SMM Focusing on Early Contributions from Transition of Large-scale Projects to Production Stage;Pursuing Efficient Management to Further Strengthen Earnings PowerThis is a transcript of Sumitomo Metal Mining Co., Ltd.’s Progress of Business Strategy briefing for
FY2023, held on May 16, 2024.
[Speaker]
Sumitomo Metal Mining, President and Representative Director, Akira Nozaki
1. Safety Initiatives

Akira Nozaki: I am Akira Nozaki, president of Sumitomo Metal Mining. Thank you very much for attending
our business strategy briefing for FY2023. We would like to express our utmost gratitude to all of you foryour continued understanding and support of our company’s business. I will now explain the points oftoday’s briefing using the presentation material.
We will look at our safety initiatives. As for the number of employee accidents in Japan for FY2023,
unfortunately we have been unable to achieve the 3-year Plan target of seven cases or less, although it
was better than the previous year. The number of cases has already reached the 3-year Plan target ofseven in the January to April 2024 period. So, we are focusing on how to keep it under control from nowon.
While this may not be directly related to the raising of retirement age for employees, there is an increasein accidents such as falling down and slipping involving older adults. The causes may be minor, but theend results are increased number of accidents such as broken bones. Therefore, we have set building
an age-friendly workplace as a target for FY2024.

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1. Global Economy

I would like to talk of the global economy to the environment surrounding SMM. There is no end to therising tensions primarily caused by geopolitical risks and the US-China trade friction or to the formationof economic blocs. The slide shows the economic growth rates forecast by IMF. The global growth rate
is at the three percent level, where you do not feel that much of actual growth.
Looking at the trends in the past few years, there was the Covid-19 pandemic, but we also saw prices ofmineral resource rising due to rapid increase in energy prices following Russia’s invasion of Ukraine.
Energy costs as such have peaked, but with Covid-19 subsiding after that, demand expanded andinflation and labor costs also rose. In particular, labor cost underpins all other costs, so we areexperiencing a continued rise in operating costs.
2. Profit before Tax Analysis FY2023 Results vs. FY2022 Results2Here, we will look at the FY2023 performance. Compared to the FY2022 results, unfortunately profits
have declined significantly. There was a decline of about 30.0 billion yen due to market factors and if you
include other gain/loss on foreign exchange, it pushed profits down approximately 60.0 billion yen.
Profits have declined significantly in the Materials Business also, which also includes the transfer of a
subsidiary. Profit/loss excluding temporary factor at this stage is assumed to be in the 100.0 to
110.0billion-yen range.
3. Profit before Tax Analysis: FY2024 Forecast (May) vs. FY2023 Results

This is our FY2024 forecast. Incorporating assumptions for foreign exchange and non-ferrous metal
prices, we forecast it to be on par with FY2023 as of now.
Profit/loss excluding temporary factor has accumulated to about 10.0 billion yen, which is due to theimpact of two large-scale projects (Quebrada Blanca and Côté). Profit before tax is up 22.5 billion yen
year on year because of them. These two projects have just started production and costs have notstabilized and production volumes also have not been normalized. We expect there is more to come interms of contribution to profit/loss excluding temporary factor.

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4. Metal Supply and Demand Outlook

Here I will explain the supply-demand outlook for copper and nickel, which is the premise for the business
forecasts.
For copper, we expect tightness to emerge in the short term. After the Cobre Panama mine in Panama
suspended its operations in November 2023, there is a lot of confusion in the copper concentrate market.
In terms of current spot trading, we are seeing the impossible situation of negative TC/RC, which is theprocessing cost for copper concentrate. The outlook from around the latter half of 2023 was that newmines would start operations and by 2024 or 2025 there would be a slight surplus of copper concentrate,
but currently the supply and demand outlook is negative for copper concentrate.
On the other hand, the supply and demand outlook for copper ingot is slightly positive. Though positive,
this is only around 200,000 tons out of about 20-odd million tons, and therefore it is more or less within
the margin of error. The current situation is one which we often refer to as “not enough ore, but surplus
of ingot,” and a very difficult situation is developing for custom smelters.
Copper ingot currently has exceeded 10,000 USD in the market, and the three-month future is contango(the future prices are higher than the spot price). Rather than feeling a supply tightness in spot trading, itappears that there are more players who are worried about the future supply.
On the other hand, the balance of the demand and supply outlook for nickel is positive for 2024. We are
expecting growth in demand for stainless steel applications and battery materials for EVs. At the sametime, we are also seeing excessive supply due to production increase of nickel pig iron (NPI) in Indonesia
and production increase of Class I from intermediate products.
Nickel, similar to copper, is a material essential for social infrastructure and formation of green society.
On the whole, the nickel market will see demand growth but in the near term there is oversupply.

