SUMITOMO METAL MINING Co., Ltd. Bataraza, Palawan, May 2011

5713

FY2010

Progress of Business Strategy

May 2011

SUMITOMO METAL MINING Co., Ltd.

Contents

Ⅰ. Progress of 09 3-Yr Business Plan

Ⅱ. External Environment

Ⅲ Business Results / Forecast for FY2011
Ⅲ.

Ⅳ. Financial Highlights and Information Materials

SUMITOMO METAL MINING CO., LTD. 2

Kanki-ko (Pit of exultation), Besshi Copper Mine
First shaft dug in 1691

1) Exploration by SMM
SMM can secure the majority
Longer lead-time
lead time
(Border Project)
2) External project partnering
Shorter lead-time
Difficult to secure the majority
Competition among companies
C titi i
Risk of cost increase (Sierra Gorda Project)

3) B
Boost existing output
t i ti t t
Leveraging partners’ capacity
Few projects for output boosting
F j t f t tb ti
Difficult to increase ratio of interest (Cerro Verde Mine)

Border Project
Background
Project mining area
2005 JOGMEC and Minotaur
commenced exploration Broken Hill

2007 SMM acquire exploratory
rights of JOGMEC
2010 Exploration of magnetite
ore was commenced
in Mutooroo Mutooroo

Ratio of interests South Australia New South
Wales
SMM 59%
Minotaur 41%
Mi t
Target minerals
Copper, zinc,
Copper zinc magnetite ore Adelaide


Stone Boy Project
Background
Exploration started i 1991
E l i d in
(This project discovered Pogo
Mine.) アンカレッジ

The exploration is currently
being conducted centrally Fairbanks
along Monte Cristo area.

Monte Cristo area
Ratio of interests Pogo
SMM 95%
Sumitomo Corp 5%
Target minerals
Au ・ Sb

Solomon Project
Current Status Locations for International Tender Competition
Dec. 2010 Choiseul

Acquired exploratory Isabel

rights for 3 mining zones
through international
tender
t d competitiontiti
Honiara

Negotiation to access to
Jejevo Zone
the local properties has
p p Takata
been concluded and Zone
Z
currently applying for San Jorge Zone
exploratory right.

→Exploration will start as
soon as obtaining
approval.
approval


Stone Boy JV

Engaged in approx.
g g pp
Alaska, USA
(Au)
20 exploration
Yukon Territory, Canada
p j
projects
(Cu, Au, Ni, PGM)

Philippines
(Au)
Carajas JV
Brazil
(Cu, Au)
Solomon Islands Peru
(Ni) (Cu, Au) Radiss JV
Border JV
Australia Chile
(Cu, Au) (Cu, Au)


100

80

Asia
Exploration cost

Exploration
60 around
(JPY

existing mines Cu
Y100M)

Oceania
40 Asia
Cu Oceania
ts

New deposit
Ni South
20 South
exploration Ni America
America
North North
Au
A Au
A America America
0
2010 2011 2010 2011 2010 2011
By Stage
y g By Metal By Area


Sierra Gorda copper mine development project
Participation agreement signed May 15, 2011
Location Cu e owner
Current o e Sierra Gorda
Region 2, Republic of Chile Quadra FNX Mining Ltd. Antofagasta

Approx. 140km northeast Ratio of interest
of Antofagasta
Santiago
Altitude roughly 1,700 meters Quadra FNX – 55%
SMM – 31.5%
Sumitomo Corp.(SC) – 13.5%

SMM gains SMM and SC
right to 50% of will together
invest roughly
produced copper $720M
concentrate

Commencement of operations
2014 (tentative)

Sierra Gorda Project
Chile

Minable reserves
Highway 5

Approx. 1.3B tons; Expected mine life – 20 years
pp ; p y
Chuquicamata
Cu Mo Au
Calama
Metals contained 5,000kt 300kt 80t Spence
p ✈
Grade 0.4% 0.025% 0.06g/t
140km Sierra Gorda
Special features Esperanza
E
・ Flat terrain ✈
・ Adjacent to highway and railway, close to port
Antofagasta
Approx.
Approx 140km from Antofagasta, 60km from Calama
Antofagasta
・ Adjacent to currently operating Spence and Esperanza
mines → Low risk
・ Practically zero precipitation → will use seawater
Escondida
E did
・ High molybdenum grade → revenue from byproducts
expected

