5713
Progress of Business Strategy of 2009 3-Year 3 Year Business Plan
March 2011
SUMITOMO METAL MINING Co., Ltd.
Contents
Ⅰ. SMM’s Strengths Ⅱ. Progress of Growth Strategy Ⅲ. Market Environment Ⅳ. Financial Highlights・Supplementary Supplementary Materials
SUMITOMO METAL MINING CO., LTD.
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Ⅰ．SMM’ss Strengths Ⅰ．SMM
Cerro Verde Mine SUMITOMO METAL MINING CO., LTD.
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１） SMM’s Skill Sets proven by 400yrs History 1691-1973 Besshi Mine
1985 commenced Hishikari Mine
1986 Join ed Morenci mine
Copper Mineral Resources
1939 Commenced Ni Smelting
Gold
2005 CBNC commenced HPAL production
Smeltingg & Refining
Nickell Nicke 1590 Commenced Cu smelting
1960 Commenced Electronics materials
Environment & Energy domain
Materials
SUMITOMO METAL MINING CO., LTD.
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Value US$87B（About $ （ 7trilloin JPY） ） Vale （M$)
$44B 1.8Mt
50,000
40,000
$32B 3.7Mt Batu Hijau
30,000
North Parkes
20,000
Cerro Verde
10,000
j Ojos Del Salado La Candelaria Morenci
Notes: 1. Based on SMM equity interests 2. SMM share of reserves = reserves × SMM equity interest in mine (%) 3 Estimated Value = SMM share of reserves ×standard metal price 3. 4. Standard metal price ＝ average price in Oct – Dec, 2010 （Cu：$8,600/t Ni：$10.7/lb Au：$1,370/toz)
Nickel Asia
Goro
$11B 250t
Figesbal Pogo PT Inco
Hishikari
0
Cu
Ni
Au
SUMITOMO METAL MINING CO., LTD.
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２） ① Hishikari Mine An environmentally-friendly mine and underground plant Highly profitable site with high gold content (approximately 50g/t), gold output highest in Japan Output (Cumulative:1985-2010) Gold output
187 ｔ
Reserves(end of 2010) Gold reserves
150 ｔ
7.5tpa output, 7.5tpa discovery A location for training mining engineers SUMITOMO METAL MINING CO., LTD.
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Developed from Ｇｒａｓｓｆｉｅｌｄ
Prudhoe Bay Colville
BROOKS RANGE
1995 Found a vein of Gold
Nome Fairbanks Tanana
A U
A D
S
K
A
S T A T E S
Anchorage Valdez
2009 SMM equity rights upto85％ and became a Operator
Reserves(end-2009)： 119t Securing g new veins Via local exploration
L
N I T E Bethel
For new O/S mines management
Pogo Mine
Kobuk
2006 Mining commenced
First oversea mine operated and managed by SMM
BEAUFORT
Barrow
Dillingham Kodlak
Gold Output（ｔ）
ｔ
15 10 5 0
Recovery（％）
G ld Gold Recovery
％
95.0 90.0 85.0 80.0
2006 2007 2008 2009 2010 SUMITOMO METAL MINING CO., LTD.
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A. Utilization of SMM-operated mines (Hishikari/Pogo) B. Sharp growth in engineers/specialist hires ( p (Japan/local) ) Join SMM
Hishikari
Mining at Pogo or o/seas site
Year 3–4
Year 4–6
Hishikari Engineering Dept. Dept
Years 5/6–10
Assignment to overseas mine
Year 10 onward
Nos. of engineers/specialists
2009
Japanese (domestic)
2012
Japanese (overseas) Local hires
2020 0
100
200 (people) SUMITOMO METAL MINING CO., LTD.
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３） World leader in smelting technologies ①Ni smelting : HPAL Control of low-grade nickel oxide ore (limonite) means control of nickel i resources HPAL technology is used for recovering nickel from limonite In 2005 SMM started HPAL commercial production at CBNC (World nickel resources (Mt)) Oxide ores
42
2005 Phase 1: initiation output 10ktpa 2009 Phase II: production increase completed output 22ktpa 2010 process upgrades 24ktpa set-up 2013 Taganito PJ Ni 30ktpa operational
93 Operating Not developed
Sulfide ores
44
0
17
50
100
(Coral Bay Nickel Corp.(Philippines))
150
High Pressure Acid Leach (HPAL) technology allows Ni-Co Ni Co recovery from low-grade low grade Ni oxide ores (SMM is the first in the world to commence large scale commercial production.)