45. Metal Price Estimation for FY2024

Here we will look at the metal price estimation. The price assumptions of the company’s plan are$9,000/tonnes for copper, $8.00/lb for nickel, and $2,000/toz for gold.
As in a regular year, there is likelihood of significant fluctuations in fundamentals. Earlier, I talked about
how the supply and demand of copper concentrate is being viewed as a problem. You might have heard
the news that some copper smelters are making production adjustments in response to the extremely
high concentrate price. This could also change the demand and supply of ingot and therefore it is quitedifficult to judge it.
On the other hand, there is not much fluctuation in the nickel supply situation. Currently, it is trading
around $8.50/lb and $8.60/lb, which means market participants are conscious of the demand strength.
Also, there have been mentions of continuation of production of laterite ore in Indonesia or its
sustainability, and I think there will be lot of movements going forward.
As for gold price, it tends to move based on various factors including foreign exchange and economic
policies of various countries as well as central bank policies, that is, their decisions on whether to keep
gold or not. It is quite difficult to judge. Right now, it is at around $2,300/toz.

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6. Initiatives to Realize Management Conscious of Capital Cost and Share Price

I will explain the initiatives we are taking to realize management conscious of capital cost and share price.
PBR has been a hot topic of discussion, and we are also aware of it. We believe that strengthening theearnings power of the business is foremost for improving PBR, and we are promoting growth strategy
and pursuing efficient management.
FY2024 is the final year of the 2021 3-year Plan, and we have largely implemented the projects that wereplanned. We were substantially complete the Côté and Quebrada Blanca 2 (QB2) projects. As for nickel,
unfortunately we had to discontinue the feasibility study of the Pomalaa project, but we are poised tomake a fresh start.
We will implement the growth strategy for raising expectations for the future earning power, and at thesame time we will also focus on strengthening the earnings base of existing businesses. I will explain thislater with the example in the battery material business.
We are also implementing various measures related to information disclosure and engagement withstakeholders. Till now, we have not shone much of a spotlight on the mineral resource interest and volumeof resources we own. However, resource companies, etc. overseas talk about the source of their future
earnings. Going forward, I think we should highlight that a bit in briefings and hope to include newly added
resources such as the Quebrada Blanca and Côté in our briefings.

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7. Dividends / Cash Flows & Financial Position

Here we look at the dividends, cash flows, and financial position. Regarding cash flows and financial
position, as I have been saying, we have to maintain a strong financial position as we can take on largescale investment, etc. only when there are opportunities.
Nevertheless, in the past few years we have seen construction cost overruns in overseas investment
projects, and the reality is that our financial standings have slightly deteriorated on the account settlement
basis.
Interest-bearing liabilities on a consolidated basis are about 530.0 billion yen, and expenditure for largescale investments will continue in 2024. Simultaneously, both mine development projects are ramped up
and we have entered the phase of recovering funds. Metal price situation is trending higher than what the
projects had assumed and therefore I believe it is vital that we strive to recover the funds by starting
operations as early as possible.
As for shareholder return policy, our aim is to maintain a consolidated payout ratio of 35% or higher inprinciple. However, when there is a downswing in performance like in FY2023, dividends also tend to
become lower than expected. So, we have set DOE at 1.5% as minimum indicator.
Regrettably, DOE 1.5% is applied to the FY2024 forecast. We plan to raise the earnings power to be ina position to have a payout ratio of 35%.
Regarding financial position, we have started next-generation large-scale projects such as embarking on
new recycling and other growth investments. In such circumstances, we will be taking a balanced
approach on cash flows, financial position, and distribution to growth fields as well as on returns toshareholders.