Development chronology Production plan
Cu production volume (kt) Mining volume (kt)
1991 97
1991-97 Various companies carry out 250 500,000
exploratory drilling Cu production volume (kt)
Mining volume (kt)
200 400,000
2004 Quadra acquires exploration rights

2010.3 Memorandum of Understanding 150 300,000

(“MOU”) announced with State Grid
100 200,000
Corporation of China (“SGCC”) for
( SGCC )
acquisition of exploratory rights
50 100,000

2010.6 Official contract with SGCC not
0 0
concluded b MOU d dli
l d d by deadline,
2014 2015 2016 2017 2018
agreement annulled
・ All production will be
2011.5 SMM acquires exploratory rights concentrated.
・ After the operation starts, the
operation will expand till 2017.

Cu Mton
nnes

( pp

0
5
10
15
20
25
30
35
Pebble
Oyu To
olgoi
Resolut
tion
La Gran
nja
Tampa kan
V n
Cerro Verde Expansion
Cerro Colorado
C
Espera nza
G
Sierra Gorda
g

Toromoocho
Las Bambas
accay
Antapa
(copper reserves and grade)
)

Relinch
ho
Copper development projects

Alejand Hales
dro

（Reference: Metals Economics Group, SMM)
Agua Rica
R
Salobo
anco
Rio Bla
Frieda River
Quellav
veco

C u M to n n e s
Panant
tza
Petaquilla
hon
El Pach
Cadia East
E
(

Cu %
Galore Creek
ules
Los Azu
Mirado r
ones
Casero
political instability, high altitude, ore body deep underground)
Pumpk in Hollow
Cerro Casale
C
Haquira
a
Rosemont
ro
El Morr
Conchi
r
Copper Mountain
Quechuua
Large development risk (environmental measures, insufficient infrastructure,

Trapich
he
San Nic
colas
0 .0
0 .2
0 .4
0 .6
0 .8
1 .0
1 .2
1 .4
1 .6

SUMITOMO METAL MINING CO., LTD.

Cu %
(includes estimated mineral volume)
)

13

Development schedule
2011 2012 2013 2014 2015 2016 2017
Acquisition of
required approvals
Construction
C t ti
Operations at 110kt
Expansion of
operations to 190kt
Operations at 190kt

Investment for development Financing
・ For 110kt operations - $2,900M ・ Project finance, primarily through JBIC
j ,p y g
・ For expansion to 190kt - $800M ・ Remainder through investments and loans
from 3 companies

Investment scheme
Quadra FNX SMM Sumitomo Corp.
100% 100% 100%
Quadra Barbados SMM Chile (Subsidiary)
70% 30%
SMM Sierra Gorda
55% Inversiones Ltda..
45%
Minera Quadra Chile

Sierra Gorda mine

・ Quadra is operator
・ SMM will dispatch personnel (approx. 8 staff)
(approx
Will participate from construction stage

Quadra FNX
Overview of Quadra FNX Business Performance
Headquarters: Vancouver, Canada
Overview (Sales: MUS$) (Income: MUS$)
Listed on the Toronto Stock Exchange 1,200 400
Sales
売上高
Operating Income
History 1,000 営業利益
Net income
純利益 300
2002 Quadra Mining Ltd. Established 800

2004 Acquired Robinson mine 600 200
Acquired exploration rights t Si
A i d l ti i ht to Sierra G d
Gorda
2009 Acquired Centanario Copper 400
Corporation, acquired Franke mine 100
200
2010 Acquired FNX Mi i C
A i d Mining Company
0 0
Assets owned Results of operations at copper mines 2005 2006 2007 2008 2009 2010

Production
Project Interest Location Reserves (kt)
volume (2010, kt)
Robinson 100% Nevada, U.S.A. 49 554
Carlota 100% Arizona, U.S.A.
Arizona U S A 13 190
Franke 100% Chile 17 263
Podolsky 100% Canada 11 15

Cerro Verde mine – Expansion project
Background
Dec. 2008 FS f E
D for Expansion C
i Completed
l t d
Volume of concentration process doubles to
240kt/day from 120kt/day
→ Negative estimation based on the copper
price in those days.

