2015
ANNUALThe Sumitomo Business Spirit

SMM Group Corporate Philosophy

Article 1• Sumitomo Metal Mining Co., Ltd.
(SMM), in accordance with theSumitomo Business Spirit, shall,through the performance of soundcorporate activities and the promotionof sustainable co-existence with theglobal environment, seek to makepositive contributions to society and to
fulﬁll its responsibilities to its
stakeholders, in order to win evergreater trust.

Sumitomo shall achievestrength and prosperity byplacing prime importance on
integrity and soundmanagement in the conductof its business.

Article 2

Sumitomo shall manage its
activities with foresight andﬂexibility in order to cope
eﬀectively with the changing
times.
Under no circumstances,
however, shall it pursue easy
gains or act imprudently.

“Business Principles” forming the Rules Governing the Houseof Sumitomo (version formulated in 1928)• SMM shall, based on respect for all
individuals and recognizing each
person’s dignity and value, seek to be a
forward-minded and vibrant company.
SMM Group Management Vision• By developing and employing innovativetechnology, we shall fulﬁll our social
responsibilities as a manufacturing
enterprise.
• Based on the principles of compliance,
environmental protection andoperational safety, the Sumitomo Metal
Mining Group shall pursue maximum
corporate value through the provision,
via its global network, of high-quality
materials such as non-ferrous metals
and electronics and advanced materials.

C O N T E N T S

02 Financial Summary
04 A World Leader in the Non-

Ferrous Metals Industry &an Excellent Company of Japan

06 Message from the President
10 Business Proﬁle12 Review of Operations
18 Business Network
20 Corporate Governance23 Corporate Social Responsibility
24 Directors and Audit &Supervisory Board Members

25 Financial Section
70 Glossary
72 Consolidated Subsidiaries andEquity-Method Aﬃliates

75 Corporate Data and Investor
Information

Specialized terms:
Specialized terms are covered in the Glossary
on pages 70 to 71.
Note regarding forward-looking statements:
The forward-looking statements in this annual
report, including business result forecasts, arebased on information available to the Company
and on certain assumptions deemed to bereasonable as of the date of release of thisreport. Actual business results may diﬀer
substantially due to a number of factors.
Unless speciﬁcally stated otherwise, information in this annual report is as of July 1, 2015.

01

Financial Summary
Fiscal year

2014

2013

2012

2011

2010

2009

2008

2007

Results for the year
(Millions of yen)
Net sales

921,334

830,546808,540

847,897864,077

725,827

793,797 1,132,372

Operating income

125,779

75,41895,78588,577

96,03866,265

10,534

155,394

Recurring proﬁt

174,226

114,352

115,034

108,829

123,701

87,791

32,572

217,866

Income (loss) before
income taxes andminority interests

123,261

111,006

122,455

87,962

123,394

82,776

22,942

216,504

Net income (loss)

91,11380,25886,64065,286

83,962

53,952

21,974

137,808

Financial position at
year-end (Millions of yen)
Total assets

1,740,246

1,572,367 1,351,153 1,146,759 1,052,353

981,458

880,001 1,091,716

1,158,945

1,019,053

844,547

726,039

684,103629,684

547,251

640,345

Long-term debt due
after one year

245,000

243,130

212,323

157,119

135,128

132,311

141,716

169,394

Interest-bearing debt

394,094

383,580

330,073

265,951

210,969

200,939

218,534

258,054

Net assets

Amounts per
share (Yen)

Operating Income

Recurring Proﬁt(¥ billions)(¥ billions)150(¥ billions)

1,000

800

120

160

600

90

120

400

60

80

200

30

40

0

2011

2012

2013

2014

165.11145.35155.58116.17149.38

96.26

38.87

238.13

Net assets

1,905.50

1,653.83

1,393.02

1,173.97

1,121.19

1,043.50

913.92

1,017.96

48.0

37.0

34.0

28.0

32.0

20.0

13.0

30.0

0

2011

200

2012

2013

(FY)

Total Assets /Equity Ratio

Net income

Cash dividends

Net Sales

Total assets(left scale)

2014

0

2011

2012

2013

(FY)

Net Assets

2014

(FY)

Net Income /Cash Dividends per Share

Equity ratio(right scale)

Net Income(left scale)

Cash Dividends per
Share (right scale)(¥ billions)(％)(¥ billions)

2,000

100

1,500

(¥ billions)

100

(Yen)

50

1,600

80

1,200

80

40

1,200

60

900

60

30

800

40

600

40

20

400

20

300

20

10

0

0

Key ratios (%)
ROA

5.50

5.49

6.94

5.94

8.26

5.80

2.23

13.64

ROE*

9.28

9.54

12.13

10.12

13.80

9.89

4.02

25.39

Equity ratio*

60.4

58.1

56.9

57.5

59.9

59.8

57.3

54.0

Interest-bearing debt
to total assets ratio

22.6

24.4

24.4

23.2

20.0

20.5

24.8

23.6

Debt-to-equity
ratio* (times)

0.37

0.42

0.43

0.40

0.33

0.34

0.43

0.44

* Shareholders’ equity is deﬁned as follows: Shareholders’ equity = Total shareholders’ equity + Accumulated other comprehensive income

0

2011

2012

2013

2014

(FY)

02

2011

2012

2013

2014

(FY)

0

2011

2012

2013

2014

0

(FY)

03

Long-Term Vision

A World Leader in the NonFerrous Metals Industry &an Excellent Company of Japan
Sumitomo Metal Mining Co., Ltd. (SMM) aims to become a World
Leader in the Non-Ferrous Metals Industry and an Excellent

Company of Japan by promoting a continuous growth strategy
while deploying advanced technical capabilities cultivated overa history of more than 400 years.

Become a World Leader

Long-Term Visionin the Non-Ferrous Metals
Industry and an Excellent
Company of Japan

FY2013-2015 12 3-Yr Business Plan
Strengthen global
competitiveness

FY2010-2012 09 3-Yr Business Plan

a
te
u
ec
Ex

Strengthen
platform for
global competition

FY2004-2009 03 & 06
3-Yr Business Plans

s
ou
u
n
i
nt
co

wt
o
r
g

h

g
ate
str

y

Long-Term Vision Targets
World Leader in the Non-Ferrous Metals Industry

CopperAnnual Production Interest

300 ktNickelAnnual Production Capacity

Production at Taganito began in 2013 and expanded
to full capacity in 2014, broadening our annual nickel
production structure to 100,000 tonnes. Our goal is
to further expand our capacity to 150,000 tonnes,
with a focus on development initiatives suitable forapplication of our HPAL technology.

SMM is pursuing investment in overseas mining projects. We
currently hold interests in copper mines located in the US, Chile,Peru, Australia, and other countries. We began commercial
production at the Sierra Gorda Mine in July 2015, and havemade great progress toward our target. Going forward, we willseek to participate in new development projects, expand
production at existing mines, and take other steps to raise ourannual copper production interest to 300,000 tonnes.

Gold

Annual Production Interest

30 t

New
Materials ¥SMM owns the Hishikari Mine, the only commerciallyoperated metal mine in Japan. We also operate the PogoGold Mine in Alaska, US. Using our accumulated expertisein mine operation, we are seeking to raise our annual gold
production interest to 30 tonnes.

Excellent Company of JapanNet sales■ 2012 3-Year Business Plan Strategies
Research and Development
Accelerate development of new products in material business● Technical innovation in mineral resources, smelting & reﬁning

04●

Promote process development

Maintain sound ﬁnancial constitution

Dividend Policy

●

●

●

Maintain ample liquidity to support large projects
Maintain minimum consolidated equity ratio of50%●

RecurringproﬁtContinue in line with business results
Investor return: Raise consolidated dividend
ratio from minimum 20% to minimum 25%

150 billion

Net
incomeFinancial Strategy■ Mineral Resources ■ Smelting & Reﬁning■ Materials ■ Other ■ Adjusted amount■ Total assets● Equity ratio(¥ billions)recurringproﬁt¥

100 billion■ Interest-bearing debt ■ Shareholders’ equity● Debt-to-equity ratio● ROE
Equity ratio: 61%(%)(trial calculation)

75

1,800

200

1,500

150

Debt-to-equity ratio:
50
0.35 (trial
calculation)

1,200
900

100

25

600

50
0
‐25

¥

5 billion

Through collaboration between the Materials
Division and the Research & Development Division,
we aim to accelerate new materials development andraise proﬁt.

Segment Proﬁt(¥ billions)●

Financial Strategy

1¥ trillion

150 kt

ROE: 12%(trial calculation)

300
0
2012

2013

2014

12 3-Yr (FY)Plan 2015

2010

2011

2012

2013

2014

12 3-Yr
Plan 2015

0

(FY)

05

Message from the President

In ﬁscal 2014 we recorded solid progressin all business segments, moving closer
to the target of our Long-Term Vision
incorporated into our 2012 3-YearBusiness Plan.
Fiscal 2014 in Retrospect
In ﬁscal 2014 SMM registered 174.2 billion yen
inconsolidated
recurring
proﬁt,
thethird-highest ﬁgure in the company’s history.
Although this achievement owes considerably
to changes in the external environment, mostnotably the yen’s depreciation during the year,
I believe our robust earnings this past year
were also attributable to solid contributions
from our many projects worldwide andsustained eﬀorts at our workplaces to reduce
costs and improve eﬃciency.
Looking ahead, in our external environment
we expect the weak yen to provide a favorable
tail wind; but, through the near term at least,
metal prices are unlikely to rise by signiﬁcantmargins. Against this backdrop, SMM willneed to further strengthen and maintain its
earning capacity.
SMM’s business centers on the developmentof mineral resources, and today the environ-ment surrounding these operations is becoming increasingly challenging. Speciﬁcally, inthe performance of operations in mineral
resources co-existence and co-prosperity withlocal communities and broader society are
becoming issues of greater importance thanever before.
The Sierra Gorda copper mine serves as aprime example. Operating the mine requires
water, but because the local river water cannot
be used for that purpose, it has been necessary
to bring seawater to the mine by pipeline, adistance of approximately 150 kilometers. This
arrangement not only necessitates a much
longer amount of time to develop the resourcesat the mine, but also involves considerablylarger development costs. As a result, risk
management pertaining to the project must
now be carried out more cautiously than everbefore.

Review of Fiscal 2014 and Business Strategies for Fiscal 2015
Mineral Resources

Yoshiaki Nakazato
President &Representative Director

06

A major topic of concern in the Mineral
Resources business is the increasing delay in the
Sierra Gorda Copper Mine development projectin Chile. A signiﬁcant challenge this year will beto get Phase I operations under way and begin
generating investment beneﬁts. This year we
will also take under advisement measuresnecessary for achieving Phase II of the project,when the mine’s output is to be expanded.

Elsewhere, the Morenci Copper Mine expansion project in Arizona, in which we have an
investment stake, has been making smooth
progress, and this year a substantial increase in
the mine’s production is anticipated. Meanwhile
the expansion project at the Cerro Verde Copper
Mine in Peru is also proceeding smoothly, andwe expect the increasing output from the mine
to continue contributing to our proﬁts.

07

Message from the President

Materials

Smelting & Reﬁning
In the Smelting & Reﬁning segment, in ﬁscal
2014 Taganito HPAL registered a smooth startand succeeded in producing 26,000 tonnes ofnickel, very close to its designed capacity of
30,000 tonnes per year. At the Harima
Smelter, production of nickel sulfate, a productmeeting robust demand growth for use inbattery materials, got under way for the ﬁrst
time in 2014, with output at the plant’s
capacity level.
In these ways, our two major projects in thissegment have both launched successfully,
enabling major contributions to our annual
earnings ‒ a situation I ﬁnd greatly reassuring.
With the commencement of operations at
Taganito HPAL and the Harima Smelter, in2014 we were able to achieve our initial target,a production system capable of producing
100,000 tonnes of nickel per year. Goingforward, we will continue to undertake various
feasibility studies, at the Pomalaa project inIndonesia and elsewhere, toward achieving thetarget hoisted in our Long-Term Vision: thecollective capacity to produce 150,000 tonnesof nickel per year.

After a temporary slump, business in Materials
segment recovered in ﬁscal 2014, with proﬁtreaching 12.9 billion yen. In terms ofstrengthening the segment’s earning capacity,
the challenge still lies ahead, however, and themeasures we are taking now will, I believe,
have great importance for the future of ourMaterials operations.
SMM’s strength rests in its ability to produce
nickel and other metals in its Smelting &Reﬁning segment, and what is demanded of us
will be to make optimal use of this supply
chain and provide stable supplies, at lower
cost, of the products in demand by ourcustomers.
Also, in order to forge a system forproducing new products that will next beneeded, we will proceed forward and build
strong relationships of trust with ourcustomers and create structures enabling us torespond to and apply the information we
receive from them.

Today’s investments targeting development ofmineral resources are larger than ever before,
which means that our risk burden too isincreasing. And while we always make every
eﬀort to reduce our investment risk, risk itself
never disappears. In order for SMM to respondto any situation that might conceivably arise, I
believe it will be vital for us to maintain afavorable equity ratio, our current policy
calling for a ﬁgure above 50%.
Japan today is focusing on ROE as a coreﬁnancial indicator, but in SMM’s case I believethat directly targeting ROE harbors inherentdiﬃculties. In my position as president I
naturally am aware of our shareholders’ focus
on ROE, and I see ROE as an importantmanagement target. But all around the world
projects involving mine development or

smelting
andreﬁningarebecoming
increasingly longer to carry out, and the spanfrom investment start to the commencement ofinvestment returns is normally about ﬁve
years. For a company like SMM, I believe thatthe nature of our business makes it very
diﬃcult to undertake such projects andsimultaneously carry out measures that aim atelevating our ROE during any given year.
Today we consider raising ROA a key
indicator of company management: increasing
ROA and increasing proﬁts. At the same time,
we will form our judgments giving fullconsideration to the ﬁnancial perspective also,
ultimately raising our ROE over the medium tolong range. I believe we have a responsibility
to thoroughly explain this management stanceto our investors.

Financial Policies

08

Strengthening Our Management BaseIn the performance of company managementtargeting our Long-Term Vision, we havesteadily strengthened our internal managementbase. In accordance with our Corporate
Governance Code of Japan, which indicatesthe advisability of appointing two or more
outside directors, at our General Meeting of
Shareholders this year we appointed one
additional outside director.

With the establishment of Corporate
Governance Code and Stewardship Code ofJapan, opportunities to exchange views with
our stakeholders are increasing. We lookforward to incorporating more and morevaluable
opinions
expressedby
ourstakeholders into our management policies inthe years ahead.

Message to Shareholders and Investors
In ﬁscal 2014 we distributed our largest
dividend to date: 48 yen per share per annum.
In our 2012 3-Year Business Plan we set ourdividend payout ratio at more than 25%, and inﬁscal 2015 we intend to pay a dividend inaccordance with that policy.
At SMM we believe that enhancing ourenterprise value is the best return we could
possibly oﬀer our investors. Going forward,
based on the Sumitomo Business Spirit passed
down through four centuries, we pledge tocontinue the steady advancement of our

growth strategies and to respond faithfully tothe trust and expectations of our shareholders
and investors.
August 2015

Yoshiaki Nakazato,
President & Representative Director

09Busi ness Prof i le
Under our long-term vision to be a World Leader
in the Non-Ferrous Metals Industry and an
Excellent Company of Japan, we are expanding
our scope of operations to the entire globe.

Development capabilities cultivatedover many years in Japan and overseas

Unsurpassed hydrometallurgicaland pyrometallurgical technology

SMM is pursuing an integrated business that ranges
from primary upstream processes, including
resources development, non-ferrous metal smelting
and reﬁning, and the development and production ofmaterials using the most advanced technologies, tothe development and sale of metal materials that are
indispensable for daily life.
SMM’s strengths include its Technology and R&D
Expertise, Capacity to Expand Business Globally, andSound Financial Position. SMM focuses its
management resources in three core business areas:
Mineral Resources, Smelting & Reﬁning, and Materials,
and is reinforcing its competitive capabilities.

Developing
and mining
resources

Extracting
metalsfrom ore
Supplying quality
metals to theMaterials business

Smelting & Reﬁning
Business

R&D Expertise

Stable raw materials
supply for the Smelting& Reﬁning business

Mineral Resources
Business

Technology andLeveraging our competitive advantage in metals to expand
our business to the environmental and energy ﬁeld

10

Materials
Business

Addingvalue tometals

SMM’s
Core
Advantages

Sound

Financial
Position

Capacity to Expand
Business Globally

Promoting Expanded Proﬁtability:
Shifting from Raw Material Procurement toResources Development and Mine Management
To adapt to the changes in our business environment, SMM isincreasing the supply of raw material to its Smelting & Reﬁning
business. In addition, we are aiming to increase revenues from ourmineral resources business. We will leverage our accumulated
technical expertise to promote prospecting activities and participate
in new development discussions, and will strive to acquire majority
production interests.

Cost-Eﬃcient Operations with World-Leading
Smelting and Reﬁning Technology
For nickel, we are using HPAL technology to produce intermediatesfrom low-grade ore in the Philippines. We then reﬁne theseintermediates into electrolytic nickel in Japan. SMM is Japan’s sole
producer of electrolytic nickel. We are also producing electrolytic
copper at the Toyo Smelter & Reﬁnery, which has world-classproduction capacity and cost competitiveness. Using its advanced
technology, SMM is generating further initiatives for cost-eﬃcient
operations with reduced environmental footprints.

Building a Deeper Relationship with Our Customers
In the 1960s, SMM leveraged its accumulated metals technology toenter the electronics materials business. Now we are promoting
advanced material development in the ﬁeld of environmental
preservation and energy conservation, particularly in the battery
material market for hybrid vehicles produced by major auto
manufacturers, and for electric vehicles, which have met withsigniﬁcant success in the US.

11

Review of Operations

Mineral Resources
Business

Review of Operations: Mineral Resources Business

Sumitomo’s Mineral Resources business got
under way in the mid-17th century. In 1691,
operations began at the Besshi Copper Mine, oneof the richest in the world at that time. The
expertise cultivated through those operations wasapplied to the Hishikari Mine, which opened in
1985. Today, SMM is engaged in exploration anddevelopment activities around the globe.

Copper Mine Project
Sierra Gorda Project
The Sierra Gorda Mine, a copper mine in the
Republic of Chile, has been developed byoperator KGHM Polska Miedź S.A. of Poland. In
2011, SMM acquired an interest and began
construction; the mine began producing its
ﬁrst copper and molybdenum ore in 2014, andsuccessfully commenced commercial production at the end of June 2015.
We are planning an output expansion projectas part of phase two at the Sierra Gorda Mine.
SMM is promoting this expansion project while
continuing to work to ensure stable production.

Fiscal 2014 Review

Segment
Proﬁt● Operations at Hishikari Mine proceeded on a stable basis,
producing 6.9 tonnes of gold.

36.3%● Production at the Pogo Gold Mine was stable, with output
similar to the previous ﬁscal year.
● Copper production at Morenci Mine was also stable.
Output fell at the Cerro Verde Mine mainly due to a
decline in the ore grade.

Location

Region 2 of the Republic of Chile

Start of
Production

2014

Minable Ore

Approx. 1.5 billion tonnes(sulﬁde ore only)

Mining andMilling Methods

Open-pit mining and conventional
ﬂotation methods

Metal Volume
Content

Copper: 6 million tonnes
Molybdenum: 300,000 tonnes

AverageAnnual
Production

Copper: 220,000 tonnes
Molybdenum: 11,000 tonnes

Mine Life

20 years or more

EquityInterests

SMM: 31.5%
KGHM: 55%
Sumitomo Corporation: 13.5%

Outlook● In copper, we are pursuing stable operations at the Sierra
Gorda Mine, and are working on expansion projects forcopper mines in which we already hold an interest.
● Elsewhere, we will also continue to promote exploration in
the vicinity of operating mines, as well as evaluate
possible participation in development projects, etc.

Gold ore (Hishikari Mine)Net Sales(¥ billions)

150
104.9

Capital Expenditure / Depreciation

Segment Proﬁt

113.9

113.8

75

(¥ billions)

100
66.11

(¥ millions)

30,00069.06

19,387

53.78

50

0

2012

2013

2014 (FY)

0

2012

2013

2014

(FY)

0

2012

8,782

2013

10,6152014 (FY)■■ Capital expenditure■■ Depreciation

12

SMM’s Metal Interests by Mine(¥ billions)

8

200

6.4

20,19315,0008,987
6,524

Exploration Costs

4.7(gold: t)

170

164

5.2
100

4

(Notes)•Hishikari Mine
Recoverable metal, JIS standard: 170 t

0

2015
(FY)
Planned■ New deposit exploration■ Exploration around existing mines
2013

2014

0

HishikariPogo(as of December 31, 2014)•Pogo Gold Mine
Reserve: 55 t
Resource: 108 t(Canadian standard)

13

Review of Operations

Smelting &Reﬁning Business

Review of Operations: Smelting & Refining Business

SMM smelts and reﬁnes raw materials procured
from a variety of sources, mainly from mines
where we have an interest, into such metals as
copper, nickel, and gold. SMM possesses
world-class smelting and reﬁning technology andhas forged a solid position within its industry. As
an example, SMM became the ﬁrst in the world
to successfully commercialize HPAL technology
for the recovery of nickel from low-grade ore,
which had been diﬃcult with conventional
technologies.
Segment
Proﬁt

Fiscal 2014 Review

55.0%● In nickel reﬁning, production started in earnest at Taganito
HPAL, with an output of 26,000 tonnes. Production also
increased greatly at the Niihama Nickel Reﬁnery, whereintermediates from Taganito are processed. Operations at
Coral Bay Nickel Corporation are also proceeding smoothly.
● In copper smelting and reﬁning, output increased
compared to the previous ﬁscal year, in which periodic
maintenance work was carried out.

Outlook● In the nickel business, the Taganito and Coral Bay HPAL
plants will continue their operations. We are also working
to increase production of nickel sulfate at the Harima
Smelter.