71. Four Challenges under 2021 3-year Plan

This slide shows the progress made in the important strategic measures under the 2021 3-year Plan. Of
the four challenges under the plan, I will explain the contents shown in blue in this slide.
QB2 and Côté, which were hit by the Covid-19 pandemic and inflation and struggled with work delays
and business expenses, have already entered the phase to start operations. We are aiming to focus on
capturing the benefits of the high-level metal prices.
2. Quebrada Blanca 2 (QB2) Project (1)Construction of QB2 is almost complete. It is a major work, and though there are some areas yet to becompleted, we have started production of bulk copper concentrate in June 2023. The construction of themolybdenum separation plant also has been completed and it has started operations. We plan tocomplete the demobilization of the construction workers by end of June 2024.
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Copper concentrate will be arriving at the Toyo Smelter & Refinery in May 2024 and we are planning tohold a ceremony to the arrival of the first shipment at the end of May.
As for ramping up status, the copper ore processing volume per day has reached around 140,000
tons/day, or 100% of the designed capacity. We expect production to be 207,000 tons or more on a joint
venture 100% basis in 2024.
Since we are in the initial days of the operations, there are small corrections being made in so-called
short-time shutdowns, but overall ramping up has been on track and we are in the process of confirming
the facilities and processing capacity.
We plan to raise the production to 280,000 tons from 2025. When you look at it in the long-term, this willbe the average production volume, but depending on the grade of the ore that might be higher or lower
than the plan. It depends on the life of mine (LOM) and we are thinking of such a plan.
2. Quebrada Blanca 2 (QB2) Project (2)As shown in the graph here, QB2’s production volume has reached a level equivalent to 12th in the world.
We are keenly considering expansion, and if it happens, we can expect it to be one of the largest minesin the world.
Currently, we are not at a stage where we can accurately measure the operation cost, but with strip ratio
at 0.7, it has quite superior cost competitiveness. Further, it is a project that can produce high gradeconcentrate with the low impurity ore.
We have built a large operations room in central Santiago and it serves as the integrated operation center.
Though we call it a room, it is more of an operation floor. It monitors the mining site, which is about 1,800
km away, with data and cameras, and they are thinking of a system where they discuss any abnormality
in the data with the skilled planning staff at the center to provide improvement guidance to the site.
We are close to the start of operations, and we will see its real effects only after the operations stabilize.
We are hoping to secure good operators.
As for potential, as we are still going forward with the exploration, there is room for expansion in terms ofresource volume also.

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2. Quebrada Blanca 2 (QB2) Project (3)Here we have a full picture of QB2. The pictures at the top of the slide show the mining pit and an
autonomous truck. This, I believe, is a large 300-ton class truck. At the bottom are pictures of the tailingdam, ship loading facility, and a desalination facility in the port.
Similar to the prevailing situation, the copper concentrate market also tends to fluctuate when something
happens. But, the acquisition of the large mine adds a sense of stability to the company’s ability to secure
raw materials. Moreover, owning copper resources means there is a trade-off relationship between thecompany’s Smelting & Refining business and TC/RC, which is expected to provide stability to business
management.

3. Côté Gold Project (1)10This is our Côté Gold Project. Construction works are substantially complete, and we have already started
gold doré production. We are also in the midst of ramping up, producing the first doré in March, andproduction is still going smoothly in May. We will ramp up aiming to achieve 90% of the designed capacity
for end of 2024.
We plan to raise the production volume to almost seven tons per year in 2024 and to about 15 tons per
year from 2025.
Involved personnel are traveling to the site next week for a ribbon cutting ceremony, and we will confirm
the situation then.
3. Côté Gold Project (2)This slide shows pictures of the Côté. We have a 200-ton class autonomous truck operating also at the
Côté. Here also we are pursuing ramping up of operations to maximize the benefits from the rising prices.
The format is different, but from our experience with similar mines in the past, like the Pogo mine, wehave been carrying out processes up to gold smelting on site. Based on the knowledge gained from such
experiences, we are providing advises at site and cooperating in the ramping up operations.

113. Côté Gold Project (3)The Gosselin deposit is in an adjacent site about 500 meters ahead of the Côté deposit. Its indicatedmineral resources are 137 tons while inferred mineral resources are 93 tons. In terms of so-called volumeof resources, which is different from ore reserves, we have 230 tons in total.
We have confirmed about 370 tons of resources at the Côté deposit so far and we are expecting the
project value to improve. The data suggests that it could expand to a scale equivalent to the Côté deposit,
which has ore reserves of more than 200 tons.
In the diagram on the right side, the closer the color is to red, the higher the grade of gold. I asked a
specialist whether the gold grade of the ore body of the Gosselin deposit is higher and why the Côté
deposit was developed first. This has to be worded very carefully. As per the specialist, the explorationof the Gosselin deposit has not progressed and the diagram is based on the grades of ore veins thathave been reached so far. We would not know the average grade unless we explore further.
Another point is that the ore body of the Côté deposit clearly lies closer to the surface. The yellow bowl
shapes in the Côté deposit denote the pit scheme drawing, and the Côté deposit was the one where we
could collect ore early on.

