKHLU
LQFRPHVHLWKHUIDOORUUHPDLQVWDJQDQW
&5HWKLQNLQJWKHHFRQRPLFVRIGHYHORSLQJ
IUDJLOHEDODQFHEHWZHHQDSURGXFWLRQIRUWKHPDUNHW FRXQWULHV·IRRGV\VWHPV
DQG WKXV LQFRPH JHQHUDWLRQ E SURGXFWLRQ IRU WKHLU 2YHU WKH FRXUVH RI WKH SDVW IHZ GHFDGHV YDULRXV
RZQFRQVXPSWLRQDQGFKRXVHKROGH[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
FRQFHSWV DQG VWUDWHJLHV KDYH EHHQ GHYHORSHG WKDW
ERWKUHFRQFLOHDJULFXOWXUHZLWKHFRORJLFDOF\FOHVDQGDW
WKHVDPHWLPHJLYHVPDOOSURGXFHUVJUHDWHUHFRQRPLF
VWDELOLW\ DQG UHVLOLHQFH ([DPSOHV RI VXFK VWUDWHJLHV
LQFOXGHUHVRXUFHFRQVHUYLQJDJULFXOWXUHDJURHFRORJ\
DQGRUJDQLFDJULFXOWXUHVHHIRUH[DPSOH$OWLHULDQG
YRQ GHU :HLG  3UHWW\  DQG 3UHWW\ HW DO
SURGXFHUVLQJOREDOYDOXHFKDLQV
/RRNLQJ DW VPDOOKROGHUV· SURGXFWLRQ IRU WKH PDUNHW
SDUWLFLSDWLRQ LQ JOREDO YDOXH FKDLQV RIWHQ GHPDQGV
VSHFLDOL]DWLRQLQDIHZFDVKFURSVDQGDQLQWHQVLÀFDWLRQ
RISURGXFWLRQ$VDFRQVHTXHQFHPDQ\IDUPHUVKDYH
 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
JLYHQ XS PRUH GLYHUVLÀHG SURGXFWLRQ V\VWHPV VXFK UHVLOLHQFH DGDSWLYH FDSDFLW\ DQG UHGXFH *+*V
DVPL[HGFURSSLQJ+RZHYHUPL[HGFURSSLQJLVPXFK PLWLJDWLRQDQGWKXVFRQWULEXWHWRWKHDFKLHYHPHQWRI
EHWWHU VXLWHG WR FRSLQJ ZLWK WKH LPSDFWV RI FOLPDWH QDWLRQDO IRRG VHFXULW\ DQG GHYHORSPHQW JRDOV )$2
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

+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
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 $Q LQFUHDVLQJO\
YRODWLOH DQG IUDJLOH JOREDO IRRG SURGXFWLRQ V\VWHP
GXH WR FOLPDWH FKDQJH PHDQV WKDW VPDOO SURGXFHUV
IDFH D KLJKHU ULVN QRW RQO\ RI SURGXFWLRQ ORVVHV EXW
DOVR RI VKDUSO\ LQFUHDVLQJ IRRG SULFHV 7KH YRODWLOLW\
RI IRRG SULFHV KDV LQFUHDVHG WUHPHQGRXVO\ RYHU WKH
SDVWIHZ\HDUVLQSDUWGXHWRKDUYHVWORVVHVUHVXOWLQJ
IURP FOLPDWH FKDQJH <HW VHYHUDO VWXGLHV VKRZ WKDW
KLJK SULFHV RQ ZRUOG PDUNHWV DUH VHOGRP SDVVHG
RQ WR EHQHÀW VPDOO SURGXFHUV UDWKHU WKH\ DUH RIWHQ
SURFHVVRUV UHWDLOHUV DQG GLVWULEXWRUV LQ WKH JOREDO
WUDGHDUHQD,QFUHDVLQJO\WKLVLVRFFXUULQJHYHQLQWKH
QHZO\JOREDOL]HGPDUNHWIRURUJDQLFSURGXFH$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 GRPHVWLFDQGORFDOPDUNHWV)LUVWDQGIRUHPRVWWKLV

JXLGDQFH IRU WKLV WUDQVIRUPDWLRQ 6DFKV DQG LQFOXGHVSROLFLHVWKDWJREH\RQGWUDGHZKLFKSURWHFW
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
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
RYHUDOOHFRQRPLFGHYHORSPHQWVHHDOVR)$2
'3ROLFLHVWRSURPRWHVXVWDLQDEOHORFDO
IRRGV\VWHPV
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
,Q RUGHU WR ODXQFK D WUDQVLWLRQ WRZDUGV D UH IRVWHU WKH GHYHORSPHQW RI VXVWDLQDEOH DJULFXOWXUDO
UHJLRQDOL]DWLRQ RI WUDGH ÁRZV DQG WR IRVWHU VKRUW
SURGXFWLRQ FKDLQV SROLF\ FKDQJHV DUH UHTXLUHG DW
VXEQDWLRQDO QDWLRQDO DQG LQWHUQDWLRQDO OHYHOV $W WKH
QDWLRQDO OHYHO ÀUVW DQG IRUHPRVW JRYHUQPHQWV QHHG
WR HQVXUH WKDW WKH\ DUH DOORZHG VXIÀFLHQW SROLF\
VSDFHYLVjYLVH[LVWLQJELODWHUDODQGPXOWLODWHUDOWUDGH
REOLJDWLRQV 7KLV LQFOXGHV DOORZLQJ JRYHUQPHQWV
DGHTXDWHVSDFHWRVWDELOL]HGRPHVWLFIRRGSULFHVDQG
SURWHFW VPDOO IDUPHUV IURP H[FHVVLYH SULFH YRODWLOLW\
&RXQWULHVDOVRQHHGWREHDEOHWRLPSOHPHQWSROLFLHV
DQG PHDVXUHV WKDW FKDUW WKHLU RZQ GHÀQHG SDWKV WR
VXVWDLQDEOH DJULFXOWXUH DQG IRRG V\VWHPV VHH WKLV
SURFHVV DQG SURGXFWLRQ VWDQGDUGV LQFOXGLQJ
VWDQGDUG PRQLWRULQJ DQG YHULÀFDWLRQ VFKHPHV 7KH
LPSOHPHQWDWLRQRIVXFKVFKHPHVFRXOGEHVXSSRUWHG
E\ ORZLQWHUHVW ORDQV IRU LQYHVWLQJ LQ VXVWDLQDEOH
IDUPLQJ SUDFWLFHV 7KRVH ORDQV FRXOG EH RIIHUHG E\
FRPPXQLWLHVQDWLRQDOJRYHUQPHQWVDQGLQWHUQDWLRQDO
GRQRUV ,I IDUPHUV· WUDLQLQJ DQG ÀHOG VFKRROV IRU
VXVWDLQDEOH IDUPLQJ SUDFWLFHV DUH VXSSRUWHG DQG LI
WKHFDSDFLWLHVRIORFDO1*2VDUHVFDOHGXSWKLVZLOO
FDWDO\VHIXUWKHUDFWLYLWLHVLQWKHIDUPLQJFRPPXQLWLHV
DQG JHQHUDWH ORFDO RZQHUVKLS LQ WKH SURFHVV /DVW
EXW QRW OHDVW FRPPXQLFDWLRQ VWUDWHJLHV WKDW SURYLGH
FKDSWHU·VOHDGDUWLFOHE\/LDQG.KRU3ROLF\VSDFHQRW
RQO\LPSOLHVKDYLQJPRUHÁH[LELOLW\LQWKHXVHRIWDULIIV
TXRWDV DQG RWKHU ERUGHU FRQWURO PHDVXUHV LW DOVR
LPSOLHVIUHHGRPIURPFRQVWUDLQWVLPSRVHGE\ELODWHUDO
DQG PXOWLODWHUDO DJUHHPHQWV RQ GRPHVWLF UHJXODWRU\
FRPSHWHQFH RU RQ LQYHVWPHQWV ZKLFK LQÁXHQFH WKH
DJULFXOWXUDOVHFWRU·VSURGXFWLRQVWUXFWXUH
EHWWHULQIRUPDWLRQWRWKHSXEOLFFRXOGSURPRWHDVKLIW
LQ FRQVXPSWLRQ SDWWHUQV WRZDUGV PRUH VXVWDLQDEOH
DQGORFDOO\SURGXFHGIRRGLWHPV
7KHWUDQVLWLRQWRZDUGVPRUHVXVWDLQDEOHIRRGV\VWHPV
FDQEHIXUWKHUDGYDQFHGWKURXJKDVHWRISROLFLHVDW
YDULRXVPXOWLODWHUDOIRUXPV,QSDUWLFXODUSROLFLHVWKDW
PDNH ORQJGLVWDQFH WUDQVSRUWDWLRQ PRUH H[SHQVLYH
7KH PDLQ WDVN DW WKH VXEQDWLRQDO OHYHO LV WR HQDEOH FRXOGFRQWULEXWHVLJQLÀFDQWO\WRWKHUHUHJLRQDOL]DWLRQ
VPDOO IDUPHUV WR UHJDLQ ORQJWHUP DFFHVV WR WKHLU RISURGXFWLRQFKDLQV6LQFHDJULFXOWXUDO WUDGHLVYHU\
 75$'($1'(19,5210(175(9,(:

WUDQVSRUWLQWHQVLYH WKH H[SDQVLRQ RI JOREDO PDUNHWV LQWKHIDFHRIWKHJOREDOSHDNRLOVFHQDULRPHDVXUHV

DQG YDOXH FKDLQV ZRXOG QRW KDYH EHHQ SURÀWDEOH WRLQWHUQDOL]HHQYLURQPHQWDOFRVWVLQWUDQVSRUWSULFHV
LI IUHLJKW FRVWV KDG EHHQ KLJK ,Q SDUWLFXODU IRUHLJQ VKRXOGEHSXUVXHG)RULQVWDQFHWKHLQFOXVLRQRIDLU
SURGXFWV FDQ FRPSHWH LQ GRPHVWLF PDUNHWV HJ WUDIÀF LQ WKH (XURSHDQ (PLVVLRQV 7UDGLQJ 6FKHPH
%UD]LOLDQFKLFNHQOHJVFRPSHWLQJZLWKORFDOSRXOWU\LQ LV D ÀUVW VWHS LQ WKLV GLUHFWLRQ $GGLWLRQDO PHDVXUHV
:HVW$IULFDRQO\LIWUDQVSRUWFRVWVDUHORZRWKHUZLVH FRXOGEHDGYDQFHGWKURXJKQHJRWLDWLRQVDWWKH8QLWHG
WKH ORZHU PDUJLQDO SURGXFWLRQ FRVWV DEURDG ZRXOG 1DWLRQV )UDPHZRUN &RQYHQWLRQ RQ &OLPDWH &KDQJH
VRRQ EH QHJDWHG E\ KLJKHU WUDQVSRUW FRVWV 2YHU WKH ,QWHUQDWLRQDO &LYLO $YLDWLRQ 2UJDQL]DWLRQ DQG WKH
DQGDERYHWKHULVLQJRLOSULFHVWKDWFDQEHH[SHFWHG :RUOG0DULWLPH2UJDQL]DWLRQ
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$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
PRGHO EUHHGV LQFRPH GLVSDULW\ DQG KLJKO\ VNHZHG
SRZHU UHODWLRQV  7KH UHVXOWLQJ VRFLDO LQHTXLW\ DQG
HQYLURQPHQWDOGHJUDGDWLRQHIIHFWLYHO\FDQFHOVRXWWKH
VXSSRVHGEHQHÀWVIURPKLJKHUSURGXFWLYLW\DQGPRUH
HIÀFLHQWSURGXFWLRQV\VWHPV
$&RUSRUDWHFRQFHQWUDWLRQLQDJULFXOWXUDO
LQSXWVSURFHVVLQJDQGUHWDLOLQJ
$ERXWSHUFHQWRIWKHWRWDOJOREDOFRPPHUFLDOPDUNHW
IRUVHHGVHVWLPDWHGDWELOOLRQZDVFRQWUROOHGE\
WR HQYLURQPHQWDO DQG KXPDQLQGXFHG VKRFNV 7KH WKH WRS  FRPSDQLHV LQ  (7& *URXS E
SDUDGLJPRIDFFXPXODWLRQXQGHUO\LQJWKLVDJULFXOWXUDO -XVW WKUHH FRPSDQLHV FRQWUROOHG  SHU FHQW RI WKDW

7DEOH:RUOG·VWRSVHHGFRPSDQLHV 7DEOH:RUOG·VWRSDJURFKHPLFDOFRPSDQLHV
&RPSDQLHVE\UDQNLQJ 6HHGVDOHV 0DUNHWVKDUH &RPSDQLHVE\UDQNLQJ $JURFKHPLFDO 0DUNHW
PLOOLRQ SHUFHQW VDOHV VKDUH
0RQVDQWR8QLWHG6WDWHV   PLOOLRQ SHUFHQW
'X3RQW3LRQHHU8QLWHG6WDWHV   6\QJHQWD6ZLW]HUODQG  
6\QJHQWD6ZLW]HUODQG   %D\HU&URS6FLHQFH*HUPDQ\  
*URXSH/LPDJUDLQ)UDQFH   %$6)*HUPDQ\  
/DQG2·/DNHV:LQÀHOG6ROXWLRQV   0RQVDQWR8QLWHG6WDWHV  
8QLWHG6WDWHV 'RZ$JUR6FLHQFHV8QLWHG6WDWHV  
.:6$**HUPDQ\   'X3RQW8QLWHG6WDWHV  
%D\HU&URS6FLHQFH*HUPDQ\   6XPLWRPR&KHPLFDO-DSDQ  
'RZ$JUR6FLHQFHV8QLWHG6WDWHV   1XIDUP$XVWUDOLD  
6DNDWD-DSDQ   0DNKWHVKLP$JDQ,QGXVWULHV,VUDHO  
'/)7ULIROLXP$6'HQPDUN   $U\VWD/LIH6FLHQFH-DSDQ  
7RWDOVDOHVDQGPDUNHWVKDUHV   7RWDOVDOHVDQGPDUNHWVKDUHVRI  
RIWKHWRS WRS
6RXUFH(7&*URXSFRPSDQLHV·UHSRUWLQJFXUUHQFLHV 6RXUFH(7&*URXSFRPSDQLHV·UHSRUWLQJFXUUHQFLHV
KDYHEHHQFRQYHUWHGWR86GROODUVXVLQJ KDYHEHHQFRQYHUWHGWR86GROODUVXVLQJ
KLVWRULFDODYHUDJHH[FKDQJHUDWHV KLVWRULFDODYHUDJHH[FKDQJHUDWHV
 75$'($1'(19,5210(175(9,(:

