Sumitomo Corp. to Expand Equity Iron Ore, Coal

Sumitomo Corporation’s mineral resources division No.2 expands supply base of competitive iron ore and coal resources. The unit triples the equity iron ore by around 2015 and increases the coal assets through organic growth at the existing projects while the unit seeks competitive assets as long term core assets. The unit secures competitive assets through the model to expand the business based on core assets to serve Japanese and other users.

The unit established 3 core assets including Australian coal assets, equity in South African Assmang with iron ore, manganese and other operations and Brazilian iron ore asset by acquiring the Brazil asset last year. The unit tries to expand the core assets while the unit tries to get new core assets with potential growth.

The unit tries to participate in development of Russian Elga coking coal mine and Mongolian Tavan Tolgoi coking coal mine as next generation top class coking coal sources. The unit tries to realize the new sources through cooperation with Japanese trading companies, steel makers and power companies along with South Korean and Russian companies.

Assmang, in which the unit has 15% indirect interest, expands the iron ore production to annual 14 million tonnes level in mid-2012, which is 4 million tonnes higher than current level. Minera??o Usiminas, in which the unit has 30% interest, expands the iron ore production by 23 million tonnes to 30 million tonnes by 2015. With the expansions, the unit’s equity ore increases to 11.1 million tonnes in 2015 compared with current 5 million tonnes. Assmang also eyes expansion to annual 20 million tonnes level in future.

The unit expands the coal assets through expansions in Australian mines. Rolleston thermal coal mine, in which the unit has 12.5% interest, expands the output by 12 million tonnes. NCA, in which the unit has 10% interest, expands the coking coal production by as much as 1.5 million tonnes. The unit’s equity coal increases from around 5 million tonnes to around 8 million tonnes in 2015. Oaky Creek coking coal mine, in which the unit has 25% interest, plans new underground operation while Wandoan thermal coal mine, in which the unit has 12.5% interest, would develop 22 million tonnes class operation.

The unit expects the net profit reaches 35-40 billion yen for fiscal 2011 ending March 2012 when Brazilian iron ore equity generates 9-10 billion yen of profit. The unit posted near 30 billion yen of profit in fiscal 2010 due to strong price and higher coal sales volume compared with former record 25.1 billion yen in fiscal 2008.