Segment Information

Last Update : September, 2018

Mineral Resources Segment

Sumitomo has been involved in the mineral resources business ever since the discovery of the Besshi Copper Mine in 1690. The technologies cultivated through the years at Besshi have subsequently been carried on at the Hishikari Gold Mine, which opened in 1983. Today Hishikari ranks among the world’s foremost sources of gold – a precious commodity the mine continues to produce in significant quantities.
In addition to its mineral resource operations in Japan, Sumitomo Metal Mining has for many years engaged in the development of mines overseas. Today the company is actively undertaking exploration at its own mines and participating in the development of jointly owned mines at points all around the globe.
Going forward, the company will continue striving for stable operation of its gold mines at Hishikari and Pogo, in Alaska, and will vigorously carry forward with further development of gold, copper and nickel resources.

Overview of Results for the First Six Months of FY2018

  • Ongoing smooth production as planned at the Hishikari Mine.
  • On September 28, all $USD 260 million in the Pogo gold mine (USA) held by SMM (85%) and Sumitomo Corporation (15%) was transferred to North Star Resources Limited (Australia) Since starting commercial production in 2006, the Pogo gold mine has contributed to SMM’s business results over its approximately 13 years of operation.
  • The main copper mines overseas have seen reduced production due to the impact of a decrease in the grade of copper in mineral ore.

Projections

  • For copper, a debottlenecking project is underway at the Sierra Gorda copper mine to increase mineral ore processing volume by 10% to 20%.
  • For gold, while maintaining stable production at the Hishikari Mine, the Côté Gold Project will be taken forward in Canada.
  • Regarding the acquisition of new interest, SMM will concentrate on conducting its own explorations targeting gold and will undertake proactive activities for the acquisition of good quality interest.

Smelting & Refining Segment

Equipped with the world’s highest level of technologies, Sumitomo Metal Mining produces and markets metal materials of outstanding grade. In Japan the company has two bases, both in Ehime Prefecture: the Toyo Smelter & Refinery producing copper and the Niihama Nickel Refinery producing nickel. Overseas bases include Coral Bay Nickel Corporation and Taganito HPAL Nickel Corporation, both in the Philippines.
Because smelting and refining operations have an impact on the environment, today the company is developing technologies targeted at further reducing CO₂ and other harmful emissions.

Overview of Results for the First Six Months of FY2018

  • In copper smelting and refining, production at the Toyo Smelter & Refinery proceeded smoothly.
  • In nickel smelting and refining, while operation at Coral Bay Nickel Corporation (Philippines) was mostly smooth, product was reduced due to frequent equipment trouble at Taganito HPAL Nickel Corporation, and this resulted in reduced production of final product at the Niihama Nickel Refinery and the Harima Refinery.

Projections

  • In copper smelting and refining, SMM will continue to maintain capacity utilization to work towards the goal of a production volume of 450,000 tons.
  • In nickel smelting and refining, SMM will aim for stable production at Taganito HPAL Nickel Corporation after the frequent occurrence of equipment trouble by enhancing inspection of equipment when not operating, improving maintenance methods, and enhancing daily production management.
  • For scandium, work on setting up is underway with the goal of starting of commercial production in 2018.

Materials Segment

Metals of all kinds, in the form of semiconductor materials and functional materials, are widely used for various purposes: copper for electrical circuitry, nickel powder for capacitors, and indium for liquid-crystal displays, to name a few. Sumitomo Metal Mining has been involved in the materials business since 1960. Today, applying technologies developed through the years, the company is processing metals into ever more advanced products meeting the latest needs of its customers.

Overview of Results for the First Six Months of FY2018

  • In battery materials for automobile batteries, investment in increased monthly production of lithium nickel oxide from 1,850 tons to 3,550 tons is almost complete, and this is contributing to increased sales.
  • Crystal materials for communication devices such as smartphones have been impacted by an prolonged inventory correction, meaning both production and sales continued to stagnate.
  • Sales of powder materials continued to be robust due to an active automobile electronic component market centering on passive components.

Projections

  • For battery materials, investment is underway to increase monthly production volume for lithium nickel oxide from 3,550 tons to 4,550 tons, and the target is for completion of work around the end of the year with full operation soon after.
  • For crystal materials, SMM will enhance its quality and cost competitiveness in preparation for an another expansion in demand henceforth.
  • As the volume of powder materials used is expected to increase due to increased electrification of automobile-related products, SMM will bring to market products that meet customer needs in a timely fashion, and increase sales.

Note

Inter-segment transactions take place, and the figures released by SMM for sales are total external sales with inter-segment transaction removed. Sales for each business and segment profits show the amount prior to removal of inter-segment transaction. Segment profit structure ratio shows the ratio for the three-segment total.

From this year a voluntarily switch has been made from the Japanese standards used thus far to IFRS. As such, the accounting values for the year of comparison FY2017 have also been converted to IFRS.

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