WRWDOPDUNHWZLWK0RQVDQWR²WKHZRUOG·VODUJHVWVHHG UHDG\µRU´FOLPDWHVPDUWµFURSV%HWZHHQ-XQH
FRPSDQ\ DQG IRXUWK ODUJHVW SHVWLFLGH FRPSDQ\ ² DQG -XQH  WKH ZRUOG·V VL[ ODUJHVW VHHG DQG
DFFRXQWLQJIRUSHUFHQWRIWKHZRUOG·VFRPPHUFLDO DJURFKHPLFDO FRPSDQLHV ÀOHG SDWHQW DSSOLFDWLRQV RQ
VHHGPDUNHWWDEOH WUDLWV DQG JHQHV WKDW GHYHORSHG FURS UHVLVWDQFH WR
7KH FRPPHUFLDO VHHG VHFWRU ZKLFK VXSSOLHV DQ DELRWLF VWUHVVHV VXFK DV GURXJKW SHVWV DQG VDOLQLW\
HVWLPDWHGSHUFHQWRIWKHWRWDOVHHGUHTXLUHPHQWV
JOREDOO\ LV LQH[WULFDEO\ OLQNHG WR WKH DJURFKHPLFDO
PDUNHW2IWKHWRSVL[DJURFKHPLFDOFRPSDQLHVÀYHDUH
DPRQJWKHZRUOG·VODUJHVWVHHGFRPSDQLHV1HDUO\
SHUFHQWRIWKHZRUOGPDUNHWIRUDJULFXOWXUDOFKHPLFDOV
LQHVWLPDWHGDWELOOLRQZDVFRQWUROOHGE\WKH
WRSSHVWLFLGHFRPSDQLHV8.)RRG*URXS
(7&*URXSD7KH´SDWHQWJUDEµFRUUHVSRQGVWR
SDWHQWIDPLOLHVLQYROYLQJSDWHQWGRFXPHQWV
ZRUOGZLGH (YHQ LQ WKH IDFH RI WKH FOLPDWH FULVLV WKH
SURÀWPRWLYHUHLJQVVXSUHPHDPRQJFRUSRUDWHSOD\HUV
LQWKHVHHGDQGDJURFKHPLFDOLQGXVWULHV
2OLJRSROLVWLF WUHQGV DOVR UHYHUEHUDWH GRZQ WKH
DJULFXOWXUDOYDOXHFKDLQSDUWLFXODUO\LQWKHSURFHVVLQJ
(7&*URXSE7KHWRSVL[FRPSDQLHVZKLFKVHOO DQGUHWDLOLQJVHFWRUV,QWKHODUJHVWIRRGDQG
SURSULHWDU\IRUPXODVDFFRXQWHGIRURYHUSHUFHQW EHYHUDJHFRPSDQLHVDFFRXQWHGIRUPRUHWKDQSHU
RIWKHJOREDODJURFKHPLFDOPDUNHWWDEOH FHQWRIWKHWRWDOUHYHQXHRIWKLVVHFWRU/HDWKHUKHDG
,QWHOOHFWXDOSURSHUW\ULJKWV,35VVXFKDVSDWHQWVWUDGH
VHFUHWVDQGSODQWYDULHW\SURWHFWLRQDUHNH\WRSURWHFWLQJ
WKHEXVLQHVVLQWHUHVWVRIJLDQWFRUSRUDWLRQVE\DOORZLQJ
WKHPPRQRSRO\FRQWURORYHUWKHLUSURSULHWDU\SURGXFWV
)RRGFLWHGLQ(7&*URXSE7KHWKUHHODUJHVW
FRPSDQLHV ² 1HVWOp 3HSVL&R DQG .UDIW ² WRJHWKHU
FRQWUROSHUFHQWRIWKHUHYHQXHVJHQHUDWHGE\WKH
ZRUOG·VWRSÀUPVDQGSHUFHQWRIWKHUHYHQXHV
JHQHUDWHGE\WKHWRSÀUPVLQWKHIRRGSURFHVVLQJ
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
VHFWRULELGWDEOH
,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
FRPSDQLHV KDYH VWDUWHG WR SRVLWLRQ WKHLU FRPPHUFLDO WULOOLRQ3ODQHW5HWDLOFLWHGLQ(7&*URXSE
LQWHUHVWV LQ WKH GHYHORSPHQW RI VRFDOOHG ´FOLPDWH 7KH FRPELQHG VKDUH RI WKH WRS WKUHH VXSHUPDUNHW

7DEOH:RUOG·VWRSIRRGDQGEHYHUDJH 7DEOH:RUOG·VWRSIRRGUHWDLOHUV
FRPSDQLHV 

&RPSDQLHVE\UDQNLQJ )RRGDQG 7RWDO 0DUNHWVKDUH &RPSDQLHVE\UDQNLQJ *URFHU\ 0DUNHW 1RRI

EHYHUDJH VDOHV SHUFHQWDV VDOHV VKDUHDV FRXQWULHVRI
VDOHV  SHUFHQWDJH  SHUFHQWDJH RSHUDWLRQ
 PLOOLRQ RIVKDUHRI PLOOLRQ RIVKDUHRI
PLOOLRQ WRS WRS
1HVWOp6ZLW]HUODQG    :DOPDUW8QLWHG6WDWHV   
3HSVL&R8QLWHG6WDWHV    &DUUHIRXU)UDQFH   
.UDIW8QLWHG6WDWHV    6FKZDU]*URXS   
$%,Q%HY%HOJLXP    *HUPDQ\
$'08QLWHG6WDWHV    7HVFR8QLWHG.LQJGRP   
&RFD&ROD8QLWHG6WDWHV    $OGL*HUPDQ\   
0DUV,QF8QLWHG6WDWHV    .URJHU8QLWHG6WDWHV   
8QLOHYHU7KH1HWKHUODQGV    $(21-DSDQ   
7\VRQ)RRGV8QLWHG    (GHND*HUPDQ\   
6WDWHV 5HZH*URXS*HUPDQ\   
&DUJLOO8QLWHG6WDWHV    $KROG8QLWHG   
7RWDOVDOHVDQGPDUNHW    .LQJGRP
VKDUHVRIWKHWRS 7RWDO7RS  

6RXUFH/HDWKHUKHDG)RRG5HVHDUFKFLWHGLQ(7& 6RXUFH3ODQHW5HWDLODWKWWSZZZSODQHWUHWDLOQHW
*URXSE
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

FKDLQV ² :DOPDUW &DUUHIRXU DQG 6FKZDU] *URXS ² VRORQJDVWKHOLIHVSDQRIWKHSDWHQWVJUDQWHGWRWKHP

DFFRXQWHGIRUSHUFHQWRIWKHWRWDOUHYHQXHVRIWKH XVXDOO\\HDUV
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
,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
5XVVLDQ)HGHUDWLRQZKHUHGHPDQGLVH[SDQGLQJDQG
HYHQRXWSDFLQJWKDWLQLQGXVWULDOL]HGFRXQWULHV*LDQW
VXSHUPDUNHWVDUHVFUDPEOLQJWRHVWDEOLVKRSHUDWLRQV
IRUJLQJ MRLQW YHQWXUHV ZLWK PDMRU ORFDO UHWDLOHUV DQG
VZDSSLQJ DVVHWV DPRQJ WKHP WR HQVXUH PDUNHW
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&
GRPLQDQFH,QPHUJHUVDQGDFTXLVLWLRQVLQWKH *URXS E 6XFK SUDFWLFHV FODLP WR LQFUHDVH
IRRGDQGEHYHUDJHVHFWRUZHUHYDOXHGDWELOOLRQ IDUPHUV· LQFRPHV EXW SURFHVVLQJ DQG UHWDLOLQJ
,0$3 FRPSDQLHV VXFK DV :DOPDUW H[HUW ´QHYHUHQGLQJ
GRZQZDUG SUHVVXUH RQ LWV VXSSOLHUV WR SURYLGH LW
)DUPHUVDQGROLJRSROLHVLQWKHDJULFXOWXUDO
ZLWK LQFUHDVLQJO\ ORZHU SULFHV WKDW VLPSO\ DUHQ·W
YDOXHFKDLQ
VXVWDLQDEOHµ 'RQQHOO\  FLWHG LQ (7& *URXS
$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
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
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
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
FRQVXPHUVRISHVWLFLGHVKHUELFLGHVDQGIXQJLFLGHV   6XFK SROLFLHV GHWHU IDUPHUV IURP DGRSWLQJ
7KHDJURFKHPLFDOPDUNHWLVGRPLQDWHGE\JLDQWSHV HFRIXQFWLRQDO IDUPLQJ V\VWHPV WKXV HIIHFWLYHO\
WLFLGH FRPSDQLHV WKDW KDYH WKH SRZHU WR GLFWDWH WKH OLPLWLQJ WKH SRVVLELOLWLHV IRU WKHP WR H[HUFLVH WKHLU
SULFHV DQG VXSSO\ RI WKHLU SURGXFWV JOREDOO\ DW OHDVW ULJKWVWRPDNHGHFLVLRQVRQWKHLUIDUPV

