INTEGRATEDREPORT
2023
T O H O T I TA N I U M
CHANGES THE WORLD

Editorial Policy

Management
Philosophy

Readership

Period Covered

This Integrated Report has been compiled with the following stakeholders in
mind: shareholders and investors, customers, business partners, employees
and their families, students and job applicants, and members of local
communities and society.

In general, this Integrated Report includes the results for FY2022 (April
1, 2022 to March 31, 2023). However, some information regarding past
initiatives, as well as some information for FY2023 are also included, as
necessary. The figures for FY2023 (forecast) in the table and graph areincluded in the external announcement made on May 8, 2023.

Our Stance on Information DisclosureThis Integrated Report emphasizes the Toho Titanium Group's approach toand strategy for value creation in the form of stories, and is positioned as acommunication tool to help our stakeholders understand our growth potential
and our contribution to a sustainable society.
For detailed performance information and ESG-related data, please referto the latest information on the "Investor Relations" and "Sustainability" pagesof our website, as well as the Integrated Report.

The Toho Titanium Group pursues
the infinite possibility of titanium andrelated technologies, and contributes
to building a sustainable society bycontinuously supplying excellent
products and services.

Scope of Coverage
In principle, all domestic and overseas business sites of the Toho Titanium
Group are covered.
Toho Titanium Co., Ltd.:	Headquarters, Chigasaki Plant, Hitachi Plant,
Kurobe Plant, Wakamatsu Plant, and Yahata Plant
Group Companies: T oho Technical Service Co., Ltd.
Toho Material Co., Ltd.
Toho Titanium Europe Co., Ltd. (UK)

Data/Initiatives
Financialresults
briefing
materials
Earnings
summary,financialstatement,
etc.

Toho Titanium America Co., Ltd. (US)

Sustainability
websiteIR website

Future Outlook

Mutual linkage

The information published in this Integrated Report may include thecompany's future strategies, forecasts, and opinions. However, please beaware that actual results may differ from these forecasts due to external
factors such as various environmental changes at the time.

Integrated Report
Approach / Strategy

Note:
Disclosure Policy and Disclaimer

Non-financial Information

Financial Information(Information on economic value)

www.toho-titanium.co.jp/en/ir/disclosure/(Information on social value)

Process of Deepening Dialogue Using Integrated Reports
Through this report, we will enhance our dialogue with stakeholders and continue to discuss how our Group should disclose information in order to improve our corporate value.

Fundamental Code of Conduct

1) Establishing the purposeof this publication· In preparing the Integrated Report 2023, we endeavored to provide more comprehensive information about how our company creates value, thebusiness environment in which we operate, and our initiatives.

2) Reference to guidelines· IFRS Foundation "International Integrated Reporting Framework"· Ministry of Economy, Trade and Industry "Guidance for Collaborative Value Creation"

To put our Management Philosophy into practice, we adhere to the following three Fundamental Policies.
1. We give the highest priority
to safety and compliance andoperate a healthy and fairbusiness.

2. We practice innovation andcreativity to achieve continuous
growth for our employees andorganization.

3. We enhance communication
with all stakeholders including
customers, local communities,
and shareholders, to develop
relationships of mutual trustand symbiosis.

· The Corporate Planning Department was in charge of publication development. The report was edited by the ESG Promotion Department,
Technology Strategy Headquarters, each Business Division, Environment and Safety Department, Quality Assurance Department, General Affairs
and Human Resources Department, and other related departments.
· It was produced with the corporate management's commitment while under the supervision and evaluation of the board of directors.
3) Editorial system
Management(Board of
Directors)

CONTENTS

4) Dialogue withstakeholders

Collaboration Department

Chief Editor Department
Corporate Planning
Department

Linkage

ESG Promotion Department, Technology Strategy Headquarters
Each Business Division, Environment and Safety Department
Quality Assurance Department, General Affairs and Human
Resources Department, and other departments· When communicating with shareholders and investors, we will augment the content of our dialogue by using this report in conjunction withbriefing sessions and IR interviews.
· We will use the opinions we receive from our stakeholders as internal feedback and use them for improving management.
· We place great importance on dialogue with our employees and strive to improve the accuracy of the contents of the report.

INTRODUCTIONVISIONVALUE

STRATEGY

FOUNDATION

DATA

01

03

09

The Toho Titanium Value
Creation Process

13

Rebuilding "Vision for 2030"

29

Promotion of
ESG Management

45

Key Consolidated Financial
and Non-Financial Summary

11

Accelerating Value Creation

15

FY2023-2025

31

Stakeholder Engagement

47

Corporate Information

17

Titanium-related Technologies

33

E: Environment

23

Special Feature

37

S: Society

42

G: GovernanceManagement Philosophy /Editorial Policy

Message fromthe President andRepresentative Director

Toho Titanium’sManagement Resources

Beyond Expectations! "BE2030"
Medium-term Management Plan

Social Value Created by Toho Titanium's
Technological Capabilities

Achieving a Carbon-neutral Society
with the Power of WEBTi Materials

25
01

Report/Evaluation

I N T E G R AT E D R E P O R T 2 0 2 3

Technologies that Contribute to
Sustainability
I N T E G R AT E D R E P O R T 2 0 2 3

02

VISION
Message from the President and Representative Director

We will launch a new "fourth pillar" andpromote ESG management with a businessportfolio that is resilient to change.
Reaffirming the strength of businessdevelopment based on the "Three Pillars"
As the COVID-19 infection has been moved to Category 5 andeconomic activities continue to be normalized, the businessenvironment surrounding the Toho Titanium Group remains
uncertain, with factors such as heightened geopolitical risks
associated with the conflict in Ukraine and the rising cost of
global energy and raw materials. However, given the rapidlychanging business environment, we believe that FY2022 wasa good opportunity to examine the foundations for our Groupto demonstrate resilience, such as reevaluating country risks
and rebuilding our procurement network.
In our Titanium Metal Business, in which we possess
the manufacturing technology for titanium sponges that only
a few companies in the world have, sales volume to theaircraft industry is steadily turning bullish as the number ofairline passengers recovers. Also, in response to the Ukraine
conflict, the world's two largest aircraft manufacturers haveannounced plans to suspend or reduce purchases from
Russia's VSMPO-AVISMA, which holds the largest shareof titanium sponge production for aircrafts. As a result, thedemand for substitute providers has surged. That is why
our three production sites in Chigasaki, Wakamatsu, andSaudi Arabia are in full operation. Under this tight supply anddemand situation, we are implementing recovery measures,such as passing on the increase in costs due to soaring prices
of imported raw materials and electricity, to the sales price,
as we ask for the understanding of our customers in order toimprove profitability. Against this backdrop, we plan to improve
the facilities at our domestic production sites and increase
capacity by approximately 3,000 tons per year by FY2025.
Demand for aircrafts is expected to continue to grow at anannual rate of 4%, so we are considering further investment toincrease capacity, assuming a reliable return on investment.
On the other hand, the market environment for theCatalyst Business and Chemicals Business is currently
sluggish due to the slowing economic growth rate of China,
the largest consumer country. Given that both businesses
have a structure in which the profits are influenced by the ups

and downs of the Chinese economy, as well as geopoliticalrisks, we believe it is time to reconsider our strategies. We cansay that now is the time to set our sights on India and other
Southeast Asian countries, where high growth is expectedin the future, and consider whether to invest management
resources for market development.
The Medium-term Management Plan over the past three
years (FY2020-2022) have been a period of continuous changethat far exceeded our expectations. First, the COVID-19
pandemic caused a significant drop in aircraft demand, leading
to a slump in the Titanium Business. However, this significant
decline in sales was offset by the Catalyst Business, which
responded to increased demand for medical and sanitary
products such as masks, as well as the Chemicals Business,
which responded to increased demand for PCs and otheritems from consumers staying at home. Next, in 2022, special
demand for titanium stemming from the conflict in Ukraine
covered the slump in the Catalyst and Chemicals Businesses
due to the slowdown of the Chinese economy. As a result, net
sales and operating profit for the three-year cumulative period
were 122% and 155% of the planned figures, respectively,
resulting in significant increases in income and profit. We werealso able to clear all of the issues regarding the "Five Basic
Strategies" set forth in the previous medium-term plan, withthe exception of early profitability of the joint venture in Saudi
Arabia (ATTM). ATTM will be fully operational by the end of
this year, and I feel that the time is approaching when we cancontribute to profitability.
Looking back on these results, we are reminded once
again of the utmost importance for our company to develop
our business based on the "Three Pillars" of Titanium, Catalyst,
and Chemicals. The proof that management based on theseThree Pillars is functioning is the fact that the financial stabilityof the Group as a whole is ensured, in that if one businessfaces difficulties, another business can compensate. Moving
forward, our theme will be conglomerate premium, whichmeans increasing the synergistic effects obtained through thecollaboration of multiple businesses, and linking this to further
improvements in competitiveness and resilience.

Yasuji Yamao
President and Representative Director

03

I N T E G R AT E D R E P O R T 2 0 2 3

I N T E G R AT E D R E P O R T 2 0 2 3

04

Rebuilding "Vision for 2030"
In 2022, our company has set the "promotion of ESG
management" as a basic policy. The aim of formulating thispolicy is for the entire company to share the will to contributeto the creation of a sustainable society while solving social
issues by leveraging our unique business characteristics.
As we celebrate our 70th anniversary in August 2023, we
would like to pursue sustainability by working on corporate
management and contributing to society from a longer-term
perspective.
As a milestone for the future, we have decided to update
the long-term vision we announced in 2020, "Vision for 2030".
First, we convened young and mid-career employees whowill be responsible for our company in the 2030s, and held
training camps where they freely exchanged opinions about
what their ideal future self would be like. The resulting vision
for 2030 is to "create advanced materials and technologies,
become a highly profitable company that is flexible toenvironmental changes, and contribute to the developmentof a highly recycling-oriented society." (p.13). With regards tothe "Promotion of ESG Management" basic policy, we haveestablished quantitative and qualitative targets and measureswith 2030 to 2040 as the goal period in order to unify theentire Group's vector and promote it while fostering a sense ofunity.
For "E = Environment," we will not only accelerate thedevelopment of existing products, but also the developmentof new materials and technological improvements that reduce
environmental impact. In the production process, we aredeveloping a new titanium smelting technology that saves
resources and energy, as well as promoting the introduction of
CO2-free electricity and carbon-neutral LNG, with the aim ofquickly achieving decarbonized management.
With regards to "S = Society", we have begun activities
in line with our policy to improve our contribution to society
and create an attractive workplace. "Aim to become acompany that is compassionate and kind to people bypromoting new values within the organization that are directly
linked to productivity, diversity and inclusion, and a pleasantwork environment" -- Based on this goal, we will promote

FY2020-2022 Medium-termManagement Plan
FY2020(results)

FY2021(results)

various measures while being conscious of our contribution
to society as we strive to create a more attractive workplace.
In June 2023, we became the first company to be selected
as a constituent of the FTSE Blossom Japan Index, arepresentative ESG index. Receiving this kind of evaluation
gives us confidence and pride in our employees who provide
support to the workplace on a daily basis.

Major measures of the FY2023-2025
Medium-term Management Plan
Moving towards "Vision for 2030", we have identified the gaps
between our goal and the current situation and have deviseda catch-up strategy to fill them. The 2023-2025 Medium-termManagement Plan we have recently formulated is positioned
as an action plan to be implemented over the first three years
to achieve this strategy (p.15).
Under the new Medium-term Management Plan, we
will promote carbon neutrality in the production processes of
our three existing business divisions, and polish our functions
and quality that will further contribute to our customers'
businesses. We will also make timely investment decisions
and aim to expand production capabilities in order to fulfill our
responsibility to supply to markets that are expected to grow,such as ultrafine nickel powder, which we have already started
investing in to increase capacity, as well as titanium spongeand polypropylene.
In the future business environment, we will need to
anticipate the emergence of more volatile changes anduncertainties than we have experienced in the past. Based on
this assumption, we would like to further diversify our business
items by developing and applying our proprietary technologies
in order to further increase the potential for business continuity.
During this medium-term plan period, we are drawing up a
strategy to add one new pillar to the current Three Pillars andestablish it as a new business.
I will also touch on the main policies for each businesssegment. First, in the Titanium Metal Business, we will
increase production at our sponge production joint venture in
Saudi Arabia towards full operation, in order to respond to thestrong demand for titanium which is mainly used in aircrafts.

FY2023-2025 Medium-termManagement Plan

FY2022(results)

FY2023(forecast)

FY2024(target)FY2025(target)FY2030(target)Net sales

36.2 billion yen

55.5 billion yen 80.4 billion yen

83.2 billion yen

107 billion yen

120 billion yen

170 billion yen

Operating profit

3.1 billion yen

5.2 billion yen 10.7 billion yen

4.6 billion yen

10 billion yen

13 billion yen

25 billion yen

ROS(1.2%)

9.3%

13.1%

5%

9%

11%

15% or more

ROE

(6.8%)

8.1%

15.0%

5%

11%

13%

10% or more

0.9

0.9

0.8

1.0

0.9

0.8

Less than 1.0 times

D/E ratio

05

I N T E G R AT E D R E P O R T 2 0 2 3

At our domestic Wakamatsu and Chigasaki plants, we aim
to increase production capacity by a total of approximately
3,000 tons per year. We will also continue to work to achieve
appropriate sales prices that reflect these factors, amid asituation where the prices of raw materials remain high, andelectricity and fuel prices continue to soar. We are aiming
to capture the world's top share in global sales of titanium
sponge for aircrafts by 2030.
With regards to the Catalyst Business, we will improvethe efficiency of catalyst production by improving production
technology at our Kurobe and Chigasaki plants, and increase
production through capital investment in the medium to longterm, since demand for polypropylene, which is the main
application field for our products, is expected to increase. At
the same time, we will begin considering the next capacity
expansion plan with a focus on future sales expansion.
In 2030, we aim to be in the top 3 global market share ofcatalysts for polypropylene production.
In the Chemicals Business, we will deploy measures in
anticipation of a recovery and subsequent expansion in the
demand for multilayer ceramic capacitors (MLCC), which isthe application of our main product, ultra-fine nickel powder.
During the three-year period of the new medium-termbusiness plan, we expect that telecommunication equipment
and telecommunication base station applications, as well as
automotive applications that use MLCC, will return to a growthtrajectory. In particular, automotive applications are expected
to see high growth as the global market accelerates the shift
towards the use of electronics in equipment. Currently, thedemand for MLCC is expected to grow at an annual rate ofabout 7%. However, we are aiming for growth that exceeds
this level. We will be building a nickel powder supply systemthat can support small, large-capacity MLCC that meet thetechnical requirements of next-generation telecommunications
and next-generation EV. Based on this goal, we have begun
construction of the fifth plant at the Wakamatsu Plant, which isscheduled to be completed in FY2025. Through these capital
investments, we will increase our current production capacity
by approximately 20% over the next three years, aiming tobecome the top company in the domestic market share ofnickel powder by 2030. Since it is necessary to decentralize
our production bases from a BCP perspective, we will flesh
out plans for a sixth plant during this medium-term plan
period.
In addition to the above Three Pillars, we will establish
a New Materials Division with the aim of commercializing
porous titanium materials (WEBTi) and other products, in orderto make this the Fourth Pillar during the medium-term plan
period from FY2023 to 2025, to strengthen our organizationalfoundation (p.22). Porous titanium is a material used in waterelectrolysis hydrogen generators, an essential element forbuilding a hydrogen energy based society, which is expected
to be a means of reducing CO2 emissions. Up until now, ourTechnical Development Center has been playing a central rolein promoting R&D of porous titanium materials and handlingsamples for our customers. However, in recent years, as wehave been receiving increasing requests for mass production,
we have decided to establish and operate a new divisionalorganization with sales and management functions. We predictthat the market for water electrolysis hydrogen generators will
expand significantly in the future, starting with Europe, which
is an advanced carbon-neutral region. By 2030, which is thegoal of "Our Vision", we have envisioned a scenario in which
the market for porous titanium materials will grow to around 50
billion yen. Based on this assumption, we have set the sales
target for the New Materials Division at 10 billion yen for 2030.
We also have plans to commercialize several new materials by
FY2030 using our group's advanced powder manufacturing
technology, such as ultra-fine nickel powder and high-purity
titanium dioxide.

Financial strategy that considers thebalance between medium- to long-term
growth and risk management
Needless to say, our Group's business performance is affectedby the market environment of a given year. The impact may
be even greater due to the gap between current market
conditions and the contract details negotiated with customers,such as sales prices.
Using titanium sponge for aircrafts as an example,

I N T E G R AT E D R E P O R T 2 0 2 306

we adjust costs by taking into account factors such as
fluctuations in titanium ore prices in the relevant year andthe actual unit price of electricity in Japan, based on longterm contracts signed with customers, to determine theannual sales price for the next fiscal year. In other words, thetime when manufacturing costs are reflected in sales prices
is delayed by one year, resulting in a temporary decrease inprofits when costs rise, while on the contrary, there may be anincrease in profits during periods when costs go down.
As mentioned above, the supply and demand situation
has recently become tighter and the unit price of electricity
has increased, so in 2023 the price increased beyond therange stipulated in the long-term contract. Moving forward,
we will continue to engage in negotiations to make it easier toreflect cost fluctuations in sales prices, and aim to achieve theordinary profit to net sales ratio set for each business.
In 2021, we took a decisive step toward company-wide07

risk management and strengthened our organization. First,
with nickel powder raw materials, fluctuations in the nickel
LME price have the greatest impact on our profit and loss, so
we engaged in hedging through futures trading. In contrast
to the increasing trends in FY2021, there was a downturn
in FY2022 when we started futures trading. However, by
establishing a hedging system at that time, we were able tominimize the decrease in margin by subtracting the cost of
raw materials from the sales price. For currency, we have beenusing futures transactions for hedging, and we will continue to
strive to secure reasonable margins by combining them with
commodity futures.
Furthermore, with regards to borrowing interest rates,
we are striving to make timely and appropriate judgments,
including the timing and method of financing arrangements,
while maintaining financial soundness (D/E ratio of less than
1.0). With regards to risk management on the balance sheet,
we will individually quantify financial risks due to changes inthe business environment for all assets such as accounts
receivables, inventories, and fixed assets. We control this bysetting quantitative indicators so that the total amount is lessthan 70% of the total net assets, which is the company's
dissolution value.
In order to make a leap forward in 2030, we will needto invest in our Fourth Pillar, the New Materials Business.
The scale of investment in each business division will be
determined based on the ROIC (return on invested capital)
for each business. In order to achieve management that is
conscious of capital costs and stock prices, we will accurately
understand capital costs and capital returns, and proceed withbusiness operations that promote those improvements.
With regards to shareholder returns, we will continue ourprevious policy and set the dividend payout ratio at 30% of
the current net income. Also, given that our PBR is currently
more than double and our PER is more than 40 times, we feelthat our shareholders have high expectations regarding the
growth of our Titanium Metal Business, Catalyst Business,
and Chemicals Business, as well as the potential of our New
Materials Business. We will continue to strive to achieve theoptimal balance between growth investments and shareholder
returns, facilitate improvements in corporate value, and meetthe expectations of our shareholders.

