Business Environment

Demand for mineral resources and energy is expanding against the backdrop of economic growth in emerging countries. As the global resource majors with enormous capital come to dominate the market and emerging countries take stronger steps to secure their own resource interests around the world, the race to obtain resource interests has become increasingly fierce.

Moreover, unconventional energy sources are now being actively developed. This is particularly the case with ongoing shale gas development in North America.

Strengths and Strategies

We will cautiously yet steadily upgrade and expand our portfolio of resource interests, giving consideration to time factors (start of production and mine life) and regional factors (distribution of country risk), with an emphasis on key strategic resources.

Furthermore, our people have gained invaluable experience and expertise by taking the lead in managing the San Cristobal silver, zinc and lead mining project in Bolivia, where we have assumed full ownership.

In the U.S. natural gas business, we became the first Japanese company to participate in a shale gas development project. We also operate a gas trading company in the country. By combining the shale gas development project with the functions of the gas trading company, we will work to build a gas value chain spanning upstream operations to distribution, liquefaction and LNG export operations.

Actions for Target Achievement

We are focused on steadily executing large-scale mineral resource projects.

We began production at the Ambatovy nickel mining and refining project in Madagascar in June 2012, with the aim of operating at full capacity within 2013.

We invested in Mineração Usiminas S.A. (MUSA), an integrated iron ore mining operation in Brazil, in 2010. Expansion of this operation is proceeding steadily, with the view to increasing the annual production, in which we own a 30% interest, to 29 million tons by 2015.

We aim to increase the ore reserve at San Cristobal and are continuing to explore the mine in the surrounding areas. Through these and other measures, we are working to enhance the value of this project.

Another key priority is to acquire new interests in order to strengthen our mineral resources portfolio.

In copper, we have joined the Sierra Gorda copper mine project in Chile. The Sierra Gorda project has a mine life of 20 years, with the start of production planned for 2014.

In coal, we are working to expand our existing coal mining interests in Australia, as well as acquire new interests.

In natural gas, we have entered into negotiations with Dominion Cove Point LNG, LP, a U.S.-based energy supplier, on the refining, liquefaction, and export of LNG.

Business Environment

Demand for food should increase in step with population growth and economic development in emerging countries. In this climate, increased demand is projected for agricultural chemicals and related products that improve the quality and yield of agricultural produce.

Supplying highly functional materials for use in high value-added products that are energy-efficient and environmentally friendly will also be essential. One particularly urgent priority will be to address instability in the supply of rare earths, which are crucial to next-generation automobiles.

Strengths and Strategies

Having developed the agricultural chemicals business globally since the 1990s, we will continue to expand our business areas by forming strategic alliances with leading companies.

We are also advancing a project to recover rare earth resources from uranium-ore residue, generating synergies with our uranium mining operations in Kazakhstan.

Actions for Target Achievement

In FY2011, Sumitomo Corporation invested in the Romanian company Alcedo S.R.L., an integrated supplier of agricultural materials. We have provided Alcedo's client farmers with crop protection technologies and finance, in addition to agricultural chemicals. We also formed a strategic capital alliance with Sipcam S.p.A., a leading Italian manufacturer and seller of agricultural chemicals with a strong presence in Western and Southern Europe. Combining with our strengths in Eastern Europe, we are working to regionally expand the agricultural business across Europe, while strengthening development and sales of agricultural chemicals, seeds and fertilizer.

In rare earths, we commenced rare earth production in Kazakhstan in FY2012, with the view to providing a stable supply of these resources to Japan. We are exploring the possibility of developing a new mine in Kazakhstan.