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4. Initiatives to Secure New Nickel Ore Sources

Here I will explain our initiatives for securing new nickel ore sources. This is the Goongarrie Hub Projectin Kalgoorlie, Australia. As we have already explained in the overview we provided, this is one of the
projects we were considering in parallel.
We decided to embark on a definitive feasibility study, which in the olden days we referred to as bankable,or the so-called highly accurate feasibility study. We will be confirming the project scale, amount ofinvestment, operability, whether or not the ore is suitable for HPAL, and what kind of operation would bepossible.
In terms of HPAL, one of the main tasks is to build and maintain the tailing dam. What has been of highinterest for us in this project is that we can introduce tailing in the mining pit without having to create a
new large dam. Rainfall is scarce in Western Australia and it would be very interesting if the project isfeasible in terms of environment, economy, and technology.
We are also considering the Baptiste Nickel Project owned by FPX Nickel of Canada in the Decar Nickel
District, where awaruite ore is the principal mineral. We decided to invest in the company but it is likely
to take time as it is in the investigation stage.

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5. Battery Material Business: Progress in Expanding Production Capacity

This is the Battery Material Business. The construction of the new Niihama Plant, which has a monthly
production capacity of 2,000 tons and annual production capacity of 24,000 tons, is progressing smoothly.
In the initial plan, we had thought of starting operations in 2025 but it has been slightly brought forward
and we want to start supplying in the fourth quarter of FY2024.
In discussions regarding next-phase production increase, we are also considering R&D of a new mass
production process for lithium ferrous phosphate (LFP) cathode materials as well as cathode materials
for all solid batteries. We are driving forward R&D of cathode materials for all solid batteries also in theGreen Innovation Fund Project by NEDO and we will continue to study it.

5. Battery Material Business: Initiative to Strengthen Asset Efficiency

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In this slide, I will explain the strengthening of the earning base of existing businesses in the battery
material business. We have referred to it here as strengthening of asset efficiency, but in myunderstanding, it will also lead to improvement in earnings power.
In FY2023, we achieved inventory reduction by reducing lead time. As the graph on the right side of theslide shows, we reduced lead time by about 30%. When converted into quantity of nickel, it exceeds 20%.
Operating funds improved by about 35%. We reduced inventory volume by about 40.0 billion yen acrossthe company in FY2023 and the contribution from the battery material business was very large.
We promoted productivity improvement using the Toyota production system (TPS). The essence of TPS
is very profound and the final destination is one where we gain the mindset to eliminate all sorts of waste.
In terms of instilling this in involved parties, we are still at the starting point, or in other words, there may
still be lots of things we can do.
6. 3-Business Collaboration (Nickel-Battery) to Strengthen Value Chain

We started construction of lithium-ion secondary battery recycling plant to strengthen the value chain of
the three-business collaboration. It was like a cry-wolf situation with us saying we would implement it, but
we finally decided to make the investment. We were originally pursuing recycling-related research anddevelopment under the Green Innovation Fund Project. We already have the process in place and theplant is scheduled to be completed in June 2026. It employs a process we are good at, which combines
pyrometallurgical smelting and hydrometallurgical refining and is highly resistant to impurities.
In recycling, how to build supply chains and value chains is extremely important and we had been having
negotiations with various involved parties for several years now. We have signed partnership agreementswith intermediate scrap treatment companies, etc. and are heading towards building cooperating
relationships in the future.
Naturally, in addition to further strengthen our technology, recycling incurs costs at each process, and thechallenge is to gain social recognition for initiatives like that.

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7. Expansion of Advanced Materials Business (1)Although the slide’s title says expansion of Advanced Materials Business, currently the profit situation isextremely difficult as I have mentioned. Demand is on a recovery trend but it is down 11% in FY2023
compared with the previous year because the main market is electronic parts.
The projection for 2024 is up 7% from the previous year showing a recovery trend, and is still only halfway up. We are working on cost reductions, productivity improvement, and product development, and wewill assess our ability with a clear mind under these circumstances.
We are currently confirming what approach we should take as to how much we can lower the break-evenpoint including our operational structure. Changing the operational structure would not be so simple
because of certification issues, but we need to take drastic measures like this or we will not be able tostrengthen the business foundation.
Strengthening of marketing is also important and I will provide some examples later. We should makesure that we leave no stone unturned.