Creating a structure that maximizes theability and value of human resources
Among the companies listed on the TSE Prime Market, ourcompany has a small but elite workforce of around 1,000
employees, and each employee is a driving force behind our
growth. Based on the assumption that Japan's declining
birthrate and aging population will continue to be an issue,
we are promoting work style reforms that will lead to theacquisition of new human resources and improved employee
satisfaction.

I N T E G R AT E D R E P O R T 2 0 2 3

Nonetheless, there is considerable hard labor in hightemperature environments at our titanium smelting sites,
which is the core of our business. All the employees working
in the field are doing their best. As the number of older
employees increases, we are actively pushing for automationof tasks that can be automated and mechanized with robots
and automated equipment in order to reduce the risk ofoccupational accidents. However, when it comes to handing
down expertise and know-how that are difficult to replace
digitally, we believe that it is necessary to take sufficient timeto provide thorough education for knowledge transfer between
personnel. For example, for seasoned employees who havebecome concerned about their physical strength as they age,
we have them take on a new role as advisors, in an effort
to raise the level of technology and safety at the workplace,rather than having them leave the workplace.
Furthermore, the major benefits of automation andmechanization are that they can improve the plant's utilization
rate and make our operations more efficient by accumulating
and analyzing digital data acquired on-site. We are aiming toincrease employee labor productivity by around 30%. We arealso advancing DX initiatives starting this fiscal year by utilizing
digital data obtained from each site.
In order to accelerate these new initiatives that differ
from conventional practices, it is important to not only foster
a mindset, but also to create a system to increase motivation.
In addition to running existing human resource development
programs, we have also started implementing an awards
system that provides impactful incentives to members working
on-site, to increase their motivation for improvement.
It is essential that we swiftly move forward to resolvethese current issues while steadily developing the humanresources who will lead the future in 2030 and beyond.
Based on the succession plan formulated in 2022, we are
implementing a training program for executives and corehuman resources starting this fiscal year. On the other hand,
we recognize that there are still many issues to be addressedin terms of diversity and inclusion, which are included in themeasures of the medium-term plan. Aside from proactively
promoting foreign and female employees to managerial
positions, we will also actively recruit and promote digitaltalent, facility engineers, and other specialized technicians in
the future. If such human resources participate in decisionmaking in the workplace, it will be an opportunity to change
the mindset of other members, and it can be expected to havea revitalizing effect on the entire organization. We hope thateach and every one of us will change our mindset, graciously
let go of the negative practices common to old-fashioned
manufacturers, such as a "male-dominated society" and"seniority by length of service", and most of all, promote agileand effective utilization of human resources, with an emphasison accelerating innovation.

Grow into a company that can deliver
value to all stakeholders
In this medium-term plan, we have also launched measures tostrengthen the foundation of our management, "G = Corporate
Governance", as well as compliance and risk management.
Over the next three years, we will solidify our drive andoperational structure in line with each measure, starting withappropriate responses to disclosure requests.
The most significant feature of our capital relationships
is our parent-subsidiary listing with the ENEOS Group.
Regarding this point, from the perspective of protecting
minority shareholders, the Group Company Supervisory
Committee for Conflicts of Interest, which is comprised of all
independent outside directors, meets regularly to check thedetails of transactions with the parent company group. In
light of future risk concerns and the mandatory disclosure of
information on human capital, we are also asking our outside
directors to attend risk management meetings and various
internal meetings as much as possible, for us to receive
appropriate advice from them. As a result, discussions at theBoard of Directors' Meeting have clearly become more active,
with more substantive discussions from the perspective of risk
management and compliance inspections. We believe that
corporate governance that is conscious of transparency andeffectiveness is directly linked to protecting the interests ofshareholders and investors, so we would like to continue towork hard to further improve our functionality.
When updating "Vision for 2030", we coined thecatchphrase "Beyond Expectations 2030", to help makethis a reality. This represents the Toho Titanium Group's
determination to "Beyond the Expectations" of all stakeholders.
We believe that we have a duty to thoroughly explain BE2030
to everyone for their understanding, and work toward becominga "100-year Company" 30 years from now.
What I envision as a 100-year company in the future is
one in which our technology contributes to the establishmentof a completely carbon-neutral world, and in which we flexibly
change in response to the changing needs of the world, andI envision a corporate entity with a deep-rooted corporate
culture that allows employees of various nationalities tolive a secure life with their families while also taking on new
challenges. We will continue to aim to maximize corporate
value and practice management that is focused on constantly
moving quickly and producing results. I hope you will lookforward to the further evolution of the Toho Titanium Group.

I N T E G R AT E D R E P O R T 2 0 2 308

VA L U E

The Toho Titanium
Value Creation Process

Management
Philosophy

The Toho Titanium Group is creating new value needed for future
lifestyles and industry through the synergistic effect created by titaniumrelated technologies that have been refined based on proprietary
technologies and sustainable technologies that contribute to reducing
environmental impact.
In 2021, we specified as materiality the perspective of working
together with all stakeholders to resolve social issues. While solidifying
our management foundation by strengthening our human resources
capabilities and corporate governance, we will take on the challengeof evolving ESG management as we continue to grow toward therealization of a prosperous society.

Vision for 2030

Customers

1

p.3

S

k
ta

eh

rs

QOL
(Better qualityof life)Business
partners

Contribution
to global
environmental
conservation

ComfortablelivingShareholders
and investors

Employees
and families
Appealing
workplaceContribution
to society

Medium-term Management Planiaerl i tyTitanium
Divisionp.19

M

Spongesmelting

Local
community& society

Cultural preservation& transmission to
next generation

Reductionof CO2emissions

Catalyst
Division
p.20
Titanium
tetrachloride

Titanium-related
Technologies
TitaniumpowderStrengthen
management
resources

New Materials
Division
p.22

Appliedtechnology

Newenergycreation

Chemicals
Division
p.21

p.11

Human
CapitalManufacturing
CapitalSocialCapitalRelationship
CapitalCorporate Governance

I N T E G R AT E D R E P O R T 2 0 2 3

Sustainable
Technology
p.25

Effective
resource
utilization

Management Resources

Financial
Capital09

p.15

Solidifying
ourmanagementfoundation

9
p.2

at

Providingvalue tosociety

e
o ld

p.13

Conserving
the global
environment

Realizing a society
with safe, secure
mobility

Revitalizing
industry

The Toho Titanium Group pursues the infinite possibility of titanium andrelated technologies, and contributes to building a sustainable society bycontinuously supplying excellent products and services.

Strengthen
management
resources

Intellectual
CapitalNaturalCapitalp.42

I N T E G R AT E D R E P O R T 2 0 2 3

10

VA L U E

Accelerating Value Creation

Toho Titanium’s Management Resources

as of the end of March 2023

External
Evaluation

Selected as a constituent of the ESG investment index,"FTSE Blossom Japan Index", for the first time
For the first time, we have been selected as a constituent of the FTSE Blossom Japan
Index, a representative ESG index adopted by Japan's Government Pension Investment
Fund (GPIF), one of the world's largest institutional investors. (June 2023)

For 70 years, The Toho Titanium Group has steadily strengthened its management resources through the power of people andtechnology. This capital, which forms the basis of growth, is the source of our group's competitive advantage and enables us toachieve sustainable improvements in corporate value.

Financial
CapitalHuman
Capital

Total Assets

111.429

Number of employees(consolidated)billion yen

Net income-to-equity ratio(share capital)

47.7

%

Market Capitalization
End of FY2021 → End of FY2022

51.5

%UP

Net sales

1,127

Female Recruitment Rate

22%

New University Graduate
Retention Rate (past 5 years)

96%

Manufacturing
Capital

Number of Production Sites

6

Domestic: 5 / Overseas: 1

Chigasaki/Wakamatsu/Yahata/Hitachi/
Kurobe/Saudi Arabia

Amount of Capital Investment(annual)6.496

billion yen%UP

Financial foundation
supporting our business
Our Group is constantly reviewing its
financial portfolio to optimize it for eachbusiness area, and strives to maintain asound financial structure.
We aim to achieve our medium-termgoals for 2025 (ROS of 11% or more,
ROE of 13% or more, ROIC of 7% or
more, and dividend payout ratio of 2530%) and improve shareholder returns.

11

Human resource foundation
with diverse attributes that
implements solutions to social
issuesWe strive to ensure security, safety, andhealth in the work environment. We also
take steps to ensure that employees canwork with fairness and motivation. We
will also increase the number of female
managers and foreign managers, andcreate a work environment that places
importance on diversity and inclusion.

I N T E G R AT E D R E P O R T 2 0 2 3Years since Establishment

70

years as ofAugust 20, 2023

Number of Countries forOverseas Sales
Titanium Division / Catalyst Division /Chemicals Division

8/ 9 /6

Energy Usage(electricity/annual)

473,570

Number of Patents Held

MWh/year

Water Usage (Annual)

2.343

Our company was given a"Gold" rating in the sustainability
evaluation conducted by EcoVadis(HQ: France). (July 2021)

Intellectual
CapitalNaturalCapitalmillion m3

Number of Countries fromwhich Raw Materials are
Procured7

End of FY2021 → End of FY2022

44.7

SocialCapitalRelationship
CapitalA "Gold" rating in
the EcoVadis
Sustainability Survey

Domestic:
Overseas:

336
364

Research and Development
Expenses (annual)

2.3

billion yen

and aboveHigh-quality manufacturing
and production sites expanding
domestically and internationally

Stability and trust fromstakeholders and building asustainable supply chain

Reducing environmental
impact through efficient use ofresources

Our Group strives to manufacture
products with a constant focus on
stable production of quality products.
By operating multiple production sites,
including those overseas, we haveestablished a system that meets theneeds of all regions. In FY2023, we are
beginning to consider factors including
location, in order to proceed with thenext capital investment plans for eachbusiness division.

The stability and trust that come fromcontinuous operations make it possible
to expand our business globally. We
have built a supply chain based onrelationships of trust with a diversityof customers and suppliers. We will
also aim to coexist and co-create withexternal partners in developing newmarkets.

Recognizing that all resources arelimited, we strive to reduce our useof resources by promoting resource
conservation, reuse, and recycling.
In addition, we are promoting the
introduction of CO2-free electricity andcarbon-neutral city gas, while setting
targets for reducing GHG emissions
through titanium smelting and working
to reduce environmental impact
throughout the value chain.

I N T E G R AT E D R E P O R T 2 0 2 3

Proprietary technology andtechnological foundations thatlead to new business creationand expansion
As part of our business strategy, we arepromoting our proprietary technology
and research. We will establish a
New Materials Division in FY2023.
WEBTi, a porous titanium material,
is a revolutionary new material thatcombines the characteristics of porous
metal materials with titanium, which
has advantages such as high corrosion
resistance. Following this, we are also
focusing on developing new materials.

12

BE2030
S T R AT E G Y

Vision for 2030

Rebuilding "Vision for 2030"

Beyond Expectations!
"BE2030"

Net sales

With this concept in mind, we announced our vision of creating advanced materials andtechnologies, becoming a highly profitable company that is flexible to environmental changes,
and contributing to the development of a highly recycling-oriented society.

1,200

Recognize
the gap with
our goals

1. C larify and quantify our
goals
2. R
 ecognize the gap
between the current status
and the 2030 target

832

3. D
 evelop a catch-up
strategy to close the gap

1,070

New
Business

Doublethe Sales

15% or more

15% or more

Chemicals
Business

10% or more

Net sales progression(in hundreds of millions of yen)

Net sales
Ordinary profit to
net sales ratio

Catalyst
Business

20% or more

PP catalyst global
sales share

TOP 3

TOP

Net sales

Net sales
Ordinary profit to
net sales ratio

Ordinary profit to
net sales ratio

Nickel powder
domestic sales
share(compared to FY2022)

Titanium
Metal
Business(compared to FY2022)

Net sales
Ordinary profit to
net sales ratio

BeyondExpectations!
"BE2030"

1,700(target)Ordinary profit to
net sales ratio (ROS)

Approximately

2 times 15% or more

(Target)FY2030Net sales
170 billion yen
25 billion yen
Ordinary profit
15% or more
ROS
ROE
10% or more
ROIC
10% or more
D/E ratio
Less than 1.0 times(Target)(Forecast)

4. Incorporate the threeyear action plan into the
FY2023-2025 Medium-termManagement Plan

scale

Create advanced materials andtechnologies, become a highly
profitable company that is flexible
to environmental changes, andcontribute to the development of
a highly recycling-oriented society

Under the slogan of "Beyond Expectations" of all stakeholders surrounding our group, including employees and their families,
customers, business partners, shareholders and investors, corporate management and all employees will work together as
one, by aligning our vectors.

Planning Perspective

TOP

10 billion
yen

Catchphrase

In May 2023, The Toho Titanium Group formulated "Vision for 2030" and the "FY2023-2025 Three-Year Medium-termManagement Plan." This year marks the 70th anniversary of our founding, and with the aim of becoming a 100-yearcompany, the next major milestone, we are committed to sustainable corporate management and social contribution from along-term perspective.

Global sales shareof titanium sponge
for aircrafts

804
555
362

Catch-up Strategy
Three-year Action Plan

FY2020-2022 Medium-termManagement Plan

13

I N T E G R AT E D R E P O R T 2 0 2 3FY2023-2025 Medium-termManagement Plan

FY2026-2028 Medium-term Management Plan

FY2030(planned)

I N T E G R AT E D R E P O R T 2 0 2 3

14

S T R AT E G Y

FY2023-2025

Medium-term Management Plan
Recognize the gap between the current situation and "Vision for 2030" and develop a catch-up strategy to fill that gap.
The first three-year action plan is positioned as the "FY2023-2025 Medium-term Management Plan".

Net sales and Operating Profit Targets

Financial Indicators / Shareholder Returns
FY2022 (results)

FY2023 (forecast)

FY2024 (target)

FY2025 (target)

804

832

1,070

1,200

Titanium Metal Business

544

587

670

720

Catalyst Business

88

98

130

150

Chemicals Business

172

139

260

300

-

8

10

30

107

46

100

130

Titanium Metal Business

65

23

50

60

Catalyst Business

29

28

33

40

Chemicals Business

26

11

29

35

-

(1)

2

10

(13)

(15)

(14)

(15)

ROS

13%

5%

9%

11%

ROE

15%

5%

11%

13%

0.8

1.0

0.9

0.8

Sales (Unit: ¥100 million)

New Business
Operating profit (in hundreds of millions of yen)

New BusinessCompany-wide Expenses

D/E ratio

In order to improve production efficiency
and ensure a steady supply to the growing
market, we will proactively increase thecapacity of our production sites and update
our facilities. To this end, we plan to invest
a total of 40 billion yen over the three yearsof our Medium-term Management Plan.
We will steadily implement our "catchup strategies" (see diagram below) set foreach business. In addition to gaining further
growth potential, we will position returnon equity (ROE) as the most importantmanagement indicator from the perspectiveof improving capital efficiency, and aim to
improve it to above 13%. We will strive tocontinuously improve corporate value by
establishing a resilient financial foundationand enhancing returns to shareholders andinvestors.

Sustainable improvement of corporate value

3-yearaverage sales
growth rate

3-yearaverage
operating profit
growth rate

3-yearcumulative
capitalinvestment

3-yearcumulative
operatingcash flow

13.9%

4.6%

40 billion yen

30 billion yen

ROS
FY2025ROE
FY2025ROIC
FY2025

D/E ratio
FY2025

Dividend
payout ratio

11% or more

13% or more

7% or more

0.8 or less25-30%

Strong financial foundation and improved shareholder returns

Strategy by Business
Recognition of the Current Situation

Titanium
Metal
Business

Catalyst
Business

Chemicals
Business

New
Business

FY2023-2025 Medium-term Management Plan

Vision for 2030

Catch-up Strategy· Top 3 in global sales share of titanium sponge· Ordinary profit to net sales ratio is zero excluding
the influence of inventory in the previous period·A pply a price formula linked to cost fluctuations· Increase titanium sponge production capacity at the Wakamatsu/Chigasaki
Plants (3 kt/year)·F ull operation of the Saudi Arabia Sponge Plant (ATTM)· Improve titanium ingot production efficiency· Optimization of titanium sponge price levels· Increase processing margin due to increased production of titanium ingots· Increase capacity through partial improvement of titanium sponge equipment(Wakamatsu/Chigasaki Plants)· Consider construction of a new plant that can ensure profitability· 30% improvement in labor productivity

The top company in global sales shareof titanium sponge for aircrafts
with an ordinary profit to net sales ratioof 10% or more·T op 5 in global sales share of PP catalysts·O rdinary profit to net sales ratio of 33%· Increase production capacity through improvements in production technology
and other areas (approximately 60% increase compared to the current
production capacity)·F ormulate a plan to increase capacity by constructing a new factory· Improvement of production technology at the Kurobe/Chigasaki Plants (approximately
40% increase compared to the current production capacity)· Increase production capacity by constructing a new plant (approximately 30%
increase compared to the current production capacity)· Aggressive market development by improving catalyst performance· 30% improvement in labor productivity

A top 3 company in global sales shareof PP catalysts
with an ordinary profit to net sales ratioof 20% or more·T op 3 in domestic sales share of nickel powder·O rdinary profit to net sales ratio of 12%
excluding inventory valuation profit and loss

· Increase production capacity by operating the fifth plant (scheduledfor FY2025)(approximately 20% increase compared to the current production
capacity)· Increase production capacity by operating the fifth plant (approximately 40%
increase compared to the current production capacity, upon completion)· Create concrete plans for the next expansion investment (approximately 30%
increase compared to the current production capacity)· 30% improvement in labor productivity

The top company in domestic sales
share of nickel powder
with an ordinary profit to net sales ratioof 15% or more·C urrently promoting the commercialization of
porous titanium material (WEBTi)·C urrently considering new business projects asa follow-through・Commercialization of WEBTi via the New Materials Division· Increase production capacity in line with business expansion·P lan and develop new business themes at the Technology
Strategy Department and Technology Development Center· Expansion of the WEBTi business· Creation of more new businesses

Net sales of around 10 billion yen

Toward solving materialities

Promotion of ESG Management →p.29

15

I N T E G R AT E D R E P O R T 2 0 2 3

I N T E G R AT E D R E P O R T 2 0 2 3

16

S T R AT E G Y

Titanium-related Technologies

Messages from the Division Managers

Catalyst
Division

Titanium
Division

Business overview
As one of the world's leading titanium manufacturers, theToho Titanium Group operates 4 businesses: the Titanium
Metal Business that manufactures and sells titanium metal;
the Catalyst Business and the Chemicals Business based on
the Titanium Metal Business; and the New Materials Business

Titanium
Metal Business

which opens up new possibilities for titanium. By accurately
identifying market needs and pursuing the unlimited potential oftitanium products and related technologies, we will contributeto our customers' product and business development, thereby
achieving sustainable growth for our Group.