0RQRFURSSLQJDQGXQLIRUPLW\
,Q GHYHORSLQJ FRXQWULHV WKH YDVW PDMRULW\ RI IDUPHUV
DUHVWLOOVRXUFLQJWKHLUVHHGVWKURXJKWUDGLWLRQDOVDYLQJ
75$'($1'(19,5210(175(9,(:
IRUKLJKHU\LHOGVDQGLQGXVWULDOIDUPLQJSUDFWLFHVKDYH
UHVXOWHGLQWKHGHFOLQHRIHVVHQWLDOQXWULHQWVDQGPLQ
HUDOV LQ WKH IRRG VXSSO\ -RQHV  FLWHG LQ (7&
*URXS&RQVXPHUVDQGUHWDLOHUVLQGHYHORSHG
UHXVLQJ VKDULQJ DQG H[FKDQJH SUDFWLFHV +RZHYHU
FRXQWULHV ZDVWH DOPRVW DV PXFK IRRG DQQXDOO\ 
JLDQWVHHGFRPSDQLHVDUHVWHDGLO\H[SDQGLQJWRWKHVH
PLOOLRQWRQVDVWKHHQWLUHQHWIRRGSURGXFWLRQRIVXE
SRWHQWLDOO\OXFUDWLYHPDUNHWVWRVHOOFRPPHUFLDOVHHGV
RIWHQDLGHGE\JRYHUQPHQWVLQWKHLUHIIRUWVWRLQFUHDVH
FRPPRGLW\ H[SRUWV ,QGHHG VRPH JRYHUQPHQWV
DUH DFWLYHO\ SURPRWLQJ DQG HYHQ VXSSRUWLQJ WKH XVH
RI FRPPHUFLDO VHHGV WRXWHG E\ WKH FRUSRUDWLRQV
IRU LQFUHDVLQJ SURGXFWLYLW\  0DVVLYH SURPRWLRQ
RI FRPPHUFLDO VHHGV EUHHGV PRQRFURSSLQJ DQG
XQLIRUPLW\WKHUHE\SXVKLQJRXWWUDGLWLRQDOIRRGFURSV
6DKDUDQ$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
DQGORFDOYDULHWLHV%DUNHU GLYHUVLW\ LQ IDUPV DUH WKH IDUPHUV· EHVW LQVXUDQFH
DJDLQVW WKHDGYHUVHHIIHFWV RI FOLPDWLF FKDQJH ,35V
7KHKLJKO\PHFKDQL]HGEXONSURFHVVLQJRIIRRGDQG
RQ VHHGV LPSHGH IDUPHUV· ULJKWV WR VDYH UHXVH
IHHGSURGXFWVE\SURFHVVRUVDOVRUHTXLUHVXQLIRUPLW\
VKDUH DQG H[FKDQJH VHHGV DQG WKH\ UHGXFH WKH
LQ WHUPV RI IHDWXUHV DQG TXDOLWLHV RI UDZ PDWHULDOV
FDSDFLW\RIFRPPXQLWLHVIRURQIDUPLQQRYDWLRQVDQG
VRXUFHG IURP IDUPHUV 5HWDLOHUV OLNHZLVH LPSRVH RQ
GHYHORSPHQWRIORFDOO\DGDSWHGYDULHWLHVWKDWUHVSRQG
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
WRQHZHQYLURQPHQWDOFKDOOHQJHV+HLQHPDQQ
$JULFXOWXUHIRUHTXLW\DQGZHOOEHLQJ
$JULFXOWXUH IRU GHYHORSPHQW KDV EHHQ VR WUDJLFDOO\
QDUURZHGGRZQWRLQFUHDVLQJSURGXFWLYLW\LQRUGHUWR
ERRVWHFRQRPLFGHYHORSPHQWE\UDLVLQJ *'3WKDW LW
KDVQRWUHDOO\WUDQVODWHGLQWREHQHÀWVIRUWKHPDMRULW\
RIIDUPHUVZKRDUHVWLOOPLUHGLQSRYHUW\7KHFXUUHQW
8WYLNOLQJVIRQGHW  6PDOOVFDOH IDUPHUV FDXJKW
LQGXVWULDODJULFXOWXUHPRGHOEUHHGVROLJRSROLHVDFURVV
XS LQ FRQWUDFW IDUPLQJ DQG FRPPHUFLDO JURZLQJ
WKHDJULFXOWXUDOYDOXHFKDLQDQGLVLQFRPSDWLEOHZLWKDQ
DUUDQJHPHQWV RIWHQ HQG XS ZLWK QR ODQG WR FXOWLYDWH
HFRIXQFWLRQDODJULFXOWXUDOV\VWHP7KHFXUUHQWV\VWHP
WKHLU KRXVHKROGV· IRRG UHTXLUHPHQWV DQG PDQ\ ORVH
DFFXPXODWHVSURÀWVIRUDIHZDWLPPHDVXUDEOHFRVWVWR
WKHLU ODQGV LQ FDVHV RI FURS IDLOXUHV 0LQRW 
WKHHQYLURQPHQWDQGVRFLHW\$VKLIWWRHQYLURQPHQWDOO\
(YHQ WKRVH ZKR JURZ IRRG FURSV VRPHWLPHV HQG
VXVWDLQDEOHVRFLDOO\HTXLWDEOHDQGHFRQRPLFDOO\YLDEOH
XSVHOOLQJDOOWKHLUSURGXFWVDQGEX\LQJFKHDSHUDQG
DJULFXOWXUH ZLOO UHTXLUH D IXQGDPHQWDO WUDQVIRUPDWLRQ
ORZHU TXDOLW\ IRRG IRU WKHLU RZQ FRQVXPSWLRQ LQ WKH
RIWKHGRPLQDQWDJULFXOWXUDOV\VWHPDQGGHYHORSPHQW
ORFDOPDUNHW
PRGHOWRRQHWKDWSURPRWHVHTXLW\DQGWKHZHOOEHLQJ
7KH H[SDQVLRQ RI PHJDUHWDLO FRPSDQLHV LQ PDQ\ RISHRSOHDQGWKHSODQHWDVH[SOLFLWJRDOV
GHYHORSLQJFRXQWULHVZKHUHWKHUHWDLOLQGXVWU\LQFOXGLQJ
WKH VRFDOOHG XQGHUJURXQG HFRQRP\ OHG PDLQO\ E\ (QDEOLQJVXVWDLQDEOHHFRQRPLHV
ZRPHQ HQWUHSUHQHXUV FRQVWLWXWHV D PDMRU VHFWRU LQ
$JULFXOWXUHDVWKHEDFNERQHRIWKHHFRQRP\LQPRVW
WKH QDWLRQDO HFRQRP\ SRVHV D VHULRXV WKUHDW WR ORFDO
GHYHORSLQJ FRXQWULHV VKRXOG VXSSRUW DQG SURPRWH
OLYHOLKRRGV ,Q ,QGLD IRU H[DPSOH UHWDLO LV WKH VHFRQG
UXUDOOLYHOLKRRGV7KURXJKVWUDWHJLFSXEOLFLQYHVWPHQWV
ODUJHVWHPSOR\HUDIWHUWKHDJULFXOWXUDOVHFWRUHPSOR\LQJ
DVZHOODVSROLFLHVDQGVXSSRUWSURJUDPPHVWKDWKDYH
VRPH  PLOOLRQ SHRSOH $UQROG\  DQG 1DLU
DQ LQKHUHQW ELDV WR XSOLIW VPDOOKROGHUV DQG VXSSRUW
*KDVZDOOD  FLWHG LQ (7& *URXS E ZKRVH
MREV DQG OLYHOLKRRGV DUH WKUHDWHQHG E\ WKH HQWU\ RI
WUDQVQDWLRQDOPHJDUHWDLOFKDLQVRQWKHGRPHVWLFVFHQH
3UHYDLOLQJSUDFWLFHVLQWKHDJULFXOWXUDOLQSXWSURFHVV
LQJDQGUHWDLOLQGXVWULHVDOVRUDLVHVHULRXVHWKLFDOTXHV
WLRQVDERXWJOREDOIRRGVHFXULW\'HFDGHVRIEUHHGLQJ
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 WKHLUDFFHVVWRSURGXFWLYHUHVRXUFHVLQFUHDVLQJWKHLU
SROLWLFDO YRLFH DQG HQDEOLQJ WKHLU DFWLYH SDUWLFLSDWLRQ
$V D FRPSOHPHQW WR LQWHUYHQWLRQV DW WKH ORFDO DQG
QDWLRQDOOHYHOVWUDGHSUDFWLFHVWKDWEUHHGROLJRSROLHV LQGHFLVLRQPDNLQJ:RUOG%DQN,$$67'
DQGLQKLELWFRPSHWLWLRQQHHGWREHFXUEHGDWWKHJOREDO 8. )RRG *URXS   3URYLGLQJ DFFHVV WR EDVLF
OHYHO 7KLV UHTXLUHV VWULFWHU UHJXODWLRQ RI FRUSRUDWH VHUYLFHV DQG VRFLDO SURWHFWLRQ VXFK DV HGXFDWLRQ
SUDFWLFHV DQWLWUXVW DFWLRQV DQG D PRUDWRULXP RQ KHDOWKQXWULWLRQVRFLDOZHOIDUHDQGLQIUDVWUXFWXUHDUH
PHUJHUV DQG DFTXLVLWLRQV %DUNHU  8. )RRG DOVR HVVHQWLDO IRU IDUPHU HPSRZHUPHQW :)3 DQG
*URXS   ,35V DQG WHFKQRORJLFDO ´DGYDQFHVµ )$2
HJK\EULGL]DWLRQJHQHWLFHQJLQHHULQJDQGWHUPLQDWRU
WHFKQRORJ\ ZKLFK LQKHUHQWO\ SURKLELWV VKDULQJ UHXVH 3URPRWLQJIRRGVRYHUHLJQW\DQGWKHULJKWWRIRRG
DQG VDYLQJ RI VHHGV DPRQJ IDUPHUV WKDW SURPRWH
PRQRSRO\ FRQWURO RYHU SURGXFWV DQG LPSHGH
LQQRYDWLRQV E\ VPDOOHU SOD\HUV VKRXOG EH UHYLHZHG
DQG FRUUHFWHG  6XEVLGLHV WKDW EHQHÀW RQO\ WKH ELJ
SOD\HUV LQ WKH DJULFXOWXUDO VHFWRU VKRXOG EH SKDVHG
RXW DQG SROLFLHV WKDW H[HUW SUHVVXUH RQ IDUPHUV WR
DGRSWFRPPHUFLDODJULFXOWXUDOLQSXWVUHYHUVHG
&RQVHUYLQJGLYHUVLW\
*OREDO DQG QDWLRQDO IRRG VHFXULW\ FDQ EH VXVWDLQHG
RQO\ LI ORFDO IRRG VHFXULW\ LV DVVXUHG ERWK LQ
FRPPXQLWLHV WKDW SURGXFH IRRG DQG LQ XUEDQ DUHDV
WKDW GHSHQG RQ WKH IRUPHU IRU WKHLU IRRG VXSSO\
)RRG VRYHUHLJQW\ ² WKH ULJKW RI VRYHUHLJQ 6WDWHV
DQG FRPPXQLWLHV WR GHPRFUDWLFDOO\ GHWHUPLQH WKHLU
RZQDJULFXOWXUDODQGIRRGSROLFLHV²VKRXOGEHJLQDW
WKH ORFDO OHYHO ZLWK FRPPXQLWLHV WDNLQJ FHQWUH VWDJH
,$$67'  *UHHQSHDFH  8WYLNOLQJVIRQGHW
/RQJWHUPVXVWDLQDELOLW\LQDJULFXOWXUHFDQRQO\EHUHDOL]HG 8.)RRG*URXS)RRGVRYHUHLJQW\JRHV
ZKHQ VXSSRUWHG E\ KHDOWK\ HFRORJLFDO DQG ELRORJLFDOO\
EH\RQGIRRGVHOIVXIÀFLHQF\LWLQFRUSRUDWHVDJUDULDQ
GLYHUVHHFRV\VWHPV&URSDQGYDULHWDOGLYHUVLW\DUHWKH
UHIRUPV ORFDO PDUNHWV ELRGLYHUVLW\ DXWRQRP\ IURP
VPDOOKROGHUIDUPHUV·EHVWLQVXUDQFHDJDLQVWFURSIDLOXUHV
H[WHUQDO SUHVVXUHV FRRSHUDWLRQ DQG DOO DVSHFWV RI
DJURHFRORJLFDO VWUHVVHV DQG FOLPDWH FKDQJH +R
ORFDOIRRGSURGXFWLRQ,$$67'
,$$67'8.)RRG*URXS'LYHUVLW\
QXUWXUHGRQIDUPE\IDUPHUVSURYLGHVDZHDOWKRIKHDOWK\
DQGVXVWDLQDEOHSURGXFWVWKDWFDQFDWHUWRWKHGHPDQGV
RIFRQVXPHUVZKRDUHEHFRPLQJLQFUHDVLQJO\DZDUHRI
HQYLURQPHQWDO KHDOWK DQG IRRG LVVXHV  2QIDUP DQG
*RYHUQPHQWV DQG WKH LQWHUQDWLRQDO FRPPXQLW\ QHHG
WR UHVSHFW DQG HQVXUH WKH ULJKW RI HYHU\ SHUVRQ WR
DGHTXDWHIRRGDVDIXQGDPHQWDOFRPSRQHQWRIVXV
WDLQDEOHVROXWLRQVWRIRRGFKDOOHQJHV:)3DQG)$2
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
 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
VPDOOKROGHUV:RUOG%DQN7KHSHUIRUPDQFHRI
VPDOOVFDOHSURGXFHURUJDQL]DWLRQVDQGVPDOOKROGHUV *UHHQSHDFH8.)RRG*URXS8WYLNOLQJV
SUDFWLFLQJDJURHFRORJLFDOIDUPLQJFDQEHHQKDQFHG IRQGHW  1DWLRQDO VXSSRUW SURJUDPPHV DQG
E\ EXLOGLQJ WKHLU FDSDELOLWLHV IDFLOLWDWLQJ WKHLU DFFHVV DJULFXOWXUDOHGXFDWLRQFXUULFXODQHHGWREHUHVKDSHG
WR ÀQDQFLDO VHUYLFHV LPSURYLQJ SULFH LQFHQWLYHV DQG DQG GHFLVLRQPDNHUV LPSOHPHQWHUV DQG H[WHQVLRQ
UHGXFLQJ WKHLU H[SRVXUH WR XQLQVXUHG ULVNV ,$$67' VHUYLFH SURYLGHUV UHRULHQWHG WRZDUGV UHVSHFWLQJ DQG
:RUOG%DQN VXSSRUWLQJWKHFHQWUDOUROHRIVPDOOKROGHUIDUPHUVDQG
SHDVDQWV LQ DJULFXOWXUDO GHYHORSPHQW WKURXJK DJUR
%H\RQGHFRQRPLFHPSRZHUPHQWVRPHIXQGDPHQWDO
HFRORJLFDOIDUPLQJ,$$67'
VWHSV WRZDUGV HPSRZHULQJ VPDOOKROGHUV LQFOXGH
SURWHFWLQJ WKHLU WHQXUH ULJKWV RYHU ODQG LPSURYLQJ
 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 GHPDQG IRU WKHVH DOWHUQDWLYH IXHOV LQFUHDVHV FURS
DQGWKHSULFHVRIERWKIRRGDQGIXHOKDYHULVHQDQG SULFHV DUH IRUFHG XSZDUGV PDNLQJ IRRG HYHQ OHVV
IDOOHQ PRUH RU OHVV LQ WDQGHP LQ UHFHQW \HDUV ÀJXUH DIIRUGDEOH
0RGHUQDJULFXOWXUHXVHVRLOSURGXFWVWRIXHOIDUP
([SRUWOHG DJULFXOWXUDO VWUDWHJLHV DOVR LQFUHDVH WKH
PDFKLQHU\WRWUDQVSRUWRWKHULQSXWVWRWKHIDUPDQG
ZRUOG·V YXOQHUDELOLW\ WR KLJK RLO SULFHV 0RVW GRQRU
WRWUDQVSRUWIDUPRXWSXWWRWKHXOWLPDWHFRQVXPHU2LO
DJHQFLHV KDYH HQFRXUDJHG WKH OHVV LQGXVWULDOL]HG
LVRIWHQDOVRXVHGDVLQSXWLQDJULFXOWXUDOFKHPLFDOV
FRXQWULHV WR IRFXV RQ WKH SURGXFWLRQ RI FDVK FURSV
2LOSULFHLQFUHDVHVWKHUHIRUHSXWSUHVVXUHRQDOOWKHVH
DW WKH H[SHQVH RI VWDSOHV IRU ORFDO FRQVXPSWLRQ $V
DVSHFWVRIFRPPHUFLDOIRRGV\VWHPV
D UHVXOW SHRSOH LQ WKHVH FRXQWULHV DUH IRUFHG WR UHO\
7KXV WKHUH LV FRQFHUQ WKDW KLJK DQG YRODWLOH SULFHV LQFUHDVLQJO\ RQ LPSRUWV RI RIWHQ VXEVLGL]HG FHUHDOV
RI FUXGH RLO PD\ FDXVH IRRG SULFHV WR FRQWLQXH WR RU WKRVH IXQGHG E\ IRRG DLG SURJUDPPHV +RZHYHU
LQFUHDVH%ORRPEHUJ ULVLQJ WUDQVSRUW FRVWV FRQWULEXWH WR ULVLQJ SULFHV RI
IRRGLPSRUWVPDNLQJWKHPHYHUOHVVDIIRUGDEOH)XHO
0RUHRYHU DV RLO SULFHV ULVH VR GRHV GHPDQG IRU
FRVWVUHSUHVHQWDVPXFKDVWRSHUFHQWRIWRWDO
ELRIXHOVZKLFKDUHWKHRQO\QRQIRVVLOOLTXLGIXHOVDEOH
VKLSRSHUDWLQJFRVWV)URPHDUO\WRPLG
WRUHSODFHSHWUROHXPSURGXFWVLQH[LVWLQJFRPEXVWLRQ
DV IXHO SULFHV VRDUHG WKH FRVW RI VKLSSLQJ IRRG DLG
HQJLQHV DQG PRWRU YHKLFOHV %XW ELRIXHOV DUH RIWHQ
FOLPEHGE\DERXWSHUWRQ²DQHDUO\SHUFHQW
PDGH IURP FRUQ DQG RWKHU DJULFXOWXUDO SURGXFWV $V
LQFUHDVH DFFRUGLQJ WR WKH 8QLWHG 6WDWHV $JHQF\ IRU
)LJXUH(YROXWLRQRIIRRGDQGIXHOSULFHVWR ,QWHUQDWLRQDO'HYHORSPHQW*DUEHU
0HDQZKLOHPDQ\SRRUIDUPHUVZKRFDQQRWDIIRUGPD
225 - - 225
FKLQHU\IXHOVDQGFRPPHUFLDOIDUPLQSXWVÀQGWKHP
200 - - 200 VHOYHVDWDGLVDGYDQWDJHLQWKHJOREDOIRRGHFRQRP\
175 - - 175 &RPSRXQGLQJWKLVDUHDJULFXOWXUDOSROLFLHVLQLQGXVWUL
150 - - 150
DOL]HGIRRGH[SRUWLQJFRXQWULHVWKDWVXEVLGL]HGRPHV
WLF SURGXFHUV DQG GXPS VXUSOXVHV RQWR GHYHORSLQJ
UN FAO food index