SMM’s Nickel Business
SMM produces electrolytic nickel, nickel
chemical products, and ferronickel. Electrolytic nickel, nickel sulfate, nickel chloride, andother products are produced at our Niihama
Nickel Reﬁnery. Nickel sulfate is also produced
at the Harima Smelter, while ferronickel isproduced by Hyuga Smelting Co., Ltd.
The principal raw material for electrolytic
nickel and nickel chemical products is MS(nickel-cobalt mixed sulﬁde) produced by
Coral Bay Nickel Corporation and Taganito
HPAL Nickel Corporation. The Niihama Nickel
Reﬁnery uses the MCLE process to reﬁneMS, which has an ore grade of 55% to 60%,
as well as nickel matte and other raw
materials
toproduce99.99%
grade

Nickel Production Flow

Rio Tuba
Mine● In the copper business, we are planning to improve costcompetitiveness.

Net Sales
800(¥ billions)

637.8

631.8

710.3

400

0

2013

2014 (FY)(¥ billions)100

50,000

81.32

50

2012

Capital Expenditure / Depreciation

Segment Proﬁt

0

40.65

2012

(¥ millions)40,14634,65625,00029.10

201312,1692014 (FY)0

PT ValeIndonesia,
others2012

20,126 18,044
13,3902013

New Caledonia
and Philippine
nickel mines

Low-grade nickel
oxide ores
(nickel grade:approx. 1%)

Low-grade nickel
oxide ores
(nickel grade:approx. 1%)

Coral
Bay
NickelHarimaSmelterMS(nickel grade:approx. 55%
to 60%)

Batterymaterials

NickelsulfateNiihamaNickelReﬁnery

Electrolytic nickel(nickel grade: 99.99%)

Other chemical products

Other raw materials

Nickel ore

NickelsulfateIsouraPlant

Taganito
HPAL

Nickel matte

Nickel sulfate

Customers

Taganito
Mine

Electrolytic nickel

electrolytic nickel and other chemical products.
In addition, the Harima Smelter produces nickel
sulfate from MS. Combined total production ofelectrolytic nickel and nickel chemical products
for ﬁscal 2015 is projected to be 74,000 tonnesof nickel equivalent.
The raw material for ferronickel is nickel ore
with a grade of approximately 2%. We wereable to import raw materials from Indonesia
until 2013, but the new mining law in Indonesia
eﬀective from January 2014 has halted importsof this ore. By accessing raw material from New
Caledonia, the Philippines, and other sources,
we expect ﬁscal 2015 production of ferronickel
to be approximately 20,000 tonnes.

Hyuga
Smelting
Co., Ltd.

Ferronickel(nickel grade: approx. 15% to 20%)2014 (FY)■■ Capital expenditure■■ Depreciation

14

15

Review of Operations

Materials Business

Review of Operations: Materials Business

A wide range of metals are used in the
manufacture of electronic devices. Copper, forexample, is a critical input for electric circuitry
manufacture, while nickel is used in the
production of battery materials and capacitors.
SMM has been engaged in the Materials businesssince the 1960s and will continue to process andsupply advanced metal products by leveraging its
accumulated technologies.

Fiscal 2014 Review

Segment
Proﬁt● Sales in battery materials increased due to solid demand
for automotive batteries.

8.7%● Demand for leadframes, pastes, and crystal materials for
smartphones and other applications was also favorable.

Outlook● In battery materials, we are working to increase production of lithium nickel oxide for electric vehicles.
● We also plan to increase production of crystal materials
used for smartphones (lithium tantalate and lithium
niobate substrates).

Materials Products
Battery Materials
SMM’s main battery materials products arenickel hydroxide and lithium nickel oxide, both ofwhich are used in cathodes for secondary
batteries.
Nickel hydroxide is used as a cathode material
in nickel metal hydride batteries, which are usedin Toyota Motor Corporation’s hybrid vehicles.
SMM’s nickel hydroxide has a large share of themarket.
NCA (lithium nickel cobalt aluminum oxide) isused in cathodes for lithium-ion batteries. Oneof our current NCA customers, Panasonic
Corporation, produces the batteries used inTesla Motors, Inc.’s electric vehicles. Because
the NCA we produce has high nickel content, it
makes possible a larger battery capacity, which
in turn means cars can travel farther on a single
charge.
SMM is pursuing a project to increase NCA
output from 850 to 1,850 tonnes per month. We
are working toward the launch of the Naraha
Plant in Fukushima Prefecture as a new base forour subsidiary Sumiko Energy Materials Co., Ltd.

Also, at the Isoura Plant, a project to increase
production capacity is slated for completionin ﬁscal 2015.
One of SMM’s strengths lies in its
integrated production from nickel raw materials to high-capacity battery materials. We
intend to make use of this capability tofurther strengthen our battery materials
business.

Nickel hydroxide

Catalyst Business
Battery materials (Isoura Plant)

Net Sales

Segment Proﬁt(¥ billions)

200
156.6

153.3

174.2

100

Capital Expenditure / Depreciation(¥ billions)

15
11.07

12.91

(¥ millions)

12,00010,962
8,221

7.5

6,000

8,379 8,007

6,811

7,392

3.30
0

2012

2013

2014 (FY)

0

2012

2013

2014

(FY)

0

2012

2013

N.E. Chemcat Corporation is a joint ventureof SMM and BASF SE of Germany, one of
the world’s leading chemical companies. N.E.
Chemcat is one of Japan’s largest developermanufacturers of precious metal catalysts, forpurifying hazardous substances in automobile
exhaust gases, and chemical catalysts for
petrochemicals, pharmaceuticals, aromatic
chemicals and other purposes. N.E. Chemcat
will continue to utilize its accumulated catalyst
technology to develop new catalysts.
Nippon Ketjen Co., Ltd. is a joint venture
between SMM and Albemarle Corporation of

the United States, a leader in high polymer
chemistry, catalysts, and related ﬁelds. Nippon
Ketjen develops and manufactures petroleumhydrogenation and hydroprocessing catalysts,
oﬀers oﬀ-site catalyst regeneration, provides
other technical services, and is engaged inrelated process licensing. By deploying
technically advanced and economical solutions
for the oil reﬁning industry, Nippon Ketjen is
working to protect the global environment.
SMM is collaborating with BASF andAlbemarle to advance our strategies forfurther growth in the catalyst business.

2014 (FY)■■ Capital expenditure■■ Depreciation

16

17

Business Network

SMM Mines and Smelters / Reﬁneries

Business Network: SMM Mines and Refineries

Mineral Resources
Business
Pogo (85.0%)

Besshi-Niihama District Division
Toyo Smelter & Reﬁnery

Smelting & Reﬁning
Business

CopperCopperGold

NickelOther

Niihama Nickel Reﬁnery
Shisaka Smelting Co., Ltd. (100%)

Other Major Site / Aﬃliated Company

Harima Smelter
Hishikari Mine

Figures in parentheses indicate percentage interest

Morenci (12.0%)

Head Oﬃce

Hyuga Smelting Co., Ltd. (60%)

Jinlong Copper Co., Ltd. (27.1%)

Nickel Asia Corporation (26%)
Taganito HPAL Nickel Corporation(62.5%)

Coral Bay Nickel Corporation (54.0%)

Soroako (20.1%)

Batu Hijau (3.5%)

Cerro Verde (16.8%)

Figesbal (25.5%)
Goro (7.6%)

Sierra Gorda (31.5%)
Ojos del Salado (16.0%)
Candelaria (16.0%)

Northparkes (13.3%)

Materials Business: Major Aﬃliates & Sites

25 26

1 Sumiko Kunitomi Denshi Co., Ltd.

13 Nittosha Co., Ltd.

25 SH Electronics Chengdu Co., Ltd.

2 SMM Precision Co., Ltd.

14 Sumiko Tec Co., Ltd.

26 SH Precision Chengdu Co., Ltd.

3 GRANOPT Co., Ltd.

15 Shinko Co., Ltd.

27 Dongguan Sumiko Electronic Paste Co., Ltd.

4 SH Precision Co., Ltd.

16 Isoura Plant

28 SH Electronics Taiwan Co., Ltd.

5 Sumiko Energy Materials Co., Ltd.

17 Niihama Electronics Co., Ltd.

29 Taiwan Sumiko Materials Co., Ltd.

6 SH Copper Products Co., Ltd.

18 Niihama Materials Co., Ltd.

30 Malaysian SH Electronics Sdn. Bhd.

7 Ome District Div.

19 Ohkuchi Electronics Co., Ltd.

31 Malaysian SH Precision Sdn. Bhd.

5

8 SH Materials Co., Ltd.

20 Ohkuchi Materials Co., Ltd.

32 SH Asia Paciﬁc Pte. Ltd.

6

9 N.E. Chemcat Corporation

21 SMM KOREA Co., Ltd.

10 Nippon Ketjen Co., Ltd.

22 Shanghai Sumiko Electronic Paste Co., Ltd.

11 Sumitomo Metal Mining Siporex Co., Ltd.

23 SH Electronics Suzhou Co., Ltd.

12 Sumico Lubricant Co., Ltd.

24 Suzhou SH Precision Co., Ltd.

1

21
22 23 24
2 3
27

28 29
4
15
16 17 18

30 31
32

18

13 14

Materials Business: Major Affiliates & Sites

7 8 9
10 11 12

19 20

19

Corporate Governance
SMM is committed to building and developing an outstanding corporate governance structure and systems
that balance the requirements of maximizing enterprise value and securing a sound ﬁnancial position as apart of eﬀorts to garner the trust and fulﬁll the expectations of all stakeholders including shareholders.
Basic Policy Stance,
Structure and Systems

Management Decision-Making andBusiness Execution Structures and Systems

1. The SMM Group views corporate governance as adisciplinary framework both for maximizing theenterprise value of the SMM Group and for ensuring sound management practices. As such, it is an
important management issue.

SMM delegates substantial authority to executiveoﬃcers. This in turn has clariﬁed the authority andresponsibilities of directors and executive oﬃcers, allowing the Board of Directors to strengthen its fulﬁllment oftimely decision-making and supervisory functions.

2. SMM has instituted the SMM Group Corporate
Philosophy based on the Sumitomo Business Spirit,and has formulated the SMM Group Code of
Conduct as a set of behavioral standards to guide
executives and employees.

Directors and the Board of Directors
SMM’s Articles of Incorporation provides for a Boardof Directors of up to ten members. This number isconsidered appropriate to ensure agility together withlively discussion during Board of Directors’ meetings.
The Board of Directors meets on a regular basis once amonth, with extraordinary meetings held as and whenrequired, to ensure that decisions are made expeditiously,with reports made and discussions held regarding conﬂicts
of interest and important business matters. Any resolutions taken by, and any matters reported to the Board of
Directors are in turn reported at meetings of executiveoﬃcers to ensure that information is properly shared
among oﬃcers. The Board of Directors is presided over by
the chairman and representative director of the Company.

3. SMM is committed to striving to achieve the goals
contained in the business philosophy, to conducting
eﬃcient and sound business activities, to making avaluable social contribution, and to fulﬁlling responsibilities to stakeholders.
4. SMM has a Board of Directors and has also adopted
Executive Oﬃcer and Audit & Supervisory Board
systems to ensure that decision-making, supervision and execution of business management eachfunction eﬀectively within governance systems.
Corporate Governance Framework

General Meeting of Shareholders

Decision-Making and Supervision

Auditing

Audit & Supervisory
Board

Board of Directors

Independent
Public Accountant

Business Execution

President

Social Responsibility

Business Operations

Six CSR Subcommittees

Internal Audit Department(Headquarters)

Quality Assurance WG

Operating Department

Enterprise Value
Internal Control
Committee
Enhancement Committee

CSR
Committee

Compliance WG

Management Committee

Risk Management WG

20

Executive Oﬃcers

Eﬃcient Resource Utilization
Environmental Protection
Corporate Citizenship
Human Rights and Human
Resources Development

Occupational Health & Safety
Communications

Management Committee
SMM has established the Management Committee as a forum
to engage in preliminary deliberations with respect to mattersthat require a decision by management. The Management
Committee accordingly deliberates on matters requiring carefulconsideration from a wide range of views prior to theirsubmission for resolution by the Board of Directors or sanction
by the president. In this regard, the Management Committee
plays an important role in ensuring rational decision-making,increasing the eﬃciency of the decision-making process andpromoting appropriate internal control.
Executive Oﬃcer System
Executive oﬃcers are appointed by the Board of Directors. As
previously mentioned, substantial authority has been delegatedto executive oﬃcers whose authority and responsibilities havebeen clearly deﬁned to reinforce their executive function.
Executive oﬃcers are entrusted with important positions (suchas heading an operational division, a department or an oﬃce at
the Company’s headquarters) and expected to perform theirduties with the speciﬁc authority assigned to each position. In
addition, executive oﬃcers report on the status of businessexecution once a month at executive oﬃcer meetings.
Auditing System
The sound execution of business operations at the Company isensured through legal audits conducted by Audit & Supervisory
Board Members and internal audits conducted by the Audit
Department. Furthermore, an independent public accountant
conducts accounting as well as internal control audits in its
capacity as an independent public accounting ﬁrm.
Audit & Supervisory Board
SMM is a company with an Audit & Supervisory Board. Audit &Supervisory Board Members remain independent of the Boardof Directors and audit the status of management
decision-making, business execution and accounting. SMM’s
Articles of Incorporation provide for up to ﬁve Audit &Supervisory Board Members. The Audit & Supervisory Board
meets on a regular basis once a month, with extraordinary
meetings held as and when required in conjunction withmeetings of the Board of Directors.
Audit & Supervisory Board Members attend meetings of theBoard of Directors, Management Committee and all othermeetings considered of importance. Audits are conducted on
the basis of reports received from directors, consideration ofﬁnancial reports and materials, and onsite visits to businessoﬃces and plants as well as subsidiaries. Audit & Supervisory
Board Members belonging to the Company present theiropinions at important meetings including meetings of the Boardof Directors based on the audits they have conducted as Audit& Supervisory Board Members (Standing) independently fromthe Company while outside Audit & Supervisory Board
Members present their opinions based on their experiences andexpertise in specialist ﬁelds. Audit & Supervisory Board
Members (Standing) shall report the details of onsite auditsthat have been conducted solely by Audit & Supervisory Board
Members (Standing) as well as meetings that were not attended
by outside Audit & Supervisory Board Members at meetings of
the Audit & Supervisory Board.
Collaboration between the Internal Audit
Department, Independent Public Accountant andAudit & Supervisory Board Members
The Internal Audit Department undertakes internal audits on aregular basis on the status of business execution across the
SMM Group. At the same time, the Internal Audit Department
provides an explanation of its audit plans to Audit &Supervisory Board Members while passing on all relevant
information. Audit & Supervisory Board Members provide

details of audit plans determined during meetings of the Audit& Supervisory Board to the Internal Audit Department,
accompany oﬃcers of the Internal Audit Department when
conducting internal audits as required, and attend meetings
when reports on the results of internal audits are delivered to
executive oﬃcers and the heads of operational divisions. KPMG
AZSA LLC is currently the Company’s independent public
accountant and conducts accounting as well as internal control
audits in its capacity as an independent public accounting ﬁrm.
Audit & Supervisory Board Members provide details of audit
plans to the independent public accountant. Audit &Supervisory Board Members in turn receive explanations
regarding audit plans and reports on audit results from theindependent public accountant. In this manner, close
collaboration is maintained between the independent public
accountant and Audit & Supervisory Board Members.
Remuneration System for Directors and Audit &Supervisory Board Members
Limits on the total amounts of remuneration paid to directors
and Audit & Supervisory Board Members are ratiﬁed atshareholders meetings. In addition, the total amount of bonuses
to be paid to directors (with the exception of outside directors),
if applicable, is also ratiﬁed at shareholders meetings.
While the amount of remuneration paid to each director isdetermined by the representative director under the authority of
the Board of Directors, the basic remuneration (excluding bonus
payments) takes into consideration predetermined criteria basedon the Company’s performance as well as other factors including
an evaluation of the performance of each division and the statusof business execution together with the performance of eachindividual based on speciﬁc oﬃce assessment criteria. Bonuses(with the exception of outside directors) are determined basedon the same remuneration criteria together with an assessmentof each individual’s performance. Taking into consideration the
independent status of outside directors and the focus placed onoutside directors’ oversight function, an assessment of individual
performance is not reﬂected in the payment of remuneration tooutside directors. Accordingly, the payment of remuneration tooutside directors is limited to basic remuneration and does notinclude any bonus payment.
While the payment of remuneration to individual Audit &Supervisory Board Members is determined throughdeliberations between Audit & Supervisory Board Members,
taking into consideration the independent status of Audit &Supervisory Board Members in the execution of their duties
and the focus placed on the audit function, an assessment of
individual performance is not reﬂected in the payment of
remuneration to Audit & Supervisory Board Members.
Accordingly, the payment of remuneration to Audit &Supervisory Board Members is limited to basic remunerationand does not include any bonus payment.
The total amounts of remuneration by oﬃcer classiﬁcationand type as well as the number of oﬃcers to whom
remuneration was paid (including oﬃcers who retired during
the period) for the ﬁscal year under review are presented asfollows.
(¥ millions)Classiﬁcation
Directors(excluding outside directors)

Audit & Supervisory
Board Members(excluding outside Audit &Supervisory Board Members)

Outside Directors
Outside Audit &Supervisory Board Members

NumberTotal Remuneration by Type
Total
of
Remuneration
Basic Remuneration BonusOﬃcers
9

405

295

110

3

63

63

―

3

36

36

―

Note: In addition to the aforementioned, an employee salary portion totaling ¥28 million
was paid to an employee who holds the concurrent position of director.

21

Corporate Social Responsibility

Corporate Governance
Information Disclosure and IR Activities
In order to ensure the integrity and transparency of management and to garner the trust of stakeholders, SMM recognizes
the importance of accountability and information disclosure. As
a result, the Company aggressively engages in investor relations(IR) activities as a part of eﬀorts to provide all stakeholders,
particularly shareholders and investors, with a deeper understanding of the Group. In speciﬁc terms, SMM posts information
on its homepage and issues shareholder and annual reports.
Furthermore, the president provides explanations of the Group’sbusiness strategies and other important details to analysts andinstitutional investors several times each year.
Complementing these activities, and in order to continuously
upgrade and expand the Company’s IR activities, management
and the IR Department conduct individual meetings withanalysts and institutional investors in Japan and overseas as well
as plant inspection tours. Looking ahead, the Company will
endeavor to upgrade and expand its IR activities for the beneﬁtof individual investors.

Takeover Defense Measures
SMM introduced takeover defense measures in 2007 andupdated these in 2010. Revisions to and renewal of thesemeasures were ratiﬁed at the Company’s 88th Ordinary
General Meeting of Shareholders, held in June 2013. The
Company will maintain these measures with an eﬀective
period of three years, to expire at the conclusion of theCompany’s 91st Ordinary General Meeting of Shareholders
in June 2016. In the event of a large-scale acquisition by athird party of the Company’s shares, an independent
committee shall consider any takeover proposal and makean appropriate recommendation regarding an applicationof takeover defense measures to preserve the Company’s
enterprise value and preserve and enhance shareholder
proﬁts.

Outside Directors and Outside Audit & Supervisory Board Members
Outside Director
Relationship with SMM
Reason for
Appointment
Independence
Attendance
at Meetings
Outside Director
Relationship with SMM
Reason for
Appointment
Independence
Attendance
at Meetings

Tsutomu Ushijima
He has signed a contract for Limitation of Liability with SMM and has no relationship with SMM Group companies.
Having specialist knowledge and a wealth of experience as a lawyer and a licensed tax accountant, he has justiﬁed his
appointment as an outside director through providing advice from a compliance perspective in particular, thus playing an aptrole in bolstering our system of corporate governance.
He is appointed as an independent director (an individual with no conﬂict of interest with general shareholders) based on theregulations of the Tokyo Stock Exchange.
During the term, he attended all 21 Board of Directors meetings (12 regular meetings and 9 extraordinary sessions), at which
he made statements based on his specialist knowledge as a lawyer and licensed tax accountant, posed pertinent questions,and made his opinions clear.
Hitoshi Taimatsu
He has signed a contract for Limitation of Liability with SMM and has no relationship with SMM Group companies.
Possessing specialist knowledge as a material engineering science researcher, mainly in the ﬁeld of metals, he was appointed
as an outside director to apply such knowledge, and his academic background as a university professor, to playing an aptrole in bolstering our system of corporate governance.
He is appointed as an independent director (an individual with no conﬂict of interest with general shareholders) based on theregulations of the Tokyo Stock Exchange.

CSR Objectives

CSR Policy

Sustainable Co-Existence with Society and the
Global Environment

1. SMM shall work to combat global warming bypromoting recycling and eﬀective resource
utilization while also targeting technologicalinnovation and continuous improvements inenergy eﬃciency.

SMM’s Philosophy

2. SMM shall promote sustainable co-existencewith society by respecting the needs of local
communities in which we operate around theworld.

The SMM Group upholds the Sumitomo BusinessSpirit in its Corporate Philosophy and Management
Vision. The very activities we pursue to substantiate the visions expressed in those lines constituteSMM’s CSR activity and their implementation willtake us closer toward our goal of “sustainableco-existence with society and the global environment.”

3. To continue sound business activities, SMM shallrespect human rights and shall try to be acompany in which diverse human resources takeactive parts.

4. According safety the highest priority, SMM shallprovide safe, comfortable working environments
and seek to eliminate occupational accidents.
5. SMM shall strengthen communications with all
stakeholders to build healthy, trust-based
relationships.

Six Key CSR Areas and CSR Vision for 2020
In 2008, SMM determined six key areas of CSR activity for the Group and a CSR Vision for 2020 based on
the impact of those areas on the Group and the extent of related social needs.
We will actively pursue initiatives in those areas in line with the CSR Policy, toward our goal of “sustainableco-existence with society and the global environment.”
A company that applies its distinct
technologies to reduce
environmental burden andcontributes to environmental
preservation

He was newly appointed at the General Meeting of Shareholders held in June 2015.