Catalyst Business
Chemicals Business

Titanium feedstock
Chlorination
Titanium
tetrachloride

Titanium sponge
Melting
Titanium ingot
High-purity titanium
Titaniumpowder

Processed
titaniumproducts(Toho Technical Service)

Electrode material

Polyolefin production
catalysts

Reduction
Chloridation / reduction technology

Aircraft
General industry
Electronics materials

Raw materials

Petrochemicals
Electronics materials
Automotive parts
materials

High-purity titanium oxide
Uses
Ultra-fine nickel powder

Business, research,and engineering are
unified to demonstratecompetitiveness

800.0
600.0
400.0
200.0
0

17

Operating profit by business segment
Catalyst Business

Chemicals Business

171.8
158.1
82.7

87.8

543.9

139.0
98.0

587.0

314.3
FY2021

FY2022

FY2023 (forecast)

The strength of our catalysts is that they can be applied not only
to a specific polypropylene (PP) manufacturing process, butalso to several different processes. We also have a PP rating
technology that other catalyst manufacturers do not have. Ourability to discuss technology from the same perspective as ourcustomers also gives us a market advantage.
In 2022, we have established "strengthening costcompetitiveness", "product differentiation," and "new businessacquisition" as the pillars of our business strategy. We havealready established a method that significantly reduces
manufacturing costs, and have successfully produced
prototypes using commercial equipment. Going forward, in
addition to accelerating the development of higher-performance
PP catalysts through joint research with PP manufacturers anduniversities, we will promote our three pillars by strengthening
our sales capabilities.
The PP market is growing at an annual rate of 4%, but
price competition is intensifying, especially in the Asian market.
In order to lead our current research to success and establish
a strong business with high added value and high profits, wewould like to first ensure that we achieve our Medium-termManagement Plan by FY2025.

New Materials
Division

Chemicals
Division

Sales by business segment

1000.0

Our advanced titanium sponge smelting technology and ingot
melting technology have been highly praised by our manycustomers. However, given the steady growth in demand in theaviation industry and tight global supply due to the impact of
the conflict in Ukraine, we recognize that stably providing thequantities required by our customers is presently an important
issue. Against this backdrop, the Titanium Division has set its"Vision for 2030" for the company to "capture the top position in
global sales share of titanium sponge for aircrafts" and "obtainan ordinary profit to net sales ratio of 10%". We are focusing on
expanding production capacity and improving productivity.
In this period of major change, we believe that the progress
made in our Medium-term Management Plan up to FY2025 will
have a major impact on future development. We will work witha sense of speed to solidify our footing at our manufacturing
sites, increase production capacity, and improve our profit
structure. Also, by taking advantage of titanium's excellent
properties and further expanding its use in fields such as aircraft,general industry, and semiconductors, we will contribute to therealization of a sustainable society.

Hideo Funabashi(Toho Material)

New Materials
Business

Titanium Metal Business

Takeshi Shiraki

Building a strong
business with evenhigher added value

Potassium titanate

Porous Titanium(¥100 million)

Acceleratingtransformation
for future leaps(¥100 million)
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0
(20.0)I N T E G R AT E D R E P O R T 2 0 2 3

Titanium Metal Business

Catalyst Business

Chemicals Business
26.4
28.6
37.3
28.3

64.7

11.0
28.0
23.0

(3.1)
FY2021

FY2022

FY2023 (forecast)Takashi Fujii

In FY2022, we were largely able to carry out our main tasks ofincreasing the operating rate of the fourth nickel powder plant,
making investment decisions for a fifth nickel powder plant,
and promoting new development, as planned. Although sales
were sluggish due to the effects of China's economic slump, we
believe that we were able to strengthen initiatives that will lead tomedium- to long-term business growth.
Going forward, we recognize that the market will continue
to grow over the medium to long term, with demand forelectronic components, such as Multilayer Ceramic Capacitors(MLCC), expected to increase. We believe it is important tosteadily capture new demand while taking into account thetrends of emerging competitors such as Chinese manufacturers.
All of our products are based on our proprietary technology,
and the high appraisal we receive from our customers is thesource of our competitiveness. We will continue to improve our
R&D capabilities for newly developed products and maintain andexpand our supply capacity to reliably meet increasing demand.
Sales, research, and manufacturing will come together toaccelerate problem-solving toward "Vision for 2030".

Aiming to establish
the "Fourth Pillar"
by accelerating
commercialization

Kenichi Yamaguchi

The New Materials Division was launched in April 2023. The
mission of this division is to develop into a business, items thathave reached the commercialization stage through development
projects carried out by the Technology Strategy Headquarters(formerly the Technical Development Center). Through thepromotion of this commercialization, it is also an important mission
to contribute to achieving an annual sales of 10 billion yen for new
businesses envisioned in "Vision for 2030".
The first product that our division will work on commercializing
is porous titanium material (WEBTi), which is primarily used as acomponent for PEM water electrolysis generators for hydrogenproduction. The water electrolysis generator market is expected
to expand significantly as we move toward the realization of acarbon-neutral society. We will establish communication channels
with customers and expand the sales base by developing andimproving products that meet market needs. At the same time,
we will expand our production scale by establishing a stable mass
production process and improving productivity. We will also work
to improve the functions of our business management, such asbuilding quality control systems and risk management systems.
We will expand our human resources through active recruitmentof new graduates and mid-career employees, as well as enhance
our business promotion capabilities.

I N T E G R AT E D R E P O R T 2 0 2 318

Titanium Division
Expanding domains of application with stable
quality metallic titanium
In our Titanium Division, in addition to titanium sponges andtitanium ingots made by melting and casting the sponges, wehave a wide range of products such as DC Slab and titanium
powder, each with high added value, and their own superiorfeatures as a raw material.
With high quality and reliable supply, we provide titanium
products that satisfy our customers.

Catalyst Division
Main Products

Titanium sponge

Titanium ingot (rectangular)

High-purity titanium ingot(round)Titanium powder

Titanium ingot (DC Slab)Contributing to Value-added Polyolefins

Main Products

Taking advantage of our ability to internally procure titanium
tetrachloride and magnesium chloride, which are raw materials
for catalysts from the titanium manufacturing process, wedevelop, manufacture (including outsourced manufacturing),and sell catalysts for the production of polyolefins (PO) such as
polypropylene (PP), a plastic product, and polyethylene (PE). We
also process and sell magnesium chloride for applications suchas catalyst raw material and raw material for pharmaceuticalintermediates.

Polyolefin catalysts∙ For PP manufacturing∙ For PE manufacturing∙ For other olefin polymerization

Market Environment and Overview of the Current Fiscal YearThe demand for aircraft and general industrial applications has continued
to be strong since FY2022. In addition to increased demand for new
aircraft due to recovery in passenger demand from the COVID-19
pandemic, supply and demand became tight, especially for titanium
sponge, a major raw material, due to the demand for substitutes causedby the avoidance of Russian-made wrought products due to the invasionof Ukraine. Our domestic Chigasaki and Wakamatsu plants continue tooperate at full capacity, and our plant in Saudi Arabia has also preparedfor full operation. The tight situation for titanium is expected to continue
for several years, so we are increasing production capacity through facility
and process improvements, as well as considering the construction of anew plant that can ensure profitability.

Demand for polyolefin catalysts in Asia continues to weaken, mainly
due to the economic downturn in China. Due to weak demandin the first half of FY2023, sales volume is below the level of thesame period in FY2022, but we expect it to gradually recover fromthe second half of FY2023 and return to a growth trajectory. Duein part to the effects of a weaker yen, tight supply and demand is
expected to continue. Global demand for PP is expected to growat an annual rate of 4%. In response to this growth, we are working
on further product improvements, providing catalysts with reduced
environmental impact, and developing new products.

Mediumterm
to 2025
Long term
to 2030

General Industry

100
50
0

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
year■Demand for aircraft remains strong due to recovery from the
COVID-19 pandemic and avoidance of procurement from Russia■General industrial demand also recovers, mainly for high-end
products■For titanium ore, demand for titanium oxide is currently on the
decline, but is expected to recover by the end of the year, andprices are expected to rise from the second half of the year.
■The demand and supply gap in the aviation industry is expected tocontinue to exist■Customers place importance on securing quantity■Titanium ore prices continue to rise■The aircraft industry is growing at an annual rate of about 4%■Continued avoidance of procurement from Russia is expected

Operating profit

600.0

543.9

500.0
400.0
300.0

587.0

70.0

64.7

60.0
50.0
40.0

314.3

30.0

23.0

20.0

200.0

10.0

100.0
0

Short term
FY20230

FY2021 FY2022 FY2023(forecast)(10.0)■The polypropylene market weakens due to soaring raw material
prices and China's Zero-COVID policy, and catalyst usage
declines among customers in Asia, Europe, America, and Japan.
■Demand bottoms out and gradually recovers in the second halfof FY2023

Apply a priceformula linked tocost fluctuations

Aim to optimize prices by linking
sales prices to fluctuations
in energy costs such as raw
materials, secondary materials,
and electricity related to products.

19

5
4
3
2
1
0

2010

2015

80.0

■Polypropylene demand returns to a growth trajectory fromFY2024 onwards

60.0Long term
to 2030■Polypropylene demand is expected to grow at an annual rate ofaround 4%

20.0

FY2021 FY2022 FY2023(forecast)

2030
year

35.0

87.8

82.7

98.0

30.0

28.3

28.6

28.0

25.0
20.0
15.0

40.0

0

2025

(¥100 million)

120.0
100.0

2020

Operating profit(¥100 million)(3.1)

Growth Strategy

6

Mediumterm
to 202510.0
5.0

FY2021 FY2022 FY2023(forecast)

0

FY2021 FY2022 FY2023(forecast)

Our catalysts
are widelyused in plastic
products that are
essential for daily
necessities, aswell as automobile
bumpers andinterior PP.

High-performance
catalyst
development
research is being
conducted in ourlatest catalyst
research facilities.

Plant in Saudi Arabia
operating towards fullproduction

1

7

Net sales

Outlook on the business environment(¥100 million)(¥100 million)

Global PP growth rate (our YoY estimate)

PP growth rate (%)

Aviation Industry / Military150

Net sales

Outlook on the business environment
Short term
FY2023

Titanium sponge demand forecast (our estimate) *2019 is set to 100∙ Magnesium chloride
powder∙ Magnesium chloride lump∙ Magnesium chloride
Catalyst raw
powder/titaniummaterials
trichloride mixture

External donor for PP production

THC catalyst

Market Environment and Overview of the Current Fiscal YearRaw materials for catalyst
supports and pharmaceuticalintermediates

Growth Strategy

2

3

Aim to increase capacity by
3 kt/year at the two domestic
plants combined by increasing
capacity through facility
improvements at each plant.

Start full operation within 2023
in order to respond to the strong
increase in demand.

Increase titanium
sponge production
capacity at Wakamatsu/
Chigasaki (3 kt/year)

Full operation of
the Saudi Arabia
Sponge Plant

I N T E G R AT E D R E P O R T 2 0 2 3

4

Improve titanium
ingot production
efficiency

Aim to improve productivity
by improving operations andoptimizing personnel allocation.

1

Increase production capacity through improvements
in production technology and other areas(approximately 60% increase compared tothe current production capacity)

Aim to expand production capacity by fundamentally reviewing issues in
the production process.

2

Formulate a plan to increase capacity
by constructing a new plant

Start by considering the location of the new plant in anticipation of future
demand.

I N T E G R AT E D R E P O R T 2 0 2 3

20

Chemicals Division

New Materials Division

Powder manufacturing technologies supporting theevolution of electronic component materials

Full-scale start towards mass production of WEBTi as need increases

Main Products

In recent years, hydrogen has been attracting attention as a next-generation energy source. That
is why the porous titanium material (WEBTi) we developed is expected to be used in solid polymer
electrolyte membrane (PEM) water electrolysis generators, a type of hydrogen generator. Our division
will work towards early commercialization of WEBTi, including establishing a supply system. We will
also move forward with initiatives to commercialize other new business projects as well.

In our Chemicals Division, we manufacture and sell high-purity titaniumoxide, ultra-fine nickel powder, and other electronic component materials
used in multilayer ceramic capacitors (MLCC), PTC thermistors (positive
temperature coefficient thermistors), and dielectric resonators. In particular,
ultra-fine nickel powder is used for the internal electrodes of MLCC, taking
advantage of its ability to control particle size and surface condition. We willfurther refine our powder manufacturing technology with high levels of quality
stability to meet growing demand in the markets for telecommunications
equipment, in-vehicle electrical components, and electronic equipment.

High-purity titanium oxidea Carbon-neutral Society
FOCUS Achieving
with the Power of WEBTi Materials

Ultra-fine nickel powder

p.23

Market Environment and Overview of the Current Fiscal Year

Market Environment and Overview of the Current Fiscal YearIn FY2022, while MLCC, the main application for our main
product, ultra-fine nickel powder, was on the road to recovery
from the decline in demand caused by the COVID-19 pandemic,
we entered an adjustment phase once again due to the impactof China's economic stagnation, and demand recovery for bothcommunication and automotive applications was delayed. The
slump in demand continued into the first half of FY2023, and as
a result, the liquidation of distribution inventories is also being
protracted. Although a full-fledged recovery in demand is expected
to occur in the second half of FY2023, sales volume and profits are
expected to decline in FY2023.
In the long term, demand for electronic components is
expected to further expand due to faster communications, higher
functionality of electronic devices, and automobile electrification.
In order to meet this growing demand, we have decided to build a
new nickel powder plant to strengthen our supply system.

WEBTi, which has been under development since the early 2000s,
has grown into a developed product that receives many inquiries
as a material for PEM water electrolysis generators.
We will establish an initial mass production system in FY20232024, and aim to fully commercialize it in FY2025.
We are also progressing with planning and development
projects other than WEBTi, and will continue their commercialization
as well.

Applications

Internal electrode
Electroceramics
material (nickel powder)

Pharmaceuticals

Optical materials■Although there is an impression that the decline in MLCC
demand has bottomed out, recovery in demand for bothcommunication and automotive applications is delayed, mainly
due to the prolonged economic slump in China.
■Considering the elimination of excess inventory in distribution, it
is estimated that demand for MLCC materials will recover fromthe second half of FY2023 onwards.

Mediumterm
to 2025■Under the assumption that the Chinese economy will bestabilized, once MLCC demand recovers, both communication
and automotive applications will return to a growth trajectory.
■In particular, automotive applications are expected to grow as
the speed of automobile electrification accelerates.

Long term
to 2030■There will be no change in the trends in the improvement ofcommunication functionality, automobile electrification, anddriving automation.
■MLCC demand is expected to grow at an annual rate of
approximately 7%

Growth Strategy

1

Increase production
capacity by operating
the fifth nickel powder plant(scheduled for FY2025)(approximately 20% increase
compared to the current
production capacity)

In line with the growth in MLCC demand,the company will build a new plant toincrease the supply capacity for ultra-finenickel powder, which is a raw material forcomponents.

21

WEBTi-K (development product)

PEM electrolytic tank installation capacity forecast(our estimate)
(GW)
40
30
20
10

MLCC demand forecast (our estimate) *2020 is set at 100

0

250
200

2023

2024

2025

2030
year

Outlook on the business environment

150
100
50

"Vision for 2030"

0

2020

2021

2022

2023

2024

2025

2030
year

Outlook on the business environment
Short term
FY2023Main Products

Net sales

Operating profit(¥100 million)(¥100 million)

200.0
150.0

158.1

40.0

171.8

35.0
139.0

30.0
25.0
15.0
10.0

50.0

FY2021 FY2022 FY2023(forecast)0

3 billion yen/year(target)Mediumterm
to 2025■We aim to start mass production of WEBTi in 2024
■Proceed with new planning and development projects
simultaneouslyLong term
to 2030■The porous titanium material market for PEM water electrolysis
generators has the potential to become a megamarket.
■Commercializing new projects other than WEBTi

Growth Strategy
26.4

1Commercialization of WEBTi
via the New Materials Division

2

3 Plan and develop new businessthemes at the Technology
Strategy Department andTechnology Development Center

Increased capacity in linewith business expansion

11.0

Solve issues in the production process andestablish a mass production system.

5.00

Sales of10 billion yen/year

Achievement of■Requests for samples of porous titanium material WEBTi for PEM
water electrolysis generators are increasing.

37.3

20.0

100.0

Ordinary profit

New Business

Short term
FY2023

FY2021 FY2022 FY2023(forecast)TOPIC

The porous titanium material market for PEM
water electrolysis generators has the potential
to become a megamarket. Continue toincrease capacity while paying close attention
to market trends.

Simultaneously plan new planning anddevelopment projects that come after WEBTi.

FOCUS

Start of construction of the Nickel Powder Plant
No. 5 within the Wakamatsu Plant (September 2023)

Start of the New Materials
Division and a new structure

Officer in Charge

Ultrafine nickel powder, the main product of the Chemicals Division, is used as the internal electrodein MLCC. MLCC is an electronic component with functions such as assisting and stabilizing power
supply, and suppressing noise. It is installed in most electronic devices such as mobile and home
appliances, automobiles, IT, and infrastructure equipment. The market is expected to continue togrow significantly in the future as communication equipment becomes more sophisticated and 6G(6th generation mobile communication systems) become more practical.
In the past, we constructed a nickel powder plant in the Wakamatsu Plant to enhance our
production capacity, and now we decided to construct a new plant in order to strengthen the supply
system of nickel powder that can respond to compact MLCC with large capacities. Moving forward,
we will continue to invest in expansion in line with the growth of the MLCC market.

We started with a total of 51 people, mainly development
project members, but also new personnel. In order tomake this the Fourth Pillar of our business, we will work
diligently to resolve issues and expand our organizationand personnel.

