Business Operations and Main Products

Specialty Chemicals
Inorganic
Chemicals
Primarily focusedon cleaning agentsfor semiconductors

Electronic Chemicals (EL Chemicals)Super-purehydrogen peroxide

Hydrogen peroxide

Global market share#1

Super-purehydrogen peroxide

Secures supply capacity matching the growth of customers in response to robust demand
from overseas semiconductor manufacturers. Also globally builds development facilities
adjacent to customers and continuously provides products contributing to the speedy
resolution of problems.

Electronic
Materials
Top manufacturer ofsubstrate materials
for IC plastic
packagingHybrid chemicals

BT Products
Cyanate monomers

BT resin

Copper-clad laminates (CCL)
Prepreg

Global market share#1

Captures new demand as 5G progresses, and steadily responds to robust demand in
the semiconductor industry. Establishes and strengthens a marketing system consciousof end customers, and offers a wide range of high-performance products, primarily
targeting the mid-range and high end of the market.

BT products

OpticalMaterials
Raw materials

Contributes to higher
performance ofsmartphones withworld-leadingrefractive index

Optical resin/polymer(External procurement)

Global market share*1#1

Opticalresin/polymer

Continues careful technical service along with timely development and introduction of newgrades with the aim of further expanding share in the smartphone area, and also focuses
on development of materials aimed at applications other than smartphones, such as
sensing applications.

*1 As a highly refractive resin (concave lens)Engineering
Plastics

MethanolDevelops
engineering plastics

Formalin

Iupital™ (Polyacetal resin) (POM)

MX-Nylon (MXD6)

Reny™ (High-performancepolyamide resin)

Bisphenol A

Polycarbonate resin(PC)

PC sheet(External procurement)

PC film

Global market share#3

Polyacetal resin(POM)

Conducts management globally overseeing production, sales and technologicaldevelopment through business restructuring, and seeks to optimize management
resources throughout the entire Group while making swift management decisions.

Polycarbonate
resin (PC)

Performs business restructuring to make MEP*3 a consolidated subsidiary focusing on the
PC business, while increasing the percentage of high-value-added products such as highly
transparent grades, and shifting toward a structure less susceptible to market conditions.
Promotes research of PC mass-production technology using CO2 as a raw material.

Supply capacity*2#3*2 As the Mitsubishi Group

OxygenAbsorbers
Wide range ofsolutions in daily food,electronic component
and pharmaceuticalmarkets37*3 Mitsubishi Engineering-Plastics Corporation

AGELESS™

RP System™
PharmaKeep™
Anaero Pack™

Global market share#1

AGELESS™

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Aims to expand market share in the food area and also focus on the expansion of sales
overseas. Also, provides total solutions for maintaining quality for non-food areas such as
pharmaceuticals, medical parts, electronic components, and cultural property protection.

Basic Chemicals
EnergyResources andEnvironment
Applies domestic
natural gas
exploration anddevelopment
technology, anddevelops it for otherenergy businesses

Natural Gas

Energy Utilization
Resource
development
technology

Domestic gas field development• Higashi-Niigata Oil and Gas Field• Iwafune-Oki Oil and Gas Field

Geothermal power generation*5• Sumikawa Geothermal Power Station• Wasabizawa Geothermal Power Station
Natural gas power generation*5• Fukushima Natural Gas Power Plant

4

Methanol/Ammonia production*

Chemicals company

Only

1

Geothermal power
generation

Utilizing more than four decades of experience and accomplishments that distinguish
us as a unique chemicals company, contributes to the reduction of GHGs throughthe supply of clean energy, and establishes a base for stable earnings.

*4 Only the Niigata Plant’s methanol pilot is currently operational

Methanol,
Basic
Chemicals I,
Life Science*5 Joint venture

Methanol production using overseas gas*5• Saudi Arabia• Venezuela• Brunei• Trinidad and Tobago

MethanolFirst in Japan toproduce methanolusing natural gas
as raw material

Methanolprotein research

FormalinLife sciencerelated products

Iupital™
(Polyacetal)

Dimethyl ether(DME)

Methylmethacrylate(MMA)

Methylamines

Cyanate ester
monomers

BT resin

Production capacity*6#3

Ammonia

Establishes a competitive position through active overseas expansion and a totalbusiness model encompassing the manufacturing process, catalyst technology,
a global sales network and the manufacture of derivatives. Uses accumulated technology
to focus on the establishment of processes for manufacturing methanol from CO2.

Methanol*6 Total for all affiliates using MGC technology

HighPerformance
Products,
Basic
Chemicals II

Superacid
HF-BF3technology

Manufacturescompetitive products
and derivatives using
proprietary technology

Meta-xylene

Aromatic aldehydes

Global market share#1

MX-Nylon (MXD6)

As momentum for extension of quality assurance and food waste reduction increases
in the food packaging material field, aims to establish a position by providing recyclable
barrier material friendly to the global environment. Also strengthens downstream
deployment such as weight reduction of vehicles by replacing metal parts with resin.