SUMITOMO METAL MINING CO., LTD.
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３） World leader in smelting technologies ②Cu smelting : Toyo 1. More cost competitive p (higher ( g productivity) p y) Rank 1 Guixi G i i 2 Onsan 3 Hamburg East 4 Toyo To o 5 Saganoseki
Furnace/s
2 2 2 1 1
Capa (kt) 770 525 425 450 470
2. Technical development p
Estimated ’10 output
765 515 405 401 400 100%
Minimum cost operation
87% 65%
[1] Ore burner, cont. converter furnace [2] Dressing (boost concentrate grade) 3 Expand earnings 3. [1] Raise prod. margins (cut losses) [2] Improve sales premium
Multiplier effect with developing Cu mines
2009
2012
Long term
Plan for reducing costs at Toyo SUMITOMO METAL MINING CO., LTD.
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（JPY 100M）
（％）
14,000
70
12,000
60
10,000 ,
50
8,000
40
Interst-bearing debt
6,000
30
S a e o de s Shareholders Equity Equity ratio (%)
4,000
20
Debt-to-equity ratio
2,000
10
0
T t l assets Total t
ROE
0
2007
2008
2009
2010/9End 09 3‐Yr2012
F di ffor o/seas Funding / interests i t t SUMITOMO METAL MINING CO., LTD.
11
（JPY 100M)
Cons. Recurring Profit
Overseas asset contribution to cons. RP
1 200 1,200 1,000 800 600 400 200 0
2008
（JPY100M） Cons. Recurring Profit Overseas asset contribution to cons RP cons. Cu ($/T) Ni ($/lb) Au ($/Toz) Forex (¥/US$)
2009
2010 （Forecast） 2008
2009
09 3‐Yr 2012 2010 09 3 3-Yr Yr Forecast 2012 1,110 1,100
326
878
402
461
750
550
5,864 7.48 867.4 100.54
6,101 7.72 1023.3 92.86
7,977 10.25 1290.2 85.90
6,000 8.0 1,000 90.0
Note: Goro Project results are included in consolidated recurring profit, but not in overseas asset contribution to consolidated recurring profit.
SUMITOMO METAL MINING CO., LTD.
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Progress g of Growth Strategy gy
Ｐｏｇｏ Mine SUMITOMO METAL MINING CO., LTD.
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Non-ferrous major Long-terrm Vision
Cu interests: 180ktpa → 300ktpa
Cu: Application of R&D
Earnings boosted via radical reforms
Ni: Solomons operational Au interests: 20tpa → 30tpa
Ni: 150ktpa set-up
Back Casting
Fore Casting
Strrategic poin nts
Mineral Resources
Smelting & Refining
Cu/Au: secure mine interests
Cu: more cost competitive
Ni: Solomons project B-FS
Ni: progress at Taganito
p. env. Op
Fight for resources
Higher investment risk
Tight ore supplies Severe supply terms
Materials Expand into E&E Exit loss-making ops
Lack of supply in longer term
Shorter life-spans, faster price erosion
SUMITOMO METAL MINING CO., LTD.
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[Expansion of interests]
・Acquire Majority ・Be B a Strategic St t i Partner P t
Cu interests: 180kt/y→300kt/y A interests: Au i 20t/y 20 / → 30t/y 30 /
1) SMM development
Expansion of exploration area
2) Participation in development projects
Focus on projects in earlier stages
3) Increased production at existing mines
- Cerro Verde doubling plan, F/S complete in 1H 2011
Cu Output
kｔ/y 300
ｔ/y
target g
Au Output
30
Batu Hijau 200
North Parkes Cerro Verde
100
0 2009
2010
Target
Ojos Del Salado La Candelaria Morenci
20
Target By‐product
10
Pogo Hishikari
0 2009SUMITOMO 2010 Target METAL MINING CO., LTD.
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Stone Boy JV
Alaska, USA (Au) Yukon Territory, Canada (Cu, Au, Ni, PGM)
Engaged in approx. 20 exploration projects
Philippines (Au) Brazil (Cu, Au)
Border JV
Solomon Islands (Ni)
Peru (Cu, Au)
Australia ust a a (Cu, Au)
C e Chile (Cu, Au)
Carajas JV
Radiss JV
SUMITOMO METAL MINING CO., LTD.
