I would like to begin by extending a special thank you to all of our shareholders for your ongoing support of the business activities of Sumitomo Metal Mining Co., Ltd. (SMM)
A robust American economy led the way for the world economy in the first half of this fiscal year (April - September 2018), with each region generally experiencing an ongoing tendency towards growth. The foreign exchange rate saw a tendency towards a weaker yen and stronger dollar due to factors such as the difference in interest rates, but due to protectionist trade policy by the United States government amongst other things, there was a stronger tendency towards risk avoidance in the market and this slowed down the weakening of the yen and strengthening of the dollar.
The non-ferrous metals gold, copper, and nickel saw an across the board downward trend due to capital leaving the market as a result of escalating trade friction between the USA and China, tightening finances in the USA, and concerns over a worsening economic situation in China and other emerging economies. In industries related to materials, demand for materials for automobile battery continued to increase.
Against this backdrop, sales for the first half of this fiscal year increased year-on-year for the same period by 26.4 billion yen to 466.7 billion yen due to factors including a rise in the price of copper and nickel and increased sales of battery materials. Pretax profit increased by 24.9 billion yen year-on-year for the same period to 73.2 billion yen, while quarterly profit attributable to parent company owners increased by 19.8 billion yen year-on-year for the same period to 58.1 billion yen.
Please note that for consolidated financial statements and consolidated accounting documents from this year a voluntarily switch has been made from the Japanese standards used thus far to International Financial Reporting Standards (IFRS). As such, the accounting values for the year of comparison FY2017 have also been converted to IFRS.
The Pogo gold mine (USA) started operating in 2006, but all interest was transferred to Northern Star Resources Limited (Australia) in September 2018. Improvements at the Sierra Gorda copper mine (Chile) led to an operational state close to that in the original plan as a result of tackling operational improvement as a priority issue. Furthermore, an on-site feasibility study(*) was completed in November 2018 for the Côté Gold Project (Canada), in which SMM acquired an interest in June 2017.
(*) Feasibility study: A survey and investigation carried out in advance into whether a project is feasible or not (potential profit, etc.)
Due to equipment trouble, Taganito HPAL Nickel Corporation (Philippines) was unable to fully enjoy the benefits of the expansion completed last year (increase in annual production from 30,000 tons to 36,000 tons). SMM will reflect upon this and enhance inspection of equipment when not operating, improve maintenance methods, and enhance daily production management.
In materials business, Investment in increased production for lithium nickel oxide, an automobile battery material, from 3,550 tons per month to 4,550 tons is almost complete, and a monthly production capacity of 4,550 tons is expected to be in place before the end of the year in order to deal with ongoing strong demand.
Sumitomo Metal Mining's growth to date has in no way been underpinned solely by the business climate; it has also been built up by the efforts made by its employees and stakeholders. The SMM Group will continue to make the utmost effort to implement its growth strategy as it has in the past, based on economic conditions and the business climate. Based on our motto, "deeds, not words," we will fulfill our objectives in an effort to further increase our corporate value.
We will actively distribute information relating to projects as well as new products and technologies in order to familiarize stakeholders more deeply with SMM and retain your trust.
We look forward to the continued support and understanding of stakeholders in these endeavors.
President & Representative Director