Aromatic aldehydes

Decided to increase its production capacity in response to steady growth in demand.
Also focuses on marketing activities, aiming to diversify applications, add value, andfurther strengthen relationships with customers by shifting from seed-oriented
development to product development that reflects customer needs.

Foamed plastic

Backed by the tailwind of weight reduction in automotive parts, supplies next-generation
products supporting energy-saving and recycling requirements. Seeks to increase sales
backed by heightened needs for energy-saving housing in applications of residential
insulation material. Expands overseas operations in flat panel display protective materials.

Global market share*7

JSP

#1

MX-Nylon (MXD6)

By building a new plant in Europe, where demand is greatest, establishes a morestable and competitive supply chain. In addition to stable growth of conventional
infrastructure applications, accelerating expansion into environmentally friendly
applications such as wind power blades.

Global market share#1

Meta-xylenediamine(MXDA)

Meta-xylenediamine(MXDA)

Global market share#1

Purified isophthalic acid (PIA)*7 For automotive use(Global market share, etc. are estimates made by the Company)

MGC Report 2023

38

Specialty Chemicals BusinessWe will prepare an environmentthat can respond sensitively tochanges in the market, and makenew value proposals.

Ryozo Yamaguchi
Director, Managing Executive Officer
In charge of Specialty Chemicals Business Sector

39

Slumping demand due to changes in theexternal environment. Starting work on
business reorganization and revision of
production and sales methods

We are promoting reforms aimed attransitioning to a highly profitable structure.
We are also focusing on environmental
technologies

In fiscal 2022, the Specialty Chemicals Business Sector had
a strong start, mainly reflecting a rush to secure inventory
due to supply chain disruptions. However, from the second
quarter, demand retreated rapidly, especially in China,
and stay-home demand due to the COVID-19 pandemic
slowed. From July onward, demand for semiconductorrelated products slumped, and in autumn, Europe andthe United States showed clear signs of an economic
slowdown. Due to the unevenness of supply and demand
globally, in some products negotiating positions became
stronger on the customer side, while in products such aspolyacetal we were able to maintain sales volume even after
passing through high raw material costs to our prices.
From another perspective, these changes in thebusiness environment offer opportunities to promote
differentiation and increase added value. In fact, there
has been increasing activity for rebuilding supply chains
and revising sales methods, not only in MGC, but in theindustry itself. We recognize the necessity of observing
the market with greater care than before, and exercising
flexible judgment regarding when, to whom, and what kindof approach to take.
In our business portfolio reform, we focused onincreasing the competitive capabilities of our engineering
plastics. Among them, the polyacetal business saw strong
effects from business reorganization in South Korea, where
the reforms have happened first. We have continued tomake changes, clearly demarcating manufacturing, sales,
and business management roles between our subsidiaries,
and we are now concentrating our management resourcesin preparation to ensure that our double brand strategy for
IupitalTM and KepitalTM will work well. I am confident that we
can expect significant synergies going forward. Meanwhile,having made Mitsubishi Engineering-Plastics Corporationa consolidated subsidiary in April 2023, we reorganized
it to specialize in the polycarbonate business, which has
been lacking momentum. With this change, we are driving
forward the strategy of integrating manufacturing, sales,
and technology, and we see recovering our competitiveedge as an urgent priority.

To realize a business structure that is able to respond to
rapid changes in society, the Specialty Chemicals Business
Sector is working to refine the points that differentiate it fromother companies, while attempting to explore uncharted“blue ocean” markets. Therefore, our ability to engage withmarkets and identify partners is becoming increasingly
important. With this in mind, in April 2023 we reorganized
the Planning & Development Division, which oversees
our development activities from an organization based on
business divisions to one based on markets and functions.
To take the example of the Electronics Materials Group,
the person in charge of the development of electronic
chemicals used in the front-end process of semiconductor
manufacturing and the person in charge of BT materials usedin the back-end process are working on the same team. By
combining the perspectives of both the front-end and backend processes for semiconductor manufacturing, we would
like to broaden our dialogue with customers and come up
with new value proposals for new chip architectures.
Furthermore, to promote strategies and measuresflexibly, we set quantitative indicators for each business.
We are building a structure that enables the Business
Administrative Division, Corporate Planning Division, andthe Finance & Accounting Division to coordinate andmonitor the progress of each project across all aspects.
In the final fiscal year of the Medium-Term Management
Plan, our top priority is to prepare a foundation to support
improvements in the PC business. We aim to change our
focus from quantity to quality, and get structural reforms
on track as soon as possible. Meanwhile, semiconductors
have come to be viewed as international strategic goods,
and we therefore have started discussing optimal supply
structures for related products in the lead up to our next
Medium-Term Management Plan.
Over the medium term, we will strengthen environmental
technologies for applications such as carbon neutrality
and plastic recycling. Creating specific technologies andservices aligned to the needs of society and markets is theproper mission of specialty products. By supplying added
value, we will win recognition in the market and achieve thegoal of balancing social and economic value. With a soundconcept of a decent scale that contributes to the further
advancement of society over the medium to long term, we
will transition to a highly profitable structure.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Basic Information