125 - - 125
US dollars per barrell

FAO food index

FRXQWULHVWKXVDGGLQJWRWKHHFRQRPLFGLVDGYDQWDJ
100 - - 100
HVRIWKHVPDOOKROGHUIDUPHUVLQWKRVHFRXQWULHV$VD
75 - - 75

Price of oil
UHVXOWPLOOLRQVRIWKRVHIDUPHUVDUHEHLQJGULYHQRXW
50 - - 50
RI EXVLQHVV DQQXDOO\ $W WKH VDPH WLPH GHYHORSLQJ
25 - - 25 FRXQWULHV DUH JLYLQJ LQFUHDVLQJ SULRULW\ WR SURGXFWLRQ
0- -0 IRUH[SRUWGHVSLWHDEXUJHRQLQJODQGOHVVSRRUXUEDQ
2000 -

2001 -

2002 -

2003 -

2004 -

2005 -

2006 -

2007 -

2008 -

2009 -

2010 -

FODVVZKRVHLPPHGLDWHDQFHVWRUVZHUHVXEVLVWHQFH
IDUPHUVWKDWLVFKURQLFDOO\PDOQRXULVKHGDQGKXQJU\
6RXUFHV86(QHUJ\,QIRUPDWLRQ$GPLQLVWUDWLRQ
DQG)$2VWDW 6RDULQJIRRGDQGIXHOSULFHVKDYHDGLVSURSRUWLRQDWH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$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\ $V -HUHP\
*LOEHUW IRUPHU FKLHI SHWUROHXP HQJLQHHU IRU %3 KDV
SXWLW´7KHFXUUHQWÀHOGVZHDUHFKDVLQJZH·YHNQRZQ
DERXWIRUDORQJWLPHLQPDQ\FDVHVEXWWKH\ZHUHWRR
FRPSOH[WRRIUDFWXUHGWRRGLIÀFXOWWRFKDVH1RZRXU
WHFKQRORJ\DQGXQGHUVWDQGLQJ>DUH@EHWWHUZKLFKLVD
JRRG WKLQJ EHFDXVH WKHVH GLIÀFXOW ÀHOGV DUH DOO WKDW
RI ZRUOG K\GURFDUERQ UHVHUYHV FRXOG OHDG WR D
EUHDNGRZQ RI WKH IRRG V\VWHP DW HYHU\ OHYHO IURP
IDUPHUWRSURFHVVRUWRGLVWULEXWRUWRUHWDLOHUDQGÀQDOO\
WRFRQVXPHU
7RVXPPDUL]HKLJKRLOSULFHVFRQWULEXWHWRVRDULQJIRRG
SULFHV2XUPRGHUQJOREDOIRRGV\VWHPLVKLJKO\RLO
GHSHQGHQWEXWSHWUROHXPLVEHFRPLQJOHVVDQGOHVV
DIIRUGDEOH([WUHPHZHDWKHUHYHQWVDOVRFRQWULEXWHWR
KLJKIRRGSULFHVDQGWRWKHH[WHQWWKDWVXFKHYHQWV
UHVXOW IURP DQWKURSRJHQLF JOREDO ZDUPLQJ WKH\ DUH
DOVRXOWLPDWHO\IXHOUHODWHG7KXVWKHUHLVQRVROXWLRQWR
WKHZRUOG·VZRUVHQLQJIRRGFULVLVZLWKLQFXUUHQWHQHUJ\
DQGDJULFXOWXUDOV\VWHPV
:KDWLVQHHGHGLVDPDMRUUHGHVLJQLQJRIERWKIRRGDQG
HQHUJ\V\VWHPV7KHJRDORIPDQDJHUVRIWKHJOREDO
IRRG V\VWHP VKRXOG EH WR UHGXFH LWV GHSHQGHQFH
RQ IRVVLO HQHUJ\ LQSXWV ZKLOH DOVR UHGXFLQJ *+*
ZHKDYHOHIWµ*LOEHUW
7KH WUHQGV LQ WKH RLO LQGXVWU\ DUH FOHDU DQG
XQGLVSXWHG H[SORUDWLRQ DQG SURGXFWLRQ DUH
EHFRPLQJPRUHFRVWO\DQGDUHJLYLQJULVHWRJUHDWHU
HQYLURQPHQWDOULVNVZKLOHFRPSHWLWLRQIRUDFFHVVWR
QHZ SURVSHFWLYH UHJLRQV LV JHQHUDWLQJ LQFUHDVLQJ
JHRSROLWLFDOWHQVLRQV$FFRUGLQJWRWKH,QWHUQDWLRQDO
HPLVVLRQV IURP ODQGXVH DFWLYLWLHV $FKLHYLQJ WKLV
JRDOZLOOUHTXLUHLQFUHDVLQJORFDOIRRGVHOIVXIÀFLHQF\
DQGSURPRWLQJOHVVIXHODQGSHWURFKHPLFDOLQWHQVLYH
PHWKRGVRISURGXFWLRQ
*LYHQWKHGHJUHHWRZKLFKWKHPRGHUQIRRGV\VWHPKDV
EHFRPH GHSHQGHQW RQ IRVVLO IXHOV PDQ\ SURSRVDOV
IRUGHOLQNLQJIRRGDQGIRVVLOIXHOVPD\VHHPUDGLFDO
(QHUJ\$JHQF\,($DWKHUDWHRIZRUOGFUXGH
+RZHYHUHIIRUWVWRWKLVHQGPXVWEHMXGJHGQRWE\WKH
RLO SURGXFWLRQ UHDFKHG LWV SHDN LQ  7KH ,0)
GHJUHHWRZKLFKWKH\VXSSRUWWKHH[LVWLQJLPSHUDWLYHV
KDV MRLQHG D FKRUXV RI HQHUJ\ LQGXVWU\ DQDO\VWV LQ
RIWKHJOREDOIRRGV\VWHPEXWE\WKHLUDELOLW\WRVROYH
FRQFOXGLQJWKDWVFDUFLW\DQGKLJKSULFHVDUHKHUHWR
WKH IXQGDPHQWDO FKDOOHQJH WKDW IDFHV XV WKH QHHG
VWD\,0)DQG
WR IHHG D JOREDO SRSXODWLRQ RI VHYHQ ELOOLRQ 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
FRXQWLQJZLWKDGLPLQLVKLQJVXSSO\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
WHFKQRORJLFDO EUHDNWKURXJK FRXOG UDSLGO\ UHVXOW LQ D
ZLOO UHPDLQ DIIRUGDEOH LQ WKH IXWXUH DQG WKH\ VKRXOG
FKHDS HIIHFWLYH DOWHUQDWLYH WR SHWUROHXP +RZHYHU
WKHUHIRUH FKDQJH WKHLU EXVLQHVV SODQV DFFRUGLQJO\
WKHVHODWWHUWZRGHYHORSPHQWVDUHUDWKHULPSUREDEOH
:KLOH PDQ\ DSSURDFKHV FRXOG EH H[SORUHG ZKLFK
7KXVWKHUHLVQROLNHO\VFHQDULRLQZKLFKWKHVHUYLFHV
LQ DQ\ FDVH ZRXOG GHSHQG RQ VSHFLÀF JHRJUDSKLF
SURYLGHGE\RLOZLOOEHFRPHPRUHDIIRUGDEOHZLWKLQWKH
ORFDWLRQVWKHQHFHVVDU\RXWOLQHVRIDJHQHUDOWUDQVLWLRQ
FRQWH[WRIDVWDEOHJOREDOHFRQRP\DWDQ\WLPHLQWKH
VWUDWHJ\DUHDOUHDG\FOHDUDVGLVFXVVHGEHORZ
IRUHVHHDEOHIXWXUH
‡ )DUPHUVVKRXOGPRYHWRZDUGVUHJHQHUDWLYHIHUWLOLW\
:KLOH ZHDOWK\ FRQVXPHUV DUH DEOH WR DEVRUE V\VWHPVWKDWEXLOGKXPXVDQGVHTXHVWHUFDUERQLQ
LQFUHPHQWDO LQFUHDVHV LQ IRRG SULFHV D VXGGHQ VRLOV WKXV FRQWULEXWLQJ WR VROYLQJ FOLPDWH FKDQJH
LQWHUUXSWLRQLQWKHDYDLODELOLW\RIIXHOGXHWRJHRSROLWLFDO UDWKHUWKDQH[DFHUEDWLQJLW
HYHQWV RU D VLJQLÀFDQW JUDGXDO FXUWDLOPHQW RI IRVVLO ‡ )DUPHUV VKRXOG UHGXFH WKHLU XVH RI SHVWLFLGHV LQ
IXHO SURGXFWLRQ GXH WR WKH FRQWLQXLQJ GHSOHWLRQ IDYRXURILQWHJUDWHGSHVWPDQDJHPHQWV\VWHPVWKDW

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
75$'($1'(19,5210(175(9,(:
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
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
$IULFDQ DJULFXOWXUH E\ 81&7$' DQG 81(3 E
VXJJHVWV WKDW RUJDQLF VPDOOVFDOH IDUPLQJ FDQ
GHOLYHUWKHDPRXQWRILQFUHDVHG\LHOGVWKRXJKWWREH
SRVVLEOHRQO\WKURXJKLQGXVWULDOIDUPLQJDQGZLWKRXW
WKH HQYLURQPHQWDO DQG VRFLDO GDPDJHV FDXVHG E\
UHÁHFWHG LQ FKDQJHV LQ GLHWDU\ DQG FRQVXPSWLRQ
SDWWHUQV DPRQJ WKH JHQHUDO SRSXODWLRQ ZLWK D
SUHIHUHQFHIRUIRRGVWKDWDUHJURZQORFDOO\WKDWDUH
LQVHDVRQDQGWKDWXQGHUJROHVVSURFHVVLQJ$OVR
DVKLIWDZD\IURPHQHUJ\DQGPHDWLQWHQVLYHGLHWV
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\
VKRXOGEHHQFRXUDJHG +ROH HW DO  SODFH JUHDWHU HPSKDVLV RQ VRLO
‡ :LWK OHVV IXHO DYDLODEOH WR SRZHU DJULFXOWXUDO EXLOGLQJ'·6RX]DDQG,NHUGDQGGLVSOD\JUHDWHU
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 )$2 DQG
WKH:RUOG%DQNDQGDOVRE\QDWLRQDODQGUHJLRQDO
JRYHUQPHQWV
,I VXFK D WUDQVLWLRQ LV XQGHUWDNHQ SURDFWLYHO\ DQG
LQWHOOLJHQWO\WKHUHFRXOGEHPDQ\DGGLWLRQDOEHQHÀWV
ZLWKPRUHHPSOR\PHQWLQIDUPLQJPRUHHQYLURQPHQWDO
SURWHFWLRQ OHVV VRLO HURVLRQ D UHYLWDOL]DWLRQ RI UXUDO
ODQGXVHHIÀFLHQF\WKDQODUJHIDUPV5RVVHW
1HYHUWKHOHVV GHVSLWH WKHVH SURPLVLQJ WUHQGV DQG
ÀQGLQJVLWLVD[LRPDWLFWKDWQRIRRGV\VWHPWLHGWRWKH
HDUWK·VÀQLWHVRLODQGZDWHUUHVRXUFHVFDQVXSSRUWDQ
HYHUH[SDQGLQJ DQG HYHU PRUH UHVRXUFHGHPDQGLQJ
SRSXODWLRQ 7KH SUXGHQW SDWK WRZDUGV UHIRUPLQJ WKH
JOREDO IRRG V\VWHP PXVW WKHUHIRUH FRRUGLQDWH DJUL
FXOWXUDO SROLF\ ZLWK DSSURSULDWH SRSXODWLRQ HGXFD
WLRQ HFRQRPLF WUDQVSRUW DQG HQHUJ\ SROLFLHV 7KH
WUDQVLWLRQ WR D SRVWSHWUROHXP IRRG V\VWHP ZLOO QHHG
WREHFRPSUHKHQVLYH,QLWVVFDOHDQGUHTXLUHGVSHHG
LW SURPLVHV WR EH RQH RI WKH JUHDWHVW FKDOOHQJHV LQ
KXPDQ KLVWRU\ %XW WKH FKDOOHQJH ZLOO RQO\ JURZ WKH
ORQJHULWLVSRVWSRQHG
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$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 WUDGLQJYROXPHRIPLOOLRQWRQVRIZKHDWDWDYDOXH

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
RIDERXWELOOLRQDQGWKDWDWMXVWRQHFRPPRGLW\
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
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
SRROVµDVRYHUWKHFRXQWHU27&WUDQVDFWLRQV7KH
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
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\
%,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
SURSHUUHDOIXQGVWKHVRFDOOHGPDUJLQUHVXOWVLQDQ DERXWWULOOLRQ²DOPRVWWKHHTXLYDOHQWRI*HUPDQ\·V
DUWLÀFLDOLQFUHDVHLQLQYHVWPHQWVWKURXJKFUHGLW *'3

7KH &KLFDJR %RDUG RI 7UDGH &%27 ([FKDQJH

9ROXPH5HSRUWRI0D\UHSRUWHGWUDGLQJRIVRPH
%,PSDFWRQFRPPRGLW\SULFHV
PLOOLRQIXWXUHVDQGRSWLRQVFRQWUDFWVLQWKDWPRQWK 3ULFHYRODWLOLW\LQFHUWDLQFRPPRGLW\PDUNHWVLQFOXGLQJ
:LWKDVLQJOHFRQWUDFWDERXWWRQVRIZKHDW IRU VRPH JUDLQV KDV VLJQLÀFDQWO\ LQFUHDVHG WKRXJK
EXVKHOV DW  NJ ZHUH WUDGHG UHVXOWLQJ LQ D WRWDO LW LV YHU\ GLIÀFXOW WR GHWHUPLQH WR ZKDW H[WHQW WKLV LV
 75$'($1'(19,5210(175(9,(:

)LJXUH&RUUHODWLRQEHWZHHQWKHQXPEHURI27&FRQWUDFWVDQGFRPPRGLW\SULFHGHYHORSPHQW²

200 - - 14,000

Sales value of OTC contracts in $ bn

OTC contracts ($ bn)
180 - - 12,000
Primary commodity price index

12,389
Commodity price index

160 - - 10,000

7,758
7,053
6, 399
140 - - 8,000
5,853
5,038

120 - - 6,000

3,392

3,101
100 - - 4,000

80 - - 2,000
Jan. 2006 -
Mar. 2006 -
May 2006 -
Jul. 2006 -
Sep. 2006 -
Nov. 2006 -
Jan. 2007 -
Mar. 2007 -
May 2007 -
Jul. 2007 -
Sep. 2007 -
Nov. 2007 -
Jan. 2008 -
Mar. 2008 -
May 2008 -
Jul. 2008 -
Sep. 2008 -
Nov. 2008 -
Jan. 2009 -
Mar. 2009 -
May 2009 -
Jul. 2009 -
Sep. 2009 -
Nov. 2009 -
6RXUFH*KRVK