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7. Expansion of Advanced Materials Business (2)I would like to introduce some examples of development and sales expansion of high-functional materials
that contribute to reducing GHG emissions. Here, I will explain the development of two products, siliconcarbide (SiC) and near-infrared light absorbing material (CWO), which are contributing to lower carbon
emissions.
We are promoting the marketing of SiC under the product name SiCkrest, which employs the bonding
technology.
We have been promoting sales of some of the 6-inch substrates. Customers have been strongly
requesting 8-inch substrates, which have a slightly larger diameter. We have built a production line andplan to start production of prototypes in the first quarter of FY2024. The plant has been completed. If thistechnology appears to be promising, the market may expand.
If that happens, we would not be able to handle it alone. We have begun offering the license to somecustomers, based on the thinking that it is also necessary to increase the players by sharing the licensed
technology.
We are promoting CWO under the brand name of SOLAMENT. You may already know that it has received
various awards, and its branding activities were extremely inspirational for us. It is probably fair to saythat we had not fully recognized or noticed the functions and advantages of our own products.
I would like the employees to take a fresh look at our products by taking this as an example.

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8. Promoting Development of Products, New Technologies and Processes Contributing to Carbon
Neutrality

This is about the promotion of development of products, new technologies, and processes that contributeto achievement of carbon neutrality.
When you look at what is going on in the world, everyone is engaged in manufacture of hydrogen, and it
is highly likely that a market will be created.
We already offer high-purity nickel oxide and scandium products that can be used for manufacturinghydrogen. Till now, however, we have marketed them mainly for solid fuel cells, and though we havebeen supplying them for hydrogen applications, it was for quite limited customers. We need to pay
attention to things like these right now.
It goes without saying that the volume of scandium is limited because it is produced using HPAL. On theother hand, since we have manufacturing process for nickel oxide, we must refine our manufacturing
process, cost, and supply capabilities. Taking into consideration things like these, there are products
worth paying attention to.
We are also currently working on preparing for mass production of SiC and LFP that I have mentioned
earlier. As for a new product process that leads to social contribution, we believe our mission isdevelopment. I would not say it does not make sense to work on things that do not result in corporate
earnings, but they will have limited sustainability.
I would like us to contribute with products that can definitely earn, because our motto is to solve social
issues through our business.

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Introduction of the next president

I would like to introduce Nobuhiro Matsumoto, who is expected to take office as the Representative
Director and President in June 2024. Matsumoto has a wealth of experience working on-site and working
abroad including R&D and as the General Manager of refineries in Japan and abroad of the Non-Ferrous
Metals Division. As the General Manager of the Non-Ferrous Metals Division, he also has experience inbusiness administration of a division. He has a technical background, and given his extremely positivemindset, I consider him as a very reliable person to whom I can entrust the company.
Matsumoto will lead this briefing from next time onwards. We look forward to your continued support.

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Q&A: Earnings Forecast for FY2024

Q: I initially had an impression that the targets of KPI under the 3-Year Plan were conservative. What isyour analysis regarding the point that you cannot achieve the profit target of the plan even through theforecast for FY2024 is better than the market conditions you had calculated in the plan?
Please tell us the background; for instance, due to the delay in QB2, rising costs, or the impact of inventory
evaluation as well as how you are going to catch up in the future.
Nozaki: We, within the company, are also looking at it as a serious problem that profits are not reaching
the target even though market factors have improved compared with the estimates made in the 3-Year
Plan. From the manufacturing perspective, however, it is not that we are unable to produce, so we believethat it is an issue with production costs.
As the slide shows, each of Mineral Resources, Smelting & Refining, and Materials is lower than therespective plan estimates. I believe that Smelting & Refining Business has been considerably affected byso-called temporary evaluations and differences in the timing of realization such as QP difference.
Increases in costs including electricity bill have been putting pressure on the earning power of Smelting& Refining.
How to reduce them is quite a difficult task. Once you start paying attention to going green and low carbon
emissions, you cannot avoid cost increases, and we are already seeing its impact.
We believe that we should drastically change the production processes to mitigate these cost-related
impacts. We will work hard without giving up because the history of Smelting & Refining is the history ofprocess changes.
In the Mineral Resources Business, the costs of mines have risen quite significantly. We used to consider
large-scale investments, but depreciation expense has increased reflecting the increase in startup costs
and it is a burden on the income statement.
The Materials Business is almost 20 billion yen short because of the current difficult situation and it isvery regrettable. As I mentioned earlier, we will once again turn it around by identifying our strengths
instead of just waiting for the market to recover.
The most recent three years have been the years we heavily focused on development investment.
However, it is not that we would not be making any investments in the next three years, and we think it
is a phase where we once again need to strengthen our manufacturing, also given the projects you havementioned. We put together the next management structure by taking such points into consideration.