Business Lines: Inorganic chemicals, engineering plastics, optical materials, electronic materials,
oxygen absorbers

Ratio of Net Sales andOrdinary Profit

Major Group Companies:
TAIXING MGC LINGSU CO., LTD., SAMYOUNG PURE CHEMICALS CO., LTD.,
MGC PURE CHEMICALS AMERICA, INC., MGC PURE CHEMICALS SINGAPORE PTE. LTD.,
MGC PURE CHEMICALS TAIWAN, INC., MGC Filsheet Co., Ltd., THAI POLYACETAL CO., LTD.,MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS (SHANGHAI) CO., LTD.,MGC Electrotechno Co., Ltd., MGC ELECTROTECHNO (THAILAND) CO., LTD.,
Mitsubishi Engineering-Plastics Corporation, KOREA ENGINEERING PLASTICS CO., LTD.,
THAI POLYCARBONATE CO., LTD., RYODEN KASEI CO., LTD.,TAI HONG CIRCUIT INDUSTRIAL CO., LTD., GRANOPT CO., LTD., MGC AGELESS Co., Ltd.,
Yonezawa Dia Electronics Co., Inc.

Ratio of
Ordinary Profit

Ratio ofNet Sales

39.5%
55.5%
FY2022(Results)

Number of employees: 4,069

Overall Policy under the Medium-Term Management Plan

Overall Policy

Numerical Targets (Announced in May 2021)• Increase ratio of high-value-added products,
strengthen cost competitivenessNet sales• Continue capital investments in growth markets

Operating profit

Ordinary profit¥330.0 billion ¥49.0 billion ¥53.0 billion

Performance

Net Sales / Operating Profit / Ordinary Profit (Billions of yen)
Net sales
Operating profit
Ordinary profit

309.0
257.8
210.0

224.3

225.4

222.4
32.9

26.5
17.1
8.2 8.7

2013*1

33.8

257.7

255.9

43.5

34.8

32.6
25.5

25.2

267.8

285.5
45.4

37.5
33.6

38.7
32.6

28.1

19.4

12.1 13.2

2014*1

2015*1

2016*1

2017*1

2018*1

2019

2020

2021

2022

(FY)

Capital Expenditure / Depreciation and Amortization (Billions of yen)
32.6

Capital expenditure
Depreciation and amortization

28.6

17.8
12.6

11.9 12.5

2013*1

2014*1

14.7

13.7

18.6

17.2

16.7
11.8

11.6

12.9 12.6

12.3

12.5

2015*1

2016*1

2017*1

2018*1

2019*1

13.0

2020

13.0

2021

13.7

2022

(FY)

*1 Aggregate of former segments (Specialty Chemicals/Information and Advanced Materials)

MGC Report 2023

40

Specialty Chemicals BusinessClassification of Product Lines under the Medium-Term Management Plan
New/next-generation businesses

Differentiating businesses

Main products in development• XR materials• Post-5G materials• Materials for EVs• Electronic chemicals• Optical resin/polymer• IC plastic packaging BT materials• Polyacetal• Ultra-high refractive lens monomers

Unprofitable businesses or those needing rebuilding

Foundation businesses• Polycarbonate, sheet film
• Hydrogen peroxide• Oxygen absorbers

None

Business Strategy
Differentiating businesses

Electronic chemicals (EL chemicals)

Further strengthening the global
supply system.
Finding new opportunities in high-levelneeds for customized products
MGC’s electronic chemicals are comprised mainlyof super-pure hydrogen peroxide, which is used forwashing and etching silicon wafers for semiconductors,
and hybrid chemicals, which are custom products for
specific processes such as residue removal. For superpure hydrogen peroxide, we have strengthened our global
supply system by bolstering and increasing our productionin Japan and overseas to keep pace with the growth of
the semiconductor industry. For hybrid chemicals, ourmain strength is our research and development system,
which works closely with customer needs. We haveresearch and development locations in Tokyo and South
Korea, and we will also establish bases in the UnitedStates, Taiwan, and China to accelerate our development
speed in order to handle advanced technologies and new
semiconductor materials.
We have also established the Electronic Chemicals
R&D Group as a specialist organization to develop
new applications and promote strategies for intellectual

EL Chemicals: Transition in Net Sales(FY2020=100)

Hirokazu Hanawa
General Manager,
Inorganic Chemicals Division,Specialty Chemicals Business Sector

property. We have actively posted young employees
overseas as part of efforts to pick up on the latest
technology trends.
With the development of an information society,which is represented by Society 5.0, we plan to enhance
our position in the super-pure hydrogen peroxide market
by strengthening both our manufacturing capacity andcost competitiveness. We will increase our operational
efficiency at every step, from plant construction to raw
material procurement, production, and logistics. Since
super-pure hydrogen peroxide is an integral part ofwashing silicon wafers and is also a chemical with low
environmental impact, it is unlikely that it will be replacedby competitive new products. In hybrid chemicals, thelevel of the solutions sought by customers is becoming
increasingly advanced. This trend presents a huge
opportunity for MGC, which has been working on
product development in direct collaboration with theworld’s leading semiconductor manufacturers.

