Sumitomo Corp. to Invest for Higher Coal Equity

Sumitomo Corporation’s mineral resources division No.2 tries to get new resource equity mainly for coal. The division shifts the main target to coal for the resource investment after the firm realized 170 billion yen of major iron ore equity acquisition. The firm is in study to develop Australian major thermal coal project, Wandoan with potential 30 million tonnes of annual output. With the project, Sumitomo Corp.’s coal equity increases from current 5 million tonnes per year to 8 million tonnes level. The firm targets 10 million tonnes level through new investment in Russia and Mongol. The division tries to strengthen the profitability through wide activity mainly for steel making raw materials.

The division invests 120 billion yen to get Usiminas’ iron ore interests in Brazil in fiscal 2010 started April. The single major acquisition is more than planned 110 billion yen investment for resource and energy for the year. However, the division tries to acquire competitive new resource equity for future growth.

The division tries to promote iron ore joint expansion project with Usiminas in Brazil to increase the production volume to 4 times of current level. The division eyes annual 100 million tonnes class of major iron ore supply from the iron ore rich area of Serra Azul with potential tie-up with other miners in the areas. The division focuses on the Brazil expansion and South African expansion through Assmang while the division eyes chance to get new iron ore interests in new competitive projects.

The division posted 15 billion yen of net profit for fiscal 2009, which was 10 billion yen lower than fiscal 2008 while the profit was higher than original plan of 10 billion yen for fiscal 2010 thanks to higher coal sales for China. The division plans 19-20 billion yen net profit for fiscal 2010 under higher resource prices.