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Q&A: Evaluation of QB2 and Côté gold mine

Q: QB2 and Côté have finally started moving and the impact of large-scale projects in the profit before
tax analysis is 22.5 billion yen. I guess in terms of absolute value of profit it is starting from a very low
level, but in terms of change, it appears to be quite significant. You have said that it is still too early toevaluate, but can you elaborate on your confidence?
I believe that the risk is low this time because you are teaming up with a sound partner and parties with
abundant experience, and it also has a brownfield-like aspect to it. How do you see it? Your personal
opinion would be enough.
Nozaki: I have confidence in QB2 and Côté because, to be honest, they are proceeding more smoothly
than I had expected considering how well the commissioning is progressing and the speed of rampingup.
QB2 has exceeded the daily processing volume early on and at one point it was operating at a level far
above it. Operations of the Côté are also progressing at a pace faster than we had expected.
Nevertheless, we will closely watch their operations because there are cases where some problems
emerge at new facilities after several months.
Q&A: Expansion of the copper mine
Q: At present, there are talks that Teck may expand the potential of QB2. I think some talks aboutauthorization also have started emerging and I expect SMM to take part in it if those talks make progress.
How different are the construction costs for copper mines between greenfield and brownfield in general?
For example, it was possible in the past to build a copper mine with production capacity of 300,000 tons
per year for 3 to 4 billion USD. Does it cost about 5 to 6 billion USD now?
You have also talked about management conscious of capital cost but the hurdle rate has risen quite
significantly. Conversely, incentive for construction would decrease unless the copper price isconsiderably high. Please share with us your insights on copper mine development in general terms.
Nozaki: Recently, I saw a report by someone saying that it would cost 7.5 billion USD for a mine with acapacity of 300,000 tons per year. If you want to develop a greenfield copper mine, it also depends on
the region, but if it is in Chile, for example, you have to desalinate sea water and transport it to the site.
The development in Chile this time was carried out in highlands at heights more than 4,000 meters andthe infrastructure and environmental costs are very large.
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As you have said, the cost we have assumed till now would be around 5 billion USD for a mine withproduction of 300,000 tons per year, but that would not be sufficient now when you consider the
infrastructure costs. I think this is the consensus among most of resource majors.
In an expansion project, infrastructure has been completed to a certain extent, and all you have to do isto enhance production facilities, so focus is likely to shift to such projects. The Teck case is probably the
expansion of QB2 and this exactly falls under expansion projects.
There also was a report by an analyst overseas that you cannot develop a new copper mine unless thecopper price is at least 12,000 USD. Production costs are rising not only at SMM but it is a global trend
and construction costs are also rising. Under such circumstances, rising metal prices may be the only
incentive for new mine development.
When we consider the increase in producer costs, the bottom of the future copper price would hold out
to be higher than what it used to be. Development would progress based on this, while we will also be
looking at what level of higher price a long-term consensus would be formed.
Q&A: Outlook of the Materials Business

Q: In the investment plan, I feel that investment in the Materials Business is again high in FY2024. I
believe you are considering expanding the capacity of battery materials. Please share with us the timing
at which the cash flow of the Materials Business will turn positive.
Nozaki: You are right in that the investment in the Materials Business in FY2024 is at a quite high level.
The spending for the Niihama Plant, which has a capacity of 2,000 tons per month and is close tocompletion, is large. One big portion of investment in SiC is over and the materials-related business will
settle down, but next is what to do with LFP cathode materials.
Cash flow excluding growth investment of the Battery Material Business is positive. It is extremely
important to create a situation where cash flow is perpetually positive by turning these strategic
investments into a strategic strength in the future.
I believe there will be plenty of funds remaining if we raise production efficiency and eliminate waste.
There are still lots of waste at the timing of switching of operations. We should be steadily doing what
manufacturers would do and fully recover it.