Super-Pure Hydrogen Peroxide Production Sites

South Korea
282,000 tons/year
China
90,000 tons/year
Operation started
in 2022

Japan (Yokkaichi, Yamakita, Saga)
61,000 tons/year
Production increase planned
Taiwan90,000 tons/year
Production increaseplannedSingapore
30,000 tons/year

2020

41

2021

2022

2023 (FY)(Forecast)

MITSUBISHI GAS CHEMICAL COMPANY, INC.

United States
140,000 tons/year
Production
increaseplannedDifferentiating businesses

Optical materials (optical resin/polymer)
Noriyuki Kato

Responding to increasing functionalityof smartphone cameras while expanding
into new fields such as VR, automotive,
and monitoring cameras

General Manager, Business
Development Department,
Optical Materials Division,Specialty Chemicals
Business Sector

MGC’s optical resin/polymer has been widely usedas materials for camera lenses in smartphones andother devices, as they are highly regarded for their
distinctive combination of a high refractive index*2 andlow birefringence,*3 which are unmatched by competingproducts. Recently, demand is expanding for applications
such as automotive and monitoring cameras, and VR
devices for experiencing the metaverse. Customer
demands increase in sophistication each year, placing
a burden on development. Therefore, we are always
delighted when we achieve the functional requirementsfor optical characteristics and so forth. Using a portal
website, the laboratories, plants, and business divisions
are able to share information in real time, enablingcustomer needs to be reflected rapidly in our in-house
technology seeds.
In 2022, we established a joint venture with Taoka
Chemical Co., Ltd. with the aim of further optimizing the
production systems, including raw material monomers.
In the same year, we also expanded our polymerization
plant for optical resin/polymer within the Kashima Plant
as part of efforts to ensure supply stability.

In the society of the future, with the seamlessmerging of virtual and real spaces, the quality of image
information used for input will be important, so theareas in which optical resin/polymer can contribute
will continue to expand. We are also working on
development of a technology for collecting and recycling
the molded pieces generated by customers’ injection
molding processes.

Differentiating businesses

Foundation businesses*2 The characteristic of light bending inside a material. Using materials
with a high refractive index allows lenses to be made thinner.
*3 Lower birefringence contributes to clearer images.
Trend in Increasing Resolution of Smartphones (Rear main camera)
(%)
100
80
60
40
20
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 (Year)
Forecast■~3 MP■5.0~48.0 MP■50.0 MP~
Source: Materials by Techno Systems Research Co., Ltd. published inJune 2023

Engineering plastics

We will pursue synergies through a new
structure having consolidated MEP and
accelerate the development of highly
competitive products
In the polycarbonate (PC) business, which is positioned
as a foundation business, in April 2023 we started a
new structure with Mitsubishi Engineering-Plastics
Corporation (MEP) as a consolidated subsidiary. This
new structure is intended to accelerate developmentof highly competitive products through rapid decisionmaking led by the Company.
Recently, competition has been increasing in thelargest market, China. As profits become increasingly
difficult to secure with our existing sales portfolio, we arefocusing on developing and expanding sales of productsthat are resilient to the impact of market fluctuations
and demonstrate the Company’s competitive strengths.
We will maintain this course, while making full use of
the management resources of MEP and the Company
to drive the development of applications that lead tosolutions for customers’ issues.
In polyacetal (POM), which is positioned as adifferentiating business, business performance has
been favorable, reflecting customers’ approval of thestable supply capacity and product quality of our three

Ichiro Koyanagawa
Executive Officer
General Manager,
Engineering Plastics Division,Specialty Chemicals
Business Sector

production sites in Asia, as well as our detailed technicalservice capabilities. From April 2022, supervisory
function for the POM business has been assigned towholly owned subsidiary Global Polyacetal Co., Ltd.
(GPAC), to create an integrated structure for managing
production, sales, and development. Under thisstructure, we will develop products with higher added
value, such as medical applications, for global markets.
MEP’s strengths• Customer-focused technical services• Marketing functions (Business locations: 27 in Japan and overseas)• Manufacturing base offering superior cost competitiveness
Make THAI POLYCARBONATE a consolidated subsidiary of Company
as well

GPAC’s strengths• Customer-focused technical services• Use of regional headquarters sales companies, such as KOREAPOLYACETAL• Manufacturing bases offering superior cost competitiveness(THAI POLYACETAL, KOREA ENGINEERING PLASTICS, etc.)

MGC Report 2023

42

Basic Chemicals BusinessWe will further strengthen
differentiating businesses while
contributing to carbon neutrality
over the medium to long term.