2Q 2011- Review of FS for expansion
to be completed (expected)
・ Aiming to triple the current volume of
concentration process 120kt/day to 360kt/day
・ Cost of operation launch shall be up to $3 5b
$3.5b
Start proceeding with environmental impact assessment in late 2011

Morenci mine – Expansion project
Increase of mining output
Mining t t i 2010 450kt/d
Mi i output in 2010: 450kt/day
→ Increased to 650kt/day

Increase of concentration capability
Currently increased from 48kt/day to
50kt/day
→ Commenced F/S to boost it to 115kt/day
Cu production volume will be (Cu t)
Morenci Production volume
400
increased to approx. 70 - 90kt/year 300
within 2 to 3 years 200

100

0
2007 2008 2009 2010 2011F

Pogo Mine
Production volume in 2010: 12t
Reserves(as of end of Dec. 2010): 122t
Conducting field
C d ti fi ld exploration t
l ti to
further reserves.
Pogo Mine p
g production volume and recovery rate
y
Au (t) Recovery (%) %
14 92
Hishikari Mine
12.1 12.0 11.6
es Au

12 10.8
10
10 89.6 90.3
89 6 90 3
tonne

8.1 88
8 87.0 Sales volume in FY2010: 7.5t
6 84.5
3.5 83.8 84 Reserves (as of end of Dec. 2010):
4
2
2 82.0
82.0 149t
0 80 Maintaining reserves by carrying on
06 07 08 09 10 11Forecast the policy of “Explore the same
amount we have mined”
The recovery rate rose to
89.6% in FY2010.

Value US$130B
Value（M$)

80,000

70,000
70 000
7.1Mt Notes:
1. Based
1 B d on SMM equity interests
it i t t
2. SMM share of reserves = reserves × SMM equity
interest in mine (%)
60,000 3. Estimated Value = SMM share of reserves
×standard metal price
Sierra Golda
50,000
1.8Mt
1 8Mt 4. St d d
4 Standard metal price ＝ average price in Jan – M 2011
t l i i i J
（Cu：$9,650/t Ni：$12.0/lb Au：$1,380/toz)
Mar,

Batu Hijau
North Parkes Nickel Asia
40,000 Portfolio of
the amount of production by metal
h f d i b l
Cerro Verde
30,000
Goro
20,000
0,000 Ojos Del Salado
j Au
b l
Figesbal
La Candelaria 250t
10,000 Cu
Morenci PT Inco Pogo Ni
Hishikari
0
Cu Ni Au

Toyo capacity (ktpa)
50

450kt
(100%)
40

Cerro Verde
300kt 30
Expansion
(67%)
Sierra Gorda

20
70k
180kt
(40%)

10

0

Great progress to meet the target of
p p
proprietary ore ratio of two third.
y


Steady progress of the ２nd construction of world’s
most advanced HPAL plant b
t d d l t based on CBNC results
d lt
◆ Production capacity: Ni 30kt/year; Co 2.6kt/year
◆Investment amount: US$1.3bln Dormitory
construction
Investment ratio: SMM (62.5%), (Mar. 2011)
NAC (22.5％), Mitsui & Co. (15%)
Expected operation life： 30yrs
Plant site construction in steady
Schedule
 progress (Mar. 2011)
Mar. 2010 Launch of construction
2013 Construction to be completed
Test operation
Commercial production
will start


Facility Reinforcement
Electrolytic Ni production
capacity reinforcement Technical Expertise
Improvement
◆Capacity: 41kt/year
→65kt/year Operation in
Conjunction with
◆Investment amount: ¥14bln Taganito
◆Schedule
Construction t b completed to enter mass
C t ti to be l t dt t
production in 2013
→ In line with Taganito HPAL operation
Production capacity is to be Ni100kｔ /year
Ni100kｔ

Niihama Nickel Refinery

Flash furnace will undergo complete brickwork renovation during
its mandatory shutdown maintenance period (Sep. 13 – Nov. 11).
◆ The first complete brickwork
renovation including bottom brick
since its inauguration in 1971
◆ Strengthening and improving
furnace cooling mechanism
◆ Improving operation environment

≪Effect≫
◆ Prevention of molten metal
leakage
→ Reduction of operation risk
◆ Improvement of response
capabilities to high-load
operations
◆ Reduction of copper slag loss Morning assembly during mandatory shutdown maintenance
(Conducted every day during the period)
→ Increase profitability SUMITOMO METAL MINING CO., LTD. 24

S.O.F (Side-blowing and Oxy-fuel Flash smelting) has been employed
(Side- Oxy-
Upgraded version of Sumitomo method concentrate burner
◆Air for reaction is blasted from the side nozzles on the side walls of the shaft
≪Effect≫
◆ Lower dust generation rate, higher oxygen efficiency, less copper slag loss
→ Operational efficiency and productivity are improved
Concentrate Burner ConcentrateAir for reaction Operation will start in Feb 2012
Air for reaction Top from
Apr May to Aug to Oct to Dec
blast Feb