GXHWRWKHHIIHFWRIHVFDODWLQJVSHFXODWLRQRQVSHFLÀF LWZDVWKHFRQVLGHUDEOHVSHFXODWLRQLQWKHPDUNHWWKDW
FRPPRGLW\SULFHV:KHUHDVLQWKHGLVWDQWSDVWSULFHV GURYHWKRVHSULFHVWKLVDSSOLHGERWKWRWKHLUXSZDUG
YDULHG RQO\ PDUJLQDOO\ WRGD\ D GRXEOLQJ RI SULFHV DQGGRZQZDUGPRYHPHQWV
RUDGURSRISHUFHQWRUPRUHLVQRORQJHUDUDUH
,Q WKH FRXUVH RI WKH VHFRQG KDOI RI  QXPHURXV
RFFXUUHQFH7KLVOHYHORIH[WUHPHYRODWLOLW\FDQKDUGO\
VSHFXODWRUV ZHUH KDUG KLW E\ WKH GUDPDWLF
EHH[SODLQHGE\PDUNHWIXQGDPHQWDOVDORQH$UHFHQW
GHYHORSPHQWVLQWKHZRUOG·VÀQDQFLDOPDUNHWVDQGWKH
VWXG\E\/DJL%DU<DPDQG%HUWUDQGDWWULEXWHV
UHVXOWLQJORVVLQWKHIDFHYDOXHRIERQGVDQGVKDUHV
IRRG SULFH YRODWLOLW\ ODUJHO\ WR VSHFXODWLRQ DQG WR D
6SHFXODWRUVZHUHREOLJHGWROLTXLGDWHORDQVIRUZKLFK
OHVVHUH[WHQWWRWKHH[SDQVLRQRIELRIXHOSURGXFWLRQ
WKH\ QR ORQJHU KDG VXIÀFLHQW FRYHU $V D UHVXOW DQ\
$QLOOXVWUDWLYHH[DPSOHRIVSHFXODWLYHDFWLYLWLHVFDQEH SRVLWLRQVRQWKHPDMRUSOD\HUV·ERRNVWKDWVWLOOKDGDQ\
VHHQ LQ WKH KLVWRU\ RI RLO SULFHV VSHFLÀFDOO\ RI :HVW YDOXHDQGFRXOGEHVROGHDVLO\WRJHQHUDWHOLTXLGLW\LQD
7H[DV ,QWHUPHGLDWH :7, RYHU WKH SDVW ÀYH \HDUV FUDVKLQJHQYLURQPHQWLQFOXGLQJDVLJQLÀFDQWYROXPH
ÀJXUH)URPWKHOHYHORISHUEDUUHODWWKHHQG RI IRUZDUG FRQWUDFWV RQ FRPPRGLWLHV ZHUH VROG
RIWKHSULFHVKRWXSWRRYHUSHUEDUUHOLH ZKLFK OHG WR D FRQVLGHUDEOH HDVLQJ RI FRPPRGLW\
E\ VRPH  SHU FHQW RQO\ WR IDOO VKDUSO\ VKRUWO\ SULFHV 2WKHU DFWRUV ZKR DOVR KDG VPDOO FROODWHUDO
WKHUHDIWHUE\RYHUSHUFHQWWRVRPHSHUEDUUHO RQIRUZDUGFRQWUDFWVJRWLQWRWURXEOHEHFDXVHIDOOLQJ
:LWKRXW GRXEW WKH HFRQRPLF FULVLV RI ²
GDPSHQHG RLO GHPDQG EXW XQOLNHO\ E\ DV PXFK DV )LJXUH'HYHORSPHQWRIWKHSULFH
SHUFHQW/LNHZLVHLWLVKLJKO\XQOLNHO\WKDWGHPDQG RIRLO:7,²
LQWKHWZRSUHFHGLQJ\HDUVURVHE\SHUFHQW$QG
WKHUH ZDV QR VKRUWDJH RI VXSSO\ WKDW PLJKW KDYH 160 -
MXVWLÀHGVXFKDQDEHUUDWLRQ 140 -
120 -
'XULQJ WKH ORQJ SKDVH RI ULVLQJ FRPPRGLW\ SULFHV
PRVWO\ IURP  RQZDUGV PDQ\ DUJXPHQWV ZHUH 100 -

DGYDQFHG WR H[SODLQ WKH LQFUHDVH LQFOXGLQJ ULVLQJ 80 -

GHPDQG LQ UDSLGO\ LQGXVWULDOL]LQJ FRXQWULHV DQG WKH 60 -
SROLWLFDOLQVHFXULW\LQVHYHUDOSURGXFLQJUHJLRQVVXFK 40 -
DV,UDT$OWKRXJKWKHJOREDOHFRQRPLFFULVLVLQ² 20 -
GDPSHQHGRLOGHPDQGWKHIXQGDPHQWDOIDFWRUV 01.01.2008 01.01.2010
SHUVLVWHGVRWKDWLWLVXQOLNHO\WKDWWKRVHIDFWRUVFDXVHG
RLOSULFHVWRHDVHE\DVPXFKDVSHUFHQW5DWKHU 6RXUFHKWWSZZZÀQDQ]HQQHW
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

)LJXUH&RUUHODWLRQEHWZHHQVKDUHDQGFRPPRGLW\SULFHV'RZ-RQHV,QGXVWULDO$YHUDJHYHUVXV'RZ-RQHV8%6
&RPPRGLW\,QGH[6HSW²6HSW

160 -

140 -

120 -
Dow Jones Industrial Average
Percentage

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
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
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 $W WKH
DUH DOVR LQFUHDVLQJO\ LQÁXHQFLQJ WKRVH SULFHV 7KLV
PDNHVFRPPRGLW\SULFHVGHSHQGHQWRQLQWHUQDWLRQDO
PRQHWDU\SROLF\DQGWKHFDSLWDOVWRFNVLWXDWLRQRIODUJH
EDQNV 6XFK D GHYHORSPHQW LV KLJKO\ SUREOHPDWLF
EHFDXVHHYHU\ORFDOÀQDQFLDOFULVLVFDQHDVLO\WULJJHU
D JOREDO HFRQRPLF RQH DV ZLWQHVVHG RYHU WKH SDVW
WKUHH\HDUV
)RUWKHPDMRULW\RIÀQDQFLDODFWRUVZKHWKHUWKH\DUH
EDQNV RU LQYHVWPHQW IXQGV WKH RYHUULGLQJ LQWHUHVW LV
WR PDNH PRQH\ IURP FRPPRGLW\ SULFH YRODWLOLW\ DQG
QRW WKH DFTXLVLWLRQ RI UHDO JRRGV 7KH\ EX\ IRUZDUG
FRQWUDFWVRQWKHGHOLYHU\RIFRPPRGLWLHVLQWKHIXWXUH
DWDQDOUHDG\SUHGHWHUPLQHGSULFH6KRUWO\EHIRUHVXFK
FRQWUDFWVEHFRPHGXHWKH\FRQFOXGHRWKHUFRQWUDFWV
WR HYHQ RXW WKHLU ÀQDQFLDO SRVLWLRQV ZLWKRXW KDYLQJ
HYHUPRYHGDNLORJUDPRIPHWDORUDEXVKHORIJUDLQ,I
WKHLUEHWWXUQVRXWWREHVXFFHVVIXOWKH\PDNHVRPH
PRQH\RWKHUZLVHWKH\LQFXUDORVV,WLVHVWLPDWHGWKDW
 75$'($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 IRRG PXVW WKHUHIRUH EH YLHZHG ZLWK FRQVLGHUDEOH
OHDG WR D UHDO SK\VLFDO GHOLYHU\ RI FRPPRGLWLHV WKH VFHSWLFLVPDQGFRQFHUQ
UHVWDUHOLTXLGDWHGEHIRUHGHOLYHU\<HWFRQWUDU\WRZKDW
,Q WKH FDVH RI ZKHDW WKH HFRQRPLF GDWD SURYLGH D
ZRXOGEHDVVXPHGWKLVOLTXLGDWLRQGRHVQRWWULJJHUD
UDWKHUVROLGSLFWXUH²SURGXFWLRQKDVDOZD\VNHSWSDFH
SULFHGHFOLQHEHFDXVHWKHUHVXOWLQJIUHHGLQYHVWPHQW
ZLWK GHPDQG ÀJXUH  ,W LV WKHUHIRUH SDUDGR[LFDO
FDSLWDO LV LPPHGLDWHO\ UHLQYHVWHG LQ QHZ FRQWUDFWV ²
WKDWLQUHFHQW\HDUVWKHSULFHRIZKHDWKDVEHHQYHU\
WKHVRFDOOHG´UROORYHUµRIFRQWUDFWV
YRODWLOH
&DSLWDOLQYHVWHGLQWKLVZD\WHQGVWRVWD\LQFRPPRGLW\
6LQFH HDUO\  ODUJH ÀQDQFLDO LQYHVWRUV KDYH
IXWXUHV PDUNHWV LQ WKH PHGLXP WHUP ZKLFK OHDGV WR
LQYHVWHG LQ FRPPRGLWLHV E\ DFTXLULQJ WKH VWRFNV
SULFH EXEEOHV WKDW LQ WXUQ DWWUDFW PRUH VSHFXODWLYH
RI HQWLUH ZDUHKRXVHV DQG VLQFH WKHVH DUH DFTXLUHG
LQYHVWPHQW 7KLV LV ZKDW KDSSHQHG LQ WKH SHULRG
GLUHFWO\IURPWKHSURGXFHUVWKH\GRQRWIHDWXUHLQWKH
² DQG DJDLQ LQ WKH VXEVHTXHQW WZR \HDUV
UHDO HFRQRP\ 7KLV SURYRNHV SURGXFWLRQ VKRUWDJHV
,I WKH PDUNHW WKXV DWWUDFWV PRUH DQG PRUH PRQH\
DQG SULFH ERRPV ZLWK WKH VLPSOH REMHFWLYH RI SURÀW
YLD FRPPRGLW\ LQGH[ IXQGV RU VLPLODU YHKLFOHV WKLV
PD[LPL]DWLRQ E\ WKH LQWHUQDWLRQDO ÀQDQFLDO VHFWRU
DFFHOHUDWHVSULFHGHYHORSPHQWV7KXVWKHLQFUHDVLQJ
ZKLFK LV GHWULPHQWDO WR WKH UHDO HFRQRP\ DQG WR
SDUWLFLSDWLRQ RI ÀQDQFLDO LQYHVWRUV LQ FRPPRGLW\
VRFLHW\DWODUJH
PDUNHWV IRU VSHFXODWLYH SXUSRVHV GULYHV XS IXWXUHV
SULFHV DQG LQGH[ IXQGV MXVW DV ZLWK VKDUHV RQ WKH 7KHUHLVQRUHDOQHHGIRUWKHDJURIRRGLQGXVWU\RUWKH
VWRFNH[FKDQJHEHFDXVHIRUHDFKEX\HUWKHUHH[LVWV HFRQRP\WRJLYHÀQDQFLDOLQYHVWRUVYLUWXDORUSK\VLFDO
DVHOOHU EDJV RI ZKHDW RU RWKHU VFDUFH FRPPRGLWLHV IRU
GLYHUVLI\LQJ WKHLU ÀQDQFLDO SRUWIROLR DQG WKXV FUHDWLQJ
7KHLQYHVWPHQWIXQGVPDQDJHUDOVRVHOOVFRPPRGLW\
DUWLÀFLDO GHPDQG 7KH ZRUOG PDUNHW IRU IRRG DQG
LQYHVWPHQWV LI WKH SULFH SHUVLVWHQWO\ GHFOLQHV RU LI
RWKHU FRPPRGLWLHV LV DOUHDG\ XQGHU KHDY\ GHPDQG
LQYHVWRUV SXOO WKHLU PRQH\ RXW RI WKH IXQGV DQG
SUHVVXUHZKLFKWKHIRRGDQGFRPPRGLW\VHFWRUKDV
WKXVUHLQIRUFHVWKHGHFOLQLQJSULFHWUHQG1RLQYHVWRU
PDQDJHGWRNHHSLQFKHFNE\H[SDQGLQJSURGXFWLRQ
VSHFXODWRU RU IXQG PDQDJHU EX\V DQ DJULFXOWXUDO
+RZHYHU LI WKHUH LV DGGLWLRQDO DQG XQQHFHVVDU\
FRPPRGLW\ DW WLPHV RI EXPSHU KDUYHVWV RU ORZ
GHPDQGSUHVVXUHIURPÀQDQFLDOLQYHVWRUVWKLVIUDJLOH
GHPDQGUDWKHUWKH\DUHDWWUDFWHGE\KDUYHVWIDLOXUHV
PDUNHWHTXLOLEULXPZLOOEHMHRSDUGL]HG
DQG H[WUHPH GHPDQG VLWXDWLRQV 7KLV LV ZK\ ERWK
VSHFXODWRUV DQG ÀQDQFLDO LQYHVWRUV UHLQIRUFH HUUDWLF
SULFH ÁXFWXDWLRQV 7KHLU UROH LQ SULFH IRUPDWLRQ IRU
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\ 7KHUHDUHGLIIHUHQWRSWLRQVIRUFRQIRUPLW\DVVHVVPHQW