Naruyuki Nagaoka
Director, Managing Executive Officer
In charge of Basic Chemicals Business Sector

Smoothly executing an investment
strategy designed to further strengthen
differentiating businesses
Fiscal 2022 was a year with an extremely uncertain outlook.
However, through steady execution of our policies andappropriate pricing strategies, among other measures, wehave achieved ordinary profit of ¥30.5 billion, coming close
to the ¥31.0 billion target for the Basic Chemicals Business
Sector under the current Medium-Term Management Plan.
Our investment strategy was aligned with the key
corporate strategy of further strengthening differentiating
businesses. We proceeded without delay to construct a
new MXDA plant in Europe and to increase production
capacity of aromatic aldehydes at the Mizushima Plant, andthese actions have been supported by steady demand. We
plan to start production of MXDA in 2024. While there has
been some impact from rising construction costs, we areconfident of being able to reflect this in the product pricing.
At the Mizushima Plant, we produce aromatic aldehydes.
A bottleneck issue here was resolved in April 2023 with the
improvement of production processes, and construction of
the new plant is scheduled for completion in November.
Within our business portfolio, the formalin businesshas been classified under unprofitable businesses or
those needing rebuilding. In August 2022, we stopped
production of formalin at our Yokkaichi Plant and stopped
production of formalin, paraformaldehyde, and hexamine at
our Niigata Plant in May 2023. Furthermore, in April 2022,
we established MGC Woodchem Corporation, building an
integrated production system spanning from formalin down
the value chain to adhesives. In May 2023, we announced
the transfer of the Company’s formalin sales business to
MGC Woodchem.
Meanwhile, the purified isophthalic acid (PIA) business
continued to be unprofitable due to worldwide oversupply,and we examined restructuring it, including the possibilityof stopping it during the Medium-Term Management Plan
period. However, we decided to maintain a certain levelof production from a perspective of optimizing our overall
product chain, including the raw material meta-xylene
and xylene separation co-products. If we become able toshift production of meta-xylene to a higher-value-added
European MXDA plant in the near future, we will revisit theidea of scaling down or stopping production of PIA.

Directing overall awareness of theorganization towards market needs.
Increasing successful examples ofdifferentiating businesses
The Basic Chemicals Business is situated in the upstreamzone of the value chain. With no direct interface withtrends in final products, the business structure has astrong orientation towards technology seeds. However,this orientation has been changing as the Company has
clearly set out its contribution to carbon neutrality and ismoving toward execution. Currently, nobody can see clearly
whether we are truly meeting market needs when we
incorporate the larger trend of carbon neutrality into specificdetails. This is why we have recently been increasing
opportunities for dialogue with diverse people involved in
our value chain. As a result, the orientation of our overallawareness as an organization is gradually but palpablychanging from technology seeds to market needs.
Looking back, differentiated products such as MXDA
and MX-Nylon have arisen from technology seeds, but by
maintaining close contact with customers through detailed
technical services, they have stimulated latent demand.
It had taken time for these products to be sought bysociety. However, when the time was right, their market
developed, and now we are market leaders in their field.
We are working to realize successful examples like thismore quickly. For example, in the CFRP*1 business using
our specialty resin and recycled carbon fiber and so forth,
we have formed a consortium between Japan U-PiCA
Company, Ltd. which became a wholly owned subsidiary inMarch 2023, as well as JSP Corporation and other Group
companies, and having accurately grasped market needs,
we are now preparing a comprehensive structure coveringfrom upstream to downstream.
I see it as my mission to lay the foundations for the
future. An example of such foundations is Circular Carbon
Methanol. Currently, we are proceeding to examine
possibilities for various materials, including CO2, waste
plastic, and biomass. It may take some time for this initiative
to generate significant value; however, there is no doubting
the strong demand from society for this technology. Overa five- to ten-year span, we aim to develop this into a
differentiating business that will be a supporting pillar for theGroup in the future.
*1 Carbon fiber-reinforced plastic

43

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Basic Information

Business Lines: Natural gas chemicals, xylene chemicals, energy resources and environment,
life science

Ratio of Net Sales andOrdinary Profit
Ratio ofNet Sales

Major Group Companies:
JAPAN FINECHEM COMPANY, INC., JSP CORPORATION, MGC Terminal Company, Inc.,TOHO EARTHTECH, INC., Japan U-PiCA Company, Ltd.,MGC SPECIALTY CHEMICALS NETHERLANDS B.V., Japan Saudi Arabia Methanol Company, Inc.,METANOL DE ORIENTE, METOR, S.A., BRUNEI METHANOL COMPANY SDN. BHD.,
Japan Trinidad Methanol Company, Inc., Yuzawa Geothermal Power Corporation,
MGC Advance Co., Ltd., FUDOW COMPANY LTD., MGC Woodchem Corporation,
MGC ADVANCED POLYMERS, INC.