Test operation
Side blast (3)
Side blast (2) Review of test
results and
study facility
Side blast improvement
Side blast (1) Modification of
(4) cooling
mechanism
Application to
operation
Schematic view of flash furnace shaft

◆ Business secto s where S
us ess sectors e e SMM a s to p o ote g o t
aims promote growth
Materials for environment and energy fields

◆ Business sectors where basic operating platforms
need to be reinforced
Pursue productivity improvement and cost
reduction

◆ Business sectors where SMM cannot pursue a growth
strategy
t t
Withdraw / Transfer


（trillion yen /year） From 2010 report by Institute of information Technology
6
NiCd batteries
b tt i
5 NiMH batteries for automobiles
4 NiMH batteries for consumer use
LIB batteries for automobiles
3
LIB batteries for consumer use
2
1
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Prioritized Strategy
“Expand market share in automotive sector”

① Continuous development
of nickel hydroxide for NiMH battery
② Acceleration of material development
and commercialization of LIB for HEV and PHV
③ Gain market advantage with the strategy
of battery material recycling

Customers’ strong inquiries 350
LED demand by use Unit: 1bln units
for large substrates
g
300
Etc
Establishment of stable mass production 250 Lighting
technology Automotive
200 Sign Display
◆Crystal fabrication in large fabrication Back Light
furnace 150 Mobile
◆ vest e t plan
◆Investment p a to boost 6inφ substrate
6 φ subst ate 100
production
50
Fabrication in large furnace is under testing
0
process to establish the condition.
condition

2008
8
2009
9
2010
0
2011
2
2012
2013
3
2014
4

2023
3
2024
4
2025
5
2015
5
2016
6
2017
7
2018
8
2019
9
2020
0
2021
2022
2
Have reached to the idea for process cost
reduction.
[Plan]
Autumn in 2011 – Operation launch
Aim to start mass production in 2012


SMM Chinese Sales companies

Allocation o
ocat o of Feedback of
sales volume market
information

SMMGr
SMM SMM
Manufacturing
Metals Sales Materials Sales Dept.
◆ China is the most important market from the view point of both scale
and growth potential.
◆ Gather up-to-date market information and accumulate the
knowledge/expertise.
knowledge/expertise
◆ Unique marketing approach based on the customer profile of
Metals/Materials business. SUMITOMO METAL MINING CO., LTD. 29

Sales Trend (Index 08/1H=100) (JPY 100M) Operating Income
120 160
100 140
80 120
60 100
40 80
20 60
0 40
08/1Ｈ 08/4Ｑ 09/4Ｑ 10/1Ｑ 10/2Ｑ 10/3Ｑ 10/4Ｑ 11/1H 11/2H
20
Copper‐clad polyimide film(sales) 0
Bonding Wire(Sales Volume)
B di Wi (S l V l )
FY2010 FY2011 09‐3Yr
Leadframe(Sales)
Forecast 2012
Advanced Materials (sales)

◆ B tt
Battery/crystal (incl. sapphire)/thin and thick film/COF: Profit
/ t l (i l hi )/thi d thi k fil /COF P fit
growth by volume increase
◆ Copper-clad polyimide Film/COF/Lead frame: Cost reduction
through improvement of yield and productivity
th hi t f i ld d d ti it
◆ Other businesses: Promote ‘selection and concentration’

Current Besshi Copper Mine


（％）
20.0
China
Chi

15.0 Emerging and Developing
Economies
10.0 World

Advanced Economies
5.0

United States
0.0
Euro area
-5.0
Japan

-10.0
2007 2008 2009 2010 2011 2012
Forecast Forecast

（Source：IMF2011/Apr）

($/€) $/Euro $/¥ ($/¥)

1.75 175
Euro is trending up (Dollar is weakening)
1.5 150

1.25 125

1 100

0.75 75
Yen appreciated after the Great
Earthquake, and now around lower ¥80 level
0.5 50
09/1 09/7 10/1 10/7 11/1


Current LME Cash & Stock Historical Chart
$/T KT
SHFE COMEX LME LME Cash
12,000 2,000