Outside Audit &Supervisory Board Member Hikoyuki Miwa
Relationship with SMM He has signed a contract for Limitation of Liability with SMM and has no relationship with SMM Group companies.
Reason for
Based on his auditing experience accumulated over many years at audit ﬁrms as well as his extensive knowledge in
Appointment
accounting, and particularly through his ability to oﬀer opinions and recommendations from the perspective of an
accounting specialist, he has fulﬁlled his auditing duties and justiﬁed his appointment as an outside Audit & Supervisory
Board Member.
Independence
He is appointed as an independent auditor (an individual with no conﬂict of interest with general shareholders) based on theregulations of the Tokyo Stock Exchange.
Attendance
During the term, he attended all 21 Board of Directors meetings (12 regular meetings and 9 extraordinary sessions) and allat Meetings
15 meetings of the Audit & Supervisory Board held during the term, at which he made statements based on his specialist
knowledge as a chartered accountant, posed pertinent questions, and made his opinions clear, thus fulﬁlling his auditing
function.
Outside Audit &Shigeru Nozaki
Supervisory Board Member
Relationship with SMM He has signed a contract for Limitation of Liability with SMM and has no relationship with SMM Group companies.
Based on his wealth of ﬁnancial institution experience, and through providing opinions and recommendations regarding theReason for
management of the Company, he has fulﬁlled his auditing duties and justiﬁed his appointment as an outside Audit &Appointment
Supervisory Board Member.
He is appointed as an independent auditor (an individual with no conﬂict of interest with general shareholders) based on the
Independence
regulations of the Tokyo Stock Exchange.
During the term, the Board of Directors convened 21 times (12 regular meetings and 9 extraordinary sessions).
Attendance
He attended 20 of these meetings (12 regular meetings and 8 extraordinary sessions) and all 15 meetings of the Audit &at Meetings
Supervisory Board held during the term, at which he made statements based on his extensive ﬁnancial institution experience,
posed pertinent questions, and made his opinions clear, thus fulﬁlling his auditing function.

22

The Sumitomo Group has been developing its business for around four centuries through continuous
adherence to the Sumitomo Business Spirit. Acknowledging the importance of the values and ethics
our forerunners built into the Sumitomo Business Spirit, we will make every eﬀort to strengthen SMM
Group business and consolidate society’s trust in us. See our CSR Report for more details.

A company that generates resources
using innovative technology
A company that, throughsocial contribution activities
rooted ﬁrmly in businessactivities and local regions,contributes to regional
development and gains thetrust of society

A company that accords
safety the highest priority andprovides comfortable working
environments

Eﬀective useof resources
Contribution
to society
and local
communities

Environmental
preservation

health andsafetypeople andhuman rights

A company where diverse humanresources can let individual talents
shine and engage with passion in
their respective ﬁelds

CSR Vision
for 2020 Respect for
Occupational

A company that works actively
together with related stakeholders
to achieve a society where humanrights are respected

Stakeholder
communication

A company that strives fortransparent communications with all
stakeholders on a global scale anddeepens mutual understanding

23

Directors and Audit & Supervisory Board Members

Financial Section

Masahiro Morimoto
Director

Naoyuki TsuchidaDirector
Akira Nozaki
Director

Mikinobu Ogata
Director

Nobumasa Kemori
Chairman, Representative Director

24

Tsutomu Ushijima
Outside Director
Hitoshi Taimatsu
Outside Director

Yoshiaki Nakazato
President, Representative Director

Kazuo Nakashige
Standing Senior Audit &Supervisory Board Member

Hikoyuki Miwa
Outside Audit &Supervisory Board Member

Hajime Sato
Standing Audit &Supervisory Board Member

Shigeru Nozaki
Outside Audit &Supervisory Board Member

26

Eleven-Year Financial
Summary

28

Management’s Discussion &Analysis of Financial Position
and Operating Results

32
34

Consolidated Balance Sheets

35

Consolidated Statements of
Changes in Net Assets

37

Consolidated Statements ofCash Flows38

Notes to Consolidated
Financial Statements

69

Independent Auditors’ Report

Consolidated Statements ofIncome / Consolidated
Statements of Comprehensive
Income25

Eleven-Year Financial Summary
SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Millions of yen (except per share amounts and key ratios)Years ended March 31

2014

2015

2013

2012*2

2011

2010

2009

2008

2007

2006

2005

725,827¥ 793,797¥ 1,132,372¥ 966,764¥ 625,579¥ 484,585

Results for the year:
Net sales¥

921,334¥

830,546¥808,540¥

847,897¥864,077¥

Gross profit

174,257

124,822

140,650

132,421

138,810

105,956

56,887

198,147

203,180

120,137

82,878Operating income

125,779

75,41895,78588,577

96,03866,265

10,534

155,394

162,632

82,75647,893(2,518)35,58826,670(615)

27,356

16,511

12,408

61,11042,985

10,2186,024

22,942

216,504

205,617

92,97453,917

Other income (expenses)
Income before income taxes and minority interests

123,261

111,006

122,455

87,962

123,394

82,776

Net income

91,11380,25886,64065,286

83,962

53,952

21,974

137,808

126,054

62,80037,017

31,53673,956

46,70821,915

13,513Equity in earnings of affiliated companies

23,94329,77017,10023,217

34,832

26,090Capital expenditures

55,232

66,44159,291

73,143

53,105

26,41447,72365,14551,56750,56836,488Depreciation

38,12532,426

27,57831,132

34,62534,74634,26830,50525,693

22,951

20,578Net interest expenses

6,250

3,530

(144)

663

257

(654)

(271)

(2,209)(2,606)(1,281)(893)

Net cash flows from operating activities

120,003

80,014

114,665

144,999

102,458

44,153

128,000

157,383

95,98570,77240,150Net cash flows from investing activities(105,024)(126,937)(88,745)(135,932)(75,735)(75,443)(28,386)(126,413)(77,429)(102,384)(31,725)

Net cash flows from financing activities(39,047)

81

21,54950,314

7,379(19,322)(74,086)

55,727(10,073)

28,723

6,097

Free cash flows

14,979(46,923)

25,9209,067

26,723(31,290)

99,61430,97018,556(31,612)8,425

1,740,246

1,572,367

1,351,153

1,146,759

1,052,353

981,458

880,001

1,091,716

929,208

772,562

573,925547,251

640,345528,921394,899

–

–

–

–

–

283,897

Financial position at year-end:
Total assets
Net assets
Shareholders’ equity *1

1,158,945

1,019,053

844,547

726,039

684,103629,684

−

−

–

–

–

–

Long-term loans due after one year

245,000

243,130

212,323

157,119

135,128

132,311

141,716

169,394

93,800114,405

109,777

Interest-bearing debt

394,094

383,580

330,073

265,951

210,969

200,939

218,534

258,054

189,910

190,891

160,533

Working capital

307,436

314,198

338,866

312,542

267,072

229,259

206,123

266,250

103,791

72,22886,382− Basic

165.11145.35155.58116.17149.38

96.26

38.87

238.13220.49109.9664.77− Diluted

149.44129.71142.40106.84136.98

88.75

36.18

231.50213.67108.87–

1,905.50

1,653.83

1,393.02

1,173.97

1,121.19

1,043.50

913.92

1,017.96

859.82654.15497.57

13.0

30.0

27.0

14.0

8.0

Amounts per share (yen):
Net income

Shareholders’ equity
Cash dividends

48.0

37.0

34.0

28.0

32.0

20.0

5.50

5.49

6.94

5.94

8.26

5.80

2.23

13.64

14.81

9.33

6.78

Key ratios:
ROA (%)

9.28

9.54

12.13

10.12

13.80

9.89

4.02

25.39

28.99

19.10

13.79

Equity ratio (%) *1

60.4

58.1

56.9

57.5

59.9

59.8

57.3

54.0

53.4

48.4

49.5

ROE (%) *1

Interest-bearing debt to total asset ratio (%)

22.6

24.4

24.4

23.2

20.0

20.5

24.8

23.6

20.4

24.7

28.0

Debt-to-equity ratio (times) *1

0.37

0.42

0.43

0.40

0.33

0.34

0.43

0.44

0.38

0.51

0.57

Current ratio (times)

2.29

2.40

2.60

2.67

2.30

2.19

2.17

2.04

1.39

1.33

1.61

Shareholders’ equity are defined as following equation.
*1Shareholders’equity = Total shareholders’ equity + Accumulated other comprehensive income*2 The Company applied the new accounting method retroactively and restated the consolidated financial statements for the year ended March 31, 2012.

26

27

Management’s Discussion & Analysis ofFinancial Position and Operating Results
SUMITOMO METAL MINING CO., LTD, AND CONSOLIDATED SUBSIDIARIES

Medium- to Long-Term Business Strategy and Financial Policies
The short-term performance of the SMM Group’s three core businesses—Mineral Resources, Smelting & Refining, andMaterials—is significantly affected by fluctuations in non-ferrous metals prices, demand for electronic and other related materials,
and movements in foreign currency exchange rates. In addition, considerable time is required to generate returns from investments
in development of non-ferrous metal resources. In view of these unique business factors, the SMM Group recognizes the vital
importance of adopting business strategies that focus on the medium to long term, opportune investment timing, and securing
sustainable growth.
SMM consistently maintains a sound financial position to ensure that the Group is well positioned to undertake medium- to longterm investments and address any and all risks. In particular, SMM has maintained a consolidated equity ratio in excess of 50%
since fiscal 2006. Under the Group’s 2012 3-Year Business Plan, which covers the period from fiscal 2013 to fiscal 2015, SMM
plans to selectively channel management resources into priority fields, acquire and expand its interests in overseas mines, and invest aggressively in construction of cutting-edge smelting and refinery facilities. Moving forward, SMM will continue to emphasize
a strong financial position based on financial policies of maintaining a consolidated equity ratio of at least 50% and a low level ofgearing as measured by the debt-to-equity (D/E) ratio.

Scope of Consolidation: For fiscal 2014 (the year ended March

Other Income / Income before Income Taxes and Minority

31, 2015), the SMM Group comprised the parent company (Sumito-

Interests

mo Metal Mining Co., Ltd.), 68 subsidiaries (two subsidiaries moreIn the category of other income (expenses), although gains werethan in the previous fiscal year), and 16 equity-method affiliates (themade on foreign exchange due to depreciation of the yen, signifi-

same as in the previous fiscal year) on a global basis.

cant allocations to reserves for investment losses and other allocations to reserves for corporate restructuring losses were recorded.

Operating Results

As a result, income before taxes and minority interests increased

Overview of Operations and Consolidated Operating Results¥12,255 million (11.0%), to ¥123,261 million.

In the non-ferrous metals industry during fiscal 2014, nickel prices
remained high for a time due to supply concerns caused by Indo-

Net Income

nesia’s imposition of controls on ore exports; however, this had no

After accounting for taxes and minority interests, net income in-great effect on demand, causing prices to fall, and a rapid decline

creased ¥10,855 million (13.5%) to ¥91,113 million. As a result, ba-

resulted due to prospects of a surplus. Copper prices had been

sic net income per share increased from ¥145.35 at the end of theassumed to rise, however recurring concerns of a decline in Chi-

previous term to ¥165.11.

nese demand prompted a downward trend, resulting in a slump.
A similar downward trend in gold continued, with prices remain-

Operating Results by Business Segment

ing weak. With respect to Materials segment related industries,

For details regarding results and the status of business progress bydemand for materials used in the manufacture of automotive bat-business segment, please refer to the Review of Operations sec-teries increased, while demand for materials for advanced mobile

tion on pages 12 to 17.

devices and other products were also buoyed by a healthy sales
environment.

Capital Expenditures

Under these circumstances, and based on the 2012 3-Year Busi-

Total capital expenditures in fiscal 2014 amounted to ¥55,232 mil-ness Plan, SMM is promoting a new growth strategy based onlion, down ¥11,209 million (16.9%) compared to the previous term.

its long-term vision as the underlying platform for bolstering the

By segment, capital expenditures were ¥20,193 million in the Min-

competitiveness of its three core businesses—Mineral Resources,eral Resources segment, ¥20,126 million in the Smelting & Refining

Smelting & Refining, and Materials—while channeling business re-segment, and ¥10,962 million in the Materials segment.

sources into growth sectors by revamping its business structure.
Research and Development (R&D) Expenses
Net Sales

Total fiscal 2014 R&D expenses amounted to ¥5,865 million, an

In fiscal 2014, consolidated net sales increased ¥90,788 million

increase of ¥783 million (11.8%) compared with the previous term.

(10.9%) over the previous term to ¥921,334 million. The year saw

In the Mineral Resources segment, we are carrying out R&D re-increased income due to such factors as a depreciating yen andlating to non-ferrous ore processing, including dressing technology

expanding sales of electrolytic nickel.

development to improve refined ore quality and yield, as well asprocessing of effluent from the Hishikari Mine and inactive mines

28

Operating Income

in Japan.

Consolidated operating income for fiscal 2014 was favorably im-

In the Smelting & Refining segment, the major R&D themes in-pacted by the rising price of nickel and inventory valuation, resulting

cluded the development of refining technologies that will foster thein a net increase of ¥50,361 million (66.8%), to ¥125,779 million.

ability to handle a wide range of raw materials and ore grades andimproved cost competitiveness, as well as the development of new

Net Assets

metal-refining processes. In addition, the segment moved ahead

Net assets as of March 31, 2015 stood at ¥1,158,945 million, up

with the development of recycling processes with respect to rare

¥139,892 million from ¥1,019,053 million at the end of the previ-and other metals, including nickel from used hybrid-vehicle second-ous fiscal year. Net income for the period was ¥91,113 million, dueary batteries.

in part to substantial positive foreign currency translation adjust-In the Materials segment, R&D initiatives were mainly directed to-ments resulting from depreciation in the value of the yen. In line

ward functional materials related to secondary batteries and SAW

with the increase in net assets, net assets per share improved fromfilters for information communications terminals, which are current-¥1,653.83 to ¥1,905.50 as of March 31, 2015.

ly drawing attention in the environment- and energy-related field
and information communications field. In particular, we are working

Major Financial Indicators

to enhance the cost competitiveness, capacity, safety, and other

Due to the aforementioned factors, the D/E ratio fell to 0.37, com-functions of lithium nickelate, a cathode material for lithium second-

pared to 0.42 at the end of the previous year. The equity ratio re-ary batteries, to aggressively extend the use of this material intomained sound, increasing from 58.1% to 60.4%.

hybrid and electric vehicle batteries.
Cash Flows
Financial Position

Net cash provided by operating activities came to ¥120,003 million,

Assetsup from ¥80,014 million at the end of the previous fiscal year, due to

As of March 31, 2015, total assets amounted to ¥1,740,246 million,

an increase in inventories, coupled with higher income before taxes

up ¥167,879 million from the level of ¥1,572,367 million recorded atand minority interests, and lower corporate taxes.

the end of the previous term.

Net cash used in investing activities totaled ¥105,024 million, com-

Of this total, current assets fell, mainly among marketable securi-pared with ¥126,937 million in fiscal 2013, following factors includ-ties included in negotiable deposits, but the effects of the depre-

ing a drop in new investments.

ciating yen resulted in increased bills receivable and gold prices.

Net cash used in financing activities amounted to ¥39,047 million,

This, along with increased inventories, raised current assets ¥7,900

a reversal from ¥81 million provided in the previous fiscal year. Con-million to ¥545,861 million. Total fixed assets rose ¥159,979 mil-tributing factors included a decrease in new long-term debt due af-

lion to ¥1,194,385 million, mainly due to an increase in investment

ter one year and an increase in repayments.

securities driven by such factors as increased equity earnings of

Taking into account the aforementioned activities and after deduct-affiliated companies and the influence of the yen’s depreciation;

ing the effect of exchange rate change, cash and cash equivalents

long-term loans to the Sierra Gorda Project, etc.; and an increase in

as of March 31, 2015 amounted to ¥177,720 million, a decrease ofproperty, plant and equipment due to mine expansion work at the¥24,863 million over the previous term.

Morenci Mine.
Liabilities
Total liabilities amounted to ¥581,301 million as of the end of fiscal
2014, an increase of ¥27,987 million compared with ¥553,314 million a year earlier. Of this total, current liabilities rose ¥14,662 million to ¥238,425 million, attributable to such factors as an increasein accrued income taxes payable. Meanwhile, long-term liabilities
rose ¥13,325 million to ¥342,876 million.

Shareholders’ Equity and Equity Ratio

Debt-to-Equity Ratio and Interest-Bearing Debt

■Shareholders’ Equity■Interest-Bearing Debt

Equity Ratio(¥ billions)
1,000

(%)
80

(¥ billions)
400

500

40

200

0
2014
2015
(As of March 31)

0

0

2011

2012

2013

Debt-to-Equity Ratio(Ratio)
0.50

0.25

2011

2012

2013

2014

0.00
2015
(As of March 31)

29

Risk Information

Supplies of ore can also be delayed or suspended due to unpre-

endeavors to manage operations so that related compliance costs

could prevent the Group from earning a suitable return on overseas

The following section provides an overview of the risk factors that

dictable disruptive events beyond the control of the Group, suchare kept within reasonable limits.

investments. Such risks include the development of mineral re-

could exert a significant effect on the business performance and fi-

as extreme weather conditions, large-scale earthquakes, suppliernancial position of the SMM Group. All forward-looking statements

operational accidents and industrial disputes. Such factors could

5 Risks associated with market shifts, new producternments against the backdrop of high non-ferrous metals prices,in the text refer to management decisions based on the best infor-

impose various constraints on Group production volumes, whichdevelopment and intellectual property rights

or the levying of higher taxes on such operations. Increased envi-

mation available at the end of fiscal 2014.

as a result could exert a negative impact on the Group’s businessIn those markets related to the Group’s Materials business, increas-ronmental demands from various quarters constitute a further risk.

performance and financial position.

ingly longer periods are required for the development of new prod-

To mitigate such risks, the SMM Group makes overseas investment

To mitigate such risks, the Group continues to seek to develop over-ucts due largely to rapid changes in applied technologies, customer

decisions based on careful consideration of all relevant country

seas mines and invest in high-grade overseas mines to secure reli-requirements and product life. This is even as product development

risks.

able within-Group supplies of ore.

programs in these areas require the investment of increasingly large

1 Fluctuations in non-ferrous metals prices andexchange rates
1. Sustained downturn in non-ferrous metals prices

amounts of time and resources.

7 Disaster-related risks

are essentially determined by the London Metal Exchange (LME)

3 Uncertainty inherent in mining investments

Expected returns on investment from related new product develop-

The SMM Group locates production operations based on consider-and other international markets (hereinafter referred to as “LME

As described above, the raw materials procurement policy of thement programs may not materialize due to obsolescence caused byations such as customer relationships, raw material procurement,

and other market prices”). LME and other market prices are influ-

SMM Group is to develop within-Group mining resources to boost

technological progress, delays caused by responding to customer

linkage to other Group operations, and effective use of manage-

enced by a number of factors, including international supply andthe proprietary ore ratio. Amounts of extractable ore and extraction

requests, or the launch of competitor products among other factors.

ment resources. Unexpected large-scale natural disasters such as

demand, political and economic circumstances, speculative trading,costs can only be estimated based on the results of exploratory

Customer demand for products may also decline in the future. All

earthquakes or typhoons that affect the regions where such facili-

and competition from alternative materials. A sharp and sustained

surveys.

these various factors could have a negative impact on the Group’s

ties are located could result in major financial losses arising fromdownturn in non-ferrous metals prices could have a significant

With respect to mining development, the development costs of abusiness performance and financial position.

such factors as onsite damage and loss of production.

negative impact on the Group’s business performance and financial

mining project can rise due to a variety of factors, such as compli-

In addition, sales volumes of the Group’s mainstay Materials busi-

To mitigate such risks, the Group insures such facilities where thisposition.

ance with environmental or regulatory actions. Any additional in-ness products are dependent upon customer production levels ofis possible at reasonable cost and has made plans containing suit-vestment or increase in the burden of extraction costs arising fromsuch items as mobile handsets, PCs, and electric household ap-

able countermeasures to minimize any secondary effects due to

2. Appreciation of the yen

the inherent uncertainty associated with mining developments

pliances. Accordingly, performance is subject to a variety of fac-such disasters.

Not only imported raw materials, including copper concentrates andcould have a negative impact on the Group’s business performance

tors including cyclical demand for the products manufactured bynickel matte but also the domestic prices of non-ferrous metals, areand financial position.

customers, advances in technological innovation, and general eco-

8 Management of sensitive information

determined under U.S. dollar-denominated LME and other market

To mitigate such risks, the SMM Group employs a selective invest-

nomic trends.

In the event of a leakage of client or personal information, the SMM

standards. Accordingly, the refining margins earned by SMM fromment policy and undertakes strict assessments of the potential

As a result of such factors, the development of new products andGroup would be liable for compensation, posing a risk to our busi-

its Smelting & Refining business are effectively denominated in

profitability of individual mining developments, based on extensive

sales of existing products in the Group’s Materials business may

ness performance and financial position.

U.S. dollars. In addition, returns on investments in overseas mining

experience in mining extraction and mine valuation accumulated

not progress in accordance with plans. This in turn could exert a

To mitigate such risks, the SMM Group installs security systems

developments, income earned from investments in the Materials

over many years.

negative impact on the Group’s business performance and financial

and carries out information security education for its employees.

The prices of nickel, copper, gold and other non-ferrous metals

position.

business, and revenues from exports of products in each of theaforementioned businesses are also denominated in foreign currencies.

30

source projects by organizations funded by national or regional gov-

4 Environmental protection and

The SMM Group recognizes the importance and value of acquir-

regulatory compliance risks

ing intellectual property rights and managing such rights properly

A substantial appreciation of the yen against these currencies over

SMM Group businesses, notably its mining and non-ferrous met-in accordance with related laws and regulations. However, it is nota sustained period could exert a significant negative impact on theal smelting and refining operations, are subject to a broad range

always possible to secure such rights even if the necessary proce-

Group’s business performance and financial position.

of laws and regulations in such areas as occupational safety anddures are followed. As such, our use of the fruits of our R&D activi-

To mitigate these external risks, the SMM Group continues to makehealth, environmental protection, pollution prevention, industrial

ties could be threatened by disputes with third parties or unlawfulprogress in implementing a variety of measures aimed at boosting

waste disposal and management of potentially toxic substances.

third-party use of intellectual property.

competitiveness, both in materials procurement and manufactur-

In accordance with these statutory and regulatory requirements,

To reduce the impact of such risk, the SMM Group has establisheding.

operators may be charged with compensation for loss or damages,

an R&D structure aimed at rapid utilization of its end products. We

irrespective of the existence of negligence or otherwise, or de-have also established a specialized department to manage our intel-

2 Deterioration in terms of non-ferrous metal ore

mands for the maintenance and management of abandoned mines.

lectual property rights, and are working to reliably obtain and pre-purchasing contracts and supply disruptions

Moreover, operators may incur the burden of additional expenses

serve such rights.

