Itochu’s Energy, Metals & Minerals Unit to Build Competitive Assets

Itochu Corporation’s Energy, Metals & Minerals Company tries to expand competitive assets in next mid-term business plan starting April 2011 as the core growth strategy. The unit expands selected assets of iron ore, coking coal, nonferrous metal and energy resources while the unit tries to improve the asset portfolio in items and areas by divesting non-core assets. The unit invests around 800 billion yen in around 5 years to increase the assets to 2 trillion yen level in order to improve the profitability in the across the board efforts including expanding trading business and better group companies’ operation.

The senior managing executive officer Yoichi Kobayashi said the unit tries to increase competitive assets when the resource market is in second paradigm shift mainly due to rapid growth of India and Southeast Asian countries. The unit keeps investing annual 140-150 billion yen in and after fiscal 2011 starting April as fiscal 2010 when the strong resource market continues for years.

The unit is confident the equity iron ore will double to annual 30 million tonnes in 2015 through expansion of Australian joint venture with BHP Billiton and expansion of Namisa mine in Brazil. The unit targets to increase the equity coal from current 8 million tonnes to 15 million tonnes in 2015 by acquiring new coking coal assets.

The unit tries to power up weak items while the unit improves the strong points more. The unit expands oil assets from current around 40,000 barrel per day to 70,000 barrel in 2015 and tries to get equity in copper, lead, zinc, nickel and platinum group metals. The unit also balances time frame portfolio from exploration to production. The unit also develops uranium, bio ethanol and other new energy and environmental businesses as next generation cash cow.

The unit tries to improve profitability for total group through better synergy in the group including the unit for resource development and retail subsidiaries including Marubeni-Itochu Steel, Itochu Metals and Itochu Enex. The unit increases the employees from current 330 to 360 by 2012 while the unit expands the offshore business by increasing offshore staff from current 90 or 27% of total to 110 or 30% of total manpower.

The unit’s assets were 1.255 trillion yen excluding assets for Marubeni-Itochu Steel at end of September. The unit targets 115 billion yen of net profit in fiscal 2010 or more than 9% of return on assets. The unit expects higher profit even at lower ROA when the unit expands the total assets to 2 trillion yen level. The unit tries to improve the profitability through the efforts even when resource price level would decrease from current high level.