Ratio of
Ordinary Profit

60.4%
43.8%
FY2022(Results)

Number of employees: 5,521

Overall Policy under the Medium-Term Management Plan

Overall Policy

Numerical Targets (Announced in May 2021)• Turn products and businesses that respond tosocietal demands into business opportunities• Reduce volatility through portfolio reforms andrebuilding of unprofitable businesses

Net sales

Operating profit

Ordinary profit¥410.0 billion ¥25.0 billion¥31.0 billion

Performance

Net Sales / Operating Profit / Ordinary Profit (Billions of yen)
Net sales
Operating profit
Ordinary profit

336.3

478.9
425.3

381.5
348.0

320.9

31.8
28.2
20.5

400.0

387.8
38.8

363.8
36.6

31.1
25.7

20.8

18.8

18.0
12.8 14.2

11.2
5.7

2013*2

2014*2

30.5

30.0

27.6
19.3

5.6

335.7

4.7
2015*2

2016*2

2017*2

2018*2

2019

2020

2021

2022

(FY)

Capital Expenditure / Depreciation and Amortization (Billions of yen)
32.0

Capital expenditure
Depreciation and amortization

22.2
20.3

19.5
15.9
10.4

9.7

19.7

17.3
14.3

2015*2

13.5

13.6

14.2

2016*2

2017*2

2018*2

15.8

19.2
16.4

17.1

17.9

10.8

6.8

2013*2

2014*2

2019*2

2020

2021

2022

(FY)

*2 Aggregate of former segments (Natural Gas Chemicals/Aromatic Chemicals)

MGC Report 2023

44

Basic Chemicals BusinessClassification of Product Lines under the Medium-Term Management Plan
New/next-generation businesses

Differentiating businesses

Main products in development• Bio-products• Contract manufacturing of antibody drugs• Carbon fiber composite material• Neopulim transparent polyimide resin• Methanol fuel cells• MXDA• Aromatic aldehydes• MX-Nylon

Unprofitable businesses or those needing rebuilding

Foundation businesses• Formalin and polyol products• Xylene separators and derivatives• Methanol• Energy resources and environmental businesses• Ammonia and methylamines• MMA products• Foamed plastic (JSP)Sales Trend for High-Performance Products

MXDA Operations(Billions of yen)
50.0

MXDA, which we began producing in 1970, has been exhibiting its unique functions in special nylon
films, polyurethane paint, and epoxy resin curing agents. Using MXDA as a main ingredient we havebeen expanding our product line to include MX-Nylon with a superior gas barrier and 1,3-BAC which
are quick to cure and don't yellow under ultraviolet light.

40.0

Xylene separators and derivatives
Mixed xylene(external
procurement)

30.0Superacid technology(Xylene separation& isomerization)

20.0

Meta-xylene
Agrichemicals andpigments, etc.

Purified isophthalicacid (PIA)
Additive for PET and the like
High-performance products

10.0
Other rawmaterials(external
procurement)

0
2018

2019

2020

2021

2022

(FY)

Superacid technology(carbonylation)

Meta-xylenediamine(MXDA)Engineering plastics, etc.

MX-Nylon
Packaging materials, etc.

Aromatic aldehydes
Fragrances, etc.

1,3-BAC
Paint andcomposite material

Business Strategy
Differentiating businesses

MXDA

Plant construction in Europe is inprogress as planned.
Meeting growing demand related
to wind power generation
As a major supplier of MXDA, which is highly resistant tosalt water and chemicals, we hold over 90% of the world
market, producing it for over half a century. It is mainly
used in paint for structures that must resist corrosion,
such as bridges, marine structures, ships and plants.
We have begun constructing a new production
base in Europe, where demand is highest, with a plan tostart operation in July 2024. Prices for energy and raw
materials have risen substantially due to the continuing
Ukraine conflict, but we project that the new plant willproduce MXDA with a competitive advantage on a parwith that of our existing plant. When production begins,
we plan to sell not just in Europe but also in otherregions of high potential demand, like the Americas, theMiddle East and Africa. We will satisfy growing demandfor MXDA as an epoxy resin curing agent, which is used
for rapidly growing wind power generation facilities aswell as for conventional infrastructure applications.
We will promote research on possible MXDA uses
for solvent-free paint and water-based paint that emit

45

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Ryoji Otaki
Division Director,
High-performance Products Division,
Basic Chemicals Business Sector

low VOCs*3, as well as applications for direct air capture(DAC) of CO2 to allow for multifaceted contributions toenvironmental preservation. In the future, we will also
produce MXDA and 1,3-BAC*4 using green hydrogenand ammonia to raise their profile as environmentfriendly products.
*3 Volatile organic compounds*4 1,3-bis(aminomethyl)cyclohexane. This is widely used as an
epoxy resin curing agent for composite materials and paints.