Division Manager,
New Materials
Division

I N T E G R AT E D R E P O R T 2 0 2 3

Planning &Coordination GroupNew Materials
Planning &Sales GroupI N T E G R AT E D R E P O R T 2 0 2 3

Porous Titanium
Sheet Production &Development GroupHigh Purity Chloride
Production &Development Group22

SPECIALFEATURES T R AT E G Y

Social Value Created by
Toho Titanium's Technological Capabilities

We will fulfill our mission of creating the "Fourth
Pillar" and develop it into a business that leads toincreasing corporate value.

Achieving a Carbon-neutral
Society with the Power of
WEBTi Materials

As a company at the top of the commercial chain for material
manufacturers, we see WEBTi as a great opportunity to
showcase our advanced technological capabilities to the market.
We are confident that this product will not only generate profits,
but will also allow us to lead the way in decarbonization, which isan urgent social issue. We are also confident that this product willlead the way in increasing our corporate value by contributing toenergy innovation for the next generation.
Hydrogen is highly important from the perspective of energy
security, so we predict that demand for WEBTi will increase morethan 100 times its current level. However, as this is a developing
market, each customer has their own requirements, so there iscurrently no "correct answer" to all issues. Establishing a stablesupply system is also an issue. As a salespersonwith a technical background, I will coordinate thelaunch of new businesses from both technology
and marketing aspects, and strive to carry out
negotiations with European and US customers
quickly and with a high level of understanding. We
will establish the "Fourth Pillar" and contribute to
our leap forward as a sustainable company.

Our company has developed the "WEBTi" porous titanium sheet, a metallic titanium sheet with numerous microporous.
WEBTi is a new material that combines the characteristics of porous metals, such as liquid permeability and conductivity,
and the advantages of titanium having high corrosion resistance and strength. It is intended for use in electrode materials,
diffusion layers, and filters in highly corrosive environments.
Particularly in recent years, it has been expected to be used as the anode side diffusion layer of a PEM (solid polymer
electrolyte membrane) water electrolysis generator, which is a type of hydrogen generator. Hydrogen generators are essential
to building a hydrogen-based society, which is expected to be one of the major solutions for reducing CO2 emissions. We
will quickly conduct the implementation of WEBTi into PEM water electrolysis generators and contribute to CO2 reduction.

1) Ventilation/liquidpermeability2) E lectrical/
thermalconductivity3) Impact energy
absorbency4) L arge specificsurface area5) Unique texture1) H igh corrosion
resistance2) High strength3) A nodic
oxidation color
formation

WEBTi-T

WEBTi-S

Titanium
PowderTitanium
Fiber

Global hydrogen
demand(statistical results)

1 million kW
power plant*
Approximately

2020 270

90 million tons

Carbon neutrality is a rapidly accelerating movement mainly in Europe
and the United States. There is no doubt that hydrogen, the next
generation energy source, is essential to achieving this goal. What isparticularly sought after now is called "green hydrogen."Green hydrogen refers to completely carbon-free (no CO2emissions) hydrogen produced through water electrolysis using
renewable energy such as solar and wind power. Among the waterelectrolysis methods, the PEM water electrolysis method is said tobe the most compatible with renewable energy. It is an essential
technology for green hydrogen production, and various countries are
moving forward with many projects to popularize this water electrolysis
method. Replacing existing energy sources with hydrogen requiresa large amount of water electrolysis capacity, so demand for WEBTi,
which is used for this purpose, is expected to increase exponentially.
In order to capitalize on this trend, we have set the goal ofquickly launching the mass production of WEBTi, so our development,
manufacturing, and sales teams are working together to contribute to
the realization of a carbon-neutral society.

Grey hydrogen

Blue hydrogen

Green hydrogen

Fossil fuelFossil fuelRenewable energy

I N T E G R AT E D R E P O R T 2 0 2 3

al

WEBTi-K(according toour research)

Collection / Savings /Utilization

Not emitted

Mass Production
Stage

W

Global hydrogen
demand(our estimate)2030

Realization ofa carbon-neutral society
1 million kW
power plant*
Approximately

2050 1500

500 million tons

A porous titanium sheet
made from titanium powder
paste. It is characterized by
its thin film thickness andsmall pore diameter, making
it a product with excellent
flexibility and smoothness.

Taking advantage of the unique properties of titanium

Types of Hydrogen

Emissions

Ti

WEBTi-K(smoothness)plants*Approximately equivalent to
one nuclear power plantus

Development
Stage

Titanium
PowderPaste

Titanium

Supporting "green hydrogen" production technology

23

As the transition to hydrogen energy and the development of waterelectrolysis generators progress, WEBTi has begun to attract attention
as one of the equipment materials. Considering the environmental impact
during hydrogen production, there are high expectations for WEBTi's
potential as the material is titanium, and high porosity is needed.

m M at e ri
ta niuTi

Porous metalmaterials

New Materials Division
Porous Titanium Sheet Production & Development Group2023

Towards water electrolysis applications

We started development of the productas an electrode material.
We developed several prototypes. We
tried sample work but we were having
a hard time getting a feel for moving onto the next step.

Moving forward, we will focus on building a teamto overcome the mounting challenges. For ourmembers and cooperating departments who are
working hard under a lot of uncertainty, we would liketo achieve profitability as soon as possible and growour division into a profit center.

EB

We have begun development aimed at creating
new business areas by combining the wide rangeof possibilities for the application of porous metalmaterials and the excellent properties of titanium.

2018

Market Exploration

Since this is a product made using a new manufacturingmethod, we have to work very hard to maintain delivery dates,
quality, and production safety, while there are unexpectedfacility problems, and with productivity and yield not improving
as expected. In addition, creating a quality/production control
and facility maintenance scheme is also a major mission towardcommercialization.

Yosuke Inoue

New Materials Division
New Materials Planning & Sales Groupro

Development of Seeds

2008

About three years ago, inquiries about WEBTi for PEM waterelectrolysis applications increased rapidly, and the required
size and number of sheets expanded, leading to the startof production at a pilot facility. Currently, we are working on
developing technologies and creating systems to improve
production capacity and stabilize quality, as well as developing
next-generation porous titanium materials and cost-reducing
technologies.

Ryo Ishizuka

Po

2004

We will work as a team to establish "high quality"and "stable production."plants*Approximately equivalent to
one nuclear power plant(according to our research)

PEM water electrolysis generator (hydrogen generator)

WEBTi was born in 2004 by combining the characteristics of titanium,
such as light weight, high strength, and high corrosion resistance, withthe characteristics of porous materials, such as high air permeability,
high specific surface area, and electrical/thermal conductivity.
Originally, we decided to develop it because of its potential as anelectrode material, and we were considering expanding it to various
specifications such as large voids and high strength, but unfortunately,
it was discontinued. However, now more than 10 years have passed,
it has attracted attention as a material for water electrolysis generatorsthat produce the next-generation energy source, "hydrogen", andespecially as a material for PEM water electrolysis methods.
In the PEM water electrolysis method, which has the opposite
mechanism to a fuel cell, the environment inside the equipment has
a large acidic load that ordinary metals cannot withstand. However,it became clear that WEBTi is a unique material that combines
titanium's high corrosion resistance with high air permeability, making
it ideal for water electrolysis generators, and that it cannot be replacedby other metals.

I N T E G R AT E D R E P O R T 2 0 2 3

Hydrogen production using water electrolysis
H 2O→2H ++1/2O 2
Strongly acidic
environment on theanode side

2H +→H 2

Green hydrogen→High corrosion
resistance oftitanium

CO2 emissions: ZeroOxygen generation
catalyst layer
Electrolyte membrane(H+ exchange membrane)

C cathode side PTL
Hydrogen generation
catalyst layer

24

S T R AT E G Y

FOCUS
Achieving a Carbon-neutral Society
with the Power of WEBTi Materials

Technologies thatContribute to Sustainability

p.23

R&D Case Studies

CASE 1

Reductionof CO2emissions

Establishing a new smelting technology with low energy and high efficiency
New titanium smelting method

R&D Enhancing the Value of Titanium, the Metal of the Future
The Toho Titanium Group have expanded its business areas
by readily responding to the emerging needs of our customers,
and steadily accumulating technological development that
increases the value of titanium, which has various properties
such as it being lightweight, strong, and gentle to the humanbody. Furthermore, we are now promoting the development of
new products that contribute to resource utilization, the spreadof clean energy, and reduction of environmental impact, thereby
contributing to the development of a sustainable society.

Advantages of Titanium

Titanium Challenges

Low thermal
expansioncoefficient

StrongAround twice
the specificstrength of iron(ordinary steel)

Designpotential
Various color
tones are obtainedby changing the
thickness of theoxide film

Safe forhumansmechanical engineering, and electrical engineering to solve highly

more diversified year by year. Titanium feedstock is widely available

challenging technical issues of high-temperature smelting reactions

around the world, but the smelting process currently being used

and molten salt electrolysis, and to design processes and facilities

to convert it into titanium metal is a complex technique based on asuitable for actual implementation. We aim to implement the newparticular method called the Kroll method.

smelting technology by the end of FY2025 by making full use of ouradvanced technologies and putting all our efforts into development.

derived from electricity emits approximately 9 tons of CO 2 to produce

technology, the Group as a whole aims to reduce CO2 emissions by

The current titanium smelting technique (Kroll method) uses batch

1 ton of titanium. Various alternatives to the Kroll smelting method

40% from 2018 levels by 2030, and to achieve carbon neutrality (netproduction, a complex process that consumes large amounts ofhave been studied, but none has yet been put into use. In order tozero CO2 emissions) by 2050.

electricity, resulting in high production costs. In addition, the burningbuild a low-carbon society, there is an urgent need to reduce CO2of coke produces large amounts of CO2.

emissions from the smelting process.

Anticipated Results

The new smelting technology that Toho Titanium is developing

Difficult to process

in collaboration with Universal Achemetal Titanium, LLC (UAT, LLC.)

Rustproof

Titanium has high strength, which makes it difficult to cut, press,of the United States is a smelting process that has the potential

Excellentcorrosion
resistance,
in seawater

and weld. In addition, because its thermal conductivity is low, heatto reduce CO2 emissions virtually to zero. We also aim at reducing

does not escape during machining, causing cutting heat to build up,

electric power consumption by approximately 75%.

thus making tools more prone to wear, and metal fires more likely to

Excellentbiocompatibility

Furthermore, through measures centered on the new smelting

electricity, combining the CO2 emitted from the process and the CO2- We will reduce direct CO2 emissions from the titanium smelting process tozero.
- A major energy conservation effect is anticipated, as the introduction ofthis new smelting method has the potential to reduce the domestic power
consumption required for the production of metallic titanium by up to 75%.
- Titanium products manufactured with this newly developed technology canhelp create products with low environmental impact in both name and reality,
including the materials used.

In this development, it is necessary to utilize knowledge

occur. Processing methods and advanced technologies suited to thecharacteristics of the material are therefore required.

Technical details of the new processThis process is expected to be an excellent smelting
method since it is a simpler process than the current
method, uses almost no hazardous materials,
consumes about a fourth of the electricity, andproduces no CO2.

Toho Titanium Takes Pride in Sustainable Technology
Reductionof CO2emissionsNew energy-saving titanium production process enabled by
Reduce CO2 emissions in our customers' value chains byproviding titanium and products using related technologies●

Reduction of material loss throughimprovement of existing processes andEffective
resource
utilization

products, and development of newprocesses and products●

converted into an electrically conductive material, andR&D Organization

introducing new technology●

Promote reuse of titanium scrap

in the second process, it is electrolytically purified.

We conduct our research and development work undera policy of strengthening and building a managementfoundation through the pursuit of quality. In collaboration
with engineers from each Business Division, the Technology
Strategy Headquarters leads the development of newtechnologies and products in line with business strategies.

25

such as renewable energy andhydrogen energy

I N T E G R AT E D R E P O R T 2 0 2 3

Use of hazardous
substances
CO2 generation➡

Yes(Cl2 gas, molten Mg, TiCl4, etc.)
Yes

➡

No

➡

Zero

1 As an example, by first mixing granular titanium

High-grade titanium feedstockHigh-grade titanium feedstock

Finally, residual salt is removed to finish the product.

Coke (C)Cl2ore, calcium fluoride (fluorite), and metallic

Chlorination

CO2
generation

aluminum and reacting at high temperatures, aHigh-purity TiCl4

Electrolysis

ReductionMg

easily recovered in isolation.
MgCl2

Low-carbon Al /Carbon-free Al
Extraction

CO2
Conservation
generation:of electric
Zero
power

Metallic titanium withHigh O, Al content
Electrolytic refining

Salt bath

Bath separation

Vacuum separation

2 We use a proprietary electro-refining process, inwhich titanium ions are mainly dissolved from the

Fluorite
CaF2
Al2O3

Crude TiCl4

Distillation/Refining

aluminum is produced. Slag consisting of theseparated by flotation, so the titanium alloy can be

Pure titanium (sponge)

Titanium containing Al,
Pure titanium (Grain)titanium alloy into the salt bath, and deposited as

Support the creation of nextgeneration energy sourcesHigh

4
1/5 to 1/4 of the current process(Note: electric power used to
produce ore, aluminum, salt baths
and other substances is not taken
into account.)

byproducts aluminum oxide and calcium fluoride isTechnology Strategy
Headquarters

Technical
Development Center●

New process➡

Electricity
consumption

conductive titanium alloy containing oxygen andPresident and Representative Director

Corporate Planning
Department

Newenergycreation➡

6

Number of steps

This technology consists of two major
processes: In the first process, titanium feedstock is●

Current process basedon Kroll method

Electric power consumption

Specific gravityof 4.51, around
60% that of iron(ordinary steel)of basis sciences such as thermodynamics, electrochemistry,

strength, and high corrosion resistance, is expanding and getting

However, since this method consumes a large amount ofHigh manufacturing costs and environmental impact

Lightweight

Use of titanium, a metal characterized by its light weight, highdendritic solid metal titanium on the cathode. After
Each Business
Division

Pure titanium obtained by the new method

vacuum separation or rinsing, we obtain metallic
titanium with few impurities, equivalent to current
commercially pure titanium sponge.

Melting

Melting

Melting

Melting

Titanium Alloy IG
containing Al

Pure titanium IG

Titanium Alloy IG
containing Al

Pure titanium IG

I N T E G R AT E D R E P O R T 2 0 2 3

26

R&D Case Studies

INTELLECTUAL
PROPERTY
STRATEGY

CASE 2

Reductionof CO2emissions

Effective
resource
utilization

IP Strategy

Greatly Simplified Titanium Foil Manufacturing Process
Direct Titanium Foil Production with Smooth Electrodeposition

We aim to be aggressive with ourintellectual property, which is the core of
our competitive strength.
For our company, whose core competency is advanced titanium-related technology, securing andutilizing intellectual property is an important initiative that can be called the core of our competitiveness.

In general, titanium foil is manufactured by melting and forging

to resource conservation.

raw materials such as titanium sponge, followed by a number of

The Intellectual Property Department continuously files strategic patent applications, provides IP

We have established the technology for manufacturing titanium

processing steps such as hot and cold rolling.

education for engineers, and steadily performs invention discovery activities.

foil of A4 paper size and approximately 100 μm thickness using this

There are two main roles that the Intellectual Property Department plays. The first is establishing an

The smooth electrodeposition method that we are currently

process, and will continue to develop the technology with the aim

appropriate patent network for the inventions we have developed to ensure our business dominance.

developing is a manufacturing process that can significantly eliminateof commercializing it. Taking advantage of titanium's high corrosion

The second is making full use of the IP landscape to contribute to the exploration and planning of new

steps of fabrication by electrodepositing the raw material in foil

resistance, it is expected to be used in bipolar plates for PEM waterbusinesses from promising business areas. In these cases, it is also extremely important to consider

form through molten salt electrolysis. As a result, reduction in CO2electrolysis hydrogen production equipment and anti-corrosion films

sustainable materials and their manufacturing methods that contribute to reducing environmental

emissions can be expected through energy-saving manufacturing

for steel structural buildings, thereby contributing to the maintenanceprocess. Furthermore, since the electrodeposition also has a refining

and preservation of social infrastructure.

General Manager,
Intellectual Property Department,
Technology Strategy Headquarters

effect, low-cost titanium scrap can be used as raw material, leading
Smooth Electrodeposition Significantly Simplifies Titanium Foil Manufacturing Process
Titanium sponge,
etc.

Hot
rolling

Forging

MeltingColdrolling

Ti2+
Ti2+
Ti2+

Molten salt

Ti2+
Ti2+
Ti2+

CathodeAnodePower source

Electro-deposited
titanium foil

Foil

Titanium ions areleached from thesoluble titanium
anode, and titanium
is deposited on thecathode in the formof a smooth foil.

impact. In order to turn the results of research and development into a competitive advantage for ourcompany, we will lead the strategic use of intellectual property, with an emphasis on medium- to longterm business growth.

Electro-deposited titanium foil with A4 dimensions

Smoothelectrodeposition Significant Simplification
Titanium sponge
Low-cost scrap, etc.

Masakatsu Ikisawa

230mm

Setting quantitative and qualitative goals

IP education

With regard to patent applications, we set annual targets for the

In FY2022, we conducted four IP training sessions for engineers.

number of applications and for acquisition of know-how based on

Until now, the only people eligible for in-house IP training were

the progress of our business strategy and development themes.

engineers who could become inventors. However, starting in

In FY2022, we acquired 42 patents in Japan. When determining

FY2023, we will begin providing IP training to sales personnel.

whether or not to obtain patents internationally, we use a checklist
300mm

In addition to basic knowledge of patent law and copyrightto check whether competitors have manufacturing and sales bases

law, the training content is related to situations that frequently

in a particular country, as well as the level of competition, and makeoccur in sales activities,

comprehensive decisions from the perspective of cost performance.

such as during sample
shipping, sales promotion

CASE 3

Reductionof CO2emissions

All-Solid-State Batteries Promote Clean Energy

For existing products, we use the IP landscape to compare theintellectual property capabilities of our competitors and to specify
We also share information about the current status of our

Structure of an all-solid-state battery with LLTO™
Cathode active material

enthusiasm to "create business with intellectual property", we willcontribute to management by proactively making proposals to ourand Clean Energy." The lithium-ion batteries that have been widelyused in the past have used liquid as the electrolyte, which has

Solid-state electrolyte: LLTO™

presented challenges in terms of capacity and safety. All-solid-statebatteries using solid electrolyte are attracting the most attention as

Anode active material

the next-generation battery.
We have focused our development work on lanthanum

Plate LLTO™ (LLTO™ in plate form)

is chemically very stable, and is expected to be used in multilayer(chip-type) all-solid-state batteries and large batteries for automotive
use in the future.
LLTO™, currently achieves ionic conductivity of 5×10-4Scm-1
at 27°C in plate form, demonstrating the characteristics of high ionic
conductivity among oxide-based solid electrolytes. We will continue
to develop all-solid-state batteries for practical use.

also provide explanations ofrelated knowledge along withhypothetical examples.
IP education materials for sales staff

monthly reporting meetings of the Technology Strategy Headquarters
as well as in the reporting meetings with management. With ourrenewable energy sources, as called for in SDG No. 7: "Affordable

guarantee contracts. We

IP capabilities and changes in our IP capabilities over time during

expanding the deployment of clean energy, electricity generated fromlithium titanate (LLTO™), an oxide-based solid-state electrolyte. It

operations, and signing patent

Leveraging the IP landscapethe content of patents that should be obtained in the future.