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March 2010 JOGMEC joined （30％） Proceeding as National PJ Dec. 2010 Acquired additional exploration rights 356km2+Additional 330km2 Total 686km2
Hand Feed
Jejevo Zone
Takata Zone
New Exploratory zone Current Exploratory zone San Jorge Zone
Map
Monorail
Cockatoo Camp
SUMITOMO METAL MINING CO., LTD.
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2006
2007
2008
2009
2010
2011
Long-term vision
2012
GD：Grand Design SS：Scoping g Study y F/S：Feasibility Study EIS： Environmental Impact Study
Exploration (Phases 1-3) EIS GD/SS
F/S
B-F/S Approval Construction
Saprolite
Limonite
Saprolite extraction
HPAL
Construction Operation
Sep-09: preparations
Taganito HPAL facility built SUMITOMO METAL MINING CO., LTD.
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5
15
10
0 (Source:Metals Economics Group)
Cu Million ton Cu %
San n Nicolas
Trap piche
Que echua
Cop pper Mountain
Con nchi
El M Morro
Ros semont
Haq quira
Cerrro Casale
Pum mpkin Hollow
Cas serones
Mira ador
Los s Azules
Gallore Creek
Cad dia East
El P Pachon
Pettaquilla
Pan nantza
Que ellaveco
Frie eda River
Rio Blanco
Salo obo
Sierrra Gorda
Agu ua Rica
Alejjandro Hales
Reli lincho
Anttapaccay
Las s Bambas
Torromocho
Esp peranza
Cerrro Colorado
Cerrro Verde Expa ansion
Tam mpakan
La G Granja
Res solution
Oyu u Tolgoi
Peb bble
・Simultaneously studying over 10 projects per year Evaluate (1) costs, (2) scale, and (3) risks for large-scale projects that have at least 5 million tons of reserves
Million ton Cu %
35 1.6
30 1.4
25 1.2
1.0
20 0.8
0.6
0.4
0.2
0.0
SUMITOMO METAL MINING CO., LTD.
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(kt) 400
Cerro Verde (Peru)
SMM interests: 16 16.8% 8% (FCX: 53.56%) 53 56%) Capa: Concentrate 180 kt / E-Cu 90 kt/y - FY2010: Increase processing volume and increase production of concentrate by approx. 14 kt-Cu kt Cu - F/S for “Increase concentrate production” will be prepared by 1H 2011
300 200 100 100 0 2005
2006
2007
2008
2009
2010
After expansion outcome will be Cu Cu-500ｋｔ/y 500ｋｔ/y as world top class output mines
(kt) 400
Morenci （USA)
SMM interests: 12% (FCX: 85%) (Take-in-Kind method/Australia NP same) -Almost Al t all ll E-Cu E C production d ti -Increase mining output from 500 kt/d in 4Q 2010 to 700 kt/d by 3Q 2011
300 200 100 0 2005
2006
2007
2008
2009
2010
SUMITOMO METAL MINING CO., LTD.
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ＳＭＭ Approx. 25% Limonite
10%
62.5%
54%
100%
MS
CBNC(24 kt/y)
ＮＡＣ 22 5% 22.5% 20.1%
T Taganito it (30 kt/y)
Limonite
Solomoｎ PJ
Mining
6→10 kt/y
60%
25.5%
Goro project
41→65 kt/y
Ni-Matte
(Approx. 80 kt/y)
SMM11%
Nickel E Ni E-Ni Refinery
Ni-Chemicals
P T Inco P.T.
Figesbal
MS
2010→2013 Niihama production capacity
Saprolite
Hyuga Smelting
11% capital injection by SMM (N contribution (No t ib ti off raw materials) t i l )
production capacity FeNi 22kt/y
Smelting & Refining
SUMITOMO METAL MINING CO., LTD.
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(ktpa) 450 400 350 300 250 200 150 100 50 0 -50
Top 5
Vale CVRD Norilsk + Jinchuan Inco Inco + OMG
SMM 20XX 2016
X Fal
BHPB
SMM 2013
Eramet Sherritt PAMCO Murrin Murrin (ktpa)
(Capacity)
End-2009
2013
Long-term vision
Electrolytic Ni
41
65
65
Ferronickel
22
22
22
Refined Ni products
6
10
10
Nickel oxide sinter (Goro)
0
7
7
New Ni products
-
-
50
Total
69
Over 100 SUMITOMO Over METAL150 MINING CO., LTD.
