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Revenue and Expense Structure of Copper Smelters

The cost of copper concentrate, which smelting and refining companies pay to mining companies, is the LME copper cathode price less TC/RC,

which are smelting and refining margins. TC/RC under long-term contracts are normally determined through annual negotiations. The actual sales

price of copper cathode produced by copper smelters is the LME price plus a sales premium, which is established by reference to various factors,

including importation costs and quality.

Flowchart from Mining to Smelting and Refining

The method of processing copper ore differs according to the type of ore (sulfide copper ore or oxide copper ore).

Pyrometallurgical method (sulfide copper ore)

Coppercathode

(electrolyticcopper)

Cu: 99.99%

Copper mine Copper smelter

Sulfide copper ore

Cu2S, CuFeS2

Cu: about 1.0%

Copper concentrate

Cu: 30.0%

S: 30.0%

Fe: 30.0%

Smelting (flash furnace 65.0%)

Converting (converter 99.0%)

Refining (anode furnace 99.3%)

MiningElectrolytic

refining

Crushing,Grinding,Flotation

Scrap

Hydrometallurgical method (SX-EW* method) (oxide copper ore) * Solvent Extraction-Electrowinning

Coppercathode

(electrolyticcopper)

Cu: 99.99%

Copper mine

Oxide copper ore

CuO, Cu2O

Leaching(sulfuric acid leaching)

Solvent extraction(extraction of copper ions)

MiningElectrolytic

refiningCrushing

Earnings structure of copper smelter and refinery Movement in TC/RCLME copper

cathode priceCopper cathode

sales price

Sales premium($denominated)

Cost of copperconcentrate

TC/RC($denominated)

Share ofcoppersmelter

Share ofmining

company

Cost of copperconcentrate

($denominated)

0

100/10

80/8

90/9

70/7

60/6

50/5

40/4

30/3

20/2

10/1

2007 2008 2009 2010

*

2011 2012 2013(CY)

(TC/RC)

* Smelting and refining margin at the end of 2010 comprises multiple agreements in accordance withcontract counterparties, contract periods, etc.

TC (Treatment Charge): Dollars per ton of copper concentrateRC (Refining Charge): Cents per pound of copper contained in copper concentrate

About the Copper Business

22 JX Holdings, Inc.

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Principal Products and Applications of Electronic Materials

Applications of electronic materials products in smartphones

Electronic materials made from copper are indispensable in advanced electronic devices, such as smartphones, tablets, and PCs. Global demand is

increasing due to technical innovation and to economic growth in emerging countries. The JX Group is one of the worlds leading vendors for suchproducts as sputtering targets for semiconductors and flat panel displays, treated rolled copper foil for flexible printed circuit boards, and precision

rolled products, which are primarily used as connector materials. On a base of processing technologies developed over many years, the Group is

working to develop innovative technologies.

End-use applications

Principal electronicmaterials products

JX Groupsglobal share(as of 2012)

Primaryapplications

PCsMobile

phones /Smartphones

Digitalequipment /Audiovisualequipment

Telecommu-nications

infrastructureAutomobiles

Treated rolled copper foil 70%(No. 1)

Flexible printedcircuit boards

Target materials

Semiconductortargets

60%

(No. 1)

CPUs, memorychips, etc.

ITO targetsfor flat panel

displays

30%

(No. 1)

Transparentelectrodes

HD mediatargets

50%

(No. 1)

HDD (hard diskdrives), etc.

Precision rolledmaterials

Phosphorbronze

20%

(No. 1)

Connectors,springs for elec-

tronic components

Corson alloy(C7025) 45%(No. 1)Lead frames,connectors

Titaniumcopper alloy

70%

(No. 1)

High-classconnectors, etc.

In-P compound semiconductors50%

(No. 1)

Optical communi-cation devices,high-speed IC

IT-related

The JX Groups electronic materials products

Autofocus camera modules

Flexible printed circuit boards

Micro SIM /SD card connectors

Lithium-ion batteries

Battery terminals

Ground contacts

Earphone jacks

Board-to-board connectors

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About Recycling and Environmental Services

Flowchart of recycling and environmental services

Producer

Recycled materials

Industrial waste Collection Receipt Slag

Collection Receipt

Analysis

Pretreatment

Metal recovery

Copper /Precious metals

Declining amountof metals contained

in materials

Intensifyingcollection

competition

Principal recycled materials

Electronic componentscraps (connectors)

Electronic componentscraps (semiconductorpackages)

Punched scrap(gold-plated brass)

Discarded mobilephones

Discarded printedcircuit boards

About the Copper Business

Intensifying worldwide competition for natural resources and the necessity to reduce the environmental burden have led to the increasing impor-

tance of recycling metal resources. However, in recent years a rising number of electronic component companies have shifted their operationsoverseas, and there has been a trend toward the reduced use of metals. These factors have reinforced the trend toward a lower volume of recycled

materials generated in Japan. Accordingly, we are increasing the collection of recycled materials overseas and differentiating our operations,

including the detoxification processing of industrial waste.

Flowchart of complete detoxification processing for low-concentration PCB waste

Rotary kiln incinerator

Waste, including low-concentration PCB(insulation oil, etc.)

Waste, includinglow-concentration PCB

(chassis from transformers, etc.)

Wash tower Stack

Electrostaticprecipitator

Detoxified gas

Fixed bed furnace

Secondaryincinerator

Quenchtower

Bag filter

After disassembly, chassis are recycled intocopper, steel, aluminum, etc., at smelters, etc.

Detoxification of WasteCHECK

PCBs (polychlorinated biphenyls) are materials that provide excellent electrical insulation and are principally used in insulation oil in trans-

formers and capacitors. Due to the harmful nature of PCBs, their manufacture or import is currently prohibited. In Japan, there are only seven

bases, including the JX Groups bases, that can detoxify not only insulation oil that directly contains PCBs but also chassis that used that type

of oil. The processing capacity is not suffi cient for the volume of waste. Moving forward, the JX Group will work to expand and differentiate

its detoxification processing operations.

Detoxificationprocessing

24 JX Holdings, Inc.