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SOJITZ IR DAY 2016 Metals & Coal Division January 13, 2017 Masaaki Bito Chief Operating Officer Metals & Coal Division Sojitz Corporation
SOJITZ IR DAY 2016 Metals & Coal Division
January 13, 2017
Masaaki Bito
Chief Operating Officer
Metals & Coal Division
Sojitz Corporation
Copyright © Sojitz Corporation 2017
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Contents
◆ Division Overview
◆ Business Environment
◆ Measures for Addressing Business Environment
・Organization and Business Groups ・Trading Routes for Major Products ・Major Business Sites and Upstream Interests ・Division Policies, Performance and Assets
・Business Environment for Metals & Coal Division ・Market Conditions
・Measures for Addressing Metals & Coal Division’s Business Environment ・Strengthening of Trading ・Enhancement of Existing Assets and Restructuring of Asset Portfolio ・Exploration of New Business Areas ・Initiatives for Targeting Further Growth
Caution regarding Forward-looking Statements This document contains forward-looking statements based on information available to the company at the time of disclosure and certain assumptions that management believes to be reasonable. Sojitz makes no assurances as to the actual results and/or other outcomes, which may differ substantially from those expressed or implied by such forward-looking statements due to various factors including changes in economic conditions in key markets, both in and outside of Japan, and exchange rate movements. The company will provide timely disclosure of any material changes, events, or other relevant issues.
Division Overview
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The only general trading company engaging in coal mine operation functions No. 1 share of Indonesian coal production interests
No. 1 share of imports of Russian coal into Japan Large share of high-quality iron ore in Japan
Import of almost all niobium and a large share of ferrochrome supplied to Japan Participation in Australian alumina refinery business, Joint-development of
Canadian copper mining business with Japanese copper manufacturers
The sole distributorship for various industrial minerals; leading trading company in handling fluorite and vermiculite
Development of supply chain encompassing everything from upstream raw materials to downstream products including such articles as bentonite and carbon products
Capture demand surrounding steel industries together with Metal One, No.1 integrated steel trading company in Japan
□Coal and iron ore trade targeting Japan, China and other Asian countries
□Management of overseas coal mines and investment in overseas coal
mine interests
□Trading of auxiliary materials and feedstock for steel, industrial
minerals and refractory materials
□Investment in overseas interests in rare metal and nonferrous metal,
Development of distribution businesses
□Steel products distribution and processing initiatives through Metal One and Unique steel-related businesses
Coal & Mineral Resources
Development Dept.
Coal & Iron Ore Dept.
Ferroalloys, Non-Ferrous & Precious Metals
Dept.
Industrial Minerals Dept.
Metal One Business Office
Metals & Coal Division
Organization and Business Groups
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Industrial minerals (Fluorite, Vermiculite, etc.)
Coal
Rare metals (Chromium, Nickel, Niobium, Vanadium, etc.)
Iron ore
Base metals (Copper, Aluminum, etc.）
Trading Routes for Major Products
Supplying Japan and a wide-range of Asian countries
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Southdown Iron Ore Mine (iron ore)
Worsley Alumina Refinery (alumina)
Endako Molybdenum Mine (molybdenum)
Coral Bay Nickel (nickel)
Crometals (chromium)
PT Berau Coal(thermal coal)
Jellinbah East (PCI coal, thermal coal)
Yamala (thermal coal)
Moolarben (thermal coal)
Minerva (thermal coal)
Athena (thermal coal)
Gibraltar Copper Mine (copper)
CBMM Araxá Mine (niobium)
Wyong (thermal coal)
Le Nickel (nickel)
Vametco Vanadium (vanadium)
Lake Vermont (coking coal, PCI coal)
PT Bara Alam Utama (thermal coal)
Zhongmeng Coal(coal distribution)
PT Balangan Project (thermal coal)
Black Hills Bentonite (bentonite)
Major Business Sites and Upstream Interests
Industrial Materials
Steel Products
Business Interests
◆Numbers of Group Companies and Employees (As of Sep. 30, 2016) Japan : 5 companies approx. 240 employees Overseas: 38 companies approx. 280 employees
Anhui Hong Ri Mining(dolomite) Metal One (steel products) Sojitz Ject (carbon materials) Vermitech (vermiculite) Volclay Japan (bentonite)
Rare Metals
Coal Nonferrous and other metals
Iron ore and industrial minerals
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▲ 2.7
4.7
6.0
▲0.6%
1.1%
▲ 1.0%
0.0%
1.0%
2.0%
▲ 50
0
50
100
Division Policies, Performance and Assets
（Billions of Yen）
FY2014 FY2015 FY2016 (forecast)
◆Profit (Loss) for the Year and ROA (Attributable to Owners of the Company)
□Strengthen trading businesses targeting growth markets □Hold upstream assets based on actual demand and functions □Revise supply chain and explore new areas
Fulfill energy and metal resources supply responsibilities through trading and securing high-quality interests while establishing a stable revenue base that is resilient to market fluctuations
Division Policies
15%
45%
40%
■Trading： Notes and accounts receivable, etc.
■Businesses: Metal One, etc.
■Upstream interests： coal, base metals, rare metals, etc.
◆Assets by Business Model (Total assets, as of March 31, 2016)
Total Assets: ￥390.5 billion
Performance and Assets
( 2.7)
4.7 6.0
(0.6)%
1.1%
(1.0)%
0.0%
1.0%
2.0%
(5)
0
5
10
Business Environment
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Business Environment for Metals & Coal Division
Solid demand in emerging countries, despite temporary slowdown (sluggish growth in Japan)
Market Volatility
More stringent environmental regulations and trend toward new materials
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Market Conditions
Source (for forecasts represented by dotted line): Consensus Economics Inc. (November 14, 2016)
Recent surging resource prices including coal projected to be temporary
0
3
6
9
12
15
18
21
24
27
Apr.