1,800
10,000
1,600

1,400
8,000
1,200

6,000 1,000

800
4,000
600

400
2,000
200

0 0

ICSG Macquarie
(kt) 2010 2011 2012 2010 2011
Production 19,061 19,724 20,686 18,776 19,308
Consoumption 19,314 20,102 20,965 18,961 19,821
Balance △ 253 △ 378 △ 279 △ 185 △ 513
Estimated Timing 2011.4 2011.1

(t) ($/lb)
LME Nickel
25.00
350,000
350 000
LME Stocks LME Prices
300,000 20.00
250,000
15.00
15 00
200,000
150,000 10.00
100,000
5.00
50,000
0 0.00

SMM INSG M ac qu ar ie
(Kt) 2009 2010 2011 2009 2010 2011 2011
Output
O t t 1,292
1 292 1,416
1 416 1,592
1 592 1,329
1 329 1,439
1 439 1,600
1 600 1,596
1 596
Consumption 1,265 1,468 1,557 1,238 1,466 1,545 1,596
Balance 27 △ 52 35 91 △ 27 55 0
Estimated Timing 2011.04 2011.04 2011.04
Ni Pig Iron (Included) 95 160 180 －－－ 217
Stainless steel 25,865 31,256 32,262 －－－ 35,718


($/Toz)

London Gold
L d G ld Public ld
P bli gold reserves by country
b t
1,600 (March 2011)
Gold Gold /
1,400
Sectors reserves foreign
1,200 (t) reserves (%)
1 USA 8,134 73.8%
1,000
2 Germany 3,401 69.8%
800 3 IMF 2,814
2 814 -
4 Italy 2,452 68.0%
600 5 France 2,435 64.8%
400
6 China 1,054 1.6%
7 Switzerland 1 040
1,040 17.4%
17 4%
200 8 Russia 789 3.0%
9 Japan 765 7.0%
0
10 Netherlands 613 57.3%
73/1
1
74/9
9
76/5
5
78/1
1
79/9
9
81/5
5
83/1
1
84/9
9
86/5
5
88/1
1
89/9
9
91/5
5
93/1
1
94/9
9
96/5
5
98/1
1
99/9
9
01/5
5
03/1
1
04/9
9
06/5
5
08/1
1
09/9
9
11 India 558 7.9%


Tounaru Area, Besshi Copper Mine


（JPY100M）
2,000
Inventory
Au Price impairment
1,750 +50
50
Ni Price +130
+220 Exchange
1,500 (TC・RC) Exchange
loss Materials
Cu Price ▲50 ▲50 segment Goro
+160 ▲70 PJ
1,250
▲70 Cost
etc.
▲183
1,000
,
1,237
1,100
750

500
09 3-Yr 2010
2012 Result


（JPY100M）（％）

14,000 70
Equity Ratio
60%
12,000 60

10,000 50
Total assets
D/E Ratio
8,000
, 0.4 40 Interest
Interest-
bearing debt
6,000 30 Shareholder's
equity
Equity ti
E it ratio
4,000 20

D/E ratio
2,000 10
ROE
10% ROE
0 0
2007 2008 2009 2010 09 3‐Yr
2012

Dividend payout ratio of +20% FY2009 20.8% FY2010 21.4%

FY2010 FY2011 (forecast)
Loss on direct damage
- 400 mil. yen - 100 mil. yen
(damage on properties)
Impact on earnings - 300 mil. yen - 1,400 mil. yen
Forecast as of
【Damage on properties】
properties】 this point

◆ Sumiko Teck Co., Ltd. ： Partial damage on the inner
wall,
wall damage on mold/measurement equipment etc
equipment, etc.
【Business loss】
loss】
◆ Materials bus ess e c
a e a s business etc
Effect of rolling blackout and power restrictions
during peak time
Effect f th d l
Eff t of the delay of supply chain restorations, etc.
f l h i t ti t

Jan. 2010 Front-end process (HPAL) test operation started
Mar.
Mar 2010 Back-end
Back end process (refining process)test operation started
Apr. 2010 Refining process (solvent extraction)
Facilities partially damaged
Aug. 2010 First Metal Production
Dec. 2010 First shipment of Nickel Hydroxide
2011-
2011 Dispatch one executive l
Di t h ti level person, t
l two process engineers
i
and one facility engineer from SMM.
→ Support for fundamental solution on the issue of
pp
solvent extraction facilities
Establish production system to make final products
(Ni Hydroxide) from intermediates promptly
2012- Large scale production of Nickel Oxide