WKURXJK DJURLQGXVWULDO PRGHOV KDV FUHDWHG VHULRXV 6HOIFODLP UHODWLRQVKLSV EDVHG RQ SHUVRQDO WUXVW
HQYLURQPHQWDO DQG VRFLDO SUREOHPV 7KXV EXVLQHVV SDUWLFLSDWRU\ JXDUDQWHH V\VWHPV DQG WKLUGSDUW\
DV XVXDO LV QRW DQ RSWLRQ 7KH ZRUOG QHHGV WR FHUWLÀFDWLRQ FDQ DOO ZRUN ZHOO DW ORFDO DQG QDWLRQDO
XQGHUJRDIXQGDPHQWDOVKLIWWRZDUGVVXVWDLQDEOHDQG OHYHOV )RU H[FKDQJHV DFURVV GLVWDQFHV LQFOXGLQJ
HFRORJLFDO DJULFXOWXUDO DQG IRRG V\VWHPV 7KLV KDV UHJLRQDO RU LQWHUQDWLRQDO WUDGH XVXDOO\ WKLUGSDUW\
EHHQKLJKOLJKWHGE\DQLQFUHDVLQJQXPEHURI8QLWHG FHUWLÀFDWLRQLVQHHGHG,QFRXQWULHVWKDWUHJXODWHWKHLU
1DWLRQVVWXGLHVLQFOXGLQJDUHSRUWE\WKH,QWHUQDWLRQDO PDUNHWV DQG FHUWLÀFDWLRQ V\VWHPV WKHUH LV JHQHUDOO\
$VVHVVPHQWRI$JULFXOWXUDO.QRZOHGJH6FLHQFHDQG DQ DGGLWLRQDO OD\HU WKDW RI DFFUHGLWDWLRQ VXSHUYLVLRQ
7HFKQRORJ\ IRU 'HYHORSPHQW ,$$67'  PDQ\ RUDSSURYDORIFHUWLÀFDWLRQERGLHV7KHRUJDQLFSULYDWH
81&7$'UHSRUWVLQFOXGLQJLWV7UDGHDQG(QYLURQPHQW VHFWRUV\VWHPDOVRRIIHUVWKLVDGGLWLRQDOOD\HURIJOREDO
5HYLHZ  DQG  81(3·V *UHHQ (FRQRP\ RUJDQLF JXDUDQWHH WKURXJK WKH ,QWHUQDWLRQDO 2UJDQLF
5HSRUW 81(3  DQG UHSRUWV E\ WKH +LJK /HYHO $FFUHGLWDWLRQ6HUYLFH
3DQHORI([SHUWVRQ)RRG6HFXULW\DQG1XWULWLRQ+/3(
,Q UHFHQW GHFDGHV WKHUH KDV EHHQ D SUROLIHUDWLRQ RI
DQGWKH8QLWHG1DWLRQV6SHFLDO5DSSRUWHXURQ
SXEOLF DQG SULYDWH 2*6V ZRUOGZLGH 2IWHQ WKHVH
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
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
2UJDQLF JXDUDQWHH V\VWHPV 2*6V DUH VHW XS WR UHTXLUHPHQWV LQ DOO WKH GLIIHUHQW PDUNHWV ZKHUH
JXDUDQWHH WR FRQVXPHUV WKDW SURGXFWV KDYH EHHQ WKH\ ZLVK WR VHOO ZKLFK FRXOG HYHQ EH WZR GLIIHUHQW
SURGXFHGLQDFFRUGDQFHZLWKRUJDQLFSULQFLSOHVDQG VWRUHV RQ WKH VDPH VWUHHW 6LPLODUO\ SURFHVVRUV DQG
SUDFWLFHV7KHPDLQFRPSRQHQWVRIDQ2*6DUH WUDGHUV VWUXJJOH WR VRXUFH DFFHSWDEO\ FHUWLÀHG ÀQDO
‡ $SURGXFWLRQDQGSURFHVVLQJVWDQGDUGDQG SURGXFWV DQG LQJUHGLHQWV IRU SURFHVVHG SURGXFWV
‡ $FRQIRUPLW\DVVHVVPHQWV\VWHPWRHQVXUHWKDWWKH $QG FHUWLÀFDWLRQ ERGLHV SD\ KLJK FRVWV IRU PXOWLSOH
VWDQGDUGLVEHLQJIROORZHG 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
$,PSRUWDQFHRIRUJDQLFWUDGH
7KH ZRUOG QHHGV VWURQJ YLEUDQW ORFDO IRRG V\VWHPV
ZLWK ORFDO PDUNHWV DQG ORFDO UHODWLRQVKLSV 7KHVH
VKRXOG EH DFWLYHO\ VXSSRUWHG E\ ORFDO FRQVXPHUV
UHWDLOHUV DQG JRYHUQPHQWV DOLNH 7KHUH LV D ZKROH
DUUD\RIDFWLRQVWKDWQHHGWREHXQGHUWDNHQLQFOXGLQJ
GHYHORSPHQWRIORFDODQGUHJLRQDOLQIUDVWUXFWXUHVXFK
DVURDGVDQGPDUNHWVSURYLVLRQRIPLVVLQJVHUYLFHV
VXFKDVFUHGLWWRVPDOOKROGHUIDUPHUVVXSSRUWIRUWKH
FRQVHUYDWLRQDQGH[FKDQJHRIORFDOVHHGVEUHHGVDQG
UHODWHG WUDGLWLRQDO NQRZOHGJH SDUWLFLSDWRU\ UHVHDUFK
LQ SDUWQHUVKLS ZLWK ORFDO RSHUDWRUV DQG LQ UHVSRQVH
WRORFDOQHHGVH[WHQVLRQVHUYLFHVWRVXSSRUWRUJDQLF
SURGXFWLRQ DQG VXSSRUW WR VPDOOKROGHU IDUPHUV WR
75$'($1'(19,5210(175(9,(:
SURGXFWV ZLOO VWLOO JHQHUDOO\ SUHIHU ORFDO SURGXFWV
GRPHVWLF RUJDQLF RSHUDWRUV FDQ EHQHÀW IURP WKLV E\
PDUNHWLQJWKHLUSURGXFWVDV
‡ QDWLRQDO WKURXJK D QDWLRQDO ODEHO VXFK DV WKH
QDWLRQDOÁDJDQGRU
‡ ORFDO WKURXJK GLUHFW VDOHV RU E\ VLJQV RQ ORFDO
SURGXFWVDWSRLQWRIÀQDOVDOH
7KHVH ORFDO RU QDWLRQDO ODEHOV PD\ HYHQ DWWUDFW QHZ
FRQVXPHUV RI RUJDQLF ZKR DUH LQWHUHVWHG LQ EX\LQJ
ORFDOSURGXFWV,QDGGLWLRQLQJUHGLHQWVIRUSURFHVVHG
SURGXFWVRIWHQKDYHWREHVRXUFHGIURPPDQ\GLIIHUHQW
FRXQWULHVZKLFKPHDQVWKDWLPSRUWVDUHQHFHVVDU\IRU
GHYHORSLQJWKHRUJDQLFSURFHVVHGSURGXFWVLQGXVWU\
ZKLFKLVRQHRIWKHPRVWUDSLGO\JURZLQJVHJPHQWVRI
WKHRUJDQLFPDUNHW
2SHQQHVV WR WUDGH LQ RUJDQLF SURGXFWV DOVR VKRZV
VROLGDULW\ZLWKWKHUHVWRIWKHRUJDQLFZRUOGHVSHFLDOO\
ZLWKRUJDQLFSURGXFHUVIURPGHYHORSLQJFRXQWULHV,Q
PRVWRIWKHVHFRXQWULHVWKHGRPHVWLFRUJDQLFPDUNHWV
DUH SDUWLFXODUO\ VPDOO 7KHUHIRUH RUJDQLF H[SRUWV
FDQ EH DQ LPSRUWDQW SXOO IDFWRU IRU WKH GHYHORSPHQW
RI VXVWDLQDEOH DJULFXOWXUDO SUDFWLFHV DQG LPSURYHG
RUJDQL]HLQWRJURXSV81&7$'81(3D OLYHOLKRRGVIRUWKHZRUOG·VSRRU2QVPDOOKROGHUIDUPV
LQ GHYHORSLQJ FRXQWULHV RIWHQ RQH RU WZR SURGXFWV
7UDGHLQRUJDQLFSURGXFWVFDQDOVRSOD\DQLPSRUWDQW DUHH[SRUWHGEXWGR]HQVRIRWKHUSURGXFWVDUHEHLQJ
FRPSOHPHQWDU\ UROH 2UJDQLF SURGXFWV FXUUHQWO\ SURGXFHGLQDQRUJDQLFPDQQHUDQGVROGORFDOO\7KLV
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
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
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
$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 GHYHORS WKH IROORZLQJ WRROV WR IRVWHU WUDGH EDVHG RQ
Ą²Ą ELOOLRQ SHU \HDU DW FXUUHQW UDWHV RXWZHLJK HTXLYDOHQF\
WKH GLUHFW HFRQRPLF EHQHÀWV RI UHDFWLYH QLWURJHQ LQ ‡ )RU FRQIRUPLW\ DVVHVVPHQW WKH ,QWHUQDWLRQDO
DJULFXOWXUH7KHKLJKHVWVRFLHWDOFRVWVDUHDVVRFLDWHG 5HTXLUHPHQWV IRU &RQIRUPLW\ $VVHVVPHQW %RGLHV
ZLWK ORVV RI DLU TXDOLW\ DQG ZDWHU TXDOLW\ OLQNHG WR ,52&%DUHSHUIRUPDQFHUHTXLUHPHQWVIRURUJDQLF
LPSDFWV RQ HFRV\VWHPV DQG HVSHFLDOO\ RQ KXPDQ FHUWLÀHUV DGDSWHG IURP ,62  ZKLFK IDFLOLWDWH
KHDOWKµ6XWWRQHWDO+RZHYHUWKHVHFRVWVDUH
QRWUHÁHFWHGLQWKHSULFHVRIWKHIRRGDQGDJULFXOWXUDO
SURGXFWVSURGXFHGZLWKKHDY\LQSXWVRIWKHV\QWKHWLF
QLWURJHQ IHUWLOL]HUV 7KH ORQJWHUP VROXWLRQ WR WKLV
SUREOHP FOHDUO\ VKRXOG EH WR FKDQJH WKH XQGHUO\LQJ
UHFRJQLWLRQDFURVVV\VWHPV
‡ )RU SURGXFWLRQ DQG SURFHVVLQJ VWDQGDUGV WKH
(TXLWRROLVDJXLGHWRDVVHVVLQJGLIIHULQJVWDQGDUGV
LQDVWUXFWXUHGDQGWUDQVSDUHQWPDQQHU
8QGHUDVXFFHVVRUMRLQWLQLWLDWLYHWKH*OREDO2UJDQLF
LQFHQWLYH VWUXFWXUHV VR WKDW QHJDWLYH H[WHUQDOLWLHV 0DUNHW$FFHVV*20$SURMHFWWKH(TXLWRROKDVEHHQ
DUH GXO\ UHÁHFWHG LQ WKH SULFHV RI DOO DJULFXOWXUDO HQKDQFHGWKURXJKWKHGHYHORSPHQWRIWKH&RPPRQ
SURGXFWV$WWKHYHU\OHDVWJRYHUQPHQWVVKRXOGVWRS 2EMHFWLYHV DQG 5HTXLUHPHQWV IRU 2UJDQLF 6\VWHPV
VXEVLGL]LQJWKHVHKDUPIXOLQSXWV7KLVFRXOGXOWLPDWHO\
UHVXOWLQRUJDQLFSURGXFWLRQEHFRPLQJWKHQRUPZLWK
2*6VQRORQJHUQHHGHG,QWKHPHDQWLPHKRZHYHULW
LVLPSRUWDQWWRUHGXFHWKHWHFKQLFDOEDUULHUVWRWUDGH
FDXVHG E\ GLIIHUHQFHV LQ 2*6V VR WKDW WKH RUJDQLF
DJULFXOWXUHVHFWRUFDQJURZ7KHPDLQWRROVIRUWKLVDUH
&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
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
PDQQHU ,)2$0 WKH LQWHUQDWLRQDO SULYDWH VHFWRU
VWDQGDUG VHWWLQJ ERG\ LV XVLQJ &2526 WR GHYHORS
WKH ,)2$0 IDPLO\ RI VWDQGDUGV ² WKRVH ZKLFK KDYH
EHHQDVVHVVHGDQGIRXQGWREHRYHUDOOHTXLYDOHQWWR
&2526
7KH SXEOLF DQG SULYDWH VHFWRUV VKRXOG PDNH IXOO XVH
RIWKHVHWRROV6SHFLÀFDOO\IRUWKHSXUSRVHRIWUDGHLQ
RUJDQLFSURGXFWVDQGSDUWLFXODUO\DVUHJDUGVLPSRUWV
RI RUJDQLF SURGXFWV IURP RWKHU V\VWHPV SXEOLF DQG
SULYDWH VHFWRU DFWRUV LQYROYHG LQ UHJXODWLQJ RUJDQLF
JXDUDQWHHV\VWHPVVKRXOG
)RUSURGXFWLRQDQGSURFHVVLQJVWDQGDUGV
‡ 8VH &2526 DQG WKH (TXLWRRO WR HYDOXDWH RWKHU
SURGXFWLRQDQGSURFHVVLQJVWDQGDUGVWRGHWHUPLQH
LI FRPSOLDQFH ZLWK WKRVH VWDQGDUGV ZRXOG DV D
ZKROH DFKLHYH WKH PRVW LPSRUWDQW XQGHUO\LQJ
REMHFWLYHVRIRUJDQLFSURGXFWLRQV\VWHPV
)RUFRQIRUPLW\DVVHVVPHQWV\VWHPV
‡ %XLOG WUXVW DPRQJ DFFUHGLWRUV DQG VXSHUYLVLQJ
LPSRUWV RI RUJDQLF SURGXFWV WKDW DUH SURGXFHG DQG ERGLHV LQFOXGLQJ JRYHUQPHQWV WR PXWXDOO\
JXDUDQWHHG LQ D PDQQHU HTXLYDOHQW QRW LGHQWLFDO WR UHFRJQL]H DFFUHGLWDWLRQDSSURYDO V\VWHPV RI
WKHLURZQ FHUWLÀFDWLRQERGLHVDQGRWKHUPHDQVRIFRQIRUPLW\
DVVHVVPHQW
)RURYHUDGHFDGH81&7$')$2DQGWKH,QWHUQDWLRQDO
‡ 8VH ,52&% WR HYDOXDWH WKH SHUIRUPDQFH
)HGHUDWLRQ RI 2UJDQLF $JULFXOWXUH 0RYHPHQWV
UHTXLUHPHQWVIRUFHUWLÀFDWLRQERGLHV
,)2$0 WKURXJK WKHLU MRLQW ,QWHUQDWLRQDO 7DVN )RUFH
RQ +DUPRQL]DWLRQ DQG (TXLYDOHQFH LQ 2UJDQLF 7KH ODQGVFDSH RI LQWHUQDWLRQDO WUDGH LQ RUJDQLF
$JULFXOWXUH²KDYHZRUNHGWRJHWKHUDORQJ SURGXFWV LV FXUUHQWO\ FKDQJLQJ 0DQ\ UHJLRQV DUH
ZLWKDKRVWRINH\SXEOLFDQGSULYDWHVHFWRUDFWRUVWR 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 $IULFDQ 2UJDQLF 3URGXFWV
75$'($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
6WDQGDUG ($236 ZDV GHYHORSHG WKURXJK D WKLUGFRXQWU\OLVW
UHJLRQDOSXEOLFSULYDWHVHFWRUFRQVXOWDWLYHSURFHVV )RU UHJXODWLRQV WKDW PDLQWDLQ OLVWV RI DSSURYHG
LQ ² DQG DGRSWHG DV WKH (DVW $IULFDQ FHUWLÀFDWLRQERGLHVVXFKDVLQWKH(8DQGWKH8QLWHG
&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 $VLDQ
6WDWHV FHUWLÀFDWLRQ ERGLHV VKRXOG EH DOORZHG WR
FHUWLI\ WR GLIIHUHQW VWDQGDUGV LQ GLIIHUHQW UHJLRQV )RU
H[DPSOH D (XURSHDQ FHUWLÀFDWLRQ ERG\ RSHUDWLQJ LQ
(XURSHDQGLQ(DVW$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
5HJLRQDO 2UJDQLF 6WDQGDUG $526 WKH GUDIW RI
ZKLFKZDVÀQDOL]HGLQ)HEUXDU\
7KHVH HIIRUWV DW KDUPRQL]DWLRQ FDQ ERWK H[SDQG WKH
UHJLRQDO PDUNHWV DQG GHYHORS D VHQVH RI FRPPRQ
UHJLRQDOLGHQWLW\ZLWKSRVLWLYHVSLOORYHUHIIHFWVLQWHUPV
RI6RXWK6RXWKFRRSHUDWLRQLQDQXPEHURIDUHDV
5HJXODWLRQV FRQFHUQLQJ RUJDQLF LPSRUWV QHHG WR EH
XSGDWHG WR UHÁHFW WKLV VKLIWLQJ ODQGVFDSH DQG DOORZ
IRU UHFRJQLWLRQ RI UHJLRQDO RUJDQLF VWDQGDUGV 7KLV
HTXLYDOHQF\ DJUHHPHQW ZLWK IXOO V\VWHP UHFRJQLWLRQ
LQFOXGLQJ IRU LPSRUWV &HUWLÀFDWLRQ ERGLHV DURXQG
WKH ZRUOG QHHG RQO\ REWDLQ RQH DFFUHGLWDWLRQ DQG
RSHUDWRUV RQO\ RQH FHUWLÀFDWLRQ WR DFFHVV ERWK
PDUNHWV7KLVHTXLYDOHQF\DJUHHPHQWWKXVSURPRWHV
RUJDQLFWUDGHFUHDWLRQZLWKRXWWUDGHGLYHUVLRQZKLFK
PD\ RFFXU XQGHU PRUH H[FOXVLRQDU\ DJUHHPHQWV ,W
WKXVVKDUHVWKHEHQHÀWVZLWKWKHUHVWRIWKHZRUOG,W
LVDEHVWSUDFWLFHWREHHPXODWHGDQGKRSHIXOO\DOVR
UHSOLFDWHGPXOWLODWHUDOO\ZRUOGZLGH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$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 SURGXFHUV 6SHFLDOL]DWLRQ PHFKDQL]DWLRQ DQG

