Metals & Coal Division – Main Businesses & Vision –

Business Overview

Invests in upstream interests and conducts trading in coal and mineral resources including iron ore, base metals, and rare metals.

【Main Products】

▶  Coal (thermal coal, PCI coal, coking coal)
▶  Iron ore, iron ore pellets, hot briquetted iron, steel products
▶  Rare metals (chromium, molybdenum, nickel, niobium, vanadium, tungsten, etc.)
▶  Industrial minerals (fluorite, vermiculite, bentonite, zircon sand, etc.), auxiliary materials for steel (refractory products, etc.), carbon materials and carbon products
▶  Non-ferrous metals (alumina, copper concentrates, copper, etc.), precious metals (gold, silver, platinum, palladium, etc.)

Coal

Minerva Mine in Australia
Managing overseas mine (Australia’s Minerva mine) as the sole Japanese trading company to facilitate mine operations. Participating in the management of multiple coal mines in Australia as well as Indonesia.
Expanding offshore coal trading and import sales of coal and coke to Japan.
[Major Business Activities] Coal Business

Ferrous Metals

CBMM Araxá Mine, Brazil
Developing trade and investment in upstream interests for a variety of ferrous materials and auxiliary feedstock.
Supporting domestic/international sales of steel products from Metal One Corporation, a joint venture owned 40% by Sojitz.
[Major Business Activities] Iron Ore Business
[Major Business Activities] Steel Products Business
[Major Business Activities] Industrial Minerals Business
[Major Business Activities] Ferroalloy Business

Base Metals

Worsley Alumina Refinery in Australia
Participating in alumina refinery project in Australia
Promoting the acquisition and development of upstream copper interests overseas
Expanding the logistics business centered around the Asia region
[Major Business Activities] Non-ferrous and Precious Metals Businesses

Business Overview and Vision

Meeting the diverse needs of industry through the supply of energy and mineral resources

  • ▶ This division supplies energy and mineral resources to Japan, fast-growing emerging countries, and other countries and regions.
  • ▶ Operate a unique trading business in high-grade iron ore, Russian coal, ferronickel, fluorite, vermiculite, recycled precious metals and other metals.
  • ▶ Invest in upstream interests centered on Australian and Indonesian coal, as well as rare metals (niobium and nickel) and base metals.
  • ▶ Distribute steel products through equity-method associate Metal One Corporation, a steel trading company.

Strengths That Drive Value Creation

  • ▶ Relationships of trust built through many years of business with customers, suppliers and business partners
  • ▶ A strong lineup of products, including Russian coal, of which we are the leading importer into Japan, high-grade iron ore, fluorite and vermiculite, based on our robust sales and supply network
  • ▶ As the only general trading company engaged in management of a coal mine (Minerva Coal Mine in Australia), we apply the knowledge and network acquired there in many areas

Strategies and Initiatives

Energy and mineral resources are indispensable for driving development and growth in countries around the world. In particular, demand is growing in emerging countries as a result of industrial development. This division will continue to fulfill its duty to provide a stable supply of competitive energy and mineral resources to Japan, which lacks resources, and to emerging countries, whose economies are growing rapidly. In addition, to meet the increasingly complex and diverse needs of our customers and business partners resulting from advancements in industry, we provide new functions and value that only Sojitz can offer, while controlling risks as a general trading company.

In the year ended March 31, 2017, we exceeded our performance targets. However, we recognize that the bulk of this earnings growth depended heavily on rising commodity prices for mineral resources in general because of expectations for infrastructure investment worldwide, and we are taking this issue very seriously. While the sweeping cost reductions we have been making in upstream operations and the reinforcement of trading operations, this division’s traditional strength, are steadily producing results, we are acutely aware of the urgent need to transform our earnings structure to establish a foundation for stable earnings. The division is therefore implementing the following strategies in its three business areas.

First, in trading, we are expanding trade with emerging countries where growing demand is expected, while maintaining and expanding our traditional commercial rights for Japan. Conventional trading alone is no longer sufficient, and a new business model is needed. Therefore, we believe it is important to further solidify our ties with suppliers and customers and meet the diverse needs being created by changes in the business environment.

Second, we aim to structure an asset portfolio in upstream businesses that will generate earnings even in a market downturn. To do this, we will execute three measures concurrently: 1) conduct ongoing and sweeping cost reductions in existing projects; 2) promptly withdraw from inefficient businesses that have lost strategic significance; and 3) acquire new prime assets. We are the only general trading company engaged in management of a coal mine (Minerva Coal Mine in Australia), including operation, and are acquiring extensive expertise in that business. Managing the coal mine directly will help to sharpen our information gathering and analytical abilities and lead to faster and more sophisticated management decisions through which we aim to increase profitability.

Minerva Coal Mine in Australia

Third, we will create new business areas to prepare for the Sojitz Group’s next medium-term management plan. Key in this process are supply chain overhaul and responding to changes in the environment. To start with, we will once again review the supply chains for the products we currently handle and leverage our finance, logistics and other capabilities to enter downstream sectors such as collection, storage and processing. Moreover, we view changes in the business environment such as recent changes in laws and regulations and growing environmental consciousness as business opportunities, and will take on the challenge of developing a new business model that goes beyond the conventional business of supplying raw materials and fuel. For example, we will participate in resource recycling and recovery businesses in preparation for the advent of the circular economy, handle soil improvement materials to comply with regulations on protection of the soil environment, and handle raw materials needed to meet growing demand for electric vehicles. Making full use of new technologies and new materials will be key in creating new business areas. We therefore believe that it is also our mission as a trading company to develop such technologies.

Opportunities

▶  Healthy demand for resources and steel driven by medium-to-long-term economic growth in emerging countries
▶  New business areas such as recycling and recovery resulting from changes in laws and regulations, environmental measures and other factors
▶  New opportunities to supply raw materials due to advances in technology and rising demand for new materials

Risks

▶  Manifestation of geopolitical risk
▶  Sluggish market conditions due to declining demand in China and other emerging countries
▶  Decrease in transaction volume associated with decline in competitiveness of certain products due to the emergence of alternative products and tightening of environmental regulations

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