Currently, the SMM Group procures the majority of copper ores,

due to requirements imposed under new environmental standards

nickel matte and other raw materials for non-ferrous metal refining

and regulations. At the same time, both the mining and non-fer-

6 Overseas investments

operations based on long-term ore-purchasing contracts that arerous metals refining industries incur the risks and associated re-

The Group strives to develop its overseas business, both in terms of

not backed by investment.

sponsibilities for environmental pollution as well as the disposal of

the location of production bases as well as the sale of its products.

Each year, the raw materials purchasing terms and conditions ofmining and industrial waste. Ongoing regulatory compliance costs

In the conduct of overseas business, however, SMM is subject tolong-term ore-purchasing contracts are subject to negotiation. In

are substantial and subject to unexpected increases as the result

a wide range of political and economic risks that vary by country.

each case, there are instances in which required volumes cannot beof the sudden emergence of previously unknown risks. The costs

These include, but are not limited to, political instability; changes inpurchased at an appropriate price due to a variety of market factors.

of ensuring regulatory compliance could therefore exert a negative

statutory and regulatory requirements with respect to the environ-Furthermore, as product prices are generally determined by suchimpact on the Group’s business performance and financial position.

ment, labor, taxes, currency management and controls as well asfactors as supply and demand—particularly factors relating specifi-

To mitigate such risks, the Group seeks to ensure that operations

trade; limited protection under the law or inadequate enforceability

cally to non-ferrous metals—there are instances where the transfer

are in full compliance with environmental protection and other laws

in connection with intellectual and other property rights; fluctua-of any deterioration in the purchasing terms and conditions of raw

and regulations through the operation of environmental and risk

tions in foreign currency exchange rates; and the confiscation ormaterials to product prices is difficult.

management systems based on strict standards. The Group also

nationalization of assets. The emergence of various developments

31Consolidated Balance Sheets
SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2015

202,583$ 1,479,151

2015

As of March 31, 2015 and 2014
Current assets:
Cash and cash equivalents (Notes 3 and 8)
Time deposits (Note 3)

177,720
4,944

¥

187

41,14986,715917,911

Unconsolidated subsidiaries and affiliated companies

5,931

3,652

49,363

Allowance for doubtful accounts

(396)

(295)

(3,296)

201,423

155,886

1,676,429

3,765

1,834

Deferred tax assets (Note 9)
Other current assets
Total current assets

Thousands of
U.S. dollars(Note 1)

2014

2015

2015

As of March 31, 2015 and 2014
Bank loans (Notes 3 and 8)
Long-term debt due within one year (Notes 3 and 8)¥

80,360¥72,342$

668,831

18,734

18,108

155,922

34,38834,012286,209

Notes and accounts payable:
110,287

Inventories (Note 6)

Millions of yen

Current liabilities:¥

Notes and accounts receivable (Note 3):
Trade

LIABILITIES AND NET ASSETS

Trade (Note 3)
Unconsolidated subsidiaries and affiliated companies (Note 3)

2,379

4,398

19,800

Others

25,574

20,275

212,851

Accrued income taxes

30,7299,531

255,755

Accrued expenses

4,806

3,963

40,00031,336

Advances received

516

943

4,295

Accrued restructuring charges

1,236

97

10,287

Accrued environmental measures

4,243

898

35,31442,18787,399351,120545,861

537,961

4,543,163

Deferred tax liabilities (Note 9)
Other current liabilities
Total current liabilities

25

442

208

35,43558,754294,922238,425

223,763

1,984,394

Investments and long-term receivables:
Long-term liabilities:

Investment securities (Notes 3, 4 and 8):
Unconsolidated subsidiaries and affiliated companies
Others386,869
205,622331,139
181,099

3,219,883

Long-term debt (Notes 3 and 8)

295,000

293,130

2,455,264

1,711,377

Deferred tax liabilities (Note 9)28,571

22,301

237,794

534

1,280

4,444

1,220

–

10,154(50,683)−―(421,831)

Unconsolidated subsidiaries and affiliated companies

106,111

69,791

883,154

Others36,7809,107

306,117

26,59314,016

221,333

(201)

(209)

(1,673)711,091

604,9435,918,360

Allowance for losses on investments
Long-term loans receivable (Notes 3 and 8):

Other long-term receivables (Note 8)
Allowance for doubtful accounts
Total investments and long-term receivables

Accrued environmental measures
Accrued restructuring charges
Other accruals

251

246

2,089

Net defined benefit liability (Note 10)

7,763

4,961

64,611

Asset retirement obligations (Note 16)

7,525

6,030

62,630

Other long-term liabilities

2,012

1,603

16,747

342,876

329,551

2,853,733

Total long-term liabilities
Contingent liabilities (Note 13)
Net assets (Note 12):

Property, plant and equipment (Note 8):

Shareholders’ equity:Land

29,25228,758

243,462

Buildings and structures

275,653

236,0872,294,241

Machinery and equipment

589,168

524,957

4,903,604

Construction in progress

Accumulated depreciation
Net property, plant and equipment

40,25647,936

335,048934,329

837,738

7,776,355(464,956)(421,965)(3,869,797)

469,373415,773

3,906,558

Common stock
Authorized - 1,000,000,000 shares
93,242

93,242776,047

Capital surplus

86,066

86,062

716,321

Retained earnings

770,020704,824

6,408,822

Treasury stock, at cost

(32,753)(31,978)(272,601)

916,575

852,150

7,628,589

46,67931,335388,506

247

100

2,056

Foreign currency translation adjustments

87,28829,466

726,493

Remeasurements of defined benefit plans

435

120

3,620

134,649

61,021

1,120,675

Minority interests

107,721

105,882

896,554

Total net assets

1,158,945

1,019,053

9,645,818¥ 1,740,246¥ 1,572,367$ 14,483,945

Issued - 581,628,031 shares

Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gains on securities

Deferred tax assets (Note 9)

3,156

2,593

26,267

Other assets

10,765

11,09789,597¥ 1,740,246¥ 1,572,367$ 14,483,945

Total assets
The accompanying notes are an integral part of these financial statements.

Deferred gains on hedges

Total accumulated other comprehensive income

Total liabilities and net assets

32

33

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESSUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2015 and 2014
Net sales (Note 15)

Millions of yen

Thousands of
U.S. dollars(Note 1)2015
¥ 921,334

2014¥ 830,546

2015$ 7,668,198

747,077

705,724

6,217,869

Shareholders’ Equity

Costs and expenses:
Cost of sales
Selling, general and administrative expenses (Note 11)
Operating income

48,47849,404403,479

795,555

755,128

6,621,348

125,779

75,4181,046,850

For the years ended March 31, 2015 and 2014
Balance at April 1, 2013

Interest and dividend income

10,218

7,092

85,044

Interest expense(3,968)(3,562)(33,025)

−―

(3)

−―

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

581,628

Total
shareholders’equityMillions of yen(thousands)

Cumulative effect of changes in accounting policies

Other income (expenses):

Write-down of investment securities

Number ofshares issued¥ 93,242¥ 86,062¥ 644,642¥ (31,895)¥ 792,051

–

–

–

–

–

Increase resulting from changes in accounting policies
of affiliated companies (Note 2)
Restated balance at April 1, 2013

581,628

–

–

1,204

–

1,204

93,242

86,062645,846(31,895)

793,255

Gain (Loss) on sale and disposal of property, plant and equipment

(577)

306

(4,802)

Loss on impairment of fixed assets (Note 7)(614)(1,253)(5,110)Cash dividends paid––

(20,432)–(20,432)

Exchange gain

19,977

6,513

166,267

Net income––

80,258–80,258Provision for environmental measures(2,861)(2,134)(23,812)Acquisition of treasury stock

–

–

–

(89)

(89)

Maintenance cost for ceased projects

(535)

(500)

(4,453)

Casualty loss

(168)

(5)

(1,398)23,94329,770199,276

(130)

(3)

(1,082)

−―

(101)

−―

Equity in earnings of affiliated companies
Loss from valuation of derivative instruments
Loss on change in equity

Sale of treasury stock

–

–

–

6

6

Change of scope of consolidation

–

–

(848)

–

(848)

Net changes of items other than shareholders’ equity
Balance at April 1, 2014

Provision for allowance for losses on investments(44,474)−(370,154)

Cumulative effect of changes in accounting policies

Provision for restructuring charges(2,449)(97)(20,383)

(880)

(435)

(7,325)

Increase resulting from changes in accounting policies(2,518)35,588(20,957)

123,261

111,006

1,025,893

Current

46,407

24,573386,243

Deferred(1,058)(950)(8,806)45,34923,623

377,437

Income before minority interests

77,91287,383

648,456

Minority interests in loss（(income) of consolidated subsidiaries

13,201(7,125)

109,871¥ 91,113¥ 80,258

Other, net
Income before income taxes and minority interests
Income taxes (Note 9):

Net income$

758,327
U.S. dollars(Note 1)

Yen

581,628

of affiliated companies (Note 2)
Restated balance at April 1, 2014

581,628

–

–

–

–

–

¥ 93,242¥ 86,062¥ 704,824¥ (31,978)¥ 852,150––(2,062)–(2,062)

–

–

429

–

429

93,242

86,062

703,191(31,978)

850,517

Cash dividends paid––

(24,284)–(24,284)

Net income––

91,113–

91,113Acquisition of treasury stock

–

–

–

(778)

(778)

Sale of treasury stock

–

4

–

3

7

Change of scope of consolidation

–

–

–

–

–

Net changes of items other than shareholders’ equity
Balance at March 31, 2015

581,628

–

–

–

–

–

¥ 93,242¥ 86,066¥ 770,020¥ (32,753)¥ 916,575

Amounts per share of common stock:

Shareholders’ Equity

Net income (Note 19)− Basic− Diluted
Cash dividends applicable to the year
The accompanying notes are an integral part of these financial statements.

¥ 165.11
149.4448.00¥ 145.35
129.71
37.00

$

1.37
1.24
0.40

Balance at April 1, 2014
Cumulative effect of changes in accounting policies

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2015 and 2014
Income before minority interests

2015

2014

¥ 77,912¥ 87,383

of affiliated companies (Note 2)

Thousands of
U.S. dollars(Note 1)

2015$

648,456

Other comprehensive income
Net unrealized holding gains on securities
Deferred gains on hedges

15,277

6,666

127,149

125

1,909

1,040

Foreign currency translation adjustments

27,97545,784

232,835

Remeasurements of defined benefit plan

490

−

4,078

42,11849,628350,545

Share of other comprehensive income ofaffiliated companies accounted for using equity method

Retainedearnings$ 776,047$ 716,288$ 5,866,201$ (266,151)$ 7,092,385––(17,163)–(17,163)

–

–

3,571

–

3,571

776,047

716,288

5,852,609(266,151)

7,078,793––(202,114)–(202,114)

Thousands of U.S. dollars (Note 1)

Increase resulting from changes in accounting policies

SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Millions of yen

Capitalsurplus

For the year ended March 31, 2015

Treasury
stock

Total
shareholders’equityCommonstock

Restated balance at April 1, 2014
Cash dividends paid
Net income––

758,327–

758,327

Acquisition of treasury stock

–

–

–

(6,475)(6,475)

Sale of treasury stock

–

33

–

25

58

Change of scope of consolidation

–

–

–

–

–

Net changes of items other than shareholders’ equity

–

–

–

–

–

$ 776,047$ 716,321$ 6,408,822$ (272,601)$ 7,628,589

Balance at March 31, 2015
The accompanying notes are an integral part of these financial statements.

Total other comprehensive income

85,985

103,987

715,647

Comprehensive income (Note 14)

163,897

191,370

1,364,103

164,893

163,960

1,372,393(996)

27,410(8,290)Comprehensive income attribute to:
Owners of the parent
Minority interests
The accompanying notes are an integral part of these financial statements.

34

35

Consolidated Statements of Changes in Net Assets (continued)

Consolidated Statements of Cash Flows

SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESSUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Accumulated other comprehensive income
Net unrealized
holding gains
on securities

Deferred gains
on hedges

Foreign
Remeasurements ofcurrencytranslation defined benefit
plans
adjustments

Total accumulated othercomprehensive
incomeMinority
interests

For the years ended March 31, 2015 and 2014
Balance at April 1, 2013
Cumulative effect of changes in accounting policies

Total net
assetsMillions of yen¥ 24,645¥ (1,856)¥ (45,590)¥–¥ (22,801) ¥ 75,297¥ 844,547

–

–

–

–

–

–

–

–

–

–

–

–

301

1,505

24,645(1,856)(45,590)–(22,801)

75,598

–

–

–

–

–

Increase resulting from changes in accounting
policies of affiliated companies (Note 2)
Restated balance at April 1, 2013
Cash dividends paid

5,110

(306)

4,802

–

(20,432)

Write-down of investment securities

–

3

–

130

3

1,082

–

–

–

80,258––(89)

Sale of treasury stock

–

–

–

–

–

–

6

Change of scope of consolidation

–

–

–

–

–

–

(848)

6,690

1,956

75,056120

83,82230,284

114,106¥ 29,466¥ 120¥ 61,021–––¥ 105,882 ¥ 1,019,053–(2,062)

Increase resulting from changes in accounting
Restated balance at April 1, 2014

–

–

–

–

–

–

429

31,335100

29,466120

61,021

105,882

1,017,420

–

–

–

–

–

–

(24,284)

Net income

–

–

–

–

–

–

91,113Acquisition of treasury stock

–

–

–

–

–

–

(778)

Sale of treasury stock

–

–

–

–

–

–

7

Change of scope of consolidation

–

–

–

–

–

–

–

15,344147

57,822315

73,6281,839

75,467

Balance at March 31, 2015

Loss from valuation of derivative instruments
Increase in allowance for losses on investments

50,683–421,831

Interest and dividend income(10,218)(7,092)(85,044)

3,968

3,562

33,025(23,943)(29,770)(199,276)Interest expense
Equity in earnings of affiliated companies
Casualty loss

168

5

1,398

Increase (Decrease) in trade receivables(11,417)

2,588(95,023)

Increase in inventories(40,833)(8,216)(339,850)

Increase (Decrease) in trade payables(14,557)624(121,157)

3,252(7,450)27,067

Sub-totalInterest and dividend received

119,810

98,636997,170

29,984

20,784

249,555

Interest paid

(3,545)(3,518)(29,505)

Payments for maintenance costs for ceased projects

(535)

(500)

(4,453)

Payments for recovery costs

(168)

(5)

(1,398)

Payments for income taxes(25,543)(35,383)(212,593)

120,003

80,014

998,776

OthersCash dividends paid

Net changes of items other than shareholders’ equity¥ 46,679¥

247¥ 87,288¥ 435¥ 134,649¥ 107,721 ¥ 1,158,945

Net cash provided by operating activities
Cash flows from investing activities:
Payments for acquisition of property, plant and equipment(58,614)(64,067)(487,840)

Proceeds from sale of property, plant and equipment

809

1,788

6,733

Payments for acquisition of intangible assets

(117)

(883)

(974)

30

86

250

(1,506)(18,098)(12,534)

Proceeds from sale of intangible assets
Payments for purchases of investment securities

Accumulated other comprehensive income
Net unrealized
holding gains
on securities

Deferred gains
on hedges

Foreign
Remeasurements ofcurrencytranslation defined benefit
plans
adjustments

For the year ended March 31, 2015
Balance at April 1, 2014
Cumulative effect of changes in accounting policies

Total accumulated othercomprehensive
incomeProceeds from sales of investment securities
Minority
interests

Total net
assetsThousands of U.S. dollars (Note 1)$ 260,799

$

–

832

$ 245,243

–

–

$

999
–

Restated balance at April 1, 2014

5,016

–―

41,748

Payments for purchase of securities of subsidiaries and affiliated companies(13,556)(285)(112,826)

Payments into time deposits(4,398)(60)(36,604)

57

1,038

474

(46,741)(277,761)
3,354

Proceeds from withdrawal of time deposits$ 507,873 $ 881,248 $ 8,481,506

Payments for loans lended(33,373)(17,163)

Collection of loans repaid

403

570

Others

225

(285)

1,873

(105,024)(126,937)(874,107)––

Increase resulting from changes in accounting
policies of affiliated companies (Note 2)

317,312minority interests to net cash provided by operating activities:

577

–

–

$ 1,025,893

Loss (Gain) on sale and disposal of property, plant and equipment–100¥ 111,006

846,052–¥¥ 123,261

Adjustments to reconcile income before income taxes and

1,253

–

policies of affiliated companies (Note 2)

Income before income taxes and minority interests

32,426

–

–

2015

614

–

¥ 31,335

2014

38,125–

Cumulative effect of changes in accounting policies

2015

Loss on impairment of fixed assets

Net income

Balance at April 1, 2014

Thousands of
U.S. dollars(Note 1)

Cash flows from operating activities:

Depreciation

Acquisition of treasury stock

Net changes of items other than shareholders’ equity

For the years ended March 31, 2015 and 2014

Millions of yen

–

–

–

–

–

–

3,571

Net cash used in investing activities
Cash flows from financing activities:

260,799832

245,243999

507,873881,248

8,467,914

Proceeds from long-term debt

747

27,596

6,217

Cash dividends paid

–

–

–

–

–

–

(202,114)

Repayments of long-term debt

(19,281)(7,410)(160,474)

Net income

–

–

–

–

–

–

758,327

Net increase in bank loans

928

2,624

7,724

5,386

40

44,827

Acquisition of treasury stock

–

–

–

–

–

–

(6,475)

Sale of treasury stock

–

–

–

–

–

–

58

Change of scope of consolidation
Net changes of items other than shareholders’ equity
Balance at March 31, 2015

–

–

–

–

–

–

–

127,707

1,224

481,250

2,621

612,80215,306628,108$ 388,506$ 2,056$ 726,493

The accompanying notes are an integral part of these financial statements.

$ 3,620 $ 1,120,675 $ 896,554 $ 9,645,818

Contribution from minority in consolidated subsidiaries
Increase in treasury stocks

(771)

(83)

(6,417)(24,284)(20,432)(202,114)

Cash dividends paid to minority in consolidated subsidiaries(1,772)(2,254)(14,748)

Net cash provided by (used in) financing activities
Effect of changes in exchange rate on cash and cash equivalents(39,047)81(324,985)

(795)

9,715

(6,617)

Net decrease in cash and cash equivalents(24,863)(37,127)(206,933)

Cash and cash equivalents at beginning of year

202,583

239,691

1,686,084

–

19

–

¥ 177,720¥ 202,583$ 1,479,151

Cash dividends paid

Increase in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.

36

37

Notes to Consolidated Financial Statements
SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIEStranslated at the rates used by the Company.

1 Basis of presenting consolidated financial statements

Investments in the remaining unconsolidated subsidiaries andInvestment securities — Securities are classified into two

The accompanying consolidated financial statements haveaffiliated companies are carried at cost because of theircategories based on the intent of holding: available-for-salebeen prepared in accordance with the provisions set forth inimmaterial effect on the consolidated financial statements.

securities; and securities issued by unconsolidated subsidiaries

Inventories — Inventories are mainly stated at the lower of cost

the Japanese Financial Instruments and Exchange Act, and in

P.T. Vale Indonesia, which is the affiliate company of theand affiliated companies.

determined by the first-in first-out (FIFO) method or net sellingconformity with accounting principles generally accepted inCompany, has changed a certain accounting policy for the year

Japan (“Japanese GAAP”), which are different in certain

ended December 31, 2014. The Sumitomo Metal Mining Group (the(marketable securities) are stated at the fair value. Unrealized

respects as to the application and disclosure requirements of“Group”) has presented the accumulated effects on the retained

gains and losses on these securities are reported, net ofInternational Financial Reporting Standards (“IFRSs”).

earnings in the consolidated financial statements as at April 1, 2014,

applicable income taxes, as a separate component of net

Property, plant and equipment — Property, plant andwhich is the beginning of the earliest period in which retrospective

assets. The cost of securities sold is determined by the moving-equipment are stated at cost.

affiliated companies are based on their accounting records

application is practicable, as “increase resulting from changes inaverage method. Other available-for-sale securities with nomaintained in conformity with generally accepted accounting

accounting policies of affiliated companies” in the consolidated

available fair values (non-marketable securities) are stated atby the straight-line method, based on the estimated usefulprinciples prevailing in the respective countries of domicile andstatements of changes in net assets for the year ended March 31,

moving-average method. Securities issued by unconsolidated

lives of respective assets. The depreciation period generally

make necessary amendments for consolidated financial statements

2015.

subsidiaries and affiliated companies other than those accounted

ranges from 2 years to 60 years for buildings and structures

for by the equity method are carried at cost.

and 2 years to 22 years for machinery and equipment.

The accounts of the Company’s overseas subsidiaries andrequired by Practical Issues Task Force No.18 and No.24 issued by

In the elimination of investments in subsidiaries, the assets

Available-for-sale securities with available fair values

value of inventories regarded as the decreased profitability ofassets, whose write-downs are included in cost of sales.