Ni Ni
Limonite HPAL
HPA Hydroxide Refinery
R fi Oxide

（JPY 100M）
Consolidated recurring profit (Equities in earnings of affiliated companies)
1,400
1 400
1,200
1,000
800
600
400
200
0
2009 2010 FY2011 09 3‐Yr
Forecast 2012

（JPY 100M） 2011 09 03 Yr
03-Yr
2009 2010
Forecast 2012
Consolidated recurring profit 878 1,237 1,240 1,100
(Equities in earnings of
461 763 820 550
affiliated companies)
Cu ($/T) 6,101 8,140 8,500 6,000
Ni ($/lb) 7.7 10.7 11.0 8.0
Au ($/Toz)
A ($/T ) 1,023
1 023 1,294
1 294 1,400
1 400 1,000
1 000
Exchange 92.9 85.7 80.0 90.0


View of Seto Inland Sea
from Douzan-mine (peak of Besshi mine)

2011 09 3-Yr
2006 2007 2008 2009 2010
Forecast
F 2012

Net Sales 9,668 11,324 7,938 7,258 8,641 8,090 7,800
Operating Income 1,626
1 626 1,554
1 554 105 663 960 940 850
Recurring Profit 2,053 2,179 326 878 1,237 1,240 1,100
Equity Method profit 467 740 315 261 348 340 300
Net Income 1,261 1,378 220 540 840 850 700
ROA（%） 14.8 13.6 2.2 5.8 8.3 N/A 6
ROE（%） 29.0
29 0 25.4
25 4 4.0
40 9.9
99 13.8
13 8 N/A 10
Dividend Per Share(¥) 27.0 30.0 13.0 20.0 32.0 32.0 N/A
Copper ($/t) 6,970 7,584 5,864 6,101 8,140 8,500 6,000
Nickel ($/lb) 14 15.5 7.5 7.7 10.7 11.00 8.0
Gold ($/Toz) 629 766 867 1,023 1,294 1,400 1,000
Zinc ($/T) 3,579
3 579 2,986
2 986 1,560
1 560 1,934
1 934 2,187
2 187 2,200
2 200 2,000
2 000
Exchange(¥/$) 117.0 114.4 100.7 92.9 85.7 80.0 90.0

（JPY 100M）
2,000

1,500

1,000 Others
Materials
500
Smelting & Refining
Mineral Resources
0
Diff.
Diff Adjustment
500
2006 2007 2008 2009 2010 2011 09 3‐Yr
Forecast 2012
(JPY 100M)
2011 09 3-Yr
2006 2007 2008 2009 2010
Forecast 2012
Mineral Resources 337 383 179 309 430 490 290
Smelting & Refining 1,181 1,174 107 417 569 460 470
Materials 152 98 △ 87 45 78 90 160
Others 63 37 6 △1 10 10 20
Sub total
Sub-total 1,733
1 733 1,692
1 692 205 770 1,087
1 087 1,050
1 050 940
Diff.Adjustment △ 107 △ 138 △ 100 △ 107 △ 127 △ 110 △ 90
Total 1,626 1,554 105 663 960 940 850

（JPY 100M）
2,500 Consolidated recurring profit
Equities in earnings of Affiliated Companies
2,000

1,500
1,500

1,000

500

0
2006 2007 2008 2009 2010 2011
Forecast
(JPY100M)
2011
2006 2007 2008 2009 2010
Forecast
Consolidated recurring profit 2,053 2,179 326 878 1,237 1,240
(Equities in earnings
467 740 315 261 348 340
of Affiliated Companies)


4）FCF
（JPY 100M）
2,000
Operating
1,500
Activities
Investing
1,000 activities
Free Cash
500
500 Flow
Fl

0

‐500

‐1 000
1,000

‐1,500
2003 2004 2005 2006 2007 2008 2009 2010


Gold
Nickel
Copper

Pogo(８５.０％)

Morenci(１２.０％)
Jinlong Copper Co., Ltd.(27.1％)

Taganito (
g (62.5%)
)
タガニート(６２.５％)
タガト(６２５％)
Coral Bay (54.0%)

Soroako(２０.１％)

Batu Hijau(３.５％) Cerro Verde(１６.８％)
Ojos del Salado(１６.０％)
Candelaria(１６.０％)
Northparkes(１３.３％)
Figesbal(２５．５％)
Goro(１１．０%)


Sensitivity

JPY100M/Year

FY2011
Fluctuation
Profit up/down
Cu ±100＄/t 5/10

Ni ±10￠/ｌｂ 7/9

Au ±10 $/Toz
$ 4/4

￥／＄ ±１ /$ 12/12
（Remarks）
Operating income/Recurring profit
USD/JPY translation applied to RC-related only.
pp y
(Oversea profit effects excluded).