&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
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 (FRORJLFDOFULWHULD (FRQRPLFYDULDEOHV

6WUXFWXUHRIHPSOR\PHQW
/HYHORIZDJHV
)OXFWXDWLRQ
4XDOLW\RIMREIXQFWLRQV
6RLOIHUWLOLW\ 'LVWULEXWLRQRIYDOXHFUHDWLRQ
%LRGLYHUVLW\ 9DOXHFUHDWLRQIRUWKHUHJLRQ
'HYHORSPHQWRIRUJDQLFFXOWLYDWLRQDUHD 5HJLRQDOHQJDJHPHQW
5HVRXUFHFRQVXPSWLRQ 'LDORJXHZLWKLQWKHYDOXHFUHDWLRQFKDLQ
,PSOHPHQWDWLRQRI(8'LUHFWLYHRQ
2UJDQLF$JULFXOWXUH

VRFLDODQGHFRORJLFDOHIIHFWVRI59$&6&DFWLYLWLHVE\ QR  IDPLO\ VXFFHVVRU LQWHUHVWHG LQ UXQQLQJ LW WKXV

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
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 DQGPDUNHWLQJSDUWQHUV
ELRGLYHUVLW\ DQG WKH HQYLURQPHQW ² DQG WKH FUHDWLRQ ‡ 0DLQWDLQLQJ PDQDJHULDO VRYHUHLJQW\ WKURXJK
RI UXUDO OLYHOLKRRGV 7KLV PRGHO RIIHUV D QXPEHU RI VKDUHKROGHULQYROYHPHQWDVWKHUHLVQRGHSHQGHQFH
HFRQRPLFHQYLURQPHQWDODQGVRFLDOEHQHÀWV RQH[WHUQDOÀQDQFLDODJHQFLHV
‡ &RQWULEXWLRQWRUXUDOGHYHORSPHQWDQGVXVWDLQDEOH
(FRQRPLFEHQHÀWV OLYHOLKRRGVWKURXJKWKHFUHDWLRQRIQHZFRPSDQLHV
‡ 1R RQHVLGHG VSHFLDOL]DWLRQ RI SURGXFWLRQ WKH DQGIDUPVDQG
QHWZRUNLQJ DQG FRQVXOWDWLYH DSSURDFK DV ZHOO ‡ 0RELOL]DWLRQRIFDSLWDOIURPZLWKLQWKHUHJLRQ
DV WKH SULQFLSDOV RI RUJDQLF DJULFXOWXUH SUHYHQW
ORSVLGHGVSHFLDOL]DWLRQ (QYLURQPHQWDOEHQHÀWV
‡ /HVV SUHVVXUH WR UHGXFH FRVWV DQG LQFUHDVH WKH ‡ 6KRUWWUDQVSRUWGLVWDQFHV
VFDOHRISURGXFWLRQ ‡ 6PDOO SURGXFLQJ XQLWV WKDW UHVSHFW WKH PXOWL
‡ 3ULRULW\ JLYHQ WR TXDOLW\ RYHU HFRQRPLHV RI VFDOH IXQFWLRQDOLW\RIDJULFXOWXUH
WKURXJKDFWLYHVXSSRUWWRVPDOOKROGHUIDUPHUVDQG ‡ 3URPRWLRQ RI RUJDQLF DJULFXOWXUH DQG VXVWDLQDEOH
VPDOOVFDOHSURFHVVLQJDQGPDUNHWLQJFRPSDQLHV SURFHVVLQJDQGPDUNHWLQJPHWKRGVZLWKUHVXOWLQJ
‡ 0XWXDO VXSSRUW ZLWKLQ WKH QHWZRUN WKURXJK LPSURYHPHQWV LQ VRLO IHUWLOLW\ DQG ELRGLYHUVLW\ DQG
FRXQVHOOLQJDQGVXSSRUWRISDUWQHUFRPSDQLHV FRQWULEXWLRQWRFOLPDWHFKDQJHPLWLJDWLRQDQG
‡ 1R GHSHQGHQFH RQ VSHFLÀF PDUNHWLQJ V\VWHPV ‡ 'LUHFW FRQWULEXWLRQ RI FRQVXPHUV WR WUDQVIRUPLQJ

7DEOH2YHUYLHZRINH\LQYHVWPHQWVRI59$&6&

3URMHFW 1DWXUHRILQYHVWPHQW ,QYHVWHGFDSLWDOĄ

'DLU\IDUP*URRV 3XUFKDVHDQGOHDVH 
0DUNHWJDUGHQ)HOGPDQQ 3XUFKDVHDQGOHDVH 
5HDOHVWDWHLQYHVWPHQWV 3XUFKDVHDQGOHDVH 
&URSDUHDKD 3XUFKDVHDQGOHDVH 
1DWXUDOIRRGZKROHVDOHFRPSDQ\%RGDQ/WG 6LOHQWSDUWQHU 
)RRGUHWDLORXWOHW5LHVHOIHOG/WG+ 6KDUHKROGHU 
2UJDQLF&DWHULQJ0RFHOOLQ 6LOHQWSDUWQHU 
)UXLWJDUGHQ-RHO6LHJHO 6LOHQWSDUWQHU 
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH 6KDUHKROGHU 
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH /RDQ 
59$&6&5HDO(VWDWH 6KDUHKROGHU 
59$&6&RUJDQLFPDUNHWRXWOHW%LR0DUNW*PE+%UHLVDFK 6KDUHKROGHU 
59$&6&5HDO(VWDWH /RDQ 
,QYHVWHGFDSLWDO 
$SSURYHGLQYHVWPHQWSURMHFWV  
$JULFXOWXUDOPDFKLQHU\ 3XUFKDVH 
&RQVWUXFWLRQRIIDUPKRXVH /RDQ 
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH ,QFUHDVHRIVKDUHV 
59$&6&'HOLYHU\6HUYLFH/WG%LRK|IH)ULVFKHNLVWH /RDQ 
7RWDO 
3ODQQHGSURMHFWV  
3URFHVVLQJIDFLOLW\IRUGULHGIUXLWDQGYHJHWDEOHV 3XUFKDVHRIVXLWDEOHEXLOGLQJ 
0DUNHWJDUGHQLQ'RQDXHVFKLQJHQQHZHQWHUSULVH 3DUWLDORZQHUVKLS 
,QFUHDVLQJWKHQXPEHURIRXWOHWVIRU59$&6&RUJDQLFPDUNHWRXWOHW ,QFUHDVHRIVKDUHKROGLQJ 
%LRPDUNHWLQWKHFLW\RI)UHLEXUJDQGLQDGMDFHQWDUHDV
)UXLWJDUGHQFUHDWLRQRIQHZHQWHUSULVH 3DUWLDORZQHUVKLS 
2UJDQLFFKLFNHQIDUPFUHDWLRQRIQHZHQWHUSULVH 3DUWLDORZQHUVKLS 
9HJHWDEOHSURFHVVLQJIDFLOLW\FUHDWLRQRIQHZHQWHUSULVH 3DUWLDORZQHUVKLS 
&DVKUHVHUYHIRUODQGDFTXLVLWLRQ 
5HTXLUHGFDSLWDO 
 75$'($1'(19,5210(175(9,(:

DJULFXOWXUDO SUDFWLFHV WR PRUH HQYLURQPHQWDOO\ )59$&6&JRYHUQDQFHERGLHVDQG

IULHQGO\RQHV FXUUHQWFDSLWDO
6RFLDOEHQHÀWV $Q59$&6&VKDUHFXUUHQWO\FRVWVĄDQGWDNHVWKH
‡ %HWWHUZRUNLQJDQGVRFLDOFRQGLWLRQV IRUPRIDUHJLVWHUHGVKDUHZLWKUHVWULFWHGWUDQVIHUDELOLW\
‡ *UHDWHUUHFRJQLWLRQRIWKHIDUPLQJSURIHVVLRQ VRWKDWLWFDQQRWEHVROGZLWKRXWWKHH[SOLFLWFRQVHQW
‡ ,QFUHDVHG DWWUDFWLYHQHVV RI DJULFXOWXUH IRU \RXQJ RIWKHRWKHUVKDUHKROGHUV&XUUHQWO\WKH59$&6&KDV
SHRSOHDQGWKHORFDOFRPPXQLW\DQG VKDUHKROGHUVDQGDFDSLWDOVWRFNRIĄPLOOLRQ
‡ $VVLVWDQFH WR \RXQJ SHRSOH IRU FUHDWLQJ 7KH FXUUHQW FDSLWDO LV LQYHVWHG LQ WKH IDUPV DQG
DJULEXVLQHVVHV HQWHUSULVHVDVVKRZQLQ7DEOH
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$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

)LJXUH6(.(0·VDFWLYLWLHVEDVHGRQLWVYLVLRQIRU(J\SW
Cultural
Life
• The SEKEM Development Foundation
(SDF) operates a broad range of educa-
tional 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 Egyp-
tian 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, phyto-
pharmaceutical 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 sustain-
able development and annually reports on
progress and achievements
75$'($1'(19,5210(175(9,(:
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 oppor-
tunities
• 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 accord-
ing 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
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\
FHQWXU\ XSWRSHUFHQW6FLDODEED,Q(J\SWZKHUH
6(.(0·VEXVLQHVVPRGHOLVEDVHGRQWKHFRQFHSWRI GHVHUWODQGRQZKLFK6(.(0VWDUWHGLWVRSHUDWLRQVLV
´ELRG\QDPLF DJULFXOWXUHµ D VSHFLÀF IRUP RI RUJDQLF WKHPRVWGHJUDGHGIRUPRIVRLOSRVVLEOH6(.(0KDV
7KH,PSRUWDQFHRI,QWHUQDWLRQDO7UDGHDQG7UDGH5XOHVIRU7UDQVIRUPLQJ*OREDO$JULFXOWXUH 