LLTO™ Technology Improves Performance of Lithium-ion Batteries
High-capacity, high-performance, safe batteries are essential inNewenergycreationbusiness divisions regarding patent acquisition and the explorationand narrowing down of new businesses.

Digital utilization in research and development
We aim to speed up R&D and improve the quality of R&D results
by introducing appropriate digital tools that match the content andstages of our R&D. Specifically, we are actively introducing various
simulation software, through which we have achieved results such as
narrowing down the appropriate experimental conditions and clarifying

Promoting open innovation

the causal relationship between conditions and characteristics.

When it comes to technology development, we place the highest

We are working to further achieve labor saving, speed

priority on promoting development and early commercialization

improvement, and functionality enhancement in intellectual propertyof the results. To this end, we are proactively considering andwork. For example, when searching for past papers and documents,

introducing external technologies that we lack, rather than relying

it used to take time and effort to check a huge amount of documents,

on in-house development. For example, we not only exchange

one by one. Therefore, by introducing an AI tool that collects andtechnology with our parent company, JX Metals, through technology

displays articles in the order of their relevance to the target keyword

presentations, but also conduct joint research on multiple individual

being searched, we are now able to obtain the necessary documents

themes. In addition, we are collaborating with an overseas start-

extremely quickly, significantly reducing work time, and improving theup company to develop metallic materials, and joint research withquality of our staff's work.

several universities is underway.

27

I N T E G R AT E D R E P O R T 2 0 2 3

I N T E G R AT E D R E P O R T 2 0 2 3

28

F O U N D AT I O N

Promotion of

ESG Management

Basic Policy

The Toho Titanium Group will contribute to the development of a sustainable society by strengthening ESG initiatives
and realizing solutions to various social issues through corporate activities.

and enhance our corporate value over the long term.

Promotion Structure

Based on our Group's Management Philosophy, our basic policy on

Board of Directors

management is to work toward solving social issues involving the

Executive Committee

company and our stakeholders by engaging in business activities fromESG Promotion Committee

the perspectives of the environment (E), society (S) and governance (G),ESG Promotion Subcommittee

so that we can contribute to the sustainable development of society

EWorking GroupG

Working Group

5．重要課題（マテリアリティ）とその取組み

ESG dissemination activities

3．ESG推進の必要性

In FY2022, we provided an opportunity to directly explain to the general managers of eachdepartment and GM class based on the materials created by the ESG Promotion Department. The

社外秘
社外秘

社外秘
ESG活動に優れた企業＝持続可能性が⾼く、⻑期的に成⻑が期待できる企業
ﾏﾃﾘｱ
取組

ﾘﾃｨ

内容

目標 及び KPI

2023年度活動

ESGで評価される時代に・CO フリー電力契約及びCN都市ガス
目標：2030年CO2排出量2018年度比40％削減、2導入によるCO2排出量削減

企業のESG情報を収集・分析して運⽤機関に提供するESG評価機関が急増
・廃熱の有効利用、高効率設備更新に2050年カーボンニュートラル達成
脱炭素
よるCO2排出量削減
国内外で600以上
化社会
・新製錬実用化に向けた改良プロセスのKPI ：CO 排出量2018年度比19％以上削減
2の実現

評価機関 例①FTSE (英)概要 量産技術開発促進に向けた取組みの推進（2018年度25.7万t）

・省エネ、省人化、作業環境改善
・新電源、エネルギー構想立案と検討

気候変動、ダイバーシティ、ジェンダーなど
ESG説明資料
幅広いESGテーマで評価
気候変動、⽔セキュリティ、森林減少リスクといった－ESGとは？－環境側⾯を重視

環境･
安全性
に配慮
した
製品の
③MSCI (⽶) 提供
地球環境

目標：環境･安全性に配慮した新素材開発、技術改良、新規用途開発による複数製品化

contents of the materials include the concept of ESG and SDGs, the background and necessity

②CDP
保全
E (英)

of ESG proliferation, our company's materiality and initiatives, and our organizational structure. In

産業カテゴリごとに評価
・茅ヶ崎・若松の廃カーボン電極再利用
目標：2040年廃棄物最終処分量2020年度比ESG推進部
オシノカーボンへの有価引取り継続
業績に重⼤なリスクをもたらすESG課題にフォーカス④Sustainalytics
持続 (蘭) 50%削減、サプライチェーン全体での・廃プラスチックの再資源化を全社展開

FY2023, we will make a video of this content and disseminate it throughout the company.

Materialities

S

Working Group

への
貢献

可能な

・WEBTi®パイロット設備の操業で抽出された課題を反映、量産設備仕様を確定、投資判断
・ノンフタレート触媒の高性能品（高活性且つ高立体特異性）をパイロット設備で試作、KPI ：量産設備の初期投資仕様確定
プラント設備へのスケールアップ検討
ノンフタレート触媒の高性能化計画
リスクの⼤きさと管理体制の視点から（パイロット規模）進捗率80％以上

廃棄物再利用
2023年5月作成

・若松工場汚泥最終処理を資源化できる

資源
投資家以外のステークホルダーにも利⽤され始めており、社会全体が処分先の探索（目標資源化率25%）
活用
KPI ：最終処分量4,500t
・処理業者と木製パレットの有価対応を検討
ESG情報を活⽤して企業を評価する時代に変わりつつある（2020年度比約6％削減）以下（目標資源化率50%）

今後の課題
ESG評価機関からの情報開⽰要請に応えていくこと

12
8

1

FY2023 materials for ESG dissemination
activities for all employees

In line with our defined materialities, we will work to resolve important issues surrounding our company and our stakeholders,
contribute to the sustainable development of society, and aim to enhance our corporate value over the long term.
Materiality

E

Contribution
to global
environmental
conservation

Contribution
to society

Solidifying ourmanagementfoundation

Target (2030 - 2040)

Catch-up Strategy and Major Measures for FY2023-2025

To realize a decarbonizedsociety

Reduce CO2 emissions by 40% from the 2018 level by 2030
and achieve carbon neutrality by 2050

• D evelopment of new titanium smelting technology, CO 2-free electricity,
introduction of carbon-neutral LNG, etc.
*2025 CO2 emissions: 190,000 t/y (-25% compared to 2018)

Development ofenvironmentally safe
products

Develop new materials, technological improvements, and new
applications for multiple products with consideration for theenvironment and safety• C ommercialization of WEBTi• C onsider commercialization of new materials other than WEBTi

Shareholders
and Investors

p.33

STAKEHOLDERENGAGEMENT

Sustainable resource
utilization

Reduce final waste disposal volume by 50% by 2040
compared to FY2020. Reuse waste materials throughout the
supply chain• R euse waste throughout the supply chain• P romote recycling of raw materials and effective use of waste

Respect for human rights inthe supply chain

Respect the human rights ofall those involved in the supply chain• S urvey and audit suppliers' human rights initiatives• R aise awareness of human rights among all employees

Coexisting with local
communities

Support social contribution
and community revitalization in each region• S upport social contributions and regional revitalization at each businesssite (supporting local sports and cultural activities, joint volunteer activities
with nearby schools, and accepting plant tours)

Eliminate serious industrial accidents
Create healthy work environments• M aintain JIS Q 45100• D evelop various activities related to industrial health andsafety based on JIS Q 45100

our company's survival andcommitted to understanding the

Ensure a diverse and inclusive workplace• S et the ratio of women in management positions to 20% or more• M aintain a ratio of women at 20% or more among new graduatesand mid-career hires

Diversity and inclusion

Appealing
workplace

29

Item

Improving occupational healthand safety in the workplace

S

G

Related SDGs

Creating comfortable work
environments

Realize vibrant work environments• E stablishing a personnel system suitable for work style reforms• Improve treatment conditions• Identification and implementation of areas for improvement throughcontinuous implementation of employee satisfaction surveys

Next-generation humanresource development

Create a foundation to encourage personal growth of
all employees and establishing education• A ctively recruit highly-skilled human resources with specialized skills• D evelop executive and core human resources through reshuffling basedon succession plans

Strengthening corporate
governance

Resolutely apply the CG Code• F ormulate and disclose transition plans for decarbonization• R espond appropriately to disclosure requests

Ensuring thoroughcompliance

Achieve zero compliance complaints• R aise employee compliance awareness• Identify and recognize workplace-specific issues

Risk management promotion

Establish and appropriately implement the company-wide risk
management system• E stablish and implement company-wide risk management• P DCA through the Risk Management Committee• O ptimize asset efficiency

I N T E G R AT E D R E P O R T 2 0 2 3

Customers

At the Toho Titanium Group, we

p.37

believe that building relationships

Business
partnersof trust with stakeholders throughdialogue is indispensable forsustainable development. We are
expectations and desires of our

p.39

stakeholders and reflecting them

Local community& societyin our corporate activities.

Employees
and families

p.42

I N T E G R AT E D R E P O R T 2 0 2 330

F O U N D AT I O N

Shareholders
and Investors

We aim to be a company that istrusted by all stakeholders, including
shareholders and investors, and strive
to disclose information promptly,
appropriately, and fairly, and toproactively disseminate information.

Customers

Business
partners

Local community& society

Employees
and families

31

Our Group strives to provide
products and services that prioritize
quality in order to continue receiving
the trust of our customers. We
also strive to improve customer
satisfaction by accurately
understanding customer needs andcontinually improving our products
and processes.

In order to achieve the procurementof purchased goods that meet thestandards of "quality", "cost", and"delivery time", our Group conducts
material procurement activities withthe aim of building relationships
of mutual trust with our business
partners and building better
partnerships.

At the business sites of our Group in
various locations, we are working torevitalize local communities and support
the generations who will lead the future,so that we are able to develop together
with society as corporate citizens, while
striving for harmony with everyone asmembers of the local community.

Our Group respects the individuality ofeach employee and strives to develop
their abilities. At the same time, in orderto create an attractive work environment,
we are implementing various humanresources systems, including support forwork-life balance and promotion of women
empowerment, as well as measures toactively develop human resources who will
pave the way for the future of our company.

I N T E G R AT E D R E P O R T 2 0 2 3

Stakeholder Expectations/Interests (Examples)

Opportunities forCommunication

Important Value Co-created with Stakeholders(examples of value provided)• Improvement of corporate value• Suitable stock price• Stability of financial foundation• Increase in ROE and ROIC• Profit improvements• Safe operations• Promotion of ESG, SDGs
• Providing timely information• Holding a regular general meeting of shareholders• Holding a briefing session for investors• Conducting individual IR meetings• Publication of business reports, Integrated Reports /CSR reports• Publication of company introduction pamphlets• Distribution of information via website, etc.
• Distribution of news releases through mass media
Disclosure Policy• Stock price improvement• Stable dividend• Providing high quality products and services• Stable supply, thorough supply chain management,
legal compliance• Promotion of environmental load reduction• Safe operations• BCP compliance• Fair price• Capital investment• Daily communication through Sales Department• Display at exhibitions• Explanation through company introduction videos
and pamphlets• Distribution of information via website, etc.
• Distribution of news releases through mass media• Contributing to reducing environmental impact andCO2 emissions• Improving
trust through regular engagements with customers throughsales activities• Increasingawareness through exhibitions of our products and technicalinformation• Improving
customer satisfaction by transferring the maximum possible
load during product delivery• Ensuringquality by conducting quality audits of raw material suppliers• Stable
operations through thorough process and logistics management• Expansion of the fourth catalyst plant• Start of construction of the Nickel Powder Plant No. 5

Quality Standard - ISO9001/JIS Q 9100

• Fair, just, and transparent transactions• Thorough supply chain management and legal compliance• Safe operations• Business continuity• Promotion of environmental load reduction• Procurement of product materials, supplies, etc.
• Implementation of quality audits, process audits, etc.
• Initiatives to reduce environmental impact and CO2
emissions• Co-existence and co-prosperity with the local community• Contribution to regional development• Safe operations• Promotion of environmental load reduction• Disaster prevention response• Dialogue with local residents• Interacting with local citizens through plant tours andsoccer clinics• Distribution of information through news releases• Notifications and reports to government agencies• Contributing to reducing environmental impact andCO2 emissions• Building a response manual for accidents anddisasters• Improving trust from local communities• Promoting understanding of safety and security through plant tours
for local residents• CO2 reduction during product delivery• Ensuring safety and security and business continuity in the eventof an accident or disaster• Safety first• A work environment where one can work energetically(health, respect for human rights, equal opportunities,
ensuring rights to working conditions based on laws andregulations)• Utilizing a wide range of human resources (diversity &inclusion)• Promotion of environmental load reduction• Improvement of education, welfare, and other various
systems• Delivering the President's message during New Year's
ceremonies, and other events• Distribution of information through company
newsletters and intranet• Holding Group management meetings• Consultations with labor unions• Operation of compliance hotlines• Maintaining the work environment• Ensuring welfare benefits• Health management• Improving

the work environment under the policy of putting safety first• Employeehealth management through medical checkups and mental
health care at least once a year
• SharingGroup intentions by disseminating business status andpolicies to all employees• Negotiations
and discussions held every month on various
management topics and employee working conditions• Improving
the ratio of women in management positions and the rateof men taking childcare leave• Improving
communication through dormitories, company housing,various events, recreation, etc.

Green procurement guidelines, responsible mineral sourcing• Fair business transactions through the execution of sales contracts,
specifications, etc.
• Avoiding procurement risks by purchasing multiple raw materials• Stabilizing business through sustainable transactions• Continuing to conduct regular supplier quality audits• CO2 reduction during product delivery• Optimization of prices commensurate with manufacturing costs

I N T E G R AT E D R E P O R T 2 0 2 3

Ident ify ing Materiality

STAKEHOLDER ENGAGEMENT

32E

ENVIRONMENTNVIRONMENT

Scenario Analysis
Selected Scenario

Contribution to
global environmental conservation

Hypothetical Scenario

SDGs and the Paris Agreement. Our Group supports the Japanese

important management mission for the Toho Titanium Group to

government's decision to lead the country toward decarbonization,

gain new profit opportunities. We will work to mitigate and adapt

and will comply with all laws and regulations related to climate

to climate change through our business, actively contribute tochange. We also recognize the importance of climate-related

decarbonization through technological innovation, and work

financial disclosures, support the TCFD, and disclose information inproactively in good collaboration with stakeholders to achieve bothline with the TCFD.

We selected the above scenario and assumed the following as our business environment.
· Each country's decarbonization policies continue to progress as they currently do, and the 1.5˚C target set out in the Paris Agreement will not be achieved.
· There is little incentive to actively invest in the development of decarbonization technologies, including switching the electricity consumed in our main titanium smelting business torenewable energy electricity, and adopting new smelting technologies that reduce electricity consumption.
· Regarding weather conditions such as storms, floods, and rise in temperature, we assume that the frequency/intensity will increase slightly from the current level, and consider the
impact on our main plants and production systems.

Identified Risks and Opportunities
Type

DriverOverview

Time horizon

Financial
ImpactUnder China's current energy consumption control policy
through decarbonization policies, it is highly possible thatthe country will end up with restrictions on power supply
to industries, and power supply to magnesium smelting
Introductionis also expected to be restricted, assuming that the
Approximatelyof renewable Short/medium/transition to renewable energy does not make significant
400 million yen/energy inlong term
progress. As a result, if magnesium production is delayed
year
China
in China (China accounts for approximately 80% of theworld's magnesium supply), there is a risk that the priceof magnesium we use in titanium smelting may rise andit may become difficult to procure it.

· Diversify magnesium procurement sources and adjust inventory to stabilize procurement.
We are considering reducing the amount of products imported from China.
· We will also respond to fluctuations in magnesium prices by shortening the contract
period and stipulating automatic cost adjustment items in the contract for titanium sales.

Physical risk
(acute)We expect the frequency and intensity of storms andflooding to increase in the areas where our plants arelocated. In particular, plants that are at high risk offlooding, due to nearby rivers overflowing, are likely tosuspend operations if occurrence of heavy rains increasein the future.
Frequency
Also, if the intensity of storms increases in the future, theof storms
scattering risk of roofs and walls of aging plant buildings
and floods
also increases.

Approximately
Short/medium/
100 million yen/long termday· For plants that are at risk of flooding due to nearby rivers overflowing, we have
implemented risk countermeasures to the point where the risk of plant shutdown isvirtually non-existent under the hazard conditions assumed by the city where the plant
is located (assuming rainfall once every 50 years). Going forward, we will continue toevaluate trends in changes in the frequency and intensity of abnormal weather eventsand consider whether additional measures are necessary.
· For plants with aging buildings and are in areas experiencing high levels of storm
intensity, we have formed a risk countermeasure working group and are proceedingwith storm countermeasure construction after conducting a risk level assessment.
Of the 19 countermeasures taken at the Chigasaki Plant, 13 are completed, 4 are in
progress, and 2 are planned. The Wakamatsu Plant is considering reinforcing the plantroof and installing a seawall at the central substation. Going forward, we will complete
construction according to this countermeasure plan. We will also consider the need for
additional measures by monitoring trends in typhoon and storm intensity across all sites.

Short/medium/Not remarkable
long term· In addition to activities that drive awareness of heatstroke via the Safety and Health
Department, we are also taking measures to counter the heat by installing air conditioning
equipment in departments where heatstrokes occurred.
· In workplaces where air conditioning measures is not expected to be very effective, suchas large work areas, risks are avoided through measures such as work time management.
· We will continue to monitor changes in heat conditions and the number of heatstroke
occurrences, and consider strengthening measures according to the situation.
· We will continue our effort to avoid a situation that would lead to a shutdown of operations
due to the reason multiple people at the same work place suffer from heatstroke at thesame time.