Depreciation of property, plant and equipment is computed

ASBJ. The accompanying consolidated financial statements haveand liabilities of the subsidiaries, including the portion

been restructured and translated into English with some expanded

attributable to minority shareholders, are recorded based on

Derivatives and hedge accounting — Derivative instruments are

Accrued restructuring charges — Accrued restructuring

descriptions from the consolidated financial statements ofthe fair value at the time the Company acquired control of thestated at fair value. Changes in the fair values are recognized as

charges are provided by the Company and its consolidated

Sumitomo Metal Mining Co., Ltd. (the “Company”) prepared in

respective subsidiaries.

gains and losses unless derivative transactions are used for hedging

subsidiaries to cover the costs of business reconstruction.

accordance with Japanese GAAP and filed with the appropriate

Goodwill (consolidation difference between the investment

purposes.
Accrued environmental measures — Accrued environmental

Local Finance Bureau of the Ministry of Finance as required by thecost and the underlying equity in its net assets at the date of

If derivative transactions are used as hedges and meet

Japanese Financial Instruments and Exchange Act. Someacquisition) is amortized over five years on a straight-line basis.

certain hedging criteria, the Company and its consolidated

measures are estimated and recorded to provide for future

supplementary information included in the statutory JapaneseWith respect to subsidiaries in the United States, goodwill is

subsidiaries defer recognition of gains or losses resulting frompotential costs, such as costs related to the disposal of

language consolidated financial statements, but not required

amortized over twenty years on a straight-line basis.

changes in fair value of derivative transactions until thepolychlorinated biphenyl (PCB) and to environmental

related losses or gains on the hedged items are recognized.

measures for inactive mines.

for fair presentation, is not presented in the accompanying
Cash and cash equivalents and cash flow statements —If interest rate swap contracts are used as hedges and meet

Cash on hand, readily available bank deposits, negotiablecertain hedging criteria, the net amount to be paid or received under

Retirement benefits — In calculating projected benefit obligations

dollars are included solely for the convenience of readerscertificates of deposits and short-term highly liquid investments

the interest rate swap contract is added to or deducted from thethe benefit formula basis is used to attribute the expected benefit

outside Japan, using the prevailing exchange rate at Marchwith maturities not exceeding three months at the time ofinterest on the assets or liabilities for which the swap contract was

attributable to the respective years. Actuarial gains and losses are31, 2015, which was ¥120.15 to US$1.00. The conveniencepurchase are considered to be cash and cash equivalents.

executed.

recognized in expenses using the straight-line method over 10

consolidated financial statements.
The translations of the Japanese yen amounts into U.S.

The Company evaluates hedge effectiveness monthly bytranslations should not be construed as representations that
the Japanese yen amounts have been, could have been, orAllowance for doubtful accounts — The allowance forcomparing the cumulative changes in cash flows from or the

could in the future be, converted into U.S. dollars at this or any

doubtful accounts is provided at an amount determinedchanges in fair value of hedged items and the corresponding

other rate of exchange.

based on the historical experience of bad debt with respectchanges in the hedging derivative instruments.

Prior service costs are recognized in expenses using the straightline method over 10 years within the average remaining service

Some domestic consolidated subsidiaries use the simplified

2 Summary of significant accounting policies

amount determined by reference to specific doubtful

Consolidation — The consolidated financial statements

accounts from customers who are experiencing financial

Foreign currency translation — Receivables and payables

difficulties.

denominated in foreign currencies are translated into
Japanese yen at the fiscal year-end rates.

subsidiaries (68 subsidiaries in 2015, 66 in 2014). All significant

the following period.

period.

to ordinary accounts, plus an estimate of uncollectible

include the accounts of the Company and its significant

years within the average remaining service years commencing from

Balance sheets of consolidated overseas subsidiaries are

method for the calculation of projected benefit obligations.

Research and development expense — Research anddevelopment expense is charged to income as incurred.

inter-company balances and transactions have been

Allowance for losses on investments — The allowance for losses

eliminated. Investments in affiliated companies of which theon investments is provided for the loss on investments in affiliates

translated into Japanese yen at the fiscal year-end rates

Company has the ability to exercise significant influence over

and others based on the amount to be required considering theexcept for account components of net assets, which are

Accounting for certain lease transactions — Finance leases,

financial and operating policies, are accounted for by thefinancial position of the affiliates.

translated at historical rates. Income statements ofexcept for certain immaterial leases, are capitalized andconsolidated overseas subsidiaries are translated at average

depreciated over the lease term.

equity method (16 affiliated companies in 2015, 16 in 2014).

rates except for transactions with the Company, which are38

39

Income taxes — Deferred tax assets and liabilities are
determined based on the differences between the financial
statement carrying amounts and the tax bases, and measured using
the statutory tax rates which will be in effect when the differences
are expected to be realized.

Sales — Sales of merchandise and finished products arerecognized when the products are shipped to customers.

Statement No.7, September 13, 2013)

In order to reflect this change in presentation, the amountsof the account have been reclassified in the consolidated

also exposed to fluctuations in foreign currency exchange

statements of income for the year ended March 31, 2014.

rates. Turning to the metals business, trade receivables are・・“Revised Guidance on Accounting Standard for Business

Consolidated Statements of Cash Flows — “Payments into time

also exposed to the risk of movements in the prices ofCombinations and Accounting Standards for Businessdeposits” and “Proceeds from withdrawal of time deposits” that

non-ferrous metals. Investment securities, which largely

Divestitures” (ASBJ Guidance No.10, September 13, 2013)

was included in “Others“ in cash flows from investing activities ofrepresent shares of companies with whom the Groupthe consolidated statements of cash flows for the year ended

trades or has formed an equity alliance, are exposed to the

March 31, 2014 has become significant in its amounts and isrisk of changes in their market prices.

・・“Revised Accounting Standard for Earnings Per Share” (ASBJ
Statement No.2, September 13, 2013)

・・“Revised Guidance on Accounting Standard for Earnings Per
Share” (ASBJ Guidance No.4, September 13, 2013)

therefore separately presented for the year ended March 31, 2015.
Change in accounting policies — The Company and its

which are generated by global business operations, are(1) Summary

In order to reflect this change in presentation, the amounts of theNotes and accounts payable, which are tradeobligations, generally have maturity dates of one year or

consolidated domestic subsidiaries have adopted Article 35 of the

The above standards and guidances have been revised primarily

accounts have been reclassified in the consolidated statements ofless. In similar fashion to trade receivables, trade obligations“Accounting Standard for Retirement Benefits” (ASBJ Statement

to account for:cash flows for the year ended March 31, 2014.

in the metals business are subject to the risk of movements

No.26, May 17, 2012 (hereinafter, “Statement No.26”)) and Article① How the changes of the shares in subsidiaries, over whichin the prices of non-ferrous metals. A certain portion of

67 of the “Guidance on Accounting Standard for Retirement

the Company continues to control, should be treated by the

3 Notes to financial instruments

trade obligations are related to the import of raw andBenefits” (ASBJ Guidance No.25, March 26, 2015 (hereinafter,

Company when additional stock of a subsidiary is acquired.

1. Status of financial instruments

other materials and as such are denominated in foreign(1) Policies on the handling of financial instruments

currencies. On this basis, they too are open to the risk of“Guidance No.25”)) from the current fiscal year, and have changed② Treatment of acquisition related costs

the determination of retirement benefit obligations and current③ Presentation of net income and the change of shareholders’

The Group procures the funds necessary for its capitalfluctuations in the foreign currency exchange rates. Withinequity from minority interests to non-controlling interests

expenditure, investment and loan plans mainly throughloans and bonds payable, bank loans payable primarilybank loans and the issuance of bonds. Short-term operating

represent funding applicable to operating transactions

funds are funded through bank loans as required. In the event ofwhile long-term debt (with a maximum maturity up toa need for new funds, the Group, in principle, looks to the

March 21, 2025) and bonds mainly concern funding

issuance of short-term bonds (commercial paper). This isrelating to capital expenditures. A certain portion of loans

service costs. In addition the Company and its consolidated
domestic subsidiaries have changed the method of attributing
estimated retirement benefits to periods from the straight -line
basis to the benefit formula basis, and the method of determining
the discount rate from using the bond rate determined by reference④ Provisional application of accounting treatments(2) Effective date
Effective from the beginning of the year ending March 31, 2016.
Provisional application of the accounting treatments isto the terms closely related to the average of the estimatedscheduled to begin for business combinations effective after the

supplemented by bank loans and the use of liquidation schemes

and bonds payable is provided on a floating rate ofremaining service years of the employees, to using a single

beginning of the year ending March 31, 2016.

applicable to notes and accounts receivable. The Group takes

interest basis. Accordingly, this portion is exposed to the risk

great care to monitor the status of its funding needs andof fluctuation in interest rates.

weighted average discount rate that reflects the estimated timing
and amount of benefit payments.
In accordance with Article 37 of Statement No.26, the effect ofchanging the determination of retirement benefit obligations and(3) Effects of the application of the standards
The Company and its consolidated subsidiaries have not yet

financial position. This is to ensure that the Group does notassessed the potential impact of these new standards on theoverly rely on specific procurement methods and financial

aforementioned risks include forward foreign currency

consolidated financial statements.

instruments. Accordingly, steps are taken to ensure a balanced

exchange rate contracts; forward and option transaction

funding portfolio from both the short and long term as well as

agreements; interest rate swap transaction agreements;

direct and indirect financing perspectives.

and interest rate cap transaction agreements, which seek

current service costs has been recognized in retained earnings at
the beginning of the current year.
As a result of the application, net liabilities for retirement benefit
obligations increased by ¥3,332 million (US$27,732 thousands) andretained earnings decreased by ¥2,062 million (US$17,162

Amount per share of common stock — Basic net income pershare is computed based on the weighted-average numberof shares of common stock issued during each year.
Diluted net income per share assumes that outstanding

thousands) at the beginning of the current year. The impact on theconvertible bonds were converted into common stock at the

profit for the current year is immaterial.

beginning of the period at the current conversion price.

The effect on the earnings per share is immaterial.

Cash dividends per share represent the actual amountapplicable to the respective year.

Accounting standards issued but not yet effective —・・“Revised Accounting Standard for Business Combination” (ASBJ
Statement No.21, September 13, 2013)

Temporary surplus funds are utilized only for highly safe

currency exchange rates of trade receivables and tradeof principal.

obligations; the prices of non-ferrous metals applicable to

Derivative transactions are only used to avoid the risks

non-ferrous metal trade receivables and trade obligations;

attributable to fluctuations in the prices of non-ferrous

and interest rates applicable to loans and bonds payable,

metals as well as foreign currency exchange and interest

respectively. For hedging instruments and hedged items,

rates. The Group does not engage in derivative translations

hedging policy, the method of assessing the effectivenessfor speculative purposes.

of hedges and other details in connection with hedge
accounting, refer to the “Derivatives and hedge(2) Details of and risks associated with financial instruments

charges” that was included in “Other, net” in other income

Notes and accounts receivable, which are trade

Statements” (ASBJ Statement No.22, September 13, 2013)(expenses) of the consolidated statements of income for the year

receivables, are exposed to the credit risk of customers. In・・“Revised Accounting Standard for Business Divestitures” (ASBJ

ended March 31, 2014 has become significant in its amounts and isaddition, foreign currency-denominated trade receivables,

・・“Revised Accounting Standard for Consolidated Financial

to provide hedges for the risks of fluctuations in the foreign

financial assets for which there is a low probability of a loss

Change in presentation
Consolidated Statements of Income — “Provision for restructuring

Derivative transactions employed in an effort to offset theaccounting” described in the Note 2 Summary of significant
accounting policies.

(3) Risk management systems relating to financial instruments

therefore separately presented for the year ended March 31, 2015.

40

41

(i) Management of credit risk (risk relating totransactions while providing authority and setting limits andnonperformance of a contract obligation by ascope, individual departments and divisions are responsible

counterparty, etc.)

for formulating operating rules with respect to theWith respect to trade receivables, each operating

implementation of derivative transactions, executing anddepartment and division within the Group is guided by its own

booking transactions and reconciling balances with

set of management rules and regulations. Sales and marketing

counterparties on a regular basis. Consolidated subsidiaries

departments and divisions regularly monitor the status ofMillions of yen

2015
Cash and cash equivalents

Book values ofConsolidated
Balance Sheets

Fair Values

Difference¥ 177,720¥ 177,720

¥

4,944

4,944

Time deposits

Thousands of U.S. dollars
Book values ofConsolidated
Balance Sheets

Fair Values−$ 1,479,151$ 1,479,151−

41,14941,149Difference$−−

also adhere to the Company’s derivative transaction

Notes and accounts
receivable

116,218

116,218−

967,274

967,274−

customers, managing due dates and balances on an individual

management rules and regulations while working to build

Investment securities

292,595

374,350

81,7552,435,247

3,115,689

680,442

customer basis. In this manner, every effort is made to ensure

the aforementioned management structure under which

early detection and the mitigation of concerns regarding

derivative transactions are managed.

collection due to deterioration in financial standing or other(iii) Management of liquidity risks associated with thefactors. With respect to the use of derivative transactions, steps

procurement of funds (the risk of being unable to makeare taken to engage in transactions with highly rated financial

payments on due dates)

institutions only. These steps are taken with the aim of
mitigating counterparty risk.
The maximum amount of the credit risk is shown in the

The Group manages liquidity risk by preparing andupdating a cash management plan six months in advanceLong-term loans receivable
Total Assets

142,891

146,3543,463

1,189,272

1,218,094

28,822¥ 734,368¥ 819,586¥ 85,218$ 6,112,093$ 6,821,357$ 709,264

Notes and accounts
payableBank loans and long-term
debt due within one year

36,76736,767−

306,009

306,009−

99,09499,094−

824,752

824,752−

Long-term debt due after
one year

295,000

296,362

1,362

2,455,265

2,466,601

11,336

Total Liabilities

430,861

432,223

1,362

3,586,026

3,597,362

11,336

based on reports from each department and division.

value of financial assets on the balance sheet which are

Certain domestic consolidated subsidiaries have adopted

subject to credit risk.

a cash management system and are efficiently(ii) Management of market risks (risks associated withmaintaining appropriate levels of liquidity and cash on hand.

Derivative transactions

¥

63

¥

(424)

The Group employs commodity forward transaction and

(487)

$

524

$

(3,529)$(4,053)

Millions of yen

fluctuations in the price of non-ferrous metals, foreign
currency exchange as well as interest rates, etc.)¥(4) Supplementary explanation for fair values, etc. of financial
instruments

2014
Cash and cash equivalents

commodity option transaction agreements, which seek toFair values of financial instruments are determined byprovide hedges for the risks of fluctuations in the prices ofmarket prices. If no market price is available, the fair value

imported raw materials with respect to non-ferrous metals

is based on the value that is calculated in a reasonable

as well as the sales prices of commodity metals andmanner. The determination of such values contains variablecopper concentrate on international commodities markets.

factors and as such the adoption of wide ranging and

At the same time, the Group utilizes forward foreign

differing assumptions may cause values to change. In

currency exchange rate contracts in an effort to offset theaddition, with respect to contract and other amounts

risks of movements in foreign currency exchange rates inapplicable to derivative transactions outlined as follows inconnection with trade receivables and obligations“2. Fair values, etc. of financial instruments” such amounts

Notes and accounts
payableBank loans and long-term
debt due within one year

denominated in foreign currencies, interest rate swap

themselves do not indicate the size of market risksLong-term debt due after
one yeartransaction agreements, and interest rate cap transaction

associated with derivative transactions.

Total Liabilities

Book values ofConsolidated
Balance Sheets

Fair Values

Difference¥ 202,583¥ 202,583

¥

187

187

Time deposits––

Notes and accounts
receivable

90,36790,367–

Investment securities

240,274

298,844

58,570Long-term loans receivable

78,89880,9572,059¥ 612,309¥ 672,938¥ 60,629

38,41038,410–90,45090,450–

293,130

294,419

1,289

421,990423,279

1,289

Total Assets

agreements aimed at hedging the risks of fluctuations ininterest rate.

2. Fair values, etc. of financial instruments

With respect to investment securities, the Group regularly

Amounts on the consolidated balance sheets, fair values

monitors fair values as well as the financial status of issuers

and the differences between the two as of March 31, 2015

(counterparties), and reviews its holdings on a continuousand 2014 are shown as follows. Certain financial instruments

basis taking into consideration its relationships with

were excluded from the following table as the faircounterparties.

values were not available (refer to the table shown in *2 below).

Derivative transactions

¥

883

*

¥

*
54

¥

(829)

Net receivables and obligations arising from derivative transactions are shown as a net amount and items for which aggregated results lead to* net
obligations are shown in parenthesis.

As for derivative transactions, in accordance with
derivative transaction management rules and regulations
that outline the purpose and objectives of derivative

42

43

*3

The aggregate maturities subsequent to March 31, 2015 and 2014 for financial assets are as follows:*1

Millions of yen

Fair values of financial instruments, and matters pertaining to securities and derivative transactions

AssetsLiabilities

1. Cash and cash equivalents, 2. Time deposits

1. Notes and accounts payable, 2. Bank loans

2015

Due within
1 yearCash and cash equivalents¥ 177,720

Time deposits
Notes and accounts receivable$ 1,479,151
41,149

$

$

−

−

−

−

$

−
−

−

967,274

−

−

−

1,640

−

280,208

895,414

13,650¥ 298,882¥ 33,667¥ 107,584¥ 1,640$ 2,487,574$ 280,208$ 895,414$ 13,650

2014

Due within
1 yearDue after
1 year andwithin 5 years

Due after
5 years andwithin 10 years

Cash and cash equivalents¥ 202,583

3. Bonds

Millions of yen

The fair values are based on market prices.
4. Long-term debt
The discounted cash flow method was used to estimate the fair

Time deposits

values, based on marginal borrowing rates as discount rate.

Notes and accounts receivable

market prices of securities exchanges on which shares are

For details regarding securities on an individual holding

−
−

−

Total

listed.

¥Due over10 years

107,584

settlement of these instruments.

The fair values of investment securities are based on the−−

Due after
5 years andwithin 10 years−

high liquidity.

4. Investment securities¥

Due within
1 year

33,667Long-term loans receivablematurities of these instruments.

−−

Due over10 yearsThousands of U.S. dollars
Due after
1 year andwithin 5 years−

The book values approximate to the fair values due to short-term

The book values approximate to the fair values due to short-term

¥

4,944

Due after
5 years andwithin 10 years

116,218

The book values approximate to the fair values due to their

3. Notes and accounts receivable

Due after
1 year andwithin 5 years

Long-term loans receivable

Derivative transactions

Total

¥

–

¥

–

Due over10 years

¥

–

187

–

–

90,367

–

–

–
–

–

29,08948,0901,719¥ 293,137¥ 29,089¥ 48,090¥ 1,719

Refer to the Note 5 Derivative transactions.

purpose basis refer to the Note 4 Securities.

*4

5. Long-term loans receivable

The amount scheduled to be repaid after March 31, 2015, of long-term debt

The fair values of floating-rate long-term loans receivable are
Refer to the Note 8 Bank loans and long-term debt.

based on their book values because the fair values of floating-ratelong-term loans receivable reflect market interest rates within a

4 Securities

short period of time and closely approximate their book values.

(1) The following tables summarize acquisition costs and book values (available fair values) as of March 31, 2015 and 2014:

The fair values of fixed-rate long-term loans receivable arebased on a method of calculation whereby the total principal and

Available-for-sale securities

interest are discounted at the contracted rates as adjusted
Securities with book values (available fair values) exceeding acquisition costs

considering the market rate.

*2

Millions of yen

The financial instruments excluded from the above table as of March 31, 2015 and 2014 are as follows:

Unlisted equity securities

2014

2015
Millions of yen

Thousands of U.S. dollars

2015

2014

2015

Book values ofConsolidated Balance
SheetsBook values ofConsolidated Balance
SheetsBook values ofConsolidated Balance
Sheets¥ 289,458¥ 263,225$ 2,409,139

These instruments are not included in “Investment securities” (refer to above table) as the fair values are not available.

Acquisition cost

Equity securities¥ 78,596¥

Book value

Difference

Acquisition cost

Book value

Difference

145,589¥ 66,993¥ 71,260¥ 118,581¥ 47,321

Thousands of U.S. dollars

2015
Equity securities

Acquisition cost

Book value

Difference$ 654,149$ 1,211,727$ 557,578

Securities with book values (available fair values) not exceeding acquisition costs
Millions of yen

2014

2015
Acquisition cost

Equity securities

¥

6,343

Book value

¥

5,381

¥

Difference

Acquisition cost(962)

¥ 11,791¥

Book value

Difference

9,269¥ (2,522)

Thousands of U.S. dollars

2015
Acquisition cost

Equity securities44$ 52,792$

Book value

Difference

44,786$ (8,006)45

(2) The following table summarizes book values of the securities with no available fair values as of March 31, 2015 and 2014:

Millions of yen

2014

2015
Available-for-sale securities

Unlisted equity securities

Contracted amount and others
Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 54,418¥ 53,035$ 452,917

Total

year ended March 31, 2015 amounted to ¥20 million (US$166

and its consolidated subsidiaries write down the book value ofInterest:

thousands) and related gains amounted to ¥10 million (US$83

such securities. If the fair value of available-for-sale securities

Interest rate cap contracts:

thousands).

declines between 30% and 50% compared to the acquisition

year ended March 31, 2014.
No losses on sales of available-for-sale securities were

Commodity:

possibilities for recovery of the fair value.

Forward contracts:
Sell position−Metal

5 Derivative transactions(4) There was no impairment loss on available-for-sale securities
during the year ended March 31, 2015.
Impairment losses on available-for-sale securities amounted
to ¥3 million during the year ended March 31, 2014.
If the fair value of available-for-sale securities declines by over

Buy position
Total

write down the book value of the securities considering therecognized during the year ended March 31, 2015.