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Launch of construction of world’s most advanced HPAL plant based on CBNC results Production capacity: Ｎｉ 30kｔ/year; Ｃｏ 2.6 kｔ/year ◆Investment amount: US$1 US$1.3bn 3bn Investment ratio： SMM (62.5%), NAC (22.5％), Mitsui & Co. (15%) Project operating life: 30 yrs Sep 2009: Announcement of project Mar 2010: Launch of construction 2013: Completion of construction Test operations Commercial production
Leveling of plant site (Sep 2010)
Port construction (Sep 2010) SUMITOMO METAL MINING CO., LTD.
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３） Smelting & Refining ④ Ni Establishing a base in the Philippines On February 10 2011, President Kemori and the NAC President visited President Aquino to strengthen cooperation with NAC and establish SMMPH (regional headquarters)
Coral Bay Nickel Corporation SUMITOMO METAL MINING CO., LTD.
24
３） Smelting & Refining ⑤ Ni Expansion of E E--Ni production
E Expansion i off E-Ni E Ni production d ti 41kt/y→65ｋｔ/y CAPEX 14 Billion yen Complete in 2013 （Start together with Taganito HPAL）
Development of Ni10万ｔ/y
Niihama Nickel Refinery
SUMITOMO METAL MINING CO., LTD.
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Cost reduction at Toyo Plant
’09 results=1.00
[Securing profits] (1) Raise prod. margins (cut losses) (2) Improve sales premium ((3)) Securing g TC/RC
1.2 1
1.00
1.00 0.92 0.80
08 0.8 0.6
“Maintain minimum cost operations” (1) Continuation of approx. 10% production decrease (2) Promotion of cost reductions -Reduction of operating/materials costs and repairs -Control of capital expenditure and reduction of depreciation expenses
0.4 02 0.2
(3) Promotion of technological improvement/development
0 2008
2009
2010 （Budget） (Plan)
09 3 09 3‐Yr Yr 2012 SUMITOMO METAL MINING CO., LTD.
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[Development of flash furnace concentrate burner at Toyo Plant] S.O.F（Side-blowing and Oxy-fuel Flash smelting） Concentra te
(Effect) Based on the results of the pilot test, the inside walls of the shaft can be expected to be protected by the low dust generation rate* and high oxygen efficiency
[Renovation of all bricks in flash furnace y Plant in 2011]] at Toyo
Air for reaction
Concent Concent rate Top
rate burner Side blast (3)
Side blast (4)
blast Side blast ((2)) Side blast (1)
(Effect) -Avoid risk of molten metal leaks caused by furnace degradation
Copper concentrate & silica sand
Bricks
Concentrate burner Heavy oil
Preheated air
-Respond to high-load operations by strengthening and Reaction shaft improving furnace cooling mechanism h i
Uptake
-Improvement of degree of operational freedom and copper slag loss
Matte
Exhaust gas Slag
Matte
Slag
SettlerMINING CO., LTD. SUMITOMO METAL
27
４） Materials: battery business ① The expanding market 6
(trillions of yen/year) （兆円／年度）
Trends in the global secondary battery market (by cash amount)
Nickel-cadmium Nickel cadmium battery ﾆｯｹﾙｶﾄ ﾆｯｹﾙｶﾄﾞﾐｳﾑ電池 ﾐｳﾑ電池 Nickel-metal ﾆｯｹﾙ水素電池 hydride battery for cars 自動車用途
5
Nickel-metal hydride battery for consumers 民生用途 ﾆｯｹﾙ水素電池 自動車用途 ﾘﾁｳﾑｲｵﾝ電池 Lithium ion battery for cars 民生用途 Lithium ionﾘﾁｳﾑｲｵﾝ電池 battery for consumers
4 3 2 1 0 00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
*In addition to consumer and car batteries, the growth of applications for mass storage t e batteries b tte ie is i expected.（ e e ted （ a market ket off 1.5 1 5 to t 2 trillion t illi yen e is i expected by 2020)
15
16
17
18
19
20
Source: IIT , 2010
In the secondary battery market, the car battery market has rapidly grown. It is expected a new market will be created that surpasses the consumer market. SUMITOMO METAL MINING CO., LTD.
