Mitsui & Co. to Expend 220 billion yen for Metal Resources

Mitsui & Co.’s iron and steel raw materials and nonferrous metals unit plans to expend 220 billion yen in 2 years to March 2008 for new projects of coal and nonferrous metals along with expansion of existing iron ore and coal operations. The investment could increase more when the unit tries to double the captive resources of coal and nickel by 2010. The unit improves the profitability to secure annual 100 billion yen of consolidated net profit even when the resources’ prices decreases through the aggressive investment and restructuring of the investment portfolio including divestment of assets without synergy with the businesses. The unit posted 2.4 times of consolidated net profit at 62.2 billion yen for the first half year to September from same period of 2005. The profit exceeded the original expectation when prices of iron ore and copper increased along with near 14.2 billion yen of onetime gain from disposal of Toho Titanium share and more than 5 billion yen from CVRD’s integration of Caemi. The unit revised profit outlook upward to 100 billion yen for the year to March 2007, which is 83% higher than previous year and 41% higher than original forecast under the favorable business conditions despite of some negative factors including higher operating cost for the mining businesses. The unit clears the target of 90 billion yen of consolidated net profit, which the unit set under the vision for 3-5 years from 2006. However, the unit keeps improving the profitability to secure stable profit with lower resources’ prices when the higher prices lift the profit temporally. The unit tries to increase the captive resources by 10 million tonnes to annual 50 million tonnes for iron ore and double the resources to 16 million tonnes for coal and to 100,000 tonnes for copper by 2010. The firm seeks competitive projects through the partnership with major miners including CVRD, BHP Billiton, Rio Tinto and Anglo American in order to expand the profit base.