The following tables summarize the market value information asof March 31, 2015 and 2014 of derivative transactions for which
hedge accounting has not been applied:

Recognized
gains (losses)

Total

Over
1 yearFair Value

Recognized
gains (losses)¥ 11,300

¥−

¥

(22)

¥

(22)

¥ 9,285

¥–

¥

47

¥

47

¥ 11,300

¥−

¥

(22)

¥

(22)

¥ 9,285

¥–

¥

47

¥

47

¥ 1,350

¥−

¥

136

¥ (1,214)¥ 1,350

¥–

¥

367

¥ (983)¥ 1,350

¥−

¥

136

¥ (1,214)¥ 1,350

¥–

¥

367

¥ (983)

¥

¥

¥

(11)

¥

Buy position−U.S. dollars

cost thereof, the Company and its consolidated subsidiaries

Fair Value

Forward contracts:
Total

There was no sale of available-for-sale securities during theOver
1 yearCurrency:

50% compared to the acquisition cost thereof, the Company(3) Total sales of available-for-sale securities sold during theContracted amount and others

Buy position−Metal

792

¥−

¥ (501)(501)¥ 10,651

¥–

454

−

−―

−―

8,696

–

–

(11)
–

20,893

−

(60)

(60)

14,638

–

(108)

(108)

Option contracts:
Sell position
Call option−Metal
Buy position
13,020−151¥ 35,159¥−¥ (410)Put option−Metal
Total

¥

151

–

–

–

–

(410)

¥ 33,985¥–¥ (119)¥ (119)Thousands of U.S. dollars

2015
Contracted amount and others
Recognized
gains (losses)

Total

Over
1 year

$ 94,049

$−

$

(183)

$

(183)

$ 94,049

$−

$

(183)

$

(183)

$ 11,236$−$ 1,132$ (10,104)$ 11,236$−$ 1,132$ (10,104)

$

6,592

$−

$ (4,170)$ (4,170)

3,779

−

−

−

173,890

−

(499)

(499)

Fair Value

Currency:
Forward contracts:
Buy position−U.S. dollars
TotalInterest:
Interest rate cap contracts:
Buy position
Total
Commodity:
Forward contracts:
Sell position−Metal
Buy position−Metal
Option contracts:
Sell position
Call option−Metal
Buy position
Put option−Metal
Total

46

108,365

−

1,257

1,257

$ 292,626$−$ (3,412)$ (3,412)

47

Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2015 and 2014 consisted of the following:Thousands of U.S. dollars
Contracted amount and others

Millions of yen

2015

Contracted amount and others

2015Type of transaction

Type of derivative transaction

Currency

Forward contracts:
Buy position
U.S. dollars

Type of transaction

Type of derivative transaction

Currency

Forward contracts:

Foreign currency expectedtransaction

Buy position
U.S. dollars
¥

248

¥

−

¥

(0)

¥

248

¥

−

¥

(0)

Interest

Long-term loans

Total¥ 6,909¥ 4,145¥ (32)¥ 6,909¥ 4,145¥ (32)¥−¥ (505)

2,757

700

Accounts receivable¥ 18,775

Buy position−Metal

Accounts receivable,
Accounts payable

17,880Long-term loans

Total

1,700

−

196

¥ 38,355¥ 2,757¥ 391¥ 20,523¥ 12,314¥ (487)¥ 20,523¥ 12,314¥ (487)

call option contracts are based on zero cost option contracts. There is no transfer of option fees.
* Commodity
The interest rate swap contracts are used as hedges and meet certain hedging criteria. The net amount to be paid or received under these interest** rate swap contracts is added to or deducted from the interests on the assets or liabilities for which these interest rate swap contracts were executed.
Main items hedged are long-term loans.
Millions of yen
Contracted amount and others

2014
Currency

Forward contracts:
Buy position
U.S. dollars

Foreign currency expectedtransaction

Long-term loans

Total
Commodity

Fair Value

(0)

$

(0)

$ 57,503$ 34,499$(266)$ 57,503$ 34,499

$

(266)

$

–

$ (4,203)

22,946

5,826

Accounts receivable$ 156,263

Accounts receivable,
Accounts payable

148,814¥ 1,154

¥

−

¥

6

¥ 1,154

¥

−

¥

6

¥ 8,282¥ 5,916¥ (42)¥ 8,282¥ 5,916¥ (42)¥

Accounts receivable

Total
Interest

14,149–1,631$ 319,226$ 22,946$ 3,254$ 170,811$ 102,489$ (4,053)$ 170,811$ 102,489$ (4,053)

Interest rate swap contracts**:
Paid fixed/received floating

Long-term loans

Totalcall option contracts are based on zero cost option contracts. There is no transfer of option fees.
* Commodity
interest rate swap contracts are used as hedges and meet certain hedging criteria. The net amount to be paid or received under these in**The
terest rate swap contracts is added to or deducted from the interests on the assets or liabilities for which these interest rate swap contracts
were executed.
Main items hedged are long-term loans.

6 Inventories
Inventories as of March 31, 2015 and 2014 consisted of the following:

Merchandise and finished productsInterest rate swap contracts:
Paid fixed/received floating$–

Buy position−Metal

Major hedged items

Total
Interest

Over
1 yearTotal

Type of derivative transaction–$

Sell position−Metal

Call position−Metal*
Accounts receivable

Interest rate swap contracts**:

Type of transaction

$

2,064

Sell position

Total
Paid fixed/received floating

2,064

$

Option contracts:

Sell position

Interest$

Forward contracts:

Option contracts:
Call position−Metal*

Long-term loans

Total

Forward contracts:
Sell position−Metal

Foreign currency expectedtransaction

Interest rate swap contracts:
Paid fixed/received floating

Commodity

Fair Value

Major hedged items

Total

Interest rate swap contracts:
Paid fixed/received floating

Commodity

Fair Value

Major hedged items

Total
Interest

Over
1 yearTotal

Over
1 year

Total

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 75,188¥ 62,304

Work in process

57,96245,057482,414

Raw materials and supplies

68,27348,525568,231¥ 201,423¥ 155,886$ 1,676,429

Total

$

625,784

Forward contracts:
Sell position−Metal

Accounts receivable¥ 2,319−¥ 101

Buy position−Metal

Accounts payable

23,212

1,123

(184)

Accounts receivable

60,70160,701

566

Option contracts:
Sell position
Call position−Metal*
Buy position
Put position−Metal

Accounts receivable

Total
Interest

399

−

142

¥ 86,631¥ 61,824¥ 625¥ 24,602¥ 17,573¥ (829)¥ 24,602¥ 17,573¥ (829)Interest rate swap contracts**:
Paid fixed/received floating
Total

Long-term loans

Commodity call option contracts are based on zero cost option contracts. There is no transfer of option fees.
* The
rate swap contracts are used as hedges and meet certain hedging criteria. The net amount to be paid or received under these interest**rate interest
swap contracts is added to or deducted from the interests on the assets or liabilities for which these interest rate swap contracts were executed.

48

Main items hedged are long-term loans.

49

The Company categorizes its operating assets by such business

7 Loss on impairment of fixed assets
Loss on impairment of fixed assets for the year ended March 31, 2015 consisted of the following:
2015

Millions ofyen

Thousands of
U.S. dollars

Loss

Loss

Location

Major use

Asset category

Kako-gun, Hyogo Prefecture, Japan

Manufacturing facilities for prime
western grade zinc

Building and structures andmachinery and other assets¥ 612$ 5,094

Niihama City, Ehime Prefecture, Japan

Manufacturing facilities for certain
copper-clad polyimide film substrates

Machinery and other assets

1

8

Office electronics

Other assets

Selangor, Malaysia
Total

1

8

¥ 614

$ 5,110units as plants and manufacturing processes based on theamount along with the decline in the market price of land.

divisions of managerial accounting.

The net sales price (fair value less cost to sell) of the asset was

Loss on impairment was recognized for the following reasons:(1) The book values of rental properties were reduced torecoverable amounts due to expectation that their use would(2) The book values of manufacturing facilities for certain copper-used as recoverable amounts for the measurement of impair-Bank loans are generally represented by short-term notes

ment losses. The net sales prices were estimated based on(most of which are unsecured) and bank overdrafts, and bore

third-party appraisal or by similar means.

interest at annual weighted average rate of 0.74% and 0.81%

stagnation in sales volume of nickel powder.

amounts due to the expectation that these facilities would cease

The values in use of assets were used as recoverable amounts

to operate.

for the measurement of impairment losses.

The net sales price (fair value less cost to sell) of the assets was

They were calculated by discounted future cash flows at 7.75%.

used as the recoverable amount for the measurement of

the production of zinc at the Harima Smelter will be discontin-

impairment loss. As sale of these assets was expected to beued.

difficult, the net sales price was assessed as zero.

The values in use of assets were used as recoverable amounts(3) The book values of office electronics were reduced to theirfor the measurement of impairment losses.

recoverable amounts due to the expectation that they would noSince future cash flow was expected to be negative,

longer be in use.

it was assumed that there was no recoverable value.

The net sales price (fair value less cost to sell) of the assets wasused as the recoverable amount for the measurement of

as of March 31, 2015 and 2014, respectively.

materials were reduced to recoverable amounts due toclad polyimide film substrates were reduced to their recoverable

grade zinc were reduced to their recoverable amount because

third-party appraisal or by similar means.

8 Bank loans and long-term debt

divisions of managerial accounting.

(1) The book values of manufacturing facilities for prime western

impairment loss. The net sales price was estimated based on

The net sales prices (fair values less costs to sell) of assets wereunits as plants and manufacturing processes based on the

Loss on impairment was recognized for the following reasons:used as the recoverable amount for the measurement ofcease after the termination of the lease contracts.

(2) The book value of manufacturing facilities for powder
The Company categorizes its operating assets by such business(3) The book value of idle land was reduced to the recoverable

Long-term debt as of March 31, 2015 and 2014 consisted of the following:
Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 18,734¥ 18,108

245,000

243,130

Long-term loans:
Due within one year *Due after one year, maturing through 2025 **$

155,9222,039,118

impairment loss. As sale of these assets was expected to bedifficult, the net sales price was assessed as zero.

50

83,22930,000249,688

Loss

830- average interest rate at March 31, 2015 is 1.08％* Weighted
Weighted- average interest rate at March 31, 2015 is 0.87％**

Location

Major use

Asset category

Rental properties

Land and building and structuresand machinery

Niihama City, Ehime Prefecture, Japan

Manufacturing facilities for powder Building and structures andmaterials
machinery and other assets

381

Chitose City, Hokkaido Prefecture, Japan

Idle land

42¥

Amount due within one year
Total

Kashima City, Ibaraki Prefecture, Japan

Total

10,00030,000

Total
Millions of
yen

Land

10,0000.77% domestic bonds due in 2018
1.26% domestic bonds due in 2021

Loss on impairment of fixed assets for the year ended March 31, 2014 consisted of the following:2014

0.48% domestic bonds due in 2016

10,00010,00083,229313,734

311,238

2,611,186(18,734)(18,108)(155,922)¥ 295,000¥ 293,130$ 2,455,264¥ 1,253

51

The aggregate annual maturities of long-term debt as of March 31, 2015 are as follows:(Adjustment of deferred tax assets and liabilities based on enacted changes in tax laws and rates)

Years ending March 31,

On March 31, 2015, amendments to the Japanese tax regulations were enacted into law. Based on the amendments, the statutory income tax

Millions of yen

Thousands of U.S. dollars

2016¥ 18,734$

2017

35,910298,8762018

11,957

99,5172019

47,372394,2742020

118,507986,325

million (US$2,114 thousands), net unrealized holding gains on securities increased by ¥2,028 million (US$16,879 thousands), and deferred

Thereafter

81,254676,272

gains (losses) on hedges increased by ¥5 million (US$42 thousands) as of March 31, 2015.

¥ 313,734$ 2,611,186

Total

155,922

rates utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized from April 1, 2015 to March 31, 2016
and on or after April 1, 2016 are changed from 35.6% for the year ended March 31, 2015 to 33.1% and 32.3%, respectively, as of March 31,
2015.
Due to these changes in statutory income tax rates, deferred tax liabilities (after deducting the deferred tax assets) increased by ¥2,440 million(US$20,308 thousands) as of March 31, 2015, deferred income tax expense recognized for the year ended March 31, 2015 increased by ¥254

Significant components of the Company’s and its consolidated subsidiaries’ deferred tax assets and liabilities as of March 31, 2015 and 2014 are as
follows:
Assets pledged as collateral for bank loans and long-term debt as of March 31, 2015 and 2014 are as follows:
Millions of yen

Thousands of U.S. dollars

2014

2015

2015
Cash and cash equivalents

¥

1

¥

83

$

Millions of yen

Thousands of U.S. dollars

2014

2015

–

$ 105,460

2015
Deferred tax assets:

8

Allowance for losses on investments¥ 12,671¥

Property, plant and equipment, at net book value and other assets

42,47750,616

353,533

Net operating losses carry forwards

5,596

6,014

46,575Investment securities

93,69074,690779,775

Net defined benefit liability

5,299

4,579

44,103Long-term loans receivable

26,91423,045224,003

Overseas exploration costs

4,310

2,707

35,872

376

280

3,130

Unrealized profits

2,778

2,529

23,121¥ 163,458¥ 148,714$ 1,360,449

Loss on impairment of fixed assets

1,973

2,141

16,421OthersTotal

9 Income taxes
Income taxes in the accompanying consolidated statements

The following table summarizes the significant differences

Accrued business taxes

1,905

429

15,855

Accrued environmental measures

1,729

838

14,390Allowance for bonus payable

1,335

1,353

11,111

Contribution gains on securities to employee retirement benefits trust

1,183

1,189

9,846

464

514

3,862

of income comprise corporation taxes, inhabitants’ taxes

between the statutory tax rate and the Company’s and its

Excess allowance for doubtful accounts

and enterprise taxes. Consolidated overseas subsidiaries areconsolidated subsidiaries’ effective tax rate for financial statement

Otherssubject to income taxes of the countries in which they are

purposes for the years ended March 31, 2015 and 2014:

Gross deferred tax assets
Less valuation allowance

domiciled.

Statutory tax rate

Deferred tax assets after deducting valuation allowance

5,158

4,592

42,93044,401

26,885369,546(20,624)(8,329)(171,652)

23,777

18,556

197,894(170,004)

2015

2014

–

38.0%

Net unrealized holding gains on available-for-sale securities(20,426)(14,515)

Deferred tax liabilities:

Equity in earnings of unconsolidated subsidiaries and affiliated companies

–

(7.4)

Depreciation(11,671)(8,559)(97,137)

Effect of eliminating intercompany dividends received

–

18.8

Reserve for losses on overseas investment(4,953)(4,081)(41,223)

Permanently nontaxable dividends received–(19.8)

Accumulated earnings of overseas subsidiaries(3,039)(3,737)(25,293)

Tax credit

–

(0.9)

Deferred gains on properties for tax purpose(2,068)(2,346)(17,212)

Effect of mining taxes

–

(0.9)

Reserve for explorations(1,184)(1,180)(9,854)

Undistributed earnings of foreign subsidiaries

–

(0.4)

Gains on securities contributed to employee retirement benefits trust

Difference in local tax system

–

(4.4)

OthersIncrease (Decrease) in valuation allowance

–

(0.1)

Difference of statutory tax rate in subsidiaries

–

(1.8)

Loss (Gain) on change in equity–

0.4

Refunded income taxes

–

(0.4)

Others–0.2

Effective tax rate

–

21.3%

Deferred tax liabilities
Net deferred tax assets (liabilities)

(472)

(520)

(3,928)(1,639)(1,934)(13,643)(45,452)(36,872)(378,294)¥ (21,675)¥ (18,316)$ (180,400)

Information for the year ended March 31, 2015 is not provided because the difference between the effective tax rate and the statutory tax rate
is immaterial.

52

53

10 Retirement benefits and pension costs

Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits(1) Outline of retirement benefits and pension costs

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ (63,567)¥ (56,944)$ (529,064)

57,45253,007478,169

The Company and certain consolidated subsidiaries have a defined benefit pension plan and a defined contribution pension plan.
The defined benefit pension plan is based upon years of service, compensation at the time of severance and other factors.

Funded retirement benefit obligations

Such retirement benefits are provided through a lump-sum benefit or a funded pension plan. The Company has a retirement benefit trust.

Plan assets¥

Some domestic consolidated subsidiaries use the simplified method for the calculation of projected benefit obligations. Also, certain consoliUnfunded retirement benefit obligations

dated subsidiaries enroll in multiemployer pension plans. Such plans are recognized as defined contribution plans.

(6,115)¥ (3,937)$ (50,895)(1,317)(933)(10,961)

Total net liability for retirement benefits at end of year¥

(7,432)¥ (4,870)$ (61,856)

Liability for retirement benefits¥(7,763)¥ (4,961)

$

331

91

2,755

(7,432)¥ (4,870)$ (61,856)

Millions of yen

Thousands of U.S. dollars

2014

2015

(2) Defined benefit plans
The detailed notes relating to retirement benefit plans for the 12-month period ended March 31, 2015 and 2014 are as follows:

Asset for retirement benefits
Total net liability for retirement benefits at end of year¥

(64,611)

Movements in retirement benefit obligations, excluding plans to which the simplified method is applied

Balance at beginning of year

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 52,921¥ 52,374$ 440,458

3,279

–

27,291

56,20052,374

467,749

Service costs

1,921

1,802

15,988Interest costs

The cumulative effect of an accounting change
Restated balance at beginning of year
Service costs

Retirement benefit costs

2015
¥

1,921

¥

1,795

$

15,988

679

719

5,651

679

722

5,651

Expected return on plan assets(1,034)(922)(8,606)

Actuarial gains and losses

2,798

(307)

23,288

Net actuarial gains and losses amortization

102

289

849

Benefits paid

(1,928)(1,783)(16,047)

Prior service costs amortization

191

(319)

1,590

Retirement benefit costs based on the simplified method

(32)

(104)

(266)

Interest costs

Prior service costs

58

–

483

Others

244

113

2,031

¥ 59,972¥ 52,921$ 499,143

Balance at end of year

Total retirement benefit costs for the year

¥

1,827

¥

1,458

$

15,206

Other comprehensive income on defined retirement benefit plans, before tax
Movements in plan assets, excluding plans to which the simplified method is applied

Balance at beginning of year

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 49,323¥ 42,833$ 410,512

Expected return on plan assets

1,034

922

8,606

Actuarial gains and losses

3,326

5,732

27,682

857

968

7,133

(1,170)(1,132)(9,738)¥ 53,370¥ 49,323$ 444,195

Contributions paid by the employer
Benefits paid
Balance at end of year

Millions of yen

Thousands of U.S. dollars

2014

2015

2015
Prior service costs

¥

Total

(133)

¥

¥

(778)

¥

2015

2014

2015

Balance at beginning of year

¥ 1,272¥ 1,755$ 10,587

Retirement benefit costs

(32)

(104)

(266)

Benefits paid

(220)

(138)

(1,832)Contributions paid by the employer

(190)

(215)

(1,581)OthersBalance at end of year

54

Unrecognized actuarial gains and losses
Thousands of U.S. dollars

¥

–

(26)

830

¥ 1,272–

Millions of yen(1,107)(5,368)$(6,475)

Total

¥

201

¥

334

¥

(285)

2015
$

(619)

(1,220)¥ (1,019)

Thousands of U.S. dollars

2014

2015

Millions of yen$

Accumulated other comprehensive income on defined retirement benefit plans, before tax

Unrecognized prior service costs
Movements in liability (asset) for retirement benefits to which the simplified method is applied

–
–

(645)

Actuarial gains and losses

1,673(10,154)$(8,481)

–
$

6,908

55

Plan assets

11 Research and development expense1)）Plan assets consisted of the following:

Research and development expense included in selling, general2015 and 2014 are ¥5,865 million (US$48,814 thousands) andand administrative expenses for the years ended March 31,¥6,648 million, respectively.

2015

2014

Bonds

32.4%

30.8%

Equity securities

58.0

58.0

12 Net assets

Cash and cash equivalents

4.5

6.1

Net assets comprise three subsections, which are shareholders’

5.1

5.1

equity, accumulated other comprehensive income, and minority

100.0

100.0

OthersTotalinterests.
Under the Japanese Corporate Law (the “Law”), the entire

consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in
capital could be used to eliminate or reduce a deficit, or
could capitalize by a resolution of the shareholders’ meeting.

2)）Long-term expected rate of returnamount paid for new shares is required to be designated as

Additional paid-in capital and legal earnings reserve may

Current and target asset allocations, and historical and expected returns on various categories of plan assets have been considered in determin-

common stock. However, a company may, by resolution of the

not be distributed as dividends. Under the Law, however, alling the long-term expected rate of return.

Board of Directors, designate an amount not exceeding one-half ofadditional paid-in capital and all of the legal earning reserve

the price of the new shares as additional paid-in capital, which ismay be transferred to other capital surplus and retained earnings,

included in capital surplus.

respectively, however which are potentially available forAssumptions used in calculating the above numbers are as follows:
2014

2015

Under the Law, in cases where a dividend distribution of surplus

dividends.

Discount rate

(Mainly)

0.9%

1.4%

is made, the smaller of an amount equal to 10% of dividend or

Expected long-term return on plan assets(Mainly)

3.5%

3.5%

excess, if any, of 25% of common stock over the total of additional

dividends is calculated based on the unconsolidated financial

paid-in capital and legal earnings reserve must be set aside asstatements of the Company in accordance with Japanese

additional paid-in capital or legal earnings reserve. Legal earnings

laws and regulations.

(3) Defined contribution plans(4) Multiemployer pension plans

The amount of required contributions to the defined contribu-

The amount of required contributions to the multiemployer planstion plans of the Company and certain consolidated subsidiaries

which are recognized as defined contribution plans for the years

for the years ended March 31, 2015 and 2014 were ¥327 million

ended March 31, 2015 and 2014 were ¥81million (US$674 thou-(US$2,722 thousands) and ¥265 million, respectively.

sands) and ¥82 million, respectively.

The maximum amount that the Company can distribute as

reserve is included in retained earnings in the accompanying

13 Contingent liabilities
Contingent liabilities as of March 31, 2015 are as follows:
Millions of yen

The funded status of the multiemployer pension plans at March 31, 2014 and 2013, to which contributions were recorded as net periodic retirement benefit costs, was as follows:

Plan assets
Actuarial liability based on pension plan finance calculation andminimum actuarial reserve*
Balance**

Notes and accounts receivable sold to factoring companies with recourse¥

Thousands of U.S. dollars

2014

2013

2014

¥ 349,753¥ 322,615$ 2,910,970

386,624

367,888

3,217,845¥ (36,871)¥ (45,273)$ (306,875)

tively.
It was presented as “Retirement benefit obligations based on pension plan finance calculation” for the year ended March 31, 2014.
* The
principle factor relating to the balance was the prior service obligations in pension financing which were△△¥35,835 million** (△△US$298,252
thousands) at March 31, 2014,△△¥38,526 million at March 31, 2013.