The amount of damage to our company due to thesuspension of plant operations will be significant, and wewill also incur costs for repairs to the plant building.

medium- to long-term improvements in the Group's corporate value
Physical risk
(chronic)

and sustainable development of society as a whole.
Through the reduction of GHG emissions across the wholevalue chain, we will also help achieve the goals set forth in the

As summer temperature and humidity rise and thenumber of extremely hot days is expected to increase, it
is possible that there will be an increase in the number ofcases of employees suffering from heat stroke while at
Number ofwork.
extremely
hot days

Information disclosure consistent with the four TCFD themes
GovernanceSelected Scenario

The ESG Promotion Subcommittee, which is made up of three(chaired by the President and Representative Director), which meetsworking groups of the ESG Promotion Committee, serves as thetwice a year, we discuss the status of activities from the Promotion

parent body responsible for formulating specific response plans andSubcommittee, as well as activity policies related to materiality,

targets for climate change issues and managing the progress ofimportant matters, plans for the next fiscal year, and other topics.

countermeasures, while also playing a liaison role with the business

These matters are then reported to the Executive Committee and thedivisions.

Board of Directors, and opinions and suggestions are fed back to

The status of the working groups is shared at the ESG

the ESG Promotion Committee. This way the climate change issues

Promotion Subcommittee Meeting, which is held regularly every

are monitored from a secondary and company-wide perspective.

month. Furthermore, at the ESG Promotion Committee Meeting

System for addressing materiality including decarbonization (ESG promotion system)
Directions

Board of Directors

Identified Risks and Opportunities
Type

Transition risk We anticipate that demand for carbon(market)
free materials will increase from aircraft
manufacturers, plant manufacturers, and heatexchanger manufacturers, which are our major
customers. The current titanium smelting
method is a power-intensive manufacturing
Price ofmethod, so there is the potential issue of highcarbon-free
CO 2 emissions. If we do not reduce theseelectricity
emissions, we will not be able to meet customer
demands, and there is a possibility that our
products will be replaced with other materials
with lower emissions. Moreover, switching tocarbon-free electricity in order to avoid this will
result in higher costs.

Physical risk
(chronic)*Same as physical risk (chronic) in the table above

President and Representative Director

Opportunity(Products/
Services)

As efforts, such as decarbonization, arestrengthened toward building a sustainable
society, titanium, which is lightweight, has highstrength, and excellent durability, is a usefulmaterial that can contribute to this goal. Thus, by
establishing a new smelting technology that can
produce CO2-free titanium, we expect to create
opportunities for our titanium business.

ESG Promotion Subcommittee

Risk Management Committee
Business Execution Teams (various departments)

Opportunity(Products/
Services)

G
WorkingGroup

Strategy
The Group strives to understand the financial impact of climate change through scenario analysis. Based on the results of the scenario analysis,
we are formulating a concrete transition plan to achieve a low-carbon society, which will be reflected in the three-year medium-term corporate
management plan starting in FY2023.

33

DriverOverview

Management

ESG Promotion Committee

S
WorkingGroup

We selected the above scenario and assumed the following as our business environment.
· Decarbonization policies in each country will progress toward achieving the 1.5˚C target set forth in the Paris Agreement.
· There will be increasing pressure on the titanium smelting business, an electricity-intensive business, to switch to renewable energy.
· Development of a new smelting technology that can significantly reduce power consumption is required.
· Competition in technology development will intensify in the field of decarbonization technology, which we have determined as having a significant impact on our business.
As our technology develops in response to the acceleration of the shift to EV and the advent of a hydrogen society, new market expansion is expected.
· Regarding weather conditions such as storms, floods, and rise in temperature, we assume that the frequency/intensity will increase slightly from the current level, andconsider the impact on our main plants and production systems.

*Same as physical risk (acute) in the table above

Executive Committee

E
Working
Group

Hypothetical Scenario

IEA NZE 2050

Physical risk
(acute)ReportingI N T E G R AT E D R E P O R T 2 0 2 3Countermeasures

Transition risk
(market)To realize a decarbonized society
We recognize that climate change represents both risks and an

IEA STEPS
IPCC RCP4.5

Opportunity(Products/
Services)

The production and use of hydrogen is
expected to play a major role in building
a sustainable society centered on
decarbonization. In addition, our company's
business opportunities are expected to expandby developing titanium and titanium-containing
compounds essential as hydrogen-relatedmaterials.

Time horizon

Medium/long term

Financial
ImpactApproximately
600 million yen/
year

Countermeasures· We are progressing with the development and gradualcommercialization of a new titanium smelting methodthat significantly reduces power consumption and CO2
emissions to minimize the amount needed for switching tocarbon-free electricity.
· Compress
electricity cost increases through directpurchase of non-fossil fuel certificates· Continue
to proceed with energy conservation / waste
heat recovery and utilization measures, and use carbonfree energy other than electricity.
· In the future, we will also consider participatingin renewable energy power generation projects incollaboration with local communities and other companies.

· We will complete studies on resolving issues facing
industrialization by FY2024 based on the results obtainedso far regarding CO2-free titanium production technology.
·A company-wide steering organization will proceed withtechnology evaluation and investment decisions, with theaim of starting small-scale commercial production in 2025.
· Proceedwith gradual scale expansion while incorporating
improvements related to productivity and cost reduction.
· In conjunction with the application of other CO2 emission
reduction measures, the goal is to achieve substantial
carbon neutrality in FY2040.

Customerdemand for
low carbon
products· Mid-term:Start of dissemination of new
smelting technology· Long-term:Applicable to approximately 40%
of titanium products, stabilizing theeffect of the demonstration

Nationalhydrogenrelated
measures· The WEBTi porous thin titanium sheet is expected to be
applied to parts of water electrolysis hydrogen generators,
which is expected to be put into practical use by around2030. In order to be able to respond to the rapidly
increasing number of inquiries on the WEBTi porous thin
· Long-term:Emergence of markets for porous
titanium sheet, we will establish an initial mass production
titanium, titanium foils, and FeTi
system in 2024.
hydrogen storage alloys as the· Centered around the departments in charge of technology
creation of a hydrogen energy based
billions of yen /development and new businesses, we will accurately
society gains momentum
annual revenue
grasp technological seeds and market needs and trends,· Long-term:Promote in-house hydrogen
increase (FY2030) and aim for timely development and stage deployment.
utilization using the above· In addition to technological improvements, a companytechnologies (ultra-fine nickel
wide steering organization will make investment decisions
powder production, WEBTi Ti
and technology evaluations in accordance with thepowder production, etc.)
progress of building a hydrogen energy based society, andaim to expand the scale.
· In FY2040, the above materials will become a large-scale
market with the full-scale operation of a hydrogen energy
based society.

As decarbonization policies progress, EV are
expected to account for more than 50% of
new car sales by 2030. There is a strong needfor reducing the weight of EV, and there is a
EV production
Medium/long term
need for lighter and thinner parts, so we expect volume
increase in our Catalysts Business sales by
providing high-performance catalysts that can
produce these resins.

I N T E G R AT E D R E P O R T 2 0 2 3Not determined· Development
of high-performance catalysts began
Approx.
in 2020, and we plan to continue to improve their¥1 billion/year
functionality.
increase in· In order to respond to increasing demand, we haverevenue (FY2030) worked to expand our production sites for high*Compared toperformance catalysts, and a new plant was completed
FY2021
in November 2022.

34

ENVIRONMENT

Contribution to global environmental conservation
TOPIC

Information disclosure consistent with the four TCFD themes
Risk Management

Initiatives to make fuel carbon-free

The Climate Change Risk Identification Process

How We Respond to Risks

The Risk Management Committee leads the identification of climatechange risks. The results of ESG Promotion Committee deliberations arereported to the Executive Committee for final approval of the company's
identified climate change risks. In assessing and determining the severityof climate change risk, we primarily consider the following factors:

Identified climate change risks are assessed in accordance with the Risk
Management Manual. They will be categorized by avoidance, mitigation,transfer, and retention, and measures will be considered for each. After
deliberation by the Risk Management Committee, response policies arereported to and approved by the Executive Committee through the ESG
Promotion Committee.

Method of Determining Level of Severity

Integration into Company-Wide Risk Management∙ Short-, medium-, and long-term time horizons∙ Transition
risks: Decarbonization trends, generation power mix, productdemand trends, existing and new regulatory requirements (carbon
pricing, plastics regulations, etc.)∙ Physicalrisks: Frequency of occurrence, loss of life, impact on external
parties, degree of loss
∙ Potential
for risks to materialize

The Risk Management Committee is chaired by the Toho Titanium
president, and consists of its executive officers, the presidents of affiliatedcompanies, and other members appointed by the President. Climatechange risk is also managed by the Risk Management Committee in thesame manner as other risks, based on the system set forth in the Risk
Management Manual.

■Carbon Neutral LNG Buyers AllianceToho Titanium joined 14 companies including Tokyo Gas Co., Ltd. inlaunching the Carbon Neutral LNG Buyers Alliance in March 2021. The
alliance brings together Tokyo Gas and other companies that purchasecarbon-neutral LNG (CNL) in an effort to realize a sustainable society,expand the use of CNL, and increase the value of its utilization.
CNL is liquefied natural gas (LNG) that is regarded as producing
no CO2 emissions on a net global basis when burned, because thegreenhouse gases produced in the process from the mining of CNL to its
combustion are offset with CO2 credits (carbon offsets). In the future, we
aim to make CNL widely known worldwide, improve its reputation among
investment institutions, and establish its position in various environmentrelated systems.

■Introduction of carbon offset LPG

CO2 absorbed byforest conservation,afforestation, etc.

CO2 emissions in
the LNG value chain

We are in the process of switching to carbon offset LPG at sites that use
LPG in the manufacturing processes. Carbon offset LPG uses carbon
credits to offset the greenhouse gas emissions that occur when it isburned. We started implementing it at one location in Japan in October
2022.

Net zero emissions

Indicators and Targets
Our Group is committed to reducing GHG emissions by achieving zero-CO2 emissions from manufacturing processes, conservation and effective use ofenergy, and moving to carbon-free sources for the energy we use. We have set targets of a 25% reduction by FY2025 and a 40% reduction by FY2030 (bothcompared to FY2018), with a final goal of reaching net zero by FY2050.

Roadmap to Achieving Carbon Neutrality by 2050
* FY2018 CO2emissions as 100

Achieving zero CO2emissions arisingfrom manufacturing
processes

2018

2025

2030

2040

2050

100

Toho Titanium CO2 emissions (FY2018)
260,000 t-CO2

Our Group responds to the emerging demands of our customers

of a sustainable society. The introduction of pilot equipment forand promotes the development of new processes and new products

WEBTi, a new material that will contribute to building a hydrogenthat contribute to reducing global environmental impact (p.25). We

energy based society, is progressing as planned, and sample work

are also keenly aware of how we can help achieve the SDGs throughis currently underway with the goal of full-scale commercialization

the raw materials we use, our manufacturing processes, and our

within FY2025.

product applications, thereby contributing to the development

75

Sustainable resource utilization

New titanium smelting technologies (from 2025)
58

Energy-saving
and efficientuse of energy

Providing Products Beneficial to the Environment and Safety

Effective Use of Water Resources

Extensive recovery and utilization of waste heat (from 2021)

Our Group is working to improve operations and promote water
Purchase of green power sources (from 2021)

Greening ofenergysources in use

Participation in renewable energy production and associated businesses (from 2030)

2
GHG Emissions*CO2 emissions from carbon
neutral city gas and carbon offset
LPG are considered zero.
*W ith regards to Scope 2 (samescore for FY2021 and FY2022(182)), in FY2022, sponge
production increased by 15%
compared to FY2021, andelectricity consumption increased.
However, we were able to reduce
CO2 emissions by expanding theswitch to CO2-free electricity.

Scope 1

30

33

34

29

32
26

20

200

191
153

150

182

182

FY2018FY2019FY2020

FY2021

FY2022

Disposal and Public Cleansing Act.
FY2018FY2019FY2020

FY2021

FY2022Adoption of CO2-free electricity

Compensation Rules for Directors and Management

From FY2021, we have introduced CO2-free electricity to the Chigasaki
Plant part of the Wakamatsu Plant, and the Hitachi Plant. In FY2022, we
increased the amount of CO2-free electricity introduced at the Chigasaki
Plant. Moving forward, we will continue to introduce CO2-free electricity
to other processes to reduce CO2 emissions.

The Company's compensation system for Directors and management
consists of fixed and performance-linked remuneration. In the future, wewill consider reflecting the achievement of climate change-related goals in
our compensation structure.

35

I N T E G R AT E D R E P O R T 2 0 2 3

While controlling amounts of waste generated at each business site as much as possible,
waste disposal is the only option left, we do so properly and in compliance with the Waste

50
0Reusable waste plastic
collection container

we are also enhancing our sorting of waste to render it valuable and recyclable. When

100

10
0

Promotion of Waste Reduction and Reuse(thousands of tons)
250
224

water intake. In addition to meeting the permit standards for water
regulations, we have confirmed that there are no business sites

Scope 2(thousands of tons)
40level survey results *1 in the "Aqueduct Water Risk Atlas *2".
*1 https://www.toho-titanium.co.jp/csr/data/*2 A tool published by the World Resources Institute (WRI) for measuring water
risks in various regions around the world.

quality and quantity in each region and complying with laws and0experiencing water stress as of FY2022 based on the water stressrecycling, as well as identify regions with high water risks and reduce

Investigating Where to Dispose of Sludge
Generated at the Wakamatsu Plant
With regards to the sludge generated from the
Wakamatsu Plant that is disposed of in landfills,
we will continue to consider switching disposal
contractors so that we can recycle waste,
and plan to develop measures to reduce thechlorine concentration in the sludge.

Promotion of Waste Plastic Reuse
Continuing from the previous fiscal year, weare promoting initiatives to recycling waste
by changing the outsourcing company for
waste treatment and adopting a recycling
process. This fiscal year, we are increasing
the number of departments within the
Chigasaki Plant that recycle waste plastic
and carrying out activities that contribute toenvironmental conservation.

I N T E G R AT E D R E P O R T 2 0 2 3

Breakdown of Industrial Waste (FY2022)
Adding Recyclable Value
12%
Landfill
Disposal*
34%

Recycling54%*32% of the 34%
landfill disposal ratio iseffectively utilized for thedevelopment of offshore
landfill sites.

36

S

SOCIETY

OCIETY

Contribution to society

Participation in the "White Logistics" Promotion Movement

Voluntary Action," which includes itemized and detailed voluntary

In March 2022, we endorsed the objectives of the "White Logistics"

efforts to improve logistics. To date, approximately 1,658 companies

promotion campaign developed by the Ministry of Land, Infrastructure,

have endorsed the campaign. We have declared the following eightTransport and Tourism, the Ministry of Economy, Trade and Industry,

points as our own initiatives.

and the Ministry of Agriculture, Forestry and Fisheries, and submitted

Supply chain managementa Declaration of Voluntary Action.
The White Logistics campaign aims to address the growing
shortage of truck drivers, secure stable logistics services necessary

Respect for human rights in the supply chain

for people's daily lives and industrial activities, and contribute to the

The Toho Titanium Group promotes respect for human rights infulfill our social responsibility as the operator of an integrated supply

growth of the economy. Through the campaign, we are working to (1)keeping with the United Nations (UN) Guiding Principles on Businesschain by clearly stating respect for human rights and diversity in our

improve productivity and efficiency of transportation, and (2) createand Human Rights. We also understand the human rights described

Code of Conduct, and by requesting our business partners to give thelabor environments that are comfortable for all workers includingin the International Bill of Human Rights and the Declaration onsame consideration to human rights and diversity.

female and elderly (over 60) drivers. Participating companies are

Fundamental Principles and Rights at Work of the International Labour
Organization (ILO) are an absolute minimum to be observed. We will

Detailed information are listed in the Corporate Management Policy page on
our website.

https://www.toho-titanium.co.jp/en/company/principels/

Strengthening linkage and collaboration with business partners
Based on the Guidelines for Business Conduct and Promise to Business Partners (Transaction Principles) within our Fundamental Purchasing
Policy, the Group will strive to build relationships of trust with business partners through fair and equitable transactions as well as legal complianceand environmental conservation.

Fundamental Purchasing Policy
Guidelines
for BusinessConduct

Transparency

We will be open and transparent in our dealings.

7. P roactive use of logistics
companies that are involved in
work-style reforms, etc.
8. Safety measures during loading
and unloading operations

Responsible Mineral Procurement
Our Group's basic policy entails never procuring or using minerals

risk areas (CAHRAs), including tin, tantalum, tungsten, gold, cobalt,with OECD Annex II risk (i.e., [1] human rights abuses associatedand mica. If any risks are found in the supply chain, correctivewith the mining, transportation, and trade of minerals; [2] direct or

actions will be taken.

indirect support for non-government armed groups; [3] illegal acts by

In order to comply with this policy, we request that our

public or private security forces; [4] bribery and misrepresentation ofbusiness partners understand the Group's thinking and commit

mineral origin; [5] money laundering; [6] non-payment of taxes, fees,

to responsible mineral sourcing. We will also disclose appropriate

and mining rights fees to the government) in conflict areas and high-information about these efforts to all stakeholders.

Fairness		We will base our selection of suppliers on fair evaluation.

Coexisting with local communities

Legal compliance		We will comply with all applicable laws and regulations, and will conduct our business not only inaccordance with the letter of individual provisions of laws and regulations, but also with a respect forthe spirit of the law.

Our Group believes that, as a member of the local communities

we are making various social contributions and supporting local

Environment conservation	We place importance on the environment and actively promote "Green Purchasing" practices.

where our business sites are located, building relationships of trust

revitalization in each region so that we can continue to develop

Mutual trust		We will build relationships of trust with our business partners through transactions based on equal
partnership.

while maintaining harmony and cooperation with local communities

together with local communities as a corporate citizen.

Ethics		We will maintain appropriate relationships with business partners based on strict ethical viewpoint.
We will sever all relationships with Antisocial Forces and conduct sound purchasing activities.
We will not engage in any transactions that exploit an advantage of ours to the unfair advantage ordisadvantage of others.
Promiseto Business
Partners(Transaction
Principles)

required to formulate, declare, and implement a "Declaration of(Excerpt)
1. Proposals for and cooperation inlogistics improvement
2. Separation of work tasks otherthan driving
3. Improvement of facilities on thepart of shippers
4. Modal shift to ships and railroads
5. Introduction of fuel surcharges
6. Consideration of legal compliancewhen selecting contract
counterparts

Fair opportunity for entry		We will provide fair entry opportunities for those who wish to transact business, and we will respondsincerely to trade offers.
Fair evaluation		Selection of suppliers will be based on fair evaluation of quality, price, delivery time, and performance.
Confidential information management	We will strictly manage and maintain the confidentiality of information obtained for administrative
purposes in the course of purchasing transactions.
Clarity of reasons for selection	For business partners who were not selected for orders due to competing inquiries, etc., we will, uponrequest, clarify the fact that they were not selected and the reason for not being selected.