Differentiating businesses

MX-Nylon

Exploring its strength as anenvironment-friendly product.
Creating value matching seeds andneeds at the Group’s global convention
MX-Nylon is an original MGC material featuring an
excellent barrier against oxygen and CO2 and superb
chemical resistance. Used as a raw material in food andbeverage packaging, it delays deterioration of flavorand quality, and extends “best-by” periods. Adding
fiberglass and other toughening agents in the resin
processing stage can produce materials with extremely
high strength and stiffness, which are currently used as
structural components in the automotive and industrial
machine industries.
We have many people involved in research anddevelopment, production and sales of MX-Nylon meet
twice a year at a global convention. The participants
share information on trends in market changes andlegal restrictions by nation or region, potential risks
and future prospects. Based on that they explore new
applications of MX-Nylon and create initiatives to marryseeds with needs.
I am excited to be exploring the strengths andpossibilities of MX-Nylon as an environment-friendly

Takahiro Takano
General Manager,
Polymer Materials Department,
High-performance Products Division,
Basic Chemicals Business Sector

product. I will work to make MX-Nylon the de-facto
standard in various industries by drawing attention towhat it can do, like reducing food waste by extending“best-by” dates and improving fuel efficiency by making
vehicle parts lighter. In 2022 MX-Nylon produced at the
Niigata Plant received the ISCC PLUS certificate. To
capitalize on this opportunity we will begin manufacturing
and selling ISCC PLUS-certified MX-Nylon withsustainable raw materials, including plant-derived raw
materials as per a mass balance approach.

Differentiating businesses

Aromatic aldehydes

Superacid realizes unprecedented
high quality.
Pursuit of market-oriented
development of fragrances
MGC produces and sells more than ten types ofaromatic aldehydes. With these it has been making
stable annual growth of about 5%, mainly for resin
additives and fragrances. Our products are excellent inpurity and safety, and highly evaluated as raw materials
also for agricultural chemicals and pharmaceuticals. The
superb quality is made possible by an original production
technology employing a continuous-reaction systemwith a superacid, which is extremely difficult to handle,
as a catalyst. The catalyst is collected and reused inside
the system, so very little is wasted, and large volumesof the product can be reliably produced. This is just one
example of our large fund of technical expertise built up
over the years, leaving our competitors far behind.
To address diverse customer needs and issues,
through dialogue with them we customize their orders
into unique products. This is a special feature of ourbusiness. Production facilities capable of producing
a wide variety of products while assuring reliable highquality are our strength as well.

Haruya Kubo
General Manager,
Chemicals Department,
High-performance Products Division,
Basic Chemicals Business Sector

It’s not easy to match the needs of prospective
customers with the seeds, such as the technologies andfacilities we own. Because of that, high-performancecustom products, the results of those matches, areindispensable to customers. Now we are surveying andunderstanding the market needs for fragrances withwhich aromatic aldehydes are highly compatible, whilesteadily working to expand the areas covered by the
R&D capabilities and production technologies of MGC.

MGC Report 2023

46

New/Next-Generation Businesses

Whenever speedy solutions areneeded, we will consider allianceswith other companies and even
M&A as alternatives.

Yoshinori Isahaya
Director, Managing Executive Officer
Responsible for Research & Development,in charge of Intellectual Infrastructure
General Manager of Intellectual Infrastructure Center

47

Unification of research systems improves
the perceived speed of progress and balancein marketability

Creating businesses of different wavelengths
by staying close to customer issues at a
deep level

To build an earnings structure that adapts to change inthe external environment, for the current Medium-Term
Management Plan we instituted a new segment called “new/next-generation businesses.” In new-product development
we used to create research themes under the four-internalcompany system, with organic growth in mind. Certain
research themes were looking to the next generation anddid not belong to any specific company. Calling them
“corporate research,” we explored new materials.
Looking at a market environment that has been rapidlychanging beyond imagination in recent years, we abolishedthe internal company system in 2020. With optimizationof the entire Group in mind, we brought together researchlaboratories that used to be under the internal companies
and the Advanced Business Development Division, whichused to be one of the administrative divisions, now under
the Research & Development Division. We expanded R&D
investment in the fields projected to have high mediumto long-term growth potential. At the same time we aim
for growth that is not simply the extension of existing
businesses.
Next-generation research used to carry challenges
like differences in speed between the research team andthe internal company overseeing the research when it isready for commercialization. Under the current system,
however, all research themes, including those for the
next generation, became visible on a single assessment
measure and assessment frequency, the senses of speed
and marketability are better balanced, and the sensitivity toreturn on investment has increased.
Research themes and product development projects
that we’ve been working on for a long time need newtime frames for management. To do that, we’ve stopped
insisting on doing everything on our own and would rather
look into alternatives, like business and capital alliances withother companies and even M&A, depending on the themes.
We flexibly adjust how research should be conducted andhow each internal organization should be run as we assess
performance and the sense of speed. That said, we avoid
going too fast to the point of impairing the creativity of theresearchers, considering it important to maintain our free,open-minded culture that allows for playfulness.