$

3,620

103,514

861,540

480

3,995

As guarantor for the construction costs of:Electric facilities which provides electric power to Pogo Gold Mine
As a stockholder for future payment of :The mining royalty tax, interests and penalties of Cerro Verde S.A.A.
Total

Pursuant to the Agreement of Guarantees and Measures to
The percentage of the Group’s contribution to the multiemployer pension plans at March 31, 2014 and 2013 were 0.45% and 0.46%, respec-

435

As guarantor for loans of:Non-consolidated subsidiaries and affiliated companies

Millions of yen

Thousands of U.S. dollars

3,331

27,724¥ 107,760$ 896,879

2006 (the “Project”), from the mining royalty tax regime.

Promote Investments with the Government of Peru (the “1998 Sta-

Although Cerro Verde has made an appeal to related agencies

bility Agreement”), which was effective from 1999 through 2013,that the 1998 Stability Agreement exempted the Project, the Com-

Sociedad Minera Cerro Verde S.A.A. (“Cerro Verde”), the Company’s

pany’s share of the payment being demanded in case such demandaffiliated company accounted for by the equity method, has paid

is validated is described above.

taxes based on the assumption that the mining royalty tax regime of2004 did not apply to Cerro Verde.

Cerro Verde had continued to pay taxes for 2009 and onward
based on the same assumption that the 1998 Stability Agreement

In October 2013, the Peruvian national tax authority issued to

had been effective and had exempted the Project. Although the tax

Cerro Verde a payment order of taxes for the years 2006 throughauthority claims that the 1998 Stability Agreement also does not

2008, plus interests and penalties thereon, because the tax author-

exempt the Project for 2009 or onward, the tax authority has not

ity decided that the 1998 Stability Agreement did not exempt theissued to Cerro Verde a payment order of taxes for such years.

Copper Sulfide Ores Development Project, which commenced in

56

57

issued on March 21, 2008).

Amounts reclassified to net income in the current period that were recognized in other comprehensive income in the current or As described above, the Group consists of three segments(loss), segment assets and other material items

previous periods and tax effects for each component of other comprehensive income are as follows:identified by products and services based on the business

The accounting methods for each reported segment are basi-

divisions.

cally the same as those set forth in Note 2, entitled the “Sum-D ue to the start of commercial operation, the Taganito Projectmary of significant accounting policies,” excepting the allocation

has been abolished in the second quarter. The segment was notof the amount equivalent to the interest on the internal loan

affected by the abolition.

payable to each segment.

Millions of yen

Thousands of U.S. dollars

2014

2015

2015
Net unrealized holding gains on securities
Increase during the year

¥ 21,243¥ 10,769$ 176,804

(10)

3

(83)

21,233

10,772

176,721

Reclassification adjustments
Sub-total, before tax
Sub-total, net of tax(4,106)(49,572)In the Mineral Resources segment, the Group mainly engages

¥

6,666

$ 127,149

in the exploration, development and production of non-ferrous

¥

¥

3,666

$

(5,956)

Deferred gains on hedges
Increase during the year739

a nd other products.

164

3,192

1,365

 In the Smelting & Refining segment, the Group mainly(39)(1,283)(325)

Sub-total, before tax
Tax effect

125

¥

1,909

$

1,040

¥ 27,975¥ 44,609$ 232,835

−

1,175

−―

Sub-total, before tax

27,97545,784

232,835

Sub-total, net of tax¥ 27,975¥ 45,784$ 232,835¥¥$

Reclassification adjustments

Remeasurements of defined benefit plans
Increase during the year

485

−

4,037

−

293

Reclassification adjustmentse ngages in smelting and sales of copper, nickel, ferro-nickel,

2,438s uch as gold, silver and platinum.
 In the Materials segment, the Group mainly engages inmanufacturing, processing and sales of semiconductor materials such as leadf rames, tape materials, substrates (electronic packaging materi-

Sub-total, before tax

778

−

6,475

als used to make LCD panel integrated circuits) as well as ofTax effect

(288)

−

(2,397)

advanced materials such as pastes, powder materials (e.g.,

Sub-total, net of tax

¥

490

¥

−

$

4,078

Share of other comprehensive income of affiliated companies
accounted for using equity method
Increase during the year
Reclassification adjustments
Sub-total
Total other comprehensive income

15 Segment information(1) General information about reported segments(a) Basis of decision about reported segments

nickel powder), battery materials (e.g., nickel hydroxide, lithium
nickel oxide) and crystalline materials, manufacturing and sales¥ 42,123¥ 49,628$ 350,587

(5)

−

(42)

¥ 42,118¥ 49,628$ 350,545

petroleum refinery and desulfurization catalysts, as well as¥ 85,985¥ 103,987$ 715,647

autoclaved lightweight concrete (ALC) products.

of automotive exhaust processing catalysts, chemical catalysts,

business activities.
The three aforementioned business divisions and the Sierra
Gorda Project—the purpose of which is to participate in a

The reported segments of the Group refer to business units, forcopper mine development project in the Republic of Chilewhich separate financial information is available and that areare classified as “business segments” of the Group.

subject to periodic reviews by the Board of Directors as the

The Group integrated these four business segments into

supreme, managerial decision-making body to determine thethree reported segments: “Mineral Resources,” “Smelting

allocation of management resources and assess their respective& Refining” and “Materials.” In determining these reported

operating results.

segments, the Sierra Gorda Project is into Mineral Resources,

The Company currently has three business divisions—arm’s length transactions.

z inc and lead, as well as smelting and sales of precious metals

Foreign currency translation adjustments
Increase during the year Inter-segment net sales are calculated based on the prices ofm etal resources in Japan and overseas, as well as sales of ores

(4,786)

(575)

¥

6,151

(474)

Reclassification adjustments

Sub-total, net of tax(b) Types of products and services of each reported segment¥ 15,277

Tax effect58(2) Basis of measurement regarding reported segment income

14 Comprehensive Incomein accordance with the integration criteria and quantitative

Mineral Resources Div., Non-Ferrous Metals Div., Materials

standards set forth in the “Accounting Standard for Disclosures

Div.— in the pursuit of effective business operations by products

about Segments of an Enterprise and Related Information” (ASBJ

and services. Each of these business divisions plans its own

Statement No. 17 issued on March 27, 2009) and “Guidancecomprehensive strategies to be carried out in Japan and over-on Accounting Standard for Disclosures about Segments of anseas for its own product and service lines and engages in diverse

Enterprise and Related Information” (ASBJ Guidance No. 2059(3) Information about reported segment income (loss), segment assets and other material items

Thousands of U.S. dollars

Segment information as of and for the years ended March 31, 2015 and 2014 are as follows:
Millions of yen

2015

MineralResources

Smelting &Refining

Materials¥ 72,349¥ 684,347¥ 161,027

Others*Adjustment**

3,611

¥

Consolidated

Inter segment
Total

Outside customers$

Inter segment¥

917,723

MineralResources

Smelting &Refining

Materials

602,156$ 5,695,772$ 1,340,216

Others*7,638,144$ 30,054

Adjustment**

Consolidated

Net sales:

Total ofreportedsegments

Net sales:
Outside customers

2015

Total ofreportedsegments¥−¥

921,334

41,44225,944

13,17980,565

13,755(94,320)¥ 113,791¥ 710,291¥ 174,206¥

998,288¥ 17,366¥ (94,320)¥

921,334

148,012¥174,226

―−

$

$

–

$

7,668,198

7,668,198

344,919

215,930

109,688670,537

114,482(785,019)$

947,075$ 5,911,702$ 1,449,904$ 8,308,681$ 144,536$ (785,019) $Segment income$

447,565$$

107,482$ 1,231,893

$

Total

676,846(665) $–

218,843$ 1,450,071$ 3,652,734$ 14,483,945

Segment income¥ 53,775¥ 81,323¥ 12,914¥(80)¥ 26,294¥

Segment assets$ 3,349,072$ 5,834,707$ 1,490,994$ 10,674,773$ 156,438

Segment assets¥ 402,391¥ 701,040¥ 179,143¥ 1,282,574¥ 18,796¥ 438,876¥ 1,740,246

Segment liabilities$

238,727$ 3,095,880$

750,994$ 4,085,601$ 74,648 $

677,878$ 4,838,127

Segment liabilities¥ 28,683¥ 371,970¥ 90,232¥

490,885¥ 8,969¥ 81,447¥

581,301

Depreciation

88,348150,179

61,523300,050

2,722

14,540317,312

10,61518,044

7,392

36,051327

1,747

38,125

Amortization of goodwill

983

–

191

1,174

–

–

1,174

Amortization of goodwill

118

−

23

141

−

−

141

Interest income

274

158

61

493

−

6,687

7,180

Interest expense

16

3,347

387

3,750

19

199

3,968

8,920

10,943

3,755

23,618−325

23,943

196,442

78,31328,272

303,027

100

83,662386,789

Investment in equity-method
affiliated companies

55,232

Capital expenditures

Depreciation

Equity in earnings of affiliated companies
Investment in equity-method
affiliated companies
Capital expenditures

20,193

20,126

10,962

51,281712

3,239Interest income

2,280

1,315

508

4,103

–

55,65659,759Interest expense

133

27,857

3,221

31,211158

1,656

33,02574,24091,07831,253

196,571–2,705

199,276

1,634,973

651,793

235,306

2,522,072

832

696,3143,219,218

168,065

167,507

91,236426,808

5,926

26,958459,692

Equity in earnings of affiliated companies* The “Others” segment refers to businesses other than thoseMillions of yen

Others*827,110¥ 3,436

71,953

17,371(89,324)¥

899,063¥ 20,807¥ 11,072¥

109,239¥ 685,979¥ 151,697¥ 29,017¥ 342,491¥ 72,503

8,782

13,3908,007

Smelting &Refining

Materials¥ 72,834¥ 614,831¥ 139,445

41,062

17,011

13,880¥ 113,896¥ 631,842¥ 153,325

Segment income¥ 69,063¥ 29,104

Segment assets¥ 347,987

Segment liabilities

businesses.

ness directly operated by Head Office divisions/departments.

Total ofreportedsegments

MineralResources

2014included in the reported segments and other profit-seeking busi-

Other businesses include technical engineering and real estate

Adjustment**

Consolidated

Net sales:
Outside customers
Inter segment
Total

Depreciation
Amortization of goodwill

−

18

¥

830,546¥ (89,324)¥

830,546¥ 1,581¥¥

114,352¥ 1,185,663¥ 16,437¥ 370,267¥ 1,572,367¥

444,011¥ 5,704¥ 103,599¥

30,179

318

1,929

127

−

¥

−

3,532

−

−

553,31432,426127

Interest income

308

177

32

517

−

4,120

4,637

Interest expense

60

1,425

408

1,893

14

1,655

3,562

Equity in earnings of affiliated companies
Investment in equity-method
affiliated companies
Capital expenditures

60

109

¥

23,006

3,025

3,977

30,008−(238)** “Adjustments” are as follows:

1. Adjustments for segment income are as follows:

Head Office expenses not allocated to each reported segment*Internal interest expense
Eliminations of inter-segmental transactions among
the reported segments

29,770Non-operating income/expenses not allocatedto each reported segment**
Total

183,678

76,212

26,932286,822−42,800329,622

19,38734,656

8,379

62,422682

3,337

66,441* Head Office expenses not allocated to each reported

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ (1,461)¥ (2,835)$ (12,160)

543

534

4,519

1,039

301

8,648

26,173

5,532

217,836¥ 26,294¥ 3,532$ 218,843** Non-operating income/expenses not allocated to eachsegment mainly consist of general administrative expenses

reported segment mainly consist of foreign exchange gains/

and R&D expenses, which are not attributable to the reported

losses and interest expenses, which are not attributable to thesegments.

reported segments.

61

*1

2. Adjustments for segment assets and liabilities are as follows:

Corporate assets not allocated to each reported segment*
Offset and eliminations of inter-segmental receivables among
the reported segments, including those toward Head Officedivisions/departments
Total

Corporate liabilities not allocated to each reported segment*

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 471,716¥ 473,725$ 3,926,059*3

Net sales are segmented by country or region according to custom-

Major countries or regions that belong to the segments are as

ers’ location data.

follows:*2

1. East Asia: Taiwan, Hong Kong and South Korea

Regions are segmented based on their geographical proximity, and

2. Southeast Asia: Indonesia, Malaysia, Thailand, Philippines, etc.

(32,840)(103,458)(273,325)

only those countries for which the net sales amount accounts for

3. North America: United States, Mexico and Canada¥ 438,876¥ 370,267$ 3,652,734

more than 10% of the net sales stated in the consolidated state-

4. Others: Australia, India, Germany, Belgium, etc.

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

¥ 203,498¥ 220,828$ 1,693,700

Offset and eliminations of inter-segmental payables among
the reported segments, including those toward Head Officedivisions/departments(122,051)(117,229)

Total¥ 81,447¥ 103,599

ments of income are separately listed.

(b) Property, plant and equipment(1,015,822)$

2015

Millions of yen

677,878* Corporate assets and liabilities not allocated to each reported segment mainly refer to the assets and liabilities under the control of theJapan

East Asia¥ 141,791¥ 8,484

6. Adjustments on equity in earnings (losses) of affiliated compa-

Head Office divisions/departments, which are not allocatednies refer to the deduction of unrealized income relating to theto the reported business segments.

inter-segmental transactions among the reported segments.

4. Adjustments on interest income consist of interest income at

7. Adjustments on investment in equity-method affiliated compa-

the Head Office divisions/departments, which is not allocatednies represent the amount corresponding to “Foreign currency

to the reported segments, and eliminations of transactionstranslation adjustments.”

among the reported segments.
8. Adjustments on capital expenditures refer to increases thereof at

the Head Office divisions/departments, which are not allocated toUnited States

Others244,572¥ 2,028¥ 66,484¥ 6,014¥the Head Office divisions/departments, which are not allocatedto the reported segments.

Total

¥

469,373

Millions of yen
Japan

East Asia

140,132¥ 8,213Japan$ 1,180,117¥

5. Adjustments on interest expense consist of interest expense atSoutheast Asia

2014

Administration Dept. at the Head Office, which are not allocated to the reported segments.

3. Adjustments on depreciation refer to depreciation at thePhilippines

Philippines

Southeast Asia

212,370¥ 1,624

East Asia

Philippines$ 70,612$ 2,035,556¥

United States¥

OthersTotal

47,785¥ 5,649

Southeast Asia

United States

OthersTotal$ 16,879$ 553,342$ 50,052$ 3,906,558

2015

¥

415,773

Thousands of U.S. dollars*1*2

Regions are segmented based on their geographical proximity,

Major countries or regions that belong to the segments are

and only those countries for which the property, plantas follows:

and equipment amount accounts for more than 10% of the

1. East Asia: China and Taiwan

property, plant and equipment stated in the consolidated

2. Southeast Asia: Malaysia and Singapore

balance sheets are separately listed.

3. Others: Australia, Solomon Islands, Peru, Chile, Brazil(2) Information about major customers

the reported segments, and eliminations of transactions among

Millions of yen

Thousands of U.S. dollars

2015

2014

2015

Sales

Sales

Sales

the reported segments.
Customer’s designation or name

Related reported segments

Related information

Sumitomo Corporation¥ 136,925¥ 123,763$ 1,139,617

Smelting & Refining, Materials(1) Information about geographic areas

MITSUI & CO., LTD.

¥ 75,918¥ 62,359$

Smelting & Refining

631,860(a) Sales
2015

Millions of yen

¥

Japan

China

East Asia

Southeast Asia

North America

OthersTotal

558,183¥ 100,988¥ 91,445¥ 71,406¥ 75,619¥ 23,693¥ 921,334

North America

OthersMillions of
yen
Total

77,489¥ 70,922¥ 11,986¥ 830,546

2014
Japan

China

East Asia

498,457¥ 81,894¥ 89,798

Japan

China

East Asia

Southeast Asia

North America

OthersTotal$ 4,645,718$ 840,516$ 761,090$ 594,307$ 629,372$ 197,195$ 7,668,198¥

Southeast Asia

¥

2015

62

Thousands of U.S. dollars

63

(3) Information about impairment loss of fixed assets by reported segment

The asset retirement obligations as of March 31, 2015 and 2014 are as follows:
Millions of yen

2015

Millions of yen
MineralResources

Smelting &Refining

Materials

OthersAdjustment

¥–

612

2

–

–

Loss on impairment of fixed assets
2014

Consolidated¥

614

Millions of yen
MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated

¥–

–

423

830

–

¥ 1,253

MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated

$–

5,094

16

–

–

$ 5,110

Loss on impairment of fixed assets
2015

Thousands of U.S. dollars

Loss on impairment of fixed assets

2015

2014

2015

Balance at beginning of year

¥ 6,030¥ 5,337$ 50,187

Newly recorded obligations

296

3

2,464

Adjustment due to passage of time

319

276

2,655

Decrease due to fulfillment of obligations

(93)

(9)

(774)

Increase due to change in estimates

130

(506)

1,082

–

0―

―̶−

OthersForeign exchange adjustment
Balance at end of year

(2) Asset retirement obligations other than those recorded in the(4) Information about unamortized balance of goodwill by reported segment

2015

Millions of yen
MineralResources

Balance at end of year¥

403

Smelting &Refining

Materials

OthersAdjustment

–

77

–

–

2014

Consolidated¥

480

Millions of yen
MineralResources

Balance at end of year¥469

Smelting &Refining

Materials

OthersAdjustment

–

100

–

–

2015

Consolidated¥

Thousands of U.S. dollars

843

929

7,016

¥ 7,525¥ 6,030$ 62,630

Pollution Control Act, and at the time of removing its facilities

balance sheets

the Company is required to conduct soil remediation surveys

The Group is required under leasing agreements to restore

in accordance with the Soil Contamination Countermeasurescertain facilities on borrowed buildings and sites to their originalLaw. However, as the responsibility for fulfilling this obligation

condition at the time of removal. In cases where the period

is estimated to be deferred, the timing for performing such sur-of use for lease assets is unclear or for which no relocation

veys is unclear. Therefore, asset retirement obligations cannot

plans are in existence, asset retirement obligations cannot be

be rationally estimated. Consequently, no corresponding asset

rationally estimated. Furthermore, certain sites at our facili-

retirement obligations are included in these obligations.

ties employ hazardous substances specified under the Water

569

Thousands of U.S. dollars

Balance at end of year

MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated$ 3,354

–

641

–

–

$ 3,995

16 Asset retirement obligations(1) Asset retirement obligations that are recorded in the consoli-

64

of asbestos-related regulations and occupational health anddated balance sheets

safety regulations of dioxin-related regulations, and posts theseWith regard to mines and quarries in operation in Japan, theamounts as asset retirement obligations.

Company is required by the Mining Safety Act, the Law on

Sumitomo Metal Mining Pogo LLC, Sumitomo Metal Mining

Special Measures for Mine Damages Caused by the Metal

Arizona Inc., Sumitomo Metal Mining Oceania Pty. Ltd., Coral

Mining Industry, etc., the Quarrying Act and leasing agreements

Bay Nickel Corporation and Taganito HPAL Nickel are subject toto undertake mine pollution prevention activities for post-use

the U.S. GAAP or International Financial Reporting Standards,

specified facilities and to restore such facilities to their originalas well as the mining laws and regulations of the United States,

condition. Based on these requirements, the Company records

Australia and the Republic of the Philippines, respectively. Basedas asset retirement obligations a rational estimate of theon its business plans, the Company determines asset retirement

expenses required for mine pollution prevention activities andobligations by making rational estimates of its obligations under

any removal expenses.

such regulations of restoring operating mines and smelters

For the domestic facilities of the Group in Japan, the Com-to their original condition and the expenses of fulfilling thesepany makes rational estimates of the costs of demolishing andobligations. Asset retirement obligations are calculated based

conducting surveys in accordance with requirements regarding

on determining the estimated period until expenditure, thespecial removal methods and obligations to conduct environ-

remaining useful life of facilities and the mine life (13 to 69) andmental surveys under asbestos damage prevention regulations

discounted by the rates of 1.0% to 11.0%.

65

17 Information for certain leases(2) Condensed financial information of major affiliated companies(1) Finance leases

Pursuant to the relevant accounting standards, condensed financial information of major affiliated companies which are disclosed for the years

Lease assets

ended December 31, 2014 and 2013 are as follows:

Primarily, the production management server at the headquarters

ownership, depreciation of leased assets is computed over the(machinery and equipment)

lease period using the straight-line method with no residual value.
Sociedad Minera Cerro Verde S.A.A.

For lease assets related to finance leases that do not transfer(2) Operating leases
Future minimum lease payments as of March 31, 2015 and 2014 are as follows:
Millions of yen

Thousands of U.S. dollars

2014

2015

248

$ 2,0472015
Due within one year¥

Due after one year
Total

246

¥

1,145

1,391

9,530

¥ 1,391¥ 1,639$ 11,577

Millions of yen

Thousands of U.S. dollars

2014/122013/12

2014/12

Total current assets¥ 81,698¥ 175,987

Total long-term assets

614,174

332,761

5,111,727

Total current liabilities

66,61845,026554,457$

679,967

Total long-term liabilities

90,941

33,024756,896

Total net assets

538,313430,698

4,480,341

Net sales

155,204

177,037

1,291,752

Net income before tax

65,181

92,511

542,497

Net income

39,94759,934332,476

Millions of yen

Thousands of U.S. dollars

18 Related party transaction
Sierra Gorda S.C.M.

(1) Related party transaction
Related party transaction for the years ended March 31, 2015 and 2014 are as follows:
2015
Name of related party

Capitalinvestment

Location

Segment

Description of thebusiness relationship

Votinginterest

Transaction detailThousands of
U.S. dollars

Sierra Gorda S.C.M.

Santiago,
Chile

Mineral$ 1,214,302 Resources

Debt guarantee*
Debt guarantee and pledge as
security for the loan etc. from theIndirectly financial institution and others
Pledge as security**
45.0%
Loans

Loans receivable***Amounts
Millions ofyen

Thousands of
U.S. dollars¥ 100,164$ 833,658

84,105700,000

36,318302,272

2014
Name of related party

Capitalinvestment

Location

Segment

Votinginterest

Description of thebusiness relationshipTransaction detailThousands of
U.S. dollars

Sierra Gorda S.C.M.