200
0
Apr.
200
2
Apr.
200
4
Apr.
200
6
Apr.
200
8
Apr.
201
0
Apr.
201
2
Apr.
201
4
Apr.
201
6
Apr.
201
8
Apr.
202
0
(U$/lb)
Nickel
$0.00
$30.00
$60.00
$90.00
$120.00
$150.00
$180.00
$210.00
$240.00
$270.00
$300.00
$330.00
0
30
60
90
120
150
180
210
240
270
300
330
Apr.
200
0
Apr.
200
2
Apr.
200
4
Apr.
200
6
Apr.
200
8
Apr.
201
0
Apr.
201
2
Apr.
201
4
Apr.
201
6
Apr.
201
8
Apr.
202
0
(U$/MT)
Coal Coking coal
(BM price)
Thermal coal
(spot price)
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
Apr.
200
0
Apr.
200
2
Apr.
200
4
Apr.
200
6
Apr.
200
8
Apr.
201
0
Apr.
201
2
Apr.
201
4
Apr.
201
6
Apr.
201
8
Apr.
202
0(U$/MT)
Copper
1,200
1,500
1,800
2,100
2,400
2,700
3,000
3,300
3,600
Apr.
200
0
Apr.
200
2
Apr.
200
4
Apr.
200
6
Apr.
200
8
Apr.
201
0
Apr.
201
2
Apr.
201
4
Apr.
201
6
Apr.
201
8
Apr.
202
0
(U$/MT)
Aluminum
Measures for Addressing Business Environment
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Measures for Addressing Metals & Coal Division’s Business Environment
Solid demand in emerging countries, despite temporary slowdown (sluggish growth in Japan)
Market volatility
More stringent environmental regulations and trend toward new materials
Strengthening of Trading
Enhancement of Existing Assets and Restructuring of Asset Portfolio
Exploration of New Business Areas
1
2
3
３ Measures Business Environment
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Policy
Iron ore
Coal
Rare metals
Industrial minerals
Base metals
◆High-quality iron ore from South America
◆Fluorine materials (fluorite) ◆Titanium materials (ilmenite, etc.) ◆Various ceramics materials (refractory materials, etc.)
◆Niobium ◆Chromium ◆Nickel
◆Alumina
Measure 1—Strengthening of Trading
◆No. 1 share of imports of Russian coal into Japan
Achieve leading coal transaction in volume (23 million tons → 40 million tons)
Be a top-class distributor by expanding high-quality ore offerings and sales channels
Leverage leading industrial mineral share while prioritizing new business development
Maintain leading share in rare metal industry by taking advantage of robust product lineup and strong share
Increase alumina and copper transactions to address growing demand in emerging countries and develop mid - downstream operations
Product Areas of Strength Future Policy
Enhance product lineups in areas of strength and expand off-shore trading transactions
in Asian and other emerging markets
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Reinforce resilience to market fluctuations by strengthening competitiveness through development of surrounding area of Minerva, extension of life of mine and reduction of costs
Share expertise for use in coal mine in Indonesia and
nonferrous metal (copper and aluminum) business investments and strengthen management frameworks
Minerva Coal Mine in Australia
Quickly divest inefficient assets and withdraw from businesses that have lost their strategic significance
Establish well-balanced coal assets portfolio to replace overemphasizing thermal coal with coking coal from the viewpoint of environmental impacts
Worsley Alumina Refinery in Australia
Coal Assets Portfolio
Reduce costs of existing projects, develop frameworks for generating earnings amidst sluggish market conditions and create upstream asset portfolio linked to actual demand and required functions, including the revision of coal asset portfolio
Thermal coal Coking coal and PCI coal
Current Future Image
Market fluctuation resilience reinforcement (Continued efforts of cost reductions) —Utilize expertise gained through management of Minerva Coal Mine
Restructuring of asset portfolio —Address environmental regulations and reinforce resilience to market fluctuations
Policy
Measure 2—Enhancement of Existing Assets and Restructuring of Asset Portfolio
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Develop resource recycling business model to recover copper, precious metals and rare metals from scrap electronic substrate
Consider launching a new business to recover valuable materials from mine waste
Supply carbon materials for making parts used in lithium-ion batteries in EVs, which promise high levels of growth.
Waste circuit boards
Recycling and recovery businesses
— Contribute to closed-loop society
Supply of carbon materials for lithium-ion batteries — Capture EV demand
Soil improvement agent supply — View changing environmental regulations as opportunities
Supply raw materials for making agent used to improve heavy-metal containing soil
Together with manufacturers, promote sales in Japan and Asian market
Soil improvement materials
Graphite (raw material for making
carbon materials)
Measure 3—Exploration of New Business Areas
Policy View business environment changes (legislative changes, environmental measures, etc.)
as business opportunities , create new mid - downstream businesses regardless of
traditional business domain and develop stable earnings sources
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FY2015
Future
Be an earnings driver for the Sojitz Group
Initiatives for Targeting Further Growth
■Strengthening of Trading
■Enhancement of Existing Assets and Restructuring of Asset Portfolio
■Exploration of New Business Areas
Projected Asset Portfolio (Net Income Basis)
Trading
※Loss in FY2015 posted for upstream interests
Businesses
Upstream Assets Businesses