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LMO
LFPO LNCMO
LNO
LCO Possible / Good / Superior
Possiblle/Superiorr/Good
Possiblle/Superiorr/Good
４） Materials: battery business ② a promising future for Li Li--ion battery anode materials LNO LCO LNCMO
LFPO LMO
Possible / Good / Superior
Performance, energy density
Thermal stability
＊LN0；LiNiO２ LCO；LiCoO２ LMO；LiMnO４ LNCMO；LiNiCoMnO２ LFPO；LiFePO４ SMM battery materials business development (maintain the top share for existing products and respond to market needs)
Current massproduced products ＳＴＥＰ １
Nickel-metal hydride battery Lithium ion battery Nickel-metal hydride battery
nickel hydroxide ･･･ (HEV: hybridelectric vehicle)
LNO (lithium nickel oxide) ･･･ (consumers, HEV) nickel hydroxide upgrade ･･･(HEV) (HEV)
Lithium ion battery high-performance nickel battery (LNO) ･･･ product with highest performance in the world (EV- electric vehicles, PCs)
ＳＴＥＰ ２
Lithium ion battery
high output product (LNO, LNCMO) ･･･ post-nickel-metal hydride battery (HEV)
ＳＴＥＰ ３
Lithium ion battery
high-performance product (LNO, LNCMO) ･･･ (PHEV-plug-in hybrid electric vehicle)
ＳＴＥＰ ４
Lithium ion battery
new materials (high performance, highly safe)・・・(PHEV, EV)
SUMITOMO METAL MINING CO., LTD. 29
４） Materials: battery business ③ SMM strategy ●Business growth with Panasonic and Toyota at the core ● Provide a new business model for resources -> anode materials -> recycling y g ●Gain new customers and markets. Develop businesses in response to market needs. Battery materials development Mass production and proprietary technology
A t market Auto k t
Business growth with Panasonic and Toyota at the core Battery materials integration department
Battery manufacturer
Gain new customers and markets. Develop businesses in response to market needs. Materials design, development expertise Battery raw materials production
Battery research center
Auto manufacturer
Provide a new business model for resources -> anode materials -> recycling
General consumers
Recycling
Recycled resources Nickel plant
Venous business
Recycling plant
Arterial business SMM Ni and Co resources
SUMITOMO METAL MINING CO., LTD.
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Ⅲ． Market Environment
Hishikari Mine SUMITOMO METAL MINING CO., LTD.
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Current LME Cash & Stock Historical Chart $/T
LME
10,000
COMEX
SHFE
KT
LME Cash
2,000
9,000
1,800
8,000
1,600
7,000 ,
1,400 ,
6,000
1,200
5,000
1,000
4,000
800
3,000
600
2,000
400
1,000
200 0 10/9
10/5
10/1
09/5
09/9
09/1
08/5
08/9
08/1
07/9
07/5
06/9
07/1
06/5
06/1
05/9
05/5
05/1
04/5
04/9
04/1
03/9
03/5
03/1
02/9
02/5
01/9
02/1
01/5
01/1
00/9
00/1
00/5
0
LM E Stock Chart by Are a
Asia
KT 350
Europe
America
300 250 200 150 100 50
10 /1 0
10 /7
10 /4
10 /1
09 /1 0
09 /7
09 /4
09 /1
08 /1 0
08 /7
08 /4
08 /1
07 /1 0
07 /7
07 /4
07 /1
06 /1 0
06 /7
06 /4
06 /1
0
SUMITOMO METAL MINING CO., LTD.
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(kt) Production Consumption Balance FY($/t) CY($/t) Prediction
ICSG 2009 2010 18,356 19,081 18,189 18,882 167 199 6,101 － 5,150 － 2010 10 2010.10
Cerro Verde Mine
2011 19,293 19,729 △ 436 － －
Macquarie 2010 2011 18,776 19,308 18,961 19,821 △ 185 △ 513 － － 7,536 11,023 2011 1 2011.1
Toyo Smelter & Refinery
SUMITOMO METAL MINING CO., LTD.
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Nickel LME Prices & Stocks 180,000
25.00 LME Stocks
140,000
LME Prices
20 00 20.00
120,000 100 000 100,000 80,000
15.00
10.00
60 000 60,000 40,000
ＬＭＥ ＰＲ ＲＩＣＥ($/lb)
ＬＭＥ ＳＴ ＴＯＣＫＳ(t）
160,000
5.00
20,000 0
0.00
SUMITOMO METAL MINING CO., LTD.
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(Kt) Output Consumption Balance Estimated Timing FY ($/lb) Ni Pig Iron (Included) ( ) Stainless steel
SMM 2009 2010 1,292 1,374 1,265 1,431 27 △ 57 2010.12 7.72 95 140 25,421 29,905
Coral Bay Nickel Corporation
2011 1,585 1,561 24 150 32,144
INSG 2009 2010 1,347 1,427 1,242 1,429 105 △2 2010.10 － － － － － －
Mac qu ar ie
2011 1,610 1,525 85 － － －
2011 1,578 1,586 △8 2011.1 11.00 190 34,634
Niihama Nickel Refinery
SUMITOMO METAL MINING CO., LTD.