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Q&A: Ratio regarding net assets of cross-shareholdings
Q: What is the ratio of cross-shareholdings to net assets as of the end of March 2024? What is your viewon reduction of cross-shareholdings?
Nozaki: It will be disclosed in the securities report but we have sold a good number of issues in FY2023.
The share price has been rising lately and it is possible that the ratio to equity capital has risen comparedto the previous fiscal year.
We are discussing cross-shareholdings at the board of directors meetings every year after taking into
account the purpose of holding them and their benefits in comparison with capital cost and have beensolemnly reducing them.
The prices of some companies’ shares that we own are very high and some have increased in terms ofvalue, but we are pursuing reduction also considering the issue of business relationships. We are taking
it seriously as we know of the recent trend where reduction of cross-shareholders has been gathering
pace.
Q&A: Effect of large-scale projects

Q: The impact of large-scale projects in the profit before tax analysis is 22.5 billion yen. How much can
you add to this in after FY2024 and what kind of contribution can you expect from it ultimately? Please
explain it quantitatively if possible.
Nozaki: Among large-scale investments, Delta will add 22.5 billion yen. In other words, we could say thatthe impact of large-scale investment is the approximately 10 billion yen we accumulated as profit/loss
excluding temporary factor.
Full-scale production will start from FY2024. It is hard for us to discuss the level of costs once operation
stabilizes because we are yet to receive guidance from the majority owner.
For example, if the Côté produces 15 tons of gold, it is 6 tons given the current production interest of
about 40%. And, if the Quebrada Blanca produces 280,000 tons of copper, it is 70,000 tons for the
production interest of 25%.
We have high expectations because the projects that have certain levels of earning power are expected
to produce these amounts, but we right now do not have figures we can disclose.
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Q&A: Information disclosure regarding mines in which SMM has those interest
Q: You have talked about information disclosure based on the value of mine production interests owned
by SMM. What led you consider information disclosure, and how are you evaluating the value of
production interests you currently own?
Nozaki: Regarding disclosure of resources owned, mine companies in the US and Canada are rated
based on what kind of resources they own and how much can be expected in the future, and their PBRs
are at a high level, two times or more.
In our case, it was triggered by an incident where someone pointed out to me that SMM owns the very
promising and outstanding Morenci, Cerro Verde, and Quebrada Blanca mines but does not make muchdisclosure even though the value of these resources is extremely high. We would like to pursue a methodthat would enable us to properly showcase the resources we already own.
Q&A: Outlook of production expansion plan of the Battery Material Business

Q: I have an impression that your tone regarding the expansion plan of battery materials has changed
from the briefing for the second quarter of FY2023. From talks of expanding production led by NCA and
NMC in accordance with the existing production expansion plan, your scenario has changed toconsidering LFP and secondary battery recycling as well as introduction of low-cost production processes.
In the graph in the bottom of the slide, how should we consider the blue and green portions of FY2027
and FY2030? Is it composed of existing NCA and NMC, and do you aim to roughly add LFP, recycling,
and introduction of new processes?
You have explained that you would develop LFP independently instead of purchasing the technology.
The target market may be primarily China. What are the winning chances as a business development?
Also, is the time frame of 2030 feasible for implementation of what lies ahead in terms of technology
development and expanding the sales of products contributing to realization of carbon neutrality?
Nozaki: Regarding the production expansion plan for battery materials, when we implemented monthly
production of 2,000 tons at Niihama Plant, which is under construction, we had explained that market
requirements will decide whether the future expansion would be in LFP or in nickel. There is also aviewpoint as to whether we should work on it alone in this wildly fluctuating market.