VLJQLÀFDQWO\ FRQWULEXWHG WR WKH DYDLODELOLW\ RI KHDOWK\ SKDUPDFHXWLFDOV7KHVHSURGXFWVDUHGLVWULEXWHGDQG

DQG DIIRUGDEOH IRRG WKURXJK WKLV IRUP RI RUJDQLF VROGRQWKHGRPHVWLFSHUFHQWDQGLQWHUQDWLRQDO
DJULFXOWXUH ,QGHHG LW LV D SLRQHHU LQ ELRG\QDPLF PDUNHWVSHUFHQW7KHHLJKWKFRPSDQ\LV(O0L]DQ
DJULFXOWXUH LQ WKH 0(1$ 0LGGOH (DVW DQG 1RUWK ZKLFKRIIHUVJUDIWLQJDQGSODQWFXOWLYDWLRQVHUYLFHVIRU
$IULFDUHJLRQDQGLQHVWDEOLVKLQJWKHRUJDQLFPDUNHW
LQ(J\SW
7RGD\WKHRUJDQL]DWLRQDQGLWVELRG\QDPLFVXSSOLHUV
RZQ RYHU  DFUHV RI IDUPODQG RI ZKLFK 
DFUHV DUH FXOWLYDWHG 7R VSUHDG NQRZOHGJH DERXW
ELRG\QDPLFDJULFXOWXUH6(.(0DFWLYHO\VXSSRUWVWKH
IUXLWDQGYHJHWDEOHJURZHUV
7KH6(.(0*URXSRIFRPSDQLHVWKHUHIRUHIRUPVDQ
LQWHJUDWHG YDOXH FKDLQ DV DOO FRPSDQLHV DUH FORVHO\
LQWHUOLQNHG,QWKHVHFRPSDQLHVHPSOR\HGRYHU
SHRSOHPRVWO\KLUHGIURPDPRQJWKHVXUURXQG
LQJ ORFDO FRPPXQLWLHV 7KH\ RIIHU KHDOWK LQVXUDQFH
(J\SWLDQ%LRG\QDPLF$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
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
7R SURPRWH KXPDQ GHYHORSPHQW WKH 6(.(0 ÀJXUH  DQG IXUWKHU UHÀQHG XVLQJ WKH SULQFLSOHV RI
'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
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\
&UHDWLQJZRUNSODFHVWKDWUHVSHFWKXPDQGLJQLW\ DQG 7UDGH ,$3 ZDV IRUPHG ZKLFK GHYHORSHG WKH
DQGVXSSRUWHPSOR\HHGHYHORSPHQW 6XVWDLQDELOLW\ )ORZHU ÀJXUH  WKDW VHUYHV DV WKH
7KH6(.(0*URXSFRQVLVWVRIHLJKWFRPSDQLHVWZR FRQFHSWXDO IUDPHZRUN IRU SHUIRUPDQFH PRQLWRULQJ
RIWKHPSURFHVVWKHUDZPDWHULDOVJURZQRQLWVÀHOGV DQGHYDOXDWLRQ7KH6(.(0*URXSKDVLPSOHPHQWHG
/LEUDDQG6(.(0IRU/DQG5HFODPDWLRQZKLOH/RWXV WKLVFRPSUHKHQVLYHPDQDJHPHQWV\VWHPLQWHJUDWLQJ
SURFHVVHV KHUEV DQG VSLFHV ,6,6 SURGXFHV KLJK WKH IRXU GLPHQVLRQV RI VXVWDLQDEOH GHYHORSPHQW
TXDOLW\ RUJDQLF IRRGVWXIIV 1DWXUH7(; PDQXIDFWXUHV HFRORJ\ HFRQRP\ VRFLHW\ FXOWXUH DQG SURYLGHV
WH[WLOHV DQG $726 3KDUPD PDQXIDFWXUHV SK\WR DQQXDOUHSRUWVRQSURJUHVVDQGDFKLHYHPHQWVUHODWLQJ
 75$'($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

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
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
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
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
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
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
WKH 6XVWDLQDELOLW\ )ORZHU DV ZHOO DV WR LQWHJUDWH VWDQGDUGVRIWKH*OREDO5HSRUWLQJ,QLWLDWLYH*5,EXW
WKH JXLGHOLQHV DQG SHUIRUPDQFH LQGLFDWRUV LQWR DQ 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 LG DFFQDPH JXHVW FKH
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
'H6FKXWWHU2D5HSRUWRIWKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$GGHQGXP0LVVLRQWRWKH:RUOG7UDGH
2UJDQL]DWLRQ-XQH$+5&$GG+XPDQ5LJKWV&RXQFLO*HQHYD
'H6FKXWWHU2E5HSRUWRIWKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$JULEXVLQHVVDQGWKHULJKWWRIRRG$
+5&+XPDQ5LJKWV&RXQFLO*HQHYD
'H6FKXWWHU25HSRUWVXEPLWWHGE\WKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRG$+5'+XPDQ5LJKWV
&RXQFLO*HQHYD
 75$'($1'(19,5210(175(9,(:

'H6FKXWWHU2D$JURHFRORJ\DQGWKH5LJKWWR)RRG5HSRUWE\WKH6SHFLDO5DSSRUWHXURQWKHULJKWWRIRRGWR

WKH8QLWHG1DWLRQV
'H6FKXWWHU2E7KH&RPPRQ$JULFXOWXUDO3ROLF\WRZDUGV7KHUROHRIWKH(XURSHDQ8QLRQLQVXSSRUWLQJ
WKHUHDOL]DWLRQRIWKHULJKWWRIRRG&RPPHQWVDQGUHFRPPHQGDWLRQVE\WKH8QLWHG1DWLRQV6SHFLDO5DSSRUWHXURQ
WKHULJKWWRIRRG-XQH
'H6FKXWWHU2F7KH:RUOG7UDGH2UJDQL]DWLRQDQGWKH3RVW*OREDO)RRG&ULVLV$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&RPPLVVLRQ7KHHFRQRPLFEHQHÀWVRIWKH1DWXUD1HWZRUNV$YDLODEOHDWKWWSHFHXURSDHX
HQYLURQPHQWQDWXUHQDWXUDÀQDQFLQJGRFV(19B/5B)LQDOSGI
(XURSHDQ(QYLURQPHQW$JHQF\5RDGXVHUFKDUJHVIRUKHDY\JRRGVYHKLFOHV$YDLODEOHDWZZZHHDHXURSDHX
SXEOLFDWLRQVURDGXVHUFKDUJHVIRUYHKLFOHV
)DQ6DQG+HDGH\'5HÁHFWLRQVRQWKHJOREDOIRRGFULVLV+RZGLGLWKDSSHQ"+RZKDVLWKXUW"$QGKRZFDQ
ZHSUHYHQWWKHQH[WRQH",)35,5HVHDUFK0RQRJUDSK,)35,:DVKLQJWRQ'&
)$26RPHWUDGHSROLF\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
)$27KH6WDWHRI$JULFXOWXUDO&RPPRGLW\0DUNHWVLQ+LJKIRRGSULFHVDQGWKHIRRGFULVLV²H[SHULHQFHV
DQGOHVVRQVOHDUQHG5RPH$YDLODEOHDWZZZIDRRUJGRFUHSLHLHKWP
)$2´&OLPDWH6PDUWµ$JULFXOWXUH²3ROLFLHV3UDFWLFHVDQG)LQDQFLQJIRU)RRG6HFXULW\$GDSWDWLRQDQG0LWLJDWLRQ
5RPH
)$27KH6WDWHRI)RRG,QVHFXULW\LQWKH:RUOG5RPH$YDLODEOHDWKWWSZZZIDRRUJKXQJHUHQ
)$26PDOOKROGHUVDQG)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(256ORZ7UDGH6RXQG)DUPLQJ(FRIDLU7UDGH'LDORJXH
+HUUHQ+5HWDO$JULFXOWXUH,QYHVWLQJLQQDWXUDOFDSLWDO,Q81(37RZDUGVD*UHHQ(FRQRP\3DWKZD\VWR
6XVWDLQDEOH'HYHORSPHQWDQG3RYHUW\(UDGLFDWLRQ*HQHYD²
+LQH52UJDQLF$JULFXOWXUHDQG)RRG6HFXULW\LQ$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 $VVHVVPHQW 5HSRUW RI WKH
,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH&DPEULGJHDQG1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
,3&&E6XPPDU\IRUSROLF\PDNHUV,Q3DUU\0/&DQ]LDQL2)3DOXWLNRI-3YDQGHU/LQGHQ3-DQG+DQVRQ&(
HGV&OLPDWH&KDQJH,PSDFWV$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 FRPBFRQWHQW YLHZ DUWLFOH LG $WRZDUGVDQ
DOWHUQDWLYHQDUUDWLYHIRUWKHPXOWLODWHUDOWUDGLQJV\VWHPQRYHPEHU FDWLG $VRXWKYLHZV ,WHP
LG  ODQJ HV
,7&DQG)L%/5HVHDUFK,QVWLWXWHRI2UJDQLF$JULFXOWXUH2UJDQLFIDUPLQJDQGFOLPDWHFKDQJH*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  $YDLODEOH DW ZZZFOXERIURPHRUJFPVZSFRQWHQW
XSORDGV&R5'LVFXVVLRQ3DSHU6HULHV,DQ-RKQVRQSGI
-RUGDQ52UJDQLF$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$'
7KH7UDQVLWLRQWRD*UHHQ(FRQRP\%HQHÀWV&KDOOHQJHVDQG5LVNVIURPD6XVWDLQDEOH'HYHORSPHQW3HUVSHFWLYH
5HSRUWE\D3DQHORI([SHUWVWRWKH6HFRQG3UHSDUDWRU\&RPPLWWHH0HHWLQJIRUWKH8QLWHG1DWLRQV&RQIHUHQFHRQ
6XVWDLQDEOH'HYHORSPHQW1HZ<RUNDQG*HQHYD
.RWVFKL-IRUWKFRPLQJ0LQHUDOIHUWLOL]HUVDQGWKHSHUVSHFWLYHRIWURSLFDOVPDOOKROGLQJV3DSHUIRUWKH+HLQULFK%RHOO
)RXQGDWLRQDQG::)*HUPDQ\%HUOLQ
.RWVFKL-DQG0OOHU6lPDQQ.7KHUROHRIRUJDQLFDJULFXOWXUHLQPLWLJDWLQJFOLPDWHFKDQJH$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$YDLODEOHDWKWWSGRQORWWHUQHWORWWHUBDMDDBDUWLFOHSGI
/XQHQERUJ36PDOOVFDOHIDUPLQJDQGUXUDOOLYHOLKRRGV3UHVHQWDWLRQDWWKH81&7$'VHPLQDURQWKHLPSRUWDQFH
RIVPDOOVFDOHDQGIDPLO\IDUPLQJIRUIRRGVHFXULW\*HQHYD)HEUXDU\
0D\HW07KHQHZJUHHQUHYROXWLRQLQ$IULFD7URMDQKRUVHIRU*02V",Q1RUVWDG$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$PHULFD6FLHQWLVWVVXSSRUWIDUPHUVUHJDLQLQJFRQWURORIDJULFXOWXUH
)LQGLQJV IURP WKH 81OHG ,QWHUQDWLRQDO $VVHVVPHQW RI $JULFXOWXUDO .QRZOHGJH 6FLHQFH DQG 7HFKQRORJ\ IRU
'HYHORSPHQW6DQ)UDQFLVFR
3LQJDOL3.KZDMD<DQG0HLMHU0&RPPHUFLDOL]LQJVPDOOIDUPV5HGXFLQJWUDQVDFWLRQFRVWV,Q,)35,DQG2',
7KH)XWXUHRI6PDOO)DUPV3URFHHGLQJVRID5HVHDUFK:RUNVKRSLQ:\H²-XQH
3UHWW\-DQG+LQH55HGXFLQJ)RRG3RYHUW\ZLWK6XVWDLQDEOH$JULFXOWXUH$6XPPDU\RI1HZ(YLGHQFH6$)(
:RUOG7KH3RWHQWLDORI6XVWDLQDEOH$JULFXOWXUHWR)HHGWKH:RUOG5HVHDUFK3URMHFW8QLYHUVLW\RI(VVH[$YDLODEOH
DWZZZHVVH[DFXNFHVRFFDVLRQDOSDSHUV6$)(),1$/3DJHVSGI
 75$'($1'(19,5210(175(9,(:

3UHWW\-15HJHQHUDWLQJ$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:DQG6DQWDULXV76ORZ7UDGH²6RXQG)DUPLQJ$0XOWLODWHUDO)UDPHZRUNIRU6XVWDLQDEOH0DUNHWVLQ
$JULFXOWXUH%HUOLQ$DFKHQ+HLQULFK%|OO6WLIWXQJ0LVHUHRU
6DXQGHUV3,QGXVWULDODJULFXOWXUHDQGJOREDOZDUPLQJ(XURSHDQ3DUOLDPHQW%ULHÀQJ2FWREHU$YDLODEOHDW
KWWSZZZLQGVSRUJ,$*:SKS
6&$5²(XURSHDQ&RPPLVVLRQ6WDQGLQJ&RPPLWWHHRQ$JULFXOWXUDO5HVHDUFK6XVWDLQDEOHIRRGFRQVXPSWLRQ
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+DJH2UJDQLFDJULFXOWXUHDQGIRRGVHFXULW\5RPH)$20D\
6FLDODEED 1( DQG 0OOHU/LQGHQODXI 0  2UJDQLF DJULFXOWXUH DQG FOLPDWH FKDQJH 5HQHZDEOH $JULFXOWXUH DQG
)RRG6\VWHPV²
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&HQWUH3DSHUVSUHSDUHGIRUWKH)$2LQLWLDWLYH*UHHQLQJWKH(FRQRP\ZLWK$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
6ZDQVRQ77KH(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
7ZDURJ62UJDQLFDJULFXOWXUH$WUDGHDQGVXVWDLQDEOHGHYHORSPHQWRSSRUWXQLW\IRUGHYHORSLQJFRXQWULHV,Q
81&7$'7UDGHDQG(QYLURQPHQW5HYLHZ1HZ<RUNDQG*HQHYD8QLWHG1DWLRQV
8.)RRG*URXS6HFXULQJIXWXUHIRRG7RZDUGVHFRORJLFDOIRRGSURYLVLRQ8.)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(37RZDUGVD*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)RRG3URJUDPPHDQG)$27KH6WDWHRI)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%DQN27XUQ'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\WLFVH[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\LHOGVFRPSDUHGPRQRFXOWXUHPDL]HZLWKOHJXPHGLYHUVLÀHGPDL]HWKDW
LQFOXGHGDQQXDODQGVHPLSHUHQQLDO63JURZWKKDELWVLQWHPSRUDODQGVSDWLDOFRPELQDWLRQVLQFOXGLQJURWDWLRQ
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\QRWVLODJHIHHG: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 )$2VWDW DQG WKH &%27 ([FKDQJH 9ROXPH 5HSRUW RI 0D\  VHH ZZZFPHJURXSFRP
ZUDSSHGSDJHVZHEBPRQWKO\BUHSRUW:HEB9ROXPHB5HSRUWB&%27SGI
 /DJLHWDOKDYHDOVRUHYLHZHGWKHLPSRUWDQFHRINH\PDUNHWIXQGDPHQWVDVH[SODQDWRU\IDFWRUVIRUIRRGSULFHKLNHV
LQSDUWLFXODUDZHDWKHUSDUWLFXODUO\GURXJKWVLQ$XVWUDOLDELQFUHDVLQJGHPDQGIRUPHDWLQWKHGHYHORSLQJZRUOG
HVSHFLDOO\LQ&KLQDDQG,QGLDFFXUUHQF\H[FKDQJHUDWHVDQGGOLQNDJHEHWZHHQRLODQGIRRGSULFHVWKURXJK
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\$IULFDQFRXQWULHVLWLVGLIÀFXOWIRUORFDO
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