Sumitomo Corp. to Add Competitive Iron Ore, Coal Assets

Sumitomo Corporation’s mineral resources division No.2 expands equity iron ore and coal volume through aggressive expansion in existing mines. The division expects the equity reaches 11 million tonnes for iron ore and 8 million tonnes for coal in 2015, which are 3 times and 1.5 times of current levels respectively. The division adds the volume mainly by adding long term competitive coal assets. The division tries to build business base for next generation to realize long term profit growth while the division will renew record profit for fiscal 2011 ending March 2012 as fiscal 2010.

The division expects the expansion works is slightly behind the original schedule while the division expected the equity coal would reach 8.5 million tonnes in 2015 before. The division expands existing Australian coal mines including Oaky Creek and Rolleston mines in coming years through partnership with Xstrata. Through the expansion, the division expects the equity coal increases to 8 million tonnes in 2015 including 3.5 million tonnes of coking coal and 4.5 million tonnes of thermal coal.

The division tries to get new coal interests to add the competitive equity coal. The division also supports major coking coal development projects in Russia and Mongolia as a part of Japanese resource security in longer term.

The division expects the equity iron ore volume will keep increasing through expansion in mines with the interest. Assmang of South Africa increases the annual iron ore production to 14 million tonnes in mid-2012 compared with current 10 million tonnes. The firm expands the production to 16 million tonnes in 2016 and to 20 million tonnes in longer term. Mineracao Usiminas of Brazil added around 700 million tonnes of reserve through purchase of adjacent deposits and partnerships. The firm expands the annual production to 30 million tonnes by 2015. The firm expands the production and develops export market in long term eyeing construction of own port facility.

The division’s annual profit from businesses of Australian coal, South African iron ore and Brazilian iron ore is 10 billion yen more in fiscal 2011 from 2010. The division still expects to post 35-40 billion yen of net profit for fiscal 2011 despite of the uncertainty in coal price and volume compare with record near 30 billion yen for fiscal 2010. The division will have wider profitable base in and after fiscal 2012 through the expansion.