24Forming inorganic alliances, after observing a bit more from the upstream of supply chain to downstream,is also an option. Currently we do not have a plan but we will work towards the major target of 180,000
tons a year in FY2030 without lowering the target.
Regarding LFP, we will utilize the facilities and technologies that were transferred and create newprocesses and new capabilities. I cannot say anything about the market, as our customers are also there,
but it is not something like we are going to develop LFP with certain capabilities and jump into the market
with that. The battery material business is moving forward through repeated discussions with users anddeliberating on what kind of product would be good. It is closer to a custom-made business and it also
has not become a commodity. In this regard, it is safe for you to assume that there are various talks goingon towards pushing LFP forward.
Q&A: Rising costs related to carbon neutrality
Q: Regarding profitability, the challenge you said is the rising costs led by electricity expenses. At thesame time, in the sustainability briefing you held in April 2024, you said fuel switch and purchase ofrenewable energy are the greatest means for achieving carbon neutrality in the future. I feel such costs
will increase further.
On the other hand, you have announced the Green Metal concept among other things and if you canoffer ingot that can command premium, it is also possible to pass on the cost increase. Could you tell us
how you are going to handle the cost increase and the factors that further push down profits excluding
temporary factor?
Nozaki: As you said, unless you implement a very large process change or something innovative for
reducing the environmental burden, it will only lead to cost increases. Nonetheless, I do not think it will
directly lead to a reduction in profit excluding temporary factors. Taking measures and surviving isimportant, and we might see a world where we can command a premium by demonstrating our presencein the market.
Recycling is also similar. I would like to guide the measures we are taking now so that it will add premiumvalue to the company instead of being a negative factor.
Q&A: Next 3-year business plan
Q: I may be overreaching here, but could you tell me where your largest expectations lie in your next 3year business plan and what you would like to definitely achieve?
Nozaki: The new 3-year business plan will be formulated by the new management team. Considering thecontinuation from the 2021 3-Year Business Plan, one goal would be to steadily turn large-scale
investments into a strategic strength.
The second point is next growth investment targets and I think the focus will be on expansion of Quebrada
Blanca and kick-off of the nickel project, etc., which we will have to work on. We are in the phase of
considering their details, so this is the most I can give regarding the question on the next 3-year businessplan.
Q&A: Short-term impact of a decline in TC/RC
Q: Regarding copper smelting, TC/RC is negative in the spot market, which is a situation we have notseen before. In a briefing by another company recently, that company said that it has to start thinking ofincreasing the introduction of e-scrap in the smelting business in the future and may have to a different
approach amid the considerable decline in TC/RC.
In SMM’s case, given that you own mining interests, you have the capability to offset a certain level offluctuation in TC/RC, and you have also said that you need to have a method that could drastically change
the cost of copper smelting. Could you please explain the short-term impact brought about by the decline
in TC/RC and whether your thinking will change in the long term.
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Nozaki: In this world, if you overshoot, there will definitely be a swing back. As for TC/RC, though it isnegative in the spot market now, if it continues like this, copper smelting will collapse.
I am telling those specializing in the copper mining business that they may be happy that TC/RC became
low but they eventually will lose customers. If we start seeing smelters going out of business, there will
be insufficient smelting capacity and TC/RC will start rising.
In a situation where the smelting capacity is increasing in China and will likely to increase also in India, it
may be that the change will happen only on the map depicting smelting capacity. Even then, it is hard to
think that the current situation will continue on the whole.
The reason behind the emergence of spot market like this now, I think, is that there were smelters who
were trying to buy raw materials in spot trading. Most of the major smelting companies, including thosein Japan, have entered into brick contracts or medium- to long-term contracts and therefore there is noneed to rush to buy. However, the current situation is abnormal.
On the other hand, we should of course be thinking of lowering the smelting cost. Since we are making
temporary investments such as investments to improve efficiency and carbon-neutral investments, there
is amortization burden. This will eventually fade away but the only thing we can do is to build strength.
Q&A: Attractiveness of Battery Material Business
Q: Compared to one or two years ago, the shift to EV around the world is slowing down a bit. Further, theshare of non-NMC cathode materials is rising in China and the business environment surrounding battery
materials is changing rapidly. Taking the current situation into account, do you still consider the battery
materials business’s attractiveness to be quite high?
Nozaki: The growth in the number of EVs sold is slowing down a bit in 2024. Some say that hybrid vehicles
are growing, but without doubt the major global trend is towards electrification.
As you said, China has already been shifting from NMC to LFP, and there is a possibility that an entirely
different battery material will become the major player. We can think of the current NMC and nickel
materials and also all solid batteries in the future.
There will be such changes, but I think the Battery Materials Business will keep growing a lot further.
Regarding small and large changes also, because some parts are still custom-made, we will not be able
to address them if we do not have a lot of customer contact points. Conversely, in this industry, customers
would not adopt a material that is good in our opinion but was produced without any customer inputs.
We will be focusing also on LFP, and will keep pace with the changes in the battery materials. And,
though there will be some ups and downs, there will not be any significant changes in the major trend
towards shift to EVs, which is at its base.

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