35
Au prices continuing strong （$/Toz） 1500 1450 1400 1350 1300 1250 1200 1150 1100 1050 1000 950 900 850 800 750 700 650 600 550
London Gold Price
Public gold reserves by country
（September 2010） Gold Gold / foreign Sectors reserves reserves (%) (t) 1 USA 8,134 72.1% 2 Germany 3,403 67.4% 3 IMF 2,907 4 Italy 2,452 66.2% 5 France 2,435 65.7% , 1.5% 6 China 1,054 7 Switzerland 1,040 15.1% 8 Japan 765 2.7% 9 Russia 726 5.7% 10 Netherlands 613 55.8% 11 India 558 7.4%
500 450 400 350 300 250 200 150 100 50 0 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
SUMITOMO METAL MINING CO., LTD.
36
Significant Impact on Japanese Economy and Price of Metal Resources Index : Jan-07 = 1.0
1.50
Value of US$:
Drops 1.25
Japan Brazil Australia
1.00
Canada Peru Chile Euro
0.75
South Africa
Ri Rises
India
Oct‐10
Jul‐10
Apr‐10
Jan‐10
Oct‐09
Jul‐09
Apr‐09
Jan‐09
Oct‐08
Jul‐08
Apr‐08
Jan‐08
Oct‐07
Jul‐07
Apr‐07
Jan‐07
0.50
SUMITOMO METAL MINING CO., LTD.
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Supplementary Materials
Ｔａｇａｎｉｔｏ Ｐｒｏｊｅｃｔ SUMITOMO METAL MINING CO., LTD.
38
JPY100M
2005 Net Sales Operating Income Recurring Profit Equity Method profit
2006
2007
2008
2009
2010 Forecast
09 3-Yr 2012
6,256
9,668
11,324
7,938
7,258
8,500
7,800
828
1,626
1,554
105
663
910
850
997
2,053
2,179
326
878
1,110
1,100
219
467
740
315
261
291
300
628
1,261
1,378
220
540
790
700
Net Income ROA（%） ROE（%）
9.3
14.8
13.6
2.2
5.8
N/A
6
19.1
29.0
25.4
4.0
9.9
N/A
10
Dividend Per Share(¥)
14.0
27.0
30.0
13.0
20.0
30.0
N/A
4,097
6,970
7,584
5,864
6,101
7,977
6,000
66 6.6
14
15 5 15.5
75 7.5
77 7.7
10 25 10.25
80 8.0
Copper ($/T) Nickel ($/lb) Gold ($/Toz) Zinc ($/T)
477
629
766
867
1,023
1,290
1,000
1,614
3,579
2,986
1,560
1,934
2,164
2,000
Forex (¥/$)
113 3 113.3
117 0 117.0
114 4 114.4
100 7 100.7
92 9 92.9
85 9 85.9
90 0 90.0
SUMITOMO METAL MINING CO., LTD.
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２）Sound ２） Sound financial Position： Position： Free Cash Flow （JPY100M）
2,000
Operating activities Investing activities
1,500
Free Cash Flow Free Cash Flow 1,000 500 0 ‐500 ‐1,000 ‐1,500 2003
2004
2005
2006
2007
2008
2009
2010/1H
SUMITOMO METAL MINING CO., LTD.
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（JPY）
300
Net income per Net income per share (JPY)
250
Dividend per share(JPY) h (JPY)
200
Dividend payout ratio (%)
・Performance-linked shareholder returns ・Consolidated dividend payout ratio of 20%+
60 0% 60.0% 50.0% 40.0%
150
30.0%
100
20.0%
50
10 0% 10.0%
0
0.0% 2004
2005
2006
2007
2008
2009
2010
（Forecast）
SUMITOMO METAL MINING CO., LTD.