Santiago,
Chile$

Mineral934,302 Resources¥ 82,729¥ 57,947

Total long-term assets

696,018

411,520

5,792,909

Total current liabilities

50,51740,397420,449

Total long-term liabilities

552,921330,315

4,601,923

Total net assets

146,748

98,755

1,221,373

Net sales–––

Net income before tax

–

–

–

Net income

–

–

–

Millions of yen

Thousands of U.S. dollars

2014/12$450,836Compania Contractual Minera Candelaria

72,01647,164*  The Company pledges its owned shares in Sierra Gorda S.C.M. as security for the loan from the financial institution to finance developments of the** Sierra Gorda copper project. The amounts of security is the debt balance as of March 31, 2015 and 2014.
*** The Company determined terms and conditions of loan based on market interest rates, etc.
The Company guarantees the loan etc. from the financial institution

2013/12¥ 54,168

Amounts
Millions ofyen

Debt guarantee*
Debt guarantee and pledge as
security for the loan etc. from theIndirectly financial institution and others
Pledge as security**
45.0%
Loans
Loans receivable***2014/12
Total current assets

2013/12

2014/12 *Total current assets

2014/12 *–¥ 62,138–

Total long-term assets–

162,656–

Total current liabilities–

14,073–

Total long-term liabilities–

19,660–Total net assets–

191,061–

Net sales–

139,778–

Net income before tax–

72,631–

Net income–

55,875–*Information for the year ended December 31, 2014 is not provided due to diminished importance.
66

67

Independent Auditor’s Report

19 Earnings per share
Reconciliation of the difference between basic and diluted net income per share for the years ended March 31, 2015 and 2014 are as follows:
Millions of yen

Thousands of U.S. dollars

2014

2015

80,258$ 758,327

552,186−

2015
Basic net income per share calculation
Numerator:
Net income¥¥ 91,113

Denominator (thousands of shares):Weighted average number of shares
Basic net income per share (yen and U.S. dollars)

551,848¥ 165.11¥

145.35$¥ 91,113¥

80,258$ 758,327

91,50380,656

761,573

Weighted average number of shares

551,848

552,186−

Assumed conversion of convertible bonds

60,45969,638−

1.37

Diluted net income per share calculation
Numerator:
Net income
Adjusted net income
Denominator (thousands of shares):

Adjusted weighted average number of shares

612,307

Diluted net income per share (yen and U.S. dollars)¥ 149.44

621,824¥

129.71−$

1.24

20 Subsequent event
Appropriation of retained earnings
The following appropriation of retained earnings of the Company, which has not been reflected in the accompanying consolidated financial statements for the year ended March 31, 2015, was approved at a shareholders’ meeting held on June 29, 2015:

Year-end dividends of ¥24.00 per share

68

Millions of yen

Thousands of U.S. dollars¥ 13,240$ 110,196

69

Glossary

Mineral Resources Business andSmelting & Refining Business

unit of exchange for valuing goods inmuch more energy to achieve melting.

Resource Reserves

nickel refinery. The matte and mixed

Materials Businessterms of gold or silver weights, the troy

For this reason, the hydrometallurgicalGold

sulfide ores are dissolved in chlorine

Copper-clad polyimide film (CCPF)

Metal Trading

ounce is still used today in gold trading.

approach is generally used to refine these

Canadian standard

at high temperature to produce high-

CCPF is a polyimide film that is coatedores.

•Reserve

grade nickel using electrolysis. MCLE

using a copper base. It is used as a

Amount of ore evaluated to have purity

is competitive in cost terms, but posesmaterial for making COF substrates.

London Metal Exchange (LME)The LME specializes in trading of non-

Metal Refining

ferrous metals such as copper, nickel,

Smelting and refining

Copper concentrates

at or above the level indicated in thesignificant operational challenges, andaluminum, lead and zinc. The LME

Refining processes extract valuable

Used as raw materials in copper smelting,prefeasibility study that is judged to be

only two other producers besides SMM

Leadframes

trading prices for metals are used as themetals from ores or other raw

copper concentrates have a copper

economically recoverable.

have commercialized it, using similar

Leadframes are electronic packaging

international pricing benchmarks for sales

materials. They fall into two basic

content of about 30% by weight. The

technology.

materials used to form connections inof refined metal and purchases of refining

types: pyrometallurgical (dry) andremainder consists mostly of sulfur and•Resourceores.

hydrometallurgical (wet). At SMM’s Toyoiron. Copper concentrates are madeOre of purity or quality that is estimatedMain Applications for Metals

boards. They contain thin strips of a metalsite (Saijo, Ehime Prefecture) copper

mostly from sulfide ores. Ores extracted

to be economically extractable.

Copperalloy containing mostly nickel or copper.

Treatment Charge (TC) and Refining

concentrate preprocessing (treatment

from overseas mines have a typical grade

Charge (RC)processes) are pyrometallurgical,

of about 1%. The ores are then “dressed”

Japanese standard (JIS)and other forms. Besides power cables,

Secondary batteries

These are commonly used in the terms

while the nickel plant (Niihama,at the mine to increase the purity and•Recoverable ore

copper is used widely in consumer

Secondary batteries are ones that can beof purchase for copper concentrate or

Ehime Prefecture) makes use of

produce concentrate. Most of the copper

Amount of ore expected to be recovered,applications such as wiring in vehicles or

recharged and used again. SMM supplies

nickel ore for refining. They are amounts

hydrometallurgical processes throughout.

ores imported by SMM for smelting inconsisting of actually recoverable ore plus

houses, and in air conditioning systems.

battery materials that are used in thedesigned to cover refining costs. For

The term ‘smelting’ is used for theJapan are concentrates.

slag.

example, copper concentrate contracts

extraction of metal from ores using

may define a purchase price based on themelting and heating (pyrometallurgy). The

Nickel oxide ores

LME price at a certain date, minus the TC

term ‘refining’ refers to any process thatWhilst the higher-grade sulfide ores areor RC being used at the time.

increases the grade or purity of a metal.

used predominantly in nickel refining,

Copper is fabricated into wires, pipes

anodes of nickel metal hydride batteries
Electrolytic nickel

and lithium-ion rechargeable batteries,•Identified resources

This form of nickel, which has a purity

which supply power for electric vehicles,

Total ore identified at the site.

of at least 99.99%, is used in specialty

hybrid vehicles or notebook computers,

steels, electronics materials andamong other consumer applications.

nickel oxide ores are more prevalent than

Copper and Nickel

electroplating, among other applications.

London fixing

Pyrometallurgical refining

nickel sulfides. The sulfide-oxide ratio

Reserve according to standards of the

SMM is the only producer of electrolytic

Gold is not traded on the LME. Its price

The precursor ore is melted at highin current nickel reserves is believed torespective country.

nickel in Japan.

is determined for each transaction

temperature in a furnace, and refining

be about 3:7. High refining costs andbetween market participants. The

techniques are applied to separate

technical issues have limited use of oxide

Nickel Production Process

Ferronickel

financial institutions in the London Bullion

the metal in a molten state. While thisores in nickel refining to date, but SMM

Coral Bay Nickel Corporation (CBNC)

Ferronickel is an alloy containing nickel

Market Association (LBMA) agree on atechnique allows large-volume ore

has succeeded in refining nickel from

Based in the Philippines, this SMM(about 20%) and iron. Its main use is instandard price for gold based on theseprocessing, it also requires periodic

low-grade oxide ores based on HPAL

subsidiary produces mixed nickel-

the manufacture of stainless steel, whichtransactions and publish it on the morning

furnace maintenance.

technology.

cobalt sulfides using HPAL technology

is about 10% nickel by weight. Based inand exports the raw materials to the

Hyuga, Miyazaki Prefecture, SMM Groupand afternoon of each trading day. This
“London fixing” price is the benchmark

Hydrometallurgical refining

Mixed sulfide (MS) ores

SMM Group’s nickel refining facilities infirm Hyuga Smelting Co., Ltd. produces

for trading in gold.

The ore and impurities are dissolved in a

CBNC and Taganito produce a mixed

Niihama, Ehime Prefecture.

ferronickel.

solution, and chemical reactions are usednickel-cobalt sulfide intermediate

Pound (lb)to separate out the metal.

containing about from 55% to 60% nickel

High Pressure Acid Leach (HPAL)

Gold

Part of the imperial system of measures,This refining method is stable and allows

by weight. This is used as a raw material

HPAL technology enables the recovery

Gold is in demand worldwide forthe pound is the standard unit of weightfor continuous refining, but the solutions

in electrolytic nickel production.

of nickel from low-grade nickel oxide ores

investment and decorative purposes.

used in measuring and pricing baserequired are costly.

that traditionally were difficult to process.

Gold is widely used in Japanese industryMatte

SMM was the first company in the world

within the electronics sector because of
its high malleability and ductility.

metals such as copper and nickel, and in
TC/RC calculations. One pound equals

Metal Ores

A matte is another term for metal

to apply it successfully on a commercial

approximately 453.59 g; a metric ton

Sulfide ores

sulfides. For raw material, electrolytic

scale. The oxide ores are subjected toequals approximately 2,204.62 lb.

These ores contain copper, nickel ornickel production at SMM also uses ahigh temperature and pressure andother metals chemically bonded to sulfur.

nickel matte (of about 75–80% purity)

reacted under stable conditions with

Troy ounce (toz)Since the application of heat breaks thesesourced from P.T. Vale Indonesia.

sulfuric acid to produce a nickel-rich

The troy ounce is the standard unit ofbonds, releasing the sulfur, such ores areweight for precious metals such as gold

generally refined using pyrometallurgicaland silver. It equals approximately 31.1 g.

techniques.

It is named after Troyes, a city in the70

semiconductor chips and printed circuit

refining intermediate.
Matte Chlorine Leach
Electrowinning (MCLE)

Champagne region of central France that

Oxide ores

Matte Chlorine Leach Electrowinning

was the site of a major market in Europe

These ores contain metals in oxidized(MCLE) is the technology used in thein medieval times. Originally used as aforms. Unlike sulfide ores, oxides needmanufacturing process at SMM’s

71

Consolidated Subsidiaries and Equity-Method Affiliates
As of March 31, 2015

Percentage
of VotingShares (%)

Location

Sumiko Resources Exploration &Development Co., Ltd.

100

Japan

Geological survey of resources, test boring

Sumitomo Metal Mining America Inc.

100

USA

Exploration, management of mining subsidiaries inNorth America

Mineral Resources

Principal Operations

Equity-Method Affiliates
Jinlong Copper Co., Ltd.

27

China

Manufacture and sale of electrolytic copper andsulfuric acid

Acids Co., Ltd.

50

Japan

Manufacture and sale of sulfuric acid and related
products

PT Vale Indonesia Tbk.

20

Indonesia

Nickel ore mining, nickel smelting

Nickel Asia Corporation

26

Philippines

Nickel ore mining

Figesbal SA

26

New Caledonia

MS Zinc Co., Ltd.

50

Japan

Sale of zinc and related operations

Mitsui Sumitomo Metal Mining Brass &Copper Co., Ltd.

50

Japan

Manufacture and sale of copper and brass products
and processed copper and brass products

Percentage
of VotingShares (%)

Location

SH Materials Co., Ltd.

51

Japan

Manufacture and sale of leadframes

Ohkuchi Electronics Co., Ltd.

100

Japan

Recovery and recycling of non-ferrous metals,
manufacture of functional ink and crystal products

Consolidated Companies

80

USA

Mining and related operations

SMMA Candelaria Inc.

100

USA

Investments in local companies in Chile operating theCandelaria Mine

Sumitomo Metal Mining Canada Ltd.

100

CanadaExploration, consulting

Sumitomo Metal Mining Oceania Pty. Ltd.

100

Australia

Resource surveys, mine development and related
operations in Oceania

Sumitomo Metal Mining Pogo LLC

100

USA

Investment in the Pogo Mine

SMM Resources Inc.

100

CanadaMineral resources business

SMM Cerro Verde Netherlands B.V.

80

Netherlands

SMM Exploration Corporation

100

USA

SMM Solomon Ltd.

100

Sumitomo Metal Mining Peru S.A.

100

Peru

Exploration

Ohkuchi Materials Co., Ltd.

100

Japan

Manufacture of leadframes

Sumitomo Metal Mining Chile Ltda.

100

Chile

Exploration

Sumiko Solomon Exploration Co., Ltd.

70

Japan

Exploration in the Solomon Islands

Niihama Electronics Co., Ltd.

100

Japan

Manufacture of substrate material (two-layer platedboards)Sumac Mines Ltd.

100

CanadaExploration

Niihama Materials Co., Ltd.

100

Japan

Manufacture of leadframes

Stone Boy Inc.

80

USA

Exploration

SH Precision Co., Ltd.

100

Japan

Manufacture of leadframes

SMM Sierra Gorda Inversiones Ltda.

70

Chile

Investment in the Sierra Gorda Project

Shinko Co., Ltd.

97

Japan

SMM-SG Holding Inversiones LTDA.

100

Chile

Investment in the Sierra Gorda Project

Design, manufacture and sale of printed circuitboardsSumitomo Metal Mining do Brasil Ltda.

100

BrazilExploration

SH Asia Pacific Pte. Ltd.

100

Singapore

Regional headquarters for overseas leadframe
operations

Equity-Method Affiliates

Sumiko Tape Materials Singapore Pte. Ltd.

100

Singapore

Regional headquarters for tape material operations

Sociedad Minera Cerro Verde S.A.A.

Cerro Verde Mine

Malaysian SH Electronics Sdn. Bhd.

100

Malaysia

Manufacture and sale of leadframes

Malaysian SH Precision Sdn. Bhd.

100

Malaysia

Manufacture and sale of leadframes

SH Electronics Taiwan Co., Ltd.

70

TaiwanManufacture and sale of leadframes

Taiwan Sumiko Materials Co., Ltd.

100

TaiwanManufacture of thin-film paste

21

Investments in local companies in Peru operating the
Cerro Verde Mine
Mineral resources business

Solomon Islands Exploration in the Solomon Islands

Peru

Materials

Principal Operations

Consolidated Companies

Compania Contractual Minera Candelaria

20

Chile

Candelaria Mine

Compania Contractual Minera Ojos Del
Salado20

Chile

Ojos Del Salado Mine

Sierra Gorda S.C.M.

45

Chile

Sierra Gorda MineSH Electronics Chengdu Co., Ltd.

70

China

Manufacture and sale of leadframes

Cordillera Exploration Co., Inc.

25

Philippines

Exploration

SH Precision Chengdu Co., Ltd.

70

China

Manufacture of leadframes

SH Electronics Suzhou Co., Ltd.

100

China

Manufacture and sale of leadframes

Suzhou SH Precision Co., Ltd.

100

China

Manufacture of leadframes

Percentage
of VotingShares (%)

Location

Principal Operations

Hyuga Smelting Co., Ltd.

60

Japan

Ferronickel smelting

Shisaka Smelting Co., Ltd.

100

Japan

Manufacture of crude zinc oxide

Sumiko Logistics Co., Ltd.

100

Japan

Sumic Nickel Netherlands B.V.

52

Coral Bay Nickel Corporation

Smelting & Refining

Sumiko Tec Co., Ltd.

100

Japan

Terminals and connectors for electronic and electric
equipment; related components, electric wire,
power cords and pressure bonding machines andtheir maintenance; manufacture and sale of formed
products for optical equipment

Maritime trading, harbor transportation and services,land transportation

Nittosha Co., Ltd.

100

Japan

Plating of metal products, surface treatment
processing and distribution

Netherlands

Investment in nickel and cobalt development
businesses, sale of nickel and cobalt

Sumiko Kunitomi Denshi Co., Ltd.

100

Japan

Manufacture of crystal products and magnetic
materials

54

Philippines

Manufacture of nickel and cobalt intermediates

Sumiko Energy Materials Co., Ltd.

100

Japan

Manufacture of battery materials

Taganito HPAL Nickel Corporation

62.5

Philippines

Manufacture of nickel and cobalt intermediates

Shanghai Sumiko Electronic Paste Co., Ltd.

69

China

Manufacture and sale of thick-film paste

Sumitomo Metal Mining Philippine Holdings
Corporation

Dongguan Sumiko Electronic Paste Co., Ltd.

100

China

Manufacture and sale of thick-film paste

100

Philippines

Regional headquarters

SMM KOREA Co., Ltd.

100

South Korea

Sumitomo Metal Mining Management(Shanghai) Co., Ltd.

100

China

Sale of Group products, operations management
support for Group companies in the China region,
consulting business

Sales support for advanced materials and business
operations

SMM Precision Co., Ltd.

100

Japan

Manufacture and sale of optical communications
components

Sumitomo Metal Mining (Hong Kong) Co., Ltd.

100

China

Sale of Group products

Taihei Metal Industry Co., Ltd.

97

Japan

Manufacture of heat-, corrosion- and friction-resistantsteel castings

Consolidated Companies

72

Nickel ore mining, harbor transportation

Sumitomo Metal Mining Arizona Inc.

73

Corporate Data and Investor Information
As of March 31, 2015

Consolidated Companies (continued)
Sumico Lubricant Co., Ltd.

100

Japan

Manufacture and sale of lubricants, in particularmolybdenum-containing special lubricants

Sumico Lubricant Trading (Shanghai) Co., Ltd.

100

China

Sale of lubricants

Sumitomo Metal Mining Siporex Co., Ltd.

100

Japan

Manufacture and sale of ALC (autoclaved lightweightaerated concrete), base isolation products, and otherconstruction materials

50

Japan

Manufacture and sale of copper strip, copper alloy
fabricated products, and processed copper products

Corporate Data
FoundedIncorporated
Paid-In Capital
Number of Employees
Head Office

Equity-Method Affiliates
SH Copper Products Co., Ltd.
N.E. Chemcat Corporation

50

Japan

Manufacture and sale of catalysts, recovery andrefining of precious metals

Nippon Ketjen Co., Ltd.

50

Japan

Manufacture and sale of desulfurization catalysts for
petroleum processing

Granopt Co., Ltd.

50

Japan

Manufacture and sale of rare earth iron garnet (RIG)

Percentage
of VotingShares (%)

Location

Other

Principal Operations

Consolidated Companies
Sumiko Techno-Research Co., Ltd.

100

Japan

Environmental measurement verification operations
such as water quality, air, soil, noise and vibration;
data collection, adjustment and product evolution as
well as technological development

Sumiko Technical Service Co., Ltd.

100

Japan

Commission-based work in area of non-ferrous
smelting, personnel agency businessJapan

Survey, design, manufacturing, repair andmaintenance of various types of machinery,equipment and plants in wide-ranging fields including
non-ferrous metal smelting, chemicals, and theenvironment

Sumitomo Metal Mining Engineering
Co., Ltd.

100

Sumiko Plantech Co., Ltd.

100

Japan

Manufacture of machinery and equipment and repair
work for non-ferrous metal smelting and chemicalplants; installation of machinery and equipment andpiping work; steel structure work

JCO Co., Ltd.

100

Japan

Management of facilities using uranium and related
wastesJapan

Construction of steel frame and reinforced concreteapartments and condominiums
Irradiation sterilization service for pharmaceuticalproducts, medical instruments and pharmaceuticalcontainers; modification of various industrial
materials

Igeta Heim Co., Ltd.

100

Japan Irradiation Service Co., Ltd.

100

Japan

SMM Holland B.V.

100

Netherlands

Investment in nickel and cobalt development
businesses

Contact Information
Public Relations & Investor Relations Department
11-3, Shimbashi 5-chome, Minato-ku,
Tokyo 105-8716, Japan
Phone: +81-3-3436-7705
Facsimile: +81-3-3434-2215
Website: http://www.smm.co.jp/E/

1590
1950
¥93.2 billion
8,766 (Consolidated)
11-3, Shimbashi 5-chome,
Minato-ku, Tokyo 105-8716,
Japan

Registrar of Shareholders
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8233, Japan
Stock Transfer Agency Department: 4-1, Marunouchi
1-chome, Chiyoda-ku, Tokyo 100-8233, Japan

Investor Information
Closing Date
March 31
Ordinary General Meeting
June
Common Stock
Number of authorized shares
1,000,000,000
Number of issued and outstanding shares
581,628,031
Number of shareholders
40,233
Listing of shares
Tokyo
Stock transaction unit
1,000 shares

Method of Public NoticeElectronic notification (However, if electronic notification is
not available due to unavoidable circumstances, notice will
be published in the Nihon Keizai Shimbun newspaper.)Independent Public Accountant
KPMG AZSA LLC
1-2, Tsukudo-cho, Shinjuku-ku, Tokyo

Major Shareholders

Number ofshares held
(thousands)

Shareholding
ratio (%)

30,319

5.21

Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)

27,868

4.79

Toyota Motor Corporation

18,916

3.25

Sumitomo Mitsui Banking Corporation

7,650

1.31

Sumitomo Realty & Development Co., Ltd.

7,490

1.28

Sumitomo Life Insurance Company

7,474

1.28

THE BANK OF NEW YORK MELLON SA / NV 10

7,157

1.23

STATE STREET BANK AND TRUST COMPANY 505225

7,053

1.21

Sumitomo Corporation

7,000

1.20

THE BANK OF NEW YORK MELLON AS DEPOSITARY BANK FOR DR HOLDERS

6,958

1.19

Breakdown of Shareholders(thousands of shares)

Treasury Stock
29,948
5.15%

Financial
Institutions
184,824
31.78%

Individuals
andOthers80,46413.83%
ForeignInvestors
196,81333.84%

Securities
Companies
13,6202.34%
Other Entities
75,95613.06%

Stock Price and Trading Volume
SMM (yen) (left)

TOPIX (points) (left)

Trading volume (millions of shares) (right)

2,000

1,500

60

1,000

30

500
Apr. 2013

0Oct. 2013

Apr. 2014

Oct. 2014

Apr. 2015

Note: TOPIX began on 4 January 1968 with a base level of 100.

74

75

SUMITOMO METAL MINING CO., LTD.
11-3, Shimbashi 5-chome, Minato-ku, Tokyo 105-8716, Japan
http://www.smm.co.jp/E/