Mineral resources and metals 2) Metal refining Copper concentrates
1)Metal trading Smelting and refining Used as raw materials in copper smelting, copper
London Metal Exchange (LME) Refining processes extract valuable metals from ores or concentrates have a copper content of about 30% by
The LME specializes in trading of non-ferrous metals such
p g o e a
other raw materials. They fall into two bas c types:
ae as ey a o o basic ypes weight. The remainder consists mostly of sulfur and iron.
as copper, nickel, aluminum, lead and zinc. The LME hydrometallurgical (wet) and pyrometallurgical (dry). At Copper concentrates are made mostly from sulfide ores.
trading prices for metals are used as the international SMM’s Toyo facilities in Ehime Prefecture, the copper Ores extracted from overseas mines have a typical grade of
pricing benchmarks for sales of refined metal and purchases concentrate pre-processing undertaken at Saijo uses about 1%. The ores are then “dressed” at the mine to
of refining ores. pyrometallurgical processes and the nickel refining at the increase the purity and produce concentrate. Most of the
Niihama site uses hydrometallurgical processes entirely. copper ores imported by SMM for smelting in Japan are
TC/RC The term ‘smelting’ is used for the extraction of metal from concentrates.
Treatment Charge (TC) and Refining Charge (RC) are
T t t Ch d R fi i Ch ores using melting and heating (pyrometallurgy) The term
(pyrometallurgy).
commonly used in the terms of purchase for copper ‘refining’ refers to any process that increases the grade or Nickel oxide ores
concentrate or nickel ore for refining. They are amounts purity of a metal. Whilst the higher-grade sulfide ores are used predominantly
designed to cover refining costs. For example, copper in nickel refining, nickel oxide ores are more prevalent than
concentrate contracts may define a purchase price based Pyrometallurgical refining nickel sulfides. The sulfide-oxide ratio in current nickel
on the LME price at a certain date, minus the TC or RC The precursor ore is melted at high temperature in a reserves is believed to be about 3:7. High refining costs and
being used at the time. furnace, and refining techniques are applied to separate the technical issues have limited use of oxide ores in nickel
metal in a molten state. Although large amounts of ore can refining to date, but SMM has succeeded in refining nickel
London fixing be processed at one time, the equipment needs periodic from low-grade oxide ores based on HPAL technology.
Gold is not traded on the LME. Its price is determined for maintenance for heat proofing.
each transaction between market participants. The financial Mixed sulfide (MS) ores
institutions in the London Bullion Market Association (LBMA)
Hydrometallurgical refining CBNC produces a mixed nickel-cobalt sulfide intermediate
agree a standard price for gold based on these transactions
The ore and impurities are dissolved in a solution, and
p , containing about 60% nickel by weight. This is used as a
and publish it on the morning and afternoon of each trading
chemical reactions are used to separate out the metal. This raw material in electrolytic nickel production.
day. This “London fixing” price is the benchmark for trading
in gold. approach allows continuous and stable refining, but incurs
additional costs due to the refining chemicals consumed. Matte
Pound (lb) A matte is another term for metal sulfides. For raw
Part of the imperial system of measures, the pound is the 3) Metal ores material, electrolytic nickel production at SMM also uses a
standard unit of weight used in measuring and pricing base Sulfide ores nickel matte (of about 75-80% purity) sourced from PT Inco.
metals such as copper and nickel, and in TC/RC These ores contain copper, nickel or other metals
calculations. One pound is equal to 453.59 grams; an chemically bonded to sulfur. Since the application of heat Proprietary ore ratio
imperial ton equals 2,204.62lb. breaks these bonds, releasing the sulfur, such ores are This ratio is the proportion by volume of ore procured from
generally refined using pyrometallurgical techniques. overseas mining interests relative to the overall volume of
Troy ounce (toz) smelting ores used as raw materials. Typically, off-take
The troy ounce is the standard unit of weight for precious Oxide ores rights are proportional to the equity interest in a mine. In the
metals such as gold and silver It equals approximately 31 1
silver. 31.1 These ores contain metals in oxidized forms. Unlike sulfide case of Cerro Verde, SMM has secured 50% off-take rights
Verde off take
grams. It is named after Troyes, a city in the Champagne ores, oxides need much more energy to achieve melting. for the first ten years of production from 2006, based on a
region of central France that was the site of a major market For this reason, the hydrometallurgical approach is 21% equity interest.
in Europe in medieval times. Originally used as a unit of generally used to refine these ores.
exchange for valuing goods in terms of gold or silver
weights, the troy ounce is still used today in gold trading. SUMITOMO METAL MINING CO., LTD. 50