For those of us involved in new/next-generation businesses,
innovation means combining existing A and B to create C, a
new value. So people in administrative divisions doing office
work can innovate as well as our technical employees.
Within MGC people with diverse viewpoints and ideas get
together to improve one another and create new valueby having fun with it. If all our employees are looking inthe same direction, we can’t generate C by combining A
and B. By looking at things from different viewpoints, it’seasier to be inspired, leading to innovation. I often advise
employees, “You can’t find a solution if you stay in yourlab or office.” By getting out to the market side and talking
with customers with development agility in mind, we candeepen our understanding of the essences of issues eventhe customers aren’t aware of.
We used to win customer approval just by suggestinga single new material. Today it’s a new era, when we can’t
receive an order without suggesting a string of upstreamto-downstream solutions. So we are considering a businessmodel in which we decide on the core part of a businessthat we will take charge of, then share profits with leadingbusiness partners handling other parts.
When I was head of the Corporate Planning Division,
I was deeply involved in drawing up the current MediumTerm Management Plan, and determined five target fields
backcasting from 2030-2050 by imagining changes insociety and technological trends for those years. To getto the exit sooner, we will further narrow our researchand development subjects in the target areas more
precisely. We are creating several businesses of different
wavelengths, for example, with a portfolio of products withdifferent cycles and characteristics, and making our R&D
organizations capable of handling environmental changes
with resilience and flexibility.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

New/next-generation businesses

Solid electrolytes

Development of LiBH4*1
and carborane-based solid
electrolytes for application invarious fields
With the proliferation of electric vehicles and electronic
devices, the rechargeable battery market is projected
to grow and the field’s technological trends are drawing
attention. We are developing solid electrolytes for allsolid-state Li-ion batteries*2, a type of next-generation
rechargeable battery. Solid electrolytes are divided into
three categories depending on the main ingredient:sulfides, oxides and complex hydrides. Our development
focus has been complex-hydride electrolytes. Theiradvantage is that they are softer than other solid
electrolytes, making them easier to use in producing
precision electrodes. They also minimize startup
investment by sharing existing production equipment for
liquid Li-ion batteries.
MGC has developed a method for producing LiBH4
solid electrolytes, but much has been desired in terms of
Li-ion conductivity for high output, as needed by electricvehicles. As a solution we developed carborane-basedsolid electrolytes, a type of complex-hydride electrolyte,that achieve Li-ion conductivity on a par with sulfide-

Takuo Ohshida
Associate General Manager,
New Business Development Department,
Research & Development Division

based solid electrolytes. With mass production of thiselectrolyte in mind, we plan to supply it at low costthrough a liquid-phase mass-production process that is
unique to a chemical maker. Now we are working with
universities to assess the properties of carborane-basedsolid electrolytes and explore new applications for it.
We will continue to explore applications for both LiBH4
and carborane-based electrolytes that employ theirrespective characteristics with a wide range of uses inmind, from stationary batteries to electric vehicles.
*1 Lithium borohydride. This compound reacts with water and alcohol
to generate hydrogen, and is generally used as a reducing agent.
*2 Conventional liquid Li-ion batteries use an electrolytic solution for
conductivity. On the other hand, all-solid-state batteries use solid
electrolytes rather than liquid electrolytes.
Cathode (positive electrode)

Solid electrolyte
Anode (negative electrode)

New/next-generation businesses

OXYCAPTTM

The syringes*3, vials*4 and other glass containers usedin healthcare provide an excellent oxygen barrier, butthey break easily and are low in pH resistance, to namea couple of disadvantages. In work to create plastic
alternatives, a weaker oxygen and UV barrier has beena challenge. Taking on this challenge, MGC began
developing a better plastic alternative in 2012. We
promoted projects that apply our own multilayer molding
technology for beverage containers using MX-Nylon andnon-crystal oxygen-barrier plastics we have developed.
In 2019 we commercialized OXYCAPTTM, the world’s
first container that has the advantages of both glass andplastic. In addition to its excellent gas barrier, it features
minimal leaching of inorganic materials, and is currently
in testing by pharmaceutical companies in Europe andthe U.S. for official adoption. When OXYCAPTTM is inwide use, we believe we can offer the healthcare industry
new environmental value, because its low weight can
reduce CO2 emissions in addition to preventing container
breakage during production and transportation.
In May 2022 we announced that we have opened

Tomohiro Suzuki
Associate General Manager,
New Business Development Department,
Research & Development Division

talks with Becton, Dickinson and Company of the U.S.*5
concerning a business alliance. We are discussing
specifics, including joint development of syringes. We arealso focusing on applying OXYCAPTTM characteristics
to low- and ultra-low-temperature storage of biopharmaceuticals and applications in regenerative
medicine.
*3 The cylindrical part of the injection syringe, excepting the needle*4 Sealed container for injectable medicine*5 A world-leading company for medical equipment

10-mL Vial
0.04
Oxygen permeability(cc/pkg/day/0.21 atm)

Supplying the healthcare industry
with the world’s only multilayer
plastic container with a glass-like
oxygen barrier

ClosureVial body

0.03
0.02

14 times
betterthan COP

0.01
0.00
COP

Glass OXYCAPT™-P• Measurement device: MOCON OX-TRAN® 2/61
• Conditions: 23°C/ In 100% RH, Out 50% RH

MGC Report 2023

48