Green Procurement

Initiatives to eliminate Antisocial Forces

As part of our efforts to protect the environment, we actively

We are continuously working to eliminate Antisocial Forces. Our

promote "Green Procurement" practices. We strive to do business

Code of Conduct emphasizes fair trade and the promotion of soundwith partners that are proactive in their environmental responses

business practices. We also conduct surveys of business partners on

including reduction of the environmental impact related to thethe status of implementation of measures to prevent involvement with

manufacture, use, and disposal of their products and the provision

Antisocial Forces, and we follow up with them on an ongoing basis.

of services to our Group as well as purchasing of goods that haveless environmental impact on the global environment.

Procurement BCP Initiatives

Fair Trade(Activities for compliance with the Subcontracting Law)business shutdown due to natural disasters such as earthquakes,

The Group considers the deepening of relationships of trust withare advancing the diversification and multiple decentralization ofbusiness partners to be extremely important, and we are particularly

procurement sources to minimize procurement risks.

We are working on procurement BCP to prepare for the risk ofwindstorms, and floods, as well as fire and power outages. We

is essential for sustainable development. Based on this thinking,

Fostering a Toho Titanium Mindset
Toho Titanium Soccer Club
Established in 1955, the Toho Titanium Soccer Club has a long history
and has players who have played in the professional J League andvarious other categories. Players work at either the Chigasaki Plant or
the Yokohama Headquarters, and all are employees who balance workand soccer. Since 2002, we have planned and managed the boys' andgirls' soccer tournament "Toho Southern Cup," and since 2016, we havecontinued to support the healthy growth and development of children
through soccer by holding soccer clinics in the Chigasaki and Samukawa
areas, and we are loved as a community-based team.

C ontributing to the Local Community throughProactive Communication
In addition to inviting local elementary, middle school, and high school
students to our company on plant tours, our employees also provide
classes at local high schools. While contributing to children's education, theprogram provides an opportunity for children to deepen their understandingof our business and safety initiatives.
The Toho Titanium Soccer Club also promotes harmony with the local
community by organizing monthly community cleanups by staff and players.

committed to strict compliance with the Subcontracting Law,
engaging in ongoing measures to ensure the proper and smooth
operation of subcontracting transactions.

37

I N T E G R AT E D R E P O R T 2 0 2 3

I N T E G R AT E D R E P O R T 2 0 2 3

38

SOCIETY

Appealing workplace

Diversity and inclusion
Our Group aims to achieve diversity and inclusion in the workplace.

Message from a Human Resources and Labor Affairs Officer

We will enhance the competitivenessof our human resources and organization
toward "Vision for 2030".

Training to Promote Active Participation
by Women

TOPIC

Based on the Law Concerning the Promotion of Active Participation
by Women in the Workplace, our Group has formulated a General

After spending 15 years in charge ofvarious development tasks for material
manufacturers in France and the UnitedStates, I spent 6 years in Japan inmanagement work at a public agency.
We are currently focusing on developing
new materials with 3 members,
including new graduates and mid-careerhires.

Business Owner Action Plan to support the development of the next
generation.

Senior Employees in Action
From April 2023, we have extended the retirement age from 60 to
65, to encourage senior employees with extensive work experience

Akira Inokawa
Director and Executive Managing Officer
General Manager, Corporate Management Division

The Toho Titanium Group has envisioned a medium- to long-term growth strategy, setting goals for each division andimplementing various measures described in "Vision for 2030" and "FY2023-2025 Medium-term Management Plan"
formulated in May 2023. In order to achieve these medium- to long-term management goals, securing and developing
human resources is a major key for all departments. Recognizing that our human resources are the source of thecompetitiveness of our business, we have been proceeding with our initiatives on each theme toward "creating an
attractive workplace", which is one of our four materialities (important issues). The themes are: "Improving Industrial
Health and Safety in the Workplace", "Diversity & Inclusion", "Creating a Comfortable Work Environment", and "Human
Resource Development".
Moreover, in order to achieve sustainable growth, we are continually working to improve employee engagement.
We have conducted an "Employee Satisfaction Survey" once a year since FY2022, with the aim of investigating andunderstanding what employees think about company management, their current work, the work environment, andother areas. By repeatedly performing identification of issues and implementing countermeasures through regularmonitoring, we aim to make effective improvements and foster a culture of continuing to take on challenges without
being bound by preconceived notions.
On the other hand, we will promote productivity improvements by reducing labor through automation andmechanization at manufacturing sites. The long-term goal of "Vision for 2030" is to improve labor productivity by 30%.
We will accelerate the creation of innovation by improving the work environment and creating time for employees totake on more creative tasks. We will actively promote the development of DX human resources and aim to raise thelevel of DX literacy throughout the company.
As competition to acquire talent continues to intensify, we will focus on improving our work environment andhuman resource development system so that our employees can find their work attractive and rewarding. We hope tosecure excellent human resources and support the expansion of human capital by proactively appealing to people whoare interested in working for our Group.

Improving Occupational Health and Safety in the Workplaceand specialized knowledge to continue working with high motivation
physical strength of our senior employees than ever before, andcreate an environment where they can continue working for a longtime with peace of mind.

Employment of People with Disabilities
Our company is working on recruitment activities and improving
the work environment, targeting to achieve the nationally mandated
legal employment rate of 2.3% with a view to responding to future
increases in the legal employment rate.

Creating a supportive work environment
We have introduced a system that allows each employee to flexibly

to maintain good labor-management relations through dialoguechoose a wide range of work styles according to their individual life

between labor and management based on the labor agreement.

experiences and the stage of life they are in. A Parental / Nursing
Care Leave System is also in place to help employees balance workand family life, as well as a Flex-Time System and an Accumulated

Training is provided to employees and managers for early detection andDevelopment and Operation of Various Systems

prevention of mental health problems. In addition, we have established

SystemLimited-Area
Employee
Reemployment
System
Accumulated
Annual Leave(holidays)
Dormitories andCompany Housing(including rentals)
Recreation
Subsidies
Refreshment
Bonus

Key Features
Work location can be restricted within a specified area.
Reemployment is made available within a specified periodof time in the event of unavoidable discontinuation due tochildcare, nursing care, spouse's transfer, etc.
Annual paid leave days which ordinarily lapse and are ineligible
for carryover can be accumulated separately
Enables moving in with low out-of-pocket expenses (subject tooccupancy conditions)
Provides semi-annual recreation subsidies to employees andothers to promote fellowship in the workplace
Refreshment Bonus for employees completing 10 years and20 years of service

Consultation with Labor Unions

We implement a variety of measures to maintain and improve the

The Group has a stable labor-management relationship with theand achieve zero work-related accidents.

health of our employees, such as providing various types of health

JAM Toho Titanium Labor Union, and through dialogue about once

maintenance support and regular physical fitness tests.

a month, we negotiate and discuss various management topics andI N T E G R AT E D R E P O R T 2 0 2 3

a mental and physical health consultation service, provide guidance on
improving lifestyle habits, and focus effort on information dissemination
and awareness-raising activities through various in-house media.

Better treatment
As a result of negotiations with the labor union, the following systems
were mainly revised. In the FY2023 spring offensive, we raised
the base salary and increased allowances to improve employee
satisfaction and strengthen recruitment competitiveness.
SystemMaternity nursing
leaveUnaccompanied
assignment

in a variety of activities to ensure a comfortable working environment

39

Mental Healthcare

Annual Leave system in case of illness, etc.

good health at all times and work to the best of their abilities.

We also believe that it is an important matter in management

Although overcoming the languageDavidbarrier is very challenging, I am very
Lechevaliergrateful to have been accepted by
Chief Engineer, Technology
my colleagues just the way I am.
Strategy Department,
Moving forward, I would like to makeTechnology Strategy
recommendations on areas that
Headquarters
need improvement from a diversity
perspective, such as information
on organizational rules that is unique to Japan. I valuecommunication by carefully conveying messages and receiving
them well. I will be exploring the practical application of newtechnologies while increasing the capabilities of my team bycollaborating with internal engineers and external partners.

beyond the age of 60. We will pay more attention to the health andBased on our basic policy of prioritizing safety, our group is engaged

to create an environment in which all employees can maintain

Enhancing our abilities as a teamusing diversity as our strength

employee working conditions based on mutual trust. We will continue

Relocation allowance
Dormitory /company housing
Accumulated Annual
Leave (holidays)

I N T E G R AT E D R E P O R T 2 0 2 3

Revision Details
Increase in number of days, relaxation of conditions forapplication
Increase in the amount of allowance for unaccompanied
assignment and transportation expenses for returning
home
Increase in relocation allowance
Relaxation of conditions for dormitory entry and double
loans
Relaxation of conditions for application

40

G

Appealing workplace

Human Resource Development

inculcate the abilities and knowledge required for each position,
as well as a short-term study-abroad program and selective

New Employee
Training

are available to improve the skills of each and every employee.

New
Employees

education to foster global and innovative human resources fromthe earliest stages. In addition, various self-development programs

New Employee
Training

Selective education

Selective education

Business Task
Presentation Meeting
Graduate Employee
Mentoring System

New Career Plan

Proposal presentation meeting

Mental healthcare

Selective education

Strengthening Corporate Governance
Correspondence Education System

plans. At the same time, we have introduced group education to

Proposal presentation meeting

Training to promote active participation by women

employees and creating custom-made guidance and training

New Employee
Training

Selective education

Online English conversation

human resources development by assigning instructors to new

Junior /Mid-ranking

knowledge and foster awareness, we are engaged in systematic

New Employee
Training

Proposal presentation meeting

TOEIC Examination

In addition to on-site skills training to pass on and acquire
advanced technical skills, and individual theme training to acquire

New Employee
Training

Short-term study abroadbase to support our medium- to long-term business strategies.

Next-generation human resource development

development plan to strengthen and establish a human resource

Management
Employee
Development
Training Plan

our competitiveness. We have formulated a human resource

Solidifying our management foundation
Medium- to Long-term Human Resource Development Plan(excerpt)
Management
Positions

Our Group believes that human resources are the source of

OVERNANCE

Basic Thinking
Based on our Corporate Philosophy, the Company strives to enhance corporate governance in accordance with the following basic policies inorder to achieve sustainable corporate growth and increase medium- to long-term corporate value, and to ensure transparent, fair, timely, andaccurate decision-making and appropriate business execution in light of our business characteristics and the surrounding environment.
1	We will respect the rights of shareholders, ensure the substantial equality of shareholders, and strive to create an environment for the appropriate
exercise of rights.
2 We strive to cooperate appropriately with all stakeholders.
3	In addition to disclosure in accordance with laws and regulations, we work proactively to provide information beyond that required by law in efforts toensure transparency.

High-school
Graduate Employee
Mentoring System

4 The Board of Directors and the Auditing Committee members will:
i Clearly articulate the major direction of corporate strategy, etc.
ii Create an environment that supports appropriate risk-taking by senior managementiii Effectively supervise management (including Executive Officers) and Directors
etc. We will strive to appropriately fulfill our respective roles and responsibilities.

We also carry out 360-degree evaluations in managerial
positions with the objective that the person being evaluatedbecomes aware of the gap between their own perceptions and5	We strive to engage in constructive dialogue with shareholders to contribute to sustainable growth and medium- to long-term enhancement ofcorporate value.

of those around them, which leads them to change their behavior
and improve their management skills.

Corporate Governance Structure (as of June 20, 2023)

TOPIC

General Meeting of Shareholders

Supporting the career advancement of younger employees while improving
my own expertise

Board of Directors (Chairperson: President and Representative Director)

Manager,Internal Audit Department

Reporting
Supervisory
Committee for
Conflicts ofInterest among
Group Companies

When I just became a manager at my previous job, there weren't many female managers, and I remember
working 24 hours straight, within and outside working hours, just to be physically "on par" with men. But working forthis company, I feel that I can enjoy a good work-life balance. Also, I have never felt excluded due to gender and otherforms of discrimination. I feel that there is a good openness in the workplace that respects experience and knowledge.

Findings(report)Personnel andCompensation
Advisory
Committee

Monitoringand supervision

Directors who are not Audit and Supervisory Committee Members: 6 (including 2 outside)
Directors who are Audit and Supervisory Committee members: 3 (including 2 outside)

In 2021, I joined our company's Audit Department as a mid-career employee. I gained experience in secretarial
work in my 20s, learned from management how important it was to understand the mechanics of numbers, andtransitioned to an Accounting position. While gaining practical experience, I obtained the qualification of a US
Certified Public Accountant. Since then, I have been engaged in internal control and audit work for over 10 years.
Internal audits are carried out voluntarily by each company in accordance with the "International Standards for theProfessional Practice of Internal Auditing", so as a professional, I strive to brush up on my knowledge every days.

S i n ob u
Ka wa n oAppointment and dismissal

Appointment and dismissal

ReportingExecutive Committee

Judgment

Personnel and Compensation Advisory Committee

or whether they are new graduates or in their mid-careers. We areOver the past 5 years, the percentage was 22.4%.

The Committee consists of all Independent Outside Directors, as wellas the Representative Director and other Directors appointed by the
Representative Director, and is chaired by the President. The Personnel
and Compensation Advisory Committee meets at least once a year
to discuss and report to the Board of Directors on matters related topersonnel and remuneration of Directors and senior management, as wellas to evaluate the effectiveness of the Board of Directors.

job seeker's field of expertise and future career vision, we are able

FY2018to prevent early post-recruitment job turnover that can result from ill-

FY2019FY2020

FY2021

FY2022For fiveyears

matched assignments. In addition, our 5-year retention rate for new

Male

7

5

10

9

14

45

university graduates is 96%.

Female

1

3

3

2

4

13

12.5%

37.5%

23.1%

18.2%

22.2%

22.4%

8

8

13

11

18

58

In accordance with the Law Concerning the Promotion of Active
Participation by Women in the Workplace, we have set a target of

41

Female ratio
Total

I N T E G R AT E D R E P O R T 2 0 2 3

Audit

Audit
Internal
audit

Audit Department(Internal Audit Department)

LinkageIn order to clarify the structure of responsibility in the management
organization and to speed the execution of business operations, we haveintroduced an Executive Committee system under which certain businessexecution authority is delegated to Executive Committee members.
The Executive Committee consists of the President and Representative
Director (President), Executive Officers and Full-time Auditing Committee
members, and other persons appointed by the President.
Regular Executive Committee meetings are held several times
a month, or as needed, at which the President instructs Executive
Committee members and communicates policies and resolutions of
the Board of Directors. Executive Committee members report to the
President on the status of business execution.

number of female employees and quickly develop female managers.

and research institutes. By providing work experience based on the

Linkage

Executive Committee

hiring 20% or more female employees in order to steadily increase the

Number of Employees Hired in the Past 5 Years(new graduates and careers)

Accounting Auditor

The Board of Directors deliberates and decides on growth strategies,
management plans and other corporate strategies to ensure the Company's
sustainable growth and increase its corporate value over the medium to longterm. To monitor and control risk-taking, we have 4 Outside Directors (all 4of whom are Independent Directors) in the 9-member Board of Directors.
Each of them monitors the operation of Directors from a professional,
independent, and objective standpoint. We maintain a system to ensure thatinternal controls and risk management are fully functional.

who can play an active role globally, regardless of gender, nationality,

the-job trainings and observations of actual equipment at factories

Linkage

Board of Directors

At Toho Titanium, we are striving to secure talented human resources

particularly focusing on expanding internships that mainly include on-

Directors who are Audit and Supervisory
Committee members: 3(including 2 outside)(Chairperson: President and Representative Director)

Executive Officer

Approach to Recruitment

Audit and Supervisory Committee

Deliberative decision[Business execution]

We are currently in a transition period within the company, as we are setting up a system that allows for various
ways of working and building career plans. In order to advance in your career, I believe it is important to create yourown "image of a manager" by getting in touch with the experiences and ideas of your predecessors, and discussing
your concerns through continuous education for managerial candidates and opportunities to interact with managers
from other departments. Moving forward, I would like to actively support young colleagues so that I can somehow
give something back for the support I have received from so many people.

Audit

Group Company Supervisory Committee
for Conflicts of Interest
Regarding important transactions between the parent company groupand our Group, deliberations and considerations are held once a year,
and as necessary, from the perspective of protecting the interests ofminority shareholders. The members of this committee are independent
outside directors, and a summary of deliberations and results is reported
to the Board of Directors.

Audit and Supervisory Committee
2 of the 3 Audit and Supervisory Committee members are Independent
Outside Directors, who fulfill their responsibilities through monitoring andverification from an independent and objective standpoint. Audit andSupervisory Committee members include qualified accountants, who
use their high level of expertise to conduct operational and accounting
audits and provide active and appropriate opinions at Board of Directors
meetings. Full-time Audit and Supervisory Committee members attend
important meetings and have access to all information regarding internal
proposals and reports. Audit and Supervisory Committee also conduct
audits in full cooperation with the Accounting Auditor and the Internal
Audit Department.

I N T E G R AT E D R E P O R T 2 0 2 342

GOVERNANCE

Messages from the Outside Directors

Our Group commitment to quality improvement
Initiatives to improve customer satisfaction

Focusing on risk management that
supports the achievement of
our ambitious goals

Supporting the development ofmanagement capital to grow into acomprehensive materials manufacturer

I believe that the role of outside directors is to monitor
business execution from an independent, external perspective,
and to provide useful advice and recommendations byleveraging their expertise. I am a lawyer by profession, so as adirector, I pay the most attention to legal compliance. Modern
corporate management requires aggressive management, but
having solid safeguards in place makes it possible to carry out
proactive execution of business. Therefore, I believe that myrole is to solidify our safeguards so that we can manage ourbusiness aggressively.

I have been using my long experience in business operationsin the metal industry to make recommendations for setting
goals for each division and for optimizing the company's overallbusiness portfolio. I am also conscious of my active commitment
to creating a structure for more advanced business operations,such as building management systems that include investment
risk management and finance and accounting.

In "Vision for 2030", we aim to significantly improvesales and profit margins by promoting ESG management,
increasing production capacity in growth areas, and creating
new business areas and technologies. In working towards
these ambitious goals, I will utilize
my knowledge and experience as alawyer in this area to further enhanceand strengthen our risk management
system and contribute to thesustainable growth of our company
and the improvement of its corporate
value.