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Metals (SMM’s interest) [Annual production capacity]
Gold Nickel Copper
Pogo(８５.０％)
T Taganito it Morenci(１２.０％) Jinlong Copper Co., Ltd.(２７.1％)
Coral Bay (54.0%) Soroako(２０.１％)
[
nickel/cobalt mixed sulfide Nickel 24,000 tonnes, cobalt 1,500 tonnes
]
Cerro Verde(１６.８％)
Batu Hijau(３.５％)
Ojos del Salado(１６.０％) Candelaria(１６.０％) Northparkes(１３.３％) Figesbal(２５．５％) Goro(１１．０%)
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Metals (SMM's interest) [Annual production capacity]
Gold Nickel Copper Zinc/lead
Harima Smelt ［ zinc 90,000 tonnes, lead 30,000 tonnes ］
Toyo Smelter & Refinery ［ copper 450,000 tonnes, gold 60 tonnes, silver 360 tonnes ］
Toyo Smelter & Refinery (Ehime)
Niihama Nickel Refinery ［ nickel 41,000 tonnes ］
Shisaka Plant ［ zinc oxide 120,000 tonnes processing capacity]
Hyuga Smelting Co., Ltd. (60%) ［ ferro-nickel 23,000 tonnes ］
Hishikari Mine
Hyuga Smelting Co., Ltd. (Miyazaki) SUMITOMO METAL MINING CO., LTD.
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Mineral resources and metals 1)Metal trading London Metal Exchange (LME) p in trading g of non-ferrous metals such The LME specializes as copper, nickel, aluminum, lead and zinc. The LME trading prices for metals are used as the international pricing benchmarks for sales of refined metal and purchases of refining ores. TC/RC T t Treatment t Charge Ch (TC) and d Refining R fi i Charge Ch (RC) are commonly used in the terms of purchase for copper concentrate or nickel ore for refining. They are amounts designed to cover refining costs. For example, copper concentrate contracts may define a purchase price based on the LME price at a certain date, minus the TC or RC being used at the time. London fixing Gold is not traded on the LME. Its price is determined for each transaction between market participants. The financial institutions in the London Bullion Market Association (LBMA) agree a standard price for gold based on these transactions and publish it on the morning and afternoon of each trading day. This “London fixing” price is the benchmark for trading in gold. Pound (lb) Part of the imperial system of measures, the pound is the standard unit of weight used in measuring and pricing base metals such as copper and nickel, and in TC/RC calculations. One pound is equal to 453.59 grams; an imperial ton equals 2,204.62lb. Troy ounce (toz) The troy ounce is the standard unit of weight for precious metals such as gold and silver silver. It equals approximately 31 31.1 1 grams. It is named after Troyes, a city in the Champagne region of central France that was the site of a major market in Europe in medieval times. Originally used as a unit of exchange for valuing goods in terms of gold or silver weights, the troy ounce is still used today in gold trading.
2) Metal refining Smelting and refining Refining processes extract valuable metals from ores or other o e raw a materials. a e a s They ey fall a into o two o bas basic c types: ypes hydrometallurgical (wet) and pyrometallurgical (dry). At SMM’s Toyo facilities in Ehime Prefecture, the copper concentrate pre-processing undertaken at Saijo uses pyrometallurgical processes and the nickel refining at the Niihama site uses hydrometallurgical processes entirely. The term ‘smelting’ is used for the extraction of metal from ores using melting and heating (pyrometallurgy) (pyrometallurgy). The term ‘refining’ refers to any process that increases the grade or purity of a metal. Pyrometallurgical refining The precursor ore is melted at high temperature in a furnace, and refining techniques are applied to separate the metal in a molten state. Although large amounts of ore can be processed at one time, the equipment needs periodic maintenance for heat proofing. Hydrometallurgical refining The ore and impurities p are dissolved in a solution,, and chemical reactions are used to separate out the metal. This approach allows continuous and stable refining, but incurs additional costs due to the refining chemicals consumed. 3) Metal ores Sulfide ores These ores contain copper, nickel or other metals chemically bonded to sulfur. Since the application of heat breaks these bonds, releasing the sulfur, such ores are generally refined using pyrometallurgical techniques. Oxide ores These ores contain metals in oxidized forms. Unlike sulfide ores, oxides need much more energy to achieve melting. For this reason, the hydrometallurgical approach is generally used to refine these ores.