4) Nickel production process Ferronickel Semiconductor and advanced materials
Coral Bay Nickel Corporation (CBNC) Ferronickel is an alloy containing nickel (about 20%) and iron. Copper-clad polyimide film (CCPF)
Based in the Philippines, this SMM subsidiary produces mixed Its main use is in the manufacture of stainless steel, which is CCPF is a polyimide film that is coated using a copper base. It
nickel-cobalt
nickel cobalt sulfides using HPAL technology and exports the about 10% nickel by weight. Based in Hyuga, Miyazaki
weight Hyuga is used as a material for making COF substrates SMM
substrates.
raw materials to the SMM Group’s nickel refining facilities in Prefecture, SMM Group firm Hyuga Smelting produces commands a global market share of over 70% of the CCPF
Niihama, Ehime Prefecture. ferronickel. supplied for use in large liquid crystal displays.

High Pressure Acid Leach (HPAL) Gold Chip-on-film (COF) substrates
HPAL technology enables the recovery of nickel from nickel Gold is in demand worldwide for investment and decorative COF substrates are electronic packaging materials used to
oxide ores that traditionally were difficult to process SMM
process. purposes. Gold is widely used in Japanese industry within the make integrated circuits for LCD drivers They connect these
drivers.
was the first company in the world to apply it successfully on electronics sector because of its high malleability and circuits to the LCD panel.
a commercial scale. The oxide ores are subjected to high ductility. Part of SMM’s gold production goes to SMM Group
temperature and pressure and reacted under stable conditions companies engaged in fabricating and selling bonding wire.
Lead frames (L/F)
with sulfuric acid to produce a nickel-rich refining
Lead frames are electronic packaging materials used to form
intermediate.
connections in semiconductor chips and printed circuit boards.
They contain thin strips of a metal alloy containing mostly
Matte Chlorine Leach Electrowinning (MCLE) nickel or copper.
MCLE is the technology used in the manufacturing process at
SMM’s nickel refinery. The matte and mixed sulfide ores are Bonding wire
dissolved in chlorine at high pressure to produce high-grade
Composed of gold wire that is just a few micrometers
nickel using electrolysis. MCLE is competitive in cost
thick, bonding wire is used to make electrical connections
terms, but poses significant operational challenges. Other than
between lead frames and the electrodes on semiconductor
SMM,
SMM only two companies are producing nickel based on this
chips.
kind of technology.

Secondary batteries
5) Main applications for metals
Secondary batteries are ones that can be recharged and used
Copper
again. SMM supplies battery materials that are used in the
Copper is fabricated into wires, pipes and other forms. anodes of nickel metal hydride batteries and lithium-ion
Besides power cables copper is used widely in consumer
cables, rechargeable batteries, which supply power for hybrid vehicles
applications such as wiring in vehicles or houses, and in air or notebook computers, among other consumer applications.
conditioning systems.

Electrolytic nickel
This form of nickel, which has a purity of at least 99.99%, is
used in specialty steels electronics materials and
steels,
electroplating, among other applications. SMM is the only
producer of electrolytic nickel in Japan.


The materials provided herein are not intended as disclosure under the Securities Law and
Law,

no warranty is made as to their completeness or accuracy. Any projections included in these

materials are based solely on information available at the time of this briefing, and are

subject to change based on market conditions, competitive conditions, and a number of

other factors. Therefore, we ask that you refrain from making any investment decisions

based on these materials alone. The Company cannot be held responsible in any way for

any losses that may occur as a result of the use of these materials.

All copyrights, trademarks, and intellectual property rights attaching to the materials herein

are the sole property of Sumitomo Metal Mining Co Ltd
Co., Ltd.

SUMITOMO METAL MINING Co., Ltd.


SUMITOMO METAL MINING Co., Ltd. Bataraza, Palawan, May 2011

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SUMITOMO METAL MINING Co., Ltd. Bataraza, Palawan, May 2011