Yasuhiko Ikubo
Director

Our company has grown and expanded based on titanium,
and expanded our business into the fields of chemicals
and catalysts. Going forward, we are planning to become acomprehensive material manufacturer with four pillars, that
include New Business. As we aim to diversify our business,
I believe it is important to review our portfolio, as well as theportfolio of our affiliates, and share long-term goals and issues.
I think this should be an ongoing
discussion. On the other hand, thepromotion of business diversification
for the future seems attractive
to employees, and I feel that it isbearing fruit in a corporate culturethat is increasingly becoming open.
I hope to deepen my understanding
through regular on-site visits andcommunication with executives,
as well as make more effective
recommendations for developing
Kimiharu Okura
the next generation of management
Director
personnel.

At the Toho Titanium Group, we work hard to provide products and services that place the highest priority on quality so that we can continue
earning the trust of our customers. We aim to improve customer satisfaction by accurately identifying customer needs and continuously
realizing product and process improvements. We also conduct environmental impact assessments considering the entire product lifecycle,
including products under development, and when design specifications are changed, we evaluate whether or not any changes in environmental
impact will result.

The Toho Titanium Group Fundamental Quality Policy
We recognize that we have a mission with respect to society, which is to continue providing superior products and services.
We act in accordance with this Fundamental Quality Policy to help realize a sustainable society.
1. Compliance	We will ensure compliance with legal requirements and act with high ethical standards.
2. Meeting customer expectations	We will not only correctly identify customer needs and provide accurate information on quality, but also
provide products and services that are trusted and satisfactory.
3. Continuous improvement	We will promote continuous improvement of quality and service through our quality management system.
4. Human resource development	In our efforts to develop human resources, we will foster a keen awareness and sense of responsibility for
quality and service, developing personnel who take the initiative in pursuit of quality.
5. Concern for safety and environment,
and providing information

 e will create products that reflect our concern for safety and environmental compatibility, and we willW
provide the appropriate information.

Quality Control Initiatives
We have acquired ISO 9001 certification, an international standard for quality management systems, and have established a world-class quality
management system that is appropriate for a global company supplying products that customers can use with confidence. In particular, wehave obtained certification under JIS Q 9100, one of the international standards for quality control systems, for our titanium sponge and titanium
ingots, enabling us to promise stable quality that meets the high quality control requirements of the aerospace industry and other industries.

Supporting the evolution of
ESG management through monitoring
via dialogue

Deepening discussions on governancethat supports management reform andcreation from multiple perspectives

Our company aims to create cutting-edge materials andtechnologies and become a highly profitable company that is
flexible to environmental changes. From an ESG perspective,
we are promoting ESG management that strives to resolve
important issues through our business activities. I recognizethat our ultimate goal is not only to increase corporate value,
but also to contribute to building a highly recycling-oriented
society and realizing the sustainability of society as a whole byleveraging our strength of having an abundance of enterprisingtechnical experts.

It is essential to establish appropriate corporate governance,
including appropriate risk management, in order to promotemanagement based on our company's policy of practicing
innovation and creation. So I will keep an eye on risk
management, including financial management, while supporting
our efforts to expand growth that is in line with our management
policy, leveraging my experience in strategy formulation andexecution, both domestically and internationally. I will also pay
close attention to ensuring a compliance system that monitors
and prevents events that could damage corporate value or theprivileges of minority shareholders.

As an outside director, I recognize that my importantrole is to oversee progress towards this goal and provide
effective recommendations, such as sustainability disclosures.
Also, as risks are identified andmeasures are taken in each businessdivision, I would like to contributeto the continual strengtheningof the monitoring function of theBoard of Directors. As an Audit andSupervisory Committee Member, I willcontinue to focus on strengthening
corporate governance by leveraging
the knowledge I have acquired overmy many years as a certified public
accountant. I will also continue toengage in dialogue not only with
Shigeko Senzaki
management but also with on-site
Director,
managers.
Audit and Supervisory
Committee Member

43

As the social demands increase for management toemphasize ESG, companies are expected to create a virtuous
cycle in which they contribute tosolving social issues through theirbusiness activities, which in turnleads to increased corporate value.
In order to achieve this, I believe thatboard members need to be willing toprovide advice and point out problems
regarding future business strategies,
human resource development, anddiversity, based on objectivity andbroad experience and knowledge. I will
monitor whether a momentum within
the company that is conscious of
Naoki Harada
ESG is being built and taking root
Director,by conducting on-site inspections.
Audit and Supervisory

I N T E G R AT E D R E P O R T 2 0 2 3ISO 9001 Certification
Starting with ISO 9002 certification of our Catalyst Division in 1996,

Business sites certified under ISO 9001:2015

we achieved ISO 9002 certification for all titanium divisions in 1998,

Headquarters, Chigasaki Plant,
Hitachi Plant, Yahata Plant,

and by 2001, we had expanded certification to ISO 9001 for our
main titanium and electrical materials products, with certification for

Wakamatsu Plant, and Kurobe Plant

Scope of Certification

the scope of registration shown on the right.
We will continue to expand our quality management system,
promote certification, and strive to further build trust and increasesatisfaction among our customers.

Design, development and manufacture, as well as liquification under contractof titanium tetrachloride, titanium sponge, high-purity titanium (sponge,
ingot and billet), titanium ingot, high-purity titanium dioxide, propylene
polymerization catalyst, ultra-fine nickel powder, magnesium chloride,titanium trichloride solution, and titanium tetrachloride solution.

Implementation of a quality management system for the aerospace industry
We received JIS Q 9100 certification one of the quality system

Business sites that have obtained JIS Q 9100:2016 certification

standards for aerospace applications for titanium sponge in 2003,

Headquarters, Chigasaki Plant,

and in 2010, we expanded the scope of certification to include

Yahata Plant, and Wakamatsu Plant

titanium ingots. We will continue our efforts to provide better quality
and service.

Scope of Certification
Manufacture of titanium sponge and titanium ingot

Committee Member

I N T E G R AT E D R E P O R T 2 0 2 3

44

D ATAKey Consolidated Financial Summary (11 years)
FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

Net sales

40,08130,43033,702

43,424

31,212

37,256

43,64845,50936,15955,51580,351

Cost of goods sold33,232

29,916

31,666

34,762

22,54827,80732,62835,33827,36441,75559,027

Selling, general and administrative expenses

6,047

5,220

4,674

4,771

4,937

5,518

5,746

6,102

5,660

8,531

10,629Operating profit

801(4,706)(2,638)

3,891

3,726

3,930

5,274

4,068

3,135

5,228

10,693

Ordinary profit

485(5,157)(2,595)

3,541

3,874

3,493

5,269

3,716

(417)

5,177

10,532Current net profit (-loss)(2,151)(5,498)(2,633)

4,233

3,367

3,394

6,499

2,366

(3,156)

3,699

7,505

EBITDA (operating profit + depreciation costs)

7,849

2,153

4,004

10,009

9,275

9,000

10,251

9,333

8,639

11,283

17,500R&D Costs

1,509

1,222

1,254

1,266

1,402

1,567

1,527

1,683

1,729

1,976

2,265

Capital expenditure

2,466

5,267

981

851

1,069

4,062

4,190

4,644

8,441

10,584

6,496

Depreciation expense

7,048

6,859

6,642

6,118

5,549

5,070

4,977

5,265

5,504

6,055

6,807

Net assets (at end of period)

39,732

34,62032,20736,19239,15642,03747,73048,26244,45947,16653,281

Total assets (end of year)

101,900

95,752

88,49783,03383,43983,94587,645

87,11891,14998,095

111,429

Interest-bearing debt (end of year)

54,431

57,117

51,11341,49938,13935,872

32,79831,67639,36740,42844,596

Operating results, etc. (Unit: ¥1 million)

Financial position (Unit: ¥1 million)

Cash flow (Unit: ¥1 million)
Cash flow from business activity

1,093

4,392

7,307

12,945

5,889

6,394

8,316

7,953

1,402

9,790

5,294

Cash flow from investment activity(4,158)(5,421)(1,100)(3,954)(1,443)(4,048)(4,114)(4,482)(8,390)(10,433)(6,765)

Cash flow from financial activity

3,002

1,758

(6,406)(10,088)(4,018)(2,785)(3,787)(2,405)

6,835

206

2,732

Cash and cash equivalent year-end balance

1,531

2,528

2,368

1,226

1,620

1,184

1,600

2,641

2,534

2,128

3,416

Net assets per share

556.8

484.7

450.9

506.8

548.4

588.9

668.8

676.2

622.8

660.8

746.7

Current net profit (-loss) per share(30.9)(77.3)(37.0)

59.5

47.3

47.7

91.3

33.2

(44.4)

51.9

105.4

3.0

-

-

5.0

7.0

10.0

12.0

12.0

12.0

15.0

30.0

Cost to sales ratio (%)

82.9

98.3

94.0

80.1

72.2

74.6

74.8

77.7

75.7

75.2

73.5

Selling, general and administrative expense ratio (%)

15.1

17.2

13.9

11.0

15.8

14.8

13.2

13.4

15.7

24.8

13.2

Net income-to-equity ratio (share capital) (%)

38.9

36.0

36.3

43.4

46.8

49.9

54.3

55.2

48.6

47.9

47.7

Operating return on assets (ROA) (%)

0.8

(4.8)

(2.9)

4.5

4.5

4.7

6.1

4.7

3.5

5.5

10.2

Ordinary return on assets (ROA) (%)

0.5

(5.2)

(2.8)

4.1

4.7

4.2

6.1

4.3

(0.5)

5.5

10.1

Net return on equity (ROE) (%)(6.4)(14.8)

(7.9)

12.4

9.0

8.4

14.5

4.9

(6.8)

8.1

15.0

D/E Ratio (times)

1.4

1.7

1.6

1.2

1.0

0.9

0.7

0.7

0.9

0.9

0.8

-

-

-

8.3

14.6

18.2

14.6

26.9

-

28.1

27.6

Operating profit to net sales ratio (%)

2.0(15.5)

(7.8)

9.0

11.9

10.5

12.1

8.9

8.7

9.4

13.3

Ordinary profit to net sales ratio (%)

1.2(16.9)

(7.7)

8.2

12.4

9.4

12.1

8.2

(1.2)

9.3

13.1

Per-share information (¥)

Dividend per share
Financial indicators

Dividend payout ratio (%)

Key Consolidated Non-Financial Summary (5 years)
FY2018Environment
Water emissions (1,000m3)
Atmospheric emissions

FY2020

FY2021

FY2022Society (human resources related)

FY2019FY2020

FY2021

FY2022
1,127

1,379

1,348

1,304

1,429

1,550

Number of employees at end of term

859

907

956

981

0.12310.07580.07210.07280.0503

Ratio of employees with disabilities (%)

2.2

2.3

1.9

1.9

2.3

NOx emissions (t)2.57222.18711.89692.41511.9953

Ratio of females to all employees (%)

5.5

6.2

6.8

7.2

7.2

23,203

21,115

21,77225,02528,290

Permanent employee turnover rate (%)

3.4

2.1

2.5

3.0

3.7

4.5

4.6

3.7

4.3

4.8

-

-

11.0

11.4

15.1

Waste emissions (t)Scope 1 (Unit: 1,000t CO2)

33

34

29

32

26

Scope 2 (Unit: 1,000t CO2)

224

191

153

182

182

Total of Scope 1 and 2 (Unit: 1,000t CO2)

257

225

182

214

208

*Items without notes comprise TOHO TITANIUM CO., LTD. and 1 domestic consolidated subsidiary.
*1 Scope of data: Toho Titanium Co. and its 4 subsidiaries in Japan and overseas*2 Reporting period: FY2022 (Japan: April 1, 2022 to March 31, 2023; overseas: January 1 to December 31, 2022)

Average annual training time per employee (hours)

Governance
Number of Directors

9

9

9

9

7

Number/ratio of Outside Directors(persons/%)

3/33

3/33

3/33

3/33

2/29

Number/ratio of female Directors(persons/%)

0/0

0/0

0/0

0/0

0/0

3

3

3

3

3

Number/ratio of Outside Audit and Supervisor Committee members (persons/%)

2/67

2/67

2/67

2/67

2/67

Number/ratio of female Audit and Supervisor Committee members (persons/%)

0/0

1/33

1/33

1/33

1/33

Number of Audit and Supervisor Committee members

45

FY2018SOx emissions (t)Total energy consumption (PJ)*1, *2CO2 emissions*1, *2

FY2019I N T E G R AT E D R E P O R T 2 0 2 3

I N T E G R AT E D R E P O R T 2 0 2 3

46

Corporate Information as of March 31, 2023
Company Overview

Stock Information

Company Name TOHO TITANIUM CO., LTD.

Basic Stock Information

Headquarters
Location

JR Yokohama Tower 22nd Floor, 1-1-1 Minamisaiwai,
Nishi-ku, Yokohama, Kanagawa 220-0005, Japan+81 45-394-5522 (General Affairs and Personnel
Department)

Number of Shares Per Unit

100 shares

Total Shares Authorized for Issuance

160,000,000 shares

Shares Outstanding

71,270,910 shares

Established

August 20, 1953

Number of Shareholders

26,431

Capital¥11.963 billion

Fiscal Year Closing Date

March 31

Business
Activities

Manufacture and sales of titanium
Manufacture and sales of catalyst for polyolefin production
Manufacture and sales of electronic component materials

Ordinary General Meeting of Shareholders June

Number of
Employees

1,127 (consolidated)

Business
Sites in Japan

Headquarters (Yokohama City, Kanagawa Prefecture)
Chigasaki Plant (Chigasaki City, Kanagawa Prefecture)
Wakamatsu Plant (Kitakyushu City, Fukuoka Prefecture)
Yahata Plant (Kitakyushu City, Fukuoka Prefecture)
Kurobe Plant (Kurobe City, Toyama Prefecture)
Hitachi Plant (Hitachi City, Ibaraki Prefecture)

Consolidated
Subsidiaries

2 domestic companies: Toho Technical Service Co., Ltd.
Toho Material Co., Ltd.
2 overseas companies:	Toho Titanium America Co., Ltd.
(US)	Toho Titanium Europe Co., Ltd.
(UK)

Stock Exchange The Prime market of the Tokyo Stock Exchange
Listing(Securities Code: 5727)

Group Companies and Affiliates:
Toho Technical Service Co., Ltd.
Office Address
3-3-5 Chigasaki, Chigasaki, Kanagawa 253-0041
Principal Business	Manufacture and sales of welded, machined or forged titanium
products, insoluble electrodes, titanium-based powders(titanium powder, titanium hydride powder, 64 alloy powder),and sales of various titanium materials and zirconium sponge
URL
https://www.tohotec.co.jp/english/

Accounting Auditor

Ernst & Young ShinNihon LLC

Major Shareholders
Numberof Shares(Unit: 1,000
shares)Shareholding
Ratio

JX Nippon Mining & Metals Corporation

35,85950.38%The Master Trust Bank of Japan (Trust Account)

4,289

6.03%

Nippon Steel Corporation

3,500

4.92%

Custody Bank of Japan (Trust Account)

1,349

1.90%

HAYAT (Standing Representative: Settlements Division,
Mitsubishi UFJ Bank, Ltd.)

Shareholder Name

1,185

1.67%

Nomura Securities Co., Ltd. Self-transfer Account

900

1.26%

SICAV COVEA ACTIONS MONDE (Standing Representative:
Custody Department, Tokyo Branch, Hong Kong andShanghai Banking Corporation)

527

0.74%

Nomura Securities Co., Ltd.

511

0.72%

STATE STREET BANK WEST CLIENT- TREATY 505234(Standing Representative: Settlement Sales Department,
Mizuho Bank, Ltd.)

453

0.64%

STATE STREET BANK AND TRUST COMPANY FOR STATESTREET BANK INTERNATIONAL GMBH, LUXEMBOURG
BRANCH ON BEHALF OF ITS CLIENTS: CLIENT OMNIOM25 (Standing Representative: Custody Department, Tokyo
Branch, Hong Kong and Shanghai Banking Corporation)

426

0.60%

(Note) O
 f the number of shares held above, the number of shares related tofiduciary work is as follows.
Master Trust Bank of Japan, Ltd. (trust account) 4,289,000 shares
Japan Custody Bank, Ltd. (trust account) 1,349,000 shares

Shareholder Composition
Individuals /othersToho Material Co., Ltd.
Office Address692-1 Tokiguchi, Tokitsu-cho, Toki-shi, Gifu 509-5122
Principal Business	Manufacture and sales of automotive disc brake pad materials
such as potassium titanate and other titanic acid compounds
URL
https://www.toho-titanium.co.jp/pdf/company/tohomaterial.pdf

Other
corporate
entities

20.7%

8.9%

56.7%

Toho Titanium America Co., Ltd. (US)Foreign corporate
entities, etc.

Principal Business	Sales and market research of titanium and catalyst for polyolefin
production, etc.

8.9%
Securities companies

Toho Titanium Europe Co., Ltd. (UK)

4.8%

Principal Business	Sales and market research of titanium and catalyst for polyolefin
production, etc.

TOHO WORLD Corporation
Office Address	11-2 Otemachi, Kokurakita-ku, Kitakyushu-shi, Fukuoka 8030814
Principal Business	Solutions in the field of technology and skills, dispatch ofengineers and technicians, contract manufacturing, contract
equipment maintenance, and handing down technology andskillsURL
https://towor.co.jp/

Advanced Metal Industries Cluster andToho Titanium Metal Company Limited
Office Address

Yanbu, Kingdom of Saudi Arabia

Principal Business Manufacture and sales of titanium sponge

WEBTi is a registered trademark of Toho Titanium Co., Ltd.

Financial
institutions

Information Disclosure and Promotion of Dialogue with
Shareholders and Investors
The Toho Titanium Group discloses necessary information to shareholders,investors and other stakeholders in a timely, appropriate, and proactive manner,
while giving due consideration to fair disclosure. We are moving forward withinitiatives to enhance corporate value and sustainable growth based on the
feedback and other information we receive in these efforts.
Target readershipcontent

Analysts and domestic/
foreign institutional
investors

Briefings on financial results attended by the
President twice a year (interim and year-end)
Online conference calls and individual interviews by
the IR Department

Individual shareholders
and Investors

Delivery of business reports (interim and yearend), annual shareholders' meetings, responses totelephone inquiries, etc.

Posting of IR materials
on website

Financial results briefing materials, quarterly financial
results information and other news materials areposted in the "IR Library" section of the Company's
website.