Copper concentrates Used as raw materials in copper smelting, copper concentrates have a copper content of about 30% by weight. The remainder consists mostly of sulfur and iron. Copper concentrates are made mostly from sulfide ores. Ores extracted from overseas mines have a typical grade of about 1%. The ores are then “dressed” at the mine to increase the purity and produce concentrate. Most of the copper ores imported by SMM for smelting in Japan are concentrates. Nickel oxide ores Whilst the higher-grade sulfide ores are used predominantly in nickel refining, nickel oxide ores are more prevalent than nickel sulfides. The sulfide-oxide ratio in current nickel reserves is believed to be about 3:7. High refining costs and technical issues have limited use of oxide ores in nickel refining to date, but SMM has succeeded in refining nickel from low-grade oxide ores based on HPAL technology. Mixed sulfide (MS) CBNC produces a mixed nickel-cobalt sulfide intermediate containing about 60% nickel by weight. This is used as a raw material in electrolytic nickel production. Matte A matte is another term for metal sulfides. For raw material, electrolytic nickel production at SMM also uses a nickel matte (of about 75-80% purity) sourced from PT Inco. Proprietary ore ratio This ratio is the proportion by volume of ore procured from overseas mining interests relative to the overall volume of smelting ores used as raw materials. Typically, off-take rights are proportional to the equity interest in a mine. In the case of Cerro Verde, Verde SMM has secured 50% off-take off take rights for the first ten years of production from 2006, based on a 21% equity interest.
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4) Nickel production process Coral Bay Nickel Corporation (CBNC) Based in the Philippines, this SMM subsidiary produces mixed nickel cobalt sulfides using HPAL technology and exports the nickel-cobalt raw materials to the SMM Group’s nickel refining facilities in Niihama, Ehime Prefecture.
Ferronickel Ferronickel is an alloy containing nickel (about 20%) and iron. Its main use is in the manufacture of stainless steel, which is about 10% nickel by weight. weight Based in Hyuga, Hyuga Miyazaki Prefecture, SMM Group firm Hyuga Smelting produces ferronickel.
Semiconductor and advanced materials
High Pressure Acid Leach (HPAL) HPAL technology enables the recovery of nickel from nickel oxide ores that traditionally were difficult to process process. SMM was the first company in the world to apply it successfully on a commercial scale. The oxide ores are subjected to high temperature and pressure and reacted under stable conditions with sulfuric acid to produce a nickel-rich refining intermediate.
Gold Gold is in demand worldwide for investment and decorative purposes. Gold is widely used in Japanese industry within the electronics sector because of its high malleability and ductility. Part of SMM’s gold production goes to SMM Group companies engaged in fabricating and selling bonding wire.
Chip-on-film (COF) substrates COF substrates are electronic packaging materials used to make integrated circuits for LCD drivers drivers. They connect these circuits to the LCD panel.
Matte Chlorine Leach Electrowinning (MCLE) MCLE is the technology used in the manufacturing process at SMM’s nickel refinery. The matte and mixed sulfide ores are dissolved in chlorine at high pressure to produce high-grade nickel using electrolysis. MCLE is competitive in cost terms, but poses significant operational challenges. Other than SMM only two companies are producing nickel based on this SMM, kind of technology. 5) Main applications for metals Copper Copper is fabricated into wires, pipes and other forms. Besides power cables cables, copper is used widely in consumer applications such as wiring in vehicles or houses, and in air conditioning systems.
Copper-clad polyimide film (CCPF) CCPF is a polyimide film that is coated using a copper base. It is used as a material for making COF substrates substrates. SMM commands a global market share of over 70% of the CCPF supplied for use in large liquid crystal displays.
Lead frames (L/F) Lead frames are electronic packaging materials used to form connections in semiconductor chips and printed circuit boards. They contain thin strips of a metal alloy containing mostly nickel or copper. Bonding wire Composed of gold wire that is just a few micrometers thick, bonding wire is used to make electrical connections between lead frames and the electrodes on semiconductor chips. Secondary batteries Secondary batteries are ones that can be recharged and used again. SMM supplies battery materials that are used in the anodes of nickel metal hydride batteries and lithium-ion rechargeable batteries, which supply power for hybrid vehicles or notebook computers, among other consumer applications.
Electrolytic nickel This form of nickel, which has a purity of at least 99.99%, is used in specialty steels steels, electronics materials and electroplating, among other applications. SMM is the only producer of electrolytic nickel in Japan.
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The materials provided herein are not intended as disclosure under the Securities Law Law, and no warranty is made as to their completeness or accuracy. Any projections included in these materials are based solely on information available at the time of this briefing, and are subject to change based on market conditions, competitive conditions, and a number of other factors. Therefore, we ask that you refrain from making any investment decisions based on these materials alone. The Company cannot be held responsible in any way for any losses that may occur as a result of the use of these materials.
All copyrights, trademarks, and intellectual property rights attaching to the materials herein are the sole property of Sumitomo Metal Mining Co., Co Ltd. Ltd
SUMITOMO METAL MINING Co., Ltd. SUMITOMO METAL MINING CO., LTD.
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