San Cristobal silver, zinc and lead mine in Bolivia

MUSA iron ore mine in Brazil

Ambatovy nickel plant in Madagascar

Business Environment

Resource prices are headed for correction, partially because clouds have emerged over China's economic growth—the driver of the recent sustained uptrend. Given this change, even global resource majors that had been pursuing increased dominance are postponing and revising development and expansion plans. On the other hand, unconventional energy development is building up, and the global energy supply and demand landscape is being transformed.

Strengths and Strategies

We will steadily enhance our portfolio of resource interests with an eye to longer-term demand growth with our emphasis on key strategic resources—copper, coal, iron ore, and crude oil and gas. We will also take into account time factors like the start of production and mine life, as well as regional factors such as distribution of country risk.
Through our mining businesses including at the San Cristobal silver, zinc and lead mining project in Bolivia, where we have assumed full ownership, we are building up our mining operation expertise and nurturing numerous personnel. In our U.S. unconventional gas business, we will work to build a gas value chain traversing upstream operations to distribution, liquefaction and LNG export. We will do this by combining the functions of our U.S. natural gas trading company with our activities as the first Japanese company to participate in a shale gas development project.

Actions for What We Aim to Be

Along with bolstering our existing interests' cost competitiveness and firmly moving expansion plans forward, we are concentrating on steadily executing large-scale upstream resource projects. The U.S. tight oil development project we joined in September 2012 is on track. At the Sierra Gorda copper mine project in Chile, we are working toward starting production in 2014. In Brazilian Mineração Usiminas S.A. (MUSA) iron ore mining operations, we are advancing plans for expansion. At the Ambatovy nickel project in Madagascar, we aim to bring operations to full capacity as soon as possible. We are working to enhance the San Cristobal project's value through ongoing exploration aimed at increasing the ore reserve. In midstream and downstream business, we have also concluded basic agreements with the U.S. company Dominion Cove Point LNG related to natural gas liquefaction as well as LNG exports, targeting exports to Japan from 2017.

Site in Kazakhstan for recovering rare earth from uranium mine tailings

Business Environment

With food demand rising as emerging countries' populations increase and economies develop, crop protection products and fertilizers that improve the quality and yield of agricultural produce should see growing demand. Further, there are needs pertaining to high value-added products that are energy-­efficient and environmentally friendly, as well as new technologies harnessing unconventional energy.

Strengths and Strategies

We will work to build our agricultural value chain including fertilizer operations, continuing to expand the scope of our worldwide crop protection business. We are also striving to develop gas chemicals-related businesses peripheral to our U.S. shale gas upstream interests.

Actions for What We Aim to Be

We are deepening and globally developing our multifaceted crop-production support business through the Romanian agricultural materials distribution company Alcedo S.R.L. We are also extending the breadth of our resource-based inorganic chemicals business. For instance, we are advancing a project to recover rare earth resources from uranium-ore tailings to expand the scope of our initial foothold in mining uranium in Kazakhstan. In electronics operations, we are working to fortify our EMS business base and augment our value chain.

An elementary school constructed in the resettlement village

For the Sumitomo Corporation, consideration for local communities and the environment are of paramount importance in promoting the Ambatovy Project—one of the world's largest nickel mining enterprises located in Madagascar.

In considering local communities, the project has engaged in a large number of consultations with local stakeholders, including those who were asked to relocate to new areas as a result of the project implementation. After the consultations, the project has constructed resettlement villages in the relocation zone, and built new houses, schools and medical facilities. Other initiatives aim to improve self-sufficiency among farmers in surrounding areas by providing them with technical support and purchasing their produce.

Environmental considerations include rigorous efforts to protect the environment, such as the establishment of a buffer zone* around the mining site to protect rare species, burying pipelines, and reforestation.

Sumitomo Corporation will continue to value its involvement with local communities and the environment, and to contribute to the development of Madagascar through the Ambatovy Project.

^*Buffer zone: A zone established to protect specified areas by reducing the impact of ­outside factors.