Sojitz Invests in Iron Ore, LNG and Coal Mines Intensively from F2012

Sojitz Corporation’s energy and metal business division projects intensive investment into iron ore, LNG and coal for fiscal 2012-2014 starting in April 2012. The division plans to advance expansion projects of existing assets steadily, such as an alumina refinery in Australia or molybdenum and copper mines in Canada. Meanwhile, the division eyes acquisition of new interests in energy and metal related assets to reinforce business portfolio. The division also tries to raise earning power by strategic investment for trading business to follow demand growth mainly in Asia. The profit target is set higher than 36.1 billion yen of annual recurring profit marked in fiscal 2007.

The highlight in the next midterm for fiscal 2012-2013 will be development of a new iron ore mine in West Australia in which Sojitz has 30% interests. The production is scheduled to commence in 2H of 2014. As for coking coal and fuel coal, the division eyes acquisition of new interests. The division also focuses on LNG business when the demand is expected to increase as an alternate energy source for atomic power plants.

The division has invested more than 130 billion yen accumulatively for fiscal 2009-2011. Sojitz acquired a management right in coal mines, enhanced rare metal business including niobium, and progressed bioethanol business in Brazil.

In 1H of fiscal 2011, the division carried out near 20 billion yen of capex. In 2H of fiscal 2011, the division currently decided investment into expansion of Canadian copper mine. Annual investment plan is approximately 50 billion yen in fiscal 2011, in which 20 billion yen is targeted to acquisition of new interests such for coal business.

The division’s net profit was 9.9 billion yen in 1H of fiscal 2011, almost flat year-on-year. Raw material prices stayed high and non-recurring profit emerged at 2.5-3.0 billion yen such from sellout of the shares in a direct-reduced iron business in Venezuela. Annual net profit is estimated at 20.5 billion yen, 23% lower year-on-year, mainly due to raw material price downturn.